AGREEMENT
Agreement dated as of May 1, 1997, by and between Xxxxx Xxxxxxx
("Xxxxxxx") and Esquire Communications Ltd., a Delaware corporation (the
"Corporation").
W I T N E S S E T H :
WHEREAS, the Corporation and Xxxxxxx are parties to an Amended and
Restated Employment, Non-Competition and Non-Disclosure Agreement dated as of
September 30, 1993 (the "Employment Agreement"); and
WHEREAS, the Corporation and Xxxxxxx mutually desire to provide for
the resignation of Xxxxxxx as President and Chief Operating Officer of the
Corporation and for the termination of Xxxxxxx'x employment with the Corporation
pursuant to a buyout of the Employment Agreement by the Corporation under which
the Corporation will make various payments to Xxxxxxx;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Unless otherwise defined herein, terms defined in the Employment
Agreement shall have the same meaning when used herein.
2. Effective the date hereof, (a) Xxxxxxx'x employment with the
Corporation is hereby terminated and Xxxxxxx hereby resigns as President and
Chief Operating Officer and as an employee of the Corporation and (b) the term
of the Employment Agreement is hereby ended. Concurrently herewith, all accrued
but unpaid amounts due to Xxxxxxx under Sections 3.1, 3.4, 3.5, 3.6 and 4 of the
Employment Agreement are being paid to Xxxxxxx, all as listed on Schedule A
hereto; provided, however that in the event Xxxxxxx shall have incurred prior to
the date hereof expenses in an amount not to exceed $5,000 in the aggregate
otherwise reimbursable under Section 4 of the Employment Agreement, but not
included for any reason in such Schedule A, he shall promptly be reimbursed by
the Corporation therefor upon submission to the Corporation of receipts or other
documents reasonably evidencing the same.
3. Except for the provisions contained in Section 14(b) of the
Employment Agreement, the Employment Agreement is hereby terminated and is of no
further force and effect irrespective of any other provisions therein contained
which might otherwise have survived. The provisions of Section 14(b) shall
continue in full force and effect, except as modified in this Agreement.
4. In consideration of the Corporation's buyout of the Employment
Agreement pursuant to this Agreement, the non-competition covenants contained
herein, and Xxxxxxx'x execution and delivery of the release pursuant to Section
15 hereof, the Corporation agrees to pay to Xxxxxxx (even if Xxxxxxx dies or is
disabled or ceases rendering services as provided herein, other than as
expressly provided herein) an aggregate amount of $641,035, payable as follows:
(a) commencing on the date hereof and continuing through March 31, 1998, an
amount of $22,185 per month, payable on the first business day of each month;
(b) for the period April 1, 1998 through September 30, 1998, the amount of
$6,000 per month payable on the first business day of each month; (c) on August
15, 1997, the amount of $161,000; (d) on November 15, 1997, the amount of
$150,000; and (e) through September 30, 1997, the amount of $10,000 per month,
payable in advance on the execution and delivery hereof and thereafter on the
first business day of each month; provided, however that if Xxxxxxx continues to
use the automobile heretofore provided for his personal use (to which the
Corporation hereby consents), (x) the Corporation will also pay the monthly
automobile lease payments with respect thereto through January 13, 1998 (the
last day of the lease), but the $10,000 per month to be paid by the Corporation
under this subparagraph (e) shall be reduced by an amount equal to such lease
payments, and (y) the Corporation will use its best efforts to cause Xxxxxxx to
have the right to exercise the lease purchase option under the automobile lease.
Notwithstanding anything herein to the contrary, none of the foregoing payments
or benefits shall be subject to deduction or setoff, except solely the amount of
up to $7,500 per month which may be withheld (but not retroactively in respect
of any prior months) solely upon the occurrence of any one or more of the
following events which shall have remained uncured after the expiration of any
applicable notice and opportunity to cure periods: a material breach by Xxxxxxx
of his obligations under Sections 6 or 10(a) or the first and third sentences of
Section 16 hereof; or if Xxxxxxx takes any action which materially damages the
Corporation, except for actions taken by him in his capacity as a consultant or
director or pursuant to any rights of indemnification. Of the foregoing amounts,
$70,000 shall be allocated to the covenant not to compete contained in Section 6
hereof. The Corporation, after having consulted with its independent tax
advisors, believes that under current law none of the payments under this
Agreement are subject to tax withholding and the Corporation shall not issue a
Form 1099 (except with respect to amounts paid for consulting services provided
by Xxxxxxx pursuant to Section 10 hereof) or a Form W-2 to Xxxxxxx in respect
thereof unless hereafter otherwise required by a change in law.
5. Although as a result of this Agreement Xxxxxxx is no longer an
employee of the Corporation, the Corporation's 1993 Stock Option Plan (the
"Plan") is applicable to directors and consultants of the Corporation and its
Subsidiaries (as defined in the Plan) and shall remain applicable to Xxxxxxx,
subject to the provisions hereof. Effective September 30, 1998, all then
unvested options to purchase shares of Common Stock of the Corporation held by
Xxxxxxx shall immediately become vested on such date if Xxxxxxx is in material
compliance with the provisions of Section 6 of this Agreement and such options
shall be exercisable in full by Xxxxxxx at that time and remain exercisable as
provided herein. All unvested options held by Xxxxxxx as of the date hereof
shall continue to vest in accordance with their terms as if Xxxxxxx'x employment
had not terminated, subject to accelerated vesting pursuant to the immediately
preceding sentence. All options held by Xxxxxxx shall continue to be exercisable
by Xxxxxxx in accordance with their terms so long as Xxxxxxx remains a director
of the Corporation as if Xxxxxxx'x employment had not terminated, and upon his
no longer being a director the options shall continue to be exercisable until
the first to occur of two years from his ceasing to be a director or ten years
from the respective dates on which the options were granted. The provisions of
Section 14 of the Plan shall not apply to options held by Xxxxxxx or shares of
common stock issued upon exercise thereof. The provisions of this Section 5
shall be deemed to constitute an amendment to Xxxxxxx'x stock option
certificates or other evidences of his option grants and the Plan as it relates
to Xxxxxxx'x options, notwithstanding anything to the contrary contained
therein. The Corporation hereby confirms that the provisions of this Section 5
have been approved by the Corporation's Board of Directors and Stock Option
Committee. Notwithstanding anything to the contrary contained in this Section 5
or the Plan, options held by Xxxxxxx shall continue to be exercisable for a
period of at least two years after Xxxxxxx is no longer a director or consultant
to the Corporation or such longer period as may otherwise be provided herein,
but in no event for a period longer than ten years from the respective dates on
which the options were granted. The provisions of this Section 5 shall apply
even if Xxxxxxx dies or is disabled or for any reason ceases rendering services
to the Corporation or any of its Subsidiaries (as defined in the Plan) as
provided herein or contemplated hereby or if such services are terminated for
any reason, except as otherwise may be expressly provided in the second sentence
of this Section 5, and none of the foregoing shall operate to limit or prevent
the vesting or exercise of any of Xxxxxxx'x options. The Corporation hereby
further confirms that all options granted to Xxxxxxx were validly granted and
are outstanding. Upon the request of Xxxxxxx, the Corporation will prepare and
timely file a Form 4 if Xxxxxxx advises the Corporation that such Form is
required to be filed in connection with the provisions of this Section 5.
6. (a) During the period commencing the date hereof and through and
including September 30, 1998, Xxxxxxx agrees that he shall not directly or
indirectly, for his own account or as agent, employee, officer, director,
trustee, consultant or shareholder of any corporation or a member of any firm or
otherwise, anywhere within 50 miles of metropolitan New York and within 25 miles
of any office of the Corporation engage or attempt to engage in any business
activity which is the same as, substantially similar to or directly competitive
with the Corporation.
(b) During the period commencing the date hereof and through and
including September 30, 1998, Xxxxxxx agrees that he shall not, directly or
indirectly, for his own account or as agent, employee, officer, director,
trustee, consultant or shareholder of any corporation, or member of any firm or
otherwise, employ or solicit the employment or retention of any court reporter
retained by the Corporation or any employee of the Corporation.
7. Until the later of September 30, 1998 or the date Xxxxxxx is no
longer a director of the Corporation (subject to the Corporation's applicable
insurance policies not prohibiting the same, or if they do the Corporation
obtaining permission from the insurance carriers, which the Corporation shall
use its best reasonable efforts to procure; in the event such permission is not
obtained, Xxxxxxx at his option may elect at any time or from time to time
either to (x) be entitled to receive, and not be deemed to have waived, any fees
or compensation for services as a director under Section 8 hereof or (y) have
the Corporation pay for his COBRA coverage), the Corporation shall continue to
pay for Xxxxxxx and his family all costs for medical and dental coverage under
the Corporation's medical and dental insurance plans; thereafter, the
Corporation will use its best reasonable efforts to make equivalent COBRA
coverage available to Xxxxxxx at Xxxxxxx'x expense, up to age 65. At any time
Xxxxxxx ceases to participate in the Corporation's 401(k) plan, he may elect to
transfer any funds in his account to another account selected by him. The
provisions contained in this Section 7 shall not be subject to set off or
deduction by the Corporation.
8. If Xxxxxxx decides to remain as a director of the Corporation, he
shall not be entitled to any fees or compensation for services as a director
solely for so long as the Corporation provides and pays for his family medical
and dental insurance pursuant to Section 7 hereof; thereafter, Xxxxxxx shall be
entitled to any and all applicable directors fees and compensation. The
Corporation agrees to use its best efforts to cause Xxxxxxx to remain and
continue to be re-elected as a director of the Corporation for so long as he may
desire through the later of (a) September 30, 1998 and (b) the date Xxxxxxx or
his affiliates ceases to own an aggregate of at least 400,000 shares of Common
Stock (subject to adjustment to reflect stock splits or similar events) of the
Corporation if Xxxxxxx is not a principal, officer, director or greater than 5%
stockholder of a competing court reporting business. When Xxxxxxx is no longer a
director of the Corporation, the Corporation shall use its best efforts to have
Xxxxxxx released from all his rights and obligations under the October 23, 1996
Stockholders Agreement (the "Stockholders Agreement"). The Corporation hereby
agrees to indemnify and hold Xxxxxxx harmless from and against any and all
liabilities, obligations, claims, losses and expenses (including, without
limitation, reasonable attorneys' fees), which Xxxxxxx may suffer, incur or
otherwise have arising out of, or related to (x) the amendment dated as of the
date hereof to the Stockholders Agreement not being approved or executed by all
of the parties thereto or Xxxxxxx not being released from all his obligations
thereunder or Xxxxxxx'x voting in favor of the election of Messrs. Xxxxxx and
White as directors of the Corporation or (y) the Stockholders Agreement dated
June 22, 1994 not having been terminated in all respects. After Xxxxxxx is no
longer a director of the Corporation and is permitted under Rule 144(k) of the
Securities Act of 1933, as amended, to sell his shares, the Corporation will
cause any restrictive legend to be removed promptly from Xxxxxxx'x stock
certificates. The Corporation further agrees to cause to be provided promptly,
upon Xxxxxxx'x request, legal opinions enabling Xxxxxxx to sell his shares in
compliance with Rule 144.
9. The Corporation shall pay to the existing driver for Xxxxxxx'x
automobile two months severance pay.
10. (a) From the calendar month which commences following the date
hereof through September 30, 1998, Xxxxxxx shall make himself reasonably
available at times and from time to time as may hereafter be mutually agreed
upon by Xxxxxxx and the Corporation during normal business hours to conduct one
sales meeting per calendar month. If Xxxxxxx is unable for personal reasons to
be available in any one or more particular months, Xxxxxxx shall so make himself
available for an additional sales meeting in a subsequent month; provided,
however, that at any given time no more than three sales meetings may be carried
forward to subsequent months. For such availability and any such services,
Xxxxxxx shall be paid, commencing as of the date hereof and continuing through
September 30, 1998, an amount equal to $1,500 per month, payable by the
Corporation on the first business day of each month, which shall not be subject
to setoff or deduction.
(b) Xxxxxxx may accept voluntary consulting assignments with the
Corporation from time to time through September 30, 1998, if, as and to the
extent as may hereafter be mutually agreed upon between the Corporation and
Xxxxxxx. Such assignments may include the solicitation of key accounts,
solicitation of acquisition candidates, training of sales personnel, attendance
at conferences and high level consulting. For such services, Xxxxxxx shall be
paid by the Corporation promptly $2,000 per day (or portion thereof) and will be
eligible for periodic grants of stock options and additional compensation for
exemplary service to the Corporation as reasonably determined by the Board of
Directors in the exercise of its discretion. In addition, Xxxxxxx will be
reimbursed promptly for his out-of-pocket expenses incurred in connection with
the foregoing upon submission of receipts or other documentation reasonably
evidencing the same. In performing such services, Xxxxxxx will be entitled to
travel in a manner consistent with past practice.
11. Each of the Corporation and Xxxxxxx shall be responsible for its
professional fees and out-of-pocket expenses incurred in connection with the
negotiation, execution and delivery of this Agreement.
12. The Corporation will continue to pay in accordance with its terms
the promissory note (without giving effect to any provisions therein contained
accelerating the payment of such note if Xxxxxxx is no longer employed by the
Corporation) dated September 30, 1993 in the original principal amount of
$600,000 payable to the order of Xxxxxxx; provided, however, that such amount
shall be paid without offset or deduction.
13. Except solely for its right to withhold amounts payable to Xxxxxxx
as and to the extent set forth in the second sentence of Section 4, the
Corporation shall not offset or deduct from any amounts, payments or benefits
now or hereafter payable or owing to Xxxxxxx hereunder any damages which may
arise in the event of or as the result of Xxxxxxx'x breach of any of his
obligations hereunder or for any other reason. Notwithstanding the foregoing,
the Corporation shall not be deemed to have waived and may seek to exercise any
and all other rights and remedies (except for offset and deduction), it may have
in connection with any such breach, whether at law or in equity.
14. In the event of Xxxxxxx'x death or disability, all payments
otherwise payable to, and benefits of, Xxxxxxx under this Agreement shall
continue to accrue and shall be payable to Xxxxxxx'x estate or legal
representatives at the time or times otherwise payable hereunder to Xxxxxxx.
15. The Corporation and Xxxxxxx shall execute and deliver releases in
the form attached hereto. Concurrently herewith, the Corporation, Xxxxxxx and
certain other parties to the Stockholders Agreement are entering into an
amendment thereto in the form attached hereto.
16. Through September 30, 1998 and thereafter for as long as Xxxxxxx
is a director of the Corporation, Xxxxxxx agrees not to make to anyone outside
of his immediate family or legal or financial advisors or outside of the
Corporation any statements which are false, defamatory or derogatory in any
material respect, either orally or in writing, about the Corporation, its
officers or directors, and during the term of this Agreement and through
September 30, 1998 and thereafter for as long as Xxxxxxx is a director of the
Corporation the Corporation, Xxxxxxx Xxxxx and Xxxx Xxxxxxx agree not to, and to
use their best efforts to cause the officers and directors of the Corporation
not to, make outside the Corporation any statements which are false, defamatory
or derogatory in any material respect, either orally or in writing, about
Xxxxxxx. Upon Xxxxxxx'x request, the Corporation, Xxxxxxx Xxxxx and Xxxx Xxxxxxx
will provide to Xxxxxxx solely positive references for submission by him to
third parties and, upon Xxxxxxx'x prior written request, oral confirmation
thereof. Xxxxxxx agrees that he shall not take or disclose to anyone in
documentary form or otherwise at any time from and after the date hereof any
material confidential or proprietary information of the Corporation relating to
the Corporation's customers or sales, including, but not limited to, customer
calling cards, customer lists or pricing information; provided, however, that
this shall not prevent and shall not be construed to operate to limit Xxxxxxx
from using any such information which is known to him. Any documents of the
Corporation evidencing the foregoing are the property of the Corporation and may
not be removed from the premises of the Corporation. Xxxxxxx and the Corporation
agree to the joint press release attached hereto relating to the substance of
this Agreement and neither the Corporation nor Xxxxxxx shall issue a press
release or make any public statement relating to this Agreement without the
prior approval of the other party. Notwithstanding anything to the contrary
contained herein, Xxxxxxx shall be given the reasonable opportunity to
personally inform the staff of the Corporation of the changes in Xxxxxxx'x
status. If there is a claim that any party violated the provisions of this
Section 16, the parties shall cooperate to resolve promptly such dispute and if
they are unable to do so to have such dispute promptly resolved by a mutually
acceptable independent mediator.
17. The provisions of Section 14(b) of the Employment Agreement will
survive the termination of the Employment Agreement and will apply and continue
to apply to (a) Xxxxxxx as a director of the Corporation and to all of Xxxxxxx'x
actions and omissions and consulting or other services provided by Xxxxxxx to
the Corporation and its subsidiaries pursuant to or contemplated by this
Agreement, including, without limitation, his service as a director of the
Corporation and (b) any and all matters which occurred or arose in whole or in
part prior to the date hereof. Nothing contained in this Agreement shall be
deemed to release any rights which Xxxxxxx may have for indemnification from the
Corporation or otherwise under the Corporation's directors and officers
liability insurance policy.
18. In the event that the Corporation shall at any time or from time
to time believe that Xxxxxxx shall have committed a breach of, or be in default
of, this Agreement, or have committed any act under which the Corporation would
seek to withhold payment of any of the amounts set forth in and pursuant to the
provisions of the second sentence of Section 4, then the Corporation shall
promptly provide Xxxxxxx with written notice thereof, specifying the alleged
breach, default, act or omission, as the case may be, in reasonable detail, and
affording Xxxxxxx a period of at least ten days following Xxxxxxx'x receipt of
such notice to cure any such alleged breach, default, act or omission.
19. Xxxxxxx agrees that all ideas, inventions, trademarks and other
developments or improvements conceived, developed or acquired by Xxxxxxx during
the term of his employment with the Corporation under the Employment Agreement,
whether or not during working hours, at the premises of the Corporation or
elsewhere, alone or with others, that are within the scope of the Corporation's
business operations or that relate to any work or projects of the Corporation
shall be the sole and exclusive property of the Corporation. Xxxxxxx agrees to
disclose promptly and fully to the Corporation all such ideas, inventions,
trademarks or other developments conceived, developed or acquired by Xxxxxxx
during the term of his employment under the Employment Agreement if not already
disclosed to the Corporation and, at the request of the Corporation, Xxxxxxx
shall submit to the Corporation a full written report thereof regardless of
whether the request for a written report is made after the termination of his
employment. Xxxxxxx agrees that upon the request of the Corporation and at its
expense, he shall execute and deliver any and all applications, assignments and
other instruments which the Corporation shall deem necessary or advisable to
transfer to and vest in the Corporation Xxxxxxx'x entire right, title and
interest in and to all such ideas, inventions, trademarks or other developments
conceived, developed or acquired by Xxxxxxx during the term of his employment
under the Employment Agreement and to apply for and to obtain patents or
copyrights for any such patentable or copyrightable ideas, inventions,
trademarks and other developments. Notwithstanding the foregoing, none of the
foregoing provisions of this Section 19 shall apply to sales techniques.
20. Xxxxxxx acknowledges that the Corporation will suffer damages
incapable of ascertainment in the event that any of the provisions of Sections 6
or 19 or the third sentence of Section 16 hereof are breached and that the
Corporation will be irreparably damaged in the event that the provisions of
Sections 6 or 19 or the third sentence of Section 16 are not enforced.
Therefore, in the event of Xxxxxxx'x breach or threatened breach of Sections 6
or 19 or the third sentence of Section 16 of this Agreement, Xxxxxxx agrees and
consents, that in addition to any and all other remedies available to the
Corporation, an injunction or restraining order or other equitable relief may be
issued or ordered by a court of competent jurisdiction restraining any breach or
threatened breach of Sections 6 or 19 or the third sentence of Section 16 of
this Agreement. Xxxxxxx agrees not to assert in any such action that an adequate
remedy exists at law. All expenses, including, without limitation, reasonable
attorney's fees and expenses incurred in connection with any legal proceeding
arising as a result of a breach of Sections 6 or 19 or the third sentence of
Section 16 of this Agreement shall be borne by the losing party to the fullest
extent permitted by law and the losing party hereby agrees to indemnify and hold
the other party harmless from and against all such expenses.
21. This Agreement shall be governed by the internal domestic laws of
the State of New York without reference to conflict of laws principles. This
Agreement shall be binding upon and inure to the benefit of the executors,
administrators, legal representatives, successors and permitted assigns of the
parties hereto (provided, however, that neither party shall have the right to
assign this Agreement or delegate any of its obligations hereunder without the
prior written consent of the other party). All headings and subheadings are for
convenience only and are not of substantive effect. This Agreement, including
the provisions of Section 14(b) of the Employment Agreement which expressly
survives as provided herein, constitute the entire agreement between the parties
hereto with respect to the subject matter hereof and supersede all prior
negotiations, understandings and writings (or any part thereof) whether oral or
written between the parties hereto relating to the subject matter hereof. There
are no oral agreements in connection with this Agreement. Neither this Agreement
nor any provision of this Agreement may be waived, modified or amended orally or
by any course of conduct but only by an agreement in writing duly executed by
both of the parties hereto. If any article, section, portion, subsection or
subportion of this Agreement shall be determined to be unenforceable or invalid,
then such article, section, portion, subsection or subportion shall be modified
in the letter and spirit of this Agreement to the extent permitted by applicable
law so as to be rendered valid and any such determination shall not affect the
remainder of this Agreement, which shall be and remain binding and effective as
against all parties hereto. This Agreement may be executed in counterparts, each
of which when taken together shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
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Xxxxx Xxxxxxx
ESQUIRE COMMUNICATIONS LTD.
By:_________________________
Print Name:
Title:
The first two sentences of Section 16
are hereby agreed to and the undersigned
hereby agree not to pursue, and hereby forever
waive and release, any claims
against Xxxxxxx relating to the subject of the
first sentence of Section 16
which may have occurred prior to the date hereof:
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Xxxxxxx X. Xxxxx
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Xxxx X. Xxxxxxx
