Exhibit 10.1
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SETTLEMENT AGREEMENT AND RELEASES
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This Settlement Agreement and Releases (the "Agreement") is made as of
February 15, 2006, between Xxxxx Xxxxxx ("Xxxxxx") and Homestore, Inc., formerly
known as Xxxxxxxxx.xxx, Inc. ("Homestore"). Tafeen and Homestore are referred to
collectively herein as the "Parties".
WHEREAS, Tafeen was formerly an officer and employee of Homestore;
WHEREAS, Tafeen 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 Tafeen was an officer
and/or employee of Homestore (collectively, the "Underlying Proceedings");
WHEREAS, Tafeen 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 October 28, 2003, Tafeen filed a Complaint for
Advancement against Homestore in the Court of Chancery of the State of Delaware
in and for New Castle County, Xxxxx Xxxxxx v. Homestore, Inc., C.A. No. 023-N
("Tafeen I"), seeking the advancement, pursuant to Section 6.2 of the Bylaws of
Homestore and the Delaware General Corporation Law, of certain expenses
(including attorneys' fees) incurred by him in connection with certain of the
Underlying Proceedings, and on or about October 22, 2004, Tafeen filed a
Complaint against Homestore in the Court of Chancery of the State of Delaware in
and for New Castle County, Xxxxx Xxxxxx v. Homestore, Inc.., C.A. No. 771-N,
seeking indemnification, pursuant to Section 145 of the Delaware General
Corporation Law, of certain expenses (including attorneys' fees) incurred by him
in connection with certain of the Underlying Proceedings ("Tafeen II") ("Tafeen
I and Tafeen II are referred to collectively herein as "the Litigation");
WHEREAS, Tafeen also asserts additional claims for and rights to
indemnification by Homestore pursuant to the Bylaws of Homestore and Section 145
of the Delaware General Corporation Law;
WHEREAS, in Tafeen I, the Court entered a Final Order and Judgment on
April 27, 2005, requiring, inter alia, that Homestore advance certain
Eligible Costs to Tafeen;
WHEREAS, as of the date of this Agreement, Homestore has advanced
Tafeen $6,373,034.96, while reserving Homestore's rights to recoup from Tafeen
amounts advanced (plus prejudgment interest) to the extent he is later
determined not to be entitled to indemnification in connection with one or more
of the Underlying Proceedings;
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.
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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 Tafeen may have with respect to the
payment or reimbursement by Homestore of Eligible Costs incurred or to be
incurred by Tafeen, the Parties agree that the full settlement amount to be paid
by Homestore to Tafeen shall be a maximum of $11,850,000, paid as follows:
(A) As set forth in the releases in this Agreement, Homestore releases
its rights to seek repayment of the $6,373,034.96 previously paid to Tafeen
pursuant to the Final Judgment and Order entered in Tafeen I;
(B) As soon as practicable after the Effective Date of this Agreement
(as defined in Section VII below), Homestore shall deposit in an irrevocable
grantor trust established for the benefit of Tafeen and administered by an
independent trustee (the "Trust") the amount of $5,476,965.04. 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 Tafeen 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 Eligible Costs incurred by Tafeen which have not previously
been advanced by Homestore. The trustee shall make any such disbursement only
upon receipt of appropriate supporting documentation that substantiates the
incurrence of such additional Eligible Costs by Tafeen. Within twenty (20) days
after the end of each calendar month, Tafeen 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.
(C) The full settlement amount of $11,850,000 is the maximum possible
amount to be paid by Homestore to Tafeen (including the amounts previously
advanced to Tafeen pursuant to the Final Order and Judgment entered in Tafeen
I). Homestore shall have no obligation to pay Tafeen anything other than
Eligible Costs actually incurred by Tafeen, and in the event that the Underlying
Proceedings are concluded, and all Eligible Costs total less than $11,850,000,
Homestore shall have no obligation to pay Tafeen more than the amount of such
Eligible Costs.
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II. Releases
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A. Release by Tafeen
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Tafeen irrevocably 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"), 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, Tafeen or Tafeen's 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, Tafeen specifically
releases and discharges the Homestore Releasees from any claims arising out of
or related to Tafeen's employment or separation from employment with Homestore,
including, but not limited to, any rights or claims arising under the Bylaws of
Homestore, the Delaware General Corporation Law, common law, and/or any other
source or theory, for advancement of expenses, or indemnification, including
with respect to any actions that have been filed or may be filed against Tafeen
or others in the future, and 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, 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 and expenses.
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Tafeen 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, Tafeen 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. Tafeen 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. 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
--------------------
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 Tafeen, members of
Tafeen's immediate family, entities controlled by Tafeen, trusts for which
Tafeen is or was a beneficiary, trustee or trustor, partnerships for which
Tafeen is or was a partner, companies and corporations of which Tafeen 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 "Tafeen 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 Tafeen
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.
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 Tafeen in any of the Underlying Proceedings), Homestore
irrevocably releases and discharges the Tafeen Releasees for all time from any
rights or claims, whether arising under the Bylaws of Homestore, the Delaware
General Corporation Law, common law, the undertaking provided to Homestore by
Tafeen and/or any other source or theory, for repayment or recoupment of amounts
paid to Tafeen 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
Tafeen Releasee of amounts paid to Tafeen as advancement of expenses or as
indemnification (including the settlement payments made under this Agreement for
Eligible Costs).
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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:
"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
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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 and expenses. The foregoing
does not in any way limit any other remedies available to the Parties for breach
of this Agreement.
IV. The Litigation
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Contemporaneously with the execution of this Agreement, counsel for
the Parties shall execute and exchange Stipulations of Dismissal with Prejudice
in Tafeen I and Tafeen II, substantially in the forms annexed hereto as Exhibits
A and B. As soon as practicable on or after the Effective Date, counsel for
Tafeen shall file the executed Stipulations in the Chancery Court.
X. Xxxxx Litigation
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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 Tafeen, including any actual or
potential cross-claims against Tafeen for contribution or indemnity. Nothing in
this paragraph shall in any way obligate Homestore to advance or indemnify
Tafeen's defenses costs or any judgment entered against Tafeen in the Xxxxx
case, other than as set forth in Section I of this Agreement.
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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.
VII. Effective Date
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Although this Agreement is dated as of February 15, 2006 and has been
executed as of that day, the parties acknowledge that Tafeen shall have a period
of seven (7) days from February 15, 2006 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 February 15, 2006 (the "Effective Date"), Tafeen has not revoked the
Agreement. On the Effective Date, counsel for Tafeen shall provide counsel for
Homestore with written notice as to whether or not Tafeen has revoked the
Agreement, and Homestore shall have no obligation to make the payment required
by Section I(B) above until receipt of such notice stating that the Agreement
has not been revoked by Tafeen. In the event Tafeen revokes this Agreement
pursuant to this paragraph, this Agreement shall be null and void ab initio.
VIII. Governing Law
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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
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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
Tafeen (including but not limited to the undertaking provided to Homestore by
Tafeen 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.
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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. Tafeen acknowledges and
represents that Homestore has given Tafeen 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 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
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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.
XVIII. Counterparts
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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.
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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/ Xxxxx Xxxxxx
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XXXXX XXXXXX
HOMESTORE, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Executive Vice President, General
EXHIBIT A
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IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
)
XXXXX XXXXXX, )
)
Plaintiff, )
)
- against - ) C.A. No. 023--N
)
HOMESTORE, INC., )
)
Defendant. )
)
STIPULATION OF DISMISSAL WITH PREJUDICE
---------------------------------------
WHEREAS the parties have entered into a settlement agreement resolving
all issues between them, including but not limited to the defendant's
obligations under the Final Order and Judgment entered in this action.
NOW THEREFORE IT IS HEREBY STIPULATED AND AGREED between Plaintiff
Xxxxx Xxxxxx and defendant Homestore, Inc., by and through their undersigned
counsel, that, pursuant to Court of Chancery Rule 41(a)(1), the within-captioned
action shall be dismissed with prejudice and without costs.
MORRIS, NICHOLS, ARSHT & XXXXXXX
By_______________________________
Xxxxxxx X. Xxxxxxxx (#2755)
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000-0000
000-000-0000
Attorneys for Plaintiff Xxxxx Xxxxxx
YOUNG XXXXXXX STARGATT & XXXXXX LLP
By:_____________________________
Xxxxxxx X. Xxxxxxxx
The Brandywine Building
0000 Xxxx Xxxxxx, 00xx Xxxxx
X.X. Xxx 000 Xxxxxxxxxx,
Xxxxxxxx 00000-0000 (302)
571-6600
Attorneys for Defendant Homestore, Inc.
Dated: February __, 2006
EXHIBIT B
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IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
)
XXXXX XXXXXX, )
)
Plaintiff, )
)
- against - ) C.A. No. 771-N
)
HOMESTORE, INC., )
)
Defendant. )
)
STIPULATION OF DISMISSAL WITH PREJUDICE
---------------------------------------
WHEREAS the parties have entered into a settlement agreement resolving
all issues between them.
NOW THEREFORE IT IS HEREBY STIPULATED AND AGREED between Plaintiff
Xxxxx Xxxxxx and defendant Homestore, Inc., by and through their undersigned
counsel, that, pursuant to Court of Chancery Rule 41(a)(1), the within-captioned
action shall be dismissed with prejudice and without costs.
MORRIS, NICHOLS, ARSHT & XXXXXXX
By_______________________________
Xxxxxxx X. Xxxxxxxx (#2755)
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000-0000
000-000-0000
Attorneys for Plaintiff Xxxxx Xxxxxx
YOUNG XXXXXXX STARGATT & XXXXXX LLP
By:_____________________________
Xxxxxxx X. Xxxxxxxx
The Brandywine Building
0000 Xxxx Xxxxxx, 00xx Xxxxx
X.X. Xxx 000 Xxxxxxxxxx,
Xxxxxxxx 00000-0000 (302)
571-6600
Attorneys for Defendant Homestore, Inc.
Dated: February __, 2006
