Robert S. Holcombe October 3, 1995 Page 3 5. Remaining Agreement. Except as modified by the terms of this letter agreement, all of the terms and conditions of your Employment Agreement shall remain in full force and effect. 6. Notice. Notices to be...

[The Xxxxxx Companies Logo]                       The Xxxxxx Companies, Inc.
                                                  0 Xxxxxx Xxxxx, Xxxxx Xxxxx
                                                  Xxxx Xxx, XX 00000 XXX
                                                  000-000-0000
                                                  000-000-0000 Fax
 
                                                                 October 3, 1995
 
Xxxxxx X. Xxxxxxxx
000 Xxxxx Xxxxxx
Xxxxx Xxxx, XX 00000
 
Dear Bob:
 
     In  view of  the decision to  close the  Fort Xxx office,  this letter sets
forth the  agreement  between  us  with  respect  to  the  termination  of  your
employment  with The Xxxxxx Companies, Inc.  ('Xxxxxx'). As used in this letter,
'Employment Agreement'  shall refer  to the  Employment Agreement,  dated as  of
December  1, 1991, between you and Xxxxxx, as amended on November 16, 1994. Each
capitalized term  used herein  which is  not otherwise  defined shall  have  the
meaning  assigned to it in the Employment  Agreement. To the extent there is any
inconsistency between the  Employment Agreement and  this letter agreement,  the
provisions of this letter agreement shall be controlling. This letter shall also
constitute  the  Notice of  Termination  called for  under  Section 4(c)  of the
Employment Agreement.
 
     By signing this  agreement, you acknowledge  that you were  advised by  the
Company to consult with another attorney before signing, that you negotiated the
agreement  and  that  this agreement  accurately  sets  forth the  terms  of our
agreement regarding termination of  your employment. Should  you decide to  sign
the  agreement, you  will have  a period of  seven calendar  days following your
execution of the  agreement in which  to revoke your  consent, which  revocation
must be in writing signed by you.
 
     1. Termination. (a) The termination of your employment with Xxxxxx shall be
effective  April 30, 1996 (the 'Termination Date'). Subject to the last sentence
of this subparagraph (a) and to subparagraph 1 (b) below, you shall continue  to
fully  and faithfully  perform those  duties assigned to  you by  Xxxxxx in your
current capacity as Senior  Vice President and General  Counsel and continue  to
receive  your  Annual Salary  at  your current  rate  and all  other  rights and
benefits to which  you are entitled  under your Employment  Agreement until  the
close  of business on the Termination  Date. Notwithstanding the foregoing, from
March 1, 1996 through and including April  30, 1996, you shall work at the  rate
of  18.75 hours per  week and shall receive  an Annual Salary  payable at a rate
equal to 50% of your current Annual Salary.
 
     (b) Should you notify the  Company in writing at  least 30 days before  its
effectiveness  of a  decision to  end your  employment prior  to the Termination
Date, you shall  continue to  receive your  Annual Salary  through such  earlier
termination  date  at the  rate  currently in  effect (or  50%  of that  rate if
subsequent to February 29, 1996) and all other rights and benefits to which  you
are  entitled. All of the severance benefits  described in Section 2 below shall
remain due to you  on exactly the  same terms as  described therein except  that
provision of the same shall begin on the early
 





Xxxxxx X. Xxxxxxxx
October 3, 1995
Page 2
 
termination  date, rather than  on April 30,  1996. Upon delivery  of the notice
provided  for  herein,  such  early  termination  date  shall  become  the   new
Termination Date.
 
     2.  Benefits. (a)  Your employment  has been  terminated by  Xxxxxx without
Cause, thereby entitling you to all of the benefits specified in Section 5(c) of
the Employment Agreement.
 
     (b) On the Termination Date, Xxxxxx shall deliver to you a check in payment
of all accrued but unused vacation time less all amounts required to be withheld
in connection with ordinary tax withholding rules and regulations.
 
     (c) Following the Termination Date, Xxxxxx will facilitate the transfer  of
any funds in which you are vested under the Xxxxxx 401(k) Plan.
 
     (d) All rights with respect to options or restricted stock issued under the
1988  Long Term Incentive Plan shall be governed by the provisions of such Plan,
the various  Option  Certificates  and Restricted  Stock  Agreements  issued  in
accordance with such Plan and the Turn-Around Incentive Plan.
 
     (e)  With respect  to your  1995 and pro  rata 1996  Incentive Payment Plan
bonuses, in view of the changed circumstances all of your MBOs will be deemed to
have been achieved and there will be no negative distinction made in  comparison
with  other senior Xxxxxx  executives when determining the  amount of your bonus
payments.
 
     (f) In  full satisfaction  of  Xxxxxx'x obligations  to you  under  Section
5(c)(iii)  of the Employment Agreement, Xxxxxx  shall pay you on the Termination
Date a lump sum retirement benefit in the amount of $48,330.60.
 
     3. Release. On the Termination Date, you will execute and deliver to Xxxxxx
a General Release in the form attached hereto.
 
     4. Return of Records. You hereby agree and confirm that, on or prior to the
Termination Date,  you  will return  to  the Company  all  documents  containing
Non-Public  Information relating to the Company or entities in or with which the
Company has, or  has contemplated or  is contemplating any  investment or  other
transaction  which  you obtained  during your  employment  with Xxxxxx.  As used
herein, 'Non-Public  Information' shall  mean any  information relating  to  the
Company,   its  investments  and  acquisitions   and  proposed  investments  and
acquisitions, and entities affiliated  with any of the  foregoing that you  have
acquired  by  reason  of  your  employment  with  the  Company,  except  for (A)
information which is in the public domain at the time of receipt by you, and (B)
information which, after  receipt thereof  by you,  becomes part  or the  public
domain through no improper act or omission of yours.
 





Xxxxxx X. Xxxxxxxx
October 3, 1995
Page 3
 
     5.  Remaining Agreement.  Except as  modified by  the terms  of this letter
agreement, all of the  terms and conditions of  your Employment Agreement  shall
remain in full force and effect.
 
     6.  Notice. Notices to be given hereunder  shall be deemed given if made in
accordance with  Section  10 of  the  Employment Agreement,  provided  that  the
address  to  be  used for  the  Company  shall be:  0000  Xxxxxxxxxx  Xxxx Xxxx,
Xxxxxxxxxx, XX 00000, and the address to  be used for you shall be your  address
as  specified on the first page of this  letter, or such other address as either
party shall specify in a  written notice given to  the other in accordance  with
such Section 10 and this provision.
 
     You hereby confirm and acknowledge that you have read this letter agreement
and  fully understand  the provisions  contained herein.  If the  foregoing sets
forth your understanding  of our agreement,  please sign in  the space  provided
below-v  for  your  signature,  whereupon this  letter  shall  become  a binding
agreement.
 
     This  letter  agreement  will be  governed  by  the laws  of the  State  of
California (without giving effect to its choice of law provisions).
 
                                          Very truly yours,
                                          THE XXXXXX COMPANIES, INC.
 
                                          By:           XXXXXX X. XXXXX
                                                ------------------------------
 
ACCEPTED AND AGREED as
of the date first written above
 
XXXXXX X. XXXXXXXX
------------------------------------
Xxxxxx X. Xxxxxxxx