EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, made as of September 1, 1997 (this "Agreement"),
by and between ESQUIRE COMMUNICATIONS LTD., a Delaware corporation ("XXX.XXX"),
and XXXXXXX X. XXXXXXX ("Mazares").
WHEREAS, XXX.XXX desires to retain the services of Mazares and Mazares
desires to be employed by XXX.XXX according to the terms and conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the agreements herein contained,
the parties hereto agree as follows:
1. EMPLOYMENT. Xxx.Xxx hereby employs Mazares, and Mazares hereby
agrees to serve, as Senior Vice President of Marketing, Sales and Strategic
Planning of XXX.XXX, reporting to XXX.XXX's Chief Executive Officer, for the
Term of Employment as hereinafter defined. Mazares agrees to perform faithfully
and to the best of his ability such services customary to such office as shall
from time to time be assigned to him by XXX.XXX's Chief Executive Officer and/or
Board of Directors (the "Board") and, in the absence of such assignment, such
services customary to such positions as are necessary to the operations of
XXX.XXX. Mazares further agrees to use his best efforts to promote the interests
of XXX.XXX, and to devote his full business time and energies during normal
business hours to the business and affairs of XXX.XXX during the Term of
Employment.
2. TERM OF EMPLOYMENT. Mazares' employment hereunder shall be for the
period (the "Term of Employment") which shall commence on September 1, 1997 and
continuing through August 31, 1999, unless earlier terminated (a) upon death of
employee, (b) at the option of XXX.XXX upon 30 days' prior written notice to
Mazares, in the event of the inability of Mazares to perform his duties
hereunder, whether by reason of injury (physical or mental), illness or
otherwise, incapacitating Mazares for a continuous period exceeding 120 days,
(c) upon the discharge of Mazares by the Chief Executive Officer and/or Board of
XXX.XXX for cause, or (d) upon 30 days' prior written notice to Mazares, upon
the discharge of Mazares by the Chief Executive Officer and/or Board of XXX.XXX
without cause. A termination of the Term of Employment pursuant to this Section
2 shall become effective upon the delivery of notice, unless otherwise specified
in the aforementioned notice, informing Mazares of such termination and the
reasons therefor.
For the purposes of this Agreement, an event or occurrence
constituting "cause" shall mean the following:
(i) Mazares' failure or refusal, after notice therefor, to
perform specific directives of the Chief Executive
Officer and/or Board when such directives are
consistent with the scope and nature of Mazares' duties
and responsibilities as set forth in Section 1 hereof;
(ii) Dishonesty of Mazares affecting XXX.XXX;
(iii) Drunkenness or use of drugs which interfere with the
performance of Mazares' obligations under this
Agreement, continuing after warning;
(iv) Any gross negligence or willful misconduct of Mazares
resulting in substantial loss to XXX.XXX, substantial
damage to XXX.XXX's reputation or theft or defalcation
from XXX.XXX;
(v) Gross incompetence on the part of Mazares in the
performance of the duties undertaken by Mazares under
the terms of this Agreement;
(vi) Any other event or occurrence for which removal is
permitted under Section 2924 of the California Labor
Code, or any successor statutory provision; and
(vii) Any material breach (not covered by any of the clauses
(i) through (vi)) of any of the provisions of this
Agreement if such breach is not cured within 10 days
after written notice thereof to Mazares by XXX.XXX.
3. COMPENSATION DURING TERM OF EMPLOYMENT.
(a) COMPENSATION PACKAGE. Subject to Sections 3(b) and
3(c) hereof, as compensation for services hereunder
and in consideration of Mazares' covenants set forth in
Section 4, XXX.XXX shall pay Mazares during the Term of
Employment the following:
(i) BASE SALARY. A salary of $150,000 per annum,
except that for any period less than a complete
year such salary shall be prorated. Such salary
shall be payable in installments to conform with
the regular payroll dates for salaried personnel
of XXX.XXX and otherwise in accordance with the
policies of XXX.XXX. Salary may be subject to
increase during the Term of Employment at the
sole discretion of XXX.XXX and its Board.
(ii) BONUSES. A sign-on bonus in the amount of
$50,000, payable September 5, 1997, and an
additional bonus in the amount of $50,000, payable
September 1, 1998. In the event that Mazares'
base salary is at a level greater than $150,000
as of August 18, 1998, the amount of the bonus due
to Mazares on August 18, 1998 will be equal to
$200,000 less Mazares' annual base salary as of
August 18, 1998.
(iii) AUTOMOBILE ALLOWANCE. Commencing August 1997,
and throughout the Term of Employment, an
automobile allowance of $850.00 per month,
payable by separate check once per month. In
addition to the monthly automobile allowance,
XXX.XXX agrees to reimburse Mazares for the cost
of gasoline, insurance, tires, maintenance and
repairs upon the submission of documentation
supporting such expenses.
(iv) INCENTIVE COMPENSATION. Mazares will be eligible
to participate in an annual incentive
compensation program to be developed for all
senior management personnel of XXX.XXX.
Participation in any incentive compensation
program introduced by XXX.XXX will not impact any
of the other areas of the compensation package
due Mazares, except that Mazares will receive the
incentive compensation he earns less any annual
lump-sum bonus, as outlined in Section 3 a (ii)
above, he actually receives.
(v) INCENTIVE STOCK OPTIONS. Mazares will receive
options to purchase 100,000 shares of XXX.XXX
common stock. The option price will be set at
$4.00 per share. Options will vest at the rate
of 4,167 shares per month in which Mazares
remains employed in good standing by XXX.XXX
during the Term of Agreement. Thus, 50% (50,000
shares) will be fully-vested as of August 31,
1998 and 50% (the additional 50,000 shares) will
be fully-vested as of August 31, 1999. XXX.XXX
and its Board, at its sole discretion, may grant
additional stock options (at option prices to be
determined) to Mazares and other members of the
XXX.XXX senior management team.
(vi) VACATION. Mazares will be eligible to earn twenty (20)
days of paid vacation per annum, accruing at the rate
of 1.67 days per month. Carryover of earned but unused
vacation will be limited to ten (10) days per annum,
but never to exceed twenty (20) days carried over in
total.
(vii) OTHER BENEFITS. Mazares will be eligible to
receive the fringe benefits, perquisites, and
other benefits of employment enjoyed by all of the
five highest paid executives of XXX.XXX,
including, without limitation, inclusion in
XXX.XXX's Directors and Officers insurance
coverage, medical and dental insurance coverage
and premiums paid for Mazares and his spouse, and
participation in the XXX.XXX 401(k) plan and other
programs which may be introduced from time to
time.
(viii) RELOCATION. XXX.XXX agrees to pay for the
cost of Mazares' relocation to San Diego from Los
Angeles at any time during the Term of
Employment. The moving expenses will include,
but are not limited to, realtor fees; packing,
transporting and unpacking personal goods;
documented charges for utilities and other
one-time expenses incurred by Mazares in the
move-in to a new residence in San Diego; and
associated travel and expenses relating to the
acquisition or lease of a new residence in San
Diego. Until Mazares relocates to San Diego,
XXX.XXX agrees to cover the cost of lodging and
meals during periods in which it is necessary for
Mazares to stay overnight in San Diego.
(ix) GENERAL BUSINESS EXPENSES. Authorized expenses for
business travel, client entertainment, telephone,
facsimile, and other necessary business activities will
be reimbursed to Mazares according to XXX.XXX policy.
(b) PAYMENT UPON EARLY TERMINATION. In the event the Term
of Employment is ended by XXX.XXX pursuant to Section
2(d) hereof, Mazares shall be entitled to receive a
termination bonus of $200,000 payable over one year in
12 monthly installments at the rate of $16,667 per
month, commencing thirty (30) days after notice of
termination has been given, plus any other amounts
accrued under 3(a)iii, iv and vi to the end of the
month preceding the termination of the Term of Employment. The
payment of such termination bonus shall not affect Mazares'
right to exercise previously unexercised but vested stock
options according to the policies and guidelines within
XXX.XXX's Stock Option Agreement. In the event the Term of
Employment is ended pursuant to Section 2(a) or 2(b), Mazares or
his estate shall be entitled to receive his base salary earned
to the date of termination, together with any other amounts
accrued under Sections 3(a)iii, iv and vi to the end of the
month preceding the termination of the Term of Employment. In
the event that the Term of Employment is ended by XXX.XXX
pursuant to Section 2(c), or by Mazares, XXX.XXX shall have no
further obligation to make any payments of any kind whatsoever
to Mazares except that any base salary payments, bonuses,
incentive compensation, and/or earned but unused vacation
payments under Sections 3(a)i, ii, iv, and vi that Mazares shall
have earned prior to the date of termination but which shall not
yet have been paid shall be paid by XXX.XXX to Mazares.
(c) SALE OF ASSETS OR STOCK. In the event XXX.XXX, in one
or more related transactions, sells all or
substantially all of its assets or stock, and this
Agreement is not assigned to the purchaser of the
assets or stock, XXX.XXX shall be deemed to have
terminated Mazares according to Section 2 (d) hereof,
effective upon the closing of the sale or, in the case
of a series of related sales, the last related sale.
In the event XXX.XXX, in one or more related
transactions, sells all or substantially all of its
assets or stock, and this Agreement is assigned to the
purchaser of the assets or stock, XXX.XXX shall not be
deemed to have terminated Mazares as a result of such
assignment and XXX.XXX shall be discharged from its
obligations to Mazares hereunder and such purchaser
shall thereafter be deemed the "Employer" to Mazares
for all purposes under this Agreement.
4. COVENANT NOT TO COMPETE; INTELLECTUAL PROPERTY;
CONFIDENTIALITY. It is recognized by Mazares that the
business of XXX.XXX and Mazares' connection therewith is
or will be international in scope, and that geographical
limitations on the following covenants are therefore not
appropriate and, as a result of Mazares' employment by
XXX.XXX, Mazares will have access to trade secrets and
confidential information about XXX.XXX, its products and
services, customers and methods of doing business. In
consideration of the mutual premises and compensation
paid to Mazares hereunder, Mazares agrees as follows:
(a) COVENANT NOT TO COMPETE. While Mazares is employed by
XXX.XXX and for one (1) year after his date of
termination, Mazares will not, within any city, county
or state in the United States or in any foreign
country in which XXX.XXX is duly qualified to do
business, directly or indirectly own, manage, operate,
control, be employed by or participate in the
ownership, management, operation or control of, or
otherwise perform services for or be connected in any
manner with, any business of the type and character
engaged in and competitive with that of XXX.XXX. For
these purposes, Mazares' ownership of securities of a
public company not in excess of 1% of any class of
such securities shall not be considered to be
competition with XXX.XXX.
(b) INTELLECTUAL PROPERTY. During the Term of Employment,
and for as long thereafter as Mazares is providing
services to XXX.XXX (whether pursuant to this Agreement
or otherwise or whether Mazares is performing such
services for XXX.XXX or otherwise), Mazares will
disclose to XXX.XXX all ideas, inventions and business
plans developed by Mazares during such period which
relate directly to the business of XXX.XXX
(collectively "Intangible Rights"). Mazares agrees
that such Intangible Rights as may be developed by him
while actually engaged in the performance of the
services set forth in Section 1 hereof will be the
property of XXX.XXX and that he will, at XXX.XXX's
request and cost, do whatever is necessary to secure
the rights thereto by patent, copyright or otherwise to
XXX.XXX.
(c) CONFIDENTIALITY. Mazares agrees that he shall not
divulge to anyone (other than to XXX.XXX and its
affiliates or any persons employed or designated by
XXX.XXX) any knowledge or information of any type
whatsoever of a confidential nature relating to the
business of XXX.XXX or any of its affiliates,
including, without limitation, all types of trade
secrets (unless readily ascertainable from public or
published information or trade sources). Mazares
further agrees not to disclose, publish or make use of
any such knowledge or information of a confidential
nature without the prior written consent of XXX.XXX.
The provisions of this paragraph shall apply both
during the Term of Employment and thereafter.
5. BREACH BY MAZARES. Both parties recognize that the
services to be rendered under this Agreement by Mazares
are special, unique and extraordinary in character, and
that in the event of the breach by Mazares of the terms
and conditions of this Agreement to be performed by him,
or in the event Mazares performs services for any
person, firm or corporation engaged in a competing line
of business with XXX.XXX, then XXX.XXX shall be
entitled, if it so elects, to institute and prosecute
proceedings in any court or competent jurisdiction,
either in law or in equity, to obtain damages for any
breach of this Agreement, or to enforce the specific
performance thereof by Mazares, or to enjoin Mazares
from performing services for any such other person, firm
or corporation.
6. ASSIGNMENT. The rights and obligations of Mazares pursuant to this
Agreement may not be sold, transferred, delegated, assigned,
pledged, or hypothecated without the prior written consent of ESQ.
COM. The rights and obligations of XXX.XXX hereunder shall be
binding upon and shall run in favor of XXX.XXX and its successors
and assigns.
7. GOVERNING LAW; ARBITRATION OF DISPUTES.
7.1 GOVERNING LAW. This Agreement shall be deemed made
under and shall be governed by the substantive laws of
the State of California, excluding its conflict of laws
rules.
7.2 ARBITRATION. All disputes which arise under this
Agreement shall be settled by arbitration in the
City of Los Angeles (or such other location to be
mutually agreed upon by XXX.XXX and Mazares)
before a panel of three (3) arbitrators according
to the rules of the American Arbitration
Association. The losing party in any such
proceeding shall bear the costs and expenses of
the winning party. In the event a controversy or
claim should arise with respect to any
computation or payment of any amount owed under
this Agreement, the party alleged to owe the
amount shall pay to the other that portion of the
total amount that is not in dispute, and only that
portion of the amount that is in dispute shall be the
subject of the arbitration. The award of the
arbitrators shall be nonappealable, final, conclusive
and binding upon the parties and judgment thereon may
be entered in any court or competent jurisdiction.
8. NOTICES. Any notice to be given concerning this
Agreement shall be given in writing and either: (i)
sent by certified or registered mail, postage prepaid;
or (ii) hand delivered to the recipient personally.
In the case of the notice sent by mail, the date of
the giving of the notice shall be deemed to be: (i) the
date of the postmark if postmarked by the United
States Postal Service; or (ii) the date of the actual
receipt if not postmarked by the United States Postal
Service. In the case of the notice being hand
delivered, a written dated receipt shall be given
therefor. Hand delivery of any notice to XXX.XXX
shall be delivered to XXX.XXX's chief executive officer
personally.
8.1 Notice by mail shall be sent as follows:
If to Mazares: Xxxxxxx X. Xxxxxxx
00000 Xxxxxxxx Xxxxxxxxx
Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
If to XXX.XXX: Esquire Communications Ltd.
000 X Xxxxxx
Xxxxx 0000
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: Chief Executive Officer
8.2 By giving notice to the other party, either party may,
from time to time, designate (i) a different address to
which notice by mail to such party shall be sent and/or
(ii) a different person to receive notices which are
hand delivered.
9. CAPTIONS. Paragraph headings are for the convenience
of reference only and shall not be considered a part
of this Agreement.
10. SEVERABILITY. If any provisions of this Agreement are held
invalid or unenforceable, such invalidity or unenforceability
shall not affect the validity or enforceability of the other
portions hereof, all of which provisions are hereby declared
severable.
11. ENTIRE AGREEMENT. This Agreement constitutes the entire
understanding between the parties hereto as to the subject
matter covered herein, and except as expressly noted otherwise,
all prior understandings and agreements are terminated and
merged herein and succeeded hereby.
12. AMENDMENT; WAIVER. No amendment or other modification of this
Agreement nor any waiver of any term of this Agreement shall be
valid unless it is in writing and signed by the party against whom
enforcement of the amendment, modification or waiver is sought. No
waiver by any party of the breach of any term contained in this
Agreement, whether by conduct or otherwise, in any one or more
instances shall be deemed to be or construed as a further or
continuing waiver of any similar breach or of the breach of any
other term of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
and as of the day and year first written above.
ESQUIRE COMMUNICATIONS LTD. EMPLOYEE
By:______________________ By:______________________
XXXXX X. XXXXX XXXXXXX X. XXXXXXX
CHIEF EXECUTIVE OFFICER
