EXHIBIT 99.3
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT (this "Agreement") is entered into as of
this 30th day of July, 1998 by and among WINDSOR ART, INC., a Missouri
corporation with an address of c/o Interiors, Inc., 000 Xxxxxxxxxx Xxxxxx, Xx.
Xxxxxx, Xxx Xxxx 00000-0000 (the "Company"), XXXXX X. XXXXXX, residing at 9719
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Xxxxxx Xxxx, Xx. Xxxxx, Xxxxxxxx 00000 ("Consultant"), and INTERIORS, INC., a
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Delaware corporation with an address of 000 Xxxxxxxxxx Xxxxxx, Xx. Xxxxxx, Xxx
Xxxx 00000-0000 ("Interiors").
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R E C I T A L S
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A. WHEREAS, Interiors and Bentley International, Inc., a Missouri
corporation ("Bentley"), have entered into that certain Stock Purchase Agreement
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dated as of July 7, 1998 (the "Stock Purchase Agreement") pursuant to which
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Interiors has purchased all of the issued and outstanding capital stock of the
Company from Bentley.
B. WHEREAS, it is a condition precedent to the consummation of the
transactions contemplated by the Stock Purchase Agreement, that Consultant enter
into a consulting agreement with the Company;
C. WHEREAS, the Company desires to secure the services of
Consultant, and Consultant desires to furnish his services to the Company, on
the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained, and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties hereto hereby
agree as follows:
1. Defined Terms. Terms used in this Agreement in capitalized form
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which are not defined in this Agreement shall have the same definitions as used
in the Stock Purchase Agreement.
2. Consulting Services.
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(a) Commencing on the date of this Agreement and continuing
(unless terminated earlier pursuant to Section 7 hereof) until four (4) years
from the date of this Agreement, Consultant shall make himself available at
reasonable times and upon reasonable notice, as requested by the Company or
Interiors, to consult with the Board of Directors and management of each of the
Company and Interiors regarding input and advice on overall strategy for the
Company and Interiors and provide advice and assistance with respect to the
business affairs of Interiors and its subsidiaries.
(b) The Company and Interiors acknowledge and agree that
Consultant may be engaged in other business activities which will limit the
frequency and duration of Consultant's services hereunder. More specifically,
the Company and Interiors acknowledge that Consultant may establish his primary
business headquarters, from time to time, any where in the world and that
Consultant's current primary business
location is in St. Louis County, Missouri. In addition, Company and Interiors
agree that Consultant shall not be required during any month to be out of town
for more than six (6) nights, and that Consultant shall not be required to
expend more than ten (10) hours per week, for forty-eight (48) weeks, during any
calendar year to comply in full with his obligations under this Agreement.
3. Compensation. In consideration of the services to be rendered by
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Consultant hereunder, the Company agrees to compensate Consultant as follows:
3.1 Cash Compensation. During the term hereof, the
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Company will pay to Consultant the following amounts: (i) during the first three
years of the term of this Agreement an aggregate annual fee equal to Two Hundred
Thousand Dollars ($200,000.00) in bi-monthly payments equal $8,333.33, and (ii)
during the last year of the term of this Agreement an aggregate annual fee of
Fifty Thousand Dollars ($50,000) in bi-monthly payments equal to $2,083.33.
3.2 Benefits and Expense Allowances. During the term
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hereof,the Company shall provide the following benefits and expense allowances
to Consultant:
(a) The Company shall provide Consultant and
Consultant's family with coverage under a health insurance policy with benefits
equivalent to or better than those provided by Consultant's current health
insurance policy for Consultant and Consultant's family.
(b) Consultant shall be entitled to a maximum
reimbursement of $2,400 per year for expenses associated with the maintenance of
an office in St. Louis, Missouri, or such other location as Consultant shall
designate. All reimbursements hereunder shall be made within twenty-one (21)
days following the Company's receipt of an expense statement, including, where
appropriate, all original statements of charges and proof of payment.
(c) Commencing August 1, 1998, and the first day of
each month thereafter during the term of this Agreement, Company shall pay to
Consultant a Los Angeles housing allowance in the amount of $2,000 per month so
long as that certain condominium situated in the State of California, which
Consultant makes use of, continues to be owned by the Xxxxx X. Xxxx Children's
Trust. Consultant shall identify in writing to the Company within three (3) days
after the execution of this Agreement the address of such condominium and shall
inform the Company forthwith in the event such condominium is sold by such
trust.
(d) Commencing August 1, 1998, and the first day of
each month thereafter during the term of this Agreement, Company shall pay to
Consultant (i) a Los Angeles automobile allowance in the amount of $450 per
month so long as Consultant and/or a member of Consultant's family maintains an
automobile in the State of California, which Consultant makes use of, and (ii) a
St. Louis automobile allowance in the amount of $150 per month for the
automobile Consultant makes use of at his primary business headquarters.
Consultant shall identify in writing to the Company within three (3) days after
the execution of this Agreement the initial automobiles in each location, and
any changes to such initial designation shall be made in writing to the Company.
In addition, within ten (10) days following the Company's receipt of an
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expense statement from Consultant regarding gas and oil for the automobile
located in the State of California, with all original statements for such
expenses and proof of payment, Company shall reimburse Consultant for all such
expenses.
3.3 Warrants. On the date hereof, Consultant shall be granted
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a warrant (the "Warrant") to purchase an aggregate of Fifty Thousand (50,000)
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shares of Class A Common Stock of Interiors, at the average closing market price
of such shares for the five (5) trading days after the effective date of this
Agreement. In addition, Consultant shall have the right to grant to employees
of the Company an aggregate of Forty Thousand (40,000) warrants to purchase
shares of Class A Common Stock of Interiors on terms and conditions
substantially identical to the terms and conditions of the Warrant. Such
grant(s) shall be made within 30 days of the date hereof.
The foregoing consulting fee, benefits, expense allowances and
warrants shall be Consultant's sole compensation for all services rendered by
Consultant hereunder.
4. Expenses. The Company shall reimburse Consultant for expenses
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incurred by him during the term of this Agreement (including travel-related
expenses) in the performance of his duties as a consultant for the Company;
provided, however, that the Company shall not be obligated to reimburse
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Consultant for any expenses which have not been approved in advance by the
Company.
5. Use of Automobile and Condominium. Consultant hereby agrees that
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(i) the automobile designated by Consultant for use in the State of California
pursuant to Section 3.2(d) hereof and (ii) the condominium designated by
Consultant pursuant to Section 3.2(c) hereof shall, during the term hereof, be
made available for use by Xxx Xxxx and Xxxxxx Xxxx and such other senior
executives of the Company and Interiors as Consultant shall approve of in
advance when not in use by Consultant. Consultant shall have no obligation to
maintain the condominium or the automobile referred to in this Section 5, and at
such time as either or both are sold, the rights granted pursuant to this
Section 5 shall lapse with respect to such one or both of them that has or have
been sold. In any event the Company and Interiors agree to indemnify, reimburse
and hold Consultant and the owner or owners of such automobile and condominium
harmless from any and all damages and/or liability to the extent such damages
and/or liability arise from the use of such automobile or condominium by Xxx
Xxxx, Xxxxxx Xxxx, and such other senior executives of the Company and Interiors
to the extent such damages and/or liability are not covered by any policy of
insurance maintained by the Company, Interiors, Xxx Xxxx, Xxxxxx Xxxx, any such
senior executive, Consultant, or any other person.
6. Guaranty of Obligations. Interiors hereby irrevocably and
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unconditionally guarantees to Consultant full and indefeasible payment of the
obligations of the Company to Consultant under this Agreement (the "Guaranteed
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Obligations"). In the event that the Company fails to timely make any payment
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of any Guaranteed Obligations, Interiors shall promptly cause such payment to be
made.
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7. Termination.
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7.1 Termination for Cause. Consultant understands and agrees
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that this Agreement may be terminated by the Company for "cause" upon written
notice to Consultant in the manner set forth in Section 10.3 below. "Cause"
shall mean willful misconduct on the part of Consultant, which shall include
only (i) fraud with respect to the Company or Interiors occurring after the date
of this Agreement and (ii) conviction of a felony or theft. In the event of any
termination pursuant to this Section 7.1, the obligations of Consultant under
Section 8 hereof shall expressly survive such termination unless there is a
Default under either of the Promissory Notes, in which case the provisions of
Section 8 hereof shall lapse and be of no further force or effect upon the
occurrence of such Default.
7.2 Death. In the event of the death of Consultant during the
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Term, the Company shall pay, or cause to be paid, to any one or more
beneficiaries designated by Consultant pursuant to notice to the Company or,
failing such designation, to Consultant's estate, the fees provided for herein
through the date on which Consultant's death occurs plus an amount equal to the
lesser of the amount that would have been payable to Consultant for the twelve
(12) months following Consultant's death if the remaining term of this Agreement
is in excess of twelve (12) months or the aggregate amount that would have been
payable to Consultant for the remainder of the term of this Agreement pursuant
to Section 3.1 of this Agreement.
7.3 Disability. In the event that Consultant shall become, by
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reason of physical or mental disability, incapable of performing his duties and
services in accordance with the provisions of this Agreement, and such
incapacity(ies) shall continue for a period of sixty (60) days, the Company
shall have the right to terminate this Agreement by giving him written notice of
such termination and, thereafter, this Agreement shall immediately terminate. In
the event of such termination, the Company shall continue to pay, or cause to be
paid, to Consultant the fees provided for herein through the date such
termination occurs plus an amount equal to the lesser of the amount that would
have been payable to Consultant for the twelve (12) months following
Consultant's termination if the remaining term of this Agreement is in excess of
twelve (12) months or the aggregate amount that would have been payable to
Consultant for the remainder of the term of this Agreement pursuant to Section
3.1 of this Agreement.
7.4 Termination by Consultant. This Agreement may be
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terminated immediately by Consultant upon written notice to the Company in the
manner set forth in Section 10.3 below. In the event of such termination, the
Company shall have no further obligation to compensate Consultant under this
Agreement and Consultant shall have no further obligations to the Company or
Interiors hereunder.
7.5 Termination Upon Buyout. On or prior to December 31,
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1998, the Company shall have the right, but not the obligation, to terminate
this Agreement by paying to Consultant on or before such date the sum of Five
Hundred Twenty-Five Thousand Dollars ($525,000) plus all amounts then due but
unpaid; provided, however, that the Company may not exercise its rights pursuant
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to this Section 7.5 unless Interiors has repurchased the Buyer Shares pursuant
Section 8.13 of the Stock Purchase Agreement. In the event of such payment and
termination, the Company shall have no further obligation to compensate
Consultant under this Agreement, including,
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without limitation, continuance of the benefits provided for in Section 3 hereof
and Consultant shall have no further obligations to the Company or Interiors
hereunder.
7.6 Certain Liability of Interiors. In the event of a Default
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under either of the Promissory Notes, Interiors shall forthwith assume and
become primarily liable for all obligations of the Company hereunder, including
without limitation, all compensation and benefits provided for in Section 3
hereof until Interiors has signed all documents and taken all actions reasonably
required to allow Bentley to reacquire all of the outstanding stock of Windsor
free and clear of all liens and encumbrances.
7.7 No Additional Compensation. Except as expressly provided
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in this Section 7, Consultant acknowledges and agrees that he will not be
entitled to any additional compensation as a result of the termination of this
Agreement or his services hereunder.
7.8 Effect of Termination. Upon termination or expiration of
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this Agreement, Consultant shall immediately surrender to the Company all lists,
books, records, materials and documents, together with all copies thereof, and
all other property in his possession or under his control, relating to or used
in connection with the past or present business of the Company, or any affiliate
or subsidiary of the Company. Consultant acknowledges and agrees that all such
lists, books, records, materials and documents, including without limitation
compilations or collections of suppliers', contractors', employees' and
customers' names and addresses, are the sole and exclusive property of the
Company.
8. Nondisclosure; Ownership and Protection of Proprietary Rights.
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8.1 Nondisclosure. Consultant understands and agrees that,
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in the course of his relationship with the Company, he may acquire confidential
information and trade secrets concerning the Company's operations, future plans,
methods of doing business, projected and historical sales, marketing, costs,
production, growth and distribution, and that it would be extremely damaging to
the Company if such information were disclosed to a competitor or made available
to any other person or corporation. In view of the nature of the consulting
relationship with the Company contemplated herein, Consultant agrees that,
during the term of this Agreement and thereafter, any and all confidential
information, including, without limitation, any customer lists, customer
information or addresses, trade secrets, prices being charged, information
relating to governmental relations, discoveries, practices, processes, methods
or products, whether patentable or not, concerning the business of the Company
or any confidential information concerning or relating to any former or existing
suppliers, contractors, employees or customers of the Company or any corporation
or business entity that is controlling, controlled by, under common control with
or otherwise affiliated with the Company (collectively, the "Customers"), with
respect to the past, present or future business of the Company, or any affiliate
or subsidiary of the Company or any secret, proprietary or confidential
information concerning or relating to the past, present or future business of
the Company, or any affiliate or subsidiary of the Company (collectively,
"Confidential Information") that Consultant has acquired or may acquire from any
such corporation or business entity or the Company, shall be maintained by him
in confidence and shall not be disclosed or divulged to any third party without
the prior
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written consent of the Board of Directors of the Company. Consultant further
agrees that he will not utilize such Confidential Information on his own behalf
or on behalf of others at any time during the term of this Agreement or
thereafter. Consultant agrees that he will not divert or attempt to divert any
of the customers or do any act to impair, prejudice or destroy the goodwill of
the Company with the Customers. The Consultant and the Company acknowledge that
they have entered into and agreed to be bound by a Noncompetition,
Nondisclosure, Nonsolicitation and Intellectual Property Agreement, dated of
even date herewith.
8.2 Ownership of Intellectual Property. Consultant
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acknowledges and agrees that all intellectual property (including without
limitation all ideas, concepts, inventions, plans, developments, software, data,
configurations, materials (whether written or machine-readable), designs,
drawings, illustrations and photographs, which may be protectable, in whole or
in part, under any patent, copyright, trademark, trade secret or other
intellectual property law), developed, created, conceived, made or reduced to
practice during the term of this Agreement which (a) relate to the current,
future or potential business of the Company, (b) result from the duties or work
performed by Consultant hereunder, or (c) are developed during working time or
using the Company's equipment, supplies, facilities, resources, materials or
information, shall be the sole and exclusive property of the Company and
Consultant shall and hereby does assign all right, title and interest in and to
such intellectual property to the Company.
8.3 Nonsolicitation. Because Consultant's solicitation of
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the Customers of the Company, or any affiliate of the Company, under certain
circumstances would necessarily involve the use or disclosure of Confidential
Information, Consultant shall not, either directly or indirectly, at any time
during the term of this Agreement and for a period of three (3) years from the
date of termination or expiration of this Agreement (a) call on, solicit or take
away, or attempt to call on, solicit or take away, any past or present Customers
of the Company, or any affiliate of the Company, (b) employ, hire or solicit the
employment of any person employed by the Company, or any affiliate of the
Company, (c) do any act to impair, prejudice or destroy the goodwill of the
Company, or any affiliate of the Company, or to prejudice or impair the
relationship or dealing between the Company, or any affiliate of the Company,
and the Customers or (d) assist any other person, firm or corporation in any
such acts; provided that Consultant's post-termination obligations under this
Section 8.3 shall not apply if this Agreement is terminated by Consultant as a
result of an uncured, material breach of this Agreement by the Company or
bankruptcy of the Company; and further provided, however, that Xxxxxxxx Xxxxxxx
(i) shall be permitted to serve as a director of Bentley, (ii) may be solicited
by Bentley or Consultant to become a full-time employee of Bentley after January
1, 1999 and (iii) may be hired as a full-time employee of Bentley only upon
ninety (90) days' written notice to Company.
8.4 Noncompetition. Consultant shall not, at any time during
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the term of this Agreement, be or become (a) interested or engaged in any
manner, directly or indirectly, in any county and/or city in the United States
of America or any county or political subdivision in any state or country in the
world, either alone or with any person, firm or corporation now existing or
hereafter created, in any business, trade or other enterprise substantially
similar to or which is or may be directly or indirectly competitive with the
past, present or future business of the Company or Interiors (as such
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business relates to the manufacture and sale of decorative accessories) (the
"Business") or (b) directly or indirectly, a stockholder, bondholder or officer,
director or employee of, or in any manner associated with, or aid or abet or
give information or financial assistance to any business which is or may be
competitive with the Business; provided that nothing contained in this Section
8.4 shall prevent Consultant from acquiring or holding, as a passive investment,
not more than five percent (5%) of the outstanding capital shares of any
publicly held corporation engaged in such business. Consultant represents and
warrants that as of the date hereof, Consultant does not own more than five
percent (5%) of the outstanding capital shares of any publicly held corporation
engaged in a business which is or may be competitive with the Business other
than Bentley International, Inc., which upon the sale of Company to Interiors on
the date hereof shall cease to be engaged in a business which is or may be
competitive with the Business.
8.5 Survival. Subject to the following provisions, the
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provisions of this Section 8 shall survive the termination of this Agreement,
irrespective of the reason therefor; provided, however, that in the event of a
Default under either of the Promissory Notes, the above provisions of this
Section 8 shall lapse and be of no further force or effect.
9. Relief. Consultant acknowledges that (a) the services to be
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rendered by him are of a special, unique and extraordinary character and it
would be very difficult or impossible to replace such services, (b) the
provisions of Section 8 are reasonable and necessary to protect the legitimate
interests of the Company, (c) the restrictions contained in Section 8 will not
prevent Consultant from earning or seeking a livelihood, (d) the restrictions
contained in Section 8 shall apply in all areas where such application is
permitted by law and (e) any violation of this Agreement by Consultant would
result in irreparable harm to the Company. Accordingly, Consultant consents and
agrees that, if he violates any of the provisions of this Agreement, the Company
shall be entitled to, in addition to other remedies available to it, an
injunction to be issued by any court of competent jurisdiction restraining him
from committing or continuing any violation of this Agreement, without the need
to post any bond or for any other undertaking, including without limitation
proving the inadequacy of money damages.
In the event that the whole or any part of the provisions of Section 8
hereof shall be determined to be invalid by reason of the extent, duration,
scope or other provision set forth therein, the extent, duration, scope or other
provision of that section shall be reduced so as to cure such invalidity and in
its reduced form the provisions of Section 8 shall be enforceable in the manner
contemplated hereby. Subject to the provisions of Section 8.5, the provisions
of this Section 9 shall survive the termination of this Agreement, irrespective
of the reason therefor.
10. Miscellaneous.
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10.1 Waiver of Breach. Neither party's failure to enforce any
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provision or provisions of this Agreement shall be deemed or in any way
construed as a waiver of any such provision or provisions, nor prevent that
party thereafter from enforcing each and every provision of this Agreement. The
rights granted the parties herein are cumulative and shall not constitute a
waiver of any party's right to assert all other legal remedies available to it
under the circumstances.
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10.2 Successors; Assigns. The Company shall be entitled to
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assign its rights and obligations hereunder. Consultant shall not assign any of
his rights or obligations under this Agreement without the prior written consent
of the Board of Directors of the Company. Subject to the foregoing, the
provisions of this Agreement shall be binding upon and inure to the benefit of
the heirs, legal representatives, executors, successors and assigns of
Consultant and the Company.
10.3 Notices. All notices and other communications which are
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required or permitted to be given under this Agreement shall be in writing and
shall be deemed to be sufficiently given (a) if delivered personally, upon
delivery and (b) if delivered by registered or certified mail (return receipt
requested), postage prepaid, upon the earlier of actual delivery or upon three
(3) days after being mailed, in each case to Consultant or the Company at the
address set forth at the beginning of this Agreement. Either party may, by
notice given hereunder, designate any further or different address to which
subsequent notices or other communications shall be sent.
10.4 Severability. If any term or provision of this
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Agreement is held to be void or unenforceable by any court of competent
jurisdiction, only that objectionable term or provision shall be deleted
herefrom while the remainder of the term, provision and agreement shall be
enforceable.
10.5 Governing Law. Each party hereto irrevocably submits
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to the jurisdiction of the courts of the State of Missouri and the United States
District Court for the Eastern District of Missouri for the purpose of any suit,
action, proceeding or judgment relating to or arising out of this Agreement and
the transactions contemplated hereby and to the laying of venue in any such
court. Each party hereto irrevocably waives any claim that any such suit, action
or proceeding brought in any such court has been brought in an inconvenient
forum. This Agreement shall be governed by and construed in accordance with the
internal, substantive laws of the State of Missouri.
10.6 Attorneys' Fees. In the event any litigation or other
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proceeding ("Proceeding") is initiated by any party against any other party to
enforce, interpret or otherwise obtain judicial or quasi-judicial relief in
connection with this Agreement, the prevailing party or parties in such
proceeding shall be entitled to recover from the unsuccessful party or parties
all costs, expenses and reasonable attorneys' fees relating to or arising out of
such Proceeding (whether or not the Proceeding results in a judgment), including
any post-judgment or post-award Proceeding, including, without limitation, one
to enforce any judgment or award resulting from any such Proceeding. Any such
judgment or award shall contain a specific provision for the recovery of all
such subsequently incurred costs, expenses and reasonable attorneys' fees.
10.7 Counterparts. This Agreement may be executed
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simultaneously in two (2) or more counterparts, each of which shall be deemed to
be an original, but all of which together shall constitute one (1) and the same
instrument. Furthermore, facsimiles of signatures may be taken as the actual
signatures, and each party agrees to furnish the other with documents bearing
the original signatures within ten (10) days of the facsimile transmission.
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10.8 Complete Agreement; Amendments. This Agreement
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contains the entire understanding between the parties hereto with respect to the
subject matter hereof and supersedes any prior agreements and understandings
relating thereto. This Agreement may not be waived, changed, modified, extended
or discharged orally, but only by a written instrument signed by the party
against whom enforcement of any waiver, change, modification, extension or
discharge is sought.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement on the day and year first above written.
The "Company"
WINDSOR ART, INC.
By:_________________________________
An Authorized Officer
"Consultant"
___________________________________
Xxxxx X. Xxxxxx
"Interiors"
INTERIORS, INC.
By:_________________________________
An Authorized Officer
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