Exhibit 10.3
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is entered into as of April 21,
1999, by and between Xxxxxx Xxxxxxx, a resident of Minnesota ("Employee") and
ENGINEERING ANIMATION, INC., a Delaware corporation with its principal offices
in Ames, Iowa ("EAI" or "Company").
RECITALS
A. EAI is in the business of producing enterprise product and process
management software, interactive and custom animation products, and conducting
various other activities associated therewith (the "Business").
B. EAI desires to employ Employee and Employee desires to be employed
by EAI on the terms and conditions set forth herein.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Employment Term. Subject to the terms and conditions set forth
herein, EAI will employ Employee for a term commencing as of April 21, 1999 (the
"Effective Date") and ending on the second anniversary of the Effective Date, or
such earlier date as may occur pursuant to the terms of this Agreement (the
"Employment Term"). This Agreement may be extended by mutual agreement of the
parties.
2. Employment Duties. During the term of this Agreement, Employee will
serve EAI as the Chief Operating Officer and Executive Vice President and shall
be responsible for all operations of EAI and other duties which are assigned by
the Chief Executive Officer. Employee will, during the term of this Agreement,
serve the Company faithfully, diligently and competently and will perform
assigned duties on a full-time basis to the best of Employee's ability.
3. Compensation. During the term of employment, EAI will pay to
Employee for services rendered by Employee under this Agreement, the following:
(a) Salary. From the Effective Date of this Agreement through the
first anniversary of the Effective Date, a salary at a rate of
$300,000. per annum, payable in arrears monthly, in accordance
with the EAI's ordinary payroll practices; and
(b) Bonus. Employee shall receive during 1999, an annual bonus
equal to his annual salary, paid quarterly in the third and
fourth quarters of 1999. Employee's 1999 annual bonus shall be
prorated according to the date of commencement of employment;
and
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(c) Car Allowance. Employee shall receive a car allowance of $750
per month as additional compensation and in lieu of
reimbursement for personal auto mileage expenses. Normal
payroll taxes shall apply to this payment.
4. Stock Options. EAI shall grant Employee a stock option representing
the right to purchase 225,000 shares of EAI common stock pursuant to the terms
and conditions contained in EAI's standard stock option agreement. Such option
shall provide for vesting at the rate of twenty-five percent (25%) on each of
the first four anniversaries of the date of grant and shall provide for an total
term of ten (10) years. The exercise price for such option shall be the market
price on the day of grant as determined by the average of the high and low sales
quotes as shown on Nasdaq on the day of issue.
5. Severance Provisions. In the event that there is a termination of
employment for good reason as defined in paragraph 10 or in the event that there
is a Change of Control of EAI, as defined in EAI's stock option plan, and
employment is terminated within 18 months of the date of this Agreement, then
Employee shall receive a severance benefit equal to three times the total of
Employee's current annual salary and Employee's current annual bonus, if
determinable, and if such bonus is not determinable, three times the total of
Employee's current annual salary and Employee's bonus during the previous 12
months. In the event that Employee's employment relationship is terminated
following a Change of Control after the expiration of 18 months from the date of
this Agreement, Employee shall be entitled to a severance payment equal to two
times the total of Employee's current salary and current annual bonus, if
determinable, and if such bonus is not determinable two times the total of
Employee's current annual salary and Employee's bonus for the 12 months prior to
termination.
6. Benefits.
(a) Employee shall be entitled during the Employment Term to
participate in such employee benefit plans and programs,
including, without limitation, health, dental, and life
insurance plans, as are maintained from time to time for
employees of EAI to the extent that his position, tenure,
compensation, age, health and other qualifications make him
eligible to participate. EAI does not promise the adoption or
continuance of any particular plan or program during the
employment term and employee's (and his dependents')
participation in any such plan or program shall be subject to
the provisions, rules, regulations and laws applicable from
time to time thereto.
(b) During the Employment Term, Employee shall be entitled to paid
time off at EAI's maximum accrual rate of twenty-seven (27)
days per year. In addition, Employee shall be entitled to paid
time off on such holidays as are observed by EAI from time to
time. Accrued, unused vacation may be carried over from one
year to the next in accordance with EAI policies.
(c) Employee shall be permitted, upon the Effective Date to
participate in the EAI 401(k) savings plan which permits
employee contributions of up to eighteen percent (18%) of
total annual compensation and provides that EAI will match
one-half of Employee's contribution up to a total match amount
of two percent (2%) of Employee's total compensation. EAI's
contribution to the Plan vests according to the terms of the
Plan.
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7. Reimbursement of Expenses. To the extent consistent with the general
expense reimbursement policies maintained by EAI from time to time, Employee
shall be entitled to reimbursement for ordinary, necessary and reasonable
out-of-pocket trade or business expenses which Employee incurs in connection
with performing his duties under this Agreement, including reasonable travel and
meal expenses. The reimbursement of all such expenses shall be made upon
presentation of evidence reasonably satisfactory to EAI of the amounts and
nature of such expenses and shall be subject to the prior approval of EAI.
8. Employee Proprietary Information Agreement. Employee recognizes that
as a result of employment by EAI, he will come into possession of confidential
information and as a condition of employment, agrees to execute and abide by the
terms of the Employee Proprietary Information Agreement attached hereto as
Exhibit A.
9. Key Employee Non-competition Agreement. Employee agrees to be bound
by the terms of the Key Employee Non-competition Agreement as attached hereto as
Exhibit B.
10. Termination. This Agreement may be terminated by EAI for cause,
which shall be defined as: (i) any action by Employee involving willful gross
misconduct having a material adverse effect on the Company; (ii) Employee being
convicted of a felony under the laws of state of the United States or any state
or under the laws of any other country or political subdivision thereof. This
Agreement may be terminated for good reason by Employee under the following
circumstances: (a) Employee's duties are reduced to a non-executive level, (b)
the failure of a successor to the Company to assume the obligations of this
Agreement, (c) breach of this Agreement by the Company, (d) a Change in Control
of EAI. In the event of termination of this Agreement by expiration of its term,
or according to the terms of this paragraph 10, the provisions of paragraphs 5,
8, 9, 11 and 12 shall continue in full force and effect.
11. Arbitration. Any and all disputes arising directly or indirectly
out of or relating in any way to this Agreement that cannot be satisfactorily
resolved by the parties shall be submitted to binding arbitration pursuant to
the rules then in effect of the American Arbitration Association (AAA).
Arbitration shall be held in Chicago, Illinois. The arbitrator(s), who shall be
attorneys experienced in employment law, shall decide the matters submitted to
them based upon the evidence presented and the terms of this Agreement. The
arbitrator(s) shall issue a written award that shall state the basis of the
award, the findings of fact and the conclusions of law. The arbitration award
shall be final, non-appealable and binding upon the parties. Judgment upon the
award may be entered in any court having jurisdiction thereof.
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12. Miscellaneous.
(a) All notices hereunder shall be in writing and shall be deemed
given when delivered in person or when sent by email or
telecopier followed by hard copy; or following three (3)
business days after being deposited in the United States mail,
postage prepaid, registered or certified mail, or two (2) days
after delivery to a nationally recognized express courier,
expenses prepaid, addressed as follows:
If to Employee: Addressed to the last address on
the payroll records of EAI.
If to EAI: Engineering Animation, Inc.
0000 Xxxxx Xxxx Xxxxx
Xxxx, Xxxx 00000
Attention: Xxxxx X. Xxxx, General Counsel
(b) This Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective heirs, successors
and permitted assigns
(c) This Agreement contains all of the agreements between the
parties with respect to the subject matter hereof and this
Agreement supersedes all other agreements, oral or written,
between the parties hereto with respect to the subject matter
hereof.
(d) No change or modification of this Agreement shall be valid
unless the same shall be in writing and signed by the parties
hereto. No waiver of any provisions of this Agreement shall be
valid unless in writing and signed by the waiving party.
(e) If any provisions of this Agreement (or portions thereof)
shall, for any reason, be deemed invalid or unenforceable by
any court of competent jurisdiction, such provisions (or
portions thereof) shall be ineffective only to the extent of
such invalidity or enforceability, and the remaining
provisions of this Agreement (or portions thereof) shall
nevertheless be valid, enforceable and of full force and
effect. EAI's rights under this Agreement shall not be
exclusive and shall be in addition to all other rights and
remedies available at law or in equity.
(f) This Agreement may be executed in multiple counterparts, each
of which shall be deemed to be an original and all of which,
when taken together, shall constitute a single instrument.
(g) This Agreement shall be governed and controlled as to
validity, enforcement, interpretation, construction, effect
and in all other respects by the laws of the State of Iowa
applicable to contracts made in Iowa (other than any conflict
of laws rule which might result in the application of the laws
of any other jurisdiction).
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IN WITNESS WHEREOF, the parties have executed this Agreement on this
first day of November, 1999.
ENGINEERING ANIMATION, INC. XXXXXX XXXXXXX
--------------
By:/s/Xxxxxxx X. Xxxxx /s/ Xxxxxx Xxxxxxx
--------------------
Name:Xxxxxxx X. Xxxxx
Title:Chairman, Chief Executive Office and
President
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Exhibit A
PROPRIETARY INFORMATION, INVENTION AND
BUSINESS OPPORTUNITIES AGREEMENT
I,______________________, agree to the following terms and conditions
regarding the Company's Proprietary Information, Inventions and Business
Opportunities in consideration of my employment or continuing employment with
the Company.
1) Definitions. The following definitions apply to this Agreement.
a) "Company" means Engineering Animation, Inc. and its
subsidiaries, divisions, affiliates and assignees.
b) "Proprietary Information" means information that is of value to the
Company, or information that the Company does not disclose to others
on an unrestricted basis. Proprietary Information includes but is not
limited to the following kinds of information, whether verbal or
written, originals or copies, concerning the Company, the Company's
operations, or the Company's clients, customers, consultants or
licensees: trade secrets, patents, copyrights, techniques, know how or
inventions (whether patentable or not), Inventions (as defined below),
designs, configurations, tooling, documentation, recorded data,
schematics, products, test data, source code, object code, master
works, master databases, algorithms, flow charts, formulae, circuits,
works of authorship, mechanisms, research, manufacture, improvements,
processes, assembly, installation, business, marketing,forecasts,
strategies, pricing, customers, the salaries, duties, qualifications,
performance levels, and terms of compensation of other employees, or
cost or other financial data. Proprietary Information also means
information provided by a third party to the Company that the Company
has a duty to protect from unauthorized use or disclosure. Proprietary
information shall not include general knowledge and experience, as
would be commonly known or comparable to that of other persons in the
same field as the Employee.
c) "Invention" includes but is not limited to an idea, improvement,
design or discovery, whether patentable or reduced to practice, made or
conceived by me alone or jointly with others during my employment with the
Company that relates in any manner to the actual or demonstrably anticipated
business, work, or research and development of the Company, or results from or
is suggested by any task assigned to me or any work performed by me for, or on
behalf of, the Company.
d) "Business Opportunities" means all opportunities for contractual
arrangements which will produce revenue for the Company and, provided that, such
Business Opportunities are similar to opportunities which have resulted in
contractual arrangements with customers that are responsible for current revenue
of the Company.
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2) Proprietary Information and Other Company Material and Property.
a) I acknowledge and agree that the Company owns the Proprietary
Information. At all times during and after my employment with the Company,
I will keep the Proprietary Information in confidence and trust and guard
it against unauthorized disclosure and use. I will not disclose or use the
Proprietary Information without the prior written consent of a Company
officer, except as may be necessary in the ordinary course of performing my
job duties for the Company. I hereby assign to the Company any rights I may
have or acquire in and to the Proprietary Information. Notwithstanding the
foregoing, my obligations shall not apply with respect to any Proprietary
Information which is lawfully obtained by me outside of the scope of my
employment by the Company or which hereafter becomes public for any reason
other than a violation of this Agreement on my part.
b) During my employment with the Company, I will not remove the
Proprietary Information or any other Company related material or property from
the Company's premises, except as I am required to do so in connection with
performing my job duties for the Company. I will return to the Company the
Proprietary Information or any other Company related material or property as and
when requested by the Company. Even if the Company does not so request, I will
return the Proprietary Information or any other Company related material or
property upon termination of my employment. The only information that I will
have access to after my employment with the Company ends will be: (i) my
personal copies of records relating to my compensation; (ii) my personal copies
of any materials previously distributed generally to stockholders of the
Company; (iii) my copy of this Agreement; and (iv) any other information that I
am granted access to by law.
3) Inventions.
a) I acknowledge and agree that the Company owns the Inventions. I will
promptly disclose to the Company and preserve as Proprietary Information any and
all Inventions. I hereby assign to the Company any right, title and interest I
may have or acquire in and to the Inventions.
b) During my employment, I will perform all acts necessary or desirable
by the Company to permit and assist it, at the Company's expense, in obtaining,
maintaining, defending and enforcing letters patent, copyrights or other rights
in Inventions and improvements in any and all countries, to protect the
interests of the Company or its nominee in the Inventions, and to vest title to
Inventions in the Company or its nominee. These acts may include, but are not
limited to, execution of documents and assistance or cooperation in legal
proceedings. If the Company is unable after diligent attempt to secure my
signature to any document reasonably necessary or appropriate for any of these
purposes (including renewals, extensions, continuations, divisions or
continuations in part), I hereby irrevocably designate and appoint the Company
and its duly authorized officers and agents, as my agents and attorneys-in-fact
to act for and on my behalf and instead of me. This designation and appointment,
however, is limited to the purposes of executing and filing these documents and
doing all other lawfully permitted acts to accomplish the foregoing acts with
the same legal force and effect as if executed by me.
c) All inventions, if any, patented or unpatented, which I made prior to my
employment with the Company, are excluded from this Agreement. To preclude
any possible uncertainty, I have listed on Exhibit A to this Agreement all
of my prior inventions, including numbers of all patents and patent
applications, and a brief description of all unpatented inventions that are
not the property of a previous employer. I represent and covenant that the
list is complete. If there are no items on Exhibit A, I have no prior
inventions. I agree to notify the Company in writing before I make any
disclosure or perform any work on behalf of the Company that appears to
threaten or conflict with proprietary rights I claim in an invention. In
the event of my failure to give this notice, I will make no claim against
the Company with respect to any such invention.
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4) Protecting Business Opportunities.
a) During my employment with the Company and for one year after the
termination of my employment, I agree not to encourage or solicit any
employees of the Company to leave the Company for any reason. I also agree
not to solicit Business Opportunities for myself or anyone other than the
Company, and not to divert any Business Opportunities from the Company
during these time periods.
b) MY AGEEMENT NOT TO COMPETE FOR THE COMPANY'S BUSINESS OPPORTUNITIES: In
exchange for good and valuable consideration, receipt of which I hereby
acknowledge, I agree that during my employment with the Company and for one
year after the termination of my employment, I will not engage in any
employment, business or activity that competes with the Company in
geographic areas and for opportunities substantially similar to Business
Opportunities that I contributed to, or participated directly in, while an
employee of the Company. However, it is understood that this section is not
intended to prevent me, upon termination of my employment with the Company,
from finding reasonable employment in educational institutions, non-profit
research organizations, governmental entities, or non-profit end-user
organizations any of which may be involved in research, development,
customization, or application of technology similar to the technology that
I contributed to or participated directly in while an employee of the
Company. Further, it is understood that, upon termination of my employment
with the Company, I may become employed by a company which may produce a
number of products or services, some of which compete with those of the
Company, provided that my activities with such competing company do not
assist such competing company in designing, programming, producing, or
selling products or services which utilize technology similar to the
technology that I contributed to or participated directly in while an
employee of the Company.
c) I agree that these time periods, geographical areas and business
restrictions are fair and reasonably required for the protection of the
proprietary interests of the Company. In the event that any of these
restrictions are declared by a court of competent jurisdiction to exceed the
maximum that the court deems reasonable and enforceable, then the restriction
determined by the court as reasonable and enforceable shall apply.
d) So that the Company may be aware of the extent of any other demands
upon my time and attention, I will disclose to the Company the nature and scope
of any other business activity in which I am or become engaged during my
employment with the Company.
e) I represent that my execution of this Agreement, my employment with
the Company and my performance of my duties for the Company will not violate any
obligations I may have to any former employer or any other third party,
including any obligations to keep confidential any proprietary or confidential
information. In the course of performing my duties for the Company, I will not
utilize any proprietary or confidential information of any former employer or
any other third party.
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5) General Provisions.
a) I agree that this Agreement does not constitute an employment
agreement and that, unless otherwise specifically provided in a written contract
signed by both an officer of the Company and me, my employment with the Company
is "at will" and I have the right to resign my employment and the Company has
the right to terminate my employment at any time, with or without cause, for any
or no reason.
b) I agree that this Agreement does not set forth all of the terms and
conditions of my employment, and that as an employee of the Company, I have
obligations to the Company which are not set forth in this Agreement.
c) I agree that my obligations under this Agreement shall continue in
effect after termination of my employment, regardless of the reason or reasons
for termination, and whether such termination is voluntary or involuntary on my
part, and that the Company is entitled to communicate my obligations under this
Agreement to any future employer or potential employer of mine.
d) Except as otherwise provided for in this Agreement, I agree that if
one or more provisions of this Agreement are held to be unenforceable, such
provision shall be excluded from this Agreement and the balance of the Agreement
shall be interpreted as if the provision were excluded. The Agreement shall then
be enforceable in accordance with its remaining terms.
e) Any and all disputes arising directly or indirectly out of or
relating in any way to this Agreement, which cannot be satisfactorily
resolved by the parties, shall be submitted to binding arbitration pursuant
to the Rules then in effect of the American Arbitration Association (AAA)
and shall be held in Chicago, Illinois. The arbitrator(s) shall decide the
matters submitted to them based upon the evidence presented and the terms
of this Agreement and the arbitrator(s) shall issue a written award which
shall state the basis of the award and include findings of fact and
conclusions of law. The award of the arbitration shall be final,
non-appealable and binding upon the parties. Judgment upon the award may be
entered in any court having the jurisdiction thereof.
f) This Agreement shall be effective as of the first day of my
employment by the Company, shall be binding upon me, my heirs, executors,
assigns and administrators, and shall inure to the benefit of the Company, its
successors and assigns.
g) This Agreement may not be changed, modified, released, discharged,
abandoned, or otherwise amended, in whole or in part, except by an instrument in
writing, signed by the Company and me. I agree that any subsequent change or
changes in my duties, salary or compensation shall not affect the validity or
scope of this Agreement.
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h) I acknowledge receipt of this Agreement, and agree that with respect to
its subject matter, it is my entire agreement with the Company, superseding
any previous oral or written communications, representations,
understandings, or agreements with the Company or any of its officers or
representatives.
i) I warrant and represent that I have the continuing right, power and
authority to enter into and perform this Agreement in accordance with its
terms, without violating any other agreement, obligation or undertaking.
j) When my employment with the company terminates, I agree to sign and
deliver to the Company the "Resignation/Termination Certificate" attached to
this Agreement as Exhibit B.
k) I agree that a remedy at law for my breach of this Agreement is
inadequate and that if I breach or threaten to breach this Agreement, the
Company shall be entitled to an injunction to restrain me from beaching the
Agreement. In addition, I agree that if I violate this Agreement, the Company
will be entitled to an accounting and repayment of all profits, compensation,
commissions, or benefits that I, directly or indirectly, have or may realize.
These remedies are cumulative and do not limit the remedies the Company may be
entitled to at law, in equity or under this Agreement.
Dated:________________________
_________________________
(employee signature)
________________________
(printed name)
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Exhibit A
List of Prior Inventions
TITLE DATE BRIEF DESCRIPTION OF INVENTIONS
1.
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2.
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3.
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4.
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5.
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6.
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7.
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8.
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9.
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10.
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11.
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12.
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13.
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14.
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Exhibit B
Resignation/Termination Certificate
This is to certify that I do not have in my possession, nor have I
failed to return, any Proprietary Information or any other Company related
material.
I further certify that I have complied with and will continue to
comply with all the terms of the Proprietary Information, Invention and Business
Opportunities Agreement signed by me with the Company including, without
limitation:
a) the reporting of any Inventions; and
b) the preservation of Proprietary Information and Business
Opportunities.
___________________________
Employee Signature Date:
___________________________
Employee Name (please print) Social Security Number:
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Exhibit B
Key Employee Non-competition Agreement
This Key Employee Non-Competition Agreement ("Agreement") by
and between Engineering Animation, Inc. ("Company") and the undersigned
Employee ("Employee") is effective as of the date shown below. The terms
of this Agreement are as follows:
A. Employee acknowledges that Employee's services are of a special and
unusual character which have a unique value to Company and that confidential
information will be obtained by or disclosed to Employee as a result of
employment. As a material inducement to Company to employ Employee and in
consideration of compensation to be paid to Employee for services, Employee
covenants and agrees as follows:
During Employee's employment by Company and for a period of one (1)
year after Employee ceases to be employed by Company, Employee shall
not, directly or indirectly, as principal or agent, or in any other
capacity:
(a) solicit or divert business from any client, account or
location of Company.
(b) own, manage, operate, participate in or be employed by or
otherwise be interested in, or connected in any manner with,
any person, firm, corporation or other enterprise which
directly competes with the business of the Company anywhere in
the world. Nothing herein contained shall be construed as
denying Employee the right to own publicly-traded securities
of any corporation which competes with the business of the
Company, up to an aggregate of two percent (2%) of the
outstanding shares thereof.
(c) solicit for employment or employ any employee of the Company.
B. Employee acknowledges having carefully read and considered the
provisions of this Agreement and agrees that the restrictions set forth in
Paragraph A including, but not limited to, the time period of restriction and
the geographical area restriction are fair and reasonably required for the
protection of the interests of Company, its officers, directors and other
employees. Employee agrees that if any part of the covenants set forth above
shall be held to be invalid or unenforceable, the remaining parts of this
Agreement shall nevertheless continue to be valid and enforceable as though the
invalid or unenforceable parts had not been included therein. In the event that
any provision of Paragraph A hereof relating to time period and/or area of
restriction shall be declared by a court of competent jurisdiction to exceed the
maximum time period or area such court deems reasonable and enforceable, said
time period and/or area or restriction shall be deemed to become and thereafter
be the maximum time period and/or area which such court deems reasonable and
enforceable.
This Agreement is dated this _____ day of __________________, 1999.
Employee Name: ____________________
Employee Signature:_________________
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