EMPLOYMENT AGREEMENT
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THIS AGREEMENT, is made as of September 22, 1997 by and between NetSelect,
Inc., a Delaware corporation (the 'Company'), and Peter Tafeen (the
'Executive').
WHEREAS, the Company and Executive desire to enter into this Agreement
providing for the Executive's employment as Vice President of Business
Development, all on the terms, and subject to the conditions, as hereinafter set
forth;
NOW THEREFORE, in consideration of the mutual covenants contained herein,
the Company and the Executive agree as follows:
ARTICLE I
Period of Employment
1.1 Period of Employment. The Executive shall be an employee at-will and
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there shall be no specified term of employment. The period during which the
Executive is providing services to the Company hereunder shall be referred to as
the Period of Employment.
ARTICLE II
Position and Duties
2.1 Position. The Executive shall be employed as the Vice President of
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Business Development.
2.2 Duties. The Executive agrees to perform the duties, undertake the
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responsibilities and exercise the authority customarily performed, undertaken
and exercised by persons situated in a similar executive capacity The Company
and the Executive agree that the Executive shall report to the Chief Executive
Officer of the Company, or such other executive officer as the Chief Executive
Officer shall direct. Excluding periods of vacation and sick leave to which the
Executive is entitled, the Executive agrees that during the Employment Term he
shall devote substantially all his business time to the business and affairs of
the Company and to the duties and responsibilities assigned to him hereunder.
Notwithstanding the foregoing, the Executive may (i) with the written permission
of the Chief Executive Officer serve on corporate boards, (ii) serve on civic or
charitable boards or committees, (iii) manage personal investments and (iv)
deliver lectures and teach at educational institutions, so long as such
activities in clauses (i) through (iv) do not significantly interfere with the
performance of the Executive's duties and responsibilities hereunder.
ARTICLE III
Compensation
3.1 Base Salary. The Company agrees to pay or cause to be paid to the
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Executive during the first year of the employment hereunder a base salary at the
rate of $140,000 per annum (the 'Base Salary'). Such Base Salary shall be
payable in accordance with the
Company's customary practices applicable to its executives. Such rate of salary,
or increased rate of salary, if any, as the case may be, shall be reviewed at
least annually by the Chief Executive Officer and may be further increased (but
not decreased) in such amounts as the Chief Executive Officer may decide.
3.2 Short-Term Incentives. For each calendar year ending during the
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Period of Employment, the Executive's bonus compensation ('Annual Bonus') shall
be a rate equal to a percentage between 0% and 30% of his Base Salary in effect
on the last day of such year, with a target of 30% of Base Salary, if the
Executive achieves budgeted financial and other performance targets which shall
be mutually established by the Executive and the Chief Executive Officer. With
respect to the first calendar year, such targets shall be established within 60
days of the date hereof and such bonus shall be appropriately prorated to
reflect that Executive was not employed for the entire year. Executive may earn
a maximum of 15% of Base Salary for each six-month period and such Annual Bonus
may be paid in semi-annual installments.
ARTICLE IV
Other Benefits
4.1 Long-Term Incentives; Parity Incentives.
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The Executive shall be granted options to purchase 40,000 shares of the
Company's voting common stock ('Common Stock'), at $5.54 or Best Possible per
share. The options shall be granted pursuant to the terms of the NetSelect, Inc.
Stock Incentive Plan (the 'Plan') and, to the maximum extent possible, shall
qualify as incentive stock options (within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended). The options shall vest in four (4)
nearly equal annual installments (each, an 'Option Installment') beginning on
the first anniversary of the date hereof, subject to Executive's continued
employment on such date.
4.2 Executive Benefits. Subject to the terms of such plans, the Executive
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will be covered under all retirement and welfare benefit plans maintained from
time to time by the Company for its senior executives.
4.3 Vacation and Sick Leave. The Executive shall be entitled to annual
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vacation in accordance with the policies as periodically established by the
Board of Directors for similarly situated executives of the Company, which shall
in no event be less than three (3) weeks per year. The Executive shall be
entitled to sick leave (without loss of pay) in accordance with the Company's
policies as in effect from time to time.
4.4 Expenses. The Company shall reimburse the Executive for all
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reasonable travel, entertainment and other business expenses incurred by him in
accordance with Company policy regarding travel, entertainment and business
expenses in connection with the performance of the Executive's duties under this
Agreement during the Employment Term, such reimbursement to be made in
accordance with the Company's policy and practice relating to reimbursement of
senior executives.
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4.5 Expenses Incurred in Relocation. The Company will pay or reimburse
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the Executive for all normal and reasonable expenses incurred by the Executive
in relocating his family and personal effects to the Westlake Village,
California area, including cancellation fees incurred in respect of Executive's
current residence; provided, however, all such reimbursements shall not exceed
$6,000.
ARTICLE V
Termination of Employment
5.1 Termination other than for Cause, Death or Disability. The Company
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may, at any time, terminate the Executive's employment. If, during the Period
of Employment, the Company terminates the Executive's employment other than for
Cause, death or Disability the Company shall provide the following to the
Executive upon Executive's signing of a general release of claims in form and
manner acceptable to the Company:
(a) As soon as practicable and in no event more than thirty days after
the Termination Date (as hereinafter defined) a lump sum cash payment equal to
the aggregate of the following:
(i) the portion of the Executive's then current Base Salary
accrued to the Termination Date but unpaid as of the
Termination Date (the 'Unpaid Salary'); plus
(ii) an amount equal to three (3) months Base Salary.
(b) If prior to the first anniversary of the date hereof Executive's
employment is terminated by the Company other than for Cause, death or
Disability, the first Option Installment shall be deemed vested as of the
Termination Date. If after the first anniversary but prior to the fourth
anniversary of the date hereof Executive's employment is terminated by the
Company other than for Cause, death or Disability, the next Option Installment
which would vest (i.e., with respect to 10,000 shares) following Executive's
Termination of Employment shall be deemed vested with respect to the number of
whole shares equal to the total number of shares covered by the Option
Installment multiplied by a fraction the numerator of which is the number of
whole months that have occurred from the last anniversary date to the
Termination Date and the denominator of which is 12. All options granted to
Executive, to the extent vested on the Termination Date, remain outstanding for
three (3) months from the Termination Date.
5.2 Termination in the Event of Death or Disability. If, during the
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Period of Employment, the Company terminates the Executive's employment due to
the Executive's death or Disability, the Company shall provide the following to
the Executive (or his Beneficiary):
(a) As soon as practicable after the Termination Date, a lump sum cash
payment equal to the sum of the Unpaid Salary.
(b) All stock options granted to the Executive by the Company shall,
to the extent vested, remain outstanding for three (3) months from the
Termination Date or one (1) year from the date of death, as the case may be.
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5.3 Termination for Cause.
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(a) Except as otherwise set forth in this Section 5.3, all obligations
of the Company under this Agreement shall cease if, during the Period of
Employment, the Company terminates the Executive for Cause. Upon such
termination, the Executive shall be entitled to receive in a lump sum cash
payment as soon as practicable after the Termination Date, an amount equal to
the Unpaid Salary. In addition, all options held by Executive, whether or not
vested, shall be forfeited and any shares held by Executive which were acquired
upon exercise of an option ('Option Shares') shall be subject to repurchase by
the Company as provided below at their then Fair Value.
(b) For purposes of this Employment Agreement, the 'Fair Value' of the
shares of Company Stock shall mean the fair market value thereof as agreed
between the Company and the Executive or, if the Company and the Executive are
unable to agree within 45 days, the Fair Value thereof determined in accordance
with the Appraisal Procedure. 'Appraisal Procedure' shall mean a determination
of Fair Value per share by an appraiser selected by the Company and the
Executive. The Company and the Executive shall each submit to the appraiser a
statement setting forth their respective calculations of Fair Value of the
shares and the appraiser shall be instructed to select the proposed Fair Value
closest in amount to the value which the appraiser believes to be accurate. The
appraiser shall be obligated to select the Company's or the Executive's proposed
Fair Value and may not select any other amount. The determination of Fair Value
shall be deemed to be binding on the Company and the Executive upon (i)
resolution of any disagreement as to Fair Value by mutual agreement of the
parties or (ii) notification by the appraiser of its final selection of either
the Company's or the Executive's proposed Fair Value. The fee of such appraiser
shall be borne equally by the parties.
(c) The purchase price for any shares to be purchased by the Company
pursuant to this Section 5.3 may be paid in cash, by certified check or by wire
transfer of immediately available funds.
(d) The right to buy the Executive's Option Shares hereunder shall be
exercised by the Company by the giving of written notice to the Executive within
120 days after the Termination Date. The closing of the purchase and sale of
Option Shares sold in accordance with this Section 5.3 shall take place on such
date or dates as the parties to such transaction may agree, but not later than
30 days after delivery of the notice exercising the right to buy such Shares.
Unless otherwise agreed, the closing of any sale and purchase of such Option
Shares shall take place in New York, New York. In the event of the purchase and
sale of such Option Shares hereunder, certificates representing such Shares
shall be delivered at the closing endorsed in blank or accompanied by stock
powers endorsed in blank.
5.4 Voluntary Resignation. If, during the Period of Employment, the
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Executive resigns, the Executive shall be entitled to receive in a lump sum,
cash payment as soon as practicable after the Termination Date, an amount equal
to the Unpaid Salary. In addition, all stock options granted to the Executive
by the Company shall, to the extent vested, remain outstanding for three (3)
months from the Termination Date.
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5.5 Payments upon the Executive's Termination. The foregoing payments
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upon the Executive's termination shall constitute the exclusive payments due the
Executive upon termination from his employment with the Company under this
Agreement or otherwise; provided, however, that except as stated above, such
payments shall have no effect on any benefits which may be payable to the
Executive under any plan of the Company which provides benefits after
termination of employment, other than severance pay or salary continuation
pursuant to a Company plan which amount shall be reduced by the amount of the
Severance Amount received by the Executive pursuant to this Agreement.
ARTICLE VI
Certain Definitions
6.1 'Beneficiary' means the person or trust designated in writing by the
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Executive to receive any payments due under this Agreement in the event of the
Executive's death and if no such person or trust is designated, the Executive's
estate.
6.2 'Cause' means (a) the Executive's material breach of this Agreement or
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of generally applicable Company policy, (b) conviction of the Executive for (i)
any crime constituting a felony in the jurisdiction in which committed, (ii) any
crime involving moral turpitude (whether or not a felony), (iii) any other
criminal act against the Company involving dishonesty or willful misconduct
intended to injure the Company (whether or not a felony), (c) willful
malfeasance or gross misconduct by the Executive which damages the Company, (d)
a continuous and substantial dereliction of duties which is uncured after
written notice, or (e) repeated insubordination which is uncured after written
notice.
6.3 'Disability' means any medically determinable physical or mental
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impairment that renders the Executive substantially unable to perform all of the
Executive's duties required under Article I hereof for 180 days out of any 360-
day period. The date of the Disability is the date on which the Executive is
certified as having incurred a Disability by a physician mutually acceptable to
the Executive (or the Executive's representative) and the Company.
6.4 'Termination Date' means the date as of which the Executive's
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employment with the Company is terminated by the Company or by the Executive for
any reason which, except in the event of the Executive's death, shall be
specified in a written notice of termination received by either party from the
other.
ARTICLE VII
Executive Covenants
7.1 Confidential Information. The Executive agrees and understands that
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in the Executive's position with the Company, the Executive may be exposed to
and receive information relating to the confidential affairs of the Company,
including but not limited to business and marketing plans, membership lists,
products, promotions, development, financing, expansion plans, business policies
and practices, and information considered by the Company to be confidential and
in the nature of trade secrets. The Executive agrees that during the Period of
Employment and thereafter the Executive will keep such information confidential
and not
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disclose such information to any third person or entity without the prior
written consent of the Company. The Executive shall not be liable for the
inadvertent or accidental disclosure of such information, if such disclosure
occurs despite the exercise of a reasonable degree of care. This confidentiality
covenant shall not apply to any knowledge or information that: (i) is or becomes
available to others, other than as a result of a breach by the Executive of this
section 7.1; (ii) was available to the Executive on a nonconfidential basis
prior to its disclosure to the Executive through his status as an officer of the
Company; or (iii) becomes available to the Executive on a nonconfidential basis
from a third party is not bound by any confidentiality obligation to the
Company.
7.2 Ownership of Trade Secrets. The Executive agrees that any trade
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secret, invention, improvement, patent, patent application or writing, and any
program, method, process, systems or novel technique or idea (whether or not
capable of being trademarked, copyrighted or patented), conceived, devised,
developed, or otherwise obtained by the Executive during the Period of
Employment, shall be and become the property of the Company and the Executive
agrees to give the Company prompt written notice of his conception, invention,
authorship, development or acquisition of any such trade secret, invention,
improvement, patent application, writing, program, method, process, system or
novel technique or idea and to execute such instruments or transfer, assignment,
conveyance or confirmation and such other documents and to do all appropriate
lawful acts as may be requested by the Company to transfer, assign, confirm, and
perfect in the Company all legally protectable rights in any such trade secret,
invention, improvement, patent, patent application, writing, program, method,
process, system or novel technique or idea.
7.3 Non-Compete. (a) By and in consideration of the Base Salary, bonus
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and other benefits to be provided by the Company hereunder, and further in
consideration of the Executive's exposure to the proprietary information of the
Company, the Executive agrees that the Executive will not, while employed by the
Company, and for a period of twelve (12) months after termination of employment
hereunder, directly or indirectly own, manage, operate, join, control, be
employed by, or participate in the ownership, management, operation or control
of or be connected in any manner, including but not limited to holding the
positions of shareholder, director, officer, consultant, independent contractor,
employee, partner, or investor, with any Competing Enterprise (as hereinafter
defined); provided, however, that the Executive may invest in stocks, bonds, or
other securities of a Competing Enterprise (but without otherwise participating
in the business thereof if (i) such stocks, bonds, or other securities are
listed on any national securities exchange or are registered under Section 12(g)
of the Securities Exchange Act of 1934, as amended (or any successor statute
thereto); and (ii) his investment does not exceed, in the case of any class of
the capital stock of any one issuer, 5% of the issued and outstanding shares, or
in the case of bonds or other securities, 5% of the aggregate principal amount
thereof issued and outstanding.
(b) For purposes of this Agreement, the term 'Competing Enterprise'
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shall mean any person, corporation, partnership or other entity engaged in a
business in the United States or in any foreign jurisdiction in which the
Company is engaged in business on the Termination Date, in each case which is in
competition with any of the on-line real estate businesses of the Company or any
of its affiliates as of the date of the termination of this Agreement.
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7.4 Survival. The provisions of this Section 7 shall survive any
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termination of this Agreement and the Period of Employment, and the existence of
any claim or cause of action by the Executive against the Company, whether
predicated on this Agreement or otherwise, shall not constitute, defense to the
enforcement by the Company of the covenants and agreements of this Section 7.
ARTICLE VIII
Taxes
8.1 Taxes. Any amounts payable to the Executive hereunder shall be paid
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to the Executive subject to all applicable taxes required to be withheld by the
Company pursuant to federal, state or local law. The Executive or his
Beneficiary, if applicable, shall be solely responsible for all taxes imposed on
the Executive or his Beneficiary by reason of his receipt of any amounts of
compensation or benefits payable to the Executive hereunder.
ARTICLE IX
Miscellaneous
9.1 Assignment, Succession. This Agreement shall be binding upon the
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Company and its successors and assigns and the Executive and his Beneficiary.
9.2 Severability. If all or any part of this Agreement is declared by any
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court or governmental authority to be unlawful or invalid, such unlawfulness or
invalidity shall not serve to invalidate any portion of this Agreement not
declared to be unlawful or invalid. Any paragraph or part of a paragraph so
declared to be unlawful or invalid shall, if possible, be construed in a manner
which will give effect to the terms of such paragraph or part of a paragraph to
the fullest extent possible while remaining lawful and valid.
9.3 Amendment and Waiver. This Agreement shall not be altered, amended or
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modified except by written instrument executed by the Company and the Executive.
A waiver of any term, covenant, agreement or condition contained in this
Agreement shall not be deemed a waiver of any other term, covenant, agreements
or condition, and any waiver of any default in any such term, covenant,
agreement or condition shall not be deemed a waiver of any later default thereof
or of any other term, covenant, agreement or condition.
9.4 Notices. All notices and other communications required hereunder
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shall be in writing and delivered by hand or by first class registered or
certified mail, return receipt requested, postage prepaid, addressed as follows:
If to the Company:
NetSelect, Inc.
5655 Lindero Canyon Road
Suite 106
Westlake Village, CA 91362
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With a copy to:
Battle Fowler LLP
75 East 55th Street
New York, NY 10022
Attention: Charles H. Baker, Esq.
If to the Executive:
Peter Tafeen
With a copy to:
Any party may from time to time designate a new address by notice given in
accordance with this Paragraph. Notice and communications shall be effective
when actually received by the addressee.
9.5 Counterpart Originals. This Agreement may be executed in several
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counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument. The Agreement may be
signed by facsimile provided the original execution pages are delivered to the
other party within thirty (30) days after signing.
9.6 Entire Agreement. This Agreement and the Exhibits attached hereto and
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made a part hereof form the entire agreement between the parties herein with
respect to any severance payments and with respect to the subject matter
contained in this Agreement.
9.7 Applicable Law. This Agreement and the rights and obligations of the
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parties hereto shall be governed by and construed and enforced in accordance
with the laws of the State of California, without giving effect to the conflicts
of law principles thereof. The Executive and the Company hereby irrevocably and
unconditionally consent to submit to the exclusive jurisdiction of the courts of
the State of California or the United States of America located in the State of
California for any actions, suits or proceedings arising out of or relating to
this Agreement and the transactions contemplated hereby (and the parties agree
not to commence any action, suit or proceeding relating hereto except in such
courts), and further agree that service of any process, summons, notice or
documents by United States registered
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Employment Agreement - NetSelect Inc. and Peter Tafeen
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