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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K/A NO. 1
FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO
SECTIONS 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
(MARK ONE)
|X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER : 000-21261
VIATEL, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 13-378366
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
800 THIRD AVENUE, NEW YORK, NEW YORK 10022
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (212) 350-9200
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
COMMON STOCK, PAR VALUE $0.01 PER SHARE
INDICATE BY CHECK MARK WHETHER THE REGISTRANT: (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH
FILING REQUIREMENTS FOR THE PAST 90 DAYS. [X] YES [ ] NO
INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM
405 OF REGULATION S-K IS NOT CONTAINED HEREIN, AND WILL NOT BE CONTAINED, TO THE
BEST OF REGISTRANT'S KNOWLEDGE, IN DEFINITIVE PROXY OR INFORMATION STATEMENTS
INCORPORATED BY REFERENCE IN PART III OF THIS FORM 10-K OR ANY AMENDMENT TO THIS
FORM 10-K [ ].
THE AGGREGATE MARKET VALUE OF THE VOTING STOCK HELD BY NON-AFFILIATES OF
THE REGISTRANT AS OF APRIL 24, 1997 WAS APPROXIMATELY $85,339,595. AS OF APRIL
24, 1997, 22,609,213 SHARES OF THE REGISTRANT'S COMMON STOCK, $0.01 PAR VALUE,
WERE OUTSTANDING.
DOCUMENTS INCORPORATED BY REFERENCE. NONE.
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<PAGE>
The information required by Part III (Items 10, 11, 12 and 13) of the
undersigned Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996 (the "Annual Report"), filed pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), was to
be incorporated by reference to the definitive Proxy Statement for the 1997
Annual Meeting of Stockholders of the Company, which Proxy Statement was to be
filed pursuant to Regulation 14A under the Exchange Act within 120 days
following the end of the Company's fiscal year as permitted under General
Instruction G of Form 10-K ("Instruction G"). However, the definitive Proxy
Statement will not have been filed within such period. Accordingly, pursuant to
Instruction G, the Company hereby amends Items 10, 11, 12 and 13 of the Annual
Report as follows:
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Information with respect to executive officers of the Company is presented
in Item 4 of this Report under the caption "Executive Officers of the Company."
MARTIN VARSAVSKY. Mr. Varsavsky, a founder of the Company, has served as
Chairman of the Board and Chief Executive Officer of the Company since September
1996 and as Chief Executive Officer and director of the Company since February
1991. Mr. Varsavsky was also President of the Company from February 1991 through
September 1996. In 1985, Mr. Varsavsky founded both Urban Capital Corporation,
a commercial real estate development company, and Medicorp Sciences, a
biotechnology company which conducts AIDS research. Mr. Varsavsky does not
currently hold an officer position with either Urban Capital Corporation or
Medicorp Sciences. Mr. Varsavsky is related by marriage to Mr. Juan Manuel
Aisemberg, a principal stockholder of the Company. Mr. Varsavsky is 37 years
old.
MICHAEL J. MAHONEY. Mr. Mahoney has served as President and Chief Operating
Officer of the Company since September 1996 and as a director of the Company
since 1995. Mr. Mahoney was also Executive Vice President, Operations and
Technology of the Company from July 1994 to September 1996 and Managing
Director, Intercontinental of the Company from January 1996 to September 1996.
From August 1990 to June 1994, Mr. Mahoney was employed by SITEL Corporation, a
teleservices company, most recently as President, Information Services Group.
From August 1987 to August 1990, Mr. Mahoney was employed by URIX Corporation, a
manufacturer of telecommunications hardware and software, in a variety of sales
and marketing positions. Mr. Mahoney is 38 years old.
ALLAN L. SHAW. Mr. Shaw has served as Vice President, Finance and Chief
Financial Officer of the Company since January 1996 and Treasurer of the Company
since September 1996. Mr. Shaw has served as a director of the Company since
June 1996. Prior to becoming the Company's Vice President, Finance and Chief
Financial Officer, Mr. Shaw served as Corporate Controller of the Company from
November 1994 to December 1995. From August 1987 to November 1994, Mr. Shaw was
employed by Deloitte & Touche LLP, most recently as a Manager. Mr. Shaw is a
Certified Public Accountant and a member of the American Institute, United
Kingdom Society and New York State Society of Certified Public Accountants. Mr.
Shaw is 33 years old.
W. JAMES PEET. Mr. Peet has served as a director of the Company since
November 1995. He is Vice President of The Chatterjee Group, an affiliate of S-C
V-Tel Investments, L.P. ("S-C V-Tel") a principal stockholder of the Company,
and has been associated with The Chatterjee Group since August 1991. From June
1985 to July 1991, Mr. Peet was a management consultant employed by McKinsey &
Company. Mr. Peet is 42 years old.
PAUL G. PIZZANI. Mr. Pizzani has served as a director of the Company since
April 1996. He is the Treasurer of COMSAT Corporation and has been associated
with COMSAT Corporation in various capacities since November 1985, most recently
as the Vice President of Finance and Business Planning of COMSAT International
Ventures. COMSAT International, Inc. ("COMSAT"), an affiliate of COMSAT
Corporation, is a principal stockholder of the Company. Mr. Pizzani is 37 years
old.
ANTONIO CARRO. Mr. Carro has served as a director of the Company since
August 1996. He is the head of Corporate Projects of Banco Santander, where he
has been employed since July 1995. From January 1994 to July 1995, Mr. Carro was
a Managing Director of Airtel, a mobile telephone operator and from January 1985
to December 1993 was employed by McKinsey & Co. where he was co-leader of its
European Telecommunications practice. Mr. Carro is 38 years old.
<PAGE>
The number of directors of the Company, as determined by the Board of
Directors, is six. The Board of Directors of the Company consists of three
classes: Class A, Class B and Class C. One of the three classes, comprising
one-third of the directors, is elected each year to succeed the directors whose
terms are expiring. Directors hold office until the annual meeting for the year
in which their terms expire and until their successors are elected and qualified
unless, prior to that date, they have resigned, retired or otherwise left
office. In accordance with the Company's Amended and Restated Certificate of
Incorporation, Class A directors are to be elected at the 1997 Annual Meeting of
Stockholders, Class B directors are to be elected at the 1998 Annual Meeting of
Stockholders and Class C directors are to be elected at the 1999 Annual Meeting
of Stockholders.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors, certain
officers and persons holding more than 10% of a registered class of the
Company's equity securities to file reports of ownership and reports of changes
in ownership with the Securities and Exchange Commission (the "Commission") and
the Nasdaq National Market. Directors, certain officers and greater than 10%
stockholders are also required by Commission regulations to furnish the Company
with copies of all such reports that they file. Based on the Company's review of
copies of such forms provided to it, the Company believes that all filing
requirements were complied with during the fiscal year ended December 31, 1996,
except for one late filing for each of Morten Steen-Jorgensen and Sheldon
M. Goldman.
ITEM 11. EXECUTIVE COMPENSATION.
SUMMARY COMPENSATION TABLE
The following table sets forth information concerning compensation for
services in all capacities awarded to, earned by or paid to, the Company's Chief
Executive Officer and the other most highly compensated executive officers of
the Company, whose aggregate cash and cash equivalent compensation exceeded
$100,000 (the "Named Executives"), with respect to the last three fiscal years.
2
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<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION
-------------------------------------- -------------------------
OTHER
ANNUAL RESTRICTED SECURITIES
COMPENSATION STOCK UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) ($)(1) AWARDS ($) OPTIONS(#)
- --------------------------- ---- --------- -------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Martin Varsavsky,
Chairman and Chief Executive Officer... 1996 $350,000 $200,000 $ 76,476 -- --
1995 329,673 100,000 99,813 -- --
1994 309,345 200,000 -- -- --
Michael J. Mahoney,
President and Chief Operating Officer.. 1996 166,458 183,129 102,825 $299,997(2) 253,333
1995 123,000 117,607 52,715 -- 23,333
1994 59,538(3) 50,000 -- -- 23,333
Allan L. Shaw(4),
Vice President, Finance; Chief
Financial Officer and Treasurer........ 1996 108,333 115,000 -- -- 43,333
Lawrence G. Malone(5),
Vice President and Managing Director,
Intercontinental....................... 1996 98,333 88,147 -- -- 33,333
Sheldon M. Goldman(6),
Vice President, Business and Legal
Affairs................................ 1996 86,354 100,000 -- -- 20,000
- -----------
(1) The amount reflected for Mr. Varsavsky (i) for 1996, includes $67,375
of housing allowance expense and $8,180 of tuition reimbursement for
his children's schooling and (ii) for 1995, includes $35,880 of housing
allowance expense and $47,500 of relocation expense reimbursement. The
amount reflected for Mr. Mahoney (i) for 1996, represents $32,416 of
tax equalization payments, $28,227 of relocation expense reimbursement
associated with Mr. Mahoney's repatriation from London to New York and
$9,263 of tax gross ups and (ii) for 1995, includes $23,834 of housing
allowance expense.
(2) Calculated based on a value of $9.00 per share, the fair market value
of the Common Stock on December 31, 1996.
(3) Mr. Mahoney began his employment with the Company in July 1994.
(4) Mr. Shaw was not an executive officer of the Company during 1995 or
1994.
(5) Mr. Malone was not an executive officer of the Company during 1995 or
1994.
(6) Mr. Goldman began his employment with the Company in March 1996.
</TABLE>
3
<PAGE>
STOCK OPTION GRANTS
The following table sets forth information regarding grants of options to
purchase Common Stock made by the Company during the fiscal year ended December
31, 1996 to each of the Named Executives. No stock appreciation rights ("SARs")
were granted during 1996.
<TABLE>
<CAPTION>
OPTION GRANTS IN 1996
INDIVIDUAL GRANTS POTENTIAL REALIZABLE VALUE
------------------------------------------------------- AT ASSUMED ANNUAL
NUMBER OF PERCENT OF RATES OF STOCK PRICE
SECURITIES TOTAL OPTIONS APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OPTION TERM (3)
OPTIONS EMPLOYEES IN PRICE EXPIRATION -------------------------
NAME GRANTED (#) 1996 (1) ($/SHARE)(2) DATE (5%) (10%)
- ---- ----------- -------------- ------------ ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Martin Varsavsky.................. - - - - - -
Michael J. Mahoney................ 133,000(4)(5) 16.2% $ 5.85 01/01/06 $489,311 $1,240,011
120,000(5)(6) 14.6 12.00 10/23/01 905,608 2,294,989
Allan L. Shaw .................... 43,333(5)(7) 5.3 5.85 01/01/06 159,424 404,011
Lawrence G. Malone................ 33,333(5)(7) 4.1 5.85 01/01/06 122,633 310,777
Sheldon M. Goldman................ 20,000(5)(8) 2.4 5.85 03/01/06 73,581 186,468
- -----------
(1) The Company granted options to purchase a total of 822,265 shares of
Common Stock during 1996.
(2) The exercise price was equal to the fair market value of the shares of
Common Stock underlying the options on the grant date.
(3) Amounts reported in these columns represent amounts that may be
realized upon exercise of options immediately prior to the expiration
of their term assuming the specified compounded rates of appreciation
(5% and 10%) on the Common Stock over the term of the options. These
assumptions are based on rules promulgated by the Commission and do not
reflect the Company's estimate of future stock price appreciation.
Actual gains, if any, on the stock option exercises and Common Stock
holdings are dependent on the timing of such exercise and the future
performance of the Common Stock. There can be no assurance that the
rates of appreciation assumed in this table can be achieved or that the
amounts reflected will be received by the option holder.
(4) Options to purchase 77,296 shares of Common Stock were exercisable at
December 31, 1996. The remaining 56,037 options will vest in 1997 and
1998 if certain objective criteria are met.
(5) In the event of certain Corporate Transactions (as defined herein), all
unvested stock options become exercisable, unless assumed by the
successor corporation or its parent company.
(6) Options vest and become exercisable as to 25% on October 23, 1997 and
as to an additional 25% on each anniversary thereafter.
(7) Options vested and became exercisable as to 33.34% on January 1, 1997
and will vest and become exercisable as to an additional 33.33% on each
anniversary thereafter.
(8) Options vested and become exercisable as to 33.34% on March 1, 1997 and
will vest and become exercisable as to an additional 33.33% on each
anniversary thereafter.
</TABLE>
4
<PAGE>
YEAR-END OPTION VALUES
The following table sets forth information regarding the number and year
end value of unexercised options held at December 31, 1996 by each of the Named
Executives. No SARs were exercised by the Named Executives during fiscal 1996.
<TABLE>
<CAPTION>
FISCAL 1996 YEAR-END OPTION VALUES
Number of Securities VALUE OF UNEXERCISED
Underlying Unexercised "IN-THE-MONEY"
Options at Fiscal OPTIONS AT FISCAL
Year-End (#) YEAR-END ($)
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE (1)
- ---- ------------------------- -----------------------------
<S> <C> <C>
Martin Varsavsky.......................... 0/0 $0/$0
Michael J. Mahoney........................ 113,591/186,408 400,206/216,024
Allan L. Shaw............................. 23,704/32,962 74,668/103,830
Lawrence G. Malone........................ 18,055/25,278 56,873/79,626
Sheldon M. Goldman........................ 0/20,000 0/62,997
- ------------
(1) Options are "in-the-money" if the fair market value of the underlying
securities exceeds the exercise price of the options. The amounts set
forth represent the difference between $9.00 per share, the fair market
value of the Common Stock issuable upon exercise of options at December
31, 1996 and the exercise price of the option, multiplied by the
applicable number of options.
</TABLE>
EMPLOYMENT AGREEMENTS
The Company has executed employment agreements with each of Messrs.
Varsavsky and Mahoney, which became effective on October 23, 1996, pursuant to
which Mr. Varsavsky agreed to continue to serve as Chairman and Chief Executive
Officer and Mr. Mahoney agreed to continue to serve as President and Chief
Operating Officer of the Company until October 23, 1999 and October 30, 1999,
respectively, unless earlier terminated in accordance with the terms of their
respective employment agreement. The annual base salary under such agreements
will be reviewed annually but cannot be less than $350,000 for Mr. Varsavsky and
$200,000 for Mr. Mahoney (in each instance as adjusted for inflation). In
addition, each employment agreement also provides for an annual cash bonus
payment equal to the executive's base salary multiplied by a bonus multiple
ranging from 0.6 to 1.9 determined based upon a comparison of actual versus
projected EBITDA and revenue figures. Each employment agreement also provides
that the respective executive will be entitled to receive annual grants of stock
options or restricted stock in amounts to be determined by the Board of
Directors in its sole and absolute discretion.
Mr. Varsavsky's employment agreement also provides that upon certain
terminations of employment (including certain terminations following a Change in
Control, as defined therein), the Company will be obligated to pay Mr. Varsavsky
an amount equal to the Severance Amount (as defined therein). Mr. Mahoney's
employment agreement provides that following a Change in Control, the Company
will be obligated to pay him an amount equal to the Severance Amount (as defined
therein) if he chooses to terminate his employment. Each of Messrs. Varsavsky's
and Mahoney's employment agreement also include a prohibition on the
solicitation of employees and a non-competition covenant.
In each of Messrs. Varsavsky's and Mahoney's employment agreements, "Change
in 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 of 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
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<PAGE>
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.
STOCK INCENTIVE PLAN
The Company has adopted the 1993 Flexible Stock Incentive Plan (the "Stock
Incentive Plan") under which "non-qualified" stock options ("NQSOs") to acquire
shares of Common Stock may be granted to employees, directors and consultants of
the Company and "incentive" stock options ("ISOs") to acquire shares of Common
Stock may be granted to employees, including employee-directors. The Stock
Incentive Plan also provides for the grant of SARs and shares of restricted
stock to the Company's employees, directors and consultants.
The Stock Incentive Plan provides for the issuance of up to a maximum of
1,833,333 shares of Common Stock and is currently administered by the
Compensation Committee. Under the Stock Incentive Plan, the option price of any
ISO may not be less than the fair market value of a share of Common Stock on the
date on which the option is granted. The option price of an NQSO may be less
than the fair market value on the date the NQSO is granted if the Board of
Directors so determines. An ISO may not be granted to a "ten percent
stockholder" (as such term is defined in Section 422A of the Code) unless the
exercise price is at least 110.0% of the fair market value of the Common Stock
and the term of the option may not exceed five years from the date of grant.
Each option granted pursuant to the Stock Incentive Plan is evidenced by a
written agreement executed by the Company and the grantee, which contains the
terms, provisions and conditions of the grant. Stock options may not be assigned
or transferred during the lifetime of the holder except as may be required by
law or pursuant to a qualified domestic relations order. Common Stock subject to
a restricted stock purchase or bonus agreement is transferable only as provided
in such agreement. The maximum term of each stock option granted to persons
other than ten percent stockholders is ten years from the date of grant.
For options to quality as ISOs, the aggregate fair market value, determined
on the date of grant, of the shares with respect to which the ISOs are
exercisable for the first time by the grantee during any calendar year may not
exceed $100,000. Payment by option holders upon exercise of an option may be
made in cash or, with the consent of the Board of Directors, in whole or in
part, (i) with shares of Common Stock, (ii) by irrevocable direction to an
approved securities broker to sell shares and deliver all or a portion of the
proceeds to the Company, (iii) by delivery of a promissory note with such
provisions as the Board of Directors determines appropriate or (iv) in any
combination of the foregoing. In addition, the Board of Directors, in its sole
discretion, may authorize the surrender by an optionee of all or part of an
unexercised stock option and authorize a payment in consideration thereof of an
amount equal to the difference between the aggregate fair market value of the
shares of Common Stock subject to such stock option and the aggregate option
price per share of such Common Stock. In the Board of Directors' discretion,
such payment may be made in cash, shares of Common Stock with a fair market
value on the date of surrender equal to the payment amount or some combination
thereof.
The Stock Incentive Plan provides that outstanding options, restricted
shares of Common Stock or SARs vest in their entirety and become exercisable, or
with respect to restricted stock, are released from restrictions on transfer and
repurchase rights, in the event of a "Corporate Transaction." For purposes of
the Stock Incentive Plan, a Corporate Transaction includes any of the following
stockholder-approved transactions to which the Company is a party: (i) a merger
or consolidation in which the Company is not the surviving entity, other than a
transaction the principal purpose of which is to change the state of the
Company's incorporation, or a transaction in which the Company's stockholders
immediately prior to such merger or consolidation hold (by virtue of securities
received in exchange for their shares in the Company) securities of the
surviving entity representing more than 50.0% of the total voting power of such
entity immediately after such transaction; (ii) the sale, transfer or other
disposition of all or substantially all of the assets of the Company unless the
Company's stockholders immediately prior to such sale, transfer or other
disposition hold (by virtue of securities received in exchange for their shares
in the Company) securities of the purchaser or other transferee representing
more than 50.0% of the total voting power of such entity immediately after such
transaction; or (iii) any reverse merger in which the Company is the surviving
entity but in which the Company's stockholders immediately prior to such merger
do not hold (by virtue of their shares in the Company held immediately prior to
such transaction) securities of the Company representing more than 50.0% of the
total voting power of the Company immediately after such transaction.
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<PAGE>
The Company has filed with the Commission a Registration Statement on Form
S-8 covering the shares of Common Stock underlying options granted under the
Stock Incentive Plan.
COMPENSATION OF DIRECTORS
Non-employee directors receive an annual fee of $12,000, a meeting fee of
$1,000 for every board meeting attended and each committee meeting held
separately and a $500 fee for each board meeting or committee meeting
participated in by telephone. Directors who are also employees of the Company
are not separately compensated for serving on the Board of Directors. All
directors are reimbursed for out-of-pocket expenses. Under the Stock Incentive
Plan, the Company may, from time to time and in the discretion of the
Compensation Committee, grant options to directors.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Board of Directors did not have a Compensation Committee prior to the
establishment of one in January 1996. As a result, prior to such time the entire
Board of Directors, including Messrs. Varsavsky and Mahoney, made all
determinations concerning compensation of executive officers. The current
members of the Compensation Committee are Messrs. Peet, Pizzani and Mahoney. Mr.
Mahoney is the Company's President and Chief Operating Officer. None of the
executive officers of the Company currently serves on the compensation committee
of another entity or any other committee of the board of directors of another
entity performing functions similar to the Compensation Committee. No
interlocking relationships exist between the Company's Board of Directors or its
Compensation Committee and the board of directors or compensation committee of
any other company.
SHAREHOLDERS AGREEMENTS. S-C V-Tel and Mr. Varsavsky are parties to a
shareholders' agreement (the "S-C V-Tel Shareholders Agreement") which provides
that, in certain instances, if Mr. Varsavsky and Mr. Aisemberg propose to sell
20.0% or more of the aggregate number of shares of Common Stock collectively
owned by them, S-C V-Tel has the right to sell its shares of Common Stock in
such a transaction on a pro rata basis with Messrs. Varsavsky and Aisemberg and
certain of the Company's other stockholders, for the same consideration per
share and on the same terms as Mr. Varsavsky.
On April 5, 1994, Messrs. Varsavsky and Aisemberg and COMSAT entered into a
shareholders' agreement (as subsequently amended, the "COMSAT Shareholders
Agreement"). Pursuant to the terms of the COMSAT Shareholders Agreement, so long
as COMSAT beneficially owns at least 10.0% (subject to certain adjustments) of
the issued and outstanding shares of Common Stock on a fully diluted basis,
COMSAT is entitled to representation on the Company's Board of Directors in
proportion to its percentage ownership of Common Stock, subject to a minimum of
one seat, and to designate one member of an Executive Committee of the Board of
Directors, if any such committee is established. In addition, in certain
instances, if Mr. Varsavsky proposes to sell 10.0% or more of the shares of
Common Stock which he owns, COMSAT has the right to sell its shares of Common
Stock in such a transaction on a pro rata basis with Mr. Varsavsky and certain
of the Company's other stockholders, for the same consideration per share and on
the same terms as Mr. Varsavsky.
VOTING AGREEMENT. S-C V-Tel and COMSAT are parties to a voting agreement
(the "Voting Agreement"), pursuant to which, at all times that either S-C V-Tel
or COMSAT is entitled to nominate directors to the Company's Board of Directors,
the other party is required to vote its respective shares of Common Stock in
favor of the first party's nominees. The Voting Agreement remains in effect
until the earlier of the dissolution of the Company or the date on which either
S-C V-Tel or COMSAT no longer owns any shares of Common Stock. See "Item 13.
Certain Relationships and Related Transactions -- S-C V-Tel Investments, L.P.,"
and "Item 13. Certain Relationships and Related Transactions -- COMSAT
Investments, Inc." for a description of the registration rights held by each of
S-C V-Tel and COMSAT.
7
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth certain information regarding the beneficial
ownership of the Common Stock, as of April 24, 1997, by (i) each person known to
the Company to own beneficially more than 5% of the Company's outstanding shares
of Common Stock, (ii) each director of the Company, (iii) each of the Named
Executives, and (iv) all executive officers and directors of the Company, as a
group. All information with respect to beneficial ownership has been furnished
to the Company by the respective stockholders of the Company.
Amount and Nature Percentage
of Beneficial of
Name And Address Ownership (1) Class
- ---------------- ------------- -----
Martin Varsavsky
Parque Empresarial Edificio 2,
c/o Beatriz De Bobadilla
14,5 Ofic. B
Madrid, Spain.............................. 6,068,167 26.8%
COMSAT Investments, Inc.
6560 Rock Spring Drive
Bethesda, MD 20817(2)..................... 2,140,539 9.5
S-C V-Tel Investments, L.P.
888 Seventh Avenue
New York, NY 10106........................ 1,698,272 7.5
FMR Corp.
82 Devonshire Street
Boston, MA 02109.......................... 1,978,900 8.8
Mellon Bank Corporation
One Mellon Bank Center
Pittsburgh, PA 15258...................... 1,396,000 6.2
Michael J. Mahoney(3)...................... 169,702 *
Allan L. Shaw(3)........................... 30,925 *
Lawrence G. Malone(3)...................... 19,722 *
Sheldon M. Goldman(3)(4)................... 13,666 *
Antonio Carro.............................. - -
W. James Peet.............................. - -
Paul G. Pizzani............................ - -
All directors and executive
officers as a group (11 persons)(5)... 6,333,441 28.0%
- -----------
* Represents beneficial ownership of less than 1% of the outstanding
shares of Common Stock.
(1) Beneficial ownership is determined in accordance with the rules of the
Commission. In computing the number of shares beneficially owned by a
person and the percentage ownership of that person, shares of Common
Stock subject to options and warrants held by that person that are
currently exercisable or exercisable within 60 days of April 24, 1997
are deemed outstanding. Such shares, however, are not
8
<PAGE>
deemed outstanding for the purpose of computing the percentage
ownership of any other person. Except as indicated in the footnotes to
this table, the stockholder named in the table has sole voting and
investment power with respect to the shares set forth opposite such
stockholder's name.
(2) Does not include 6,694,240 shares of Common Stock which COMSAT may be
deemed to beneficially own as a result of certain voting arrangements
contained in the COMSAT Shareholders Agreement.
(3) Includes shares of Common Stock which the executive officers have the
right to acquire through the exercise of options within 60 days
of April 24, 1997, as follows: Michael J. Mahoney 121,369; Allan L.
Shaw 25,925; Lawrence G. Malone 19,722; and Sheldon M. Goldman 6,666.
(4) Includes 1,000 shares owned by Mr. Goldman's wife.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
S-C V-TEL INVESTMENTS, L.P.
Pursuant to the terms of a stock purchase agreement, dated September 30,
1993 (as subsequently amended, the "S-C V-Tel Stock Purchase Agreement"), S-C
V-Tel purchased 1,695,532 shares of Common Stock on October 1, 1993 and 2,739
shares of Common Stock on December 15, 1993 for an aggregate purchase price of
$5 million (the "S-C V-Tel Shares"). The terms of the S-C V-Tel Stock Purchase
Agreement provide that, among other things, beginning on April 16, 1997, S-C
V-Tel has the right to demand registration under the Securities Act of 1933, as
amended (the "Securities Act") of the S-C V-Tel Shares. Such demand right must
be exercised for at least 30.0%, and no more than 70.0% of the S-C V-Tel Shares
then owned by S-C V-Tel. No earlier than six months after the effective date of
its first demand registration, S-C V-Tel may request a second demand
registration for any remaining S-C V-Tel Shares. The expenses of such demand
registrations, excluding any underwriter's commissions and discounts relating to
the sale of the S-C V-Tel Shares, will be paid by the Company. In addition, if
the Company proposes to register any of its securities under the Securities Act,
S-C V-Tel has the right, on up to four occasions, to include in such
registration a maximum of 33-1/3% of the S-C V-Tel Shares it then owns. The
expenses of any such "piggy-back" registration, excluding any underwriter's
commissions and discounts relating to the sale of the S-C V-Tel Shares and the
fees and disbursements of S-C V-Tel's legal counsel, will be paid by the
Company. S-C V-Tel is entitled to sell or transfer any of the S-C V-Tel Shares,
without the consent of the Company, provided that the transferee is not in
competition with, or does not otherwise have interests adverse to, the Company.
COMSAT INVESTMENTS, INC.
Pursuant to the terms of a stock purchase agreement, dated April 5, 1994
(as subsequently amended, the "COMSAT Purchase Agreement"), COMSAT purchased
2,140,539 shares of Common Stock for a purchase price of $8.0 million (the
"COMSAT Shares"). Pursuant to the terms of the COMSAT Purchase Agreement, COMSAT
has been granted the same demand and piggyback registration rights as S-C V-Tel.
The COMSAT Purchase Agreement further provides that COMSAT may not transfer any
COMSAT Shares to any transferee without first offering such shares to the
Company if, following such transfer, such transferee would own 20.0% or more of
the then outstanding shares of Common Stock. In addition, COMSAT has agreed that
it will not acquire more than 30.0% of the shares of Common Stock outstanding at
any time except in certain circumstances relating to changes in the percentage
of the outstanding Common Stock owned by Mr. Varsavsky. Prior to the sale of all
or substantially all of the assets of the Company or the consolidation or merger
of the Company with any person in which the Company is not the surviving entity,
COMSAT has certain rights to invest in any joint venture proposed by the
Company. See "Item 10. Executive Compensation -- Compensation Committee
Interlocks and Insider Participation -- Shareholders Agreements" for a
description of certain voting rights held by COMSAT.
9
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Amendment to the
Report to be signed on its behalf by the undersigned, thereunto duly authorized,
in the City and State of New York, on the 24th day of April, 1997.
VIATEL, INC.
By: MARTIN VARSAVSKY*
-------------------------------------------------
Martin Varsavsky
Chairman of the Board and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
Registrant and in the capacities indicated on the 24th day of April, 1997.
SIGNATURE TITLE(S)
MARTIN VARSAVSKY* Chairman of the Board and Chief
- ------------------------------- Executive Officer (Principal Executive
Martin Varsavsky Officer)
MICHAEL J. MAHONEY* President, Chief Operating Officer
- ------------------------------- and Director (Principal Executive
Michael J. Mahoney Officer)
ALLAN S. SHAW* Vice President, Finance; Chief Financial
- ------------------------------- Officer; Treasurer (Principal Financial
Allan S. Shaw and Accounting Officer) and Director
PAUL G. PIZZANI* Director
- -------------------------------
Paul G. Pizzani
W. JAMES PEET* Director
- -------------------------------
W. James Peet
ANTONIO CARRO* Director
- -------------------------------
Antonio Carro
By: /S/ SHELDON M. GOLDMAN
- -------------------------------
Sheldon M. Goldman
Attorney-in-fact
10
