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Exhibit 10.33
SEVERANCE AGREEMENT
This Severance Agreement (the "Agreement") is made and entered into
effective as of October 31, 1997, by and between Xxxx Xxxxx (the "Executive")
and MetaCreations Corporation, a Delaware corporation (the "Company").
R E C I T A L S
A. The Board of Directors of the Company (the "Board") believes that it
is in the best interests of the Company and its stockholders to provide the
Executive with certain severance benefits should Executive's employment with the
Company terminate under certain circumstances. Such benefits will provide
Executive with enhanced financial security and with sufficient incentive and
encouragement for Executive to remain with the Company.
B. To accomplish the foregoing objectives, the Board has directed the
Company, upon execution of this Agreement by the Executive, to agree to the
terms provided herein.
C. Certain capitalized terms used in the Agreement are defined in
Section 7 below.
A G R E E M E N T
In consideration of the mutual covenants herein contained, and in
consideration of the continuing employment of Executive by the Company, the
parties agree as follows:
1. Duties and Scope of Employment. The Company shall employ the
Executive in the position of Senior Vice President, Sales and Marketing, as such
position has been defined in terms of responsibilities and compensation as of
the effective date of this Agreement. The Executive shall comply with and be
bound by the Company's operating policies, procedures and practices from time to
time in effect during his employment. During the term of the Executive's
employment with the Company, the Executive shall continue to devote his full
time, skill and attention to his duties and responsibilities, and shall perform
them faithfully, diligently and competently, and the Executive shall use his
best efforts to further the business of the Company and its affiliated entities.
2. Base Compensation. The Company shall pay the Executive as
compensation for his services a base salary at the annualized rate of $234,000.
Such salary shall be paid periodically in accordance with normal Company payroll
practices. The annual compensation specified in this Section 2, together with
any increases in such compensation as the Board may direct from time to time, is
referred to in this Agreement as "Base Compensation."
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3. Executive Benefits. The Executive shall be eligible to participate
in the Executive benefit plans and executive compensation programs maintained by
the Company applicable to other key executives of the Company, including
(without limitation) retirement plans, savings or profit-sharing plans, stock
option, incentive or other bonus plans, life, disability, health, accident and
other insurance programs, paid vacations, and similar plans or programs, subject
in each case to the generally applicable terms and conditions of the applicable
plan or program in question and to the sole determination of the Board or any
committee administering such plan or program.
4. At-Will Employment/Term of Agreement.
(a) At-Will Employment. The Company and the Executive acknowledge
that the Executive's employment is and shall continue to be at-will, as defined
under applicable law. If the Executive's employment terminates for any reason,
the Executive shall not be entitled to any payments, benefits, damages, awards
or compensation other than as provided by this Agreement, or as may otherwise be
available in accordance with the Company's established employee plans and
policies at the time of termination.
(b) Term of Agreement. The terms of this Agreement shall terminate
on the date that all obligations of the parties hereunder have been satisfied. A
termination of the terms of this Agreement pursuant to this Section shall be
effective for all purposes.
5. Severance Benefits.
(a) Involuntary Termination. Subject to Section 8 below, if the
Executive's employment terminates as a result of Involuntary Termination within
one (1) year after a Change of Control, the Executive shall be entitled to
receive the following severance benefits:
(i) Severance Payments. A severance payment equal to nine
(9) months of the Executive's Base Compensation for the Company's fiscal year
then in effect or if greater, the Executive's Base Compensation for the
Company's fiscal year immediately preceding the date of such termination. Any
severance payments to which the Executive is entitled pursuant to this Section
5(a)(i) shall be paid to the Executive (or to the Executive's estate or
beneficiary in the event of the Executive's death) in accordance with the
Company's standard payroll practices.
(ii) Medical Benefits. The Executive shall receive 100%
Company-paid health insurance coverage as provided to such Executive immediately
prior to the Executive's termination or such comparable alternative insurance
coverage (including additional compensation to fund such coverage) as the
Company may, in its discretion, determine to be sufficient to satisfy its
obligations to provide continued health insurance coverage hereunder (the
"Company-Paid Coverage"). If the Executive's health insurance coverage included
the Executive's dependents immediately prior to the Executive's termination,
such dependent shall also be covered at Company expense. Company-Paid Coverage
shall continue until the earlier of (a) this Agreement terminates pursuant to
Section 4(b) or (b) the date the Executive becomes covered under another
employer's health insurance plan. For purposes
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of the continuation health coverage required under COBRA, the date of the
"qualifying event" giving rise to the Executive's COBRA election period (and
that of his "qualifying beneficiaries") shall be the last date on which the
Executive receives Company-Paid Coverage under this Agreement.
(iii) Options. Subject to Sections 8 and 9 below, fifty
percent (50%) of the unvested portion of any stock option(s) held by the
Executive under the Company's stock option plans shall vest, and the Executive
shall have the right to exercise such additional vested portion of such stock
option(s), in addition to any portion of the option vested and exercisable prior
to the application of this Section.
(b) Voluntary Resignation; Termination For Cause. If the Executive
voluntarily resigns from the Company (other than as an Involuntary Termination),
or if the Company terminates the Executive's employment for Cause, then the
Executive shall not be entitled to receive severance or other benefits pursuant
to this Agreement.
(c) Disability; Death. If the Company terminates the Executive's
employment as a result of the Executive's Disability or if the Executive's
employment terminates due to the death of the Executive, then the Executive
shall not be entitled to receive severance or other benefits pursuant to this
Agreement. However, Executive shall remain eligible for those severance and
other benefits (if any) as may then be available under the Company's then
existing severance and benefits plans and policies at the time of death.
6. Covenants Not to Compete and Not to Solicit.
(a) Until the Executive has received all Severance Payments as
provided in Section 5, upon the termination of the Executive's employment with
the Company for any reason, the Executive agrees that he shall not, on his own
behalf, or as owner, manager, advisor, principal, agent, partner, consultant,
director, officer, stockholder or employee of any business entity, or otherwise
in any territory in which the Company is actively engaged in business (1) open
or operate business which is in competition with any business of the Company,
(2) act as an employee, agent, advisor or consultant of any competitor of the
Company, (3) solicit or accept business from any of the Company's competitors,
(4) take any action to or do anything reasonably intended to divert business
from the Company or influence or attempt to influence any existing customers of
the Company to cease doing business with the Company or to alter its business
relationship with the Company, or (5) take any action or do anything reasonably
intended to influence any suppliers of the Company to cease doing business with
the Company or to alter its business relationship with the Company, Executive
further covenants and agrees that he will not for himself or on behalf of any
other person, partnership, firm, association or corporation in any territory
served by the Company, directly or indirectly solicit or accept business from
any of the Company's existing customers for the purchase or sale of products or
services of a like kind to those sold or provided the Company. The foregoing
covenant shall not be deemed to prohibit Executive from acquiring an investment
not more than one percent (1%) of the capital stock of a competing business,
whose stock is traded on a national securities exchange or through the automated
quotation system of a registered securities association.
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(b) Until fifteen (15) months after termination of Executive's
employment, upon the termination of Executive's employment with the Company for
any reason, the Executive agrees that he shall not either directly or indirectly
solicit, induce, attempt to hire, recruit, encourage, take away, hire any
employee of the Company or cause an employee to leave their employment either
for Executive or for any other entity or person.
(c) The Executive represents that he (i) is familiar with the
foregoing covenants not to compete and not to solicit, and (ii) is fully aware
of his obligations hereunder, including, without limitation, the reasonableness
of the length of time, scope and geographic coverage of these covenants.
7. Definition of Terms. The following terms referred to in this
Agreement shall have the following meanings:
(a) Cause. "Cause" shall mean (i) any act of personal dishonesty
taken by the Executive in connection with his responsibilities as an Executive
and intended to result in substantial personal enrichment of the Executive, (ii)
conviction of a felony that is injurious to the Company, (iii) a willful act by
the Executive which constitutes gross misconduct and which is injurious to the
Company, and (iv) continued violations by the Executive of the Executive's
obligations under Section 1 of this Agreement that are demonstrably willful and
deliberate on the Executive's part after there has been delivered to the
Executive a written demand for performance from the Company which describes the
basis for the Company's belief that the Executive has not substantially
performed his duties.
(b) Change of Control. "Change of Control" shall mean the
occurrence of any of the following events:
(i) The acquisition by any "person" (as such term is used in
Sections 13(d) and 14(d) of the Exchange Act) (other than the Company or a
person that directly or indirectly controls, is controlled by, or is under
common control with, the Company) of the "beneficial ownership" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the
Company representing fifty percent (50%) or more of the total voting power
represented by the Company's then outstanding voting securities; or
(ii) A change in the composition of the Board of Directors of
the Company occurring within a two-year period, as a result of which fewer than
a majority of the directors are Incumbent Directors. "Incumbent Directors" shall
mean directors who either (A) are directors of the Company as of the date
hereof, or (B) are elected, or nominated for election, to the Board of Directors
of the Company with the affirmative votes of at least a majority of the
Incumbent Directors at the time of such election or nomination (but shall not
include an individual not otherwise an Incumbent Director whose election or
nomination is in connection with an actual or threatened proxy contest relating
to the election of directors to the Company); or
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(iii) A merger or consolidation of the Company with any other
corporation, other than a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) at least fifty percent (50%) of
the total voting power represented by the voting securities of the Company or
such surviving entity outstanding immediately after such merger or
consolidation, or the approval by the stockholders of the Company of a plan of
complete liquidation of the Company or of an agreement for the sale or
disposition by the Company of all or substantially all the Company's assets; or
(iv) The hiring of a new chief executive officer for the
Company.
(c) Disability. "Disability" shall mean that the Executive has
been unable to perform his duties under this Agreement as the result of his
incapacity due to physical or mental illness, and such inability, at least
ninety (90) days after its commencement, is determined to be total and permanent
by a physician selected by the Company or its insurers and acceptable to the
Executive or the Executive's legal representative (such Agreement as to
acceptability not to be unreasonably withheld). Termination resulting from
Disability may only be effected after at least 30 days' written notice by the
Company of its intention to terminate the Executive's employment. In the event
that the Executive resumes the performance of substantially all of his duties
hereunder before the termination of his employment becomes effective, the notice
of intent to terminate shall automatically be deemed to have been revoked.
(d) Exchange Act. "Exchange Act" shall mean the Securities
Exchange Act of 1934, as amended.
(e) Involuntary Termination. "Involuntary Termination" shall mean:
(i) without the Executive's express written consent, the
significant reduction of the Executive's duties, authority or responsibilities
relative to the Executive's duties, authority and responsibilities as in effect
immediately prior to such reduction or the assignment to the Executive of such
reduced duties, authority or responsibilities;
(ii) without the Executive's express written consent, a
reduction by the Company in the Base Compensation of the Executive as in effect
immediately prior to such reduction other than a reduction which is part of, and
generally consistent with, a general reduction of officer salaries;
(iii) a material reduction by the Company in the kind or level
of Executive benefits to which the Executive is entitled immediately prior to
such reduction with the result that the Executive's overall benefits package is
significantly reduced, other than a reduction applicable to officers of the
company generally; or
(iv) the failure of the Company to obtain the assumption of
this agreement by any successors contemplated in Section 10 below.
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8. Limitation on Payments.
(a) In the event that the severance and other benefits provided
for in this Agreement or otherwise payable to the Executive (i) constitute
"parachute payments" within the meaning of Section 280G of the Internal Revenue
Code of 1986, as amended (the "Code") and (ii) but for this Section would be
subject to the excise tax imposed by Section 4999 of the Code, then the
Executive's severance benefits under Section 5 shall be payable either (i) in
full, or (ii) as to such lesser amount which would result in no portion of such
severance benefits being subject to excise tax under Section 4999 of the Code,
whichever of the foregoing amounts, taking into account the applicable federal,
state and local income taxes and the excise tax imposed by Section 4999, results
in the receipt by the Executive on an after-tax basis, of the greatest amount of
severance benefits under this Agreement, notwithstanding that all or some
portion of such severance benefits may be taxable under Section 4999 of the
Code.
(b) If a reduction in the payments and benefits that would
otherwise be paid or provided to the Executive under the terms of this Agreement
is necessary to comply with the provisions of Section 8(a), the Executive shall
be entitled to select which payments or benefits will be reduced and the manner
and method of any such reduction of such payments or benefits (including but not
limited to the number of options that would vest under Sections 5(a)(iii)
subject to reasonable limitations (including, for example, express provisions
under the Company's benefit plans) (so long as the requirements of Section 8(a)
are met). Within thirty (30) days after the amount of any required reduction in
payments and benefits is finally determined in accordance with the provisions of
Section 8(c), the Executive shall notify the Company in writing regarding which
payments or benefits are to be reduced. If no notification is given by the
Executive, the Company will determine which amounts to reduce. If, as a result
of any reduction required by Section 8(a), amounts previously paid to the
Executive exceed the amount to which the Executive is entitled, the Executive
will promptly return the excess amount to the Company.
(c) Unless the Company and the Executive otherwise agree in
writing, any determination required under this Section shall be made in writing
by the Company's independent public accountants (the "Accountants"), whose
determination shall be conclusive and binding upon the Executive and the Company
for all purposes. For purposes of making the calculations required by this
Section, the Accountants may make reasonable assumptions and approximations
concerning applicable taxes and may rely on reasonable, good faith
interpretations concerning the application of Sections 280G and 4999 of the
Code. The Company and the Executive shall furnish to the Accountants such
information and documents as the Accountants may reasonably request in order to
make a determination under this Section. The Company shall bear all costs the
Accountants may reasonably incur in connection with any calculations
contemplated by this Section.
9. Certain Business Combinations. In the event it is determined by the
Board, upon receipt of a written opinion of the Company's independent public
accountants, that the enforcement of any Section or subsection of this
Agreement, including, but not limited to, Section 5(a)(iii) hereof, which allows
for the acceleration of vesting of options to purchase shares of the Company's
common stock upon a
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termination in connection with a Change of Control, would preclude accounting
for any proposed business combination of the Company involving a Change of
Control as a pooling of interests, and the Board otherwise desires to approve
such a proposed business transaction which requires as a condition to the
closing of such transaction that it be accounted for as a pooling of interests,
then any such Section of this Agreement shall be null and void, but only if the
absence of enforcement of such Section would preserve the pooling treatment. In
the event that the acceleration of vesting of options to purchase shares of the
Company's Common Stock is null and void as a result of this Section, then the
Company shall provide the Executive with a cash payment equal to the value of
the acceleration; provided, however, that if such cash payment would prevent the
Change of Control from being accounted for as a pooling of interests, then no
such cash payment shall be made. For purposes of this Section, the Board's
determination shall require the unanimous approval of the disinterested Board
members.
10. Successors.
(a) Company's Successors. Any successor to the Company (whether
direct or indirect and whether by purchase, lease, merger, consolidation,
liquidation or otherwise) to all or substantially all of the Company's business
and assets shall assume the obligations under this Agreement and agree expressly
to perform the obligations under this Agreement in the same manner and to the
same extent as the Company would be required to perform such obligations in the
absence of a succession. For all purposes under this Agreement, the term
"Company" shall include any successor to the Company's business and assets which
executes and delivers the assumption agreement described in this Section or
which becomes bound by the terms of this Agreement by operation of law.
(b) Executive's Successors. The terms of this Agreement and all
rights of the Executive hereunder shall inure to the benefit of, and be
enforceable by, the Executive's personal or legal representatives, executors,
administrators, successors, heirs, devisees and legatees.
11. Notice.
(a) General. Notices and all other communications contemplated by
this Agreement shall be in writing and shall be deemed to have been duly given
when personally delivered or when mailed by U.S. registered or certified mail,
return receipt requested and postage prepaid. In the case of the Executive,
mailed notices shall be addressed to him at the home address which he most
recently communicated to the Company in writing. In the case of the Company,
mailed notices shall be addressed to its corporate headquarters, and all notices
shall be directed to the attention of its Secretary.
(b) Notice of Termination. Any termination by the Company for
Cause or by the Executive as a result of an Involuntary Termination shall be
communicated by a notice of termination to the other party hereto given in
accordance with Section 11(a) of this Agreement. Such notice shall indicate the
specific termination provision in this Agreement relied upon, shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination under the provision so indicated, and shall specify the termination
date (which shall be not more than 15 days after the giving of such notice). The
failure by the Executive to include in the notice any fact or circumstance which
contributes to a showing
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of Involuntary Termination shall not waive any right of the Executive hereunder
or preclude the Executive from asserting such fact or circumstance in enforcing
his rights hereunder.
12. Arbitration.
(a) The Company and Executive agree that any dispute or
controversy arising out of, relating to, or in connection with this Agreement,
the interpretation, validity, construction, performance, breach, or termination
hereof, or any of the matters herein released shall be settled by binding
arbitration to be held in Santa Xxxxxxx County, California in accordance with
the National Rules for the Resolution of Employment Disputes then in effect of
the American Arbitration Association (the "Rules"). The arbitrator may grant
injunctions or other relief in such dispute or controversy. The decision of the
arbitrator shall be final, conclusive and binding on the parties to the
arbitration. Judgment may be entered on the arbitrator's decision in any court
having jurisdiction.
(b) The arbitrator(s) shall apply California law to the merits of
any dispute or claim, without reference to conflicts of law rules. Executive
hereby consents to the personal jurisdiction of the state and federal courts
located in California for any action or proceeding arising from or relating to
this Agreement or relating to any arbitration in which the Parties are
participants.
(c) The Company and Executive shall each pay one-half of the costs
and expenses of such arbitration, and each shall separately pay its counsel fees
and expenses, unless otherwise required by law.
(d) EXECUTIVE HAS READ AND UNDERSTANDS THIS SECTION, WHICH
DISCUSSES ARBITRATION. EXECUTIVE UNDERSTANDS THAT BY SIGNING THIS AGREEMENT,
EXECUTIVE AGREES TO SUBMIT ANY CLAIMS ARISING OUT OF, RELATING TO, OR IN
CONNECTION WITH THIS AGREEMENT, THE INTERPRETATION, VALIDITY, CONSTRUCTION,
PERFORMANCE, BREACH OR TERMINATION THEREOF, OR ANY OF THE MATTERS HEREIN TO
BINDING ARBITRATION, AND THAT THIS ARBITRATION CLAUSE CONSTITUTES A WAIVER OF
EXECUTIVE'S RIGHT TO A JURY TRIAL AND RELATES TO THE RESOLUTION OF ALL DISPUTES
RELATING TO ALL ASPECTS OF THIS SEVERANCE AGREEMENT AND RELEASE OF ALL CLAIMS.
13. Miscellaneous Provisions.
(a) Waiver. No provision of this Agreement shall be modified,
waived or discharged unless the modification, waiver or discharge is agreed to
in writing and signed by the Executive and by an authorized officer of the
Company (other than the Executive). No waiver by either party of any breach of,
or of compliance with, any condition or provision of this Agreement by the other
party shall be considered a waiver of any other condition or provision or of the
same condition or provision at another time.
(b) Whole Agreement. Except for the Executive's stock option
agreements, no agreements, representations or understandings (whether oral or
written and whether express or implied) which are
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not expressly set forth in this Agreement have been made or entered into by
either party with respect to the subject matter hereof.
(c) Choice of Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
California.
(d) Severability. The invalidity or unenforceability of any
provision or provisions of this Agreement shall not affect the validity or
enforceability of any other provision hereof, which shall remain in full force
and effect.
(e) No Assignment of Benefits. The rights of any person to
payments or benefits under this Agreement shall not be made subject to option or
assignment, either by voluntary or involuntary assignment or by operation of
law, including (without limitation) bankruptcy, garnishment, attachment or other
creditor's process, and any action in violation of this Section 13 shall be
void.
(f) Employment Taxes. All payments made pursuant to this Agreement
will be subject to withholding of applicable income and employment taxes.
(g) Assignment by Company. The Company may assign its rights under
this Agreement to an affiliate, and an affiliate may assign its rights under
this Agreement to another affiliate of the Company or to the Company; provided,
however, that no assignment shall be made if the net worth of the assignee is
less than the net worth of the Company at the time of assignment. In the case of
any such assignment, the term "Company" when used in a section of this Agreement
shall mean the corporation that actually employs the Executive.
(h) Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which together will
constitute one and the same instrument.
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IN WITNESS WHEREOF, each of the parties has executed this Agreement, in
the case of the Company by its duly authorized officer, as of the day and year
first above written.
COMPANY: METACREATIONS CORPORATION
/s/XXXXXXX X. XXXX III
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By
Director - Compensation Committee
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Title
EXECUTIVE: XXXX XXXXX
/s/XXXX XXXXX
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Signature
Xxxx Xxxxx
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Printed Name
SIGNATURE PAGE OF SEVERANCE AGREEMENT
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