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EXHIBIT 10.4
EMPLOYMENT AGREEMENT
THIS AGREEMENT, made as of the 31st day of October, 1997, by and
between MECHANICAL DYNAMICS, INC., a Michigan corporation (the "Company"),
having offices located at 0000 Xxxxxxxxxxxx Xxxx., Xxx Xxxxx, Xxxxxxxx 00000,
and Xxxxxxx X. Xxxxxxxx of Canton, Michigan ("Employee").
WITNESSETH:
WHEREAS, the Company desires to employ the Employee to devote his full
time and attention to the business of the Company and Employee desires to be so
employed.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants herein contained, the parties hereto agree as follows:
1. EMPLOYMENT. The Company hereby agrees to employ Employee in
the capacity of Vice President of Product Development of the
Company. Employee hereby accepts this employment and agrees to
diligently and conscientiously devote his full and exclusive
business time and attention to the affairs of the Company. In
his capacity as Vice President of Product Development of the
Company, Employee shall perform such duties of an executive
nature as shall be assigned to him from time to time by the
President or the Board of Directors and Employee shall at all
times discharge his duties in consultation with and under the
supervision of the President and the Board of Directors.
2. TERM. The term of this Agreement shall commence on the date
hereof and shall terminate on December 31, 1998. This
Agreement may be extended for an additional one (1) year term,
upon such terms as may be mutually agreed between Employee and
the Company.
3. COMPENSATION. Employee's compensation hereunder, including
base salary, bonus, vacation and other fringe benefits, for
the term of this Agreement are set forth in Attachment I
annexed hereto. The Company and Employee agree that during the
term of this Agreement the fringe benefits offered to Employee
shall be as set forth in Attachment I.
4. DISABILITY. In the event that Employee is absent from his
employment by reason of illness or other incapacity for a
period of six (6) consecutive months, Employee shall
nevertheless be entitled to receive his full base salary
hereunder as well as his pro-rata bonus, vacation accruals and
all fringe benefits during said six (6) month period.
Thereafter, during the continued period of his illness or
incapacity in excess of six (6) months, Employee shall be
entitled to receive such long-term disability benefits as are
payable under the Company's then long-term disability
insurance program. He shall also receive continued health and
life insurance benefits for the remaining term of this
Agreement. Except as provided above, all bonus accruals,
vacation accruals and other fringe benefits shall cease at the
end of said six (6) month period. Notwithstanding the
foregoing, Employee's salary, bonus, vacation and other fringe
benefits shall be fully reinstated upon his complete return to
employment and the full discharge of his duties hereunder.
5. DEATH. In the event that Employee dies during the term of this
Agreement while still employed hereunder and drawing his full
base salary, then the Company shall continue to pay an amount
equal to one hundred percent (100%) of Employee's monthly base
salary (as of the date of his
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death) to his designated beneficiary for a period of two (2)
months subsequent to the date of his death. Such payments
shall be in addition to any other death benefits payable to
Employee's designated beneficiary from life insurance or
otherwise.
6. CHANGE OF DUTIES; RELOCATION. In the event that during the
term of this Agreement the President or the Board of Directors
chooses to change the Employee's title and/or his duties
hereunder, this Agreement shall nevertheless remain in full
force and effect in accordance with its terms and no such
change shall constitute grounds upon which Employee may
terminate this Agreement. In the event that the Board of
Directors directs Employee to relocate away from Ann Arbor,
Michigan, then Employee shall be entitled to resign and to
receive as severance compensation, the base salary and fringe
benefits provided in Section 7.2 hereof.
7. TERMINATION.
7.1 For Cause; Resignation; Retirement. In the event that
Employee is discharged from his employment during the term
of this Agreement for "Cause" (as hereinafter defined), or
Employee voluntarily resigns or retires, then Employee
shall be entitled to receive only such payments and/or
benefits as would be provided to other employees of the
Company under similar circumstances in accordance with the
Company's employee policies and procedures then in effect.
7.2 Without Cause. In the event Employee is discharged from
his employment during the term of this Agreement without
"Cause", then the Company shall continue to pay Employee's
base salary and provide all fringe benefits and pro rata
bonus, if applicable, in each case as in effect at the
date of Employee's termination, for a period equal to the
greater of twelve (12) months from the date of termination
or the remaining term of this Agreement (including any
renewals or extension hereof). Such payment and benefits
shall be in lieu of all other payments and benefits to
which Employee might otherwise be entitled under the
Company's employee policies and procedures and/or under
this Agreement.
7.3 Definition. For purposes of this Agreement, the term
"Cause" shall mean:
(i) Failure or refusal of Employee to work; or
(ii) Violation of written directives of the Board of
Directors or the President by Employee following
Employee's receipt thereof; or
(iii) Intentional misrepresentation to, or concealment of
a material fact regarding the operations of the Company
from, the Board of Directors or the President by Employee;
or
(iv) A material breach of this Agreement by Employee; or
(v) Conviction of a crime involving moral turpitude.
Except in the case of (v) above, termination of this
Agreement for "Cause" shall only become effective thirty
(30) days after Employee has received written notice of
such termination from the Company specifying the details
of such "Cause". During such thirty (30) day period,
Employee shall be entitled to a formal meeting with the
Board of Directors for the purpose of presenting reasons
why the Agreement should not be terminated.
7.4 Change of Control. In the event that more than fifty
percent (50%) of the issued and outstanding capital stock
of the Company or more than fifty percent (50%) of the
assets of the Company is purchased by any entity, person
or group of persons acting in concert, and if the
remaining term of this Agreement is less than one (1) year
from the effective date of such change of control, then
the term of this Agreement shall be automatically extended
through a date one (1) year from such effective date.
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7.5 Release. Anything contained in this Section 7 to the
contrary notwithstanding, the payment of any sums to
Employee under subsections 7.1, 7.2 or 7.4 hereof, shall
be conditioned upon (i) Employee executing and delivering
to the Company the Full And Final Release attached hereto
as Attachment II (the "Release") and (ii) in the event
Employee is over forty (40) years of age on the date of
execution of the Release, upon Employee not exercising his
right to revoke said Release after having executed it.
8. RESTRICTIVE COVENANT. Employee agrees that during the term of
this Agreement and for a period of two (2) years after the
termination or expiration of this Agreement, he will not
directly or indirectly, for his own benefit, or for or with
any other person, firm, or corporation (a) own, manage, engage
in, be employed by or consult for any business in the United
States (other than ass a holder of less than 5% of the
outstanding capital stock of a publicly traded corporation)
which competes directly with the business presently conducted
by the Company, or (b) encourage, solicit, attempt to hire as
an employee or consultant or otherwise attempt to persuade any
other employee of the Company to leave the employ of the
Company. For purposes of this Agreement, the "business
presently conducted by the Company" shall mean the
development, manufacture, marketing or licensing of computer
programs or software for mechanical systems simulation (often
referred to as "multi-body system analysis"). Employee further
agrees that the Company's remedy at law for any breach of this
restrictive covenant is inadequate and that the Company shall
be entitled to injunctive relief with respect to any breach of
this covenant.
9. NOTICE. Any notice to be delivered under this Agreement shall
be given in writing and delivered, personally or by certified
mail, postage prepaid, addressed to the Company or Employee at
their last known addresses.
10. ENTIRE AGREEMENT. This Agreement constitutes the entire
understanding of the parties hereto regarding the subject
matter hereof, and there are no other agreements, conditions
or representations, oral or written, express or implied, with
regard thereto. This Agreement may be amended only in writing,
signed by both parties. Notwithstanding anything in this
Agreement to the contrary, nothing in this Agreement is
intended to or shall in anyway affect the rights and
obligations of the parties set forth in that certain
Noncompetition Agreement dated October 31, 1997, between the
Company and Employee.
11. BINDING EFFECT. The provisions of this Agreement shall be
binding upon and shall inure to the benefit of both of the
parties hereto and their respective successors and assigns.
12. GOVERNING LAW. This Agreement shall be governed by and
construed under in accordance with the laws of the State of
Michigan.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and date first above written.
"COMPANY"
MECHANICAL DYNAMICS, INC.
By: /s/ Xxxxxx X. Xxxx
---------------------------------------
Xxxxxx X. Xxxx, President
"EMPLOYEE"
/s/ Xxxxxxx X. Xxxxxxxx
------------------------------------------
Xxxxxxx X. Xxxxxxxx
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Attachment I
Compensation Plan
Xxxxxxx X. Xxxxxxxx
Vice President of Product Development
Base Salary: $100,000/year.*
Car Allowance: $300/month.
Vacation/Sick Days: 15 days/year (vacation); 10 days/year
(sick days).
Fringe Benefits: As provided for all employees in accordance
with Company policy (but without any waiting
or eligibility periods) plus additional life
insurance to bring total life insurance to
two times Employee base salary; provided,
that Employee will continue to receive
medical benefits under the current medical
plan at StatDesign, Inc. ("SDI"), at
Company's expense, until December 31, 197
and thereafter he will receive medical
benefits under the Company's medical plan.
Bonus/Commission: Per following bonus/commission matrix.
Other: 15,000 stock options/4-year vesting period.
Employee will receive credit for his years
of service with SDI, but Employee will not
be entitle to or otherwise receive from the Company any 401(k) employee match
related to such years of service.
The bonus/commission matrix is as follows:
Commission+
StatDesign Consulting Service Gross Revenue
Up to $2 million 1%
Incremental Amount Beyond $2 million 3%
StatDesign Software Gross Revenue
XXXXX/Pre 2%
AutoDOE 2%
Smart Chassis 2%
Bonuses
Completion of AutoDOE Toolkit $20,000
Bonus for Smart Chassis (over and above any other bonuses/commissions) 3%
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* Minimum total compensation(consisting of base salary, commissions
and bonuses) first twelve months -- $125,000
+ The Company will keep records of information relating to the
commissions payable to Employee and, upon request of Employee, will make such
records available to Employee.
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ATTACHMENT II
MECHANICAL DYNAMICS, INC.
FULL AND FINAL RELEASE
Employee ______________________________________________________
Title ______________________________________________________
Forwarding
Address ______________________________________________________
For good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the undersigned hereby agrees as follows:
1. I affirm all of my obligations under the Confidentiality and Noncompetition
Agreement dated October 31, 1997 (the "Confidentiality/Noncompetition
Agreement"), between MDI and me to the extent such obligations otherwise remain
in effect in accordance with the terms thereof.
2. I hereby release, acquit and forever discharge MDI, each of its subsidiaries
and all of their respective past and present agents, representatives, employees,
heirs, executors, administrators, officers, directors, shareholders, attorneys,
successors and assigns (collectively "Releasees") from any and all manner of
action and causes of action, suits, choses in action, contracts, covenants,
claims, damages, costs, expenses, liabilities, debts, sums of money,
commissions, compensation, judgments, executions, demands and rights whatsoever,
at law or in equity, of any nature whatsoever, which I may not have, or which
may hereafter accrue to me against Releasees, by reason of events occurring
prior to, or facts or circumstances existing on the date hereof, subject,
however to payment in full for all amounts owed to me under Section 7 of my
employment agreement with MDI dated October 31, 1997 and to the rights (if any)
I have to purchase common stock of MDI pursuant to that certain Stock Option
Agreement between me and MDI dated October 31, 1997.
3. I hereby covenant that I will refrain from commencing any action or suit, or
prosecuting any pending action or suit, at law or in equity, against Releasees
on account of any action or cause of action which not exists or which may
hereafter accrue in my favor upon the basis of facts existing at the date
hereof. In addition to any other liability which shall accrue upon the breach of
this covenant, I shall be liable to pay all attorneys' fees and costs incurred
by Releasees in the defense of such action or suit.
4. I have returned all MDI property to the President or CEO of MDI or their
respective designees. This return of property includes all materials that
contain any Proprietary Information (as defined in the
Confidentiality/Noncompetition Agreement), including but not limited to, sales
and marketing materials, pricing information and computer software-related
materials, including demonstration materials, user manuals, etc.
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5. I have been apprised of my rights to continue medical and/or dental coverage
for myself and/or my dependent(s).
6. THIS FULL AND FINAL RELEASE IS FREELY AND VOLUNTARILY GIVEN BY ME WITHOUT
DURESS OR COERCION AND AFTER CONSULTATION WITH COUNSEL AND I HAVE CAREFULLY AND
COMPLETELY READ ALL OF THE TERMS AND PROVISIONS OF THIS FULL AND FINAL RELEASE.
--------------------------------
Signature of Employee
--------------------------------
Name
Date:
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FIRST AMENDMENT TO EMPLOYMENT AGREEMENT
THIS FIRST AMENDMENT, made as of the 31st day of December, 1998, by and
between MECHANICAL DYNAMICS, INC., a Michigan corporation (the "Company"),
having offices located at 0000 Xxxxxxxxxxxx Xxxx., Xxx Xxxxx, Xxxxxxxx 00000,
and XXXXXXX X. XXXXXXXX, of Canton, Michigan ("Employee"), for the purpose of
amending that certain Employment Agreement between the Company and Employee
dated as of October 31, 1997 ( the "Employment Agreement").
WITNESSETH:
WHEREAS, the Company and Employee desire to extend the Employment
Agreement and to confirm such extension herein.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants contained herein and in the Employment Agreement, the parties hereto
agree as follows:
A. Section 2 of the Employment Agreement is hereby amended to extend
the term of said Agreement through March 31, 2000.
B. Except as expressly modified herein, the Employment Agreement shall
remain in full force and effect in accordance with its original terms.
IN WITNESS WHEREOF, the parties hereto have duly executed this First
Amendment as of the day and year first above written.
WITNESS: COMPANY
MECHANICAL DYNAMICS, INC.
/s/ Xxxxx X. Xxxxx By: /s/ Xxxxxx X. Xxxx
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Xxxxxx X. Xxxx, President
EMPLOYEE
/s/ Xxxxx X. Xxxxx /s/ Xxxxxxx X. Xxxxxxxx
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Xxxxxxx X. Xxxxxxxx
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SECOND AMENDMENT TO EMPLOYMENT AGREEMENT
THIS SECOND AMENDMENT, made as of the 1st day of March, 2000, by and
between MECHANICAL DYNAMICS, INC., a Michigan corporation (the "Company"),
having offices located at 0000 Xxxxxxxxxxxx Xxxx., Xxx Xxxxx, Xxxxxxxx 00000,
and XXXXXXX X. XXXXXXXX, of Canton, Michigan ("Employee"), for the purpose of
amending that certain Employment Agreement between the Company and Employee
dated as of October 31, 1997, and amended by agreement dated as of December 31,
1998 ( collectively, the "Employment Agreement").
WITNESSETH:
WHEREAS, the Company and Employee desire to extend the Employment
Agreement and to confirm such extension herein.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants contained herein and in the Employment Agreement, the parties hereto
agree as follows:
A. Section 2 of the Employment Agreement is hereby amended to extend
the term of said Agreement through March 31, 2001.
B. Except as expressly modified herein, the Employment Agreement shall
remain in full force and effect in accordance with its original terms.
IN WITNESS WHEREOF, the parties hereto have duly executed this Second
Amendment as of the day and year first above written.
WITNESS: COMPANY
MECHANICAL DYNAMICS, INC.
/s/ Xxxxx X. Xxxxx By: /s/ Xxxxxx X. Xxxx
----------------------------- ----------------------------------
Xxxxxx X. Xxxx, President
EMPLOYEE
/s/ Xxxxx X. Xxxxx /s/ Xxxxxxx X. Xxxxxxxx
----------------------------- ----------------------------------
Xxxxxxx X. Xxxxxxxx
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THIRD AMENDMENT TO EMPLOYMENT AGREEMENT
THIS THIRD AMENDMENT, made as of the 1st day of March, 2001, by and
between MECHANICAL DYNAMICS, INC., a Michigan corporation (the "Company"),
having offices located at 0000 Xxxxxxxxxx Xxxxx, Xxx Xxxxx, Xxxxxxxx 00000, and
XXXXXXX X. XXXXXXXX, of Canton, Michigan ("Employee"), for the purpose of
amending that certain Employment Agreement between the Company and Employee
dated as of October 31, 1997, and amended by agreements dated as of December 31,
1998, and as of March 1, 2000 (collectively, the "Employment Agreement").
WITNESSETH:
WHEREAS, the Company and Employee desire to amend the Employment
Agreement to reflect a change in Employee's title and to extend the Employment
Agreement for an additional one-year period.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants contained herein and in the Employment Agreement, the parties hereto
agree as follows:
A. Section 1 of the Employment Agreement is amended to change
Employee's title to "Vice President - Product Development" and "Chief Technical
Officer."
B. Section 2 of the Employment Agreement is hereby amended to extend
the term of said Agreement through March 31, 2002.
C. Except as expressly modified herein, the Employment Agreement shall
remain in full force and effect in accordance with its original terms.
IN WITNESS WHEREOF, the parties hereto have duly executed this Third
Amendment as of the day and year first above written.
WITNESS: COMPANY
MECHANICAL DYNAMICS, INC.
/s/ Xxxxx X. Xxxxx By: /s/ Xxxxxx X. Xxxx
----------------------------- -------------------------------
Xxxxxx X. Xxxx, President
EMPLOYEE
/s/ Xxxxx X. Xxxxx /s/ Xxxxxxx X. Xxxxxxxx
----------------------------- -------------------------------
Xxxxxxx X. Xxxxxxxx
