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