SEPARATION AND TRANSITION SERVICES AGREEMENT
EXHIBIT
10.1
THIS
SEPARATION AND TRANSITION SERVICES AGREEMENT (the “Agreement”) is made and
entered into by and between Xxxxxxx Xxxxxxx Xxxxxxxxx, Xx. (“Xxxxxxxxx”) and
Arbinet Corporation (f/k/a Arbinet-thexchange, Inc.) (“Arbinet”) (collectively,
the “Parties”), dated as of January 12, 2010.
WHEREAS,
Xxxxxxxxx’x employment with Arbinet is hereby terminated, without cause,
effective March 12, 2010;
WHEREAS,
Arbinet desires that Xxxxxxxxx provide Arbinet certain Transition Services as
hereinafter described; and
WHEREAS,
Arbinet has offered Xxxxxxxxx valuable consideration over and above Xxxxxxxxx’x
normal benefits on termination in exchange for Xxxxxxxxx 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 Xxxxxxxxx’x employment with Arbinet
is hereby terminated, without cause, effective February 28, 2010 (the
“Termination Date”). Xxxxxxxxx shall remain as General Counsel and
Secretary Arbinet until the Termination Date or until a successor is appointed,
whichever is earlier. The services to be performed by Xxxxxxxxx
hereunder through the Termination Date do not need to be performed at Arbinet’s
offices in Virginia but may be performed at Xxxxxxxxx’x residence or any other
location reasonably requested by the President and Chief Executive Officer of
Arbinet and reasonably acceptable to Xxxxxxxxx.
2. (a) On
the Termination Date, in accordance with his employment letter dated September
20, 2006 and as amended on April 23, 2008 (the “Employment Letter”), Arbinet
shall pay Xxxxxxxxx xxxxxxxxx pay in a lump sum payment, less applicable
deductions and withholdings, of $275,000, which is comprised of (i) 12 months
base salary at a rate of $250,000 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
Xxxxxxxxx: (1) the salary which would otherwise be payable to Xxxxxxxxx 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 Xxxxxxxxx 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 the Termination Date 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 Xxxxxxxxx as
xxxxxxxxx pay, in a lump sum payment less applicable deductions and
withholdings, an amount equal to (i) 100 percent (100%) of Xxxxxxxxx’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, 100
percent (100%) 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 “January 2010 Restricted Stock
Agreement”), Xxxxxxxxx 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 Xxxxxxxxx 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 May 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
Xxxxxxxxx as a consultant through June 30, 2010 (the “Transition
Period”). In his capacity as a consultant, Xxxxxxxxx will not perform
legal services but will advise Arbinet with respect to historical activities in
connection with the ongoing arbitration matters with NNP Communications, LLC and
Savontel Communications, Inc. and its annual proxy and other filings with the
Securities and Exchange Commission (the “Transition Services”). The
Parties acknowledge and agree that as full and adequate compensation for the
Transition Services, Arbinet shall pay Xxxxxxxxx at the rate of $5,000 per month
for Transition Services performed by Xxxxxxxxx at Arbinet’s request (“Transition
Compensation”). In the event Xxxxxxxxx is assigned to spend more than
15 hours per month on the Transition Services, Arbinet shall compensate
Xxxxxxxxx at the rate of $350 per hour for the additional hours over 15
hours. Arbinet shall not exercise general supervision or control over
the time, place or manner in which Xxxxxxxxx provides Transition Services
hereunder and, in performing Transition Services pursuant to this Agreement,
Xxxxxxxxx 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. Xxxxxxxxx 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, Xxxxxxxxx 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 Xxxxxxxxx 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. Xxxxxxxxx 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.
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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 Xxxxxxxxx as a
consultant pursuant to Paragraph 2(d), only if Xxxxxxxxx has not revoked this
Agreement during the seven-day revocation period referenced in Paragraph 14
below. In the event Xxxxxxxxx revokes this Agreement, all Equity
Awards shall cease vesting on the Termination Date.
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, Xxxxxxxxx, 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 Xxxxxxxxx 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. Xxxxxxxxx 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. Xxxxxxxxx
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.
Xxxxxxxxx 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.
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7. Xxxxxxxxx
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 Xxxxxxxxx, nor will it authorize,
encourage or participate with anyone on its behalf to make such
statements.
8. Xxxxxxxxx
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, Xxxxxxxxx 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 Xxxxxxxxx may
have knowledge or information. Xxxxxxxxx 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 Xxxxxxxxx to make himself available to an extent that
would unreasonably interfere with his employment responsibilities. Xxxxxxxxx
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 Xxxxxxxxx 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 Xxxxxxxxx at a rate of
$350 per hour for time Arbinet requires Xxxxxxxxx to appear in person or
telephonically for such services performed in cooperation with Arbinet absent a
subpoena.
10. Xxxxxxxxx
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. Xxxxxxxxx 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 Xxxxxxxxx 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. Xxxxxxxxx
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.
Xxxxxxxxx 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 Xxxxxxxxx signs this Agreement, he has
the right to revoke this Agreement by delivering written notice of revocation to
Xxxxx X’Xxxxxxx, President and Chief Executive Officer, 000 Xxxxxxx Xxxxxxx,
Xxxxx 000, Xxxxxxx, XX 00000 prior to midnight Eastern Daylight Time on the
seventh day following the date on which Xxxxxxxxx signs this
Agreement. The Agreement shall not be effective or enforceable, and
Xxxxxxxxx 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 Xxxxxxxxx continues to serve as an
employee, officer, director, consultant or advisor to Arbinet), (i) Xxxxxxxxx
shall be deemed an “Eligible Participant” under the terms of (A) Xxxxxxxxx’x
Nonstatutory Stock Option Agreement dated September 30, 2006 (the “Stock Option
Agreement”) under the 2004 Plan, (B) Xxxxxxxxx’x Restricted Stock Unit Award
Agreement dated September 27, 2007 (the “0000 XXX Agreement”) under the 2004
Plan, (C) Xxxxxxxxx’x Restricted Stock Award Agreement dated February 20, 2008
(the “2008 Restricted Stock Agreement”) under the 2004 Plan, (D) Xxxxxxxxx’x
Stock Appreciation Rights Agreement dated February 20, 2008 (the “2008 SARs
Agreement”) under the 2004 Plan, (E) Xxxxxxxxx’x Restricted Stock Award
Agreement dated February 18, 2009 (the “2009 Restricted Stock Agreement”) under
the 2004 Plan, and (F) Xxxxxxxxx’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, and the 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) Xxxxxxxxx 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 Xxxxxxxxx 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 Virginia 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.
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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.
20. This
Agreement shall be binding on Xxxxxxxxx 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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XXXXXXX
X. XXXXXXXXX
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By:
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/s/ Xxxxx X. X’Xxxxxxx
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/s/ Xxxxxxx X. Xxxxxxxxx, Xx. | ||
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Xxxxx
X. X’Xxxxxxx
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Xxxxxxx X. Xxxxxxxxx, Xx. | |||
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President
& Chief Executive Officer
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Date
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January 12, 2010
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Date
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January 12,
2010
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