Exhibit 10.10
EMPLOYMENT AGREEMENT
AGREEMENT made as of October 1, 2004, by and between iVoice Technology
2, Inc., a Nevada corporation (hereinafter referred to as the "Company"),
having an office at 000 Xxxxxxx 00, Xxxxxxx, Xxx Xxxxxx 00000 and Xxxx
Xxxxxx, with offices at 000 Xxxxxxxxxx Xxxxxxx, Xxxxxxxxxx, XX 00000
(hereinafter referred to as the "Executive").
W I T N E S S E T H :
WHEREAS, the Company desires to engage the services of the Executive,
and the Executive desires to render such services;
NOW, THEREFORE, in consideration of the premises, the parties agree as
follows:
1. Employment. The Company hereby employs the Executive as Chief
Executive Officer, President, and Chief Financial Officer, and the Executive
hereby accepts such employment, subject to the terms and conditions
hereinafter set forth.
2. Term. The term of the Executive's employment hereunder shall
commence on October 1, 2004 and shall continue to September 30, 2009.
3. Duties. The Executive agrees that the Executive will serve the
Company on a part-time basis faithfully and to the best of his ability as the
Chief Executive Officer, President, and Chief Financial Officer, subject to
the general supervision of the Board of Directors of the Company. The
Executive agrees that the Executive will not, during the term of this
Agreement, engage in any other business activity which interferes with the
performance of his obligations under this Agreement. The Executive further
agrees to serve as a director of the Company and/or of any parent, subsidiary
or affiliate of the Company if the Executive is elected to such directorship.
Upon the Date of Termination, the Executive shall resign as an officer
and director of the Company and any of its subsidiaries.
4. Compensation.
(a) In consideration of the services to be rendered by the Executive
hereunder, including, without limitation, any services rendered by the
Executive as director of the Company or of any parent, subsidiary or
affiliate of the Company, the Company agrees to pay the Executive, and the
Executive agrees to accept fixed compensation at the rate of Eighty Five
Thousand ($ 85,000.00), subject to all required federal, state and local
payroll deductions, that shall increase on the anniversary date of October
1, 2005 and upon every annual anniversary thereafter, at the rate based on
the Consumer Price Index. At such time as the Company has annual sales
equal to or in excess of $2,000,000, Executive's base annual compensation
shall automatically be increased to $145,000.
(b) The Executive shall also be entitled to three weeks vacation,
unlimited sick leave and fringe benefits, (monthly expenses, travel expenses
and an Annual Bonus) in accordance with Company policies and plans in effect,
from time to time, for executive officers of the Company.
(c) The Executive shall participate in the Company's Corporate
Compensation Program as approved and authorized by the Board of Directors of
the Company, subject to amendment by the Board of Directors or the
Compensation Committee of the Board of Directors of the Company ("Incentive
Compensation"). The Executive shall not receive any Incentive Compensation
should the Executive be terminated for Termination for Cause. Such Incentive
Compensation for the particular fiscal year shall be paid to the Executive no
later than upon the filing of the Company's Form 10-KSB, or equivalent form,
or if no Form 10-KSB need be filed, then within ninety (90) days after the
end of each fiscal year.
(d) Except as hereinafter provided in Section 5(a), the Company shall
pay the Executive, for any period during which the Executive is unable fully
to perform his duties because of physical or mental illness or incapacity, an
amount equal to the fixed compensation due the Executive for such period less
the aggregate amount of all income disability benefits which the Executive
may receive or to which the Executive may be entitled under or by reason of
(i) any group health and/or disability insurance plan provided by the
Company; (ii) any applicable state disability law; (iii) the Federal Social
Security Act; (iv)
any applicable worker's compensation law or similar law; and (v) any plan
towards which the Company or any parent, subsidiary or affiliate of the
Company has contributed or for which it has made payroll deductions, such
as group accident, health and/or disability policies.
(e) The Executive shall be granted a stock option under the Company's
stock option plan as adopted by the Board of Directors and the shareholders
of the Company (the "Plan"). The Company will provide the Executive a Stock
Option Contract for his signature which will set out the terms of the
option. This Stock Option shall be subject to the terms of the Plan.
(f) The Executive shall be entitled to receive acquisition compensation
equal to six percent (6%) of the gross consideration paid or received by the
Company relating to a merger or acquisition transaction entered into by the
Company (a "Covered Transaction"). Such acquisition compensation shall be
payable, at the Executive's option, in the form of cash, debt or in shares
of the Company's Class B Common Stock, at such time as a Covered Transaction
is consummated by the Company.
(g) At such time that the Company's registration statement to
effectuate the sale and/or distribution of the Company stock on Form X-0,
XX-0, or any other such form of registration statement is declared effective
by the Securities and Exchange Commission, the Company shall pay, and
Executive agrees to accept, cash compensation in the amount of fifty thousand
dollars ($50,000.00). Such amount shall be paid in a lump sum on the date
the registration statement is declared effective, or alternatively, at the
discretion of the Company, in shares of the Company's Class B Common Stock
5. Compensation Upon Termination.
Upon termination of the Executive's employment or during a period of
Disability the Executive shall be entitled to the following benefits:
(a) Termination for Cause, Disability, Death or Retirement etc.
(i)If the Executive's employment shall be terminated by the
Company for Termination for Cause, or by the Company or the Executive for
Disability, or by either the Company or the Executive for Retirement, the
Company shall pay to the Executive the Executive's full base salary for five
years from date of termination at the highest salary under the agreement,
plus all other amounts to which the Executive is entitled under any
compensation plan of the Company in effect on the date the payments are due,
in addition to any other benefits set forth in this Agreement. If the
Executive's employment shall be terminated by the Company for Death, the
Company shall pay to the estate of the Executive the Executive's full base
salary through the period of eight (8) years following the Date of
Termination at the highest rate in effect at the date that Notice of
Termination is given, plus all other amounts to which the Executive is
entitled under any compensation plan of the Company in effect on the date the
payments are due, in addition to any other benefits set forth in this
Agreement, and the Company shall have no further obligations to the Executive
under this Agreement.
(ii) If the Executive's employment shall be terminated by the
Executive for any reason other than for Termination for Cause, Death,
Disability, Retirement or Good Reason after a Change in Control, the Company
shall pay to the Executive the Executive's full base salary through the Term
of this Agreement, plus an additional five (5) years following the Date of
Termination, at the highest rate in effect at the date that Notice of
Termination is given, plus all other amounts to which the Executive is
entitled under any compensation plan of the Company in effect on the date the
payments are due , in addition to any other benefits set forth in this
Agreement, and the Company shall have no further obligations to the Executive
under this Agreement.
(b) Severance Benefits. If the Executive's employment shall be
terminated by the Company within three (3) years after a Change in Control of
the Company, for reasons other than for Termination for Cause, Retirement,
Death or Disability, or terminated by the Executive for Good Reason within
three (3) years after a Change in Control of the Company, then, subject to
the limitations set forth in Subparagraph 5(d) below, the Executive shall be
entitled to the benefits provided below:
(i) the Company shall pay the Executive the Executive's full
base salary through the Date of Termination, plus (5), five years at the rate
equal to the greater of the rate in effect on the date prior to the Change in
Control and the rate in effect at the time Notice of Termination is given,
plus all
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other amounts to which the Executive is entitled under any compensation
plan of the Company in effect on the date, the payments are due, except as
otherwise provided below;
(ii) in lieu of any further salary payments to the Executive for
periods subsequent to the Date of Termination, except as provided in
Paragraph 5(d) below, the Company shall pay as severance pay to the Executive
a lump sum severance payment equal to 300% of an average annual amount
actually paid by the Company or any parent or subsidiary of the Company to
the Executive and included in the Executive's gross income for services
rendered in each of the five prior calendar years (or shorter period during
which the Executive shall have been employed by the Company or any parent or
subsidiary of the Company), less $100;
(iii) in consideration of the surrender on the Date of
Termination of the then outstanding options ("Options") granted to the
Executive, if any, under the stock option plans of the Company, or otherwise,
for shares of common stock of the Company ("Company Shares"), except as
provided in Paragraph 5(d) below, the Executive shall receive an amount in
cash equal to the product of (A) the excess of, (x) in the case of options
granted after the date of this Agreement that qualify as incentive stock
options ("ISOs") under Section 422A of the Internal Revenue Code of 1986, as
amended (the "Code"), the closing price on or nearest the Date of Termination
of Company Shares as reported in the principal national securities exchange
on which the Company's Shares are listed or admitted to trading or, if the
Company Shares are not listed or admitted to trading on any national
securities exchange, the last quoted price or, if not so quoted, the average
of the high bid and low asked prices in the over-the-counter market, as
reported by the National Association of Securities Dealers, Inc. Automated
Quotation System ("NASDAQ") or such other system then in use, or, if on any
such date the Company Shares are not quoted by any such organization, the
average of the closing bid and asked prices as furnished by a professional
market maker making a market in the Company Shares selected by the Board of
Directors of the Company, and (y) in the case of all other Options, the
higher of such closing price or the highest per share price for any Company
Shares actually paid in connection with any Change in Control of the Company,
over the per share exercise price of each Option held by the Executive
(irrespective of whether or not such Option is then fully exercisable), times
(B) the number of Company Shares covered by each such Option (irrespective of
whether or not such Option is then fully exercisable). The parties hereto
acknowledge and agree that the benefits afforded to the Executive under this
Subparagraph (iii) do not, and shall not be deemed to, materially increase
the benefits accruing to the Executive under any stock option plan under
which any such Options are granted. Insofar as the Executive receives full
payment under this Subparagraph (iii) with respect to the surrender of all
such Options, such Options so surrendered shall be canceled upon the
Executive's receipt of such payment. However, if pursuant to the limitations
set forth under Paragraph 5(d) below, the full amount described under this
Subparagraph 5(b)(iii) cannot be paid, the number of Options which are
canceled shall be reduced so that the ratio of the value of the canceled
Options to the value of all such Options equals the ratio of the amount
payable under this Subparagraph 5(b)(iii) after the application of the
limitation described under Paragraph 5(d), to the amount that otherwise would
have been paid under this Subparagraph 5(b)(iii) in the absence of such
limitations. The Options canceled pursuant to the immediately preceding
sentence shall be those Options providing the smallest "excess amounts" as
determined under Subparagraph 5(b)(iii)(A). For those Options not
surrendered and canceled pursuant to this subparagraph, the Company shall
guaranty the Executive's loan for such amount as needed by the Executive to
exercise those outstanding Options that may be exercised as they become
exercisable by the Executive. Additionally, those stock options not
surrendered and canceled as determined in this Subparagraph 5(b)(iii) shall
hereinafter become fully exercisable for the remaining term of such stock
option grant, regardless whether the Executive continues as an employee of
the Company; and
(iv) The Company shall also pay to the Executive all legal fees
and expenses incurred by the Executive as a result of such termination
(including all such fees and expenses, if any, incurred in contesting or
disputing any such termination or in seeking to obtain or enforce any right
or benefit provided by this Agreement or in connection with any tax audit or
proceeding to the extent attributable to the application of Section 499 of
the Code to any payment or benefit provided hereunder).
(c) Date Benefits Due. The payments provided for in Paragraph 5(b)
above shall be made not later than the fifth day following the Date of
Termination, provided, however, that if the amounts of such payments cannot
be finally determined on or before such day, the Company shall pay to the
Executive on such day an estimate, as determined in good faith by the
Company, of the minimum amount
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of such payments and shall pay the remainder of such payments (together
with interest at the rate provided in Section 7872(f)(2) of the Code) as
soon as the amount thereof can be determined but in no event later than the
thirtieth day after the Date of Termination. In the event that the amount
of the estimated payments exceeds the amount subsequently determined to
have been due, such excess shall constitute a loan by the Company to the
Executive repayable on the fifth day after demand by the Company (together
with interest at the rate provided in Section 7872(f)(2) of the Code).
(d) Reduction to Avoid Non-Deductibility. Any of the other
provisions of this Agreement notwithstanding, if any payment to be made by
the Company pursuant to this Agreement to the Executive or for the
Executive's benefit (the "Payments") otherwise would not be deductible by the
Company for Federal income tax purposes due to the provisions of the Code
Section 280G, the aggregate present value (determined as of the date of the
Change in Control) of the Payments shall be reduced (but not to a negative
amount) to an amount expressed in the present value as of such date (the
"Reduced Amount") that maximizes the present value of the Payments without
causing any payment to be nondeductible by the Company due to the Code
Section 280G. The determination of the Reduced Amount and the accompanying
reduction in Payments shall be made by the independent certified public
accountants for the Company. Any such decrease in Payments shall be applied
to the amounts to be paid to the Executive or for the Executive's benefit
hereunder in the following order but only to the extent such amounts would be
taken into account in determining whether the Payments constitute "parachute
payments" within the meaning of the Code Section 280G(b)(2)(A): (i) to
decrease the amounts payable to the Executive pursuant to Subparagraph
5(b)(iii); (ii) to decrease the amounts payable to the Executive pursuant to
Subparagraph 5(b)(ii); (iii) to decrease the amounts payable to the Executive
pursuant to Section 5(j); (iv) to decrease the amounts payable to the
Executive pursuant Subparagraph 5(b)(iv); and (v) to decrease the amounts
payable to the Executive pursuant to Section 5(a)
(e) Determination of Reduced Amount. The determination of the
Reduced Amount and of the reduction in the Payments shall be communicated to
the Executive in writing by the Company. If the Executive does not agree with
such determinations, the Executive may give written notice of such
disagreement to the Board within five (5) days of the Executive's receipt of
the determination, and within fifteen (15) days after the Executive's notice
of disagreement, the Executive shall deliver to the Board the Executive's
calculation of the reduction in Payments. If the Executive fails to give
notice of disagreement or to furnish the Executive's calculation in
accordance with the provisions of the immediately preceding sentence, the
Executive shall be conclusively deemed to have accepted the determinations
made by the independent public accountants for the Company. If the
accountants for the Company and the Executive's accountants are unable to
agree upon the reduction of Payments within ten (10) days of the receipt of
the Board of the Executive's calculation, the determination of the reduction
in Payments shall be made by a third accounting firm picked by the Company's
accountants and the Executive's accountants (the "Arbiter") whose
determination shall be final and binding upon the Executive and the Company,
except to the extent provided below. The Company shall withhold for income
tax purposes all amounts that the Company's independent certified public
accountants believe that the Company is required to withhold.
(f) Arbiter to Resolve Disputes. If the Arbiter's and the Company's
accountant's fees shall be borne solely by the Company. The Executive's
accountant's fees shall be borne by the Executive.
(g) Final Payment. As promptly as practicable after the final
determination of the reduction in Payments, the Company shall pay to the
Executive or for the Executive's benefit the amounts determined to be payable.
(h) IRS Ruling. In the event there is a final determination by the
Internal Revenue Service or by a court of competent jurisdiction that any
portion of the Payments is not deductible by the Company by reason of Section
280G, then the amount of the Payments that exceeds the amount deductible by
the Company shall be deemed to be a loan by the Company to the Executive,
which shall be repaid by the Executive five (5) days after delivery of a
demand by the Company therefor together with interest from the date paid by
the Company to the date repaid by the Executive at the rate provided for a
demand loan in Section 7872(f)(2) of the Code.
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(i) Interpretation. The provisions of this Section 4 shall be
interpreted in a manner that will avoid the disallowance of a deduction to
the Company pursuant to Section 280G and the imposition of excise taxes on
the Executive under Section 4899 of the Code.
(j) Additional Fringe Benefits. If the Executive's employment shall
be terminated by the Company other than for Termination for Cause,
Retirement, Death or Disability or by the Executive within three years after
a Change in Control of the Company for Good Reason, then for an (8) year
period after such termination, the Company shall arrange to provide the
Executive with life, disability, Health and accident insurance benefits
substantially similar to those that the Executive was receiving immediately
prior to the Notice of Termination. In addition to the benefits set forth
above, the Company shall reimburse the Executive for the cost of leasing,
insuring and maintaining (including the cost of fuel) a luxury automobile of
the Executive's choice not to exceed $800 per month during the eight (8) year
period following the Executive's termination.
Benefits otherwise receivable by the Executive pursuant to this
Paragraph 5(j) shall be reduced to the extent comparable benefits are
otherwise received by the Executive during the three (3) year period
following the Executive's termination and any such benefits otherwise
received by the Executive shall be reported to the Company.
(k) No Mitigation. The Executive shall not be required to mitigate
the amount of any payment provided for in this Paragraph 5 by seeking other
employment or otherwise, nor shall the amount of any payment or benefit
provided for in this Paragraph 5 be reduced by any compensation earned by the
Executive as the result of the Executive's employment by another employer, by
any retirement benefits, by offset against any amount claimed to be owing by
the Executive to the Company, or otherwise, except as specifically provided
in this Paragraph 5.
(l) The benefits provided in this Paragraph 5 shall replace benefits
provided to the Executive other than in this Agreement only in the
circumstances set forth herein, and under all other circumstances, the
Executive's benefits will be determined in accordance with other agreements
between the Company and the Executive and other plans, arrangements and
programs of the Company in which the Executive participates.
(m) Notwithstanding anything in this Agreement, the Company shall
arrange to provide the Executive and his immediate family with health
insurance benefits substantially similar to those that the Executive was
receiving, immediately prior to the Notice of Termination, for the remainder
of his and his spouse's life.
6. Termination for Cause. Termination by the Company of the
Executive's employment for cause (hereinafter referred to as "Termination for
Cause), shall mean termination upon (i) the willful and continued failure by
the Executive to substantially perform the Executive's material duties with
the Company (other than any such failure resulting from the Executive's
incapacity due to physical or mental illness or any such failure after the
issuance by the Executive for Good Reason of a Notice of Termination (as the
terms "Good Reason" and "Notice of Termination" are defined in this
Agreement) after a written demand for substantial performance is delivered to
the Executive by the Board, which demand specifically identifies the material
duties that the Board believes that the Executive has not substantially
performed, or (ii) the willful engaging by the Executive in conduct that is
demonstrably and materially injurious to the Company, monetarily or otherwise
or (iii) the conviction of the Executive of a felony, limited solely for a
crime related to the business operations of the Company, or that results in
the Executive being unable to substantially carry out his duties as set forth
in this Agreement, or (iv) the commission of any act by the Executive against
the Company that may be construed as the crime of embezzlement, larceny,
and/or grand larceny. For purposes of this Paragraph 6, no act, or failure
to act, on the Executive's part, shall be deemed "willful" unless done, or
omitted to be done, by the Executive not in good faith and without reasonable
belief that the Executive's action or omission was in the best interest of
the Company. Any other provision in this paragraph to the contrary
notwithstanding, the Executive shall not be deemed to have been terminated
for Termination for Cause unless and until the Board duly adopts a resolution
by the affirmative vote of no less than three-quarters (3/4) of the entire
membership of the Board, at a meeting of the Board called and held for such
purpose (after reasonable notice to the Executive and an opportunity for the
Executive, together with the Executive's counsel, to be heard before
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the Board), finding that in the good faith opinion of the Board, the
Executive was guilty of conduct described in Subparagraphs (i), (ii) or
(iv) of this paragraph and specifying the particulars thereof in detail and
a certified copy of such resolution is delivered to the Executive.
7. Non-Disclosure of Confidential Information and Non- Competition
(a) The Executive acknowledges that the Executive has been informed
that it is the policy of the Company to maintain as secret and confidential
all information (i) relating to the products, processes, designs and/or
systems used by the Company and (ii) relating to the customers and employees
of the Company (all such information hereafter referred to as "confidential
information"), and the Executive further acknowledges that such confidential
information is of great value to the Company. The parties recognize that the
services to be performed by the Executive are special and unique, and that by
reason of his employment by the Company, the Executive has and will acquire
confidential information as aforesaid. The parties confirm that it is
reasonably necessary to protect the Company's goodwill, and accordingly the
Executive does agree that the Executive will not directly or indirectly
(except where authorized by the Board of Directors of the Company for the
benefit of the Company):
A. At any time during his employment by the Company or after
the Executive ceases to be employed by the Company, divulge to any persons,
firms or corporations, other than the Company (hereinafter referred to
collectively as "third parties"), or use or allow or cause or authorize any
third parties to use, any such confidential information; and
B. At any time during his employment by the Company and for a
period of one (1) year after the Executive ceases to be employed by the
Company, solicit or cause or authorize directly or indirectly to be
solicited, for or on behalf of the Executive or third parties, any business
from persons, firms, corporations or other entities who were at any time
within one (1) year prior to the cessation of his employment hereunder,
customers of the Company; and
C. At any time during his employment by the Company and for a
period of one (1) year after the Executive ceases to be employed by the
Company, accept or cause or authorize directly or indirectly to be accepted,
for or on behalf of the Executive or third parties, any business from any
such customers of this Company; and
D. At any time during his employment by the Company and for a
period of one (1) year after the Executive ceases to be employed by the
Company, solicit or cause or authorize directly or indirectly to be solicited
for employment, for or on behalf of the Executive or third parties, any
persons (excluding any individuals residing in the same immediate primary
residence as the Executive, and/or the Executive's immediate family) who were
at any time within one year prior to the cessation of his employment
hereunder, employees of the Company; and
E. At any time during his employment by the Company and for a
period of one year after the Executive ceases to be employed by the Company,
employ or cause or authorize directly or indirectly to be employed, for or on
behalf of the Executive or third parties, any such employees of the Company;
and
F. At any time during his employment by the Company and for a
period of one (1) year after the Executive ceases to be employed by the
Company, compete with the Company in any fashion or work for, advise, be a
consultant to or an officer, director, agent or employee of or otherwise
associate with any person, firm, corporation or other entity which is engaged
in or plans to engage in a business or activity which competes with any
business or activity engaged in by the Company, or which is under development
or in a planning stage by the Company.
Notwithstanding the above, should the Executive not be receiving
compensation from the Company either in a lump sum, or on a regular basis for
a period at least equal to one (1) year, or life, as set forth in this
Agreement following his Date of Termination, then Subparagraphs 7(C), 7(E)
and 7(F) shall be ineffective. Additionally, Subparagraphs 7(C), 7(D), and
7(E) shall be ineffective as it relates to the spouse of the Executive.
(b) The Executive agrees that, upon the expiration of his employment
by the Company for any reason, the Executive shall forthwith deliver up to
the Company any and all records, drawings, notebooks, keys and other
documents and material, and copies thereof in his possession or under his
control which is the property of the Company or which relate to any
confidential information or any discoveries of the Company.
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(c) The Executive agrees that any breach or threatened breach by the
Executive of any provision of this Section 7 shall entitle the Company, in
addition to any other legal remedies available to it, to enjoin such breach
or threatened breach through any court of competent jurisdiction. The
parties understand and intend that each restriction agreed to by the
Executive herein above shall be construed as separable and divisible from
every other restriction, and that the unenforceability, in whole or in part,
of any restriction will not affect the enforceability of the remaining
restrictions, and that one or more or all of such restrictions may be
enforced in whole or in part as the circumstances warrant.
(d) For the purposes of this Section, the term "Company" shall mean
and include any and all subsidiaries, parents and affiliated corporations of
the Company in existence from time to time.
8. Change in Control.
(a). Effectiveness of Change in Control Provisions. The terms set
forth in this Paragraph 8, shall be effective should a Change in Control of
the Company, as defined below, have occurred during the term of this
Agreement, or during any extensions thereof, and shall continue in effect for
a period of thirty-six (36) months beyond the month in which such Change in
Control occurred. However, the definitions set forth in Subparagraph 8(c)
shall apply throughout this Agreement.
(b) Change in Control. No benefits shall be payable hereunder unless
an event as set forth below, shall have occurred (hereinafter called a
"Change in Control"):
(i) Any person including any individual, firm, partnership or
other entity, together with all Affiliates and Associates (as defined by
ss.240.12b-2 of the regulations promulgated under the Securities Exchange Act
of 1934, as amended (the "Exchange Act") of such person, directly or
indirectly acquires securities of the Company's then outstanding securities
representing twenty percent (20%) or more of the voting securities of the
Company, such person being hereinafter referred to as an Acquiring Person;
or, but excluding:
(A) a trustee or other fiduciary holding securities under
an employee benefit plan of the Company or any Subsidiary of the Company, or
(B) a corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same proportions as their
ownership of the Company, or
(C) the Company or any Subsidiary of the Company, is or
becomes the Beneficial Owner (as defined in Rule 13d-3 under the Exchange
Act),or
(D)a person who acquires securities of the Company
directly from the Company pursuant to a transaction that has been approved by
a vote of at least a majority of the Incumbent Board, or
(ii) Individuals who, on the date hereof, constitute the
Incumbent Board shall cease for any reason to constitute a majority of the
Board; or
(iii) The stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than a merger
or consolidation that would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) at least 80% of the combined voting power of the voting
securities of the Company or such other surviving entity outstanding
immediately after such merger or consolidation, or the stockholders of the
Company approve a plan of complete liquidation of the Company or an agreement
for the sale or disposition by the Company of all or substantially all of the
Company's assets.
(c) Definitions. For the purposes of this Agreement, the following
terms shall mean:
(i) "Incumbent Board" shall mean the members of the Board, who
were members of the Board prior to the date of this Agreement.
(ii) "Subsidiary" shall mean any corporation of which an amount
of voting securities sufficient to elect at least a majority of the directors
of such corporation is beneficially owned, directly or indirectly, by the
Company, or is otherwise controlled by the Company.
(iii) "Good Reason" shall mean, without the Executive's express
written consent, the occurrence of any of the following circumstances
unless, such circumstances are fully corrected prior to the Date of
Termination specified in the Notice of Termination, as defined in
Paragraphs 8(c)(iv) and (v), respectively, given in respect thereof:
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(A) the assignment to the Executive of any duties
inconsistent with the Executive's status as Chairman of the Board, and/or
Chief Executive Officer of the Company, or a substantial adverse alteration
in the nature or status of the Executive's responsibilities from those in
effect immediately prior to a Change in Control of the Company;
(B) a reduction by the Company in the Executive's annual
base salary as in effect on the date hereof or as the same may be increased
from time to time, except for across-the-board salary reductions similarly
affecting all senior executives of the Company and all senior executives of
any person in control of the Company;
(C) the relocation of the Company's principal executive
offices to a location which is not within the boundaries of the state of New
Jersey or the Company requiring the Executive to be based anywhere other than
the Company's principal executive offices, except for required travel on the
Company's business to an extent substantially consistent with the Executive's
present business travel obligations, or the adverse and substantial
alteration of the office space or secretarial or support services provided to
the Executive for the performance of the Executive's duties;
(D) the failure by the Company, without the Executive's
consent, to pay to the Executive any portion of the Executive's current
compensation, except pursuant to an across-the-board compensation deferral
similarly affecting all senior executives of the Company and all senior
executives of any person in control of the Company, or the failure by the
Company to pay to the Executive any portion of an installment of deferred
compensation under any deferred compensation program of the Company, within
seven (7) days of the date such compensation is due;
(E) the failure by the Company to continue in effect any
compensation plan in which the Executive participates that is material to the
Executive's total compensation, including but not limited to the Company's
Incentive Stock Option Plan, 401(k) plan, cafeteria or salary reduction plan,
or any other or substitute plans adopted prior to a Change in Control of the
Company, unless an equitable arrangement (embodied in an ongoing substitute
or alternative plan) has been made with respect to such plan, or the failure
by the Company to continue the Executive's participation therein (or in such
substitute or alternative plan) on a basis not materially less favorable,
both in terms of the amount of benefits provided and the level of the
Executive's participation relative to other participants, than the
Executive's participation as it existed at the time of a Change in Control of
the Company;
(F) unless such action is pursuant to an across-the-board
reduction in benefits similarly affecting all senior executives of the
Company and all senior executives of any person in control of the Company,
the failure by the Company to continue to provide the Executive with benefits
substantially similar to those enjoyed by the Executive under any of the
Company's pension, life insurance, automobile reimbursement, Company credit
card, medical, health and accident, or disability plans, if any, in which
the Executive was participating at the time of a Change in Control of the
Company, or the taking of any action by the Company that would directly or
indirectly materially reduce any of such benefits or deprive the Executive of
any material fringe benefit enjoyed by the Executive at the time of a Change
in Control of the Company, or the failure by the Company to provide the
Executive with the number of paid vacation or sick days to which the
Executive is entitled under this Agreement at the time of a Change in Control
of the Company;
(G) the failure of the Company to obtain a satisfaction
agreement from any successor to assume and agree to perform this Agreement,
as contemplated in Paragraph 5 hereof; or
(H) any purported termination of the Executive's
employment that is not affected pursuant to a Notice of Termination
satisfying the requirements of Subparagraph 8(c)(iv) below (and, if
applicable, the requirement of Paragraph 6 above); for purposes of this
Agreement, no such purported termination shall be effective.
The Executive's right to terminate the Executive's employment
pursuant to this paragraph shall not be affected by the Executive's
incapacity due to physical or mental illness. The Executive's continued
employment shall not constitute consent to, or a waiver of right with respect
to, any circumstances constituting Good Reason hereunder.
(iv) "Notice of Termination" shall mean a notice that shall
indicate the specific termination provision of this Agreement relied upon and
shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Executive's employment under the
provision so indicated.
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(v) "Date of Termination" shall mean (A) if employment is
terminated for Disability, thirty (30) days after Notice of Termination is
given (provided, that the Executive shall not return to the full-time
performance of the Executive's duties during such thirty (30) day period), or
(B) if employment is terminated due to Death of the Executive, upon receipt
of Notice of Termination or (c) if employment is terminated pursuant to any
other provision in this Agreement, the date specified in Notice of
Termination (which, in the case of a termination pursuant to any provision of
this Agreement other than for Disability and Death shall not be less than
fifteen (15) nor more than sixty (60) days, respectively, from the date such
Notice of Termination is given).
Notwithstanding the above, provided, that if within fifteen (15)
days after any Notice of Termination is given to the Executive or prior to
the Date of Termination (as determined without regard to this provision) the
Executive receiving such Notice of Termination notifies the Company that a
dispute exists concerning such termination, that during the pendency of any
such dispute, the Company will continue to pay the Executive his full
compensation in effect when the notice giving rise to the dispute was given
(including, but not limited to, base salary) and continue the Executive as a
participant in all compensation, benefit, and insurance plans in which the
Executive was participating when the notice giving rise to the dispute was
given, until the dispute is finally resolved. However, should final
resolution of the dispute result in the Notice of Termination being affirmed
in the forum, as set forth in Paragraph 16, utilized for resolving said
dispute, then the Executive shall be liable to the Company for all
compensation, benefit, and insurance plans paid and/or provided to the
Executive during the period that the Notice of Termination was in dispute.
Amounts paid under this subparagraph are prior to all other
amounts due under this Agreement and shall not reduce any other amounts due
under this Agreement, which other amounts shall be in addition to, and shall
not be offset by, amounts due under this subparagraph.
Anything to the contrary herein notwithstanding, twenty-four
hours after written notice to the Executive, the Company may relieve the
Executive of authority to act on behalf of, or legally bind, the Company,
provided, that any such action by the Company shall be without prejudice to
the Executive's right to the compensation and benefits provided under this
Agreement and the Executive's right to termination hereunder under such
circumstances and with the compensation and benefits following such
termination as provided in this Agreement.
(vi) "Disability"- If the Executive, due to physical or mental
illness or incapacity, is unable fully to perform his duties herein for
twelve (12) consecutive months.
(vii) "Death"- If the Executive shall die during the term of this
Agreement.
(viii) ""Retirement"- Shall mean termination in accordance
with the Company's retirement policy, if any, including early retirement,
generally applicable to its salaried employees or in accordance with any
retirement arrangement established with the Executive's consent with respect
to the Executive.
(d) Termination Following Change in Control. If any of the events
described in Paragraph 8(b) hereof constituting a Change in Control of the
Company shall have occurred, the Executive shall be entitled to the benefits
provided in Paragraph 5 hereof upon the subsequent termination of the
Executive's employment during the term of this Agreement unless such
termination is (i) because of the Executive's Death, Disability or
Retirement, (ii) by the Company for Termination for Cause, or (iii) by the
Executive for Good Reason within three years after a Change in Control shall
have occurred.
(e) Notice of Termination. Any purported termination of the
Executive's employment by the Company or by the Executive shall be
communicated by written Notice of Termination to the other party hereto in
accordance with Paragraph 15 hereof.
9. Successors; Binding Agreement.
(a) Assumption by Successor. The Company shall require any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise)
to all or substantially all of the business and/or assets of the Company to
expressly assume and agree to perform this Agreement in the same manner and
to the same extent that the Company would be required to perform it if no
such succession had taken place. Failure of the Company to obtain such
assumption and agreement prior to the effectiveness of any such succession
shall be a breach of this Agreement and shall entitle the Executive to
compensation from the Company in the same amount and on the same terms as the
Executive would be entitled hereunder
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if the Executive terminates the Executive's employment for Good Reason
following a Change in Control of the Company, except that for purposes of
implementing this paragraph, the date on which any such succession becomes
effective shall be deemed the Date of Termination. As used in this
Agreement, "Company" shall mean the Company as hereinbefore defined and any
successor to its business and/or assets as aforesaid that assumes and
agrees to perform this Agreement by operation of law, or otherwise.
(b) Successors. Neither this Agreement nor any right or interest
hereunder shall be assignable by the Executive (except by will or intestate
succession) or any successor to the Executive's interest, nor shall it be
subject to attachment, execution, pledge or hypothecation, but this Agreement
shall inure to the benefit of and be enforceable by the Executive's personal
or legal representative, executors, administrators, successors, heirs,
distributees, devisees and legatees. If the Executive should die while any
amount would still be payable to the Executive hereunder if the Executive had
continued to live, all such amounts, unless otherwise provided herein, shall
be paid in accordance with the terms of this Agreement to the Executive's
devisee, legatee or other designee or, if there is no such designee, to the
Executive's estate.
10. Miscellaneous. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed
to in writing and signed by the Executive and such officer as may be
specifically designated by the Board. No waiver by either party hereto of,
or compliance with, any condition or provision of this Agreement to be
performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or subsequent
time. No agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by either
party that are not set forth in this Agreement. All references to sections
of the Exchange Act or the Code shall be deemed also to refer to any
successor provisions to such sections. Any payments provided for hereunder
shall be paid net of any applicable withholding required under federal, state
or local law. The obligations of the Company under Paragraph 5 shall survive
the expiration of the term of this Agreement.
11. Severance and Validity. The invalidity or unenforceability of
any provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which shall remain
in full force and effect.
12. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of
which together shall constitute one and the same instrument.
13. Entire Agreement. This Agreement contains the entire
understanding of the parties with respect to the subject matter hereof,
supersedes any prior agreement between the parties, and may not be changed or
terminated orally. No change, termination or attempted waiver of any of the
provisions hereof shall be binding unless in writing and signed by the party
to be bound; provided, however, that the Executive's compensation and
benefits may be increased at any time by the Company without in any way
affecting any of the other terms and conditions of this Agreement, which in
all other respects shall remain in full force and effect.
14. Negotiated Agreement. This Agreement has been negotiated and
shall not be construed against the party responsible for drafting all or
parts of this Agreement.
15. Notices. For the purposes of this Agreement, notices and all
other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when delivered personally or received
by United States registered or certified mail, return receipt requested,
postage prepaid, or by nationally recognized overnight delivery service
providing for a signed return receipt, addressed to the Executive at the
Executive's home address set forth in the Company's records and to the
Company at the address set forth on the first page of this Agreement,
provided that all notices to the Company shall be directed to the attention
of the Board with a copy to counsel to the Company, at Xxxxx & Xxxxxx, P.C.,
0000 X Xxxxxx, Xxxxxxxxxx XX 00000, Attention: Xxxxxxxx X. Xxxxx, Esq., or to
10
such other address as either party may have furnished to the other in writing
in accordance herewith, except that notice of change of address shall be
effective only upon receipt.
16. Governing Law and Resolution of Disputes. All matters concerning
the validity and interpretation of and performance under this Agreement shall
be governed by the laws of the State of New York. Any dispute or controversy
arising under or in connection with this Agreement shall be settled
exclusively by arbitration in Garden City, New York, in accordance with the
rules of the American Arbitration Association ("AAA") then in effect. Any
judgment rendered by the arbitrator as above provided shall be final and
binding on the parties hereto for all purposes and may be entered in any
court having jurisdiction; provided, however, that the Executive shall be
entitled to seek specific performance of the Executive's right to be paid
following termination for any reason during the pendency of any dispute or
controversy arising under or in connection with this Agreement. The Company
share bear the total cost of filing fees for the initial Demand of
Arbitration, as well as all charges billed by the AAA, regardless of which
party shall commence the action. The Company shall bear the cost of the
Executive's legal fees regarding any dispute or controversy arising under or
in connection with this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
iVoice Technology2, Inc
By: /s/ Xxxxxx Xxxxxxx Dated:______________________
----------------------------
Title: Chairman
-------------------------
XXXX XXXXXX
By: /s/ Xxxx Xxxxxx Dated:______________________
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