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EXHIBIT 10.11
XXXXXX-Insignia/ESG Holdings
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement"), is entered into as of August
3, 1998, by and between Insignia/ESG Holdings, Inc., a Delaware corporation
with an office at 000 Xxxx Xxxxxx, Xxx Xxxx, XX 00000 (the "Company"), and
Xxxxxx Xxxxxxxx Xxxxxx, an individual with an office at 000 Xxxx Xxxxxx, Xxx
Xxxx, X.X. (the "Executive "). This Agreement is effective as of the date of
the consummation of the spin-off of the Company from Insignia Financial Group,
Inc. ("IFG") to its shareholders, and as of such date the obligations of IFG
under the Amended and Restated Employment Agreement between IFG and the
Executive dated as of January 1, 1998 shall be assumed by the Company, and the
Company hereby assumes and agrees to pay (without duplication under this
Agreement) the rights thereunder regarding amounts owed by IFG thereunder if
IFG does not timely pay such amounts (in which case the Company will be
subrogated to the right of the Executive to collect such amounts from IFG).
BACKGROUND
The Company desires to assure itself of the services of the Executive
for the period provided in this Agreement, and the Executive is willing to
serve in the employ of the Company for such period upon the terms and
conditions provided in this Agreement.
STATEMENT OF AGREEMENT
In consideration of the foregoing and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:
SECTION 1. EMPLOYMENT. The Company hereby agrees to employ the
Executive, and the Executive hereby accepts such employment, in each case upon
the terms and conditions set forth herein, for a period commencing on the
effective date hereof (the "Commencement Date") and ending three years from the
Commencement Date, or on such earlier date as provided herein (the "Expiration
Date") (such period, as it may be so terminated, being referred to herein as
the "Employment Period").
SECTION 2. DUTIES AND SERVICES.
(a) OFFICES. Subject to Section 2(e), during the Employment
Period the Executive shall serve as Chief Executive Officer of the Company and,
at the Company's request, as an officer or director of one or more of its
subsidiaries. In the performance of his duties hereunder, the Executive shall
report to and shall be responsible only to the Board of Directors of the
Company. The Executive agrees to his employment as described in this Section
2. The parties hereto understand and agree that the Executive has substantial
business interests outside of the scope of this Agreement, including, without
limitation, at Metropolitan Asset Enhancement, L.P.
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("MAE"), Insignia Properties Trust, as a strategic partner at Charterhouse, and
under an employment or consulting agreement with IFG, and both parties hereby
consent to such arrangements. The Executive shall be available to travel as
the needs of the business of the Company reasonably require.
(b) NOMINATION TO THE BOARD OF DIRECTORS AND COMMITTEES THEREOF.
The Company agrees that the Executive shall be nominated by its Board of
Directors to be elected to such Board of Directors as a Director of the Company
at each meeting of its stockholders at which Directors of the Company are to be
elected for so long as the Executive shall be employed by the Company. The
Company further agrees that, for so long as the Executive shall be employed by
the Company and shall be a Director of the Company, he shall be elected or
appointed, as the case may be, to serve (i) as Chairman of the Board of
Directors of the Company, (ii) on the Executive Committee of the Board of
Directors of the Company as the Chairman thereto, and (iii) on the Compensation
Committee of the Board of Directors as an ex officio member thereof
(collectively, the "Board Positions"). This Section 2(b) shall terminate upon
the conversion of this Agreement into a consulting agreement pursuant to
Section 2(e) of this Agreement.
(c) LOCATION OF OFFICE. Subject to Section 2(e), during the
Employment Period the Company shall provide the Executive with an office in
both the principal executive offices of the Company in New York, New York. The
Company will provide the Executive with two executive secretaries acceptable to
him, and other support appropriate to his duties hereunder, in the sole
discretion of the Executive.
(d) PRIMARY RESPONSIBILITIES. Subject to Section 2(e), during the
Employment Period, the Executive shall have primary responsibility for the
business of the Company and its subsidiaries, including, without limitation,
the following areas:
(i) Underwriting decisions;
(ii) Securitization decisions;
(iii) Acquisition and disposition decisions;
(iv) Hiring and termination of employees;
(v) Setting executive and other employee compensation;
(vi) Setting the location of the Company's principal executive offices at any
time and from time to time; and
(vii) Other similar general management decisions affecting the operations of
the Company,
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in each case subject to the approval of the Board of Directors of the Company
or the appropriate committee thereof to the extent required by the laws of the
State of Delaware or the By-Laws of the Company.
(e) CONSULTING. If (i) without the prior written consent of the
Executive the Executive's title, powers or duties within the Company have been
substantially diminished, other than as a result of a Termination For Cause, or
(ii) if an Influence Change Event (as defined in Section 8(a)(iv)) after or in
connection with an Extraordinary Transaction (as defined in Section 8(a)(i), an
Extraordinary Stock Event (as defined in Section (8(a)(v)), or a Material Asset
Disposition (as defined in Section 4(e)), has taken place, then Executive may
elect in writing to convert this Agreement into a consulting agreement. Under
the terms of the consulting agreement, the Executive shall consult with respect
to the assets and liabilities of the Company as they existed immediately before
the Extraordinary Transaction, Extraordinary Stock Event, or Material Asset
Disposition. Such consultation shall be at the reasonable times convenient to
the Executive on no less than five business days' notice, the parties
recognizing that the Executive during the consulting period likely will have
substantial other business interests, including under including, without
limitation, at Metropolitan Asset Enhancement, L.P. ("MAE"), as a strategic
partner at Charterhouse, and under an employment or consulting agreement with
IFG. The terms and conditions of this Agreement (including all rights
hereunder of the Executive as to compensation, bonus, payments and benefits)
shall continue unabridged during the period of consulting. The other
provisions of this Agreement also shall remain in effect except that (i)
Section 2(a) shall be deleted and the remainder of Section 2 shall be modified
by this Section 2(d), (ii) Section 7(a)(iv)(B) and Section 7(a)(iv)(C) shall be
deleted, and (iii) references to salary (and Base Salary) in Section 4(a) and
elsewhere in this Agreement shall be deemed to refer to a consulting fee (and
Base Consulting Fee), and such Base Consulting Fee shall be paid to the
executive in twelve monthly installments, payable on the first day of each
calendar month. The "Employment Period" shall be deemed to include the period
during which the Executive is obligated to provide consulting services
hereunder and therefore, to the extent permitted by law, the conversion shall
not be deemed a termination or resignation for any purpose and, if the law
requires that the conversion be treated as a termination, then the Company must
provide the Executive with benefits equivalent to those he would have received
had there been no termination. The Executive shall not be obligated to consult
for more than five days or portions of a day in any calendar month.
SECTION 3. KEY MAN LIFE INSURANCE. The Company shall have the
right to place a "key man" life insurance policy, providing a death benefit of
up to $15,000,000 upon the life of the Executive, for which the Company is the
beneficiary (the "Key Man Insurance Policy"). In connection therewith, the
Executive hereby authorizes the Company, at its sole cost and expense, to
purchase and maintain upon the life of the Executive such insurance policy, and
agrees to submit to such reasonable medical examinations, and to provide and/or
consent to the release of such medical information, as may be necessary or
desirable in order to secure the issuance thereof. Except as may be required
in order to obtain insurance coverage as described in this
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Section 3, any and all information about Executive's health or medical records
shall be kept confidential by the Company and shall not be disclosed by the
Company to any party without the Executive's prior written consent.
SECTION 4. COMPENSATION. As full compensation for his services
hereunder, the Company shall pay, grant, issue or give, as the case may be, to
the Executive the compensation and benefits specified below:
(a) BASE SALARY. Subject to the provisions of Sections 7 and 8, a
base salary at the rate of $750,000 per annum ("Base Salary"), which Base
Salary shall be paid to the Executive in accordance with the customary
executive payroll policy of the Company as in effect from time to time;
provided, however, that the Base Salary, as in effect at any time and from time
to time, may be further increased by action of the Board of Directors; and
further provided, however, that in no event shall the Base Salary be decreased
at any time or from time to time without the prior consent of the Executive,
which consent may be granted or withheld in the Executive's sole discretion.
(b) ANNUAL DISCRETIONARY BONUS. An annual discretionary bonus
("Discretionary Bonus"), the amount of which, if any, shall be determined by
the Board of Directors of the Company in its sole and absolute discretion,
which shall be paid to the Executive, with respect to any fiscal year of the
Company, before the expiration of 74 days after the end of such fiscal year.
In making bonus determinations, the Company shall evaluate the Executive's
performance in accordance with the bonus guidelines used by the Company for
executives of the Company in the same or a similar position as the Executive.
In the event of the consummation of the sale of the present residential
business of IFG to Apartment Investment and Management Company pursuant to an
amended and restated merger agreement dated May 26, 1998 (the "AIMCO Merger")
in any year, the Company shall, immediately after the consummation of the AIMCO
Merger, pay to the Executive an amount equal to X times Y, where X equals: (a)
if the consummation of the AIMCO Merger occurs in 1998, the amount of the
discretionary bonus the Executive received from IFG with respect to 1997, (b)
if the consummation of the AIMCO Merger occurs in 1999, the amount of the
discretionary bonus the Executive received from the Company with respect to
1998, divided by the number of days between the effective date of this
Agreement and the end of 1998, and multiplied by 365, or (c) if the
consummation of the AIMCO Merger occurs after 1999, the amount of the
discretionary bonus the Executive received with respect to the year prior to
the year in which the consummation of the AIMCO Merger occurred, and Y equals a
fraction the numerator of which is the number of days between the beginning of
the year and the occurrence of the consummation of the AIMCO Merger and the
denominator of which is 365.
(c) EXTRAORDINARY TRANSACTION, INFLUENCE CHANGE EVENT, OR
EXTRAORDINARY STOCK EVENT. Upon the occurrence of an Extraordinary
Transaction, an Influence Change Event, or an Extraordinary Stock Event, the
Company shall, in addition to remaining obligated under the terms of this
Agreement, immediately before the Extraordinary Transaction, Influence Change
Event, or Extraordinary Stock Event, pay the Executive a payment (the
"Extraordinary
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Transaction Payment") equal to one percent (1%) of the total equity market
capitalization of the Company on the date the Extraordinary Transaction, the
Influence Change Event, or the Extraordinary Stock Event occurred. In
addition, the Company shall pay the Executive the amounts and benefits
contemplated in Section 7(e). Notwithstanding the foregoing, (A) the Company
shall not be obligated to make any payment under this Section 4(c) (or under
Section 8(b)(iii)) with respect to a matter if it must also make a payment with
respect to such matter under Section 4(d) and (B) no more than one payment
shall be made under this Section 4(c)(or under Section 8(b)(iii)) with respect
to any single matter, regardless of whether that matter qualifies as more than
one of an Extraordinary Transaction, an Influence Change Event, or an
Extraordinary Stock Event.
(d) MATERIAL ASSET DISPOSITION BONUS. In the event of a Material
Asset Disposition, as defined below, in consideration of the services performed
by the Executive and consistent with the prior terms of the Executive's
employment, the Company (or, in the case of clause (iii) below, the spin-off
entity or, in default thereof, the Company) shall pay to the Executive
immediately before the consummation of such Material Asset Disposition, a cash
bonus equal to 1.00% of the consideration (valued as set forth below) received
by the Company or its shareholders as a result of such Material Asset
Disposition, provided, however, that if the Material Asset Disposition giving
rise to the cash bonus contemplated by this Section 4(d) is the consummation of
the AIMCO Merger, the Company shall pay such cash bonus immediately after the
consummation of the AIMCO Merger, and the amount of such cash bonus shall be
equal to 1.00% of the consideration (valued as set forth below) received by IFG
or its shareholders as a result of the consummation of the AIMCO Merger (not
including the value of the distribution of the shares of the Company to
shareholders of IFG). A "Material Asset Disposition" as used herein means,
without duplication for the same matter: (i) a transaction which results in a
majority of the equity interest in the Company being beneficially owned by any
"person" or "persons," including any "group" (as such terms are used in Section
13(d) and 14(d) of the Exchange Act), other than any of the Company's present
Affiliates; (ii) a sale or series of sales by the Company of subsidiaries,
divisions, assets (other than marketable securities), or operating businesses
representing in the aggregate 20% or more of the Company's 1998 budgeted EBITDA
(which shall include for purposes of this Agreement EBITDA for all contemplated
subsidiaries of the Company) and each such sale after such threshold has been
reached or, if the AIMCO Merger is consummated, a sale or series of sales by
the Company of subsidiaries, divisions or assets (other than marketable
securities), or operating businesses, regardless of size; (iii) a spin off, or
series of spin offs, of any of the Company's divisions, operating businesses or
subsidiaries that meet the 1998 budgeted EBITDA threshold set forth in (ii)
above (or, if the AIMCO Merger is consummated, any such spin off regardless of
size) which is followed by a subsequent Extraordinary Transaction (as defined
above, but with reference to the spun off entity rather than the Company) of
the subsidiary, division or business spun off within five years following such
spin off; (iv) any transaction which results in any one or more of the
Company's divisions, subsidiaries or operating businesses, representing in the
aggregate 20% or more of the Company's EBITDA, being owned by a third party or,
if the AIMCO Merger is consummated, any transaction, regardless of size, which
results in any one or more of the Company's divisions, subsidiaries, or
operating businesses being owned by a third party; or (v) the consummation of
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the AIMCO Merger. In the event a Material Asset Disposition is consummated in
one or more steps, including, without limitation, by way of second-step merger,
any additional consideration paid or to be paid in any subsequent step in the
Material Asset Disposition in respect of (x) subsidiaries, divisions, assets
(other than marketable securities), or operating businesses of the Company and
(y) capital stock of the Company (and any securities convertible into, or
options, warrants or other rights to acquire, such capital stock) shall be
included for purposes of calculating the bonus payable pursuant to this Section
4(d). "Consideration" shall not include the assumption, directly or
indirectly, or repayment of indebtedness or other liabilities of the Company
but shall include the assumption, directly or indirectly, or repayment
securities similar to the IFG Trust Convertible Preferred Securities now
outstanding. If all or a portion of the consideration paid in the Material
Asset Disposition is other than cash or securities, then the value of such
non-cash consideration shall be the fair market value thereof on the date the
Material Asset Disposition is consummated as mutually agreed upon in good faith
by the Company's Board of Directors and the Executive. If the Board of
Directors and the Executive are unable to come to agreement on the fair market
value of such non-cash consideration following the provisions of this Section
4(d), then, at the request of either, an independent valuation expert agreeable
to both shall be appointed to determine the fair market value of such non-cash
consideration, and the determination of such independent expert shall be
binding on both the Executive and the Company. If such non-cash consideration
consists of common stock, options, warrants or rights for which a public
trading market existed prior to the consummation of the Material Asset
Disposition, then the value of such securities shall be determined by the
closing or last sales price thereof on the date of the consummation of the
Material Asset Disposition; provided, however, that if such non-cash
consideration consists of newly-issued, publicly-traded common stock, options,
warrants or rights for which no public trading market existed prior to the
consummation of the Material Asset Disposition, then the value thereof shall be
the average of the closing prices for the 20 trading days subsequent to the
fifth trading day after the consummation of the Material Asset Disposition. In
such event, the portion of the bonus payable to the Executive pursuant to this
Section 4(d) attributable to such securities shall be paid on the 30th trading
day subsequent to consummation of the Material Asset Disposition. If no public
market exists for the common stock, options, warrants or other rights issued in
the Material Asset Disposition, then the value of thereof shall be as mutually
agreed upon in good faith by the Company's Board of Directors and the
Executive. If the non-cash consideration paid in the Material Asset
Disposition consists of preferred stock or debt securities (regardless of
whether a public trading market existed for such preferred stock or debt
securities prior to consummation of the Material Asset Disposition or exists
thereafter), the value hereof shall be the face or principal amount, as the
case may be. Any amounts payable by a purchaser to the Company, any
shareholder of the Company or any Affiliate of either the Company or any
shareholder of the Company in connection with a non-competition, employment,
consulting, licensing, supply or other agreement shall be deemed to be part of
the consideration paid in the Material Asset Disposition. If all or a portion
of the consideration payable in connection with the Material Asset Disposition
includes contingent future payments, then the Company shall pay to the
Executive, upon consummation of such Material Asset Disposition, an additional
cash fee, determined in accordance with this Section 4(d) as, when and if such
contingency payments are received. However, in the event of an installment
purchase at a fixed price and a fixed time
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schedule, the Company agrees to pay the Executive, upon consummation of the
Material Asset Disposition, a cash fee determined in accordance with this
Section 4(d) based on the present value of such installment payments using a
discount rate of 6.5%. For purposes of this Section 4(d), in no case shall the
"consideration" received by the Company be greater than the total market
capitalization of the Company at the time of the Material Asset Disposition.
(e) FRINGE BENEFIT PROGRAMS. In addition to the other benefits
provided to the Executive hereunder and to the extent he satisfies the
eligibility requirements thereof and to the extent permitted by law,
participation in fringe benefit programs made available generally to employees
or independent contractors of the Company, including, without limitation,
pension, profit sharing, stock purchase, savings, bonus, disability, life
insurance, health insurance, hospitalization, dental, deferred compensation and
other plans and policies authorized on the date hereof or in the future.
(f) EXPENSE REIMBURSEMENT. Reimbursement of the Executive for all
out-of-pocket expenses incurred by him in connection with the performance of
his duties hereunder, and business related mobile or cellular phone expense in
accordance with the Company's written policies and procedures, all upon the
presentation of appropriate documentation therefore in accordance with the then
regular procedures of the Company.
(g) PERQUISITES. In addition to the other benefits provided to
the Executive hereunder, and at the sole cost and expense of the Company,
except as otherwise provided in Section 7(d), the Company shall provide:
(i) $3,750 to the Executive on the first day of each month,
for car and driver expenses; and
(ii) full reimbursement for expenses incurred in respect of
professional continuing education.
(h) DISABILITY PROTECTION. Subject to the provisions of Sections
7 and 8 hereof, the Company will provide to the Executive disability insurance
coverage identical to the disability insurance coverage provided to senior
executives of the Company from time to time at the Company's sole cost and
expense.
(i) PARACHUTE LIMIT. Notwithstanding anything else herein, to the
extent the Executive would be subject to the excise tax under Section 4999 of
the Internal Revenue Code of 1986, as amended (the "Code"), on such amounts or
benefits received from the Company required to be included in the calculation
of parachute payments for purposes of Sections 280G and 4999 of the Code (the
"Parachute Payments "), the amounts of any Parachute Payments shall be
automatically reduced as described herein to an amount one dollar less than an
amount that would subject the Executive to the excise tax under Section 4999 of
the Code (the "Parachute Limit "); provided, however, that this Section 4(i)
shall apply only if the reduced Parachute Payments received by the Executive
(after taking into account further reductions for applicable
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federal, state and local income, social security and other taxes) would be
greater than the unreduced Parachute Payments to be received by the Executive
minus (i) the excise tax payable under Section 4999 of the Code with respect to
such Parachute Payments and (ii) all applicable federal, state and local
income, social security and other taxes on such Parachute Payments. The
foregoing reduction shall be applied to the Parachute Payments as follows: (i)
first by reducing the amounts payable under Section 4(c) (if such amounts are
included in such computation) until such amounts have been exhausted up to the
Parachute Limit, (ii) then by reducing any such other amounts and benefits
(other than awards described in (iii) below) as determined by the Company, and
(iii) notwithstanding anything contained herein or in an option, warrant or
restricted stock agreement, award or plan relating to the Executive then, on a
pro-rata basis up to the Parachute Limit, by failing to accelerate the vesting
(without affecting the right to vest) upon a change in ownership or effective
control or change in ownership of a substantial portion of assets (as described
in Code Section 280G(b)(2)(A)(i)) of any unvested awards of shares of
restricted stock of the Company previously granted to Executive and options or
warrants to purchase shares of the Company previously granted to Executive.
Notwithstanding the foregoing, the Company shall treat any of the amounts
described in (i) through (iii) above as a Parachute Payment solely to the
extent required under applicable law.
(j) REGISTRATION RIGHTS. The Company hereby ratifies the
Executive's registration rights with respect to all of the securities of the
Company beneficially owned by the Executive as set forth in the Registration
Rights Agreement heretofore executed by the Executive and the Company.
(k) VESTING. In the event of (a) a termination of Executive's
employment for any reason other than a Termination for Cause or voluntary
termination by the Executive, including, but not limited to a Death Termination
Event, Disability Termination Event, Termination Without Cause or in the event
of (b) the occurrence of an Extraordinary Transaction, an Influence Change
Event, or an Extraordinary Stock Event (whether or not resulting in a
termination of Executive's employment), all options and warrants then granted
to the Executive will immediately vest and be exercisable by the Executive.
(l) PURCHASE OF INSURANCE. Provided Executive does not
voluntarily terminate his employment during the Employment Period or is not
subject to a Termination For Cause by the Company, the Company will continue,
at the Company's sole cost, individual and dependent care health insurance
coverage on the Executive through the Employment Period, or through the date
three years from the Commencement Date, whichever is later, and, following
Executive's cessation of employment with the Company for any reason, (i)
thereafter, the Executive shall have the right to continue, at the Executive's
sole cost, any or all life insurance policies on the life of the Executive
maintained by the Company during the Employment Period and to determine the
beneficiaries and owners thereof, and (ii) the Executive and his dependents
shall have the right to purchase from or through the Company or its successor,
at the Executive's or his dependents' sole cost, individual and dependent care
health insurance coverage upon terms and conditions identical to the terms and
conditions upon which health insurance coverage is provided to employees of the
Company and their dependents. Notwithstanding anything in this
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Agreement to the contrary, the provisions of this Section 4(l) shall continue
regardless of the cessation of the Executive's employment with the Company. In
the case of the death of the Executive, whether during or after the Employment
Period, the rights under Section 4(l)(ii) of the persons who were the
Executive's dependents at the time of his death shall continue in full force
and effect for the duration of each of their lives.
SECTION 5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
EXECUTIVE. The Executive represents and warrants to the Company as follows:
(a) He is under no contractual or other restriction or obligation
which is inconsistent with the execution of this Agreement, the performance of
his duties hereunder, or the other rights of the Company hereunder; and
(b) He is able to perform the essential functions of his duties
hereunder with or without reasonable accommodations.
SECTION 6. NON-SOLICITATION; CONFIDENTIALITY.
(a) NON-SOLICITATION.
(1) In recognition of the close personal contact
the Executive has or will have with the Company's and its affiliates' trade
secrets, confidential information, records and business relationships, and the
position of trust in which the Company holds the Executive, the Executive
further covenants and agrees that while the Executive is employed by the
Company and for a period lasting for one (1) year following the date of
cessation of the Executive's employment with the Company, the Executive will
not, if such action would have a material adverse effect on the Company, in
direct competition with the Company (where competition is measured as of the
date the Executive ceases to be employed by the Company), either for himself or
as an officer, director, employee, agent, representative, independent
contractor or in any relationship to any person, partnership, corporation, or
other entity (except the Company or its Affiliates or subsidiaries), solicit,
directly or by assisting others, business from any of the Company's customers
or clients who were customers or clients of the Company as of the date of the
cessation of the Executive's employment and with whom the Executive has had
material contact (as defined below) during the twelve (12) month period
preceding the date of cessation of the Executive's employment with the Company
in the event of a cessation of employment with the Company or, absent such
cessation, during the twelve (12) month period preceding the solicitation, for
the purpose of providing goods or services to said customers and clients. For
purposes of this Agreement, "material contact" exists between the Executive and
any of the Company's customers or clients (i) with whom the Executive actually
dealt; or (ii) whose dealings with the Company were handled, coordinated or
supervised by the Executive; or (iii) about whom the Executive obtained
confidential information in the ordinary course of business through the
Executive's association with the Company.
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(2) The Executive covenants and agrees that, for
a period ending on the second anniversary of the date on which the Executive's
employment with the Company ceases, the Executive will not solicit any
employee, broker or sales person of the Company, or any of its respective
subsidiaries or affiliates to leave their employ for the employ of a person or
entity which directly competes with the Company, or any of its respective
subsidiaries or affiliates.
(3) The Executive covenants and agrees that, for
a period ending on the second anniversary of the date on which the Executive's
employment with the Company ceases, the Executive will not purchase for his own
account any limited partnership units of partnerships that, on the date of
purchase, are controlled directly or indirectly by the Company, except that the
provisions of this sentence shall not be deemed breached merely because the
Executive owns, immediately after a purchase, not more than one percent of the
outstanding units. Should the Executive breach the foregoing sentence, all his
options issued by the Company or any of its subsidiaries shall be canceled and
all of his restricted stock issued by the Company or any of its subsidiaries
(whether or not then vested) which he then owns shall be forfeited. For
purposes of this Section 6(a)(3), "purchase" shall mean the payment of cash
only for such limited partnership units and shall not include payment of cash
for interests in an entity whose assets consist in whole or in part of such
limited partnership units.
(4) The Executives covenants and agrees that he
will not, either for himself or as an officer, director, employee, agent,
representative, or independent contractor of any person, partnership,
corporation, or other entity (except the Company or its Affiliates or
subsidiaries), interfere with any contract that exists between the Company and
any customers or clients of the Company as of the effective date of this
Agreement.
The Executive acknowledges that the foregoing provisions are intended
to protect the Company's and its subsidiaries' and Affiliates' business and
customer contacts, not to prevent the Executive from pursuing a livelihood in
the general area of his previous training, and they should be interpreted
accordingly.
(b) CONFIDENTIALITY. All confidential information which the
Executive may now possess, may obtain during or after his employment with
Company, or may create prior to the end of his employment with the Company or
otherwise relating to the business of the Company or any of its subsidiaries or
affiliates or of any customer or supplier of any of them shall not be
published, disclosed, or made accessible by him to any other person, either
during or after the cessation of his employment, or used by him except during
his employment with the Company in the business and for the benefit of the
Company and its subsidiaries and Affiliates. In addition, the Executive agrees
not to disclose, publish or make accessible to any other person, from and after
the date of this Agreement, during the Employment Period or at any time
thereafter, any of the terms or provisions of this Agreement, except the
Executive's accountants or legal counsel who need such information to advise
him, prepare his tax returns, make required filings, represent him and the
like; provided, however, that the Executive will be responsible for causing
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any such accountants and legal counsel to be aware of and to abide by the
obligations contained in this Section 6(b) and will be responsible for any
breach of such obligations by any of them. In the event that the Executive
becomes legally compelled to disclose any of the confidential information, the
Executive will provide the Company with prompt written notice so that the
Company may seek a protective order or other appropriate remedy and/or waive in
writing compliance with the provisions of this Section 6(b) and in the event
that such protective order or other remedy is not obtained, or should the
Company waive in writing compliance with the provisions of this Section 6(b),
the Executive will furnish only that portion of the confidential information
which is so legally required. The Executive shall return all tangible evidence
of such confidential information to the General Counsel of the Company prior to
or at the cessation of his employment.
(c) INTERPRETATION. Since a breach of the provisions of this
Section 6 could not adequately be compensated by money damages, the Company
shall be entitled, in addition to any other right and remedy available to it,
to an injunction restraining such breach and the Company shall not be required
to post a bond in any proceeding brought for such purpose. The Executive
agrees that the provisions of this Section 6 are necessary and reasonable to
protect the Company in the conduct of its businesses. If any restriction
contained in this Section 6 shall be deemed to be invalid, illegal, or
unenforceable by reason of the extent, duration, or geographical scope thereof,
or otherwise, then the court making such determination shall have the right to
reduce such extent, duration, geographical scope, or other provisions hereof,
and in its reduced form such restriction shall then be enforceable in the
manner contemplated hereby. Nothing herein shall be construed as prohibiting
the Company from pursuing any other remedies, at law or in equity, for such
breach or threatened breach.
(d) INVESTORS. Notwithstanding anything herein to the contrary,
nothing in this Agreement shall restrict the right of the Executive to solicit
or receive, on his own behalf or on behalf of others, any investment or any
funds in any form from any person, regardless of whether such person is an
investor in the Company or in any current or former affiliate of the Company.
SECTION 7. TERMINATION.
(a) DEFINITIONS.
(i) Death Termination Event. As used herein, "Death
Termination Event" shall mean the death of the Executive.
(ii) Disability Termination Event. As used herein,
"Disability Termination Event" shall mean a circumstance where the Executive is
physically or mentally incapacitated or disabled or otherwise unable to fully
discharge his duties hereunder for a period of 185 consecutive days.
(iii) Estate. As used herein, "Estate" shall mean (A) in
the event that the last will and testament of the Executive has not been
probated at the time of determination, the estate
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of the Executive and (B) in the event that the last will and testament of the
Executive has been probated at the time of determination, the legatees of the
Executive who are entitled under such will to the assets or payments at issue.
(iv) Termination For Cause. As used herein, the term
"Termination For Cause" shall mean the termination by the Company of the
Executive's employment hereunder upon a good faith determination by a majority
vote of the members of the Board of Directors of the Company that termination
of this Agreement is necessary by reason of (A) the Executive shall be
convicted of a felony, (B) the Executive shall commit any act or omit to take
any action in bad faith and to the material detriment of the Company and
Executive shall not have cured the same within 30 days after the Company sends
written notice thereof, or (C) Executive shall breach in a material way any
material term of this Agreement and fail to correct such breach within 30 days
after the Company sends written notice thereof.
(v) Termination Without Cause. As used herein,
"Termination Without Cause" shall mean any termination of the Executive's
employment hereunder that is not a Termination For Cause, a Death Termination
Event, or a Disability Termination Event, and shall include, without
limitation, a termination of the Executive's employment hereunder due to the
scheduled expiration of the Employment Period on the date three years from the
Commencement Date or (as contemplated by Section 8(b)(i)), an Extraordinary
Transaction, an Influence Change Event, or an Extraordinary Stock Event.
(b) DEATH TERMINATION EVENT. Upon the occurrence of a Death
Termination Event, this Agreement shall terminate automatically upon the date
that such Death Termination Event occurred (subject to the last sentence of
this Section 7), whereupon the Executive's estate shall receive the
consideration set forth in Sections 4(a) and 4(g)(i) and (ii), through the date
three years from the Commencement Date. In addition, the Executive's Estate
shall be entitled to receive the payments contemplated by Section 4(c) and
Section 4(d) if the event giving rise to such payment occurs, or a definitive
agreement regarding such event is executed, before or within 180 days after the
Death Termination Event.
(c) DISABILITY TERMINATION EVENT. Upon the occurrence of a
Disability Termination Event, this Agreement shall terminate automatically upon
the date that such Disability Termination Event occurred (subject to the last
sentence of this Section 7), whereupon (i) the Company shall continue to pay
seventy-five percent (75%) of the then- current Base Salary to the Executive
for twice the period equal to the remaining term of the Employment Period (such
calculation will be determined upon the assumptions: (A) that the Employment
Period will not be terminated prior to the date three years from the
Commencement Date, and (B) that the remaining term of the Employment Period
will not in any event be less than two years), (ii) the Company shall continue
to provide to the Executive the disability protection contemplated by Section
4(h) of this Agreement until such time as the Executive elects to discontinue
such coverage, (iii) the Company will arrange for the Executive (x) to have the
ability to maintain the Key Man Insurance Policy thereafter at the sole expense
of the Executive, and (y) to designate the beneficiaries thereof, in each case
to the exclusion of the Company and as promptly as
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practicable after such termination, and (iv) the Executive shall receive the
consideration set forth in Sections 4(b) and 4(g)(i) and (ii) through the date
three years from the Commencement Date. In addition, the Executive shall be
entitled to receive the payments contemplated by Section 4(c) and Section 4(d)
if the event giving rise to such payment occurs, or a definitive agreement
regarding such event is executed, before or within 180 days after the
Disability Termination Event.
(d) TERMINATION FOR CAUSE. The Executive and the Company agree
that the Company shall have the right to effectuate a Termination for Cause
prior to the date three years from the Commencement Date. Upon the occurrence
of a Termination For Cause, this Agreement will terminate upon the date of that
such Termination For Cause occurs (subject to the last sentence of this Section
7), whereupon (i) the Executive shall be entitled to receive the Base Salary,
as then in effect, to and including the date that such Termination for Cause
occurs, and (ii) the Company will arrange for the Executive (x) to have the
ability to maintain the Key Man Insurance Policy thereafter at the sole expense
of the Executive, and (y) to designate the beneficiaries thereof, in each case
to the exclusion of the Company and as promptly as practicable after such
termination.
(e) TERMINATION WITHOUT CAUSE. Upon the occurrence of a
Termination Without Cause, this Agreement shall terminate upon the date that
such Termination Without Cause occurs (subject to the last sentence of this
Section 7), whereupon (i) the Company shall (A) in the event that such
Termination Without Cause is not an Extraordinary Transaction, an Influence
Change Event, or an Extraordinary Stock Event, continue to pay the then-current
Base Salary to the Executive until the date three years from the Commencement
Date, and (B) in the event that such Termination Without Cause is an
Extraordinary Transaction, an Influence Change Event, or an Extraordinary Stock
Event, the Company shall pay to the Executive the Extraordinary Transaction
Payment (as defined in Section 4(c)) in accordance with the provisions of
Section 8, and (ii) the Company shall continue to provide to the Executive the
disability protection contemplated by Section 4(h) of this Agreement until such
time as the Executive elects to discontinue such coverage, and (iii) the
Company will arrange for the Executive (x) to have the ability to maintain the
Key Man Insurance Policy thereafter at the sole expense of the Executive, and
(y) to designate the beneficiaries thereof, in each case to the exclusion of
the Company and as promptly as practicable after such termination. In
addition, the Company shall pay the Executive the amounts and benefits
contemplated by Sections 4(b) and 4(g)(i) and (ii). Also, the Executive shall
be entitled to receive the payments contemplated by Section 4(c) and Section
4(d) if the event giving rise to such payment occurs, or a definitive agreement
regarding such event is executed, on or before the date three years from the
Commencement Date.
Notwithstanding anything in this Agreement to the contrary, (i)
Sections 3, 4(k), 4(l), 5, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18 and 19
of this Agreement shall survive any termination of this Agreement or of the
Executive's employment hereunder until the expiration of the statute of
limitations applicable hereto; and (ii) the Company will pay to the Executive
(or the Estate), regardless of the termination of this Agreement for any reason
other than a Termination For Cause, any amounts pursuant to Sections 4(c), 4(d)
and 8(b) with regard to Material Xxxxx
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Disposition, Extraordinary Transaction, Extraordinary Stock Event, or Influence
Change Event (A) where definitive agreements regarding such transaction have
been executed before the termination of this Agreement, (B) where definitive
agreements regarding such transaction have been executed before the date three
years from the Commencement Date and the Executive has not as of such date
voluntarily resigned as Chairman of the Board of the Company, or (C) in the
event of a Termination Without Cause, where the event giving rise to such
payment occurs, or a definitive agreement regarding such event is executed, on
or before the date three years from the Commencement Date.
SECTION 8. EXTRAORDINARY TRANSACTION.
(a) DEFINITIONS.
(i) Extraordinary Transaction. As used herein,
"Extraordinary Transaction" shall mean the occurrence of any one or more of the
following:
(1) the Company ceases to be required to file
reports under Section 13 of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), or any successor to that Section;
(2) a majority of the members of the Board of
Directors of the Company are not persons who (a) had been directors of the
Company for at least the preceding 12 consecutive months or (b) when they
initially were elected to the Board (x) were nominated (if they were elected by
the stockholders) or elected (if they were elected by the directors) with the
affirmative vote of two-thirds of the directors who were Continuing Directors
at the time of the nomination or election by the Board and (y) were not elected
as a result of an actual or threatened solicitation of proxies or consents by a
person other than the Board of Directors of the Company or an agreement
intended to avoid or settle such a proxy solicitation (the directors described
in clauses (a) and (b) being "Continuing Directors");
(3) any "person," including a "group" (as such
terms are used in Sections 13(d) and 14(d) of the Exchange Act, but excluding
the Company, any of its present affiliates (as such term is defined in Rule 405
promulgated under the Securities Act of 1933, as amended) ("Affiliates"), or
any employee benefit plan of the Company or any of its present Affiliates) is
or becomes the "beneficial owner" (as defined in Rule 13(d) (3) under the
Exchange Act), directly or indirectly, of securities of the Company
representing 30% or more of the combined voting power of the Company's then
outstanding securities;
(4) the purchase of Common Stock of the Company
("Common Stock") pursuant to any tender or exchange offer or otherwise made by
any "person," including a "group" (as such terms are used in Sections 13(d) and
14(d) of the Exchange Act), other than the Company, any of its present
Affiliates, or any employee benefit plan of the Company or any of its present
Affiliates, which results in "beneficial ownership" (as so defined) of 30% or
more of the outstanding Common Stock;
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(5) the execution and delivery of a definitive
agreement by the Company that provides for a merger or consolidation, or a
transaction having a similar effect (unless such merger, consolidation or
similar action is with a subsidiary of the Company or with another company, a
majority of whose outstanding capital stock is owned by the same persons or
entities who own a majority of the Company's outstanding Common Stock at such
time), where (A) the majority of the Common Stock of the Company is no longer
held by the persons who were the stockholders of the Company immediately prior
to the transaction, (B) the sale, lease, exchange or other disposition of all
or substantially all of the assets of the Company, but excluding the trading of
marketable securities held as portfolio securities or (C) the Company's Common
Stock is converted into cash, securities or other property (other than the
common stock of a company into which the Company is merged), provided, however,
that, in the event that the contemplated merger, consolidation or similar
transaction is not consummated, then any rights that may arise under this
paragraph (5) by virtue of such Change of Control shall not apply;
(6) upon the consummation of any transaction
requiring stockholder approval for the acquisition of the Company by an entity
other than the Company or a subsidiary through purchase of assets, or by
merger, or otherwise;
(7) the election to the Board of Directors of the
Company, by vote of the stockholders of the Company, of one individual under
circumstances where (A) the Board of Directors of the Company, after such
election, is comprised of one individual, and (B) all of the Xxxxxx Shares (as
defined in Section 8(a)(iii)) at the time of such election were not voted for
such election to the Board of Directors of the Company of such individual;
(8) the appointment to the Board of Directors of
the Company, by vote of the Board of Directors of the Company, of one
individual under circumstances where (A) the Board of Directors of the Company,
after such appointment, is comprised of one individual, and (B) the Executive
did not so vote for such appointment to the Board of Directors of the Company
of such individual, either because the Executive was not a Director of the
Company at such time or because the Executive did not vote affirmatively for
the appointment to the Board of Directors of the Company of such individual;
(9) the election to the Board of Directors of the
Company, by the stockholders of the Company, of one or more individuals under
circumstances where (A) the Board of Directors of the Company, after such
election, is comprised of more than one individual under the By-Laws of the
Company, as then in effect, and (B) a majority of the Directors of the Company
in office after such election did not receive Executive Approval (as defined in
Section 8(a)(ii)); or
(10) the appointment to the Board of Directors of
the Company, by vote of the Board of Directors of the Company, of one or more
individuals under circumstances where (A) the Board of Directors of the
Company, after such appointment, is comprised of more than one individual under
the By-Laws of the Company, as then in effect, and (B) a majority of the
Directors of the Company in office after such appointment did not receive
Executive Approval.
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(ii) Executive Approval. As used herein, the term
"Executive Approval" shall mean, with respect to any member of the Board of
Directors of the Company in office at the time of determination, (A) if such
individual is not then a member of the Board of Directors of the Company by
virtue of election to the Board of Directors of the Company by vote of the
stockholders of the Company, the Executive, as a Director of the Company, voted
for the appointment of such individual to the Board of Directors of the Company
pursuant to which such individual is then a member of the Board of Directors of
the Company, and (B) if such individual is then a member of the Board of
Directors of the Company by virtue of election to the Board of Directors of the
Company by vote of the stockholders of the Company, all of the Xxxxxx Shares at
the time of such election were voted in favor of the election of such
individual to the Board of Directors of the Company pursuant to which such
individual is then a member of the Board of Directors of the Company.
(iii) Xxxxxx Shares. As used herein, the term "Xxxxxx
Shares," as of any time, shall mean the securities of the Company entitled to
vote generally in the election of Directors of the Company as to which, at such
time, the Executive had the sole power to vote or to direct the voting of.
(iv) Influence Change Event. As used herein "Influence
Change Event" shall mean the occurrence of the loss by the Executive of any of
the Board Positions or if the Executive's title, powers and duties within the
Company or the Board of Directors of the Company have been diminished, in each
case other than as a result of a Termination For Cause, without the prior
written consent of the Executive.
(v) Extraordinary Stock Event. As used herein
"Extraordinary Stock Event" shall mean either (i) the occurrence of more than
fifteen (15%) percent of the outstanding securities of the Company entitled to
vote in the election of directors of the Company being owned (by beneficial
ownership, as such term is used in Section 13(d) of the Exchange Act, and the
rules and regulations thereunder or otherwise) or acquired by any person (as
such term is used in Sections 13(d) and 14(d) of the Exchange Act), other than
the Executive, a person over whom the Executive has the power to exercise a
controlling influence exclusive of any other person, or a person whose
beneficial ownership has been approved by the Executive in writing (such person
being referred to herein as the "Acquiror") and the Acquiror either describes,
is required to describe, or would be required to describe in the event that the
Acquiror was subject to Section 13(d) of the Exchange Act, as in effect on the
date hereof, any plans or proposals which it may have which relate to or would
result in any of the events described in paragraphs (a) through (j) of Item 4
of Schedule 13D, as in effect on the date hereof, in a Schedule 13D, or
amendments thereto, filed with the Securities and Exchange Commission with
respect to such ownership or acquisition or (ii) the occurrence of more than
forty (40%) percent of the outstanding securities of the Company entitled to
vote in the election of directors of the Company being owned (by beneficial
ownership, as such term is used in Section 13(d) of the Exchange Act and the
rules and regulations thereunder, or otherwise) or acquired by any person (as
such term is used in Sections 13(d) and 14(d) of the Exchange Act), whether or
not such ownership has been consented to by the Executive.
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(b) EXTRAORDINARY TRANSACTION; INFLUENCE CHANGE EVENT;
EXTRAORDINARY STOCK EVENT. Upon the occurrence of either an Extraordinary
Transaction, an Influence Change Event, or an Extraordinary Stock Event, (i)
this Agreement may, at Executive's option exercised in writing, be terminated
as of the date of such Extraordinary Transaction, Influence Change Event, or
Extraordinary Stock Event, as the case may be (an "Extraordinary Transaction
Termination"), (ii) in the event of such termination contemplated by Section
8(b)(i), the provisions of Section 7(e) of this Agreement shall be in effect as
of the date of such Extraordinary Transaction, Influence Change Event, or
Extraordinary Stock Event, as the case may be, and (iii) whether or not there
is such termination, the Company shall pay to the Executive, in immediately
available funds, the Extraordinary Transaction Payment, as described in Section
4(c), immediately before the occurrence of such Extraordinary Transaction,
Influence Change Event, or Extraordinary Stock Event, as the case may be.
SECTION 9. INDEMNIFICATION. The Company hereby ratifies the
indemnification of the Executive pursuant to the terms of an Indemnification
Agreement to be executed by the Executive and the Company.
SECTION 10. WITHHOLDING. The Company shall be entitled to
withhold from amounts payable to the Executive hereunder such amounts as may be
required by applicable law to be so withheld.
SECTION 11. MODIFICATION. This Agreement sets forth the entire
understanding of the parties hereto with respect to the subject matter hereof,
supersedes all existing agreements between them concerning such subject matter,
and may be modified only by a written instrument duly executed by each party.
SECTION 12. NOTICES. Any notice or other communication required
or permitted to be given hereunder shall be in writing and shall be mailed by
certified mail, return receipt requested, or delivered against receipt to the
party to whom it is to be given, at the address of such party set forth in the
preamble to this Agreement (or to such other address as such party shall have
furnished in writing in accordance with the provisions of this Section 12).
Notice to the Estate shall be sufficient if addressed to the Executive as
provided in this Section 12. Any notice or other communication given by
certified mail shall be deemed given at the time of certification thereof,
except for a notice changing a party's address which shall be deemed given at
the time of receipt thereof.
SECTION 13. WAIVER. Any waiver by either party of a breach of
any provision of Agreement shall not operate as a waiver of any other breach of
such provision or of any breach of any other provision of this Agreement. The
failure of a party to insist upon strict adherence to any term of this
Agreement on one or more occasions shall not be considered a waiver or deprive
that party of the right thereafter to insist upon strict adherence to that term
or any other term of this Agreement. Any waiver must be in writing.
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SECTION 14. BINDING EFFECT. The Executive's rights and
obligations under this Agreement shall not be transferable by assignment or
otherwise, such rights shall not be subject to commutation, encumbrance or the
claims of the Executive's creditors, and any attempt to do any of the foregoing
shall be void. The provisions of this Agreement shall be binding upon and
inure to the benefit of the Executive and his heirs and personal
representatives, and shall be binding upon and inure to the benefit of the
Company and its successors.
SECTION 15. THIRD PARTY BENEFICIARIES. This Agreement does not
create, and shall not be construed as creating, any rights enforceable by any
person not a party to this Agreement; provided, however, that notwithstanding
any provision of this Agreement to the contrary, each of the successors,
spouse, issue, legatees, estate, administrators, executors, and legal
representatives of the Executive shall be entitled to rely upon and to enforce
this Agreement as a third party beneficiary hereof.
SECTION 16. HEADINGS. The headings in this Agreement are solely
for convenience of reference, and shall be given no effect in the construction
or interpretation of this Agreement.
SECTION 17. ENFORCEMENT. Should the Executive xxx to enforce any
of his rights under this Agreement and should the Executive prevail on any
issue in such suit, then the Company shall pay all the Executive's costs of
such suit (including attorneys fees and disbursements). If any taxes are
imposed on such payment, the Company shall make such additional payments to the
Executive as may be necessary, so that after deducting the taxes imposed on all
payments made to the Executive pursuant to this paragraph, the Executive is
left on an after tax basis with an amount equal to his claim for
indemnification prior to the payments described in this sentence.
SECTION 18. COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
SECTION 19. GOVERNING LAW. This Agreement shall be governed by
and construed in accordance with the laws of the State of South Carolina,
without reference to the conflict of law provisions thereof.
SECTION 20. WAIVER OF TRIAL BY JURY. TO THE EXTENT PERMITTED BY
APPLICABLE LAW, EACH OF THE PARTIES TO THIS AGREEMENT HEREBY AGREES TO WAIVE
ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED
UPON OR ARISING OUT OF THIS AGREEMENT OR ANY DEALING BETWEEN OR AMONG THEM
RELATING TO THE SUBJECT MATTER OF THIS AGREEMENT AND THE RELATIONSHIPS BEING
ESTABLISHED. THE SCOPE OF THIS WAIVER IS INTENDED TO ENCOMPASS ANY AND ALL
DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER
OF THIS AGREEMENT, INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS,
BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND
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STATUTORY CLAIMS. EACH PARTY HERETO ACKNOWLEDGES THAT THIS WAIVER IS A
MATERIAL INDUCEMENT TO ENTER INTO THIS AGREEMENT, AND THAT EACH WILL CONTINUE
TO RELY ON THE WAIVER IN THEIR RELATED FUTURE DEALINGS. EACH PARTY HERETO
FURTHER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL
COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS
FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING
THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING. IN THE EVENT OF
LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO THE TRIAL BY
THE COURT.
IN WITNESS WHEREOF, the parties have duly executed this
Agreement as of the date first written above.
INSIGNIA/ESG HOLDINGS, INC.
By:
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Name:
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Its:
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EXECUTIVE
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Name: Xxxxxx X. Xxxxxx
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