EMPLOYMENT AGREEMENT
Exhibit 10.10
EMPLOYMENT AGREEMENT dated as of October 21, 2005, by and between Xxxxxxx Xxxxxxx Inc., a
Maryland corporation (the “REIT”), Xxxxxxx Xxxxxxx XX, a Delaware Limited Partnership (the
“Operating Partnership”) each with its principal place of business at 0000 Xxxxxxx Xxxxx Xxxxx,
Xxxxx 000, Xxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000, and Xxxxxxx X. Xxxxx, residing at the address set
forth on the signature page hereof (the “Executive”).
WHEREAS, the REIT and the Operating Partnership (collectively, the “Company”) wish to employ
the Executive, and the Executive wishes to accept such offer, on the terms set forth below:
Accordingly, the parties hereto agree as follows:
1. Term. The Company hereby employs the Executive, and the Executive hereby accepts
such employment, for an initial term (the “Initial Term”) commencing on the date of closing of the
initial public offering of the shares of the Company (an “IPO”), provided that the Executive is
employed by the Company immediately prior to such date, and continuing for a three-year period,
unless sooner terminated in accordance with the provisions of Section 4 or Section 5; with such
employment to continue for successive one-year periods in accordance with the terms of this
Agreement (subject to termination as aforesaid) unless either party notifies the other party of
non-renewal in writing prior to 90 days before the expiration of the initial term and each annual
renewal, as applicable (the Initial Term, together with any such extensions of employment
hereunder, shall hereinafter be referred to as the “Term”).
2. Duties. During the Term, the Executive shall be employed by the Company as the
Chief Financial Officer, Senior Vice President and Secretary of the Company, and, as such, the
Executive shall faithfully perform for the Company the duties of said office and shall perform such
other duties of an executive, managerial or administrative nature as shall be specified and
designated from time to time by the Board of Directors of the Company (the “Board”) or the General
Partner of the Operating Partnership
(the “General Partner”) (including, without limitation, the performance of duties for
affiliates and subsidiaries of the Company). The Executive shall devote substantially all of his
business time and effort to the performance of his duties hereunder; provided that, the following
activities do not interfere with the Executives ability to perform his duties hereunder, the
Executive shall not be prohibited from performing personal and charitable activities and engaging
in any other business interests as may be approved by the Board or the General Partner.
Notwithstanding the foregoing, unless otherwise consented to by the parties hereto, in the event of
any termination of employment with either the REIT or the Operating Partnership at a time when the
REIT and the Operating Partnership are affiliates, then such termination will be considered to be a
termination of such employment with the Company. Nothing herein shall restrict the ability of the
Operating Partnership from classifying the Executive as a non-employee service provider thereto for
tax-administrative purposes, for purposes of employee benefit plans and programs and for such other
purposes as it may deem appropriate.
3. Compensation.
3.1 Salary. The Company shall pay the Executive during the Term a salary at the rate
of $225,000 per annum (the “Annual Salary”), in accordance with the customary payroll practices of
the Company applicable to senior executives (or, if there is no such policy, such practices of the
Company’s principal affiliates). At least annually, the Board and the General Partner shall review
the Executive’s Annual Salary and may provide for increases therein as it may in its discretion
deem appropriate.
3.2 Bonus. During the Term, in addition to the Annual Salary, for each fiscal year of
the Company ending during the Term, the Executive shall have the opportunity to receive an annual
bonus in an amount to be determined by the Company (the “Annual Bonus”).
3.3 Benefits — In General. The Executive shall be permitted during the Term to
participate in any group life, hospitalization or disability insurance plans, health programs,
equity-based plans, retirement plans, fringe benefit programs and similar benefits that may be
available to other senior
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executives of the Company generally, on the same terms as such other executives, in each case
to the extent that the Executive is eligible under the terms of such plans or programs.
3.4 Expenses. The Company shall pay or reimburse the Executive for all ordinary and
reasonable out-of-pocket expenses actually incurred (and, in the case of reimbursement, paid) by
the Executive during the Term in the performance of the Executive’s services under this Agreement;
provided that the Executive submits proof of such expenses, with the properly completed forms as
prescribed from time to time by the Company.
3.5. Certain Specific Benefits. The Company shall make available to the Executive,
vacation of 20 business days per year and an appropriate Company car for the Executive’s use as the
Executive reasonably directs.
4. Termination upon Death or Disability. If the Executive dies during the Term, the
Term shall terminate as of the date of death, and the obligations of the Company to or with respect
to the Executive shall terminate in their entirety upon such date except as otherwise provided
under this Section 4. If the Executive by virtue of ill health or other disability is unable to
perform substantially and continuously the duties assigned to him for more than 180 consecutive or
non-consecutive days out of any consecutive 12-month period, the Company shall have the right, to
the extent permitted by law, to terminate the employment of the Executive upon notice in writing to
the Executive. Upon termination of employment due to death or disability, (i) the Executive (or
the Executive’s estate or beneficiaries in the case of the death of the Executive) shall be
entitled to receive any Annual Salary, Annual Bonus and other benefits earned and accrued under
this Agreement prior to the date of termination (and reimbursement under this Agreement for
expenses incurred prior to the date of termination), (ii) all outstanding unvested equity-based
awards (including, without limitation, stock options and restricted stock) held by the Executive
shall fully vest and become immediately exercisable, as applicable, subject to the other terms of
such awards, and (iii) except as otherwise required under applicable law, the Executive (or, in the
event of his death, his estate and beneficiaries) shall have no further rights to any other
compensation or benefits hereunder on or after the termination of employment, or any other rights
hereunder.
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5. Certain Terminations of Employment.
5.1 Termination by the Company for Cause; Termination by the Executive without Good
Reason.
(a) For purposes of this Agreement, “Cause” shall mean the Executive’s:
(i) conviction of, or formal admission to, a felony;
(ii) engagement in the performance of his duties hereunder, or otherwise to the
material and demonstrable detriment of the Company, in willful misconduct, willful
or gross neglect, fraud, misappropriation or embezzlement;
(iii) repeated failure to adhere to the directions of the Board or the General
Partner, or to adhere to the Company’s policies and practices;
(iv) willful and continued failure to substantially perform his duties properly
assigned to him (other than any such failure resulting from his disability) after
demand for substantial performance is delivered by the Company specifically
identifying the manner in which the Company believes the Executive has not
substantially performed such duties;
(v) breach of any of the provisions of Section 6; or
(vi) breach in any material respect of the terms and provisions of this Agreement
and failure to cure such breach within 90 days following written notice from the
Company specifying such breach;
provided that the Company shall not be permitted to terminate the Executive for Cause except on
written notice given to the Executive at any time following the occurrence of any of the events
described in clauses (i), (ii) or (v) above and on written notice given to the Executive at any
time not more than 30 days following the occurrence of, or if later, the Company’s knowledge of,
any of the events described in clause (iii), (iv) or (vi) above. No termination for Cause shall be
effective unless the Board or the General Partner makes a Cause determination after notice to the
Executive and the Executive has been provided with the opportunity (with counsel of his choice) to
contest the determination at a meeting of the Board or with the board of trustees the General
Partner.
(b) During the Term, the Company may terminate the Executive’s employment hereunder for Cause,
as provided above, and the Executive may terminate his employment without Good Reason on at least
30 days’ and not more than 60 days’ written notice given to the Company. If (i) the
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Company terminates the Executive for Cause, or the Executive terminates his employment and the
termination by the Executive is not for Good Reason in accordance with Section 5.2 or covered by
Section 5.3, the Executive shall receive Annual Salary and other benefits (but, in all events, and
without increasing the Executive’s rights under any other provision hereof, excluding any bonuses
not yet paid) earned and accrued under this Agreement prior to the termination of employment (and
reimbursement under this Agreement for expenses incurred prior to the termination of employment);
and (ii) a termination occurs in accordance with this Section 5.1, except as otherwise required
under applicable law, the Executive shall have no further rights to any other compensation or
benefits hereunder on or after the termination of employment, or any other rights hereunder.
5.2 Termination by the Company without Cause; Termination by the Executive for Good
Reason.
(a) For purposes of this Agreement, “Good Reason” shall mean, unless otherwise consented to by
the Executive,
(i) the material reduction of the Executive’s authority, duties and
responsibilities, or the assignment to the Executive of duties materially
inconsistent with the Executive’s position or positions with the Company;
(ii) a reduction in Annual Salary of the Executive;
(iii) the relocation of the Executive’s office to more than 50 miles from Charlotte,
North Carolina; or
(iv) the Company’s material and willful breach of this Agreement.
Notwithstanding the foregoing, (i) Good Reason shall not be deemed to exist unless notice of
termination on account thereof (specifying a termination date no later than 30 days from the date
of such notice) is given no later than 90 days after the time at which the event or condition
purportedly giving rise to Good Reason first occurs or arises and (ii) if there exists (without
regard to this clause (ii)) an event or condition that constitutes Good Reason, the Company shall
have 60 days from the date notice of such a termination is given to cure such event or condition
and, if the Company does so, such event or condition shall not constitute Good Reason hereunder.
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(b) During the Term, the Company may terminate the Executive’s employment at any time for any
reason or no reason and the Executive may terminate the Executive’s employment with the Company for
Good Reason. If the Company terminates the Executive’s employment and the termination is not
covered by Section 4, 5.1 or 5.3, or the Executive terminates his employment for Good Reason and
the termination by the Executive is not covered by Section 5.3, (i) the Executive shall receive
Annual Salary, Annual Bonus and other benefits earned and accrued under this Agreement prior to the
termination of employment (and reimbursement under this Agreement for expenses incurred prior to
the termination of employment); (ii) the Executive shall receive (A) a cash payment equal to 1.99
times the sum of (x) the Executive’s Annual Salary (as in effect on the effective date of such
termination) payable no later than 30 days after such termination and (y) the greater of (1) the
average of the two previous Annual Bonuses received by the Executive as provided for in Section
3.2, or (2) the maximum amount payable under Section 3.2 for the fiscal year in which the
termination occurs (the “Termination Bonus”), or, in the event the Executive has not received any
Annual Bonuses pursuant to Section 3.2 at the time of such termination, the Termination Bonus shall
be equal to the Annual Bonus the Executive would have received under Section 3.2 if the Executive
would have remained employed through the period required to be entitled to receive the Annual Bonus
and satisfied all target performance objectives, payable no later than 30 days after such
termination (or, if later, as soon as practicable, but in no event more than 30 days after, the
amount of the Termination Bonus is known) and (B) for a period of three years after termination of
employment such continuing health benefits (including any medical, vision or dental benefits),
under the Company’s health plans and programs applicable to senior executives of the Company
generally as the Executive would have received under this Agreement (and at such costs to the
Executive) as would have applied in the absence of such termination (but not taking into account
any post-termination increases in Annual Salary that may otherwise have occurred without regard to
such termination and that may have favorably affected such benefits); (iii) all outstanding
unvested equity-based awards held by the Executive shall vest and become immediately exercisable
and shall otherwise become free of restrictions and be exercisable in accordance with their terms
and the Executive shall become vested in any pension or other
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deferred compensation other than pension or deferred compensation under a plan intended to be
qualified under Section 401(a) or 403(a) of the Internal Revenue Code of 1986, as amended; and (iv)
except as otherwise required under applicable law, the Executive shall have no further rights to
any other compensation or benefits hereunder on or after the termination of employment, or any
other rights hereunder.
(c) Notwithstanding clause (ii)(B) of the second sentence of Section 5.2(b), (i) nothing
herein shall restrict the ability of the Company to amend or terminate the plans and programs
referred to in such clause (ii)(B) from time to time in its sole discretion, but the Company may
not reduce benefits already earned and accrued by, but not yet paid to, the Executive and (ii) the
Company shall in no event be required to provide any benefits otherwise required by such clause
(ii)(B) after such time as the Executive becomes entitled to receive benefits of the same type from
another employer or recipient of the Executive’s services (such entitlement being determined
without regard to any individual waivers or other similar arrangements).
5.3 Change of Control.
(a) Without duplication of the foregoing, upon a “Change in Control” (as defined below) while
the Executive is employed, all outstanding unvested equity-based awards (including stock options
and restricted stock) shall fully vest and become immediately exercisable, as applicable. In
addition, if, after a Change in Control, the Executive terminates his employment with the Company
for any reason on or before the first anniversary of the Change in Control, such termination shall
be deemed a termination by the Executive for Good Reason covered by Section 5.2, provided, that the
Executive provides no less than 30 days’ advance written notice to the Company.
(b) For purposes of this Agreement, “Change in Control” shall have the same meaning as in the
Company 2005 Long Term Incentive Compensation Plan (or any successor plan thereof).
6. Covenants of the Executive.
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6.1 Consideration. The Executive acknowledges, understands and agrees that, in
consideration for agreeing to and complying with the terms and conditions contained in this Section
6 hereof, he will be entitled to a lump sum payment, payable no later than 30 days after a
termination of the Executive’s employment under Section 5 of this Agreement, equal to the sum of
(i) the Executive’s Annual Salary for one year and (ii) the greater of (A) the average of the two
previous Annual Bonuses received by the Executive as provided for in Section 3.2, or (B) the
maximum amount payable under Section 3.2 for the fiscal year in which the termination occurs, or,
in the event the Executive has not received any Annual Bonuses pursuant to Section 3.2 at the time
of such termination, such Annual Bonus shall be equal to the Annual Bonus the Executive would have
received under Section 3.2 if the Executive would have remained employed through the period
required to be entitled to receive the Annual Bonus and satisfied all target performance
objectives. Notwithstanding the foregoing, within seven days of a termination of the Executive’s
employment under Section 5 of this Agreement, the Company may give written notice to the Executive
stating that it does not wish to enforce the terms and conditions contained in this Section 6, and
upon issuance of such notice, the Company will not be obligated to pay and the Executive will not
be entitled to receive any consideration under this Section 6 and the covenants contained in this
Section 6 will have no force and effect.
6.2 Covenant Against Competition; Other Covenants. The Executive acknowledges that
(i) the principal business of the Company (which expressly includes for purposes of this Section 6
(and any related enforcement provisions hereof), its successors and assigns) is the ownership,
operation, development, redevelopment, acquisition and management of strategically located medical
office buildings and other healthcare related facilities in the Southeastern United States. (such
business and any and all other businesses that after the date hereof, and from time to time during
the Term, become material with respect to the Company’s then-overall business, herein being
collectively referred to as the “Business”); (ii) the Company is one of the limited number of
persons who have developed such a business; (iii) the Company’s Business is, in part, national in
scope; (iv) the Executive’s work for Xxxxxxx Xxxxxxx Advisors, Inc. and the Company has given and
will continue to give him access to the
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confidential affairs and proprietary information of the Company; (v) the covenants and
agreements of the Executive contained in this Section 6 are essential to the business and goodwill
of the Company; and (vi) the Company would not have entered into this Agreement but for the
covenants and agreements set forth in this Section 6. Accordingly, the Executive covenants and
agrees that:
(a) By and in consideration of the payments to be provided by the Company hereunder, and
further in consideration of the Executive’s exposure to the proprietary information of the Company,
the Executive covenants and agrees that, during the period commencing on the date hereof and ending
one year following the date upon which the Executive shall cease to be an employee of the Company
and its affiliates (the “Restricted Period”), he shall not in the Restricted Territory (as defined
below), directly or indirectly, whether as an owner, partner, shareholder, principal, agent,
employee, consultant or in any other relationship or capacity, (i) engage in any element of the
Business (other than for the Company or its affiliates) or otherwise compete with the Company or
its affiliates, (ii) render any services to any person, corporation, partnership or other entity
(other than the Company or its affiliates) engaged in competition with the Company or its
affiliates, or (iii) provide financial assistance to or otherwise obtain an ownership interest in a
competitor of the Company or its affiliates; provided, however, that, notwithstanding the
foregoing, the Executive may invest in securities of any entity, solely for investment purposes and
without participating in the business thereof, if (A) such securities are traded on any national
securities exchange or the National Association of Securities Dealers, Inc. Automated Quotation
System, (B) the Executive is not a controlling person of, or a member of a group which controls,
such entity and (C) the Executive does not, directly or indirectly, own 5% or more of any class of
securities of such entity.
For purposes of this Agreement, the “Restricted Territory” shall mean:
(i) North Carolina;
(ii) South Carolina;
(iii) Kentucky;
(iv) Georgia;
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(v) Louisiana;
(vi) Florida;
(vii) Mississippi;
(viii) any other state in the United States in which the Company is actively
conducting its business; or
conducting its business; or
(ix) any other state in the United States in which the Company, during the Term,
conducts its business.
conducts its business.
(b) During and after the Restricted Period, the Executive shall keep secret and retain in
strictest confidence, and shall not use for his benefit or the benefit of others, except in
connection with the business and affairs of the Company and its affiliates, all confidential
matters relating to the Company’s Business and the business of any of its affiliates and to the
Company and any of its affiliates, learned by the Executive heretofore or hereafter directly or
indirectly from the Company or any of its affiliates (the “Confidential Company Information”), and
shall not disclose such Confidential Company Information to anyone outside of the Company except
with the Company’s express written consent and except for Confidential Company Information which is
at the time of receipt or thereafter becomes publicly known through no wrongful act of the
Executive or is received from a third party not under an obligation to keep such information
confidential and without breach of this Agreement.
(c) During the Restricted Period, the Executive shall not, without the Company’s prior written
consent, directly or indirectly, knowingly (i) solicit or encourage to leave the employment or
other service of the Company, or any of its affiliates, any employee or independent contractor
thereof or (ii) hire (on behalf of the Executive or any other person or entity) any employee or
independent contractor who has left the employment or other service of the Company or any of its
affiliates within the one-year period which follows the termination of such employee’s or
independent contractor’s employment or other service with the Company and its affiliates. From the
date hereof through the end of the two-year period commencing with the Executive’s termination of
employment with the Company, the Executive will not, whether for his own account or for the account
of any other person, firm, corporation or other business organization, intentionally interfere with
the Company’s or any of its affiliates’ relationship
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with, or endeavor to entice away from the Company or any of its affiliates, any person who
during the 12-month period prior to the Executive’s termination is or was a customer or client of
the Company or any of its affiliates. While the Executive’s non-compete obligations under Section
6.2(a) are in effect, the Executive shall not publish any statement or make any statement under
circumstances reasonably likely to become public that is critical of the Company or any of its
affiliates, or in any way adversely affecting or otherwise maligning the Business or reputation of
the Company or any of its affiliates.
(d) All memoranda, notes, lists, records, property and any other tangible product and
documents (and all copies thereof), whether visually perceptible, machine-readable or otherwise,
made, produced or compiled by the Executive or made available to the Executive concerning the
business of the Company or its affiliates, (i) shall at all times be the property of the Company
(and, as applicable, any affiliates) and shall be delivered to the Company at any time upon its
request, and (ii) upon the Executive’s termination of employment, shall be immediately returned to
the Company.
6.3 Rights and Remedies upon Breach.
(a) The Executive acknowledges and agrees that any breach by him of any of the provisions of
Section 6.2 (the “Restrictive Covenants”) would result in irreparable injury and damage for which
money damages would not provide an adequate remedy. Therefore, if the Executive breaches, or
threatens to commit a breach of, any of the provisions of Section 6.2, the Company and its
affiliates, in addition to, and not in lieu of, any other rights and remedies available to the
Company and its affiliates under law or in equity (including, without limitation, the recovery of
damages); shall have the right and remedy to have the Restrictive Covenants specifically enforced
(without posting bond and without the need to prove damages) by any court having equity
jurisdiction, including, without limitation, the right to an entry against the Executive of
restraining orders and injunctions (preliminary, mandatory, temporary and permanent) against
violations, threatened or actual, and whether or not then continuing, of such covenants.
(b) The Executive agrees that in any action seeking specific performance or other equitable
relief, he will not assert or contend that any of the provisions of this Section 6 are unreasonable
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or otherwise unenforceable. The existence of any claim or cause of action by the Executive,
whether predicated on this Agreement or otherwise, shall not constitute a defense to the
enforcement of the Restrictive Covenants.
7. Other Provisions.
7.1 Severability. The Executive acknowledges and agrees that (i) he has had an
opportunity to seek advice of counsel in connection with this Agreement and (ii) the Restrictive
Covenants are reasonable in geographical and temporal scope and in all other respects. If it is
determined that any of the provisions of this Agreement, including, without limitation, any of the
Restrictive Covenants, or any part thereof, is invalid or unenforceable, the remainder of the
provisions of this Agreement shall not thereby be affected and shall be given full effect, without
regard to the invalid portions.
7.2 Duration and Scope of Covenants. If any court or other decision-maker of
competent jurisdiction determines that any of the Executive’s covenants contained in this
Agreement, including, without limitation, any of the Restrictive Covenants, or any part thereof, is
unenforceable because of the duration or geographical scope of such provision, then, after such
determination has become final and unappealable, the duration or scope of such provision, as the
case may be, shall be reduced so that such provision becomes enforceable and, in its reduced form,
such provision shall then be enforceable and shall be enforced.
7.3 Enforceability; Jurisdiction; Arbitration.
(a) The Company and the Executive intend to and hereby confer jurisdiction to enforce the
Restrictive Covenants set forth in Section 6 upon the courts of any jurisdiction within the
geographical scope of the Restrictive Covenants. If the courts of any one or more of such
jurisdictions hold the Restrictive Covenants wholly unenforceable by reason of breadth of scope or
otherwise it is the intention of the Company and the Executive that such determination not bar or
in any way affect the Company’s right, or the right of any of its affiliates, to the relief
provided above in the courts of any other jurisdiction within the geographical scope of such
Restrictive Covenants, as to breaches of such
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Restrictive Covenants in such other respective jurisdictions, such Restrictive Covenants as
they relate to each jurisdiction’s being, for this purpose, severable, diverse and independent
covenants, subject, where appropriate, to the doctrine of res judicata. The
parties hereby agree to waive any right to a trial by jury for any and all disputes hereunder
(whether or not relating to the Restricted Covenants).
(b) Any controversy or claim arising out of or relating to this Agreement or the breach of
this Agreement (other than a controversy or claim arising under Section 6, to the extent necessary
for the Company (or its affiliates, where applicable) to avail itself of the rights and remedies
referred to in Section 6.3) that is not resolved by the Executive and the Company (or its
affiliates, where applicable) shall be submitted to arbitration in Charlotte, North Carolina in
accordance with North Carolina law and the procedures of the American Arbitration Association. The
determination of the arbitrator(s) shall be conclusive and binding on the Company (or its
affiliates, where applicable) and the Executive and judgment may be entered on the arbitrator(s)’
award in any court having jurisdiction.
7.4 Notices. Any notice or other communication required or permitted hereunder shall
be in writing and shall be delivered personally, telegraphed, telexed, sent by facsimile
transmission or sent by certified, registered or express mail, postage prepaid. Any such notice
shall be deemed given when so delivered personally, telegraphed, telexed or sent by facsimile
transmission or, if mailed, five days after the date of deposit in the United States mails as
follows:
| (i) | If to the Company, to: |
| Xxxxxxx Xxxxxxx Inc. | ||
| 0000 Xxxxxxx Xxxxx Xxxxx, Xxxxx 000 | ||
| Xxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000 | ||
| Attention: Xxxxx X. Xxxxxxx | ||
| with a copy to: | ||
| Xxxxxxxx Chance US LLP | ||
| 00 Xxxx 00 Xxxxxx | ||
| Xxx Xxxx, Xxx Xxxx 00000 | ||
| Attention: Xxx Xxxxxxxxx |
| (ii) | If to the Executive, to: |
| Xxxxxxx X. Xxxxx | ||
| [at the address set forth on the signature page hereof] |
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Any such person may by notice given in accordance with this Section 7.4 to the other parties hereto
designate another address or person for receipt by such person of notices hereunder.
7.5 Entire Agreement. This Agreement contains the entire agreement between the
parties with respect to the subject matter hereof and supersedes all prior agreements, written or
oral, with respect thereto.
7.6 Waivers and Amendments. This Agreement may be amended, superseded, canceled,
renewed or extended, and the terms hereof may be waived, only by a written instrument signed by the
parties or, in the case of a waiver, by the party waiving compliance. No delay on the part of any
party in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor
shall any waiver on the part of any party of any such right, power or privilege nor any single or
partial exercise of any such right, power or privilege, preclude any other or further exercise
thereof or the exercise of any other such right, power or privilege.
7.7 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NORTH CAROLINA WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW WHICH
COULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF NORTH CAROLINA.
7.8 Assignment. This Agreement, and the Executive’s rights and obligations hereunder,
may not be assigned by the Executive; any purported assignment by the Executive in violation hereof
shall be null and void. In the event of any sale, transfer or other disposition of all or
substantially all of the Company’s assets or business, whether by merger, consolidation or
otherwise, the Company may assign this Agreement and its rights hereunder.
7.9 Withholding. The Company shall be entitled to withhold from any payments or
deemed payments any amount of tax withholding it determines to be required by law.
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7.10 No Duty to Mitigate. Except as may be provided in Section 5.2(c)(ii), the
Executive shall not be required to mitigate damages or the amount of any payment provided for under
this Agreement by seeking other employment or otherwise, nor will any payments hereunder be subject
to offset in the event the Executive does mitigate.
7.11 Binding Effect. This Agreement shall be binding upon and inure to the benefit of
the parties and their respective successors, permitted assigns, heirs, executors and legal
representatives.
7.12 Counterparts. This Agreement may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be an original but all such
counterparts together shall constitute one and the same instrument. Each counterpart may consist
of two copies hereof each signed by one of the parties hereto.
7.13 Survival. Anything contained in this Agreement to the contrary notwithstanding,
the provisions of Sections 6, 7.3 and 7.9, and the other provisions of this Section 7 (to the
extent necessary to effectuate the survival of Sections 6, 7.3 and 7.9), shall survive termination
of this Agreement and any termination of the Executive’s employment hereunder.
7.14 Existing Agreements. The Executive represents to the Company that he is not
subject or a party to any employment or consulting agreement, non-competition covenant or other
agreement, covenant or understanding which might prohibit him from executing this Agreement or
limit his ability to fulfill his responsibilities hereunder.
7.15 Headings. The headings in this Agreement are for reference only and shall not
affect the interpretation of this Agreement.
7.16 Parachutes. If any amount payable to or other benefit receivable by the Executive
pursuant to this Agreement is deemed to constitute a Parachute Payment (as defined below), alone or
when added to any other amount payable or paid to or other benefit receivable or received by the
Executive which is deemed to constitute a Parachute Payment (whether or not under an existing plan,
arrangement or other agreement), and would result in the imposition on the Executive of an excise
tax under Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”), then, in
addition to
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any other benefits to which the Executive is entitled under this Agreement, the Executive
shall be paid by the Company an amount in cash equal to the sum of the excise taxes payable by the
Executive by reason of receiving Parachute Payments plus the amount necessary to put the Executive
in the same after-tax position (taking into account any and all applicable federal, state and local
excise, income or other taxes at the highest applicable rates on such Parachute Payments and on any
payments under this Section 7.16) as if no excise taxes had been imposed with respect to Parachute
Payments. “Parachute Payment” shall mean a “parachute payment” as defined in Section 280G of the
Code. The amount of any payment under this Section 7.16 shall be computed by a certified public
accounting firm selected by the Company and reasonably acceptable to the Executive.
[remainder of the page left intentionally blank]
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IN WITNESS WHEREOF, the parties hereto have signed their names as of the day and year first
above written.
| XXXXXXX XXXXXXX INC. | ||||||
| By: | ||||||
| Name: | ||||||
| Title: | ||||||
| Xxxxxxx X. Xxxxx | ||||||
[to be deleted from all public filings:]
Executive’s address —
17
