Exhibit 10.16
EMPLOYMENT AGREEMENT
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This Employment Agreement is dated as of March 23, 2001, and is
entered into between Xxxxx, Inc., a Delaware corporation (the "Company"), and
Xxxxxx X. Xxxxx ("Executive").
WHEREAS, Executive and the Company desire to embody in this
Agreement the terms and conditions of Executive's employment by the Company.
NOW, THEREFORE, the parties hereby agree:
ARTICLE I
Employment, Duties and Responsibilities
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1.01. Employment. The Company shall employ Executive as Chief Executive
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Officer of the Company. Executive hereby accepts such employment. Executive
agrees to devote his full business time and efforts to promote the interests
of the Company.
1.02. Duties and Responsibilities. Executive shall have such duties and
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responsibilities as are customarily associated with such position and as are
assigned to the Executive from time to time by the Company's Board of Directors
(the "Board"). Executive shall in any event perform such additional services,
without the receipt of additional compensation, with respect to the Company's
subsidiaries as are assigned from time to time by the Board.
ARTICLE II
Term
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2.01. Term. (a) The term of this Agreement (the "Term") shall commence
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on April 1, 2001, and shall continue for a period of one year from such date;
provided, however, that the term of the Executive's employment shall be
automatically extended without further action of either party for successive
additional periods of one year, unless written notice of either party's
intention not to extend has been given to the other party at least sixty (60)
days prior to the expiration of the then effective term.
(b) Executive represents and warrants to the Company that to the best of
his knowledge, neither the execution and delivery of this Agreement nor the
performance of his duties hereunder violates or will violate the provisions of
any other agreement to which he is a party or by which he is bound.
ARTICLE III
Compensation and Expenses
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3.01. Salary, Bonuses and Benefits. As compensation and consideration
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for the performance by Executive of his obligations under this Agreement,
Executive shall be entitled to the following (subject, in each case, to the
provisions of Article V hereof):
(a) The Company shall pay Executive a base salary ("Base Salary") during
the Term, payable in accordance with the normal payment procedures of the
Company and subject to such withholdings and other normal employee deductions
as may be required by law, at the rate of not less than $400,000 per annum.
The Company agrees to review such compensation (for possible increases, not
decreases) not less frequently than annually during the Term.
(b) Executive shall participate during the Term in such pension, life
insurance, health, disability and major medical insurance plans, and in such
other employee benefit plans and programs, for the benefit of the employees of
the Company, as may be maintained from time to time during the Term, in each
case to the extent and in the manner available to other executive officers of
the Company and subject to the terms and provisions of such plans or programs.
Executive confirms that he is aware that the Company or one of its affiliates
may seek to obtain for their benefit "key man" insurance covering the
Executive and Executive agrees to use his reasonable best efforts (without
the incurrence of any unreimbursed out-of-pocket expenses) to cooperate in
connection therewith.
(c) Executive shall participate during the Term in such other bonus plans
or programs that are established during the Term for senior management by the
Board, with a target annual bonus opportunity for each year during the Term of
100% of Executive's Base Salary, which shall be calculated on the basis of
achievement of goals set by the Board, which goals may include, without
limitation, specific individual goals and/or corporate performance parameters
such as revenue, profit, balance sheet and cash management objectives. The
Board shall establish the goals applicable to Executive in consultation with
the Executive in advance of any fiscal year or other applicable period.
(d) Executive shall be entitled to a paid vacation, in accordance with
Company policy (but not necessarily consecutive vacation weeks) during the
Term.
(e) During and after the Term the Company agrees that if Executive is
made a party, or compelled to testify or otherwise participate in, any action,
suit or proceeding, (a "Proceeding"), by reason of the fact that he is or was
a director or officer of the Company or any of its subsidiaries, the Executive
shall be indemnified by the Company to the fullest extent permitted by Section
145 of the Delaware General Corporation Law or authorized by the Company's
certificate of incorporation or bylaws or resolutions of the Company's Board
against all cost, expense, liability and loss reasonably incurred or suffered
by the Executive in connection therewith, and such indemnification shall
continue as to the Executive even if he has ceased to be a director or officer
of the Company or subsidiary, for the period of any applicable statute of
limitations or, if longer, for the period in which any such Proceeding which
commenced within the period of any such statute of limitations is pending.
The Company shall advance to the Executive all reasonable costs and expenses
incurred by him in connection with a Proceeding within 20 days after receipt
by the Company of a written request for such advance. Such request shall
include an itemized list of the costs and expenses and an undertaking by the
Executive to repay the amount of such advance if it shall ultimately be
determined that, pursuant to applicable law, he is not entitled to be
indemnified against such costs and expenses. During the Term (and thereafter
for the period of any applicable statute of limitations), the Company agrees
to purchase from a reputable insurance company, and maintain, a directors'
and officers' liability insurance
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policy covering the Executive, in amounts reasonably determined by the Board
to be appropriate for directors and officers of the Company given the Company's
business, securities, operations and financial condition.
3.02. Expenses. The Company will reimburse Executive for reasonable
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business-related expenses incurred by him in connection with the performance of
his duties hereunder during the Term, subject, however, to the Company's
policies relating to business-related expenses as in effect from time to time
during the Term.
3.03. Parachute Gross-Up. The shareholder of the Company with more
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than 75% of the voting power of all outstanding stock of the Company has
previously approved the making of all payments due under or pursuant to this
Agreement or resulting from the accelerated vesting of shares of common stock
or options to acquire common stock of the Company after having received full
disclosure of all material facts concerning such payments. As a result, the
provisions of Section 280G of the Internal Revenue Code of 1986, as amended
(the "Code") are expected to be inapplicable. Notwithstanding anything to the
contrary in this Agreement and in addition to any other compensation or other
amount payable by the Company to the Executive pursuant to this Agreement or
otherwise, if it shall be determined that, notwithstanding such shareholder
approval, any payment or distribution by the Company to or for the benefit of
the Executive, pursuant to the terms of this Agreement or otherwise or
resulting from the accelerated vesting of shares of common stock or options to
acquire common stock of the Company (a "Payment"), are subject to the excise
tax imposed by Section 4999 of the Code, or any interest or penalties with
respect to such excise tax (such excise tax, together with any such interest
and penalties, are hereinafter collectively referred to as the "Excise Tax"),
the Executive shall be entitled to receive an additional payment (a "Gross-Up
Payment") in an amount such that after payment by the Executive of all taxes
on the Gross-Up Payment, (including any interest or penalties imposed with
respect to such taxes, and any Excise Tax imposed upon the Gross-Up Payment),
the Executive retains an amount of the Gross-Up Payment equal to the Excise
Tax imposed upon the Payments. If the Excise Tax is determined to exceed the
amount taken into account hereunder at the time of the termination of the
Executive's employment or otherwise (including by reason of any payment the
existence or amount of which cannot be determined at the time of the Gross-Up
Payment), the Company shall make an additional Gross-Up Payment in respect of
such excess (plus any interest, penalties or additions payable by the Executive
with respect to such excess) at the time that the amount of such excess is
finally determined. The Executive and the Company shall each reasonably
cooperate with the other in connection with any administrative or judicial
proceedings concerning the existence or amount of liability for Excise Tax
with respect to the Payments. All determinations required to be made under
this Section, including whether a Gross-Up Payment is required and the amount
of such Gross-Up Payment, shall be made by the Company's independent
accountants. If the Internal Revenue Service determines that Excise Tax is
larger than the amount calculated by the Company's accountants, and the Company
does not contest such determination and prevail in such contest at its own
expense, the Gross-Up Payment due the Executive shall be recalculated and any
additional amounts owed Executive shall be promptly paid to him. If the
Company does contest such determination and prevail in such contest, or if the
Company obtains a private letter ruling which holds that the Excise Taxes are
not payable or are less than the amount previously determined to be owed by
the Company's accountants, the Executive shall promptly repay to the
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Company any excess of the Gross-Up Payment previously made to the Executive
over the amount required to have been paid to him.
ARTICLE IV
Exclusivity, Etc.
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4.01. Exclusivity. Executive agrees to perform his duties,
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responsibilities and obligations hereunder efficiently and to the best of his
ability. Executive agrees that he will devote his entire working time, care
and attention and best efforts to such duties, responsibilities and obligations
throughout the Term. Executive also agrees that he will not engage in any
other business activities, pursued for gain, profit or other pecuniary
advantage, that are competitive with the activities of the Company, except as
permitted in Section 4.02 below. Executive agrees that all of his activities
as an employee of the Company shall be in conformity with all policies, rules
and regulations and directions of the Company not inconsistent with this
Agreement.
4.02. Other Business Ventures. Executive agrees that, so long as he is
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employed by the Company, he will not own, directly or indirectly, any
controlling or substantial stock or other beneficial interest in any business
enterprise which is engaged in, or competitive with, any business engaged in
by the Company, any of its subsidiaries, or any of its affiliates involved in
the office furniture business ("Affiliates"). Notwithstanding the foregoing,
Executive may own, directly or indirectly, up to 1% of the outstanding capital
stock of any business having a class of capital stock which is traded on any
national stock exchange or in the over-the-counter market.
4.03. Confidentiality; Non-competition. (a) Executive agrees that he
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will not, at any time during or after the Term, make use of or divulge to any
other person, firm or corporation any trade or business secret, any information
pertaining to any business process, method or means, customer lists, details of
contracts with or requirements of customers, any information pertaining to
accounting methods, practices and procedures, financial records or financial
condition, computer systems and software, sales or marketing plans, acquisition
plans or candidates, Intellectual Property (as hereinafter defined) of the
Company or any of its subsidiaries or Affiliates, or any other written
information treated as confidential or as a trade secret by the Company or any
of its subsidiaries or Affiliates, which he may have learned or acquired in
connection with his employment (collectively, "Confidential information").
Executive's obligation under this Section 4.03(a) shall not apply to any
information which (i) is known publicly; (ii) is in the public domain or
hereafter enters the public domain without the fault of Executive; (iii) is
known to Executive prior to his receipt of such information from the Company
or any predecessor of the Company with which he was employed, as evidenced by
written records of Executive or (iv) is hereafter disclosed to Executive by a
third party which, to Executive's knowledge, is not under an obligation of
confidence to the Company. Executive agrees not to remove from the premises
of the Company, except as an employee of the Company in pursuit of the business
of the Company or except as specifically permitted in writing by the Company,
any notes, memoranda, papers, documents, correspondence or writing (which shall
include information recorded or stored in writing, on magnetic tape or disc,
or otherwise stored for reproduction, whether by mechanical or electronic means
and whether or not such reproduction will result in a permanent record being
made) containing or reflecting any
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Confidential Information ("Documents"). Executive recognizes that all such
Documents, whether developed by him or by someone else, will be the sole and
exclusive property of the Company. Upon termination of his employment
hereunder, Executive shall forthwith deliver to the Company all such
Confidential Information, including without limitation all Documents,
correspondence, and any other property held by him or under his control in
relation to the business or affairs of the Company, and no copy of any
Confidential Information shall be retained by him.
(b) Executive acknowledges and agrees that the Company owns all writings,
trade names, trademarks, service marks, copyrights, database rights, domain
name rights and other intellectual property and material registered or
registrable or otherwise protected or protectable under state, federal or
foreign patent, trademark, copyright or similar laws, including, without
limitation, analytics, software, programs and models owned, developed or
utilized by or on behalf of the Company or any of its subsidiaries or
Affiliates in connection with its business (collectively "Intellectual
Property"). Executive further agrees that he shall not at any time assert,
and hereby waives, any claim of right against the Company or any of its
subsidiaries, Affiliates or licensees with respect to the Intellectual
Property.
(c) Upon any termination of Executive's employment with the Company,
the Executive shall not, for a period of two years from the date of such
termination, directly or indirectly, whether as an employee, consultant,
independent contractor, partner, joint venture or otherwise, (i) engage in any
business activities which are competitive, to a material extent, with any
substantial type or kind of business activities conducted by the Company or any
of its subsidiaries or Affiliates at the time of such termination (provided
that Executive may own, directly or indirectly, up to 1% of the outstanding
capital stock of any business having a class of capital stock which is traded
on any national stock exchange, interdealer quotation system or in the over-
the-counter market); (ii) solicit or induce, or in any manner attempt to
solicit or induce, any person employed by, or as agent of, the Company or any
of its subsidiaries or Affiliates to terminate such person's contract of
employment or agency, as the case may be, with the Company or any of its
subsidiaries or Affiliates or (iii) divert, or attempt to divert, any person,
concern, or entity from doing business with the Company or any of its
subsidiaries or Affiliates, nor will he attempt to induce any such person,
concern or entity to cease being a customer or supplier of the Company or any
of its subsidiaries or Affiliates.
(d) Executive agrees that, at any time and from time to time during and
after the Term, he will execute any and all documents which the Company may
deem reasonably necessary or appropriate to effectuate the provisions of this
Section 4.03.
4.04. Equitable Relief. Executive and the Company agree that the
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restrictions, prohibitions and other provisions of Article IV of this Agreement
are reasonable, fair, and equitable in scope, terms, and duration, are
necessary to protect the legitimate business interests of the Company and are
a material inducement to the Company to enter into this Agreement. The
Company and the Executive recognize that the services to be rendered under
this Agreement by the Executive are special, unique and of extraordinary
character, and that in the event of the breach by the Executive of the terms
and conditions of this Agreement or if the Executive, without the prior
consent of the Board, shall leave his employment for any reason and take any
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action in violation of this Article IV, the Company will be entitled to
institute and prosecute proceedings in any court of competent jurisdiction
referred to in Section 4.05 below, to enjoin the Executive from breaching the
provisions of Article IV. In such action, the Company will not be required to
plead or prove irreparable harm or lack of an adequate remedy at law. Nothing
contained in this Article IV shall be construed to prevent the Company from
seeking such other remedy in arbitration in case of any breach of this
Agreement by the Executive, as the Company may elect.
4.05. Submission to Jurisdiction. Any proceeding or action must be
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commenced in the federal courts, or in the absence of federal jurisdiction in
state court, in either case in New York. The Executive and the Company
irrevocably and unconditionally submit to the jurisdiction of such courts and
agree to take any and all future action necessary to submit to the jurisdiction
of such courts. The Executive and the Company irrevocably waive any objection
that they now have or hereafter may have to the laying of venue of any suit,
action or proceeding brought in any court and further irrevocably waive any
claim that any such suit, action or proceeding brought in any such court has
been brought in an inconvenient forum. Final judgment against the Executive
or the Company in any such suit shall be conclusive and may be enforced in
other jurisdictions by suit on the judgment, a certified or true copy or which
shall be conclusive evidence of the fact and the account of any liability of
the Executive or the Company therein described, or by appropriate proceedings
under an applicable treaty or otherwise.
ARTICLE V
Termination
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5.01. Termination by the Company. The Company shall have the right to
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terminate Executive's employment at any time, with or without "Cause". For
purposes of this Agreement, "Cause" shall mean (i) the substantial and
continued failure of Executive to perform material duties reasonably required
of Executive by the Board (it being understood that a failure to attain
performance objectives shall not be treated as a failure to perform material
duties for purpose of this clause (i)) for a period of not less than 30
consecutive days, provided notice in writing from the Board is given to
Executive specifying in reasonable detail the circumstances constituting such
substantial and continued failure, (ii) conduct substantially disloyal to the
Company which conduct is identified in reasonable detail by notice in writing
from the Board and which conduct, if susceptible of cure, is not remedied by
Executive within 30 days of Executive's receipt of such notice, (iii) any act
of fraud, embezzlement or misappropriation against the Company, or (iv) the
conviction of Executive of a felony.
5.02. Death. In the event Executive dies during the Term, his
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employment shall automatically terminate effective on the date of his death.
5.03. Disability. In the event that Executive shall suffer a disability
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which shall have prevented him from performing satisfactorily his obligations
hereunder for a period of at least 90 consecutive days, or 180 nonconsecutive
days within any 365 day period, the Company shall have the right to terminate
Executive's employment for "Disability," such termination to be effective upon
the giving of notice thereof to Executive in accordance with Section 6.03
hereof.
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5.04. Compensation upon Termination. (a) In the event of termination of
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Executive's employment by the Company (other than for Cause or Disability), or
in the event of termination of Executive's employment by the Company as a
result of the Company's failure to renew this Agreement, or in the event of a
termination of Executive's employment by Executive following a breach of a
material provision of this Agreement by the Company, provided that the
Executive has given advance written notice to the Company, identifying the
basis for the breach in reasonable detail and, except in the event of a
failure to pay Base Salary, giving the Company 30 days' opportunity to cure,
the Company shall pay Executive an amount equal to the sum of (i) 200% of the
Executive's then current Base Salary, payable in twenty-four equal monthly
installments following the date of such termination, plus (ii) the average of
the annual bonuses paid to Executive pursuant to Section 3.01(c) hereof for
the two completed fiscal years of the Company that immediately preceded the
fiscal year of the Executive's termination of employment, payable in twelve
consecutive equal monthly installments following the date of such termination.
(b) The Executive's rights upon termination of employment with respect
to stock options or other incentive awards shall be governed by the terms and
conditions of any stock option agreements or as established by the Company with
respect to such awards.
(c) Upon termination of Employment for any reason, Executive shall be
entitled to continued coverage under the Company's health, disability and
medical benefits for the greater of (i) the period provided under applicable
law (but only to the extent the Executive takes whatever actions are required
of him under applicable law to secure such continued coverage) or (ii) one
year from the date of termination; provided that nothing in this Section 5.04
shall affect Executive's continuing entitlement under any disability insurance
policy if Executive's employment is terminated by the Company for Disability.
Notwithstanding the preceding sentence, if the Executive's employment is
terminated under the circumstances described in Section 5.04(a), such continued
coverage shall be provided on the same basis as for active employees for a
period of one year from the date of termination.
(d) Except as provided in this Section 5.04, Executive shall not be
entitled to compensation as a result of any termination of his employment with
the Company.
ARTICLE VI
Miscellaneous
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6.01. Mitigation; Offset. Executive shall not be required to mitigate
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damages resulting from his termination of employment and, during such time, the
amounts payable to Executive pursuant to Article V of this Agreement shall not
be offset or reduced by any other compensation earned by Executive.
6.02. Benefit of Agreement; Assignment; Beneficiary. (a) This
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Agreement shall inure to the benefit of and be binding upon the Company and
its successors and assigns, including, without limitation, any corporation or
person which may acquire all or substantially all of the Company's assets or
business, or with or into which the Company may be consolidated or
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merged. This Agreement shall also inure to the benefit of, and be enforceable
by, the Executive and his personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If
the Executive should die while any amount would still be payable to the
Executive hereunder if he had continued to live, all such amounts shall be
paid in accordance with the terms of this Agreement to the Executive's
beneficiary, devisee, legatee or other designee, or if there is no such
designee, to the Executive's estate.
(b) The Company shall require any successor (whether direct or indirect,
by operation of law, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place.
6.03. Notices. Any notice required or permitted hereunder shall be in
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writing and shall be sufficiently given if personally delivered or if sent by
telegram or telecopier or by registered or certified mail, postage prepaid,
with return receipt requested, addressed: (a) in the case of the Company to:
Xxxxx, Inc., c/o Warburg, Xxxxxx Ventures, L.P., 000 Xxxxxxxxx Xxxxxx, Xxx
Xxxx, XX 00000, Attention: Xxxxxxx X. Xxxxxx, tel: (000) 000-0000; fax:
(000) 000-0000, with a copy to the office of General Counsel of Xxxxx, Inc.,
0000 Xxxxx Xxxxxx, Xxxx Xxxxxxxxxx, Xxxxxxxxxxxx 00000, tel: (000) 000-0000;
fax: (000) 000-0000, or to such other address and/or to the attention of such
other person as the Company shall designate by written notice to Executive;
and (b) in the case of Executive, to: Xxxxxx X. Xxxxx, 0 Xxxx 00xx Xxxxxx,
Xxxxxxxxx 0X, Xxx Xxxx, Xxx Xxxx 00000, or to such other address as Executive
shall designate by written notice to the Company, with a copy to F. Xxxxxx
Xxxxxx, Xxxxx, Xxxxxxx & Xxxxxxxxx, 000 Xxxx Xxxxxx, Xxxxxx, XX 00000, tel:
(000) 000-0000, fax: (000) 000-0000. Any notice given hereunder shall be
deemed to have been given at the time of receipt thereof by the person to whom
such notice is given.
6.04. Entire Agreement; Amendment. This Agreement contains the entire
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agreement of the parties hereto with respect to the terms and conditions of
Executive's employment during the term and supersedes any and all prior
agreements and understandings, whether written or oral, between the parties
hereto with respect to compensation due for services rendered hereunder. This
Agreement may not be changed or modified except by an instrument in writing
signed by both of the parties hereto.
6.05. Waiver. The waiver by either party of a breach of any provision
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of this Agreement shall not operate or be construed as a continuing waiver or
as a consent to or waiver of any subsequent breach hereof.
6.06. Headings. The Article and Section headings herein are for
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convenience of reference only, do not constitute a part of this Agreement and
shall not be deemed to limit or affect any of the provisions hereof.
6.07. Governing Law. This Agreement shall be governed by, and construed
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and interpreted in accordance with, the internal laws of the State of New York
without reference to the principles of conflict of laws.
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6.08. Agreement to Take Actions. Each party hereto shall execute and
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deliver such documents, certificates, agreements and other instruments, and
shall take such other actions, as may be reasonably necessary or desirable in
order to perform his or its obligations under this Agreement or to effectuate
the purposes hereof.
6.09. Survivorship. The respective rights and obligations of the
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parties hereunder shall survive any termination of this Agreement to the
extent necessary to the intended preservation of such rights and obligations.
6.10. Validity. The invalidity or unenforceability of any provision or
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provisions of this Agreement shall not affect the validity or enforceability
of any other provision or provisions of this Agreement, which shall remain in
full force and effect.
6.11. Counterparts. This Agreement may be executed in one or more
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counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
IN WITNESS WHEREOF, each of the parties hereto has duly executed
this Agreement effective as of the date first above written.
Xxxxx, Inc.
By: /s/ Xxxxx X. XxXxxx
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Name: Xxxxx X. XxXxxx
Title: Senior Vice President
/s/ Xxxxxx X. Xxxxx
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Xxxxxx X. Xxxxx
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