TERMINATION AGREEMENT
TERMINATION AGREEMENT dated as of May 11, 1999 between XXXX XXXXXXXXXX
(hereinafter the "Executive"), residing at 000 Xxxx Xxx, Xxxxxxxx, Xxx Xxxx
00000 and COMPU-XXXX, INC., a Delaware corporation ( the "Company"), having its
principal place of business at 00 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxx Xxxx 00000.
RECITALS
WHEREAS, Executive is employed by the Company as its President, Chief
Executive Officer and Secretary in accordance with a Restated and Amended
Employment Agreement dated March 4, 1997, as amended as of January 8, 1999 ( the
"Employment Agreement").
WHEREAS, Executive and the Company desire to terminate the Employment
Agreement on the basis herein provided.
NOW, THEREFORE, upon the agreements and covenants set forth herein, the
parties hereto agree as follows:
1. Employment Termination. The parties acknowledge and agree that,
effective at the close of business on the date hereof, the Executive's
employment with the Company as its President, Chief Executive Officer and
Secretary is hereby terminated. Accordingly, the Employment Agreement is hereby
terminated and of no further force or effect, and neither the Executive nor the
Company shall have any further liability or obligation thereunder, except for
any salary and benefits which are earned, accrued and unpaid as of the date
hereof.
2. Payments; Accounting.
(a) For and in consideration of the Executive's entering into this
Termination Agreement and performing his obligations hereunder, the Company
agrees to pay to Executive:
(i) the sum of Five Hundred Thousand Dollars ($500,000) (the
"Base Termination Amount"). The Base Termination Amount shall be
payable as follows:
(A) One Hundred Thousand Dollars ($100,000) payable to the
Executive simultaneously with the execution and delivery hereof;
and
(B) Four Hundred Thousand Dollars ($400,000) payable,
subject to the provisions of Section 3 hereof, in twelve (12)
equal semi-monthly installments of Thirty-Three Thousand Three
Hundred Thirty-Three Dollars and Thirty-Three Cents ($33,333.33).
Each such monthly installment shall be payable at the same time
and in the same manner
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as payments of the Company's normal payroll cycle, but not less
than semi-monthly.
(ii) In addition to the Base Termination Amount, in the event the
Company sells its Public Safety Business (as defined in Section 3
hereof), it is contemplated that such sale shall provide for the
payment by the buyer thereof (the "Buyer") to the Company of a royalty
(the "Royalty") based on the revenues derived by the Buyer from the
sale or licensing of products and/or assets acquired in connection
with its purchase of the Public Safety Business, or derived from
services related to the sale of such products and/or assets. In such
event, the Company shall pay the Executive an amount equal to eighty
percent (80%) of the Royalty, (the "Installment Termination Amount"
and, together with the Base Termination Amount, the "Termination
Amount"), for so long as the Royalty shall be payable by the Buyer,
subject to the provisions of Section 3 hereof.
(b) The Company shall irrevocably direct the Buyer of the Public
Safety Business to pay that portion of the Royalty comprising the
Installment Termination Amount directly to the Executive contemporaneously
with the Buyer's payment of the balance of the Royalty to the Company. The
Company agrees to execute an irrevocable collateral assignment or other
documents sufficient to insure assignment of the Installment Termination
Amount, if deemed necessary by the Executive.
(c) The Company shall designate the Executive as one of its duly
authorized representatives to review and audit the books of account of the
Buyer, or otherwise conduct an accounting of the Buyer with respect to the
Royalty, pursuant to any right to any accounting the Company obtains with
respect to the Royalty in any Agreement between the Company and the Buyer
relating to the sale of the Public Safety Business (a "Public Safety Sale
Agreement"). The Company hereby covenants that it will include an
accounting provision in the Public Safety Sales Agreement which allows the
Company to conduct an accounting of the Buyer with respect to the
Royalties.
(d) The Company shall pay all of the reasonable legal fees and
expenses of the Executive incurred by him in connection with the
negotiation, preparation and delivery of this Termination Agreement
including, without limitation, all reasonable fees and expenses due and
payable to Xxxxxxx Xxxxxx L.L.P. in connection herewith.
3. Acceleration of Payment of Termination Amount. The Company and the
Executive acknowledge that the Company is negotiating the sale of its business
of designing, developing, licensing, installing and servicing computer software
products and systems predominantly for public safety and law enforcement
agencies (the "Public Safety Business"). The Company hereby agrees that, if a
sale of the Public Safety Business is consummated prior to the payment to the
Executive of the Base Termination Amount, the obligation to make the payments
contemplated by Section 2(a)(i)(B) above shall be accelerated, and all such
payments remaining shall, three (3) days after the consummation of such sale, be
due and payable to Executive, out of the proceeds of such sale. The Company and
the Executive further agree that if the proceeds of the sale of the Public
Safety Business are insufficient to fund such payments, such proceeds shall
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nevertheless be applied in full and in reverse order of payment toward the
payment of the Base Termination Amount, and any balance of the Termination
Amount remaining shall be payable to the Executive in the manner contemplated by
Section 2(a)(i)(B) above in semi-monthly installments of $33,333.33 until the
Base Termination Amount has been paid in full (such installment may be less if a
lesser amount will pay the remaining Base Termination Amount in full).
4. Security Interest.
(a) The Company hereby grants to the Executive a valid and binding
security interest in any and all tangible and intangible assets in which
the Company has or shall have an interest, now or hereafter existing or
acquired, and wherever located, together with all additions and accessions
thereto and replacements and substitutions thereof and all proceeds and
products of the foregoing, as security for the payment or performance of
the obligations of the Company to the Executive hereunder. Simultaneously
with the execution of this Agreement, the parties are entering into First
Amendment to Security Agreement to evidence the security interest granted
herein.
(b) Notwithstanding the foregoing, the Executive shall relinquish his
security interest in, and consent to the transfer of, assets of the Company
comprising the Public Safety Business in connection with a bona fide sale
thereof; provided, however, that such consent shall be conditioned upon the
Executive receiving an assignment (the "Assigned Security Interest") from
the Company to the Executive of all of the Company's rights and interest in
a security agreement between the Company and the Buyer contemplated to be
entered into in connection with such sale. The parties hereto agree to
amend, or cause to be amended, any UCC Financing Statement naming the
Executive as the Secured Party and the Company as the Debtor presently
filed against the assets of the Company to reflect the provisions of this
Termination Agreement, if deemed reasonably necessary by the Executive. The
Assigned Security Interest shall terminate upon the earlier to occur of (i)
the fulfillment of the Company's obligation to pay the Termination Payment
or (ii) the termination and/or fulfillment of any and all obligations of
the Buyer to the Company in connection with the sale of the Public Safety
Business.
5. Resignation. By executing this Termination Agreement, the Executive
voluntarily resigns, effective immediately, from all capacities and positions
with the Company, including but not limited to the offices of Chief Executive
Officer, President and Secretary and Director of the Company, the Chief
Executive Officer, Secretary, and Director of x.XX Commerce, Inc., and all
officerships and directorships of Rugby Acquisition Corp. and ETEL
Communications Corp.
6. Representations of the Executive. The Executive represents, warrants,
and agrees with the Company as follows:
(a) To his knowledge, after due investigation, no consents of
governmental and other regulatory agencies, foreign or domestic, or of
other parties, are required to be received by or on the part of the
Executive to enable him to enter into and carry out this Agreement and the
transactions contemplated hereby.
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(b) The Executive has the power to enter into this Agreement and to
carry out his obligations hereunder. This Agreement constitutes the valid
and binding obligation of the Executive, and is enforceable in accordance
with its terms.
(c) There is no unfulfilled agreement or commitment, written or oral,
made by the Executive for or on behalf of the Company pursuant to which the
Company is obligated to pay more than $5,000 singly, or $15,000 in the
aggregate, or which contractually restricts in any way the Company's
ability to enter into any agreement in the future (i) that since December
31, 1998 has not been disclosed in writing to the Company and (ii) prior to
December 31, 1998 has not been disclosed in the Company's Annual Report on
Form 10-KSB for the year ended December 31, 1998 or the audited annual
financial statements of the Company in connection therewith.
(d) There is no liability or obligation incurred on behalf of the
Company by the Executive that has not been disclosed in writing to the
Company.
(e) No acts or omissions finally determined by a court of competent
jurisdiction prior to or following the date hereof to constitute fraud,
gross negligence, or other illegality which has a material adverse effect
on the Company, have been committed by the Executive for or on behalf of,
or in his capacity as a director or officer of, the Company.
(f) Neither the execution and delivery of this Agreement, nor
compliance by the Executive with any of the provisions hereof, nor the
consummation of the transactions contemplated hereby, will:
(i) violate any judgment, order, injunction, decree or award
against, or binding upon, the Executive;
(ii) violate or otherwise breach the terms of any agreement or
understanding, written or oral, to which the Executive is a party or
is otherwise bound; or
(iii) violate any law or regulation of any jurisdiction relating
to the Executive.
(g) No representation, warranty or statement by the Executive in this
Agreement intentionally contains any untrue statement of a material fact,
or omits to state a fact necessary in order to make such representations,
warranties or statements not misleading.
7. Representations of the Company. The Company represents, warrants, and
agrees with the Executive as follows:
(a) To the Company's knowledge, after due investigation, no consents
of governmental and other regulatory agencies, foreign or domestic, or of
other parties, are required to be received by or on the part of the Company
to enable it to enter into and carry out this Agreement
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and the transactions contemplated hereby.
(b) The Company has the requisite corporate power to enter into this
Agreement and to carry out its obligations hereunder. The execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by the Board of Directors of
the Company, and no other corporate proceedings are necessary to authorize
the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby. This Agreement constitutes the valid and
binding obligation of the Company, and is enforceable in accordance with
its terms.
(c) Neither the execution and delivery of this Agreement nor
compliance by the Company with any of the provisions hereof, nor the
consummation of the transactions contemplated hereby, will:
(i) violate the Certificate of Incorporation or By-Laws of the
Company;
(ii) violate any judgment, order, injunction, decree or award
against, or binding upon, the Company;
(iii) violate or otherwise breach the terms of any agreement or
understanding, written or oral, to which the Company is a party or is
otherwise bound; or
(iv) violate any law or regulation of any jurisdiction relating
to the Company.
(d) No representation, warranty or statement by the Company in this
Agreement contains any untrue statement of a material fact, or omits to
state a fact necessary in order to make such representations, warranties or
statements not misleading.
8. Restrictive Covenants. (a) The Executive covenants that for a period of
twenty-four (24) months following the date hereof, he will not, either directly
or indirectly, (i) disclose or otherwise make known to any person or entity the
names and addresses of any of the customers of the Company, or (ii) call on,
solicit, or take away, or attempt to call on, solicit, or take away, any of the
customers of the Company or its subsidiaries with whom he became acquainted
during his employment with the Company, either for himself or for any other
person, firm, corporation or other entity.
(b) The Executive acknowledges that the Company and/or its
subsidiaries have developed unique skills, concepts, sales presentations,
marketing programs, marketing strategy, business practices, methods of
operation, trademarks, licenses, technical information, proprietary
information, computer software programs, tapes and disks concerning its or
their operations, systems, customer lists, customer leads, documents
identifying past, present and future customers, hiring and training
methods, investment policies, financial and other confidential and
proprietary information concerning its operations and expansion plans
("Trade Secrets"). The Executive agrees and covenants that, except with the
prior written consent of the Company, the Executive shall not, directly or
indirectly, use for the Executive's own benefit or for the benefit of
another, or disclose,
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disseminate, or distribute to another, any Trade Secret (whether or not
acquired, learned, obtained, or developed by the Executive alone or in
conjunction with others) of the Company or its subsidiaries. All memoranda,
notes, records, drawings, documents, or other writings whatsoever
(including copies thereof) made, compiled, acquired, or received by the
Executive during his employment by the Company, arising out of, in
connection with, or related to any activity or business of the Company or
its subsidiaries, including, but not limited to, the customers, suppliers,
or others with whom the Company or its subsidiaries has a business
relationship, the arrangements of the Company or its subsidiaries with such
parties, and the pricing and expansion policies and strategy of the Company
or its subsidiaries, are, and shall continue to be, the sole and exclusive
property of the Company and its subsidiaries, and shall be returned to the
Company within five (5) days of the execution of this Agreement.
(c) The Executive hereby covenants and agrees that for a period of
twenty four (24) months following the date hereof, he will not, either
directly or indirectly, as an employee, employer, consultant, agent,
principal, partner, shareholder (other than through ownership of publicly
traded capital stock of a corporation which represents less than five
percent (5%) of the outstanding capital stock of such corporation),
corporate officer, director, investor, financier or in any other individual
or representative capacity, engage or participate in any business which is
directly competitive with the business of the Company or any of its
subsidiaries in the Internet service provider, e-commerce and
telecommunications business marketing products and services through a
multi-level referral network marketing organization.
9. Other Agreements. (a) The parties hereto acknowledge and agree that,
except as expressly provided in, or contemplated by, this Termination Agreement,
and except for (i) any rights of indemnification to which the Executive may be
entitled by law or under the By-Laws or Certificate of Incorporation of the
Company, and any rights of indemnification to which the Executive is entitled
pursuant to the Indemnification Agreement by and between the Executive and the
Company (the "Indemnification Agreement"), (ii) the obligation of the Company to
pay to the Executive [Twelve Thousand Five Hundred Dollars ($12,500) ]in
principal amount, plus interest, pursuant to that certain Amended and Restated
Loan Agreement dated April 30, 1997, by and between the Company and the
Executive (the "Loan Agreement"), and (iii) unreimbursed expenses of the
Executive, which the Company hereby agrees to pay, there are no outstanding
unfulfilled contracts, commitments, or other obligations of whatsoever nature as
between the Executive and the Company or any outstanding indebtedness owed by
either party to the other; and the parties hereto hereby further agree that any
and all disputes, claims, open accounts and other unresolved matters with
respect to any of the foregoing which may exist on the date hereof, shall be,
and hereby are, in all respects resolved, satisfied and settled as between the
parties.
(b) Simultaneously with the execution and delivery hereof, the parties
shall enter into a Consulting Agreement pursuant to which the Executive
shall agree to provide consulting services to the Company, upon the terms
and conditions, and for the consideration, set forth in the Consulting
Agreement in or substantially in, the form annexed hereto as Exhibit 9(b)
(the "Consulting Agreement").
(c) The Company shall, at its expense, provide to the Executive until
at least
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December 31, 1999, such office space at its executive offices in
Cedarhurst, New York (the Cedarhurst Premises") as shall, in the reasonable
opinion of the Board of Directors, be suitable and adequate for the
Executive's use and shall be comparable in amenities to, his current office
space. In the event that the Company subleases or reconfigures the
Cedarhurst Premises prior to such date, the Company shall provide to the
Executive an amount of space and amenities approximately equivalent to
those provided to the Executive before such sublease or reconfiguration.
The foregoing notwithstanding, the Company shall have no obligation to
provide the Executive with such office space if, and from the time that,
the Company subleases the entire Cedarhurst Premises to an unaffiliated
third party.
(d) The Company hereby agrees to employ Xxxx Xxxxxxxxxxx
("Xxxxxxxxxxx") through at least December 31, 1999, and as full
compensation for services rendered by Xxxxxxxxxxx shall pay to her the
salary, and provide the benefits, currently being received by her as of the
date hereof. In the event that the Company terminates Xxxxxxxxxxx'x
employment on or after December 31, 1999, and Xxxxxxxxxxx is not employed
by the Executive or by any affiliate of the Executive within one week of
such termination, Xxxxxxxxxxx shall be entitled to receive a severance
payment in an amount equal to three month's salary, payable by the Company
within seven (7) days of such termination. During the period of
Xxxxxxxxxxx'x employment, the Company shall allow the Executive the use of
the services of Xxxx Xxxxxxxxxxx as required by the Executive, provided
however that the Company may utilize a reasonable amount of Xxxxxxxxxxx'x
working time and under the supervision of the Executive from time to time
during normal business hours to attend to certain administrative matters of
the Company of the same nature as those matters which Xxxxxxxxxxx currently
attends.
10. Releases.
(a) The Company hereby remises, releases, and forever discharges and
by these presents does for itself and its successors and assigns, remise,
release, and forever discharge the Executive and his heirs, successors and
assigns from all manner of action and actions, cause and causes of action,
suits, debts, dues, sums of money, accounts, reckonings, bonds, bills,
specialties, covenants, contracts, controversies, agreements, promises,
variances, trespasses, damages, judgments, executions, claims and demands
whatsoever, in law or in equity, which it ever had, now has or which may
hereafter accrue or which it, its successors or assigns, hereafter can,
shall or may have for, upon or by reason of any matter from the beginning
of the world to the day of the date of these presents; provided, however,
it is confirmed herewith that this release does not affect the rights or
obligations of the Company or the Executive under or pursuant to (i) the
Consulting Agreement, (ii) the Loan Agreement the related Security
Agreement, the associated promissory note and other related documents,
(iii) the Indemnification Agreement, or (iv) this Termination Agreement
(the "Excluded Agreements").
(b) The Executive hereby remises, releases, and forever discharges and
by these presents does for himself and his successors and assigns, remise,
release, and forever discharge the Company, its subsidiaries, affiliates,
directors, officers and stockholders (collectively, the "Company
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Releasees") and successors and assigns of Company Releasees from all manner
of action and actions, cause and causes of action, suits, debts, dues, sums
of money, accounts, reckonings, bonds, bills, specialties, covenants,
contracts, controversies, agreements, promises, variances, trespasses,
damages, judgments, executions, claims and demands whatsoever, in law or in
equity, which the Executive ever had, now has or which may hereafter accrue
or which the Executive, his successors or assigns, hereafter can, shall or
may have for, upon or by reason of any matter from the beginning of the
world to the day of the date of these presents; provided, however, it is
confirmed herewith that this release does not affect the rights or
obligations of the Executive or the Company Releasees under or pursuant to
the Excluded Agreements.
(c) The Company and the Executive affirm that no representation of
fact or opinion has been made to induce the giving of the releases provided
by this Section 10 (the "Releases") other than as specifically set forth
herein and that it is therefore specifically agreed that the Releases shall
be a complete bar to any and all claims, suits or damages whatsoever, other
than with respect to the Excluded Agreements.
11. Nondisparagement. The Company agrees that neither the Company nor any
officer, director, employee, consultant, affiliate or agent of the Company shall
make any statement, written or oral, to any person or entity, or otherwise in
general to the public, or to the business or financial community, or take any
action, directly or indirectly, that disparages or is likely to diminish the
reputation of the Executive, or which could adversely affect the ability of the
Executive to enter into or consummate any business transaction, or the business
or reputation of the Executive; provided, however, that the foregoing shall not
preclude the Company from making any statement which is required (i) to
accurately comply with a court order, subpoena or other discovery necessary in
an action or proceeding in a court of competent jurisdiction, or (ii) by an
administrative agency or the Nasdaq Stock Market, Inc., or (iii) to accurately
comply with the Company's reporting requirements under the Securities Exchange
Act of 1934, as amended.
12. Choice of Law and Venue. The parties agree that this Termination
Agreement is made and entered into in Nassau County, New York and shall be
governed by and construed in accordance with the laws of the State of New York,
and that any litigation, special proceeding or other proceeding as between the
parties that may be brought, or arise out of, in connection with or by reason of
this Termination Agreement shall be brought in the applicable state court in and
for Nassau County, New York which Courts shall be the exclusive courts or
jurisdiction and venue.
13. Entire Agreement. This Termination Agreement contains the full and
complete understanding and agreement of the parties hereto with respect to the
subject matter contained herein and supersedes all prior or contemporaneous
written or oral understandings or agreements with respect to the subject matter
hereof. No modification of this Termination Agreement shall be binding unless
made in writing and signed by the party sought to be charged.
14. Binding Effect. This Termination Agreement shall be binding upon, and
shall inure to the benefit of, the parties hereto and their respective
successors, assigns and legal representatives.
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Shaugnessy is an intended third-party beneficiary of Section 9(d) hereof.
15. Equitable Relief; Breach. The Executive acknowledges and agrees that,
in the event the Executive shall violate or threaten to violate any of the
restrictions of Section 8 hereof, the Company will be without an adequate remedy
at law and will therefore be entitled to enforce such restrictions by temporary
or permanent injunctive or mandatory relief in any court of competent
jurisdiction without the necessity of proving damages and without prejudice to
any other remedies which it may have at law or in equity, it being understood
that such remedy shall be in addition to any other remedies which the Company
may have at law or in equity.
17. Waiver; Severability. The waiver by either party of a breach of any
provision of this Termination Agreement shall not operate or be construed as a
waiver of any subsequent breach. If any provision of this Termination Agreement,
or part thereof, shall be held to be invalid or unen forceable, such invalidity
or unenforceability shall attach only to such provision and not in any way
affect or render invalid or unenforceable any other provisions of this
Termination Agreement, and this Termination Agreement shall be carried out as if
such invalid or unenforceable provision, or part thereof, had been reformed, and
any court of competent jurisdiction is authorized to so reform such invalid or
unenforceable provision, so that it would be valid, legal and enforceable to the
fullest extent permitted by applicable law.
18. Notices; Deliveries. Any notice, delivery or other communication
required or permitted hereunder shall be sufficiently given if delivered by hand
or sent by certified mail, return receipt requested, facsimile transmission,
overnight mail or nationally recognized overnight courier, addressed as follows:
If to the Company:
c/o x.XX Commerce, Inc.
12735 Xxxx Xxx Xxxxxxx Xxxx, Xxxx. 000
Xxxxxxxxxxxx, Xxxxxxx 00000
Attention: Chairman of the Board
Telecopier Number: (000) 000-0000
with a copy to:
Certilman Balin Xxxxx & Xxxxx, LLP
00 Xxxxxxx Xxxxxx
Xxxx Xxxxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxx, Esq.
Telecopier Number: (000) 000-0000
If to the Executive:
000 Xxxx Xxx
Xxxxxxxx, Xxx Xxxx 00000
Telecopier Number: (000) 000-0000
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with a copy to:
Xxxxxxx Xxxxxx L.L.P.
000 Xxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxxx Xxxxxxx, Esq.
Telecopier Number: (000) 000-0000
or such other address as shall be furnished in writing by either party, and any
notice, delivery or communication given pursuant to the provisions hereof shall
be deemed to have been given as of the date delivered or so mailed or
transmitted.
19. Counterparts; Headings. This Termination Agreement may be executed in
counterparts, each of which shall be an original, but all of which taken
together shall constitute one agreement. The headings contained in this
Termination Agreement are solely for the convenience of the parties, and are not
intended to and do not limit, construe or modify any of the terms and conditions
hereof.
20. Waiver of Jury Trial. THE COMPANY AND THE EXECUTIVE ACKNOWLEDGE THAT
THE RIGHT TO A TRIAL BY JURY IS A CONSTITUTIONAL RIGHT, BUT THAT THE RIGHT MAY
BE WAIVED. THE COMPANY AND THE EXECUTIVE EACH KNOWINGLY, VOLUNTARILY,
IRREVOCABLY AND WITHOUT COERCION, WAIVES ALL RIGHTS TO TRIAL BY JURY OF ALL
DISPUTES BETWEEN THEM. NEITHER THE COMPANY NOR THE EXECUTIVE SHALL BE DEEMED TO
HAVE GIVEN UP THIS WAIVER OF JURY TRIAL UNLESS THE PARTY CLAIMING THAT THIS
WAIVER HAS BEEN RELINQUISHED HAS A WRITTEN INSTRUMENT SIGNED BY THE OTHER PARTY
STATING THAT THIS WAIVER HAS BEEN GIVEN UP. IN THE EVENT OF LITIGATION, A COPY
OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO TRIAL BY THE COURT.
IN WITNESS WHEREOF, the parties have executed this Termination Agreement as
of the day and year first above written.
COMPU-XXXX, INC.
By:/s/ Xxxxxx X. (Teddy) Xxxxxx, IV
--------------------------------
Xxxxxx X. (Teddy) Xxxxxx, IV
Chairman of the Board
/s/ Xxxx Xxxxxxxxxx
--------------------------------
XXXX XXXXXXXXXX
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