EXHIBIT 10.20
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is entered into effective as of June 1, 2005,
between Xxxx Xxxxx ("Executive") and XXXXXXXX'X, INC., a Tennessee corporation
with principal offices in Jackson, Tennessee (the "Company").
RECITAL
Executive and the Company desire to memorialize the terms of Executive's
employment with the Company as Chief Executive Officer and President of the
Company. The Company operates a chain of retail stores (the "Stores"). The
parties have agreed concerning the terms of Executive's employment.
NOW, THEREFORE, in consideration of the premises and the parties' mutual
covenants, it is agreed:
1. Employment; Scope of Duties. The Company hereby employs Executive, and
Executive accepts employment as Chief Executive Officer and President. Executive
shall report to the Board of Directors of the Company, and shall perform those
duties as from time to time assigned by the Board of Directors of the Company.
2. Term. The term of this Agreement shall commence on June 1, 2005 and
continue until terminated as provided herein.
3. Compensation and Benefits.
(a) Salary and Annual Bonus. As base compensation for the services
rendered hereunder to the Company, Executive shall be paid an annual base
salary of $375,000, payable in accordance with the Company's standard
payroll practices as in effect from time to time. The Board's Compensation
Committee will review the base salary amount annually. In addition,
beginning in fiscal 2005, Executive's target annual bonus opportunity will
be $375,000, with $250,000 of that first year's bonus guaranteed. The
bonus criteria, and the actual amount of any annual bonus (other than the
first year's guaranteed amount), shall be determined by the Board of
Directors Compensation Committee. The Board's Compensation Committee will
review the bonus annually in accordance with the Company's Management
Bonus Plan, as in effect from time to time.
(b) Stock Options. Effective upon the commencement of employment, the
Company will grant Executive an incentive stock option for the purchase of
200,000 shares of Kirkland's common stock, with the option price set as
the closing price for the stock on the date of the award. The option will
vest over four years based on Executive's continued employment by the
Company over that period. The remaining terms of this option will be
determined by the Company's Board and set forth in a separate stock option
agreement.
In addition, provided Executive is still employed in good standing with
the Company, the Company will, during 2006, grant Executive an additional
incentive stock option for the purchase of 100,000 shares of Kirkland's
common stock, with the stock price set as the closing price of the stock
on the date of the award. The vesting schedule for this option will be the
same as for the first option, and the remaining terms of this second
option will be determined by the Company's Board and set forth in a
separate stock option agreement.
(c) Health/Life Insurance. Subject to the terms of the Company's group
health insurance plans and policies from time to time in effect, Executive
and his dependents are eligible for group health coverage, having such
benefits as from time to time provided by the Company in its absolute
discretion, together with the maximum life insurance coverage available
for senior executives of the Company under such policies (up to such limit
as from time to time set by the Company in the Company's absolute
discretion). Executive understands and agrees that it is Executive's
responsibility to promptly fill out and submit any insurance
application(s) necessary for such coverage and that the Company has no
control over any requirement by the insurer for medical "underwriting".
The Company shall have no liability resulting from denial of coverage by
the insurer or for the denial of one or more claims thereunder. Executive
is solely responsible to make valid claims for benefits thereunder in
order to generate benefits due and owing. Employee shall also be eligible
to participate in the Company's voluntary life insurance program.
(d) Company Car or Allowance. Executive shall receive a $600 per month car
allowance.
(e) Vacation and Other Benefits. Executive shall have such other benefits
as from time to time provided by the Company in the Company's absolute
discretion, including but not limited to paid vacation, and the right to
participate in the Company's 401(k) plan, deferred compensation plan, and
Employee Stock Purchase Plan, all on the terms applicable to such
benefits. Executive is entitled to four (4) weeks of paid vacation in
2005, and four (4) weeks of paid vacation each year thereafter. Accrued
but unused vacation may not be carried over to a subsequent calendar year
and will not be payable upon any termination of employment. After three
years of service, Executive will be entitled to six (6) weeks of paid
vacation each year.
4. Expense Reimbursement.
(a) Relocation Expenses. The Company agrees to reimburse Executive for
reasonable moving expenses arising out of Executive's relocation to
Jackson, Tennessee, as approved in advance by the Company. Upon
Executive's purchase of a home in Jackson, Tennessee, the Company will
reimburse Executive's closing costs (excluding any "points" charged on a
mortgage), up to $5,000. The Company will also reimburse Executive for
reasonable temporary living expenses for hotel, necessary travel, and
meals for a reasonable period until Executive purchases a home in the
Jackson, Tennessee vicinity.
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(b) Standard Business Expenses. Executive shall be reimbursed for those
reasonable expenses (as determined by the Company in accordance with then
existing policies) necessarily incurred by Executive in the performance of
the duties herein as are specifically approved by the Company and as
verified by vouchers, receipts, or other evidence of expenditure and
business necessity as from time to time required by the Company.
5. Other Employment; Conduct. Executive agrees to devote all working time
and efforts to performing the duties required hereunder so as to maximize the
sales volume and profitable operation of the Stores. Executive shall not engage
in other employment or become involved in other business ventures requiring
Executive's time, absent the prior written consent of the Board of Directors of
the Company. Executive shall at all times conduct such duties and his personal
affairs in a manner that is satisfactory to the Company and so as to not in any
manner injure the reputation of or unfavorably reflect upon the Kirkland's
organization or any Store or element thereof or any member thereof or third
persons or entities connected therewith.
6. Confidentiality. Executive understands and agrees that information
developed by or disclosed to Executive in the performance of his duties
hereunder (including, without limitation, information relating to vendor
relations, inventory procurement and management, inventory distribution,
marketing and sales, and store operations) and any other business or technical
information or trade secret of the Company or the Stores (collectively, the
"Information") is proprietary and confidential and represents a valuable,
special and unique asset of the Company and the Stores, the disclosure of which
would cause continuing and irreparable injury to the Company and the Stores.
Accordingly, Executive agrees not to divulge in any manner, at any time, for any
purpose other than the exercise of his duties hereunder in the best interest of
the Company and the Stores, any of the Information.
7. Restrictive Non-Competition Covenant. Executive agrees that during his
employment by the Company and for the Restriction Period, Executive will not,
directly or indirectly, own, manage, operate, control, be employed by,
participate in, lend money, advise or furnish services or information of any
kind (including consulting services) to, be compensated in any manner by, or be
connected in any way with the management, ownership, operation or control of any
business similar to the type of retail business conducted by the Company or as
operated by the Stores during the term of this Agreement, at the time of
termination of this Agreement, or during the Restriction Period. Executive
understands and acknowledges that the type of retail business conducted by the
Company is national in scope, and that similar businesses include national or
regional chain retail operations (including "big box" operators, discounters,
and "specialty stores" operating in malls, strip centers, and freestanding
locations) specializing in or having a substantial inventory mix involving gifts
and home decor, including but not limited to decorative accessories, home
furnishings, and related items.
As used herein, the term "Restriction Period" means a period of three years
after the end of the term of this Agreement, but the Restriction Period shall be
extended for the period, if any, that Executive is in default under the
restrictions in this Agreement.
During the term hereof and for the Restriction Period, Executive agrees to (a)
notify any prospective employer of the existence of this restrictive
non-competition covenant, and (b) notify
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the Company of Executive's commencement of employment with any other employer,
along with the identity of such new employer.
8. Covenant Not to Hire Company Employees. During his employment by the
Company and for the Restriction Period, Executive agrees not to enter into or
engage in any discussion or negotiation, or assist in such actions to encourage
or cause present employees of the Company to disassociate their employment
relationship with the Company and induce such present employees to go into the
employment of any other entity. This restriction shall not apply to any
personnel that Executive hires from Garden Ridge during his employment with the
Company.
9. Termination.
(a) Definitions. As used herein, the term "Average Compensation" means an
amount equal to Executive's average annual cash compensation received with
respect to the three immediately preceding years of employment with the
Company (or such lesser time period as Executive has been employed with
the Company), paid over a period of one year in substantially equal
installments on a biweekly basis.
As used herein, the term "Cause" means the occurrence of any of the
following, as determined in good faith by the Board of Directors of the
Company: (i) the death of Executive; (ii) any physical or mental condition
reasonably expected to or which does prevent the Executive from performing
any essential element of his job for more than 90 days; (iii) alcohol
abuse or use of controlled drugs (other than in accordance with a
physician's prescription); (iv) illegal conduct or gross misconduct of
Executive which is materially and demonstrably injurious to the Company,
its affiliates or subsidiaries including, without limitation, fraud,
embezzlement, theft or proven dishonesty in the course of his employment;
(v) conviction of a misdemeanor involving moral turpitude or a felony;
(vi) the entry of a guilty or nolo contendere plea to a misdemeanor
involving moral turpitude or a felony, (vii) material breach of any
agreement with, or duty owed to, the Company or Stores, or (viii)
Executive's failure, refusal or inability to perform, in any material
respect, his duties to the Company or Stores, which failure continues for
more than fifteen (15) days after written notice thereof from the Company.
As used herein, the term "Good Reason" means the occurrence of any of the
following: (i) the assignment to Executive of any duties inconsistent with
Executive's position, authority, duties or responsibilities, or any other
action by the Company which results in a material diminution in such
position, authority, duties or responsibilities (excluding any isolated
action not taken in bad faith); (ii) a reduction by the Company in
Executive's annual salary, provided that if the salaries of substantially
all of the Company's senior executive officers (including the Company's
President and CEO) are contemporaneously and proportionately reduced, a
reduction in the Executive's salary will not constitute "Good Reason"
hereunder; (iii) the failure by the Company, without Executive's consent,
to pay to him any portion of his current compensation, except pursuant to
a compensation deferral elected by Executive, other than an isolated and
inadvertent failure which is remedied by the Company promptly after
receipt thereof given by Executive; (iv) the relocation of the Company's
principal executive offices to a location more than 35 miles
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from the location of such offices on the Effective Date, or the Company's
requiring the Executive to be based anywhere other than the Company's
principal executive offices, except for required travel on the Company's
business; or (v) the failure of the Company to obtain a satisfactory
agreement from any successor to assume and agree to perform this
Agreement; provided, however, that the foregoing events or conditions will
constitute "Good Reason" hereunder only if the Executive provides the
Company with written objection to the event or condition within 60 days
following the occurrence thereof, the Company does not reverse or
otherwise cure the event or condition within 30 days of receiving that
written objection and the Executive resigns his employment within 90 days
following the expiration of that cure period.
As used herein, the term "Health Insurance Benefit" means, a one-year
waiver of the portion of the applicable premium otherwise payable for
COBRA coverage equal to the amount the Company had contributed toward the
cost of group health insurance for the Executive and his eligible
dependents immediately prior to his termination.
(b) Termination Rights. The Company may terminate Executive's employment
hereunder at any time for Cause (as defined below), and either the Company
or Executive may terminate Executive's employment hereunder at any time
without Cause. Upon termination, Executive shall be entitled only to such
compensation and benefits described in this Section 9. The Company will,
in any event, have such rights and remedies as may be available to it
under this Agreement, at law, in equity (to include injunctive relief) or
otherwise, for any breach by the Executive of any material provision of
this Agreement. The provisions of this Section 9 shall survive the
termination of Executive's employment hereunder.
(c) Termination For Cause; Resignation Without Good Reason. If the
Executive's employment with the Company ceases for any reason other than
those described below in Section 9(d) (including, without limitation,
termination by the Company for Cause or resignation by the Executive
without Good Reason), the Company's obligation to the Executive will be
limited solely to the payment of accrued and unpaid annual salary and
benefits through the date of such termination. All salary and benefits
will cease at the time of such termination, subject to the terms of any
benefits or compensation plans then in force and applicable to Executive,
and the Company shall have no further liability or obligation by reason of
such termination.
(d) Company Terminates Executive Without Cause or Executive Resigns With
Good Reason. If the Company terminates the Executive's employment without
Cause or if the Executive resigns with Good Reason, the Company will pay
Executive the Average Compensation and provide him the Health Insurance
Benefit. The severance benefits described in this paragraph will be paid
in lieu of, and not in addition to, any other severance arrangement
maintained by the Company. Notwithstanding the foregoing, no amount will
be paid or benefit provided under this paragraph unless Executive executes
and delivers to the Company a release substantially identical to that
attached hereto as Exhibit I in a manner consistent with the requirements
of the Older Workers Benefit Protection Act.
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10. Injunctive Relief. Executive understands and agrees that any breach by
him of Sections 6, 7 or 8 of this Agreement will cause continuing and
irreparable injury to the Company for which monetary damages would not be an
adequate remedy. Executive shall not, in any action or proceeding to enforce any
of the provisions of this Agreement, assert the claim or defense that such an
adequate remedy at law exists. In the event of such breach by Executive, the
Company shall have the right to enforce such sections by seeking injunctive or
other relief in any court and this Agreement shall not in any way limit remedies
of law or in equity otherwise available to the Company.
11. Acknowledgements. Executive acknowledges that Sections 6, 7 and 8 of
this Agreement are reasonable and necessary to protect the legitimate interests
of the Company and its affiliates and that the duration and geographic scope of
those provisions are reasonable given the nature of this Agreement and the
position Executive will hold within the Company. Executive further acknowledges
that Sections 6, 7 and 8 of this Agreement are included herein in order to
induce the Company to employ him and to enter into this Agreement and that the
Company would not have entered into this Agreement or otherwise employed
Executive in the absence of those provisions. Executive further acknowledges and
agrees that Sections 6, 7 and 8 of this Agreement will survive the termination
of this Agreement or his employment hereunder and will apply without regard to
whether any termination of his employment is initiated by the Company or the
Executive, and without regard to the reason for that termination.
12. Waiver of Breach. Any waiver by the Company of a breach of any
provision hereof shall not operate as or constitute a waiver of any of the terms
hereof with regard to any subsequent breach.
13. Assignment. Neither this Agreement nor any rights or obligations
hereunder may be assigned except by the Company to a business entity which is a
successor to the Company by merger, stock exchange, consolidation, or other
reorganization, or to an entity which results from a purchase or sale or other
transfer or transaction involving third parties, or except to an entity owned or
controlled by the principals of the Company. This Agreement (and all rights and
benefits hereunder) is for Executive's personal services and is, therefore, not
assignable by Executive.
14. Entire Agreement; Modification. This Agreement is the entire agreement
of the parties with regard to Executive's employment and all other agreements
and understandings, whether written or oral, if prior hereto, are merged herein
so that the provisions of any prior agreement(s) are void and of no further
force and effect. This Agreement may not be modified except by a writing signed
by both parties.
15. Applicable Law; Venue. This Agreement shall be construed in accordance
with the laws of the State of Tennessee, without regard to the principles of
conflicts of law, even if Employee executed this Agreement outside Tennessee or
Madison County, Tennessee, and even if some or all of Executive's services are
to be rendered outside Tennessee. All legal disputes between the parties shall
have a venue in the courts of Madison County, Tennessee.
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16. Notices. All notices required or permitted under this Agreement shall
be in writing and effective upon mailing, postage prepaid, by certified mail,
return receipt requested, to the addresses indicated herein, or as from time to
time modified by notice:
EXECUTIVE:
Xxxx Xxxxx
00 Xxxxx Xxxxxx Xxxx
Xxxxxxx, XX 00000
COMPANY:
Xxxxxxxx'x, Inc.
000 Xxxxx Xxxxxxx
Xxxxxxx, XX 00000
ATTN: General Counsel
17. Provisions Severable. Any provision hereof adjudged void or voidable
by a court of competent jurisdiction shall be deemed severable such that the
remaining provisions are in full force and effect. To the extent that any
provision hereof is adjudged to be overly broad, then such provision shall be
deemed automatically replaced by a similar provision as near to the original
provision as possible but still enforceable.
18. Parties Bound. This Agreement shall bind the parties' respective
heirs, legal representatives, successors and permitted assigns.
19. Other Agreements. Executive represents and warrants to the Company
that there are no restrictions, agreements or understandings whatsoever to which
he is party (or by which he is otherwise bound) that would prevent or make
unlawful his execution of this Agreement or employment by the Company, or that
would in any way prohibit, limit or impair (or purport to prohibit, limit or
impair) his provision of services to the Company.
19. Effective Date. The Effective Date hereof for all purposes shall be
June 1, 2005.
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IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
by its duly authorized officer, and Executive has executed this Agreement, on
May 16, 2005, effective as of the date first above written.
EXECUTIVE: COMPANY:
XXXXXXXX'X, INC.
/s/ Xxxx X. Xxxxx /s/ Xxxxxx X. Xxxxxxxx
----------------- ------------------------------------
Xxxx Xxxxx Xxxxxx X. Xxxxxxxx
Chairman of the Board, President and
Chief Executive Officer
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Exhibit I
RELEASE AND NON-DISPARAGEMENT AGREEMENT
THIS MUTUAL RELEASE AND NON-DISPARAGEMENT AGREEMENT (the "Release") is
made as of the 13th day of May 2005 by and between XXXX XXXXX ("Executive") and
XXXXXXXX'X, INC. (the "Company").
WHEREAS, Executive's employment by the Company will terminate; and
WHEREAS, in connection with that termination and pursuant to Section 9(d)
of the Employment Agreement by and between the Company and Executive dated as of
June 1, 2005 (the "Employment Agreement"), the Company has agreed to pay
Executive certain amounts, subject to the execution of this Agreement.
NOW THEREFORE, in consideration of these premises and the mutual promises
contained herein, and intending to be legally bound hereby, the parties agree as
follows:
SECTION 1. Resignation. Executive hereby resigns as an officer and employee of
the Company, and as an officer, employee director or board committee member of
any subsidiary or affiliate of the Company, effective as of the date of this
Release.
SECTION 2. Acknowledgements. Executive acknowledges that: (a) the payments
described in Section 9 of the Employment Agreement constitute full settlement of
all his rights under the Employment Agreement, (b) he has no entitlement under
any other severance or similar arrangement maintained by the Company, and (c)
except as otherwise provided specifically in this Release, the Company does not
and will not have any other liability or obligation to him. Executive further
acknowledges that, in the absence of his execution of this Release, he would not
otherwise be entitled to the payments described in Section 9 of the Employment
Agreement.
SECTION 3. Release and Covenant Not to Xxx.
(a) Release. Executive hereby fully and forever releases and discharges
Company (including, for purposes of this Section 3, all predecessors and
successors, subsidiaries, affiliates, assigns, officers, directors, trustees,
employees, agents and attorneys, past and present) from any and all claims,
demands, liens, agreements, contracts, covenants, actions, suits, causes of
action, obligations, controversies, debts, costs, expenses, damages, judgments,
orders and liabilities, of whatever kind or nature, direct or indirect, in law,
equity or otherwise, whether known or unknown, arising out of Executive's
employment by the Company or the termination thereof, including, but not limited
to, any claims for relief or causes of action under the Age Discrimination in
Employment Act, 29 U.S.C. Section 621 et seq., or any other federal, state or
local statute, ordinance or regulation regarding discrimination in employment
and any claims, demands or actions based upon alleged wrongful or retaliatory
discharge or breach of contract under any state or federal law.
(b) Covenant Not to Xxx. Executive expressly represents that he has not
filed a lawsuit or initiated any other administrative proceeding against the
Company and that he has not assigned any claim against the Company to any other
person or entity. Executive further
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promises not to initiate a lawsuit or to bring any other claim against the
Company arising out of or in any way relating to Executive's employment by the
Company or the termination of that employment. This Release will not prevent
Executive from filing a charge with the Equal Employment Opportunity Commission
(or similar state agency) or participating in any investigation conducted by the
Equal Employment Opportunity Commission (or similar state agency); provided,
however, that any claims by Executive for personal relief in connection with
such a charge or investigation (such as reinstatement or monetary damages) will
be barred.
(c) Claims Not Released. The forgoing will not be deemed to release the
Company from claims solely (i) to enforce this Release, (ii) to enforce Section
9 of the Employment Agreement, or (iii) for indemnification under the Company's
By-Laws, under applicable law, under any indemnification agreement between the
Company and Executive or under any similar arrangement.
SECTION 4. Non-Competition and Confidentiality Obligations. Executive
acknowledges that Sections 6, 7 and 8 of the Employment Agreement survive the
termination of his employment. Executive affirms that the restrictions contained
in Section 6, 7 and 8 of the Employment Agreement are reasonable and necessary
to protect the legitimate interests of the Company, that he received adequate
consideration in exchange for agreeing to those restrictions, and that he will
abide by those restrictions.
SECTION 5. Non-Disparagement. Executive will not disparage Company or any of its
directors, officers, agents, employees or affiliates or otherwise take any
action which could reasonably be expected to adversely affect the personal or
professional reputation of Company or any of its directors, officers, agents,
employees or affiliates.
SECTION 6. Cooperation. Executive further agrees that he will cooperate fully
with the Company and its counsel with respect to any matter (including
litigation, investigations, or governmental proceedings) that relates to matters
with which Executive was involved during his employment with Company. Executive
shall render such cooperation in a timely manner on reasonable notice from the
Company. The Company will (a) reimburse reasonable expenses incurred by
Executive in the course of fulfilling his obligations under this paragraph and
(b) will exercise commercial reasonable efforts to schedule the time for
Executive's cooperation so as to avoid interfering with the Executive's other
personal and professional obligations.
SECTION 7. Rescission Right. Executive expressly acknowledges and recites that
(a) he has read and understands this Release in its entirety, (b) he has entered
into this Release knowingly and voluntarily, without any duress or coercion; (c)
he has been advised orally and is hereby advised in writing to consult with an
attorney with respect to this Release before signing it; (d) he was provided
twenty-one (21) calendar days after receipt of the Release to consider its terms
before signing it; and (e) he is provided seven (7) calendar days from the date
of signing to terminate and revoke this Release in which case this Release shall
be unenforceable, null and void. Executive may revoke this Release during those
seven (7) days by providing written notice of revocation to the Company, care of
its general counsel, at the address and in the manner indicated in Section 16 of
the Employment Agreement.
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SECTION 8. Challenge. If Executive violates or challenges the enforceability of
this Release, no further benefits under Section 9 of the Employment Agreement
will be paid or provided to Executive.
SECTION 9. Miscellaneous.
(a) No Admission of Liability. This Release is not to be construed as an
admission of any violation of any federal, state or local statute, ordinance or
regulation or of any duty owed by the Company to Executive. There have been no
such violations, and the Company specifically denies any such violations.
(b) No Reinstatement. Executive agrees that he will not apply for
reinstatement with the Company or seek in any way to be reinstated, re-employed
or hired by the Company in the future.
(c) Successors and Assigns. This Release will inure to the benefit of and
be binding upon the Company and Executive and their respective successors,
executors, administrators, heirs and (in the case of the Company) permitted
assigns. The Company may assign this Release to any successor to all or
substantially all of its assets and business by means of liquidation,
dissolution, merger, consolidation, transfer of assets, or otherwise. Executive
may not make any assignment of this Release or any interest herein.
(d) Severability. The provisions of this Release are severable. If any
provision or the scope of any provision is found to be unenforceable or is
modified by a court of competent jurisdiction, the other provisions or the
affected provisions as so modified shall remain fully valid and enforceable.
(e) Entire Agreement; Amendments. Except as otherwise provided herein,
this Release contains the entire agreement and understanding of the parties
hereto relating to the subject matter hereof, and merges and supersedes all
prior and contemporaneous discussions, agreements and understandings of every
nature relating subject matter hereof. This Release may not be changed or
modified, except by a Release in writing signed by each of the parties hereto.
(f) Governing Law. This Release shall be governed by, and enforced in
accordance with, the laws of the State of Tennessee, without regard to the
application of the principles of conflicts of laws.
(g) Counterparts and Facsimiles. This Release may be executed, including
execution by facsimile signature, in one or more counterparts, each of which
shall be deemed an original, and all of which together shall be deemed to be one
and the same instrument.
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IN WITNESS WHEREOF, the Company has caused this Release to be executed by
its duly authorized officer, and Executive has executed this Release, in each
case as of the date first above written.
XXXXXXXX'X, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
------------------------------------
CHAIRMAN OF THE BOARD, PRESIDENT AND
CHIEF EXECUTIVE OFFICER
XXXX XXXXX
/s/ Xxxx X. Xxxxx
-----------------
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