CROSS/Z INTERNATIONAL, INC.
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is made and entered into
effective as of May 1, 1997 (the "Effective Date"), by and between Xxxxxx Xxxx
(the "Executive") and Cross/Z International, Inc., a California company (the
"Company").
R E C I T A L S
The Company and the Executive desire to enter into this Agreement in
order to provide additional financial security and benefits to the Executive, to
encourage the Executive to continue employment with the Company and to enhance
the motivation and incentive of the Executive to increase the profitability of
the Company.
In consideration of the mutual covenants herein contained, and in
consideration of the continuing employment of Executive with the Company, the
parties agree as follows:
1. DUTIES AND SCOPE OF EMPLOYMENT.
(a) POSITION. The Company shall employ the Executive in
the position of VICE PRESIDENT OF FINANCE AND ADMINISTRATION, with such duties,
responsibilities and compensation as in effect as of the Effective Date;
provided, however, that the Board of Directors of the Company (the "Board")
shall have the right to revise such responsibilities and compensation from time
to time as the Board may deem necessary or appropriate. Such duties and
responsibilities shall be commensurate with the Executive's past practices and
consistent with his position as Vice President of Finance and Administration of
the Company. If any such revision constitutes "Involuntary Termination" as
defined in Section 7(d) of this Agreement, the Executive shall be entitled to
benefits upon such Involuntary Termination as provided under this Agreement.
(b) OBLIGATIONS. The Executive shall devote his full
business efforts and time to the Company and its subsidiaries. The foregoing,
however, shall not preclude the Executive from engaging in such activities and
services as do not interfere or conflict with his responsibilities to the
Company.
2. TERMINATION. This Agreement shall continue in force and effect
until the earliest of: (i) April 30, 1999 or (ii) until such time as notice of
non-renewal or termination of this Agreement is given in writing by either the
Company or the Executive to the other (the "Termination Event"). The Company and
the Executive agree to meet to negotiate in good faith the renewal of this
Agreement two (2) months prior to the Termination Event. This Agreement may be
extended for an additional period or periods by mutual written agreement of the
Company and the Executive. A termination of the terms of this Agreement pursuant
to the preceding sentence shall be effective for all purposes, except that such
termination shall not affect the payment or provision of compensation or
benefits on account of a termination of employment occurring prior to the
termination of the terms
of this Agreement, nor affect Executive's right to twelve (12) months of Base
Compensation as severance pay after the termination.
3. COMPENSATION AND BENEFITS.
(a) BASE COMPENSATION. The Company shall pay the
Executive as compensation for services a base salary at the annualized rate of
$125,000. Such salary shall be reviewed at least annually and may be increased
from time to time. Such salary shall be paid periodically in accordance with
normal Company payroll practice. The annual compensation specified in this
Section, as adjusted from time to time, before any salary reduction under
Section 401(k) of the Internal Revenue Code, deferred compensation plan or
agreement or any other benefit or plan requiring reduction of salary, is
referred to in this Agreement as "Base Compensation."
(b) BONUS. The Executive shall be entitled to an annual
bonus of not less than $10,000, based on the successful completion of certain
objectives designated by the Board and the President of the Company.
(c) VACATION. The Executive shall be entitled to three
(3) weeks of paid vacation per year (four (4) weeks effective July 1, 1997) or
such additional vacation as may be permitted from time to time by Company
policy.
(d) EXECUTIVE BENEFITS. The Executive shall be eligible
to participate in the employee benefit plans and executive compensation programs
maintained by the Company of general applicability to other key executives of
the Company, including (without limitation) retirement plans, savings or
profit-sharing plans, deferred compensation plans, supplemental retirement or
excess-benefit plans, stock option, incentive or other bonus plans, life,
disability, health, accident and other insurance programs, paid vacations, and
similar plans or programs, subject in each case to the generally applicable
terms and conditions of the plan or program in question and to the determination
of the Board or any committee administering such plan or program. Participation
shall be consistent with the Executive's position as Vice President of Finance
and Administration of the Company. The Company shall reimburse the Executive for
all reasonable business and travel expenses actually incurred or paid by the
Executive in the performance of services on behalf of the Company, in accordance
with the Company's expense reimbursement policy as in effect from time to time.
4. SEVERANCE BENEFITS.
(a) TERMINATION OF EMPLOYMENT DURING TERM OF AGREEMENT.
If the Executive's employment with the Company terminates during the term of
this Agreement, then the Executive shall be entitled to receive severance
benefits as follows:
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(i) INVOLUNTARY TERMINATION. If, at any time
during the term of this Agreement, the Executive's employment terminates as a
result of Involuntary Termination other than for Cause, Disability or death, or
the Company breaches any of the material terms of this Agreement (either of the
foregoing, an "Event"), the Company shall pay the Executive severance in the
amount of one-twelfth (1/12) of the Base Compensation of the Executive at the
time of such termination (without giving effect to any reduction in Base
Compensation that resulted in such Involuntary Termination) per month, for a
period of twelve (12) months.
(ii) VOLUNTARY RESIGNATION; TERMINATION FOR
CAUSE. If the Executive's employment terminates by reason of the Executive's
voluntary resignation (and is not an Involuntary Termination), or if the
Executive is terminated for Cause, then the Executive shall not be entitled to
receive severance or other benefits except for those (if any) as may then be
established (and applicable) under the Company's then-existing severance and
benefits plans and policies at the time of such termination.
(iii) DISABILITY; DEATH. If the Company
terminates the Executive's employment as a result of the Executive's Disability,
or such Executive's employment is terminated due to the death of the Executive,
then the Executive shall not be entitled to receive severance or other benefits
except (i) those (if any) as may then be established (and applicable) under the
Company's then-existing severance and other benefits plans and policies at the
time of such Disability or death, (ii) benefits required by applicable laws, and
(iii) in the case of death, the Executive's salary for thirteen (13) weeks
payable to the Executive's surviving spouse, or if the Executive has no spouse,
to the Executive's estate. In the event of termination as a result of Disability
under this Agreement, the Executive shall be entitled to the benefits provided
under the Company's then-existing disability or extended sick pay plan, for so
long as such Executive continues to be disabled under this Agreement or benefits
otherwise terminate under such plan, whether or not the Executive is deemed to
be disabled under such plan.
(b) CONTINUING BENEFITS. In the event the Executive is
entitled to severance benefits pursuant to subsection 4(a)(i), then in addition
to such severance benefits, the Executive shall receive Company-paid health,
dental, vision, disability and life insurance coverage as provided to such
Executive immediately prior to the Executive's termination, upon the terms and
conditions, including deductibles and co-payments, provided in the Company's
then-existing plans, policies and programs, for a period of twelve (12) months.
(c) ACCRUED SALARY, BENEFITS AND EXPENSES. In addition,
(i) the Company shall pay the Executive any unpaid base salary for periods prior
to the Termination Date; (ii) the Company shall pay the Executive all of the
Executive's accrued and unused vacation through the Termination Date; and (iii)
following submission of proper expense reports by the Executive, the Company
shall reimburse the Executive for all expenses reasonably and necessarily
incurred by the Executive in connection with the business of the Company prior
to termination. These payments shall be made promptly upon termination and
within the period of time mandated by law.
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(d) RETIREMENT PLANS. In addition to any other
retirement rights to which the Executive may be legally entitled by contract or
pursuant to any plan or program, the Company shall pay the Executive regularly
scheduled payments which shall commence on Executive's normal retirement age or
earlier if Executive elects early retirement and shall be payable in accordance
with the Company's then-existing retirement plan, if any, determined as though
the Executive continued his employment with the Company for an additional twelve
(12) months following the Termination Date or until Executive has attained
normal retirement age under such Plan, whichever occurs earlier. For purposes of
determining the amount the Executive is to receive the Company shall utilize the
greater of the Executive's compensation as defined under any such retirement
plan in effect on the date of this Agreement for the year including the
Termination Date.
(e) OPTIONS. In the event the Executive is entitled to
severance benefits pursuant to subsection 4(a)(i), the Executive's stock options
and other exercise rights shall remain exercisable in accordance with the
provisions of the Stock Option Plan.
(f) VESTING OF BENEFITS. If the Executive's employment
terminates as a result of Involuntary Termination other than Cause, Disability,
or death within twelve (12) months of a Change-of-Control or, prior thereto, if
resulting from a Change-of-Control, then any unvested benefits on the date of
termination, including stock options, restricted stock, stock appreciation
rights, growth units, or other incentive compensation, shall immediately
accelerate and one hundred percent (100%) of such unvested benefits shall become
fully vested and exercisable. The Executive shall thereupon have fully vested
rights to such benefits in accordance with the terms of the applicable plan or
agreement.
(g) DEFERRED COMPENSATION. Any compensation deferred by
the Executive shall be subject to the terms and conditions of any applicable
plan or agreement, and shall not be affected or altered by this Agreement.
5. LIMITATION ON PAYMENTS. In the event that any payment or benefit
received or to be received by the Executive pursuant to this Agreement or
otherwise (collectively the "Payments") would be subject to the Excise Tax
imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the
"Code"), or any similar or successor provision (the "Excise Tax"), the Company
shall pay to the Executive within ninety (90) days of the Termination Date (or,
if earlier, within ninety (90) days of the date the Executive becomes subject to
the Excise Tax), an additional amount (the "Gross-Up Payment") such that the net
amount retained by the Executive, after deduction of any Excise Tax and any
federal (and state and local) income tax on the Payments, shall be equal to the
Payments minus all applicable taxes on the Payments. For purposes of determining
whether any of the Payments will be subject to the Excise Tax and the amount of
Excise Tax, (i) any other payments or benefits received or to be received in
connection with a Change of Control of the Company or the Executive's
termination of employment (whether pursuant to the terms of this Agreement or
any other plan, arrangement or agreement with the Company), shall be treated as
"parachute payments" within the meaning of Section 280G(b)(2) of the Code or any
similar or successor provision, and all "excess parachute payments" within
meaning of Section 280G(b)(1) or any similar or successor provision shall be
treated as subject to the Excise Tax, unless in the opinion of tax counsel
selected by the Company such other payments or benefits (in whole or in part) do
not constitute parachute payments, or such excess parachute payments (in whole
or in part) represent reasonable compensation for services within the meaning of
Section 280G(b) or any similar or successor
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provision of the Code in excess of the base amount within the meaning of Section
280G(b)(3) or any similar or successor provision of the Code, or are otherwise
not subject to Excise Tax; (ii) the amount of the Payments which shall be
treated as subject to the Excise Tax shall be equal to the lesser of (A) the
total amount of the Payments or (B) the amount of the excess parachute payments
within the meaning of Section 280G(b)(1) (after applying clause (i) above), and
(iii) the value of any non-cash benefits or an deferred payment or benefit shall
be determined by the Company's independent auditors in accordance with the
principles of Section 280G(d)(3) and (4) of the Code. For purposes of
determining the amount of the Gross-Up Payment, the Executive shall be deemed to
pay federal income taxes at the highest nominal marginal rate of federal income
taxation in the calendar year in which the Gross-Up Payment is to be made and
state and local income taxes at the highest nominal marginal rate of taxation in
the state and locality of the Executive's residence on the Termination Date, net
of the maximum reduction in federal income taxes which could be obtained from
deducting of such state and local taxes. In the event that the Excise Tax is
subsequently determined to be less than the amount taken into account hereunder
at the time of termination of the Executive's employment, the Executive shall
repay to the Company at the time that the amount of such reduction in Excise Tax
is finally determined the portion of the Gross-Up Payment attributable to such
reduction (plus the portion of the Gross-Up Payment attributable to the Excise
Tax and federal (and state and local) income tax imposed on the Gross-Up Payment
being repaid by the Executive if such repayment results in a reduction in Excise
Tax and/or a federal (and state and local) income tax deduction) plus interest
on the amount of such repayment at the rate provided in Section 1274(b)(2)(B) of
the Code. In the event that the Excise Tax is determined to exceed the amount
taken into account hereunder at the time of the termination of the Executive's
employment (including by reason of a payment the existence or amount of which
cannot be determined at the time of the Gross-Up Payment), the Company shall
make an additional Gross-Up Payment in respect of such excess (plus any interest
payable with respect to such excess) at the time that the amount of such excess
is finally determined.
6. NONCOMPETE.
(a) If the Executive's employment terminates by reason
of voluntary resignation under Section 4, (a), (ii) only above, then the
Executive agrees not to work directly in the data warehousing, data mining and
business intelligence areas, or any technologies that the Executive is directly
engaged in with the Company for one year following the termination date.
(b) The Executive agrees that during his employment with
the Company, he shall not engage in, own, manage or control, or participate in
the ownership, management or control, directly or indirectly, of any person,
firm, corporation or other entity engaged in the design, development, provision,
sales or marketing of any product for the creation, compression, storage,
retreival or
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analysis of relational databases ("Restricted Business") anywhere in the world
(the "Restricted Area"). Notwithstanding the foregoing, the Executive may
acquire shares representing not more than 5% of the outstanding securities of
any publicly traded company engaged in the Restricted Business. The convenant
contained in this Section 6 shall be construed as a series of separate covenant,
one for each country in the world and each province or state within such
country. If, in any judicial proceeding, a court shall refuse to enforce any of
such separate covenants, such unenforceable covenant shall be deemed deleted
from this Agreement to the extent necessary to permit the remaining separate
covenants included in this Section 6 to be enforced.
7. DEFINITION OF TERMS. The following terms referred to in
this Agreement shall have the following meanings:
(a) CAUSE. "Cause" shall mean:
(i) Executive's failure to begin to
substantially perform his duties or responsibilities hereunder for a period of
fifteen (15) days after written notice thereof from the Board to Executive
setting forth in reasonable detail the respects in which the Company believes
Executive has not substantially performed his duties or responsibilities
hereunder or continued failure to begin to substantially perform such duties or
responsibilities for a period of thirty (30) days after such written notice;
(ii) Executive personally engaging in
knowing and intentional illegal conduct which is seriously injurious to the
Company or its affiliates;
(iii) Executive being convicted of a felony,
or committing an act of dishonesty or fraud against, or the misappropriation of
property belonging to, the Company or its affiliates;
(iv) Executive knowingly and intentionally
breaching in any material respect the terms of the confidentiality agreement or
invention or proprietary information agreement with the Company;
(v) Executive's commencement of employment
with another employer while he is an employee of the Company, without the
Company's written consent; or
(vi) any material breach by Executive of any
material provision of this Agreement for which a cure is not initiated within
fifteen (15) days of notice thereof from the Board to Executive or which remains
uncured for thirty (30) days following such notice.
(b) CHANGE OF CONTROL. "Change of Control" shall mean
the occurrence of any of the following events:
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(i) Any "person" or "group" (as such term is
used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended) is or becomes the "beneficial owner" (as defined in Rule 13d-3 under
said Act), directly or indirectly, of securities of the Company representing 50%
or more of the total voting power represented by the Company's then outstanding
voting securities; or
(ii) A change in the composition of the
Board of the Company occurring within a two-year period, as a result of which
fewer than a majority of the directors are Incumbent Directors. "Incumbent
Directors" shall mean directors who either (A) are directors of the Company as
of June 1, 1997, or (B) are elected, or nominated for election, to the Board of
the Company with the affirmative votes of at least a majority of the Incumbent
Directors at the time of such election or nomination (but shall not include an
individual whose election or nomination is in connection with an actual or
threatened proxy contest relating to the election of directors to the Company);
or
(iii) The shareholders of the Company
approve a merger or consolidation of the Company with any other corporation,
other than a merger or consolidation which would result in the voting securities
of the Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting securities of
the surviving entity) more than fifty percent (50%) of the total voting power
represented by the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation, or the shareholders
of the Company approve a plan of complete liquidation of the Company or an
agreement for the sale or disposition by the Company of all or substantially all
the Company's assets (other than to a subsidiary or subsidiaries).
(c) DISABILITY. "Disability" shall mean that the
Executive has been unable to perform his duties under this Agreement for a
period of three or more consecutive months due to illness, accident or other
physical or mental incapacity.
(d) INVOLUNTARY TERMINATION. "Involuntary Termination"
shall include, but not be limited to,
(i) the continued assignment to Executive of
any duties or the continued material reduction of Executive's duties, either of
which is substantially inconsistent with the level of Executive's position with
the Company, for a period of thirty (30) days after notice thereof from
Executive to the Board of Directors setting forth in reasonable detail the
respects in which Executive believes such assignments or duties are
substantially inconsistent with the level of Executive's position;
(ii) a reduction in Executive's salary;
(iii) a reduction by the Company in the kind
or level of employee benefits (other than salary and bonus) to which Executive
is entitled immediately prior to such reduction with
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the result that Executive's overall benefits package (other than salary and
bonus) is materially reduced (other than any such reduction applicable to
officers of the Company generally);
(iv) any purported termination of the
Executive's employment by the Company other than for Cause or as a result of the
Executive's Disability;
(v) the failure of the Company to obtain the
assumption of this Agreement by any successors contemplated in Section 9 below;
or
(vi) any material breach by the Company of
any material provision of this Agreement which continues uncured for thirty (30)
days following notice thereof; provided that none of the foregoing shall
constitute Involuntary Termination to the extent Executive has agreed thereto.
(e) TERMINATION DATE. "Termination Date" shall mean (i)
if the Executive's employment is terminated by the Company for Disability,
thirty (30) days after notice of termination is given to the Executive (provided
that the Executive shall not have returned to the performance of the Executive's
duties on a full-time basis during such thirty (30) day period), (ii) if the
Executive's employment is terminated by the Company for any other reason, 30
days from the date on which a notice of termination is given, or (iii) if the
Agreement is terminated by the Executive, 30 days from the date on which the
Executive delivers the notice of termination to the Company.
8. SUCCESSORS.
(a) COMPANY'S SUCCESSORS. Any successor to the Company
(whether direct or indirect and whether by purchase, lease, merger,
consolidation, liquidation or otherwise) to all or substantially all of the
Company's business and/or assets shall assume the obligations under this
Agreement and agree expressly to perform the obligations under this Agreement in
the same manner and to the same extent as the Company would be required to
perform such obligations in the absence of a succession. For all purposes under
this Agreement, the term "Company" shall include any successor to the Company's
business and/or assets which executes and delivers the assumption agreement
described in this subsection (a) or which becomes bound by the terms of this
Agreement by operation of law.
(b) EXECUTIVE'S SUCCESSORS. The terms of this Agreement
and all rights of the Executive hereunder shall inure to the benefit of, and be
enforceable by, the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees.
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9. NOTICE.
(a) GENERAL. Notices and all other communications
contemplated by this Agreement shall be in writing and shall be deemed to have
been duly given when personally delivered or when mailed by U.S. registered or
certified mail, return receipt requested and postage prepaid. In the case of the
Executive, mailed notices shall be addressed to him at the home address which he
most recently communicated to the Company in writing. In the case of the
Company, mailed notices shall be addressed to its corporate headquarters, and
all notices shall be directed to the attention of its Corporate Secretary.
(b) NOTICE OF TERMINATION. Any termination by the
Company for Cause or by the Executive as an Involuntary Termination shall be
communicated by a notice of termination to the other party hereto given in
accordance with this Agreement. Such notice shall indicate the specific
termination provision in this Agreement relied upon, shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination under the provision so indicated, and shall specify the termination
date (which shall be not more than 30 days after the giving of such notice). The
failure by the Executive to include in the notice any fact or circumstance which
contributes to a showing of Involuntary Termination shall not waive any right of
the Executive hereunder or preclude the Executive from asserting such fact or
circumstance in enforcing his rights hereunder.
10. CONFIDENTIALITY. Except as required by applicable laws, neither
party shall disclose the contents of this Agreement without first obtaining the
prior written consent of the other party, provided, however, that the Executive
may disclose this Agreement to his attorney, financial planner and tax advisor
if such persons agree to keep the terms hereof confidential.
11. MISCELLANEOUS PROVISIONS.
(a) VOLUNTARY EXECUTION; CONFLICT WAIVER. The Executive
has been advised to obtain independent legal counsel regarding this Agreement.
The Executive is signing this Agreement knowingly and voluntarily. The Company
and the Executive acknowledge that Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx has acted as
counsel to the Company in negotiating this Agreement and may continue to serve
as the Company's general counsel in the future, acknowledge that each has
received full disclosure of any potential conflict of interest which may result
from such representation, and knowingly and voluntarily waive any such conflict
of interest.
(b) WAIVER. No provision of this Agreement shall be
modified, waived or discharged unless the modification, waiver or discharge is
agreed to in writing and signed by the Executive and by an authorized officer of
the Company (other than the Executive). No waiver by either party of any breach
of, or of compliance with, any condition or provision of this Agreement by the
other party shall be considered a waiver of any other condition or provision or
of the same condition or provision at another time.
(c) WHOLE AGREEMENT; INTEGRATION. This Agreement and any
written agreements or other documents evidencing matters referred to herein and
any written Company existing plans that are referenced herein represent the
entire agreement and understanding between the parties as to
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the subject matter hereof. No waiver, alteration, or modification, if any, of
the provisions of this Agreement shall be binding unless in writing and signed
by duly authorized representatives of the parties hereto.
(d) CHOICE OF LAW. The validity, interpretation,
construction and performance of this Agreement shall be governed by the laws of
the State of New York. The parties hereto consent to the personal jurisdiction
of the state and federal courts of the County of Nassau, State of New York.
(e) SEVERABILITY. The invalidity or unenforceability of
any provision or provisions of this Agreement shall not affect the validity or
enforceability of any other provision hereof, which shall remain in full force
and effect.
(f) NO ASSIGNMENT OF BENEFITS. The rights of any person
to payments or benefits under this Agreement shall not be made subject to option
or assignment, either by voluntary or involuntary assignment or by operation of
law, including (without limitation) bankruptcy, garnishment, attachment or other
creditor's process, and any action in violation of this subsection (f) shall be
void.
(g) EMPLOYMENT TAXES. All payments made pursuant to this
Agreement will be subject to withholding of applicable income and employment
taxes.
(h) ASSIGNMENT BY COMPANY. The Company may assign its
rights under this Agreement to an affiliate, and an affiliate may assign its
rights under this Agreement to another affiliate of the Company or to the
Company; provided, however, that the Company shall remain jointly and severally
liable under this Agreement, and provided further, that no assignment shall be
made if the net worth of the assignee is less than the net worth of the Company
at the time of assignment. In the case of any such assignment, the term
"Company" when used in a section of this Agreement shall mean the corporation
that actually employs the Executive.
(i) COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together will constitute one and the same instrument.
(j) LEGAL FEES. In the event that the Executive is
required to enforce this Agreement or to procure the benefits hereunder through
arbitration or litigation, the Executive shall be entitled to reasonable legal
fees and all out-of-pocket expenses.
(k) INTEREST. In the event that the Company fails to
make any payment hereunder or afford any benefit when due, the Company shall pay
interest at the rate of the publicly-announced prime rate of interest of Bank of
America N.T. & S.A. or its successor in effect from time to time plus 3%, or the
maximum amount permitted by law, whichever is less.
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IN WITNESS WHEREOF, each of the parties has executed this Agreement,
in the case of the Company by its duly authorized officer, as of the day and
year first above written.
"COMPANY" CROSS/Z INTERNATIONAL, INC.
/s/ Xxxx Xxxxxxxxxxxxxx
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Xxxx Xxxxxxxxxxxxxx, President
"EXECUTIVE" XXXXXX X. XXXX
/s/ XXXXXX X. XXXX
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