EXHIBIT 10.10
EMPLOYMENT AGREEMENT
MEMORANDUM OF AGREEMENT made in Waterloo, Ontario, as of February 20, 2003,
BETWEEN:
ANSYS - Canada Ltd, formerly known as AEA Technology
Engineering Software Ltd. ("AEA Canada") (the "Company")
- and -
J. Christopher Reid of the city of Aurora in the Province of
Ontario (the "Employee").
WHEREAS immediately prior to the date hereof, Employee was employed by AEA
Canada pursuant to an employment agreement dated May 11, 2002, as amended (the
"Former Agreement");
AND WHEREAS the Employee and Company desire to terminate the Former
Agreement and enter into this Agreement which will set forth the terms and
conditions for the provision of the continuing services of the Employee as an
employee of the Company and its affiliate or related companies;
AND WHEREAS the Employee has received additional consideration from the
Company in return for entering into this Agreement;
NOW, THEREFORE, in consideration of the premises and mutual covenants and
agreements hereinafter set forth, the parties hereto agree as follows:
ARTICLE 1
TERM
This Agreement is not, and shall not be construed as, an agreement to employ the
Employee for any specific term or period of time.
ARTICLE 2
EFFECTIVE DATE
The effective date of this Agreement is to be commensurate with the closing date
of the acquisition by ANSYS Inc. of AEA Canada. The time period of service with
AEA Canada prior to the effective date will be recognized by the Company for
purposes of service awards, vacation, termination and retirement entitlements,
where applicable.
ARTICLE 3
SERVICES
The Employee shall be employed in the position of Vice President, General
Manager, Fluids Business Unit and shall fulfill and shall be given the duties
and responsibilities outlined in Exhibit A (Job Description) which Exhibit A may
be amended from time to time to reflect the Reasonable Changes (as provided for
in Article 9 hereof).
ARTICLE 4
EXCLUSIVITY AND STANDARDS
For so long as the Employee is employed pursuant to the terms of this Agreement,
the Employee shall devote his best professional efforts, skill and ability and
devote his business time to promote the interests of the Company and shall
perform his duties and responsibilities as described hereunder with a degree of
care and skill as could reasonably be expected of an employee in a comparable
position, and will not, without the prior consent of the Board of Directors of
the Company (which consent shall not be unreasonably withheld), engage in any
other business ventures, enterprises or activities which might conflict with his
obligations hereunder.
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ARTICLE 5
LOCATION
The Employee shall provide his services to the Company at the offices of the
Company in Waterloo, Ontario, subject to the travel that may reasonably be
required to perform his duties hereunder. The parties acknowledge that the
Company may from time to time request that the Employee relocate to another
location. The costs associated with relocation will be at the Company's expense
as determined by the corporate relocation policy or as by mutual consent.
ARTICLE 6
COMPENSATION
Section 6.1 Salary.
The Employee shall receive an annual salary of $267,000 CAD. The Employee's
salary shall be payable twice monthly and shall be less all statutory source
deductions. The Employee's salary will be reviewed annually beginning January
2004.
Section 6.2 Stock Option Grant.
The Employee will be granted options for 30,000 shares of common stock in ANSYS
Inc., subject to approval by the ANSYS Inc. Board of Directors. These stock
option shares will have a four-year vesting schedule and all rights in respect
thereof will be governed by the applicable stock option plan. Option price for
the shares will be market value at the time of formal Board of Directors
approval.
Section 6.3 Benefits.
The Employee shall be eligible to participate in the group insurance and
benefits plans set forth in Exhibit B attached hereto (the "Current Plans") in
accordance with the terms of the Current Plans. In the event that the Company
establishes group insurance or benefit plans (the "New Plans") which are
different from the Current Plans, the Employee shall at the time the Company
institutes such New Plans, participate in the New Plans, subject to the terms
thereof. In the unforeseen event the benefits provided under the New Plans, in
the aggregate are materially worse than the benefits provided under the Current
Plans, in the aggregate, the Company will provide a mutually agreeable benefit
supplement to Employee.
In the event of termination of the Employee's employment by the Company pursuant
to Section 10.4(a) or 10.5 hereof, the benefit coverage provided to the Employee
pursuant to the Current Plans or the New Plans, as applicable, shall, to the
extent that the Current Plans or New Plans so permit, excluding LTD and STD
coverage (except as specifically required by statute), continue for the period
of notice and the twelve (12) month period of severance pay required to be
provided by the Company pursuant to Section 10.4(a) or Section 10.5 hereof or
such greater period as may be required by applicable employment standards
legislation.
Section 6.4 Bonus.
In addition to the salary specified in Section 6.1 hereof, the Employee has the
opportunity to participate in the ANSYS Inc. Executive Variable Compensation
Plan in accordance with the terms of such plan, which plan will be issued for
each fiscal year. The parties acknowledge and agree that the nature, type or
quantum of bonus shall be set out in the plan for each fiscal year and shall be
selected at the sole discretion of the Board of Directors of ANSYS Inc. and may
vary from year to year.
Bonuses are paid on an earned quarterly basis. Employee participation will
commence in Q2 2003 (April 1, 2003). If the Company terminates the Employee for
any reason during the fiscal year no prorated bonus shall be deemed earned
except in respect of a completed quarter prior to the termination. The 30 day
period of notice of termination that is given in accordance with Section 10.4(a)
shall be utilized in determining any right to the bonus under the plan but no
other period of notice or severance which is given under this Agreement shall be
utilized in determining any right to the bonus.
In addition to the above bonus plan eligibility, the Company will issue, April
1, 2003, a one time $US5,000 bonus, less all statutory source deductions, as a
means to offset current internal equity issues relative to the Employee's
current base salary.
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Recognizing bonus eligibility and timing issues relative to the Employee's
current annual bonus program with AEA Canada, the Employee remains eligible for
the annual bonus payout under that program for fiscal period beginning April 1,
2002 through March 31, 2003, and such amount will be determined by the Chief
Executive Officer and the Board of Directors of the Company, in accordance with
the agreed objectives, measurement, and payouts defined in Exhibit D.
Benefit Entitlement Not Limited.
Subject to applicable law, the Employee shall be eligible to participate in
other bonus, stock option, stock purchase and other incentive programs or plans
or benefits for the Canadian employees established from time to time in
accordance with the terms of such plans and at the discretion of the Board of
Directors of the Company.
ARTICLE 7
VACATION
The Employee shall be entitled to an annual vacation of up to 20 days vacation
at times to be mutually agreed upon with the President, Chief Executive Officer
(CEO) of the Company. Vacation will be accrued on a monthly basis at the rate of
1.67 days per month. The Employee shall be eligible to participate in the
vacation plan (the "Current Plan") in accordance with the terms of the Current
Plan. In the event that the Company establishes a new vacation plan (the "New
Plan") which is different from the Current Plan, the Employee shall at the time
the Company institutes such New Plan, participate in the New Plan, subject to
the terms thereof. The Employee will continue, under the New Plan, to be
entitled to a minimum of 20 days vacation.
ARTICLE 8
REIMBURSEMENT OF EXPENSES
The Employee shall be reimbursed for all reasonable traveling and out-of-pocket
expenses incurred in the discharge of his duties under this Agreement, to the
extent authorized pursuant to the applicable Company travel policy (as such may
be amended from time to time, provided that the Employee accounts for those
costs and expenses in the manner prescribed from time to time by the Company).
ARTICLE 9
REASSIGNMENT OF DUTIES
The Employee acknowledges that, from time to time, it may become necessary to
reorganize the Company, its affiliates and related companies, or to reassign
Employee's duties and positions. Accordingly, the Company may, upon written
notice to the Employee, assign this Agreement to any affiliate or related
company in connection with a transfer of all or substantially all of the assets
of the Company to such affiliate or related company. In addition, the Company
may from time to time reassign the Employee to another position or change the
Employee's position or duties, provided that such reassignments or changes are
reasonable, having regard to the experience and position of the Employee (such
reassignment and changes being referred to as "Reasonable Changes"). The
Employee shall accept any such assignment of this Agreement and any Reasonable
Changes, and no such assignment of this Agreement or Reasonable Changes shall
constitute a termination, a constructive dismissal or a deemed termination of
the Employee's employment with the Company.
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ARTICLE 10
TERMINATION OF EMPLOYMENT BY THE COMPANY
Section 10.1 Death or Disability.
Subject to an earlier termination under this Section 10, the employment of the
Employee under this Agreement shall automatically terminate on the first to
occur of the following dates:
(a) the date of death of the Employee; and
(b) the date on which the Company gives the Employee notice of termination
on account of his Disability (as defined below).
Section 10.2 Termination for Disability.
(a) The Company shall be entitled at any time, upon notice to the
Employee, to terminate the employment of the Employee on account of
Disability. Such termination shall take effect upon delivery of such
notice and the Employee shall not be entitled to any additional notice
or any payment in lieu of notice.
(b) For the purposes of this Agreement, the term "Disability" means a
physical or mental condition, which prevents the Employee from
substantially performing his customary duties at his customary
standard for a period of six months whether or not consecutive in any
12-month period or as otherwise mutually agreed by Company and
Employee. The Employee agrees to submit to medical examinations by an
independent medical practitioner mutually acceptable to the parties to
determine whether a Disability exists pursuant to reasonable requests
made by the Company from time to time. If the employment of the
Employee is terminated on account of Disability, the Employee shall
continue to be eligible for long-term disability benefits in
accordance with the provisions of any long-term disability policy
purchased by the Company on behalf of the Employee.
Section 10.3 Termination for Cause.
Notwithstanding anything herein contained, the Company shall be entitled at any
time, upon written notice to the Employee, to terminate the employment of the
Employee for Cause. Such termination shall take effect upon delivery of such
notice, and the Employee shall not be entitled to any additional notice or any
payment in lieu of notice. For purposes of this Agreement, the term "Cause"
means fraud or dishonesty, breach of fiduciary duty, criminal convictions that
might reasonably be expected to impair his ability to perform his duties
effectively, gross misconduct, willful failure to perform the duties and
responsibilities set forth in this Agreement, or any material and continuing
breach of this Agreement that has not been cured by the Employee to the
satisfaction of the Company after the giving of reasonable notice (a "Cure
Notice") of 30 days which Cure Notice shall set out the breach, provided,
however, that the Company shall not be required to give a Cure Notice in respect
of the Employee's fraud, dishonesty, breach of fiduciary duty, gross misconduct
or criminal convictions.
Section 10.4 Termination for other than Cause, and other than as a result of
Material Change of Ownership - (Section 10.5).
(a) In the absence of Cause, the Company may terminate the employment of
the Employee at any time by providing to the Employee 30 days written
notice or such greater period of notice as required by employment
standards legislation (the "Notice Period"). In lieu of notice, the
Company may pay the salary and any other amounts required by statute
that are otherwise payable during the Notice Period, less applicable
taxes and withholdings. The Employee shall also be entitled to
vacation pay, if any, accrued to the date of termination together with
expense reimbursement to the date of termination. The Company shall
also pay to the Employee severance pay equal to 12 month's base salary
at the time of termination which payment shall include any severance
pay required by the Employment Standards Act (Ontario) as amended, or
any similar legislation which may be in force from time to time.
Benefits will be governed by Section 6.3.
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(b) If the Employee wishes to terminate his employment, the Employee is to
provide one month's written notice to the Company. All salary and
benefits will be paid as per standard employment conditions during the
notice period. Bonuses will be paid in accordance with Section 6.4,
there will be no prorating of bonuses. Any unused accrued vacation
would be paid out up to the actual date of termination of employment
together with expense reimbursement to the date of termination.
Section 10.5 Termination as a Result of Material Change in Ownership.
If Employee is terminated (other than for Cause) by the Company as a result of a
material change in ownership of the Company, the Company will, provide notice,
severance pay and benefits in accordance with the provisions of Section 10.4
above, together with expense reimbursement to the date of termination. The
payment provided for in Section 10.5 hereof includes any notice and severance
pay required by Employment Standards Act (Ontario), as amended, or any similar
legislation which may be in force from time to time.
Section 10.6 Upon Termination of Employment.
Except as specifically outlined in the specific sections of Section 10 or as
otherwise required by statute, the Employee shall not be entitled to any further
amounts upon termination of employment.
Section 10.7 Limitation.
(a) Upon compliance by the Company with the provisions of Sections 10.2,
10.3, 10.4(a) or 10.5, as applicable, the Employee (or his estate, in
the case of termination on death) shall have no claim against the
Company for damages for failure to give reasonable notice, pay in lieu
of notice or severance pay whether under statute, at common law or
otherwise.
(b) The Employee agrees that the said notice periods or pay in lieu
specified in Section 10.4 (a) and 10.5 are deemed conclusively to be
reasonable notice or payment in lieu of reasonable notice in
circumstances contemplated by such Sections and are made in
recognition of the Employee's service. The Employee acknowledges that
the Company has drawn his attention to the provisions contained herein
and that the Employee has been given the opportunity to seek
independent legal advice prior to executing this Agreement.
ARTICLE 11
OWNERSHIP OF INTELLECTUAL PROPERTY, NON-DISCLOSURE AND CONFIDENTIALITY; NON-
COMPETITION AND NON-SOLICITATION
It is a condition of Employment that you sign the Proprietary Information and
Employee Inventions Agreement attached as Exhibit C.
ARTICLE 12
RESTRICTIONS REASONABLE
The parties acknowledge and agree that the restrictions imposed in the provision
of Exhibit C (Proprietary Information and Employee Inventions Agreement) hereof
are fair and reasonable and are reasonably required for the protection of the
Company, and the goodwill and business of the Company. If any of the covenants
contained herein, or any part thereof, is hereafter construed to be invalid or
unenforceable, it is the intention of the parties that the same shall not affect
the remainder of the covenant or covenants, which shall be given full effect,
without regard to the invalid portions.
ARTICLE 13
ENFORCEMENT AND INJUNCTIVE RELIEF
In the event of a breach or anticipated beach by the Employee of the provisions
of Exhibit C (Proprietary Information and Employee Inventions Agreement) hereof,
the Company shall be entitled to immediate injunctive relief and shall have the
right to have provisions of this Agreement specifically enforced by any court of
competent jurisdiction without having to prove the inadequacy of any other
available remedies, it being acknowledged and agreed that any such breach will
cause irreparable harm to the Company and that damages will not provide an
adequate remedy to the Company. In addition, the Company may take all such other
actions and remedies available to it in law or in equity and shall be entitled
to such damages as it can show it has sustained by reason of such breach.
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ARTICLE 14
NO WAIVER
The failure of any party to require performance by another party of any
provisions hereunder shall in no way affect the right of that party thereafter
to enforce the same, nor shall it affect any other party's right to enforce the
same, or to enforce any of the provisions in the Agreement; nor shall the waiver
by either party of the breach of any provision here be taken or held to be a
waiver of any subsequent breach of such provision or as a waiver of the
provision itself. No provision of this Agreement may be waived by either party
without the prior written consent of the other party.
ARTICLE 15
MODIFICATION
This Agreement may not be cancelled, changed, modified or amended, and no
cancellation, change, modification or amendment shall be effective or binding,
unless in writing and signed by all parties to this Agreement.
ARTICLE 16
GOVERNING LAW AND ATTORNMENT
This Agreement shall be construed in accordance with the laws of the Province of
Ontario and the laws of Canada applicable therein and shall be treated in all
aspects as an Ontario contract. The parties hereby attorn to the laws of Ontario
and the jurisdiction of Ontario courts and agree not to dispute the competence
or jurisdiction of such courts.
ARTICLE 17
ENTIRE AGREEMENT
This Agreement represents the entire Agreement between the parties with respect
to the subject matter hereof and all prior agreements including the Former
Agreement, relating to the employment of the Employee, written, or oral, are
nullified and superseded by this Agreement.
ARTICLE 18
ASSIGNMENT
Subject to Section 9 hereof, this Agreement is not assignable and shall not be
assigned by the parties hereto without the prior written consent of all the
parties hereto, which consent shall not be unreasonably withheld.
ARTICLE 19
SUCCESSORS AND ASSIGNS
This Agreement shall be binding upon the heirs, successors and permitted assigns
of the parties hereto.
ARTICLE 20
HEADINGS
The headings contained in this Agreement are for reference purposes only and
shall not affect the meaning or interpretation of this Agreement.
IN WITNESS WHEREOF the parties have executed this Agreement on and as of the
effective date specified in Article 2:
/s/ Wilbur S. Harmon /s/ J. Christopher Reid
- --------------------------------------- --------------------------------------
Wilbur S. Harmon J. Christopher Reid
Vice President Human Resources
ANSYS Inc.
- --------------------------------------- --------------------------------------
Date: February 26, 2003 Date: February 26, 2003
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