EXHIBIT 10.12
EMPLOYMENT AGREEMENT
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This EMPLOYMENT AGREEMENT (this "Agreement") is effective as of the ____
day of ______________, 1998 (the "Effective Date"), by and between U.S.
Remodelers, Inc., a Delaware corporation (the "Company") and Xxxxxx Xxxxx
("Employee").
W I T N E S S E T H:
WHEREAS, Employee is employed as the President and Chief Executive Officer
of the Company;
WHEREAS, the Company and Employee wish to document certain terms of the
employment of Employee in such capacity; and
WHEREAS, the Company wishes to attract and retain well-qualified executive
and key personnel and assure both the Company and the Employee of continuity of
management in the event of any actual or threatened change in control of the
Company;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
ARTICLE I
RESPONSIBILITIES
Section 1.1 Scope of Employment. Employee is employed by Company to serve
as the President and Chief Executive Officer of the Company with the powers and
responsibilities set forth for such position in the Bylaws of the Company.
Employee accepts employment upon the terms set forth in this Agreement and will
perform diligently to the best of his abilities those duties set forth in the
Bylaws or as may be designated from time to time by the Board of Directors (the
"Board") of the Company and in this Agreement in a manner that promotes the
interests and goodwill of the Company.
ARTICLE II
COMPENSATION
Section 2.1 General Terms. The Company agrees to compensate Employee on a
salary basis at an annual rate of Two Hundred Thousand Dollars ($200,000),
payable in accordance with the Company's ordinary payroll policies and
procedures subject to annual review and adjustment by the Board or the
Compensation Committee thereof; provided, however, Employee's salary hereunder
shall not be adjusted downward without the prior written consent of Employee.
Section 2.2 Reimbursement. It is acknowledged by the parties that Employee,
in connection with the services to be performed by him pursuant to the terms of
this Agreement, will be required to make payments for travel, communications,
entertainment of business associates and
similar expenses. The Company will reimburse Employee for all reasonable
documented expenses of types authorized by the Company and incurred by Employee
in the performance of his duties hereunder. Employee will comply with such
budget limitations and approval and reporting requirements with respect to
expenses as the Company may establish from time to time.
Section 2.3 Employee Benefits. During the term of this Agreement, Employee
shall be entitled to participate in and receive benefits under any and all
employee benefit plans and programs which are from time to time generally made
available to the executive employees of the Company including, without
limitation, health and disability insurance and bonuses as may be specified in
applicable employee manuals or established by the Board. In addition, Employee
shall be entitled to an annual physical during the term of this Agreement.
ARTICLE III
NONDISCLOSURE OF CONFIDENTIAL INFORMATION
Section 3.1 Confidential Information. For purposes of this Agreement,
"Confidential Information" is any data or information that is unique to the
Company, proprietary, competitively sensitive, and not generally known by the
public, including, but not limited to, the Company's business plan, prospective
customers ("prospective customers" is understood to mean those potential
customers with whom or with which the Company is engaged in active discussion
about a business relationship), training manuals, product development plans,
bidding and pricing procedures, market plans and strategies, business plans and
projections, internal performance statistics, financial data, confidential
personnel information concerning employees of the Company, operational or
administrative plans, credit information, policy manuals, terms and conditions
of contracts and agreements, information derived from reports, investigations,
research and analysis and all similar information concept and ideas related to
the business of the Company's customers or potential customers or suppliers,
other than information that is publicly available. The term "Confidential
Information" shall not apply to information which is (i) already in Employee's
possession (unless such information was obtained by Employee from the Company in
the course of Employee's employment by the Company); (ii) received by Employee
from a third party with no restriction on disclosure or (iii) required to be
disclosed by any applicable law or by an order of a court of competent
jurisdiction; or (iv) contained in documents or other information that is
generally available to the public and filed by the Company with any governmental
agency or entity.
Section 3.2 Use and Disclosure. Employee recognizes and acknowledges that
the Confidential Information constitutes valuable, special and unique assets of
the Company and its affiliates. In consideration of the severance provisions
contained herein, Employee hereby agrees that during the term of this Agreement
and until the date which is either one (1) year after (a) the termination of
Employee's employment hereunder or (b) the expiration of the term of this
Agreement (the applicable one-year period will be referred to herein as the
"Restricted Period"), Employee will not use or disclose any Confidential
Information of the Company except as required to perform Employee's duties.
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Section 3.3 Surrender. Upon the request of the Company and, in any event,
upon the termination of this Agreement for any reason, Employee will surrender
to the Company (i) all memoranda, notes, records, drawings, manuals or other
documents pertaining to the Company's business including all copies and/or
reproductions thereof and (ii) all materials involving any Confidential
Information of the Company.
Section 3.4 Remedies. In the event of a breach or a threatened breach of
any of the covenants contained in this Article III, the Company shall, in
addition to the remedies provided by law, have the right and remedy to have such
covenants specifically enforced by a court having equity jurisdiction, it being
acknowledged and agreed that any material breach of any of the covenants will
cause irreparable injury to the Company and that money damages will not provide
an adequate remedy to the Company.
ARTICLE IV
NONCOMPETITION; NONSOLICITATION
Section 4.1 Restriction. In consideration of the severance provisions
contained herein and the access to the Confidential Information granted to
Employee, Employee hereby agrees as follows: (a) if this Agreement is terminated
pursuant to Section 6.1(b); (b) if this Agreement is terminated pursuant to
Section 6.1(c) or (d) and the Company continues to pay Employee's salary during
the Restricted Period as contemplated herein; or (c) if this Agreement is
terminated pursuant to Section 6.1(e) and the Company elects to pay Employee's
salary during the Restricted Period, then during the Restricted Period, Employee
will not, without the prior written consent of the Company, directly or
indirectly, (i) within a fifty (50) mile radius of any metropolitan area in
which the Company conducts its business, engage or participate in, whether as a
manager, employee, officer, director, investor, lender, principal or provide
consulting services to any business which owns, manages, or operates a kitchen
remodeling or kitchen updating or replacement business or which otherwise
engages in competition with the Company, or (ii) solicit or attempt to solicit
individually or in concert with others any employee of the Company either to
work for Employee personally or on behalf of any other person or entity (whether
or not such employment is with a company or business enterprise that is in
competition with the Company).
Section 4.2 Reformation and Severance. If a judicial determination is made
that any of the provisions of the above restriction constitutes an unreasonable
or otherwise unenforceable restriction against Employee, it shall be rendered
void only to the extent that such judicial determination finds such provisions
to be unreasonable or otherwise unenforceable. In this regard, the parties
hereby agree that any judicial authority construing this Agreement shall be
empowered to sever any portion of the prohibited business activity from the
coverage of this restriction and to apply the restriction to the remaining
portion of the business activities not so severed by such judicial authority.
Moreover, notwithstanding the fact that any provisions of this restriction are
determined by a court not to be specifically enforceable through injunctive
relief, the Company shall nevertheless be entitled to seek to recover monetary
damages as a result of the breach of such provision by Employee. The time period
during which the restrictions shall apply shall be tolled and suspended
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as to Employee for a period equal to the aggregate quantity of time during which
Employee violates such prohibitions in any respect.
Section 4.3 Remedies. In the event of a breach or a threatened breach of
any of the covenants contained in this Article IV, the Company shall, in
addition to the remedies provided by law, have the right and remedy to have such
covenants specifically enforced by a court having equity jurisdiction, it being
acknowledged and agreed that any material breach of any of the covenants will
cause irreparable injury to the Company and that money damages will not provide
an adequate remedy to the Company.
ARTICLE V
TERM
This Agreement shall commence on the Effective Date and shall continue in
effect through ______ __, 1999 provided, however, that commencing on ___________
__, 1999 and each ________ __ thereafter, the term of this Agreement shall
automatically be extended for one (1) additional year unless, not later than
__________ __ immediately preceding such _____________ __, the Company shall
have given notice (the "Non-Renewal Notice") that it does not wish to extend
this Agreement.
ARTICLE VI
TERMINATION
Section 6.1 Termination.
(a) Mutual Agreement. This Agreement may be terminated at any time by
the mutual agreement of the parties hereto. Employee will not be entitled
to any severance pay or other compensation upon termination of his
employment pursuant to this Subsection 6.1(a).
(b) By Company For Company Cause. This Agreement may be terminated by
the Company at any time upon written notice for Company Cause (as defined
herein) but only after Employee shall have had the opportunity to discuss
such termination with the Board, the Board shall have adopted a resolution
terminating Employee's employment and specifying such, and Employee shall
have received written notice of such action, which notice shall include a
copy of such resolution specifying such Company Cause. If a matter
purportedly giving rise to Company Cause may be cured by Employee, the
Board shall not take any action to terminate Employee for such Company
Cause unless and until (i) Employee has received written notice from the
Board of the Company specifying such Company Cause and setting forth the
action, which, when taken, will correct the Company Cause (if any) and (ii)
Employee shall have failed to cure or correct such Company Cause within
thirty (30) days after receiving such notice.
"Company Cause" shall mean any one or more of the following:
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I. A substantial breach by Employee of a material provision of this
Agreement;
II. A final conviction, after all available appeals have been
exhausted, for a felony which in the reasonable judgment of the
Board materially affects Employee's ability to perform his duties
pursuant to this Agreement; or
III. Commission by Employee of an act of fraud, embezzlement, or
material dishonesty against the Company or its affiliates as
determined by the Board based on information the Board deems
reasonable and adequate.
Employee will not be entitled to any severance pay or other
compensation upon termination of his employment pursuant to this Subsection
except for any portion of his base salary accrued but unpaid from the last
monthly payment date to the date of termination and expense reimbursements
under Section 2.2 hereof for expenses incurred in the performance of his
duties hereunder prior to termination.
(c) Termination by Employee for Good Reason. The Employee may
terminate this Agreement at any time for "Good Reason," upon not less than
thirty (30) days' written notice to the Employer specifying in reasonable
detail the reason(s) therefor.
"Good Reason" means any of the following:
I. Any significant change by the Employer in the Employee's (A)
rights under this Agreement with respect to issues of
compensation and employee benefits (other than changes made with
respect to the Company's standard employee benefits), or (B)
functions, duties and responsibilities from those contemplated
herein, without the prior consent of the Employee;
II. Company's refusal or willful failure, by action or inaction, of
its officers or Board, to perform its other obligations under
this Agreement; provided, that if the Employee asserts that the
Company has breached the provisions of Subsection (I) or (II),
the Employee shall give the Company written notice of the
occurrence, facts or circumstances which the Employee asserts
constitutes a breach and the Employer shall have thirty (30) days
from the date of such notice to cure the asserted breach or to
notify the Employee in writing that the Employer does not agree
that a breach has occurred; or
In the event of termination of this Agreement pursuant to this
Subsection, Employee's salary in effect on the date of termination shall
continue to be paid during the Restricted Period (the "Severance
Payments"). Employee shall also be entitled to receive expense
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reimbursements under Section 2.2 hereof for expenses incurred in
performance of his duties prior to termination.
(d) By Company Without Company Cause. The Company may terminate this
Agreement at any time, upon five (5) days prior written notice, without
Company Cause. In the event of the termination of this Agreement pursuant
to this Subsection 6.1(d), the Company will continue to pay Employee the
Severance Payments. Employee also shall be entitled to receive expense
reimbursements under Section 2.2 hereof for expenses incurred in the
performance of his duties prior to termination.
(e) By Employee Without Good Reason. Employee may terminate this
Agreement at any time without Good Reason. Upon termination of his
employment pursuant to this Subsection 6.1(e), the Company will pay any
portion of Employee's salary at the then current rate and benefits, if any,
accrued but unpaid from the last monthly payment date to the date of
termination. Employee shall also be paid expense reimbursements under
Section 2.2 hereof for expenses incurred in the performance of his duties
hereunder prior to termination.
(f) Expiration of Term. This Agreement shall automatically expire
upon completion of the term and all extensions pursuant to Article V.
Employee will not be entitled to any severance pay or other compensation
upon termination of his employment pursuant to this Subsection 6.1(f).
(g) Termination on Death. In the event of Employee's death, this
Agreement will be deemed to have terminated on the date of his death. In
the event of his death, the Company will pay to Employee's wife, if married
at the time of his death and provided that Employee's wife has not
predeceased him, (i) one year's salary and (ii) Employee's expense
reimbursements under Section 2.2 hereof for expenses incurred in the
performance of his duties hereunder prior to termination. If Employee is
not married at the time of his death or Employee's wife has predeceased
Employee, the Company shall not be obligated to make any payment to
Employee's estate.
(h) Termination on Absence. The Company may terminate this Agreement
in the event Employee shall have been absent from his duties with the
Company on a full-time basis for 120 consecutive business days. In the
event of the termination of this Agreement pursuant to this Subsection
6.1(h) and provided that Employee is entitled to receive disability
compensation under applicable insurance policies, the Company shall pay to
Employee commencing on the date of such termination, the difference between
(i) Employee's annual salary calculated on a monthly basis and (ii) any
disability compensation received by Employee during the twelve (12) months
immediately following such termination. Employee shall be required to
provide consultation services to the Company, if needed, and to the extent
Employee is able to do so.
Section 6.2 Arbitration. Any dispute arising under this Article VI shall be
resolved in the manner provided by Article VIII.
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ARTICLE VII
CHANGE IN CONTROL TERMINATION PAYMENT
Section 7.1 Termination Payment. Notwithstanding anything to the contrary
contained in Article VI hereof, if, after a Change In Control (as defined in
Section 7.2 hereof), (i) Employee elects to terminate this Agreement within one
(1) year of a Change In Control pursuant to Section 6.1(c) or 6.1(e) or (ii) the
Company terminates this Agreement for any reason within five (5) years of a
Change In Control, the Company will pay Employee a lump sum payment (the
"Termination Payment") in cash equal to one year's salary at the then current
rate in effect immediately prior to the Change In Control.
Section 7.2 Change in Control. A Change In Control will be deemed to have
occurred for purposes hereof, upon any one of the following events following the
consummation of the Company's initial public offering of equity securities under
the Securities Act of 1933, as amended (an "IPO"): (i) any person (within the
meaning of Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")), other than the Company (including its
subsidiaries, directors, and executive officers) has become the beneficial
owner, within the meaning of Rule 13d-3 under the Exchange Act, of fifty percent
(50%) or more of the combined voting power of the Company's then outstanding
Common Stock or equivalent in voting power of any class or classes of the
Company's outstanding securities ordinarily entitled to vote in elections of
directors ("voting securities"); or (ii) shares representing fifty percent (50%)
or more of the combined voting power of the Company's voting securities are
purchased pursuant to a tender offer or exchange offer (other than an offer by
the Company or its subsidiaries or affiliates); or (iii) as a result of, or in
connection with, any tender offer or exchange offer, merger or other business
combination, sale of assets, or contested election, or any combination of the
foregoing transactions (a "Transaction"), the persons who were Directors of the
Company before the Transaction shall cease to constitute a majority of the Board
of the Company or of any successor to the Company; or (iv) the Company is merged
or consolidated with another corporation and as a result of such merger or
consolidation less than fifty percent (50%) of the outstanding voting securities
of the surviving or resulting corporation shall then be owned in the aggregate
by the former shareholders of the Company, other than (A) any party to such
merger or consolidation, or (B) any affiliates of any such party; or (v) the
Company transfers more than fifty percent (50%) of its assets, or the last of a
series of transfers results in the transfer of more than fifty percent (50%) of
the assets of the Company, to another entity that is not wholly-owned by the
Company or (vi) the Board, approves a resolution that for purposes of this
Agreement a Change In Control has occurred. For purposes of Subsection (v), the
determination of what constitutes fifty percent (50%) of the assets of the
Company shall be made by the Board, as constituted immediately prior to the
events that would constitute a Change In Control if fifty percent (50%) of the
Company's assets were transferred in connection with such events, in its sole
discretion. Notwithstanding anything to the contrary contained in this Section
7.2, a Change In Control shall not be deemed to have occurred for the purposes
hereof, upon the consummation of an IPO.
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Section 7.3 No Right To Continued Employment. This Article VII will not
give Employee any right of continued employment or any right to compensation or
benefits from the Company except the rights specifically stated herein.
Section 7.4 Arbitration. Any dispute arising under this Article VII will be
resolved in the manner provided in Article VIII.
ARTICLE VIII
ARBITRATION
Section 8.1 Scope. The Company and Employee acknowledge and agree that any
claim or controversy arising out of or relating to Article VI or Article VII of
this Agreement shall be settled by final and binding arbitration in the city in
which the Company's principal executive offices are located in accordance with
the National Rules of the American Arbitration Association for the Resolution of
Employment Disputes in effect on the date of the event giving rise to the claim
or controversy. The Company and Employee further acknowledge and agree that
either party must request arbitration of any claim or controversy within sixty
(60) calendar days of the date of the event giving rise to the claim or
controversy by giving written notice of the party's request for arbitration.
Failure to give notice of any claim or controversy within sixty (60) calendar
days of the event giving rise to the claim or controversy shall constitute
waiver of the claim or controversy.
Section 8.2 Procedures. All claims or controversies subject to arbitration
shall be submitted to arbitration within six (6) months from the date that a
written notice of request for arbitration is effective. All claims or
controversies shall be resolved by a panel of three (3) arbitrators who are
licensed to practice law in the State of Texas and who are experienced in the
arbitration of labor and employment disputes. These arbitrators shall be
selected in accordance with the National Rules of the American Arbitration
Association for the Resolution of Employment Disputes in effect at the time the
claim or controversy arises. Either party may request that the arbitration
proceeding be stenographically recorded by a Certified Shorthand Reporter. The
arbitrators shall issue a written decision with respect to all claims or
controversies within thirty (30) days from the date the claims or controversies
are submitted to arbitration. The parties shall be entitled to be represented by
legal counsel at any arbitration proceedings. The determination of which party
(or combination of them) will bear the costs and expenses of the arbitration
proceeding will be determined by the arbitrators. The arbitrators will have the
discretionary authority to award to a party part of the reasonable attorney's
fees expense of a party.
Section 8.3 Enforcement. The Company and Employee acknowledge and agree
that the arbitration provisions in this Agreement may be specifically enforced
by either party, and that submission to arbitration proceedings may be compelled
by any court of competent jurisdiction. The Company and Employee further
acknowledge and agree that the decision of the arbitrators may be specifically
enforced by either party in any court of competent jurisdiction.
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Section 8.4 Limitations. Notwithstanding the arbitration provisions set
forth herein, Employee and the Company acknowledge and agree that nothing in
this Agreement shall be construed to require the arbitration of any claim or
controversy (i) arising under Articles III or IV of this Agreement or (ii) where
the this Agreement expressly provides for specific performance or any other
remedy at law or in equity. These provisions shall be enforceable by any court
of competent jurisdiction and shall not be subject to arbitration. Employee and
the Company further acknowledge and agree that nothing in this Agreement shall
be construed to require arbitration of any claim for workers' compensation or
unemployment compensation.
ARTICLE IX
GENERAL TERMS
Section 9.1 Notices. All notices and other communications hereunder will be
in writing or by written telecommunication, and will be deemed to have been duly
given if delivered personally or if sent by overnight courier or by written
telecommunication, to the relevant address set forth below, or to such other
address as the recipient of such notice or communication will have specified to
the other party hereto in accordance with this Section:
If to the Company to: U.S. Remodelers, Inc.
0000 X. Xxxxxxxxxxx Xxxx
Xxxxx 000 Xxxx
Xxxxxx, Xxxxx 00000
Attn: President
Fax No.: (000) 000-0000
with a copy to: Xxxxxxx Xxxxxx L.L.P.
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000-0000
Attn: Xxxxxxx X. Xxxxxxx, Xx.
Fax No.: (000) 000-0000
If to Employee, to: Xxxxxx X. Xxxxx
6539 Xxxxxxxx
Xxxxxx, Xxxxx 00000
Fax No.: (000) 000-0000
Section 9.2 Withholding; No Offset. All payments required to be made by the
Company under this Agreement to Employee will be subject to the withholding of
such amounts, if any, relating to federal, state and local taxes as may be
required by law. No payment under this Agreement will be subject to offset or
reduction attributable to any amount Employee may owe to the Company or any
other person.
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Section 9.3 Entire Agreement; Modification. This Agreement constitutes the
complete and entire agreement between the parties with respect to the subject
matter hereof and supersedes all prior agreements between the parties. The
parties have executed this Agreement based upon the express terms and provisions
set forth herein and have not relied on any communications or representations,
oral or written, which are not set forth in this Agreement.
Section 9.4 Amendment. The covenants or provisions of this Agreement may
not be modified by an subsequent agreement unless the modifying agreement: (i)
is in writing; (ii) contains an express provision referencing this Agreement;
(iii) is signed and executed on behalf of the Company by an officer of the
Company other than Employee; (iv) is approved by resolution of the Board; and
(v) is signed by Employee.
Section 9.5 Legal Consultation. Both parties have been accorded a
reasonable opportunity to review this Agreement with legal counsel prior to
executing this Agreement.
Section 9.6 Choice of Law. This Agreement and the performance hereof will
be construed and governed in accordance with the laws of the State of Texas,
without regard to its choice of law principles.
Section 9.7 Attorney's Fees; Interest. If legal action is commenced by
either party to enforce or defend its rights under this Agreement, the party
substantially obtaining the relief requested in such action shall be entitled to
recover its costs and reasonable attorneys' fees in addition to any other relief
granted.
Section 9.8 Successors and Assigns. The obligations, duties and
responsibilities of Employee under this Agreement are personal and shall not be
assignable. In the event of Employee's death or disability, this Agreement shall
be enforceable by Employee's estate, executors or legal representatives. This
Agreement may be assigned by the Company to an affiliate of the Company in
connection with such affiliate's IPO.
Section 9.9 Waiver of Provisions. Any waiver of any terms and conditions
hereof must be in writing and signed by the parties hereto. The waiver of any of
the terms and conditions of this Agreement shall not be construed as a waiver of
any subsequent breach of the same or any other terms and conditions hereof.
Section 9.10 Severability. The provisions of this Agreement shall be deemed
severable, and if any portion shall be held invalid, illegal or enforceable for
any reason, the remainder of this Agreement shall be effective and binding upon
the parties provided that the substance of the economic relationship created by
this Agreement remains materially unchanged. Furthermore, in lieu of each
illegal, invalid or unenforceable provision of this Agreement, there shall be
added automatically as part of this Agreement a provision as similar in terms to
such illegal, invalid or unenforceable provision as may be possible and be
legal, valid and enforceable.
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Section 9.11 Remedies. The parties hereto acknowledge and agree that upon
any breach by Employee of his obligations under either of Articles III and IV
hereof, the Company will have no adequate remedy at law, and accordingly will be
entitled to specific performance and other appropriate injunctive and equitable
relief. Notwithstanding the arbitration provisions set forth in Article VIII,
Employee and the Company acknowledge and agree that nothing in this Agreement
shall be construed to require the arbitration of any claim or controversy (i)
arising under Articles III or IV of this Agreement or (ii) where the this
Agreement expressly provides for specific performance or any other remedy at law
or in equity. No remedy set forth in this Agreement or otherwise conferred upon
or reserved to any party shall be considered exclusive of any other remedy
available to any party, but the same shall be distinct, separate and cumulative
and may be exercised from time to time as often as occasion may arise or as may
be deemed expedient.
Section 9.12 Counterparts. This Agreement may be executed in multiple
counterparts, each of which will be deemed an original, and all of which
together will constitute one and the same instrument.
[Intentionally Left Blank]
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IN WITNESS WHEREOF, Company and Employee have caused this Agreement to be
executed on the day first written above.
COMPANY:
U.S. REMODELERS, INC.
By:
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Printed Name:
Title:
EMPLOYEE:
By:
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Printed Name:
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