Exhibit 10.8
T RANSITION AND C ONSULTING A GREEMENT
This Transition and Consulting
Agreement (this “Agreement”), dated as of May 14, 2003,
is entered into by Phil Davis (“Davis”) and
HouseValues, Inc. (“HouseValues”).
W
I T N
E S S E T H
:
WHEREAS, Davis has served
HouseValues as its Executive Vice-President of Operations;
and
WHEREAS, Davis and HouseValues have
mutually agreed to end Davis’ employment as Vice President of
Operations on the terms and conditions set forth herein;
and
WHEREAS, Davis and HouseValues wish
to effectuate a smooth transition of Davis’s duties and
HouseValues wishes to retain Davis as a consultant on the terms set
forth herein.
A
G R E
E M E N T S
:
NOW, THEREFORE, for and in
consideration of the foregoing premises and for other good and
valuable consideration, the sufficiency and receipt of which are
hereby acknowledged, HouseValues and Davis hereby agree as
follows:
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1.
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TRANSITION
EMPLOYMENT DUTIES
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Unless earlier terminated as
provided herein, Davis shall continue in his assignment as
Executive Vice President of Operations until such time as
HouseValues has, in the good faith determination of its Chief
Executive Officer, hired and trained a new Chief Financial Officer,
at which time Davis’s employment with HouseValues shall
terminate. Davis agrees to fully and completely cooperate with
HouseValues in effectuating a smooth transition. Such cooperation
shall be on a full-time basis up to and including the Date of
Termination, as defined below. After the Date of Termination, Davis
agrees to make himself reasonably available to HouseValues as
needed to further a smooth transition for as long as Davis is
receiving severance payments and benefits under subparts 6.1(b) and
(c) of this agreement. The parties anticipate that Davis’s
post-termination cooperation will primarily involve Davis working
from home via telephone and email conferences. HouseValues will
provide Davis with reasonable advance notice should his presence at
the office be required during the post-termination cooperation
period.
Davis will serve HouseValues’s
interests in good faith to the best of his ability as provided
herein. Davis’s good faith efforts and cooperation are a
material term of this Agreement. HouseValues will permit Davis to
spend a reasonable amount of his time at
T RANSITION AND C ONSULTING A GREEMENT
HouseValues in connection with his search for
new employment through the Date of Termination.
HouseValues agrees to pay or cause
to be paid to Davis, and Davis agrees to accept in exchange for the
services rendered under Sections 1 and 2 by him, the following
compensation:
Davis’s compensation during
his employment as Vice President of Operations shall consist of a
monthly salary of $12,500, payable bi-weekly, less applicable
federal, state and local withholding taxes and appropriate
deductions for all benefits.
Davis shall not be eligible for or
entitled to a bonus for fiscal year 2003.
During the remainder of his
employment, Davis shall continue to be eligible for medical, dental
and/or vision coverage pursuant to his most recent enrollment
elections and the terms of the applicable benefit plans.
Davis shall not be eligible for
accrual of vacation after the Date of Termination.
The employment of Davis pursuant to
this Agreement may be terminated as follows, but in any case, the
provisions of Section 7 shall survive the termination of this
Agreement and the termination of Davis’s
employment.
HouseValues may terminate
Davis’s employment at any time with or without Cause (as
defined below) upon giving Notice of Termination (as defined
below).
Davis may terminate his employment
at any time, for any reason, upon giving Notice of
Termination.
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5.3.
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Automatic
Termination
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Davis’s employment hereunder
shall terminate automatically upon his death or total disability.
The term “ total disability ” as used herein
shall mean Davis’s inability to perform the duties set forth
in Section 1 with or without reasonable accommodation hereof for a
period or periods aggregating thirty (30) calendar days prior to
the Date of Termination, as a result of physical or mental illness,
loss of legal capacity or any other cause beyond Davis’s
control, unless Davis is granted a leave of absence by
HouseValues’s Board of Directors. Davis and HouseValues
hereby acknowledge that Davis’s ability to perform the duties
specified in Section 1 hereof is of the essence of this Agreement.
Termination hereunder shall be deemed to be effective (a) at the
end of the calendar month in which Davis’s death occurs, or
(b) immediately upon a determination by HouseValues’s Board
of Directors of Davis’s total disability, as defined
herein.
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5.4.
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Notice of
Termination
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Except by expiration of the term of
this Agreement, any termination by HouseValues or by Davis shall be
communicated by written notice to the other party given in
accordance with Section 8. The term “ Notice of
Termination ” shall mean such written notice.
The term “ Date of
Termination ” shall mean:
(a) if Davis’s employment is
terminated by reason of death, at the end of the calendar month in
which Davis’s death occurs;
(b) if Davis’s employment is
terminated by reason of total disability, immediately upon a
determination by HouseValues of Davis’s total
disability;
(c) if Davis’s employment is
terminated pursuant to the good faith determination of the Chief
Executive Officer of HouseValues that Davis’s full-time
services are no longer needed, on the date that determination is
communicated in writing to Davis;
(d) if Davis’s employment is
terminated by Davis, on the date Davis communicates in writing his
resignation to HouseValues;
(e) in all other cases, three days
after the date of mailing written Notice of Termination.
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6.
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TERMINATION
OF EMPLOYMENT PAYMENTS; SERVICE AS CONSULTANT
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If Davis’s employment
terminates, all compensation and benefits set forth in this
Agreement shall terminate except as specifically provided in this
Section 6.
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6.1.
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Termination
of Employment Pursuant to the Good Faith Determination of the Chief
Executive Officer of HouseValues that Davis’s Full-Time
Services Are No Longer Needed
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If Davis’s employment is
terminated pursuant to the good faith determination of the Chief
Executive Officer of HouseValues that Davis’s full-time
services are no longer needed, Davis shall be entitled to receive
the following termination of employment payments:
(a) To the extent not already paid,
Davis’s salary of $12,500 per month, less applicable federal,
state and local withholding taxes and appropriate deductions for
all benefits, through the Date of Termination;
(b) Severance pay of $12,500 per
month, less applicable federal, state and local withholding taxes,
for a period of six months after the Date of
Termination;
(c) A $500 per month COBRA payment
for continuation of health care coverage made by HouseValues
directly to the COBRA insurance carrier for six months after the
Date of Termination. All COBRA payments are contingent upon Davis
electing to continue his health care coverage pursuant to COBRA and
within the normal COBRA election period described in the COBRA
qualifying event notice. HouseValues shall not be obliged to make
any payments under this paragraph for any months in which Davis has
other health care coverage. Davis agrees to immediately notify
HouseValues in the event he obtains new heath care coverage that
becomes effective prior to the month the COBRA payments under this
paragraph would otherwise terminate; and
(d) Simultaneous with the
termination of Davis’ employment, on the Date of Termination,
all outstanding options to purchase shares of common stock of
HouseValues that were granted to Davis on October 20, 2000 and
February 26, 2001 (the “Stock Options”) shall become
fully vested and immediately exercisable. Any shares of common
stock issued upon exercise of the Stock Options shall remain
subject to the terms of the Incentive Stock Option Letter
Agreements evidencing such Stock Options.
(e) The payments and benefits of
subparts (b) and (c) of this section are contingent upon
Davis’s full and continuing cooperation as provided in
Section 1, above. If, in the good faith judgment of the Chief
Executive Officer of HouseValues, Davis is not cooperating fully
and in good faith to effectuate a smooth transition, including
after the Date of Termination, these payments shall immediately
cease. The payments and other benefits of subparts (b), and (c) of
this Section are further contingent upon (i) Davis first executing,
and not later revoking, the Second Waiver and Release Agreement
attached hereto as Exhibit A and (ii) Davis’s continued
adherence to the obligations of his Confidential Information,
Inventions, Nonsolicitation and Noncompetition Agreement set forth
in Section 7 and attached hereto as Exhibit B. Furthermore,
HouseValue’s obligations to provide the payments and other
benefits of (b), and (c) of this Section shall immediately
terminate if within (30) days of the Date of Termination
HouseValues discovers the occurrence of one or
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more of the Cause events set forth in Section
6.5 accruing on or before the Date of Termination. If HouseValues
so discovers the occurrence of one or more of the Cause events set
forth in Section 6.5 occurring on or before the Date of
Termination, it shall be entitled to recover from Davis any
termination payments already made under this Section.
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6.2.
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Termination
by HouseValues For Cause
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If HouseValues terminates
Davis’s employment for Cause, Davis shall not be entitled to
receive any further compensation, severance, acceleration of Stock
Options, benefits or any other payments pursuant to this Agreement
other than those set forth in Section 6.1(a) hereof.
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6.3.
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Termination
by Davis
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If Davis terminates his employment,
he shall not be entitled to receive any further compensation,
severance, acceleration of Stock Options, benefits or any other
payments pursuant to this Agreement, other than those set forth in
Section 6.1 (a) hereof. Notwithstanding the foregoing sentence; in
the event Davis voluntarily terminates his employment prior to
HouseValues hiring a new Chief Financial Officer, Davis will still
be entitled to payments and benefits as provided in Section 6.1,
provided, however, that following such termination Davis must spend
up to 80 business hours at the principal office of Housevalues
during the first month that the new Chief Financial Officer is
employed and provide up to 80 business hours of consulting services
over the following three month period assisting with a smooth
transition of a new Chief Financial Officer for HouseValues if so
requested to by the Chief Executive Officer of HouseValues. In
addition Davis will provide further consulting services as set
forth in section 6.6. The start date of such transition service
will be at the choosing of the Chief Executive Officer of
HouseValues, provided that Davis must receive notice of the start
date at least 14 days prior to such start date, and provided
further that Davis will not be available for such transition
service from December 15, 2003 through January 15, 2004.
HouseValues’ obligations to provide the payments and other
benefits of (b) and (c) of Section 6.1 and HouseValues’
obligation to retain Davis as a consultant pursuant to Section 6.6
shall immediately terminate if, as determined by the Chief
Executive Officer of HouseValues, Davis fails to provide such
transition service or fails to complete such transition service in
an acceptable manner.
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6.4.
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Automatic
Termination
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In the case of Automatic Termination
as set forth in Section 5.3, Davis (and, if applicable in the event
of his death, his personal and legal representatives, executors,
administrators, heirs, distributees, devises and legatees) shall be
entitled to the benefits set forth in Section 6.1 hereof, but shall
not be entitled to the benefits of Section 6.6.
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Wherever reference is made in this
Agreement to termination being with or without Cause, “
Cause ” shall be defined as cause given to HouseValues
by Davis and shall include, the occurrence of one or more of the
following events:
(a) Failure or refusal to carry out
any lawful duties to be performed by Davis described in Section 1
herein, or any directions of the Chief Executive Officer or Board
of Directors reasonably consistent with the duties to be performed
by Davis described in Section 1 herein which results in a material
adverse effect on HouseValues;
(b) Violation by Davis of a state or
federal criminal law involving the commission of a crime against
HouseValues;
(c) Deception, fraud,
misrepresentation, willful misconduct, insubordination, or
dishonesty in the performance of Davis’s assigned duties or
other knowing and material violation of HouseValues’s
policies and procedures in effect from time to time, which results
in a material adverse effect on HouseValues;
(d) Willful action (or intentional
failure to act) in bad faith by Davis with respect to HouseValues
that materially impairs HouseValues’s business, goodwill or
reputation;
(e) Conviction of Davis of a felony
involving an act of dishonesty, moral turpitude, deceit or fraud,
or the commission of acts that could reasonably be expected to
result in such a conviction, and which results in a material
adverse effect on HouseValues; or
(f) Any material violation by Davis
of any provision of this Agreement which results in a material
adverse effect on HouseValues.
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6.6.
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Service as
Consultant
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If Davis’s employment is
terminated other than for Cause or other than as a result of an
Automatic Termination, HouseValues shall continue to retain Davis
as a consultant for a non-terminable (subject to Sections 6.3) term
of five (5) years after the Date of Termination (the “
Consulting Term ”), and thereafter on an as needed
basis at the sole discretion of HouseValues. HouseValues shall pay
Davis at a rate of a minimum of $400 per quarter of the Consulting
Term depending on the services requested. Any services that will
result in compensation in excess of $400 per quarter shall be
preapproved by the Chief Executive Officer of HouseValues. Such
consulting will involve, among other things, participation in
conference calls, strategy sessions, and review of quarterly media
performance, and in addition, Davis will make himself available to
answer questions relating to prior work he has done for HouseValues
as Vice President of Operations. Pursuant to the terms of the
HouseValues’ 1999 Stock Incentive Plan, Davis’ options
to purchase shares of the HouseValues’ common stock (the
“Stock Options”) shall not terminate as a result of
the
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change in his status from an employee to a
consultant. Davis acknowledges that as a result of the change in
his status those Stock Options not exercised by Davis within three
(3) months after the change in his status will no longer be deemed
incentive stock options. Davis will not have the power to bind
HouseValues contractually as a consultant.
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7.
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CONFIDENTIAL
INFORMATION, INVENTIONS, NONSOLICITATION AND NONCOMPETITION
AGREEMENT
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Davis expressly reaffirms and
incorporates herein as part of this Agreement the Confidential
Information, Inventions, Nonsolicitation and Noncompetition
Agreement, which Davis signed as part of his employment with
HouseValues, a copy of which is attached hereto as Exhibit B, and
which shall remain in full effect. The Confidential Information,
Inventions, Nonsolicitation and Noncompetition Agreement shall
survive termination of Davis’s employment.
All notices given hereunder shall be
given in writing, shall specifically refer to this Agreement and
shall be personally delivered or sent by telecopy or other
electronic facsimile transmission or by registered or certified
mail, return receipt requested, at the address set forth below or
at such other address as may hereafter be designated by notice
given in compliance with the terms hereof:
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If to
Davis:
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1512 46 th Ave SW
Seattle, WA 98116
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If to HouseValues:
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Mark Powell
HouseValues, Inc.
15 Lake Bellevue Drive, Suite 100
Bellevue, Washington
98005
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If notice is mailed, such notice shall be
effective upon mailing, or if notice is personally delivered or
sent by telecopy or other electronic facsimile transmission, it
shall be effective upon receipt.
This Agreement is personal to Davis
and shall not be assignable by Davis. HouseValues may assign its
rights hereunder to (a) any corporation resulting from any merger,
consolidation or other reorganization to which HouseValues is a
party, or (b) any corporation, partnership, association or other
person to which HouseValues may transfer all or substantially all
of the assets and business of HouseValues existing at such time.
All of the terms and provisions of this Agreement shall be binding
upon and shall inure to the
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benefit of and be enforceable by the parties
hereto and their respective successors and permitted
assigns.
No delay or failure by any party
hereto in exercising, protecting or enforcing any of its rights,
titles, interests or remedies hereunder, and no course of dealing
or performance with respect thereto, shall constitute a waiver
thereof. The express waiver by a party hereto of any right, title,
interest or remedy in a particular instance or circumstance shall
not constitute a waiver thereof in any other instance or
circumstance. All rights and remedies shall be cumulative and not
exclusive of any other rights or remedies.
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11.
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ANNOUNCEMENT
OF VOLUNTARY RESIGNATION
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After the execution of this
agreement, HouseValues and Davis will issue a joint press release,
the content and timing which will be jointly agreed upon,
announcing Davis’s departure from the company.
Davis agrees that the opportunity to
earn the payments and benefits set forth herein constitute valuable
and sufficient legal consideration for the promises and the
covenants set forth in this Agreement. Davis agrees that any such
payments and benefits are not required by HouseValues policies and
procedures or by any pre-existing contractual obligation or by any
statute, regulation or ordinance, and are offered by HouseValues
solely as consideration for this Agreement. Davis further agrees
that he is not entitled to any other compensation or benefits not
expressly provided for herein.
Davis agrees that he will keep the
terms and amount of this Agreement completely confidential, and
that he will not disclose any information concerning this Agreement
or its terms to anyone other than his spouse, legal counsel, tax
advisors, and/or financial advisors, who will be informed of and
bound by this confidentiality clause prior to such disclosure and
have an obligation to abide by it, except to the extent compelled
by law or legal process. Except as expressly permitted herein,
Davis agrees that disclosure to the public or to any employee of
HouseValues of the terms or amount of this Agreement will
constitute a material breach. In the event Davis is requested, by
court order or any other legal process, to provide information
covered by this confidentiality obligation, Davis agrees to
immediately notify HouseValues of any such request at least two (2)
business days prior to disclosing the requested information so as
to allow HouseValues to seek a protective order prior to any
disclosure. Should Davis breach this clause, HouseValues shall be
entitled to injunctive relief and damages.
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14.
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WAIVER,
RELEASE AND COVENANTS
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In consideration of the mutual
agreements and covenants set forth in this Agreement and the
opportunity to earn the payments and benefits made by HouseValues
set forth herein, Davis, on behalf of himself, his heirs,
executors, administrators and assigns, hereby agrees to the
following:
14.1. Davis expressly waives any claims against
HouseValues (including, all parents, affiliates, subsidiaries,
officers, directors, shareholders, managers, employees, agents,
investors, representatives, and their marital communities) and
releases HouseValues (including its parents, affiliates,
subsidiaries, officers, directors, shareholders, managers,
employees, agents, investors, representatives, and their marital
communities) from any claims, whether known or unknown, which
existed or may have existed at any time up to the date of this
Agreement, including claims related in any way to Davis’s
employment with HouseValues . This release is comprehensive and
includes, but is not limited to , any claims for wages,
bonuses, employment benefits, stock options, or damages of any kind
whatsoever, arising out of any common law torts, any express or
implied contracts, any express or implied covenant of good faith
and fair dealing, any theory of wrongful discharge, any theory of
negligence, any theory of retaliation, any theory of discrimination
or harassment in any form, any legal restriction on
HouseValues’s right to terminate employees, or any federal,
state, or other governmental statute, executive order, or
ordinance, including, without limitation , Title VII of the
Civil Rights Act of 1964 as amended, the Civil Rights Act of 1991,
the Civil Rights Act of 1866, 42 U.S.C. § 1981, the Americans
with Disabilities Act, the Age Discrimination in Employment Act,
the Older Workers Benefit Protection Act, the Family and Medical
Leave Act, the Employee Retirement Income Security Act, the
Washington Law Against Discrimination, state or federal wage and
hour laws, or any other legal limitation on or regulation of the
employment relationship.
14.2. Davis represents that he has not filed any
complaints, charges or lawsuits against HouseValues with any
governmental agency or any court, and agrees that he will not
initiate, assist or encourage any such actions, except as required
by law. Davis further agrees that if a commission, agency, or court
assumes jurisdiction of such claim, complaint or charge against
HouseValues on behalf of Davis, Davis will immediately upon
learning of the claim, complaint or charge request in writing to
the commission, agency or court to withdraw from the
matter.
14.3. Davis agrees to indemnify and hold HouseValues
harmless from and against any and all loss, costs, damages, or
expenses, including, without limitation, reasonable
attorneys’ fees, incurred by HouseValues arising out of any
breach of this Agreement by Davis or resulting from any
representation made herein by Davis that was false when made. This
waiver and release shall not prec
