Exhibit 10.14
Employment Agreement and Restrictive Covenants
Between
Xxxxxx X. Xxxxxxxx
and
XXXX.XXX, INC.
Dated: As of January 10, 2000
EMPLOYMENT AGREEMENT AND RESTRICTIVE COVENANTS
EMPLOYMENT AGREEMENT AND RESTRICTIVE COVENANTS ("Agreement"), dated as of
January 10, 2000, between XXXX.XXX, Inc., a Delaware corporation ("the Company")
and Xxxxxx Xxxxxxxx (the "Executive").
The Company desires to employ the Executive, and the Executive desires to
be employed by the Company. In consideration of the mutual covenants and
promises contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged by the parties hereto,
the parties agree as follows:
1. Employment, Duties and Acceptance.
1.1 Employment by the Company. The Company agrees employ the Executive for
the Term (as defined in Section 2), to render full-time services to the Company
as the Chief Operating Officer, reporting directly to founder Xxxxxxx X. Xxxxxx
("Xxxxxx"). The Company will use its best efforts to cause Executive to be a
member of the Executive Committee of the Company during the Term (as hereinafter
defined).
1.2 Acceptance of Employment by the Executive. The Executive hereby
accepts such employment and agrees to undertake the duties and responsibilities
inherent in such position and such other duties and responsibilities as the
Board or its designee shall from time to time reasonably assign to the
Executive. The Executive agrees to devote his entire business time, attention
and energies to the business and interests of the Company during the Employment
Period. The Executive agrees to abide by the rules, regulations, instructions,
personnel practices and policies of the Company and any changes therein which
may be adopted from time to time by the Company. Notwithstanding the foregoing,
the Executive shall not be precluded from
accepting outside directorships which will not interfere with his duties
hereunder, subject to the prior approval of the Board in each instance, which
approval shall not be unreasonably withheld.
1.3 Place of Employment. The Executive's principal place of employment
shall be the principal executive offices of the Company in Boston, Massachusetts
or such other location, within a radius of 35 miles thereof, to which such
offices may be relocated, subject to such domestic and international travel as
the rendering of the services hereunder may require.
2. Term of Employment. The term of the Executive's employment under this
Agreement shall commence on the date of this Agreement (the "Effective Date")
and shall end on December 31, 2002 subject to the terms set forth in Section 4.1
hereof (the "Term").
3. Compensation.
3.1 Salary. As compensation for all services to be rendered pursuant to
this Agreement, beginning on the Effective Date the Company shall pay the
Executive a base salary at the annual rate of $150,000, payable in periodic
installments accordance with the payroll policies of the Company as from time to
time in effect, less such deductions as shall be required to be withheld by
applicable law and regulations. As of January 1, 2001, and each January 1st
thereafter during the Term, said base salary shall be reviewed by the Board and
shall be subject to increase, but not decrease, as determined by the Board;
provided, however, that the annual rate of base salary as of such dates shall be
no less than the product of $150,000 multiplied by the percentage obtained by
dividing (a) the Consumer Price Index-U.S. City Average (or, if publication of
that Index is terminated, any substantially equivalent successor thereto) for
the month including such date, as published by the Bureau of Labor Statistics of
the United States Department of Labor, by (b) said Consumer Price Index for the
month of January, 2000.
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3.2 Expenses. Subject to such policies as may from time to time be
established by the Company and the presentation of appropriate supporting
documentation, the Company shall pay or reimburse the Executive for all
reasonable expenses actually incurred or paid by the Executive during the Term
in the performance of the Executive's duties under this Agreement.
3.3 Bonuses.
3.3.1 Annual Bonus. In addition to the salary referred to in Section
3.1, Executive shall be eligible for bonus compensation at a target level
of his base salary in the range of 0-70% to be determined by the Board
conditioned on completing such performance objectives as may be determined
by the Board. The target level set for the Executive shall be comparable
to the target levels set for other similarly situated senior executives.
3.4 Stock Options. As further consideration for the Executive's agreement
to work for the Company, the Company hereby grants to the Executive options to
purchase a total of 250,000 shares of its Class A Common Stock, 200,000 shares
at an exercise price of $ 10.00 per share and 50,000 shares at an exercise price
of $16.10. In addition, if the Company completes an initial public offering
before December 31, 2000, the Company will, immediately prior to the public
offering, grant the Executive an option to purchase 75,000 shares of Class A
Common Stock at an exercise price equal to the public offering price and if such
public offering is not completed before December 31, 2000, the Company will, on
December 31, 2000, grant the Executive an option to purchase 75,000 shares at an
exercise price per share equal to $16.10 per share. The options shall be granted
pursuant to the Company's 1999 Incentive and Non-Statutory Stock Option Plan and
shall, to the greatest extent possible, be incentive stock options as that term
is used in the Internal Revenue Code. In the event that the Company's stock is
split
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after the date hereof, the number of shares and the acquisition price set forth
in the options delivered hereunder shall be adjusted proportionately to reflect
such action.
The options shall be exercisable on a pro rata basis at the rate of (a)
100,000 shares beginning on December 31, 2000 if the Executive is a full-time
Executive of the Company at that time, (b) an additional 28,125 shares,
respectively, on each of March 31, 2001, June 30, 2001, September 30, 2001,
December 31, 2001, March 31, 2002, June 30, 2002, September 30, 2002 and
December 31, 2002, provided that the Executive is a full time Executive of the
Company at the each of those respective times, and further provided, however,
that all options shall be deemed immediately exercisable upon the termination of
this Agreement by the Company pursuant to Section 4.1(h) or upon termination by
the Executive where such termination is in consequence of a material breach of
the terms hereof by the Company, which breach is not remedied by the Company
within 10 days following written notice from the Executive to the Company
notifying it of such breach. The terms of this agreement concerning acceleration
of vesting shall be deemed to supercede any conflicting terms governing vesting
which are set forth in the options delivered hereunder.
3.5 (a) For purposes of this Agreement, the terms used herein shall have
the meaning accorded them below:
- Change in Control shall mean the occurrence of an event, other than the
completion of an offering of the Company's voting stock pursuant to a
registration statement under the Securities Act of 1933, as amended, pursuant to
which (a) the ownership of more than 50% of the Company's equity shares shall
have passed to a new owner, (b) the ownership of sufficient number of shares of
the Company's voting stock necessary to elect a majority of the board shall have
passed to a new owner, (c) a sale of all or substantially all of the assets of
the
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Company or (d) a merger of the Company such that its shares are exchanged for
cash or for property including the shares of another company.
(b) Notwithstanding the provisions of Section 3.4 hereof concerning
the timing of the Executive's rights to exercise options, the Executive's rights
to exercise the options granted hereunder shall be subject to a one-time
acceleration as provided below in the event of the occurrence of the first to
occur of the following contingencies;
(i) if the Company experiences a Change in Control during the
Term and on or after December 31, 2000, then the date upon which all options not
then exercisable shall become exercisable shall be accelerated by one (1) year;
(ii) if the stock of the Company is offered through an
initial public offering then, thereafter, if during the Term the market price of
the Company's common stock shall increase by fifty percent (50%) above the
initial offering price and stays at that level or above for 45 consecutive
business days, the date upon which all options not then exercisable shall become
exercisable shall be accelerated by one (1) year;
(iii) if during the Term the Executive dies or becomes
Disabled (as hereinafter defined), the date upon which all options not then
exercisable shall become exercisable shall be accelerated by one (1) year, and
Executive shall be deemed eligible to exercise the same notwithstanding the
termination of his employment.
3.6 Purchase Of Preferred Stock.
(a) Upon execution and delivery of this agreement, and as further
consideration for the Company's agreement to serve in the employ of the Company,
the
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Company shall sell to the Executive and the Executive shall purchase from the
Company 49,689 shares of the Company's Class E preferred stock (or such other
class of the Company's capital stock as is substantially comparable to Class E
preferred stock) at a purchase price of $16.10 per share.
(b) The Executive shall pay for such shares with the sum of $200,000
in cash and the balance, $599,992.90, in the form of a promissory note having
the following terms: principal on the note shall be payable in 12 equal
quarterly installments beginning on January 1, 2001; interest shall accrue on
the unpaid balance at the rate of 1 percent below the prime rate offered by
Fleet Bank to its most favored commercial customers; the note shall be secured
by a pledge of those preferred shares having a purchase price equal to the
amount of the note. The Company shall have full recourse against the Executive
if the collateral is insufficient.
3.7 Effect of Termination on the Bonuses. In the event of a termination of
this Agreement (i) by the Executive, or (ii) by the Company for cause (as
hereinafter defined), the Company shall not be obligated to pay to the Executive
any portion of the bonus payable for the year in which the termination occurs.
In the event of the termination of this Agreement prior to its expiration by the
Company under clauses (a), (b), or (h) of Section 4.1, the Company shall pay the
Executive or the Executive's representative, as appropriate, at the time when
such payment would have been due had Executive remained in Company's employment
a prorated portion (on a per diem basis) of the bonus for the calendar year
during which the termination took place.
3.8 Benefit Plans and Sick, Vacation/Paid Leave. The Executive shall be
entitled to participate in any pension, life and health insurance and other
similar benefit plan, program or policy plan that the Company provides to its
other Executives, whose responsibilities and duties
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are comparable to those of the Executive. The Executive shall be entitled to
sick, vacation or paid leave pursuant to the Company's generally applicable
employment policies.
3.9 Insurance. Company shall purchase and maintain for the Executive's
benefit, at all times during the agreement, Director's and Officer's liability
Insurance which coverage shall provide protection against claims made against
Executive for errors, omissions and wrongful acts allegedly committed in the
course of his service hereunder.
4. Termination.
4.1 Events of Termination. The Company may terminate this Agreement at any
time prior to the expiration of the Term upon the occurrence of any of the
following events:
(a) the death of the Executive;
(b) the Disability (as hereinafter defined) of the Executive;
(c) the indictment of the Executive of any felony (other than one
arising out of motor vehicle accidents or violations);
(d) gross negligence or willful misconduct of the Executive in
connection with the performance of his duties hereunder (including, without
limitation, willful failure to follow a directive of the Company's Board of
Directors after receipt of ten (10) days' notice);
(e) a material breach of the Executive's covenants, set forth in
Sections 5 and 6, infra;
(f) any theft or serious misappropriation by the Executive of the
funds or property of the Company;
(g) chronic alcoholism or substance abuse; or
(h) without cause, upon sixty (60) days' written notice
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provided, that termination of this Agreement under clauses (b) through (g) shall
be made upon notice to the Executive by the Company. Termination of this
Agreement under clauses (c) through (g) shall be deemed to be termination "for
cause". The term Disability shall mean, with respect to the Executive, that the
Company determines that due to physical or mental infirmity, whether total or
partial, and regardless of any reasonable accommodation to which Executive is
entitled under federal or state law, the Executive has been substantially unable
to perform his services hereunder for (i) a period of 180 consecutive days, or
(ii) for shorter periods aggregating 180 days during any continuous period of
360 days; provided, however, that any physical or mental infirmity resulting
from alcohol or drug abuse shall not be considered a "Disability" hereunder.
4.2 Effect of Termination. If the Company terminates this Agreement
pursuant to Section 4.1 hereof, this Agreement shall become null and void and
have no further force or effect, except that the undertakings set forth in
Sections 3.5, 6 and 7.1 shall survive any such termination of this Agreement. If
this Agreement is terminated by the Company other than for cause, or, if the
employment of Executive shall not be continued pursuant to a written agreement
mutually satisfactory to the parties, effective January 1, 2003, the Executive
shall continue to be paid his then current base salary pursuant to Section 3.1
for a period equal to twelve (12) months from the effective date of termination
of his employment.
4.3 Remedies. The Executive acknowledges that in the event of a
Termination hereunder or a breach by the Executive of any provision hereof, any
reduction in the amount of bonuses payable pursuant to Section 3.3 hereof shall
in no way be construed as a limitation upon, or in any way prejudice, the
Company's right to seek damages or any other remedy under law or in equity.
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5. Certain Covenants of the Executive.
5.1 Covenants. The Executive acknowledges that (i) the Company is engaged
and in the future will be engaged in the business of compiling, developing,
operating, marketing, offering for sale and distributing software, data, and
other financial information and consulting products, and services; (ii) his
services to the Company have been and will continue to be special and unique;
(iii) his work for the Company allows him access to trade secrets of and
confidential information concerning the Company; (iv) the business of the
Company is national in scope; (v) the Company would not have entered into this
Agreement but for the agreements and covenants contained in this Section 5; and
(vi) the agreements and covenants contained in this Section 5 are essential to
protect the business and goodwill of the Company. In order to induce the Company
to enter into this Agreement, the Executive covenants and agrees that:
(a) Non-Compete. During the Restricted Period (as hereinafter
defined), the Executive shall not in the United States of America directly or
indirectly, (i) engage in any business that directly competes with the Covered
Businesses (as hereinafter defined) for his own account; (ii) except for
employment by the Company or an affiliate of the Company, enter the employ of
any person engaged in any business that directly competes with the Covered
Businesses or render any services to any person for use in competing with the
Covered Businesses; (iii) engage in any business or enterprise that competes
with the Covered Businesses, directly or indirectly, in any capacity, including,
without limitation, as an individual, partner, shareholder, officer, director,
principal, agent, Executive, trustee or consultant or any other relationship or
capacity; provided, however, the Executive may own, directly or indirectly, not
more than 1% of the outstanding stock of a publicly-held company which is
competitive with the Covered Businesses.
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The term "Restricted Period" shall mean the period ending one year
following the expiration or earlier termination of this Agreement, with or
without cause; provided, however, in the event that Executive terminates his
employment on account of a material breach of this Agreement by the Company,
which is not corrected as set forth above, there shall be no Restricted Period
whatsoever.
5.1.2 Non-Solicitation. During his employment and for one year
thereafter, the Executive shall not, directly or indirectly, alone or in
association with others, (i) solicit or encourage any Executive to leave
the employment of the Company or any of its affiliates or (ii) solicit for
employment, hire or engage as an independent contractor, or permit any
organization directly or indirectly controlled by the Executive to solicit
for employment, hire or engage as an independent contractor, any person
who was employed by the Company at any time during the Term.
5.1.3 Consequence of Termination. Upon termination of the
Executive's employment with the Company, all documents, records,
notebooks, software and other repositories containing trade secrets or
intellectual property then in the Executive's possession or within its
control, including copies thereof, whether prepared by the Executive or
others, will be promptly returned to or left with the Company.
5.2 Rights and Remedies Upon Breach. If the Executive breaches, or
threatens to commit a breach of, any of the provisions of Section 5.1 (the
"Restrictive Covenants"), the Company shall have the right and remedy to have
the Restrictive Covenants specifically enforced by any court having equity
jurisdiction, it being acknowledged and agreed that any such breach or
threatened breach will cause irreparable injury to the Company and that money
damages will not provide an adequate remedy to the Company. Such rights and
remedies shall
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be in addition to, and not in lieu of, any other rights and remedies available
to the Company under law or in equity.
5.3 Severability of Covenants. The Executive agrees that the Restrictive
Covenants are temporal scope and in all other acknowledges and reasonable in
geographical and respects. If any court determines that any of the Restrictive
Covenants or any part thereof, is invalid or unenforceable, the remainder of the
Restrictive Covenants shall not thereby be affected and shall be given full
effect, without regard to the invalid portions.
5.4 Blue-Penciling. If any court determines that any of the Restrictive
Covenants, or any part thereof, is unenforceable because of the duration or
geographic scope of such provision, such court shall have the power to reduce
the duration or scope of such provision, as the case may be, and, in its reduced
form, such provision shall then be enforceable and shall be enforced.
6. Proprietary Information and Developments.
6.1 Proprietary Information.
(a) The Executive agrees that all information, whether or not in
writing, of a private, secret or confidential nature concerning the Company's
business, business relationships or financial affairs (collectively,
"Proprietary Information") is and shall be the exclusive property of the
Company. By way of illustration, but not limitation, Proprietary Information may
include inventions, products, processes, methods, techniques, formulas,
compositions, compounds, projects, developments, plans, research data, clinical
data, financial data, personnel data, computer programs, and customer and
supplier lists, and contacts at or knowledge of customers or prospective
customers of the Company. The Executive will not disclose any Proprietary
Information to any person or entity other than Executives of the Company or use
the same for any purposes (other than in the performance of his or her duties as
an Executive of the Company)
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without written approval by an officer of the Company, either during or after
his employment with the Company, unless and until such Proprietary Information
has become public knowledge without fault by the Executive.
(b) The Executive agrees that all files, letters, memoranda,
reports, records, data, sketches, drawings, laboratory notebooks, program
listings, or other written, photographic, or other tangible material containing
Proprietary Information, whether created by the Executive or others, which shall
come into his custody or possession, shall be and are the exclusive property of
the Company to be used by the Executive only in the performance of his duties
for the Company. All such materials or copies thereof and all tangible property
of the Company in the custody or possession of the Executive shall be delivered
to the Company, upon the earlier of (i) a request by the Company or (ii)
termination of his or her employment. After such delivery, the Executive shall
not retain any such materials or copies thereof or any such tangible property.
(c) The Executive agrees that his or her obligation not to disclose
or use information and materials of the types set forth in paragraphs (a) and
(b) above, and his or her obligation to return materials and tangible property,
set forth in paragraph (b) above, also extends to such types of information,
materials and tangible property of customers of the Company or suppliers to the
Company or other third parties who may have disclosed or entrusted the same to
the Company or to the Executive.
6.2 Developments.
(a) The Executive will make full and prompt disclosure to the
Company of all inventions, improvements, discoveries, methods, developments,
software, and works of authorship, whether patentable or not, which are created,
made, conceived or reduced to practice by him or her or under his or her
direction or jointly with others during his or her employment by
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the Company, whether or not during normal working hours or on the premises of
the Company (all of which are collectively referred to in this Agreement as
"Developments").
(b) The Executive agrees to assign and does hereby assign to the
Company (or any person or entity designated by the Company) all his or her
right, title and interest in and to all Developments and all related patents,
patent applications, copyrights and copyright applications. However, this
paragraph (b) shall not apply to Developments which do not relate to the present
or planned business or research and development of the Company and which are
made and conceived by the Executive not during normal working hours, not on the
Company's premises and not using the Company's tools, devices, equipment or
Proprietary Information. The Executive understands that, to the extent of this
Agreement shall be construed in accordance with the laws of any state which
precludes a requirement in an Executive agreement to assign certain classes of
inventions made by an Executive, this paragraph (b) shall be interpreted not to
apply to any invention which a court rules and/or the Company agrees falls
within such classes. The Executive also hereby waives all claims to moral rights
in any Developments.
(c) The Executive agrees to cooperate fully with the Company, both
during and after his or her employment with the Company, with respect to the
procurement, maintenance and enforcement of copyrights, patents and other
intellectual property rights (both in the United States and foreign countries)
relating to Developments. The Executive shall sign all papers, including,
without limitation, copyright applications, patent applications, declarations,
oaths, formal assignments, assignment of priority rights, and powers of
attorney, which the Company may deem necessary or desirable in order to protect
its rights and interests in any Development. The Executive further agrees that
if the Company is unable, after reasonable effort, to secure the signature of
the Executive on any such papers, any executive officer of the
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Company shall be entitled to execute any such papers as the agent and the
attorney-in-fact of the Executive, and the Executive hereby irrevocably
designates and appoints each executive officer of the Company as his or her
agent and attorney-in-fact to execute any such papers on his or her behalf, and
to take any and all actions as the Company may deem necessary or desirable in
order to protect its rights and interests in any Development, under the
conditions described in this sentence.
6.3 United States Government Obligations. The Executive acknowledges that
the Company from time to time may have agreements with other parties or with the
United States Government, or agencies thereof, which impose obligations or
restrictions on the Company regarding inventions made during the course of work
under such agreements or regarding the confidential nature of such work. The
Executive agrees to be bound by all such obligations and restrictions which are
made known to the Executive and to take all appropriate action necessary to
discharge the obligations of the Company under such agreements.
6.4 Equitable Remedies. The restrictions contained in this Section 6 are
necessary for the protection of the business and goodwill of the Company and are
considered by the Executive to be reasonable for such purpose. The Executive
agrees that any breach of this Section 6 is likely to cause the Company
substantial and irrevocable damage which is difficult to measure. Therefore, in
the event of any such breach, the Executive agrees that the Company, in addition
to such other remedies which may be available, shall have the right to obtain an
injunction from a court restraining such a breach or threatened breach and the
right to specific performance of the provisions of this Section 6.
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7. Other Provisions.
7.1 Consent to Jurisdiction and Service of Process. Any legal action, suit
or proceeding in equity or law arising out of or relating to this Agreement, and
the transactions contemplated hereby shall be instituted in the Superior Court
in Suffolk or Middlesex Counties, and each party agrees not to assert, by way of
motion, as a defense, or otherwise, in any such action, suit or proceeding, any
claim that such party is not subject personally to the jurisdiction of such
court, that the action, suit or proceeding is brought in an inconvenient forum,
that the venue of the action, suit or proceeding is improper, or that this
Agreement or that the subject matter hereof may not be enforced in or by such
court. Each party further irrevocably submits to the jurisdiction of any such
court in any such action, suit or proceeding. Any and all service of process and
any other notice in any such action, suit or proceeding shall be effective
against any party if personally delivered or if received by such party by
registered or certified mail, return receipt requested, or by any other means of
mail which requires a signed receipt, postage prepaid, mailed to such party as
herein provided. Nothing herein contained shall be deemed to affect the right of
any party to serve process in any manner permitted by law or to commence legal
proceedings or otherwise proceed against any other party in any jurisdiction
other than Massachusetts.
7.2 Notices. Any notice or other communication given hereunder shall be in
writing and shall be delivered personally, sent by facsimile transmission or
overnight courier, or sent by certified, registered or express mail, postage
prepaid, and shall be deemed given when so delivered personally or sent by
facsimile transmission or overnight courier, or, if mailed, four days after the
date of mailing, as follows:
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(i) if to the Company, to:
XXXX.XXX, Inc.
000 Xxxxxxxx Xx.
Xxxxxx, XX 00000
with a copy to:
Xxxx and Xxxx LLP
00 Xxxxx Xx.
Xxxxxx, XX 00000
Attn: Xxxxx X. Xxxx, Esq.
(ii) if to the Executive to:
Xxxxxx X. Xxxxxxxx
c/o XXXX.XXX, Inc.
000 Xxxxxxxx Xx.
Xxxxxx, XX 00000
Any party may by notice given in accordance with this Section to the other
party designate another address for receipt of notices hereunder.
7.3 Entire Agreement. This Agreement contains the entire agreement between
the parties with respect to the subject matter hereof and supersedes all prior
agreements, oral, with respect thereto.
7.4 Waivers and Amendments. This Agreement may be amended, modified,
superseded, canceled, renewed or extended, and the terms and conditions hereof
may be waived, only by a written instrument signed by the parties or, in the
case of a waiver, by the party waiving compliance. No delay on the part of
either party in exercising any right, power or privilege hereunder shall operate
as a waiver thereof, nor shall any waiver on the part of either party of any
right, power or privilege hereunder, preclude any other or further exercise
thereof or the exercise of any other right, power or privilege hereunder.
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7.5 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts.
7.6 Assignment. This Agreement, and the Executive's rights and obligations
hereunder, may not be assigned by the Executive. The Company may, without the
Executive's consent, assign its rights, together with its obligations, under
this Agreement in connection with any assignment, sale, transfer or other
disposition of all or substantially all of the assets or business of the
Division, whether by merger, consolidation or otherwise.
7.7 Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original but all of which together shall constitute one
and the same instrument.
7.8 Headings. The headings in this Agreement are for reference purposes
only and shall not in any way affect the meaning or interpretation of this
Agreement.
THE EXECUTIVE ACKNOWLEDGES THAT HE HAS CAREFULLY READ THIS AGREEMENT AND
UNDERSTANDS AND AGREES TO ALL OF THE PROVISIONS IN THIS AGREEMENT.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date
first above written.
XXXX.XXX, Inc.
By: /s/ Xxxxxxx Xxxxxx
-----------------------------------------
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Title: President and Chief Executive Officer,
By: /s/ Xxxxxx Xxxxxxxx
-----------------------------------------
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Xxxxxx Xxxxxxxx
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