EXHIBIT 10.16
SETTLEMENT AGREEMENT AND MUTUAL RELEASE
This Settlement Agreement and Mutual Release ("Agreement") is
effective April 6, 1998 and as executed on the date appearing below
opposite relevant signatures by and among Xxxx X. Xxxx ("Nast") and Anicom,
Inc., a Delaware corporation ("Anicom").
WHEREAS, Nast and Anicom entered into an employment agreement as
of March 12, 1996, wherein Nast was to be employed by Anicom through March
12, 2001 ("Nast Employment Agreement"); and
WHEREAS, the parties mutually wish to accelerate the expiration of
the Nast Employment Agreement and to settle and compromise all matters with
respect to the Nast Employment Agreement.
THEREFORE, in consideration of the above, the parties hereto agree
as follows:
1. The foregoing recitals are incorporated by reference herein and made a
part hereof as though fully set forth.
2. Terms not defined herein shall have the meaning given them in the Nast
Employment Agreement.
3. In consideration of the releases contained herein, Anicom shall pay to
Nast Five Hundred Forty Thousand Dollars ($540,000) ("Settlement
Proceeds"); provided however, that Anicom's. obligation to pay the
Settlement Proceeds shall only arise and shall be expressly conditioned
upon Nast having not elected to revoke this Agreement prior to the
expiration of the "Revocation Period" as described in Paragraph 14.
Within twenty four (24) hours after the expiration of the Revocation
Period, Anicom shall wire transfer the Settlement Proceeds less income,
FICA and Medicare taxes appropriately withheld in
connection with such disbursement (the "Net Settlement Proceeds") to
the Lipson, Neilson, Xxxxxx & Xxxx P.C. Client Trust Account (the
"Transferee Account"). The wire transfer information is as follows:
Bank: Huntington Banks of Michigan (Troy, Michigan)
Routing Code: # 000000000
Account No. # 4250 011 4430
Upon receipt of the Net Settlement Proceeds, Nast or his legal
counsel shall provide written confirmation to Anicom of receipt of the Net
Settlement Proceeds. Anicom shall promptly furnish Nast or his legal
counsel with a schedule identifying the taxes withheld in connection with
the wire transfer of the Net Settlement Proceeds. In the event any taxes,
interest and/or penalties are assessed against Anicom or Nast as a result
of this Agreement or with respect to payments made pursuant hereto which
involve taxes which are customarily the responsibility of an employee, Nast
agrees to indemnify Anicom for said taxes, interest and/or penalties and to
be responsible for any taxes, interest and/or penalties assessed against
him. Anicom shall be responsible for payment of any FICA, FUTA or Medicare
employment taxes associated with payments made pursuant hereto which are
customarily the responsibility of an employer.
In the event that Anicom shall fail to timely wire transfer the
Net Settlement Proceeds to the Transferee Account, then in such event,
Anicom shall be in default hereunder and interest shall commence to accrue
(as of the expiration of the Revocation Period) on the Settlement Proceeds
at the rate of Eighteen Percent (18%) per annum, compounded monthly, or at
the maximum legal rate of interest allowed by law if lesser in amount.
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Upon default by Anicom hereunder, Nast shall furnish Anicom with
notice of such default in the manner and to the person as set forth in
paragraph 20 (the "Notice of Default"). If Anicom shall not cure such
default hereunder by payment to Nast of the Settlement Proceeds (and
accrued interest thereon) within thirty (30) days of the date upon which
Nast furnished Anicom the Notice of Default, then the restrictive covenants
set forth in Section 6 of the Nast Employment Agreement shall terminate and
no longer be of any legal or equitable force or effect. The termination of
such restrictive covenants shall not constitute the sole, absolute or
exclusive right or remedy of Nast at law or in equity and it is expressly
acknowledged that Nast shall be entitled to exercise all other rights or
remedies at law or in equity to receive the Settlement Proceeds and such
additional payments or benefits provided to him under this Agreement.
4. Effective upon the Effective Date, the options granted by Anicom to
Nast to purchase up to 5,000 shares of the common stock of Anicom for
the aggregate option price of $43,750 (on a per share bases, for an
option price of $8.75 per share) pursuant to a December 9, 1996
Nonqualified Stock Option Agreement shall be fully vested and
exercisable as to any or all of the entire 5,000 shares granted
therein, notwithstanding the expiration of the Nast Employment
Agreement. The expiration of the Nast's employment by Anicom will not
impact Nast's ability to exercise any option to purchase shares granted
by the December 9, 1996 Nonqualified Stock Option Agreement. Nast, his
heirs, beneficiaries, and/or his assigns, may exercise such options
through December 9, 2006. Other than the clarification set forth in
this section, all other terms of the aforementioned December 9, 1996
Nonqualified Stock Option Agreement shall remain in effect.
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(a) Effective upon the Effective Date, Nast shall be fully
vested in all account balances established or maintained
with respect to any Anicom Qualified Plan (as such term
is defined in such Section 4.3 of the Nast Employment
Agreement). It is acknowledged that the aggregate
account balance of Nast's in the Anicom 401K Plan
currently approximates $32,000.00. This Agreement serves
as an acknowledgment that: (i) Nast is fully vested in
such Qualified Account Plan Balance; (ii) that Anicom
will, within sixty (60) days of the expiration of the
Revocation Period, provide Nast with the customary
distribution package provided to Qualified Plan
participants upon occurrence of a "break in service"
(the "Distribution Package"); and (iii) that Anicom will
fully and completely implement the elections and
directions furnished by Nast to Anicom in connection
with the submission of the Distribution Package by Nast
to Anicom on or before September 15, 1998 or within
thirty (30) days of the submission of the Distribution
Package by Nast, whichever shall later occur.
5. In further consideration of the agreements set forth herein,
Anicom agrees to (i) continue to provide Nast with health
insurance equivalent to that provided to Nast prior
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to the expiration of the Nast Employment Agreement, at no cost to
Nast, until March 1, 2001, and (ii) after March 1, 2001, to
provide applicable COBRA benefits thereafter through the
applicable COBRA coverage period.
6. Effective upon the Effective Date, Anicom hereby releases and
discharges Nast from any and all liability and obligation related
to the Nast Employment Agreement, other than any liability or
obligation arising from the restrictive covenants set forth in
Sections 5 and 6 of the Nast Employment Agreement together with
such remedies for breach of such restrictive covenants as set
forth in Section 9 of the Nast Employment Agreement. The language
of such restrictive covenants and remedies for breach thereof as
set forth in the Nast Employment Agreement is as follows:
5. Restrictive Covenants.
5.1 Employee's Acknowledgment. Employee agrees
and acknowledges that in order to assure Anicom that Anicom will
retain its value as a going concern, it is necessary that Employee
undertake not to utilize his special knowledge of the Business and
his relationships with customers and suppliers to compete with
Anicom. Employee further acknowledges that.
(a) Anicom is currently engaged in the Business;
(b) Employee has occupied a position of trust
and confidence with Northern prior to the date of this Agreement
and will acquire an intimate knowledge of proprietary and
confidential information concerning Anicom and the Business as a
Senior Executive Vice President of Anicom in Troy, Michigan after
the date of this Agreement;
(c) the agreements and covenants contained in
this Section 5 are essential to protect Anicom and the goodwill of
the Business;
(d) Anicom would be irreparably damaged if
Employee were to provide services to any person or entity or
otherwise act in violation of the provisions of this Agreement;
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(e) the scope and duration of the Restrictive
Covenants are reasonably designed to protect a protectable
interest of Anicom and are not excessive in light of the
circumstances; and
(f) Employee acknowledges that the Restrictive
Covenants are being entered into as a condition to, and in
connection with, a sale of substantially all of the assets of
Northern to a wholly-owned subsidiary of Anicom.
5.2 Non-Compete. The "Restricted Period" for
purposes of this Agreement shall be the period of time commencing
on the date hereof and ending on the second anniversary of the
effective date of the termination of Employee's employment by
either Anicom or Employee, for any reason, provided that Anicom
may not terminate Employee's employment hereunder during the
Initial Employment Period without "Cause" (as defined in Section
7(d)). Employee hereby agrees that at all times during the
Restricted Period, Employee shall not, directly or indirectly, as
employee, agent, consultant, stockholder, director, co-partner or
in any other individual or representative capacity, own, operate,
manage, control, engage in, invest in or participate in any manner
in, act as a consultant or advisor to, render services for (alone
or in association with any person, firm, corporation or entity),
or otherwise assist any person or entity that engages in or owns,
invests in, operates, manages or controls any venture or
enterprise that directly or indirectly engages or proposes to
engage in the Business anywhere within thirty (30) miles of any
office of Anicom or Purchaser existing as of the earlier of the
date of determination and the effective date of the termination of
Employee's employment (collectively, the "Territory"); provided,
however, that nothing contained herein shall be construed to
prevent Employee from (i) engaging in a business in which the sale
of wire and cable is ancillary to the conduct of the business and
such business does not compete with Anicom, or (fi) investing in
the stock of any competing corporation listed on a national
securities exchange or traded in the over-the-counter market, but
only if Employee is not involved in the business of said
corporation and if Employee and his "associates" (as such term is
defined in Regulation 14A promulgated under the Securities
Exchange Act of 1934, as in effect on the date hereof),
collectively, do not own more than an aggregate of two percent of
the stock of such corporation.
5.3 Non-Solicitation. Without limiting the
generality of the provisions of Section 5.2 above, Employee hereby
agrees that, during the Restricted Period, Employee will not,
directly or indirectly, as employee, agent, consultant,
stockholder, director, partner or in any other individual or
representative capacity solicit business from, or otherwise seek
to alter or influence Anicom's relationship with, (a) any Person
who is or was a customer of Anicom during the Restricted Period,
or from any successor in interest to any such Person, for the
purpose of marketing, selling or providing any such Person any
services or products offered by or available from Anicom, or
encouraging any such Person to terminate or otherwise alter his,
her or its relationship with Anicom, or (b) any Person who is or
was a "Prospective Customer" of Anicom, for the purpose of
marketing, selling or providing any such Person any services
offered by or available from
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Anicom or encouraging any such Person to terminate or otherwise
alter his, her or its relationship with Anicom. For purposes of
this Agreement, "Prospective Customer" shall mean any Person who
either Northern or Anicom has contacted (orally or in writing),
during the one year period prior to the earlier of (i) the date of
determination or (ii) the effective date of the termination of
Employee's employment with Anicom, with the goal of such Person
becoming a customer of Northern or Anicom.
5.4 Interference with Employee Relationships.
During the Restricted Period, Employee shall not, directly or
indirectly, as employee, agent consultant stockholder, director,
co-partner or in any other individual or representative capacity,
other than as expressly authorized by Anicom to act on behalf of
Anicom, employ or engage, recruit or solicit for employment or
engagement, any person who is or becomes employed or engaged by
Anicom during the Restricted Period, or otherwise seek to
influence or alter any such Person's relationship with Anicom.
5.5 Interference with Supplier Relationships.
During the Restricted Period, Employee shall not, directly or
indirectly, as employee, agent, consultant, stockholder, director,
co-partner or in any other individual or representative capacity,
other than as expressly authorized by Anicom to act on behalf of
Anicom, seek to influence or alter Anicom's relationship with (a)
any Person who is or was a supplier or vendor of Anicom during the
Restricted Period, or any successor in interest to any such
Person, or (b) any Person who is or was a "Prospective Supplier"
of Anicom. For purposes of this Agreement, "Prospective Supplier"
shall mean any Person who Northern or Anicom has contacted (orally
or in writing) during the one year period prior to the earlier of
(i) the date of determination or (ii) the effective date of the
termination of Employee's employment with Anicom, with the goal of
such Person becoming a supplier or vendor of Northern or Anicom.
5.6 Blue Pencil. If any court of competent
jurisdiction shall at any time deem the term of this Agreement or
any particular Restrictive Covenant too lengthy or the Territory
too extensive, the other provisions of this Section 5 shall
nevertheless stand, and the Restricted Period shall be deemed to
be the longest period permissible by law under the circumstances
and the Territory shall be deemed to comprise the largest
territory permissible by law under the circumstances. The court in
each case shall reduce the Restricted Period and/or the Territory
to a permissible duration or size.
6. Confidential Information. During the term of this
Agreement and thereafter, Employee shall keep secret and retain in
strictest confidence, and shall not, without the prior written
consent of Anicom, furnish, make available or disclose to any
third party or use for the benefit of himself or any third xxxxx,
any Confidential Information, except to the extent reasonable
necessary to carry out Employee's duties and responsibilities to
Anicom. As used in this Section 6, "Confidential Information"
shall mean any information relating to the Business or affairs of
Anicom, including but not limited to information relating to
financial statements, business plans, forecasts, purchasing plans,
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customer identities, potential customers, employees, suppliers,
equipment, programs, strategies and information, analyses, profit
margins or other proprietary information used by Anicom in
connection with the conduct of the Business, provided, however,
that Confidential Information shall not include any information
which is in the public domain or becomes known in the industry
through no wrongful act on the part of Employee. Employee
acknowledges that the Confidential Information is vital,
sensitive, confidential and proprietary to Anicom.
9. Employee acknowledges and agrees that the covenants
set forth in Section 5 and 6 of this Agreement (collectively, the
"Restrictive Covenants") are reasonable and necessary for the
protection of Anicom's business interests, that irreparable injury
will result to Anicom if Employee breaches any of the terms of the
Restrictive Covenants, and that in the event of Employee's actual
or threatened breach of any such Restrictive Covenants, Anicom
will have no adequate remedy at law. Employee accordingly agrees
that in the event of any actual or threatened breach by him of any
of the Restrictive Covenants, Anicom shall be entitled to
immediate temporary injunctive and other equitable relief, without
bond and without the necessity of showing actual monetary damages,
subject to hearing as soon thereafter as possible. Nothing
contained herein shall be construed as prohibiting Anicom from
pursuing any other remedies available to it for such breach or
threatened breach, including the recovery of any damages which it
is able to prove.
Nast hereby reaffirms the above covenants and provisions appearing
in the Nast Employment Agreement. It is agreed that the restrictive
covenant set forth in Section 5 of the Nast Employment Agreement duplicated
above terminates March 12, 2003 and will not extend beyond March 12, 2003.
7. Nast acknowledges and understands that the payments and commitments
provided for him under this Agreement are in consideration of Nast
waiving and otherwise releasing Anicom and its past and present parent
and subsidiary companies, affiliates, owners, directors, officers,
agents, employees, successors, heirs and assigns (the "Anicom Group"),
from certain claims, demands, rights, liabilities, and causes of
action. Accordingly, by the execution of this Agreement, and in return
for the consideration given to Nast as detailed in paragraphs 3, 4 and
5 of this Agreement, Nast does hereby release,
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waive, forever discharge and covenants not to xxx or to file
administrative charges against the Anicom Group with respect to any and
all claims, demands, rights, liabilities, and causes of action of any
kind or nature arising out of or in connection with Nast's employment
relationship with Anicom or his separation from employment with Anicom,
and any and all other claims, known and unknown, which Nast has or may
have against Anicom, other than the "Surviving Claims" as defined in
Section 8. In conjunction with the foregoing, Nast agrees to sign the
attached Release of Claims, which is incorporated herein by this
reference.
8. It is acknowledged and agreed that the terms and provisions of
paragraph 7 which provide for a general release by Nast of the Anicom
Group shall not apply to one or more of the following claims
(collectively the "Surviving Claims":
(i) The obligations of Anicom to Nast as set forth in
Agreement and specifically paragraphs 3, 4 and 5 of
this Agreement;
(ii) The obligation to indemnify Nast with respect to
any liability or obligation which is covered by any
insurance policy obtained by Anicom in which Anicom
and/or Nast are or were insured or covered parties,
including but not limited to directors' and
officers' liability insurance;
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(iii)Any liability or obligation of Anicom to Nast
pursuant to Article XII of the Restated Certificate
of Incorporation of Anicom, Inc. with respect to
Nast's service as an officer of Anicom; or
(iv) Any and all claims, demands, rights, liabilities,
and causes of action of any kind or nature
whatsoever which arise or accrue with respect to
events occurring subsequent to the execution date
of this Agreement.
(a) It is also agreed that the neither the execution of this
Agreement nor the Release of Claims described herein
shall affect, modify, enlarge, diminish, impact, amend,
terminate, create, revoke or otherwise change or alter
the following:
(i) The obligation of Anicom to make the last
$1,133,768 payment to Northern Wire & Cable, Inc.
(now known as Northern Liquidation Company) on
March 12, 1999, pursuant to the March 12, 1996
NonNegotiable Note executed by Anicom as maker
originally given to Northern Wire & Cable, Inc.; or
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(ii) Any right, privilege, immunity or power inherent
to, attendant with or otherwise associated with the
capital stock in Anicom (or any successor in
interest of Anicom) which is owned by Nast, his
heirs, personal representatives, transferees,
successors or assigns, regardless of whether such
capital stock is now owned or hereafter acquired.
9. As part of this Agreement, Nast also agrees (a) to waive
reinstatement and not to seek future employment in any position
with Anicom, or any of its parents, subsidiaries or affiliates,
and (b) to refrain from making any unfavorable comments, in
writing or verbally, about Anicom, its staff or its policies or
procedures.
10. This Agreement does not constitute an admission by Anicom of a
violation of any contract, law, order, regulation, enactment or
public policy, and Anicom specifically denies any such violation
or wrongdoing. This Agreement, its execution, and implementation
shall not in any respect be construed, and shall not be admissible
in any proceeding, as evidence of (1) an admission of an unlawful
employment practice under any federal, state or local statute,
regulation, order, or public policy, or (2) an admission by Anicom
of a violation of the common law or public policy of the State of
Michigan or that of any other State, relating to the discharge of
employees or the termination of the employment relationship
between employer and employee, or (3) any tort or breach of
contract by Anicom; provided however, that none of the foregoing
restrictions shall
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prohibit Nast from introducing this Agreement into evidence in
connection with a legal proceeding enforcing the terms of this
Agreement or seeking damages resulting from a breach thereof by
Anicom.
11. Except as provided in paragraph 12, below, the parties agree to
return any property in their possession which belongs to the other
party on or before the expiration of the Revocation Period.
12. Upon expiration of the Revocation Period, Nast shall relinquish
his use of the automotive vehicle furnished to him by Anicom (the
"Vehicle"). At that time, Nast shall drive the Vehicle to the
parking facilities at 0000 X. Xxx Xxxxxx, Xxxxx 000, Xxxx,
Xxxxxxxx 00000. All sets of keys for the Vehicle shall be left
with Lipson, Neilson, Xxxxxx & Xxxx, P.C. Representatives of
Anicom shall promptly send personnel to take possession of the
keys to the Vehicle and to take possession of the Vehicle. It is
understood that the foregoing protocol is for convenience purposes
only and no bailment relationship has been established with
respect to the Vehicle among Anicom and Nast, or with respect to
either of them and any other person. Upon expiration of the
Revocation Period, all tangible personal property currently or
formerly contained within Nast's desk at Anicom facilities which
is currently within the custody or control of Anicom shall be
promptly delivered to Lipson, Neilson, Xxxxxx & Xxxx, P.C.
13. The parties agree that any press release or internal communication
to be issued relating to the expiration of the Nast Employment
Agreement shall state that Nast's motivation in leaving the
employment of Anicom was his desire to pursue charitable activity
and business pursuits unrelated to the business activity of Anicom
and that Anicom
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was willing to honor Nast's desires. Anicom, for itself and on
behalf of its parents, subsidiaries, affiliates, owners,
directors, officers, agents, employees, successors, heirs and
assigns agrees to refrain from making any unfavorable comments, in
writing or verbally, about Nast.
14. Nast, Anicom and their respective legal counsel expressly
recognize that this Agreement shall be revocable for the seven (7)
calendar day period following execution of this Agreement by Nast.
Accordingly, this Agreement shall not become effective or
enforceable until 5:00 p.m. EDT of the eighth day immediately
following the date of this Agreement (the "Effective Date"). The
period of time between the execution of this Agreement and the
Effective Date shall constitute the "Revocation Period". Nast,
Anicom and their respective legal counsel further expressly
recognize that upon expiration of the Revocation Period, this
Agreement will become irrevocable. In any action to enforce this
Agreement, the terms of the Agreement shall be binding, and the
reneging party expressly and irrevocably waives any right to
contest or collaterally attack its terms on any basis, including
but not limited to ignorance or mistake. This acknowledgment is
not a mere recital by the parties.
15. In compliance with The Older Workers Benefit Protection Act (P.L.
101-433), Anicom and Nast do hereby acknowledge as follows:
(a) Nast acknowledges that he fully understands this
Agreement;
(b) Nast acknowledges that this Agreement and his
release and waiver of claims as expressly provided
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under this Agreement and the attached Release of
Claims specifically applies to any rights or claims
he may have against Anicom or any party released
herein under the Federal Age Discrimination in
Employment Act of 1967, as amended;
(c) This Agreement does not purport to waive rights or
claims that may arise from acts or events occurring
after the date that this Agreement is executed by
the parties;
(d) Nast acknowledges that the consideration provided
for in this Agreement and the provisions of this
paragraph is in addition to any amounts to which he
is already entitled;
(e) Nast further acknowledges that he has been advised
of his right to consult with an attorney prior to
signing this Agreement and that he has been given a
period of twenty one (21) days within which to
consider whether to sign this Agreement; and (f)
This Agreement shall be revocable by Nast until
expiration of the Revocation Period. 16. It is
further agreed that Nast will not encourage any
employee or former employee of Anicom in litigating
claims or filing administrative charges against
Anicom, and/or its
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parents, subsidiaries, affiliates, owners, agents,
officers, directors, shareholders, or employees,
unless required to provide testimony or documents
pursuant to a lawful subpoena or as otherwise
required by law. Further, Anicom shall not
encourage the prosecution of any third party claims
against Nast.
17. Both Nast and Anicom agree to keep the nature, terms, and conditions of
this Agreement confidential. Anicom and Nast may disseminate the
Agreement as necessary for internal administrative purposes, or as
required by lawful subpoena, litigation discovery request,
government-regulatory inquiry or request for information, and the
parties may share information concerning the Agreement with their legal
counsel and tax advisors as necessary for purposes of legal or tax
advice. Anicom and Nast agree to instruct all individuals whom they
inform of the nature, terms, and/or conditions of this Agreement, of
the confidential nature of the Agreement. In response to any inquiry
from third persons not otherwise referred to in this paragraph
concerning this Agreement, Nast agrees to limit his response solely to
a statement he has resigned and that the matter has been resolved or
words of similar effect.
18. This Agreement and the attached Release of Claims shall be construed
without regard to the identity of the person who drafted their
provisions and their provisions shall be construed as if each of the
parties participated in its drafting. Any rules of construction that a
document is to be construed against the drafting party shall not apply
to this Agreement.
19. Nast states that he has read and understands that this Agreement and
the attached Release of Claims is meant as a settlement and release,
releasing Anicom from any and all
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claims he may have against it other than the Surviving Claims, that he
voluntarily agrees to the terms herein, that he knowingly and willingly
intends to be legally bound by the same, that he was given adequate
opportunity to consider this Settlement Agreement and Release of
Claims, and that the terms and conditions hereof were determined by
negotiation between Nast and Anicom.
20. Nast acknowledges that any purported revocation of this Agreement must
be in writing and signed by him, directed to Anicom's Vice President &
General Counsel and received by Anicom's Vice President & General
Counsel prior to the end of the Revocation Period.
21. This Agreement shall be governed by and construed in accordance with
the laws of the State of Michigan.
22. If any action is brought to interpret or enforce any provision of this
Agreement or the rights or obligations of any party to the Agreement,
the prevailing party shall be entitled to recover reasonable attorneys'
fees and costs from the losing party in opposition.
23. No provisions of this Agreement may be modified, amended or terminated
except by a written agreement executed by all of the parties to this
Agreement.
24. This Agreement and the attached Release of Claims constitutes and
contains the entire agreement and understanding between the parties
concerning the subject matter of this Agreement, and supersedes all
prior negotiations, proposed agreements and understandings, if any,
between the parties. 25. This Agreement may be executed in
counterparts, each of which shall be deemed an original but all of
which together shall constitute one and the same document.
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26. All of the terms and conditions of this Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective
heirs, successors and assigns.
27. Each person executing this Agreement warrants and represents that he is
duly authorized to execute the Agreement on behalf of and to legally
bind, the party for whom he is signing.
[BALANCE OF PAGE LIFT BLANK INTENTIONALLY]
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IN WITNESS WHEREOF, the Agreement is duly executed on the dates
appearing below.
ANICOM, INC.
Dated:_________________________ By:_______________________
Xxxxxx X. Xxxxxxx
Chief Financial Officer
XXXX. M. NAST
Dated:__________________________ __________________________
Xxxx X. Xxxx
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