Exhibit 10.2
Execution
Copy
EMPLOYMENT
AGREEMENT
This EMPLOYMENT AGREEMENT (the
“Agreement”) is made as of September 2, 2008
(the “Effective Date”), by and between
Arbinet-thexchange, Inc. a Delaware corporation with its
headquarters located in New Brunswick, New Jersey (the
“Employer”), and Shawn F. O’Donnell (the
“Executive”). In consideration of the mutual covenants
contained in this Agreement, the Employer and the Executive agree
as follows:
1. Employment . The Employer agrees to employ the Executive
and the Executive agrees to be employed by the Employer on the
terms and conditions set forth in this Agreement.
2. Capacity . Subject to the terms and conditions of this
Agreement, the Executive shall serve the Employer as Chief
Executive Officer and President and shall have the duties,
responsibilities and authority customary for such positions. The
Executive shall report directly to the Board of Directors of
Employer (the “Board of Directors”) and shall also
serve the Employer in such additional offices incidental to such
position as the Executive may be requested by the Board of
Directors. In such capacity or capacities, the Executive shall
perform such services and duties in connection with the business,
affairs and operations of the Employer as may be assigned or
delegated to the Executive from time to time by or under the
authority of the Board of Directors. During the term of this
Agreement, the Board of Directors shall nominate the Executive for
reelection as a member of the Board of Directors at the annual
meeting of stockholders of the Employer following which the
Executive's term as a director expires; provided that the Executive
shall be, at the time of such nomination, the Chief Executive
Officer and President of the Employer; provided further that the
Executive agrees to resign as a director of the Employer upon
termination of the Executive's employment in accordance with
Section 6 hereof. During the Transition Period (as defined below)
Executive shall be permitted to devote up to ten (10) hours per
week performing duties for his former employer.
3. Relocation .
(a) The Executive understands and agrees that this
position is a full-time based at the Employer’s headquarters
in New Brunswick, New Jersey.
(b) From the date hereof until September
30, 2008 (the “Transition Period”) the Executive
agrees to be available during the regular workweek, excluding
Employer-wide holidays and business travel as necessitated in
connection with the Executive’s responsibilities hereunder.
During the Transition Period, the Executive may perform his duties
either remotely or in any of the Employer’s offices, at the
Executive’s sole discretion.
(c) From October 1, 2008 until June 30, 2009, the
Executive agrees to perform his duties from, and be present at, any
of the Employer’s offices during the regular workweek,
excluding Employer-wide holidays and business travel as
necessitated in connection with the Executive’s
responsibilities hereunder.
(d) The Executive shall maintain a permanent
residence in the New Jersey area no later than July 1,
2009.
(e) Any failure to meet the requirements of this
Section 3 due to (i) vacation time taken pursuant to this Agreement
or the Employer’s vacation policy, or (ii) travel incidental
to the Executive performing his obligations under this Agreement,
shall not be deemed a breach of Section 3(b) or Section
3(c).
4. Compensation and Benefits
. The regular compensation and
benefits payable to the Executive under this Agreement shall be as
follows:
(a) Salary . For all services rendered by the Executive
under this Agreement, the Employer shall pay the Executive an
initial annual salary (the “Salary”) of not less than
Three Hundred Forty Thousand Dollars ($340,000), during the initial
twelve (12) months of employment, subject to annual merit increases
based upon annual formal reviews by the Board of Directors or the
Compensation Committee of the Board of Directors (the
“Compensation Committee”), provided , that the
Salary is at all time subject to increase from time to time in the
discretion of the Board of Directors or the Compensation Committee.
The Salary shall be payable in periodic installments in accordance
with the Employer’s usual practice for its senior
executives.
(b) Bonus . The Executive shall be entitled to participate
in an annual incentive program established by the Board of
Directors or the Compensation Committee with such terms as may be
established by the Board of Directors or the Compensation Committee
and mutually and reasonably agreed by the Executive;
provided, that, (i) for the fiscal year ending December
31, 2008, Executive will have the opportunity to earn up to One
Hundred Thirteen Thousand Dollars ($113,000) based upon the
achievement of the performance objectives as mutually and
reasonably agreed by the Executive and the Board of Directors or
the Compensation Committee; and (ii) beginning with the fiscal year
ending December 31, 2009, the Executive will have the opportunity
to earn up to One Hundred Percent (100%) (the “Target
Percentage”) of his Salary then in effect in bonus
compensation annually based upon the achievement of both corporate
performance and individual performance objectives, as determined by
the Board of Directors or the Compensation Committee and mutually
and reasonably agreed by the Executive.
(c) Regular Benefits . The Executive shall also be entitled to
participate in any qualified retirement plans, deferred
compensation plans, supplemental retirement plans, stock option and
incentive plans, stock purchase plans, medical insurance plans,
life insurance plans, disability income plans, retirement plans,
vacation plans, expense reimbursement plans and other benefit plans
which the Employer may from time to time have in effect for all or
most of its senior executives. Such participation shall be subject
to the terms of the applicable plan documents, generally applicable
policies of the Employer, applicable law and the discretion of the
Board of Directors, the Compensation Committee or any
administrative or other committee provided for in or contemplated
by any such plan. Nothing contained in this Agreement shall be
construed to create any obligation on the part of the Employer to
establish any such plan or to maintain the effectiveness of any
such plan that may be in effect from time to time.
(d) Equity Grant : Executive is currently a participant in the
Employer’s 2004 Stock Option Plan, as amended (the
“2004 Plan”) and has existing stock options which were
previously granted to him as a member of the Board of Directors
(“Director Grant”). The stock options issued pursuant
to the Director Grant shall continue to vest in accordance with the
terms of the 2004 Plan. Concurrent with the execution of this
Agreement, and subject to the approval of the Board of Directors or
the Compensation Committee, the Employer shall also grant the
Executive an option to purchase 375,000 shares of the
Employer’s common stock (the “2008 Grant”). In
the event of a Change of Control (as defined below), the Executive
shall become fully vested in the 2008 Grant in accordance with the
terms of the Option Agreement (as defined below). Concurrent with
the execution of this Agreement, the Employer and the Executive
shall enter into a Non-Qualified Stock Option Agreement which is
attached hereto as Exhibit A (the “Option
Agreement”). The vesting terms to be included in the Option
Agreement shall provide that if the Executive’s employment is
terminated by the Employer without Cause (as defined below) during
the first twelve (12) months following the date of this Agreement,
the 2008 Grant shall become vested as to that percentage of shares
equal to the product of (i) 2.0833 and (ii) the number of full
calendar months served by the Executive pursuant to this
Agreement.
(e) Additional Benefits . The Employer shall provide the following
additional benefits to the Executive:
(A) For fiscal year 2008, the Executive shall be
entitled, as of the date hereof, to eight (8) working days’
paid vacation to be taken at such time or times as may be agreed
with the Board of Directors. Following the Transition Period, it is
further agreed that the Executive shall be entitled to work
remotely for five (5) days during fiscal year 2008.
(B) Beginning with fiscal year 2009, the Executive
shall be entitled to 20 working days’ paid vacation during
each calendar year to be taken at such time or times as may be
agreed with the Board of Directors. The Executive shall accrue five
(5) vacation days as of the first day of each calendar
quarter.
(C) The Executive may not, without the prior
consent of the Board of Directors, carry forward any unused part of
his vacation entitlement to a subsequent calendar year. Any
vacation entitlement that has not been used by the end of the
calendar year or carried forward to the next calendar year shall be
forfeited without pay.
(D) Upon termination of his employment for whatever
reason the Executive shall be compensated for any accrued, but
unused, vacation. For the purposes of calculating such payment in
lieu or such repayment, a day’s paid vacation shall be taken
to be the Executive’s Salary divided by 260.
(E) It is agreed that the Executive shall be
entitled to, at his option, take either a working day paid vacation
or a working day unpaid to attend board of directors meetings of
the companies listed on Exhibit B .
(ii) Reimbursement of Business Expenses
. The Employer shall reimburse the
Executive for all reasonable expenses incurred by him in performing
services during the term of this Agreement, in accordance with the
Employer’s policies and procedures for its senior executive
officers, as in effect from time to time.
(iii) Commuting, Living and Relocation
Expenses .
(A) During the Transition Period, the Executive
shall be entitled to reimbursement by the Employer for reasonable
and documented out-of-pocket expenses incurred by him for living
expenses in the New Jersey area and weekly travel to and from the
Executive’s residence in the Dallas, Texas area.
(B) After the Transition Period and until the
earlier of July 1, 2009 or the Executive’s
relocation to the New Jersey area, the Executive shall be entitled
to reimbursement by the Employer for up to Twelve Thousand Dollars
($12,000) per month of the Executive’s reasonable and
documented out-of-pocket expenses incurred by him for living
expenses in the New Jersey area and travel to and from the
Executive’s residence in the Dallas, Texas area.
(C) The Executive shall be entitled to
reimbursement for up to Seventy-Five Thousand Dollars ($75,000) of
the Executive’s documented relocation and moving expenses
related to his relocation to the New Jersey area.
(iv) Indemnification . From and after the date hereof, Executive will
be included under the Employer’s directors and officers
liability insurance policy, with the same coverage as is provided
to other directors or officers of the Employer in respect of their
service to the Employer, and such coverage will continue without
interruption for so long as the Employer, or its successors and
assigns, maintains such coverage for its officers and
directors.
(v) Legal Fees . The Employer 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 employment and this Agreement.
(f) Exclusivity of Salary and Benefits
. The Executive shall not be
entitled to any payments or benefits other than those provided
under this Agreement.
5. Extent of Service . During the Executive’s employment under
this Agreement, the Executive shall, subject to the direction and
supervision of the Board of Directors, devote the Executive’s
full business time, best efforts and business judgment, skill and
knowledge to the advancement of the Employer’s interests and
to the discharge of the Executive’s duties and
responsibilities under this Agreement. The Executive shall not
engage in any other business activity, except as may be approved by
the Board of Directors; 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 8(d)
and 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 one public and one private company, including the company listed
on Exhibit B attached hereto; provided that at no
time during the term of this Agreement may the Executive serve as a
member of the board of directors for more than one (1) private
company and one (1) other public company, excluding the
Employer.
6. Termination . The Executive’s employment under this
Agreement shall terminate under the following circumstances set
forth in this Section 6.
(a) Termination by the Employer for Cause
. The Executive’s employment
under this Agreement may be terminated by the Employer for Cause
(as defined below) without further liability on the part of the
Employer effective immediately upon a vote of the Board of
Directors and written notice to the Executive. Only the following
shall constitute “Cause” for such
termination:
(i) the Executive’s willful misconduct in the
performance of his duties to the Employer;
(ii) the Executive’s conviction of or plea of
guilty or any plea other than “not guilty” to a
felony;
(iii) the violation by the Executive of any material
provision of this Agreement, which is not cured within thirty (30)
days after written notice is given to the Executive by the Employer
specifying the events or circumstances allegedly giving rise to
such breach;
(iv) the Executive’s failure to maintain a
permanent residence in the New Jersey area by no later than July 1,
2009; or
(v) the Executive’s dishonesty,
misappropriation or fraud with regard to the property of the
Employer or its affiliates.
(b) Termination by the Executive for Good
Reason . The
Executive’s employment under this Agreement may be terminated
by the Executive for Good Reason (as defined below). For purposes
of this Agreement, “Good Reason” shall mean that that
the Executive has complied with the Good Reason Process (as defined
below) following the occurrence of any of the following
events:
(i) a material diminution or other substantive
adverse change, not consented to by the Executive, in the nature or
scope of the Executive’s responsibilities, authorities,
powers, functions or duties;
(ii) an involuntary reduction in the
Executive’s Salary or target bonus except for
across-the-board reductions similarly affecting all or
substantially all senior management employees;
(iii) a breach by the Employer of any of its other
material obligations under this Agreement;
(iv) a material change in the geographic location at
which the Executive must perform his services; or
(v) any requirement that Executive report to
someone other than the Board of Directors.
“Good
Reason Process” shall mean that: (A) the Executive reasonably
determines that a “Good Reason” event has occurred; (B)
the Executive notifies the Employer in writing of the occurrence of
the Good Reason event within 90 days of the occurrence of such
event; (C) the Executive cooperates with the Employer’s
efforts, for a period not less than 30 days following such notice,
to modify the Executive’s employment situation in a manner
acceptable to the Executive and the Employer; and (D)
notwithstanding such efforts, one or more of the Good Reason events
continues to exist and has not been modified in a manner acceptable
to the Executive. If the Employer cures the Good Reason event in a
manner acceptable to the Executive during the thirty (30) day
period, Good Reason shall be deemed not to have
occurred.
(c) Termination by the Em
