Document:

EXHIBIT
      10.3

    

    EMPLOYMENT
      AGREEMENT

    

    This
      EMPLOYMENT AGREEMENT (this “Agreement”) is made as of the 1st day of January,
      2004 by and between InterMetro Communications, Inc., a California corporation
      (the “Company”), and Vincent Arena, an individual (“Employee”), and is made with
      respect to the following facts:

    

    R
      E C I T A L S

    

    A.
      The Company and the Employee wish to ensure that the Company will receive the
      benefit of Employee’s loyalty and service.

    

    B.
      In order to help ensure that the Company receives the benefit of Employee’s
      loyalty and service, the parties desire to enter into this formal Employment
      Agreement to provide Employee with appropriate compensation arrangements and
      to
      assure Employee of employment stability.

    

    C.
      The parties have entered into this Agreement for the purpose of setting forth
      the terms of employment of the Employee by the Company.

    

    NOW,
      THEREFORE,
      in consideration of the premises and mutual covenants herein
      contained,
      THE PARTIES HERETO AGREE AS FOLLOWS
      :

    

    1.
      Employment of Employee and Duties.
      The Company hereby hires Employee and Employee hereby accepts employment upon
      the terms and conditions described in this Agreement. The Employee will be
      the
      Chief Financial Officer of the Company with all of the duties, privileges and
      authorities usually attendant upon such office, including but not limited to
      responsibility for the day-to-day oversight of the Company’s accounts receivable
      and accounts payable and the preparation of the Company’s annual reports.
      Subject to (a) the general supervision of the Chief Executive Officer, and
      (b) the Employee’s duty to report to the Chief Executive Officer and to
      follow Company directives and policies, Employee will have all of the authority
      to perform his employment duties for the Company.

    

    2.
      Time and Effort.
      Employee agrees to devote his full working time and attention to the management
      of the Company’s business affairs, the implementation of its strategic plan, as
      determined by the Chief Executive Officer and the Board of Directors, and the
      fulfillment of his duties and responsibilities as the Company’s Chief Financial
      Officer. Expenditure of a reasonable amount of time for personal matters and
      business and charitable activities will not be deemed to be a breach of this
      Agreement, provided that those activities do not materially interfere with
      the
      services required to be rendered to the Company under this
      Agreement.

    
      
        
        

      

      
        -1-

        
          

        

      

      
        
        

      

    

     

      
        

      

       

    

    3.
      The Company’s Authority.
      Employee agrees to comply with the Company’s rules and regulations as adopted by
      the Company’s Chief Executive Officer and Board of Directors regarding
      performance of his duties, and to carry out and perform those orders, directions
      and policies established by the Company with respect to his engagement. Employee
      will promptly notify the Company’s Chief Executive Officer or Board of Directors
      of any objection he has to the Chief Executive Officer’s or the Board’s
      directives and the reasons for such objection.

    

    4.
      Noncompetition by Employee and Proprietary Information, Confidentiality,
      Loyalty, and Nonsolicitation.
      During the term of this Agreement, the Employee will not, directly or
      indirectly, either as an employee, employer, consultant, agent, principal,
      partner, stockholder (in a private company), corporate officer, director, or
      in
      any other individual or representative capacity, engage or participate in any
      business that is in competition with the business of the Company or its
      affiliates. Additionally, Employee agrees to execute the Employee Proprietary
      Information, Confidentiality, Loyalty, and Nonsolicitation Agreement attached
      to
      this Agreement as Exhibit A.

    

    5.
      Term of Agreement.
      This Agreement will commence to be effective on January 1, 2004 (the
“Commencement Date”), and will continue until for a period of five years, unless
      sooner terminated as provided in Section 14 hereof. Thereafter, this
      Agreement will automatically be renewed for consecutive one (1) year
      periods unless either party provides the other party with written notification,
      at least sixty (60) days prior to the expiration of the then current term
      of this Agreement, of its intention not to renew this Agreement.

    

    6.
      Compensation.
      During the term of this Agreement, the Company will pay the following
      compensation to Employee:

    

    6.1
      Annual Compensation.
      Employee will be paid a fixed salary of $185,000 per year, payable in two
      installments per month of $7,708 each on the 5th and 20th day of each month,
      commencing for the first period after the Commencement Date of this Agreement.
      Employee will receive an annual 11% increase in said fixed salary effective
      each
      January 1
      st
      during the term of this Agreement.

    

    6.2
      Additional Compensation.
      In addition to the compensation set forth in Sections 6.1 and 6.3 of this
      Agreement, Employee may be paid a bonus or bonuses during each year at a target
      annual amount equal to seventy-five percent (75%) of the Employee’s then in
      effect annual salary, as determined at the sole discretion of the Company’s
      Board of Directors based on the Board’s evaluation of the Employee’s definable
      efforts, accomplishments and similar contributions.

    

    6.3
      Stock Incentives.
      On January 2, 2004 the Company will grant to the Employee 250,000 stock
      options to purchase 250,000 shares of the Company’s Common Stock pursuant to the
      Company’s 2004 Stock Option Plan for Directors, Officers, Employees, and Key
      Consultants of InterMetro Communications, Inc. (“Stock Option Plan”) having an
      exercise price of $0.05 per share and an exercise period of ten years after
      the
      date of grant, with a vesting schedule as follows: 20% upon grant and 1/16
      of
      the balance each quarter thereafter until the remaining stock options have
      vested. The stock options granted to Employee pursuant to this Agreement will
      be
      governed by the terms and conditions of the Stock Option Plan and the stock
      option agreement executed by the Company which applies to the options. Upon
      recommendation of the Compensation Committee of the Company’s Board of Directors
      and approval of the Company’s full Board of Directors, the Employee may be
      granted additional stock options to purchase additional stock of the Company
      after the first year of the term of this Agreement.

    

    

     

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

    
      
        

      

       

    

    7.
      Equipment.
      Employee will receive one laptop computer, one cellular phone, and one wireless
      handheld devise for his exclusive use during his employment with the Company.
      Within thirty (30) days after his termination as a director, officer,
      employee, and consultant of the Company, as the case may be, Employee agrees
      to
      either (i) return such computer, cellular phone, and wireless handheld
      devise to the Company or (ii) purchase such computer, cellular phone, and
      wireless handheld devise from the Company for an amount equal to the then fair
      market value of such computer, cellular phone, and wireless handheld
      devise.

    

    8.
      Fringe Benefits.
      Employee will be entitled to all fringe benefits which the Company or its
      subsidiaries may make available from time-to-time for persons with comparable
      positions and responsibilities, as approved by duly adopted resolutions of
      the
      Company’s Board of Directors. Without limitation, such benefits will include
      participation in any life and disability insurance programs, profit incentive
      plans, pension or retirement plans, and bonus plans as are maintained or adopted
      from time-to-time by the Company. The Company will also provide Employee with
      medical group insurance coverage or equivalent coverage for Employee and his
      dependents. The medical insurance coverage will begin on the Commencement Date
      and will continue throughout the term of this Agreement.

    

    9.
      Office and Staff.
      In order to enable Employee to discharge his obligations and duties pursuant
      to
      this Agreement, the Company agrees that it will provide suitable office space
      for Employee in the Simi Valley Metropolitan Area, together with all necessary
      and appropriate supporting staff and secretarial assistance, equipment,
      stationery, books and supplies. The Company agrees to provide at its expense
      parking for one vehicle by the Employee at the Company’s executive
      offices.

    

    10.
      Reimbursement of Expenses.
      The Company will reimburse Employee for all reasonable travel, mobile telephone,
      promotional and entertainment expenses incurred in connection with the
      performance of Employee’s duties hereunder. Employee’s reimbursable expenses
      will be paid promptly by the Company upon presentment by Employee of an itemized
      list of invoices describing such expenses. All compensation provided in Sections
      6, 8, and 10 of this Agreement will be subject to customary withholding tax
      and
      other employment taxes, to the extent required by law.

    

    11.
      Vacation.
      Employee will be entitled to three weeks of paid vacation per year or pro rata
      portion of each year of service by Employee under this Agreement. The Employee
      will be entitled to the holidays provided in the Company’s established corporate
      policy for employees with comparable duties and responsibilities.

    

     

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

     

      
        

      

    

    

    12.
      Automobile and Electronic Communication Devices.
      Notwithstanding anything else herein to the contrary, the Company will pay
      to
      the Employee a fixed amount equal to (a) $500 per month on the last day of
      each month during the term of this Agreement as reimbursement to the Employee
      on
      a nonaccountable basis of all expenses incurred by the Employee for the use
      of
      his automobile, including but not limited to depreciation, repairs and
      insurance, and (b) $300 per month on the last day of each month during the
      term of this Agreement as reimbursement to the Employee on a nonaccountable
      basis for all expenses incurred by the Employee for the use of his electronic
      communication devices.

    

    13.
      Arbitration.
      Any dispute under this Agreement will be resolved by binding arbitration
      conducted in accordance with the rules and procedures of the American
      Arbitration Association as they are then in effect in the County of Los Angeles,
      State of California. In order to select an arbitrator, each party to the dispute
      will select an arbitrator of its choice, and those selected arbitrators will
      then select by mutual agreement a single arbitrator for the proceeding. The
      decision of the arbitrator shall be final and binding on the parties to this
      Agreement, and judgment thereon may be entered in the Superior Court for the
      County of Los Angeles or any other court having jurisdiction. Each party to
      this
      Agreement will advance one-half of the arbitrator’s fees; however, all costs of
      the arbitration proceeding to enforce this Agreement, including attorneys’ fees
      and witness expenses, shall be paid by the party against whom the arbitrator
      rules. It is expressly agreed that the parties to any such arbitration may
      take
      discovery as contemplated and provided for by California Code of Civil Procedure
      §1283.05. Notwithstanding anything herein to the contrary, the parties hereto
      will not be required to submit a claim to arbitration if the claim is for
      temporary or preliminary equitable or injunctive relief that could not
      practicably be heard in a timely fashion through the arbitration
      process.

     

     

    14.
      Termination.
      This Agreement may be terminated in the following manner and not
      otherwise:

    

    14.1
      Mutual Agreement.
      This Agreement may be terminated by the mutual written agreement of the Company
      and Employee to terminate.

    

    14.2
      Termination by Employee for Breach.
      Employee may at his option and in his sole discretion terminate this Agreement
      for the material breach by the Company of any term or provision of this
      Agreement. In the event of such termination, Employee will give the Company
      thirty (30) day’s prior written notice.

    

    14.3
      Termination by the Company for Breach.
      The Company may at its option also terminate this Agreement in the event that
      the Employee acts in gross negligence in the performance of his duties under
      this Agreement which results in a breach of his fiduciary duty to the Company,
      to the Board of Directors or to the Company’s shareholders; provided, however,
      that the Company will give the Employee written notice of specific instances
      for
      the basis of any termination of this Agreement by the Company pursuant to
      Section 14.3 of this Agreement. Employee will have a period of thirty
      (30) days after said notice in which to cease the alleged violations before
      the Company may terminate this Agreement. If Employee ceases to commit the
      alleged violations within said thirty (30) day period, the Company may not
      terminate this Agreement pursuant to this Section. If Employee continues to
      commit the alleged violations after
      said thirty (30) day period, the Company may terminate this Agreement
      immediately upon written notification to Employee. Notwithstanding anything
      else
      herein to the contrary, if the Employee is removed pursuant to Section 14.3
      of
      this Agreement, the Employee will receive all of the benefits provided in
      Section 15(iii) of this Agreement, regardless of the terms and conditions of
      the
      Company’s Stock Option Plan or any existing stock option agreements or any
      amendments thereto governing the options described in Sections 6.3 or 15(iii)
      of
      this Agreement.

    

     

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

     

      
        

      

    

     

    14.4
      Termination Upon Death.
      This Agreement will terminate upon the death of the Employee and Employee’s
      estate shall be entitled to the payment positions set forth in Section 15
      of this Agreement.

    

    14.5
      Termination Upon the Disability of the Employee.
      This Agreement will terminate upon the disability of the Employee. As used
      in
      the previous sentence, the term “disability” means the complete disability to
      discharge Employee’s duties and responsibilities for a continuous period of not
      less than six months during any calendar year. Any physical or mental disability
      which does not prevent Employee from discharging his duties and responsibilities
      in accordance with usual standards of conduct as determined by the Company
      in
      its reasonable opinion will not constitute a disability under this Agreement.
      In
      the event of a termination of the Employee’s employment by reason of the
      Employee’s disability, Employee shall be entitled to the payment positions set
      forth in Section 15 of this Agreement.

    

    14.6
      Non Renewal of Term Due to Change in Control.
      Delivery by the Company of a notice of non-renewal of the term of this Agreement
      following a change in control of the Company will be deemed to be a termination
      subject to the severance payment positions set forth in Section 15 of this
      Agreement.

    

    14.7
      Other Termination by Employee.
      If this Agreement is terminated by Employee in writing for a reason other than
      the Company’s breach of this Agreement (i.e. not for cause) then
      (a) Employer will not be entitled to assert any claim against the Employee
      for consequential or indirect damages or for lost profits as a result of the
      termination; and (b) Employee will not be entitled to any rights set forth
      in Section 15 of this Agreement except that Employee will be entitled to
      the right to exercise vested options for a period of 90 days after the date
      of
      the written notification of termination by the Employee.

    

    15.
      Improper Termination.
      If this Agreement is terminated by Employee for any reason pursuant to
      Section 14.2 of this Agreement or by the Company in any manner except
      specifically in accordance with Section 14.1 or 14.3 of this Agreement,
      then (i) the Company will immediately pay to the Employee a lump sum
      payment equal to the greater of (a) the sum of the Employee’s entire annual
      compensation and accrued but unpaid bonus (if any, with respect to bonus)
      payable through the end of the term of this Agreement pursuant to Sections
      6.1
      and 6.2 herein, respectively or (b) the Employee’s annual base compensation
      as set forth in Section 6.1 herein , (ii) Employee will be entitled to
      all of the benefits under Section 8 of this Agreement, as amended, through
      the end of the term of this Agreement, and (iii) all unvested stock options
      owned by Employee will immediately vest, Employee will be entitled to exercise
      all vested stock options which he owns for the entire remaining exercise period
      of the stock options as set forth in Section 6.3 of this Agreement, no such
      stock options will terminate prior to said expiration dates, and no “severance”
will be deemed to have occurred under the Company’s Stock Option Plan or under
      existing Stock Option Agreements covering said stock options. It is specifically
      agreed that in such event Employee will have no duty to mitigate his damages
      by
      seeking comparable, inferior or different employment.

    

     

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    

     

      
        

      

    

     

    16.
      Indemnification of Employee.
      Pursuant to the provisions and subject to the limitations of the California
      Corporations Code, and in particular Sections 204 and 317 therein, the Company
      will indemnify and hold Employee harmless as provided in Sections 16.1, 16.2
      and
      16.3 of this Agreement. The Company will, upon the request of Employee, assume
      the defense and directly bear all of the expense of any action or proceedings
      which may arise for which Employee is entitled to indemnification pursuant
      to
      this Section. The Company’s obligations to indemnify and hold Employee harmless
      as provided in Sections 16.1, 16.2 and 16.3 of this Agreement shall survive
      the
      termination of this Agreement and continue for a period of five years
      thereafter.

    

    16.1
      Indemnification of Employee for Actions by Third
      Parties.
      The Company hereby agrees to indemnify and hold Employee harmless from any
      liability, claims, fines, damages, losses, expenses, judgments or settlements
      actually incurred by him, including but not limited to reasonable attorneys’
fees and costs actually incurred by him as they are incurred, as a result of
      Employee being made at any time a party to, or being threatened to be made
      a
      party to, any proceeding (other than an action by or in the right of the
      Company, which is addressed in Section 16.2 of this Agreement), relating to
      actions Employee takes within the scope of his employment as the Chief Financial
      Officer of the Company or in any other employment capacity, or in his role
      as a
      director of the Company, provided that Employee acted in good faith and in
      a
      manner he reasonably believed to be in the best interest of the Company and,
      in
      the case of a criminal proceeding, had no reasonable cause to believe his
      conduct was unlawful.

    

    16.2
      Indemnification of Employee for Actions in the Right of the
      Company.
      The Company hereby agrees to indemnify and hold Employee harmless from any
      liability, claims, damages, losses, expenses, judgments or settlements actually
      incurred by him, including but not limited to reasonable attorneys’ fees and
      costs actually incurred by him as they are incurred, as a result of Employee
      being made a party to, or being threatened to be made a party to, any proceeding
      by or in the right of the Company to procure a judgment in its favor by reason
      of any action taken by Employee as an officer, director or agent of the Company,
      provided that Employee acted in good faith in a manner he reasonably believed
      to
      be in the best interests of the Company and its shareholders, and provided
      further, that no indemnification by the Company will be required pursuant to
      this Section 16.2 (i) for acts or omissions that involve intentional
      misconduct or a knowing and culpable violation of law, (ii) for acts or
      omissions that Employee believed to be contrary to the best interests of the
      Company or its shareholders or that involve the absence of good faith on the
      part of Employee, (iii) for any transaction from which Employee derived an
      improper personal benefit, (iv) for acts or omissions that show a reckless
      disregard by Employee of his duties to the Company or its shareholders in
      circumstances in which Employee was aware, or should have been aware, in the
      ordinary course of performing his duties, of a risk of serious injury to the
      Company or its shareholders, (v) for acts or omissions that constitute an
      unexcused pattern of inattention that amounts to an abdication of Employee’s
      duties to the Company or its shareholders, or (vi) for any other act by Employee
      for which Employee is not permitted to be indemnified under the California
      Corporations Code. Furthermore, the Company has no obligation to indemnify
      Employee pursuant to this Section 16.2 in any of the following
      circumstances:

    

     

    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

    

     

      
        

      

    

     

    A.
      In respect of any claim, issue, or matter as to which Employee is adjudged
      to be
      liable to the Company in the performance of his duties to the Company and its
      shareholders, unless and only to the extent that the court in which such action
      was brought determines upon application that, in view of all the circumstances
      of the case, he is fairly and reasonably entitled to indemnity for the expenses
      and then only in the amount that the court will determine.

    

    B.
      In the event of the application of Section 16.2(A), then for amounts paid
      in settling or otherwise disposing of a threatened or pending action without
      court approval.

    

    C.
      In the event of the application of Section 16.2(A), then for expenses
      incurred in defending a threatened or pending action which is settled or
      otherwise disposed of without court approval.

    

    16.3
      Reimbursement.
      In the event that it is determined by a trier of fact that Employee is not
      entitled to indemnification by the Company pursuant to Sections 16.1 or 16.2
      of
      this Agreement, then Employee is obligated to reimburse the Company for all
      amounts paid by the Company on behalf of Employee pursuant to the
      indemnification provisions of this Agreement. In the event that Employee is
      successful on the merits in the defense of any proceeding referred to in
      Sections 16.1 or 16.2 of this Agreement, or any related claim, issue or matter,
      then the Company will indemnify and hold Employee harmless from all fees, costs
      and expenses actually incurred by him in connection with the defense of any
      such
      proceeding, claim, issue or matter.

    

    17.
      Assignability of Benefits.
      Except to the extent that this provision may be contrary to law, no assignment,
      pledge, collateralization or attachment of any of the benefits under this
      Agreement will be valid or recognized by the Company. Except as provided by
      law,
      payment provided for by this Agreement will not be subject to seizure for
      payment of any debts or judgments against the Employee, nor will the Employee
      have any right to transfer, modify, anticipate or encumber any rights or
      benefits hereunder; provided that any stock issued by the Company to the
      Employee pursuant to this Agreement will not be subject to Section 17 of
      this Agreement.

    

    18.
      Directors’ and Officers’ Liability Insurance.
      The Company will utilize its best efforts in good faith to purchase directors’
and officers’ liability insurance for the officers and directors of the Company,
      which would include the same coverage for Employee. The Company covenants to
      maintain in effect a directors’ and officers’ liability insurance policy on the
      same terms and conditions as applicable to all other officers and directors
      of
      the Company during the term of this Agreement and for a period of five years
      after the termination of this Agreement.

    

     

    
      
        
        

      

      
        -7-

        
          

        

      

      
        
        

      

    

     

      
        

      

    

     

    19.
      Notice.
      Except as otherwise specifically provided, any notices to be given hereunder
      will be deemed given upon personal delivery, air courier or mailing thereof,
      if
      mailed by certified mail, return receipt requested, to the following addresses
      (or to such other address or addresses as will be specified in any notice
      given):

     

    
      	
              In
                case of the Company:

            
	
              InterMetro
                Communications, Inc.

            
	
               

               

               

            
	
              Attention:
                Chairman of the Board of Directors

            
	
              In
                case of the Employee:

            
	
              Mr. Vincent
                Arena

            
	
              The
                address listed below Mr. Arena’s

               

              signature
                to this Agreement.

            

    

    

    20.
      Attorneys’ Fees.
      In the event that any of the parties must resort to legal action in order to
      enforce the provisions of this Agreement or to defend such suit, the prevailing
      party will be entitled to receive reimbursement from the nonprevailing party
      for
      all reasonable attorneys’ fees and all other costs incurred in commencing or
      defending such suit.

    

    21.
      Entire Agreement.
      This Agreement embodies the entire understanding among the parties and merges
      all prior discussions or communications among them, and no party will be bound
      by any definitions, conditions, warranties, or representations other than as
      expressly stated in this Agreement or as subsequently set forth in a writing
      signed by the duly authorized representatives of all of the parties
      hereto.

    

    22.
      No Oral Change; Amendment.
      This Agreement may only be changed or modified and any provision hereof may
      only
      be waived by a writing signed by the party against whom enforcement of any
      waiver, change or modification is sought. This Agreement may be amended only
      in
      writing by mutual consent of the parties.

    

    23.
      Severability.
      In the event that any provision of this Agreement will be void or unenforceable
      for any reason whatsoever, then such provision will be stricken and of no force
      and effect. The remaining provisions of this Agreement will, however, continue
      in full force and effect, and to the extent required, will be modified to
      preserve their validity.

    

    24.
      Applicable Law.
      This Agreement will be construed as a whole and in accordance with its fair
      meaning. This Agreement will be interpreted in accordance with the laws of
      the
      State of California, and venue for any action or proceedings brought with
      respect to this Agreement will be in the County of Los Angeles in the State
      of
      California.

    

    25.
      Successors and Assigns.
      Each covenant and condition of this Agreement will inure to the benefit of
      and
      be binding upon the parties hereto, their respective heirs, personal
      representatives, assigns and successors in interest. Without limiting the
      generality of the foregoing sentence, this Agreement will be binding upon any
      successor to the Company whether by merger, reorganization or
      otherwise.

    

    
      
        
        

      

      
        -8-

        
          

        

      

      
        
        

      

    

     

      
        

      

    

     

    26.
      Legal Expense Reimbursement.
      The Company agrees to reimburse the Employee, on demand, for all reasonable
      attorneys’ fees incurred by Employee in connection with or relating to the
      preparation and negotiation of this Agreement.

    

    27.
      Counterparts.
      This Agreement may be executed in two counterparts, each of which may be deemed
      an original, but both of which together shall constitute one and the same
      agreement.

    

    IN
      WITNESS WHEREOF,
      the parties hereto have executed this Agreement on the date first above
      written.

     

    
      	
              COMPANY:

            	
               

            	
               

            	
               

            	
              INTERMETRO
                COMMUNICATIONS, INC.

            
	
               

            	
               

            	
               

            	
               

            	
              a
                California corporation

            
	
               

            	
               

            	
              By:

            	
               

            	
              /s/
                CHARLES
                RICE

               

               

            
	
               

            	
               

            	
               

            
	
               

            	
               

            	
               

            	
               

            	
              Charles
                Rice, Chief Executive Officer and President

            
	
               

            	
               

            	
               

            
	
              Attest:

            	
               

            	
               

            	
               

            	
               

            
	
              /s/
                JONDEONG

               

               

            	
               

            	
               

            	
               

            	
               

            
	
              Jon
                deOng, Chief Technical Officer and Director

            	
               

            	
               

            	
               

            	
               

            
	
               

            	
               

            	
               

            
	
              EMPLOYEE:

            	
               

            	
               

            	
               

            	
              /s/
                VINCENT
                ARENA

               

               

            
	
               

            	
               

            	
               

            	
               

            	
              Vincent
                Arena

            
	
               

            	
               

            	
               

            	
               

            	
               

               

               

            
	
               

            	
               

            	
               

            	
               

            	
              Street
                Address

            
	
               

            	
               

            	
               

            	
               

            	
               

               

               

            
	
               

            	
               

            	
               

            	
               

            	
              City,
                State and Zip Code

            

    

     

    
      
        
        

      

      
        -9-

        
          

        

      

      
        
        

      

    

    
      

    

     

    
 

    EXHIBIT
      A

    

    EMPLOYEE
      PROPRIETARY INFORMATION,

    

    CONFIDENTIALITY,
      LOYALTY, AND NONSOLICITATION

    

    AGREEMENT

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

      
        

      

    

     

    AMENDMENT
      TO

    

    EMPLOYMENT
      AGREEMENT

    

    This
      Amendment to Employment Agreement (the “Amendment”) is made as of this 23rd day
      of June 2006 by and between InterMetro Communications, Inc., a California
      corporation (“IMC”), and Vincent Arena (“Employee”) with respect to the
      following facts:

    

    R
      E C I T A L S

    

    A.
      IMC and Employee have entered into that certain Employment Agreement, dated
      as
      of January 1, 2004 (the “Agreement”).

    

    B.
      On or about May 11, 2006, IMC filed a Registration Statement on Form S-1 (the
      “Registration Statement”) with the Securities and Exchange Commission (the
“Commission”) in connection with the initial public offering (the “Offering”)
      under the Securities Act of 1933, as amended (the “Securities Act”), of the
      common stock of InterMetro Communications, Inc., a Delaware corporation (the
      “Successor Corporation”).

    

    C.
      In recognition of the benefit that the Offering will confer upon Employee,
      and
      for other good and valuable consideration, the receipt and sufficiency of which
      are hereby acknowledged, Employee agrees, for the benefit of IMC and the
      Successor Corporation, to amend and restate the last sentence of Section 14.3
      of
      the Agreement as set forth in this Amendment in order to eliminate the
      accelerated vesting of unvested stock options upon the removal of Employee
      pursuant to Section 14.3 of the Agreement.

    

    D.
      The terms used in this Amendment will have the meanings ascribed to them in
      the
      Agreement unless otherwise defined herein.

    

    NOW,
      THEREFORE,
      for one dollar and other good and valuable consideration,
      THE PARTIES HERETO AGREE AS FOLLOWS:

    

    1.
      Amendment.

    

    Section
      5 of the Agreement is hereby amended and restated as follows: “This Agreement
      will commence to be effective on January 1, 2004 (the “Commencement Date”), and
      will continue until December 31, 2010, unless sooner terminated as provided
      in
      Section 14 hereof. Thereafter, this Agreement will automatically be renewed
      for
      consecutive one (1) year periods unless either party provides the other party
      with written notification, at least sixty (60) days prior to the expiration
      of
      the then current term of this Agreement, of its intention not to renew this
      Agreement.”

    

    The
      last sentence of Section 14.3 of the Agreement is hereby amended and restated
      as
      follows: “Notwithstanding anything else herein to the contrary, if the Employee
      is removed pursuant to Section 14.3 of this Agreement, Employee will receive
      all
      of the benefits provided in Section
      15(iii) of this Agreement with respect to all vested stock options owned by
      Employee as of the date of the termination, regardless of the terms and
      conditions of the Company’s Stock Option Plan or any existing stock option
      agreements or any amendments thereto governing such options, and all unvested
      stock options owned by Employee will immediately expire.”

    

     

    
      
        
        

      

      
        -1-

        
          

        

      

      
        
        

      

    

     

      
        

      

    

     

    2.
      Effect of Amendment.

    

    The
      Agreement will remain in full force and effect except as specifically modified
      by this Amendment. In the event of any conflict between the Amendment and the
      Agreement, the terms of this Amendment will govern.

    

    3.
      Counterparts.

    

    This
      Amendment may be executed simultaneously in any number of counterparts, each
      of
      which counterparts will be deemed to be an original and such counterparts will
      constitute but one and the same instrument.

    

    4.
      Effectiveness.

    

    This
      Amendment will become effective as of the effective date of the
      Offering.

    

    IN
      WITNESS WHEREOF,
      this Amendment is executed as of the date first above written.

     

    
      	
               

            	
               

            	
               

            	
               

            	
               

            
	
              IMC:

            	
               

            	
              INTERMETRO COMMUNICATIONS, INC.

            
	
               

            	
               

            	
              By:

            	
               

            	
              /s/                                    

            
	
               

            	
               

            	
               

            	
               

            	
              Charles Rice,
                President

            

    

    

    Attest:

     

    
      	 
	
              
                /s/                                                              
                  

              

            
	
              Jon
                deOng, Director

            

    

    

    EMPLOYEE:

     

    
      	
               

            
	
              
                /s/                                                              
                  

              

            
	
              Vincent
                Arena

            

    

     

    
      
        
        

      

      
        -2-Exhibit
      10.4

    EMPLOYMENT
      AGREEMENT

    This
      EMPLOYMENT AGREEMENT (this
“Agreement”) is made as of the 31st day of March 2006, by and between Advanced
      Tel, Inc., a California corporation (the “Company”), and David Singer, an
      individual (“Employee”), and is made with respect to the following facts:

    R
      E C I T A L S

    A.
      The Company and the Employee wish
      to ensure that the Company will receive the benefit of Employee’s loyalty and
      service. 

    B.
      In order to help ensure that the
      Company receives the benefit of Employee’s loyalty and service, the parties
      desire to enter into this formal Employment Agreement to provide Employee with
      appropriate compensation arrangements and to assure Employee of employment
      stability. 

    C.
      The parties have entered into
      this Agreement for the purpose of setting forth the terms of employment of
      the
      Employee by the Company. 

    NOW,
      THEREFORE, in
      consideration of the premises and mutual covenants herein contained, THE
      PARTIES HERETO AGREE AS FOLLOWS: 

    1.
Employment
      of Employee
      and Duties. The Company hereby hires Employee and Employee hereby
      accepts employment upon the terms and conditions described in this Agreement.
      The Employee will initially serve as the President of Advanced Tel, Inc., a
      wholly owned subsidiary of InterMetro Communications, Inc., a California
      corporation (“InterMetro”), with all of the duties, privileges and authorities
      usually attendant upon such office, including but not limited to responsibility
      for the day-to-day supervision and management of the operation of the Company.
      Subject only to Employee’s right to perform his duties for Company from Orange
      County, the Chief Executive Officer may, at his/her sole discretion, modify
      Employee’s title, duties, privileges and authorities at any time after execution
      of this Agreement. Subject to (a) the general supervision of the Board of
      Directors and the Chief Executive Officer of the Company, and (b) the
      Employee’s duty to report to the Board of Directors and the Chief Executive
      Officer periodically, as specified by the Chief Executive Officer from
      time-to-time, Employee will have all of the authority to perform his employment
      duties for the Company. A change in Employee’s title with the Company or to his
      duties, privileges, or authorities shall not be a breach of any provision of
      this Agreement. 

    2.
Time
      and
      Effort. Employee agrees to devote his full working time and
      attention to the management of the Company’s business affairs, the
      implementation of its strategic plan, as determined by the Chief Executive
      Officer, and the fulfillment of his duties and responsibilities as the President
      of Advanced Tel, Inc. Expenditure of a reasonable amount of time for personal
      matters and charitable activities will not be deemed to be a breach of this
      Agreement, provided that those activities do not materially interfere with
      the
      services required to be rendered to the Company under this Agreement.

     

    
      
         

      

      
        -1-

        
          

        

      

      
         

      

    

     

    3.
The
      Company’s
      Authority. Employee agrees to comply with the Company’s rules and
      regulations as adopted by the Company’s Board of Directors regarding performance
      of his duties, and to carry out and perform those orders, directions and
      policies established by the Company with respect to his engagement. Employee
      must promptly notify the Company’s Chief Executive Officer of any objection he
      has to the Board’s directives and the reasons for such objection. 

    4.
Noncompetition
      by
      Employee. In addition to any other noncompetition covenants of
      Employee to the Company pursuant to that certain Stock Purchase Agreement,
      dated
      March 30, 2006, by and between the Company, Employee, and InterMetro (the
“Stock Purchase Agreement”), Employee agrees that during the term of this
      Agreement and during any period that Employee is receiving any payments or
      benefits from the Company, Employee will not directly or indirectly, whether
      (a) as employee, agent, consultant, employer, principal, partner, officer
      or director; (b) holder of five percent or more of any class of equity
      securities or five percent or more of the aggregate principal amount of any
      class of debt, notes or bonds of a company with publicly traded equity
      securities; or (c) in any other individual or representative capacity
      whatsoever, in each case for his own account or the account of any other person
      or entity, engage in any business or trade competing with any of the businesses
      or trades of the Company, its parent, subsidiaries, or affiliates, which they
      conduct as of the closing date of the Stock Purchase Agreement, during the
      term
      of this Employment Agreement, or as of the termination of this Employment
      Agreement, anywhere in the world in which the Company, its parent, subsidiaries,
      or affiliates are carrying on such trade or business. 

    5.
Nondisclosure
      Covenant
      and Proprietary Information, Confidentiality, Loyalty, and
      Nonsolicitation.

    5.1
Proprietary
      Information, Confidentiality, Loyalty, and Nonsolicitation.
      Employee agrees to execute the Employee Proprietary Information,
      Confidentiality, Loyalty, and Nonsolicitation Agreement (the “PCLN Agreement”)
      attached to this Agreement as Exhibit A. This Agreement and the PCLN Agreement
      shall be interpreted in tandem to confer upon the Company the maximum
      protection. 

    5.2
Nondisclosure
      Covenant. Employee hereby covenants and agrees to maintain in
      strictest confidence all Confidential Information, as that term is defined
      in
      Exhibit A to this Agreement, in trust for the Company, its successors and
      assigns. During the period of Employee’s employment with the Company and at any
      and all times following Employee’s termination of employment for any reason,
      including without limitation Employee’s voluntary resignation or involuntary
      termination with or without cause, Employee agrees not to misappropriate, or
      disclose or make available to anyone outside Company’s organization, any
      Confidential Information, as that term is defined in Exhibit A to this
      Agreement, or anything relating thereto without the prior written consent of
      the
      Company, which consent may be withheld by the Company for any reason or no
      reason at all. 

    6.
Noninterference
      and
      Nonsolicitation Covenants. In further reflection of the Company’s
      important interests in its proprietary information on trade and customer and
      employee relationships, Employee agrees that, (a) during the thirty
      (30) month period following the termination of Employee’s employment with
      the Company “for cause” or as a result of his voluntary resignation before the
      end of the term of this Agreement under circumstances where the Company is
      not in breach of this
      Agreement, Employee will not directly or indirectly, for or on behalf of any
      person, firm, corporation or other entity, interfere with any contractual or
      other business relationships that the Company has with any of its customers,
      clients, service providers or materials suppliers as of the date of Employee’s
      termination of employment, and (b) during the thirty (30) month period
      following the termination of Employee’s employment with the Company “for cause”
or as a result of his voluntary resignation before the end of the term of this
      Agreement under circumstances where the Company is not in breach of this
      Agreement, Employee will not directly or indirectly solicit or induce any
      employee or consultant of the Company to terminate his/her employment or
      consulting relationship with Company. 

     

    
      
         

      

      
        -2-

        
          

        

      

      
         

      

    

    7.
Term
      of
      Agreement. This Agreement will commence to be effective on the date
      first above written (the “Commencement Date”), and will continue until a date
      three years from the Commencement Date, unless terminated sooner as provided
      in
      Section 13 hereof. 

    8.
      Compensation. During the term of this Agreement, the
      Company will pay the following compensation to Employee: 

    8.1
Annual
      Salary. Employee will be paid a fixed salary of $185,000 per year,
      payable in two installments per month on or about the 5th and the 20th
      day of each month, commencing on April 20, 2006 for
      the first period after the Commencement Date of this Agreement. 

    8.2
Annual
      Job
      Performance Bonus. Employee’s job performance will be reviewed by
      the Board of Directors of the Company on an annual basis and if recommended
      by
      the Compensation Committee of the Company’s Board of Directors and if approved
      by the Company’s full Board of Directors, Employee may receive an annual bonus
      of up to 50% of Employee’s salary paid in the form of cash, stock, stock options
      or any combination thereof, based on the Board’s evaluation of the Employee’s
      definable efforts, accomplishments and similar contributions. Employee’s job
      performance review shall be made without consideration for any other
      compensation Employee is receiving pursuant to the Stock Purchase Agreement
      between Employee and InterMetro. 

    9.
Reimbursement
      of
      Expenses. The Company will reimburse Employee for all reasonable
      verifiable business expenses incurred at the direction of the Company in
      connection with the performance of Employee’s duties hereunder, including
      expense reimbursement for the monthly service fees and all toll charges incurred
      on behalf of the Company for one cellular telephone. All requests for expense
      reimbursement must be submitted, with appropriate receipts, to the Company
      no
      later than thirty (30) days after the expense has been incurred. All
      compensation provided in Section 8 and 9 of this Agreement will be subject
      to customary withholding tax and other employment taxes, to the extent required
      by law. 

    10.
      Vacation. Employee will be entitled to three weeks of
      paid vacation during the first year of this Agreement and four weeks of paid
      vacation during each of the second and third years of this Agreement. The
      Employee will be entitled to the holidays provided in the Company’s established
      corporate policy for employees with comparable duties and responsibilities.
      

     

    
      
         

      

      
        -3-

        
          

        

      

      
         

      

    

     

    11.
      Automobile. Only if this Agreement is entered into by
      March 31, 2006, notwithstanding anything else herein to the contrary, the
      Company will pay to the Employee a fixed amount equal to (a) $500 per month
      on the last day of each month during the term of this Agreement as reimbursement
      to the Employee on a nonaccountable basis of all expenses incurred by the
      Employee for the use of his automobile for Company business purposes, including
      but not limited to depreciation, repairs and insurance. Employee will not be
      entitled to any other reimbursement for the use of his automobile for business
      purposes. 

    12.
Definition
      of
“Cause”. For the purposes of this Agreement, “termination for
      cause” means termination of Employee’s employment by Employer due to
      (a) Employee’s conviction of, or the entry of a pleading of guilty or nolo
      contendre by Employee to, a felony or crime involving moral turpitude, or
      (b) Employee’s breach of this Agreement or failure to comply with any
      provision of this Agreement, or (c) an act of fraud committed by Employee
      against the Company, or (d) a willful act by Employee as a result of which
      he receives a material improper personal benefit at the expense of the Company,
      or (e) Employee’s demonstration of negligence or willful misconduct in the
      execution of his assigned duties, or (f) a breach of Employee’s fiduciary
      duty to the Company, to the Board of Directors, or to the Company’s
      shareholders, or (g) Employee’s imparting Confidential Information relating
      to the Company to a third party, other than in the course of carrying out the
      Employee’s duties, which has resulted in material damage to the Company,
      provided, that the circumstances described in subparagraphs (b) and
      (e) above are not as a result of Employee’s death, disability or
      retirement; and provided further, that the Employee has been given the written
      notice specified in this Section and has failed to cure any defect in
      performance as specified in such notice within the time period specified in
      the
      next sentence. The Company will give Employee written notice specifying the
      conduct alleged to have constituted such cause and provide Employee the
      opportunity to cure such conduct, if curable, within ten (10) days
      following receipt of such notice. 

    13.
      Termination. This Agreement may be terminated in the
      following manner and not otherwise: 

    13.1
Mutual
      Agreement. This Agreement may be terminated by the mutual written
      agreement of the Company and Employee to terminate. 

    13.2
Termination
      by
      Employee for Breach. Employee may at his option and in his sole
      discretion terminate this Agreement for the material breach by the Company
      of
      this Agreement (other than where Employee has first materially breached this
      Agreement causing material damage to the Company), and failure by the Company
      to
      cure such breach within ten (10) days of receipt of written notice by the
      Company’s Board of Directors from Employee of the alleged material breach of
      this Agreement by the Company. In the event of such termination, Employee must
      give the Company thirty (30) day’s prior written notice. 

    13.3
Termination
      by the
      Company for Cause. The Company may at its option terminate this
      Agreement for cause as defined in and only in accordance with Section 12 of
      this Agreement. In the event of termination by the Company for cause as defined
      in Section 12, the Company will pay the Employee any remaining base salary,
      at the rate then in effect under Section 8.1, through the effective date of
      such termination, plus any benefits under other plans or programs in which
      the
      Employee is vested at the time of his termination. 

     

    
      
         

      

      
        -4-

        
          

        

      

      
         

      

    

     

    13.4
Termination
      Upon
      Death. This Agreement will terminate upon the death of the
      Employee. 

    13.5
Termination
      Upon the
      Disability of the Employee. This Agreement will terminate upon the
      disability of the Employee. As used in the previous sentence, the term
“disability” means the complete physical and/or mental disability to discharge
      Employee’s duties and responsibilities for a continuous period of not less than
      six months during any consecutive twelve (12) month period. Any physical or
      mental disability which does not prevent Employee from discharging his duties
      and responsibilities in accordance with usual standards of conduct as determined
      by the Company in its reasonable opinion will not constitute a disability under
      this Agreement. 

    13.6
Survival
      of
      Covenants. Notwithstanding anything contained in this Agreement to
      the contrary, the covenants of Employee contained in Section 4,
      Section 5 and Section 6 of this Agreement will survive the term of
      this Agreement (as specified in Section 7 hereof) or Employee’s termination
      of his employment relationship with the Company, in each case as specified
      further in such covenants. 

    14.
      Arbitration. Any dispute under this Agreement will be
      resolved by binding arbitration conducted in accordance with the rules and
      procedures of the American Arbitration Association as they are then in effect
      in
      the County of Los Angeles, State of California. In order to select an
      arbitrator, each party to the dispute will select an arbitrator of its choice,
      and those selected arbitrators will then select by mutual agreement a single
      arbitrator for the proceeding. The decision of the arbitrator shall be final
      and
      binding on the parties to this Agreement, and judgment thereon may be entered
      in
      the Superior Court for the County of Los Angeles or any other court having
      jurisdiction. Each party to this Agreement will advance one-half of the
      arbitrator’s fees; however, all costs of the arbitration proceeding to enforce
      this Agreement, including attorneys’ fees and witness expenses, shall be paid by
      the party against whom the arbitrator rules. It is expressly agreed that the
      parties to any such arbitration may take discovery as contemplated and provided
      for by California Code of Civil Procedure §1283.05. Notwithstanding anything
      herein to the contrary, the parties hereto will not be required to submit a
      claim to arbitration if the claim is for temporary or preliminary equitable
      or
      injunctive relief that could not practicably be heard in a timely fashion
      through the arbitration process. 

    15.
Assignability
      of
      Benefits. Except to the extent that this provision may be contrary
      to law, no assignment, pledge, collateralization or attachment of any of the
      benefits under this Agreement will be valid or recognized by the Company.
      Payment provided for by this Agreement will not be subject to seizure for
      payment of any debts or judgments against the Employee, nor will the Employee
      have any right to transfer, modify, anticipate or encumber any rights or
      benefits hereunder; provided that any stock issued by the Company to the
      Employee pursuant to this Agreement will not be subject to Section 15 of
      this Agreement. 

     

    
      
         

      

      
        -5-

        
          

        

      

      
         

      

    

     

    16.
Notice.
      Except as otherwise specifically provided, any notices to be given hereunder
      will be deemed given upon personal delivery, air courier or mailing thereof,
      if
      mailed by certified mail, return receipt requested, to the following addresses
      (or to such other address or addresses as will be specified in any notice
      given): 

    In
      case of the Company:

    Advanced
      Tel, Inc. 

    2685
      Park Center Drive 

    Building
      A 

    Simi
      Valley, California 93065

    Attention:
      Charles Rice, Chief
      Executive Officer 

    Telephone:
      (805) 433-8000

    Facsimile:
      (805) 582-1006

    In
      case of the Employee:

    David
      Singer 

    The
      address listed below
      Mr. Singer’s 

    signature
      to this Agreement.

    17.
      Recourse. Employee’s recourse for any liability, claims,
      damages, losses, expenses, judgments or settlements will be limited to the
      assets of the Company. Employee will have no recourse against any individual
      officer, director, or employee of the Company, its parent or subsidiaries.
      

    18.
Entire
      Agreement. This Agreement embodies the entire understanding among
      the parties and merges all prior discussions or communications among them,
      and
      no party will be bound by any definitions, conditions, warranties, or
      representations other than as expressly stated in this Agreement or as
      subsequently set forth in a writing signed by the duly authorized
      representatives of all of the parties hereto. 

    19.
No
      Oral Change;
      Amendment. This Agreement may only be changed or modified and any
      provision hereof may only be waived by a writing signed by the party against
      whom enforcement of any waiver, change or modification is sought. This Agreement
      may be amended only in writing by mutual consent of the parties. 

    20.
      Severability. In the event that any provision of this
      Agreement will be void or unenforceable for any reason whatsoever, then such
      provision will be stricken and of no force and effect. The remaining provisions
      of this Agreement will, however, continue in full force and effect, and to
      the
      extent required, will be modified to preserve their validity. 

    21.
Applicable
      Law and
      Venue. This Agreement will be construed as a whole and in
      accordance with its fair meaning. This Agreement will be interpreted in
      accordance with the laws of the State of California, and venue for any action
      or
      proceedings brought with respect to this Agreement will be in the County of
      Los
      Angeles in the State of California. 

    22.
Successors
      and
      Assigns. Each covenant and condition of this Agreement will inure
      to the benefit of and be binding upon the parties hereto, their respective
      heirs, personal representatives, assigns and successors in interest. Without
      limiting the generality of the foregoing sentence,
      this Agreement will be binding upon any successor to
      the Company whether by merger, reorganization or otherwise. 

     

    
      
         

      

      
        -6-

        
          

        

      

      
         

      

    

    23.
Injunctive
      Remedy. In the case of any breach or threatened breach by Employee
      of any of his covenants or obligations under this Agreement, the parties hereto
      agree that damages may not be an adequate remedy for the Company and that,
      in
      the event of any such breach or threatened breach, the Company may, either
      with
      or without pursuing any potential damage remedies, immediately obtain and
      enforce an injunction prohibiting Employee from committing or continuing to
      commit such breach or threatened breach. 

    24.
      Counterparts. This Agreement may be executed in two
      counterparts, each of which may be deemed an original, but both of which
      together will constitute one and the same agreement. 

    25.
Tax
      Advice. Employee hereby represents and warrants that he has sought
      his own independent tax advice regarding the matters set forth in this Agreement
      and Employee has not relied on any representation or statement made by the
      Company or its representatives regarding the tax implications of such matters.
      

    IN
      WITNESS WHEREOF,
      the parties hereto have executed this Agreement on the date first above written.
      

     

    
      	
            	
            	
            	
            	
            	
            	
            	
            	
            
	COMPANY:	 	
            	 	
              ADVANCED
                TEL,
                INC.

              a
                California
                corporation

            
	
            	
            	
            	
            	
            
	
            	 	
            	 	
            	 	
              By:

            	 	/s/
              Charles Rice
	
            	 	
            	 	
            	 	
            	 	Charles
              Rice, Chief Executive
              Officer

    

    
      	
            	
            	
            	
            	
            	
            	
            	
            	
            
	
            	 	
            	 	
            	 	
              Attest:

            	 	
            
	
            	
            	
            	
            
	
            	 	
            	 	
            	 	/s/
              Vince
              Arena
	
            	 	
            	 	
            	 	____________________________,
              Director
	
            	
            	
            
	EMPLOYEE:	 	
            	 	/s/
              David
              Singer
	
            	 	
            	 	
            	 	
              David
                Singer

            
	
            	
            	
            	
            
	
            	 	
            	 	
            	 	  
	
            	 	
            	 	
            	 	
              Street
                Address

            
	
            	
            	
            	
            
	
            	 	
            	 	
            	 	  
	
            	 	
            	 	
            	 	
              City,
                State and Zip
                Code

            
	
            	
            	
            	
            
	
            	 	
            	 	
            	 	  
	
            	 	
            	 	
            	 	
              Telephone
                Number

            
	
            	
            	
            	
            
	
            	 	
            	 	
            	 	  
	
            	 	
            	 	
            	 	
              Facsimile
                Number

            

    

     

     

    
      
         

      

      
        -7-

        
          

        

      

      
         

      

    

    EXHIBIT
      A

    EMPLOYEE
      PROPRIETARY
      INFORMATION, 

    CONFIDENTIALITY,
      LOYALTY,
      AND NONSOLICITATION 

    AGREEMENT
      

     

     

     

     

    
      
         

      

      
        -8-

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