EXHIBIT 99.1
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT is made as of October 19, 2004 (this
"Agreement"), between Net2Phone, Inc., a Delaware corporation (the "Company")
and Liore Alroy (the "Executive").
W I T N E S S E T H:
WHEREAS, the Company wishes to assure itself of the services of the
Executive, and the Executive and the Company are willing to enter into an
agreement to that end upon the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the promises, agreements and
undertakings of the parties made herein, the receipt and sufficiency of which
are hereby acknowledged, the parties hereby covenant and agree as follows:
1. EMPLOYMENT
The Company hereby agrees to employ the Executive, and the Executive
hereby agrees to accept employment with the Company, on and subject to the terms
and conditions of this Agreement.
2. TERM
Unless earlier terminated pursuant to Section 5 hereof, the period
of this Agreement and the Executive's continued employment hereunder (the
"Agreement Term") shall commence as of October 31, 2004 (the "Effective Date")
and shall expire on the third anniversary of the Effective Date; provided,
however, that the Agreement Term shall be automatically extended for an
additional year on the third anniversary of the Effective Date and on each
anniversary of the Effective Date thereafter (each an "Extension Date"), unless
written notice of non-extension is provided by either party to the other party
at least ninety (90) days prior to such anniversary.
3. POSITION, AUTHORITY AND RESPONSIBILITIES
(a) The Executive shall serve as, and with the title, office and authority
of, Chief Executive Officer ("CEO") of the Company and shall report directly to
the Board of Directors of the Company (the "Board").
(b) The Executive shall have all of the powers, authority, duties and
responsibilities usually incident to the position cited above and such duties
consistent with such position as may be assigned from time to time by the Board.
(c) The Executive agrees to devote substantially all of his business time,
efforts and skills to the performance of his duties and responsibilities under
this Agreement; provided, however, that nothing in this Agreement shall preclude
the Executive from (i) serving on corporate, civic or charitable boards or
committees, (ii) delivering lectures, fulfilling speaking engagements or
teaching at educational institutions, and/or (iii) managing his personal
investments.
(d) The Executive shall perform his duties at the principal offices of the
Company located in Newark, New Jersey or at any other location at which the
Company has an office, but from time to time the Executive may be required to
travel to other locations in the proper conduct of his responsibilities under
this Agreement.
(e) With respect to all regular elections of directors during the
Agreement Term, the Company shall use good faith efforts to nominate and elect
Executive to serve as a member of the Board. Upon termination of the Agreement
Term, Executive shall resign as an officer, director, or any other capacity, of
the Company and its subsidiaries, as requested by the Company.
4. COMPENSATION
In consideration of the services rendered by the Executive during
the Agreement Term, the Company shall pay or provide the Executive the amounts
and benefits set forth below.
(a) Salary. The Company shall pay the Executive an annual base
salary (the "Base Salary") of two hundred fifty thousand ($250,000) dollars. The
Executive's Base Salary shall be paid in arrears in substantially equal
installments at monthly or more frequent intervals, in accordance with the
normal payroll practices of the Company. The Executive's Base Salary shall
remain fixed for the initial three (3) year Agreement Term, and thereafter shall
be reviewed at least annually by the Board for consideration of appropriate
merit increases and, once established, the Base Salary shall not be decreased
during the Agreement Term.
(b) Annual Bonus. The Company shall provide the Executive with an
annual bonus (the "Annual Bonus") in an amount that is guaranteed to be no less
than one hundred (100%) percent of the Base Salary payable for each fiscal year
during the Agreement Term (the "Guaranteed Annual Bonus"), beginning with the
Company's fiscal year 2005 ending July 31, 2005. The Guaranteed Annual Bonus for
each fiscal year of the Agreement Term shall be prorated for any partial fiscal
year and shall be paid in cash to the Executive no later than the last day of
such fiscal year and any additional discretionary portion of the Annual Bonus
shall be paid to Executive no later than 90 days following the last day of such
fiscal year. The Guaranteed Annual Bonus for fiscal year 2005 shall be prorated
from the Effective Date to July 31, 2005.
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(c) Equity Incentives.
(i) As of the date hereof, the Executive shall be granted
800,000 stock options ("Options") under the Company's 1999 Amended and
Restated Stock Option and Incentive Plan, as amended (the "Plan"),
pursuant to the stock option agreement annexed hereto as Exhibit A.
(ii) As of the date hereof, the Executive shall be granted
800,000 shares of restricted common stock (the "Restricted Stock") under
the Plan, pursuant to the restricted stock award agreement annexed hereto
as Exhibit B.
(d) Employee Benefits. The Executive shall be entitled to
participate in all employee benefit plans, programs, practices or other
arrangements of the Company in which any other senior executive of the Company
is eligible to participate from time to time, including, without limitation, any
qualified or non-qualified pension, profit sharing and savings plans, any death
benefit and disability benefit plans, and any medical, dental, health and
welfare plans, except to the extent that a separate arrangement is implemented
for the Executive on terms no less favorable than as provided to the other
senior executives agreed to by the Executive that is intended to replace any
such general arrangement. Without limiting the generality of the foregoing, at
the Company's expense, (i) the Company shall continue to provide the Executive
with life insurance coverage with a death benefit that is not less than the
amount as is in effect as of the Effective Date and (ii) the Company shall
provide the executive with disability insurance coverage consistent with the
disability insurance coverage provided to senior executives of other companies
in the same industry as the Company.
(e) Fringe Benefits and Perquisites. The Executive shall be entitled
to all fringe benefits and perquisites that are generally made available to
senior executives of the Company from time to time on the same basis as is made
available to such other executives. Without limiting the generality of the
foregoing, the Company shall provide the Executive with the following:
(i) executive offices and support staff appropriate to the
Executive's position;
(ii) prompt reimbursement of all reasonable travel and other
business expenses and disbursements incurred by the Executive in the performance
of his duties under this Agreement in accordance with the Company's normal
practices and procedures, including professional association dues upon proper
accounting therefor;
(iii) paid vacation during each calendar year, to be taken in an
amount equal to and in accordance with the Company's vacation policy for senior
executives;
(iv) an automobile allowance consistent with the automobile
allowance policy for the Company's senior executive officers;
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(v) a relocation allowance of $10,000 to relocate Executive's family
to the United States, at such time as may be determined by the Executive;
(vi) such other fringe benefits as the Executive and the Board may
mutually agree from time to time.
5. TERMINATION OF EMPLOYMENT
The Agreement Term and the Executive's employment hereunder shall be
terminated upon the happening of any of the following events:
(a) Termination for Cause. The Company may terminate the Agreement
Term and the Executive's employment hereunder for Cause. For purposes of this
Agreement, "Cause" shall mean:
(i) conviction of the Executive, by a court of competent
jurisdiction, of, or Executive's plea of guilty or nolo contendere to, a
felony under the laws of the United States or any state thereof;
(ii) misappropriation by the Executive of the Company's funds; or
(iii) the commission by the Executive of an act of proven fraud with
respect to the Company.
Notwithstanding the foregoing, in no event shall the Company be considered
to have terminated the Executive's employment for "Cause" unless and until (i)
the Executive receives written notice from the Board identifying in reasonable
detail the acts or omissions constituting such "Cause" and the provision of this
Agreement relied upon by the Company for such termination and (ii) such acts or
omissions are not cured by the Executive within thirty (30) days of the
Executive's receipt of such notice.
(b) Termination other than for Cause. The Board shall have the right
to terminate the Agreement Term and the Executive's employment hereunder for any
reason at any time, including for any reason that does not constitute Cause,
subject to the consequ4ences of such termination as set forth in this Agreement.
(c) Resignation for Good Reason. The Executive may voluntarily
terminate the Agreement Term and his employment hereunder for Good Reason. For
purposes of this Agreement, "Good Reason" shall mean:
(i) any action by the Company that results in a diminution of the
Executive's authority or responsibilities;
(ii) any adverse modification of the Executive's positions, titles
or reporting relationships;
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(iii) any failure by the Company to comply with the compensation and
benefits provisions of Section 4 hereof or any other material breach of
this Agreement by the Company;
(iv) the relocation, without the Executive's written consent, of the
Executive's principal office from Newark, New Jersey; or
(v) any failure by the Company to obtain an assumption of this
Agreement by a successor corporation as required under Section 11(a)
hereof.
In no event shall the Executive be considered to have terminated his
employment for "Good Reason" unless and until (i) the Company receives written
notice from the Executive identifying in reasonable detail the acts or omissions
constituting such "Good Reason" and the provision of this Agreement relied upon
by the Executive for such termination, and (ii) such acts or omissions are not
cured by the Company within thirty (30) days of the Company's receipt of such
notice.
(d) Resignation other than for Good Reason. The Executive may
voluntarily terminate the Agreement Term and his employment hereunder at any
time for any reason, including for any reason that does not constitute Good
Reason by giving the Company 30-days advance written notice of such termination.
(e) Disability. The Company may terminate the Agreement Term and the
Executive's employment hereunder upon the Executive's Disability. For purposes
of this Agreement, "Disability" shall mean the inability of the Executive to
perform his duties to the Company on account of physical or mental illness for a
period of six (6) consecutive full months, or for a period of nine (9) full
months during any 18-month period. The Executive's employment shall terminate in
such case on the last day of the applicable period following written notice by
the Company of the election to terminate the Executive's employment due to the
Executive's Disability. Notwithstanding the foregoing, in no event shall the
Executive be terminated by reason of Disability unless the Executive is eligible
to begin receiving long-term disability benefits from a Company-sponsored
long-term disability plan.
(f) Death. The Agreement Term and the Executive's employment
hereunder shall terminate upon his death.
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6. COMPENSATION UPON TERMINATION OF EMPLOYMENT
Notwithstanding any provision of this Agreement to the contrary, in
the event the Agreement Term and the Executive's employment by the Company is
terminated, the Executive shall be entitled to the compensation and severance
benefits set forth below:
(a) Resignation for Good Reason; Termination without Cause. In the
event the Agreement Term and the Executive's employment hereunder is terminated
by the Executive for Good Reason or by the Company for any reason other than for
Cause, Disability or Death, the Company shall pay to the Executive and provide
him with the following:
(i) Severance Payment. The Company shall continue to pay the
Executive his then current Base Salary, in accordance with the Company's general
payroll practice, for the two (2) years following such termination. In addition,
on each of the next two (2) anniversaries of the date of the Executive's
termination, the Executive shall be entitled to receive an annual bonus in an
amount equal to the Executive's then-current Guaranteed Annual Bonus (payable in
cash), plus an amount on each anniversary equal to any discretionary Annual
Bonus the Executive would have earned under the Company's bonus plan in place
immediately prior to the Executive's termination.
(ii) Accrued Rights. The Company shall pay the Executive a lump-sum
cash amount, within ten (10) days of the date of termination, equal to the sum
of (A) his earned but unpaid Base Salary through the date of termination, (B)
any earned but unpaid Annual Bonus for any completed fiscal year, (C) any
unreimbursed business expenses or other amounts due to the Executive from the
Company as of the date of termination, and (D) any accrued, unused vacation
days. In addition, the Company shall provide to the Executive all payments,
rights and benefits due as of the date of termination under the terms of the
Company's compensation or benefit plans, programs or awards (together with the
lump-sum payment, the "Accrued Rights").
(iii) Bonus Rights. The Company shall pay the Executive, within ten
(10) days of the date of termination, a lump-sum cash amount equal to a pro rata
portion of the Annual Bonus for any partial fiscal year of service through the
date of termination (the "Bonus Rights").
(iv) Continued Benefits. Subject to Section 8 hereof, for a two-year
period following the date of termination, the Company shall continue to provide
the Executive and his eligible dependents, at its sole cost, with the medical,
dental, disability and life insurance coverages ("Welfare Benefits") that were
provided to the Executive immediately prior to termination of employment.
(v) Equity Incentives. Notwithstanding the provisions of any stock
incentive plan or award agreement between the Company and the Executive to the
contrary, (i) 100% of the Executive's options to purchase Company stock, stock
appreciation rights ("SARs"), Restricted Stock or other equity incentives which
are not fully vested and exercisable as of the date of termination shall become
fully vested and exercisable and (ii) the period during which options and SARs
shall remain exercisable shall be extended until the second anniversary of the
date of termination. All such award agreements shall be amended by the Company
and the Executive to reflect the foregoing provision.
(vi) Life and Disability Insurance. The Company shall fully fund the
life insurance and disability policies described in Section 4(d) hereof.
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(vii) Car Allowance. Until the second anniversary of the date of
termination, the Company shall continue to provide the Executive with the
automobile allowance described in Section 4(e)(iv) hereof.
(b) Resignation without Good Reason; Termination for Cause. In the
event the Executive voluntarily terminates the Agreement Term and his employment
hereunder other than for Good Reason, or in the event the Agreement Term and the
Executive's employment hereunder is terminated by the Company for Cause, the
Company shall pay and provide to the Executive all Accrued Rights and Bonus
Rights and the Executive shall retain any rights that he has pursuant to any
equity incentive agreement with the Company in accordance with the terms
thereof.
(c) Disability; Death. In the event the Agreement Term and the
Executive's employment hereunder is terminated by reason of the Executive's
Disability or Death, the Company shall pay the Executive (or his legal
representative) and provide him with the following:
(i) Severance Payment. The Company shall continue to pay the
Executive his then current Base Salary, in accordance with the Company's general
payroll practices, for the one-year period following the date of such
termination. In addition, on the first anniversary of the date of the
Executive's termination, the Executive shall be entitled to receive an annual
bonus in an amount equal to the Executive's then-current Guaranteed Annual Bonus
(payable in cash), plus an amount equal to any discretionary Annual Bonus the
Executive would have earned under the Company's bonus plan in place immediately
prior to the Executive's termination.
(ii) Accrued Rights. The Company shall pay the Executive a lump-sum
cash amount, within ten (10) days of the date of termination, equal to the
Accrued Rights.
(iii) Bonus Rights. The Company shall pay the Executive, within ten
(10) days of the date of termination, a lump-sum cash amount equal to the Bonus
Rights.
(iv) Continued Benefits. Subject to Section 9 hereof, for a one-year
period following the date of termination, the Company shall continue to provide
the Executive and his eligible dependents, at its sole cost, with the Welfare
Benefits that were provided to the Executive immediately prior to termination of
employment.
(v) Equity Incentives. Notwithstanding the provisions of any stock
incentive plan or award agreement between the Company and the Executive to the
contrary, (A) 100% of the Executive's options to purchase Company stock, SARs,
Restricted Stock or other equity incentives which are not fully vested and
exercisable as of the date of termination shall become fully vested and
exercisable and (B) the period during which such options and SARs shall be
exercisable shall be extended until the first anniversary of the date of
termination. All such award agreements shall be amended by the Company and the
Executive to reflect the foregoing provision.
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7. INDEMNIFICATION
The Company agrees to provide to the Executive all rights of
indemnification and all director's and officer's insurance coverage to the
fullest extent permitted by law and by its Certificate of Incorporation and
By-laws.
8. NO MITIGATION OR OFFSET
The Executive shall not be required to seek other employment or to
reduce any severance benefit payable to him under Section 6 hereof, and no such
severance benefit shall be reduced on account of any compensation received by
the Executive from other employment; provided, however, to the extent that the
Executive becomes eligible to receive welfare benefits pursuant to employee
benefit plans of a new employer that are comparable to the Welfare Benefits that
the Company is obligated to provide to the Executive pursuant to Section
6(a)(iv), the Company's obligation to provide such Welfare Benefits shall cease.
The Company's obligations to the Executive under this Agreement, including,
without limitation, any obligation to provide severance benefits, shall not be
subject to set-off or counterclaim in respect of any debts or liabilities of the
Executive to the Company.
9. TAX WITHHOLDING AND PAYMENT
(a) Withholding and Payment. All compensation payable pursuant to
this Agreement shall be subject to reduction by all applicable withholding,
social security and other federal, state and local taxes and deductions for
income, employment, excise and other taxes. Any lump-sum payments provided for
in Section 6 hereof shall be made in a cash payment, net of any required tax
withholding, no later than ten (10) business days following the Executive's date
of termination. Any payment required to be made to the Executive under this
Agreement that is not made in a timely manner shall bear interest at an interest
rate equal to 120% of the monthly compounded applicable federal rate as in
effect under Section 1274(d) of the Internal Revenue Code of 1986, as amended.
10. RESTRICTIVE COVENANTS
(a) Confidential Information. During the Agreement Term and at all
times thereafter, the Executive agrees that he will not divulge to anyone (other
than the Company or any persons employed or designated by the Company) any
knowledge or information of a confidential or proprietary nature relating to the
business of the Company 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 the Executive further agrees not to disclose, publish or make
use of any such knowledge or information without the consent of the Company.
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(b) Noncompetition. The Executive acknowledges that (i) the Company
is currently engaged in the business of providing high quality, low-cost
telephone calls over the Internet ("Internet Telephony"), (ii) his work for the
company will give him access to trade secrets of and confidential information
concerning the Company, and (iii) the agreements and covenants contained in this
Agreement are essential to protect the business and goodwill of the Company.
Accordingly, the Executive covenants and agrees that during the Restricted
Period (defined below), the Executive shall not, without the prior written
consent of the Company, (1) engage or participate in the business of developing,
managing or operating any Internet Telephony business (a "Competitive Business")
on his own behalf or on behalf of any person or entity, and the Executive shall
not acquire a financial interest in any Competitive Business (except for
publicly traded equity interests that do not exceed five percent (5%) of such
class of equity) or (2) directly or indirectly solicit or encourage any employee
of the Company or any of its affiliates to leave the employment of the Company
or any of its affiliates. For purposes hereof, the "Restricted Period" shall be
the Agreement Term (as may be terminated pursuant to Section 6 hereof) and,
except in the event of a termination described in Section 6(a) hereof, the
12-month period following any termination of the Executive's employment
hereunder. The advisory services referred to in paragraph 3 (c) (iv) above shall
not constitute a violation of this paragraph 10(b).
(c) Enforcement. The Executive acknowledges and agrees that the
Company will have no adequate remedy at law, and could be irreparably harmed, if
the Executive breaches or threatens to breach any of the provisions of Section
10 of this Agreement. The Executive agrees that the Company shall be entitled to
equitable and/or injunctive relief to prevent any breach or threatened breach of
this Section 10, and to specific performance of each of the terms of this
Section in addition to any other legal or equitable remedies that the Company
may have. The Executive further agrees that he shall not, in any equity
proceeding relating to the enforcement of the terms of this Section 10, raise
the defense that the Company has an adequate remedy at law.
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11. SUCCESSORS AND ASSIGNS
(a) This Agreement shall be binding upon and shall inure to the
benefit of the Company, its successors and any person or other entity that
succeeds to all or substantially all of the business, assets or property of the
Company. To the extent not otherwise provided by application of law, the Company
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 the Company, to expressly assume and agree to
perform the obligations of the Company under this Agreement in the same manner
and to the same extent that the Company is required to perform hereunder. As
used in this Agreement, the "Company" shall mean the Company as hereinbefore
defined and any successor to its business, assets or property as aforesaid which
executes and delivers an agreement provided for in this Section 11(a) or which
otherwise becomes bound by all the terms and provisions of this Agreement by
operation of law. Except as provided by the foregoing provisions of this Section
11(a), this Agreement shall not be assignable by the Company without the prior
written consent of the Executive. In the event that this Agreement is assigned
to any person or entity as may be permitted hereunder, the Company shall be
secondarily liable in the event that any such person or entity shall fail to
satisfy its obligations under Section 6 or 7 hereof.
(b) This Agreement and all rights of the Executive hereunder shall
inure to the benefit of and be enforceable by the Executive's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If the Executive should die while any amounts are due and
payable to the Executive hereunder, all such amounts, unless otherwise provided
herein, shall be paid to the Executive's designated beneficiary or, if there is
no such designated beneficiary, to the legal representatives of the Executive's
estate. This Agreement is personal in nature and the obligations of the
Executive hereunder are not be assignable to any person.
12. ENTIRE AGREEMENT/AMENDMENT
This Agreement contains the entire understanding of the parties with
respect to the subject matter hereof and, except as specifically provided
herein, cancels and supersedes any and all other agreements between the parties
with respect to the subject matter hereof. Any amendment or modification of this
Agreement shall not be binding unless in writing and signed by the parties
hereto.
13. SEVERABILITY/NO WAIVER
(a) In the event that any provision of this Agreement is determined
to be invalid or unenforceable, the remaining terms and conditions of this
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 Agreement.
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(b) The failure of a party to insist upon strict adherence to any
term of this 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 Agreement.
14. NOTICES
All notices which may be necessary or proper for either the Company
or the Executive 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
air courier, to the Executive at:
Liore Alroy
c/o Net2Phone, Inc.
000 Xxxxx Xxxxxx
Xxxxxx, Xxx Xxxxxx 00000
and shall be sent in the manner described above to the General Counsel of the
Company at the Company's principal executives offices at:
Net2Phone, Inc.
000 Xxxxx Xxxxxx
Xxxxxx, Xxx Xxxxxx 00000
Attn: General Counsel
and shall be deemed given when dispatched, provided that any notice required
under Section 5 hereof or notice given pursuant to Section 2 hereof shall be
deemed given only when received. Any party may by like notice to the other party
change the address at which he or they are to receive notices hereunder.
15. GOVERNING LAW
This 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.
16. ARBITRATION
Except for any action brought under Section 10 which may be brought
by the Company directly in any court of competent jurisdiction, any controversy
or claim arising out of, or related to, this Agreement, or the breach thereof,
shall be settled by binding arbitration in the City of Newark, New Jersey in
accordance with the rules then obtaining of the American Arbitration
Association, and the arbitrator's decision shall be binding and final, and
judgment upon the award rendered may be entered in any court having jurisdiction
thereof.
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17. LEGAL FEES AND EXPENSES
The Company shall pay the legal fees and expenses incurred by the
Executive in connection with the negotiation of this Agreement. To provide the
Executive with reasonable assurance that the purposes of this Agreement will not
be frustrated by the cost of its enforcement, the Company shall pay and be
solely responsible for any attorneys' fees and expenses and any court or
arbitration costs incurred by the Executive as a result of a claim that the
Company has breached or otherwise failed to perform this Agreement or any
provision hereof regardless of which party, if any, prevails in the contest.
18. COUNTERPARTS
This 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.
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IN WITNESS WHEREOF, the Company and the Executive have executed this
Agreement as of the date first written above.
EXECUTIVE
/s/ Liore Alroy
-----------------
Liore Alroy
NET2PHONE, INC.
By: /s/ Xxxxxxx X. Xxxxxxxxx
------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: Chief Executive Officer
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EXHIBIT A
NET2PHONE, INC.
STOCK OPTION AGREEMENT
This STOCK OPTION AGREEMENT is made as of October 19, 2004, by and between
Net2Phone, Inc., a Delaware corporation (the "Company"), and Liore Alroy (the
"Employee").
WHEREAS, the Company has adopted the Net2Phone, Inc. 1999 Stock Option and
Incentive Plan (the "Plan") and
WHEREAS, the company desires to grant to the Employee options under the
Plan to acquire shares of common stock of the Company (the "Stock"), on the
terms set forth herein and in the Plan.
NOW, THEREFORE, the parties hereby agree as follows:
19. Definitions. Capitalized terms not otherwise defined herein shall have
the meanings set forth in the Plan.
20. Grant of Options. The Employee is hereby granted Incentive Stock
Options (the "Options") to purchase an aggregate of 800,000 shares of Stock,
pursuant to the terms of this Agreement and the provisions of the Plan.
21. Term. The term of the Options (the "Option Term") shall be for ten
(10) years from the date of this Agreement.
22. Option Price. The initial exercise price per share of the Options
shall be $3.45, subject to adjustment as provided in the Plan.
23. Conditions to Exercisability. (a) Unless the Options otherwise become
vested or exercisable under subsection (b) or (c) of this Section 5, the Options
shall become vested and exercisable as follows: 1/3 on each of the following
dates - October 31, 2005, October 31, 2006, and October 31, 2007, if the
Employee continues to be the in the employ of the Company pursuant to the
employment agreement by and between the Employee and the Company, dated as of
October 19, 2004 ("Employment Agreement").
(b) The Options shall become fully vested and exercisable upon either (i) the
occurrence of a Corporate Transaction (and remain exercisable thereafter), or
(ii) an action by the Committee, in its sole discretion, accelerating such
vesting.
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(c) The Options shall also become fully vested and exercisable (and remain
exercisable) under the conditions described in the Employment Agreement. The
terms and conditions set forth in the Plan and in the Employment Agreement,
including, without limitation, the provisions relating to the termination of
Employee's employment or other relationship with the Company, are hereby
incorporated by reference into this Agreement.
24. Withholding Taxes. No later than the date of any Tax Event, the
Company shall satisfy any federal, state or local taxes of any kind required by
law to be withheld by withholding shares of Common Stock otherwise deliverable
upon exercise of the Option, for the minimum number of shares of Common Stock
that are necessary to satisfy such withholding, and not by withholding against
cash or in kind compensation otherwise payable to Employee.
25. Entire Agreement. This Agreement, the Employment Agreement and the
Plan contain all of the understandings between the parties hereto pertaining to
the matters referred to herein, and supersede all undertakings and agreements,
whether oral or in writing, previously entered into by them with respect
thereto. The Employee represents that, in executing this Agreement, he or she
does not rely and has not relied upon any representation or statement not set
forth herein made by the Company with regard to the subject matter of this
Agreement or otherwise.
26. Amendment or Modification, Waiver. No provision of this Agreement may
be amended or waived unless such amendment or waiver is agreed to in writing,
signed by the Employee and by a duly authorized officer of the Company. No
waiver by any party hereto of any breach by another party hereto of any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of a similar of dissimilar condition or provision at
the same time, any prior time or any subsequent time.
27. Notices. Each notice relating to this Agreement shall be in writing
and delivered in person or by certified mail to the proper address. All notices
to the Company shall be addressed to it at:
Net2Phone, Inc.
000 Xxxxx Xxxxxx, 0xx Xxxxx
Xxxxxx, Xxx Xxxxxx 00000
Attn: Human Resources
All notices to the Employee or other person or persons then entitled to exercise
the Options shall be addressed to the Employee or such other person or persons
at:
Liore Alroy
c/o Net2Phone, Inc
000 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Anyone to whom a notice may be given under this Agreement may designate a new
address by notice to such effect.
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28. Severability. If any provision of this Agreement or the application of
any such provision to any party or circumstances shall be determined by any
court of competent jurisdiction to be invalid and unenforceable to any extent,
the remainder of this Agreement or the application of such provision to such
person or circumstances other than those to which it is so determined to be
invalid and unenforceable, shall not be affected thereby, and each provision
hereof shall be validated and shall be enforced to the fullest extent permitted
by law.
29. Governing Law. This Agreement shall be construed and governed in
accordance with the laws of the state of Delaware, without regard to principles
of conflicts of laws.
30. Headings. All descriptive headings of sections and paragraphs in this
Agreement are intended solely for convenience, and no provision of this
Agreement is to be construed by reference to the heading of any section or
paragraph.
31. Construction. This Agreement is made under and subject to the
provisions of the Plan, and all of the provisions of the Plan are hereby
incorporated herein as provisions of this Agreement. If there is a conflict
between the provisions of this Agreement and the provisions of the Plan, the
provisions of the Agreement shall govern. If there is a conflict between the
provisions of the Plan, this Agreement and the provisions of the Employment
Agreement, then the provisions of the Employment Agreement shall govern. By
signing this Agreement, the Employee confirms that he has received a copy of the
Plan and has had an opportunity to review the contents thereof.
32. Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed to be an original but both of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by an
authorized officer and the Employee has hereunto set his hand all as of the date
first above written.
NET2PHONE, INC.
By:
---------------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: Vice Chairman
Employee:
Name:
-------------------------------------
Telephone:
--------------------------------
16
EXHIBIT B
NET2PHONE, INC.
RESTRICTED STOCK PROGRAM
RESTRICTED STOCK AWARD AGREEMENT
This Restricted Stock Award Agreement (the "Agreement") is made as
of October 19, 2004 ("Date of Award"), between Net2Phone, Inc., a Delaware
corporation (the "Company"), and Liore Alroy (the "Grantee").
WHEREAS, the Company desires to award the Grantee a restricted stock
award with respect to shares of the Company's common stock, par value $.01 per
share (the "Common Stock"), as hereinafter provided, in accordance with the 1999
Amended and Restated Stock Option and Incentive Plan (the "Plan");
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
set forth and for other good and valuable consideration, the parties hereto have
agreed, and do hereby agree, as follows:
1. Grant. A restricted stock award ("Award") of 800,000 shares
("Award Shares") of Common Stock is hereby granted by the Company to the Grantee
subject to the following terms and conditions and to the provisions of the Plan,
the terms of which are incorporated by reference herein.
2. Transfer Restrictions. Subject to Section 3 below, none of the
Award Shares shall be sold, assigned, transferred, pledged, hypothecated or
otherwise disposed of by the Grantee except by will or the laws of descent and
distribution.
3. Release of Restrictions. (a) Unless the restrictions set forth in
Section 2 above otherwise lapse under subsection (b) or (c) of this Section 3,
such restrictions with respect to 1/3 of the Award Shares which are the subject
of the Award shall lapse on each of the following dates: October 31, 2005,
October 31, 2006, and October 31, 2007, if the Grantee continues to be the in
the employ of the Company pursuant to the employment agreement by and between
the Grantee and the Company, dated as of October 19, 2004 ("Employment
Agreement").
(b) The restrictions set forth in Section 2 above, to the extent they have not
lapsed in accordance with subsection (a) of this Section 3, shall lapse upon
either (i) the occurrence of a Corporate Transaction, or (ii) an action by the
Committee, in its sole discretion, terminating such restrictions.
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(c) The restrictions set forth in Section 2 above shall also lapse under the
conditions described in the Employment Agreement. The terms and conditions set
forth in the Plan and in the Employment Agreement, including, without
limitation, the provisions relating to the termination of Grantee's employment
or other relationship with the Company, are hereby incorporated by reference
into this Agreement.
4. Forfeiture. The Award Shares shall be forfeited to the Company
upon the Grantee's termination of employment with the Company prior to the date
the restrictions lapse as provided in Section 3 above.
5. Adjustment of Shares. Notwithstanding anything contained herein
to the contrary, in the event of any change in the outstanding Common Stock
resulting from a subdivision or consolidation of shares, whether through
reorganization, recapitalization, share split, reverse share split, share
distribution or combination of shares or the payment of a share dividend, the
Award Shares shall be treated in the same manner in any such transaction as
other Common Stock. Any Common Stock or other securities received by the Grantee
with respect to the Award Shares in any such transaction shall be subject to the
restrictions and conditions set forth herein.
6. Rights as Stockholder. The Grantee shall be entitled to all of
the rights of a stockholder with respect to the Award Shares including the right
to vote such shares and to receive dividends and other distributions payable
with respect to such shares since the Date of Award.
7. Custody of Share Certificates. Certificates for the Award Shares
shall be issued in the Grantee's name and shall be held in the custody of the
Company until the restrictions with respect thereto lapse or such shares are
forfeited as provided herein; provided, however, that the terms of such custody
shall make allowance for the transaction contempalted by Section 5 above. A
certificate or certificates representing the Award Shares as to which
restrictions have lapsed shall be delivered to the Grantee upon such lapse or
delivered electronically into Grantee's brokerage account.
8. Government Regulations. Notwithstanding anything contained herein
to the contrary, the Company's obligation to issue or deliver certificates
evidencing the Award Shares shall be subject to the terms of the Plan, all
applicable laws, rules and regulations and to such approvals by any governmental
agencies or national securities exchanges as may be required.
9. Withholding Taxes. Upon the lapse of restrictions set forth in
Section 2 above, the Company shall satisfy all federal, state and local tax
withholding requirements by withholding the minimum number of Award Shares that
are necessary to satisfy such withholding, and not by withholding against cash
or in kind compensation otherwise payable to Grantee.
10. No Right to Continue Employment. Nothing contained in this
Agreement shall be construed as giving Grantee the right to be employed or to
continued to be employed by the Company or a subsidiary of the Company and the
Company and its Subsidiaries reserve the right to terminate Grantee's employment
at any time.
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11. Governing Law. This Agreement shall be construed under the laws
of the State of Delaware, without regard to choice of law principles.
12. Other Agreements. This Agreement, the Employment Agreement and
the Plan constitute the entire understanding between Grantee and the Company
relatng to the Award and any prior agreements, commitments, understandings
and/or negatiations concerning this Award are hereby superseded. Except as
provided by the Plan, this Agreement may only be amended by written agreement
between the Grantee and the Company.
IN WITNESS WHEREOF, the Company has caused this Award to be granted
on the date first above written.
Accepted: Net2Phone, Inc.
By: Xxxxxxx Xxxxxxxxx
Name:
------------------------ -------------------------------
Liore Alroy Title:
------------------------------
19
