SETTLEMENT, RELEASE AND DISCHARGE AGREEMENT
THIS SETTLEMENT, RELEASE AND DISCHARGE AGREEMENT (the "Settlement
Agreement"), made this 9th day of March, 1999 (the "Date of this Agreement"), by
and among VDC COMMUNICATIONS, INC. (formerly known as VDC Corporation Ltd.) (the
"Company"), a Delaware corporation, MASATEPE COMMUNICATIONS, U.S.A., L.L.C., a
Delaware limited liability company ("Masatepe"), and XXXX XXXXXXXX ("Xxxxxxxx"),
an individual presently residing within the State of New York (the Company,
Masatepe, and Xxxxxxxx are collectively referred to as the "Parties").
RECITALS:
WHEREAS, the Company, Masatepe, Xxxxxxxx and Activated Communications
Limited Partnership, a Texas limited partnership, are parties to a Purchase
Agreement, dated as of July 31, 1998, pursuant to which the Company acquired all
of the membership interests of Masatepe (the "Purchase Agreement");
WHEREAS, in connection with the execution of the Purchase Agreement, the
Company, Masatepe and Xxxxxxxx entered into an Employment Agreement, dated as of
August, 1998 (the "Employment Agreement"), pursuant to which Xxxxxxxx agreed to
serve as President and Chief Executive Officer of Masatepe;
WHEREAS, Paragraph 2 of the Employment Agreement provides for certain
bonuses of Company common stock (the "Stock Bonuses");
WHEREAS, in connection with the execution of the Purchase Agreement, the
Company executed a Promissory Note, dated July 31, 1998 (the "Promissory Note"),
for the benefit of Xxxxxxxx as payee, pursuant to which the Company agreed to
pay Xxxxxxxx a Phantom Membership Interest (as referenced in the Employment
Agreement) on terms set forth in the Promissory Note;
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WHEREAS, in connection with the execution of the Purchase Agreement, the
Company and Xxxxxxxx executed an Option to Purchase Common Shares Agreement,
dated as of August 1998 (the "Option Agreement"), which referenced Xxxxxxxx'x
right to purchase 10,000 shares of Company common stock;
WHEREAS, in connection with the execution of the Purchase Agreement, the
Company delivered a Letter Agreement, dated as of August 1998 (the "Letter
Agreement"), pursuant to which the Company agreed to issue certain shares of
Company common stock to Xxxxxxxx as a finder's fee (the "Finder's Fee");
WHEREAS, in connection with the execution of the Option Agreement and
Letter Agreement, the Company and Xxxxxxxx executed a Registration Rights
Agreement, dated as of August 1998 (the "Registration Rights Agreement");
WHEREAS, in December 1998, the Company's Board of Directors granted
Xxxxxxxx an option to purchase 10,000 shares of Company common stock (the
"Option Grant");
WHEREAS, on February 7, 1999, the Company sent a letter to Xxxxxxxx (the
"Letter") indicating that it would terminate Xxxxxxxx'x employment with the
Company and Masatepe effective February 26, 1999 unless certain deficiencies
were cured;
WHEREAS, on February 26, 1999, Xxxxxxxx filed for and obtained a temporary
restraining order (the "Order") in the United States District Court for the
Eastern District of Pennsylvania (Civil Action No. 99-CV-1040) (the "Action")
restraining the Company, Masatepe and certain other parties from terminating
Xxxxxxxx'x employment;
WHEREAS, Xxxxxxxx has filed a demand for arbitration with regard to the
present dispute (the "Demand for Arbitration");
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WHEREAS, the Company, Masatepe and Xxxxxxxx wish to resolve their present
dispute upon the terms and conditions set forth in this Settlement Agreement
with none of the Parties admitting liability;
NOW, THEREFORE, for and in consideration of the mutual premises,
covenants, and agreements contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Parties hereto, intending to be legally bound hereunder, agree as follows:
1. Listing, Delivery and Registration of Shares of Company Common Stock.
1.1. Promptly following the execution of the Settlement Agreement by
the Parties, the Company shall list with the American Stock Exchange, Inc.
("Amex") 95,000 shares of Company common stock, par value $.0001 per share (the
"Settlement Shares"). The Settlement Shares shall be listed in an Additional
Listing Application (the "Additional Listing Application") that the Company is
currently preparing in connection with the preparation of a Registration
Statement on Form S-1 (the "Registration Statement"). The Company shall use its
reasonable best efforts to get the Additional Listing Application approved by
Amex within thirty (30) days of the Date of this Agreement.
1.2. Promptly after Amex's approval of the Additional Listing
Application, the Company shall issue the unregistered Settlement Shares, which
shall contain the restrictive legend set forth more particularly in the investor
representation letter to be executed by Xxxxxxxx and Tab X. Xxxxxxxxx in
accordance with Paragraph 1.3 of this Settlement Agreement, in a private
placement transaction (the "Private Placement") as follows:
(a) 76,750 Settlement Shares to Xxxxxxxx (7,500 of which (the
"Escrow Shares") shall be held in escrow by Paul, Hastings, Xxxxxxxx & Xxxxxx,
LLP, as escrow agent (the "Escrow Agent") pursuant to the letter attached hereto
as Schedule 1.2 and incorporated herein by reference); and
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(b) 18,250 Settlement Shares to Tab X. Xxxxxxxxx
("Xxxxxxxxx").
1.3. Xxxxxxxx and Xxxxxxxxx shall each execute an investor
representation letter and shall deliver said letters to the Company
contemporaneously with the execution of this Settlement Agreement. Xxxxxxxx and
Xxxxxxxxx shall promptly provide whatever information and documentation is
reasonably requested by the Company or its legal counsel in connection with the
Private Placement and Registration Statement. 1.1.
1.4. The Company shall register the potential resale of the
Settlement Shares in the Registration Statement. The Company shall use its
reasonable best efforts to file the Registration Statement with the Securities
and Exchange Commission within ninety (90) days of the Date of this Agreement.
Notwithstanding anything to the contrary contained herein, the Company's
obligation in this Paragraph shall extend only to the inclusion of the
Settlement Shares in the Registration Statement in accordance with the terms of
this Paragraph. The Company shall have no obligation to assure the terms and
conditions of distribution, to obtain a commitment from an underwriter relative
to the sale of the Settlement Shares or to otherwise assume any responsibility
for the manner, price or terms of the distribution of the Settlement Shares.
Furthermore, the Company shall not be restricted in any manner from including
within the Registration Statement any of its or any other securities.
2. Computer Equipment. The Company shall give to Xxxxxxxx the desk top
computer (the "Computer"), facsimile machine and printer (collectively the
"Equipment") that were supplied to Xxxxxxxx by the Company for use by Xxxxxxxx
in the Company's Greenwich office (the "Office"). Prior to the Computer being
made accessible to Xxxxxxxx, an employee or agent of the Company's choosing
shall review the files on the Computer and shall remove all files related to the
business of the Company, Masatepe, or Masatepe Communications, S.A., the
Nicaraguan company in which Masatepe owns an equity interest ("Masatepe S.A."),
except files containing the names, address, and telephone numbers of all
vendors, business contacts, and other individuals and entities in which the
Company, Masatepe or Masatepe S.A. are interested, which files shall be copied
but not removed. Xxxxxxxx shall remove, or arrange for the removal of, the
Equipment from the Office at a time that is mutually acceptable to Xxxxxxxxx X.
Xxxxx, the Company's CEO, and Xxxxxxxx.
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3. Reimbursement of Business Expenses. The Company shall reimburse all
reasonable business expenses incurred by Xxxxxxxx prior to February 7, 1999 in
accordance with Paragraph 2 of the Employment Agreement. In addition, the
Company shall reimburse Xxxxxxxx for appropriate telephone charges of Company or
Masatepe employees that have been charged to one of Xxxxxxxx'x credit cards.
4. Resignation and Termination of Services.
4.1. Xxxxxxxx'x employment with the Company and Masatepe shall end
as of the Date of this Agreement.
4.2. Except as provided in Xxxxxxxxx 00, Xxxxxxxx hereby resigns
from and surrenders any and all positions he currently holds, or has held, with
the Company, Masatepe, Masatepe S.A. or any of their subsidiaries, affiliates,
or predecessors in interest including, but not limited to, his positions as
President and Chief Executive Officer of Masatepe (the "Resignation"). The
Company and Masatepe hereby accept the Resignation.
4.3. Other than the Letter Agreement and this Settlement Agreement,
any and all other arrangements, agreements and understandings between or
involving Xxxxxxxx and the Company, Masatepe, Masatepe S.A. or their affiliates
or subsidiaries shall terminate as of the Date of this Agreement. By way of
illustration, but not limitation, the Employment Agreement, the Promissory Note,
the Option Agreement and the Registration Rights Agreement shall terminate as of
the Date of this Agreement.
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5. Surrender of Rights to Securities. Other than as provided for in the
Letter Agreement and this Settlement Agreement, Xxxxxxxx for himself and his
heirs, assigns, executors and administrators hereby surrenders and forfeits any
and all rights to or interests in the stock, options, warrants, notes,
debentures, any other security of any form or type of and any type of payment
from the Company, Masatepe, Masatepe S.A. or any of their subsidiaries or
affiliates. By way of illustration, but not limitation, Xxxxxxxx surrenders and
forfeits for himself and his heirs, assigns, executors and administrators, any
and all interest in and to the Promissory Note, the Option Agreement, the Option
Grant, the Stock Bonuses and any and all stock grants or stock options or other
securities referenced in or contemplated by the Employment Agreement.
6. Non-Competition and Confidentiality.
6.1. As used in this Settlement Agreement, the term "Restricted
Business" means any one or more of the following: (1) the business of carrying,
transporting, or dealing in or with telecommunications and/or internet traffic
between the United States and Nicaragua; (2) the business of carrying,
transporting, or dealing in or with telecommunications and/or internet traffic
between the United States and Panama; (3) the business of carrying,
transporting, or dealing in or with telecommunications and/or internet traffic
between Nicaragua and Panama; (4) the business of carrying, transporting, or
dealing in or with telecommunications and/or internet traffic between Nicaragua
and the rest of the world; (5) the business of carrying, transporting, or
dealing in or with telecommunications and/or internet traffic between Panama and
the rest of the world; and (6) all telecommunications, internet and paging
activities in Nicaragua or Panama. For a period of two (2) years after the Date
of this Agreement, Xxxxxxxx shall not directly or indirectly: (i) engage in the
Restricted Business or help or otherwise assist any entity, business or
individual to engage in or carry on the Restricted Business; (ii) solicit or
seek to develop business relationships with any individual or entity with
respect to the Restricted Business or with any individual or entity that derives
more than 2-1/2% of its revenues from the Restricted Business; (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 the Restricted
Business and derives more than 2-1/2% of its revenues from the Restricted
Business; (iv) solicit for employment or employ any person employed by the
Company, Masatepe, Masatepe S.A. or any of their subsidiaries or affiliates; (v)
hold an ownership interest, beneficially or otherwise, in any entity that
derives more than 2 1/2% of its revenue from Restricted Business, except that he
may hold up to a 5% ownership interest in a public company that derives more
than 2 1/2% of its revenue from Restricted Business; or (vi) communicate with
any foreign government official, newspaper, or other periodical regarding the
Restricted Business or the Company, Masatepe, Masatepe S.A. or any of their
affiliates or subsidiaries unless required by law.
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6.2. Xxxxxxxx acknowledges that the restrictions contained herein in
view of the nature of the business in which the Company and Masatepe are and
have been engaged, and in consideration of the financial value of the settlement
provisions of Paragraphs 1, 2 and 3 hereof, are reasonable and necessary to
protect the legitimate interests of the Company and Masatepe, and that any
violation of any of these restrictions would result in irreparable injury to the
Company and/or Masatepe. Xxxxxxxx acknowledges that, in the event of a violation
of any of these restrictions, in addition to the forfeiture of the Escrow Shares
(if the violation occurs within one (1) year from the Date of this Agreement),
the Company and/or Masatepe shall be entitled to recover such other legal and/or
equitable relief as may be appropriate. In the event that Xxxxxxxx violates any
provision in or section of Paragraph 6.1 of this Settlement Agreement, 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.
6.3. In addition, Xxxxxxxx shall not disclose Confidential
Information of or about the Company, Masatepe, VDC Telecommunications, Inc.,
Voice & Data Communications (Hong Kong) Limited, Masatepe S.A., World Connect
Communications, and their subsidiaries and affiliates (collectively the "VDC
Entities") to any other person, entity, corporation, trust, association or
partnership. For the purposes of this Settlement Agreement, the term
"Confidential Information" shall include, without limitation, information
obtained while Xxxxxxxx was employed by the Company or Masatepe or any of their
subsidiaries or affiliates as an officer or in any other capacity, relating to
the Company's, Masatepe's and/or Masatepe S.A.'s financial condition, their
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,
suppliers, or vendors, methods of doing business, agreements with customers,
suppliers, or vendors or other aspects of the VDC Entities' business which
information is generally not available outside of the VDC Entities 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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6.4. Notwithstanding anything to the contrary contained herein, in
the event that any court of equity or arbitrator 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.
7. Return of Property. Within five (5) business day of the Date of this
Agreement, Xxxxxxxx shall return to the Company all contracts, notes regarding
the Company, Masatepe, Masatepe S.A. or their subsidiaries or affiliates, files,
memoranda, documents, records, copies of the foregoing, credit cards, keys,
equipment, telephones, and any other property of the Company or Masatepe or
their subsidiaries or affiliates in his possession or that he removed or had
removed from the offices of the Company, Masatepe, Masatepe S.A. or their
subsidiaries or affiliates (the "Company Property").
8. Taxes. Xxxxxxxx shall be responsible for paying, and shall indemnify the
Company, Masatepe and their subsidiaries and affiliates against, income taxes,
capital gains taxes, and other taxes on amounts he or his assigns or designates
receive pursuant to this Settlement Agreement.
9. Vendor Letter. The Parties shall execute the letter (the "Letter")
attached hereto as Exhibit "A," and incorporated by reference herein. The Letter
shall be distributed to the entities and individuals designated by the Parties.
10. House in Nicaragua. With respect to the house in Nicaragua that
Xxxxxxxx and Masatepe personnel have jointly used (the "House"), Xxxxxxxx shall
pay 1/3 of the rent, security, utilities and cleaning expenses (collectively the
"Obligation") for the remaining term of the lease for the House. The Company
shall pay 2/3 of the Obligation. Xxxxxxxx will have his own telephone and each
Party will be responsible to pay for its own telephone usage. Except for the one
room that Xxxxxxxx has used as a bedroom (the "Bedroom"), the Company, Masatepe,
and Masatepe S.A. and their subsidiaries and affiliates may use the House
without restriction. The Company's CEO may direct the use of the Bedroom in his
reasonable discretion; however, unless otherwise instructed by the Company's
CEO, the Bedroom shall remain locked. Xxxxxxxx may, in his discretion, use the
House subject to the Company's, Masatepe's, and Masatepe S.A.'s right of first
refusal. The Company shall have the exclusive right to renew the lease on the
House. The Company recognizes that Xxxxxxxx owns all the furniture, electronics
and artwork in the House. The Company owns the appliances in the House.
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11. Release by Xxxxxxxx.
11.1. Except for the Company's obligations set forth in the Settlement
Agreement and the limitation in Paragraphs 11.3 and 11.4, Xxxxxxxx, his assigns,
heirs, executors and administrators (collectively the "Releasors") for and in
consideration of the undertakings set forth in this Settlement Agreement and
intending to be legally bound, do hereby REMISE, RELEASE AND FOREVER DISCHARGE
the Company, Masatepe, Masatepe S.A. and their subsidiaries, affiliates,
component entities, individually and collectively, its and their respective
members, officers, directors, employees, agents, attorneys, insurers, and its
and their predecessors, successors and assigns, heirs, executors and
administrators (collectively the "Releasees"), 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 Releasors ever had, now have or hereafter may have by
reason of any matter, cause or thing whatsoever from the beginning of the world
to the Date of this Agreement. This release includes, but is not limited to, any
claims concerning or relating in any way to: (1) Xxxxxxxx'x status as an
employee or officer of the Company, Masatepe, or Masatepe S.A. or any of their
subsidiaries or affiliates; (2) Xxxxxxxx'x employment relationship and/or the
termination of his employment relationship with the Company, Masatepe, or
Masatepe S.A. or any of their subsidiaries or affiliates; and (3) 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. Section 2000e, Age Discrimination in Employment
Act, 29 U.S.C. Section 621 et seq., the Americans with Disabilities Act, 42
U.S.C. Section 12101, et seq., the Employee Retirement Income Security Act, 29
U.S.C. Section 1001, et seq. It is expressly understood and agreed that the
foregoing shall operate as a clear and unequivocal waiver by Xxxxxxxx of any
claim for accrued or future wages, benefits or any other type of payment
including, but not limited to the Promissory Note, the Option Agreement, the
Option Grant, the Stock Bonuses and any and all stock grants or stock options or
other securities referenced in or contemplated by the Employment Agreement.
Except as set forth in Paragraphs 11.3 and 11.4 and except for the Company's
obligations set forth in this Settlement Agreement, the Parties intend this to
be a general release and nothing contained herein shall be deemed to limit the
scope of the release in any manner.
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11.2. Except as provided in Paragraphs 11.3 and 11.4, Xxxxxxxx
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
within the scope of the release set forth in Paragraph 11.1. Xxxxxxxx agrees
that he will not provide any assistance or advisory services efforts (unless
required by law or compelled by legal process) to any third parties in
connection with any disputes, claims or legal proceedings between such third
parties and the Company, Masatepe, Masatepe S.A. and/or their subsidiaries or
affiliates.
11.3. This Agreement does not prevent Xxxxxxxx from filing a charge
of discrimination with the Equal Employment Opportunity Commission, although by
signing this Agreement Xxxxxxxx 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 local agency on his behalf under
any federal or state discrimination law, except where prohibited by law.
Xxxxxxxx agrees to release and discharge the Releasees 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 Releasees may arise,
in whole or in part, from any event which occurred as of the Date of this
Agreement.
11.4. By executing this Settlement Agreement, Xxxxxxxx is not
waiving his right to indemnification on the terms set forth in the Company's
Certificate of Incorporation, as amended. Xxxxxxxx reserves the right to assert
claims for contribution or indemnification against the Company or Masatepe in
the event of an action asserted by a third party against Xxxxxxxx.
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12. Release by the Company and Masatepe.
12.1. Except for Xxxxxxxx'x obligations set forth in this Settlement
Agreement and the limitation in Paragraph 12.3, the Company and Masatepe and
their subsidiaries and affiliates (the "VDC Releasors"), for and in
consideration of the undertakings set forth in this Settlement Agreement, and
intending to be legally bound, do hereby REMISE, RELEASE AND FOREVER DISCHARGE
Xxxxxxxx and his heirs, executors and administrators attorneys and insurers, 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 they ever had, now
have, or hereafter may have, or which their 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. This release includes, but is not
limited to, any claims concerning or relating in any way to: (1) Xxxxxxxx'x
status as an employee or officer of the Company, Masatepe, or Masatepe S.A. or
any of their subsidiaries or affiliates; (2) Xxxxxxxx'x employment relationship
and/or the termination of his employment relationship with the Company,
Masatepe, or Masatepe S.A. or any of their subsidiaries or affiliates; and (3)
any claims arising under any and all federal, state or local statutory or common
laws. Except as set forth in Paragraph 12.3 hereof and except for Xxxxxxxx'x
obligations set forth in this Settlement Agreement, the Parties intend this to
be a general release and nothing contained herein shall be deemed to limit the
scope of the release in any manner.
12.2. Except as set forth in Paragraph 12.3 and subject to Xxxxxxxx
fulfilling his obligations as set forth in this Settlement Agreement, the VDC
Releasors also agree that they will not file any claim for legal or equitable
relief against Xxxxxxxx for any matter within the scope of the release set forth
in Paragraph 12.1. The Company agrees that it will provide no assistance or
advisory services (unless required by law or compelled by legal process), to any
third parties in connection with any disputes between such third parties and
Xxxxxxxx. Nothing contained herein shall restrict the Company's or Masatepe's
ability to cooperate in any manner they deem appropriate with any law
enforcement agency inquiry, investigation or prosecution.
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12.3. The VDC Releasors, and each one of them, reserve their right
to assert claims for contribution or indemnification in the event of an action
asserted by a third party against the VDC Releasors, or any one of them.
13. Consulting Services.
13.1. Xxxxxxxx shall provide consulting services (the "Consulting
Services") as an independent contractor and the Company shall utilize such
services for a minimum of ten (10) days during the one (1) year following the
Date of this Agreement. Said Consulting Services shall be provided for at least
eight (8) hours per diem.
13.2. Xxxxxxxx shall be paid at the rate of $1,250 per diem.
13.3. The Company shall reimburse Xxxxxxxx for any out-of-pocket
expenses, preapproved by the Company in writing, incurred by Xxxxxxxx in
rendering Consulting Services.
13.4. Xxxxxxxx shall make himself available to render, without
charge, Consulting Services to the Company on March 9, 1999 after 6:00 p.m. and
for one (1) other business day within one (1) month from the Date of this
Agreement.
13.5. All Consulting Services must be initiated by the Company in
writing setting forth the scope of the services to be rendered. The Consulting
Services so initiated shall be performed on days and times mutually agreeable to
the Company and Xxxxxxxx.
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14. Certain Additional Covenants.
14.1. Xxxxxxxx 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, Masatepe, Masatepe S.A. or their
subsidiaries or affiliates 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 Settlement
Agreement to any third party without the Company's consent.
14.2. 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
Xxxxxxxx and (unless and then only to the extent required by law), shall not
disclose the terms and provisions of the Settlement Agreement to any third party
without the Xxxxxxxx'x consent. Nothing contained herein shall prevent the
Company from disclosing the terms and conditions of the Settlement Agreement to
comply with the rules and regulations of the Securities and Exchange Commission.
14.3. At any time and from time to time, each Party agrees, without
further consideration, to take such actions and to execute and deliver such
documents as are necessary or reasonable to effectuate the terms, conditions,
and purposes of this Settlement Agreement.
14.4. Except to the extent authorized by the Company's Chief
Executive Officer in a writing dated after the Date of this Agreement, Xxxxxxxx
covenants and agrees that he shall not represent to any individual or entity
that he is an officer or authorized representative of the Company, Masatepe,
Masatepe S.A. or any of their subsidiaries or affiliates. Furthermore, except to
the extent authorized by the Company's Chief Executive Officer in a writing
dated after the Date of this Agreement, Xxxxxxxx covenants and 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, Masatepe, Masatepe S.A. or any of their subsidiaries or
affiliates or any of their respective members, officers, directors, employees or
agents.
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14.5. Xxxxxxxx shall file a stipulation of voluntary dismissal
of the Action with prejudice pursuant to Fed. R. Civ. P. 41(a) immediately upon
execution of this Settlement Agreement.
14.6. Within five (5) days of the Date of this Agreement, Xxxxxxxx
shall withdraw the Demand for Arbitration.
14.7. The Parties shall execute and deliver to the Company,
contemporaneously with the execution of the Settlement Agreement, the letter
attached hereto as Schedule 14.7 and incorporated herein by reference. The
Parties shall use their reasonable best efforts to have Activated Communications
Limited Partnership execute said letter promptly after the execution of this
Settlement Agreement.
15. Representations and Warranties of Xxxxxxxx.
15.1. Xxxxxxxx knows of no action or failure to act on the part of
the Company, Masatepe or their subsidiaries or affiliates (including their
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.
15.2. Xxxxxxxx has not during the term of his employment disclosed
to third parties, without the knowledge or permission of the Company,
Confidential Information about the Company, Masatepe, Masatepe S.A. or their
affiliates or subsidiaries, their technologies, formulations, customers, or
suppliers, nor has he undertaken any act or omission to act in a manner which
breaches Paragraph 7 of the Employment Agreement.
15.3. Xxxxxxxx has not entered into any contracts on behalf of the
Company or Masatepe or their subsidiaries or affiliates or otherwise
contractually or legally bound said entities except as set forth on Schedule
15.3 attached hereto and incorporated herein by reference.
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15.4. Xxxxxxxx has not negotiated or otherwise transferred or
assigned the Promissory Note.
15.5. Xxxxxxxx represents and warrants that he has not sold,
assigned, transferred, conveyed, or otherwise disposed of any of the claims
settled by this Settlement Agreement.
15.6. In deciding to enter into this Settlement Agreement, Xxxxxxxx
has not relied on any statements, representations, promises or undertaking or
inducements made by the Company and/or Masatepe or any of their officers,
directors, employees and or agents except as set forth in the Settlement
Agreement.
15.7. Xxxxxxxx has entered into this Settlement Agreement
voluntarily and of his own volition without any pressure or influence whatsoever
by any individual including, but not limited to, its attorney and/or any
officer, director or employee of the Company.
15.8. Xxxxxxxx has read this Settlement Agreement, understands this
Settlement Agreement, and has knowingly with a complete understanding of the
terms and provision herein, affixed his signature to this Settlement Agreement.
15.9. Xxxxxxxx has consulted with Xxxxxxxxx of Xxxxxxxxx, Xxxxxx &
Xxxx L.L.P., his legal counsel concerning any and all rights he may have or
claim to have against the Company and Masatepe and has individually and through
his attorneys conducted such investigation as he and his counsel considered
necessary and appropriate to satisfy themselves that this Settlement Agreement
is a fair settlement.
16. Representation and Warranties of the Company
16.1. The Company and Masatepe know of no action or failure to act
on their part or on their part of subsidiaries or affiliates (including their
directors, employees, and other agents and representatives) condition, event,
occurrence or like, which could form the basis for a claim or complaint against
Xxxxxxxx, his agents or assigns, by any third party.
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16.2. The Company is unaware of any circumstances that would prevent
the Settlement Shares from being included in the Additional Listing Application
in connection with the Registration Statement currently being prepared by the
Company and having their potential resale registered as part of the Registration
Statement.
16.3. The Company and Masatepe have taken all corporate and
shareholder action necessary to authorize and effectuate the terms and
conditions of this Settlement Agreement.
16.4. In deciding to enter into this Settlement Agreement, the
Company and Masatepe have not relied on any statements, representations,
promises or undertaking or inducements made by the Xxxxxxxx except as set forth
in the Settlement Agreement.
16.5. The Company and Masatepe has entered into this Settlement
Agreement voluntarily and of its own volition without any pressure or influence
whatsoever by any individual including, but not limited to, its attorney and/or
any officer, director or employee of the Company.
16.6. The authorized officers are executing this Settlement
Agreement on behalf of the Company and Masatepe with the authorization of the
Board of Directors of both companies, have read this Settlement Agreement,
understand this Settlement Agreement, and have knowingly with a complete
understanding of the terms and provision herein, affixed their signatures to
this Settlement Agreement.
16.7. The Company, Masatepe and their officers have consulted with
Xxxx Xxxxxxxx Xxxxxxxx & Xxxxxx LLP, their legal counsel concerning any and all
rights they may have or claim to have against Xxxxxxxx and have individually and
through their attorneys conducted such investigation as counsel, the Company and
Masatepe considered necessary and appropriate to satisfy themselves that this
Settlement Agreement is a fair settlement.
43
17. Arbitration. Any dispute between the Parties hereunder shall be
determined by binding arbitration applying the laws of the State of New York.
Any arbitration pursuant to this Agreement shall be conducted in New York, New
York 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 17 will prevent the
Parties from resorting to judicial proceedings if interim injunctive relief
under the laws of the State of New York from a court is necessary to prevent
serious and irreparable injuries to one of the Parties, and the Parties agree
that the federal and state courts located in New York, New York 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.
18. Good Faith Effort to Resolve Disputes. Each Party agrees that prior to
initiating arbitration or seeking injunctive relief as permitted by this
Settlement Agreement, the complaining Party will make a good faith effort to
resolve the dispute with the Party that would be the defendant or respondent, as
the case may be.
19. COBRA. Xxxxxxxx retains the right to COBRA continuation as to any
Company health plan he had immediately prior to the date of this Settlement
Agreement under the normal COBRA health care continuation rules.
20. Awards, Judgments, Orders. With regard to any arbitration award or
judgement or order for injunctive relief resulting from any dispute associated
with or arising out of this Settlement Agreement, the Parties consent to the
jurisdiction of the state and federal courts of New York and Connecticut for
purposes of enforcing said award, judgement, or order. Additionally, with regard
to any arbitration award or judgment or order for injunctive relief resulting
from any dispute associated with or arising out of this Settlement Agreement,
Xxxxxxxx consents to enforcement of said award, judgement or order in every
state in the United States and in every country in North America, Central
America or South America.
44
21. 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.
22. Applicable Law. This Settlement Agreement shall be construed in
accordance with the laws of the State of New York without regard to principles
of conflict of laws.
23. Entire Agreement. This Settlement Agreement contains the entire
agreement of the Parties with respect to the subject matter hereof and
supersedes all existing agreements among them concerning such subject matter.
The Settlement Agreement 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.
24. Rule of Construction. No rule of construction requiring interpretation
against the drafting party shall apply to the interpretation of this Settlement
Agreement.
25. Agreement Read and Understood. The 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 Settlement Agreement.
26. Review and Revocation Period. Xxxxxxxx acknowledges that he has been
informed that he has the right to consider this Settlement Agreement for a
period of at least twenty-one (21) days prior to entering the Settlement
Agreement. He also understands that he has the right to revoke this Settlement
Agreement for a period of seven (7) days following his execution of the
Settlement 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.
27. Signatures in Counterpart and Facsimile. This Settlement 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.
45
28. Captions. The captions or headings of the paragraphs or other
subdivisions hereof are inserted only as a matter of convenience or for other
reference and shall have no affect on the meaning of the provisions hereof.
29. Severability. The invalidity or unenforceability of any term of this
Settlement Agreement shall not affect the validity or enforeceability of this
Settlement Agreement or any of its other terms; in the event that any court of
equity or arbitrator determines that the time period and/or scope of any
paragraph or section of this Settlement Agreement is unenforceably long or
broad, as the case may be, then, and in either such event, neither the
enforceability nor the validity of said paragraph or section as a whole shall be
affected. Rather, the scope of the section shall be revised by the court or
arbitrator as little as possible to make the section enforceable. If the court
or arbitrator will not revise said paragraph or section, then this Settlement
Agreement 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 of entering into this Settlement Agreement.
30. Recitals. The Recitals to this Settlement Agreement shall be deemed a
part of this Settlement Agreement.
31. Binding Effect. This Settlement Agreement shall be binding upon and
inure to the benefit of the Parties and VDC's and/or Masatepe's successors and
assigns and Xxxxxxxx'x assigns, heirs and personal representatives.
32. Waiver. Any waiver by any Party of a breach of any provision of this
Settlement Agreement shall not operate or be construed to be a waiver of any
other breach of that provision or of any other provision. The failure of any
Party to insist upon strict adherence to any term of this Settlement Agreement
on one or more occasions shall not be considered a waiver or deprive that party
of the right to insist upon strict adherence in the future. Any waiver must be
in writing.
46
IN WITNESS WHEREOF, the Parties have executed this Settlement
Agreement the day and year first above written.
WITNESS: VDC COMMUNICATIONS, INC.
/s/ Xxxxx X. Read By: /s/ Xxxxxxxxx X. Xxxxx
--------------------------- ---------------------------------------
Xxxxxxxxx X. Xxxxx
Chairman & CEO
WITNESS: MASATEPE COMMUNICATIONS, U.S.A.,
L.L.C.
/s/ Xxxxx X. Read By: VDC Communications, Inc., its managing
--------------------------- member
By: /s/ Xxxxxxxxx X. Xxxxx
----------------------------------
Xxxxxxxxx X. Xxxxx
Chairman & CEO
WITNESS:
/s/ unreadable /s/ Xxxx Xxxxxxxx
--------------------------- ----------------------------------
Xxxx Xxxxxxxx
47
Schedule 1.2
Reference is made to the Settlement Agreement dated March 9, 1999 by and
among VDC Communications, Inc. (the "Company"), Masatepe Communications, U.S.A.,
L.L.C. and Xxxx Xxxxxxxx (the "Settlement Agreement") and, in particular,
Paragraph 1.2 (a) thereof.
At the request of all parties to the Settlement Agreement, Paul,
Hastings, Xxxxxxxx & Xxxxxx LLP ("PHJW") has agreed to act as Escrow Agent to
hold the Escrow Shares on the terms and conditions set forth below.
PHJW agrees to hold the Escrow Shares until receipt from the Company of
written direction to deliver the Escrow Shares to Xxxxxxxx or receipt from
Xxxxxxxx of written direction to deliver the Escrow Shares to the Company. If,
after one year from the date of the Settlement Agreement, PHJW does not receive
such direction from the Company or Xxxxxxxx, PHJW may fulfill its obligations
hereunder by depositing the Escrow Shares into a court in New York or
Connecticut and, in such event, PHJW will be absolved of any liability to any of
the parties to the Settlement Agreement. Any costs PHJW may incur in depositing
the Escrow Shares into a court will be shared equally by the Company and
Xxxxxxxx.
Xxxxxxxx expressly agrees that notwithstanding it serving as Escrow
Agent, PHJW may represent the Company in any disputes arising out of the
Settlement Agreement or otherwise and Xxxxxxxx expressly waives any conflict
that might exist by virtue of PHJW serving as Escrow Agent.
48
Exhibit "A"
[VDC Letterhead]
To [Name of Vendor]
Dear Vendor:
Upon behalf of VDC Communications, Inc. ("VDC") and Masatepe
Communications, U.S.A. L.L.C. ("Masatepe"), I am pleased to inform you that
there has been a settlement of all disputes with the Xxxx Xxxxxxxx, the former
CEO and President of Masatepe. Although Xx. Xxxxxxxx has resigned as Masatepe's
CEO and President, the Company has reserved the right to retain Xx. Xxxxxxxx to
provide consulting services on an interim basis. We believe that the present
arrangement will enable VDC to enhance its resources and thus aid its efforts to
expand its telecommunications network.
Very truly yours,
---------------------------------
Xxxxxxxxx X. Xxxxx
Chairman & CEO
49
Schedule 14.7
March 9, 1999
Xxxxxxx X. Xxxxx, Esq.
XXXXXXXX XXXXXXXXX PROFESSIONAL CORPORATION
Eleven Penn Center
0000 Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Re: Release of Promissory Note
Dear Xx. Xxxxx:
Reference is made to the Purchase Agreement, dated as of July 31, 1998, by
and among VDC Corporation Ltd., Masatepe Communications, U.S.A., L.L.C.,
Activated Communications Limited Partnership, and Xxxx Xxxxxxxx, and the Escrow
Agreements dated as of July 31, 1998 related thereto. The undersigned hereby
instruct XXXXXXXX INGERSOLL PROFESSIONAL CORPORATION, in its capacity as Escrow
Agent under the Escrow Agreements, to immediately release to VDC Communications,
Inc., for cancellation, the Promissory Note, dated July 31, 1998, with VDC
Corporation Ltd. as maker and Xxxx Xxxxxxxx as payee.
Very truly yours,
VDC COMMUNICATIONS, INC.
By:
----------------------------------
Xxxxxxxxx X. Xxxxx
Chairman & C.E.O.
MASATEPE COMMUNICATIONS, U.S.A., L.L.C.
By: VDC Communications, Inc., its managing
member
By:
-----------------------------
Xxxxxxxxx X. Xxxxx
Chairman & C.E.O.
ACTIVATED COMMUNICATIONS LIMITED
PARTNERSHIP
By: Cellular Dynamics, Inc., its general
partner
By:
-----------------------------
Xxxx Xxxxxxxxx
Vice President
50
Xxxxxxx X. Xxxxx, Esq.
March 9, 1999
Page 2
--------------------------------
Xxxx Xxxxxxxx
cc: Xxxxx X. Xxxxx, Esq.
Tab X. Xxxxxxxxx, Esq.
51
Schedule 15.3
1. Carrier Services Agreement with D. Comm.
2. Contract with ValueCom for E-1 Space Segment.
3. Purchase Order with IDB Systems for a 9.3 meter earth station.
4. Letter Agreement with Xxxxxx Xxxxxx for design of multiplexing network.
5. Contract with ENITEL (operating Agreement).
6. Arrangement for Tricom to provide switching and billing for 50,000 free
minutes per month. (This is only an agreement with no set term).
7. Contract with Newbridge Networks for purchase and financing of muxing
equipment.
8. Contract with IDB Systems converting FlyAway Earth Station to capital lease.
9. Xxxxxxxx will furnish the Company with copies of each of these agreements.
52
