Document:

EXHIBIT 10.1

 

Securities Purchase Agreement

This Securities Purchase Agreement (this “Agreement”), dated as of May  2006 (the “Agreement Date”), is between Protocall Technologies Incorporated, a Nevada corporation (the “Company”), and ,   an individual residing at                         (the “Investor”).

	
            1.
 	
            Subscription. 
 

(a)          Share Purchase.  On the terms and subject to the conditions set forth in this Agreement, at the Closing (as defined below), the Company shall sell, and the Investor shall purchase,       shares (the “Shares”) of Common Stock, par value $0.001 per share, of the Company (the “Common Stock”), at a purchase price of $         per share (the “Per Share Price”).

(b)          Warrant.  In consideration of the Investor’s purchase of the Shares, the Company shall issue to the Investor a three-year warrant, in the form attached hereto as Exhibit A, to purchase           shares of Common Stock, at an exercise price of $          per share (the “Warrant”).

	
            2.
 	
            Closing; Conditions to Closing.  
 

(a)          Closing.  The closing of the purchase and sale of the Shares and the issuance of the Warrant (the “Closing”) will take place as promptly as practicable, but no later than five business days after satisfaction or waiver of all of the conditions set forth in Sections 2(c) and 2(d) (other than those conditions which by their terms are not to be satisfied or waived until the Closing), at the offices of Greenberg Traurig, LLP, counsel to the Company, MetLife Building, 200 Park Avenue, 15th Floor, New York, NY 10166.  The date on which the Closing occurs is referred to herein as the “Closing Date.”

(b)          Delivery of Purchase Price.  At the Closing, the Investor shall deliver or cause to be delivered by wire transfer of immediately available funds the sum of $            (the “Purchase Price”), to the Company.

(c)          Conditions to Obligations of the Investor to Effect the Closing. The obligations of the Investor to effect the Closing and the transactions contemplated by this Agreement shall be subject to the satisfaction at or prior to the Closing, of each of the following conditions, any of which may be waived, in writing, by the Investor:

	
             
 	
            (i)
 	
            The Company shall deliver or cause to be delivered to the Investor the following:
 
	
             
 	
            (1)
 	
            The Warrant executed by the Company;
 	
             

	
             
 	
            (2)
 	
            This Agreement executed by the Company; and
 	
             

						

(ii)         The representations and warranties of the Company contained in this Agreement shall be true and correct as of the Closing, and the covenants and agreements contained in this Agreement to be complied with by the Company on or before the Closing shall have been complied with; and

(iii)         No governmental authority shall have enacted, issued, promulgated, enforced or entered any law or governmental order (whether temporary, preliminary or permanent) that has the effect of making the transactions contemplated by this Agreement or any other Transaction Document (defined below) illegal or otherwise restraining or prohibiting the consummation of such transactions.

(d)          Conditions to Obligations of the Company to Effect the Closing.  The obligations of the Company to effect the Closing and the transactions contemplated by this Agreement shall be subject to the satisfaction at or prior to the Closing of each of the following conditions, any of which may be waived, in writing, by the Company:

	
             
 	
            (i)
 	
            The Investor shall have executed and delivered to the Company this Agreement;
 

 

 

 

(ii)          The Investor shall have executed and delivered to the Company the Subscription Letter (the “Subscription Letter” and, together with this Agreement and the Warrant, the “Transaction Documents”), attached hereto as Exhibit B, and the Company shall be reasonably satisfied, through the responses of the Investor, that the sale of the Shares and the Warrant shall not require registration thereof under the Securities Act of 1933, as amended (the “Securities Act”), or under the “blue sky” or securities laws of any jurisdiction;

	
             
 	
            (iii)
 	
            The Investor shall have delivered the Purchase Price;
 

(iv)         The representations and warranties of the Investor contained in this Agreement shall be true and correct in all material respects as of the Closing, and the covenants and agreements contained in this Agreement to be complied with by the Investor on or before the Closing shall have been complied with in all material respects; and

(v)           No governmental authority shall have enacted, issued, promulgated, enforced or entered any law or governmental order (whether temporary, preliminary or permanent) that has the effect of making the transactions contemplated by this Agreement or any other Transaction Document illegal or otherwise restraining or prohibiting the consummation of such transactions.

3.           Representations and Warranties of the Company.  The Company represents and warrants as of the Agreement Date to the Investor that:

(a)          Corporate Existence and Power; Subsidiaries. The Company is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Nevada, and has all corporate powers required to carry on its business as now conducted. The Company is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction where the character of the property owned or leased by it or the nature of its activities makes such qualification necessary, except for those jurisdictions where the failure to be so qualified would not have a Material Adverse Effect.  For the purposes of this Agreement, the term “Material Adverse Effect” means, with respect to the Company, any
circumstance, change in or effect on the Company that could reasonably be expected to have a material adverse effect on the Company’s condition (financial or other), business, properties, assets, liabilities (including contingent liabilities) or results of operations, taken as a whole.  For the purposes of this Agreement, the term “Subsidiary” or “Subsidiaries” means, with respect to any entity, any corporation or other organization of which securities or other ownership interests having ordinary voting power to elect a majority of the board of directors or other persons performing similar functions are directly or indirectly owned by such entity or of which such entity is a partner or is, directly or indirectly, the beneficial owner of 50% or more of any class of equity securities or equivalent profit participation interests. The Company’s only Subsidiaries are
Protocall Software Delivery Systems, Inc. and Precision Type, Inc.  Each Subsidiary is a corporation duly incorporated, validly existing and in good standing under the laws of its state of incorporation, and has all corporate powers required to carry on its business as now conducted.  Each Subsidiary is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction where the character of the property owned or leased by it or the nature of its activities makes such qualification necessary, except for those jurisdictions where the failure to be so qualified would not have a Material Adverse Effect on such Subsidiary.

(b)          Corporate Authorization.  The execution, delivery and performance by the Company of this Agreement and the other Transaction Documents to which it is a party and the consummation of the transactions contemplated hereby and thereby (including, but not limited to, the sale and delivery of the Shares and the Warrant and the subsequent issuance of the Warrant Shares (defined below) upon exercise of the Warrant) (the “Transactions”) have been duly authorized, and no additional corporate or stockholder action is required for the approval thereof.  The shares issuable upon exercise of the Warrant (the “Warrant Shares”) have been duly reserved for issuance by the
Company.  The Transaction Documents to which the Company is a party have been or, to the extent contemplated hereby or by the Transaction Documents, will be duly executed and delivered and constitute the legal, valid and binding agreement of the Company, enforceable against the Company in accordance with their terms, except as may be limited by bankruptcy, reorganization, insolvency, moratorium and similar laws of general application relating to or affecting the enforcement of rights of creditors, and except as enforceability of its obligations hereunder are subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).

 

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(c)          Non-Contravention. The execution, delivery and performance by the Company of the Transaction Documents to which it is a party, and the consummation by the Company of the Transactions do not and will not (a) violate any term of its Articles of Incorporation, as amended, or By-laws or any material agreement to which the Company is a party or by which it is bound; (b) constitute a violation of any provision of any law, regulation, judgment, injunction, order or decree binding upon or applicable to the Company; (c) constitute a default (or would constitute a default with notice or lapse of time or both) or breach under or give rise to a right of termination, cancellation or acceleration or loss of any benefit under any material agreement, contract or other instrument binding
upon the Company or under any material license, franchise, permit or other similar authorization held by the Company; or (d) result in the creation or imposition of any Lien (as defined below) on any asset of the Company. For purposes of this Agreement, the term “Lien” means, with respect to any asset, any mortgage, lien, pledge, charge, security interest, claim or encumbrance of any kind in respect of such asset.

(d)          Compliance with Law.   Unless otherwise noted in this document, the Company is in compliance and has conducted its business so as to comply with all laws, rules and regulations, judgments, decrees or orders of any court, administrative agency, commission, regulatory authority or other governmental authority or instrumentality, domestic or foreign, applicable to its operations, the violation of which would cause a Material Adverse Effect. There are no judgments or orders, injunctions, decrees, stipulations or awards (whether rendered by a court or administrative agency or by arbitration) against the Company or against any of its properties or businesses.

(e)          Absence of Certain Changes. Since September 30, 2005, the Company has conducted its business only in the ordinary course and there has not occurred any event that would reasonably be expected to have a Material Adverse Effect on the Company.

(f)          Capitalization. The authorized capital stock of the Company consists of 100,000,000 shares of Common Stock, of which 52,216,047 shares are issued and outstanding as of March 24, 2006. For example, based on subscription amounts totaling $1,000,000 at $.20 per share, the purchasers of common stock in this offering would own up to 9.6% of our outstanding shares. All issued and outstanding shares of the Company’s capital stock have been duly authorized and were validly issued, and are fully paid and nonassessable.  No securities issued by the Company from January 1, 2003 to the date hereof were issued in violation of any statutory or common law preemptive rights. Upon issuance pursuant to the terms of this Agreement, all Shares and Warrant Shares shall be duly
authorized, validly issued and outstanding, and fully paid and nonassessable and such shares shall not have been issued in violation of any statutory or contractual preemptive rights.  There are no dividends which have accrued or been declared but are unpaid on the capital stock of the Company.  All taxes required to be paid by Company in connection with the issuance and any transfers of the Company’s capital stock have been paid. All permits or authorizations required to be obtained from or registrations required to be effected with any person or entity in connection with any and all issuances of securities of the Company from January 1, 2003 to the Agreement Date have been obtained or effected, and all securities of the Company have been issued and are held in accordance with the provisions of all applicable securities or other laws.  No shares of capital stock of the Company are subject to preemptive rights or any other similar rights of the stockholders of the Company or any
Liens or encumbrances imposed through the actions or failure to act of the Company.  Except for (i) issued and outstanding stock options to purchase 6,938,440 shares of Common Stock, (ii)  warrants to purchase 11,186,486 shares of Common Stock, and (iii) promissory notes in the aggregate principal amount of $79,473 with aggregate accrued interest of $3,787 as of September 30, 2005, which promissory notes and interest are exchangeable for shares of Common Stock concurrent with a sale of equity securities by the Company, on the same terms and conditions applicable to purchasers of such equity securities, and except as contemplated by this Agreement, as of March 24, 2006, there are no outstanding options, warrants, rights to subscribe for, puts, calls, rights of first refusal, agreements, understandings, claims or other commitments or rights of any character whatsoever relating to, or securities or rights convertible into or exchangeable for any shares of capital stock of the Company, or
arrangements by which the Company is or may become bound to issue additional shares of capital stock of the Company.  There are no agreements or arrangements under which the Company is obligated to register the sale of any of its or their securities under the 1933 Act, except pursuant to the Company’s reverse merger and private offering transactions consummated on July 22, 2004, its private offering transactions consummated in June, September, December 2005, January and February 2006, and shares issued in private transactions in November 2005 and February 2006.  Except pursuant to the Company’s private offering transactions consummated in June, September and December 2005 and January and February 2006, there are no anti-dilution or price adjustment provisions contained in any security issued by the Company (or in any agreement providing rights to security holders) that will be triggered by the issuance of the Shares, the Warrant or 

 

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the Warrant Shares. Based on anti-dilution provisions of prior offerings mentioned above, a per share price below .128 triggers the issuance of additional shares to prior investors.  For example, based on subscription amounts totaling $1,000,000 at $.10 per share, the purchasers of common stock in this offering would own up to 14.47% of our outstanding shares inclusive of 6,890,625 additional shares that would be issued in connection with prior anti-dilution provisions.

(g)         Government Authorizations.  The Company holds all material authorizations, consents, approvals, franchises, licenses and permits required under applicable law or regulation for the operation of the business of the Company as presently operated (the “Governmental Authorizations”). All the Governmental Authorizations have been duly issued or obtained and are in full force and effect, and the Company is in material compliance with the terms of all the Governmental Authorizations. The Company has not engaged in any activity that, to its knowledge, would cause revocation or suspension of any such Governmental Authorizations. The Company has no knowledge of any facts which could reasonably be expected to
cause the Company to believe that the Governmental Authorizations will not be renewed by the appropriate governmental authorities in the ordinary course.  Neither the execution, delivery nor performance of this Agreement shall adversely affect the status of any of the Governmental Authorizations.

(h)          Securities Laws.  Assuming that all of the representations and warranties of the Investor set forth in Section 4 are true and correct, the offer, sale and issuance of the Shares and the Warrant in conformity with the terms of this Agreement are exempt from the registration requirements of Section 5 of the Securities Act.

(i)           Issuance of Shares. The Shares are duly authorized and, upon issuance in accordance with the terms of this Agreement will be validly issued, fully paid, and non-assessable and free from all taxes, liens, claims and encumbrances with respect to the issue thereof and shall not be subject to preemptive rights or other similar rights of stockholders of the Company and will not impose personal liability on the holder thereof.  The Warrant Shares are duly authorized and reserved for issuance, and, when issued upon exercise of or otherwise pursuant to the Warrant, respectively, in accordance with the terms thereof, will be validly issued, fully paid and non-assessable, and free from all taxes, liens, claims and encumbrances and will not be subject to preemptive rights or
other similar rights of stockholders of the Company and will not impose personal liability upon the holder thereof.

(j)           No Investment Company.  The Company is not, and upon the issuance and sale of the Shares and the Warrant as contemplated by this Agreement will not be, an "investment company" required to be registered under the Investment Company Act of 1940, as amended (an "Investment Company").  The Company is not controlled by an Investment Company.

(k)         Patents, Trademarks, Copyrights.  The Company has sufficient title and ownership of or possesses adequate licenses or other rights to use all patents, patent applications, trademarks, trademark applications, service marks, service mark applications, trade names, copyrights, processes, formulae, trade secrets, customer lists, information, proprietary rights and know how (collectively, “Intellectual Property”) necessary to the conduct of its business as currently conducted, and no claim is pending or, to the Company’s knowledge, threatened to the effect that the operations of the Company infringe upon or conflict with the asserted rights of any other person under any Intellectual Property, and to the Company’s
knowledge there is no basis for any such claim (whether or not pending or threatened).  The Company is not obligated to make any payments by way of royalties, fees or otherwise to any owner or licensor of any patent, trademark, trade name, copyright, trade secret or other intangible asset, with respect to the use thereof or in connection with the conduct of its business, or otherwise.  The Company has not granted to any third party any option, license or other right of any kind to its Intellectual Property.  The Company has not received any communications alleging that it has violated or, by conducting its business as proposed, would violate any Intellectual Property rights of any other person or entity.  The Company is not aware of any violation or infringement by a third party of any of its Intellectual Property.

	
            (l)
 	
            Litigation, Etc.  
 

Upon his termination from employment, the Company’s former CEO Mark Benedikt asserted monetary claims under his Employment Agreement with the Company, and by demand dated October 19, 2005, he has sought arbitration of those claims which for purposes of the arbitration demand he has valued at $366,978.96.  Since the filing of the arbitration demand, Mr. Benedikt has quantified his claims at $150,000 for settlement purposes as 

 

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follows:  Two months’ salary, $40,000; Two months’ severance, $40,000; out-of-pocket expenses, $10,000; legal fees and costs, $25,000 (if settlement can be expedited); stock options, $35,000. The Company settled with Mr. Benedikt on January 23, 2006. The terms of the settlement require the Company to make periodic cash payments to Mr. Benedikt totaling $100,000 and to issue Mr. Benedikt a warrant to purchase 240,000 shares of common stock at an exercise price of $1.06 per share.

On August 23, 2005, First Providence Financial Group, LLC filed a Demand for Arbitration against us with the American Arbitration Association.  The Demand alleges that we breached a January 2000 placement agency agreement with First Providence.  The Demand seeks $5 million in damages, plus fees and costs.  The Demand alleges that First Providence had a right of first refusal and that we disregarded it.  We believe that First Providence was not then in business, incapable of performing and failed to do so when requested to perform.  We intend to vigorously defend the claims in this arbitration. The Company reached a settlement agreement with First Providence on January 31, 2006.  The Company issued First Providence 1,000,000 shares of common stock and reimbursed First Providence  $8,000 for out of pocket costs.    First Providence withdrew the arbitration request.

The case of Code Ventures LLC v. Protocall Software Delivery Systems, Inc., et al., case number GIC 853271, was filed in the Superior Court of the State of California, San Diego Judicial District, on or about August 31, 2005.  The Complaint asserts claims for: (i) breach of a software development agreement between the parties dated October 13,1999; (ii) quantum merit; and (iii) goods sold, and seeks damages of $200,000, plus interest, attorneys’ fees, and cost.  The plaintiff also seeks a judgment declaring that it is entitled to exercise certain options for stock in Protocall Software Delivery Systems, Inc.  The Complaint was sent to the Company by U.S. mail but was not otherwise served upon us.  Management of the Company believes it is likely the Company will prevail and accordingly, has not recorded any charges for any potential settlement.

With the exception of the three legal matters discussed above, there is no action, suit, proceeding or investigation pending or, to the Company’s knowledge, threatened, against the Company, including any which questions the validity of the Transaction Documents, or the right of the Company to enter into any of them, or to consummate the transactions contemplated hereby or thereby.  The Company is not a party to any order, writ, injunction, judgment or decree of any court or government agency or instrumentality.  There is no action, suit, proceeding or investigation by the Company currently pending or which the Company intends to initiate.  The Company is not in default with respect to any order, writ, injunction or decree known to or served upon the Company of any court or of any federal, state, municipal or other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign.

(m)         SEC Documents.  For the period July 22, 2004 through September 2005 the Company has filed with the SEC all reports required to be filed by companies registered pursuant to Section 12(g) of the Securities Exchange Act of 1934, as amended. The Company is late in filing its Annual Report on Form 10-KSB for the year ended December 31, 2005 and is working with its independent auditors to submit the filing as soon as is practical. Consequently, the Company is currently not in compliance with the filing requirements for continued listing of its common stock on the OTC Bulletin Board. None of the Company’s annual reports on Form 10-KSB, quarterly reports on Form 10-QSB, current reports on Form 8-K and other statements reports and filings (collectively, the “SEC Documents”) filed by the Company with the SEC since July 22, 2004, as of their respective dates, contained any untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements contained therein not misleading.

(n)          Financial Statements.  The balance sheets, and statements of operations, statements of changes in shareholders’ equity and statements of cash flows contained in the SEC Documents (the “Financial Statements”) (i) have been prepared in accordance with GAAP applied on a basis consistent with prior periods (and, in the case of unaudited financial information, on a basis consistent with year-end audits), (ii) are in accordance with the books and records of the Company, and (iii) present fairly in all material respects the financial condition of the Company at the dates therein specified and the results of its operations and changes in financial position for the periods therein specified.

(o)          Proceeds. The Company shall use the Purchase Price paid for the Shares solely to finance the business of the Company and for general working capital purposes.

 

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(p)          Brokers.  The Company has not agreed or become obligated to pay, or has taken any action that might result in any person or entity claiming to be entitled to receive, any brokerage commission, finder’s fee or similar commission or fee in connection with the transactions contemplated by the Transaction Documents, except that the Company may pay to Israel E. Lozada a transaction fee of no more than ten percent (10%) of the cash received by the Company pursuant to this Agreement and a warrant to purchase no more than twenty percent  (20%) of the shares of Common Stock issuable upon exercise of the Warrant.

(q)          General Solicitation.   Neither the Company nor any other person or entity authorized by the Company to act on its behalf has engaged in a general solicitation or general advertising (within the meaning of Regulation D of the Securities Act) of investors with respect to offers or sales of the Shares or the Warrant.

(r)          No Integrated Offering.   Neither the Company, nor any affiliate of the Company, nor any person acting on its or their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause this offering of the Shares and the Warrant to be integrated with prior offerings by the Company for purposes of the Securities Act which would cause the exemptions from the U.S. Securities and Exchange Commission (the “SEC”) registration upon which the Company is relying for the sale of the Shares and the Warrant to be unavailable, any applicable state securities laws or any applicable stockholder approval provisions, nor will the Company
take any action or steps that would cause the offering of the Shares and the Warrant to be integrated with other offerings. 

4.           Representations and Warranties of the Investor. The Investor hereby represents and warrants to the Company as follows:

(a)          Exempt Transaction; Unregistered Shares and Warrant.  The Investor understands that the Shares and the Warrant are being offered and sold in reliance on one or more exemptions from registration provided for under the Securities Act, and that the Company’s reliance upon such exemptions is predicated, in part, upon the Investor’s representations and warranties set forth in this Agreement.  The Investor understands that neither the SEC, nor any governmental agency charged with the administration of the securities laws of any jurisdiction nor any other governmental agency has passed upon or reviewed the merits or qualifications of, or recommended or approved the offer and sale of the Shares and the Warrant pursuant to the terms of this Agreement.

(b)          Investment Intent; Accreditation; Authority.  The Investor is acquiring the Shares and the Warrant for investment for the Investor’s own account, not as nominee or agent, for investment and not with a view to, or for resale in connection with, any distribution or public offering thereof within the meaning of the Securities Act; provided, however, that by making the representations herein, the Investor reserves the right to dispose of the Shares, the Warrant or the Warrant Shares at any time in accordance with this Agreement or the Warrant, as applicable, and in accordance with or pursuant to a registration statement or an exemption under the Securities Act.  The Investor is
an “accredited investor” within the meaning of the Securities Act.  The Investor has the full right, power, authority and capacity to enter into and perform this Agreement, the terms of this Agreement constitute valid and binding obligations of the Investor enforceable in accordance with their terms, except as the same may be limited by equitable principles and by bankruptcy, insolvency, moratorium, and other laws of general application affecting the enforcement of creditors’ rights.

(c)          Knowledge and Experience.  The Investor (i) has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of the Investor’s prospective investment in the Shares and the Warrant; (ii) has the ability to bear the economic risks of the Investor’s prospective investment; (iii) has been furnished with and has had access to such information as the Investor has considered necessary to make a determination as to the purchase of the Shares and the Warrant together with such additional information as is necessary to verify the accuracy of the information supplied; and (iv) has had all questions which have been asked by the Investor satisfactorily answered by the Company.

(d)          Restricted Securities.  The Investor understands that the Shares and the Warrant are “restricted securities” as such term is defined in Rule 144 of Regulation D promulgated under the Securities Act (“Rule 144”) and, must be held indefinitely unless they are subsequently registered or qualified under applicable state and federal securities laws or an exemption from such registration or qualification is available.  The Investor understands that he, she or it may resell the Shares and the Warrant Shares pursuant to Rule 144 only after the satisfaction of certain 

 

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requirements, including the requirement that the Shares and the Warrant Shares be held for at least one year prior to resale.

(e)          No Obligation to Register.  The Investor further acknowledges and understands that, except for the Company’s obligations under Section 7, the Company is under no obligation to register the Shares, the Warrant or the Warrant Shares.  The Investor understands that the certificate evidencing the Shares, the Warrant and the Warrant Shares will be imprinted with a legend which prohibits the transfer of the Shares, the Warrant and the Warrant Shares unless they are registered or such registration is not required in the opinion of counsel in form and substance satisfactory to the Company.

(f)          Domicile.  The Investor is a bona fide resident and domiciliary (not a temporary or transient resident) of the state or other jurisdiction indicated on the first page hereto and he has no present intention of becoming a resident of any other state or jurisdiction.

(g)          No Need for Liquidity.  The Investor’s aggregate holding of securities that are “restricted securities” or otherwise not readily marketable is not excessive in view of the Investor’s net worth and financial circumstances and the purchase of the Shares and the Warrant will not cause such commitment to become excessive.

(h)          Independent Advice.  The Investor understands that the Company urges the Investor to seek independent advice from professional advisors relating to the suitability for the Investor of an investment in the Company in view of the Investor’s overall financial needs and with respect to legal and tax implications of such an investment.

5.           Reliance.  The Investor understands that the Company may rely on the representations and warranties in Section 4 in determining whether to permit the Investor to purchase the Shares and the Warrant.  If for any reason any representations and warranties are no longer true and accurate prior to the Closing Date, the Investor will give the Company prompt written notice of the inaccuracy.  By signing below, the Investor represents that the Investor has read and confirmed the truth and accuracy of each of the foregoing representations and warranties.

	
            6.
 	
            Anti-Dilution Provisions; Preemptive Rights.
 	
             

	
            (a)
 	
            Anti-Dilution Adjustment for Sale of Discounted Common Stock.
 

(i)           Subject to Section 6(a)(iii), if the Company shall, following the Closing Date, sell shares of its Common Stock for a consideration per share less than the Per Share Price, then the Per Share Price shall be adjusted immediately thereafter so that it shall equal the price per share of the Common Stock in such offering.  Whenever any adjustment is made pursuant to this Section 6(a)(i), the number of shares of Common Stock issuable pursuant to this Agreement shall be adjusted pursuant to Section 6(c) hereof, and such additional shares shall be delivered to the Investor pursuant to Section 6(e) hereof.

(ii)          Adjustments to the Per Share Price pursuant to this Section 6(a) shall be made successively whenever an issuance of shares triggering such an adjustment is made, subject to Section 6(f) hereof.

(iii)         Notwithstanding anything to the contrary in this Section 6(a), no adjustment to the Per Share Price shall be made pursuant to this Section 6(a) in the case of shares issued:  (i) in connection with any dividend or distribution on, or subdivision, reclassification or combination of, the outstanding shares of Common Stock of the Company; (ii) upon the exercise of options granted to the Company’s officers, directors, employees and consultants under a plan or plans adopted by the Company’s Board of Directors and approved by its stockholders, if such shares would otherwise be included in this Section 6(a); (iii) upon the exercise of stock options, warrants, convertible securities and convertible debentures outstanding as of the date hereof; (iv) to shareholders of any corporation
which merges into the Company in proportion to their stock holdings of such corporation immediately prior to such merger, upon such merger; (v) pursuant to any other anti-dilution provision affecting the Company securities; or (vi) in connection with acquisitions and acquisition financing.

 

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            (b)
 	
            Anti-Dilution Adjustment for Sale of Discounted Convertible Stock.
 

(i)           Subject to Section 6(b)(iii), if the Company shall, following the Closing Date, issue any equity or debt securities convertible or exercisable into or exchangeable for its Common Stock (a “Convertible Stock Issuance”) for a consideration per share of Common Stock initially deliverable upon conversion or exchange of such securities (as determined as provided in Section 6(d) below, the “Convertible Stock Per Share Price”) less than the Per Share Price, then the Per Share Price shall be adjusted immediately thereafter so that it shall equal the Convertible Stock Per Share Price.  Whenever any adjustment is made pursuant to this Section 6(b)(i), the number of shares
of Common Stock issuable pursuant to this Agreement shall be adjusted pursuant to Section 6(c) hereof, and such additional shares shall be delivered to the Investor pursuant to Section 6(e) hereof.

(ii)          Adjustments to the Per Share Price pursuant to this Section 6(b) shall be made successively whenever an issuance of shares triggering such an adjustment is made, subject to Section 6(f) hereof.

(iii)         Notwithstanding anything to the contrary in this Section 6(b), no adjustment to the Per Share Price shall be made pursuant to this Section 6(b) in the case of securities issued:  (i) in transactions where the Company has fixed a record date for the issuance of rights or warrants to all holders of its Common Stock entitling them to subscribe for or purchase shares of Common Stock (or securities convertible into Common Stock) at a price (or having a conversion price per share) less than the Per Share Price on such record dates; (ii) in transactions where has the Company distributed to the holders of its Common Stock evidences of its indebtedness or assets (excluding cash dividends or distributions and dividends or distributions or subscription
rights or warrants); or (iii) any of the transactions described in Section 6(a)(iii) hereof (with any reference in Section 6(a)(iii) to price or quantity of shares issued being understood, for purposes of this Section 6(b)(iii), to refer to the aggregate price or quantity, as applicable, of the shares of Common Stock into which such securities are convertible or exchangeable).

(c)          Adjustment of Securities.  Whenever the Per Share Price is adjusted pursuant to Sections 6(a) and 6(b) above, the number of shares of Common Stock issuable pursuant to this Agreement shall simultaneously be adjusted by multiplying the number of shares of Common Stock issuable hereunder by the Per Share Price and dividing the product so obtained by the Per Share Price, as adjusted.

(d)          Computation of Certain Consideration.  For purposes of any computation with respect to the consideration received pursuant to Sections 6(a) and 6(b) above, the following shall apply:

(i)           in the case of the issuance of shares of Common Stock for cash, the consideration shall be the amount of such cash, provided that in no case shall any deduction be made for any commissions, discounts or other expenses incurred by the Company for any underwriting of the issue or otherwise in connection therewith;

(ii)          in the case of the issuance of shares of Common Stock for a consideration in whole or in part other than cash, the consideration other than cash shall be deemed to be the fair market value thereof as determined in good faith by the Board of Directors of the Company (irrespective of the accounting treatment thereof), whose determination shall be conclusive; and 

(iii)         in the case of a Convertible Stock Issuance, the aggregate consideration received therefor shall be deemed to be the consideration received by the Company for the issuance of such securities plus the additional minimum consideration, if any, to be received by the Company upon the conversion or exchange thereof (the consideration in each case to be determined in the same manner as provided in clauses (i) and (ii) of this Section 6(d)).

(e)          Notice of Adjustment.  Whenever the Per Share Price is adjusted as herein provided, the Company shall promptly, but no later than 10 days after any request for such an adjustment by the Investor, cause a notice setting forth the adjusted Per Share Price and adjusted number of shares of Common Stock issuable hereunder, and, if 

 

8

 

 

requested, information describing the transactions giving rise to such adjustments, to be mailed to the Investor at its address set forth above, and shall cause a certified copy thereof to be mailed to its transfer agent, if any.  The Company may retain a firm of independent certified public accountants selected by its Board of Directors (who may be the regular accountants employed by the Company) to make any computation required by this Section 6, and a certificate signed by such firm shall be conclusive evidence of the correctness of such adjustment.  The Company shall, within thirty (30) days of any anti-dilution adjustment pursuant to this Section 6, issue and deliver to the Investor a certificate evidencing the shares of Common Stock to be issued pursuant to this Section 6.

(f)          Termination of Anti-Dilution Provisions.  The provisions of Sections 6(a) through 6(e) shall terminate and be of no further force or effect on May        , 2007. 

(g)          Anti-Dilution Provisions for Warrant Shares.  The Warrant Shares shall be entitled to the anti-dilution protections set forth in Section 3 of the Warrant.

(h)          Preemptive Rights Generally.  In order to enable the Investors who invest $500,000 or more in this offering to maintain their fully-diluted ownership position in the Company, if the Company proposes to issue, sell or exchange, agree to issue, sell or exchange, or reserves or sets aside for issuance, sale, or exchange, in a private transaction (i) any equity security of the Company, (ii) any debt security of the Company which by its terms is convertible into or exchangeable for any equity security of the Company or (iii) any option, warrant or other right to subscribe for, purchase or otherwise acquire any equity security or any debt security referred to in clause (i) or (ii) above (collectively, “Securities”) to any
person or entity at any time, the Company shall, before such proposal, deliver to the Investor an offer (the “Preemptive Offer”) to issue such number of Securities to the Investor to enable the Investor to retain the ownership position in the Company that it held immediately prior to the proposed issuance, sale, or exchange (the “Offered Securities”) upon the terms set forth in this Section 6.  The Preemptive Offer shall state that the Company proposes to issue such Securities and specify their number and terms (including purchase price).  The Preemptive Offer shall remain open for a period of seven days (the “Preemptive Period”) from the date of its delivery unless earlier withdrawn by the Company.

(i)           Response to Preemptive Offer.  The Investor may accept the Preemptive Offer by delivering to the Company a written notice (the “Purchase Notice”) within the Preemptive Period.  The Purchase Notice shall state the amount (the “Preemptive Amount”) of Offered Securities the Investor desires to purchase.  If the Investor fails to send the Purchase Notice within the Preemptive Period, the Investor shall forfeit the right to participate in the purchase of the Offered Securities.

(j)           Funding of Purchase.  The Investor, if exercising its preemptive rights, shall fund such purchase at the time of the first closing of such transaction for any other parties to such transaction.

(k)         Exceptions to Preemptive Rights.  Notwithstanding anything to the contrary in this Section 6, the Company shall not be required to extend a Preemptive Offer to the Investor with respect to an issuance of Securities described in Section 6(a)(iii).

(l)           Termination of Preemptive Rights.  The provisions of Sections 6(h) through 6(k) shall terminate and be of no further force or effect on May           , 2007.

	
            7.
 	
            Restrictive Legends and Stop-Transfer Orders. 
 

(a)          Legend.  The instruments representing the Shares, the Warrant and, if applicable, the Warrant Shares shall bear the following legend or similar legend (as well as any legends required by applicable state and federal corporate and securities laws):

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE “ACT”) AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT OR, IN THE OPINION OF COUNSEL IN FORM AND 

 

9

 

 

SUBSTANCE SATISFACTORY TO THE ISSUER OF THESE SECURITIES, SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS IN COMPLIANCE WITH AN EXEMPTION THEREWITH.

(b)          Removal of Legend and Transfer Restrictions.  Any legend endorsed on a certificate pursuant to this Section 7 shall be removed, and the Company shall issue a certificate without such legend to the holder of such Shares or the Warrant Shares if (i) such Shares or the Warrant Shares are resold pursuant to a registration statement under the Securities Act, and a prospectus meeting the requirements of Section 11 of the Securities Act is delivered or deemed delivered to the purchaser of such Shares or the Warrant Shares, (ii) if such holder satisfies the requirements of Rule 144(k) or (iii) if such holder provides the Company with an opinion of counsel for such holder of the Shares or the Warrant Shares, reasonably satisfactory to the Company, to the effect
that a sale, transfer or assignment of such Shares or Warrant Shares may be made without registration.

	
            8.
 	
            Registration Rights.
 

(a)          If the Company proposes, at any time that the Investor owns Shares or Warrant Shares, to file a registration statement on a general form for registration under the Securities Act and relating to securities issued or to be issued by it, then it shall give written notice of such proposal to the Investor.  If, within 30 days after the giving of such notice, the Investor shall request in writing that all or any Shares or Warrant Shares (including any shares of Common Stock issued or issuable thereon upon any stock split, stock combination, stock dividend or the like or as a result of any anti-dilution adjustments under the Warrant) owned by or issuable to the Investor be included in such proposed registration, the Company will also register such securities as shall have been requested in writing; provided, however, that:

(i)           the Company shall not be required to include any of such securities if, by reason of such inclusion, the Company shall be required to prepare and file a registration statement on a form promulgated by the SEC different from that which the Company otherwise would use;

(ii)          the Investor shall cooperate with the Company in the preparation of such registration statement to the extent required to furnish information concerning such owners therein; and

(iii)         the Company shall have the right at any such time after it shall have given written notice pursuant to this Section 8(a) (irrespective of whether a written request for inclusion of any Shares or Warrant Shares shall have been made) to elect not to file any such proposed registration statement, or to withdraw the same after the filing but prior to the effective date thereof.  In such event, the Investor shall retain the piggyback registration rights set forth in this Section 8(a).

	
            (b)
 

(i)           Notwithstanding the provisions of Section 8(a) hereof, if in the written opinion of the Company's managing underwriter, if any, for the offering contemplated by such registration statement, the inclusion of all or a portion of the Shares or the Warrant Shares requested to be registered, when added to the securities being registered by the Company or any selling security holder, will exceed the maximum amount of the Company's securities which can be marketed (i) at a price reasonably related to their then current market value, or (ii) without otherwise materially adversely affecting the entire offering, then the Company may exclude from such offering all or a pro rata portion of the Shares or the Warrant Shares requested to be registered as required by the managing underwriter.

(ii)          If securities are proposed to be offered for sale pursuant to such registration statement by other security holders of the Company and the total number of securities to be offered by the holders of all the Shares and Warrant Shares and such other selling security holders is required to be reduced pursuant to a request from the managing underwriter (which request shall be made only for the reasons and in the manner set forth above) the aggregate number of Shares and Warrant Shares to be offered by the Investor pursuant to such registration statement shall equal the number which bears the same ratio to the maximum number of securities that the underwriter believes may be included for all the selling security holders as the 

 

10

 

 

original number of Shares or Warrant Shares proposed to be sold by the Investor bears to the total original number of securities proposed to be offered by the Investor and the other selling security holders.

	
            (c)
 	
            In connection with the filing of a registration statement pursuant to Section 8(a), the Company shall:
 

(i)           notify the Investor as to the filing thereof and of all amendments thereto filed prior to the effective date of said registration statement;

(ii)          notify the Investor promptly after it shall have received notice of the time when the registration statement becomes effective or any supplement to any prospectus forming a part of the registration statement has been filed;

(iii)         prepare and file without expense to the Investor any necessary amendment or supplement to such registration statement or prospectus as may be necessary to comply with Section 10(a)(3) of the Securities Act or advisable in connection with the proposed distribution of the securities by the Investor;

(iv)         take all reasonable steps to qualify the Shares or Warrant Shares for sale under the securities or “blue sky” laws of such reasonable number of states as the Investor of all of the Shares or Warrant Shares may designate in writing and to register or obtain the approval of any federal or state authority which may be required in connection with the proposed distribution, except, in each case, in jurisdictions in which the Company must either qualify to do business or file a general consent to service of process as a condition to the qualification of such securities;

(v)          notify the Investor of any stop order suspending the effectiveness of the registration statement and use its reasonable best efforts to remove such stop order;

(vi)         undertake to keep such registration statement and prospectus effective for a period of 12 months after its effective date; and

(vii)        furnish to the Investor as soon as available, copies of any such registration statement and each preliminary or final prospectus and any supplement or amendment required to be prepared pursuant to the foregoing provisions of this Section 8(a), all in such quantities as the Investor may from time to time reasonably request.

(d)          The Investor holding the Shares or the Warrant Shares being so registered agrees to pay all applicable underwriting discounts and commissions, brokerage commissions, transfer taxes, and its own counsel fees with respect to the Investor's securities being registered. The Company will pay all other costs and expenses in connection with a registration statement to be filed pursuant to Section 8(a) hereof including, without limitation, the fees and expenses of counsel for the Company, the fees and expenses of its accountants and all other costs and expenses incident to the preparation, printing and filing under the Securities Act of any such registration statement, each prospectus and all amendments and supplements thereto, the costs incurred in connection with the qualification of such securities for sale in such
reasonable number of states as the Investor has designated, including fees and disbursements of counsel for the Company, and the costs of supplying a reasonable number of copies of the registration statement, each preliminary prospectus, final prospectus and any supplements or amendments thereto to such Investor.

(e)          The Company agrees to enter into an appropriate cross-indemnity agreement with any underwriter (as defined in the Securities Act) for the Investor in connection with the filing of a registration statement pursuant to Section 8(a) hereof.

(f)          The Company hereby indemnifies and holds harmless the Investor against any losses, claims, damages or liabilities (or actions in respect thereof) arising out of or based upon any untrue statement or alleged untrue statement of any material fact contained in a registration statement filed under Section 8(a) hereof, or any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make statements therein not misleading unless such statement or omission was made in reliance upon and in conformity with written 

 

11

 

 

information furnished or required to be furnished by the Investor, and the Investor hereby indemnifies and holds harmless the Company, each of its directors and officers who have signed the registration statement and each person, if any, who controls the Company, within the meaning of the Securities Act against any losses, claims, damages or liabilities (or actions in respect thereof) arising out of or based upon any untrue statement or alleged untrue statement of any material fact contained in such registration statement, or any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make statements therein not misleading, if the statement or omission was made in reliance upon and in conformity with written information furnished or required to be furnished by the Investor expressly for use in such registration statement.

(g)          Notwithstanding the provisions of Sections 8(a) hereof, if the Shares or the Warrant Shares held by the Investor may be sold by the Investor thereof in a transaction pursuant to Regulation S or Rule 144 promulgated under the Securities Act, the Investor shall not be entitled to require the Company to register such securities pursuant to any registration statement filed under the Securities Act.

	
            9.
 	
            Miscellaneous.  
 

(a)          Governing Law.  This Agreement, all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the laws of the State of New York, without giving effect to principles of conflicts of law.

(b)          Jurisdiction and Venue.  Any legal action or other legal proceeding relating to this Agreement or the enforcement of any provision of this Agreement shall be brought or otherwise commenced in any state or federal court located in the City of New York, State of New York.  Each party to this Agreement: (i) expressly and irrevocably consents and submits to the jurisdiction of each state and federal court located in New York, New York and each appellate court located in the state of New York, in connection with any such legal proceeding; (ii) agrees that each state and federal court located in New York, New York shall be deemed to be a convenient forum; and (iii) agrees not to assert, by way of motion, as a defense or otherwise, in any such legal proceeding commenced in any
state or federal court located in New York, New York any claim that such party is not subject personally to the jurisdiction of such court, that such legal proceeding has been brought in an inconvenient forum, that the venue of such proceeding is improper or that this Agreement or the subject matter of this Agreement may not be enforced in or by such court.

(c)          Entire Agreement.  This Agreement embodies the entire agreement and understanding between the parties hereto with respect to the subject matter hereof and supersedes all prior oral or written agreements and understandings relating to the subject matter hereof.  No statement, representation, warranty, covenant or agreement of any kind not expressly set forth in this Agreement shall affect, or be used to interpret, change or restrict, the express terms and provisions of this Agreement.

(d)          Notices.  All notices and other communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly given upon receipt) by delivery in person or facsimile transmission (received at the facsimile machine to which it is transmitted prior to 5:00 p.m., local time, on a business day in the State of New York, for the party to which it is sent), by courier or express delivery service or by registered or certified mail (postage prepaid, return receipt requested) to the respective parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section):

if to the Company:

Protocall Technologies Incorporated

	
             
 	
            47 Mall Drive
 

Commack, New York 11725

	
             
 	
            Attn: Donald J. Hoffmann, Chief Executive Officer
 
	
             
 	
            Fax: (631) 543-6944
 	
             

 

with a copy to (not to constitute notice):

 

Greenberg Traurig, LLP

 

12

 

 

The MetLife Building

200 Park Avenue

New York, New York 10166

Attn:  Spencer G. Feldman, Esq.

Fax: (212) 801-6400

if to the Investor:

 

Fax: __________________

(e)          Amendments and Waivers.  Any term of this Agreement may be amended, waived or departed from only with the written consent of the Company and the Investor.  No such waiver or consent shall be deemed to be or shall constitute a waiver or consent with respect to any other terms or provisions of this Agreement, whether or not similar.  Each such waiver or consent shall be effective only in the specific instance and for the purpose for which it was given, and shall not constitute a continuing waiver or consent.

(f)          Successors and Assigns.  This Agreement is personal to each of the parties and may not be assigned without the written consent of the other parties; provided, however, that the Investor shall be permitted to assign this Agreement to any person to whom it assigns or transfers securities issued or issuable pursuant to this Agreement in compliance with applicable securities laws and this Agreement.  Any assignee must be an “accredited investor” as defined in Rule 501(a) promulgated under the Securities Act.

(g)          Severability.  In the event that any court of competent jurisdiction shall determine that any provision, or any portion thereof, contained in this Agreement shall be unenforceable in any respect, then such provision shall be deemed limited to the extent that such court deems it enforceable, and as so limited shall remain in full force and effect. In the event that such court shall deem any such provision, or portion thereof, wholly unenforceable, the remaining provisions of this Agreement shall nevertheless remain in full force and effect.

(h)          Interpretation.  The parties hereto acknowledge and agree that: (i) each party and such party’s counsel has reviewed the terms and provisions of this Agreement; (ii) the rule of construction to the effect that any ambiguities are resolved against the drafting party shall not be employed in the interpretation of this Agreement; and (iii) the terms and provisions of this Agreement shall be construed fairly as to the parties hereto and not in favor of or against any party, regardless of which party was generally responsible for the preparation of this Agreement.  Whenever used herein, the singular number shall include the plural, the plural shall include the singular, the use of any gender shall include all persons.

(i)           No Waiver of Rights, Powers and Remedies.  No failure or delay by a party hereto in exercising any right, power or remedy under this Agreement, and no course of dealing between the parties hereto, shall operate as a waiver of any such right, power or remedy of the party.  No single or partial exercise of any right, power or remedy under this Agreement by a party hereto, nor any abandonment or discontinuance of steps to enforce any such right, power or remedy, shall preclude such party from any other or further exercise thereof or the exercise of any other right, power or remedy hereunder.  The election of any remedy by a party hereto shall not constitute a waiver of the right of such party to pursue other available remedies.  No notice to or demand on a party not
expressly required under this Agreement shall entitle the party receiving such notice or demand to any other or further notice or demand in similar or other circumstances or constitute a waiver of the rights of the party giving such notice or demand to any other or further action in any circumstances without such notice or demand.

(j)           Survival of Representations and Warranties.  All representations and warranties made by the parties hereto in this Agreement, shall survive (i) the execution and delivery hereof, (ii) any investigations made by or on behalf of the parties and (iii) the closing of the transaction contemplated hereby.

(k)         Expenses.  The Company shall be responsible for the payment of and bear their own expenses and legal fees relating to the preparation and negotiation of the Transaction Documents and the consummation of the transactions contemplated hereby and thereby, including the fees and expenses of counsel to the Investor, which 

 

13

 

 

may be deducted from the Purchase Price if the Company and the Investor have agreed upon the amount of such fees and expenses prior to the Closing Date.

(l)           Counterparts and Facsimile Delivery.  This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.  Any signature page delivered by facsimile or other electronic image transmission shall be binding to the same extent as an original signature page, with regard to any agreement subject to the terms hereof or any amendment thereto.  Any party who delivers such a signature page agrees to later deliver an original counterpart to any party who requests it.

(m)         Further Assurances.  Each party shall execute or cause to be delivered to each other party hereto such instruments and other documents, and shall take such other actions, as such other party may reasonably request for the purpose of carrying out or evidencing any of the transactions contemplated by the Transaction Documents.

[Remainder of the page intentionally left blank]

 

14

 

 

 

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

COMPANY:

PROTOCALL TECHNOLOGIES INCORPORATED

By:                                           
                                

Bruce Newman

Chief Executive Officer

INVESTOR:

 

	
             
 	
            Signature:                                            
                    
 

 

	
             
 	
            Print Name                                           
                    
 

 

 

 

 

EXHIBIT A

Form of Warrant

 

 

 

EXHIBIT B 

Subscription LetterExhibit 10.1

                              EMPLOYMENT AGREEMENT

      EMPLOYMENT AGREEMENT (the "Agreement") effective as of May 19, 2006, by
and between Terabeam, Inc., a Delaware corporation (the "Company") and Pankaj
Manglik (the "Executive").

      WHEREAS, the Company considers it essential to its best interests and the
best interests of its stockholders for the Company to employ Executive and
Executive is willing to accept employment on the terms hereinafter set forth in
this Agreement;

      NOW, THEREFORE, in consideration of the premises and mutual covenants
herein and for other good and valuable consideration, the parties agree as
follows:

      1. Term of Employment; Executive Representation.
         --------------------------------------------

         a. Employment Term. Executive's term of employment under this Agreement
shall commence on the date hereof and, subject to the terms hereof, Executive
and the Company agree and acknowledge that Executive's employment with the
Company constitutes "at-will" employment and that this Agreement may be
terminated at any time by the Company or Executive, subject to the terms of
Section 7 of this Agreement.

         b. Executive Representation. Executive hereby represents to the Company
that the execution and delivery of this Agreement by Executive and the Company
and the performance by Executive of the Executive's duties hereunder shall not
constitute a breach of, or otherwise contravene, the terms of any statute, law,
regulation, or of any employment agreement or other agreement or policy to which
Executive is a party or otherwise bound.

      2. Position.
         --------

         a. While employed hereunder, Executive shall serve as the President and
Chief Operating Officer of the Company and in the same position with the
Company's subsidiary Proxim Wireless Corporation. In such position, Executive
shall have such duties and authority as shall be determined from time to time by
Chief Executive Officer ("CEO").

         b. While employed hereunder, Executive will devote Executive's full
business time and best efforts to the performance of Executive's duties
hereunder and will not engage in any other business, profession or occupation
for compensation or otherwise which would conflict with the rendering of such
services either directly or indirectly, without the prior written consent of the
CEO.

      3. Base Salary. While employed hereunder, the Company shall pay Executive
         -----------
a base salary (the "Base Salary") at the annual rate of $330,000, payable in
regular installments in accordance with the Company's usual payment practices.
Executive shall be

<PAGE>

entitled to such increases in Executive's Base Salary, if any, as may be
determined from time to time in the sole discretion of the board of directors of
the Company (the "Board"), as applicable.

      4. Annual Bonus. With respect to each calendar year while employed
         ------------
hereunder, Executive shall be eligible to earn an annual bonus award (an "Annual
Bonus") pursuant to an annual incentive plan to be established by the Board no
later than the beginning of the annual period to which the bonus applies, after
consultation and input from Executive; provided, however, that Executive's
                                       --------  -------
target Annual Bonus opportunity shall not be less than 50% of Executive's Base
Salary (the "Target Bonus").

      5. Employee Benefits. The Company shall provide Executive during the term
         -----------------
of his employment hereunder with coverage under all employee pension and welfare
benefit programs, plans and practices in accordance with the terms thereof,
which the Company generally makes available to its senior executives (other than
the CEO). Executive shall be entitled to five weeks of paid vacation and such
number of days of sick leave as established under the Company's policies as in
effect from time to time, which shall be taken at such times as are consistent
with Executive's responsibilities hereunder. In addition, Executive shall be
entitled to the perquisites and other fringe benefits currently made available
to senior executives of the Company (other than the CEO), commensurate with
Executive's position with the Company.

      6. Business Expenses. Executive is authorized to incur reasonable expenses
         -----------------
in carrying out his duties and responsibilities under this Agreement, including,
without limitation, expenses for travel and similar items related to such duties
and responsibilities. The Company will reimburse Executive for all such expenses
upon presentation by Executive from time to time of appropriately itemized
accounts of such expenditures, provided such expenditures are consistent with
the Company's policy.

      7. Termination. The Executive's employment hereunder may be terminated by
         -----------
either party at any time and for any reason or no reason; provided that
Executive will be required to give the Company at least 30 days advance written
notice of any resignation of Executive's employment (unless the Company waives
its right to receive such 30-day notice). Notwithstanding any other provision of
this Agreement, the provisions of this Section 7 shall exclusively govern
Executive's rights upon termination of employment with the Company and its
affiliates.

         a. By the Company For Cause; By the Executive Without Good Reason.
            --------------------------------------------------------------

            (i) The Executive's employment hereunder may be terminated by the
Company for Cause (as defined below) at any time or by Executive without Good
Reason.

            (ii) For purposes of this Agreement, "Cause" shall mean (i)
Executive's continued failure to properly perform Executive's duties hereunder
(other than as a result of total or partial incapacity due to physical or mental
illness) as reasonably determined

                                       2
<PAGE>

by the CEO following notice by the Company to the Executive of such failure and
a reasonable opportunity for Executive to cure, (ii) dishonesty in the
performance of Executive's duties hereunder, (iii) an act or acts on Executive's
part constituting (x) a felony under the laws of the United States or any state
thereof or (y) a misdemeanor involving moral turpitude, (iv) Executive's willful
malfeasance or willful misconduct in connection with Executive's duties
hereunder or any act or omission which is materially injurious to the financial
condition or business reputation of the Company or any of its subsidiaries or
affiliates, or (v) Executive's breach of the provisions of Section 8 of this
Agreement.

            (iii) If Executive's employment is terminated by the Company for
Cause or by Executive without Good Reason, Executive shall be entitled to
receive, reduced by any amounts owed to the Company by Executive, the amounts
described in the following clauses (A) through (C) set forth below:

               (A) the Base Salary through the date of termination;

               (B) reimbursement for any unreimbursed business expenses properly
incurred by Executive in accordance with Company policy prior to the date of
Executive's termination; and

               (C) such employee benefits under the employee benefit plans of
the Company, including accrued paid vacation, which have accrued for services
already performed as of the date of termination of Executive's employment (the
amounts described in clauses (A) through (C) hereof being referred to as the
"Accrued Rights").

            (iv) Following such termination of Executive's employment by the
Company for Cause or by Executive without Good Reason, except as set forth in
this Section 7(a), Executive shall have no further rights to any compensation or
any other benefits under this Agreement.

         b. Disability or Death.
            -------------------

            (i) The Executive's employment hereunder shall terminate upon
Executive's death or if Executive becomes physically or mentally incapacitated
and is therefore unable to perform Executive's duties for a period in excess of
one hundred twenty (120) consecutive days or for more than one hundred eighty
(180) days in any consecutive twelve (12) month period (such incapacity is
hereinafter referred to as "Disability"). Any question as to the existence of
the physical or mental incapacitation of Executive as to which Executive or his
representative and the Company cannot agree shall be determined in writing by a
qualified independent physician mutually acceptable to Executive and the
Company. If Executive and the Company cannot agree as to a qualified independent
physician, each shall appoint such a physician and those two physicians shall
select a third who shall make such determination in writing. The determination
of Disability made in writing to the Company and Executive shall be final and
conclusive for all purposes of the Agreement, and all costs incurred by
Executive

                                       3
<PAGE>

and/or the Company that are related to such determination shall be paid by the
party incurring such costs.

            (ii) Upon termination of Executive's employment hereunder for either
Disability or death, Executive or Executive's estate (as the case may be) shall
be entitled to receive:

               (A) the Accrued Rights; and

               (B) a pro rata portion of any Annual Bonus that the Executive
would have been entitled to receive pursuant to Section 4 hereof in such year
based upon the percentage of the calendar year that shall have elapsed through
the date of Executive's termination of employment, payable when such Annual
Bonus would have otherwise been payable had the Executive's employment not
terminated.

            (iii) Following Executive's termination of employment due to death
or Disability, except as set forth in this Section 7(b), Executive shall have no
further rights to any compensation or any other benefits under this Agreement.

         c. By the Company Without Cause or Resignation by Executive for Good
            -----------------------------------------------------------------
Reason.
------

            (i) The Executive's employment hereunder may be terminated by the
Company without Cause or by Executive's resignation for Good Reason.

            (ii) For purposes of this Agreement, "Good Reason" shall mean:

               (v) a failure to nominate Executive to the Board as part of the
Board's slate of nominees for consideration at any meeting of stockholders of
the Company at which directors will be elected commencing in 2007; or

               (w) the reduction by the Company of Executive's Base Salary
(other than as a result of a general salary reduction affecting all Company
employees); or

               (x) any material and adverse reduction in Executive's duties and
responsibilities made without Executive's written consent; or

               (y) relocation of Executive's principal workplace more than fifty
(50) miles from Executive's principal workplace as of the date hereof made
without Executive's written consent; or

               (z) a material breach by the Company of the provisions of this
Agreement which remains uncured for thirty days after notice from Executive.

In addition, "Good Reason" shall also be deemed to have occurred in the event
the Company

                                       4
<PAGE>

fails to obtain from any successor to the Company an agreement to assume and
perform this Agreement, as contemplated by Section 10(e) hereof. Notwithstanding
the foregoing, none of the events described in clauses (x), (y) or (z) of this
Section 7(c)(ii) shall constitute Good Reason unless Executive shall have
                                              ------
notified the Company in writing describing the events which constitute Good
Reason and then only if the Company shall have failed to cure such event within
thirty (30) days after the Company's receipt of such written notice.

            (iii) If Executive's employment is terminated by the Company without
Cause (other than by reason of death or Disability) or if Executive resigns for
Good Reason, then upon the execution of an effective general release of claims
(but not rights which Executive may have as a shareholder or as a participant in
any deferred compensation arrangements established by the Company) in a form
satisfactory to the Company, Executive shall be entitled to receive:

               (A) the Accrued Rights; and

               (B) subject to Executive's continued compliance with the
applicable provisions of Section 8, (x) continued payment of the Base Salary
after the date of termination (I) for the first year of Executive's employment
with the Company, six (6) months or (II) after the one year anniversary of
Executive's employment with the Company, twelve (12) months (such number of
months being the "Severance Period"), and (y) payment of the Target Bonus
(prorated by multiplying the Target Bonus by a fraction, the numerator of which
shall be the number of months in the Severance Period and the denominator of
which shall be 12) in respect of the year in which such date of termination
occurs, payable at such time as the Annual Bonus would otherwise be payable.
Such Target Bonus will only be paid if the criteria for payment of a Target
Bonus under the annual incentive plan in effect as of the date of termination
are met; provided, that the aggregate amount described in this clause (B) shall
         --------
be reduced by the present value of any other cash severance or termination
benefits payable to Executive under any other plans, programs or arrangements of
the Company or its affiliates; and

               (C) acceleration of that portion, if any, of any outstanding
option to purchase shares of common stock of the Company granted to Executive
pursuant to the Company's stock plans (the "Option") that is otherwise
unexercisable as of the date of termination, which would have otherwise become
exercisable at any time(s) during the Severance Period, with all Options
continuing to be exercisable by Executive during the full term of the Severance
Period (but in any event for no shorter period than provided for under the terms
of the Option); and

               (D) subject to Executive's continued compliance with the
applicable provisions of Section 8, continued coverage during the Severance
Period under the Company's medical insurance plans in accordance with the terms
thereof at the same cost to Executive as was provided to Executive immediately
prior to the date of termination.

Executive shall not be required to mitigate the amount of any payments or
benefits provided for pursuant to this Section 7(c)(iii) by seeking other
employment.

                                       5
<PAGE>

            (iv) Notwithstanding anything set forth in this Section 7(c) to the
contrary, in the event that, upon or within twelve (12) months following or
three (3) months prior to the occurrence of a Change of Control, either (x)
Executive's employment is terminated by the Company without Cause (other than by
reason of Executive's death or Disability) or (y) Executive resigns for Good
Reason, the payments and benefits set forth in Section 7(c)(iii) above shall be
modified as follows:

               (A) in lieu of the continued payment of Base Salary and payment
of the Target otherwise payable pursuant to Section 7(c)(iii)(B), Executive
shall be paid, in a lump sum no later than ten (10) business days following the
termination of Executive's employment, an amount equal to the sum of the Base
Salary and the Target Bonus (without consideration of whether the criteria to
pay such Target Bonus have been met); provided, however, that such payments
shall still be offset by any other cash severance or termination benefits
payable in accordance with any other such plans, programs or arrangements;

               (B) in lieu of the acceleration of exercisability of the Option
provided for in Section 7(c)(iii)(C), one hundred percent (100%) of any portion
of the Option that is otherwise unexercisable as of the date of termination
shall become immediately exercisable, and all Options shall continue to be
exercisable by Executive during the full term of the Severance Period; and

               (C) Executive's right to the Base Salary and the Target Bonus
described in Section 7(c)(iv)(A) (collectively, the "Advanced Payments") and to
any income to be realized (but not necessarily recognized for tax purposes) on
account of the Option acceleration described in Section 7(c)(iv)(B) (the "Option
Spread"), or to retain the Advanced Payments or Option Spread, as the case may
be, is expressly contingent upon Executive's compliance with each and every
provision set forth in Section 8. In the event that Executive engages in conduct
that contravenes the terms of Section 8, the Option described in Section
7(c)(iv)(B) shall immediately terminate (and shall no longer be exercisable) and
Executive shall not be entitled to any of the benefits described in Section
7(c)(iv). In the event that Executive engages in conduct that contravenes the
terms of Section 8 subsequent to the date that he has been paid the Advanced
Payments, or subsequent to the date that he has realized Option Spread, (I) the
Option described in Section 7(c)(iv)(B) shall immediately terminate (and shall
no longer be exercisable), and (II) Executive shall promptly return a portion of
the Advanced Payments and a portion of the Option Spread, as the case may be.
The amount of Advanced Payments and Option Spread to be returned to the Company
shall be determined by multiplying the Advanced Payments and the Option Spread
by the "Return Fraction" (defined in the following sentence). The "Return
Fraction" shall be a fraction having a numerator equal to a number of
consecutive calendar months beginning in the month in which Executive first
engaged in conduct in contravention of the terms of Section 8 and including each
and every month thereafter during which the offending behavior continues through
the end of the one (1) year period following the date Executive ceases to be
employed by the Company and a denominator equal to twelve (12). The required
return of funds described in this Section 7(c)(iv)(C) shall not constitute the

                                       6
<PAGE>

Company's exclusive remedy if Executive engages in conduct that contravenes the
terms of Section 8.

               (D) Executive shall not be required to mitigate the amount of any
payments or benefits provided for pursuant to this Section 7(c)(iv) by seeking
other employment.

            (v) For purposes of Section 7(c)(iv), a "Change of Control" shall
mean the occurrence of any of the following events:

               (A) any Person (other than any Person holding securities
representing 10% or more of the combined voting power of the Company's
outstanding securities on the date hereof, the Company, any trustee or other
fiduciary holding securities under an employee benefit plan of the Company, or
any company owned, directly or indirectly, by the shareholders of the Company in
substantially the same proportions as their ownership of stock of the Company),
becomes the Beneficial Owner, directly or indirectly, of securities of the
Company representing 50% or more of the combined voting power of the Company's
then-outstanding securities;

               (B) during any period of twenty-four consecutive months (not
including any period prior to the date hereof), individuals who at the beginning
of such period constitute the Board, and any new director (other than (I) a
director nominated by a Person who has entered into an agreement with the
Company to effect a transaction described in Sections 7(c)(v)(A), (C), or (D)
hereof or (II) a director nominated by any Person (including the Company) who
publicly announces an intention to take or to consider taking actions
(including, but not limited to, an actual or threatened proxy contest) which if
consummated would constitute a Change in Control) whose election by the board of
directors of the Company or nomination by the board of directors of the Company
for election by the Company's shareholders was approved by a vote of at least
two-thirds (2/3rd) of the directors then still in office who either were
directors at the beginning of the period or whose election or nomination for
election was previously so approved, cease for any reason to constitute at least
a majority thereof;

               (C) the consummation of any transaction or series of transactions
under which the Company is merged or consolidated with any other company, other
than a merger or consolidation which would result in the shareholders of the
Company immediately prior thereto continuing to own (either by remaining
outstanding or by being converted into voting securities of the surviving entity
or its parent) more than 50% of the combined voting power of the voting
securities of the Company or such surviving entity (or its parent) outstanding
immediately after such merger or consolidation; or

               (D) the complete liquidation of the Company or the sale or
disposition by the Company of all or substantially all of the Company's assets,
other than a liquidation of the Company into a wholly-owned subsidiary.

For purposes of this Section 7(c)(v), the terms "Person" and "Beneficial Owner"
shall each have

                                       7
<PAGE>

the same meaning as such terms are defined in Section 13(d) and Rule 13d-3,
respectively, of the Securities Exchange Act of 1934, as amended, or any
successor thereto, and the term Affiliate" shall mean any entity directly or
indirectly controlling, controlled by, or under common control with, the Company
or any other entity designated by the board of directors of the Company in which
the Company has an interest.

            (vi) If all or any portion of the payments or benefits provided
under Section 7(c)(iv), either alone or together with other payments and
benefits which Executive receives or is then entitled to receive from the
Company, would constitute a payment described in Section 280G(b)(2) (or its
successors) of the Internal Revenue Code, as amended from time to time (the
"Code"), such payments and benefits provided to Executive thereunder shall be
reduced to the extent necessary so that no portion thereof shall be subject to
the excise tax imposed by Section 4999 of the Code; but only if, by reason of
such reduction, the net after-tax benefit to Executive with respect to such
payments and benefits shall exceed such net after-tax benefit if no such
reduction were made. For purposes of Section 7(c)(iv), "net after-tax benefit"
shall mean the sum of (I) the total amounts payable to Executive hereunder, plus
(II) all other payments and benefits which the Executive receives or is entitled
to receive from the Company as a result of any such termination of employment
set forth in Section 7(c)(iv) that would constitute a payment described in
Section 280G(b)(2) of the Code, less (III) the amount of federal income taxes
payable with respect to the foregoing calculated at the maximum marginal income
tax rate for each year in which the foregoing shall be paid to Executive (based
upon the rate in effect for such year as set forth in the Code at the time of
termination of Executive's employment), less (IV) the amount of excise taxes
imposed with respect to the payments and benefits described in (I) and (II)
above by Section 4999 of the Code. The foregoing calculations shall be made, at
the Company's expense, by a nationally recognized accounting firm selected by
the Company. The determination of such firm shall be conclusive and binding on
all parties.

            (vii) Following Executive's termination of employment by the Company
without Cause (other than by reason of Executive's death or Disability) or by
Executive's resignation for Good Reason, except as set forth in this Section
7(c), Executive shall have no further rights to any compensation or any other
benefits under this Agreement.

         d. Notice of Termination. Any purported termination of employment by
            ---------------------
the Company or by Executive (other than due to Executive's death) shall be
communicated by written Notice of Termination to the other party hereto in
accordance with Section 10(g) hereof. For purposes of this Agreement, a "Notice
of Termination" shall mean a notice which shall indicate the specific
termination provision in this Agreement relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of employment under the provision so indicated.

      8. Nondisclosure of Confidential Information; Non-Competition.
         ----------------------------------------------------------

      (a) At any time during or after Executive's employment with the Company,
Executive shall not, without the prior written consent of the Company, use,
divulge, disclose or make accessible to any other person, firm, partnership,
corporation or other entity any

                                       8
<PAGE>

Confidential Information (as hereinafter defined) pertaining to the business of
the Company or any of its subsidiaries, except (i) while employed by the
Company, in the business of and for the benefit of the Company, or (ii) when
required to do so by a court of competent jurisdiction, by any governmental
agency having supervisory authority over the business of the Company, or by any
administrative body or legislative body (including a committee thereof) with
jurisdiction to order Executive to divulge, disclose or make accessible such
information. For purposes of this Section 8(a), "Confidential Information" shall
mean information (whether or not in written form) which relates to the Company
or any of its affiliates, or any of its businesses or products (including,
without limitation, its financial data, strategic business plans, and other
proprietary information) or to this Agreement, and which is not known to the
public generally (excluding public knowledge which occurs as a result of
Executive's breach of this covenant or the wrongful acts of others who were
under confidentiality obligations as to the item or items involved), except in
the conduct of the business of the Company, as in existence as of the date of
Executive's termination of employment.

      (b) As President and Chief Operating Officer, Executive will acquire
knowledge of Confidential Information and trade secrets. Executive acknowledges
that the Confidential Information and trade secrets which the Company has
provided and will provide to him could play a significant role were he to
directly or indirectly be engaged in any business in Competition (as hereinafter
defined) with the Company or its subsidiaries. During the period of his
employment hereunder and for one year thereafter, Executive agrees that, without
the prior written consent of the Company, (A) he will not, directly or
indirectly, either as principal, manager, agent, consultant, officer,
stockholder, partner, investor, lender or employee or in any other capacity,
carry on, be engaged in or have any financial interest in (other than an
ownership position of less than 5 percent in any company whose shares are
publicly traded) any business which is in Competition (as hereinafter defined)
with the business of the Company or its subsidiaries as the business was
conducted at any time during Executive's employment and (B) he shall not, on his
own behalf or on behalf of any person, firm or company, directly or indirectly,
solicit or offer employment to any person who has been employed by the Company
or its subsidiaries at any time during the 12 months immediately preceding such
solicitation.

      (c) For purposes of this Section 8, a business shall be deemed to be in
"Competition" with the Company or its subsidiaries if it is engaged in or has
taken concrete steps toward engaging in the business of research and
development, designing, manufacturing, marketing, distributing, or servicing or
selling microwave or millimeter wave systems, radios, products and equipment (or
components of any of the foregoing), whether in existence or in development,
relating to microwave or millimeter wave communications (including unlicensed
spread spectrum radio, licensed radio, wireless ethernet bridge, and fixed,
portable, and mobile wireless (e.g., Wi-Fi, WiMax, wireless local loop, mesh,
point-to-point, point-to-multipoint)), as carried on by the Company or its
affiliates at any time during Executive's employment, in all cities, counties,
states and countries in which the business of the Company or its affiliates is
then being conducted or its products are being offered, sold, used, serviced, or
maintained.

      (d) The results and proceeds of Executive's services hereunder, including,
without limitation, any works of authorship resulting from Executive's services
during

                                       9
<PAGE>

Executive's employment with the Company and/or any of the Company's affiliates
and any works in progress, will be works-made-for hire and the Company will be
deemed the sole owner throughout the universe of any and all rights of
whatsoever nature therein, whether or not now or hereafter known, existing,
contemplated, recognized or developed, with the right to use the same in
perpetuity in any manner the Company determines in its sole discretion without
any further payment to Executive whatsoever. If, for any reason, any of such
results and proceeds will not legally be a work-for-hire and/or there are any
rights which do not accrue to the Company under the preceding sentence, then
Executive hereby irrevocably assigns and agrees to assign any and all of
Executive's right, title and interest thereto, including, without limitation,
any and all copyrights, patents, trade secrets, trademarks and/or other rights
of whatsoever nature therein, whether or not now or hereafter known, existing,
contemplated, recognized or developed, to the Company, and the Company will have
the right to use the same in perpetuity throughout the universe in any manner
the Company determines without any further payment to Executive whatsoever.
Executive will, from time to time as may be requested by the Company, (i) during
the term of Executive's employment without further consideration, and (ii)
thereafter at Executive's then current hourly rate, do any and all things which
the Company may deem useful or desirable to establish or document the Company's
exclusive ownership of any and all rights in any such results and proceeds,
including, without limitation, the execution of appropriate copyright and/or
patent applications or assignments. To the extent Executive has any rights in
the results and proceeds of Executive's services that cannot be assigned in the
manner described above, Executive unconditionally and irrevocably waives the
enforcement of such rights. This subsection is subject to and will not be deemed
to limit, restrict, or constitute any waiver by the Company of any rights of
ownership to which the Company may be entitled by operation of law by virtue of
the Company being Executive's employer. This Section does not apply to an
invention that qualifies as a nonassignable invention under Section 2870 of the
California Labor Code, which applies to any invention for which no equipment,
supplies, facilities or Confidential Information of the Company or its
subsidiaries was used, which does not (i) relate to the business of the Company;
(ii) relate to the Company's actual or demonstrable anticipated research or
development or (iii) result from any work performed by Executive for the
Company. This confirms that Executive has been notified of his rights under
Section 2870 of the California Labor Code.

      9. Specific Performance. Executive and the Company agree that the
         --------------------
covenants in Section 8 are reasonable covenants under the circumstances.
Executive agrees that any breach of the covenants contained in Section 8 would
irreparably injure the Company. Accordingly, Executive agrees the Company's
remedies at law for a breach or threatened breach of any of the provisions of
Section 8 would be inadequate and, in recognition of this fact, Executive agrees
that, in the event of such a breach or threatened breach, the Company may,
without posting any bond, in addition to pursuing any other remedies it may have
in law or in equity, cease making any payments otherwise required by this
Agreement and obtain equitable relief in the form of specific performance,
temporary restraining order, temporary or permanent injunction or any other
equitable remedy which may then be available against Executive from any court
having jurisdiction over the matter, restraining any threatened or further
violation of this Agreement by Executive.

                                       10
<PAGE>

      10. Miscellaneous.
          -------------

         a. Governing Law. To the maximum extent permitted by applicable law,
            -------------
this Agreement shall be governed by and construed in accordance with the laws of
the State of Delaware, without regard to conflicts of laws principles thereof.

         b. Entire Agreement/Amendments. This Agreement contains the entire
            ---------------------------
understanding of the parties with respect to the employment of Executive by the
Company. There are no restrictions, agreements, promises, warranties, covenants
or undertakings between the parties with respect to the subject matter herein
other than those expressly set forth herein. This Agreement may not be altered,
modified, or amended except by written instrument signed by the parties hereto.
This Agreement supersedes all prior agreements and understandings (including
verbal agreements) between Executive and the Company and/or its affiliates
regarding the terms and conditions of Executive's employment with the Company
and/or its affiliates.

         c. No Waiver. The failure of a party to insist upon strict adherence to
            ---------
any term of this Agreement on any occasion shall not be considered a waiver of
such party's rights or deprive such party of the right thereafter to insist upon
strict adherence to that term or any other term of this Agreement.

         d. Severability. Whenever possible, each provision of this Agreement
            ------------
will be interpreted in a manner to be effective and valid. If any of the
covenants set forth in Section 8 of this Agreement are held to be unreasonable,
arbitrary, or against public policy, such covenants will be considered divisible
with respect to scope, time, and geographic area and, in such lesser scope,
time, and geographic area, will be effective, binding, and enforceable against
Executive to the maximum extent permitted by applicable law. Any provision of
this Agreement which is determined to be prohibited, unenforceable, or not
authorized in any jurisdiction by a competent court of that jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such prohibition,
unenforceability, or non-authorization without invalidating the remaining
provisions hereof or affecting the validity, enforceability, or legality of such
provision in any other jurisdiction.

         e. Assignment. This Agreement shall not be assignable by Executive.
            ----------
This Agreement may be assigned by the Company to a company that is a successor
in interest to substantially all of the business operations of the Company. Such
assignment shall become effective when the Company notifies the Executive of
such assignment or at such later date as may be specified in such notice. Upon
such assignment, the rights and obligations of the Company hereunder shall
become solely the rights and obligations of such successor company, provided
                                                                    --------
that any assignee expressly assumes the obligations, rights and privileges of
this Agreement.

         f. Successors; Binding Agreement. This Agreement shall inure to the
            -----------------------------
benefit of and be binding upon personal or legal representatives, executors,
administrators, successors, heirs, distributes, devises and legatees.

                                       11
<PAGE>

         g. Notice. For the purpose of this Agreement, notices and all other
            ------
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth below, or to such other address as either party
may have furnished to the other in writing in accordance herewith, except that
notice of change of address shall be effective only upon receipt.

      If to the Company:

      Terabeam, Inc.
      2115 O'Nel Drive
      San Jose, CA  95131
      Attention:  Chief Executive Officer

      with a copy to:

      Terabeam, Inc.
      881 North King Street, Suite 100
      Northampton, MA  01060
      Attention:  David L. Renauld

      If to Executive:

      To the most recent address of Executive set forth in the personnel records
of the Company.

         h. Withholding Taxes. The Company may withhold from any amounts payable
            -----------------
under this Agreement such Federal, state and local taxes as may be required to
be withheld pursuant to any applicable law or regulation.

         i. Counterparts. This Agreement may be signed in counterparts, each of
            ------------
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument. A facsimile or copy of a signature is
valid as an original.

                            [Signatures on next page]

                                       12
<PAGE>

      IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the day and year first above written.

                                               TERABEAM, INC.

                                               By:  /s/ Robert E. Fitzgerald
                                                    ------------------------
                                               Name:  Robert E. Fitzgerald
                                               Title:  Chief Executive Officer

                                               EXECUTIVE:

                                               /s/ Pankaj Manglik
                                               ------------------
                                               Pankaj Manglik

                                       13

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