[logo1.jpg]
120 Albany Street
Suite 450, Tower II
New Brunswick, NJ 08901
Tel: 732-509-9100 Fax: 732-509-9101
www.thexchange.com

 
March 15, 2004
 
 
Steven Heap
12408 Fairfax Station Road
Clifton, VA 20124

Dear Steve:
 
On behalf of Arbinet-thexchange, I am pleased to offer you the position of CTO &
Vice President Business Development based in Herndon, Virginia. You will report
to me effective March 16, 2004.

Your starting compensation will be $150,000 per annum paid semi­-monthly and you
will be eligible for a bonus of up to 25% of your salary based upon the
achievement of the Company's and individual assigned performance goals. The
bonus will be paid as Profit Sharing of 10% of Net Income (paid quarterly, in
arrears) for businesses you launch, provided that such Incentive Compensation
does not exceed $100,000 per annum, but shall be no less than $25,000 annually.
You will be paid a one-time signing bonus of $10,000 upon the start of your
employment. This position is considered a full-time, exempt position for
purposes of federal wage-hour law, which means that you will not be eligible for
overtime time pay for hours actually worked in excess of 40 hours in a given
work week.

You will also be eligible to participate in the Company's employee stock option
plan. Under the option plan and subject to the Company's board of directors and
compensation committee approval, the Company will grant you an option to
purchase 650,000 shares of common stock of the Company at a per share exercise
price to be set by the Board of Directors. These options will be granted on the
first day of employment pursuant to a stock option agreement and vest over a
4-year period. Twenty-five percent of these options will vest after your
completion of one year of employment with the Company. The remaining options
will vest monthly (for so long as you remain employed by the Company) over the
subsequent three years (please see attached vesting schedule). These options
will be subject to various restrictions, including restrictions on transfer,
forfeiture and repurchase provisions. Further details regarding the option plan
will be provided to you once you have been granted options.

In addition to your compensation, you will be eligible to receive benefits that
are offered to all full-time Arbinet-thexchange employees. These benefits are
described in the enclosed materials along with a copy of the employee handbook,
which describes the Company's policies and procedures that will govern certain
aspects of your employment. Please be sure to review the handbook and sign and
return the acknowledgement of receipt page at the end of the handbook to Human
Resources on or prior to your first day of employment.
 

--------------------------------------------------------------------------------

 

[logo2.jpg]
Steven Heap
March 15, 2004
Page 2 of 3

 
The Company's vacation year runs from January 1st to December 31st and you will
be eligible for a 3-week vacation, which is accrued based on your date of hire
as explained in the handbook. Requests for holiday and vacation must be approved
by your manager to ensure adequate staffing of the department.
 
It is understood that your employment at the Company, will be on an "at will"
basis. This means that you or the Company may terminate our employment
relationship at any time, for any reason, with or without cause, and without
notice. Nothing in this letter creates any express or implied contract to the
contrary. This at-will relationship will remain in effect throughout your
employment with the Company and can be changed only by an express written
agreement.
 
In the event that your employment is terminated without cause, the Company will
pay you (i) any unpaid base salary through the date of termination and any
accrued vacation; (ii) severance pay equal to six (6) months base salary at the
rate in effect on the date of termination and (iii) COBRA coverage payable under
the Company health or welfare plan for you and your dependents during the six
(6) month period following the date of termination.

In the event that your employment is terminated for any other reason, including
cause, the Company will pay you any unpaid base salary and compensation for
accrued vacation through the date of termination. For the purposes of this
letter "cause" shall mean any of the following: (i) your willful misconduct in
the performance of your duties to the Company, or your willful failure to
implement any legal policy of the Company, (ii) conviction of or plea of guilty
or any plea other than "not guilty" to a felony, (iii) 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, (iv) your dishonesty, misappropriation or fraud with regard to the
property of the Company or its affiliates or (v) failure to achieve assigned
performance goals.

Your offer of employment is contingent on verification of your employment
eligibility as required by the Immigration Reform and Control Act of 1986, which
requires us to verify your employment eligibility. On the first day of work,
please bring documents that show both your identification and authorization to
work in the United States. These documents can be a U.S. birth certificate or
social security card and driver's license; a U.S. passport; or a Certificate of
Naturalization.
 

--------------------------------------------------------------------------------

 

[logo2.jpg]
Steven Heap
March 15, 2004
Page 3 of 3

 
 
 
This offer constitutes the entire understanding between you and the Company and
supersedes all previous verbal and written representations and agreements
relating to your employment by the Company.
 
If you agree to these terms, please sign and return this offer letter, to Kathy
Cunningham, Human Resources Manager by Tuesday, March 16, 2004.
Accepted by:
 
Sincerely,
 
/s/ J. Curt Hockemeier 
 
J. Curt Hockemeier 
 
President and Chief Executive Officer
 

 
Accepted by:
 
/s/ Steven Heap
 
Date: 3/15/2004
 

 

--------------------------------------------------------------------------------