EXHIBIT 10.45
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as of
June 1, 2000 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.
XXXXXXXX, an individual currently residing at 000 Xxxxxxxxxx Xxxx, Xxxxxxxxx, XX
00000 (the "Executive").
W I T N E S S E T H:
WHEREAS, the Company desires to employ Executive and Executive desires
to be employed by the Company.
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 Award" shall mean a cash bonus equal to fifty percent (50%)
of the Executive's Base Salary multiplied by the Bonus Multiple for the
applicable Performance Year.
1.4 "Bonus Multiple" shall mean the amount determined by reference to
Section 3.2 hereof.
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 of Directors of
the Company (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 Executive's duties hereunder or habitual neglect in the
performance of Executive's duties; 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.
1.6 "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), 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 "Code" shall mean the Internal Revenue Code of 1986, as amended.
1.8 "Common Stock" shall mean the common stock, par value $.01 a share,
of the Company.
1.9 "Competitive Activities" shall have the meaning set forth in
Section 4.3 hereof.
1.10 "Confidential Material" shall have the meaning set forth in
Section 4.2 hereof.
1.11 "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.
1.12 "Date of Termination" shall mean (i) if employment is terminated
for Disability, thirty (30) days after Notice of Termination is given (provided
that Executive shall not have returned to the full-time performance of
Executive's duties during such thirty (30) day period), and (ii) in all other
cases, the date specified in the Notice of Termination (which shall not be less
than thirty (30) nor more than sixty (60) days, respectively, from the date such
Notice of Termination is given).
1.13 "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 inability has existed for at least six consecutive months. Any question as
to the existence of a Disability shall be determined by a qualified physician
not employed by the Company and selected by Executive (or a member of
Executive's immediate family) and approved by the Company. The written
determination of such physician shall be conclusive for all purposes relating to
this Agreement.
1.14 "Disability Payment" shall mean, for purposes of Section 5.3(d)
hereof, an amount equal to the greater of (i) 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) and (ii)
the amount payable to Executive under any disability plan as adopted by the
Company from time to time (the "Disability Plan").
1.15 "EBITDA" shall mean, with respect to the Company on a consolidated
basis for any Performance Year, the Company's consolidated earnings before
interest, taxes, preferred stock dividends, depreciation and amortization, as
such is reported in the Company's financial statements.
1.16 "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
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1.17 "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), (iv) material diminution in Executive's authority,
function or position with the Company which continues after 15 days of the date
that written notice thereof is given to the Board by Executive, or (v)
relocation of Executive's office by more than fifteen miles from the Company's
midtown Manhattan office.
1.18 "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 related
improvement, right or claim.
1.19 "Notice of Termination" shall mean a written notice as provided
herein.
1.20 "Participation," including with correlative meanings, the term
"participate," shall mean the direct or indirect participation in any
Competitive Activity, whether as an operator, manager, consultant, and whether
individually or jointly.
1.21 "Payment" shall mean any payment or distribution (or acceleration
of benefits) by the Company to or for Executive's benefit (whether paid or
payable or distributed or distributable (or accelerated) pursuant to the terms
of this Agreement or otherwise, but determined without regard to any additional
payments required under Section 5.3(e)(iv) hereof. In addition, Payment shall
include the amount of income deemed to be received by Executive as a result of
the acceleration of the exercisability of any of Executive's options to purchase
stock of the Company, the acceleration of the lapse of any restrictions on
performance stock or restricted stock of the Company held by Executive or the
acceleration of payment from any deferral plan.
1.22 "Performance Year" shall mean each calendar year.
1.23 "Person" shall mean any individual or entity, whether a
governmental or other agency or political subdivision thereof or otherwise.
1.24 "Retirement" shall mean (1) voluntary Retirement (excluding
Termination for Good Reason) before mandatory retirement age, if any, with an
immediate, nonactuarially-reduced pension under any Retirement Program, (2)
termination in accordance with any Retirement arrangement other than under the
Company's Retirement Program, which is established with Executive's consent or
(3) mandatory Retirement as set forth under any Retirement Program adopted by
the Company as it existed before the Change of Control or as agreed to by
Executive following a Change of Control.
1.25 "Retirement Program" shall mean any retirement program plan for
the employees of the Company and participating subsidiaries plus any excess or
supplemental pension plans maintained by the Company.
1.26 "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
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during such Performance Year and less credits and discounts issued and accrued
during such Performance Year.
1.27 "Severance Payment" shall mean an amount equal to (i) absent a
Change of Control (A) the sum of (1) the Base Salary for the calendar year in
which the Termination occurs plus (2) the prior year's Bonus Award (not to be
less than $100,000) multiplied by (B) the Severance Period Multiple; and (ii)
within twenty four (24) months following a Change of Control, one hundred eighty
five percent (185%) of the sum of (A) the greater of Executive's Base Salary
payable to Executive by the Company immediately before the Date of Termination
and Executive's Base Salary which was payable to Executive by the Company
immediately before a Change of Control, whether or not such Base Salary was
includible in Executive's gross income for Federal income tax purposes; plus (B)
the average Bonus Award (not to be less than $100,000) for the two (2) fiscal
years prior to the Change of Control, whether or not such Bonus Award was
includible in Executive's gross income for Federal income tax purposes.
1.28 "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.
1.29 "Severance Period" shall mean the number of full calendar months
remaining in the Term on the date of any Termination.
1.30 "Term" shall have the meaning set forth in Section 2.2 hereof and
shall include any renewal or extension as set forth herein.
1.31 "Termination" shall mean termination of Executive's employment
with the Company for any reason.
1.32 "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 Senior Vice
President, General Counsel and Secretary 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. Subject to the provisions of Article V hereof, the Term shall
commence on the date hereof and shall end on the earlier of (i) the second
anniversary of the date hereof and (ii) the Date of Termination. If at least six
(6) months' advance written notice terminating this Agreement is not received by
either party from the other party before the end of the initial two-year Term,
then this Agreement shall be automatically renewed for successive one
year-periods.
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2.3 DUTIES. The Executive shall be directly responsible for all legal
matters of the Company and shall have such other powers, duties and
responsibilities as are normally performed by the General Counsel of a
corporation of a similar size and in a similar industry as the Company and as
shall be assigned to him from time to time by the Chief Executive Officer, the
President and/or the Board; provided, however, that any such powers, duties and
responsibilities assigned by the Chief Executive Officer, the President or the
Board are commensurate with his position specified in Section 2.1 hereof. The
Executive shall use his best efforts and devote all of his business time,
attention and energy in performing his duties. 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, the Company shall
pay Executive an annual Base Salary of at least $231,000 in accordance with the
Company's regular payroll practices. On each December 31, the Executive's Base
Salary shall be increased as determined in the discretion of the Chief Executive
Officer or Compensation Committee of the Board (the "Compensation Committee");
provided, however, that such annual increase shall not be less than the amount
equal to the product of the Base Salary multiplied by 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 from
the Department of Labor Bureau of Statistics or similar report.
3.2 BONUSES. (a) No later than January 15 of each calendar year, the
Company shall pay to Executive an annual Bonus in respect of the prior fiscal
year in an amount equal to the Bonus Award multiplied by the Bonus Multiple. For
purposes of this Agreement, the term "Bonus Multiple" shall mean the multiple,
if any, determined by reference to the matrix set forth below, based on the
Company's overall financial performance for the relevant year by providing the
percentage variance between "Revenue" and "EBITDA" actually reported for the
fiscal year and "Revenue" and "EBITDA" as set forth in the annual budget adopted
by the Board.
EBITDA Variance (Actual vs. Budget)
-15% to -5% -5% to 5% +5.1% to 15% + 15%
--------------------------------------------------------------------------------
Revenue -15% to -5% 0.6 0.7 0.8 1.0
Variance -4.99% to 5% 0.8 1.0 1.1 1.2
(Actual +5% to 15% 1.0 1.1 1.2 1.4
vs. +15.1% to 25% 1.2 1.5 1.7 1.8
Budget) + 25% 1.4 1.7 1.8 2.0
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(b) The final determination of EBITDA with respect to any
Performance Year shall be subject to the approval of the Compensation Committee.
If such 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 Executive is employed for a part of a Performance Year, he
shall receive a pro rated Bonus Award, determined by computing the Bonus Award
as if Executive were employed for the entire Performance Year and multiplying
such Award 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. Notwithstanding the foregoing, no Bonus Award shall be paid
if Executive's employment was terminated either (x) by the Board for Cause or
(y) by the Executive without Good Reason.
(d) Any compensation which may be otherwise authorized from time
to time by the Board (or any appropriate committee thereof), the Chief Executive
Officer or the President 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 Compensation
Committee in its sole and absolute discretion.
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 expenses and 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.
(d) VESTING UPON A CHANGE OF CONTROL. Notwithstanding anything to
the contrary contained in any other agreement, upon the occurrence of a Change
of 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 condition for ownership.
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ARTICLE IV
COVENANTS
4.1 NON-LNTERFERENCE. 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.
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)
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 other than for Company purposes.
(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 $3,000.
(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. 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 data
network within any country in any European Union member state, Switzerland or
any country in which the Company currently has a switch or point of presence for
either origination or termination of voice or data transmissions or in which the
Company is so engaged in business (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
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Executive from owning less than 5% of any class of publicly traded equity of any
Person engaged in any Competitive Activity.
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 the 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 reason, 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 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) 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.
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ARTICLE V
TERMINATION
5.1 TERMINATION OF AGREEMENT. Except as otherwise provided, this
Agreement shall become invalid upon any Termination of employment.
5.2 PROCEDURES APPLICABLE TO TERMINATION.
(a) TERMINATION FOR CAUSE. The Executive may be terminated for
Cause, upon 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. The Executive's right to be heard in connection with a
Termination shall not otherwise effect the rights and obligations hereunder.
(b) RESIGNATION FOR GOOD REASON. The Executive may terminate his
employment for Good Reason, upon 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. The Executive's obligation to be
heard in connection with a Termination shall not otherwise effect the rights and
obligations hereunder.
(c) TERMINATION WITHOUT CAUSE. The Executive may be terminated
without Cause, upon 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. The Executive's right to be heard in connection
with a Termination shall not otherwise effect the rights and obligations
hereunder.
(d) TERMINATION FOR DISABILITY. The Executive may be terminated
for Disability, upon 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. The Executive's right to be heard in connection
with a Termination shall not otherwise effect the rights and obligations
hereunder.
5.3 OBLIGATIONS OF THE COMPANY UPON TERMINATION.
(a) ALL TERMINATIONS. 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
Executive's employment is terminated without Cause (excluding Termination
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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 the Severance Payment in
a lump sum within 10 days after the date of Termination;
(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 (or such longer term as may be provided
herein); and
(iii) All stock options not then vested shall immediately
vest and become exercisable by Executive and any restrictions on any shares of
restricted Common Stock which have not lapsed shall immediately lapse and be of
no further effect.
(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) 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 the greater
of (i) three years (in accordance with the Company's regular payroll practices
then in existence) and (ii) the period covered by any Disability Plan.
(e) TERMINATION FOLLOWING A CHANGE OF CONTROL. If Executive
provides Notice of Termination of employment for Good Reason or is Terminated
without Cause within eighteen (18) months following the date that a Change of
Control occurs, in addition to the amounts payable under Section 5.3(a) and
5.3(b) hereof, Executive shall also be entitled to the benefits provided below,
without regard to any contrary provision of any plan:
(i) INSURANCE COVERAGE. The Company shall arrange to provide
Executive (and dependents, if applicable) with life, disability (to the extent
available at standard commercial rates), accident, dental and medical benefits
substantially equivalent to those which Executive receives, or was entitled to
receive, from the Company immediately before a Change of Control of the Company.
Such benefits shall be provided for the longer of (x) thirty six (36) months
after such Date of Termination or (y) the period during which such benefits
would have been provided to Executive, as a terminated employee, under the
applicable life, disability, accident, dental and medical plans in effect
immediately before a Change of Control of the Company (except that after a
period of thirty six (36) months such benefits shall be provided on the same
financial terms and conditions as provided for under the respective plans).
Should it be determined that any of the medical benefits to
be provided to Executive (and dependents, if applicable) under this subparagraph
could be included in Executive's gross income for federal, state or local tax
purposes, then the following shall apply:
(A) If Executive is Retirement eligible on Executive's
Date of Termination, then Executive shall participate in the Company's medical
benefit plans as if Executive retired from the Company on Executive's Date of
Termination, except that the Company shall provide such medical coverage at no
cost to Executive for three (3) years following Executive's Date of Termination.
Thereafter, Executive shall participate therein on the same terms as other
retired employees; and
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(B) If Executive is not eligible for Retirement upon
Executive's Date of Termination, Executive will no longer continue to
participate in the Company's medical benefit plans and (i) the Company shall
provide Executive with a cash payment in an amount equal to the amount required
by Executive to pay for coverage under COBRA for the first eighteen (18) months
following Executive's loss of medical coverage, and thereafter, (ii) the Company
shall, for the subsequent eighteen (18) months, purchase for Executive, at its
cost, a policy of medical insurance providing benefits substantially similar to
the benefits Executive would have received under the Company's medical benefit
plans.
(ii) COUNSELING. The Company shall, within 60 days of the
Date of Termination, make available to Executive financial counseling, tax
counseling and tax preparation services. Executive may select the organization
that will provide such services. However, the Company's obligation to provide
Executive benefits under this subparagraph (ii) shall be limited to $10,000. The
Company shall provide to Executive any information Executive requests regarding
Executive's personal and financial situation that Executive wishes to provide to
the financial counseling firm in order for the firm to provide the counseling
services required by this subparagraph (ii).
(iii) NO REDUCTION IN SEVERANCE PAYMENT. The Severance
Payment shall not be reduced regardless of whether the Company can properly
deduct amounts paid pursuant to Code section 280G.
(v) VESTING. Upon a Change of Control, all stock options not
then vested shall immediately vest and become exercisable by Executive and any
restrictions on any shares of restricted Common Stock which have not lapsed
shall immediately lapse and be of no further effect.
(vi) NO DUTY TO MITIGATE. Executive shall not be required to
mitigate the amount of any payment provided for hereunder by seeking other
employment or otherwise, nor shall the amount of any payment or benefit
hereunder be reduced by any compensation earned by Executive as the result of
employment by another employer or by Retirement benefits after the Date of
Termination, or otherwise; provided, however, should Executive become reemployed
in a job which (a) offers medical plan benefits which are equal to or greater
than the medical plan benefits provided to Executive under subparagraph 3.4(a),
and (b) such medical plan benefits are offered to Executive at no cost,
Executive shall no longer be eligible to receive medical plan benefits under
this Agreement.
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
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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, Xxx Xxxx 00000
Attention: Chief Executive Officer
(b) IF TO EXECUTIVE, TO:
000 Xxxxxxxxxx Xxxx
Xxxxxxxxx, XX 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.
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6.8 ENTIRE AGREEMENT; AMENDMENT. This Agreement embodies the entire
understanding of the parties hereto, and supersedes all prior employment and
related 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, Article
IV, Section 5.3 and Article VI of this Agreement shall survive termination of
this Agreement or Termination 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. Xxxxxxxx
--------------------------
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