Exhibit 10.20
HILB, XXXXX AND XXXXXXXX COMPANY
SENIOR EXECUTIVE
EMPLOYMENT AGREEMENT WITH
XXXXXX X. XXXXXXX, III
EMPLOYMENT AGREEMENT
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THIS AGREEMENT, effective the 1st day of December, 2001, by and between
XXXXXX X. XXXXXXX, III, an individual residing in the County of Henrico,
Virginia (the "Executive"), and HILB, XXXXX AND XXXXXXXX COMPANY, a Virginia
corporation with corporate offices located at 0000 Xxxx Xxxxx Xxxxx, Xxxxx 000,
Xxxx Xxxxx, Xxxxxxxx 00000 (the "Company").
WHEREAS, the Company desires to continue to employ the Executive as its
President and Chief Operating Officer and wants to assure itself of the benefit
of the Executive's services and experience; and
WHEREAS, the Executive is willing to continue in the employ of the
Company upon the terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the premises and covenants
contained herein, and intending to be legally bound hereby, the parties hereto
agree as follows:
I. TERM OF EMPLOYMENT.
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(A) The term of the employment of the Executive under this Agreement
shall be for the period commencing on December 1, 2001 , and ending on May 31,
2005; provided, however, that commencing on May 31, 2004, and on each annual
anniversary of such date (such date and each annual anniversary being
hereinafter referred to as the "Renewal Date") unless previously terminated, the
term of employment shall automatically extend so as to terminate two (2) years
from such Renewal Date, unless notice that the term of employment will not be
extended is given by either party to the other at least 60 days prior to the
Renewal Date.
(B) Notwithstanding the foregoing provision (A) of this Section I., the
term of employment of the Executive under this Agreement shall be subject to
earlier termination by:
(1) determination of disability of the Executive pursuant to
Section IV.; or
(2) dismissal of the Executive from his position as President
and Chief Operating Officer pursuant to resolution by the Board of
Directors of the Company, or failure or refusal of the Board of
Directors to re-elect the Executive to the position of President and
Chief Operating Officer;
(3) resignation by Executive; or
(4) death of the Executive;
PROVIDED, however, that
(i) in the event of termination for determination of
disability pursuant to Paragraph (1) above, Section IV. shall
apply;
(ii) in the event of termination pursuant to
Paragraph (2) above for Proper Cause (as defined in Section
V.(A)) or pursuant to Paragraph (3) above for other than Good
Reason (as defined in Section VI.(A)), Section V.(B) shall
apply;
(iii) in the event of termination pursuant to
Paragraph (2) above without Proper Cause or pursuant to
Paragraph (3) above for Good Reason, Section VI.(B) shall
apply;
(iv) in the event of retirement of the Executive upon
the expiration of the term set forth in Section I.(A), Section
VII shall apply; or
(v) in the event of termination due to the death of
the Executive pursuant to Paragraph (4) above, Section VIII.
shall apply.
II. SERVICES TO BE RENDERED.
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The Company agrees to employ the Executive as the President and Chief
Operating Officer of the Company, subject to the terms, conditions and
provisions of this Agreement. The Executive hereby accepts such employment and
agrees that he shall devote the same degree of skill and diligence in rendering
services to the Company under this Agreement as he applied during his prior
employment by the Company. The Executive agrees that his employment as President
and Chief Operating Officer of the Company pursuant to this Agreement is a full
time position. Notwithstanding the foregoing, the Executive may devote a
reasonable amount of his time to serving as an officer and director of other
companies affiliated with the Company; to his personal investments and business
affairs, including service as a director of unaffiliated companies; and to
civic, political and charitable activities; PROVIDED HOWEVER, the Executive
shall not accept any position as a director of any unaffiliated for-profit
business organization, other than positions presently held by him, without prior
approval of the Board of Directors of the Company (which approval will not be
unreasonably withheld).
III. COMPENSATION.
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In consideration for the services rendered to the Company under this
Agreement, the Company shall pay and provide to the Executive the following
compensation and benefits:
(A) SALARY.
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The Company shall pay the Executive an annual base salary of $385,000,
payable in twelve equal monthly installments on the last business day of each
calendar month. This annual base salary shall be reviewed annually by the
Compensation Committee of the Board of Directors (the "Compensation Committee")
to consider appropriate increases, but in no event shall the amount of the base
salary be reduced.
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(B) ANNUAL INCENTIVE BONUS.
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In addition to the base salary to be paid to the Executive under
Section III.(A), the Executive may also be entitled to an annual incentive bonus
as established and modified, from time to time, by the Compensation Committee.
(C) ANCILLARY BENEFITS.
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The Executive shall also be entitled to vacations, participation in the
Company's Profit Sharing Savings Plan (401K), Executive Voluntary Deferral Plan
and Supplemental Executive Retirement Plan, sick leave benefits, post-retirement
benefit plan, and all other ancillary benefits provided by the Company,
including, but not limited to, group life, health and disability insurance
coverage, consistent with the compensation policies and practices of the Company
from time to time prevailing with respect to persons who are executive officers
of the Company.
(D) The Executive shall receive such stock option awards each year as
determined by the Compensation Committee in its sole discretion.
IV. DISABILITY.
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(A) The term of employment of the Executive may be terminated at the
election of the Company upon the Board of Director's receiving evidence that the
Executive is disabled as that term is defined in the Group Long Term Disability
Insurance Certificate and Summary Plan Description for the Company's Group
Disability Plan.
(B) In the event of such termination for disability, the Company shall
thereupon be relieved of its obligations to pay any compensation and benefits
under Section III., except for accrued and unpaid items, but shall, in addition,
pay to the Executive such disability compensation as set forth in any disability
plan established by the Company for its executive officers.
V. TERMINATION FOR PROPER CAUSE OR WITHOUT GOOD REASON.
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(A) The occurrence of any of the following events shall constitute
"Proper Cause" for termination of the employment of the Executive under this
Agreement, at the election of the Board of Directors of the Company:
(1) the Executive shall voluntarily resign as a director,
officer or employee of the Company or any of its affiliates without the
written consent of the Board of Directors of the Company;
(2) the Executive shall breach this Agreement in any material
respect and fail to cure such breach within sixty (60) calendar days
after receiving written notice of such breach from the Company; or
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(3) the commission of a fraud, or other criminal act, by the
Executive directly involving the Company or any of its affiliates which
would constitute a felony if prosecuted under criminal law;
PROVIDED, HOWEVER, the inability of the Executive to achieve
favorable results of operations shall clearly not be deemed Proper
Cause for termination hereunder.
(B) In the event of termination of the Executive's employment by the
Company pursuant to Section I.(B)(2) for Proper Cause or by the Executive
pursuant to Section I.(B)(3) other than for Good Reason (as defined in Section
VI.(A)), the Company shall thereupon be relieved of its obligations to pay any
compensation and benefits under Section III., except for accrued and unpaid
items.
VI. TERMINATION FOR GOOD REASON OR WITHOUT PROPER CAUSE.
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(A) The occurrence of any of the following events shall constitute
"Good Reason" for termination of employment by Executive:
(1) the assignment to the Executive of any duties inconsistent
in any respect with the Executive's position (including status, offices, titles
and reporting requirements), authority, duties or responsibilities as
contemplated by Section II. of this Agreement, or any other action by the
Company which results in a diminution in such position, authority, duties or
responsibilities, excluding for this purpose an isolated, insubstantial and
inadvertent action not taken in bad faith and which is remedied by the Company
promptly after receipt of notice thereof given by the Executive;
(2) any failure by the Company to comply with any of the
provisions of Section III. of this Agreement, other than an isolated,
insubstantial and inadvertent failure not occurring in bad faith and which is
remedied by the Company promptly after receipt of notice thereof given by the
Executive; or
(3) the Company's requiring the Executive to be principally
based at any office or location other than within the Richmond, Virginia
metropolitan area.
(B) In the event of termination of the Executive by the Company
pursuant to Section I.(B)(2) without Proper Cause or by the Executive pursuant
to Section I.(B)(3) for Good Reason, the Company shall thereafter be and remain
obligated to the Executive (or his estate or designated beneficiary) for the
following:
(1) continuation of the compensation and benefits provided
under Section III.(A) and III.(B) and such benefits under III.(C) as are payable
to a terminated employee until expiration of the term of employment established
by Section I.(A) or for one (1) year, whichever is greater;
(2) immediate full vesting of all unvested stock options and
awards of restricted stock;
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(3) immediate full vesting of all benefits in the Company's
Supplemental Executive Retirement Plan; and
(4) the transfer to the Executive of the Company's interest in
the Split Dollar Agreement between the Company and the Executive dated April 1,
1999 and any subsequent split dollar agreements, including the transfer to the
Executive of the Company's interest in the underlying insurance policies.
(C) In the event of a dispute as to whether Executive was terminated
for or without Proper Cause, or for or without Good Reason, or regarding the
amount of compensation Executive is entitled to receive under this Section VI.,
the Company shall be obligated to continue to pay to the Executive (or his
estate or designated beneficiary) all of the compensation and benefits reserved
under this Section VI. until the dispute is resolved by an arbitrator pursuant
to Section XVIII. hereof.
(D) For purposes of calculating the annual incentive bonus payable
under Section III.(B), the Company shall make to the Executive (or his estate or
designated beneficiary), an annual payment equal to the greater of (i) the
highest annual incentive bonus payment received by Executive pursuant to Section
III.(B) for the last four (4) fiscal years prior to the date of termination or
(ii) fifty percent (50%) of his annual base salary.
VII. RETIREMENT AT EXPIRATION OF THE TERM OF CONTRACT.
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In the event Executive elects to retire upon expiration of the term set
forth in Section I.(A), all unvested stock options and grants of restricted
stock shall immediately vest, the Executive shall become fully vested in the
Company's Supplemental Executive Retirement Plan and the Company shall forfeit
its interest in the Split Dollar Life Agreement between the Company and the
Executive dated April 1, 1999 and any subsequent split dollar agreements and the
underlying insurance policies.
VIII. DEATH.
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In the event of termination of the Executive's employment pursuant to
Section I.(B)(4) above, the Company shall pay the Executive's estate or
designated beneficiary such death benefits as may be set forth in any life
insurance plan established by the Company for its executive officers.
IX. CONFIDENTIALITY.
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For purposes of this Agreement, "Confidential Information" shall mean
any information of a proprietary or confidential nature and trade secrets of the
Company and its affiliates relating to the business of the Company and its
affiliates that have not previously been publicly released by duly authorized
representatives of the Company. The Executive agrees to regard and preserve as
confidential all Confidential Information pertaining to the Company's business
that has been or may be obtained by the Executive in the course of his
employment with the Company, whether
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he has such information in his memory or in writing or other physical form. The
Executive shall not, without written authority from the Company to do so, use
for his personal benefit or his personal purposes, unrelated to business of the
Company, nor disclose to others, either during the term of his employment
hereunder or thereafter, except as required by the conditions of his employment
hereunder, any Confidential Information of the Company. This provision shall not
apply after the Confidential Information has been voluntarily disclosed to the
public by a duly authorized representative of the Company, independently
developed and disclosed by others, or otherwise enters the public domain through
lawful means.
X. REMOVAL OF DOCUMENTS OR OBJECTS.
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The 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 any of its affiliates, or except as specifically permitted in writing by the
Company, any document or object containing or reflecting any Confidential
Information of the Company. The Executive recognizes that all documents or
material containing Confidential Information developed by him or by someone else
in the course of employment by the Company, are the exclusive property of the
Company.
XI. NONPIRACY COVENANTS.
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(A) For the purpose of this Agreement, the following terms shall have
the following meanings:
(1) "HRH Customers" shall be limited to those customers of the
Company or its affiliates for whom there is an insurance policy or bond
in force or to or for whom the Company or its affiliates are rendering
services as of the date of termination of the Executive's employment;
(2) "Affiliates of the Company" shall mean each of the
subsidiary corporations of Hilb, Xxxxx and Xxxxxxxx Company engaged in
business as an insurance agency as of the date of termination of the
Executive's employment;
(3) "Prohibited Services" shall mean services in the fields of
insurance performed by the Company or its affiliates, their agents or
employees in any other business engaged in by the Company or its
affiliates on the date of termination of the Executive's employment.
"Fields of Insurance" does not include title insurance, but does
include all lines of insurance sold by the Company or its affiliates,
including, without limitation, property and casualty, life, group,
accident, health, disability, and annuities;
(4) "Restricted Period" shall mean: (i) in the case of
termination by the Company for Proper Cause or by the Executive without
Good Reason, the period of two (2) years immediately following the date
of termination of the Executive's employment; and (ii) in the case of
termination by the Company without Proper Cause or by the Executive for
Good Reason, the period following the date of termination of the
Executive's employment during which the Executive is receiving
compensation under this Agreement.
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(B) The Executive recognizes that over a period of many years the
Company has developed, at considerable expense, relationships with, and
knowledge about, Customers which constitute a major part of the value of the
Company. During the course of his employment by the Company, the Executive will
either have substantial contact with, or obtain substantial knowledge about,
these Customers. In order to protect the value of the Company's business, the
Executive covenants and agrees that, in the event of the termination of his
employment for any reason, whether voluntary or involuntary and whether with or
without Proper Cause or Good Reason, he shall not, directly or indirectly, for
his own account or for the account of any other person or entity, as an owner,
stockholder, director, employee, partner, agent, broker, consultant or other
participant during the Restricted Period:
(1) solicit a Customer for the purpose of providing Prohibited
Services to such Customer; and
(2) accept an invitation from a Customer for the purpose of
providing Prohibited Services to such Customer.
Subsections (1) and (2) are separate and divisible covenants; if for
any reason one covenant is held to be illegal, invalid or unenforceable, in
whole or in part, the remaining covenant shall remain valid and enforceable and
shall not be affected thereby. Further, the periods and scope of the
restrictions set forth in any such subsection shall be reduced by the minimum
amount necessary to reform such subsection to the maximum level of enforcement
permitted to the Company by the law governing this Agreement. Additionally, the
Executive agrees that no separate geographic limitation is needed for the
foregoing nonpiracy covenants as such are not a prohibition on the Executive's
employment in the insurance agency business and are already limited to only
those entities which are included within the definition of "Customer."
XII. NONRAIDING OF EMPLOYEES.
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The Executive covenants that during his employment hereunder and the
Restricted Period specified in Section XI. hereof, he will not solicit, induce
or encourage for the purposes of employing or offering employment to any
individuals who, as of the date of termination of the Executive's employment,
are employees of the Company or its affiliates, nor will he directly or
indirectly solicit, induce or encourage any of the Company's or its affiliates'
employees to seek employment with any other business, whether or not the
Executive is then affiliated with such business.
XIII. NOTIFICATION OF FORMER AND NEW EMPLOYMENT.
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During the term of this Agreement and the Restricted Period specified
in Section XI. hereof, the Executive covenants to notify any prospective
employer or joint venturer, which is a competitor of the Company of this
Agreement with the Company; and if the Executive accepts employment or
establishes a relationship with such competitor, the Executive covenants to
notify the Company immediately of such relationship. If the Company reasonably
believes that the Executive is affiliated or employed by or with a competitor of
the Company during the Restricted Period, then
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the Executive grants the Company the right to forward a copy of this Agreement
to such competitor.
XIV. LIQUIDATED DAMAGES.
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(A) If the Executive breaches Sections X. or XI. of this Agreement, the
Company may, at its sole option, seek liquidated damages with respect to each
Customer procured by or through the Executive, directly or indirectly, in
violation of Sections X. or XI. of this Agreement (with such Customers being
hereafter referred to as "Lost Customers"). The Executive acknowledges that it
would be difficult to calculate damages incurred by the Company in the event of
such a breach and that the following liquidated damages clause, when so elected
by the Company, is necessary and reasonable for the protection of the Executive.
The Executive also acknowledges that the Company, at its sole option, may or may
not choose to exercise this liquidated damages provision as to some or all Lost
Customers. Whether or not the Company seeks liquidated or actual damages, the
Company shall retain the right to obtain injunctive relief with respect to any
Lost Customer and with respect to any other actions by the Executive which
breach this Agreement. Finally, the Executive acknowledges that he has no right
whatsoever to force the Company to exercise this liquidated damages provision,
and that such choice remains entirely the Company's. Liquidated damages shall be
calculated as follows:
(1) A Lost Customer shall be valued at 150% of the gross
revenue to the Company in the most recent twelve (12) month period
preceding the date of loss of such account. If such Lost Customer had
not been a Customer of the Company for an entire twelve (12) month
period, such liquidated damages shall be 150% of the gross revenue
which would have been, in the absence of a breach by the Executive,
realized by the Company in the initial twelve (12) month period of such
Customer being served by the Company.
(2) The Executive acknowledges that the foregoing damage
amounts are fair and reasonable, that an industry rule of thumb for the
valuation of any agency is 150% of revenue and that, on the margin,
selected accounts may be worth much more than 150% of their annual
revenue to an agency.
(B) The Executive shall pay such liquidated damages to the Company
within ninety (90) business days after a final order is entered by the
Arbitrator and received by the Executive ordering the Executive to make such
payment. Thereafter, such liquidated damages shall bear interest at the prime
rate of interest in effect at the Bank of Virginia. The Executive acknowledges
that a broker of record letter granted during the Restricted Period, if
applicable, by a Customer in favor of the Executive or any person or entity with
whom or which the Executive is directly affiliated shall be PRIMA FACIE evidence
of a violation of Section XI. of this Agreement and establishes a rebuttable
presumption in favor of the Company that Section XI. of this Agreement has been
violated by the Executive. Further, the Executive acknowledges that if the
Restricted Period is applicable to him, he has an affirmative duty to inform
such Customer that he cannot accept its business until after the Restricted
Period.
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(C) The Executive agrees that the foregoing remedies shall be
cumulative and not exclusive, shall not be waived by any partial exercise or
nonexercise thereof and shall be in addition to any other remedies available to
the Company at law or in equity.
XV. TOLLING OF RESTRICTIVE COVENANTS DURING VIOLATION.
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If a material breach by the Executive of any of the restrictive
covenants of this Agreement occurs, the Executive agrees that the restrictive
period of each such covenant so materially violated shall be extended by a
period of time equal to the period of such material violation by the Executive.
It is the intent of this Section that the running of the restricted period of a
restrictive covenant shall be tolled during any period of material violation of
such covenant so that the Company shall get the full and reasonable protection
for which it contracted and so that the Executive may not profit by his material
breach.
XVI. NOTICES.
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All notices and other communications which are required or may be given
under this Agreement shall be in writing and shall be deemed to have been given
if delivered personally or sent by registered or certified mail, return receipt
requested, postage prepaid:
(A) If to the Company, to it at the following address:
0000 Xxxx Xxxxx Xxxxx, Xxxxx 000
Xxxx Xxxxx, Xxxxxxxx 00000
Attn: Chairman of the Board
(B) If to the Executive, to him at the following address:
0000 Xxxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000
or to such other place as either party shall have specified by notice in writing
to the other. A copy of any notice or other communication given under this
Agreement shall also be sent to the Secretary and the Treasurer of the Company
addressed to such officers at the then principal office of the Company.
XVII. GOVERNMENTAL REGULATION.
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Nothing contained in this Agreement shall be construed so as to require
commission of any act contrary to law and whenever there is any conflict between
any provision of this Agreement and any statute, law, ordinance, order or
regulation, the latter shall prevail, but in such event any such provision of
this Agreement shall be curtailed and limited only to the extent necessary to
bring it within the legal requirements.
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XVIII. ARBITRATION.
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Any dispute or controversy as to the interpretation, construction,
application or enforcement of, or otherwise arising under or in connection with
this Agreement, shall be submitted at the request of either party hereto for
mandatory, final and binding arbitration in the City of Richmond, Virginia, in
accordance with the commercial arbitration rules then prevailing of the American
Arbitration Association. The Company and Executive waive the right to submit any
controversy or dispute to a Court and/or a jury. Any award rendered therein
shall provide the full remedies available to the parties under the applicable
law and shall be final and binding on each of the parties hereto and their
heirs, executors, administrators, successors and assigns and judgment may be
entered thereon in any court having jurisdiction. The prevailing party in any
such arbitration shall be entitled to an award by the arbitrator of all
reasonable attorneys' fees and expenses incurred in connection with the
arbitration.
XIX. INDEMNIFICATION BY THE COMPANY.
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The Company shall defend, indemnify and hold harmless the Executive to
the fullest extent permitted by the laws of the Commonwealth of Virginia,
against any all claims, causes of actions, damages and expenses (including all
legal fees and expenses) in any threatened, pending or completed action, arising
out of or relating in any way to action or conduct by the Executive by reason of
the fact that he was a representative of the Company or was serving at the
request of the Company or acts or conduct within the course of his employment
pursuant to this Agreement or in his capacity as a director of the Company. If
the Company contends that any action or conduct by the Executive was not within
the course of his employment or is otherwise not subject to this provision, the
Company shall pay to the Executive all defense costs and expenses to defend such
an action and shall only be entitled to reimbursement of such fees and expenses
if after a final adjudication, including all available appeals, there is a
holding that the Executive was not entitled to the defense and indemnification
under this provision.
XX. GOVERNING LAW.
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This Agreement shall be governed by and construed in accordance with
the laws of the Commonwealth of Virginia.
XXI. DIVISIBILITY.
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Should an arbitrator declare any provision of this Agreement to be
invalid, such declaration shall not affect the validity of the remaining portion
of any such provision or the validity of any other term or provision of this
Agreement as a whole or any part thereof, other than the specific portion
declared to be invalid.
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XXII. HEADINGS.
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The headings to the Sections and Paragraphs of this Agreement are for
convenience of reference only and in case of any conflict the text of this
Agreement, rather than the headings, shall control.
XXIII. SUCCESSORS AND ASSIGNS.
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This Agreement is binding upon and shall inure to the benefit of the
successors and assigns of the Company and the heirs, executors and legal
representatives of the Executive.
XXIV. ENTIRE AGREEMENT.
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This Agreement contains the entire understanding of the parties with
respect to the subject matter contained herein and supersedes all prior
agreements, arrangements and understandings relating to the subject matter and
may only be amended by a written agreement signed by the parties hereto or their
duly authorized representatives.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
WITNESS:
/s/ Xxxx Xxxxxxx /s/ Xxxxxx X. Xxxxxx, III
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Xxxxxx X. Xxxxxxx, III
ATTEST: HILB, XXXXX and XXXXXXXX
COMPANY
/s/ By: /s/ Xxxxxxx X. Xxxxxx
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Its: Executive Vice President -
Finance and Administration
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