Exhibit 10.2
SEPARATION AGREEMENT
The following sets forth the terms of a Separation Agreement between Xxxx
Xxxxxx ("IS") and Net2Phone, Inc. ("N2P") and is intended to be binding on the
parties hereto ("Separation Agreement").
1. Resignation: IS hereby resigns as the Chief Financial Officer of N2P
and as an officer and/or director of the Net2Phone Charitable
Foundation (the "Foundation") and/or of any other subsidiary or
affiliate of N2P, effective January 4, 2002 ("Resignation Date").
2. Consulting Services: IS will provide consulting services to N2P, and/or
as directed by N2P, to Adir Technologies, Inc. ("Adir"), for a four
year period commencing on the Resignation Date. N2P will reimburse IS
for direct, out-of-pocket expenses incurred by IS relating to any
overnight travel requested by N2P or Adir.
3. Waiver: Other than with respect to his rights under this Separation
Agreement, IS waives all claims, and releases and forever discharges
and covenants not to xxx or proceed on the basis of any claims, against
N2P, and its subsidiaries and affiliates, including Adir, arising from
his employment, including rights arising under his employment agreement
with N2P. Other than with respect to its rights under this Separation
Agreement, N2P and its subsidiaries and affiliates, including Adir,
waive all claims and release and forever discharge and covenant not to
xxx or proceed on the basis of any claims, against IS arising from his
employment, including any of its rights arising under his employment
agreement with N2P.
4. Non-Compete: IS acknowledges that (i) N2P, its subsidiaries and
affiliates, including Adir (for purposes of paragraphs 4, 5 and 6,
"N2P") are currently engaged in the Internet telephony business, (ii)
his work for N2P has provided him with access to trade secrets of and
confidential information concerning N2P, and (iii) the agreements and
covenants contained in this Separation Agreement are essential to
protect the business and goodwill of N2P. Accordingly, IS covenants and
agrees that during the Restricted Period (defined below), IS shall not
(1) be employed in any capacity by, or consult with or engage or
participate in any fashion in the Internet telephony business (a
"Competitive Business") on his own behalf or on behalf of any person or
entity, and IS shall not acquire a financial interest in any
Competitive Business (except for publicly traded equity interests that
do not exceed five percent (5%) in the aggregate of all classes of
equity of any such Competitive Business) or (2) directly or indirectly
solicit or encourage any employee of N2P or any of its subsidiaries or
affiliates to leave the employment of N2P. For purposes hereof, the
"Restricted Period" shall be the two year period commencing on the
Resignation Date.
5. Confidential Information: During the term of this Separation Agreement
and at all times thereafter, IS agrees that he will not divulge to
anyone (other than N2P or any persons employed or designated by N2P)
any knowledge or information of a confidential or proprietary nature
relating to the business of N2P or any of its subsidiaries or
affiliates, including, without limitation, all trade secrets (unless
readily ascertainable from public or published information or trade
sources) and confidential commercial information, and IS further agrees
not to disclose, publish or make use of any such knowledge or
information without the consent of N2P.
6. Enforcement: IS acknowledges and agrees that N2P will have no adequate
remedy at law, and could be irreparably harmed, if IS breaches or
threatens to breach any of the provisions of paragraphs 4 and 5 of this
Separation Agreement. IS agrees that N2P shall be entitled to equitable
and/or injunctive relief to prevent any breach or threatened breach of
paragraphs 4 and 5, and to specific performance of each of the terms of
this paragraph in addition to any other legal or equitable remedies
that N2P may have. IS further agrees that he shall not, in any equity
proceeding relating to the enforcement of the terms of paragraphs 4 and
5, raise the defense that N2P has an adequate remedy at law.
7. Stock Option Repricing: As of the date hereof, IS has an Option to
purchase 200,000 shares of N2P common stock that was to be priced at
$3.50 per share in connection with a repricing program recently
approved by the Board of Directors of N2P, and an Option to purchase
approximately 72,000 shares at $3.33 per share (collectively the
"Existing Options"). Within 30 days of the date this Agreement is fully
executed (the exact day during such 30-day period to be determined by
N2P in its sole discretion), N2P will (a) grant to IS an Option to
purchase an additional 28,000 shares of common stock at $0.01 per
share, or such greater or lesser number of shares as is necessary for
the total of IS's shares subject to stock options to be equal to
300,000 (the "New Option"), and (b) reprice the Existing Options to
$0.01 per share, and upon such event, the Existing Option and New
Option shall be fully vested and exercisable as of such date and the
parties hereto mutually agree that such Options with respect to such
300,000 shares shall be automatically exercised as of such date for
shares of N2P, and IS covenants and agrees to limit the per day sale of
the shares resulting from the exercise of the Existing Options and New
Options to the greater of (a) 30,000 shares and (b) 20% of the average
trading volume of N2P shares for the preceding five days.
Notwithstanding the foregoing limitations, IS will be permitted to sell
such shares resulting from the exercise of such Options in a block
trade with a single buyer.
8. Severance: N2P shall continue to pay to IS his base salary of $225,000
in effect on the Resignation Date, and (ii) the 25% annual bonus amount
in effect for IS on the Resignation Date, for a period of two years
following the Resignation Date. Such amount shall be paid in 26 equal
installments of $10,817.30 annually, less any applicable withholding,
in a manner consistent with the payroll practice of N2P. If N2P fails
to pay 3 or more installments per year when due, all of the remaining
amounts to which IS is entitled pursuant to this paragraph 8 shall
become immediately due and payable.
9. Loan Forgiveness: IS has the following loans outstanding to N2P: (a) a
loan from N2P with an initial principal amount of $298,438 (the "IPO
Loan"), and (b) a $1.2 million line of credit from N2P with respect to
which IS borrowed the entire amount (the "N2P Line of Credit") (the
loans set forth above, and all accrued interest on such loans, the
"Debt"). The Debt will be forgiven ratably in four equal installments
upon the completion of each the first four years of the consulting
period described in paragraph 2 hereof. Such Debt forgiveness and
waiver shall be accelerated upon change in control of N2P (as defined
in N2P's 1999 Stock Option and Incentive Plan) occurring after the date
of this Separation Agreement.
10. Charitable Contribution. The Foundation shall contribute an aggregate
of $100,000 to eligible charities, as defined by the Foundation,
designated by IS, as follows: for the year commencing March 1, 2001 and
ending February 28, 2002 ("Year 1"), the Foundation shall match the
donations made by IS as requested by IS to a maximum of $50,000; and
for the years commencing March 1, 2002 and March 1, 2003, the
Foundation shall match and/or make such additional donations to
eligible charities as requested by IS, the aggregate of which shall not
exceed $100,000 less any contributions made by the Foundation during
Year 1.
11. Insurance: For a 2-year period commencing on the Resignation Date, N2P
will continue to provide IS and his dependents, at its sole cost, with
the medical, dental, disability and life insurance coverage, or
equivalent coverage, as was provided immediately prior to the
Resignation Date.
12. Car Allowance: For a 2-year period commencing on the Resignation Date,
N2P will continue to provide IS with an auto allowance for one (1) auto
consistent with the allowance provided to him immediately prior to the
Resignation Date.
13. Company Property: At the completion of the term of consulting period
described in paragraph 2 hereof, IS shall return all property of N2P
and Adir; provided, however, that IS will be permitted to keep the
personal computer, monitor, printer and PDA provided to him by N2P.
14. Disclosure: The parties mutually agree not to disclose the terms and
conditions of this Separation Agreement, except that N2P shall have the
right to make such disclosures as reasonably required by law in the
opinion of its legal counsel. Notwithstanding the foregoing, IS and N2P
may disclose such terms to their respective legal and financial
advisors and IS may disclose such terms to his immediate family
members.
15. Miscellaneous: Effective upon the Resignation Date, N2P will release IS
from his status as an SEC reporting person. Notwithstanding the
foregoing, IS remains fully and solely responsible for compliance with
all requirements of all Federal and State securities laws in connection
with the disposition of his shares of N2P and will indemnify N2P from
any liabilities arising out of his disposition of any of such shares in
violation of any of such laws. N2P agrees to provide IS all rights of
indemnification and all officer's insurance coverage in affect,
relating to the period of time IS served as an officer of N2P, to the
fullest extent permitted by law and by its Certificate of Incorporation
and By-laws, as in effect on the Resignation Date.
16. Entire Agreement/Amendment: This Separation Agreement contains the
entire understanding of the parties with respect to the subject matter
hereof and, except as specifically provided herein (including, without
limitation IS's rights to Options pursuant to paragraph 7 hereof),
cancels and supersedes any and all other agreements between the parties
with respect to the subject matter hereof, including, without
limitation any employment agreement between IS and N2P. Any amendment
or modification of this Separation Agreement shall not be binding
unless in writing and signed by the parties hereto.
17. Successors and Assigns: This Separation Agreement shall be binding upon
and shall inure to the benefit of N2P, its successors, affiliates and
any person or other entity that succeeds to all or substantially all of
the business, assets or property of N2P. To the extent not otherwise
provided by application of law, N2P will require any successor (whether
direct or indirect, by purchase, merger, consolidation, transfer or
otherwise) to all or substantially all of the business, assets or
property of N2P, to expressly assume and agree to perform the
obligations of N2P under this Separation Agreement in the same manner
and to the same extent that N2P is required to perform hereunder. As
used in this Separation Agreement, "N2P" shall mean N2P as hereinbefore
defined and any successor to its business, assets or property as
aforesaid which executes and delivers an agreement provided for in this
paragraph 17 or which otherwise becomes bound by all the terms and
provisions of this Separation Agreement by operation of law. Except as
provided by the foregoing provisions of this paragraph 17, any
assignment of this Separation Agreement, or any part hereof, by N2P
shall not relieve N2P of its obligations under paragraphs 7 through 10.
This Separation Agreement and all rights of IS hereunder shall inure to
the benefit of and be enforceable by the IS's personal or legal
representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If IS should die while any amounts
are due and payable to IS hereunder, all such amounts, unless otherwise
provided herein, shall be paid to IS's designated beneficiary or, if
there is no such designated beneficiary, to the legal representatives
of IS's estate. This Separation Agreement is personal in nature and the
obligations of IS hereunder are not be assignable to any person.
18. Severability/No Waiver: In the event that any provision of this
Separation Agreement is determined to be invalid or unenforceable, the
remaining terms and conditions of this Separation Agreement shall be
unaffected and shall remain in full force and effect, and any such
determination of invalidity or unenforceability shall not affect the
validity or enforceability of any other provision of this Separation
Agreement. The failure of a party to insist upon strict adherence to
any term of this Separation Agreement or any occasion shall not be
considered a waiver of such party's rights or deprive such party of the
right thereafter to insist upon strict adherence to that term or any
other term of this Separation Agreement.
19. Notices: All notices which may be necessary or proper for either N2P or
IS to give to the other shall be in writing and shall be delivered by
hand or sent by registered or certified mail, return receipt requested,
or by overnight courier, to IS at:
Xxxx Xxxxxx
with a copy to:
Xxxx X. Xxxxxxx, Esq.
Xxxxx Xxxxxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
; and, shall be sent in the manner described above to the Secretary of
N2P at its principal executives offices at:
000 Xxxxx Xxxxxx
Xxxxxx Xxx Xxxxxx 00000
with a copy to: General Counsel
Any party may by like notice to the other party change the address at
which he or they are to receive notices hereunder.
20. Governing Law: This Separation Agreement shall be governed by and
enforceable in accordance with the laws of the State of New Jersey,
without giving effect to the principles of conflict of laws thereof and
the resolution of any dispute relating to this Separation Agreement
shall be venued within the State of New Jersey.
21. Counterparts: This Separation Agreement may be signed in counterparts,
each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
IN WITNESS WHEREOF, the parties have hereunto set their hands and seals
to the Separation Agreement between Xxxx Xxxxxx and Net2Phone, Inc. on this 22th
day of January 2002.
WITNESS OR ATTEST: Xxxx Xxxxxx:
s/ Xxxxx Xxxxxxxx s/ Xxxx Xxxxxx
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WITNESS OR ATTEST: Net2Phone, Inc.
s/ Xxxxx Xxxxxxxx By: s/ Xxxxxxx X. Xxxxxxxxx
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WITNESS OR ATTEST: Solely with respect to paragraph 3
hereof, Adir Technologies, Inc.
s/ Xxxxx Xxxxxxxx By: s/ Xxxxx Xxxxxxxxxx
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