Employment Agreement - OLD RIG Inc. and David M. Schaffel
EMPLOYMENT AGREEMENT
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EMPLOYMENT AGREEMENT is executed this 24 day of April, 1998,
and effective as of January 1, 1998 (the "Effective Date"), by and between OLD
RIG, Inc. ("OLD RIG" and, prior to the Assignment (defined below), the
"Company"), a Delaware corporation which is the general partner of Realty
Information Group, L.P. ("RIGLP"), a Delaware limited partnership, and David M.
Schaffel ("Executive").
WHEREAS, Executive has been heretofore employed by OLD RIG in
the capacity of Vice President of Product Development;
WHEREAS, OLD RIG desires to retain Executive in such capacity;
WHEREAS, Executive desires to remain employed in such capacity
by OLD RIG upon the terms and conditions hereinafter set forth; and
WHEREAS, Executive and OLD RIG acknowledge that it is
presently contemplated that, in connection with an initial public offering (the
"Offering") of, or other significant transaction involving, the stock of Realty
Information Group, Inc., a Delaware corporation ("RIG" and, after the Assignment
(defined below), the "Company"), formerly known as Realty Information Group
(Delaware), Inc., (i) OLD RIG and RIGLP will be consolidated with RIG, and (ii)
this Employment Agreement will be automatically assigned to and assumed by RIG
pursuant to Section 15 without further action by any party.
NOW, THEREFORE, the parties hereto, intending to be legally
bound hereby, and in consideration of the mutual covenants herein contained,
agree as follows:
1. Employment. The Company agrees to employ Executive at the
Company's offices in the greater Washington metropolitan area, and Executive
agrees to be so employed, in the capacity of Vice President of Product
Development. 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. The Company and Executive agree that this
agreement terminates and replaces any previous employment agreements between
Executive and the Company.
2. Term. The term of Executive's employment under this
Agreement shall commence on the Effective Date and shall continue for the
initial term set forth of two (2) 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.
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3. Full time and efforts. Executive shall diligently and
conscientiously de vote his full time, exclusive attention and best efforts to
his duties under this contract.
4. Compensation.
(a) Commencing as of the Effective Date of this Agreement
and until the Offering, the Company shall pay Executive base compensation for
his services at the annual rate then in effect under Executive's existing
arrangements with the Company (the "Base Compensation"). Commencing as of the
effective date of the Offering, Executive's Base Compensation shall be $120,000
per year. 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.
(b) In addition, Executive shall be eligible to earn an
annual performance bonus (the "Annual Bonus") pursuant to criteria negotiated
with the President and approved by the Compensation Committee of the Board of
Directors of the Company. The Annual Bonus, if any, shall be paid within
one-hundred twenty (120) days of the end of the relevant measuring period. It is
expected that the Annual Bonus will be at a target level of not less than 25%
nor more than 50% of the Base Compensation paid during such calendar year.
(c) RIG shall adopt as of the effectiveness of its
Offering, and maintain for the benefit of Executive for as long as any options
are outstanding, a Stock Option Plan (the "Stock Option Plan"). Under the Stock
Option Plan, RIG will grant to Executive as of the effectiveness of the Offering
an option to purchase such number of shares of RIG common stock as 12,849 units
of RIGLP would be converted in the Offering. The exercise price of the options
shall be the fair market value of such stock on the grant date (measured by the
price of such stock determined at the pricing meeting of underwriters in
connection with the Offering). Options granted to Executive under the Stock
Option Plan may be non-qualified stock options or "incentive stock options"
within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code"). Such options shall vest: 25% upon the effectiveness of the
Offering; 25% on December 31, 1998; 25% on December 31, 1999; and 25% on
December 31, 2000.
(d) In the event that no Offering shall occur but the
Company, OLD RIG or RIGLP shall consummate a Significant Equity Transaction
during the term of this Agree ment, then immediately prior to the consummation
of such transaction the Company, OLD RIG or RIGLP, as the case may be, shall
grant to Executive options to purchase 40,000 shares of common stock of the
Company, 12,849 shares of OLD RIG or 12,849 units of RIGLP, as the case may be,
at a price per share or unit equivalent to the price being paid by the purchaser
in such Significant Equity Transaction. Such options will vest as provided in
Section 4(c). For purposes of this clause (d), "Significant Equity Transaction"
shall mean any equity funding of the
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Company, OLD RIG or RIGLP, as the case may be, in which the purchaser invests at
least $15 million in such entity or entities.
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.
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 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) all of Executive's unvested options due to vest within the next twelve (12)
months will vest 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 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 year during which
Executive was employed.
(b) 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. Executive shall be paid the base
compensation, accrue bonus and vest 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 after merger or acquisition. In the event of
the merger of the Company or the acquisition, directly or indirectly, of all or
substantially all of the Company's assets or a controlling interest in the
voting shares of the Company by an unaffiliated party (a "Change of Control"),
Executive may elect to treat that event as a termination 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
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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.
Executive acknowledges and agrees that the transactions described in the fourth
recital shall not constitute a "Change of Control."
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, a felony; and (iv) Executive's abuse
of alcohol or drugs (legal or illegal), other than legal drugs taken under the
direction 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 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 termina tion (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;
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(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.
(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
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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 and each of its subsidiaries, 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 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:
Andrew C. Florance
Chief Executive Officer
Realty Information Group
7475 Wisconsin Avenue
Sixth Floor
Bethesda, Maryland 20814
Telefax: 301-718-2444
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(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
shall inure to the benefit of the Company and its respective successors and
assigns but the rights and obligations of Executive are personal and may not be
assigned or delegated without the Company's prior written consent.
Notwithstanding the preceding sentence, OLD RIG shall be permitted to assign all
of its obligations hereunder to RIG and such assignment shall be deemed to have
occurred upon the effectiveness of the consolidation of OLD RIG and RIGLP with
RIG (the "Assignment").
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, together with Executive's arrangement with
the Company concerning the forgiveness of debt relating to his purchase of units
in RIGLP, 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.
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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.
OLD RIG, INC. EXECUTIVE
By:/s/ Andrew C. Florance /s/ David M. Schaffel
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Name: David M. Schaffel
Date: March 24, 1998 Date: March 24, 1998
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Address:
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Telephone/Fax:
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