EXHIBIT 10.22
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EMPLOYMENT AGREEMENT
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AGREEMENT, dated as of December 31, 1996 by and between MetaTools, Inc., a
Delaware corporation (the "Company"), and Xxxxxxxxx Xxxxxx ("Executive").
WHEREAS, concurrently with the execution and delivery of this Agreement, the
Company is acquiring by means of a merger transaction all of the shares of
capital stock to be issued and outstanding of Real Time Geometry Corp., a
Delaware corporation ("RTG"), of which Executive has been an executive officer
and a holder of shares of capital stock; and
WHEREAS, the Company desires to employ Executive as an executive officer of
the Company, and Executive desires so to serve the Company, upon the terms and
conditions contained in this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the parties hereto agree as follows:
1. Prior Agreements. Executive hereby represents and warrants to the Company
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that all agreements, understandings or arrangements between Executive and any
other person or entity contain no terms that would be breached by Executive as a
result of, or that would in any way preclude or prohibit Executive from,
entering into this Agreement with the Company or performing any of the
responsibilities provided for in this Agreement.
2. Employment and Responsibilities.
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(a) General. Upon the terms and conditions herein set forth, the Company
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hereby agrees to employ Executive and Executive agrees to serve as Vice
President, Senior Scientist of the Company, for the Term of Employment (as
defined in Section 3 hereof). In such capacity, Executive shall be responsible
for the research and development activities and other operations of the
Princeton Laboratory of RTG and shall have authority over the hiring and
terminating of personnel of RTG or the Company employed at the Princeton
Laboratory and over all other activities conducted by or at the Princeton
Laboratory, provided that he shall exercise such authority consistent with the
budget for the Princeton Laboratory in effect from time to time. It is the
Company's present intention that the current activity levels of the Princeton
Laboratory be maintained during the Term of Employment.
(b) Nature of Services. Except as provided in Sections 2(c) and 2(d)
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hereof, during the Term of Employment Executive shall, except as from time to
time may be otherwise agreed to in writing by the Company, devote his full time
and attention during
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normal business hours to carrying out his responsibilities hereunder, shall
diligently serve the Company, shall in all respects conform to, comply with and
execute the lawful directions and instructions given to him by the Company, and
shall diligently use his best efforts, skills and abilities to promote the
interests of the Company.
(c) Covenant Not to Compete.
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(i) Executive shall sign a Noncompetition Agreement concurrently with
this Agreement and shall abide by the terms and conditions of the Noncompetition
Agreement. Failure to abide by the terms of the Noncompetition Agreement shall
be considered a material breach of this Agreement.
(ii) Executive represents that he (i) is familiar with the foregoing
covenants not to solicit and not to compete, 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.
(iii) Executive shall sign and abide by the Company's standard
invention assignment agreement.
(d) Charitable or other Activities. Subject to the restrictions contained
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in Section 2(c) hereof, Executive may (i) serve on corporate, civic or
charitable boards or committees, (ii) deliver lectures, fulfill speaking
engagements or teach at educational institutions, and (iii) manage personal and
immediate family investments, so long as such activities do not interfere with
the fulfillment of Executive's responsibilities hereunder.
(e) Place of Performance. The principal place of employment of
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Executive shall be at offices maintained by the Company (or RTG) in Princeton,
New Jersey or another location within 10 miles of Princeton, New Jersey, and the
Company understands that Executive and his family shall have their permanent
residence in or around Princeton, New Jersey. Subject to the foregoing,
Executive realizes that his responsibilities hereunder shall require travel to
and the rendering of services in Carpenteria, California, where the headquarters
offices of the Company are located, and other locations.
3. Term of Employment. Subject to the provisions of Section 5 hereof,
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Executive's term of employment under this Agreement shall commence on January 1,
1997 (the "Commencement Date") and shall terminate on December 31, 1999 (the
"Term of Employment").
4. Compensation and Other Benefits. The Company shall pay and provide the
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following compensation and other benefits to Executive during the Term of
Employment (except as otherwise provided in Section 4(b) hereof) for the
services to be provided hereunder:
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(a) Base Salary. The Company shall pay to Executive a base salary (the
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"Base Salary") at the rate of $150,000 per annum, payable in approximately equal
installments in accordance with the customary payroll practices of the Company.
If the rate per annum of the base salary paid to Executive is increased during
the Term of Employment, such increased rate shall thereafter constitute the Base
Salary for all purposes of this Agreement.
(b) Stock Option and Employee Benefit Plans. During the Term of
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Employment, Executive shall be entitled to participate in such stock option,
pension, retirement, life insurance, health and other welfare plans, programs
and benefits as are maintained by the Company from time to time for the benefit
of its executive employees (the "Plans").
(c) Vacation; Fringe Benefits. During the Term of Employment,
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Executive shall be entitled to four weeks of vacation per year and to any other
fringe benefits and perquisites that are accorded to its executive employees
generally by the Company from time to time (the "Fringe Benefits").
(d) Carpenteria Living Stipend; Reimbursement of Expenses. As referred
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to in Section 2(e) hereof, the parties anticipate that Executive's
responsibilities hereunder shall require the rendering of services in
Carpenteria, California, where the headquarters offices of the Company are
located. The Company shall pay Executive a monthly stipend of $3,000 in lieu of
reimbursement of Executive for accommodations, meals and other living expenses
(but not travel expenses) in respect of his rendering of services in
Carpenteria, California (the "Carpenteria Living Expenses"). The parties also
anticipate that in the course of fulfilling his responsibilities under this
Agreement, Executive will incur other reasonable travel, entertainment and other
out-of-pocket business expenses for the account of the Company. Executive shall
be entitled to reimbursement for all reasonable out-of-pocket business expenses
so incurred (other than Carpenteria Living Expenses), upon submission to the
Company of an adequate, written accounting which complies with the Company's
policies regarding reimbursement for business expenses. The travel expense
policy applicable to Executive shall be that applicable to the most senior
executives of the Company.
(e) Company Loan. At the Closing, the Company shall loan to Employee the
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principal amount of $2,000,000 pursuant to a note and other instruments and
agreements as shall be consistent with the terms of this Section 4(e) (the
"Loan"). The Loan shall be repayable on January 15, 2000, shall be prepayable
without penalty in whole or in part (including all accrued interest on the
principal amount prepaid), and shall bear interest at the Applicable Federal
Rate under Section 1274(d) of the Internal Revenue Code of 1986, as amended, as
reported by the Internal Revenue Service, on the date the loan is made, payable
at maturity or upon prepayment as aforesaid, and compounded semi-annually. The
Loan shall be secured by shares of Common Stock owned by Executive having a fair
market value on the date the Loan is made of not less than $2,000,000, pursuant
to arrangements that permit the release of such shares in order to permit the
sale or pledge thereof to raise after-tax proceeds to pay or prepay principal
and accrued interest on the Loan at maturity or from time
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to time before maturity. Executive shall not be personally obligated to pay any
principal of or interest on the Loan nor shall any of his assets secure payment
of the principal of and interest on the Loan, except for such shares, solely
from which the Company shall seek to realize payment in the event of any failure
of payment on the part of Executive.
5. Termination of the Term of Employment.
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(a) Termination for Cause or Without Good Reason.
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(i) The Company shall have the right to terminate the Term of
Employment for Cause (as defined in Section 5(a)(ii) hereof) prior to December
31, 1999, and Executive shall have the right to terminate the Term of Employment
without Good Reason (as defined in Section 5(b)(ii) hereof) prior to December
31, 1999. If the Term of Employment is so terminated, Executive shall be
entitled to receive payment of the pro rata portion of the Base Salary through
and including the date of such termination and payment when due of the non-
competition consideration (the "Non-Competition Payments") during the non-
competition period set forth in the Non-Competition Agreement, dated as of
December 20, 1996, by and between Executive and the Company (the "NonCompetition
Agreement") unless Executive is in breach of the Non-Competition Agreement.
Executive shall not be eligible to receive Base Salary or to participate in any
of the Plans or to receive any of the Fringe Benefits with respect to any
periods after the date of such termination, except for the right to receive
vested or statutorily available benefits under any of the Plans in which
Executive participates in accordance with the terms of such Plans.
(ii) "Cause" shall mean (A) The commission of an act of fraud or
embezzlement which results in loss, damage or injury to the Company, whether
directly or indirectly; (B) Executive's use of narcotics, liquor or illicit
drugs has had a detrimental effect on the performance of his employment
responsibilities, as determined by the Company's Board of Directors; (C) The
arrest, indictment or filing of charges relating to a felony or misdemeanor,
either in connection with the performance of the Executive's obligations to the
Company or which shall adversely affect the Executive's ability to perform such
obligations; (D) Gross negligence, dishonesty, breach of fiduciary duty or
material breach of the terms of the Noncompetition Agreement or any other
agreement in favor of the Company; or (E) The commission of an act which
constitutes unfair competition with the Company. "Good Reason" shall mean a
material breach by the Company of its obligations under this Agreement which is
not remedied within 30 calendar days after receipt by the Company of written
notice of such breach from Executive, including without limitation any
diminution in the responsibilities of Executive hereunder, any change in the
principal place of employment of Executive or any reduction of or failure to pay
when due the Base Salary.
(iii) The date of termination of the Term of Employment by the
Company under this Section 5(a) shall be the date specified in a written notice
of termination delivered by the Company to Executive (which date shall not be
earlier than the date of such written notice), unless no such date is specified
in such notice, in which case the date of termination shall be the date of
receipt by Executive of written notice of termination. The
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date of termination of the Term of Employment by Executive under this Section
5(a) shall be 60 calendar days after receipt by the Company of written notice of
termination.
(b) Termination Without Cause or for Good Reason.
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(i) The Company shall have the right to terminate the Term of
Employment without Cause prior to December 31, 1999, and Executive shall have
the right to terminate the Term of Employment for Good Reason prior to December
31, 1999. If the Term of Employment is so terminated, Executive shall be
entitled to receive (A) payment when due under Section 4 hereof of the Base
Salary and bonus, if any, through December 31, 1999, (B) payment when due of the
NonCompetition Payments pursuant to the Non-Competition Agreement, (C) such
benefits and payments as may be provided in the event of termination of
employment or resignation under the terms and provisions of any of the Plans in
which Executive participates, (D) reimbursement in accordance with Section 4(e)
hereof of all business expenses incurred through the date of termination, (E)
payment of all vacation pay not previously paid, and (F) continuation of such
coverage for Executive and Executive's immediate family as was in effect on the
date of termination under any of the Plans, or comparable benefits, commencing
on the date of such termination and ending on December 31, 1999; provided,
however, that such coverage shall cease, with respect to any or all of the
Plans, when Executive is covered by an employee plan or program providing
substantially similar or more generous benefits. After such termination of the
Term of Employment, Executive shall no longer be entitled to any of the Fringe
Benefits. Any obligations of the Company pursuant to this Section are contingent
on Executive signing a Release of Claims. A "Release of Claims" shall mean a
waiver by Executive, in a form reasonably satisfactory to the Company, of all
employment related obligations of and claims and causes of action against the
Company.
(ii) The amounts provided for in Section 5(b)(i) hereof are intended
to be liquidated damages in lieu of any other liability or obligations of the
Company in respect of termination of the Term of Employment by the Company
without Cause or by Executive for Good Reason.
(iii) The date of termination of the Term of Employment by the
Company under this Section 5(b) shall be the date specified in a written notice
of termination delivered by the Company to Executive (which date shall not be
earlier than the date of such written notice), unless no such date is specified
in such notice, in which case the date of termination shall be the date of
receipt by Executive of written notice of termination. The date of termination
of the Term of Employment by Executive under this Section 5(b) shall be 30
calendar days after receipt by the Company of written notice of termination,
provided that the Good Reason specified in such notice shall not have been
remedied by the Company during such 30 calendar day period.
(c) Death. If Executive dies during the Term of Employment, the Term of
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Employment and any non-competition period shall terminate on the date of death
and Executive's beneficiary or estate shall be entitled to receive (i) payment
of the pro rata portion
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of the Base Salary and the Non-Competition Payments pursuant to the Non-
Competition Agreement through and including the date of death, (ii) payment
(promptly, rather than when normally due) of a pro rata portion of any bonus
corresponding to the portion of the year occurring prior to the date of death,
and (iii) such survivor benefits and payments for Executive's family as
Executive is entitled to under any of the Plans.
(d) Disability. If Executive becomes Permanently Disabled (as defined
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below in this Section 5(d)) during the Term of Employment, the Company shall be
entitled to terminate the Term of Employment and any non-competition period by
written notice to Executive specifying the reason for and date of such
termination (which date shall not be earlier than the date of such written
notice). In the event of such termination, Executive shall be entitled to
receive (i) payment of the pro rata portion of the Base Salary and the Non-
Competition Payments pursuant to the Non-Competition Agreement through and
including the date of termination, (ii) payment (promptly, rather than when
normally due) of a pro rata portion of any bonus corresponding to the portion of
the year occurring prior to the date of death, and (iii) such disability and
other benefits and payments as Executive is entitled to under any of the Plans.
Executive shall be deemed "Permanently Disabled" when, and only when, he is, and
has for a period of six consecutive months been, unable by reason of illness or
accident to substantially perform his responsibilities hereunder.
6. Confidentiality; Company Property.
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(a) Confidentiality. Executive recognizes that the services to be
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performed by him hereunder are special, unique and extraordinary in that, by
reason of his employment hereunder and his association with the Company, he may
acquire or has acquired Confidential Information concerning the Company the use
or disclosure of which could cause the Company substantial loss which could not
be readily calculated and for which no remedy at law would be adequate.
Accordingly, Executive agrees that he will not at any time, except in
fulfillment of his responsibilities hereunder or with the written consent of the
Company disclose any Confidential Information that he may learn or has learned
by reason of his employment or association with the Company or use any such
information for his own personal benefit or gain. The term "Confidential
Information" means information not previously disclosed to the public or to the
trade by the Company's management with respect to the Company's products,
facilities and methods, trade secrets and other intellectual property, systems,
procedures, manuals, confidential reports, price information, customer lists,
financial information (including the revenues, costs or profits associated with
any of the Company's activities or products), business plans, prospects,
opportunities or other information. Confidential Information shall not include
information which (i) is or becomes generally available to the public other than
as a result of disclosure by Executive in violation of this Section 6(a) or (ii)
Executive is required to disclose under any applicable laws, regulations or
directives of any government agency, tribunal or authority having jurisdiction
in the matter or under subpoena or other process of law. Executive understands
and agrees that the rights and obligations set forth in this Section 6(a) shall
extend beyond the Term of Employment.
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(b) Company Property. Executive confirms that all Confidential
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Information is and shall remain the exclusive property of the Company. All
business records, papers and documents kept or made by Executive relating to the
business of the Company or any Confidential Information shall be and remain the
property of the Company. Upon the termination of the Term of Employment or upon
the request of the Company at any time, Executive shall promptly deliver to the
Company, and shall not without the prior express written consent of the Company
retain, all copies of (i) any written materials not previously made available to
the public, or (ii) records and documents made by Executive or coming into his
possession concerning any Confidential Information. Executive agrees that the
rights and obligations set forth in this Section 6(b) shall extend beyond the
Term of Employment.
(c) Injunctive Relief. Without intending to limit the remedies
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available to the Company, Executive acknowledges that a breach of any of the
covenants contained in this Section 6 may result in material irreparable injury
to the Company for which there is no adequate remedy at law, that it will not be
possible to measure damages for such injuries precisely and that, in the event
of such a breach or threat thereof, the Company shall be entitled to obtain a
temporary restraining order or a preliminary or permanent injunction restraining
Executive from engaging in activities prohibited by this Section 6.
7. Assignability.
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(a) By Executive. Neither this Agreement nor any right, duty,
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obligation or interest hereunder shall be assignable by Executive without the
prior express written consent of the Company.
(b) By the Company. This Agreement and all of the Company's rights and
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obligations hereunder may be assigned or transferred by it to any entity which
at any time by sale, merger, consolidation or other transaction acquires all or
substantially all of the assets of the Company or to which the Company transfers
all or substantially all of its assets, provided that any such assignee agrees
in writing to assume all of the obligations of the Company hereunder. Upon such
assignment or transfer, and upon such assumption, any such entity shall be
deemed to be substituted for all purposes as the Company hereunder.
8. Severability. If the final determination of a court of competent
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jurisdiction declares, after the expiration of the time within which judicial
review (if permitted) of such determination may be perfected, that any term
hereof is invalid or unenforceable, (a) the remaining terms hereof shall be
unimpaired and (b) the invalid or unenforceable term shall be deemed replaced by
a term that is valid and enforceable and that comes closest to implementing the
intention of the invalid or unenforceable term.
9. Amendment; Waiver. This Agreement may not be modified, amended or
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waived in any manner except by an instrument in writing signed by both parties
hereto. The waiver by either party of compliance with any provision of this
Agreement by the other party shall not operate or be construed as a waiver of
any other provision of this Agreement, or of any subsequent breach by such party
of any provision of this Agreement.
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10. Withholding. The Company shall be entitled to deduct and withhold all
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applicable Federal, state and local taxes which the Company is required to
deduct or withhold from any payments to or on behalf of Executive under this
Agreement.
11. Beneficiaries. Executive shall be entitled to select a beneficiary or
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beneficiaries to receive any compensation or benefit payable hereunder following
Executive's death, and may change such selection, in either case by giving the
Company written notice thereof.
12. Governing Law. All matters affecting this Agreement, including the
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validity thereof, are to be governed by, interpreted and construed in accordance
with the laws of the State of Delaware.
13. Notices. Any notice hereunder by either party to the other shall be
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given in writing by personal delivery or certified mail, return receipt
requested. If addressed to Executive, the notice shall be delivered or mailed to
Executive at the address specified in the Company's personnel records or such
other address as may be specified in a notice of change of address given by
Executive to the Company, or if addressed to the Company, the notice shall be
delivered or mailed to:
MetaTools, Inc.
0000 Xxxxxxxxxxx Xxxxxx
Xxxxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Chief Executive officer
or to such other address as may be specified in a notice of change of address
given by the Company to Executive. A notice shall be deemed given, if by
personal delivery, on the date of such delivery or, if by certified mail, on the
date shown on the applicable return receipt.
14. Merger. This Agreement supersedes all prior or contemporaneous
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negotiations, commitments and agreements between the Company and Executive with
respect to the subject matter hereof, and such other negotiations, commitments
and agreements will have no further force or effect.
15. Counterparts. This Agreement may be executed by either of the parties
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hereto in counterparts, each of which shall be deemed to be an original, but all
such counterparts shall together constitute one and the same instrument.
16. Headings. The headings of paragraphs herein are included solely for
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convenience of reference and shall not control the meaning or interpretation of
any of the provisions of this Agreement.
17. Effectiveness of Agreement. This Agreement shall not be effective unless
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the transaction contemplated by the Stock Purchase Agreement, dated as of
December 20, 1996
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(the "Stock Purchase Agreement") is consummated and the Stock Purchase Agreement
is signed by the Company and RTG (the "Purchase"). In the event the Purchase is
terminated pursuant to Section 8.1 of the Stock Purchase Agreement, this
Agreement shall be null and void.
18. Arbitration.
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(a) Except as provided in Section 6(c), Executive agrees, that any dispute
or controversy arising out of, relating to or in connection with this Agreement,
or the interpretation, validity, construction, performance, breach, or
termination thereof, shall be finally settled by binding arbitration to be held
in Santa Xxxxxxx County, California under the National Rules for the Resolution
of Employment Disputes supplemented by the Supplemental Procedures for Large
Complex Disputes, of the American Arbitration Association as then in effect (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 Delaware law to the merits of any
dispute or claim, without reference to rules of conflicts of law. The
arbitrations proceedings shall be governed by federal arbitration law and by the
Rules, without reference to state arbitration law.
(c) Except as is otherwise provided in Section 21 below, the Company and
the Executive shall each pay half of the costs and expenses of such arbitration.
(d) EXECUTIVE HAS READ AND UNDERSTANDS THIS SECTION 18, 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, ANY ASPECT OF THE EMPLOYER/EMPLOYEE RELATIONSHIP, OR THE
INTERPRETATION, VALIDITY, CONSTRUCTION, PERFORMANCE, BREACH OR TERMINATION
THEREOF 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 THE EMPLOYER/EMPLOYEE RELATIONSHIP.
19. No Mitigation; No Offset. In the event of any termination of employment
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under Section 5, Executive shall be under no obligation to seek other employment
and there shall be no offset against any amounts due Executive under this
Agreement on account of any remuneration attributable to any subsequent
employment that Executive may obtain. Any amounts due under Section 5 are in
the nature of severance payments, or liquidated damages, or both, and are not in
the nature of a penalty.
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20. Legal Fees and Other Expenses. In the event that a claim for payment or
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benefits under this Agreement is disputed, Executive shall be reimbursed for all
attorney fees and expenses incurred by Executive in pursuing such claim,
provided that Executive is successful as to a substantial part of the disputed
claim by reason of litigation, arbitration or settlement.
21. Indemnification. The Company agrees that if Executive is made a party or
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is threatened to be made a party to any action, suit or proceeding, whether
civil, criminal, administrative or investigative (a "Proceeding"), by reason of
the fact that he is or was a director or officer of the Company and/or any
affiliate or subsidiary or is or was serving at the request of the Company
and/or any affiliate or subsidiary as a director, officer, member, employee or
agent of another corporation or of a partnership, joint venture, trust or other
enterprise, including, without limitation, service with respect to employee
benefit plans, whether or not the basis of such Proceeding is alleged action in
an official capacity as a director, officer, member, employee or agent while
serving as a director, officer, member, employee or agent, he shall be
indemnified and held harmless by the Company to the fullest extent authorized by
Delaware law, including without limitation by the advancement of his expenses,
as the same exists or may hereafter be amended, against all expenses incurred or
suffered by Executive in connection therewith, and such indemnification shall
continue as to Executive even if Executive has ceased to be an officer, director
or agent, or is no longer employed by the Company and shall inure to the benefit
of his heirs, executors and administrators.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
pursuant to the authority of its Board of Directors, and Executive has executed
this Agreement, as of the day and year first written above.
METATOOLS, INC.
By: /s/ XXXX XXXXXXX
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Name Xxxx Xxxxxxx
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Title: Chairman and CEO
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/s/ XXXXXXXXX XXXXXX
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Xxxxxxxxx Xxxxxx
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