Exhibit 10.1
EMPLOYMENT AGREEMENT
AGREEMENT dated July 30, 2004 between Take-Two Interactive
Software, Inc., a Delaware corporation (the "Employer" or the "Company"), and
Xxxx Xxxxx (the "Employee").
W I T N E S S E T H :
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WHEREAS, Employer and Employee have entered into a letter
agreement dated April 14, 2004 (the "Letter Agreement"), which contemplates that
Employer and Employee would enter into this Agreement; and
WHEREAS, the Employer desires to employ the Employee as its
Global Chief Operating Officer and to be assured of his services as such on the
terms and conditions hereinafter set forth; and
WHEREAS, the Employee is willing to accept such employment on
such terms and conditions;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements hereinafter set forth, and intending to be legally bound hereby, the
Employer and the Employee hereby agree as follows:
1. Term. Employer hereby agrees to employ Employee, and
Employee hereby agrees to serve Employer for a three-year period commencing
effective as of April 14, 2004 (the "Effective Date") (such period being herein
referred to as the "Initial Term," and any year commencing on the Effective Date
or any anniversary of the Effective Date being hereinafter referred to as an
"Employment Year"). After the Initial Term, this Agreement shall be renewable
automatically for successive one year periods (each such period being referred
to as a "Renewal Term"), unless, more than one hundred and eighty days prior to
the expiration of the Initial Term or any Renewal Term, either the Employee or
the Company give written notice that employment will not be renewed.
2. Employee Duties.
(a) During the term of this Agreement, the Employee shall
have the duties and responsibilities of Global Chief Operating Officer of the
Employer, reporting directly to the Chief Executive Officer. It is understood
that such duties and responsibilities shall be consistent with the Employee's
position.
(b) The Employee shall devote substantially all of his
business time, attention, knowledge and skills faithfully, diligently and to the
best of his ability, in furtherance of the business and activities of the
Company
(c) The principal place of performance by the Employee of
his duties hereunder shall be the Company's principal executive offices in New
York, although the Employee may be required to travel outside of the area where
the Company's principal executive offices are located in connection with the
business of the Company and until October 13, 2004, Employee may also perform
his duties at the Company's offices in Windsor, England.
3. Compensation.
(a) During the term of this Agreement, the Employer shall
pay the Employee a salary (the "Salary") at a rate of $600,000 per annum in
respect of each Employment Year, payable in equal installments bi-weekly, or at
such other times as may mutually be agreed upon between the Employer and the
Employee. The Salary shall be subject to annual review by the Board of directors
(the "Board") and may be increased (but not decreased) at the discretion of the
Board.
(b) The Employee shall be entitled to reimbursement of
reasonable expenses incurred in connection with relocating to and from New York
(not to exceed $50,000 for each move), and the costs associated with hiring a
relocation professional, temporary housing and air fare (Business Class) for
Employee and his family, which entitlement shall survive the termination of this
Agreement solely with respect to Employee's relocation to the United Kingdom.
Employer shall also pay Employee's reasonable housing allowance during the
Initial Term (not to exceed $12,000 per month).
(c) The Employee shall be paid a cash bonus (the "Bonus")
equal to $600,000 in respect of each fiscal year, commencing with the year
ending October 31, 2004, provided that the Company achieves mutually agreeable
reasonable quantitative and qualitative performance targets for each fiscal year
(Employee's agreement with respect to such performance targets shall be deemed
his agreement as to reasonableness). Of such Bonus, $150,000 shall be payable on
November 1, 2004. In addition, the Employee shall be entitled to receive a cash
signing bonus of $500,000, of which $250,000 was paid and $250,000 is payable on
November 1, 2004. Except as provided above or as may otherwise be agreed between
Employer and Employee, the Bonus hereunder shall be payable within sixty (60)
days after the end of the applicable fiscal year.
(d) The Employee shall receive options to purchase 145,000
shares of Common Stock under the Company's 2002 Stock Option Plan, at an
exercise price equal to $31.92 per share (vesting as to 25,000 shares on October
14, 2004; 60,000 shares on April 14, 2005; and 60,000 shares on April 14, 2006).
In addition, Employee shall receive 20,000 shares of restricted stock under
Employer's Incentive Stock Plan (with 10,000 shares vesting on April 14, 2005
and 10,000 shares vesting on April 14, 2006).
(e) The Employee shall be entitled to receive an automobile
allowance of $1,300 per month as well as insurance, maintenance, repair, fuel
and other incidental expenses.
(f) In addition to the foregoing, the Employee shall be
entitled to such other cash bonuses and such other compensation in the form of
stock, stock options or other property or rights as may be awarded to him by the
Board from time to time during or in respect of his employment hereunder.
4. Benefits.
(a) During the term of this Agreement, the Employee shall
have the right to receive or participate in all benefits and plans which the
Company may from time to time institute during such period for its senior
executives (including health insurance and benefits for him and his family,
401(k) and insurance). Employee shall also be entitled to his United Kingdom
pension benefits and shall be eligible to participate in the pension plan
provided by Take-Two Interactive Software, Europe, Ltd. ("T2 Europe") by Royal &
Sun Alliance and the Company shall contribute 7.5% of Employee's salary (out of
Employee's salary) to such pension plan on behalf of Employee. Nothing paid to
the Employee under any plan or arrangement presently in effect or made available
in the future shall be deemed to be in lieu of the salary or any other
obligation payable to the Employee pursuant to this Agreement.
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(b) During the term of this Agreement, the Employee will be
entitled to the number of paid holidays, personal days off, and vacation days in
each calendar year as are determined by the Company from time to time (provided
that in no event shall vacation time be fewer than five weeks per year). Such
vacation may be taken in the Employee's discretion at such time or times as are
not inconsistent with the reasonable business needs of the Company.
(c) The Employee shall be entitled to the benefits of all
provisions of the Certificate of Incorporation of the Company, as amended, and
the Bylaws of the Company, as amended, that provide for indemnification of
officers and directors of the Company. In addition, without limiting the
indemnification provisions of the Certificate of Incorporation or Bylaws, to the
fullest extent permitted by law, the Company shall indemnify and save and hold
harmless the Employee from and against any and all claims, demands, liabilities,
costs and expenses, including judgments, fines or amounts paid on account
thereof (whether in settlement or otherwise), and reasonable expenses, including
attorneys' fees actually and reasonably incurred (except only if and to the
extent that such amounts shall be finally adjudged to have been caused by
Employee's willful misconduct or gross negligence, including the willful breach
of the provisions of this Agreement) to the extent that the Employee is made a
party to or witness in any action, suit or proceeding, or if a claim or
liability is asserted against Employee (whether or not in the right of the
Company), by reason of the fact that he was or is a director or officer, or
acted in such capacity on behalf of the Company, or the rendering of services by
the Employee pursuant to this Agreement, whether or not the same shall proceed
to judgment or be settled or otherwise brought to a conclusion.
(d) The Company shall, at no cost to Employee, include the
Employee during the term of this Agreement and for a period of not less than two
(2) years thereafter, as an insured under the directors and officers liability
insurance policy maintained by the Company, unless (despite best efforts of the
Company) due to some unforeseeable reason it is not possible for the Employee to
be so included, in which event the Company shall immediately notify the
Executive.
5. Expenses. All travel and other expenses incident to the
rendering of services reasonably incurred on behalf of the Company by the
Employee during the term of this Agreement shall be paid by the Employer. If any
such expenses are paid in the first instance by the Employee, the Employer shall
reimburse him for such expenses on presentation of appropriate receipts for any
such expenses. In addition, Employee and his family shall be entitled to be
reimbursed for travel expenses (Business Class) to and from the United Kingdom
three (3) times a year.
6. Termination. Notwithstanding the provisions of Section 1
hereof, the Employee's employment with the Employer may be earlier terminated as
follows:
(a) By action taken by the Board, the Employee may be
discharged for cause (as hereinafter defined), effective as of such time as the
Board shall determine subject to the cure provisions of Section 6(d). Upon
discharge of the Employee pursuant to this Section 6(a), the Employer shall have
no further obligation or duties to the Employee, except for payment of Salary
and benefits and expenses accrued under Sections 3(b) and (e), 4 and 5 through
the effective date of termination, and the Employee shall have no further
obligations or duties to the Employer, except as provided in Section 7.
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(b) In the event of (i) the death of the Employee or (ii)
by action of the Board and the inability of the Employee, by reason of physical
or mental disability, to continue substantially to perform his duties hereunder
for a period of 180 consecutive days (during which 180 day period Salary and any
other benefits hereunder shall not be suspended or diminished). Upon any
termination of the Employee's employment under this Section 6(b), the Employer
shall have no further obligations or duties to the Employee, except for the
payment of Salary, Bonus (on a pro-rated basis) and benefits and expenses
accrued under Sections 3, 4 and 5 through the effective date of termination and
the provisions of Section 3(b), the cash signing bonus provisions of 3(c), 4(c)
and (d) after termination and Employee shall have no further obligations or
duties to Employer, except as provided in Section 7.
(c) In the event that Employee's employment with the
Employer is terminated by action taken by the Board without cause (as defined
below), then the Employer shall have no further obligation or duties to
Employee, except for payment of the amounts described in the following sentence,
and Employee shall have no further obligations or duties to the Employer, except
as provided in Section 7. In the event of such termination, the Employer shall
continue to pay to Employee Salary and cash signing bonus pursuant to clause
3(c) and Bonus if earned (provided that such Bonus shall not be less than
$400,000 if Employee's employment is terminated during the first Employment Year
and shall be no less than the Bonus earned in the previous year if terminated
thereafter) and continue to provide the benefits in accordance with Sections
3(b) and (e) and (f) and 4(a), (c) and (d) and section 5 through the termination
date and (other than Section 5) for a period of eighteen (18) months from the
date of termination and the Employee shall receive his Bonus as if he were
employed during such 18 month period within 60 days after the end of the
applicable fiscal year and he shall be paid the Bonus after such 18 month period
in respect of fiscal years completed prior to the end of such period or a pro
rata Bonus in respect of fiscal years partly completed at the end of such
period, and all options and shares of restricted stock granted to Employee prior
to such date shall vest immediately.
(d) For purposes of this Agreement, the Company shall have
"cause" to terminate the Employee's employment under this Agreement upon (i) the
failure by the Employee to substantially perform his material duties under this
Agreement (which is not cured pursuant to the provisions of the following
sentence), (ii) the engaging by the Employee in criminal misconduct (including
embezzlement and criminal fraud) which is materially injurious to the Company,
monetarily or otherwise, (iii) the conviction of the Employee of a felony or
(iv) gross negligence on the part of the Employee. The Company shall give
written notice to the Employee, which notice shall specify the grounds for the
proposed termination and the Employee shall be given thirty (30) days to cure if
the grounds arise under clause (i) or (iv) above.
(e) In the event that Employee's employment with the
Employer is terminated by Employer without cause following a Change in Control
(as hereinafter defined), then the Employer shall have no further obligation or
duties to Employee, except for payment of any outstanding cash signing bonus
pursuant to clause 3(c) and payment of Salary and Bonus and the benefits in
accordance with Sections 3(b) and (c) and 4(a), (c) and (d) and 5 through the
effective date of termination and the amounts described below, and Employee
shall have no further obligations or duties to the Employer, except as provided
in Section 7. In the event of such termination, the Employer shall pay the
Employee an amount equal to 1.5 times the total current Salary and Bonus (which
bonus shall be deemed to be fully earned). Employer shall also continue to
provide benefits in accordance with Sections 3 (b), (e), (f) and 4(a), (c) and
(d) for a period of eighteen (18) months following termination. All amounts
payable to the Employee pursuant to the second sentence of this Section 6(e)
shall be paid in one lump-sum payment immediately upon such termination, and all
options and shares of restricted stock granted to Employee prior to such date
shall immediately vest.
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(f) For purposes of this Agreement, a "Change in Control"
shall be deemed to occur (i) upon the election of directors constituting a
change in a majority of the Board, which directors were not nominated by the
Board immediately in place prior to such change; (ii) upon a merger or
consolidation of the Company with any other corporation, which results in the
stockholders of the Company prior thereto continuing to represent less than 50
percent of the combined voting power of the voting securities of the Company or
the surviving entity after the merger; (iii) the sale of 50% or more of the
Company's outstanding capital stock or (iv) upon the sale of all, or
substantially all, of the assets of the Company.
(g) The Employee may terminate his employment with the
Company with or without Good Reason upon thirty (30) days written notice, which
notice, in the case of a termination with Good Reason, shall specifically set
forth the nature of such Good Reason. The term "Good Reason" shall mean (i) the
material diminution in the Employee's duties, responsibilities, reporting
relationship or position, (ii) the relocation of Employee more than fifty (50)
miles from the Company's New York headquarters or (iii) any material breach of
this Agreement by the Company. Notwithstanding the occurrence of any such event
or circumstance above, such occurrence shall not be deemed to constitute Good
Reason hereunder if, within the thirty-day notice period, the event or
circumstance giving rise to Good Reason has been fully corrected by the Company.
In the event of a termination with Good Reason, the Employee shall be entitled
to the same payment and benefits as provided in Section 6 (c) above for a
termination without cause. In the event of a termination without Good Reason,
Employee shall be entitled to payment of Salary and benefits and expenses
accrued under Section 3(b), (c), (d) and (e) and 4 and 5 through the effective
date of termination by Employee, and shall receive his Bonus within 60 days of
the end of the applicable fiscal year after the effective date of termination in
respect of any fiscal year completed prior to such date or a pro rata bonus in
respect of a fiscal year partly completed at such date and shall have the duties
and obligations in Section 7.
(h) In the event that this Agreement, is not renewed, or
the Employee terminates without Good Reason or the Agreement is terminated
pursuant to clause 6(b)(ii), the Company may either waive the provisions of
Section 7(b) or pay Salary and benefits under Section 3(b) and (c), (d) and (e)
and 4(a), (c) and (d) to the Employee during the term of the non-compete
provision of Section 7(b).
(i) Notwithstanding anything to the contrary contained in
this Agreement, in the event Employee terminates without Good Reason at any time
after October 14, 2004, or notice is given that the employment will not be
renewed pursuant to clause 1, Employee may return to his former position at
Employer's wholly owned subsidiary, Take2 Europe, under the terms and conditions
of the employment agreement attached hereto as Exhibit A. In such event, 30,000
options which have not vested at that time shall vest and become immediately
exercisable, in addition to the 25,000 options that vest on October 14, 2004
(provided that the balance of the unvested options and any unvested restricted
stock granted pursuant to this Agreement shall lapse) and Employee shall be
entitled to an additional $100,000 of annual salary and an annual option grant
of 30,000 shares under the terms of such employment agreement attached
hereto as Exhibit A.
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7. Confidentiality; Non-competition.
(a) The Employer and the Employee acknowledge that the
services to be performed by the Employee under this Agreement are unique and
extraordinary and, as a result of such employment, the Employee will be in
possession of confidential information relating to the business practices of the
Company. The term "confidential information" shall mean any and all information
(oral and written) relating to the Company or any of its affiliates, or any of
their respective activities, other than such information which can be shown by
the Employee to be in the public domain (such information not being deemed to be
in the public domain merely because it is embraced by more general information
which is in the public domain) other than as the result of breach of the
provisions of this Section 7(a), including, but not limited to, information
relating to: trade secrets, personnel lists, financial information, research
projects, services used, pricing, customers, customer lists and prospects,
product sourcing, marketing and selling. The Employee agrees that he will not,
during or for a period of two years after the termination of employment,
directly or indirectly, use, communicate, disclose or disseminate to any person,
firm or corporation any confidential information regarding the clients,
customers or business practices of the Company acquired by the Employee during
his employment by Employer, without the prior written consent of Employer;
provided, however, that the Employee understands that Employee will be
prohibited from misappropriating any trade secret at any time during or after
the termination of employment. Nothing contained herein shall prohibit Employee
from disclosing confidential information if it is required by applicable law,
court order or government or regulatory body.
(b) The Employee hereby agrees that he shall not, during
the period of his employment and for a period of one (1) year following such
employment, directly or indirectly, within any county (or adjacent county) in
any State within the United States or territory outside the United States in
which the Company is engaged in business during the period of the Employee's
employment or on the date of termination of the Employee's employment, engage,
have an interest in or render any services to any business (whether as owner,
manager, operator, lender partner, stockholder, joint venturer, employee or
consultant) competitive with the Company's business activities.
(c) The Employee hereby agrees that he shall not, during
the period of his employment and for a period of one (1) year following such
employment, directly or indirectly, take any action which constitutes an
interference with or a disruption of any of the Company's business activities
including, without limitation, the solicitations of the Company's customers, or
persons listed on the personnel lists of the Company. At no time during the term
of this Agreement, or thereafter shall the Employee or the Company directly or
indirectly, disparage the commercial, business or financial reputation of the
other. Notwithstanding the foregoing, Employee may own up to 5% of the capital
stock of any company that competes with Employer that is listed on a recognized
national securities exchange.
(d) For purposes of clarification, but not of limitation,
the Employee hereby acknowledges and agrees that the provisions of subparagraphs
7(b) and (c) above shall serve as a prohibition against him, during the period
referred to therein, directly or indirectly, hiring, offering to hire, enticing,
soliciting or in any other manner persuading or attempting to persuade any
officer, employee, agent, lessor, lessee, licensor, licensee or customer who has
been previously contacted by either a representative of the Company, including
the Employee, (but only those suppliers existing during the time of the
Employee's employment by the Company, or at the termination of his employment),
to discontinue or alter his, her or its relationship with the Company.
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(e) Upon the termination of the Employee's employment for
any reason whatsoever, all documents, records, notebooks, equipment, price
lists, specifications, programs, customer and prospective customer lists and
other materials which refer or relate to any aspect of the business of the
Company which are in the possession of the Employee including all copies
thereof, shall be promptly returned to the Company.
(f) (i) The Employee agrees that all processes,
technologies and inventions ("Inventions"), including new contributions,
improvements, ideas and discoveries, whether patentable or not, conceived,
developed, invented or made by him during the course of his employment by
Employer shall belong to the Company, provided that such Inventions grew out of
the Employee's work with the Company and are related in any manner to the
business (commercial or experimental) of the Company or are conceived or made on
the Company's time or with the use of the Company's facilities or materials. The
Employee shall further: (a) promptly disclose such Inventions to the Company;
(b) assign to the Company, without additional compensation, all patent and other
rights to such Inventions for the United States and foreign countries; (c) sign
all papers necessary to carry out the foregoing; and (d) give testimony in
support of his inventorship;
(ii) If any Invention is described in a patent
application or is disclosed to third parties, directly or indirectly, by the
Employee within one year after the termination of his employment by the Company,
it is to be presumed that the Invention was conceived or made during the period
of the Employee's employment by the Company; and
(iii) The Employee agrees that he will not assert any
rights to any Invention as having been made or acquired by him prior to the date
of this Agreement, except for Inventions, if any, disclosed to the Company in
writing prior to the date hereof.
(g) The Company shall be the sole owner of all products and
proceeds of the Employee's services hereunder, including, but not limited to,
all materials, ideas, concepts, formats, suggestions, developments,
arrangements, packages, programs and other intellectual properties that the
Employee may acquire, obtain, develop or create in connection with and during
the term of the Employee's employment hereunder, free and clear of any claims by
the Employee (or anyone claiming under the Employee) of any kind or character
whatsoever (other than the Employee's right to receive payments hereunder). The
Employee shall, at the request of the Company, execute such assignments,
certificates or other instruments as the Company may from time to time deem
necessary or desirable to evidence, establish, maintain, perfect, protect,
enforce or defend its right, or title and interest in or to any such properties.
(h) The parties hereto hereby acknowledge and agree that
(i) the Company would be irreparably injured in the event of a breach by the
Employee of any of his obligations under this Section 7, (ii) monetary damages
would not be an adequate remedy for any such breach, and (iii) the Company shall
be entitled to injunctive relief, in addition to any other remedy which it may
have, in the event of any such breach.
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(i) The parties hereto hereby acknowledge that, in addition
to any other remedies the Company may have under Section 7(h) hereof, the
Company shall have the right and remedy to require the Employee 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 Employee as the result of any transactions constituting a breach of any of
the provisions of Section 7, and the Employee hereby agrees to account for any
pay over such Benefits to the Company.
(j) Each of the rights and remedies enumerated in Section
7(h) and 7(i) shall be independent of the other, and shall be severally
enforceable, and all of such rights and remedies shall be in addition to, and
not in lieu of, any other rights and remedies available to the Company under law
or in equity.
(k) If any provision contained in this Section 7 is
hereafter construed to be invalid or unenforceable, the same shall not affect
the remainder of the covenant or covenants, which shall be given full effect,
without regard to the invalid portions.
(l) It is the intent of the parties hereto that the
covenants contained in this Section 7 shall be enforced to the fullest extent
permissible under the laws and public policies of each jurisdiction in which
enforcement is sought (the Employee hereby acknowledging that said restrictions
are reasonably necessary for the protection of the Company). Accordingly, it is
hereby agreed that if any of the provisions of this Section 7 shall be
adjudicated to be invalid or unenforceable for any reason whatsoever, said
provision shall be (only with respect to the operation thereof in the particular
jurisdiction in which such adjudication is made) construed by limiting and
reducing it so as to be enforceable to the extent permissible, without
invalidating the remaining provisions of this Agreement or affecting the
validity or enforceability of said provision in any other jurisdiction.
8. General. This Agreement is further governed by the
following provisions:
(a) Notices. All notices relating to this Agreement shall
be in writing and shall be either personally delivered, sent by telecopy
(receipt confirmed) or mailed by certified mail, return receipt requested, to be
delivered at such address as is indicated below, or at such other address or to
the attention of such other person as the recipient has specified by prior
written notice to the sending party. Notice shall be effective when so
personally delivered, one business day after being sent by telecopy or five days
after being mailed.
To the Employer:
Take Two Interactive Software, Inc.
000 Xxxxxxxx
XXX XXXX, XXX XXXX 00000
To the Employee:
Xxxx Xxxxx
Take-Two Interactive Software, Inc.
000 Xxxxxxxx
Xxx Xxxx, XX 00000
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(b) Parties in Interest. Neither the Employee nor the
Company may delegate his duties or assign his rights hereunder. This Agreement
shall inure to the benefit of, and be binding upon, the parties hereto and their
respective heirs, legal representatives, successors and permitted assigns.
(c) Entire Agreement. Except for the terms of any option or
share grant, this Agreement supersedes any and all other agreements, either oral
or in writing, between the parties hereto, with respect to the employment of the
Employee by the Employer (including the Letter Agreement) and contains all of
the covenants and agreements between the parties with respect to such employment
in any manner whatsoever. Any modification or termination of this Agreement will
be effective only if it is in writing signed by the party to be charged.
(d) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York. Employee agrees
to and hereby does submit to jurisdiction before any state or federal court of
record in New York County or in the state and county in which such violation may
occur, at Employer's election.
(e) Severability. In the event that any term or condition
in this Agreement shall for any reason be held by a court of competent
jurisdiction to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other term or
condition of this Agreement, but this Agreement shall be construed as if such
invalid or illegal or unenforceable term or condition had never been contained
herein.
(f) Execution in Counterparts. This Agreement may be
executed by the parties in one or more counterparts, each of which shall be
deemed to be an original but all of which taken together shall constitute one
and the same agreement, and shall become effective when one or more counterparts
has been signed by each of the parties hereto and delivered to each of the other
parties hereto.
(g) Costs. The Company shall pay the reasonable costs
associated with professional, legal and tax advice incurred by Employee with
respect to this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement as of the date first above written.
TAKE TWO INTERACTIVE SOFTWARE, INC.
By: /s/ Xxxxxxx Xxxxxx
---------------------------------
Name: Xxxxxxx Xxxxxx
Title: Chief Executive Officer
/s/ Xxxx Xxxxx
---------------------------------
Xxxx Xxxxx
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