EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT, dated and effective as of January 1, 2002
("Effective Date"), by and between Empire Financial Services, Inc., a
Georgia corporation (the "Company"), and J. Xxxxx Xxxx, Xx., whose mailing
address is 0000 Xxxxxx Xxxxx, Xxxxxxxxxxxxx, Xxxxxxx, 00000 (the
"Executive").
The Company and the Executive are parties to a prior Employment Agreement,
dated and effective as of January 1, 1997, which Employment Agreement was
amended and restated, effective as of December 1, 2000 ("Prior Employment
Agreement"). The Company and the Executive desire to supersede and
replace the Prior Employment Agreement in its entirety with this
Agreement, effective as of the Effective Date. The Company now desires to
employ the Executive, and the Executive is willing to be employed by the
Company, on the terms and conditions set forth in this Agreement.
Accordingly, in consideration of the premises and the respective covenants
and agreements of the parties set forth below, and intending to be legally
bound hereby, the parties agree as follows:
1. Employment. The Company hereby employs the Executive, and the Executive
hereby accepts such employment, on the terms and conditions set forth in
this Agreement. The Executive represents and warrants that he is not a
signatory to, or otherwise bound by, any agreement that would prevent or
materially impair his ability to accept and perform the employment duties
contemplated by this Agreement.
2. Term. The term of employment (the "Term") shall commence on January 1,
2002 (the "Effective Date") and shall end on December 31, 2006, unless
sooner terminated as
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hereinafter provided. Each calendar year during the Term ending December 31
is sometimes referred to herein as a "Contract Year."
3. Duties, Authority, Status and Responsibilities. During the first three
(3) Contract Years of the Term (i.e., through December 31, 2004), the
Executive (i) shall serve in the capacity as President and Chief Executive
Officer and shall have the duties and responsibilities consistent
therewith as may be determined from time to time by the Board of Directors
of the Company, and (ii) shall devote his full time and best efforts
during normal business hours to the business and affairs of the Company,
except for vacations, illness or as otherwise agreed to by the Board of
Directors and the Executive. Commencing on January 1, 2005 (or such other
date as the parties may agree upon) and through the end of the Term, the
Executive shall, in consultation with the Board of Directors, assist in
the hiring, development and training of an individual to perform his
duties and responsibilities. During the period commencing January 1,
2005, the Executive and the Board of Directors will mutually agree upon a
reduced work schedule for Executive and a transfer of certain
responsibilities to his successor or to other employees. When Executive
commences working a reduced schedule, his Base Salary and Incentive
Compensation under Section 5 shall be proportionately reduced to reflect
his reduced work schedule. During the Term, the Executive will be a
member of the Board of Directors of the Company and he agrees to serve in
such capacity without additional compensation during the Term.
4. Place of Performance. The Executive shall be based and shall perform his
duties at the offices of the Company in Milledgeville, Georgia, except for
reasonable travel as the performance of the Executive's duties may
require.
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5. Compensation.
(a) Base Salary. During the Term, the Executive shall receive from the
Company an annual base salary to be determined and revised from time to
time for possible increase by the Board of Directors (as in effect from
time to time, "Base Salary"). The Base Salary shall not be decreased
during the Term. The initial Base Salary is $230,129. The Base Salary
shall be payable in regular installments in accordance with the customary
payroll practices of the Company.
(b) Incentive Compensation. In addition to the Base Salary, with respect to
each fiscal year of the Company during the Term, the Executive shall be
eligible to earn incentive or bonus compensation (the "Bonus") in
accordance with such bonus plan as may be established by the Board of
Directors for the fiscal year. Unless the parties otherwise agree, the
Bonus for the Executive for each fiscal year shall be 15% of the Total Net
Income Before Taxes and staff bonuses but after the first $500,000 of
Total Net Income Before Taxes, all determined on an annual basis. The
Bonus will be payable in quarterly draws of up to 80% of that quarter's
Bonus with a "settling up" adjustment made as soon as practical after
fiscal year end. The first $500,000 of Total Net Income Before Taxes
would be prorated equally over the four calendar quarters of each fiscal
year. If Net Income Before Taxes does not equal at least $125,000 in a
given calendar quarter, the deficiency shall be carried over to successive
quarters until $500,000 in Net Profit Before Taxes is achieved for the
fiscal year.
(c) Deferred Compensation. As additional consideration for the Executive's
service and covenants herein, the Company shall pay the Executive an
amount of other compensation ("Deferred Compensation") which shall be
determined and shall be payable in accordance with the provisions of this
subsection (c). Such payment (if any) shall be made no
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later than ninety (90) days after a Termination Event. A Termination Event
for purposes of this Agreement shall mean the Executive's termination of
employment by reason of death, disability, or other termination of employment
by the Company or by Executive, or the expiration of the Term.
(i) The Deferred Compensation payable to the Executive shall be credited
to an account ("Deferred Compensation Account") established by the Company
on its books, as follows: $200,000 on December 31, 2002, and $200,000 on
each of the four (4) December 31sts thereafter, through and including
December 31, 2006 (subject to reduction as provided in Section 3). The
Company will establish deemed investment options in which the amounts
credited to the Executive's Deferred Compensation Account will be deemed
to be invested based upon the Executive's investment elections, which
investment options will reflect those customarily offered by this type of
plan. The Company will periodically increase or decrease the Executive's
Deferred Compensation Account to reflect the amount by which the Deferred
Compensation Account would have increased or decreased if it had been
invested in the investment options selected by the Executive. The amount
credited to the Executive's Deferred Compensation Account on any date,
including the date of a Termination Event, shall reflect the adjustments
for investment in the deemed investment options.
(ii) Subject to applicable tax rules, the Company intends to establish a
grantor trust to which it will contribute the amounts credited to the
Executive pursuant to subsection (i) above. The trust may (but is not
required to) acquire investments to reflect the deemed investment options
offered to the Executive pursuant to subsection (i) above. The
establishment of the trust shall not affect the status of the Deferred
Compensation Account as an unfunded arrangement.
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(iii) The amount of the Deferred Compensation Account payable to the
Executive shall be determined as follows:
(A) In the event the Executive remains employed until the end of the
Term (whether or not he terminates employment at the end of the Term) or if
Executive elects to terminate his employment prior to the end of the Term,
the Executive will be paid in a lump sum the full amount credited to the
Deferred Compensation Account on the date of the Termination Event.
(B) In the event the Executive is terminated by the Company without
Cause prior to the end of the Term or Executive dies or incurs a Disability
prior to the end of the Term, the Executive will be paid in a lump sum the
full amount credited to the Deferred Compensation Account as of the date
of the Termination Event, plus the amount of the additional annual credits
pursuant to subsection (i) above that have not yet been made.
(C) In the event Executive is terminated by the Company for Cause prior
to the end of the Term, the Executive will be paid in a lump sum the amount
credited to the Deferred Compensation Account on the date of the
Termination Event.
(iv) For purposes of this Agreement, the term "Cause" shall mean (i) a
determination by the Board of Directors that the Executive has failed to
follow any of the Company's lawful policies or directives made to the
Executive by the Board of Directors or to perform his duties under this
Agreement and, if such breach is curable as determined by the Board of
Directors in good faith, the failure of the Executive to cure such failure
within 10 days of receiving written notice thereof from the Company; (ii)
the conviction of, or plea of guilty or nolo contendre by the Executive
to, a charge of any crime involving moral turpitude or a felony; (iii) an
act of wilful misconduct, fraud or personal dishonesty, by the Executive
involving the
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assets of the Company; (iv) the bankruptcy or an assignment
for the benefit of creditors by the Executive; or (v) refusal or failure
to furnish information concerning the Company's affairs as requested by
the Board of Directors within 10 days after notice of such request for
information is given to the Executive.
(v) For purposes of this Agreement, "Disability" shall mean Executive's
inability, as a result of physical or mental incapacity resulting from an
injury or illness, to substantially perform his duties under this
Agreement for a period of at least six (6) continuous months and which
appears to be permanent or indefinite. The determination of Disability
shall be made by the Board of Directors based upon the information
provided to, or developed by, the Board.
6. Expenses. During the Term, the Executive shall be entitled to receive
from the Company prompt reimbursement for all reasonable travel and
business expenses incurred by him (in accordance with the policies and
procedures established by the Board of Directors from time to time for the
Company's executive officers) in performing services hereunder, upon
presentation of expense statements or vouchers and such other information
as the Company may reasonably require.
7. Employee Benefits.
(a) General. The Executive shall be entitled to participate in all employee
benefit plans, programs and arrangements of the Company now or hereafter
made available to employees of the Company, as such plans, programs and
arrangements may be in effect from time to time, provided that, effective
as of the Effective Date, Executive has irrevocably elected to waive
participation in the Southwest Georgia Financial Corporation Employee
Stock Ownership Plan and the Pension Plan. Without limiting the forgoing,
during
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the Term, the Executive shall be entitled to and shall have paid
sick leave of not more than thirty days during each Contract Year. The
Board of Directors shall determine, from time to time, the extent to which
the Executive shall have the right to participate in other bonus,
incentive compensation, stock option or stock purchase plans. The Company
shall indemnify the Executive and hold the Executive harmless from and
against any claim, loss or cause of action arising from or out of the
Executive's performance as an officer, director or employee of the Company
to the maximum extent permitted by law and the certificate of
incorporation and by-laws of the Company, except in cases where such
performance constitutes fraud, gross negligence, criminal conduct or a
violation of any law, governmental regulation or course of dealing
generally accepted in the industry. The Company shall maintain in full
force and effect directors' and officers' liability insurance unless the
Board of Directors of the Company determines that the cost of such
insurance is not commercially reasonable when weighted against the nature
of the coverage available.
(b) Vacations. The Executive shall be entitled to annual vacation in
accordance with the Company's vacation policies in effect from time to
time for executives of the Company. Vacations shall not be taken in a
manner which will unreasonably interfere with the Executive's duties
hereunder. The Executive shall also be entitled to all paid holidays
given by the Company to its employees.
8. Termination. The Executive's employment hereunder may be terminated at
any time by the Company (whether with or without Cause) or by the
Executive. Upon such termination, the Executive shall receive no further
compensation from the Company pursuant to this Agreement, except any
accrued and unpaid Base Salary, any Bonus Amounts from previous fiscal
years which have been earned and are payable but which have not yet been
paid, any
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unpaid vacation pay, and any Deferred Compensation (determined
in accordance with Section 5(c)). Any termination of the Executive's
employment by the Company or by Executive shall be communicated by a
written notice of termination (the "Notice of Termination") to the other
party in accordance with Section 9. For purposes of this Agreement, the
"Date of Termination" shall mean (i) if the Executive's employment is
terminated by his death, the date of this death, (ii) if the Executive's
employment is terminated because of Disability, 30 days after delivery to
the Executive of the Notice of Termination (provided, that the Executive
shall not have returned to the satisfactory performance of his duties
during such 30-day period), (iii) if the Executive's employment is
terminated for Cause, the date specified in the Notice of Termination, and
(iv) if the Executive's employment is terminated for any other reason, the
date on which a Notice of Termination is delivered.
9. Notice. All notices or other communications hereunder shall be in writing
and shall be deemed to have been duly given (a) when delivered personally,
(b) on the business day following the day such notice or other
communication is sent by recognized overnight courier, (c) on
acknowledgment of the receipt of a facsimile of such notice or other
communication, or (d) on the fifth day following the date of deposit in
the United States mail if sent first class, postage prepaid, by registered
or certified mail. The addresses for notices to the Executive shall be as
set forth in page 1 hereof and to the Company shall be at 000 Xxxxxxxxx
Xxxxxxx, Xxxxxxxxxxxxx, Xxxxxxx, 00000, to the attention of the Chairman
of the Board of Directors, with a copy to Southwest Georgia Financial
Corporation, 000 Xxxxx Xxxxxx, X.X., Xxxxxxxx, Xxxxxxx, 00000, to the
attention of the President.
10. Covenant Not to Compete and Confidentiality. The Executive acknowledges
that the Company is engaged in the business of originating, servicing,
selling, and
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brokering commercial and mortgage loans (the "Company
Business") in Georgia and the states contiguous thereto, and his work for
the Company has given him and may continue to give him access to trade
secrets of, and confidential information concerning, the Company.
Accordingly, the Executive covenants and agrees as follows:
(a) During the Term and for a period of two years (the "Restricted Period")
following the earlier of (x) the expiration of the Term and (y) the date
the Executive ceases to be employed by the Company, the Executive will
not, in the State of Georgia or in the states adjacent thereto, directly
or indirectly, (i) engage in the Company Business for Executive's own
account, (ii) engage in the Company Business as an employee, consultant or
commissioned agent on the behalf of any person or entity engaged in any
business that competes with the Company Business, (iii) acquire a
financial interest in, or otherwise become actively involved with, any
person or entity engaged in any business that competes with the Company
Business, directly or indirectly, as an individual, partner, shareholder,
officer, director, principal, agent, trustee or consultant, or (iv)
interfere with a business relationship (whether formed before or after the
date of this Agreement) between the Company or any shareholder of the
Company and its subsidiaries that are engaged in a business similar to the
Company Business (the "Company Affiliates") and customers of the Company
or the Company Affiliates.
(b) Notwithstanding anything to the contrary in this Agreement, the Executive
may, directly or indirectly own, solely as an investment, securities of
any entity engaged in the Company Business if the Executive (i) is not a
controlling person of, or a member of a group which controls, such entity
and (ii) does not, directly or indirectly, own 5% or more of any class of
securities of such entity.
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(c) During the Term of the Executive's employment hereunder and thereafter
the Executive will keep secret and retain in strict confidence and will not
use for the benefit of himself or others except in connection with the
business and affairs of the Company and the Company Affiliates, all
confidential matters relating to the Company Business or to the Company or
the Company Affiliates which are unique to the Company Business, the
Company or the Company Affiliates, as the case may be, including "know-
how", financial information, trade secrets, customer lists, pricing
policies, marketing plans or strategies and other business affairs
relating to the Company Business or to the Company or the Company
Affiliates that are unique to the Company Business, the Company or the
Company Affiliates, as the case may be, and that are learned by the
Executive whether before or after the date of this Agreement, and will not
disclose them to anyone outside of the Company and the Company Affiliates,
whether during or after employment by the Company, except (i) as required
in the course of performing his duties for the Company, (ii) with the
Company's express written consent or (iii) to the extent any such
confidential matter must be disclosed by the Executive pursuant to law and
the Executive's disclosure is limited to that which is required by law,
upon 10 days prior written notice to the Company.
(d) All memoranda, notes, lists, records and other documents or papers (and
all copies hereof), including such items stored in computer memories, on
microfiche or by any other means, made or compiled by or on behalf of the
Executive, or made available to the Executive concerning the Company
Business or the business of the Company, are and will be the Company's
property and will be delivered to the Company promptly upon the
termination of the Executive' employment with the Company.
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(e) During the Restricted Period, the Executive will not, directly or
indirectly, solicit or encourage any employee of the Company or the
Company Affiliates to leave the employment of the Company or the Company
Affiliates.
(f) During the Restricted Period, the Executive will not, directly or
indirectly, solicit or encourage to cease to work with the Company or the
Company Affiliates any consultant then under contract with the Company or
the Company Affiliates.
(g) If the Executive breaches, or threatens to commit a breach of, any of the
provisions of this Section 10 (the "Restrictive Covenants"), the Company
will have the following rights and remedies, each of which will be
independent of the others and severally enforceable, and all of which will
be in addition to and not in lieu of, any other rights and remedies
available to the Company under law or in equity:
(i) The right and remedy to have the Restrictive Covenants specifically
enforced by any court having equity jurisdiction; provided that the
Executive acknowledges and agrees that, solely for purposes of the Company
obtaining or attempting to obtain any such equitable relief, the Executive
will not challenge an assertion by the Company that any such breach or
threatened breach will cause irreparable injury to the Company, nor will
it be asserted as a defense to any such attempt to obtain equitable relief
that money damages will provide an adequate remedy to the Company.
(ii) The right and remedy to require the Executive to account for and pay
over to the Company, all compensation, profits, monies, accruals, increments
or other benefits (collectively, "Benefits") derived or received by the
Executive as a result of any transactions constituting a breach or
threatened breach of any of the Restrictive Covenants, and the Executive
will account for and pay over such Benefits to the Company, as the case
may be.
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(iii) The right and remedy to require the Executive to account for and
pay over to the Company the amount paid to the Executive from the Deferred
Compensation Account.
(h) The Executive acknowledges and agrees that the Restrictive Covenants are
reasonable in geographical and temporal scope and in all other respects.
If any court determines that any of the Restrictive Covenants, or any part
hereof, are invalid or unenforceable, the remainder of the Restrictive
Covenants will not be affected thereby and will be given full effect,
without regard to the invalid portions.
(i) If any court determines that any of the Restrictive Covenants, or any
part hereof, is unenforceable because of the duration or geographic scope of
any such provision, such court will have the power to modify the duration
or scope of such provision, as the case may be, and, in its modified form,
such provision will then be enforceable.
(j) The Restrictive Covenants may be enforced by the courts of any
jurisdiction within the geographical scope of such covenants or any other
such court that may properly exercise jurisdiction as long as any such
court has jurisdiction over the Executive. If any of such courts hold the
Restrictive Covenants unenforceable by reason of the breadth of such scope
or otherwise, it is the intention of the Company and the Executive that
such determination not bar or in any way affect the Company's right to the
relief provided above in the courts of any other jurisdiction within the
geographical scope of such covenants or otherwise (as long as such courts
have jurisdiction over the Executive) as to breaches of such covenants in
such other jurisdiction, such covenants as they relate to each
jurisdiction being, for this purpose, severable into distinct and
independent covenants.
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11. Representations and Warranties. The Executive hereby represents and
warrants to the Company that:
(a) The Executive has not, at any time, been found by a court in a civil
action or by the Securities and Exchange Commission to have violated any
federal or state securities law where such judgment has not subsequently
been reversed, suspended or vacated.
(b) During the past five years, no petition under the Bankruptcy Code Title
11, U.S. C. or any state insolvency law has been filed by or against, nor
has any receiver or similar officer been appointed by a court for the
business or property of, (i) the Executive, (ii) any partnership in which
the Executive was a general partner at or within two years before the time
of such filing, or (iii) any corporation or business association of which
the Executive was an executive officer or director at or within two years
before the time of such filing.
(c) Except as set forth on Schedule A attached hereto, the Executive does
not, and no member of Executive's Family (as defined below):
(i) owns, directly or indirectly, any significant (as defined below)
interest in, or is an officer, director or key employee of, any entity which
is, or is engaged in business as, a competitor, lessor, lessee, supplier,
agent or customer of the Company.
(ii) owns, directly or indirectly, any significant interest in any
property that the Company uses in the conduct of its business.
As used herein, "Executive's Family" shall mean the Executive's parents,
spouse and children and "significant" shall mean ownership of more than
five (5%) of a corporation, partnership or other entity.
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During the Term, the Executive shall be under a continuing obligation to
revise Schedule A to insure that the representations and warranties
contained in Section 11(c) are true and correct as if made every day
subsequent to the date hereof.
12. Miscellaneous.
(a) Resolution of Disputes; Arbitration.
(i) Except as provided in Section 10, the Company and the Executive shall
use their best efforts to resolve any dispute, controversy or claim between
them with respect to any matter related to or arising out of this
Agreement (each, a "Dispute") through negotiation. Such negotiation shall
begin immediately after a party has delivered to the other party a written
request for such negotiation. If within 60 days following the date on
which such notice is given, the parties fail to resolve the dispute
through such negotiations, then either party may initiate an arbitration
proceeding in accordance with this Section 12(a).
(ii) Subject to Section 12(a)(i), any Dispute shall be referred to and
finally resolved by arbitration administered by the American Arbitration
Association ("AAA") in accordance with the Commercial Arbitration Rules of
the AAA and the provisions of this Section 12(a), before a single
arbitrator to be appointed by the mutual consent of the Company and the
Executive. In the event that the parties cannot agree on an arbitrator,
the parties agree that the AAA shall designate an arbitrator. The
arbitration proceedings shall be held in Macon, Georgia.
(iii) The arbitrator shall decide the Dispute in accordance with this
Agreement and the laws of the State of Georgia applicable to agreements made
and to be
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performed entirely within such State.The decision of the arbitrator
shall be in writing and presented in separate findings of fact and law.
The award of the arbitrator shall be final and binding on the parties from
which no appeal may be taken, and an order confirming the award or
judgment upon the award may be entered into in any court having
jurisdiction there over.
(iv) The arbitrator, in the award, may assess the fees and expenses
of the arbitrator and of the arbitration proceeding, and the witness and
attorneys' fees of the parties, or any part thereof, against either the
Company or the Executive or both of them, taking into account the
circumstances of the case. Except as assessed by the arbitrator in the
award, the Company and the Executive shall each bear their own costs in
connection with the arbitration proceeding, and shall each bear 50% of the
fees and expenses of the arbitrator.
(b) Modification, Waiver, etc. No provisions of this Agreement may be
modified, waived or discharged unless such waiver, modification or
discharge is agreed to in writing signed by the Executive and a duly
authorized officer of the Company, and such modification, waiver or
discharge has been approved by the Board of Directors. No waivers by any
party hereto at any time of any breach of another party hereto of, or
compliance with, any condition or provision of this Agreement to be
performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or
subsequent time. This Agreement shall be binding on and inure to the
benefit of the successors and assigns of the Company.
(c) Withholding Taxes. The Company may withhold from amounts payable under
this Agreement such federal, state and local taxes as are required to be
withheld pursuant to any applicable law or regulation and the Company
shall be authorized to take such action as may be necessary in the opinion
of the Company's counsel (including, without
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limitation, withholding amounts from any compensation or other amount owing
from the Company to Executive) to satisfy all obligations for the payment of
such taxes.
(d) Continuation of Employment. Unless the parties otherwise agree in
writing, continuation of Executive's employment with the Company beyond
the expiration of the Term shall not be deemed to extend any of the
provisions of this Agreement and Executive's employment may thereafter be
terminated at will by Executive or the Company without further obligation
of either party hereunder.
(e) Governing Law. The validly, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
Georgia applicable to agreements made and to be performed entirely in
Georgia, without regard to the conflict of laws principles of such State.
(f) Assignment. This Agreement is a personal contract, and the rights and
interest of the Executive hereunder may not, during the Term, be sold,
transferred, assigned, pledged or hypothecated. This Agreement may be
assigned by the Company to a company organized under the laws of one of
the States of the United States which is wholly-owned or controlled
directly or indirectly by the Company and which is a successor-in-interest
to substantially all of the business operations of the Company. Such
assignment shall become effective when the Company, shall have notified
the Executive of such assignment or at such later date as may be specified
in such notice. Upon such assignment, the rights and obligations of the
Company hereunder shall become the rights and obligations of such company,
and the Company shall have no further rights or obligations hereunder.
(g) Severability of Invalid or Unenforceable Provision. The invalidity or
unenforceability of any provision or provisions of this Agreement shall
not affect the validity
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or enforceability of any other provision of this Agreement, which all remain
in full force and effect.
(h) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of
which together will constitute one and the same instrument.
(i) Entire Agreement. This Agreement sets forth the entire agreement
of the parties with respect to the subject matter of this Agreement and
supersedes all prior agreements, understandings, promises, covenants,
arrangements and communications, both oral or written, among the parties
with respect to the subject matter contained herein.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
EMPIRE FINANCIAL SERVICES, INC.
By: /s/Xxxx X. Xxxxx
Title: Chairman of the Board
/s/J. Xxxxx Xxxx, Xx.
J. Xxxxx Xxxx, Xx.
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