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EMPLOYMENT AGREEMENT




This Employment Agreement is entered into by and between CALIBRUS,
INC., a Nevada corporation (“Employer”), and Jeff W. Holmes (“Employee”).




WHEREAS, Employer seeks to secure the services of Employee and
Employee seeks to serve as a key employee of Employer, privy to all of
Employer’s trade secrets, proprietary information, know how and other property
interests owned or held by Employer.




A G R E
E M E N T :




NOW, THEREFORE, in consideration of the above premises, the
promises contained in this Agreement and for other good and valuable
consideration, the receipt and sufficiency of which hereby is acknowledged, the
parties agree as follows:




1.

Employment Term and Extensions.  




1.1.  Term.  Except as provided in paragraphs 1.2
and 11 of this Agreement, Employer will employ Employee, and Employee will enter
and continue in Employer’s employment for a period of four (4) years, beginning
as of the date Employee actually commences work and continuing until the earlier
of the fifth anniversary of such date or a Termination (defined below).
 




1.2.  Extensions.  This Agreement automatically
will extend for four (4) successive one (1) year terms unless, not less than
ninety (90) days before the commencement of any such additional term, either
Employer or Employee gives written notice to the other of a Termination.




2.

Duties.  Employee shall serve as Employer’s Chief
Executive Officer, performing such duties, as Employer's Board of Directors
shall prescribe.  




3.

Extent of Service.  Employee shall devote his best
efforts, full time, attention, energy and skills to discharge his duties and
responsibilities to Employer and Employer’s business. Employee shall not, during
the term of this Agreement, directly or indirectly, engage in any commercial
enterprise for gain or profit, except that Employee may pursue any activity that
is not inconsistent with Employer’s interests and that is approved in advance
and in writing by Employer’s Board of Directors.




4.

Compensation.  




     A)

Employee agrees to accept from Employer and Employer agrees to pay


Employee an annual salary of $180,000 ($15,000 per month) for the
term of this agreement.  Employee shall be considered for Salary increases
from time to time based on merit or such other criteria as the Board of
Directors may determine with the approval of the Compensation Committee.




B)

If SG&A cost exceeds 40% of gross revenue, the Compensation
Committee reserves the right to adjust the salaries of contract employees.
 If salaries are adjusted, the percentage adjustment to Employee’s salary
will not be larger than the percentage made to the Chief Executive
Officer’s.




C)

The Compensation Committee will convene at the last scheduled
Board of Directors meeting of the calendar year (usually during November) and
determine if Options should be granted or a cash bonus should be paid based on
the company’s performance and the individual’s performance during the year.
 Compensation committee decisions on option grants and bonus payments will
usually be carried out during the last week of the calendar year.  







5.

Additional Benefits.  Employer will provide Employee
with reasonable and customary life, health and disability insurance, as well as
two (2) weeks vacation annually, sick leave, and other benefits that Employer
currently provides to its employees or that Employer’s Board of Directors later
determines to be appropriate and that Employer then provides to its employees.
 Employee acknowledges that the extent and level of benefit provided by
Employer may be decreased during the term of this Agreement.  In lieu of
providing health insurance coverage; Employer shall pay the cost of premiums
continuing Employee’s current health insurance coverage through COBRA during the
period of its availability, upon submittal of invoices for such insurance
premiums.




6.

Expenses.  Employer will pay, or reimburse Employee,
for reasonable and necessary expenses incurred in Employee’s promotion of
Employer’s business, consistent with such policies as may be established by
Employer from time-to-time with respect to expenses and expense reimbursement.
 Such policy changes shall not affect reimbursable expenses already
incurred under any prior policy in effect when such expenses were incurred.
 Employee will be entitled to such reimbursement only upon his providing
proof of the expenses for which Employee seeks reimbursement, in accordance with
Employer’s expense reporting policies, as in effect from time to time.




7.

Information Disclosure.  Employer acknowledges that
Employer’s customer lists, know-how, trade secrets, proprietary information and
other intellectual property interests now or in the future owned and held by
Employer are valuable assets to Employer’s business.  Employee will not,
during or after the term of his employment by Employer, disclose any information
or knowledge with respect to such assets or any part of such assets to any
person or entity.  If Employee breaches or threatens to breach this
paragraph, and because of the difficulty of otherwise enforcing this paragraph,
Employer may seek and receive an injunction restraining Employee from
disclosing, in whole or in part, any information or knowledge with respect to
such of Employer’s assets.  In addition to the above, Employer may pursue
any and all other legal and equitable remedies available to Employer.  This
paragraph shall not apply to information that is or becomes generally known to
the public or trade (except by reason of Employee’s breach of his obligations
hereunder), and information that Employee is required to disclose by order of a
court of competent jurisdiction (but only to the extent specifically ordered by
such court, and when reasonably possible, Employee shall give Employer prior
written notice of such intended disclosure so that Employer has the opportunity
to seek a protective order if it deems such an order appropriate).  




8.

Agreement Not to Compete.  As a material term of this
Agreement and in order to protect the goodwill, the client and vendor relations,
the confidential information, the competitive business advantage of Employer and
Employer’s investment in the training and education of Employee, Employee agrees
that, beginning with Employee’s employment with Employer and extending for a
period of one (1) year after the date of the termination of that employment with
Employer, Employee shall not, anywhere within the United States, Canada or any
other geographical area where Employer conducts its business, directly or
indirectly, be or become an officer, director, stockholder, investor, lender,
partner, proprietor, trustee, employee, advisor, consultant or agent of any
corporation, partnership, trust or other business organization or entity engaged
or to be engaged in or, individually, engage in any business or businesses
competing with or similar to that of Employer existing on or after the date of
such Termination without first obtaining the express written consent of
Employer.  Employer conducts business on the Internet, and operates in
numerous markets throughout the world.  In addition, Employee will not, for
a period of one (1) year after a Termination, directly or indirectly (i) recruit
any person employed by Employer to leave such employment, (ii) solicit the
employment of any such person on Employee's own behalf or on behalf of any other
individual or entity, or (iii) knowingly and willfully endeavor on Employee’s
own account or on behalf of any other individual or entity to interfere with any
of Employer's existing or prospective advantageous business relationships.
 Employee acknowledges and agrees that the remedy at law for any breach or
threatened breach by Employee of any of the provisions of this paragraph will be
inadequate and Employer, in addition to any other remedies, rights or damages
available to it at law or equity, shall be entitled to injunctive relief to
prevent or restrain any such breach.




Employee acknowledges and agrees that the remedy at law for any
breach or threatened breach by Employee of any of the provisions of this
paragraph will be inadequate and Employer, in addition to any other remedies,
rights or damages available to it at law or equity, shall be entitled to
injunctive relief to prevent or restrain any such breach.




Employee certifies and acknowledges that he has carefully read the
foregoing provisions, that he understands and will fully and faithfully comply
with all of the provisions hereof, and that the limitations imposed do not
unduly restrict his ability to earn a living and are reasonable in their
duration and territorial coverage, and are necessary to protect legitimate
business interests of Employer.  




9.

Employer’s Property.  Without limiting the generality
of any foregoing provision, Employee acknowledges and agrees that memoranda,
notes, records and other documents made or compiled by Employee or made
available to Employee during the term of this Agreement concerning the business
of Employer, shall be Employer’s property and shall be delivered by Employee to
Employer upon a Termination or at any other time at Employer's request.




A.1

Assignment Of Inventions.




(a)

All Inventions shall be the sole property of the Employer, and
Employee agrees to perform the provisions of this Section 9.1 with respect
thereto without the payment by the Employer of any royalty or any consideration
therefore other than the regular compensation paid to Employee in the capacity
of an employee or consultant.




(b)

Employee shall maintain written notebooks in which he shall set
forth, on a current basis, information as to all Inventions, describing in
detail the procedures employed and the results achieved as well as information
as to any studies or research projects undertaken on the Employer’s behalf.
 The written notebooks shall at times be the property of the Employer and
shall be surrendered to the employer upon termination of his engagement or, upon
the request of the Employer, at any time prior thereto.




(c)

Employee shall apply, at the Employer’s request and expense, for
United States and foreign letters patent or copyrights either in Employee’s name
or otherwise as the Employer shall desire.




(d)

Employee hereby assigns to the Employer all of his rights to such
Inventions, and to applications for United States and/or foreign letters patent
or copyrights and to United States and/or foreign letters patent or copyrights
granted upon such Inventions.




(e)

Employee shall acknowledge and deliver promptly to the Employer,
without charge to the Employer, but at its expense, such written instruments
(including application and assignments) and do such other acts, such as giving
testimony in support of Employee’s inventorship, as may be necessary in the
opinion of the Employer to obtain, maintain, extend, reissue and enforce United
States and/or foreign letters patent and copyrights relating to the Inventions
and to vest the entire right and title thereto in the Employer of its nominee.
 Employee acknowledges and agrees that any copyright developed or conceived
of, by Employee during the term of his employment which is related to the
business of the Employer shall be a “work for hire” under the copyright law of
the United States and other applicable jurisdictions.




(f)

Employee represents that his performance of all the terms of this
Agreement and as an employee of or consultant to the Employer does not and will
not breach any trust prior to his employment by the Employer.  Employee
agrees not to enter into any agreement either written or oral in conflict
herewith and represents and agrees that he has not brought and will not bring
with him to the Employer or use in the performance of his responsibilities at
the Employer any materials or documents of a former employer which are not
generally available to the public, unless he has obtained written authorization
from the former employer for their possession and use, a copy of which has been
provided to the Employer.




(g)

No provisions of the Paragraph shall be deemed to limit the
restrictions applicable to Employee under Section 8 and 9.







10.

Shop Rights.  The employer shall also have the
royalty-free right to use in its business, and to make, use and sell products,
processes and/or services derived from any inventions, discoveries, concepts and
ideas, whether or not patent able, including but not limited to processes,
methods, formulas and techniques, as well as improvements thereof or know-how
related thereto, which are not within the scope of Inventions as defined herein
but which are conceived of or made by Employee during the period he is engaged
by the Employer or with the use or assistance of the Employer’s facilities,
materials, or personnel.  




11.

Termination.  Employee’s employment may be terminated
for any of the reasons set forth in paragraphs 11.1 to 11.6 of this Agreement
(each and all of which are herein referred to as a “Termination”).  In the
event that Employee is terminated by Employer, Employee shall, within the
earlier of seven (7) days of Termination or the next regular pay period, receive
30 days severance benefits, including full salary, continued health and other
benefits for 30 days and shall receive payment of any accrued bonuses and take
possession of all vested Options.




11.1.

Breach of Agreement.  Employer may terminate
Employee’s employment if Employee fails to carry out any material duty contained
herein or assigned by the Board of Directors.  




11.2

Extensions.  Employer or Employee may terminate
Employee’s employment upon written notice to the other if given not less than
ninety (90) days before the expiration of the term of this Agreement or any
extension thereof, as provided in paragraph 1 hereof.




11.3.  Change of Control.  At Employer’s option,
Employer may terminate Employee’s employment, if (a) Employer sells a
substantial portion of Employer’s assets, (b) Employer determines to terminate
and liquidate its business, or (c) Employer is merged or consolidated into an
entity in which Employer is not the surviving entity or if Employer is purchased
or acquired by or merged into an entity in such a manner as to transfer the
day-to-day operational control of Employer to such entity.  If Employer is
operating in a positive cash flow and positive earnings per share at the time of
change of control and the Employee is terminated as a result of change of
control, Employer will pay the Employee three (3) months severance pay within
ninety (90) days of change of control.




11.4.

Criminal Conduct.  Employer may terminate Employee’s
employment if Employee is convicted, by a court of competent and final
jurisdiction, of any crime that constitutes a felony in the relevant
jurisdiction.




11.5.

Fiduciary Duty; Conduct. Employer may terminate Employee’s
employment if (a) Employee commits any material act of fraud against, or
materially breaches any fiduciary duty to, Employer; or (b) if Employee commits
any act involving moral turpitude, unethical or unprincipled conduct, or which
tends to subject Employer to ridicule, contempt or negative publicity (whether
or not protected by the Constitution).




11.6

Incapacity.  Employer may terminate Employee’s
employment if Employee becomes incapacitated or ill or otherwise is unable to
fulfill his obligations for a period of more than sixty (60) days.




11.7    Layoff.  If the Employee is
laid off without cause and Employer cash flow and earnings are positive the
Employee will be paid three (3) months severance within ninety (90) days of the
layoff.




12.

Survival.  Without limiting the survival of other
provisions of this Agreement, the provisions of paragraphs 7 and 8 shall survive
Employee’s Termination and the expiration of the term or any extension of this
Agreement, irrespective of reason therefore.




13.

Review By Counsel.  Employee acknowledges that he has
had an opportunity to seek advice and counsel from his own legal representative,
and that in determining whether to execute this Agreement, he is not relying on
Employer or its counsel for legal advice.




14.

Miscellaneous.




14.1.

Assignment.  This Agreement shall inure to the benefit
of and shall be binding upon the heirs and personal representative of Employee
and shall inure to the benefit of and be binding upon Employer and its
successors and assigns.  However, neither Employee nor Employer may assign,
transfer, pledge, encumber, hypothecate or otherwise dispose of this Agreement
or any of its or his rights hereunder without the prior written consent of the
other party, which consent shall not be unreasonably withheld, and any such
attempt to assign, transfer, pledge, encumber or hypothecate without such
consent shall be null and void.




14.2

Attorneys’ Fees.  If a dispute arises from this
Agreement, the prevailing party shall be entitled to collect its reasonable
costs and expenses, including reasonable attorneys' fees, from the losing
party.




14.3

Alternative Dispute Resolution.  Any dispute between
Employer and Employee regarding any term, provision or breach of  provision
of this Agreement shall be resolved through binding arbitration by an arbitrator
mutually agreed upon by Employer and Employee.  




14.4.

Venue and Choice of Law.  Any disputes between the
parties resolved pursuant to Section 13.3 shall be adjudicated in Phoenix,
Arizona, unless otherwise agreed by both parties in writing and such disputes
shall be governed by Arizona substantive and procedural law.  




14.5.

Complete Agreement.  This Agreement supersedes any and
all prior agreements and understandings between the parties with respect to
Employer’s employment of Employee and constitutes the complete understanding
between the parties with respect to Employer's employment of Employee.  No
statement, representation, warranty or covenant made by either party with
respect to Employee’s employment will be binding unless expressly set forth in
this Agreement.  This Agreement may not be altered, modified or amended
except by written instrument signed by each of the parties.




14.6.

Counterparts.  The parties may execute this Agreement
in counterparts, each of which shall constitute an original, but all of which
together shall constitute one and the same instrument.




14.7.

Headings.  The paragraph headings of this Agreement
are for convenience of reference only and shall not expand, modify, limit or
define the text of this Agreement.




14.8.

Notices.  Any notice or other communication required
or made under this Agreement shall be in writing and shall be delivered
personally, telegraphed or telexed, or sent by registered, certified or express
mail, postage prepaid, and shall be deemed given when so delivered personally,
telegraphed or telexed, or, if mailed, two days after the date of mailing, to
the recipient at the following address (or to such other address as the
recipient may designate by giving written notice):

 




To Employee:

Jeff W. Holmes

P.O. Box 11207

Zephyr Cove, NV 89448




To Employer:

Calibrus, Inc.

1225 W. Washington St. Suite 213

Tempe, AZ 85281







14.9.

Severability; Blue Pencilling.  If any one or more of
the provisions of this Agreement shall be deemed to be invalid, illegal or
unenforceable in any respect, in whole or in part, the validity, legality and
enforceability of the remainder of the provisions of this Agreement shall not in
any way be affected.  In addition, to the extent that any provision of this
Agreement is deemed unenforceable as written, a tribunal of competent
jurisdiction deciding any dispute between the parties may amend such provisions
by deleting or limiting clauses or portions of such provision as are necessary
to cause such provision to be enforceable under the applicable law.

  

14.10.

Waivers.  A written waiver, or successive written
waivers, by either party of any breach or default by the other party of any of
the terms and provisions of this Agreement, shall not operate as a wavier, or
custom of waiver, of any other breach or default, whether similar to or
different from the breach or default waived.  No wavier shall be effective
unless in writing and signed by the party to be charged.




14.11.

Effective Date; No Conflict.  Employee represents and
warrants to Employer that his employment by Employer and his performance of his
duties and activities hereunder, does not and will not breach any contract or
agreement to which Employee is a party or is subject, or breach any duty
Employee has to keep in confidence the proprietary information or intellectual
property rights of another.     




IN WITNESS WHEREOF, the undersigned parties have executed this
Employment Agreement as of January 1, 2005.

 

           
Holmes:                                                                         
Employer

                                                                                                CALIBRUS,
INC.

 

 

         
By:_____________________                                      
By:_____________________

               Jeff
W.
Hoilmes                                                             
Chairman of the Board
                                                                                                                                       
Board of Directors