Document:

WWW.EXFILE.COM, INC. -- 14627 -- AMERICAN TELECOM SERVICES, INC. -- EXHIBIT 10.3 TO FORM 10-K

     

    EXHIBIT
      10.3

    
      
        	 	
                EMPLOYMENT AGREEMENT (the
                  

                “Agreement”)
                  dated February 6, 2006 (the 

                “Effective
                  Time”) by and between BRUCE
                  

                LAYMAN,
                  an individual
                  (the “Employee”), and 

                AMERICAN
                  TELECOM SERVICES, INC.,
                  a
                  

                Delaware
                  corporation (the
“Company”). 

              

      

    

     

    ______________________

     

    RECITALS

     

    A.    The
      Company is engaged in the business of sourcing, marketing, and distributing
      telephony equipment bundled with broadband or prepaid communication
      services.

     

    B.    The
      Employee has been employed by the Company as its Chief Operating Officer and
      Chief Financial Officer;

     

    C.    The
      Company wishes to continue to employ the Employee as its Chief Operating Officer
      and Chief Financial Officer, subject to the terms and conditions set forth
      below.

     

    NOW,
      THEREFORE, in consideration of their mutual promises and agreements and subject
      to the terms and conditions set forth below, the parties agree as
      follows:

     

    1.    Employment;
      Term.
      The
      Company agrees to employ the Employee, and the Employee accepts employment
      with
      and agrees to be employed by the Company, in the positions of Chief Operating
      Officer and Chief Financial Officer on the terms and subject to the conditions
      contained herein. The Employee’s responsibilities, duties and authority shall be
      those reasonably accorded to and expected of such positions including those
      established from time to time by the Company’s Board of Directors, to whom the
      Employee will report. The Employee shall devote substantially all of his working
      time, attention, expertise, skill, abilities, energies and efforts to the
      business of the Company and to the discharge of such responsibilities and the
      performance of such duties as so assigned or delegated to him. The Employee
      shall comply with the Company’s policies and procedures as they may exist from
      time to time. The Employee shall not, directly or indirectly, render any
      services of a business, commercial, or professional nature to any other entity
      or person in any way competitive with the Company, whether for compensation
      or
      otherwise. The Employee represents that the execution of this Agreement and
      the
      performance of the Employee’s duties under this Agreement do not conflict with
      or result in a breach or a default under any agreement, contract or instrument
      to which the Employee is a party or by which the Employee is bound. The Employee
      may engage in charitable, civic or community activities provided that they
      do
      not interfere with the performance of the Employee’s duties hereunder or
      otherwise violate any provisions of this Agreement.. The Term of this Agreement
      shall commence as of the Effective Time and shall continue through December
      31,
      2007 unless terminated as provided herein (the “Term”).

     

    2.    Base
      Salary.
      In
      consideration for the services to be rendered by the Employee to the Company
      under this Agreement, the Company shall pay the Employee an annualized base
      salary (the “Base Salary”) in substantially equal regular periodic payments in
      accordance with the Company’s regular payroll process, less applicable
      withholding deductions required or authorized by law. For the period ending
      June
      30, 2006, the Employee’s annualized Base Salary 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    shall
      be
      $125,000 per year. For the period beginning July 1, 2006, and ending December
      31, 2007, Employee’s annualized Base Salary shall be $137,500 per
      year.

     

    The
      Employee shall be responsible for all required taxes, whether Federal, state
      or
      local in nature, including but not limited to, income taxes, Social Security
      taxes, Federal Unemployment Compensation Taxes, in each case, that are required
      to be paid by him pursuant to any applicable law. The Company shall have the
      right to withhold from the sums payable to the Employee hereunder (including
      base salary and any bonus) such amounts, if any, as may be required by the
      Internal Revenue Code of the United States or any other like statute that is,
      or
      may become, applicable to the provisions hereof.

     

    3.    Bonus
      Payments.
      The
      Employee shall be eligible for Net Sales Bonus payments and Net Profits Bonus
      payments as follows:

     

    (a)  Net
      Sales Bonus.
      The
      Employee shall be eligible for bonus payments based on the “Company’s Net
      Sales”, defined as the Company’s revenues collected during the relevant bonus
      period, less allowances granted to retailers, markdowns, discounts, commissions,
      reserves for service outages, customer holdbacks, and expenses, (the “Net Sales
      Bonus”), as described below.

     

    (i)  Calculation
      and Timing of Payments.
      The Net
      Sales Bonus shall be calculated and payable as follows:

     

    (A)  Subject
      to the limitation in Section 3(c) below, one percent of the amount by which
      the
      Company’s Net Sales during the fiscal year ending June 30, 2006, exceed
      $5,000,000, payable within ten (10) days after the first public availability
      of
      the Company’s audited financial statements for the fiscal year ending June 30,
      2006;

     

    (B)  Subject
      to the limitation in Section 3(c) below, one percent of the amount by which
      the
      Company’s Net Sales for the fiscal year ending June 30, 2007, exceed the
      Company’s Net Sales during the fiscal year ending June 30, 2006 payable within
      ten (10) days after the first public availability of the Company’s audited
      financial statements for the fiscal year ending June 30, 2007; and

     

    (C)  Subject
      to the limitation in Section 3(c) below, one percent of the amount by which
      the
      Company’s Net Sales for the six-month period ending December 31, 2007, exceed
      the Company’s Net Sales during the six-month period ending June 30, 2007 payable
      within ten (10) days after the first public availability of Company’s audited
      financial statements for the six month period ending December 31,
      2007.

     

    (D)  The
      Net
      Sales Bonus shall in no event exceed seventy five percent (75%) of (x) the
      Employee’s then current annual Base Salary or, (y) in the case of the six-month
      period ending December 31, 2007, the Base Salary during such
      period.

     

    (ii)  Termination
      for Cause.
      If this
      Agreement is terminated for cause by the Company pursuant to Section 10(a)
      of
      this Agreement, the Employee shall be ineligible for any Net Sales Bonus
      following the date of termination of this Agreement; provided, however, if
      this
      Agreement is still in effect on the last day of the fiscal year or other
      financial reporting 

     

    
      
         

      

      
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    period
      on
      which a Net Sales Bonus payment is based, the Employee shall remain eligible
      for
      a Net Sales Bonus payment for such period in accordance with this Section
      3.

     

    (iii)  Termination
      Without Cause Or For Good Reason.
      If this
      Agreement is terminated without cause by the Company, by reason of death or
      disability as provided in Section 10 hereof, or for Good Reason by the Employee,
      the Employee shall be eligible for a pro rated Net Sales Bonus based on the
      data
      from the Company’s audited financial statements for the period ending on the
      last completed quarter of the financial reporting period on which a Net Sales
      Bonus is based; it being understood for purposes of Sections 3(a)(i)a and
      3(a)(i)b that the sales figures shall be annualized and the resulting Net Sales
      Bonus shall be equal to the product of (x) the Net Sales Bonus determined on
      such annualized sales figures and (y) a fraction, the numerator of which shall
      be the number of quarters completed in the financial reporting period prior
      to
      the termination and the denominator of which shall be four; it being further
      understood that for purposes of Section 3(a)(i)c, if the termination occurs
      after September 30, 2007 but prior to December 31, 2007, the sales figures
      through the quarter ending September 30, 2007 shall be multiplied by two and
      the
      resulting Net Sales Bonus shall be equal to the quotient of (x) the Net Sales
      Bonus determined on the basis of such sales figures and (y) two. The pro rated
      bonus hereunder shall be payable within ten days of the termination date of
      this
      Agreement.

     

    For
      purposes of this Agreement, “Good
      Reason”
shall
      mean (i) the Company’s material breach of this Agreement and its failure to cure
      such breach within thirty (30) days after written notice thereof from the
      Employee to the Company.

     

    (iv)  Termination
      by the Employee.
      If this
      Agreement is terminated by the Employee for any reason (other than for Good
      Reason), the Employee shall be ineligible for any Net Sales Bonus following
      the
      date of termination, provided, however, if this Agreement is still in effect
      on
      the last day of the fiscal year or other financial reporting period on which
      a
      Net Sales Bonus is based, the Employee shall remain eligible for a Net Sales
      Bonus payment for such period in accordance with this Section 3.

     

    (b)  Net
      Profits Bonus.
      During
      the Term, the Employee shall receive a bonus based on the “Company’s Net
      Profits,” defined as the Company’s net income, after taxes, as determined in
      accordance with Generally Accepted Accounting Principles (GAAP), (the “Net
      Profits Bonus”), as described below.

     

    (i)  Calculation
      and Timing of Payments.
      The Net
      Profits Bonus shall be calculated and payable as follows:

     

    (A)  Subject
      to the limitation in Section 3(c) below, one percent of the Company’s Net
      Profits for the fiscal year ending June 30, 2006 payable within ten (10) days
      after the first public availability of the Company’s audited financial
      statements for the fiscal year ending June 30, 2006;

     

    (B)  Subject
      to the limitation in Section 3(c) below, one percent of the Company’s Net
      Profits for the fiscal year ending June 30, 2007 payable within ten (10) days
      after the first public availability of the Company’s audited financial
      statements for the fiscal year ending June 30, 2007; and

     

    
      
         

      

      
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    (C)  Subject
      to the limitation in Section 3(c) below, one percent of the Company’s Net
      Profits for the six-month period ending December 31, 2007 payable within ten
      (10) days after the first public availability of Company’s audited financial
      statements for the six month period ending December 31, 2007.

     

    (ii)  Termination
      for Cause.
      If this
      Agreement is terminated for cause by the Company pursuant to Section 10(a)
      of
      this Agreement, Employee shall be ineligible for any Net Profits Bonus payment
      following the date of termination, provided, however, if this Agreement is
      still
      in effect on the last day of the fiscal year or other financial reporting period
      on which a Net Profits Bonus is based, the Employee shall remain eligible for
      a
      Net Profits Bonus payment for such period in accordance with this Section
      3.

     

    (iii)  Termination
      Without Cause Or For Good Reason.
      If this
      Agreement is terminated without cause by the Company, by reason of death or
      disability as provided in Section 10 hereof, or for Good Reason by the Employee,
      the Employee shall be eligible for a pro rated Net Profits Bonus based on the
      data from the Company’s audited financial statements for the period ending on
      the last completed quarter of the financial reporting period on which a Net
      Profits Bonus is based; it being understood for purposes of Sections 3(b)(i)a
      and 3(b)(i)b the net profits shall be annualized and the resulting Net Profits
      Bonus payment shall be equal to the product of (x) the Net Profits Bonus
      determined on such annualized net profits and (y) a fraction, the numerator
      of
      which shall be the number of quarters completed in the financial reporting
      period prior to the termination and the denominator of which shall be four;
      it
      being further understood that for purposes of Section 3(b)(i)(c), if the
      termination occurs after September 30, 2007 but prior to December 31, 2007,
      the
      net profits through the quarter ending September 30, 2007 shall be multiplied
      by
      two and the resulting Net Profits Bonus shall be equal to the quotient of (x)
      the Net Profits Bonus determined on the basis of such net profits and (y) two.
      The pro rated bonus hereunder shall be payable within ten days of the
      termination date of this Agreement.

     

    (iv)  Termination
      by the Employee.
      If this
      Agreement is terminated by the Employee for any reason (other than for Good
      Reason), the Employee shall be ineligible for any Net Profits Bonus payment
      following the date of termination, provided, however, if this Agreement is
      still
      in effect on the last day of the fiscal year or other financial reporting period
      on which a Net Profits Bonus is based, the Employee shall remain eligible for
      a
      Net Profits Bonus payment for such period in accordance with this Section
      3.

     

    (c)  Maximum
      Amount Of Bonus Payments.
      The
      aggregate of the Employee’s Net Sales Bonus and Net Profits Bonus will in no
      event exceed seventy five 75% of the Employee’s Base Salary during any bonus
      period for which the Net Sales Bonus and Net Profits Bonus are
      paid.

     

    4.    Stock
      Options.
      Subject
      to the terms and conditions of the Company’s 2005 Stock Option Plan (the “Plan”)
      and a Stock Option Agreement to be executed by the Company and the Employee
      (the
“Option Agreement”), the Employee shall receive a grant of 50,000 stock options
      under the Plan (the “Options”) as of the Effective Time. The Options shall be
      subject to vesting as set forth in the Option Agreement which shall include,
      without limitation, accelerated vesting in the event of a termination of this
      Agreement without cause by the Company, for Good Reason by the Employee and
      in
      the event of a Change in Control.

     

    
      
         

      

      
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    “Change
      in Control”
      shall
      mean (w) any person shall after the date hereof become the beneficial owner,
      directly or indirectly, of securities of the Company representing 50% or more
      of
      the voting or economic interest of all then outstanding securities of the
      Company, (x) the consummation of any corporate transaction, including a
      consolidation or merger, of the Company in which the Company is not the
      continuing or surviving entity, other than a consolidation or merger of the
      Company in which the holders of the Company’s equity interest immediately prior
      to the consolidation or merger shall, upon consummation of the consolidation
      or
      merger, own at least 50% of the equity interests of the surviving entity after
      such consolidation or merger, (y) persons who, as of the Effective Time,
      represent all the members of the board of directors (the “Board”) of the Company
      cease for any reason to constitute at least a majority of the members of the
      Board, or (z) the consummation of any sale (in any single transaction or series
      of related transactions) of all or substantially all of the assets or business
      of the Company.

     

    5.    Performance
      Accelerated Restricted Stock (PARS).
      Subject
      to the terms and conditions of the Company’s 2005 Stock Option Plan (the “Plan”)
      and a Performance Accelerated Restricted Stock Option Agreement to be signed
      by
      the Company and the Employee (“PARS Agreement”), the Employee shall receive a
      grant of 25,000 shares of Performance Accelerated Restricted Stock (“PARS”)
      under the Plan. The PARS shall be subject to vesting as set forth in the PARS
      Agreement which shall include, without limitation, accelerated vesting in the
      event of a termination of this Agreement without cause by the Company, for
      Good
      Reason by the Employee and in the event of a Change in Control.

     

    6.    Employment
      Benefits.
      Subject
      to any applicable eligibility requirements, the Employee shall be entitled
      to
      receive benefits pursuant to the terms and conditions of the employee benefit
      plans then in effect for other executive employees of the Company. For purposes
      of this Section 6, such benefits shall include (i) coverage under the Company’s
      medical/health care plan for the Employee and the Employee’s immediate family
      members and (ii) life insurance provided by a Company-designated carrier in
      an
      amount not to exceed $500,000 (collectively, the “Benefits”).

     

    7.    Paid
      Vacation.
      The
      Employee shall accrue prorated vacation at a rate of two weeks per year during
      fiscal year 2006 and for the first six months of fiscal year 2007. Thereafter,
      the Employee shall accrue prorated vacation at a rate of three weeks per year.
      Any earned but unused vacation shall be paid to the Employee at the time of
      the
      termination or expiration of this Agreement other than for cause. The Employee
      shall provide sufficient information to the Company on an ongoing basis to
      enable it to maintain an accurate record of vacation days earned and vacation
      days taken.

     

    8.    Business
      Expense Reimbursement.
      The
      Employee shall be reimbursed for all out-of-pocket expenses reasonably incurred
      by him in the performance of his duties under this Agreement, provided that
      such
      expenses are properly documented and itemized and incurred in amounts and in
      a
      manner consistent with any standard business expense reimbursement policies.
      The
      Employee shall be given an automobile allowance of $500.00 per month, payable
      monthly.

     

    9.    Reserved.

     

    10.   Termination.

     

    
      
         

      

      
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    (a)  Termination
      for Cause by Company.
      This
      Agreement may be terminated for cause at any time by action of the Company’s
      Board of Directors. Such termination shall be effective upon the Company’s
      delivery to the Employee of written notice of such termination. For the purpose
      of this Agreement, a termination shall be for “cause” in the event
      of:

     

    (i)  any
      material breach of business or professional ethics by the Employee;

     

    (ii)  any
      act
      or omission of the Employee that materially injures the business or professional
      reputation of the Company;

     

    (iii)  the
      Employee’s conviction of, or his pleading of nolo contendere to, a felony or any
      crime involving fraud, dishonesty, or moral turpitude;

     

    (iv)  the
      Employee’s dishonesty in the conduct of the business affairs of the Company or
      in dealing with the finances or property of the Company;

     

    (v)  any
      material failure by the Employee to comply with any of the terms of this
      Agreement or any reasonable request of the Board of Directors of the Company;
      or

     

    (vi)  any
      material failure of the Employee to faithfully to perform his services hereunder
      in a timely and competent manner.

     

    Upon
      termination of this Agreement for cause, except as otherwise provided herein,
      all of the Employee’s rights to compensation and benefits shall immediately
      terminate to the maximum extent permitted by applicable law, provided that
      the
      Employee shall receive any portion of the Base Salary and other benefits under
      the Company’s benefit plans that have accrued through the date of termination
      but has not previously been paid.

     

    (b)  Termination
      Without Cause by Company Or For Good Reason By Employee.
      This
      Agreement may be terminated by the Company without cause at any time or for
      Good
      Reason by the Employee at any time. In the event of the Employee’s termination
      of this Agreement without cause by the Company or for Good Reason by the
      Employee, the Company’s obligations under this Agreement shall cease as of the
      date of such termination. However, the Employee shall receive any unpaid portion
      of any remaining Base Salary that would have accrued through the end of the
      Term
      had this Agreement not been so terminated which has not previously been paid
      to
      the Employee and shall be entitled to Benefits through the end of the Term
      as if
      this Agreement had not been so terminated, subject, in each case, to the
      condition that the Employee executes a General Release Agreement in the form
      prescribed by the Company in consideration for the payment to him by the Company
      of such remaining Base Salary. The remaining Base Salary to be paid pursuant
      to
      this paragraph shall be in accordance with the Company’s regular payroll process
      through the end of the Term (including any withholding) as if this Agreement
      had
      not been so terminated. 

     

    (c)  Termination
      for Death or Permanent Disability.
      Except
      as otherwise prohibited by law, the Employee’s employment under this Agreement
      shall be terminated by the Employee’s death or permanent disability. For the
      purpose of this Agreement, the term “permanent disability” shall mean a
      disability resulting from physical or mental illness or bodily injury which,
      in
      the reasonable opinion of an independent physician paid for by the Company
      

     

    
      
         

      

      
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    (which
      shall specifically exclude Employee’s personal physician), prevents the Employee
      from fulfilling the Employee’s essential duties hereunder with or without
      reasonable accommodation for a period of ninety (90) days in any three hundred
      sixty-five (365) day period. In the event that the Employee’s employment
      hereunder is terminated upon the Employee’s death or permanent disability, all
      of the Employee’s rights to compensation and employment benefits shall
      immediately terminate to the maximum extent permitted by applicable law,
      provided that the Employee shall, except as provided herein, receive such
      portion of the Base Salary and other benefits under the Company’s benefit plans
      that have accrued through the date of termination but have not previously been
      paid.

     

    (d)  Termination
      by Employee.
      If the
      Employee terminates his employment for any reason (other than for Good Reason),
      all of the Employee’s rights to compensation and employment benefits shall
      immediately terminate to the maximum extent permitted by applicable law,
      provided that the Employee shall receive such portion of the Base Salary and
      other benefits under the Company’s benefit plans that have accrued through the
      date of termination but have not previously been paid and bonuses payable in
      accordance with Section 3 hereof.

     

    (e)  Cooperation
      with Company after Termination.
      Following any termination of this Agreement, unless the Company has materially
      breached the terms thereof, and for a reasonable time thereafter, the Employee
      shall cooperate fully with the Company in all matters relating to the winding
      up
      of the Employee’s pending work on behalf of Company and the orderly transfer of
      any such pending work to other employees of the Company as may be designated
      by
      the Company. The Company shall reimburse the Employee for out-of-pocket costs
      of
      the Employee in connection with the Employee’s obligation under this Section
      10(e) and pay the Employee a pro-rated portion of the Employee’s Base Salary for
      each full business day the Employee is reasonably required to work to satisfy
      such obligations. 

     

    11.    Covenant
      Not to Compete / Solicit.
      The
      Employee hereby provides the Company with the following covenants:

     

    (a)  The
      Employee recognizes and acknowledges that the Proprietary Information (as
      hereinafter defined) is a valuable, special and unique asset of the Company.
      As
      a result, both during the Term and thereafter, the Employee shall not, without
      the prior written consent of the Company, for any reason, either directly or
      indirectly, divulge to any third-party or use for his own benefit, or for any
      purpose other than the exclusive benefit of the Company, any confidential,
      proprietary, business and technical information or trade secrets of any of
      the
      Company or of any subsidiary or affiliate thereof (the “Proprietary
      Information”)
      revealed, obtained or developed in the course of his employment with the
      Company. Proprietary Information shall include, but shall not be limited to:
      technical information, including research design, results, techniques and
      processes; computer codes or instructions (including source and object code
      listings, program logic algorithms, subroutines, modules or other subparts
      of
      computer programs and related documentation, including program notation);
      computer processing systems and techniques; concepts, layouts, flowcharts and
      specifications; know-how; any associated user or service manuals or other like
      textual materials (including any other data and materials used in performing
      the
      Employee’s duties); all computer inputs and outputs (regardless of the media on
      which stored or located); hardware and software configurations, designs,
      architecture and interfaces; technical management information, including project
      

     

    
      
         

      

      
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    proposals,
      research plans, status reports, performance objectives and criteria, and
      analyses of areas for business development; and business information, including
      project, financial, accounting and personnel information, business strategies,
      plans and forecasts, customer and supplier lists, customer and supplier
      information and sales and marketing plans, efforts, information and data. In
      addition, “Proprietary Information” shall include all information and materials
      received from a third party by the Company or the Employee which third party
      is
      subject to an obligation of confidentiality and/or non-disclosure. Nothing
      contained herein shall restrict the Employee’s ability to make such disclosures
      during the Term as may be necessary to the effective and efficient discharge
      of
      the duties required by the position or as such disclosures may be required
      by
      law, as determined by counsel to the Company. Furthermore, nothing contained
      herein shall restrict the Employee from divulging or using for his own benefit
      or for any other purpose any Proprietary Information that is (a) readily
      available to the general public so long as such information did not become
      available to the general public as a direct or indirect result of the Employee’s
      breach of this Section, or (b) was known to the Employee prior to its disclosure
      to him by the Company. Failure by the Company to mark any of the Proprietary
      Information as confidential or proprietary shall not affect its status as
      Proprietary Information under the terms of this Agreement.

     

    (b)  Non-competition.
      Commencing as of the Effective Time and continuing for a period of one year
      following the termination of this Agreement by the Company for cause or by
      the
      Employee for any reason (other than for Good Reason) or expiration of the Term
      (the “Restricted Period”), the Employee shall not, anywhere in the United States
      or Canada, directly or indirectly, either alone or as a shareholder, partner,
      associate, consultant, owner, agent, creditor, or co-venturer of any other
      person or entity, or in any other capacity, directly or indirectly, engage
      in
      the business of sourcing, marketing, or distributing consumer telephony
      equipment bundled with broadband/or prepaid communication services; provided
      that nothing herein shall prohibit the Employee from being an owner of not
      more
      than 5% of the outstanding stock of any class of a corporation which is publicly
      traded, so long as the Employee does not actively participate in the business
      of
      such corporation. The Employee further agrees that he shall not directly or
      indirectly engage in any business at any time under a trademark or trade name
      that is confusingly similar to or may connote an association with any trademark
      or trade name of the Company. 

     

    (c)  Non-Interference
      with Business Relations. During the Restricted Period, the Employee shall not,
      directly or indirectly, solicit, induce or attempt to solicit or induce any
      customer, supplier, licensee or other business relation of the Company to cease
      doing business with the Company, or in any way interfere with any such business
      relation of the Company.

     

    (d)  Solicitation
      of Employees. During the Restricted Period, the Employee shall not, directly
      or
      indirectly, either alone or as a shareholder, partner, consultant, adviser,
      owner, associate, agent, creditor or co-venturer of any other person or entity,
      or in any other capacity, solicit, hire, attempt to solicit or hire, or
      participate in any attempt to solicit or hire any person who is an employee
      of
      Company or who was an employee of Company within the preceding twelve
      months.

     

    (e)  Scope.
      The parties agree that the duration, scope, and area restrictions set forth
      in
      this Section 11 are reasonable. If, at the time of enforcement of this Section
      11, a court shall hold that the duration, scope or area restrictions stated
      herein are unreasonable under 

     

    
      
         

      

      
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    circumstances
      then existing, the parties agree that the maximum duration, scope or area
      reasonable under such circumstances shall be substituted for the stated
      duration, scope or area.

     

    (f)  Remedies.
      The Employee agrees that if he shall commit or threaten to commit a breach
      of
      any of the covenants and agreements contained in this Section 11, then the
      Company shall have the right to seek and obtain, without posting any bond or
      security, all appropriate injunctive and other equitable remedies therefore,
      in
      addition to any other rights and remedies that may be available at law, it
      being
      acknowledged and agreed that any such breach would cause irreparable injury
      to
      the Company and that money damages would not provide an adequate remedy
      therefor.

     

    12.    Notices.
      All
      notices and other communications given or made pursuant to this Agreement shall
      be in writing and shall be delivered personally or sent by first class
      registered or certified mail, return receipt requested, documented overnight
      delivery service or telefax to the appropriate address or number as set forth
      below:

     

    (a)  if
      to the
      Company, to:

     

    2466
      Peck
      Road

    City
      of
      Industry, California 90601

     

    (b)  if
      to
      Employee, to:

     

    2115
      Country Ridge Road

    Alpharetta,
      Georgia 30004

     

    or
      to
      such other persons or at such other addresses as shall be furnished by either
      party by like notice to the other. Such notice or communication shall be deemed
      to have been given or made (a) if personally delivered, on the date so
      delivered, (b) if sent by registered or certified mail, on the date of receipt
      or the date delivery is refused, (c) if sent by documented overnight delivery
      service, on the next business day following delivery to the courier service,
      or
      (d) if sent by facsimile transmission, on the date of transmission if sent
      during normal business hours of the recipient or, if not, then on the next
      business day.

     

    13.    Resolution
      of Disputes; Equitable Remedies.

     

    (a)  Any
      controversy, dispute or claim arising out of, or relating to, this Agreement
      or
      the breach or alleged breach hereof, or affecting this Agreement in any way,
      shall be settled by final and binding arbitration in New York, New York in
      accordance with the applicable provisions of the American Arbitration
      Association (the “AAA”) in effect at the time of filing of the demand for
      arbitration. The arbitration shall be conducted by one arbitrator who shall
      be
      selected by the mutual agreement of the parties or, failing such agreement,
      by
      the AAA. The parties will cooperate with the AAA and with one another in
      selecting an arbitrator from the AAA’s panel of neutrals and in scheduling the
      arbitration proceedings. The parties will participate in the arbitration in
      good
      faith and will share equally in its costs. The parties shall be entitled to
      such
      discovery as the parties agree or as otherwise ordered by the arbitrator. By
      further agreement of the parties or direction of the arbitrator, proceedings
      which, in the judgment of the arbitrator, are not dependent on the credibility
      of a testifying witness may be held other than in person, such as via telephone
      conference. The arbitrator shall render a written reasoned 

     

    
      
         

      

      
        -9-

        
          

        

      

      
         

      

    

    award
      and
      may award all forms of relief that would otherwise be available in court,
      including injunctive relief. If judicial enforcement of the arbitrator’s award
      is sought by either party, judgment may be entered upon such award in any court
      of competent jurisdiction. By signing this Agreement, each party expressly
      agrees to have all disputes, claims or controversies arising out of or relating
      to this Agreement, decided by neutral arbitration, and gives up (i) any rights
      the party might possess to have those matters litigated in a court or jury
      trial, and (ii) judicial rights to discovery and appeal except to the extent
      that they are specifically provided for under this Agreement. If any party
      refuses to submit to arbitration after agreeing to this provision, the party
      may
      be compelled to arbitrate under federal or state law.

     

    14.    Binding
      Agreement.
      This
      Agreement shall be binding upon and shall inure to the benefit of the parties,
      their heirs, successors, and personal representatives; provided, however, that
      the Employee may not assign any of his rights, obligations or duties
      hereunder.

     

    15.    Waivers
      and Amendments.
      This
      Agreement may be amended, modified or supplemented only by a written instrument
      executed by the parties hereto. Each of the parties may, only by an instrument
      in writing, extend the time for the performance of any of the obligations of
      the
      other or waive any compliance with any of the covenants or performance of any
      of
      the obligations of the other contained in this Agreement. The waiver by either
      party hereto of a breach of any provision of this Agreement shall not operate
      or
      be construed as a waiver of any subsequent breach. No delay on the part of
      either party in exercising any right, power or privilege hereunder shall operate
      as a waiver thereof; nor shall any waiver on the part of either party of any
      such right, power or privilege, nor any single or partial exercise of any such
      right, power or privilege, preclude any further exercise thereof or the exercise
      of any other such right, power or privilege.

     

    16.    Interpretation.

     

    (a)  The
      Section headings contained in this Agreement are solely for convenience of
      reference and shall not affect the meaning or interpretation of this Agreement
      or of any term or provision hereof.

     

    (b)  Each
      party has reviewed and participated in drafting and revising this Agreement
      and
      the normal rule of construction that any ambiguity is to be resolved against
      the
      drafting party shall not be employed in the interpretation of this
      Agreement.

     

    17.    Severability.
      This
      Agreement shall be deemed severable, and the invalidity or unenforceability
      of
      any term or provision hereof shall not affect the validity or enforceability
      of
      this Agreement or of any other term or provision hereof. If any provision of
      this Agreement is held by a court of competent jurisdiction to be invalid,
      void
      or unenforceable, the remaining provisions shall, nevertheless, continue in
      full
      force and effect without being impaired or invalidated in any way.

     

    18.    Entire
      Agreement.
      This
      Agreement, the Option Agreement and the PARS Agreement, represent the entire
      agreement and understanding of the parties with reference to the matters forth
      herein, and no representations, warranties, covenants or undertakings have
      been
      made in connection with this Agreement other than those expressly set forth
      herein. This Agreement supersedes all prior negotiations, discussions,
      correspondence, communications, 

     

    
      
         

      

      
        -10-

        
          

        

      

      
         

      

    

    understandings,
      and agreements between the parties relating to the subject matter of this
      Agreement and all prior drafts of this Agreement, all of which are merged into
      this Agreement.

     

    19.    Governing
      Law.
      This
      Agreement shall be governed by and construed in accordance with the laws of
      the
      State of Delaware, without regard to the conflicts of law rules of such
      state.

     

    IN
      WITNESS WHEREOF, the parties have caused this Agreement to be signed as of
      the
      date first written above.

     

    
      	 	 	 
	 	
              AMERICAN
                TELECOM SERVICES, INC.

            
	 
 	 
 	 
 
	 	By:  	/s/ Bruce
              Hahn
	 	
              

              Name:
                Bruce Hahn

              Title:
                Chief Executive Officer

            
	 	 

      	 	 	 
	 	
              EMPLOYEE:

            
	 
 	 
 	 
 
	 	By:  	/s/ Bruce
              Layman
	 	
              

              Bruce
                Layman

            
	 	 

     

     

     

     

     

     

     

     

     

     

    
      
         

      

      
        -11-WWW.EXFILE.COM, INC. -- 14627 -- AMERICAN TELECOM SERVICES, INC. -- EXHIBIT 10.4 TO FORM 10-K

     

    EXHIBIT
      10.4

     

    
      	 	
              EMPLOYMENT
                AGREEMENT (the
                

              “Agreement”)
                dated February 6, 2006 (the 

              “Effective
                Time”) by and between ADAM
                

              SOMER,
                an individual (the “Employee”), and 

              AMERICAN
                TELECOM SERVICES, INC.,
                a
                

              Delaware
                corporation (the “Company”).

            

    

     

    
      ______________________

       

      RECITALS

       

      A.    The
        Company is engaged in the business of sourcing, marketing, and distributing
        telephony equipment bundled with broadband or prepaid communication
        services.

       

      B.    The
        Employee has been employed by the Company as its President of Communications
        Services and Secretary;

       

      C.    The
        Company wishes to continue to employ the Employee as its President of
        Communications Services and Secretary, subject to the terms and conditions
        set
        forth below.

       

      NOW,
        THEREFORE, in consideration of their mutual promises and agreements and subject
        to the terms and conditions set forth below, the parties agree as
        follows:

       

      1.    Employment;
        Term.
        The
        Company agrees to employ the Employee, and the Employee accepts employment
        with
        and agrees to be employed by the Company, in the positions of President of
        Communications Services and Secretary on the terms and subject to the conditions
        contained herein. The Employee’s responsibilities, duties and authority shall be
        those reasonably accorded to and expected of such positions including those
        established from time to time by the Company’s Board of Directors, to whom the
        Employee will report. The Employee shall devote substantially all of his
        working
        time, attention, expertise, skill, abilities, energies and efforts to the
        business of the Company and to the discharge of such responsibilities and
        the
        performance of such duties as so assigned or delegated to him. The Employee
        shall comply with the Company’s policies and procedures as they may exist from
        time to time. The Employee shall not, directly or indirectly, render any
        services of a business, commercial, or professional nature to any other entity
        or person in any way competitive with the Company, whether for compensation
        or
        otherwise. The Employee represents that the execution of this Agreement and
        the
        performance of the Employee’s duties under this Agreement do not conflict with
        or result in a breach or a default under any agreement, contract or instrument
        to which the Employee is a party or by which the Employee is bound. The Employee
        may engage in charitable, civic or community activities provided that they
        do
        not interfere with the performance of the Employee’s duties hereunder or
        otherwise violate any provisions of this Agreement.. The Term of this Agreement
        shall commence as of the Effective Time and shall continue through December
        31,
        2007 unless terminated as provided herein (the “Term”).

       

      2.    Base
        Salary.
        In
        consideration for the services to be rendered by the Employee to the Company
        under this Agreement, the Company shall pay the Employee an annualized base
        salary (the “Base Salary”) in substantially equal regular periodic payments in
        accordance with the Company’s regular payroll process, less applicable
        withholding deductions required or authorized by law. For the period ending
        June
        30, 2006, the Employee’s annualized Base Salary 

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      shall
        be
        $125,000 per year. For the period beginning July 1, 2006, and ending December
        31, 2007, Employee’s annualized Base Salary shall be $137,500 per
        year.

       

      The
        Employee shall be responsible for all required taxes, whether Federal, state
        or
        local in nature, including but not limited to, income taxes, Social Security
        taxes, Federal Unemployment Compensation Taxes, in each case, that are required
        to be paid by him pursuant to any applicable law. The Company shall have
        the
        right to withhold from the sums payable to the Employee hereunder (including
        base salary and any bonus) such amounts, if any, as may be required by the
        Internal Revenue Code of the United States or any other like statute that
        is, or
        may become, applicable to the provisions hereof.

       

      3.    Bonus
        Payments.
        The
        Employee shall be eligible for Net Sales Bonus payments and Net Profits Bonus
        payments as follows:

       

      (a)  Net
        Sales Bonus.
        The
        Employee shall be eligible for bonus payments based on the “Company’s Net
        Sales”, defined as the Company’s revenues collected during the relevant bonus
        period, less allowances granted to retailers, markdowns, discounts, commissions,
        reserves for service outages, customer holdbacks, and expenses, (the “Net Sales
        Bonus”), as described below.

       

      (i)  Calculation
        and Timing of Payments.
        The Net
        Sales Bonus shall be calculated and payable as follows:

       

      (A)  Subject
        to the limitation in Section 3(c) below, one percent of the amount by which
        the
        Company’s Net Sales during the fiscal year ending June 30, 2006, exceed
        $5,000,000, payable within ten (10) days after the first public availability
        of
        the Company’s audited financial statements for the fiscal year ending June 30,
        2006;

       

      (B)  Subject
        to the limitation in Section 3(c) below, one percent of the amount by which
        the
        Company’s Net Sales for the fiscal year ending June 30, 2007, exceed the
        Company’s Net Sales during the fiscal year ending June 30, 2006 payable within
        ten (10) days after the first public availability of the Company’s audited
        financial statements for the fiscal year ending June 30, 2007; and

       

      (C)  Subject
        to the limitation in Section 3(c) below, one percent of the amount by which
        the
        Company’s Net Sales for the six-month period ending December 31, 2007, exceed
        the Company’s Net Sales during the six-month period ending June 30, 2007 payable
        within ten (10) days after the first public availability of Company’s audited
        financial statements for the six month period ending December 31,
        2007.

       

      (D)  The
        Net
        Sales Bonus shall in no event exceed seventy five percent (75%) of (x) the
        Employee’s then current annual Base Salary or, (y) in the case of the six-month
        period ending December 31, 2007, the Base Salary during such
        period.

       

      (ii)  Termination
        for Cause.
        If this
        Agreement is terminated for cause by the Company pursuant to Section 10(a)
        of
        this Agreement, the Employee shall be ineligible for any Net Sales Bonus
        following the date of termination of this Agreement; provided, however, if
        this
        Agreement is still in effect on the last day of the fiscal year or other
        financial reporting 

       

      
        
           

        

        
          -2-

          
            

          

        

        
           

        

      

      period
        on
        which a Net Sales Bonus payment is based, the Employee shall remain eligible
        for
        a Net Sales Bonus payment for such period in accordance with this Section
        3.

       

      (iii)  Termination
        Without Cause Or For Good Reason.
        If this
        Agreement is terminated without cause by the Company, by reason of death
        or
        disability as provided in Section 10 hereof, or for Good Reason by the Employee,
        the Employee shall be eligible for a pro rated Net Sales Bonus based on the
        data
        from the Company’s audited financial statements for the period ending on the
        last completed quarter of the financial reporting period on which a Net Sales
        Bonus is based; it being understood for purposes of Sections 3(a)(i)a and
        3(a)(i)b that the sales figures shall be annualized and the resulting Net
        Sales
        Bonus shall be equal to the product of (x) the Net Sales Bonus determined
        on
        such annualized sales figures and (y) a fraction, the numerator of which
        shall
        be the number of quarters completed in the financial reporting period prior
        to
        the termination and the denominator of which shall be four; it being further
        understood that for purposes of Section 3(a)(i)c, if the termination occurs
        after September 30, 2007 but prior to December 31, 2007, the sales figures
        through the quarter ending September 30, 2007 shall be multiplied by two
        and the
        resulting Net Sales Bonus shall be equal to the quotient of (x) the Net Sales
        Bonus determined on the basis of such sales figures and (y) two. The pro
        rated
        bonus hereunder shall be payable within ten days of the termination date
        of this
        Agreement.

       

      For
        purposes of this Agreement, “Good
        Reason”
shall
        mean (i) the Company’s material breach of this Agreement and its failure to cure
        such breach within thirty (30) days after written notice thereof from the
        Employee to the Company.

       

      (iv)  Termination
        by the Employee.
        If this
        Agreement is terminated by the Employee for any reason (other than for Good
        Reason), the Employee shall be ineligible for any Net Sales Bonus following
        the
        date of termination, provided, however, if this Agreement is still in effect
        on
        the last day of the fiscal year or other financial reporting period on which
        a
        Net Sales Bonus is based, the Employee shall remain eligible for a Net Sales
        Bonus payment for such period in accordance with this Section 3.

       

      (b)  Net
        Profits Bonus.
        During
        the Term, the Employee shall receive a bonus based on the “Company’s Net
        Profits,” defined as the Company’s net income, after taxes, as determined in
        accordance with Generally Accepted Accounting Principles (GAAP), (the “Net
        Profits Bonus”), as described below.

       

      (i)  Calculation
        and Timing of Payments.
        The Net
        Profits Bonus shall be calculated and payable as follows:

       

      (A)  Subject
        to the limitation in Section 3(c) below, one percent of the Company’s Net
        Profits for the fiscal year ending June 30, 2006 payable within ten (10)
        days
        after the first public availability of the Company’s audited financial
        statements for the fiscal year ending June 30, 2006;

       

      (B)  Subject
        to the limitation in Section 3(c) below, one percent of the Company’s Net
        Profits for the fiscal year ending June 30, 2007 payable within ten (10)
        days
        after the first public availability of the Company’s audited financial
        statements for the fiscal year ending June 30, 2007; and

       

      
        
           

        

        
          -3-

          
            

          

        

        
           

        

      

      (C)  Subject
        to the limitation in Section 3(c) below, one percent of the Company’s Net
        Profits for the six-month period ending December 31, 2007 payable within
        ten
        (10) days after the first public availability of Company’s audited financial
        statements for the six month period ending December 31, 2007.

       

      (ii)  Termination
        for Cause.
        If this
        Agreement is terminated for cause by the Company pursuant to Section 10(a)
        of
        this Agreement, Employee shall be ineligible for any Net Profits Bonus payment
        following the date of termination, provided, however, if this Agreement is
        still
        in effect on the last day of the fiscal year or other financial reporting
        period
        on which a Net Profits Bonus is based, the Employee shall remain eligible
        for a
        Net Profits Bonus payment for such period in accordance with this Section
        3.

       

      (iii)  Termination
        Without Cause Or For Good Reason.
        If this
        Agreement is terminated without cause by the Company, by reason of death
        or
        disability as provided in Section 10 hereof, or for Good Reason by the Employee,
        the Employee shall be eligible for a pro rated Net Profits Bonus based on
        the
        data from the Company’s audited
        financial statements for the period ending on the last completed quarter
        of the
        financial reporting period on which a Net Profits Bonus is based; it being
        understood for purposes of Sections 3(b)(i)a and 3(b)(i)b the net profits
        shall
        be annualized and the resulting Net Profits Bonus payment shall be equal
        to the
        product of (x) the Net Profits Bonus determined on such annualized net profits
        and (y) a fraction, the numerator of which shall be the number of quarters
        completed in the financial reporting period prior to the termination and
        the
        denominator of which shall be four; it being further understood that for
        purposes of Section 3(b)(i)(c), if the termination occurs after September
        30,
        2007 but prior to December 31, 2007, the net profits through the quarter
        ending
        September 30, 2007 shall be multiplied by two and the resulting Net Profits
        Bonus shall be equal to the quotient of (x) the Net Profits Bonus determined
        on
        the basis of such net profits and (y) two. The pro rated bonus hereunder
        shall
        be payable within ten days of the termination date of this
        Agreement.

       

      (iv)  Termination
        by the Employee.
        If this
        Agreement is terminated by the Employee for any reason (other than for Good
        Reason), the Employee shall be ineligible for any Net Profits Bonus payment
        following the date of termination, provided, however, if this Agreement is
        still
        in effect on the last day of the fiscal year or other financial reporting
        period
        on which a Net Profits Bonus is based, the Employee shall remain eligible
        for a
        Net Profits Bonus payment for such period in accordance with this Section
        3.

       

      (c)  Maximum
        Amount Of Bonus Payments.
        The
        aggregate of the Employee’s Net Sales Bonus and Net Profits Bonus will in no
        event exceed seventy five percent 75% of the Employee’s Base Salary during any
        bonus period for which the Net Sales Bonus and Net Profits Bonus are
        paid.

       

      4.    Stock
        Options.
        Subject
        to the terms and conditions of the Company’s 2005 Stock Option Plan (the “Plan”)
        and a Stock Option Agreement to be executed by the Company and the Employee
        (the
“Option Agreement”), the Employee shall receive a grant of 50,000 stock options
        under the Plan (the “Options”) as of the Effective Time. The Options shall be
        subject to vesting as set forth in the Option Agreement which shall include,
        without limitation, accelerated vesting in the event of a termination of
        this
        Agreement without cause by the Company, for Good Reason by the Employee and
        in
        the event of a Change in Control.

       

      
        
           

        

        
          -4-

          
            

          

        

        
           

        

      

      “Change
        in Control”
        shall
        mean (w) any person shall after the date hereof become the beneficial owner,
        directly or indirectly, of securities of the Company representing 50% or
        more of
        the voting or economic interest of all then outstanding securities of the
        Company, (x) the consummation of any corporate transaction, including a
        consolidation or merger, of the Company in which the Company is not the
        continuing or surviving entity, other than a consolidation or merger of the
        Company in which the holders of the Company’s equity interest immediately prior
        to the consolidation or merger shall, upon consummation of the consolidation
        or
        merger, own at least 50% of the equity interests of the surviving entity
        after
        such consolidation or merger, (y) persons who, as of the Effective Time,
        represent all the members of the board of directors (the “Board”) of the Company
        cease for any reason to constitute at least a majority of the members of
        the
        Board, or (z) the consummation of any sale (in any single transaction or
        series
        of related transactions) of all or substantially all of the assets or business
        of the Company.

       

      5.    Performance
        Accelerated Restricted Stock (PARS).
        Subject
        to the terms and conditions of the Company’s 2005 Stock Option Plan (the “Plan”)
        and a Performance Accelerated Restricted Stock Option Agreement to be signed
        by
        the Company and the Employee (“PARS Agreement”), the Employee shall receive a
        grant of 25,000 shares of Performance Accelerated Restricted Stock (“PARS”)
        under the Plan. The PARS shall be subject to vesting as set forth in the
        PARS
        Agreement which shall include, without limitation, accelerated vesting in
        the
        event of a termination of this Agreement without cause by the Company, for
        Good
        Reason by the Employee and in the event of a Change in Control.

       

      6.    Employment
        Benefits.
        Subject
        to any applicable eligibility requirements, the Employee shall be entitled
        to
        receive benefits pursuant to the terms and conditions of the employee benefit
        plans then in effect for other executive employees of the Company. For purposes
        of this Section 6, such benefits shall include (i) coverage under the Company’s
        medical/health care plan for the Employee and the Employee’s immediate family
        members and (ii) life insurance provided by a Company-designated carrier
        in an
        amount not to exceed $500,000 (collectively, the “Benefits”).

       

      7.    Paid
        Vacation.
        The
        Employee shall accrue prorated vacation at a rate of two weeks per year during
        fiscal year 2006 and for the first six months of fiscal year 2007. Thereafter,
        the Employee shall accrue prorated vacation at a rate of three weeks per
        year.
        Any earned but unused vacation shall be paid to the Employee at the time
        of the
        termination or expiration of this Agreement other than for cause. The Employee
        shall provide sufficient information to the Company on an ongoing basis to
        enable it to maintain an accurate record of vacation days earned and vacation
        days taken.

       

      8.    Business
        Expense Reimbursement.
        The
        Employee shall be reimbursed for all out-of-pocket expenses reasonably incurred
        by him in the performance of his duties under this Agreement, provided that
        such
        expenses are properly documented and itemized and incurred in amounts and
        in a
        manner consistent with any standard business expense reimbursement policies.
        The
        Employee shall be given an automobile allowance of $500.00 per month, payable
        monthly.

       

      9.    Reserved.

       

      10.   Termination.

       

      
        
           

        

        
          -5-

          
            

          

        

        
           

        

      

      (a)  Termination
        for Cause by Company.
        This
        Agreement may be terminated for cause at any time by action of the Company’s
        Board of Directors. Such termination shall be effective upon the Company’s
        delivery to the Employee of written notice of such termination. For the purpose
        of this Agreement, a termination shall be for “cause” in the event
        of:

       

      (i)  any
        material breach of business or professional ethics by the Employee;

       

      (ii)  any
        act
        or omission of the Employee that materially injures the business or professional
        reputation of the Company;

       

      (iii)  the
        Employee’s conviction of, or his pleading of nolo contendere to, a felony or any
        crime involving fraud, dishonesty, or moral turpitude;

       

      (iv)  the
        Employee’s dishonesty in the conduct of the business affairs of the Company or
        in dealing with the finances or property of the Company;

       

      (v)  any
        material failure by the Employee to comply with any of the terms of this
        Agreement or any reasonable request of the Board of Directors of the Company;
        or

       

      (vi)  any
        material failure of the Employee to faithfully to perform his services hereunder
        in a timely and competent manner.

       

      Upon
        termination of this Agreement for cause, except as otherwise provided herein,
        all of the Employee’s rights to compensation and benefits shall immediately
        terminate to the maximum extent permitted by applicable law, provided that
        the
        Employee shall receive any portion of the Base Salary and other benefits
        under
        the Company’s benefit plans that have accrued through the date of termination
        but has not previously been paid.

       

      (b)  Termination
        Without Cause by Company Or For Good Reason By Employee.
        This
        Agreement may be terminated by the Company without cause at any time or for
        Good
        Reason by the Employee at any time. In the event of the Employee’s termination
        of this Agreement without cause by the Company or for Good Reason by the
        Employee, the Company’s obligations under this Agreement shall cease as of the
        date of such termination. However, the Employee shall receive any unpaid
        portion
        of any remaining Base Salary that would have accrued through the end of the
        Term
        had this Agreement not been so terminated which has not previously been paid
        to
        the Employee and shall be entitled to Benefits through the end of the Term
        as if
        this Agreement had not been so terminated, subject, in each case, to the
        condition that the Employee executes a General Release Agreement in the form
        prescribed by the Company in consideration for the payment to him by the
        Company
        of such remaining Base Salary. The remaining Base Salary to be paid pursuant
        to
        this paragraph shall be in accordance with the Company’s regular payroll process
        through the end of the Term (including any withholding) as if this Agreement
        had
        not been so terminated. 

       

      (c)  Termination
        for Death or Permanent Disability.
        Except
        as otherwise prohibited by law, the Employee’s employment under this Agreement
        shall be terminated by the Employee’s death or permanent disability. For the
        purpose of this Agreement, the term “permanent disability” shall mean a
        disability resulting from physical or mental illness or bodily injury which,
        in
        the reasonable opinion of an independent physician paid for by the Company
        

       

      
        
           

        

        
          -6-

          
            

          

        

        
           

        

      

      (which
        shall specifically exclude Employee’s personal physician), prevents the Employee
        from fulfilling the Employee’s essential duties hereunder with or without
        reasonable accommodation for a period of ninety (90) days in any three hundred
        sixty-five (365) day period. In the event that the Employee’s employment
        hereunder is terminated upon the Employee’s death or permanent disability, all
        of the Employee’s rights to compensation and employment benefits shall
        immediately terminate to the maximum extent permitted by applicable law,
        provided that the Employee shall, except as provided herein, receive such
        portion of the Base Salary and other benefits under the Company’s benefit plans
        that have accrued through the date of termination but have not previously
        been
        paid.

       

      (d)  Termination
        by Employee.
        If the
        Employee terminates his employment for any reason (other than for Good Reason),
        all of the Employee’s rights to compensation and employment benefits shall
        immediately terminate to the maximum extent permitted by applicable law,
        provided that the Employee shall receive such portion of the Base Salary
        and
        other benefits under the Company’s benefit plans that have accrued through the
        date of termination but have not previously been paid and bonuses payable
        in
        accordance with Section 3 hereof.

       

      (e)  Cooperation
        with Company after Termination.
        Following any termination of this Agreement, unless the Company has materially
        breached the terms thereof, and for a reasonable time thereafter, the Employee
        shall cooperate fully with the Company in all matters relating to the winding
        up
        of the Employee’s pending work on behalf of Company and the orderly transfer of
        any such pending work to other employees of the Company as may be designated
        by
        the Company. The Company shall reimburse the Employee for out-of-pocket costs
        of
        the Employee in connection with the Employee’s obligation under this Section
        10(e) and pay the Employee a pro-rated portion of the Employee’s Base Salary for
        each full business day the Employee is reasonably required to work to satisfy
        such obligations. 

       

      11.    Covenant
        Not to Compete / Solicit.
        The
        Employee hereby provides the Company with the following covenants:

       

      (a)  The
        Employee recognizes and acknowledges that the Proprietary Information (as
        hereinafter defined) is a valuable, special and unique asset of the Company.
        As
        a result, both during the Term and thereafter, the Employee shall not, without
        the prior written consent of the Company, for any reason, either directly
        or
        indirectly, divulge to any third-party or use for his own benefit, or for
        any
        purpose other than the exclusive benefit of the Company, any confidential,
        proprietary, business and technical information or trade secrets of any of
        the
        Company or of any subsidiary or affiliate thereof (the “Proprietary
        Information”)
        revealed, obtained or developed in the course of his employment with the
        Company. Proprietary Information shall include, but shall not be limited
        to:
        technical information, including research design, results, techniques and
        processes; computer codes or instructions (including source and object code
        listings, program logic algorithms, subroutines, modules or other subparts
        of
        computer programs and related documentation, including program notation);
        computer processing systems and techniques; concepts, layouts, flowcharts
        and
        specifications; know-how; any associated user or service manuals or other
        like
        textual materials (including any other data and materials used in performing
        the
        Employee’s duties); all computer inputs and outputs (regardless of the media on
        which stored or located); hardware and software configurations, designs,
        architecture and interfaces; technical management information, including
        project

       

      
        
           

        

        
          -7-

          
            

          

        

        
           

        

      

      proposals,
        research plans, status reports, performance objectives and criteria, and
        analyses of areas for business development; and business information, including
        project, financial, accounting and personnel information, business strategies,
        plans and forecasts, customer and supplier lists, customer and supplier
        information and sales and marketing plans, efforts, information and data.
        In
        addition, “Proprietary Information” shall include all information and materials
        received from a third party by the Company or the Employee which third party
        is
        subject to an obligation of confidentiality and/or non-disclosure. Nothing
        contained herein shall restrict the Employee’s ability to make such disclosures
        during the Term as may be necessary to the effective and efficient discharge
        of
        the duties required by the position or as such disclosures may be required
        by
        law, as determined by counsel to the Company. Furthermore, nothing contained
        herein shall restrict the Employee from divulging or using for his own benefit
        or for any other purpose any Proprietary Information that is (a) readily
        available to the general public so long as such information did not become
        available to the general public as a direct or indirect result of the Employee’s
        breach of this Section, or (b) was known to the Employee prior to its disclosure
        to him by the Company. Failure by the Company to mark any of the Proprietary
        Information as confidential or proprietary shall not affect its status as
        Proprietary Information under the terms of this Agreement.

       

      (b)  Non-competition.
        Commencing as of the Effective Time and continuing for a period of one year
        following the termination of this Agreement by the Company for cause or by
        the
        Employee for any reason (other than for Good Reason) or expiration of the
        Term
        (the “Restricted Period”), the Employee shall not, anywhere in the United States
        or Canada, directly or indirectly, either alone or as a shareholder, partner,
        associate, consultant, owner, agent, creditor, or co-venturer of any other
        person or entity, or in any other capacity, directly or indirectly, engage
        in
        the business of sourcing, marketing, or distributing consumer telephony
        equipment bundled with broadband/or prepaid communication services; provided
        that nothing herein shall prohibit the Employee from being an owner of not
        more
        than 5% of the outstanding stock of any class of a corporation which is publicly
        traded, so long as the Employee does not actively participate in the business
        of
        such corporation. The Employee further agrees that he shall not directly
        or
        indirectly engage in any business at any time under a trademark or trade
        name
        that is confusingly similar to or may connote an association with any trademark
        or trade name of the Company. 

       

      (c)  Non-Interference
        with Business Relations. During the Restricted Period, the Employee shall
        not,
        directly or indirectly, solicit, induce or attempt to solicit or induce any
        customer, supplier, licensee or other business relation of the Company to
        cease
        doing business with the Company, or in any way interfere with any such business
        relation of the Company.

       

      (d)  Solicitation
        of Employees. During the Restricted Period, the Employee shall not, directly
        or
        indirectly, either alone or as a shareholder, partner, consultant, adviser,
        owner, associate, agent, creditor or co-venturer of any other person or entity,
        or in any other capacity, solicit, hire, attempt to solicit or hire, or
        participate in any attempt to solicit or hire any person who is an employee
        of
        Company or who was an employee of Company within the preceding twelve
        months.

       

      (e)  Scope.
        The parties agree that the duration, scope, and area restrictions set forth
        in
        this Section 11 are reasonable. If, at the time of enforcement of this Section
        11, a court shall hold that the duration, scope or area restrictions stated
        herein are unreasonable under 

       

      
        
           

        

        
          -8-

          
            

          

        

        
           

        

      

      circumstances
        then existing, the parties agree that the maximum duration, scope or area
        reasonable under such circumstances shall be substituted for the stated
        duration, scope or area.

       

      (f)  Remedies.
        The Employee agrees that if he shall commit or threaten to commit a breach
        of
        any of the covenants and agreements contained in this Section 11, then the
        Company shall have the right to seek and obtain, without posting any bond
        or
        security, all appropriate injunctive and other equitable remedies therefore,
        in
        addition to any other rights and remedies that may be available at law, it
        being
        acknowledged and agreed that any such breach would cause irreparable injury
        to
        the Company and that money damages would not provide an adequate remedy
        therefor.

       

      12.    Notices.
        All
        notices and other communications given or made pursuant to this Agreement
        shall
        be in writing and shall be delivered personally or sent by first class
        registered or certified mail, return receipt requested, documented overnight
        delivery service or telefax to the appropriate address or number as set forth
        below:

       

      (a)  if
        to the
        Company, to:

       

      2466
        Peck
        Road

      City
        of
        Industry, California 90601

       

      (b)  if
        to
        Employee, to:

       

      2753
        Broadway, #197

      New
        York,
        New York 10025

       

      or
        to
        such other persons or at such other addresses as shall be furnished by either
        party by like notice to the other. Such notice or communication shall be
        deemed
        to have been given or made (a) if personally delivered, on the date so
        delivered, (b) if sent by registered or certified mail, on the date of receipt
        or the date delivery is refused, (c) if sent by documented overnight delivery
        service, on the next business day following delivery to the courier service,
        or
        (d) if sent by facsimile transmission, on the date of transmission if sent
        during normal business hours of the recipient or, if not, then on the next
        business day.

       

      13.    Resolution
        of Disputes; Equitable Remedies.

       

      (a)  Any
        controversy, dispute or claim arising out of, or relating to, this Agreement
        or
        the breach or alleged breach hereof, or affecting this Agreement in any way,
        shall be settled by final and binding arbitration in New York, New York in
        accordance with the applicable provisions of the American Arbitration
        Association (the “AAA”) in effect at the time of filing of the demand for
        arbitration. The arbitration shall be conducted by one arbitrator who shall
        be
        selected by the mutual agreement of the parties or, failing such agreement,
        by
        the AAA. The parties will cooperate with the AAA and with one another in
        selecting an arbitrator from the AAA’s panel of neutrals and in scheduling the
        arbitration proceedings. The parties will participate in the arbitration
        in good
        faith and will share equally in its costs. The parties shall be entitled
        to such
        discovery as the parties agree or as otherwise ordered by the arbitrator.
        By
        further agreement of the parties or direction of the arbitrator, proceedings
        which, in the judgment of the arbitrator, are not dependent on the credibility
        of a testifying witness may be held other than in person, such as via telephone
        conference. The arbitrator shall render a written reasoned 

       

      
        
           

        

        
          -9-

          
            

          

        

        
           

        

      

      award
        and
        may award all forms of relief that would otherwise be available in court,
        including injunctive relief. If judicial enforcement of the arbitrator’s award
        is sought by either party, judgment may be entered upon such award in any
        court
        of competent jurisdiction. By signing this Agreement, each party expressly
        agrees to have all disputes, claims or controversies arising out of or relating
        to this Agreement, decided by neutral arbitration, and gives up (i) any rights
        the party might possess to have those matters litigated in a court or jury
        trial, and (ii) judicial rights to discovery and appeal except to the extent
        that they are specifically provided for under this Agreement. If any party
        refuses to submit to arbitration after agreeing to this provision, the party
        may
        be compelled to arbitrate under federal or state law.

       

      14.    Binding
        Agreement.
        This
        Agreement shall be binding upon and shall inure to the benefit of the parties,
        their heirs, successors, and personal representatives; provided, however,
        that
        the Employee may not assign any of his rights, obligations or duties
        hereunder.

       

      15.    Waivers
        and Amendments.
        This
        Agreement may be amended, modified or supplemented only by a written instrument
        executed by the parties hereto. Each of the parties may, only by an instrument
        in writing, extend the time for the performance of any of the obligations
        of the
        other or waive any compliance with any of the covenants or performance of
        any of
        the obligations of the other contained in this Agreement. The waiver by either
        party hereto of a breach of any provision of this Agreement shall not operate
        or
        be construed as a waiver of any subsequent breach. No delay on the part of
        either party in exercising any right, power or privilege hereunder shall
        operate
        as a waiver thereof; nor shall any waiver on the part of either party of
        any
        such right, power or privilege, nor any single or partial exercise of any
        such
        right, power or privilege, preclude any further exercise thereof or the exercise
        of any other such right, power or privilege.

       

      16.    Interpretation.

       

      (a)  The
        Section headings contained in this Agreement are solely for convenience of
        reference and shall not affect the meaning or interpretation of this Agreement
        or of any term or provision hereof.

       

      (b)  Each
        party has reviewed and participated in drafting and revising this Agreement
        and
        the normal rule of construction that any ambiguity is to be resolved against
        the
        drafting party shall not be employed in the interpretation of this
        Agreement.

       

      17.    Severability.
        This
        Agreement shall be deemed severable, and the invalidity or unenforceability
        of
        any term or provision hereof shall not affect the validity or enforceability
        of
        this Agreement or of any other term or provision hereof. If any provision
        of
        this Agreement is held by a court of competent jurisdiction to be invalid,
        void
        or unenforceable, the remaining provisions shall, nevertheless, continue
        in full
        force and effect without being impaired or invalidated in any way.

       

      18.    Entire
        Agreement.
        This
        Agreement, the Option Agreement and the PARS Agreement, represent the entire
        agreement and understanding of the parties with reference to the matters
        forth
        herein, and no representations, warranties, covenants or undertakings have
        been
        made in connection with this Agreement other than those expressly set forth
        herein. This Agreement supersedes all prior negotiations, discussions,
        correspondence, communications, 

       

      
        
           

        

        
          -10-

          
            

          

        

        
           

        

      

      understandings,
        and agreements between the parties relating to the subject matter of this
        Agreement and all prior drafts of this Agreement, all of which are merged
        into
        this Agreement.

       

      19.    Governing
        Law.
        This
        Agreement shall be governed by and construed in accordance with the laws
        of the
        State of Delaware, without regard to the conflicts of law rules of such
        state.

       

      IN
        WITNESS WHEREOF, the parties have caused this Agreement to be signed as of
        the
        date first written above.

       

      

       

    

    
      	 	 	 
	 	
              AMERICAN
                TELECOM SERVICES, INC.

            
	 
 	 
 	 
 
	 	By:  	/s/ Bruce
              Hahn
	 	
              

              Name:
                Bruce Hahn

              Title:
                Chief Executive Officer

            
	 	 

      	 	 	 
	 	
              EMPLOYEE:

            
	 
 	 
 	 
 
	 	By:  	/s/ Adam
              Somer
	 	
              

              
                Adam
                  Somer

              

            
	 	 

     

     

     

     

     

     

    
      
         

      

      
        -11-

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