<PAGE>
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN THE PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
<TABLE>
<S> <C>
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
</TABLE>
__________________________________VIATEL, INC.__________________________________
(Name of Registrant as Specified In Its Charter)
________________________________________________________________________________
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
<TABLE>
<S> <C> <C>
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction
applies: N/A
(2) Aggregate number of securities to which transaction
applies: N/A
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how
it was determined): N/A
(4) Proposed maximum aggregate value of transaction: N/A
(5) Total fee paid: N/A
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or
Schedule and the date of its filing.
(1) Amount Previously Paid: N/A
(2) Form, Schedule or Registration Statement no.: N/A
(3) Filing Party: N/A
(4) Date Filed: N/A
</TABLE>
<PAGE>
[LOGO]
July 31, 2000
Dear Fellow Stockholder:
You are cordially invited to attend the 2000 Annual Meeting of Stockholders
of Viatel, Inc., which will be held on Wednesday, September 13, 2000, in the
Whitney Room at the Hotel Inter-Continental, 111 East 48th Street, New York, New
York 10017, at 10:00 a.m., local time. Doors to the meeting will open at
9:30 a.m.
The business to be considered and voted upon at the meeting is explained in
the accompanying Notice of Annual Meeting of Stockholders and Proxy Statement.
Whether or not you plan to attend the Annual Meeting in person, it is
important that your shares be represented and voted at the Meeting. Accordingly,
after reading the enclosed Notice and Proxy Statement, please sign, date and
return the enclosed proxy card in the postage-paid envelope provided.
I thank you for your continued support of our Company.
Sincerely,
/s/ Michael J. Mahoney
Michael J. Mahoney
CHAIRMAN OF THE BOARD
AND CHIEF EXECUTIVE OFFICER
<PAGE>
VIATEL, INC.
685 THIRD AVENUE
NEW YORK, NEW YORK 10017
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON SEPTEMBER 13, 2000
------------------------
To the Stockholders of Viatel, Inc.:
NOTICE IS HEREBY GIVEN that the 2000 Annual Meeting of the stockholders of
Viatel, Inc., a Delaware corporation (the "Company"), will be held on Wednesday,
September 13, 2000, in the Whitney Room at the Hotel Inter-Continental, 111 East
48th Street, New York, New York 10017, at 10:00 a.m., local time, for the
following purposes:
1. To elect three Class A directors to hold office until the 2003 Annual
Meeting of Stockholders;
2. To approve the Company's 2000 Stock Incentive Plan;
3. To approve an amendment to the Company's Amended and Restated
Certificate of Incorporation to increase the number of authorized shares
of common stock available for future issuance by the Company;
4. To approve an amendment to the Company's Amended and Restated
Certificate of Incorporation to increase the number of authorized shares
of preferred stock available for future issuance by the Company;
5. To approve the Company's Employee Stock Purchase Plan (the "ESPP");
6. To ratify the appointment of KPMG LLP as independent auditors for the
Company for fiscal year 2000; and
7. To transact such other business as may properly be presented at the 2000
Annual Meeting and at any adjournments or postponements thereof.
The Board of Directors has fixed the close of business on July 25, 2000 as
the record date for the purpose of determining stockholders who are entitled to
notice of, and to vote at, the 2000 Annual Meeting and at any adjournments or
postponements thereof. A list of such stockholders will be available during
normal business hours at the Company's office, 685 Third Avenue, New York, New
York 10017, for the ten days before the meeting, for inspection by any
stockholder for any purpose germane to the meeting.
By Order of the Board of Directors,
/s/ James P. Prenetta
James P. Prenetta
SECRETARY
New York, New York
July 31, 2000
PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY
IN THE ENVELOPE PROVIDED, WHETHER OR NOT YOU PLAN TO ATTEND THE 2000 ANNUAL
MEETING. IF YOU ATTEND THE MEETING, YOU MAY VOTE YOUR SHARES IN PERSON IF YOU
WISH, EVEN IF YOU PREVIOUSLY RETURNED YOUR PROXY.
<PAGE>
VIATEL, INC.
685 THIRD AVENUE
NEW YORK, NEW YORK 10017
------------------------
PROXY STATEMENT
------------------------
This Proxy Statement is being furnished to stockholders of Viatel, Inc., a
Delaware corporation (the "Company"), in connection with the solicitation of
proxies by the Company's Board of Directors (the "Board") from holders of the
outstanding shares of the Company's common stock, $0.01 par value per share (the
"Common Stock"), for use at the 2000 Annual Meeting of Stockholders of the
Company to be held on Wednesday, September 13, 2000, in the Whitney Room at the
Hotel Inter-Continental, 111 East 48th Street, New York, New York 10017, at
10:00 a.m., local time, and at any adjournments or postponements thereof (the
"Annual Meeting"), for the purpose of considering and acting upon the matters
set forth herein.
Only holders of record of Common Stock as of the close of business on
July 25, 2000 (the "Record Date") are entitled to notice of, and to vote at, the
Annual Meeting and any adjournments or postponements thereof. At the close of
business on such date, the Company had 50,480,775 outstanding shares of Common
Stock and 162,500 shares of Series B-1 cumulative convertible preferred stock
entitled to vote. The 162,500 shares of Series B-1 cumulative convertible
preferred stock are currently convertible into an aggregate of 3,909,054 shares
of Common Stock. The Series B-1 preferred stock is entitled to vote, on an as
converted basis, on all matters that the holders of Common Stock are entitled to
vote upon. Holders of Common Stock and Series B-1 preferred stock may not
cumulate their votes for the election of directors. Shares of Common Stock and
Series B-1 preferred stock represented by a properly executed proxy, if such
proxy is received in time and not revoked, will be voted at the Annual Meeting
in accordance with the instructions indicated in such proxy. IF NO INSTRUCTIONS
ARE INDICATED, SHARES REPRESENTED BY PROXY WILL BE VOTED:
- "FOR" THE ELECTION, AS DIRECTORS OF THE COMPANY, OF THE THREE NOMINEES
NAMED IN THE PROXY TO SERVE UNTIL THE 2003 ANNUAL MEETING OF STOCKHOLDERS,
- "FOR" THE ADOPTION OF THE COMPANY'S 2000 STOCK INCENTIVE PLAN,
- "FOR" THE AMENDMENT TO THE COMPANY'S AMENDED AND RESTATED CERTIFICATE OF
INCORPORATION (THE "CERTIFICATE OF INCORPORATION") TO APPROVE AN INCREASE
IN THE NUMBER OF SHARES OF COMMON STOCK AVAILABLE FOR FUTURE ISSUANCE,
- "FOR" THE AMENDMENT TO THE COMPANY'S AMENDED AND RESTATED CERTIFICATE OF
INCORPORATION TO APPROVE AN INCREASE IN THE NUMBER OF SHARES OF PREFERRED
STOCK AVAILABLE FOR FUTURE ISSUANCE,
- "FOR" THE ADOPTION OF THE COMPANY'S EMPLOYEE STOCK PURCHASE PLAN (THE
"ESPP"),
- "FOR" THE RATIFICATION OF THE APPOINTMENT OF KPMG LLP AS INDEPENDENT
AUDITORS FOR THE COMPANY FOR FISCAL YEAR 2000 AND IN THE DISCRETION OF THE
PROXY HOLDERS AS TO ANY OTHER MATTER WHICH MAY PROPERLY BE PRESENTED AT
THE ANNUAL MEETING OR ANY ADJOURNMENTS OR POSTPONEMENTS THEREOF.
The Proxy Statement and the accompanying proxy card are being mailed to
Company stockholders on or about July 31, 2000.
Any holder of Common Stock giving a proxy in the form accompanying this
Proxy Statement has the power to revoke the proxy prior to its use. A proxy can
be revoked (i) by an instrument of revocation delivered prior to the Annual
Meeting to the Secretary of the Company, (ii) by a duly executed proxy bearing a
later date or time than the date or time of the proxy being revoked, or
(iii) at the Annual Meeting if the stockholder is present and elects to vote in
person. Mere attendance at the Annual Meeting will not serve to revoke the
proxy. All written notices of revocation of proxies should be addressed to the
Company's principal executive office as follows: Viatel, Inc., 685 Third Avenue,
New York, New York 10017, Attention: James P. Prenetta, Secretary.
<PAGE>
REQUIRED VOTE
Assuming the presence of a quorum at the Annual Meeting:
- the affirmative vote of a plurality of the votes cast at the meeting
either in person or by proxy is required for the election of the three
director nominees listed below;
- the affirmative vote of a majority of the votes cast at the meeting is
required:
- to approve the Company's 2000 Stock Incentive Plan;
- to approve the ESPP; and
- to confirm the selection of KPMG LLP as the Company's independent
auditors for fiscal year 2000; and
- the affirmative vote of the holders of a majority of the total outstanding
shares entitled to vote is required:
- to approve the amendment to the Certificate of Incorporation to
increase the authorized number of shares of Common Stock to
300,000,000 shares; and
- to approve the amendment to the Certificate of Incorporation to
increase the authorized number of shares of preferred stock of the
Company to 4,000,000.
Votes shall be counted by one or more employees of the Company's transfer agent
who will serve as the inspector of elections. The inspector of elections will
canvas the stockholders present in person at the meeting, count their votes and
count the votes represented by proxies presented. Abstentions and broker
non-votes are counted for purposes of determining the number of shares
represented at the meeting to determine a quorum, but are deemed not to have
voted on the proposal. Broker non-votes occur when a broker nominee (which has
voted on one or more matters at the meeting) does not vote on one or more other
matters at the meeting because it has not received instructions to so vote from
the beneficial owner and does not have discretionary authority to so vote. Of
the matters to be voted on at the Annual Meeting, broker nominees do not have
discretionary authority to vote on the proposal to approve the Company's 2000
Stock Incentive Plan, the proposal to amend the Certificate of Incorporation to
increase the number of authorized shares of preferred stock to 4,000,000 shares,
or the proposal to approve the ESPP.
2
<PAGE>
PROPOSAL 1 -- ELECTION OF DIRECTORS
The number of directors of the Company, as determined by the Board, is ten.
The Board consists of three classes: Class A, Class B and Class C. One of the
three classes, comprising one-third of the Company's directors, is elected each
year to succeed the directors whose terms are expiring. In connection with our
March 2000 private placement of shares of preferred stock, certain holders of
these shares were granted the right to elect, as a class, one director to the
Board. This director, John Muse, has been elected as a Class C director. See
"Certain Transactions." 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 Certificate of Incorporation, Class A
directors are to be elected at the Annual Meeting, Class B directors are to be
elected at the Company's 2001 Annual Meeting and Class C directors are to be
elected at the Company's 2002 Annual Meeting.
At the Annual Meeting, three Class A directors are to be elected to the
Board, each to serve until the Company's Annual Meeting to be held in 2003. The
nominees for election at the Annual Meeting are Sheldon M. Goldman, William C.
Murphy and Allan L. Shaw. Each nominee is presently a director of the Company.
If any nominee is unable or unwilling to serve as a director, proxies may be
voted for a substitute nominee designated by the present Board. The Board has no
reason to believe that any of the nominees will be unable or unwilling to serve
as a director.
The following table sets forth the name and age (as of the date of the
Annual Meeting) of the directors, the class to which each director has been
nominated for election or elected, their principal occupations at present, the
positions and offices, if any, held by each director with the Company in
addition to the position as a director, and the period during which each has
served as a director of the Company.
<TABLE>
<CAPTION>
SERVED AS A
NAME AGE PRINCIPAL OCCUPATION -- POSITION HELD DIRECTOR SINCE
---- -------------------- ------------------------------------- --------------
<S> <C> <C> <C>
CLASS A -- 2000
Sheldon M. Goldman.................. 40 Executive Vice President, Corporate 1999
Development
William C. Murphy................... 46 President 2000
Allan L. Shaw....................... 36 Chief Financial Officer 1996
CLASS B -- 2001
Francis J. Mount.................... 58 Chief Technology Officer 1998
Paul G. Pizzani..................... 40 Partner, eVentures LLC 1996
Edward C. Schmults.................. 69 Lawyer 1999
CLASS C -- 2002
John G. Graham...................... 62 President and Chief Executive Officer 1998
of Utilities Mutual Insurance Company
Michael J. Mahoney.................. 41 Chairman of the Board and Chief 1995
Executive Officer
John R. Muse........................ 49 Managing Director and Principal of 2000
Hicks, Muse, Tate & Furst
Alfred West......................... 39 Vice Chairman of the Board 1999
</TABLE>
3
<PAGE>
CLASS A DIRECTORS
SHELDON M. GOLDMAN. Mr. Goldman has served as a director of the Company
since December 1999 and as its Executive Vice President, Corporate Development
since January 2000. Prior to becoming Executive Vice President, Corporate
Development, Mr. Goldman served the Company in a number of capacities, including
as its General Counsel. Mr. Goldman joined the Company in April 1996. From
January 1987 to March 1996, Mr. Goldman was associated with the law firm of
Wien, Malkin & Bettex. Since March 1996, Mr. Goldman has been Of Counsel to the
law firm of Brief Kesselman Knapp & Schulman, LLP.
WILLIAM C. MURPHY. Mr. Murphy has served as a director of the Company since
March 2000 and as its President since February 2000. From 1988 to January 2000,
Mr. Murphy was employed by British Telecom, most recently as its Director of
Customer Service, Sales and Marketing, United Kingdom Corporate Clients Business
Division. Before joining British Telecom, Mr. Murphy worked for ITT WorldCom for
eight years.
ALLAN L. SHAW. Mr. Shaw has served as a director of the Company since June
1996 and as its Chief Financial Officer since January 1996. Mr. Shaw served as
the Company's Treasurer from September 1996 to April 1998 and served as its
Corporate Controller 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.
CLASS B DIRECTORS
FRANCIS J. MOUNT. Mr. Mount has served as a director of the Company since
June 1998 and as its Chief Technology Officer since March 2000. Prior to
becoming Chief Technology Officer of the Company, Mr. Mount served as Senior
Vice President, Engineering and Network Operations from December 1997 to March
2000. Prior to joining the Company, Mr. Mount was Senior Vice President,
Business Initiatives of Primus Telecommunications Group from October 1997 to
December 1997, responsible for Internet telephony, European operations and
network quality. From June 1997 to October 1997, Mr. Mount was Executive Vice
President and Chief Operating Officer of Telepassport, Inc. and was Vice
President and Chief Operating Officer of Telepassport, Inc. from January 1996 to
June 1997. From 1990 to January 1996, Mr. Mount was employed by MCI, most
recently as Director, Global Technical Services, responsible for international
development, alliance management and all technical operations and services
outside the United States, including the construction and maintenance of large
networks such as Hyperstream, "Concert" and private networks for large accounts
such as J.P. Morgan, Procter and Gamble and I.B.M. From March 1967 to December
1989, Mr. Mount was employed by AT&T in various positions.
PAUL G. PIZZANI. Mr. Pizzani has served as a director of the Company since
April 1996. Mr. Pizzani is currently a partner at eVentures LLC. From November
1997 to March 1999, Mr. Pizzani served as a Managing Director of Wasserstein
Perella Emerging Markets L.P. where he had been employed since November 1997.
Prior to November 1997, Mr. Pizzani was associated with COMSAT Corporation and
its subsidiaries in various capacities from November 1985 to October 1997, most
recently as Treasurer.
EDWARD C. SCHMULTS. Mr. Schmults has served as a director of the Company
since December 1999 and was a director of Destia Communications, Inc. ("Destia")
prior to its acquisition by the Company. Mr. Schmults served as Senior Vice
President and General Counsel of GTE Corporation from February 1984 to June
1994. Mr. Schmults has held various positions in government, including Deputy
Attorney General of the United States and Under Secretary of the U.S. Treasury
Department. Mr. Schmults was a partner with White & Case, a law firm in New York
City. Mr. Schmults is a Director of Greenpoint Financial Corp., The Germany
Fund, The Central European Equity Fund and BT Insurance Funds, Inc.
Mr. Schmults is also Chairman of the Board of Trustees of The Edna McConnell
Clark Foundation, a charitable foundation.
4
<PAGE>
CLASS C DIRECTORS
JOHN G. GRAHAM. Mr. Graham has served as a director of the Company since
June 1998. Mr. Graham has been the President and Chief Executive Officer of
Utilities Mutual Insurance Company since May 1, 1999, a position he assumed
following his retirement from GPU Service, Inc. From December 1998 to May 1999,
Mr. Graham was an Executive Vice President of GPU Service, Inc. and from 1987 to
December 1998, was Senior Vice President and Chief Financial Officer of
GPU, Inc., a domestic and international electric utility and independent power
generation company. Mr Graham was employed by GPU in various other capacities
from 1976 to 1987. From 1970 to 1976, Mr. Graham was a partner in the law firm
of Ruprecht and Graham, Newark, New Jersey. From 1993 to 1997, Mr. Graham served
as a Director and Chairman of the Audit Committee of Edisto Resources, Inc.,
which was engaged in the exploration, production and marketing of natural gas
and oil. He is also a director and chairman of the Audit Committee of CoHo
Energy, Inc., of Dallas, Texas, an oil and gas production company.
MICHAEL J. MAHONEY. Mr. Mahoney has served as a director of the Company
since 1995 and as Chairman of the Board since September 1998. Mr. Mahoney has
served as Chief Executive Officer of the Company since September 1997. Mr.
Mahoney was also the Company's President from September 1996 to February 2000,
Chief Operating Officer from September 1996 to September 1997, Executive Vice
President, Operations and Technology from July 1994 to September 1996 and
Managing Director, Intercontinental 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 also serves as a director of Sonus
Communications, Inc., and as a director of several private companies.
JOHN R. MUSE. Mr. Muse has served as a Director of the Company since March
2000. Mr. Muse is the Chief Operating Officer of Hicks, Muse, Tate & Furst, a
private investment firm. Before joining Hicks Muse in 1989, Mr. Muse was with
Prudential Securities, heading its investment/merchant banking activities for
the Southwest region of the United States. Prior to joining Prudential
Securities, from 1980 to 1984 Mr. Muse served as a Senior Vice President and
Director of Schneider, Bemet & Hickman, Inc. and was responsible for its
investment banking activities. Mr. Muse is Chairman of Sunrise Television Corp.,
Arena Brands Holding Corp., Glass's Information Services, G.H. Mumm & Cie. and
Champagne Perrier-Jouet. Mr. Muse serves as director of several portfolio
companies in which Hicks Muse has invested, including International Home Foods,
Regal Cinemas Inc., Suiza Foods Corporation, Olympus Real Estate 4 Corporation,
LIN Television Corporation, Arnold Palmer Golf Management Co., Premier Brands
International and Media Capital. Mr. Muse also serves as director of the
Southern Methodist University Edwin L. Cox School of Business and the Andersen
School of Management at the University of California at Los Angeles.
ALFRED WEST. Mr. West has served as Vice Chairman of the Board since
December 1999. Prior to the Company's acquisition of Destia in December 1999,
Mr. West served as Destia's Chairman of the Board and Chief Executive Officer
from its founding in 1992. Prior to founding Destia, Mr. West managed a
family-owned textile trading company.
THE BOARD RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE ELECTION OF SHELDON M.
GOLDMAN, WILLIAM C. MURPHY AND ALLAN L. SHAW, AS CLASS A DIRECTORS.
5
<PAGE>
GENERAL INFORMATION RELATING TO THE BOARD
THE BOARD
The business and affairs of the Company are managed by the Board. To assist
it in carrying out its duties, the Board has delegated certain authority to
three committees. The Board held five meetings in 1999. Each member of the Board
attended at least 75% of the aggregate meetings of the Board and the committees
thereof of which he was a member during 1999.
COMMITTEES OF THE BOARD
During 1999, the standing committees of the Board consisted of an Audit
Committee, a Compensation Committee and a Directors Committee. The Company's
By-laws provide, in general, that if a stockholder intends to propose business
or make a nomination for the election of directors at an annual meeting, the
Company must receive notice of such intention at least 120 days prior to the
first anniversary of the preceding year's annual meeting. If the date of the
meeting is changed more than 30 days from the prior anniversary date, notice
must be delivered ten days following the day on which notice of the annual
meeting is first mailed to stockholders. The notice must include all information
relating to the proposed nominee required by the Securities and Exchange
Commission (the "Commission") to be disclosed in solicitations of proxies for
election of directors or, in the case of a proposal, a brief description of the
proposal, and any material interest of the stockholder in the proposal. The
notice must also include (i) the name and address of the stockholder giving the
notice and any other stockholders known by such stockholder to be supporting the
nominees or proposal and (ii) the class and number of shares of the Company that
are owned beneficially by such stockholder and by any other stockholders known
by such stockholder to be supporting such nominee or proposal. The foregoing is
only a summary of detailed provisions of the By-laws and is qualified by
reference to the text thereof.
During 1999, the Audit Committee, which consisted of Messrs. Graham and
Pizzani, held one meeting. The Audit Committee's primary duties and
responsibilities are to (i) monitor the integrity of the Company's financial
reporting process and systems of internal controls regarding financial,
accounting, and legal compliance; (ii) monitor the independence and performance
of the Company's independent auditors and internal auditing department, if any;
and (iii) provide an avenue of communications among the Company's independent
auditors, management, internal auditing department, if any, and the Board. The
Audit Committee also recommends to the Board the firm of independent public
accountants to audit the Company's financial statements, reviews with management
and the independent accountants the Company's interim and year-end operating
results, considers the adequacy of internal controls and audit procedures of the
Company and reviews the nonaudit services to be performed by the independent
accountants.
During 1999, the Compensation Committee, which consisted of Messrs. Graham,
Pizzani and Mahoney, held two meetings. The Compensation Committee reviews
general policy matters relating to compensation and benefits of employees and
officers of the Company and administers the Stock Incentive Plans (as
hereinafter defined) and the ESPP.
During 1999, the Directors Committee, which consisted of Messrs. Graham,
Mahoney, Pizzani and Shaw, held no meetings. The Directors Committee searches
for and interviews prospective directors, makes recommendations to the Board
regarding the size of the Board and candidates to fill any vacancies, including
vacancies created by reason of an increase in the size of the Board, and
nominates candidates for election to the Board. Any recommendations by
stockholders should be submitted in writing to the Secretary of the Company in
compliance with the notice requirements described above. Such recommendations
should be sent to the Company at 685 Third Avenue, New York, New York 10017,
Attention: Secretary.
6
<PAGE>
COMPENSATION OF DIRECTORS
The Company pays an annual fee to non-employee directors consisting of
$15,000 in cash, paid in quarterly installments, $15,000 in shares of restricted
Common Stock, and 1,000 options to purchase shares of Common Stock. In addition,
non-employee directors also receive $1,200 for each Board meeting attended and
held separately and $600 for each Board meeting or committee meeting
participated in by telephone. Directors who are employees of the Company are not
separately compensated for serving on the Board. All directors are reimbursed
for out-of-pocket expenses incurred in attending Board and committee meetings.
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 during 1999, and the Company's other four most highly
compensated executive officers during 1999 whose aggregate cash and cash
equivalent compensation exceeded $100,000.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION
-------------------------------------- -------------------------
OTHER
ANNUAL RESTRICTED SECURITIES ALL
COMPENSATION STOCK UNDERLYING OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($)(1) ($)(2) AWARDS($)(3) OPTIONS(#) COMPENSATION(4)
--------------------------- -------- --------- ----------- ------------ ------------ ---------- -----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Michael J. Mahoney,...... 1999 $367,833 $425,000 (2) $2,351,939 90,474 $ 10,000
President and Chief 1998 289,583 260,000 -- -- 360,771 10,000
Executive Officer 1997 212,500 125,000 -- -- -- 9,500
Allan L. Shaw,........... 1999 231,750 252,000 (2) 864,596 42,642 10,000
Senior Vice President, 1998 172,917 107,500 -- -- 195,019 10,000
Finance and Chief 1997 140,000 60,000 -- -- 60,666 8,400
Financial Officer
Lawrence G. Malone,...... 1999 232,850 245,000 (2) 864,596 42,642 10,000
Senior Vice President, 1998 155,833 110,000 -- -- 138,140 9,350
Global Sales and Mar- 1997 141,750 35,588 -- -- 73,533 8,505
keting
Sheldon M. Goldman,...... 1999 238,325 257,200 (2) 864,596 42,642 10,000
Senior Vice President, 1998 182,917 112,000 -- -- 162,500 10,000
Business and Legal 1997 143,750 60,000 -- -- 40,200 9,000
Affairs
Francis J. Mount(5),..... 1999 228,417 250,000 (2) 864,596 42,642 10,000
Senior Vice President, 1998 175,000 107,500 -- -- 122,500 10,000
Engineering and Network
Operations
</TABLE>
------------------------
(1) Includes the following amounts for Messrs. Mahoney, Shaw, Malone, Goldman
and Mount taken in the form of shares of restricted Common Stock, $39,000,
$55,200, $43,720, $51,440 and $50,000, respectively.
(2) The aggregate value of the perquisites and other personal benefits received
by each executive named in the foregoing table has not been reported because
such amount was below the Commission's reporting threshold.
(3) Calculated based on a value of $53.625, the fair market value of the Common
Stock on December 31, 1999. The stock performance criteria associated with
these shares vested on March 29, 2000 when the
7
<PAGE>
Common Stock traded at or above $60 per share for a twenty (20) consecutive
business day period. These shares remain subject to a minimum two year
employment requirement but would vest upon a change of control or a
termination of the named executive without cause.
(4) Represents matching contributions under the Company's 401(k) plan.
(5) Mr. Mount began his employment with the Company in December 1997.
STOCK OPTION GRANTS
The following table sets forth information regarding the Company's grant of
stock options during the fiscal year ended December 31, 1999 to each of the
executives named in the summary compensation table. No stock appreciation rights
were granted during 1999.
OPTION GRANTS IN 1999
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE VALUE
----------------------------------------------------------- AT ASSUMED ANNUAL
NUMBER OF PERCENT OF RATES OF STOCK PRICE
SECURITIES TOTAL OPTIONS APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OPTION TERM (3)
OPTIONS EMPLOYEES IN PRICE EXPIRATION --------------------------
NAME GRANTED (#) 1999 (1) ($/SHARE)(2) DATE (5%) (10%)
---- ----------- ------------- ------------ ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Michael J. Mahoney......... 52,278(4)(5) 6.2% $ 22.875 01/01/09 $ 752,071 $1,905,899
38,196(4)(6) 4.6 43.00 06/01/09 1,032,820 2,617,572
Allan L. Shaw.............. 38,519(4)(5) 4.6 22.875 01/01/09 554,137 1,392,511
4,123(4)(6) 0.5 43.00 06/01/09 111,486 287,549
Lawrence G. Malone......... 38,519(4)(5) 4.6 22.875 01/01/09 554,139 1,392,511
4,123(4)(6) 0.5 43.00 06/01/09 111,436 284,549
Sheldon M. Goldman......... 38,519(4)(5) 4.6 22.875 01/01/09 554,174 1,392,511
4,123(4)(6) 0.5 43.00 06/01/09 111,486 289,549
Francis J. Mount........... 38,519(4)(5) 4.6 22.875 01/01/09 554,139 1,392,511
4,123(4)(6) 0.5 43.00 06/01/09 111,486 289,549
</TABLE>
------------------------
(1) The Company granted options to purchase a total of 837,709 shares of Common
Stock during 1999.
(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) Each of these options vests upon a change in control of the Company. See
"--Employment Agreements."
(5) These options vested and became exercisable as to 33.34% on January 1, 2000
and the remainder will vest and become exercisable on each successive
anniversary date thereafter to the extent of 33.33%.
(6) These options vested and became exercisable as to 33.34% on June 1, 2000 and
the remainder will vest and become exercisable on each successive
anniversary date thereafter to the extent of 33.33%.
8
<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, 1999 by each of the executives
named in the summary compensation table. No stock appreciation rights were
exercised by these executives during 1999.
FISCAL 1999 YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED "IN-THE-MONEY"
ACQUIRED OPTIONS AT FISCAL OPTIONS AT FISCAL
ON VALUE YEAR-END (#) YEAR-END ($)
NAME EXERCISE (#) REALIZED ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE (1)
---- ------------ ------------ ------------------------- -----------------------------
<S> <C> <C> <C> <C>
Michael J. Mahoney..... -- -- 308,089/368,470 $15,436,113/$14,654,551
Allan L. Shaw.......... 20,000 $852,500(2) 131,127/197,866 6,030,293/8,410,111
6,000 276,750(5)
Lawrence G. Malone..... 20,000 835,500(2) 113,409/164,239 5,257,128/6,869,187
Sheldon M. Goldman..... 19,999 757,962(3) 75,976/169,367 3,505,237/7,165,441
Francis J. Mount....... 13,333 593,319(4) 15,590/126,558 714,530/5,208,790
3,667 161,348(4)
6,000 276,750(5)
</TABLE>
------------------------
(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 $53.625 per share, the fair market value of
the Common Stock issuable upon exercise of options at December 31, 1999 and
the exercise price of the option, multiplied by the applicable number of
options.
(2) The amount set forth represents the difference between $47.625 per share,
the fair market value of the Common Stock issuable upon exercise of these
options at June 23, 1999, and the exercise price of the option, multiplied
by the applicable number of options.
(3) The amounts set forth represent the difference between $43.750 per share,
the fair market value of the Common Stock issuable upon exercise of these
options at June 22, 1999, and the exercise price of the option, multiplied
by the applicable number of options.
(4) The amounts set forth represent the difference between $49.50 per share, the
fair market value of the Common Stock issuable upon exercise of these
options at June 7, 1999, and the exercise price of the option, multiplied by
the applicable number of options.
(5) The amount set forth represents the difference between $51.625 per share,
the fair market value of the Common Stock issuable upon exercise of these
options at June 24, 1999, and the exercise price of the option, multiplied
by the applicable number of options.
EMPLOYMENT AGREEMENTS
The Company has employment agreements with Messrs. Mahoney, Shaw and
Goldman, pursuant to which Mr. Mahoney serves as the Company's Chief Executive
Officer, Mr. Shaw serves as the Company's Chief Financial Officer and
Mr. Goldman serves as the Company's Executive Vice President, Corporate
Development. In addition, the Company has employment agreements with Alfred
West, William Murphy, Lawrence Malone and Francis Mount, pursuant to which Mr.
West serves as Vice Chairman of the Board, Mr. Murphy serves as President, Mr.
Malone serves as Executive Vice President, Wholesale Sales and Marketing and Mr.
Mount serves as the Company's Chief Technology Officer. The term of the Mahoney
employment agreement extends for a period of three years, and the term of the
employment agreement of each of Messrs. Shaw, Goldman, West, Murphy, Malone and
Mount extends for a period of two years, in each case unless earlier terminated
in accordance with the terms of the respective agreement. Pursuant to their
respective employment agreement, Mr. Mahoney is entitled to receive an annual
base salary of $450,000 (subject to certain adjustments), Mr. West is entitled
to receive an annual base salary of $400,000, Mr. Murphy is entitled to receive
an annual base salary of $395,000, Mr. Shaw is entitled to receive an annual
base salary of $299,000, Mr. Goldman is entitled to receive an annual base
salary of $304,200 and
9
<PAGE>
Messrs. Malone and Mount are each entitled to receive an annual base salary of
$250,000, subject, in each case, to increases approved from time to time by the
compensation committee of the Board in its sole discretion. In addition,
Mr. Mahoney's agreement provides for an annual cash bonus payment equal to 100%
of his base salary, Mr. West's agreement provides for an annual cash bonus
payment equal to 90% of his base salary, Mr. Murphy's agreement provides for an
annual cash bonus payment equal to 85% of his base salary and each of Messrs.
Shaw's, Goldman's, Mount's and Malone's employment agreement provides for an
annual cash bonus payment equal to 80% of their base salary, in each case
multiplied by a bonus multiple ranging from 0.6 to 2.0 determined based upon a
comparison of actual versus budgeted EBITDA and revenue figures. Each of these
employment agreements also (1) provides that the executive is entitled to
receive annual grants of stock options or restricted stock in amounts to be
determined by the Board (or any committee thereof) in its sole and absolute
discretion, except that Mr. West is entitled to receive a minimum of 20,000
shares of restricted stock with respect to each of calendar years 2000 and 2001,
(2) provides that following a change in control (as defined therein), the
Company will be obligated to pay the executive an amount equal to the severance
amount (as defined therein), together, in the case of Messrs. Mahoney, Murphy,
Shaw, Goldman, Mount and Malone, any applicable excise tax gross up on such
amount if the executive's employment is terminated, and (3) with respect to each
executive, includes a non-competition and non-solicitation covenant.
For purposes of each of the foregoing employment agreements, "change in
control" is defined to mean such time as (1) a "person" or "group" (within the
meaning of Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934,
becomes the ultimate "beneficial owner" (as defined in Rule 13d-3 of the
Securities Exchange Act) of more than 50% of the total voting power of the
Company's then outstanding voting stock on a fully diluted basis or
(2) 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 this 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 PLANS
The Company has adopted an Amended Stock Incentive Plan (the "Stock
Incentive Plan"), the Amended and Restated 1999 Flexible Incentive Plan (the
"1999 Flexible Incentive Plan") (previously a Destia plan) and the Amended and
Restated 1996 Flexible Incentive Plan (previously a Destia plan) (the "1996
Flexible Incentive Plan," and collectively with the Stock Incentive Plan and the
1999 Flexible Incentive Plan, the "Plans"). Pursuant to the Plans,
"non-qualified" stock options to acquire shares of Common Stock may be granted
to the Company's employees, directors and consultants and "incentive" stock
options to acquire shares of Common Stock may be granted to the Company's
employees, including employee-directors. The Plans also provide for the grant of
stock appreciation rights and shares of restricted Common Stock to the Company's
employees, directors and consultants.
The Plans are currently administered by the compensation committee of the
Board. The Plans allow for the issuance of up to an aggregate of 10,417,500
shares of Common Stock, of which approximately 150,000 remain available for
grant. As a result of the Company's acquisition of Destia, virtually all options
granted by Destia prior to the merger under either the 1999 Flexible Incentive
Plan and the 1996 Flexible Incentive Plan vested and became exercisable. Any
options granted under the 1999 Flexible Incentive Plan and the 1996 Flexible
Incentive Plan after the Company's acquisition of Destia will be subject to
accelerated vesting only as described below. Under the Plans, the option price
of any incentive stock option 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 a non-qualified stock option may be less than the fair market value on
the date the non-qualified stock option is granted if the Board so determines.
An incentive stock option may not be granted to a "ten percent stockholder" (as
that term is defined in Section 422A of the Internal Revenue Code) unless the
exercise price is at least 110.0% of the fair market value of the Common Stock
10
<PAGE>
and the term of the option may not exceed five years from the date of grant.
Each option granted pursuant to the Plans is evidenced by a written agreement,
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 that 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 qualify as incentive stock options, the aggregate fair market
value, determined on the date of grant, of the shares with respect to which the
incentive stock options 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, in
whole or in part,
- with shares of Common Stock,
- by irrevocable direction to an approved securities broker to sell shares
and deliver all or a portion of the proceeds to the Company,
- by delivery of a promissory note with any provisions that the Board
determines appropriate, or
- in any combination of these three possibilities.
In addition, the Board, 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 the
stock option and the aggregate option price per share of such Common Stock. In
the discretion of the Board, this 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 a combination of the two.
The Plans provide that outstanding options, restricted shares of Common
Stock or stock appreciation rights vest in their entirety and become
exercisable, or with respect to restricted Common Stock, are released from
restrictions on transfer and repurchase rights, in the event of a "corporate
transaction," unless assumed by the successor corporation. For purposes of the
Plans, a corporate transaction includes any of the following
stockholder-approved transactions to which the Company is a party:
- 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 the 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 that entity
immediately after the transaction,
- 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 the 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 that entity immediately after the
transaction, or
- any reverse merger in which the Company is the surviving entity but in
which the Company's stockholders immediately prior to the 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 the
transaction.
At the Annual Meeting, the Company is soliciting stockholder approval for a
new stock incentive plan. For details regarding the proposed plan, see Proposal
number 2 and Annex A.
EMPLOYEE STOCK PURCHASE PLAN
The Company adopted the ESPP in December 1999 and implemented this plan as
of July 1, 2000.
11
<PAGE>
Under the ESPP, eligible employees are permitted to invest up to 20% of
their base salary in shares of Common Stock. The amounts deducted or, in some
countries, contributed by wire transfer or check, during each six-month period
are accumulated and, at the end of such period, are used to purchase shares of
Common Stock at the lower of 85% of the closing market price on the first
trading day of the relevant participation period or 85% of the closing market
price on the final day of the relevant period.
The ESPP, which is administered by the Compensation Committee of the Board,
allows for the issuance of up to a maximum of five hundred thousand (500,000)
shares of Common Stock. Under the ESPP, a participant has no rights as a
stockholder until he or she acquires the stock at the end of the relevant
participation period.
The ESPP provides that in the event of any reorganization, recapitalization,
stock split, reverse stock split, stock dividend, combination of shares, merger,
consolidation, offering of rights or other similar change in the capital
structure of the Company, the Compensation Committee may make such adjustment,
if any, as it deems appropriate in the number, kind and purchase price of the
shares available for purchase under the ESPP and in the maximum number of shares
that may be issued under the plan, subject to the approval of the Board. If the
Company is acquired in a transaction whereby the Company is not the surviving
entity or all or substantially all of its assets are acquired, the Compensation
Committee is permitted to determine a plan termination date. This date must
precede the expected effective date of such acquisition by not more than sixty
(60) days. In the event the ESPP is terminated and the acquisition transaction
is not consummated, the plan may be reactivated on a date determined by the
Compensation Committee.
The ESPP is designed to qualify as an "employee stock purchase plan" within
the meaning of Section 423 or any successor provisions of the Internal Revenue
Code and related regulations.
For additional details regarding the ESPP, see proposal number 5 and Annex
C.
MANAGEMENT SEVERANCE PLAN
On December 8, 1999, the Company implemented a Management Severance Plan,
which provides that selective members of senior management are entitled to
receive at least six months base salary and accelerated vesting of options and
restricted stock in the event such employee is terminated without "cause" or
resigns for "good reason" within eighteen (18) months following a change in
control of the Company. For purposes of this plan, a resignation for "good
reason" includes a voluntary termination due to a reduction in the employee's
base pay and a forced relocation of the employee to a site in excess of sixty
(60) miles from his or her worksite and the term change in control has the same
meaning described above under "--Employment Agreements." Decisions of the plan
administrator concerning eligibility and entitlement to benefits are final and
binding on all parties.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1999, the members of the Company's Compensation Committee were
Messrs. Pizzani, Mahoney and Graham. Mr. Mahoney is the Chairman of the Board
and Chief Executive Officer. None of the Company's executive officers 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 Board or
the Compensation Committee and the board of directors or compensation committee
of any other company.
12
<PAGE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
During 1999, the members of the Compensation Committee were
Messrs. Pizzani, Mahoney and Graham.
EXECUTIVE COMPENSATION POLICY
The Company's compensation program is designed to attract, motivate, reward
and retain executive personnel capable of making significant contributions to
the long-term success of the Company. During 1999, the Company's compensation
program consisted of base salary, annual incentive bonuses and stock option and
restricted stock grants. Base salary provides the foundation for the Company's
executive pay, its purpose is to compensate the executive for performing his or
her basic duties. The purpose of annual incentive bonuses is to provide rewards
for favorable performance and achievement of intermediate-term objectives while
the purpose of stock option and restricted stock grants is to provide incentives
and rewards for long-term performance and to motivate long-term strategic
planning.
BASE SALARY. Base salaries for the Company's executive officers are set
annually subject, in certain cases, to certain minimum requirements established
under the executives' employment agreement. During 1999, the Company increased
the salaries paid to its executive officers based upon (i) the results of a
formal survey conducted for the Company by a national compensation consulting
firm, (ii) a number of subjective factors, including the individual's
responsibilities, performance, contribution and experience, and (iii) the
Company's performance as compared with the prior year and general economic
factors. As a result of the foregoing, Mr. Mahoney's base salary was increased
to $367,833 during 1999, an increase of approximately 27% over the prior year.
INCENTIVE BONUSES. The Company's executive officers and certain other
officers are eligible to receive annual incentive bonuses which are linked to
the financial and operating performance of the Company and the individual's
performance. Certain executive officers are assigned an individual incentive
target, which represents the amount that would be payable to the executive if
performance goals were met. The incentive targets range from 20% to 100% of base
salary. Mr. Mahoney received a $425,000 bonus in 1999. The incentive bonus paid
to Mr. Mahoney was determined based on a number of factors, including the
completion of phase 1 of the Company's fiber optic network and an equity and
debt offering.
STOCK OPTIONS AND SHARES OF RESTRICTED STOCK. The Company's compensation
program also utilizes stock options and shares of restricted stock which are
intended to provide additional incentive to increase stockholder value. All
stock option awards are granted with an exercise price at least equal to 100% of
fair market value of the Common Stock on the date of grant and generally vest in
increments of one-third. Awards of restricted stock are granted subject to both
employment and stock price performance objectives. Currently, no specific
formula is used to determine option or restricted stock awards to employees but
instead awards are based on guidelines suggested by the Company's outside
compensation consulting firm and a subjective evaluation of each individual's
overall past and expected future contribution to the Company. During 1999,
Mr. Mahoney was granted options to purchase 90,474 shares of Common Stock and
43,859 shares of restricted Common Stock.
13
<PAGE>
SECTION 162(M) OF THE INTERNAL REVENUE CODE
In connection with making decisions with respect to executive compensation,
the Compensation Committee takes into account, as one of the factors that it
considers, the provisions of Section 162(m) of the Internal Revenue Code, which
limits the deductibility by the Company of certain categories of compensation in
excess of $1.0 million paid to certain executive officers.
Respectfully Submitted,
Paul G. Pizzani
Michael J. Mahoney
John G. Graham
CERTAIN TRANSACTIONS
Through August 1999, James Prenetta, Senior Vice President and General
Counsel of the Company, was a partner at the law firm of Kelley Drye & Warren
LLP, Viatel's primary U.S. outside counsel. Mr. Prenetta is currently Of Counsel
to Kelley Drye & Warren LLP and, in such capacity, continues to receive certain
payments from that firm.
Destia had outstanding loans of $308,000 due to Mrs. Rose West, the mother
of Alfred West. During 1999, Destia repaid these loans in full.
Alfred West has borrowed approximately $234,000 from Destia pursuant to
unsecured, interest bearing notes, repayable upon demand.
Sonja Gross, the sister of Alfred West, previously owned a 28% interest in
Destia's Swiss subsidiary, Econophone Services GmbH. On March 30, 1999, Destia
acquired Ms. Gross' interest in such company in exchange for 103,981 shares of
restricted voting common stock of Destia.
On February 1, 2000, the Company entered into a Securities Purchase
Agreement to issue and sell to entities affiliated with HMTF Europe Acquisition
Corp., for a purchase price of $162.5 million, shares of the Company's
Series B-1 cumulative convertible preferred stock. The Series B-1 preferred
stock has an annual dividend rate of 7.5% of the then-effective liquidation
preference and an initial conversion price of $46.25. The Series B-1 preferred
stock is convertible into Common Stock at any time at the option of the holders.
In addition, the Series B-1 preferred stock is redeemable, in whole or in part,
by the Company, at any time on or after the fifth anniversary date of its
issuance and is subject to mandatory redemption on the fifteenth anniversary of
its issue date. In connection with the placement of the Series B-1 preferred
stock, the Company agreed to provide HMTF Europe Acquisition Corp. and its
affiliates with the right to appoint one director. John R. Muse was elected to
the Board as a result of this agreement.
14
<PAGE>
SECURITY OWNERSHIP OF BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of Common Stock, as of July 28, 2000, by (1) each person known to the
Company to own beneficially more than 5% of the Company's outstanding shares of
Common Stock, (2) each of the Company's directors, (3) each person named in the
summary compensation table, and (4) all of the Company's executive officers and
directors, as a group. All information with respect to beneficial ownership has
been furnished to the Company by the respective stockholders.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
NAME AND ADDRESS OF OF BENEFICIAL OWN- PERCENTAGE
BENEFICIAL OWNER ERSHIP(1) OF CLASS
------------------- ------------------ ----------
<S> <C> <C>
College Retirement Equities Fund(2) ........................ 2,630,179 5.2%
730 Third Avenue
New York, NY 10017
Alfred West(3).............................................. 5,092,144 10.1
Michael J. Mahoney(4)....................................... 600,956 1.2
Allan L. Shaw(4)............................................ 271,186 *
Lawrence G. Malone(4)....................................... 237,973 *
Sheldon M. Goldman(4)(5).................................... 191,738 *
Francis J. Mount(4)......................................... 126,143 *
Edward C. Schmults(4)....................................... 7,869 *
John G. Graham(4)........................................... 3,497 *
Paul G. Pizzani(4).......................................... 2,497 *
John R. Muse(6)............................................. -- *
William C. Murphy........................................... 49,075 *
Thomas O. Hicks ............................................ 4,519,599(7) 9.0
200 Crescent Court
Dallas, Texas 75201
Chase Equity Associates, LLC ............................... 3,185,875(8) 6.3
380 Madison Avenue
12th Floor
New York, New York 10017
All directors and executive
officers as a group (19 persons).......................... 6,790,785 13.2%
</TABLE>
------------------------
* 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 July 28, 2000 are deemed outstanding. Such
shares, however, are not 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. Except as otherwise indicated, the address of each
person listed in the table is c/o Viatel, Inc., 685 Third Avenue, New York,
New York 10017. Attn: General Counsel.
(2) Includes 900 shares held by TIAA Separate Account VA-1; 90,655 shares held
by TIAA-CREF Mutual Funds; 6,479 shares held by TIAA-CREF Institutional
Mutual Funds; and 100 shares held by TIAA-CREF Life Funds.
(3) Includes 397,593 shares held by AT Econ Ltd. Partnership and 39,297 shares
held by AT Econ Ltd. Partnership No. 2.
(4) Includes shares of Common Stock that these individuals have the right to
acquire through the exercise of options within 60 days of July 28, 2000, as
follows: Michael J. Mahoney, 345,687; Allan L. Shaw,
15
<PAGE>
165,560; Lawrence G. Malone, 122,621; Sheldon M. Goldman, 94,755; Francis J.
Mount, 8,877; Edward C. Schmults, 5,340; John G. Graham, 1,463; and Paul G.
Pizzani, 1,463.
(5) Includes 1,000 shares owned by Mr. Goldman's wife. Mr. Goldman disclaims
"beneficial ownership" of such shares within the meaning of Rule 13d-3 under
the Securities Exchange Act.
(6) Mr. Muse, one of the Company's directors, was appointed to the Board on
behalf of the holders of the Company's Series B-1 cumulative convertible
preferred stock. See "Certain Transactions."
(7) The amount shown for Mr. Hicks is based upon a Schedule 13D filed on
March 20, 2000 by Mr. Hicks, chief executive officer of Hicks, Muse, Tate &
Furst Incorporated, Hicks, Muse, Tate & Furst Europe Fund, L.P.; HMEU Viatel
Qualified Fund LLC; Hicks, Muse, Tate & Furst Europe Private Fund, L.P.;
HMEU GP LLC; HMEU Viatel I-EQ Coinvestors, LLC; HMEU I-EQ Coinvestors, L.P.;
HMEU Viatel I-SBS Coinvestors, LLC; HMEU I-SBS Coinvestors, L.P.; HMEU
Intermediate Partners I-C, L.P.; Viatel PG Europe LLC; HM PG Europe I, C.V.;
HMEU Fund I-C, Inc.; HMTF Bridge Viatel, LLC; HMTF Bridge Partners, L.P.;
and HMTF Bridge Partners, LLC. The amount shown assumes conversion of all of
the Company's Series B-1 cumulative convertible preferred stock beneficially
owned by such entities. The shares shown are subject to shared voting and
investment power.
(8) The amount shown assumes conversion of all Series B-2 cumulative convertible
preferred stock beneficially owned by Chase Equity Associates, LLC.
CUMULATIVE TOTAL STOCKHOLDERS RETURN
The following graph shows a comparison of cumulative total returns on the
Common Stock against the cumulative total return for The Nasdaq Stock
Market--U.S. Index and The Nasdaq Telecommunications Index. The graph assumes an
investment of $100 on October 18, 1996 (the date the Common Stock began trading
on The Nasdaq National Market) in the Common Stock, The Nasdaq Stock
Market--U.S. Index and The Nasdaq Telecommunications Index. Cumulative total
return assumes reinvestment of dividends. The performance shown is not
necessarily indicative of future performance.
16
<PAGE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
VIATEL, INC. NASDAQ STOCK MARKET - U.S. INDEX NASDAQ TELECOMMUNICATIONS INDEX
<S> <C> <C> <C>
10/18/96 100 100 100
Dec-96 75 104 103
Mar-97 55 98 96
Jun-97 56 116 121
Sep-97 39 136 140
Dec-97 42 127 153
Mar-98 115 149 194
Jun-98 142 153 207
Sep-98 89 138 184
Dec-98 191 179 250
Mar-99 238 200 309
Jun-99 468 219 329
Sep-99 246 224 305
Dec-99 447 324 433
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
QUARTERLY CUMULATIVE TOTAL RETURN ($)
-----------------------------------------------------
NASDAQ
NASDAQ STOCK TELECOMMUNICATIONS
QUARTER-END VIATEL, INC. MARKET-U.S. INDEX INDEX
----------- ------------ ----------------- ------------------
<S> <C> <C> <C>
December 31, 1996................................. 75 104 103
March 31, 1997.................................... 55 98 96
June 30, 1997..................................... 56 116 121
September 30, 1997................................ 39 136 140
December 31, 1997................................. 42 127 153
March 31, 1998.................................... 115 149 194
June 30, 1998..................................... 142 153 207
September 30, 1998................................ 89 138 184
December 31, 1998................................. 191 179 250
March 31, 1999.................................... 238 200 309
June 30, 1999..................................... 468 219 329
September 30, 1999................................ 246 224 305
December 31, 1999................................. 447 324 433
</TABLE>
PROPOSAL 2 -- ADOPTION OF THE COMPANY'S 2000 STOCK INCENTIVE PLAN
In July 2000, subject to stockholder approval, the Board adopted the
Company's 2000 Stock Incentive Plan and directed that the plan be submitted to
the Company's stockholders for their approval. This new plan will allow for the
issuance of up to 5.2 million shares of Common Stock.
The Board believes that the Company and its stockholders have benefitted
from the grant of stock options and restricted stock in the past and that
similar benefits will result from the adoption of the 2000 Stock Incentive Plan.
It is believed that stock options and restricted stock play an important role in
providing eligible employees with an incentive and inducement to contribute
fully to the further growth and development of the Company because of the
opportunity to acquire a proprietary interest in the Company on an attractive
basis.
The following summary of the Company's 2000 Stock Incentive Plan, as
proposed to be adopted, is subject to the complete terms of the plan, a copy of
which is attached to this Proxy Statement as Annex A and incorporated by
reference herein.
1. ADMINISTRATION. The plan will be administered by the Compensation
Committee, which must consist of not less than two non-employee director
members. Subject to the provisions of the plan, the Compensation Committee has
sole authority to select eligible participants, determine (subject to the terms
of the plan) the terms and timing of grants and to generally interpret and
administer the plan.
2. PARTICIPANTS. Subject to the terms of the plan, employees, officers,
directors, independent contractors and consultants of the Company or an
affiliate of the Company selected by the Compensation Committee, in its
discretion, will be eligible to receive grants under the plan.
3. TYPES OF AWARDS. The plan will authorize the granting of stock options
(both incentive stock options and nonqualified stock options), shares of
restricted Common Stock, shares of bonus stock, SARs and any other form of stock
benefit or stock-related benefit. The terms and features of these various forms
of awards are set forth below and are described more fully in Annex A hereto.
STOCK OPTIONS. Options granted under the plan may be either incentive stock
options or nonqualified stock options. Options may be granted to participants in
such number, at such times, and subject to such terms and conditions as the
Compensation Committee may determine, except that: (i) the option price of an
incentive stock option may not be less than the fair market value of the Common
Stock on the date of grant; (ii) the option price of a nonqualified stock option
may be as determined by the Compensation Committee; (iii) no incentive stock
option may be granted to a "ten percent stockholder" (as such term is
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defined in Section 422A of the Internal Revenue Code) unless the exercise price
is at least 110.0% of the fair market value of the Common Stock on the date of
grant and the term of the option may not exceed five years from the date of
grant; (iv) no incentive stock option may be exercised more than ten years after
the date of grant; and (v) the aggregate fair market value of the stock with
respect to which incentive stock options are exercisable by a participant for
the first time by the grantee during any calendar year may not exceed $100,000.
With respect to each option granted under the plan, the Compensation Committee
may determine and reflect in the option agreement such other terms, provisions
and conditions consistent with the plan as may be determined by the Compensation
Committee.
Payment for the shares of Common Stock purchased upon exercise of an option
must be made in full upon exercise of the option, by cash (including the
following cash equivalents: certified check, bank draft or postal or express
money order payable to the order of the Company in lawful money of the United
States); provided, however, that the Compensation Committee, in its sole
discretion, may permit a participant to pay the option price, in whole or in
part (i) with shares of Common Stock owned by the participant, (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 Compensation Committee determines
appropriate, or (iv) in any combination of the foregoing. In addition, the
Compensation Committee, in its sole discretion, may authorize the surrender by a
participant of all or part of an unexercised 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 option and the
aggregate option price of such shares of Common Stock. In the Compensation
Committee's discretion, such payment may be made in cash, shares of Common Stock
with a fair value on the date of surrender equal to the payment amount, or some
combination thereof.
Each option issued to a participant will be exercisable in accordance with
its terms so long as the participant is an employee of the Company or an
affiliate of the Company. In addition, to the extent then exercisable options
will be exercisable by a participant for a period of thirty (30) days after
termination of employment or consulting relationship or such longer period of
time as may be permitted by the Internal Revenue Code (but in no event later
than the expiration date of the option). Options will vest in accordance with
the schedule established by the Compensation Committee at the time of grant and
will not be exercisable until vested. In the event of a Corporate Transaction
(as defined in the form of the plan attached as Annex A hereto), however,
outstanding options will, to the extent not then vested, vest in their entirety
and become exercisable unless assumed by the successor corporation or its parent
company pursuant to options providing substantially equal value and having
substantially equivalent provisions as the options granted pursuant to the plan.
SHARES OF RESTRICTED COMMON STOCK. Shares of restricted Common Stock may be
sold or granted under the plan in such numbers and at such times during the term
of the plan as the Compensation Committee shall determine. Each participant who
receives a grant of shares of restricted Common Stock or who purchases shares
subject to restrictions will have all the rights of a stockholder with respect
to such shares of restricted Common Stock (subject to certain restrictions that
may be imposed on transferability), including the rights to vote, receive
dividends (including stock dividends), participate in stock splits or other
capitalizations and exchange such shares in a merger, consolidation or other
reorganization.
Each sale or grant of restricted Common Stock pursuant to the plan will be
evidenced by a written restricted stock purchase agreement or restricted stock
bonus agreement, which agreement may contain such other terms, provisions and
conditions consistent with the plan as may be determined by the Compensation
Committee, including restrictions on transfer and forfeiture and vesting
provisions.
In the event of a Corporate Transaction, any shares of restricted Common
Stock will be released from restrictions on transfer and repurchase rights
unless assumed by the successor corporation or its parent company pursuant to
restricted stock agreements providing substantially equal value and having
substantially equivalent provisions as the shares of restricted Common Stock
granted pursuant to the plan.
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SARS. SARs may be granted under the plan either separately or in tandem
with options and will be subject to such terms and conditions as the
Compensation Committee may deem appropriate. Each SAR will entitle the holder to
surrender the SAR, and to receive from the Company in exchange therefor, cash
compensation equal to any appreciation in value of the Common Stock underlying
such SAR. In the event of a Corporate Transaction, outstanding SARs will vest in
their entirety and become exercisable unless assumed by the successor
corporation or its parent company pursuant to SARs providing substantially equal
value and having substantially equivalent provisions as the SARs granted
pursuant to the plan.
OTHER AWARDS. The Compensation Committee may also grant any other stock or
stock-related awards to participants that the Compensation Committee deems
appropriate, including, but not limited to, bonuses of shares and grants of
shares based on performance or upon the satisfaction of other conditions.
4. TERMINATION AND AMENDMENTS. The plan will terminate with respect to
Incentive Stock Options on June 15, 2010. However, the Board will be entitled
to, at any time, amend, suspend or terminate the plan as it deems advisable,
provided that such amendment, suspension or termination complies with all
applicable requirements of state and federal law, including any applicable
requirement that the plan, or any amendment to the plan, be approved by the
Company's stockholders. Notwithstanding the foregoing, the Board will not be
entitled to amend the plan without the approval of the stockholders of the
Company to: (i) increase the maximum number of shares subject to incentive stock
options issued under the plan; or (ii) change the designation or class of
persons eligible to receive incentive stock options under the plan.
5. TRANSFERABILITY. Neither options granted pursuant to the plan, nor any
right thereunder, will be transferable by the participant by operation of law or
otherwise other than by will or the laws of descent and distribution. During the
participant's lifetime, options may be exercised only by the participant. Stock
subject to a restricted stock purchase agreement, restricted stock bonus
agreement or other agreements relating to a stock benefit or stock-related
benefit will be transferable only as provided in such agreement.
6. CONSIDERATION. The consideration to be received by the Company for the
granting of options, SARs, shares of restricted Common Stock and certain other
forms of stock benefits or stock-related benefits will be the continued
employment of participants. Consideration for the issuance of shares under the
plan will also consist of the payment of the option price upon exercise of an
option, surrender of a related option upon exercise of a SAR and payment of the
established purchase price with respect to the purchase of shares of restricted
Common Stock and certain forms of stock benefits or stock-related benefits.
7. TAX CONSEQUENCES. The grant of an option or SAR will have no immediate
tax consequences for the participant or the Company. The participant will have
no taxable income upon exercising an incentive stock option (except that an
alternative minimum tax may apply), and the Company will not receive a deduction
when an incentive stock option is exercised. If the participant does not dispose
of the shares of Common Stock acquired on exercise of an incentive stock option
within the two-year period beginning on the day after the grant of the incentive
stock option or within one year after the transfer of such shares to the
participant, the gain or loss on a subsequent sale will be a capital gain or
loss to the participant. The Company would not be entitled to any deduction in
such event. If the participant disposes of the shares within the two-year or
one-year period described above, the participant generally will realize ordinary
income and the Company will be entitled to a corresponding deduction. Upon
exercising a SAR or a nonqualified stock option, the participant must recognize
ordinary income in an amount equal to the difference between the exercise price
and the fair market value of the Common Stock on the date of exercise, unless
the shares of Common Stock received are subject to certain restrictions. The
Company will be entitled to a deduction for the same amount as of the exercise
date (or the date the restrictions lapse).
Awards granted under the plan that are settled in cash or shares of Common
Stock that are either transferable or not subject to a substantial risk of
forfeiture will be taxable as ordinary income in an amount equal to the cash or
the fair market value of the shares received. Awards granted under the plan that
are settled in shares of Common Stock that are subject to restrictions as to
transferability or subject to
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a substantial risk of forfeiture will be taxable as ordinary income in an amount
equal to the fair market value of the shares received at the first time such
shares become transferable or not subject to a substantial risk of forfeiture,
whichever occurs earlier. Awards of restricted Common Stock granted under the
plan will be taxable as ordinary income, as of the earlier of the date that the
shares become transferable or are no longer subject to a substantial risk of
forfeiture, in an amount equal to the fair market value of the shares on such
date, unless the participant makes an election under Section 83(b) of the
Internal Revenue Code. If a Section 83(b) election is made, the participant will
be required to include in income the value of the shares as of the date of
grant.
The Company will receive a deduction for the amount recognized as income by
the participant, subject to the provisions of Section 162(m) of the Internal
Revenue Code, which provides for a possible denial of a tax deduction to the
Company for compensation paid by it to certain key executive officers in excess
of $1.0 million in any year.
The tax treatment upon disposition of shares of Common Stock acquired under
the plan will depend on how long the shares have been held. In the case of
shares of Common Stock acquired through exercise of an option, the tax treatment
will also depend on whether or not the shares were acquired by exercising an
incentive stock option. There will be no tax consequences to the Company upon
disposition of shares of Common Stock acquired under the plan, except that the
Company may receive a deduction in the case of disposition of shares acquired
under the plan before the applicable holding period has been satisfied.
8. OTHER INFORMATION. The closing price of the Common Stock on July 28,
2000 was $14.00.
THE BOARD RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE APPROVAL OF THE
COMPANY'S 2000 STOCK INCENTIVE PLAN.
PROPOSAL 3 -- AMENDMENT TO CERTIFICATE OF INCORPORATION REGARDING INCREASE IN
AUTHORIZED COMMON STOCK
In July 2000, subject to stockholder approval, the Board adopted an
amendment to the Certificate of Incorporation pursuant to which the number of
authorized shares of Common Stock would be increased from 150,000,000 to
300,000,000, and, as a result, the Company's total authorized shares of capital
stock would be increased from 152,000,000 to 304,000,000 (assuming approval of
Proposal 4 to authorize an increase in the number of authorized preferred
stock).
If the stockholders approve the amendment, the Company's Certificate of
Incorporation will be amended as proposed by the Board and the number of
authorized shares of Common Stock will be increased to 300,000,000. See Annex B
for the text of the proposed amendment to the Company's Certificate of
Incorporation.
Of the 150,000,000 currently authorized shares of Common Stock, as of
July 25, 2000, 50,480,775 shares of Common Stock were issued and outstanding and
an additional 22,554,835 were reserved for issuance under the Plans and the
ESPP, for conversion of outstanding preferred stock and trust certificates and
upon exercise of warrants.
The Board believes that the increase in the number of authorized shares of
Common Stock will provide the Company flexibility in connection with future
activities, including:
- financings;
- investment opportunities;
- acquisitions of other companies;
- stock dividends or splits;
- employee benefit plans; and
- for other corporate purposes that the Board deems advisable.
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If the proposed amendment is approved, all or any of the authorized shares
of Common Stock may be issued from time to time as determined by the Board
without further action by the stockholders, subject to any restrictions imposed
by The Nasdaq National Market and unless issued in transactions, such as certain
mergers, which require stockholder approval. Accordingly, the Company would be
in a position to use its Common Stock to take advantage of market conditions and
opportunities without the delay and expense associated with the holding of a
special meeting of stockholders. Although the Company may, based on its review
of prevailing market conditions, issue and sell shares of Common Stock in the
public markets, currently there is no agreement, arrangement or understanding
relating to the issuance and sale of Common Stock. No preemptive rights exist
with respect to any outstanding shares of Common Stock. The issuance of
additional shares of Common Stock may cause dilution to present stockholders.
THE BOARD RECOMMENDS A VOTE "FOR" APPROVAL OF THE PROPOSED AMENDMENT TO THE
COMPANY'S CERTIFICATE OF INCORPORATION AUTHORIZING AN INCREASE IN THE NUMBER OF
SHARES OF COMMON STOCK AVAILABLE FOR FUTURE ISSUANCE.
PROPOSAL 4 -- AMENDMENT TO CERTIFICATE OF
INCORPORATION REGARDING INCREASE IN AUTHORIZED PREFERRED STOCK
In July 2000, subject to stockholder approval, the Board adopted an
amendment to the Certificate of Incorporation pursuant to which the number of
authorized shares of preferred stock, $.01 par value, of the Company would be
increased from 2,000,000 to 4,000,000.
If the stockholders approve the amendment, the Certificate of Incorporation
will be amended as proposed by the Board and the number of authorized shares of
preferred stock will be increased to 4,000,000. See Annex B for the text of the
proposed amendment to the Certificate of Incorporation.
Of the 2,000,000 shares of preferred stock authorized, 1,000 shares are
designated as Series A junior participating preferred stock, 325,000 shares are
designated as 7.50% Series B-1 cumulative convertible preferred stock due 2015,
325,000 shares are designated as 7.50% Series B-2 cumulative convertible
preferred stock due 2015 and 162,500 shares are designated as Series C preferred
stock. Of the designated shares of preferred stock, 162,500 shares of B-1
preferred stock and 162,500 shares of B-2 preferred stock are currently issued
and outstanding.
If the proposed amendment is approved, all or any of the authorized shares
of preferred stock may be issued without further action by the stockholders,
subject to any restrictions imposed by The Nasdaq National Market, and without
first offering such shares to the stockholders for subscription.
While the Board does not have a present plan to issue additional shares of
preferred stock, it believes that it is desirable that the Company have the
flexibility to issue such shares without further stockholder action.
The Board believes that the increase in the number of authorized shares of
preferred stock will provide the Company flexibility in connection with future
activities, including:
- financings;
- investment opportunities;
- acquisitions of other companies; and
- other corporate purposes that the Board deems advisable.
The Board will determine whether or when and on what terms the issuance of
shares of preferred stock may be warranted in connection with any of the
foregoing purposes.
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The availability for issuance of additional shares of preferred stock could
enable the Board to render more difficult or discourage an attempt to obtain
control of the Company. The Company is not currently aware of any pending or
threatened efforts to obtain such control.
THE BOARD RECOMMENDS A VOTE "FOR" APPROVAL OF THE PROPOSED AMENDMENT TO THE
COMPANY'S AMENDED AND RESTATED CERTIFICATE OF INCORPORATION AUTHORIZING AN
INCREASE IN THE NUMBER OF SHARES OF PREFERRED STOCK AVAILABLE FOR FUTURE
ISSUANCE.
PROPOSAL 5 -- ADOPTION OF THE VIATEL INC. EMPLOYEE STOCK
PURCHASE PLAN
Effective December 1999, the Board adopted the ESPP. In order to receive
favorable tax treatment under Section 423 of the Internal Revenue Code,
stockholder approval of the ESPP is required. A summary of the material features
of the ESPP follows. This summary is qualified in its entirety by reference to
the full text of the ESPP, which is attached to this Proxy as Annex C and
incorporated by reference herein.
The ESPP provides eligible employees of the Company and its designated
subsidiaries with an opportunity to acquire shares of Common Stock and thereby
acquire an interest in the future of the Company. The maximum number of shares
of Common Stock that may be purchased under the ESPP is 500,000.
Employees eligible to participate in the ESPP include each regular
(non-temporary) employee of the Company and of each eligible subsidiary. No
employee may participate in the ESPP to the extent that, immediately after such
participation, such employee would own capital stock of the Company or any
subsidiary and/or hold outstanding options to purchase such stock possessing
five percent (5%) or more of the total combined voting power or value of all
classes of capital stock of the Company or any subsidiary.
An offer to purchase Common Stock under the ESPP (an "Offer") was made on
July 15, 2000 (the "Offer Date") and will last for 6 months (the "Offer
Period"), ending on January 14, 2001. Subsequent Offers may be made under the
ESPP. No Offer will have a term of more than 6 months.
An eligible employee may participate in an Offer by authorizing payroll
deductions or, in some countries, making contributions by wire transfer or
check, of up to 20% of his or her base salary per pay period. Amounts
withheld/contributed will be held for the credit of the participant as part of
the Company's general funds. On the last day of each participation period (the
"Purchase Date"), the entire account balance of a participating employee is
applied to purchase shares of Common Stock at a purchase price equal to the
lower of (i) 85% of the closing market price of the Common Stock on the first
day of the Offer Period; (ii) 85% of the closing market price of the Common
Stock on the last trading day of the Offer Period (the "Option Price"). In no
event, however, is an employee permitted to purchase in excess of $25,000 worth
of shares of Common Stock under this plan (determined based upon the fair market
value of the Common Stock at the applicable Grant Date) during a calendar year.
An employee who is not eligible to participate in the ESPP on the effective
date of an Offer but who becomes eligible during the term of the Offer may
participate in the next Offer Period by authorizing payroll deductions or, where
applicable, by making contributions by wire transfer or check, as described
above.
In the event of any change in the outstanding Common Stock due to a
reorganization, recapitalization, stock split, reverse stock split, capital
stock dividend, combination of shares, merger, consolidation, offering of rights
or other similar change in the capital structure of the Company, adjustments may
be made in the number, kind and price of shares available for purchase under the
ESPP and in the maximum number of shares that may be issued under the ESPP.
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The Company has the right to terminate or amend the ESPP at any time without
stockholder approval unless stockholder approval is required by Section 423 of
the Internal Revenue Code or another law or regulation. If not previously
terminated by the Company, the ESPP will terminate on December 17, 2009.
ADMINISTRATION. The Compensation Committee of the Board will supervise the
administration and enforcement of the ESPP and will have the exclusive right to
interpret the provisions of the ESPP and to determine any questions arising
thereunder.
CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES. A participant's contributions
through payroll deductions and/or by wire transfer or check, are not tax
deductible but will constitute a part of the cost basis of the Common Stock
purchased under the ESPP.
No tax liability results upon the purchase of Common Stock. The employee
becomes liable for Federal income tax on the disposition of the Common Stock. In
order to receive the beneficial treatment provided under Section 423 of the
Internal Revenue Code, a participant must hold the Common Stock for two years
from the Offer Date, or one year from the Purchase Date, whichever is later.
If an employee disposes of shares acquired under the ESPP after the holding
period, or if an employee dies while holding any shares acquired under the ESPP,
the employee must include in gross income, as compensation, in the taxable year
of disposition or death, an amount with respect to each share of Common Stock
equal to the lesser of (i) the excess of the fair market value of the share at
the time of the disposition or death over the amount paid for the share, or (ii)
the excess of the fair market value of the share on the first day of the Offer
over 85 percent of the fair market value of the share on the first day of the
Offer. The Company will not be allowed a corresponding deduction for the amount
treated as ordinary income.
Except in the case of death, the basis of the shares in the employee's hands
at the time of the disposition will equal the price paid for the shares
increased by the amount, if any, included in the employee's gross income as
compensation. Any additional gain recognized will be treated as short-term or
long-term capital gain depending on the holding period of such shares. In the
case of death of the employee, the basis of the shares to the employee's estate
or heirs will be determined under Section 1014 of the Internal Revenue Code.
If an employee disposes of any of the shares purchased under the ESPP before
the expiration of the required holding period, the employee must include in
gross income, as compensation, an amount with respect to each share equal to the
excess of the fair market value of the share on the last trading day prior to
the date of purchase over the price paid for such share pursuant to the ESPP.
Such amount will be includible in the gross income of the employee for the
employee's taxable year in which the disposition occurs. The Company will be
allowed a corresponding deduction in the same year and in the same amount
required to be included in gross income by the employee if and to the extent
such amount is an ordinary and necessary business expense and satisfies the test
of reasonable compensation, provided that the Company's deduction with respect
to certain officers may be limited by Section 162(m) of the Internal Revenue
Code.
The basis of the shares in the hands of the employee will be the amount paid
for the shares plus the amount, if any, included in the employee's gross income
as compensation. Any gain or loss will be short-term or long-term capital gain
or loss depending on the holding period for such shares. The holding period for
the shares will commence on the date the shares are acquired by the employee
from the Company.
The foregoing is intended as a summary of certain U.S. Federal income tax
consequences associated with the ESPP and it does not purport to be a complete
statement of such consequences. Except as otherwise discussed, tax treatment
under foreign, state, local or other law, including estate tax law, is not
covered by the foregoing summary.
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PROPOSAL 6 -- RATIFICATION OF THE SELECTION OF INDEPENDENT AUDITORS
The Board desires to obtain stockholder ratification of the resolution
appointing KPMG LLP, New York, New York, as independent auditors for the Company
for fiscal year 2000. KPMG LLP served as the Company's auditors for the fiscal
year ended December 31, 1999.
If the appointment of KPMG LLP is not ratified, the adverse vote will be
considered as an indication to the Board that it should select other independent
auditors for the following fiscal year. Given the difficulty and expense of
making any substitution of auditors after the beginning of the current fiscal
year, it is contemplated that the appointment for fiscal year 2000 will be
permitted to stand unless the Board finds other good reason for making a change.
A representative of KPMG LLP will attend the Annual Meeting, will have an
opportunity to make a statement if he or she desires to do so, and will be
available to respond to appropriate questions.
THE BOARD RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE RATIFICATION OF THE
APPOINTMENT OF KPMG LLP AS INDEPENDENT AUDITORS FOR THE COMPANY FOR FISCAL YEAR
2000.
COSTS OF SOLICITATION
The cost of preparing, printing and mailing this Proxy Statement and the
accompanying proxy card, and the cost of solicitation of proxies on behalf of
the Board will be borne by the Company. The Company has retained Corporate
Investor Communications, Inc. (the "CIC") to assist in the solicitation of
proxies from stockholders at an estimated fee of $7,500, plus reimbursement of
out-of-pocket expenses. In addition to the use of the mail, proxies may be
solicited personally or by telephone by regular employees of the Company without
additional compensation as well as by CIC. Banks, brokerage houses and other
institutions, nominees or fiduciaries will be requested to forward the proxy
materials to the beneficial owners of the Common Stock held of record by such
persons and entities and will be reimbursed for their reasonable expenses
incurred in connection with forwarding such material.
OTHER MATTERS
As of the date of this Proxy Statement, the Board knows of no other matters
that will be brought before the Annual Meeting. In the event that any other
business is properly presented at the Annual Meeting, it is intended that the
persons named in the enclosed proxy will have authority to vote such proxy in
accordance with their judgment on such business.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities 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 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, 1999.
SUBMISSION OF STOCKHOLDER PROPOSALS
Stockholder proposals submitted for inclusion in the Proxy Statement to be
issued in connection with the Company's 2001 Annual Meeting of Stockholders must
be mailed to the Secretary, Viatel, Inc., 685 Third Avenue, 24th Floor, New
York, New York 10017, and must be received by the Secretary on or before
March 29, 2001. In addition, stockholder proposals for presentation at the 2001
Annual Meeting must also
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be received on or before March 29, 2001. See "General Information Relating to
the Board -- Committees of the Board."
ANNUAL REPORT
A copy of the Company's 1999 Annual Report to Stockholders is being mailed
with this Proxy Statement to each stockholder entitled to vote at the Annual
Meeting. Stockholders not receiving a copy of such Annual Report may obtain one,
without charge, by writing or calling Cindy B. Glynn, Director, Investor
Relations, Viatel, Inc., 685 Third Avenue, New York, New York 10017, telephone
(212) 350-9200.
By Order of the Board of
Directors,
/s/ James P. Prenetta
James P. Prenetta
SECRETARY
New York, New York
July 31, 2000
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ANNEX A
VIATEL, INC.
2000 STOCK INCENTIVE PLAN
1. ESTABLISHMENT, PURPOSE, AND DEFINITIONS.
(a) There is hereby adopted the 2000 Stock Incentive Plan (the "Plan") of
VIATEL, INC. (the "Company").
(b) The purpose of the Plan is to provide a means whereby Eligible
Individuals (as defined in paragraph 4, below) can acquire Common Stock, $.01
par value, of the Company (the "Stock"). The Plan provides employees (including
officers and directors who are employees) of the Company and of its Affiliates
(as defined in subparagraph (c) below) an opportunity to purchase shares of
Stock pursuant to options which may qualify as incentive stock options (referred
to as "Incentive Stock Options") under Section 422 of the Internal Revenue Code
of 1986, as amended (the "Code"), and employees, officers, directors,
independent contractors, and consultants of the Company and of its Affiliates an
opportunity to purchase shares of Stock pursuant to options which are not
described in Sections 422 or 423 of the Code (referred to as "Nonqualified Stock
Options"). The Plan also provides for the sale or bonus of Stock to Eligible
Individuals in connection with the performance of services for the Company or
its Affiliates. Further, the Plan authorizes the grant of stock appreciation
rights ("SARs"), either separately or in tandem with options, entitling holders
to cash compensation measured by appreciation in the value of the Stock.
Finally, the Plan authorizes the grant of any other stock benefit or
stock-related benefit that the Committee (as defined in paragraph 2(a) below)
deems appropriate.
(c) The term "Affiliates" as used in the Plan means parent or subsidiary
corporations, as defined in Sections 424(e) and (f) of the Code (but
substituting "the Company" for "employer corporation"), including parents or
subsidiaries which become such after adoption of the Plan.
2. ADMINISTRATION OF THE PLAN.
(a) The Plan shall, unless otherwise determined by the Board of Directors,
be administered by the Compensation Committee of the Board (the "Committee").
The Committee shall consist of not less than two non-employee director members
within the meaning of the rules promulgated under Section 16(b) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). Members of the
Committee shall serve at the pleasure of the Board. The Committee shall select
one of its members as chairman, and shall hold meetings at such times and places
as it may determine. A majority of the Committee shall constitute a quorum and
acts of the Committee at which a quorum is present, or acts reduced to or
approved in writing by all the members of the Committee, shall be the valid acts
of the Committee. If the Board does not delegate administration of the Plan to
the Committee, then each reference in this Plan to "the Committee" shall be
construed to refer to the Board.
(b) The Committee shall determine which Eligible Individuals shall be
granted options under the Plan, the timing of such grants, the terms thereof
(including any restrictions on the Stock), and the number of shares subject to
such options.
(c) The Committee may amend the terms of any outstanding option granted
under this Plan, but any amendment which would adversely affect the optionee's
rights under an outstanding option shall not be made without the optionee's
written consent. The Committee may, with the optionee's written consent, cancel
any outstanding option or accept any outstanding option in exchange for a new
option.
(d) The Committee shall also determine which Eligible Individuals shall be
issued Stock, SARs or other stock benefits or stock-related benefits under the
Plan, the timing of such grants, the terms thereof (including any restrictions),
and the number of shares of Stock, SARs or stock benefits or stock-related
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benefits to be granted. The Stock, stock benefits or stock-related benefits
shall be issued for such consideration (if any) as the Committee deems
appropriate. Stock issued subject to restrictions shall be evidenced by a
written agreement (the "Restricted Stock Purchase Agreement" or the "Restricted
Stock Bonus Agreement") and stock benefits or stock-related benefits shall be
evidenced by written agreement (the "Stock Benefit Agreement"). The Committee
may amend any Restricted Stock Purchase Agreement, Restricted Stock Bonus
Agreement or Stock Benefit Agreement, but any amendment which would adversely
affect the stockholder's rights to the Stock, stock benefits or stock-related
benefits shall not be made without his or her written consent.
(e) The Committee shall have the sole authority, in its absolute discretion,
to adopt, amend, and rescind such rules and regulations as, in its opinion, may
be advisable for the administration of the Plan, to construe and interpret the
Plan, the rules and the regulations, and the instruments evidencing options,
Stock, SARs or stock benefits or stock-related benefits granted under the Plan
and to make all other determinations deemed necessary or advisable for the
administration of the Plan. All decisions, determinations, and interpretations
of the Committee shall be binding on all participants.
3. STOCK SUBJECT TO THE PLAN.
(a) An aggregate of not more than 5.2 million shares of Stock shall be
available for the grant of options, the issuance of Stock or the issuance of
stock benefits or stock-related benefits under the Plan. If an option is
surrendered (except surrender for shares of Stock) or for any other reason
ceases to be exercisable in whole or in part, the shares which were subject to
such option but as to which the option had not been exercised shall continue to
be available under the Plan. Any Stock which is retained by the Company upon
exercise of an option in order to satisfy the exercise price for such option or
any withholding taxes due with respect to such option exercise shall be treated
as issued to the optionee and will thereafter not be available under the Plan.
(b) If there is any change in the Stock subject to either the Plan, an
Option Agreement (as defined below), a Restricted Stock Purchase Agreement, a
Restricted Stock Bonus Agreement, a SAR Agreement (as defined in paragraph 8) or
Stock Benefit Agreement through merger, consolidation, reorganization,
recapitalization, reincorporation, stock split, stock dividend, or other change
in the capital structure of the Company, appropriate adjustments shall be made
by the Committee in order to preserve but not to increase the benefits to the
individual, including adjustments to the aggregate number, kind of shares, and
price per share subject to either the Plan, an Option Agreement, a Restricted
Stock Purchase Agreement, a Restricted Stock Bonus Agreement, a SAR Agreement or
a Stock Benefit Agreement.
4. ELIGIBLE INDIVIDUALS. Individuals who shall be eligible to have granted
to them the options, Stock, SARs or other stock benefits or stock-related
benefits provided for by the Plan shall be such employees, officers, directors,
independent contractors, and consultants of the Company or an Affiliate as the
Committee in its discretion, shall designate from time to time ("Eligible
Individuals"). Notwithstanding the foregoing, only employees of the Company or
an Affiliate (including officers and directors who are bona fide employees)
shall be eligible to receive Incentive Stock Options.
5. THE OPTION PRICE. The exercise price of the Stock covered by each
Incentive Stock Option shall be not less than the per share fair market value of
such Stock on the date the option is granted. The exercise price of the Stock
covered by each Nonqualified Stock Option shall be as determined by the
Committee. Notwithstanding the foregoing, in the case of an Incentive Stock
Option granted to a person possessing more than ten percent of the combined
voting power of the Company or an Affiliate, the exercise price shall be not
less than 110 percent of the fair market value of the Stock on the date the
option is granted. The exercise price of an option shall be subject to
adjustment to the extent provided in paragraph 3(b), above.
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6. TERMS AND CONDITIONS OF OPTIONS.
(a) Each option granted pursuant to the Plan will be evidenced by a written
agreement (the "Option Agreement") executed by the Company and the person to
whom such option is granted.
(b) The Committee shall determine the term of each option granted under the
Plan; PROVIDED, HOWEVER, that the term of an Incentive Stock Option shall not be
for more than 10 years and that, in the case of an Incentive Stock Option
granted to a person possessing more than ten percent of the combined voting
power of the Company or an Affiliate, the term shall be for no more than five
years.
(c) In the case of Incentive Stock Options, the aggregate fair market value
(determined as of the time such option is granted) of the Stock with respect to
which Incentive Stock Options are exercisable for the first time by an Eligible
Individual in any calendar year (under this Plan and any other plans of the
Company or its Affiliates) shall not exceed $100,000.
(d) The Stock Option Agreement may contain such other terms, provisions and
conditions consistent with this Plan as may be determined by the Committee. If
an option, or any part thereof, is intended to qualify as an Incentive Stock
Option, the Option Agreement shall contain those terms and conditions which are
necessary to so qualify it.
7. TERMS AND CONDITIONS OF STOCK PURCHASES AND BONUSES.
(a) Each sale or grant of Stock pursuant to the Plan will be evidenced by a
written Restricted Stock Purchase Agreement or Restricted Stock Bonus Agreement
executed by the Company and the person to whom such Stock is sold or granted.
(b) The Restricted Stock Purchase Agreement or Restricted Stock Bonus
Agreement may contain such other terms, provisions and conditions consistent
with this Plan as may be determined by the Committee, including not by way of
limitation, restrictions on transfer, forfeiture provisions, repurchase
provisions and vesting provisions.
8. TERMS AND CONDITIONS OF SARS. The Committee may, under such terms and
conditions as it deems appropriate, authorize the issuance of SARs evidenced by
a written SAR agreement (which, in the case of tandem options, may be part of
the Option Agreement to which the SAR relates) executed by the Company and the
person to whom such SAR is granted (the "SAR Agreement"). The SAR Agreement may
contain such terms, provisions and conditions consistent with this Plan as may
be determined by the Committee.
9. TERMS AND CONDITIONS OF STOCK BENEFITS AND STOCK-RELATED BENEFITS. The
Committee may, under such terms and conditions as it deems appropriate,
authorize the issuance of other forms of stock benefits and stock-related
benefits evidenced by a Stock Benefit Agreement executed by the Company and the
person to whom such stock benefit or stock-related benefit is granted. The Stock
Benefit Agreement may contain such terms, provisions and conditions consistent
with the Plan as may be determined by the Committee.
10. USE OF PROCEEDS. Cash proceeds realized from the issuance of Stock
under the Plan shall constitute general funds of the Company.
11. AMENDMENT, SUSPENSION, OR TERMINATION OF THE PLAN.
(a) The Board may at any time amend, suspend or terminate the Plan as it
deems advisable; provided that such amendment, suspension or termination
complies with all applicable requirements of state and federal law, including
any applicable requirement that the Plan or an amendment to the Plan be approved
by the Company's stockholders, and provided further that, except as provided in
paragraph 3(b) above, the
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Board shall in no event amend the Plan in the following respects without the
consent of stockholders then sufficient to approve the Plan in the first
instance:
(i) To increase the maximum number of shares subject to Incentive Stock
Options issued under the Plan; or
(ii) To change the designation or class of persons eligible to receive
Incentive Stock Options under the Plan.
(b) No option, stock benefit or stock-related benefit may be granted nor any
Stock issued under the Plan during any suspension or after the termination of
the Plan, and no amendment, suspension, or termination of the Plan shall,
without the affected individual's consent, alter or impair any rights or
obligations under any option, stock benefit or stock-related benefit previously
granted under the Plan. The Plan shall terminate with respect to the grant of
Incentive Stock Options on September 29, 2003, unless previously terminated by
the Board pursuant to this paragraph 11.
12. ASSIGNABILITY. Each option granted pursuant to this Plan shall, during
the optionee's lifetime, be exercisable only by him, and neither the option nor
any right hereunder shall be transferable by the optionee by operation of law or
otherwise other than by will or the laws of descent and distribution. Stock
subject to a Restricted Stock Purchase Agreement, a Restricted Stock Bonus
Agreement or a Stock Benefit Agreement shall be transferable only as provided in
such Agreement.
13. PAYMENT UPON EXERCISE OF OPTIONS.
(a) Payment of the purchase price upon exercise of any option granted under
this Plan shall be made in cash (including for purposes of this Plan the
following cash equivalents: certified check, bank draft, postal or express money
order payable to the order of the Company in lawful money of the United States);
PROVIDED, HOWEVER, that the Committee, in its sole discretion, may permit an
optionee to pay the option price in whole or in part (i) with shares of Stock
owned by the optionee; (ii) by delivery on a form prescribed by the Committee of
an irrevocable direction to a securities broker approved by the Committee to
sell shares and deliver all or a portion of the proceeds to the Company in
payment for the Stock; (iii) by delivery of the optionee's promissory note with
such recourse, interest, security, and redemption provisions as the Committee in
its discretion determines appropriate; or (iv) in any combination of the
foregoing. Any Stock used to exercise options shall be valued at its fair market
value on the date of the exercise of the option. In addition, the Committee, in
its sole discretion, may authorize the surrender by an optionee of all or part
of an unexercised option and authorize a payment in consideration thereof of an
amount equal to the difference between the aggregate fair market value of the
Stock subject to such option and the aggregate option price of such Stock. In
the Committee's discretion, such payment may be made in cash, shares of Stock
with a fair market value on the date of surrender equal to the payment amount,
or some combination thereof.
(b) In the event that the exercise price is satisfied by the Committee
retaining from the shares of Stock otherwise to be issued to the optionee shares
of Stock having a value equal to the exercise price, the Committee may issue the
optionee an additional option, with terms identical to the Option Agreement
under which the option was received, entitling the optionee to purchase
additional Stock in an amount equal to the number of shares so retained.
14. WITHHOLDING TAXES.
(a) No Stock shall be granted or sold under the Plan to any participant, and
no SAR or other stock benefit or stock-related benefit may be exercised, until
the participant has made arrangements acceptable to the Committee for the
satisfaction of federal, state, and local income and employment tax withholding
obligations, including without limitation obligations incident to the receipt of
Stock under the Plan, the lapsing of restrictions applicable to such Stock, the
failure to satisfy the conditions for treatment as
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Incentive Stock Options under applicable tax law, or the receipt of cash
payments. Upon exercise of a stock option or lapsing of restrictions on Stock
issued under the Plan, the Company may satisfy its withholding obligations by
withholding from the optionee or requiring the stockholder to surrender shares
of Stock sufficient to satisfy federal, state and local income and employment
tax withholding obligations.
(b) In the event that such withholding is satisfied by the Company or the
optionee's employer retaining from the shares of Stock otherwise to be issued to
the optionee shares of Stock having a value equal to such withholding tax, the
Committee may issue the optionee an additional option, with terms identical to
the Option Agreement under which the option was received, entitling the optionee
to purchase additional Stock in an amount equal to the number of shares so
retained.
15. RESTRICTIONS ON TRANSFER OF SHARES. The Stock acquired pursuant to the
Plan shall be subject to such restrictions and agreements regarding sale,
assignment, encumbrances or other transfer as are in effect among the
stockholders of the Company at the time such Stock is acquired, as well as to
such other restrictions as the Committee shall deem advisable.
16. CORPORATE TRANSACTION.
(a) For purposes of this paragraph 16, a "Corporate Transaction" shall
include 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, except (1) for a transaction the principal purpose of which is to
change the state of the Company's incorporation, or (2) a transaction in
which the Company's stockholders immediately prior to such merger or
consolidation hold (by virtue of securities received in exchange for their
shares in the Company) securities of the surviving entity representing more
than fifty percent (50%) of the total voting power of such entity
immediately after such transaction;
(ii) the sale, transfer or other disposition of all or substantially all
of the assets of the Company unless the Company's stockholders immediately
prior to such sale, transfer or other disposition hold (by virtue of
securities received in exchange for their shares in the Company) securities
of the purchaser or other transferee representing more than fifty (50%) 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 fifty
percent (50%) of the total voting power of the Company immediately after
such transaction.
(b) In the event of any Corporate Transaction, any option, restricted Stock,
SAR, stock benefit or stock-related benefit shall vest in its entirety and
become exercisable, or with respect to restricted Stock, be released from
restrictions on transfer and repurchase rights, immediately prior to the
specified effective date of the Corporate Transaction unless assumed by the
successor corporation or its parent company, pursuant to options, restricted
Stock, SARs or stock benefits or stock-related benefits providing substantially
equal value and having substantially equivalent provisions as the options,
restricted Stock, SARs or stock benefits or stock-related benefits granted
pursuant to this Plan.
17. STOCKHOLDER APPROVAL. This Plan shall only become effective with regard
to the issuance of additional Incentive Stock Options upon its approval by a
majority of the stockholders voting (in person or by proxy) at a stockholders'
meeting held within 12 months of the Board's adoption of the Plan. The Committee
may grant additional Incentive Stock Options under the Plan prior to the
stockholders' meeting, but until stockholder approval of the Plan is obtained,
no such additional Incentive Stock Option shall be exercisable.
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ANNEX C
VIATEL, INC. EMPLOYEE STOCK PURCHASE PLAN
1. PURPOSE
The Viatel, Inc. Employee Stock Purchase Plan (the "Plan") is designed to
encourage employees of Viatel, Inc. ("Viatel") and its Subsidiaries, as defined
herein (hereinafter collectively referred to as the "Company"), where permitted
by applicable laws and regulations, to acquire an equity interest in Viatel
through the purchase of shares of the common stock, par value $0.01 per share,
of Viatel ("Common Stock"). These purchases are intended to establish a closer
identification of employee, Company and stockholder interests and to provide
employees with a direct means of participating in the Company's growth and
earnings. It is anticipated that Plan participation will motivate employees to
remain in the employ of the Company and give greater efforts on behalf of
Viatel. It is intended that this Plan shall constitute an "employee stock
purchase plan" within the meaning of Section 423 of the Internal Revenue Code of
1986, as amended (the "Code").
2. DEFINITIONS
The following words or terms, when used herein, shall have the following
respective meanings:
"Base Salary" shall mean an Employee's pre-tax salary or base wages for each
pay period during any Participation Period as determined from the payroll
records of the Company. Base salary shall not include any amounts received from
the Company as a bonus, as determined by the Committee in its sole discretion.
"Board" shall mean the Board of Directors of Viatel.
"Closing Market Price" refers to the reported closing sales price for shares
of the Common Stock (or the closing bid, if no sales were reported) as reported
in THE WALL STREET JOURNAL for that day or such other source as the Committee
deems reliable. In the absence of an established market for the Common Stock,
the Closing Market Price shall be determined in good faith by the Committee.
"Code" is defined in Section 1 hereof.
"Committee" is defined in Section 3 hereof.
"Common Stock" is defined in Section 1 hereof.
"Effective Date" means the earlier of the date upon which this Plan is
approved by the Board and the date upon which this Plan is approved by the
stockholders of Viatel.
"Employee" refers to any individual who is a regular (non-temporary)
employee of the Company. For purposes of the Plan, the employment relationship
shall be treated as continuing intact while the individual is on sick leave or
other leave of absence approved by the Company. When the period of leave exceeds
90 days and the individual's right to reemployment is not guaranteed either by
statute or by contract, the employment relationship shall be deemed to have
terminated on the 91st day of such leave. The term Employee shall include the
employees of any Subsidiary incorporated or operating in a non-U.S. jurisdiction
unless the Committee has determined, in its sole discretion, that the legal, tax
or administrative requirements of affording participation in the Plan to such
employees is unduly burdensome or that the participation of such employees in
the Plan would violate the law of the jurisdiction in which such Subsidiary is
registered or conducts its business.
"Employee Contribution Amounts" refers to the amounts contributed by
employees via payroll deduction. In those locations where employee contributions
by payroll deduction are not allowed by local law, the Plan Administrator may
allow the Employee to contribute through wire transfer or check. The
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term "payroll deduction" shall be construed to include any amount contributed by
wire transfer or check as permitted by the Plan Administrator.
"Enrollment Period" refers to the period beginning on the Grant Date for the
current Participation Period and ending ten (10) business days prior to the
Grant Date for the upcoming Participation Period, during which period Employees
eligible to participate in the Plan are provided the opportunity to enroll in
the Plan for the upcoming Participation Period. The exact dates for each
Enrollment Period will be determined by the Committee, in its sole discretion
and communicated to all eligible Employees prior to the Enrollment Period.
"Exercise Date" refers to the last Trading Day in a Participation Period.
"Fair Market Value" refers to the Closing Market Price on either the first
or last Trading Day in the Participation Period, as determined in accordance
with Section 9 hereof, or on the date shares of Common Stock are purchased with
cash dividends pursuant to Section 14 hereof, as the case may be.
"Grant Date" refers to the first day of each Participation Period.
"Participant" refers to any employee meeting the eligibility requirements
specified in Section 5 hereof who has enrolled in the Plan.
"Participation Period" shall mean a period of approximately six (6) months
commencing on the first Trading Day on or after January 15 and terminating on
the last Trading Day on or before the following July 14, or commencing on the
first Trading Day on or after July 15 and terminating on the last Trading Day on
or before the following January 14. The duration of Participation Periods may be
changed pursuant to Section 22 hereof.
"Plan" shall refer to this Viatel, Inc. Employee Stock Purchase Plan.
"Plan Administrator" refers to the administrator that will assist the
Committee in administering the Plan and which may be designated from time to
time by the Committee.
"Purchase Price" for any Participation Period shall mean the lower of:
(a) 85% of the Closing Market Price on the Grant Date and (b) 85% of the Closing
Market Price on the Exercise Date for such Participation Period. These dates
constitute the date of grant and the date of exercise, respectively, for
valuation purposes under Section 423 of the Code.
"Stock Plan Administrator" shall mean the person or persons designated by
the Committee to provide administrative support for the Plan and coordinate with
the Plan Administrator. Initially, the Stock Plan Administrator shall be certain
members of Viatel's Human Resources Department and Legal Department.
"Subsidiary" shall mean any corporation that is a "subsidiary corporation"
of Viatel within the meaning of Section 424 of the Code.
"Trading Day" shall mean a day on which national stock exchanges and the
Nasdaq National Market are open for trading.
3. ADMINISTRATION OF THE PLAN
The Plan shall be administered by the Compensation Committee (the
"Committee") appointed by the Board, which Committee shall consist of at least
three (3) persons, who need not be members of the Board. The members of the
Committee serve at the pleasure of the Board and may be removed by the Board at
any time with or without cause. The Committee shall supervise the administration
and enforcement of the Plan according to its terms and provisions and shall have
all powers necessary to accomplish these purposes and discharge its duties
hereunder including, but not limited to, the power to interpret the Plan and
resolve issues of eligibility, stock price determination, or any other issues
arising under the Plan or as a result of participation of Participants in the
Plan.
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The Committee may act by majority decision of its members at a regular or
special meeting of the Committee or by decision reduced to writing and signed by
all members of the Committee without holding a formal meeting. Vacancies in the
membership of the Committee arising from death, resignation or other inability
to serve shall be filled by appointment by the Board as soon as possible. All
decisions by the Committee shall be final and conclusive and binding upon all
Participants and the Company.
4. NATURE AND NUMBER OF SHARES
The Common Stock subject to issuance under the terms of the Plan shall be
shares of Viatel authorized but unissued shares or shares acquired by Viatel
through purchases on the open market, as determined in the sole discretion of
the Committee but subject to existing limitations in Viatel's indentures. The
aggregate number of shares that may be issued under the Plan shall not exceed
five hundred thousand (500,000) shares of Common Stock. If the total number of
shares that Employees elect to purchase under the Plan exceeds the aggregate
shares available, the Committee will allot shares among Employees in such manner
as it shall determine to be equitable.
In the event of any reorganization, recapitalization, stock split, reverse
stock split, stock dividend, combination of shares, merger, consolidation,
offering of rights or other similar change in the capital structure of Viatel,
the Committee may make such adjustment, if any, as it deems appropriate in the
number, kind and purchase price of the shares available for purchase under the
Plan and in the maximum number of shares that may be issued under the Plan,
subject to the approval of the Board and in accordance with Section 22 hereof.
If Viatel is acquired in a transaction whereby it is not the surviving
entity or all or substantially all of its assets are acquired, the Committee
shall determine a Plan termination date. This date shall precede the expected
effective date of such acquisition by not more than sixty (60) days. Employee
Contribution Amounts accumulated during the period between the most recent Grant
Date and Plan termination date shall be used to purchase shares for Participants
in the manner provided in Section 9 hereof utilizing the Plan termination date
as the Exercise Date for determining the purchase price for shares of Common
Stock. In the event the Plan is terminated and the acquisition transaction is
not consummated, the Plan may be reactivated on a date determined by the
Committee.
5. ELIGIBILITY REQUIREMENTS
Each Employee who shall have completed thirty (30) days of continuous
service with the Company prior to the end of any Enrollment Period (or, for the
first Participation Period, prior to June 30, 2000) shall become eligible to
participate in the Plan in accordance with this Section 5 on the first Grant
Date following such completion of thirty (30) days of continuous service with
the Company. Participation in the Plan is voluntary.
Notwithstanding any other provision of the Plan, no Employee shall be
entitled to participate in the Plan: (1) to the extent that, immediately after
such participation, such Employee (or any other person whose stock would be
attributed to such Employee pursuant to Section 424(d) of the Code) would own
capital stock of Viatel or any Subsidiary and/or hold outstanding options to
purchase such stock possessing five percent (5%) or more of the total combined
voting power or value of all classes of capital stock of Viatel or any
Subsidiary, or (2) to the extent that his or her rights to purchase stock under
all employee stock purchase plans of the Company (other than those stock
purchase plans that do not fall within the meaning of Section 423 of the
Internal Revenue Code) accrues at a rate that exceeds twenty-five thousand
dollars ($25,000) worth of stock (determined at the fair market value of the
shares at the applicable Grant Date) for any calendar year.
Employees of any corporation that may become a Subsidiary after the
Effective Date shall automatically be deemed to be eligible for participation
under this Plan effective as of the Grant Date following the date (1) the
corporation became a Subsidiary, (2) the Employee has satisfied the continuous
service
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requirements described above (including the continuous period of employment with
such Subsidiary prior to such Subsidiary becoming a Subsidiary), and (3) if the
Subsidiary is incorporated or operates in a non-U.S. jurisdiction, the Committee
has determined, in its sole discretion, that the legal, tax or administrative
requirements of affording participation in the Plan to such Subsidiary's
employees is not unduly burdensome and that the participation of such employees
in the Plan would not violate the law of the jurisdiction in which such
Subsidiary is registered or conducts its business.
6. ENROLLMENT
Each eligible Employee of the Company as of the Effective Date may enroll in
the Plan as of the Effective Date. Each other Employee of the Company who
thereafter becomes eligible to participate may enroll in the Plan during any
Enrollment Period following the date he or she first meets the eligibility
requirements of Section 5 hereof. Any eligible Employee not enrolling in the
Plan when first eligible may, if still eligible, enroll in the Plan during any
succeeding Enrollment Period. In order to enroll, an eligible Employee must
complete, sign and submit an enrollment form, or, if the Company in its
discretion implements a telephonic or electronic enrollment mechanism, through
the completion and submission of such enrollment, during the applicable
Enrollment Period.
Payroll deductions for a Participant shall commence on the first payroll
following the Grant Date (other than for the first Participation Period, in
which case payroll deductions shall commence on the first payroll in August) and
shall end on the last payroll in the Participation Period to which such
authorization is applicable, unless sooner terminated by the Participant as
provided in Section 15 hereof.
Continued enrollment in subsequent periods shall be automatic and no
additional documentation shall be required unless a Participant notifies the
Stock Plan Administrator that he or she elects not to re-enroll or desires to
discontinue payroll deductions during such Participation Period, pursuant to
Section 8 hereof. A Participant's payroll deductions shall remain constant if
not terminated at the Participant's request during a subsequent Enrollment
Period. In order to terminate Plan participation, at any time, the Participant
must complete, sign and submit a new enrollment form to the Stock Plan
Administrator in the manner described above. Such request will be processed
effective for the first payroll period that is administratively feasible. A
Participant who has terminated his or her participation in the Plan during any
Participation Period must re-enroll during a subsequent Enrollment Period.
7. GRANT OF RIGHT TO PURCHASE SHARES
Enrollment in the Plan by an Employee on a Grant Date will constitute the
grant by Viatel to the Participant of the right to purchase on the Exercise Date
of the applicable Participation Period (at the applicable Purchase Price) shares
of Common Stock, pursuant to Section 9 hereof; provided that such purchase shall
be subject to the limitations set forth in Sections 8 and 9 hereof. Each
exercise of such right shall occur automatically as provided in Section 9
hereof, unless the Participant has terminated his or her employment or withdrawn
from participation pursuant to Section 10 hereof.
Each right to purchase shares of Common Stock under the Plan during any
Participation Period shall have the following terms:
i) the right to purchase shares of Common Stock during any Participation
Period shall expire on the earlier of: (A) the completion of the
purchase of shares on the Exercise Date or (B) the date on which the
Participant terminates employment;
ii) in no event shall the right to purchase shares of Common Stock during
any Participation Period extend beyond twenty-seven (27) months from
the Grant Date;
iii) payment for shares purchased shall be made only with amounts
contributed through payroll deductions;
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iv) purchase of shares shall be accomplished only in accordance with
Section 9 hereof;
v) the Purchase Price shall be determined as provided in Section 9 hereof;
and
vi) the right to purchase shares of Common Stock shall in all respects be
subject to the terms and conditions of the Plan, as interpreted by the
Committee from time to time.
8. METHOD OF PAYMENT
Payment for shares of Common Stock shall be made as of the applicable
Exercise Date with amounts contributed through payroll deductions collected over
the Plan's designated Participation Period, with the first such deduction
commencing with the payroll period ending after the Grant Date, or, with respect
to the first Participation Period under the Plan, such other payroll period as
the Committee shall determine in its sole discretion. Each Participant will
authorize such payroll deductions from his or her pay for each pay period during
the Participation Period. A Participant may discontinue his or her participation
in the Plan in accordance with Section 6 hereof during the Participation Period
by completing, signing and filing with the Stock Plan Administrator a new
enrollment form (or telephonic or electronic indication) authorizing such
termination. A termination shall be effective during the subsequent payroll
period following ten (10) business days after the Company's receipt of the new
enrollment form unless the Company elects, in its sole discretion, to process a
given change in participation more quickly. Employees may select any Employee
Contribution Amount, which shall not be less than one percent (1%) nor more than
twenty percent (20%) of Base Salary. The percentage must be a whole number (such
as 5%) and not a fractional amount (such as 5.5%). Employees may not make any
additional payments into such Participant's account under the Plan.
9. PURCHASE OF SHARES
The right to purchase shares of Common Stock granted by the Company under
the Plan is for the term of a Participation Period. The number of shares of
Common Stock purchased on behalf of a Participant shall be recorded in the Plan
Administrator stock trading account established for each Participant as soon as
administratively feasible, but no later than seven (7) business days following
the last business day of the preceding Participation Period. The aggregate
number of shares purchased shall be computed by dividing the aggregate Employee
Contribution Amount accumulated as of the Exercise Date and retained in the
Participants' accounts on such date by the applicable Purchase Price for the
Common Stock. Participants shall then be allocated shares based on their
individual Contribution Amounts. Participants shall be treated as the record
owners of the shares, with all rights of a stockholder, effective as of the date
the shares are posted to the Participant's stock trading account. Any fees
associated with maintaining these stock trading accounts shall be the obligation
of the Company.
No fractional shares shall be purchased and any payroll deductions
accumulated in a Participant's account which are not sufficient to purchase a
full share shall be retained in the Participant's account for the subsequent
Participation Period, subject to earlier withdrawal by the Participant as
provided in Section 10 hereof. Any other monies remaining in a Participant's
account after the Exercise Date shall be returned to the Participant.
10. WITHDRAWAL FROM PLAN; WITHDRAWAL OF SHARES
A Participant may withdraw all but not less than all of the payroll
deductions credited to his or her account and not yet used to purchase shares in
accordance with the terms hereof at any time by giving written notice to the
Stock Plan Administrator in the form designated by the Company in its
discretion, including a telephonic or electronic withdrawal mechanism. All of
the Participant's payroll deductions credited to his or her account shall be
paid to such Participant as soon as administratively feasible after receipt of
notice of the withdrawal and such Participant's rights to purchase shares during
the applicable Participation Period shall be automatically terminated and no
further payroll deduction for the purchase of shares shall be made for such
Participation Period. If a Participant withdraws from a Participation Period,
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payroll deductions shall not resume at the beginning of the succeeding
Participation Period unless the Participant re-enrolls pursuant to Section 6
hereof.
The record of shares of Common Stock purchased under the Plan shall be
maintained by the Plan Administrator and such shares shall remain in an
individual stock trading account maintained by one or more brokerage firms
selected by the Plan Administrator until the shares are either withdrawn or
sold. A Participant may elect to withdraw all shares held in his or her account
at any time (without withdrawing from the Plan) by giving notice to the Stock
Plan Administrator. Upon receipt of such notice, the Plan Administrator will
arrange for either (a) the issuance and delivery of all shares held in the
Participant's account as soon as administratively feasible or (b) sale of the
shares, as directed by the Participant.
Certificates shall be issued only in the following situations:
i) if the Participant requests a certificate; or
ii) if the Participant terminates employment with the Company and requests
a certificate.
In both of these cases, the Participant will be required to notify the Plan
Administrator and pay an issuance fee. The share certificate will be issued to
the Participant as soon as administratively feasible after the receipt by the
Plan Administrator of the required form and payment of the issuance fee.
11. INCOME TAX OBLIGATIONS
Participants shall be responsible for all personal income tax obligations
associated with selling shares of Common Stock purchased through the Plan.
12. NOTICE TO COMPANY OF DISQUALIFYING DISPOSITION
By electing to participate in the Plan, EACH PARTICIPANT WHO IS A TAX
RESIDENT IN THE UNITED STATES AT THE END OF THE PARTICIPATION PERIOD AGREES TO
NOTIFY THE COMPANY IN WRITING IMMEDIATELY AFTER THE PARTICIPANT SELLS OR
OTHERWISE TRANSFERS COMMON STOCK ACQUIRED UNDER THE PLAN, IF SUCH SALE OR OTHER
TRANSFER OCCURS WITHIN TWO YEARS AFTER THE FIRST BUSINESS DAY OF THE
PARTICIPATION PERIOD IN WHICH SUCH COMMON STOCK WAS ACQUIRED. Each Participant
further agrees to provide any information about such a sale or other transfer as
may be requested by the Company in order to assist it in complying with the tax
laws and minimizing the Company's obligations thereunder.
13. WITHHOLDING OF ADDITIONAL INCOME TAXES
By electing to participate in the Plan, each Participant acknowledges that
the Company is required to withhold taxes with respect to the amounts deducted
from the Participant's compensation and accumulated for the benefit of the
Participant under the Plan, and each Participant agrees that the Company may
deduct additional amounts from the Participant's compensation, when amounts are
added to the Participant's account, used to purchase Common Stock or refunded,
in order to satisfy such withholding obligations.
It is intended that tax withholding will be accomplished in such a manner
that the full amount of payroll deductions elected by the Participant under
Article 8 will be used to purchase Common Stock. However, if amounts sufficient
to satisfy applicable tax withholding obligations have not been withheld from
compensation otherwise payable to any Participant, then, notwithstanding any
other provision of the Plan, the Company may withhold such taxes from the
Participant's accumulated payroll deductions and apply the net amount to the
purchase of Common Stock, unless the Participant pays the Company, prior to the
Exercise Date, an amount sufficient to satisfy such withholding obligations.
Each Participant further acknowledges that the Company may be required to
withhold taxes in connection with the disposition of Common Stock acquired under
the Plan and agrees that the Company may take whatever action it considers
appropriate to satisfy such withholding requirements, including deducting from
compensation
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otherwise payable to such Participant an amount sufficient to satisfy such
withholding requirements or conditioning any disposition of Common Stock by the
Participant upon the payment to the Company of an amount sufficient to satisfy
such withholding requirements.
14. DIVIDENDS
Cash dividends, if any, for shares of Common Stock in Participants' accounts
under the Plan shall not be distributed to Participants directly, but shall be
automatically invested in shares of Common Stock at the full Fair Market Value
on the date of such investment as soon as administratively possible after such
dividends are paid by the Company. Such shares of Common Stock will be held in
accounts under the Plan.
15. TERMINATION OF PARTICIPATION
The right to participate in the Plan terminates automatically when a
Participant ceases to be employed by the Company. Employee Contribution Amounts
collected prior to the date of termination of employment and not theretofore
used for the purchase of Common Stock in accordance with the Plan shall be
returned to the Participant (or in the case of his or her death, to the person
or persons entitled thereto under Section 16 hereof). Such amounts shall be
delivered as soon as administratively feasible following the end of the
Participation Period in which the Participant's employment terminates.
With regard to any shares of Common Stock acquired prior to the date of
termination of employment, such shares may be sold or withdrawn as provided in
Section 10 hereof or may be maintained in the Participant's stock trading
account.
16. DEATH OF A PARTICIPANT
As soon as administratively feasible after receiving notification of the
death of a Participant, Employee Contribution Amounts collected, and shares
purchased under the Plan but not delivered, prior to the date of termination of
employment shall be distributed in accordance with this Section 16. No
additional shares of Common Stock may be purchased on behalf of a Participant
after notification of death is received.
Unless prohibited by local law, a Participant may file a written designation
of a beneficiary who is to receive any shares and cash, if any, from the
Participant's account under the Plan in the event of such Participant's death
subsequent to an Exercise Date on which the right to purchase shares is
automatically exercised pursuant to the terms hereof but prior to the delivery
to such Participant of such shares and cash. In addition, a Participant may
file a written designation of a beneficiary who is to receive any cash from the
Participant's account under the Plan in the event of such Participant's death
prior to the exercise of the right to purchase shares hereunder. In the absence
of such a designation, the surviving spouse of a married Participant shall be
deemed to be such Participant's beneficiary and, in the case of an unmarried
Participant, the Participant's estate shall be deemed to be such Participant's
beneficiary. Such designation of beneficiary may be changed by the Participant
at any time by written notice.
17. ASSIGNMENT
Neither payroll deductions credited to a Participant's account nor any
rights of a Participant under the Plan shall be assignable or otherwise
transferable by the Participant except by will or the laws of descent and
distribution in accordance with Section 16 hereof. No purported assignment or
transfer of any rights of a Participant under the Plan, whether voluntary or
involuntary, by operation of law or otherwise, shall vest in the purported
assignee or transferee any interest or right therein whatsoever, but immediately
upon such assignment or transfer, or any attempt to make the same, such rights
shall terminate and become of no further effect. If the foregoing provisions of
this Section 17 are violated, the Participant's election to purchase Common
Stock shall terminate and the only obligation of the Company remaining under the
Plan shall be to pay to the person entitled thereto the payroll deductions then
credited to the Participant's
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account. No Participant may create a lien on any funds, securities, rights or
other property held for the account of the Participant under the Plan, except to
the extent permitted by will or the laws of descent and distribution if
beneficiaries have not been designated. A Participant's right to purchase shares
of Common Stock under the Plan shall be exercisable only during the
Participant's lifetime and only by him or her.
18. COSTS
The Company will pay all expenses incident to establishing and administering
the Plan. Expenses to be incurred by Participants shall be limited to brokerage
fees relating to sales of stock from the Participant's account (as described
herein), issuance or transfer fees (as described in Section 10 hereof), cash
distribution fees and any personal income tax obligations.
19. REPORTS
At least annually, the Company shall provide or cause to be provided to each
Participant a report of their Employee Contribution Amounts and the shares of
Common Stock purchased with such Employee Contribution Amounts by that
Participant on each Exercise Date.
20. EQUAL RIGHTS AND PRIVILEGES
All eligible Employees shall have equal rights and privileges with respect
to the Plan so that the Plan qualifies as an "employee stock purchase plan"
within the meaning of Section 423 or any successor provision of the Code and
related regulations. Any provision of the Plan that is inconsistent with
Section 423 or any successor provision of the Code shall without further act or
amendment by the Company be reformed to comply with the requirements of
Section 423 of the Code. This Section 20 shall take precedence over all other
provisions in the Plan.
21. RIGHTS AS STOCKHOLDER
A Participant shall have no rights as a stockholder under his or her rights
to purchase Common Stock until he or she becomes a stockholder as herein
provided. A Participant will become a stockholder with respect to shares for
which payment has been completed as provided in Section 8 hereof effective as of
the date such shares are purchased for the Participant's stock trading account
in accordance with the provisions of the Plan. Shares purchased by a Participant
under the Plan shall be registered in the name of the Participant or in the name
of the Participant and his or her spouse.
22. MODIFICATION AND TERMINATION
The Board or Committee may amend or terminate the Plan at any time insofar
as permitted by law. No amendment shall be effective unless within one (1) year
after the change is adopted by the Board it is approved by the holders of a
majority of the voting power of Viatel's outstanding shares if:
i) such amendment is required to be approved by stockholders to continue
the exemption provided for in Rule 16b-3 of the Securities Exchange Act
of 1934, as amended (the "1934 Act") (or any successor provision); or
ii) such amendment would cause the rights granted under the Plan to
purchase shares of Common Stock to fail to meet the requirements of
Section 423 of the Code (or any successor provision).
With respect to Viatel or any Subsidiary of Viatel which employs
Participants who reside outside of the United States, and notwithstanding
anything herein to the contrary, the Board may in its sole discretion amend or
vary the terms of the Plan in order to conform such terms with the requirements
of local law to meet the objectives and purpose of the Plan, and the Board may,
where appropriate, establish one or more sub-plans to reflect such amended or
varied provisions.
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23. BOARD AND STOCKHOLDER APPROVAL; EFFECTIVE DATE; TERM
The Plan was approved by the Board on December 17, 1999, whereupon the Plan
became effective subject to approval of Viatel stock holders on or before
December 17, 2000. The Plan shall continue in effect for a term of ten
(10) years unless sooner terminated under Section 22 hereof.
24. CONDITIONS UPON ISSUANCE OF SHARES; GOVERNMENTAL APPROVALS OR CONSENTS
Shares shall not be issued with respect to any Participant's right to
purchase shares pursuant to the Plan unless the exercise of such right and the
issuance and delivery of shares pursuant thereto shall comply with all
applicable provisions of law, domestic or foreign, including, without
limitation, the Securities Act of 1933, as amended, the 1934 Act, any applicable
foreign securities laws, the rules and regulations promulgated thereunder and
the requirements of any stock exchange upon which the shares may then be listed
or quoted. The issuance of any shares pursuant to the Plan shall be further
subject to the approval of counsel for the Company with respect to such
compliance.
As a condition to the purchase of any shares pursuant hereto, the Company
may require the Participant to represent and warrant that the shares are being
acquired only for investment and without any present intention to sell or
distribute such shares.
Without limiting the foregoing, the Plan and any offering or sale made to
Employees under the Plan are subject to any governmental approvals or consents
that may be or become applicable in connection therewith. Subject to the
provisions of Section 22 hereof, the Board may make such changes in the Plan and
include such terms in any offering under the Plan as may be desirable to comply
with the rules or regulations of any governmental authority.
25. USE OF FUNDS
Unless otherwise prohibited by local law, all Employee Contribution Amounts
received or held by the Company under this Plan may be used by the Company for
any corporate purpose, and the Company shall not be obligated to segregate such
amounts.
26. NO ADDITIONAL PURCHASE RIGHTS OR EMPLOYMENT RIGHTS
Other than for rights to purchase Common Stock under the Plan, the Plan does
not, directly or indirectly, create any right for the benefit of any Employee or
class of Employee to purchase any shares under the Plan, or create in any
Employee or class of Employees any right with respect to continuation of
employment with the Company, and it shall not be deemed to interfere in any way
with the Company's right to terminate, or otherwise modify, any Employee's
employment at any time.
27. EFFECT OF PLAN
The provisions of the Plan shall, in accordance with its terms, be binding
upon, and inure to the benefit of, all successors of each Employee participating
in the Plan, including, without limitation, such Employee's estate and the
executors, administrators or trustees thereof, heirs and legatees, and any
receiver, trustee in bankruptcy or representative of creditors of such Employee.
28. GOVERNING LAW
The laws of the State of New York shall govern all matters relating to the
Plan except to the extent superseded by the laws of the United States or the
property laws of any particular state.
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29. NO PAYMENT OF INTEREST
Unless otherwise required by local law, no interest will be paid or allowed
on any Employee Contribution Amounts or amounts credited to the account of any
Participant.
30. OTHER PROVISIONS
Any agreement to purchase shares of Common Stock under the Plan may contain
such other provisions as the Committee and the Board shall deem advisable,
provided that no such provision shall in any way conflict with the terms of the
Plan.
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[Form of Proxy Card for Common Stock]
VIATEL, INC.
PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD SEPTEMBER 13, 2000
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby authorizes Michael J. Mahoney and James P.
Pranetta, and each of them individually, with power of substitution, to vote
and otherwise represent all of the shares of common stock of Viatel, Inc.
(the "Company"), held of record by the undersigned, at the Annual Meeting of
Stockholders of the Company to be held in the Whitney Room at the Hotel
Inter-Continental, 111 East 48th Street, New York, New York, on Wednesday,
September 13, 2000 at 10:00 a.m., local time, and at any adjournments or
postponements thereof, as indicated on the reverse side thereof.
The undersigned acknowledges receipt of the Notice of Annual Meeting and
Proxy Statement dated, in each case, July 31, 2000. All other proxies,
heretofore given by the undersigned to vote shares of the Company's common
stock are expressly revoked.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DESCRIBED ON THE
REVERSE HEREOF BY THE STOCKHOLDER. IF NOT OTHERWISE DIRECTED, THIS PROXY WILL
BE VOTED "FOR" THE ELECTION AS DIRECTORS OF THE COMPANY ALL NOMINEES IN ITEM
1 AND "FOR" THE PROPOSALS REFERRED TO IN ITEMS 2, 3, 4, 5 AND 6.
(Continued and to be signed and dated on the reverse side.)
VIATEL, INC.
P.O. BOX 11288
NEW YORK, N.Y. 10208-0288
===============================================================================
<PAGE>
<TABLE>
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<S> <C> <C> <C>
(THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR")
1. To elect three (3) Class A directors to the Board FOR all nominees / / WITHHOLD AUTHORITY to vote / / *EXCEPTIONS / /
of Directors of the Company to hold office until listed below for all nominees listed
the 2003 Annual Meeting of Stockholders. below
Nominees: Sheldon M. Goldrish, William C. Murphy and Allan L. Shaw
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, mark the "Exceptions" box and write that nominee's name
in the space provided below.)
*Exceptions _______________________________________________________________________________________________
2. To approve the Company's 2000 Stock Incentive Plan. 5. To approve the Company's Employee Stock
Purchase Plan.
FOR / / AGAINST / / ABSTAIN / / FOR / / AGAINST / / ABSTAIN / /
3. To approve an amendment to the Company's Amended and Restated 6. To ratify the appointment of KPMG LLP, New York,
Certificate of Incorporation, as amended, to increase the as independent auditors for the Company for
number of authorized shares of common stock available for fiscal year 2000.
future issuance by the Company.
FOR / / AGAINST / / ABSTAIN / / FOR / / AGAINST / / ABSTAIN / /
4. To approve an amendment to the Company's Amended and Restated
Certificate of Incorporation, as amended, to increase the CHANGE OF ADDRESS AND
number of authorized shares of preferred stock available for OR COMMENTS MARK HERE / /
future issuance by the Company.
FOR / / AGAINST / / ABSTAIN / /
Please sign exactly as name or names appear(s)
herein. When signing in a discretionary capacity,
print your full title.
Dated: ___________________________________, 2000
________________________________________________
Signature
________________________________________________
illegible
VOTES MUST BE INDICATED
SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE. (X) IN BLACK OR BLUE INK. / /
===================================================================================================================================
</TABLE>
<PAGE>
===============================================================================
[Form of Proxy Card for Series B-1 Preferred Stock]
VIATEL, INC.
PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD SEPTEMBER 13, 2000
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby authorizes Michael J. Mahoney and James P.
Pranetta, and each of them individually, with power of substitution, to vote
and otherwise represent all of the shares of 7.50% Series B-1 Cumulative
Convertible Preferred Stock due 2015 of Viatel, Inc. (the "Company"), held of
record by the undersigned, at the Annual Meeting of Stockholders of the
Company to be held in the Whitney Room at the Hotel Inter-Continental, 111
East 48th Street, New York, New York, on Wednesday, September 13, 2000 at
10:00 a.m., local time, and at any adjournments or postponements thereof, as
indicated on the reverse side thereof.
The undersigned acknowledges receipt of the Notice of Annual Meeting and
Proxy Statement dated, in each case, July 31, 2000. All other proxies,
heretofore given by the undersigned to vote shares of the Company's Series
B-1 Cumulative Convertible Preferred Stock due 2015 are expressly revoked.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DESCRIBED ON THE
REVERSE HEREOF BY THE STOCKHOLDER. IF NOT OTHERWISE DIRECTED, THIS PROXY WILL
BE VOTED "FOR" THE ELECTION AS DIRECTORS OF THE COMPANY ALL NOMINEES IN ITEM
1 AND "FOR" THE PROPOSALS REFERRED TO IN ITEMS 2, 3, 4, 5 AND 6.
(Continued and to be signed and dated on the reverse side.)
VIATEL, INC.
P.O. BOX 11288
NEW YORK, N.Y. 10208-0288
===============================================================================
<PAGE>
<TABLE>
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<S> <C> <C> <C>
(THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR")
1. To elect three (3) Class A directors to the Board FOR all nominees / / WITHHOLD AUTHORITY to vote / / *EXCEPTIONS / /
of Directors of the Company to hold office until listed below for all nominees listed
the 2003 Annual Meeting of Stockholders. below
Nominees: Sheldon M. Goldrish, William C. Murphy and Allan L. Shaw
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, mark the "Exceptions" box and write that nominee's name
in the space provided below.)
*Exceptions _______________________________________________________________________________________________
2. To approve the Company's 2000 Stock Incentive Plan. 5. To approve the Company's Employee Stock
Purchase Plan.
FOR / / AGAINST / / ABSTAIN / / FOR / / AGAINST / / ABSTAIN / /
3. To approve an amendment to the Company's Amended and Restated 6. To ratify the appointment of KPMG LLP, New York,
Certificate of Incorporation, as amended, to increase the as independent auditors for the Company for
number of authorized shares of common stock available for fiscal year 2000.
future issuance by the Company.
FOR / / AGAINST / / ABSTAIN / / FOR / / AGAINST / / ABSTAIN / /
4. To approve an amendment to the Company's Amended and Restated
Certificate of Incorporation, as amended, to increase the CHANGE OF ADDRESS AND
number of authorized shares of preferred stock available for OR COMMENTS MARK HERE / /
future issuance by the Company.
FOR / / AGAINST / / ABSTAIN / /
Please sign exactly as name or names appear(s)
herein. When signing in a discretionary capacity,
print your full title.
Dated: ___________________________________, 2000
________________________________________________
Signature
________________________________________________
illegible
VOTES MUST BE INDICATED
SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE. (X) IN BLACK OR BLUE INK. / /
===================================================================================================================================
</TABLE>
