1
Exhibit 10.6
LTI ACQUISITION CORP.
EMPLOYMENT AGREEMENT
This AGREEMENT (the "Agreement") dated this 8th day of
January, 1999 (the "Effective Date") is by and between LTI Acquisition Corp. a
Delaware corporation (the "Company") and Xxxx X. Xxxxxxxx III (the
"Executive").
The Company desires to employ the Executive to devote full
time to the business of the Company, and the Executive desires to be so
employed on the terms and conditions outlined below.
The parties agree as follows:
1. Employment. The Company agrees to employ Executive
and Executive agrees to be so employed in the capacity of Senior Vice
President. Executive shall perform such functions and undertake such
responsibilities as are assigned from time to time by the President of the
Company or the Board of Directors, relating principally and initially to
maintaining Company operations, to the conversion of LeaseTrend data and
customer base to the Company's systems and forms of contract, and to the
expansion of the LeaseTrend database and customers. Executive shall not be
required to relocate from Cincinnati, OH as a condition of employment.
2. Term. The term of Executive's employment under this
Agreement shall commence on the date of this Agreement and shall continue for
the initial term of three (3) years (the "Initial Term"), and for automatic and
successive renewal terms of one (1) year each (each, a "Renewal Term" and
collectively, the "Renewal Terms"), unless either the Company or Executive
elects not to extend the term beyond the Initial Term or any Renewal Term
(herein, the Initial Term or a Renewal Term is sometimes referred to as the
"Current Term") and gives to the other party hereto written notice of
termination at least six (6) months prior to the end of the Initial Term or at
least three (3) months prior to the end of the Renewal Term.
3. Full time and efforts. Executive shall diligently
and conscientiously devote substantially his full time and exclusive attention
and best efforts to his duties under this contract.
4. Compensation.
(a) Commencing as of the Effective Date of this
Agreement, the Company shall pay Executive base compensation for his services
in the amount of $120,000 per year (the "Base Compensation"). The President of
the Company in consultation with the Compensation Committee of the Board of the
Company will review Executive's performance and determine any appropriate
increases annually thereafter. Base Compensation shall be payable in biweekly
or such other installments as shall be consistent with the Company's payroll
procedures for its senior executives.
2
(b) In addition, Executive shall be eligible to
earn a quarterly performance bonus (the "Quarterly Bonus") of up to 75% of Base
Compensation payable for the quarter pursuant to criteria set forth on Exhibit
A. The Quarterly Bonus, if any, shall be paid within sixty (60) days of the
end of the quarter.
(c) In addition, Executive shall receive 105,000
stock options in Realty Information Group, Inc. ("RIG") (the "Initial
Options"), the Company's parent, vesting 25% on the Closing Date of the
Acquisition and Reorganization Agreement by and among Realty Information Group,
Inc., and LeaseTrend, Inc. and the Shareholders of LeaseTrend, Inc., and 25% on
each of the three subsequent anniversaries of that Closing Date. The Initial
Options were awarded by the Board of Directors of RIG on December 14, 1998,
when Executive was appointed an officer of RIG, and Option Pricing will be set
at 8 3/4, the fair market price of the stock as of that date. The Company will
make reasonable efforts to cause the Initial Options to be deemed Incentive
Stock Options in accordance with the RIG Incentive Stock Option Plan (the
"Stock Option Plan"), but shall not be required to amend the Stock Option Plan.
In the event of an irreconcilable inconsistency between the Stock Option Plan
and this Agreement, this Agreement shall control, and the options shall not be
deemed Incentive Stock Options under the Stock Option Plan. The Company shall
within ninety (90) days of the Effective Date of this Agreement provide the
Executive with an award agreement setting forth the options that have been
awarded to the Executive consistent with the provisions of this Agreement.
5. Benefits. Executive shall be entitled to participate
in, and receive benefits from any insurance, medical, disability, vacation or
pension plan of the Company for which Executive satisfies the generally
applicable criteria for eligibility, and to other perquisites which may be in
effect at any time during the term hereof that are generally available to
senior executive officers of the Company. With the exception of the Stock
Option Plan, the Company will make reasonable efforts to credit Executive, for
purposes of benefits, for the period Executive served as an employee of
LeaseTrend, Inc., but shall not be required to amend the terms of its
respective benefit plans.
6. Expense reimbursement. The Company shall reimburse
Executive for all categories of expenses incurred in carrying out his duties
under this Agreement that the Company's policies regard as reasonable and
necessary. Executive shall present to the Company from time to time an
itemized account of such expenses in any form generally required by the
Company.
7. Termination without cause.
(a) By the Company. The Company may terminate
this Agreement without cause upon sixty (60) days' written notice. In such an
event (i) any remaining Initial Options shall vest immediately, and (ii)
Executive will, as severance and liquidated damages and in consideration of his
execution of a complete and absolute release of the Company and its officers
from any and all further claims, receive (A) on a monthly basis, as if he had
not been
- 2 -
3
terminated, all payments (other than bonus) he would have received for the
greater of (x) the term remaining under the Agreement had he not been
terminated or (y) six months, and (B) a pro rata share of any bonus based upon
that portion of such calendar quarter during which Executive was employed.
(b) Termination after merger or acquisition. In
the event of the merger of the Company or RIG, or the acquisition, directly or
indirectly, of all or substantially all of the Company's or RIG's assets or a
controlling interest in the voting shares of the Company or RIG by an
unaffiliated party (a "Change of Control"), Executive may elect to treat that
event as a termination by the Company without cause unless the new party: (a)
extends to him a reasonable offer to (i) be retained by the Company in an
executive position of responsibility, authority and compensation comparable in
material respects (including location) to the position of Executive immediately
prior to the Change of Control, (ii) retain all rights accorded under this
Agreement and (iii) be afforded all privileges accorded to other executives of
the Company; and (b) in fact retains Executive in such capacity for at least
twelve (12) months after the Change of Control.
(c) By Executive. Executive may without cause
terminate this Agreement, by giving one hundred eighty (180) days' written
notice during the Initial Term, or ninety (90) days' written notice during any
Renewal Term, to the Company. In such event, at the sole discretion of the
Company, Executive shall continue to render all services through the date of
termination. Executive shall be paid the base compensation, accrued bonus and
vested options as provided by Section 4 up to the date of termination, but
shall not receive any salary or bonus payment thereafter nor shall any stock
option that is not otherwise vested or nonforfeitable on the date of
termination become vested or nonforfeitable on such date.
8. Termination for Good Cause. The Company may
terminate the Executive for Good Cause, defined as failure to perform or
insubordination, only after the 1-year anniversary of the Effective Date of
this Agreement by providing 30 days written notice. In the event of a
termination of the Executive for Good Cause: (i) the Executive will be paid
salary, excluding bonus, through the date of termination, (ii) the Executive's
remaining Initial Options which would otherwise vest within 18 months of the
date of termination shall vest immediately, and (iii) the Executive shall
forfeit all other unvested options.
9. Termination for cause. The Company may terminate
this Agreement (a) for cause at any time by notifying Executive in writing of
such termination and the cause thereof or (b) in the event of Executive's death
or prolonged disability; provided, however, that the only grounds constituting
cause shall be: (i) Executive's gross negligence in the performance of his
duties hereunder, intentional nonperformance or mis-performance of such duties,
or refusal to abide by or comply with the reasonable, material and documented
directives of the Board, his superior officers, or the Company's material
policies and procedures (including without limitation the provisions of Section
10 hereof), which actions continue uncured for a period of at least thirty (30)
days after receipt by Executive of written notice of the need to cure or cease;
(ii) Executive's willful dishonesty, fraud, or misconduct with respect to the
business or affairs of the Company; (iii) Executive's indictment for,
conviction of, or guilty or nolo contendere plea to,
- 3 -
4
a felony; and (iv) Executive's abuse of alcohol or drugs (legal or illegal),
other than legal drugs taken under the directions of a physician, that, in the
Company's reasonable judgment, materially impairs Executive's ability to
perform his duties hereunder. In any such event, Executive will forfeit all
unvested options and all claims to bonuses not yet awarded, and will be paid
salary, excluding bonus, through the date of the termination; provided,
however, that in the event of termination for death or prolonged disability,
all unvested options shall immediately vest.
10. Confidentiality, Invention and Non-Compete Agreement.
(a) During the term of this Agreement, and
thereafter for the duration of the period, if any, that Executive continues to
be employed by the Company and/or any other entity owned by or affiliated with
the Company or on an "at will" basis, and thereafter for the Non-Competition
Period (defined below), Executive shall not, directly or indirectly, for
himself or on behalf of or in conjunction with any other person, company,
partnership, corporation, business, group, or other entity (each, a "Person"):
(i) engage, as an officer, director,
shareholder, owner, partner, member, joint venturer, or in a managerial
capacity, whether as an employee, independent contractor, consultant, advisor,
or sales representative, in any business selling any products or services in
direct competition with the Company in the United States, Canada, the United
Kingdom, or other nations in which the Company is conducting or in which he was
aware the Company had plans to conduct business within the eighteen (18) months
following his termination (the "Territory"); provided, however, that the
foregoing covenant shall not be deemed to prohibit Executive from acquiring as
an investment not more than one percent (1%) of the capital stock of a
competing business whose stock is traded on a national securities exchange or
over-the-counter;
(ii) call upon any Person who is, at that
time, within the Territory, an employee of the Company for the purpose or with
the intent of enticing such employee away from or out of the employ of the
Company;
(iii) call upon any Person who or that is,
at that time, or has been, within one year prior to that time, a customer of
the Company within the Territory for the purpose of soliciting or selling
products or services in direct competition with the Company within the
Territory; or
(iv) on Executive's own behalf or on
behalf of any competitor, call upon any Person as a prospective acquisition
candidate for an entity other than the Company or its affiliates who or that,
during Executive's employment by the Company was, to Executive's knowledge,
either called upon by the Company as a prospective acquisition candidate or was
the subject of an acquisition analysis conducted by the Company. Executive, to
the extent lacking the knowledge described in the preceding sentence, shall
immediately cease all contact with any prospective acquisition candidate upon
being informed that the Company had called upon such candidate or made an
acquisition analysis thereof.
- 4 -
5
(b) Executive acknowledges that during the course
of his employment, he may develop and obtain access to trade secrets,
proprietary software and other "confidential business information" of the
Company, such as its software systems, sources of data, databases and other
competitively sensitive information kept in confidence by the Company such as
selling and pricing information and procedures, research methodologies,
customer lists, business and marketing plans, and internal financial
statements. Executive agrees to not use or disclose any trade secrets,
proprietary software or confidential business information to which he is
exposed or has access in the course of his employment with the Company, even if
elements of any of them may belong to third parties, during his employment and
for so long afterwards as the Company seeks to maintain as confidential the
proprietary software, trade secrets or confidential business information,
whether or not the software, trade secrets and confidential business
information are in written or tangible form, except as required and authorized
during the performance of Executive's duties for and with the Company.
Executive agrees that, given the nature of the Company's business and business
plans there will never come a time when disclosure of the Company's proprietary
software, trade secrets or confidential information would not be seriously
injurious to the Company.
(c) Executive acknowledges that he has been
employed by the Company during its critical developmental and roll-out stages
and that leaving the employ of the Company to join any business competitor
would seriously hamper the business of the Company. Accordingly, Executive
agrees that the Company shall be entitled to injunctive relief to prevent him
from violating this Section 10, in addition to all remedies permitted by law,
to enforce the provisions of this Agreement. Executive further acknowledges
that his training, experience and technical skills are of such breadth that
they can be employed to Executive's advantage in other areas which are not in
direct competition with the business of the Company on the date of termination
of Executive's employment and consequently the foregoing obligations will not
unreasonably impair Executive's ability to engage in business activity after
the termination of Executive's employment.
(d) For purposes of this Section 10, the term
"Company" shall mean the Company, its parent, and each of its parent's direct
or indirect subsidiaries, and each of these entities' predecessors in interest
and successors; and the term "Non-Competition Period" shall mean the period
commencing on the date hereof to and including the second anniversary of the
Date on which Executive ceases to be employed by the Company (provided,
however, that the Non-Competition Period, during which the agreements and
covenants of Executive made in this Section 10 shall be effective, shall be
computed by excluding from such computation any time during which Executive is
in violation of any provision of this Section 10).
(e) The covenants in this Section 10 are
severable and separate, and the unenforceability of any specific covenant shall
not affect the provisions of any other covenant. If any provision of this
Section 10 relating to the time period or geographic area of the restrictive
covenants shall be declared by a court of competent jurisdiction to exceed the
maximum time period or geographic area, as applicable, that such court deems
reasonable and enforceable, said time period or geographic area shall be deemed
to be, and thereafter shall
- 5 -
6
become, the maximum time period or largest geographic area that such court
deems reasonable and enforceable and this Agreement shall automatically be
considered to have been amended and revised to reflect such determination.
Upon termination of this Agreement for any reason, the covenants specified in
this Section 10 shall survive for the term specified herein.
(f) All of the covenants in this Section 10 shall
be construed as an agreement independent of any other provision in this
Agreement, and the existence of any claim or cause of action of Executive
against the Company, whether predicated on this Agreement or otherwise, shall
not constitute a defense to the enforcement by the Company of such covenants.
11. Notices. All notices required or permitted to be
given under this Agreement shall be given by certified mail, return receipt
requested, to the parties at the following addresses or to such other addresses
as either may designate in writing to the other party.
(a) If to the Company:
Xxxxxx X. Xxxxxxxx
Chief Executive Officer
CoStar Realty Information, Inc.
0000 Xxxxxxxxx Xxxxxx
Xxxxx Xxxxx
Xxxxxxxx, Xxxxxxxx 00000
Telefax: 000-000-0000
(b) If to Executive, to the address indicated
below Executive's name on the signature page.
12. Arbitration. The parties agree that any dispute
between the parties relating to this Agreement shall not be resolved in
litigation, but instead shall be resolved in final, binding arbitration by a
single arbitrator under the auspices of the American Arbitration Association
("AAA") in Washington, D.C. Any such arbitration shall be conducted in
accordance to the AAA's Employment Dispute Resolution Procedures.
13. Waiver of Breach. The waiver by either party of a
breach of any provisions of this Agreement by the other shall not operate or be
construed as a waiver of any subsequent breach. A delay or failure by either
party to exercise a right under this Agreement, or a partial or single exercise
of that right, shall not constitute a waiver of that or any other right.
14. Governing Law. The Agreement shall be governed by
and construed and enforced in accordance with the laws of the State of
Delaware.
15. Binding Effect. This Agreement shall be binding upon
and share inure to the benefit of the Company and its respective successors and
assigns but the rights and
- 6 -
7
obligations of Executive are personal and may not be assigned or delegated
without the Company's prior written consent.
16. Counterparts. This Agreement, for the convenience of
the parties, may be executed in any number of counterparts, all of which when
taken together shall constitute one and the same Agreement.
17. Entire Agreement Concerning Employment; Supremacy of
Employment Agreement. This Agreement constitutes the entire Agreement between
the parties as to Executive's employment and compensation therefor and
supersedes and replaces any and all agreements, written or oral, as to such
matters. This Agreement may not be modified or amended orally, but only by an
agreement in writing, signed by the party against whom enforcement of any
waiver, change, modification, extension or discharge is sought. If there is
any conflict with respect to Executive between the provisions of this Agreement
and the provisions of either the bonus plan or the Stock Option Plan, as
applicable, the provisions of this Agreement shall govern.
18. Amendments. This Agreement may be amended only in
writing, signed by both parties.
In witness whereof, Company has by its appropriate officers,
signed and affixed its seal and Executive has signed and sealed this Agreement,
to be effective as of the last date noted below.
LTI ACQUISITION CORP. EXECUTIVE
By: /s/ /s/
---------------------------- ----------------------------------
Name: Xxxx X. Xxxxxxxx III
Date: 1/8/99 Date: 1/8/99
---------------------------- -----------------------------
Address:
7405 Rd.
----------------------------------
Xxxxxxxxxx, Xxxx 00000
----------------------------------
Telephone/Fax:
513/271-7890
----------------------------------
- 7 -
8
EXHIBIT A
Criteria for Executive Bonus
YEAR ONE - 50% of the bonus shall be based upon maintaining existing
LeaseTrend operations, revenue levels, and EBIDTA levels. 50% of the
bonus will be based upon successfully working with Company management
to affect the integration of LeaseTrend databases, products, systems,
pricing, and personnel into RIG operations while maintaining continued
revenue growth.
YEAR TWO AND THREE - 100% of the bonus to be based upon operational
goals developed by the Chief Executive Officer of the Company with the
assistance of the Executive and approved by the Compensation Committee
of the Board of Directors of the Company.
