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MAR 29 2004

FILEDLOS ANGELES SliP/jIUOR COURT

EX PARTE APPLICATION FORTEMPORARY RESTRAINING ORDERAND ORDER TO SHOW CAUSE RE:PRELIMINARY INJUNCTION;MEMORANDUM OF POINTS ANDAUTHORlTIES; DECLARATIONS OFCRAIG BLOCK AND ROBERT P.WARGO (RE: NOTICE OF HEARING)

DATE: March 29, 2004TIME: 8:30 A.M.DEPT.: 46Hon. Rodney E. Nelson

FOR THE COUNTY OF LOS ANGELES

CASE NO.: BC312678

JOfm A. CLARKE, EXEff~'VE OFFICER! CLERK

BY J. TOR~S, Dpfji:~),

SUPERIOR COURT OF THE STATE OF CALIFORNIA ~ "\,

Defendants.

Plaintiffs

Plaintiffs ABC Escrow, Inc., and Alcohol Enterprises, Inc., hereby make this Ex Parte

Application for Temporary Restraining Order and Order to Show Cause Re: Preliminary Injunction

against their former employee, Defendant Michael Steinhauer, who, in retaliation for the lawful

ternlination of his at-will employment with Plaintiffs on March 5, 2004, has subsequently

intentionally interfered with Plaintiffs' prospective economic advantage with one of the~ Ij,)hg'- ~ :::t""') -< ""-I r,""J -t

:~,.~ ::: #=i rT1 ~ ;;:;

st~ding clients and. unless restrained by this Court, Plaintiffs are informed f~ ~el~w,~h~t; ~

D~ndantwill continue his tortious course of conduct, to Plaintiffs' irreparable~Yn~ry.S ~ ,r;; ,".' ~~

flf Accordingly, Plaintiffs seek to enjoin Defendant Michael Steinhauer from communiclliiii:g~ :~

wi, calling on, soliciting, taking away, or attempting to communicate, call on. solicit ori:ke aw;:;,~ ~;....' . I

either for Defendant, or for any other person, firm, corporation or entity, any of Plaintiffs' c1ieryts,"

v.MICHAEL STEINHAUER, an individual, andDoes I through 10, inclusive

ABC ESCROW, INC., a California corporation; )ALCOHOL ENTERPRlSES, INC.. a California )corporation )

)))))))).,

Attorneys for Plaintiffs ABC Escrow, Inc.,and Alcohol Enterprises, Inc.

1 Ronald Jason Palmieri, State Bar #96953Robert P. Wargo, State Bar #175177

2 LAW OFFICES OF RONALD JASON PALMIERI911 Linda Flora Drive

3 Los Angeles, California 90049Tel: (310)471-1881

4 Fax: (310)471-3511

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customers and employees.

Pa e \EX PARTE APPLICATION FOR TEMPORARY RESTRAINING ORDER AND osc RE: PRELIMINARY INJUN 'RIGINAL

• •I This Ex Part", Application is based on the upon the instant Application, the Memorandum

2 of Points and Authorities and the Declarations of Craig Block and Robert P. Wargo (Re: Notice of

3 Hearing), and any and all records and pleadings on liIe with this Court in connection with the above-

4 referenced matter.

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6 Dated: March 29, 2004

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Robert P. WargoAttorneys for Plaintiffs

NALD JASON PALMIERI

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Page 2EX PARTE APPLICATION FOR TEMPORARY RESTRAINING ORDER AND O$C RE: PRELIM1NARY INJUNCTION

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MEMORANDUM OF POINTS AND AUTHORITIES

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STATEMENT OF FACTS

The facts ofthis case are relatively straightforward and compel the granting ofthe Temporary

Restraining Order and Order to Show Cause requested by Plainti tTs herein against Defendant

Michael Steinhauer.

As set forth in the attached Declaration ofCraig Block, an officer ofboth corporate Plaintiffs,

Plaintiffs ABC Escrow, Inc., and Alcohol Enterprises, Inc., are related California corporations

qualified to transact business in this state, and are engaged in the business of acting as a third party

tinder and providing consulting and escrow services in connection with the sale, purchase and

transfer ofalcoholic beverage licenses in California and throughout the United States. On or about

August 20, 200 I, Plaintiffs and Defendant Steinhauer entered into a written Employment Agreement

whereby Plaintiffs agreed to employ Defendant as an at will employee in the position of

Sales/Customer Service Representative, on the terms and conditions set forth in the Agreement, a

copy of which is attached hereto as Exhibit "A."

Paragraph 10.4 of the Employment Agreement states that "during his ... employment and

for a period of two (2) years following the discharge, resignation or termination of [Defendant] or

the termination ofthis Agreement, [Defendant] shall not directly or indirectly use any [ofPlaintiffs']

Confidential Information to call on, solicit, take away, or attempt to call on, solicit or take away,

either for [Defendant] or for any other person, firm, corporation or entity the company's clients,

customers and employees." "Confidential Information"~ is defined in Paragraph 10.1 of the

Employment Agreement to include: (I) the name, address or telephone number of clients or

cq~omers; (2) infornJation obtained trom customers or clients; (3) costs incurred by the Company

in~'qui ring licenses; (4) fees charged clients or customers for services; and (5) procedures utilized

b' e Company in acquiring licenses on behalf of clients."i Paragraph 10.5 of the Employment Agreement states that "no adequate remedy at law may

exit for any violation of Sections 10.1-10.4 of this Agreement and that in the case of any breach,

a restraining order or injunction may be issued in addition to any other rights or remedies, including

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damages, which may be appropriate." Paragraph 11.9 ofthe Employment Agreement states that "in

the event of any litigation between or among the parties hereto respecting or arising out of this

Agreement, the prevailing party or parties shall be entitled to recover reasonable attorneys' fees and

costs, whether or not such litigation proceeds to final judgment or determination."

Plaintiffs terminated Defendant's employment on March 5, 2004, due to company

reorganization. As ofthat date, Defendant Steinhauer knew that Plaintiffs had recently brokered the

sale of a liquor license to Safeway, one of Plaintiffs' longtime clients, for the sum of $200,000.

Plaintiffs are informed and believe, and thereupon allege, that Defendant Steinhauer also knew that

Plaintiffs were then in the midst ofnegotiations with Safeway for the potential sale ofanother liquor

license for the sum 01'$210,000, which Plainti ffs would acquire from a potential seller for $120,000.

On March 11,2004, Defendant Steinhauer twice telephoned Jan Martin, a vice president of

Safeway, who was Plaintiffs' principal contact with the company. During the first conversation,

Steinhauer identified himself only as "Mike" to Ms. Martin and stated to her that he had a liquor

license available for sale to Safeway for the sum of$180,000.

Ms. Martin thereafter contacted Craig Block, an officer ofboth Plaintiffs, and infonned that

she had been contacted by someone named "Mike" calling from the 323 area code and offering her

the liquor license. Mr. Block suspected that "Mike" was Plaintiffs' recently terminated employee,

Defendant Steinhauer, and that the license he was attempting to sell her was a license he was

negotiating for from the potent ial seller when he was terminated from his employment by Plaintiffs.

Mr. Block requested that Ms. Martin contact "Mike" to make further inquiry regarding his identity

and the potential seller.

Ms. Martin subsequently spoke with "Mike" and he confirmed to her that he was, in fact,

DI/kndant Steinhauer. He thereafter advised Ms. Martin that the reason that he was calling her was

so'at Safeway could avoid being "gouged" with respect to this transaction because Plaintiffs always

g4ed their clients. This statement was false. and known by Defendant to be false, and had a

te~ncy to injure Plaintiffs with respect to their trade or business because the statement imputes

di~{)lIesty or a lack of ethics to Plaintiffs.

Steinhauer also stated that he would not be making any money from the transaction and that

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would have the seller of the license contact Ms. Martin directly. The potential seller contacted Ms.

Martin directly, and Safeway and the seller tentatively have entered into an agreement whereby

Safeway has agreed to purchase the liquor license directly from the seller for approximately

$180,000.00, or approximately $30,000 less than the amount which Safeway tentatively had agreed

to pay to Plaintiffs for acquiring the license.

Had Defendant Steinhauernot utilized Plaintiffs' confidential infomlation and interfered with

Plaintiffs' potential brokering of the sale of this liquor license to Safeway, Plaintifls would have

earned approximately $90,000 from the sale. Defendant's wrongful conduct, as set forth above,

constituted a breach of his employment contract in that he agreed not "to call on, solicit, take away,

or attempt to call on, solicit or take away, either for [Defendant] or for any other person, firm,

corporation or entity the company's clients, customers and employees."

Defendant's wrongful conduct, as set forth hereinabove, has caused Plaintiffs to suffer

damages in the amount of $90,000.00, and unless and until enjoined by Order of this Court,

Defendant's conduct shall continue to cause irreparable injury to Plaintiffs, including, but not limited

to lost profits and damage to its customer goodwill. Plaintiffs are further informed and believe, and

thereon allege, that Defendant intends to continue his course ofwrongful conduct by contacting other

of Plaintifts' clients and customers, in retaliation for Plaintifts' lawful termination of Defendant

Steinhauer's employment. Defendant Steinhauer intended to interfere with Plaintiffs' prospective

economic advantage by depriving them of the profits they would have earned from successfully

brokering the sale of the liquor license to Safeway.

Plaintiffs have no adequate remedy at law inasmuch as monetary damages cannot compensate

for damage to its customer goodwill and damages for loss ofprofits may not be quantifiable. Based

uJWl the foregoing, Plaintiffs are entitled to a Temporary Restraining Order, OSC Re Preliminary

Tinction, Preliminary Injunction and Permanent Injunction as prayed for herein restraining

Dtndant Steinhauer from the following: Communicating with, calling on, soliciting, taking away,

or~ltempting to communicate, call on, solicit or take away, either for Defendant, or for any other

pe~on, firm, corporation or entity, any of Plaintiffs' clients, customers and employees.

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n.THE COURT HAS THE RIGHT TO STOP THE

UNLAWFUL CONDUCT IN ITS ENTIRETY BY INJUNCTIVE RELIEF

California Code of Civil Procedure §526 provides, inter alia, as follows:

An Injunction may be granted in the following cases:I. When it appears by the Complaint that the Plaintiff is entitled to the

relief demanded. and such relief. or any part thereot: consists in restraining thecommission or continuance of the act complained of. either for a limited period orpemetually;

*******3. When it appears, during the litigation, that a party to the action is

doing. or threatens or is about to do. or is procuring or suffering to be done, some atin violations of the rights ofanother party to the action respecting the subject of theaction. and tending to render the judgment ineffectual;

4. When pecunia!)' compensation would not afford adequate relief;5. Where it would be extremely difficult to ascertain the amount of

compensation which would afford adequate reliet; .. , (Emphasis added).

Furthermore, Code of Civil Procedure §527 provides that an Injunction and/or Temporary

Restraining Order may be granted at any time before judgment where it appears that great or

irreparable injury will result before the matter can be heard on notice. Finally, the Employment

Agreement between Plaintiffs and Defendant also specifically authorizes injunctive relief for

violations thereof.

A. Plaintiffs Meet The Initial Two Part Test Justifyine Injunctive Relief

"[T]rial courts should evaluate two interrelated factors when deciding whetherornotto issue

a preliminary injunction. The first is the likelihood that the plaintiffwill prevail on the merits at trial.

The second is the interim harm that the plaintiff is likely to sustain if the injunction were denied as

compared to the harm that the defendant is likely to suffer ifthe preliminary injunction were issued."

Shoemaker v. County of Los Angeles (1995) 37 Cal.App.4th 618, 624-625. The facts in the instant

case cry out to equity to issue the limited restraint Plaintiffs seek.

~'"~ The facts set forth in the Declaration of Craig Block demonstrate that Plaintiffs are likely to

pretail on the merits at trial. Defendant Steinhauer can demonstrate no justification for his unlawful.~

uS~l)f PlaintilTs' confidential information and intentional interference with prospective economic

ad~ntage. His actions clearly were motivated by malice against his former employers, upon whom

intended to inflict, and has actually inflicted, substantial monetary injury.

Page 6EX PARTE APPLICATION FOR TEMPORARY RESTRAINING ORDER AND osc RE' PRELIMINARY INJUNCTiON

• •Furthennore, Plaintiffs shall suffer great and irreparable damage ifDefendant is not enjoined

2 from continuing to unlawfully solicit Plaintiffs' clients and customers and/or interfere with existing

3 business transactions, as Plaintiffs will lose substantial business and customer goodwill. In contrast,

4 Defendant Steinhauer shall suffer no injury if is he enjoined from communicating with Plaintiffs'

5 clients and customers. Thus, there is more than a reasonable probability that PlaintitTs will prevail

6 on the merits in this action and balancing the equities ofthe respective parties, equity mandates that

7 this Court enjoin Defendant Steinhauer as requested.

As noted above, Defendant Steinhauer's actual and threatened conduct constitutes an

inducing a third person not to enter into or continue a business relation with another." The "threat

of future interference is a proper subject for injunctive action." (Emphasis added)

damage if Defendant Steinhauer is not enjoined from continuing to engage in tortious acts against

As noted in Robert L. Cloud & Assocs., Inc. v. Mikesell (1999) 69 Cal.AppAth 1141, 1150:

California Courts Have Enjoined Unlawful Solicitation of a Former Employer'sCustomers and Interference With Prospective Business Advantage

Plaintitls. Plaintiffs have already lost, and will continue to lose, substantial profits and customerCrl>.

g~dwill, if Defendant is permitted to continue to contact Plaintifts' customers and clients and

intlrfere with Plaintiffs' pending or future business activities. Accordingly, equity mandates that!(j.

thicourt enjoin Defendant Steinhauer as requested.

While a former employee has the right to compete with his fomJer employer, even for thebusiness of those who had been the customers of the former employer, a former employeecannot solicit those customers' new business.... Acts of solicitation of the fonneremployer's customers and the misuse of confidential infommtion are acts of unfaircompetition that may be enjoined.

Also, as stated in Uptown Enterprises v. Strand (1961) 195 Cal.App.2d 45, 50-51, actionable

interference with one's right "to establish and conduct a lawful business ... is not limited to

inducing breach ofan existing contract or other wrongful conduct but comprises also unjustifiably

unlawful solicitation ofhis fonner employers' customers and unlawful interference with Plaintiffs'

business advantage, both of which are enjoinable. Plainti ffs shall suffer great and irreparable

B.

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Page 7EX PARTE APPLICATION FOR TEMPORARY RESTRAINING QRDERAND osc RE: PRELIMINARY INJUNCTION

• •V.

2 THE TRO AND PRELIMINARY INJUNCTION SHOULD BE ISSUED WITHOUT THEREOUIREMENTS OF AN UNDERTAKING

Case authority is clear that upon issuance ofa Temporary Restraining Order. as opposed to

For the foregoing reasons, Plaintiffs request that this Court issue the Temporary Restraining

enjoining him from contacting PlaintitTs' customers and clients.

Respectfully submitted.Dated: March 29, 2004

VI.

CONCLUSION

Order enjoining Defendant Michael Steinhauer from communicating with, calling on. soliciting,

taking away, or attempting to communicate, calion. solicit or take away, either for Defendant, or for

any other person, firm, corporation or entity, any ofPlaintiffs ' clients, customers and employees, and

issue an and an Order to Show Cause re: Preliminary Injunction with respect thereto.

requirement of an undertaking due to the fact that no haml can result to Defendant Steinhauer in

Miller (1983) 140 Cal.App.3d 562; Allen vs. Pitchess (1973) 36 Cal.App.3d 321.

Given the Court's inherent equitable power of provisional relief, Plaintiffs respectfully

request that the limited Temporary Restraining Order sought herein be issued without the

a Preliminary Injunction. no undertaking is required by Code ofCivil Procedure §529; Wallace vs.

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Page 8EX PARTE APPLICATION FOR TEMPORARY RESTRAINING ORDER AND osc RE, PRELIMINARY INJllNCTION

• •DECLARATION OF ROBERT P. WARGO

2 L Robert P. Wargo, declare as follows:

3 I. r am an attorney duly licensed to practice law before all of the Courts of the state of

4 California, and am an associate of the Law Offices of Ronald Jason Palmieri, attorney for

5 Plaintiffs herein.

6 2. The facts set forth in this Declaration are true of my own knowledge and if called upon to

7 testify, I could and would testify competently thereto.

8,j. Pursuant to CRC 379, notice of this Application was given on March 25, 2004, at 3:15

9 PM. On said date and time, I personally called Michael Steinhauer at his home telephone,

10 323/850-5414, and left a message on his answering machine infornling him that Plaintiffs

11 would be filing this Ex Parte Application at 8:30 AM, in Department 46 of this Court,

12 located at III North Hill Street, Los Angeles, CA, on Monday, March 29, 2004.

13 rdeclare the foregoing to be true and correct and under penalty ofperjury under the laws of

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the State ofCalifomia. Executed on March 25, 2004, at Los Angeles, CA.

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Page 9EX PARTE APPLICATION FOR TEMPORARY RESTRAINING ORDER AND OSC RE: PRELIMINARY INJUNCTION

• •DECLARATION OF CRAIG BLOCK

2 I, Craig Block, declare as follows:

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I am an ofIicer of Plaintiffs ABC Escrow, Inc., and Alcohol Enterprises, Inc.

The facts set forth in this Declaration are true of my own knowledge and if called upon to

testifY, I could and would testifY competently thereto.

Plaintiff ABC Escrow, Inc., is a California corporation qualified to transact business in this

state, with its principal place of business in Pacific Palisades, CA.

Plaintiff Alcohol Enterprises, Inc., is a California corporation qualified to transact business

in this state. with its principal place of business in Pacific Palisades, CA.

Plaintiffs are related companies engaged in the business of acting as a third party finder and

providing consulting and escrow services in connection with the sale, purchase and transfer

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of alcoholic beverage licenses in California and throughout the United States.

On or abollt August 20, 200 L Plaintiffs and Defendant Steinhauer entered into a written

Employment Agreement whereby Plaintiffs agreed to employ Defendant as an at will

employee in the position of Sales/Customer Service Representative, on the terms and

conditions set forth in the Agreement, a copy of which is attached hereto as Exhibit "A."

Paragraph 10.4 of the Employment Agreement states that "during his ... employment and

for a period of two (2) years following the discharge, resignation or termination of

[Defendant] orthe termination ofth is Agreement, [Defendant] shall not directly or indirectly

use any [of Plaintiffs'] Confidential Information to call on, solicit, take away, or attempt to

call on, solicit or take away, either for [Defendant] or for any other person, firm, corporation

or entity the company's clients, customers and employees."

"Confidential Information" is defined in Paragraph 10.1 of the Employment Agreement to

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include: (I) the name, address or telephone number ofclients or customers; (2) information

obtained from customers or clients; (3) costs incurred by the Company in acquiring licenses;

(4) fees charged clients or customers for services; and (5) procedures utilized by the

Company in acquiring licenses on behalf of clients.

Paragraph 10.5 of the Employment Agreement states that "no adequate remedy at law may

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exist for any violation of Sections 10.1-10.4 of this Agreement and that in the case of any

breach, a restraining order or injunction may be issued in addition to any other rights or

remedies, including damages, which may be appropriate."

Paragraph 11.9 of the Employment Agreement states that "in the event of any litigation

between or among the parties hereto respecting or arising out of this Agreement, the

prevailing party or parties shall be entitled to recover reasonable attorneys' fees and costs,

whether or not such litigation proceeds to final judgment or determination."

Plaintiffs terminated Defendant's employment on March 5, 2004, due to company

reorganization.

As of that date, Defendant Steinhauer knew that Plaintitfs had recently brokered the sale of

a liquor license to Safeway, one of Plaintilfs' longtime clients, for the sum of $200,000,

because Defendant Steinhauer had worked on the transaction during the course of his

employment with Plaintiffs.

I am infonned and believe, and thereupon allege, that during the course ofhis employment

with Plaintiffs, Defendant Steinhauer learned that Plaintiffs were then in the midst of

negotiations with Safeway for the potential sale of another liquor license for the sum of

$210,000.00, which Plaintiffs would acquire from a potential seller for $120,000.

I was infornled by Jan Martin, a vice president of Safeway, who is Plaintiffs' principal

contact with the company, that on March 11,2004, Defendant Steinhauer twice telephoned

Ms. Martin.

Ms. Martin informed me that during the first conversation, Steinhauer identitied himselfonly

as "Mike" to Ms. Martin and stated to her that he had a liquor license available for sale to

Safeway for the sum of $180,000.

Ms. Martin thereafter infornled me that she had been contacted by someone named "Mike"

calling from the 323 area code and offering her the liquor license.

r suspected that "Mike" was our recently tenuinated employee, Defendant Steinhauer, and

that the license he was attempting to sell her was a license he was negotiating for from the

potential seller when he was temlinated from his employment by Plaintiffs. I requested that

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Ms. Martin contact "Mike" to make further inquiry regarding his identity and the potential

seller.

Ms. Martin infonned me that she subsequently spoke with "Mike·" and he confinned to her

that he was, in fac.t, Defendant Steinhauer. He thereafter advised Ms. Martin that the reason

that he was calling her was so that Safeway could avoid being "gouged" with respect to this

transaction because Plaintitfs always gouged their clients. This statement was false, and

known by Defendant to be false, and had a tendency to injure Plaintiffs with respect to their

trade or business because the statement imputes dishonesty or a lack of ethics to Plaintiffs.

Steinhauer also stated that he would not be making any money from the transaction and that

would have the seller of the license contact Ms. Martin directly.

Ms. Martin infornled methat the potential seller contacted her directly, and Safeway and the

seller tentatively have entered into an agreement whereby Safeway has agreed to purchase

the liquor license directly from the seller for approximately $180,000.00, or approximately

$30,000 less than the amount which Safeway tentatively had agreed to pay to Plainti ffs for

acquiring the license.

Had Defendant Steinhauer not utilized Plaintiffs' confidential infonnation and interfered

with Plaintiffs' potential brokering of the sale of this liquor license to Safeway, Plaintiffs

would have earned approximately $90,000 from the sale.

Defendant's wrongful conduct, as set forth above, constituted a breach of his employment

contract in that he agreed not "to call on, solicit, take away, or attempt to call on, solicit or

take away, either for [Defendant] or for any other person, t"inn, corporation or entity the

company's dients, customers and employees."

Defendant's wrongful conduct, as set forth hereinabove, has caused Plaintiffs to suffer

damages in the amount of$90,OOO.00, and unless and until enjoined by Order ofthis Court,

Defendant's conduct shall continue to cause irreparable injury to Plaintiffs, including, but

not limited to lost profits and damage to its customer goodwill.

Plaintiffs are further infonned and believe, and thereon allege, that Defendant intends to

continue his course of wrongful conduct by contacting other of Plaintiffs' clients and

Page 12EX PARTE APPLICATION FOR TEMPORARY RESTRAINING ORDER AND OSC RE: PRELIMINARY INJUNCTION

,03/25/2004 THU 15:09 FAX 3~9 3688 ABC ESCROW \ LLS • ~ 0021002

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custome:rs, in retaliation for Plaintiffs' lawful termination of Defendant Steinhauer's

employment Defendant Steinhauer intended to interfere with Plaintiffs' prospective

economic advantage by depriving them of the profi~ they would have earned from

successfully brokering the sale ofthe liquor license to Safeway.

Plaintiffs have no adequate remedy at law inaslUUch as monetary damages cannot

compensate for damage to its customer goodwill and damages for loss ofprofits may notbe

quantifiable.

Based upon the foregoing, Plaintiffs are entitledto a Temporary Restraining Order, ose Re

PreliminaryInjUlletion, PreliminaryInjunctionaudPermanentInjunction as prayed forherein

restraining Defendant Steinhauer from the following: Communicating with, calling on,

soliciting, taking away, or attempting to communicate, call on, solicit orta!re away, either

for Defendant, or for any other pernon, finn, corporation or entity, any ofPlaintiffs' cli~,

customers and employees.

I declare under penalty ofpe.jwy under the laws ofthe State 0 ' . oroia that the fOrl:going

is true and correct. Executed on March¢2004, at Lu6

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EX PAR're Al'pur.ATION PORTEMPORARY RESTltAlNlNG ORDEilAND OSC RE: PRELIMINARY INJUNCTION

~t/t>l 39"'<1 I~I~l"'d al\lN~ n9~lLt>el~

• •

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EXHlBIT"A"

. • 03/~1/2004 THU 16:09 FAX _459 3688 ABC ESCROW \ LLS • ~002/014

EMPLOYMENT AGREEMENT,

This Employment Agreement {"Agreement"} is made and entered into ong-2.0 , 200.1.. by and between ABC Escrow, Inc" Alcohol

EnterPrisesj.;~/ba Alcohol Licensed Properties (the 'Company") and..M.iJe. ~'N6~ ,an individual ("Employee"), as follows:•

1. EMPLOYMENT

1.1 Commencement Date and Title. Beginning B,Ur-WOf '200..L E/TIQloyee Sha~1".~ ~. • . ' ... .sAI6=i ~aa. .:s9(VI<.t:'. for theCompany, sUbject to eiermsand conditions of this Agreement and the Company'spolicies, rules, regulations and procedures as contained in its Employee Manual1'lnd asdictated by management. The terms and conditions of this Agreement cannot bechanged, modified or altered. The Company, however, may amend its policies, TtIles,regUlations, procedures and handbooks from time to time, and at any time, withoutnotice. Employee hereby accepts the employment and agrees to render and perform allservices loyally, conscientiously and to the best of Employee's ability and experience,

2. EMPLOYMENT DEPENDENT UPON SUCCESSFUL COMPLETION OFBACKGROUND INVESTIGATION

2.1 InvesligationS'''oy Department of Corporations and Department ofJustice.. Employee agrees atll;l.J!."derstands that any employment with ABC Escrow isconditioned upon the Employee successfully completing the statutorily requiredbackground investigations conduqled by the Department of Corporations, theDepartment of Justice and any other governmental agencies.

. 3. TERMINATION AND AT WILL EMPLOYMENT

3.1 AT WILL EM'F'COYMENT. Either party may terminate this Agreement atany time, with01Jt notice, for any reason, with or without cause, without further obligationor liability (except that the Company shall be obligated to pay Employee all salaJ)' thendue and owing for work completed and make payment for unused vacation time, if any).Any contrary information or statements her~fter made by any person may not be relied

~I, upon. The at-will nature of this employment can only be altered by Craig Block or Cindy\i~ Block, and then any such representations will only be enforced if they. are in writing.

; : 3.2 Return of Company Property. Within twenty-four (24) hoors following, 'the discharge, termination or resignation of Employee or any other event which ends:lthis Agreement. Employee shall return to the Company all Company property.

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4. DUTIES AND OBLIGATIONS OF EMPLOYEE

4.1 Description of Duties. Employee shall be employed by the Company inthe position set forth in SeCtIon 1.1. In such capacity, Employee shall do and performall services, acts or things necessary or adVisable, as determined by the Company, toperform and fulfill Employee's duties in acting in such capacity for the Company.

4.2 Performance of Duties. Employee shall perform all services necessary,required, or advisable to fulfill the duties of his or her position. Employee shall at alltimes be sUbject to the direction of the Company, its management and other aulhon<:edagents, .and to all policies, rules, regulalio.ns and procedures established from time totime by the Company. Employee will at all times faithfully;industriously, and to the bestof his or her ability, experience, and talents, perform all the duties that may be reqUiredof him or her.

4.3 Conflicts and Interferences. Employee shall not without the prior writtenconsent of the Company render services of a business, commercial, or professionalnature to any other person or organization that might create a conflict of interest orotherwise interfere in any way with Employee's obligations under this Agreement.SPecifically, while employed with the Company, Employee shall not, directly orindirectly, whether as partner, employee, creditor, sh~holder, or otherwise, promote,participate, or engage in any activity or other business competitive with the Company'sbusiness.

.'s. COMPENSATION ".........

5.1 Sa. ., sation for his or her services, Employee shall receive(an hourly wage annual salary of$SO, Dr:!? CU' ,payable bi-weekly.dUri~period ofemploymenl '1ifiWJia ~eu.) - ~MiW#t ..eev/~

5.2 Deductions and Wrthholdjngs. The Company shall have the right todeduct from Employee's compensation all applicable state and federal tax withholdingsand deductions, and all federa!,_state, municipal and other taxes and charges as maynow be in effect or which mayhereafter be enacted or required as charges on thecompensation 9f Employee. The Company shall also have the right to deduct. fromEmployee's compensation any Group Medical Insurance Premium for Employee'scovered dependents.

"l, 5.3 Closina of Company. In the event the Company is closed due to an

i',earthquake, flooding, riol, or any other natural or man-made disaster pr unsafe. •condition, the Company, in its discretion, will determine whether it will pay to Employee: .. the amount that would have been paid to Employee had Employee worked the closedI 'day(s), .

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6. HOLIDAYS

6.1 Paid Holidays. Following the initial three (3)-month probationary period,if employed with the Company on the following holidays, then Employee shall be paidfor the following holidays:

New Years Day

Memorial Day

Independence Day

Labor Day

Thanksgiving.Oay

Christmas Day

6.2 Policies. Rules. Regulations and Pro9f!dures RegardingHolidays. (Refer to the Employee Manual.)

7. VACATION TIME

7.1 Vacation lime Allotted. If employed following one full year on a full-timebasis..Employee shall receive paid vacation time in accordance with the followingschedule: ~

..........-(a) Second Through·Fjflh Year of Employment. During Employee's

second through fifth year of employment with the Company, Employee shall receive "five(5) days paid vacation, per calendar year (January 1 to December 31). Five (5) days isequal to fOrty (40) hours. '

(b) , .After Fjfth Year of Employment. Following the completion of five(5) years of amployment wi~Jt'le Company, Employee shall receive ten (10) days ofpaid vacation per calendar year (January 1 to December 31). Ten (10) days is eqlJal toeighty (80) hotJrs.

7.2 Policies. Rules. RegUlations and Procec!ures Regartfing VacationTime. (Refer to the Employee Manual.)

f.l,-

i 8. SICK LEAVE

8.1 Paid Sick leave. If employed following one year of full-time. i\!employment with the Company. Employee may use, if needed, up to six (6) paid non­~orking days per calendar year (January 1 to December 31) if unable to work because

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of his or her own illness, the need to care for a sick child, bereavement, or to resolvepersonal emergencies.

8,2 Policies. Rules, Regulations and Procedures Regarding SickLeave. (Refer to the Employee ManUal.)

9. CONTRIBUTION TO GROUP MEDICAL PLAN OR LIFE INSURANCEPOLICY

9.1 Terms of Contribution. If employed after ninety (90) days of full-timeemployment (40+ houl'$ per week), Employee will become eligible to participate in theCompany's Group Medical Plan. It is the responsibility of Employee to notify theaccounting department, in writing, when ninety (90) days have passed. The Companywill pay the premium for Employee's participation in the Company's Group MedicalInsurance Plan. Employee may add his or her dependents to the Company's GroupMedical Insurance Plan but must pay the full amount of the additional premium.

9.2 Release from Liability. The Company is not an insurer or insurancecompany. Employee acknowledges that the Company is not responsible in any mannerfor the acts or omissions of the medical plan. FLlrther,"Employee expressly releeses theCompany from any and all liability relating to the medical plan. Nothing in this provisionshall be construed as a release of any insurer or insurance company associated in anyway with the medical plan for. any acts or omissions.

. ~ 9.3 Right to Mod!f¥. The Company reserves the right to modify, suspend ordiscontinue any and all of its..P.eneftt plans, policies and practIces at any time withoutnotice to or recourse by Employ~, so long as such action is leken generally withrespect to other similarly situated persons and does not single out Employee.

9.4 Policies. Rules, Regulations and.Procedures Regarding Contribution toMedical Plan. (Refer to the Employee Manual and consult with the Company's planadministrator.) ;

~_ ...- -

10. CONFIDENTIALITY

10.1 Definition of "Confidentiel Information". For the p1Jrposes ¢ thisAgreement, "Confidential Information" shall'mean and indude, but shall not be limited

(~, to, all of the following infonnation with respect to the Company: (i) the name, address,IiI.:or telephone number of clients or customers; (2) information obtained from customers or: ,clients; (3) costs incurred by the Company in acquiring licenses; (4) tees charged dients

,or customers for ljervices; and (5) procedures utilized by the Company in acquiring, licenses on behalf of clients.

lA

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10,2 Agreement of Confidentiality, Nondisclosure and Nonsolicitation. Toperfol1ll the SBlVices desaibed herein, Employee will be given access to secret andConfidential Information. Employee hereby agrees that all Confidential Information soprovided shall be used solely by Employee in the performance of his or 'her obligationsunder this Agreement. Employee further agrees that he or she shall not, without theadvance written consent of the Company, during his or her employment orany timethereafter, directly or indirectly:

(a) Publish or in any way disclose to any third person or entity thewhole or any part of the Confidential Information;

(0) Make use of any Conlidentiallnforination in conducting businesswith any other person or entity;

'" (c) Permit the use of the Confidential Information by any employerother than the Company, or by any friend, relative, employee, agent, independentcontractor or affiliate of Employee for any purpose contrary to the tenns of thisAgreement; or

(d) Make use of any Conlidentiallnformation to call on, solicit, takeaway, or attempt to call on, solicit or take away, either for Employee or for any otherperson, firm, corporation or entity the Company's clients, customers, or employees,

10,3 Possession and Ownership of Confidenliallnformation. EmployeeacknOWledges that the Confidential Information represents a valuable, important a,ndmateri!,!' business asset of the Company and disclosure is not permitted both byCalifornia law and pursuant tcrthis Agreement Employee hereby agrees that theConfidential Information is~ shall remain at all times the exclusive property of theCompany and under no circum~ncewhatsoever shall Employee disclose or sell thisinformation to any person or entity.

'lOA Prohibition on Unfair CompetitioA and SoliCitation of Clients and Co-Emplgyees Based Upon Use of-Secret or Conlidentiallnformation. Wi1l1out limiting theobligations containea in Sections 10.1 through 10,3, in consideration of Employee'Saccess to the Company's Con_fjrJentiallnformation, Employee agrees that during his orher employment and for a period of two (2) years following the discharge, resignation ortermination of, Employee or the termination of this Agreement, Employee shall notdirectly or indirectly use any Confidential Information to calion, solicit, take away, orattempt to call on, solicit or take ENlay, either for Employee or for any other person, firm,

,oj.corporation or entity the Company's clients; customers and employees.

~: Moreover, in consideration of Employee's access to the Company's Confidential~ Information, E~ployee ~9rees that dUring .his or her emp!oyment and for a period of twoi~'(2) years follOWing the dIscharge, reslgnallon or termination of Employee or the\ 'termination of this Agreement, Employee shall not directly or indirectly use the

~" ;Company's ConfidentiallnformatJon to compete with the Company In the counties of. Los Angeles, San Bernardino, Ventura, Kern, Orange, San Diego, Riverside, San",

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U3I1lfZUUq m 16: 12 FAXI 459 3688 ABC ESCROW \ LLS • ~007 /014

Francisco, Sacramento, Alameda and Santa Barbara. Employee understands andagrees that direct competition means lI1e development,' production, promotion or sale ofservices competitive with those of lI1e Company. Indirect Competition meansemployment by any competitor or third party providing services competing with theCompany for whom Employee wJII perform the same or similar function as he or sheperforms for the Company. 6y signing below, Employee acknowledges that theselimited restrictions will not SUbstantially affect his or her right and ability to engage in hisor her business trade or profession following the tennination of this agreement.

10.5 Remedies. The Company and Employee .acknowledge that noadequate remedy at law may exist for any violation of·Sections 10.1·10.4 of thisAgreement and that in the case of any breach, a restraining order or injunction may beissued in addition to any other rights or remedies, induding damages, which may beappropriate.

10.6 Survival of Section 10. The provisions of Section 10 survive thedischarge, resignation or tennination of Employee or the tennination of this Agreement.

11. GENERAL PROVISIONS

11.1 Severability. If any provision of this Agreement, as applied to any partyor to any circumstance, shall be found by a court of competent jurisdiction to be void,invalid or unenforceable, the same shall in no way affect any other provision of thisAgreement, the application of any such provision in any other circumstance, or thevalidity or enforceability of this Agreement.

~.

11.2 Waivers. A w.ai~r by !'loy party of any of the terms and conditions ofthis Agreement in anyone instance shall not be deemed or construed to be !'l waiver ofsuch term or condition for the future, or of any subsequent breach thereof, nor shall it bedeemed a waiver of performance of any other obligation hereunder..

11.3 Entire Agreement. This Agreement contains the entire understanding ofthe parties hereto relating to the subject matter hereof and supersedes all plior andcollateral agreements, undt:~~;Indings, statements and negotiations of the parties.Each party acknowledges that no representations, inducements, promises, oragreements, oral or written, with reference to the subject matter hereof have been madeother than as expressly set forth herein.

11 4 Representation by Counsel-in Execution. The parties agree that theyI'll each have been afforded the opportunity to be represented by counsel in the

inegotiation and preparation of this Agreement. The parties each agree that they enter

• into this Agreement freely, without coercion, and relying on each one's own jUdgment,. not on any representations or promises made by the other party, except those

contained herein..

.!: 11.5 Governing Law.. This Agreement shall be govemecl by and construed in1l. accordance with the laws of the State of California, and the parties hereby submit

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themselves to the courts of the County of Los Angeles for the purpose of enforcing theAgreement. .

11.6 Gender and Number. In all matters of interpretation, whenevernecessary to give effect to any provision of this Agreement, each gender shall indudethe other, the singular shall include the plural, and the plural shall include the singular.

11.7 Section and Subsection Headings. The titles of the sections of thisAgreement are for convenience only and shall not in any Wfl)/ affect the interpretation ofany provision or condition of this Agreement.

11.8 Thircj Psrties. Except as may be elCPresstyset forth herein, the partieshereto do not intend to confer any rights or remedies upon any person other than theparties hereto.

11.9 Legal Action. In the event of any litigation between or among the partieshereto respecting or arising out of this Agreement, the prevailing party or parties shallbe entitled to recover reasonable attorneys' fees and costs, whether or not suchlitigation proceeds to final judgment or determination.

11.10 Counterna!iS. This Agreement may be executed in counterparts which,taken together, shall constitute the whole of the Agreement as between the parties.

12. AGREEMENT TO ARBITRATE,.

. Employee agrees that any dispute (1) arising under or involving any provision .of the Agreement, or (2) theotel!eh and/or alleged breach of any provision of thisAgreement, shall be submitted to binding arbitration. Such arbitration shall beconducted pursuant to the provisions of the Federal Arbitration Act, 9 U.S.C., section 1,et seq., if applicable, or the provisions of Title 9 of Part III of the California Code of CivilProcedure, commencing at Section 1280 et seq. (or any successor or replacementstatutes) if the Fedanal Arbitration Act does not apply to Employee's employment.Employee and Company agree to submit any such dispute to arbitration within one (1)year of the date the dispute"1lfsfarose, or within one (1) year of the termination ofemployment, whichever occurs first; provided, however, that if Employee's claim arisesunder a statute providing for a longer time to file a claim, that staMe shall govern.

Notwithstanding the above paragraph, Employee does not waive his or her>Ii, right to litigate claims for workers' compens'ation, unemployment insurance and any~lwage and hour matter within the Jurisdiction of the California Labor Commissioner.•",' Employee also reserves the right to litigate claims under Title VII of the Civil Righls Act~:of 1964 or the Fair Employment and Housing ht (FEHA) to the extent that the right tol~litigate such claims is not wBivable under applicable law.

~ If Employee and the Company are unable to agree on a neutral arbitrator'~.knOWledgeable in employment issues, the Company will obtain a list of arbitrators

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knowledgeable in employment matters from the Federal or Stale Mediation andConciliation Service. Employee (first) and then the Company will altemately strikenames from the list until only One name remains; the remaining person shall be thearbitrator. Arbitration proceedings shall be held at a location mutually convenient toEmployee and the Company.

The arbitrator shall have jurisdiction over pre-hearing discovery matters. Thearbitrator shall allow an adequate amount of.discovery reasonably necessary toarbitrate the daims at issue.

Following a hearing conducted by the arbitrator, in a manner to be determinedas mutually agreed to by the parties andlor'by the arbitratbr, the arbitrator shall issue awritten opinion and award which shall be signed and dated. The arbitrator's opinion andaward shall decide all issues submItted and shall set forth the legal principles supportingeach part of the opinion. The arbitrator shall be pennitled to award only those remediesin raw or equity which are requested DY the parties and which the arbitrator determinesto De supported by the credible, relevant evidence.

Employee and the Company agree that arbitration shall be the exdusive forumfor resolving all disputes arising out of or involving fh;s Agreement and Employee'semployment with the Company or the termination of that employment (with theexception of claims for workers' compensation, unemployment insurance and any wageand hour matter within the jurisdiction of the Califomia Labor Commissioner); provided,however, that either party may file a request with a court of competent'jurisdlction forequitable relief, including but,not limited to injunctive relief, pending resolution of anydispute through the arbi1ration procedure set forth herein. If lhe Company does notreceive a written request for a-bitralion from Employee within one (1) year from the dateof Employee's termination, emJ:liQyee agrees that he or she will have waived any right toraise any claim, in any forum, arising out of the breach or alleged breach of anyprovision in this Agreement or termination of Employee's employment.

Nothing in this agreement shall be con!llrued as preclUding Employee fromfiling a charge or complaint with the Equal Opportunity Commission (EEOC), thElNatlohallabor Relations Board (NLRB) or any other similar state or federal agencyseeking administrative resolution of a dispute or daim. However, any claim that cannotbe resolved administratively through such an agency shall be subject to this arbitrationpolicy. Employee and the Company shall each bear their own costs for legalrepresentation at any such arbitration. The Company will pay all costs of the aJt)ilration,

, including but not limited to arbitrator fees, that Employee would not be reqUired to bear~,if the action were brought In court. '

~ Employee and the Company hereby agree that nothing contained herein shallipredude either party from obtaining injunctive Qr other equitable relief to restrain~wiolations of this agreement or applicable law or to pres!!IVe the status quo pending the, arbitration of any disputes subject to this section. Nothing contained herein shalt bereemed to alter or modify the Company's policy of at-will employment. Employment

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With the Company is at-will and can be tenninated by either Employee or the Companyat any time, with or without cause or notice.

Employee and the Company hereby agree that this arbitration agreement shallsurvive the termination elf Employee's employment and that this Agreement is a contractbinding on Employee and the Company.

13. ACKNOWLEDGEMENT

By signing this agreement, Employee acknowledges that he or she has read,understands and agrees to be bound by the terms of this Agreement, includingspecifically but not limited to, the At-Will Employment, Confidentiality, and theAgreement to Arbitrate provisions. Employee also acknowledges that he or she hasreceived a copy of this Agreement.

Executed at __.j.(..tl4...S..j.a+l"'~m.Il.l<"'~"'- -" California.• (J

Employer.

i,'

Date: j.J,lj. too I

Employee:

Date: 3:iu·Zf!o (

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".

EMPLOYMENT AGREEMENT ADEMVMNOriginal Employment Agreement dated 8-20-01

This Employment Agreement("Agreement") is made and entered into on August 7,2002by and between ABC Escrow, Inc Alcohol Enterprises, Inc dba Alcohol LicensedProperties( the "Company") and Michael Stei.nhauer, an individual("Employee") asfollows:

1. EMPLOYMENT(per original employee agreement dated August 20.200n

1.1 Commencement Date and Title. Beginning August 7, 2002 Employeeshall serve as a Sales /Customer Service RepreseDtative, for the Company, subjectto the terms and conditions of the original Agreement and the Campany'spolicies, rules regulations and procedures as contained in its Employee Manualand as dictated by management. The tenns and conditions ofthis Agreementcannot be changed, modified or altered. The Company however may amend itspolicies, rules, regulations, procedures and handbooks from time to time and atany time, without notice. Employee herby ar:cepts the employment and agrees torender and perform all services loyally, conscientiously and to the best oftheEmployee's ability and experience.

5. COMPENSATION (per the original employee agreement dated august 20, 200])

5. I Salary. As compensation for his or her services, Employee shall receive (anannual salary of $34,000.00, payable bi-weekly during the period of employment.Employee understands and accepts that there will be no other increase in the salarycompensation through the telID ofemployment.

ACKNOWLEDGEMENT

By signing this agreement, employee acknowledges that he /she has read, understandsand agrees to be bound by the terms of this Addendum! Agreement, includingspecifically but not limited to, the At-Will Employment, Confidentiality, and theAgreement to Arbitrate provisions. Employee also acknowledges that he or she hasreceived a c this Addendum! Agreement.