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EXHIBIT 10.6
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XXXXXX X. XXXX
CONSULTING AGREEMENT
This CONSULTING AGREEMENT (the "Agreement') dated as of December 7,
1998, between I-Storm, Inc., a Nevada corporation, and its wholly owned
subsidiary, LVL Communications Corporation, a California corporation,
(collectively, the "Company"), each with its principal place of
business in the United States at 000 Xxxxxx Xxxxxx, Xxxx Xxxx,
Xxxxxxxxxx, 00000 (herein called the "Company") and XXXXXX X. XXXX
(herein called the "Consultant") residing at 0000 Xxxxxx Xxxx Xxxxxx,
Xxxxxx Xxxx, XX 00000.
1. RETENTION AND DESCRIPTION OF SERVICE. The Company hereby retains
Consultant as the Vice President Finance and Chief Financial Officer of
I-Storm Inc. reporting to the Company's President. Consultant will be
responsible for management and supervision of all Company financial and
administrative activities for the term of this Agreement, and the
Consultant hereby accepts such assignment upon the terms and conditions
hereinafter set forth. Consultant will perform services as an
independent contractor with the customary and usual independence
associated therewith, and the Consultant will not be deemed an employee
of the Company.
2. TERM. The term of this Agreement shall commence as of January 11,
1999 (the "Assignment Date") and shall continue in effect for a term of
12 months, unless earlier terminated in accordance with the provisions
of Section 6 of this Agreement. Thereafter, this Agreement shall be
automatically renewed on a year-to-year basis unless either party shall
provide the other with notice in writing of the termination of this
Agreement at least 60 days' prior to the expiration of this Agreement
at the end of its original term or any renewal thereof For purposes of
this Agreement, the "term of this Agreement" shall refer to the initial
term and all renewal terms hereof In the event of tennination by the
Company prior to the expiration of this Agreement at the end of
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its original term or any renewal thereof, the Company shall pay the
Consultant severance pay and benefits required by Section 6(e) of this
Agreement unless termination by the Company is for a reason specified
in Sections 6(a), 6(b) or 6(c) hereunder.
3. COMPENSATION. For all services rendered by the Consultant under this
Agreement, the Company shall pay the Consultant a base retainer and
fringe benefits as follows:
(a) Cash Compensation: The Company shall pay the Consultant a
base retainer during the term of this Agreement, payable
semi-monthly, at the rate of $8,000 per month. Consultant will
be eligible to receive a fiscal annual performance bonus of up
to 50% of base retainer based upon achievement of reasonable
and achievable Company goals as determined and approved in
good faith by the Board of Directors of the Company to be paid
no later than 30 days from the end of such year. Consultant
shall be eligible for annual performance appraisal and merit
increase. Company may, but is not obligated to, increase
Consultant's retainer as Company deems appropriate.
(b) Stock Warrants: The Company shall grant the Consultant
five-year exercisable warrants to purchase 168,000 (14,000 *
12) common shares of the Company at $2.00 per share, of which
168,000 shares shall vest ratably over a period of 12 months
from the Assignment Date.
(c) Medical, Insurance, and Other Benefits: The Consultant
shall at his option be entitled to participate in all
Company's group fringe benefit plans or other group
arrangements authorized and adopted from time to time.
Consultant shall also receive such other benefits including
vacation, holidays, and sick leave, as Company generally
provides to its Consultants holding similar positions as that
of Consultant.
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(d) Expenses: The Company shall either pay directly or
reimburse Consultant for reasonable travel, entertainment and
other business expenses incurred by Consultant in the
performance of his duties hereunder; provided that the
incurring of such expenses shall be subject to such policies
as shall be established by the Board of Directors of the
Company from time to time, and Consultant shall submit to the
Company such documentation to substantiate such expenses as
the Company shall reasonably request.
Nothing herein shall be deemed to preclude the Company from awarding
additional compensation or benefits to Consultant during the term of
this Agreement, upon approval of Company's Board of Directors, whether
in the form of retainers, bonuses, additional fringe benefits, or
otherwise.
4. DUTIES. During the term of this Agreement, the Consultant hereby
promises to perform and discharge faithfully the duties which may be
assigned to him from time to time by the Board of Directors in
connection with the conduct of its business so long as such duties are
reasonably related to the Consultant's duties as an Executive Officer
of the Company. Consultant will be responsible for all activities of
the Company as determined by the President and as required of officers
of the Company under applicable state and federal law, and will have
all relevant executives and their respective subordinates report to
him. Consultant is retained to actively serve on a three to four day a
week basis as an executive officer of the Company.
5. EXTENT OF SERVICES; OTHER INTERESTS. During the term of this
Agreement, the Consultant shall devote his working time, attention and
energies which are reasonably required for the performance of his
duties and the business of the Company and shall travel as reasonably
required to discharge the duties of his position with the Company as
assigned by its President. The Consultant shall not during the term of
this Agreement be engaged in any other business activities that are, or
could potentially be, in competition with the business activities of
the Company whether or not such business activities are pursued for
gain, profit or other pecuniary advantage. Subject to the
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foregoing, the Consultant may engage in investment, business,
professional and continuing education activities so long as such
activities do not substantially interfere with the performance of his
duties as an Officer of the Company.
6. TERMINATION. Payment of severance described in this Section 6 shall
be paid no later than ten (10) days after becoming due.
(a) Death: In the event of Consultant's death during the term
hereof, this Agreement shall terminate immediately and, except
as expressly set forth in this paragraph, the Company shall
have no further liability hereunder to Consultant or his
estate. The Company shall continue to pay to Consultant's
estate his retainer and continued stock option vesting for a
period of three (3) months from and after the date of death
during the term of this Agreement.
(b) Permanent Disability. In the event that Consultant becomes
totally disabled during the term hereof and such total
disability continues for a period in excess of ninety (90)
days, whether consecutive or in the aggregate during any 12
month period, at the end of such period of disability the
Consultant shall be considered as permanently disabled and
this Agreement shall terminate immediately and, except as
expressly set forth in this paragraph, the Company shall have
no further liability hereunder to Consultant. The Company
shall continue to pay to Consultant his retainer and continue
stock option vesting for the period of disability and a period
of two (2) months from and after the date of total disability
commencing with the expiration of the first 90 day period of
such disability as severance pay hereunder.
Consultant shall be considered as totally disabled if, and
when because of injury, illness or physical or mental
disability, he is prevented from effectively performing the
duties of this Agreement. The determination of total
disability shall be made by the Board of Directors of the
Company, but said decision shall not be unreasonable or
arbitrary and shall be supported by the opinion (at the
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Company's expense) of at least one licensed physician, unless
Consultant shall without justification fail to submit to the
necessary physical or mental examinations. It is understood
that Consultant's occasional sickness of short duration shall
not result in Consultant being considered totally disabled,
and Consultant shall continue to be compensated hereunder
during such periods of occasional sickness so long as they
shall not exceed the greater of twelve (12) days in a calendar
year or the amount of sick leave available to an employee of
the Company.
(c) Involuntary Termination for Cause. The Company may
terminate this Agreement for cause. For the purposes of this
Agreement, a termination for "cause" shall mean a termination
resulting from a good faith and reasonable determination by
the Company's Board of Directors that Consultant (i) has
committed a felony or act of moral turpitude which would
materially injure the Company or its reputation or, (ii) has
intentionally or willfully and repeatedly breached his duties
hereunder in a material respect and, if curable, has failed to
cure the same within thirty (30) days after receiving written
notice of such breach from the Board of the Company. Such
notice must be given to Consultant following each claimed
breach, whether or not curable. In the event of termination
for cause, the Company shall have no further liability
hereunder to Consultant from and after the date of such
termination.
(d) Termination Without Cause. Termination of Consultant by
the Company for any reason other than in paragraphs 6(a),
6(b), and 6(c) hereof shall be considered Termination Without
Cause.
(e) Salary and Benefit Continuation Upon Termination Without
Cause. Upon the Company's termination of Consultant for any
reason whatsoever prior to the expiration of the original term
or any annual renewal of the term of this Agreement, except
for (i) termination upon death as set forth in paragraph 6(a)
hereof; (ii) termination upon permanent disability as set
forth in paragraph 6(b)
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hereof; or (iii) termination for cause pursuant to paragraph
6(c) hereof ("Termination for Cause"); or (iv) Consultant's
voluntarily electing not to continue in the employment of the
Company under conditions other than Constructive Discharge;
then the Company within thirty (30) days after such
termination, and in lieu of all other obligations, the Company
hereunder, shall: 1) pay to Consultant a lump-sum payment
equal to his then base salary and continue warrant vesting for
a period equal to one (1) month; 2) provide Consultant, at
Company's cost, with employment benefits consisting of life,
health, dental and long-term disability insurance for a period
of 12 months after termination; and 3) enter into a
Post-termination Consulting Agreement as defined below in
paragraph 6(f) hereof. Thereafter, any continuation of
benefits under the Consolidated Omnibus Budget Reconciliation
Act (COBRA) will be at Consultant's cost.
(f) Post-termination Consulting Agreement. Upon the
Termination Without Cause, the Consultant will hold himself
available to provide consulting services to the Company for a
period terminating one year after the Termination Date (the
"Consulting Period"). Consultant will provide the consulting
services only upon the request of the Company's President and
for no more than ten hours per week at such times and places
as are mutually convenient to Consultant and the Company.
However, Consultant will perform those services at times and
places that do not reasonably conflict with his
responsibilities to his then current employer or as a self
employed individual. Consultant will perform services as an
independent contractor with the customary and usual
independence associated therewith, and he will not be deemed
an Consultant or agent of the Company or have the authority to
bind, or to enter into any contract on behalf of, the Company,
unless expressly authorized in writing to do so. The Company
will pay Consultant a consulting fee of $150.00 per hour for
each hour actually worked at the Company's request. If the
Company's Board of Directors determines that Consultant will
be providing "substantial services" to the Company during the
Consulting Period, any warrant held by Consultant on
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the Termination Date, if not fully vested at the time, will
continue to vest at the rate of 1/12 of the warrant grant per
month during the Consulting Period provided that total vesting
shall not exceed the original total shares granted under each
stock warrant. Any warrant held by Consultant at the
Termination Date will remain exercisable for the duration of
the original five year exercisable period.
7. NONDISCLOSURE OF CONFIDENTIAL INFORMATION. The Consultant recognizes
and acknowledges that the Company's trade secrets and proprietary
processes as they may exist from time to time are valuable, special and
unique assets of the Company's business, access to and knowledge of
which are essential to the performance of the Consultant's duties
hereunder. The Consultant will not during or after the term of his
employment, disclose such secrets or processes to any person, firm,
corporation, association or other entity for any reason or purpose
whatsoever, nor shall the Consultant make use of any such secrets or
processes for his own purposes or for the benefit of any person, firm,
corporation, or other entity (except the Company) under any
circumstances during or after the term of his employment; provided
that, after the expiration of the term of his Agreement these,
restrictions shall not apply to such secrets and processes which are
then, or from time to time thereafter, in the public domain (provided
that he was not responsible, directly or indirectly, for permitting
such secrets or processes to enter the public domain without the
Company's consent).
8. COVENANT NOT TO COMPETE OR INTERFERE. With the exception of
activities associated with the purchase and subsequent operation of the
Company. Consultant agrees that during the term of this Agreement and
for a period of one (1) year after the date of Termination under this
Agreement, whichever occurs first; (a) Consultant shall not
intentionally interfere with, disrupt or attempt to disrupt the
relationship, contractual or otherwise between the Company and any
customer, supplier, lessor or Consultant of the Company or any of its
subsidiaries and (b) Consultant shall not as a sole proprietor or
otherwise for his own account or as a partner, Consultant, officer,
director, manager, agent, distributor, consultant, marketing
representative, associate, investor or
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otherwise (except as to a less than 5% interest in a public company
listed on the Nasdaq, a national, or a regional exchange), directly or
indirectly, own, purchase, organize or take preparatory steps for the
organization of, finance, work for, provide services to, advise,
acquire, lease, operate, manage or invest in or permit his name to be
used or employed in connection with any business which engages directly
in competition with the Company. Consultant further agrees that the
covenants and other provisions of this paragraph shall cover his
activities in the whole of North America, Europe and Asia (the
"Territory"). The parties hereto agree that the covenants contained in
this paragraph (b) shall be construed as if the covenants are divided
into separate and distinct covenants in respect of each of the products
and services of the Company, each capacity in which the party is
prohibited from competing, and each part of the world in which such
competition is prohibited from taking place. The territorial
restrictions contained in this Section 8 are properly required for the
adequate protection of the Company and in the event any covenant or
other provision contained this Section 8 shall be deemed to be illegal,
unenforceable, or unreasonable by a court or other tribunal of
competent jurisdiction. With respect to any part of the Territory or
otherwise, such covenant or provision shall not be affected with
respect to any other part of the Territory or otherwise, and each of
the parties hereto agrees and submits to the reduction of said
territorial restriction or other provisions to such an area or
otherwise, as said court shall deem reasonable. The parties further
agree that if any provision of this Agreement is found to be
unenforceable, it shall not affect the enforceability of the remaining
provisions and the court shall enforce all remaining provisions to the
extent permitted by law.
9. INVENTIONS. The Consultant hereby sells, transfers, and assigns to
the Company, or to any person or entity designated by the Company, at
of the entire right, title and interest of the Consultant in and to all
inventions, ideas, disclosures, and improvements, whether patented or
unpatented, and copyrightable material made or conceived by the
Consultant, solely or jointly during the term hereof which relate to
methods, apparatus, formulae, designs, products, processes or devices,
sold, leased, used, or under consideration or development by the
Company, or which otherwise relate to or pertain
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to the business, functions, or operations of the Company. The
Consultant agrees to communicate promptly and to disclose to the
Company, in such form as the Consultant may be required to do so, all
information, details, and data pertaining to the aforementioned
inventions, ideas, disclosures, and improvements and to execute and
deliver to the Company such formal transfers and assignments and such
other papers and documents as may be required of the Consultant to
permit the Company or any person or entity designated by the Company to
file and prosecute the patent applications and, as to copyrightable
material, to obtain copyright thereof.
For the purposes of this Agreement, an invention shall be deemed to
have been made during the term of Consultant's retainer if, during such
period, the invention was conceived or first actually reduced to
practice by the Company, and Consultant agrees that any patent
application filed within one (1) year after termination of this
employment shall be presumed to relate to an invention which was made
during the term of Consultant's employment unless Consultant can
provide satisfactory evidence to the contrary.
10. INJUNCTIVE RELIEF. The parties hereto acknowledge that (a) the
covenants and restrictions set forth in Sections 7, 8 and 9 of this
Agreement are necessary, fundamental and required for the protection of
the business of the Company, (b) such covenants and restrictions are
material inducements to investors to enter into agreements to invest in
the Company, and (c) a breach of any of such covenants and restrictions
by Consultant will result in irreparable harm and damages to the
Company which cannot be adequately compensated by a monetary award.
Accordingly, in the event of breach or threatened breach of such
provisions by Consultant, Consultant expressly agrees that the Company
shall be entitled to the immediate remedy of a temporary restraining
order, preliminary injunction or such other form of injunctive or
equitable relief as may be used by any court of competent jurisdiction
to restrain or enjoin the Consultant from breaching any such covenant
or provision or to specifically enforce the provisions hereof. Nothing
herein shall be construed as prohibiting the Company from pursuing any
other remedies for such breach or threatened breach.
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11. INSURANCE. The Company, at its election and for its benefit, may
insure the Consultant against accidental loss or death and the
Consultant shall submit to such physical examination and supply such
information as may be required in connection therewith.
12. NOTICES. Any notice required or permitted to be given under this
Agreement shall be sufficient if in writing and if sent by registered
or certified mail to his last known residence in the case of the
Consultant or to its last known principal office in the case of the
Company.
13. WAIVER OF BREACH. The waiver by either party of a breach of any
provision of this Agreement shall not operate or be construed by a
waiver of any subsequent breach.
14. GOVERNING LAW. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of California.
15. ASSIGNMENT. The rights and obligations of the parities under this
Agreement shall inure to the benefit of and shall be binding upon the
successors of such parties.
16. ENTIRE AGREEMENT. This instrument contains the entire agreement of
the parties and supersedes all existing agreements between them. It may
not be changed orally but only by an agreement in writing signed by the
party against whom enforcement of any waiver, modification, extension
or discharge is sought.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day first written above.
CONSULTANT:
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Xxxxxx X. Xxxx
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COMPANY I-STORM, INC
By:
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Xxxxxxx Xxx
President
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EXHIBIT 10.6
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XXXXXX X. XXXX
CONSULTING AGREEMENT
AMENDMENT NUMBER #1
DATED MARCH 19, 1999
This Amendment Number #1 ("Amendment") dated as of March 19, 1999
refers to the Consulting Agreement ("Agreement") dated as of December 7, 1998
between I-Storm, Inc. and Xxxxxx X. Xxxx and which is hereby attached. The
primary substance of this Amendment is that Xxxxxx X. Xxxx will no longer be an
officer or acting officer of the Company effective March 19, 1999, which date is
prior to any take-downs or actual closing of the Company's private placement of
its Series C Preferred Stock. Accordingly, the paragraphs in the Agreement are
hereby amended as follows:
PARAGRAPH 1 - RETENTION AND DESCRIPTION OF SERVICES. Effective March 19, 1999,
the first two sentences of the paragraph no longer apply and are replaced with:
"The Company hereby retains Consultant as a Financial Advisor of I-Storm, Inc.
reporting to the Company's President. Consultant will be responsible for
advising the Company on certain financial and administrative activities of the
Company for the term of this Agreement, and the Consultant hereby accepts such
assignment upon the terms and conditions hereinafter set forth."
PARAGRAPH 3(a) - CASH COMPENSATION. Effective January 11, 1999, the first
sentence is deleted in entirety and is replaced with: "The Company shall pay
the Consultant a base retainer during the term of this Agreement, payable
semi-monthly, at the rate of $15,000 per month."
PARAGRAPH 4-- DUTIES. Effective March 19, 1999, the first two sentences of the
paragraph no longer apply and are replaced with: "During the term of this
Agreement, the Consultant hereby promises to perform and discharge faithfully
the duties which may be assigned to him from time to time by the President."
PARAGRAPH 5 -- EXTENT OF SERVICES; OTHER INTERESTS. Effective March 19, 1999,
the words "an Officer" in the last sentence shall be amended to read "a
Financial Advisor".
IN WITNESS WHEREOF, the parties have executed this Amendment to the Agreement as
of the day first written above.
/s/ XXXXXX X. XXXX
CONSULTANT: --------------------------
Xxxxxx X. Xxxx
COMPANY: I-Storm, Inc.
By /s/ XXXXXXX XXX
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Xxxxxxx Xxx, President
