EXHIBIT 2.4(c)
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EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the "Agreement") dated as of August 5, 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 XXXXXXX XXX (herein called the
"Employee") residing at 00000 Xxxx Xxxx, Xxx Xxxxx Xxxxx, Xxxxxxxxxx,
00000.
1. EMPLOYMENT. The Company hereby employs Employee as the President of I-
Storm, Inc. and as the President of LVL Communications Corporation
reporting to the Company's Board of Directors. Employee will be
responsible for management and supervision of all Company activities for
the term of this Agreement, and the Employee hereby accepts such employment
upon the terms and conditions hereinafter set forth.
2. TERM. The term of this Agreement shall have commenced as of July 15,
1998 (the "Employment Date") and shall continue in effect for a term of 36
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 termination by the Company prior
to the expiration of this Agreement at the end of its original term or any
renewal thereof, the Company shall pay the Employee 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 Employee under this
Agreement, the Company shall pay the Employee a salary and fringe benefits
as follows:
(a) Cash Compensation: The Company shall pay the Employee a base
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salary during the term of this Agreement, payable semi-monthly, at the
rate of $150,000 per year. Employee will be eligible to receive an
fiscal annual performance bonus of up to 50% of base salary based upon
achievement of reasonable and achievable Company goals as determined
and approved in good faith by the Board of Directors to be paid no
later than 30 days from the end of such year. Employee shall be
eligible for annual performance appraisal and merit increase. Company
may, but is not obligated to, increase Employee's salary as Company
deems appropriate.
(b) Stock Options: The Company shall grant the Employee stock
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options to purchase 600,000 common shares of the Company at $0.50 per
share, of which 300,000 shares shall vest ratably over a period of 36
months from the Employment Date; and of which 300,000 shares will only
vest upon the Company's sales revenue meeting or exceeding twelve
million dollars ($12,000,000) for any twelve month period from the
Employment Date and upon the Company's quarterly revenue exceeding
operating expenses for the same twelve month period, as determined by
the Board of Directors at its sole discretion.
(c) Medical, Insurance, and Other Benefits: The Employee shall at his
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option be entitled to participate with other employees of the Company
in all group fringe benefit plans or other group arrangements
authorized and adopted from time to time. Employee shall also receive
such other benefits including
vacation, holidays, and sick leave, as Company generally provides to
its employees holding similar positions as that of Employee.
(d) Expenses: The Company shall either pay directly or reimburse
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Employee for reasonable travel, entertainment and other business
expenses incurred by Employee 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 Employee 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 Employee during the term of this
Agreement, upon approval of Company's Board of Directors, whether in the
form of raises, bonuses, additional fringe benefits, or otherwise.
4. DUTIES. During the term of this Agreement, the Employee 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
Employee's duties as President of the Company. Employee will be
responsible for all activities of the Company as determined by the Board of
Directors 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. Employee is employed to actively serve on a
full-time basis as an executive officer of the Company.
5. EXTENT OF SERVICES; OTHER INTERESTS. During the term of this Agreement,
the Employee shall devote all of 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 Board of Directors. The
Employee 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 foregoing, the Employee 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 the
President 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 Employee's death during the term hereof,
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this Agreement shall terminate immediately and, except as expressly
set forth in this paragraph, the Company shall have no further
liability hereunder to Employee or his estate. The Company shall
continue to pay to Employee's estate his salary 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 Employee becomes totally
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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 Employee 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 Employee. The Company shall continue to
pay to Employee his salary 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.
Employee 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 his employment. 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 Company's
expense) of at least one licensed physician, unless Employee shall
without justification fail to submit to the necessary physical or
mental examinations. It is understood that Employee's occasional
sickness of short duration shall not result in Employee being
considered totally disabled, and Employee 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 any other
employee of the Company.
(c) Involuntary Termination for Cause. The Company may terminate this
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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
Employee (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 Employee following each claimed breach, whether or not curable. In
the event of termination for cause, the Company shall have no further
liability hereunder to Employee from and after the date of such
termination.
(d) Termination Without Cause. Termination of Employee by the
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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.
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Upon the Company's termination of Employee's employment 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) hereof; or (iii)
termination for cause pursuant to paragraph 6(c) hereof ("Termination
without Cause"); or (iv) Employee'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 Employee a lump-sum payment equal to his
then base salary for a period equal to twelve (12) months; 2) provide
Employee, 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 Employee's cost.
(f) Post-termination Consulting Agreement. Upon Termination Without
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Cause, the Employee will hold himself available to provide consulting
services to the Company for a period terminating one year after the
Termination Date (the "Consulting Period"). Employee will provide the
consulting services only upon the request of the Company's Board of
Directors and for no more than ten hours per week at such times and
places as are mutually convenient to Employee and the Company.
However, Employee will perform those services at times and places that
do not reasonably conflict with his responsibilities to his then
current employer. Employee will perform services as an independent
contractor with the customary and usual independence associated
therewith, and he will not be deemed an employee 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 Employee a consulting fee of $150.00 per
hour for each hour actually worked at the Company's request. The
Company's Board of Directors has determined that Employee will be
providing "substantial services" to the Company during the Consulting
Period such that any option held by Employee on the Termination Date,
if not fully vested at the time, will continue to vest at the rate of
1/36 of the option grant per month during the Consulting Period
provided that total vesting shall not exceed the original total shares
granted under each stock option. Any option held by Employee at the
Termination Date will remain exercisable for 36 months from the
Termination Date even though the employment of Employee will terminate
on the Termination Date.
7. NONDISCLOSURE OF CONFIDENTIAL INFORMATION. The Employee 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 Employee's duties hereunder. The Employee 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 Employee 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 employment 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.,
Employee 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) Employee shall not intentionally interfere with, disrupt
or attempt to disrupt the relationship, contractual or otherwise between
the Company and any customer, supplier, lessor or employee of the Company
or any of its subsidiaries and (b) Employee shall not as a sole proprietor
or otherwise for his own account or as a partner, employee, officer,
director, manager, agent, distributor, consultant, marketing
representative, associate, investor or 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. Employee 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 Employee 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 Employee in and to all inventions,
ideas, disclosures, and improvements, whether patented or unpatented, and
copyrightable material made or conceived by the Employee, 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 to the business, functions, or operations of the Company. The
Employee agrees to communicate promptly and to disclose to the Company, in
such form as the Employee 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 Employee 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 Employee's employment if, during such period,
the invention was conceived or first actually reduced to practice by the
Company, and Employee 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 Employee's employment
unless Employee can provide satisfactory evidence to the contrary.
10. INJUNCTIVE RELIEF. The parties hereto acknowledge that (a) the
covenants and restrictions set forth in Sections 8, 9 and 10 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 Employee 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 Employee, Employee 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 Employee 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.
11. INSURANCE. The Company, at its election and for its benefit, may insure
the Employee against accidental loss or death and the Employee 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 Employee 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.
XXXXXXX XXX
/s/ Xxxxxxx Xxx
EMPLOYEE: -------------------------------
Xxxxxxx Xxx
COMPANY I-STORM, INC
By: /s/ Xxxxx XxXxxx
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Xxxxx XxXxxx
Chairman of the Board
