SEVERANCE AGREEMENT
SEVERANCE
AGREEMENT (this “Agreement”), dated as of July 14, 2009, by and between
XxxXxxxxx.xxx, Inc., a Delaware corporation (the “Company” or “XxxXxxxxx.xxx”),
and Xxxxxxx X. Xxxxxx (“Xxxxxx”).
WHEREAS,
the Company desires that Xxxxxx enter into this Agreement, and Xxxxxx desires to
enter into this Agreement, on the terms and conditions set forth
herein;
WHEREAS,
the Company granted Xxxxxx Restricted Stock Units pursuant to the Letter dated
July 14, 2009 (“Letter”);
WHEREAS,
Xxxxxx agreed to be bound by certain restrictive covenants and prohibitions on
competition in the Letter; and
NOW
THEREFORE, the parties hereto agree as follows:
Section 1. Severance
Benefits.
(a) General Severance. In
the event that the Company terminates Xxxxxx’x employment with the Company
without Cause or Xxxxxx voluntarily terminates his employment with the Company
for Good Reason, then the Company shall pay Xxxxxx an amount equal to the lesser
of (i) one year of Xxxxxx’x base salary (at the rate in effect immediately prior
to termination) and (ii) the sum of:
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A.
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four
weeks of Xxxxxx’x base salary (at the rate in effect immediately prior to
termination), plus
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B.
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the
product of (x) four weeks of Xxxxxx’x base salary (at the rate in effect
immediately prior to termination) multiplied by (y) a fraction, the
numerator of which is the number of calendar days from and including June
5, 2010, to and including the effective date of the termination of
Xxxxxx’x employment pursuant to this Section 1, and the denominator of
which of 365 (for the avoidance of doubt, if Xxxxxx’x employment
terminates prior to June 5, 2010, this fraction shall be
zero).
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As
provided in the second paragraph of Section 1(b) herein, despite the fact that
the effective date of Xxxxxx’x termination as CEO may occur prior to the
consummation of a Change of Control, for purposes of determining the appropriate
amount payable to Xxxxxx, Xxxxxx’x xxxxxxxxx shall be determined under Section
1(b) rather than this Section 1(a), and Section 1(c) shall be applicable
thereto.
For
purposes of this Agreement, “Cause” and “Good Reason” shall have the same
meaning ascribed to them in the Letter and “Change of Control” shall mean the
happening of any of the following:
(1) the
acquisition by any person or group deemed a person under Sections 3(a)(9) and
13(d)(3) of the Securities Exchange Act of 1934 (the “Exchange Act”) (other than
the Company and its subsidiaries as determined immediately prior to that date
and any of its or their employee benefit plans) of beneficial ownership,
directly or indirectly (with beneficial ownership determined as provided in Rule
13d-3, or any successor rule, under the Exchange Act), of a majority of the
total combined voting power of all classes of stock of the Company having the
right under ordinary circumstances to vote at an election of the Board of
Directors of the Company (the “Board”), if such person or group deemed a person
does not include you;
(2) the
date on which a majority of the members of the Board consist of persons other
than Current Directors (which term shall mean any member of the Board on the
effective date of this Agreement and any member whose nomination or election has
been approved by a majority of Current Directors then on the
Board);
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(3) the
date of consummation of a merger or consolidation of the Company with another
corporation or other entity where (x) stockholders of the Company immediately
prior to such merger or consolidation would not beneficially own following such
merger or consolidation shares entitling such stockholders to a majority of all
votes (without consideration of the rights of any class of stock to elect
directors by a separate class vote) to which all stockholders of the surviving
corporation would be entitled in the election of directors in substantially the
same proportions as their ownership, immediately prior to such merger or
consolidation, of voting securities of the Company, or (y) where the members of
the Company’s Board of Directors, immediately prior to such merger or
consolidation, would not, immediately after such merger or consolidation,
constitute a majority of the board of directors of the corporation issuing cash
or securities in the merger; or
(4) the
sale of all or substantially all of the assets of the Company; or
(5) the
date of approval by the stockholders of the Company of a plan of complete
liquidation of the Company.
(b) Upon a Change of
Control. In the event that (i) a Change of Control occurs on or before
November 30, 2011 and (ii) Xxxxxx’x employment is terminated by the Company
without Cause or by Xxxxxx for Good Reason, in either event within two years
after the effective date of consummation of such Change of Control, then, in
partial consideration for Xxxxxx’x agreement to abide by the restrictions and
covenants set forth in Section 6 (regarding non-competition), Section 7(a)
(non-solicitation of employees) and Section 7(b) (non-solicit of clients and
vendors) in the Letter, the Company shall pay Xxxxxx an amount equal to one year
of Xxxxxx’x base salary (at the rate in effect immediately prior to
termination).
For
purposes of this Agreement, regardless of the fact that Xxxxxx’x last day of
employment with the Company may occur prior to the consummation of a Change of
Control, an involuntary termination of Xxxxxx’x employment by the Company
without Cause or a voluntary termination by Xxxxxx of his employment for Good
Reason shall be deemed to have occurred after a Change of Control in the event
that:
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x.
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Xxxxxx
is employed as the Company’s Executive Vice President, Business and Legal
Affairs, General Counsel and Secretary at the time that events or efforts
are initiated by the Company that directly lead to consummation of a
Change of Control; and
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y.
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The
consummation of the Change of Control occurs prior to November 30,
2011.
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For the
sake of avoidance of doubt, in the event that both (x) and (y) of this Section
1(b) apply, Xxxxxx shall receive the net severance benefits described under this
Section 1(b), as modified by Section 1(c) herein.
(c) No Double Benefits.
Notwithstanding any other provision of this Agreement, should Xxxxxx qualify for
severance benefits under both Sections 1(a) and 1(b), then the benefits to be
provided under Section 1(b) shall be offset by any amounts that were theretofore
provided under Section 1(a).
(d) Payment of Benefits.
If Xxxxxx becomes entitled to a payment under Section 1(a) or 1(b), the Company
shall pay Xxxxxx the applicable amount in a lump sum within thirty (30) days of
Xxxxxx’x becoming entitled to such payment.
Section 2. Parachute Payment
Limitation.
Anything
in this Agreement or the Letter to the contrary notwithstanding, in the event
that:
(a) the
aggregate payments or benefits to be made or distributed by the Company or its
affiliates to or for the benefit of Xxxxxx (whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise) which are deemed to be parachute payments as defined in Internal
Revenue Code (“Code”) Section 280G or any successor thereto (the “Change of
Control Benefits”) would be deemed to include an “excess parachute payment”
under Code Section 280G; and
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(b) if
such Change of Control Benefits were reduced to an amount (the “Non-Triggering
Amount”), the value of which is one dollar ($1.00) less than an amount equal to
three (3) times Xxxxxx’x “base amount,” as determined in accordance with Code
Section 280G and the Non-Triggering Amount less the product of the marginal rate
of any applicable state and federal income tax times the Non-Triggering Amount
would be greater than the aggregate value of the Change of Control Benefits
(without such reduction) minus (x) the amount of tax required to be paid by
Xxxxxx thereon by Code Section 4999 and further minus (y) the product of the
Change of Control Benefits times the marginal rate of any applicable state and
federal income tax, then the Change of Control Benefits shall be reduced to the
Non-Triggering Amount. The allocation of any reduction required
hereby among the Change of Control Benefits shall be determined by
Xxxxxx.
Section 3. Notices.
Unless
otherwise provided herein, any notice, exercise of rights or other communication
required or permitted to be given hereunder shall be in writing and shall be
given by overnight delivery service such as Federal Express or personal delivery
against receipt, or mailed by registered or certified mail (return receipt
requested), to the party to whom it is given at, in the case of the Company,
Compensation Committee Chair, XxxXxxxxx.xxx, Inc., 00 Xxxx Xxxxxx, 00xx Xxxxx,
Xxx Xxxx, XX 00000, or, in the case of Xxxxxx, at his principal residence
address as then reflected on the records of the Company or such other address as
such party may hereafter specify by notice to the other party hereto. Any notice
or other communication shall be deemed to have been given as of the date so
personally delivered or transmitted by telecopy or like transmission or on the
next business day after sent by overnight delivery service for next business day
delivery or on the fifth business day after sent by registered or certified
mail.
Section 4. Representations.
The
Company hereby represents and warrants that the execution and delivery of this
Agreement and the performance by the Company of its obligations hereunder have
been duly authorized by all necessary corporate action of the
Company.
Section 5. Amendment.
This
Agreement may be amended only by a written agreement signed by the parties
hereto.
Section 6. Binding
Effect.
The
rights and duties under this Agreement are not assignable by Xxxxxx other than
as a result of his death. None of Xxxxxx’x rights under this Agreement shall be
subject to any encumbrances or the claims of Xxxxxx’x creditors. This Agreement
shall be binding upon and inure to the benefit of the Company and any successor
organization which shall succeed to the Company by merger or consolidation or
operation of law, or by acquisition of all or substantially all of the assets of
the Company.
Section 7. Governing
Law.
This
Agreement shall be governed by and construed in accordance with the internal
laws of the State of New York applicable to contracts to be performed wholly
within the state and without regard to its conflict of laws provisions that
would defer to the laws of another jurisdiction.
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Section 8. Severability.
If any
provision of this Agreement shall for any reason be held invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions hereof shall not be affected or impaired thereby. Moreover, if any
one or more of the provisions of this Agreement shall be held to be excessively
broad as to duration, activity or subject, such provisions shall be construed by
limiting and reducing them so as to be enforceable to the maximum extent
allowable by applicable law. To the extent permitted by applicable law, each
party hereto waives any provision of law that renders any provision of this
Agreement invalid, illegal or unenforceable in any way.
Section 9. Execution in
Counterparts.
This
Agreement may be executed in one or more counterparts, each of which shall be
deemed to be an original and all of which shall constitute one and the same
instrument.
Section 10. Entire
Agreement.
This
Agreement, together with the Letter and award agreements entered into by and
between Xxxxxx and the Company with respect to outstanding incentive awards and
incentive awards granted on or before the date hereof, sets forth the entire
agreement, and supersedes all prior agreements and understandings, both written
and oral, between the parties with respect to the subject matter hereof and
thereof.
Section 11. Titles and
Headings.
Titles
and headings to Sections herein are for purposes of reference only, and shall in
no way limit, define or otherwise affect the meaning or interpretation of any of
the provisions of this Agreement.
Section 12. Consent to
Jurisdiction.
The
parties hereto each hereby irrevocably submit to the exclusive jurisdiction of
any New York State or Federal court sitting in the Borough of Manhattan, City of
New York in any action or proceeding to enforce the provisions of this
Agreement, and waives the defense of inconvenient forum to the maintenance of
any such action or proceeding.
Section 13. No Duty to
Mitigate.
Xxxxxx
shall have no duty to mitigate or, except as specified in Section 1(c), have any
off-set made against amounts payable by the Company to Xxxxxx
hereunder.
Section 14. Release.
As a
condition to the obligation of the Company to make the payments provided for in
this Agreement and otherwise perform its obligations hereunder to Xxxxxx upon
termination of Xxxxxx’x employment (other than due to his death), Xxxxxx or his
legal representatives shall deliver to the Company a written release,
substantially in the form attached hereto as Exhibit A, and the time for
revocation of such release shall have expired, no later than thirty (30) days
following termination of Xxxxxx’x employment; provided, however, that such
release shall be conditioned on the receipt from the Company of a release of
Xxxxxx, provided that such release from the Company shall not be such a
condition and shall be null and void and of no force or effect in the event of
any act or omission by Xxxxxx that constitutes Cause or that could be a crime of
any kind.
Section 15. Section
409A.
(a) Notwithstanding
any provision of this Agreement to the contrary, if Xxxxxx is a “specified
employee” as determined by the Board or the Compensation Committee of the Board
in accordance with Section 409A of the Internal Revenue Code of 1986, as amended
or any regulations or Treasury guidance promulgated thereunder (“Section 409A”),
Xxxxxx shall not be entitled to any payments of amounts which constitute
deferred compensation within the meaning of Section 409A upon a termination of
his employment until the earlier of (i) the date which is six months after his
termination of employment for any reason other than death (except that during
such six (6) month period Xxxxxx may receive total payments from the Company
that do not exceed the amount specified in Treas. Reg. Section 1.409A-1(b)(9) or
that constitute a short-term deferral within the meaning of Section 409A), or
(ii) the date of his death.
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(b) If
any provision of this Agreement or of any award of compensation, including
equity compensation or benefits would cause Xxxxxx to incur any additional tax
or interest under Section 409A, the parties agree to negotiate in good faith to
reform such provision in such manner as to maintain, to the maximum extent
practicable, the original intent and economic terms of the applicable provision
without violating the provisions of Section 409A.
(c)
Notwithstanding any provision of this Agreement to the contrary, to the extent
any compensation or award which constitutes deferred compensation within the
meaning of Section 409A shall vest upon the occurrence of a Change of Control
and such Change of Control does not constitute a “change in the ownership or
effective control” or a “change in the ownership or a substantial portion of the
assets” of the Corporation within the meaning of Section 409A, then
notwithstanding such vesting, payment will be made to Xxxxxx on the earliest of
(i) Xxxxxx’x “separation from service” with the Company (determined in
accordance with Section 409A) or, if Xxxxxx is a specified employee within
the meaning of Section 409A, such later date as provided in paragraph (a) of
this Section 15, (ii) the date payment otherwise would have been made, or
(iii) Xxxxxx’x death.
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IN
WITNESS WHEREOF, the undersigned have executed this Agreement as of July 14,
2009.
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/s/ Xxxxxxx Xxxxxx
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Xxxxxxx
X. Xxxxxx
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XXXXXXXXX.XXX,
INC.
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By:
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/s/ Xxxxx Xxxx
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Name:
Xxxxx Xxxx
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Title:
Chief Executive
Officer
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EXHIBIT
A
Form of
Release
This
Release (this “Release”) is entered into by Xxxxxxx X. Xxxxxx (“Xxxxxx”) and
XxxXxxxxx.xxx, Inc., a Delaware corporation (the “Company”), effective as of
[DATE] (the “Effective Date”).
In
consideration of the promises set forth in the Severance Agreement between
Xxxxxx and the Company, dated as of July 14, 2009 (the “Agreement”), Xxxxxx and
the Company agree as follows:
1. General
Releases and Waivers of Claims.
(a) Xxxxxx’x Release of
Company. In consideration of the payments and benefits provided to Xxxxxx
under the Agreement and after consultation with counsel, Xxxxxx on behalf of
himself and each of his respective heirs, executors, administrators,
representatives, agents, successors and assigns (collectively, the “Xxxxxx
Parties”) hereby irrevocably and unconditionally release and forever discharge
the Company and its subsidiaries and affiliates and each of their respective
officers, employees, directors, shareholders and agents (“Company Parties”) from
any and all claims, actions, causes of action, rights, judgments, fees and costs
(including attorneys’ fees), obligations, damages, demands, accountings or
liabilities of whatever kind or character (collectively, “Claims”), including,
without limitation, any Claims based upon contract, tort, or under any federal,
state, local or foreign law, that the Xxxxxx Parties may have, or in the future
may possess, arising out of any aspect of Xxxxxx’x employment relationship with
and service as an employee, officer, director or agent of the Company, or the
termination of such relationship or service, that occurred, existed or arose on
or prior to the date hereof; provided, however, that Xxxxxx does not release,
discharge or waive (i) any rights to payments and benefits provided under the
Agreement, (ii) any right Xxxxxx may have to enforce this Release or the
Agreement, (iii) Xxxxxx’x eligibility for indemnification in accordance with the
Company’s certificate of incorporation, bylaws or other corporate governance
document, any applicable insurance policy or any contract or provision to which
Xxxxxx is a party or as to which Xxxxxx otherwise is entitled to indemnification
benefits, with respect to any liability he incurred or might incur as an
employee, officer or director of the Company, (iv) any claims for accrued,
vested benefits under any employee benefit or pension plan of the Company
Parties subject to the terms and conditions of such plan and applicable law
including, without limitation, any such claims under COBRA or the Employee
Retirement Income Security Act of 1974, or (v) any rights under or in respect of
that certain Agreement for Grant of Restricted Stock Units Under 2007
Performance Incentive Plan between Xxxxxx and the Company, dated as of July 14,
2009 (the “Letter”).
(b) Executive’s Specific Release
of ADEA Claims. In further consideration of the payments and benefits
provided to Xxxxxx under the Agreement, Xxxxxx on behalf of himself and the
other Xxxxxx Parties hereby unconditionally release and forever discharge the
Company Parties from any and all Claims that the Xxxxxx Parties may have as of
the date Xxxxxx signs this Release arising under the Federal Age Discrimination
in Change of Control and Severance Act of 1967, as amended, and the applicable
rules and regulations promulgated thereunder (“ADEA”). By signing this Release,
Xxxxxx hereby acknowledges and confirms the following: (i) Xxxxxx was
advised by the Company in connection with his termination to consult with an
attorney of his choice prior to signing this Release and to have such attorney
explain to him the terms of this Release, including, without limitation, the
terms relating to his release of claims arising under ADEA, and Xxxxxx has in
fact consulted with an attorney; (ii) Xxxxxx was given a period of not
fewer than 21 days to consider the terms of this Release and to consult with an
attorney of his choosing with respect thereto; and (iii) Xxxxxx knowingly
and voluntarily accepts the terms of this Release. Xxxxxx also understands that
he has seven (7) days following the date on which he signs this Release
within which to revoke the release contained in this paragraph, by providing the
Company a written notice of his revocation of the release and waiver contained
in this paragraph.
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(c) Company’s Release of
Executive. The Company for itself and on behalf of the Company Parties
hereby irrevocably and unconditionally release and forever discharge the Xxxxxx
Parties from any and all Claims, including, without limitation, any Claims based
upon contract, tort, or under any federal, state, local or foreign law, that the
Company Parties may have, or in the future may possess, arising out of any
aspect of Xxxxxx’x employment relationship with and service as an employee,
officer, director or agent of the Company, or the termination of such
relationship or service, that occurred, existed or arose on or prior to the date
hereof, excepting (i) any Claim which would constitute or result from conduct by
Xxxxxx that constituted the basis for termination for Cause under the Agreement
or could be a crime of any kind, or (ii) rights arising under or in respect of
the Letter. Anything to the contrary notwithstanding in this Release, nothing
herein shall release Xxxxxx or any other Executive Party from any Claims based
on any right the Company may have to enforce this Release or the
Agreement.
(d) No Assignment. The
parties represent and warrant that they have not assigned any of the Claims
being released under this Release.
2. Proceedings. Neither Xxxxxx nor the Company have
filed, any complaint, charge, claim or proceeding against the other party before
any local, state or federal agency, court or other body relating to Xxxxxx’x
employment or the termination thereof (each, individually, a
“Proceeding”).
3. Remedies.
(a) In
the event Xxxxxx initiates or voluntarily participates in any Proceeding
involving any of the matters waived or released in this Release, or if he fails
to abide by any of the terms of this Release, or if he revokes the ADEA release
contained in Paragraph 1(b) of this Release within the seven-day period
provided under Paragraph 1(b), the Company may, in addition to any other
remedies it may have, reclaim any amounts paid to him, and terminate any
benefits or payments that are due, pursuant to the termination provisions of the
Agreement, without waiving the release granted herein. In addition, in the event
that Xxxxxx has failed to comply with Sections 6 and/or 7 of the Letter (other
than as a result of an unintentional and immaterial disclosure of confidential
information), the Company may, in addition to any other remedies it may have, to
the extent permitted in the Agreement and the Letter reclaim any amounts paid to
him pursuant to the Agreement or the Letter, without waiving the release granted
herein. Xxxxxx acknowledges and agrees that the remedy at law available to the
Company for breach of any of his post-termination obligations under the
Agreement or his obligations herein would be inadequate and that damages flowing
from such a breach may not readily be susceptible to being measured in monetary
terms. Accordingly, Xxxxxx acknowledges, consents and agrees that, in addition
to any other rights or remedies that the Company may have at law or in equity,
the Company shall be entitled to seek a temporary restraining order or a
preliminary or permanent injunction, or both, without bond or other security,
restraining Xxxxxx from breaching his post-termination obligations under the
Agreement or his obligations hereunder. Such injunctive relief in any court
shall be available to the Company, in lieu of, or prior to or pending
determination in, any arbitration proceeding.
(b) Xxxxxx
understands that by entering into this Release he will be limiting the
availability of certain remedies that he may have against the Company and
limiting also his ability to pursue certain claims against the
Company.
(c) The
Company acknowledges and agrees that the remedy at law available to Xxxxxx for
breach of any of its post-termination obligations under the Agreement or its
obligations hereunder would be inadequate and that damages flowing from such a
breach may not readily be susceptible to being measured in monetary terms.
Accordingly, the Company acknowledges, consents and agrees that, in addition to
any other rights or remedies that Xxxxxx may have at law or in equity, Xxxxxx
shall be entitled to seek a temporary restraining order or a preliminary or
permanent injunction, or both, without bond or other security, restraining the
Company from breaching its post-termination obligations under the Agreement or
its obligations hereunder. Such injunctive relief in any court shall be
available to Xxxxxx, in lieu of, or prior to or pending determination in, any
arbitration proceeding.
(d) The
Company understands that by entering into this Release it will be limiting the
availability of certain remedies that it may have against Xxxxxx and limiting
also its ability to pursue certain claims against Xxxxxx.
4. Severability Clause.
In the event any provision or part of this Release is found to be invalid or
unenforceable, only that particular provision or part so found, and not the
entire Release, will be inoperative.
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5. Nonadmission. Nothing contained in this Release
will be deemed or construed as an admission of wrongdoing or liability on the
part of the Company or Xxxxxx.
6. Governing
Law. All matters affecting
this Release, including the validity thereof, are to be governed by, and
interpreted and construed in accordance with, the laws of the New York
applicable to contracts executed in and to be performed in that
State.
7. Notices. All notices or communications
hereunder shall be made in accordance with Section 3 of the
Agreement.
XXXXXX
ACKNOWLEDGES THAT HE HAS READ THIS RELEASE AND THAT HE FULLY KNOWS, UNDERSTANDS
AND APPRECIATES ITS CONTENTS, AND THAT HE HEREBY EXECUTES THE SAME AND MAKES
THIS RELEASE AND THE RELEASE AND AGREEMENTS PROVIDED FOR HEREIN VOLUNTARILY AND
OF HIS OWN FREE WILL.
IN
WITNESS WHEREOF, the parties have executed this Release as of
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Xxxxxxx
X. Xxxxxx
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XXXXXXXXX.XXX,
INC.
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By:
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Name:
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Title:
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