EXECUTIVE EMPLOYMENT AGREEMENT (Executive Chairman)
Exhibit 10.1
EXECUTIVE EMPLOYMENT AGREEMENT
(Executive Chairman)
(Executive Chairman)
This Executive Employment Agreement (the “Agreement”) is entered into on September 10,
2008, by and between Grand Canyon Education, Inc., a Delaware corporation (the “Company”),
and Xxxxx X. Xxxxxxxxxx (“Executive”).
The parties agree as follows:
1. Employment. The Company hereby employs Executive, and Executive hereby accepts
such employment, upon the terms and conditions set forth herein.
2. Duties.
2.1 Position. Executive is employed as Executive Chairman and shall have the duties
and responsibilities assigned by the Company’s Board of Directors as may be reasonably assigned
from time to time. Executive shall perform faithfully and diligently all duties assigned to
Executive. The Company reserves the right to modify Executive’s position and duties at any time in
its sole and absolute discretion, except that any material diminution in Executive’s duties shall
be subject to Section 7.3(ii) below.
2.2 Board. Executive shall serve as a member and Chairman of the Board of Directors,
subject to the review and recommendation of the Company’s Nominating and Corporate Governance
Committee.
2.3 Best Efforts/Full-time. Executive will expend Executive’s best efforts on behalf
of the Company, and will abide by all policies and decisions made by the Company, as well as all
applicable federal, state and local laws, regulations or ordinances. Executive will act in the
best interest of the Company at all times. Executive shall devote Executive’s full business time
and efforts to the performance of Executive’s assigned duties for the Company, unless Executive
notifies the Company in advance of Executive’s intent to engage in other paid work and receives the
Company’s express written consent to do so. Notwithstanding the foregoing, Executive will be
permitted to serve as an outside director on the board of directors for corporate, civic, nonprofit
or charitable entities, so long as Executive obtains the consent of the Company and provided such
entities are not competitive with the Company and subject to the provisions of section 9 below.
2.4 Work Location. Executive’s principal place of work shall be located in Phoenix,
Arizona, or such other location as the Company may direct from time to time.
3. Term.
3.1 Initial Term. The employment relationship pursuant to this Agreement shall be for
an initial term commencing on September 10, 2008 (the “Effective Date”) and continuing for
a period of four (4) years following such date (“Initial Term”), unless sooner terminated
in accordance with section 7 below.
3.2 Renewal. On expiration of the Initial Term specified in subsection 3.1 above,
this Agreement will automatically renew for subsequent one (1) year terms (each a “Renewal
Term”) unless either party provides thirty (30) days’ advance written notice to the
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other that the Company or Executive does not wish to renew the Agreement for subsequent
Renewal Term. In the event either party gives notice of nonrenewal pursuant to this subsection
3.2, this Agreement will expire at the end of the then current term. The Initial Term and each
subsequent Renewal Term are referred to collectively as the “Term”.
4. Compensation.
4.1 Base Salary. As compensation for Executive’s performance of Executive’s duties
hereunder, the Company shall pay to Executive an initial Base Salary at the rate of Two-Hundred
Ninety-Seven Thousand Five-Hundred Dollars ($297,500.00) per year payable in accordance with the
normal payroll practices of the Company, less required deductions for state and federal withholding
tax, social security and all other employment taxes and payroll deductions. In the event
Executive’s employment under this Agreement is terminated by either party, for any reason,
Executive will earn the Base Salary prorated to the date of termination, except as otherwise set
forth herein. Executive’s Base Salary shall be reviewed annually by the Compensation Committee of
the Company’s Board of Directors (the “Compensation Committee”).
4.2 Incentive Compensation. Executive will be eligible to earn incentive compensation
in the form of an annual bonus for each fiscal year of the Company as determined by the
Compensation Committee. The Compensation Committee will base such determination upon both the
Company’s achievement of overall performance metrics for the year and Executive’s achievement of
individual performance metrics as agreed upon by the Compensation Committee and the Executive.
Bonus amounts, if any, are to be awarded annually and payment shall be made within two and one-half
months following the end of the applicable Company fiscal year.
5. Customary Fringe Benefits. Executive will be eligible for all customary and usual
fringe benefits generally available to senior management of the Company, subject to the terms and
conditions of the Company’s benefit plan documents. The Company reserves the right to change or
eliminate fringe benefits on a prospective basis, at any time, effective upon notice to Executive.
6. Business Expenses. Executive will be reimbursed for all reasonable, out-of-pocket
business expenses incurred in the performance of Executive’s duties on behalf of the Company. To
obtain reimbursement, expenses must be submitted promptly with appropriate supporting documentation
and will be reimbursed in accordance with the Company’s policies. Any reimbursement Executive is
entitled to receive shall (a) be paid no later than the last day of Executive’s tax year following
the tax year in which the expense was incurred, (b) not be affected by any other expenses that are
eligible for reimbursement in any tax year, and (c) not be subject to liquidation or exchange for
another benefit.
7. Termination of Executive’s Employment.
7.1 Termination for Cause by Company. Although the Company anticipates a mutually
rewarding employment relationship with Executive, the Company may terminate Executive’s employment
immediately at any time for Cause. For purposes of this Agreement, “Cause” is defined as:
(a) acts or omissions constituting gross negligence, recklessness or willful misconduct on the part
of Executive with respect to Executive’s obligations or otherwise relating to the business of the
Company; (b) Executive’s material breach of this Agreement, including, without limitation, any
breach of Section 8, Section 9, or Section 11; (c) Executive’s
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breach of the Company’s Employee Nondisclosure and Assignment Agreement; (d) Executive’s
conviction or entry of a plea of nolo contendere for fraud, misappropriation or embezzlement, or
any felony or crime of moral turpitude; (e) Executive’s inability to perform the essential
functions of Executive’s position, with or without reasonable accommodation, due to a mental or
physical disability; (f) Executive’s willful neglect of duties as determined in the sole and
exclusive discretion of the Board of Directors, provided that Executive has received written notice
of the action or omission giving rise to such determination and has failed to remedy such situation
to the satisfaction of the Board of Directors within thirty (30) days following receipt of such
written notice, unless Executive’s action or omission is not subject to cure, in which case no such
notice shall be required, or (g) Executive’s death. In the event Executive’s employment is
terminated in accordance with this subsection 7.1, Executive shall be entitled to receive only
Executive’s Base Salary then in effect, prorated to the date of termination, and all fringe
benefits through the date of termination. All other Company obligations to Executive pursuant to
this Agreement will be automatically terminated and completely extinguished. Executive will not be
entitled to receive the Severance Package described in subsection 7.2 below. Any termination
pursuant to this subsection 7.1 shall be evidenced by a resolution or written consent of the Board
of Directors of the Company, and the Company shall provide Executive with a copy of such resolution
or written consent, certified by the Secretary of the Company, upon Executive’s written request.
7.2 Termination Without Cause by Company/Severance. The Company may terminate
Executive’s employment under this Agreement without Cause at any time upon written notice to
Executive. In the event of such termination, Executive will receive Executive’s Base Salary then
in effect, prorated to the date of termination of employment. In addition, Executive will receive
a “Severance Package” that shall include (a) a severance payment equivalent to twelve (12)
months of Executive’s Base Salary then in effect on the date of termination, payable in accordance
with the Company’s regular payroll cycle commencing with the first payroll date occurring on or
after the 60th day following the date of Executive’s termination of employment, and (b) payment by
the Company of the premiums required to continue Executive’s group health care coverage for a
period of twelve (12) months following Executive’s termination, under the applicable provisions of
the Consolidated Omnibus Budget Reconciliation Act (“COBRA”), provided that Executive
timely elects to continue and remains eligible for these benefits under COBRA, and does not become
eligible for health coverage through another employer during this period. Executive will only
receive the Severance Package if Executive: (i) complies with all surviving provisions of this
Agreement as specified in subsection 14.8 below; and (ii) executes a full general release,
releasing all claims, known or unknown, that Executive may have against the Company arising out of
or any way related to Executive’s employment or termination of employment with the Company, and
such release has become effective in accordance with its terms prior to the 60th day following the
termination date. All other Company obligations to Executive will be automatically terminated and
completely extinguished.
7.3 Voluntary Resignation by Executive for Good Reason/Severance. Executive may
voluntarily resign Executive’s position with the Company for Good Reason at any time on thirty (30)
days’ advance written notice to the Company. In the event of Executive’s resignation for Good
Reason, Executive will be entitled to receive Executive’s Base Salary then in effect, prorated to
the date of termination of employment, and the Severance Package described in subsection 7.2 above,
provided Executive complies with all of the conditions described in subsection 7.2 above. All
other Company obligations to Executive pursuant to this Agreement will be automatically terminated
and completely extinguished. Executive will be deemed to have resigned for Good Reason if
Executive voluntarily terminates his employment
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with the Company within ninety (90) days following the first occurrence of a condition
constituting Good Reason. “Good Reason” means the occurrence of any of the following
conditions without Executive’s written consent, which condition(s) remain(s) in effect thirty (30)
days after Executive provides written notice to the Company of such condition(s): (i) a material
reduction in Executive’s Base Salary as then in effect prior to such reduction, other than as part
of a salary reduction program among similar management employees, (ii) a material diminution in
Executive’s authority, duties or responsibilities as an employee of the Company as they existed
prior to such change, or (iii) a relocation of Executive’s principal place of work which increases
Executive’s one-way commute distance by more than fifty (50) miles. Executive will be deemed to
have given consent to any condition(s) described in this subsection if Executive does not provide
written notice to the Company of his intent to exercise his rights pursuant to this subsection
within thirty (30) days following the first occurrence of such condition(s).
7.4 Voluntary Resignation by Executive Without Good Reason. Executive may voluntarily
resign Executive’s position with the Company without Good Reason at any time on thirty (30) days’
advance written notice to the Company. In the event of Executive’s resignation without Good
Reason, Executive will be entitled to receive only Executive’s Base Salary, prorated to the date of
termination of employment, and all fringe benefits through the date of termination. All other
Company obligations to Executive pursuant to this Agreement will be automatically terminated and
completely extinguished. In addition, Executive will not be entitled to receive the Severance
Package described in subsection 7.2 above.
7.5 Termination After a Change in Control.
(a) Severance Payment; Option Vesting Acceleration. If, upon or within twelve (12)
months after a Change in Control (as that term is defined below), Executive’s employment is
terminated by the Company other than for Cause (as defined in subsection 7.1 above) or Executive
resigns for Good Reason (as defined in subsection 7.3 above), then (i) Executive shall be entitled
to receive (A) Executive’s Base Salary, prorated to the date of termination of employment, and (B)
the Severance Package described in subsection 7.2 above, provided Executive complies with all of
the conditions described in subsection 7.2 above, and (ii) to the extent not yet vested, any stock
options or equity grants granted to Executive by the Company shall vest in full as of the date of
such termination of employment, provided Executive complies with the conditions described in
subsection 7.2 above.
(b) Parachute Payments. If, due to the benefits provided under subsection 7.5(a) and
any other payments or benefits, Executive would be subject to any excise tax pursuant to Section
4999 of the Internal Revenue Code of 1986, as amended (the “Code”) due to characterization
of any such amounts as excess parachute payments pursuant to Section 280G of the Code, the amounts
payable under subsection 7.5(a) will be reduced (to the least extent possible) in order to avoid
any “excess parachute payment” under Section 280G(b)(1) of the Code.
(c) Change in Control. A Change in Control is defined as any one of the following
occurrences:
(i) Any “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange
Act of 1934 (the “Exchange Act”)), becomes the “beneficial owner” (as such term is defined
in Rule 13d-3 promulgated under the Exchange Act), directly or indirectly, of securities of the
Company representing more than fifty percent (50%) of the total fair market value or total combined
voting power of the Company’s then-outstanding securities
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entitled to vote generally in the election of directors; provided, however, that a Change in
Control shall not be deemed to have occurred if such degree of beneficial ownership results from
any of the following: (A) an acquisition of securities by any person who on the Effective Date is
the beneficial owner of more than fifty percent (50%) of such voting power, (B) any acquisition of
securities directly from the Company, including, without limitation, pursuant to or in connection
with a public offering of securities, (C) any acquisition of securities by the Company, (D) any
acquisition of securities by a trustee or other fiduciary under an employee benefit plan of the
Company, or (E) any acquisition of securities by an entity owned directly or indirectly by the
stockholders of the Company in substantially the same proportions as their ownership of the voting
securities of the Company; or
(ii) the sale or disposition of all or substantially all of the Company’s assets (other than a
sale or disposition to one or more subsidiaries of the Company), or any transaction having similar
effect is consummated; or
(iii) the Company is party to a merger or consolidation that results in the holders of voting
securities of the Company outstanding immediately prior thereto failing to continue to represent
(either by remaining outstanding or by being converted into voting securities of the surviving
entity) more than 50% of the combined voting power of the voting securities of the Company or such
surviving entity outstanding immediately after such merger or consolidation; or
(iv) the dissolution or liquidation of the Company.
7.6 Termination of Employment Upon Nonrenewal. In the event either party decides not
to renew this Agreement for a subsequent term in accordance with subsection 3.2 above, this
Agreement will expire, Executive’s employment with the Company will terminate and Executive will
only be entitled to Executive’s Base Salary then in effect paid through the last day of the then
current term. All other Company obligations to Executive pursuant to this Agreement will be
automatically terminated and completely extinguished. Executive will not be entitled to receive
the Severance Package described in subsection 7.2 above, but shall be subject to the surviving
provisions of this Agreement as set forth in section 14.8 below.
7.7 Resignation of Board or Other Positions. Executive agrees that should Executive’s
employment terminate for any reason, Executive will immediately resign all other positions
(including board membership) Executive may hold on behalf of the Company.
7.8 Application of Section 409A.
(a) Notwithstanding anything set forth in this Agreement to the contrary, no amount payable
pursuant to this Agreement on account of Executive’s termination of employment with the Company
which constitutes a “deferral of compensation” within the meaning of the Treasury Regulations
issued pursuant to Section 409A of the Code (the “Section 409A Regulations”) shall be paid
unless and until Executive has incurred a “separation from service” within the meaning of the
Section 409A Regulations. Furthermore, if Executive is a “specified employee” within the meaning
of the Section 409A Regulations as of the date of Executive’s separation from service, no amount
that constitutes a deferral of compensation which is payable on account of Executive’s separation
from service shall be paid to Executive before the date (the “Delayed Payment Date”) which
is first day of the seventh month after the date of Executive’s separation from service or, if
earlier, the date of Executive’s death following such separation from service. All such amounts
that would, but for this subsection, become
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payable prior to the Delayed Payment Date will be accumulated and paid on the Delayed Payment
Date.
(b) The Company intends that income provided to Executive pursuant to this Agreement will not
be subject to taxation under Section 409A of the Code. The provisions of this Agreement shall be
interpreted and construed in favor of satisfying any applicable requirements of Section 409A of the
Code. However, the Company does not guarantee any particular tax effect for income provided to
Executive pursuant to this Agreement. In any event, except for the Company’s responsibility to
withhold applicable income and employment taxes from compensation paid or provided to Executive,
the Company shall not be responsible for the payment of any applicable taxes incurred by Executive
on compensation paid or provided to Executive pursuant to this Agreement.
8. No Violation of Rights of Third Parties. Executive represents and warrants to the
Company that Executive is not currently a party, and will not become a party, to any other
agreement that is in conflict with, or will prevent Executive from complying with, with this
Agreement. Executive further represents and warrants to the Company that Executive’s performance
of all of the terms of this Agreement as an employee of the Company does not and will not breach
any agreement to keep in confidence any proprietary information, knowledge, or data acquired by
Executive in confidence or trust prior to Executive’s employment with the Company. Executive
acknowledges and agrees that the representations and warranties in this Section 8 are a material
part of this Agreement.
9. Other Covenants. Executive hereby makes the following covenants, each of which
Executive acknowledges and agrees are a material part of this Agreement:
9.1 During the Term of Executive’s employment with the Company, Executive will not (a) breach
any agreement to keep in confidence any confidential or proprietary information, knowledge or data
acquired by Executive prior to Executive’s employment with Company, or (b) disclose to the Company,
or use or induce the Company to use, any confidential or proprietary information or material
belonging to any previous employer or any other third party. Executive acknowledges that the
Company has specifically instructed Executive not to breach any such agreement or make any such
disclosures to the Company.
9.2 During the Term of Executive’s employment with the Company, Executive will not engage in
any work or activity, paid or unpaid, that creates an actual conflict of interest with the Company.
Such work shall include, but is not limited to, directly or indirectly competing with the Company
in any way, or acting as an officer, director, employee, consultant, stockholder, volunteer,
lender, or agent of any business enterprise of the same nature as, or which is in direct
competition with, the business in which the Company is now engaged or in which the Company becomes
engaged during the term of Executive’s employment with the Company, as may be determined by the
Company in its sole discretion. If the Company believes such a conflict exists during the term of
this Agreement, the Company may ask Executive to choose to discontinue the other work or activity
or resign employment with the Company.
9.3 During the Term of Executive’s employment with the Company and after the termination
thereof, neither Executive nor the Company will disparage each other, or the Company’s products,
services, agents or employees.
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9.4 During the Term of Executive’s employment with the Company and after the termination
thereof, at the Company’s expense and upon its reasonable request, Executive will cooperate and
assist the Company in its defense or prosecution of any disputes, differences, grievances, claims,
charges, or complaints between the Company and any third party, which assistance will include
testifying on the Company’s behalf in connection with any such matter or performing any other task
reasonably requested by the Company in connection therewith.
10. Confidentiality and Proprietary Rights. Executive agrees to read, sign and abide
by the Company’s Employee Nondisclosure and Assignment Agreement, which is provided with this
Agreement and incorporated herein by reference.
11. Non-Competition; Nonsolicitation of Company’s Employees. Executive acknowledges
that in the course of his employment with the Company he will serve as a member of the Company’s
senior management and will become familiar with the Company’s trade secrets and with other
confidential and proprietary information and that his services will be of special, unique and
extraordinary value to the Company. Executive further acknowledges that the Company’s business, a
substantial portion of which is conducted online, is national in scope and that the Company, in the
course of such business, recruits students and faculty throughout the United States, works with
vendors throughout the United States, and competes with other companies located throughout the
United States. Therefore, in consideration of the foregoing, Executive agrees that, during the
Term, and during the twelve-month (12) month period following the Term, he shall not directly or
indirectly anywhere within the United States of America (a) own (except ownership of less than 1%
of any class of securities which are listed for trading on any securities exchange or which are
traded in the over-the-counter market), manage, control, participate in, consult with, render
services for, be employed by, or in any manner engage in the operation of (i) a for-profit,
post-secondary education institution, or (ii) any other business of the Company in which Executive
had significant involvement prior to Executive’s separation; (b) solicit funds on behalf of, or for
the benefit of, any for-profit, post-secondary education institution (other than the Company) or
any other entity that competes with the Company; (c) solicit individuals who are current or
prospective students of the Company to be students for any other for-profit, post-secondary
education institution; (d) induce or attempt to induce any employee of the Company to leave the
employ of the Company, or in any way interfere with the relationship between the Company and any
employee thereof, or (e) induce or attempt to induce any student, customer, supplier, licensee or
other business relation of the Company to cease doing business with, or modify its business
relationship with, the Company, or in any way interfere with or hinder the relationship between any
such student, customer, supplier, licensee or business relation and the Company.
12. Injunctive Relief. Executive acknowledges that Executive’s breach of the
covenants contained in sections 9-11 hereof (collectively “Covenants”) would cause
irreparable injury to the Company and agrees that in the event of any such breach, the Company
shall be entitled to seek temporary, preliminary and permanent injunctive relief without the
necessity of proving actual damages or posting any bond or other security in addition to any other
relief to which the Company may be entitled and other remedies Company may exercise under this
Agreement or otherwise.
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13. Insurance; Indemnification.
13.1 During the Term of Executive’s employment hereunder, Executive will be covered by the
Company’s director and officer insurance policy to the same extent as all other senior executive
officers of the Company
13.2 Following the execution of this Agreement, the Company will execute and deliver a
director and officer indemnification agreement with Executive in a form approved by the Board of
Directors for the senior executive officers of the Company.
14. General Provisions.
14.1 Successors and Assigns. The rights and obligations of the Company under this
Agreement shall inure to the benefit of and shall be binding upon the successors and assigns of the
Company. Executive shall not be entitled to assign any of Executive’s rights or obligations under
this Agreement.
14.2 Waiver. Either party’s failure to enforce any provision of this Agreement shall
not in any way be construed as a waiver of any such provision, or prevent that party thereafter
from enforcing each and every other provision of this Agreement.
14.3 Attorneys’ Fees. In the event of a dispute involving the interpretation or
enforcement of this Agreement, a court shall award attorneys’ fees and costs to the prevailing
party.
14.4 Severability. In the event any provision of this Agreement is found to be
unenforceable by a court of competent jurisdiction, such provision shall be deemed modified to the
extent necessary to allow enforceability of the provision as so limited, it being intended that the
parties shall receive the benefit contemplated herein to the fullest extent permitted by law. If a
deemed modification is not satisfactory in the judgment of such court, the unenforceable provision
shall be deemed deleted, and the validity and enforceability of the remaining provisions shall not
be affected thereby.
14.5 Interpretation; Construction. The headings set forth in this Agreement are for
convenience only and shall not be used in interpreting this Agreement. This Agreement has been
drafted by legal counsel representing the Company, but Executive has participated in the
negotiation of its terms. Furthermore, Executive acknowledges that Executive has had an
opportunity to review and revise the Agreement and have it reviewed by legal counsel, if desired,
and, therefore, the normal rule of construction to the effect that any ambiguities are to be
resolved against the drafting party shall not be employed in the interpretation of this Agreement.
14.6 Governing Law; Forum. This Agreement will be governed by and construed in
accordance with the laws of the United States and the State of Arizona . Each party consents to
the jurisdiction and venue of the state or federal courts in Phoenix, Arizona, if applicable, in
any action, suit, or proceeding arising out of or relating to this Agreement, and agrees that the
state or federal courts in Phoenix, Arizona shall have exclusive jurisdiction over any dispute
arising between the parties related to this Agreement or Executive’s employment with the Company.
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14.7 Notices. Any notice required or permitted by this Agreement shall be in writing
and shall be delivered as follows with notice deemed given as indicated: (a) by personal delivery
when delivered personally; (b) by overnight courier upon written verification of receipt; (c) by
telecopy or facsimile transmission upon acknowledgment of receipt of electronic transmission; or
(d) by certified or registered mail, return receipt requested, upon verification of receipt.
Notice shall be sent to the addresses set forth under the signatures below, or such other address
as either party may specify in writing.
14.8 Survival. Sections 9 (“Other Covenants”), 10 (“Confidentiality and Proprietary
Rights”), 11 (“Non-Competition; Nonsolicitation”), 12 (“Injunctive Relief”), 13 (“Insurance;
Indemnification”), 14 (“General Provisions”) and 15 (“Entire Agreement”) of this Agreement shall
survive termination of Executive’s employment with the Company.
15. Entire Agreement. This Agreement, including the Employee Nondisclosure and
Assignment Agreement incorporated herein by reference, constitutes the entire agreement between the
parties relating to this subject matter and supersedes all prior or simultaneous representations,
discussions, negotiations, and agreements, whether written or oral. This agreement may be amended
or modified only with the written consent of Executive and the Board. No oral waiver, amendment or
modification will be effective under any circumstances whatsoever.
THE PARTIES TO THIS AGREEMENT HAVE READ THE FOREGOING AGREEMENT AND FULLY UNDERSTAND EACH AND EVERY
PROVISION CONTAINED HEREIN. WHEREFORE, THE PARTIES HAVE EXECUTED THIS AGREEMENT ON THE DATES SHOWN
BELOW.
| XXXXX X. XXXXXXXXXX |
||||
| Dated: September 10, 2008 | By: | /s/ Xxxxx X. Xxxxxxxxxx | ||
| Address: | ||||
| GRAND CANYON EDUCATION, INC. |
||||
| Dated: September 10, 2008 | By | /s/ Xxxxx X. Xxxxxxx | ||
| Name: | Xxxxx X. Xxxxxxx | |||
| Title: | Chief Executive Officer | |||
| Address: |
0000 Xxxx Xxxxxxxxx Xxxx Xxxxxxx, Xxxxxxx 00000 |
|||
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