EXHIBIT 10
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as of
the 3rd day of July, 1997 by and among Tel-Save, Inc. ("Company"), a
Pennsylvania corporation and a wholly-owned subsidiary of Tel-Save Holdings,
Inc. ("Holdings") and Holdings, having its prinicipal place of business at Xxxxx
000, Xxx Xxxx, Xxxxxxxxxxxx 18938) ("Principal Place of Business"), and Xxxxxx
X. Xxxxxx ("Employee"). Company and Holdings shall be collectively be referred
to herein as "Company".
Preliminary Statement
WHEREAS, Employee is currently employed as the chief financial officer
of Twin County Grocers, Inc. and can not commence his employment with the
Company until after September 30, 1997;
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 which
sets forth the terms and conditions of said employment.
NOW, THEREFORE, in consideration of the mutual covenants set forth
herein, the parties hereto 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 reporting and withholding).
2. Term of Agreement. The Term of Employee's employment hereunder shall
commence in October 1997 and shall continue in effect for a period of three
years thereafter, except as hereinafter provided ("Term").
3. Position and Duties.
3.1 General. Except as may otherwise be agreed upon between
Company and Employee, Employee shall perform such duties and
responsibilities of Chief Financial Officer of Holdings and
Company and such duties as may be reasonably assigned or
delegated to him from time to time by the Chief Executive
Officer and/or the majority of the Board of Directors,
including without limitation service as an, officer or
director of Company and affiliates of the Company without
additional compensation. References in this Agreement to
Employee's employment
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with Company shall be deemed to refer to employment with
Company or an affiliate. Employee shall perform his duties and
responsibilities to the best of his abilities in a diligent,
trustworthy, businesslike and efficient manner.
3.2 Base Amount. Employee shall devote at the Principal Place of
Business or such specific place as the Chairman of the Board
and Chief Executive Officer shall designate at least four days
per week ("Base Amount") to the business and affairs of
Company. Employee shall devote such additional working time
and effort to the business and affairs of the Company as may
from time to time be reasonably requested by the Company.
3.3 Directorships. Employer acknowledges that Employee may serve
as a member of the Board of Directors of up to three other
corporations. Employee will not serve on the Boards of
Directors of corporations in the telecommunications or any
other related industries or which are, directly, or
indirectly, competitive with Employer, without the written
consent of Employer. Employee agrees that his membership on
the Boards of Directors of other corporations and any time
devoted to such membership will not impair his ability to
fully perform his duties and responsibilities hereunder.
3.4 Holdings' Board of Directors. Employee shall continue as a
member of the Board of Directors of Holdings until the next
annual meeting of the shareholders and shall be nominated to
stand for election at such meeting to serve as a director
until the year 2000.
4. Compensation and Related Matters.
4.1 Base Salary. During the Term of his employment hereunder,
Company shall pay to Employee a minimum annual base salary of
not less than $200,000 or such greater amount as may be
determined from time to time by Company's Board of Directors.
Base salary shall be paid in accordance with Company's usual
and customary payroll practices. Base salary shall be
increased each year after the first full year (on the
anniversary hereof) by the greater of (i) an amount
established by the Board of Directors; and (ii) the percentage
increase in the CPI (as hereinafter defined) over the previous
year's CPI, with such increases each year being on a
cumulative basis. "CPI" shall mean the U.S. City Average
Consumer Price Index for all Urban Customers.
4.2 Benefit Plans and Arrangements. Employee shall be entitled to
participate in and to receive benefits under Company's benefit
plans available to a Company employee with your tenure and
annual compensation level under Company's employee benefit
plans and arrangements in effect during the Term of his
employment hereunder, which may be altered from time to time
at the discretion of Company.
4.3 Perquisites. During the Term of his employment hereunder,
Employee shall be
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entitled to receive fringe benefits ordinarily and customarily
provided by Company to officers of the Company, including but
not limited to a credit card.
4.4 Expenses. Company shall promptly reimburse Employee for all
normal 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, the Company agrees during the Term to provide
Employee with (i) an automobile, as the Company shall
determine; and telephones, a computer and a fax for use at
Employee's office.
4.5 Stock Options. Holdings agrees to issue Employee non-qualified
and investment options to purchase an aggregate number of
shares of Common Stock, $.01 par value, of Holdings ("Common
Stock") as follows:
(i) Employee shall be granted an option to purchase
400,000 shares of Common Stock (the "Option). The
form of, terms and conditions of the Option are set
forth in Exhibit A attached hereto. The Option shall
have an exercise price equal to $13.25, the fair
market value of the Common Stock on the date hereof
and shall vest in accordance with the schedule in the
Option. The fair market value of the Company's Common
Stock for purposes of this Agreement shall mean the
last reported sale price of a share of the Company's
Common Stock on the NASDAQ National Market System.
(ii) Company agrees to register the shares issuable upon
the exercise of the options contemplated hereunder
under the Securities Act of 1933 and any applicable
state registration provisions as so as practicable
after issuance or purchase as the case may be.
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. Company may terminate the Term of Employee's
employment hereunder as a result of Employee's physical or
mental incapacity in accordance with Company's disability
policy.
5.3 Cause. Company may terminate the Term of Employee's employment
hereunder for Cause. For purposes of this Agreement, Company
shall have "Cause" to terminate Employee's employment
hereunder upon Employee's (i) material breach of any material
provision of this Agreement, (ii) engaging in conduct
injurious to Company or in willful misconduct as an employee
of the Company in connection with misappropriating any funds
or property of Company or attempting to willfully obtain
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any personal profit from any transaction in which Employee has
an interest adverse to the interests of the Company, or (iii)
gross neglect or unreasonable refusal to perform the duties
assigned to Employee under or pursuant to this Agreement.
5.4 By Employee.
(i) Employee may terminate the Term of this employment
hereunder upon sixty days prior written notice to
Company, provided that, upon the giving of such
notice by Employee, Company may establish an earlier
date for the termination of the Term and such
termination nonetheless shall be considered a
termination under this Section 5.4.
(ii) Employee may terminate employment hereunder for good
reason immediately and with notice to the Company.
"Good Reason" for termination by Employee shall
include, but is not limited to, the following conduct
of Company:
(a) Material breach of any provision of this
Agreement by Company, which breach shall
have not been cured by Company within thirty
(30) days of receipt of written notice of
said material breach;
(b) Failure to maintain Employee in a position
commensurate with that referred to in
Section 2 of this Agreement, or any action
by Company which results in the diminution
of such position, authority, duties or
responsibilities.
(iii) Employee may terminate employment hereunder in the
event of a "Change in Control" of Holdings, if the
conduct described in Section 5.4(ii)(a), (b) or (c)
shall also occurred. 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 Securities Exchange
Act of 1934, as amended ("Exchange Act"), other than
a trustee or other fiduciary holding securities under
an employee benefit plan of Company or a corporation
owned directly or indirectly by the stockholders of
the Company in substantially the same proportions as
their ownership of the Company, becomes after the
date hereof the "beneficial owner" (as defined in
Rule 13d-3 under said Act), directly or indirectly,
of securities of Company representing more than 20%
of the total voting power represented by the
Company's then outstanding voting securities, (ii)
during any period of two consecutive years,
individuals who at the beginning of such period
constitute the Board of Directors of Holdings and any
new director whose election by the Board of Directors
or nomination for election by Holding'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
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previously so approved, cease for any reason to
constitute a majority thereof, (iii) the stockholders
of Holdings approve a merger or consolidation of
Holdings or Company with any other corporation other
than a merger or consolidation which would result in
the voting securities of Holdings 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
represented by the voting securities of Holdings or
such surviving entity outstanding immediately after
such merger or consolidation, or the stockholders of
Holdings approve a plan of complete liquidation of
the Company or an agreement for the sale or
disposition by the Company of (in one transaction or
a series of transactions) all or substantially all of
the assets of the Company , (vi) a change in control
of a nature that would be required to be reported in
response to Item 6(e) of Schedule 14A of Regulation
14A promulgated under the Exchange Act to Item1 of
Form 8-K promulgated under the Exchange Act, or(vii)
Xxxxxx Xxxxxxxx ceases to be the Chief Executive
Officer of Holdings and/or Company. Notwithstanding
the foregoing, it shall not be a "Change in Control"
of Holdings if stock holders of Holdings who or which
as of the date of this Agreement beneficially own
more than 5% of the total voting power of Holdings
increase its beneficial holdings to above 20%.
5.5 Without Cause. Company may terminate the Term of Employee's
employment other than for Cause or disability at any time upon
written notice to Employee.
6. Compensation in the Event of Termination. In the event that
Employee's employment pursuant to this Agreement terminates
prior to the end of the Term of this Agreement, Company shall
pay the Employee compensation as set forth below:
6.1 By Employee for Good Reason Following a Change in Control; By
Company without Cause. In the event that Employee's employment
hereunder is terminated: (i) by Employee for good reason or
pursuant to Section 5.4 (iii); or (ii) by the Company without
cause, then the Company shall continue to pay and provide
Employee his Compensation as set forth in Section 4 in the
same manner as before termination, and for a period of time
ending on the date when the Term of this Agreement would
otherwise have expired in accordance with Section 1 of this
Agreement.
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Employee shall not be required to mitigate the amount of
payment provided for in this Section 6.1 by seeking employment
or otherwise, nor shall any amounts received from other
employment or otherwise by Employee offset in any manner the
obligations of Company hereunder.
6.2 By Company for Cause. In the event that Company shall
terminate Employee's employment hereunder for Cause pursuant
to Section 5.3 hereof, all Compensation, as specified in this
Agreement heretofore payable or provided to the Employee shall
cease to be payable or provided, except for salary and
benefits which may have been earned and are due and payable
but which have not been paid as of the date of termination and
reimbursements for expenses which may have been incurred,
reported and documented but which have not been paid as of the
date of termination.
6.3 Death; Disability By Employee Without Cause or Good Reason. In
the event of Employee's death, disability, or in the event
that Employee shall terminate employment hereunder without
Good Reason or Cause, Company shall not be obligated to pay
Employee or his estate or beneficiaries any compensation
except for salary and benefits which may have been earned and
are due and payable but which have not been paid as of the
date of termination.
7. Unauthorized Disclosure. Employee shall not, without the prior
written consent of Company, disclose or use in any way, either during the
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 Company affiliate, other than information which is generally known (other
than through a breach of this Agreement by Employee) in the industry in which
such business is transacted or acquired from public sources, all of which are
the exclusive and valuable property of Company and its affiliates.
8. Tangible Items. All files, records, documents, manuals, books,
forms, reports, memoranda, studies, data, calculations, recordings,
correspondence, in whatever from 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, are and shall
remain the exclusive property of Company and its affiliates and shall not be
removed from their premises, except as required in the course of employment by
Company, without the prior written consent of Company, and the same shall be
promptly returned by Employee on the termination of Employee's employment with
Company or at any time prior thereto upon the request of Company.
9. Inventions and Patents. Employee agrees that all inventions,
innovations, improvements, developments, methods, designs, analyses, drawings,
reports, and all similar or related information which relates to Company's
actual or anticipated business, research and development or existing or future
products or services and which are conceived, developed or made
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by or at the direction of Employee while employed by Company will be owned by
Company. Employee also agrees to promptly perform all reasonable actions
(whether before, during or after the Term) necessary to establish and confirm
such ownership.
10. Certain Restrictive Covenants. During the Term of his employment
hereunder and for a period of six months thereafter, Employee agrees that, he
will not act either directly or indirectly as a partner, officer, director,
substantial stockholder or employee, 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 competitive with the business of Company or its affiliates, except
with the express written consent of the Board of Directors of Company. Employee
further agrees that in the event of the termination of his employment under
Section 5, for a period of two years thereafter, he will employ or offer to
employ, call on, solicit, actively interfere with Company's or any Company's
affiliates relationship with, or attempt to divert or entice away, any employee
of Company or any Company affiliate.
11. Employee Representations. Employee hereby represents and warrants
to Company that (i) 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 contract, agreement, instrument, order, judgment or decree to which
Employee is a party or by which he is bound, (ii) except as disclosed to Company
in writing prior to the execution of this Agreement, Employee is not a party to
or bound by any employment agreement, noncompete agreement or confidentiality
agreement with any other person or entity, and (iii) 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.
12. Remedies. Employee acknowledges that the restrictions and
agreements contained in this Agreement are reasonable and necessary to protect
that 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.
13. Severability. It is the intent and understanding of the parties
hereto that if, in any action before any court or agency legally empowered to
enforce this Agreement, any term, restriction, covenant, or promise is found to
be unreasonable and for that reason unenforceable, 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 agency
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,
such modification or amendment in any event to apply only with respect to the
operation of this Agreement in the particular jurisdiction in which such
adjudication is made.
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14. Notice. For the purposes of this Agreement, notices, demands and
all other communications provided for in the Agreement shall be in writing and
shall be deemed to have been duly given when received if delivered in person or
by overnight courier or if mailed by United States registered mail, return
receipt requested, postage prepaid, to the following addresses:
If to Employee:
Xx. Xxxxxx X. Xxxxxx
00 Xxxxxxxx Xxxxxx
Xxxxxxx XX 00000
If to Company:
Tel-Save, Inc.
0000 Xxxxx 000
Xxx Xxxx, Xxxxxxxxxxxx 00000
Attn: Chief Executive Officer
Either party may change its address for notices by written notice to the other
party in accordance with this Section 14.
15. Miscellaneous. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing signed by Employee and Company. No waiver by either party hereto at
any time of any breach by the other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time. No agreements or representations,
oral or otherwise, expressed or implied, with respect to the subject matter
hereof have been made by either party which are not set forth expressly or
referred to in this Agreement. 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.
16. Headings. The headings in this Agreement are inserted for
convenience only and shall have no significance in the interpretation of this
Agreement.
17. Successors. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their heirs, personal representatives and
successors, including without limitation any affiliate to which Company may
assign this Agreement.
18. 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.
IN WITNESS WHEREOF, each of the parties hereto has executed this
Agreement as of the
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day and year first written above.
Tel-Save, Inc.
By:
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TEL-SAVE HOLDINGS, INC.
By:
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Xxxxxx X. Xxxxxx
