EXHIBIT 10.7
EMPLOYMENT AGREEMENT
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THIS EMPLOYMENT AGREEMENT (this "Agreement"), is made and entered into as
of the 31st day of October, 1997, by and between XXXXXX X. XXXXXX, XX. (the
"Executive"), and XXX RIVER INC., a Georgia corporation (the "Company");
W I T N E S S E T H:
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WHEREAS, the Executive has been employed by the Company as the Chief
Executive Officer and Chairman of the Board of the Company since November, 1989;
and
WHEREAS, the Company desires to continue to employ the Executive, and the
Executive desires to continue to be employed by the Company, on the terms and
conditions contained herein; and
WHEREAS, to induce the Executive to continue in the employ of the Company,
the Company wishes to enter into this Agreement;
NOW, THEREFORE, in consideration of the mutual promises and agreements
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound, hereby agree as follows:
Section 1. Employment
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1.1. Duties. Subject to the terms hereof, the Company hereby employs the
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Executive as the Chief Executive Officer and Chairman of the Board of Directors
of the Company, and the Executive hereby accepts such employment. Subject to
customary responsibility and oversight of the Board of Directors of the Company
(the "Board"), the Executive will have such responsibility and authority
regarding the operations and management of the Company as is customary for a
chief executive officer, including, without limitation, (i) the responsibility
and authority to make day-to-day manufacturing, marketing, procurement and
strategy decisions, (ii) the responsibility and authority to make personnel
decisions, including hiring and termination decisions, and, subject to
compliance with the merit budget to be approved annually by the Board,
compensation decisions relating to all employees of the Company (other than with
respect to the Executive and other than with respect to the other corporate
officers of the Company whose compensation will be determined by the Executive,
subject to approval by the Board) including decisions concerning participation
in the Xxx River Inc. Management Incentive Plan (the "MIP") and any other
employee
benefit and incentive plans, and (iii) the responsibility and authority to take
other actions necessary to implement the annual business plan of the Company.
The Executive agrees that during the employment of the Executive pursuant to
this Agreement, the Executive shall devote such business time and attention to
the business of the Company as is consistent with his past practices as Chief
Executive Officer of the Company.
1.2. Other Activities. The Executive may, without limitation, (i) serve
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on corporate, civic or charitable boards or committees, (ii) deliver lectures,
fulfill speaking engagements or teach at educational institutions and (iii)
manage personal investments, provided such activities do not materially
interfere with the performance of the Executive's responsibilities to the
Company hereunder. The parties hereto expressly understand and agree that to
the extent the Executive has engaged in any such activities prior to the date of
this Agreement, any subsequent conduct of activities similar in nature and scope
to such previous activities shall not be deemed to materially interfere with the
performance of the Executive's duties hereunder.
Section 2. Compensation; Expenses
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2.1. Salary. During the term of his employment hereunder, the Company
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shall pay the Executive a base salary (the "Base Salary") at a rate of
$460,000.00 per annum. The Board shall review the compensation payable to the
Executive hereunder annually and shall increase such compensation at the time of
each such review by an amount which the Board deems appropriate in light of the
Company's performance; provided, however, that the Base Salary shall be
increased during the term of this Agreement by at least an amount necessary to
give effect to the consumer price index (excluding housing) as published by the
United States Department of Labor or any substantially similar successor index
(the "CPI Adjustment"); provided, further, however, that no CPI Adjustment shall
be made during any year of the term of this Agreement if, during the immediately
preceding year, there has been a material adverse change in the business or
operations of the Company. The Base Salary shall be paid to the Executive in
equal bi-monthly or monthly installments in accordance with applicable payroll
policies, less all applicable withholding taxes.
2.2. Bonus. In addition to the Base Salary, the Company shall pay the
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Executive, for each fiscal year ending during the term of this Agreement, an
annual bonus (the "Bonus") pursuant to the MIP in existence as of the date
hereof, or any comparable or successor plan. The Bonus shall be payable in cash
promptly after the date on which the audited financial statements of the Company
are first available for the fiscal year for which the Bonus is awarded, unless
the Executive shall otherwise timely elect to defer the receipt of such Bonus
under any deferred compensation plan of the Company then in effect. Under no
circumstances shall the MIP, as in effect as of the date hereof,
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including, without limitation, any performance targets that have been
established with respect thereto, be amended during the term of this Agreement
without the consent of the Executive, which consent shall be evidenced by a
writing to such effect or the affirmative vote by the Executive at the Board
meeting approving any such amendment to the MIP.
2.3. Expenses. The Executive shall be reimbursed promptly for all
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reasonable business-related expenses incurred by the Executive in accordance
with the policies and procedures of the Company applicable to other senior
executives thereof.
Section 3. Term; Termination of Agreement.
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3.1. Term; Termination. This Agreement shall become effective if and only
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if the Company consummates an initial public offering of the Company's Common
Stock on or before January 31, 1998. Provided that the Executive is employed on
the date the initial public offering is consummated as provided above, the
employment of the Executive pursuant to this Agreement shall continue for a
period of five (5) years from such date or, if earlier, the occurrence of any of
the following events:
(a) the death or total disability of the Executive (total
disability meaning the failure of the Executive to perform his normal
required services hereunder for a period of six consecutive months
during the term hereof by reason of the Executive's mental or physical
disability) (a "Disability Termination Event");
(b) termination by the Company of the Executive's employment
hereunder for "Good Cause," which shall exist upon the occurrence of
any of the following: (i) the Executive is convicted of, pleads guilty
to, or confesses to any felony or any act of fraud, misappropriation
or embezzlement, (ii) the Executive engages in a fraudulent act to the
material damage or prejudice of the Company, or (iii) the Executive
otherwise fails to comply with the terms of this Agreement or deviates
from any written policies or directives of the Board, in either such
case to the material detriment of the Company, and, within 30 days
after written notice from the Board of such failure or deviation, the
Executive has not corrected such failure (in any such case, a "Good
Cause Termination Event");
(c) termination by the Company of the Executive's employment
hereunder for any reason other than as a result of a Good Cause
Termination Event (a "No Cause Termination Event");
(d) termination by the Executive of the Executive's employment
hereunder for "Good Reason",
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which shall mean (i) the assignment to the Executive of any duties
inconsistent in any material respect with the Executive's position
(including status, offices, titles and reporting requirements),
authority or duties or responsibilities as contemplated by Section 1
hereof or any other action by the Company that results in a material
diminishment in such position, authority, duties or responsibilities,
other than action or inaction on the part of the Company that is
corrected by the Company within 30 days after receipt of written
notice thereof given by the Executive, (ii) any failure by the Company
to comply with the terms of this Agreement, including, without
limitation, Sections 2 and 5 hereof, which is not corrected by the
Company within 30 days after receipt of written notice thereof given
by the Executive, (iii) the Company's requiring the Executive to be
based at any office or location more than 40 miles away from that at
which the Executive is based as of the date of this Agreement, except
for travel reasonably required consistent with past practices, in the
performance of the Executive's responsibilities, or (iv) any purported
termination by the Company of the Executive's employment pursuant to
this Agreement other than as permitted herein, in each such case
without the prior written consent of the Executive (in any such case,
a "Good Reason Termination Event"); or
(e) voluntary termination by the Executive of the Executive's
employment hereunder other than for "Good Reason" (as defined above)
(a "Voluntary Termination Event");
(f) the occurrence of a "Change in Control" in respect of the
Company, which shall mean any event or series of events, other than
events or series of events proposed or approved in writing by the
Executive, which result in any "Person" (as hereinafter defined) and
its "Affiliates" (as hereinafter defined) or any group of Persons (as
the term "group" is used in Section 13(d) of the Securities Exchange
Act of 1934, as amended, and the rules thereunder), other than the
Executive and Metropolitan Life Insurance Company and his or its
Affiliates as a group, owning or controlling capital stock of the
Company possessing the voting power (under ordinary circumstances) to
elect a majority of the Board (a "Control Termination Event"). For
purposes of this Agreement, "Person" shall mean an individual, a
partnership, a corporation, an association, a joint stock company, a
trust, a joint venture, an unincorporated organization or a
governmental entity or any department, agency or political subdivision
thereof. For purposes of this Agreement, "Affiliate" shall mean (i)
with respect to any particular natural Person, such Person's spouse,
descendants (whether
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natural or adopted) and other relatives, and (ii) with respect to any
particular Person, any other Person, controlling, controlled by or
under common control with such particular Person.
3.2. Notice of Termination. Any termination of the Executive's
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employment hereunder by the Company or the Executive (other than by reason of
death) shall be communicated by a Notice of Termination to the other party
hereto given in accordance with the requirements of Section 7.10 of this
Agreement and in the case of terminations contemplated by Sections 3.1(a) and
(b) of this Agreement, no termination shall become effective sooner than 10 days
after the date of delivery of the Notice of Termination. For purposes of this
Agreement, a "Notice of Termination" means a written notice which (i) indicates
the specific termination provision in this Agreement relied upon, and (ii) sets
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive's employment under the provision so
indicated.
Section 4. Result of Termination.
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4.1. Termination As Result Of Voluntary or Good Cause Termination
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Events. If the Executive's employment hereunder is terminated prior to the
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fifth anniversary of the date hereof as a result of the occurrence of a
Voluntary Termination Event or a Good Cause Termination Event, as of the date of
the termination of Executive's employment hereunder, the Company shall have no
further obligation to pay to the Executive any Base Salary, Bonus or any other
benefits pursuant to this Agreement; provided, however, that the Company shall
pay to the Executive any vested compensation previously deferred by the
Executive and not paid as of the date of such termination; provided, further,
however, that the Company shall have the right to deduct from any such deferred
compensation any amounts owed to the Company by the Executive pursuant to any
promissory notes or Company advances. If such termination occurs prior to the
end of any pay period, the Executive shall be entitled to receive a portion of
the Base Salary and Bonus for such pay period prorated to the date on which the
Executive's employment is terminated.
4.2. Termination As Result Of No Cause, Control or Good Reason
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Termination Event. If the Executive's employment hereunder is terminated as a
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result of the occurrence of a No Cause Termination Event, a Control Termination
Event or a Good Reason Termination Event, the Company shall pay to the Executive
(a) an amount equal to 100% of the aggregate Base Salary then in effect that
would have been payable to the Executive pursuant to this Agreement if the
Executive had remained employed by the Company for the twenty-four consecutive
months immediately following the termination of his employment hereunder, (b) if
such termination occurs prior to the end of any pay period, a portion of the
Base Salary and Bonus for such pay period prorated to the date on which the
Executive's employment is terminated,
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(c) any vested compensation previously deferred by the Executive and not yet
paid, and (d) all reasonable business-related expenses incurred by the Executive
prior to such termination for which the Executive would have been reimbursed
pursuant to Section 2.5 hereof (the amounts referred to in clauses (a), (b), (c)
and (d) being the "Severance Payments"). The Severance Payments shall be paid
by the Company to the Executive within 10 days after such termination. In
addition to the Severance Payments, the Company shall continue to provide to the
Executive all benefits set forth in Section 5.1 for twenty-four consecutive
months following such termination (the "Severance Benefits"). To the extent
that all or any portion of the Severance Payments and the Severance Benefits is
subject to excise tax under Section 280G and 4999 of the Internal Revenue Code
of 1986, as amended, the Company shall pay to the Executive any amounts
necessary to reimburse the Executive in full for any such excise tax payable by
the Executive in respect of the Severance Payments and the Severance Benefits
and for any income taxes payable by the Executive in respect of such payments by
the Company to the Executive (the "Tax Reimbursement"). Other than the
Severance Payments, the Severance Benefits and the Tax Reimbursement, the
Company shall have no further obligation to pay the Executive the Base Salary,
Bonus or any other benefits pursuant to this Agreement.
4.3. INTENTIONALLY OMITTED.
4.4. Termination As Result of Disability Termination Event. If the
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Executive's employment hereunder is terminated as a result of a Disability
Termination Event, as of the date of the termination of the Executive's
employment hereunder, the Company shall have no further obligation to pay the
Executive any Base Salary, Bonus or any other benefits pursuant to this
Agreement; provided, however, that the Company shall pay to the Executive any
vested compensation previously deferred by the Executive and not paid as of the
date of such termination. If such termination occurs prior to the end of any
pay period, the Executive shall be entitled to receive a portion of the Base
Salary and Bonus for such pay period prorated to the date on which the
Executive's employment is terminated. Notwithstanding the foregoing, if this
Agreement is terminated as a result of the (a) death of the Executive, the
Executive's family shall be entitled to receive benefits at least equal to those
provided by the Company to surviving families of senior executives of the
Company under such plans, programs and policies relating to family death
benefits, if any, in effect on the date of the Executive's death, or (b) total
disability of the Executive as described in Section 3.1(a), in addition to the
benefits contemplated by Section 5.2, the Executive shall be entitled to receive
disability and other benefits at least equal to those provided by the Company to
disabled employees and their families in accordance with such plans, program and
policies relating to disability, if any, in effect on the date of the
Executive's total disability.
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Section 5. Additional Employment Benefits
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5.1. Benefits. The Company shall provide the Executive with such
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medical, dental, life and disability insurance as the Board shall authorize from
time to time for the benefit of senior executives of the Company generally. In
addition, the Executive shall have the right to participate in all incentive,
savings and retirement plans available to senior executives of the Company
generally and to receive such additional fringe benefits as the Board shall
authorize from time to time for the benefit of senior executives of the Company
generally.
5.2. Vacation. The Executive shall receive at least four (4) weeks of
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paid vacation time each calendar year during the term of his employment
hereunder, which vacation shall be prorated if the Executive's employment
hereunder is terminated prior to December 31 of any year.
Section 6. Covenants
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6.1. Confidential Information. Other than in connection with
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performing his duties in good faith hereunder, the Executive hereby agrees that
he will hold in confidence any confidential information relating to the business
or operations of the Company ("Confidential Information") and will not use or
disclose the same to any third party for any reason (unless disclosure is
compelled by judicial or administrative process, or in the reasonable opinion of
the Executive's counsel, by other requirements of law). Confidential
Information shall not include information (a) known by the Executive prior to
his employment by the Company in any capacity, (b) ascertained by the Executive
other than in his capacity as the Chief Executive Officer of the Company, (c)
ascertainable or obtained from public or published sources, or (d) that is or
becomes known to the public (other than through a breach of this Agreement).
6.2. Nonsolicitation. If the Executive's employment hereunder is
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terminated as a result of the occurrence of a Voluntary Termination Event or a
Good Cause Termination Event, the Executive agrees that he shall not, during the
two year period after the date of such termination, without the Company's prior
written consent, directly or indirectly, knowingly solicit or encourage to leave
the employment of the Company, any salaried employee of the Company or hire any
salaried employee (other than the personal secretary of the Executive or a
relative of the Executive) who has left the employment of the Company within one
year of such termination of the Executive's employment; provided, however, that
the Executive shall not be prohibited from hiring any employee of the Company
whose employment has been terminated by the Company without good cause.
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Section 7. Miscellaneous
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7.1. Indemnification. The Company shall indemnify and hold the
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Executive harmless to the fullest extent permitted under applicable law as it
presently exists or may hereafter be amended (but, in the case of any such
amendment, only to the extent that such amendment permits the Company to provide
broader indemnification rights than said law permitted prior to such amendment)
against all expense, liability and loss (including attorneys' fees, judgements,
fines, ERISA excise taxes or penalties and amounts to be paid in settlement)
incurred in connection with any asserted or threatened action, suit or
proceeding, whether civil, criminal, administrative or investigative, by reason
of the fact that he was an officer, director or employee of the Company or its
former parent, Braelan Corp. ("Braelan") or was serving at the request of the
Company or Braelan as an officer, director, employee, fiduciary or agent of
another corporation or other entity. In the event that the Executive shall
receive written notice of any claim or proceeding against him that, if
successful, might result in a claim under this Section 7.1, the Executive shall
give written notice to the Company of such claim or proceeding and shall permit
the Company to participate in the defense of such claim or proceeding by counsel
of the Company's own choosing and at the expense of the Company. In addition,
upon the written request of the Company, the Company may assume at its own
expense the defense of any such claim or proceeding, provided that the Executive
may participate at his expense in any such defense to the extent he may deem
necessary or appropriate to protect his interests. Upon the final determination
of any such claim or proceeding, the defense of which has been assumed by the
Company, the Company shall fully discharge at its own expense all liability of
the Executive and shall be entitled at its own expense, but without any
liability of the Executive therefor, to compromise or settle any such claim or
proceeding upon terms reasonably satisfactory to both the Company and the
Executive.
7.2. No Disclosure. Each party hereto agrees that if the Executive's
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employment by the Company is terminated for any reason whatsoever, each party
hereto will keep confidential and not make any public disclosures concerning the
circumstances relating to such termination.
7.3. No Litigation. The Executive represents and warrants to the
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Company that there are no litigation proceedings pending or, to his knowledge,
threatened against the Executive in his individual capacity or in any capacity
that might give rise to a claim for indemnification under Section 7.1 hereof.
7.4. Binding Effect. This Agreement shall inure to the benefit of and
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shall be binding upon the Executive and his executor, administrator, heirs,
personal representative and assigns, and the Company and its successors and
assigns; provided, however, that the Executive shall not be entitled to
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assign or delegate any of his rights or obligations hereunder without the prior
written consent of the Company.
7.5. No Mitigation. In no event shall the Executive be obligated to
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seek employment in mitigation of amounts payable to the Executive pursuant to
Section 4 hereof, and the employment of the Executive after the termination of
the Executive's employment by the Company shall not affect in any way or offset
any amounts payable to the Executive pursuant to this Agreement.
7.6. Fees. The Company agrees to pay to the Executive to the fullest
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extent permitted by law all fees and expenses (including reasonable attorneys'
fees) incurred by the Executive in seeking to enforce any provision of this
Agreement, provided that the Executive shall refund such fee and expense
payments if it is finally judicially determined that the Executive is not
entitled to any relief.
7.7. Governing Law. This Agreement shall be deemed to be made in, and
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in all respects shall be interpreted, construed and governed by and in
accordance with, the laws of the State of Georgia, without reference to
principles of conflict of laws. No provision of this Agreement or any related
document shall be construed against or interpreted to the disadvantage of any
party hereto by any court or other governmental or judicial authority by reason
of such party having or being deemed to have structured or drafted such
Provision.
7.8. Survival of Certain Agreements. The agreements and covenants set
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forth in Section 6.1 hereof shall survive the termination of the Executive's
employment under this Agreement for any reason, and the agreements and covenants
set forth in Section 6.2 hereof shall survive the termination of the Executive's
employment under this Agreement as a result of the occurrence of a Voluntary
Termination Event or a Good Cause Termination Event.
7.9. Headings. The section and paragraph headings contained in this
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Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
7.10. Notices. Unless otherwise agreed to in writing by the parties
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hereto, all communications provided for hereunder shall be in writing and shall
be deemed to be given when delivered in person or five (5) business days after
being sent by first class mail, certified, return receipt requested, and
addressed as follows:
(a) If to the Executive, addressed to:
Xx. Xxxxxx X. Xxxxxx, Xx.
X.X. Xxx 000
000 0xx Xxxxxx
Xxxx Xxxxx, Xxxxxxx 00000
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(b) If to the Company, addressed to:
Xxx River Inc.
0000 Xxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Board of Directors
c/o Corporate Secretary
or to such other person or address as shall be furnished in writing by any party
to the other prior to the giving of the applicable notice or communication.
7.11. Counterparts. This Agreement may be executed in two or more
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counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
7.12. Entire Agreement. This Agreement is intended by the parties
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hereto to be the final expression of their agreement with respect to the subject
matter hereof and is the complete and exclusive statement of the terms thereof,
notwithstanding any representations, statements or agreements to the contrary
heretofore made. This Agreement may be modified only by a written instrument
signed by each of the parties hereto.
7.13. Non-exclusivity of Rights. Nothing in this Agreement shall
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prevent or limit the Executive's continuing or future participation in any
benefit, bonus, incentive or other plan or program provided by the Company or
any of its Affiliates for which the Executive may qualify, nor shall anything
herein limit or otherwise affect such rights as the Executive may have under any
other agreements with the Company or any of its Affiliates. Amounts which are
vested benefits or which the Executive is otherwise entitled to receive under
any plan or program of the Company or any of its Affiliates at or subsequent to
the date on which his employment hereunder is terminated shall be payable in
accordance with such plan or program.
7.14. Severability. In the event that any provision of this Agreement
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shall be deemed invalid or unenforceable, the remaining provisions of this
Agreement shall remain in full force and effect.
7.15. Prior Agreement. Subject to the conditions set forth in the
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introductory paragraph of Section 3.1 above, this Agreement succeeds an
Employment Agreement dated September 3, 1996. Should the aforementioned
conditions remain unsatisfied, the September 3, 1996 agreement shall remain in
full force and effect.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
THE COMPANY
XXX RIVER INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
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Title: President
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[CORPORATE SEAL]
ATTEST:
By: /s/ Xxxxx X. Xxxxxxxx
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Title: Secretary
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THE EXECUTIVE
/s/ Xxxxxx X. Xxxxxx, Xx.
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Xxxxxx X. Xxxxxx, Xx.
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