Employment Agreement - CoStar Realty Information Inc. and John Place
EMPLOYMENT AGREEMENT
This AGREEMENT (the "Agreement") dated this 1st day of May, 2000 (the
"Effective Date") is by and between CoStar Realty Information, Inc., a Delaware
corporation (the "Company"), and John Place (the "Executive").
The Company desires to employ the Executive to devote his full time and
best efforts to the business of the Company, and the Executive desires to be so
employed on the terms and conditions outlined below.
The parties agree as follows:
1. Employment. The Company agrees to employ Executive at the Company's
offices in the Greater Washington D.C. metropolitan area, and Executive agrees
to be so employed in the capacity of Executive Vice President. Executive shall
perform such functions and undertake such responsibilities as are assigned from
time to time by the President of the Company. Executive agrees that he shall
spend no less than four (4) Business Days (as defined below) per week in the
Company's principal executive offices in the Greater Washington D.C.
metropolitan area, other than when Executive is traveling on Company business or
on vacation. "Business Day" means any day other than a Saturday, Sunday or a day
that is designated as a holiday pursuant to the Company's written policies.
2. Term. The term of Executive's employment under this Agreement shall
commence on the date of this Agreement 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 Executive 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. Executive 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 Executive base compensation for his services in the amount of
$280,000 per year (the "Base Compensation"). The President of the Company in
consultation with the Compensation Committee of the Board of Directors of the
Company will review Executive'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 senior executives.
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(b) In addition, Executive shall be eligible to be granted an annual
performance bonus (the "Annual Bonus") of between 25% and 85% of Base
Compensation. The first annual bonus paid will be calculated pro rata based on
Base Compensation for the period from the Effective Date of the Agreement
through December 31, 2000. Thereafter, the annual bonus will be based on Base
Compensation during each calendar year. The minimum annual bonus will be 25% of
Base Compensation, and additional amounts up to an aggregate amount of 85% of
Base Compensation will be determined based on performance related to criteria
established by the President of the Company and the Board of Directors.
(c) In addition, Executive will be awarded 60,000 stock options in
CoStar Group, Inc. ("CoStar") (the "Initial Options"), the Company's parent,
vesting 25% on the grant date (the Effective Date of employment), 25% after the
first year, 25% after the second year, and 25% after three years. The exercise
price for the Initial Options shall be the Fair Market Value (as defined in
CoStar's 1998 Incentive Stock Plan) of the CoStar common stock on the Effective
Date.
(d) In addition, Executive shall be awarded an initial bonus of
$75,000 (the "Initial Bonus"), with $25,000 to be paid within 30 days of the
Effective Date, $25,000 to be paid within 60 days of the Effective Date, and
$25,000 to be paid within 90 days of the Effective Date; provided, however, that
if Executive is terminated with cause (as defined in Section 8) or if Executive
terminates his employment with the Company (or has given notice to the Company
to terminate his employment with the Company) within twelve (12) months of the
Effective Date, then Executive shall pay to the Company within ten (10) days of
his termination date with the Company the full amount of the Initial Bonus.
5. Benefits. Executive shall be entitled to participate in, and receive
benefits from any insurance, medical, disability, vacation or pension plan of
the Company for which Executive 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 executive officers of the
Company.
6. Expense reimbursement. The Company shall reimburse Executive for all
categories of expenses incurred in carrying out his duties under this Agreement
that the Company's policies regard as reasonable and necessary. Executive shall
present to the Company from time to time an itemized account of, and supporting
documentation for, such expenses in any form generally required by the Company.
The Company hereby agrees to reimburse Executive for Executive's reasonable
relocation expenses to the Greater Washington D.C. area in accordance with the
Company's relocation policy in effect from time to time. For the period between
the Effective Date and December 31, 2000, the Company agrees to provide an
apartment in the greater Bethesda, Maryland area for the Executive's use.
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 sixty (60)
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days written notice. In such an event (other than a termination as provided for
in Section 2 of this Agreement): (i) any remaining Initial Options due to vest
within twelve (12) months of the date of such written notice shall vest
immediately; and (ii) Executive will, 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 directors and officers 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 the lessor of (x) the
term remaining under the Agreement had he not been terminated from the date of
such written notice, or (y) twelve months from the date of such written notice.
(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"), Executive may elect to treat that event as a
termination by the Company without cause unless the new party: (a) extends to
him a reasonable offer to (i) be retained by the Company in an executive
position of responsibility, authority and compensation comparable in material
respects (including location) to the position of Executive immediately prior to
the Change of Control, (ii) retain all rights accorded under this Agreement and
(iii) be afforded all privileges accorded to other executives of the Company;
and (b) in fact retains Executive in such capacity for at least twelve (12)
months after the Change of Control.
(c) By Executive. Executive 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, Executive shall
continue to render all services through the date of termination. Executive shall
be paid the base compensation, accrued Annual Bonus, if any, 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 Executive in writing of such termination and the
cause thereof or (b) in the event of Executive's death or prolonged disability;
provided, however, that the only grounds constituting "cause" shall be: (i)
Executive's negligence in the performance of his duties hereunder, intentional
nonperformance or mis-performance of such duties, or refusal to abide by or
comply with the reasonable, directives of the Board of Directors of the Company
or the President of the Company, or the Company's material policies and
procedures (including without limitation the provisions of Section 9 hereof),
which actions continue uncured for a period of at least ten (10) days after
receipt by Executive of written notice of the need to cure or cease; (ii)
Executive's willful dishonesty, fraud, or misconduct with respect to the
business or affairs of the Company; (iii) Executive's indictment for, conviction
of, or guilty or nolo contendere plea to, a felony; and (iv) Executive'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 Executive's ability to perform his duties hereunder. In any
such event, Executive will forfeit all unvested options and all claims to
bonuses not yet awarded, and will be paid salary,
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excluding bonus, through the date of the termination; provided, however, that in
the event of termination for death or prolonged disability, all unvested options
shall immediately vest.
9. Confidentiality, Invention and Non-Compete Agreement.
(a) During the term of this Agreement, and thereafter for the
duration of the period, if any, that Executive 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),
Executive 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, or in a managerial capacity, whether as an
employee, independent contractor, consultant, advisor, or sales representative,
in any business selling any products or services in direct competition with the
Company in the United States, Canada, the United Kingdom, or other nations in
which the Company is conducting or in which he was aware the Company had plans
to conduct business within the eighteen (18) months following his termination
(the "Territory"); provided, however, that the foregoing covenant shall not be
deemed to prohibit Executive 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 soliciting or selling products or services in
direct competition with the Company within the Territory; or
(iv) on Executive'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 Executive's employment by
the Company was, to Executive'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. Executive, 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.
(b) Executive 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
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marketing plans, and internal financial statements. Executive 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 tangible form, except as
required and authorized during the performance of Executive's duties for and
with the Company. Executive 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.
(c) Executive 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, Executive agrees that the Company shall be
entitled to injunctive relief to prevent him from violating this Section 9, in
addition to all remedies permitted by law, to enforce the provisions of this
Agreement. Executive further acknowledges that his training, experience and
technical skills are of such breadth that they can be employed to Executive's
advantage in other areas which are not in direct competition with the business
of the Company on the date of termination of Executive's employment and
consequently the foregoing obligations will not unreasonably impair Executive's
ability to engage in business activity after the termination of Executive's
employment.
(d) For purposes of Section 8 and Section 9 of this Agreement, 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 Effective Date to and including the second anniversary
of the date on which Executive ceases to be employed by the Company (provided,
however, that the Non-Competition Period, during which the agreements and
covenants of Executive made in this Section 9 shall be effective, shall be
computed by excluding from such computation any time during which Executive is
in violation of any provision of this Section 9).
(e) 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.
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(f) 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 Executive 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. Notices. All notices required or permitted to be given under this
Agreement shall be given by certified mail, return receipt requested, to the
parties at the following addresses or to such other addresses as either may
designate in writing to the other party.
(a) If to the Company:
Andrew C. Florance
President
CoStar Realty Information, Inc.
7475 Wisconsin Avenue
Sixth Floor
Bethesda, Maryland 20814
Telefax: 301-718-2444
(b) If to Executive, to the address indicated below Executive's name
on the signature page.
11. Arbitration. The parties agree that any dispute between the parties
relating to this Agreement shall not be resolved in litigation, but instead
shall be resolved in final, binding arbitration by a single arbitrator under the
auspices of the American Arbitration Association ("AAA") in Washington, D.C. Any
such arbitration shall be conducted in accordance to the AAA's Employment
Dispute Resolution Procedures.
12. 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.
13. Governing Law. The Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Delaware.
14. 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 Executive are personal and may not be assigned or
delegated without the Company's prior written consent.
15. Counterparts. This Agreement, for the convenience of the parties, may
be executed in any number of counterparts, all of which when taken together
shall constitute one and the same Agreement.
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16. Entire Agreement Concerning Employment; Supremacy of Employment
Agreement. This Agreement and any related stock option agreement constitute the
entire agreement between the parties as to Executive's employment and
compensation therefor and supersede and replace 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, extension or discharge is
sought. If there is any conflict with respect to Executive between the
provisions of this Agreement and the provisions of the Stock Option Plan, the
provisions of this Agreement shall govern.
17. Amendments. This Agreement may be amended only in writing, signed by
both parties.
In witness whereof, the parties have executed this Agreement effective as
of the date set forth above.
COSTAR REALTY INFORMATION, INC. EXECUTIVE
By: /s/ By: /s/
-------------------------------- ----------------------------------
Name: Andrew C. Florance Name: John Place
Title: President