SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
AMENDMENT NO.2
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Year Ended December 31, 1998
Commission File No. 0-26728
TALK.COM INC.
FORMERLY, TEL-SAVE.COM, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 23-2827736
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
12020 SUNRISE VALLEY DRIVE, SUITE 100
RESTON, VIRGINIA 22091
(703) 391-7500
(Address, including zip code, and telephone
number, including area code, of registrant's
principal executive offices)
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
Title of each class: Name of each exchange on which registered:
None Not applicable
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
COMMON STOCK, PAR VALUE $.01 PER SHARE
Indicate by check mark whether the Registrant (1) has filed all documents and
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the
<PAGE>
Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment of this
Form 10-K. [X]
The aggregate market value of voting stock held by non-affiliates of the
registrant as of April 26, 1999 was approximately $741,591,301 based on the
average of the high and low prices of the Common Stock on April 26, 1999 of
$13.56 per share as reported on the Nasdaq National Market.
As of April 26, 1999, the Registrant had issued and outstanding 60,141,892
shares of its Common Stock, par value $.01 per share.
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PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
DIRECTORS
The following sets forth certain biographical information, present
occupation and business experience for the past five years for each of the
directors of the Company.
CLASS I: TERMS TO EXPIRE IN 2001
GABRIEL BATTISTA, AGE 54. Mr. Battista became a director and the
Chairman of the Board, Chief Executive Officer and President of the Company on
January 5, 1999. Prior to joining the Company, Mr. Battista served as Chief
Executive Officer of Network Solutions Inc., an Internet domain name
registration company. Prior to joining Network Solutions, Mr. Battista served
from 1995 to 1996 as CEO and from 1991 to 1995 as President and Chief Operating
Officer of Cable & Wireless, Inc., the nation's largest telecommunications
provider exclusively serving businesses. His career also includes management
positions at US Sprint, GTE Telenet and General Electric Information Services.
Mr. Battista also serves as a director of Axent Technologies, Inc., Capitol
College, Systems & Computer Technology Corporation (SCT) and Online Technologies
Group, Inc. (OTG).
RONALD R. THOMA, AGE 61. Mr. Thoma currently serves as Executive Vice
President of Crown Cork and Seal Company, Inc. where he has been employed since
1955. Mr. Thoma has served as a director of the Company since 1995.
CLASS II: TERMS TO EXPIRE IN 2000
GEORGE P. FARLEY, AGE 60. Mr. Farley became Chief Financial Officer and
Treasurer of the Company effective October 29, 1997. Mr. Farley is formerly
Group Vice President of Finance/Chief Financial Officer of Twin County, a food
distribution company. Twin County filed a petition under Federal bankruptcy laws
in December 1998. Prior to joining Twin County in September 1995, Mr. Farley was
a partner of BDO Seidman, LLP, where he had served as a partner since 1974. Mr.
Farley has served as a director of the Company since late 1996.
GARY W. MCCULLA, AGE 39. Mr. McCulla joined the Company in March 1994
and previously served as President and Director of Sales and Marketing of the
Company until his retirement from those offices on January 5, 1999. Mr. McCulla
has served as a director of the Company since 1995.
CLASS III: TERMS TO EXPIRE IN 1999
EMANUEL J. DEMAIO, AGE 40. Mr. DeMaio joined the Company in February
1992 and currently serves as Chief Operations Officer. Prior to joining the
Company, from 1981 through 1992, Mr. DeMaio held various technical and
managerial positions with AT&T. Mr. DeMaio has served as a director of the
Company since 1995.
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HAROLD FIRST, AGE 61. Mr. First is a certified public accountant and
currently is a financial consultant. Mr. First served as Chief Financial Officer
of Icahn Holdings Company and related entities from December 1990 through
December 1992. Mr. First serves as a director of Cadus Pharmaceutical Company,
Panaco, Inc. and Phillips Service Corp. Mr. First has served as a director of
the Company since 1995.
Under Mr. Battista's employment agreement with the Company, he has the
right to nominate a majority of the Board of Directors of the Company at the
next annual meeting of shareholders.
EXECUTIVE OFFICERS
The executive officers of the Company as of April 28, 1999 were as
follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C>
Gabriel Battista 54 Chairman of the Board, Chief Executive Officer, President and Director
Emanuel J. DeMaio 40 Chief Operations Officer and Director
George P. Farley 60 Chief Financial Officer, Treasurer and Director
Michael Ferzacca 41 Executive Vice President, Sales
Norris M. Hall, III 38 Senior Vice President, Network Management
Edward B. Meyercord, III 33 Executive Vice President, Marketing and Corporate Development
George Vinall 43 Executive Vice President, Business Development
Aloysius T. Lawn, IV 40 General Counsel and Secretary
Kevin R. Kelly 34 Controller
</TABLE>
GABRIEL BATTISTA. Mr. Battista became a director and the Chairman of the Board,
Chief Executive Officer and President of the Company on January 5, 1999. Prior
to joining the Company, Mr. Battista served as Chief Executive Officer of
Network Solutions Inc. Prior to joining Network Solutions, Mr. Battista served
as CEO, from 1995 to 1996, and as President and Chief Operating Officer, from
1991 to 1995, of Cable & Wireless, Inc., the nation's largest telecommunications
provider exclusively serving businesses. His career also includes management
positions at US Sprint, GTE Telenet and General Electric Information Services.
Mr. Battista also serves as a director of Axent Technologies, Inc., Capitol
College, Systems & Computer Technology Corporation (SCT) and Online Technologies
Group, Inc. (OTG).
EMANUEL J. DEMAIO. Mr. DeMaio joined the Company in February 1992 and currently
serves as a Director and as Chief Operations Officer. Prior to joining the
Company, from 1981 through 1992, Mr. DeMaio held various technical and
managerial positions with AT&T. As of May 14, 1999, Mr. DeMaio's employment at
the Company
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will terminate, pursuant to the Letter Agreement between Mr. DeMaio and the
Company dated April 6, 1999.
GEORGE P. FARLEY. Mr. Farley became Chief Financial Officer and Treasurer of the
Company effective October 29, 1997. Mr. Farley is formerly Group Vice President
of Finance/Chief Financial Officer of Twin County Grocers, Inc. ("Twin County"),
a food distribution company. Prior to joining Twin County in September 1995, Mr.
Farley was a partner of BDO Seidman, LLP, where he had served as a partner since
1974.
MICHAEL FERZACCA. Mr. Ferzacca became Executive Vice President, Sales of the
Company in January 1999. Prior to joining the Company, he served in various
roles at Cable & Wireless USA, a telecommunications provider, including manager
of the Alternate Channels Division and Co-Chief Operating Officer.
NORRIS M. HALL, III. Mr. Hall became Senior Vice President, Network Management,
of the Company in January 1999. Prior to joining the Company, he served as
Senior Vice President, Network Operations of Premiere Technologies, a
telecommunications service provider, from August 1998 to December 1998. Prior to
joining Premiere Technologies he served as Vice President, Network Operations of
Cable and Wireless, an international common carrier.
EDWARD B. MEYERCORD, III. Mr. Meyercord joined the Company in September 1996 and
currently serves as Executive Vice President, Marketing and Corporate
Development. From 1993 until joining the Company, Mr. Meyercord worked in the
corporate finance department of Salomon Brothers, where he held various
positions, the most recent of which was Vice President. Prior to joining Salomon
Brothers, Mr. Meyercord worked in the corporate finance department at Paine
Webber Incorporated.
GEORGE VINALL. Mr. Vinall became Executive Vice President, Business Development
of the Company in January 1999. Prior to joining the Company he served as
President of International Protocol LLC, a telecommunication consulting
business, as General Manager of Cable & Wireless Internet Exchange, an
international internet service provider, and as Vice President, Regulatory &
Government Affairs of Cable and Wireless North America, an international common
carrier.
ALOYSIUS T. LAWN, IV. Mr. Lawn joined the Company in January 1996 and currently
serves as General Counsel and Secretary of the Company. Prior to joining the
Company, from 1985 through 1995, Mr. Lawn was an attorney in private practice.
KEVIN R. KELLY. Mr. Kelly joined the Company in April 1994 and currently serves
as Controller. From 1987 to 1994, Mr. Kelly held various managerial positions
with a major public accounting firm. Mr. Kelly is a certified public accountant.
COMPENSATION OF DIRECTORS
The Company currently pays non-employee directors an annual retainer of
$10,000. In October, 1998, the Company's employee directors approved the grant
to each of the two
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non-employee directors of an option to purchase 30,000 shares of Common Stock at
the then-current market value under the 1998 Long-Term Incentive Plan. In
December 1998, the employee directors approved an additional grant to each of
the two non-employee directors of an option to purchase 30,000 shares of Common
Stock at the then-current market value.
The Company's employee directors may, from time to time in the future,
grant options to non-employee directors. Non-employee directors also are
reimbursed for reasonable expenses incurred in connection with attendance at
Board meetings or meetings of committees thereof.
ITEM 11. EXECUTIVE COMPENSATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table sets forth information for the fiscal years ended
December 31, 1998, 1997 and 1996 as to the compensation paid by the Company to
the Chief Executive Officer for services rendered and the four other most highly
compensated executive officers of the Company whose annual salary and bonus
exceeded $100,000 (the "Named Executives").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Name and Principal Position Annual Compensation Long Term
Compensation
- ----------------------------------------------------- ---------------------------- ----------------
Securities
Underlying
Options/SARs
(#)(3)
------
Year Salary(2) Bonus(2)
---- --------- --------
<S> <C> <C> <C> <C>
DANIEL BORISLOW, Chairman and Chief Executive Officer(1) 1998 $325,000 $400,000(6) 750,000
1997 $325,000 $500,000 --
1996 $325,000 $500,000 --
GARY W. MCCULLA, President and Director of Sales 1998 $300,000 $446,955(4) 350,000
and Marketing(5)
1997 $300,000 $500,000(6) --
1996 $300,000 $350,000 900,000
EMMANUEL J. DEMAIO, Chief Operations Officer(7) 1998 $185,000 $345,382(4) 350,000
1997 $175,000 $225,000(6) --
1996 $165,000 $150,000 270,000
EDWARD B. MEYERCORD, III, Executive Vice President 1998 $200,000 $128,338(4) --
- - Marketing and Corporate Development
1997 $210,000 $150,000 --
1996(8) $52,000 $400,000 800,000
GEORGE P. FARLEY, Chief Financial Officer and Treasurer 1998 $200,000 $100,000(6) 250,000
1997(9) $28,462 $5,000(6) 200,000(9)
</TABLE>
- -----------------------------------
(1) Effective January 5, 1999, Mr. Borislow resigned from all offices with
the Company and its subsidiaries.
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(2) The costs of certain benefits are not included because they did not
exceed, in the case of each Named Executive, the lesser of $50,000 or
10% of the total annual salary and bonus reported in the above table.
(3) As adjusted to reflect a three-for-two stock split in the form of a
stock dividend effective as of March 15, 1996 and a two-for-one stock
split in the form of a stock dividend effective as of January 31, 1997.
(4) Bonus paid in shares of Common Stock and in-kind property valued in
each case at the current market value at the date of grant.
(5) Effective January 5, 1999, Mr. McCulla resigned from all offices with
the Company and its subsidiaries.
(6) Bonus paid in shares of Common Stock valued at the current market value
at the date of grant.
(7) Effective May 14, 1999, Mr. DeMaio will resign from all offices with
the Company and its subsidiaries.
(8) Mr. Meyercord was hired by the Company effective as of September 5,
1996. In connection therewith, Mr. Meyercord was paid $400,000 and was
granted an option to purchase 800,000 shares of the Company`s Common
Stock.
(9) Mr. Farley became an employee and Chief Financial Officer and Treasurer
of the Company on October 29, 1997. In connection with his employment,
he purchased 200,000 shares of the Company's Common Stock at a price of
$4.25 per share from a former executive officer of the Company.
STOCK OPTION GRANTS
The following table sets forth further information regarding grants of
options to purchase Common Stock made by the Company during the fiscal year
ended December 31, 1998 to the Named Executives.
<TABLE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<CAPTION>
Potential Realizable
Percent of Value at Assumed
Number of Total Annual Rates of Stock
Securities Options/SARs Exercise Price Appreciation for
Underlying Granted to Price per Option Term(1)
Options/SARs Employees Share Expiration -----------------------
Name Granted in 1998 ($ share) Date 5%($) 10%($)
---- ------- ------- --------- ----- ------ ------
<S> <C> <C> <C> <C> <C> <C>
Daniel Borislow 750,000 13.6 5.75 Oct. 12, 2009 $3,063,338 $7,991,566
Gary W. McCulla 350,000 6.3 5.75 Jan. 5, 2001 $206,281 $422,625
Emanuel J. DeMaio 350,000 6.3 5.75 Jan. 5, 2001 $206,281 $422,625
Edward B. Meyercord, III -- -- -- -- -- --
George P. Farley 250,000 4.5 5.75 Jan. 5, 2001 $147,344 $301,875
</TABLE>
- ----------------
(1) Disclosures of the 5% and 10% assumed annual compound rates of stock
appreciation are mandated by the rules of the SEC and do not represent the
Company's estimate or projection of future common stock prices. The actual
value realized may be greater or less than the potential realizable value
set forth in the table.
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The following table sets forth information concerning the 1998 year-end
value of unexercised in-the-money options held by each of the Named Executives.
<TABLE>
AGGREGATED OPTION/SAR EXERCISES AND FISCAL YEAR-END OPTION/SAR VALUES
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Shares Options/SARs In-the-Money Options/SARs at
Acquired Value at Fiscal Year-End(#) Fiscal Year-End($)(1)
On Exercise Realized --------------------- ---------------------
----------- -------- -------------------------
Exercisable/Unexercisable Exercisable/ Unexercisable
Name
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Daniel Borislow 300,000 $1,460,250 750,000/0 $8,250,000/0
Gary W. McCulla 673,900 $1,263,610 0/800,000 0/$9,326,500
Emanuel J. DeMaio 213,978 $446,438 199,200/485,000 $2,424,264/$5,492,950
Edward B. Meyercord, III -- -- 800,000/0 $6,200,000/0
George P. Farley -- -- 0/250,000 0/$2,750,000
</TABLE>
- --------------------------------------------------------------------------------
(1) Calculated as the difference between the exercise/base-price of the
options/SARs and a year-end fair market value of the underlying
securities equal to $16.75.
EMPLOYMENT CONTRACTS
Gabriel Battista is party to an employment agreement with the Company
that expires on December 31, 2001. Under the terms of the agreement, Mr.
Battista received a signing bonus of $3,000,000 and is entitled to an annual
salary of $500,000, payable in advance, plus a discretionary bonus. Mr. Battista
is also entitled to other benefits and perquisites. In addition, Mr. Battista
was granted options that vest over three years to purchase 1,000,000 shares of
the Company's Common Stock at an exercise price of $10.4375 per share, and
options that vested immediately upon execution of the agreement to purchase an
additional 650,000 shares at an exercise price of $7.00 per share. In the event
of certain transactions (including an acquisition of the Company's assets, a
merger into another entity or a transaction that results in the Company's Common
Stock no longer being required to be registered under the Securities Exchange
Act of 1934), Mr. Battista will receive an additional bonus of $1,000,000 if the
price per share for the Company's Common Stock in such transaction was less than
or equal to $20.00 per share, or $3,000,000 if the consideration is greater than
$20.00 per share. In addition, upon a change in control of the Company, all of
Mr. Battista's options immediately vest.
Edward B. Meyercord, III entered into a five-year employment agreement
with the Company effective as of September 5, 1996. Under the contract, Mr.
Meyercord is entitled to a minimum annual base salary of $210,000 for each year.
In the event of a "change in control" as defined in Mr. Meyercord's agreement,
he will be entitled to receive an amount equal to the positive difference, if
any, between $2,000,000 and an amount equal to the product of (a) 800,000 (the
number of options held by Mr. Meyercord) and (b) the positive
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difference, if any, between the market price of the Common Stock on the date of
the change in control and the exercise price of Mr. Meyercord's stock options
($9.00).
During 1998, George Farley was party to an employment agreement with the
Company, which provides for a base annual salary of $200,000 and annual bonuses
determined by the Board. The resignation of Mr. Borislow as the Chief Executive
Officer of the Company permitted Mr. Farley, under the terms of the agreement,
to terminate his agreement and continue receiving payments through the original
term of the agreement ending in October 2000. In lieu of exercising these
rights, Mr. Farley and the Company modified his employment agreement to provide
for, among other things (i) a continuation of his employment until October 31,
1999, (ii) a base annual salary of $240,000, commencing January 1, 1999 and
(iii) the continuation of his compensation payments under the agreement for
twenty-two consecutive months following the termination of his employment.
Mr. Borislow's employment agreement with the Company terminated on
January 5, 1999. Under the terms of the agreement, Mr. Borislow was entitled to
an annual base salary of $325,000, customary benefits and a cost of living
adjustment based upon the Consumer Price Index as published by the Department of
Labor. Mr. McCulla's and Mr. DeMaio's employment agreements have or will be
terminated in connection with their separation from the Company as executive
officers. See "Certain Relationships and Related Party Transactions."
The above-described agreements require each of the executives to
maintain the confidentiality of Company information and assign inventions to the
Company. In addition, each of such executive officers has agreed that such
person will not compete with the Company by engaging in any capacity in any
business that is competitive with the business of the Company during the term of
his respective agreement and thereafter for specified periods.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Daniel Borislow, the Chief Executive Officer of the Company in 1998,
served on the Compensation Committee until March 3, 1998, the date of his
resignation from the Committee. Until the termination of his employment
agreement on January 5, 1999, Mr. Borislow's compensation was determined by the
non-employee director members of the Compensation Committee.
CERTAIN TRANSACTIONS
See "Certain Relationships and Related Party Transactions."
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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information known to the Company
with respect to beneficial ownership of the Company's Common Stock as of April
28, 1999 (except as otherwise noted) by (i) each stockholder who is known by the
Company to own beneficially more than five percent of the outstanding Common
Stock, (ii) each of the Company's directors, (iii) each of the executive
officers named below and (iv) all current directors and executive officers of
the Company as a group. Except as otherwise indicated below, the Company
believes that the beneficial owners of the Common Stock listed below have sole
investment and voting power with respect to such shares.
<TABLE>
<CAPTION>
NUMBER OF
SHARES
BENEFICIALLY PERCENT OF SHARES
NAME OF BENEFICIAL OWNER OR IDENTITY OF GROUP OWNED(1) BENEFICIALLY OWNED
- ------------------------------------------------- ------------ -------------------
<S> <C> <C>
Massachusetts Financial Services Company 7,848,200 (2) 13.0%
500 Boylston Street
Boston, Massachusetts 02116
America Online, Inc. 6,843,356 (3) 11.4%
22000 AOL Way
Dulles, Virginia 20166
FMR Corp. 6,613,200 (4) 11.0%
82 Devonshire Street
Boston, Massachusetts 02109
Paul Rosenberg 5,759,985 (5) 9.6%
600 North 4th Street
Philadelphia, PA 19123
Daniel Borislow 1,956,109 3.2%
Seth Tobias 4,637,491 (6) 7.7%
George P. Farley 1,579,249 (7) 2.6%
Gary W. McCulla 1,174,719 1.9%
Edward B. Meyercord, III 806,131 1.3%
Emanuel J. DeMaio 663,178 1.1%
Gabriel Battista 670,000 (8) 1.1%
Harold First 84,004 *
Ronald R. Thoma 97,934 *
All current directors and executive officers as 4,387,689 (9) 7.3%
a group (12 persons)
</TABLE>
* Less than 1%
(1) The securities "beneficially owned" by a person are determined in
accordance with the definition of "beneficial ownership" set forth in
the regulations of the Commission and, accordingly, may include
securities owned by or for, among others, the spouse, children or
certain other relatives of such person. The same shares may be
beneficially owned by more than one person. Beneficial ownership may be
disclaimed as to certain of the securities. Furthermore, the
information as to numbers and percentages of shares owned generally
does not
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reflect, and has not been adjusted for, any shares that may be issued
upon exercise of the non-transferable share purchase rights that were
distributed to holders of shares, options and warrants of record on
December 31, 1998. Such holders of record received one such
non-transferable right for every 20 shares of Common Stock held or
underlying options or warrants on the record date.
(2) Massachusetts Financial Services Company ("MFS"), an investment
adviser, filed an amendment to a Schedule 13G with the Commission on
February 11, 1999 (the "MFS 13G"), in which it reported beneficial
ownership of 7,848,200 shares, 6,471,100 of which are also beneficially
owned by MFS Series Trust II-MFS Emerging Growth Fund, an investment
company, and 1,377,100 of which are also owned by certain non-reporting
entities as well as MFS. The foregoing information is derived from the
MFS 13G.
(3) The foregoing information is derived from the Schedule 13G filed by
America Online, Inc. on January 15, 1999.
(4) The foregoing information is derived from the Schedule 13G filed by
FMR Corp. on March 10, 1999.
(5) The foregoing information is derived from the Schedule 13D filed by
Paul Rosenberg, the Rosenberg Family Limited Partnership, PBR, Inc.
and the New Millennium Charitable Foundation on January 12, 1999.
(6) The foregoing information is derived from the Schedule 13G filed by
Seth Tobias on February 16, 1999.
(7) Includes 1,200,000 shares held by the D&K Charitable Foundation, of
which Mr. Farley serves as a director.
(8) Does not include 1,000,000 shares of Common Stock that could be
acquired upon exercise of options granted to Mr. Battista that have not
yet vested.
(9) Does not include an aggregate of 830,000 shares of Common Stock that
could be acquired upon exercise of options by certain executive
officers that have not yet vested.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Under Section 16(a) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), the Company's directors and certain officers and persons
who are the beneficial owners of more than 10 percent of the Common Stock are
required to report their ownership of the Common Stock, options and certain
related securities and any changes in that ownership to the SEC. Specific due
dates for these reports have been established, and the Company is required to
report in this proxy statement any failure to file by such dates in 1998. The
Company believes that all of the required filings have been made in a timely
manner. In making this statement, the Company has relied on copies of the
reporting forms received by it.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS.
On January 5, 1999, Mr. Daniel Borislow, a founder of the Company and
its Chairman of the Board and Chief Executive Officer, resigned as a director
and officer of the Company and its subsidiaries. As outlined below, the Company
entered into various agreements and engaged in various transactions with Mr.
Borislow and certain entities in which he or his family has an interest.
The Company paid $1.0 million to Mr. Borislow, assigned certain
automobiles to him, and continued certain of his health and medical benefits and
director and officer
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insurance. The Company also agreed that, so long as Mr. Borislow owns
beneficially at least two percent (2%) of the common stock (on a fully diluted
basis), Mr. Borislow and trusts for the benefit of his children would be
entitled to: registration rights with respect to their shares of Common Stock,
the right to require the Company to use a portion of proceeds from any public or
private sale of debt securities, excluding borrowings from a commercial bank or
other financial institution, by the Company to repurchase debt securities of the
Company owned by Mr. Borislow or the trusts for the benefit of his children and
the right to require the Company to use the proceeds from the exercise of stock
options or rights to repurchase Common Stock owned by Mr. Borislow or the trusts
for the benefit of his children. The Company also agreed that, so long as Mr.
Borislow had such beneficial ownership, the Company would not, without the prior
written consent of Mr. Borislow and subject to certain exceptions: (a) engage in
certain significant corporate transactions, including the sale or encumbrance of
substantially all of its assets, mergers and consolidations and certain material
acquisitions, or, (b) for a period of 18 months from the agreement date, offer
or sell any of its Common Stock unless and until Mr. Borislow and the trusts
have sold or otherwise disposed of all of the shares of Common Stock held by him
on the agreement date. In turn, Mr. Borislow terminated his employment with the
Company and agreed not to compete with the Company for at least one year. Mr.
Borislow also agreed to guarantee up to $20.0 million of the Company's
obligations in connection with the Investment Agreement with AOL described in
Item 7 of this report.
Effective December 31, 1998, the Company, in exchange for a total of
783,706 shares of Common Stock, (i) sold to Jimlew Capital, L.L.C., a company
owned by Mr. Borislow, (a) all of the capital stock of Emergency Transportation
Corporation (a wholly owned subsidiary of the Company, the primary asset of
which is an interest in a jet airplane), valued at approximately $8.7 million,
and (b) all of the real property constituting the Company's headquarters in New
Hope, Pennsylvania, valued at approximately $2.0 million, and (ii) released Mr.
Borislow from an obligation to the Company for borrowings representing
approximately $4.7 million principal amount and interest at the rate of 6% per
annum. Mr. Borislow agreed to lease to the Company a portion of the headquarters
property at a base monthly rent of $12,500. The subsidiary stock and the real
property were valued based on the book value of these assets, which the
management of the Company believes approximated the fair market value of these
assets on the date of exchange. The Common Stock exchanged for the assets was
valued at its market value on the date of the exchanges. The Company had
previously determined that it would be desirable to dispose of these assets and
accordingly believed that the ownership of these assets was not required for the
continued operation of the Company's business.
During 1998, the following additional officers and directors had
outstanding non-interest-bearing loans from the Company in the amounts
indicated: Gary W. McCulla, $3,541,382; George P. Farley, $1,554,532; Aloysius
T. Lawn, IV, $1,293,506; Emanuel J. DeMaio, $821,906; Harold First, $236,800;
and Ronald Thoma, $236,800. These loans were incurred in connection with the
exercise of stock options or the holding of shares of Common Stock. The loans
have since been repaid through delivery
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by the borrower to the Company of shares of Common Stock with a fair market
value on date of payment equal to the outstanding amount of such loans.
On January 5, 1999, the Company assigned to a trust for the benefit of
Mr. Borislow's children the Company's interest in $53,700,000 principal amount
of subordinated notes of Communication TeleSystems International d/b/a
WorldxChange Communications, in exchange for $62,545,000 aggregate principal
amount of the Company's 2002 Convertible Notes and 2004 Convertible Notes owned
by the trust. The exchange rate was determined based on the Company's assessment
of the fair values of the WorldxChange Notes and of the Company's Convertible
Notes given in exchange, which assessment was supported by the opinion of an
independent investment banking firm as to the fairness to the Company of the
consideration received.
In the first quarter of 1999, the Company purchased from Mr. Borislow
amd from two trusts for the benefit of Mr. Borislow's children $76,557,000
aggregate principal amount of the Company's 2002 Convertible Notes and 2004
Convertible Notes for $65.4 million in cash.
On January 5, 1999, Gary W. McCulla entered into a letter agreement
with the Company in connection with his separation from the Company as an
officer. Pursuant to this agreement, he is entitled to receive payments
aggregating $750,000 per year through January 5, 2001, and is eligible to
receive certain health, medical and other benefits.
On April 6, 1999, Emanuel J. DeMaio entered into a letter agreement with
the Company providing for the termination of his employment with the Company as
of May 14, 1999. Under this agreement, he is entitled to receive payments
aggregating $400,000 per year for two years, and is eligible to receive certain
health, medical and other benefits. The agreement also provides that Mr. DeMaio
shall provide consulting services to the Company for a period of 18 months at a
rate of two hundred dollars ($200) per hour.
13
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
3. EXHIBITS:
EXHIBIT
NUMBER DESCRIPTION
- ------------------------------
2.1 Plan of Reorganization between and among Tel-Save Holdings,
Inc., a Delaware corporation, Tel-Save, Inc., a Pennsylvania
corporation, Daniel Borislow and Paul Rosenberg, and Exhibits
Thereto (incorporated by reference to Exhibit 2.1 to the
Company's registration statement on Form S-1 (File No.
33-94940)).
3.1 Amended and Restated Certificate of Incorporation of the
Company, as amended (incorporated by reference to Exhibit 4.1
to the Company's registration statement on Form S-4 (File No.
333-38943)).
3.2 Bylaws of the Company (incorporated by reference to Exhibit 3.2
to the Company's registration statement on Form S-1 (File No.
33-94940)).
3.3 Certificate of Ownership and Merger Merging Tel-Save.com, Inc.
into Tel-Save Holdings, Inc. (Changing the name of the
Registrant) (incorporated by reference to Exhibit 3(i) to the
Company's Current Report on Form 8-K dated January 20, 1999).
10.1 Employment Agreement between the Company and Emanuel J. DeMaio
(incorporated by reference to Exhibit 10.2 to the Company's
registration statement on Form S-1 (File No. 33-94940)).*
10.2 Employment Agreement between the Company and George P. Farley
(incorporated by reference to Exhibit 10 to the Company's
report on Form 10-Q for the quarter ended September 30, 1997).*
10.3 Employment Agreement between the Company and Aloysius T. Lawn,
IV dated October 13, 1998.*
10.4 Employment Agreement between the Company and Edward B.
Meyercord, III (incorporated by reference to Exhibit 10.6 to
the Company's Annual Report on Form 10-K for the year ended
December 31, 1996).*
10.5 Indemnification Agreement between the Company and Daniel
Borislow (incorporated by reference to Exhibit 10.4 to the
Company's registration statement on Form S-1 (File No.
33-94940)).
10.6 Indemnification Agreement between the Company and Emanuel J.
DeMaio (incorporated by reference to Exhibit 10.5 to the
Company's registration statement on Form S-1 (File No.
33-94940)).
14
<PAGE>
10.7 Indemnification Agreement between the Company and Gary W.
McCulla (incorporated by reference to Exhibit 10.6 to the
Company's registration statement on Form S-1 (File No.
33-94940)).
10.9 Indemnification Agreement between the Company and Peter K.
Morrison (incorporated by reference to Exhibit 10.8 to the
Company's registration statement on Form S-1 (File No.
33-94940)).
10.10 Indemnification Agreement between the Company and Kevin R.
Kelly (incorporated by reference to Exhibit 10.9 to the
Company's registration statement on Form S-1 (File No.
33-94940)).
10.11 Indemnification Agreement between the Company and Aloysius T.
Lawn, IV (incorporated by reference to Exhibit 10.12 to the
Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1995).
10.12 Indemnification Agreement between the Company and Edward B.
Meyercord, III (incorporated by reference to Exhibit 10.14 to
the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1996).
10.14 Tel-Save Holdings, Inc. 1995 Employee Stock Option Plan
(incorporated by reference to Exhibit 10.15 to the Company's
registration statement on Form S-1 (File No. 33-94940)).*
10.15 Tel-Save Holdings, Inc. Employee Bonus Plan (incorporated by
reference to page 13 of the Company's Proxy Statement for the
Company's 1996 Annual Meeting of Stockholders dated April 3,
1996).*
10.19 Telecommunications Marketing Agreement by and among the
Company, Tel-Save, Inc. and America Online, Inc., dated
February 22, 1997 (incorporated by reference to Exhibit 10.32
to the Company's Form 10-K for the year ended December 31,
1996).+
10.20 Amendment No. 1, dated as of January 25, 1998, to the
Telecommunications Marketing Agreement dated as of February 22,
1997 by and among the Company, Tel-Save, Inc. and America
Online, Inc. (incorporated by reference to Exhibit 10.31 to the
Company's Form 10-K for the year ended December 31, 1997). +
10.21 Amendment No. 2, dated May 14, 1998, among the Company,
Tel-Save, Inc. and America Online, Inc., which amends that
certain Telecommunications Marketing Agreement, dated as of
February 22, 1997, as corrected and amended by letter, dated
April 23, 1997, and amended by an Amendment No. 1, dated
January 25, 1998 (incorporated by reference to Exhibit 10.1 to
the Company's quarterly report on Form 10-Q, dated August 14,
1998).+
10.22 Amendment No. 3, effective as of October 1, 1998, among the
Company, Tel-Save, Inc. and America Online, Inc., which amends
that certain Telecommunications Marketing Agreement, dated as
of February 22, 1997, as corrected and amended by letter, dated
April 23, 1997, and amended by an Amendment No. 1, dated
January 25, 1998, and an Amendment No. 2, dated May 14, 1998.++
10.23 Indenture dated as of September 9, 1997 between the Company and
First Trust of
15
<PAGE>
New York, N.A. (incorporated by reference to Exhibit 4.3 to the
Company's registration statement on Form S-3 (File No.
333-39787)).
10.24 Registration Agreement dated as of September 3, 1997 between
the Company and Salomon Brothers Inc, Deutsche Morgan Grenfell
Inc., Bear, Stearns & Co. Inc., Smith Barney Inc., Robertson
Stephens & Company LLC (incorporated by reference to the
Company's registration statement on Form S-3 (File No.
333-39787)).
10.25 Indenture dated as of December 10, 1997 between the Company and
First Trust of New York, N.A. (incorporated by reference to
Exhibit 10.34 to the Company's Annual Report on Form 10-K for
the year ended December 31, 1997).
10.26 Registration Agreement dated as of December 10, 1997 between
the Company and Smith Barney Inc. (incorporated by reference to
Exhibit 10.35 to the Company's Annual Report on Form 10-K for
the year ended December 31, 1997).
10.27 Employment Agreement, dated as of November 13, 1998, between
the Company and Gabriel Battista (incorporated by reference to
Exhibit 10.1 to the Company's Current Report on Form 8-K dated
January 20, 1999).*
10.28 Indemnification Agreement, dated as of December 28, 1998,
between the Company and Gabriel Battista (incorporated by
reference to Exhibit 10.2 to the Company's Current Report on
Form 8-K dated January 20, 1999).
10.29 Stock Option Agreement, dated as of November 13, 1998, between
the Company and Gabriel Battista (incorporated by reference to
Exhibit 10.3 to the Company's Current Report on Form 8-K dated
January 20, 1999).*
10.30 Stock Option Agreement, dated as of November 13, 1998,between
the Company and Gabriel Battista (incorporated by reference to
Exhibit 10.4 to the Company's Current Report on Form 8-K dated
January 20, 1999).*
10.31 Severance Agreement, dated as of December 31, 1998, between the
Company and Daniel Borislow (incorporated by reference to
Exhibit 10.5 to the Company's Current Report on Form 8-K dated
January 20, 1999).*
10.32 Purchase Agreement regarding the stock of Emergency
Transportation Corporation, dated as of January 5, 1999,
between the Company and Jimlew Capital, L.L.C. (incorporated by
reference to Exhibit 10.6 to the Company's Current Report on
Form 8-K dated January 20, 1999).
10.33 Exchange Agreement, dated as of December 31, 1998, among the
Company, Tel-Save,Inc. and Mark Pavol, as Trustee of that
certain D&K Grantor Retained Annuity Trust dated June 15, 1998
(incorporated by reference To Exhibit 10.7 to the Company's
Current Report on Form 8-K dated January 20, 1999).
10.34 Modification of the Exchange Agreement, dated ___________,
1999, by and among the Company, Tel-Save, Inc. and Mark Pavol.
10.35 Registration Rights Agreement, dated as of December 31, 1998,
among the Company, Daniel Borislow, Mark Pavol, as Trustee of
that certain D&K Grantor
16
<PAGE>
Retained Annuity Trust, dated June 15, 1998 and the Trustee of
that certain D&K Grantor Retained Annuity Trust II
(incorporated by reference to Exhibit 10.8 to the Company's
Current Report on Form 8-K dated January 20, 1999).
10.36 Amendment of Registration Rights Agreement dated as of March
18, 1999, by and among the Company, Daniel M Borislow, and Seth
Tobias.
10.37 Amendment of Registration Rights Agreement dated as of March
18, 1999, by and among the Company and Mark Pavol.
10.38 Agreement of Purchase and Sale of Real Property, dated as of
January 5, 1999, between Tel-Save, Inc. and Jimlew Capital,
L.L.C. (incorporated by reference to Exhibit 10.9 to the
Company's Current Report on Form 8-K dated January 20, 1999).
10.39 Lease, dated as of January 5, 1999, between Tel-Save, Inc. and
Jimlew Capital, L.L.C. (incorporated by reference to Exhibit
10.10 to the Company's Current Report on Form 8-K dated January
20, 1999).
10.40 1998 Long-Term Incentive Plan of the Company (incorporated by
reference to Exhibit 10.14 to the Company's Current Report on
Form 8-K dated January 20, 1999).*
10.41 Investment Agreement, dated as of December 31, 1998, as amended
on February __, 1999, among the Company, America Online, Inc.,
and, solely for purposes of Sections 4.5, 4.6 and 7.3(g)
thereof, Daniel Borislow, and solely for purposes of Section
4.12 thereof, Tel-Save, Inc. and the D&K Retained Annuity Trust
dated June 15, 1998 by Mark Pavol, Trustee .
10.42 Registration Rights Agreement, dated as of January 5, 1999,
between the Company and America Online, Inc.
10.43 Sublease Agreement, dated January ____, 1997, by and between
Gemini Air Cargo, LLC and RMS International, Inc.
10.44 Sublease Agreement, dated as of January 20, 1999, by and
between RMS International and Tel-Save, Inc.
10.45 Lease by and between Aetna Life Insurance Company and Potomac
Financial Group, L.L.C .
10.46 Agreement, effective as of February 28, 1999, by and among the
Company, Communication Telesystems International, d.b.a.
WorldxChange Communications, Tel-Save, Inc., Mark Pavol, Roger
B. Abbott and Rosalind Abbott, and Edward Soren.
10.48 Letter Agreement between the Company and Emanuel DeMaio
regarding Employment Agreement dated October 13, 1998.
10.49 Letter Agreement, dated as of January 5, 1999, between the
Company and Gary R. McCulla amending Employment Agreement with
Mr. McCulla. (1) *
17
<PAGE>
10.50 Form of Indemnification Agreement, dated as of January 5, 1999,
for each of George Vinall, Michael Ferzacca and Norris M. Hall,
III. (1)
10.51 Form of Non-Qualified Stock Option Agreement, dated as of
December 16, 1998, for each of George Vinall, Michael Ferzacca
and Norris M. Hall, III. (1) *
10.60 Employment Agreement, dated as of December 16, 1998, between
the Company and Michael Ferzacca. (1) *
10.61 Employment Agreement, dated as of December 16, 1998, between
the Company and Norris M. Hall, III. (1) *
10.62 Employment Agreement, dated as of December 16, 1998, between
the Company and George Vinall. (1) *
10.63 Letter Agreement, dated as of December 30, 1998, between the
Company and George Farley regarding Employment Agreement dated
July 3, 1997. (1) *
21.1 Subsidiaries of the Company.
23.1 Consent of BDO Seidman, LLP.
27 Financial Data Schedule.
* Management contract or compensatory plan or arrangement.
+ Confidential treatment previously has been granted for a
portion of this exhibit.
++ Confidential treatment has been requested for portions of this
exhibit.
(1) Filed with this Amendment No. 2 on Form 10-K/A.
(b) Reports on Form 8-K.
The following Current Reports on Form 8-K were filed by the Company during the
three months ended December 31, 1999:
1. Current Report on Form 8-K dated October 29, 1998.
18
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
Date: April 30, 1999 TALK.COM INC.
By: /s/ Gabriel Battista
------------------------
Gabriel Battista
Chairman of the Board of Directors,
Chief Executive Officer, President
and Director
19
EXHIBIT 10.49
As of January 5, 1999
Mr. Gary McCulla
3728 Windy Bush
New Hope, PA 18938
Dear Gary:
We are writing to confirm our agreements and understandings regarding the
terms of your continued employment under the Employment Agreement, dated as of
October 13, 1998 (the "Employment Agreement"), among you, as "Employee",
Tel-Save, Inc., as "Company", and Tel-Save.com, Inc. (formerly, Tel-Save
Holdings, Inc.), as "Holdings", from and after January 5, 1999 (the "Change
Date") (except as otherwise defined herein, capitalized terms shall be defined
as in the Employment Agreement):
1. From and after the Change Date, you, as "Employee" under the
Employment Agreement, will continue as an employee of Company, but you
shall have no duties or responsibilities, nor shall you have any
rights, except as specifically set forth herein and in the Employment
Agreement as hereby amended. Each of Sections 3, 4, 5 and 6 of the
Employment Agreement is hereby eliminated and shall be of no further
force and effect from and after the Change Date, except as and to the
extent specifically set forth elsewhere herein.
2. The "Term" of your employment under the Employment Agreement as
hereby amended shall commence on the Change Date and shall continue in
effect to, but not including, January 5, 2001, except as earlier
terminated as herein specifically provided.
3. The sole compensation payable to you pursuant to the Employment
Agreement (including, without limitation, Sections 4,6 and 10 thereof)
from and after the Change Date is $750,000 per year, payable for the
Term and in the same manner (equal periodic payments throughout the
year) as your base salary was paid to you pursuant to Section 4.1
before the Change Date. The aggregate amount payable to you pursuant
to this paragraph 3 will not exceed $1,500,000. Upon your death or a
"Change of Control" (as such term is defined in the Indenture, dated
as of December 10, 1997, relating to Company's 5% Convertible
Subordinated Notes due 2004), any balance of such compensation for the
Term not theretofore paid to you or on your behalf shall be paid to
you (or, in the case of your death, to your estate or beneficiaries)
in a lump sum and the Term shall thereupon
<PAGE>
terminate for all purposes of the Employment Agreement as hereby
amended.
4. The sole benefits and perquisites to which you will be entitled,
and Company will provide, pursuant to the Employment Agreement
(including, without limitation, Sections 4 and 6 thereof) from and
after the Change Date are: (a) health and medical benefits, during the
Term only, equal to the greater of (i) the health and medical benefits
provided to you immediately before the Change Date and (ii) the health
and medical benefits as are made available generally to the Company's
senior executives in effect during the Term; (b) maintenance, during
the Term and until the third anniversary of the last day of such Term,
by Company of director and officer insurance policies with benefits
equal to or greater than Company's director and officer insurance
policy in effect as of the Change Date; and (c) the continued use of
the 1998 Mercedes SL500 automobile leased by Company and used by you
as of the Change Date for the remainder of the term of the existing
lease of such automobile and the continued payment by Company of all
lease, insurance and other payments with respect to such automobile
for the remainder of such lease term ( it being expressly understood,
however, that you shall defend and hold Company harmless from all
claims, damages, litigation, liabilities and all matters whatsoever
regarding such automobile and your use thereof, except such as shall
be covered by insurance). In addition, at the end of the Term, Company
acknowledges that you will be entitled to such COBRA benefits as are
provided by law.
5. Except as specifically provided in paragraphs 4 and 5 of this
letter agreement and except for your entitlement, if any, to
indemnification and reimbursement by Company or Holdings arising out
of your having been an officer or director thereof, provided that you
hereby agree to cooperate with Company or Holdings to the extent
reasonably requested by Company or Holdings in any proceeding that may
give rise to any such indemnification, neither you nor your estate or
beneficiaries shall be entitled to any other payments, compensation,
perquisites or other benefits, from Company or Holdings or any
subsidiary thereof, under or by reason of the Employment Agreement or
otherwise and all such other payments, compensation, perquisites or
other benefits are hereby expressly waived by you (for yourself and
for your estate and your beneficiaries). Company shall withhold any
state, federal or other taxes that it may be required to withhold from
or with respect to any such payments, compensation, perquisites or
other benefits.
6. You will be entitled to no additional compensation for serving as
a director of Holdings. While you may, of course, resign as a director
of Holdings at any time, you hereby agree to resign as a director of
Holdings as and when requested by the Chairman of the Board of
Holdings, but not
<PAGE>
earlier than August 15, 1999. Furthermore, you agree that you will,
prior to your resignation as a director, vote in favor of the election
or nomination of your successor as a director or such other person as
shall have been designated as a nominee for director by Company's
Chairman of the Board.
7. The provisions of Section 10 of the Employment Agreement are
amended as follows: (a) the provisions thereof shall be for the Term
only and the "Restricted Period" therein shall be coterminous with the
Term, without regard to any conditions in the existing Section 10; (b)
you shall not be entitled to any compensation or other payments under
or otherwise by reason of such Section 10; and (c) you may, without
violation of the terms of such Section 10, also be employed by
Communications TeleSystems International d.b.a. WorldxChange
Communications during the Term without violation of the Employment
Agreement, as hereby amended, including Section 10 thereof.
8. You will make yourself available and shall cooperate, in each
case to the extent reasonably requested by Company or Holdings, in
respect of any litigation or other proceedings that arise out of or by
reason of the conduct of Company's or Holding's business or operations
during any time that you were a director or officer thereof, without
further compensation or payment except the payment of your reasonable
out-of-pocket costs and expenses in connection therewith.
9. Except as specifically provided herein, the Employment Agreement
shall continue in full force and effect.
10. The provisions of Sections 16 through (and including) 21 of the
Employment Agreement shall apply to this letter agreement as fully as
if set forth in full herein and the references therein to "this
Agreement" were a reference to this letter agreement.
If the foregoing correctly sets forth our agreements and understandings,
please so acknowledge by signing the enclosed copy of this letter agreement in
the space provided and returning it to us, whereupon this shall be a valid and
binding agreement by and among us.
<PAGE>
Very truly yours,
Tel-Save, Inc.
By:___________________________
Name
Title
Tel-Save.com, Inc.
By:___________________________
Name
Title
Accepted and agreed as of the date first above written:
- ---------------------------------
Gary McCulla
EXHIBIT 10.50
TEL-SAVE.COM, INC.
INDEMNIFICATION AGREEMENT
This Indemnification Agreement ("Agreement") is made as of January 5,
1999, by and between Tel-Save.com, Inc., a Delaware corporation (the "Company"),
and ___________________________ ("Indemnitee").
WHEREAS, pursuant to that certain employment agreement between the
Company and Indemnitee dated December 18, 1998 (the "Employment Agreement")
Indemnitee will commence service, on or prior to January 4, 1999 Senior Vice
President, Network Management of the Company and will perform a valuable service
in such capacity for the Company; and
WHEREAS, the Company desires to attract and retain the services of
highly qualified individuals, such as Indemnitee, to serve the Company and, in
order to induce Indemnitee to enter into the Employment Agreement, the Company
agreed to enter into an agreement with Indemnitee providing for the
indemnification of Indemnitee as provided herein.
NOW, THEREFORE, in consideration of the foregoing, the mutual
covenants set forth herein and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the undersigned hereby
agree as follows:
1. Indemnification.
(a) Indemnification of Indemnitee. The Company shall indemnify and
hold harmless Indemnitee to the fullest extent permitted by law if Indemnitee
was or is or becomes a party to, or witness or other participant in, or is
threatened to be made a party to, or witness or other participant in, any
threatened, pending or completed action, suit, proceeding or alternative dispute
resolution mechanism, or any hearing, inquiry or investigation that Indemnitee
in good faith believes might lead to the institution of any such action, suit,
proceeding or alternative dispute resolution mechanism, whether civil, criminal,
administrative, investigative or other (collectively, hereinafter a "Claim") by
reason of, or arising in whole or in part out of, any event or occurrence
related to the fact that Indemnitee is or was a director, officer, manager,
employee, agent, representative or fiduciary of the Company, a subsidiary of the
Company (a "Subsidiary") or an affiliate (as defined in Rule 405 under the
Securities Act of 1933, as amended) of the Company (an "Affiliate"), or is or
was serving at the request of the Company or any Subsidiary or Affiliate as a
director, officer, manager, employee, agent, representative or fiduciary of
another corporation, limited liability company, partnership, joint venture,
employee benefit plan, trust or other entity or enterprise (collectively, an
"Other Entity"), or by reason of any action or inaction on the part of
Indemnitee while serving in any of such capacities, whether or not the basis of
the Claim is an alleged action in an official capacity as a director, officer,
manager, employee, agent, representative or fiduciary of the Company, or any
Subsidiary, Affiliate or Other Entity (any of the foregoing capacities
referenced in this Section 1(a), an "Indemnified Capacity"), against any and all
costs, expenses and other amounts actually and reasonably incurred and/or, as
the case may be, paid (including, without limitation, attorneys' fees and all
other costs, expenses and obligations actually and reasonably incurred in
connection with
<PAGE>
investigating, defending, being a witness in, or otherwise participating in
(including on appeal), or preparing to defend, any Claim), and judgements,
fines, penalties and amounts paid in connection with the settlement of any Claim
and any federal, state, local or foreign taxes imposed on the Indemnitee as a
result of the actual or deemed receipt of any payments under this Agreement,
including all interest, assessments and other charges paid or payable by the
Indemnitee in connection with or in respect of such costs, expenses and other
amounts (collectively, hereinafter, the "Expenses"). Without limiting the rights
of Indemnitee under Section 2(a) below, the payment of Expenses actually paid by
Employee shall be made by the Company as soon as practicable, but in any event
no later than thirty (30) days after written demand by Indemnitee therefor is
presented to the Company. Any event giving use to the right of Indemnitee to be
indemnified hereinafter is referred to herein as an "Indemnifiable Event."
(b) Reviewing Party. Notwithstanding the foregoing, (i) the
obligations of the Company under Section 1(a) hereof shall be subject to the
condition that the Reviewing Party (as defined in Section 10(e) hereof) shall
not have determined (in a written opinion, in any case in which the Independent
Legal Counsel (as defined in Section 10(d) hereof) is involved) that Indemnitee
would not be permitted to be indemnified under applicable law, and (ii) the
obligation of the Company to make an advance payment of Expenses to Indemnitee
pursuant to Section 2(a) hereof (an "Expense Advance") shall be subject to the
condition that, if, when and to the extent that the Reviewing Party determines
that Indemnitee would not be permitted to be so indemnified under applicable
law, the Company shall be entitled to be reimbursed by Indemnitee (who hereby
agrees to so reimburse the Company) for all such amounts theretofore paid;
provided, however, that if Indemnitee has commenced or thereafter commences
legal proceedings in a court of competent jurisdiction to secure a determination
that Indemnitee could be indemnified under applicable law, any determination
made by the Reviewing Party that Indemnitee would not be permitted to be
indemnified under applicable law shall not be binding and Indemnitee shall not
be required to reimburse the Company for any Expense Advance until a final
judicial determination is made with respect thereto (as to which all rights of
appeal therefrom have been exhausted or lapsed). Indemnitee's obligation to
reimburse the Company for any Expense Advance shall be unsecured and no interest
shall be charged thereon. If there has not been a Change in Control (as defined
in Section 10(c) hereof), the Reviewing Party shall be selected by members of
the Board of Directors who are not or were not, as the case may be, a party or
parties, as the case may be, to the Claim in respect of which indemnification is
sought, and if there has been a Change in Control (other than a Change in
Control which has been approved by a majority of the Company's Board of
Directors who were directors immediately prior to such Change in Control), the
Reviewing Party shall be the Independent Legal Counsel. If, within thirty (30)
days after the Company's receipt of written notice from Indemnitee demanding
such indemnification (the "30-Day Period") (i) the Reviewing Party determines
that Indemnitee substantively would not be permitted to be indemnified in whole
or in part under applicable law or makes no determination in that regard or,
(ii) Indemnitee shall not have received full indemnification from the Company,
Indemnitee shall have the right to commence litigation seeking a determination
by a court of competent jurisdiction as to the propriety of indemnification
under the circumstances involved or challenging any such determination (or lack
thereof) by the Reviewing Party or any aspect thereof, including the legal or
factual bases therefor or the failure of the Company to fully indemnify the
Indemnitee, and the Company hereby consents to service of process and to appear
in any such proceeding and hereby appoints the Secretary of the Company (or, if
such office is not filled at a time in question, any Assistant
2
<PAGE>
Secretary of the Company or, if such office is not filled at a time in question,
any Vice President of the Company - each, a "Service Receiver") as its agent for
such service of process. Any determination by the Reviewing Party not otherwise
so challenged shall be conclusive and binding on the Company and Indemnitee.
(c) Change in Control. The Company agrees that if there is a Change in
Control (other than a Change in Control which has been approved by a majority of
the Company's Board of Directors who were directors immediately prior to such
Change in Control), then, with respect to all matters thereafter arising
concerning the rights of Indemnitee to payments of Expenses and Expense Advances
under this Agreement or any other agreement or under the Company's Certificate
of Incorporation or Bylaws as now or hereafter in effect, the Company shall seek
legal advice only from the Independent Legal Counsel. Such counsel, among other
things, shall render its written opinion to the Company and Indemnitee as to
whether and to what extent Indemnitee would be permitted to be indemnified under
applicable law. The Company agrees to pay the reasonable fees of the Independent
Legal Counsel referred to above and to fully indemnify such counsel against any
and all expenses (including attorneys' fees), claims, liabilities and damages
arising out of or relating to this Agreement or its engagement pursuant hereto.
(d) Mandatory Payment of Expenses. Notwithstanding any other provision
of this Agreement, to the extent that Indemnitee has been successful on the
merits or otherwise, including, without limitation, the dismissal of an action
without prejudice, in connection with any Claim, Indemnitee shall be indemnified
against all Expenses actually and reasonably incurred by Indemnitee in
connection therewith.
2. Expenses; Indemnification Procedure.
(a) Advancement of Expenses. The Company shall advance all Expenses
incurred by Indemnitee so that the Company, and not Indemnitee, shall be
obligated to pay such incurred Expenses. The advances of Expenses to be made
hereunder shall be paid by the Company to Indemnitee as soon as practicable, but
in any event no later than five (5) days after written demand by Indemnitee
therefor to the Company.
(b) Notice and Cooperation by Indemnitee. Indemnitee shall, as a
condition precedent to Indemnitee's right to be indemnified under this
Agreement, give the Company notice in writing as soon as practicable of any
Claim made against Indemnitee for which indemnification will or could be sought
under this Agreement; but the Indemnitee's failure to so notify the Company
shall not relieve the Company from any liability that it may have to Indemnitee
under this Agreement, except to the extent that the Company is able to establish
that its ability to avoid liability under such Claim was prejudiced in a
material respect by such failure. Notice to the Company shall be directed to a
Service Receiver at the address of the Company shown on the signature page of
this Agreement (or such other address as the Company shall designate in writing
to Indemnitee). In addition, Indemnitee shall, at the expense of the Company,
provide the Company with such information and cooperation with respect to a
Claim, or any matters related to such Claim, as it may reasonably require in
connection with the indemnification provided for herein and as shall be within
Indemnitee's power. Any costs or expenses (including attorneys' fees and
disbursements) actually and reasonably incurred by
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Indemnitee in so cooperating shall be borne by the Company (irrespective of the
determination as to Indemnitee's entitlement to indemnification), which shall
pay any such amount within fifteen (15) days after receiving a request therefor
from Indemnitee, and the Company hereby indemnifies and agrees to hold
Indemnitee harmless therefrom.
(c) No Presumptions; Burden of Proof. For purposes of this Agreement,
the termination of any Claim by judgment, order, settlement (whether with or
without court approval) or conviction, or upon a plea of nolo contendere, or its
equivalent, shall not create a presumption that Indemnitee did not meet any
particular standard of conduct or have any particular belief or that a court has
determined that indemnification is not permitted by applicable law. In addition,
neither the failure of the Reviewing Party to have made a determination as to
whether Indemnitee has met any particular standard of conduct or had any
particular belief, nor an actual determination by the Reviewing Party that
Indemnitee has not met such standard of conduct or did not have such belief,
prior to the commencement of legal proceedings by Indemnitee to secure a
judicial determination that Indemnitee should be indemnified under applicable
law, shall be a defense to a claim for indemnification by Indemnitee hereunder
or create a presumption that Indemnitee has not met any particular standard of
conduct or did not have any particular belief. In connection with any
determination by the Reviewing Party or otherwise as to whether Indemnitee is
entitled to be indemnified hereunder, the burden of proof shall be on the
Company to establish that Indemnitee is not so entitled.
(d) Notice to Insurers. If, at the time of the receipt by the Company
of a notice of a Claim pursuant to Section 2(b) hereof, the Company has one or
more policies of liability insurance in effect which may cover such Claim, the
Company shall give prompt notice of the commencement of such Claim to the
applicable insurer(s) in accordance with the procedures set forth in the
applicable policies. The Company shall thereafter take all action necessary or
desirable to cause such insurers to pay, on behalf of Indemnitee, all amounts
payable as a result of such Claim in accordance with the terms of such policies.
(e) Selection of Counsel. In the event that the Company shall be
obligated hereunder to pay the Expenses with respect to any Claim, the Company,
except as otherwise provided below, shall be entitled to assume the defense of
such Claim at its own expense with counsel approved by Indemnitee, upon the
delivery to Indemnitee of written notice of its election so to do. Indemnitee's
approval of such counsel shall not be unreasonably withheld. After delivery of
such notice, approval of such counsel by Indemnitee and the retention of such
counsel by the Company, the Company will not be liable to the Indemnitee under
this Agreement for any fees of counsel subsequently incurred by the Indemnitee
with respect to such Claim, other than as provided below. Indemnitee shall have
the right to employ Indemnitee's own counsel in connection with a Claim, but the
fees and expenses of such counsel incurred after written notice from the Company
of its assumption of the defense thereof shall be at the expense of Indemnitee,
unless (i) the employment of counsel by Indemnitee has been previously
authorized by the Company, or, following a Change in Control (other than a
Change in Control approved by a majority of the members of the Board of
Directors who were directors immediately prior to such Change in Control), the
employment of counsel by Indemnitee has been approved by the Independent Legal
Counsel, (ii) Indemnitee shall have reasonably concluded that there may be a
conflict of interest between the Company and Indemnitee in the conduct of any
such defense, or (iii) the Company shall not, in fact, have employed or retained
or
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continued to employ or retain counsel to assume the defense of such Claim, in
each of which cases the fees and expenses of Indemnitee's counsel shall be at
the expense of the Company. The Company shall not be entitled to assume or
control the defense of any Claim brought by or on behalf of the Company or as to
which the Indemnitee has reached the conclusion that there may be a conflict of
interest between the Company and Indemnitee. The Company shall not settle any
Claim in any manner which would impose any penalty or limitation on Indemnitee
without the Indemnitee's written consent (which approval shall not be
unreasonably withheld).
(f) Settlement of Claims. The Company shall not be required to
indemnify Indemnitee under this Agreement for any amounts paid in settlement of
any Claim effected without the Company's written consent; provided, however,
that consent by the Company to the settlement of any claim shall not be
unreasonably withheld. Notwithstanding the foregoing, however, if a Change in
Control has occurred (other than a Change in Control approved by a majority of
the members of the Board of Directors who were directors immediately prior to
such Change in Control), then the Company shall be required to indemnify
Indemnitee for amounts paid in settlement of any Claim if the Independent Legal
Counsel has approved such settlement or has not made a determination with
respect to such settlement within (30) days after the effective date of such
Change in Control.
3. Additional Indemnification Rights; Non-Exclusivity.
(a) Scope. The Company hereby agrees to indemnify Indemnitee to the
fullest extent permitted by law, notwithstanding that such indemnification is
not specifically authorized by the Company's Certificate of Incorporation or
Bylaws or by statute. In the event of any change after the date of this
Agreement in any applicable law, statute or rule which expands the right of the
Company to indemnify Indemnitee, it is the intent of the parties hereto that
Indemnitee shall enjoy under this Agreement the greater benefits afforded by
such change. In the event of any change in any applicable law, statute or rule
which narrows the right of the Company to indemnify the Indemnitee, such change,
to the extent not otherwise required by such law, statute or rule to be applied
to this Agreement, shall have no effect on this Agreement or the parties' rights
and obligations hereunder.
(b) Non-Exclusivity. The indemnification provided by this Agreement
shall be in addition to any rights to which Indemnitee may be entitled under the
Company's Certificate of Incorporation or Bylaws, any agreement, vote of
stockholders or directors, the General Corporation Law of the State of Delaware,
or otherwise. The indemnification provided under this Agreement shall continue
as to Indemnitee for any Indemnifiable Event while serving in an Indemnified
Capacity even though Indemnitee may have ceased to serve in such Indemnified
Capacity.
4. No Duplication of Payments. The Company shall not be liable under this
Agreement to make any payment in connection with any Claim to the extent
Indemnitee has otherwise actually received payment (under any insurance policy
or otherwise) of the amounts otherwise indemnifiable hereunder.
5. Partial Indemnification. If Indemnitee is entitled under any provision
of this Agreement to indemnification by the Company for a portion of any of the
Expenses in
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connection with the investigation, appeal or settlement of any Claim, but not
for the total amount thereof, the Company shall nevertheless indemnify
Indemnitee for such portion of the Expenses.
6. Mutual Acknowledgment. Both the Company and Indemnitee acknowledge that,
in certain instances, applicable law or public policy may prohibit the Company
from indemnifying Indemnitee under this Agreement or otherwise. Indemnitee
understands and acknowledges that the Company has undertaken or may be required
in the future to undertake with the Securities and Exchange Commission to submit
the question of indemnification to a court in certain circumstances for a
determination of the Company's right under public policy to indemnify
Indemnitee.
7. Liability Insurance. To the extent the Company or any Subsidiary or
Affiliate maintains liability insurance applicable to directors, officers,
managers, employees, agents, representatives or fiduciaries of the Company or
such Subsidiary or Affiliate (collectively, the "Covered Persons"), Indemnitee
shall be covered by such policies in such a manner as to provide Indemnitee the
same rights and benefits as are accorded to the most favorably insured of the
Covered Persons who is then serving in the same capacity or capacities, as the
case may be, as Indemnitee.
8. Exceptions. Any other provision herein to the contrary notwithstanding,
the Company shall not be obligated pursuant to the terms of this Agreement:
(a) Excluded Action or Omissions. To indemnify Indemnitee for any
Expenses resulting from acts, omissions or transactions from which Indemnitee
may not be indemnified under applicable law, or for any Expenses resulting from
Indemnitee's conduct which is finally adjudged to have been willful misconduct
or knowingly fraudulent conduct;
(b) Claims Initiated by Indemnitee. To indemnify or advance Expenses
to Indemnitee with respect to Claims initiated or brought voluntarily by
Indemnitee and not by way of defense, regardless of whether Indemnitee
ultimately is determined to be entitled to such indemnification, Expense Advance
or insurance recovery, as the case may be, except (i) with respect to
proceedings brought to establish or enforce (a) a right to, or for, Expense
Advances and/or, as the case may be, (b) any other right of Indemnitee under
this Agreement or any other agreement or insurance policy or under the Company's
Certificate of Incorporation or Bylaws now or hereafter in effect, (ii) in
specific cases, if the Board of Directors has approved the initiation or
bringing of such suit or (iii) as otherwise required under applicable law or
statute;
(c) Lack of Good Faith. To indemnify Indemnitee for any Expenses
incurred by Indemnitee with respect to any proceeding instituted by Indemnitee
to enforce or interpret this Agreement, if a court of competent jurisdiction
determines that each of the material assertions made by the Indemnitee in such
proceeding was not made in good faith or was frivolous; or
(d) Claims Under Section 16(b). To indemnify Indemnitee for Expenses
and the payment of profits arising from the purchase and sale or, sale and
purchase, by Indemnitee of securities in violation of Section 16(b) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), or any similar
successor statute.
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9. Period of Limitations. No legal action shall be brought and no cause of
action shall be asserted by or in the right of the Company with respect to the
matters addressed in this Agreement against Indemnitee, or Indemnitee's estate,
spouse, heirs, executors or personal or legal representatives after the
expiration of two(2) years from the date of accrual of such cause of action, and
any claim or cause of action of the Company shall be extinguished and deemed
released unless asserted by the timely filing of a legal action within such
two-year period; provided, however, that if any shorter period of limitations is
otherwise applicable to any such cause of action, such shorter period shall
govern.
10. Construction of Certain Phrases.
(a) Company. For purposes of this Agreement, references to the
"Company" shall include, in addition to the resulting entity, any constituent
entity (including any constituent of a constituent) absorbed in a consolidation
or merger which, if its separate existence had continued, would have had power
and authority to indemnify its directors, officers, managers, employees, agents,
representation or fiduciaries, so that if Indemnitee is or was a director,
officer, employee, agent or fiduciary of such constituent corporation, or is or
was serving at the request of such constituent corporation as a director,
officer, manager, employee, agent or fiduciary of an Other Entity, Indemnitee
shall stand in the same position under the provisions of this Agreement with
respect to the resulting or surviving entity as Indemnitee would have stood with
respect to such constituent entity if its separate existence had continued. The
consummation of any transaction described in this Section 10(a) shall be subject
to the requirements of Section 12, below.
(b) Miscellaneous Terms. For purposes of this Agreement, references to
"fines" shall include any excise taxes assessed on Indemnitee with respect to an
employee benefit plan; and references to "serving at the request of the Company
or any Subsidiary or Affiliate" or words of similar import shall include any
service as a director, officer, manager, employee, agent, representative or
fiduciary of the Company which imposes duties on, or involves services by, such
director, officer, manager, employee, representative, agent or fiduciary with
respect to an employee benefit plan, or its participants or its beneficiaries;
and if Indemnitee acted in good faith and in a manner Indemnitee reasonably
believed to be in the interest of the participants and beneficiaries of an
employee benefit plan, Indemnitee shall be deemed to have acted in a manner "not
opposed to the best interests of the Company" as referred to in this Agreement
or under any applicable law or statute.
(c) Change in Control. For purposes of this Agreement, a "Change in
Control" shall be deemed to have occurred if (i) any "person" (as such term is
used in Sections 13(d) and 14(d) of the Exchange Act), other than a trustee or
other fiduciary holding securities under an employee benefit plan of the Company
or a corporation owned directly or indirectly by the stockholders of the Company
in substantially the same proportions as their ownership of stock of the
Company, is or becomes the "beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of Voting Securities (as defined
below) of the Company representing more than twenty percent (20%) of the total
voting power represented by the Company's then outstanding Voting Securities,
(ii) during any period of two (2) consecutive years, individuals who at the
beginning of such period constitute the Board of Directors of the Company and
any new director (other than a director designated by a person who has entered
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into an agreement with the Company to effect a transaction described in clauses
(i), (iii) and (iv) of this Section 10(c)) whose election by the Board of
Directors or nomination for election by the Company's stockholders was approved
by a vote of at least two-thirds (2/3) of the directors then still in office who
either were directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for any reason to
constitute a majority thereof, or (iii) the stockholders of the Company approve
a merger or consolidation of the Company with any other corporation other than a
merger or consolidation which would result in the Voting Securities of the
Company outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into Voting Securities of the
surviving entity) at least 80% of the total voting power of the resulting or
surviving entity outstanding immediately after such merger or consolidation, or
(iv) the stockholders of the Company approve a plan of complete liquidation of
the Company or an agreement for the sale or disposition by the Company (in one
transaction or a series of transactions) of all or substantially all of the
Company's assets. For purposes of this Agreement, "Voting Securities" shall mean
any securities the holders of which vote generally in the election of directors.
(d) Independent Legal Counsel. For purposes of this Agreement,
"Independent Legal Counsel" shall mean an attorney or firm of attorneys, who
shall not have otherwise performed services for the Company or Indemnitee within
the then prior three years (other than with respect to matters concerning the
rights of Indemnitee under this Agreement, or of other indemnitees under similar
indemnity agreements) selected by the Company and approved by Indemnitee in
writing, which approval shall not be unreasonably withheld. Notwithstanding the
foregoing, the term "Independent Legal Counsel" shall not include any firm or
person who, under the applicable standards of professional conduct then
prevailing, would have a conflict of interest in representing either the Company
or Indemnitee in an action to determine Indemnitee's right to indemnification
under this Agreement.
(e) Reviewing Party. For purposes of this Agreement, a "Reviewing
Party" shall mean (i) any person or group of persons consisting of a member or
members of the Company's Board of Directors and/or, as the case may be, or any
other person appointed by the Board of Directors who is not a party to the
particular Claim for which Indemnitee is seeking indemnification, or (ii)
Independent Legal Counsel.
11. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original and all of which,
together, shall constitute one and the same document.
12. Binding Effect; Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of and be enforceable by the parties hereto and
their respective successors and permitted assigns, heirs and personal and legal
representatives. The Company may not assign its obligations under this Agreement
to any individual or entity except by operation of law to an entity acquiring
all or substantially all of the business and/or, as the case may be, assets of
the Company (a "Successor") and, in any such case, the Company shall continue to
be obligated hereunder. The Company shall require and cause any Successor by
written agreement in form and substance satisfactory to Indemnitee, expressly to
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform if no such succession had
taken place. This Agreement shall
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continue in effect regardless of whether Indemnitee continues to serve in an
Indemnified Capacity.
13. Attorneys' Fees. In the event that any action is instituted by
Indemnitee in a court of competent jurisdiction under this Agreement or under
any liability insurance policies maintained by the Company to enforce, or
interpret any of the terms hereof or thereof, Indemnitee shall be entitled to be
paid all Expenses actually and reasonably incurred by Indemnitee with respect to
such action, regardless of whether Indemnitee is ultimately successful in such
action, and shall be entitled to an advance of such Expenses in the manner
provided in Section 2 (a), above, with respect to such action, unless, as a part
of such action, the court in which such action is brought determines that each
of the material assertions made by Indemnitee as a basis for such action was not
made in good faith or was frivolous. In the event of an action instituted by or
in the name of the Company under this Agreement to enforce or interpret any of
the terms of this Agreement, Indemnitee shall be entitled to be paid all
Expenses actually and reasonably incurred by Indemnitee in defense of such
action (including costs and expenses incurred with respect to Indemnitee's
counterclaims and cross-claims made in such action), and shall be entitled to an
advance of such Expenses in the manner provided in Section 2 (a), above, with
respect to such action, unless as a part of such action such court determines
that each of Indemnitee's material defenses to such action were made in bad
faith or were frivolous.
14. Notice. Any notices or demands given in connection herewith shall be in
writing and deemed given when (a) personally delivered, (b) sent by facsimile
transmission to a number provided in writing by the addressee and a confirmation
of the transmission is received by the sender or (c) two (2) days after being
deposited for delivery with a recognized overnight courier, such as Fed Ex, and
addressed or sent, as the case may be, to the address or facsimile number set
forth below or to such other address or facsimile number as such party may in
writing designate:
If to Indemnitee:
If to Company: Tel-Save.com, Inc.
6805 Route 202
New Hope, Pennsylvania 18938
Attn: Secretary
Fax No.: (215) 862-1515
15. Consent to Jurisdiction. The Company and Indemnitee each hereby
irrevocably consent to the jurisdiction of the courts of the Commonwealth of
Pennsylvania for all purposes in connection with any action or proceeding which
arises out of or relates to this Agreement and agree that any action instituted
under this Agreement shall be commenced, prosecuted and continued only in the
courts of the Commonwealth of Pennsylvania in and for the County of
Philadelphia, which shall be the exclusive and only proper forum for
adjudicating such a claim.
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16. Severability. The provisions of this Agreement shall be severable in
the event that any of the provisions hereof (including any provision within a
single section, paragraph or sentence) are held by a court of competent
jurisdiction to be invalid, void or otherwise unenforceable, and the remaining
provisions shall remain enforceable to the fullest extent permitted by law.
Furthermore, to the fullest extent possible, the provisions of this Agreement
(including, without limitation, each portion of this Agreement containing any
provision held to be invalid, void or otherwise unenforceable, that is not
itself held to be invalid, void or unenforceable) shall be construed so as to
give effect to the intent manifested by the provision held invalid, illegal or
unenforceable.
17. Choice of Law. This Agreement shall be governed by and its provisions
construed and enforced in accordance with the laws of the State of Delaware,
without regard to the conflict of laws principles thereof.
18. Subrogation. In the event of payment to, or on behalf of Indemnitee
under this Agreement, the Company shall be subrogated to the extent of such
payment to all of the rights of recovery of Indemnitee, who shall, at Company's
expense, execute all documents required and shall do all acts that may be
necessary to secure such rights and to enable the Company effectively to bring
suit to enforce such rights.
19. Amendment and Termination. No amendment, modification, termination or
cancellation of this Agreement shall be effective unless it is in writing signed
by both of the parties hereto. No waiver of any of the provisions of this
Agreement shall be deemed to, or shall constitute a waiver of, any other
provisions hereof (whether or not similar thereto), nor shall such waiver
constitute a continuing waiver. Except as specifically set forth herein, no
failure to exercise, or any delay in exercising, any right or remedy hereunder
shall constitute a waiver thereof.
20. Integration and Entire Agreement. This Agreement sets forth the entire
understanding between the parties hereto and supersedes all previous written and
oral negotiations, commitments, understandings and agreements relating to the
subject matter hereof between the parties hereto.
21. No Construction as Employment Agreement. Nothing contained in this
Agreement shall be construed as giving Indemnitee any right to be retained in
the employ of the Company or any Subsidiaries.
22. Certain Words. As used in this Agreement, the words "herein,"
"hereunder," "hereof" and similar words shall be deemed to refer to this
Agreement in its entirety, and not to any particular provision of this Agreement
unless the context clearly requires otherwise.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
TEL-SAVE.COM, INC.
By:
---------------------------------
Title:
------------------------------
AGREED TO AND ACCEPTED
INDEMNITEE:
- ---------------------------------
________________________
11
EXHIBIT 10.51
NON-QUALIFIED STOCK OPTION AGREEMENT
To: _____________________________:("Employee")
----------------------------------------------------------------------
Name
_______________________________________________
----------------------------------------------------------------------
Address
Date of Grant: December 16, 1998
Exercise Price: $8 9/16 per share
Employee is hereby granted the option described below, effective as of the
above date of grant, to purchase shares of common stock, $.01 par value per
share ("Stock"), of Tel-Save.com, Inc. (the "Company") at the exercise price
shown above. Capitalized terms used herein without definition have the meanings
assigned in the employment agreement dated as of the above date of grant between
the Company and Employee (the "Employment Agreement").
1. Employee is hereby granted options to purchase 240,000 shares of Stock
(the "Option"). The Option shall have an exercise price equal to eight dollars
and 5625/10,000 cents ($8.5625) per share (the "Exercise Price") and, subject to
Section 2, below, shall vest with respect to the indicated number of shares of
Stock according to the following schedule:
(a) eighty thousand (80,000) shares of Stock shall vest and become
exercisable upon the first anniversary of the date of grant.
(b) eighty thousand (80,000) shares of Stock shall vest and become
exercisable upon the second anniversary of the date of grant.
(c) eighty thousand (80,000) shares of Stock shall vest and become
exercisable upon the third anniversary of the date of grant.
(d) Notwithstanding the foregoing, (i) any portion of the Option that
was not previously vested and exercisable shall become fully vested and
exercisable on the effective date of any termination of the employment of
Employee under the Employment Agreement by the Company without Cause (as defined
in Section 6.3 of the Employment Agreement) or by Employee for Good Reason (as
defined in Section 6.4(b) of the Employment Agreement) and (ii) the Board of
Directors of the Company (the "Board") or its designees may accelerate or waive
the aforesaid scheduled vesting dates with respect to any or all of the shares
of Stock covered by the Option.
<PAGE>
2. In the event of a "Change in Control" (as hereafter defined) of the
Company, any portion of the Option that was not previously vested and
exercisable on the effective date of the Change in Control, shall become fully
vested and exercisable on such effective date of such Change in Control. A
"Change in Control" shall be deemed to have occurred upon the happening of any
of the following events:
(a) any Person (as defined in Section 3(a)(9) under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")), other
than the Company, becomes the Beneficial Owner (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company or any Significant Subsidiary (as
defined below) representing fifty percent (50%) or more of the
combined voting power of the Company's, or such Significant
Subsidiary's, as the case may be, then outstanding securities;
provided, that a Person shall be deemed to be the Beneficial
Owner of all shares that any such Person has the right to acquire
pursuant to any agreement or arrangement or upon exercise of
conversion rights, warrants, options or otherwise, without regard
to the sixty (60)-day period referred to in Rule 13d-3 under the
Exchange Act);
(b) during any period of two years, individuals who at the beginning
of such period constitute the Board and any new director (other
than a director designated by a person who has entered into an
agreement with the Company to effect a transaction described in
clauses (a), (b) or (d) of this Section 2) whose election by the
Board or nomination for election by stockholders was approved by
a vote of at least two-thirds (2/3) of the directors then still
in office who either were directors at the beginning of the
two-year period or whose election or nomination for election was
previously so approved, but excluding for this purpose any such
new director whose initial assumption of office occurs as a
result of either an actual or threatened election contest or
other actual or threatened solicitation of proxies or consents by
or on behalf of an individual, corporation, partnership, group,
association or other entity other than the Board, cease for any
reason to constitute at least a majority of the Board of either
or the Company or a Significant Subsidiary;
(c) the consummation of a merger or consolidation of the Company or
any subsidiary of the Company owning directly or indirectly all
or substantially all of the consolidated assets of the Company (a
"Significant Subsidiary") with any other entity, other than a
merger or consolidation which would result in the voting
securities of the Company or a Significant Subsidiary outstanding
immediately prior thereto continuing to represent more than fifty
percent (50%) of the combined voting power of the surviving or
resulting entity outstanding immediately after such merger or
consolidation;
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(d) the shareholders of the Company approve a plan or agreement for
the sale or disposition of fifty percent (50%) or more of the
consolidated assets of the Company in which case the Board shall
determine the effective date of the Change of Control resulting
therefrom;
(e) any other event occurs which the Board determines, in its
discretion, would materially alter, the structure of the Company
or its ownership; and
(f) a person other than Gabriel Battista is elected by the Board of
Directors to serve as the Company's principal executive officer.
3. Employee may exercise the Option by giving written notice to the
Secretary of the Company on forms supplied by the Company at its then principal
executive office, accompanied by payment of the Exercise Price for the total
number of shares specified to be purchased by Employee. The payment may be in
any of the following forms: (a) cash, which may be evidenced by a check and
includes cash received from a so-called "cashless exercise" of the Option; (b)
certificates representing shares of Stock, which will be valued at the fair
market value (as defined in the Employment Agreement) per share of the Stock on
the date of the Option exercise in question, accompanied by an assignment of
such Stock to the Company; or (c) any combination of cash and Stock valued as
provided in clause (b), immediately above. Any assignment of Stock shall be in a
form and substance satisfactory to the Secretary of the Company, including
guarantees of signature(s) and payment of all transfer taxes, if the Secretary
of the Company deems such guarantees necessary or desirable.
4. The Option will, to the extent not previously exercised by Employee,
expire on December 16, 2008.
5. In the event of any change in the outstanding shares of the Stock by
reason of a stock dividend, stock split, consolidation, transfer of assets,
reorganization, conversion or what the Board deems in its reasonable discretion
to be similar circumstances, the number and kind of shares of Stock subject to
the Option and the Exercise Price shall be appropriately adjusted in a manner to
be determined in the reasonable discretion of the Board.
6. The Option is not transferable otherwise than by will or the laws of
descent and distribution, and is exercisable during Employee's lifetime only by
Employee, including, for this purpose, Employee's legal guardian or custodian in
the event of the disability of Employee. Until the Exercise Price has been paid
in full pursuant to due exercise of this Option and certificate(s) representing
Employee's ownership of the purchased shares are issued to Employee, Employee
does not have any rights as a shareholder of the Company. The Company reserves
the right not to deliver to Employee the certificate(s) representing shares
purchased by virtue of the exercise of the Option during any period of time in
which the Company deems, based on the written opinion of its counsel, that such
delivery would violate a federal, state, local or securities exchange rule,
regulation or law.
7. Notwithstanding anything to the contrary contained herein, the Option is
not exercisable:
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(a) During any period of time in which the Company deems, based on the
written opinion of its counsel, that the exercisability of the Option, the offer
to sell the shares underlying the Option, or the sale thereof, would violate a
federal, state, local or securities exchange rule, regulation or law; or
(b) Until Employee has paid or made suitable arrangements to pay all
federal, state and local income tax withholding required to be withheld by the
Company in connection with the Option exercise.
8. The following two paragraphs shall be applicable if, on a date of
exercise of the Option, the Stock to be purchased pursuant to such exercise has
not been registered under the Securities Act of 1933, as amended (the "Act"),
and under applicable state securities laws, and shall continue to be applicable
for so long as such registration has not occurred:
(a) Employee hereby agrees, warrants and represents that he will
acquire the Stock to be issued hereunder for his own account for investment
purposes only, and not with a view to, or in connection with, any resale or
other distribution of any shares of such Stock, except as hereafter permitted.
Employee further agrees that he will not at any time make any offer, sale,
transfer, pledge or other disposition of such Stock to be issued hereunder
without an effective registration statement under the Act, and under any
applicable state securities laws or an opinion of counsel acceptable to the
Company to the effect that the proposed transaction will be exempt from such
registration. Employee shall execute such instruments, representations,
acknowledgments and agreements as the Company may, in its sole discretion, deem
advisable to avoid any violation of federal, state, local or securities exchange
rule, regulation or law.
(b) The certificates for Stock to be issued to Employee hereunder
shall bear the following legend:
"The shares represented by this certificate have not
been registered under the Securities Act of 1933, as
amended, or under applicable state securities laws. The
shares have been acquired for investment and may not be
offered, sold, transferred, pledged or otherwise disposed of
without an effective registration statement under the
Securities Act of 1933, as amended, and under any applicable
state securities laws or an opinion of counsel acceptable to
the Company that the proposed transaction will be exempt
from such registration."
The foregoing legend shall be removed upon registration of the legended shares
under the Act and under any applicable state laws or upon receipt of an opinion
of counsel acceptable to the Company that said registration is no longer
required.
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<PAGE>
9. The sole purpose of the agreements, warranties, representations and
legend set forth in the two immediately preceding paragraphs is to prevent
violations of the Act, and any applicable state securities laws.
10. It is the intention of the Company and Employee that the Option shall
not be an "Incentive Stock Option" as that term is used in Section 422 of the
Internal Revenue Code of 1986, as amended, and the regulations thereunder. The
Option is not granted pursuant to any stock option plan.
11. This agreement and the Employment Agreement constitute the entire
understanding between the Company and Employee with respect to the subject
matter hereof and no amendment, modification or waiver of this agreement, in
whole or in part, shall be binding upon the Company or Employee unless in
writing and signed by the Executive Vice President of the Company and Employee.
This agreement and the performances of the parties hereunder shall be construed
in accordance with, and governed by the laws of, the Commonwealth of
Pennsylvania.
Employee shall sign a copy of this agreement and return it to the Company's
Secretary, thereby indicating Employee's understanding of, and agreement with
its terms and conditions.
TEL-SAVE.COM, INC,
By:___________________________
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<PAGE>
I hereby acknowledge receipt of a copy of the foregoing stock option agreement
and, having read it, hereby signify my understanding of, and my agreement with,
its terms and conditions.
January , 1999
- ------------------------------------ -------------------------------
(Date)
_____________________________
6
EXHIBIT 10.60
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as of the
16th day of December, 1998 between Tel-Save.com, Inc., a Delaware corporation
(the "Company"), and Michael Ferzacca ("Employee").
WHEREAS, Company desires to employ Employee and Employee desires to be
employed by Company; and
WHEREAS, Company and Employee desire to enter into this Agreement that sets
forth the terms and conditions of said employment.
NOW THEREFORE, in consideration of the foregoing, the mutual covenants set
forth herein and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the undersigned hereby agree as
follows:
1. Employment. Company agrees to employ Employee, and Employee accepts such
employment and agrees to serve Company, on the terms and conditions set forth
herein. Except as otherwise specifically provided herein, Employee's employment
shall be subject to the employment policies and practices of Company in effect
from time to time during the term of Employee's employment hereunder (including,
without limitation, its practices as to tax reporting and withholding).
2. Term of Agreement. The term of Employee's employment hereunder shall
commence on December 28, 1998 (the "Commencement Date") and shall continue in
effect for a period of three years thereafter, except as hereinafter provided
(the "Term"). Notwithstanding the foregoing, Employee shall not assume the
Positions (as defined in Section 3.1 hereof) until January 4, 1998. For purposes
of this Section 2, Employee shall be deemed to have commenced employment
hereunder in accordance with his obligations under this Agreement if an
Employment Presentment (as defined below) takes place. For purposes of this
Agreement, an "Employee Presentment" shall be deemed to have occurred if
Employee does present himself at the offices of Company in New Hope,
Pennsylvania (or such other location as Employee may be directed by the Gabriel
Battista) prepared to commence performing his duties hereunder on or before
December 31, 1998.
3. Positions and Duties.
3.1 Officer Positions. Except as may otherwise be agreed upon between
Company and Employee, Employee shall perform such duties and have such
responsibilities as Executive Vice President, Sales and such other duties and
responsibilities consistent with the foregoing duties and responsibilities as
may be reasonably assigned or delegated to him from time to time by Company's
Chief Executive Officer or Company's Board of Directors (the "Board"),
including, without limitation, service as an employee, officer or director of
affiliates (as that term is defined
<PAGE>
in Rule 405 under the Securities Act of 1933, as amended (the "Act"))
(hereinafter, "Affiliates") of Company, without additional compensation.
References in this Agreement to Employee's employment with Company shall be
deemed to refer to employment with Company and/or, as the case may be, an
Affiliate, as the context requires. Employee shall perform his duties and
responsibilities to the best of his abilities hereunder in a diligent,
trustworthy, businesslike and efficient manner. Employee shall devote
substantially all of his working time and efforts to the business and affairs of
Company; provided, however, that nothing in this Agreement shall preclude
Employee from (a) engaging in charitable activities and community affairs, and
(b) managing his personal investments and affairs (subject to the limitations in
Section 10 hereof.
4. Compensation and Related Matters.
4.1 Base Salary. During the Term, Company shall pay to Employee a base
salary ("Base Salary") at the rate of Three Hundred Thousand Dollars ($300,000)
per year, which Base Salary shall be paid to Employee in accordance with
Company's usual and customary payroll practices.
4.2 Benefit Plans and Arrangements. Employee shall be entitled to
participate in and to receive benefits under Company's employee benefit plans
and arrangements (including, but not limited to, bonus plans) as are made
available to the Company's senior executive officers during the Term, which
employee benefit plans and arrangements may be altered from time to time at the
discretion of the Board (the "Benefits"). Annual bonuses to Employee may be up
to one hundred percent (100%) of Base Salary. Notwithstanding the foregoing,
Employee acknowledges and agrees that bonuses, annual or otherwise, are
performance based and discretionary with the Board of Directors or a Committee
thereof.
4.3 Perquisites. During the Term, Employee shall be entitled to receive
fringe benefits as are made available to Company's senior executive officers.
4.4 Expenses. Company shall promptly reimburse Employee for all
out-of-pocket expenses related to Company's business that are actually paid or
incurred by him in the performance of his services under this Agreement and that
are incurred, reported and documented in accordance with Company's policies. In
addition, during the Term, Company will provide Employee with an automobile, as
Company shall determine, and Company shall keep such automobile fully insured in
accordance with Company's practices for similarly situated employees.
4.5 Stock Options.
(a) Grant of Options. Effective on the date hereof, Employee shall be
granted an award of 130,000 shares of Common Stock ("Award") and an option to
purchase 350,000 shares of the Common Stock (the "Option") in accordance with
the stock option agreement to be mutually agreed to, and executed by, Company
and Employee prior to the Commencement Date, which stock option agreement shall
be in
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<PAGE>
substantially in the form thereof attached hereto as Exhibit A upon execution of
the option. The Option shall have an exercise price equal to $8 9/16, which is
equal to the fair market value (as defined below) of the Common Stock on the
date hereof. The Option expires on the tenth anniversary of the date hereof and
shall vest and become exercisable, subject to accelerated vesting in the event
of a Change in Control (defined as provided below) of Company in installments,
as follows: (i) options with respect to 116,666 shares of Common Stock shall
vest and become exercisable on the first anniversary of the date hereof, (ii)
options with respect to 116,666 shares of Common Stock shall vest and become
exercisable on the second anniversary of the date hereof and (iii) options with
respect to 116,668 shares of Common Stock shall vest and become exercisable on
the third anniversary of the date hereof. In the event of a Change in Control of
Company, all of the options issued under the Option which are not then vested
and exercisable shall immediately become vested and exercisable. The fair market
value of Common Stock for purposes of this Agreement shall mean the last
reported sale price of a share of the Common Stock on the Nasdaq National Market
System preceding the date in question or if no sale took place on such day, such
last reported sale price on the then next preceding date on which such sale took
place. The Company agrees to make a loan or an advance ("Loan") to Employee
sufficient to enable Employee to pay or satisfy withholding and tax obligations
associated with the grant of the Award. The Loan shall be made to Employee
pursuant to a Promissory Note the form of which is attached hereto as Exhibit A.
Notwithstanding the foregoing, the Option and Award shall be forfeited by
Employee if an Employment Presentment does not take place on or before December
31, 1998. For the purposes of this Agreement, a "Change of Control" shall be
deemed to have occurred if:
(i) any Person (as defined in Section 3(a)(9) under the
Securities Exchange Act of 1934, as amended (the "Exchange
Act")), other than the Company, becomes the Beneficial Owner
(as defined in Rule 13d-3 under the Exchange Act; provided,
that a Person shall be deemed to be the Beneficial Owner of
all shares that any such Person has the right to acquire
pursuant to any agreement or arrangement or upon exercise of
conversion rights, warrants, options or otherwise, without
regard to the 60 day period referred to in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of
the Company or any Significant Subsidiary (as defined below)
representing 50% or more of the combined voting power of the
Company's, or such subsidiary's, as the case may be, then
outstanding securities;
(ii) during any period of two years, individuals who at the
beginning of such period constitute the Board and any new
director (other than a director designated by a person who
has entered into an agreement with the Company to effect a
transaction described in clauses (i), (iii), or (iv) of this
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<PAGE>
Section 2(a)) whose election by the Board or nomination for
election by stockholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who
either were directors at the beginning of the two-year
period or whose election or nomination for election was
previously so approved, but excluding for this purpose any
such new director whose initial assumption of office occurs
as a result of either an actual or threatened election
contest or other actual or threatened solicitation of
proxies or consents by or on behalf of an individual,
corporation, partnership, group, association or other entity
other than the Board, cease for any reason to constitute at
least a majority of the Board of either or the Company or a
Significant Subsidiary;
(iii)the consummation of a merger or consolidation of the
Company or any subsidiary of the Company owning directly or
indirectly all or substantially all of the consolidated
assets of the Company ( a "Significant Subsidiary") with any
other entity, other than a merger or consolidation which
would result in the voting securities of the Company or a
Significant Subsidiary outstanding immediately prior thereto
continuing to represent more than fifty percent (50%) of the
combined voting power of the surviving or resulting entity
outstanding immediately after such merger or consolidation;
(iv) the shareholders of the Company approve a plan or agreement
for the sale or disposition of fifty percent (50%) or more
of the consolidated assets of the Company in which case the
Board shall determine the effective date of the Change of
Control resulting therefrom;
(v) any other event occurs which the Board determines, in its
discretion, would materially alter, the structure of the
Company or its ownership; and
(vi) a person other than Gabriel Battista is elected by the Board
of Directors to serve as the Company's principal executive
officer.
(b) Registration Statement. Company will file with the Securities and
Exchange Commission and any applicable state securities regulatory authorities a
Registration Statement on the applicable form to register the resale of the
Award and Form S-8 (or if unavailable, a registration statement on Form S-3) to
register the shares
4
<PAGE>
issuable upon exercise of the Option under the Act and any applicable state
securities or "Blue Sky" laws as soon as practicable after the date hereof.
Notwithstanding the foregoing, Company shall be entitled to postpone for a
reasonable period of time the filing or the effectiveness of such registration
statement if the Board shall determine in good faith that such filing or
effectiveness would be materially detrimental to the Company's business
interests.
4.6 Signing Bonus. In consideration of Employee's agreement to become
employed by Company, Company shall pay Employee Two Hundred Thousand Dollars
($200,000) (the "Signing Bonus") by means of a wire transfer on earlier of the
Commencement Date, upon Employee's commencement of employment with Company as
herein provided and the date and time in which this contract is executed.
5. Termination. The Term of Employee's employment hereunder may be
terminated under the following circumstances:
5.1 Death. The Term of Employee's employment hereunder shall terminate upon
his death.
5.2 Disability. If Employee becomes physically or mentally disabled during
the term hereof so that he is unable to perform services required of him
pursuant to this Agreement for an aggregate of six (6) months in any twelve (12)
month period (a `Disability"), Company, at its option, may terminate Employee's
employment hereunder.
5.3 Cause. Upon written notice, Company may terminate Employee's employment
hereunder for Cause (as defined below). For purposes of this Agreement, Company
shall have "Cause" to terminate Employee's employment hereunder upon (a) a
material breach by Employee of any material provision of this Agreement, (b)
willful misconduct by Employee in connection with misappropriating any funds or
property of Company, (c) attempting to obtain any personal profit from any
transaction in which Employee has an interest that is adverse to the interests
of Company without prior written disclosure thereof to the Board or (d)
Employee's gross neglect in the performance of the duties required to be
performed by Employee under this Agreement.
5.4 By Employee. Employee may terminate his employment hereunder:
(a) Upon sixty (60) days' prior written notice to Company, provided that,
upon the giving of such notice by Employee, Company may establish an earlier
date for such termination under this Section 5.4 (a).
(b) For Good Reason (as defined below) immediately and with notice to
Company. "Good Reason" for termination by Employee shall include, but is not
limited to, the following:
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<PAGE>
(i) Material breach of any provision of this Agreement by Company,
which breach shall not have been cured by Company within thirty
(30) days of receipt of written notice of said material breach;
(ii) Failure by Company to maintain Employee in a position
commensurate with that referred to in Section 3 of this
Agreement; or
(iii)The assignment to Employee of any duties inconsistent with
Employee's position, authority, duties or responsibilities as
contemplated by Section 3 hereof or any other action by Company
that results in a diminution of such position, authority, duties
or responsibilities.
5.5 Without Cause. Company may otherwise terminate the Term of Employee's
employment at any time upon written notice to Employee.
6. Compensation In the Event of Termination. In the event that Employee's
employment hereunder terminates prior to the end of the Term, Company shall make
payments to Employee as set forth below:
6.1 By Employee for Good Reason; By Company Without Cause. In the event
that Employee's employment hereunder is terminated by Company without Cause or
by Employee for Good Reason, then the Company shall (a) pay to Employee all
amounts due to Employee pursuant to any bonus that was due to Employee as of the
date of such termination, pursuant to the terms of such bonus (a "Due Bonus"),
(b) continue to pay to Employee the Base Salary and Benefits to which Employee
would be entitled hereunder in the manner provided for herein for the period of
time ending on the earlier of the date when the Term would otherwise have
expired in accordance with Section 2 hereof and the second anniversary of the
date of such termination, (c) reimburse Employee for expenses that may have been
incurred, but which have not been paid as of the date of termination, subject to
the requirements of Section 4.4 hereof and (d) one hundred percent (100%) of the
outstanding stock options granted to the Employee that are unvested shall
immediately vest and become exercisable.
6.2 By Company for Cause; By Employee Without Good Reason. In the event
that Company shall terminate Employee's employment hereunder for Cause pursuant
to Section 5.3 hereof or Employee shall terminate his employment hereunder
without Good Reason, all compensation and Benefits, as specified in Section 4 of
this Agreement, theretofore payable or provided to Employee shall cease to be
payable or provided, except for any Due Bonus and any Benefits that may have
been due and payable but that have not been paid as of the date of termination
and reimbursement of expenses that may have been incurred, but which have not
been paid as of the date of termination, subject to the requirements of Section
4.4 hereof.
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<PAGE>
6.3 Death. In the event of Employee's death, Company shall not be obligated
to pay Employee or his estate or beneficiaries any compensation except for (a)
any Due Bonus or any Benefits that may have been earned and are due and payable
as of the date of death, but which have not been paid as of such date, (b)
reimbursement of expenses that may have been incurred, but which have not been
paid as of the date of death, subject to the requirements of Section 4.4 hereof,
and (c) all outstanding stock options granted to Employee that are unvested
shall immediately vest and become exercisable and Employee's estate or
beneficiaries, as the case may be, shall have the right to exercise any of such
stock options during the period commencing on the date of death and ending on
the second anniversary of the date of such termination or for the remainder of
the period set forth in the option agreement applicable to the option in
question (the "Exercise Period'), if less.
6.4 Disability. In the event of Employee's Disability, Company shall not be
obligated to pay Employee or his estate or beneficiaries any additional
compensation except for: (a) any Due Bonus and Benefits that may have been
earned and are due and payable as of the date of such Disability, but which have
not been paid as of such date, and (b) reimbursement for expenses that may have
been incurred but which have not been paid as of the date of Disability, subject
to the requirements of Section 4.4 hereof. Upon termination due to Disability,
fifty percent (50%) of the outstanding stock options granted to Employee that
are unvested shall immediately vest and become exercisable and Employee or his
estate or beneficiaries, as the case may be, shall have the right to exercise
any of such stock options during the period commencing on the date of Disability
and ending on the second anniversary of the date of the Disability or for the
remainder of Exercise Period, if less.
6.5 No Mitigation. In the event of any termination of employment under
Section 5 hereof, Employee shall be under no obligation to seek other
employment; provided; however, that to the extent that Employee does obtain
other employment subsequent to the termination of Employee's employment
hereunder, the obligations of Company to pay Benefits under this Agreement from
and after the date of commencement of such other employment shall terminate.
7. Unauthorized Disclosure. Employee shall not, without the prior written
consent of Company, disclose or use in any way, either during Employee's
employment with Company or thereafter, except as required in the course of such
employment, any confidential business or technical information or trade secret
acquired in the course of such employment, whether or not conceived of or
prepared by him, which is related to any service or business of Company or any
Affiliate; provided, however, that the foregoing shall not apply to (a)
information that is not unique to the Company or that is generally known to the
industry or the public other than as a result of Employee's breach of this
covenant, (b) information known to Employee other than from information provided
by Company or (c) information that Employee is required to disclose to, or by,
any governmental or judicial authority; provided, however, if Employee should be
required in the course of judicial or other governmental proceedings to disclose
any information, Employee shall give Company prompt written notice thereof so
that
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<PAGE>
Company may seek an appropriate protective order and/or waive in writing
compliance with the confidentiality provisions of this Agreement. If, in the
absence of a protective order or the receipt of a waiver by Company, Employee is
compelled to disclose information to, or pursuant to the requirements of, a
court or other governmental authority, Employee may disclose such information to
such court or other governmental authority without liability to any other party
hereto.
8. Tangible Items. All files, records, documents, manuals, books, forms,
reports, memoranda, studies, data, calculations, recordings and correspondence,
in whatever form they may exist, and all copies, abstracts and summaries of the
foregoing and all physical items related to the business of Company and its
affiliates, other than merely personal items, whether of a public nature or not,
and whether prepared by Employee or not, and which are received by Employee
from, or on behalf of Company or an Affiliate in the course of his employment
hereunder are and shall remain the exclusive property of Company and any such
Affiliate and shall not be removed from the premises of the Company or such
Affiliate, as the case may be, except as required in the course of Employee's
employment hereunder, without the prior written consent of the Company's Chief
Executive Officer or the Board, and the same shall be promptly returned by
Employee upon the termination of Employee's employment with Company or at any
time prior thereto upon the request of the Company's Chief Executive Officer or
the Board.
9. Inventions and Patents. Employee agrees that all inventions,
innovations, improvements, developments, methods, designs, analyses, drawings,
reports, and all similar or related information that relates to Company's actual
or anticipated business, research and development or existing or future products
or services and that are conceived, developed or made by or at the direction of
Employee while Employee is employed by Company will be owned by Company.
Employee also agrees to promptly perform, at the expense of Company, all
reasonable actions (whether before, during or after the Term) necessary to
establish and confirm such ownership.
10. Certain Restrictive Covenants. During the Term, and for a period ending
six (6) months after the earlier of Employee's termination of employment
hereunder and the end of the Term for which the Employee is being compensated at
an annual rate equal to the Base Salary, Employee agrees that he will not act,
either directly or indirectly, as a partner, officer, director, substantial
stockholder (an equity interest of 5% or more) or employee of, or render
advisory or other services for, or in connection with, or become interested in,
or make any substantial financial investment in any firm, corporation, business
entity or business enterprise that competes with the business of Company (each,
a "Competitor"), except with the express written consent of the Board. Employee
further agrees that in the event of the termination of his employment under
Section 5 hereof, for a period of twelve (12) months thereafter, he will not,
directly or indirectly, employ, offer to employ, or actively interfere with the
relationship of Company or an Affiliate with, any employee of Company or any
employee of any Affiliate.
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<PAGE>
11. Employee Representations and Covenants. Employee hereby represents,
warrants and covenants to Company that (a) the execution, delivery and
performance of this Agreement by Employee does not and will not conflict with,
breach, violate or cause a default under any employment, non-competition or
confidentiality contract or agreement, instrument; order, judgment or decree to
which Employee is a party or by which he is bound; (b) Employee, in performing
this Agreement and the duties of Employee's employment with Company, will not
disclose or utilize any trade secrets of a former employer, unless Employee has
first obtained express written authorization from any such former employer for
their disclosure or use; (c) Employee has not brought, and will not bring to
Company, any documents, records, information or other materials of a former
employer that are not generally available to the public, unless Employee has
first obtained express written authorization from any such former employer for
their possession and use; and (d) upon the execution and delivery of this
Agreement by Company, this Agreement shall be the valid and binding obligation
of Employee, enforceable in accordance with its terms, subject to applicable
bankruptcy, insolvency and similar laws affecting the rights of creditors
generally.
12. Company Representations. Company represents and warrants (a) that it is
duly authorized and empowered to enter into this Agreement, (b) the execution,
delivery and performance of this Agreement by Company does not and will not
conflict with, breach, violate or cause a default under any contract, agreement,
instrument, order, judgment or decree to which Company is a party or by which it
is bound, and (c) upon the execution and delivery of this Agreement by Employee,
this Agreement shall be the valid and binding obligation of Company, enforceable
in accordance with its terms, subject to applicable bankruptcy, insolvency and
similar laws affecting the rights of creditor generally.
13. Indemnification. Prior to the Commencement Date, Company and Employee
shall enter into an indemnification agreement in a form mutually acceptable to
Company and Employee and containing terms no less favorable to Employee than
those contained in any indemnification or similar agreement currently in effect
between Company and any of its officers.
14. Remedies. Employee acknowledges that the restrictions and agreements
contained in this Agreement are reasonable and necessary to protect the
legitimate interests of Company, and that any violation of this Agreement will
cause substantial and irreparable injury to Company that would not be
quantifiable and for which no adequate remedy would exist at law and agrees that
injunctive relief, in addition to all other remedies, shall be available
therefor.
15. Effect of Agreement on Other Benefits. Except as specifically provided
in this Agreement, the existence of this Agreement shall not be interpreted to
preclude, prohibit or restrict Employee's participation in any other employee
benefit plan or other plans or programs provided to officers, directors or
employees of Company.
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<PAGE>
16. Rights of Employee's Estate. If Employee dies prior to the payment of
all amounts due and owing to him under the terms of this Agreement, such amounts
shall be paid to such beneficiary or beneficiaries as Employee may have last
designated in writing filed with the Secretary of Company or, if Employee has
made no beneficiary designation, to Employee's estate. Such designated
beneficiary or the executor of Employee's estate, as the case may be, may
exercise all of Employee's rights hereunder. If any beneficiary designated by
Employee shall predecease Employee, the designation of such beneficiary shall be
deemed revoked, and any amounts which would have been payable to such
beneficiary shall be paid to Employee's estate. If any designated beneficiary
survives Employee, but dies before payment of all amounts due hereunder, such
payments shall, unless Employee has designated otherwise, be made to such
beneficiary's estate. In the event of Employee's death or judicial determination
of his incompetence, reference in this Agreement to Employee shall be deemed
where appropriate, to refer to his beneficiary, estate or other legal
representative.
17. Severability. It is the intent and understanding of the parties hereto
that if, in any action before any court or other tribunal of competent
jurisdiction legally empowered to enforce this Agreement, any term, restriction,
covenant, or promise is held to be unenforceable as a result of being
unreasonable or for any other reason, then such term, restriction, covenant, or
promise shall not thereby be terminated, but, that it shall be deemed modified
to the extent necessary to make it enforceable by such court or other tribunal
and, if it cannot be so modified, that it shall be deemed amended to delete
therefrom such provision or portion adjudicated to be invalid or unenforceable,
and this agreement shall be deemed to be in full force and effect as so modified
and such modification or amendment in any event shall apply only with respect to
the operation of this Agreement in the particular jurisdiction in which such
adjudication is made.
18. Notices. Any notices or demands given in connection herewith shall be
in writing and deemed given when (a) personally delivered, (b) sent by facsimile
transmission to a number provided in writing by the addressee and a confirmation
of the transmission is received by the sender or (c) two (2) days after being
deposited for delivery with a recognized overnight courier, such as Federal
Express, and addressed or sent, as the case may be, to the address or facsimile
number set forth below or to such other address or facsimile number as such
party may in writing designate:
If to Employee: Michael Ferzacca
13561 Stoneband Lane
Gaithersburg, MD 20878
Fax No.: (301) 947-8349
If to Company: Tel-Save.com, Inc.
6805 Route 202
New Hope, Pennsylvania 18938
Attn: President
Fax No.: (215) 862-1515
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Either party may change its address for notices by written notice to the other
party in accordance with this Section 17.
19. Waiver. No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in a
writing executed by Employee and Company. No waiver by any party hereto at any
time of any breach by another 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.
20. Governing Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of Pennsylvania
relating to contracts made and to be performed entirely therein.
21. Headings. The headings in this Agreement are inserted for convenience
only and shall have no significance in the interpretation of this Agreement.
22. Successors. Company may not assign any of its rights or obligations
under this Agreement hereunder. Employee may assign his rights, but not his
obligations, hereunder and all of Employee's rights hereunder shall inure to the
benefit of his estate, personal representatives, designees or other legal
representatives. All of the rights of Company hereunder shall inure to the
benefit of, and be enforceable by the successors of Company. Any person, firm or
corporation succeeding to the business of Company by merger, purchase,
consolidation or otherwise shall be deemed to have assumed the obligations of
Company hereunder; provided, however, that Company shall, notwithstanding such
assumption by a successor, remain primarily liable and responsible for the
fulfillment of its obligations under this Agreement.
23. 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.
24. Certain Words. As used in this Agreement, the words "herein,"
"hereunder," "hereof" and similar words shall be deemed to refer to this
Agreement in its entirety, and not to any particular provision of this Agreement
unless the context clearly requires otherwise.
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IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement
as of the day and year first written above.
Tel-Save.com, Inc.
By:
-------------------------------------
Name:
Title:
- ----------------------------------------
Michael Ferzacca
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EXHIBIT A
PROMISSORY NOTE
$______ New Hope, Pennsylvania
December __, 1998
1. FOR VALUE RECEIVED, Michael Ferzacca (hereinafter referred to as
"Maker"), residing at 13561 Stoneband Lane, Gaithersburg, MD 20878, hereby
promises to pay to Tel-Save.com, Inc. (hereinafter referred to as "Payee"), at
its offices at 6805 Route 202, New Hope, Pennsylvania 18938, or at such other
place as the holder hereof may from time to time designate in writing, or to
order, the principal sum of ___________ AND 00/100 DOLLARS ($________) (or such
lesser amount thereof as has been disbursed by Payee to Maker hereunder, as
evidenced on the books and records of Payee), which, together with interest as
hereinafter provided, shall be payable as follows:
(a) A payment of interest on the principal sum of this Promissory Note
outstanding from time to time, at the Interest Rate, from the date hereof, to
and including the date that all principal amounts outstanding hereunder shall be
repaid in full, on the ____ day of each month after the date of this Promissory
Note or otherwise on the date that all principal amounts outstanding hereunder
shall be due and payable.
(b) On the earlier of December __, 1999 or the date that the shares
held by Maker are sold (the "Maturity Date") the entire unpaid principal balance
of this Promissory Note, together with all accrued fees and interest at the
Interest Rate, shall become immediately due and payable after demand by the
Payee.
For purposes of this Promissory Note the term "Interest Rate" shall
mean the rate of interest to be paid by Maker on any principal amount
outstanding under this Promissory Note and shall be a rate per annum equal to
the prime rate reported in the Money Rates column or section of The Wall Street
Journal, as the rate in effect for corporate loans at large United States money
center commercial banks with respect to the date (or nearest practicable date)
of the first advance made under this Promissory Note.
2. (a) Notwithstanding any other provision of this Promissory Note, all
payments made hereunder, including all amounts received by Payee pursuant to the
exercise of its security interests granted hereby, shall be applied first to
sums payable hereunder other than interest and principal, secondly, to payment
of interest on the principal balance outstanding hereunder from time to time,
and the balance, if any, to principal.
<PAGE>
(b) The interest payable on this Promissory Note will be computed on
the basis of a 360 day year for the actual number of elapsed days, in each case
including the date of any advance by Payee to Maker and the date of any payment.
Principal, interest and all other sums payable under this Promissory Note shall
be paid in lawful money of the United States in immediately available funds,
free and clear of, and without deduction or offset for, any present or future
taxes, levies, imposts, charges, withholdings, or liabilities with respect
thereto, or any other defenses, offsets, set-offs, claims, counterclaims,
credits or deductions of any kind.
(c) This Promissory Note may be prepaid in whole or in part, at any
time before it becomes due, without penalty or premium. Any prepayment shall be
applied first to any late charges or sums payable hereunder other than interest
and principal, and then to accrued interest, and then to principal.
3. (a) It is hereby expressly agreed that the entire unpaid principal
balance of this Promissory Note, together with interest and all other sums
payable to the holder hereof, shall immediately become due and payable at the
option of Payee in the event that (i) Maker shall default in making any payment
hereunder when due, and such default continues for fifteen (15) days; (ii) Maker
fails to observe or perform any other term, covenant, undertaking or agreement
contained in this Promissory Note or Maker's Employment Agreement with Payee,
and such failure or default continues unremedied for a period of ten (10) days
after written notice thereof has been given to Maker by Payee specifying such
failure and requiring it to be remedied; or (iii) Maker shall, or shall permit
another to, sell, assign, lease, convey, mortgage, pledge, encumber, or in any
manner whatsoever transfer all or part of the Collateral (as herein after
defined), or any interest therein, whether by operation of law or otherwise,
except as permitted herein.
(b) In addition, in any such event specified in subparagraph (a) of
this paragraph 3, Payee shall have and may exercise all rights and remedies
provided in this Promissory Note, in law or in equity. The Payee's failure to
accelerate for any cause shall not be deemed a waiver nor shall it prevent Payee
from doing so for a later or another cause.
4. As collateral security for the payment when due (whether at stated
maturity, by acceleration or otherwise) of all amounts owing to Payee from time
to time under this Promissory Note (collectively, the "Secured Obligations"),
Maker does hereby grant to Payee a security interest in all of Maker's right,
title and interest in those certain shares of common stock of Tel-Save.com, Inc.
owned by Maker ("Stock") and all proceeds and products of, and the proceeds of
any insurance covering, the foregoing property, including, without limitation,
the stock of the Payee issuable upon exercise of the aforementioned stock
options and any cash or other proceeds paid upon the sale or other disposition
of such stock.
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5. This Promissory Note shall constitute a security agreement between Maker
and Payee for purposes of the Uniform Commercial Code in effect in the
Commonwealth of Pennsylvania. In addition, at Maker's expense, Maker shall
execute and deliver to Payee, at such times and in such places as may be
required or permitted by applicable law, such UCC-1 Financing Statements, and
any other document or instrument reasonably required by Payee, and shall take
such other actions as are reasonably required by Payee, to better assure,
convey, assign, transfer and confirm unto Payee the property and rights hereby
or hereafter conveyed or assigned, and create preserve and perfect the security
interests granted herein, or to enable Payee to exercise its rights and remedies
with respect thereto. Further to the foregoing, Maker hereby expressly
authorizes Payee to retain possession of any stock issued by Payee pursuant to
paragraph 4.
6. Payee shall have all the rights with respect to the Collateral of a
secured creditor under the laws of the Commonwealth of Pennsylvania. Such rights
shall be in addition to, but not in limitation of, the other rights afforded to
Lender by this Promissory Note, any document described herein, or at law or in
equity.
7. When the Secured Obligations have been paid in full, the security
interest granted by this Promissory Note shall terminate and be released, and
any Collateral then in the possession or control of Payee shall be returned or
relinquished. Payee shall execute and deliver to the Maker upon such termination
such Uniform Commercial Code termination statements and such other documentation
as shall be reasonably requested by Maker to effect the termination and release
of the security interest in the Collateral.
8. If this Promissory Note is declared by Payee, or otherwise becomes,
immediately due and payable prior to the Maturity Date in accordance with the
terms of this Promissory Note, or is not paid in full on the Maturity Date,
Maker agrees that interest hereunder shall be calculated at a rate equal to the
Interest Rate plus one percent (1%) per annum from the date of said default or
defaults, until the date of payment, provided that in no event shall such
interest rate exceed the maximum interest rate which Maker may pay by law.
9. If any payment under this Promissory Note is not made when due (beyond
any applicable grace period), Maker agrees to pay all reasonable out-of-pocket
costs, fees, charges and expenses of collection by Payee, including, without
limitation, attorneys' fees and disbursements (which costs shall be added to the
amount due under this Promissory Note and shall be receivable therewith). Maker
agrees to perform and comply with each of the terms, covenants and provisions
contained in this Promissory Note on the part of Maker to be observed or
performed.
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<PAGE>
10. No extension of time for payment of this Promissory Note, or any
installment hereof, and no alteration, amendment or waiver of any provision of
this Promissory Note made by agreement between Payee and any other person or
party shall release, discharge, modify, change or affect the liability of Maker
under this Promissory Note. Maker and any endorsers and guarantors hereof, and
all others who may become liable for all or any part of this obligation, consent
to any number of renewals or extensions of time for payment hereof.
11. Payee shall not be deemed to waive any of its rights or remedies
hereunder unless such waiver be in writing and signed by Payee and then only to
the extent specifically set forth therein; a waiver on one occasion shall not be
construed as continuing or as a bar to or waiver of such right or remedy on any
other occasion. All remedies conferred upon Payee by this Promissory Note shall
be cumulative and none shall be exclusive, and such remedies may be exercised
concurrently or consecutively at Payee's option.
12. Maker agrees during the period of time that this Note is outstanding
that Maker will not purchase or own any securities of any company except for the
Stock and shares of common stock of Tel-Save.com, Inc. In addition, Maker
acknowledges that this Promissory Note and Maker's obligations hereunder are and
shall at all times continue to be absolute and unconditional in all respects.
This Promissory Note sets forth the entire agreement and understanding of Payee
and Maker with respect to the subject matter hereof. MAKER ABSOLUTELY,
UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY AND,
TO THE EXTENT PERMITTED BY APPLICABLE LAW, TO ASSERT ANY DEFENSE, SETOFF,
COUNTERCLAIM OR CROSSCLAIM OF ANY NATURE OR KIND WHATSOEVER (EXCEPT MANDATORY
COUNTERCLAIMS AND THE DEFENSES OF PAYMENT AND ACTUAL PERFORMANCE) WITH RESPECT
TO THIS PROMISSORY NOTE OR THE OBLIGATIONS OF MAKER HEREUNDER.
13. All notices hereunder shall be in writing and shall be sufficiently
given for all purposes when delivered personally or sent by ordinary mail, to
any party hereto at its address on the first page hereof or at such other
address of which it shall have notified the party giving such notice in writing
in accordance with the foregoing requirements. Any such notice shall be deemed
effective upon the fifth (5th) day following the date it is mailed.
14. This Promissory Note and the rights of the parties hereunder shall be
governed by and construed and interpreted in accordance with the laws of the
Commonwealth of Pennsylvania. If any provision hereof is held to be illegal,
invalid or unenforceable in any jurisdiction, the other provisions hereof shall
remain in full force and effect in such jurisdiction and the remaining
provisions
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<PAGE>
hereof shall be liberally construed in favor of the holder hereof in order to
effectuate the provisions hereof; and the invalidity of any provision hereof in
any jurisdiction shall not affect the validity or enforceability of such
provisions in any other jurisdiction, including the Commonwealth of
Pennsylvania.
15. Notwithstanding anything to the contrary contained in this Promissory
Note, in no event shall the total of all charges payable hereunder that are or
could be held to be in the nature of interest exceed the maximum rate permitted
to be charged by applicable law. Should Payee receive any payment that is or
would be in excess of that permitted to be charged under such applicable law,
then such payment shall be deemed to have been made in error and shall
automatically be applied to reduce the principal sum outstanding under this
Promissory Note.
16. This Promissory Note may not be changed, altered, modified or
terminated in any way except by a written instrument duly executed by the holder
hereof.
17. The rights of Maker to receive advances under this Promissory Note
shall not be assignable, whether by operation of law or otherwise, and does not
create or confer, and shall not be deemed to create or confer, any beneficial
rights or interests in favor of third parties, including, without limitation,
any right to obtain the proceeds in respect of an advance made hereunder.
--------------------------------
Michael Ferzacca
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<PAGE>
COMMONWEALTH OF _________________)
: ss.:
COUNTY OF _________________)
On the ____ day of December, 1998, before me personally came Michael
Ferzacca to me known to be the individual described in and who executed the
foregoing instrument, and acknowledged that he executed the same.
--------------------------------
Notary Public
6
EXHIBIT 10.61
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as of the
16th day of December, 1998 between Tel-Save.com, Inc., a Delaware corporation
(the "Company"), and Norris M. Hall, III ("Employee").
WHEREAS, Company desires to employ Employee and Employee desires to be
employed by Company; and
WHEREAS, Company and Employee desire to enter into this Agreement that sets
forth the terms and conditions of said employment.
NOW THEREFORE, in consideration of the foregoing, the mutual covenants set
forth herein and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the undersigned hereby agree as
follows:
1. Employment. Company agrees to employ Employee, and Employee accepts such
employment and agrees to serve Company, on the terms and conditions set forth
herein. Except as otherwise specifically provided herein, Employee's employment
shall be subject to the employment policies and practices of Company in effect
from time to time during the term of Employee's employment hereunder (including,
without limitation, its practices as to tax reporting and withholding).
2. Term of Agreement. The term of Employee's employment hereunder shall
commence on December 28, 1998 (the "Commencement Date") and shall continue in
effect for a period of three years thereafter, except as hereinafter provided
(the "Term"). Notwithstanding the foregoing, Employee shall not assume the
Positions (as defined in Section 3.1 hereof) until January 4, 1998. For purposes
of this Section 2, Employee shall be deemed to have commenced employment
hereunder in accordance with his obligations under this Agreement if an
Employment Presentment (as defined below) takes place. For purposes of this
Agreement, an "Employee Presentment" shall be deemed to have occurred if
Employee does present himself at the offices of Company in New Hope,
Pennsylvania (or such other location as Employee may be directed by the Gabriel
Battista) prepared to commence performing his duties hereunder on or before
December 31, 1998.
3. Positions and Duties.
3.1 Officer Positions. Except as may otherwise be agreed upon between
Company and Employee, Employee shall perform such duties and have such
responsibilities as Senior Vice President, Network Management and such other
duties and responsibilities consistent with the foregoing duties and
responsibilities as may be reasonably assigned or delegated to him from time to
time by Company's Chief Executive Officer or Company's Board of Directors (the
"Board") and as set forth in Exhibit A hereto, including, without limitation,
service as an employee, officer or director
<PAGE>
of affiliates (as that term is defined in Rule 405 under the Securities Act of
1933, as amended (the "Act")) (hereinafter, "Affiliates") of Company, without
additional compensation. References in this Agreement to Employee's employment
with Company shall be deemed to refer to employment with Company and/or, as the
case may be, an Affiliate, as the context requires. Employee shall perform his
duties and responsibilities to the best of his abilities hereunder in a
diligent, trustworthy, businesslike and efficient manner. Employee shall devote
substantially all of his working time and efforts to the business and affairs of
Company; provided, however, that nothing in this Agreement shall preclude
Employee from (a) engaging in charitable activities and community affairs, and
(b) managing his personal investments and affairs (subject to the limitations in
Section 10 hereof.
4. Compensation and Related Matters.
4.1 Base Salary. During the Term, Company shall pay to Employee a base
salary ("Base Salary") at the rate of Two Hundred Twenty-Five Thousand Dollars
($225,000) per year, which Base Salary shall be paid to Employee in accordance
with Company's usual and customary payroll practices.
4.2 Benefit Plans and Arrangements. Employee shall be entitled to
participate in and to receive benefits under Company's employee benefit plans
and arrangements (including, but not limited to, bonus plans) as are made
available to the Company's senior executive officers during the Term, which
employee benefit plans and arrangements may be altered from time to time at the
discretion of the Board (the "Benefits"). Annual bonuses to Employee may be up
to fifty percent (50%) of Base Salary. Notwithstanding the foregoing, Employee
acknowledges and agrees that bonuses, annual or otherwise, are performance based
and discretionary with the Board of Directors or a Committee thereof.
4.3 Perquisites. During the Term, Employee shall be entitled to receive
fringe benefits as are made available to Company's senior executive officers.
4.4 Expenses. Company shall promptly reimburse Employee for all
out-of-pocket expenses related to Company's business that are actually paid or
incurred by him in the performance of his services under this Agreement and that
are incurred, reported and documented in accordance with Company's policies. In
addition, during the Term, Company will provide Employee with an automobile, as
Company shall determine, and Company shall keep such automobile fully insured in
accordance with Company's practices for similarly situated employees.
4.5 Stock Options.
(a) Grant of Options. Effective on the date hereof, Employee shall be
granted an option (the "Option") to purchase 240,000 shares of Common Stock in
accordance with a stock option agreement to be mutually agreed to, and executed
by, Company and Employee prior to the Commencement Date, which stock option
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<PAGE>
agreement shall be in substantially the form thereof attached hereto as Exhibit
A. The Option shall have an exercise price equal to $8 9/16 per share and shall
expire on the tenth anniversary of the date hereof and shall vest and become
exercisable, subject to accelerated vesting in the event of a Change in Control
(defined as provided below) of Company in installments, as follows: (i) options
with respect to 80,000 shares of Common Stock shall vest and become exercisable
on the first anniversary of the date hereof, (ii) options with respect to 80,000
shares of Common Stock shall vest and become exercisable on the second
anniversary of the date hereof and (iii) options with respect to 80,000 shares
of Common Stock shall vest and become exercisable on the third anniversary of
the date hereof. In the event of a Change in Control of Company, the Option
shall vest and become exercisable as to all shares then subject thereto that are
not then vested and exercisable. For purposes of this Agreement, "Change in
Control" shall be deemed to have occurred if:
(i) any Person (as defined in Section 3(a)(9) under the
Securities Exchange Act of 1934, as amended (the "Exchange
Act")), other than the Company, becomes the Beneficial Owner
(as defined in Rule 13d-3 under the Exchange Act; provided,
that a Person shall be deemed to be the Beneficial Owner of
all shares that any such Person has the right to acquire
pursuant to any agreement or arrangement or upon exercise of
conversion rights, warrants, options or otherwise, without
regard to the 60 day period referred to in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of
the Company or any Significant Subsidiary (as defined below)
representing 50% or more of the combined voting power of the
Company's, or such subsidiary's, as the case may be, then
outstanding securities;
(ii) during any period of two years, individuals who at the
beginning of such period constitute the Board and any new
director (other than a director designated by a person who
has entered into an agreement with the Company to effect a
transaction described in clauses (i), (iii), or (iv) of this
Section 2(a)) whose election by the Board or nomination for
election by stockholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who
either were directors at the beginning of the two-year
period or whose election or nomination for election was
previously so approved, but excluding for this purpose any
such new director whose initial assumption of office occurs
as a result of either an actual or threatened election
contest or other actual or threatened solicitation of
proxies or consents by or on behalf of an individual,
corporation, partnership, group, association or other entity
other than the
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Board, cease for any reason to constitute at least a
majority of the Board of either or the Company or a
Significant Subsidiary;
(iii)the consummation of a merger or consolidation of the
Company or any subsidiary of the Company owning directly or
indirectly all or substantially all of the consolidated
assets of the Company ( a "Significant Subsidiary") with any
other entity, other than a merger or consolidation which
would result in the voting securities of the Company or a
Significant Subsidiary outstanding immediately prior thereto
continuing to represent more than fifty percent (50%) of the
combined voting power of the surviving or resulting entity
outstanding immediately after such merger or consolidation;
(iv) the shareholders of the Company approve a plan or agreement
for the sale or disposition of fifty percent (50%) or more
of the consolidated assets of the Company in which case the
Board shall determine the effective date of the Change of
Control resulting therefrom;
(v) any other event occurs which the Board determines, in its
discretion, would materially alter, the structure of the
Company or its ownership; and
(vi) a person other than Gabriel Battista is elected by the Board
of Directors to serve as the Company's principal executive
officer.
The fair market value of Common Stock for purposes of this Agreement shall
mean the last reported sale price of a share of the Common Stock on the Nasdaq
National Market System preceding the date in question or if no sale took place
on such day, such last reported sale price on the then next preceding date on
which such sale took place. Notwithstanding the foregoing, the Options shall be
forfeited by Employee if an Employment Presentment does not take place on or
before December 31, 1998.
(b) Registration Statement. Company will file with the Securities and
Exchange Commission and any applicable state securities regulatory authorities a
Registration Statement on Form S-8 (or if unavailable, a registration statement
on Form S-3) to register the shares issuable upon exercise of the Option under
the Act and any applicable state securities or "Blue Sky" laws as soon as
practicable after the date hereof. Notwithstanding the foregoing, Company shall
be entitled to postpone for a reasonable period of time the filing or the
effectiveness of such registration statement if the Board shall determine in
good faith that such filing or effectiveness would be materially detrimental to
the Company's business interests.
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4.6 Signing Bonus. In consideration of Employee's agreement to become
employed by Company, Company shall pay Employee One Hundred Fifty Thousand
Dollars ($150,000) (the "Signing Bonus") by means of a wire transfer on earlier
of the Commencement Date, upon Employee's commencement of employment with
Company as herein provided and the date and time in which this contract is
executed.
4.7 Relocation of Employee.
(a) Subject to the terms and conditions and limitations in Section
4.7(b)(iv) the Company shall pay Employee's reasonable moving expenses incurred
in connection with Employee's move from his current residence in Atlanta,
Georgia ("Old Residence") to a new residence in the greater metropolitan
Washington D. C. area ("New Residence").
(b) (i) Subject to the limitations in Section 4.7(b)(iv), upon the
consummation of the sale of Employee's Old Residence, the Company agrees to pay
Employee the amount of money equal to the difference between the purchase price
that Employee paid for such residence and the sale price that Employee received
in connection with the sale of such residence. If the Employees existing
residence fails to sell at or above his previous sales price, the Company will
pay the Employee an amount equal to the difference, but not to exceed two (2)
percentage points of the existing mortgage.
(ii) Subject to the limitations in Section 4.7(b)(iv), in the event
that and so long as the Employee owns both a New Residence and his Old Residence
during the period commencing on the date hereof and terminating nine months
thereafter ("Transition Period"), the Company shall reimburse the Employee for
the greater of (i) his monthly mortgage for his New Residence and (ii) his
monthly mortgage payment for his Old Residence, provided, however, that the
Company shall reimburse the Employee only for one such mortgage payment each
month during the Transition Period.
(iii) Subject to the limitations of Section 4.7(b)(iv), to the extent
that Employee has not purchased the New Residence, the Company shall provide the
Employee with a two-bedroom rental residence, as the Company shall determine
during the Transition Period. The Company will also pay reasonable expenses for
family travel associated with finding a new residence and relocation.
(iv) Notwithstanding the foregoing, (i) Employee shall obtain the
Company's prior approval for any single moving expenditure in excess of $1,000;
(ii) the Company, prior to the Company paying any amounts to Employee pursuant
to this Section 4.7, has the right to review, examine and confirm Employee's
bills and invoices with respect to these matters and (iii) the Company's
aggregate liability to Employee pursuant to this Section 4.7(b) shall not exceed
seventy-five thousand dollars ($75,000.00).
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5. Termination. The Term of Employee's employment hereunder may be
terminated under the following circumstances:
5.1 Death. The Term of Employee's employment hereunder shall terminate upon
his death.
5.2 Disability. If Employee becomes physically or mentally disabled during
the term hereof so that he is unable to perform services required of him
pursuant to this Agreement for an aggregate of six (6) months in any twelve (12)
month period (a `Disability"), Company, at its option, may terminate Employee's
employment hereunder.
5.3 Cause. Upon written notice, Company may terminate Employee's employment
hereunder for Cause (as defined below). For purposes of this Agreement, Company
shall have "Cause" to terminate Employee's employment hereunder upon (a) a
material breach by Employee of any material provision of this Agreement, (b)
willful misconduct by Employee in connection with misappropriating any funds or
property of Company, (c) attempting to obtain any personal profit from any
transaction in which Employee has an interest that is adverse to the interests
of Company without prior written disclosure thereof to the Board or (d)
Employee's gross neglect in the performance of the duties required to be
performed by Employee under this Agreement.
5.4 By Employee. Employee may terminate his employment hereunder:
(a) Upon sixty (60) days' prior written notice to Company, provided that,
upon the giving of such notice by Employee, Company may establish an earlier
date for such termination under this Section 5.4 (a).
(b) For Good Reason (as defined below) immediately and with notice to
Company. "Good Reason" for termination by Employee shall include, but is not
limited to, the following:
(i) Material breach of any provision of this Agreement by Company,
which breach shall not have been cured by Company within thirty
(30) days of receipt of written notice of said material breach;
(ii) Failure by Company to maintain Employee in a position
commensurate with that referred to in Section 3 of this
Agreement; or
(iii)The assignment to Employee of any duties inconsistent with
Employee's position, authority, duties or responsibilities as
contemplated by Section 3 hereof or any other action by Company
that results in a diminution of such position, authority, duties
or responsibilities.
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5.5 Without Cause. Company may otherwise terminate the Term of Employee's
employment at any time upon written notice to Employee.
6. Compensation In the Event of Termination. In the event that Employee's
employment hereunder terminates prior to the end of the Term, Company shall make
payments to Employee as set forth below:
6.1 By Employee for Good Reason; By Company Without Cause. In the event
that Employee's employment hereunder is terminated by Company without Cause or
by Employee for Good Reason, then the Company shall (a) pay to Employee all
amounts due to Employee pursuant to any bonus that was due to Employee as of the
date of such termination, pursuant to the terms of such bonus (a "Due Bonus"),
(b) continue to pay to Employee the Base Salary and Benefits to which Employee
would be entitled hereunder in the manner provided for herein for the period of
time ending on the earlier of the date when the Term would otherwise have
expired in accordance with Section 2 hereof and the second anniversary of the
date of such termination, (c) reimburse Employee for expenses that may have been
incurred, but which have not been paid as of the date of termination, subject to
the requirements of Section 4.4 hereof and (d) one hundred percent (100%) of the
outstanding stock options granted to the Employee that are unvested shall
immediately vest and become exercisable.
6.2 By Company for Cause; By Employee Without Good Reason. In the event
that Company shall terminate Employee's employment hereunder for Cause pursuant
to Section 5.3 hereof or Employee shall terminate his employment hereunder
without Good Reason, all compensation and Benefits, as specified in Section 4 of
this Agreement, theretofore payable or provided to Employee shall cease to be
payable or provided, except for any Due Bonus and any Benefits that may have
been due and payable but that have not been paid as of the date of termination
and reimbursement of expenses that may have been incurred, but which have not
been paid as of the date of termination, subject to the requirements of Section
4.4 hereof.
6.3 Death. In the event of Employee's death, Company shall not be obligated
to pay Employee or his estate or beneficiaries any compensation except for (a)
any Due Bonus or any Benefits that may have been earned and are due and payable
as of the date of death, but which have not been paid as of such date, (b)
reimbursement of expenses that may have been incurred, but which have not been
paid as of the date of death, subject to the requirements of Section 4.4 hereof,
and (c) all outstanding stock options granted to Employee that are unvested
shall immediately vest and become exercisable and Employee's estate or
beneficiaries, as the case may be, shall have the right to exercise any of such
stock options during the period commencing on the date of death and ending on
the second anniversary of the date of such termination or for the remainder of
the period set forth in the option agreement applicable to the option in
question (the "Exercise Period'), if less.
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6.4 Disability. In the event of Employee's Disability, Company shall not be
obligated to pay Employee or his estate or beneficiaries any additional
compensation except for: (a) any Due Bonus and Benefits that may have been
earned and are due and payable as of the date of such Disability, but which have
not been paid as of such date, and (b) reimbursement for expenses that may have
been incurred but which have not been paid as of the date of Disability, subject
to the requirements of Section 4.4 hereof. Upon termination due to Disability,
fifty percent (50%) of the outstanding stock options granted to Employee that
are unvested shall immediately vest and become exercisable and Employee or his
estate or beneficiaries, as the case may be, shall have the right to exercise
any of such stock options during the period commencing on the date of Disability
and ending on the second anniversary of the date of the Disability or for the
remainder of Exercise Period, if less.
6.5 No Mitigation. In the event of any termination of employment under
Section 5 hereof, Employee shall be under no obligation to seek other
employment; provided; however, that to the extent that Employee does obtain
other employment subsequent to the termination of Employee's employment
hereunder, the obligations of Company to pay Benefits under this Agreement from
and after the date of commencement of such other employment shall terminate.
7. Unauthorized Disclosure. Employee shall not, without the prior written
consent of Company, disclose or use in any way, either during Employee's
employment with Company or thereafter, except as required in the course of such
employment, any confidential business or technical information or trade secret
acquired in the course of such employment, whether or not conceived of or
prepared by him, which is related to any service or business of Company or any
Affiliate; provided, however, that the foregoing shall not apply to (a)
information that is not unique to the Company or that is generally known to the
industry or the public other than as a result of Employee's breach of this
covenant, (b) information known to Employee other than from information provided
by Company or (c) information that Employee is required to disclose to, or by,
any governmental or judicial authority; provided, however, if Employee should be
required in the course of judicial or other governmental proceedings to disclose
any information, Employee shall give Company prompt written notice thereof so
that Company may seek an appropriate protective order and/or waive in writing
compliance with the confidentiality provisions of this Agreement. If, in the
absence of a protective order or the receipt of a waiver by Company, Employee is
compelled to disclose information to, or pursuant to the requirements of, a
court or other governmental authority, Employee may disclose such information to
such court or other governmental authority without liability to any other party
hereto.
8. Tangible Items. All files, records, documents, manuals, books, forms,
reports, memoranda, studies, data, calculations, recordings and correspondence,
in whatever form they may exist, and all copies, abstracts and summaries of the
foregoing and all physical items related to the business of Company and its
affiliates, other than merely personal items, whether of a public nature or not,
and whether prepared by Employee or not, and which are received by Employee
from, or on behalf of Company or
8
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an Affiliate in the course of his employment hereunder are and shall remain the
exclusive property of Company and any such Affiliate and shall not be removed
from the premises of the Company or such Affiliate, as the case may be, except
as required in the course of Employee's employment hereunder, without the prior
written consent of the Company's Chief Executive Officer or the Board, and the
same shall be promptly returned by Employee upon the termination of Employee's
employment with Company or at any time prior thereto upon the request of the
Company's Chief Executive Officer or the Board.
9. Inventions and Patents. Employee agrees that all inventions,
innovations, improvements, developments, methods, designs, analyses, drawings,
reports, and all similar or related information that relates to Company's actual
or anticipated business, research and development or existing or future products
or services and that are conceived, developed or made by or at the direction of
Employee while Employee is employed by Company will be owned by Company.
Employee also agrees to promptly perform, at the expense of Company, all
reasonable actions (whether before, during or after the Term) necessary to
establish and confirm such ownership.
10. Certain Restrictive Covenants. During the Term, and for a period ending
six (6) months after the earlier of Employee's termination of employment
hereunder and the end of the Term for which the Employee is being compensated at
an annual rate equal to the Base Salary, Employee agrees that he will not act,
either directly or indirectly, as a partner, officer, director, substantial
stockholder (an equity interest of 5% or more) or employee of, or render
advisory or other services for, or in connection with, or become interested in,
or make any substantial financial investment in any firm, corporation, business
entity or business enterprise that competes with the business of Company (each,
a "Competitor"), except with the express written consent of the Board. Employee
further agrees that in the event of the termination of his employment under
Section 5 hereof, for a period of twelve (12) months thereafter, he will not,
directly or indirectly, employ, offer to employ, or actively interfere with the
relationship of Company or an Affiliate with, any employee of Company or any
employee of any Affiliate.
11. Employee Representations and Covenants. Employee hereby represents,
warrants and covenants to Company that (a) the execution, delivery and
performance of this Agreement by Employee does not and will not conflict with,
breach, violate or cause a default under any employment, non-competition or
confidentiality contract or agreement, instrument; order, judgment or decree to
which Employee is a party or by which he is bound; (b) Employee, in performing
this Agreement and the duties of Employee's employment with Company, will not
disclose or utilize any trade secrets of a former employer, unless Employee has
first obtained express written authorization from any such former employer for
their disclosure or use; (c) Employee has not brought, and will not bring to
Company, any documents, records, information or
9
<PAGE>
other materials of a former employer that are not generally available to the
public, unless Employee has first obtained express written authorization from
any such former employer for their possession and use; and (d) upon the
execution and delivery of this Agreement by Company, this Agreement shall be the
valid and binding obligation of Employee, enforceable in accordance with its
terms, subject to applicable bankruptcy, insolvency and similar laws affecting
the rights of creditors generally.
12. Company Representations. Company represents and warrants (a) that it is
duly authorized and empowered to enter into this Agreement, (b) the execution,
delivery and performance of this Agreement by Company does not and will not
conflict with, breach, violate or cause a default under any contract, agreement,
instrument, order, judgment or decree to which Company is a party or by which it
is bound, and (c) upon the execution and delivery of this Agreement by Employee,
this Agreement shall be the valid and binding obligation of Company, enforceable
in accordance with its terms, subject to applicable bankruptcy, insolvency and
similar laws affecting the rights of creditor generally.
13. Indemnification. Prior to the Commencement Date, Company and Employee
shall enter into an indemnification agreement in a form mutually acceptable to
Company and Employee and containing terms no less favorable to Employee than
those contained in any indemnification or similar agreement currently in effect
between Company and any of its officers.
14. Remedies. Employee acknowledges that the restrictions and agreements
contained in this Agreement are reasonable and necessary to protect the
legitimate interests of Company, and that any violation of this Agreement will
cause substantial and irreparable injury to Company that would not be
quantifiable and for which no adequate remedy would exist at law and agrees that
injunctive relief, in addition to all other remedies, shall be available
therefor.
15. Effect of Agreement on Other Benefits. Except as specifically provided
in this Agreement, the existence of this Agreement shall not be interpreted to
preclude, prohibit or restrict Employee's participation in any other employee
benefit plan or other plans or programs provided to officers, directors or
employees of Company.
16. Rights of Employee's Estate. If Employee dies prior to the payment of
all amounts due and owing to him under the terms of this Agreement, such amounts
shall be paid to such beneficiary or beneficiaries as Employee may have last
designated in writing filed with the Secretary of Company or, if Employee has
made no beneficiary designation, to Employee's estate. Such designated
beneficiary or the executor of Employee's estate, as the case may be, may
exercise all of Employee's rights hereunder. If any beneficiary designated by
Employee shall predecease Employee, the designation of such beneficiary shall be
deemed revoked, and any amounts which would have been payable to such
beneficiary shall be paid to Employee's estate. If any designated
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<PAGE>
beneficiary survives Employee, but dies before payment of all amounts due
hereunder, such payments shall, unless Employee has designated otherwise, be
made to such beneficiary's estate. In the event of Employee's death or judicial
determination of his incompetence, reference in this Agreement to Employee shall
be deemed where appropriate, to refer to his beneficiary, estate or other legal
representative.
17. Severability. It is the intent and understanding of the parties hereto
that if, in any action before any court or other tribunal of competent
jurisdiction legally empowered to enforce this Agreement, any term, restriction,
covenant, or promise is held to be unenforceable as a result of being
unreasonable or for any other reason, then such term, restriction, covenant, or
promise shall not thereby be terminated, but, that it shall be deemed modified
to the extent necessary to make it enforceable by such court or other tribunal
and, if it cannot be so modified, that it shall be deemed amended to delete
therefrom such provision or portion adjudicated to be invalid or unenforceable,
and this agreement shall be deemed to be in full force and effect as so modified
and such modification or amendment in any event shall apply only with respect to
the operation of this Agreement in the particular jurisdiction in which such
adjudication is made.
18. Notices. Any notices or demands given in connection herewith shall be
in writing and deemed given when (a) personally delivered, (b) sent by facsimile
transmission to a number provided in writing by the addressee and a confirmation
of the transmission is received by the sender or (c) two (2) days after being
deposited for delivery with a recognized overnight courier, such as Federal
Express, and addressed or sent, as the case may be, to the address or facsimile
number set forth below or to such other address or facsimile number as such
party may in writing designate:
If to Employee: Norris M. Hall, III
16740 Queen Anne Road
Upper Marlboro, MD 20774
Fax No.:
If to Company: Tel-Save.com, Inc.
6805 Route 202
New Hope, Pennsylvania 18938
Attn: President
Fax No.: (215) 862-1515
Either party may change its address for notices by written notice to the other
party in accordance with this Section 17.
19. Waiver. No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in a
writing executed by Employee and Company. No waiver by any party hereto at any
time of any breach by another 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.
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20. Governing Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of Pennsylvania
relating to contracts made and to be performed entirely therein.
21. Headings. The headings in this Agreement are inserted for convenience
only and shall have no significance in the interpretation of this Agreement.
22. Successors. Company may not assign any of its rights or obligations
under this Agreement hereunder. Employee may assign his rights, but not his
obligations, hereunder and all of Employee's rights hereunder shall inure to the
benefit of his estate, personal representatives, designees or other legal
representatives. All of the rights of Company hereunder shall inure to the
benefit of, and be enforceable by the successors of Company. Any person, firm or
corporation succeeding to the business of Company by merger, purchase,
consolidation or otherwise shall be deemed to have assumed the obligations of
Company hereunder; provided, however, that Company shall, notwithstanding such
assumption by a successor, remain primarily liable and responsible for the
fulfillment of its obligations under this Agreement.
23. 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.
24. Certain Words. As used in this Agreement, the words "herein,"
"hereunder," "hereof" and similar words shall be deemed to refer to this
Agreement in its entirety, and not to any particular provision of this Agreement
unless the context clearly requires otherwise.
IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement
as of the day and year first written above.
Tel-Save.com, Inc.
By:
-----------------------------------
Name:
Title:
- --------------------------------------
Norris M. Hall, III
12
EXHIBIT 10.62
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as of the
16th day of December, 1998 between Tel-Save.com, Inc., a Delaware corporation
(the "Company"), and George Vinall ("Employee").
WHEREAS, Company desires to employ Employee and Employee desires to be
employed by Company; and
WHEREAS, Company and Employee desire to enter into this Agreement that sets
forth the terms and conditions of said employment.
NOW THEREFORE, in consideration of the foregoing, the mutual covenants set
forth herein and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the undersigned hereby agree as
follows:
1. Employment. Company agrees to employ Employee, and Employee accepts such
employment and agrees to serve Company, on the terms and conditions set forth
herein. Except as otherwise specifically provided herein, Employee's employment
shall be subject to the employment policies and practices of Company in effect
from time to time during the term of Employee's employment hereunder (including,
without limitation, its practices as to tax reporting and withholding).
2. Term of Agreement. The term of Employee's employment hereunder shall
commence on December 28, 1998 (the "Commencement Date") and shall continue in
effect for a period of three years thereafter, except as hereinafter provided
(the "Term"). Notwithstanding the foregoing, Employee shall not assume the
Positions (as defined in Section 3.1 hereof) until January 4, 1998. For purposes
of this Section 2, Employee shall be deemed to have commenced employment
hereunder in accordance with his obligations under this Agreement if an
Employment Presentment (as defined below) takes place. For purposes of this
Agreement, an "Employee Presentment" shall be deemed to have occurred if
Employee does present himself at the offices of Company in New Hope,
Pennsylvania (or such other location as Employee may be directed by the Gabriel
Battista) prepared to commence performing his duties hereunder on or before
December 31, 1998.
3. Positions and Duties.
3.1 Officer Positions. Except as may otherwise be agreed upon between
Company and Employee, Employee shall perform such duties and have such
responsibilities as Senior Vice President, Business Development and such other
duties and responsibilities consistent with the foregoing duties and
responsibilities as may be reasonably assigned or delegated to him from time to
time by Company's Chief Executive Officer or Company's Board of Directors (the
"Board"), including, without limitation, service as an employee, officer or
director of affiliates (as that term is defined
<PAGE>
in Rule 405 under the Securities Act of 1933, as amended (the "Act"))
(hereinafter, "Affiliates") of Company, without additional compensation.
References in this Agreement to Employee's employment with Company shall be
deemed to refer to employment with Company and/or, as the case may be, an
Affiliate, as the context requires. Employee shall perform his duties and
responsibilities to the best of his abilities hereunder in a diligent,
trustworthy, businesslike and efficient manner. Employee shall devote
substantially all of his working time and efforts to the business and affairs of
Company; provided, however, that nothing in this Agreement shall preclude
Employee from (a) engaging in charitable activities and community affairs, and
(b) managing his personal investments and affairs (subject to the limitations in
Section 10 hereof.
4. Compensation and Related Matters.
4.1 Base Salary. During the Term, Company shall pay to Employee a base
salary ("Base Salary") at the rate of Two Hundred Thousand ($200,000) Dollars
per year, which Base Salary shall be paid to Employee in accordance with
Company's usual and customary payroll practices.
4.2 Benefit Plans and Arrangements. Employee shall be entitled to
participate in and to receive benefits under Company's employee benefit plans
and arrangements (including, but not limited to, bonus plans) as are made
available to the Company's senior executive officers during the Term, which
employee benefit plans and arrangements may be altered from time to time at the
discretion of the Board (the "Benefits"). Annual bonuses to Employee may be up
to fifty percent (50%) of Base Salary. Notwithstanding the foregoing, Employee
acknowledges and agrees that bonuses, annual or otherwise, are performance based
and discretionary with the Board of Directors or a Committee thereof.
4.3 Perquisites. During the Term, Employee shall be entitled to receive
fringe benefits as are made available to Company's senior executive officers.
4.4 Expenses. Company shall promptly reimburse Employee for all
out-of-pocket expenses related to Company's business that are actually paid or
incurred by him in the performance of his services under this Agreement and that
are incurred, reported and documented in accordance with Company's policies. In
addition, during the Term, Company will provide Employee with an automobile, as
Company shall determine, and Company shall keep such automobile fully insured in
accordance with Company's practices for similarly situated employees.
4.5 Stock Options.
(a) Grant of Options. Effective on the date hereof, Employee shall be
granted an option (the "Option") to purchase 240,000 shares of Common Stock in
accordance with a stock option agreement to be mutually agreed to, and executed
by, Company and Employee prior to the Commencement Date, which stock option
agreement shall be in substantially the form thereof attached hereto as Exhibit
A upon
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<PAGE>
execution of the option. The Option shall have an exercise price equal to $8
9/16 per share, expire on the tenth anniversary of the date hereof and shall
vest and become exercisable, subject to accelerated vesting in the event of a
Change in Control (defined as provided below) of Company in installments, as
follows: (i) options with respect to 80,000 shares of Common Stock shall vest
and become exercisable on the first anniversary of the date hereof, (ii) options
with respect to 80,000 shares of Common Stock shall vest and become exercisable
on the second anniversary of the date hereof and (iii) options with respect to
80,000 shares of Common Stock shall vest and become exercisable on the third
anniversary of the date hereof. In the event of a Change in Control of Company,
the Option shall vest and become exercisable as to all shares then subject
thereto that are not then vested and exercisable. For purposes of this
Agreement, "Change in Control" shall be deemed to have occurred if:
(i) any Person (as defined in Section 3(a)(9) under the
Securities Exchange Act of 1934, as amended (the "Exchange
Act")), other than the Company, becomes the Beneficial Owner
(as defined in Rule 13d-3 under the Exchange Act; provided,
that a Person shall be deemed to be the Beneficial Owner of
all shares that any such Person has the right to acquire
pursuant to any agreement or arrangement or upon exercise of
conversion rights, warrants, options or otherwise, without
regard to the 60 day period referred to in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of
the Company or any Significant Subsidiary (as defined below)
representing 50% or more of the combined voting power of the
Company's, or such subsidiary's, as the case may be, then
outstanding securities;
(ii) during any period of two years, individuals who at the
beginning of such period constitute the Board and any new
director (other than a director designated by a person who
has entered into an agreement with the Company to effect a
transaction described in clauses (i), (iii), or (iv) of this
Section 2(a)) whose election by the Board or nomination for
election by stockholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who
either were directors at the beginning of the two-year
period or whose election or nomination for election was
previously so approved, but excluding for this purpose any
such new director whose initial assumption of office occurs
as a result of either an actual or threatened election
contest
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<PAGE>
or other actual or threatened solicitation of proxies or
consents by or on behalf of an individual, corporation,
partnership, group, association or other entity other than
the Board, cease for any reason to constitute at least a
majority of the Board of either or the Company or a
Significant Subsidiary;
(iii)the consummation of a merger or consolidation of the
Company or any subsidiary of the Company owning directly or
indirectly all or substantially all of the consolidated
assets of the Company ( a "Significant Subsidiary") with any
other entity, other than a merger or consolidation which
would result in the voting securities of the Company or a
Significant Subsidiary outstanding immediately prior thereto
continuing to represent more than fifty percent (50%) of the
combined voting power of the surviving or resulting entity
outstanding immediately after such merger or consolidation;
(iv) the shareholders of the Company approve a plan or agreement
for the sale or disposition of fifty percent (50%) or more
of the consolidated assets of the Company in which case the
Board shall determine the effective date of the Change of
Control resulting therefrom;
(v) any other event occurs which the Board determines, in its
discretion, would materially alter, the structure of the
Company or its ownership; and
(vi) a person other than Gabriel Battista is elected by the Board
of Directors to serve as the Company's principal executive
officer.
The fair market value of Common Stock for purposes of this Agreement shall
mean the last reported sale price of a share of the Common Stock on the Nasdaq
National Market System preceding the date in question or if no sale took place
on such day, such last reported sale price on the then next preceding date on
which such sale took place. Notwithstanding the foregoing, the Options shall be
forfeited by Employee if an Employment Presentment does not take place on or
before December 31, 1998.
(b) Registration Statement. Company will file with the Securities and
Exchange Commission and any applicable state securities regulatory authorities a
Registration Statement on Form S-8 (or if unavailable, a registration statement
on Form S-3) to register the shares issuable upon exercise of the Option under
the Act and any applicable state securities or "Blue Sky" laws as soon as
practicable after the date hereof.
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<PAGE>
Notwithstanding the foregoing, Company shall be entitled to postpone for a
reasonable period of time the filing or the effectiveness of such registration
statement if the Board shall determine in good faith that such filing or
effectiveness would be materially detrimental to the Company's business
interests.
4.6 Signing Bonus. In consideration of Employee's agreement to become
employed by Company, Company shall pay Employee One Hundred Seventy-Five
Thousand Dollars ($175,000) (the "Signing Bonus") by means of a wire transfer on
earlier of the Commencement Date, upon Employee's commencement of employment
with Company as herein provided and the date and time in which this contract is
executed.
5 Termination. The Term of Employee's employment hereunder may be
terminated under the following circumstances:
5.1 Death. The Term of Employee's employment hereunder shall terminate upon
his death.
5.2 Disability. If Employee becomes physically or mentally disabled during
the term hereof so that he is unable to perform services required of him
pursuant to this Agreement for an aggregate of six (6) months in any twelve (12)
month period (a `Disability"), Company, at its option, may terminate Employee's
employment hereunder.
5.3 Cause. Upon written notice, Company may terminate Employee's employment
hereunder for Cause (as defined below). For purposes of this Agreement, Company
shall have "Cause" to terminate Employee's employment hereunder upon (a) a
material breach by Employee of any material provision of this Agreement, (b)
willful misconduct by Employee in connection with misappropriating any funds or
property of Company, (c) attempting to obtain any personal profit from any
transaction in which Employee has an interest that is adverse to the interests
of Company without prior written disclosure thereof to the Board or (d)
Employee's gross neglect in the performance of the duties required to be
performed by Employee under this Agreement.
5.4 By Employee. Employee may terminate his employment hereunder:
(a) Upon sixty (60) days' prior written notice to Company, provided that,
upon the giving of such notice by Employee, Company may establish an earlier
date for such termination under this Section 5.4 (a).
(b) For Good Reason (as defined below) immediately and with notice to
Company. "Good Reason" for termination by Employee shall include, but is not
limited to, the following:
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<PAGE>
(i) Material breach of any provision of this Agreement by Company,
which breach shall not have been cured by Company within thirty
(30) days of receipt of written notice of said material breach;
(ii) Failure by Company to maintain Employee in a position
commensurate with that referred to in Section 3 of this
Agreement; or
(iii)The assignment to Employee of any duties inconsistent with
Employee's position, authority, duties or responsibilities as
contemplated by Section 3 hereof or any other action by Company
that results in a diminution of such position, authority, duties
or responsibilities.
5.5 Without Cause. Company may otherwise terminate the Term of Employee's
employment at any time upon written notice to Employee.
6. Compensation In the Event of Termination. In the event that Employee's
employment hereunder terminates prior to the end of the Term, Company shall make
payments to Employee as set forth below:
6.1 By Employee for Good Reason; By Company Without Cause. In the event
that Employee's employment hereunder is terminated by Company without Cause or
by Employee for Good Reason, then the Company shall (a) pay to Employee all
amounts due to Employee pursuant to any bonus that was due to Employee as of the
date of such termination, pursuant to the terms of such bonus (a "Due Bonus"),
(b) continue to pay to Employee the Base Salary and Benefits to which Employee
would be entitled hereunder in the manner provided for herein for the period of
time ending on the earlier of the date when the Term would otherwise have
expired in accordance with Section 2 hereof and the second anniversary of the
date of such termination, (c) reimburse Employee for expenses that may have been
incurred, but which have not been paid as of the date of termination, subject to
the requirements of Section 4.4 hereof and (d) one hundred percent (100%) of the
outstanding stock options granted to the Employee that are unvested shall
immediately vest and become exercisable.
6.2 By Company for Cause; By Employee Without Good Reason. In the event
that Company shall terminate Employee's employment hereunder for Cause pursuant
to Section 5.3 hereof or Employee shall terminate his employment hereunder
without Good Reason, all compensation and Benefits, as specified in Section 4 of
this Agreement, theretofore payable or provided to Employee shall cease to be
payable or provided, except for any Due Bonus and any Benefits that may have
been due and payable but that have not been paid as of the date of termination
and reimbursement of expenses that may have been incurred, but which have not
been paid as of the date of termination, subject to the requirements of Section
4.4 hereof.
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<PAGE>
6.3 Death. In the event of Employee's death, Company shall not be obligated
to pay Employee or his estate or beneficiaries any compensation except for (a)
any Due Bonus or any Benefits that may have been earned and are due and payable
as of the date of death, but which have not been paid as of such date, (b)
reimbursement of expenses that may have been incurred, but which have not been
paid as of the date of death, subject to the requirements of Section 4.4 hereof,
and (c) all outstanding stock options granted to Employee that are unvested
shall immediately vest and become exercisable and Employee's estate or
beneficiaries, as the case may be, shall have the right to exercise any of such
stock options during the period commencing on the date of death and ending on
the second anniversary of the date of such termination or for the remainder of
the period set forth in the option agreement applicable to the option in
question (the "Exercise Period'), if less.
6.4 Disability. In the event of Employee's Disability, Company shall not be
obligated to pay Employee or his estate or beneficiaries any additional
compensation except for: (a) any Due Bonus and Benefits that may have been
earned and are due and payable as of the date of such Disability, but which have
not been paid as of such date, and (b) reimbursement for expenses that may have
been incurred but which have not been paid as of the date of Disability, subject
to the requirements of Section 4.4 hereof. Upon termination due to Disability,
fifty percent (50%) of the outstanding stock options granted to Employee that
are unvested shall immediately vest and become exercisable and Employee or his
estate or beneficiaries, as the case may be, shall have the right to exercise
any of such stock options during the period commencing on the date of Disability
and ending on the second anniversary of the date of the Disability or for the
remainder of Exercise Period, if less.
6.5 No Mitigation. In the event of any termination of employment under
Section 5 hereof, Employee shall be under no obligation to seek other
employment; provided; however, that to the extent that Employee does obtain
other employment subsequent to the termination of Employee's employment
hereunder, the obligations of Company to pay Benefits under this Agreement from
and after the date of commencement of such other employment shall terminate.
7. Unauthorized Disclosure. Employee shall not, without the prior written
consent of Company, disclose or use in any way, either during Employee's
employment with Company or thereafter, except as required in the course of such
employment, any confidential business or technical information or trade secret
acquired in the course of such employment, whether or not conceived of or
prepared by him, which is related to any service or business of Company or any
Affiliate; provided, however, that the foregoing shall not apply to (a)
information that is not unique to the Company or that is generally known to the
industry or the public other than as a result of Employee's breach of this
covenant, (b) information known to Employee other than from information provided
by Company or (c) information that Employee is required to disclose to, or by,
any governmental or judicial authority; provided, however, if Employee should be
required in the course of judicial or other governmental proceedings to disclose
any information, Employee shall give Company prompt written notice thereof so
that
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<PAGE>
Company may seek an appropriate protective order and/or waive in writing
compliance with the confidentiality provisions of this Agreement. If, in the
absence of a protective order or the receipt of a waiver by Company, Employee is
compelled to disclose information to, or pursuant to the requirements of, a
court or other governmental authority, Employee may disclose such information to
such court or other governmental authority without liability to any other party
hereto.
8. Tangible Items. All files, records, documents, manuals, books, forms,
reports, memoranda, studies, data, calculations, recordings and correspondence,
in whatever form they may exist, and all copies, abstracts and summaries of the
foregoing and all physical items related to the business of Company and its
affiliates, other than merely personal items, whether of a public nature or not,
and whether prepared by Employee or not, and which are received by Employee
from, or on behalf of Company or an Affiliate in the course of his employment
hereunder are and shall remain the exclusive property of Company and any such
Affiliate and shall not be removed from the premises of the Company or such
Affiliate, as the case may be, except as required in the course of Employee's
employment hereunder, without the prior written consent of the Company's Chief
Executive Officer or the Board, and the same shall be promptly returned by
Employee upon the termination of Employee's employment with Company or at any
time prior thereto upon the request of the Company's Chief Executive Officer or
the Board.
9. Inventions and Patents. Employee agrees that all inventions,
innovations, improvements, developments, methods, designs, analyses, drawings,
reports, and all similar or related information that relates to Company's actual
or anticipated business, research and development or existing or future products
or services and that are conceived, developed or made by or at the direction of
Employee while Employee is employed by Company will be owned by Company.
Employee also agrees to promptly perform, at the expense of Company, all
reasonable actions (whether before, during or after the Term) necessary to
establish and confirm such ownership.
10. Certain Restrictive Covenants. During the Term, and for a period ending
six (6) months after the earlier of Employee's termination of employment
hereunder and the end of the Term for which the Employee is being compensated at
an annual rate equal to the Base Salary, Employee agrees that he will not act,
either directly or indirectly, as a partner, officer, director, substantial
stockholder (an equity interest of 5% or more) or employee of, or render
advisory or other services for, or in connection with, or become interested in,
or make any substantial financial investment in any firm, corporation, business
entity or business enterprise that competes with the business of Company (each,
a "Competitor"), except with the express written consent of the Board. Employee
further agrees that in the event of the termination of his employment under
Section 5 hereof, for a period of twelve (12) months thereafter, he will not,
directly or indirectly, employ, offer to employ, or actively interfere with the
relationship of Company or an Affiliate with, any employee of Company or any
employee of any Affiliate.
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<PAGE>
11. Employee Representations and Covenants. Employee hereby represents,
warrants and covenants to Company that (a) the execution, delivery and
performance of this Agreement by Employee does not and will not conflict with,
breach, violate or cause a default under any employment, non-competition or
confidentiality contract or agreement, instrument; order, judgment or decree to
which Employee is a party or by which he is bound; (b) Employee, in performing
this Agreement and the duties of Employee's employment with Company, will not
disclose or utilize any trade secrets of a former employer, unless Employee has
first obtained express written authorization from any such former employer for
their disclosure or use; (c) Employee has not brought, and will not bring to
Company, any documents, records, information or other materials of a former
employer that are not generally available to the public, unless Employee has
first obtained express written authorization from any such former employer for
their possession and use; and (d) upon the execution and delivery of this
Agreement by Company, this Agreement shall be the valid and binding obligation
of Employee, enforceable in accordance with its terms, subject to applicable
bankruptcy, insolvency and similar laws affecting the rights of creditors
generally.
12. Company Representations. Company represents and warrants (a) that it is
duly authorized and empowered to enter into this Agreement, (b) the execution,
delivery and performance of this Agreement by Company does not and will not
conflict with, breach, violate or cause a default under any contract, agreement,
instrument, order, judgment or decree to which Company is a party or by which it
is bound, and (c) upon the execution and delivery of this Agreement by Employee,
this Agreement shall be the valid and binding obligation of Company, enforceable
in accordance with its terms, subject to applicable bankruptcy, insolvency and
similar laws affecting the rights of creditor generally.
13. Indemnification. Prior to the Commencement Date, Company and Employee
shall enter into an indemnification agreement in a form mutually acceptable to
Company and Employee and containing terms no less favorable to Employee than
those contained in any indemnification or similar agreement currently in effect
between Company and any of its officers.
14. Remedies. Employee acknowledges that the restrictions and agreements
contained in this Agreement are reasonable and necessary to protect the
legitimate interests of Company, and that any violation of this Agreement will
cause substantial and irreparable injury to Company that would not be
quantifiable and for which no adequate remedy would exist at law and agrees that
injunctive relief, in addition to all other remedies, shall be available
therefor.
15. Effect of Agreement on Other Benefits. Except as specifically provided
in this Agreement, the existence of this Agreement shall not be interpreted to
preclude, prohibit or restrict Employee's participation in any other employee
benefit plan or other plans or programs provided to officers, directors or
employees of Company.
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16. Rights of Employee's Estate. If Employee dies prior to the payment of
all amounts due and owing to him under the terms of this Agreement, such amounts
shall be paid to such beneficiary or beneficiaries as Employee may have last
designated in writing filed with the Secretary of Company or, if Employee has
made no beneficiary designation, to Employee's estate. Such designated
beneficiary or the executor of Employee's estate, as the case may be, may
exercise all of Employee's rights hereunder. If any beneficiary designated by
Employee shall predecease Employee, the designation of such beneficiary shall be
deemed revoked, and any amounts which would have been payable to such
beneficiary shall be paid to Employee's estate. If any designated beneficiary
survives Employee, but dies before payment of all amounts due hereunder, such
payments shall, unless Employee has designated otherwise, be made to such
beneficiary's estate. In the event of Employee's death or judicial determination
of his incompetence, reference in this Agreement to Employee shall be deemed
where appropriate, to refer to his beneficiary, estate or other legal
representative.
17. Severability. It is the intent and understanding of the parties hereto
that if, in any action before any court or other tribunal of competent
jurisdiction legally empowered to enforce this Agreement, any term, restriction,
covenant, or promise is held to be unenforceable as a result of being
unreasonable or for any other reason, then such term, restriction, covenant, or
promise shall not thereby be terminated, but, that it shall be deemed modified
to the extent necessary to make it enforceable by such court or other tribunal
and, if it cannot be so modified, that it shall be deemed amended to delete
therefrom such provision or portion adjudicated to be invalid or unenforceable,
and this agreement shall be deemed to be in full force and effect as so modified
and such modification or amendment in any event shall apply only with respect to
the operation of this Agreement in the particular jurisdiction in which such
adjudication is made.
18. Notices. Any notices or demands given in connection herewith shall be
in writing and deemed given when (a) personally delivered, (b) sent by facsimile
transmission to a number provided in writing by the addressee and a confirmation
of the transmission is received by the sender or (c) two (2) days after being
deposited for delivery with a recognized overnight courier, such as Federal
Express, and addressed or sent, as the case may be, to the address or facsimile
number set forth below or to such other address or facsimile number as such
party may in writing designate:
If to Employee: Mr. George Vinall
8622 Ordinary Way
Annandale, VA 22003
Fax No.: (703) 764-8011
If to Company: Tel-Save.com, Inc.
6805 Route 202
New Hope, Pennsylvania 18938
Attn: President
Fax No.: (215) 862-1515
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Either party may change its address for notices by written notice to the other
party in accordance with this Section 17.
19. Waiver. No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in a
writing executed by Employee and Company. No waiver by any party hereto at any
time of any breach by another 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.
20. Governing Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of Pennsylvania
relating to contracts made and to be performed entirely therein.
21. Headings. The headings in this Agreement are inserted for convenience
only and shall have no significance in the interpretation of this Agreement.
22. Successors. Company may not assign any of its rights or obligations
under this Agreement hereunder. Employee may assign his rights, but not his
obligations, hereunder and all of Employee's rights hereunder shall inure to the
benefit of his estate, personal representatives, designees or other legal
representatives. All of the rights of Company hereunder shall inure to the
benefit of, and be enforceable by the successors of Company. Any person, firm or
corporation succeeding to the business of Company by merger, purchase,
consolidation or otherwise shall be deemed to have assumed the obligations of
Company hereunder; provided, however, that Company shall, notwithstanding such
assumption by a successor, remain primarily liable and responsible for the
fulfillment of its obligations under this Agreement.
23. 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.
24. Certain Words. As used in this Agreement, the words "herein,"
"hereunder," "hereof" and similar words shall be deemed to refer to this
Agreement in its entirety, and not to any particular provision of this Agreement
unless the context clearly requires otherwise.
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IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement
as of the day and year first written above.
Tel-Save.com, Inc.
By:
--------------------------------------
Name:
Title:
- -----------------------------------------
George Vinall
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EXHIBIT 10.63
December 30, 1998
Mr. Daniel Borislow
Chief Executive Officer
Tel-Save.com, Inc.
6802 Rte. 202
New Hope, PA 18938
Dear Dan:
A "Change in Control" as defined in my Employment Agreement dated July 3, 1997
and as defined in my Stock Option Agreement dated October 13, 1998 will occur on
your resignation as Chief Executive Officer. As a result I may terminate my
employment and receive Compensation for the remaining term of the Employment
Agreement (approximately 22 months) without mitigation.
You have requested that I continue in my current capacity rather than elect
immediate termination of my employment and payment of the Compensation required
under the Employment Agreement.
1. I will continue as Chief Financial Officer of Tel-Save.com, Inc. until
a replacement is found but no later than October 31, 1999.
2. My compensation will continue without any requirement for mitigation
for 22 months after a replacement is found or October 31, 1999.
3. I will continue as a Director of Tel-Save.com, Inc. until expiration
of my current Term (year 2000).
4. I will consult on a limited basis after cessation of employment until
December 31, 2000.
5. I will be paid $20,000.00 per month for commencing January 1999.
6. The 250 000 stock options which I have are fully vested and
exercisable as of December 30,1998.
7. All other terms of my Employment Contract will continue to be in
effect until October 31, 1999.
Any other arrangements for services will be separately negotiated with the then
appropriate executives of the Company.
Please indicate your acceptance and agreement in the space provided below.
Yours truly; Accepted and Agreed
Tel-Save.com, Inc.
George P. Farley By:
---------------------
Daniel Borislow, CEO
