Exhibit 10.45
EMPLOYMENT AGREEMENT
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THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as of
August 27, 1999 by and between VIATEL, INC., a Delaware corporation with an
office at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (the "Company"), and Xxxx
X. Xxxx (the "Executive").
W I T N E S S E T H:
WHEREAS, the Company desires to employ Executive and Executive desires
to provide services to the Company; and
WHEREAS, the Company and the Executive desire that the Company employs
the Executive as the Company's 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
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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 "Acquisition Date" shall have the meaning set forth in Section 2.2
hereof.
1.3 "Base Salary" shall mean the amount set forth in Section 3.1
hereof, or if the Executive has received different Base Salaries during the
course of a year, the most recent of such Base Salaries.
1.4 "Bonus Award" shall mean a cash bonus equal to eighty percent (80%)
of the Executive's Base Salary multiplied by the Bonus Multiple for the
applicable Performance Year.
1.5 "Bonus Multiple" shall mean the amount determined by reference to
Section 3.2 hereof.
1.6 "Board" shall mean the Board of Directors of the Company.
1.7 "Cause" shall mean Executive's (i) material violation of Section
2.3 hereof, which violation has not been cured within 20 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) any attempt by Executive to secure any personal profit in connection with
the business of the Company; (v) gross negligence, dishonesty, moral turpitude
or other misconduct in the performance of his duties hereunder or habitual
neglect in managing his responsibilities; 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 (vi)
conviction of, or a plea of nolo contendere to, a felony or a misdemeanor
involving fraud, misrepresentation or dishonesty, whether or not relating to the
business and affairs of the Company.
1.8 "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.
1.9 "Common Stock" shall mean the common stock, par value $0.01 a
share, of the Company.
1.10 "Competitive Activities" shall have the meaning set forth in
Section 4.3 hereof.
1.11 "Confidential Material" shall have the meaning set forth in
Section 4.2 hereof.
1.12 "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.
1.13 "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 has existed for an aggregate of four months during any twelve-month
period. In the event of any dispute between the Company and Executive as to
whether Executive has suffered a Disability, the determination of whether
Executive has suffered a Disability shall be made by an independent physician
selected by the Company (subject to Executive's reasonable consent), and the
decision of such physician shall be binding upon the Company and Executive.
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1.14 "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).
1.15 "EBITDA" shall mean, with respect to the Company on a consolidated
basis for any Performance Year, the Company's consolidated earnings before
interest, taxes, extraordinary loss, dividends on preferred stock and
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.
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 6.3 hereof), (iv) transaction resulting in a Change of Control, if
Executive has provided written notice to the Company within 60 days of such
Change of Control of his intentions to cease employment hereunder, (v) Executive
ceases to be a member of the Company's Board of Directors (except in the case of
a voluntary resignation), or (vi) material dimunition in Executive's authority,
function, position or title with the Company which continues after 15 days of
the date that written notice thereof is given to the Board by Executive.
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
improvement, right or claim related to the foregoing.
1.19 "Participation", which includes 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.
1.20 "Performance Year" shall mean each calendar year.
1.21 "Person" shall mean any individual or entity, whether a
governmental or other agency or political subdivision thereof or otherwise.
1.22 "Severance Amount" shall mean, for purposes of Section 5.3(b)
hereof, an amount equal to 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 multiplied by the Severance Period Multiple.
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1.23 "Severance Period Multiple" shall mean, except as provided in
Section 5.3(b), the quotient obtained by dividing the Severance Period by 12;
provided, however, that the Severance Period Multiple shall not be less than one
(1), except that in the case of a Change of Control, the Severance Period
Multiple shall not be less than one and one-half
1.24 "Severance Period" shall mean the number of full calendar months
remaining in the Term on the date of any Termination.
1.25 "Term" shall have the meaning set forth in Section 2.2 hereof and
shall include any renewal or extension as set forth therein.
1.26 "Termination" shall mean termination of Executive's employment
with the Company for any reason.
1.27 "Voting Stock" shall mean any share, interest, participation or
other equivalent, however designated, in equity of the Company, whether now
outstanding or issued after the date hereof, including, without limitation, any
Common Stock or any preferred stock or other 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
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2.1 Employment. (a) Effective as of the Acquisition Date (as defined
below) the Executive shall be employed as Chief Operating Officer of the Company
and Executive shall accept 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 Chief Executive
Officer. In the event that Executive is assigned a different position in the
Company, the Company and Executive will execute a new employment agreement with
terms at least as favorable as the terms contained in this Agreement.
(b) Effective as of the Acquisition Date, the Company shall cause
Executive to be nominated for election to the Board as a Class A director (which
term will expire at the Company's Annual Meeting of Stockholders occurring in
the year 2000). The Company shall renominate Executive for an additional term as
a Class A director at the Company's Annual Meeting occurring in the year 2000 so
long as he remains actively employed by the Company at such date under the terms
of this Agreement. Executive shall resign his directorship upon any Termination.
(c) Executive shall be employed at the Company's headquarters at
000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx or such other location in the New York
metropolitan area as the Chief Executive Officer shall designate from time to
time.
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2.2 Term. (a)The Term shall commence on the date on which the Company
acquires at least 50.1% of the voting stock of Destia Communications, Inc., a
Delaware corporation (the "Acquisition Date"), and shall end on the earlier of
(i) the second anniversary of the Acquisition Date and (ii) the date of any
Termination. This Agreement shall automatically terminate without liability of
either party to the other if the Merger Agreement, dated August 27, 1999, among
the Company, Viatel Acquisition Corp. and Destia Communications, Inc. is
terminated prior to the effective date of the merger contemplated thereby.
(b) Subject to Section 5.2 hereof, if six (6) months' advance
written notice terminating this Agreement is not received by either party prior
to the expiration of the initial term, or any subsequent renewal term, then this
Agreement shall be automatically renewed for successive one-year-periods.
2.3 Duties; Full Time Employment. The Executive shall serve as Chief
Operating Officer of the Company and shall, subject to the direction and
supervision of the President and Chief Executive Officer of the Company, have
control of the following segments of the Company's operations (i) internal
management information systems, (ii) billing systems, (iii) least cost routing
and margin systems, (iv) switched network operations, (v) end-user sales and
marketing organizations and other end-user channels of distributions and
switched carrier services sales force and shall have such other duties and
responsibilities as may be assigned to, or required of Executive from time to
time by the Chief Executive Officer. With respect to Executive's control over
global accounts and data products and services, Executive shall share
responsibility with the Company's Senior Vice President of Sales and Marketing
and Senior Vice President, Chief Technology Officer and such other people as may
be identified from time to time by the Chief Executive Officer. The Executive
shall faithfully and diligently perform his duties and responsibilities, shall
adhere to the instructions of the Chief Executive Officer and shall devote his
entire business time, attention, energy and skill in performing his duties
hereunder and to the business and affairs of the Company. Executive shall also
use his best efforts to promote the interests of the Company consistent with the
foregoing and shall adhere to all corporate policies of the Company to the
extent applicable to Executive's duties hereunder. Executive shall not, directly
or indirectly, alone or as a member of any partnership, or as an officer,
director or executive of any other corporation, partnership or other
organization, be actively engaged in or concerned with any other duties or
pursuits which interfere with the performance of his duties hereunder, or which
may be inimical to or contrary to the best interests of the Company.
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
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3.1 Base Salary. For all services performed by Executive for the
Company and/or any of its subsidiaries hereunder, including, without limitation,
as an executive, officer or member of any committee of the Board, the Company
shall pay Executive an annual Base Salary of $345,000 payable in equal
installments in accordance with the Company's prevailing payroll practices
applicable to its senior executives in effect from time to time. The Base Salary
shall be increased at such time and in such amount as determined by the
Compensation Committee of the Board in its sole and absolute discretion.
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 for the
Company adopted by the Board.
EBITDA Variance (Actual vs. Budget)
-15% to -5% -5% to 5% +5.1% to 15% + 15%
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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
(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,
in respect of a Performance Year, if during such Performance Year, Executive's
employment was terminated either (x) by the Board for Cause or (y) by the
Executive without Good Reason. The Bonus Award shall be paid no later than
January 31 of the succeeding year.
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(d) 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 Long-term Incentives. With respect to each of calendar year 2000
and 2001, Executive shall be entitled to receive a minimum of 16,123 shares of
restricted Common Stock and options to purchase 42,642 shares of Common Stock
with an exercise price equal to the fair market value of the Common Stock on the
day before the Acquisition Date and subject to such other terms and conditions
customary for such a grant and otherwise applicable to senior executives of the
Company. Any additional grants of stock options or restricted stock shall be in
amounts determined by the Compensation Committee in its sole and absolute
discretion.
3.4 Other Benefits. In addition to Base Salary and any 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, savings and all other similar benefits
made available by the Company to its senior executive officers on terms at least
as favorable as those granted to other senior executives 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 on terms at least as favorable as those
granted to other senior executives.
(b) Vacation. Executive shall be entitled to annual vacation and
paid holidays consistent with the Company's practices for other senior
executives as adopted from time to time; provided, however, that such vacation
shall not be less than 20 days each year (without deduction in salary or other
compensation or benefits). Executive shall take such vacation at such time or
times as may be reasonably convenient to the operations of the Company.
(c) Reimbursement of Expenses. The Company shall reimburse
Executive for reasonable travel expenses and other reasonable out of pocket
business expenses incurred by Executive in the performance of his duties
hereunder, provided appropriate itemized documentation supporting such expenses
is submitted in accordance with the Company's prevailing expense reimbursement
policy for senior executives of the Company.
(d) Parking Spot. The Company shall provide Executive with a
parking spot in close proximity to the Company's headquarters at 000 Xxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx.
(e) Tax Indemnity. The Company shall select and retain a law firm
or accounting firm with a national reputation (which may be the Company's
current law firm or auditors) to determine whether Executive has a reasonable
reporting position determining that the acceleration of certain stock options
under Executive's Employment
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Agreement, dated May 3, 1999, with Destia Communications, Inc. is not subject to
the excise tax under Section 280G of the Internal Revenue Code of 1986, as
amended. Executive shall provide the law firm or accounting firm selected by the
Company with such information and cooperation as may be reasonably requested to
complete the required analysis. Upon reciept of written advice confirming the
existance of such a reasonable reporting position, Executive agrees that he will
not make any payment in respect of such taxes. In such event, the Company shall
indemnify Executive for up to $3.0 million of any excise tax liabilities
resulting from the acceleration of stock options, provided, however, that the
$3.0 million indemnity shall be reduced to the extent that similar payments are
required in respect of any other Destia Communications, Inc. employee. In the
event Executive does not have such a reasonable reporting position, the Company
will pay up to $3.0 million of any such excise taxes payable by Executive.
ARTICLE IV
Covenants
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4.1 Non-lnterference. During the Term and a period of eighteen months
thereafter, Executive agrees not to directly or indirectly solicit, induce,
counsel, advise 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 plans and practices,
financial data, operational methods, development plans or projects, customers,
affairs, marketing or sales or purchasing strategy, costs and specifications of
Company products and services and any other information of a proprietary nature
(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, communicate or disclose or use any
Confidential Material for the benefit of, any person (including Executive) other
than the Company, its subsidiaries or affiliates.
(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 for any reason, or whenever
requested by the Company, Executive shall promptly deliver to the Company all of
the Confidential Material (and all copies and extracts thereof and any notes
relating thereto) that may be in Executive's possession or control. Executive
shall, if so requested by the Company, promptly deliver to
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the Company a written confirmation that all such Confidential Information has
been returned to the Company.
(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, promptly 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 (i)
Control any Person which is engaged, directly or indirectly, or Participate in
any business that is competitive with the Company's business as constituted
immediately following the completion of the Company's acquisition of Destia
Communications, Inc. or in which the Company is 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 or (ii) solicit, attempt to solicit,
induce, counsel, advise or encourage any customer, agent, dealer, distributor or
consultant of the Company on behalf of any Competitor or any other business,
directly or indirectly on behalf of himself or any other Person ((i) and (ii)
collectively referred to as, "Competitive Activities"); provided, however, that
nothing in this Agreement shall preclude Executive from owning less than 5% 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 any such
business in such country.
(b) Upon Termination for Disability or Cause or without Good Reason
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 any
Competitive Activities.
(c) Upon Termination either without Cause, for Good Reason or
failure of Company to renew this Agreement for an additional Term, the Executive
shall not, for himself or any third party, directly or indirectly, engage in
Competitive Activities for a period of 30 days following the date of such
Termination.
Notwithstanding the foregoing, Executive shall be permitted to make
minority investments in private businesses in which he is neither actively
employed or serving as a director, provided that Executive (i) did not learn of
such opportunity while employed by the Company, or (ii) if Executive learned of
the opportunity while so employed, Executive
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offered the opportunity to the Company and the Company declined to pursue the
opportunity.
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 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 money 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.
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(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
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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 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 terminate his
employment 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.
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(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) All Terminations. Upon any Termination, the Company shall pay
to Executive, or, upon Executive's Disability, if applicable, to his heirs,
estate or legal representatives, as the case may be, the following:
(i) all Accrued Obligations in a lump sum within 15 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, Resignation for Good Reason, or
Failure To Renew Contract. If the Board terminates Executive's employment
without Cause (excluding Termination because of Disability), if Executive
resigns for Good Reason (other than following a Change of Control) or if the
Company fails to renew this Agreement, in addition to the amounts payable under
Section 5.3(a) hereof, Executive shall also be entitled to receive two months of
Base Salary paid in a lump sum.
Notwithstanding the foregoing, in the event that Executive's employment
is terminated following a Change in Control, the Executive shall receive the
Severance Amount. The Severance Period Multiple used in calculating the
Severance Amount shall be one and one-half and Executive shall be entitled to an
additional payment equal to the amount of any excise taxes payable by Executive
pursuant to Section 4999 of the Internal Revenue Code as a result of such
termination plus all federal, state and local taxes applicable to the Company's
payment of such excise taxes, including any additional excise taxes due under
Section 4999 of the Internal Revenue Code with respect to the payments made
pursuant to this provision, including any such taxes resulting from the
acceleration of any other benefits hereunder. The determination of the amounts
required to be paid under this Agreement shall be made by a nationally
recognized United States public accounting firm which may be the independent
public accounting firm used by the Company to audit its financial statements.
(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
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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
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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 Lock-Up. Executive agrees that, for a period of six months from the
Acquisition Date, he will not offer, pledge, sell, contract to sell, sell any
option or contract to purchase or purchase any option, or contract to sell,
grant any option, right or warrant to purchase, lend, or otherwise transfer or
dispose of, directly or indirectly, any shares of the Company's Common Stock or
any securities convertible into or exercisable or exchangeable for Common Stock
or enter into any swap or other arrangement that transfers to another, in whole
or in part, any of the economic consequences of ownership of the Common Stock,
provided, however, that the foregoing restrictions shall cease upon a
Termination for Good Reason or without Cause or upon a Change of Control and
shall not apply (i) to a single sale by Executive of up to 100,000 shares of
Common Stock sold by Executive in connection with a sale of Common Stock by
Xxxxxx Xxxx and (ii) the sale of such number of shares as required to cover the
payment of amounts in excess of the $3.0 million indemnity or payment
contemplated by Section 3.4(e) hereof.
6.3 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.
6.4 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
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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
Xxx Xxxx, Xxx Xxxx 00000
Tel.: (000) 000-0000
Fax.: (000) 000-0000
Attention: Chief Executive Officer
(b) if to Executive, to:
the then current address of Executive maintained in the
Company's employee files
with a copy to:
Xxxxxxx Xxxxxxxxxx, Esq.
Xxxxxxx Xxxx & Xxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Tel.: (000) 000-0000
Fax.: (000) 000-0000
Any such address may be changed by written notice sent to the other party at the
last recorded address of that party.
6.5 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.
6.6 No Assignment; No Third Party Beneficiaries. Except as otherwise
expressly provided in Section 6.3 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.
6.7 Expenses. Each party hereto shall assume and pay its own expenses
incident to the negotiation and execution of this Agreement, the preparation for
carrying it
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into effect and the consummation of the transactions contemplated hereby.
Without limiting the generality of the foregoing, each party shall pay all legal
fees and other fees to consultants and advisors incurred by it relating to this
Agreement and such transactions and shall indemnify and hold the other party
harmless from and against any claims for such expenses and fees of the first
party's consultants and advisors; provided, however, in the event of any dispute
hereunder between the Company and the Executive, the Company shall pay all costs
and expenses incurred by Executive in enforcing his rights hereunder in any suit
or proceeding in which Executive is awarded damages or otherwise prevails on the
merits or procedural grounds.
6.8 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.
6.9 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.
6.10 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, beginning on the Acquisition
Date, supersede all prior agreements regarding the subject matter hereof,
including the Employment Agreement, dated May 3, 1999 between Executive and
Destia Communications, Inc. No change, alteration or modification hereof may be
made except in writing, signed by both of the parties hereto.
6.11 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.
6.12 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/Xxxxxxx X. Xxxxxxx
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President and
Chief Executive Officer
EXECUTIVE
/s/Xxxx Xxxx
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