SETTLEMENT, RELEASE AND DISCHARGE AGREEMENT
THIS SETTLEMENT, RELEASE AND DISCHARGE AGREEMENT (the "Agreement"),
made this 19th day of November, 1998 (the "Date of this Agreement"), by and
among VDC COMMUNICATIONS, INC. (the "Company"), a corporation organized and
existing under the laws of the State of Delaware, XX. XXXXX X. XXXXXXX
("Xxxxxxx"), an individual presently residing within the State of Connecticut
and XXXXXXXXX X. XXXXX, an individual presently residing within the State of
Connecticut ("Xxxxx").
WITNESSETH:
WHEREAS, VDC Corporation Ltd., a Bermuda corporation which merged with
and into the Company on or about Xxxxxxxx 0, 0000 ("XXX Xxxxxxx"), and Xxxxxxx
are parties to an employment agreement dated as of March 3, 1998 (the
"Employment Agreement") pursuant to which Xxxxxxx served as an officer and
director of VDC Bermuda and the Company;
WHEREAS, as a result of the merger of VDC Bermuda with and into the
Company on or about November 6, 1998 (the "Domestication Merger"), the Company
is the successor-in-interest to all of the assets, liabilities and agreements of
VDC Bermuda, including, without limitation, the Employment Agreement;
WHEREAS, during his term of employment, Xxxxxxx, directly or
indirectly, was a principal stockholder of the Company;
WHEREAS, the Company and Xxxxxxx desire to adjust his stock ownership
in the Company and terminate the Employment Agreement, together with any and all
other arrangements, agreements or understandings between them, and except as
otherwise set forth herein, to terminate any and all claims that relate in any
manner to any matters arising out of or
relating in any way to Xxxxxxx' employment with or severance from the Company,
or that otherwise relate to Xxxxxxx' relationship with the Company, and to take
the other actions as provided below;
WHEREAS, in conjunction with the termination of all such agreements and
arrangements, Xxxxxxx does hereby tender his resignation as set forth in
Paragraph 1 hereafter;
WHEREAS, on or about June 24, 1998, Xxxxx and Xxxx X. Xxxxx, husband
and wife, entered into a loan agreement with Xxxxxxx which was secured by a
pledge of stock by the Trust and Xxxxx, individually, has loaned Xxxxxxx certain
funds for moving expenses (collectively the "Xxxxx Loans"); and
WHEREAS, Xxxxxxx and Xxxxx would like to provide for the repayment of
the Xxxxx Loans as set forth herein.
NOW, THEREFORE, in consideration of the mutual premises and covenants
contained herein, the parties hereto, intending to be legally bound hereunder,
agree as follows:
1. Resignation and Termination of Services.
1.1 Xxxxxxx hereby resigns as an officer, director and
employee of the Company, effective as of November 19, 1998, and the Company
hereby accepts such resignation. Xxxxxxx and the Company further agree to
terminate, effective November 19, 1998, the Employment Agreement, together with
any and all other arrangements, agreements and understandings between them
relating in any way or manner to Xxxxxxx' employment by the Company or services
on behalf of the Company; provided, however, that the provisions of Paragraph 7
of the Employment Agreement shall survive the termination thereof.
1.2 Xxxxxxx hereby resigns as an officer and director of VDC
Bermuda, effective as of November 19, 1998, and the VDC Bermuda hereby accepts
such resignation.
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1.3 Xxxxxxx hereby resigns from all positions he held with
Voice & Data Communications (Hong Kong) Limited, including, but not limited to
director, as of the Date of this Agreement.
1.4 Xxxxxxx hereby resigns from all positions he held, if any,
with Masatepe Communications, U.S.A., L.L.C.
2. Release of Obligations.
2.1 By Xxxxxxx.
(a) Except for the Company's obligations set
forth herein and subject to the Company fulfilling its obligations as set forth
herein, Xxxxxxx, for and in consideration of the undertakings set forth herein,
and intending to be legally bound, does hereby REMISE, RELEASE AND FOREVER
DISCHARGE the Company and its subsidiaries, component and affiliated entities,
individually and collectively, its and their respective officers, directors,
employees and agents (including but not limited to Xxxxxxxxx X. Xxxxx, Xxxxxxx
X. Xxxxx, Xxxx Xxxxx, Xxxxxxx XxXxxxx, Xxxxx X. Xxxxx, Xxxxxxx Xxxxxx, Xx.
Xxxxxxx Xxxxxxx, Xxxxx Xxxxxxx, Xxxxxxx Xxxxxxx, Xxxxxxx Xxxxxxxxxx, Xxxxx
Xxxxx, and Xxxxxx Xxxxxx), and its and their predecessors, successors and
assigns, heirs, executors and administrators, of and from any and all manner of
actions and causes of actions, suits, debts, claims and demands whatsoever in
law or in equity, which Xxxxxxx ever had, now has, or hereafter may have, or
which his heirs, executors or administrators hereafter may have by reason of any
matter, cause or thing whatsoever from the beginning of the world to the Date of
this Agreement and, particularly, but without limitation of the foregoing terms,
any claims concerning or relating in any way to Xxxxxxx' status as an employee,
officer or director of the Company or VDC Bermuda, or any of its subsidiaries,
or to Xxxxxxx' employment relationship and/or the termination of his employment
relationship with the Company and/or its predecessors,
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component and/or affiliated corporate entities including, but not limited to,
any claims which have been or could have been asserted, or could be asserted now
or in the future against the Company and/or its trustees, officers, directors,
employees and agents including any claims arising under any and all federal,
state or local statutory or common laws including, but not limited to, any
claims arising under Title VII of the Civil Rights Act of 1964, 42 U.S.C. ss.
2000e, Age Discrimination in Employment Act, 29 U.S.C. ss. 621 et seq., the
Americans with Disabilities Act, 42 U.S.C. ss. 12101, et seq., the Employee
Retirement Income Security Act, 29 U.S.C. ss. 1001, et seq., any contract with
the Company or its subsidiaries, and any and all other claims arising out of
Xxxxxxx' employment at the Company and termination thereof, including any claims
for counsel fees and costs. It is expressly understood and agreed that this
Agreement shall operate as a clear and unequivocal waiver by Xxxxxxx of any
claim for accrued or future wages, benefits or any other type of payment.
(b) Xxxxxxx further agrees and covenants
that neither he, nor any person, organization or other entity on his behalf,
will file, charge, claim, xxx or cause or permit to be filed, charged or claimed
any action for legal or equitable relief (including damages, injunctive,
declaratory, monetary or other relief) involving any matter related in any way
whatsoever to Xxxxxxx' employment relationship with the Company or VDC Bermuda
or involving any continuing effects of any acts or practices which may have
arisen or occurred during Xxxxxxx' employment relationship or thereafter in
connection with the termination of his employment relationship with the Company
or VDC Bermuda.
(c) This Agreement does not prevent Xxxxxxx from
filing a charge of discrimination with the Equal Employment Opportunity
Commission, although by signing this Agreement Xxxxxxx waives his right to
recover any damages or other relief in any claim or suit brought by or through
the Equal Employment Opportunity Commission or any other state or
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local agency on his behalf under any federal or state discrimination law, except
where prohibited by law. Xxxxxxx agrees to release and discharge the Company not
only from any and all claims which he could make on his own behalf but also
specifically waives any right to become, and promises not to become, a member of
any class in any proceeding or case in which a claim or claims against the
Company may arise, in whole or in part, from any event which occurred as of the
Date of this Agreement. Xxxxxxx agrees to pay for any legal fees or costs
incurred by the Company as a result of any breach of the promises in this
paragraph. The parties agree that if Xxxxxxx, by no action of his own, becomes a
mandatory member of any class from which he cannot, by operation of law or order
of court, opt out, he shall not be required to pay for any legal fees or costs
incurred by the Company as a result.
2.2 By the Company.
(a) Except for the Xxxxxxx'x obligations set
forth herein and subject to the Xxxxxxx fulfilling his obligations as set forth
herein, the Company, for and in consideration of the undertakings set forth
herein, and intending to be legally bound, does hereby REMISE, RELEASE AND
FOREVER DISCHARGE Xxxxxxx and his heirs, executors and administrators, of and
from any and all manner of actions and causes of actions, suits, debts, claims
and demands whatsoever in law or in equity, which the Company ever had, now has,
or hereafter may have, or which its successors or assigns hereafter may have by
reason of any matter, cause or thing whatsoever from the beginning of the world
to the Date of this Agreement and, particularly, but without limitation of the
foregoing terms, any claims concerning or relating in any way to Xxxxxxx' status
as an employee, officer or director of the Company or VDC Bermuda, or any of its
subsidiaries, or to Xxxxxxx' employment relationship and/or the termination of
his employment relationship with the Company and/or its predecessors, component
and/or affiliated corporate
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entities including, but not limited to, any claims which have been or could have
been asserted, or could be asserted now or in the future against Xxxxxxx or his
heirs, executors and administrators including any claims arising under any and
all federal, state or local statutory or common laws.
(b) The Company also agrees that it will not file any
claim for legal or equitable relief against Xxxxxxx for any matter related in
any way whatsoever to Xxxxxxx' employment relationship with the Company or
involving any continuing effects of any acts or practices which may have arisen
or occurred during Xxxxxxx' employment relationship or thereafter in connection
with the termination of his employment relationship with the Company or VDC
Bermuda. This provision, however, is not intended to restrict the Company's
ability to cooperate in any manner it deems appropriate with any enforcement
agency with any analysis, investigation or prosecution related in any way to
Xxxxxxx' employment with the Company or VDC Bermuda.
3. Non-Competition and Confidentiality.
(a) Xxxxxxx agrees, that for and in consideration of
compliance by the Company of the mutual covenants and premises contained herein,
for a period of two (2) years after the date hereof, he shall not directly or
indirectly: (i) engage in or carry on any business or in any way become
associated with any business which is similar to or is in competition with the
Business of the Company (as such term is used and defined below); (ii) solicit
the business of any person or entity, on behalf of himself or any other person
or entity, which is or has been at any time during the term of the Employment
Agreement a material customer or material supplier of the Company including, but
not limited to, former or present customers or suppliers with whom Xxxxxxx has
had personal contact during, or by reason of, his relationship with the Company;
(iii) be or become an employee, agent, consultant, representative, director or
officer of, or be otherwise in any manner associated with, any person, firm,
corporation, association or
6
other entity which is engaged in or is carrying on any business which is similar
to or in competition with the Business of the Company; (iv) solicit for
employment or employ any person employed by the Company or VDC Bermuda at any
time during the 24-month period immediately preceding such solicitation or
employment; or (v) be or become a shareholder, joint venturer, owner (in whole
or in part), partner, or be or become associated with or have any proprietary or
financial interest in or of any firm, corporation, association or other entity
which is engaged in or is carrying on any business which is similar to or in
competition with the Business of the Company. Notwithstanding the preceding
sentence above, passive equity investments by Xxxxxxx of $25,000 or less in any
entity or affiliated group of any entity which is engaged in or is carrying on
any business which is similar to or in competition with the Business of the
Company, shall not be deemed to violate this Paragraph 3. As used in this
Agreement, the term "Business of the Company" shall include all material
business activities in which the Company is engaged now which consists of (i)
telecommunications gateways in the United States, Nicaragua, Hong Kong, Egypt,
Costa Rica, Honduras, El Salvador, South Korea, Russia and Poland; (ii)
international and domestic long distance telecommunications services in the
United States, Nicaragua, Hong Kong, Egypt, Costa Rica, Honduras, El Salvador,
South Korea, Russia and Poland; and (iii) prepaid telephone calling cards.
(b) Xxxxxxx acknowledges that the restrictions contained
herein in view of the nature of the business in which the Company is and has
been engaged, and in consideration of the financial value of the settlement
provisions of Paragraphs 4 and 5 hereof, are reasonable and necessary to protect
the legitimate interests of the Company, and that any violation of any of these
restrictions would result in irreparable injury to the Company. Xxxxxxx
acknowledges that, in the event of a violation of any of these restrictions, the
Company shall be entitled to
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preliminary and permanent injunctive relief as well as an equitable accounting
of all earnings, profits and other benefits arising from such violation which
rights or remedies shall be cumulative and in addition to any other rights or
remedies to which the Company may be entitled. In the event that Xxxxxxx shall
engage, directly or indirectly, in any business in competition with the business
of the Company, the period of non-competition referred to above shall be
extended by a period of time equal to that period beginning when such violation
commenced, and ending when the activities constituting such a violation shall
have finally been terminated in good faith.
(c) In addition, Xxxxxxx shall not disclose Confidential
Information of or about the Company, VDC Bermuda, VDC Telecommunications, Inc.,
Voice & Data Communications (Hong Kong) Limited, Masatepe Communications,
U.S.A., L.L.C., Masatepe Communiciones S.A., World Connect and their
subsidiaries and affiliates to any other person, entity, corporation, trust,
association or partnership. For the purposes of this Agreement, the term
"Confidential Information" shall include, without limitation, information
obtained while Xxxxxxx was employed by the Company or VDC Bermuda as an officer
or director or in any other capacity, relating to the Company's financial
condition, its systems, know-how, designs, formulas, processes, devices, patents
(pending or otherwise), inventions, research and development, projects,
technologies, communications with third parties such as governmental agencies,
customers or suppliers, methods of doing business, agreements with customers or
suppliers or other aspects of the Business of the Company which information is
generally not available outside of the Company to persons who are not authorized
to have such information or which information is otherwise treated as
confidential or which is sufficiently secret to derive economic value from not
being disclosed.
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(d) Notwithstanding anything to the contrary contained herein,
in the event that any court of equity determines that the time period and/or
scope of this restrictive covenant is held to be unenforceably long or broad, as
the case may be, then, and in either such event, neither the enforceability nor
the validity of this paragraph as a whole shall be affected. Rather, the time
period and/or scope of the restriction as affected shall be reduced to the
maximum permitted by law.
4. Consideration.
4.1 Severance Pay and Medical Benefits. The Company
shall:
(a) pay Xxxxxxx the amount of $5,208.34, less any state, local
and federal withholding, employment or income taxes payable with respect
thereto, payable on each of the following dates: November 30, 1998, December 15,
1998, and December 30, 1998. This total gross sum of $15,625.02 represents
payment of Xxxxxxx' annual salary of $125,000 as set forth in the Employment
Agreement for the period commencing as of November 16, 1998 and ending December
30, 1998; and
(b) at its own expense, from the period commencing November
19, 1998 through December 31, 1998, maintain Xxxxxxx as a participant in his
current major medical or group health insurance plan.
4.2 Transfer, Surrender and Conversion of Stock.
(a) Upon the execution of this Agreement by Xxxxxxx and the
Company, Xxxxxxx, as settlor and co-trustee of The Xxxxxxx Family Trust (the
"Trust"), shall deliver to the Company: (x) VDC Corporation Ltd. Stock
Certificate Number VDC1635, representing 1,512,500 shares of common stock of VDC
Corporation Ltd. in the name of the Trust (the "VDC Corp. Shares") (which by
virtue of the Domestication Merger are exchangeable for 1,512,500
9
shares of common stock of the Company); and (y) a stock power duly executed
disposing of the VDC Corp. Shares upon the following terms:
(i) 637,500 of the VDC Corp. Shares shall be
exchanged for Company common stock and issued in the name of the Company (the
"First Series Shares");
(ii) 700,000 of the VDC Corp. Shares shall be
exchanged for Company common stock and issued in the name of the Trust (the
"Trust Shares");
(iii) 125,000 of the VDC Corp. Shares shall be
exchanged for Company common stock and issued in the name of Xxxxxxxxx X. Xxxxx
(the "Payment Shares"), and
(iv) 50,000 of the VDC Corp. Shares shall be
exchanged for Company common stock and issued in the name of the Trust (the
"Additional Consulting Fee Shares").
The First Series Shares shall be delivered and surrendered to the Company within
twenty (20) business days of the Date of this Agreement. The Trust Shares shall
be delivered to Xxxxxxx within twenty (20) business days of the Date of this
Agreement. The Payment Shares and Additional Consulting Fee Shares shall be
delivered to Xxxxx within twenty (20) business days of the Date of this
Agreement.
(b) Upon the execution of this Agreement by Xxxxxxx and the
Company, Xxxxxxx, as settlor and co-trustee of the Trust, shall deliver to the
Company a duly executed stock power transferring to the Company the 1,237,500
shares of the Company preferred stock owned by the Trust (which by virtue of the
Domestication Merger are convertible into 1,237,500 shares of the Company's
common stock) represented by stock certificate number PB7 of VDC (Delaware),
Inc. (n/k/a VDC Communications, Inc.). Said shares shall be converted into
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Company common stock and delivered and surrendered to the Company within twenty
(20) business days of the Date of this Agreement.
(c) Of the 700,000 Trust Shares, the parties hereby agree that
50,000 of the Trust Shares shall be payment for Advisory Services (as defined
below) in accordance with Paragraph 6.1(a)(i). In addition to any restrictions
on the sale, offering or transfer of the Trust Shares pursuant to federal or
state securities laws, the Trust Shares shall be subject to certain restrictions
as set forth in Paragraphs 4.2(d) and 4.2(f). As such, all stock certificates
for the Trust Shares shall bear the following restrictive legend:
The Shares represented by this certificate are subject to a
Settlement, Release and Discharge Agreement dated November 19,
1998, by and among Xxxxx X. Xxxxxxx, VDC Communications, Inc.,
and Xxxxxxxxx X. Xxxxx, and may not be transferred or
encumbered except in accordance with the terms of that
Agreement.
(d) Subject to the condition set forth in Paragraph 4.2(e),
Xxxxxxx covenants that none of the Trust Shares shall be sold by the Trust,
Xxxxxxx or any other person or entity until the one year anniversary of the Date
of this Agreement; provided, however, that a sale of the Trust Shares by a
brokerage or securities firm pledgee of such shares during the one year period
following the Date of this Agreement shall not be considered a breach of this
Paragraph if such sale is made as a result of a foreclosure or margin call of
such shares by said pledgee. Xxxxxxx further covenants that during the one year
period following the Date of this Agreement: (x) neither the Trust nor Xxxxxxx,
nor any person or entity on their behalf, shall margin more than 300,000 Trust
Shares; (y) the Trust, Xxxxxxx, and any person or entity on their behalf, shall
margin the Trust Shares only with brokerage and securities firms ("Selected
Firms") that are willing to lend funds at the rate of 40% or greater of the
aggregate value, calculated as set forth below on the day the Trust Shares are
margined with the respective Selected Firm, of the Trust
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Shares margined with a Selected Firm; and (z) that during the one year period
following the Date of this Agreement, neither the Trust nor Xxxxxxx, nor any
person or entity on their behalf, shall margin the Trust Shares for more than
25% of the aggregate value, calculated as set forth below on the day the Trust
Shares are margined with the respective Selected Firm, of the Trust Shares
margined with the respective Selected Firm. For the purposes of this Paragraph,
the value of a Trust Share on a given day shall be determined as follows: (A) if
the Company's common stock is traded in the over-the-counter market and not on
any national securities exchange nor in the NASDAQ Reporting System, the value
shall be the last bid price per share, as reported by the National Quotation
Bureau, Inc. or an equivalent generally accepted reporting service, for the most
recent trading day, or if not so reported, the closing bid price for a share of
the Company's common stock for the most recent trading day as furnished to the
Company by any member of the National Association of Securities Dealers, Inc.,
selected by the Company for that purpose; or (B) if the Company's common stock
is traded on a national securities exchange or in the NASDAQ Reporting System,
the value shall be the closing price at which a share of the Company's common
stock traded, as quoted on a national or other major stock exchange or the
NASDAQ Reporting System for the most recent trading day.
(e) The restrictions and covenants set forth in Paragraph
4.2(d) hereof shall immediately terminate if the market price of Company common
stock is $7.00 or more on at least 30 trading days during any 120 consecutive
trading day period following the Date of this Agreement. For the purposes of
this Paragraph, the market price of a share of Company common stock on a given
day shall be determined as follows: (A) if the Company's common stock is traded
in the over-the-counter market and not on any national securities exchange nor
in the NASDAQ Reporting System, the market price shall be the last bid price per
share, as reported by
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the National Quotation Bureau, Inc. or an equivalent generally accepted
reporting service, for the most recent trading day, or if not so reported, the
closing bid price for a share of the Company's common stock for the most recent
trading day as furnished to the Company by any member of the National
Association of Securities Dealers, Inc., selected by the Company for that
purpose; or (B) if the Company's common stock is traded on a national securities
exchange or in the NASDAQ Reporting System, the market price shall be the
closing price at which a share of the Company's common stock traded, as quoted
on a national or other major stock exchange or the NASDAQ Reporting System for
the most recent trading day.
(f) If the restrictions and covenants set forth in Paragraph
4.2(d) are terminated in accordance with Paragraph 4.2(e), then, in addition to
any restrictions on the sale, offering or transfer of the Trust Shares pursuant
to federal or state securities laws, the resale of the Trust Shares shall be
subject to the following restrictions:
(i) 33% of the Trust Shares may be sold, offered
or transferred immediately;
(ii) 33% of the Trust Shares may not be sold,
offered or transferred until the six month anniversary of the Date of this
Agreement; and
(iii) 34% of the Trust Shares may not be sold,
offered or transferred until the twelve month anniversary of the Date of this
Agreement.
Notwithstanding the restrictions in this Paragraph
4.2(f), a sale of shares pledged in accordance with Paragraph 4.2(d) by a
brokerage or securities firm pledgee shall not be considered a breach of this
Paragraph if such sale is made as a result of a foreclosure or margin call of
such shares by said pledgee.
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(g) For thirty (30) days from the Date of this Agreement, the
Company shall provide Xxxxxxx with whatever reasonable assistance is necessary
to permit Xxxxxxx to pledge his Company stock in accordance with the terms of
this Paragraph 4.2; said assistance may include reasonable modifications on the
restrictions contained in this Paragraph 4.2.
(h) Stock certificates representing the Payment Shares and
the Additional Consulting Fee Shares shall be delivered to Xxxxx who shall hold
the Payment Shares and the Additional Consulting Fee Shares in escrow to be
disbursed pursuant to the terms hereof. The Payment Shares (consisting, in part,
of 100,000 shares of VDC Corporation Ltd. common stock that Xxxxxxx had
previously pledged to Xxxxx and Xxxx Xxxxx (the "Pledge") to secure the
Residential Loan (as defined below)) shall be disbursed in accordance with the
provisions of Paragraph 5.2 hereof to satisfy certain obligations of Xxxxxxx,
and the Additional Consulting Fee Shares shall be disbursed, in accordance with
the terms of Paragraph 6.1, to compensate Xxxxxxx for providing consulting
services to the Company as set forth in Paragraph 6.1.
(i) Xxxxxxx hereby agrees that Xxxxx will hold the
Payment Shares and Additional Consulting Fee Shares in escrow, Xxxxx hereby
agrees to hold and disburse such shares, and the remaining parties hereto agree
to such arrangement.
(ii) Xxxxx shall not be under any duty to give
the property held by him hereunder any greater care than it gives its own
similar property.
(iii) Xxxxx may act in reliance upon advice of
counsel in reference to any matter connected herewith, and shall not be liable
for any mistake of fact or error of judgment.
(iv) Xxxxx shall have the right to vote all shares
held in escrow.
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(v) The Company, Xxxxxxx and the Xxxxxxx Family
Trust, and their respective employees, representatives, agents, heirs,
beneficiaries, successors and assigns, hereby waive any suit, claim, demand or
cause of action of any kind which any of them may have or may assert against
Xxxxx arising out of or relating to the execution or performance by Xxxxx of
this Agreement. The Company, Xxxxxxx and the Xxxxxxx Family Trust hereby
irrevocably covenant not to xxx or commence or join in any proceedings, whether
legal, equitable or otherwise, against Xxxxx on account of any act or omission
to act on the part of Xxxxx. Further, to induce Xxxxx to act hereunder, Xxxxxxx
and the Xxxxxxx Family Trust hereto agree to hold Xxxxx harmless from any
liability incurred by any action taken or omission by Xxxxx.
5. Cancellation of Loan - Return of Securities - Tower Lease
5.1 The Company shall forgive the indebtedness owed to it by
Xxxxxxx under that certain Promissory Note, dated December 8, 1997, in the
original principal amount of $164,175, made in connection with the Subscription
Agreement, dated December 8, 1997, between Xxxxxxx and Sky King Communications,
Inc. (predecessor-in-interest to the Company).
5.2 Xxxxx shall hold the Payment Shares and the proceeds
derived from the sale thereof in escrow pursuant to the terms hereof and shall
dispose of the Payment Shares as follows:
(a) Each of the parties hereto authorizes Xxxxx to sell as
soon as is practicable and judicious, in the sole discretion of Xxxxx, that
number of Payment Shares Xxxxx determines, in his sole discretion, is necessary
in order to repay a loan of approximately $270,000 made by Xxxxxxxxx X. and Xxxx
X. Xxxxx, husband and wife, to Xxxxxxx in connection with the lease and/or
purchase of a residence (the "Residence") in Greenwich, Connecticut by Xxxxxxx
(the "Residential Loan");
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(b) Each of the parties hereto authorizes Xxxxx to sell that
number of Payment Shares Xxxxx determines, in his sole discretion, is necessary
to repay a loan in the original principal amount of $5,000 made by Xxxxxxxxx X.
Xxxxx to Xxxxxxx on the date hereof for moving expenses (the "Moving Loan").
(c) Each of the parties hereto authorizes Xxxxx to sell, as
soon as is practicable and from time to time, that number of Payment Shares
Xxxxx determines, in his sole discretion, is necessary to satisfy certain of
Xxxxxxx' rental or lease obligations associated with the Residence which
obligations consist solely of monthly rental payments of approximately $18,000
for the six month period following the Date of this Agreement, which rental
obligations shall equal approximately $108,000 in the aggregate (the "Rental
Obligation").
(d) Each of the parties hereto authorizes Xxxxx to sell that
number of Payment Shares Xxxxx determines, in his sole discretion, is necessary
to reimburse any expenses incurred by the Company and/or VDC Bermuda in
connection with expediting the consummation of the Domestication Merger between
the Company and VDC Bermuda on behalf of Xxxxxxx, which expenses include but are
not limited to, expedited fees for filing the certificate of merger with the
Secretary of State of Delaware and courier and postal fees for documents related
to the Domestication Merger (the "Merger Expedition Fees");
(e) Xxxxx shall apply the proceeds from the sale of the
Payment Shares first to the repayment of the Residential Loan; second, to the
repayment of the Moving Loan; third, to reimbursement of the Company for the
Merger Expedition Fees; and fourth, to the satisfaction of the Rental
Obligation.
(f) Upon the satisfaction in full of the Residential Loan, the
Lease Obligations, the Merger Expedition Fees and Moving Loan as set forth
herein, the parties hereby
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authorize Xxxxx to distribute the remaining Payment Shares (the "Remaining
Payment Shares") as follows:
(i) If there are more than 25,000 Remaining
Payment Shares, Xxxxx shall be entitled to any Remaining Payment Shares in
excess of 25,000 as satisfaction of the Xxxxx Loans; provided, however, that in
no event shall such shares be distributed to Xxxxx until January 1, 1999. Xxxxx
shall surrender the 25,000 Remaining Payment Shares to the Company for
cancellation on the Company's books and records.
(ii) If there are 25,000 or fewer Remaining Payment
Shares, Xxxxx shall surrender the said Remaining Payment Shares to the Company
for cancellation on the books and records of the Company.
5.3 The Company agrees to indemnify and hold Xxxxxxx harmless
against any liability of Xxxxxxx arising under the Agreement of Lease between
Tower Realty Operating Partnership, L.P. and VDC Bermuda, dated July, 1998 (the
"Tower Lease") and Xxxxxxx' Good Guy Guaranty of the Tower Lease. The Company
shall use diligent and good faith efforts to release Xxxxxxx from his Good Guy
Guaranty of the Tower Lease.
6. Affirmative Covenants.
6.1 Advisory Services.
(a) For a period of twenty-four months from the date hereof,
Xxxxxxx agrees to provide advisory services (the "Advisory Services") on a
limited basis, to, or on behalf of, the Company as set forth below. As
compensation for providing these services, Xxxxxxx shall be entitled to the
following:
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(i) 50,000 shares of Company common stock (which
shall be issued as part of the 700,000 Trust Shares), for Advisory Services to
be rendered during the first 12 months; and
(ii) 50,000 of Additional Consulting Fee Shares on
the twelve month anniversary of the Date of this Agreement for Advisory Services
to be rendered during the second 12 months.
All of the Additional Consulting Fee Shares shall be subject to the same
restrictions as the Trust Shares as set forth in Paragraphs 4.2(d) and 4.2(f).
(b) Xxxxxxx shall be required to respond to telephonic
inquiries of employees or officers of the Company, particularly the C.E.O., and
to otherwise provide general assistance in connection with business matters as
they relate to the Company.
(c) Xxxxxxx shall cooperate with the Company in connection
with confirming matters or providing information relative to matters for which
he had principal responsibility while in the employ of the Company.
(d) Xxxxxxx will cooperate with the Company's auditors in
connection with the preparation of financial statements.
(e) On most occasions Xxxxxxx may provide such assistance or
confirmation telephonically; however, he may on an occasional basis be required
to meet personally with Company personnel at the offices of the Company or in
the general surrounding area, or be requested to provide confirmations to third
parties.
(f) The Company shall reimburse Xxxxxxx for any out-of-pocket
expenses, preapproved by the Company in writing, incurred by Xxxxxxx in
rendering Advisory Services.
18
6.2 Return of Company Materials.
Xxxxxxx has, or will upon the execution hereof,
deliver to the Company any and all Company property in his possession or under
his control. For the purpose of this paragraph, the term "property" means all
files, memoranda, minutes of Board meetings, employee files, documents, papers,
agreements, keys, credit cards, items, records, computer hardware, computer
software, computer apparatus, items of personal property, machinery and
equipment or other materials, that belong to the Company, were taken from the
premises of the Company or were purchased with funds or in the name of the
Company. The Company may, at the request of Xxxxxxx, make copies of certain
non-confidential files of a personal nature that he may retain for his records.
6.3 Full and Complete Accounting; Responsibility for Expenses.
(a) Xxxxxxx agrees to reimburse the Company for all
personal expenses incurred by the Company on his behalf since March 6, 1998, and
to henceforth refrain from charging any items of personal expense to the account
of the Company. Xxxxxxx shall immediately return the two (2) Sprint cellular
telephones the Company has permitted Xxxxxxx to use and all unused DHL
envelopes. Any other personal expenses incurred by the Company on behalf of
Xxxxxxx, since March 6, 1998, shall be offset on a pro-rata basis against the
remaining payments of consideration set forth at Paragraph 4.1 hereof. Prior to
offset, however, the Company shall provide Xxxxxxx with reasonable notice of any
such items in question so that Xxxxxxx may designate the character of such
terms. To the extent that any of the items to be offset exceed the total amount
of consideration due hereunder, Xxxxxxx shall immediately reimburse the Company
for such amounts. To the extent that Xxxxxxx and the Company cannot
19
agree on the nature or amount of an expense in question, they agree to submit
the matter to arbitration in the manner provided for at Paragraph 9 hereunder.
6.4 Xxxxxxx agrees that he shall not make or publish, or
assist anyone else to make or publish, any negative, critical, disparaging,
slanderous, or libelous statements about the Company or its subsidiaries or any
of their respective officers, directors, agents, employees, or representatives,
and unless (and then only to the extent) required by law, shall not disclose the
terms and provisions of the Agreement to any third party without the Company's
consent. Xxxxxxx agrees that he will provide no assistance, advisory services or
efforts to any third parties in connection with any disputes, claims or legal
proceedings between such third parties and the Company.
6.5 The Company agrees that neither it nor its officers,
directors, agents, employees, or representatives shall make or publish any
negative, critical, disparaging, slanderous, or libelous statements about
Xxxxxxx, and unless (and then only to the extent) required by law, shall not
disclose the terms and provisions of this Agreement to any third party, without
Xxxxxxx' consent. The Company agrees that it will provide no assistance or
advisory services (unless required by law) to any third parties in connection
with any disputes between such third parties and Xxxxxxx.
6.6 Xxxxxxx agrees to execute and deliver any documents or
make any representation reasonably required by the Company in order to
facilitate the termination of Xxxxxxx' employment with the Company.
6.7 Xxxxxxx agrees to serve as a witness for the Company, and
otherwise assist and cooperate with the Company, in any dispute between the
Company, or its subsidiaries, and BDO Xxxxxxx, or its subsidiaries, affiliates
or divisions. The Company shall reimburse Xxxxxxx
20
for any out-of-pocket expenses, preapproved by the Company in writing, incurred
by Xxxxxxx in serving as a witness for the Company or otherwise assisting or
cooperating with the Company, in any dispute between the Company, or its
subsidiaries, and BDO Xxxxxxx, or its subsidiaries, affiliates or divisions.
6.8 Xxxxxxx covenants and agrees to indemnify, defend and hold
harmless the Company and each of its shareholders, officers, directors,
employees, attorneys, and/or agents, individually and collectively (the
"Indemnified Parties"), against and in respect of any claim, liability, loss,
cost, damage or expense (including attorneys' fees and costs of investigation
incurred in defending against or settling any such claim, liability, loss, cost,
damage or expense, and any amounts paid in settlement thereof) imposed on,
incurred or sustained by the Company and/or the Indemnified Parties as a result
of any inaccuracy or breach of Xxxxxxx' representations and warranties set forth
in Paragraph 7 or the subsections thereof or any breach of any obligations of
Xxxxxxx under this Agreement.
7. Representations and Warranties of Xxxxxxx.
Xxxxxxx does hereby provide the following representations and
warranties to the Company and the Company does hereby rely upon the accuracy and
truthfulness of such representations and warranties for the purpose of this
Agreement.
7.1 Xxxxxxx has delivered, or will upon the execution hereof,
deliver to the Company any and all files, memoranda, documents, records,
employee files, minutes of Board meetings, keys, credit cards, items of personal
property, computer hardware, software or other apparatus, machinery or
equipment, or any other materials which belong to the Company or were paid for
with Company funds, which Xxxxxxx has in his possession or control, which he
knows
21
are in the possession or control of his spouse or which were removed from the
premises of the Company by him or his spouse.
7.2 He knows of no action or failure to act on the part of the
Company (including its directors, officers, employees and other agents and
representatives) condition, event, occurrence or the like, which could form the
basis for a claim or complaint against the Company, its subsidiaries or other
entities or individuals described above, by any third party and has not
committed or contracted the Company to any obligations.
7.3 Xxxxxxx has not during the term of his employment, alone
or with others, disclosed to third parties, without the knowledge or permission
of the Company, Confidential Information about the Company, its technologies,
formulations, customers, or suppliers, nor has he undertaken any act or omission
to act in a manner which breaches Paragraph 7 of his employment agreement, which
was effective during the term of his employment, nor has he knowingly
misrepresented the Company to any entity.
7.4 Xxxxxxx agrees that he shall not represent to any
individual or entity that he or any of his family members is an officer or
director of the Company. Furthermore, Xxxxxxx agrees that he shall not represent
to any third party that he has the authority or ability to execute contracts or
other documents or make decisions or take actions on behalf of the Company, any
of its subsidiaries or any of their respective officers, directors, employees or
agents.
7.5 The Rental Obligation, described more particularly in
Paragraph 5.2(c), does not exceed, in the aggregate, $108,000.
7.6 Xxxxxxx and Xxxxx Xxxxxxx, as Co-Trustees of the Trust,
have the sole requisite authority to execute this Agreement on behalf of the
Trust and bind the Trust thereto.
22
The foregoing representations and warranties shall be deemed to be in the nature
of an obligation of Xxxxxxx in so far as the falsehood of same shall be deemed
to be a breach by Xxxxxxx of his obligations hereunder.
8. Standstill Provision.
For and in consideration of the mutual covenants and premises
contained herein, during the term of this Agreement, and for a period of one (1)
year thereafter, (which period shall lapse in the event of the breach of this
Agreement by the Company), neither Xxxxxxx nor any family member (defined for
this purpose to include his spouse and children) or company, partnership or
trust in which Xxxxxxx (or such family member) owns five (5%) percent or more of
its equity or voting interests or for which Xxxxxxx serves as an employee,
agent, officer, director or partner will: (i) for the purposes of subparagraphs
(ii) or (iii) hereafter, acquire, offer to acquire, or agree to acquire,
directly or indirectly, by purchase or otherwise, any voting securities or
direct or indirect rights or options to acquire any voting securities of the
Company; (ii) make, or in any way participate, directly or indirectly, in any
"solicitation" of "proxies" to vote (as such terms are interpreted in the proxy
rules of the Securities and Exchange Commission), or seek to advise or influence
any person or entity with respect to the voting of any voting securities of the
Company, or (iii) form, join or in any way participate in a "group" within the
meaning of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended,
with respect to any voting securities of the Company for the purpose of seeking
to control the management, Board of Directors or policies of the Company.
Further, the parties acknowledge that the Company would not have an adequate
remedy at law for money damages in the event that this covenant were not
performed in accordance with its terms and therefore Xxxxxxx agrees that the
Company shall be
23
entitled to specific enforcement of the terms hereof in addition to any other
remedy to which it may be entitled, at law or in equity.
9. Arbitration.
Any dispute between the parties hereunder shall be determined
by binding arbitration applying the laws of the State of Connecticut. Any
arbitration pursuant to this Agreement shall be conducted in Stamford,
Connecticut before the American Arbitration Association in accordance with its
arbitration rules. The arbitration shall be final and binding upon all the
parties (so long as the award was not procured by corruption, fraud or undue
means) and the arbitrator's award shall not be required to include factual
findings or legal reasoning. Nothing in this Paragraph 9 will prevent either
party from resorting to judicial proceedings if interim injunctive relief under
the laws of the State of Connecticut from a court is necessary to prevent
serious and irreparable injuries to one of the parties, and the parties hereto
agree that the federal and state courts located in Stamford, Connecticut shall
have exclusive subject matter and in personam jurisdiction over the parties and
any such claims or disputes arising from the subject matter contained herein.
10. Notice.
Any notice, demand, or communication given in connection with
this Agreement shall be in writing and shall be deemed received (a) when
delivered if given in person or by courier or courier service, or (b) on the
date and at the time of transmission if sent by facsimile (receipt confirmed) or
(c) five (5) business days after being deposited in the mail postage prepaid.
24
11. Applicable Law.
This Agreement shall be construed in accordance with the laws
of the State of Connecticut without regard to principles of conflict of laws.
12. Entire Agreement.
This instrument contains the entire agreement of the parties.
It may not be changed orally but only by an agreement in writing signed by the
party against whom enforcement of any waiver, change, modification, extension or
discharge is sought.
13. Rule of Construction.
No rule of construction requiring interpretation against the
drafting party shall apply to the interpretation of this Agreement.
14. Agreement Read and Understood.
Both parties hereto acknowledge that they have had an
opportunity to consult with an attorney regarding this Agreement and that they,
or their designated agents, have read and understand this Agreement.
15. Review and Revocation Period. Xxxxxxx acknowledges that he has
been informed that he has the right to consider this Agreement for a period of
at least twenty-one (21) days prior to entering the Agreement. He also
understands that he has the right to revoke this Agreement for a period of seven
(7) days following his execution of the Agreement by giving written notice to
the Chief Executive Officer of the Company at its principal offices. Such notice
shall be effective upon receipt by the Company's Chief Executive Officer.
16. Signatures in Counterpart and Facsimile.
This Agreement may be executed in multiple counterparts and by
facsimile signature, each of which shall constitute an original, but all of
which counterparts taken together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties have executed this Agreement the day
and year first above written.
ATTEST: VDC COMMUNICATIONS, INC.
/s/ Xxxxx X. Xxxxx By: /s/ Xxxxxxxxx X. Xxxxx
------------------ --------------------------
Xxxxxxxxx X. Xxxxx, C.E.O.
WITNESS:
/s/ Xxxxx Xxxxxxx /s/ Xxxxx X. Xxxxxxx
------------------ ---------------------
Xxxxx X. Xxxxxxx
WITNESS:
/s/ Xxxxx X. Xxxxx /s/ Xxxxxxxxx X. Xxxxx
------------------ -----------------------
Xxxxxxxxx X. Xxxxx
Accepted and agreed this 19th
day of November, 1998
THE XXXXXXX FAMILY TRUST
By: /s/ Xxxxx X. Xxxxxxx
--------------------
Xx. Xxxxx X. Xxxxxxx, Co-Trustee
By: /s/ Xxxxx Xxxxxxx
-----------------
Xxxxx Xxxxxxx, Co-Trustee
26
