Employment Agreement - CoStar Realty Information Inc. and Lawrence J. Dressel
EMPLOYMENT AGREEMENT
This AGREEMENT (the "Agreement") dated as of the 29th day of
August, 2000 is executed by and between CoStar Realty Information, Inc, a
Delaware corporation (for purposes of this Agreement other than Section 9
hereof, the "Company"), and Lawrence J. Dressel (the "Employee"). The effective
date of Employee's employment with the Company shall be September 25, 2000 or
such other date as mutually agreed to by the Company and the Employee (the
"Effective Date").
The Company desires to employ the Employee to devote his full time
and best efforts to the business of the Company, and the Employee desires to be
so employed on the terms and conditions outlined below.
The parties agree as follows:
1. Employment. The Company agrees to employ Employee at the
Company's offices in the Washington, D.C. metropolitan area and Employee agrees
to be so employed, in the capacity of Chief Operating Officer. Employee shall
perform such functions and undertake such responsibilities as are assigned from
time to time by the Chief Executive Officer of the Company (the "Supervisor").
2. Term. The term of Employee's employment under this
Agreement shall commence on the Effective Date and shall continue for the
initial term of two (2) years (the "Initial Term"), and for automatic and
successive renewal terms of one (1) year each (each, a "Renewal Term" and
collectively, the "Renewal Terms"), unless either the Company or Employee elects
not to extend the term beyond the Initial Term or any Renewal Term (herein, the
Initial Term or a Renewal Term is sometimes referred to as the "Current Term")
and gives to the other party hereto written notice of termination at least three
(3) months prior to the end of the Initial Term or the Renewal Term.
3. Full time and efforts. Employee shall diligently and
conscientiously devote substantially his full time and exclusive attention and
best efforts to his duties under this Agreement.
4. Compensation.
(a) Commencing as of the Effective Date of this
Agreement, the Company shall pay Employee base compensation for his services in
the amount of $250,000 per year (the "Base Compensation"). The Supervisor,
together with the Compensation Committee of the Board of Directors, will review
Employee's performance and determine any appropriate increases annually
thereafter. Base Compensation shall be payable in biweekly or such other
installments as shall be consistent with the Company's payroll procedures for
its employees.
(b) During the term of this Agreement, Employee shall be
entitled to earn an annual bonus (the "Annual Bonus") of up to 75% of Base
Compensation during each calendar
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year, as determined by the Supervisor and the Compensation Committee based on
the criteria established by the Supervisor and the Board of Directors. With
respect to the calendar year ending December 31, 2000, Employee shall receive a
minimum first Annual Bonus of $100,000 (less applicable withholding and other
taxes), and shall be entitled to earn up to an additional 35% of Base
Compensation calculated pro rata for the period from the Effective Date through
December 31, 2000, as determined by the Supervisor and the Compensation
Committee. Thereafter, the Annual Bonus will be based on Base Compensation
earned during each calendar year.
(c) On the Effective Date, Employee will be awarded
80,000 stock options (the "Options") to purchase shares of common stock in
CoStar Group, Inc. ("CoStar"), the Company's parent, with 15,000 vesting on the
first anniversary of the Effective Date, 15,000 vesting on the second
anniversary of the Effective Date, 25,000 vesting on the third anniversary of
the Effective Date, and 25,000 vesting on the fourth anniversary of the
Effective Date. The Options shall vest immediately in the event of a Change of
Control of the Company (as defined in CoStar's 1998 Stock Incentive Plan). The
exercise price for the Options shall be the Fair Market Value (as defined in
CoStar's 1998 Stock Incentive Plan) of the CoStar common stock on the Effective
Date.
5. Benefits. Commencing on the Effective Date, Employee shall
be entitled to participate in, and receive benefits from any insurance, medical,
disability, vacation or pension plan of the Company for which Employee satisfies
the generally applicable criteria for eligibility, and to other perquisites
which may be in effect at any time during the term hereof that are generally
available to officers of the Company. Employee shall be entitled to accrue four
(4) weeks of paid vacation time per year under the Company's standard vacation
policy.
6. Expense reimbursement. The Company shall reimburse Employee
for all categories of expenses incurred in carrying out his duties under this
Agreement that the Company's policies regard as reasonable and necessary.
Employee shall present to the Company from time to time an itemized account of
expenses to be reimbursed pursuant to this Section 6 in any form generally
required by the Company.
7. Termination without cause.
(a) By the Company. The Company may terminate this
Agreement without cause (and regardless of the time periods and provisions in
Section 2 hereof) upon thirty (30) days written notice prior to such
termination. If the Company terminates this Agreement during the Initial Term or
any Renewal Term (other than a termination as provided for in Section 2),
Employee shall, as severance and liquidated damages and in consideration of his
execution of a complete and absolute release of the Company and its affiliates
and their respective officers, employees, affiliates and directors from any and
all further claims, receive on a monthly basis, as if he had not been
terminated, all payments (other than bonus) he would have received for a period
of twelve (12) months (for the avoidance of doubt, such twelve month period
shall commence upon the date of the notice set forth in the first sentence of
this subsection 7(a)).
(b) Termination after merger or acquisition. In the
event of the merger of the Company or CoStar, or the acquisition, directly or
indirectly, of all or substantially all of the Company's or CoStar's assets or a
controlling interest in the voting shares of the Company or CoStar by an
unaffiliated party (a "Change of Control"), Employee may elect to treat that
event as a
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termination by the Company without cause unless the new party: (a) extends to
his a reasonable offer to (i) be retained by the Company in a position of
responsibility, authority and compensation comparable in material respects
(including location) to the position of Employee immediately prior to the Change
of Control, and (ii) retain all rights accorded under this Agreement; and (b) in
fact retains Employee in such capacity for at least six (6) months after the
Change of Control.
(c) By Employee. Employee may without cause terminate
this Agreement, by giving one hundred eighty (180) days written notice during
the Initial Term, or ninety (90) days written notice during any Renewal Term, to
the Company. In such event, at the sole discretion of the Company, Employee
shall continue to render all services through the date of termination. Employee
shall be paid the Base Compensation, accrued bonus and vested options as
provided by Section 4 up to the date of termination, but shall not receive any
salary or bonus payment thereafter nor shall any stock option that is not
otherwise vested or nonforfeitable on the date of termination become vested or
nonforfeitable on such date or thereafter.
8. Termination for cause. The Company may terminate this
Agreement (a) for cause at any time by notifying Employee in writing of such
termination and the cause thereof or (b) in the event of Employee's death or
prolonged disability; provided, however, that the only grounds constituting
"cause" shall be: (i) Employee's gross negligence in the performance of his
duties hereunder, nonperformance or mis-performance of such duties, or refusal
to abide by or comply with the directives of the Board of Directors of the
Company, his superior officers, or the Company's policies and procedures
(including the provisions of Section 9 hereof) which actions continue uncured
for a period of at least five (5) days after receipt by Employee of written
notice of the need to cure or cease or which recur thereafter; (ii) Employee's
dishonesty, fraud, or misconduct with respect to the business or affairs of the
Company; (iii) Employee's indictment for, conviction of, or guilty or nolo
contendere plea to, a felony; and (iv) Employee's abuse of alcohol or drugs
(legal or illegal), other than legal drugs taken under the directions of a
physician, that, in the Company's reasonable judgment, materially impairs
Employee's ability to perform his duties hereunder. In any such event, Employee
will forfeit all unvested options and all claims to bonuses not yet awarded and
paid, and will be paid salary, excluding bonus, through the date of the
termination.
9. Confidentiality, Invention and Non-Compete Agreement.
(a) Employee acknowledges and agrees that in
consideration for entering into this Agreement, Employee will come into contact
with, have access to and learn various technical and non-technical trade secrets
and other confidential information, which are the property of the Company.
Employee also will receive training in the Company's proprietary business
methods and practices. All of the Company's trade secrets and confidential
information have been developed, acquired and compiled by the Company at its
great effort and expense. Employee acknowledges, agrees and understands that the
Company is relying upon this covenant not to compete in providing Employee
access to its trade secrets and other confidential information and will not
provide Employee access to this information but for Employee's agreement to this
covenant.
(b) Employee acknowledges and agrees that the Company is
engaged in a highly competitive business and that by virtue of Employee's
position and responsibilities with the Company and Employee's access to the
trade secrets and confidential information, engaging in any business which is
directly or indirectly competitive with the Company will cause the Company great
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and irreparable harm.
(c) Therefore, during the term of this Agreement, and
thereafter for the duration of the period, if any, that Employee continues to be
employed by the Company and/or any other entity owned by or affiliated with the
Company or on an "at will" basis, and thereafter for the Non-Competition Period
(defined below), Employee shall not, directly or indirectly, for himself or on
behalf of or in conjunction with any other person, company, partnership,
corporation, business, group, or other entity (each, a "Person"):
(i) engage, as an officer, director, shareholder,
owner, partner, member, joint venturer, employee, independent contractor,
consultant, advisor, or sales representative or in a managerial capacity, in any
business providing any products or services in competition with the Company in
the United States or in any other country that the Company is then conducting
business (the "Territory"); provided, however, that the foregoing covenant shall
not be deemed to prohibit Employee from acquiring as 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 over-the-counter;
(ii) call upon any Person who is, at that time,
within the Territory, an employee of the Company for the purpose or with the
intent of enticing such employee away from or out of the employ of the Company;
(iii) call upon any Person who or that is, at that
time, or has been, within one year prior to that time, a customer of the Company
within the Territory for the purpose of providing, soliciting or selling
products or services in competition with the Company within the Territory; or
(iv) on Employee's own behalf or on behalf of any
competitor, call upon any Person as a prospective acquisition candidate for an
entity other than the Company or its affiliates who or that, during Employee's
employment by the Company was, to Employee's knowledge, either called upon by
the Company as a prospective acquisition candidate or was the subject of an
acquisition analysis conducted by the Company. Employee, to the extent lacking
the knowledge described in the preceding sentence, shall immediately cease all
contact with any prospective acquisition candidate upon being informed that the
Company had called upon such candidate or made an acquisition analysis thereof.
(d) Employee acknowledges that during the course of his
employment, he may develop and obtain access to trade secrets, proprietary
software and other "confidential business information" of the Company, such as
its software systems, sources of data, databases and other competitively
sensitive information kept in confidence by the Company such as selling and
pricing information and procedures, research methodologies, customer lists,
business and marketing plans, sales methods and internal financial statements.
Employee agrees to not use or disclose any trade secrets, proprietary software
or confidential business information to which he is exposed or has access in the
course of his employment with the Company, even if elements of any of them may
belong to third parties, during his employment and for so long afterwards as the
Company seeks to maintain as confidential the proprietary software, trade
secrets or confidential business information, whether or not the software, trade
secrets and confidential business information are in written or
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tangible form, except as required and authorized during the performance of
Employee's duties for and with the Company. Employee agrees that, given the
nature of the Company's business and business plans there will never come a time
when disclosure of the Company's proprietary software, trade secrets or
confidential information would not be seriously injurious to the Company.
(e) Employee acknowledges that he has been employed by
the Company during its critical developmental and roll-out stages and that
leaving the employ of the Company to join any business competitor would
seriously hamper the business of the Company. Accordingly, Employee agrees that
the Company shall be entitled to injunctive relief to prevent his from violating
this Section 9, in addition to all remedies permitted by law, to enforce the
provisions of this Agreement. Employee further acknowledges that his training,
experience and technical skills are of such breadth that they can be employed to
Employee's advantage in other areas which are not in direct competition with the
business of the Company on the date of termination of Employee's employment and
consequently the foregoing obligations will not unreasonably impair Employee's
ability to engage in business activity after the termination of Employee's
employment.
(f) For purposes of this Section 9, the term "Company"
shall mean the Company, its parent, and each of its parent's direct or indirect
subsidiaries, and each of these entities' predecessors in interest and
successors; and the term "Non-Competition Period" shall mean the period
commencing on the date hereof to and including the second anniversary of the
date on which Employee ceases to be employed by the Company (provided, however,
that the Non-Competition Period, during which the agreements and covenants of
Employee made in this Section 9 shall be effective, shall be computed by
excluding from such computation any time during which Employee is in violation
of any provision of this Section 9).
(g) The covenants in this Section 9 are severable and
separate, and the unenforceability of any specific covenant shall not affect the
provisions of any other covenant. If any provision of this Section 9 relating to
the time period or geographic area of the restrictive covenants shall be
declared by a court of competent jurisdiction to exceed the maximum time period
or geographic area, as applicable, that such court deems reasonable and
enforceable, said time period or geographic area shall be deemed to be, and
thereafter shall become, the maximum time period or largest geographic area that
such court deems reasonable and enforceable and this Agreement shall
automatically be considered to have been amended and revised to reflect such
determination. Upon termination of this Agreement for any reason, the covenants
specified in this Section 9 shall survive for the term specified herein.
(h) All of the covenants in this Section 9 shall be
construed as an agreement independent of any other provision in this Agreement,
and the existence of any claim or cause of action of Employee against the
Company, whether predicated on this Agreement or otherwise, shall not constitute
a defense to the enforcement by the Company of such covenants.
10. Disclosure of Work Product.
(a) Employee shall fully disclose to his Supervisor any
idea, invention, discovery, development, design, technique, improvement, plan,
work of authorship, computer software, data information, enhancement, or other
work product, whether tangible or intangible, developed by Employee, solely or
jointly with others, during Employee's employment with the
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Company (1) made with the Company's equipment, supplies, facilities, trade
secrets, or time; (2) that relate, at the time of conception or reduction to
practice to the Company's business, or the Company's actual or demonstrably
anticipated research; or (3) result from any work performed by Employee for the
Company (collectively the "Work Product").
(b) All Work Product shall be conclusively deemed to be
conceived, made, developed, reduced to practice, prepared, or otherwise created
within the scope of Employee's employment and shall be the sole property of the
Company. Employee hereby irrevocably assigns to the Company all right, title,
and interest of whatever nature that Employee may have in the Work Product.
(c) Employee shall, at the expense and on behalf of
Employer, do all acts and things requested by Employer for Employer to obtain,
establish, preserve, and protect Employer's rights and interests in the Work
Product, including, but not limited to, preparing and signing such applications,
papers, instruments, and other documents as the Company may deem necessary for
it, or its nominee, to obtain and maintain patents, copyrights, trade secrets,
trademarks, and service markings within the United States or elsewhere or both.
Employee's obligations under this Section 10(c) of this Agreement shall be in
effect at all times while Employee is employed by the Company and for three
years after Employee's termination of employment with the Company.
11. Notices. All notices required or permitted to be given
under this Agreement shall be in writing and shall be given by certified mail,
return receipt requested, or by personal delivery (including by express courier)
to the parties at the following addresses (or such other addresses as either may
designate by notice in accordance with this section):
(a) If to the Company:
Andrew C. Florance
Chief Executive Officer
2 Bethesda Metro Center
Bethesda, Maryland 20814
Telefax: 301-718-2444
with a copy to:
Carla J. Garrett
General Counsel
2 Bethesda Metro Center
Bethesda, Maryland 20814
Telefax: 301-664-9176
(b) If to Employee, to the address set forth below
Employee's name on the signature page of this Agreement, or to such other
address as the Employee shall notify the Company from time to time.
12. Arbitration.
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(a) When Arbitration is Required. In the event of any
dispute, claim or controversy cognizable in a court of law between the Company
and the Employee concerning any aspect of the employment relationship, including
disputes upon termination, the parties agree to submit such dispute to final and
binding arbitration before a single arbitrator pursuant to the provisions of the
American Arbitration Association's Employment Dispute Resolution Procedures. The
parties acknowledge that this obligation to arbitrate disputes applies to claims
for discrimination or harassment under the Age Discrimination in Employment Act,
Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act
of 1990, Sections 1981 through 1988 of Title 42 of the United States Code, the
Maryland Fair Employment Practices Act, as well as any other federal, state, or
local law, ordinance, or regulation, or based on any public policy, contract,
tort, or common law or any claim for costs, fees, or other expenses including
attorney's fees. All claims and defenses which could be raised before a
government administrative agency or court must be raised in arbitration and the
arbitrator shall apply the law accordingly. Employee and the Company further
agree that this duty to arbitrate extends not only to disputes between Employee
and the Company, but also to disputes between Employee and the Company's
affiliates and the Company's and its affiliate's respective officers, directors,
employees and agents that arise out of Employee's employment with the Company or
the termination of that employment.
Notwithstanding the foregoing, Employee and the Company recognize
and acknowledge each party's right to request injunctive relief under
appropriate circumstances from any court of competent jurisdiction, including
but not limited to injunctive relief for any violations of Sections 9 of this
Agreement by Employee. The parties being desirous of having any disputes
resolved in a forum having a substantial body of law and experience with the
matters contained herein, the parties agree that any proceeding for injunctive
relief shall be brought in the Circuit Court of Montgomery County, Maryland, or
in the United States District Court for the District of Maryland and the parties
agree to the jurisdiction thereof.
(b) Time for Demanding Arbitration. Any demand for
arbitration shall be made in writing and served upon the other party to this
Agreement. Such demand shall be served no later than the expiration of the
applicable statute of limitation period under governing law for such dispute(s).
Absent express written agreement of the parties, this time period shall not be
extended by virtue of informal attempts to resolve the dispute.
(c) Remedies. The arbitrator shall have the power to
award any types of legal or equitable relief that would be available in a court
of competent jurisdiction or administrative tribunal.
(d) Final and Binding Arbitration. The decision of the
arbitrator shall be final and binding on the parties.
(e) No Deletion, Addition or Modification. The
arbitrator shall have no authority to add to, delete from, or modify in any way
the provisions of this Agreement.
(f) Costs of Arbitration. The costs of commencing the
arbitration and the remainder of the arbitration fees will be paid by the
Company.
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(g) Place of Arbitration. The arbitration hearing shall
occur within the County in which the Company's principal place of business is
located, the County in which the conduct giving rise to the claim occurred, or
as the arbitrator may otherwise order.
(h) Time to Consider or Revoke Agreement. Employee
acknowledges that Employee's acceptance of binding arbitration can be revoked
any time within seven (7) days of his signing this Agreement, but such
revocation must be submitted in writing and will result in his immediate
termination and/or denial of consideration for employment. Employee further
acknowledges that he has had at least 21 days to consider this Agreement and has
decided to sign knowingly, voluntarily, and free from duress or coercion.
(i) Waiver of Jury Trial. Employee and the Company agree
that if for any reason the arbitration provisions of this Agreement are declared
unenforceable, they waive any right they may have to a jury trial with respect
to any dispute or claim between them relating to any of the terms and conditions
of this Agreement, Employee's employment with or termination from employment
with the Company, including, but not limited to, any of the claims enumerated in
paragraph 11(a) of this Agreement, as well as claims arising or relating to any
confidentiality agreement Employee may sign.
12. Employability.
(a) Employee affirms he is not presently subject to a
restrictive covenant or other prior agreement which would prohibit or restrict
employment with the Company.
(b) If Employee learns or becomes aware or is advised
that he is subject to an actual or alleged restrictive covenant or other prior
agreement which may prohibit or restrict employment by the Company, Employee
shall immediately notify the Company of the same.
(c) Employee agrees that he shall not disclose to the
Company, use for the Company's benefit, or induce the Company to use any trade
secret or confidential information he may possess belonging to any former
employer or other third party.
13. Waiver of Breach. The waiver by either party of a breach of
any provisions of this Agreement by the other shall not operate or be construed
as a waiver of any subsequent breach. A delay or failure by either party to
exercise a right under this Agreement, or a partial or single exercise of that
right, shall not constitute a waiver of that or any other right.
14. Governing Law, Interpretation. The Agreement shall be
governed by and construed and enforced in accordance with the laws of the State
of Maryland. As used herein, the term "including" means "including without
limitation," whether or not such words of non-limitation are stated.
15. Binding Effect. This Agreement shall be binding upon and
share inure to the benefit of the Company and its respective successors and
assigns but the rights and obligations of Employee are personal and may not be
assigned or delegated without the Company's prior written consent.
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16. Counterparts. For the convenience of the parties, this
Agreement may be executed in any number of counterparts, all of which when taken
together shall constitute one and the same Agreement.
17. Entire Agreement Concerning Employment, Modification and
Amendment. This Agreement constitutes the entire Agreement between the parties
as to Employee's employment and compensation therefor and supersedes and
replaces any and all agreements, written or oral, as to such matters. This
Agreement may not be modified or amended orally, but only by an agreement in
writing, signed by the party against whom enforcement of any waiver, change,
modification, amendment, extension, or discharge is sought.
IN WITNESS WHEREOF, Company and Employee have executed this Agreement, to
be effective as of the last date set forth below.
EMPLOYEE: COMPANY:
_______/s/________________ ________/s/_______________________
Lawrence Dressel Andrew C. Florance
Chief Executive Officer
ADDRESS:
___________________________ Date:_____8/29/00_________________
___________________________
___________________________
Telephone/Fax:
Date:_____8/29/00__________________