Exhibit 10.2
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement"), dated as of September 22,
1999, between Xxxxxx X. Xxxxxxx (the "Executive") and Xxxxxx-Xxxxxx Company, a
Virginia corporation (the "Company"), recites and provides as follows:
WHEREAS, the Board of Directors of the Company (the "Board") expects that
the Executive will continue to make substantial contributions to the growth and
prospects of the Company; and
WHEREAS, the Board desires that the Company retain the services of the
Executive, and the Executive desires to continue his employment with the
Company, all on the terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants herein contained, the Company and the Executive agree as follows:
1. Employment Period. The Company hereby agrees to continue the Executive
in its employ, and the Executive hereby agrees to remain in the employ of the
Company, in accordance with the terms and provisions of this Agreement, for the
period commencing on the date of this Agreement (the "Effective Date") and
ending on the third anniversary of such date (the "Employment Period"). Subject
to the provisions of Section 3 hereof, the Employment Period shall be a constant
rolling period of three (3) years, commencing on the Effective Date, with the
result that, for each day after the Effective Date the Executive's term of
employment shall be extended for an additional day so that at all times the
remaining period of the Executive's term of employment shall be three (3)
years.
2. Terms of Employment.
a) Position and Duties.
i) During the Employment Period, (A) the Executive's position
(including status, offices, titles and reporting requirements),
authority, duties and responsibilities shall be at least commensurate
in all material respects with the most significant of those held,
exercised and assigned at any time during the 90-day period
immediately preceding the Effective Date and (B) the Executive's
services shall be performed at the location where the Executive was
employed immediately preceding the Effective Date or any office which
is less than 35 miles from such location.
ii) During the Employment Period, and excluding any periods of
vacation and leave to which the Executive is entitled, the Executive
agrees to devote reasonable attention and time during normal business
hours to the business and affairs of the Company and, to the extent
necessary to discharge the responsibilities assigned to the Executive
hereunder, to use the Executive's reasonable best efforts to perform
faithfully and efficiently such responsibilities. During the
Employment Period it shall not be a violation of this Agreement for
the Executive to (A) serve on corporate, civic, charitable, furniture
industry association or professional association boards or committees
(provided the Executive obtains prior approval by the Chief Executive
Officer of the Company), (B) deliver lectures, fulfill speaking
engagements or teach at educational institutions and (C) manage
personal investments, so long as such activities do not significantly
interfere with the performance of the Executive's responsibilities as
an employee of the Company in accordance with this Agreement. It is
expressly understood and agreed that to the extent that any such
activities have been conducted by the Executive prior to the Effective
Date, the continued conduct of such activities (or the conduct of
activities similar in nature and scope thereto) subsequent to the
Effective Date shall not thereafter be deemed to interfere with the
performance of the Executive's responsibilities to the Company.
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b) Compensation.
i) Base Salary. During the Employment Period, the Executive shall
receive an annual base salary ("Annual Base Salary"), which shall be
paid in equal installments on a monthly basis, at least equal to
twelve times the highest monthly base salary paid or payable to the
Executive by the Company and its affiliated companies in respect of
the twelve-month period immediately preceding the month in which the
Effective Date occurs. During the Employment Period, the Annual Base
Salary shall be reviewed at least annually and shall be increased at
any time and from time to time as shall be substantially consistent
with increases in base salary generally awarded in the ordinary course
of business to other peer executives of the Company and its affiliated
companies. Any increase in Annual Base Salary shall not serve to limit
or reduce any other obligation to the Executive under this Agreement.
Annual Base Salary shall not be reduced after any such increase and
the term Annual Base Salary as utilized in this Agreement shall refer
to Annual Base Salary as so increased. As used in this Agreement, the
term "affiliated companies" shall include any company controlled by,
controlling or under common control with the Company.
ii) Annual Bonus. In addition to Annual Base Salary, the
Executive shall be awarded, for each fiscal year during the Employment
Period, an annual bonus opportunity (the "Annual Bonus") under the
Company's Annual Performance-Based Bonus Plan at least equal to his
bonus opportunity immediately preceding the Effective Date or, if more
favorable to the Executive, under any plans, practices, programs and
policies of the Company and its affiliates in effect generally at any
time after the Effective Date with respect to other peer executives of
the Company and its affiliated companies.
iii) Incentive, Savings and Retirement Plans. During the
Employment Period, the Executive shall be entitled to participate in
all incentive (including, without limitation, stock incentive),
savings and retirement plans, practices, policies and programs
applicable generally to other peer executives of the Company and its
affiliated companies, but in no event shall such plans, practices,
policies and programs provide the Executive with incentive
opportunities (measured with respect to both regular and special
incentive opportunities, to the extent, if any, that such distinction
is applicable), savings opportunities and retirement benefit
opportunities, in each case, less favorable, in the aggregate, than
the most favorable of those provided by the Company and its affiliated
companies for the Executive under such plans, practices, policies and
program as in effect at any time during the 90-day period immediately
preceding the Effective Date or if more favorable to the Executive,
those provided generally from time to time after the Effective Date to
other peer executives of the Company and its affiliated companies.
iv) Welfare Benefit Plans. During the Employment Period, the
Executive and/or the Executive's family, as the case may be, shall be
eligible for participation in and shall receive all benefits under
welfare benefit plans, practices, policies and programs provided by
the Company and its affiliated companies (including, without
limitation, medical, prescription, dental, disability, salary
continuance, employee life, group life, accidental death and travel
accident insurance plans and programs) to the extent applicable
generally to other peer executives of the Company and its affiliated
companies, but in no event shall such plans, practices, policies and
programs provide the Executive with benefits which are less favorable,
in the aggregate, than the most favorable of such plans, practices,
policies and programs in effect for the Executive at any time during
the 90-day period immediately preceding the Effective Date or, if more
favorable to the Executive, those provided generally at from time to
time after the Effective Date to other peer executives of the Company
and its affiliated companies.
v) Expenses. During the Employment Period, the Executive shall be
entitled to receive prompt reimbursement for all reasonable employment
expenses incurred by the Executive in accordance with the most
favorable policies, practices and procedures of the Company and its
affiliated companies in effect for the Executive at any time during
the 90-day period immediately preceding the Effective Date or, if more
favorable to the Executive, as in effect generally from time to time
after the Effective Date with respect to other peer executives of the
Company and its affiliated companies.
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vi) Fringe Benefits. During the Employment Period, the Executive
shall be entitled to fringe benefits in accordance with the most
favorable plans, practices, programs and policies of the Company and
its affiliated companies in effect for the Executive at any time
during the 90-day period immediately preceding the Effective Date or,
if more favorable to the Executive, as in effect generally from time
to time after the Effective Date with respect to other peer executives
of the Company and its affiliated companies.
vii) Office and Support Staff. During the Employment Period, the
Executive shall be entitled to an office or offices of a size and with
furnishings and other appointments, and to exclusive personal
secretarial and other assistance, at least equal to the most favorable
of the foregoing provided to the Executive by the Company and its
affiliated companies at any time during the 90-day period immediately
preceding the Effective Date or, if more favorable to the Executive,
as provided generally from time to time after the Effective Date with
respect to other peer executives of the Company and its affiliated
companies.
viii) Vacation. During the Employment Period, the Executive shall
be entitled to paid vacation in accordance with the most favorable
plans, policies, programs and practices of the Company and its
affiliated companies as in effect for the Executive at any time during
the 90-day period immediately preceding the Effective Date or, if more
favorable to the Executive, as in effect generally from time to time
after the Effective Date with respect to other peer executives of the
Company and its affiliated companies.
3. Termination of Employment.
a) Death or Disability. The Executive's employment shall
terminate automatically upon the Executive's death during the
Employment Period. If the Company determines in good faith that the
Disability of the Executive has occurred during the Employment Period
(pursuant to the definition of Disability set forth below), it may
give to the Executive written notice in accordance with Section 11(b)
of its intention to terminate the Executive's employment. In such
event, the Executive's employment with the Company shall terminate
effective on the 30th day after receipt of such notice by the
Executive (the "Disability Effective Date"), provided that, within the
30 days after such receipt, the Executive shall not have returned to
full-time performance of the Executive's duties. For purposes of this
Agreement, "Disability" shall mean the absence of the Executive from
the Executive's duties with the Company on a full-time basis for 180
consecutive business days as a result of incapacity due to mental or
physical illness which is determined to be total and permanent by a
physician selected by the Company or its insurers and acceptable to
the Executive or the Executive's legal representative (such agreement
as to acceptability not to be withheld unreasonably).
b) Cause. The Company may terminate the Executive's employment
during the Employment Period for Cause. For purposes of this
Agreement, "Cause" shall mean (i) a material breach by the Executive
of the Executive's obligations under Section 2(a) (other than as a
result of incapacity due to physical or mental illness) which is
demonstrably willful and deliberate on the Executive's part, which is
committed in bad faith or without reasonable belief that such breach
is in the best interests of the Company and which is not remedied in a
reasonable period of time after receipt of written notice from the
Company specifying such breach or (ii) the conviction of the Executive
of a felony involving moral turpitude.
c) Notice of Termination. Any termination by the Company for
Cause, or by the Executive, shall be communicated by Notice of
Termination to the other party hereto given in accordance with Section
11(b). 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, (ii) to the extent
applicable, 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 and (iii) if
the Date of Termination (as defined below) is other than the date of
receipt of such notice, specifies the termination date (which date
shall be not more than 15 days after the giving of such notice). The
failure by the Executive or the Company to set forth in the Notice of
Termination any fact or circumstance shall not waive any right of the
Executive or the Company hereunder or preclude the Executive or the
Company from asserting such fact or circumstance in enforcing the
Executive's or the Company's rights hereunder.
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d) Date of Termination. "Date of Termination" means (i) if the
Executive's employment is terminated by the Company for Cause, or by
the Executive, the date of receipt of the Notice of Termination or any
later date specified therein, as the case may be, (ii) if the
Executive's employment is terminated by the Company other than for
Cause or Disability, the Date of Termination shall be the date on
which the Company notifies the Executive of such termination and (iii)
if the Executive's employment is terminated by reason of death or
Disability, the Date of Termination shall be the date of death of the
Executive or the Disability Effective Date, as the case may be.
4. Obligations of the Company upon Termination.
a) Other than for Cause or Death. The Company may terminate the
Executive's employment during the Employment Period for other than
Cause or death. If, during the Employment Period, the Company shall
terminate the Executive's employment other than for Cause or death or
the Executive shall terminate employment:
i) The Company shall pay to the Executive in a lump sum in
cash within 30 days after the Date of Termination the sum of (1)
the Executive's Annual Base Salary through the Date of
Termination to the extent not theretofore paid; (2) to the extent
not theretofore paid, the product of (A) the greater of (x) the
Annual Bonus paid or payable, including by reason of any
deferral, to the Executive (and annualized for any fiscal year
consisting of less than twelve full months or for which the
Executive has been employed for less than twelve full months) for
the most recently completed fiscal year during the Employment
Period, if any, and (y) the average annualized (for any fiscal
year consisting of less than twelve full months or with respect
to which the Executive has been employed for less than twelve
full months) bonus paid or payable, including by reason of any
deferral, to the Executive by the Company and its affiliated
companies in respect of the three fiscal years immediately
preceding the fiscal year in which the Date of Termination occurs
(such greater amount shall be hereinafter referred to as the
"Highest Annual Bonus") and (B) a fraction, the numerator of
which is the number of days in the current fiscal year through
the Date of Termination, the denominator of which is 365; (3) any
compensation previously deferred by the Executive (together with
any accrued interest or earnings thereon) to the extent not
therefore paid; and (4) any accrued vacation pay, to the extent
not therefore paid (the sum of the amounts described in clauses
(1), (2), (3) and (4) shall be hereinafter referred to as the
"Accrued Obligations"); and
ii) The Company shall pay to the Executive in a lump sum in
cash within 30 days after the Date of Termination the sum of the
Executive's Annual Base Salary and Highest Annual Bonus payable
to the Executive from the Date of Termination to the end of the
Employment Period; and
iii) For the remainder of the Employment Period, or such
longer period as any plan, program, practice or policy may
provide, the Company shall continue benefits to the Executive
and/or the Executive's family at least equal to those which would
have been provided to them in accordance with the plans,
programs, practices and policies described in Section 2(b)(iv) if
the Executive's employment had not been terminated in accordance
with the most favorable plans, practices, programs or policies of
the Company and its affiliated companies as in effect and
applicable generally to other peer executives and their families
during the 90-day period immediately preceding the Effective Date
or, if more favorable to the Executive, as in effect generally at
any time thereafter with respect to other peer executives of the
Company and its affiliated companies and their families,
provided, however, that if the Executive becomes reemployed with
another employer and is eligible to receive medical or other
welfare benefits under another employer - provided plan, the
medical and other welfare benefits described herein shall be
secondary to those provided under such other plan during such
applicable period of eligibility (such continuation of such
benefits for the applicable period herein set forth shall be
hereinafter referred to as "Welfare Benefit Continuation"). For
purposes of determining eligibility of the Executive for retiree
benefits pursuant to such plans, practices, programs and
policies, the Executive shall be considered to have remained
employed until the end of the Employment Period and to have
retired on the last day of such period; and
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iv) To the extent not theretofore paid or provided, the
Company shall timely pay or provide to the Executive and/or the
Executive's family any other amounts or benefits required to be
paid or provided or which the Executive and/or the Executive's
family is eligible to receive pursuant to this Agreement and
under any plan, program, policy or practice or contract or
agreement of the Company and its affiliated companies as in
effect and applicable generally to other peer executives and
their families during the 90-day period immediately preceding the
Effective Date or, if more favorable to the Executive, as in
effect generally thereafter with respect to other peer executives
of the Company and its affiliated companies and their families
(such other amounts and benefits shall be hereinafter referred to
as the "Other Benefits").
b) Death. If the Executive's employment is terminated by reason
of the Executive's death during the Employment Period, this Agreement
shall terminate without further obligations to the Executive's legal
representatives under this Agreement, other than for payment of
Accrued Obligations (which shall be paid to the Executive's estate or
beneficiary, as applicable, in a lump sum in cash within 30 days of
the Date of Termination) and the timely payment or provision of the
Welfare Benefit Continuation and Other Benefits.
c) Cause. If the Executive's employment shall be terminated for
Cause during the Employment Period, this Agreement shall terminate
without further obligations to the Executive other than the obligation
to pay to the Executive his Annual Base Salary through the Date of
Termination plus the amount of any compensation previously deferred by
the Executive, in each case to the extent theretofore unpaid.
d) Time of Payment. The Company shall make all payments required
by this Section 4 within the time periods provided in Sections 4(a),
4(b) and 4(c); provided, however, that in the event that any such
payments would be non-deductible to the Company under the provisions
of Section 162(m) of the Internal Revenue Code of 1986, as amended
(the "Code"), and the Executive is a "covered employee" as defined in
Treas. Reg. Section 1.162-27(c)(2) for the taxable year of the Company
during which the Date of Termination occurred or for the immediately
preceding year, the Company shall make any such payment not earlier
than 90 days following the end of the Company's taxable year during
which the Executive last was a "covered employee."
5. Nonexclusivity of Rights. Expect as provided in Sections 4(a)(iii),
4(b) and 4(c), nothing in this Agreement shall prevent or limit the
Executive's continuing or future participation in any plan, program, policy
or practice provided by the Company or any of its affiliated companies and
for which the Executive may qualify, nor shall anything herein limit or
otherwise affect such rights as the Executive may have under any contract
or agreement with the Company or any of its affiliated companies. Amounts
which are vested benefits or which the Executive is otherwise entitled to
receive under any plan, policy, practice or program of or any contract or
agreement with the Company or any of its affiliated companies at or
subsequent to the Date of Termination shall be payable in accordance with
such plan, policy, practice or program or contract or agreement except as
explicitly modified by this Agreement.
6. Full Settlement; Resolution or Disputes.
a) The Company's obligation to make the payments provided for in
this Agreement and otherwise to perform its obligations hereunder
shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the Company may have
against the Executive or others. In no event shall the Executive be
obligated to seek other employment or take any other action by way of
mitigation of the amounts payable to the Executive under any of the
provisions of this Agreement and, except as provided in Section
4(a)(iii) with respect to Welfare Benefit Continuation and Section
8(a) with respect to non-competition, such amounts shall not be
reduced whether or not the Executive obtains other employment. The
Company agrees to pay to the full extent permitted by law, all
reasonable legal fees and expenses which the Executive may incur to
enforce this Agreement and that result from a breach of this Agreement
by the Company; provided however, that the reasonableness of the fees
and expenses must be determined by an independent arbitrator, using
standard legal principles, mutually agreed upon by the Company and the
Executive in accordance with rules set forth by the American
Arbitration Association.
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b) If there shall be any dispute between the Company and the
Executive in the event of any termination of the Executive's
employment by the Company or by the Executive, then, unless and until
there is a final, nonappealable judgment by a court of competent
jurisdiction declaring that such termination was for Cause, the
Company shall pay all amounts, and provide all benefits, to the
Executive and/or the Executive's family or other beneficiaries, as the
case may be, that the Company would be required to pay or provide
pursuant to Section 4(a) as though such termination were by the
Company without Cause or by the Executive; provided, however, that the
Company shall not be required to pay any disputed amounts pursuant to
this paragraph except upon receipt of an undertaking (which may be
unsecured) by or on behalf of the Executive to repay all such amounts
to which the Executive is ultimately adjudged by such court not to be
entitled.
7. Confidential Information.
a) The Executive shall hold in a fiduciary capacity for the
benefit of the Company all secret or confidential information,
knowledge or data relating to the Company or any of its affiliated
companies, and their respective businesses, which shall have been
obtained b the Executive during the Executive's employment by the
Company or any of its affiliated companies and which shall not be or
become public knowledge (other than by acts by the Executive or
representatives of the Executive in violation of this Agreement).
After termination of the Executive's employment with the Company, the
Executive shall not, without the prior written consent of the Company
or except as may otherwise be required by law or legal process,
communicate or divulge any such information, knowledge or data to
anyone other than the Company and those designated by it. In no event
shall an asserted violation of the provisions of this Section 7
constitute a basis for deferring or withholding any amounts otherwise
payable to the Executive under this Agreement.
8. Non-Compete; Non-Solicitation.
a) Except as is set forth below, for a period commencing on the
date hereof and ending on the date 36 months after the Executive
ceases to be employed by the Company (the "Non-Competition Period"),
the Executive shall not in the United States of America, directly or
indirectly, either for himself or any other person, own, manage,
control, materially participate in, invest in, permit his name to be
used by, act as consultant or advisor to, render material services for
(alone or in association with any person, firm, corporation or other
business organization) or otherwise assist in any manner any entity
that engages in or owns, invests in, manages or controls any venture
or enterprise engaged in the retail furniture industry (or any other
business of the type that constitutes a substantial portion of the
Company's business at the date the Executive ceases to be employed by
the Company) (collectively, a "Competitor"); provided, however, that
the restrictions set forth above shall immediately terminate and shall
be of no further force or effect (i) in the event of a default by the
Company in the payment of any compensation or benefits to which the
Executive is entitled hereunder, which default is not cured within ten
(10) days after written notice thereof, or (ii) at the election of the
Executive if the Executive's employment has been terminated by the
Company other than for Cause and if the Executive (A) gives written
notice to the Company during the Non-Competition Period that he
desires to accept employment with a Competitor; and (B) agrees that
the severance payment specified in Section 4(a)(i) and (ii) hereof
shall be mitigated by the amount of salary and pro rata target bonus
payable to the Executive by the Competitor and attributable to
employment during the Non-Competition Period (it being understood that
the amount of such mitigated severance shall be paid by the Executive
to the Company in a lump-sum payment within thirty (30) days after the
Executive commences employment with the Competitor). Nothing herein
shall prohibit the Executive from being a passive owner of not more
than 2% of the equity securities of a corporation engaged in such
business which is publicly traded, so long as he has no active
participation in the business of such corporation.
b) During the Non-Competition Period, the Executive shall not,
directly or indirectly, (i) induce or attempt to induce or aid others
in inducing an employee of the Company to leave the employ of the
Company, or in any way interfere with the relationship between the
Company and an employee of the Company except in the proper exercise
of the Executive's authority, or (ii) in any way interfere with the
relationship between the Company and any customer, supplier, licensee
or other business relation of the Company.
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c) If, at the time of enforcement of this Section 8, a court
shall hold that the duration, scope, area or other restrictions stated
herein are unreasonable under circumstances then existing, the parties
agree that the maximum duration, scope, area or other restrictions
reasonable under such circumstances shall be substituted for the
stated duration, scope, area or other restrictions.
d) The covenants made in this Section 8 shall be construed as an
agreement independent of any other provisions of this Agreement, and
shall survive the termination of this Agreement. Moreover, the
existence of any claim or cause of action of the Executive against the
Company or any of its affiliates, whether or not predicated upon the
terms of this Agreement, shall not constitute a defense to the
enforcement of these covenants.
9. Indemnity. The Company will indemnify the Executive, in his
capacity as an officer and director of the Company, to the fullest extent
permitted by the Company's Articles of Incorporation and Bylaws.
10. Successors.
a) This Agreement is personal to the Executive and without the
prior written consent of the Company shall not be assignable by the
Executive otherwise than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be
enforceable by the Executive's legal representatives.
b) This Agreement shall inure to the benefit of and be binding
upon the Company and its successors and assigns.
c) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to
assume expressly 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. As used in this
Agreement, "Company" shall mean the Company as hereinbefore defined
and any successor to its business and/or assets as aforesaid which
assumes and agrees to perform this Agreement by operation of law, or
otherwise.
11. Miscellaneous.
a) This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Virginia, without
reference to principles of conflict of laws. The captions of this
Agreement are not part of the provisions hereof and shall have no
force or effect. This Agreement may not be amended or modified
otherwise than by a written agreement executed by the parties hereto
or their respective successors and legal representatives.
b) All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by
registered or certified mail, return receipt requested, postage
prepaid, addressed as follows:
If to the Executive to: If to the Company to:
Xxxxxx X. Xxxxxxx Xxxxxx-Xxxxxx Company
00000 Xxxx Xxxxx Xxxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Corporate Secretary
or to such other address as either party shall have furnished to the
other in writing in accordance herewith. Notice and communications
shall be effective when actually received by the addressee.
c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
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d) The Company may withhold from any amounts payable under this
Agreement such Federal, state, local or foreign taxes as shall be
required to be withheld pursuant to any applicable law or
regulation.
e) The Executive's or the Company's failure to insist upon strict
compliance with any provision hereof or any other provision of this
Agreement or the failure to assert any right the Executive or the
Company may have hereunder, shall not be deemed to be a waiver of such
provision or right or any other provision or right of this
Agreement.
f) Any entitlements to the Executive created under Section 2(b)
shall be contract rights to the extent not prohibited by law. However,
the Company shall not be required to amend, or refrain from amending,
any of its plans, practices, policies and programs to so provide the
contract rights.
g) The Executive and the Company agree that as of the date
hereof, this Agreement supersedes and terminates any existing
employment agreement between the Company and the Executive.
IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand
and, pursuant to the authorization from its Board of Directors, the Company has
caused these presents to be executed in its name on its behalf, all as of the
day and year first above written.
XXXXXX-XXXXXX COMPANY
By: / s / Xxxxxx X. Xxxxxx, Xx.
-----------------------------
Xxxxxx X. Xxxxxx, Xx.
Chairman, Compensation Committee
Board of Directors
/ s / Xxxxxx X. Xxxxxxx
---------------------------------
Xxxxxx X. Xxxxxxx
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