Exhibit 10.9
EMPLOYMENT AGREEMENT
AGREEMENT made as of August 3, 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 Xxxxxx Xxxxxxx, having an office at 000 Xx. 00 Xxxxxxx, 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
Chairman of the Board of Directors 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 August 3, 2004 and shall continue to August 2.
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 Chairman of the Board of Directors, 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 August 3, 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
$2,000.00, Executive's base annual compensation shall automatically be
increased to $145,000.00
(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) Upon the closing of an acquisition or merger by the Company the
Executive shall be entitled to receive acquisition compensation equal to
six percent (6%) of the gross consideration paid or received by the Company
payable in the form of cash, debt or in Shares of the Company's Class B
Common stock at the Executive's option.
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 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;
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(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 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
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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.
(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
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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) yearperiod 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
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.
(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.
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(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:
(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;
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(C) the relocation of the Company's principal
executive offices to a location which is not within the boundaries 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.
(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).
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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 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.
9
(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 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
10
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 Technology 2 Inc.
By: /s/ Xxxx Xxxxxx Dated:______________________
-----------------------------
Title: Chief Executive Officer & President
XXXXXX XXXXXXX
By: /s/ Xxxxxx Xxxxxxx Dated:______________________
-----------------------------
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