INFOCROSSING INC
EMPLOYMENT AGREEMENT - CORTENS
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<TYPE>EX-10
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<FILENAME>ex105sms.txt
<DESCRIPTION>EMPLOYMENT AGREEMENT - CORTENS
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                                                                    EXHIBIT 10.5

                              EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into as of April 2,
2004, by and between Jim Cortens ("Executive") and Infocrossing, Inc., a
Delaware corporation (the "Company").

                                    RECITALS

     WHEREAS, the Company and ITO Holdings, LLC, a California limited liability
company ("Holdings"), have entered into a Stock Purchase Agreement dated as of
March 3, 2004 (as such agreement may hereafter be amended, the "Stock Purchase
Agreement") pursuant to which the parties thereto have agreed that the Company
will acquire all of the outstanding common stock of ITO Acquisition Corporation,
a California corporation (the "Corporation"), and pursuant to which the
Corporation will become a wholly-owned subsidiary of the Company;

     WHEREAS, Executive is the President of the Corporation and holds limited
liability company member interests in Holdings, with respect to which interests
Holdings will make distributions to Executive of its proceeds from the sale of
the Corporation to the Company;

     WHEREAS, the covenants provided herein, including Executive's
non-competition and non-solicitation covenants set forth in Section 8, and in
that certain Employee Confidentiality and Invention Assignment Agreement dated
as of the date hereof by and between the Company and Executive (the
"Confidentiality Agreement"), are necessary in order for the Company to fully
acquire the Corporation's business and goodwill and are material, significant
and essential to effecting the acquisition of the Corporation and the other
transactions contemplated by the Stock Purchase Agreement; and

     WHEREAS, the Company desires to employ Executive and to enter into this
Agreement embodying the terms of such employment, effective as of the closing
the Company's acquisition of the Corporation pursuant to the Stock Purchase
Agreement (the "Closing"); and

     WHEREAS, Executive desires to enter into this Agreement and to accept
employment with the Company, effective as of the Closing, subject to the terms
and conditions of this Agreement.

                                    AGREEMENT

     NOW, THEREFORE, in consideration of the promises and the mutual covenants
and agreements set forth herein and for other good and valuable consideration,
the adequacy and receipt of which are, hereby acknowledged, the parties hereto
agree as follows:

1. Employment.

     The Company hereby agrees to employ Executive, and Executive hereby agrees
to be employed by the Company commencing immediately after, and on the date of,
the Closing (the "Effective Date'), on the terms and conditions set forth in
this Agreement.

2. Position and Duties.

     (a) Position. During the term of his employment by the Company, Executive
shall serve as the Executive Vice President of the Company and shall report
directly to the President and Chief Operating Officer of the Company.

     (b) Duties. Executive will generally be responsible for managing the
operations, sales and marketing, the pre-sales, account management and human
resource functions of the Company under the direction of the President and Chief
Operating Officer of the Company. Executive shall have such other duties and
authority consistent with the foregoing and consistent with the position of
Executive Vice President as shall be assigned to him from time to time by the
Board of Directors. Executive's duties and authority shall not be reduced or
changed except by the prior written consent of Executive and any reduction or
change by the Company of Executive's duties and authority without Executive's
prior written consent shall constitute a material breach of this Agreement by
the Company. Executive shall devote his full business time, attention, skill and
best efforts to the performance of his duties under this Agreement and shall not
engage in any other business or occupation while employed by the Company.
Notwithstanding the foregoing, nothing herein shall preclude Executive from: (i)
engaging in charitable activities and community affairs, and (ii) managing his
personal investments and affairs; provided, however, that the activities set out
in clauses (i) and (ii) shall be limited by Executive so as not to materially
interfere, individually or in the aggregate, with the performance of his duties
and responsibilities hereunder. The Company agrees that Executive shall perform
a majority of his duties at the Company's corporate offices in Brea, California.

     (c) Stock Options. On the Effective Date, Executive shall be granted an
option for 200,000 shares of the Company's common stock (the "Inducement
Option") pursuant to the Company's 2002 Stock Option and Stock Appreciation
Rights Plan, as amended (the "Plan"), which option (i) shall have an exercise
price equal to the per share "Fair Market Value" (as defined in the Plan) of the
stock on the Effective Date, (ii) shall have a term of ten (10) years from the
Effective Date, without regard to any termination of Executive's employment with
the Company, and (iii) shall be fully vested and exercisable as of the Effective
Date. The Company has obtained the approval by the Compensation Committee of its
Board of Directors for the Inducement Option. The Inducement Option shall be
governed by the terms and conditions of a Stock Option Agreement in form and
substance acceptable to Executive. Thereafter, on each anniversary of the
Effective Date on which Executive is employed by the Company, beginning with the
first anniversary of the Effective Date, Executive shall be granted an option
for 50,000 shares of the Company's common stock pursuant to the Plan, subject to
such terms and conditions as may be determined by the Committee that administers
the Plan.

3. Compensation.

     (a) Base Salary. During the term of Executive's employment, the Company
shall pay Executive an annual base salary of Two Hundred Fifty Thousand Dollars
($250,000) (the "Annual Base Salary") payable in accordance with the Company's
regular payroll practices, but not less frequently than twice per month. The
Annual Base Salary shall be reviewed at least annually by the Board of Directors
and may be adjusted upwards (but not downwards) in the sole discretion of the
Board of Directors.

     (b) Additional Compensation. In addition to the Annual Base Salary
Executive shall receive such additional compensation and annual bonus payments
as the Board of Directors may award Executive from time to time in its sole and
absolute discretion.

     (c) Withholding. The Company shall deduct and withhold from any
compensation payments payable to Executive all social security and other
federal, state and local taxes and charges in the minimum amounts (or such
greater amounts as Executive may from time to time request) which currently are
or which hereafter may be required by law to be so deducted and withheld,
including withholding pursuant to bonus withholding rates, as applicable.

4. Benefits: Vacation and Expense Reimbursement.

     (a) Benefits. During the term of Executive's employment, Executive shall be
entitled to participate in all fringe benefits (including without limitation,
group medical and dental insurance) and other benefit plans which are available
from time to time to executive employees of the Company, subject in each case to
the generally applicable terms and conditions of the applicable plan or program.
In addition, Executive shall be covered by the Company's disability insurance
plans and policies for senior executives as they may be maintained by the
Company from time to time.

     (b) Vacation: Holidays and Sick Leave. During the term of Executive's
employment, Executive shall be entitled to four (4) weeks of paid time off
("PTO") per year under the same terms and conditions as other employees of the
Company. In addition, Executive shall be entitled to all paid Company holidays
and other benefits as are generally provided to other executives of the Company
in accordance with Company policies in effect from time to time.

     (c) Automobile. The Company shall provide Executive with the use of a
current model automobile owned or leased by the Company and the Company shall
pay for and/or reimburse Executive for all maintenance and repairs thereon as
well as for gasoline, tolls and parking expenses for business use of such
automobile for the Company, upon submission of such documentation as may be
reasonably required by the Company.

     (d) Expense Reimbursement. Executive shall be authorized to incur
reasonable expenses in carrying out his duties and responsibilities under this
Agreement and the Company shall reimburse him for all business expenses incurred
in connection with carrying out the business of the Company upon presentation of
expense statements or such other supporting information as the Company may
customarily require of its executives. Because it is anticipated that Executive
will perform some or a substantial amount of his duties in the Company's
corporate office located in New Jersey, the Company will advance and pay to
Executive all of Executive's reasonable travel expenses, in accordance with the
Company's expense reimbursement policies, to and from New Jersey and California,
including hotel and meals while traveling on Company business.

5. Confidentiality Agreement.

     Concurrently with the execution of this Agreement, Executive shall execute
the Company's standard Employee Confidentiality and Invention Assignment
Agreement (the "Confidentiality Agreement").

6. Termination of Executive's Employment.

     (a) Termination of Employment. Executive's employment may be terminated (i)
by the Company, at any time, for any reason or for no reason (including, without
limitation, due to the Disability (as defined below) of Executive) and (ii) by
Executive at any time with or without Good Reason (as defined below). In
addition, Executive's employment shall terminate upon the death of Executive.

     (b) Definitions.

          (i) Disability. For purposes of this Agreement, a "Disability" shall
     occur in the event that there is a determination by the Company, upon the
     advice of an independent qualified physician, reasonably acceptable to
     Executive, that Executive has become physically or mentally incapable of
     performing his duties under this Agreement and such disability has disabled
     Executive, or can reasonably be anticipated to disable Executive, for a
     cumulative period of one hundred eighty (180) days within a twelve (12)
     month period.

          (ii) Good Reason. For purposes this Agreement, "Good Reason" shall
     mean, without Executive's prior written consent: (A) the occurrence of any
     material breach of this Agreement by the Company which remains uncured for
     a period of more than thirty (30) days after written notice of such breach
     and of Executive's intention to terminate his employment for "Good Reason"
     if such breach is not remedied; (B) a failure to pay any amount due
     hereunder within ten (10) business days following written demand for
     payment, which demand shall state that Executive intends to resign for Good
     Reason if such payment is not made within such ten (10) business day
     period; (C) the assignment to Executive of duties or responsibilities
     materially inconsistent with Executive's current position, duties or
     responsibilities, as contemplated by this Agreement, sufficient to
     constitute a substantial diminution of status within the Company which
     duties or responsibilities are not reassigned within thirty (30) days after
     written demand from Executive, which demand shall state that Executive
     intends to resign for Good Reason if such duties and responsibilities are
     not reassigned; or (D) a relocation of the office of the Company to which
     Executive is required to report to a location outside of a fifty (50) mile
     radius of the then existing location of such office or a requirement that
     Executive relocate his residence from Orange County, California.

7. Compensation Upon Termination of Employment.

     (a) Generally. Except as otherwise provided in Section 7(b) and Section
7(c), if the Company terminates Executive's employment for any reason
(including, without limitation, as a result of Executive's death or Disability)
or Executive terminates his employment for Good Reason, the Company shall:

          (i) immediately upon such termination, pay to Executive (A) any unpaid
     Annual Base Salary at the rate then in effect accrued through and including
     the date of termination, (B) an amount equal to the value of Executive's
     accumulated PTO, (C) an amount equal to any unpaid bonus or additional
     compensation to which Executive is entitled, and (D) an amount equal to the
     pro rata value of any bonus or additional compensation accrued through and
     including the date of termination;

          (ii) pay to Executive as severance one-twelfth of the Annual Base
     Salary in effect as of the date of the termination of Executive's
     employment each month after such termination (such monthly payments, the
     "Monthly Severance Payments"), in accordance with the Company's regular
     payroll practices and payroll schedule for a period of nine (9) months (the
     "Severance Period"); provided, however, that, if Executive enters into an
     employment relationship with any other party during the Severance Period,
     the Monthly Severance Payments shall immediately be reduced by fifty
     percent (50%) for the remainder of the Severance Period; provided further,
     that, if Executive's employment is terminated as a result of Executive's
     Disability, the Monthly Severance Payments shall be reduced by the amount,
     if any, paid to Executive during the Severance Period under any disability
     insurance policy purchased by the Company on behalf and for the benefit of
     Executive; and

          (iii) make all payments necessary to provide Executive with
     continuation coverage under the Company's group health plan until the
     earlier to occur of (A) the expiration of the Severance Period, or (B) in
     the event Executive enters into an employment or consulting relationship
     with any other party during the Severance Period, the date on which
     Executive becomes eligible to participate in the group health plan of such
     other party.

     Executive's right to receive the severance benefits described in Section
7(a)(ii) and Section 7(a)(iii) shall be subject to (x) Executive's execution of
a full and complete release in favor of the Company and its officers, directors,
shareholders and affiliates (and the respective officers, directors and
shareholders of such affiliates), in form and substance reasonably acceptable to
the Company, releasing the Company and such other parties from any and all
claims of Executive in connection with his employment by the Company, and (y) to
the extent applicable, Executive's compliance with the provisions of Section 8
of this Agreement. Except for the salary, PTO and severance payments described
in this Section 7(a), the Company shall not be obligated to make any further
payments to Executive hereunder.

     (b) Compensation Upon Termination by Company in Event of Misconduct. In the
event that the Company terminates Executive's employment as a result of
Misconduct (as defined below), the Company shall, immediately upon such
termination, pay to Executive (i) any unpaid Annual Base Salary at the rate then
in effect accrued through and including the date of termination, (ii) an amount
equal to the value of Executive's accumulated PTO, and (iii) an amount equal to
any unpaid bonus or additional compensation to which Executive is then entitled.
Upon the payment of the amounts described in the previous sentence, the Company
shall not be obligated to make any further payments to Executive hereunder. For
purposes of this Section 7(b), "Misconduct" shall mean (1) any act of theft,
fraud, embezzlement, falsification of Company or customer documents,
misappropriation of funds or other assets of the Company or other acts of
dishonesty or misconduct involving the property or affairs of the Company or the
carrying, out of Executive's duties; (2) a conviction (by trial, upon a plea or
otherwise) or the admission of guilt of any felony or misdemeanor involving
moral turpitude or other act of dishonesty, fraud or deceit; or (3) the repeated
material violation of any written policy or procedure of the Company.

     (c) Compensation Upon Termination by Executive Without Good Reason. If
Executive terminates his employment without Good Reason, the Company shall,
immediately upon such termination, pay to Executive (i) any unpaid Annual Base
Salary at the rate then in effect accrued through and including the date of
termination, (ii) an amount equal to the value of Executive's accumulated PTO,
and (iii) an amount equal to any unpaid bonus or additional compensation to
which Executive is then entitled. Upon the payment of the amounts described in
the previous sentence, the Company shall not be obligated to make any further
payments to Executive hereunder.

8. Non-Competition and Non-Solicitation.

     (a) Non-Competition. Except as provided below, upon the termination of
Executive's employment with the Company Executive shall not directly or
indirectly, for a period of twelve (12) months after such termination of
Executive's employment, engage in (whether as an employee, consultant, agent,
proprietor, principal, partner, major stockholder, corporate officer, director
or otherwise), manage or control, any person, firm, corporation or business that
competes with the Company's business at the time of termination. Notwithstanding
the foregoing, Executive shall not be prohibited from owning shares of a
business that competes with the Company's business if the shares are listed on a
national or regional securities exchange or have been registered under Section
12(g) of the Securities Exchange Act of 1934, as amended, and the investment in
such shares does not exceed two percent (2%) of the outstanding shares of such
class of shares. The foregoing covenant shall not apply (i) if the Company
terminates Executive's employment other than for Misconduct or Executive's
Disability or (ii) if Executive terminates his employment with the Company for
Good Reason. Executive further acknowledges that his agreement pursuant to this
Section 8(a) is given, in part, in connection with and in consideration of the
Company's acquisition of the Corporation pursuant to the Stock Purchase
Agreement.

     (b) Non-Solicitation. Executive agrees and acknowledges that for a period
of twelve (12) months after the termination of Executive's employment with the
Company for any reason, Executive shall not, either directly or indirectly,
personally, or on behalf of or in conjunction with any person or firm, divert or
take away any client or customer of the Company or solicit, induce, facilitate,
recruit, encourage or cause any employee, consultant, contractor, agent or
representative of the Company, to leave their employment or engagement with the
Company for any reason. Executive further acknowledges that his agreement
pursuant to this Section 8(b) is given, in part, in connection with and in
consideration of the Company's acquisition of the Corporation pursuant to the
Stock Purchase Agreement.

     (c) Understanding of Covenants. Executive hereby represents that he (i) is
familiar with the foregoing covenants not to compete and not to solicit; (ii) is
fully aware of and agrees specifically to his obligations thereunder, including,
without limitation, the reasonableness of the length of time and scope of these
covenants: (iii) acknowledges that the remedies set forth herein for violation
of such covenants are in addition to any remedies that the Company may have in
law or in equity; and (iv) understands that he will also be executing
simultaneously with this Agreement, the Confidentiality Agreement and that the
obligations set forth in that agreement are in addition to those set forth in
this Section 8.

9. Remedies.

     The parties hereto agree that the Company would suffer irreparable harm
from a breach by Executive of any of the covenants or agreements contained in
Section 8 of this Agreement. Therefore, in the event of the actual or threatened
breach by Executive of any of the provisions of Section 8 of this Agreement, the
Company may, in addition and supplementary to other rights and remedies existing
in its favor, apply to any court of law or equity of competent jurisdiction for
specific performance and/or injunctive or other relief in order to enforce or
prevent any violation of the provisions thereof.

10. Representation of Executive.

     Executive hereby warrants and represents that he is not bound by any other
agreement or subject to any other restriction which would either prevent him
from entering into this Agreement or from performing his duties as contemplated
hereunder.

11.      Indemnification.

     The Company shall, to the maximum extent permitted by the General
Corporation Law of the State of Delaware, indemnify Executive and hold Executive
harmless from and against any claim, loss or cause of action arising from or out
of Executive's performance as an officer or employee of the Company or in any
other capacity, including serving as a fiduciary, in which Executive serves at
the request of the Company, except for acts or omissions not in good faith or
which involve gross negligence, intentional misconduct or a knowing violation of
law, for any breach of Executive's duty of loyalty or any other fiduciary duty
to the Company; or for any transaction from which Executive derived an improper
personal benefit. If any claim is asserted against Executive for which Executive
reasonably believes in good faith he is entitled to be indemnified hereunder,
the Company shall, at its option, (i) assume the defense thereof; or (ii) pay
Executive's reasonable legal expenses (or cause such expenses to be paid), if
the Company does not so assume the defense; provided, however that Executive
shall reimburse the Company for such amounts if Executive shall be found by a
final, non-appealable order of a court of competent jurisdiction or any
arbitrator or mediator (whose judgment Executive has agreed to be bound by) not
to be entitled to indemnification.

12. Arbitration and Equitable Relief.

     (a) Executive and the Company each agree that any dispute or controversy
arising out of, relating to, or in connection with this Agreement, or the
interpretation, validity, construction, performance, breach, or termination
thereof shall be settled by arbitration to be held in Orange County, California,
in accordance with the National Rules for the Resolution of Employment Disputes
then in effect of the American Arbitration Association (the "Rules"). The
arbitrator may grant injunctions or other relief in such dispute or controversy.
The decision of the arbitrator shall be final, conclusive and binding on the
parties to the arbitration. Judgment may be entered on the arbitrator's decision
in any court having jurisdiction.

     (b) The arbitrator shall apply California law to the merits of any dispute
or claim, without reference to rules of conflict of law. The arbitration
proceedings shall be governed by California arbitration law and by the Rules.

     (c) The Company shall pay the costs and expenses of such arbitration, and
each party shall separately pay his or its attorneys' fees and expenses.

     (d) Executive has read and understands this Section 12. Executive
understands that by signing this Agreement, Executive agrees to submit any
future claims arising out of, relating to, or in connection with this Agreement,
or the interpretation, validity, construction, performance, breach, or
termination thereof to binding arbitration, and that this arbitration clause
constitutes a waiver of Executive's right to a jury trial and relates to the
resolution of all disputes relating to all aspects of the employer/executive
relationship, including but not limited to, the following claims:

          (i) employment; breach of contract, both express and implied; breach
     of the covenant of good faith and fair dealing, both express and implied;
     negligent or intentional infliction of emotional distress; negligent or
     intentional misrepresentation; negligent or intentional interference with
     contract or prospective economic advantage; and defamation;

          (ii) any and all claims for violation of any federal state or
     municipal law, regulation, statute or ordinance, including, but not limited
     to, Title VII of the Civil Rights Act of 1964, the Civil Rights Act of
     1991, the Age Discrimination in Employment Act of 1967, the Americans with
     Disabilities Act of 1990, the Fair Labor Standards Act, the California Fair
     Employment and Housing Act, and the California Labor Code Section 201, et
     seq.; and

          (iii) any and all claims arising out of any other laws and regulations
     relating to employment or employment discrimination.

     (e) By signing this Agreement, the Company agrees to submit any future
claims arising out of, relating to, or in connection with this Agreement, or the
interpretation, validity, construction, performance, breach or termination
thereof to binding arbitration, and further agrees that this arbitration clause
constitutes a waiver of the Company's right to a jury trial and relates to the
resolution of all disputes relating to all aspects of the relationship between
the Company and Executive.

     (f) Adherence to this Section 12 regarding Arbitration shall not limit the
right of the parties hereto to obtain any provisional remedy including, without
limitation, injunctive or similar relief, from any court of competent
jurisdiction as may be necessary to protect their respective rights and
interests pending arbitration, particularly if necessary to avoid irreparable
harm.

13. Successors and Assigns.

     This Agreement may not be assigned by Executive; provided, however, that
Executive's rights to payments hereunder shall, upon his death, inure to the
benefit of Executive's personal or legal representatives, executors,
administrators, heirs, distributees, devisees and legatees. This Agreement shall
inure to the benefit of and be binding on the successors and assigns of the
Company.

14. Modification or Waiver.

     No provision of this Agreement may be modified, waived, or discharged
unless agreed to in writing by both parties hereto. The failure of a party to
insist upon strict adherence to any term, condition or other provision of this
Agreement shall not be considered a waiver or deprive that party of the right
thereafter to insist upon strict adherence to that term or any other term,
condition or other provision of this Agreement.

15. Notices.

     All notices or other communications required or permitted hereunder shall
be made in writing and shall be deemed to have been duly given if delivered by
hand or delivered by a recognized delivery service or mailed, postage, prepaid,
by express, certified or registered mail, return receipt requested, and
addressed to the Company or Executive, as applicable, at the address set forth
below (or to such other address as shall have been previously provided in
accordance with this Paragraph 14):

                  If to the Company:        Infocrossing, Inc.
                                            2 Christie Heights
                                            Leonia, NJ  07605
                                            Attention: Chairman of the Board

                  If to Executive:          Jim Cortens
                                            1866 Port Taggart Place
                                            Newport Beach, California 92660


16. Governing Law.

     This Agreement shall be governed by, and construed and enforced in
accordance with the laws of the State of California without regard to its
conflict of laws provisions.

17.      Severability.

     Whenever possible, each provision and term of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision or term of this Agreement shall be held to be prohibited by
or invalid under such applicable law, then such provision or term shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating or affecting in any manner whatsoever the remainder of such
provisions or term or the remaining provisions or terms of this Agreement.

18.      Counterparts.

     This Agreement may be executed in two or more counterparts, each of which
shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.

19.      Entire Agreement.

     This Agreement and the Confidentiality Agreement constitute the entire
agreement of the parties with respect to the subject matter hereof and
supersedes all other prior agreements and undertakings, both written and oral,
among the parties with respect to the subject matter hereof.

20. Acknowledgement of Executive.

     EXECUTIVE ACKNOWLEDGES THAT HE HAS HAD THE OPPORTUNITY TO CONSULT TAX AND
LEGAL COUNSEL IN REGARD TO THIS AGREEMENT, THAT HE HAS READ AND UNDERSTANDS THIS
AGREEMENT, THAT HE IS FULLY AWARE OF ITS LEGAL EFFECT, AND THAT HE HAS ENTERED
INTO IT FREELY AND VOLUNTARILY AND BASED ON HIS OWN JUDGMENT AND NOT ON ANY
REPRESENTATIONS, UNDERSTANDINGS, OR PROMISES OTHER THAN THOSE CONTAINED IN THIS
AGREEMENT.

                  [Remainder of Page Intentionally Left Blank]



<PAGE>


                    [Signature Page to Employment Agreement]

     IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first above written.

EXECUTIVE                                THE COMPANY

/s/ JIM CORTENS
---------------------------
Jim Cortens                              By: /s/ ZACH LONSTEIN
                                             -----------------------------------
                                             Name:  Zach Lonstein
                                             Title: Chief Executive Officer




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