EXHIBIT 10.7
March 18, 1999
Xxxxxxx X. Xxxxxxx
0000 X.X. Xxxxxxxx Xxx
Xxxxxxxx, XX 00000
Re: Employment Agreement
Dear Xxxx:
800-U.S. Search ("U.S. Search" or the "Company") is pleased to offer you the
position of Vice President and Chief Financial Officer, effective March 29,
1999, on the following terms (the "Agreement"):
As Vice President and Chief Financial Officer for U.S. Search, your work
location will be in the San Francisco Bay Area. Temporarily, however, you will
work in our current office in Southern California until the Company establishes
its office in the San Francisco Bay Area. You will be expected to perform the
duties customarily associated with this position, reporting directly to the
President and Chief Executive Officer. Of course, the Company may change your
job duties and work location from time to time, as it deems necessary. You will
be expected to work the hours required by the nature of your work assignments.
Your initial base salary will be one hundred seventy thousand ($170,000) per
year, less standard deductions and withholdings, paid bi-weekly. You will be
eligible for annual performance bonuses based on goals and objectives to be
mutually agreed upon by you and the Chief Executive Officer. The Company agrees
that your incentive bonus plan for 1999 will be completed within sixty (60) days
after your employment commences.
You will be granted a stock option on your date of hire with respect to one
hundred fifty (150) shares of the Company's common stock (or such higher number
that equals one and one half percent (1-1/2%) of the fully diluted shares
outstanding of the Company at the date of the grant (excluding convertible
debentures), at an exercise price equal to the price per share, calculated on
the basis of a $80,000,000 Company valuation, which the Board believes is the
fair market value of a share of the Company's common stock on the date of the
grant. The stock option will be an incentive stock option to the extent
permissible under Section 422 of the Internal Revenue Code of 1986, as amended
(the "Code"). One-fourth of the shares subject to the option will vest one year
after the date of grant; and an additional one-fourth of the shares will vest on
the three subsequent anniversaries of the date of grant. Your stock option will
be granted under the "800-U.S. Search Amended and Restated 1998 Stock Incentive
Plan" (the "Option Plan") and will be evidenced by the Stock Option Award
Agreement, attached as Exhibit A.
In addition to your salary and incentive compensation, you will be eligible for
executive-level Company benefits consistent with Company policy, including
vacation, 401(k) plan, life insurance
1.
and medical and dental coverage. The Company will reimburse you for reasonable
documented business expenses pursuant to Company policy. Details about these
benefits will be available for your review. Your compensation and benefits will
be subject to changes in the Company's compensation and benefit plans applicable
to Company executives generally.
You will be expected to abide by all of the Company's policies and procedures.
As a condition of your employment, you agree to sign and comply with the
Company's Proprietary Information and Inventions Agreement (attached as Exhibit
B).
You may terminate your employment with the Company at any time and for any
reason whatsoever simply by notifying the Company. Likewise, the Company may
terminate your employment at any time and for any reason whatsoever, with or
without cause or advance notice. This at-will employment relationship cannot be
changed except in a writing signed by the Chief Executive Officer.
If the Company terminates your employment without Cause: (i) at any time during
the first twelve (12) months of your employment, the Company will continue to
pay your base salary then in effect, as severance, for six (6) months; or (ii)
at any time after your first twelve (12) months of employment, the Company will
continue to pay you, as severance, your base salary then in effect for the
following twelve (12) months, and you will receive a pro-rata share of any bonus
due for the period prior to the termination date. These severance payments will
be subject to standard payroll deductions and withholdings, payable on the
Company's normal payroll dates. You will not be entitled to any additional
compensation or benefits beyond what is provided in this paragraph. In the
event of your termination without Cause, the severance obligations will be
reduced by any compensation received from other employment or the substantial
equivalent of other employment (e.g., consulting) during the severance period.
You acknowledge that by virtue of your position with the Company you will
develop considerable expertise in the business operations of the Company and
will have access to extensive confidential information with respect to the
Company. You also acknowledge that this is a personal services contract wherein
your services are of a special, unique, unusual, extraordinary and intellectual
character. You further acknowledge that your services will have peculiar value,
the loss of which cannot be reasonably or adequately compensated in damages in
an action at law. You acknowledge that the Company would be irreparably
damaged, and its substantial investment materially impaired, if you were to
enter into an activity competing with the Company's business in violation of the
terms of this Agreement or if you were to make unauthorized use or disclosure of
any confidential information concerning the business of Company. Therefore, in
order to protect the trade secrets and confidential and proprietary information
of the Company, you agree that while the Company is paying you severance, you
will not obtain employment with, perform work for, or engage in any professional
activity on behalf of any company, person or entity that directly competes in
any manner with the business of the Company without first obtaining written
authorization from the Company. You further agree to notify the Company, in
writing, before you obtain employment with, perform work for, or engage in any
professional activity on behalf of any company, person or entity in the search
business. In the event that you engage in any such competitive activity in
breach of this Agreement, the Company may stop its salary continuation payments
to you and seek equitable relief (e.g., injunctions) to prevent any such
competitive activity. You agree that if you resign from your employment with
the Company, all the provisions in this paragraph will apply if
2.
the Company decides, in its sole discretion, to provide you with all of the same
consideration you would have received if your employment had been terminated
without Cause. If you resign and the Company does not exercise the option
described in the preceding sentence, all compensation and benefits will cease
immediately, and you will receive no severance benefits or any other
compensation or benefits. You expressly acknowledge that you are voluntarily
entering into this Agreement, that the provisions in this paragraph are a
material inducement to the Company in entering this Agreement, and that the
terms and conditions of this Agreement are fair and reasonable to you in all
respects.
If, at any time, your employment is terminated for Cause, all compensation and
benefits will cease immediately, and you will receive no severance benefits,
pro-rated bonus or any other compensation or benefits. For purposes of this
Agreement, "Cause" means: (i) conviction of any felony or any crime involving
moral turpitude or dishonesty; (ii) participation in a fraud or act of
dishonesty against the Company; (iii) material breach of the Company's policies;
(iv) intentional damage to the Company's property; (v) material breach of this
Agreement; (vi) material breach of the Proprietary Information and Inventions
Agreement or other disclosure of nonpublic Company information; (vii)
participation in any conduct, either directly or indirectly, that competes with
the business of the Company; or (viii) conduct by you, which in the good faith
and reasonable determination of the Company's Chief Executive Officer
demonstrates gross unfitness to serve or unacceptable job performance.
To ensure rapid and economical resolution of any disputes that may arise under
this Agreement or that relate in any way to your employment, you and the Company
agree that any and all disputes or controversies of any nature whatsoever,
relating to your employment or regarding the interpretation, performance,
enforcement or breach of this Agreement will be resolved by confidential, final
and binding arbitration (rather than trial by jury or court or resolution in
some other forum), to the fullest extent permitted by law, by Judicial
Arbitration and Mediation Services/Endispute ("JAMS") under the then-existing
JAMS rules. Nothing in this paragraph is intended to prevent either party from
obtaining injunctive relief in court to prevent irreparable harm pending the
conclusion of any such arbitration. 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.
This letter Agreement and Exhibits A and B constitute the complete, final and
exclusive embodiment of the entire agreement between you and U.S. Search with
respect to the terms and conditions of your employment. 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. It may not
be amended or modified except by a written instrument signed by you and a duly
authorized officer 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 this Agreement and the
provision in question will be modified by the court so as to be rendered
enforceable. 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.
3.
As required by law, this offer of employment is subject to satisfactory proof of
your right to work in the United States.
I trust that the points outlined above fully clarify the terms of U.S. Search's
employment offer. If you choose to accept our offer under the terms described
above, please sign below and return this letter to me. I am excited by the
prospect of your joining the U.S. Search team. We look forward to a productive
and enjoyable work relationship helping U.S. Search grow.
Very truly yours,
800-U.S. Search
By: /s/ C. N. Xxxxxxx, Jr.
------------------------------------------
C. N. Xxxxxxx, Jr.
President and Chief Executive Officer
Exhibit A - Stock Option Award Agreement (with attachments)
Exhibit B - Proprietary Information and Inventions Agreement
Acknowledged and Accepted:
/s/ Xxxxxxx X. Xxxxxxx
-------------------------------
Xxxxxxx X. Xxxxxxx
Date: 3/25/99
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4.
EXHIBIT A
STOCK OPTION AWARD AGREEMENT
5.
EXHIBIT B
PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT
6.
