EXHIBIT 10.11
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of May 30, 2000, by and
between deltathree.com, Inc., a Delaware corporation (the "Company"), and
Mark Gazit ("Executive").
W I T N E S S E T H:
WHEREAS, the Company desires to enter into an agreement,
effective as of August 1, 2000 (the "Commencement Date") to set out the terms
and conditions of Executive's employment by the Company from and after the
Commencement Date; and
WHEREAS, the Executive desires to continue in the
employment of the Company from and after the Commencement Date under those
terms and conditions;
NOW, THEREFORE, in consideration of the mutual covenants
herein contained, the Company and Executive hereby agree as follows:
1. EMPLOYMENT.
(a) AGREEMENT TO EMPLOY. Upon the terms and subject to the
conditions of this Agreement, the Company hereby employs Executive, and
Executive hereby accepts continued employment by the Company.
(b) TERM OF EMPLOYMENT. The Company shall employ Executive for a
term (the "Term") commencing on the Commencement Date and ending on July 30,
2003, unless extended by a written agreement signed by both parties. The
period commencing on the Commencement Date and ending on the earlier of (i)
the expiration of the Term, or (ii) the date of Executive's termination of
employment pursuant to Section 5(a) shall be referred to as the "Employment
Period".
2. POSITION AND DUTIES.
(a) IN GENERAL. Executive shall be employed as Executive VP of
Technology and shall perform such duties and services, consistent with such
position and his current duties and services for the Company, and as may be
assigned to him from time to time by the Chief Executive Officer (the "CEO")
of the Company. The duties of the Executive shall include serving as an
officer or director or otherwise performing services for any "Affiliate" of
the Company as requested by the Company. An "Affiliate" of the Company means
any entity that controls, is controlled by or is under common control with
the Company. Executive shall report to the CEO.
(b) FULL-TIME EMPLOYMENT. During the Employment Period, Executive
shall devote his full business time to the services required of him
hereunder, except for time devoted to services required by him to be
performed for any "Affiliate" of the Company, vacation time and reasonable
periods of absence due to sickness, personal injury or other disability, and
shall use his reasonable best efforts, judgment, skill and energy to perform
such services in a manner consonant with the duties of his position and to
improve and advance the business and interests of the Company. Executive
shall not be engaged in any other business activity which, in the reasonable
judgment of the CEO, conflicts with the duties of the Executive under this
Agreement. In such event, Executive shall receive five days' written notice
to disengage from such business activity. Executive may serve on the Board of
Directors or on advisory boards of other corporations which do not compete
with the Company; PROVIDED, HOWEVER, that, in such case, (i) Executive shall
provide the Company with 5 days' written notice of any scheduled meeting of
the Board of Directors of such company and (ii) Executive shall be charged
with 1/2 vacation day for every four hours spent at such Board of Directors
meeting during business hours. Executive shall travel to such location or
locations as may be requested by the Company, or which Executive believes is
necessary or advisable, in the performance by Executive of his duties
hereunder or to the extent appropriate to improve and advance the interests
of the Company and its Affiliates. There is no formal disciplinary procedure,
but Executive is expected at all times to behave in a manner befitting his
employment.
3. COMPENSATION.
(a) BASE SALARY. During the Employment Period, the Company shall pay
Executive a base salary at the annual rate of US$170,000 ; PROVIDED that
Executive's annual base salary shall be increased as of January 1 of each
year, commencing January 1, 2001, by an amount equal to the base salary then
in effect, multiplied by the percentage increase in the Cost of Living Index
during the preceding year. The "Cost of Living Index" means the consumer
price index for all urban consumers in the New York metropolitan area
published by the Department of Labor, or if such index is no longer
available, such other generally available index measuring changes in consumer
purchasing power (in the New York metropolitan area or nationally) designated
by the Board of Directors. Any delay in increase in Executive's annual base
salary by reason of the unavailability of any such index at the time any such
increase shall otherwise be due shall be made up by a lump sum payment
promptly after the index becomes available. Executive's salary, as adjusted
for any increase in the Cost of Living Index, may be further increased at the
option and in the discretion of the Board of Directors (such salary, as the
same may be increased from time to time, is referred to herein as the "Base
Salary"). The Base Salary shall be payable in such installments (but not less
frequent than monthly) as the salaries of other executives of the Company are
paid.
(b) PERFORMANCE INCENTIVE PLAN. During the Employment Period,
Executive shall be eligible to participate in the Company's 1999 Performance
Incentive Plan. The discretionary portion of the bonus shall be determined by
the Compensation Committee. If the Company shall amend or terminate the 1999
Performance Incentive Plan in a manner that would reduce the
opportunity of Executive to earn an incentive bonus as provided in the 1999
Performance Incentive Plan, the Company shall provide a substitute
arrangement so that Executive's total bonus opportunity will not be
materially reduced. In addition to you your base salary set forth herein, the
Company will provide you with a one-time $25,000 signing bonus. Such signing
bonus shall be less all applicable taxes and will be included in the third
pay check you receive after you start working for the Company
(c) STOCK INCENTIVE PLAN. The Company shall grant Executive an award
of stock options (the "Option") to purchase 173,938 shares of the Company's
Class A Common Stock (the "Common Stock") at an exercise price equal to US$6
15/16 per share, the Fair Market Value (as defined under the 1999 Stock
Incentive Plan) on the date of grant. The Option shall be governed by, and
fall under, the Company's 1999 Stock Incentive Plan. The Option shall become
exercisable as set forth below, PROVIDED that Executive is employed by the
Company on such date, and once exercisable shall, except as otherwise
provided below, remain exercisable until the expiration of seven years from
the date of grant. However, the Option shall be immediately terminated upon a
termination of Executive's employment by the Company for Cause (as
hereinafter defined):
Date First Exercisable Percentage Exercisable
---------------------- ----------------------
First Anniversary of the Commencement Date 33-1/3%
Second Anniversary of the Commencement Date 66-2/3%
Third Anniversary of the Commencement Date 100%
The Option shall become immediately exercisable in full in the event
that Executive's employment with the Company is terminated: (i) by the
Company other than for Cause, (ii) by Executive for Good Reason or (iii) by
reason of the death or Disability of the Executive; PROVIDED, HOWEVER, that
if Executive's employment is terminated for any reason prior to the 18 month
anniversary of the Commencement Date, only the exercisable portion of the
Option, if any, shall remain exercisable and any unvested portion of the
Option shall not be exercisable. The Option shall expire on the seven-year
anniversary of the Commencement Date.
Additionally, the Option shall become immediately exercisable in
full upon a Change in Control. The exercisable portion of the Option shall,
following any termination of Executive's employment (other than for Cause),
remain exercisable for the lesser of two years and the remaining term of the
Option.
4. BENEFITS, PERQUISITES AND EXPENSES.
(a) BENEFITS. During the Employment Period, Executive shall be
eligible to participate in (i) each welfare benefit plan sponsored or
maintained by the Company, including, without limitation, each group life,
hospitalization, medical, dental, health, accident or disability
insurance or similar plan or program of the Company, and (ii) each pension,
profit sharing, retirement, deferred compensation or savings plan sponsored
or maintained by the Company, in each case, whether now existing or
established hereafter, on the same basis as generally made available to other
senior officers of the Company.
(b) PERQUISITES. During the Employment Period, Executive shall be
entitled to five weeks' paid vacation annually and shall also be entitled to
receive such perquisites as are generally provided to other senior officers
of the Company in accordance with the then current policies and practices of
the Company. Executive shall not be entitled to receive remuneration for
unused vacation and shall not be permitted to carry-over unused vacation to
the following year, unless Executive receives the written consent from the
CEO prior to September 30th of such year.
(c) BUSINESS EXPENSES. During the Employment Period, the Company
shall pay or reimburse Executive for all reasonable expenses incurred or paid
by Executive in the performance of Executive's duties hereunder, upon
presentation of expense statements or vouchers and such other information as
the Company may require and in accordance with the generally applicable
policies and procedures of the Company.
(d) INDEMNIFICATION. The Company shall indemnify Executive and hold
Executive harmless from and against any claim, loss or cause of action
arising from or out of Executive's performance as an officer, director or
employee of the Company or any of its subsidiaries or affiliates or in any
other capacity, including any fiduciary capacity, in which Executive serves
at the request of the Company to the maximum extent permitted by applicable
law and the Company's Certificate of Incorporation and Bylaws in effect on
the date hereof. If any claim is asserted against Executive with respect to
which Executive reasonably believes in good faith he is entitled to
indemnification, the Company shall either defend Executive or, at its option,
pay Executive's legal expenses (or cause such expenses to be paid) on a
quarterly basis, PROVIDED that Executive shall reimburse the Company for such
amounts, plus simple interest thereon at the 90-day United States Treasury
Bill rate as in effect from time to time, compounded annually, if Executive
shall be found by a court of competent jurisdiction not to have been entitled
to indemnification.
5. TERMINATION OF EMPLOYMENT.
(a) TERMINATION OF THE EMPLOYMENT PERIOD. The Employment Period
shall end upon the earliest to occur of (i) a termination of Executive's
employment on account of Executive's death, (ii) a Termination due to
Disability or Retirement, (iii) a Termination for Cause, (iv) a Termination
Without Cause, (v) a Termination by Executive for Good Reason, (vi) a
Termination by Executive other than for Good Reason, or (vii) the expiration
of the Term. The Company or the Executive may initiate a termination in any
manner permitted hereunder by giving the other party written notice thereof
(the "Termination Notice"). The effective date (the "Termination Date") of
any termination shall be deemed to be the later of (i) in the case of a
Termination Notice from Executive, 45 days after the receipt by the Company
of the Termination
Notice, (ii) the date on which the Termination Notice is given, or (iii) the
date specified in the Termination Notice; PROVIDED, HOWEVER, that in the case
of the Executive's death, the Termination Date shall be the date of death.
Upon termination of his employment for any reason, Executive will immediately
resign from all positions that he holds with the Company and its Affiliates.
(b) PAYMENTS UPON CERTAIN TERMINATIONS.
(i) TERMINATION WITHOUT CAUSE OR TERMINATION BY EXECUTIVE
FOR GOOD REASON. In the event that Executive's employment is terminated by
the Company Without Cause or by Executive for Good Reason, the Company shall
pay Executive his Earned Salary, Vested Benefits and a Severance Benefit (as
such terms are hereinafter defined). In addition, if Executive's employment
terminates pursuant to this subsection (i), the Company shall continue to
provide to Executive the welfare benefits (other than disability insurance)
referred to in Section 4, or substantially comparable benefits, until the
earlier of (x) the date on which Executive is eligible to obtain comparable
benefits from other employment, (y) the expiration of the Term or (z) one
year.
(ii) TERMINATION DUE TO DEATH. In the event of the
termination of Executive's employment due to Executive's death, the Company
shall pay Executive's estate Executive's Earned Salary, Vested Benefits and a
lump sum payment equal to 12 months of Executive's Base Salary (at the rate
in effect on the date of his death).
(iii) TERMINATION DUE TO DISABILITY OR RETIREMENT. In the
event of termination of Executive's employment by the Company due to
Disability or a Termination due to Retirement, the Company shall pay
Executive his Earned Salary and Vested Benefits, plus, in the event of
termination due to Disability, to the Executive or his estate his Base Salary
at the Termination Date on a monthly basis for 12 months following the month
in which Executive's employment is terminated. In the event that Executive's
employment with the Company is terminated due to Disability, Executive's
benefits under this subsection (iii) shall be reduced by the amount of any
Company sponsored (and paid for) disability benefits paid to Executive.
(iv) TERMINATION BY EXECUTIVE OTHER THAN FOR GOOD REASON.
In the event of a Termination by Executive other than for Good Reason, the
Company shall pay Executive his Earned Salary and Vested Benefits.
(v) TERMINATION FOR CAUSE. In the event of a termination of
Executive's employment by the Company for Cause, the Company shall pay
Executive his Earned Salary and Vested Benefits.
(c) TIMING OF PAYMENTS. Earned Salary shall be paid in a single lump
sum as soon as practicable, but in no event later than the earlier of 60 days
following the end of the Employment Period or the day such Earned Salary would
have been payable under the Company's normal payroll practices. Vested Benefits
shall be payable in accordance with the terms of the plan,
policy, practice, program, contract or agreement under which such benefits
have accrued except as otherwise expressly modified by this Agreement. Fifty
percent (50% ) of Severance Benefits shall be paid within 30 days after the
Termination Date and the remaining 50% of the Severance Benefits shall be
paid in equal monthly installments during the eleven-month period following
the first payment.
(d) RETENTION OF MONIES OWED. The Company may at any time during
Executive's employment or upon his termination for any reason deduct and
retain from any monies owed by it to Executive any sum properly paid by it or
any Affiliate to, on behalf or at the request of Executive or due to it from
Executive including, but not limited to, unauthorized expenses or excess
vacation.
(e) DEFINITIONS. The following capitalized terms have the following
meanings:
"Change in Control" means the occurrence of (i) a sale or
other disposition of stock of the Company, other than a spin-off or any other
form of distribution of the Company's shares owned by RSL COM to the
shareholders of RSL COM, or an issuance of stock of the Company as a result
of which any "person" (as such term is used in section 13(d) and 14(d) of the
Exchange Act), other than RSL COM or any of its subsidiaries, or Ronald S.
Lauder ("Lauder"), or any of his controlled entities, is or becomes the
beneficial owner of more than 50% of the total voting power of the Company
and those persons who are members of the Board of Directors of the Company
immediately prior to the closing of such transaction constitute less than one
half of the membership of the Board of Directors of the Company immediately
following the closing of such transaction, (ii) any merger, consolidation or
reorganization following which those persons who are members of the Board of
Directors of the Company immediately prior to the closing of such transaction
constitute less than one half of the membership of the board of directors of
the surviving entity immediately following the closing of such transaction,
(iii) a transaction pursuant to which more than 50% of the total value of the
assets of the Company and its consolidated subsidiaries are transferred and
the transferee of such assets is not RSL COM or any of its subsidiaries, or
Lauder or a company controlled by him, or (iv) a complete liquidation of the
Company.
"Earned Salary" means any Base Salary earned, but unpaid,
for services rendered to the Company on or prior to the date on which the
Employment Period ends.
"Normal Retirement Age" means the first day of the month
following Executive attaining age 65.
"Severance Benefit" means an amount equal to Executive's
annual Base Salary as in effect immediately prior to the Termination Date.
"Termination due to Disability" means a termination of
Executive's employment by the Company because Executive has been incapable of
substantially fulfilling the positions, duties, responsibilities and
obligations set forth in this Agreement because of physical, mental or
emotional incapacity resulting from injury, sickness or disease for a period
of (i) at least six
consecutive months or (ii) more than nine months in any twelve month period.
Any question as to the existence, extent or potentiality of Executive's
disability upon which Executive and the Company cannot agree shall be
determined by a qualified, independent physician selected by the Company and
reasonably acceptable to Executive. The determination of any such physician
shall be final and conclusive for all purposes of this Agreement. Executive
or his legal representative or any adult member of his immediate family shall
have the right to present to such physician such information and arguments as
to Executive's disability as he, she or they deem appropriate, including the
opinion of Executive's personal physician.
"Termination due to Retirement" means termination of
employment by Executive other than for Good Reason, or termination of
Executive's employment by the Company other than a Termination for Cause, on
or after Executive's Normal Retirement Age.
"Termination for Cause" means a termination of Executive's
employment by the Company due to (i) Executive's conviction of a felony or
the entering by Executive of a plea of nolo contendere with respect to a
charged felony, (ii) Executive's gross negligence, recklessness, dishonesty,
or fraud, willful malfeasance or willful misconduct in the performance of the
services contained in this Agreement; (iii) a willful failure without
reasonable justification to comply with a reasonable written order of the
Board of Directors or the CEO; or (iv) a willful and material breach of
Executive's duties or obligations under this Agreement, including, without
limitation, Executive's failure to devote full business time to the Company
in accordance with Section 2(b) of this Agreement. Notwithstanding the
foregoing, a termination shall not be treated as a Termination for Cause
unless the Company shall have delivered a written notice to Executive stating
that it intends to terminate his employment for Cause and specifying the
factual basis for such termination, and the event or events that form the
basis for the notice, if capable of being cured, shall not have been cured
within 30 days of the receipt of such notice.
"Termination Without Cause" means any termination by the
Company of Executive's employment hereunder other than (i) a Termination due
to Disability, (ii) a Termination due to Retirement or (iii) a Termination
for Cause.
"Termination for Good Reason" means a termination of
Executive's employment by Executive within 90 days following (i) a reduction
in Executive's annual Base Salary or opportunity under the 1999 Performance
Incentive Plan below the levels contemplated by Sections 3(a) and (b), (ii) a
material reduction in Executive's positions, duties, responsibilities or
reporting lines from those described in Section 2 hereof; or (iii) a material
breach of this Agreement by the Company. Notwithstanding the foregoing, a
termination shall not be treated as a Termination for Good Reason (x) if
Executive shall have consented in writing to the occurrence of the event
giving rise to the claim of Termination for Good Reason or (y) unless
Executive shall have delivered a written notice to the Company within 30 days
of his having actual knowledge of the occurrence of one of the events
specified in clause (i), (ii) or (iii) above stating that he intends to
terminate his employment for Good Reason and specifying the factual basis for
such termination, and such event, if capable of being cured, shall not have
been cured within 30 days of the receipt of such notice or (z) if the
opportunity under the Company's
proposed 1999 Performance Incentive Plan is reduced by action of the Board of
Directors of the Company. Following a "Change in Control," Executive shall
not be deemed to have Good Reason under clause (ii) above so long as he
continues to have substantially the responsibilities he had at the time of
the Change in Control.
"Termination Without Good Reason" means any termination by
Executive of Executive's employment hereunder other than (i) a termination
due to Executive's death, (ii) a Termination due to Retirement, (iii) a
Termination for Good Reason, or (iv) a Termination due to Disability.
"Vested Benefits" means amounts which are vested or which
Executive is otherwise entitled to receive under the terms of or in
accordance with any plan, policy, practice or program of, or any contract or
agreement with, the Company, including the Option (to the extent provided in
Section 3(c)), at or subsequent to the date of his termination without regard
to the performance by Executive of further services or the resolution of a
contingency and expenses incurred prior to termination of employment that are
reimbursable under Section 4(c).
(f) FULL DISCHARGE OF COMPANY OBLIGATIONS. The amounts payable to
Executive pursuant to this Section 5 following termination of his employment
(including amounts payable with respect to Vested Benefits) shall be in full
and complete satisfaction of Executive's rights under this Agreement and any
other claims he may have in respect of his employment by the Company or any
of its subsidiaries or Affiliates, including, without limitation, RSL COM.
Such amounts shall constitute liquidated damages with respect to any and all
such rights and claims and, upon Executive's receipt of such amounts, the
Company shall be released and discharged from any and all liability to
Executive in connection with this Agreement or otherwise in connection with
Executive's employment with the Company and its subsidiaries and Affiliates,
other than Executive's rights to indemnification under Section 4(d).
6. AGREEMENT NOT TO COMPETE WITH COMPANY
(a) During the Employment Period and for a period of twelve months
thereafter (the "Applicable Period"), Executive shall not directly or
indirectly own, manage, operate, finance, join, control, advise, consult,
render services to, have an interest or future interest or participate in the
ownership, management, operation, financing or control of, or be employed by
or connected in any manner with any Competing Business (other than as a
holder of common stock of the Company, and not in excess of 1% of the
outstanding voting shares of any other publicly traded company). "Competing
Business" means the business of internet telephony and web telephony
communication services engaged in by the Company in any country where the
Company or an Affiliate conducts such business at any time during the Term.
Any opportunity directly or indirectly related to any business engaged in by
the Company, its subsidiaries and Affiliates of which Executive becomes aware
during the Term shall be deemed a corporate opportunity of the Company, and
Executive shall promptly make such opportunity available to the Company.
(b) If, during the period of twelve months after expiration of the
Employment Period, Executive proposes to engage directly or indirectly in
what may be a Competing Business, Executive shall so notify the Company in a
writing which shall fully set forth and describe in detail the nature of the
activity which may be a competitive Business, the names of the companies or
other entities with or for whom such activity is proposed to be engaged in by
Executive or by an Affiliate of Executive (the "Section 6 Notice"). If,
within 30 days after receipt by the Company of a Section 6 Notice, the
Company shall fail to notify Executive that it deems the proposed activity to
be a Competitive Business, then Executive shall be free to engage in the
activities described in the Section 6 Notice without violation of Section
6(a). If, however, the Company notifies Executive that the proposed
activities constitute a Competitive Business, then (i) Executive shall not
engage in such Competitive Business during the twelve month period following
expiration of the Employment Period, and (ii) the Company shall pay
Executive, during such twelve month period, in equal monthly installments, an
amount equal to his highest Base Salary; PROVIDED that the amount payable
under this Section 6(b) shall be reduced by the amount of Severance Benefit
that Executive is receiving for such period.
7. CONFIDENTIAL INFORMATION
(a) Without the prior written consent of the Company, Executive
shall not disclose at any time during the Employment Period or any time
thereafter any Confidential Information (as defined below) to any third
person other than in the course of fulfilling Executive's responsibilities
under this Agreement unless such Confidential Information has been previously
disclosed to the public by the Company or an Affiliate or is in the public
domain (other than by reason of Executive's breach of the provisions of this
paragraph).
(b) "Confidential Information" is any non-public information
pertaining to the Company or an Affiliate, any of their businesses or the
business or personal affairs of Lauder or his family and how any of them
conducts its or his business or affairs. "Confidential Information" includes
not only information disclosed by the Company or an Affiliate to Executive,
but non-public information developed, created or learned by Executive during
the course of or as a result of Executive's employment with the Company.
"Confidential Information" specifically includes non-public information and
documents concerning the Company's and its Affiliates' methods of doing
business; research, telecommunications technology, its actual and potential
clients, transactions and suppliers (including the Company's or an
Affiliate's terms, conditions and other business arrangements with them);
client or potential client or transaction lists and billing; advertising,
marketing and business plans and strategies (including prospective or pending
licensing applications or investments in license holders or applicants);
profit margins, goals, objectives and projections; compilations, analyses and
projections regarding the Company, its Affiliates or any of its clients or
potential clients or their businesses; trade secrets; salary, staffing,
management organization or employment information; information relating to
members of the Board of Directors and management of the Company or an
Affiliate; files, drawings or designs; information regarding product
development, marketing plans, sales plans or manufacturing plans; operating
policies or manuals, business plans, financial records or packaging design;
or any other non-public financial, commercial, business or technical
information relating to the Company, an Affiliate, Lauder or his family or
non-public information designated as confidential or proprietary that the
Company, an Affiliate or Lauder may receive belonging to others who do
business with any of them.
(c) Nothing herein shall prevent the disclosure by Executive of any
information required by an order of a court having competent jurisdiction or
under subpoena from a government agency, PROVIDED that, if Executive receives
a request for the disclosure of any Confidential Information pursuant to
court process or by a government agency, Executive shall promptly (and at the
latest within five business days but not less than three days prior to the
date Executive is required to respond to the request) notify the Company of
that request and cooperate to the maximum extent authorized by law with the
Company in protecting the Company's and it Affiliates' interest in
maintaining the confidentiality of any Confidential Information. The Company
will reimburse Executive for reasonable out-of-pocket costs or expenses
incurred by Executive in connection with his cooperation with the Company and
its Affiliates hereunder.
8. NO DISPARAGING COMMENTS
Each of the parties hereto agrees not to make disparaging or derogatory
comments about the other party, members of the Board or Affiliates, or
members of the Board of Affiliates, except to the extent required by law, and
then only after consultation with the other party to the maximum extent
possible in order to maintain goodwill for each of the parties.
9. RETURN OF COMPANY PROPERTY
Promptly (and at the latest within ten business days) following Executive's
termination of services, Executive shall:
(i) return to the Company all documents, records, notebooks,
computer diskettes and tapes and anything else containing the
Company's Confidential Information (as defined above), and any
other property or Confidential Information of the Company or
its Affiliates, including all copies thereof in Executive's
possession, custody or control, and
(ii) delete from any computer or other electronic storage medium
owned by Executive any of the proprietary or Confidential
Information of the Company or its Affiliates.
10. NO SOLICITING OR HIRING COMPANY EMPLOYEES
During the Employment Period and for a one-year period thereafter, Executive
shall not directly or indirectly induce any employee of the Company or any
Affiliate, other than Executive's secretary or personal assistant, to
terminate employment with such entity, and during the Employment Period and
for a six-month period thereafter, shall not directly or indirectly, either
individually or as owner, agent, employee, consultant or otherwise, employ or
offer employment
to any person who is or was employed by the Company or any Affiliate as an
employee.
11. CONTINUING OBLIGATIONS FOLLOWING TERMINATION
Executive agrees that his obligations and restrictions with respect to
noncompetition, confidentiality, Company property, nondisparagement and
nonsolicitation, and the Company obligations to indemnify Executive under
Section 4(d), will continue to apply following the termination of Executive's
relationship regardless of the manner in which his relationship with the
Company is terminated, whether voluntarily, for Cause, for Good Reason,
without Cause or otherwise.
12. ARBITRATION OF ALL DISPUTES
(a) Any dispute, controversy or claim between the Executive and the
Company or any of its officers, directors, employees or shareholders (who are
expressly made third-party beneficiaries of this agreement) arising out of,
relating to or in connection with this agreement, or the breach, termination
or validity thereof, shall be finally resolved by binding and non-appealable
arbitration, before a single arbitrator selected by the procedure set forth
below, conducted in New York, New York.
(b) Either party may commence an arbitration proceeding by giving
written notice to the other party of its desire to arbitrate.
(c) The single arbitrator (the "Arbitrator") shall be selected from
among the New York City members of the New York Regional Panel of
Distinguished Neutrals (the "Panel") of the Center for Public Resources
("CPR") by mutual agreement of the parties, or if the parties are unable to
agree, by the following means:
(A) The Company, on one hand, and Executive
on the other hand, shall simultaneously exchange lists each
containing the names of five members of their choice of the
Panel who have indicated a willingness to serve.
(B) If a single name appears on both lists,
that individual shall be appointed.
(C) If more than one name appears on both
parties' lists, the Arbitrator shall be selected from the
common names by mutual agreement of the parties or by the toss
of a coin.
(D) If the lists contain no names in common,
each party shall strike four names from the other party's list
and the Arbitrator shall be selected from the remaining two
names by mutual agreement of the parties or by the toss of a
coin.
(E) If the CPR ceases to have a Panel or it
is otherwise impossible to select the Arbitrator from the
Panel as contemplated by this Agreement, the Arbitrator shall
be selected by the President of the CPR in the manner that the
President deems closest to satisfying the purposes of this
Section, or, if such person is unable to do so, by the
President of the Association of the Bar of the City of New
York.
(d) The Arbitrator, after appropriate consultation with the parties,
shall (i) determine, in his or her sole discretion, the rules governing the
arbitration proceeding, including whether and to what extent the parties
shall have any right to pre-hearing discovery or other forms of disclosure,
the manner of presentation of arguments and/or evidence before or at any
hearing, whether and to what extent formal rules of evidence shall govern the
proceeding and the parties' rights following the proceeding, and (ii) be
governed in exercising such discretion by the goal of reaching a fair and
reasonable decision in an expeditious and efficient manner while endeavoring
to streamline the process and avoid undue litigation costs.
(e) The Arbitrator shall assess the costs of the proceeding
(including the prevailing party's reasonable attorney's fees) on any
unsuccessful party to the extent the Arbitrator concludes that such party is
unsuccessful, unless he or she concludes that (i) matters of equity or
important considerations of fairness dictate otherwise or (ii) in the case of
Executive, the Arbitrator determined that Executive acted reasonably and in
good faith in pursuing all of the claims asserted by him in such arbitration.
(f) The Arbitrator shall be required to state his or her decision in
writing and may, but shall not be required to, elaborate on the reasons for
such decision.
(g) The arbitrator(s) shall have the authority upon application by a
party to direct specific performance, including preliminary or interim
specific performance pending the final resolution of the arbitration, of any
portion of this agreement. The parties expressly consent to the jurisdiction
and power of any federal or state court in New York to enforce the terms of
such a direction upon application by a party. If the arbitrator(s) have not
yet been appointed, the parties may obtain injunctive or other appropriate
relief from a court to enforce the terms of this agreement pending the
appointment of the arbitrator(s) who shall thereafter have full power to
continue, modify or vacate the terms of any injunctive relief ordered by the
court.
(h) Notwithstanding the terms of this agreement that provide that
New York law shall govern, the arbitration and the provisions in this
agreement dealing with arbitration shall be governed exclusively by the
United States (Federal) Arbitration Act, 9 U.S.C. Sections 1-16, and judgment
on or enforcement of the award or any direction for specific performance
rendered by the arbitrators may be entered by any court having jurisdiction
thereof or having jurisdiction over the relevant party or assets of such
party.
(i) If, notwithstanding the parties' agreement to arbitrate, any
issue is presented to a court for decision, the parties hereby waive any
right to trial by jury.
(j) The parties agree that any dispute between the parties and the
arbitration itself shall be kept confidential and that the existence of the
arbitration and any element of it (including but not limited to any pleading,
brief or other document submitted or exchanged, any testimony or other oral
submission, and any award) shall not be disclosed except to the
arbitrator(s), the CPR Institute for Dispute Resolution, the parties, their
counsel and any person necessary to the conduct of the proceeding, except as
may be lawfully required in judicial proceedings relating to the arbitration
or otherwise.
13. NO PUNITIVE OR EMOTIONAL DAMAGES
The parties hereto agree that neither the Executive nor the Company will be
entitled to seek or obtain punitive, exemplary or similar damages of any kind
from the other or, in the case of Executive, from the Company's officers,
directors, employees or shareholders, or to seek or obtain damages or
compensation for emotional distress, as a result of any dispute, controversy
or claim arising out of, relating to or in connection with this Agreement, or
the performance, breach, termination or validity thereof. Nothing herein
shall preclude an award of compensatory or punitive damages against any other
third party.
14. INJUNCTIVE RELIEF TO AVOID IRREPARABLE INJURY
(a) Executive acknowledges and agrees that the individualized
services and capabilities that he will provide to the Company under this
Agreement are of a personal, special, unique, unusual, extraordinary and
intellectual character.
(b) Executive acknowledges and agrees that because the internet
telephony and web communications industry is globally integrated and that its
constituent companies are dependent for their survival on protection of their
confidential information which is highly advanced and technical and on
carefully developed knowledge of customer systems and requirements, the
restrictions in this agreement are reasonable to protect the Company's rights
under this Agreement and to safeguard the Company's and it Affiliates'
Confidential Information.
(c) Executive acknowledges and agrees that the covenants and
obligations of Executive with respect to noncompetition, nonsolicitation,
confidentiality and Company property relate to special, unique and
extraordinary matters and that a violation of any of the terms of such
covenants and obligations will cause the Company and its Affiliates
irreparable injury for which adequate remedies are not available at law.
Executive therefore agrees that the Company shall be entitled to an order of
specific performance, injunction, restraining order or such other interim or
permanent equitable relief (without the requirement to post bond) restraining
Executive from committing any violation of the covenants and obligations
contained in this Agreement. Executive acknowledges and agrees that if any
one or more of any part of such restrictions shall be rendered or judged
invalid or unenforceable, such restriction or part shall be deemed to be
severed from this Agreement and such invalidity or unenforceability shall not
in any way affect the validity of the remaining provisions.
(d) These injunctive remedies are cumulative and are in addition to
any other rights and remedies the Company may have at law or in equity.
15. AUTOMATIC AMENDMENT BY COURT ORDER AND INTERIM ENFORCEMENT
(a) If the Arbitrator(s) or a court determines that, but for the
provisions of this paragraph, any part of this agreement is illegal, void as
against public policy or otherwise unenforceable, the relevant part will
automatically be amended to the extent necessary to make it sufficiently
narrow in scope, time and geographic area to be legally enforceable. All
other terms will remain in full force and effect.
(b) If the Executive raises any question as to the enforceability of
any part or terms of this agreement, including, without limitation, the
provisions relating to noncompetition, nonsolicitation, confidentiality and
Company property, the Executive specifically agrees that he will comply fully
with this Agreement unless and until the entry of an arbitral award to the
contrary.
16. NOTICES
All notices and other communications required or permitted hereunder shall be
sufficiently given if (a) delivered personally, (b) sent by facsimile
transmission (with confirmation received), (c) sent by a
nationally-recognized air courier assuring overnight delivery, or (d) mailed
(by registered or certified mail, return receipt requested and postage
prepaid) as follows:
if to the Executive, to the Executive at:
Mark Gazit
18/8 Hadolev St
Jerusalem, Israel
if to the Company, to the Company at
deltathree.com, Inc.
430 Park Avenue
5th Floor
New York , NY 10022
Attention: Corporate Counsel
With a copy to :
RSL Communications, Ltd.
767 Fifth Avenue
Suite 4300
New York, NY 10153
Attention: Corporate Counsel
or to such other address as shall be furnished by notice from time to time by
one party hereto to the other party. Any such communication shall be deemed
to have been given, (i) in the case of personal delivery, on the date of
delivery, (ii) in the case of delivery by air courier, on the first business
day following the day on which such communication was posted, and (iii) in
the case of mailing, on the third business day following the day on which
such notice was posted.
17. SOLE AND ENTIRE UNDERSTANDING; AMENDMENTS
The entire understanding and agreement between the Company and Executive have
been incorporated into this Agreement. There are no other agreements,
promises, representations, understandings or inducements by the Company to
Executive or Executive to the Company other than those specifically set forth
in this Agreement. This Agreement may not be altered, amended or added to
except in a single writing signed by the Company and the Executive.
18. WAIVER OF BREACH
A waiver or breach of any provision of this Agreement shall not constitute or
operate as a waiver of any other breach of such provision or of any other
provision, and any failure to enforce any provision hereof shall not operate
as a waiver of such provision or of any other provision.
19. HEADINGS
The headings of sections in this Agreement are for convenience only, are not
a part of this Agreement and shall not affect the construction of the
provisions of this Agreement.
20. ARM'S LENGTH
(a) This Agreement was entered into at arm's length, without duress
or coercion, and is to be interpreted as an agreement between parties of
equal bargaining strength. Both the Company and the Executive agree that this
Agreement is clear and unambiguous as to its terms, and that no parol or
other evidence will be used or admitted to alter or explain the terms of this
Agreement, but that it will be interpreted based on the language within its
four corners in accordance with the purposes for which it is entered into.
(b) The parties hereto expressly agree that any rule or contractual
interpretation, as applied under California law or anywhere else, that would
allow parol or extrinsic evidence to attempt to show fraud in the inducement
or duress to contradict the plain, unambiguous terms of this Agreement shall
not apply to this Agreement and its performance and enforcement. This
provision is a material part of this Agreement and, should any party try to
introduce evidence
contrary to this provision, any other party shall be entitle to consider it a
breach and to rescind this contract in full.
21. SUCCESSORS AND ASSIGNS
(a) This Agreement will inure to the benefit of, and will be binding
upon, the Company, its successors and assigns and upon the Executive and his
heirs, successors and assigns; PROVIDED, HOWEVER, that, because this is an
Agreement for personal services, the Executive cannot assign any of his
obligations under this Agreement to anyone else.
(b) This Agreement may be executed in counterparts, in which case
each of the two counterparts will be deemed to be an original and the final
counterpart shall be deemed to have been executed in New York, New York.
22. NEW YORK LAW GOVERNS
Any questions or other matters arising under this Agreement, whether of
validity, interpretation, performance or otherwise, will therefore be
governed by and construed in accordance with the laws of the State of New
York applicable to agreements made and to be wholly performed in New York,
without reference to principles of conflicts or choice of law under which the
law of any other jurisdiction would apply.
IN WITNESS WHEREOF, this Agreement has been executed by Executive
and then by the Company in New York, New York, on the dates shown below, but
effective as of the date and year first above written.
Date: May 30, 2000 /s/ Mark Gazit
------------------ ------------------------------------
Mark Gazit
DELTATHREE.COM, INC.
Date: May 30, 2000 By: /s/ Noam Bardin
------------------ ---------------------------------
Name: Noam Bardin
Title: Chief Executive Officer