Employment Agreement - Arbinet-thexchange Inc. and Peter P. Sach
July 5, 2001
Mr. Peter P. Sach
5333 Pinyon Jay Road
Parker, CO 80134-2722
Dear Peter:
On behalf of Arbinet-thexchange, Inc. (the "Company"), I am pleased to extend to
you an offer of employment in accordance with the following terms:
Title: You will serve as Senior Vice President and Chief Administrative Officer
(CAO). You will report to the President and CEO and based in New York, NY.
Duties and Obligations: During your employment you will devote your full
business time, interest and effort to the performance of your duties with the
Company. These duties include those which are commonly associated with the Chief
Financial Officer position, and additionally will include management and
oversight of the Company's information technology (I.T.) initiatives and the
human resources function.
Employment Relationship: Your employment will be "at-will" and may be terminated
by either you or the Company at any time for any reason or no reason, by
providing sixty (60) days written notice to the other party. Further, your
participation in any Company benefit or equity program does not constitute an
agreement by the Company to employ or continue to employ you for any period of
time.
Salary and Bonus: While you are employed on a full-time basis by the Company,
the Company will pay you a base salary which annualizes to $250,000, payable in
accordance with the usual payroll practices of the Company including the
withholding of all income and employment taxes. Your base salary will be
reviewed on an annual basis and may be subject to adjustment upward based on
various factors including, without limitation, your performance or the Company's
achievement of its business plan (as determined by the Board of Directors of the
Company), provided that in no event shall such annual increase be less than the
annual rate of increase in the Consumer Price Index. When the Company completes
an Initial Public Offering (IPO) your annualized salary will be increased to
$275,000. You will be eligible for a 40% target bonus based upon achievement of
assigned performance goals and subject to the approval of the Board of
Directors.
Relocation: Per the attached.
<PAGE>
Relocation Expense Repayment: In the event you do not complete 12 months of
service following the payment of the Relocation payments, the Company will be
entitled to repayment of the full amount, less an allowance pro rata to the
months served (e.g., if you serve five months after the Relocation payments, you
will be required to repay 7/12 of such payments).
Equity: The Board (or duly authorized committee thereof) will grant to you, in
the form of stock options ("Options"), the right to purchase shares of Common
Stock of the Company which equal 3/4 of 1% of the Company immediately following
the closing of the Series E round of investment. This grant will be at the
lowest available employee plan price as of the acceptance of this offer, subject
to the following vesting schedule: such Options will become exercisable as to
1/48th each month as long as you are employed by the Company; provided, further,
that in the event of termination of employment without cause in the 12 months
following a "change of control" event (which will not include an IPO or a
private equity financing transaction), any remaining unvested options will then
vest.
Benefits: You will participate, to the extent eligible and subject to confirming
coverage with applicable underwriters (if any), in all of the Company's employee
benefit programs generally provided to the other executive officers, in
accordance with the terms thereof as in effect from time to time; provided that
your annual vacation shall not exceed four (4) weeks.
Termination of Employment:
a. In the event your employment hereunder is terminated by the Company
without cause, the Company will pay you, subject to your compliance
with this and paragraphs b, c and d following, (i) any unpaid base
salary through the date of termination and any accrued vacation; (ii)
severance pay equal to twelve (12) month's base salary at the rate in
effect on the date of termination; (iii) an amount reimbursing you for
the applicable premium payment for any COBRA coverage payable under a
Company health or welfare plan for you and your dependents during the
12 month period following the date of termination (the "Twelve Month
Period"); and (iv) an amount equal to any employer contribution that
would have been made by the Company pursuant to any retirement plan of
the Company on your behalf and you remained employed by the Company
during the Twelve Month Period assuming you contributed the maximum
amount to such plan. Notwithstanding the foregoing, the amounts paid
to you pursuant to subsections (iii) and (iv) of this paragraph (a)
shall not exceed $25,000.
b. In the event your employment hereunder is terminated for any other
reason, the Company will pay you any unpaid base salary and
compensation for accrued vacation through the date of termination.
<PAGE>
c. In addition, in all termination events, except as specifically
provided in the Relocation Expense Repayment section, the Company will
pay you any other amounts or benefits owing to you under the then
applicable employee benefit plans and programs of the Company in
accordance with such plans and programs.
d. For purposes of this letter, "cause" shall mean any of the following:
(w) your willful misconduct in the performance of your duties to the
Company, or your willful failure to implement any legal policy of the
Company, (x) conviction of or plea of guilty or any plea other than
"not guilty" to a felony; (y) the violation by you of any material
provision of this letter which either is not cured within ten days
after a written notice is given to you by the Company or constitutes a
habitual breach; or (z) your dishonesty, misappropriation of fraud
with regard to the property of the Company or its affiliates.
Confidential Information: While providing your services, you will have access to
and will obtain confidential information as to the Company, its affiliates, its
employees and its customers and you may during the course of your employment
develop certain information, inventions or other intellectual property. As a
condition of your employment with the Company, you will be required to enter
into the Company's Employee Inventions and Confidentiality Agreement (the
"Confidentiality Agreement"). The Confidentiality Agreement exists to assure the
Company and its investors that the Company's valuable intellectual property and
its rights thereto are protected.
Non-Competition/Non-Solicitation:
a. You agree that during your employment term hereunder and for a twelve
month period following the date your employment terminates, you will
not enter into Competition with the Company. "Competition" shall mean
participating, directly or indirectly, as an individual proprietor,
partner, stockholder, officer, employee, director, joint venturer,
investor, lender, consultant or in any capacity whatsoever in a
business in competition with any business conducted by the Company or
its affiliates (a "Competitor") in any jurisdiction where the Company
and/or its affiliates conduct as of the date your employment
terminates such business, which 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 termination of the employment term hereunder; provided
however, that such participation shall not include (i) the mere
ownership of not more than one percent (1%) of the total outstanding
stock of a publicly held company; (ii) the performance of services for
any enterprise to the extent such services are not performed, directly
or indirectly, for a business unit of the enterprise in the aforesaid
Competition; or (iii) any activity engaged in with the prior written
approval of the Board.
b. You agree that, during the one (1) year period following the date your
employment terminates, you will not, directly or indirectly (i)
solicit, recruit
<PAGE>
or hire any non-administrative or non-clerical employee of the Company
for the purpose of being employed by you or by any Competitor of the
Company on whose behalf you are acting as an agent, representative or
employee and that you will not convey any confidential information or
trade secrets about other employees of the Company to any other person
or (ii) influence or attempt to influence customers or suppliers of
the Company or its affiliates to direct their business to any
Competitor of the Company
c. You acknowledge that the foregoing are reasonable and necessary for
the protection of the business of the Company and its affiliates and
that part of the compensation paid under this letter is in
consideration for these provisions. If any restrictions set forth with
regard to competition or solicitation of employees or customers is
found by any court of competent jurisdiction to be unenforceable
because it extends for too long a period of time or over too great a
range of activities or over too broad a geographic area, it shall be
interpreted to extend over a maximum period of time, range of
activities or geographic area as to which it may be enforceable. You
further acknowledge and consent that the Company would by reason of
such competition or solicitation of employees or customers be entitled
to injunctive relief in a court of appropriate jurisdiction
prohibiting you from competing with the Company or its affiliates or
engaging in solicitation in violation of this letter.
Governing Law/Miscellaneous: This letter is subject to the laws of the
State of New York. This letter, along with the Confidentiality Agreement,
sets forth the terms of your employment with the Company and supersedes all
prior agreements, arrangements and communications, whether oral or written,
between the Company and you. This letter may not be altered, modified, or
amended except by a written instrument signed by an individual authorized
to sign on behalf of the Company (other than you) and by you. This letter
may not be assigned in whole or in part, except that the Company may assign
it to an acquirer of all or substantially all of the assets of the Company.
This letter shall be binding on the successors and permitted assignees of
the parties hereto.
This offer is made to you based on your representation to the Company that
your acceptance of employment with the Company and performance of the
contemplated services does not and will not conflict with or result in any
breach or default under any agreement, contract or arrangement to which you
are a party or violate any other legal restriction. If you find this offer
of employment acceptable, please sign the enclosed copy of this letter and
return it to us.
/s/ J. Curt Hockemeier
J. Curt Hockemeier
President and Chief Executive Officer
<PAGE>
Agreed and Accepted:
/s/ Peter P. Sach
-----------------------------
Peter P. Sach
Dated: July 12, 2001