EXHIBIT 10.22
EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as of the 29th
day of March, 2002, between Talk America Holdings, Inc., a Delaware corporation
("Company"), and Tim Leonard ("Employee").

Preliminary Statement

WHEREAS, Employee has been an employee of Company and Company desires to
continue to employ Employee and Employee desires to continue 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 continued 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 reporting and withholding).

2.  Term of Agreement. The term of Employee’s employment hereunder shall
continue in effect for a period of three (3) years after the date hereof, except
as hereinafter provided (the "Term").

3.            Position and Duties.  Except as may otherwise be agreed upon
between Company and Employee, Employee shall perform such duties and have such
responsibilities as Chief Information Officer, and/or 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 the
Company’s Chief Executive Officer or the Company’s Board of Directors (the
“Board”), including, without limitation, service as an employee, officer or
director of affiliates (as that term is defined in Rule 405 of the Securities
Act of 1933, as amended (the “Act”)) of Company (the affiliates of Company,
“Affiliates”) without additional compensation.  References in this Agreement to

       

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Employee’s employment 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, business like 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 the Employee from (i) engaging in
charitable activities and community affairs; (ii) managing his personal
investments and affairs, subject to the limitations of Section 10 hereof; and
(iii) acting as a director of another corporation if the Chairman of the Board
or the Chief Executive Officer of Company shall have consented to Employee’s
accepting such such directorship.

4.  Compensation and Related Matters.

4.1  Base Salary. During the Term, Company shall pay to Employee an annualized
base salary of not less than $225,000, subject to review from time to time by
the Board ("Base Salary"). Base Salary shall be paid 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 may be altered from time to time at the discretion of the Board
(collectively with the benefits referred to in Section 4.3, the "Benefits").
Without limitation of the generality of the foregoing, the Benefits shall
include a minimum of three (3) weeks of paid vacation each calendar year, which,
if not used in its entirety in any year, may be carried over to the next
succeeding calendar year, provided that Employee shall not be entitled to more
than five (5) weeks of paid vacation in any calendar year. Employee acknowledges
and agrees that bonuses, annual or otherwise, are performance-based and
discretionary with the Company’s Chief Executive Officer and the Board of
Directors of the Company.

4.3  Perquisites. During the Term of his employment hereunder, Employee shall be
entitled to receive fringe benefits as are made available to the Company’s
senior executive officers. In addition, during the Term, Company will provide
Employee with either an automobile or an allowance for an automobile, as Company
shall determine.

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.

5.  Termination. The Term may be terminated under the following circumstances:

5.1  Death. The Term shall terminate upon the Employee’s death.

5.2  Disability. Company may terminate the Term as a result of Employee’s
physical or mental incapacity in accordance with Company’s disability policy (a
"Disability").
 
 

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5.3  Cause.  Upon written notice, Company may terminate the Term for Cause. For
purposes of this Agreement, Company shall have "Cause" to terminate Employee’s
employment hereunder upon (i) material breach by Employee of any material
provision of this Agreement if Employee fails to cure such breach in the 30 day
period following written notice specifying in reasonable detail the nature of
the breach ; (ii) willful misconduct by Employee as an employee of Company in
connection with misappropriating any funds or property of Company or attempting
to willfully 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, and consent from, the Board; or (iii) Employee’s
gross neglect or unreasonable refusal to perform the duties assigned to Employee
under or pursuant to this Agreement if Employee fails to eliminate such neglect
in the 30 day period following written notice specifying in reasonable detail
the nature of the gross neglect.

5.4  By Employee.

(i)  Employee may terminate the Term 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 the termination of the Term and such
termination under this Section 5.4.

(ii)  Employee may terminate employment hereunder for Good Reason immediately
and with notice to Company. "Good Reason" for termination by Employee shall
include, but is not limited to, the following:

(a)  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 specifying in reasonable detail the nature of said material
breach;

(b)  Failure by Company to maintain Employee in a position commensurate with
that referred to in Section 3 of this Agreement;

(c)  The assignment to Employee of any duties inconsistent with the Employee’s
position, authority, duties or responsibilities as contemplated by Section 3 of
this Agreement, or any other action by Company that results in a diminution of
such position, authority, duties or responsibilities; or

(d)  The relocation of Company’s offices at which Employee is principally
employed to a location more than 50 miles away from New Hope, Pennsylvania or
Company’s requiring Employee to be based anywhere other than Company’s offices
in Philadelphia greater metropolitan area except for required travel on
Company’s business to the extent substantially consistent with Employee’s travel
obligations during the year preceding the

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date of this Agreement (including, without limitation, periodic travel to and
work at Company’s executive offices in Virginia and call center operations in
Florida).

5.5  Without Cause. Company may otherwise terminate the Term at any time upon
written notice to Employee.

6.  Compensation In the Event of Termination. Except as otherwise provided in
Section 7.3, in the event that Employee’s employment pursuant to this Agreement
terminates prior to the end of the Term of this Agreement, 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: (i) by Employee for Good Reason
or (ii) by Company without Cause, then 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 and provide Employee t he 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 Cause. 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, heretofore payable or provided to the Employee shall cease to be
payable or provided, except for any Due Bonus and any Benefits that may have
been earned and are due and payable but that have not been paid as of the date
of termination and reimbursements for expenses that may have been incurred,
reported and documented but that 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 and any Benefits that may have been earned and are due and payable but
that have not been paid as of the date of termination and reimbursements for
expenses that may have been incurred, reported and documented but that have not
been paid as of the date of termination, (b) reimbursement of expenses that may
have been incurred, but that 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

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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 compensation except for: (a) any Due Bonus and any Benefits
that may have been earned and are due and payable but that have not been paid as
of the date of termination; and (b) reimbursement for expenses that may have
been incurred, reported and documented but that have not been paid as of the
date of termination, 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 the Exercise Period, if less.

 

                        6.5            No Mitigation.  In the event of any
termination of employment under Section 5 or Section 7.3, Employee shall be
under no obligation to seek other employment; provided, however, to the extent
that Employee does obtain other employment subsequent to the termination of
Employee’s employment hereunder, Company’s obligations to continue to pay or
provide Benefits under this Agreement for the period from and after the date of
commencement of such other employment shall terminate.

7.  Change in Control.

7.1  Change in Control. For purposes of this Agreement, "Change in Control"
shall be deemed to have occurred if:

7.1.1    any Person (as defined in Section 3(a)(9) under the Securities Exchange
Act of 1934, as amended (the "Exchange Act")), other than Company or any
Significant Subsidiary (as defined below), 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 Company or any Significant Subsidiary (as defined
below) representing 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;

7.1.2     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 Company to effect
a transaction described in 7.1.3, 7.1.4 or

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7.1.5) 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 Company or a Significant Subsidiary;

7.1.3     the consummation of a merger or consolidation of Company or any
subsidiary of Company owning directly or indirectly all or substantially all of
the consolidated assets of Company (a "Significant Subsidiary") with any other
entity, other than a merger or consolidation that would result in the holder(s)
of voting securities of Company or a Significant Subsidiary outstanding
immediately prior thereto continuing to hold more than fifty percent (50%) of
the combined voting power of the surviving or resulting entity outstanding
immediately after such merger or consolidation;

7.1.4     the stockholders of Company approve a plan or agreement for the sale
or disposition of fifty percent (50%) or more of the consolidated assets of
Company in which case the Board shall determine the effective date of the Change
of Control resulting therefrom; or

7.1.5     any other event occurs that the Board determines, in its discretion,
would materially alter the structure of Company or its ownership.
 
7.2   Options Vesting . In the event of a Change in Control of Company, all
outstanding options granted to you by Company shall vest immediately and become
exercisable as to all shares then subject thereto that are not then vested and
exercisable.

7.3  Termination after Change in Control.

7.3.1    If a Change of Control shall occur during the Term of this Agreement,
the term of Employee’s employment hereunder shall continue in effect until the
later of the first anniversary of the date of the Change in Control and the date
that the Term would otherwise have terminated without regard to the extension in
this sentence, except for earlier termination as provided in Section 5 of this
Agreement. The rights and obligations of Employee and Company under this
Agreement upon or after any termination of the Term shall survive any such
termination.

7.3.2    Notwithstanding the provisions of Section 6 hereof, if a Change in
Control has occurred and Employee’s employment hereunder is terminated within
one year of such Change in Control: (i) by Employee for Good Reason or (ii) by
Company without Cause, then Company shall

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(a) pay to Employee the Base Salary and Benefits through the date of termination
plus all amounts due to Employee pursuant to any Due Bonus; (b) pay to Employee,
as severance pay, a lump sum amount equal to the sum of (x) twenty-four months’
Base Salary plus (y) an amount equal to the average annual incentive bonus
earned by Employee from Company during the last four (4) completed fiscal years
of Company preceding the date of Change in Control, or if Employee was not an
officer during any or all of such prior four (4) fiscal years, the average of
the incentives received during the fiscal years when Employee was such an
officer; (c) for a period of two years after the date of termination, arrange to
provide Employee with life, disability, sickness and accident, health, vision
and dental insurance benefits substantially similar to those that Employee was
entitled prior to the Change in Control, as well as with the other fringe
benefits and perquisites to which Employee was entitled pursuant to Section 4.3;
and (d) 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.

8.  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 (including, without limitation of the
generality of the foregoing, any and all information referred to in Section 9
hereof), whether or not conceived of or prepared by him, that is related to the
actual or anticipated business, services, operating systems, reporting systems,
research and development of Company or any of its Affiliates or to existing or
future products or services of Company or any of its Affiliates; provided, that
the foregoing shall not apply to (i) information that is not unique to Company
or that is generally known to the industry or the public other than as a result
of Employee’s breach of this covenant, (ii) information known to the Employee
prior to the date he first became an employee of Company or any of its
Affiliates (except insofar as it is part of the information that is the
exclusive property of Company as provided in Section 9), or (iii) 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 administrative 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 nonetheless, in the
written opinion of its counsel, compelled to disclose information to a court or
tribunal or otherwise stand liable for contempt or suffer other serious censure
or penalty, Employee may disclose such information to such court or tribunal
without liability to any other party hereto.

9.  Inventions and Patents. Employee agrees that all inventions, innovations,
ideas, concepts, improvements, developments, methods, designs, analyses,
drawings, reports, algorithms, software programs, applications, configurations,
and all similar or related information that relates to the actual or anticipated
business, services, operating systems, reporting systems, research and
development of the Company or any of its affiliates or existing or future 

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products or services of the Company or any of its affiliates, tangible or
intangible, and that are conceived, developed or made by or at the direction of
Employee while employed by Company, and all rights to the results and proceeds
of any thereof and all now known and hereafter existing rights of every kind and
nature throughout the universe, in perpetuity and in all languages, pertaining
to such results and proceeds and all elements thereof for all now known and
hereafter existing uses, media and form will be owned exclusively by Company;
and the foregoing is inclusive of a full irrevocable and perpetual assignment to
the Company. Employee acknowledges that there are, and may be, new uses, media,
means and forms of exploitation throughout the universe employing current and/or
future technology yet to be developed, and the parties specifically intend the
foregoing full, irrevocable and perpetual grant of rights to the Company to
include all such now known and unknown uses, media and form of exploitation,
throughout the universe. Employee agrees to execute at any time upon the
Company’s request such further documents or do such other acts (whether before,
during or after the Term) as may be required to evidence and/or confirm the
Company’s ownership of any or all of the foregoing. The termination, completion
or breach of this Agreement for any reason and by either party shall not affect
the Company’s exclusive ownership of any or all of the foregoing.

10.  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, are and shall remain the exclusive
property of Company and its affiliates and shall not be removed from the
premises, 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.

11.  Certain Restrictive Covenants. For a period ending twelve (12) months after
the earlier of the Employee’s termination of employment hereunder or the Term,
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, 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, for a period of one year
thereafter, he will not employ or offer to employ, call on, solicit, actively
interfere with Company’s or any Affiliate’s relationship with, or attempt to
divert or entice away, any employee of Company or any Affiliate.

12.  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

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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, non-compete
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.

13.  Company Representations. Company represents and warrants (i) that it is
duly authorized and empowered to enter into this Agreement, (ii) that the
performance of its obligations under this Agreement will not violate any
agreement between it and any other person, firm or organization and (iii) upon
the execution and delivery of this Agreement by the Employee, this Agreement
shall be the valid and binding obligation of Company, enforceable in accordance
in accordance with its terms.

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 or other plans or programs provided to officers, directors or employees
of Company.

16.  Rights of Executive’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 his 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 that 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 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,

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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.

18.  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:

Timothy Leonard

If to Company:

Talk America Inc.
6805 Route 202
New Hope, Pennsylvania 18938
Attn: General Counsel

Either party may change its address for notices by written notice to the other
party in accordance with this Section.

19.  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. 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.

20.  Headings. The headings in this Agreement are inserted for convenience only
and shall have no significance in the interpretation of this Agreement.

21.  Successors. This Agreement shall be binding upon and inure to the benefit
of the parties hereto and their heirs, personal representatives

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and successors, including without limitation any Affiliate to which Company may
assign this Agreement. Employee may not assign or transfer his rights to
compensation and benefits, except by will or operation of law and except as
provided in Section 15 above.

22.  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 day and year first written above.

TALK AMERICA INC.

By:  /s/ Aloysius T. Lawn IV_____    
Name: Aloysius T. Lawn IV
Title: Executive Vice President

/s/ Timothy Leonard    
Timothy Leonard
Employee

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