AMENDED & RESTATED EMPLOYMENT AGREEMENT

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 NICHOLAS MATZORKIS ("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





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



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 Kushner-Locke 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 l ...