Severance Agreement - Tel-Save.com Inc. nd Daniel M. Borislow
SEVERANCE AGREEMENT
THIS SEVERANCE AGREEMENT (this "Agreement") is entered into as of the
__ day of December, 1998, by and among Tel-Save.com, Inc., a Delaware
corporation (the "Company"), and Daniel M. Borislow, Chairman of the Board and
Chief Executive Officer of the Company ("Borislow"). The Company and Borislow
shall sometimes be referred to herein individually as a "Party" and collectively
as the "Parties."
RECITALS
A. Borislow is presently the Chairman of the Board and the Chief
Executive Officer of the Company.
B. Concurrently herewith, the Company and Borislow are entering into
certain other agreements referred to in Section 8 hereof
(collectively, the "Other Agreements").
C. In connection with the Other Agreements, Borislow and the Company
desire to enter into several agreements with each other, including
agreements related to the resignation by Borislow of his positions as
a director and an officer of the Company and each of its subsidiaries.
NOW, THEREFORE, in consideration of entering into the Other Agreements
and the covenants and agreements hereinafter set forth, and for other good and
valuable consideration the receipt and adequacy of which are hereby
acknowledged, the Parties hereby agree as follows.
1. Employment by Borislow; Resignation of Positions with the
Company.
1.1 That certain Employment Agreement dated September __, 1995,
by and between the Company and Borislow (the "Employment
Agreement") is hereby terminated, effective as of the date
hereof, except to the extent hereinafter expressly provided.
Borislow shall be entitled to no further compensation or
benefits under the Employment Agreement after the date
hereof.
1.2 Borislow acknowledges and agrees that: (a) the Company has
not committed any default under the Employment Agreement;
Borislow has no claim of any nature whatsoever against the
Company or any of its affiliates under the Employment
Agreement or otherwise (a "Claim," except that the term
Claim shall not include any rights or claims arising under
this Agreement or the
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agreements entered into between the Company and Borislow
concurrently herewith); and Borislow hereby waives and
relinquishes any and all Claims.
1.3 Section 7 of the Employment Agreement shall remain in full
force and effect, except that
1.3.1 The first paragraph of Section 7(a) of the
Employment Agreement is hereby amended to read in
full as follows:
"(a) The Employee acknowledges and agrees that he has had
and might continue to have access to secret and confidential
information of the Company and that the following
restrictive covenant is necessary to protect the interests
and continued success of the Company. Except as otherwise
expressly consented to in writing by the Company, for a
period of eighteen (18) months after the date hereof (the
"Restricted Period"), the Employee shall not, directly or
indirectly, acting as an employee, owner, shareholder,
partner, joint venturer, officer, director, agent,
salesperson, consultant, adivsor, investor, or principal of
a corporation or other business entity:"
1.3.2 Sections 7(a)(i)-(iii) are hereby deleted in favor
of Section 3 hereof.
1.3.3 The remainder of Section 7 of the Employment
Agreement, including without limitation Sections
7(b)through (g) thereof, shall remain in full force
and effect.
1.4 The Employee's Invention Assignment and Confidential
Information Agreement attached to the employment Agreement
as Exhibit A shall remain in full force and effect.
1.5 Any and all rights and claims of the Company against
Borislow shall be unaffected by such termination and by this
Agreement.
1.6 Borislow hereby agrees to resign, not later than January 7,
1999, and effective as of the date of such resignation, as a
director of the Company, as the Chairman of the Board of
Directors of the Company, as the Chief Executive Officer of
the Company and as a director and an officer of each of the
subsidiaries of the Company.
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2. Severance Payment.
2.1 The Company shall pay Borislow one million dollars
($1,000,000) as a severance payment (the "Severance
Payment").
2.2 The Severance Payment, net of withholding and similar
requirements imposed by applicable law, shall be offset
against amounts owed by Borislow to the Company as of
January 4, 1999.
2.3 The Company shall have the right to offset against its
obligations to make any installment of the Severance Payment
any amount that the Company alleges is owed to it by
Borislow at the time that such installment is due.
3. Non-Competition and Non-Solicitation.
3.1 During the one (1) year period commencing on the date
hereof, which period shall be automatically extended by an
amount of time equal to any amount of time during which
Borislow is in violation of this Section (the
Non-Competition Period), Borislow shall not, without the
prior written consent of the Company, engage in any
Competitive Activity anywhere in the world.
3.2 The term Competitive Activity shall mean any participation
in, assistance of, employment by, ownership of any interest
in, acceptance of business from, engagement in business
with, or assistance, promotion, or organization of, any
person, partnership, corporation, firm, association, or
other business organization, entity, or enterprise (i) that,
directly or indirectly, is engaged in, or hereinafter
engages in, research on, or development, production,
marketing, leasing, or selling of, any product, process, or
service that is the same as, similar to, or in competition
with, any line of business or research in which the Company
is engaged at the date hereof; provided, however, that
Competitive Activity shall not include the employment of Mr.
Borislow by Communications TeleSystems International d.b.a.
WorldxChange Communications; and provided further, that
Competitive Activity shall not include the holding by
Borislow for investment of less than 1% of the outstanding
securities of any corporation if such securities are
regularly traded on a recognized stock exchange.
3.3 During the Non-Competition Period, Borislow shall not,
directly or indirectly, either for his own benefit or
purposes or for the benefit or purposes of any other person
or entity, solicit, call on, interfere with, accept any
business from, attempt to divert or entice away any person
or entity who is a customer or client of the Company or who
was a client or customer of the Company within the 24 months
preceding the date hereof.
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3.4 During the Non-Competition Period, Borislow shall not,
directly or indirectly, employ or offer to employ, call on,
solicit, interfere with, attempt to divert or entice away
any employee or independent contractor of the Company (or
any person whose employment or status as an independent
contractor with the Company has terminated within the 24
months preceding the date hereof) in any capacity.
4. Consulting.
4.1 Borislow agrees that for a period of two (2) years
commencing on the date hereof (the "Consulting Period"), he
will provide consulting services to the Company (the
"Services").
4.2 Borislow shall provide up to two hundred (200) hours of the
Services per year at times reasonably requested by the
Company and reasonably convenient to Borislow.
4.3 Borislow shall be compensated for the Services at the rate
of five hundred dollars ($500) per hour. Borislow shall
provide the Company with an invoice for Services rendered
not more frequently than each calendar month. If the Company
does not dispute such invoice, the Company shall pay the
amount of such invoice promptly after receipt of such
invoice by the Company.
4.4 Borislow agrees that during the Consulting Period he will
not enter into any agreement, understanding, or relationship
that would prohibit the performance of the Services by him
or that would create a conflict of interest with regard to
the performance of the Services.
5. Health and Medical Benefits.
5.1 For the two (2) year period commencing on the date hereof
(the "Benefits Period"), the Company shall provide Borislow
with the health and medical benefits described in Section
5.2 hereof (the "Benefits").
5.2 The Benefits shall be equal to the greater of: (a) the
health and medical benefits provided to Borislow by the
Company immediately prior to the execution and delivery of
this Agreement; or (b) the health and medical benefits
provided by the Company from time to time during the
Benefits Period to any other employee of the Company.
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6. Director and Officer Insurance.
6.1 For the five (5) year period commencing on the date hereof
(the "Insurance Period"), the Company shall maintain its
director and officer insurance policy with benefits as
described in Section 6.2 hereof (the "Benefits").
6.2 The Benefits shall be equal to or greater than the benefits
currently provided under the Company's present director and
officer insurance policy.
7. Automobiles.
7.1 Borislow currently is using certain automobiles owned by the
Company and identified on Exhibit A attached hereto and by
this reference incorporated herein (the "Automobiles").
7.2 Promptly after the execution and delivery hereof, the
Company shall transfer title to the Automobiles to Borislow
and shall deliver possession to the Automobiles to Borislow
at the headquarters offices of the Company.
7.3 Title to and possession of the Automobiles shall be
transferred to Borislow "as is" and "where is" without any
representation or warranty of any kind by the Company.
Borislow shall defend and hold the Company harmless from all
claims, damages, litigation, liabilities and all matters
whatsoever regarding the Automobiles.
8. Other Agreements.
8.1 Concurrently with the execution and delivery of this
Agreement, the Company and Borislow are entering into each
of the following agreements, and certain agreements
pertaining thereto:
8.1.1 Purchase Agreement Regarding the Stock of
Emergency Transportation Corporation
8.1.2 Agreement for Purchase and Sale of Real Property
8.1.3 Lease of Real Property
8.1.4 Registration Rights Agreement
8.2 The effectiveness of this Agreement and of each Agreement
set forth in Section 8.1 is conditioned upon the execution
and delivery of each of such agreements.
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9. Miscellaneous.
9.1 Effectiveness. The effectiveness of this Agreement is
conditioned upon the effectiveness of each of the Other
Agreements.
9.2 Costs and Expenses. Each party hereto shall pay its or his
own costs and expenses in connection with this Agreement and
the transactions contemplated hereby, including without
limitation the costs and expenses of its or his attorneys,
accountants, advisors, finders, brokers, and other agents
and representatives.
9.3 Notices. All notices which are required or permitted to be
given pursuant to the terms of this Agreement shall be in
writing and shall be sufficient in all respects if given in
writing and delivered personally or by telegraph or by
registered or certified mail, postage prepaid, as follows:
If to the Company:
Tel-Save.com, Inc.
6805 Route 202
New Hope, PA 18938
Attention: General Counsel
With a copy to:
Arnold & Porter
777 S. Figueroa Street, 44th Floor
Los Angeles, CA 90017
Attention: Theodore G. Johnsen
If to Borislow:
Daniel M. Borislow
8234 Horseshoe Bay Road
Boynton Beach, FL 33437
Notice shall be deemed to have been given upon receipt
thereof as to communications that are personally delivered
or telegraphed and five (5) days after deposit of the same
in any United States mail post office box in the state to
which the notice is addressed, or seven (7) days after
deposit of same in any such post office box other than in
the state to which the notice is addressed, postage prepaid,
addressed as set forth above. Notice shall not be deemed
given under the preceding sentence unless and until notice
shall be given to all addressees above other than the
sender. The addresses
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and addressees for the purpose of this Section may be
changed by giving written notice of such change in the
manner provided herein for giving notice. Unless and until
such written notice is given, the addresses and addressees
as stated by prior written notice, or as provided herein if
no written notice of change has been given, shall be deemed
to continue in effect for all purposes hereunder.
9.4 Survival of Representations and Warranties. Notwithstanding
any investigation made by any party hereto, all
representations and warranties made herein shall survive the
execution and delivery of this Agreement.
9.5 Applicable Law. This Agreement and all documents executed
and delivered in connection herewith and the rights and
obligations of the parties hereto and thereto shall be
governed by and construed in accordance with the laws of the
State of New York other than and without giving effect to
the laws of the State of New York relating to choice of law.
9.6 Applicable Jurisdiction. The parties hereby agree that any
action, at law or in equity, arising under this Agreement or
any of the other documents executed and delivered in
connection herewith, shall be filed in and only in the state
courts of the State of New York for the County of New York
or a United States District Court in the State of New York.
The parties hereby consent and submit to the in personam
jurisdiction of such courts for purposes of litigating any
such action.
9.7 Assignments. This Agreement and the other documents executed
and delivered in connection herewith shall be binding upon
and inure to the benefit of the parties hereto and their
respective personal and legal representatives, heirs,
successors, and assigns; provided, however, that no party
hereto may assign or transfer its or his rights in and to
this Agreement or any other document executed and delivered
in connection herewith, without the prior written consent of
the other parties hereto, except that Borislow may assign
his rights under the Purchase Agreement Regarding the Stock
of Emergency Transportation Corporation and his rights under
the Agreement for Purchase and Sale of Real Property and his
rights under the Lease of Real Property, all such agreements
being referred to in Section 8 hereof, but Borislow shall
remain obligated to perform his duties and obligations under
those agreements unless the Company shall otherwise
expressly provide in writing.
9.8 Entire Agreement. Except as otherwise expressly set forth
herein, this Agreement and the Other Agreements embody the
complete
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agreement and understanding among the Parties with respect
to the subject matter hereof and supersede and preempt any
prior understandings, agreements, or representations by or
among the Parties, written or oral, which may have related
to the subject matter hereof in any way.
9.9 Severability. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be
effective and valid under applicable law, but if any
provision of this Agreement is held to be prohibited by or
invalid under applicable law, such provision will be
ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of this
Agreement.
9.10 Counterparts. This Agreement may be executed in two or more
counterparts, any one of which need not contain the
signatures of more than one Party, but all such counterparts
taken together will constitute one and the same Agreement.
9.11 Descriptive Headings. The descriptive headings of this
Agreement are inserted for convenience only and do not
constitute a part of this Agreement.
9.12 Terminology. As used in this Agreement, the masculine,
feminine, or neuter gender, and the singular or plural
number, shall be deemed to include the others whenever the
context so indicates or requires.
9.13 Legal Fees. If any legal action or any arbitration or other
proceeding is brought for the enforcement or interpretation
of this Agreement, or because of an alleged dispute,
default, misrepresentation, or breach in connection with any
of the provisions of this Agreement, the successful or
prevailing party or parties shall be entitled to recover
reasonably attorneys' fees, expenses, and other costs
incurred in that action or proceeding in addition to any
other relief to which it or he may be entitled. The right to
such attorneys' fees, expenses, and costs shall be deemed to
have accrued upon the commencement of such action and shall
be enforceable whether or not such action is prosecuted to
judgment.
9.14 Broker's or Finder's Fees. Each of the Parties represents to
each of the others that it or he does not have any liability
to any broker or any representative, nor owe any fee or
compensation to any agent, finder, or broker, in connection
with the subject matter of this Agreement, and each of them
hereby agrees to indemnify and hold harmless the other Party
against any liability, damage, cost, or
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expense (including reasonable attorneys' fees) incurred by
reason of the breach of the foregoing representation.
9.15 Advice of Counsel. Each Party has carefully reviewed this
Agreement, is familiar with the terms and conditions herein,
and was advised by legal counsel with respect thereto. Each
Party agrees that the terms and conditions set forth herein
are fair and not unconscionable.
9.16 Relationship of the Parties. Nothing in this Agreement shall
create a partnership, joint venture, employment
relationship, or any other relationship between the Parties
other than the relationship of independent contractors.
9.17 Further Cooperation. Each Party covenants and agrees to
prepare, execute, acknowledge, file, record, publish, and
deliver to the other Party such other instruments,
documents, and statements including, without limitation,
instruments and documents of assignment, transfer, and
conveyance, and take such other action as may be reasonably
necessary or convenient in the discretion of the requesting
Party to carry out more effectively the purposes of this
Agreement.
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9.18 Modifications. This Agreement may not be altered, amended,
changed, waived, terminated, or modified in any manner
unless the same shall be in writing and signed by or on
behalf of the Party to be bound.
Tel-Save.com, Inc.
By________________________
Name
Title
Daniel M. Borislow
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