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EXHIBIT 10.32
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as of
September 23, 1996 by and between VIATEL, INC. a Delaware corporation with an
office at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (the "Company"), and
XXXXXXX X. XXXXXXX, an individual currently residing at 000 Xxxx 00xx Xxxxxx,
Xxxxxxxxx 00X, Xxx Xxxx, Xxx Xxxx (the "Executive").
W I T N E S S E T H:
WHEREAS, the Company is contemplating a Public Offering (as defined
below) of certain of its equity securities;
WHEREAS, the Board of Directors (the "Board") desires to provide
incentives to retain the Executive in the Company's employ for a three-year
period after the Public Offering; and
WHEREAS, the Board and the Executive desire that the Company employ
the Executive as the President and Chief Operating Officer.
NOW THEREFORE, each of the Company and the Executive, intending to be
legally bound, hereby mutually covenant and agree as follows:
ARTICLE I
DEFINITIONS
The following terms used in this Agreement shall have the meanings set
forth below.
1.1 "Accrued Obligations" shall mean, as of the date of Termination,
the sum of Executive's aggregate accrued but unpaid (A) Base Salary, (B) Bonus
Award, (C) other cash compensation and (D) vacation pay, expense reimbursements
and other cash entitlements, all determined through the date of Termination.
1.2 "Base Salary" shall mean the amount set forth in Section 3.1
hereof.
1.3 "Bonus Agreement" shall mean the Bonus Agreement entered into by
the parties in the form attached hereto as EXHIBIT A.
1.4 "Bonus Award" shall have the meaning specified in the Bonus
Agreement.
1.5 "Cause" shall mean Executive's (i) material violation of Section
2.3 hereof, which violation has not been cured within 15 days of the date that
written notice thereof is received by Executive from the Board; (ii) material
violation of Section 4.1 or 4.2 hereof; (iii) violation of Section 4.3 hereof;
(iv) gross negligence or dishonesty in the performance of his duties hereunder
or habitual neglect in managing the Company; PROVIDED, HOWEVER, that the Board
undertakes a comprehensive review and determines that such conduct is materially
injurious or materially damaging to
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the Company or its reputation; or (vi) conviction of any felony or a misdemeanor
involving fraud, misrepresentation or dishonesty.
1.6 "Change of Control" is defined to mean such time as (1) a
"person" or "group" (within the meaning of Sections 13(d) and 14(d)(2) of the
Exchange Act), becomes the ultimate "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act) of more than 50% of the total voting power of the
then outstanding Voting Stock of the Company on a fully diluted basis or
(ii)individuals who at the beginning of any period of two consecutive calendar
years constituted the Board (together with any new directors whose election by
the Board or whose nomination for election by the Company's stockholders was
approved by a vote of at least two-thirds of the members of the Board then still
in office who either were members of the Board at the beginning of such period
or whose election or nomination for election was previously so approved) cease
for any reason to constitute a majority of the members of the Board then in
office.
1.7 "Common Stock" shall mean the common stock, par value $.01 a
share, of the Company.
1.8 "Competitive Activities" shall have the meaning set forth in
Section 4.3 hereof.
1.9 "Confidential Material" shall have the meaning set forth in
Section 4.2 hereof.
1.10 "Control" (including, with correlative meanings, the terms
"controlling," "controlled by," and "under common control with"), as used with
respect to any Person, shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of such
Person, whether through ownership of voting securities, by contract or
otherwise.
1.11 "Disability" shall mean Executive's death or inability to perform
his material duties to the Company by reason of a physical or mental disability
which has existed for an aggregate of nine months during any twelve month
period.
1.12 "Disability Payment" shall mean, for purposes of Section 5.3(d)
hereof, an amount equal to 60% of the Base Salary in effect for the calendar
year in which such Disability occurred (or the average Base Salary if such
Disability occurred over more than one calendar year).
1.13 "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
1.14 "Good Reason" shall mean any (i) reduction in Executive's Base
Salary, (ii) failure by the Company to continue any material benefit or
compensation plan, life insurance plan, health and accident plan, disability
plan (or plan providing Executive with substantially similar benefits) in which
Executive is participating or the material reduction by the Company of
Executive's benefits under any such plan, (iii) failure by the Company to obtain
an assumption of this Agreement by any successor of the Company (as contemplated
in Section 6.2 hereof) or (iv) transaction resulting in a Change of Control, if
Executive has
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provided written notice to the Company within 60 days of such Change of Control
of his intentions to cease employment hereunder.
1.15 "Intellectual Property" shall mean any idea, process, trademark,
service xxxx, trade or business secret, invention, technology, computer program
or hardware, original work of authorship, design, formula, discovery, patent or
copyright, application, record, design, plan or specification and any
improvement, right or claim related to the foregoing.
1.16 "Participation" shall mean the direct or indirect participation
in any Competitive Activity, whether as an operator, manager, consultant, and
whether individually or jointly.
1.17 "Performance Year" shall mean each calendar year beginning on
January 1 and ending on December 31.
1.18 "Person" shall mean any individual or entity, whether a
governmental or other agency or political subdivision thereof or otherwise.
1.19 "Public Offering" shall mean the first date after which at least
20% of the outstanding Common Stock is publicly held and such Common Stock is
listed or admitted to trading on a national securities exchange or quoted on the
National Association of Securities Dealers, Inc.'s National Market System.
1.20 "Severance Amount" shall mean, for purposes of Section 5.3(b)
hereof, an amount equal to (i) the sum of (A) the Base Salary for the calendar
year in the Term in which the date of Termination occurs plus (B) the prior
year's Bonus Award (not to be less than $50,000) MULTIPLIED BY (ii) the
Severance Period Multiple.
1.21 "Severance Period Multiple" shall mean, the quotient obtained by
DIVIDING (i) the Severance Period by (ii) 12; PROVIDED, HOWEVER, that the
Severance Period Multiple shall not be less than one, except that in the case of
a Change of Control, the Severance Period Multiple shall not be less than two.
1.22 "Severance Period" shall mean the number of full calendar months
remaining in the Term on the date of any Termination.
1.23 "Term" shall have the meaning set forth in Section 2.2 hereof and
shall include any renewal or extension as set forth therein.
1.24 "Termination" shall mean termination of Executive's employment
with the Company for any reason, including (i) for Disability, (ii) with or
without Cause, (iii) resignation by Executive with or without Good Reason
(including a Voluntary Resignation) or (iv) upon the expiration of the Term.
1.25 "Voluntary Resignation" shall have the meaning set forth in
Section 2.2(b) hereof.
1.26 "Voting Stock" shall mean with respect to any share, interest,
participation or other equivalent (however designated, whether voting or
non-voting) in equity of the Company, whether now outstanding or issued after
the date hereof, including, without
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limitation, any Common Stock, any preferred stock and any class or kind
ordinarily having the power to vote for the election of directors, managers or
other voting members of the Board.
ARTICLE II
EMPLOYMENT AND TERM
2.1 EMPLOYMENT. The Executive shall be employed as the President and
Chief Operating Officer of the Company, and Executive hereby accepts such
employment. In addition, Executive agrees that he will serve in any similar
capacity on behalf of any existing or future subsidiary of the Company as
reasonably requested by the Board.
2.2 TERM. (a) The Term shall commence on the date of the Public
Offering; PROVIDED, HOWEVER, that if the Public Offering does not occur before
December 1, 1996 this Agreement shall not commence, and the parties hereto shall
be under no obligation or entitlement hereunder. Once commenced, this Agreement
shall end on the earlier of (i) one week after the third anniversary of the
Public Offering and (ii) the date of any Termination.
(b) Notwithstanding Section 2.2(a) hereof, if (i) Executive's
principal place of business is moved without the Executive's consent to a
location which is more than 50 miles from its current location or (ii) there is
a material diminution in Executive's authority, duty, responsibility, function
or position with the Company and such diminution continues after 15 days of the
date that written notice thereof is given to the Board by Executive, then
Executive may terminate this Agreement by sending written notice of the
Executive's election of such option, and such Termination shall be effective 30
days after the receipt by the Company of such written notice unless the
effectiveness is accelerated by the Company (the "Voluntary Resignation").
(c) Subject to Section 5.2 hereof, if six months' advance written
notice terminating this Agreement is not received by either party from the other
party before any anniversary after the second anniversary of the Public
Offering, then this Agreement shall be automatically renewed for successive one
year-periods.
2.3 DUTIES. The Executive shall be directly responsible for the
Company's daily operations and shall have all powers, duties and
responsibilities commensurate with his position as set forth in Section 2.1
hereof or as may be assigned by the Board from time to time; PROVIDED, HOWEVER,
that any such powers, duties and responsibilities assigned by the Board are
commensurate with such position. The Executive shall use his best efforts and
devote all of his business time, attention and energy in performing his duties
hereunder. Notwithstanding the foregoing, nothing in this Agreement shall
restrict Executive from managing his personal investments, personal business
affairs and other personal matters, or serving on civic or charitable boards or
committees, if such activities do not interfere with the performance of his
duties hereunder or conflict with the Company's interests.
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ARTICLE III
COMPENSATION AND BENEFITS
3.1 BASE SALARY For services performed by Executive for the Company
and its subsidiaries hereunder, the Company shall pay Executive an annual Base
Salary of $200,000 in accordance with the Company's regular payroll practices.
On each anniversary date of the Public Offering, the Executive shall be subject
to an annual review; PROVIDED, HOWEVER, that the Executive's Base Salary shall
be increased (but not decreased) to an amount equal to the product of the Base
Salary MULTIPLIED BY the sum of (i) one PLUS (ii) the percentage increase, if
any, in the Consumer Price Index for all Urban Consumers, All Items, for the
most recent twelve-month period for which such figures are then available as
promulgated by the Department of Labor Bureau of Statistics.
3.2 BONUSES. Executive shall be eligible to receive an annual cash
bonus in accordance with the Bonus Agreement. Any compensation which may be
otherwise authorized from time to time by the Board (or an appropriate committee
thereof) shall be in addition to the Base Salary and any Bonus Award.
3.3 STOCK OPTIONS. Executive shall be entitled to receive annual
grants of stock options or restricted stock in amounts determined by the Board
(or any committee thereof) in its sole and absolute discretion. Upon execution
of this Agreement, Executive shall be entitled to receive a stock option award
for 120,000 shares of Common Stock, vesting over 4 years with an exercise price
equal to the "price to the public" as set forth in any registration statement
declared effective for any Public Offering, pursuant to the form of stock option
agreement attached hereto as EXHIBIT B.
3.4 OTHER BENEFITS. In addition to the Base Salary and the Bonus
Award, Executive shall also be entitled to the following:
(a) PARTICIPATION IN BENEFIT PLANS. Executive shall be entitled
to participate in and receive benefits under all present and future life,
accident, disability, medical, pension, and savings plan and all similar
benefits made available to senior executive officers of the Company. Executive
shall also be entitled to participate in all other welfare and benefit plans
maintained by the Company and/or its subsidiaries, as the case may be, for their
respective employees generally.
(b) VACATION. Executive shall be entitled to vacation and paid
holidays consistent with the Company's practices as adopted from time to time;
PROVIDED, HOWEVER, that such vacation shall not be less than 20 days each year.
(c) EXPENSES. The Company shall reimburse Executive for
reasonable travel, out of pocket business expenses incurred by Executive in the
performance of his duties hereunder, provided appropriate documentation
supporting such expenses is submitted in accordance with the Company's governing
policies.
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ARTICLE IV
COVENANTS
4.1 NON-INTERFERENCE. During the Term and a period of two years
thereafter, Executive agrees not to solicit or encourage any employee of the
Company who is employed in an executive, managerial, administrative or
professional capacity or who possesses Confidential Material to leave the
employment of the Company. Notwithstanding anything to the contrary contained in
this Agreement, upon a Voluntary Resignation Executive shall not be subject to
the restrictions contained in this Section 4.1.
4.2 NONDISCLOSURE OF CONFIDENTIAL MATERIAL. (a) In the performance of
his duties hereunder, Executive shall have access to confidential records and
information, including, but not limited to, information relating to (i) any
Intellectual Property or (ii) the Company's business practices, finances,
developments, customers, affairs, marketing or purchasing strategy or other
secret information (collectively, clauses (i) and (ii) of this Section 4.2(a)
are referred to as the "Confidential Material").
(b) All Confidential Material shall be disclosed to Executive in
confidence. Except in performing his duties hereunder, Executive shall not,
during the Term and at all times thereafter, disclose or use any Confidential
Material.
(c) All records, files, drawings, documents, equipment and other
tangible items containing Confidential Material shall be the Company's exclusive
property, and, upon termination of this Agreement, or whenever requested by the
Company, Executive shall promptly deliver to the Company all of the Confidential
Material (and copies thereof) that may be in Executive's possession or control.
The Company hereby represents and warrants that it shall give custody of such
Confidential Material to a escrow agent, with terms acceptable to both the
Company and the Executive, for a three-year period at an annual cost not to
exceed $500.
(d) The foregoing restrictions shall not apply if (i) such
Confidential Material has been publicly disclosed (not due to a breach by
Executive of his obligations hereunder or by breach of any other person of a
fiduciary or confidential obligation to the Company) or (ii) Executive is
required to disclose Confidential Material by or to any court of competent
jurisdiction or any governmental or quasi- governmental agency, authority or
instrumentality of competent jurisdiction; PROVIDED, HOWEVER, that Executive
shall, prior to any such disclosure, immediately notify the Company of such
requirement; PROVIDED, FURTHER, that the Company shall have the right, at its
expense, to object to such disclosures and to seek confidential treatment of any
Confidential Material to be so disclosed on such terms as it shall determine.
4.3 NON-COMPETITION. (a) The Executive shall not, during the Term,
Control any Person which is engaged, directly or indirectly, or Participate in
any business that is competitive with the Company's business of developing,
operating or expanding a facilities-based telecommunications voice or voice
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band data network within any country in any European Union member state,
Switzerland or any country (excluding the Americas) in which the Company
currently has a switch or point of presence for either origination or
termination of voice or voice band data transmissions or in which the Company is
so engaged in business or proposes to be so engaged in business in accordance
with its strategic business plan current at the time of the Termination
(including the solicitation of any customer of the Company on behalf of any
Competitor or any other business, directly, indirectly on behalf of himself or
any other Person) (collectively, "Competitive Activities"); PROVIDED, HOWEVER,
that nothing in this Agreement shall preclude Executive from owning less than 5
percent of any class of publicly traded equity of any Person engaged in any
Competitive Activity. Notwithstanding the immediately preceding sentence, if the
Company has ceased to so provide such services within any such country at the
time of Executive's Termination (or any time thereafter), the covenant set forth
in the immediately preceding sentence shall no longer be applicable to such any
such business in such country.
(b) Upon Termination for Disability or Cause or without Good
Reason (other than a Voluntary Resignation) the Executive shall not, for
himself or any third party, directly or indirectly, for a period of one year
following the date of such Termination engage in Competitive Activities.
Notwithstanding anything to the contrary contained in this Agreement, upon a
Voluntary Resignation Executive shall not be subject to the restrictions
contained in this Section 4.3.
(c) Upon Termination either without Cause or for Good Reason the
Executive shall not, for himself or any third party, directly or indirectly,
engage in Competitive Activities for a period equal to the greater of (i) the
Severance Period and (ii) one year following the date of Termination.
4.4 EXECUTIVE INVENTIONS AND IDEAS.
(a) Executive hereby agrees to assign to the Company, without
further consideration, his entire right, title and interest (within the United
States and all foreign jurisdictions), to any Intellectual Property created,
conceived, developed or reduced to practice by Executive (alone or with others),
free and clear of any lien or encumbrance. If any Intellectual Property shall be
deemed patentable or otherwise registrable, Executive shall assist the Company
(at its expense) in obtaining letters patent or other applicable registration
therein and shall execute all documents and do all things (including testifying
at the Company's expense) necessary or appropriate to obtain letters patent or
other applicable registration therein and to vest in the Company, or any
affiliate specified by the Board.
(b) Should Company be unable to secure Executive's signature on
any document necessary to apply for, prosecute, obtain or enforce any patent,
copyright or other right or protection relating to any Intellectual Property,
whether due to Executive's Disability or other cause, Executive hereby
irrevocably designates and appoints the Company and each of its duly authorized
officers and agents as Executive's agent and attorney-in-fact to act for and on
Executive's behalf and stead and to execute and file any such document and to do
all other lawfully permitted acts to further the prosecution, issuance and other
enforcement of patents, copyrights or other rights or protections with the same
effect as if executed and delivered by Executive.
4.5 ENFORCEMENT.
(a) Executive acknowledges that violation of any covenant or
agreement set forth in this Article IV would cause the Company irreparable
damage for which the Company cannot be reasonably compensated in damages in an
action at law, and, therefore, upon any
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breach by Executive of this Article IV, the Company shall be entitled to make
application to a court of competent jurisdiction for equitable relief by way of
injunction or otherwise (without being required to post a bond). This provision
shall not, however, be construed as a waiver of any of the rights which the
Company may have for damages, and all of the Company's rights and remedies shall
be unrestricted.
(b) If any provision of this Agreement, or application thereof to
any person, place or circumstance, shall be held by a court of competent
jurisdiction or be found in an arbitration proceeding to be invalid,
unenforceable or void, the remainder of this Agreement and such provisions as
applied to any other person, place and circumstance shall remain in full force
and effect. It is the intention of the parties hereto that the covenants
contained herein shall be enforced to the maximum extent (but no greater extent)
in time, area, and degree of participation as is permitted by the law of the
jurisdiction whose law is found to be applicable to the acts allegedly in breach
of this agreement, and the parties hereby agree that the court making any such
determination shall have the power to so reform the Agreement.
(c) The Executive understands that the provisions of this Article
IV may limit his ability to earn a livelihood in a business similar to the
business of the Company but nevertheless agrees and hereby acknowledges that (i)
such provisions do not impose a greater restraint than is necessary to protect
the goodwill or other business interests of the Company; (ii) such provisions
contain reasonable limitations as to time and the scope of activity to be
restrained; and (iii) the consideration provided under this Agreement,
including, without limitation, any amounts or benefits provided under Article V
hereof, is sufficient to compensate Executive for the restrictions contained in
this Article IV. In consideration of the foregoing and in light of Executive's
education, skills and abilities, Executive agrees that he will not assert, and
it should not be considered, that any provisions of this Article IV prevented
him from earning a living or otherwise are void, voidable or unenforceable or
should be voided or held unenforceable.
(d) Each of the covenants of this Article IV is given by
Executive as part of the consideration for this Agreement and as an inducement
to the Company to enter into this Agreement and accept the obligations
hereunder.
ARTICLE V
TERMINATION
5.1 TERMINATION OF AGREEMENT. Except for those provisions of this
Agreement that survive Termination, this Agreement shall terminate upon any
Termination.
5.2 PROCEDURES APPLICABLE TO TERMINATION.
(a) TERMINATION FOR CAUSE. The Executive may be terminated for
Cause, upon at least 30 days' prior written notice from the Board to Executive
for termination for Cause provided that Executive, with his counsel, shall have
had the opportunity during such period to be heard at a meeting of the Board
concerning such determination.
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(b) RESIGNATION FOR GOOD REASON. The Executive may terminate his
employment for Good Reason or by a Voluntary Resignation, upon at least 30 days'
prior written notice from Executive to the Board of his intent to resign for
Good Reason provided that Executive, with his counsel, shall have met with the
Board, if requested by the Board, during such period with respect to his intent
to resign.
(c) TERMINATION WITHOUT CAUSE OR FOR DISABILITY. The Executive
may be terminated without Cause or for Disability, upon at least 30 days' prior
written notice from the Board to Executive, by a vote of the Board, provided
that Executive, with his counsel, shall have had the opportunity during such
period to be heard at a meeting of the Board with respect to such determination.
(d) NO EFFECT ON RIGHTS. The Executive's right or obligation to
be heard in connection with a Termination shall not otherwise effect the rights
and obligations of the Executive and the Company hereunder.
5.3 OBLIGATIONS OF THE COMPANY UPON TERMINATION.
(a) ACCRUED OBLIGATIONS AND OTHER BENEFITS. Upon any Termination,
the Company shall pay to Executive, or, upon Executive's Disability, to his
heirs, estate or legal representatives, as the case may be, the following:
(i) all Accrued Obligations in a lump sum within 10 days
after the date of Termination; and
(ii) all benefits accrued by Executive as of the date of
Termination under all qualified and nonqualified retirement, pension, profit
sharing and similar plans of the Company to such extent, in such manner and at
such time as are provided under the terms of such plans and arrangements.
(b) TERMINATION WITHOUT CAUSE OR RESIGNATION FOR GOOD REASON. If
the Board terminates Executive's employment without Cause (excluding Termination
because of Disability), or if Executive resigns for Good Reason, in addition to
the amounts payable under Section 5.3(a) hereof:
(i) The Company shall pay Executive (A) one-half (1/2) of the
Severance Amount in a lump sum within 10 days after the date of Termination and
(b) one-half (1/2) of the Severance Amount over the unexpired portion of the
Term in accordance with the Company's regular payroll practices then in
existence; and
(ii) The Company shall continue all benefits coverage of
Executive and any dependents then provided under its benefit plans or policies
for the unexpired portion of the Term.
(c) TERMINATION FOR CAUSE OR RESIGNATION WITHOUT GOOD REASON. If
the Board terminates Executive's employment for Cause, or if Executive resigns
without Good Reason (including a Voluntary Resignation), Executive shall only be
entitled to the amounts payable under Section 5.3(a) hereof:
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(d) TERMINATION FOR DISABILITY. Upon Termination of Executive
because of a Disability, in addition to the amounts payable under Section 5.3(a)
hereof, the Company shall pay the aggregate Disability Payment for three years
in accordance with the Company's regular payroll practices then in existence.
(e) EXCLUSIVITY. Any amount payable to Executive pursuant to this
Article V shall be Executive's sole remedy upon a Termination, and Executive
waives any and all rights to pursue any other remedy at law or in equity;
PROVIDED, HOWEVER, that Executive does not hereby waive any right provided under
any federal, state or local law or regulation relating to employment
discrimination.
ARTICLE VI
MISCELLANEOUS
6.1 EXECUTIVE ACKNOWLEDGMENT. The Executive acknowledges that he has
consulted with or has had the opportunity to consult with independent counsel of
his own choice concerning this Agreement and has been advised to do so by the
Company, and that he has read and understands the Agreement, is fully aware of
its legal effect, and has entered into it freely based on his own judgment.
6.2 BINDING EFFECT. This Agreement shall be binding upon and inure to
the benefit of Executive's heirs and representatives and the Company's
successors and assigns. The Company shall require any successor (whether direct
or indirect, by purchase, merger, reorganization, consolidation, acquisition of
assets or stock, liquidation, or otherwise), by agreement in form and substance
reasonably satisfactory to Executive, to assume performance of this Agreement in
the same manner that the Company would have been required to perform this
Agreement if no such succession had taken place. Regardless of whether such
agreement is executed, this Agreement shall be binding upon any successor of the
Company in accordance with the operation of law.
6.3 NOTICES. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
delivered by hand or mailed within the continental United States by first class
certified mail, return receipt requested, postage prepaid, addressed as follows:
(a) if to the Board or the Company, to:
Viatel, Inc.
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx XX 00000
Attention: General Counsel
(b) if to Executive, to:
000 Xxxx 00xx Xxxxxx, Xxxxxxxxx 00X
Xxx Xxxx, Xxx Xxxx
with a copy to:
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Xxxxx X. Xxxxxxxxx, Esq.
Xxxxxxx & Xxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Any such address may be changed by written notice sent to the other party at the
last recorded address of that party.
6.4 TAX WITHHOLDING. The Company shall provide for the withholding of
any taxes required to be withheld under federal, state and local law (other than
the employer's portion of such taxes) with respect to any payment in cash and/or
other property made by or on behalf of the Company to or for the benefit of
Executive under this Agreement or otherwise. The Company may, at its option: (i)
withhold such taxes from any cash payments owing from the Company to Executive,
(ii) require Executive to pay to the Company in cash such amount as may be
required to satisfy such withholding obligations and/or (iii) make other
satisfactory arrangements with Executive to satisfy such withholding
obligations.
6.5 NO ASSIGNMENT; NO THIRD PARTY BENEFICIARIES. Except as otherwise
expressly provided in Section 6.2 hereof, this Agreement is not assignable by
any party, and no payment to be made hereunder shall be subject to alienation,
sale, transfer, assignment, pledge, encumbrance or other charge. Except for the
Company and its existing and future subsidiaries, no Person shall be, or deemed
to be, a third party beneficiary of this Agreement.
6.6 EXECUTION IN COUNTERPARTS. This Agreement may be executed by the
parties hereto in one or more counterparts, each of which shall be deemed to be
an original, but all such counterparts shall constitute one and the same
instrument, and all signatures need not appear on any one counterpart.
6.7 JURISDICTION AND GOVERNING LAW. Jurisdiction over disputes with
regard to this Agreement shall be exclusively in the courts of the State of New
York, and this Agreement shall be construed and interpreted in accordance with
and governed by the laws of the State of New York as applied to contracts
capable of being wholly performed in such State.
6.8 ENTIRE AGREEMENT; AMENDMENT. Except as otherwise provided in
Section 3.3 hereof, this Agreement and the Exhibits attached hereto embody the
entire understanding of the parties hereto, and supersede all prior agreements
regarding the subject matter hereof. No change, alteration or modification
hereof may be made except in a writing, signed by both of the parties hereto.
6.9 HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not be construed as part of this Agreement or to limit
or otherwise affect the meaning hereof.
6.10 SURVIVAL. Notwithstanding anything to the contrary herein,
Section Article IV, Section 5.3 and Article VI of this Agreement shall survive
termination of this Agreement or Termination for any reason whatsoever.
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IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the day first written above.
VIATEL, INC.
By: /s/ Xxxxxx Xxxxxxxxx
--------------------
EXECUTIVE
/s/ Xxxxxxx X. Xxxxxxx
----------------------
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BONUS AGREEMENT
THIS BONUS AGREEMENT ("AGREEMENT") is entered into on September 23, 1996
by and between VIATEL, INC., a Delaware corporation with an office at 000 Xxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (the "Company"), and XXXXXXX X. XXXXXXX, an
individual currently residing at 000 Xxxx 00xx Xxxxxx, Xxxxxxxxx 00X, Xxx Xxxx,
Xxx Xxxx (the "Executive").
W I T N E S S E T H:
WHEREAS, the Company is contemplating a Public Offering (as
defined below) of certain of its equity securities;
WHEREAS, the Board of Directors (the "Board") desires to provide
incentives to Executive to remain in the Company's employ for a three-year
period after the Public Offering; and
WHEREAS, the Board and the Executive desire that Company employ the
Executive as the President and Chief Operating Officer.
NOW THEREFORE, each of the Company and Executive, intending to be
legally bound, hereby covenants and agrees as follows:
1. DEFINITIONS. All capitalized terms used in this Agreement that
are not defined herein shall have the definitions ascribed thereto in the
Executive's Employment Agreement, dated September 23, 1996, between the
Executive and the Company.
2. PURPOSE. The Company has entered into this Agreement to provide
appropriate incentives to the Executive to achieve and exceed specified
performance objectives to enhance the Company's value for the benefit of
its stockholders.
3. PERFORMANCE YEAR. Each calendar year beginning with January 1, 1997
shall be a "Performance Year." During the Term, if the Executive is employed by
the Company for a part of a Performance Year, he shall receive a Bonus Award (as
hereinafter defined) equal to the Bonus Award he would have received had he been
employed for the entire Performance Year, MULTIPLIED BY a fraction, of which (i)
the numerator is the number of days he was employed by the Company during such
Performance Year and (ii) the denominator is 365; PROVIDED, HOWEVER, that if
Executive's employment is terminated before the end of the Performance Year
either (x) by the Board for Cause or (y) by the Executive without Good Reason,
no Bonus Award shall be made for the related Performance Year (or part thereof).
4. REVENUE. Revenue shall mean, with respect to the Company on a
consolidated basis for any Performance Year, the Company's consolidated Net
Revenue for such Performance Year as determined in accordance with generally
accepted accounting principles consistently applied, including revenue earned
during such Performance Year and less credits and discounts issued and accrued
during such Performance Year.
5. EBITDA. EBITDA shall mean, with respect to the Company on a consolidated
basis for any Performance Year, the Company's consolidated pre-tax income for
such Performance Year as determined in accordance with generally accepted
accounting principles consistently applied, PLUS, to the
14
extent deducted in computing such consolidated pre-tax income, without
duplication, (A) the sum of (a) interest expense, (b) depreciation expense and
amortization expense, (c) extraordinary losses, (d) realized and unrealized
foreign currency losses, performance losses relating to any foreign currency
transactions or hedging activities, (e) all bonuses paid to employees in such
year, whether for any prior or current year, MINUS, to the extent included in
computing such consolidated pre-tax income, without duplication, (B) the sum of
(i) interest income, (ii) extraordinary gains and (iii) non-cash exchange,
translation or performance gains relating to any foreign currency transactions
or currency fluctuations.
6. BONUS AWARDS. (a) For each Performance Year set forth below, the
Executive shall receive a cash bonus (the "Bonus Award") equal to the
Executive's Base Salary multiplied by the Bonus Multiple for such Performance
Year as specified below. For purposes of this Agreement, the term "Bonus
Multiple" shall mean the multiple, if any, selected from the charts below by
computing (i) actual REVENUE for the Performance Year as a percentage of
Projected REVENUE for such Year, assuming that the Projected REVENUE is
$84,000,000, $131,000,000 and $212,000,000 for 1997, 1998 and 1999,
respectively, and (ii) the variance in actual EBITA as compared to Projected
EBITDA, assuming that the Projected EBITDA, having been adjusted so that the
total projected bonus payment for such year is zero, is $(19,000,000),
$(19,000,000) and $(7,200,000) for 1997, 1998 and 1999, respectively.
1997
Variance in Actual EBITDA from Projected EBITDA
-10% 0% 5% 10% 15% 20% 25%
or or or or or or or
better better better better better better better
Actual 100%
or 0.6 1.0 1.1 1.2 1.2 1.2 1.2
above
Revenue 110%
or 0.7 1.1 1.2 1.2 1.2 1.2 1.2
above
as a 120%
or 0.8 1.2 1.2 1.2 1.2 1.2 1.2
above
Percent 130%
of or 0.9 1.2 1.2 1.2 1.2 1.2 1.2
above
Projected 140%
or 0.9 1.2 1.2 1.2 1.2 1.2 1.2
above
Revenue
1998
15
Variance in Actual EBITDA from Projected EBITDA
-10% 0% 5% 10% 15% 20% 25%
or or or or or or or
better better better better better better better
Actual 100%
or 0.8 1.0 1.1 1.2 1.3 1.4 1.5
above
Revenue 110%
or 0.9 1.1 1.2 1.3 1.4 1.5 1.5
above
as a 120%
or 1.0 1.2 1.3 1.4 1.5 1.5 1.5
above
Percent 130%
of or 1.1 1.3 1.4 1.5 1.5 1.5 1.5
above
Projected 140%
or 1.2 1.4 1.5 1.5 1.5 1.5 1.5
above
Revenue
1999
Variance in Actual EBITDA from Projected EBITDA
-10% 0% 5% 10% 15% 20% 25%
or or or or or or or
better better better better better better better
Actual 100%
or 0.8 1.0 1.1 1.2 1.3 1.4 1.5
above
Revenue 110%
or 1.0 1.1 1.2 1.3 1.4 1.5 1.6
above
as a 120%
or 1.1 1.2 1.3 1.4 1.5 1.6 1.7
above
Percent 130%
of or 1.2 1.3 1.4 1.5 1.6 1.7 1.8
above
Projected 140%
or 1.3 1.4 1.5 1.6 1.7 1.8 1.9
above
Revenue
16
(b) The final determination of EBITDA with respect to any Performance
Year shall be subject to the affirmative approval (the "Approval") of a majority
of Compensation Committee members then in office. If the Approval is not
obtained within 15 days after completion of the Company's audited financial
statements for the related Performance Year, the Compensation Committee shall
appoint a nationally recognized accounting firm (which may be the Company's
auditors) to determine EBITDA in respect of such Performance Year.
(c) If the Company issues additional securities, whether debt or
equity, for the purpose of raising funds after the initial Public Offering, then
the Compensation Committee (excluding the Executive if the Executive is a member
of the Compensation Committee) shall be empowered to amend this Agreement in any
manner it deems appropriate taking into account all of the facts and
circumstances, including (i) the Company's desire to provide long-term incentive
to the Executive and (ii) the reasons such additional capital was raised.
7. TIME OF PAYMENT. Each Award shall be paid no later than the fourteenth
(14th) day (assuming Approval is obtained or, assuming Approval is not obtained,
as to the undisputed amount), or the thirtieth (30th) day (assuming Approval is
not obtained, as to the disputed amount), after completion of the Company's
audited financial statements for such Performance Year.
8. NO ASSIGNMENTS. A Executive may not assign an Bonus Award without the
prior written consent of the Board. Any attempted assignment without such
consent shall be void. For purposes of this Agreement, any designation of, or
payment to, an administrator, representative or beneficiary in the event of the
Executive's Disability shall not be deemed an assignment.
9. UNFUNDED INCENTIVE COMPENSATION ARRANGEMENT. The Bonus Agreement is
intended to constitute an unfunded incentive compensation arrangement covering
the Executive. Nothing contained hereunder shall create or be construed to
create a trust of any kind. Any Bonus Award shall be paid from the general funds
of the Company, and no special or separate fund shall be established and no
segregation of assets shall be made to assure payment of such awards.
10. NO RIGHT TO SPECIFIC ASSETS. There shall not vest in any
participant any right, title, or interest in and to any specific assets of
the Company.
11. BINDING EFFECT. This Agreement shall be binding upon and inure
to the benefit of Executive's heirs and representatives and the Company's
successors and assigns.
12. NOTICES. All notices hereunder shall be in writing and shall be
sent to the address (as amended from time to time) and in the manner
specified in the Employment Agreement.
13. TAX WITHHOLDING. The Company shall provide for the withholding of any
taxes required to be withheld under federal, state and local law (other than the
employer's portion of such taxes) with respect to any payment in cash and/or
other property made by or on behalf of the Company
17
to or for the benefit of Executive under this Agreement or otherwise.
14. EXECUTION IN COUNTERPARTS. This Agreement may be executed by the
parties hereto in one or more counterparts, each of which shall be deemed
to be an original, but all such counterparts shall constitute one and the
same instrument, and all signatures need not appear on any one counterpart.
15. JURISDICTION AND GOVERNING LAW. Jurisdiction over disputes with
regard to this Agreement shall be exclusively in the courts of the State of
New York, and this Agreement shall be construed and interpreted in
accordance with and governed by the laws of the State of New York as applied to
contracts capable of being wholly performed in such State.
16. ENTIRE AGREEMENT; AMENDMENT. This Agreement embodies the entire
understanding of the parties hereto, and supersedes all prior agreements
regarding the subject matter hereof. No change, alteration or modification
hereof may be made except in a writing, signed by both of the parties
hereto.
17. HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not be construed as part of this Agreement or to
limit or otherwise affect the meaning hereof.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day first written above.
VIATEL, INC.
By:/s/ Xxxxxx Xxxxxxxxx
--------------------------
Xxxxxx Xxxxxxxxx, Chairman
EXECUTIVE
/s/ Xxxxxxx X. Xxxxxxx
--------------------------
18
VIATEL, INC.
THIS INCENTIVE STOCK OPTION AGREEMENT (the "Agreement") is made as of
September 23, 1996 between Viatel, Inc. (the "Company") and Xxxxxxx X. Xxxxxxx
("Optionee").
WITNESSETH:
WHEREAS, the Company has adopted the Viatel, Inc. 1993 Flexible Stock Incentive
Plan (the "Plan"), which Plan is incorporated in this Agreement by reference and
made a part hereof; and
WHEREAS, the Board of Directors of the Company (the "Board") believes it to be
in the Company's best interest to grant the options provided for in this
Agreement to Optionee as an inducement to remain in the Company's service.
NOW THEREFORE, in consideration of the mutual covenants hereinafter set forth,
the parties hereto agree as follows:
1. OPTION GRANT. The Company hereby grants to Optionee the option to
purchase from the Company on the terms and conditions hereinafter set forth, all
or any part of an aggregate of 120,000 shares of the common stock, $.01 par
value per share, of the Company (the "Stock"), without adjustment for the 3-2
reverse stock split contemplated in the Company's registration statement
numbered 333-09699 (the "Registration Statement"). Except as set forth in
paragraph 4(b) hereof, this option is intended to satisfy the requirements of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code").
2. OPTION PRICE. The purchase price for each share of Stock subject to this
option shall be the "price to the public" for each share of Stock as set forth
on the cover page of each prospectus contained in Registration Statement when
declared effective by the Securities and Exchange Commission. The term "Option
Price" as used in this Agreement refers to the purchase price of the Stock
subject to this option.
3. OPTION PERIOD. This option shall be exercisable only during the Option
Period, the exercisability of this option shall be subject to the limitations
on the Option Period and vesting as set forth in paragraphs 4 and 5 hereof,
respectively. The Option Period shall commence on the date that the
Registration Statement is declared effective by the Securities and Exchange
Commission (the "Grant Date") and, except as provided in paragraph 4 hereof,
shall terminate five (5) years from such Date (the "Termination Date").
4. LIMITS ON OPTION PERIOD. (a) The Option Period shall end on the date
that Optionee's employment with the Company (or any of its Affiliates) is
terminated either (i) for Cause or (ii) because the Optionee resigns without
Good Reason (including a Voluntary Resignation). For purposes of this Agreement,
"Cause," "Good Reason" and "Voluntary Resignation" have such meanings ascribed
to them as provided in the Employment Agreement, dated as of September 23, 1996
(the "Employment Agreement").
(b) Optionee acknowledges that the extension of the time periods
provided for herein may cause this option to fail to qualify for incentive stock
option treatment under Section 422 of the Code.
5. VESTING OF RIGHT TO EXERCISE OPTIONS.
(a) Subject to other limitations contained in this Agreement, on each
anniversary of the effective date of the Registration Statement until and
19
including the fourth such anniversary date, the shares subject to this option
shall vest, and Optionee shall have the right
to exercise this option, for 30,000 shares; provided, however, that the shares
subject to this option also shall (i) vest for the balance of the original term
of the Employment Agreement upon any resignation for Good Reason or termination
without Cause and (ii) immediately vest upon any Disability (as defined in the
Employment Agreement). Notwithstanding anything to the contrary contained
herein, the option shall cease to vest if employment is terminated (x) for
Cause or (y) because the Optionee resigns without Good Reason (including a
Voluntary Resignation).
20
(b) Any portion of this option that is not exercised shall accumulate
and may be exercised at any time during the Option Period prior to the
Termination Date. No partial exercise of this option may be for less than five
(5) percent of the total number of shares then available under this option. In
no event shall the Company be required to issue fractional shares.
(c) If the aggregate fair market value of the stock concerning which
options are exercisable for the first time in any calendar year (under the Plan
and any other incentive stock option plans of the Company or its Affiliates)
exceeds $100,000 (determined as of the time such options are granted), then
options shall be treated as incentive stock options to the extent that the
underlying Stock has a fair market value of $100,000 (determined as of the date
the options were granted) and options shall be treated as non-qualified stock
options to the extent that the underlying Stock has a fair market value in
excess of $100,000 (determined as of the date the options were granted).
6. METHOD OF EXERCISE. Optionee may exercise this option for any part
the shares of Stock then subject to such exercise as follows:
(a) By giving the Company written notice of such exercise, specifying
the number of such shares as to which this option is exercised. Such notice
shall be accompanied by an amount equal to the Option Price of such shares, in
the form of any one or combination of the following: (i) cash; a certified
check, bank draft, postal or express money order payable to the order of the
Company in lawful money of the United States; (ii) shares of Stock valued at
fair market value on the date of such exercise; (iii) notes or (iv) delivery on
a form prescribed by the Committee (as such term is defined in the Plan) of an
irrevocable direction to a securities broker approved by the Committee to sell
shares and deliver all or a portion of the proceeds to the Company in payment
for the Stock. Any note used to exercise this option shall be a full recourse,
interest-bearing obligation containing such terms as the Committee shall
determine. If a note is used, Optionee agrees to execute such further documents
as the Company may deem necessary or appropriate in connection with issuing the
note, perfecting a security interest in the Stock purchased with the note, and
any related term or conditions that the Company may propose. Such further
documents may include, not by way of limitation, a security agreement, an escrow
agreement, a voting trust agreement and an assignment separate from certificate.
(b) If required by the Company, Optionee shall give the Company
satisfactory assurance in writing, signed by Optionee or his or her legal
representative, as the case may be, that such shares are being purchased for
investment and not with a view to the distribution thereof, provided that such
assurance shall be deemed inapplicable to (1) any sale of such shares by such
Optionee made in accordance with the terms of a registration statement covering
such sale, which may hereafter be filed and become effective under the
Securities Act of 1933, as amended (the "Securities Act") and with respect to
which no stop order suspending the effectiveness thereof has been issued, and
(2) any other sale of such shares with respect to which in the opinion of
counsel for the Company, such assurance is not required to be given in order to
comply with the provisions of the Securities Act.
(c) As soon as practicable after receipt of the notice required in
paragraph 6(a) hereof and satisfaction of the conditions set forth in paragraphs
6(b) and 6(c) hereof, the Company shall, without transfer or issue tax and
without other incidental expense to Optionee, deliver to Optionee at the office
of the Company, at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, attention of the
21
Secretary, or such other place as may be mutually acceptable to the Company and
Optionee, a certificate or certificates for such shares of Stock; provided,
however, that the time of such delivery may be postponed by the Company for such
period, as may be required for it with reasonable diligence to comply with
applicable registration requirements under the Securities Act, the Securities
Exchange Act of 1934, as amended, any applicable listing requirements of any
22
national securities exchange, and requirements under any other law or regulation
applicable to the issuance or transfer of such shares.
7. CORPORATE TRANSACTIONS.
(a) If there should be any change in the Stock subject to this option,
through merger, consolidation, reorganization, recapitalization,
reincorporation, stock split, stock dividend or other change in the capital
structure of the Company, the Company shall make appropriate adjustments in
order to preserve, but not to increase, the benefits to Optionee, including
adjustments in the number of shares of such Stock subject to this option, kind
of shares and in the price per share. Any adjustment made pursuant to this
paragraph 7 hereof as a consequence of a change in the capital structure of the
Company shall not entitle Optionee to acquire a number of shares of such Stock
or shares of stock of any successor company greater than the number of shares
Optionee would receive if, prior to such change, Optionee had actually held a
number of shares of such Stock equal to the number of shares subject to this
option.
(b) For purposes of this paragraph 7 hereof, a "Corporate Transaction"
shall include any of the following transactions:
(i) a merger or consolidation in which the Company is not the
surviving entity, except (1) for a transaction the principal purpose
of which is to change the state of the Company's incorporation, or (2)
a transaction in which the Company's stockholders immediately prior to
such merger or consolidation hold (by virtue of securities received in
exchange for their shares in the Company) securities of the surviving
entity representing more than fifty percent (50%) of the total voting
power of such entity immediately after such transaction;
(ii) the sale, transfer or other disposition of all or
substantially all of the assets of the Company unless the Company's
stockholders immediately prior to such sale, transfer or other
disposition hold (by virtue of securities received in exchange for
their shares in the Company) securities of the purchaser or other
transferee representing more than fifty percent (50%) of the total
voting power of such entity immediately after such transaction;
(iii) any reverse merger in which the Company is the surviving
entity but in which the Company's stockholders immediately prior to
such merger do not hold (by virtue of their shares in the Company held
immediately prior to such transaction) securities of the Company
representing more than fifty percent (50%) of the total voting power
of the Company immediately after such transaction; or
(iv) a Change in Control, as defined in the
Employment Agreement.
(c) Upon any Corporate Transaction, this option shall become
exercisable in its entirety immediately before the specified effective date of
the Corporate Transaction; provided, however, that for any Corporate
Transaction specified in paragraphs 7(b) (i) (ii) or (iii), this option shall
so vest only if such option is not assumed by any successor corporation or its
parent company, pursuant to options providing substantially equal value and
having substantial equivalent provisions as the options granted pursuant to
this Agreement.
8. LIMITATIONS ON TRANSFER. This option shall, during Optionee's
lifetime, be exercisable only by Optionee, and neither this option nor any
right
23
hereunder shall be transferable by Optionee by operation of law or otherwise
other than by will or the laws of descent and distribution. Upon any attempt by
Optionee to alienate, assign, pledge, hypothecate, or otherwise dispose of this
option or of any right hereunder, except as provided for in this Agreement, or
in the event of the levy of any attachment, execution, or similar process upon
the rights or interest hereby conferred, the Company at its election may
24
terminate this option by notice to Optionee and this option shall thereupon
become null and void.
9. NO STOCKHOLDER RIGHTS. Neither Optionee nor any person entitled to
exercise Optionee's rights upon his death shall have any right of a stockholder
concerning the shares of the Stock subject to this option except to the extent
certificates for such shares shall have been issued upon the exercise hereunder.
10. NOTICE. Any notice required to be given hereunder shall be addressed to
the Company in care of its Secretary at the Office of the Company at 000 Xxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 any notice to be given to Optionee shall be
addressed to him or her at the address given by him or her beneath his or her
signature to this Agreement, or such other address as either party to this
Agreement may hereafter designate in writing to the other. Any such notice shall
be deemed to have been duly given when enclosed in a properly sealed envelope or
wrapper addressed as aforesaid, registered or certified and deposited (postage
or registration or certification fee prepaid) in a post office or branch post
office regularly maintained by the United States or, if Optionee is located
outside of the United States, an applicable foreign governmental body.
11. SUCCESSORS. This Agreement shall be binding upon and inure to the
benefit of any successor or successors of the Company. Where the context
permits, "Optionee" as used in this Agreement shall include Optionee's executor,
administrator or other legal representative or the person or persons to whom
Optionee's rights pass by will or the applicable laws of descent and
distribution.
12. EARLY DISPOSITIONS. Optionee agrees, as partial consideration for the
designation of this option as an incentive stock option under Section 422 of the
Code, to notify the Company in writing within thirty (30) days of any
disposition of any shares acquired by exercise of this option if such
disposition occurs within two (2) years from the Grant Date or within one (1)
year from the date Optionee purchased such shares by exercise of this option.
13. NEW YORK LAW. The interpretation, performance and enforcement of
this Agreement shall be governed by the laws of the State of New York as
applied to contracts capable of being wholly performed within such State.
IN WITNESS WHEREOF, the Company has caused these presents to be executed on its
behalf, and Optionee has hereunto set his or her hand as of the day and year
first above written.
September 23, 1996 By: /s/ Xxxxxx Xxxxxxxxx
--------------------------
Xxxxxx Xxxxxxxxx, Chairman
Accepted by: /s/ Xxxxxxx X. Xxxxxxx
----------------------
