EMPLOYMENT AGREEMENT (“Agreement”) dated as of September 30, 2002 by and
among Global eXchange Services, Inc., a Delaware corporation (together with its
successors, the “Company”), GXS Holdings, Inc., a Delaware corporation
(together with its successors, “GXS”), and Xxxxx Xxxxxxx (“Executive”), to be
effective as of the Effective Date (certain capitalized terms used herein being
defined in Article 7 hereof).
WHEREAS, pursuant to a Recapitalization Agreement dated as of June 21,
2002 among General Electric Company (“GE”), GE Investments, Inc. and Global
Acquisition Company (the “Acquiror”), the Acquiror agreed to acquire 90% of the
shares of GXS (the “Recapitalization”);
WHEREAS, immediately prior to the closing of the Recapitalization,
Executive was employed by the Company or one of its affiliates;
WHEREAS, as of the closing of the Recapitalization, the Company became a
wholly owned subsidiary of GXS;
WHEREAS, the Company has entered into an Employee Lease Agreement dated on
or about the date hereof (the “Employee Lease Agreement”) with GE pursuant to
which all U.S. employees of the Company prior to the closing of the
Recapitalization are being transferred to GE but their services will be leased
to the Company during the period commencing on the closing date of the
Recapitalization and ending on the date the employees are transferred to the
Company or its affiliates pursuant to the terms of the Employee Lease Agreement
(such period, the “Transition Period”);
WHEREAS, each of the Company and GXS considers it in its best interests
and the best interests of its stockholders to xxxxxx the continued employment
of Executive from and after the Effective Date;
WHEREAS, Executive is willing to continue his employment on and after the
Effective Date on the terms hereinafter set forth in this Agreement;
NOW THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements of the parties set forth in this Agreement, and of
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto, intending to be legally bound, agree
POSITION; TERM OF AGREEMENT
Section 1.01. Position. (a) As of and following the Effective Date,
Executive shall serve as Senior Vice President, Global Transaction Services of
the Company and shall report to President and Chief Executive Officer.
Executive shall have such duties and authority, consistent with such position,
as shall be determined from time to time by Executive’s direct report.
(b) During the Employment Term, Executive will devote substantially all of
his business time to the performance of his duties under this Agreement and
will not engage in any other business, profession or occupation for
compensation or otherwise which would conflict with the rendition of such
services either directly or indirectly, without the prior written consent of
Section 1.02. Term. Executive shall be employed by the Company for a
period (the “Employment Term”) commencing on the Effective Date and, subject to
earlier termination or extension as provided herein, ending on the second
anniversary thereof; provided that on each anniversary of the Effective Date
beginning on such second anniversary, the Employment Term shall be
automatically extended for successive one-year periods unless not later than
one month prior to any such automatic extension the Company or Executive shall
give notice that the Employment Term shall not be extended.
COMPENSATION AND BENEFITS
Section 2.01. Base Salary. Commencing on the Effective Date, the
Company shall pay Executive an annual base salary (the “Base Salary”) at the
annual rate of $225,000, payable in equal monthly installments or otherwise in
accordance with the payroll and personnel practices of the Company from time to
time. Executive’s Base Salary shall not be reduced during the Employment Term.
Section 2.02. Bonus. Subject to Executive’s continued employment
hereunder through December 31, 2002, for the calendar year ending December 31,
2002, Executive will receive a guaranteed bonus (together with the GE Bonus
defined below, the “First-Year Bonus”) in an amount equal to the product of (i)
the quotient obtained by dividing (A) the portion of the annual bonus Executive
receives from General Electric Company and its Affiliates for the period from
January 1, 2002, through the date immediately preceding the closing of the
Recapitalization, provided that the amount of such bonus for purposes hereof
shall not exceed $220,000 on an annualized basis (such portion, the “GE
Bonus”), by (B) the number of full calendar weeks during the period commencing
on January 1, 2002, and ending on the closing of the Recapitalization, and (ii)
the number of full calendar weeks during the period commencing on the closing
of the Recapitalizationand ending December 31,
2002, to be paid in a lump sum payment on or before March 31, 2003. For
each calendar year thereafter, subject to Executive’s continued employment
hereunder on December 31 of such year, Executive shall be eligible to receive
an annual bonus (“Annual Bonus”) of $225,000 (the “Target Bonus”), with a
minimum guaranteed bonus of 50% of the Target Bonus. The Annual Bonus for each
calendar year shall be paid in a lump sum payment on or before March 31 of the
following calendar year. For the 12 months following the closing of the
Recapitalization, the Executive will receive a combined base salary and minimum
guaranteed bonus (excluding the GE Bonus) not less than what the Executive
received in the 12 months prior to such closing.
Section 2.03. Employee Benefits. (a) During the Employment Term,
Executive shall be eligible for employee benefits (including fringe benefits,
vacation and health, accident and disability insurance, and retirement plan
participation) substantially similar to those benefits made available generally
to senior executives of the Company.
Section 2.04. Business And Travel Expenses. Reasonable travel,
entertainment and other business expenses incurred by Executive in the
performance of Executive’s duties hereunder shall be reimbursed by the Company
in accordance with Company policies as in effect from time to time.
Section 2.05. Options. (a) On the Effective Date, the Company shall
grant to Executive an option (the “Option”) to purchase 568,182 shares of
common stock of GXS (“Common Stock”) (representing 0.50% of GXS’s Common Stock
as of the Effective Date on a fully diluted basis), at an exercise price per
share equal to the fair market value (determined in accordance with the terms
of the Plan) of a share of Common Stock on the date of grant. The Option will
be treated as an “incentive stock option” within the meaning of Section 422 of
the Code to the maximum extent permitted by law and shall be issued pursuant to
Rule 701 of the Securities Act or registered on a Form S-8 registration
statement under the Securities Act that becomes effective within ninety (90)
days after the Effective Date.
(b) The Option shall consist of five tranches. The first tranche shall
consist of 340,910 shares of Common Stock (representing 60% of the total shares
of Common Stock subject to the Option) and the remaining four tranches shall
each consist of 56,818 shares of Common Stock (each such tranche representing
10% of the total shares of Common Stock subject to the Option). Provided
Executive remains in the employ of the Company, GXS or one of their
Subsidiaries as of the applicable vesting date, each such tranche shall become
vested and exercisable as to 25% of the shares constituting such tranche on the
first anniversary of the Vesting Commencement Date with respect to such
tranche, and the balance of the shares constituting such tranche shall become
vested and exercisable at a rate of 1/36 of such balance per month over the
3-year period following such anniversary.
(c) The vesting commencement date (the “Vesting Commencement Date”) with
respect to the first tranche (as described in paragraph (b) above) of the
Option shall be the September 28, 2002, and the Vesting Commencement Date for
the second, third, fourth and fifth tranches shall be, respectively, the first,
second, third and fourth anniversaries of September 28, 2002.
(d) Any unvested portion of the Option shall become fully vested and
exercisable upon (i) termination of Executive’s employment by the Company
without Cause (other than by reason of Executive’s death or disability) within
12 months after a Change in Control or (ii) termination of Executive’s
employment by reason of Executive’s death. Except as set forth herein, the
Options shall otherwise be subject to the terms of the GXS Stock Incentive Plan
(the “Plan”) and the applicable award agreement, copies of which are attached
hereto as Attachment 1 and Attachment 2, respectively.
(e) Upon termination of Executive’s employment, GXS shall have the right
to repurchase the shares of Common Stock acquired upon exercise of the Option
in accordance with the terms of the Plan and the applicable award agreement.
CERTAIN TERMINATION BENEFITS
Section 3.01. Certain Events. (a) A “Qualifying Event” means the
termination of Executive’s employment by the Company without Cause (other than
by reason of Executive’s death or disability).
(b) Each party hereto shall give to the other party 30 days prior written
notice of such party’s intent to terminate Executive’s employment with the
Company for any reason.
Section 3.02. Right To Certain Benefits. In the event of any
termination of employment during the Employment Term, Executive shall be
entitled to receive from the Company either the relevant Severance Benefits to
the extent and as described in Section 3.03 or the relevant Separation Benefits
to the extent and as described in Section 3.04, as the case may be, contingent
upon Executive signing a release in a form reasonably acceptable to the
Section 3.03. Benefits Upon A Qualifying Event. In the event of any
termination of employment during the Employment Term, Executive shall be
entitled to the following benefits (the “Severance Benefits”) upon a Qualifying
(a) The Company shall pay Executive as soon as practicable a lump sum, in
cash, equal to Executive’s earned but unpaid Base Salary and other vested but
unpaid cash entitlements for the period through and including the date of
termination of Executive’s employment, including unused earned vacation
pay and unreimbursed documented business expenses (collectively, “Accrued
Compensation”). In addition, Executive shall be entitled to any other vested
benefits earned by Executive for the period through and including the date of
termination of Executive’s employment under any other employee benefit plans
and arrangements maintained by the Company, in accordance with the terms of
such plans and arrangements, except as modified herein (collectively, “Accrued
(b) The Company shall pay Executive (i) a pro rata portion (based on the
number of whole and partial calendar months prior to and including the month in
which the Qualifying Event occurs) of the most recent Annual Bonus or
First-Year Bonus, as applicable, paid to Executive, and (ii) a lump sum
severance payment in an amount equal to one times the sum of (A) the annual
Base Salary in effect immediately prior to such Qualifying Event and (B) the
most recent Annual Bonus or First-Year Bonus, as applicable, paid to Executive.
(c) The portion of the Option which would have become vested and
exercisable within the 12-month period following the date of termination shall
become fully vested and exercisable on the date of such termination. The
vested portion of the Option shall remain exercisable by Executive for three
months following the date of such termination. In the case of retirement, the
vested portion of the options shall remain exercisable by the executive for 6
months following the date of such retirement.
(d) Except as set forth in this Section 3.03, Executive will be entitled
to no other payments or benefits from the Company.
Section 3.04. Separation Benefits. In the event of any termination of
employment during the Employment Term other than upon a Qualifying Event,
Executive (or his estate, as the case may be) shall be entitled to the benefits
set forth below (the “Separation Benefits”):
(i) The Accrued Compensation;
(ii) The Accrued Benefits; and
(iii) Executive shall be entitled to exercise the portion of the Options
vested on the date of such termination for the period provided in the Plan and
the applicable award agreement.
Section 3.05. Non-renewal Of Agreement. In the event that at the end of
the Employment Term the Company does not renew this Agreement in accordance
with 1.02 hereof and terminates Executive’s employment without Cause at such
time, the Executive shall be entitled to the following benefits:
(i) The Accrued Compensation;
(ii) The Accrued Benefits; and
(iii) The Company shall pay Executive a lump sum severance payment in an
amount equal to two times of the sum of (A) the annual Base Salary in effect
immediately prior to such Qualifying Event and (B) the most recent Annual Bonus
or First-Year Bonus, as applicable, paid to Executive.
COVENANTS AND REPRESENTATIONS
Section 4.01. Noncompetition, Nonsolicitation, Noncompete,
Nondisparagement And Nondisclosure. (a) While employed by the Company and for
12 months after the termination of Executive’s employment (except where the
Company does not renew this Agreement at the end of the Employment Term in
which case the period shall be 6 months after the termination of Executive’s
employment), Executive shall not, on his account, or as an employee,
consultant, independent contractor, partner, owner, officer, director or
stockholder, engage in, be connected with, have any interest in, or aid or
assist anyone else to engage in, be connected with, or have any interest in,
any firm or person which directly competes with a line or lines of business
which the Company or GXS (or any of their Subsidiaries) was engaged in or
sought to be engaged in during the Employment Term; provided that Executive may
(i) purchase securities in any corporation whose securities are listed or
traded on a national securities exchange or in an over-the-counter securities
market if such purchases do not result in Executive beneficially owning,
directly or indirectly, at any time 5% or more of the equity securities of any
such corporation and (ii) be an employee, independent contractor or officer of
any such firm or person provided Executive has no direct or indirect duties or
responsibilities with respect to any activities of such firm or person which
are competitive with any line or lines of business of the Company or GXS (or
any of their Subsidiaries).
(b) While employed by the Company and for 12 months after the termination
of Executive’s employment, Executive shall not, directly or indirectly:
|| (i) induce or attempt to induce any employee of GXS or the Company
(or any Subsidiary of GXS or the Company) to be employed or perform
|| (ii) solicit or attempt to solicit the trade of any individual or
entity which, at the time of such solicitation, is a customer of GXS or
the Company (or any Subsidiary of GXS or the Company) or which GXS or
the Company (or any Subsidiary of GXS or the Company) is undertaking
reasonable steps to procure as a customer at the time of or immediately
preceding termination of employment; provided, however, that this
limitation shall only apply to any product or service which is in
||competition with a product or service of GXS or the Company (or any
Subsidiary of GXS or the Company).
(c) In connection with the termination of Executive’s employment
hereunder, Executive shall cooperate with the Company and any Subsidiary or
Affiliate of the Company to ensure an orderly transition, in such a manner and
at such times as the Company shall reasonably request.
(d) Except as required by law, neither party will at any time (whether
during or after termination of Executive’s employment with the Company)
knowingly make any statement, written or oral, or take any other action that
would disparage or otherwise harm the other party, its business or reputation
or, in the case of the Company, the reputation of any of its Affiliates or the
officers and directors of any of them.
(e) Executive shall enter into and agrees to be bound by the Proprietary
Information and Inventions Agreement of the Company, a copy of which is
attached as Annex A to the Plan.
Section 4.02. Material Inducement; Specific Performance. (a) If any
provision of Section 4.01 is determined by a court of competent jurisdiction
not to be enforceable in the manner set forth in this Agreement, the Company
and Executive agree that it is the intention of the parties that such provision
should be enforceable to the maximum extent possible under applicable law and
that such court shall reform such provision to make it enforceable in
accordance with the intent of the parties.
(b) Executive acknowledges that a material part of the inducement for the
Company to provide the compensation provided herein is Executive’s covenants
set forth in Section 4.01 and that the covenants and obligations of Executive
with respect to noncompetition, nondisclosure and nonsolicitation relate to
special, unique and extraordinary matters and that a violation of any of the
terms of such covenants and obligations will cause the Company irreparable
injury for which adequate remedies are not available at law. Therefore,
Executive agrees that, if Executive shall materially breach any of those
covenants during or following termination of employment, the Company shall be
entitled to an injunction, restraining order or such other equitable relief
(without the requirement to post a bond) restraining Executive from committing
any violation of the covenants and obligations contained in Section 4.01 and
the Company shall have no further obligation to pay Executive any benefits
otherwise payable hereunder. The remedies in the preceding sentence are
cumulative and are in addition to any other rights and remedies the Company may
have at law or in equity as an arbitrator (or court) shall reasonably
Section 4.03. Employee Representation. Executive expressly represents
and warrants to the Company that Executive is not a party to any contract or
agreement and is not otherwise obligated in any way, and is not subject to any
rules or regulations, whether governmentally imposed or otherwise, which
will or may restrict in any way Executive’s ability to fully perform
Executive’s duties and responsibilities under this Agreement.
SUCCESSORS AND ASSIGNMENTS
Section 5.01. Assignments. Except for an assignment in the event of a
Change in Control or an assignment to an affiliate of the Company, this
Agreement shall not be assignable by the Company without the written consent of
Executive. This Agreement shall not be assignable by Executive.
Section 5.02. Successors; Binding Agreement. This Agreement shall inure
to the benefit of and be binding upon personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees, and
Section 6.01. Notices. Any notice required to be delivered hereunder
shall be in writing and shall be addressed:
if to the Company, to:
000 Xxxxxx Xxxx Xxxxx
Xxxxxxxxxxxx, XX 00000
Attn: General Counsel
with copies to:
Xxxxx Xxxx & Xxxxxxxx
0000 Xx Xxxxxx Xxxx
Xxxxx Xxxx, XX 00000
Attn: Xxxx X. XxXxxxxxxx
(ii) if to Executive, to Executive’s last known address as reflected on
the books and records of the Company;
or, in each case, to such other address as such party may hereafter specify for
the purpose by written notice to the other party hereto. Any such notice shall
be deemed received on the date of receipt by the recipient thereof if received
prior to 5:00 p.m. in the place of receipt and such day is a business day in
the place of
receipt. Otherwise, any such notice shall be deemed not to have been received
until the next succeeding business day in the place of receipt.
Section 6.02. Effectiveness of Agreement. The effectiveness of this
Agreement is subject to approval by a majority of the Board of Directors of GXS
and approval by a vote of the persons who own more than 75% of the outstanding
voting stock of GXS immediately after the Effective Date.
Section 6.03. Dispute Resolution. (a) Except as provided in Section
4.02, each of Executive and the Company shall have the right and option to
elect (in lieu of litigation) to have any dispute or controversy arising under
or in connection with this Agreement settled by arbitration, conducted before a
panel of three arbitrators sitting in a location in Maryland, in accordance
with the rules of the American Arbitration Association then in effect.
Executive’s election to arbitrate, as herein provided, and the decision of the
arbitrators in that proceeding, shall be binding on the Company and Executive.
Judgment may be entered on the award of the arbitrator in any court having
(b) Each party shall pay its own expenses of such arbitration or
litigation and all common expenses of such arbitration or litigation shall be
borne equally by Executive and the Company. Each party to an arbitration or
litigation hereunder shall be responsible for the payment of its own attorneys’
Section 6.04. Unfunded Agreement. The obligations of the Company under
this Agreement represent an unsecured, unfunded promise to pay benefits to
Executive and/or Executive’s beneficiaries, and shall not entitle Executive or
such beneficiaries to a preferential claim to any asset of the Company.
Section 6.05. Non-exclusivity Of Benefits. Unless specifically provided
herein, neither the provisions of this Agreement nor the benefits provided
hereunder shall reduce any amounts otherwise payable, or in any way diminish
Executive’s rights as an employee of the Company, whether existing now or
hereafter, under any compensation and/or benefit plans (qualified or
nonqualified), programs, policies, or practices provided by the Company, for
which Executive may qualify; provided, however, that the Severance Benefits
shall be in lieu of any severance benefits under any such plans, programs,
policies or practices. Vested benefits or other amounts which Executive is
otherwise entitled to receive under any plan, policy, practice, or program of
the Company (i.e., including, but not limited to, vested benefits under any
qualified or nonqualified retirement plan), at or subsequent to the date of
termination of Executive’s employment shall be payable in accordance with such
plan, policy, practice, or program except as expressly modified by this
Section 6.06. Employment Status. Nothing herein contained shall
interfere with the Company’s right to terminate Executive’s employment with the
Company at any time, with or without Cause, subject to the Company’s obligation
to provide Severance Benefits or Separation Benefits, if any. Executive shall
have the right to terminate Executive’s employment with the Company at any
time without liability, subject only to the provisions hereof and Executive’s
Section 6.07. Entire Agreement. This Agreement represents the entire
agreement between Executive and the Company and its affiliates with respect to
Executive’s employment and/or severance rights, and supersedes all prior
discussions, negotiations, and agreements concerning such rights; provided,
however, that any amounts payable to Executive hereunder shall be reduced by
any amounts paid to Executive as required by any applicable law in connection
with any termination of Executive’s employment.
Section 6.08. Tax Withholding. Notwithstanding anything in this
Agreement to the contrary, the Company shall withhold from any amounts payable
under this Agreement all federal, state, city, or other taxes as are legally
required to be withheld.
Section 6.09. Waiver Of Rights. The waiver by either party of a breach
of any provision of this Agreement shall not operate or be construed as a
continuing waiver or as a consent to or waiver of any subsequent breach hereof.
Section 6.10. Severability. In the event any provision of this
Agreement shall be held illegal or invalid for any reason, the illegality or
invalidity shall not affect the remaining parts of this Agreement, and this
Agreement shall be construed and enforced as if the illegal or invalid
provision had not been included.
Section 6.11. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Maryland without
reference to principles of conflict of laws.
Section 6.12. Counterparts. This Agreement may be signed in several
counterparts, each of which shall be an original, with the same effect as if
the signatures thereto and hereto were on the same instrument.
For purposes of this Agreement, the following terms shall have the
meanings set forth below.
“Accrued Benefits” has the meaning accorded such term in Section 3.03.
“Accrued Compensation” has the meaning accorded such term in Section 3.03.
“Affiliate” has the meaning accorded to such term in Rule 12b-2 under the
“Agreement” has the meaning accorded such term in the introductory
paragraph of this Agreement.
“Base Salary” has the meaning accorded such term in Section 2.01.
“Beneficial Ownership” A Person shall be deemed the “Beneficial Owner”
of, and shall be deemed to “beneficially own,” securities pursuant to Rule
13d-3 under the Exchange Act.
“Board” means, the Board of Directors of the Company.
“Cause” means the occurrence of any one or more of the following:
|| (i) Executive’s willful and continued failure substantially to
perform the duties of Executive’s position as then in effect (other than
as a result of incapacity due to physical or mental illness) which
failure is not remedied within fifteen business days of written notice
from the Company;
|| (ii) Executive’s gross negligence or willful malfeasance in the
performance of Executive’s duties hereunder as then in effect;
|| (iii) Executive’s breach of any of the covenants contained in
Section 4.01; or
|| (iv) Executive’s commission of an act constituting fraud,
embezzlement, or any other act constituting a felony;
||provided, however, that for purposes of this definition, no act or
failure to act shall be deemed “willful” unless effected by Executive
not in good faith and without reasonable belief that such action or
failure to act was in the best interests of the Company.
“Change in Control” means the occurrence of any of the following:
|| (i) the consummation of a merger or consolidation of the Company or
GXS with or into any other entity pursuant to which the stockholders of
the Company or GXS, as applicable, immediately prior to such merger or
consolidation hold less than 50% of the voting power of the surviving
|| (ii) the sale or other disposition of all or substantially all of
the Company’s or GXS’s assets or any approval by the stockholders of the
Company or GXS of a plan of complete liquidation of the Company or GXS,
|| (iii) any acquisition by any person or persons (other than the
direct and indirect stockholders of the Company or GXS immediately after
||the Effective Date) of the Beneficial Ownership of 50% or more of
the voting power of the Company’s or GXS’s equity securities in a single
transaction or series of related transactions; provided, however, that
an underwritten public offering of the Company’s or GXS’s securities
shall not be considered a Change in Control; or
|| (iv) any change in the composition of the Board over a two-year
period such that the directors at the beginning of the period and new
directors elected during that period and approved by two-thirds of the
incumbent directors cease to constitute at least a majority of the
||provided, however, that a transaction shall not constitute a Change in
Control if its sole purpose is to change the state of the Company’s
incorporation or to create a holding company that will be owned in
substantially the same proportions by the persons who held the Company’s
securities immediately before such transaction.
“Code” means the Internal Revenue Code of 1986, as amended.
“Effective Date” means the last date of the Transition Period which date
is November 18, 2002.
“Employment Term” has the meaning accorded such term in Section 1.02.
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
“Option” has the meaning accorded such term in Section 2.05.
“Person” means an individual, corporation, partnership, association, trust
or any other entity or organization.
“Qualifying Event” has the meaning accorded such term in Section 3.01.
“Securities Act” means the Securities Act of 1933, as amended.
“Separation Benefits” has the meaning accorded such term in Section 3.04.
“Severance Benefits” has the meaning accorded such term in Section 3.03.
“Subsidiary” of any Person means any other Person of which securities or
other ownership interests having voting power to elect a majority of the board
of directors or other Persons performing similar functions are at the time
directly or indirectly owned by such Person.
“Vesting Commencement Date” shall have the meaning accorded such term in
IN WITNESS WHEREOF, the Company, GXS and Executive have executed this
Agreement, to be effective as of the day and year first written above.
|GXS HOLDINGS, INC.
/s/ Xxxxxx X. Xxxxxxx
Name: Xxxxxx X. Xxxxxxx
Title: President & Chief Executive Officer
|GLOBAL EXCHANGE SERVICES, INC.
/s/ Xxxxxx X. Xxxxxxx
Name: Xxxxxx X. Xxxxxxx
Title: President & Chief Executive Officer
|/s/ Xxxxx Xxxxxxx