SETTLEMENT AGREEMENT AND RELEASES
Exhibit 10.1
SETTLEMENT AGREEMENT AND RELEASES
This Settlement Agreement and Releases (the “Agreement”) is made as of September 20, 2005,
between Xxxxxx X. Xxxxx (“Xxxxx”) and Homestore, Inc., formerly known as Xxxxxxxxx.xxx, Inc.
(“Homestore”). Xxxxx and Homestore are referred to collectively herein as the “Parties”.
WHEREAS, Xxxxx was formerly a director, officer and employee of Homestore;
WHEREAS, Xxxxx maintains that he has been made a party to, or is otherwise involved in,
various actions, suits and/or proceedings, and may be made a party to, or be otherwise involved in,
additional actions, suits and/or proceedings in the future, by reason of the fact that Xxxxx was a
director, officer and/or employee of Homestore (collectively, the “Underlying Proceedings”);
WHEREAS, Xxxxx maintains that he has incurred and will continue to incur substantial expenses,
liabilities, and/or losses (including but not limited to attorneys’ fees and other defense costs)
in connection with the Underlying Proceedings (collectively, “Eligible Costs”);
WHEREAS, on or about July 1, 2005, Xxxxx filed a Complaint for Advancement against Homestore
in the Court of Chancery of the State of Delaware in and for New Castle County, Xxxxxx X. Xxxxx v.
Homestore, Inc., C.A. No. 1473-N (the “Litigation”), seeking the advancement, pursuant to Section
6.2 of the Bylaws of Homestore and the Delaware General
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Corporation Law, of certain expenses (including attorneys’ fees) incurred by him in connection
with certain of the Underlying Proceedings;
WHEREAS, Xxxxx also asserts claims for and rights to indemnification by Homestore pursuant to
the Bylaws of Homestore, an indemnity agreement dated December 18, 2001, and Section 145 of the
Delaware General Corporation Law;
WHEREAS, the Parties wish to avoid the inherent burden, expense, and uncertainties associated
with litigation and to resolve and settle the claims and controversies between them, and to provide
for certain agreement upon the terms and conditions set forth in this Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Parties, intending to be legally bound, agree as follows:
I. Payment of Eligible Costs
In full satisfaction of any claims Xxxxx may have with respect to the payment or reimbursement
by Homestore of Eligible Costs incurred or to be incurred by Xxxxx, Homestore agrees to make the
following payments, up to a maximum of $11,000,000.00 (Eleven Million Dollars), as follows:
(A) On the Effective Date of this Agreement (as defined in Section VII below), Homestore will
pay Xxxxx the amount of $7,648,021.22 in reimbursement of all Eligible
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Costs incurred by Xxxxx prior to the date of this Agreement. Xxxxx will deliver to Homestore
a detailed schedule listing all such Eligible Costs, together with appropriate supporting
documentation;
(B) On December 22, 2005, Homestore will pay Xxxxx an amount equal to the sum of all
additional Eligible Costs incurred by Xxxxx on or after the date of this Agreement and prior to
December 20, 2005; provided, however, that the maximum aggregate amount payable pursuant to clauses
(A) and (B) of this Section I shall not exceed $11,000,000.00. Xxxxx shall deliver to Homestore,
on or prior to December 20, 2005, a detailed schedule listing all additional Eligible Costs for
which payment is made pursuant to this clause (B), together with appropriate supporting
documentation; and,
(C) On January 6, 2006, Homestore shall deposit in an irrevocable grantor trust established
for the benefit of Xxxxx (the “Trust”) an amount (the “Trust Amount”) equal to the difference
between (i) $11,000,000.00 and (ii) the aggregate amount previously paid by Homestore pursuant to
clauses (A) and (B) above. Homestore shall be the grantor of the trust and shall be responsible
for funding the trust as set forth in the preceding sentence; otherwise, except for its obligation
to cooperate with Xxxxx under Section XV below, Homestore shall have no responsibility with respect
to the establishment of the trust, the appointment of the trustee, or the administration of the
trust. The Trust Amount and all earnings thereon shall be disbursed by the trustee solely in
payment or reimbursement of additional Eligible Costs incurred by Xxxxx on or after December 20,
2005. The trustee shall make any such disbursement only upon receipt of
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appropriate supporting documentation that substantiates the incurrence of such additional
Eligible Costs by Xxxxx. Within twenty (20) days after the end of each calendar month, Xxxxx shall
deliver to Homestore a detailed schedule listing all Eligible Costs paid from the Trust during such
month, together with appropriate supporting documentation. Any amount remaining in the Trust upon
conclusion of all Underlying Proceedings shall be returned to Homestore.
(D) All amounts payable directly to Xxxxx pursuant to clauses (A) and (B) above shall be paid
by the wiring of such funds to an account identified by Xxxxx in written instructions provided to
Homestore following the execution of this Agreement.
(E) The deposit to be made by Homestore to the Trust shall be made by wiring the funds to an
account identified by Xxxxx in written instructions provided to Homestore following the execution
of this Agreement.
(F) Specific Release by Xxxxx. Except to enforce Homestore’s obligations under this Section
I, in exchange for the payments to be made by Homestore pursuant to this Section I, Xxxxx
specifically releases and discharges Homestore, each of its present and former directors, officers,
employees, parents, divisions, subsidiaries, affiliates, attorneys, and accountants, and each of
their heirs, executors, administrators, predecessors, successors and assigns (all, collectively,
the “Homestore Releasees”), from any rights or claims arising under the Bylaws of Homestore, the
Delaware General Corporation Law, common law, the indemnity agreement dated December 18, 2001,
and/or any other source or theory, for advancement of expenses, or
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indemnification, including with respect to any actions that have been filed or may be filed
against Xxxxx or others in the future.
II. Additional Exchange of Releases
A. Release by Xxxxx
Separate and apart from the specific release set forth in Section I(F) above, and as
consideration for the general release provided by Homestore pursuant to Section II(B) hereof,
except for the matters released pursuant to Section I(F) above and except to enforce Homestore’s
obligations under this Agreement, Xxxxx irrevocably releases and discharges the Homestore Releasees
for all time from all actions, causes of action, suits, debts, dues, sums of money, accounts,
reckonings, bonds, bills, specialties, covenants, contracts, controversies, agreements, promises,
variances, trespasses, damages, judgments, extents, executions, claims and demands whatsoever, in
law, admiralty or equity, which against any Homestore Releasee, Xxxxx or Xxxxx’x heirs, executors,
administrators, successors and assigns ever had, now has or hereafter can, shall or may have, for,
upon, or by reason of any matter, cause or thing whatsoever from the beginning of the world to the
Effective Date of this Agreement.
Without in any way limiting the foregoing release, Xxxxx specifically releases and discharges
the Homestore Releasees from any claims arising out of or related to Xxxxx’x employment or
separation from employment with Homestore, including, but not limited to, any claims for salary,
bonuses, severance pay, vacation pay, or any benefits under the Employee Retirement Income Security
Act, sexual harassment, or discrimination based on race, color, national origin, ancestry,
religion, marital status, sex, sexual orientation, citizenship status, pregnancy,
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leave of absence, medical condition or disability (as defined by the Americans with
Disabilities Act, or any other state or local law), claims under the Age Discrimination in
Employment Act and/or the Older Workers Benefit Protection Act, or any other unlawful
discrimination, breach of implied or express contract, breach of promise, misrepresentation,
negligence, fraud, estoppel, defamation, infliction of emotional distress, loss of consortium,
violation of public policy or wrongful or constructive discharge, and for attorneys’ fees.
Xxxxx agrees that this release includes a full and final release of all unknown and
unsuspected claims or damages that, if known, might have affected his decision to enter into this
Agreement and release, as well as a release of any and all claims now known or disclosed that arise
as a result of any act or omission occurring before the Effective Date of this Agreement.
Therefore, as to any and all such claims, Xxxxx waives any and all rights or benefits under the
terms of Section 1542 of the California Civil Code, which provides as follows:
“A general release does not extend to claims which the creditor does not know or
suspect to exist in his favor at the time of executing the release, which if known
by him must have materially affected his settlement with the debtor”,
and under any and all similar provisions contained in the laws of any and all other jurisdictions,
within and without the United States, to the fullest extent that he may lawfully so waive all such
rights and benefits. Xxxxx may hereafter discover facts related to the claims released herein in
addition to or different from those which he believed to be true on the date of this Agreement.
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The claims released herein shall, nonetheless, be deemed to be fully, finally, and forever settled
and released upon the execution of this Agreement, without regard to the subsequent discovery or
existence of such additional or different facts.
B. Release by Homestore
In consideration for the release set forth in Section II(A) above, and except to enforce
Xxxxx’x obligations under this Agreement, Homestore, on behalf of itself and each of its present
and former parents, subsidiaries, divisions, and affiliates and each of their predecessors,
successors and assigns, irrevocably releases and discharges Xxxxx, members of Xxxxx’x immediate
family, entities controlled by Xxxxx, trusts for which Xxxxx is or was a beneficiary, trustee or
trustor, partnerships for which Xxxxx is or was a partner, companies and corporations of which
Xxxxx is or was a majority or controlling owner, shareholder or member, and each of their present
and former agents, attorneys, predecessors, parents, subsidiaries, affiliates, heirs, executors,
administrators, successors and assigns (all, collectively, the “Xxxxx Releasees”), from all
actions, causes of action, suits, debts, dues, sums of money, accounts, reckonings, bonds, bills,
specialties, covenants, contracts, controversies, agreements, promises, variances, trespasses,
damages, judgments, extents, executions, claims and demands whatsoever, in law, admiralty or
equity, which against any Xxxxx Releasee, Homestore and/or any of its present and former parents,
subsidiaries, divisions, and affiliates and/or any of their predecessors, successors and assigns
ever had, now has or hereafter can, shall or may have, for, upon, or by reason of any matter, cause
or thing whatsoever from the beginning of the world to the Effective Date.
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Without in any way limiting the generality of the foregoing release, and without regard to
whether facts and circumstances may change in the future that might otherwise arguably affect such
rights or claims (e.g., any decision or outcome adverse to Xxxxx in any of the Underlying
Proceedings), Homestore irrevocably releases and discharges the Xxxxx Releasees for all time from
any rights or claims, whether arising under the Bylaws of Homestore, the Delaware General
Corporation Law, common law, or the indemnity agreement dated December 18, 2001, the undertaking
provided to Homestore by Xxxxx and/or any other source or theory, for repayment or recoupment of
amounts paid to Xxxxx as advancement of expenses or as indemnification (including the settlement
payments made under this Agreement for Eligible Costs), and from any claims for fraud, negligence
or breach of fiduciary duty, or for contribution or indemnity (including claims with respect to any
actions that may be filed against Homestore or others in the future). Homestore acknowledges that
this release prohibits Homestore from ever seeking repayment or recoupment from any Xxxxx Releasee
of amounts paid to Xxxxx as advancement of expenses or as indemnification (including the settlement
payments made under this Agreement for Eligible Costs).
Homestore agrees that this release includes a full and final release of all unknown and
unsuspected claims or damages that, if known, might have affected its decision to enter into this
Agreement and release, as well as a release of any and all claims now known or disclosed that arise
as a result of any act or omission occurring before the Effective Date of this Agreement.
Therefore, as to any and all such claims, Homestore waives any and all rights or benefits under the
terms of Section 1542 of the California Civil Code, which provides as follows:
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“A general release does not extend to claims which the creditor does not know or
suspect to exist in his favor at the time of executing the release, which if known
by him must have materially affected his settlement with the debtor”,
and under any and all similar provisions contained in the laws of any and all other jurisdictions,
within and without the United States, to the fullest extent that it may lawfully so waive all such
rights and benefits. Homestore may hereafter discover facts related to the claims released herein
in addition to or different from those which it believed to be true on the date of this Agreement.
The claims released herein shall, nonetheless, be deemed to be fully, finally, and forever settled
and released upon the execution of this Agreement, without regard to the subsequent discovery or
existence of such additional or different facts.
III. Released Claims
Each of the Parties agrees and covenants that he or it will not file or cause to be filed any
lawsuit, arbitration or other proceeding asserting any claim released by the foregoing releases.
In the event a Party files any such lawsuit, arbitration or other proceeding that is determined to
be encompassed by the foregoing releases, the Party so filing will indemnify the other Party for
all costs incurred in defending or otherwise responding to such lawsuit, arbitration or proceeding,
including attorneys’ fees. The foregoing does not in any way limit any other remedies available to
the Parties for breach of this Agreement.
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IV. The Litigation
Upon execution of this Agreement, counsel for Xxxxx will deliver to counsel for Homestore a
copy of an executed Notice of Dismissal with Prejudice substantially in the form annexed hereto as
Exhibit A. The original executed Notice of Dismissal with Prejudice will be filed in the Chancery
Court by counsel for Xxxxx as soon as practicable following actual receipt by Xxxxx of the payment
required by Section I(A).
X. Xxxxx Litigation
To the extent that Homestore enters into a settlement of Xxxxxxx Xxxxx, et al., v. Homestore,
Inc., et al., Case No. BC 312115, presently pending in the Superior Court of the State of
California for the County of Los Angeles, Homestore will secure, as part of such settlement, a
complete release and dismissal with prejudice of the claims against Xxxxx, including any actual or
potential cross-claims against Xxxxx for contribution or indemnity. Nothing in this paragraph
shall in any way obligate Homestore to advance or indemnify Xxxxx’x defenses costs or any judgment
entered against Xxxxx in the Xxxxx case, other than as set forth in Section I of this Agreement.
VI. No Admission of Liability
Neither this Agreement, nor anything contained herein shall be construed as an admission by
any Party that he or it has in any respect violated or abridged any federal, state, or local law or
any contractual or other right or obligation that he or it may owe or may have owed to the other
Party.
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VII. Effective Date
Although this Agreement is dated as of September 20, 2005 and has been executed as of that
day, the parties acknowledge that Xxxxx shall have a period of seven (7) days from September 20,
2005 in which he may consider and revoke this Agreement. Accordingly, the parties acknowledge that
this Agreement shall not become effective unless and until, after the expiration of seven (7) days
after September 20, 2005 (the “Effective Date”), Xxxxx has not revoked the Agreement. In the event
Xxxxx revokes this Agreement pursuant to this paragraph, this Agreement shall be null and void ab
initio.
VIII. Governing Law
This Agreement shall be subject to, governed by, and construed and enforced pursuant to the
laws of the State of Delaware without regard to its choice of law principles, and the parties agree
to the non-exclusive jurisdiction of the respective state and federal courts of Delaware for the
resolution of any disputes concerning the interpretation and/or enforcement of this Agreement.
IX. Entire Agreement
This Agreement constitutes the entire agreement between and among the Parties regarding the
subject matter hereof, superseding all prior written and oral agreements. Without limiting the
foregoing, the Parties expressly agree that any and all prior oral or written agreements concerning
the employment of Xxxxx (including but not limited to the indemnity agreement dated December 18,
2001 and the undertaking subsequently provided to Homestore by
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Xxxxx in relation to advancement of attorneys’ fees and defense costs) are terminated,
canceled and of no further force or effect.
With respect to the subject matter of this Agreement, no Party shall be bound by any
representations, warranties, promises, statements or information unless set forth herein. This
Agreement has been jointly drafted by the Parties, none of whom shall be deemed to be its drafter
for purposes of any rule of law which construes a document against the person who drafted it.
X. Voluntary Execution and Representation by Counsel
The Parties acknowledge that they have carefully read this Agreement and understand all of its
terms including the full and final release of claims set forth above. The Parties further
acknowledge that they have voluntarily entered into this Agreement; that they have not relied upon
any representation or statement, written or oral, not set forth in this Agreement; that the only
consideration for signing this Agreement is as set forth herein; and that they have had this
Agreement reviewed by their attorneys and have received advice from their attorneys with which they
are satisfied. Xxxxx acknowledges and represents that Homestore has given Xxxxx a period of at
least twenty-one (21) days in which to consider this Agreement.
XI. No Other Existing Suits
Except for the Litigation, the Parties represent and warrant that they do not presently have
on file any claims, charges, grievances, actions, appeals, or complaints against one
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another in or with any administrative, state, federal or governmental entity, agency, board or
court, or before any other tribunal or panel or panel of arbitrators, public or private.
XII. Ownership of Claims
The Parties represent and warrant that they are the sole and lawful owners of all rights,
title and interest in and to all released matters, claims and demands referred to herein.
XIII. Non-Disparagement
Subject to obligations under applicable laws and regulations, each Party agrees not to make
any statements or comments to any third party or entity that disparage the reputation of the other
Party. “Disparage”, as used in this section, means to make any statement, written or oral, that
casts another party in a negative light of any kind, or implies or attributes any negative quality
to another party. This section shall have no application to communications with government
entities, officials or representatives or to any deposition, trial or other testimony given in any
actions, suits and/or proceedings.
XIV. Severability
The provisions of this Agreement are severable. If any one of the provisions contained
herein, or the application thereof in any manner or circumstance, is held invalid, illegal or
unenforceable in any respect and for any reason, the validity, legality and enforceability of any
such provision is every other respect and of the remaining provisions hereof shall not be affected
or impaired in any way, it being intended that all of the parties’ rights and privileges arising
hereunder shall be enforceable to the fullest extent permitted by law.
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XV. Cooperation
Each of the Parties shall execute such other and further documents and do such other and
further acts as may be reasonably required to effectuate the intent of the Parties and carry out
the terms of this Agreement.
XVI. Valid Authority
All persons executing this Agreement, or any related settlement documents, represent and
warrant that they have the full authority to do so and that they have the authority to take
appropriate action required or permitted to be taken pursuant to the Agreement to effectuate its
terms. Without limiting the generality of the foregoing, Homestore represents and warrants that
this Agreement and the promises and actions set forth herein have been approved by its Board of
Directors at a meeting duly and properly called, and that Homestore’s officers and agents have been
duly authorized by the Board of Directors to take all appropriate actions to effectuate the terms
of this Agreement.
XVII. Successors and Assigns
It is expressly understood and agreed by the Parties that this Agreement and all of its terms
shall be binding upon the Parties’ respective heirs, executors, trustees, administrators,
successors and assigns.
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XVIII. Counterparts
This Agreement may be executed by the Parties in counterparts, each of which shall be deemed
an original, and all of which shall be deemed to constitute but one and the same instrument.
XIX. Amendment or Modification
No amendment or modification of the Agreement shall be valid unless it is in writing and
signed by the Parties hereto.
| /s/ Xxxxxx X. Xxxxx | ||||
| XXXXXX X. XXXXX | ||||
| HOMESTORE, INC. |
||||
| By: | /s/ Xxxxxxx X. Xxxxxxx | |||
| Name: | Xxxxxxx X. Xxxxxxx | |||
| Title: | Executive Vice President, General Counsel and Secretary | |||
EXHIBIT A
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
| XXXXXX X. XXXXX, | ) | |||||||||
| ) | ||||||||||
| ) | ||||||||||
| Plaintiff, | ) | |||||||||
| ) | ||||||||||
| - against - | ) | C.A. No. 1473-N | ||||||||
| ) | ||||||||||
| HOMESTORE, INC., | ) | |||||||||
| ) | ||||||||||
| Defendant. | ) | |||||||||
| ) | ||||||||||
NOTICE OF DISMISSAL WITH PREJUDICE
PLEASE TAKE NOTICE that plaintiff Xxxxxx X. Xxxxx, by and through his undersigned counsel and
pursuant to Court of Chancery Rule 41(a)(1), hereby dismisses with prejudice the within-captioned
action.
| POTTER XXXXXXXX & XXXXXXX LLP | ||||
| By | ||||
| Xxxxxx X. Xxxx (#2491) | ||||
| 0000 X. Xxxxxx Xxxxxx | ||||
| X.X. Xxx 000 | ||||
| Xxxxxxxxxx, XX 00000 | ||||
| (000) 000-0000 | ||||
| Attorneys for Plaintiff | ||||
OF COUNSEL:
Paul, Hastings, Xxxxxxxx & Xxxxxx, LLP
Xxxxxx X. Xxxxxxxx
000 Xxxxx Xxxxxx Xxxxxx — 00xx Xxxxx
Xxx Xxxxxxx, XX 00000
Xxxxxx X. Xxxxxxxx
000 Xxxxx Xxxxxx Xxxxxx — 00xx Xxxxx
Xxx Xxxxxxx, XX 00000
Dated: September ___, 2005
