EMPLOYMENT AGREEMENT
This Employment Agreement (“Agreement”), effective October ___, 2007, is entered into by and between i2 Telecom International, Inc. (“the Company”), a Washington corporation, and its wholly-owned subsidiaries (the ‘Employer”), and Xxxx Xxxxxx, 0000 Xxx Xxxx Xxxxxx, Xxxxxxxx, XX 00000 (the “Employee”).
WITNESSETH:
WHEREAS, Employer is engaged in the telecommunications technology and related businesses, including but not limited to internet telecommunication services, hardware and software development and sales, and information technology (the “Telecommunications Technologies”); and conducts research, experimentation, development, and exploitation of related technologies and engages in other businesses; and
WHEREAS, Employer desires to employ Employee to serve as Chief Strategy Officer for the Company, and Employee desires to be employed by Employer in such capacities pursuant to the terms and conditions hereinafter set forth.
NOW THEREFORE, in consideration of the foregoing and the mutual promises and covenants herein contained, it is agreed as follows:
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1. |
EMPLOYMENT: DUTIES AND RESPONSIBILITIES |
Employer hereby employs Employee as Chief Strategy Officer of the Company. Subject at all times to the direction of the Chief Executive Officer and Board of Directors of the Employer, Employee shall have direct responsibility over corporate strategy, collaboration of engineering and development, operations and negotiation of business development and partner relationships. Employee will also perform other services and duties as the Board of Directors shall determine. Employee’s permanent job site shall be in the Atlanta, Georgia area and it is acknowledged by Employer that presence in Atlanta shall be limited to approximately one-third of the Employee’s time. Employee shall serve, by mutual consent, in such other positions and offices of the Employer and its affiliates, if selected, without any additional compensation.
Employee shall confer with the Directors, and other Officers of the Company, regarding ideas and proposals with respect to the overall technological direction of the Company.
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2. |
FULL TIME EMPLOYMENT |
Employee hereby accepts employment by Employer, upon the terms and conditions contained herein, and agrees that during the term of this Agreement the Employee shall devote substantially all of his business time, attention, and energies to the business of the Employer. Employee, during the term of this Agreement, will not perform any services for any other business entity, with exception of EcoSystem Partners, LLC (which will not account for more than 25% of Employee’s time, whether such entity conducts a business which is competitive with the business of Employer or is engaged in any other business activity; provided, however, that nothing herein
contained shall be construed as (a) preventing Employee from investing his personal assets in any business or businesses which do not compete directly or indirectly with the Employer, provided such investment or investments do not require any services on his part in the operation of the affairs of the entity in which such investment is made and in which his participation is solely that of an investor, (b) preventing Employee from purchasing securities in any corporation whose securities are regularly traded, if such purchases shall not result in his owning beneficially, at any time, more than 5% of the equity securities of any corporation engaged in a business which is competitive, directly or indirectly, to that of Employer, (c) preventing Employee from engaging in any other activities, if he receives the prior written approval of the Board of Directors of Company with respect to his engaging in such activities.
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3. |
RECORDS |
In connection with his engagement hereunder, Employee shall accurately maintain and preserve all notes and records generated by Employer which relate to Employer and its business and shall make all such reports, written if required, as Employer may reasonably require.
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4. |
TERM |
Employee’s employment hereunder shall be for one six-month period (the “Initial Term”), to commence on October ___, 2007 and end six months from the date of this Agreement. Thereafter, the Company and Employee may elect to extend employment to Employee for one or more additional six-month periods (the “Subsequent Term”), commencing six-months from the date hereof upon mutual consent. A six-month term shall be deemed a Contract Term. For all compensation and benefit purposes, other than those specifically addressed herein, the Employee shall be deemed to have been continually employed with the Employer since October ___, 2007.
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5. |
COMPENSATION |
(a) As full compensation (“Base Salary”) for the performance of his duties on behalf of Employer, Employee shall be compensated as follows:
(i) Base Salary. Employer, during the Initial Term hereof, shall pay Employee a base salary at the rate of One Hundred Twenty Thousand Dollars ($120,000.00) per annum, payable semi-monthly commencing on the date hereof. Additionally, the Employee shall receive Two Hundred Thousand (200,000) options from the Company’s 2004 Incentive Stock Option Plan, (the “ISO Plan”), exercisable at $.01 each for a period of three (3) years into underlying shares of the Company’s common stock, (the “Additional Compensation Options”) which shall vest equally over the Initial Term of six-months.
Directors may, in their sole discretion, consider other meritorious adjustments in compensation, or a bonus, under appropriate circumstances, including the conception of valuable or unique inventions, processes, discoveries or improvements capable of profitable exploitation.
(ii) Incentive Stock Options. Employee shall also receive Employment options, under the ISO Plan, to purchase shares of i2 Telecom’s Common Stock. In the event the Employee
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is terminated by Employer as a direct result of a merger, acquisition or sale transaction by the Employer which causes a Change of Control of the Employer (“the Trigger Event”), then any stock options or similar securities held beneficially by the Employee shall automatically become 75% vested, and the Employee shall be entitled to an additional 30% of the Employee’s total ISO Plan position at the time of the Trigger Event. Such additional shares shall be priced at no greater than the then prevailing value of the Common Stock vested as determined by the Company’s Board of Directors. For purposes of this Section 5(a)(ii), Change of Control shall mean the occurrence of any of the following events: (i) a majority of the outstanding voting stock of Employer shall have been acquired or beneficially owned by any person (other than Employer or a subsidiary of Employer) or any two or more persons acting as a partnership, limited partnership, syndicate or other group, entity or association acting in concert for the purpose of voting, acquiring, holding, or disposing of voting stock of Employer; or (ii) a merger or a consolidation of Employer with or into another corporation, other than (A) a merger or consolidation with a subsidiary of Employer, or (B) a merger or consolidation in which the holders of voting stock of Employer immediately prior to the merger as a class hold immediately after the merger at least a majority of all outstanding voting power of the surviving or resulting corporation or its parent; or (iii) a statutory exchange of shares of one or more classes or series of outstanding voting stock of Employer for cash, securities, or other property, other than an exchange in which the holders of voting stock of Employer immediately prior to the exchange as a class hold immediately after the exchange at least a majority of all outstanding voting power of the entity with which Employer stock is being exchanged; or (iv) the sale or other disposition of all or substantially all of the assets of Employer, in one transaction or a series of transactions, other than a sale or disposition in which the holders of voting stock of Employer immediately prior to the sale or disposition as a class hold immediately after the exchange at least a majority of all outstanding voting power of the entity to which the assets of Employer are being sold; or (v) the liquidation or dissolution of Employer.
(iii) Initial ISO Grant. Upon execution of this Agreement, Employee shall be granted an aggregate of 1,300,000 stock options: (i) 300,000 stock options shall vest immediately upon the Employee’s execution and delivery of this Agreement and shall be exercisable at $.01 each for a period of three (3) years into underlying shares of the Company’s common stock; (ii) 500,000 stock options shall be exercisable at $.15 each for a period of three (3) years into underlying shares of the Company’s common stock will vest upon the Company closing a financing in excess of $10 million; and (iii) 500,000 stock options shall be exercisable at $.15 each for a period of three (3) years into underlying shares of the Company’s common stock will vest upon the Employer’s completion of the Initial Term of six-months of Employment.
(b) The Employer also shall reimburse the Employee for all business expenses incurred by Employee in the performance of his duties hereunder including, but not limited to, travel on business, attending technical and business meetings, professional activities, and customer entertainment, such reimbursement to be made in accordance with regular Company policy and within a reasonable period following Employee’s presentation of the details of, and proof of, such expenses.
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6. |
FRINGE BENEFITS |
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(a) |
During the term of this Agreement, Employer shall provide to Employee, at |
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its sole expense, hospitalization, major medical, life insurance and other fringe benefits on the same terms and conditions as it shall afford other senior management employees. Nothing herein shall require Employee to obtain or maintain such coverage.
(b) During the term of this Agreement, Employer shall provide paid vacation, to Employee, which accrues from the date of execution of this Agreement. The annual paid vacation earned for each year of employment is: (i) three (3) weeks for the first three (3) years of full-time employment; (ii) four (4) weeks per year for more than three (3) and up to seven (7) years of full-time employment; and (iii) five (5) weeks per year for more than seven (7) years of full-time employment.
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7. |
SUBSIDIARIES |
For the purposes of this Agreement all references to business products, services and sales of Employer shall include those of Employer’s affiliates.
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8. |
INVENTORIES: SHOP RIGHTS |
All systems, inventions, discoveries, apparatus, techniques, methods, know-how, formulae or improvements made, developed or conceived by Employee during Employee’s employment by Employer, whenever or wherever made, developed or conceived, and whether or not during business hours, which constitute an improvement, on those heretofore, now or at any during Employee’s employment, developed, manufactured or used by Employer in connection with the manufacture, process or marketing of any product heretofore or now or hereafter developed or distributed by Employer, or any services to be performed by Employer or of any product which shall or could reasonably be manufactured or developed or marketed in the reasonable expansion of Employer’s business, shall be and continue to remain Employer’s exclusive property, without any added compensation or any reimbursement for expenses to Employee, and upon the conception of any and every such invention, process, discovery or improvement and without waiting to perfect or complete it, Employee promises and agrees that Employee will immediately disclose it to Employer and to no one else and thenceforth will treat it as the property and secret of Employer.
Prior inventions which include and are not limited to jCopia, and the Intellectual property developed from the existing Xxxxxxx Ranch/Xxxxxx & Partners agreement are excluded from this Section 8..
Employee will also execute any instruments requested from time to time by Employer to vest in it complete title and ownership to such invention, discovery or improvement and will, at the request of Employer, do such acts and execute such instrument as Employer may require, but at Employer’s expense to obtain Letters of Patent, trademarks or copyrights in the United States and foreign countries, for such invention, discovery or improvement and for the purpose of vesting title thereto in Employer, all without any reimbursement for expenses (except as provided in Section 5 or otherwise) and without any additional compensation of any kind to Employee.
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9. |
CONFIDENTIAL INFORMATION and TRADE SECRETS |
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(a) All Confidential Information shall be the sole property of Employer. Employee will not, during the period of his employment and for a period ending two years after termination of his employment for any reason, disclose to any person or entity or use or otherwise exploit for Employee’s own benefit or for the benefit of any other person or entity any Confidential Information which is disclosed to Employee or which becomes known to Employee in the course of his employment with Employer without the prior written consent of an officer of Employer except as may be necessary and appropriate in the ordinary course of performing his duties to Employer during the period of his employment with Employer. For purposes of this Section 10(a), “Confidential Information” shall mean any data or information belonging to Employer, other than Trade Secrets, that is of value to Employer and is not generally known to competitors of Employer or to the public, and is maintained confidential by Employer, including but not limited to non-public information about Employer’s clients, executives, key contractors and other contractors and information with respect to its products, designs, services, strategies, pricing, processes, procedures, research, development, inventions, improvements, purchasing, accounting, engineering and marketing (including any discussions or negotiations with any third parties). Notwithstanding the foregoing, no information will be deemed to be Confidential Information unless such information is treated by Employer as confidential and shall not include any data or information of Employer that has been voluntarily disclosed to the public by Employer (except where such public disclosure has been made without the authorization of Employer), or that has been independently developed and disclosed by others, or that otherwise enters the public domain through lawful means.
(b) All Trade Secrets shall be the sole property of Employer. Employee agrees that during his employment with Employer and after its termination, Employee will keep in confidence and trust and will not use or disclose any Trade Secret or anything relating to any Trade Secret, or deliver any Trade Secret, to any person or entity outside Employer without the prior written consent of an officer of Employer. For purposes of this Section 10(b), “Trade Secrets” shall mean any scientific, technical and non-technical data, information, formula, pattern, compilation, program, device, method, technique, drawing, process, financial data, financial plan, product plan or list of actual or potential customers or vendors and suppliers of Employer or any portion or part thereof, whether or not copyrightable or patentable, that is of value to Employer and is not generally known to competitors of Employer or to the public, and whose confidentiality is maintained, including unpatented and un-copyrighted information relating to Employer’s products, information concerning proposed new products or services, market feasibility studies, proposed or existing marketing techniques or plans and customer consumption data, usage or load data, and any other information that constitutes a trade secret, as such term as defined in § 10-1-761 of the Official Code of Georgia Annotated, in each case to the extent that Employer, as the context requires, derives economic value, actual or potential, from such information not being generally known to, and not being readily ascertainable by proper means by, other persons or entities who can obtain economic value from its disclosure or use.
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10. |
NON-SOLICITATION OF EMPLOYEES |
During the term of Employee’s employment and for one year thereafter, Employee will not cause or attempt to cause any employee of Employer to cease working for Employer to retain employment with another employer that is a competitor of Employer’s. However, this obligation
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shall not affect any responsibility Employee may have as an employee of Employer with respect to the bona fide hiring and firing of Employer’s personnel.
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11. |
NON-SOLICITATION OF CUSTOMERS AND PROSPECTIVE CUSTOMERS |
Employee will not, during the period of his employment and for a period ending two years after the termination of his employment for any reason, directly or indirectly, solicit the business of any customer for the purpose of, or with the intention of, selling or providing to such customer any product or service in competition with any product or service sold or provided by Employer during the 12 months immediately preceding the termination of Employee’s employment with Employer; provided that the provisions contained in this Section 12 shall apply only to a customer who is or was during the 12 months immediately preceding the termination of Employee’s employment with Employer either (a) a customer of Employer, with whom Employee had material contact and/or whom Employee serviced in his role as an employee of Employer or (b) a prospective customer of Employer, with whom Employee had material contact and/or whom he serviced in his role as an employee of Employer.
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12. |
NON-COMPETITION |
Employee agrees that during his employment with Employer, Employee will not engage in any employment, business, or activity that is in any way competitive with the business or proposed business of Employer, and Employee will not assist any other person or organization in competing with Employer or in preparing to engage in competition with the business or proposed business of Employer. The provisions of this paragraph shall apply both during normal working hours and at all other times including, without limitation, nights, weekends and vacation time, while Employee is employed with Employer.
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13. |
TERMINATION |
Employee’s employment with Employer may be terminated as follows:
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(a) |
Termination Without Just Cause. |
(i) Employer, in its sole discretion, may terminate Employee’s employment hereunder without Just Cause (as defined below), at any time, by giving written notice to Employee of such intent at least 30 days in advance of the effective date of termination; provided, during all or any part of the remaining Term, Employer, in its sole discretion, may modify, reduce or eliminate Employee’s duties hereunder.
(ii) If Employer terminates Employee’s employment hereunder without Just Cause before the end of the Term, all unvested options refered to in Section 5 shall be considered fully vested and Employee will be entitled to receive the compensation and benefits, in the full amount provided under the terms of any benefit plan or this Agreement (to the extent permitted by law) that Employer would have been required to pay to Employee if Employee’s employment had instead been terminated at the end of the Term; provided, if necessary to prevent the reimbursements under Employer’s group health plans from being treated as taxable income to Employee, the Employee’s cost of maintaining coverage under state or federal law mandating the
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right to continue such benefits will be paid by Employer and treated as taxable income to Employee.
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(b) |
Termination With Just Cause. |
(i) Employer may immediately terminate Employee’s employment hereunder for Just Cause (as defined below) at any time upon delivery of written notice to Employee.
(ii) For purposes of this Agreement, the phrase “Just Cause” means: (A) Employee’s material fraud, gross malfeasance, gross negligence, or willful misconduct done in bad faith, with respect to Employer’s business affairs; (B) Employee’s refusal or repeated failure to follow Employer’s established reasonable and lawful policies of Employer; (C) Employee’s material breach of this Agreement; or (D) Employee’s conviction of a felony or crime involving moral turpitude. A termination of Employee for Just Cause based on clause (A), (B) or (C) of the preceding sentence will take effect 30 days after Employee receives from Employer written notice of its intent to terminate Employee’s employment and Employer’s description of the alleged cause, unless Employee, in the good-faith opinion of Employer, during such 30-day period, remedies the events or circumstances constituting Just Cause.
(iii) If Employee’s employment hereunder is terminated by Employer for Just Cause, Employer will be required to pay to Employee only that portion of his base salary, accrued vacation, and to the extent required under the terms of any benefit plan or this Agreement, the vested portion of any benefit under such plan, all as earned through the date of termination.
(c) Disability and Death. Employee’s employment hereunder will be terminated immediately upon his disability (as determined for purposes of Employer’s long-term disability plan) or his death. If Employee’s employment is terminated due to such disability or death, Employer will be required to pay to Employee or Employee’s estate, as the case may be, in addition to the amounts payable under Employer’s short-term and long-term disability plans or life insurance plans (as applicable), only his base salary and accrued vacation, earned through the date of termination, and to the extent required under the terms of any benefit plan or this Agreement, the vested portion of any benefit under such plan. Employee or Employee’s estate, as the case may be, will not by operation of this provision forfeit any rights in which Employee is vested at the time of Employee’s disability or death.
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INJUNCTION |
(a) Should Employee at any time reveal, or threaten to reveal, any such secret knowledge or information, or during any restricted period engage, or threaten to engage, in any business in competition with that of Employer, or perform, or threaten to perform, any services for anyone engaged in such competitive business, or in any way violate, or threaten to violate, any of the provisions of this Agreement, Employer shall be entitled to seek an injunction restraining Employee from doing, or continuing to do, or performing any such acts; and Employee hereby consents to the issuance of such an injunction.
(c) The existence of any claim or cause of action by Employer against Employee, or by Employee against Employer, whether predicated upon this Agreement or otherwise, shall not
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constitute a defense to the enforcement by Employer of the foregoing restrictive covenants but shall be litigated separately.
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MISCELLANEOUS |
If any provision of this Agreement shall be declared, by a court of competent jurisdiction, to be invalid, illegal or incapable of being enforced in whole or in part, the remaining conditions and provisions or portions thereof shall nevertheless remain in full force and effect and enforceable to the extent they are valid, legal and enforceable, and no provision shall be deemed dependent upon any covenant or provision so expressed herein.
The parties hereto have made no agreements, representations or warranties relating to the subject matter of this Agreement which are not set forth herein. The provisions of this Agreement may not be amended, supplemented, waived, or changed orally, but only in writing and signed by the party as to whom enforcement of any such amendment, supplement, waiver, or modification is sought and making specific reference to this Agreement.
The rights, benefits, duties and obligations under this Agreement shall inure to, and be binding upon, the Employer, its successors and assigns, and upon the Employee and his legal representatives, heirs and legatees. This Agreement constitutes a personal service agreement, and the performance of the Employee’s obligations hereunder may not be transferred or assigned by the Employee.
The failure of either party to insist upon the strict performance of any of the terms, conditions and provisions of this Agreement shall not be construed as a waiver or relinquishment of future compliance therewith, and said terms, conditions and provisions shall remain in full force and effect. No waiver of any term or condition of this Agreement, on the part of either party, shall be effective for any purpose whatsoever unless such waiver is in writing and signed by such party.
This Agreement shall be construed and governed by the laws of the State of Georgia.
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IN WITNESS WHEREOF, this employment agreement is dated as of the ___ day of October, 2007.
On Behalf of Employer:
i2 TELECOM INTERNATIONAL, INC.
By: ___________________________
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Xxxx X. Arena, |
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Chief Executive Officer |
XXXX XXXXXX
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By: ___________________________ |
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Xxxx Xxxxxx, Employee |
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