EXHIBIT 10.42
|__| Employee's Copy
|__| Partnership's Copy
CAPITAL AUTOMOTIVE L.P.
EMPLOYMENT AGREEMENT
To XXXX X. XXXXXX:
This Agreement establishes the terms of your employment with Capital
Automotive L.P., a Maryland limited partnership (the "Partnership").
EMPLOYMENT AND DUTIES You and the Partnership agree to your employment as
Vice President and General Counsel on the terms
contained herein. In such position, you will report
directly to the Chief Executive Officer (the "CEO") of
Capital Automotive REIT, a Maryland real estate
investment trust (the "Company") and to the General
Partner of the Partnership. You agree to perform
whatever duties the Partnership may assign you from
time to time, consistent with your position as a senior
executive. During your employment, you agree to devote
your full business time, attention, and energies to
performing those duties (except as the CEO otherwise
agrees from time to time). You agree to faithfully
serve the Partnership, to conform to and comply with
the lawful and good faith directions and instructions
given you by the Partnership, and to use your best
efforts to promote and serve the interests of the
Partnership. You agree to comply with the
noncompetition, secrecy, and other provisions of
Exhibit A to this Agreement.
TERM OF EMPLOYMENT Your employment under this Agreement begins as of July
20, 1998 (the "Effective Date"). Unless sooner
terminated under this Agreement, your employment ends
at 6:00 p.m. Eastern Time on October 19, 2001. The
period running from the Effective Date to the
applicable date in the preceding sentence is the
"Term."
Termination or expiration of this Agreement ends your
employment but does not end your obligation to comply
with Exhibit A.
COMPENSATION
Salary The Partnership (or, in its discretion, the
Company) will pay you an annual salary (the
"Salary") from the Effective Date at the rate of
not less than $150,000 in accordance with its
payroll practices. The Partnership or the
Compensation Committee of the General Partner
("Compensation Committee") will review your Salary
annually and consider you for increases.
Bonus The Partnership or the Compensation Committee will
establish annual bonus targets under which you
will be eligible for an annual bonus equal to up
to 100% of your Salary.
Employee Benefits While you are employed under this Agreement, the
Partnership will provide you with the same
benefits, including medical insurance coverage, as
the Partnership makes generally available from
time to time to the Partnership's employees, as
those benefits are amended or terminated from time
to time, and such other benefits as are
commensurate with your position as a senior
executive of a public company. Your participation
in the Partnership's benefit plans will be subject
to the terms of the applicable plan documents and
the Partnership's generally applied policies, and
the Partnership in its sole discretion may from
time to time adopt, modify, interpret, or
discontinue such plans or policies.
PLACE OF EMPLOYMENT Your principal place of employment will be at the
Partnership's headquarters in the Washington
metropolitan area (or such other offices as the
Partnership may establish from time to time and to
which it assigns you in its sole discretion). You
understand and agree that you must travel from
time to time for business reasons.
INDEMNIFICATION The Partnership will indemnify you to the fullest
extent authorized by law if you are made a party
to any action, suit, or proceeding, whether
criminal, civil, administrative, or investigative,
because you are or were a manager, officer, or
employee of the Partnership or serve or served any
other entity as a director, officer, or employee
at the Partnership's request; provided, however,
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that you must repay the Partnership for any
indemnification if the final determination of an
arbitrator or a court of competent jurisdiction
declares, after the expiration of the time within
which judicial review (if permitted) of such
determination may be perfected, that
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indemnification by the Partnership is not
permissible under applicable law.
EXPENSES The Partnership will reimburse you for reasonable
and necessary travel and other business-related
expenses you incur for the Partnership in
performing your duties under this Agreement. You
must itemize and substantiate all requests for
reimbursements. You must submit requests for
reimbursement in accordance with the policies and
practices of the Partnership and within 60 days
after incurring the expense.
NO OTHER EMPLOYMENT For so long as you are employed by the
Partnership, you agree that you will not, directly
or indirectly, provide services to any person or
organization for which you receive compensation or
otherwise engage in activities that would conflict
or interfere significantly with the faithful
performance of your duties to the Partnership
without the Partnership's prior written consent.
(This prohibition excludes any work performed at
the Partnership's direction including any work for
the Partnership.) You may manage your personal
investments, as long as the management takes only
minimal amounts of time and is consistent with the
provisions of the No Competition Section in
Exhibit A and is otherwise consistent with the
policies and practices of the Partnership.
You represent to the Partnership that you are not
subject to any agreement, commitment, or policy of
any third party that would prevent you from
entering into or performing your duties under this
Agreement, and you agree that you will not enter
into any agreement or commitment or agree to any
policy that would prevent or hinder your
performance of duties and obligations under this
Agreement, including Exhibit A.
NO CONFLICTS OF INTEREST You confirm that you have fully disclosed to the
Partnership and the Company, to the best of your
knowledge, all circumstances under which you, your
spouse, and your relatives (including their
spouses, children, and relatives) have or may have
a conflict of interest with the Partnership or the
Company. You further agree to fully disclose to
the Partnership any such circumstances that might
arise during the Term. You agree to fully comply
with the Partnership's policy and practices
relating to conflicts of interest.
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NO PAYMENTS TO You will neither pay nor permit payment of any
GOVERNMENTAL OFFICIALS remuneration to or on behalf of any governmental
official other than payments required or permitted
by applicable law.
TERMINATION Subject to the provisions of this section, the
Partnership may terminate your employment, or you
may resign, except that, if you voluntarily
resign, you must provide the Partnership with 90
days' prior written notice (unless the Partnership
has previously waived such notice in writing or
authorized a shorter notice period).
For Cause The Partnership may terminate your employment for
"Cause" if you:
(i) engage in dishonesty that relates
materially to the performance of services or
any obligations under this Agreement,
including Exhibit A;
(ii) are convicted of any misdemeanor (other
than for minor infractions) involving fraud,
breach of trust, misappropriation, or other
similar activity or any felony;
(iii) perform your duties under this
Agreement in a grossly negligent manner; or
(iv) willfully breach this Agreement,
including Exhibit A, in a manner materially
injurious to the Partnership. An act or
omission is only "willful" if you acted in
bad faith or without any reasonable belief
that the action or omission was in the
interests of the Partnership and consistent
with your duties and obligations under this
Agreement.
Your termination for Cause under (i) and will be
effective immediately upon the Partnership's
mailing or transmission of such notice. Before
terminating your employment for Cause under (iii)
or (iv), the Partnership will specify in writing
to you the nature of the act, omission, refusal,
or failure that it deems to constitute Cause. The
Partnership will give you the opportunity to
correct the situation (and thus avoid termination
for Cause under (iii) or (iv)). You must complete
the correction within a reasonable period of time
after the written notice to you, and the
Partnership agrees to provide you no less than 15
days for such correction.
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Without Cause Subject to the provisions below under Payments on
Termination, the Partnership may terminate your
employment under this Agreement before the end of
the Term without Cause.
Good Reason You may resign for Good Reason with 45 days'
advance written notice as provided below. "Good
Reason" means the occurrence, without your written
consent, of any of the following circumstances:
the Partnership's failure to perform or
observe any of the material terms or
provisions of this Agreement,
the assignment to you of any duties
inconsistent with, or any substantial
diminution in, your employment status or
responsibilities as in effect on the date of
this Agreement,
the Partnership's relocation of its corporate
headquarters to a location that would
increase your commuting distance by more than
50 miles, based on your residence when this
Agreement is executed, or
a Change of Control, consisting of any one or
more of the following events:
a person, entity, or group (other than
the Company, the Partnership, any
subsidiary of either, any Company Group
benefit plan, or any underwriter
temporarily holding securities for an
offering of such securities) acquires
ownership of more than 40% of the
undiluted total voting power of the
Company's then-outstanding securities
eligible to vote to elect members of the
Board ("Company Voting Securities");
consummation of a merger or
consolidation of the Company into any
other entity -- unless the holders of
the Company Voting Securities
outstanding immediately before such
consummation, together with any trustee
or other fiduciary holding securities
under a Company Group benefit plan, hold
securities that represent immediately
after such merger or consolidation more
than 60% of the
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combined voting power of the then
outstanding voting securities of either
the Company or the other surviving
entity or its parent; or the
stockholders of the Company approve (i)
a plan of complete liquidation or
dissolution of the Company or (ii) an
agreement for the Company's sale or
disposition of all or substantially all
the Company's assets, and such
liquidation, dissolution, sale, or
disposition is consummated.
Even if other tests are met, a Change of Control
has not occurred under any circumstance in which
the Company files for bankruptcy protection or is
reorganized following a bankruptcy filing.
You must give notice to the Partnership of your
intention to resign for Good Reason within 30 days
after the occurrence of the event that you assert
entitles you to resign for Good Reason. In that
notice, you must specify the condition that you
consider provides you with Good Reason and must
give the Partnership an opportunity to cure the
condition within 30 days after your notice. If the
Partnership fails to cure the condition, your
resignation will be effective on the 45th day
after your notice (unless the Partnership has
previously waived such notice period in writing or
agreed to a shorter notice period).
You will not be treated as resigning for Good
Reason if the Partnership had Cause to terminate
your employment as of the date of your notice of
resignation.
Disability If you become "disabled" (as defined below), the
Partnership may terminate your employment. You are
"disabled" if you are unable, despite whatever
reasonable accommodations the law requires, to
render services to the Partnership for more than
90 consecutive days because of physical or mental
disability, incapacity, or illness. You are also
disabled if you are deemed to be disabled within
the meaning of the Partnership's long-term
disability policy as then in effect.
Death If you die during the Term, the Term will end as
of the date of your death.
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Payments on If the Partnership terminates your employment
Termination for or without Cause or because of disability or
death or you resign, the Partnership will pay you
any unpaid portion of your Salary prorated through
the date of actual termination and any annual
bonuses already determined by such date but not
yet paid, reimburse any substantiated but
unreimbursed business expenses, pay any accrued
and unused vacation time (to the extent consistent
with the Partnership's policies), and provide such
other benefits as applicable laws or the terms of
the benefits require. Except to the extent the law
requires otherwise or as provided in the Severance
paragraph, neither you nor your beneficiary or
estate will have any rights or claims under this
Agreement or otherwise to receive severance or any
other compensation, or to participate in any other
plan, arrangement, or benefit, after such
termination.
Severance In addition to the foregoing payments, if the
Partnership terminates your employment
without Cause or you resign for Good Reason
before the end of the Term, the Partnership
will
pay you severance equal to your Salary,
as then in effect, for 12 months in a
single lump sum as soon as practicable
but in any event no more than 90 days
after termination;
pay the premium cost for you to receive
any group health coverage the
Partnership must offer you under Section
4980B of the Internal Revenue Code of
1986 ("COBRA Coverage") for the period
of such coverage;
pay you, at the time the Partnership
would otherwise pay your annual bonus,
your pro rata share of the bonus for the
year of your termination, where the pro
rata factor is based on days elapsed in
your year of termination till date of
termination over 365, less any portion
of the bonus for the year of your
termination already paid; and
cause any otherwise unexercisable
options to purchase units in the
Partnership or stock in the
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Company to become exercisable, subject
to expiration at the end of their
regular term.
You are not required to mitigate amounts
payable under the Severance paragraph by
seeking other employment or otherwise;
however, you agree to return any payments
under this Severance paragraph if you fail to
comply with Exhibit A. Expiration of this
Agreement, whether because of notice of non-
renewal or otherwise, does not constitute
termination without Cause nor is it grounds
for resignation with Good Reason.
ASSIGNMENT The Partnership may assign or otherwise transfer
this Agreement and any and all of its rights,
duties, obligations, or interests under it to
the Company or any of the affiliates or
subsidiaries of the Company or the
Partnership or
to any business entity that at any time by
merger, consolidation, or otherwise acquires
all or substantially all of the Company's
stock or assets or the partnership units or
assets of the Partnership or to which the
Company or the Partnership transfers all or
substantially all of its assets.
Upon such assignment or transfer, any such
business entity will be deemed to be substituted
for the Partnership for all purposes. Assignment
or transfer does not constitute termination
without Cause nor is it grounds for resignation
with Good Reason absent the occurrence of a Change
of Control. This Agreement binds the Partnership,
its successors or assigns, and your heirs and the
personal representatives of your estate. Without
the Partnership's prior written consent, you may
not assign or delegate this Agreement or any or
all rights, duties, obligations, or interests
under it.
SEVERABILITY If the final determination of an arbitrator or a
court of competent jurisdiction declares, after
the expiration of the time within which judicial
review (if permitted) of such determination may be
perfected, that any term or provision of this
Agreement, including any provision of Exhibit A,
is invalid or unenforceable, the remaining terms
and provisions will be unimpaired, and the invalid
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or unenforceable term or provision will be deemed
replaced by a term or provision that is valid and
enforceable and that comes closest to expressing
the intention of the invalid or unenforceable term
or provision.
AMENDMENT; WAIVER Neither you nor the Partnership may modify, amend,
or waive the terms of this Agreement other than by
a written instrument signed by you and a duly
authorized representative of the General Partner.
Either party's waiver of the other party's
compliance with any provision of this Agreement is
not a waiver of any other provision of this
Agreement or of any subsequent breach by such
party of a provision of this Agreement.
WITHHOLDING The Partnership will reduce its compensatory
payments to you for withholding and FICA taxes and
any other withholdings and contributions required
by law.
THIRD PARTY BENEFICIARY You understand and agree that the Company is a
third party beneficiary of this Agreement.
GOVERNING Law The laws of the Commonwealth of Virginia
(other than its conflict of laws provisions)
govern this Agreement.
NOTICES Notices must be given in writing by personal
delivery, by certified mail, return receipt
requested, by telecopy, or by overnight delivery.
You should send or deliver your notices to the
Partnership's headquarters. The Partnership will
send or deliver any notice given to you at your
address as reflected on the Partnership's
personnel records. You and the Partnership may
change the address for notice by like notice to
the others. You and the Partnership agree that
notice is received on the date it is personally
delivered, the date it is received by certified
mail, the date of guaranteed delivery by the
overnight service, or the date the fax machine
confirms receipt.
LEGAL FEES If a claim is asserted for breach of any provision
of this Agreement, you will be entitled to recover
your reasonable attorney's fees and expenses if
you prevail.
SUPERSEDING EFFECT This Agreement supersedes any prior oral or
written employment, severance, or fringe benefit
agreements between you and the Company or the
Partnership. This Agreement supersedes all prior
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or contemporaneous negotiations, commitments,
agreements, and writings with respect to the
subject matter of this Agreement. All such other
negotiations, commitments, agreements, and
writings will have no further force or effect; and
the parties to any such other negotiation,
commitment, agreement, or writing will have no
further rights or obligations thereunder.
If you accept the terms of this Agreement, please sign in the space indicated
below. We encourage you to consult with any advisors of your choosing.
CAPITAL AUTOMOTIVE L.P.
General Partner:
CAPITAL AUTOMOTIVE REIT, a Maryland real
estate investment trust
By: /s/ XXXXXX X. XXXXXX
---------------------------------------
Its: President and Chief Executive Officer
--------------------------------------
I accept and agree to the terms of employment
set forth in this Agreement:
/s/ XXXX X. XXXXXX
--------------------------------
Xxxx X. Xxxxxx
Dated: June 22, 1998
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Exhibit A
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NO COMPETITION In consideration of your employment by the
Partnership and salary and benefits under this
Agreement, during the term of your employment, and
until the date one year after your employment with
the Company, the Partnership, or their successors,
assigns, affiliates, or subsidiaries (collectively,
the "Company Group") ends for any reason (the
"Restricted Period"), you agree as follows:
The Company is a real estate investment trust formed
to acquire real properties owned by automobile
dealerships and other automotive-related businesses
and lease the properties to such businesses. Except
as provided below under Excluded Category, you will
not, directly or indirectly, promote, be employed by,
lend money to, invest in, or engage in any Competing
Business within the Market Area. That prohibition
includes, but is not limited to, acting, either
singly or jointly or as agent for, or as an employee
of or consultant to, any one or more persons, firms,
entities, or corporations directly or indirectly (as
a director, independent contractor, representative,
consultant, member, or otherwise) that constitutes
such a Competing Business. You may own up to 3% of
the outstanding capital stock of any corporation that
is actively publicly traded without violating this No
Competition covenant. This covenant does not preclude
you from being employed by any automobile dealership
or dealership group or other automotive- related
business that is a lessee or prospective lessee of
properties the Company or the Partnership holds or is
actively considering acquiring.
If, during the Restricted Period, you are offered and
want to accept employment with a business that
engages in activities similar to the Company's or the
Partnership's, you will inform the Partnership in
writing of the identity of the business, your
proposed duties with that business, and the proposed
starting date of that employment. You will also
inform that business of the terms of this Exhibit A.
The Partnership will analyze the proposed employment
and make a good faith determination as to whether it
would threaten the Partnership's legitimate
competitive interests. If the Partnership determines
that the proposed employment would not pose an
unacceptable threat to its interests, the Partnership
will notify you that it does not object to the
employment.
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You acknowledge that, during the portion of the
Restricted Period that follows your employment,
you may engage in any business activity or gainful
employment of any type and in any place except as
described above. You acknowledge that you will be
reasonably able to earn a livelihood without
violating the terms of this Agreement.
You understand and agree that the rights and
obligations set forth in this No Competition
section will continue for one year from the date
of termination of this Agreement and your
employment with the Partnership or the Company
Group.
Excluded This No Competition section is not intended to
Category prevent you from practising solely as an attorney
after the termination of your employment, whether
you are directly employed by a Competing Business
or serving as outside counsel to such business.
You acknowledge and agree that, as counsel to the
Partnership, you have an ethical duty to preserve
attorney work product and matters subject to the
attorney-client privilege and to comply with
conflict of interest rules if advising new clients
on matters (i) where their interests are adverse
to the Partnership or the Company Group or (ii)
that relate to matters on which you gave advice to
the Partnership or the Company Group.
Definitions
Competing Competing Business means any service or financial
Business product of any person or organization other than
the Company Group, in existence or then under
development, that competes or could potentially
compete, directly or indirectly, with any service
or financial product of the Company Group upon
which or with which you have worked for the
Partnership or the Company Group or about which
you acquire knowledge while working for the
Partnership or the Company Group. Competing
Business includes any enterprise engaged in the
formation or operation of real estate investment
trusts or other entities that invest primarily in
automobile dealership or automotive-related
properties or provide real estate financing to
automobile dealerships or automotive-related
businesses. Competing Business excludes real
estate investment trusts and similar entities that
do not engage in activities related to automotive
dealerships or automotive-related businesses.
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Market Area The Market Area consists of the United States.
NO INTERFERENCE; During the Restricted Period, you agree that
NO SOLICITATION you will not, directly or indirectly, whether
for yourself or for any other individual or
entity (other than the Partnership or its
affiliates or subsidiaries), intentionally
solicit or endeavor to entice away from the
Company Group:
any person whom the Company Group
employs (other than as your personal
secretary) or otherwise engages to
perform services as a consultant or
sales representatives; or
any person or entity who is, or was,
within the Restricted Period, a
contractor or subcontractor of the
Company Group known to you or a
lessee or prospective lessee of
properties the Company Group holds
or is actively considering
acquiring.
SECRECY
Preserving Your employment with the Partnership under
Partnership and, if applicable, before this Agreement has
Confidences given and will give you Confidential
Information (as defined below). You acknowledge
and agree that using, disclosing, or publishing
any Confidential Information in an unauthorized
or improper manner could cause the Partnership
or Company Group substantial loss and damages
that could not be readily calculated and for
which no remedy at law would be adequate.
Accordingly, you agree with the Partnership
that you will not at any time, except in
performing your employment duties to the
Partnership or the Company Group under this
Agreement (or with the Partnership's prior
written consent), directly or indirectly, use,
disclose, or publish, or permit others not so
authorized to use, disclose, or publish any
Confidential Information that you may learn or
become aware of, or may have learned or become
aware of, because of your prior or continuing
employment, ownership, or association with the
Partnership or the Company Group or any of
their predecessors, or use any such information
in a manner detrimental to the interests of the
Partnership or the Company Group.
Preserving You agree not to use in working for the
Others' Company Group and not to disclose to the
Confidences Company Group any trade secrets or
other
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Confidences information you do not have the right to use or
disclose and that the Company Group is not free
to use without liability of any kind. You agree
to promptly inform the Partnership in writing
of any patents, copyrights, trademarks, or
other proprietary rights known to you that the
Partnership or the Company Group might violate
because of information you provide.
Confidential "Confidential Information" includes, without
Information limitation, information the Partnership or the
Company Group has not previously disclosed to
the public or to the trade with respect to the
Partnership's or the Company Group's present or
future business, operations, services,
products, research, inventions, discoveries,
drawings, designs, plans, processes, models,
technical information, facilities, methods,
trade secrets, copyrights, software, source
code, systems, patents, procedures, manuals,
specifications, any other intellectual
property, confidential reports, price lists,
pricing formulas, customer lists, financial
information (including the revenues, costs, or
profits associated with any of the
Partnership's or the Company Group's products
or services), business plans, lease structure,
projections, opportunities or strategies,
acquisitions or mergers, advertising or
promotions, personnel matters, legal matters,
any other confidential and proprietary
information, and any other information not
generally known outside the Partnership or the
Company Group that may be of value to the
Partnership or the Company Group but excludes
any information already properly in the public
domain. "Confidential Information" also
includes confidential and proprietary
information and trade secrets that third
parties entrust to the Partnership or the
Company Group in confidence.
You understand and agree that the rights and
obligations set forth in this Secrecy Section
will continue indefinitely and will survive
termination of this Agreement and your
employment with the Partnership or the Company
Group.
EXCLUSIVE PROPERTY You confirm that all Confidential Information
is and must remain the exclusive property of
the Partnership or the relevant member of the
Company Group. All business records, business
papers, and business documents you keep or make
in the course of your employment by the
Partnership relating to the Partnership or any
member of the Company Group must be and remain
the property of the Partnership or the relevant
member of the Company Group.
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Upon the termination of this Agreement with the
Partnership or upon the Partnership's request
at any time, you must promptly deliver to the
Partnership or to the relevant member of the
Company Group any Confidential Information or
other materials (written or otherwise) not
available to the public or made available to
the public in a manner you know or reasonably
should recognize the Partnership did not
authorize, and any copies, excerpts, summaries,
compilations, records and documents you made or
that came into your possession during your
employment. You agree that you will not,
without the Partnership's consent, retain
copies, excerpts, summaries or compilations of
the foregoing information and materials. You
understand and agree that the rights and
obligations set forth in this Exclusive
Property Section will continue indefinitely and
will survive termination of this Agreement and
your employment with the Company Group.
MAXIMUM LIMITS If any of the provisions of Exhibit A are ever
deemed to exceed the time, geographic area, or
activity limitations the law permits, you and
the Partnership agree to reduce the limitations
to the maximum permissible limitation, and you
and the Partnership authorize a court or
arbitrator having jurisdiction to reform the
provisions to the maximum time, geographic
area, and activity limitations the law permits.
INJUNCTIVE RELIEF Without limiting the remedies available to the
Partnership, you acknowledge
that a breach of any of the covenants in
this Exhibit A may result in material
irreparable injury to the Partnership and
Company Group for which there is no
adequate remedy at law, and
that it will not be possible to measure
damages for such injuries precisely.
You agree that, if there is a breach or
threatened breach, the Partnership or any
member of the Company Group will be entitled to
obtain a temporary restraining order and/or a
preliminary or permanent injunction restraining
you from engaging in activities prohibited by
any provisions of this Exhibit A or such other
relief as may be required to specifically
enforce any of the covenants in this Exhibit A.
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