EMPLOYMENT AGREEMENT
Exhibit
10.17
EXECUTION
COPY
THIS
AGREEMENT
is dated
March 15, 2007 (the “Effective
Date”)
by and
between TELKONET,
INC., a
Utah
corporation (“TELKONET”)
and
XXXXX
XXXXXX
(“Executive”).
WHEREAS,
TELKONET is the purchaser of the outstanding membership units of Ethostream
LLC
(“ETHOSTREAM”),
pursuant to a Unit Purchase Agreement of even date herewith by and among
TELKONET, ETHOSTREAM and the members of ETHOSTREAM (the “Purchase
Agreement”);
WHEREAS,
TELKONET desires to maintain the business of ETHOSTREAM and to expand and
further develop the business of ETHOSTREAM; and
WHEREAS,
TELKONET, in connection with the consummation of the purchase of the outstanding
membership units of ETHOSTREAM, desires to employ Executive effective as
of the
Closing Date (as defined in the Purchase Agreement), and Executive desires
to
accept such employment, on the terms and conditions set forth
below.
NOW,
THEREFORE,
in
consideration of the mutual covenants contained herein, and for such other
good
and valuable consideration, the receipt and sufficiency of which are hereby
conclusively acknowledged, the parties, intending to be legally bound, agree
as
follows:
1. Duties.
TELKONET
hereby employs Executive in the capacity of CEO of ETHOSTREAM. In such capacity,
Executive shall perform his duties in a professional, supervisory and managerial
nature solely for the benefit of TELKONET and pertaining to the business
and
affairs of TELKONET as determined by the Board of Directors and/or the Executive
Committee of TELKONET. Executive shall report directly to TELKONET’s Chief
Executive Officer (the “TELKONET CEO”). Executive’s duties and responsibilities
shall also include, but not be limited to, the following:
(a) Serve
as
head of ETHOSTREAM’s operations and provide leadership for ETHOSTREAM’s
activities;
(b) Under
the
direction of the Board of Directors and with the assistance of the Human
Resource Department of TELKONET: hire, compensate, discipline and terminate
ETHOSTREAM staff; establish or oversee the establishment of job descriptions,
duties and responsibilities of all ETHOSTREAM staff; and, perform or oversee
the
performance of regular evaluations of all ETHOSTREAM staff and determine
the
level of compensation of such staff on the basis of such
evaluations;
(c) Alert
and
advise the Board of Directors and/or the Executive Committee of TELKONET
about
reasonably significant matters needing their attention and action;
(d) Serve
as
the representative of ETHOSTREAM in activities related to its objectives
and
policies;
(e) Direct
the coordination of the activities of ETHOSTREAM committees and
projects;
(f) Under
the
direction of the Board of Directors and with the assistance of TELKONET’s
outside certified public accountant or the Finance Department of TELKONET:
oversee the custody, use and consumption of ETHOSTREAM’s assets; oversee the
receipt, disbursement and expenditure of ETHOSTREAM’s funds; oversee the
preparation of a proposed annual budget of ETHOSTREAM;
(i) Supervise
the sales, installation and support of all ETHOSTREAM subscriber acquisition
activities;
(j) Oversee,
under the direction of the Board of Directors, the development and expansion
of
ETHOSTREAM’s business, sales and production operations;
(l) Present
to the Board of Directors an annual report of all activities of
ETHOSTREAM;
(m) Oversee
the negotiation, evaluation and execution of all contracts, agreements and
commitments arising in the ordinary course of ETHOSTREAM’s business for and on
behalf of ETHOSTREAM, consistent with the duties and responsibilities set
forth
above; and
(o) Implement
all Board directives and perform all such other duties that may be assigned
from
time-to-time by the Board of Directors in its discretion.
2. Term.
The term
of this Agreement (the “Term”) shall commence on the Effective Date and shall
expire on March 14, 2010. This Term may be extended by the mutual agreement
of
both parties unless the Executive is terminated as provided in Section
6.
3. Extent
of Services.
During
the Term and any extension thereof, Executive shall devote his full time
and
efforts to the performance, to the best of his abilities, of such duties
and
responsibilities, as described in Section 1 above, and as the Board of Directors
and/or the TELKONET CEO shall determine, consistent therewith.
4. Compensation.
(a) Salary.
Executive shall be paid One Hundred Forty Eight Thousand Dollars ($148,000.00)
on an annualized basis in accordance with TELKONET’s normal payroll practices,
and subject to all lawfully required withholding. The base salary may be
increased annually as determined by the TELKONET CEO.
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(b) Bonus.
The
Board of Directors of TELKONET and the Executive will agree upon milestones
for
bonus achievement. The actual bonus amount will be determined by the Board
of
Directors with the recommendation/review by the TELKONET CEO.
(c) Executive
Participation in TELKONET Staff Benefits Plans.
Following the Effective Date, Executive shall be entitled to participate
in any
group health programs and other benefit plans, which may be instituted from
time-to-time for TELKONET employees, and for which Executive qualifies under
the
terms of such plans. All such benefits shall be provided on the same terms
and
conditions as generally apply to all other TELKONET employees under these
plans
and may be modified by TELKONET from time-to-time.
(d) Expenses.
Subject
to approval by the TELKONET CEO, Executive shall be reimbursed by TELKONET
for
all ordinary, reasonable, customary and necessary expenses incurred by him
in
the performance of his duties and responsibilities. Executive agrees to prepare
documentation for such expenses as may be necessary for TELKONET to comply
with
the applicable rules and regulations of the Internal Revenue Service. TELKONET
will provide a monthly stipend equal to $700 to Executive for the purpose
of
obtaining an auto for the Executive’s business use.
5. Vacation.
At full
pay and without any adverse effect to his compensation, provided all other
terms
and conditions of this Agreement are satisfied, Executive shall be entitled
to
three (3) weeks of vacation for each full calendar year during the term of
this
Agreement. Executive agrees to schedule his vacation leave in advance upon
written notice to the TELKONET CEO. Carryover of vacation days in excess
of two
weeks is subject to the prior approval of the TELKONET CEO.
6. Termination.
This
Agreement shall terminate in accordance with Section 2 of this Agreement,
or
upon the first to occur of any of the following events:
(a) The
death
of Executive;
(b) The
mutual consent of Executive and TELKONET;
(c) “Cause”
exists for termination. For purposes of this Agreement, “cause” shall mean the
occurrence of any of the following: (1) theft, fraud, embezzlement, or any
other
act of dishonesty by Executive; (2) any material breach by Executive of any
provision of this Agreement which breach is not cured within a reasonable
time
(but not to exceed thirty (30) days) after written notification thereof to
Executive by TELKONET; (3) any habitual neglect of duty or misconduct of
Executive in discharging any of his duties and responsibilities under this
Agreement after a written demand for performance was delivered to Executive
that
specifically identified the manner in which the Board believed the Executive
had
failed to discharge his duties and responsibilities, and the Executive failed
to
resume substantial performance of such duties and responsibilities on a
continuous basis immediately following such demand; (4) commission by Executive
of a felony or any offense involving moral turpitude; or (5) any default
of
Executive’s obligations hereunder, or any failure or refusal of Executive to
comply with the policies, rules and regulations of TELKONET generally applicable
to TELKONET employees, which default, failure or refusal is not cured within
a
reasonable time (but not to exceed thirty (30) days) after written notification
thereof to Executive by TELKONET. If cause exists for termination, Executive
shall be entitled to no further compensation, except for accrued leave and
vacation and except as may be required by applicable law.
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(d) “Good
reason” exists for Executive to terminate his employment with TELKONET. For
purposes of this Agreement, “good reason” shall mean the occurrence of any of
the following: (1) any material adverse reduction in the scope of Executive’s
authority or responsibilities as CEO of ETHOSTREAM; (2) any reduction in
the
amount of Executive’s compensation or participation in any employee benefits; or
(3) Executive’s principal place of employment is actually or constructively
moved to any office or other location 50 miles or more outside of Milwaukee,
Wisconsin. If Executive terminates his employment with TELKONET for “good
reason,” then, upon notice to TELKONET by Executive of such termination,
TELKONET shall continue to pay Executive's base salary and provide Executive
with continued participation in each employee benefit plan in which Executive
participated immediately prior to the termination date for the period starting
on the first day after the termination date and ending upon expiration of
the
Term.
If
Executive is terminated by TELKONET for any reason other than for “cause,” then
TELKONET shall continue to pay Executive's base salary and provide Executive
with continued participation in each employee benefit plan in which Executive
participated immediately prior to the termination for the period starting
on the
first day after the termination and ending upon the expiration of the Term.
In
the event TELKONET fails to renew this Agreement upon expiration of the Term,
then TELKONET shall continue to pay Executive's base salary and provide
Executive with continued participation in each employee benefit plan in which
Executive participated immediately prior to expiration of the Term for a
period
of three months following expiration of the Term.
7. Surrender
of Books and Papers.
Upon
termination of this Agreement (irrespective of the time, manner, or cause
of
termination, be it for cause or otherwise), Executive shall immediately
surrender to TELKONET all books, records, or other written papers or documents
entrusted to him or which he has otherwise acquired pertaining to TELKONET
and/or ETHOSTREAM and all other TELKONET property in Executive’s possession,
custody or control.
8. Inventions
and Patents.
Executive agrees that Executive will promptly from time-to-time fully inform
and
disclose to TELKONET any and all ideas, concepts, copyrights, copyrightable
material, developments, inventions, designs, improvements and discoveries
of
whatever nature that Executive may have or produce during the term of
Executive’s employment under this Agreement that pertain or relate to the then
current business of TELKONET (the “Creations”), whether conceived by Executive
alone or with others and whether or not conceived during regular working
hours.
All Creations shall be the exclusive property of TELKONET and shall be “works
made for hire” as defined in 17 U.S.C. §101, and TELKONET shall own all rights
in and to the Creations throughout the world, without payment of royalty
or
other consideration to Executive or anyone claiming through Executive. Executive
hereby transfers and assigns to TELKONET (or its designee) all right, title
and
interest in and to every Creation. Executive shall assist TELKONET in obtaining
patents or copyrights on all such inventions, designs, improvements and
discoveries being patentable or copyrightable by Executive or TELKONET and
shall
execute all documents and do all things reasonably necessary (at TELKONET’S sole
cost and expense) to obtain letters of patent or copyright, vest the TELKONET
with full and exclusive title thereto, and protect the same against infringement
by third parties, and such assistance shall be given by Executive, if needed,
after termination of this Agreement for whatever cause or reason. Executive
hereby represents and warrants that Executive has no current or future
obligation with respect to the assignment or disclosure of any or all
developments, inventions, designs, improvements and discoveries of whatever
nature to any previous Employer, entity or other person and that Executive
does
not claim any rights or interest in or to any previous unpatented or
uncopyrighted developments, inventions, designs, improvements or
discoveries.
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9. Trade
Secrets, Non-Competition and Non-Solicitation.
(a) Trade
Secrets.
Contemporaneous with the execution of this Agreement and during the term
of
employment under this Agreement, TELKONET shall deliver to Executive or permit
Executive to have access to and become familiar with various confidential
information and trade secrets of TELKONET, including without limitation,
data,
production methods, customer lists, product format or developments, other
information concerning the business of TELKONET and ETHOSTREAM, and other
unique
processes, procedures, services and products of ETHOSTREAM and TELKONET,
which
are regularly used in the operation of the business of the ETHOSTREAM and
TELKONET (collectively, the “Confidential Information”) For purposes of the
preceding sentence, information is not treated as being Confidential Information
if it: (i) is or becomes generally available to the public other than by
Executive in violation of this Agreement; (ii) is obtained by Executive in
good
faith from a third party who discloses such information to Executive on a
non-confidential basis without violating any obligation of confidentiality
or
secrecy relating to the information disclosed; (iii) is independently developed
by Executive outside the scope of his employment without use of Confidential
Information; or (iv) is Executive’s personnel information. Executive shall not
disclose any of the Confidential Information that he receives from ETHOSTREAM,
TELKONET or their clients and customers in the course of his employment with
TELKONET, directly or indirectly, nor use it in any way, either during the
term
of this Agreement or for a period of five (5) years thereafter, except as
required in the course of employment with TELKONET. Executive further
acknowledges and agrees that Executive owes ETHOSTREAM and TELKONET, a fiduciary
duty to preserve and protect all Confidential Information from unauthorized
disclosure or unauthorized use. All files, records, documents, drawings,
graphics, processes, specifications, equipment and similar items relating
to the
business of ETHOSTREAM and/or TELKONET, whether prepared by Executive or
otherwise coming into Executive’s possession in the course of his employment
with TELKONET, shall remain the exclusive property of TELKONET and shall
not be
removed from the premises of ETHOSTREAM and/or TELKONET without the prior
written consent of TELKONET unless removed in relation to the performance
of
Executive’s duties under this Agreement. Any such files, records, documents,
drawings, graphics, specifications, equipment and similar items, and any
and all
copies of such materials which have been removed from the premises of TELKONET,
shall be returned by Executive to TELKONET.
(b) Non-Competition.
Executive acknowledges that he will be provided with and have access to the
Confidential Information, the unauthorized use or disclosure of which would
cause irreparable injury to TELKONET, that TELKONET’s willingness to enter into
this Agreement is based in material part on Executive’s agreement to the
provisions of this Section 9(b)
and that
Executive’s breach of the provisions of this Section would materially and
irreparably damage TELKONET. In consideration for TELKONET’s disclosure of
Confidential Information to Executive, Executive’s access to the Confidential
Information, and the salary paid to executive by ETHOSTREAM hereunder, Executive
agrees that during the term of Executive’s employment with ETHOSTREAM under this
Agreement and for one (1) year after the termination of Executive’s employment
and regardless whether such termination is with or without cause, Executive
shall not, directly or indirectly, either as an executive, employee, employer,
consultant, agent, principal, partner, stockholder, corporate officer, director,
advisor or in any other individual or representative capacity, engage or
participate in any business that is in competition in any manner whatsoever
with
the Restricted Business (as defined herein) in North America. “Restricted
Business” means any business conducted by TELKONET, either itself or through
ETHOSTREAM, at any time prior to or during Executive’s employment pursuant to
this Agreement.
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(c) Reasonableness
of Restrictions.
Executive acknowledges that the restrictions set forth in Section
9(b)
of this
Agreement are reasonable in scope and necessary for the protection of the
business and goodwill of TELKONET. Executive agrees that should any portion
of
the covenants in Section
9
be
unenforceable because of the scope thereof or the period covered thereby
or
otherwise, the covenant shall be deemed to be reduced and limited to enable
it
to be enforced to the maximum extent permissible under the laws and public
policies applied in the jurisdiction in which enforcement is
sought.
(d) Soliciting
Executives.
Executive shall not during the term of this Agreement or for a period of
one (1)
year after termination of Executive’s employment hereunder for any reason,
whether by resignation, discharge or otherwise, either directly or indirectly,
employ or solicit the employment of, any employee of ETHOSTREAM or TELKONET
for
the purpose of causing them to leave the employment of ETHOSTREAM or TELKONET
or
take employment with any business that is in competition in any manner
whatsoever with the business of ETHOSTREAM or TELKONET.
(e) Injunctive
Relief; Extension of Restrictive Period.
In the
event of a breach of any of the covenants by Executive or TELKONET contained
in
this Agreement, it is understood that damages will be difficult to ascertain,
and either party may petition a court of law or equity for injunctive relief
in
addition to any other relief which Executive or TELKONET may have under the
law,
including but not limited to reasonable attorneys’ fees.
10. Miscellaneous.
(a) This
Agreement shall be binding upon the parties and their respective heirs,
executors, administrators, successors and assigns. Executive shall not assign
any part of his rights under this Agreement without the prior written consent
of
TELKONET.
(b) This
Agreement contains the entire agreement and understanding between the parties
and supersedes any and all prior understandings and agreements between the
parties regarding Executive’s employment.
(c) No
modification hereof shall be binding unless made in writing and signed by
the
party against whom enforcement is sought. No waiver of any provisions of
this
Agreement shall be valid unless the same is in writing and signed by the
party
against whom it is sought to be enforced, unless it can be shown through
custom,
usage or course of action.
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(d) This
Agreement is executed in, and it is the intention of the parties hereto that
it
shall be governed by, the laws of the State of Wisconsin without giving effect
to applicable conflict of laws provisions.
(e) The
provisions of this Agreement shall be deemed to be severable, and the invalidity
or unenforceability of any provision shall not affect the validity or
enforceability of the other provisions hereof.
(f) Any
notice or communication permitted or required by this Agreement shall be
in
writing and shall become effective upon personal service, or service by wire
transmission, which has been acknowledged by the other party as being received,
or two (2) days after its mailing by certified mail, return receipt requested,
postage prepaid addressed as follows:
(1) If
to
TELKONET:
Xxxxx
X.
Xxxxxxxxx, PHR
Vice
President, Human Resources
Telkonet,
Inc.
00000
Xxxxxx Xxxxxxx Xxxxxxx
Xxxxxxxxxx,
Xxxxxxxx 00000
(2) If
to
Executive, to:
Xxxxx
Xxxxxx
ETHOSTREAM,
LLC
00000
Xxxxxxxxxx Xxxxx
Xxxxxxxxx,
XX 00000
[signature
on next page]
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IN
WITNESS WHEREOF,
TELKONET and Executive have executed this Agreement as of the Effective
Date.
|
TELKONET,
INC.
By:
___________________________
Name:
Title:
|
EXECUTIVE
By:
/s/ Xxxxx Xxxxxx
Xxxxx
Xxxxxx
|
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