Exhibit 10.12


 


EMPLOYMENT AGREEMENT


 


THIS
EMPLOYMENT AGREEMENT (“Agreement”) is made effective as of November 9,
2005 (“Effective Date”), by and between IT&E International Group (“Company”)
and Anthony Allocca (“Executive”).


 


RECITALS


 


A.                                   Company
desires to retain the services of Executive, and Executive is willing to
provide such services to the Company.


 


B.                                     Company
and Executive desire to enter into this Agreement to provide for Executive’s
employment by the Company, upon the terms and conditions set forth herein.


 


The parties hereby
agree as follows:


 


1.                                       Duties.


 


1.1.                              Position.  Executive shall serve as Vice President of
Operations of the Company and shall have the duties and responsibilities incident
to such position and such other duties as may be determined in consultation
with the Company’s Board of Directors (“Board of Directors”).  Executive shall perform faithfully,
cooperatively and diligently all of his job duties and responsibilities.


 


1.2.                              Best
Efforts.  Executive will expend his
best efforts on behalf of Company in connection with his employment and will
abide by all policies and decisions made by Company, as well as all applicable
federal, state and local laws, regulations or ordinances.


 


2.                                       Employment
Term.  The term of Executive’s
employment under this Agreement shall commence as of the Effective Date and
shall continue until that date which is twenty-four (24) months after the
Effective Date (the “Employment Term”), unless earlier terminated by either the
Executive or the Company.


 


3.                                       Compensation.


 


3.1.                              Base
Salary.  As compensation for
Executive’s performance of his duties hereunder, Company shall pay to Executive
an initial base salary of Fourteen Thousand Five Hundred Eighty Three Dollars
and Thirty Three Cents ($14,583.33) per month (“Base Salary”), which if
annualized, would represent One Hundred Seventy Five Thousand Dollars ($175,000),
payable in accordance with the normal payroll practices of Company, less
required deductions for state and federal withholding tax, social security and
all other employment taxes and payroll deductions.  Such Base Salary may be increased at any time
or from time to time at the discretion of the Board of Directors.


 


3.2.                              Annual
Bonus.  In addition to the Base
Salary, Executive shall be eligible to receive an annual cash bonus, in
accordance with, and based upon the satisfaction of the criteria and
performance standards to be established by the Board (“Annual Bonus”).


 





















 


3.3.                              Stock
Options.  Effective as of the
Effective Date, the Company will grant to Executive stock options to purchase
an aggregate of one million two hundred fifty thousand (1,250,000) shares of
its common stock (the “Common Stock”) 
The exercise price for such Common Stock shall be equal to the fair
market value of the Common Stock on the Effective Date, as determined by the
Board of Directors.  Such stock options
shall have a ten (10) year term and become exercisable or “vest” as
described in the individual stock option agreement related thereto, subject to
acceleration as set forth below.  The
exercisability or “vesting” of such stock options shall automatically
accelerate such that the option shall become fully exercisable in accordance
with its terms as of the date the Executive is terminated without Cause or
resigns for Good Reason.  The other terms
and conditions of such stock options shall be governed by the terms and
conditions set forth in the individual stock option agreement and the Company’s
2005 Equity Incentive Plan.  Executive
shall also be eligible to receive such other stock options, restricted stock or
other equity incentive grants pursuant to one or more equity incentive plans
offered by the Company from time to time, subject to the approval of the Board
of Directors.


 


4.                                       Health
and Welfare Benefit Plans.  The
Executive and the Executive’s family, as the case may be, shall be eligible for
participation in and shall receive all benefits under health and welfare
benefit plans, practices, policies and programs provided by the Company to similarly
situated employees of the Company at Executive’s level.  Such benefits will be paid by the Company for
Executive and Executive’s family.


 


5.                                       Customary
Benefits.  Executive shall be
entitled to all customary and usual fringe benefits, including, without
limitation, a reasonable car allowance, and shall be entitled to participate in
all savings and retirement plans, practices, policies and programs generally
applicable to employees of the Company and that are in effect during the
Employment Term, subject to the terms and conditions of Company’s benefit plan
documents, as applicable.  Company
reserves the right to change or eliminate the fringe benefits or plans,
practices and programs on a company-wide, prospective basis, at any time.


 


6.                                       Business
Expenses.  Executive shall be
entitled to receive prompt reimbursement for all reasonable, out-of-pocket
business expenses incurred in the performance of his duties on behalf of
Company.  To obtain reimbursement,
expenses must be submitted promptly with appropriate supporting documentation
in accordance with Company’s policies.


 


7.                                       Vacation.  Executive shall be entitled to at least four (4) weeks
paid vacation each calendar year in accordance with the Company’s plans,
policies and programs then in effect.


 


8.                                       Severance
Package Upon Termination of Employment Other Than for Cause.  If the Company terminates Executive’s
employment without Cause or Executive resigns as an employee of the Company for
Good Reason, Company agrees to provide Executive with the Severance Package
described in section 8.1 below in accordance with the payment schedule set
forth in section 8.2 below, provided Executive agrees to comply with all
of the conditions set forth in section 8.3 below.


 


8.1.                              Description
of Severance Package.  The “Severance
Package” will consist of:


 


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(a)                                  all
Accrued Obligations (defined below);


 


(b)                                 a
“Severance Payment” equal to the greater of: (i) the amount of Executive’s
then in effect Base Salary that would have been payable to Executive if
Executive had been employed by the Company from the Date of Termination through
the end of the Employment Term, or (ii) an amount equal to one (1) year
of Executives then in effect Base Salary; and


 


(c)                                  Upon
termination of employment, the Executive will be allowed to continue in the
Company’s group health insurance plan at the Executive’s own expense for up to
eighteen (18) months, in accordance with applicable law (COBRA).  However, if the Executive elects COBRA
coverage, the Company will pay the first twelve (12) months of COBRA coverage.


 


8.2.                              Payment
Schedule.  The Severance Package will
be paid less required deductions for state and federal withholding tax, social
security and all other employment taxes as required by law.  The Accrued Obligations described in

section 8.1(a) will be paid within fifteen (15) days after the Date of
Termination, unless otherwise required by law. 
The Severance Payment described in section 8.1(b) will be
payable in equal installments in accordance with the normal payroll practices
of the Company from the Date of Termination through the end of the Employment
Term or one (1) year after the Date of Termination, whichever is
applicable (the “Severance Period”), with the first installment to be paid on
the payroll date immediately following the later of the Date of Termination or
the date Executive executes the General Release.  The payments to be made under Section 8.1(c) above
shall be made in accordance with the terms of the applicable plan or policy.


 


8.3.                              Conditions
to Receive Severance Package. 
Executive will receive the Severance Package described above only if he
complies with all of the following conditions and continues to comply with the
following for the duration of the Severance Period:


 


(a)                                  Executive
executes a full general release in favor of the Company in the form attached
hereto as Exhibit A (the “General Release”); and


 


(b)                                 Executive
complies with the Company’s then in effect trade secrets policies and any
inventions and proprietary information agreement between Executive and the
Company (the “Confidentiality Agreement”) in accordance with the terms thereof.


 


(c)                                  During
the term of the Executive’s employment by the Company, and for the next
succeeding twelve (12) months, the Executive shall not, directly or indirectly:


 


(i)                                     Solicit
any of the Company’s customers except on the Company’s behalf, or direct any
current or prospective customer to anyone other than the Company for goods or
services that the Company provides;


 


(ii)                                  Influence
any of the Company’s employees to terminate their employment with the Company
or accept employment with any of the Company’s competitors; or


 


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(iii)                               Interfere
with any of the Company’s business relationships, including without limitation
those with customers, suppliers, consultants, attorneys, and other agents,
whether or not evidenced by written or oral agreements.


 


The Company’s
obligation to make payments under this Section 8 shall cease if at any
time Executive is not in compliance with any of the foregoing agreements.


 


9.                                       Definitions.


 


9.1.                              Accrued
Obligations.  For purposes of this
Agreement, “Accrued Obligations” shall mean: (i) payment of Executive’s then
in effect Base Salary through the Date of Termination to the extent not
theretofore paid; (ii) payment of any compensation previously deferred by
Executive (together with any accrued interest thereon) and not yet paid by
Company and any accrued vacation pay not yet paid by Company; and (iii) payment
of any unreimbursed expenses as contemplated by Section 6 hereof.


 


9.2.                              Cause.  For purposes of this Agreement, “Cause” shall
mean: (i) any willful, material violation of any law or regulation
applicable to the business of the Company or any subsidiary of the Company; (ii) conviction
for, or guilty plea to, a felony or a crime involving moral turpitude, or any
willful perpetration of a common law fraud; (iii) commission of an act of
personal dishonesty which involves personal profit in connection with the Company
or any subsidiary of the Company, or any other entity having a business
relationship with the Company or any subsidiary of the Company; (iv) disregard
of the policies of the Company or any subsidiary of the Company, so as to cause
material loss, damage or injury to the property, reputation or employees of the
Company or any subsidiary of the Company if Executive has been given a
reasonable opportunity to comply with such policy or cure his failure to comply;
or (v) Executive’s continued failure to satisfactorily perform his job
duties, provided reasonable written notice is given to Executive and at least
sixty (60) days to cure such performance deficiencies.  In addition, until the date that is
thirty (30) days after the date on which the Company’s financial audit for
the year ended December 31, 2006 is completed, the definition of “Cause”
shall include the following: a breach of any representation or warranty made by
the Company in Article III of that certain Securities Purchase Agreement
between the Company and ComVest Investment Partners II LLC and certain other
purchasers set forth on the signature pages thereto, dated as of November     ,
2005 (the “Purchase Agreement”), as the same are qualified by the Disclosure Schedule delivered
in connection with the Purchase Agreement, but assuming in each case
that each such representation or warranty is also qualified in its
entirety as to the actual knowledge of the Executive as of the date
hereof, without any obligation on the part of the Executive to
make any inquiry into the same, and that results in damages or liability to the
Company in excess of Five Hundred Thousand Dollars ($500,000).


 


9.3.                              Disability.  For purposes of this Agreement, “Disability”
shall mean Executive is unable to engage in any substantial gainful activity by
reason of any medically determinable physical or mental impairment that can be
expected to result in death or can be expected to last for a continuous period
of not less than 12 months as determined by a physician selected by the Company
or its insurers and acceptable to Executive or Executive’s legal representative
(such agreement not to be unreasonably withheld or delayed).  Notwithstanding


 


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the foregoing,
the Company will comply with any reasonable accommodation obligations it may to
Executive under federal and state disability laws.


 


9.4.                              Good
Reason.  For purposes of this
Agreement, “Good Reason” shall mean:


 


(a)                                  A
material diminution in Executive’s position, authority, duties or
responsibilities as contemplated by Section 1 of this Agreement, excluding
non-substantial changes in title or office, and excluding any isolated,
insubstantial and inadvertent action not taken in bad faith and which is
remedied by Company promptly after receipt of written notice thereof given by
Executive;


 


(b)                                 Any
reduction of Executives then in effect Base Salary;


 


(c)                                  A
material adverse change by the Company to the Annual Bonus criteria, milestones
or objectives or a decrease in the amount to be received as an Annual Bonus
upon achievement of any such criteria, milestone or objective, each as set
forth on Exhibit A hereto;


 


(d)                                 Any
Board of Directors action or assignment related to Employee that (i) is
contrary to applicable law, regulatory guidelines or accounting standards or
which constitutes an unethical business practice and (ii) is not cured by
the Board of Directors within thirty (30) days after receipt of written notice
by Employee objecting to such action or assignment; or


 


(e)                                  The
Company requiring Executive to (i) be based at any office or location that
is more than twenty (20) miles away from the Company’s principal office on the
Effective Date, or (ii) travel away from his office in the course of
discharging responsibilities or duties in a manner which is (A) inappropriate
for the performance of Executive’s duties hereunder, or (B) significantly
more frequent (in terms of consecutive days or aggregate days in any calendar
year) than was required prior to the Effective Date, in each case without
Executive’s written consent.


 


10.                                 Notice
of Termination.  Any termination by
Company for Cause or by Executive for Good Reason shall be communicated by a “Notice
of Termination” to the other party hereto given in accordance with Section 16.6
of this Agreement. For purposes of this Agreement, a “Notice of Termination”
means a written notice which: (i) indicates the specific termination
provision in this Agreement relied upon; (ii) to the extent applicable,
sets forth in reasonable detail the facts and circumstances claimed to provide
a basis for termination of Executive’s employment under the provision so
indicated; and (iii) if the Date of Termination (as defined below) is
other than the date of receipt of such notice, specifies the termination date
(which date shall be not more than fifteen (15) days after the giving of such
notice).  The failure by Executive or
Company to set forth in the Notice of Termination any fact or circumstance
which contributes to a showing of Good Reason or Cause, as the case may be,
shall not waive any right of Executive or Company hereunder or preclude
Executive or Company from asserting such fact or circumstance in enforcing
Executive’s or Company’s rights hereunder. 
Any termination by Company without Cause or by Executive without Good
Reason must be preceded by thirty (30)


 


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days’ advance
written notice in accordance with the terms of Sections 11 and 16.6 of this
Agreement.


 


11.                                 Date
of Termination.  “Date of Termination”
means the date of death, Disability or the date of delivery of the Notice of
Termination or any later date specified therein, as the case may be; provided,
however, that if Executive’s employment is terminated by Company other than for
Cause or Executive resigns without Good Reason, the Date of Termination shall
be at least thirty (30) days after the date of the applicable Notice of
Termination.


 


12.                                 Nondisparagement.  Executive agrees not to disparage, defame or
make any negative or critical public statements, whether verbally or in
writing, regarding the personal or business reputation, technology, products,
practices or conduct of Company or any of Company’s officers or directors.  In addition, except as required by law,
Executive shall not make any public statements regarding Company without the prior
written approval of the Board of Directors.


 


13.                                 Injunctive
Relief.  Executive acknowledges that
Executive’s breach of the covenants contained in sections 8.3 and 12 of this
Agreement would cause irreparable injury to Company and agrees that in the event
of any such breach, Company shall be entitled to seek temporary, preliminary
and permanent injunctive relief without the necessity of proving actual damages
or posting any bond or other security.


 


14.                                 No
Mitigation.  Executive shall not be
required to mitigate the amount of any payment provided for in Section 8
hereof by seeking other employment or otherwise, nor shall the amount of any
payment provided for in Section 8 hereof be reduced by any compensation
earned by Executive as the result of employment by another employer or
self-employment or by retirement benefits.


 


15.                                 Deferred
Compensation.  To the extent any
amount payable under this Agreement constitutes amounts payable under a “nonqualified
deferred compensation plan” (as defined in Section 409A of the U.S.
Internal Revenue Code) following a “separation from service” (as defined in Section 409A
of the U.S. Internal Revenue Code), then, notwithstanding any other provision
of this Agreement to the contrary, such payment will not be made until the date
that is six months following Executive’s separation from service, but only if
the Executive is then deemed to be a “specified employee” under Section 409A
of the U.S. Internal Revenue Code.


 


16.                                 General
Provisions.


 


16.1.                        Successors
and Assigns.  The rights and
obligations of Company under this Agreement shall inure to the benefit of and
shall be binding upon the successors and assigns of Company.  Executive shall not be entitled to assign any
of Executive’s rights or obligations under this Agreement.


 


16.2.                        Waiver.  The rights and remedies of the parties to
this Agreement are cumulative and not alternative.  Neither the failure nor any delay by any
party in exercising any right, power or privilege under this Agreement or the
documents referred to in this Agreement will operate as a waiver of such right,
power or privilege; and no single or partial exercise of any such right, power
or


 


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privilege will
preclude any other or further exercise of such right, power or privilege or the
exercise of any other right, power or privilege.  To the maximum extent permitted by applicable
law, (i) no claim or right arising out of this Agreement or the documents
referred to in this Agreement can be discharged by one party, in whole or in
part, by a waiver or renunciation of the claim or right unless in writing
signed by the other party; (ii) no waiver that may be given by a party
will be applicable except in the specific instance for which it is given; and (iii) no
notice to or demand on one party will be deemed to be a waiver of any
obligation of such party or of the right of the party giving such notice or
demand to take further action without notice or demand as provided in this
Agreement or the documents referred to in this Agreement.


 


16.3.                        Severability.  In the event any provision of this Agreement
is found to be unenforceable, invalid or illegal by an arbitrator or court of
competent jurisdiction, such provision shall be deemed modified to the extent
necessary to allow enforceability of the provision as so limited, it being
intended that the parties shall receive the benefit contemplated herein to the
fullest extent permitted by law.  If a
deemed modification is not satisfactory in the judgment of such arbitrator or
court, the unenforceable, invalid or illegal provision shall be deemed deleted,
and the legality, validity and enforceability of the remaining provisions shall
not be affected thereby.


 


16.4.                        Interpretation;
Construction.  The headings set forth
in this Agreement are for convenience only and shall not be used in
interpreting this Agreement.  This
Agreement has been drafted by legal counsel representing the Company, but
Executive has participated in the negotiation of its terms.  Furthermore, Executive acknowledges that
Executive has had an opportunity to review the Agreement and has had it
reviewed and negotiated by legal counsel acting on his behalf, and, therefore,
the normal rule of construction to the effect that any ambiguities are to
be resolved against the drafting party shall not be employed in the
interpretation of this Agreement.


 


16.5.                        Governing
Law.  This Agreement will be governed
by and construed in accordance with the laws of the United States and the State
of California, without reference to its conflicts of laws principles.  Each party consents to the jurisdiction and
venue of the state or federal courts in San Diego, California, if applicable,
in any action, suit, or proceeding arising out of or relating to this
Agreement.


 


The Executive hereby agrees to submit to
binding arbitration before the American Arbitration Association (which means A
WAIVER OF THE EXECUTIVE’S RIGHT TO SUE IN COURT AND PROCEED BY A JUDGE OR JURY
TRIAL) of all disputes and claims arising out of this Agreement.  The Executive further understands and agrees
that the Executive shall execute the Company’s standard agreement to arbitrate,
which is separate from this Agreement and may be contained in the Company’s
Employee Handbook.  This Agreement will
be the exclusive method to resolve all disputes or controversies that the
Executive or the Company may have, whether or not arising out of the Executive’s
employment or termination of that employment with the Company, except as
provided in Section 13 hereof.  THE
AGREEMENT TO ARBITRATE CONSTITUTES A WAIVER OF ANY RIGHT THAT THE EXECUTIVE OR
THE COMPANY MAY HAVE TO LITIGATE ANY CLAIM IN COURT IN A JUDGE OR JURY
TRIAL.


 


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16.6.                        Notices.  All notices, consents, waivers and other
communications under this Agreement must be in writing and will be deemed to
have been duly given when (i) delivered by hand (with written confirmation
of receipt); (ii) sent by facsimile (with written confirmation of
receipt); or (iii) when received by the addressee, if sent by a nationally
recognized overnight delivery service, return receipt requested, in each case
to the appropriate addresses and facsimile numbers set forth below or on the
signature pages hereto (or to such other address as a party may designate
by notice to the other parties):


 


	
  If to IT&E:

  	
  IT&E International Group

  Attention:  Peter Sollenne, Chief
  Executive Officer and

  Dave Vandertie, Chief Financial Officer

  505 Lomas Santa Fe Drive, Suite 200

  Solana Beach, California 92075

  Telephone: (858) 777-1644

  Facsimile: (858) 366-0961

  
	
   

  	
   

  
	
  with a required copy to:

  	
  Foley & Lardner LLP

  Attention:  Kenneth D. Polin, Esq.

  402 West Broadway, Suite 2300

  San Diego, California 92101

  Telephone:  (619) 234-6655

  Facsimile:  (619) 234-3510

  
	
   

  	
   

  
	
  If to Executive:

  	
  Anthony Allocca

  
	
   

  	
  Telephone:  

  
	
   

  	
  Facsimile:

  



 


or to such
other address as either party shall have furnished to the other in writing in
accordance herewith.


 


16.7.                        Counterparts;
Facsimile.  This Agreement may be
executed in one or more counterparts, all of which when fully executed and
delivered by all parties hereto and taken together shall constitute a single
agreement, binding against each of the parties. 
To the maximum extent permitted by law or by any applicable governmental
authority, any document may be signed and transmitted by facsimile with the
same validity as if it were an ink-signed document.  Each signatory below represents and warrants
by his or her signature that he or she is duly authorized (on behalf of the respective
entity for which such signatory has acted) to execute


 


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and deliver
this instrument and any other document related to this transaction, thereby
fully binding each such respective entity.


 


16.8.                        Survival.  Sections 8 (“Severance Package Upon
Termination of Employment Other than for Cause”), 9 (“Definitions”), 12 (“Nondisparagement”),
13 (“Injunctive Relief”), 14 (“No Mitigation”), 15 (“Deferred Compensation”),
16 (“General Provisions”) and 17 (“Entire Agreement”) of this Agreement shall survive
Executive’s employment by Company.


 


17.                                 Entire
Agreement.  This Agreement constitutes
the entire agreement between the parties relating to this subject matter and
supersedes all prior or simultaneous representations, discussions,
negotiations, and agreements, whether written or oral.  This Agreement may be amended or modified
only with the written consent of Executive and the Company.  No oral waiver, amendment or modification
will be effective under any circumstances whatsoever.


 


[Remainder of Page Intentionally
Left Blank]


 


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THE PARTIES TO
THIS EMPLOYMENT AGREEMENT HAVE READ THE FOREGOING EMPLOYMENT AGREEMENT AND
FULLY UNDERSTAND EACH AND EVERY PROVISION CONTAINED HEREIN. WHEREFORE, THE
PARTIES HAVE EXECUTED THIS EMPLOYMENT AGREEMENT ON THE DATES SHOWN BELOW.


 


 


	
  Dated:

  	
  November 9, 2005

  	
   

  	
  EXECUTIVE

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ Anthony Allocca

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Dated:

  	
  November 9, 2005

  	
   

  	
  IT&E
  International Group

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Peter Sollenne

  
	
   

  	
   

  	
  Peter Sollenne, Chief Executive Officer

  
	
   

  	
   

  



 


 


[Signature Page to Employment Agreement]


 





















 


EXHIBIT A

FORM OF GENERAL RELEASE


 


1