XXXXXX X. XXXX
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is made as of the ___ day of
_________, 1997 between Sybra, Inc. (the "Company"), a Michigan corporation,
with offices at 0000 Xxxxxxxx Xxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxx 00000-0000 and
Xxxxxx X. Xxxx, an individual residing at 0000 Xxxxxxx Xxxx, Xxxx X-00, Xxxxxxx,
Xxxxxxx 00000 (the "Executive").
RECITALS
WHEREAS, I.C.H. Corporation ("ICH") is purchasing all of the
outstanding capital stock of the Company from Valcor, Inc. pursuant to the Stock
Purchase Agreement dated February 7, 1997 (the "Stock Purchase Agreement")
effective on the date of the closing of the transactions contemplated by the
Stock Purchase Agreement (the "Closing Date"); and
WHEREAS, the Executive has served as a key executive of the Company
and, through such service, has acquired special and unique knowledge, abilities
and expertise; and
WHEREAS, the Company desires to continue to employ the Executive as its
Chief Financial Officer after the Closing Date, and the Executive desires to be
employed by the Company, pursuant to the terms set forth herein.
W I T N E S S E T H:
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein, the parties hereto, each intending to be legally bound hereby,
agree as follows:
1. Employment. The Company hereby agrees to employ the Executive as
Chief Financial Officer of the Company, and the Executive accepts such
employment for the term of employment specified in Section 3 below (the
"Employment Term"). During the Employment Term, the Executive shall, subject to
the direction of the Chief Executive Officer, and the Board of Directors of the
Company render such services to the Company as are customarily rendered by the
Chief Financial Officer and perform such other duties befitting the office of
Chief Financial Officer of the Company.
2. Performance. The Executive agrees to devote his best efforts and
substantially all of his business time to the performance of his duties
hereunder during the Employment Term, except for: (a) time spent in managing his
personal, financial, and legal affairs and serving on corporate (subject to the
written consent of the Company which shall not be unreasonably withheld), civic
or charitable boards or committees, in each case only if and to the extent such
activities do not interfere with the performance of Executive's
responsibilities, and (b) periods of vacation to which he
is entitled. Executive's service on the corporate boards or committees set forth
in Exhibit A, attached hereto, is hereby deemed to be consented to by the
Company.
3. Employment Term. The Employment Term shall begin on the date of this
Agreement, ____________________ __, 1997 and continue until the second
anniversary of the date of this Agreement, ____________________ __, 1999 unless
terminated sooner pursuant to the provisions of this Agreement.
4. Compensation.
(a) Salary. During the Employment Term, the Company shall pay the
Executive an annual base salary of one hundred thousand dollars ($100,000),
payable in accordance with the normal payroll practices of the Company which
amount may be increased, but not decreased, as the Board of Directors of the
Company may determine.
(b) Bonus. Executive shall be entitled to an annual bonus in the
event certain performance targets are met. The bonus shall be determined based
on Actual EBITDA (as defined below) as a percentage of Target EBITDA (as defined
below). If Actual EBITDA is equal to one hundred percent (100%) of Target
EBITDA, Executive shall receive a bonus of seventeen thousand ($17,000) dollars.
If Actual EBITDA is 105% of Target EBITDA or greater, Executive shall be
entitled to receive a bonus equal to forty percent (40%) of the Executive's
annual base salary. If Actual EBITDA is more than one hundred percent (100%) but
less than one hundred and five percent (105%) of Target EBITDA, Executive shall
receive a bonus equal to an interpolated amount between $17,000 and forty
percent (40%) of his annual base salary.
"Target EBITDA" for the 1997 fiscal year shall be the amount set
forth on Exhibit B attached hereto. "Target EBITDA" for the 1998 fiscal year
shall be determined by the Board of Directors of ICH and agreed to by Executive
prior to the commencement of such fiscal year to be a reasonable target for
EBITDA performance of the Company for such fiscal year and shall be calculated
in a manner similar to the that used to calculate Target EBITDA for the 1997
fiscal year as set forth in Exhibit C attached hereto. "Actual EBITDA" shall be
calculated in the same manner as Target EBITDA except that the calculation shall
be made using actual dollars as determined by the Company's independent
certified public accounting firm for purposes of financial reporting, provided,
however, that in calculating Actual EBITDA, management fees and overhead
allocations paid or accrued with respect to ICH or its affiliates and
administrative overhead associated with individuals who were not employed by the
Company prior to its acquisition by ICH, but are now employed by the Company and
ICH, or sit on the Board of Directors of ICH shall be capped at $240,000. All of
the aforementioned calculations shall be determined in accordance with generally
accepted accounting principles, applied in a consistent manner with prior
periods.
(c) Bonus Calculation and Payment. The bonus shall be paid to the
Executive no later than ninety (90) days following the end of the period for
which the bonus is being paid.
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(d) Additional Benefits. In addition to the other compensation
payable to the Executive hereunder, during the Employment Term the Executive
shall be entitled to the following benefits: (i) participation in the ICH
Corporation 1997 Employee Stock Option Plan (the "Stock Option Plan") and other
benefit plans made generally available to executives of the Company with such
participation to be consistent with reasonable Company guidelines; (ii)
participation in any health insurance, disability insurance, group life
insurance or other welfare benefit program made generally available to all
executives of the Company; (iii) vacation and other benefits as applicable to
executives of the Company and in accordance with Company policies; and (iv)
reimbursement for reasonable business expenses incurred by the Executive in
furtherance of the interests of the Company.
In the event that ICH adopts an employee benefit plan in which the
Executive is eligible to participate, the Executive shall receive credit for any
service performed for the Company prior to its acquisition by ICH as if such
service were performed for ICH for vesting and eligibility purposes only. This
paragraph shall not be construed to confer any right upon the Executive to
participate in any of ICH's employee benefit plans.
(e) Withholding. The Company shall deduct from all compensation paid
to the Executive under this Agreement, any Federal, state or city withholding
taxes, social security contributions and any other amounts which may be required
to be deducted or withheld by the Company pursuant to any Federal, state or city
laws, rules or regulations.
5. Option Grant. Upon execution of this Agreement, or as soon as
administratively possible thereafter, Executive shall receive options (the
"Options") issued pursuant to the Stock Option Plan to purchase shares of common
stock of ICH, par value $0.01 ("Common Stock") in an amount equal to one and one
quarter percent (1.25%) of the Common Stock which is then outstanding on the
Closing Date at an exercise price equal to its "Fair Market Value" (as defined
in the Stock Option Plan) as of the Closing Date which shall be the date of
grant of the Options. The Options are granted pursuant to the terms and
conditions of the Stock Option Plan and shall expire ten (10) years from the
date of the grant. Subject to Section 9 below, the Options shall vest and become
immediately exercisable during the Employment Term as follows: one-fourth on the
first anniversary of the date of this Agreement, one-fourth on the second
anniversary of the date of this Agreement, one-fourth on the third anniversary
of the date of this Agreement and one-fourth on the fourth anniversary of the
date of this Agreement; provided, however, that in the event of a Change in
Control, as defined below, of the then outstanding Options which have not vested
prior to the date of the Change in Control, an amount of such Options equal to
one-half (1/2) of the original amount of Options granted less the amount of
Options vested prior to the date of the Change in Control shall upon the date of
the Change in Control fully vest and become immediately exercisable in
accordance with the terms and conditions of the Option Grant Agreement.
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The terms and conditions of the Options are memorialized in the written
option grant agreement between the Company and the Executive ("Option Grant
Agreement"), attached hereto as Exhibit D, which shall be executed by the
Company and the Executive at the same time this Agreement is executed. The
Options granted to the Executive are intended to qualify as incentive stock
options within the meaning of Section 422(b) of the Internal Revenue Code of
1986, as amended (the "Code"); provided, however, that to the extent that any of
such Options do not satisfy the requirements of Section 422(b) of the Code, then
they shall be treated as non-qualified stock options.
In the event that Executive's employment with the Company is terminated
for any reason prior to the expiration of this Agreement, vested Options may be
exercised through a minimum period of twenty-seven (27) months following the
date of this Agreement. The Executive understands that the effect of exercising
any incentive stock options on a day that is more than ninety (90) days after
the date of termination of employment (or, in the case of termination of
employment on account of death or disability, on a day that is more than one (1)
year after the date of such termination) will be to cause such incentive stock
options to be treated as non-qualified stock options.
For purposes of this Section, Change in Control shall mean that any of
the following events has occurred: (a) any "person" or "group" of persons, as
such terms are used in Sections 13 and 14 of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), other than any employee benefit plan
sponsored by ICH, becomes the "beneficial owner", as such term is used in
Section 13 of the Exchange Act, of equity securities of ICH representing at
least thirty percent (30%) of the voting power of all equity securities of ICH
issued and outstanding immediately prior to such acquisition; (b) the
dissolution or liquidation of ICH, the consummation of any merger or
consolidation of ICH or any sale or other disposition of all or substantially
all of its assets, if the shareholders of ICH immediately before such
transaction own, immediately after consummation of such transaction, equity
securities (other than options and other rights to acquire equity securities)
possessing less than thirty percent (30%) of the voting power of the surviving
or acquiring company; (c) ICH and its wholly owned subsidiaries fail to own
equity securities representing more than fifty percent (50%) of the voting power
of the Company or any subsidiary of ICH into which the business of the Company
has been merged or transferred; or (d) substantially all of the assets of the
Company, or any other subsidiary of ICH into which the business of the Company
has been merged or transferred, are sold or transferred to any entity in which
ICH, directly or indirectly, does not own equity securities representing at
least fifty percent (50%) of the voting power.
6. Covenant Not to Compete.
(a) That Executive agrees that during the Non-Competition Period (as
such term is defined below) he will not in any capacity, either separately,
jointly, or in association with others, directly or indirectly, as an officer,
director, consultant, agent, employee, owner, partner, shareholder, beneficial
owner or otherwise engage or have a financial interest in any business which
competes in a material way with or becomes a
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material competitor of the Company or any subsidiary of the Company in the
continental United States (excepting only the ownership of not more than one
(1%) percent of the outstanding securities of any class listed on an exchange or
regularly traded in the over-the-counter market). The "Non-Competition Period"
the longer of (i) the period during which the Executive is employed hereunder,
or is receiving compensation following a termination of employment during the
Employment Term, as applicable, or (ii) the period during which the Executive is
employed hereunder through the last day of the six (6) month period following
the applicable Date of Termination.
(b) That Executive agrees that during the Employment Period and for
a one (1) year period following the applicable Date of Termination where the
Executive terminates employment with the Company for any reason he will not in
any capacity, either separately, jointly, or in association with others,
directly or indirectly, as an officer, director, consultant, agent, employee,
owner, partner, shareholder, beneficial owner or otherwise solicit or employ any
person, who was employed by the Company, or any subsidiary of the Company within
six (6) months prior to the termination of the Executive' s employment with the
Company, in any business in which the Executive has an interest either
separately, jointly or in association with others, directly or indirectly, as an
officer, director, consultant, agent, employee, owner, partner, shareholder,
beneficial owner or otherwise.
(c) If a court determines that the restrictions set forth in
Sections 6(a) and 6(b) above are too broad or otherwise unreasonable under
applicable law, including with respect to time or space, the court is hereby
requested and authorized by the parties hereto to revise the restrictions in
Section 6(a) and 6(b) to include the maximum restrictions allowed under the
applicable law.
The Executive expressly agrees that breach of either this Section 6
or Section 7 below would result in irreparable injuries to the Company, that the
remedy at law for any such breach will be inadequate and that upon (i) breach of
the provisions of Section 7, (ii) breach of the provisions of Section 6(a)
during the first six (6) months following the Executive's applicable Date of
Termination with the Company, or (iii) breach of the provisions of Section 6(b)
during the one (1) year period following the Executive's applicable Date of
Termination, the Company, in addition to all other available remedies, shall be
entitled as a matter of right to injunctive relief in any court of competent
jurisdiction without the necessity of proving the actual damages to the Company
and such violation shall result in the forfeiture of any other entitlements
Executive may have had under this Agreement as if the Executive had been
terminated for Cause (as defined below). In the event that a breach of the
provisions of Section 6(a) occurs after the six (6) month period following the
Executive's applicable Date of Termination , the Company's sole and exclusive
remedy for such breach shall be to cease any payments the Company is obligated
to make pursuant to Section 9 hereof with such payments being automatically
discontinued, and the Company shall not be entitled to further injunctive
relief.
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The Executive hereby affirmatively represents that he has the skill
and ability to earn a living without competing with the Company or ICH during
the non-competition period.
7. Confidential Information. For the Employment Term and thereafter,
(i) the Executive will not divulge, directly or indirectly, other than in the
regular and proper course of business of the Company, any confidential knowledge
or information with respect to the operation or finances of ICH, the Company,
and any subsidiaries of ICH or the Company and (ii) the Executive will not use,
directly or indirectly, any confidential information for the benefit of anyone
other than the Company or ICH; provided, however, that the Executive has no
obligation, express or implied, to refrain from using or disclosing to others
any such knowledge or information which is or hereafter shall become available
to the public other than through disclosure by the Executive.
8. Termination.
(a) Termination at End of Employment Term. This Agreement shall
terminate at the end of the Employment Term. The Executive and the Company may
mutually agree to extend the Executive's employment beyond the Employment Term
on terms and conditions mutually satisfactory to both parties.
(b) Termination by the Company With Cause. The Company shall have
the right at any time to terminate the Executive's employment hereunder without
prior notice upon the occurrence of any of the following (any such termination
being referred to as a termination for "Cause"):
(i) the commission by the Executive of any deliberate and
premeditated act against the interest of the Company or ICH in
contravention of the directives of the Chief Executive Officer of the
Company or the Board of Directors of the Company as communicated to the
Executive;
(ii) the habitual drug addiction or intoxication of the
Executive;
(iii) the conviction by the Executive of a felony;
(iv) the willful failure or refusal of the Executive to perform
his duties hereunder if such failure or refusal is not cured within ten
(10) days subsequent to notice from the Company of the failure or refusal;
or
(v) the material breach by the Executive of any terms of this
Agreement not cured within thirty (30) days subsequent to notice from the
Company to the Executive of the breach.
(c) Termination for Death or by Company for Disability. The Company
shall have the right at any time to terminate the Executive's employment
hereunder without prior notice upon the Executive's inability to perform his
duties hereunder by
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reason of any mental, physical or other disability for a period of at least six
(6) successive months, or an aggregate period of at least six (6) months during
any twelve (12) month period. For purposes of this Agreement, the term
"disability" is defined to mean any physical or mental disability suffered by
the Executive which renders the Executive unable to perform his duties. Any
determination of disability shall be made by the Company in consultation with a
qualified physician or physicians selected by the Company and reasonably
acceptable to the Executive. The Executive's employment hereunder shall also
terminate upon the death of the Executive.
(d) Termination by Company Without Cause. The Company shall have the
right at any time to terminate the Executive's employment without prior notice
for any other reason without Cause.
(e) Voluntary Quit. The Executive shall have the right at any time
to terminate his employment without prior notice for any reason (any such
termination being referred to as a "Voluntary Quit " by Executive).
(f) Termination for Good Reason. The Executive shall have the right
at any time to terminate his employment hereunder, subject to the notice
provisions of Section 8(h), within one hundred and eighty (180) days after the
Executive has notice of the occurrence of any of the following, provided that
the Company does not cure such event to the extent possible on a retroactive
basis within ten (10) days following receipt of the Executive's Notice of
Termination (as defined in Section 8(g) below) (any such termination being
referred to as a termination for "Good Reason"):
(i) The Executive's title, position, authority or
responsibilities (including reporting responsibilities and authority) are
changed in materially adverse manner.
(ii) The Executive's base salary is reduced for any reason other
than in connection with the termination of his employment hereunder.
(iii) For any reason other than in connection with the
termination of the Executive's employment, the Company materially reduces
any benefit provided under a welfare benefit plan to the Executive below
the level of such benefit provided generally to other actively employed and
similarly situated executives of the Company.
(iv) A change of over fifty (50) miles in either the Executive's
principal place of employment or the headquarters of the Company (other
than a change to the Metropolitan Atlanta, Georgia area) pursuant to which
the Executive is required to relocate.
(v) The Company refuses or is unable to perform its obligations
under this Agreement.
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(g) Notice of Termination. Any termination of the Executive's
employment by the Company hereunder, or by the Executive other than
termination upon the Executive's death, shall be communicated by written
notice to the other party ("Notice of Termination").
(h) Date of Termination. "Date of Termination" shall mean any of
the following:
(i) If the Executive's employment is terminated by his
death, the date of his death.
(ii) If the Executive's employment is terminated by the
Company as a result of Disability pursuant to Section 8(c), the
date that is thirty (30) days after the Notice of Termination is
given; provided that Executive shall not have returned to the
performance of his duties on a full-time basis during such
thirty (30) days period.
(iii) If the Executive terminates employment for Good Reason
pursuant to Section 8(f), the date that is ten (10) days after
Notice of Termination is given, provided, that the Company does
not cure such event during the ten (10) day period.
(iv) If the Executive Voluntarily Quits pursuant to Section
8(e), the date that is fourteen (14) days after Notice of
Termination is given, provided, that in the sole discretion of
the Company, such date may be any earlier date after Notice of
Termination is given.
(v) If the Executive's employment is terminated by the
Company with or without Cause pursuant to Sections 8(b) and
8(d), the date on which the Notice of Termination is given.
9. Effect of Termination of Employment Prior to End of Employment
Period.
(a) With Cause / Voluntary Quit. If the Executive's employment is
terminated with Cause (pursuant to Section 8(b)) or Executive Voluntary Quits
(pursuant to Section 8(e)), the Executive's salary and other benefits specified
in Section 4(a) and 4(d) shall cease on the Date of Termination, and the
Executive shall not be entitled to any bonuses specified in Section 4(b) which
have not been paid prior to such termination; provided, however, that the
Executive shall be entitled to continue to participate in the Company's medical
benefit plans but only to the extent required by law, and on the same basis
applicable to other employees. Additionally, all outstanding Options not vested
as of the Date of Termination shall be forfeited.
(b) Death, Disability, Without Cause or Good Reason. If the
Executive's employment is terminated by the death or disability of the Executive
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(pursuant to Section 8(c)), by the Company without Cause (pursuant to Section
(d)) or by the Executive for Good Reason (pursuant to Section 8(f)), the
Executive's annual base salary then in effect pursuant to Section 4(a) shall
continue to be paid to the Executive or, in the event of the death of the
Executive, the Executive's estate, through the end of the Employment Term as if
no such termination had occurred. The Executive shall be entitled to any bonuses
specified in Section 4(b) which are applicable to the most recently completed
fiscal year of the Company and which have been earned but not been paid prior to
such termination and the Executive shall not be entitled to any additional
bonuses. The Executive's additional benefits specified in Section 4(d) shall
terminate at the time of such termination; provided, however, that the Executive
shall be entitled to continue to participate in the Company's medical benefit
plans but only to the extent required by law, and on the same basis applicable
to other employees. Additionally, of the then outstanding Options which have not
vested prior to the date of termination, an amount of such Options equal to
one-half (1/2) of the original amount of Options granted less the amount of
Options vested prior to the date of termination shall upon the date of
termination fully vest and become immediately exercisable in accordance with the
terms and conditions of the Option Grant Agreement.
(c) No Duty to Mitigate. After any Date of Termination, the
Executive shall have no obligation to seek other employment, but shall, subject
to the provisions of Section 6, have the right to be otherwise employed, and any
compensation of any type whatsoever received by the Executive in connection with
such employment shall not be offset by the Company against any of the
obligations of the Company under this Agreement.
10. Notice. Any notices required or permitted hereunder shall be in
writing and shall be deemed to have been given when personally delivered, or
when mailed, certified or registered mail, postage prepaid, to the following
addresses:
If to the Executive:
Xxxxxx X. Xxxx
0000 Xxxxxxx Xxxx
Xxxx X-00
Xxxxxxx, Xxxxxxx 00000
With a copy to:
Powell, Goldstein, Xxxxxx & Xxxxxx LLP
16th Floor
000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
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If to the Company:
Sybra, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000-0000
Attention: Xxxxx Arabia
With a copy to:
Pryor, Cashman, Xxxxxxx & Xxxxx
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxx, Esq.
Either party hereto may change its or his address specified for notices herein
by designating a new address by notice in accordance with this Section 10.
11. Nonexclusivity of Rights. Nothing in this Agreement shall prevent
or limit the Executive's continuing future participation in any incentive,
fringe benefit, deferred compensation, or other plan or program provided by the
Company and for which the Executive may qualify, nor shall anything herein limit
or otherwise affect such rights as the Executive may have under any other
agreements with the Company. Amounts that are vested benefits or that the
Executive is otherwise entitled to receive under any plan or program of the
Company at or after the Date of Termination, shall be payable in accordance with
such plan or program.
12. Indemnification. The Executive shall be indemnified in the same
manner as actively employed and similarly situated executives of the Company and
to the maximum extent as permitted for such executives under the by-laws of the
Company for any acts or omission taken or omitted to be taken by the Executive
in good faith and such indemnification shall survive the termination or
expiration of this Agreement and the termination of the Executive's employment
with the Company.
13. Arbitration. Any claim for damages arising out of or related to
this Agreement except for any claims arising out of or related to Sections 6 and
7 hereof shall be settled by arbitration in accordance with the Commercial
Arbitration Rules of the American Arbitration Association, provided, however,
that the arbitration shall take place in Delaware and the arbitrators shall
apply Delaware law. Each party to the Agreement may select one arbitrator. The
selected arbitrators shall in turn appoint a third arbitrator, and the three so
chosen shall comprise the arbitration panel. All arbitrators shall be
independent third parties. The decision of the arbitration panel shall be final
and binding on the parties, and judgment upon the award rendered by the
arbitration panel may be entered by any court having jurisdiction thereof. This
Section shall not be construed to prevent the Company from seeking injunctive
relief as provided in Section 6 hereof and any and all disputes arising out of
or related to Sections 6 and 7 shall be adjudicated by a court of competent
jurisdiction.
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14. General.
(a) Governing Law. The terms of this Agreement shall be governed by
the laws of the State of Delaware.
(b) Binding Effect. This Agreement shall be binding upon and inure
to the benefit of the Company, its successors and assigns. The Company will
require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of its assets to
expressly assume and agree to perform this Agreement in the same manner and to
the same extent the Company would be required to perform if no such succession
had taken place. Executive agrees that this Agreement is personal to him and may
not be assigned by him other than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be enforceable by
the Executive's legal representative.
(c) Entire Agreement; Modification. This Agreement constitutes the
entire agreement of the parties hereto with respect to the subject matter
hereof, supersedes in its entirety any prior agreement between the Company and
the Executive, and may not be modified or amended in any way except in writing
by the parties hereto.
(d) Provisions Severable. In case any one or more of the provisions
of this Employment Agreement shall be invalid, illegal or unenforceable in any
respect, or to any extent, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired thereby.
(e) Duration. Notwithstanding the term of employment hereunder, this
Agreement shall continue for so long as any obligations remain under this
Agreement.
THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound,
have hereunto executed this Agreement the day and year first written above.
SYBRA, INC.
Attest:
_____________________________ By: __________________________
Secretary Name:
Title:
Witness: EXECUTIVE
______________________________ ________________________________
Xxxxxx X. Xxxx
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