printer-friendly

Sample Business Contracts

Separation Agreement - Net2Phone Inc. and Howard Balter

Sponsored Links

                              SEPARATION AGREEMENT

         The following sets forth the terms of a Separation Agreement between
Howard Balter ("HB") and Net2Phone, Inc. ("N2P") and is intended to be binding
on the parties hereto ("Separation Agreement").

         1.       Resignation: HB resigned as the Chief Executive Officer and as
                  a member of the Board of Directors of N2P, effective October
                  23, 2001 ("Resignation Date"). HB agrees to resign as a member
                  of the Board of Directors of Adir Technologies, Inc. ("Adir")
                  and from the Board of Directors of any other subsidiary or
                  affiliate of N2P, immediately upon the execution of this
                  Separation Agreement.

         2.       Consulting Services: HB will provide the equivalent of one (1)
                  eight (8) hour day per week of consulting services to N2P,
                  and/or as directed by N2P, to Adir, for a 15-month period
                  commencing on the Resignation Date. N2P will reimburse HB for
                  direct, out-of-pocket expenses incurred by HB relating to any
                  overnight travel requested by N2P or Adir.

         3.       Waiver: Other than with respect to his rights under this
                  Separation Agreement, HB waives all claims, and releases and
                  forever discharges and covenants not to sue or proceed on the
                  basis of any claims, against N2P, and its subsidiaries and
                  affiliates, including Adir, arising from his employment,
                  including his right to a $750,000 severance payment and any
                  other rights arising under his employment agreement with N2P.
                  Other than with respect to its rights under this Separation
                  Agreement, N2P and its subsidiaries and affiliates, including
                  Adir, waive all claims and release and forever discharge and
                  covenant not to sue or proceed on the basis of any claims,
                  against HB arising from his employment, including any of its
                  rights arising under his employment agreement with N2P.

         4.       Non-Compete: HB acknowledges that (i) N2P, its subsidiaries
                  and affiliates, including Adir (for purposes of paragraphs 4,
                  5 and 6, "N2P") are currently engaged in the Internet
                  telephony business, (ii) his work for N2P has provided him
                  with access to trade secrets of and confidential information
                  concerning N2P, and (iii) the agreements and covenants
                  contained in this Separation Agreement are essential to
                  protect the business and goodwill of N2P. Accordingly, HB
                  covenants and agrees that during the Restricted Period
                  (defined below), HB shall not (1) be employed in any capacity
                  by, or consult with or engage or participate in any fashion in
                  the Internet telephony business (a "Competitive Business") on
                  his own behalf or on behalf of any person or entity, and HB
                  shall not acquire a financial interest in any Competitive
                  Business (except for publicly traded equity interests that do
                  not exceed five percent (5%) in the aggregate of all classes
                  of equity of any such Competitive Business) or (2) directly or
                  indirectly solicit or encourage any employee of N2P or any of
                  its subsidiaries or affiliates to leave the employment of N2P.
                  For purposes hereof, the "Restricted Period" shall be the
                  21/2year period commencing on the Resignation Date.

         5.       Confidential Information. During the term of this Separation
                  Agreement and at all times thereafter, HB agrees that he will
                  not divulge to anyone (other than N2P or any persons employed
                  or designated by N2P) any knowledge or information of a
                  confidential or proprietary nature relating to the business of
                  N2P 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 HB
                  further agrees not to disclose, publish or make use of any
                  such knowledge or information without the consent of N2P.

         6.       Enforcement. HB acknowledges and agrees that N2P will have no
                  adequate remedy at law, and could be irreparably harmed, if HB
                  breaches or threatens to breach any of the provisions of
                  paragraphs 4 and 5 of this Separation Agreement. HB agrees
                  that N2P shall be entitled to equitable and/or injunctive
                  relief to prevent any breach or threatened breach of
                  paragraphs 4 and 5, and to specific performance of each of the
                  terms of this paragraph in addition to any other legal or
                  equitable remedies that N2P may have. HB further agrees that
                  he shall not, in any equity proceeding relating to the
                  enforcement of the terms of paragraphs 4 and 5, raise the
                  defense that N2P has an adequate remedy at law.


<PAGE>

         7.       Stock and Stock Options:

                  Rescission of Exercise. HB's 1/01 Option exercise with respect
                  to 142,980 shares is hereby rescinded and N2P agrees to honor
                  such rescission for all purposes, including income tax
                  reporting. HB shall return to N2P the shares acquired upon
                  such exercise. N2P shall return the aggregate exercise price
                  of $476,123 and HB will continue to hold the Option with
                  respect to such shares. Upon the completion of the first 3
                  months of the consulting period described in paragraph 2
                  hereof, N2P will reprice such Option at $0.01 per share. HB
                  acknowledges that N2P's obligations to repay $476,123 has been
                  satisfied by the N2P payment of $500,000 to HB as of the
                  Resignation Date and, immediately upon fully execution of this
                  Separation Agreement, HB shall repay $23,877 to N2P.

                  Repricing and Forfeiture. HB was previously granted an Option
                  to purchase 223,500 shares of N2P on 7/28/99 at $15 per share
                  and an Option to purchase 500,000 shares of N2P on 8/2/00 at
                  $25 per share. Upon the completion of the first 3 months of
                  the consulting period described in paragraph 2 hereof, N2P
                  will reprice the Options to purchase 580,520 shares at $0.01
                  per share and will amend such Options with respect to such
                  shares so that they are fully vested and exercisable as of
                  such date and the parties hereto mutually agree that such
                  Options with respect to such 580,520 shares shall be
                  automatically exercised as of such date for shares of N2P. Any
                  remaining shares subject to such Options will lapse as of the
                  date of the repricing.

         8.       Adir Stock: Upon the completion of the first 3 months of the
                  consulting period set forth in paragraph 2 hereof, N2P or Adir
                  will purchase the 937 Shares of Adir Stock owned by HB and HB
                  will transfer such shares to N2P or Adir, as the case may be,
                  free and clear of any and all liens and encumbrances (other
                  than liens and encumbrances of N2P or Adir), for $2.365
                  million, with the proceeds to be applied toward repayment of
                  HB's Debt as set forth in paragraph 10 hereto. N2P shall
                  indemnify and defend HB from any liability arising from such
                  purchase and sale.

         9.       Charitable Contribution: IDT, or a foundation established by
                  it, will make a $1.250 million charitable contribution to a
                  foundation or charities designated by HB. Such contribution
                  will be made in $416,667 installments, with the first
                  installment to be made within fifteen (15) days of the date of
                  this Separation Agreement, and the second and third
                  installments to be made on the first and second anniversaries
                  of the date of this Separation Agreement.

         10.      Loan Forgiveness: HB has the following loans outstanding to
                  N2P and Adir: (1) a loan from N2P with an initial principal
                  amount of $1,447,260, (2) a loan from N2P with an initial
                  principal amount of $2 million, (3) a loan from Adir with an
                  initial principal amount of $163,975 and (4) miscellaneous
                  loans and advances in the aggregate amount of $750,000. In
                  addition, N2P has guaranteed the repayment of $5 million
                  borrowed by HB from Safra Bank. N2P shall repay such $5
                  million Safra loan on behalf of HB, (the repaid Safra loan and
                  HB's guarantee thereof, together with the other loans set
                  forth in the preceding sentence, and all accrued interest on
                  such loans, the "Debt"). Upon the completion of the first 3
                  months of the consulting period described in paragraph 2
                  hereof, N2P and Adir will forgive and waive $2 million worth
                  of the Debt. Upon the completion of 15 months of the
                  consulting period described in paragraph 2 hereof, N2P and
                  Adir will forgive and waive any of the remaining Debt. Such
                  Debt forgiveness and waiver shall be accelerated upon change
                  in control of N2P (as defined in N2P's 1999 Stock Option and
                  Incentive Plan) occurring after the date of this Separation
                  Agreement.

         11.      Insurance: For a 2-year period commencing on the Resignation
                  Date, N2P will continue to provide HB and his dependents, at
                  its sole cost, with the medical and dental insurance coverage,
                  or equivalent coverage, as was provided immediately prior to
                  the Resignation Date.

         12.      Car Allowance: For a 2-year period commencing on the
                  Resignation Date, N2P will continue to provide HB with an auto
                  allowance for one (1) auto consistent with the allowance
                  provided to him immediately prior to the Resignation Date. HB
                  shall immediately return both automobiles provided to him by
                  N2P, or affect a full assignment and assumption of the leases
                  associated with such automobiles within fifteen (15) days from
                  the date this Separation Agreement is fully executed. HB shall
                  indemnify and defend N2P with respect to any such assignment
                  and assumption of the auto leases.

         13.      Company Property: At the completion of the term of consulting
                  period described in paragraph 2 hereof, HB shall return all
                  property of N2P and Adir, including computer equipment, cell
                  phone, PDA, etc.

         14.      Disclosure: The parties mutually agree not to disclose the
                  terms and conditions of this Separation Agreement, except that
                  N2P shall have the right to make such disclosures as
                  reasonably required by law in the opinion of its legal
                  counsel. Notwithstanding the foregoing, HB and N2P may
                  disclose such terms to their respective legal and financial
                  advisors and HB may disclose such terms to his immediate
                  family members.

         15.      Miscellaneous: Effective upon the Resignation Date, N2P will
                  release HB from his status as an SEC reporting person.
                  Notwithstanding the foregoing, HB remains fully and solely
                  responsible for compliance with all requirements of all
                  Federal and State securities laws in connection with the
                  disposition of his shares of N2P and will indemnify N2P from
                  any liabilities arising out of his disposition of any of such
                  shares in violation of any of such laws. N2P agrees to provide
                  HB all rights of indemnification and all director's and
                  officer's insurance coverage in affect, relating to the period
                  of time HB served as a director and officer of N2P, to the
                  fullest extent permitted by law and by its Certificate of
                  Incorporation and By-laws, as in effect on the Resignation
                  Date.


2
<PAGE>

         16.      Entire Agreement/Amendment: This Separation Agreement contains
                  the entire understanding of the parties with respect to the
                  subject matter hereof and, except as specifically provided
                  herein (including, without limitation HB's rights to Options
                  pursuant to paragraph 7 hereof), cancels and supersedes any
                  and all other agreements between the parties with respect to
                  the subject matter hereof. Any amendment or modification of
                  this Separation Agreement shall not be binding unless in
                  writing and signed by the parties hereto.

         17.      Successors and Assigns: This Separation Agreement shall be
                  binding upon and shall inure to the benefit of N2P, its
                  successors, affiliates and any person or other entity that
                  succeeds to all or substantially all of the business, assets
                  or property of N2P. To the extent not otherwise provided by
                  application of law, N2P 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 N2P, to expressly assume and
                  agree to perform the obligations of N2P under this Separation
                  Agreement in the same manner and to the same extent that N2P
                  is required to perform hereunder. As used in this Agreement,
                  "N2P" shall mean N2P as hereinbefore defined and any successor
                  to its business, assets or property as aforesaid which
                  executes and delivers an agreement provided for in this
                  paragraph 17 or which otherwise becomes bound by all the terms
                  and provisions of this Separation Agreement by operation of
                  law. Except as provided by the foregoing provisions of this
                  paragraph 17, any assignment of this Separation Agreement, or
                  any part hereof, by N2P shall not relieve N2P of its
                  obligations under paragraphs 7 through 10.

                  This Separation Agreement and all rights of HB hereunder shall
                  inure to the benefit of and be enforceable by the HB's
                  personal or legal representatives, executors, administrators,
                  successors, heirs, distributees, devisees and legatees. If HB
                  should die while any amounts are due and payable to HB
                  hereunder, all such amounts, unless otherwise provided herein,
                  shall be paid to HB's designated beneficiary or, if there is
                  no such designated beneficiary, to the legal representatives
                  of HB's estate. This Separation Agreement is personal in
                  nature and the obligations of HB hereunder are not be
                  assignable to any person.

         18.      Severability/No Waiver: In the event that any provision of
                  this Separation Agreement is determined to be invalid or
                  unenforceable, the remaining terms and conditions of this
                  Separation 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 Separation
                  Agreement. The failure of a party to insist upon strict
                  adherence to any term of this Separation 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
                  Separation Agreement.

         19.      Notices: All notices which may be necessary or proper for
                  either N2P or HB 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 overnight courier, to HB
                  at:

                                    Howard Balter
                                    1024 Reads Lane
                                    Far Rockaway, New York 11691

                  with a copy to:

                                    Joel I. Krasnow, Esq.
                                    Dewey Ballantine LLP
                                    1301 Avenue of the Americas
                                    New York, New York 10019


                  ; and, shall be sent in the manner described above to the
                  Secretary of N2P at its principal executives offices at:

                                    520 Broad Street
                                    Newark New Jersey  07102

                  with a copy to:   General Counsel


                  Any party may by like notice to the other party change the
                  address at which he or they are to receive notices hereunder.


3
<PAGE>



         20.      Governing Law: This Separation 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 and the resolution of any dispute
                  relating to this Separation Agreement shall be venued within
                  the State of New Jersey.

         21.      Counterparts: This Separation 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.




4
<PAGE>



         IN WITNESS WHEREOF, the parties have hereunto set their hands and seals
to the Separation Agreement between Howard Balter and Net2Phone, Inc. on this
26th day of November 2001.


WITNESS OR ATTEST:                            Howard Balter:


    /S/ Glenn Williams                            /s/ Howard Balter
----------------------------                  ---------------------------------



WITNESS OR ATTEST:                            Net2Phone, Inc.


    /S/ Glenn Williams                        By:   /S/ James Courter
----------------------------                     -------------------------------



WITNESS OR ATTEST:                            Solely with respect to Section 9
                                              hereof, IDT, Inc.


   /S/ Glenn Williams                         By:   /S/ James Courter
----------------------------                     -------------------------------



WITNESS OR ATTEST:                            Solely with respect to paragraphs
                                              3, 8 and 10 hereof, Adir
                                              Technologies, Inc.


   /S/ Debbie Greenblatt                      By:   /S/ David Greenblatt
----------------------------                     -------------------------------







5