EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as
of November 1, 1997 by and between VIATEL, INC., a Delaware corporation with an
office at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (the "Company"), and XXXXX
X. XXXX, an individual currently residing at 00 Xxxxx Xxxx, Xxxxxxxx, Xxx Xxxx,
00000 (the "Executive").
W I T N E S S E T H:
WHEREAS, the Board of Directors (the "Board") desires to provide
certain incentive to Executive to remain in the Company's employ; and
WHEREAS, the Board and the Executive desire that Company employ the
Executive as the Vice President, Chief Financial Officer and Treasurer.
NOW THEREFORE, each of the Company and 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) gross negligence in performing his
duties hereunder or dishonesty in the performance of his duties 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 the Company or its reputation; or (v) conviction of any
felony or a misdemeanor involving fraud, misrepresentation or dishonesty;
provided, however, that "Cause" shall be conclusively presumed not to exist
during the twelve month period commencing immediately after the date of any
Change of Control.
1.6 "Common Stock" shall mean the common stock, par value $.01 a
share, of the Company.
1.7 "Confidential Material" shall have the meaning set forth in
Section 4.2 hereof.
1.8 "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.
1.9 "Change of Control" is defined to mean such time as (i) a
"person" or "group" (within the meaning of Sections 13(d) and 14(d)(2) of the
Exchange Act), (A) 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.
1.10 "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.
1.11 "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
1.12 "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) after a Change of Control, any breach of this
Agreement or of the Bonus Agreement; PROVIDED, HOWEVER, that the Executive has
provided written notice to the Company of such breach and the Company has not
cured such breach (if capable of being cured) within 15 days of receipt of such
notice.
1.13 "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.
1.14 "Performance Year" shall mean each calendar year beginning on
January 1 and ending on December 31.
1.15 "Person" shall mean any individual or entity, whether a
governmental or other agency or political subdivision thereof or otherwise.
1.16 "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.
1.17 "Severance Period" shall mean the number of full calendar
months remaining in the Term on the date of any Termination.
1.18 "Severance Period Multiple" shall mean, the quotient obtained
by DIVIDING (i) the number of full calendar months otherwise remaining in the
Term on the date of Termination 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.
1.19 "Term" shall have the meaning set forth in Section 2.2
hereof.
1.20 "Termination" shall mean termination of Executive's employment
with the Company for any reason.
1.21 "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 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 Vice
President, Chief Financial Officer and Treasurer, 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. The term (the "Term") of this Agreement shall commence on
the date hereof and shall terminate one (1) year from such date, unless
terminated earlier for Cause; PROVIDED, HOWEVER, that the Term shall
automatically renew for a one year period if a termination notice is not
provided at least four (4) months before the termination date of the Agreement.
Notwithstanding the foregoing, Executive's employment can not be terminated
durring the period commencing 6 months before and ending twelve-month period
after the date of any Change of Control.
2.3 DUTIES. The Executive 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.
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 $140,000, in accordance with the Company's regular payroll
practices. The Base Salary shall be increased in the sole and absolute
discretion of the Board.
3.2 BONUSES. Executive shall be eligible to receive an annual
Bonus Award. 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.
3.4 OTHER BENEFITS. In addition to the Base Salary and
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 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.
3.5 VESTING ON A CHANGE IN CONTROL. Notwithstanding anything to the
contrary contained in any other agreement, upon the occurrence of any Change in
Control, any outstanding option, restricted stock, stock appreciation right or
similar right, entitlement or payment shall become fully vested and shall no
longer be subject to any conditions for ownership.
ARTICLE IV
COVENANTS
4.1 NON-LNTERFERENCE. During the Term and a period of one year
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.
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.
(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 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
irrevocable 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.
4.4 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 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 expire 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.
(b) RESIGNATION FOR GOOD REASON. The Executive may resign for
Good Reason, 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, Executive shall only be entitled to the amounts
payable under Section 5.3(a) hereof:
(d) 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:
at 00 Xxxxx Xxxx
Xxxxxxxx, 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 3.5, Article IV, Section 5.3 and Article VI of this Agreement shall
survive termination of this Agreement for any reason whatsoever.
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the day first written above.
VIATEL, INC.
By: /s/ XXXXXXX X. XXXXXXX
-------------------------------
EXECUTIVE
/s/ XXXXX X. XXXX
-----------------------------------
BONUS AGREEMENT
THIS BONUS AGREEMENT ("Agreement") is entered into on November
1, 1997 by and between VIATEL, INC., a Delaware corporation with an office at
000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (the "Company"), and XXXXX X. XXXX,
an individual currently residing at with an address at 00 Xxxxx Xxxx Xxxxxxxx,
Xxx Xxxx 00000 (the "Executive").
W I T N E S S E T H:
WHEREAS, the Compensation Committee of the Board of Directors
(the "Board") desires to provide incentives to Executive to remain in the
Company's employ; and
WHEREAS, the Board and the Executive desire that Company
employ the Executive as the Vice President, Finance and Chief Financial 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 August 1997, 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 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 all 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 EBITDA as compared to Projected EBITDA,
having been adjusted so that the total projected bonus payments for such year is
zero, is $(23,200,000), $(22,600,000) and $(8,600,000) for 1997, 1998 and 1999,
respectively.
--------------------------------------------------------------------------
1997
VARIANCE IN EBITDA
-10% 0% 5% 10% 15% 20% 25%
OR OR OR OR BETTER OR BETTER OR BETTER OR BETTER
BETTER BETTER BETTER
---------------------------------------------------------------------------------------------------
ACTUAL 100%
OR ABOVE 0.5 0.6 0.7 0.8 0.9 1.0 1.0
---------------------------------------------------------------------------
REVENUE 110%
OR ABOVE 0.6 0.7 0.8 0.9 1.0 1.0 1.0
---------------------------------------------------------------------------
AS A 120%
OR ABOVE 0.7 0.9 0.9 1.0 1.0 1.0 1.0
---------------------------------------------------------------------------
PERCENT OF 130%
OR ABOVE 0.9 0.9 1.0 1.0 1.0 1.0 1.0
---------------------------------------------------------------------------
PROJECTED 140%
OR ABOVE 0.9 1.0 1.0 1.0 1.0 1.0 1.0
REVENUE
---------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------
1998
VARIANCE IN EBITDA
-10% 0% 5% 10% 15% 20% 25%
OR OR OR OR BETTER OR BETTER OR BETTER OR BETTER
BETTER BETTER BETTER
---------------------------------------------------------------------------------------------------
ACTUAL 100%
OR ABOVE 0.6 0.8 0.9 1.0 1.0 1.1 1.1
---------------------------------------------------------------------------
REVENUE 110%
OR ABOVE 0.8 0.9 1.0 1.0 1.1 1.1 1.1
---------------------------------------------------------------------------
AS A 120%
OR ABOVE 0.9 1.0 1.0 1.1 1.1 1.1 1.1
---------------------------------------------------------------------------
PERCENT OF 130%
OR ABOVE 1.0 1.0 1.1 1.1 1.1 1.1 1.1
---------------------------------------------------------------------------
PROJECTED 140%
OR ABOVE 1.0 1.1 1.1 1.1 1.1 1.1 1.1
REVENUE
---------------------------------------------------------------------------
----------------------------------------------------------------------------
1999
VARIANCE IN EBITDA
-10% 0% 5% 10% 15% 20% 25%
OR OR OR OR BETTER OR BETTER OR BETTER OR BETTER
BETTER BETTER BETTER
---------------------------------------------------------------------------------------------------
ACTUAL 100%
OR ABOVE 0.7 0.9 1.0 1.1 1.1 1.2 1.2
-----------------------------------------------------------------------------
REVENUE 110%
OR ABOVE 0.9 1.0 1.1 1.1 1.2 1.2 1.2
-----------------------------------------------------------------------------
AS A 120%
OR ABOVE 1.0 1.1 1.1 1.2 1.2 1.2 1.3
-----------------------------------------------------------------------------
PERCENT OF 130%
OR ABOVE 1.1 1.1 1.2 1.2 1.2 1.3 1.3
-----------------------------------------------------------------------------
PROJECTED 140%
OR ABOVE 1.1 1.2 1.2 1.2 1.3 1.3 1.3
REVENUE
---------------------------------------------------------------------------------------------------
(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 a 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 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/ XXXXXXX X. XXXXXXX
-------------------------------------
Xxxxxxx X. Xxxxxxx, President
EXECUTIVE
/s/ XXXXX X. XXXX
----------------------------------------
