SEPARATION AND TRANSITION SERVICES AGREEMENT
Exhibit
10.3
This
Separation and Transition Services Agreement is made by and between
Arbinet-thexchange, Inc., a Delaware corporation with its headquarters located
in New Brunswick, New Jersey (the “Company”), and Xxxxxxx X. Xxxxxxx (the
“Executive”), effective as of the Effective Date (as that term is defined in
Section 8, below). This agreement summarizes the severance, transition and
other
arrangements between the Executive and the Company (the “Separation
Agreement”). In consideration of the mutual covenants contained in this
Separation Agreement, the Company and the Executive agree as
follows:
1. Termination.
The
Executive’s employment with the Company is hereby terminated without cause as of
the Effective Date in accordance with Section 6(c) of that certain Employment
Agreement (the “Employment Agreement”) made as of November 16, 2007, by and
between the Company and the Executive and the parties hereby acknowledge and
agree that the Employment Agreement is terminated as of the Effective
Date.
2. Transition
Services.
Subject
to the terms and conditions of this Separation Agreement, the Executive shall
serve the Company as the Chairman of the Board of Directors of the Company
(the
“Board of Directors”) through the Company’s 2009 Annual Meeting of Stockholders
(the “2009 Annual Meeting”). The Executive shall also provide the Company with
such additional transition assistance incidental to such position as the
Executive may be reasonably requested by the Board of Directors, including,
but
not limited to, working on various matters related to (a) evaluating potential
merger, stock purchase, asset purchase, recapitalization, reorganization,
consolidation, amalgamation or other transaction opportunities for the Company
and (b) significant members of the Company’s exchange. In such capacity or
capacities, the Executive shall provide such transition services in connection
with the business, affairs and operations of the Company as may be reasonably
assigned or delegated to the Executive from time to time by or under the
authority of the Board of Directors.
3. Transition
Period.
The
Executive agrees to serve as a Class I Director until the 2009 Annual Meeting
(the “Transition Period”). The Executive further agrees that, effective as of
the date of the 2009 Annual Meeting, the Executive shall no longer be a member
of the Board of Directors and Chairman of the Board of Directors, and such
resignation shall be effective as of that date.
4. Severance
Payments; Director Compensation; Benefits:
(a) Severance
Payments.
The
Company shall pay you severance pay in the aggregate of Four Hundred
Seventy-Eight Thousand One Hundred Twenty Five Dollars ($478,125), which is
comprised of:
(i) Aggregate
payments of Thirty-One Thousand Two Hundred Fifty ($31,250), which is equal
to
the salary which would otherwise be payable under the Employment Agreement
from
the date hereof until October 1, 2008 (the “Initial Transition Period”), at the
annual rate of Three Hundred Seven-Five Thousand Dollars ($375,000) (the
“Initial Severance Payment”) payable in periodic installments during the Initial
Transition Period in accordance with the Company’s ordinary payroll
periods;
(ii) One
(1)
lump sum payment the salary which would otherwise be payable under the
Employment Agreement from October 2, 2008 and November 16, 2008, equal
to Forty-Six Thousand Eight Hundred Seventy-Five ($46,875), payable within
ten
(10) days of execution of this Separation Agreement;
(iii) One
(1)
lump sum payment of Four Hundred Dollars ($400,000) (the “Severance Payment”
and, together with the Initial Severance Payment, the “Severance Payments”)
payable on the earlier of (A) six (6) months and one (1) day following October
1, 2008 and (B) the death of the Executive consisting of:
(1) Twelve
(12) months’ base salary, equal to Three Hundred Seventy-Five Hundred Dollars
($375,000); and
(2) Reimbursement
for payments under the Consolidated Omnibus Budget Reconciliation Act of 1985
(“COBRA”) for a period of one (1) year following the Effective Date, plus an
amount equal to potential employer contributions to Arbinet’s retirement plan
for one year, which amount cannot exceed Twenty-Five Thousand Dollars
($25,000).
(b) Director
Compensation.
The
Executive hereby waives the right to any compensation under the Company’s
non-employee director compensation policy during the Transition
Period.
(c) Benefits.
The
Company will present the Executive with information on COBRA under separate
cover. If the Executive timely elects continuation of coverage under COBRA,
the
Executive shall be entitled to coverage under the Company’s group medical and
dental plans in which the Executive is currently participating (“Group Health
Plans”) at the coverage levels that currently apply to the Executive, subject to
payment solely by the Executive of any premiums at the then current rate
required for active employees with the same coverage levels, effective until
the
COBRA continuation period ends.
(d) Additional
Benefits.
The
Company shall provide the following additional benefits to the Executive during
the Transition Period:
(i) Reimbursement
of Business Expenses.
The
Company shall reimburse the Executive for all reasonable expenses incurred
by
him in performing services during the Transition Period, including any expenses
resulting from any travel at the direction of and/or preapproved by the
Company’s Chief Executive Officer, including but not limited to travel to New
Jersey, all such reimbursements to be made in accordance with the Company’s
policies and procedures for its senior executive officers, as in effect from
time to time.
(ii) Reimbursement
of Living Expenses.
In
addition to reimbursements pursuant to Section 4(d)(i) above, the Company shall
also reimburse the Executive for the cost of temporary housing in the New Jersey
area, which amounts shall not exceed One Thousand Five Hundred Dollars ($1,500)
per month.
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(iii) Indemnification.
During
the Transition Period, Executive will be included under the Company’s directors
and officers liability insurance policy, with the same coverage as is provided
to other directors or officers of the Company in respect of their service to
the
Company, and such coverage will continue thereafter without interruption for
so
long as the Company, or its successors and assigns, maintains such coverage
or
any similar coverage for its officers and directors.
(iv) Legal
Fees.
The
Company shall reimburse the Executive for all reasonable and documented attorney
and professional fees incurred by the Executive in connection with the
negotiation and review of the terms of this Separation Agreement.
(v) Options.
During
the Transition Period (and for so long as the Executive continues to serve
as an
employee, officer or director, or consultant or advisor to, the Company), the
Executive shall be deemed an “Eligible Participant” under the terms of the
Executive’s Non-Qualified Stock Option Agreement granted under the Company’s
2004 Stock Inventive Plan and the options granted thereunder shall continue
to
vest during such period in accordance with the terms thereunder.
(e) Exclusivity
of Payments and Benefits.
During
the Transition Period, the Executive shall not be entitled to any payments
or
benefits other than those provided under this Separation Agreement.
5. Extent
of Service.
The
Executive shall, subject to the direction and supervision of the Chief Executive
Officer of the Company, devote (a) during the Initial Transition Period, the
Executive’s full business time and (b) from expiration of the Initial Transition
Period until the expiration of the Transition Period, no minimum amount of
time,
but in any event not to exceed five (5) hours a week or, in the aggregate,
20%
of the average weekly hours worked by the Executive under the Employment
Agreement, including service as a member of the Board of Directors, in each
case, as well as his best efforts and business judgment, skill and knowledge,
to
the discharge of the Executive’s duties and responsibilities under this
Separation Agreement; provided
that
nothing in this Agreement shall be construed as preventing the Executive
from:
(a) investing
the Executive’s assets in any company or other entity in a manner not prohibited
by Section 6(d) and, during the Initial Transition Period, in such form or
manner as shall not require any material activities on the Executive’s part in
connection with the operations or affairs of the companies or other entities
in
which such investments are made;
(b) engaging
in religious, charitable or other community or non-profit activities that do
not
impair the Executive’s ability to fulfill the Executive’s duties and
responsibilities under this Agreement; or
(c) serving
as a member of the board of directors of the companies listed on Exhibit
A
attached
hereto or any other one or more private companies, subject to Section 6(d)
below.
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6. Confidential
Information, Noncompetition and Cooperation.
(a) Confidential
Information.
As used
in Separation Agreement, “Confidential Information” means information belonging
to the Company which is of value to the Company in the course of conducting
its
business and the disclosure of which could result in a competitive or other
disadvantage to the Company. Confidential Information includes, without
limitation, financial information, reports, and forecasts; inventions,
improvements and other intellectual property; trade secrets; know-how; designs,
processes or formulae; software; market or sales information or plans; customer
lists; and business plans, prospects and opportunities (such as possible
acquisitions or dispositions of businesses or facilities) which have been
discussed or considered by the management of the Company. Confidential
Information includes information developed by the Executive in the course of
the
Executive’s employment under Employment Agreement (the “Employment Services”)
and the performance of the Executive’s performance of the services under this
Separation Agreement (the “Transition Services,” and together with the
Employment Services, the “Services”), as well as other information to which the
Executive may have access in connection with the Services. Confidential
Information also includes the confidential information of others with which
the
Company has a business relationship. Notwithstanding the foregoing, Confidential
Information does not include (i) information in the public domain, unless due
to
breach of the Executive’s duties under Section 6(b) or (ii) otherwise known
by the Executive other than by reason of his employment with the Company under
the Employment Agreement or performing obligations hereunder; provided
that the
source of such information is not known by the Executive to have disclosed
such
information in violation of an obligation of confidentiality owed to the
Company.
(b) Confidentiality.
The
Executive understands and agrees that the Executive’s performance of the
Services creates a relationship of confidence and trust between the Executive
and the Company with respect to all Confidential Information. At all times,
both
during the Executive’s employment with the Company under the Employment
Agreement or performing obligations hereunder, and, in each case, after its
termination, the Executive will keep in confidence and trust all such
Confidential Information, and will not use or disclose any such Confidential
Information without the written consent of the Company, except as may be
necessary in the ordinary course of performing the Executive’s duties to the
Company.
(c) Documents,
Records, etc.
All
documents, records, data, apparatus, equipment and other physical property,
whether or not pertaining to Confidential Information, which are furnished
to
the Executive by the Company or are produced by the Executive in connection
with
the Executive’s performance of the Services will be and remain the sole property
of the Company. The Executive will return to the Company all such materials
and
property as and when requested by the Company. In any event, the Executive
will
return all such materials and property immediately upon expiration of the
Transition Period. The Executive will not retain any such material or property
or any copies thereof after such Transition Period.
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(d) Noncompetition
and Nonsolicitation.
During
the Transition Period and for six (6) months thereafter, the Executive (i)
will
not, directly or indirectly, whether as owner, partner, shareholder, consultant,
agent, employee, co-venturer or otherwise, engage, participate, assist or invest
in any Competing Business (as defined below); (ii) will refrain from directly
or
indirectly employing, attempting to employ, recruiting or otherwise soliciting,
inducing or influencing any person to leave employment with the Company (other
than terminations of employment of subordinate employees undertaken in the
course of the Executive’s performance of the Services); and (iii) will refrain
from soliciting or encouraging any customer or supplier to terminate or
otherwise modify adversely its business relationship with the Company. The
Executive understands that the restrictions set forth in this Section 6(d)
are
intended to protect the Company’s interest in its Confidential Information and
established employee, customer and supplier relationships and goodwill, and
agrees that such restrictions are reasonable and appropriate for this purpose.
For purposes of this Separation Agreement, the term “Competing Business” shall
mean a business conducted anywhere in any jurisdiction where the Company and/or
its affiliates conduct such business as of the expiration of the Transition
Period, and shall be deemed to include, without limitation, any business
activity or jurisdiction which is covered by or included in a written proposal
or business plan existing on the date of the expiration Transition Period with
the Company, which is competitive with any business which the Company or any
of
its affiliates conducts or proposes to conduct at any time during the Executives
performance of the Services. Notwithstanding the foregoing, (i) the Executive
may own up to one percent (1%) of the outstanding stock of a publicly held
corporation which constitutes or is affiliated with a Competing Business, and
(ii) the companies listed on Exhibit
A
hereto
shall not be deemed to be a Competing Business.
(e) Third-Party
Agreements and Rights.
The
Executive hereby confirms that the Executive is not bound by the terms of any
agreement with any previous Company or other party which restricts in any way
the Executive’s use or disclosure of information or the Executive’s engagement
in any business. The Executive represents to the Company that the Executive’s
execution of this Separation Agreement, the Executive’s position with the
Company and the performance of the Executive’s proposed duties for the Company
will not violate any obligations the Executive may have to any such previous
Company or other party. In the Executive’s work for the Company, the Executive
will not disclose or make use of any information in violation of any agreements
with or rights of any such previous Company or other party, and the Executive
will not bring to the premises of the Company any copies or other tangible
embodiments of non-public information belonging to or obtained from any such
previous employment or other party.
(f) Litigation
and Regulatory Cooperation.
During
and after the Transition Period, the Executive shall cooperate fully with the
Company in the defense or prosecution of any claims or actions now in existence
or which may be brought in the future against or on behalf of the Company which
relate to events or occurrences that transpired while the Executive was employed
by the Company under the Employment Agreement or performing obligations
hereunder. The Executive’s full cooperation in connection with such claims or
actions shall include, but not be limited to, being available to meet with
counsel to prepare for discovery or trial and to act as a witness on behalf
of
the Company at mutually convenient times. During and after the Transition
Period, the Executive also shall cooperate fully with the Company in connection
with any investigation or review of any federal, state or local regulatory
authority as any such investigation or review relates to events or occurrences
that transpired while the Executive was employed by the Company under the
Employment Agreement or performing obligations hereunder. The Company shall
reimburse the Executive for any reasonable out-of-pocket expenses incurred
in
connection with the Executive’s performance of obligations pursuant to this
Section 6(f).
(g) Injunction.
The
Executive agrees that it would be difficult to measure any damages caused to
the
Company which might result from any breach by the Executive of the promises
set
forth in this Section 6, and that in any event money damages would be an
inadequate remedy for any such breach. Accordingly, the Executive agrees that
if
the Executive breaches, or proposes to breach, any portion of this Separation
Agreement, the Company shall be entitled, in addition to all other remedies
that
it may have, to an injunction or other appropriate equitable relief to restrain
any such breach without showing or proving any actual damage to the
Company.
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7. Release.
(a) In
exchange for the Company’s promises set forth herein, and other good and
valuable consideration, the sufficiency of which is hereby acknowledged, the
Executive and the Executive’s representatives, agents, estate, heirs, successors
and assigns, absolutely and unconditionally hereby release, remise, discharge,
indemnify and hold harmless the Company and/or any of its parents, subsidiaries
or affiliates, predecessors, successors or assigns, and its and their respective
current and/or former partners, directors, shareholders/stockholders, officers,
employees, attorneys and/or agents, all both individually and in their official
capacities (collectively, the “Company Releasees”), from any and all actions or
causes of action, suits, claims, complaints, contracts, liabilities, agreements,
promises, torts, debts, damages, controversies, judgments, rights and demands,
whether existing or contingent, known or unknown, suspected or unsuspected,
which arise out of the Employment Agreement, the Executive’s employment with,
change in employment status with, and/or separation of employment from, the
Company up to the date of this Separation Agreement. This release is intended
by
the Executive to be all encompassing and to act as a full and total release
of
any claims, whether specifically enumerated herein or not, that the Executive
may have or have had against the Company Releasees arising from conduct
occurring up to and through the date of this Separation Agreement, including,
but not limited to, any claims arising from any federal, state or local law,
regulation or constitution dealing with either employment, employment benefits
or employment discrimination such as those laws or regulations concerning
discrimination on the basis of race, color, creed, religion, age (including,
but
not limited to the Age Discrimination in Employment Act, 29 U.S.C. § 634), sex,
sex harassment, sexual orientation, national origin, ancestry, genetic carrier
status, handicap or disability, veteran status, any military service or
application for military service, or any other category protected under federal
or state law; any contract, whether oral or written, express or implied,
including without limitation, any letter offering employment and any stock
option agreement(s); any tort; any claim for equity or other benefits; or any
other statutory and/or common law claim. The Executive not only releases and
discharges the Company Releasees from any and all claims as stated above that
the Executive could make on the Executive’s own behalf or on behalf of others,
but also those claims that might be made by any other person or organization
on
the Executive’s behalf, and the Executive specifically waives any right to
recover any damage awards as a member of any class in a case in which any
claim(s) against the Company Releasees are made involving any
matters.
(b) The
Executive acknowledges that he has read the contents of this Section 7,
that he has had the opportunity to review such Section 7 and this Separation
Agreement with counsel of his choice, that he understands the same and that
he
has given such general release of his own free act and deed.
(c) Notwithstanding
anything contained in this Section 7 to the contrary, nothing herein shall
be
deemed to release or waive any claims arising from this Separation Agreement
or
any claims or rights arising under any directors’ and officers’ liability
insurance coverage maintained by the Company or any indemnification to which
the
Executive may be entitled under the Company’s certificate of incorporation,
bylaws or other instrument.
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8. Period
for Consideration.
Executive acknowledges that he has been given the opportunity to consider this
Separation Agreement for a period of at least twenty-one (21) days. In the
event
that the Executive has executed this Separation Agreement within fewer than
twenty-one (21) days of the date of its delivery to the Executive, he
acknowledges that such decision was entirely voluntary and that he had the
opportunity to consider this Separation Agreement for the entire twenty-one
(21)
day period. For a period of seven (7) days from the date of the execution
of this Agreement (the “Revocation Period”), the Executive shall retain the
right to revoke this Agreement by providing written notice to the Board of
Directors. Provided that this Agreement is not revoked pursuant to the preceding
sentence, this Separation Agreement shall become effective and enforceable
on
the date immediately following the last day of the Revocation Period (the
“Effective Date”).
9. Consent
to Jurisdiction.
The
parties hereby consent to the jurisdiction of the Superior Court of the State
of
New Jersey and the United States District Court for the District of New Jersey.
Accordingly, with respect to any such court action, the parties (a) submit
to
the personal jurisdiction of such courts; (b) consent to service of process;
and
(c) waive any other requirement (whether imposed by statute, rule of court,
or
otherwise) with respect to personal jurisdiction or service of
process.
10. Integration.
This
Separation Agreement constitutes the entire agreement between the parties with
respect to the subject matter hereof and supersedes all prior agreements between
the parties with respect to any related subject matter.
11. Assignment;
Successors and Assigns, etc.
Neither
the Company nor the Executive may make any assignment of this Separation
Agreement or any interest herein, by operation of law or otherwise, without
the
prior written consent of the other party; provided
that the
Company may assign its rights under this Separation Agreement without the
consent of the Executive in the event that the Company shall effect a
reorganization, consolidate with or merge into any other corporation,
partnership, organization or other entity, or transfer all or substantially
all
of its properties or assets to any other corporation, partnership, organization
or other entity. This Separation Agreement shall inure to the benefit of and
be
binding upon the Company and the Executive, their respective successors,
executors, administrators, heirs and permitted assigns.
12. Enforceability.
If any
portion or provision of this Separation Agreement (including, without
limitation, any portion or provision of any section of this Separation
Agreement) shall to any extent be declared illegal or unenforceable by a court
of competent jurisdiction, then the remainder of this Separation Agreement,
or
the application of such portion or provision in circumstances other than those
as to which it is so declared illegal or unenforceable, shall not be affected
thereby, and each portion and provision of this Separation Agreement shall
be
valid and enforceable to the fullest extent permitted by law.
13. Waiver.
No
waiver of any provision hereof shall be effective unless made in writing and
signed by the waiving party. The failure of any party to require the performance
of any term or obligation of this Separation Agreement, or the waiver by any
party of any breach of this Separation Agreement, shall not prevent any
subsequent enforcement of such term or obligation or be deemed a waiver of
any
subsequent breach.
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14. Notices.
Any
notices, requests, demands and other communications provided for by this
Separation Agreement shall be sufficient if in writing and delivered in person
or sent by a nationally recognized overnight courier service or by registered
or
certified mail, postage prepaid, return receipt requested, to the Executive
at
the last address the Executive has filed in writing with the Company or, in
the
case of the Company, at its main offices, attention of the Chief Executive
Officer, and shall be effective on the date of delivery in person or by courier
or three (3) days after the date mailed.
15. Amendment.
This
Separation Agreement may be amended or modified only by a written instrument
signed by the Executive and by a duly authorized representative of the
Company.
16. Governing
Law.
This is
a New Jersey contract and shall be construed under and be governed in all
respects by the laws of the State of New Jersey, without giving effect to the
conflict of laws principles of such State. With respect to any disputes
concerning federal law, such disputes shall be determined in accordance with
the
law as it would be interpreted and applied by the United States Court of Appeals
for the Third Circuit.
17. Counterparts.
This
Separation Agreement may be executed in any number of counterparts, each of
which when so executed and delivered shall be taken to be an original; but
such
counterparts shall together constitute one and the same document.
*remainder
of page has intentionally been left blank*
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IN
WITNESS WHEREOF, this Separation Agreement has been executed as a sealed
instrument by the Company, by its duly authorized officer, and by the Executive,
as of the Effective Date.
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ARBINET-THEXCHANGE,
INC.
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By:
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/s/ Xxxx X. Xxxxxx |
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Name:
Xxxx X. Xxxxxx
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Title:
Director
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/s/
Xxxxxxx X. Xxxxxxx
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Xxxxxxx
X. Xxxxxxx
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EXHIBIT
A
Board
of Directors
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CIT
Group, Inc.
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2.
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Terrestar
Corp.
|
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3.
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Drew
University Trustee
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4.
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Value
Added Communications
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