Exhibit 10
[FIRST ADVANTAGE CORPORATION LOGO APPEARS HERE]
August 4, 2003
Dear Xxxxx:
The First Advantage Corporation (the "Company") is pleased to offer you
employment as Chief Technology Officer of the Company, effective on the date
indicated above and ending December 31, 2005 (the "Term"), on the terms and
conditions set forth in this agreement (the "Agreement"). Upon the expiration of
the Term, this Agreement will not be renewed and, similar to other senior
executives of the Company, you will be employed at-will, subject to the
Severance Covenant (as defined below).
During the Term, you shall devote your full business time, energy and ability
exclusively to the business and interests of the Company at such address
(subject to usual and ordinary travel requirements) in the greater Los Angeles,
California metropolitan area (including, for the avoidance of doubt, cities
other than Los Angeles) as the Company shall determine; provided, however, that
without your consent your office will not be at a location that is greater than
20 miles from your current office at 0000 Xxxxxxxxx Xxxxxx, Xxx Xxxxxxx,
Xxxxxxxxxx (the "Current Location"). You will report to the Chief Operating
Officer of the Company (the "COO") and shall perform the duties and have the
authority customarily associated with the positions set forth above, including
any such duties as may be assigned to you by the COO, the President of the
Company (the "President"), the Chief Executive Officer of the Company (the
"CEO") or the Board of Directors which are consistent with your position as
Chief Technology Officer.
During the Term, your base salary will be $250,000 per year, pro rata for any
partial pay period during the Term, less standard deductions and withholdings,
paid in accordance with the Company's standard payroll procedures. You will be
eligible for salary increases as approved in the sole and unfettered direction
of the compensation committee (the "Compensation Committee") of the Board of
Directors or if there is no Compensation Committee, the Board of Directors.
For the calendar year 2003, you will receive a minimum bonus of $100,000, paid
at such time as the bonuses paid to other senior executive of the Company are
paid. For the calendar years 2004 and 2005, you will be paid a bonus equal to
the sum of
(a) the lesser of (i) the product of 0.01 and the pre-tax net income of
the Company (as defined in accordance with generally accepted
accounting principles), excluding the effects of expenses directly
resulting from the acquisition of US XXXXXX.xxx Inc. by the Company
("Adjusted Pre-Tax Income"), for such year and (ii) $250,000 and
(b) the product of 0.005 and Adjusted Pre-Tax Income for such year in
excess of $25,000,000, if any;
provided, however, that in the event the calculation in subparagraph (a) above
results in a negative number, the bonus payable for the calendar year 2004 or
2005, respectively, pursuant to this sentence shall be $0. Such bonus will be
paid at such time as the bonuses paid to other senior executives of the Company
are paid for such calendar year; provided, however, that if your employment with
the Company terminates after the end of the calendar year 2003, 2004 or 2005, as
the case may be, but prior to the time bonuses are paid to senior executives of
the Company for such calendar year, you shall be paid your bonus for such
calendar year as soon as practicable after your termination of employment. For
the avoidance of doubt, if you remain employed by the Company after the Term,
all salary and bonuses shall be determined and paid in the sole and unfettered
discretion of the Compensation Committee or, if there is no Compensation
Committee, the Board of Directors.
During the Term, the Company shall pay you a car allowance of $900 per month,
pro rata for any partial month during the Term.
You will be granted an option to purchase 40,000 shares of the Class A common
stock of the Company on the same terms as option grants made to other senior
executives of the Company around such time and otherwise subject to the First
Advantage Corporation 2003 Incentive Compensation Plan and the option agreement
to be executed by you and the Company; provided, however, that the strike price
with respect to such options shall be the mean between the high and low trading
price of Class A common stock of the Company on the Nasdaq National Market
System as of the date of this agreement; provided, further, that if the Company
terminates your employment without Cause (as defined below) during the Term, or
if you terminate your employment with the Company for Good Reason (as defined
below) during the Term, or if you retire or otherwise voluntarily terminate your
employment with the Company such options, to the extent vested as of the date of
such termination, may be exercised by you at any time prior to the first
anniversary of the date of such termination; provided, further, that if the
Company terminates your employment for Cause such options, to the extent vested
as of the date of such termination, may be exercised by you at any time prior to
the 30 day anniversary of the date of such termination; provided, further, that
your rights upon a Change of Control (as defined in the Option Plan) shall be as
specified in Article XIV of the Option Plan as the Option Plan existed on the
date hereof (a copy of which is attached hereto as Exhibit A), without giving
effect to any subsequent amendments or modifications thereto (including, without
limitation, to the definition of "Change of Control" therein).
During the Term, you shall be entitled to receive all other benefits of
employment generally available to other similar employees of the Company when
and as you become eligible for them, including medical, dental, life and
disability insurance benefits. The Company reserves the right to modify, suspend
or discontinue any and all of the above benefit plans, policies, and practices
at any time without notice to or recourse by you, so long as such action is
taken generally with respect to other similarly situated employees of the
Company and does not single you out. You shall be entitled to four weeks
vacation per year, which shall accrue and carry-over in accordance with the
policies and practices of the Company applicable to similarly situated employees
of the Company.
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During the Term, to the extent that such expenditures satisfy the criteria under
the Internal Revenue Code for deductibility by the Company (whether or not fully
deductible) for federal income tax purposes as ordinary and necessary business
expenses, the Company shall reimburse you for reasonable business expenses in
accordance with the policies and procedures established from time to time with
respect to similarly situated employees of the Company.
You agree that all processes, inventions, patents, copyrights, trademarks and
other intangible rights that may be conceived or developed by you, either alone
or with others, during the Term and after the Term while you are employed by the
Company or any of its affiliates, whether or not conceived or developed during
your working hours, and with respect to which the equipment, supplies,
facilities or trade secret information of the Company or any of its affiliates
was used, or that relate at the time of conception or reduction to practice of
the invention to the business of the Company or any of its affiliates or to the
Company's or any of its affiliate's actual or demonstrably anticipated research
and development, or that result from any work performed by you for the Company
or any of its affiliates, shall be the sole property of the Company. You shall
disclose to the Company all inventions conceived during the Term, during any
time you are employed by the Company or any of its affiliates subsequent to the
Term and for one year thereafter, whether or not the property of the Company or
any of its affiliates under the terms of the preceding sentence, provided that
such disclosure shall be received by the Company in confidence. You shall
execute all documents, including patent applications and assignments, reasonably
required by Company to establish the Company's rights under this paragraph. This
paragraph shall survive the termination of this Agreement, whether by expiration
of the Term or otherwise.
Because of your employment by the Company, you will have access to trade secrets
and confidential information about the Company and its affiliates, their
products, their customers and their methods of doing business. Such information
is considered secret and is disclosed to you in confidence. During and after
your employment by the Company, whether pursuant to this Agreement or otherwise,
you shall not directly or indirectly disclose or use any such information except
as required in the course of your employment by the Company. This paragraph
shall survive the termination of this Agreement, whether by expiration of the
Term or otherwise.
By accepting this Agreement, you represent and warrant that you are not a party
to any agreement with any third party or prior employer that would conflict with
or inhibit your performance of your duties with the Company.
If (a) the Company terminates your employment without Cause during the Term or
(b) you terminate your employment with the Company for Good Reason during the
Term, the Company will provide you with the following severance benefits,
provided that you provide the Company with a signed general release of all
claims substantially in the form set forth as Exhibit B:
(i) continuation of your base salary, subject to standard payroll
deductions and withholdings, payable on the Company's regular
payroll dates, for the greater of the remainder of the Term and
twelve (12) months;
(ii) payment within 15 business days of the date of termination an amount
equal to the product of (a) the bonus paid you for service during
the calendar year immediately
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preceding the date of termination and (b) the quotient derived from
the division of the number of days elapsed in the calendar year
during which the date of termination occurs by 365; and
(iii) reimbursement to you of your COBRA premiums for the greater of
twelve months or the remainder of the Term; provided, however, that
the Company's obligations under this subsection shall terminate when
you become eligible for health insurance benefits at the expense of
a new employer; provided, further, that if (i) you are entitled to
reimbursement of your COBRA premiums for the remainder of the Term,
and (ii) your right to COBRA coverage is exhausted prior to the end
of the Term, the Company will reimburse you for the cost of securing
individual health insurance coverage for the remainder of such Term,
up to the dollar amount previously provided to you for reimbursement
of your COBRA premiums.
For purposes of this Agreement, "Good Reason" shall mean, without your express
written consent, any of the following circumstances:
(i) a significant adverse alteration in the nature or status of your
responsibilities or the conditions of your employment or if the
Board of Directors fails to appoint you as Chief Technology Officer
of the Company;
(ii) the reduction of your annual base salary as the same may be
increased from time to time except for across-the-board salary
reductions similarly affecting all senior management personnel;
(iii) unless known to you and accepted by you, relocation of your offices
at which you are principally employed to a location more than 20
miles from the Current Location; or
(iv) the failure to pay to you any portion of your then current
compensation within seven (7) days of the date such compensation is
due.
Any severance benefits provided to you by the Company will not be reduced in any
way by compensation or benefits received (or foregone) by you from sources other
than the Company.
At any time the Company may terminate this Agreement (i) for Cause, (ii) as a
result of your death or (iii) if you resign from the Company other than for Good
Reason, in which case (except as provided in the paragraph immediately
following) all compensation and unvested benefits will cease immediately,
subject to the Company's obligations under COBRA and other applicable laws,
rules and regulations, and subject to Company's officers insurance and indemnity
obligations to you hereunder.
For a period beginning on the six month anniversary of the date of this
agreement and ending five business days later, you shall have the right to
resign from the Company and terminate this agreement effective sixty days after
the date on which the Company receives the Termination Notice (as defined
below), in which case (a) the Company will pay you, within five business days of
the effective date of such termination, cash in the amount of $100,000 and (b)
all
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compensation and unvested benefits will cease immediately, subject to the
Company's obligations under COBRA and other applicable laws, rules and
regulations, and subject to Company's officers insurance and indemnity
obligations to you hereunder. This right shall only be exercised by delivery of
written notice to such effect to the Company (the "Termination Notice"), which
notice must be delivered by fax or hand and received by the Company within the
five business day period set forth above at the following address: First
Advantage Corporation, 0 Xxxxx Xxxxxxxx Xxx, Xxxxx Xxx, Xxxxxxxxxx 00000, Fax:
000-000-0000, Attention: Xxxxxxx X. XxXxxxxxx, General Counsel.
As used in this Agreement, "Cause" means (i) your willful and recurring failure
or refusal to perform specific directives of the President, the CEO, the COO or
the Board of Directors, when such directives are consistent with the scope and
nature of your duties and responsibilities as set forth in this Agreement; (ii)
your conviction of any crime involving fraud, misrepresentation, moral turpitude
or any felony; (iii) participation in a fraud or embezzlement against the
Company; or (iv) material breach of this Agreement if such breach continues
after timely written notice to you of such breach and your failure to cure same
within 30 business days after your receipt of such notice.
If you become Disabled during your employment with Company, the Company may, in
its discretion, terminate your employment. In addition to any disability
insurance benefits to which you may be entitled upon such disability, the
Company will continue to pay your base salary then in effect for a period of six
months, even if such six-month term extends beyond the portion of the Term which
remained on the date you were terminated for disability. For purposes of this
Agreement, "Disabled" means your inability due to mental or physical illness or
injury to perform your duties under this Agreement in your normal and regular
manner for four consecutive full calendar months or for 80 percent or more of
the normal working days during six consecutive full calendar months.
If after the expiration of the Term you remain employed by the Company or any of
its subsidiaries and the Company terminates your employment for any reason other
than your death, retirement or for Cause (as defined above), provided that you
first resign your position, if any, on the Board of Directors and you provide
the Company with a signed general release of all claims substantially in the
form set forth as Exhibit B, the Company shall (a) continue to pay you your base
salary, subject to standard payroll deductions and withholdings, payable on the
Company's regular payroll dates, for twelve (12) months and (b) pay you, within
15 business days of the date of termination, an amount equal to the product of
(i) the bonus paid you for service during the calendar year immediately
preceding the date of termination and (ii) the quotient derived from the
division of the number of days elapsed in the calendar year during which the
date of termination occurs by 365. If after the expiration of the Term you
remain employed by the Company or any of its subsidiaries and the Company
terminates your employment because you have become Disabled (as defined above),
in addition to any disability insurance benefits to which you may be entitled
upon such disability, the Company will continue to pay your base salary then in
effect for a period of six months. This paragraph shall survive the termination
of this Agreement, whether by expiration of the Term or otherwise.
To ensure rapid and economical resolution of any disputes that may arise under
this Agreement, you and the Company agree to first try to resolve the dispute
with the help of a mutually agreed
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upon mediator in Los Angeles, California. Any costs and fees, other than
attorneys' fees and costs associated with the mediation (which shall be paid by
the Company), shall be shared equally by you and the Company. If it proves
impossible to arrive at a mutually satisfactory solution through mediation, the
parties agree to submit the dispute to binding arbitration in Los Angeles,
California. The parties agree that the binding arbitration will be conducted
under the rules of the American Arbitration Association. Judgment upon the award
rendered by the Arbitrator may be entered in any court with jurisdiction to do
so. In the event that the prevailing party in arbitration seeks enforcement of
the arbitration award in a court of law, the prevailing party in that court
action will be entitled to be reimbursed for its costs and attorneys' fees.
During and after the Term and your employment, the Company will indemnify you
and hold you harmless from and against any and all costs, liability and
necessary expenses from any claim by any person with respect to, or in any way
related to, your employment with the Company, to the maximum extent permitted by
law. Notwithstanding this Agreement or any termination of your employment with
the Company pursuant to this Agreement or otherwise, you will be entitled to
coverage under the officers' liability coverage maintained by the Company, as in
effect or as may be subsequently replaced or modified, to the same extent as
other officers and directors of the Company.
This Agreement and the exhibits attached hereto, constitute the complete, final
and exclusive embodiment of the entire agreement between you and the Company
with respect to the terms and conditions of your employment; provided, however,
that nothing in this Agreement shall effect any stock options granted to you by
US XXXXXX.xxx Inc. ("US SEARCH"); provided, further, that for the avoidance of
doubt any employment agreement between US SEARCH and you, including, without
limitation, that certain letter agreement, dated May 1, 2000, is hereby
terminated and of no further force and effect. This Agreement is entered into
without reliance upon any promise, warranty or representation, written or oral,
other than those expressly contained herein, and it supersedes any other such
promises, warranties, representations or agreements. This Agreement may not be
amended or modified except by a written instrument signed by you and a duly
authorized representative of the Company. If any provision of this Agreement is
determined to be invalid or unenforceable, in whole or in part, this
determination will not affect any other provision of the Agreement. All issues
and questions concerning the construction, validity, enforcement and
interpretation of this Agreement will be governed by, and construed in
accordance with, the laws of the State of California, without giving effect to
any choice of law or conflict of law rules or provisions that could cause the
application of the laws of any jurisdiction other than the State of California.
YOU AND THE COMPANY AGREE THAT THE FOREGOING ARBITRATION PROCEDURE SHALL BE THE
EXCLUSIVE MEANS OF RESOLVING ANY ARBITRABLE DISPUTE AND THAT NO OTHER ACTION
WILL BE BROUGHT BY EMPLOYEE IN ANY COURT OR OTHER FORUM. THIS AGREEMENT IS A
WAIVER OF ALL RIGHTS TO A CIVIL COURT ACTION AND APPEAL FOR AN ARBITRABLE
DISPUTE; ONLY THE ARBITRATOR, NOT A JUDGE OR JURY, WILL DECIDE SUCH DISPUTE.
As required by law, this offer of employment is subject to satisfactory proof of
your right to work in the United States.
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Please acknowledge and agree to the foregoing by countersigning below.
Very truly yours,
FIRST ADVANTAGE CORPORATION
By: /s/ Xxxxxxx X. XxXxxxxxx
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Name: Xxxxxxx X. XxXxxxxxx
Title: Executive Vice President
ACKNOWLEDGED AND AGREED AS OF THE DATE FIRST WRITTEN ABOVE:
/s/ Xxxxx X. Xxxxxxx
---------------------------------
Xxxxx X. Xxxxxxx
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