EXHIBIT 10.22
EMPLOYMENT AGREEMENT
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THIS AGREEMENT, executed on the 21st day of August, 1998 (the "Execution
Date"), effective as of August 21, 1998 (the "Effective Date"), is made by and
between NetSelect, Inc. and RealSelect, Inc., Delaware corporations (the
"Company"), and Xxxxxxx X. Xxxxxxx (the "Executive") and shall constitute an
amendment and restatement of the employment agreement between the Company and
Executive dated November 26, 1996.
WHEREAS, the Company and Executive previously entered into an agreement
dated November 26, 1996 providing for the Executive's employment as President
and Chief Operating Officer and, if so elected, for Executive's service on the
Board of Directors of the Company;
WHEREAS, the Company and Executive desire to amend and restate such
agreement as hereinafter set forth;
NOW THEREFORE, in consideration of the mutual covenants contained herein,
the Company and the Executive agree as follows:
ARTICLE I
Term of Agreement
1.1 Term. The term of employment under this Agreement shall be for the
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one-year period commencing on the Effective Date (the "Employment Term").
ARTICLE II
Position and Duties
2.1 Position. The Executive shall be employed as the President of the
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Company. Notwithstanding the foregoing, the Executive shall continue to perform
duties as Chief Operating Officer until the Company hires a new Chief Operating
Officer. The Executive shall serve as an observer to the Chief Operating Officer
Selection Committee with rights to participate in all meetings. The Executive
shall serve as President of the Company until his full-time employment is no
longer required by the Company.
2.2 Duties.
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(a) Phase I - The Executive agrees to perform the duties, undertake
the responsibilities and exercise the authority customarily performed,
undertaken and exercised by persons situated in a similar executive capacity.
The Executive shall report to the Chief Executive Officer. 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 of his
business time to the business and affairs of the Company and to the duties and
responsibilities assigned to him hereunder. Notwithstanding the
foregoing, with the written permission of the Board of Directors the Executive
may (i) 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 Executive's
duties and responsibilities hereunder.
(b) Phase II - Following the hiring by the Company of a new Chief
Operating Officer, the Executive shall assist in the transition of the new Chief
Operating Officer and shall have such responsibilities as assigned by the
Company's Chief Executive Officer.
(c) Phase III - When the Company no longer requires the Executive's
full time employment, the Executive agrees at the Company's option to maintain a
consulting relationship for up to 3 additional months following the Executive's
Termination Date. Executive shall report to the CEO on projects consistent with
previous positions and shall be paid $15,833 per month for such consulting
services.
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 Employment Term a base salary at the rate of $190,000 per
annum or such larger amount as the Board of Directors may from time to time
determine (hereinafter referred to as 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 Board of Directors and
may be further increased (but not decreased) in such amounts as the Board of
Directors in its discretion may decide.
3.2 Short-Term Incentives. For each calendar year ending during the
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Employment Term, the Executive's bonus compensation ("Annual Bonus") shall be at
an annual rate equal to a percentage between 0% and 100% of his Base Salary in
effect on the last day of such year, with a target of 40% of Base Salary (the
"Targeted Bonus") if the Company and the Executive achieve budgeted financial
and other performance targets which shall be established by the Board and as set
forth in the Company's Business Plan (the "Performance Goals"). The Executive's
Annual Bonus shall be 60% of Base Salary if 120% of the Performance Goals are
achieved and a percentage less than 40% of Base Salary to be determined by the
Board if the Company's performance falls short of the Performance Goals. The
Executive's Annual Bonus earned with respect to each year shall be paid at the
same time as annual incentive bonuses with respect to that year are paid to
other senior executives of the Company generally.
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ARTICLE IV
Other Benefits
4.1 Long-Term Incentives; Other Prerequisites.
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(a) All options held by the Executive shall vest and be exercisable in
accordance with the terms of the respective stock option grants except as
described in Section 5.1(c) below and shall terminate ten years after the date
of grant.
(b) The Executive shall also be eligible to participate, on terms
comparable to those applicable to other senior executives of the Company, in
such other long-term incentive compensation plans maintained by the Company
which provide opportunities to receive compensation in addition to annual base
salary to senior executives of the Company.
(c) Within five (5) days after an IPO (as defined in that certain
Stock and Interest Purchase Agreement, dated as of November 26, 1996, by and
among NetSelect, Inc., NetSelect LLC and InfoTouch Corporation), the Company
shall cause a registration statement to be filed, in compliance with the
Securities Act of 1933, as amended, on Form S-8 or such other similar form
adopted by the Securities and Exchange Commission after the date hereof, which
effects the registration of all shares of the Company's voting common stock
issuable pursuant to the Plan, including, but not limited to, the shares of the
Company's voting common stock underlying the options granted to the Executive.
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.
4.5 Executive Allowance. The Executive shall be entitled to an annual
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allowance, not to exceed $4,800 for an automobile and cellular telephone. The
Company
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will pay such amounts as expenses are incurred upon presentation by the
Executive of an itemized account of such expense.
ARTICLE V
Termination of Employment
5.1 Voluntary Resignation for Good Reason, Termination other than for
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Cause or after the Employment Term. The Company may terminate the Executive's
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employment for any reason at any time and the Executive may voluntarily resign
for any reason at any time. If, during the Employment Term, (i) the Company
terminates the Executive's employment other than for Cause or (ii) the Executive
resigns his employment for Good Reason, or if, at any time on or after the first
anniversary of the Effective Date, the Company terminates Executive for any
reason or Executive resigns for any reason, the Company shall provide the
following to the Executive:
(a) As soon as practicable after the Termination Date (as defined in
Section 6.6) 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") and any Annual Bonus
accrued in a prior year but unpaid as of the Termination
Date (the "Unpaid Bonus"); plus
(ii) severance pay in an amount equal to 100% of the Executive's
then current Base Salary (the "Severance Amount").
(b) The amount and value of his entire plan account and interest
under any investment plan or stock ownership plan (which does not include the
Plan), and all employer contributions made or payable to any such plan for his
account prior to the end of the month in which the Termination Date occurs shall
be deemed vested and payable to him. Such payment or distribution shall be in
accordance with the elections made by the Executive.
(c) All stock options, stock appreciation rights, restricted stock,
and other incentive compensation granted to the Executive by the Company shall
become immediately vested.
5.2 Termination for Cause.
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(a) All obligations of the Company under this Agreement shall cease
if, during the Employment Term, 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 unvested options or shares held by
Executive shall be forfeited or
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repurchased at their original purchase price and any vested 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 5.2 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 5.2 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 the 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.
5.3 Voluntary Resignation other than for Good Reason. If, during the
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Employment Term, the Executive resigns other than for Good Reason, 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 and the Unpaid
Bonus In addition, all unvested options or shares held by Executive which were
acquired upon exercise of an option ("Option Shares") shall be forfeited or
repurchased at their original purchase price and any vested Option Shares held
by Executive shall be subject to repurchase by the Company as provided below at
their then Fair Value. In addition, all stock options, stock appreciation
rights, restricted stock and other incentive compensation
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granted to the Executive by the Company shall, to the extent vested, remain
outstanding for one (1) year from the Termination Date.
5.4 Payments upon the Executive's Termination. The foregoing payments upon
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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. The
Executive shall not be required to mitigate the amount of any payment by seeking
other employment or otherwise, nor shall the amount of any such payment be
reduced by any compensation earned by the Executive as the result of employment
by another employer after the Termination Date.
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,
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(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), or (iii) any other criminal act against the Company
involving dishonesty or willful misconduct intended to injure the Company
(whether or not a felony), or (c) willful malfeasance or gross misconduct by the
Executive which damages the Company; provided, however, that the Company shall
not be deemed to have Cause pursuant to clause (a) or (c) unless the Company
gives the Executive written notice that the specified conduct or event has
occurred and the Executive fails to cure the conduct or event within thirty (30)
days after receipt of such notice. Termination of the Executive for Cause shall
be communicated by a Notice of Termination. For purposes of this Agreement, a
"Notice of Termination" shall mean delivery to the Executive of a copy of a
resolution duly adopted by the affirmative vote of not less than a majority of
the entire membership of the Company's Board of Directors at a meeting of the
Board called and held for the purpose (after reasonable notice to the Executive
and reasonable opportunity for the Executive, together with the Executive's
counsel, to be heard before the Board prior to such vote), of finding that in
the good faith opinion of the Board the Executive was guilty of conduct
constituting Cause and specifying the particulars thereof in detail, including,
with respect to the conduct or event described in clause (a) or (c), that the
Executive failed to cure such conduct or event during the thirty-day period
following the date on which the Company gave written notice of the conduct or
event referred to in clause (a) or (c). For
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purposes of this Agreement, no such purported termination of the Executive's
employment shall be effective without such Notice of Termination.
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 1 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 "Good Reason" means, at any time during the Employment Term, the
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occurrence of any one of the following events:
(i) The assignment to the Executive by the Company of duties
inconsistent with the Executive's duties as defined in Section 2.2(a), any
change to the Executive's title other than as contemplated by Section 2.1 or any
material reduction in his duties or responsibilities prior to the date the
Company hires a new Chief Operating Officer, except in connection with the
termination of the Executive's employment for Cause, Disability or as a result
of the Executive's death or by the Executive other than for Good Reason;
(ii) A reduction by the Company in the Executive's Base Salary as in
effect at the commencement of the Employment Term or as the same may be
increased from time to time during the term of this Agreement;
(iii) A failure by the Company, without the Executive's written
consent, to continue the Executive as a participant in the Incentive Program on
at least the same basis as the Executive participates at the commencement of the
Employment Term or in one or more substitute plans with, in the aggregate,
benefits and bonus opportunities which are substantially similar to those
provided by the Incentive Program at the commencement of the Employment Term;
(iv) The failure by the Company to obtain the specific assumption of
this Agreement by any successor or assign of the Company or any person acquiring
substantially all of the Company's assets; or
(v) Any material breach by the Company of this Agreement.
6.5 "Termination Date" means the date as of which the Executive's full-
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time 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.
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ARTICLE VII
Confidential Information
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 Employment
Term and thereafter the Executive will keep such information confidential and
not 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(a); (ii) was available to the Executive on a nonconfidential basis
prior to its disclosure to the Executive through his status as an officer or
director of the Company; or (iii) becomes available to the Executive on a
nonconfidential basis from a third party who is not bound by any confidentiality
obligation to the Company.
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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.
8.2 Excise Tax Payments. In the event that the severance and other
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benefits provided to Executive (i) constitute "parachute payments" within the
meaning of Section 280G of the Internal Revenue Code of 1986, as amended and
(ii) but for this Section 8.2, such severance and benefits would be subject to
the excise tax imposed by Section 4999 of the Code, then Executive's severance
benefits shall be payable either:
(a) in full, or
(b) as to such lesser amount which would result in no portion of such
severance and other benefits being subject to excise tax under Section 4999 of
the Code, whichever of the foregoing amounts, taking into account the applicable
federal, state and local income taxes and the excise tax imposed by Section
4999, results in the receipt by Executive on an after-tax basis, of the greatest
amount of severance benefits under Article V. Unless the Company and Executive
otherwise agree in writing, any determination required under this Section 8.2
shall be made in writing by independent public accountants agreed to by the
Company and Executive (the "Accountants"), whose determination shall be
conclusive and binding upon Executive and the Company for all purposes. For
purposes of making the calculations required by this Section 8.2, the
Accountants may make reasonable assumptions and approximations concerning
applicable taxes and may rely on reasonable, good faith interpretations
concerning the application of Sections 280G and 4999 of the Code. The Company
and Executive shall furnish to the Accountants such information and documents as
the Accountants may reasonably request in order to make a determination under
this Section 8.2. The Company shall bear all costs the Accountants may
reasonably incur in connection with any calculations contemplated by this
Section 8.2.
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ARTICLE IX
Miscellaneous
9.1 Arbitration. Any controversy or claim arising out of or relating to
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this Agreement or the breach of this Agreement that cannot be resolved by the
Executive and the Company, including (i) any dispute as to the calculation of
the amounts payable pursuant to Article V or (ii) any entitlement under Section
9.2(a), shall, at the instance of either the Executive or the Company, be
submitted to arbitration in California in accordance with California law and the
procedures of the American Arbitration Association. The determination of the
arbitrator(s) shall be conclusive and, subject to the provision for
indemnification in Section 9.2, binding on the Company and the Executive and,
subject to Section 9.9, judgment may be entered on the arbitrator(s)' award in
any court having jurisdiction.
9.2 Fees, Expenses and Indemnification.
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(a) The Company shall pay all reasonable legal fees and related
expenses (including the costs of experts, evidence and counsel) incurred by the
Executive as a result of (i) the Executive's hearing before the Board as
contemplated in Section 6.2 of this Agreement or (ii) the Executive's seeking to
obtain or enforce any right or benefit provided by this Agreement, provided the
Executive substantially prevails in the proceeding.
(b) The Company shall indemnify the Executive to the fullest extent
permitted by the laws of the State of Delaware, as in effect at the time of the
subject act or omission, and shall advance to the Executive reasonable
attorney's fees and expenses as such fees and expenses are incurred (subject to
an undertaking from the Executive to repay such advances if it shall be finally
determined that by a judicial decision which is not subject to appeal that the
Executive was not entitled to the reimbursement of such fees and expenses) and
he will be entitled to the protection of any insurance policies the Company may
elect to maintain generally for the benefit of its directors and officers
against all costs, charges and expenses incurred or sustained by him in
connection with any action, suit or proceeding or which he may be made a party
by reason of his being or having been a director, officer or employee of the
Company or any of its subsidiaries or his serving or having served any other
enterprise as a director, officer or employee at the request of the Company
(other than any dispute, claim or controversy arising under or relating to this
Agreement).
9.3 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.
9.4 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,
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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.
9.5 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, agreement 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.
9.6 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.
0000 Xxxxxxx Xxxxxx Xxxx
Xxxxx 000
Xxxxxxxx Xxxxxxx, XX 00000
With a copy to:
Fenwick & West LLP
Xxx Xxxx Xxxx Xxxxxx
Xxxx Xxxx, XX 00000
Attention: Xxxx X. Xxxxxxx
If to the Executive:
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.
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9.7 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.
9.8 Entire Agreement. This Agreement and the Exhibits attached hereto and
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made a part hereof from the entire agreement between the parties hereto with
respect to any severance payments and with respect to the subject matter
contained in this Agreement.
9.9 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. Subject to the parties' agreement to arbitrate
disputes set forth in Section 9.1, 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 mail to either party in
accordance with Section 9.6 hereof shall be effective service or process for any
action, suit or proceeding brought against the party in any such court and,
absent any statue, rule or order to the contrary, that each party shall have
thirty (30) days from actual receipt of any complaint to answer or otherwise
plead with respect thereto. The parties hereby irrevocably and unconditionally
waive any objection to the laying of venue of any action, suite or proceeding
arising out of this Agreement or the transactions contemplated hereby in the
courts of the State of California or the United States of America located in the
State of California, and hereby further irrevocably and unconditionally waive
and agree not to plead or claim in any such court that any such action, suit or
proceeding brought in any such court has been brought in an inconvenient forum.
[SIGNATURE PAGE TO FOLLOW]
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IN WITNESS WHEREOF, the parties have executed this Agreement on the date
first above written.
NETSELECT, INC.
By: /s/ Xxxxxx Xxxxx
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REALSELECT, INC.
By: /s/ Xxxxxx Xxxxx
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XXXXXXX X. XXXXXXX
/s/ Xxxxxxx X. Xxxxxxx
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Executive
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