EXHIBIT 10.1
EMPLOYMENT AGREEMENT OF XXXXX X. XXXXXX
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EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into as
of this 31st day of August 2003, by and between Gaming & Entertainment Group,
Inc., a Nevada corporation ("COMPANY"), and Xxxxx X. Xxxxxx, an individual
("EMPLOYEE").
WITNESSETH:
WHEREAS, COMPANY and EMPLOYEE deem it to be in their respective best
interests to enter into an agreement providing for COMPANY's employment of
EMPLOYEE pursuant to the terms herein stated.
NOW, THEREFORE, in consideration of the premises and the mutual
promises and agreements contained herein, it is hereby agreed as follows:
1. Term. COMPANY hereby employs and EMPLOYEE hereby accepts
employment with COMPANY for a period of four (4) years beginning on the date
hereof ("Term"). Unless COMPANY or EMPLOYEE provides written notice that this
Agreement shall be allowed to expire and the employment relationship thereby
terminated at least thirty (30) days prior to the expiration of the Term or any
Renewal Term (as defined herein), this Agreement shall continue in effect for
additional terms of (1) one year each ("Renewal Term").
2. Duties of Employee. EMPLOYEE's position with COMPANY will be
Chief Executive Officer. EMPLOYEE shall do and perform all services, acts, or
things reasonably necessary or advisable to accomplish the objectives and
complete the tasks assigned to EMPLOYEE by COMPANY's Board of Directors. COMPANY
may assign EMPLOYEE to another position so long as the compensation paid to
EMPLOYEE is equal to or greater than the compensation provided in this
Agreement.
3. Devotion of Time to Company's Business. EMPLOYEE shall be a
full-time EMPLOYEE of COMPANY and shall devote such substantial and sufficient
amounts of his productive time, ability, and attention to the business of
COMPANY during the Term of this Agreement as may be reasonable and necessary to
accomplish the objectives and complete the tasks assigned to EMPLOYEE. EMPLOYEE
may devote reasonable time to activities other than those required under this
Agreement, including activities involving professional, charitable, community,
educational, religious and similar types of organizations, speaking engagements,
membership on the boards of directors of other organizations and similar types
of activities to the extent that such activities do not inhibit or prohibit the
performance of services under this Agreement.
4. Uniqueness of Services. EMPLOYEE hereby acknowledges that the
services to be performed by him under the terms of this Agreement are of a
special and unique value. Accordingly, the obligations of EMPLOYEE under this
Agreement are non-assignable.
5. Compensation of EMPLOYEE.
a. Base Annual Salary. Subject to other specific provisions in
this Agreement, as compensation for services hereunder, EMPLOYEE shall receive a
Base Annual Salary at the rate of not less than $185,000 per annum payable in
accordance with the Company's ordinary payroll practices (and in any event no
less frequently than monthly). On each anniversary date hereof, EMPLOYEE's Base
Annual Salary will be reviewed and may be increased by the COMPANY'S Board of
Directors.
b. Cash Bonus. EMPLOYEE shall receive a bonus of $35,000 if
COMPANY achieves the EBITDA target approved by the Board of Directors for the
calendar year. In addition, EMPLOYEE shall receive 5% of the amount by which the
EBITDA target is exceeded up to a total bonus not to exceed $100,000.
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c. Stock Options. During the term of the Agreement, COMPANY
shall grant to EMPLOYEE options to purchase shares of COMPANY Common Stock (the
"Option") under the COMPANY's 2003 Stock Option and Incentive Plan ("Plan"). The
Option, which shall be in the form attached hereto as Exhibit A, shall be
subject to the terms and conditions thereof and of the Plan, and shall
additionally provide as follows:
(1) The number of shares subject to the Option and the
vesting schedule relating thereto, if any.
(2) The purchase price per share, which shall be equal
to the closing bid price on the date of issuance of the Option.
(3) The Option shall be designated as an Incentive
Option.
(4) The Option shall terminate on (i) the expiration
date specified in the Stock Option Agreement or (ii) such earlier date as
termination may occur according to the terms and conditions of the Plan and/or
the Stock Option Agreement; provided, however, provided, however, EMPLOYEE shall
have an irrevocable right to exercise any and all options to purchase common
stock of the Company issued to him at any time, assuming such options are fully
vested, through the final date on which such options are exercisable by
EMPLOYEE; provided, further, EMPLOYEE shall not be bound by the terms of Section
6(f) of the Plan.
(6) All Options to acquire common stock of COMPANY
granted to EMPLOYEE during the term of this Agreement shall become 100% vested
(to the extent such options are not otherwise fully vested at that time) upon
(i) any merger or consolidation involving COMPANY if COMPANY is not the
surviving corporation; (ii) any transfer of all or substantially all of the
assets of COMPANY; (iii) any voluntary or involuntary dissolution of COMPANY;
(iv) any material change in ownership of COMPANY which results in a change of a
majority of the Board of Directors; or (v) if COMPANY or any successor or
assignee of COMPANY should terminate this Agreement other than for Cause. In
addition to the foregoing, in the event of any merger, consolidation, transfer
of assets or change in ownership, the surviving or resulting corporation or the
transferee of COMPANY's assets may terminate this Agreement without cause only
upon payment to EMPLOYEE of a sum equal to EMPLOYEE's salary which would be
payable under the remaining term of this Agreement pursuant to Section 5(a)
assuming that COMPANY would allow the Agreement to expire at the earliest
possible date by providing notice pursuant to Section 1; provided, further, that
the provisions of the first sentence of this Section 5(d)(6) shall continue to
apply in such event.
e. EMPLOYEE Benefits. EMPLOYEE shall receive Employee shall
receive such benefits, fringe benefits and entitlements as is usual and
customary for COMPANY to provide an employee of like status and position and are
consistent with COMPANY's established policies on employment, which may be
revised from time to time in the sole discretion of COMPANY.
f. Business Expenses. COMPANY will reimburse EMPLOYEE for
reasonable business expenses directly incurred in performing EMPLOYEE's duties
and promoting the business of COMPANY.
6. Termination of Employment.
a. Either party shall have the right to terminate this
Agreement upon thirty (30) days written notice to the other. In the event
COMPANY should terminate this Agreement other than for just "Cause" as defined
in Section 6(b) below ("termination without Cause"), COMPANY shall pay to
EMPLOYEE the greater of [1] a sum equal to EMPLOYEE's Base Salary for the most
recent calendar year or [2] a sum equal to the Base Salary payable to EMPLOYEE
over the remaining term of this Agreement. Any sum payable under this Section
shall be paid in full upon the effective date of the termination of the
employment relationship between COMPANY and EMPLOYEE. Upon the expiration of
this Agreement without renewal by COMPANY, COMPANY shall pay to EMPLOYEE a sum
equal to EMPLOYEE's Base Salary for the most recent calendar year. Said sum
shall be paid in full upon the effective date of the termination of the
employment relationship between COMPANY and EMPLOYEE.
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b. COMPANY shall have the right to terminate EMPLOYEE's
employment at any time for Cause by giving EMPLOYEE written notice of the
effective date of Termination. For the purposes of this Agreement, "Cause" shall
mean:
(1) Fraud, misappropriation, embezzlement or any other
action of material misconduct against COMPANY or any of its affiliates or
subsidiaries;
(2) Substantial failure to render services in accordance
with the provisions of this Agreement, provided that:
(i) a written demand for performance has been
delivered to EMPLOYEE at least ten (10) days prior to termination identifying
the manner in which COMPANY believes that EMPLOYEE has failed to perform; and
(ii) EMPLOYEE has thereafter failed to remedy such
failure to perform;
(3) Material violation of any law, rule or regulation of
any governmental or regulatory body material to the business of COMPANY;
(4) Conviction or a guilty plea or nolo contendere plea
to a felony;
(5) The loss, revocation, suspension of, or failure to
obtain any license or certification of EMPLOYEE necessary for EMPLOYEE to
discharge EMPLOYEE's duties on behalf of COMPANY;
(6) Acts or omissions by EMPLOYEE which jeopardize any
governmental registration, license, permit or other governmental permission
material to the business of COMPANY in any jurisdiction in which COMPANY does
business or seeks to do business;
(7) Repeated and persistent failure to abide by the
policies established by COMPANY after written warning from COMPANY;
(8) Any acts of violence or threats of violence made by
EMPLOYEE against COMPANY or anyone associated with COMPANY's business;
(9) The solicitation or acceptance of payment or
gratuity from any existing or potential customer or supplier of COMPANY without
the prior written consent of COMPANY's Chief Executive Officer.
(10) Failure to disclose any fact material to COMPANY's
decision to enter into this Agreement including, without limitation, failure to
disclose any criminal or civil fraud charges brought against EMPLOYEE at any
time or failure to disclose a prior business or personal bankruptcy action
involving EMPLOYEE;
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(11) Drug dependency or habitual insobriety; or
(12) Gross incompetence.
c. In the event of termination for cause, EMPLOYEE shall be
paid EMPLOYEE's salary through the effective date of termination on the date of
termination. After the effective date of Termination, EMPLOYEE shall not be
entitled to accrue or vest in any further salary, severance pay, benefits,
fringe benefits or entitlements except as may be required by statute or
regulation of any agency of competent jurisdiction; provided that EMPLOYEE shall
retain the right to exercise any options which are vested as of the effective
date of termination as provided in Section 5(c) herein.
d. This Agreement shall terminate automatically in the event
that: (i) EMPLOYEE fails or is unable to perform EMPLOYEE's duties due to
injury, illness or other incapacity for ninety (90) days in any twelve (12)
month period (except that EMPLOYEE may be entitled to disability payments
pursuant to COMPANY's disability plan, if any); or (ii) Death of EMPLOYEE. Upon
termination of this Agreement as the result of the death or disability of
EMPLOYEE, all vested stock options provided herein shall become the property of
the EMPLOYEE's estate.
7. Covenant of Confidentiality. All documents, records, files,
manuals, forms, materials, supplies, computer programs, trade secrets and other
information which comes into EMPLOYEE's possession from time to time during
EMPLOYEE's employment by COMPANY and/or any of COMPANY's subsidiaries or
affiliates, shall be deemed to be confidential and proprietary to COMPANY and
shall remain the sole and exclusive property of COMPANY. EMPLOYEE acknowledges
that all such confidential and proprietary information is confidential and
proprietary and not readily available to COMPANY's business competitors. On the
effective date of the termination of the employment relationship or at such
other date as specified by COMPANY, EMPLOYEE agrees that he will return to
COMPANY all such confidential and proprietary items (including, but not limited
to, Company marketing material, business cards, keys, etc.) in his control or
possession, and all copies thereof, and that he will not remove any such items
from the offices of COMPANY.
8. Covenant of Non-Disclosure. Without the prior written approval of
COMPANY, EMPLOYEE shall keep confidential and not disclose or otherwise make use
of any of the confidential or proprietary information or trade secrets referred
to in Section 7 nor reveal the same to any third party whomsoever, except as
required by law.
9. Covenant of Non-Solicitation. During the Term of this Agreement
and for a period of two (2) years following the effective date of termination,
EMPLOYEE, either on EMPLOYEE's own account or for any person, firm, Company or
other entity, shall not solicit, interfere with or induce, or attempt to induce,
any EMPLOYEE of COMPANY, or any of its subsidiaries or affiliates to leave their
employment or to breach their employment agreement, if any, with COMPANY.
10. Covenant of Cooperation. EMPLOYEE agrees to cooperate with
COMPANY in any litigation or administrative proceedings involving any matters
with which EMPLOYEE was involved during his employment by COMPANY. COMPANY shall
reimburse EMPLOYEE for reasonable expenses incurred in providing such
assistance.
11. Covenant Against Competition.
a. Scope and Term. During the Term of this Agreement and for
an additional period ending one (1) year after the effective date of termination
or expiration of this Agreement, whichever occurs first, EMPLOYEE shall not
directly or indirectly engage in or become a partner, officer, principal,
EMPLOYEE, consultant, investor, creditor or stockholder of any business,
proprietorship, association, firm, corporation or any other business entity
which is engaged or proposes to engage or hereafter engages in any business
which competes with the business of COMPANY and/or any of COMPANY's subsidiaries
or affiliates in any geographic area in which COMPANY conducts business at the
time of the termination or expiration of the employment relationship.
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b. Option to Extend Term of Covenant. Upon thirty (30) days'
written notice to EMPLOYEE given prior to the expiration of the term of the
Covenant Against Competition specified in Section 11(a) above, COMPANY shall
have the option to extend said term for a period of up to one (1) additional
year upon payment of the following consideration to EMPLOYEE:
(1) If EMPLOYEE is terminated without cause or this
Agreement expires without renewal, the sum of EMPLOYEE's annual salary at the
time of termination without cause or the Agreement expires with renewal; or
(2) If EMPLOYEE terminates this Agreement or is
terminated by COMPANY for Cause, the sum of fifty percent (50%) of EMPLOYEE's
annual salary at the time of termination with cause.
12. Rights to Inventions.
a. Inventions Defined. "Inventions" means discoveries,
concepts, and ideas, whether patentable or not, relating to any present or
contemplated activity of COMPANY, including without limitation devices,
processes, methods, formulae, techniques, and any improvements to the foregoing.
b. Application. This Section 12 shall apply to all Inventions
made or conceived by EMPLOYEE, whether or not during the hours of his employment
or with the use of COMPANY facilities, materials, or personnel, either solely or
jointly with others, during the Term of his employment by COMPANY and for a
period of one (1) year after any termination of such employment. This Section 12
does not apply to any invention disclosed in writing to COMPANY by EMPLOYEE
prior to the execution of this Agreement.
c. Assignment. EMPLOYEE hereby assigns and agrees to assign to
COMPANY all of his rights to Inventions and to all proprietary rights therein,
based thereon or related thereto, including without limitation applications for
United States and foreign letters patent and resulting letters patent.
d. Reports. EMPLOYEE shall inform COMPANY promptly and fully
of each Invention by a written report, setting forth in detail the structures,
procedures, and methodology employed and the results achieved ("Notice of
Invention"). A report shall also be submitted by EMPLOYEE upon completion of any
study or research project undertaken on COMPANY's behalf, whether or not in
EMPLOYEE's opinion a given study or project has resulted in an Invention.
e. Patents. At COMPANY's request and expense, EMPLOYEE shall
execute such documents and provide such assistance as may be deemed necessary by
COMPANY to apply for, defend or enforce any United States and foreign letters
patent based on or related to such Inventions.
13. Remedies. Notwithstanding any other provision in this Agreement
to the contrary, EMPLOYEE acknowledges and agrees that if EMPLOYEE commits a
material breach of the Covenant of Confidentiality (Section 7), Covenant of
Non-Disclosure (Section 8), Covenant of Non-Solicitation (Section 9), Covenant
of Cooperation (Section 10), Covenant Against Competition (Section 11), or
Rights to Inventions (Section 12), COMPANY shall have the right to have the
obligations of EMPLOYEE specifically enforced by any court having jurisdiction
on the grounds that any such breach will cause irreparable injury to COMPANY and
money damages will not provide an adequate remedy. Such equitable remedies shall
be in addition to any other remedies at law or equity, all of which remedies
shall be cumulative and not exclusive. EMPLOYEE further acknowledges and agrees
that the obligations contained in Sections 7 through 12, of this Agreement are
fair, do not unreasonably restrict EMPLOYEE's future employment and business
opportunities, and are commensurate with the compensation arrangements set out
in this Agreement.
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14. Survivability. Sections 7 through 13, of this Agreement shall
survive termination of the employment relationship and this Agreement.
15. General Provisions.
a. Arbitration. Any controversy involving the construction,
application, enforceability or breach of any of the terms, provisions, or
conditions of this Agreement, including without limitation, claims for breach of
contract, violation of public policy, breach of implied covenant, intentional
infliction of emotional distress or any other alleged claims which are not
settled by mutual agreement of the parties, shall be submitted to final and
binding arbitration in accordance with the rules of the American Arbitration
Association in Las Vegas, Nevada. The cost of arbitration shall be borne by the
losing party. In consideration of each party's agreement to submit to
arbitration any and all disputes that arise under this Agreement, each party
agrees that the arbitration provisions of this Agreement shall constitute
his/its exclusive remedy and each party expressly waives the right to pursue
redress of any kind in any other forum. The parties further agree that the
arbitrator acting hereunder shall not be empowered to add to, subtract from,
delete or in any other way modify the terms of this Agreement. Notwithstanding
the foregoing, any party shall have the limited right to seek equitable relief
in the form of a temporary restraining order or preliminary injunction in a
court of competent jurisdiction to protect itself from actual or threatened
irreparable injury resulting from an alleged breach of this Agreement pending a
final decision in arbitration.
b. Authorization. COMPANY and EMPLOYEE each represent and
warrant to the other that he/it has the authority, power and right to deliver,
execute and fully perform the terms of this Agreement.
c. Entire Agreement. EMPLOYEE understands and acknowledges
that this document constitutes the entire agreement between EMPLOYEE and COMPANY
with regard to EMPLOYEE's employment by COMPANY and EMPLOYEE's post-employment
activities concerning COMPANY. This Agreement supersedes any and all other
written and oral agreements between the parties with respect to the subject
matter hereof. Any and all prior agreements, promises, negotiations, or
representations, either written or oral, relating to the subject matter of this
Agreement not expressly set forth in this Agreement are of no force and effect.
This Agreement may be altered, amended, or modified only in writing signed by
all of the parties hereto. Any oral representations or modifications concerning
this instrument shall be of no force and effect.
d. Severability. If any term, provision, covenant, or
condition of this Agreement is held by a court or other tribunal of competent
jurisdiction to be invalid, void, or unenforceable, the remainder of such
provisions and all of the remaining provisions hereof shall remain in full force
and effect to the fullest extent permitted by law and shall in no way be
affected, impaired, or invalidated as a result of such decision.
e. Governing Law. Except to the extent that federal law may
preempt Nevada law, this Agreement and the rights and obligations hereunder
shall be governed, construed and enforced in accordance with the laws of the
State of Nevada.
f. Taxes. All compensation payable hereunder is gross and
shall be subject to such withholding taxes and other taxes as may be provided by
law. EMPLOYEE shall be responsible for the payment of all taxes attributable to
the compensation provided by this Agreement except for those taxes required by
law to be paid or withheld by COMPANY.
g. Assignment. This Agreement shall be binding upon and inure
to the benefit of the successors and assigns of COMPANY. EMPLOYEE may not sell,
transfer, assign, or pledge any of his rights or interests pursuant to this
Agreement.
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h. Waiver. Either party's failure to enforce any provision or
provisions of this Agreement shall not in any way be construed as a waiver of
any such provision or provisions, or prevent that party thereafter from
enforcing such provision or provisions and each and every other provision of
this Agreement.
i. Captions. Titles and headings to sections in this Agreement
are for the purpose of reference only and shall in no way limit, define, or
otherwise affect any provisions contained therein.
j. Breach - Right to Cure. A party shall be deemed in breach
of this Agreement only upon the failure to perform any obligation under this
Agreement after receipt of written notice of breach and failure to cure such
breach within ten (10) days thereafter; provided, however, such notice shall not
be required where a breach or threatened breach would cause irreparable harm to
the other party and such other party may immediately seek equitable relief in a
court of competent jurisdiction to enjoin such breach.
16. Acknowledgement. EMPLOYEE acknowledges that he has been given a
reasonable period of time to study this Agreement before signing it. EMPLOYEE
certifies that he has fully read, has received an explanation of, and completely
understands the terms, nature, and effect of this Agreement. EMPLOYEE further
acknowledges that he is executing this Agreement freely, knowingly, and
voluntarily and that EMPLOYEE's execution of this Agreement is not the result of
any fraud, duress, mistake, or undue influence whatsoever. In executing this
Agreement, EMPLOYEE does not rely on any inducements, promises, or
representations by COMPANY other than the terms and conditions of this
Agreement.
17. Effective Only Upon Execution by Authorized Officer of COMPANY.
This Agreement shall have no force or effect and shall be unenforceable in its
entirety until it is executed by a duly authorized officer of COMPANY and such
executed Agreement is delivered to EMPLOYEE.
IN WITNESS WHEREOF, the parties hereto have read, understood, and
voluntarily executed this Agreement as of the day and year first above written.
EMPLOYEE COMPANY
/s/ Xxxxx X. Xxxxxx By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------- -----------------------------------
Xxxxx X. Xxxxxx Xxxxxxx X. Xxxxxx
President
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EXHIBIT A
STOCK OPTION GRANT
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GAMING & ENTERTAINMENT GROUP, INC. 2004
STOCK OPTION AND INCENTIVE PLAN
OPTION GRANT
Optionee: Date of Grant:
Grant No: Exercise Price: $
Type of Option: Incentive Option(1) Number of Shares: ___________
Term of Option: Commencing on the Date of Grant and expiring on the tenth
anniversary date of this option grant(2)
Subject to the terms, conditions and restrictions of the 2004 Stock Option
and Incentive Plan (the "Plan") and this Option Grant, Gaming & Entertainment
Group, Inc. (the "Company") hereby grants an option (the "Option") to purchase
the above-referenced number of shares of common stock, $.01 par value ("Common
Stock"), of the Company exercisable at the exercise price stated above.
Capitalized terms used and not otherwise defined herein shall have the meanings
assigned to them in the Plan.
The Option granted hereunder shall be exercisable only to the extent it
has vested. Each installment of the Option shall vest on the vesting date(s) set
forth below so long as Optionee continues to have an uninterrupted Relationship
with the Company or a Subsidiary up to, and including, each such respective
scheduled vesting date. Optionee will only have the right to exercise any vested
portion(s) of the Option. If Optionee ceases to have a Relationship with the
Company or a Subsidiary up to, and including, the date upon which all or any
installment of the option vest(s), the Optionee shall have no right, nor be
entitled, to exercise the unvested portion of the Option. The vesting schedule
for the Option under this Option Grant is as follows:
The Option shall not be assigned, pledged, sold, encumbered, transferred
or otherwise disposed of by Optionee, either voluntarily or by operation of law,
other than by will or the laws of descent and distribution, and during the
lifetime of Optionee the Option shall be exercisable only by such Optionee. Any
attempted assignment, pledge, sale, encumbrance, transfer or other disposition
of the Option, other than in accordance with the terms set forth herein, shall
be null and void, and of no effect.
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(1) In order to qualify as an Incentive Option, numerous conditions must be
met, including the approval of the Plan by the stockholders of the Company
within twelve months after the date of adoption of the Plan by the Board.
Neither the Committee, the Board nor the Company shall have any liability
if the Option does not qualify as an Incentive Option. Any portion of the
Option that does not qualify as an Incentive Option shall be deemed to be
a Nonstatutory Option.
(2) The Option shall terminate in accordance with the Plan.
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NOTE: A COPY OF THE PLAN IS ATTACHED. THE PLAN DETAILS THE TERMS, CONDITIONS AND
RESTRICTIONS OF THE OPTION AND THE UNDERLYING SHARES OF COMMON STOCK, AND SHOULD
BE CAREFULLY READ IN ITS ENTIRETY. IN ADDITION, THIS OPTION GRANT MAY CONTAIN
ADDITIONAL TERMS, CONDITIONS AND RESTRICTIONS OF THE OPTION AND THE UNDERLYING
SHARES OF COMMON STOCK. IF THERE IS ANY QUESTION, AMBIGUITY OR CONTRADICTION IN
THIS OPTION GRANT, THE LANGUAGE OF THE PLAN SHALL GOVERN.
IN WITNESS WHEREOF, the undersigned executes this Option Grant as of the
date first set forth above:
GAMING & ENTERTAINMENT GROUP, INC.,
A NEVADA CORPORATION
By:
-------------------------------------
Xxxxxxx X. Xxxxxx
President
ACCEPTED AND AGREE TO AS OF THE DATE OF GRANT:
Signature: Passport or Other
Government Issued
Identification Number:
-------------------------------- ----------------------
Residence Address:
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(street address) (city, state, zip code)
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