Document:

f8k102811ex10i_idt.htm

Exhibit 10.1

 

SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT

 

This SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “Agreement”), dated as of October 28, 2011, is by and between IDT Corporation, a Delaware corporation (the “Company”), and Howard S. Jonas (the “Executive”).

 

WHEREAS, in recognition of the Executive’s experience and abilities, the Company desires to assure itself of the continued employment of the Executive in accordance with the terms and conditions provided herein;

 

WHEREAS, the Executive wishes to continue to perform services for the Company in accordance with the terms and conditions provided herein;

 

WHEREAS, the Company and the Executive are parties to that certain Amended and Restated Employment Agreement, dated as of October 31, 2008 (the “Prior Agreement”); and

 

WHEREAS, the parties desire to further amend and restate the Prior Agreement as follows:

 

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’ Prior Agreement.  The Company hereby agrees to continue to employ the Executive, and the Executive hereby agrees to continue to be employed by and perform services for the Company, on the terms and conditions set forth herein.

 

For all purposes related to the period beginning on and following the date hereof, except as expressly provided herein, the Prior Agreement shall be of no further force or effect and the terms hereof shall govern the employment relationship between the Company and the Executive and the other matters covered hereby.

 

2.    Term.  This Agreement is for the period (the “Term”) commencing on the date hereof, and terminating on December 31, 2013,  or upon the Executive’s earlier death or other termination of employment pursuant to Section 7 hereof; provided, however, that commencing on December 31, 2013 and each anniversary thereafter, the Term shall automatically be extended for one additional year beyond its otherwise scheduled expiration unless, not later than ninety (90) days prior to any such anniversary, either party hereto shall have notified the other party in writing that such extension shall not take effect.

 

3.    Position.  During the Term, the Executive shall serve as the Chairman of the Board of Directors and Chief Executive Officer of the Company.

 

4.    Duties and Reporting Relationship.  During the Term, the Executive shall use his skills and render services to the best of his abilities on behalf of the Company.  The Executive shall dedicate as much time (up to his full business time) as is, in the judgment of the Board of Directors of the Company (the “Board”), necessary or advisable for the performance his duties hereunder.  The Executive shall report directly to the Board.  Notwithstanding the foregoing, the Company acknowledges that the Executive will be serving as the Chairman of the Board of CTM Media Holdings, Inc. and Genie Energy Ltd., as well as in certain other positions with business and not-for-profit entities, and that, for so long as the Executive performs his duties hereunder, such service shall not be deemed to be a breach of the terms hereof.

 

  

 

  

 

5.    Place of Performance.  The Executive shall perform his duties and conduct his business at the offices of the Company, currently located in Newark, New Jersey, except for required travel on the Company’s business.

 

6.    Compensation and Related Matters.

 

(a)    Base Salary.  Subject to clause (vi) below with respect to the Compensation Shares, the Company shall pay the Executive as follows (to the extent related to periods prior to the date hereof, the terms of the Prior Agreement shall control):

 

(i) For the period from January 1, 2009 through December 31, 2011, the Company shall pay to the Executive as base compensation, One Million Seven Hundred Four Thousand Five Hundred Forty-Five (1,704,545) shares (the “2009-2011 Shares”) of the Company’s Class B Common Stock, par value $0.01 per share (“Class B Common Stock”) to be issued on the date hereof, and as to which the restrictions/risk of forfeiture shall terminate (“Vesting”) on January 15, 2012, subject to the restrictions and acceleration events set forth herein and in the relevant Grant Agreement (as defined below).

 

(ii) For the period from January 1, 2012 through December 31, 2012, the Company shall pay to the Executive as base compensation Two Million Two Hundred Thirty Seven Thousand Three Hundred Sixty Nine(2,237,369) shares (the “2012  Shares”) of Class B Common Stock , to be issued on the date hereof (subject to the approval of the stockholders of the Company as set forth in clause (vii) below).  The 2012 Shares shall Vest on December 31, 2013, subject to the restrictions and acceleration events set forth herein and in the relevant Grant Agreement.

 

(iii) For the period from January 1, 2013 through December 31, 2013, the Company shall pay to the Executive as base compensation Two Million Two Hundred Thirty Seven Thousand Three Hundred Sixty Eight (2,237,368) shares (the “2013 Shares”) of Class B Common Stock (the 2013 Shares together with the 2009-2011 Shares and the 2012 Shares, the “Compensation Shares”) to be issued on the date hereof (subject to the approval of the stockholders of the Company as set forth in clause (vii) below).  The 2013 Shares shall Vest on December 31, 2013, subject to the restrictions and acceleration events set forth herein and in the relevant Grant Agreement.

 

(iv) In the event that the Executive resigns for any reason other than for Good Reason (as set forth in Section 7(c) hereunder), the Executive shall not be entitled to receive any shares that have not Vested as of the date of the Executive’s resignation.

 

(v) In the event that there is a Change of Control, all restrictions and risk of forfeiture as to Compensation Shares that have been issued shall lapse and all stock grants hereunder shall accelerate. For purposes of this Agreement, a Change of Control shall be defined as set forth in the Plan (as defined below).

 

(vi) All Compensation Shares have previously been issued pursuant to the Company’s 2005 Stock Option and Incentive Plan, as amended (the “Plan”).

 

  

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(vii) In addition to the Compensation Shares, the Company may pay the Executive a cash base salary not to exceed FIFTY THOUSAND DOLLARS ($50,000) per annum during the periods covered by the issuance of the Compensation Shares, and the Executive shall be eligible to receive bonuses as determined by the Compensation Committee of the Board.

 

(viii) Except as otherwise agreed upon by the Parties hereto, for any period during the Term (and as the Term may be extended hereunder) where Base Salary is not paid by issuance of the Compensation Shares under clauses (i), (ii) and (iii) above, the Company shall pay the Executive an annual Base Salary of at least One Million United States Dollars ($1,000,000), or more, as mutually agreed to by the Parties hereunder.

 

(b)    Employee Benefit Plans.  During the Term, the Executive shall be entitled to participate in those incentive plans, programs, and arrangements which are available to other senior executive officers of the Company (the “Benefits Plans”).  The Executive shall be provided benefits under the Benefit Plans substantially equivalent, in the aggregate, to the benefits provided to other senior executive officers of the Company and on substantially similar terms and conditions.

 

(c)    Pension and Welfare Benefits.  During the Term, the Executive shall be eligible to participate in the pension and retirement plans (the “Pension Plans”) provided to other senior executive officers of the Company, and participate fully in all health benefits, insurance programs, life and disability insurance and other similar executive welfare benefit arrangements available to other senior executive officers of the Company and shall be provided benefits under such plans and arrangements substantially equivalent, in the aggregate, to the benefits provided to other senior executive officers of the Company and on substantially similar terms and conditions.

 

(d)    Fringe Benefits and Perquisites.  During the Term, the Company shall provide to the Executive all of the fringe benefits and perquisites that are provided to other senior executive officers of the Company, and the Executive shall be entitled to receive any other fringe benefits or perquisites that become available to other senior executive officers of the Company subsequent to the date hereof.  The benefits described herein include, but are not limited to, an automobile leased for the Executive by the Company, the make and model of which is consistent with that being used by the Executive on the execution date of this Agreement.

 

(e)    Business Expenses.  The Executive will be reimbursed for all ordinary and necessary business expenses incurred by him in connection with his employment (including without limitation, expenses for travel and entertainment incurred in conducting or promoting business for the Company) upon submission by the Executive of receipts and other documentation in accordance with the Company’s normal reimbursement procedures.

 

  

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7.    Termination.  The Executive’s employment hereunder may be terminated without breach of the Agreement only under the following circumstances:

 

(a)    Death; Disability.  The Executive’s employment hereunder shall terminate upon his death or “Disability” (as hereafter defined).  For purposes of this Agreement, “Disability” shall mean the inability of the Executive to perform his duties on account of a physical or mental illness for a period of ninety (90) consecutive days or one hundred and twenty (120) days in any eight (8) month period.

 

(b)    Cause.  The Company may terminate the Executive’s employment hereunder for “Cause.”  For purposes of this Agreement, the Company shall have “Cause” to terminate the Executive’s employment hereunder (i) upon the Executive’s conviction for the commission of an act or acts constituting a felony under the laws of the United States or any state thereof, or (ii) upon the Executive’s willful and continued failure to substantially perform his duties hereunder (other than any such failure resulting from the Executive’s incapacity due to physical or mental illness), after written notice has been delivered to the Executive by the Company, which notice specifically identifies the manner in which the Executive has not substantially performed his duties, and the Executive’s failure to substantially perform his duties is not cured within ten (10) business days after notice of such failure has been given to the Executive.  For purposes of this Section 7 (b), 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 act, or failure to act, was in the best interest of the Company.

 

(c)    Termination by the Executive.  As provided in this Section 7(c), the Executive may terminate his employment hereunder for “Good Reason.”  “Good Reason” shall mean the occurrence (without the Executive’s express written consent) of any one of the following acts by the Company, or failure by the Company to act:

 

(i) a material breach of the Agreement by the Company;

 

(ii) the assignment to the Executive of any duties inconsistent with the Executive’s status as a senior executive officer of the Company or a substantial adverse alteration in the nature or status of the Executive’s responsibilities; or

 

(iii) any purported termination of the Executive’s employment which is not effected pursuant to a Notice of Termination satisfying the requirement of paragraph (d) below; for purposes of this Agreement, no such purported termination shall be effective.

 

(iv) a reduction in Executive’s annual Base Salary;

 

(v) a significant reduction in Executive’s positions, duties, responsibilities or reporting lines from those described in Section 4 hereof;

 

(vi) relocation of Executive’s principal place of employment outside of the Newark, New Jersey area; or

 

  

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(vii) a “Change in Control,” as defined in the Plan,

 

(each of the foregoing being a “Good Reason Event”). Executive may terminate employment for Good Reason if (A) Executive has given written notice to the Company of the existence of the Good Reason Event no later than 90 days after its initial existence, (B) the Company has not remedied such Good Reason Event in all material respects within 30 days after its receipt of such written notice, and (C) Executive terminated employment within one year following the initial existence of such Good Reason Event.

 

The Executive’s right to terminate the Executive’s employment for Good Reason 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 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 Termination for Good Reason if the Executive shall have consented in writing to the occurrence of the event giving rise to the claim of Termination for Good Reason.

 

(d)    Notice of Termination.  Any termination of the Executive’s employment by the Company or by the Executive (other than termination by reason of the Executive’s death) shall be communicated by written Notice of Termination to the other party hereto in accordance with Section 12 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 claims to provide a basis for termination of the Executive’s employment under the provision so indicated.  Further, a Notice of Termination for Cause or Disability must include a copy of a resolution duly adopted by the affirmative vote of not less than a majority of the entire membership of the Board at a meeting of the Board (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 set forth in the definition of Cause herein or satisfied the criteria of a Disability, and specifying the particulars thereof.

 

(e)    Date of Termination.  “Date of Termination” shall mean if the Executive’s employment is terminated (i) by his death, the date of his death, (ii) by reason of Disability, the date that the Executive is determined by the Board to be Disabled, (iii) by resignation of the Executive, the date the Executive so notifies the Board, or (iv) pursuant to paragraph (c) or (d) above, the date specified in the Notice of Termination; provided, however, that if within thirty (30) days after any Notice of Termination is given the party receiving such Notice of Termination notifies the other party that a dispute exists concerning the termination, the Date of Termination shall be the date on which the dispute is finally determined.  If within fifteen (15) days after any Notice of Termination is given, or if later, prior to the Date of Termination (as determined without regard to this Section 7(e)), the party receiving such Notice of Termination notifies the other party that a dispute exists concerning the termination, the Date of Termination shall be the date on which the dispute is finally resolved, either by mutual written agreement of the parties or by a final judgment, order or decree of a court of competent jurisdiction (which is not appealable or with respect to which the time for appeal, therefrom has expired and no appeal has been perfected); provided further that the Date of Termination shall be extended by a notice of dispute only if such notice is given in good faith and the party giving such notice pursues the resolution of such dispute with reasonable diligence.

 

  

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(f)    Compensation During Dispute.  If a purported termination occurs during the Term of this Agreement, and such termination is disputed in accordance with Section 7(e) hereof, the Company shall continue to pay the Executive the 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.  Amounts paid under this Section 7(f) are in addition to all other amounts due under this Agreement and shall not be offset against or reduce any other amounts due under this Agreement.

 

8.    Compensation Upon Termination or During Disability.

 

(a)    Death; Disability. In the event that Executive’s employment is terminated pursuant to Section 7(a) hereof, then as soon as practicable thereafter, the Company shall pay the Executive or the Executive’s Beneficiary (as defined in Section 11(b) hereof), as the case may be, (i) all unpaid amounts, if any, to which the Executive was entitled as of the Date of Termination under Section 6(a) hereof and (ii) all unpaid amounts to which the Executive was then entitled under the Benefit Plans, the Pension Plans and any other unpaid employee benefits, perquisites or other reimbursements (the amounts set forth in clauses (i) and (ii) above being hereinafter referred to as the “Accrued Obligations”).  In addition, in the event of the Executive’s death, the Company shall pay Executive’s estate a lump sum payment equal to twelve (12) months of Executive’s Base Salary (at the rate in effect on the date of his death) (the “Severance Benefit”). Any unvested Compensation Shares shall vest upon a termination pursuant to Section 7(a).

 

(b)    Termination for Cause; Voluntary Termination without Good Reason.  If the Executive’s employment is terminated by the Company for Cause or by the Executive other than for Good Reason, then the Company shall pay all Accrued Obligations to the Executive, the Company shall have no further obligations to the Executive under this Agreement.  If the Executive’s employment is terminated by the Executive other than for Good Reason, all Compensation Shares that have not Vested shall be forfeited.  If the Executive’s employment is terminated by the Company for Cause, then the Pro Rata Portion (as defined below) of the Compensation Shares that have not Vested as of the Date of Termination shall accelerate and Vest and all other Compensation Shares that had not yet Vested shall be forfeited.  As used herein, the term “Pro Rata Portion” shall mean a percentage of the Compensation Shares as shall reflect the pro rata portion of the time served between January 1, 2009 and the Date of Termination as a percentage of the period between January 1, 2009 and December 31, 2013.  By way of example, if the Executive’s employment is terminated by the Company for Cause on June 30, 2011, one half of the Compensation Shares shall accelerate and Vest as of such termination and the remainder of the Compensation Shares shall be forfeited.

 

(c)    Termination Without Cause; Termination for Good Reason.  If the Company shall terminate the Executive’s employment, other than for Cause, or the Executive shall terminate his employment for Good Reason, then;

 

(i) the Company shall pay to the Executive, within ten (10) days after the Date of Termination, the Accrued Obligations;

 

  

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(ii) all Compensation Shares shall accelerate and Vest as of the Date of Termination; and

 

(iii) the Company shall pay the Executive the Severance Benefit.

 

9.    Non-Disclosure.  The parties hereto agree, recognize and acknowledge that during the Term the Executive shall obtain knowledge of confidential information regarding the business and affairs of the Company.  It is therefore agreed that the Executive will respect and protect the confidentiality of all confidential information pertaining to the Company, and will not (i) without the prior written consent of the Company, (ii) unless required in the course of the Executive’s employment hereunder, or (iii) unless required by applicable law, rules, regulations or court, government or regulatory authority order or decree, disclose in any fashion such confidential information to any person (other than a person who is a director of, or who is employed by, the Company or any subsidiary or who is engaged to render services to the Company or any subsidiary) at any time during the Term.

 

10.    Covenant Not to Compete.

 

(a) Executive hereby agrees that for a period of one (1) year following the termination of this Agreement (other than a termination of the Executive’s employment (i) by the Executive for Good Reason or (ii) by the Company other than for Cause) (the “Restricted Period”) the Executive shall not, directly or indirectly, whether acting individually or through any person, firm, corporation, business or any other entity:

 

(i) engage in, or have any interest in any person, firm, corporation, business or other entity (as an officer, director, employee, agent, stockholder, or other security holder, creditor, consultant or otherwise) that engages in any business activity where a substantial aspect of the business of the Company is conducted, or planned to be conducted, at any time during the Restricted Period, which business activity is the same as, similar to or competitive with the Company as the same may be conducted from time to time;

 

(ii) interfere with any contractual relationship that may exist from time to time of the business of the Company, including, but not limited to, any contractual relationship with any director, officer, employee, or sales agent, or supplier of the Company; or

 

(iii) solicit, induce or influence, or seek to induce or influence, any person who currently is, or from time to time may be, engaged or employed by the Company (as an officer, director, employee, agent, or independent contractor) to terminate his or her employment or engagement by the Company.

 

(b) Notwithstanding anything to the contrary contained herein, Executive, directly or indirectly, may own publicly traded stock constituting not more than five percent (5%) of the outstanding shares of such class of stock of any corporation covered by clause (a)(i) above if, and as long as, Executive is not an officer, director, employee or agent of, or consultant or advisor to, or has any other relationship or agreement with such corporation.

 

  

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(c) Executive acknowledges that the non-competition provisions contained in this Agreement are reasonable and necessary, in view of the nature of the Company and his knowledge thereof, in order to protect the legitimate interests of the Company.

 

11.    Successors; Binding Agreement.

 

(a) 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, by agreement in form and substance reasonably satisfactory to the Executive, 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 he would be entitled to hereunder if he terminated his employment for Good Reason, except that for purposes of implementing the foregoing, 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 hereinafter defined and any successor to its business and/or assets as aforesaid that executes and delivers the agreement provided for in this Section 11 or that otherwise becomes bound by all the terms and provisions of this Agreement by operation of law.

 

Notwithstanding the foregoing, the contemplated spin-off of the capital stock of Genie Energy Ltd. to the stockholders of the Company shall not be deemed to be covered by the provisions of this clause (a).

 

(b) This Agreement and all rights of the Executive hereunder shall insure to the benefit of and be enforced by the Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributee, devisee, and legatees.  If the Executive should die while any amounts should still be payable to him hereunder if he 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 be no such designee, to the Executive’s estate (any of which is referred to herein as a “Beneficiary”).

 

12.    Notice.  For 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 paid, addressed as follows:

 

 

  

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If to the Company:

 

IDT Corporation

520 Broad Street, 7th Floor

Newark,  New Jersey 07102

Attn:  General Counsel

 

If to the Executive, at the executive’s address in the Company’s human resources files.

 

or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt.

 

13.    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 Executive and such other 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, 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 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.

 

14.    Validity.  The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability if any such other provision of this Agreement, which shall remain in full force and effect.

 

15.    Remedies of the Company.  Upon any termination for Cause that may cause irreparable harm to the Company or upon the violation of the provisions of Section 9 or 10 hereof, 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.

 

16.    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.

 

17.    Entire Agreement.  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 hereto, and in prior agreements of the parties hereto in respect to the subject matter contained herein is hereby terminated and canceled.

 

18.    Special Rules Regarding Section 409A of the Internal Revenue Code.

 

  

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(a) It is intended that any and all benefits under this Agreement either (i) shall not constitute “nonqualified deferred compensation” within the meaning of Section 409A of the Internal Revenue Code (“Section 409A”), and therefore are exempt from Section 409A or (ii) are subject to a “substantial risk of forfeiture” and exempt from Section 409A under the “short−term deferral rule” set forth in Treasury Regulation § 1.409A−1(b)(4).  In any event, 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.

(b) Notwithstanding anything herein to the contrary, if the Company determines that the Severance Benefit constitutes “nonqualified deferred compensation” within the meaning of Section 409A, payment of such Severance Benefit shall not commence until the Executive incurs a “separation from service” within the meaning of Treasury Regulation §1.409A−1(h) (“Separation from Service”). If, at the time of Executive’s Separation from Service, the Executive is a “specified employee” (under Section 409A), such Severance Benefit shall not be paid until after the earlier of (i) the expiration of the six−month period measured from the date of Executive’s Separation from Service with the Company, or (ii) the date of the Executive’s death (the “409A Suspension Period”).

(c) The determination of whether the Severance Benefit constitutes “nonqualified deferred compensation” within the meaning of Section 409A shall be made by the Company in good faith. If the Company determines that such Severance Benefit is subject to the 409A Suspension Period, and the Executive does not believe that such determination is reasonable, then the Company and the Executive shall mutually select, at the Company’s expense, an independent outside counsel to render a legal opinion regarding the applicability of the 409A Suspension Period. If the outside counsel described in the preceding sentence agrees with the Company’s determination that any items due to the Executive under this agreement should be subject to the 409A Suspension Period, then such payment shall be made at the end of the 409A Suspension Period as set forth in Section 17(b) hereof; provided however, if such outside counsel determines that such payment shall not be subject to the 409A Suspension Period, then such payment shall be effected within fourteen (14) days of the date of such counsel’s determination.

 

 

  

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date and year first above written.

 

EXECUTIVE

 

/s/ Howard S. Jonas                                                                               

Howard S. Jonas

IDT CORPORATION

 

By:       /s/ Ira A. Greenstein                                                                    

Ira A. Greenstein

President

 

 

11f8k102811ex10ii_idt.htm

Exhibit 10.2

 

EMPLOYMENT AGREEMENT

 

This EMPLOYMENT AGREEMENT (this “Agreement”), dated October 28, 2011 (the “Effective Date”), is by and between IDT Corporation, a Delaware corporation (the “Company”) and Liore Alroy, an individual (the “Employee”).

 

WHEREAS, the Employee has served the Company and certain of its subsidiaries in various capacities;

WHEREAS, in recognition of the Employee’s experience and abilities, the Company desires to assure itself of the continued 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.

 

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 Effective Date set forth above and terminate on the third anniversary thereof, 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 Deputy Chairman 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. The Deputy Chairman position shall (i) have the duties, responsibilities and privileges associated therewith in the By-Laws of the Company in effect from time to time, (ii) be a non-executive officer position and (iii) not be a position involving service on the Board (provided that nothing herein shall restrict the Company and its stockholders’ ability to nominate or elect the Employee to the Board).  The Employee shall provide advice and input on strategic planning and development to the Chairman of the Board and the other members of the Company’s management and be involved in such projects and matters on behalf of the Company and its subsidiaries as shall be directed by the Chairman of the Board.  Except as may be agreed upon by the Company and the Employee, the Employee shall not have any duties or powers to bind the Company in a manner inconsistent with his non-executive officer capacity.

 

  

  

  

 

4. Duties and Reporting Relationship.  During the Term, the Employee shall 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 of the Board of the Company.  The Employee’s time commitment shall be approximately one-half of his business time and effort, provided that the commitment will vary over time and may be more or less than one-half time during specific periods.  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 basis at one the Company’s offices, 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 THREE HUNDRED SIXTY THREE THOUSAND SEVEN HUNDRED FIFTY DOLLARS ($363,750), payable in accordance with the Company’s standard payroll practices, less applicable taxes and customary withholdings.  

 

(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) Equity.

The Company hereby confirms the prior grant to the Employee of shares of stock in the Company’s subsidiary Innovative Communications Technology, Inc. (“ICTI”) representing five percent (5%) of the outstanding capital stock of ICTI on the date of grant.  Within thirty (30) days following the date hereof, the Company will cause to be completed all documentation necessary for such issuance.

Within thirty (30) days following the Effective Date, the Company shall cause to be granted to the Employee options to purchase a number of shares of Class B Common Stock of the Company that shall represent one percent (1%) of the outstanding shares of capital stock of the Company on the Effective Date, with an exercise price equal to the fair market value on the date of grant.  Such options are to be granted pursuant to the Company’s 2005 Stock Option and Incentive Plan (the “Plan”), be issued pursuant to an option agreement substantially in the form annexed to the Plan, and vest in equal annual installments on the first through the eighth anniversaries of the Effective Date (the “Equity Grant”).

(d) 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.

 

  

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(e)           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 business class for all trans-Atlantic travel or other flights of six (6) hours or longer in duration and coach class for all other travel) 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 policies.  The Employee must use the Company’s travel department, if such a department exists, to arrange for all business related travel.

 

(f)           Paid Vacation. The Company will provide the Employee with four (4) weeks of paid vacation during each calendar year during the Term.  In addition, the Employee shall be entitled to Company Closed 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:

 

(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.

 

  

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(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 or the Chairman of the Board, or material breach of the terms hereof or of the  Non-Disclosure and Non-Competition Agreement annexed hereof, in each case, 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 or has committed a breach, and the Employee's failure to substantially perform his duties or breach is not cured within fifteen (15) business days after such notice 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 of the Board, 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.  

 

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.

  

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.

 

  

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(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 thirty (30) 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 of duties inconsistent with the Company’s rules, policies or procedures, including without limitation, the Company’s Code of Business Conduct and Ethics; or (iv) any purported termination of the Employee’s employment not in accordance with the terms hereof.  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.

  

If the Company terminates the Employee’s employment without Cause or the Employee terminates his employment for Good Reason, (1) the Company shall pay to the Employee all accrued or vested compensation, including salary, commission, and bonus(es) through the Date of Termination, (2) 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), (3) the Equity Grant, to the extent not vested prior thereto or scheduled to vest in accordance with its terms prior to the dates set forth in this sentence, shall vest (A) as to three eighths (3/8) of the total amount thereof, on the first anniversary of the Date of Termination, (B)  as to on half (1/2) of the total amount thereof, on the second anniversary of the Date of Termination, and (C) as to all remaining unvested portions thereof, on the third anniversary of the Date of Termination, and (5) the Company shall pay to the Employee a severance payment equal to the greater of (i) FIVE  HUNDRED SIXTY THREE THOUSAND SEVEN HUNDRED FIFTY DOLLARS ($563,750.00) ) 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 and the acceleration of the vesting of the Equity Grant, the Employee will be required to execute, deliver and comply with the Company’s standard release agreement (the “Release Agreement”). Subject to Section 19 hereof, the Severance Payment will be paid in equal payments over the twelve (12) month period following the effective date of the Release Agreement on the Company’s regularly scheduled payroll payment dates.

 

  

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(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 all compensation and other consideration as set forth above in connection with a termination by the Company without Cause, subject to the conditions set forth above, provided that the right to receive the Severance Payment shall only apply if the non-renewal is prior to the eighth (8th) anniversary of the Effective Date.

(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.

  

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

520 Broad Street

Newark, New Jersey 07102

Attn:   Chairman of the Board

with a copy to:

 

IDT Corporation

520 Broad Street

Newark, New Jersey 07102

Attn:    General Counsel

  

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If to the Employee:

Liore Alroy

88 Crescent Avenue

Passaic, New Jersey 07055

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.

  

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.

 

  

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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.

 

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”).

 

  

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date and year first written above.

 

	 	
IDT CORPORATION

	 
	 	 	 	 
	 	
By: 

	/s/ Ira Greenstein	 
	 	 	Ira Greenstein	 
	 	 	President	 
	 	 	 	 
	 	EMPLOYEE: 	 
	 	 	
/s/Liore Alroy

	 
	 	 	
Liore Alroy

	 

 

 

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