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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
----------------------------
Date of Report (date of earliest event reported): July 23, 1998
----------------------------
I-STORM, INC.
(formerly Digital Power Holding Company)
(Exact name of registrant as specified in its charter)
----------------------------
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NEVADA 2-93477-D 87-0410127
(State or other jurisdiction of incorporation) (Commission File Number) (I.R.S. Employer Identification No.)
</TABLE>
480 COWPER STREET
PALO ALTO, CALIFORNIA 94301
(Address of principal executive offices)
Registrant's telephone number, including area code: (650) 463-4388
----------------------------
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ITEM 1. CHANGE IN CONTROL.
I-Storm, Inc. ("I-Storm" or the "Company") was formerly named "Digital
Power Holding Company." The following table sets forth certain information with
respect to the beneficial ownership of the Company's outstanding Common Stock
owned as of the date of filing by: (i) beneficial owners of more than 5% of the
Company's Common Stock; (ii) each executive officer and director of the Company;
and (iii) all executive officers and directors of the Company as a group. The
issuance of certain of such shares of Common Stock is in progress pursuant to
the events described in Item 2 and Item 5 of this 8-K.
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NUMBER OF SHARES OF COMMON
STOCK PERCENTAGE OF
BENEFICIAL OWNER/(1)/ BENEFICIALLY OWNED Beneficial Ownership
---------------- ------------------ --------------------
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Calbert Lai 297,642 5.44%
Stephen Venuti 297,642 5.44%
Thomas A. Schultz 500,000/(2)/ 9.14%
Benchmark Equity Group, Inc. 557,800/(3)/ 10.19%
Mackenzie Shea, Inc. 500,000/(4)/ 9.14%
I-Storm Acquisition Corp. 700,000/(5)/ 12.79%
Frank M. DeLape 1,689,000/(6)/ 30.85%
Trident III, L.L.C. 1,131,200/(7)/ 20.66%
Fordham Financial Management, Inc. 700,000 12.79%
Richard Snyder 0 0%
Timothy Cohrs 0 0%
Matthew Howard 0 0%
All Officers and Directors as a Group 1,653,084 30.2%
</TABLE>
________________________
/(1)/ Beneficial ownership is determined in accordance with Rule 13d-3 under
the Securities Exchange Act of 1934, as amended, and is generally
determined by voting powers and/or investment powers with respect to
securities. Unless otherwise noted, all of such shares of Common Stock
listed above are owned of record by each individual named as beneficial
owner and such individual has sole voting and dispositive power with
respect to the shares of Common Stock owned by each of them. Such person
or entity's percentage of ownership is determined by assuming that any
options or convertible securities held by such person or entity which are
exercisable within 60 days from the date hereof have been exercised or
converted as the case may be.
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/(2)/ Includes 125,000 shares of Common Stock issued but held in escrow to be
released only upon either: (a) the receipt by the Company of $1,000,000
in post-confirmation financing; or (b) the net assets of the Company
increasing to $1,000,000, either event to occur within 8 months of the
date of issuance; and 200,000 shares of Common Stock held by Kayne
International Corporation, a Cayman Islands corporation, and an affiliate
of Mr. Schultz, and 175,000 shares of Common Stock held by LaPlaza
Capital, Inc., a Cayman Islands corporation and an affiliate of Mr.
Schultz.
/(3)/ Does not include 1,131,200 shares held by Trident III, L.L.C. Frank M.
DeLape, a director of the Company, is an officer, director and principal
of Benchmark Equity Group, Inc. ("Benchmark"). Benchmark is owned and
controlled by Mr. DeLape. Trident III, L.L.C. is managed by Trident
Equity Management Group, a Cayman Islands exempted company. Mr. DeLape is
a director of Trident Equity Management Group. Benchmark disclaims
beneficial ownership of such shares and does not have voting or
dispositive power with respect to such shares.
/(4)/ Includes 125,000 shares of Common Stock issued but held in escrow to be
released only upon either: (a) the receipt by the Company of $1,000,000
in post-confirmation financing or (b) the net assets of the Company
increasing to $1,000,000, either event to occur within 8 months of the
date of issuance; 240,000 shares of Common Stock held by SOMA 2000,
L.L.C., a California limited liability company and an affiliate of
Mackenzie Shea, Inc., and 135,000 shares of Common Stock held by Avon
Brill, L.L.C., a California limited liability company and an affiliate of
Mackenzie Shea, Inc.
/(5)/ Includes 600,000 shares held in a voting trust for the benefit of the
shareholders of I-Storm Acquisition Corp., which is a wholly-owned
subsidiary of Lighthouse Capital Insurance Company ("Lighthouse"), a
Cayman Island Class B unlimited licensed insurance company. Under the
terms of the Voting Trust Agreement, the Voting Trustee must vote or take
consent action, with respect to such 600,000 shares, in accordance with
the vote or consent action of a majority of the remaining outstanding
shares of Common Stock, all in accordance with Nevada law. Includes
100,000 shares of Common Stock issuable under options exercisable at any
time until May 6, 1999 at an exercise price of $2.00 per share. I-Storm
Acquisition Corp. purchased these options from existing shareholders of
the Company as follows: options to purchase 40,000 shares from David
Merrill/dba Chiracahua Company; options to purchase 40,000 shares from
Melinda Johnson; and options to purchase 20,000 shares from Leonard
Burningham. Mr. DeLape is a director of Trident Equity Management Group,
which is also a wholly-owned subsidiary of Lighthouse. Frank DeLape and
his children are remote contingent beneficiaries of a variable universal
life insurance contract issued by Lighthouse. Mr. DeLape disclaims
beneficial ownership of such shares and does not have voting or
dispositive power with respect to such shares.
/(6)/ Includes 557,800 shares of Common Stock held by Benchmark, and 1,131,200
shares of Common Stock beneficially held by Lighthouse. Mr. DeLape is a
director of Trident Equity Management Group, the manager of Trident III,
L.L.C. Trident Equity Management Group is a wholly owned subsidiary of
Lighthouse. Mr. DeLape disclaims beneficial owenership of such shares
held by Lighthouse and does not having voting or dispositive power with
respect to such shares.
/(7)/ Includes 600,000 shares of redeemable Common Stock and 531,200 shares of
non-redeemable Common Stock. Trident III, L.L.C., is managed by Trident
Equity Management Group, a Cayman Islands exempted company. Frank M.
DeLape is a director of the Trident Equity Management Group.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On July 23, 1998, the California Secretary of State's Office approved the
forward subsidiary merger of Digital Power Holding Company's wholly-owned
subsidiary, Digital Acquisition Corporation, into LVL Communications Corporation
("LVL"), a California corporation engaged in marketing, advertising and Internet
commerce development. The effective date of the merger was approved as of July
17, 1998. The merger resulted in Digital's acquiring 100% of the outstanding
common stock of LVL, and LVL's becoming the Company's wholly-owned subsidiary.
The merger is intended to qualify as a reorganization under (S) 368(a) of the
Internal Revenue Code. The transaction was made pursuant to an April 16, 1998
Order confirming a Plan of Reorganization for LVL, issued by the United States
Bankruptcy Court for the Northern District of California.
2
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ITEM 5. OTHER EVENTS.
Fourth Amended and Restated Articles of Incorporation
A Fourth Amended and Restated Articles of Incorporation for the Company was
filed with the State of Nevada on July 20, 1998, changing the Company's name to
I-Storm, Inc., amending Article V of the Company's Articles of Incorporation to
authorize the Board of Directors to issue, to fix, and to determine from time to
time all the rights, preferences and privileges, and restrictions of one or more
series of Preferred Stock, and providing for indemnification and non-liability
of officers and directors to the extent allowable under Nevada law.
Board Approval of Stock Issuance
On July 23, 1998, the Board of Directors of the Company approved the
issuance of certain Common Stock, Warrants and options to purchase Common Stock
pursuant to the Order confirming the Plan of Reorganization,/1/ and on August 1,
1998, the Board approved the issuance of Common Stock and Warrants to certain
bridge financiers and consultants to the Company./2/ The issuance of such Common
Stock, Warrants and Options is currently in progress.
Executive Compensation
On August 6, 1998, the Company entered into Employment Agreements with
Calbert Lai, Stephen Venuti and Timothy Cohrs, three of the executive officers
of the Company. Mr. Lai's Employment Agreement provides for a $150,000 per annum
base salary for a term of 36 months with eligibility to earn an annual
performance bonus of up to 50% of base salary upon the achievement of certain
performance criteria to be established by the Board of Directors. The Company
will also grant Mr. Lai stock options to purchase 600,000 shares of Common Stock
of the Company, of which 300,000 shares shall vest ratably over a period of 36
months from his employment date, and of which 300,000 shares will only vest upon
the Company's sales revenue meeting or exceeding twelve million dollars 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.
- ---------------------------
/1/ The Company will issue 2,640,000 shares of Common Stock, 1,400,000 Options
to employees to purchase shares of Common Stock exercisable at $0.50 per
share to vest ratably over a three year period, with the exception of the
Options of Messrs. Lai, Venuti and Cohrs, which vest as described in Item 5
of this Form 8-K, and 350,000 Warrants to service providers to purchase
Common Stock exercisable at $0.50 per share, all pursuant to this Plan of
Reorganization.
/2/ The Company further issued 120,000 Warrants exercisable at $0.50 per share,
and 1,391,200 shares of Common Stock to bridge financiers and consultants.
3
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Mr. Venuti's Employment Agreement provides for a $150,000 per annum base
salary for a term of 36 months with eligibility to earn an annual performance
bonus of up to 50% of base salary upon the achievement of certain performance
criteria to be established by the Board of Directors. The Company will also
grant Mr. Venuti stock options to purchase 300,000 shares of Common Stock of the
Company, of which 150,000 shares shall vest ratably over a period of 36 months
from his employment date, and of which 150,000 shares will only vest upon the
Company's sales revenue meeting or exceeding twelve million dollars 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.
Mr. Cohrs' Employment Agreement provides for a $240,000 per annum base
salary for a term of 36 months with eligibility to earn an annual performance
bonus of up to 50% of base salary upon the achievement of certain performance
criteria to be established by the Board of Directors. The Company will also
grant Mr. Cohrs stock options to purchase 75,000 shares of Common Stock of the
Company, of which 37,500 shares shall vest ratably over a period of 36 months
from his employment date, and of which 37,500 shares will only vest upon the
Company's sales revenue meeting or exceeding twelve million dollars 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.
Board of Directors
The Company's Board of Directors are as follows:
Name Age Office
---- --- ------
Frank M. DeLape 44 Director and Chairman of the Board
Calbert Lai 43 Director
Thomas A. Schultz 48 Director
Richard Snyder 53 Director
Matthew Howard 45 Director
FRANK M. DELAPE, Chairman of the Board. Mr. DeLape has served as the CEO of
Benchmark Equity Group, Inc. (Benchmark) since its formation in April 1994.
Through Benchmark and its affiliates, Mr. DeLape has financed a number of public
companies in industries such as telecommunications, internet-services,
retailing, business services and computer technology. Mr. DeLape is a director
of the Trident Equity Management Group, a Cayman Islands exempted company. Mr.
DeLape has also served as a director of Think New Ideas, Inc. (NASDAQ: THINK)
since January 1996. Mr. DeLape has served as President, Secretary, Treasurer and
a director of Oak Tree Capital, Inc., a financial consulting firm since its
formation in January 1996.
4
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CALBERT LAI, Director. A co-founder of the Company in 1986, Mr. Lai has
held executive positions in the business affairs and community relations
departments at Stanford University. Mr. Lai received a B.A. in English and
Creative Writing from Stanford University in 1978.
THOMAS A. SCHULTZ, Director. Mr. Schultz is a consultant to the Company and
a director. He has been the President and Chief Executive Officer of Vista
Technologies, Inc., a public surgical center firm from February 1996 to March
1997. Prior to joining Vista Technologies, Inc., Mr. Schultz served as
Chairman/Chief Executive Officer of Crystallume, a public corporation, from
February 1986 to January 1996. Mr. Schultz also serves on the Board of Directors
of Adrenalin Corporation and Electronic Design, Inc., both public companies. He
is a CEO and director of Cellgate, a private corporation and a director of
Security Capital Management and Electronic Design, Inc., also private
corporations.
RICHARD SNYDER, Director. Mr. Snyder has served as Senior Vice President
and General Manager of Dell Computers Corporation, Americas Division, and as
Senior Vice President of World Wide Sales, Marketing and Support for Compaq
Computer Corporation. Mr. Snyder also spent 18 years at Hewlett-Packard Company
where he headed the $5 billion Ink Jet printer business and was responsible for
achieving a 65% market share and creating the "Desk Jet" brand.
Management
The officers of the Company are as follows:
NAME AGE OFFICE
---- --- ------
Calbert Lai 43 President
Stephen Venuti 45 Executive Vice President, Secretary and
General Manager
Tim Cohrs 45 Vice President and Executive Creative Director
Thomas Schultz 48 Treasurer and Chief Operating Officer
CALBERT LAI, President. A co-founder of the Company in 1986, Mr. Lai has
held executive positions in the business affairs and community relations
departments at Stanford University. Mr. Lai received a B.A. in English and
Creative Writing from Stanford University in 1978.
THOMAS A. SCHULTZ, Chief Operating Officer and Treasurer. Mr. Schultz is a
consultant to the Company and a director. He has been the President and Chief
Executive Officer of Vista Technologies, Inc., a public surgical center firm
from February 1996 to March 1997. Prior to joining Vista Technologies, Inc., Mr.
Schultz served as Chairman/Chief Executive Officer of Crystallume, a NASDAQ-
listed corporation, from February 1986 to January 1996. Mr. Schultz also serves
on the Board of Directors of Adrenalin Corporation and Electronic Design, Inc.,
xxxx public companies. He is a CEO and director of Cellgate, a private
corporation and a director of Security Capital Management and Electronic Design,
Inc., also private corporation. Mr. Shultz intends to devote certain of his time
to the Company in a consulting arrangement while continuing his outside
consulting activities.
STEPHEN VENUTI, Executive Vice President, Secretary and General Manager. A
co-founder and senior executive of the Company since 1986, Mr. Venuti is
currently responsible for the Company's key interactive services business as
General Manager of LVL. Mr. Venuti previously served as Director of Marketing at
Stanford University Hospital and has held positions in Marketing and Business
Development at Kaiser Engineering. Mr. Venuti received a B.A. in English in 1976
and an M.A. in Comparative Literature at the University of California in 1982.
5
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TIMOTHY COHRS, Vice President and Executive Creative Director. Timothy
Cohrs joined LVL as Vice President and Executive Creative Director of LVL
Advertising, Inc. in 1996. Mr. Cohrs previously served as Vice President,
Creative Director at the GAP, Inc., where he received two Clio Awards for the
campaigns "Individuals of Style" and "Who Wears Khakis." Previously he held
creative positions at J. Crew Catalog, JC Penney Co. and Bergdorf Goodman. Mr.
Cohrs received a B.A. in Creative Writing at Beloit College in 1975, a M.F.A. in
Creative Writing from Cornell University in 1978, and a M.A. in American Art and
Architectural History at New York University in 1980.
Present officers of the Company who served as officers of LVL or its
subsidiaries prior to the bankruptcy reorganization were Calbert Lai, President
of LVL, Stephen Venuti, Vice President of LVL, and Timothy Cohrs, Vice President
of LVL Advertising, Inc.
The Business of I-Storm, Inc.
I-Storm, Inc. ("I-Storm" or the "Company") is the parent company of LVL
Communications Corporation, located in Silicon Valley, an advertising and
Internet marketing and communications agency, and the developer of the
"CyberStore" concept, a joint venture program to finance, design, develop, and
operate electronic commerce storefronts in partnership with brand-name consumer
and technology product companies. LVL Communications Corporation was named the
1997 "Agency of the Year" by Marketing Computers Magazine.
Electronic commerce or "E-commerce" is the direct retail sale of goods and
services to consumers and end-users over the Internet. Over the past five years,
LVL Communications Corporation ("LVL") has developed electronic and on-line
commerce on behalf of major international manufacturing and technology
corporations including: NETSCAPE, INC., E*TRADE, INC., US ROBOTICS INC.,
HEWLETT-PACKARD COMPANY, SUN MICROSYSTEMS, INC. MITSUBISHI, INC. and others. In
particular, the Company designed and developed the EGGHEAD, INC. and CISCO
SYSTEMS INC. retail transaction sites, two successful E-commerce sites on the
Web today.
In May 1998, the Company launched its CyberStore strategy with the goal of
creating significant long-term shareholder value. In a CyberStore partnership,
the Company expects to provide all necessary resources required to world-class
branded companies ("Product Partners") to build and operate an electronic
commerce storefront capable of selling technology and consumer products direct
to consumers and businesses. Each I-Storm CyberStore will be designed to feature
the Product Partner's brand names exclusively and will be seamlessly tied to the
Product Partner's corporate, product-specific and other web-sites. From a
customer's point of view, the CyberStore will be a "company store" dedicated to
the Product Partner's entire line of products, including parts, accessories and
related products. Ownership and profits of the CyberStore are anticipated to be
split between the Company and the Product Partner.
6
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I-STORM ADVISORY BOARD
In June 1998, the Company formed the "I-Storm Advisory Board," consisting
of senior retailing and high technology marketing executives to provide
expertise and contacts related to branded product distribution. Initial members
include:
. Richard Snyder, former head of the HEWLETT-PACKARD COMPANY Ink Jet
business, Senior Vice President of DELL COMPUTER CORPORATION, and
Senior Vice President of Worldwide Sales for COMPAQ COMPUTER
CORPORATION
. Matthew Howard, past President of COMPUTER CITY and a former top
merchandising executive at SEARS and MONTGOMERY WARD; and
. Peter Janssen, a veteran of MINDSET, WYSE TECHNOLOGY, ACER COMPUTER,
and EGGHEAD(TM) SOFTWARE.
RELATIONSHIP WITH ORACLE CORPORATION
Oracle Corporation ("Oracle"), a global supplier of software for enterprise
information management, entered into a Memorandum of Understanding with the
Company on May 5, 1998 to potentially produce and manage world-class electronic
marketing sites for high profile consumer brand companies. Under the proposed
arrangement, it is anticipated that the Company would have the right to own and
develop each E-commerce site for the target account, and Oracle would
subcontract its software and technical consulting services on an as-needed
project basis. Both Oracle and I-Storm propose to jointly invest the pre-sales
and up-front marketing resources needed to win the target account. The E-
commerce sites would be co-branded with both the "On Oracle" and the "I-Storm"
registered marks. Oracle and I-Storm have anticipated that they will jointly
construct no less than three, and up to ten, world-class electronic marketing
sites. Oracle and the Company intend to negotiate in good faith to enter into a
general contract to govern their working relationship, although there can be no
assurance that such a contract will be executed. Oracle has currently paid
$25,000 to the Company for the development of a CyberStore site, and it is
anticipated that $25,000 will be paid to the Company by Oracle for each
additional CyberStore site developed by the Company.
LVL COMMUNICATIONS CORPORATION
LVL, a marketing communications and technology advertising company
headquartered in Palo Alto, California, has a twelve-year track record of
creative and technical success in serving marketers of consumer-oriented
technology products. Founded in 1986 by Calbert Lai and Stephen Venuti, LVL
specializes in offering a wide range of strategic communication services that
help its clients market their products, services and messages to targeted
segments of the consumer population. These services have included market
research, corporate and product market strategy development, identity
definition, product branding, consumer and technical media services, advertising
and promotion and interactive advertising development. In particular, LVL is a
provider of integrated communications to consumers that take advantage of
emerging technologies and new media, including electronic communications such
7
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as the Internet, the World Wide Web, on-line services, PC-related media (CD-
ROMs, multi-media, etc.) and emerging broadcast media such as satellite-direct
television.
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LVL's clients over the past three years have included:
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Netscape Bay Networks, Inc. Hewlett-Packard Company Bank of America
Disney Cisco Systems, Inc. Mitsubishi, Inc. 3COM(R)
E*Trade Group Inc. DirecTV, Inc. Philips Electronics, Inc.
US Robotics, Inc. Sun Microsystems, Inc. Acer, Inc.
</TABLE>
The Company's headquarters and principal executive office consists of
15,847 square feet of subleased office space at 480 Cowper Street, Palo Alto,
California 94301. The Company has 26 full-time employees. The Company's phone
number is (650) 463-4388.
Item 7. FINANCIAL STATEMENTS.
(a);(b) Financial Statements; Pro Forma Financial Information.
-----------------------------------------------------
It is impracticable for the Company to file those financial statements of
I-Storm, Inc. and the pro forma financial information relating to the
acquisition required to be filed pursuant to this item, as of the date hereof.
The Company will amend this report as soon as the required financial statements
and pro forma financial information are available so as to include them in this
report, but in no event does the Company expect that such amendment will be
filed later than October 17, 1998.
(c) Exhibits
--------
The following exhibits are filed herewith:
2.4(a) July 17, 1998 date stamped copy of the Agreement of Merger and Plan
of Reorganization between Digital Acquisition Corporation and LVL
Communications Corporation, as filed with the California Secretary
of State's Office.
2.4(b) July 20, 1998 Fourth Restated and Amended Articles of Incorporation
of I-Storm, Inc., filed with the Nevada Secretary of State's
Office.
2.4(c) August 6, 1998 Employment Agreement between the Company and Calbert
Lai.
2.4(d) August 6, 1998 Employment Agreement between the Company and Stephen
Venuti.
2.4(e) August 6, 1998 Employment Agreement between the Company and Timothy
Cohrs.
8
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
I-STORM, INC.
(Registrant)
Date: August 18, 1998 By: /s/ Calbert Lai
-----------------------------
Calbert Lai, President
9
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EXHIBIT 2.4(a)
AGREEMENT OF MERGER AND PLAN OF REORGANIZATION
----------------------------------------------
This Agreement of Merger and Plan of Reorganization, dated as of the 19th day
of June, 1998, is entered into by and between LVL Communications Corporation, a
California corporation ("Parent Corporation"); and its wholly owned
subsidiaries, LVL Interactive, Inc., a California corporation, and LVL
Advertising, Inc., a California corporation (collectively referred to herein as
the "Subsidiary Corporations").
W I T N E S S E T H:
WHEREAS, the Parent Corporation is a corporation duly organized and existing
under the laws of the State of California;
WHEREAS, each of the Subsidiary Corporations is a wholly owned subsidiary
corporation of the Parent Corporation, and is duly organized and existing under
the laws of the State of California;
WHEREAS, the Parent Corporation and the Subsidiary Corporations are subject to
an April 16, 1998 Order of the United States Bankruptcy Court for the Northern
District of California (the "Order") confirming a First Amended Plan of
Reorganization (the "Plan of Reorganization"), and the respective Boards of
Directors of the Parent Corporation and the Subsidiary Corporations wish to
comply with this Order and First Amended Plan of Reorganization; and
WHEREAS, the respective Boards of Directors of the Parent Corporation and the
Subsidiary Corporations have determined that it is advisable that each
Subsidiary Corporation be merged into the Parent Corporation on the terms and
conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties herein contained, it is agreed that, in
accordance with the applicable statutes of the State of California, the
Subsidiary Corporations shall be at the effective date of the merger merged with
and into the Parent Corporation, which shall be the surviving corporation, and
that the terms and conditions of such merger and the mode of carrying it into
effect shall be as follows:
ARTICLE I
MERGER OF THE SUBSIDIARY CORPORATIONS INTO THE PARENT CORPORATION
-----------------------------------------------------------------
At the effective date of the merger, the Subsidiary Corporations shall be
merged with and into the Parent Corporation, the separate existence of the
Subsidiary Corporations shall cease and the Parent Corporation shall continue in
existence as the Parent Corporation and, without other transfer or assumption,
succeed to and possess all the estate, properties, rights, privileges,
immunities and franchises, as well of a public as of a private nature, of the
Subsidiary Corporations; and all property, real, personal and mixed, and all
debts due on whatever account,
<PAGE>
including subscriptions to shares, and all other choses in action, and all and
every other interest, of or belonging to or due to the Subsidiary Corporations,
shall be taken and deemed to be transferred to and vested in the Parent
Corporation without further act or deed, as provided in Sections 1110 and 1400
of the California Corporations Code.
If at any time the Parent Corporation shall consider or be advised that any
further assignments, conveyances or assurances in law are necessary or desirable
to carry out the provisions hereof, the proper officers and directors,
respectively, of the Subsidiary Corporations, as of the effective date of the
merger, shall execute and deliver any and all proper deeds, assignments and
assurances in law, and do all things necessary or proper to carry out the
provisions hereof.
ARTICLE II
ARTICLES OF INCORPORATION AND BYLAWS
------------------------------------
OF PARENT CORPORATION; GOVERNING LAW
------------------------------------
From and after the effective date of the merger and until thereafter amended
as provided by law, the Articles of Incorporation of the Parent Corporation
shall be the Articles of Incorporation of the merged corporation. The Parent
Corporation shall be governed under the laws of the State of California. The
address of the principal office of the merged corporation in the State of
California will be 480 Cowper Street, Palo Alto, California 94301.
ARTICLE III
CANCELLATION OF THE CAPITAL STOCK OF THE SUBSIDIARY CORPORATIONS
----------------------------------------------------------------
At the effective date of the merger, each share of the common stock
outstanding immediately prior to the merger, of each Subsidiary Corporation, and
all shares of treasury stock and all rights in respect thereof, shall forthwith
cease to exist and shall be cancelled, and the authorized capital stock of the
Parent Corporation immediately prior to the merger shall continue to be
outstanding and shall not be changed, but shall remain the same as immediately
before the merger.
ARTICLE IV
OFFICERS AND DIRECTORS
----------------------
When the merger becomes effective, the officers and directors of the Parent
Corporation shall be the same as immediately before the merger.
<PAGE>
ARTICLE V
EFFECTIVE DATE
--------------
This Plan and Agreement of Merger shall become effective upon the execution
hereby of the Chief Executive Officers of, respectively, each of the Subsidiary
Corporations and the Parent Corporation, as provided under the applicable laws
of the State of California. Pursuant to Sections 1110, 1400 and 1401 of the
California Corporations Code, a Certificate of Ownership, and such other
instruments as may be required by California law, shall be executed, verified
and delivered to the Secretary of State of California.
ARTICLE VI
COUNTERPARTS
------------
This Plan and Agreement of Merger may be executed in multiple counterparts,
each of which when so executed shall be deemed to be an original, but all of
which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, each Subsidiary Corporation and the Parent Corporation,
each pursuant to the approval and authority duly given by Sections 1110 and 1400
of the California Corporations Code, have each caused this Plan and Agreement of
Merger to be executed by its officers thereunto duly authorized.
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ATTEST LVL COMMUNICATIONS CORPORATION
By: /s/ Stephen Venuti By: /s/ Calbert Lai
---------------------------------- -----------------------------------
Stephen Venuti, Secretary Calbert Lai, President
-------------- -----------
ATTEST LVL INTERACTIVE, INC.
By: /s/ Stephen Venuti By: /s/ Calbert Lai
---------------------------------- -----------------------------------
Stephen Venuti, Secretary Calbert Lai, President
-------------- -----------
</TABLE>
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ATTEST LVL ADVERTISING, INC.
By: /s/ Stephen Venuti By: /s/ Calbert Lai
---------------------------------- -----------------------------------
Stephen Venuti, Secretary Calbert Lai, President
</TABLE>
<PAGE>
EXHIBIT 2.4(b)
FOURTH RESTATED AND AMENDED ARTICLES OF INCORPORATION
OF
I-STORM, INC.
(FORMERLY LVL COMMUNICATIONS, INC.)
I-STORM, INC., a Nevada corporation (hereinafter referred to as
"Corporation"), which originally filed its Articles of Incorporation with the
Secretary of State of Nevada on February 24, 1984, pursuant to Section 78.030 of
the Nevada Revised Statutes, does hereby certify the following:
1. The name under which the Corporation was originally incorporated
was Inter-Venture Corporation. The date of filing of its original Articles
of Incorporation with the Secretary of State was February 24, 1984.
2. The Corporation filed Restated and Amended Articles of
Incorporation on June 6, 1989 whereby the Corporation's name was changed to
"Digital Power Holding Company." The Corporation filed a Certificate of
Amendment on July 20, 1998, renaming the Corporation "LVL Communications,
Inc."
3. Pursuant to resolution adopted by the Board of Directors on April
8, 1996, the Corporation approved a 1 for 100 reverse split of its then
20,521,776 outstanding shares of Common Stock with par value at $0.01 per
share. The Corporation filed an Amended Certificate of Incorporation on
November 4, 1996. The Corporation retained its number of authorized shares
of Common Stock at 25,000,000 shares.
4. Pursuant to Section 78.390 of the Nevada Revised Statutes, these
Amended Articles of Incorporation were approved by a majority of the
Company's stockholders entitled to vote on July 17, 1998, and were
subsequently approved by the Board of Directors on July 20, 1998.
The undersigned officers of I-Storm, Inc., desiring to amend and restate in
their entirety the Articles of Incorporation of the Corporation in accordance
with the laws of the State of Nevada, do hereby sign, verify and deliver, in
duplicate, to the Secretary of State of Nevada these Restated and Amended
Articles of Incorporation of the Corporation, which have been approved by a
majority of the shareholders entitled to vote and duly approved by the Board of
Directors and which shall supercede the original Articles of Incorporation and
all amendments thereto.
.
<PAGE>
ARTICLE I - NAME
The name of the Corporation is I-Storm, Inc. (AMENDED)
ARTICLE II REGISTERED AGENT
The street address of the registered office of the Corporation in the State
of Nevada is 502 East John Street, Carson City, Nevada 89706-3072, and the name
of the registered agent of the Corporation in the State of Nevada at such
address is Corporation Service Company. (NO CHANGE)
ARTICLE III PURPOSE
The purpose of the Corporation shall be to conduct any lawful business, to
promote any lawful purpose, and to engage in any lawful act or activity for
which the Corporation may be organized in the State of Nevada. (AMENDED)
ARTICLE IV CAPITALIZATION
The Corporation is authorized to issue a total of 27,000,000 shares
consisting of 2,000,000 shares of Preferred Stock having a par value of $0.01
per share, and 25,000,000 shares of Common Stock having a par value of $0.01 per
share. (NO CHANGE)
ARTICLE V PREFERRED STOCK
The Board of Directors of the Corporation is expressly authorized to fix by
resolution the designation, powers, preferences, and relative participating
options or other rights, including, but not limited to, voting powers,
preferential rights to received dividends or assets upon liquidation,
conversion, redemption and exchange rights, and the qualifications, limitations
or restrictions of one or more series of Preferred Stock. (AMENDED)
ARTICLE VI INCORPORATORS
(NO CHANGE)
ARTICLE VII BOARD OF DIRECTORS
(a) The number of directors of the Corporation shall be five, which number
may be increased or decreased by the Board of Directors, subject to the approval
of certain classes of Preferred Stock, as from time to time may be provided
under Certificates of Designation of the Corporation. (AMENDED)
(b) The Board of Directors may exercise all such powers and do all such
acts and things as may be exercised or done by the Corporation and as authorized
by the laws of the
2
<PAGE>
State of Nevada, and by the Articles of Incorporation, as amended or restated,
and under the Bylaws of the Corporation. (AMENDED)
(c) The power to adopt, amend or repeal the Bylaws of the Corporation and
to adopt new Bylaws may be exercised by a majority vote of all directors then
serving on the Board, except as may otherwise be provided by applicable law, or
under a Certificate of Designation with respect to any class or series of
Preferred Stock. (AMENDED)
ARTICLE VIII - INDEMNIFICATION
(a) Each person who at any time is or was a director or officer of the
Corporation, and is threatened to be or is made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative, arbitrative or investigative (a "Proceeding"), by reason of the
fact that such person is or was a director or officer of the Corporation, or is
or was serving at the request of the Corporation as a director, officer,
partner, venturer, proprietor, member, employee, trustee, agent or similar
functionary of another domestic or foreign corporation, partnership, joint
venture, sole proprietorship, trust, employee benefit plan or other for-profit
or non-profit enterprise, whether the basis of a Proceeding is an alleged action
in such person's official capacity or in another capacity while holding such
office, shall be indemnified and held harmless by the Corporation to the fullest
extent authorized by the Nevada Revised Statutes, or any other applicable law as
may from time to time be in effect (but, in the case of any such amendment or
enactment, only to the extent that such amendment or law permits the Corporation
to provide broader indemnification rights than such law prior to such amendment
or enactment permitted the Corporation to provide), against all expense,
liability and loss (including, without limitation, court costs and attorneys'
fees, judgments, fines, excise taxes or penalties, and amounts paid or to be
paid in settlement) actually and reasonably incurred or suffered by such person
in connection with a Proceeding, and such indemnification shall continue as to a
person who has ceased to be a director or officer of the Corporation or a
director, officer, partner, venturer, proprietor, member, employee, trustee,
agent or similar functionary of another domestic or foreign corporation,
partnership, joint venture, sole proprietorship, trust, employee benefit plan or
other for-profit or non-profit enterprise, and shall inure to the benefit of
such person's heirs, executors and administrators. The Corporation's
obligations under this Article VIII include, but are not limited to, the
convening of any meeting, and the consideration of any matter thereby, required
by statute in order to determine the eligibility of any person for
indemnification. (AMENDED)
(b) Expenses incurred by a director or officer of the Corporation in
defending a Proceeding shall be paid by the Corporation in advance of the final
disposition of such Proceeding to the fullest extent permitted by, and only in
compliance with, the Nevada Revised Statutes or any other applicable laws as may
from time to time be in effect, including, without limitation, any provision of
the Nevada Revised Statutes which requires, as a condition precedent to such
expense advancement, the delivery to the Corporation of an undertaking, by
3
<PAGE>
or on behalf of such director or officer, to repay all amounts so advanced if it
shall ultimately be determined that such director or officer is not entitled to
be indemnified under Section (a) of this Article VIII or otherwise. Repayments
of all amounts so advanced shall be upon such terms and conditions, if any, as
the Corporation's Board of Directors deems appropriate. (AMENDED)
ARTICLE IX LIABILITY OF DIRECTORS
No director of the Corporation shall be personally liable to the
Corporation or to its stockholders for monetary damages for breach of fiduciary
duty as a director, provided that this Article Eighth shall not eliminate or
limit the liability of a director: (i) for any breach of the director's duty of
loyalty to the Corporation or its stockholders; (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law; (iii) under Section 78.300 of the Nevada Revised Statutes, as it may
hereafter be amended from time to time, for any unlawful payment of a dividend
or unlawful stock purchase or redemption; or (iv) for any transaction from which
the director derived an improper personal benefit. (AMENDED)
4
<PAGE>
We the undersigned, being the President and the Secretary of the
Corporation, herein before named, do make and file these Restated Articles of
Incorporation, hereby certifying that the facts herein are true. We do further
verify that we have been duly authorized by a majority of the shareholders
having voting power and by the Board of Directors of the Corporation to make and
file these Restated Articles of Incorporation.
Dated this 20th day of July, 1998.
/s/ Calbert Lai /s/ Stephen Venuti
- ------------------------------------- -------------------------------------
Calbert Lai, President Stephen Venuti, Secretary
STATE OF CALIFORNIA :
: ss
COUNTY OF ________________ :
On this ____ day of ________, 1998, personally appeared before me, the
undersigned, a notary public, Calbert Lai and Stephen Venuti, who being by me
first duly sworn, declared that they are the President and Secretary,
respectively, of the above-named corporation, acknowledged that they signed the
foregoing Restated Articles of Incorporation, and verified that the statements
contained therein are true.
WITNESS MY HAND AND OFFICIAL SEAL.
--------------------------------------
, Notary Public
-----------------------
Residing in __________________ County
5
<PAGE>
EXHIBIT 2.4(c)
CALBERT LAI
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 480 Cowper Street, Palo Alto, California, 94301
(herein called the "Company") and CALBERT LAI (herein called the
"Employee") residing at 26063 Todd Lane, Los Altos Hills, California,
94022.
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
<PAGE>
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
----------------------
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
------------------
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
-------------------------------------------
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
<PAGE>
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
-------------
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
<PAGE>
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,
----------
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
-----------------------
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
<PAGE>
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
--------------------------------------
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.
<PAGE>
(d) Termination Without Cause. Termination of Employee 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 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
-----------------------------------------
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
<PAGE>
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).
<PAGE>
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
<PAGE>
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
<PAGE>
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.
<PAGE>
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.
CALBERT LAI
/s/ Calbert Lai
EMPLOYEE: -------------------------------
Calbert Lai
COMPANY I-STORM, INC
By: /s/ Frank DeLape
----------------------------
Frank DeLape
Chairman of the Board
<PAGE>
EXHIBIT 2.4(d)
STEPHEN VENUTI
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 480 Cowper Street, Palo Alto, California, 94301
(herein called the "Company") and STEPHEN VENUTI (herein called the
"Employee") residing at 24130 Big Basin Way, Saratoga, CA, 95070.
1. EMPLOYMENT. The Company hereby employs Employee as the Executive Vice
President and General Manger of I-Storm Inc. and as the Executive Vice
President and General Manger of LVL Communications Corporation reporting to
the Company's President. 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
<PAGE>
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
----------------------
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 options
------------------
to purchase 300,000 common shares of the Company at $0.50 per share,
of which 150,000 shares shall vest ratably over a period of 36 months
from the Employment Date; and of which 150,000 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
-------------------------------------------
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
<PAGE>
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
-------------
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 an Executive Officer of the Company. Employee 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. 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
<PAGE>
and shall travel as reasonably required to discharge the duties of his
position with the Company as assigned by its President. 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 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 Employee'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 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
-----------------------
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.
<PAGE>
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
--------------------------------------
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
-------------------------------
Company for any reason other than in paragraphs 6(a), 6(b), and 6(c)
hereof shall be considered Termination Without Cause.
<PAGE>
(e) Salary and Benefit Continuation Upon Termination Without Cause.
------------------------------------------------------------------
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 the Termination
-----------------------------------------
Without 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
President 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,
<PAGE>
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
<PAGE>
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.
<PAGE>
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
<PAGE>
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.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
first written above.
STEPHEN VENUTI
/s/ Stephen Venuti
EMPLOYEE: ------------------------------
Stephen Venuti
COMPANY I-STORM, INC
By: /s/ Frank DeLape
---------------------------
Frank DeLape
Chairman of the Board
<PAGE>
EXHIBIT 2.4(e)
TIMOTHY COHRS
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 480 Cowper Street, Palo Alto, California, 94301
(herein called the "Company") and TIMOTHY COHRS (herein called the
"Employee") residing at 724 Ninth Avenue, San Francisco, CA 94118.
1. EMPLOYMENT. The Company hereby employs Employee as the Vice President
and Executive Creative Director of I-Storm Inc. and as the Vice President
and Executive Creative Director of LVL Communications Corporation reporting
to the Company's President. 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
<PAGE>
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
----------------------
salary during the term of this Agreement, payable semi-monthly, at the
rate of $240,000 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 options
------------------
to purchase 75,000 common shares of the Company at $0.50 per share, of
which 37,500 shares shall vest ratably over a period of 36 months from
the Employment Date; and of which 37,500 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
-------------------------------------------
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
<PAGE>
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
-------------
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 an Executive Officer of the Company. Employee 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. 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
<PAGE>
and shall travel as reasonably required to discharge the duties of his
position with the Company as assigned by its President. 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 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 Employee'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 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
-----------------------
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.
<PAGE>
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
--------------------------------------
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
-------------------------------
Company for any reason other than in paragraphs 6(a), 6(b), and 6(c)
hereof shall be considered Termination Without Cause.
<PAGE>
(e) Salary and Benefit Continuation Upon Termination Without Cause.
------------------------------------------------------------------
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 the Termination
-----------------------------------------
Without 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
President 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,
<PAGE>
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
<PAGE>
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.
<PAGE>
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
<PAGE>
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.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
first written above.
TIMOTHY COHRS
/s/ Timothy Cohrs
EMPLOYEE: ----------------------------------
Timothy Cohrs
COMPANY I-STORM, INC
By: /s/ Frank DeLape
-------------------------------
Frank DeLape
Chairman of the Board
