Executive Retention and Severance Agreement
This Executive Retention and Severance Agreement (the "Agreement") is made and
entered into as of March , 2002 (the "Effective Date"), by and between
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Homestore.com, Inc. and Walter Lowry (the "Executive"). Capitalized terms used
in this Agreement shall have the meanings set forth in Section 4, below.
1. Purpose. The purpose of this Agreement is (i) to encourage Executive to
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remain in the employ of the Company and to continue to devote Executive's full
attention to the success of the Company and (ii) to provide specified benefits
to Executive in the event of a Termination Upon Change of Control or a
Termination in Absence of Change of Control, as such terms are defined in
Section 4 of this Agreement.
2. Termination Upon Change of Control. In the event of Executive's Termination
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Upon a Change of Control, provided that Executive complies with Section 6.2
below and that Executive continues in the employment of the Company for such
period, if any, as Executive's service is requested, with such period being no
longer than six (6) months, Executive shall receive the following payments and
benefits:
2.1 Accrued Salary and Vacation, and Benefits. Executive shall receive all
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salary and accrued vacation (less applicable withholding) earned through
Executive's termination date, and the benefits, if any, under Company benefit
plans to which Executive may be entitled pursuant to the terms of such plans.
2.2 Cash Severance Payment. Executive shall receive a lump sum payment in
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an amount equal to twelve (12) months of Executive's base salary (less
applicable withholding), paid within five (5) business days of Executive's
termination date.
2.3 Stock Award Acceleration. Immediately prior to the effective date of
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the Change of Control, all outstanding stock options granted and restricted
stock issued by the Company to Executive prior to the Change of Control shall
have their vesting accelerated by a number of months equal to twenty-four (24)
months.
2.4 Cash Bonus Payment. Executive shall receive a payment in an amount
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equal to a portion of Executive's target bonus for the year in which Executive's
termination date occurs prorated based on achievement of objectives and the
number of days Executive is employed by the Company during such year (less
applicable withholding).
3. Termination in Absence of Change of Control. In the event of Executive's
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Termination in Absence of a Change of Control, provided that Executive complies
with Section 6.2 below and that Executive continues in the employment of the
Company for such period, if any, as Executive's service is requested, with such
period being no longer than six (6) months, Executive shall receive the
following payments and benefits:
3.1 Basic Severance Compensation. Executive shall receive all salary and
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accrued vacation (less applicable withholding) earned through Executive's
termination date, and the benefits, if any, under Company benefit plans to which
Executive may be entitled pursuant to the terms of such plans.
3.2 Cash Severance Payment. Executive shall receive an amount equal to
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twelve (12) months of Executive's base salary (less applicable withholding),
payable over the twelve months following Executive's termination date on the
Company's regularly scheduled payroll dates.
3.3 Stock Award Acceleration. Upon Executive's termination date, all
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outstanding stock options granted and restricted stock issued by the Company to
Executive prior to Executive's Termination in Absence of Change of Control shall
have their vesting accelerated by a number of months equal to eighteen (18)
months.
3.4 Cash Bonus Payment. Executive shall receive a payment in an amount
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equal to a portion of Executive's target bonus for the year in which Executive's
termination date occurs prorated based on achievement of objectives and the
number of days Executive is employed by the Company during such year (less
applicable withholding).
4. Certain Events Within 6 Months of Effective Date.
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4.1 Voluntary Termination of Employment by Executive. In the event of the
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voluntary termination of employment by Executive within six months of the
Effective Date, other than pursuant to Section 2 or 3 above, provided that
Executive complies with Section 6.2 below and that Executive continues in the
employment of the Company for such period, if any, as Executive's service is
requested, with such period being no longer than the greater of (i) six (6)
months from the Effective Date or (ii) if Executive gives notice of his intent
to terminate his employment on or after the first 90 days following the
Effective Date, 90 days, Executive shall receive the following payments and
benefits:
(a) Basic Severance Compensation. Executive shall receive all salary
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and accrued vacation (less applicable withholding) earned through
Executive's termination date, and the benefits, if any, under
Company benefit plans to which Executive may be entitled pursuant
to the terms of such plans.
(b) Cash Severance Payment. Executive shall receive a lump sum
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payment in an amount equal to six (6) months of Executive's base
salary (less applicable withholding).
(c) Stock Award Acceleration. Upon Executive's termination date, all
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outstanding stock options granted and restricted stock issued by
the Company to Executive prior to Executive's Termination in
Absence of Change of
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Control shall have their vesting accelerated by a number of
months equal to twelve (12) months; provided, however, that, for
purposes of this Section 4.1 (c), the number of stock options
granted to Executive shall be deemed to be 500,000 (i.e., vesting
of 125,000 options will be accelerated).
(d) Cash Bonus Payment. Executive shall receive a payment in an
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amount equal to a portion of Executive's target bonus for the
year in which Executive's termination date occurs prorated based
on achievement of objectives and the number of days Executive is
employed by the Company during such year (less applicable
withholding).
4.2 Termination Without Cause. In the event of the termination of
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employment of Executive by the Company without Cause within six months of the
Effective Date, other than pursuant to Section 2 above, provided that Executive
complies with Section 6.2 below and that Executive continues in the employment
of the Company for such period, if any, as Executive's service is requested,
with such period being no longer than six (6) months, Executive shall receive
the following payments and benefits:
(a) Basic Severance Compensation. Executive shall receive all salary
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and accrued vacation (less applicable withholding) earned through
Executive's termination date, and the benefits, if any, under
Company benefit plans to which Executive may be entitled pursuant
to the terms of such plans.
(b) Cash Severance Payment. Executive shall receive a lump sum
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payment in an amount equal to twelve (12) months of Executive's
base salary (less applicable withholding).
(c) Stock Award Acceleration. Upon Executive's termination date, all
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outstanding stock options granted and restricted stock issued by
the Company to Executive prior to Executive's Termination in
Absence of Change of Control shall have their vesting accelerated
by a number of months equal to twenty-four (24) months, provided,
however, that, for purposes of this Section 4.1 (c), the number
of stock options granted to Executive shall be deemed to be
500,000 (i.e., vesting of 250,000 options will be accelerated).
(d) Cash Bonus Payment. Executive shall receive a payment in an
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amount equal to a portion of Executive's target bonus for the
year in which Executive's termination date occurs prorated based
on achievement of objectives and the number of days Executive is
employed by the Company during such year (less applicable
withholding).
4.3 Death or Disability of Executive. In the event of the death or
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disability of Executive that occurs within six months of the Effective Date,
upon the occurrence of such event, all outstanding stock options granted and
restricted stock issued by the Company to Executive prior to such event shall
have their vesting accelerated by a number of months equal to six (6) months.
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5. Definitions. Capitalized terms used in this Agreement shall have the meanings
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set forth in this Section
5.1 "Cause" means Executive's (a) willful failure to follow the lawful
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written directions of the Chief Executive Officer or the Board of Directors; (b)
conviction of a felony; (c) engagement in misconduct which is materially
detrimental to the Company; (d) failure or refusal to comply in any material
respect to the Company's new hire confidentiality agreement, the Company's
insider trading policy, or any other reasonable policies of the Company where
non-compliance would be detrimental to the Company; or (e) willful and continued
failure to perform substantially the duties and responsibilities of the position
that Executive holds with the Company after a written demand for substantial
performance is delivered to Executive by the Chief Executive Officer of the
Company which specifically identifies the manner in which the Chief Executive
Officer believes that Executive has not substantially performed his duties.
5.2 "Change of Control" means (a) any "person" (as such term is used in
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Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")), other than a trustee or other fiduciary holding securities of
the Company under an employee benefit plan of the Company, becomes the
"beneficial owner" (as defined in Rule 13d-3 promulgated under the Exchange
Act), directly or indirectly, of securities of the Company representing 50% or
more of (A) the outstanding shares of common stock of the Company or (B) the
combined voting power of the Company's then-outstanding securities; (b) the
Company is party to a merger or consolidation, or series of related
transactions, which results in the voting securities of the Company outstanding
immediately prior thereto failing to continue to represent (either by remaining
outstanding or by being converted into voting securities of the surviving or
another entity) at least fifty (50%) percent of the combined voting power of the
voting securities of the Company or such surviving or other entity outstanding
immediately after such merger or consolidation; (c) the sale or disposition of
all or substantially all of the Company's assets (or consummation of any
transaction, or series of related transactions, having similar effect); (d)
there occurs a change in the composition of the Board of Directors of the
Company within a two-year period, as a result of which fewer than a majority of
the directors are Incumbent Directors; (e) the dissolution or liquidation of the
Company; or (f) any transaction or series of related transactions that has the
substantial effect of any one or more of the foregoing.
5.3 "Company" means Homestore.com, Inc., any successor thereto and,
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following a Change of Control, any successor or assign to substantially all the
business and/or assets of Homestore.com, Inc.
5.4 "Diminution of Responsibilities" means the occurrence of any of the
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following conditions, without Executive's consent: (a) Executive's no longer
serving as an executive officer of the company or any successor thereto; (b) a
reduction in Executive's base salary, provided that a reduction in base salary
that is the result of a general reduction in salary in an amount similar to
reductions for other similarly situated Company executives shall not constitute
a "Diminution of Responsibilities"; (c) the Company's requiring Executive to be
based at any office or location more than 50 miles from the Company's
headquarters in Westlake Village, California; or (d) Executive's no longer
holding the position of General Counsel reporting to the Chief Executive Officer
of the Company or, if the Company is a subsidiary of another entity, the Chief
Executive Officer of the Company's ultimate parent corporation.
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5.5 "Disability" means the inability to engage in the performance of
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Executive's duties by reason of a physical or mental impairment which
constitutes a permanent and total disability in the opinion of a qualified
physician.
5.6 "Incumbent Director" means a director who either (1) is a director of
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the Company as of the Effective Date, or (2) is elected, or nominated for
election, to the Board of Directors of the Company with the affirmative votes of
at least a majority of the Incumbent Directors at the time of such election or
nomination, but (3) was not elected or nominated in connection with an actual or
threatened proxy contest relating to the election of directors to the Company.
5.7 "Termination in Absence of Change of Control" means:
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a) any termination of employment of Executive by the Company without
Cause (i) that occurs prior to the date that the Company first
publicly announces it has reached a definitive agreement that would
result in a Change of Control (even though still subject to approval
by the Company's stockholders and other conditions and contingencies),
(ii) that occurs after the Company announces that it has terminated
any such definitive agreement and does not thereafter enter into
discussions that lead to such a definitive agreement, or (iii) that
occurs more than twelve (12) months following a Change of Control; or
(b) any resignation by Executive based on a Diminution of
Responsibilities that occurs within one-hundred and twenty (120) days
following the occurrence of one of the conditions that constitutes a
Diminution of Responsibilities, but only where such Diminution of
Responsibilities occurs: (i) prior to the date that the Company first
publicly announces it has reached a definitive agreement that would
result in a Change of Control (even though still subject to approval
by the Company's stockholders and other conditions and contingencies),
(ii) after the Company announces that it has terminated any such
definitive agreement and does not thereafter enter into discussions
that lead to such a definitive agreement, or (iii) more than twelve
(12) months following a Change of Control.
The term "Termination in Absence of Change of Control" shall not include
any other termination, including a termination of the employment of Executive
(1) by the Company for Cause; (2) by the Company as a result of the Disability
of Executive; (3) except as set forth in Section 4.3 above, as a result of the
death of Executive; or (4) as a result of the voluntary termination of
employment by Executive for reasons other than a Diminution of Responsibilities.
5.8 "Termination Upon Change of Control" means:
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(a) any termination of the employment of Executive by the Company
without Cause during the period commencing on or after the date that
the Company first publicly announces a definitive agreement that would
result in a Change of Control (even though still subject to approval
by the Company's stockholders and other conditions and contingencies)
and ending on the date which is twelve (12) months following a Change
of Control; or
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(b) any resignation by Executive based on a Diminution of
Responsibilities where (i) such Diminution of Responsibilities occurs
during the period commencing on or after the date that the Company
first publicly announces a definitive agreement that would result in a
Change of Control (even though still subject to approval by the
Company's stockholders and other conditions and contingencies) and
ending on the date which is twelve (12) months following the Change of
Control, and (ii) such resignation occurs within one-hundred and
twenty (120) days following such Diminution of Responsibilities.
The term "Termination Upon Change of Control" shall not include any other
termination, including a termination of the employment of Executive (1) by the
Company for Cause; (2) by the Company as a result of the Disability of
Executive; (3) as a result of the death of Executive; or (4) as a result of the
voluntary termination of employment by Executive for reasons other than a
Diminution of Responsibilities.
6. Exclusive Remedy.
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6.1 No Other Benefits Payable. Executive shall be entitled to no other
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compensation, benefits, or other payments from the Company as a result of any
termination of employment with respect to which the payments and/or benefits
described in Sections 2 or 3 have been provided to Executive.
6.2 Release of Claims. The Company may condition payment of the cash
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severance and accelerated vesting of stock awards in Sections 2 or 3 of this
Agreement upon the delivery by Executive of a signed mutual release of claims in
a form satisfactory to the Company.
7. Agreement Not to Solicit. If Company performs its obligations to deliver the
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severance payments and benefits set forth in Sections 2, 3 or 4 of this
Agreement, then for a period of one (1) year after Executive's termination of
employment, Executive will not solicit the services or business of any employee,
distributor, vendor, representative or customer of the Company to discontinue
that person's or entity's relationship with or to the Company.
8. Arbitration. Any claim, dispute or controversy arising out of this Agreement,
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the interpretation, validity or enforceability of this Agreement or the alleged
breach thereof shall be submitted by the parties to binding arbitration by the
American Arbitration Association. The site of the arbitration proceeding shall
be in Los Angeles County, California, or another location mutually agreed to by
the parties.
9. Conflict in Benefits; Noncumulation of Benefits.
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9.1 Effect of Agreement. This Agreement shall supersede all prior
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arrangements, whether written or oral, and understandings regarding the subject
matter of this Agreement and shall be the exclusive agreement for the
determination of any payments and accelerated stock award vesting due upon
Executive's termination of employment, except as provided in Section 9.2.
9.2 Noncumulation of Benefits. Executive may not cumulate cash severance
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payments or acceleration of stock award vesting under this Agreement and another
agreement. If
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Executive has any other binding written agreement with the Company which
provides that upon a Change of Control or termination of employment Executive
shall receive one or more of the benefits described in Sections 2, 3 or 4 of
this Agreement, then with respect to each such benefit the amount payable under
this Agreement shall be reduced by the corresponding amount paid or payable
under such other agreements.
10. Miscellaneous.
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10.1 Successors of the Company. The Company will require any successor or
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assign (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company, expressly, absolutely and unconditionally to assume and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession or assignment had
taken place.
10.2 Modification of Agreement.This Agreement may be modified, amended or
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superceded only by a written agreement signed by Executive and the Chief
Executive Officer or an authorized member of the Board of Directors of the
Company.
10.3 Governing Law. This Agreement shall be interpreted in accordance with
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and governed by the laws of the State of California.
10.4 No Employment Agreement. This Agreement does not alter Executive's
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at-will employment status or obligate the Company to continue to employ
Executive for any specific period of time, or in any specific role or geographic
location.
EXECUTIVE HOMESTORE.COM, INC.
---------------------------- By:
Walter Lowry --------------------------
Name:
Title:
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Executive Retention and Severance Agreement - Homestore.com Inc. and Walter Lowry
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