EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement"), dated as of September 9,
2002, by and between LEXENT INC., a Delaware corporation (the "Company") and
Xxxxx Xxxx (the "Employee").
W I T N E S S E T H:
WHEREAS the Company desires to induce the Employee to enter into
employment with the Company for the period provided in this Agreement, and the
Employee is willing to accept such employment with the Company on a full-time
basis, all in accordance with the terms and conditions set forth below;
NOW, THEREFORE, for and in consideration of the premises hereof and the
mutual covenants contained herein, the parties hereto hereby covenant and agree
as follows:
1. Employment.
a. The Company hereby agrees to employ the Employee, and the
Employee hereby agrees to accept such employment with the
Company, commencing on September 9, 2002 (the "Commencement
Date") and continuing for the period set forth in Section 2
hereof, all upon the terms and conditions hereinafter set
forth.
b. The Employee affirms and represents that as of the
commencement of his employment by the Company, he was under no
obligation to any former employer or other party which is in
any way inconsistent with, or which imposes any restriction
upon, the Employee's acceptance of employment hereunder with
the Company, the employment of the Employee by the Company, or
the Employee's undertakings under this Agreement, except to
the extent provided in the FE Consulting Agreement
incorporated by reference and attached as EXHIBIT A.
2. Term of Employment. Unless earlier terminated as provided in this
Agreement, the term of the Employee's employment under this
Agreement shall be for a period beginning on the Commencement Date
and ending on September 8, 2006. The period from the Commencement
Date until September 8, 2006, or, in the event that the Employee's
employment hereunder is earlier terminated as provided herein, such
shorter period, is hereinafter called the "Employment Term" (the
"Employment Term"). In the event that this Agreement is not earlier
termination as provided herein, prior to the natural expiration of
this Agreement on September 8, 2006, Company shall provide Employee
with six (6) months' prior written notice of its intent
to renew this Agreement for an additional period to be mutually
agreed upon by the parties or to let the Agreement lapse on
September 8, 2006.
3. Duties. The Employee shall be employed as the President & Chief
Operating Officer of the Company. Employee shall faithfully perform
and discharge the duties set forth in the Job Description
incorporated by reference and attached as EXHIBIT B, and shall also
perform and discharge such other duties and responsibilities
consistent with such position as the Board of Directors of the
Company (the "Board of Directors") and the Chief Executive Officer
of the Company shall from time to time determine, provided that any
such other duties and responsibilities are consistent with
Employee's knowledge, background and/or experience. The Employee
shall report to the Chief Executive Officer of the Company. The
Employee shall perform his duties at the principal offices of the
Company, with such travel to such other locations from time to time
as the Chief Executive Officer may reasonably prescribe. Except as
may otherwise be approved in advance by the Board of Directors, and
except during vacation periods and reasonable periods of absence due
to sickness, personal injury or other disability, the Employee shall
devote his full business time throughout the Employment Term to the
services required of him hereunder. The Employee shall render his
business services exclusively to the Company and its subsidiaries
during the Employment Term and shall use his best efforts, judgment
and energy to improve and advance the business and interests of the
Company and its subsidiaries in a manner consistent with the duties
of his position.
4. Compensation.
a. Salary. As compensation for the performance by the Employee of
the services to be performed by the Employee hereunder during
the Employment Term, the Company shall pay the Employee a base
salary at the annual rate of Two Hundred Eighty Thousand
Dollars ($280,000) (said amount, together with any increases
thereto as may be determined from time to time by the Board of
Directors in its sole discretion, being hereinafter referred
to as "Salary"). Any Salary payable hereunder shall be paid in
regular intervals in accordance with the Company's payroll
practices from time to time in effect.
b. Bonus. The Employee shall be eligible to receive bonus
compensation from the Company in respect of each fiscal year
(or portion thereof) occurring during the Employment Term in
an amount targeted at 80% of his Salary (pro rated for any
portion of a fiscal year occurring during the Employment Term)
if the Company achieves the target performance objectives
established by the Compensation Committee of the Board of
Directors (the "Compensation Committee") with respect to such
fiscal year, which bonus, if any, shall be payable at the time
bonuses are payable to other Company senior executives. The
Employee shall also be eligible
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to receive additional bonus compensation from the Company in
respect of each fiscal year (or portion thereof) occurring
during the Employment Term (pro rated for any portion of a
fiscal year occurring during the Employment Term) for
exceptional performance as may be determined by the
Compensation Committee in its sole discretion. Notwithstanding
the above, Employee shall be entitled to receive a minimum
bonus of One Hundred Thousand and 00/100 Dollars ($100,000)
for fiscal year 2003. Employee expressly understands and
agrees that in the event that Employee's employment is
terminated in accordance with Section 7(b), Employee shall
neither receive nor be entitled to receive a bonus.
5. Other Benefits; Options.
a. General. During the Employment Term, the Employee shall:
i. be eligible to participate in employee fringe benefits
and pension and/or profit sharing plans that may be
provided by the Company for its senior executive
employees in accordance with the provisions of such
plans, as may be in effect from time to time;
ii. be eligible to participate in any medical and health
plans or other employee welfare benefit plans that may
be provided by the Company for its senior executive
employees in accordance with the provisions of any such
plans, as may be in effect from time to time;
iii. be entitled to the number of paid vacation days in each
calendar year determined by the Company from time to
time for its senior executive officers, provided that
such number of paid vacation days in each calendar year
shall not be less than twenty (20) work days (four
calendar weeks). The Employee shall also be entitled to
all paid holidays given by the Company to its senior
executive officers;
iv. be entitled to sick leave, sick pay and disability
benefits in accordance with any Company policy that may
be applicable to senior executive employees from time to
time;
v. be entitled to reimbursement for all reasonable and
necessary out-of-pocket business expenses incurred by
the Employee in the performance of his duties hereunder
in accordance with the Company's normal policies from
time to time in effect; and
vi. be entitled to a monthly car allowance in the amount of
$750.00 in addition to reimbursement for monthly parking
expenses at a parking lot/garage in proximity to the
Company's New York, NY
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office location and gasoline expenses incurred in
connection with Company purposes.
x. Xxxxx of Initial Options. In connection with the execution and
delivery of this Agreement by the Employee, the Company is
granting to the Employee options to purchase 600,000 shares
("Initial Options") of Company Common Stock, $.001 par value
("Common Stock"), at a purchase price equal to the Fair Market
Value (as defined in (d) below), of which options to purchase
25% of such shares of Common Stock shall vest on the
Commencement Date and options to purchase the remaining shares
of Common Stock shall vest in thirty-six equal increments over
the thirty-six month period beginning at the end of the month
following the first anniversary of the Commencement Date, all
as provided in the Stock Option Agreement of even date
herewith between the Company and the Employee.
x. Xxxxx of Subsequent Options. In connection with his continued
employment by the Company, on the first anniversary of the
Commencement Date, and on each of the subsequent anniversaries
thereof during the Employment Term, the Company agrees to
grant the Employee options ("Subsequent Options") to purchase
a minimum of 25,000 shares (as adjusted equitably for stock
dividends, stock splits, combinations, etc.) of Common Stock
at a purchase price equal to the Fair Market Value (as defined
in (d) below) of the Common Stock on the pertinent
anniversaries. The Subsequent Options shall vest in accordance
with the following schedule: 25% shall vest one year from the
grant date of the Subsequent Options during the Employment
Term, and options to purchase the remaining shares issued
pursuant to each grant of the Subsequent Options shall vest in
equal increments over the subsequent 36 months, as more fully
described in 5(b) above. Each grant of these Subsequent
Options shall be pursuant to specific terms set forth in a
stock option agreement between the Company and the Employee.
d. Fair Market Value. "Fair Market Value" means as of any date,
the value of Common Stock determined as follows:
i. If the Common Stock is listed on any established stock
exchange or a national market system, including without
limitation the National Market System of the National
Association of Securities Dealers, Inc. Automated
Quotation ("NASDAQ") System, the Fair Market Value of a
share of Common Stock shall be the closing sales price
for such stock (or the closing bid, if no sales were
reported) as quoted on such system or exchange (or the
exchange with the greatest volume of trading in Common
Stock) on the last trading day prior to the day of grant
of the particular Options and as reported in the Wall
Street Journal or such other source as the Compensation
Committee deems reliable;
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ii. If the Common Stock is quoted on the NASDAQ System (but
not on the National Market System thereof) or is
regularly quoted by a recognized securities dealer but
selling prices are not reported, the Fair Market Value
of a share of Common Stock shall be the average between
the high bid and low asked prices for the Common Stock
on the last market trading day prior to the day of grant
of the particular Subsequent Options and as reported in
the Wall Street Journal or such other source as the
Compensation Committee deems reliable; or
iii. In the absence of an established market for the Common
Stock, the Fair Market Value shall be determined in good
faith by the Compensation Committee.
e. Change of Control. If there is a Change of Control of the
Company (as defined below) 50% of all then unvested Initial
Options granted pursuant to Section 5 of this Agreement shall
vest immediately upon completion of the Change of Control, and
the remaining 50% of the unvested Initial Options shall
continue to vest in accordance with the schedule set forth in
Section 5. Notwithstanding, in the event that a Change of
Control results in Employee's termination within six (6)
months after the completion of the Change of Control, all then
remaining unvested Initial Options shall vest immediately upon
Employee's termination. As used hereinabove, "Change of
Control" means the occurrence of any of the following (i) the
Company consolidates with or merges with or into another
person pursuant to the transaction in which the outstanding
securities of the Company are converted into or exchanged for
cash or other property of for securities possessing less than
50% of the voting power of the outstanding securities of the
person surviving such merger or consolidation; (ii) the
Company sells, assigns conveys, transfers, leases or otherwise
disposes of all or substantially all of its assets to any
persons; or (iii) any "person" or "group" (as such terms are
used in Sections 13(d) and 14 (d) of the Securities and
Exchange Act), other than the holders of the Securities of the
Company as of the date hereof shall, by virtue of ownership of
securities or by agreement or otherwise, be entitled to elect
a majority of the director of the Company.
6. Confidential Information. The Employee hereby covenants, agrees and
acknowledges as follows:
a. The Employee has and will have access to and will participate
in the development of or be acquainted with confidential or
proprietary information and trade secrets related to the
business of the Company and any present or future subsidiaries
or affiliates of the Company (collectively with the Company,
the "Companies"), including but not
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limited to (i) customer lists; related records and
compilations of information; the identity, lists or
descriptions of any new customers, referral sources or
organizations; financial statements; cost reports or other
financial information; contract proposals or bidding
information; business plans; training and operations methods
and manuals; personnel records; software programs; reports and
correspondence; and management systems, policies or
procedures, including related forms and manuals; (ii)
information pertaining to future developments such as future
marketing or acquisition plans or ideas, and potential new
business locations and (iii) all other tangible and intangible
property, which are used in the business and operations of the
Companies but not made public. The information and trade
secrets relating to the business of the Companies described
hereinabove in this paragraph (a) are hereinafter referred to
collectively as the "Confidential Information", provided that
the term Confidential Information shall not include any
information (A) that is or becomes generally publicly
available (other than as a result of violation of this
Agreement by the Employee), (B) that the Employee receives on
a nonconfidential basis from a source (other than the
Companies or their representatives) that is not known by him
to be bound by an obligation of secrecy or confidentiality to
any of the Companies or (C) that was in the possession of the
Employee prior to disclosure by the Companies.
b. The Employee shall not disclose, use or make known for his or
another's benefit any Confidential Information or use such
Confidential Information in any way except as is in the best
interests of the Companies in the performance of the
Employee's duties under this Agreement. The Employee may
disclose Confidential Information when required by a third
party and applicable law or judicial process, but only after
providing immediate notice to the Company of any third party's
request for such information, which notice shall include the
Employee's intent to disclose any Confidential Information
with respect to such request.
c. The Employee acknowledges and agrees that a remedy at law for
any breach or threatened breach of the provisions of this
Section 6 would be inadequate and, therefore, agrees that the
Companies shall be entitled to seek injunctive relief in
addition to any other available rights and remedies in case of
any such breach or threatened breach by the Employee;
provided, however, that nothing contained herein shall be
construed as prohibiting the Companies from pursuing any other
rights and remedies available for any such breach or
threatened breach, including, but not limited to,
reimbursement of any amounts paid by Company under Section 8
of this Agreement.
d. The Employee agrees that upon termination of his employment
with the Company for any reason, the Employee shall forthwith
return to the
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Company all Confidential Information in whatever form
maintained (including, without limitation, computer discs and
other electronic media).
e. The obligations of the Employee under this Section 6 shall,
except as otherwise provided herein, survive the termination
of the Employment Term and the expiration or termination of
this Agreement.
f. Without limiting the generality of Section 12 of this
Agreement, the Employee hereby expressly agrees that the
foregoing provisions of this Section 6 shall be binding upon
the Employee's heirs, successors and legal representatives.
7. Termination of Employment.
a. The Employee's employment hereunder shall be terminated upon
the occurrence of any of the following:
i. death of the Employee;
ii. the Employee's inability to perform his duties on
account of disability or incapacity for a period of one
hundred eighty (180) or more days, whether or not
consecutive, within any period of twelve (12)
consecutive months;
iii. the Company giving written notice, at any time, to the
Employee that the Employee's employment is being
terminated for "Cause" (as defined in (b) below);
iv. the Company giving written notice, at any time, to the
Employee that the Employee's employment is being
terminated or is not being renewed, other than pursuant
to clause (i), (ii) or (iii) above ("Without Cause"); or
v. the Employee terminates his employment hereunder for any
reason whatsoever (whether by reason of retirement,
resignation or otherwise).
b. Cause. The following actions, failures and events by or
affecting the Employee shall constitute "Cause" for
termination within the meaning of clause (iii) of Section 7
(a) above:
i. indictment for or conviction of the Employee of, or the
entering of a plea of nolo contendere by the Employee
with respect to, having committed a felony;
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ii. abuse of controlled substances or alcohol or acts of
dishonesty or moral turpitude by the Employee that are
materially detrimental to one or more of the Companies;
iii. acts or omissions by the Employee that the Employee knew
were likely to cause significant or material damage the
business of one or more of the Companies;
iv. negligence by the Employee in the performance of, or
disregard by the Employee of his material obligations
under this Agreement or otherwise relating to his
employment, which negligence or disregard continue
unremedied for a period of fifteen (15) days after
written notice thereof to the Employee; or
v. failure by the Employee to use his best efforts to obey
the reasonable and lawful orders and policies of the
Board of Directors that are consistent with the
provisions of this Agreement (in particular Exhibit B
and Section 3 hereof).
8. Payments Upon Termination.
a. Termination Without Cause. In the event that the Employee's
employment is terminated by the Company Without Cause during
the Employment Term and provided that the Employee is acting
in accordance with his obligations pursuant to Section 10,
then the Company shall pay to the Employee, as severance pay
or liquidated damages or both, monthly payments at the rate
per annum of his Salary at the time of such termination for a
period of:
i. Twenty four (24) months after such termination if
such termination occurs between the Commencement Date
and the date twelve months following the Commence Date
("Initial Period");
ii. twelve (12) months after such termination if such
termination occurs after the end of the Initial Period.
b. Payments Limited. Notwithstanding anything to the contrary
expressed or implied herein, except as required by applicable
law and except as set forth in Sections 4(b) and 8(a), neither
the Company nor any of its affiliates shall be obligated to
make any payments to the Employee or on his behalf of whatever
kind or nature by reason of the Employee's cessation of
employment (including, without limitation, by reason of
termination of the Employee's employment by the Company for
Cause or Without Cause), other than (i) such amounts, if any,
of his Salary and bonus as shall have accrued and remained
unpaid as of the date of said
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cessation and (ii) such other amounts, if any, which may be
then otherwise payable to the Employee pursuant to the terms
of the Company's benefits plans or pursuant to clauses (v) and
(vi) of Section 5(a) above.
c. The parties agree that in the event of termination, the
accrual and use of vacation and payment for unused vacation
shall be governed by and consistent with the Employee
Handbook.
d. In the event of Employee's termination pursuant to Section 7,
Employee shall be eligible for continuing health benefits for
a period of six (6) months. Approval of any grant of
continuing health benefits shall be subject to approval by the
Company's Board of Directors and Compensation Committee.
e. Interest. No interest shall accrue on or be paid with respect
to any portion of any payments under this Section 8.
f. The obligations of the Company under this section 8 shall,
except as otherwise provided herein, survive the termination
of the Employment Term and the expiration or termination of
this Agreement.
9. Non-Assignability.
a. Neither this Agreement nor any right or interest hereunder shall
be assignable by the Employee or his beneficiaries or legal
representatives without the Company's prior written consent; provided,
however, that nothing in this Section 9(a) shall preclude the Employee
from designating a beneficiary to receive any benefit payable hereunder
upon his death or incapacity. This Agreement may not be assigned by the
Company except with the Employee's prior written consent, provided,
however, that the Company may assign this Agreement upon sixty (60) days'
written notice to Employee without Employee's consent to an affiliate of
the Company with the financial resources to fulfill the Company's
obligations hereunder and to an entity involved in a Change of Control, as
defined in Section 5(e) of this Agreement.
b. Except as required by law, no right to receive payments under
this Agreement shall be subject to anticipation, commutation, alienation,
sale, assignment, encumbrance, charge, pledge, or hypothecation or to
exclusion, attachment, levy or similar process or to assignment by
operation of law, and any attempt, voluntary or involuntary, to effect any
such action shall be null, void and of no effect.
10. Restrictive Covenants.
a. Competition. During the Employment Term and, in the event the
Employee's employment is terminated, during the period
following such termination and continuing until (i) the last
payment is made to the
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Employee pursuant to Section 8(a) hereof, as the case may be,
or (ii) in the case of a termination of the Employee's
employment pursuant to Section 7(a)(iii) or (v) hereof, the
first anniversary of the date of such termination (the
"Applicable Continuation Period"), the Employee will not
directly or indirectly (as a director, officer, executive
employee, manager, consultant, independent contractor, advisor
or otherwise) engage in competition with, or own any interest
in, perform any services for, participate in or be connected
with any business or organization which engages in competition
with the Company or any of its affiliates (Cumulatively
referred to throughout this Agreement as the "Companies")
within the meaning of Section 10(d), provided, however, that
the provisions of this Section 10(a) shall not be deemed to
prohibit the Employee's ownership of not more than two percent
(2%) of the total shares of all classes of stock outstanding
of any publicly held company, or ownership, whether through
direct or indirect stock holdings or otherwise, of not more
than one percent (1%) of any other business.
b. Non-Solicitation. During the Employment Term and during the
Applicable Continuation Period, the Employee will not directly
or indirectly induce or attempt to induce any employee of any
of the Companies to leave the employ of the Company or such
subsidiary or affiliate, or in any way interfere with the
relationship between any of the Companies and any employee
thereof.
c. Non-Interference. During the Employment Term and during the
Applicable Continuation Period, the Employee will not directly
or indirectly hire, engage, send any work to, place orders
with, or in any manner be associated with any supplier,
contractor, subcontractor or other business relation of any of
the Companies if such action by him would have an adverse
effect on the business, assets or financial condition of any
of the Companies, or materially interfere with the
relationship between any such person or entity and any of the
Companies.
d. Certain Definitions.
i. For purposes of this Section 10, a person or entity
(including, without limitation, the Employee) shall be
deemed to be a competitor of one or more of the
Companies, or a person or entity (including, without
limitation, the Employee) shall be deemed to be engaging
in competition with one or more of the Companies, if
such person or entity conducts, or, to the knowledge of
the Employee, plans to conduct, the Specified Business
(as hereinafter defined) as a significant portion of its
business in any of the markets served by the Companies.
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ii. For purposes of this Agreement, "Specified Business"
means (A) providing outsourced telecommunications
infrastructure services to local or long distance
telecommunications providers or engaging in any business
conducted by the Company at the time of termination of
the Employee's employment with the Company or (B)
conducting, operating, carrying out or engaging in the
business of managing any entity described in clause (A).
iii. Certain Representations of the Employee. In
connection with the foregoing provisions of this Section
10, the Employee represents that his experience,
capabilities and circumstances are such that such
provisions will not prevent him from earning a
livelihood. The Employee further agrees that the
limitations set forth in this Section 10 (including,
without limitation, time and territorial limitations)
are reasonable and properly required for the adequate
protection of the current and future businesses of the
Companies. It is understood and agreed that the
covenants made by the Employee in this Section 10 (and
in Section 6 hereof) shall survive the expiration or
termination of this Agreement.
iv. Injunctive Relief. The Employee acknowledges and
agrees that a remedy at law for any breach or threatened
breach of the provisions of Section 10 hereof would be
inadequate and, therefore, agrees that the Company and
any of its subsidiaries or affiliates shall be entitled
to seek injunctive relief in addition to any other
available rights and remedies in cases of any such
breach or threatened breach; provided, however, that
nothing contained herein shall be construed as
prohibiting the Company or any of its affiliates from
pursuing any other rights and remedies available for any
such breach or threatened breach.
11. Representations and Warranties. The Employee represents and warrants
that he is not subject to or a party to any agreement, contract,
covenants, order or other restriction which in any way prohibits,
restricts or impairs the Employee's ability to enter into this Agreement
and carry out his duties and obligations hereunder, except the FE
Consulting Agreement incorporated by reference and attached as Exhibit A.
Each party hereto represents and warrants to the other that (i) each has
the full legal right and power and all authority and approvals required to
enter into, execute and deliver this Agreement and to perform fully all of
his or its obligations hereunder; and (ii) this Agreement has been duly
executed and delivered and constitutes a valid and binding obligation of
each party, enforceable in accordance with its terms.
12. Binding Effect. Without limiting or diminishing the effect of Section
9 hereof, this Agreement shall inure to the benefit of and be binding upon
the parties hereto and their respective heirs, successors, legal
representatives and assigns.
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13. Notices. All notices which are required or may be given pursuant to
the terms of this Agreement shall be in writing and shall be sufficient in
all respects if given in writing and (i) delivered personally, (ii) mailed
by certified or registered mail, return receipt requested and postage
prepaid, (iii) sent via a nationally recognized overnight courier or (iv)
sent via facsimile confirmed in writing to the recipient, if to the
Company at the Company's principal place of business, and if to the
Employee, at his home address most recently filed with the Company, or to
such other address or addresses as either party shall have designated in
writing to the other party hereto, provided, however, that any notice sent
by certified or registered mail shall be deemed delivered on the date of
delivery as evidenced by the return receipt.
14. Law Governing. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York. Any disputes arising
out of this Agreement must first be submitted to nonbinding arbitration
before the American Arbitration Association and either withdrawn or
otherwise resolved as a condition precedent to filing any action or
proceeding in a court of competent jurisdiction or other venue.
15. Severability. The Employee agrees that in the event that any court of
competent jurisdiction shall finally hold that any provision of Section 6
or 10 hereof is void or constitutes an unreasonable restriction against
the Employee, the provisions of such Section 6 or 10 shall not be rendered
void but shall apply with respect to such extent as such court may
judicially determine constitutes a reasonable restriction under the
circumstances. If any part of this Agreement other than Section 6 or 10 is
held by a court of competent jurisdiction to be invalid, illegible or
incapable of being enforced in whole or in part by reason of any rule of
law or public policy, such part shall be deemed to be severed from the
remainder of this Agreement for the purpose only of the particular legal
proceedings in question and all other covenants and provisions of this
Agreement shall in every other respect continue in full force and effect
and no covenant or provision shall be deemed dependent upon any other
covenant or provision.
16. Waiver. Failure to insist upon strict compliance with any of the
terms, covenants or conditions hereof shall not be deemed a waiver of such
term, covenant or condition, nor shall any waiver or relinquishment of any
right or power hereunder at any one or more times be deemed a waiver or
relinquishment of such right or power at any other time or times.
17. Entire Agreement; Modifications. This Agreement constitutes the entire
and final expression of the agreement of the parties with respect to the
subject matter hereof and supersedes all prior agreements, oral and
written, between the parties hereto with respect to the subject matter
hereof. This Agreement may be modified or amended only by an instrument in
writing signed by both parties hereto.
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18. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the Company and the Employee have duly executed and
delivered this Agreement as of the day and year first above written.
LEXENT INC.
__________________________ DATE: September 9, 2002
BY: Xxxxx X'Xxxx
Its: Chief Executive Officer
XXXXX XXXX
___________________________ DATE: September 9, 2002
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