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EXHIBIT 10.18
PERFORMANCE ASSET MANAGEMENT COMPANY
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT ("Agreement"), is made and entered into
in duplicate as of the ____ day of __________, 1997, by and between Performance
Asset Management Company, a Delaware corporation ("Corporation"), and Xxxxxxx X.
Xxxxxxxx ("Indemnitee").
RECITALS
A. Indemnitee is currently serving as a director and officer of the
Corporation and in another Corporate Status (hereinafter defined) and Indemnitee
is willing, subject to, among other things, the Corporation's execution and
performance of this Agreement, to continue in or assume such capacities; and
B. The Bylaws of the Corporation provide that the Corporation shall
indemnify and advance Expenses (hereinafter defined) to all directors and
officers of the Corporation in the manner set forth therein and to the fullest
extent permitted by applicable law, and to such greater extent as applicable law
may thereafter permit, and the Corporation's Certificate of Incorporation
provides for limitation of liability for directors; and
C. In order to induce Indemnitee to provide services as contemplated
hereby, the Corporation has deemed it to be in its best interest to enter into
this Agreement with Indemnitee;
NOW, THEREFORE, in consideration of Indemnitee's agreement to provide services
to the Corporation and certain of its affiliates as contemplated hereby, the
mutual agreements contained herein and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto
stipulate and agree as follows:
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ARTICLE I
CERTAIN DEFINITIONS
As used herein, the following words and terms shall have the following
respective meanings (whether singular or plural):
"Change of Control" means a change in control of the Corporation after
both the date of the closing of any initial public offering ("IPO") of the
Corporation's $.01 par value Common Stock to the public for cash that has been
registered using a registration statement that has been filed with and declared
effective by the Securities and Exchange Commission and after the date
Indemnitee acquired his Corporate Status, which shall be deemed to have occurred
in any one of the following circumstances occurring after such date (i) there
shall have occurred an event required to be reported with respect to the
Corporation in response to Item 6(e) of Schedule 14A of Regulation 14A (or in
response to any similar item or any similar schedule or form) promulgated under
the Securities Exchange Act of 1934, as amended ("Exchange Act"), whether or not
the Corporation is then subject to such reporting requirement; (ii) any "person"
(as such term is used in Sections 13(d) and 14(d) of the Exchange Act) shall
have become the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Corporation representing 40%
or more of the combined voting power of the Corporation's then outstanding
voting securities without prior approval of at least two-thirds of the members
of the Board of Directors in office immediately prior to such person attaining
such percentage interest; (iii) the Corporation is a party to a merger,
consolidation, sale of assets or other reorganization, or a proxy contest, as a
consequence of which members of the Board of Directors in office immediately
prior to such transaction or event constitute less than a majority of the Board
of Directors thereafter; or (iv) during any period of two consecutive years,
persons who at the beginning of such period constituted the Board of Directors
(including, for this purpose, any new director whose election or nomination for
election by the Corporation's stockholders was approved by a vote of at least
two-thirds of the directors then still in office who were directors at the
beginning of such period) cease for any reason to constitute at least a majority
of the Board of Directors.
"Corporate Status" describes the status of Indemnitee as a director,
officer, employee, agent or fiduciary of the Corporation or of any other
corporation, partnership, limited liability company, association, joint venture,
trust, employee benefit plan or other enterprise that Indemnitee is or was
serving at the request of the Corporation.
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"Court" means any court of competent jurisdiction.
"DGCL" means the Delaware General Corporation Law.
"Expenses" shall include all reasonable attorneys' fees, retainers,
court costs, filing fees, transcript costs, fees of experts, witness fees,
travel expenses, duplicating costs, printing and binding costs, telephone
charges, postage, delivery service fees, and all other disbursements or expenses
of the types customarily incurred in connection with prosecuting, defending,
preparing to prosecute or defend, investigating, or being or preparing to be a
witness in a Proceeding.
"Independent Counsel" means a law firm, or a member of a law firm, that
is experienced in matters of corporation law and neither presently is, nor in
the five years previous to his selection or appointment has been, retained to
represent (i) the Corporation or Indemnitee in any matter material to either
such party or (ii) any other party to the Proceeding resulting in a claim for
indemnification hereunder.
"Matter" is a claim, a material issue or a substantial request for
relief.
"Proceeding" includes any action, litigation, arbitration, alternate
dispute resolution procedure, investigation, administrative hearing or any other
proceeding, whether civil, criminal, administrative or investigative, except one
initiated by Indemnitee pursuant to Section 6.1 of this Agreement to enforce his
rights under this Agreement.
ARTICLE II
SERVICES BY INDEMNITEE
Section 2.1. SERVICES BY INDEMNITEE. Indemnitee agrees to serve or
continue to serve in his current capacity or capacities as a director, officer,
employee, agent or fiduciary of the Corporation. Indemnitee also agrees to
serve, as the Corporation may request from time to time, as a director, officer,
employee, agent or fiduciary of any other corporation, partnership, limited
liability company, association, joint venture, trust or other enterprise in
which the Corporation has an interest. Indemnitee and the Corporation each
acknowledge that they have entered into this Agreement as a means of inducing
Indemnitee to serve the Corporation in such capacities. Indemnitee may at any
time and for any reason resign from such capacity or capacities (subject to any
other contractual obligation or any obligation imposed by operation of law). The
Corporation shall have no obligation under this Agreement to continue Indemnitee
in any such capacity for any period of time and shall not be precluded by the
provisions of this Agreement from removing Indemnitee from any such capacity at
any time.
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ARTICLE III
INDEMNIFICATION
Section 3.1. GENERAL. The Corporation shall, to the fullest extent
permitted by applicable law in effect on the date hereof, and to such greater
extent as applicable law may thereafter permit, indemnify and hold Indemnitee
harmless from and against any and all losses, liabilities, claims, damages and,
subject to Section 3.2, Expenses whatsoever occurring because of any event or
occurrence related to the fact that Indemnitee is or was a director or officer
of the Corporation or is or was serving in another Corporate Status.
Section 3.2. EXPENSES. If Indemnitee is, by reason of his Corporate
Status a party to and is successful, on the merits or otherwise, in any
Proceeding, he shall be indemnified against all Expenses actually and reasonably
incurred by him or on his behalf in connection therewith. If Indemnitee is not
wholly successful in such Proceeding but is successful, on the merits or
otherwise, as to any Matter in such Proceeding, the Corporation shall indemnify
Indemnitee against all Expenses actually and reasonably incurred by him or on
his behalf relating to such Matter. The termination of any Matter in such a
Proceeding by dismissal, with or without prejudice, shall be deemed to be a
successful result as to such Matter. To the extent that the Indemnitee is, by
reason of his Corporate Status, a witness in any Proceeding, he shall be
indemnified against all Expenses actually and reasonably incurred by him or on
his behalf in connection therewith.
ARTICLE IV
ADVANCEMENT OF EXPENSES
Section 4.1. ADVANCES. In the event of any threatened or pending
Proceeding in which Indemnitee is a party or is involved and that may give rise
to a right of indemnification under this Agreement, following written request to
the Corporation by Indemnitee, the Corporation shall promptly pay to Indemnitee
amounts to pay Expenses reasonably incurred by Indemnitee in such Proceeding in
advance of its final disposition upon the receipt by the Corporation of (i) a
written undertaking executed by or on behalf of Indemnitee providing that
Indemnitee will repay the advance if it shall ultimately be determined that
Indemnitee is not entitled to be indemnified by the Corporation as provided in
this Agreement and (ii) satisfactory evidence as to the amount of such Expenses.
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Section 4.2. REPAYMENT OF ADVANCES OR OTHER EXPENSES. Indemnitee shall
reimburse the Corporation for all Expenses paid by the Corporation in defending
any Proceeding against Indemnitee in the event and only to the extent that it
shall be determined pursuant to the provisions of this Agreement or by final
judgment or other final adjudication under the provisions of any applicable law
that Indemnitee is not entitled to be indemnified by the Corporation for such
Expenses.
ARTICLE V
PROCEDURE FOR DETERMINATION OF ENTITLEMENT
TO INDEMNIFICATION
Section 5.1. REQUEST FOR INDEMNIFICATION. To obtain indemnification,
Indemnitee shall submit to the Secretary of the Corporation a written claim or
request. Such written claim or request shall contain sufficient information to
reasonably inform the Corporation about the nature and extent of the
indemnification or advance sought by Indemnitee. The Secretary of the
Corporation shall promptly advise the Board of Directors of such request.
Section 5.2. DETERMINATION OF ENTITLEMENT; NO CHANGE OF CONTROL. If
there has been no Change of Control at the time the request for indemnification
is submitted, Indemnitee's entitlement to indemnification shall be determined in
accordance with Section 145(d) of the DGCL. If entitlement to indemnification is
to be determined by Independent Counsel, the Corporation shall furnish notice to
Indemnitee within 10 days after receipt of the request for indemnification,
specifying the identity and address of Independent Counsel. The Indemnitee may,
within 14 days after receipt of such written notice of selection, deliver to the
Corporation a written objection to such selection. Such objection may be
asserted only on the ground that the Independent Counsel so selected does not
satisfy the requirements of Independent Counsel and the objection shall set
forth with particularity the factual basis for such assertion. If there is an
objection to the selection of Independent Counsel, either the Corporation or
Indemnitee may petition the Court for a determination that the objection is
without a reasonable basis or for the appointment of Independent Counsel
selected by the Court.
Section 5.3. DETERMINATION OF ENTITLEMENT; CHANGE OF CONTROL. If there
has been a Change of Control at the time the request for indemnification is
submitted, Indemnitee's entitlement to indemnification shall be determined in a
written opinion by Independent Counsel selected by Indemnitee. Indemnitee shall
give the Corporation written notice advising of the identity and address of the
Independent Counsel so selected.
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The Corporation may, within seven days after receipt of such written notice of
selection, deliver to the Indemnitee a written objection to such selection.
Indemnitee may, within five days after the receipt of such objection from the
Corporation, submit the name of another Independent Counsel and the Corporation
may, within seven days after receipt of such written notice of selection,
deliver to the Indemnitee a written objection to such selection. Any objections
referred to in this Section 5.3 may be asserted only for the reason that the
Independent Counsel so selected does not satisfy the requirements of Independent
Counsel and such objection shall set forth with particularity the factual basis
for such assertion. Indemnitee may petition the Court for a determination that
the Corporation's objection to the first or second selection of Independent
Counsel is without a reasonable basis or for the appointment as Independent
Counsel of a person selected by the Court.
Section 5.4. PROCEDURES OF INDEPENDENT COUNSEL. If a Change of Control
shall have occurred before the request for indemnification is sent by
Indemnitee, Indemnitee shall be presumed (except as otherwise expressly provided
in this Agreement) to be entitled to indemnification upon submission of a
request for indemnification in accordance with Section 5.1 of this Agreement,
and thereafter the Corporation shall have the burden of proof to overcome the
presumption in reaching a determination contrary to the presumption. The
presumption shall be used by Independent Counsel as a basis for a determination
of entitlement to indemnification, unless the Corporation provides information
sufficient to overcome such presumption by clear and convincing evidence or the
investigation, review and analysis of Independent Counsel convinces him by clear
and convincing evidence that the presumption should not apply.
Except in the event that the determination of entitlement to
indemnification is to be made by Independent Counsel, if the person or persons
empowered under Section 5.2 or Section 5.3 of this Agreement to determine
entitlement to indemnification shall not have made and furnished to Indemnitee
in writing a determination within 60 days after receipt by the Corporation of
the request therefor, the requisite determination of entitlement to
indemnification shall be deemed to have been made and Indemnitee shall be
entitled to such indemnification, unless Indemnitee knowingly misrepresented a
material fact in connection with the request for indemnification or such
indemnification is prohibited by applicable law. The termination of any
Proceeding or of any Matter therein, by judgment, order, settlement or
conviction, or upon a plea of nolo contendere or its equivalent, shall not
(except as otherwise expressly provided in this Agreement) of itself adversely
affect the right of Indemnitee to indemnification or create a presumption that
Indemnitee did not act in good faith and in a manner that he reasonably believed
to be in or not opposed to the best interests of the Corporation, or with
respect to any Proceeding, that Indemnitee had reasonable cause to believe that
his conduct was
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unlawful. A person who acted in good faith and in a manner he reasonably
believed to be in the interest of the participants and beneficiaries of an
employee benefit plan of the Corporation shall be deemed to have acted in a
manner not opposed to the best interests of the Corporation.
For purposes of any determination hereunder, a person shall be deemed
to have acted in good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the Corporation, or, with respect to any
criminal action or Proceeding, to have had no reasonable cause to believe his
conduct was unlawful, if his action is based on the records or books of account
of the Corporation or another enterprise or on information supplied to him by
the officers of the Corporation or another enterprise in the course of their
duties or on the advice of legal counsel for the Corporation or another
enterprise or on information or records given or reports made to the Corporation
or another enterprise by an independent certified public accountant or by an
appraiser or other expert selected with reasonable care by the Corporation or
another enterprise. The term "another enterprise" as used in this section shall
mean any other corporation or any partnership, limited liability company,
association, joint venture, trust, employee benefit plan or other enterprise of
which such person is or was serving at the request of the Corporation as a
director, officer, employee or agent. The provisions of this section shall not
be deemed to be exclusive or to limit in any way the circumstances in which an
Indemnitee may be deemed to have satisfied the applicable standards of conduct
for determining entitlement to rights under this Agreement.
Section 5.5. INDEPENDENT COUNSEL EXPENSES. The Corporation shall pay
any and all reasonable fees and expenses of Independent Counsel incurred acting
pursuant to this article and in any proceeding to which it is a party or witness
in respect of its investigation and written report and shall pay all reasonable
fees and expenses incident to the procedures in which such Independent Counsel
was selected or appointed. No Independent Counsel may serve if a timely
objection has been made to his selection, until a court has determined that such
objection is without a reasonable basis.
ARTICLE VI
CERTAIN REMEDIES OF INDEMNITEE
Section 6.1. ADJUDICATION. In the event that (i) a determination is
made pursuant to Section 5.2 or Section 5.3 of this Agreement that Indemnitee is
not entitled to indemnification under this Agreement; (ii) advancement of
Expenses is not timely made pursuant to Section 4.1 of this Agreement; (iii)
Independent Counsel has not made and delivered a written opinion determining the
request for indemnification (a) within 90 days
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after being appointed by the Court, or (b) within 90 days after objections to
his selection have been overruled by the Court or (c) within 90 days after the
time for the Corporation or Indemnitee to object to his selection; or (iv)
payment of indemnification is not made within five days after a determination of
entitlement to indemnification has been made or deemed to have been made
pursuant to Section 5.2, Section 5.3 or Section 5.4 of this Agreement,
Indemnitee shall be entitled to an adjudication in Court of his entitlement to
such indemnification or advancement of Expenses. In the event that a
determination shall have been made that Indemnitee is not entitled to
indemnification, any judicial proceeding or arbitration commenced pursuant to
this Section 6.1 shall be conducted in all respects as a de novo trial on the
merits and Indemnitee shall not be prejudiced by reason of that adverse
determination. If a Change of Control shall have occurred, in any judicial
proceeding commenced pursuant to this Section 6.1, the Corporation shall have
the burden of proving that Indemnitee is not entitled to indemnification or
advancement of Expenses, as the case may be. If a determination shall have been
made or deemed to have been made that Indemnitee is entitled to indemnification,
the Corporation shall be obligated by such determination in any judicial
proceeding commenced pursuant to this Section 6.1, or otherwise, unless
Indemnitee knowingly misrepresented a material fact in connection with the
request for indemnification, or such indemnification is prohibited by law.
The Corporation shall be precluded from asserting in any judicial
proceeding commenced pursuant to this Section 6.1 that the procedures and
presumptions of this Agreement are not valid, binding and enforceable, and shall
stipulate in any such proceeding that the Corporation is obligated by all
provisions of this Agreement. In the event that Indemnitee, pursuant to this
Section 6.1, seeks a judicial adjudication to enforce his rights under, or to
recover damages for breach of, this Agreement, Indemnitee shall be entitled to
recover from the Corporation, and shall be indemnified by the Corporation
against, any and all Expenses actually and reasonably incurred by him in such
judicial adjudication, but only if he prevails therein. If it shall be
determined in such judicial adjudication that Indemnitee is entitled to receive
part but not all of the indemnification or advancement of Expenses sought, the
Expenses incurred by Indemnitee in connection with such judicial adjudication or
arbitration shall be appropriately prorated.
ARTICLE VII
PARTICIPATION BY THE CORPORATION
Section 7.1. PARTICIPATION BY THE CORPORATION. With respect to any such
Proceeding as to which Indemnitee notifies the Corporation of the commencement
thereof, (a) the Corporation will be entitled to participate therein at its own
expense; (b) except
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as otherwise provided below, to the extent that it may desire, the Corporation
(jointly with any other indemnifying party similarly notified) will be entitled
to assume the defense thereof, with counsel reasonably satisfactory to
Indemnitee. After receipt of notice from the Corporation to Indemnitee of the
Corporation's election so to assume the defense thereof, the Corporation will
not be liable to Indemnitee under this Agreement for any legal or other expenses
subsequently incurred by Indemnitee in connection with the defense thereof other
than reasonable costs of investigation or as otherwise provided below.
Indemnitee shall have the right to employ his own counsel in such Proceeding but
the fees and expenses of such counsel incurred after notice from the Corporation
of its assumption of the defense thereof shall be at the expense of Indemnitee
unless (i) the retention of counsel by Indemnitee has been authorized by the
Corporation, (ii) Indemnitee shall have reasonably concluded that there is a
conflict of interest between the Corporation and Indemnitee in the conduct of
the defense of such action or (iii) the Corporation shall not in fact have
employed counsel to assume the defense of such action, in each of which cases
the fees and expenses of counsel employed by Indemnitee shall be subject to
indemnification pursuant to the terms of this Agreement. The Corporation shall
not be entitled to assume the defense of any Proceeding brought in the name of
or on behalf of the Corporation or as to which Indemnitee shall have made the
conclusion provided for in (ii) above; and (c) the Corporation shall not be
liable to indemnify Indemnitee under this Agreement for any amounts paid in
settlement of any action or claim effected without its written consent, which
consent shall not be unreasonably withheld. The Corporation shall not settle any
action or claim in any manner that would impose any limitation or unindemnified
penalty on Indemnitee without Indemnitee's written consent, which consent shall
not be unreasonably withheld.
ARTICLE VIII
MISCELLANEOUS
Section 8.1. NONEXCLUSIVITY OF RIGHTS. The rights of indemnification
and advancement of Expenses as provided by this Agreement shall not be deemed
exclusive of any other rights to which Indemnitee may at any time be entitled to
under applicable law, the Corporation's Certificate of Incorporation, or any
amendment thereto; the Corporation's Bylaws, or any amendment thereto; any
agreement; a vote of stockholders or a resolution of directors, or otherwise. No
amendment, alteration or repeal of this Agreement or any provision hereof shall
be effective as to any Indemnitee for acts, events and circumstances that
occurred, in whole or in part, before such amendment, alteration or repeal. The
provisions of this Agreement shall continue as to an Indemnitee whose Corporate
Status has ceased for any reason and shall inure to the benefit of his heirs,
executors and administrators.
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Section 8.2. INSURANCE AND SUBROGATION. The Corporation shall not be
liable under this Agreement to make any payment of amounts otherwise
indemnifiable hereunder if, but only to the extent that, Indemnitee has
otherwise actually received such payment under any insurance policy, contract,
agreement or otherwise.
In the event of any payment hereunder, the Corporation shall be
subrogated to the extent of such payment to all the rights of recovery of
Indemnitee, who shall execute all papers required and take all action reasonably
requested by the Corporation to secure such rights, including execution of such
documents as are necessary to enable the Corporation to commence litigation to
enforce such rights.
Section 8.3. ACKNOWLEDGMENT OF CERTAIN MATTERS. In certain instances,
applicable law or public policy may prohibit indemnification of Indemnitee by
the Corporation under this Agreement or otherwise. The Corporation has
undertaken or may be required in the future to undertake, by the Securities and
Exchange Commission, to submit the question of indemnification to a court in
certain circumstances for a determination of the Corporation's right under
public policy to indemnify Indemnitee.
Section 8.4. AMENDMENT. This Agreement may not be modified or amended,
except by a written instrument executed by or on behalf of each of the parties
hereto.
Section 8.5. WAIVERS. The observance of any term of this Agreement may
be waived (either generally or in a particular instance and either retroactively
or prospectively) by the party entitled to enforce such term only by a writing
signed by the party against which such waiver is to be asserted. Unless
otherwise expressly provided herein, no delay on the part of any party hereto in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any waiver on the part of any party hereto of any right,
power or privilege hereunder operate as a waiver of any other right, power or
privilege hereunder nor shall any single or partial exercise of any right, power
or privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or privilege hereunder.
Section 8.6. ENTIRE AGREEMENT. This Agreement and the documents
referred to herein constitute the entire agreement between the parties hereto
with respect to the matters covered hereby, and any other prior or
contemporaneous oral or written understandings or agreements with respect to the
matters covered hereby are superseded by this Agreement.
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Section 8.7. SEVERABILITY. If any provision or provisions of this
Agreement shall be held to be invalid, illegal or unenforceable for any reason
whatsoever, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby; and, to the
fullest extent possible, the provisions of this Agreement shall be construed so
as to give effect to the intent manifested by the provision held invalid,
illegal or unenforceable.
Section 8.8. CERTAIN ACTIONS FOR WHICH INDEMNIFICATION IS NOT PROVIDED.
Notwithstanding any other provision of this Agreement, Indemnitee shall not be
entitled to indemnification or advancement of Expenses under this Agreement with
respect to any Proceeding, or any Matter therein, brought or made by Indemnitee
against the Corporation.
Section 8.9. NOTICES. Promptly after receipt by Indemnitee of notice of
the commencement of any Proceeding, Indemnitee shall, if he anticipates or
contemplates making a claim for Expenses or an advance pursuant to the terms of
this Agreement, notify the Corporation of the commencement of such Proceeding;
provided, however, that any delay in so notifying the Corporation shall not
constitute a waiver or release by Indemnitee of rights hereunder and that any
omission by Indemnitee to so notify the Corporation shall not relieve the
Corporation from any liability that it may have to Indemnitee otherwise than
under this Agreement. Any communication required or permitted to the Corporation
shall be addressed to the Secretary of the Corporation and any such
communication to Indemnitee shall be addressed to the Indemnitee's address as
shown on the Corporation's records, unless the Indemnitee specifies otherwise
and shall be personally delivered or delivered by overnight mail or similar
delivery. Any such notice shall be effective upon receipt.
Section 8.10. GOVERNING LAW. This Agreement shall be construed in
accordance with and governed by the laws of the State of Delaware without regard
to any principles of conflict of laws that, if applied, might permit or require
the application of the laws of a different jurisdiction.
Section 8.11. HEADINGS. The article and section headings in this
Agreement are for convenience of reference only, and shall not be deemed to
alter or affect the meaning or interpretation of any provisions hereof.
Section 8.12. COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be one and the same instrument.
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Section 8.13. USE OF CERTAIN TERMS. As used in this Agreement, the
words "herein," "hereof," and "hereunder" and other words of similar import
refer to this Agreement as a whole and not to any particular paragraph,
subparagraph, section, subsection, or other subdivision. Whenever the context
may require, any pronoun used in this Agreement shall include the corresponding
masculine, feminine or neuter forms, and the singular form of nouns, pronouns
and verbs shall include the plural and vice versa.
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered to be effective as of the date first above written.
PERFORMANCE ASSET
MANAGEMENT COMPANY,
a Delaware corporation
By: _____________________________ ______________________________
Xxxxxxx X. Xxxxxxxx
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