EXHIBIT 2.2
EMPLOYEE MATTERS AGREEMENT
BETWEEN
EON COMMUNICATIONS CORPORATION
AND
CORTELCO SYSTEMS PUERTO RICO, INC.
EFFECTIVE AS OF
JANUARY 30, 2002
EMPLOYEE MATTERS AGREEMENT
This Employee Matters Agreement (this "AGREEMENT") is entered into as
of January 30, 2002, between eOn Communications Corporation, a Delaware
corporation ("EON") and Cortelco Systems Puerto Rico, Inc., a Puerto Rico
corporation ("CSPR").
RECITALS
WHEREAS, pursuant to the terms of the Distribution Agreement by and
between EON and CSPR dated as of January 30, 2002 (the "DISTRIBUTION
AGREEMENT"), the parties have entered into this Agreement regarding certain
employment, compensation and benefit matters occasioned by the Distribution.
NOW, THEREFORE, in consideration of the foregoing and the covenants and
agreements contained in this Agreement and the Distribution Agreement, each of
the parties hereto hereby agrees as follows:
1. Definitions.
1.1 DEFINITIONS. The following terms, when capitalized herein,
shall have the meanings set forth below in this Section 1. Unless indicated
otherwise, all other capitalized terms which are used but are not otherwise
defined herein shall have the meanings ascribed to them in the Distribution
Agreement.
1.1.1 "ACTIVE EMPLOYEES" means all employees actively
engaged in the performance of services to, for or on behalf of
CSPR as of the Distribution Date, including any employee who
is not actively performing services because of (a) leave of
absence within a job protection period, or (b) disability
within a job protection period, and the dependents of such
persons (and, as applicable, the alternate payees of such
persons).
1.1.2 "EON SAVINGS PLAN" means the EON Savings Plan,
a defined contribution plan.
1.1.3 "FORMER EMPLOYEES" means all former employees
of CSPR, except for employees then employed by EON, as of the
Distribution Date, and the dependents and, as applicable, the
alternate payees, of those persons who, if they were actively
engaged in the performance of services to, for or on behalf of
CSPR at the Distribution Date, would be an Active Employee,
determined on a basis consistent with the determination of the
Active Employees.
1.1.4 "LIABILITIES" means all debts, liabilities,
guarantees, assurances, commitments and obligations, whether
fixed, contingent or absolute, asserted or unasserted, matured
or unmatured, liquidated or unliquidated, accrued or not
accrued, known or unknown, due to become due, whenever or
however arising (including, without limitation, whether
arising out of any contract or tort based on negligence or
strict liability) and whether or not the same would be
required by generally accepted principles
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and accounting policies to be reflected in financial
statements or disclosed in the notes thereto.
1.1.5 "CSPR SAVINGS PLAN" means the defined
contribution plan to be established by CSPR pursuant to
Section 3.
2. General Employment Matters.
2.1 General Obligations. Except as specifically provided
herein, from and after the Distribution Date, CSPR shall (a) continue the
employment of all of the Active Employees, subject, however to the terms of
Section 2.3 below and (b) except as otherwise specifically provided herein,
assume, pay, perform and discharge any and all labor, employment, compensation
and benefit Liabilities with respect to all Active Employees and all Former
Employees.
2.2 Initial Compensation of Active Employees. The initial base
salary or wage level of each Active Employee shall be no less than the base
salary or wage level of such Active Employee immediately prior to the
Distribution DATE.
2.3 No Additional Employment Rights Created. Nothing in this
Agreement shall give any Active Employee any right to continued employment by
the CSPR beyond the Distribution Date, which is in addition to or supplemental
to any such right he or she may have arising under contract or otherwise.
2.4 Service Credit. Except as specified otherwise in this
Agreement, with respect to Active Employees, the CSPR Savings Plan shall provide
that all service, all compensation and all other determinations that affect
benefits eligibility or vesting under the CSPR Savings Plan that, as of the
Distribution Date, were recognized under the corresponding EON Savings Plan
shall, as of the Distribution Date receive full recognition and credit and be
taken into account under such CSPR Savings Plan to the same extent as if such
items occurred under such CSPR Savings Plan, except to the extent that
duplication of benefits would result. The service crediting provisions shall be
subject to any respectively applicable "service bridging," "break in service,"
"employment date," or "eligibility date" rules under the CSPR Savings Plan and
the EON Savings Plan.
3. Retirement Plan Benefits.
3.1 Establishment of CSPR Savings Plan.
3.1.1 CSPR Savings Plan. On or before the
Distribution Date, CSPR will establish or make available a
defined contribution plan for the benefit of the Active
Employees and Former Employees (the "CSPR SAVINGS PLAN").
3.1.2 Transfer of Account Balances to CSPR Savings
Plan. Unless otherwise determined by CSPR and EON, and as
promptly as practicable after the Distribution Date: (i) the
CSPR Savings Plan shall assume and be solely responsible for
all Liabilities for or relating to Active Employees and Former
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Employees under the EON Savings Plan; and (ii) EON shall cause
the accounts of the Active Employees and Former Employees of
CSPR under the EON Savings Plan that are held by its related
trust as of the Distribution Date to be transferred to the
CSPR Savings Plan and its related trust, and CSPR shall cause
such transferred accounts to be accepted by such plan and its
related trust. CSPR and EON each agree to use their
commercially reasonable best efforts to accomplish the
foregoing. As soon as reasonably practicable after the
Distribution Date, CSPR shall use its best efforts to enter
into agreements satisfactory to CSPR to accomplish such
assumption and transfer, the maintenance of the necessary
participant records, the appointment of the initial trustee
under the CSPR Savings Plan, and the engagement of the initial
recordkeeper under the CSPR Savings Plan. The transfer of
account balances from the EON Savings Plan to the CSPR Savings
Plan is contingent upon EON receiving reasonable assurances
from CSPR that the CSPR Savings Plan and its associated trust
are tax-qualified under Sections 401 and 501 of the Internal
Revenue Code.
3.1.3 No Distribution to CSPR Active Employees. No
distribution of account balances under either the EON Savings
Plan or the CSPR Savings Plan shall be made to any Active
Employee solely on account of CSPR ceasing to be an affiliate
of EON as of the Distribution Date.
3.2 Reimbursement. CSPR shall assume all direct and indirect
administrative costs associated with the CSPR Savings Plan with respect to
Active Employees and Former Employees, which costs would otherwise be borne by
EON.
4. Stock Plans. Subject to the terms of this Agreement, after the
Distribution Date, EON's board of directors will adjust the exercise prices for
all outstanding options under the 1999 Equity Incentive Plan and the 2001 Stock
Option Plan by an amount equal to the fair market value an option holder would
have received in shares of CSPR common stock, if such option holder had
exercised the option prior to the distribution of the CSPR stock to the EON
stockholders. No other adjustments shall be made as a result of the
distribution, and the employees of CSPR that currently hold options to purchase
shares of EON common stock will retain their options, and no substitute options
to purchase shares of CSPR stock will be issued. Prior to the close of the
Distribution Date, the 1999 Equity Incentive Plan and 2001 Stock Option Plan
will be amended to provide that the distribution of the CSPR stock will not
constitute a termination of a CSPR employee's continuous service, and the EON
options held by CSPR employees will continue to vest in accordance with the
vesting schedule set forth in the EON grant notice.
5. General.
5.1 Post-Distribution Administration of Plans. The parties
hereto will administer all plans consistently herewith, and to the extent
necessary will amend their respective employee benefit plans accordingly.
5.2 Costs and Expenses. Each party shall bear all costs and
expenses, including but not limited to legal and consulting fees, incurred from
and after the Distribution Date in the design, drafting and implementation of
any and all plans and compensation structures
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which it establishes or creates and the amendment of its existing plans or
compensation structures.
5.3 Sharing of Participant Information. From and after the
Distribution Date, EON and CSPR shall share with each other and with their
respective agents and vendors all participant information necessary and
appropriate for the efficient and accurate administration of each party's
respective employee benefit plans and performance of their respective
obligations under this Agreement. EON and CSPR shall, subject to all applicable
laws concerning confidentiality, be given reasonable and timely access to, and
may make copies of, all information relating to the subjects of this Agreement
in the custody of another party, to the extent necessary and appropriate for
such administration and performance.
5.4 Consent of Third Parties. If any provision of this
Agreement is dependent on the consent of any third party (such as a vendor) and
such consent is withheld, EON and CSPR shall use their commercially reasonable
best efforts to implement the applicable provisions of this Agreement. If any
provision of this Agreement cannot be implemented due to the failure of such
third party to consent, EON and CSPR shall negotiate in good faith to implement
the provision in a mutually satisfactory manner.
6. Dispute Resolution. Any and all controversies, disputes or claims
arising out of, relating to, in connection with or resulting from this Agreement
(or any amendment thereto or any transaction contemplated hereby or thereby),
including as to its existence, interpretation, performance, non-performance,
validity, breach or termination, including any claim based on contract, tort,
statute or constitution and any claim raising questions of law, whether arising
before or after termination of this Agreement, shall be deemed a Dispute as
defined in Section 4.6 of the Distribution Agreement and shall be resolved
exclusively by, in accordance with, and subject to the procedures and
limitations set forth in, Section 4.6 of the Distribution Agreement.
7. Miscellaneous Provisions.
7.1 Incorporation of Distribution Agreement. The miscellaneous
provisions provided in Article V of the Distribution Agreement are incorporated
herein by reference as though set forth in full.
7.2 Other Agreements. This Agreement is not intended to
address, and should not be interpreted to address, the matters expressly covered
by the Distribution Agreement and/or the other Ancillary Agreements. In the
event of a conflict between this Agreement and the Distribution Agreement and/or
any other Ancillary Agreement executed in connection herewith, the provisions of
this Agreement shall prevail.
7.3 Survival of Agreements. All covenants and agreements of
the parties contained in this Agreement shall survive the Distribution Date
except as expressly provided herein and shall not be merged into any other
transfer or closing instruments or documents.
7.4 Termination. This Agreement may be terminated at any time
before the Distribution by EON in its sole discretion without the approval of
CSPR or the EON shareholders. In the event of such termination, no party shall
have any Liability of any kind to
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any other party. After the Distribution Date, this Agreement may not be
terminated except by an agreement in writing signed by each of the parties.
7.5 No Third Party Beneficiaries. This Agreement is solely for
the benefit of the parties and should not be deemed to confer upon third parties
any remedy, claim, liability, right of reimbursement, claim of action or other
right in excess of those existing without reference to this Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly elected as of the day and year first above written.
EON COMMUNICATIONS CORPORATION CORTELCO SYSTEMS PUERTO RICO, INC.
By: /s/ Xxxxx Xxxxxxx By: /s/ Xxxxxx Xxxxx
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Xxxxx Xxxxxxx Xxxxxx Xxxxx
Chief Financial Officer President
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