EMPLOYMENT AGREEMENT
AGREEMENT made as of the 3rd day of March, 1998, by and between Xxxxxxxxx
X. Xxxxx, an adult individual residing at 00 Xxxxxxxx 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 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 Company's Chairman and
Chief Executive Officer, 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 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 fifth
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 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.
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.
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5. Termination by the Company
a. Termination 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.
b. Termination without "Cause". 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 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 one year'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
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payment of such amounts, the Company shall have no further obligation
to Executive under this Agreement.
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 120 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; (ii) a lump sum
equal to one year of his Base Salary at the rate in effect at the time
of such notice, 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.
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; (ii) a
lump sum equal to one year of the Executive's Base Salary at the rate
in effect at the effective date of termination, 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.
e. 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.
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,
and in consideration of the severance payments set forth in Section 5
hereof, 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
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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, 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, and an equity
investment 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, shall not be deemed to
violate this Section 6. 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 various republics and regions of Russia; (iv) 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 Egypt and
Ukraine; (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.
b. 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
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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.
c. 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
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
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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.
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
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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.
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:
VDC Corporation Ltd.
00 Xxxxxx Xxxxxx
Xxxxxxxx XX FX Bermuda
with a copy to:
Xxxxxxx X. Xxxxx, Esquire
Xxxxxxxx Xxxxxxxxx Professional Corporation
Eleven Xxxx Xxxxxx, 00xx Xxxxx
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
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To the Executive at:
Xxxxxxxxx X. Xxxxx
00 Xxxxxxxx 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.
IN WITNESS WHEREOF, the parties have executed this Agreement as of this
___ day of ____________, 1998.
ATTEST: VDC CORPORATION LTD.
By: /s/ Xxxxxx Xxxxxxxx Xxxxx
----------------------------- --------------------------------
Xxxxxx Xxxxxxxx Lacey, President
WITNESS: EXECUTIVE:
/s/ Xxxxxxxxx X. Xxxxx
----------------------------- --------------------------------
Xxxxxxxxx X. Xxxxx
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AMENDMENT TO EMPLOYMENT AGREEMENT
This Amendment to Employment Agreement ("Amendment") is made as of the 18th
day of May, 1998, by and between VDC CORPORATION LTD., a Bermuda corporation
("Company"), and XXXXXXXXX X. XXXXX, an adult individual residing at 00 Xxxxxxxx
Xxxx, Xxxxxxxxx, Xxxxxxxxxxx 00000 (hereinafter referred to as "Executive").
Capitalized terms used but not otherwise defined herein shall have the meaning
ascribed to them in the Employment Agreement (as such term is defined below).
W I T N E S S E T H :
WHEREAS, Company and Executive have entered into that certain Employment
Agreement, dated as of March 3, 1998 (the "Employment Agreement"); and
WHEREAS, Company and Executive wish to amend the Employment Agreement as
set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto, intending to be
legally bound hereby, agree as follows:
1. Section 2(a) of the Employment Agreement is amended to provide for a Base
Salary of One Hundred Twenty Five Thousand Dollars ($125,000).
2. Except as otherwise set forth herein, the terms of the Employment Agreement
shall remain in full force and effect.
3. This Amendment shall be construed in accordance with the laws of the State
of Delaware without giving effect to conflicts of law principles.
4. This Amendment is made and entered into effective as of the date first
above written.
IN WITNESS WHEREOF, Company and Executive have caused this Amendment to be
duly executed as of the day and year first above written.
VDC CORPORATION LTD.
By: /s/ Xxxxxxxxx X. Xxxxx
-------------------------------------------
Xxxxxxxxx X. Xxxxx, Chief Executive Officer
EXECUTIVE:
/s/ Xxxxxxxxx X. Xxxxx
-------------------------------------------
Xxxxxxxxx X. Xxxxx
