EXHIBIT 10.6
February 3, 1999
C. N. Xxxxxxx, Jr.
Global Technology Consulting
0000 Xxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Re: Employment Agreement
Dear Nick:
800-U.S. Search ("U.S. Search" or the "Company") is pleased to offer you the
position of President and Chief Executive Officer, effective February 1, 1999,
on the following terms (the "Agreement"):
As President and Chief Executive Officer of U.S. Search, you will initially work
full time in the Los Angeles area and perform the duties customarily associated
with this position, including direct responsibility for the overall profit and
loss of the Company, managing the Company's growth plans and such duties as may
be assigned to you by the Company's Board of Directors (the "Board"). The Board
may also, in its discretion, appoint you as the Vice Chairman of the Board to
perform the duties of such position. Of course, the Company may change 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 two hundred fifty thousand ($250,000) 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 Board. The Company agrees that your incentive bonus
plan for 1999 will be completed as soon as possible after your employment
commences.
Upon approval by the Board, you will receive a stock option grant on your date
of hire with respect to four hundred (400) shares of the Company's common stock
(or such higher number that equals four percent (4%) of the fully diluted shares
outstanding of the Company at February 1, 1999) at an exercise price equal to
the price per share calculated on the basis of a $40,000,000 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. One-third of these shares will vest on
the date of grant; one-third of these shares will vest one year after the date
of grant; and one-third of these shares will vest two years after the date of
grant. The terms of your stock option grant are set out in the Stock Option
Grant Notice, attached as Exhibit A.
In addition to your salary and incentive compensation, you will be eligible for
Company benefits consistent with Company policy, including vacation, life
insurance and medical and dental coverage. 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.
1.
Although your current work location will be our Los Angeles area office, the
Company may consider, at its sole discretion, a relocation of its principal
office and your work location to the San Francisco Bay Area or other geographic
region within California. As long as the Company is located in the Los Angeles
area, however, you will be reimbursed while performing your employment
obligations in the Los Angeles area for documented reasonable and actual: (i)
living expenses to a maximum of twenty five hundred dollars ($2,500) per month,
and (ii) approved travel expenses consistent with Company policy. The Company
may, at its sole discretion, provide you with certain actual and reasonable
relocation costs if it decides that the Company's principal place of business
will remain in the Los Angeles area. In addition, the Company agrees to
reimburse you for reasonable documented business expenses pursuant to Company
policy.
You will be expected to abide by all of the Company's policies and procedures.
As a condition of your employment, you agree to refrain from any use or
disclosure of the Company's proprietary or confidential information or
materials. As a further condition of your employment and due to the
developmental nature of U.S. Search's business, you also agree to sign and
comply with the Company's Proprietary Information and Inventions Agreement
(attached as Exhibit B).
By accepting this offer, 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. You may, however,
continue to provide limited and incidental services to E-Net Corporation,
LICenergy A/S and MCMS Inc. and continue to serve on the Boards of Directors of
these three companies. You may also provide services to other third parties as
approved by the Board, which approval will not be unreasonably withheld. You
will be permitted to devote reasonable time to the supervision of your personal
investments, civic and charitable affairs, provided that such activities do not
interfere with the performance of your duties hereunder.
Your employment with the Company is for a specified term of one (1) year, after
which the Company may, in its discretion, extend the term of this Agreement for
up to an additional two (2) years. If the Company terminates your employment
without Cause: (i) at any time during the first two (2) years of your
employment, the Company will continue to pay you our base salary then in effect,
as severance, for twelve (12) months, subject to standard payroll deductions and
withholdings, payable on the Company's normal payroll dates; or (ii) at any time
during your third year of employment, the Company will continue to pay you, as
severance, your base salary then in effect for the remainder of that third year
of employment (e.g., if your employment terminates after 30 months of service,
you will receive six (6) months of your base salary as severance). In addition
to severance, if the Company terminates your employment without Cause, any
remaining unvested shares of your stock option grant will vest immediately, and
you will receive a pro-rata share of any bonus due for the period prior to the
termination date. 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, these severance, bonus and stock vesting obligations
will not be reduced in any way by any compensation or benefits received (or
foregone) by you from sources other than the Company.
2.
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 search 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 all equitable relief 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 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,
bonus, additional stock option vesting 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) intentional and material breach of the Proprietary
Information and Inventions Agreement or other disclosure of nonpublic Company
information; or (vii) participation in any conduct, either directly or
indirectly, that competes with the business of the Company.
If you become disabled during your employment with the Company, the Company may,
in its discretion, terminate your employment. You will, however, continue to
receive your base salary then in effect for six (6) months, less standard
deductions and withholdings, payable on the Company's normal payroll dates. For
the purposes of this Agreement, "disabled" means that, because of an illness or
injury that substantially limits one or more major life activity, you are unable
to perform one or more essential functions of your job, with or without
reasonable accommodation, for twelve (12) or more consecutive weeks.
3.
In the event of a Change of Control of the Company, any remaining unvested
shares of your stock option grant will vest immediately upon the effective date
of the Change of Control. For the purposes of this Agreement, "Change of
Control" means: (i) a sale of substantially all of the assets of the Company,
(ii) a merger or consolidation in which the Company is not the surviving
corporation or (iii) a reverse merger in which the Company is the surviving
corporation but the shares of Common Stock outstanding immediately preceding the
merger are converted by virtue of the merger into other property, whether in the
form of securities, cash or otherwise.
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.
The Company will indemnify 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 as
contemplated by this Agreement (including reasonable attorneys fees) resulting
from any act or omission by you within the authorized course and scope of your
employment with the Company, to the maximum extent permitted by law.
Notwithstanding this Agreement or any termination of your employment by the
Company pursuant to this Agreement or otherwise, you will be entitled to
coverage under the directors' and 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 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. 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
applications of the laws of any jurisdiction other than the State of California.
As required by law, this offer of employment is subject to satisfactory proof of
your right to work in the United States.
4.
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/ Xxxxx Xxxxx
---------------------------------
Xxxxx Xxxxx
Member, Board of Directors
Exhibit A - Stock Option Grant Notice (with attachments)
Exhibit B - Proprietary Information and Inventions Agreement
Acknowledged and Accepted:
/s/ C. N. Xxxxxxx, Jr.
-------------------------------
C. N. Xxxxxxx, Jr.
Date: 2/4/99
--------------------------
5.
EXHIBIT A
STOCK OPTION GRANT NOTICE
6.
EXHIBIT B
PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT
7.
