Document:

Exhibit 10.11

 

AMENDMENT TO

REGISTRATION RIGHTS
AGREEMENT

 

This Amendment to Registration Rights Agreement
(this “Amendment”) is made and entered into as of April 22, 2008, between
Etelos, Incorporated, a Washington corporation (the “Company”), and each
of the several purchasers signatory hereto (each such purchaser, a “Purchaser”
and, collectively, the “Purchasers”).

 

RECITALS

 

WHEREAS, the Company and the Purchasers are parties
to that certain Registration Rights Agreement dated January 31, 2008 (the “RRA”);

 

WHEREAS, contemporaneous with the execution of this
Amendment, the Company and each of Purchasers are entering into a Securities
Purchase Agreement of even date herewith (the “April 2008 Purchase
Agreement”) pursuant to which each of the Purchaser is purchasing from the
Company, and the Company is selling to the Purchasers, 6% Secured Convertible
Debentures due April 30, 2010 (the “April 2008 Debentures”)
and common stock purchase warrants (the “April 2008 Warrants”); and

 

WHEREAS, the Company and each Purchaser desire to
amend the RRA as set forth herein.

 

The Company and each Purchaser hereby agrees as
follows:

 

1.             Definitions.  Capitalized terms used and not otherwise
defined herein that are defined in the RRA shall have the meanings given to
such terms in the RRA.

 

2.             Amendment to Definition of Registrable Securities.  The term “Registrable
Securities” as defined in Section 1 of the RRA is hereby
amended to read in its entirety as follows:

 

“Registrable Securities” means (i) all
of the shares of Common Stock issuable upon conversion in full of the
Debentures (assuming on the date of determination the Debentures are converted
in full without regard to any conversion limitations therein), (ii) all
shares of Common Stock issuable as interest or principal on the Debentures
assuming all permissible interest and principal payments are made in shares of
Common Stock and the Debentures are held until maturity, (iii) all Warrant
Shares (assuming on the date of determination the Warrants are exercised in
full without regard to any exercise limitations therein), (iv) any
additional shares of Common Stock issuable in connection with any anti-dilution
provisions in the Debentures or the Warrants (in each case, without giving
effect to any limitations on conversion set forth in the Debentures or
limitations on exercise set forth in the Warrants), (v) if and when
issued, the shares of Common Stock issuable pursuant to Section 4.15 of
the Purchase Agreement, (vi) all of the shares of Common Stock issuable
upon conversion in full of the April 2008 Debentures (assuming on the date
of determination the April 2008 Debentures are converted in full without
regard to any conversion limitations therein), (vii) all shares of Common
Stock issuable as interest or principal on the April 2008 Debentures 

 

1

 

assuming all permissible interest and
principal payments are made in shares of Common Stock and the April 2008
Debentures are held until maturity, (viii) all Warrant Shares (as such term
is defined in the April 2008 Purchase Agreement) (assuming on the date of
determination the April 2008 Warrants are exercised in full without regard
to any exercise limitations therein), (ix) any additional shares of Common
Stock issuable in connection with any anti-dilution provisions in the April 2008
Debentures or the April 2008 Warrants (in each case, without giving effect
to any limitations on conversion set forth in the April 2008 Debentures or
limitations on exercise set forth in the April 2008 Warrants), and (x) any
securities issued or issuable upon any stock split, dividend or other
distribution,  recapitalization or
similar event with respect to the foregoing.

 

3.     Conflict.  In the
event of a conflict between the provisions of this Amendment and the RRA, the
provisions of this Amendment shall prevail and the provisions of the RRA shall
be deemed modified by this Amendment as necessary to resolve such conflict.

 

4.     Effect of Amendment. 
Except as expressly amended by this Amendment and/or by Section 3,
the terms and provisions of the RRA shall continue in full force and effect.

 

5.     Counterparts.  This
Amendment may be executed in one or more counterparts, each of which shall be
deemed an original but all of which together shall constitute one and the same
instrument.

 

********************

 

2

 

IN
WITNESS WHEREOF, the parties have executed this Amendment as of the date first
written above.

 

	
   

  	
  ETELOS, INCORPORATED

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jeffrey L. Garon  

  
	
   

  	
   

  	
  Name: Jeffrey L. Garon

  
	
   

  	
   

  	
  Title: President and Chief Executive
  Officer

  

 

 

[SIGNATURE PAGE OF PURCHASERS FOLLOWS]

 

3

 

[SIGNATURE PAGE OF HOLDERS TO AMENDMENT TO RRA]

 

	
  Name
  of Purchaser:

  	
  Enable
  Growth Partners LP

  	
   

  
	
   

  
	
  Signature
  of Authorized Signatory of Purchaser:

  	
  /s/ Brendan O’Neil

  	
   

  
	
   

  
	
  Name
  of Authorized Signatory:

  	
  Brendan
  O’Neil

  	
   

  
	
   

  
	
  Title
  of Authorized Signatory:

  	
   President and Chief Investment Officer

  	
   

  
									

 

[SIGNATURE PAGES CONTINUE]

 

4

 

[SIGNATURE PAGE OF HOLDERS TO AMENDMENT TO RRA]

 

	
  Name
  of Purchaser:

  	
  Hudson
  Bay Fund LP

  	
   

  
	
   

  
	
  Signature
  of Authorized Signatory of Purchaser:

  	
  /s/ Yoav Roth

  	
   

  
	
   

  
	
  Name
  of Authorized Signatory:

  	
  Yoav
  Roth

  	
   

  
	
   

  
	
  Title
  of Authorized Signatory:

  	
  Principal
  and Portfolio Manager

  	
   

  
								

 

[SIGNATURE PAGES CONTINUE]

 

5

 

[SIGNATURE PAGE OF HOLDERS TO AMENDMENT TO RRA]

 

	
  Name
  of Purchaser: 

  	
  Hudson
  Bay Overseas Fund LTD

  	
   

  
	
   

  
	
  Signature
  of Authorized Signatory of Purchaser:

  	
  /s/ Yoav Roth

  	
   

  
	
   

  
	
  Name
  of Authorized Signatory:

  	
  Yoav
  Roth

  	
   

  
	
   

  
	
  Title
  of Authorized Signatory:

  	
  Principal
  and Portfolio Manager

  	
   

  
									

 

6Exhibit
10.12

 

ETELOS,
INC

 

EMPLOYMENT
AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (“Agreement”) is entered into and effective
this 11th day of August, 2007 (the “Effective Date”), by and between Etelos, Inc.
a Washington corporation (“Company”), and Jeffery L. Garon
(“Employee”).

 

RECITALS

 

A.            Company wishes to
employ Employee and Employee wishes to be employed by Company pursuant to the
terms and conditions of this Agreement; and

 

B.            Company’s Board of
Directors (“Board”) believes in the best interests of Company and its
shareholders to provide Employee with appropriate incentive to be employed by
Company and to motivate Employee to maximize the value of Company; and

 

C.            Board may consider
certain organizational changes, and believes it appropriate to provide Employee
with certain benefits upon termination of employment or upon a Change in
Control, which benefits are designed to provide sufficient incentive for
Employee to remain with Company notwithstanding the possibility of a Change in
Control.

 

NOWTHEREFORE, in consideration of the promises and mutual covenants set
forth in this Agreement, the parties agree as follows:

 

1.             Position, Duties, and Standards
of Performance.  (a)   Effective August 11, 2007, (“Employment Date”)
Company shall employ Employee in the position of President &
Chief Executive Officer with such duties and responsibilities as are
generally described in Exhibit A to this Agreement, or such other position
with duties and responsibilities as mutually agreed.  The Board has the right, subject to the
provisions and limitations of this Agreement, to revise the position, duties,
responsibilities, and compensation, provided that such position, duties and
responsibilities and compensation are consistent with Employee’s skills and
background and are no less favorable than his current position, duties,
responsibilities and compensation.

 

(b) 
Employee will perform his duties in a fully professional manner pursuant to the
standards of skill, competence and efficiency expected of his position, and
subject to the direction and control of the Company and Board of
Directors.  Employee shall comply and be
bound by the Company’s operating policies, procedures and practices from time
to time in effect during his employment. 
During the term of Employee’s employment with the Company, Employee
shall devote substantially his full time, skill and attention to his duties and
responsibilities, and shall perform them faithfully, diligently, and
competently, and Employee shall use his best efforts to further the business of
Company.

 

2.             Term; Employment at Will.  The parties acknowledge that this Agreement
is for an indefinite term, and that Employee’s employment is and shall continue
to be at-will, as defined under applicable law. 
If Employee’s employment terminates for any reason, Employee shall only
be entitled to the benefits and compensation as provided in this Agreement, or
as may be otherwise provided in accordance with Company’s established employee
plans and policies in 

 

 

effect
at the time of termination.

 

3.             Compensation, Benefits, and
Policies.   (a)  As
compensation for all services pursuant to this Agreement, Employee shall be
paid a base salary (“Base Salary”) in a gross amount of $175,000 on an
annualized basis, payable pursuant to Company’s regular payroll practices, but
not less frequently than monthly.  Base
Salary is subject to periodic review, not less frequently than annually, and
adjustment, as recommended and approved by the Board.

 

(b)           In addition,
Employee is eligible for payment of a performance bonus (“Bonus”), payable at
the sole discretion of the Board and pursuant to standards based on Company’s
achievement of objectives pursuant to its own business plan, and Employee’s
achievement of specific objectives, the latter objectives to be mutually agreed
upon annually thereafter based on Company’s fiscal year.

 

(c)           In addition, the
Board shall grant and issue to Employee 7,150,000 shares of Common Stock in
Company (“Shares”), at the fair market value price of such Common Stock set by
the Board on the Effective Date (the “Original Grant”).  The Original Grant shall be subject, in part,
to the Company’s Right To Repurchase such shares, in accordance with §83(b) of
the Internal Revenue Code of 1986, as amended, and the Restricted Stock
Purchase Agreement between Company and Employee, as follows: (i) 25% of
the Original Grant shall be owned free and clear by Employee and not subject to
any right to repurchase by the Company on the date of issuance; (ii) 25%
of the Original Grant shall be subject to the Company’s Right to Repurchase for
a period of 12 months after the Effective Date of this Agreement; and (iii) the
remainder of the Original Grant shall be subject to a declining Right of
Repurchase at the monthly rate of 1/24th per month for 24 months
following the 12 months’ anniversary of the Effective Date .  Subject to the discretion of the Board,
Employee may be eligible to receive additional grants of stock, stock options
or purchase rights from time to time in the future, on such terms and
conditions as the Board shall determine at the grant date.

 

(d)           In addition, the
Company will pay to Employee a signing bonus, of not less than One Hundred
Fifty Thousand Dollars [$150,000], concurrently with the issuance of the Shares
pursuant to Section 3(c) of this Agreement.

 

(e)           The Company shall
cause Employee to be nominated for election to the Company’s Board of
Directors.

 

(f)            Employee is
eligible to participate in such other and additional employee benefit plans and
executive compensation programs as may be developed and maintained by Company
and as may be applicable to other key executives of Company from time to time,
including (without limitation) retirement plans, savings or profit-sharing
plans, stock option, incentive or other bonus plans, life, disability, health,
accident and other insurance programs, paid vacations and similar plans or
programs, subject in each case to the generally applicable terms and conditions
of the particular plan or program and to the determination of any committee
administering such plan or program.

 

(g)           Employee is subject
to and is bound by Company’s financial, personnel, and other operating
policies, practices and procedures as they exist, or may be developed and
modified and as are in effect from time to time, including the Company’s
indemnification of officers.

 

(h)           Employee will be
reimbursed for expenses reasonably incurred in connection with the 

 

2

 

performance
of his duties under this Agreement in accordance with Company’s policies and
practices.

 

(i)            Within a reasonable
time after the Effective Date, the Company will obtain Director’s and Officer’s
liability and other customary insurance coverage, and Employee shall be
entitled to be covered under the terms of such policy(s).

 

4.             Termination of Employment.

 

(a)           By Company for
Cause.  Company
may terminate this Agreement at any time, with or without prior notice, for
Cause, which for these purposes is defined as:

 

(i) any material act of personal dishonesty by Employee in
connection with his responsibilities as an employee intended to result in
substantial personal enrichment to Employee at the expense of Company or its
shareholders;

 

(ii) Employee’s conviction of or plea of nolo contendere to any
felony charge brought in any court of competent jurisdiction;

 

(iii) an act of fraud against Company; or

 

(iv) material breach of this Agreement, or repeated or continued
failure of Employee to perform his obligations under this Agreement or any
related agreement which are demonstrably willful and deliberate on Employee’s
part, after receiving written demand for performance from the Company
describing the manner in which Employee has not substantially performed his
duties, and providing at least thirty (30) days to cure the failure.

 

(b)           By Company without
Cause.  Company may terminate this
Agreement without Cause by providing Employee with written notice of
termination, which termination shall become effective on the thirtieth (30th)
day after receipt by Employee.

 

(c)           By Employee for
Good Reason.  Employee may
terminate this Agreement for Good Reason (defined below) by giving written
notice of termination, which termination shall become effective on the
thirtieth (30th) day after receipt of notice by Company or such
other date as specified by Employee not greater than thirty (30) days, unless
mutually agreed.  Employee agrees to
comply with any reasonable instruction issued by Company or his supervisor
concerning the performance of his duties until the termination for Good Reason
becomes effective.  For this purpose, “Good
Reason” means:

 

(i) without Employee’s express written consent, the assignment of
any duties or the significant reduction of Employee’s duties, either of which
is inconsistent with Employee’s position with Company and responsibilities in
effect immediately prior to such assignment, or the removal of Employee from
such position and responsibilities; or

 

(ii) without Employee’s express written consent, a substantial
reduction, without good business reasons, of the facilities and perquisites
(including office space, support staff and location) available to Employee
immediately prior to such reduction; or

 

(iii) a reduction by Company in Employee’s Base Salary in effect
immediately prior 

 

3

 

to
such reduction; or

 

(iv) a material reduction by Company in the kind or level of
employee benefits to which Employee is entitled immediately prior to such
reduction with the result that Employee’s overall benefits package is significantly
reduced; or

 

(v) without Employee’s express written consent, the relocation of
Employee to a facility or a location more than 50 miles from Employee’s then
present location; or

 

(vi) any purported termination of Employee by Company which is
effected for Disability or for Cause or any purported termination for which the
grounds relied upon are not valid; or

 

(vii) the failure of Company to obtain the assumption of this
Agreement by any successors contemplated in Section 7 below.

 

(d)           Related to a Change
of Control.  Company, or any
successor or assignee, on the one hand, or Employee on the other hand, may
terminate this Agreement in connection with a Change of Control, the
terminating party giving written notice to the other, and termination taking
effect on the thirtieth (30th) following receipt of notice.  For purposes of this Agreement, “Change of
Control” shall mean the occurrence of any of the following events:

 

(i)            Any “person” (as
such term is used in Section 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended) becomes the “beneficial owner” (as defined in
Rule 13d-3 under said Act) directly or indirectly, of securities
representing fifty percent (50%) or more of the total voting power represented
by Company’s then outstanding voting securities; or

 

(ii)           A merger,
combination or consolidation of Company with any other corporation or business
entity, other than a merger, combination or consolidation which would result in
the voting securities of Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) at least fifty percent (50%) of
the total voting power represented by the voting securities of Company or such
surviving entity outstanding immediately after such merger or consolidation; or

 

(iii)          Effectiveness of an
agreement for the sale, lease or disposition by Company of all or substantially
all of Company’s assets; or

 

(iv)          Liquidation or
dissolution of Company.

 

Further, for purposes of this Agreement, “Related to a Change of
Control” shall mean any time during the period beginning on the date the Board
makes a decision to seek to sell or otherwise to effect a Change of Control
with respect to Company and directs any officer and/or agent to take steps to
effectuate that decision, and ending on the date eighteen (18) months after a
Change of Control becomes effective (“No Change Period”), except as otherwise
specifically provided in this Agreement. 
The foregoing notwithstanding, if Employee resigns Related to a Change
of Control, the No Change Period shall be deemed to begin sixty (60) days prior
to the Change of Control and end eighteen (18) months following a Change of
Control.

 

(e)           By Company for
Disability.  Company may
terminate this Agreement because 

 

4

 

Employee
is unable to perform, with or without accommodation, due to Disability.  For purposes of this Agreement, “Disability”
shall mean: Employee has been unable to perform his duties under terms of this
Agreement due to physical or mental illness for at least 26 weeks after its
commencement, and further, it is determined, by a physician selected by Company
or its insurers and acceptable to Employee or Employee’s legal representative
(agreement to such acceptability not to be unreasonably withheld) that such
Disability is likely to be indeterminate or permanent, and total.  Termination for Disability shall become
effective after thirty (30) days’ written notice by the Company, provided
however that Company shall have continued to pay Employee’s Base Salary
during the period of Disability, pursuant to insurance or otherwise.  In the event that Employee resumes the
performance of substantially all of his or her duties under this Agreement
before the termination of employment becomes effective, the notice of
termination shall automatically be deemed to have been revoked.

 

(f)            Upon Death.  This Agreement shall terminate upon Employee’s
death, such termination to be effective on the last day of the month in which
Employee dies.

 

5.             Benefits on Termination.

 

(a)           Termination
without Cause, Termination Upon Disability, or Resignation for Good Reason, all
Other than Related to a Change of Control. 
In the event Company terminates Employee’s employment without Cause or
Due to Disability, or in the event Employee terminates his employment for Good
Reason, all other than Related to a Change of Control, Employee shall be
entitled to receive the following:

 

(i)            all accrued unpaid
Base Salary earned prior to the effective date of such termination plus a
payment equal to the value of accrued but unused vacation, all payable on or
before termination; plus

 

(ii)           severance pay equal
to twelve (12) months’ Base Salary in effect at the time of termination,
payable in a lump sum on the effective date of Employee’s termination; plus

 

(iii)          the Bonus pro-rated
through the date of termination, that Employee would have received in the
termination year, payable promptly following calculation of the appropriate
amount; plus

 

(iv)          with respect to any
stock held by Employee which may be subject to the Company’s Right to
Repurchase and any unvested (unexercisable) options, if any, held by Employee
to buy stock under any of the Company’s stock option plans, Employee shall
immediately vest in such additional number of shares and options that would
have vested (or become owned or exercisable, as applicable) had Employee
remained employed by the Company for an additional twelve (12) months, which
additional vesting shall be not less than fifty percent (50%) of the Original
Grant.  These accelerated shares and
options are in addition to any shares and options already vested.

 

(b)           Termination Related
to a Change of Control.  Subject
to the limitation on payments set forth in Section 7 below, if Company
terminates Employee’s employment for any reason other than Cause or Disability
during the No Change Period, or if Employee resigns his employment for any
reason whatsoever during the No Change Period (as defined in Section 4(d) above),
then Employee shall be entitled to receive the following:

 

5

 

(i)            all accrued unpaid
Base Salary earned prior to the effective date of such termination plus a
payment equal to the value of accrued but unused vacation, all payable on or
before termination; plus

 

(ii)           severance pay in an
amount equal to twelve (12) months’ Base Salary in effect at the time of
termination, payable in a lump sum on the effective date of Employee’s
termination; plus

 

(iii)          the Bonus pro-rated
through the date of termination, that Employee would have received in the
termination year, payable promptly following calculation of the appropriate
amount; plus

 

(iv)          with respect to any
stock held by Employee which might be subject to the Company’s Right to
Repurchase and any unvested (unexercisable) options, if any, held by Employee
to buy stock under any of the Company’s stock option plans, Employee shall
immediately vest in and shall own free and clear all such additional number of
shares subject to the Company’s Right to Repurchase and in all such additional
number of unvested shares and options, as of the date ten (10) days prior to the closing
date of the Change in Control.  These accelerated shares and options are in addition
to any shares and options already vested.

 

(c)           Termination for
Cause.  Notwithstanding anything else
contained in this Agreement, if Company terminates Employee’s employment for
Cause, then Employee shall not be entitled to receive severance or other
benefits pursuant to this Agreement, including acceleration of exercisability
of stock options or vesting of stock purchased from Company, except for those
benefits (if any) as then established under Company’s then existing severance
and benefits plans and policies at the time of such termination.  Nothing in this Agreement shall affect any
rights Employee may have to any shares or options already vested.

 

(d)           Voluntary
Resignation Other than Related to a Change of Control.  In the event Employee voluntarily resigns,
other than for Good Reason or other than Related to a Change of Control,
Employee shall only be entitled to such severance and other payments as in
accordance with Company’s existing severance and benefit plans and policies
generally at the time of such resignation.

 

(e)           Medical Benefits. In the event Employee is entitled to severance
benefits pursuant to this Agreement, whether payable over time or in a lump
sum, then in addition to such severance benefits, Employee shall receive
Company-paid health insurance coverage to the extent provided to such Employee
immediately prior to Employee’s termination (the “Company-Paid Coverage”) for
the period set forth in the appropriate subsections of this Section 5.  If Employee’s health insurance coverage
included Employee’s dependents immediately prior to Employee’s termination,
such dependent also shall be covered at Company expense.  Company-Paid Coverage shall continue for
twelve (12) months following termination or until Employee becomes covered
under another employer’s group health insurance plan, whichever occurs
first.  For purposes of the continuation
health coverage required under COBRA, the date of the “qualifying event” giving
rise to Employee’s COBRA election period (and that of his “qualifying
beneficiaries”) shall be the last date on which Employee received Company-Paid
Coverage under this Agreement.

 

(f)            Termination on
Death.   In the event of Employee’s
death, his estate shall be entitled to receive the following:

 

6

 

(i)            all accrued unpaid
Base Salary earned prior to the effective date of such termination plus a
payment equal to the value of accrued but unused vacation, all payable as
promptly as practicable following termination; plus

 

(ii)           any benefits otherwise provided pursuant to Company’s
plans and policies at the time of such death.

 

6.             Limitation on Payments.  To the extent that any of the payments and
benefits provided for in this Agreement or otherwise payable to Employee
constitute “parachute payments” within the meaning of Section 280G of the
Code, as amended and, but for this Section 6, would be subject to the
excise tax imposed by Section 4999 of the Code, then Employee’s benefits
under Section 5(a) and (b) above, as applicable, shall be
payable either:

 

(a)  in full, or

 

(b)  as to such lesser amount as would result in no portion of
such severance benefits being subject to excise tax under Section 4999 of
the Code,

 

whichever
of the foregoing amounts, taking into account the applicable federal, state and
local income taxes and excise tax imposed by Section 4999, results in the
receipt by Employee on an after-tax basis of the greatest amount of severance
benefits under Sections 5(a) or (b) above, notwithstanding that all
or some portion of such severance benefits may be taxable under Section 4999
of the Code. Unless Company and Employee otherwise agree in writing, any
determination required under this Section 6 shall be made in writing by
Company’s independent public accountants (the “Accountants”), whose
determination shall be conclusive and binding upon Employee and Company for all
purposes.  For purposes of making the
calculations required by this Section 6, the Accountants may make
reasonable assumptions and approximations concerning applicable taxes and may
rely on reasonable, good faith interpretations concerning the application of
Sections 280G and 4999 of the Code. 
Company and Employee shall furnish to the Accountants such information
and documents as the Accountants may reasonably request in order to make a
determination under this Section. 
Company shall bear all costs the Accountants may reasonably incur in
connection with any calculations contemplated by this Section 6.

 

7.             Successors.

 

(a)           Company’s
Successors.     Any successor to
Company (whether direct or indirect and whether by purchase of stocks, purchase
of assets, lease, merger, consolidation, liquidation, or otherwise) to all or
substantially all of Company’s business and assets shall assume the obligations
under this Agreement and agrees expressly to perform the obligations under this
Agreement in the same manner and to the same extent as Company would be
required to perform such obligations in the absence of a succession.  For all purposes under this Agreement, the
term “Company” shall include any successor to Company’s business and assets
which executes and delivers the assumption agreement described in this
paragraph or which becomes bound by the terms of this Agreement by operation of
law.

 

(b)           Employee’s
Successors.     The terms of this
Agreement and all rights of Employee under this Agreement shall inure to the
benefit of, and be enforceable by, Employee’s personal or legal
representatives, executors, administrators, successors, heirs, devises, and
legatees.

 

7

 

8.             Notice.

 

(a)           General.  Notices and all other communications
contemplated by this Agreement shall be in writing and shall be deemed to have
been duly given as follows: (i)  personal delivery; (ii)  three (3) days
after deposit by first class mail, postage prepaid; (iii)  upon receipt by
registered or certified mail, return receipt requested, postage prepaid (if
delivery is confirmed); (iv)  upon delivery when delivered by an
authorized overnight delivery service, charges prepaid or charged to sender’s
account (if delivery is confirmed); (v)  when sent by facsimile
transmission to the last number known to the party giving notice (if delivery
is confirmed in writing or a duplicate copy is mailed first-class or by overnight
delivery).  In the case of Employee,
mailed notices shall be addressed to him at the home address which he most
recently communicated to the Company in writing.  In the case of Company, mailed notices shall
be addressed to its corporate headquarters, and all notices shall be directed
to the attention of its Secretary.

 

(b)           Notice of Termination.  Any termination notice by either party shall:
(i) be communicated in accordance with the notice provisions of this
Agreement; (ii) indicate the specific termination provision in this
Agreement relied upon; (iii) set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination under the provision so
indicated; and (iv) specify the termination date (which shall be not more
than 30 days after the giving of such notice). 
Failure by Employee to include in the notice any fact or circumstance
which contributes to a showing of Involuntary Termination shall not waive any
right of Employee under this Agreement or preclude Employee from asserting such
fact or circumstance in enforcing his or her rights under this Agreement.

 

9.             Miscellaneous Provisions.

 

(a)           No Duty to Mitigate.  Employee shall not be required to mitigate
the amount of any payment contemplated by this Agreement (whether by seeking
new employment or in any other manner) nor shall any such payment be reduced by
any earnings that Employee may receive from any other source.

 

(b)           Waiver.  No provision of this Agreement shall be
modified, waived or discharged unless the modification, waiver or discharge is
agreed to in writing and signed by Employee and by an authorized officer of
Company (other than Employee).  No waiver
by either party of any breach of, or of compliance with, any condition or
provision of this Agreement by the other party shall be considered a waiver of
any other condition or provision or of the same condition or provision at
another time.

 

(c)           Whole Agreement.  No agreements, representations or
understandings (whether oral or written, whether express or implied) which are
not expressly set forth in this Agreement have been made or entered into by
either party with respect to the subject matter of this Agreement.

 

(d)           Choice of Law.  The validity, interpretation, construction,
performance of this Agreement shall be governed by the laws of the State of
California, without giving effect to its conflicts of law principles.

 

(e)           Severability.  The invalidity or unenforceability of any
provision or provisions of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, 

 

8

 

which
shall remain full in force and effect.

 

(f)            Arbitration.  In the event of any dispute or controversy
arising under or in connection with this Agreement, the parties first shall
attempt to settle the issue by negotiation or other informal means including,
if amenable to both parties, mediation. 
Should such efforts fail, the controversy shall be settled by binding
arbitration, and either party, within one year of the occurrence of the event
giving rise to the claim or controversy or within the period of the applicable
statute of limitations, if shorter, may submit such claim or controversy to
binding arbitration in San Francisco, California, before one arbitrator in
accordance with the Employment Rules of the American Arbitration
Association then in effect.  Failure to
serve notice of arbitration upon the other within such time shall be deemed a
waiver of the right to remedy such claim or controversy.  Costs shall be shared, but the arbitrator
shall be authorized to award reasonable attorneys’ fees and costs to the
prevailing party.  The parties shall
request that all testimony in front of such arbitrator be transcribed, and that
any award be accompanied by findings of fact and a statement of the reasons for
the decision.  Judgment may be entered on
the arbitrator’s award in any court having competent jurisdiction.  Punitive damages and specific performance
shall not be awarded.  The provisions of
this Section 9(f) constitutes a complete defense to, and may be
asserted or pleaded successfully as such, in any motion to a court of competent
jurisdiction for a stay of any action or proceeding commenced contrary to the
intent of this provision.

 

(g)           No Assignment of Benefits.   The rights of any person to payments or
benefits under this Agreement shall not be made subject to option or
assignment, either by voluntary or involuntary assignment or by operation of
law, including (without limitation) bankruptcy, garnishment, attachment or
other creditor’s process, and any action in violation of this paragraph shall
be void.

 

(h)           Employment Taxes.  All payments made pursuant to this Agreement
will be subject to withholding of applicable income and employment taxes, calculated
at the lowest permissible rate.

 

(i)            Assignment by Company.  Company may assign its rights under this
Agreement only to a successor or other affiliated company.

 

(j)            Construction.   Headings
in this Agreement are for reference purposes only and do not affect the
provisions of this Agreement.  Pronouns
are used without regard to gender or number.

 

(j)            Counterparts.   This
Agreement may be executed in counterparts, each of which shall be deemed an
original, but all of which together will constitute one and the same
instrument.

 

9

 

                IN WITNESS WHEREOF, the parties has
executed this Agreement effective on the date written above.

 

	
   

  	
  ETELOS,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
  Attest:

  	
  /s/ Ronald A. Rudy

  	
   

  	
  By:

  	
  /s/ Daniel J. A. Kolke

  
	
   

  	
   

  	
   

  	
   

  
	
  Name/Title:

  	
  Director

  	
   

  	
  Name/Title:

  	
   

  
	
   

  	
  

  Its:

  	
  

         Chairman/CTO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EMPLOYEE

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jeffrey L. Garon

  
	
   

  	
  

  Name:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
									

 

[SIGNATURE PAGE TO EMPLOYMENT AGREEMENT]

 

10

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