EMPLOYMENT AGREEMENT
Exhibit 10.1
This
EMPLOYMENT AGREEMENT (this “Agreement”), dated
April 29, 2009, with an effective date of January 2, 2009, is by and between IDT
Corporation, a Delaware corporation (the “Company”) and Xxxxxx
Xxxxxxx, an individual (the “Employee”).
WHEREAS,
in recognition of the Employee’s experience and abilities, the Company desires
to assure itself of the employment of the Employee in accordance with the terms
and conditions provided herein; and
WHEREAS,
the Employee wishes to continue to perform services for the Company in
accordance with the terms and conditions provided herein; and
NOW,
THEREFORE, in consideration of the promises and the respective covenants and
agreements of the parties herein contained, and intending to be legally bound
hereby, the parties hereto agree as follows:
1. Employment. The
Company hereby agrees to employ the Employee, and the Employee hereby agrees to
be employed by and perform services for the Company or its subsidiaries and
affiliates, on the terms and conditions set forth herein.
2. Term. The
term of this Agreement is for a three (3) year period (the “Term”) and shall
commence as of the date set forth above (the “Start Date”) and
terminate on January 1, 2012, or upon the Employee's earlier death, or other
termination of employment pursuant to Section 9 hereof. The Term
shall automatically be renewed or extended for additional one year periods
beyond its otherwise scheduled expiration unless, not later than ninety (90)
days prior to any such expiration, either party hereto shall have notified the
other party in writing that such renewal extension shall not take
effect.
3. Position. During the
Term, the Employee shall serve as the Chief Financial Officer and Treasurer of
the Company and in such other capacities as shall be designated by the Board of
Directors of the Company (the “Board”) and agreed to
by the Employee from time to time.
4. Duties and Reporting
Relationship. During the Term, the Employee shall, on a
full-time basis, use his skills and render services to the best of his abilities
on behalf of the Company. The Employee shall report directly to the Chairman and
the Chief Executive Officer (“CEO”) of the
Company. The Employee shall comply with all of the policies and
procedures of the Company.
5. Place of
Performance. The Employee shall perform his duties and conduct
his business on a full-time basis at the Company’s Headquarters, except for
required travel on Company business.
6. Compensation and Related
Matters.
(a) Annual Base
Salary. The Company shall pay to the Employee an annual base
salary (the “Base
Salary”) at a rate of Four Hundred Thirty Five Thousand Dollars
($435,000.00), payable in accordance with the Company’s standard payroll
practices, less applicable taxes and customary withholdings. While
this Agreement is in effect, the Employee’s total “Compensation” (Base
Salary plus all bonus payments) shall be increased via a bonus payment, if
necessary, so that the Employee’s Compensation remains at least 8.75% higher
than the total compensation (base salary plus any bonus payments) of the highest
paid financial officer/employee of the Company (during the prior fiscal year) or
any of its controlled entities (the “Catch-up
Bonus”). The Catch-up Bonus shall be calculated at the end of
the Company’s fiscal year and shall be paid at the same time bonuses are paid to
other similarly situated executives of the Company.
(b) Executive Management Bonus
Program. In the event the Company establishes a bonus program
for its senior executive management, the Employee shall also be entitled to
participate in such program at a level as shall be approved by the Compensation
Committee of the Board.
(c) Employee
Benefits. During the Term, the Employee will be eligible to
participate in the Company’s medical, dental, life and disability programs
(collectively the "Programs") subject to
the terms and conditions of the Programs. In addition, during the
Term, the Employee will be eligible to participate in the Company’s 401(k)
savings plan (the “401(k) plan”) subject
to the terms and conditions of the 401(k) plan.
(d) Business Expenses.
The Company shall reimburse the Employee for all ordinary and necessary business
expenses incurred by him in connection with his employment (including without
limitation, expenses for travel (via coach class) and entertainment incurred in
conducting or promoting business for the Company) upon submission by the
Employee of receipts and other documentation in accordance with the Company's
normal business expense reimbursement procedures. The Employee must
use the Company’s travel department to arrange for all business related
travel.
(e) Paid Vacation. The
Company will provide the Employee with four (4) weeks of paid vacation during
each calendar year during the Term. The Employee shall be entitled to
Paid Holidays, Personal Days, and Sick Days as outlined in the Company’s Policy
Handbook for Employees.
7. Non-Disclosure and
Non-Competition Agreement. The Employee agrees that upon execution of
this Agreement, he will simultaneously execute the Company’s standard
Non-Disclosure and Non-Competition Agreement, a copy of which is attached hereto
as Exhibit “A”. Notwithstanding anything to the contrary contained
herein, the remedies provided for in the Non-Disclosure and Non-Competition
Agreement are separate and distinct from those provided for in this Agreement
and in no event shall such remedies be superseded by any provision contained
herein.
8. Representations. The
Employee represents and warrants to the Company that the execution and delivery
of this Agreement, and the Non-Disclosure and Non-Competition Agreement, do not,
and the performance by the Employee of his obligations hereunder shall not,
conflict with, result in the breach of any provisions of or the termination of,
or constitute a default under, any agreement, contract, or other obligation to
assign inventions or to keep information confidential, to which the Employee is
a party or by which the Employee was, is, or may be bound.
9. Termination. The
Employee’s employment hereunder may be terminated without breach of this
Agreement as follows:
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(a) Death;
Disability. The Employee’s employment hereunder shall
terminate upon his death or “Disability” (as
hereinafter defined). Upon any such termination, the Employee (or, in
the event of his death, his estate) (i) shall receive any accrued or vested
compensation, including salary, commission, bonus(es), through the “Date of Termination”
(as hereinafter defined), (ii) shall be reimbursed for unpaid and approved
business expenses (in accordance with the Company’s normal business expense
reimbursement procedures) through such Date of Termination. The
Employee (and in the event of his death, his estate) shall not be entitled to
any other amounts or benefits from the Company or otherwise, except payments
pursuant to any Company life insurance program / policy then in
effect. For purposes of this Agreement, “Disability” shall
mean the inability of the Employee to perform his duties on account of a
physical or mental illness for a period of sixty (60) consecutive days or ninety
(90) days in any six (6) month period. If, during the Term, the
Employee’s employment is terminated by reason of the Employee becoming Disabled,
the Company shall pay to the Employee (or his estate as applicable) any accrued
or vested compensation including salary, commission, bonus(es), through the Date
of Termination and the Employee (or his estate as applicable) shall be
reimbursed for unpaid and approved business expenses (in accordance with the
Company’s normal business expense reimbursement procedures) through such Date of
Termination. Notwithstanding anything contained herein to the
contrary, during any period of Disability, the Company shall not be obligated to
pay any compensation or other amounts to the Employee except as expressly
provided by the Programs then in effect. In addition, in the event of
the Employee’s death, the Company shall pay to the Employee’s estate his Base
Salary (at the rate in effect at the time of his death) for the greater of
(I) the six month period following the Employee’s death or (II) the
remainder of the Term of the Agreement, not to exceed one year.
(b) Cause; Resignation Without
Good Reason. The Company may terminate the Employee’s
employment hereunder for “Cause” (as
hereinafter defined) or the Employee may resign from his position with the
Company without “Good
Reason” (as hereinafter defined). For purposes of this
Agreement, the Company shall have “Cause” to terminate
the Employee’s employment hereunder (i) upon the Employee’s indictment or
conviction for the commission of an act or acts constituting a felony under the
laws of the United States or any State thereof, (ii) upon the Employee’s
commission of fraud, embezzlement or gross negligence, (iii) upon the Employee’s
willful or continued failure to perform an act permitted by the Company’s rules,
policies or procedures, including without limitation, the Company’s Code of Business Conduct
and Ethics that is within his material duties hereunder (other than by reason of
physical or mental illness or disability) or directives of the Board after
written notice has been delivered to the Employee by the Company, which notice
specifically identifies the manner in which the Employee has not substantially
performed his duties, and the Employee's failure to substantially perform his
duties is not cured within fifteen (15) business days after notice of such
failure has been given to the Employee; (iv) upon any misrepresentation by the
Employee of a material fact to or concealment by the Employee of a material fact
from the Board, the Chairman, the CEO and/or general counsel; or (v)
upon any material violation of the Company’s rules, policies or procedures,
including without limitation, the Company’s Code of Business Conduct
and Ethics. For purposes of this Section 7(b), no act or failure to
act on the Employee's part shall be deemed "willful" unless done or omitted to
be done, by the Employee not in good faith and without reasonable belief that
the Employee's act, or failure to act, was in the best interest of the
Company.
If the
Company terminates the Employee’s employment for Cause, or if the Employee shall
resign from the Company without Good Reason, the Employee shall not be entitled
to any severance payments, any unvested stock options, or other unvested equity
incentive awards shall terminate, and the Employee shall relinquish any and all
rights to any amounts payable and to any benefits otherwise provided for herein,
provided that the Employee shall (A) be entitled to receive accrued or vested
compensation, including salary, commission, and bonus(es), through the Date of
Termination, and (B) have the right to be reimbursed for unpaid and approved
business expenses (in accordance with the Company’s normal business expense
reimbursement procedures) through such Date of Termination.
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If the
Employee resigns from the Company without Good Reason, or if the Employee does
not intend to seek renewal of the Term, the Employee shall provide written
notice to the Company at least ninety (90) days prior to the actual Date of
Termination of the Employee’s employment, which ninety day notice period may be
waived by the Company in its sole discretion.
(c) Termination Without Cause;
Resignation for Good Reason. The Employee’s employment hereunder may also
be terminated by the Company at any time for any reason without Cause or by the
Employee for “Good
Reason”.
For
purposes of this Agreement, the Employee shall have “Good Reason” to
terminate his employment hereunder upon (i) the Company’s failure to perform its
material duties hereunder, which failure has not been cured by the Company
within fifteen (15) days of its receipt of written notice thereof from the
Employee; (ii) a reduction by the Company (without the consent of the Employee,
which consent may be revoked at any time) in the Employee’s Base Salary, or
substantial reduction in the other benefits provided to the Employee; (iii) the
assignment to the Employee of duties inconsistent with the Employee’s status as
a senior executive officer of the Company or a substantial adverse alteration in
the nature or status of the Employee’s responsibilities; (iv) a substantial
diminution of the Employee’s responsibilities as the CFO of the Company; (v) the
relocation of the Employee’s principle place of employment to a location more
than thirty-five (35) miles from any of its current New Jersey locations or
outside of the New York City metropolitan areas; (vi) removal of the Employee
from the office of Chief Financial Officer of the Company (without the consent
of the Employee); (vii) the assignment of duties inconsistent with the Company’s
rules, policies or procedures, including without limitation, the Company’s Code
of Business Conduct and Ethics; (viii) any purported termination of the
Employee’s employment not in accordance with the terms hereof; or (ix) any
“Change in Control” of the Company. For purposes of this Agreement, a
“Change in Control” shall mean and shall be deemed to
have occurred if (A) any person or group (within the meaning of Rule 13d-3 of
the rules and regulations promulgated under the Securities Exchange Act of 1934,
as amended), other than Xxxxxx Xxxxx, members of his immediate family, his
affiliates, trusts or private foundations established by or on his behalf, and
the heirs, executors or administrators of Xxxxxx Xxxxx, shall acquire in one or
a series of transactions, whether through sale of stock or merger, more than 50%
of the outstanding voting securities of the Company or any successor entity of
the Company, or (B) the stockholders of the Company shall approve a complete
liquidation or dissolution of the Company. The Employee's right to terminate the
Employee’s employment for Good Reason shall not be affected by the Employee's
incapacity due to physical or mental illness. The Employee's
continued employment shall not constitute consent to, or a waiver of rights,
with respect to any act or failure to act constituting Good Reason
hereunder. Notwithstanding the foregoing, a termination shall not be
treated as a resignation for Good Reason if the Employee shall have consented in
writing to the occurrence of the event giving rise to the claim of resignation
for Good Reason.
If the
Employee gives notice of his intent to terminate his employment with Good
Reason, the Employee shall first provide written notice to the Company, which
notice specifically identifies the event or circumstances giving rise to the
Good Reason for which the Employee is terminating his employment, within ninety
(90) days of when such event or circumstance giving rise to the Good Reason
becomes effective or transpires. The notice of Good Reason must give
the Company the opportunity to cure and if the Company fails to cure within
thirty (30) business days of its receipt of the notice, the Employee’s
resignation for Good Reason shall be deemed effective.
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If the
Company terminates the Employee’s employment without Cause or the Employee
terminates his employment for Good Reason, (1) the Company shall provide the
Employee with at least ninety (90) days notice (which time period may be
shortened by mutual agreement of the parties) of its intent to terminate this
Agreement without Cause; (2) the Company shall pay to the Employee all accrued
or vested compensation, including salary, commission, and bonus(es) through the
Date of Termination, (3) the Company shall reimburse the Employee for unpaid and
approved business expenses through such Date of Termination (in accordance with
the Company’s normal business expense reimbursement procedures), and (4) all
awards theretofore granted to the Employee under the Company’s incentive plans
shall immediately vest (and the restrictions thereon lapse) on the day
immediately prior to the Date of Termination, and (5) the Company shall pay to
the Employee a severance payment equal to the greater of (i) $600,000.00 (Six
Hundred Thousand Dollars) or (ii) his Base Salary (at the rate in effect on the
Date of Termination) for the remainder of the Term (the “Severance
Payment”). As a condition to receiving the Severance Payment,
the Employee will be required to execute and deliver the Company’s standard
release agreement (the “Release Agreement”).
Subject to Section 19 hereof, the Severance Payment will be paid in a lump sum
within five business days of the effective date of the Release Agreement
provided, however, that said effective date shall in no event be more than forty
five (45) days after termination of the Employee’s employment.
(d) Severance upon expiration of
the Term. Upon expiration of the Term, and in the event that
the Company does not offer to extend the Term, the Employee shall also be
entitled to receive (1) all accrued or vested compensation, including salary,
commission, and bonus(es) through the Date of Termination, (2) unpaid and
approved business expenses through such Date of Termination (in accordance with
the Company’s normal business expense reimbursement procedures), and (3) a
severance payment in the amount of $600,000, subject to his execution and
delivery of the Release Agreement. Subject to Section 19 hereof, the
severance payment in the amount of $600,000 will be paid in a lump sum within
five business days of the effective date of the Release Agreement provided,
however, that said effective date shall in no event be more than forty five (45)
days after termination of the Employee's employment. In addition, all
awards theretofore granted to the Employee under the Company’s incentive plans
shall immediately vest (and the restrictions thereon lapse) on the day
immediately prior to the Date of Termination.
(e) Notice of
Termination. Any termination of the Employee’s employment by the Company
(other than termination upon the death of the Employee) or by the Employee shall
be communicated by written Notice of Termination by such party to the other in
accordance with Section 10
hereof. For purposes of this Agreement, a “Notice of
Termination” shall mean a notice that shall indicate the specific
termination provision in this Agreement relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Employee’s employment under the provision so indicated (as
applicable).
(f) Date of Termination.
“Date Of
Termination” shall mean (i) if the Employee’s employment is terminated by
his death, the date of his death, (ii) the date of expiration of the Term if
either party elects not to renew the Term for an additional year or (iii) if the
Employee’s employment is terminated pursuant to any of the other terms set forth
above, the date specified in the Notice of Termination.
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10. Notices. For
the purposes of this Agreement, notices, demands and all other communications
provided for in this Agreement shall be in writing and shall be deemed to have
been duly given when delivered or (unless otherwise specified) mailed by United
States certified or registered mail, return receipt requested, postage prepaid,
or by an overnight courier (signature required), sent by facsimile (with
evidence of successful transmission) or by electronic mail (return receipt
requested) in each case addressed as follows:
If to the
Company:
IDT Corporation
000 Xxxxx Xxxxxx
Xxxxxx, Xxx Xxxxxx 00000
Attn: Chief Executive
Officer
with a
copy to:
IDT Corporation
000 Xxxxx Xxxxxx
Xxxxxx, Xxx Xxxxxx 00000
Attn: General
Counsel
If to the
Employee:
Xxxxxx
Xxxxxxx
00 Xxxx
Xxxxx Xxxx
Xxx
Xxxxx, XX 00000
or to
such other address, facsimile number or email address as either party may have
furnished to the other in accordance herewith, except that notices of change of
address shall be effective only upon receipt.
11. Miscellaneous. No
provision of this Agreement may be modified, waived or discharged unless such
waiver, modification or discharge is agreed to in writing signed by the Employee
and such officer of the Company as may be specifically designated by the
Board. No waiver by either party hereto at any time of any breach by
the other 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, which are not set forth expressly in this
Agreement. The validity, interpretation, construction and performance
of this Agreement shall be governed by the laws of the State of New Jersey
without regard to its conflicts of law principles. By executing this
Agreement, the Employee consents to the personal jurisdiction of all state and
federal courts and arbitration forums located in the State of New
Jersey. This Agreement shall be binding upon and inure to the benefit
of the Company, and its successors and assigns, and upon the
Employee. The obligations of the Employee shall not be assignable or
otherwise transferable.
12. Validity. The
invalidity or unenforceability of any provision or provisions 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.
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13. Counterparts. This
Agreement may be executed in one or more counterparts, each of which shall be
deemed to be an original but all of which together will constitute one and the
same instrument.
14. Entire Agreement.
Other than the
Company’s Non-Disclosure and Non-Competition Agreement referenced above, this Agreement sets
forth the entire agreement of the parties hereto in respect of the subject
matter contained herein and supersedes any and all other prior agreements,
promises, covenants, arrangements, communications, representations or
warranties, whether oral or written, by any officer, employee or representative
of any party hereof; and any prior agreement of the parties hereto in respect of
the subject matter contained herein is hereby terminated and
canceled.
15. Arbitration. Except
as set forth in Section 7 and Section 17, the Employee and the Company agree
that any claim, controversy or dispute between the Employee and the Company
(including, without limitation, its affiliates, officers, representative or
agents) arising out of or relating to this Agreement, the employment of the
Employee, the cessation of employment of the Employee, or any matter relating to
the foregoing shall be submitted to and settled by commercial arbitration in a
forum of the American Arbitration Association ("AAA") located in the
State of New Jersey and conducted in accordance with the National Rules for the
Resolution of Employment Disputes. In such arbitration: (i) the
arbitrator shall agree to treat all evidence and other information presented by
the parties to the same extent as Confidential Information under the
Non-Disclosure and Non-Competition Agreement must be held confidential by the
Employee, (ii) the arbitrator shall have no authority to amend or modify any of
the terms of this Agreement, and (iii) the arbitrator shall have ten business
days from the closing statements or submission of post-hearing briefs by the
parties to render his or her decision. Any arbitration award shall be
final and binding upon the parties, and any court, state or federal, having
jurisdiction may enter a judgment on the award. Each party shall bear
its/his own costs of participating in any arbitration proceedings or other
dispute proceedings. The foregoing requirement to arbitrate claims,
controversies, and disputes applies to all claims or demands by the Employee,
including, without limitation any rights or claims the Employee may have under
the Age Discrimination in Employment Act of 1967 (which prohibits age
discrimination in employment), Title VII of the Civil Rights Act of 1964 (which
prohibits discrimination in employment based on race, color, national origin,
religion, sex, or pregnancy), the Americans with Disabilities Act of 1991 (which
prohibits discrimination in employment against qualified persons with a
disability), the Equal Pay Act (which prohibits paying men and women unequal pay
for equal work), ERISA, the New Jersey Law Against Discrimination, the New
Jersey Conscientious Employee Protection Act (or other federal or state
whistleblower laws), or any other federal, state, or local laws or regulations
pertaining to the Employee’s employment or the termination of the Employee's
employment.
16. Choice of
Law. This Agreement shall be interpreted and enforced in
accordance with the laws of the State of New Jersey.
17. Remedies of the
Company. Notwithstanding the arbitration provisions of Section
15, upon any termination for Cause that may cause irreparable harm to the
Company or upon the violation of the Company’s Non-Disclosure and
Non-Competition Agreement, the Company shall be entitled, if it so elects, to
institute and prosecute proceedings to obtain injunctive relief and damages,
costs and expenses, including, without limitation, reasonable attorneys' fees
and expenses, with respect to such termination.
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18. Representations. The
Employee has been advised to obtain independent counsel to evaluate the terms,
conditions, and covenants set forth herein and he has been afforded ample
opportunity to obtain such independent advice and evaluation. The
Employee warrants to the Company that he has relied upon such independent
counsel and not upon any representation (legal or otherwise), statement, or
advice said or offered by the Company or the Company’s counsel in connection
herewith.
19. Section
409A. All provisions of this Agreement shall be construed and
interpreted in a manner consistent with the requirements for avoiding taxes or
penalties under Section 409A of the Internal Revenue Code (“Section
409A”). By way of example, and not limitation, it is the
intent of the parties that the Severance Payment be exempt from the application
of Section 409A pursuant to the “short-term deferral” rule
set forth in Section 1.409A-1(b)(4) of the Treasury
Regulations. Notwithstanding the above, if the Company determines that the
Severance Payment constitutes “nonqualified deferred compensation” within the
meaning of Section 409A, payment of such Severance Payment shall not commence
until the Employee incurs a “separation from service” within the meaning of
Treasury Regulation §1.409A−1(h) (“Separation from
Service”). If, at the time of Employee's Separation from Service, the
Employee is a “specified employee” (under Section 409A), such Severance Payment
shall not be paid until after the earlier of (i) the expiration of the six−month
period measured from the date of Employee’s Separation from Service with IDT, or
(ii) the date of the Employee's death (the “409A Suspension
Period”).
IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date and
year first written above.
IDT
Corporation
By: /s/ Xxxxx
Xxxxxxx
Name:
Xxxxx Xxxxxxx
Title:
CEO
EMPLOYEE:
/s/
Xxxxxx Xxxxxxx
Xxxxxx
Xxxxxxx
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