Exhibit
10.1


 


EMPLOYMENT
AGREEMENT


 


EMPLOYMENT AGREEMENT, made
on August 31, 2003, and effective as of the effective date of the Second
Amended Plan of Reorganization of Metromedia Fiber Network. Inc.. et. al., dated July 1, 2003. as filed July 16, 2003, as
the same may be amended from time to time (the “Effective Date”),
by and between AboveNet Inc. (the “Company”). a Delaware corporation having its principal
offices at 360 Hamilton Avenue, White Plains, New York 10601 and Michael A.
Doris. residing at 10 Nathan Court, Syosset, New York 11791 (the “Employee”).


 


W  I  T  N  E  S
S  E  T  H:


 


WHEREAS, Metromedia Fiber
Network. Inc. (“MFN”) has employed the Employee as Senior Vice President
and Chief Financial Officer; and


 


WHEREAS, the Company is the
successor corporation to MFN after the Effective Date;  and


 


WHEREAS, the parties hereto
now desire to provide for the continued employment of the Employee by the
Company after the Effective Date on the terms and conditions hereinafter set
forth.


 


NOW, THEREFORE, in consideration
of the premises and the mutual covenants and agreements herein contained, the
parties hereto agree as follows:


 


1.                                            Employment; Term.


 


(a)                                       The Company hereby agrees to employ the
Employee, and the Employee hereby agrees to serve, as Senior Vice President and
Chief Financial Officer during the Term (defined below).


 


(b)                                      The term (the “Term”) of the
Employee’s employment hereunder will commence on the Effective Date and, unless
sooner terminated as provided in Section 8 hereof, will terminate at the end of
the day which is the third anniversary of the Effective Date; provided, however, the
Term will be automatically extended, unless sooner terminated as provided in
Section 8 hereof, for successive additional one-year periods, unless at least
120 days prior to the end of the Term, the Company or the Employee has notified
the other in writing that the Term will not be extended.


 


(c)                                       In the event that the Employee’s employment
is not renewed after the Term or after the end of any subsequent renewal
period, the unvested portion of the Option (defined in Section 4) and unvested
Stock Units (as defined in Section 5) will be forfeited. The vested portion of
the Option will remain exercisable for three years after the termination of
employment.


 

















 


2.             Duties.


 


(a)           The Employee will have such powers and duties reasonably consistent
with Employee’s position as Senior Vice President and Chief Financial Officer
and Employee will perform such duties as assigned to him by the Chief Executive
Officer of the Company (the “CEO”) or as reasonably requested by the
Board of Directors of the Company (the “Board”). The Employee agrees to
perform his duties and exercise his authority pursuant to the direction and
control of the CEO and will report to the CEO. The Employee will perform his
duties diligently, faithfully and to the best of his ability and in accordance
with sound business practices.


 


(b)           The Employee will devote substantially all his business time and
attention to his duties and responsibilities hereunder, subject to paid
vacations and holidays as hereinafter set forth in Section 7 of this Agreement.


 


3.             Compensation.


 


(a)           Base Salary.  During the Term, for all the services rendered by the Employee
in all capacities hereunder, the Employee will receive an annual base salary of
Two Hundred and Forty Thousand Dollars ($240,000) dollars (the “Base Salary”)
subject to required deductions and withholdings or as otherwise required by
law, payable in accordance with the standard payroll practices of the Company
then in effect which is currently bi-weekly. Base Salary may be increased but
not decreased during the Term.


 


(b)           Bonus Plan.  In addition to the Base Salary set forth in Section 3(a)
hereof, the Employee will be entitled to participate in the Company’s bonus
program (the “Bonus Plan”) which is based on the achievement of annual
performance and other targets.


 


(i)            Calendar Year 2003. With respect to calendar year 2003, the
Employee will be entitled to a bonus equal to: (A) 35% of his Base Salary if
the Company achieves 100% of the Ten Million Eight Hundred Thousand Dollar ($
10,800,000) Earnings Before Interest, Taxes, Depreciation, Amortization and
Restructuring Costs target (the “2003 EBITDAR Target”) under the March
2003 Company Business Plan (the “Business Plan”); or (B) 15% of his Base
Salary if the Company achieves 75% of the 2003 EBITDAR Target under the
Business Plan. If the Company achieves between 75% and 100% of 2003 EBITDAR
Target under the Business Plan, the applicable percentage of Base Salary will
be pro-rated between 15% and 35%. The Compensation Committee, in its sole
discretion, will determine whether the 2003 EBITDAR Target has been achieved.


 


(ii)           Calendar Year 2004 and Thereafter. The annual performance and other targets
and the potential payouts under the Bonus Plan for calendar year 2004 will be
determined by the Compensation Committee of the Board (the “Compensation  Committee”) within 180 days following the
Effective Date. Performance targets and other targets and the potential bonus
payouts for calendar years after 2004 will be determined by the Compensation
Committee from time to time.


 


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(c)                                  Special Payment.  Within fifteen business days of the
Effective Date, the Company will pay the Employee Sixty Thousand Dollars
($60,000). By executing this Agreement, the Employee waives his rights, as of
the Effective Date, to any payment with respect to Success Payment C and/or
Success Payment D pursuant to Sections IV(c)(iv) and (v) (the “Success
Payments”) of the Metromedia Fiber Network, Inc. Employee Plans (the
“KERP”).


 


4.                                            Stock Options.


 


(a)                                       The Employee will be granted, as of the
Effective Date, an Option under the Company Management Incentive Plan (the “Incentive
Plan”) with a ten-year term to purchase 16,500 shares of the Company’s
common stock (the “Option”). The Option will bear an exercise price
equal to $20.95 per share (the “Exercise Price”). One-third of the
Option will vest (i.e., become non-forfeitable) and become exercisable on the
first anniversary of the Effective Date, and an additional one-third of the
Option will vest and become exercisable on each of the second and third
anniversaries of the Effective Date. The Option will be granted pursuant to
such terms and conditions as set forth in an agreement to be entered into
between the Employee and the Company (the “Option Agreement”).


 


(b)                                      In the event of a “Change in Control” (as
such term is hereinafter defined) during the Term, 50% of the unvested portion
of the Option will immediately vest and become exercisable, and the vested
portion of the Option will remain exercisable for the remaining ten-year term
of the Option. For the remaining unvested portion of the Option: (i) if,
following the Change in Control, Company stock continues to be publicly traded
(for example, a merger where the Company is the surviving entity), the unvested
portion of the Option will continue to vest as set forth in the Incentive Plan,
(ii) if, following the Change in Control, Company stock does not continue to be
publicly traded (for example, in an asset purchase or in a merger whereby the
other party is the surviving entity), then: (A) if the transaction is a stock
transaction, the unvested portion of the Option will continue to vest as set
forth in the Incentive Plan and will be converted into acquirer stock according
to the exchange ratio set forth in the transaction, or (B) if the transaction
is a cash transaction, the unvested portion of the Option will continue to vest
as set forth in the Incentive Plan but upon vesting, when the Employee seeks to
exercise the Option, the Company will pay the Employee the corresponding cash
value equal to the excess of: (x) the value per share paid in the cash
transaction, minus (y) the Exercise Price of the Option.


 


(c)                                       For purposes of this Agreement, the term
“Change in Control” means the occurrence of any of the following events:


 


(i)                                          any “person” as such term is used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934 (the “Act”)
(other than the Company, any trustee or other fiduciary holding securities
under any employee benefit plan of the Company, or any company owned, directly or indirectly by
the shareholders of the Company in substantially the same proportions as their
ownership of common stock of the Company) is or becomes the “beneficial owner”
(as defined in Rule 13d-3 under the Act), directly or indirectly, of securities
of the Company representing more than 50% of the combined voting power of the
Company’s then outstanding securities;


 


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(ii)                                       a merger or consolidation of the Company with
any other corporation, other than a merger or consolidation which would result
in the voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) more than 50% of the combined
voting power of the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation; provided, however,
that a merger or consolidation effected to implement a recapitalization of the
Company (or similar transaction) in which no person acquires more than 50% of
the combined voting power of the Company’s then outstanding securities will not
constitute a Change in Control of the Company; or


 


(iii)                                    the shareholders of the Company approve a
plan of complete liquidation of the Company or the sale or disposition by the
Company of all or substantially all of the Company’s assets other than (A) the
sale or disposition of substantially all of the assets of the Company to a
person or persons who beneficially own, directly or indirectly, more than 50%
of the combined voting power of the outstanding voting securities of the Company
at the time of the sale or (B) pursuant to a dividend in kind or spin-off type
transactions, directly or indirectly, of such assets to the shareholders of the
Company.


 


For avoidance of doubt, the
following events shall not constitute or give rise to a Change in Control: (a)
the implementation and consummation of the Second Amended Plan of
Reorganization of Metromedia Fiber Network, Inc. et al, dated July 1, 2003, as filed July 16, 2003, as the
same may be amended from time to time (the “Plan of Reorganization”)
including the exercise or any warrants issued thereunder and the right to
purchase shares granted thereunder, or (b) the Company’s Chapter 11 case is
converted to a case under Chapter 7 of the Bankruptcy Code, or (c) a Chapter 11
trustee is appointed to administer the Company’s Chapter 11 case.


 


5.                                            Restricted Stock Units.


 


(a)                                       The Employee will be granted, as of the
Effective Date, stock units under the Incentive Plan for 41,122 shares of the
Company’s Class A common stock (the “Stock Units”). One-fifth of the
Stock Units will not be subject to forfeiture, and the underlying shares with
respect to such Stock Units will be delivered to the Employee on January 2,
2005. One-fifth of the Stock Units will vest on the first anniversary of the
Effective Date, and the underlying shares of such Stock Units will be delivered
to the Employee on January 2, 2005. An additional one-fifth of the Stock Units
will vest, and the underlying shares of such Stock Units will be delivered to
the Employee, on each of the second, third and fourth anniversaries of the
Effective Date. The Stock Units will be granted pursuant to the terms and
conditions as set forth in an agreement to be entered into between the Employee
and the Company (the “Stock Unit Agreement”).


 


(b)                                      In the event of a Change in Control during
the Term, 50% of the as yet unvested Stock Units will immediately vest and the
underlying shares of all of the vested Stock Units will be immediately
delivered to the Employee (but in no event prior to January 2, 2005). For the
remaining unvested Stock Units: (i) if, following the Change in Control,
Company stock


 


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continues to be publicly traded (for example,
a merger where the Company is the surviving entity), the unvested Stock Units
will continue to vest as set forth in the Incentive Plan; or (ii) if, following
the Change in Control, Company stock does not continue to be publicly traded
(for example, in an asset purchase or a merger whereby the other party is the
surviving entity), then: (A) if the transaction is a stock transaction, the
unvested Stock Units will continue to vest as set forth in the Incentive Plan
and will be converted into acquirer stock according to the exchange ratio set
forth in the transaction; or (B) if the transaction is a cash transaction, the
unvested Stock Units will continue to vest as set forth in the Incentive Plan
but upon vesting the Company will pay the Employee the value per share paid in
the cash transaction.


 


(c)                                  The Company will use its commercially
reasonable efforts to cause the stock delivered to the Employee upon the
vesting of Stock Units to be free from restrictions on transfer under the
federal securities law other than such restrictions that may be applicable to
the holder solely by virtue of being an affiliate of the Company. Such
commercially reasonable efforts include seeking a no action letter from the
Securities Exchange Commission and otherwise seeking to have such stock
registered on a Form

S-8 or made subject to an applicable registration exemption.


 


(d)                                 In the event that any of the shares of stock
delivered to the Employee with respect to vested Stock Units may not, in the
reasonable opinion of the counsel to the Company, be sold on the date such
shares of stock are delivered to the Employee (i) under an effective
registration statement or (ii) to a third party pursuant to Rule 144 or (iii)
pursuant to another exemption under the Securities Act of 1933, as amended, at
the option of the Employee, the Company shall be obligated to repurchase such
number of shares of stock at the fair market value of the stock on the date of
such repurchase as required to meet the Company’s required minimum tax
withholding with respect to the delivered shares (based on minimum statutory
withholding rates for federal, state and local purposes, including payroll
taxes, that are applicable to such supplemental taxable income). For purposes
of this Section 5(d), fair market value will be determined under the provisions
of the Incentive Plan. Notwithstanding the immediately preceding sentence, in
the event the Internal Revenue Service determines that the fair market value of
the stock is greater than the fair market value as determined under the
Incentive Plan and the Employee has incurred additional liability for income
taxes, the fair market value for purposes of this Section 5(d) will be
increased to the value determined by the Internal Revenue Service. The Employee
must give his notice of election to exercise the repurchase right from the
Company to the Company within forty-five (45) days of the delivery date of such
stock. In the event such Employee does not exercise such right, he will be
deemed to have elected to forego such right.


 


6.                                            Expenses.


 


The Company will reimburse
the Employee for all reasonable out-of-pocket business expenses paid or
incurred by him in connection with the performance of his duties and
responsibilities hereunder, but payment will be made only against a signed,
itemized list of such expenses, utilizing general forms for that purpose
established by the Company and accompanied by proper documentation verifying
such expenses. Receipts will not be required for any expenses that are less
than Twenty-Five Dollars ($25) in value. The Company may audit the Employee’s
expense reports at any time.


 


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7.                                            Additional Benefits; Vacations; Facilities.


 


(a)                                  During the Term, the Employee will be
entitled to participate in all group health and insurance programs and all
other fringe benefit or retirement plans or other plans provided to employees
of the Company in similarly-situated senior executive positions generally,
subject to the Employee’s satisfying all of the eligibility requirements
thereof. Nothing herein will be deemed to require the Company to establish or
maintain any employee benefit plan whatsoever, and the Company has the right,
in its sole and absolute discretion, to alter, amend, modify, discontinue or
terminate any and all employee benefit plans at any time.


 


(b)                                 During the Term, the Employee will be
entitled to the same paid holidays as are provided to employees in
similarly-situated senior executive positions generally and will be entitled to
take five weeks of paid time off (including vacation days and sick days) per
calendar year, consistent with his duties and responsibilities hereunder and
the Company’s vacation policy. Paid time off which remains unused at the end of
a calendar year will be subject to the then existing policy regarding carryover
of, or payments for, such unused time. With respect to the period beginning
with the Effective Date and ending on December 31, 2003, the Employee will be
entitled to: (i) any accrued but unused paid time off he had as of the
Effective Date under MFN’s then existing policy: and (ii) the number of days of
paid time off (including vacation days and sick days) which is equal to five
weeks multiplied by a fraction, the numerator of which is the number of days
from the Effective Date through December 31, 2003 and the denominator of which
is 365.


 


(c)                                  The Company will furnish the Employee with
such working facilities and other services as are suitable to his position and
are adequate for the performance of his duties hereunder.


 


(d)                                 If the Employee qualifies for term life
insurance at non-smoker’s rates, the Company will provide the Employee during
the Term, at no cost to the Employee, with a minimum of $1 million term life
insurance. If the Employee fails to qualify for term life insurance at
non-smoker’s rates, the Company will make its best efforts to provide the
Employee, at no cost to the Employee, with the maximum amount of term life
insurance it can obtain for the premiums the Company would have paid on a $1
million term life insurance on the Employee at non-smoker’s rates if the Employee
were qualified for such insurance.


 


8.                                            Termination of Employment.


 


This Agreement may be
terminated prior to the end of the Term in accordance with the following
provisions:


 


(a)                                  Death. In the event of the Employee’s death prior to the end of the Term, this
Agreement will automatically terminate. In such event, the Employee’s
beneficiary or beneficiaries will be entitled to: (i) all accrued but unpaid
Base Salary; (ii) all accrued but unpaid annual bonuses under the Bonus Plan
for years prior to the year of the termination of employment; (iii) a pro-rated
annual bonus under the Bonus Plan for the year of the termination of employment
(at the rate he would be entitled to receive under the Bonus Plan if 100% of
the annual target was satisfied); and (iv) all accrued vacation (collectively,
the “Accrued Benefits”).


 


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Upon the Employee’s death, the unvested
portion of the Option will immediately vest and become exercisable. The Option
will remain exercisable until the earlier of: (x) the third anniversary of the
Employee’s death; or (y) the 10th anniversary of the Effective Date. In
addition, upon the Employee’s death, all unvested Stock Units will immediately
vest and the underlying shares of the Stock Units will be immediately delivered
to the Employee’s beneficiary or beneficiaries (but in no event prior to
January 2, 2005).


 


(b)                                 Disability. If the Employee suffers a Disability (as hereinafter defined) prior
to the end of the Term, this Agreement may be terminated at the option of the
Company by notice from the Company to the Employee given at any time after the
Employee has suffered a Disability. The term “Disability” means that the
Employee is unable, for a period of ninety (90) consecutive days or more during
the Term, because of a physical or mental illness or condition, to perform his
duties hereunder. In such event, such termination will be effective as of the
date on which the Company gives notice to the Employee that it is terminating
his employment hereunder pursuant to this Section 8(b) without further
obligation to Employee other than to pay the Accrued Benefits and as otherwise
provided herein. Upon the termination of Employee’s employment with the Company
as a result of a Disability, the unvested portion of the Option will
immediately vest and become exercisable. The Option will remain exercisable
until the earlier of: (i) the third anniversary of the termination of the
Employee’s employment; or (ii) the 10th anniversary of the Effective Date. In
addition, upon termination of employment as a result of a Disability, all
unvested Stock Units will immediately vest and the underlying shares of the
Stock Units will be immediately delivered to the Employee (but in no event
prior to January 2, 2005).


 


(c)                                  For Cause or Not For Good Reason.


 


(i)                                          This Agreement may be terminated prior to the
end of the Term at the option of the Company for Cause (as hereinafter defined)
or by the Employee not for Good Reason (as defined in subsection (d) below),
effective as of the date on which the Company gives notice to the Employee that
it is terminating his employment pursuant to this Section 8(c) or the date on
which the Employee gives notice to the Company that he is terminating his
employment pursuant to this Section 8(c).


 


(ii)                                       The term for “Cause” means any of the
following events:


 


(A)                              fraud, misappropriation or embezzlement of
funds or property by the Employee involving the Company or an Affiliated
Company (as hereinafter defined);


 


(B)                                the conviction of the Employee in any
jurisdiction for any crime which constitutes a felony, or which constitutes a
misdemeanor that involves fraud, moral turpitude or material loss to the
Company or an Affiliated Company, or their respective businesses or
reputations;


 


(C)                                the Employee’s material misconduct in, or
material neglect of, the performance of his material duties and
responsibilities hereunder, or the Employee’s repeated violation of any
reasonable specific written directions of the CEO which directions are
consistent with the provisions of this Agreement; and


 


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(D)                          the Employee’s material breach of this
Agreement, including but not limited to the provisions set forth in Sections 10
(Confidential Information), 11 (Restricted Covenants), 12 (Bribery, Extortion
or Kickbacks) and 13 (Intellectual Property) hereof;


 


provided, however, if any such event described
in Section 8(c)(ii)(C) or (D) (other than an event described in Section 12)
occurs and is reasonably curable, no termination for cause will be made unless
the Employee fails to cure such event promptly and in no event later than ten
(10) days after written notice thereof is given to the Employee by the Company
acting through its CEO, General Counsel or Board.


 


(iii)                                    In the event of the termination of the
Employee’s employment hereunder for “Cause” or by the Employee not for “Good
Reason”, such termination will be effective as of the date of notice of such
termination and the Company will have no further obligations whatsoever hereunder
to compensate the Employee pursuant to the terms of this Agreement other than
with respect to: (A) accrued but unpaid Base Salary, accrued paid time off. and
any accrued benefits under the Company’s benefit plans through the date of
termination; and (B) any undelivered shares of the Company’s Class A common
stock underlying previously vested Stock Units and the Company’s obligations
under Section 5(d) hereof with respect to such shares. All unvested Stock Units
and Options shall be forfeited. The vested portion of the Option must be
exercised within ninety (90) days of termination, and will thereafter be
forfeited.


 


(iv)                                   The term “Affiliated Companies” means all
entities that directly or indirectly control, or are controlled by, the
Company, all entities that are under direct or indirect common control with the
Company, and all entities in which the Company has a significant joint venture
or other similar interest. (Any entity which is a member of the Affiliated
Companies is referred to herein as an “Affiliated Company”.) “Control”
and “controlled” means possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a corporation,
partnership or other entity, whether through ownership of voting securities, by
contract or otherwise.


 


(d)                                      For Good Reason or Without Cause.


 


(i)                                          This Agreement may be terminated prior to the
end of the Term by the Employee for Good Reason (as herein after defined) or at
the option of the Company without Cause. effective as of the date on which the
Employee gives notice to the Company that he is terminating his employment
pursuant to this Section 8(d) or as of the date on which the Company gives
notice to the Employee that it is terminating his employment pursuant to this
Section 8(d).


 


(ii)                                       The term “Good Reason” means any of the
following events:


 


(A)                           fruad by the Company or an Affiliated Company
in which the Employee was not a participant:


 


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(B)                                     indictment or conviction of the Company in
any jurisdiction for any crime which constitutes a felony, or which constitutes
a misdemeanor that involves fraud or moral turpitude in which the Employee was
not a participant;


 


(C)                                     the Company’s material breach of any
provision of the Agreement which breach continues uncured for ten (10) days
after written notice thereof is given to the Company by the Employee; and


 


(D)                                    relocation of the Employee’s principal place
of employment to a location more than 30 miles from the Employee’s principal place
of employment on the Effective Date.


 


(iii)                                Upon the termination the Employee’s
employment with the Company by
the Company without Cause or by the Employee for Good Reason, the Employee will
be entitled to receive from the Company: (A) the Accrued Benefits; (B) payments
of Base Salary for 12 months; (the “Severance Payments”); and (C)
continuation of health and welfare benefits for 12 months (subject to such
continuing health and welfare benefits being terminated in the event coverage
is provided to the Employee by a subsequent employer). The unvested portion of
the Option will immediately vest and become exercisable. The Option will remain
exercisable until the earlier of: (x) the third anniversary of the termination
of the Employee’s employment; or (y) the 10th anniversary of the Effective
Date; provided, however, if the termination of the Employee’s
employment occurs upon or after a Change in Control, the portion of the Option
which was vested at the time of the Change in Control or became vested upon the
Change in Control shall remain exercisable for the remaining ten-year term of
the Option. In addition, upon
such termination of employment, all unvested Stock Units shall immediately vest
and the underlying shares of the Stock Units shall be immediately delivered to
the Employee (but in no event prior to January 2, 2005).


 


(e)                                       Release. A condition precedent to the Company’s obligations under Section 8(d)
will be the Employee’s execution and delivery of the release of all claims
(other than claims under this Agreement and for directors’ and officers’
indemnification) he may have against the Company, its affiliates and their
directors, officers, employees, agents and shareholders which relate to his
employment with the Company and termination of such employment (the “Release”).
At the time the Employee delivers his Release to the Company, the Company will
execute and deliver to the Employee a release of any claims it may have against
the Employee which relate to his employment with the Company and the termination
of such employment.


 


(f)                                         Payment Date. The Employee will receive all required
payments under subparagraphs (a) – (c) no later than 30 days following the
Employee’s termination of employment. The Employee will receive the Accrued
Benefits and Severance Payments required under subparagraph (d) in a lump-sum
payment no later then ten (10) business days following the execution and
delivery of the Release by the Employee.


 


(g)                                      No Mitigation; No Set-Off. In the event of the
termination of Employee’s employment by the Company without Cause or by the
Employee for Good Reason, the


 


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Employee shall be under no obligation to seek
other employment and there shall be no offset against amounts due to him on
account of any remuneration or benefits provided to him by any subsequent
employment he may obtain. Notwithstanding the preceding, if the Employee’s
employment is terminated by the Company without Cause or by the Employee for
Good Reason, the obligation of the Company to continue to provide the Employee
with heath insurance under Section 8(d) (iii) (C) shall cease upon coverage by
a subsequent employer.


 


9.                                  Excise Tax.


 


In the event that any
payment or benefit made or provided to or for the benefit of the Employee in
connection with this Agreement or his employment with the Company or the
termination thereof (a “Change
in Control Payment”) is
determined to be subject to any excise tax (“Excise Tax”)
imposed by Section 4999 of the United States Internal Revenue Code of 1986, as
amended, (or any successor to such section), if it is determined that, on an
after-Excise Tax basis, the Employee’s economic benefit would be increased if
the Company reduced the Change in Control Payments to be provided to the
Employee to the extent necessary to avoid the imposition of the Excise Tax. the
Company will reduce such Change in Control Payments to the Employee. The
determination regarding the Excise Tax will be made by an expert on the issues
related to the Excise Tax selected by the Company and approved by the Employee.
The same expert will be used for the determination of any other Excise Taxes
due relating to a Change in Control for any other employee.


 


10.                            Confidential Information. The Employee
covenants and agrees that:


 


(a)                                  During the Term and thereafter, he will keep
secret and retain in the strictest confidence all information about business
and financial matters (including, without limitation, information relating to
costs, profits. budgets and plans for future development, strategy, methods of
operation and marketing concepts) of the Company and the Affiliated Companies,
their respective employment policies and plans, and any other trade secrets and
proprietary information relating to the Company, the Affiliated Companies or their
respective operations, business and financial affairs, other than information
which is otherwise generally available to the public other than as a result of
a disclosure by the Employee (collectively, the “Confidential Information”), and, for such time as the Company or any Affiliated Company is
operating. not disclose any Confidential Information to anyone outside of the
Company or an Affiliated Company, either during or after the term of his
employment by the Company or an Affiliated Company, except: (i) in the course
of performing his duties hereunder; (ii) with the Company’s express prior
written consent: or (iii) as required by law.


 


(b)                                 The Employee will surrender to the Company
immediately after the termination of his employment hereunder, or at any time
the Company may so request, all memoranda. notes, records, reports, lists and
other documents in whatever form or medium containing, describing or relating
to Confidential Information, together with all copies thereof, obtained by him
or entrusted to him during the course of his employment by the Company or an
Affiliated Company or otherwise in his possession at the time of such
termination or request.


 


(c)                                  This section does not supersede any
confidentiality agreements between MFN and the Employee signed by the Employee
prior to the Effective Date. All such


 


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confidentiality
agreements will continue in full force and effect with the Company substituted
for MFN, where applicable.


 


11.           Restrictive Covenants.


 


(a)           Employee covenants and agrees that:


 


(i)            except with respect to a Permitted Investment
(as such term is defined below), while employed by the Company and, if the
Employee’s employment with the Company is terminated for any reason during the
Term, for nine months after the termination of his employment with the Company,
he will not compete, directly or indirectly, with the Company or any Affiliated
Company, by participating in the direct or indirect ownership, management,
operation or control, whether as an officer, director, partner, employee,
advisor, stockholder, investor, consultant, agent, independent contractor,
lender or otherwise, of any corporation, partnership or other entity which
owns, acquires or seeks to acquire or obtain any franchise, lease or license,
relating to, or is otherwise engaged in, the acquisition of or planning,
design, construction and deployment of fiber optic telecommunications services
or the provision of high performance, managed co-location or internet
connectivity solutions for electronic commerce and other business critical
internet operations or similar business purpose (collectively “Telecommunications
Services”). As used in this Section 10(a), “Permitted Investment”
means the ownership by the Employee (as the result of open market purchase(s))
of one ( 1%) percent or less of any class of capital stock of a corporation which
is regularly traded on a national securities exchange or over the counter on
the NASDAQ system.


 


(ii)           for one ( 1 ) year after the termination of
his employment with the Company for any reason whatsoever;


 


(A)          he will not solicit. in competition with the
Company or any Affiliated Company, any person who is a customer of the Company
or any Affiliated Company; and


 


(B)           he will not employ or induce or attempt to
persuade any employee of the Company or any Affiliated Company to terminate his
employment relationship in order to enter into competitive employment, or in
any way cause, influence or participate in the employment of any such
individual by anyone else in any business that is competitive with any business
then engaged in by the Company or any Affiliated Company.


 


(b)           If any of the restrictions contained or referenced in this Section 10
is for any reason held by court to be excessively broad as to duration,
activity, geographical scope, or subject, then such restriction shall be
construed or judicially modified so as to thereafter be limited or reduced to
the extent required to be enforceable in accordance with applicable law; provided,
however, that such court’s determination will not affect the
enforceability of Section 10 hereof in any other jurisdiction.


 


11

















 


(c)           If Executive breaches, or threatens to commit
a breach of, any of the provisions of this Section 11 (collectively, the “Restrictive
Covenants”), the Company will have the following rights and remedies, each
of which rights and remedies will be independent of the other and severally
enforceable, and all of which rights and remedies will be in addition to, and
not in lieu of, any other rights and remedies available to the Company under
law or in equity:


 


(i)            Specific Performance. The right and remedy to seek from any court
of competent jurisdiction specific performance of the Restrictive Covenants or
injunctive relief against any act which would violate any of the Restrictive
Covenants, it being acknowledged and agreed that any breach or threatened
breach will cause irreparable injury to the Company and that money damages will
not provide an adequate remedy.


 


(ii)           Accounting. The right and remedy to require Employee to account for and pay over to
the Company all compensation, profits, monies, accruals, increments or other
benefits derived or received by the Employee as the result of any transactions
constituting a breach of any of the Restrictive Covenants.


 


12.           Bribery, Extortion and Kickbacks.


 


Employee
will not at any time make or promise to make or accept any payments or
transfers of value which has the purpose or effect of public or commercial
bribery, acceptance of or acquiescence in extortion, kickbacks or other
unlawful or improper means of obtaining or conducting business for the Company.
Employee will not at any time agree that he will, in connection with his
employment or in connection with any other business transactions involving the
Company, make or promise to make any payment or transfer anything of value,
directly or indirectly: (i) to any governmental official or employee
(including employees of government corporations); (ii) to any political
party, official of a political party or candidate (or to an intermediary for
payment to any of the foregoing); (iii) to any officer, director,
employee, or representative of any actual or potential customer of the Company;
or (iv) to any other person or entity. The foregoing will not prohibit
normal and customary business entertainment or the giving of business mementos
of nominal value.


 


13.           Ownership of Intellectual Property.


 


(a)           All Inventions (as hereinafter defined), or
patents, trademarks, copyrights, trade secrets or any other rights relating to
any of the foregoing, which have or may have a material importance to the
business of the Company and which are conceived or made by Employee in
connection with his employment with the Company, either alone or with others,
are the sole and exclusive property of the Company whether or not they are conceived
or made during work time for the Company, except to the extent generally known
by persons generally knowledgeable in the fiber optics telecommunications
field.


 


(b)           Employee will immediately disclose to the
Company any and all Inventions (whether or not patentable) made or conceived by
the Employee during the Term, either alone or in conjunction with others,
whether or not made or conceived at the request or upon the suggestion of the
Company, whether or not resulting from any work done in the course


 


12

















 


of
employment, whether or not reduced to practice during the term of employment,
and whether or not made or conceived during or outside of the usual hours of
employment or upon or not upon any premises of the Company.


 


(c)           Employee assigns and will hereafter assign to
the Company all present or future right, title and interest in and to all
Inventions referred to above. Employee will not disclose any such Inventions to
any third party without the written consent of the Company.


 


(d)           At any time and from time to time during and
after the Term, on the request of the Company, without further consideration
Employee will: (i) execute specific documents of assignment in favor of
the Company, or its nominee, of any of the Inventions covered hereunder. (ii) execute
all papers and perform all acts the Company considers necessary or advisable
for the preparation, application procurement, maintenance, enforcement and
defense of patent applications and patents of the United States or other
jurisdictions of such Inventions, if applicable, for the perfection or
enforcement of any trademarks, copyrights or trade secrets relating to such
Invention, and for the transfer of any interest the Employee may have in such
Inventions, and (iii) execute any and all papers and comments which the
Company considers to necessary to vest sole right, title and interest in the
Company or its nominee in and to the above Inventions, patent applications,
patents, or any trademarks or copyright or applications therefore relating
thereto. Notwithstanding the foregoing, after termination of employment,
Employee will be entitled to reasonable compensation for more than incidental
time and effort required to be expended by Employee to fulfill his
responsibilities under clause (ii). Employee will execute all documents
(including those referred to above) and do all other acts which the Company
considers to be necessary to assist in the preservation of all the Company’s
interests in such Inventions.


 


(e)           Upon execution of this Agreement, Employee
will provide to the Company, if Employee has not already done so, a complete
written list of all Inventions which have been made or conceived before his
employment with the Company commenced or first reduced to practice by Employee
alone or in conjunction with others prior to employment with the Company.


 


(f)            For purposes of this Section 13. “Invention”
means: (i) any and all machines, apparatuses, compositions of matter,
methods, know-how, processes, computer programs, designs, configurations, uses
thereof, or writings (in any form or any media) of any kind, discovered,
conceived, developed, made or produced, or any improvement to the same, and
will not be limited to the definition of any invention contained in the United
States Patent law; (ii) all matters subject to copyright protection under
United States law; (iii) all matters subject to trademark protection under
the laws of the United States or those of any state of the United States or
under common law of any jurisdiction within the United States; and (iv) all
matters subject to protection as trade secrets under the laws or common law of
any state of the United States or of the United States.


 


(g)           For purposes of this Section 13, the
term “Work Product” refers to all work product and work-in-progress generated,
created, or developed by Employee in the course of employment, regardless of
the form or medium in which such Work Product is embodied, including without
limitation electronic form and new media. All Work Product will be deemed


 


13

















 


work
made for hire as defined by the Copyright Act of 1976. As such, all right,
title and interest in and to all Work Product will vest in and remain with the
Company from its inception, and Employee will execute all documents and all
acts which the Company considers necessary to assist in the preservation of the
Company’s interest in such Work Product.


 


(h)           If a court of competent jurisdiction
determines that the Work Product does not constitute work made for hire,
Employee agrees that this Agreement constitutes a written continuing assignment
by the Employee to the Company of all right, title and interest in and to the
Work Product.


 


(i)            This section does not supersede any intellectual
property agreements between MFN and the Employee signed by the Employee prior
to the Effective Date. All such intellectual property agreements will continue
in full force and effect with the Company substituted for MFN, where
applicable.


 


14.           Enforcement.


 


It
is agreed by the Employee that any breach or threatened breach by the Employee
of any provision of Sections 9, 10, 11, 12 or 13 hereof cannot be remedied
solely by damages. In the event of a breach or threatened breach by the
Employee of any of the provisions of Sections 9, 10, 11, 12 or 13 hereof, the
Company or any Affiliated Company will be entitled to injunctive relief
restraining the Employee and any business, firm, partnership, individual,
corporation or other entity participating in such breach or threatened breach.
Nothing contained herein will be construed to prohibit the Company or any
Affiliated Company from pursuing any other remedies available at law or in
equity for such breach or threatened breach, including, without limitation, the
recovery of damages.


 


15.           Representations and Warranties.


 


(a)           The Employee represents and warrants to the
Company that:


 


(i)              The Employee has full power and authority to
enter into this Agreement, and this Agreement has been duly and validly executed
and delivered by the Employee and constitutes the legal, valid and binding
obligation of the Employee, enforceable against the Employee in accordance with
its terms;


 


(ii)             The execution and delivery of this Agreement
by the Employee and his performance hereunder will not violate any provision of
law and will not conflict with or result in a breach of any judgment, decree,
order, writ, injunction, regulation, ordinance or other similar document or
instrument of any court or governmental authority, and will not (with or
without the giving of notice or lapse of time, or both) violate or breach any
term or condition of, or constitute a default under, any agreement, document or
instrument to which the Employee is a party or by which he is bound; and


 


(iii)            The execution and delivery of this Agreement
by the Employee and his performance hereunder do not require the consent or
approval of any other person or entity.


 


14

















 


(b)           The Company represents and warrants to the
Employee that it has full power
and authority to execute and deliver this Agreement and perform its obligations
hereunder and this Agreement has been duly executed and delivered, will be
valid and binding as of the Effective Date and enforceable in accordance with
its terms.


 


16.           Notices.


 


All
notices and other communications hereunder will be in writing and will be
deemed to have been duly given if delivered by hand, registered or certified
mail (first class postage and fees prepaid, return receipt requested),
facsimile or overnight courier guaranteeing next-day delivery, as follows:


 


If
to the Company, one copy to:


 


AboveNet
Inc.


360
Hamilton Avenue


White
Plains, New York 10601 


Attention:
Chief Executive Officer


Fax
No.: (914) 421-7550


 


If
to the Employee, one copy to:


 


Michael
A. Doris


10
Nathan Court


Syosset,
New York 11791


 


and/or
to such other persons and addresses as any party specifies in writing to the
other by notice as aforesaid.


 


17.           Prior Agreement; Entire Agreement.


 


The
Employee and the Company hereby acknowledge and agree that the terms and
provisions of this Agreement shall replace and supersede any prior employment
or services agreement which the Employee may have previously entered into with
the Company or any of its predecessors in interest, except as provided in
Sections 10 and 13 of this Agreement, and constitutes the entire agreement
between the Company and the Employee as of the Effective Date with respect to
the subject matter hereof. This Agreement also supersedes the KERP, except for
Sections III, VI and VII and the Employee’s right to receive Success Payment E
pursuant to Section IV(c)(vi). Notwithstanding the foregoing, the Employee
will continue to be entitled to any accrued salary, reimbursement of expenses,
welfare or pension benefits he accrued on or prior to the Effective Date under
any prior agreement and to all rights or benefits he is entitled to under the
Plan of Reorganization, including, but not limited to, indemnification.


 


18.           Amendment.


 


(a)           Prior to the Effective Date, this Agreement
may not be amended, changed, modified or discharged except: (i) by an
instrument in writing executed by or on behalf of the party or parties against
whom any amendment, change, modification or discharge is sought to be


 


15

















 


enforced;
and (ii) with express written permission of the Official Committee
of Unsecured Creditors of MFN.


 


(b)           After to the Effective Date, this Agreement
may not be amended, changed, modified
or discharged except: (i) by an instrument in writing executed by or on
behalf of the party or parties against whom any amendment, change, modification
or discharge is sought to be enforced; and (ii) with express
written permission of the CEO; provided, however, if an amendment
results in a change in the definitions of the term “Change in Control”, “Cause”
or “Good Reason” or in a change in the provisions of Section 2(a) hereof,
such amendment must be made with the express written permission of the Board.


 


19.           Waiver.


 


No
failure by any party to insist upon the strict performance of any covenant,
duty, agreement or condition of this Agreement or to exercise any right or
remedy consequent upon a breach thereof will constitute a waiver of any such
breach or of any other covenant, duty, agreement or condition of this
Agreement, any such waiver being made only by a written instrument executed and
delivered by the waiving party. Such written waiver by the Company must be
approved by the CEO, except that in the case where the waiver involves an event
within the definition of Cause or a breach of the Employee’s obligations under Section 2(a) hereof,
such written waiver by the Company must be approved by the Board.


 


20.           Assignability.


 


This
Agreement will not be assignable by the Employee and any purported assignment
hereof by the Employee will be null and void. This Agreement will be binding
upon, and inure to the benefit of, the Employee and his heirs, executors,
administrators and legal representatives, and the Company and its successors
and assigns.


 


21.           Severability.


 


If
any of the covenants contained in this Agreement, including, without
limitation, those contained in Sections 10, 12 or 13 hereof, are hereafter
construed to be invalid or unenforceable in any jurisdiction, the same will not
affect the remainder of the covenant or covenants or their enforceability in
any other jurisdiction, which will be given full force and effect, without
regard to the invalid portions or the enforceability in such other
jurisdiction.


 


22.           Governing Law.


 


This
Agreement will be governed by, and construed and interpreted in accordance
with, the laws of the State of New York without reference to conflict of laws
principles.


 


23.           Indemnification and Liability Insurance.


 


The
Company agrees to indemnify the Employee and hold him harmless, both during the
Term and thereafter, to the fullest extent permitted by law and under the
articles, by-laws, or other agreements of the Company against and in respect to
any and all actions, suits, proceedings, claims, demands, judgments, costs,
expenses (including reasonable attorneys fees),


 


16

















 


losses,
and damages resulting from the Employee’s good faith performance of his duties
as an officer or director of the Company, on or after the Effective Date. If
the Company obtains and/or maintains directors’ and officers’ liability
insurance, the Employee will be covered under such insurance to the same amount
and to the same extent as other officers and directors of the Company are covered.


 


24.           Consent to Jurisdiction and Service of
Process.


 


The
parties hereto irrevocably (a) submit to the exclusive jurisdiction of the
courts of the State of New York or the courts of the United States located in
the State of New York, for the purpose of any suit, action or other proceeding
arising out of this Agreement, and (b) waive to the extent not prohibited
by law, and agree not to assert, by way of motion, as a defense or otherwise,
in any such suit, action or proceeding, any claim that they are not subject to
the personal jurisdiction of the above-named courts, that their property is
exempt or immune from attachment or execution, that any such suit, action or
proceeding brought in one of the above-named courts is brought in an
inconvenient forum, that the venue of any such suit, action or proceeding is
improper, or that this Agreement or the subject matter hereof may not be
enforced in or by such court, and (c) waive the right to a trial by jury
in any such suit, action or proceeding.


 


The
Employee hereby consents to service of process in any such suit, action or
proceeding in any manner permitted by civil practice laws and rules of the
State of New York, and agrees that service of process by registered or
certified mail, return receipt requested, at his address specified in or
pursuant to Section 16 hereof is reasonably calculated to give actual
notice.


 


25.           Costs.


 


Each
party to this Agreement will pay his costs (including legal fees) in connection
with enforcement of this Agreement. However, if the Employee prevails on such
issues, the Company will reimburse the Employee for all reasonable costs,
including legal fees that the Employee incurs. Notwithstanding the preceding,
the Employee will not be reimbursed if the Employee challenges the validity of Section 11,
regardless of whether the Employee is successful in such challenge.


 


26.           Headings.


 


The
headings contained in this Agreement are for convenience of reference only and
in no way define, limit or describe the scope or intent of this Agreement or in
any way affect this Agreement.


 


27.           Construction.


 


(a)           For purposes of this Agreement, whenever the
context requires; the singular
number will include the plural, and vice versa; and the masculine gender will
include the feminine and neuter genders.


 


17

















 


(b)           As used in this Agreement the words “include”
and “including” and variations
thereof, will not be deemed to be terms of limitation, but rather will be
deemed to be followed by the words “without limitation.”


 


28.           Counterparts.


 


This
Agreement may be executed in counterparts, each of which will be deemed an
original, but all of which together will constitute one and the same
instrument.


 


29.           Agreement Not Binding Prior to the Effective
Date.


 


This
Agreement is not binding on either party prior to the Effective Date and shall
not become effective if the Employee’s employment with MFN is terminated on or
prior to the Effective Date.


 


IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date
first above written.


 


	
   

  	
  ABOVENET
  INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ John W. Gerdelman

  



 


	
   

  	
  Name:

  	
   John W. Gerdelman

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/
  Michael A. Doris

  
	
   

  	
  Michael
  A. Doris

  



 


18