SEPARATION AND TRANSITION SERVICES AGREEMENT
Exhibit
10.1
THIS
SEPARATION AND TRANSITION SERVICES AGREEMENT (the “Agreement”) is made and
entered into by and between Xxxx X. Xxxxx, Xx. (“Xxxxx”) and Arbinet Corporation
(“Arbinet”) (collectively, the “Parties”).
WHEREAS,
Xxxxx’x employment with Arbinet is hereby terminated, without cause, effective
November 15, 2009;
WHEREAS,
Arbinet desires that Xxxxx provide Arbinet certain Transition Services as
hereinafter described; and
WHEREAS,
Arbinet has offered Xxxxx valuable consideration over and above Xxxxx’x normal
benefits on termination in exchange for Xxxxx entering into this
Agreement.
NOW
THEREFORE, in consideration of the mutual promises contained herein, it is
agreed as follows:
1. The
Parties acknowledge and agree that Xxxxx’x employment with Arbinet is hereby
terminated, without cause, effective November 15, 2009 (the “Termination
Date”). Xxxxx shall remain as Chief Financial Officer of Arbinet
until the Termination Date or until a successor is appointed, whichever is
earlier. Xxxxx acknowledges and agrees that Arbinet has no obligation
to re-employ Xxxxx at any time in the future and, if Xxxxx should seek
employment with Arbinet at some future date, that Arbinet may choose to decline
Xxxxx’x request for future employment, without consequence to
Arbinet.
2. (a) On
the Termination Date, in accordance with his employment letter dated October 16,
2006 and as amended on April 23, 2008 (the “Employment Letter”), Arbinet shall
pay Xxxxx xxxxxxxxx pay in a lump sum payment, less applicable deductions and
withholdings, of $300,000, which is comprised of (i) 12 months base salary at a
rate of $275,000 and (ii) reimbursement for COBRA payments for a period of one
year plus an amount equal to potential employer contributions to Arbinet’s
retirement plan for one year, which amount cannot exceed $25,000. In
addition, on the Termination Date, Arbinet will pay to Xxxxx (1) the salary
which would otherwise be payable to Xxxxx under the Employment Letter from the
date hereof through the Termination Date but which has not been paid as of the
Termination Date, less applicable deductions and withholding; (2) any accrued
but unused vacation pay as of the Termination Date, less applicable deductions
and withholdings; and (3) reimbursement of reasonable business expenses incurred
by Xxxxx prior to the Termination Date, to be paid in accordance with Arbinet’s
policy for reimbursement of employee business expenses.
(b) On
the earlier of March 31, 2010 or the date that bonus awards are paid to the
other senior executive officers of Arbinet under the 2009 Short-Term Cash
Incentive Bonus Plan (the “Bonus Plan”), Arbinet shall pay Xxxxx as xxxxxxxxx
pay, in a lump sum payment less applicable deductions and withholdings, an
amount equal to (i) 91.66 percent (91.66%) of Xxxxx’x target bonus under the
Bonus Plan (the “Target”), based on Arbinet’s achievement of the corporate
performance metrics for the Bonus Plan (the “Objectives”), as determined by the
Board of Directors of Arbinet (the “Board”) or the Compensation Committee of the
Board of Directors of Arbinet (the “Compensation Committee”), or (ii) in the
event the Board or the Compensation Committee exercises its discretion under the
Bonus Plan and awards to the other senior executive officers of Arbinet other
than the President and Chief Executive Officer (the “Executive Officers”) bonus
awards based on such discretion and not entirely on a mathematical calculation
of achievement of the Objectives, 91.66 (91.66%) percent of the
Target times the
average percentage of the target bonuses awarded to the Executive
Officers.
(c) On
the Effective Date (as hereinafter defined), Arbinet shall grant, pursuant to a
Restricted Stock Award Agreement (the “September 2009 Restricted Stock
Agreement”), Xxxxx 17,500 shares of restricted common stock of Arbinet (the
“Shares”) under the 2004 Stock Incentive Plan, as amended (the “2004 Plan”),
which Shares shall fully vest on the Termination Date, in consideration for the
acknowledgement and agreement by Xxxxx that he hereby irrevocably and
unconditionally waives any and all rights, claims or causes of action of any
nature whatsoever that he has, had, may have or may have had to claim that (i) a
“Change in Control” under the 2004 Plan, the Equity Agreements (as hereinafter
defined) and/or the Employment Letter has occurred prior to the date hereof
because of a change in the composition of the Board over a period of thirty-six
(36) consecutive months or less such that a majority of the Board members
ceases, by reason of one or more contested elections for Board membership, to be
comprised of individuals who either (1) have been Board members continuously
since the beginning of such period or (2) have been elected or nominated for
election as Board members during such period by at least a majority of the Board
members described in clause (1) who were still in office at the time the Board
approved such election or nomination (the “Board Change in Control Provision”)
and (ii) a “Change in Control” under the 2004 Plan, the Equity Agreements and/or
the Employment Letter has occurred from the period beginning on the date hereof
and ending on March 31, 2010 because of the Board Change in Control Provision
(subsections (i) and (ii) together shall hereinafter be referred to as the
“Equity Awards Claim”).
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(d) Subsequent
to the Termination Date, Arbinet acknowledges and agrees that it will engage
Xxxxx as a consultant through March 31, 2010 (the “Transition
Period”). Xxxxx’x services in his capacity as a consultant will be
limited to advice with respect to historical accounting and financial reporting
activities (the “Transition Services”) as assigned by the President and Chief
Executive Officer. The Parties acknowledge and agree that as full and
adequate compensation for the Transition Services, Arbinet shall pay Xxxxx at
the rate of $5,000 per month for Transition Services performed by Xxxxx at
Arbinet’s request (“Transition Compensation”). In the event Xxxxx is
assigned to spend more than 15 hours per month on the Transition Services,
Arbinet shall compensate Xxxxx at the rate of $350 per hour for the additional
hours over 15 hours. The Transition Compensation and the assigned
time shall be prorated for the month of November 2009. Arbinet shall
not exercise general supervision or control over the time, place or manner in
which Xxxxx provides Transition Services hereunder and, in performing Transition
Services pursuant to this Agreement, Xxxxx shall be acting and shall act at all
times as an independent contractor only and not as an employee, agent, partner
or joint venture of or with Arbinet. Xxxxx acknowledges that he is
solely responsible for the payment of all Federal, state, local and foreign
taxes that are required by applicable laws or regulations to be paid with
respect to the Transition Compensation. During the Transition Period, all Equity
Awards (as hereinafter defined) shall continue to vest per the terms of the
applicable Equity Agreements. Additionally, Xxxxx acknowledges and
agrees that any and all rights or remedies he has, had, may have or may have had
with respect to any unvested Equity Awards are terminated as of the end of the
Transition Period. Arbinet shall reimburse Xxxxx for all reasonable
expenses incurred by him in performing services during the Transition Period,
all such reimbursements to be made in accordance with Arbinet’s policies and
procedures for its senior executive officers, as in effect from time to
time. Xxxxx may be asked to execute Arbinet’s AGREEMENT TO PROTECT
ARBINET’S CONFIDENTIAL INFORMATION, INTELLECTUAL PROPERTY AND BUSINESS
RELATIONSHIPS for the pendency of the Transition Period.
3. Arbinet
shall become obligated to pay the severance pay set forth in Paragraphs 2(a) and
2(b), grant the Shares pursuant to Paragraph 2(c) and engage Xxxxx as a
consultant pursuant to Paragraph 2(d), only if Xxxxx has not revoked this
Agreement during the seven-day revocation period referenced in Paragraph 14
below. In the event Xxxxx revokes this Agreement, all Equity Awards
shall cease vesting on the Termination Date.
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4. As
a material inducement to Arbinet to enter into this Agreement and in
consideration of Arbinet’s promise to severance pay set forth in Paragraph 2(b),
the grant of the Shares pursuant to Paragraph 2(c) and the continued vesting of
Equity Awards pursuant to Paragraph 2(d) above, Xxxxx, on behalf of himself, his
heirs, executors, administrators and assigns, hereby irrevocably and
unconditionally releases Arbinet and all its parent companies, subsidiaries,
affiliates and related entities, together with all of its and their current,
former and future employees, directors, partners, members, shareholders,
officers, agents, attorneys, representatives, insurers, predecessors,
successors, assigns, and the like, and all persons acting by, through, under or
in concert with any of them (collectively, the “Releasees”) from any and all
charges, complaints, claims, liabilities, obligations, promises, agreements,
controversies, damages or causes of action, suits, rights, demands, costs,
losses, debts and expenses (including attorneys’ fees and costs incurred) of any
nature whatsoever, known or unknown, suspected or unsuspected, arising on or
before the date Xxxxx signs this Agreement, including, but not limited to, any
claims arising out of or related to his employment with Arbinet, the ending of
that employment and the Equity Awards Claim, as well as rights under federal,
state or local laws prohibiting any form of discrimination, including without
limitation, discrimination on the basis of age, as prohibited by the Age
Discrimination in Employment Act. Xxxxx further agrees to waive
irrevocably any right to recover under any claim that may be filed on his behalf
by the EEOC or any other federal, state or local government entity, relating to
his employment with Arbinet or the ending of that employment.
5. Xxxxx
represents and warrants that he has not filed any complaints or charges or
lawsuits against Arbinet or any other Releasee with any governmental agency or
court, and he has not assigned or transferred, or purported to assign or
transfer, to any person or entity, any claim or any portion thereof or interest
therein he has against Arbinet or any other Releasee.
6. Xxxxx
represents that at the end of the Transition Period he will return all Arbinet
property he received, prepared or helped to prepare in connection with his
employment or Transition Services, and all copies, duplicates, reproductions or
excerpts thereof.
7. Xxxxx
agrees that he will not make any disparaging or defamatory comments about
Arbinet or about any other Releasee, nor will he authorize, encourage or
participate with anyone on his behalf to make such
statements. Arbinet agrees that its’ Officers will not make any
disparaging or defamatory comments about Xxxxx, nor will it authorize, encourage
or participate with anyone on its behalf to make such statements.
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8. Xxxxx
agrees to keep the terms, amount and fact of this Agreement completely
confidential, except as may be required by law or legal process, and except that
he may reveal the terms of this Agreement to his immediate family and his legal,
financial and tax advisors, provided that each such individual agrees not to
reveal such information further.
9. Subsequent
to the Transition Period, Xxxxx agrees to cooperate reasonably with Arbinet
(including its outside counsel) in connection with the contemplation,
prosecution and defense of all phases of existing, past and future litigation,
regulatory or administrative actions about which Arbinet believes Xxxxx may have
knowledge or information. Xxxxx further agrees to make himself
reasonably available at mutually convenient times as reasonably deemed necessary
by Arbinet’s counsel. Arbinet shall not utilize this Paragraph 9 to
require Xxxxx to make himself available to an extent that would unreasonably
interfere with his employment responsibilities. Xxxxx agrees to appear without
the necessity of a subpoena to testify truthfully in any legal proceedings in
which Arbinet calls him as a witness. Arbinet shall reimburse Xxxxx
for any reasonable business travel expenses that he may incur on Arbinet’s
behalf as a result of his cooperation services after receipt of appropriate
documentation. Subsequent to the Transition Period, Arbinet agrees to reimburse
Xxxxx at a rate of $350 per hour for time Arbinet requires Xxxxx to appear in
person or telephonically for such services performed in cooperation with Arbinet
absent a subpoena.
10. Xxxxx
acknowledges that the severance pay set forth in Paragraph 2(b), the grant of
the Shares pursuant to Paragraph 2(c) and the continued vesting of Equity Awards
pursuant to Paragraph 2(d) above exceeds the compensation or benefits which
would otherwise be paid to him on termination of his
employment. Xxxxx further acknowledges and agrees that the severance
pay set forth in Paragraph 2(b), the grant of the Shares pursuant to Paragraph
2(c) and the continued vesting of Equity Awards pursuant to Paragraph 2(d) above
shall be in lieu of and discharge any obligations of Arbinet to him for any
further compensation, severance benefits, or any other expectations of
remuneration or benefit on his part, except: (i) for payment of the severance
pay under Paragraph 2(a); (ii) for the payment of the salary which would
otherwise be payable to Xxxxx under the Employment Letter from the date hereof
through the Termination Date but which has not been paid as of the Termination
Date, less applicable deductions and withholdings; (iii) for the payment of any
accrued but unused vacation pay as of the Termination Date, less applicable
deductions and withholdings; (iv) for the reimbursement of reasonable business
expenses incurred by him prior to the Termination Date, to be paid in accordance
with Arbinet’s policy for reimbursement of employee business expenses; and (v)
to the extent that he qualifies for benefits under the terms of any employee
benefit or stock option plan following termination of employment.
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11. Xxxxx
represents and acknowledges that he has been given a period of twenty-one (21)
days to consider this Agreement; has read this Agreement, understands the terms
of the Agreement and has been given an opportunity to ask questions of Arbinet’s
representatives; and has been advised to consult with an attorney prior to
signing this Agreement.
12. Xxxxx
further represents that in signing this Agreement he does not rely, and has not
relied, on any representation or statement not set forth in this Agreement made
by any representative of Arbinet or any other Releasee with regard to the
subject matter, basis or effect of this Agreement or otherwise.
13. This
Agreement is knowingly and voluntarily entered into by all Parties.
14. For
a period of seven (7) days after the date Xxxxx signs this Agreement, he has the
right to revoke this Agreement by delivering written notice of revocation to
Xxxxx Xxxxxxxxx, General Counsel, 120 Albany Street, Tower II, 0xx Xxxxx,
Xxx Xxxxxxxxx, XX 00000 prior to midnight Eastern Daylight Time on the seventh
day following the date on which Xxxxx signs this Agreement. The
Agreement shall not be effective or enforceable, and Xxxxx shall not be entitled
to any of the benefits hereunder, unless and until seven (7) days have elapsed
from the date he signs this Agreement and he has not revoked the Agreement
during that seven (7) day period (the “Effective Date”).
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15. This
Agreement sets forth the entire agreement between the Parties and supersedes any
and all prior agreements, understandings or arrangements between the Parties
about the subject matter of this Agreement; provided, however, that the Parties
hereby agree and acknowledge that (a) prior to the Termination Date and during
the Transition Period (and for so long as Xxxxx continues to serve as an
employee, officer, director, consultant or advisor to Arbinet), (i) Xxxxx shall
be deemed an “Eligible Participant” under the terms of (A) Xxxxx’x Nonstatutory
Stock Option Agreement dated October 17, 2006 (the “Stock Option Agreement”)
under the 2004 Plan, (B) Xxxxx’x Restricted Stock Unit Award Agreement dated
September 27, 2007 (the “0000 XXX Agreement”) under the 2004 Plan, (C) Xxxxx’x
Restricted Stock Award Agreement dated February 20, 2008 (the “2008 Restricted
Stock Agreement”) under the 2004 Plan, (D) Xxxxx’x Stock Appreciation Rights
Agreement dated February 20, 2008 (the “2008 SARs Agreement”) under the 2004
Plan, (E) Xxxxx’x Restricted Stock Award Agreement dated February 18, 2009 (the
“2009 Restricted Stock Agreement”) under the 2004 Plan, and (F) Xxxxx’x Stock
Appreciation Rights Agreement dated February 18, 2009 (the “2009 SARs Agreement”
and collectively with the Stock Option Agreement, the 0000 XXX Agreement, the
2008 Restricted Stock Agreement, the 2008 SARs Agreement, the 2009 Restricted
Stock Agreement, and the September 2009 Restricted Stock Agreement, the “Equity
Agreements” and the equity awards granted under the Equity Agreements shall
hereinafter be referred to as the “Equity Awards”) under the 2004 Plan, (ii) the
Equity Awards shall continue to vest in accordance with the terms in the
applicable Equity Agreements and the 2004 Plan, (iii) Xxxxx shall have a right
to exercise his vested Equity Awards by following the procedures in the
applicable Equity Agreements and the 2004 Plan and (iv) any exercise of the
Equity Awards after the Transition Period shall be subject to the terms of the
applicable Equity Agreements and the 2004 Plan; (b) the restrictive covenants
entered into by and between Xxxxx and Arbinet and the “Confidential Information”
and “Non-Competition/Non-Solicitation” provisions contained in the Employment
Letter shall remain in full force and effect; and (c) prior to the Termination
Date, the definition of “cause” in the Employment Letter shall remain in full
force and effect.
16. This
Agreement shall be governed by and construed in accordance with the laws of the
State of New York without reference to rules regarding conflicts of
law.
17. The
provisions of this Agreement are severable, and if any part of it is found to be
unenforceable, the other provisions shall remain fully valid and enforceable,
provided, however, that if the release provided for in Paragraph 4 above (or any
part thereof) is found to be invalid, the Parties shall negotiate a modification
to such release to ensure the maximum enforceability permitted by
law.
18. This
Agreement may be executed in any number of counterparts, each of which shall,
when executed, be deemed to be an original and all of which shall be deemed to
be one and the same instrument.
19. Neither
this Agreement nor any part of it may be modified, amended, changed or
terminated orally, and any modification, amendment, or termination must be in
writing signed by both Parties. Any waiver of any term or provision
of this Agreement must be in writing and signed by the Party granting the
waiver.
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20. This
Agreement shall be binding on Xxxxx and his heirs, administrators,
representatives, executors and assigns and shall inure to the benefit of
Arbinet, its parent companies, subsidiaries and affiliates and to all of their
successors and assigns.
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IN
WITNESS WHEREOF, each of the Parties hereunto has executed this Agreement on the
date(s) indicated below.
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ARBINET
CORPORATION:
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XXXX
X. XXXXX, XX.:
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By:
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/s/ Xxxxx X.
X’Xxxxxxx
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/s/ Xxxx X. Xxxxx, Xx.
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Xxxxx
X. X’Xxxxxxx
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Xxxx
X. Xxxxx, Xx.
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President
&
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Chief
Executive Officer
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Date
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September 1, 2009
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Date
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September 1,
2009
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