EMPLOYMENT AGREEMENT
THIS AGREEMENT is made and entered into as of April 29, 1998, by and
between Alliance Imaging, Inc., a Delaware corporation (hereinafter called
the "Corporation"), and Xxxxxxx X. Xxxxxxxx, Xx. (hereinafter called the
"Executive").
WITNESSETH THAT:
The Corporation desires to employ the Executive as its General
Counsel ("GC"), and the Executive desires to accept such employment;
NOW, THEREFORE, the Corporation and the Executive, each intending to
be legally bound, hereby mutually covenant and agree as follows:
1. EMPLOYMENT AND TERM.
(a) Employment. The Corporation shall employ the Executive as the GC
of the Corporation, and the Executive shall so serve, for the term set forth
in Paragraph 1(b).
(b) Term. The term of the Executive's employment under this
Agreement shall commence on the date hereof (the "Effective Time") and shall
end on the second anniversary of the Effective Time, subject to the extension
of such term as hereinafter provided and subject to earlier termination as
provided in Paragraph 8. The expiration of the term of this Agreement shall
be extended automatically by an additional three months as of the last day of
each quarterly period following the Effective Time unless either party
desires to modify or terminate this Agreement and notifies the other party of
its desire to modify or terminate this Agreement at least 30 days prior to
any such quarterly renewal date. The period of employment as provided in this
Paragraph 1(b) is sometimes referred to herein as the "Term".
2. DUTIES.
During the Term, the Executive shall serve as GC of the Corporation
and have all powers and duties consistent with such position. The Executive
shall devote substantially his entire time during reasonable business hours
(reasonable sick leave and vacations excepted) and use diligent efforts to
fulfill faithfully, responsibly and to the best of his ability his duties
hereunder; PROVIDED, HOWEVER, that Executive may engage in and devote time to
other non-competitive activities to the extent that such time spent is
immaterial and does not interfere with Executive's obligations hereunder.
During the Term, Executive shall report to the Chairman and Chief Executive
Officer of the Corporation. Executive's duties shall be performed, initially,
principally at the Corporation's current offices located in Anaheim,
California, unless Executive otherwise agrees in writing. Notwithstanding,
the foregoing, Executive may be required to travel in the conduct of the
Corporation's business and to discharge his duties hereunder, provided that
the amount and nature of such travel is reasonably consistent with the amount
and
nature of travel engaged in by other senior executives of the Corporation
during the twelve-month period immediately preceding the date of this
Agreement.
3. SALARY.
The Corporation shall pay to the Executive as compensation for his
services a salary of $125,000 per year, payable in accordance with the
Corporation's payroll procedures. From time to time, the Board of Directors
of the Corporation or a committee thereof (the "Board") will review the
Executive's performance and compensation, and will consider adjustments
thereto.
4. ANNUAL BONUSES.
For each calendar year during the term of employment, the Executive
shall be eligible to receive a cash bonus based on the Corporation's
achievement of certain operating and/or financial or other goals established
by the Board in its sole discretion, with an annual target bonus amount
(based on the Corporation's achievement of a reasonable operating budget to
be approved by the Board) equal to 30% (the "Target Bonus") of the
Executive's then current annual base salary. The bonus plan shall be adopted
and administered by the Compensation Committee of the Board.
5. EQUITY INCENTIVE COMPENSATION.
During the term of employment hereunder the Executive shall be
eligible to participate in the Corporation's Stock Option Plan in effect as
of the date hereof.
6. OTHER BENEFITS.
In addition to the compensation described in Paragraphs 3 through 5,
above, the Executive shall also be entitled to the following:
(a) Expense Reimbursement. Executive will be reimbursed all
reasonable, ordinary and necessary business expenses, including expenses for
entertainment, travel and similar items that are approved by the Corporation
in accordance with its regular policy(ies) for business expense
reimbursement. The Corporation will reimburse Executive for all expenses upon
a presentation by Executive of itemized accounts of such expenditures in
accordance and in the manner and on a form reasonably prescribed by the
Corporation.
(b) Car Allowance. The Corporation shall pay to the Executive, on
the first day of each month during the term of employment, a monthly
automobile allowance (the "Automobile Allowance") of not less than $400, to
help defray the costs associated with Executive's acquisition or maintenance
(by lease or otherwise) of an automobile and the related insurance and
maintenance therefor.
(c) Vacation. The Executive shall be entitled to all legal holidays,
and three weeks paid vacation per annum, in accordance with the Corporation's
policies.
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(d) Insurance and Benefits. The Executive and his "dependents," to
the extent eligible thereunder, shall be entitled to participate in all
employee and executive benefit plans, programs and policies currently
available to other Corporation employees of comparable status, title and
experience, as well as any plans, programs and policies adopted by the
Corporation during the Term of this Agreement.
(e) Participation in Other Benefit Plans. In addition to the
foregoing, the Executive shall be entitled to participate in all of the other
various retirement, welfare, fringe benefit, executive perquisite, and
expense reimbursement plans, programs and arrangements of the Corporation to
the same extent that employees generally of the Corporation are eligible for
participation under the terms of such plans, programs and arrangements.
7. CONFIDENTIALITY.
In view of the fact that Executive's work as an executive of the
Corporation will bring Executive into close contact with many confidential
affairs of the Corporation, including matters of a business nature, such as
information about customers (including pricing information), costs, profits,
markets, sales, strategic plans for future development and any other
information not readily available to the public, Executive hereby agrees:
(a) To keep secret all confidential matters of the Corporation
(including without limitation such matters which the Corporation notifies
Executive are confidential) learned prior to the date of this Agreement and
in the course of Executive's employment hereunder, and not to disclose them
to anyone outside of the Corporation, either during or after Executive's
employment with the Corporation, or both, until such time as the Corporation
gives its written consent to such disclosure;
(b) To deliver promptly to the Corporation on termination of
Executive's employment by the Corporation or at any other time the
Corporation may so request, all memoranda, notes, records, reports and other
documents (and all copies thereof) relating to the Corporation's business
which Executive may then possess or have under Executive's control; and
(c) That violation of this Paragraph 7 would cause the Corporation
irreparable damage for which the Corporation cannot be reasonably compensated
in damages in an action at law, and therefore in the event of any breach or
threatened breach by Executive of this Paragraph 7, the Corporation shall be
entitled to make application to a court of competent jurisdiction for
equitable relief by way of injunction or otherwise (without being required to
post a bond). This provision shall not, however, be construed as a waiver of
any of the rights which the Corporation may have for damages under this
Agreement or otherwise, and all of the Corporation's rights and remedies
shall be unrestricted and cumulative.
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8. TERMINATION.
Unless earlier terminated in accordance with the following
provisions of this Paragraph 8, the Corporation shall continue to employ the
Executive and the Executive shall remain employed by the Corporation during
the entire Term. Paragraph 9 hereof sets forth certain obligations of the
Corporation in the event that the Executive's employment hereunder is
terminated. Certain capitalized terms used in this Xxxxxxxxx 0, Xxxxxxxxx 9
and Paragraph 10 hereof are defined in Paragraph 8(d), below.
(a) Death or Disability. Except to the extent otherwise provided in
Paragraph 9 with respect to certain post-Date of Termination payment
obligations of the Corporation, this Agreement shall terminate immediately as
of the Date of Termination in the event of the Executive's death or in the
event that the Executive becomes disabled. The Executive will be deemed to be
disabled upon the earlier of (i) the end of a six (6)-consecutive month
period during which, by reason of physical or mental injury or disease, the
Executive has been unable to perform substantially all of his usual and
customary duties under this Agreement or (ii) the date that a reputable
physician selected by the Board, and as to whom the Executive has no
reasonable objection, determines in writing that the Executive will, by
reason of physical or mental injury or disease, be unable to perform
substantially all of the Executive's usual and customary duties under this
Agreement for a period of at least six (6) consecutive months. If any
question arises as to whether the Executive is disabled, upon reasonable
request therefor by the Board, the Executive shall submit to reasonable
medical examination for the purpose of determining the existence, nature and
extent of any such disability. In accordance with Paragraph 14, the Board
shall promptly give the Executive written notice of any such determination of
the Executive's disability and of any decision of the Board to terminate the
Executive's employment by reason thereof.
(b) Discharge for Cause. In accordance with the procedures
hereinafter set forth, the Board may discharge the Executive from his
employment hereunder for Cause. Except to the extent otherwise provided in
Paragraph 9 with respect to certain post-Date of Termination obligations of
the Corporation, this Agreement shall terminate immediately as of the Date of
Termination in the event the Executive is discharged for Cause. Any discharge
of the Executive for Cause shall be communicated by a Notice of Termination
to the Executive given in accordance with Paragraph 14 of this Agreement. For
purposes of this Agreement, a "Notice of Termination" means a written notice
which (i) indicates the specific termination provision in this Agreement
relied upon and (ii) if the Date of Termination is to be other than the date
of receipt of such notice, specifies the termination date (which date shall
in all events be within fifteen (15) days after the giving of such notice).
In the case of a discharge of the Executive for Cause, the Notice of
Termination shall include a copy of a resolution duly adopted by the Board at
a meeting called and held for such purpose authorizing such action. No
purported termination of the Executive's employment for Cause shall be
effective without a Notice of Termination.
(c) Termination for Other Reasons. The Corporation may discharge the
Executive without Cause by giving written notice to the Executive in
accordance with Paragraph 14 at least thirty (30) days prior to the Date of
Termination. The Executive may resign from
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his employment by giving written notice to the Corporation in accordance with
Paragraph 14 at least thirty (30) days prior to the Date of Termination.
Except to the extent otherwise provided in Paragraph 9 with respect to
certain post-Date of Termination obligations of the Corporation, this
Agreement shall terminate immediately as of the Date of Termination in the
event the Executive is discharged without Cause or resigns.
(d) Definitions. For purposes of this Agreement, the following
capitalized terms shall have the meanings set forth below:
(i) "Accrued Obligations" shall mean, as of the Date of
Termination, the sum of (A) the Executive's base salary under
Paragraph 3 through the Date of Termination to the extent not
theretofore paid, (B) the amount of any bonus, incentive
compensation, deferred compensation and other cash
compensation accrued by the Executive as of the Date of
Termination to the extent not theretofore paid and (C) any
vacation pay, expense reimbursements and other cash
entitlements accrued by the Executive as of the Date of
Termination to the extent not theretofore paid. For the
purpose of this Paragraph 8(d)(i), the amount of bonus accrued
shall be equal to (A) the Average Bonus, multiplied by (B) a
fraction equal to the number of days in such year preceding
the Date of Termination divided by 365.
(ii) "Average Bonus" means (A) if a termination of employment of
the Executive occurs prior to January 1, 1999, the Target
Bonus of the Executive payable in respect of the calendar year
in which such termination occurs and (B) if a termination of
employment of the Executive occurs on or after January 1,
1999, the actual cash bonus earned by the Executive pursuant
to Section 4 for the calendar year completed immediately prior
to the time in question.
(iii) "Cause" means that any of the following has occurred with
respect to Executive: (A) Executive has committed a felony
(other than a motor vehicle moving violation); (B) Executive
has stolen funds or property from the Corporation or otherwise
engaged in fraudulent conduct against the Corporation; (C)
Executive has engaged in knowing and willful misconduct which
is materially injurious to the Corporation; (D) Executive has
failed or refused to comply with the directions of the Board
that are reasonably consistent with Executive's current
executive employee title and the terms of this Agreement, the
failure with which to comply is materially injurious to the
Corporation; or (E) Executive has repeatedly failed or refused
to comply with the directions of the Board that are reasonably
consistent with Executive's current executive employee title
and the terms of this Agreement. Notwithstanding clause (E) of
the preceding sentence, no act or omission by the Executive
shall constitute Cause hereunder unless the Corporation has
given detailed written notice thereof to the Executive, and
the Executive has failed to remedy such act or omission within
a reasonable time after receiving such notice.
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(iv) "Date of Termination" shall mean (A) in the event of a
discharge of the Executive by the Board for Cause, the date
the Executive receives a Notice of Termination, or any later
date specified in such Notice of Termination, as the case may
be, (B) in the event of a discharge of the Executive without
Cause or a resignation by the Executive, the date specified in
the written notice to the Executive (in the case of discharge)
or the Corporation (in the case of resignation), which date
shall be no less than thirty (30) days from the date of such
written notice, (C) in the event of the Executive's death, the
date of the Executive's death, and (D) in the event of
termination of the Executive's employment by reason of
disability pursuant to Paragraph 8(a), the date the Executive
receives written notice of such termination (or, if earlier,
six (6) months following the date the Executive's disability
began).
(v) "Good Reason" shall mean any of the following:
(A) the Corporation reduces Executive's base salary; or
(B) the assignment to the Executive of any duties
inconsistent in any material respect with the
Executive's positions with the Corporation as set
forth in this Agreement (including status, offices,
titles and reporting requirements), authority, duties
or responsibilities as contemplated by Paragraph 2;
or
(C) any material failure by the Corporation to comply
with any of the provisions of this Agreement, which
is not remedied within 15 days after notice thereof
from the Executive.
(D) the Corporation requires Executive to change the
location of his principal office or offices in a
manner inconsistent with Paragraph 2 hereof;
(E) the Corporation or the Board shall notify the
Executive that it does not want to renew the Term
pursuant to Paragraph 1(b); or
(F) the Corporation otherwise subjects Executive to
abusive, critical or adversarial conditions such that
there is a material worsening of the general quality
of Executive's job conditions immediately prior to
such change.
9. OBLIGATIONS OF THE CORPORATION UPON TERMINATION.
The following provisions describe the obligations of the Corporation to
the Executive under this Agreement upon termination of his employment.
(a) Death, Disability, Discharge for Cause, or Resignation Without Good
Reason. In the event this Agreement terminates pursuant to Paragraph 8(a) by
reason of the death or disability of the Executive, or pursuant to Paragraph
8(b) by reason of the discharge of
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the Executive by the Corporation for Cause, or pursuant to Paragraph 8(c) by
reason of the resignation of the Executive other than for Good Reason, the
Corporation shall pay to the Executive, or his heirs or estate, in the event
of the Executive's death, all Accrued Obligations in a lump sum in cash
within thirty (30) days after the Date of Termination; provided further that
in the event this Agreement terminates pursuant to Paragraph 8(a) by reason
of the disability of the Executive, the Corporation shall continue to provide
to the Executive, for a period of twenty-four (24) months from the
commencement of such disability, all health benefits at least equal to those
which would have been provided to Executive in accordance with the plans,
programs and arrangements referred to in Paragraph 7 of this Agreement, in
addition to any other benefits or payments to which Executive is entitled
hereunder or otherwise.
(b) Discharge Without Cause or Resignation with Good Reason. In the
event that this Agreement terminates pursuant to Paragraph 8(c) by reason of
the discharge of the Executive by the Corporation other than for Cause, death
or disability or by reason of the resignation of the Executive for Good
Reason (any such termination, a "Severance"):
(i) The Corporation shall pay all Accrued Obligations to the
Executive in a lump sum in cash within thirty (30) days after
the Date of Termination;
(ii) For a period equal to the greater of two years and the
remainder of the Term (assuming the Term had not expired on
the Date of Termination), the Corporation shall continue to
provide benefits to the Executive and/or the Executive's
family at least equal to those which would have been provided
to them in accordance with the plans, programs and
arrangements referred to in Paragraph 6 of this Agreement; and
(iii) The Corporation shall, at its sole expense (not to exceed
$25,000), provide the Executive with outplacement services the
scope and provider of which shall be selected by the
Executive.
10. DEFRA LIMITATION.
(a) Notwithstanding anything in this Agreement to the contrary, in
the event that the provisions of the Deficit Reduction Act of 1984 ("DEFRA")
relating to "excess parachute payments" shall be applicable to any payment or
benefit received or to be received by Executive in connection with a
termination of the Executive's employment with the Corporation, then the
total amount of payments or benefits payable to Executive which are deemed to
constitute parachute payments shall be reduced to the largest amount such
that provisions of DEFRA relating to "excess parachute payment" shall no
longer be applicable. Should such a reduction be required, the Executive
shall determine, in the exercise of his sole discretion, which payment or
benefit to reduce or eliminate. Pending such determination, the Corporation
shall continue to make all other required payments to Executive at the time
and in the manner provided herein and shall pay the largest portion
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of any parachute payments such that the provisions of DEFRA relating to
"excess parachute payments" shall no longer be applicable.
(b) Recharacterization of Payments. Due to the complexity in the
application of Section 280(G) of the Internal Revenue Code of 1986, as
amended (the "Code") it is possible that payments made or benefits received
hereunder should not have been made under Paragraph 10(a) (an "Overpayment").
In the event that it is determined in writing by the Corporation's outside
auditors in their reasonable good faith judgment or by any court of competent
jurisdiction that an Overpayment has been made resulting in an "Excess
Parachute Payment" as defined in Section 280G(b)(1) of the Code, then any
such Overpayment shall be treated for all purposes as an unsecured, long-term
loan from the Corporation to the Executive, his personal representative, his
successors or assigns, as the case may be, that is payable, together with
accrued interest from the date of the making of the Overpayment at the rate
of 8% per annum on the later to occur of the third anniversary of the payment
of such Overpayment, or 6 months following the date upon which it is
determined an Overpayment was made. Should it be determined that such an
Overpayment has been made, the Executive shall determine, in the exercise of
his sole discretion, which payments or benefits shall be deemed to constitute
the Overpayment.
11. NO SET-OFF OR MITIGATION.
The Corporation's obligation to make the payments provided for in
this Agreement and otherwise to perform its obligations hereunder shall not
be affected by any set-off, counterclaim, recoupment, defense or other claim,
right or action which the Corporation may have against the Executive or
others. In no event shall the Executive be obligated to seek other employment
or take any other action by way of mitigation of the amounts payable to the
Executive under any of the provisions of this Agreement and such amounts
shall not be reduced whether or not the Executive obtains other employment.
12. PAYMENT OF CERTAIN EXPENSES.
The losing party in any suit or proceeding to enforce this Agreement
shall reimburse the prevailing party for all reasonable costs and expenses
incurred in connection with such suit or proceeding.
13. BINDING EFFECT.
This Agreement shall be binding upon and inure to the benefit of the
heirs and representatives of the Executive and the successors and assigns of
the Corporation. The Corporation shall require any successor (whether direct
or indirect, by purchase, merger, reorganization, consolidation, acquisition
of property or stock, liquidation, or otherwise) to all or a substantial
portion of its assets, by agreement in form and substance reasonably
satisfactory to the Executive, expressly to assume and agree to perform this
Agreement in the same manner and to the same extent that the Corporation
would be required to perform this Agreement if no such succession had taken
place. Regardless of whether such an agreement is executed, this Agreement
shall be binding upon any
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successor of the Corporation in accordance with the operation of law, and
such successor shall be deemed the "Corporation" for purposes of this
Agreement.
14. NOTICES.
All notices, requests, demands and other communications hereunder
shall be in writing and shall be deemed to have been duly given if delivered
by hand or mailed within the continental United States by first class
certified mail, return receipt requested, postage prepaid, addressed as
follows:
(a) If to the Board or the Corporation, to:
Alliance Imaging, Inc.
0000 Xxxxx XxxxxxXxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attention: President
Facsimile: (000) 000-0000
with a copy to:
Apollo Management, L.P.
1301 Avenue of the Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx Xxxxxx
Facsimile: (000) 000-0000
(b) If to the Executive, to:
Xxxxxxx X. Xxxxxxxx, Xx.
0000 Xxxxxxxx Xx., Xxxx 000
Xxxxx xxx Xxx, XX 00000
Such addresses may be changed by written notice sent to the other party at
the last recorded address of that party.
15. INDEMNIFICATION.
The Corporation agrees to indemnify the Executive to the fullest
extent permitted by law for his services to, or on behalf of the Corporation,
as an Executive hereunder, as a director (as applicable) and in any and every
other capacity in which he may serve the Corporation or its interests. In
furtherance of such agreement to indemnify, but not by way of limitation, the
terms of the Corporation's certificate of incorporation and by-laws providing
for such indemnification and payment of expenses, as in effect on the date
hereof (and, which are attached hereto as Exhibit A), are hereby incorporated
by reference as if fully stated herein. For the purpose of this Agreement,
any amendment to said certificate of incorporation or by-laws shall not be
effective to reduce, qualify or
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otherwise limit the scope, benefit or enforceability of this provision;
provided, however, if any such amendment extends or improves the scope,
benefit or enforceability of the indemnification and payment of expenses
contained in such certificate of incorporation or by-laws for any officer,
director, employee or agent, such extended or improved provisions shall be
deemed to be incorporated by reference herein for the benefit of the
Executive without any further action by the Corporation or the Executive.
16. TAX WITHHOLDING.
The Corporation shall provide for the withholding of any taxes
required to be withheld by federal, state, or local law with respect to any
payment in cash, shares of stock and/or other property made by or on behalf
of the Corporation to or for the benefit of the Executive under this
Agreement or otherwise. The Corporation may, at its option: (a) withhold such
taxes from any cash payments owing from the Corporation to the Executive, (b)
require the Executive to pay to the Corporation in cash such amount as may be
required to satisfy such withholding obligations and/or (c) make other
satisfactory arrangements with the Executive to satisfy such withholding
obligations.
17. ARBITRATION.
Except as to any controversy or claim which the Executive elects, by
written notice to the Corporation, to have adjudicated by a court of
competent jurisdiction, any controversy or claim arising out of or relating
to this Agreement or the breach hereof shall be settled by arbitration in Los
Angeles, California in accordance with the laws of the State of California.
The arbitration shall be conducted in accordance with the rules of the
American Arbitration Association. The costs and expenses of the arbitrator(s)
shall be borne by the Corporation. The award of the arbitrator(s) shall be
binding upon the parties. Judgment upon the award rendered by the
arbitrator(s) may be entered in any court having jurisdiction.
18. NO ASSIGNMENT.
Except as otherwise expressly provided herein, this Agreement is not
assignable by any party and no payment to be made hereunder shall be subject
to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance
or other charge.
19. EXECUTION IN COUNTERPARTS.
This Agreement may be executed by the parties hereto in two (2) or
more counterparts, each of which shall be deemed to be an original, but all
such counterparts shall constitute one and the same instrument, and all
signatures need not appear on any one counterpart.
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20. JURISDICTION AND GOVERNING LAW.
Except as provided in Paragraph 17, jurisdiction over disputes with
regard to this Agreement shall be exclusively in the courts of the State of
California, and this Agreement shall be construed and interpreted in
accordance with and governed by the laws of the State of California, other
than the conflict of laws provisions of such laws.
21. SEVERABILITY.
If any provision of this Agreement shall be adjudged by any court of
competent jurisdiction to be invalid or unenforceable for any reason, such
judgment shall not affect, impair or invalidate the remainder of this
Agreement. Furthermore, if the scope of any restriction or requirement
contained in this Agreement is too broad to permit enforcement of such
restriction or requirement to its full extent, then such restriction or
requirement shall be enforced to the maximum extent permitted by law, and the
Executive consents and agrees that any court of competent jurisdiction may so
modify such scope in any proceeding brought to enforce such restriction or
requirement.
22. PRIOR UNDERSTANDINGS.
This Agreement embodies the entire understanding of the parties
hereto and, upon its effectiveness, will supersede all other oral or written
agreements or understandings between them regarding the subject matter
hereof. No change, alteration or modification hereof may be made except in a
writing, signed by each of the parties hereto. The headings in this Agreement
are for convenience and reference only and shall not be construed as part of
this Agreement or to limit or otherwise affect the meaning hereof.
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IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the day and year first above written.
Attest: ALLIANCE IMAGING, INC.
/s/ XXXXXX XXXXXXX By: /s/ XXXXXXX X. XXXXXX
------------------------------- -------------------------------
Name: Xxxxxx Xxxxxxx Name: Xxxxxxx X. Xxxxxx
Title: Chairman and Chief
Executive Officer
EXECUTIVE
By: /s/ XXXXXXX X. XXXXXXXX, XX.
-------------------------------
Name: Xxxxxxx X. Xxxxxxxx, Xx.
General Counsel
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