SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended March 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission File Number O-24742
U.S. Wireless Corporation
(Exact name of Company as specified in its charter)
Delaware 13-3704059
(State or other jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or organization)
2694 Bishop Drive, Suite 213, San Ramon, California 94583
(Address of principal executive offices) (Zip Code)
(510) 830-8801
(Company's telephone number, including area code)
Securities registered pursuant to Section 12(b)
of the Act:
Title of each class Name of each exchange on which registered
NONE
Securities registered pursuant to Section 12(g)
of the Act:
Common Stock, $.01 par value
(Title of Class)
Common Stock Purchase Warrants
(Title of Class)
Check whether the Issuer: (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
past 12 months (or for such shorter period that Company was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes [X] No [ ]
Check if no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is contained in this form, and no disclosure will be contained,
to the best of Company's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB [X].
The Company had $5,024,338 of revenues from operations during the
fiscal year ended March 31, 1997.
The aggregate market value of the voting stock (consisting of Common
Stock, par value $.01 per share) held by non-affiliates on June 2, 1997 was
approximately $10,756,969, based upon the average closing bid and asked prices
for such Common Stock on said date ($4.53), as reported by a market maker. On
such date, there were 7,325,245 shares of Company's Common Stock outstanding.
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PART I
ITEM 1. DESCRIPTION OF BUSINESS
General
U.S. Wireless Corporation ("the Company") is a Delaware corporation
organized in February 1993. In July 1996, the Company acquired 51% of the
outstanding shares of common stock of each of Mantra Technologies, Inc.
("Mantra") and Labyrinth Communication Technologies Group, Inc. ("Labyrinth"),
both Delaware corporations formed in July and June 1996, respectively, by Dr.
Oliver Hilsenrath. Unless the context requires, all references to the "Company"
include Labyrinth and Mantra.
Statements contained in this report which are not historical facts may be
considered forward looking information with respect to plans, projections, or
future performance of the Company as defined under the Private Securities
Litigation Reform Act of 1995. These forward looking statements are subject to
risks and uncertainties which could cause actual results to differ materially
from those projected.
Reverse Stock Split
The Company held a special meeting of its stockholders on May 31, 1996,
at which meeting the stockholders approved a 1 for 4 reverse stock split of its
outstanding shares of Common Stock, reducing its issued and outstanding shares
of Common Stock from 3,575,980 shares to 893,995 shares. The record date for the
purpose of calculating the reverse split was April 17, 1996. Unless otherwise
specified, all references herein to shares and per share information give effect
to the reverse stock split.
Name Change and Spin-off
In June 1996, the Company's Board of Directors, pursuant to the consent
of its then majority stockholder, authorized the distribution to its
shareholders ("the Spin-off Distribution") of the shares of common stock of Play
Co. Toys & Entertainment Corp. ("Playco.") owned by the Company. In addition,
the Company, as majority stockholder of Playco, prior to but in contemplation of
the Spin-off Distribution, authorized the conversion of Playco's Series D
Preferred Stock owned by the Company into 1,157,028 shares of Playco's common
stock. This conversion was based on the average closing bid price ($1.21) of
Playco's shares for the 90 day period from March 1, 1996 to May 31, 1996.
In October 1996, the Company filed an amendment to its certificate of
incorporation changing its name from American Toys, Inc., to its present name.
Simultaneously, its trading symbol was changed from "ATOY" to "USWC." The name
change was effected due to the Company's change in direction.
Private Placements
In July 1996, the Company consummated a private placement ("the Private
Placement") of its securities. The Company offered 600,000 shares at a purchase
price of $2.50 per share for gross proceeds
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of $1,500,000. The proceeds of the offering were used for the Company's
acquisitions of Labyrinth and Mantra. Simultaneously, Labyrinth consummated a
private placement offering of an aggregate of 79,000 shares at $12.00 per share
for gross proceeds of $948,000.
Business of Labyrinth Communication Technologies Group, Inc.
General
In July 1996, the Company commenced the development of an infrastructure
product, the RadioCamera, for the cellular base station. The RadioCamera is
designed to provide value added services and features for cellular networks. The
Company has a development plan according to which these services and features
gradually will be introduced to the cellular networks. These services and
features include caller location finding and tracking, autonomous network
management, and caller location based improved trunking.
Industry Overview
In June 1996, the Federal Communications Commission adopted a report and
order establishing certain performance goals and timetables requiring wireless
service providers to be able to identify each caller's phone number and physical
location for the purpose of providing emergency services. See "Government
Regulations." This initiative, requiring service providers to obtain location
finding capabilities for 911 emergency services, has caused a number of
companies to dedicate research funding to solving the problem of developing a
location technology. As the industry attempts to solve this problem, the
industry is contemplating additional uses for location finding technology, as a
means to increase revenues by offering additional value added services to the
wireless communications industry. There are a number of companies competing to
develop mobile location finding technologies. See "Competition."
There are a number of different measurement formats being developed
which use existing radio frequency ("RF") signals to locate a caller, including
the following:
Time difference of arrival ("TDOA") of RF signals, 1 Direction or angle of
arrival ("AOA") of RF signals, 1 Amplitude or signal strength measurements, 1
Polarization of signals, and 1 Phase of signal measurements.
TDOA and AOA are the primary techniques to triangulate the location of the
user, being developed by several of the Company's competition. Since most
companies use triangulation (the use of RF signals from two or more base
stations) to determine location, it is important that multiple cell sites be
able to communicate with the user's handset. For AOA systems, at least two cell
sites are required. For TDOA systems, three or more cell sites are usually
required for accurate location.
A major problem in urban environments is multipath signals. Multipath
occurs when multiple RF signals bounce off buildings and other solid objects,
resulting in the receipt of several different
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signals at the cell site from a single caller. As there is rarely a line of
sight from the user to the cell site, in urban environments, reflected RF
signals are beneficial in delivering the call but can be detrimental to finding
the user's location. Thus, TDOA or AOA techniques typically experience
difficulties in pinpointing the location of the caller in urban environments, as
there are many conflicting angles and times for the RF signals received at the
cell sites.
Other current technical solutions are only able to locate the caller at the
start of a call. These technologies cannot track the caller if the caller moves
from the original position after the time the call was placed. These types of
technical deficiencies do not provide the information necessary for both 911
emergency services and for commercial location applications. It is important for
any location technology to be able to continually track the user's location
while a call is in progress.
Company Outlook
The Company's RadioCamera is designed to solve the multipath problem in
offering location finding services by taking various measurements of the RF
signals from any caller to a single cell site with a special focus on collecting
all multipath rays. The "fingerprint" collected in this fashion is then utilized
to reconstruct the location out of which the signals could have emerged in order
to locate the caller.
The Company is currently in the process of completing the research,
development, and initial testing of the RadioCamera prototype in preparation for
its rollout scheduled for fiscal 1998. To this end the Company is (i) completing
the design, construction, and testing of a second prototype of the RadioCamera,
which prototype will be used as a platform for mass production of the commercial
units; (ii) preparing the RadioCamera for testing in active base station and
independent sites; (iii) engaging in marketing and developing relationships and
strategic alliances with companies in the wireless industry for the anticipated
rollout of the RadioCamera and the formation of an operating company to offer
geolocation services; and (iv) developing a plan for manufacturing the
RadioCamera in anticipation of its rollout.
Initially, the RadioCamera is being developed for incorporation into
the cellular systems using the AMPS standard, which is the largest cellular
market in the United States, incorporating approximately 40 million subscribers
and approximately 30,000 base stations. In the near future, the Company plans to
modify the RadioCameras for use with PCS, GSM, CDMA, TDMA and other standards.
The RadioCamera
The RadioCamera is an independent system designed for either incorporation
into the infrastructure of a cellular base station or to be operated on a stand
alone basis. It is designed to perform two functions: (i) to provide location
finding information from the measurement of a hybrid signature based on the RF
signals from all cellular callers in a geographic area, identifying the callers'
locations on a continuous basis; and (ii) to improve trunking efficiency in
order to increase user capacity. The RadioCamera will provide trunking
efficiency by effectively managing the allocation of channels provided by the
antennas to the sectors in which there is demand; therefore, it will apportion a
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station's capacity where it is needed, allowing capacity changes as demand
changes. The Company believes that such efficiency in allocation shall enable
each base station to significantly increase its capacity.
The location finding technology combines algorithms developed by the
Company operating on the collected rays, including all direct and reflected rays
from any subscriber at any point in time, and matches such rays to an estimated
location of origination. This technology constantly determines the location of a
caller regardless of whether or not he makes a request for location.
Management believes that the advantage of this technology over TDOA and AOA
technologies is that it resolves the multipath problem of an urban environment.
Unlike TDOA or AOA technologies, the RadioCamera technology can generate a
user's location from a single site in an urban environment since it uses
multipath signals for its location detection ability. See "Industry Overview."
The system also tracks the geographical performance of the wireless base station
and can detect whether the base station's coverage is as desired or whether it
has shifted and is not providing coverage to an expected area of coverage, thus
providing an additional benefit, network management, and substantially
increasing and enhancing the network's operational efficiency.
Testing
The Company has commenced the testing of the RadioCamera in three different
locations in Northern California. The Company anticipates testing the
RadioCamera in operating base stations and on a stand alone basis within the
next few months. This preliminary testing is designed to determine the accuracy
of the RadioCamera in several operating environments, to refine the software and
hardware of the RadioCamera in an operating environment, and to monitor the
performance of the product. The
Company expects testing to continue through the end of calendar 1997.
Supply and Manufacturing
The Company is presently reviewing alternatives to address anticipated
product demand. The Company believes that when the technology risk has been
eliminated, there will be a demand for the RadioCamera. Presently the Company is
performing the design and engineering of the manufacturing of the prototype of
the RadioCamera. This will be the model for the first RadioCamera manufactured
for integration and within the base stations of the commercial carrier. The
Company believes that these prototypes will be adjusted and modified during the
testing process to conform to base station integration and production
requirements. Simultaneously during the testing period, a manufacturing plan
will be developed for the mass production of the RadioCamera.
In April 1997, the Company submitted a proposal to the government of
Germany to receive a subsidy and grant for the purpose of building a
manufacturing plant in Rostock, Germany, as part of a redevelopment effort
undertaken by the German authority. The Company estimates that the manufacturing
facility will require a US $14 million investment. The proposal includes the
receipt of grants and a US $4.35 million long-term loan from the German
government. The loan will be secured by the facility.
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There can be no assurance that an uninterrupted and adequate supply of
the RadioCamera will be available initially to meet demand. The Company believes
that there are a sufficient number of suppliers,
vendors, and manufacturers available to the Company at competitive prices
and on competitive terms.
Marketing and Distribution
The Company plans to distribute the RadioCamera through sales (i)
directly to service providers; (ii) to companies offering or planning to offer
geo-location services; (iii) to OEM infrastructure manufacturers; and (iv) to
engineering firms developing and constructing base stations. Through its testing
process, the Company is developing strategic alliances and consummating
relationships with various companies referred to in items (i) - (iv) above. The
Company believes that by eliminating the technology risk associated with a
product of this kind, through its testing process, there will develop a market
for the RadioCamera, though no assurances can be given.
In addition to sales of the RadioCamera, the Company anticipates entering
into strategic alliances and/or joint venture agreements to offer geo-location
services to the wireless communications industry. These services will include
911 emergency, 411 information, wireless network management, geographically
sensitive billing, and in the future, advanced network management and more
advanced network applications. The Company can provide such services by (i)
accessing the location information produced by the RadioCameras; (ii)
transporting the information through a communications system to a hub for
coordination and integration of the information with other systems (i.e. mapping
system); and (iii) transporting and selling the information to (a) public safety
answering points ("PSAP") with respect to 911 emergency services, (b) service
providers, (c) geo-location service companies, and (d) end users.
Business of Mantra
General
Mantra Technologies, Inc. was founded in July 1996 as a software
development company dedicated to the enhancement of human computer interaction.
In July 1996, it began the development of a self-driven research tool ("the
Research Tool") designed to access various databases to locate and collect
information based on a user interest profile. The Research Tool engages in a
self-driven daily process of creating and updating a user interest profile,
which process is performed by analyzing the data on a user's system. The user
profile is submitted to an index server search engine which searches the various
databases the user requests, and the information gathered by the tool is then
filtered for relevant materials. Finally, the relevant information and all
ancillary documents are downloaded into the system to be analyzed and filtered
for content, categorized and clustered into a useable format for the user.
The first version of this product is currently being developed and
tested for use as an Internet research tool. It studies the data stored on the
user's computer, determines the user's current areas of interest, and searches
for information which may be of value to the user on any indexed database (LAN,
local drives, Intranets, Internet, and paid information services which are
supported by the user), and
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retrieves and presents this information to the user in a conveniently
organized HTML document.
Industry Overview
Information retrieval is a rapidly growing industry. With the rise of
the Internet and the personal computer, users are constantly desiring greater
access to information, quicker and cheaper. Technology, though continuously
improving, has not been able to meet the increased demands of users. Speed of
transmissions, limitations of communications platforms, and differences in
programming have made research of these databases a tedious endeavor.
The Internet has become a new mass media channel that exposes tens of
millions of people to existing public and private databases. The technology the
Internet is based on, both at the networking layer and the information indexing
techniques, has forced the industry to redesign legacy databases and/or their
interfaces to be compatible with the new mass media channel. The Internet's
information indexing and distribution methodology has also become the model for
private local and wide area networks and Intranets.
As opposed to record based or relational databases, the
Internet/Intranet indexing model was designed to accommodate a chaotic system of
resources. On the Internet, new resources are added daily and old ones are
removed, all without notice and without a supervising body. That means indexing
such a system has to be done both randomly and with enough flexibility to absorb
inconsistencies, false entries, and a variety of resource types.
The only type of attempt to index the Internet was made by voluntary
and free service providers who operated complex systems of automated programs
that roamed the Internet and collected information. This type of activity is
done today by hundreds of non-profit organizations on the Internet or outside
it, with the same search-engine model emerging as the leading standard in
indexing text-based information. This text-based information indexing is not
only on the Internet, it is used with Intranets and anywhere text information is
being accumulated.
This indexing technique for text-based
material utilizes extraction of the most "important" words out of each
text-based resource and then indexes that resource according to the words
extracted. Thus, retrieving the resource demands that the system be queried with
the same words it used to index the resource. This method of organizing text
material is very flexible but also introduces an array of problems. Searching
for a resource in a very big
database is complex, there being many subtleties to using search words or
search strings.
Today, a person needs to have some proficiency in using these systems when
trying to find a resource, and more often than not, basic proficiency is not
enough. Since the indexing systems are not linear, there can be many results to
a single query, sometimes up to hundreds of thousands of results which the query
issuing person has to then filter based on his individual needs.
Based on the need for the accumulation of information and the need for the
ability to access it simply, a market for information retrieval products is
emerging and continuously developing. Users basically are looking for products
to perform one or more of the following functions:
1. To assist in the process of retrieving a resource from a query-based
database.
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2. To submit a query to multiple search-engines for local or public
databases.
3. To automate retrieval of specific type of information the user has
designated.
4. To improve the accuracy of the query results.
5. To automatically filter out the less relevant results for a user query.
6. To relieve the users' need to acquire proficiency in resource search
techniques.
The available products that target this market can be divided into three
categories:
1. "Push Technology" - allows a person to state his field (s) of interest
or specific items of interest, and later actively sends the user updates about
resource s to use or directly sends the desired information to the user.
2. "Multiple Search Engine Submission" - allows a user to form a fairly
simple query , submit this query to multiple search engines, and filter the
results .
3. "Search Engine Enhancements" - increase the indexing accuracy of the
search engine and deliver additional services to narrow the search and yield
fewer, more accurate results per query.
Company Outlook
Until now, searching for information on databases (such as the
Internet) required the computer user to proficiently articulate a search string,
submit it to a search engine, manually filter the results, and thus expend
extensive amounts of time during this process. Mantra has developed the Research
Tool, which is designed to eliminate the time inefficiency and extensive cost of
other researching techniques.
Mantra has produced the first prototype of its Research Tool and is
engaging in testing and market research to complete the development of the
product and formulate a direction for its implementation in the industry.
Mantra's goal is to integrate the Research Tool into a client's operating system
as a module which learns and adjusts to the user's habits, needs, and interests,
thereby becoming a personal assistant to the user. The concept is to provide the
user, whether he is an employee of a large corporation or an individual at home,
with the ability to have a search engine search the Internet or other databases
for information helpful and necessary to the person's daily operations, all of
which is done in the background of the computer system without the user waiting
for results. The Research Tool is to be a learning and communicative
self-executing program which will give the user greater efficiency and
flexibility in performing daily necessary functions.
Mantra anticipates that additional versions of the initial prototype
shall be developed based upon the testing process. These versions shall include
a more robust set of features and will strive to be more closely integrated with
the user's system, conceptually residing between the application level and the
shell level. Whereas now the only information source used is the Internet, the
structure of the product is such that it will allow simple additions of
information modules allowing the software to interact with just about any
indexed information source. Its features will allow the product to be deployed
in a wide variety of working environments, providing the most value in research
intensive environments.
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As part of the Company's development process, the Company studies the
possibilities of adding standardized tests, handwriting recognition and
analysis, and behavioral pattern recognition to the resource pool for future
products.
The Product
Mantra has produced the first prototype of its "Research Tool," which
is an innovative approach to information search and retrieval. The Research Tool
is a self-learning and adaptive tool which proactively anticipates a user's
needs and desires. The tool is set up to develop an evolving user profile to
search and access pertinent information. In addition, it has the versatile
ability to be utilized by submitting an individual document, or a portion of a
document, as the basis for the analysis and search. The user does not need to
come up with individual key words for the search. This system studies documents,
extracts the topics discussed in them, and searches the Internet, or other
available network
resources, for relevant content. Once the user has accessed a document of
interest, the document can be submitted to the Research Tool while the user
returns to other duties. When the research is finished, the user can access the
relevant content found.
The operational process of the Research Tool performs the following
functions: (i) it reviews and analyzes the documents in a user's computer to
produce a user interest profile, which is a part of the "MindStep" technology;
(ii) this profile is then downloaded into an index server search engine to
search the database, initially the Internet, to find relevant documents; (iii)
once matching documents and materials are found, the MindStep technology
reengages in analyzing the gathered information, discarding irrelevant
information so as to compile only information which is current and closely
associated to the user's profile; (iv) once this process is completed and
relevant documents are found, a process called "Infodam" engages to download all
the relevant materials to the user's computer for viewing by the user. MindStep
is the process of formulating a profile of a user's areas of interest from a set
of one or more documents (initiating an adaptive search on any indexed database
of documents) and analyzing the results to determine their relevance to the set
of areas of interest extracted from the original set of documents. The relevant
documents are then categorized according to topics (areas of interest) and
presented to the user.
The process of presenting the information to the user is provided by
the Infodam technology which allows the computer to download onto the user's
hard drive the relevant information, as a background function, so that when the
user goes to retrieve the relevant information it is a quick process.
The Research Tool may also commence its process of researching
databases by a user's pro-active initiation of the process described above. The
direct interaction occurs when a user wants to research a specific topic. This
is done by delivering a document or set of documents into a special section of
the Research Tool, whereby an immediate search is requested. The research
assistant then sends the document through the analysis and retrieval process
described above.
The daily background analysis autonomously monitors the user's level of
interaction with the computer and waits for a period of inactivity which implies
the user is away from the computer. It then
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builds a profile of documents accessed, modified, and created within a
user-controlled number of days. The documents contained in this profile should
reflect the recent areas of interest of the user. The documents may be e-mail
messages, e-mail attachments, web pages visited, documents created with any word
processor, presentations, etc. All of these documents are then fed into the
MindStep engine, which identifies topics discussed in this set of documents,
merges similar topics to form more accurate topic modules, and initiates its
research. The result of this daily activity will be an HTML page on the user's
desktop which will contain links to the relevant documents that were found,
categorized according to topics.
Marketing and Distribution
The Company is currently undergoing studies to determine the most
appropriate vehicle for marketing the Mantra product. Management anticipates a
universal appeal of the product to include large and medium sized corporations,
and professional groups such as doctors and lawyers, individuals who
continuously search databases for the most recent information on certain topics
and every day Internet users. Management believes that the best approach to
marketing the product will fall under one of the two following categories:
1. One approach is the mass commercialization, distribution, and marketing
of the product, which requires intense name recognition and extensive
distribution channels in putting the product on retail shelves. This approach is
capital intensive and requires a bigger investment in building distribution
networks and service and support.
2. Another approach is the marketing of the product directly to the biggest
users and creating an impetus for the product through licensing the software.
This approach includes engaging in strategic alliances with computer
manufacturers, Internet service providers, and other research oriented systems.
This method offers the most control regarding sales, service, and support
issues.
Competition
The cellular communications and research and informational services
industries, in general, are highly competitive, with a number of companies
competing to provide value added services. Existing and developing companies are
providing large budgets for research and development in these areas. Products
are continuously being introduced in to the marketplace as newer and better
versions are being developed.
Labyrinth
There are a number of companies offering value added wireless services.
Though the Company is competing with other smart antenna companies offering
products to increase the base stations' efficiency, the Company's primary
competitors are firms offering or seeking to offer network-based location
finding services. A network-based solution accesses operating base stations in
order to locate callers. Currently,
the Company is familiar with various network-based methods relying on TDOA and
AOA techniques. The Company's competitors include TruePosition, a division of
The Associated Group, Inc.; Lockheed Sanders, a wholly-owned subsidiary of
Lockheed Martin Corporation; E-Systems Company; KSI, Inc.;
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and AccuCom Wireless Services. The Company believes that some of its competitors
have greater marketing, customer support, financial, and other resources than
those of the Company.
Other location technologies being developed include dedicated
radiolocation networks which are built solely for location finding and global
positioning systems which are based on satellite tracking systems. The Company
does not believe that dedicated positioning systems or global tracking systems
have the cost efficiencies needed to replace the network-based systems as the
technology of choice. Since this area of wireless services is relatively new,
sparked by the requirement of the FCC to provide 911 emergency services with
location finding capability, most wireless and cellular service providers or
intended providers are in the development and testing stages of their products,
as is the Company.
Mantra
Though the Company is unaware of any company or product which is in
direct competition with the Company's Research Tool, there can be no assurances
that there are not any products which have been developed or which are in
development. The Company is familiar with other companies and products which
perform some of the functions provided by the Research Tool, including: (i) Push
Technology products, for which there are the following competitors: Pointcast,
Inc., Marimba, Inc., BackWeb Technologies, AgentSoft Ltd., Intermind
Corporation, Lanacom Inc., and Autonomy; (ii) Multiple Search Engine Submission
products for which Symantec and WebCompass are the two main competitors; and
(iii) Search Engine Enhancement products for which ICE and Live-Topics are the
companies competitors.
The Company shall compete with such other companies on the basis of the
quality and efficiency of its products. Although the Company is confident that
the technology behind its products is sound, the Company cannot offer any
assurance that one or more of its competitors will not develop and market
products equal to or better than those marketed by the Company; nor can the
Company assure that other companies will not enter the marketplace or that other
companies will not produce and market products technologically superior to the
Company's.
Patents and Trademarks
Members of the Company filed a patent application on January 8, 1997,
regarding the RadioCamera and the Company's location finding technology, which
application is currently pending. Simultaneously with the filing of the patent
application, the individuals assigned any and all rights, title,
and interest to the patent to Labyrinth.
In June 1996, employees of Mantra filed a provisional patent with the
U.S. Patent and Trademark office with respect to the development of a personal
web map system. The filing of a provisional patent requires a full patent
application within one year of the filing of the provisional patent in order for
the date of the patent, if and when issued, to be the date of the filing of the
provisional patent. On March 28, 1997, employees of Mantra filed a patent
application, including the technology developed in the provisional patent, as
further developed. This patent is currently pending. The inventors subsequently
filed assignments, assigning any and all rights, title, and interest to the
patent, to Mantra.
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There can be no assurance that patents will be issued pursuant to these
filings or that any particular aspect of the Company's technology will not be
found to infringe on the products or technologies of other companies or that
other companies will not infringe on the patents or technologies of the Company.
The Company relies on common law trademarks for use of "RadioCamera,"
"MindStep," and "Infodam." The Company has filed intent to use applications to
register these trademarks in the United States. The Company has one year from
the filing date to file trademark applications showing use of the trademarks.
There can be no assurance that such trademarks will be registered, or that if
registered, they will adequately be protected against infringement.
In the event the Company were to become engaged in litigation either as
a result of a claimed infringement by the Company or as a result of infringement
by a third party of the Company's technology or trademarks, there can be no
assurance that the Company will be able to fund such litigation or, if able to
fund same, that it will prevail.
Government Regulations
The wireless communications industry is regulated by the Federal
Communications Commission ("FCC"). The FCC regulates and monitors the use of
radio waves which are apportioned to numerous uses for all frequencies of the
spectrum,. In September 1994, the FCC sought comment on a Notice of Rule making
(NPRM Docket 94-102) which proceeding addressed the issue of 911 emergency
services for advanced telecommunications technologies. On June 12, 1996, the FCC
adopted a Report & Order which establishes performance goals and timetables for
the identification of a wireless caller's phone number and physical location.
Under phase I of the order, wireless carriers must be able to identify the
telephone numbers of their subscribers and locate subscribers to the nearest
cell by April 1, 1998. Under phase II, wireless carriers must be able to locate
a 911 caller within 125 meters, in 67% of all cases, by October 1, 2001.
Additionally, the Company is required to comply with a wide range of
other state and local rules and regulations applicable to its business. The
ability to adapt the Company's product lines in order to comply with the current
and anticipated broad federal, state, and local regulatory network is essential
and may be costly. The failure to comply with such regulations may have an
adverse effect on the Company's operations.
ITEM 2. DESCRIPTION OF PROPERTY
On July 31, 1996, the Company entered a building lease agreement ("the
Lease") with Annabel Investment Company, a California partnership, for the lease
of executive office space at 2694 Bishop Drive, Suite 213, San Ramon, California
94583. Pursuant to the Lease, the Company maintains 2,549 square feet of
executive office space at a total cost of $50,980 per annum. The Lease,
effective for a term of three (3) years, commencing on August 23, 1996 and
continuing through August 23, 1999, was amended on November 11, 1996, to include
the rental of 2,667 additional square feet of office space (comprising Suite
250) at a cost of $56,007 per annum.
<PAGE>
ITEM 3. LEGAL PROCEEDINGS
The Company is not a party to any material litigation and is not aware
of any threatened litigation that would have a material adverse effect on its
business.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the fourth quarter of the fiscal year ended March 31, 1997, no
matter was submitted to a vote of security holders, through the solicitation of
proxies or otherwise.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's Common Stock is quoted on the SmallCap Market of the Nasdaq
Stock Market. The following table sets forth representative high and low closing
bid quotes as reported by a market
maker for the Company's Securities during the period from January 1, 1995
through June 2, 1997, or their expiration. Bid quotations reflect prices between
dealers, do not include resale mark-ups, mark-downs or other fees or
commissions, and do not necessarily represent actual transactions.
<TABLE>
<CAPTION>
Common Stock Warrants(1) Distribution Warrants(1)(2)
Calendar Period Low High Low High Low High
- --------------- --- ---- --- ---- --- ----
1995
<C> <C> <C> <C> <C> <C> <C> <C> <C>
01/01/95 - 03/31/95 9 48 7 26 2 1/2 25 1/2
04/01/95 - 06/30/95 2 16 21/32 1/8 7 1/2 1/8 4
07/01/95 - 09/30/95 12 1/4 12 1/4 3/4 3/4 1/4 1/4
10/01/95 - 12/31/95 14 36 1/8 1/2 1/8 1/4
1996
01/01/96 - 03/31/96 18 10 1/8 1/2 1/8 1/4
04/01/96 - 06/30/96 10 1/2 14
07/01/96 - 09/30/96 1 1/8 6 1/2
10/01/96 - 12/31/96 3 1/8 4 1/4
1997
01/01/97 - 03/31/97 31/4 6 1/4
04/01/97 - 06/03/97 23/4 4 13/16
- -----------------------
</TABLE>
(1) Unexercised Distribution Warrants and Public Warrants expired on March
28, 1996.
(2) The Warrants and Distribution Warrants began trading on June 14, 1994
upon the separation of the Units, and ceased trading on March 27, 1996 upon
their expiration.
(3) The Company's Units only traded from March 28, 1994 through June 14,
1994.
As of June 2, 1997, there were 44 holders of record of the Company's
Common Stock, although
<PAGE>
the Company believes that there are approximately 905 additional beneficial
owners of shares of Common Stock held in street name. As of June 2, 1997, there
were 7,325,245 shares of the Company's Common Stock outstanding.
On July 31, 1996, the Company consummated a private placement offering
of an aggregate of 600,000 shares of its Common Stock at a purchase price of
$2.50 per share, for which the Company received gross proceeds of $1,500,000.
The proceeds of the offering were used to purchase the securities of Labyrinth
and Mantra in accordance with the acquisition. See "Business." The purchasers in
the offering received "piggy back" registration rights. At the same time,
Labyrinth consummated a private placement offering of an aggregate of 79,000
shares at $12.00 per share for gross proceeds of $948,000.
<PAGE>
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
General
The Company was originally organized in February 1993 as a holding
company to acquire a majority interest in Playco. Historically, through August
15, 1996, the Company's results of operations and financial condition have
related primarily to those of Playco. Effective August 15, 1996, the Company
spun-off its ownership of Playco Common Stock to the Company's stockholders and
recorded a dividend for the net book value of the spin-off. With the July 1996
acquisitions of 51% of Labyrinth
and Mantra, the Company changed its business focus. As discussed in Item 1,
Labyrinth is in the business of researching and developing cellular
infrastructure products while Mantra is in the business of developing software
to enhance human interaction with computers, and in particular, of gathering and
analyzing data from such sources as the Internet.
Due to the Company's change in focus, the results of operations for the
year ended March 31, 1997, which primarily reflect the activities of a research
and development company, are not directly comparable to the results of
operations for the year ended March 31, 1996, which reflect the results of
operations from a retailer. Additionally, as operations for the year ended March
31, 1997 did include some results of operations from Playco and the start-up of
operations for Labyrinth and Mantra, the results of operations for the year
ended March 31, 1997 are not an indication of any future results of operations.
Statements contained in this report which are not historical facts may
be considered forward looking information with respect to plans, projections, or
future performance of the Company as defined under the Private Securities
Litigation Reform Act of 1995. These forward looking statements are subject to
risks and uncertainties which could cause actual results to differ materially
from those projected.
Results of Operations:
Year Ended March 31, 1997 as Compared to the Year Ended March 31, 1996
For the year ended March 31, 1997, the Company recorded retail sales
from Playco of $5,024,338 as compared to $21,230,853 in retail sales for the
year ended March 31, 1996. The decrease in sales is reflective of the August
1996 spin-off of the Company's majority ownership in Playco. Through March 31,
1997, the Company has recorded no revenues from the operations of Labyrinth and
Mantra.
Costs and expenses totaled $9,165,746 for the year ended March 31, 1997
as compared to total costs and expenses of $25,321,474 for the year ended March
31, 1996. As with sales, the overall decrease in costs and expenses is primarily
due to the Company's divestiture of its majority ownership of Playco. For the
year ended March 31, 1997, the Company had operating expenses which totaled
$1,558,193 of the reported $4,283,797, the balance constituting operating
expenses from Playco
<PAGE>
through the date of the spin-off.
For the year ended March 31, 1997, compensation expense associated with
the issuance of 2,641,500 Common Stock options to employees and 1,550,000 Common
Stock options to consultants totaled $731,535. In addition, Labyrinth recorded
compensation expense of $620,000 in connection with the issuance of 151,000
shares of its common stock to its Officers and key employees.
The Company recorded $106,542 of amortization of the excess of cost
over basis of the net assets acquired, $100,000 of which was recorded as a
result of the Labyrinth acquisition in July 1996, for the year ended March 31,
1997. Such amortization is included in operating expenses.
For the year ended March 31, 1997, the Company had interest income of
$137,152 as compared to $18,417 for the year ended March 31, 1996. The increase
in interest income is the result of (i) higher cash balances resulting from the
Company's and Labyrinth's July 1996 private placement of 600,000 shares and
79,000 shares of Common Stock, respectively, which resulted in net proceeds of
$1,458,000 and $948,000, respectively, and (ii) the exercise of 3,250,000
options to purchase Common Stock between July and December 1996 which resulted
in additional capital of $3,992,483 being contributed to the Company. Interest
expense decreased to $238,171 for the year ended March 31, 1997 from $535,158
for the year ended March 31, 1996 primarily as a result of the spin-off of
Playco which incurred interest on its obligations with a finance company.
During the year ended March 31, 1997, the Company changed its method of
accounting for the minority stockholders' interest in Playco. The Company
changed from one method of accounting which records the total amount of the net
proceeds received from Playco's equity transactions as the minority interest to
a more generally accepted method which reflects the minority interest as a
percentage of the net assets of Playco. The change in accounting for minority
interest is recorded as a cumulative effect of a change in accounting principle
which had the effect of reducing minority interest by $2,413,973, increasing
additional paid in capital by $2,873,408, and increasing the net loss for the
year ended March 31, 1997 by $459,435.
As a result of the above, the Company recorded a net loss of
$4,203,857, or $0.56 per share, for the year ended March 31, 1997 compared to a
net loss of $2,876,733, or $4.02 per share, for the year ended March 31, 1996.
Research and Development - Future Operations
The Company expects that the research, development, and testing stages of
both Labyrinth's and Mantra's products will continue for approximately six to
twelve months. Thus, the Company does not expect Labyrinth or Mantra to earn any
significant revenues from operations for at least six to twelve months. Research
and development activities, as well as operating and marketing expenses, are
expected to be financed with funds raised through Labyrinth's private placement
and Labyrinth's and Mantra's sales each of 51% of their outstanding common stock
to the Company.
Liquidity and Capital Resources:
<PAGE>
As of March 31, 1997, the Company had working capital of $5,166,493 and cash
equivalents of $5,328,781. Such funds resulted primarily from the Company's and
Labyrinth's July 1996 private placements and the exercise of 3,250,000 Common
Stock options.
Trends Affecting Liquidity, Capital Resources, and Operations
As discussed above, the nature of the Company's operations has changed.
While it once was a holding company for a retailer, it is now a holding company
for research and development companies. As such, management is currently not
aware of any trends that may affect its liquidity, capital resources, and/or
operations.
However, the Company's future operations could be adversely affected if
the Company's timetable for the developing, marketing, and manufacturing of its
planned products exceeds available capital resources. The primary initial
expenses associated with the commencement of Labyrinth's and Mantra's operations
are expected to include officer and key employee salaries. Furthermore,
additional financing may be required to complete product development and begin
product marketing. Management expects the limited resources of the Company,
Labyrinth, and Mantra, as well as the required continuation of research,
development, and testing for approximately twelve to eighteen months, to cause
significant strain on the Company's technical, financial, and other resources.
Inflation and Seasonality
Inflation and seasonality are currently not expected to have a material
effect on the Company's liquidity, capital resources, or operating activities.
New Accounting Pronouncement:
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards ("SFAS") No. 128 Earnings Per Share
("EPS"). SFAS No. 128 requires all companies to present "basic" EPS and, if they
have a complex capital structure, "diluted" EPS. Under SFAS No. 128, "basic" EPS
is computed by dividing income (adjusted for any preferred stock dividends) by
the weighted average number of common shares outstanding during the period.
"Diluted" EPS is computed by dividing income (adjusted for any preferred stock
or convertible stock dividends and any potential income or loss from convertible
securities) by the weighted average number of common shares outstanding during
the period plus the number of additional common shares that would have been
outstanding if any dilutive potential common stock had been issued. The issuance
of antidilutive potential common stock should not be considered in the
calculation. In addition, SFAS No. 128 requires certain additional disclosures
relating to EPS. SFAS No. 128 is effective for financial statements issued for
periods ending after December 15, 1997. Thus, the Company expects to adopt the
provisions of this statement in fiscal year 1998. Management does not expect the
adoption of this pronouncement to have a significant impact on the Company's
financial statements.
ITEM 7. FINANCIAL STATEMENTS
See attached financial statements.
<PAGE>
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
On August 15, 1996, the Board of Directors of the Company authorized
the Company's Executive Officers to interview and engage a new auditing firm for
the Company. This resolution was enacted in order for the Company to have its
auditors in closer proximity to its executive offices. On October 24, 1996, the
Company dismissed Scarano & Lipton, P.C. as its auditors. The change in
accountants was not due to any discrepancies or disagreements between the
Company and Scarano & Lipton on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure. The
former accountants' reports on the Company's financial statements for the years
ended March 31, 1995 and 1996 did not contain any adverse opinions or
disclaimers of opinion; nor were they qualified or modified as to uncertainty,
audit scope, or accounting principles.
Effective as of November 20, 1996, the Company engaged Haskell & White,
Certified Public Accountants as its certifying auditors to audit the Company's
financial statements for the year ended March 31, 1997. In December 1996, the
Company engaged Haskell & White, to reaudit the Company's financial statements
for the year ended March 31, 1996.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND
CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a)
OF THE EXCHANGE ACT
Executive Officers and Directors
The Executive Officers and Directors of the Company are as follows:
<PAGE>
<TABLE>
<CAPTION>
NAME AGE POSITION
<S> <C> <C>
Dr. Oliver Hilsenrath 40 President, Chief Executive Officer,
Director
Dr. Mati Wax 50 Chief Technology Officer
David Klarman 32 General Counsel and
Secretary
David Tamir 53 Director
Regina Gindin 45 Director
</TABLE>
Dr. Oliver Hilsenrath has been the President and Chief Executive Officer
and a Director of the Company since July 31, 1996. Since their inceptions, Dr.
Hilsenrath has been the Chief Executive
<PAGE>
Officer, President, and a Director of both Labyrinth and Mantra. From 1992
through 1996, he was a Senior Vice President, General Manager, and co-founder of
Geotek Communications, Inc., an international wireless carrier with networks in
the United States, United Kingdom, and Germany. Dr. Hilsenrath received his
Ph.D. in information theory from Technion-Polytechnical Institute of Israel. He
has worked in the wireless communications industry for twenty years.
Dr. Mati Wax has been the Chief Technology Officer of the Company and
Labyrinth since August
1996. From 1985 to 1996 he was the head of the Signal Processing Center at
RAFAEL. From 1984 through 1985 he was a visiting scientist for IBM Research
Laboratories. Dr. Wax received his Ph.D. in electrical engineering from Stanford
University in 1985. While at Stanford he founded the smart antenna group, and
received the fellow of IEEE.
David Klarman has been General Counsel and Secretary of the Company since
September 1, 1996. In August 1996, Mr. Klarman formed Klarman & Associates, a
law firm specializing in corporate and securities law with offices in New York,
New York and San Ramon, California. From July 1994 to August 1996, Mr. Klarman
was an associate with Lampert & Lampert, a New York law firm specializing in
corporate and securities law. Prior thereto, from February 1991 to July 1994, he
was an associate with Goldstein, Axelrod & DiGioia, also a New York law firm
specializing in corporate and securities law. Mr. Klarman was elected a member
of the Board of Directors of The Appletree Companies, Inc. in August 1996 and
served as such until April 1997. Mr. Klarman received a Juris Doctorate in 1990
from Yeshiva University, Benjamin N. Cardozo School of Law and a B.S. in Finance
from the University of Maryland in 1986.
David Tamir has been a Director of the Company since August 1996. Since
September 1995, Mr. Tamir has been the General Manager of GeoNet Israel Limited,
a subsidiary of Geotek Communications,
Inc. From July 1992 to September 1995, Mr. Tamir was the President of
Powerspectrum Technology Limited, a subsidiary of Geotek Communications, Inc., a
cellular-wireless communications corporation.
Prior thereto, from 1990 to 1992, Mr. Tamir was a representative of RAFAEL, the
defense branch of the Israeli government. Mr. Tamir received BS and MS degrees
in Electrical Engineering from Technion, the Israel Institute of Technology in
Haifa, and an MBA degree from Hebrew University.
Regina Gindin has been a Director of the Company since August 1996. Since
August 1994, Ms. Gindin has been an independent consultant for RBG Associates, a
consulting firm which provides management consulting services for strategic
business planning. From 1993 to August 1994, Ms. Gindin was the Senior Vice
President of Strategic Management and Corporate Communications for Conner
Peripherals, Inc. ("Conner"), computer peripheral manufacturer. Prior thereto,
from 1992 to 1993, Ms. Gindin was the acting Chief Financial Officer of such
corporation and prior to that, from 1988 to 1992, she was the Vice President of
Strategic Planning and Corporate Communications. Ms. Gindin received her MBA in
Business Administration from the Wharton School of Finance, University of
Pennsylvania. She is a Director of The American Jewish World Service. Ms. Gindin
is also an advisor to the marketing department of the Wharton School of Finance.
The Directors of the Company are elected annually by the shareholders and
hold office until the next annual meeting of shareholders or until their
successors are elected and qualified. The Executive
<PAGE>
Officers are elected annually by the Board of Directors, serve at the discretion
of the Board of Directors and hold office until their successors are duly
elected and qualified. Vacancies on the Board of Directors may be filled by the
remaining Directors.
As permitted under Delaware Corporation Law, the Company's certificate
of incorporation eliminates the personal liability of the Directors to the
Company or any of its shareholders for damages for breaches of their fiduciary
duty as Directors. As a result of the inclusion of such provision, stockholders
may be unable to recover damages against Directors for actions taken by them
which constitute negligence or gross negligence or that are in violation of
their fiduciary duties. The inclusion of this provision in the Company's
certificate of incorporation may reduce the likelihood of derivative litigation
against Directors and other types of shareholder litigation.
Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's Officers, Directors, and persons who beneficially own
more than ten percent of a registered class of the Company's equity securities
to file reports of securities ownership and changes in such ownership with the
Securities and Exchange Commission ("SEC"). Officers, Directors, and greater
than ten percent beneficial owners also are required by rules promulgated by the
SEC to furnish the Company with copies of all Section 16(a) forms they file.
Based solely upon requests for information of the Company's Officers, Directors,
and greater than ten percent shareholders, during fiscal 1997, the Company has
been informed that all Officers, Directors, or greater than ten percent
shareholders have filed such reports as are required pursuant to Section 16(a).
The Company has no basis to believe that any required filing by any of the above
indicated individuals has not been made.
<PAGE>
ITEM 10. EXECUTIVE COMPENSATION
Summary of Cash and Certain Other Compensation
The following provides certain information concerning all Plan and
Non-Plan (as defined in Item 402 (a)(ii) of Regulation S-B) compensation awarded
to, earned by, or paid by the Company during the year ended March 31, 1997 to
each of the named Executive Officers of the Company.
<TABLE>
<CAPTION>
Summary Compensation Table
Annual Compensation
(a) (b) (c) (d) (e) (f)
Name and Principal Options/ Other Annual
Position Year(1) Salary($) Bonus($) SARS Compensation
<S> <C> <C> <C> <C> <C>
Dr. Oliver Hilsenrath 1997 106,667(2) - 1,500,000(3) $5,572(4)
President
Chief Executive Officer
David Klarman 1997 70,000 - 150,000(5) --
General Counsel and Secretary
Dr. Mati Wax 1997 66,667 - 100,000(6) --
Chief Technology Officer
- -----------------------------
</TABLE>
(1) No compensation was paid to any officer of the Company prior to July
31, 1996.
(2) Reflects the portion of the year worked based on salaries of $160,000,
$120,000, and $100,000 for Dr. Hilsenrath, Mr. Klarman, and Dr. Wax,
respectively.
(3) Pursuant to his employment agreement, Dr. Hilsenrath receive an option
to purchase 1,500,000 shares of Common Stock at $2.00 per share.
(4) Includes (i) the payment of $509 per month for automobile allowance,
and (ii) the payment of approximately $1,500 per annum for a life
insurance and disability policy for the benefit of Dr. Hilsenrath's
beneficiaries. See "Employment and Consulting Agreements."
( 5) In August 1996, the Company granted Mr. Klarman the option to purchase
150,000 shares of the Company's Common Stock at an exercise price of $2.00 per
share subject to a vesting schedule. See "Employment and Consulting Agreements."
(6) In July 1996, the Company granted Dr. Wax the option to purchase
100,000 shares of the Company's Common Stock at an exercise price of $2.00 per
share pursuant to a vesting schedule. See "Employment and Consulting Agreement."
The Company also issued Dr. Wax 50,000 restricted shares of Labyrinth's Common
Stock.
<PAGE>
<TABLE>
<CAPTION>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
(Individual Grants)
Individual Grants
(a) (b) (c) (d) (e)
% of Total
# of Securities Options/SAR's
underlying Granted Exercise or
Options/SAR's Employees in Base
Name Granted (1) Fiscal Year Price ($/SH) Expiration Date
- ---- ------------ ------------ ------------- ---------------
<S> <C> <C> <C> <C>
Dr. Oliver Hilsenrath 1,500,000 56.8 $2.00 06/30/01
David Klarman 150,000 5.7 $2.00 08/30/01
Dr. Mati Wax 100,000 3.8 $2.00 07/06/01
</TABLE>
The following table contains information with respect to employees of the
Corporation concerning options held as of March 31, 1997.
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISE IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
(a) (b) (c) (d) (e)
Value of
Number of Unexercised
Unexercised In-The-Money
Options/SAR's Options/SAR's
Shares at FY-End (#) at FY-End ($)
Acquired on Value Exercisable/ Exercisable/
Name Exercise (#) Realized ($) Unexercisable Unexercisable (1)
- ---- ------------ ------------ ------------- -----------------
<S> <C> <C> <C> <C>
Dr. Oliver Hilsenrath - - 1,500,000/0 3,000,000/0
David Klarman - - 0/150,000 0/300,000
Dr. Mati Wax - - 0/100,000 0/200,000
</TABLE>
(1) Based upon the closing price for the Common Stock on March 31, 1997
($4.00), as reported by a market maker.
<PAGE>
Employment and Consulting Agreements
In April 1997, the Company amended the five year employment agreement
it entered with Dr. Hilsenrath in July 1996. As amended, Dr. Hilsenrath remains
the Chief Executive Officer and President of the Company and the President and
sole Director of both Labyrinth and Mantra. The agreement, as amended, provides
for an annual salary of $160,000 and increases of 15% per annum for each year of
its five year term. Upon execution, the Company granted Dr. Hilsenrath an option
to purchase 1,500,000 shares of Common Stock at an exercise price of $2.00 per
share. The Company provides Dr. Hilsenrath with an automobile allowance. In
addition, the Company shall maintain during the full term hereof and at its sole
cost and expense, a policy of life insurance on the life of Dr. Hilsenrath in
the face amount of $1,000,000 payable to his designee. This policy shall include
provisions for the payment of up to 18 months salary to Dr. Hilsenrath in the
event that Dr. Hilsenrath is disabled. Upon the conclusion of this agreement,
all right, title, and interest in the policy shall be transferred to Dr.
Hilsenrath, and Dr. Hilsenrath shall be responsible for any premiums due after
such transfer. The agreement restricts Dr. Hilsenrath from competing with the
Company for a period of two years after the termination of his employment. The
agreement provides for severance compensation to be paid to Dr. Hilsenrath if
his employment with the Company is terminated or if there is a decrease in
responsibilities or duties following a change in control of the Company. The
severance compensation shall be made in one payment equal to three times the
aggregate annual compensation paid to Dr. Hilsenrath during the preceding
calendar year. In the event the Company wishes to obtain Key Man life insurance
on the life of Dr. Hilsenrath, Dr. Hilsenrath agrees to cooperate with the
Company in completing any applications necessary to obtain such insurance and in
promptly submitting to such physical examinations and furnishing such
information as any proposed insurance carrier may request.
In August 1996, the Company entered into a three year employment
agreement with Mr. Klarman pursuant to which Mr. Klarman is to receive a salary
of $120,000 per annum and the option to purchase 150,000 shares of the Company's
Common Stock at an exercise price of $2.00 per share, subject to a three year
vesting schedule. The employment agreement provides that Mr. Klarman will be
General Counsel to and Secretary of the Company. The agreement also acknowledges
that Mr. Klarman shall have the right to represent non-competing companies
during the term of the agreement.
In July 1996, Dr. Mati Wax entered into a three year employment
agreement with the Company whereby as Chief Technology Officer of same, Dr. Wax
is to receive a salary of $100,000 per annum, the option to purchase 100,000
shares of the Company's Common Stock at an exercise price of $2.00 per share,
subject to a three year vesting schedule, and 50,000 restricted shares of
Labyrinth's common stock, subject to a three year vesting schedule.
In June 1996, the Company entered into a five year employment agreement
with Ilan Arbel pursuant to which Mr. Arbel was to be Vice President of Business
Development, a non-executive officer position, upon the Company's consummation
of the acquisitions of Labyrinth and Mantra. Mr. Arbel's sole compensation was
the grant of options to purchase 1,000,000 shares of Common Stock at $1.00 per
share for a period of five years and 2,250,000 shares at $1.33 per share,
exercisable until December 31, 1996. In July 1996 Mr. Arbel, exercised his
option to purchase 1,000,000 shares at $1.00 in full. Mr. Arbel exercised the
remaining options in August and December 1996. Pursuant to an S-8 registration
<PAGE>
statement, 1,000,000 shares were transferred. The S-8 registration statement has
been amended to deregister the sale of the remaining shares, all of which were
issued with restrictive legends.
Between July 1996 and December 1997, the Company entered into consulting
agreements with individuals and entities within the investment banking and
cellular communications industries. These consultants have been instrumental in
the raising of capital for the Company and have been engaged to provide
expertise in the area of cellular communications. The consultants are to
initiate and facilitate relationships with companies operating within the
investment banking and cellular communications industries. In addition, they
seek to coordinate the development of purchasers for the Company's products and
the co-development of business ventures for the possible combination and joint
development of technologies within the communication industry. The Company has
granted options to purchase an aggregate of 1,450,000 shares of the Company's
Common Stock at exercise prices ranging from $2.00 to $4.00 per share. Some of
the options granted have been subject to vesting schedules. In addition, an
aggregate of $100,000 is being paid to a consultant for services rendered in the
business development and capitalization of the Company. No other compensation
was issued to these consultants; however, certain consulting agreements have
provisions for fees to be paid in the event that transactions are consummated by
the Company based on relationships initiated by such consultants.
Stock Option Plan
During 1993, the Company adopted the Company's 1993 Stock Option Plan
("the Plan"). The Board believes that the Plan is desirable to attract and
retain executives and other key employees of outstanding ability. Under the
Plan, options to purchase an aggregate of not more than 37,500 shares of Common
Stock may be granted from time to time to key employees, Officers, Directors,
advisors, and independent consultants to the Company and its subsidiaries.
The Board of Directors is charged with the administration of the Plan
and is generally empowered to interpret the Plan, prescribe rules and
regulations relating thereto, determine the terms of the option agreements,
amend same with the consent of the Optionee(s), determine the employees to whom
options are to be granted, and determine the number of shares subject to each
option and the exercise price thereof. The per share exercise price for
incentive stock options ("ISO's") will not be less than 100% of the fair market
value of a share of the Common Stock on the date the option is granted (110% of
fair market value on the date of grant of an ISO if the optionee owns more than
10% of the Common Stock of the Company).
Options will be exercisable for a term determined by the Board which
will not be less than one year. Options may be exercised only while the original
grantee has a relationship with the Company or with a subsidiary of the Company,
which latter relationship confers eligibility to be granted options, or at the
sole discretion of the Board, within ninety days after the original grantee's
termination. In the event of termination due to retirement, the Optionee, with
the consent of the Board, shall have the right to exercise his option at any
time during the thirty-six month period following such retirement. Options may
be exercised up to thirty-six months after the death or total and permanent
disability of an Optionee. In the event of certain basic changes in the Company,
including a change in control of the Company as defined in the Plan, in the
discretion of the Board, each option may become fully and immediately
exercisable.
<PAGE>
ISO's are not transferable other than by will or by the laws of descent and
distribution. Options may be exercised during the holder's lifetime only by the
holder or his guardian or legal representative.
Options granted pursuant to the Plan may be designated as ISO's with
the attendant tax benefits provided therefor pursuant to Sections 421 and 422A
of the Internal Revenue Code of 1986. Accordingly, the Plan provides that the
aggregate fair market value (determined at the time an ISO is granted) of the
Common Stock subject to ISO's exercisable for the first time by an employee
during any calendar year (under all plans of the Company and its subsidiaries)
may not exceed $100,000. The Board may modify, suspend, or terminate the Plan,
provided, however, that certain material modifications affecting the Plan must
be approved by the shareholders, and any change in the Plan that may adversely
affect an Optionee's rights under an option previously granted under the Plan
requires the consent of the Optionee.
<PAGE>
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following table sets forth certain information as of June 10, 1997
with respect to the beneficial ownership of Common Stock by (i) each person
(including any "group" as that term is used in Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended) known by the Company to be the
owner of 5% or more of the outstanding shares of Common Stock; (ii) each
Director; and (iii) all Officers and Directors as a group. Except as otherwise
indicated below, each named beneficial owner set forth herein has sole voting
power with respect to the shares of Common Stock listed opposite his name.
<TABLE>
<CAPTION>
Name and Address Amount and % of outstanding]
of Beneficial Owner Nature of shares owned
Beneficial
Ownership
<S> <C> <C>
Dr. Oliver Hilsenrath
c/o U.S. Wireless Corp. 3,750,000(1) 42.2%
2694 Bishop Drive, Suite 213
San Ramon, CA 94583
United Textiles & Toys
Corporation 378,758 5.1%
448 West 16th Street
New York, New York 10011
David Tamir (2)
c/o U.S. Wireless Corp. -- --
2694 Bishop Drive, Suite 213
San Ramon, CA 94583
Regina Gindin (2)
c/o U.S. Wireless Corp.
2694 Bishop Drive, Suite 213 -- --
San Ramon, CA 94583
Galit Capital Limited
(3) 1,071,880 14.5%
Tortola, British Virgin Islands
Amir Overseas Capital Limited(
(3) 750,000 10.1%
Tortola, British Virgin Islands
ZOE Arbel Trust (3)
500,000 6.8%
Tortola, British Virgin Islands
Officers and Directors as a group
(4 persons) (1) - (2) 3,750,000 42.2%
</TABLE>
<PAGE>
Footnotes from previous page
*Less than 1%.
(1) Includes 1,500,000 shares of Common Stock issuable upon the exercise of
an option granted pursuant to Dr. Hilsenrath's employment agreement.
(2) Does not include stock options to purchase an aggregate of 100,000
shares of Common Stock which vest 1/3 each year from grant, non of which are
presently vested or exercisable.
(3) Mr. Arbel, a former Officer and Director of the Company, exercised
options granted pursuant to an employment agreement and thereafter transferred
said shares to the referenced companies. Mr. Arbel denies beneficial ownership
of these shares.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In June 1996, the Company's Board of Directors, pursuant to the consent of
the then majority stockholder of the Company, distributed ("the Spin-off
Distribution") the shares of common stock of Playco owned by the Company. In
addition, the Company, as majority stockholder of Playco, prior to, but in
contemplation of the Spin-off Distribution, authorized the conversion of
Playco's Series D Preferred Stock owned by the Company into 1,157,028 shares of
Playco's common stock. This conversion was based on the average closing bid
price ($1.21) of Playco's shares for the ninety day period from March 1, 1996 to
May 31, 1996.
In June 1996, European Ventures Corp. ("EVC"), a British Virgin Islands
corporation of which Moses Mika at the time was the sole Officer, Director, and
stockholder, acquired 3,106,005 shares of the Company's Common Stock, par value
$.01, in exchange for 400,000 shares of common stock of Multimedia Concepts
International, Inc. ("Media"), a Delaware Corporation. The Company had the right
either to pay $1,800,000 for the shares or to transfer 400,000 shares of Media
to the Company. Mr. Mika is the father of Mr. Arbel, the former President and
Chief Executive Officer of the Company. The shares of Common Stock issued to EVC
were not eligible for the Spin-off Distribution of the Playco shares referred to
herein. In April 1997, the Company and EVC entered into an agreement to rescind
the transaction, and EVC returned 2,706,006 shares to the Company in exchange
for the 400,000 shares of Media. This transaction was consummated in May 1997.
See "Executive Compensation-Employment and Consulting Agreements" for a
discussion of the compensation arrangements the Company has with its Executive
Officers and consultants.
<PAGE>
PART IV
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
All exhibits, except those designated with an asterisk (*), which are
filed herewith, previously have been filed with the Commission in connection
with (i) the Company's Registration Statement on Form SB-2, dated March 28,
1994, under file No. 33-68306-NY; or (ii) Form 8-K, dated July 11, 1996,
pursuant to 17 C.F.R. Section 230.411, and are incorporated by reference herein.
<TABLE>
<CAPTION>
<S> <C>
2.1 - Stock Purchase Agreement Among the Company, Labyrinth Communications
Technologies Group, Inc., and the stockholders of Labyrinth Communications
Technologies Group, Inc., dated July 10, 1996 (incorporated by reference to the
indicated exhibit in the Company's Form 8-K dated July 11, 1996).
2.2 - Stock Purchase Agreement Among the Company, Mantra Technologies, Inc., and
the stockholders of Mantra Technologies, Inc., dated July 10, 1996 (incorporated
by reference to the indicated exhibit in the Company's Form 8-K dated July 11,
1996).
3.1 - Certificate of Incorporation of the Company filed February 12, 1993. (incorporated by
reference to the indicated exhibit in the Company's SB-2 Registration Statement File No. 33-
68306-NY )
3.2 - Amended and Restated Certificate of Incorporation of the Company filed on August 25,
1993. (incorporated by reference to the indicated exhibit in the Company's SB-2 Registration
Statement File No. 33-68306-NY)
3.4 - By-Laws of the Company. (incorporated by reference to the indicated exhibit in the
Company's SB-2 Registration Statement File No. 33-68306-NY)
3.5 - Specimen Common Stock Certificate.
4.7 - Form of Option from Stockholders of Mantra Technologies, Inc., dated July 10, 1996
(incorporated by reference to the indicated exhibit in the Company's Form 8-K dated July 11,
1996).
10.41 - The 1993 Stock Option Plan (incorporated by reference to the indicated exhibit in the
Company's SB-2 Registration Statement File No. 33-68306-NY)
10.74 - Form of Employment Agreement with Dr. Oliver
Hilsenrath (incorporated by reference to the
indicated exhibit in the Company's Form 8-K dated
July 11, 1996).
10.75 - Form of Stockholders Agreement for Labyrinth (incorporated by reference to the
indicated exhibit in the Company's Form 8-K dated July 11, 1996).
10.76 * - S & S Engineering agreement.
10.77* - Amended Employment Agreement with Dr. Oliver Hilsenrath.
10.78* - Employment Agreement with David Klarman
10.79* - Employment Agreement with Dr. Mati Wax.
10.80* - Consulting Agreement with Young Associates.
10.81* - Consulting Agreement with Dennis Frances.
10.82* - Consulting Agreement with Spencer Corporation.
10.83* - Consulting Agreement with Ryburn Limited.
10.84* - Consulting Agreement with Crossgar Limited.
10.85* - Consulting Agreement with Pelican Investments Limited.
21.01 - List of all Company Subsidiaries.
27.01 - Financial Data Schedule.
</TABLE>
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the Company
has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized this 23th day of June, 1997.
U.S. WIRELESS CORPORATION
By: \s\ Dr. Oliver Hilsenrath
Dr. Oliver Hilsenrath
Chief Executive Officer
In accordance with the Exchange Act, this report has been signed below
by the following persons on behalf of the Company, in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
<S> <C> <C>
\s\ Dr. Oliver Hilsenrath Chief Executive Officer June 23, 1997
Dr. Oliver Hilsenrath President and Director Dated
\s\ David Tamir Director June 23, 1997
David Tamir Dated
\s\ Regina Gindin Director June 23, 1997
Regina Gindin Dated
</TABLE>
<PAGE>
U.S. WIRELESS CORPORATION AND SUBSIDIARIES
CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS F - 2
CONSOLIDATED BALANCE SHEET F - 3
CONSOLIDATED STATEMENTS OF OPERATIONS F - 5
STATEMENTS OF STOCKHOLDERS' EQUITY F - 7
CONSOLIDATED STATEMENTS OF CASH FLOWS F - 9
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS F - 13
</TABLE>
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders
U.S. Wireless Corporation and Subsidiaries
We have audited the accompanying consolidated balance sheet of U.S. Wireless
Corporation, formerly known as American Toys, Inc., and Subsidiaries (the
"Company") as of March 31, 1997 and the related consolidated statements of
operations, stockholders' equity and cash flows for each of the two years in the
period ended March 31, 1997. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of the Company as of March 31, 1997,
and the results of its operations and its cash flows for each of the two years
in the period ended March 31, 1997, in conformity with generally accepted
accounting principles.
HASKELL & WHITE
Certified Public Accountants
May 30, 1997, except for the last sentence of Note 6.a) which is as of June
16, 1997
F - 2
<PAGE>
U.S. WIRELESS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
MARCH 31, 1997
ASSETS
<TABLE>
<CAPTION>
Current assets
<S> <C>
Cash and cash equivalents $ 5,328,781
Other current assets 3,500
Total current assets 5,332,281
Equipment, improvements and fixtures, net 281,211
Excess of costs over basis of net assets acquired, net of
accumulated amortization of $100,000 2,150,000
Other assets 4,667
Total assets $ 7,768,159
================
</TABLE>
See accompanying notes to consolidated financial statements.
F - 3
<PAGE>
U.S. WIRELESS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
MARCH 31, 1997
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Current liabilities
<S> <C>
Accounts payable and accrued expenses $ 140,550
Obligations under capital leases, current 25,238
Total current liabilities 165,788
Obligations under capital leases, noncurrent 45,427
Total liabilities 211,215
Minority interest in subsidiaries 1,529,534
Commitments (Notes 8 and 9)
Stockholders' equity
Common Stock, $.01 par value, 40,000,000 shares authorized,
10,031,250 shares issued and outstanding 100,312
Additional paid-in capital 20,493,262
Unearned compensation (1,277,918)
Stock subscription receivable (1,569,483)
Accumulated deficit (11,718,763)
Total stockholders' equity 6,027,410
Total liabilities and stockholders' equity $ 7,768,159
================
</TABLE>
See accompanying notes to consolidated financial statements.
F - 5
<PAGE>
U.S. WIRELESS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED MARCH 31, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
--------------- ----------
<S> <C> <C>
Net sales $ 5,024,338 $ 21,230,853
--------------- ----------------
Cost and expenses
Cost of sales 3,429,395 15,132,895
Operating expenses 4,283,797 9,518,238
Stock and stock options issued as compensation 1,351,535 153,600
Interest expense and financing fees, net of interest
income of $137,152 and $18,417, respectively 101,019 516,741
Total costs and expenses 9,165,746 25,321,474
--------------- ----------------
Loss before minority interest in net losses of subsidiaries,
income tax (expense) benefit and cumulative effect
of a change in accounting principle (4,141,408) (4,090,621)
Minority interest in net losses of subsidiaries 396,986 1,213,888
Loss before income tax (expense) benefit and cumulative
effect of a change in accounting principle (3,744,422) (2,876,733)
Income tax (expense) benefit - -
Loss before cumulative effect of a change
in accounting principle (3,744,422) (2,876,733)
Cumulative effect of a change in accounting principle (459,435) -
Net loss $ (4,203,857) $ (2,876,733)
=============== ================
</TABLE>
See accompanying notes to consolidated financial statements.
F - 7
<PAGE>
U.S. WIRELESS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED MARCH 31, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
--------------- ----------
<S> <C> <C>
Loss per common equivalent share
Loss before minority interest in net losses of subsidiaries,
income tax (expense) benefit and cumulative effect
of a change in accounting principle $ (0.55) $ (4.93)
Minority interest in net losses of subsidiaries 0.05 1.46
Loss before income tax (expense) benefit and cumulative
effect of a change in accounting principle (0.50) (3.47)
Income tax (expense) benefit - -
Loss before cumulative effect of a change in
accounting principle (0.50) (3.47)
Cumulative effect of a change in accounting principle (0.06) -
Net loss per common equivalent share $ (0.56) $ (3.47)
============ ============
Weighted average number of common shares outstanding 7,443,419 828,891
Pro forma amounts assuming the new minority
interest accounting method is applied retroactively
Net loss $ (3,744,422) $ (3,336,168)
Net loss per common equivalent share $ (0.50) $ (4.02)
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
F - 9
<PAGE>
U.S. WIRELESS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED MARCH 31, 1997 AND 1996
<TABLE>
<CAPTION>
Additional Stock Total
Common Stock Paid-in Unearned Subscription Accumulated Stockholders'
Shares Amount Capital Compensation Receivable Deficit Equity
<S> <C> <C> <C> <C> <C> <C> <C>
Balances at April 1, 1995 753,995 $7,540 $5,774,590 $- $- $(3,874,126) $1,908,004
Sale of common shares 56,250 562 273,938 - - - 274,500
Issuance of shares as
consideration for services
provided to the Company 15,000 150 153,450 - - - 153,600
Issuance of shares in
connection with exercise
of special warrant 68,750 688 549,312 - - - 550,000
Net loss for the year ended
March 31, 1996 - - - - - (2,876,733) (2,876,733)
Balances at March 31, 1996 893,995 8,940 6,751,290 - - (6,750,859) 9,371
Spin-off of Playco as
dividend - - - - - (731,964) (731,964)
Cancellation of stock
subscription receivable
and accrued interest (68,750) (688) (549,312) - - (32,083) (582,083)
</TABLE>
See accompanying notes to consolidated financial statements.
F - 10
<PAGE>
U.S. WIRELESS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED MARCH 31, 1997 AND 1996
(Continued)
<TABLE>
<CAPTION>
Additional Stock Total
Common Stock Paid-in Unearned Subscription Accumulated Stockholders'
Shares Amount Capital Compensation Receivable Deficit Equity
<S> <C> <C> <C> <C> <C> <C> <C>
Issuance of Common Stock
options for compensation - - 2,009,453 (1,277,918) - - 731,535
Exercise of common
stock options 3,250,000 32,500 3,959,983 - - - 3,992,483
Private placement of
Common Stock, net of
offering costs of $42,000 600,000 6,000 1,452,000 - - 1,458,000
Common Stock issued for
acquisition 2,250,000 22,500 2,227,500 - - - 2,250,000
Stock subscription
receivable 3,106,005 31,060 1,768,940 - (1,569,483) - 230,517
Cumulative effect of a
change in accounting
principle - - 2,873,408 - - - 2,873,408
Net loss for the year ended
March 31, 1997 - - - - - (4,203,857) (4,203,857)
Balances at March 31, 1997 10,031,250 $100,312 $20,493,262 $(1,277,918) $(1,569,483) $(11,718,763) $6,027,410
</TABLE>
See accompanying notes to consolidated financial statements.
F - 12
<PAGE>
U.S. WIRELESS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED MARCH 31, 1997 AND 1996
Increase (Decrease) in Cash and Cash Equivalents
<TABLE>
<CAPTION>
1997 1996
--------------- ----------
Cash flows from operating activities
<S> <C> <C>
Net loss $ (4,203,857) $ (2,876,733)
Adjustments to reconcile net loss to net
cash used for operating activities:
Cumulative effect of a change in accounting principle 459,435 -
Depreciation and amortization 242,382 487,594
Amortization of excess of cost over net assets acquired 106,542 78,508
Minority interest in net losses of subsidiaries (396,986) (1,213,888)
Issuance of Common Stock for
compensation and services 620,000 153,600
Issuance of Common Stock options for compensation
and services 731,535 -
Write-down of stock subscription receivable 230,517 -
Increase (decrease) from change in assets and liabilities,
net of the effects of spin-off of subsidiary:
Accounts receivable (165,207) 586,824
Merchandise inventories (1,743,239) 1,673,284
Other current assets 174,810 73,738
Deposits and other assets (4,667) 33,387
Accounts payable and accrued expenses 1,632,146 (402,693)
Deferred rent liability (20,823) 57,717
--------------- ----------------
Net cash used for operating activities (2,337,412) (1,348,662)
Cash flows from investing activities
Equipment, improvements and fixtures acquired (388,220) (340,311)
</TABLE>
See accompanying notes to consolidated financial statements.
F - 13
<PAGE>
U.S. WIRELESS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED MARCH 31, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
--------------- ----------
Cash flows from financing activities
<S> <C> <C>
Payments on capital lease obligation - (42,045)
Borrowings under bank lines of credit - 1,092,361
Repayments under bank lines of credit - (3,466,852)
Borrowings under financing agreement 1,465,859 5,637,392
Repayments under financing agreement - (2,234,367)
Payment of financing fees - (199,455)
Repayment to stockholders (381,430) (217,723)
Proceeds from affiliates - 701,472
Payment of accrued dividends on subsidiary's
redeemable preferred stock - (18,982)
Redemption of subsidiary's Series B redeemable preferred
stock from Common Stock - (163,157)
Proceeds from issuance of Common Stock 6,398,483 274,500
Proceeds from issuance of preferred stock (Playco) 584,000 -
Redemption of Series B redeemable preferred stock (Playco) (87,680) -
Net cash provided by financing activities 7,979,232 1,363,144
Net increase (decrease) in cash 5,253,600 (325,829)
Cash and cash equivalents at beginning of year 75,181 401,010
Cash and cash equivalents at end of year $ 5,328,781 $ 75,181
=============== ================
</TABLE>
See accompanying notes to consolidated financial statements.
F - 15
<PAGE>
U.S. WIRELESS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED MARCH 31, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
--------------- ----------
Supplemental disclosure of cash flow information:
<S> <C> <C>
Interest paid $ 166,453 $ 464,832
Income taxes paid $ - $ 15,821
Schedule of non-cash financing activities:
As discussed in Note 1, the Company spun-off its shares of Playco in August
1996. This non-cash event had the following effects on the Company's financial
statements:
Decrease in accounts receivable $ 286,793
Decrease in merchandise inventories 8,002,320
Decrease in other current assets 152,801
Decrease in equipment, improvements and fixtures, net 1,793,833
Decrease in deferred financing costs 393,699
Decrease in deposits and other assets 57,285
Decrease in accounts payable and accrued expenses (4,683,291)
Decrease in notes payable (4,868,884)
Decrease in deferred rent liability (177,112)
Decrease in minority interest 358,520
Decrease in preferred stock (584,000)
Net equity of Playco (731,964)
</TABLE>
As discussed in Note 1, in connection with the Company's acquisition of a 51%
interest in Labyrinth Communications Technologies Group, Inc., the Company
issued 2,250,000 shares of Common Stock.
As discussed in Note 9, the Company exchanged 3,106,005 shares of its Common
Stock for 400,000 shares of Multimedia Concepts International, Inc.'s Common
Stock. Subsequent to March 31, 1997, the Company negotiated the return of
2,706,006 shares of its Common Stock in exchange for the return of the 400,000
shares of Multimedia Concepts International, Inc. Common Stock. In connection
these transactions, the Company recorded a stock subscription receivable in the
amount of $1,569,483 and a current year expense of $230,517.
During the year ended March 31, 1997, the Company issued options to purchase an
aggregate of 2,641,500 shares of Common Stock to employees. In connection with
these issuances, the Company recorded compensation expense of $271,535 and
unearned compensation of $1,277,918.
See accompanying notes to consolidated financial statements.
F - 17
<PAGE>
U.S. WIRELESS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED MARCH 31, 1997 AND 1996
Schedule of non-cash financing activities (continued):
During the year ended March 31, 1997, the Company issued 1,550,000 Common Stock
options to consultants. In connection with these issuances, the Company recorded
compensation expense of $460,000.
During the year ended March 31, 1997, the Company canceled a $550,000 stock
subscription receivable and $32,083 of related accrued interest.
During the year ended March 31, 1997, the Company entered into capital leases
for office equipment that totaled $70,665.
During the year ended March 31, 1996, the Company issued 15,000 shares of its
Common Stock as consideration for services and recorded related compensation
expense of $153,600.
During the year ended March 31, 1996, the Company issued 68,750 shares of its
Common Stock as a result of the exercise of a special warrant.
See accompanying notes to consolidated financial statements.
F - 19
<PAGE>
U.S. WIRELESS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 1997 AND 1996
1. ORGANIZATION
U.S. Wireless Corporation, (the "Company") was incorporated in the
State of Delaware on February 12, 1993. On July 31, 1996, the Company
consummated a stock purchase agreement and acquired 51% of the
outstanding shares of common stock of Labyrinth Communications
Technologies Group, Inc. "Labyrinth", whereby 20% of the shares were
acquired for $2,000,000 from Labyrinth and an additional 31% was
acquired from the principle stockholder of Labyrinth for 2,250,000
shares of the Company's Common Stock. Upon consummation of this
acquisition, the founding shareholder of Labyrinth, Dr. Oliver
Hilsenrath, was appointed the Company's President and Chief Executive
Officer. Labyrinth is a development stage company engaged in the
research and development of wireless communications hardware and
software technology.
On July 31, 1996, the Company also consummated an agreement and
acquired 51% of the outstanding common stock of Mantra Technologies,
Inc. ("Mantra") and an option to acquire the remaining 49% of the
outstanding shares of common stock for an aggregate purchase price of
$500,000. Pursuant to the terms of the agreement, the Company has the
right to acquire the remaining 49% of the outstanding shares of
Mantra's common stock in exchange for an aggregate 1,000,000 shares of
the Company's Common Stock. In order for the Company to exercise its
options, the closing bid price of its Common Stock must have been at
least $5.00 for the 30 trading days prior to the date of exercise.
Mantra is a development stage company which is engaged in the
development of an advanced user interface for the Internet and other
databases.
Prior to the acquisitions of Labyrinth and Mantra, the Company, which
was formerly known as American Toys, Inc., was the majority stockholder
of Play Co. Toys & Entertainment Corp. ("Playco"), a California-based
toy retailer. On June 1, 1996, the then majority stockholder of the
Company, United Textiles & Toys Corporation, formerly known as Mister
Jay Fashions International Inc. ("Mister Jay"), a publicly-held
Delaware Corporation, authorized and consented to the spin-off of the
shares of common stock of Playco owned by the Company to the
stockholders of the Company as of the record date of August 15, 1996.
Additionally, the Company, as majority stockholder of Playco,
authorized the conversion of its 1 share of Series D preferred stock
owned into 1,157,028 shares of Playco's common stock, based on the
average closing bid price ($1.21) of Playco's shares for the period
from March 1, 1996 to May 31, 1996.
Pursuant to a special meeting of the shareholders on May 31, 1996, the
Company effected, as of April 17, 1996, a one-for-four reverse stock
split. The consolidated financial statements give retroactive effect
for this one-for-four reverse stock split.
See accompanying notes to consolidated financial statements.
F - 20
<PAGE>
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a) Consolidated financial statements
The consolidated financial statements for the year ended March
31, 1997, include the accounts of the Company, Labyrinth,
Mantra and Playco through the spin-off date of August 15,
1996. The consolidated financial statements for the year ended
March 31, 1996 include the accounts of the Company and Playco.
All significant intercompany balances and transactions have
been eliminated in consolidation.
For the year ended March 31, 1997, 100% of the recorded
revenues and cost of sales, approximately 64% of the operating
expenses, and 100% of the interest expense are from the Playco
operations through the August 15, 1996 spin-off date. The
Company has recorded no revenues from the operations of
Labyrinth and Mantra through March 31, 1997.
b) Cash and cash equivalents
The Company considers all highly liquid investments purchased
with a maturity of three months or less on the date of
acquisition to be cash equivalents.
c) Equipment, improvements and fixtures
Equipment, improvements and fixtures are recorded at cost.
Depreciation and amortization are provided using the
straight-line method over the estimated useful lives (3 - 15
years) of the related assets. Leasehold improvements are
amortized over the lesser of the related lease terms or the
estimated useful lives of the improvements. Maintenance and
repairs are charged to operations as incurred.
d) Excess of costs over basis of net assets acquired
Excess of costs over basis of net assets acquired is being
amortized on the straight-line method over a period of 15
years. The Company assesses whether there has been a permanent
impairment in the value of intangible assets by considering
factors such as estimated future revenues and product demand,
related competition and other economic factors. Management has
determined that no impairment adjustments have been necessary
to date.
See accompanying notes to consolidated financial statements.
F - 22
<PAGE>
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
e) Income taxes
The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes," which
requires the use of the "liability method" of accounting for income taxes.
Accordingly, deferred tax liabilities and assets are determined based on the
difference between the financial statement and tax bases of assets and
liabilities, using enacted tax rates in effect for the year in which the
differences are expected to reverse. Current income taxes are based on the
year's income taxable for federal and state income tax reporting purposes.
Accounting for employee stock options
In October 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards ("SFAS") No. 123, "Accounting for Stock-Based
Compensation." In conformity with the provisions of SFAS No. 123, the Company
has determined that it will not change to the fair value method presented by
SFAS No. 123 and will continue to follow Accounting Principle Board Opinion No.
25 for measurement and recognition of employee stock-based transactions. The
Company has adopted the "disclosure only" requirements of SFAS No. 123 in fiscal
year 1997.
Software development costs
Costs incurred in the research and development of new software products are
expensed as incurred until technological feasibility has been established. After
technological feasibility is established, any additional costs are capitalized
in accordance with SFAS No. 86, "Accounting for the Cost of Computer Software to
Be Sold, Leased or Otherwise Marketed." The establishment of technological
feasibility and the ongoing assessment of recoverability of capitalized software
development costs require considerable judgment by management with respect to
certain external factors such as anticipated future revenues, estimated economic
life and changes in software and hardware technologies. No software development
costs have been capitalized during the year ended March 31, 1997.
See accompanying notes to consolidated financial statements.
F - 24
<PAGE>
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
h) Net loss per share
Net loss per share is based upon the weighted average number
of outstanding common shares during the year. Common Stock
equivalents have been excluded from the computation since the
results would be anti-dilutive.
i) Use of estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported
amounts of assets and liabilities, revenues and expenses, and
disclosure of contingent assets and liabilities at the date of
the financial statements. Actual amounts could differ from
those estimates.
j) Concentration of credit risk
As of March 31, 1997, the Company had cash on deposit with a
financial institution that exceeded the federally insured
limit by $3,047,096.
k) Reclassifications
Certain amounts as of and for the year ended March 31, 1996
have been reclassified for presentation purposes. The
reclassifications have no effect on the Company's financial
position or results of operations as previously reported.
l) New Accounting Pronouncement
In February 1997, the Financial Accounting Standards Board
issued SFAS No. 128, Earnings Per Share ("EPS"). SFAS No. 128
requires all companies to present "basic" EPS and, if they
have a complex capital structure, "diluted" EPS. Under SFAS
No. 128, "basic" EPS is computed by dividing income (adjusted
for any preferred stock dividends) by the weighted average
number of common shares outstanding during the period.
"Diluted" EPS is computed by dividing income (adjusted for any
preferred stock or convertible stock dividends and any
potential income or loss from convertible securities) by the
weighted average number of common shares outstanding during
the period plus the number of additional common shares that
would have been outstanding if any dilutive potential Common
Stock had been issued. The issuance of anti-dilutive potential
Common Stock should not be considered in the calculation. In
addition, SFAS No. 128 requires certain additional disclosures
relating to EPS. SFAS No. 128 is effective for financial
statements issued for periods ending after December 15, 1997.
Thus, the Company expects to adopt the provisions of this
statement in fiscal year 1998. Management does not expect the
adoption of this pronouncement to have significant impact on
the Company's financial statements.
See accompanying notes to consolidated financial statements.
F - 26
<PAGE>
3. CHANGE IN ACCOUNTING PRINCIPLE
During the first quarter of the Company's fiscal year, the Company
changed its method of accounting for the minority shareholders interest
in Playco. The Company changed from one method of accounting which
records the total amount of the net proceeds received from Playco's
equity transactions as the minority interest to a more generally
accepted method which reflects the minority interest as a percentage of
the net assets of Playco. The change in accounting for minority
interest is recorded as a cumulative effect of a change in accounting
principle, which had the effect of reducing minority interest by
$2,413,973, increasing additional paid-in-capital by $2,873,408 and
increasing the net loss for the year ended March 31, 1997 by $459,435.
The consolidated financial statements have not been restated to reflect
this accounting change; however, pro forma information, as if the
change were made retroactively, is shown on the consolidated statement
of operations.
4. EQUIPMENT, IMPROVEMENTS AND FIXTURES, NET
Equipment, improvements and fixtures, net, at March 31, 1997 and 1996
consisted of the following:
<TABLE>
<CAPTION>
1997 1996
--------------- ----------
<S> <C> <C>
Furniture, fixtures and equipment $ 299,692 $ 2,918,621
Leasehold improvements - 542,785
Computerized inventory management system - 484,074
Signs - 265,959
Vehicles - 104,912
299,692 4,316,351
Less accumulated depreciation and amortization (18,481) (2,457,813)
$ 281,211 $ 1,858,538
</TABLE>
Equipment, improvements and fixtures include equipment under capital
leases of $70,665 and no accumulated amortization as of March 31, 1997.
See accompanying notes to consolidated financial statements.
F - 28
<PAGE>
5. INCOME TAXES
The reconciliation of income taxes computed at the federal statutory
tax rate to income tax expense at the effective income tax rate is as
follows:
<TABLE>
<CAPTION>
1997 1996
--------------- ----------
<S> <C> <C>
Federal statutory income tax (benefit) rate (34.0)% (34.0)%
Increases (decreases) resulting from:
Non-deductible expenses 6.7 2.0
Net change in valuation allowance 27.3 32.0
--------------- ---------------
Effective income tax benefit rate -% - %
The income tax effects of significant items comprising the Company's
net deferred income tax assets and liabilities as of March 31, 1997 and
1996 are as follows:
1997 1996
--------------- ----------
Inventories $ - $ (57,883)
AMT tax credits - (23,260)
Accrued expenses - (17,816)
Valuation allowance - 98,959
Current portion of deferred tax liabilities $ - $ -
Depreciation and amortization $ 15,639 $ 246,185
Net operating loss carryforwards (1,192,326) (1,958,123)
Deferred rent liability - (79,447)
Unearned compensation (542,479) -
Valuation allowance 1,719,166 1,791,385
--------------- ----------------
Long-term portion of deferred tax liabilities $ - $ -
</TABLE>
At March 31, 1996, a significant portion of the deferred tax assets and
deferred tax liabilities resulted from Playco. At March 31, 1997, the
deferred tax assets and liabilities result from the Company, Labyrinth
and Mantra. The Company has federal and state NOLs approximating
$3,387,784 and $659,492, respectively. The federal NOL carryforwards
expire between the years 2009 and 2012. The state NOL carryforwards
expire in the year 2002. Utilization of a portion of the NOLs may be
limited on Section 382 of the Internal Revenue Code due to ownership
changes.
At March 31, 1997 and 1996, a 100% valuation allowance has been
provided to reduce the Company's net deferred tax assets for the amount
by which the deferred tax asset related to NOLs exceeded the net
deferred tax liability resulting from all other temporary differences.
The Company has provided the allowance since management could not
determine that it was "more likely than not" that the benefits of the
deferred tax assets would be realized.
See accompanying notes to consolidated financial statements.
F - 30
<PAGE>
6. STOCKHOLDERS' EQUITY
a) Sale of shares
On June 16, 1995, pursuant to an amendment to Form S-8 filed
with the Securities and Exchange Commission (the "SEC"), the
Company terminated its original option to purchase 150,000
shares of Common Stock at $4.25. Such amendment included the
registration of 150,000 and 75,000 new options, respectively,
to the Company's former President and to a former Director at
an exercise price of $1.00 per share. Such shares were granted
on June 2, 1995. During June 1995, all such options were
exercised and the Company received $225,000 as payment for the
56,250 post-split common shares. On the grant date, the
average market value of the Company's shares was approximately
$1.22 per share. Accordingly, the Company has recorded
compensation expense in the amount of $49,500 which represents
the excess of the fair market value over the exercise price of
such options on the grant date.
On August 11, 1995, the Company filed Amendment #2 to Form S-8
clarifying the date of grant with respect to the new 225,000
options registered in Amendment No. 1 to Form S-8.
On August 24, 1995, pursuant to a Form S-8 Registration
Statement filed with the SEC, the Company registered 30,000
post-split common shares underlying options to issue Common
Stock of the Company. In connection therewith, the Company
issued 15,000 shares of Common Stock to two consultants as
consideration for services. On the grant date, the average
market value of the Company's shares was approximately $2.56
per share. Accordingly, the Company recorded consulting
expense in the amount of $153,600 ($2.56 x 60,000 pre-split
common shares) since such consulting contracts expired on
November 8, 1995.
During July 1996, the Company commenced and completed a
private placement of its Common Stock, whereby it offered and
sold 600,000 shares of its Common Stock. The gross proceeds
received from the sale were $1,500,000. Simultaneously,
Labyrinth consummated a private placement of its Common Stock
whereby it sold 79,000 shares for aggregate gross proceeds of
$948,000.
See accompanying notes to consolidated financial statements.
F - 32
6. STOCKHOLDERS' EQUITY (continued)
a) Sale of shares (continued)
In July 1996, pursuant to a Form S-8 Registration Statement filed with the
SEC, the Company registered 3,250,000 shares of Common Stock underlying options
held by the Company's former President. All shares except 1,000,000 have a
restrictive legend. The 3,250,000 options were exercised by the former President
between July 1996 and December 1996 for an aggregate of $3,992,483. On June 16,
1997, the Company filed an amendment to the S-8 registration deregistering the
resale of the remaining 2,250,000 shares.
b) Cancellation of stock subscription receivable
On October 27, 1995, Mister Jay exercised its right pursuant to the terms
of a special warrant and purchased 275,000 pre-split common shares at $2.00 per
share and issued a twelve month promissory note for $550,000 bearing interest at
8% per annum. The note, accrued interest totaling $32,083 and the related shares
of Common Stock were canceled by mutual agreement in July 1996.
7. STOCK OPTIONS
During the year ended March 31, 1997, the Company issued Common Stock
options to its employees and to various consultants performing services for the
Company. Options granted to employees vest over three years, expire five years
from the date of grant and have exercise prices ranging from $2 to $5 per share.
Substantially all options granted to consultants vest immediately, expire five
years from the date of grant and have exercise prices ranging from $2 to $4 per
share. The number of options issued and outstanding at March 31, 1997 are as
follows:
Options outstanding, beginning of period -
Granted 7,441,500
Canceled -
Exercised (3,250,000)
Options outstanding, end of period 4,191,500
Options exercisable, end of period 1,550,000
See accompanying notes to consolidated financial statements.
F - 34
<PAGE>
7. STOCK OPTIONS (continued)
The difference between the exercise price and the fair market value of
the options issued to employees on the dates of grant is accounted for
as unearned compensation and amortized to expense over the related
vesting period. During fiscal 1997, $1,549,453 of unearned compensation
was recorded, of which $271,535 was amortized to expense as of March
31, 1997.
Compensation expense associated with stock options issued to
consultants is measured based on the estimated value of services
received by the Company. During fiscal 1997, $460,000 of compensation
expense was recorded in connection with these stock options.
As discussed in Note 2.f), the Company follows Accounting Principle
Board Opinion No. 25 for measurement and recognition of employee
stock-based transactions. Had the Company elected to adopt the
measurement and recognition provisions of SFAS No. 123, the Company
would have incurred an additional $751,226 in related compensation
expenses. The pro forma net loss under the provisions of SFAS No. 123
is $(4,955,083) and the pro forma net loss per common equivalent share
is $(0.67).
8. COMMITMENTS
a) Operating lease
The Company leases office facilities in San Ramon, California
under a non-cancelable operating lease. The lease requires
minimum monthly payments of $8,916 and expires in August 1999.
At March 31, 1997, aggregate future minimum lease payments due
under this lease are as follows:
Year ending
March 31,
1998 $ 106,987
1999 44,578
Total minimum lease payments $ 151,565
Rent expense related to the operating lease discussed above
was $75,173 for the year ended March 31, 1997.
See accompanying notes to consolidated financial statements.
F - 36
<PAGE>
8. COMMITMENTS (continued)
b) Capital leases
The Company leases various equipment under two non-cancelable
capital leases. Minimum monthly rental payments are $512 and
$2,011, respectively, and the leases expire in January 2000.
Principal payments pursuant to these lease agreements
aggregate $70,665, of which $25,238 is due during the year
ended March 31, 1998. At March 31, 1997, aggregate future
minimum lease payments due under these leases are as follows:
Year ending
March 31,
1998 30,283
1999 30,283
2000 25,235
85,801
Less amounts representing interest (15,136)
$ 70,665
9. RELATED PARTY TRANSACTIONS
a) Employment agreements
The Company has a five-year employment agreement with its
President that provides for an annual salary of $160,000 and
annual increases of 15% per annum. Upon execution of this
agreement, the President was granted an option to purchase
1,500,000 shares of the Company's Common Stock for $2.00 per
share. No such options were exercised as of March 31, 1997.
The agreement provides for a two year non-compete period upon
termination of the President's employment and provides for
severance compensation in the amount of three times the
aggregate annual compensation paid to the President during the
preceding calendar year. The Company's President is also the
President and sole Director of both Labyrinth and Mantra.
See accompanying notes to consolidated financial statements.
F - 38
<PAGE>
9. RELATED PARTY TRANSACTIONS (continued)
a) Employment agreements (continued)
The Company also has three-year employment agreements with its
Chief Technology Officer and General Counsel that provide for
annual salaries of $100,000 and $120,000, respectively. In
addition, an aggregate of 250,000 options to purchase shares
of the Company's Common Stock at $2.00 per share were issued
in connection with these agreements. The options vest equally
over a three-year period and have five-year lives. No such
options were vested or exercised as of March 31, 1997.
On June 1, 1996, the Company's former President entered into a
five-year employment agreement. Pursuant to the employment
agreement, the former President shall not receive
any monetary compensation during the term. As consideration,
the Company's former President was granted stock options to
purchase 1,000,000 shares of Common Stock at $1.00 per share
for five years and 2,250,000 shares of Common Stock at $1.33
per share exercisable until December 31, 1996. As discussed in
Note 6.a) all such options were exercised during fiscal year
1997.
b) Investment in Multimedia Concepts International, Inc.
On June 28, 1996, European Venture Corp. ("EVC"), an affiliate
of the Company's former President, entered into an option to
acquire 3,106,005 shares of the Company's Common Stock for
$1,800,000 or for an exchange for 400,000 shares of Common
Stock of Multimedia Concepts International, Inc. ("MCII"),
which shares shall not be subject to the distribution. During
July 1996, EVC exercised its option and acquired 3,106,005
shares in exchange for 400,000 shares of Common Stock of MCII.
Subsequent to year-end, EVC returned 2,706,006 of the
Company's shares and the Company returned all of the MCII
shares due to a decline in the value of the MCII shares. At
March 31, 1997, the Company has recorded a stock subscription
receivable in the amount of $1,569,483 in connection with the
return of 2,706,006 shares of its Common Stock. Additionally,
the Company has expensed $230,517 in fiscal 1997 for the
shares of Common Stock that were not returned.
See accompanying notes to consolidated financial statements.
F - 40
<PAGE>
Exhibit 10.76
S & S Engineering Agreement
<PAGE>
INDEPENDENT CONTRACTOR/ ENGINEERING AGREEMENT
THIS AGREEMENT is made as of this 17th day of December, 1996,
and is by and between U.S. Wireless Corporation, a Delaware corporation
("Company") with its principal executive offices at 2694 Bishop Drive, San
Ramon, CA 94583 (the "Company"), and S& S Engineering, a Partnership organized
under the laws of the state of Maryland, with its principal executive offices at
14102 Brown Road, Smithburg, MD 21783 ("Contractor").
WITNESSETH:
WHEREAS, the Company wishes to engage the Contractor, and the
Contractor wishes to be so engaged, as engineer, to design and fabricate two
down converters and one synthesizer (collectively referred to as the
"Equipment"), in accordance with the specifications provided for in Appendix A
annexed hereto pursuant to the terms and conditions described herein; and
WHEREAS, the Contractor and the Company shall set forth a production
schedule, whereby the Equipment shall be built, tested and delivered within 135
calendar days of the date hereof.
NOW, THEREFORE, in consideration of the premises, mutual promises,
covenants, terms and conditions contained herein, and other good and valuable
considerations, the receipt and sufficiency of which are acknowledged by the
parties hereto, the parties agree and covenant as follows:
1. Basic Terms of Engagement.
(a) The Company hereby engages the Contractor as its engineer to design and
fabricate two down converters and one synthesizer (collectively referred to as
the "Equipment") in accordance pursuant to the specifications listed in Appendix
A, annexed hereto and made a part hereof, as prototype for the Company to
produce in an efficient and cost effective manner.
(b) The Contractor shall adhere to the following reporting and progress
scheduling:
(i) The preliminary design of the Equipment shall be completed within 3
weeks of the date hereof;
(ii) The fabrication of the initial downconverter shall require
approximately 530 hours and shall be completed within 10 weeks of completion of
item (i) above.
(iii) The fabrication of the synthesizer shall require approximately 410
hours and shall be completed within 8 weeks of completion of item (ii) above.
(iv) The fabrication of the second downconverter shall require
approximately 18 hours and shall be completed within 1 week of completion of
item (iii) above.
<PAGE>
(v) Upon completion of the preliminary design of the equipment, the
Contractor shall provide bi-monthly written reports detailing the progress of
the fabrication of the Equipment. Each report shall provide (i) a detailed
analysis of the stage of production, problems found and possible solutions and
any items which may delay progress (ii) pictures of the work in progress and
(iii) a summary of hours worked and materials (with a cost analysis) used during
the prior two week period.
(c) Payment Schedule
(i) The Contractor shall be paid at an hourly rate of $75 per hour, whereby
the total project cost is estimated at approximately $70,000.
(ii) The Company shall pay to Contractor an advance of $7,500, upon the
signing of this agreement, in order for the Contractor to commence work. This
advance shall be applied to the initial billing of the Contractor.
(iii) the Contractor shall bill the Company on a monthly basis in
accordance with subparagraph 1(b)(v) above, which bill shall be payable upon
receipt.
(d) Work Product. All work product of the Contractor, its employees, agents
or associates, including but not exclusively all intellectual property
developed, pursuant to Contractors engagement by the Company, pursuant to this
Agreement is the sole and exclusive ownership of the Company. In accordance with
instructions by the Company, the Contractor shall, at the sole cost and expense
of the Company, file any intellectual property with the appropriate federal,
state, local or foreign government agency or authority and such application
shall be immediately upon filing be assigned to the Company.
2. Testing and Approval Process.
(a) The Contractor shall provide to the Company reports with
respect to all testing performed and results thereof, in accordance with
subparagraph 1(b)(v) above.
(b) Prior to the completion of any segment referenced in
subparagraphs 1(b)(i) -(iv) above the Company shall be required to approve the
fabricated piece of Equipment, or in the case of the Equipment design the design
itself, prior to the Contractor commencing work on additional pieces of
Equipment. Travel and the time required for Company approvals shall not be
assessed against the productions schedule listed is subparagraph 1(b).
<PAGE>
3. Purchase of Materials and Tools and Testing Equipment.
(a) All materials, tools and testing equipment purchased shall
be the sole property of the Company and all purchases made shall be made on
behalf of the Company.
(b) All tools and testing equipment needed by the Contractor
must be purchased by the Company. The Contractor shall submit a description of
the item required, and proposed place of purchase, whereby the Company shall
purchase the testing equipment and have same delivered to the Contractor, for
use during the term of this project. Upon completion of the testing, the
purchased equipment shall be returned to the Company. In the event that the
Contractor desires to purchase used equipment, the Contractor must obtain
written approval of the Company, prior to the Contractor expending an funds to
purchase said equipment. In the event that the Company approves such purchase,
the Contractor shall provide the Company with the bill of sale, for
reimbursement by the Company.
(c) All raw materials required to build the Equipment, may be
purchased directly by the Contractor, except that any materials purchased in
excess of an aggregate of $7,000 must be pre-approved in writing by the Company.
The Contractor shall submit a detailed breakdown of the materials purchased and
bill of sale with its bi-monthly reports for reimbursement in accordance with
subparagraph 1 (c)(iii) above.
4. Completion Schedule
(a) In the event that the Equipment is fabricated,
successfully tested and approved by the Company within 90 days of the date
hereof, the Company shall pay to the Contractor a bonus of 10% of the time
billed, not to exceed $5,000.
(b) In the event that the Contractor is delayed in fabricating
and testing the Equipment, through no fault of the Company, past the 135 day
schedule period, then the Contractor shall not bill the Company until the
Equipment is completed and tested and with regards to such additional hours
above the stated hours per piece of Equipment as referenced in subparagraphs
1(b)(i) - (iv) above, the Contractor shall bill the Company at $37.50 per hour
thereafter.
5. Contractor's Covenants. The Contractor shall:
(a) Use its best efforts and devote such time as deemed necessary to
complete the design, fabrication and testing of the Equipment in a timely and
efficient manner and use its best efforts to keep to the schedule referenced in
subparagraph 1(b)(i)-(iv) above.
(b) Provide the reports herein required and allow access to the Company and
any of its officers, directors and employees, to review the Contractors records
with respect to this Agreement and to observe and perform its own tests on the
Equipment fabricated.
(c) Maintain records of the design, fabrication and testing of the
Equipment.
(d) Upon completion of the fabrication and testing of the Equipment deliver
the
<PAGE>
Equipment and all records, designs and other documents of a proprietary
nature to the Company, no copies of which should be kept by the Contractor.
Contractor acknowledges that all work product of the Contractor, its employees,
agents or associates pursuant to this Agreement is the sole and exclusive
ownership of the Company.
6. Non-Disclosure. The Contractor shall execute and deliver a
Non-disclosure agreement to the Company in the form annexed hereto as Appendix
B.
7. Expenses. The Company shall not be responsible for any administrative
expenses of the Contractor. Any expenses which the Contractor desires
reimbursement for must be previously approved in writing by the Company. The
Company shall pay all approved expenses for travel and lodging.
8. Termination. The Company may terminate this Agreement at any time upon 2
days prior notice. Upon termination the Contractor shall immediately deliver to
the Company the documents and Equipment as referred to in subparagraph 4(d)
above.
9. Indemnification. The Contractor agrees to indemnify and hold harmless
the Company, its officers, partners, employees, agents, associates and
controlling persons (and the officers, directors, employees, agents, associates
and controlling persons of each of them) from and against any and all injuries
and property damages, and the related liabilities, costs and expenses thereof,
directly caused by the Equipment fabricated by the Contractor, its agents or
employees. This paragraph shall survive termination of this Agreement.
10. Non-Transferability. This Agreement may not be transferred, assigned or
delegated by any of the parties hereto without the prior written consent of the
other party hereto.
11. Independent Contractor Nothing contained in the Agreement shall be
construed to constitute the Contractor as a partner, employee, or agent of the
Company, therefore the Contractor shall not have any authority to bind the
Company, it being intended that the Contractor shall remain an independent
contractor responsible for its own actions.
12. Entire contract. This Agreement and the Appendixes hereto contain the
entire understanding of the parties and supersedes all previous verbal and
written agreements. There are no other agreements, representations, or
warranties not set forth herein.
13. Notices. All notices or other documents under this Agreement shall be
in writing and delivered personally, by facsimile or mailed by overnight mail,
addressed to the Company or the Contractor at the addresses first above written,
on any new address designated in like manner by any party hereto.
14. Nonwaiver. No delay or failure by either party to exercise any right
under this Agreement, and no partial or single exercise of that right, shall
constitute a waiver of that or any other right, unless otherwise expressly
provided herein.
15. Headings. Headings in this Agreement are for convenience only and shall
not be used to interpret or construe its provisions.
<PAGE>
16. Governing law. This Agreement shall be construed in accordance with and
governed by the laws of the State of California.
17. Counterparts. This agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
18. Binding effect. The provisions of this Agreement shall be binding upon
and inure to the benefit of each of the parties and their respective successors
and assigns.
U.S. Wireless Corporation
By: \s\ Dr. Oliver Hilsenrath
Dr. Oliver Hilsenrath
Chief Executive Officer
S&S Engineering,
A Maryland Partnership
By: \s\ Richard Szakonyi
Richard Szakonyi
Partner
<PAGE>
Exhibit 10.77
Amendment to Dr. Hilsenrath's Employment Agreement
<PAGE>
EMPLOYMENT AGREEMENT
As of the 9th day of April 1997, the employment agreement dated 31st
day of July, 1996, by and between Dr. Oliver Hilsenrath, residing at 32 Essex
Court, Alamo CA 94507 (hereinafter referred to as the "Employee") and Labyrinth
Communications Technology Group, Inc. ("Labyrinth"), Mantra Technologies, Inc.
("Mantra") and U.S. Wireless Corporation (formerly American Toys, Inc.), (all of
which are hereinafter collectively referred to as the "Company").
W I T N E S S E T H :
WHEREAS, the Company employs and desires to continue the employment of the
Employee for the purpose of securing to the Company the experience, ability and
services of the Employee; and
WHEREAS, the Employee desires to continue his present employment with the
Company, pursuant to the terms and conditions herein set forth, superseding all
prior agreements between the Company, its subsidiaries and/or predecessors and
Employee; and
NOW, THEREFORE, it is mutually agreed by and between the parties hereto as
follows:
ARTICLE I
EMPLOYMENT
Subject to and upon the terms and conditions of this Agreement, the
Company hereby agrees to continue the employment of the Employee, and the
Employee hereby accepts such continued employment in his capacity as President
and Chief Executive Officer of U.S. Wireless Corporation and acting president
and sole director of Labyrinth and Mantra. In this capacity, Employee will
report to the Board of Directors of each company. It is understood between the
parties that Mantra and Labyrinth, may seek to replace Dr. Hilsenrath as its
chief executive officer as such companies grow to where they require the
individual attention of a chief executive officer, which shall have no affect on
this Agreement.
ARTICLE II
DUTIES
(A) The Employee shall, during the term of his employment with the
Company, and subject to the direction and control of the Company's Boards of
Directors, perform such duties and functions related to his position as he may
be called upon to perform by the Company's Boards of Directors during the term
of this Agreement.
(B) The Employee agrees to devote 100% of his business time and best
efforts to the performance of his duties for the Company and to render such
services as the boards of directors of such companies shall require.
(C) The Employee shall continue to perform, in conjunction with the
Company's senior management, to the best of his ability the following services
and duties for the Company (by way of example, and not by way of limitation):
<PAGE>
(i) Those duties attendant to the position with the Company for which he is
hired;
(ii) Corporate development;
(iii) Formulation of the Company's business plans and implementation of
such plans subject to the direction of the Boards of Directors;
(iv) Promotion of the relationships of the Company and their operations,
including with respect to their respective employees, customers, suppliers and
others in the business community;
(v) Research and development.
(D) Employee shall be based in the San Ramon, California area, and shall
undertake such occasional travel, within or without the United States as is or
may be reasonably necessary in the interests of the Company.
ARTICLE III
COMPENSATION
(A) Commencing with the commencement date of his initial employment,
the Company shall pay to Employee a salary at the rate of $160,000 per annum
until July 31, 1997, thereafter in the event that this Agreement shall be in
effect (payable in equal weekly installments or pursuant to such regular pay
periods adopted by the Company) (the "Base Salary"). Employee's salary shall
increase by 15% per annum commencing August 1, 1997.
(B) The Company shall deduct from Employee's compensation all federal,
state and local taxes which it may now or may hereafter be required to deduct.
ARTICLE IV
BENEFITS
(A) During the term hereof, (i) the Company shall provide Employee
with Blue Cross/Blue Shield or equivalent health insurance benefits and major
medical insurance; (ii) Employee shall be reimbursed by the Company upon
presentation of appropriate vouchers for all business expenses incurred by the
Employee on behalf of the Company; (iii) the Company shall provide the Employee,
if requested, with an automobile suitable for his position and reimburse
reasonable automobile expenses including repairs, maintenance, gasoline charges,
mobile phone, etc. via receipt of expense reports.
(B) In the event the Company wishes to obtain Key Man life insurance on
the life of Employee, Employee agrees to cooperate with the Company in
completing any applications necessary to obtain such insurance and promptly
submit to such physical examinations and furnish such information as any
proposed insurance carrier may request.
<PAGE>
(C) For each year of the term hereof, Employee shall be entitled to 4 weeks
paid vacation. At the option of the Employee, at any time after it has accrued,
he may request that the vacation time be converted into paid salary.
(D) The Company will obtain and maintain during the full term hereof and at
its sole cost and expense a policy of life insurance, on the life of Employee in
the face amount of $1,000,000 payable to a beneficiary named and designated by
Employee. In addition, this policy shall include provisions for the payment of
up to 18 months salary to employee in the event that Employee is disabled. Upon
the conclusion of this agreement, all right, title and interest in the policy
shall be transferred to the Employee, and the Employee shall be responsible for
any premiums due after such transfer.
ARTICLE V
NON-DISCLOSURE
The Employee shall not, at any time during or after the termination of
his employment hereunder except when acting on be half of and with the
authorization of the Company, make use of or disclose to any person,
corporation, or other entity, for any purpose whatsoever, any trade secret or
other confidential information concerning the Company's business, finances,
proposed and current services and pricing, and any information relating to the
Company's business (collectively referred to as the "Proprietary Information").
For the purposes of this Agreement, trade secrets and confidential information
shall mean information disclosed to the Employee or known by him as a
consequence of his employment by the Company, whether or not pursuant to this
Agreement, and not generally known in the industry, concerning the business,
finances, methods, operations, marketing information, pricing and information
relating to proposed expansion of the Company or the Company's business plans.
The Employee acknowledges that trade secrets and other items of confidential
information, as they may exist from time to time, are valuable and unique assets
of the Company, and that disclosure of any such information would cause
substantial injury to the Company. The foregoing is intended to be confirmatory
of the common law of the state of Delaware relating to trade secrets and
confidential information.
ARTICLE VI
RESTRICTIVE COVENANT
(A) In the event of the voluntary termination of employment with the
Company or Employee's discharge in accordance with Article IX or XI paragraph
(A), Employee agrees that he will not, for a period of two years following such
termination, directly or indirectly enter into or become associated with or
engage in any other business (whether as a partner, officer, director,
shareholder, employee, consultant, or otherwise), which business is in
competition with that of the Company, including but not exclusively any business
in the field of wireless communications.
(B) If any court shall hold that the duration of non-competition or
any other restriction contained in this paragraph is unenforceable, it is our
intention that same shall not thereby be terminated but shall be deemed amended
to delete therefrom such provision or portion adjudicated to be invalid or
unenforceable or in the alternative such judicially substituted term may be
substituted therefor.
<PAGE>
ARTICLE VII
TERM
This Agreement shall be for a term of five years commencing on the date of
his initial employment agreement and terminating July 31, 2001, unless sooner
terminated pursuant to the terms hereof.
ARTICLE VIII
PATENTS, COPYRIGHTS AND TRADEMARKS
All research and development which is undertaken by the Company and its
employees as well as all products and services developed therefrom, including
but not exclusively all intellectually property, patentable technology and
products developed by Employee in the field of wireless communications and all
algorythems, software and hardware developed shall be patented, copyrighted and
trademarked, as applicable, as soon as practicable and all patents, copyrights
and trademarks filed shall be accompanied by an assignment to either Labyrinth,
Mantra or U.S. Wireless Corporation as appropriate. The Company shall own
outright all the technology, products and tradenames and trademarks used by the
Company.
ARTICLE IX
TERMINATION OR RESIGNATION
(a) The Company may terminate this Agreement:
(i) Upon the death of Employee during the term hereof, except that the
Employee's legal representatives, successors, assigns and heirs shall have those
rights and interests as other wise provided in this Agreement, including the
right to receive accrued but unpaid bonus and severance compensation, if any.
(ii) Subject to the terms of Article IX herein, upon written notice from
the Company to the Employee, if Employee becomes totally disabled and as a
result of such total disability, has been prevented from and unable to perform
all of his duties hereunder for a consecutive period of four (4) months.
(iii) If the Employee engages in fraud, misappropriation or embezzlement of
Company funds or gross negligence in the performance of his duties.
(iv) If the Employee engages in the misappropriation of corporate
opportunities.
(B) The Employee may only terminate this Agreement:
(i) In the event Employee is totally disabled and as a result
of such total disability, has been prevented from and unable to perform all of
his duties hereunder for a consecutive
period of four (4) months.
(ii) In the event the Employee's duties are inconsistent with
the Employee's position, duties, responsibilities and status with the Company
immediately prior to a change in
<PAGE>
control of the Company; subject to Article XI below.
ARTICLE X
STOCK OPTIONS
As an inducement to Employee to enter into this Agreement the Company
hereby grants to Employee options to purchase shares of the Company's Common
Stock, $.01 par value, upon and subject to the following conditions:
(a) Subject to the terms and conditions of a stock option agreement
the Employee is hereby granted options, to purchase 1,500,000 shares of the U.S.
Wireless Corporation's common stock, all of which options shall be vested and
exercisable as of the date of the Option Agreement, for a term of five years.
The option shall contain such other terms and conditions as set forth in the
stock option agreement. The exercise price of the options shall be $2.00 per
share, subject to adjustment. The foregoing options are intended to qualify as
incentive stock options.
The Options provided for herein are not transferable by Employee and
shall be exercised only by Employee, or by his legal representative or executor,
as provided under the terms of the stock option agreement. Such Option shall
terminate as provided under the terms of the stock option agreement.
ARTICLE XI
SEVERANCE COMPENSATION
The Company's Board of Directors has determined that it is
appropriate to reinforce and encourage the continued attention and dedication of
members of the Company's management, including the Employee, to their assigned
duties without distraction in potentially disturbing circumstances arising from
the possibility of a change in control of the Company.
This Agreement sets forth the severance compensation which the
Company agrees it will pay to the Employee if the Employee's employment with the
Company terminates under one of the circumstances described herein following a
Change in Control of the Company (as defined herein).
l. Term. This Article XI shall terminate, except to the extent
that any obligation of the Company hereunder remains unpaid as of such time,
upon the earliest of (i) the termination of the Employment Agreement including
any renewal period, if a Change in Control of the Company has not occurred
within such two-year period; (ii) the termination of the Employee's employment
with the Company based on death, Disability (as defined in Section 3(b)),
Retirement (as defined in Section 3(c)) or Cause (as defined in Section 3(d)) or
by the Employee other than for Good Reason (as defined in Section 3(e)); and
(iii) one year from the date of a Change in Control of the Company if the
Employee has not terminated his employment for Good Reason as of such time.
2. Change in Control. No compensation shall be payable under this
Article XI unless and until (a) there shall have been a Change in Control of the
Company, while the Employee is still an employee of the Company and (b) the
Employee's employment by the Company thereafter shall have been terminated in
accordance with Section 3. For purposes of this Agreement, a Change in
<PAGE>
Control of the Company shall be deemed to have occurred if (i) there shall
be consummated (x) any consolidation or merger of the Company in which the
Company is not the continuing or surviving corporation or pursuant to which
shares of the Company's Common Stock would be converted into cash, securities or
other property, other than a merger of the Company in which the holders of the
Company's Common Stock immediately prior to the merger have the same
proportionate ownership of common stock of the surviving corporation immediately
after the merger, or (y) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all, or substantially all,
of the assets of the Company, or (ii) the stockholders of the Company approved
any plan or proposal for the liquidation or dissolution of the Company, or (iii)
any person (as such term is used in Sections l3(d) and l4(d)(2) of the
Securities Exchange Act of l934, as amended (the "Exchange Act")), shall become
the beneficial owner (within the meaning of Rule l3d-3 under the Exchange Act)
of 20% or more of the Company's outstanding Common Stock, or (iv) during any
period of two consecutive years, individuals who at the beginning of such period
constitute the entire Board of Directors shall cease for any reason to
constitute a majority thereof unless the election, or the nomination for
election by the Company's stockholders, of each new director was approved by a
vote of at least two-thirds of the directors then still in office who were
directors at the beginning of the period.
3. Termination Following Change in Control.
(a) If a Change in Control of the Company shall have occurred while the
Employee is still an employee of the Company, the Employee shall be entitled to
the compensation provided in Section 4 upon the subsequent termination of the
Employee's employment with the Company by the Employee or by the Company unless
such termination is as a result of (i) the Employee's death; (ii) the Employee's
Disability (as defined in Section 3(b) below); (iii) the Employee's Retirement
(as defined in Section 3(c) below); (iv) the Employee's termination by the
Company for Cause (as defined in Section 3(d) below); or (v) the Employee's
decision to terminate employment other than for Good Reason (as defined in
Section 3(e) below).
(b) Disability. If, as a result of the Employee's incapacity due to
physical or mental illness, the Employee shall have been absent from his duties
with the Company on a full-time basis for six months and within 30 days after
written notice of termination is thereafter given by the Company the Employee
shall not have returned to the full-time performance of the Employee's duties,
the Company may terminate this Agreement for "Disability."
(c) Retirement. The term "Retirement" as used in this Article XX shall mean
termination by the Company or the Employee of the Employee's employment based on
the Employee's having reached age 65 or such other age as shall have been fixed
in any arrangement established with the Employee's consent with respect to the
Executive.
(d) Cause. The Company may terminate the Employee's employment for Cause.
For purposes of this Agreement only, the Company shall have "Cause" to terminate
the Employee's employment hereunder only on the basis of fraud, misappropriation
or embezzlement on the part of the Employee. Notwithstanding the foregoing, the
Employee shall not be deemed to have been terminated for Cause unless and until
there shall have been delivered to the Employee a copy of a resolution duly
adopted by the affirmative vote of not less than three-quarters of the entire
membership of the Company's Board of Directors at a meeting of the Board called
and held for the
<PAGE>
purpose (after reasonable notice to the Employee and an opportunity for the
Employee, together with the Employee's counsel, to be heard before the Board),
finding that in the good faith opinion of the Board the Employee was guilty of
conduct set forth in the second sentence of this Section 3(d) and specifying the
particulars thereof in detail.
(e) Good Reason. The Employee may terminate the Employee's employment for
Good Reason at any time during the term of this Agreement. For purposes of this
Agreement "Good Reason" shall mean any of the following (without the Employee's
express written consent):
(i) the assignment to the Employee by the Company of duties inconsistent
with the Employee's position, duties, responsibilities and status with the
Company immediately prior to a Change in Control of the Company, or a change in
the Employee's titles or offices as in effect immediately prior to a Change in
Control of the Company, or any removal of the Employee from or any failure to
reelect the Employee to any of such position, except in connection with the
termination of his employment for Disability, Retirement or Cause or as a result
of the Employee's death or by the Employee other than for Good Reason;
(ii) a reduction by the Company in the Employee's base salary as in effect
on the date hereof or as the same may be increased from time to time during the
term of this Agreement or the Company's failure to increase (within l2 months of
the Employee's last increase in base salary) the Employee's base salary after a
Change in Control of the Company in an amount which at least equals, on a
percentage basis, the average percentage increase in base salary for all
officers of the Company effected in the preceding l2 months;
(iii) any failure by the Company to continue in effect any benefit plan or
arrangement (including, without limitation, the Company's life insurance and
medical, dental, accident and disability plans) in which the Employee is
participating at the time of a Change in Control of the Company (or any other
plans providing the Employee with substantially similar benefits) (hereinafter
referred to as "Benefit Plans"), or the taking of any action by the Company
which would adversely affect the Employee's participation in or materially
reduce the Employee's benefits under any such Benefit Plan or deprive the
Employee of any material fringe benefit enjoyed by the Employee at the time of a
Change in Control of the Company;
(iv) any failure by the Company to continue in effect any incentive plan or
arrangement (including, without limitation, bonus and contingent bonus
arrangements and credits and the right to receive performance awards and similar
incentive compensation benefits) in which the Employee is participating at the
time of a Change in Control of the Company (or any other plans or arrangements
providing him with substantially similar benefits) (hereinafter referred to as
"Incentive Plans") or the taking of any action by the Company which would
adversely affect the Employee's participation in any such Incentive Plan or
reduce the Employee's benefits under any such Incentive Plan, expressed as a
percentage of his base salary, by more than l0 percentage points in any fiscal
year as compared to the immediately preceding fiscal year;
(v) any failure by the Company to continue in effect any plan or
arrangement to receive securities of the Company (including, without limitation,
the Company's Stock Option Plan, and any other plan or arrangement to receive
and exercise stock options, stock appreciation rights, restricted stock or
grants thereof) in which the Employee is participating at the
<PAGE>
time of a Change in Control of the Company (or plans or arrangements providing
him with substantially similar benefits) (hereinafter referred to as "Securities
Plans") or the taking of any action by the Company which would adversely affect
the Employee's participation in or materially reduce the Employee's benefits
under any such Securities Plan;
(vi) a relocation of the Company's principal executive offices to a
location outside of San Ramon, California, or the Employee's relocation to any
place other than the location at which the Employee performed the Employee's
duties prior to a Change in Control of the Company, except for required travel
by the Employee on the Company's business to an extent substantially consistent
with the Employee's business travel obligations at the time of a Change in
Control of the Company;
(vii) any failure by the Company to provide the Employee with the number of
paid vacation days to which the Employee is entitled at the time of a Change in
Control of the Company;
(viii) any material breach by the Company of any provision of this
Agreement;
(ix) any failure by the Company to obtain the assumption of this Agreement
by any successor or assign of the Company; or
(x) any purported termination of the Employee's employment which is not
effected pursuant to a Notice of Termination satisfying the requirements of
Section 3(f), and for purposes of this Agreement, no such purported termination
shall be effective.
(f) Notice of Termination. Any termination by the Company pursuant to
Section 3(b), 3(c) or 3(d) shall be communicated by a Notice of Termination. For
purposes of this Agreement, a "Notice of Termination" shall mean a written
notice which shall indicate those specific termination provisions in this
Agreement relied upon and which sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Employee's
employment under the provision so indicated. For purposes of this Agreement, no
such purported termination by the Company shall be effective without such Notice
of Termination.
(g) Date of Termination. "Date of Termination" shall mean (a) if this
Agreement is terminated by the Company for Disability, 30 days after Notice of
Termination is given to the Employee (provided that the Employee shall not have
returned to the performance of the Employee's duties on a full-time basis during
such 30-day period) or (b) if the Employee's employment is terminated by the
Company for any other reason, the date on which a Notice of Termination is
given; provided that if within 30 days after any Notice of Termination is given
to the Employee by the Company the Employee notifies the Company that a dispute
exists concerning the termination, the Date of Termination shall be the date the
dispute is finally determined, whether by mutual agreement by the parties or
upon final judgment, order or decree of a court of competent jurisdiction (the
time for appeal therefrom having expired and no appeal having been perfected).
4. Severance Compensation upon Termination of Employment.
<PAGE>
If the Company shall terminate the Employee's employment other than
pursuant to Section 3(b), 3(c) or 3(d) or if the Employee shall terminate his
employment for Good Reason, then the Company shall:
(i) pay to the Employee as severance pay in a lump sum, in cash, on the
fifth day following the Date of Termination, an amount equal to three times the
aggregate annual compensation paid to the Employee during the calendar year
preceding the change in control of the Company by the Company and any of its
subsidiaries subject to United States income taxes; provided, however, that if
the lump sum severance payment under this Section 4, either alone or together
with other payments which the Employee has the right to receive from the
Company, would constitute a "parachute payment" (as defined in Section 280G of
the Internal Revenue Code of l954, as amended (the "Code")), such lump sum
severance payment shall be reduced to the largest amount as will result in no
portion of the lump sum severance payment under this Section 4 being subject to
the excise tax imposed by Section 4999 of the Code. The determination of any
reduction in the lump sum severance payment under this Section 4 pursuant to the
foregoing proviso shall be made by the Employee in good faith, and such
determination shall be conclusive and binding on the Company; and
(ii) within ten days following the Date of Termination, shall cause the
Employee to be relieved of any and all personal guarantees of Company
obligations, and fully pay all outstanding loans and other obligations of the
Company to the Executive. If, for any reason, the Company fails to comply with
its obligations under this subparagraph, the Employee shall have the option, at
his sole discretion, to convert up to the principal amount of such Notes to
shares of the Company's Common Stock at the rate of 50% of the closing bid price
on the such date per share; provided, that the conversion of all or a portion of
any outstanding loans by the Employee shall not relieve the Company of any of
its obligations arising under this subparagraph including the obligations to
repay any unconverted loans and relieve the Employee of any personal guarantees.
5. No Obligation to Mitigate Damages; No Effect on Other Contractual
Rights.
(a) The Employee shall not be required to mitigate damages or the amount of
any payment provided for under this Article XI by seeking other employment or
otherwise, nor shall the amount of any payment provided for under this Article
XI be reduced by any compensation earned by the Employee as the result of
employment by another employer after the Date of Termination, or otherwise.
(b) The provisions of this Article XI, and any payment provided for
hereunder, shall not reduce any amounts otherwise payable, or in any way
diminish the Employee's existing rights, or rights which would accrue solely as
a result of the passage of time, under any Benefit Plan, Incentive Plan or
Securities Plan, employment agreement or other contract, plan or arrangement.
6. Successor to the Company. (a) The Company will require any successor or
assign (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company, by agreement in form and substance satisfactory to the Executive,
expressly, absolutely and unconditionally to assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to
<PAGE>
perform it if no such succession or assignment had taken place. Any failure of
the Company to obtain such agreement prior to the effectiveness of any such
succession or assignment shall be a material breach of this Agreement and shall
entitle the Employee to terminate the Employee's employment for Good Reason. As
used in this Agreement, "Company" shall mean the Company as hereinbefore defined
and any successor or assign to its business and/or assets as aforesaid which
executes and delivers the agreement provided for in this Section 6 or which
otherwise becomes bound by all the terms and provisions of this Agreement by
operation of law. If at any time during the term of this Agreement the Employee
is employed by any corporation a majority of the voting securities of which is
then owned by the Company, "Company" as used in Sections 3 and 4 hereof shall in
addition include such employer. In such event, the Company agrees that it shall
pay or shall cause such employer to pay any amounts owed to the Employee
pursuant to Section 4 hereof.
(b) This Agreement shall inure to the benefit of and be enforceable by the
Employee's personal and legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If the Employee should
die while any amounts are still payable to him hereunder, all such amounts,
unless otherwise provided herein, shall be paid in accordance with the terms of
this Agreement to the Employee's devisee, legatee, or other designee or, if
there be no such designee, to the Employee's estate.
7. Legal Fees and Expenses. The Company shall pay all legal fees and
expenses which the Employee may incur as a result of the Company's contesting
the validity, enforceability or the Employee's interpretation
ARTICLE XII
TERMINATION OF PRIOR AGREEMENTS
This Agreement sets forth the entire agreement between the parties and
supersedes all prior agreements between the parties, whether oral or written,
without prejudice to Employee's right to all accrued compensation prior to the
effective date of this Agreement.
ARTICLE XIII
ARBITRATION
Any dispute arising out of the interpretation, application and/or
performance of this Agreement with the sole exception of any claim, breach or
violation arising under Articles V or VI hereof shall be settled through final
and binding arbitration before a single arbitrator in the City of San Francisco,
the State of California in accordance with the rules of the American Arbitration
Association. The arbitrator shall be selected by the Association and shall be an
attorney at law experienced in the field of corporate law. Any judgment upon any
arbitration award may be entered in any court, federal or state, having
competent jurisdiction of the parties.
ARTICLE XIV
SEVERABILITY
If any provision of this Agreement shall be held invalid and
unenforceable, the remainder of this Agreement shall remain in full force and
effect. If any provision is held invalid or unenforceable with respect to
particular circumstances, it shall remain in full force and effect in
<PAGE>
all other circumstances.
ARTICLE XXV
NOTICE
All notices required to be given under the terms of this Agreement
shall be in writing and shall be deemed to have been duly given only if
delivered to the addressee in person or mailed by certified mail, return receipt
requested, to the address as included in the company's records or to any such
other address as the party to receive the notice shall advise by due notice
given in accordance with this paragraph.
ARTICLE XVI
BENEFIT
This Agreement shall inure to, and shall be binding upon, the parties
hereto, the successors and assigns of the Company, and the heirs and personal
representatives of the Employee.
ARTICLE XVII
WAIVER
The waiver by either party of any breach or violation of any provision
of this Agreement shall not operate or be construed as a waiver of any
subsequent breach of construction and validity.
ARTICLE XVIII
GOVERNING LAW
This Agreement has been negotiated and executed in the State of
California, and Delaware law shall govern its construction and validity.
ARTICLE XIX
JURISDICTION
Any or all actions or proceedings which may be brought by the Company
or Employee under this Agreement shall be brought in courts having a situs
within the State of California and Employee hereby consents to the jurisdiction
of any local, state or federal court located within the State of California.
ARTICLE XX
ENTIRE AGREEMENT
This Agreement contains the entire agreement between the parties
hereto. No change, addition or amendment shall be made hereto, except by written
agreement signed by the parties hereto.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement and affixed
their hands and seals the day and year first above written.
(Corporate Seal)
U.S. Wireless Corporation
By: /s/ Dr. Oliver Hilsenrath
Dr. Oliver Hilsenrath
Chief Executive Officer
By: /s/ Dr. Oliver Hilsenrath
Dr. Oliver Hilsenrath
Chief Executive Officer
<PAGE>
Exhibit 10.78
Employment Agreement with David Klarman
<PAGE>
EMPLOYMENT AGREEMENT
AGREEMENT made as of the 1st day of September, 1996, by and between
David Klarman, an individual who resides at 110 Sunnyhill Drive, East Norwich,
New York 11732 (hereinafter referred to as the "Employee") and U.S. Wireless
Corporation, a Delaware corporation with principal offices located at 2694
Bishop Drive, Suite 213, San Ramon, California 94583 (hereinafter referred to as
the "Company").
W I T N E S S E T H :
WHEREAS, the Company is a public holding company for Labyrinth
Communication Technologies Group, Inc., and Mantra Technologies, Inc. which are
engaged in the wireless communications and software development industries; and
WHEREAS, the Company desires to obtain the services of the Employee to be
General Counsel and Secretary of the Company; and
WHEREAS, Employee would be an executive officer of the Company; and
WHEREAS, Employee acknowledges that all work product, inclusive of all
Intellectual Property developed by the Employee during Employees tenure with the
Company shall be the sole property of the Company; and
WHEREAS, any Intellectual Property (as hereinafter defined) filed with any
federal, state, local or foreign government agency or authority by the Employee,
shall be immediately upon filing assigned to the Company; and
WHEREAS, Employee acknowledges that it has received the handbook of the
parent company, U.S. Wireless Corporation, and agrees to abide by the provisions
therein; and
WHEREAS, the Employee desires to be employed by the Company, pursuant to
the terms and conditions herein set forth, superseding all prior agreements
between the Company and Employee, if any;
NOW, THEREFORE, it is mutually agreed by and between the parties hereto as
follows:
ARTICLE I
EMPLOYMENT
Subject to and upon the terms and conditions of this Agreement, the
Company hereby employs and agrees to commence the employment of the Employee,
and the Employee hereby accepts such employment in his capacity as General
Counsel and Secretary n this capacity, Employee will report directly to the
Chief Executive Officer and President of the Company.
ARTICLE II
DUTIES AND ACKNOWLEDGMENTS
<PAGE>
(A) The Employee shall, during the term of his employment with the Company, and
subject to the direction and control of the Company's Board of Directors,
perform such duties and functions related to his position as he may be called
upon to perform by the Company's Board of Directors during the term of this
Agreement.
(B) The Employee agrees to devote a substantial portion of his normal
business time to the business of the Company. Employee shall use his best
efforts in the performance of his duties for the Company and in rendering such
services for any subsidiary corporations of the Company or Parent of the
Company.
(C) The Employee shall perform, in conjunction with the Company's
Senior Management, to the best of his ability the following services and duties
for the Company and its subsidiary corporations (by way of example, and not by
way of limitation):
(i) Those duties attendant to the position with the Company for which he is
hired;
(ii) Administer all legal affairs of the Company and its subsidiaries,
including all corporate proceeding and agreements; coordinating all outside
counsel activities, strategic alliances and all business; and
(E) Employee acknowledges that all Intellectual Property developed by
the Employee during the Employees tenure with the Company shall be the sole
property of the Company and that any Intellectual Property (as hereinafter
defined) filed by the Employee with any federal, state, city, local or foreign
government agency or authority shall be immediately upon filing assigned to the
Company.
(F) Employee represents that he shall comply with all federal, state
and local securities laws and have prepared and filed with the appropriate
agencies all required filings in a timely and efficient manner. Employee further
agrees to abide by the rules and regulations of the Company and its Parent
company, U.S. Wireless Corporation annexed hereto as Appendix A.
ARTICLE III
COMPENSATION
(A) Commencing with the commencement date hereof, the Company shall pay
to Employee a salary starting at the rate of $120,000 per annum until August 30,
1999 (payable in equal weekly installments or pursuant to such regular pay
periods adopted by the Company) (the "Base Salary"), subject to adjustment by
management and the board of directors.
(B) The Company shall deduct from Employee's compensation all federal,
state and local taxes which it may now or may hereafter be required to deduct.
ARTICLE IV
BENEFITS
(A) During the term hereof, (i) the Company shall provide Employee with
Blue Cross/Blue Shield or equivalent health insurance benefits and major medical
insurance; and (ii)
<PAGE>
Employee shall be reimbursed by the Company upon presentation of appropriate
vouchers for all business expenses incurred by the Employee on behalf of the
Company.
(B) In the event the Company wishes to obtain Key Man life insurance on
the life of Employee, Employee agrees to cooperate with the Company in
completing any applications necessary to obtain such insurance and promptly
submit to such physical examinations and furnish such information as any
proposed insurance carrier may request.
(C) For each year of the term hereof, Employee shall be entitled to
fifteen (15) days paid vacation.
ARTICLE V
NON-DISCLOSURE
The Employee shall not, at any time during or after the termination of
his employment hereunder, except when acting on behalf of and with the
authorization of the Company, make use of or disclose to any person,
corporation, or other entity, for any purpose whatsoever, any trade secret or
other confidential information concerning the Company's business, finances,
proposed and current services and pricing, and any information relating to the
Company's business (collectively referred to as the "Proprietary Information").
For the purposes of this Agreement, trade secrets and confidential information
shall mean information disclosed to the Employee or known by him as a
consequence of his employment by the Company, whether or not pursuant to this
Agreement, and not generally known in the industry, concerning the Company's
Intellectual Property, business, finances, methods, operations, marketing
information, pricing and information relating to proposed expansion of the
Company or the Company's business plans. The Employee acknowledges that trade
secrets and other items of confidential information, as they may exist from time
to time, are valuable and unique assets of the Company, and that disclosure of
any such information would cause substantial injury to the Company. The
foregoing is intended to be confirmatory of the common laws of the states of
California, and Delaware relating to trade secrets and confidential information.
"Intellectual Property" means (a) all inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements thereto,
and all patents, patent applications, and patent disclosures, together with all
reissuances, continuations, continuations- in-part, revisions, extensions, and
reexaminations thereof, (b) all trademarks, service marks, trade dress, logos,
trade names, and corporate names, together with all translations, adaptations,
derivations, and combinations thereof and including all goodwill associated
therewith, and all applications, registrations, and renewals in connection
therewith, (c) all copyrightable works, all copyrights, and all applications,
registrations, and renewals in connection therewith, (d) all mask works and all
applications, registrations, and renewals in connection therewith, (e) all trade
secrets and confidential business information (including ideas, research and
development, know-how, formulas, compositions, manufacturing and production
processes and techniques, technical data, designs, drawings, specifications,
customer and supplier lists, pricing and cost information, and business and
marketing plans and proposals), (f) all computer software (including data and
related documentation), (g) all other proprietary rights, and (h) all copies and
tangible embodiments thereof (in whatever form or medium).
<PAGE>
ARTICLE VI
RESTRICTIVE COVENANT S
(A) In the event of the Employee's termination, whether voluntarily or
for Cause, with the Company, Employee agrees that he will not, for a period of
four years following such termination, directly enter into or become associated
with or engage in any other business (whether as a partner, officer, director,
shareholder, employee, consultant, or otherwise), which business is a direct or
indirect competitor of the Company, or any current or future subsidiary,
associate, affiliate or joint venture partner, which is a direct or indirect
competitor of the Company, or any subsidiary or Parent company.
(B) If any court shall hold that the duration of non-competition or any
other restriction contained in this paragraph is unenforceable, it is our
intention that same shall not thereby be terminated but shall be deemed amended
to delete therefrom such provision or portion adjudicated to be invalid or
unenforceable or in the alternative such judicially substituted term may be
substituted therefor.
(C) Employee agrees that during the term of this Restrictive Covenant,
he will not, directly or indirectly, (a) contact, induce or influence any
customer or clients with respect to the Company's proposed business as described
in (a) above, joint venture partners, employee, consultant, associate or
affiliate of the Company or its or their successors for any reason whatsoever,
without the written consent of the Company, signed by two executive officers;
(b) request or advise any customer, client, joint venture partners, supplier,
manufacturer, employee, consultant, associate or affiliate of the Company or its
or their successors, who may contact or attempt to contact the Employee to
withdraw, curtail or cancel such parties business with the Company or its
successors; (c) disclose to any other person or corporation the name or
addresses of any of the customers, clients, joint venture partners, suppliers,
manufacturers, wireless services providers, employees, consultants, associates
or affiliates of the Company or its or their successors of the Company or its
successors; or (d) induce or encourage any employee to terminate his
relationship with the Company.
ARTICLE VII
OTHER ENGAGEMENTS
Employee shall be permitted to engage in and to be engaged by other
companies, except that the Employee shall not be permitted to be engaged by any
entity which is a direct of the Company or which may require such time
commitments adversely affecting employees performance for the Company. Employee
and the Company acknowledge that the Employee shall run a legal practice within
the offices of the Company.
ARTICLE VIII
TERM
This Agreement shall be for a term commencing on the date first set forth
above and terminating August 30, 1999, unless sooner terminated pursuant to the
terms hereof.
ARTICLE IX
<PAGE>
TERMINATION AND EFFECT THEREOF
(A) The Company may terminate this Agreement:
(i) Upon the death of Employee during the term hereof, except
that the Employee's legal representatives, successors, assigns and heirs shall
have those rights and interests as otherwise provided in this Agreement,
including the right to receive accrued but unpaid bonus compensation, if any.
(ii) Upon written notice from the Company to the Employee, if
Employee becomes totally disabled and as a result of such total disability, has
been prevented from and unable to perform all of his duties hereunder for a
period of four (4) consecutive months.
(iii) If the Employee engages in fraud, misappropriation of
Company funds or gross negligence in the performance of his duties.
(iv) The Company shall have the right to terminate Employee's
employment hereunder for Cause. For purposes of this Agreement, "Cause" means
(a) a breach of the covenants herein, (b) failure to perform his duties in a
professional and competent manner; (c) failure by Employee to substantially
perform his duties or obligations hereunder; (d) Employee engaging in misconduct
which is materially injurious to the Company; (e) Employee engaging in any act
that in any way has a direct, substantial, and adverse effect on the Company's
reputation; (f) Employee committing involving crime of moral turpitude; (g)
Executive's conviction by, or entry of a plea of guilty or nolo contendere in, a
court of competent jurisdiction of a crime constituting a felony.
(B) Upon termination of this Agreement:
(i) Pursuant to subarticles (A)(i), (iii) or (iv) Employee's
employment hereunder and all compensation and benefits payable by the Company
hereunder shall be immediately terminated, and all options shall be terminated;
provided, however, Employee or his estate, as the case may be, shall be entitled
to receive any payments under any applicable life or disability insurance plans.
Such payments, if any, shall be made at the time and in accordance with the
terms and conditions of such plans.
(ii) Pursuant to subarticle (A)(ii) Employee's employment
hereunder shall terminate, all vested options shall continue to be exercisable
for a period of six months thereafter and all non vested options shall
terminate.
ARTICLE X
STOCK OPTIONS
As an inducement to Employee to enter into this Agreement the Company
hereby grants to Employee options to purchase shares of the Company's Common
Stock, $.001 par value per share, upon and subject to the following conditions:
(A) Subject to the terms and conditions of an option agreement, Employee is
hereby
<PAGE>
granted options to purchase 100,000 shares of the common stock of the Company's
Parent company, U.S. Wireless Corporation, a publicly traded company, which
shall vest at the rate of 1/3 per year commencing September 1, 1998. The options
shall be exercisable on the dates of vesting and continuing until August 30,
2001. The exercise price of the options shall be equal to $2.00 per share. The
foregoing options are not intended to qualify as incentive stock options.
(B) The options provided for herein are not transferable by Employee and
shall be exercisable only by Employee, or by his legal representative or
executor.
ARTICLE XI
TERMINATION OF PRIOR AGREEMENTS
This Agreement sets forth the entire agreement between the parties and
supersedes all prior agreements between the parties, whether oral or written,
without prejudice to Employee's right to all accrued compensation prior to the
effective date of this Agreement.
ARTICLE XII
ARBITRATION
Any dispute arising out of the interpretation, application and/or
performance of this Agreement with the sole exception of any claim, breach or
violation arising under Articles V or VI hereof shall be settled through final
and binding arbitration before a single arbitrator in the City of San Ramon, the
State of California in accordance with the rules of the American Arbitration
Association. The arbitrator shall be selected by the Association and shall be an
attorney at law experienced in the field of corporate law. Any judgment upon any
arbitration award may be entered in any court, federal or state, having
competent jurisdiction of the parties.
ARTICLE XIII
SEVERABILITY
If any provision of this Agreement shall be held invalid and
unenforceable, the remainder of this Agreement shall remain in full force and
effect. If any provision is held invalid or unenforceable with respect to
particular circumstances, it shall remain in full force and effect in all other
circumstances.
ARTICLE XIV
NOTICE
All notices required to be given under the terms of this Agreement
shall be in writing and shall be deemed to have been duly given only if
delivered to the addressee in person or mailed by certified mail, return receipt
requested, to the address as included in the Company's records or to any such
other address as the party to receive the notice shall advise by due notice
given in accordance with this paragraph.
ARTICLE XV
BENEFIT
<PAGE>
This Agreement shall inure to, and shall be binding upon, the parties hereto,
the successors and assigns of the Company, and the heirs and personal
representatives of the Employee.
ARTICLE XVI
WAIVER
The waiver by either party of any breach or violation of any provision
of this Agreement shall not operate or be construed as a waiver of any
subsequent breach of construction and validity.
ARTICLE XVII
GOVERNING LAW
This Agreement shall be deemed to be a contract made under the laws of
the State of Delaware and for all purposes shall be construed in accordance with
the laws of such State without giving effect to the rules of said State
governing the conflicts of laws.
ARTICLE XVIII
JURISDICTION
Any or all actions or proceedings which may be brought by the Company
or Employee under this Agreement shall be brought in courts having a situs
within the State of California and Employee hereby consents to the jurisdiction
of any local, state or federal court located within the State of California.
ARTICLE XIX
ENTIRE AGREEMENT
This Agreement contains the entire agreement between the parties
hereto. No change, addition or amendment shall be made hereto, except by written
agreement signed by the parties hereto.
ARTICLE XX
CONSTRUCTION
The parties intend for the provisions of Articles V and VI of this
agreement to be construed, interpreted, and enforced to the maximum extent
permitted by law. The parties acknowledge and agree that they have both
participated in the preparation of this Agreement and it shall not be construed
or interpreted against either party on the basis that it was prepared by such
party. In the event that any provision of Articles V or VI, or part thereof,
shall be determined by any court of competent jurisdiction to be invalid,
illegal, or unenforceable in any respect for any reason, such provision shall be
revised and/or interpreted to make it enforceable to the maximum extent in all
other respects as to which it may be enforceable, all as determined by such
court in such action.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement and
affixed
<PAGE>
their hands and seals the day and year first above written.
U.S. WIRELESS CORPORATION
By: /s/ Dr. Oliver Hilsenrath /s/ David S. Klarman
Dr. Oliver Hilsenrath David S. Klarman
Chief Executive Officer
<PAGE>
Exhibit 10.79
Employment Agreement with Dr. Mati Wax
<PAGE>
EMPLOYMENT AGREEMENT
AGREEMENT made as of the 7th day of July, 1996, by and between Dr.
Mati Wax, an individual who resides at 120 Reflections Drive, San Ramon,
California 94583(hereinafter referred to as the "Employee") and Labyrinth
Communications Technologies, Inc., a Delaware corporation with principal offices
located at 2694 Bishop Drive, Suite 213, San Ramon, California 94583
(hereinafter referred to as the "Company").
W I T N E S S E T H :
WHEREAS, the Company is engaged in the wireless communications industry;
and
WHEREAS, U.S. Wireless Corporation, a Delaware corporation and publicly
traded company, is the parent company of the Company (the "Parent"); and
WHEREAS, the Company desires to obtain the services of the Employee,
initially as a consultant and upon receipt as the required visa (as described
below) to be an officer of the Company; and
WHEREAS, Employee would be the Chief Technology Officer of the Company, an
executive officer position; and
WHEREAS, Employee acknowledges that all work product, inclusive of all
Intellectual Property developed by the Employee during Employees tenure with the
Company shall be the sole property of the Company; and
WHEREAS, any Intellectual Property (as hereinafter defined) filed with any
federal, state, local or foreign government agency or authority by the Employee;
and
WHEREAS, Employee acknowledges that it has received the handbook of the
parent company, U.S. Wireless Corporation, and agrees to abide by the provisions
therein; and
WHEREAS, Employee has applied for an H-1 visa (the "Visa"); and
WHEREAS, Employee has commenced working for the Company as a consultant
prior to the receipt of said Visa; and
WHEREAS, the Employee desires to be employed by the Company, pursuant to
the terms and conditions herein set forth, superseding all prior agreements
between the Company and Employee, if any;
NOW, THEREFORE, it is mutually agreed by and between the parties hereto as
follows:
<PAGE>
ARTICLE I
EMPLOYMENT
Subject to and upon the terms and conditions of this Agreement, the
Company hereby employs and agrees to commence the employment of the Employee,
and the Employee hereby accepts such employment in his capacity, initially as a
consultant, and upon receipt of the Visa, as Chief Technology Officer. As a
consultant, Employee shall function as the Company's Chief Technology Officer.
In this capacity, Employee will report directly to the Chief Executive Officer
and President of the Company.
ARTICLE II
DUTIES AND ACKNOWLEDGMENTS
(A) The Employee shall, during the term of his employment with the
Company, and subject to the direction and control of the Company's Board of
Directors, perform such duties and functions related to his position as he may
be called upon to perform by the Company's Board of Directors during the term of
this Agreement.
(B) The Employee agrees to devote 100% of his normal business time or
such less amount of his business time as shall be agreed upon by the Company and
the Employee. Employee shall use his best efforts in the performance of his
duties for the Company and in rendering such services for any subsidiary
corporations of the Company or Parent of the Company. The Employee shall be able
to engage in consulting work in additions to his obligations hereunder. All
agreement for consulting work must be reviewed by the Company's counsel and
approved by the Company, which approval shall no be unreasonably withheld. The
Employee shall not perform consulting services for any direct or indirect
competitor of the Company. All fees generated by the Employee for consulting
services performed shall be paid to the Company, whereby, the Company shall
disburse 50% directly to the Employee and 50% shall be put into a bonus pool for
the benefit of all the officers of the Company.
(C) The Employee shall perform, in conjunction with the Company's
Senior Management, to the best of his ability the following services and duties
for the Company and its subsidiary corporations (by way of example, and not by
way of limitation):
(i) Those duties attendant to the position with the Company for which he is
hired;
(ii) Development of the Company's advanced radio front-end technology as
well as promotion of the Parent company's technology; and
(iii) Formulation of the Company's business plans with respect to his area
of operations, subject to the direction of the Board of Directors.
<PAGE>
Employee shall apply for an H-1 visa to enable him to work for the
Company.
(E) Employee acknowledges that all Intellectual Property developed by
the Employee during the Employees tenure with the Company shall be the sole
property of the Company and that any Intellectual Property (as hereinafter
defined) filed by the Employee with any federal, state, city, local or foreign
government agency or authority shall be immediately upon filing assigned to the
Company.
(F) Employee represents that he shall comply with all federal, state
and local securities laws and have prepared and filed with the appropriate
agencies all required filings in a timely and efficient manner. Employee further
agrees to abide by the rules and regulations of the Company and its Parent
company, U.S. Wireless Corporation annexed hereto as Appendix A.
ARTICLE III
COMPENSATION
(A) Commencing with the commencement date hereof, the Company shall pay
to Employee a salary at the rate of $100,000 per annum until July 6, 1999
(payable in equal weekly installments or pursuant to such regular pay periods
adopted by the Company) (the "Base Salary").
(B) The Company shall deduct from Employee's compensation all federal,
state and local taxes which it may now or may hereafter be required to deduct.
ARTICLE IV
BENEFITS
(A) During the term hereof, (i) the Company shall provide Employee with
Blue Cross/Blue Shield or equivalent health insurance benefits and major medical
insurance; and (ii) Employee shall be reimbursed by the Company upon
presentation of appropriate vouchers for all business expenses incurred by the
Employee on behalf of the Company.
(B) In the event the Company wishes to obtain Key Man life insurance on
the life of Employee, Employee agrees to cooperate with the Company in
completing any applications necessary to obtain such insurance and promptly
submit to such physical examinations and furnish such information as any
proposed insurance carrier may request.
(C) For each year of the term hereof, Employee shall be entitled to
fifteen (15) days paid vacation.
<PAGE>
ARTICLE V
NON-DISCLOSURE
The Employee shall not, at any time during or after the termination of
his employment hereunder, except when acting on behalf of and with the
authorization of the Company, make use of or disclose to any person,
corporation, or other entity, for any purpose whatsoever, any trade secret or
other confidential information concerning the Company's business, finances,
proposed and current services and pricing, and any information relating to the
Company's business (collectively referred to as the "Proprietary Information").
For the purposes of this Agreement, trade secrets and confidential information
shall mean information disclosed to the Employee or known by him as a
consequence of his employment by the Company, whether or not pursuant to this
Agreement, and not generally known in the industry, concerning the Company's
Intellectual Property, business, finances, methods, operations, marketing
information, pricing and information relating to proposed expansion of the
Company or the Company's business plans. The Employee acknowledges that trade
secrets and other items of confidential information, as they may exist from time
to time, are valuable and unique assets of the Company, and that disclosure of
any such information would cause substantial injury to the Company. The
foregoing is intended to be confirmatory of the common laws of the states of
California, and Delaware relating to trade secrets and confidential information.
"Intellectual Property" means (a) all inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements thereto,
and all patents, patent applications, and patent disclosures, together with all
re-issuances, continuations, continuations- in-part, revisions, extensions, and
reexaminations thereof, (b) all trademarks, service marks, trade dress, logos,
trade names, and corporate names, together with all translations, adaptations,
derivations, and combinations thereof and including all goodwill associated
therewith, and all applications, registrations, and renewals in connection
therewith, (c) all copyrightable works, all copyrights, and all applications,
registrations, and renewals in connection therewith, (d) all mask works and all
applications, registrations, and renewals in connection therewith, (e) all trade
secrets and confidential business information (including ideas, research and
development, know-how, formulas, compositions, manufacturing and production
processes and techniques, technical data, designs, drawings, specifications,
customer and supplier lists, pricing and cost information, and business and
marketing plans and proposals), (f) all computer software (including data and
related documentation), (g) all other proprietary rights, and (h) all copies and
tangible embodiments thereof (in whatever form or medium).
ARTICLE VI
RESTRICTIVE COVENANT S
(A) In the event of the Employee's termination, whether voluntarily or
for Cause, with the Company, Employee agrees that he will not, for a period of
four years following such termination, directly enter into or become associated
with or engage in any other business (whether as a partner, officer, director,
shareholder, employee, consultant, or otherwise),
<PAGE>
which business is a direct or indirect competitor of the Company, or any current
or future subsidiary, associate, affiliate or joint venture partner, which is a
direct or indirect competitor of the Company, or any subsidiary or Parent
company.
(B) If any court shall hold that the duration of non-competition or any
other restriction contained in this paragraph is unenforceable, it is our
intention that same shall not thereby be terminated but shall be deemed amended
to delete therefrom such provision or portion adjudicated to be invalid or
unenforceable or in the alternative such judicially substituted term may be
substituted therefor.
(C) Employee agrees that during the term of this Restrictive Covenant,
he will not, directly or indirectly, (a) contact, induce or influence any
customer or clients with respect to the Company's proposed business as described
in (a) above, joint venture partners, employee, consultant, associate or
affiliate of the Company or its or their successors for any reason whatsoever,
without the written consent of the Company, signed by two executive officers;
(b) request or advise any customer, client, joint venture partners, supplier,
manufacturer, employee, consultant, associate or affiliate of the Company or its
or their successors, who may contact or attempt to contact the Employee to
withdraw, curtail or cancel such parties business with the Company or its
successors; (c) disclose to any other person or corporation the name or
addresses of any of the customers, clients, joint venture partners, suppliers,
manufacturers, wireless services providers, employees, consultants, associates
or affiliates of the Company or its or their successors of the Company or its
successors; or (d) induce or encourage any employee to terminate his
relationship with the Company.
ARTICLE VII
TERM
This Agreement shall be for a term commencing on the first date above,
and shall reflect Employees status as a consultant until such time as Employee
receives the Visa at which time the Employee shall become the Chief Technology
Officer, and terminating July 6, 1999, unless sooner terminated pursuant to the
terms hereof. In the event that no H-1 visa is obtained, this agreement shall be
null and void except with respect to Articles V & VI which shall remain in
effect.
ARTICLE VIII
TERMINATION AND EFFECT THEREOF
(A) The Company may terminate this Agreement:
(i) Upon the death of Employee during the term hereof, except
that the Employee's legal representatives, successors, assigns and heirs shall
have those rights and interests as otherwise provided in this Agreement,
including the right to receive accrued but unpaid bonus compensation, if any.
<PAGE>
(ii) Upon written notice from the Company to the Employee, if
Employee becomes totally disabled and as a result of such total disability, has
been prevented from and unable to perform all of his duties hereunder for a
period of four (4) consecutive months.
(iii) If the Employee engages in fraud, misappropriation of
Company funds or gross negligence in the performance of his duties.
(iv) The Company shall have the right to terminate Employee's
employment hereunder for Cause. For purposes of this Agreement, "Cause" means
(a) a breach of the covenants herein, (b) failure to perform his duties in a
professional and competent manner; (c) failure by Employee to substantially
perform his duties or obligations hereunder; (d) Employee engaging in misconduct
which is materially injurious to the Company; (e) Employee engaging in any act
that in any way has a direct, substantial, and adverse effect on the Company's
reputation; (f) Employee committing involving crime of moral turpitude; (g)
Executive's conviction by, or entry of a plea of guilty or nolo contendere in, a
court of competent jurisdiction of a crime constituting a felony.
(B) Upon termination of this Agreement:
(i) Pursuant to subarticles (A)(i), (iii) or (iv) Employee's
employment hereunder and all compensation and benefits payable by the Company
hereunder shall be immediately terminated, and all options shall be terminated;
provided, however, Employee or his estate, as the case may be, shall be entitled
to receive any payments under any applicable life or disability insurance plans.
Such payments, if any, shall be made at the time and in accordance with the
terms and conditions of such plans.
(ii) Pursuant to subarticle (A)(ii) Employee's employment
hereunder shall terminate, all vested options shall continue to be exercisable
for a period of six months thereafter and all non vested options shall
terminate.
ARTICLE IX
STOCK OPTIONS AND STOCK ISSUANCE OF LABYRINTH
As an inducement to Employee to enter into this Agreement the Company
hereby grants to Employee options to purchase shares of the Company's Common
Stock, $.001 par value per share, upon and subject to the following conditions:
(A) Subject to the terms and conditions of an option agreement,
Employee is hereby granted options to purchase 100,000 shares of the common
stock of the Company's Parent company, U.S. Wireless Corporation, a publicly
traded company, which shall vest at the rate of 1/3 per year commencing July 7,
1997. The options shall be exercisable on the dates of vesting and continuing
until July 6, 2001. The exercise price of the options shall be equal to
<PAGE>
$2.00 per share. The foregoing options are not intended to qualify as
incentive stock options.
(B) The options provided for herein are not transferable by Employee and
shall be exercisable only by Employee, or by his legal representative or
executor.
(C) The Company shall issued 50,000 shares of its Common Stock on the date
hereof, which shares, shall comprise 5% of the Company's outstanding shares as
of the date of issuance. The shares shall be restricted pursuant to a restricted
share agreement, annexed hereto a Appendix B, whereby such shares shall vest at
the rate of 1/3 per year, with the first shares vesting one year from the date
hereof.
ARTICLE X
TERMINATION OF PRIOR AGREEMENTS
This Agreement sets forth the entire agreement between the parties and
supersedes all prior agreements between the parties, whether oral or written,
without prejudice to Employee's right to all accrued compensation prior to the
effective date of this Agreement.
ARTICLE XI
ARBITRATION
Any dispute arising out of the interpretation, application and/or
performance of this Agreement with the sole exception of any claim, breach or
violation arising under Articles V or VI hereof shall be settled through final
and binding arbitration before a single arbitrator in the City of San Ramon, the
State of California in accordance with the rules of the American Arbitration
Association. The arbitrator shall be selected by the Association and shall be an
attorney at law experienced in the field of corporate law. Any judgment upon any
arbitration award may be entered in any court, federal or state, having
competent jurisdiction of the parties.
ARTICLE XII
SEVERABILITY
If any provision of this Agreement shall be held invalid and
unenforceable, the remainder of this Agreement shall remain in full force and
effect. If any provision is held invalid or unenforceable with respect to
particular circumstances, it shall remain in full force and effect in all other
circumstances.
ARTICLE XIII
NOTICE
All notices required to be given under the terms of this Agreement
shall be in writing and shall be deemed to have been duly given only if
delivered to the addressee in person or mailed by certified mail, return receipt
requested, to the address as included in the Company's
<PAGE>
records or to any such other address as the party to receive the notice shall
advise by due notice given in accordance with this paragraph.
ARTICLE XIV
BENEFIT
This Agreement shall inure to, and shall be binding upon, the parties
hereto, the successors and assigns of the Company, and the heirs and personal
representatives of the Employee.
ARTICLE XV
WAIVER
The waiver by either party of any breach or violation of any provision
of this Agreement shall not operate or be construed as a waiver of any
subsequent breach of construction and validity.
ARTICLE XVI
GOVERNING LAW
This Agreement and each Option Certificate issued hereunder shall be
deemed to be a contract made under the laws of the State of Delaware and for all
purposes shall be construed in accordance with the laws of such State without
giving effect to the rules of said State governing the conflicts of laws.
ARTICLE XVII
JURISDICTION
Any or all actions or proceedings which may be brought by the Company
or Employee under this Agreement shall be brought in courts having a situs
within the State of California and Employee hereby consents to the jurisdiction
of any local, state or federal court located within the State of California.
ARTICLE XVIII
ENTIRE AGREEMENT
This Agreement contains the entire agreement between the parties
hereto. No change, addition or amendment shall be made hereto, except by written
agreement signed by the parties hereto.
ARTICLE XIX
CONSTRUCTION
The parties intend for the provisions of Articles V and VI of this
agreement to be
<PAGE>
construed, interpreted, and enforced to the maximum extent permitted by law. The
parties acknowledge and agree that they have both participated in the
preparation of this Agreement and it shall not be construed or interpreted
against either party on the basis that it was prepared by such party. In the
event that any provision of Articles V or VI, or part thereof, shall be
determined by any court of competent jurisdiction to be invalid, illegal, or
unenforceable in any respect for any reason, such provision shall be revised
and/or interpreted to make it enforceable to the maximum extent in all other
respects as to which it may be enforceable, all as determined by such court in
such action.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement and
affixed their hands and seals the day and year first above written.
AGREED AS TO OPTIONS LABYRINTH COMMUNICATIONS
U.S. WIRELESS CORPORATION TECHNOLOGIES GROUP, INC.
By: /s/ Dr. Oliver Hilsenrath By: /s/ Dr. Oliver Hilsenrath
Dr. Oliver Hilsenrath Dr. Oliver Hilsenrath
Chief Executive Officer Chief Executive Officer
EMPLOYEE
/s/ Dr. Mati Wax
Dr. Mati Wax
<PAGE>
Exhibit 10.80
Consulting Agreement with Young Associates
<PAGE>
CONSULTING AGREEMENT
Agreement made as of the 21st day of January, 1997, by and
between Young Associates (Jersey) Limited, a Jersey corporation with offices
located at Piermont House, 33/35 Pier Road, St. Helier, Jersey, JE4 8QP
(referred to as the "Consultant") and U.S. Wireless Corporation, a Delaware
corporation, with its principal executive offices located at 2694 Bishop Drive,
Suite 213, San Ramon California 94583 (the "Corporation").
W I T N E S S E T H :
WHEREAS, the Corporation engaged the Consultant as of September 30, 1996 to
perform certain services for the Corporation, which understanding and agreement
are hereby put into writing; and
WHEREAS, as of September 30, 1996 the Consultant's commences providing
services to the Corporation on a priority basis, and whereby the Corporation
desires to continue its engagement of Consultant; and
WHEREAS, the Corporation desired to assure itself of the availability of
Consultant's services and expertise on a priority basis, and desires to continue
to engage the Consultant to render the services described in Paragraph 3 below
(the "Services"); and
WHEREAS, Consultant has expertise in the field of wireless communications
and is willing to provide such knowledge and expertise to the Corporation in the
form of Services;
WHEREAS, in consideration for the Services the Consultant shall be entitled
to the compensation described in Paragraph 4 below; and
WHEREAS, the Corporation agrees to retain the Consultant and Consultant
agrees to be retained by the Corporation under the terms and conditions set
forth below.
Based upon the foregoing, the parties agree as follows:
1. Appointment. For the term of this Agreement, the Corporation hereby
appoints Consultant as an independent consultant and Consultant hereby accepts
such appointment. The consulting arrangement referred to herein is on a
non-exclusive basis subject to Paragraph 7.
2. Term of Agreement.
a. The term of this Agreement shall commence as of the date
first written above and shall remain in force for a period of two years
therefrom unless earlier terminated pursuant to Subparagraph (b) below. The
Consultant may terminate this agreement upon 10 days notice
<PAGE>
in writing to the Company.
b. The Company may terminate this Agreement:
(i) Upon the death of Consultant during the term hereof.
(ii) Upon written notice from the Company to the Consultant, if Consultant
becomes totally disabled and as a result of such total disability, has been
prevented from and is unable to perform all of his duties hereunder for a period
of two (2) consecutive months.
(iii) If the Consultant engages in fraud, misrepresentation,
misappropriation of Company funds or negligence in the performance of his
duties.
(iv) The Company shall have the right to terminate Consultant's employment
hereunder for Cause. For purposes of this Agreement, "Cause" means (a) a breach
of the covenants herein, (b) failure to perform his duties in a professional and
competent manner; (c) failure by Consultant to substantially perform his duties
or obligations hereunder; (d) Consultant engaging in misconduct which is
materially injurious to the Company; (e) Consultant engaging in any act that in
any way has a direct, substantial, and adverse effect on the Company's
reputation; (f) Consultant committing crimes involving moral turpitude; (g)
Consultant's conviction by, or entry of a plea of guilty or nolo contendere in,
a court of competent jurisdiction of a crime constituting a felony.
c. Any such termination shall be without liability or
continuing obligation to the Corporation or Consultant, other than the
obligation of the Corporation to pay expenses of the Consultant for the period
to the date of termination, in accordance with Paragraph 6 hereof and
Consultants obligation to return to the Corporation any and all confidential
information and any and all other materials of the Corporation including copies
thereof and any materials which Consultant has distributed, for which the return
thereof has been requested. Paragraph 9 (Indemnity) will survive the termination
of this Agreement.
3. Service. During the Term hereof, Consultant shall render the
following services to the Corporation: introducing the Corporation to owners of
Beta sites, facilitating relationships with potential customers and initiating
strategic alliances. Additionally, Consultant may provide investment and
business consulting and advisory services to Client, inclusive of the location,
evaluation, structuring and financing of business activities. It is specifically
understood that Consultant is not required to expend any specific number of
hours in connection with such services. Consultant will not be required to
provide services other than those described above.
<PAGE>
4. Compensation.
a. In consideration for the rendering of the services
referenced hereunder, the Corporation has granted the Consultant an option to
purchase common stock of the Corporation pursuant an Option Agreement annexed
hereto as Appendix A, which shall be exercisable in accordance with its terms.
b. In addition to the Option Agreement in the event the
Consultant is successful in facilitating a relationship between the Company and
a customer or strategic alliance, the Corporation and the Consultant agree to
enter into negotiations on a project by project basis with a view to obtaining
agreement in writing on the formula to be used in the calculation of any success
fee. A success fee will become payable once the Corporation's participation in
any such project is consummated.
5. Relationship. Consultant shall be an independent contractor and not
an employee of the Corporation. The Corporation shall not be responsible to
reimburse the Consultant for any expenses incurred in the performance of its
consulting services except as set forth in Paragraph 8. This Agreement shall not
be construed to create between the Corporation and the Consultant a relationship
of principal, employer and employee, joint ventures, copartners or any other
similar relationship, the existence of which is hereby expressly denied by the
Corporation and the Consultant. Consultant is not an agent for the Corporation,
except as described herein and the Corporation is not an agent for the
Consultant for any purpose whatsoever; and each such party has no right or
authority to assume or create any obligations, express or implied, on behalf or
in the name of the other party.
6. Non-disclosure. The Consultant shall not, at any time during or
after the termination of this agreement except (i) with the prior consent of the
Corporation, or (ii) when acting on behalf of and with the authorization of the
Corporation or (iii) if required to do so by any governmental or regulatory
agency or authority (in which case the Consultant will properly notify the
Corporation in a timely manner to allow the Company to seek injunctive relief),
make use of or disclose to any person, corporation, or other entity, for any
purpose whatsoever, any trade secret or other confidential information (referred
to as the "Proprietary Information"). For the purposes of this Agreement, trade
secrets and confidential information shall mean information disclosed to the
Consultant or known by it as a consequence of its engagement by the Corporation
as a consultant, whether or not pursuant to this Agreement, and not generally
known in the industry, concerning the Corporation's Intellectual Property (as
hereinafter defined), business, finances, methods, operations, marketing
information, pricing and information relating to proposed expansion of the
Corporation or the Corporation's business plans. "Intellectual Property" means
(a) all inventions (whether patentable or unpatentable and whether or not
reduced to practice), all improvements thereto, and all patents, patent
applications, and patent disclosures, together with all re-issuances,
continuations, continuations- in-part, revisions, extensions, and reexaminations
thereof, (b) all trademarks, service marks, trade dress, logos, trade names, and
corporate names, together
<PAGE>
with all translations, adaptations, derivations, and combinations thereof and
including all goodwill associated therewith, and all applications,
registrations, and renewals in connection therewith, (c) all copyrightable
works, all copyrights, and all applications, registrations, and renewals in
connection therewith, (d) all mask works and all applications, registrations,
and renewals in connection therewith, (e) all trade secrets and confidential
business information (including ideas, research and development, know-how,
formulas, compositions, manufacturing and production processes and techniques,
technical data, designs, drawings, specifications, customer and supplier lists,
pricing and cost information, and business and marketing plans and proposals),
(f) all computer software (including data and related documentation), (g) all
other proprietary rights, and (h) all copies and tangible embodiments thereof
(in whatever form or medium).
7. Conflict of Interest.
a. Consultant shall not during the term of this agreement
enter into or engage in any business which is a direct competitor of the
Corporation.
b. In the event that during the term of this Agreement the
Consultant desires to consult with or become engaged by any direct or indirect
competitor of the Corporation, then the Consultant shall give the Corporation 10
days prior written notice of such pending engagement and upon request of the
Corporation return any and all materials supplied by the Corporation to the
consultant together with any copies prepared by the Consultant or distributed by
the Consultant, except as may be specifically exempted in writing by the
Corporation.
c. If any court shall hold that the duration of
non-competition or any other restriction contained in this Paragraph 7 is
unenforceable, it is our intention that same shall not thereby be terminated but
shall be deemed amended to delete therefrom such provision or portion
adjudicated to be invalid or unenforceable or in the alternative such judicially
substituted term may be substituted therefore.
d. Without prejudice to its obligations under sub-paragraph (a) above, if
the Consultant may at any time have an interest in, or conflict of duty in
relation to, any transaction or matter which is the subject of services provided
to the Corporation. The Corporation acknowledges that this may be the case and
the Consultant agrees to notify the Corporation prior to such interest or
conflict arising.
8. Expenses. During the term of this Agreement, Consultant shall be
entitled to receive reimbursement for business expenses incurred by it (in
accordance with the policies and procedures from time to time adopted by the
Board of Directors of the Corporation and notified in writing to the Consultant)
in performing services hereunder, provided that Consultant properly accounts
therefore in accordance with such policy and procedures and provided that such
expenses have been specifically approved in advance in writing by the
<PAGE>
Corporation.
9. Trading of the Corporation's Securities. Consultant represents that
he shall comply with all federal, state and local securities laws and have
prepared and filed with the appropriate agencies all required filings in a
timely and efficient manner. Consultant further agrees to abide by the Corporate
guidelines of the Corporation annexed hereto as Appendix B.
10. Indemnity. The Corporation hereby indemnifies and holds harmless the
Consultant, its directors, officers and employees and of each of them
("indemnified persons"), from and against any and all losses, claims, demands,
damages, costs, charges, expenses and liabilities and actions, proceedings and
investigations in respect thereof ("claims") which any indemnified person may
suffer or incur or which may be made by the Corporation or any third party
against any indemnified person relating to or arising out of the Consultant's
appointment hereunder. The Corporation will not be required to indemnify or be
liable hereunder for claims by an indemnified person resulting from bad faith or
gross negligence of the indemnified person or the Consultant. In addition, the
Consultant shall not be indemnified for breaches of any of the terms of this
Agreement.
11. No Waiver. No delay or omission on the part of either party in
exercising any right hereunder shall operate as a waiver of such right or of any
other right of such party, nor shall any delay, omission or waiver on any one
occasion be deemed a bar to or waiver of the same or any other right on any
future occasion.
12. Assignability. This agreement is not assignable by the Corporation
without the prior written consent of the Consultant. This Agreement is not
assignable by the Consultant without the express written consent of the
Corporation. Notwithstanding the foregoing, this Agreement shall bind any
successor or assign of either party.
13. Entire Agreement. This Agreement sets forth the entire agreement
between the parties with respect to the subject matter hereof, superseding all
prior understandings and agreements whether written or oral. This Agreement may
not be amended, revised or terminated except by a writing signed by both
parties.
14. Default. In the event that either party shall fail to conform to the
terms of this Agreement, the other party shall reimburse the damaged party for
any expenses, including reasonable attorney's fees, which may be incurred by
such party in attempting to collect any obligation, or to enforce obligations
under this Agreement.
15. Governing Law, etc. This Agreement and all rights and obligations
hereunder, including matters of construction, validity and performance, shall be
governed by the laws of the State of Delaware applicable to contracts made and
performed entirely within the State of Delaware without regard to conflicts of
laws rules applied in the States of California.
<PAGE>
16. Notices. All notices, requests, demands and other communications
provided for by this Agreement shall be in writing and shall be personally
delivered or sent by certified or registered mail postage and fees prepaid or by
overnight courier, to the other party at the address mentioned in the preamble
of this Agreement. Any party may designate a different address for the purpose
of the service of notice hereunder by giving notice thereof in accordance with
the provisions of this Paragraph 16.
17. Captions. Captions herein have been inserted solely for convenience of
reference and in no way define, limit or describe the scope or substance of any
provision of this Agreement.
18. Severability. The provisions of this Agreement are severable, and
invalidity of any provision shall not affect the validity of any other provision
unless the invalidity impairs materially the benefits of the contract to either
party. In the event that any court of competent jurisdiction shall determine
that any provision of this Agreement or the application thereof is unenforceable
in whole or in part because of the duration and scope thereof, the parties
hereto agree that said court in making such determination shall have the power
to reduce the duration and scope of such provision to the extent necessary to
make it enforceable, and that the Agreement in its reduced form shall be valid
and enforceable to the full extent permitted by law.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
and affixed their hands and seals the day and year first above written,
Young Associates (Jersey)Limited U.S. Wireless Corporation
By: /s/Young Associates (Jersey) Limited By: /s/ Dr. Oliver Hilsenrath
Young Associates (Jersey) Limited Dr. Oliver Hilsenrath
Chief Executive Officer
<PAGE>
Exhibit 10.81
Consulting Agreement with Dennis Frances
<PAGE>
CONSULTING AGREEMENT
Agreement made as of the 9th day of December, 1996, by and
between Dennis Francis, residing at 3204 Cardinal Ridge Drive, Greensboro, North
Carolina 27410 (referred to as the "Consultant") and Labyrinth Communication
Technologies, Inc., a Delaware corporation, with its principal executive offices
located at 2694 Bishop Drive, San Ramon California 94583 (the "Corporation").
W I T N E S S E T H :
WHEREAS, the Corporation desires to assure itself of the availability of
Consultant's services and technical expertise on a priority basis, and desires
to engage Consultant to render services in the development and testing of its
FlyBeam product; and
WHEREAS, the Corporation is a majority owned subsidiary of U.S. Wireless
Corporation (the "Parent"); and
WHEREAS, as compensation for the services rendered the Consultant shall be
granted an option to purchase 50,000 shares of the Parent's common stock at
$4.00 per share, exercisable for a period of five years from the date hereof;
and
WHEREAS, the Corporation agrees to retain the Consultant and Consultant
agrees to be retained by the Corporation under the terms and conditions set
forth below.
Based upon the foregoing, the parties agree as follows:
1. Appointment.
For the term of this Agreement, the Corporation hereby retains
Consultant as an independent consultant and Consultant hereby accept such
retention. The consulting arrangement referred to herein is on a non-exclusive
basis subject to Paragraph 3.
2. Term of Agreement.
The term of this Agreement shall commence as of the date first
written above and shall remain in force for a period of three(3) years therefrom
subject to sooner termination at the discretion of the Corporation. The
Corporation may terminate this agreement upon 10 days notice to the Consultant.
3. Service.
During the Term hereof, Consultant shall render services in
providing technical assistance in the development and testing of the
Corporation's FlyBeam. Consultant shall
<PAGE>
provide these services to the Corporation during the Term of this Agreement. It
is specifically understood that Consultant is not required to expend any
specific number of hours in connection with such services. The Corporation
understands that the Consultant is a full-time employee of Vanguard Cellular
Financial Corp. ("VCFC") and that the services rendered by Consultant to the
Corporation will not interfere or conflict with Consultant's performance of his
duties as an employee of VCFC.
4. Compensation.
For services hereunder, the Corporation shall grant to
Consultant an option to purchase shares of the Parent's common stock, $.001 par
value per share, at $4.00 per share, upon to the following conditions, which are
subject to the terms and conditions of an option agreement, annexed hereto and
made a part hereof as Appendix A:
a. Consultant shall be granted an option to purchase up to an aggregate of
50,000 shares of the Parent's common stock, which shall be vested and
exercisable as of the date hereof.
b. The options shall be exercisable for a period of five years from the
date hereof. The options are not intended to qualify as incentive stock options.
c. The options provided for herein are not transferable by Consultant and
shall be exercisable only by Consultant, or by his legal representative or
executor.
d. The Consultant agrees that any shares purchased pursuant to the exercise
of the option, in whole or part, shall be subject to a lock-up restriction
against the resale of such shares, which restriction shall commence on the date
hereof and continue for a period of two year hereafter. No shares purchased
shall be eligible for resale during the two year restrictive period.
5. Relationship.
Consultant shall be an independent contractor and not an employee of the
Corporation. The Corporation shall not be responsible to reimburse the
Consultant for any fees, costs or expenses incurred in the performance of his
consulting services except as set forth in Paragraph 7. This Agreement shall not
be construed to create between the Corporation and Consultant the relationship
of principal, employer and employee, joint venturers, copartners or any other
similar relationship, the existence of which is hereby expressly denied by the
Corporation and the Consultant. Consultant is not an agent for the Corporation,
except as described herein and the Corporation is not an agent for the
Consultant for any purpose whatsoever; and each such party has no right or
authority to assume or create any obligations, express or implied, on behalf of
or in the name of the other party.
<PAGE>
6. Non-disclosure; Disclosure of Potential Conflicts.
a. The Consultant shall not, at any time during or after the
termination of this agreement except when acting on behalf of and with the
authorization of the Corporation, make use of or disclose to any person,
corporation, or other entity, for any purpose whatsoever, any trade secret or
other confidential information concerning the Corporation's business, finances,
proposed and current services and pricing, and any information relating to the
Corporation's business (collectively referred to as the "Proprietary
Information"). For the purposes of this Agreement, trade secrets and
confidential information shall mean information disclosed to the Consultant or
known by him as a consequence of his engagement by the Corporation as a
consultant, whether or not pursuant to this Agreement, and not generally known
in the industry, concerning the Corporation's Intellectual Property (as
hereinafter defined), business, finances, methods, operations, marketing
information, pricing and information relating to proposed expansion of the
Corporation or the Corporation's business plans. The Consultant acknowledges
that such Proprietary Information, as may exist from time to time, is valuable
and unique assets of the Corporation, and that disclosure of any such
information would cause substantial injury to the Corporation. The foregoing is
intended to be confirmatory of the common laws of the states of California, and
Delaware relating to trade secrets and confidential information. "Intellectual
Property" means (a) all inventions (whether patentable or unpatentable and
whether or not reduced to practice), all improvements thereto, and all patents,
patent applications, and patent disclosures, together with all re-issuances,
continuations, continuations- in-part, revisions, extensions, and reexaminations
thereof, (b) all trademarks, service marks, trade dress, logos, trade names, and
corporate names, together with all translations, adaptations, derivations, and
combinations thereof and including all goodwill associated therewith, and all
applications, registrations, and renewals in connection therewith, (c) all
copyrightable works, all copyrights, and all applications, registrations, and
renewals in connection therewith, (d) all mask works and all applications,
registrations, and renewals in connection therewith, (e) all trade secrets and
confidential business information (including ideas, research and development,
know-how, formulas, compositions, manufacturing and production processes and
techniques, technical data, designs, drawings, specifications, customer and
supplier lists, pricing and cost information, and business and marketing plans
and proposals), (f) all computer software (including data and related
documentation), (g) all other proprietary rights, and (h) all copies and
tangible embodiments thereof (in whatever form or medium).
b. In the event that the Consultant desires to consult with or
become engaged by any indirect or direct competitor of the Corporation, then the
consultant shall give the Corporation 10 days prior written notice of such
pending engagement and upon request of the Corporation return any and all
materials supplied by the Corporation to the Consultant together with any copies
prepared by Consultant or distributed by the Consultant, except as may be
specifically exempted in writing by the Corporation.
7. Expenses. During the Term, Consultant shall be entitled to receive
<PAGE>
reimbursement for business expenses incurred by him (in accordance with the
Corporation's policies and procedures from time to time adopted by the Board of
Directors of the Corporation) in performing services hereunder, provided that
Consultant properly accounts therefor in accordance with such policy and
procedures and provided that such expenses have been specifically approved, in
advance, in writing by the Corporation.
8. Trading of the Corporation's Securities. Consultant represents that he
shall comply with all federal, state and local securities laws and have prepared
and filed with the appropriate agencies all required filings in a timely and
efficient manner. Consultant further agrees to abide by the rules and
regulations of the Parent annexed hereto as Appendix B.
9. No Waiver. No delay or omission on the part of the Corporation in
exercising any right hereunder shall operate as a waiver of such right or of any
other right of the Corporation, nor shall any delay, omission or waiver on any
one occasion be deemed a bar to or waiver of the same or any other right on any
future occasion.
10. Assignability. This agreement is not assignable by the Corporation
without the prior written consent of the Consultant. This Agreement is not
assignable by the Consultant without the express written consent of the
Corporation. Notwithstanding the foregoing, this Agreement shall bind any
successor or assign of either party.
11. Entire Agreement. This Agreement sets forth the entire agreement
between the parties with respect to the subject matter hereof, superseding all
prior understandings and agreements whether written or oral. This Agreement may
not be amended, revised or terminated except by a writing signed by both
parties.
12. Default. In the event that either party shall fail to conform to the
terms of this Agreement, the other party shall reimburse the damaged party for
any expenses, including reasonable attorney's fees, which may be incurred by
such party in attempting to collect any obligation, or to enforce obligations
under this Agreement.
13. VCFC Acceptance; No-raid. VCFC hereby permits the Consultant to enter
in to this Consulting Agreement with the Corporation. The Corporation shall not
offer Consultant employment with the Corporation for the lesser of three years
from the date of this Consulting Agreement and 12 months from the termination of
Consultant's employment with VCFC. The Corporation shall not offer employment to
any employee of VCFC, which employee has been introduced to the Corporation by
the Consultant or other employee of VCFC. VCFC is a third party beneficiary with
respect to the provisions of this paragraph.
14. Governing Law, etc. This Agreement and all rights and obligations
hereunder, including matters of construction, validity and performance, shall be
governed by the laws of the State of Delaware applicable to contracts made and
performed entirely within the State of Delaware without regard to conflicts of
laws rules applied in the State of California.
<PAGE>
15. Notices. All notices, requests, demands and other communications
provided for by this Agreement shall be in writing and shall be personally
delivered or sent by certified or registered mail postage and fees prepaid or by
overnight courier, to the other party at the address mentioned in the preamble
of this Agreement. Any party may designate a different address for the purpose
of the service of notice hereunder by giving notice thereof in accordance with
the provisions of this Paragraph 15.
16. Captions. Captions herein have been inserted solely for convenience of
reference and in no way define, limit or describe the scope or substance of any
provision of this Agreement.
17. Severability. The provisions of this Agreement are severable, and
invalidity of any provision shall not affect the validity of any other provision
unless the invalidity impairs materially the benefits of the contract to either
party. In the even that any court of competent jurisdiction shall determine that
any provision of this Agreement or the application thereof is unenforceable in
whole or in part because of the duration and scope thereof, the parties hereto
agree that said court in making such determination shall have the power to
reduce the duration and scope of such provision to the extent necessary to make
it enforceable, and that the Agreement in its reduced form shall be valid and
enforceable to the full extent permitted by law.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
and affixed their hands and seals the day and year first above written.
Agreed and Acknowledged
as to the Options:
Labyrinth Communication
U.S. Wireless Corporation Technologies Group, Inc.
By: /s/ Dr. Oliver Hilsenrath By: /s/ Dr. Oliver Hilsenrath
Dr. Oliver Hilsenrath Dr. Oliver Hilsenrath
Chief Executive Officer Chief Executive Officer
Agreed and Acknowledged as to Paragraph 13 only.
Vanguard Cellular Financial Corp. Consultant
By: /s/ Vanguard Cellular Financial Corp. /s/ Dennis Francis
Vanguard Cellular Financial Corp. Dennis Francis
<PAGE>
Exhibit 10.82
Consulting Agreement with Spencer Corporation
<PAGE>
CONSULTING AGREEMENT
Agreement made as of the 29th day of January, 1997, by and
between Spencer Corporation, a Liberian corporation, with its principal
executive offices located at 116 Altlandstrasse, Zollikon, Switzerland(referred
to herein as the "Consultant") and U.S. Wireless Corporation, a Delaware
corporation, with its principal executive offices located at 2694 Bishop Drive,
San Ramon California 94583 (the "Corporation").
W I T N E S S E T H :
WHEREAS, the Corporation desires to assure itself of the availability of
Consultant's services and expertise on a priority basis, and desires to engage
Consultant to render services making introductions for the Corporation, and its
subsidiaries to facilitate relationships with potential customers and initiating
strategic alliances; and
WHEREAS, Consultant may provide investment and business consulting and
advisory services to the Corporation, inclusive of the location, evaluation,
structuring and financing of business activities; and
WHEREAS, the Corporation is the parent company of Labyrinth Communications
Technology Group, Inc. and Mantra Technologies, Inc. (the "Subsidiaries"); and
WHEREAS, as compensation for the services rendered the Consultant shall be
granted an option to purchase 100,000 shares of the Corporation's Common stock
at $2.50 per share, exerciseable for the period specified in the Option
Agreement; and
WHEREAS, the Corporation agrees to retain the Consultant and Consultant
agrees to be retained by the Corporation under the terms and conditions set
forth below.
Based upon the foregoing, the parties agree as follows:
1. Appointment.
For the term of this Agreement, the Corporation hereby retains
Consultant as an independent consultant and Consultant hereby accept such
retention. The consulting arrangement referred to herein is on a non-exclusive
basis subject to Paragraph 3.
2. Term of Agreement.
The term of this Agreement shall commence as of the date first
written above and shall remain in force for a period of two (2) years therefrom
subject to sooner termination at the discretion of the Corporation. The
Corporation may terminate this agreement upon 10
<PAGE>
days notice to the Consultant.
3. Service.
During the Term hereof, Consultant shall render services in
introducing the Subsidiaries to potential customer and facilitating
relationships with such companies, initiating strategic alliances and joint
ventures, as well as providing investment and business consulting and advisory
services to the Corporation, inclusive of the location, evaluation, structuring
and financing of business activities. Consultant shall provide these services to
the Corporation and its Subsidiaries during the Term of this Agreement. It is
specifically understood that Consultant is not required to expend any specific
number of hours in connection with such services.
4. Compensation.
For services hereunder, the Corporation shall grant to
Consultant an option to purchase shares of the Corporation's Common Stock, $.001
par value per share, at $2.50 per share, upon to the following conditions, which
are subject to the terms and conditions of an option agreement, annexed hereto
and made a part hereof as Appendix A:
a. Consultant shall be granted an option to purchase up to an aggregate of
100,000 shares of the Corporation's common stock, which shall be vested and
exercisable as of the date hereof.
b. The options shall be exercisable upon issuance and until September 30,
2001. The options are not intended to qualify as incentive stock options.
c. The options provided for herein are not transferable by Consultant and
shall be exercisable only by Consultant, or by his legal representative or
executor.
d. The Consultant agrees that any shares purchased pursuant to the exercise
of the option, in whole or part, shall be subject to a lock-up restriction
against the resale of such shares prior to September 30, 1998. No shares
purchased shall be eligible for resale during the restrictive period.
5. Relationship.
Consultant shall be an independent contractor and not an employee of the
Corporation. The Corporation shall not be responsible to reimburse the
Consultant for any fees, costs or expenses incurred in the performance of his
consulting services except as set forth in Paragraph 7. This Agreement shall not
be construed to create between the Corporation and Consultant the relationship
of principal, employer and employee, joint venturers, copartners or any other
similar relationship, the existence of which is hereby expressly denied by the
Corporation and the Consultant. Consultant is not an agent for the Corporation,
except as
<PAGE>
described herein and the Corporation is not an agent for the Consultant for any
purpose whatsoever; and each such party has no right or authority to assume or
create any obligations, express or implied, on behalf of or in the name of the
other party.
6. Non-disclosure; Disclosure of Potential Conflicts.
a. The Consultant shall not, at any time during or after the
termination of this agreement except when acting on behalf of and with the
authorization of the Corporation, make use of or disclose to any person,
corporation, or other entity, for any purpose whatsoever, any trade secret or
other confidential information concerning the Corporation's business, finances,
proposed and current services and pricing, and any information relating to the
Corporation's business (collectively referred to as the "Proprietary
Information"). For the purposes of this Agreement, trade secrets and
confidential information shall mean information disclosed to the Consultant or
known by him as a consequence of his engagement by the Corporation as a
consultant, whether or not pursuant to this Agreement, and not generally known
in the industry, concerning the Corporation's Intellectual Property (as
hereinafter defined), business, finances, methods, operations, marketing
information, pricing and information relating to proposed expansion of the
Corporation or the Corporation's business plans. The Consultant acknowledges
that such Proprietary Information, as may exist from time to time, is valuable
and unique assets of the Corporation, and that disclosure of any such
information would cause substantial injury to the Corporation. The foregoing is
intended to be confirmatory of the common laws of the states of California, and
Delaware relating to trade secrets and confidential information. "Intellectual
Property" means (a) all inventions (whether patentable or unpatentable and
whether or not reduced to practice), all improvements thereto, and all patents,
patent applications, and patent disclosures, together with all re-issuances,
continuations, continuations- in-part, revisions, extensions, and reexaminations
thereof, (b) all trademarks, service marks, trade dress, logos, trade names, and
corporate names, together with all translations, adaptations, derivations, and
combinations thereof and including all goodwill associated therewith, and all
applications, registrations, and renewals in connection therewith, (c) all
copyrightable works, all copyrights, and all applications, registrations, and
renewals in connection therewith, (d) all mask works and all applications,
registrations, and renewals in connection therewith, (e) all trade secrets and
confidential business information (including ideas, research and development,
know-how, formulas, compositions, manufacturing and production processes and
techniques, technical data, designs, drawings, specifications, customer and
supplier lists, pricing and cost information, and business and marketing plans
and proposals), (f) all computer software (including data and related
documentation), (g) all other proprietary rights, and (h) all copies and
tangible embodiments thereof (in whatever form or medium).
b. In the event that the Consultant desires to consult with or
become engaged by any indirect or direct competitor of the Corporation, then the
consultant shall give the Corporation 10 days prior written notice of such
pending engagement and upon request of the Corporation return any and all
materials supplied by the Corporation to the Consultant
<PAGE>
together with any copies prepared by Consultant or distributed by the
Consultant, except as may be specifically exempted in writing by the
Corporation.
7. Expenses. During the Term, Consultant shall be entitled to receive
reimbursement for business expenses incurred by him (in accordance with the
Corporation's policies and procedures from time to time adopted by the Board of
Directors of the Corporation) in performing services hereunder, provided that
Consultant properly accounts therefor in accordance with such policy and
procedures and provided that such expenses have been specifically approved, in
advance, in writing by the Corporation.
8. Trading of the Corporation's Securities. Consultant represents that he
shall comply with all federal, state and local securities laws and have prepared
and filed with the appropriate agencies all required filings in a timely and
efficient manner. Consultant further agrees to abide by the rules and
regulations of the Parent annexed hereto as Appendix B.
9. No Waiver. No delay or omission on the part of the Corporation in
exercising any right hereunder shall operate as a waiver of such right or of any
other right of the Corporation, nor shall any delay, omission or waiver on any
one occasion be deemed a bar to or waiver of the same or any other right on any
future occasion.
10. Assignability. This agreement is not assignable by the Corporation
without the prior written consent of the Consultant. This Agreement is not
assignable by the Consultant without the express written consent of the
Corporation. Notwithstanding the foregoing, this Agreement shall bind any
successor or assign of either party.
11. Entire Agreement. This Agreement sets forth the entire agreement
between the parties with respect to the subject matter hereof, superseding all
prior understandings and agreements whether written or oral. This Agreement may
not be amended, revised or terminated except by a writing signed by both
parties.
12. Default. In the event that either party shall fail to conform to the
terms of this Agreement, the other party shall reimburse the damaged party for
any expenses, including reasonable attorney's fees, which may be incurred by
such party in attempting to collect any obligation, or to enforce obligations
under this Agreement.
13. Governing Law, etc. This Agreement and all rights and obligations
hereunder, including matters of construction, validity and performance, shall be
governed by the laws of the State of Delaware applicable to contracts made and
performed entirely within the State of Delaware without regard to conflicts of
laws rules applied in the State of California.
14. Notices. All notices, requests, demands and other communications
provided for by this Agreement shall be in writing and shall be personally
delivered or sent by certified or registered mail postage and fees prepaid or by
overnight courier, to the other party at the
<PAGE>
address mentioned in the preamble of this Agreement. Any party may designate a
different address for the purpose of the service of notice hereunder by giving
notice thereof in accordance with the provisions of this Paragraph 14.
16. Captions. Captions herein have been inserted solely for convenience of
reference and in no way define, limit or describe the scope or substance of any
provision of this Agreement.
17. Severability. The provisions of this Agreement are severable, and
invalidity of any provision shall not affect the validity of any other provision
unless the invalidity impairs materially the benefits of the contract to either
party. In the even that any court of competent jurisdiction shall determine that
any provision of this Agreement or the application thereof is unenforceable in
whole or in part because of the duration and scope thereof, the parties hereto
agree that said court in making such determination shall have the power to
reduce the duration and scope of such provision to the extent necessary to make
it enforceable, and that the Agreement in its reduced form shall be valid and
enforceable to the full extent permitted by law.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
and affixed their hands and seals the day and year first above written.
U.S. Wireless Corporation
By: /s/ Dr. Oliver Hilsenrath
Dr. Oliver Hilsenrath
Chief Executive Officer
Spencer Corporation
/s/ Spencer Corporation
Spencer Corporation
<PAGE>
Exhibit 10.83
Consulting Agreement with Ryburn Limited
<PAGE>
CONSULTING AGREEMENT
Agreement dated as of the 1st day of January, 1997, by and between Ryburn
Limited, a British Virgin Islands corporation, with administrative offices
located at P.O. Box 316, Jardine House, 1 Wesley Street, St. Heiler, Jersey JE4
8UD Channel Islands (referred to herein as the "Consultant") and U.S. Wireless
Corporation, a Delaware corporation, with its principal executive offices
located at 2694 Bishop Drive, San Ramon California 94583 (the "Corporation").
W I T N E S S E T H :
WHEREAS, the Corporation engaged the Consultant as of June 30, 1996 to
perform services for the Corporation in connection with structuring and
providing the financing for the acquisition of Labyrinth Communication
Technologies Group, Inc. and Mantra Technologies, Inc. (collectively the
"Subsidiaries"); and
WHEREAS, this agreement provides for the continuation of consulting
services and puts into writing the terms and conditions as of June 30, 1996; and
WHEREAS, the Consultant's commenced providing services to the Corporation
on a priority basis, and whereby the Corporation desires to continue its
engagement of Consultant; and
WHEREAS, Consultant's services include making introductions for the
Corporation, and its subsidiaries to facilitate relationships with potential
customers and initiating strategic alliances; and
WHEREAS, as compensation for the services rendered the Consultant has been
granted an option, dated as of the date of its commencement of services to the
Corporation, to purchase 1,000,000 shares of the Corporation's Common stock at
$2.00 per share, exerciseable for a period of five years from the date hereof;
and
WHEREAS, the Corporation agrees to retain the Consultant and Consultant
agrees to be retained by the Corporation under the terms and conditions set
forth below.
Based upon the foregoing, the parties agree as follows:
1. Appointment.
For the term of this Agreement, the Corporation hereby retains
Consultant as an independent consultant and Consultant hereby accept such
retention. The consulting arrangement referred to herein is on a non-exclusive
basis subject to Paragraph 3.
<PAGE>
2. Term of Agreement.
The term of this Agreement shall commence as of the date first
written above and shall remain in force for a period of three (3) years
therefrom. This Agreement may be terminated by mutual consent of the Consultant
and the Corporation.
3. Service.
During the Term hereof, Consultant shall render services in
introducing the Subsidiaries to potential customer and facilitating
relationships with such companies, initiating strategic alliances and joint
ventures, as well as providing investment and business consulting and advisory
services to the Corporation, inclusive of the location, evaluation, structuring
and financing of business activities. Consultant shall provide these services to
the Corporation and its Subsidiaries during the Term of this Agreement. It is
specifically understood that Consultant is not required to expend any specific
number of hours in connection with such services.
4. Compensation.
For services hereunder, the Corporation shall grant to
Consultant an option to purchase shares of the Corporation's Common Stock, $.001
par value per share, at $2.00 per share, upon to the following conditions, which
are subject to the terms and conditions of an option agreement, annexed hereto
and made a part hereof as Appendix A:
a. Consultant shall be granted an option to purchase up to an aggregate of
1,000,000 shares of the Corporation's common stock, which shall be vested and
exercisable as of the date hereof.
b. The options shall be exercisable for a period of five years from the
date hereof. The options are not intended to qualify as incentive stock options.
c. The options provided for herein are not transferable by Consultant and
shall be exercisable only by Consultant, or by his legal representative or
executor.
5. Relationship.
Consultant shall be an independent contractor and not an
employee of the Corporation. The Corporation shall not be responsible to
reimburse the Consultant for any fees, costs or expenses incurred in the
performance of his consulting services except as set forth in Paragraph 7. This
Agreement shall not be construed to create between the Corporation and
Consultant the relationship of principal, employer and employee, joint
venturers, copartners or any other similar relationship, the existence of which
is hereby expressly denied by the Corporation and the Consultant. Consultant is
not an agent for the Corporation, except as described herein and the Corporation
is not an agent for the Consultant for any purpose
<PAGE>
whatsoever; and each such party has no right or authority to assume or create
any obligations, express or implied, on behalf of or in the name of the other
party.
6. Non-disclosure; Disclosure of Potential Conflicts.
a. The Consultant shall not, at any time during or after the
termination of this agreement except when acting on behalf of and with the
authorization of the Corporation, make use of or disclose to any person,
corporation, or other entity, for any purpose whatsoever, any trade secret or
other confidential information concerning the Corporation's business, finances,
proposed and current services and pricing, and any information relating to the
Corporation's business (collectively referred to as the "Proprietary
Information"). For the purposes of this Agreement, trade secrets and
confidential information shall mean information disclosed to the Consultant or
known by him as a consequence of his engagement by the Corporation as a
consultant, whether or not pursuant to this Agreement, and not generally known
in the industry, concerning the Corporation's Intellectual Property (as
hereinafter defined), business, finances, methods, operations, marketing
information, pricing and information relating to proposed expansion of the
Corporation or the Corporation's business plans. The Consultant acknowledges
that such Proprietary Information, as may exist from time to time, is valuable
and unique assets of the Corporation, and that disclosure of any such
information would cause substantial injury to the Corporation. The foregoing is
intended to be confirmatory of the common laws of the states of California, and
Delaware relating to trade secrets and confidential information. "Intellectual
Property" means (a) all inventions (whether patentable or unpatentable and
whether or not reduced to practice), all improvements thereto, and all patents,
patent applications, and patent disclosures, together with all re-issuances,
continuations, continuations- in-part, revisions, extensions, and reexaminations
thereof, (b) all trademarks, service marks, trade dress, logos, trade names, and
corporate names, together with all translations, adaptations, derivations, and
combinations thereof and including all goodwill associated therewith, and all
applications, registrations, and renewals in connection therewith, (c) all
copyrightable works, all copyrights, and all applications, registrations, and
renewals in connection therewith, (d) all mask works and all applications,
registrations, and renewals in connection therewith, (e) all trade secrets and
confidential business information (including ideas, research and development,
know-how, formulas, compositions, manufacturing and production processes and
techniques, technical data, designs, drawings, specifications, customer and
supplier lists, pricing and cost information, and business and marketing plans
and proposals), (f) all computer software (including data and related
documentation), (g) all other proprietary rights, and (h) all copies and
tangible embodiments thereof (in whatever form or medium).
b. In the event that the Consultant desires to consult with or
become engaged by any indirect or direct competitor of the Corporation, then the
consultant shall give the Corporation 10 days prior written notice of such
pending engagement and upon request of the Corporation return any and all
materials supplied by the Corporation to the Consultant together with any copies
prepared by Consultant or distributed by the Consultant, except as
<PAGE>
may be specifically exempted in writing by the Corporation.
7. Expenses. During the Term, Consultant shall be entitled to receive
reimbursement for business expenses incurred by him (in accordance with the
Corporation's policies and procedures from time to time adopted by the Board of
Directors of the Corporation) in performing services hereunder, provided that
Consultant properly accounts therefor in accordance with such policy and
procedures and provided that such expenses have been specifically approved, in
advance, in writing by the Corporation.
8. Trading of the Corporation's Securities. Consultant represents that he
shall comply with all federal, state and local securities laws and have prepared
and filed with the appropriate agencies all required filings in a timely and
efficient manner. Consultant further agrees to abide by the rules and
regulations of the Parent annexed hereto as Appendix B.
9. No Waiver. No delay or omission on the part of the Corporation in
exercising any right hereunder shall operate as a waiver of such right or of any
other right of the Corporation, nor shall any delay, omission or waiver on any
one occasion be deemed a bar to or waiver of the same or any other right on any
future occasion.
10. Assignability. This agreement is not assignable by the Corporation
without the prior written consent of the Consultant. This Agreement is not
assignable by the Consultant without the express written consent of the
Corporation. Notwithstanding the foregoing, this Agreement shall bind any
successor or assign of either party.
11. Entire Agreement. This Agreement sets forth the entire agreement
between the parties with respect to the subject matter hereof, superseding all
prior understandings and agreements whether written or oral. This Agreement may
not be amended, revised or terminated except by a writing signed by both
parties.
12. Default. In the event that either party shall fail to conform to the
terms of this Agreement, the other party shall reimburse the damaged party for
any expenses, including reasonable attorney's fees, which may be incurred by
such party in attempting to collect any obligation, or to enforce obligations
under this Agreement.
13. Governing Law, etc. This Agreement and all rights and obligations
hereunder, including matters of construction, validity and performance, shall be
governed by the laws of the State of Delaware applicable to contracts made and
performed entirely within the State of Delaware without regard to conflicts of
laws rules applied in the State of California.
14. Notices. All notices, requests, demands and other communications
provided for by this Agreement shall be in writing and shall be personally
delivered or sent by certified or registered mail postage and fees prepaid or by
overnight courier, to the other party at the address mentioned in the preamble
of this Agreement. Any party may designate a different
<PAGE>
address for the purpose of the service of notice hereunder by giving notice
thereof in accordance with the provisions of this Paragraph 14.
16. Captions. Captions herein have been inserted solely for convenience of
reference and in no way define, limit or describe the scope or substance of any
provision of this Agreement.
17. Severability. The provisions of this Agreement are severable, and
invalidity of any provision shall not affect the validity of any other provision
unless the invalidity impairs materially the benefits of the contract to either
party. In the even that any court of competent jurisdiction shall determine that
any provision of this Agreement or the application thereof is unenforceable in
whole or in part because of the duration and scope thereof, the parties hereto
agree that said court in making such determination shall have the power to
reduce the duration and scope of such provision to the extent necessary to make
it enforceable, and that the Agreement in its reduced form shall be valid and
enforceable to the full extent permitted by law.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement and
affixed their hands and seals the day and year first above written.
U.S. Wireless Corporation
By: /s/ Dr. Oliver Hilsenrath
Dr. Oliver Hilsenrath
Chief Executive Officer
Ryburn Limited
By: /s/ Ryburn Limited
Ryburn Limited
<PAGE>
Exhibit 10.84
Consulting Agreement with Crossgar Limited
<PAGE>
CONSULTING AGREEMENT
Agreement dated as of the 1st day of January, 1997, by and
between Crossgar Limited, a British Virgin Islands corporation, with
administrative offices located at P.O. Box 316, Jardine House, 1 Wesley Street,
St. Heiler, Jersey JE4 8UD Channel Islands (referred to herein as the
"Consultant") and U.S. Wireless Corporation, a Delaware corporation, with its
principal executive offices located at 2694 Bishop Drive, San Ramon California
94583 (the "Corporation").
W I T N E S S E T H :
WHEREAS, the Corporation engaged the Consultant as of June 30, 1996 to
perform services for the Corporation in connection with structuring and
providing the financing for the acquisition of Labyrinth Communication
Technologies Group, Inc. and Mantra Technologies, Inc. (collectively the
"Subsidiaries"); and
WHEREAS, this agreement provides for the continuation of consulting
services and puts into writing the terms and conditions as of June 30, 1996; and
WHEREAS, the Consultant's commenced providing services to the Corporation
on a priority basis, and whereby the Corporation desires to continue its
engagement of Consultant; and
WHEREAS, Consultant's services include making introductions for the
Corporation, and its subsidiaries to facilitate relationships with potential
customers and initiating strategic alliances; and
WHEREAS, as compensation for the services rendered the Consultant has been
granted an option, dated as of the date of its commencement of services to the
Corporation, to purchase 200,000 shares of the Corporation's Common stock at
$2.00 per share, exerciseable for a period of five years from the date hereof;
and
WHEREAS, the Corporation agrees to retain the Consultant and Consultant
agrees to be retained by the Corporation under the terms and conditions set
forth below.
Based upon the foregoing, the parties agree as follows:
<PAGE>
1. Appointment.
For the term of this Agreement, the Corporation hereby retains
Consultant as an independent consultant and Consultant hereby accept such
retention. The consulting arrangement referred to herein is on a non-exclusive
basis subject to Paragraph 3.
2. Term of Agreement.
The term of this Agreement shall commence as of the date first
written above and shall remain in force for a period of three (3) years
therefrom. This Agreement may be terminated by mutual consent of the Consultant
and the Corporation.
3. Service.
During the Term hereof, Consultant shall render services in
introducing the Subsidiaries to potential customer and facilitating
relationships with such companies, initiating strategic alliances and joint
ventures, as well as providing investment and business consulting and advisory
services to the Corporation, inclusive of the location, evaluation, structuring
and financing of business activities. Consultant shall provide these services to
the Corporation and its Subsidiaries during the Term of this Agreement. It is
specifically understood that Consultant is not required to expend any specific
number of hours in connection with such services.
4. Compensation.
For services hereunder, the Corporation shall grant to
Consultant an option to purchase shares of the Corporation's Common Stock, $.001
par value per share, at $2.00 per share, upon to the following conditions, which
are subject to the terms and conditions of an option agreement, annexed hereto
and made a part hereof as Appendix A:
a. Consultant shall be granted an option to purchase up to an aggregate of
200,000 shares of the Corporation's common stock, which shall be vested and
exercisable as of the date hereof.
b. The options shall be exercisable for a period of five years from the
date hereof. The options are not intended to qualify as incentive stock options.
c. The options provided for herein are not transferable by Consultant and
shall be exercisable only by Consultant, or by his legal representative or
executor.
5. Relationship.
Consultant shall be an independent contractor and not an employee of the
Corporation. The Corporation shall not be responsible to reimburse the
Consultant for any
<PAGE>
fees, costs or expenses incurred in the performance of his consulting services
except as set forth in Paragraph 7. This Agreement shall not be construed to
create between the Corporation and Consultant the relationship of principal,
employer and employee, joint venturers, copartners or any other similar
relationship, the existence of which is hereby expressly denied by the
Corporation and the Consultant. Consultant is not an agent for the Corporation,
except as described herein and the Corporation is not an agent for the
Consultant for any purpose whatsoever; and each such party has no right or
authority to assume or create any obligations, express or implied, on behalf of
or in the name of the other party.
6. Non-disclosure; Disclosure of Potential Conflicts.
a. The Consultant shall not, at any time during or after the
termination of this agreement except when acting on behalf of and with the
authorization of the Corporation, make use of or disclose to any person,
corporation, or other entity, for any purpose whatsoever, any trade secret or
other confidential information concerning the Corporation's business, finances,
proposed and current services and pricing, and any information relating to the
Corporation's business (collectively referred to as the "Proprietary
Information"). For the purposes of this Agreement, trade secrets and
confidential information shall mean information disclosed to the Consultant or
known by him as a consequence of his engagement by the Corporation as a
consultant, whether or not pursuant to this Agreement, and not generally known
in the industry, concerning the Corporation's Intellectual Property (as
hereinafter defined), business, finances, methods, operations, marketing
information, pricing and information relating to proposed expansion of the
Corporation or the Corporation's business plans. The Consultant acknowledges
that such Proprietary Information, as may exist from time to time, is valuable
and unique assets of the Corporation, and that disclosure of any such
information would cause substantial injury to the Corporation. The foregoing is
intended to be confirmatory of the common laws of the states of California, and
Delaware relating to trade secrets and confidential information. "Intellectual
Property" means (a) all inventions (whether patentable or unpatentable and
whether or not reduced to practice), all improvements thereto, and all patents,
patent applications, and patent disclosures, together with all re-issuances,
continuations, continuations- in-part, revisions, extensions, and reexaminations
thereof, (b) all trademarks, service marks, trade dress, logos, trade names, and
corporate names, together with all translations, adaptations, derivations, and
combinations thereof and including all goodwill associated therewith, and all
applications, registrations, and renewals in connection therewith, (c) all
copyrightable works, all copyrights, and all applications, registrations, and
renewals in connection therewith, (d) all mask works and all applications,
registrations, and renewals in connection therewith, (e) all trade secrets and
confidential business information (including ideas, research and development,
know-how, formulas, compositions, manufacturing and production processes and
techniques, technical data, designs, drawings, specifications, customer and
supplier lists, pricing and cost information, and business and marketing plans
and proposals), (f) all computer software (including data and related
documentation), (g) all other proprietary rights, and (h) all copies and
tangible embodiments thereof (in whatever form or medium).
<PAGE>
b. In the event that the Consultant desires to consult with or
become engaged by any indirect or direct competitor of the Corporation, then the
consultant shall give the Corporation 10 days prior written notice of such
pending engagement and upon request of the Corporation return any and all
materials supplied by the Corporation to the Consultant together with any copies
prepared by Consultant or distributed by the Consultant, except as may be
specifically exempted in writing by the Corporation.
7. Expenses. During the Term, Consultant shall be entitled to receive
reimbursement for business expenses incurred by him (in accordance with the
Corporation's policies and procedures from time to time adopted by the Board of
Directors of the Corporation) in performing services hereunder, provided that
Consultant properly accounts therefor in accordance with such policy and
procedures and provided that such expenses have been specifically approved, in
advance, in writing by the Corporation.
8. Trading of the Corporation's Securities. Consultant represents that he
shall comply with all federal, state and local securities laws and have prepared
and filed with the appropriate agencies all required filings in a timely and
efficient manner. Consultant further agrees to abide by the rules and
regulations of the Parent annexed hereto as Appendix B.
9. No Waiver. No delay or omission on the part of the Corporation in
exercising any right hereunder shall operate as a waiver of such right or of any
other right of the Corporation, nor shall any delay, omission or waiver on any
one occasion be deemed a bar to or waiver of the same or any other right on any
future occasion.
10. Assignability. This agreement is not assignable by the Corporation
without the prior written consent of the Consultant. This Agreement is not
assignable by the Consultant without the express written consent of the
Corporation. Notwithstanding the foregoing, this Agreement shall bind any
successor or assign of either party.
11. Entire Agreement. This Agreement sets forth the entire agreement
between the parties with respect to the subject matter hereof, superseding all
prior understandings and agreements whether written or oral. This Agreement may
not be amended, revised or terminated except by a writing signed by both
parties.
12. Default. In the event that either party shall fail to conform to the
terms of this Agreement, the other party shall reimburse the damaged party for
any expenses, including reasonable attorney's fees, which may be incurred by
such party in attempting to collect any obligation, or to enforce obligations
under this Agreement.
13. Governing Law, etc. This Agreement and all rights and obligations
hereunder, including matters of construction, validity and performance, shall be
governed by the laws of the State of Delaware applicable to contracts made and
performed entirely within the State of
<PAGE>
Delaware without regard to conflicts of laws rules applied in the State of
California.
14. Notices. All notices, requests, demands and other communications
provided for by this Agreement shall be in writing and shall be personally
delivered or sent by certified or registered mail postage and fees prepaid or by
overnight courier, to the other party at the address mentioned in the preamble
of this Agreement. Any party may designate a different address for the purpose
of the service of notice hereunder by giving notice thereof in accordance with
the provisions of this Paragraph 14.
15. Captions. Captions herein have been inserted solely for convenience of
reference and in no way define, limit or describe the scope or substance of any
provision of this Agreement.
16. Severability. The provisions of this Agreement are severable, and
invalidity of any provision shall not affect the validity of any other provision
unless the invalidity impairs materially the benefits of the contract to either
party. In the even that any court of competent jurisdiction shall determine that
any provision of this Agreement or the application thereof is unenforceable in
whole or in part because of the duration and scope thereof, the parties hereto
agree that said court in making such determination shall have the power to
reduce the duration and scope of such provision to the extent necessary to make
it enforceable, and that the Agreement in its reduced form shall be valid and
enforceable to the full extent permitted by law.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
and affixed their hands and seals the day and year first above written.
U.S. Wireless Corporation
By: /s/ Dr. Oliver Hilsenrath
Dr. Oliver Hilsenrath
Chief Executive Officer
Crossgar Limited
By: /s/ Crossgar Limited
Crossgar Limited
<PAGE>
Exhibit 10.85
Consulting Agreement with Pelican Investments Limited.
<PAGE>
FINANCIAL CONSULTING AGREEMENT
AGREEMENT dated as of October 1, 1996 by and between Labyrinth
Communications Technologies Group, Inc., a Delaware corporation, with a
principal business office at 2694 Bishop Drive, San Ramon, CA 94583 (the
"Company") and Pelican Securities & Investments, Ltd. with a principal business
office at Top Tower, 50 Dizengoff Street, Tel Aviv, 64332, Israel (the
"Consultant").
WITNESSETH
WHEREAS, the Company desires to engage the services of the Consultant so as
to benefit from its knowledge and skill to consult with and advise the Company
concerning investments in the securities markets, financial transactions and
other management issues and the Consultant desires to render such services;
NOW, THEREFORE, the parties hereto, desiring legally to be bound, hereby
agree as follows:
1. Engagement. The Company hereby engages the Consultant pursuant to the
terms and conditions of this Agreement effective as of the date hereof, to
consult with and advise the Company with respect to investments in the
securities markets and financial transactions, including, without limitation,
the identification of and negotiations with other businesses for the purpose of
entering into joint ventures or strategic alliances, analysis of relevant
markets and sectors and their future development and directions, the performance
of due diligence investigations on potential investment vehicles, assistance
with marketing efforts and negotiations, the identification of and negotiations
with potential investors in the Company and such other issues as further agreed
to by the parties from time to time. The Consultant hereby accepts such
engagement upon such terms and conditions.
2. Term. The term of the Consultant's engagement pursuant to Section 1
hereof shall commence on the date hereof and shall continue for 10 months
thereafter.
3. Extent of Services.
3.1 Extent of Services. The Company hereby acknowledges that the Consultant
is a professional consulting business. As such, the Consultant shall devote such
time and attention to the consulting services to be performed by it hereunder as
shall, in the Consultant's discretion, be necessary to fulfill its obligations
to the Company, but the parties agree the Consultant shall not be required to
devote its full time and attention to such activities.
3.2 Delegation to Affiliates. The Company hereby acknowledges that in
performing its obligations pursuant to this Agreement, the Consultant at its
discretion will delegate all or part of such performance to Pelican Consulting
USA, Inc., a New York corporation, which is the Consultant's wholly owned
subsidiary.
4. Participation in Investments. It is expressly understood and agreed by
the parties that the Company may accept or reject, in its sole and absolute
discretion, any or all actions proposed by the Consultant without any obligation
or liability to the Consultant or any other person, firm or entity with respect
thereto. The Company expressly understands and agrees that it bears all risk of
gain or loss resulting from services rendered by the Consultant pursuant to this
Agreement.
5. Compensation and Other Expenses.
5.1 Compensation. As full compensation for all services to be rendered by
the Consultant pursuant to this Agreement and for the covenants and agreements
of the Consultant contained herein, the Company shall pay the Consultant $10,000
per month. Such compensation shall be paid if full within 10 days of the first
day of each month.
<PAGE>
5.2 Expenses. All Expenses incurred by the Consultant in the performance of
its obligations hereunder shall be borne by the Consultant except only those for
which the Company specifically agrees by separate written instrument to
reimburse the Consultant, and then only as specified in such instrument.
6. Relationship of the Parties. The Consultant's relationships to the
Company pursuant to this Agreement shall be that of an independent consultant
and contractor, and not as an employee or agent. The Consultant may not make any
commitments for, or bind or purport to bind or represent, the Company or any of
its affiliates in any manner either as its employee, agent or in any other
capacity. Except as expressly stated herein, the Consultant is not entitled to
any compensation, benefit or right in respect of its relationship with the
Affiliates (or any of the them) or otherwise.
7. Miscellaneous.
7.1 Notices. Any and all notices, consents, claims, requests or other
communications required or permitted to be given under any of the provisions of
this Agreement shall be in writing and shall be deemed to have been duly given
on the earlier of the date (I) actually received and acknowledged or (ii) three
days after mailing by certified or registered mail , return receipt requested,
postage prepaid, and addressed as follows (or to such other address as any party
may specify by notice to all other parties given as aforesaid):
1 If to the Consultant to it at:
Top Tower 50 Dizengoff Street Tel Aviv 64332, Israel Attn: Mr. Haim Haruvi
1 If to the Company, to it at:
2694 Bishop Drive, Suite 213 San Ramon, CA 94583 Attn: Dr. Oliver
Hilsenrath
7.2 Confidentiality. In consideration of, among other things, the
compensation to be paid to the Consultant hereunder, the Consultant, its
subsidiaries and affiliates, shall not, at any time during or following
expiration or termination of this Agreement, directly or indirectly disclose or
furnish to any person not entitled to receive the same for the immediate benefit
of the Company or its affiliates any trade secrets or confidential information
including, without limitation, information as to the business methods,
operations and affairs of the Company or its affiliates, the names, addresses or
requirements of any of its customers and suppliers, or the credit and other
terms extended by and to the Company or its affiliates.
7.3. Merger; Amendments. All prior understandings and agreements of the
parties and their affiliates relating to the subject matter hereof have been
merged into this Agreement. This Agreement may not be modified, amended or
terminated except by a written agreement specifically referring to this
Agreement signed by all of the parties hereto.
7.4 No Waiver. No waiver by the Company of any breach by the Consultant or
any provision or condition of this Agreement by it to be performed shall be
reconsidered valid unless in writing and signed by the party giving such waiver,
and no such waiver shall be deemed a waiver of any contemporaneous or subsequent
breach of the same or similar nature.
<PAGE>
7.5 Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the corporate party hereto, its successors and assigns, and
the individual party hereto and its heirs and personal representatives. Subject
to Section ____ of this Agreement, a party may not assign its rights or
obligations hereunder.
7.6 Third Parties. Nothing contained in this Agreement shall create any
rights in or be deemed to have been executed for the benefit of any person, firm
or corporation that is not a party hereto.
7.7 Severability. Any provision of this Agreement that may be prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions thereof. Any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. To the extent permitted by law, the parties hereby waive any
provision of law that renders any provision of this Agreement prohibited or
unenforceable in any respect. In addition, in the event of any such prohibition
or unenforceability, the parties agree that it is their intention and agreement
that any such provision which is held or determined to be prohibited or
unenforceable, as written, in any jurisdiction shall nonetheless by in force and
binding to the fullest extent permitted by the law of such jurisdiction as
though such provision had been written in such a manner and to such an extent as
to be enforceable therein under the circumstances.
7.8 Captions. Captions used herein are for the purpose of convenience only
and shall not affect the interpretation or construction of this Agreement.
7.9 Further Assurances. Each party hereto shall cooperate, shall take
further action and shall execute and deliver such further documents as may be
reasonably requested by any other party in order to carry out the provisions and
purposes of this Agreement.
7.10 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one and the same instrument.
7.11 Governing Law. This Agreement and all amendments thereof shall be
governed by and construed and enforced by the courts of the State of New York in
accordance with the laws of the State of New York applicable to contracts made
and to be performed therein without giving effect to the principles of conflict
of laws thereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
Pelican Securities & Investments, Ltd.
By:____________________________
Name:
Title:
Labyrinth Communications Technologies Group, Inc.
By:____________________________
Name:
Title:
<PAGE>
Exhibit 21.01
List of all Company Subsidiaries
1. Labyrinth Communication Technologies Group, Inc.
2. Mantra Technologies, Inc.
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
EXHIBIT 27.01
FINANCIAL DATA SCHEDULE
This schedule contains summary information extracted from the Balance Sheet,
Statement of Operations, Statement of Cash Flows and Notes thereto incorporated
in Part I, Item 7, of this Form 10 - KSB and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<CAPTION>
<S> <C>
<PERIOD-TYPE> 12-mos
<FISCAL-YEAR-END> Mar-31-1997
<PERIOD-END> Mar-31-1997
<CASH> 5,328,781
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,500
<PP&E> 299,692
<DEPRECIATION> (18,481)
<TOTAL-ASSETS> 7,768,159
<CURRENT-LIABILITIES> 165,788
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 6,027,410
<TOTAL-LIABILITY-AND-EQUITY> 7,768,159
<SALES> 5,024,338
<TOTAL-REVENUES> 5,024,337
<CGS> 3,429,395
<TOTAL-COSTS> 9,165,746
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 459,435
<NET-INCOME> (4,203,857)
<EPS-PRIMARY> (.56)
<EPS-DILUTED> (.56)
<PAGE>
</TABLE>
