EXHIBIT 10.5
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This Amended and Restated Employment Agreement ("Agreement") is made and
entered into as of November 21, 1997, as amended and restated as of September
14, 1998, by and between 800-U.S. SEARCH, a California corporation (the
"Company"), and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ("Employee").
NOW, THEREFORE, in consideration of the promises and mutual covenants
contained herein, and for good and valuable consideration, the sufficiency and
receipt of which are hereby acknowledged, the Company and Employee hereby agree
as follows:
1. POSITIONS AND DUTIES.
(A) The Company hereby employs Employee with the title of Founder of
the Company during the term of this Agreement and with such other powers and
such other titles as may be prescribed by the Board of Directors of the Company
(the "Board of Directors"). Employee shall, during the term of this Agreement,
perform such additional or different duties, and accept the election or
appointment to such other offices or positions, including but not limited to the
position of Chief of Technology, as may mutually be agreeable to Employee and
the Board of Directors. Employee shall report to the President of the Company
and as otherwise designated by the Board of Directors.
(B) Employee shall devote his full working time to the promotion of
the Company's business and welfare, and use his reasonable best efforts to
promote the Company's products, services, business, operations and/or
activities. Employee shall perform such duties and responsibilities incidental
to his employment as may from time to time be requested by the Board of
Directors, and shall faithfully observe the Company's policies and procedures
consistent with the provisions hereof.
2. SALARY. During the term of his employment hereunder, the Company
shall pay to Employee a salary, in equal installments not less frequently than
monthly, at the following rates per year:
Year One (commencing September 14, 1998): $150,000
Year Two: $175,000
Year Three: $200,000
; provided, however, that effective upon the completion of a permanent financing
transaction involving the issuance by the Company of debt or equity securities
resulting in gross proceeds to the Company of at least $10 million (excluding
debt securities having a term of one year or less), the rates per year, or any
remaining portions thereof, shall be changed (on a prospective basis only, with
no change to any payments made prior thereto) to the following:
Year One (commencing September 14, 1998): $175,000
Year Two: $200,000
Year Three: $225,000
1
3. EXPENSES. The Company will reimburse or pay Employee for all usual,
reasonable and necessary expenses paid or incurred by Employee in the
performance of his duties hereunder, consistent with the Company's expense
reimbursement policies and subject to receipt by the Company of appropriate
documentary proof of all expenditures for which reimbursement is sought, up to a
maximum of $500 per month during the first two years of the employment term, and
up to a maximum of $750 per month during the year thereafter. In addition, the
Company shall reimburse Employee for mobile telephone charges for actual usage
directly related to the Company's business, up to a maximum of the greater of
(i) $200 per month or (ii) the monthly mobile telephone charge allowance of the
Chief Executive Officer of the Company.
4. EMPLOYEE BENEFITS.
(A) During the term of his employment hereunder, Employee shall be
entitled to in and receive all other benefits of employment generally available
to other employees of the Company, including, among other things, participation
in any medical, dental and accidental benefit plans, life insurance and
vacation, if and to the extent that Employee is eligible to participate in
accordance with the provisions of any such plans or benefits. Without limiting
the foregoing, Employee shall be entitled to vacations in accordance with the
general personnel policies of the Company and to a monthly automobile allowance
equal to the greater of (i) $600 or (ii) the automobile allowance, if any,
accorded by the Company to the then current Chief Executive Officer of the
Company. Nothing herein, however, is intended or shall be construed to require
the Company to institute any plan or benefits, or to maintain or refrain from
amending or terminating any such existing plan or benefits.
(B) The Company shall pay, during the term of this Agreement if
Employee is insurable on the basis of a fully healthy person of his age and
occupation, the premiums on a $1,000,000 life insurance policy insuring the life
of Employee for the benefit of Employee's designated beneficiaries. In addition,
Employee hereby grants the Company the right to obtain the benefit of a key-man
life insurance policy on the life of Employee for the benefit of the Company and
Employee agrees to assist the Company in obtaining such policy.
5. TERM.
(A) The term of Employee's employment by the Company under this
Agreement shall commence on September 14, 1998 and shall terminate upon the
first to occur of the following events: (i) the third anniversary thereof, (ii)
the death of Employee, (iii) at the option of the Company and upon 20 days prior
written notice to Employee, in the event of the inability of Employee to perform
his duties hereunder, whether by reason of injury, illness (physical or mental)
or otherwise, for a period of two (2) consecutive months, (iv) at the option of
the Company and upon 20 days prior written notice to Employee, in the event the
Board of Directors determines to discontinue the business of the Company
substantially as currently conducted, (v) at the option of Employee in the event
of the Company's filing of a voluntary bankruptcy petition, or in the event of
the filing of an involuntary bankruptcy petition against the Company which is
not dismissed within ninety (90) days from the date of such filing, or (vi) the
discharge of Employee for cause. The Company may at any time terminate the
employment of Employee for "cause." Cause shall mean (i) fraud, embezzlement or
conviction of or the
2
pleading of guilty or no contest to any felony, or to any misdemeanor involving
dishonesty, (ii) gross negligence or failure to observe or follow material
reasonable and explicit instructions or directives of the Board of Directors of
the Company, (iii) failure to perform Employee's duties hereunder, (iv) any
breach by Employee of his representations, warranties, covenants or obligations
as set forth herein or in that certain Letter Agreement, dated as of October 24,
1997, by and between ▇▇▇▇▇▇▇-▇▇▇▇▇ and Employee, (v) the occurrence of any
matter relating to Employee of the type set forth in Item 401(f) of Regulation
S-K promulgated by the Securities and Exchange Commission, or (vi) malfeasance
or failure to act involving nonfeasance in either case materially effecting the
Company; provided, however, that if a failure to comply with items (ii) or (iii)
above is capable of being cured, for so long as Employee continues diligently to
remedy or to cure such failure to comply (but in no event longer than twenty
(20) days after the occurrence of such failure to comply), the Company shall not
be able to terminate this Agreement for cause for such failure. Upon the
termination of Employee's employment pursuant to this Section 6(a), the Company
shall have no further liability or obligation of any kind or nature whatsoever
to Employee under this Agreement, except that any salary earned by Employee to
the date of termination but not paid shall be paid by the Company to Employee or
his estate, and Employee shall be entitled to such benefits, if any, under
Sections 3, 4 and 5 hereof to which he has become entitled prior to the date of
his termination of employment under the terms of this Agreement or any plan or
program (in accordance with the express terms thereof) in which Employee was
participating on the date of such termination.
(B) If Employee's employment is terminated by the Company otherwise
than as provided in Section 6(a) hereof, then Employee shall be entitled to
receive from the Company for a period of the lesser of (i) twelve (12) months or
(ii) until the ending date of the period of employment hereunder (determined as
provided in paragraph 6(a) hereof), the salary in effect at the date of such
termination, or, at the Company's option, the present value of such payments
discounted at a ten percent (10%) interest rate. The Company's obligation to
make such salary payments shall not be reduced or mitigated by any compensation
or other income Employee may receive from any other sources following any such
termination without cause. Upon the payment of the amounts provided in this
paragraph 6(b), the Company shall have no further liability or obligation of any
kind or nature whatsoever to Employee under this Agreement, except that Employee
shall be entitled to such benefits, if any, under Sections 3, 4 and 5 hereof to
which he has become entitled prior to the date of his termination of employment
under the terms of this Agreement or any plan or program (in accordance with the
express terms thereof) in which Employee was participating on the date of such
termination.
6. COVENANT NOT TO SOLICIT OR HIRE EMPLOYEES OR CUSTOMERS. During the
term of his employment hereunder and during the one-year period following
termination of his employment hereunder, Employee shall not, directly or
indirectly, on behalf of Employee or any other person or entity, solicit or
induce any of the Company's employees (other than ▇▇▇▇▇ ▇▇▇▇▇) to terminate
their employment with the Company, hire or cause any of the then current
employees of the Company (other than ▇▇▇▇▇ ▇▇▇▇▇) to be hired by any other
person or entity, or solicit or assist in soliciting any business from any of
the then current customers, prospective customers, suppliers or service
providers of the Company with respect to any products or services currently
provided or offered by the Company to any of its customers.
7. NONDISCLOSURE OF CONFIDENTIAL INFORMATION.
3
(A) "Confidential Information" includes all information related to
the products, services, business, operations and/or activities of the Company,
including, but not limited to, all of the Company's, and its affiliates',
performance, sales, financial, pricing, cost, manufacturing, contractual and
marketing information, ideas, knowledge and data, and all processes, products,
formulae, designs, practices, techniques, trade secrets, research, know-how,
customer lists, technical requirements of customers and identity and purchasing
terms of suppliers, unless such information is in the public domain to such an
extent as to be readily available to competitors other than through a breach,
directly or indirectly, of any confidentiality obligation as to which the
Company has not or does not bring or take any action in an attempt to project
such information within one (1) year after the time an officer (other than
Matzorkis) of the Company actually is aware that such information is so
available.
(B) Employee acknowledges that the Company shall have exclusive
property rights to all of its Confidential Information and agrees to assign all
rights he might otherwise possess, acquire or claim to possess or acquire in any
Confidential Information to the Company. Except as required in the performance
of his duties hereunder, Employee shall not at any time during or after the term
of his employment, directly or indirectly, use, communicate, disclose,
disseminate, lecture upon, publish articles or otherwise put in the public
domain or exploit any Confidential Information or any other information of a
secret, proprietary, confidential or generally undisclosed nature relating to
the products, services, business, operations and/or activities of the Company.
(C) All documents, records, notebooks, notes, memoranda, computer
records and other repositories of or containing Confidential Information or any
other information of a secret, proprietary, confidential or generally
undisclosed nature relating to the Company or to its products, services,
business, operations and/or activities made or compiled by Employee at any time
or made available to Employee prior to or during the term of his employment by
the Company, including any and all copies thereof, shall be the property of the
Company, shall be held by Employee in trust solely for the benefit of the
Company, and shall be delivered to the Company by Employee on the termination of
Employee's employment or at any other time on the request of the Company.
8. RIGHT TO INJUNCTION. Employee acknowledges that any remedy at law for
a breach by him of the provisions of Sections 7 and/or 8 hereof will be
inadequate. Accordingly, in the event of the breach or threatened breach by
Employee of Sections 7 and/or 8 hereof, the Company shall be entitled to
injunctive relief in addition to any other remedy it may have.
9. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement of
the parties and supersedes all prior agreements of the parties with respect to
the subject matter hereof.
10. GOVERNING LAW AND FORUM. This Agreement shall be governed by,
construed, interpreted and enforced in accordance with the laws of the State of
California without regard to the conflict of laws principles of such state. The
parties hereto agree that all actions or proceedings arising in connection with
this Agreement shall be tried and litigated exclusively in the state and federal
courts located in the County of Los Angeles, State of California. The
aforementioned choice of venue is intended by the parties hereto to be
4
mandatory and not permissive in nature, thereby precluding the possibility of
litigation between the parties hereto with respect to or arising out of this
Agreement in any jurisdiction other than that specified in this paragraph. Each
of the parties hereto hereby waives any right it may have to assert the doctrine
of forum non conveniens or similar doctrine or to object to venue with respect
to any proceeding brought in accordance with this paragraph, and stipulates that
the state and federal courts located in the County of Los Angeles, State of
California shall have in personam jurisdiction and venue over each of them for
the purpose of litigating any dispute, controversy or proceeding arising out of
or related to this Agreement. Each of the parties hereto authorizes and accepts
service of process sufficient for personal jurisdiction in any action against it
as contemplated by this paragraph according to the procedure for the giving of
notices as set forth in this Agreement. Any final judgment rendered against
either of the parties hereto in any action or proceeding shall be conclusive as
to the subject of such final judgment and may be enforced in other jurisdictions
in any manner provided by law.
11. ASSIGNMENT. Employee may not assign, transfer or convey this
Agreement or any interest therein. This Agreement and all of the Company's
rights and obligations hereunder may be assigned or transferred by it, in whole
or in part, to and shall be binding upon and inure to the benefit of any
successor of the Company, but any such assignment shall not relieve the Company
of any of its obligations. The term "successor" shall mean only any corporation
or other business entity which by merger, consolidation, purchase of assets or
otherwise succeeds to or otherwise acquires all or substantially all of the
assets of the Company.
12. ARBITRATION. Without limiting the Company's right to seek injunctive
relief as described in Section 9, in the event of a disagreement or dispute
between the Company and Employee related to this Agreement, the matter will be
finally settled in Los Angeles, California by arbitration by a single arbitrator
in a proceeding conducted under the rules of the American Arbitration
Association or any similar successor body, the arbitrator also apportioning the
costs of the arbitration. The decision of the arbitrator in writing shall be
final and binding upon the parties, and will not be subject to appeal. If either
party fails to abide by such decision, the other party may seek the order of any
federal or state court having jurisdiction thereof which shall enter judgment on
the decision of the arbitrator, and the party so failing to abide shall be
responsible for the payment of the expenses of the court proceeding and all
reasonable resulting enforcement expenses, including actual attorneys' fees.
13. AMENDMENT; WAIVER. Neither this Agreement nor any term or provision
hereof may be amended, waived, discharged or modified other than by a written
instrument signed by the party against whom enforcement of any such amendment,
waiver, discharge or modification is sought. Any amendment shall be effective
and binding on all of the parties hereto. Any waiver of the application of any
term or provision herein or breach hereof shall not be deemed to be a waiver of
any other term, provision or breach and shall not be deemed a waiver of any
subsequent application of such term or provision or the occurrence of a
subsequent breach.
14. NOTICES. All notices, requests and other communications under this
Agreement shall be in writing and shall be deemed to have been delivered on the
third Business Day after having been mailed in a general or branch post office
and enclosed in a registered or certified postage prepaid envelope; the first
Business Day after having been sent by recognized overnight
5
courier; or when personally delivered; and, in each case, addressed to the
respective parties at the addresses stated below or to such other changed
addresses that the parties may have fixed by notice in accordance herewith. The
term "Business Day" shall mean any day other than a Saturday, a Sunday or a day
on which banking institutions in the City of New York, New York or Los Angeles,
California are authorized by law, regulation or executive order to remain
closed.
If to the Company: 800-U.S. Search
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇
With a copy to: ▇▇▇▇, Scholer, Fierman, ▇▇▇▇ & Handler, LLP
1999 Avenue of the Stars, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
If to Employee: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
With a copy to: Troop ▇▇▇▇▇▇▇ Pasich Reddick & ▇▇▇▇▇, LLP
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, Esq.
15. ATTORNEY'S FEES. In any action or proceeding brought by any party
hereto to enforce any provision of this Agreement, or where any provision hereof
is validly asserted as a defense, the successful party (as determined by the
Deciding Authority (as defined below) based upon all of the facts and
circumstances) shall be entitled to recover reasonable attorney's fees and
expenses, in addition to its costs and expenses and any other available remedy,
associated with such action or proceeding as may be fixed by any court of
competent jurisdiction, or other jurisdiction or quasi-judicial body (including,
without limitation, an arbitrator or arbitrators) having jurisdiction thereof
("Deciding Authority") whether or not such action or proceeding results in a
final judgment or award.
16. SEVERABILITY. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect and shall in
no way be affected, impaired or invalidated, and the parties hereto shall use
their best efforts to find and employ an alternative means to achieve the same
or substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to be the
intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such which may
be hereafter declared invalid, void or unenforceable.
6
17. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
18. INTERPRETATION. The parties hereto agree that each party has
participated in the drafting and preparation of this Agreement, and,
accordingly, in any construction or interpretation of this Agreement, the same
shall not be construed against any party by reason of the source of drafting.
19. SECTION HEADINGS. The section headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
EMPLOYEE 800-U.S. SEARCH
a California corporation
/s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇ ▇▇▇▇▇
----------------------------------- ----------------------------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, President
7