Exhibit 10.2
ADDENDUM TO EMPLOYMENT AGREEMENT
THIS ADDENDUM TO EMPLOYMENT AGREEMENT ("Agreement") is entered into
as of August 2, 1999 by and between Xxxxxx X. Xxxxx ("Employee") and Engineering
Animation, Inc. ("EAI"), a Delaware corporation.
RECITALS
WHEREAS, EAI is in the business of providing enterprise-wide process
management, collaboration, communication and analysis solutions, producing
interactive multimedia products for various markets, and conducting various
other activities associated therewith (the "Business"); and
WHEREAS, EAI has employed Employee as Vice President and Chief
Financial Officer and Employee agreed to be so employed by EAI.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
AGREEMENT
1. Termination Other Than for Cause or Good Reason.
(a) EAI may terminate Employee's employment at any time for any or no
reason, and Employee may terminate employment with EAI at any time for any or no
reason. If Employee's employment is terminated by EAI other than for Cause (as
defined in Section 4 hereof) or Employee terminates employment with EAI for Good
Reason (as defined in Section 1(b) hereof) (the date of any such termination is
referred to herein as the "Termination Date"), Employee shall, subject to
Section 1(b)-(d) hereof, be entitled to receive compensation, payable in a
single payment not later than thirty (30) days following the Termination Date,
in an amount equal to the sum of (i) and (ii) below, in lieu of any compensation
other than as stated in this Agreement:
(i) an amount equal to Employee's total base salary received
for the twelve (12) calendar months immediately preceding the
Termination Date; and
(ii) an amount equal to the annual bonus paid to Employee in
respect of the last calendar year for which Employee received a bonus
prior to the Termination Date.
In addition, Employee shall be entitled to receive:
(iii) all unpaid amounts, as of the Termination Date, in
respect of any bonus for any calendar year ending on or prior to the
Termination Date which would have been payable had Employee remained in
employment until the date such amount would otherwise have been paid
and, with respect to the calendar year in which such Termination Date
occurs, an amount equal to (X) the annual bonus paid to Employee in
respect of the last calendar year for which Employee received a bonus
prior to the Termination Date, multiplied by (Y) a fraction, the
numerator of which is the number of days between January 1 of the
calendar year in which the Termination Date occurs and the Termination
Date and the denominator of which is 365, payable in a single payment
concurrent with the payment of the amounts due under Section 1(a)(i)
and (ii) hereof;
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(iv) any payment deferred by Employee, together with any
applicable interest or other accruals thereon, payable in a single
payment concurrent with the payment of the amounts due under Section
1(a)(i) and (ii) hereof;
(v) employee benefit plans and programs (including without
limitation, profit sharing, cafeteria and health insurance plans, as
maintained from time to time for EAI employees to the extent that
Employee's position, tenure, compensation, age, health and other
qualifications make Employee eligible to participate) that were paid to
Employee during the twelve (12) months immediately preceding the
Termination Date shall continue to be paid out in accordance with their
terms for twelve (12) months following the Termination Date; provided,
however, if Employee is provided with similar coverage by a successor
employer, any such coverage by EAI shall be reduced, with respect to
amounts payable hereunder, by the benefits actually provided to
Employee under any similar plan or coverage by any unaffiliated
successor employer; and
(vi) automobile allowance payments, if any, in the amount of
such payments payable to Employee as of the Termination Date shall
continue to be paid for twelve (12) months following the Termination
Date.
If subsequent to a termination of employment under this Section 1(a)
Employee shall die or suffer a Permanent Disability (as herein defined), such
death or Permanent Disability shall not diminish the rights of Employee or the
Employee's beneficiaries or successors to the payments and benefits of this
Section 1(a).
(b) For purposes of this Agreement, "Good Reason" shall mean any of the
following (without Employee's express prior written consent):
(i) the assignment to Employee by EAI of duties individually
or in the aggregate, materially inconsistent with Employee's position,
title or office immediately prior to such assignment, or any material
reduction by EAI of such duties or responsibilities or any removal of
Employee from or any failure to elect or re-elect Employee to any such
positions, except in connection with Employee's promotion to a higher
position, or the termination of Employee's employment for Cause or by
Employee other than for Good Reason;
(ii) a reduction by EAI in Employee's salary, a material
reduction or elimination of Employee's perquisites of office (other
than a reduction or elimination of such perquisites generally available
to senior management employees of EAI) or a substantial reduction or
elimination of Employee's aggregate employee benefits as in effect at
the time this Agreement is entered into or as the same may be increased
from time to time during the term of this Agreement;
(iii) a change in the location by more than 50 miles
at which Employee's services are to be performed;
(iv) any material breach by EAI of any provision of an
employment agreement, if any, with Employee;
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(v) a "Change of Control" shall occur. For this purpose a
"Change of Control" shall be deemed to have occurred if: (A) any
"person" (as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")),
other than a trustee or other fiduciary holding securities under an
employee benefit plan of EAI, is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly,
of securities of EAI representing 25% or more of the combined voting
power of EAI's then outstanding securities; or (B) during any period of
twenty-four consecutive months (not including any period prior to the
execution of this Agreement), individuals who at the beginning of such
period constitute the Board of Directors of EAI and any new director
(other than a director designated by a person who has entered into an
agreement with EAI to effect a transaction described in clauses (A) or
(C) of this subsection) whose election by the Board of Directors of EAI
or nomination for election by EAI's stockholders was approved by a vote
of at least two-thirds of the directors then still in office who either
were directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for any
reason to constitute a majority thereof; or (C) the stockholders of EAI
approve a merger or consolidation of EAI with any other corporation,
other than a merger or consolidation which would result in the voting
securities of EAI outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity) at least 70% of the combined
voting power of the voting securities of EAI or such surviving entity
outstanding immediately after such merger or consolidation, the
stockholders of EAI approve a plan of complete liquidation of EAI or
the stockholders of EAI approve an agreement for the sale or
disposition by EAI of all or substantially all of EAI's assets.
(c) Employee's Termination Date must occur no later than sixty (60)
days after the occurrence of an event defined as Good Reason under Section
1(b)(i)-(iv) of this section or no later than twelve (12) months after the
occurrence of an event defined as Good Reason under Section 1(b)(v) of this
Section.
(d) If any payments under this Agreement, after taking into account all
other payments to which Employee is entitled from EAI, are more likely than not
to result in a loss of a deduction to EAI by reason of Section 280G of the
Internal Revenue Code of 1986 or any successor provision to that section, such
payments shall be reduced to the extent required to avoid such loss of
deduction. Employee shall be entitled to select the order in which payments are
to be reduced in accordance with the preceding sentence. If requested by
Employee, EAI shall provide complete compensation and tax data on a timely basis
to Employee and to an accounting or law firm designated by Employee in order to
enable Employee to determine the extent to which payments from EAI may result in
a loss of a deduction, and EAI shall reimburse Employee for any reasonable fees
and expenses incurred by Employee for such purpose. If Employee and EAI shall
disagree as to whether a payment under this Agreement is more likely than not to
result in the loss of a deduction, the matter shall be resolved by an opinion of
tax counsel chosen by EAI's independent auditors. EAI shall pay the fees and
expenses of such counsel and shall make available such information as may be
reasonably requested by such counsel to prepare the opinion. If, by reason of
the limitations of this subsection, the maximum amount payable to Employee
cannot be determined prior to the due date for such payment, EAI shall pay on
the due date the minimum amount which it in good faith determines to be payable
and shall pay the remaining amount, with interest at a rate, compounded
semi-annually, equal to 120% of the applicable federal rate determined under
Section 1274(d) of the Internal Revenue Code of 1986, as soon as such remaining
amount is determined in accordance with this subsection.
(e) Employee shall not be required to mitigate damages or the amount of
any payment provided for under this Agreement by seeking employment with any
other employer (whether as an employee of or independent contractor for such
other employer) after Employee's termination of employment.
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2. Permanent Disability.
(a) If Employee becomes totally and permanently disabled (determined as
provided below) during Employee's employment, employee's employment shall
terminate as of the date such permanent disability is determined ("Permanent
Disability"). Employee shall be considered permanently disabled for purposes of
this Agreement if Employee is unable by reason of accident or illness (including
mental illness) to perform the material duties of Employee's regular position
with EAI and not expected to recover from Employee's disability within a period
of three (3) months from the commencement of the disability. If at any time
Employee claims or is claimed to be permanently disabled, a physician acceptable
to both Employee and EAI (which acceptances shall not be unreasonably withheld)
shall be retained by EAI and shall examine Employee. Employee shall cooperate
fully with the physician. If the physician determines that Employee is
permanently disabled, the physician shall deliver to EAI a certificate
certifying both that Employee is permanently disabled and the date upon which
the condition Permanent Disability commenced. The determination of the physician
shall be conclusive.
(b) Upon the occurrence of a Permanent Disability, Employee shall be
entitled to receive compensation, benefits and other consideration as described
in Section 1(a)(i) through 1(a)(vi), provided that such compensation benefits
and other consideration shall be reduced in an amount equal to payments and
benefits received under any disability plan of EAI then in place.
3. Death. In the event of Employee's death during Employee's employment,
Employee's estate or designated beneficiary shall receive payments and other
consideration equal to those described in Section 1(a)(i) through 1(a)(vi).
4. Voluntary Resignation; Discharge for Cause.
(a) If Employee resigns voluntarily, other than for Good Reason or
Permanent Disability, or EAI terminates the employment of Employee at any time
for Cause, EAI shall have no obligation under this Agreement to make any
payments to Employee except with respect to any previously deferred amounts and
any accrued but unpaid salary or bonus.
(b) The term "Cause" shall be limited to:
(i) any action by Employee involving willful or gross
misconduct having a material adverse effect on EAI;
(ii) Employee being convicted of (a) a felony under United
States' federal or state law, or (b) a felony under the laws of any
other country or political subdivision thereof involving moral
turpitude.
5. Term. This Agreement shall be effective upon signature by both Employee and
EAI and thereafter shall be without term and shall continue in full force and
effect as long as the terms hereof are applicable.
6. Miscellaneous.
(a) All notices hereunder shall be in writing and shall be deemed
given when delivered in person or when telecopied with hard copy to follow, or
three (3) business days after being deposited in the United States mail, postage
prepaid, registered or certified mail, or two (2) business days after delivery
to a nationally recognized express courier, expenses prepaid, addressed as
follows:
If to Employee, at the address of Employee shown in EAI's records.
If to EAI: Vice President of Human Resources
Engineering Animation, Inc.
0000 Xxxxx Xxxx Xxxxx
Xxxx, XX 00000
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and/or at or to such other addresses as may be designated by notice given in
accordance with the provisions hereof.
(b) This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective heirs, successors and permitted assigns,
No party shall assign this Agreement or its rights hereunder without the prior
written consent of the other party hereto; provided, however, that EAI may
assign this Agreement to any person or entity acquiring all or substantially all
of the Business of EAI (whether by sale of stock, sale or assets, merger,
consolidation or otherwise).
(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. No waiver of any of the provision of this Agreement shall be
deemed, or shall constitute, a waiver of any other provision, whether or not
similar, nor shall any waiver constitute a continuing waiver, unless so provided
in the waiver.
(e) If any provision of this Agreement (or portion 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 unenforceability, and the remaining provision
of this Agreement (or portions hereof) 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) The section or paragraph headings or titles herein are for
convenience of reference only and shall not be deemed a part of this Agreement.
(g) 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.
(h) 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 that State, (other
than any conflict of laws rule which might result in the application of the laws
of any other jurisdiction).
(i) Except as otherwise expressly set forth herein, 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,
tax or benefit 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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(j) Employee hereby expressly submits and consents in advance to the
personal jurisdiction of the federal and state courts of the State of Iowa for
all purposes in connection with any action or proceeding arising out of or
relating to this Agreement that is not otherwise subject to arbitration.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date first written above.
Engineering Animation, Inc. Xxxxxx X. Xxxxx, Employee
-------------------------
By: /s/ Xxxxxxx X. Xxxxx /s/ Xxxxxx X. Xxxxx
----------------------
Name: Xxxxxxx X. Xxxxx
Its: Chairman, Chief Executive Officer, and President
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