EXHIBIT 10.1
CONSULTING AND NON-COMPETITION AGREEMENT
BY AND BETWEEN
VSOURCE, INC.
AND
XXXXXX X. XXXXX
DATED AS OF JULY 18, 2005
This CONSULTING AND NON-COMPETITION AGREEMENT dated as of July 18, 2005 (the
"Effective Date"), by and between, Vsource, Inc., a Delaware company (the
"Company"), and Xxxxxx X. Xxxxx ("Consultant").
In consideration of consulting services to be provided by the Consultant to
the Company and the cancellation and termination of the Existing Employment
Agreements (defined in Section 16 below), the parties hereto agree as follows:
1. CONSULTING. Subject to earlier termination in accordance with Sections set
out below this Agreement shall commence as of the Effective Date and continue
until the date which is the later of the Initial Term or such additional term
provided under Section 1.b.
a. Duties. The Company agrees to retain the Consultant and Consultant
agrees to serve the Company, subject to the direction of the Board of Directors
of the Company (the "Board"), and to have such authority and duties relative to
the operation of the Company as may be determined by the Board. In addition,
Consultant agrees, if requested by the Board to serve as a Director of the
Company and/or it subsidiaries, subject to continuing directors and officers
insurance coverage pursuant to Section 16.j. below.
b. Term. The initial term of this Agreement shall be from the Effective
Date hereof until July 18, 2007 (the "Initial Term"). This Agreement shall renew
automatically for additional one (1) year terms unless either party gives notice
of termination not less than 90 days prior to the end of the existing term.
c. Best Efforts. Subject to the provisions set forth in Section 9 hereto,
during the term of this Agreement, Consultant shall use his best efforts to
advance the interests of the Company and any subsidiaries thereof (the "Vsource
Companies").
2. COMPENSATION. The Company shall pay to Consultant, as consideration for the
services to be rendered by Consultant hereunder, an annual fee of US$300,000 per
year payable monthly in twelve equal payments of $25,000 (the "Monthly Fee") on
or about the 20th day of each month by telegraphic or wire transfer to the
account designated by the Consultant from time to time in writing.
3. BONUSES, STOCK OPTIONS, RESTRICTED STOCK AND SIMILAR TYPES OF COMPENSATION
BENEFITS. Bonuses, stock option grants, participation in restricted stock
programs or deferred compensation programs and other similar types of
compensation plans will be decided by the Board.
4. BENEFITS. Consultant served as an officer of the Company prior to the
commencement of this Agreement. The Company will continue to provide the
Consultant with coverage under existing plans for medical, dental, and
retirement coverage or an alternative provider with equivalent coverage mutually
agreed by the parties.
5. EXPENSES. Upon presentation of proper vouchers, receipts or other proof,
Consultant shall be reimbursed promptly by the Company for all reasonable travel
and other expenses incurred by Consultant in connection with performing his
Consulting obligations hereunder, provided that the Consultant will comply with
the Company's expense approval policies, including prior approval of
expenditures in accordance with Company policy.
6. TERMINATION OF THE AGREEMENT.
a. By the Consultant. The Agreement may be terminated by the Consultant
without cause (a "Voluntary Termination") at any time upon at least 60 days
written notice to the Company.
b. By the Company. The Agreement may be terminated by the Company for
actual cause or without actual cause as follows:
i. Termination for Actual Cause.
1. immediately, in the event that (1) Consultant is convicted
or pleads guilty or nolo contendere to a felony or a crime
of moral turpitude, (2) the Board determines in good faith
that Consultant has been grossly negligent or acted
dishonestly to the material detriment of the Company, (3)
Consultant willfully disobeys the instructions or mandates
of the Board and such disobedience continues after
Consultant is afforded a reasonable opportunity to cure such
disobedience, or (4) the Board makes a good faith
determination that Consultant has engaged in actions
amounting to willful misconduct or failed to perform his
duties hereunder and such failure continues after Consultant
is afforded reasonable opportunity to cure such failure
(each of (1), (2), (3) or (4), referred to herein as a
"Termination for Actual Cause"); or
2. immediately, in the event that Consultant is indicted or
otherwise formally charged with a felony or a crime of moral
turpitude, in which case the Board may, upon three (3) days
written notice, suspend the Agreement. Thereafter, all
payments of salary and bonuses, if any, to which Consultant
otherwise would be entitled under this Agreement shall be
paid into an interest bearing escrow account. In the event
that Consultant shall be acquitted of such charges or such
charges shall otherwise be dismissed, Consultant shall be
reinstated as a Consultant, and all fees and accrued
bonuses, if any, paid into escrow, plus accrued interest,
shall be paid to Consultant. In the event Consultant shall
be convicted or pleads guilty or nolo contendere to such
charges; all salary and accrued bonuses paid into escrow
plus accrued interest, shall be paid over to the Company,
and this Agreement shall be deemed to have terminated as of
the date of his suspension.
ii. Termination Without Actual Cause.
1. the Board, in its discretion, resolves to terminate the
Agreement for any reason other than those set forth in
sub-sections b(i)(1) or b(i)(2) above, upon written notice
to Consultant.
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c. Death of Consultant. In the event of Consultant's death during the term
of his Agreement, this Agreement shall be deemed to have terminated on the last
day of the calendar month during which Consultant's death occurred.
8. SEVERANCE.
a. Voluntary Termination or Termination for Actual Cause. In the event of
Voluntary Termination or Termination for Actual Cause, the Company shall pay to
Consultant, in full discharge of its obligations hereunder, the Monthly Fee
through the date specified in the applicable notice as the termination date (the
"Termination Date"); plus any Bonus that has been awarded but not yet been paid,
and expenses through the Termination Date, plus any compensation or benefits to
which he may be entitled pursuant to the benefit plans of the Company (in the
aggregate, the amounts in this sentence shall be the "Accrued Amounts");
provided, that in the case of a Voluntary Termination, if the Company permits
Consultant to terminate the Agreement on a date earlier than the Termination
Date (i.e. with less than sixty (60) days written notice), then the Company
shall only be obligated to pay the Monthly Fees and Accrued Amounts due
Consultant through such earlier date.
b. Death. In event Consultant's consulting by the Company terminates on
account of Consultant's death, the Company shall pay to Consultant (or his
estate), in full discharge of its obligations hereunder, Consultant's Monthly
Fees through the Termination Date.
c. Termination Without Actual Cause. In the event the Agreement is
terminated by the Company other than for a Termination for Actual Cause,
Consultant shall be entitled to receive a lump sum termination payment which
shall be made by the Company to the Consultant within 30 days of the Termination
Date equal to (i) the Accrued Amounts and (ii) the Monthly Fee times number of
months (including fractions thereof) until the last date of the Initial Term or,
if the Termination Without Actual Cause takes place after the completion of the
Initial Term, the date which is 90 days from the Termination Date.
9. NON-COMPETITION. Consultant covenants and agrees that during the term of
Agreement with the Company and for a period (the "Non-Compete Period")
commencing on the Termination Date and ending on the date which is one (1) year
from the date of the final payment by the Company to Consultant pursuant to this
Agreement, Consultant will refrain from: (i) directly or indirectly (as a
director, officer, Consultant, manager, consultant, independent contractor,
advisor or otherwise) engaging in competition with, or owning any interest in,
performing any services for, participating in or being connected with any
business or organization which engages in competition with any of the Vsource
Companies (the "Vsource Business") (ii) soliciting directly or indirectly the
patronage of any person with whom Consultant has had personal contact or
dealings on behalf of any of the Vsource Companies during the twelve (12) month
period immediately preceding the Termination Date, or (iii) directly or
indirectly employing, soliciting for employment, or advising or recommending to
any other person that they employ or solicit for employment, any Consultant of
any of the Vsource Companies.
In connection with the foregoing provisions of this Section 9, Consultant
represents that his experience, capabilities and circumstances are such that the
provisions of these Sections will not prevent him from earning a livelihood and
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that the limitations set forth herein are reasonable and properly required for
the adequate protection of the Company.
Furthermore, in connection with the foregoing provisions of this Section 9,
the Company acknowledges that the Consultant now serves, and will continue to
serve, in a number of other capacities concurrent with his role as a Consultant
to the Company.
10. CONFIDENTIAL INFORMATION.
a. Non-Disclosure. Consultant agrees not to use other than for the benefit
of the Vsource Companies and to keep confidential, during the term of the
Agreement for at least two (2) years thereafter, all information about the
Vsource Companies which the Vsource Companies treat as confidential, including,
but not limited to, information about customers, marketing plans, marketing
techniques, technical information, and possible new products or services, except
that Consultant will not be required to keep particular items of information
confidential after those items of information become generally available to the
public without a breach by Consultant of Consultant's obligations under this
Section. Consultant covenants and agrees that except in the performance of his
duties hereunder, he will not, at any time, directly or indirectly, without the
prior written consent of the Company, use or disclose to any person any
confidential or proprietary information ("Confidential Information") obtained or
developed by him while employed by the Company relating to the business of the
Vsource Companies, except information which at the time (i) is available to
others in the business or generally known to the public other than as a result
of disclosure by him not permitted hereunder, (ii) is lawfully acquired from a
third party who is not obligated to a Vsource Company to maintain such
information in confidence or (iii) is used in any dispute or proceedings between
the parties and/or Consultant is legally compelled to disclose such information;
provided, however, that prior to any such compelled disclosure, Consultant will
(a) assert the privileged and confidential nature of the Confidential
Information against the third party seeking disclosure and (b) cooperate fully
with the Company or any other Vsource Company in protecting against any such
disclosure and/or obtaining a protective order narrowing the scope of such
disclosure and/or use of the Confidential Information. In the event that such
protection against disclosure is not obtained, Consultant will be entitled to
disclose the Confidential Information, but only as and to the extent necessary
to legally comply with such compelled disclosure.
b. Disclosure to the Company. Consultant shall disclose promptly to the
Company all new discoveries, ideas, formulae, products, methods, processes,
designs, trade secrets, copyrightable material, patentable inventions, or other
useful technical information or know-how and all improvements, modifications or
alterations of existing discoveries made, discovered, or developed by him,
either alone or in conjunction with any other person during the term of his
Consulting by the Company, or using the Vsource Companies' materials or
facilities, which discoveries or developments are based on, derived from, or
make use of any information directly related to the business disclosed to, or
otherwise acquired by, Consultant from any of the Vsource Companies during his
Consulting by the Company. Consultant agrees that any copyright, patent,
trademark, or other proprietary rights in any such discoveries shall be the sole
and exclusive property of the Company, and none of the Vsource Companies need
account to Consultant for any revenue or profit derived therefrom. If by
operation of law or otherwise, any or all of the items set forth in Section 9,
or any component or element thereof, is considered to be the intellectual
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property right of Consultant, Consultant hereby agrees to irrevocably assign to
the Company, its successor and assigns, ownership of all United States and
international copyrights and all other intellectual property rights available
with respect to each such element or item. Consultant shall be deemed to have
granted the Company an irrevocable power of attorney to execute as Consultant's
agent any and all documents (including copyright registrations) deemed necessary
by the Company to perfect the Company's intellectual properly rights in and to
each of the items set forth in this Section.
c. Trade Secrets. Consultant agrees, in order to effectuate the intent of
the parties hereunder with respect to confidentiality of the trade secrets of
the Vsource Companies, to return to the Vsource Companies forthwith upon the
request of a Vsource Company or the termination of his Consulting or promptly
thereafter, all documents, materials, photographs, memorandums, and all copies
or reproductions hereof, or any property of a similar or different nature
containing information relating to the business or other Confidential
Information, whether such material was furnished by a Vsource Company, or
otherwise. Consultant further agrees to use his best efforts and to exercise
utmost diligence to protect and guard and keep secret and confidential all
Confidential Information that shall come into his possession by reason of his
Consulting by the Company.
d. Company Property. Consultant agrees to return to the Vsource Companies
forthwith upon the request of any Vsource Company or the termination of his
Consulting or promptly thereafter, all other properly belonging to the Vsource
Companies.
11. REPORTING. Consultant shall report to the Chairman of the Board of the
Company.
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12. INDEPENDENT CONTRACTOR. Consultant shall be an independent contractor, and
not an employee or agent of the Company or any of its affiliates or subsidiaries
for any purpose, including but not limited to FICA, FUTA, and income tax
withholding. Consultant agrees to perform consulting services in accordance with
this Agreement and shall not subcontract the performance of all or any part of
its obligations hereunder to any third parties without the Company's prior
written consent.
13. INDEMNITY.
(a) Subject to Sections 14 and 15 below, Consultant agrees to defend,
indemnify, and hold the Company (and its affiliates, owners,
employees, and agents) harmless from and against all indemnifiable
damages, to the maximum extent permitted by applicable law.
(b) Subject to paragraphs 14 and 15 below, the Company agrees to defend,
indemnify, and hold Consultant harmless from and against all
indemnifiable damages, to the maximum extent permitted by applicable
law.
(c) "Indemnifiable damages" means all expenses, losses, costs,
deficiencies, liabilities, and damages (including related attorneys'
and paralegals' fees, court costs, including costs for appeals, and
arbitration expenses) incurred or suffered by a party, however caused
and regardless of whether incurred or suffered in tort, contract or
otherwise, resulting from any default in the performance of any of the
covenants or agreements of the other party in this Agreement.
14. LIMITATION OF LIABILITY. Neither party shall be liable to the other party
with respect to this Agreement, except for such party's own gross negligence or
willful misconduct.
15. FORCE MAJEURE. Neither party shall be liable for failure to perform its
obligations hereunder due to causes beyond its control, including acts of God,
laws and requirements of any government, national emergencies, materials
shortages or labor difficulties.
16. MISCELLANEOUS.
a. Notice. Any notices or other communications to Consultant or to the
Company under or relating to this Agreement must be in writing and will be
deemed given when delivered in person or sent by facsimile transmission to the
Company or Consultant, as the case may be, at the Company's principal offices,
or on the third day after the day on which mailed to the Company or Consultant,
as the case may be, by first class mail addressed to the Company or Consultant
at the Company's principal offices, except that after the term of this Agreement
terminates, any notice or other communication to Consultant will be deemed given
when delivered in person or sent by facsimile transmission, or on the third day
after the day on which mailed by first class mail, to Consultant at an address
specified by Consultant to the Company in the manner provided in this Section
(or, if Consultant does not specify an address, at the Company's principal
offices).
b. No Duplication. The payments and benefits received by Consultant
hereunder are in addition to, and not duplicative of, payments and benefits
received by Consultant under Consultant's employment and non-competition
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agreements with each of Vsource (Asia) Limited and Vsource (CI) Ltd , each dated
as of April 1, 2005 (together, the "Existing Employment Agreements").
c. Entire Agreement; Amendment. This Agreement represents the entire
understanding of the parties with respect to the subject matter hereof and
replaces in their entirety the Existing Employment Agreements which Consultant
agrees are cancelled and terminated as of the Effective Date, except that
Consultant shall be credited hereunder with all benefits that have accrued under
the Existing Employment Agreements through the Effective Date, including without
limitation vacation that has accrued and Consultant stock options that have been
granted under the Existing Employment Agreements. No termination, revocation,
waiver, modification, amendment or supplement to this Agreement shall be binding
unless consented to in writing by Consultant and the Company.
d. Governing Law. This Agreement shall be interpreted and construed in
accordance with the laws of Delaware, without giving effect to the conflict of
laws provisions thereof.
e. Interpretation. As used in this Agreement, the masculine gender shall
include the feminine or neuter gender and the plural shall include the singular
wherever appropriate. The titles of the paragraphs and sections have been
inserted as a matter of convenience of reference only and shall not control or
affect the meaning or construction of any of the terms or provisions hereof.
Nothing herein shall be construed against or more favorably toward any party by
reason of any party having drafted this Agreement or any portion hereof.
f. Severability. Any provision of this Agreement that is invalid, illegal
or unenforceable in any jurisdiction shall be automatically reformed and
construed so as to be valid, operative and enforceable to the maximum extent
permitted by law, or if no reformation is permissible, shall be ineffective to
the extent of such invalidity, illegality or unenforceability without
invalidating or rendering unenforceable the remaining provisions of this
Agreement, and any such invalidity, illegality or unenforceability shall not, of
itself, affect the validity, legality or enforceability of such provision in any
other jurisdiction.
g. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall constitute one and the same instrument.
h. No Waiver. No failure or delay on the part of either party is exercising
any right or power hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right or power preclude any other right
or power.
i. Previous Employer. Consultant hereby represents that he is under no
obligation or agreement that would prevent him from being a Consultant to the
Company or adversely impact his ability to perform the expected services for the
Company. As a condition of Consulting, no confidential documents, computer
discs, computer stored information, or any other confidential properly of any
previous employer are to be brought on the premises or used in any way in your
Consulting by the Company. As a further condition of Consulting, Consultant
agrees not to use or disclose the trade secrets or confidential information, if
any, of a previous employer in connection with Consultant's services for the
Company.
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j. Directors & Officers Insurance. The Company represents and warrants that
Article 7 (No Director Liability) of the Company's certificate of incorporation
(and the provisions therein, including those relating to indemnification)
remains in full force and effect and has not been amended, repealed or otherwise
modified. The Company agrees to maintain in effect reasonable and customary
Directors and Officers liability insurance providing a "tail period" covering
Consultant for his service as a director, officer and consultant of the Company
and its subsidiaries.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the date first above written.
Vsource, Inc.
By: /s/ Xxxxx X. Xxxxxx
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Name: Xxxxx X. Xxxxxx
Title: Vice President
By: /s/ Xxxxxx X. Xxxxx
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Xxxxxx X. Xxxxx
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