EMPLOYMENT AGREEMENT
AGREEMENT effective as of the 1st day of February, 1998, by and between
Xxxxxxx X. Xxxxxx, an adult individual residing at 00 Xxxxx Xxxxx Xxxx,
Xxxxxxxxx, Xxxxxxxxxxx 00000 (hereinafter referred to as "Executive") and VDC
Corporation Ltd., a Bermuda corporation having a registered office at 00 Xxxxxx
Xxxxxx, Xxxxxxxx XX FX Bermuda (hereinafter referred to as the "Company").
WITNESSETH
WHEREAS, the Company considers it essential and in the best interests of
its stockholders to xxxxxx the continuous employment of key management personnel
and desires to retain the services of the Executive for itself on the terms and
conditions hereinafter set forth; and
WHEREAS, Executive desires to render services to the Company on the terms
and conditions provided in this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereto, intending to be legally bound, hereby
agree as follows:
1. Employment Term, Duties and Acceptance
a. The Company hereby retains the Executive as Vice President-Corporate
Development, to render his services to the Company upon the terms and
conditions herein contained, in such executive capacity, subject to the
direction of the Company through its principal executive officers
(including its Chief Executive, Chief Operating and Chief Financial
Officers) or its Board of Directors.
b. The Executive hereby accepts the foregoing employment and agrees to
devote his full time, best efforts, energy and skill to such employment.
c. The Executive shall not engage in any other business endeavor or
activity during the Employment Period.
d. The Executive hereby agrees that any and all business opportunities
which are similar to or in competition with the Business of the Company
(as such term is used and defined in Section 6(a) below) and are
available as of the date hereof or become available to the Executive
during the Employment Period shall automatically become the sole
property of the Company without any obligation of the Company to
compensate or otherwise pay the Executive for such opportunities.
e. The term of the Executive's employment hereunder (the "Employment
Period") shall commence on the date hereof and shall end on the second
anniversary hereof, unless sooner terminated as provided herein,
provided, however, that the
Employment Period shall be extended and this Agreement shall be
automatically renewed for successive one-year periods unless: (i) this
Agreement is terminated as otherwise provided herein; or (ii) Executive
provides written notice to the Company of his desire not to extend the
Employment Period at least sixty (60) days prior to the expiration of
the then lapsing term.
2. Compensation and Expense Reimbursement
a. As base compensation for the Executive duly rendering his services
pursuant to the terms of this Agreement, Company agrees to pay and
Executive agrees to accept a base salary ("Base Salary") of One Hundred
Thousand Dollars ($100,000) per annum to be paid in accordance with the
general payroll practices of the Company as from time to time in effect.
The Base Salary will be subject to merit increases annually as
determined by the Board of Directors.
b. Any bonus or other compensation provided for herein shall at all times
be exclusive of Executive's interest in and to the options granted by
the Company to him as set forth in the Option to Purchase Common Shares
entered into by the Executive and the Company and having an effective
date of February 1, 1998 (the "Option Agreement"), as well as any stock
option plan(s) that may in the future be adopted by the Company for its
management personnel.
c. The Company will pay or reimburse Executive for all reasonable and
necessary out-of-pocket expenses incurred by him in the performance of
his duties under this Agreement, including all of the Executive's
travel, hotel, meal and other incidental expenses during the Executive's
travel on behalf of the Company. Executive shall keep detailed and
accurate records of expenses incurred in connection with the performance
of his duties hereunder and reimbursement therefor shall be in
accordance with policies and procedures to be established from time to
time by the Board.
3. Fringe Benefits
a. Executive shall be entitled, subject to the terms and conditions of
particular plans and programs, to all fringe benefits afforded to other
senior executives of the Company, including, but not by way of
limitation, the right to participate in any pension, stock option,
retirement, major medical, group health, disability, accident and life
insurance, and other employee benefit programs made generally available,
from time to time, by the Company.
b. During the term of this Agreement, the Company shall include Executive
and his family in family health insurance coverage provided for
executive level employees of the Company.
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4. Vacations
Executive shall be entitled to compensated vacation in each fiscal year, to
be taken at times which do not unreasonably interfere with the performance of
Executive's duties hereunder and otherwise in accordance with the Company's
vacation policies in effect from time to time as applied to other executives of
the Company.
5. Termination
a. Termination by Company for "Cause". In addition to any other remedies
which the Company may have at law or in equity, the Board of Directors
may upon the affirmative vote of no less than a majority of its members,
terminate Executive's employment under this Agreement by giving
Executive written notice of such termination upon or at any time
following the occurrence of any of the following events, and each such
termination shall constitute a termination for "cause," provided,
however, that Executive has first been given written notice of the facts
or circumstances constituting the determination of "cause" and a
reasonable opportunity (in no event less than fifteen (15) days) to
cure, rectify or reverse such facts or circumstances and Executive shall
have failed to do so: (a) any act or failure to act (or series or
combination thereof) by Executive done with the intent to harm in any
material respect the interests of the Company or any affiliate thereof;
(b) the commission by Executive of a felony for which he is convicted by
a court of competent jurisdiction; (c) the finding by a court of
competent jurisdiction that Executive perpetrated a dishonest act or
common law fraud against the Company or any affiliate thereof; or (d) a
grossly negligent act or failure to act (or series or combination
thereof) by Executive detrimental to a material extent to the interests
of the Company or any affiliate thereof; or (e) the continued refusal to
follow the directives of the Board or the Company's Chief Executive
Officer which are consistent with Executive's duties, responsibilities
and covenants hereunder unless the failure to follow such directives
were either: (i) based upon the advice of counsel; or (ii) based upon
the Executive's judgment in good faith that such directives would not be
in the best interests of the Company or its members.
Upon the early termination of Executive's employment under this Agreement
by the Company for "cause," the Company shall pay to Executive: (i) an amount
equal to Executive's Base Salary accrued through the effective date of
termination at the rate in effect at the time of termination, payable at the
time such payment is due; and (ii) any expense reimbursement amounts accrued to
the effective date of termination, payable on the effective date of termination.
Upon payment of such amounts, the Company shall have no further obligation to
Executive under this Agreement, and Executive shall have no further rights
hereunder.
b. Termination by Company without "Cause". At any time after the six month
anniversary of the date of this Agreement, the Company may terminate
this Agreement for any reason or no reason other than for cause upon
thirty (30) days written notice to the Executive. Upon the early
termination of the Executive's employment under this Agreement by the
Company "without cause," the Company shall pay to the Executive: (i) an
amount equal to the Executive's Base
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Salary accrued through the effective date of termination at the rate in
effect at the time of termination, payable at the time such payment is
due; (ii) a lump sum payment at the time of termination equal to three
month's Base Salary, payable on the effective date of termination; and
(iii) any expense reimbursement amounts accrued to the effective date of
termination, payable on the effective date of termination. Upon payment
of such amounts, the Company shall have no further obligation to
Executive under this Agreement, and Executive shall have no further
rights hereunder.
c. Incapacity of Executive. Subject to applicable law, if Executive shall
become ill or be injured or otherwise become incapacitated such that, in
the opinion of the Board of Directors, he cannot fully carry out and
perform his duties hereunder, and such incapacity shall continue for a
period of 180 consecutive days, the Board of Directors may, at any time
thereafter, by giving Executive twenty (20) days' prior written notice,
fully and finally terminate his employment under this Agreement.
Termination under this Section 5(c) shall be effective as of the date
provided in such notice, which date shall not be fewer than thirty (30)
days after such notice is delivered to Executive or his representative,
and on the effective date of termination, the Company shall pay the
Executive (i) his Base Salary accrued to the effective date of
termination at the rate in effect at the time of such notice, payable at
the time such payment is due; and (ii) any expense reimbursement amounts
accrued to the effective date of termination, payable on the effective
date of termination. Upon payment of such amounts, the Company shall
have no further obligation to Executive under this Agreement, and
Executive shall have no further rights hereunder.
d. Death of Executive. This Agreement shall automatically terminate upon
the death of Executive. Upon the early termination of this Agreement as
a result of death, the Company shall pay the Executive's estate: (i) an
amount equal to the Executive's Base Salary accrued through the
effective date of termination at the rate in effect at the effective
date of termination, payable at the time such payment is due; and (ii)
any expense reimbursement amounts accrued to the effective date of
termination, payable on the effective date of termination. Upon payment
of such amounts, the Company shall have no further obligation to
Executive under this Agreement, and Executive shall have no further
rights hereunder.
e. Termination by Employee. At any time after the six month anniversary of
the date of this Agreement, the Executive may terminate this Agreement
by giving at least thirty (30) days' prior written notice to the
Company.
f. Mitigation. The Executive shall not be required to mitigate the amount
of any payment or other benefits provided for under this Agreement by
seeking other employment and none of these payments or other benefits
may be reduced by any salary or other benefits that Executive may earn.
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6. Covenant Not to Compete
a. The Executive recognizes and acknowledges that the Company is placing
its confidence and trust in the Executive. The Executive, therefore,
covenants and agrees that during the Applicable Non-Compete Period (as
defined below), the Executive shall not, either directly or indirectly,
without the prior written consent of the Board of Directors: (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
this Agreement a material customer or material supplier of the Company
including, but not limited to, former or present customers or suppliers
with whom the Executive 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 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 at any time during the 12-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, the following shall not be deemed to violate this Section 6:
i. passive equity investments by Executive 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; or
ii. passive equity investments by Executive in excess of $25,000 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, so long as and only to the extent that
Executive has obtained the prior written consent of VDC to make such
investments; or
iii. an equity investment by Executive of up to 5% in any publicly
traded company which is engaged in or is carrying on any business
which is similar to or in competition with the Business of the
Company.
b. As used in this Agreement, the term "Business of the Company" shall
include all material business activities in which the Company is engaged
now or during the Applicable Non-Compete Period, which are: (i)
telephony gateways in the United States, Ukraine, Kazakhstan, Russia,
China and Egypt; (ii) the acquisition of Alaska Telecom; (iii) cellular,
PCS or other wireless telephony licenses and businesses for the United
States, Egypt, Kazakhstan, Ukraine, China and xxxxxxx xxxxxxxxx xxx
0
xxxxxxx xx Xxxxxx; (iv) Internet service provision and local loop
opportunities in the United States, Egypt, Kazakhstan, Ukraine, China
and Russia; (v) funding and/or vendor financing from NTS, Qualcomm,
Ericcson and Motorola; (vi) paging and cable TV licenses for the entire
country of Ukraine; (vii) a billing system for the United States, Egypt,
Kazakhstan, Ukraine, China and Russia; (viii) a long distance in country
project for the national railway system of Ukraine; (ix) communications
tower site management business in the United States, Ukraine,
Kazakhstan, Egypt, China and Russia; and (x) Internet service provision
in the United States, Egypt, Kazakhstan, Ukraine, China and Russia.
c. Executive hereby recognizes and acknowledges that the existing Business
of the Company extends throughout a number of countries, including
Ukraine, Russia, China, Egypt and Kazakhstan and most states of the
United States, and therefore agrees that the covenants not to compete
contained in this Section 6 shall be applicable in and throughout such
countries and states, as well as throughout such additional areas,
states or countries in which the Company may be (or has prepared written
plans to be) doing business as of the date of termination of the
Executive's employment. The Executive further warrants and represents
that, because of his varied skill and abilities, he does not need to
compete with the Business of the Company and that this Agreement will
not prevent him from earning a livelihood and acknowledges that the
restrictions contained in this Section 6 constitute reasonable
protections for the Company.
d. As used in this Section 6, "Applicable Non-Compete Period" shall mean
that period of one year following the termination of Executive's
employment hereunder.
7. Trade Secrets and Confidential Information
Executive recognizes and acknowledges that certain information including,
without limitation, information pertaining to the financial condition of the
Company, its systems, methods of doing business, agreements with customers or
suppliers or other aspects of the Business of the Company or which is
sufficiently secret to derive economic value from not being disclosed
("Confidential Information") may be made available or otherwise come into the
possession of the Executive by reason of his employment with the Company.
Accordingly, the Executive agrees that he will not at any time disclose any
Confidential Information to any person, firm, corporation, association or other
entity for any reason or purpose whatsoever or make use to his personal
advantage or to the advantage of any third party, of any Confidential
Information, without the prior written consent of the Board of Directors. The
Executive shall, upon termination of employment, return to the Company all
documents which reflect Confidential Information (including copies thereof).
Notwithstanding anything heretofore stated in this Section 7, the Executive's
obligations under this Section 7 shall not, after termination of the Executive's
employment with the Company, apply to information which has become generally
available to the public without any action or omission of the Executive (except
that any Confidential Information which is disclosed to any third party by an
employee or representative of the Company who is not authorized to make such
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disclosure shall be deemed to remain confidential and protectable by the
Executive under this Section 7).
8. Severability
The invalidity or unenforceability of any term of this Agreement shall not
affect the validity or enforceability of this Agreement or any of its other
terms; and this Agreement and such other terms shall be construed as though the
invalid or unenforceable term(s) were not included herein, unless the effect
would be to vitiate the parties' fundamental purposes in entering into this
Agreement.
9. Breach
The Executive hereby recognizes and acknowledges that irreparable injury or
damage shall result to the Company in the event of a breach or threatened breach
by the Executive of any of the terms of provisions Section 6 or 7 hereunder, and
the Executive therefore agrees that the Company shall be entitled to an
injunction restraining Executive from engaging in any activity constituting such
breach or threatened breach. Nothing contained herein shall be construed as
prohibiting the Company from pursuing any other remedies available to the
Company at law or in equity for breach or threatened breach of this Agreement,
including but not limited to, the recovery of damages from the Executive and, if
the Executive is an employee of the Company, the termination of his employment
with the Company in accordance with the terms and provisions of this Agreement.
10. Arbitration
All controversies which may arise between the parties hereto including, but
not limited to, those arising out of or related to this Agreement shall be
determined by binding arbitration applying the laws of the State of Delaware as
set forth in Section 14 hereof. Any arbitration pursuant to this Agreement shall
be conducted in Philadelphia, Pennsylvania 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 Section
10 will prevent either party from resorting to judicial proceedings if interim
injunctive relief under the laws of the State of Delaware from a court is
necessary to prevent serious and irreparable injury to one of the parties, and
the parties hereto agree that the federal and state courts located in
Philadelphia, Pennsylvania 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.
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11. Remedies Cumulative
Except as otherwise expressly provided herein, each of the rights and
remedies of the parties set forth in this Agreement shall be cumulative with all
other such rights and remedies, as well as with all rights and remedies of the
parties otherwise available at law or in equity.
12. Counterparts
This Agreement may be executed via facsimile transmission signature and in
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
13. Waiver
The failure of either party at any time or times to require performance of
any provision hereof shall in no manner affect the right at a later time to
enforce the same. To be effective, any waiver must be contained in a written
instrument signed by the party waiving compliance by the other party of the term
or covenant as specified. The waiver by either party of the breach of any term
or covenant contained herein, whether by conduct or otherwise, in any one or
more instances, shall not be deemed to be, or construed as, a further or
continuing waiver of any such breach, or a waiver of the breach of any other
term or covenant contained in this Agreement.
14. Governing Law
This Agreement shall be governed by the laws of the State of Delaware
without regard to principles of conflict of laws.
15. Complete Agreement
This Agreement constitutes the complete and exclusive agreement between the
parties hereto which supersedes all proposals, oral and written, and all other
communications between the parties relating to the subject matter contained
herein.
16. Warranties
The Executive represents, warrants, covenants and agrees that he has a
right to enter into this Agreement, that he is not a party to any agreement or
understanding whether or not written which would prohibit or restrict his
performance of his obligations under this Agreement and that he will not use in
the performance of his obligations hereunder any proprietary information of any
other party which he is legally prohibited from using.
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17. Notice
Any notice required to be given pursuant to the provisions of this
Agreement shall be in writing and sent by registered mail or nationally
recognized overnight carrier, to the parties at the following addresses:
To the Company at:
Xxxxxxxxx X. Xxxxx, Chief Executive Officer
VDC Corporation Ltd.
00 Xxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
with a copy to:
Xxxxxxx X. Xxxxx, Esquire
Xxxxxxxx Xxxxxxxxx Professional Corporation
Eleven Xxxx Xxxxxx, 00xx Xxxxx
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
To the Executive at:
Xxxxxxx X. Xxxxxx
00 Xxxxx Xxxxx Xxxx
Xxxxxxxxx, XX 00000
18. Key Man Insurance
The Company shall have the right to obtain what is commonly known as "Key
Man Insurance" on the life of the Executive in such amount as the Company deems
appropriate. The Executive agrees to cooperate in all manner in the obtaining of
such a policy. All expenses involved in connection with the obtaining and
maintaining of such a policy shall be that of the Company.
19. Due Authorization
The Company represents to the Executive that this Agreement has been duly
authorized and approved by the Board of Directors of the Company.
20. Assignment
This Agreement shall inure to the benefit of and be binding upon the
Company, its successors and assigns. This Agreement may not be assigned to any
third party without the written consent of all parties to the assignment.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of this
10th day of April, 1998.
VDC CORPORATION LTD.
By: /s/ Xxxxxxxxx X. Xxxxx
---------------------------
Xxxxxxxxx X. Xxxxx,
Chief Executive Officer
WITNESS: EXECUTIVE:
/s/ Xxxxxxx X. Xxxxxx
------------------------------- -------------------------------
Xxxxxxx X. Xxxxxx
