INDIGINET, INC.
AMENDED EMPLOYMENT AGREEMENT
For XXXX XXXXX, Chief Executive Officer
This Amended Employment Agreement ("Agreement") is entered into on this
24th day of November 2003, in the City of Newport Beach, California, by and
between INDIGINET, INC., a Florida Corporation (hereinafter referred to as
"Company") and XXXX XXXXX (hereinafter referred to as "Executive") and
collectively called the "Parties". As of the date of the signing of this
Agreement, Xxxx Xxxxx is serving as Chief Executive Officer for the Company,
referred to in this Agreement as "CEO".
WITNESSETH:
WHEREAS, Company is desirous of employing Executive in the capacity
hereinafter stated, and Executive is desirous of continuing in the employ of
Company in such capacity, for the period and on the terms and conditions set
forth herein;
NOW THEREFORE, in consideration of the premises and of the mutual covenants
and conditions herein contained, the parties hereto, intending to be legally
bound, do hereby agree as follows:
1. EMPLOYMENT
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Company hereby employs Executive as its President and Chief Executive
Officer, and Executive accepts those duties that are customarily performed by
the President and Chief Executive Officer of a telecommunications and
computer-hardware company and accepts all other duties described herein, and
agrees to discharge the same faithfully and to the best of his ability and
consistent with past performances and the highest and best standards of the
telecommunications and computer hardware industry, in accordance with the
policies of Company's Board of Directors as established, and in compliance with
all laws and Company's Articles of Incorporation, Bylaws, Policies and
Procedures. Executive shall devote his full business time and attention to the
business and affairs of Company for which he is employed and shall perform the
duties thereof to the best of his ability. Except as permitted by the prior
written consent of Company's Board of Directors, Executive shall not directly or
indirectly render any services of a business, commercial or professional nature
to any other person, firm or corporation, whether for compensation or otherwise,
which are in conflict with Company's interests. Executive shall perform such
other duties as shall be from time to time prescribed by Company's Board of
Directors.
Executive shall have such responsibility and duties and such authority to
transact business on behalf of Company, as are customarily incident to the
office of President and Chief Executive Officer of a telecommunications and
computer hardware company.
2. TERM
----
Employer hereby employs Executive, and Executive hereby accepts employment
with Employer for the period of five (5) years (the "Term"), commencing March 7,
2003, and terminating February 28, 2008, with such term being subject to prior
termination as hereinafter provided. As used herein, "Term" shall refer to the
entire period of employment of Executive by Employer, whether for the period
provided above, or whether terminated earlier or extended as hereinafter
provided, or extended by mutual agreement in writing by Employer and Executive.
3. COMPENSATION
------------
In consideration for all services to be rendered by Executive to Employer,
Employer agrees to pay Executive a starting base salary of Three Hundred and
Fifty Thousand Dollars ($350,000) for the first year of his Employment Agreement
commencing the 7th day of March 2003, through the 28th day of February 2004.
For the second year of this Employment Agreement, commencing the 7th day of
March 2004, through the 28th day of February 2005, the Executive's base salary
shall be Four Hundred Thousand Dollars ($400,000). For the third year of this
Employment Agreement, commencing the 7th day of March 2005, through the 28th
February 2006, the Executive's base salary shall be Four Hundred and Fifty
Thousand Dollars ($450,000). For the fourth year of this Employment Agreement,
commencing the 7th day of March 2006, through the 28th February 2007, the
Executive's base salary shall be Five Hundred Thousand Dollars ($500,000). For
the fifth year of this Employment Agreement, commencing the 7th day of March
2007, through the 28th February 2008, the Executive's base salary shall be Five
Hundred and Fifty Thousand Dollars ($550,000).
Company's Board of Directors may award, at any time, by way of bonus or
otherwise, as a portion of the base salary or by way of bonus stock options in
favor of Executive. Company's Board of Directors agrees to act in good faith
(with the Executive abstaining from any decision relating to Executive salary in
the event the Executive shall be a member of the Board of Directors) and shall
set the Executive's salary and/or stock option awards for ensuing years based
upon performance of the Executive, taking into account consideration
compensation paid to Executives of other similar sized entities and businesses
within the same or similar industries. Nothing herein contained shall be deemed
to limit, to any extent, the right of the Company's Board of Directors to award,
in their sole and absolute discretion, bonuses in addition to the base salary or
any stock options granted with such bonus to be paid in either salary, accrued
or otherwise, and/or stock option, provided herein, which bonuses may from time
to time be granted in favor of Executive. Executive's salary, to the extent
payable in money, shall be paid semi-monthly.
Executive shall receive a bonus of $50,000 per year if the company's annual
revenue is under two million dollars, $75,000 for revenue between two million
and one dollars to five million dollars, and $100,000 for revenue of five
million and one dollars or more ("Revenue Bonus"). The Executive may elect to
receive the Revenue Bonus in the form of cash, preferred stock of the Company,
or a combination of the cash and preferred stock. If the Executive elects to
receive all or a portion of the Revenue Bonus in the form of preferred stock,
the preferred stock will be issued at a price which is 50% of the fair market
value.
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Executive shall receive a bonus of 1 million shares of preferred stock for
any material acquisition by the Company of assets or equity in another company.
Executive shall receive 2 million shares of preferred stock if the value of
Company's assets is between $5,000 and $100,000. Executive shall receive 3
million shares of preferred stock if the value of Company's assets is between
$100,100 and $250,000. Executive shall receive 4 million shares of preferred
stock if the value of Company's assets is between $250,001 and $1,000,000.
Executive shall receive shares of common stock of Company only if certain
milestones are accomplished, attached hereto as Exhibit A and incorporated
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herein for all purposes.
Stock options of three hundred and thirty four thousand (334,000) shares of
common stock to be granted per year for three (3) years with vesting period to
begin March 7, 2003 and vesting price to be $0.05 for the first year, for each
option for the purchase of one share of Company's common stock. For the second
year of this Employment Agreement, the vesting price shall be $0.10, and for the
third year of this Employment Agreement, the vesting price shall be $0.20.
Executive shall be entitled to participate in any and all other employee
benefits and plans that may be developed and adopted by the Company and in which
Executive is eligible to participate.
4. AUTOMOBILE AND REIMBURSEMENT
----------------------------
Company agrees to provide Executive with an automobile allowance of One
Thousand Five Hundred Dollars ($1,500.00) per month. Company agrees to
reimburse Executive for reasonable and necessary business expenses for club
memberships that Executive may secure or maintain during the term of this
Employment Agreement. Company agrees to reimburse Executive for all ordinary
and necessary expenses incurred by Executive on behalf of Company, including
entertainment, meals and travel expenses. Any costs incurred by Executive for
conventions, meetings and seminars will be reimbursed as well as special social
entertainment expenses, provided that Company's Board of Directors approves
such.
5. INSURANCE
---------
Company agrees to provide Executive with health and life insurance
benefits, with health benefits to include medical and dental insurance, and life
insurance benefits to be a term policy with a death value at a minimum of Two
Million Dollars ($2,000,000), which policy is now or may hereinafter be in
effect for all other full-time employees of Company. Company may also apply for
a "key man" life insurance policy with Company as beneficiary of the policy.
6. VACATION
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Executive shall be entitled to accrue up to five (5) weeks vacation during
each year of the Term of this Agreement, with at least two (2) weeks to be taken
in a consecutive period. Vacation benefits shall not accrue above five (5)
weeks at any time. Company's Board of Directors, in its discretion, may waive
the provision with respect to unused vacation time.
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Executive shall receive five (5) days of paid Personal Time to be accrued
per year. Unused accrued Personal Time has no cash value.
7. AGREEMENT NOT TO COMPETE / TRADE SECRETS AND CONFIDENTIAL INFORMATION
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Executive recognizes that he may occupy a position of trust with respect to
business and technical information of Company, which information shall be the
property of Company and/or its affiliates. Executive further acknowledges that
Company's agreement to pay the compensation provided hereunder shall be based
upon Executive's agreement that he shall not render consulting services or
otherwise provide benefits to any entity or individual who shall directly or
indirectly be in competition with Company. Executive therefore agrees that:
(a) During the term of this Agreement, and for any additional period
which Company may be providing benefits, under the Terms of this Agreement,
Executive will not engage in nor have any material interest in any business,
person, firm, corporation or any other entity whether as an advisor, principal,
employee, independent contractor, agent, partner, officer, director, stockholder
or member of any association or otherwise that engages in any activity within
any of the states, United States or any foreign country in which the Company
conducts its business which activity is the same as or materially similar to or
directly competitive with any activity engaged in by the Company; or any
affiliate, parent or entity associated with Company.
Ownership of less that two and one-half percent (2.5%) of the outstanding
shares of capital stock or beneficial interest in an entity shall not constitute
a breach of this section.
(b) Executive shall not, directly or indirectly, without the prior
written consent of the Company (which may be withheld at the sole discretion of
Company), disclose to any person other than employees of Company or any
affiliate, parent or entity associated with Company, any Confidential
Information.
(c) Executive shall not, directly or indirectly, without the prior
written consent of the Company, which may be withheld at its sole discretion,
use any Confidential Information for Executive's own use independent of Company
or any affiliate, parent or entity associated with Company.
(d) Executive shall return promptly upon the termination of this
Agreement, or otherwise upon the request of Company, any and all originals and
copies of any documentation or materials containing any Confidential
Information.
For purposes of this Agreement, the term "Confidential Information" shall
include information of the nature and in the form specified below which is owned
by or in the possession of Company which is disclosed to the Company in
connection with the business of the Company, which information relates to (i)
potential or existing acquisitions of Company, (ii) the Company's financial
data, (iii) the Company's employee compensation or performance data, and (iv)
any other information identified to the Executive as confidential by the
Company, an executive officer thereof; provided, however, that this provision
shall not apply to any information which is publicly available, or become
available to Executive from any third party who is not breaching, to the
knowledge of Executive, any obligation of confidentiality to
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Company, or to any disclosures which are required to be made under legal
process, by subpoena or other court order.
8. TERMINATION
-----------
Company shall have the right to terminate this Agreement for any of the
following reasons by serving written notice upon Executive:
(a) willful breach of habitual neglect of, willful failure to perform,
or inability to perform, Executive's duties and obligations as President and
Chief Executive Officer;
(b) illegal conduct, constituting a crime involving moral turpitude,
conviction of a felony, or any conduct detrimental to the interests of Company;
(c) physical or mental disability rendering Executive incapable of
performing his duties for a consecutive period of 180 days, or by death. In the
event of such disability, Company will provide salary continuation for 180 days,
less accrued sick leave. Accrued sick leave is to be utilized until exhausted
prior to salary continuation provided herein; or
(d) determination by Company's Board of Directors that the continued
employment of Executive is detrimental to the best interests of Company, or for
any reason whatsoever as determined by Company's Board of Directors and in the
sole and absolute discretion of Company's Board of Directors.
In the event this Agreement is terminated for any of the reasons specified
in the paragraphs (a), (b) or (c) above, Executive will be paid two (2) weeks'
salary calculated as of the date of Executive's termination, plus any pay in
lieu of vacation accrued to, but not taken as of the date of termination. Such
termination pay shall be considered to be in full and complete satisfaction of
any and all rights, which Executive may enjoy under the Terms of this Agreement
other than rights, if any, to exercise any of the stock options vested prior to
such termination. The insurance benefits provided herein shall be extended at
Company's sole cost until the end of the month in which Executive is terminated.
In the event this Agreement is terminated for any reason specified in
paragraph (d) above, Executive shall be entitled to termination pay in an amount
equal to two (2) years of Executive's then base annual salary. Such termination
pay shall be paid in one lump sum and shall be considered to be in full and
complete satisfaction of any and all rights which Executive may enjoy under the
Terms of this Agreement including any pay in lieu of vacation accrued to, but
not taken as of the date of termination.
Where termination is pursuant to paragraph (d) above, the insurance
benefits provided herein shall be extended at Company's sole cost for the
remainder of the month and twelve (12) full months following the date of
termination.
Executive shall give sixty (60) days prior notice, in writing, to Company
in the event Executive resigns or voluntarily terminates employment.
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9. INDEMNIFICATION
---------------
To the extent permitted by law, Company shall indemnify Executive if he was
or is a party of is threatened to be made a party in any action brought by a
third party against Executive (whether or not Company is joined as a party
defendant) against expenses, judgments, fines, settlements and other amounts
actually and reasonably incurred in connection with said action of Executive
acted in good faith and in a manner Executive reasonably believed to be in the
best interest of Company (and with respect to a criminal proceeding if Executive
had no reasonable cause to believe his conduct was unlawful), provided that the
alleged conduct of Executive arose out of and was within the course and scope of
his employment as an officer or employee of Company.
10. ARBITRATION
-----------
Any dispute related to the interpretation of enforcement of this Employment
Agreement shall be enforceable only by arbitration in the County of Orange,
California (or such other metropolitan area to which the Company's principal
executive offices may be relocated), in accordance with the commercial
arbitration rules then in effect of the American Arbitration Association, before
a panel of three arbitrators, one of whom shall be selected by the Company, the
second of whom shall be selected by the Executive and the third party of whom
shall be selected by the other two arbitrators. In the absence of the American
Arbitration Association, or if for any reason arbitration under the arbitration
rules of the American Arbitration Association cannot be initiated, or if one of
the parties shall fail or refuses to select an arbitrator, or if the parties
failed or refused to select an arbitrator, or if the arbitrators selected by the
Company and the Executive cannot agree on the selection of the third arbitrator
within seven (7) days after such time as the Company and the Executive have each
been notified of the selection of the other's arbitrator, the necessary
arbitrator or arbitrators shall be selected by the presiding judge of the court
of general jurisdiction in the metropolitan area where arbitration under this
section would otherwise have been conducted. Each arbitrator selected as
provided herein is required to be or have been a director or an executive
officer for a corporation whose shares of common stock were listed during at
least one year of such service on the New York Stock Exchange or the American
Stock Exchange or quoted on the National Association if Securities Dealers
Automated Quotations System. The arbitrators shall award to the Company its
legal fees and expenses incurred in connection with any arbitration proceeding
is commenced by the Executive and the Executive has no reasonable basis for
initiating such proceeding. Any award entered by the arbitrators shall be final,
binding and nonappealable and judgment may be entered thereon by any party in
accordance with applicable law in any court or competent jurisdiction except to
the extent an Arbitration award is appealable under applicable law. This
arbitration provision shall be specifically enforceable.
11. RETURN OF DOCUMENTS
---------------------
Executive expressly agrees that all manuals, documents, files, reports,
studies, instruments or other materials used or developed by Executive during
the Term are solely the property of Company, and Executive has no right, title
of interest therein. Upon termination of this Agreement, Executive or
Executive's representatives shall promptly deliver possession of all of said
property to Company in good condition.
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12. NOTICES
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All notices, requests, demands, claims and other communications hereunder
shall be in writing. Any notice, request, demand, claim or other communication
hereunder shall be deemed duly given (i) if personally delivered against written
receipt, when so delivered, (ii) if mailed by registered or certified mail,
return receipt requested, postage prepaid and addressed to the intended
recipient as set forth below, five (5) business days after being so mailed,
(iii) if given by telefax or telecopier, once such notice or other communication
is transmitted to the telex or telecopier number specified below and the
appropriate answer back or telephonic confirmation is received, provided that
such notice or other communication is promptly thereafter delivered in
accordance with the provision of clause (i), (ii), or (iii) hereof, or (iii) if
sent through a nationally recognized overnight service which guarantees next day
delivery, on (1) business day after being so sent:
If to the Executive: If to the Company:
XXXX XXXXX INDIGINET, INC.
39 Rhode Island 0000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxxx 00000 Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Any party may give any notice, request, demand, claim or other
communication hereunder using any other means (including ordinary mail or
electronic mail), but no such notice, request, demand, claim or other
communication shall be deemed to have been duly given unless and until it
actually is received by the individual for whom it is intended. Any party may
change the address to which notices, requests, demands, claims and other
communications hereunder are to be delivered by giving the other parties notice
in manner herein set forth.
13. SUCCESSORS AND ASSIGNS
------------------------
(a) Of the Company. The Company shall require any successor (whether
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direct or indirect, by purchase, merger, consolidation, reorganization or
otherwise) to all or substantially all of the business and/or assets of the
Company expressly to assume and to agree to perform this Agreement in the same
manner and to the same extent to the Company would be required to perform if no
such succession had taken place. This Agreement shall be binding upon the
Company and any successor of or to the Company, including without limitation any
person acquiring directly or indirectly all or substantially all of the business
and/or assets of the Company whether by sale, merger, consolidation,
reorganization or otherwise (and such successor shall thereafter be deemed the
"Company" for the purposes of this Agreement), but shall not otherwise be
assignable or delegable by the Company without the written consent of the
Executive which may be withheld or granted in the sole discretion of the
Executive.
(b) Of the Executive. This Agreement shall inure to the benefit of and
----------------
be enforceable by the personal or legal representatives, executors,
administrators, successors, assigns, heirs, distributes and/or legatees of the
Executive, although duties of Executive are not assignable.
14. SEVERABILITY
------------
Any provision of this Agreement which is deemed invalid, illegal, or
unenforceable in any jurisdiction shall, as to that jurisdiction and subject to
this paragraph be ineffective to the
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extent of such invalidity, illegality, or unenforceability, without affecting in
any way the remaining provisions hereof in such jurisdiction or rendering that
or any other provisions of this Agreement invalid, illegal, or unenforceable in
any other jurisdiction, provided that by reason thereof the obligations of
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Executive hereunder are not increased or expanded. If any covenant should be
deemed invalid, illegal or unenforceable because its scope is considered
excessive, such covenant shall be modified so that the scope of the covenant is
reduced only to the minimum extent necessary to render the modified covenant
valid, legal and enforceable.
15. ENTIRE AGREEMENT
-----------------
This document constitutes the final, complete, and exclusive embodiment of
the entire agreement and understanding among the parties related to the subject
matter hereof and supersedes and preempts any prior or contemporaneous
understandings, agreements, or representations by or between the parties,
written or oral.
16. COUNTERPARTS
------------
This Agreement may be executed on separate counterparts, any one of which
need not contain signatures of more than one party, but all of which taken
together with constitute one and the same agreement.
17. AMENDMENTS
----------
No amendments or other modifications to this Agreement may be made except
by writing signed by all parties. No amendment or waiver of this Agreement
requires the consent of any individual, partnership, corporation or other entity
not a party to this Agreement. Nothing in this Agreement, expressed or implied,
is intended to confer upon any third person any rights or remedies under or by
reason of this Agreement.
18. CHOICE OF FORUM
-----------------
All questions concerning the construction, validity and interpretation of
this Agreement will be governed by the internal law, and not the law of
conflicts, of the State of California.
19. BENEFIT OF AGREEMENT
----------------------
This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective executors, administrators, successors and
assigns.
20. APPLICABLE LAW
---------------
This Agreement is made and entered into in the State of California, and the
laws of said State shall govern the validity and interpretation hereof, and the
performance of the parties hereto and their respective duties and obligations
hereunder.
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21. CAPTIONS AND PARAGRAPH HEADINGS
----------------------------------
Captions and paragraph headings used herein are for convenience only and
are not a part of this Agreement and shall not be used in construing it.
22. INVALID PROVISIONS
-------------------
Should any provision of this Agreement for any reason be declared invalid,
void, or unenforceable by a court of competent jurisdiction, the validity and
binding effect of any remaining portions shall not be affected and the remaining
portions of this Agreement shall remain in full force and effect as if this
Agreement had been executed with said provision eliminated.
23. ENTIRE AGREEMENT
-----------------
This Agreement contains the entire agreement of the parties and it
supersedes any and all other agreements, either oral or in writing, between the
parties hereto with respect to the employment of Executive by Company, except to
the extent that it is contemplated that Executive and Company may enter into a
stock option agreement and/or salary continuation agreement. Each party to this
Agreement acknowledges that no representations, inducements, promises, or
agreements, oral of otherwise, have been made by any party, or anyone acting on
behalf of any party, which are not embodied herein, and that no other agreement,
statement, or promise not contained in this Agreement shall be valid or binding.
This Agreement may not be modified or amended by oral agreement, but only by an
agreement in writing signed by Company and Executive.
24. LEGAL COSTS
------------
If either Executive or Company commences an action against the other
arising out of or in connection with this Agreement, the prevailing party shall
be entitled to have and recover from the losing party reasonable attorney fees
and costs of suit.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and years first above written.
INDIGINET, INC. EXECUTIVE
_______________________ ________________________
By:____________________ XXXX XXXXX
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EXHIBIT A
INDIGINET, INC. STRATEGIC GOALS
Goals Share Bonus
File 2003 10K and amended 3Q; clean up corporate structure. 2,000,000
IGTT offers nationwide dedicated voice and data commercial and/or residential service. 1,000,000
IGTT deploys a nationwide domestic gateway (soft switch) and/or a switched calling card network. 1,000,000
IGTT deploys a CIC on one or more underlying carrier by either state or nationwide. 500,000
Management, through acquisition or internal growth, achieves $50,000 of monthly revenue from
domestic operations. 500,000
Management, through acquisition or internal growth, achieves $1 million of annual revenue from
all operations. 500,000
Management, through acquisition or internal growth, achieves $2 million of annual revenue from
all operations. 500,000
Management, through acquisition or internal growth, achieves $3 million of annual revenue from
all operations. 500,000
Management, through acquisition or internal growth, achieves $4 million of annual revenue from
all operations. 500,000
Company achieves positive earnings and EBITDA by 2003 fiscal year end. If achieved earlier, the
bonus is increased as follows: by the end of Q1 2003 a 3X multiple; by the end of Q2 2003 a 2X
multiple; and by the end of Q3 2003 a 1.5X multiple 800,000
Company achieves positive earnings and EBITDA for 2004 fiscal year end. 1,000,000
Company achieves positive earnings and EBITDA by 2003 fiscal year end. 1,200,000
The Company is listed on the NYSE or NASDAQ exchange for 6 consecutive months. 2,000,000
The Company is listed on the AMEX exchange for 6 consecutive months. 1,000,000
Management acquires and successfully integrates a telecommunications entity with revenues
exceeding 10% of the Company's preacquisition annual revenue, and the acquisition results in a net
cash flow positive contribution to the Company. 500,000
Company achieves and maintains a cash flow positive position from operations for two quarters in
any fiscal year. Cash flow from operations is to be used from the Net Cash Provided by Operating
Activities line of the cash flow statement in the Company's publicly filed quarterly or annual
financial reports (e.g., 10KSB, or 10QSB). 500,000
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14,000,000
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Total shares available for pool 14,000,000
