EMPLOYMENT
AGREEMENT
This EMPLOYMENT AGREEMENT (the
“Agreement”) is made as of January 5, 2009 (the
“Effective Date”), by and between Arbinet-thexchange,
Inc. a Delaware corporation with its headquarters located in New
Brunswick, New Jersey (the “Employer”), and Dan
Powdermaker (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 .
(a) Subject
to the terms and conditions of this Agreement, the Executive shall
serve the Employer as Senior Vice President Sales and
Marketing. The Executive shall also serve the Employer
in such additional offices incidental to such position as the
Executive may be requested to serve by the Chief Executive Officer
of the Employer (the “Chief Executive
Officer”). 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 Chief Executive Officer.
3.
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 a salary (the “Salary”) at the annual rate of
Two Hundred Fifty Thousand Dollars ($250,000), subject to increase
from time to time in the discretion of the Board of Directors of
the Employer (the “Board of Directors”) or the
Compensation Committee of the Board of Directors (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 . Beginning with the fiscal year ending
2009, 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 the
Executive will have the opportunity to earn up to Eighty Percent
(80%) (the “Target Percentage”) of his Salary then in
effect in bonus compensation annually; provided, further ,
that the Executive will have the opportunity to earn more than or
less than the Target Percentage in bonus compensation based upon
underachievement or overachievement of either the Employer’s
or the Executive’s performance objectives or
both. The overall corporate financial objectives
established for the Executive shall be no more or less favorable to
the Executive than the financial objectives established for the
other senior executives of the Employer.
(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 Grants : The Executive shall be eligible
to participate in the Employer’s 2004 Stock Option Plan, as
amended (the “2004 Plan”). Under the 2004
Plan and subject to the approval of the Board of Directors or the
Compensation Committee, the Employer shall initially grant the
Executive an option to purchase 225,000 shares of the
Employer’s common stock (the “Initial
Grant”). 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 “Equity Agreement”).
(e)
Additional Benefits . The Employer shall provide
the following additional benefits to the Executive:
(A) For
fiscal year 2009, the Executive shall be entitled, as of the date
hereof, to 27 working days’ Paid Time Off to be taken at such
time or times as may be agreed with the Chief Executive
Officer.
(B) Upon
termination of his employment for whatever reason he shall, if
appropriate, either be entitled to salary in lieu of any accrued
vacation entitlement that has not been taken or be required to
repay to the Employer any salary received in respect of vacation
taken in excess of his proportionate vacation
entitlement. 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.
(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)
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.
(iv)
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.
4.
Extent of Service . During the Executive’s
employment under this Agreement, the Executive shall, subject to
the direction and supervision of the Chief Executive Officer,
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 Chief Executive
Officer; 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 7(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; or
(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.
(c) serving
as the President of [Strongheart Construction] ;
provided that in the event such service should impair
Executive’s ability to perform his duties as set forth above,
Executive shall, at his option, take either a working day paid
vacation or a working day unpaid to attend to such
duties.
5.
Termination . The Executive’s employment
under this Agreement shall terminate under the following
circumstances set forth in this Section 5.
(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, or the Executive’s willful failure to
implement any lawful policy of 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 either is not cured within ten (10) days after
written notice is given to the Executive by the Employer or
constitutes a habitual breach; or
(iv) 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
substantial 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 material reduction in the Executive’s base
salary;
(iii) a
breach by the Employer of any of its other material obligations
under this Agreement, or
(iv) a
material change in the geographic location at which the Executive
must perform his services.
“Good
Reason Process” shall mean that: (A) the Executive reasonably
determines in good faith 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 in good
faith 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 30 day period, Good Reason shall be deemed not to have
occurred.
(c)
Termination by the Employer without Cause
. Subject to the payment of Termination Benefits (as
defined below), the Executive’s employment under this
Agreement may be terminated by the Employer without Cause upon
written notice to the Executive.
(d)
Death . The Executive’s employment with the
Employer shall terminate upon his death.
(e)
Disability . If the Executive shall be disabled
so as to be unable to perform the essential functions of the
Executive’s then existing position or positions under this
Agreement with or without reasonable accommodation for a period of
30 nonconsecutive days or more within any six (6) month period, the
Board of Directors may, upon ten (10) days prior written notice,
terminate the Executive’s employment
hereunder. Notwithstanding any such termination, the
Executive shall continue to receive the Executive’s full
Salary (less any disability pay or sick pay benefits to which the
Executive may be entitled under the Employer’s policies) and
benefits under Section 4 of this Agreement (except to the extent
that the Executive may be ineligible for one or more such benefits
under applicable plan terms) for a period of time equal to six (6)
months, and the Executive’s employment may be terminated by
the Employer at any time thereafter. If any question
shall arise as to whether during any period the Executive is
disabled so as to be unable to perform the essential functions of
the Executive’s then existing position or positions with or
without reasonable accommodation, the Executive may, and at the
request of the Employer shall, submit to the Employer a
certification in reasonable detail by a physician selected by the
Employer to whom the Executive or the Executive’s guardian
has no reasonable objection as to whether the Executive is so
disabled or how long such disability is expected to continue, and
such certification shall for the purposes of this Agreement be
conclusive of the issue. The Executive shall cooperate
with any reasonable request of the physician in connection with
such certification. If such question shall arise and the
Executive shall fail to submit such certification, the
Employer’s determination of such issue shall be binding on
the Executive. Nothing in this Section 6(e) shall be
construed to waive the Executive’s rights, if any, under
existing law including, without limitation, the Family and Medical
Leave Act of 1993, 29 U.S.C. §2601 et seq . and the
Americans with Disabilities Act, 42 U.S.C. §12101 et
seq.
6.
Compensation Upon Termination .
(a)
Termination Generally . If the Executive’s
employment with the Employer is terminated for any reason during
the term of this Agreement, the Employer shall pay or provide to
the Executive (or to his authorized representative or estate) any
earned but unpaid Salary, unpaid expense reimbursements, accrued
but unused vacation and any vested benefits the Executive may have
under any employee benefit plan o
