EXHIBIT 10.1
CONSULTING AND NON-COMPETITION AGREEMENT
BY AND BETWEEN
VSOURCE, INC.
AND
DENNIS M. SMITH
DATED AS OF JULY 18, 2005
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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 Dennis M. Smith
("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.
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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 ot
