November 8, 2012 Christopher Rondeau Newington, NH 03801 Dear Chris:
Exhibit 10.9
November 8, 2012
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Dear ▇▇▇▇▇:
This letter (the “Agreement”) confirms the terms and conditions of your employment with Planet Fitness Holdings, LLC (the “Company”).
1. Position and Duties.
(a) Effective as of the Closing Date, as defined in the Membership Interest Purchase Agreement by and between TSG PF Investment L.L.C. (the “Buyer”) and the Company, dated as of October 23, 2012, you will continue to be employed by the Company, on a full-time basis, as its Chief Operating Officer. In addition, you may be asked from time to time to serve as a manager, director or officer of one or more of the Company’s Affiliates, without further compensation. In the event that the Closing Date does not occur, this Agreement shall be of no force or effect.
(b) You agree to perform the duties of your position and such other duties as may reasonably be assigned to you from time to time. You also agree that, while employed by the Company, you will devote your full business time and your best efforts, business judgment, skill and knowledge exclusively to the advancement of the business interests of the Company and its Affiliates and to the discharge of your duties and responsibilities for them.
(c) You agree to comply with all Company policies, practices and procedures and all codes of ethics or business conduct applicable to your position, as in effect from time to time.
2. Compensation and Benefits. During your employment, as compensation for all services performed by you for the Company and its Affiliates and subject to your full performance of your obligations hereunder, the Company will provide you the following pay and benefits:
(a) Base Salary. The Company will pay you a base salary at the rate of $500,000 per year, payable in accordance with the regular payroll practices of the Company and subject to upward adjustment from time to time by the Board of Managers of the Company (the “Board”) in its discretion (as adjusted, from time to time, the “Base Salary”).
(b) Bonus Compensation. For each fiscal year completed during your employment under this Agreement, you will be eligible to earn an annual bonus. Your target bonus will be between 50% of your Base Salary and 100% of your Base Salary, with the actual amount of any such bonus being determined by the Board in its discretion, based on the Company’s performance against goals established annually by the Board after consultation with you. In order to receive any annual bonus under this Section 4(b), except as provided in Section 5(b) of this Agreement, you must be employed by the Company on the last day of such fiscal year. Annual bonuses will be payable after completion of the Company’s fiscal audit in the fiscal year following the fiscal year in which the bonus is earned, and in all events within 90 days following the close of the preceding fiscal year.
(c) Participation in Employee Benefit Plans. You will be eligible to participate in all employee benefit plans from time to time in effect for employees of the Company generally, except to the extent such plans are duplicative of benefits otherwise provided you under this Agreement (e.g., a severance pay plan). Your participation will be subject to the terms of the applicable plan documents and generally applicable Company policies, as the same may be in effect from time to time.
(d) Vacations. You will be entitled to earn up to 4 weeks of vacation per year, in addition to holidays observed by the Company. Vacation may be taken at such times and intervals as you shall determine, subject to the business needs of the Company. Vacation shall otherwise be subject to the policies of the Company, as in effect from time to time.
(e) Business Expenses. The Company will pay or reimburse you for all reasonable business expenses incurred or paid by you in the performance of your duties and responsibilities for the Company, subject to any maximum annual limit and other restrictions on such expenses set by the Company and to such reasonable substantiation and documentation as may be specified from time to time. Your right to reimbursement for business expenses hereunder shall be subject to the following additional rules: (i) the amount of expenses eligible for reimbursement during any calendar year shall not affect the expenses eligible for reimbursement in any other taxable year, (ii) reimbursement shall be made not later than December 31 of the calendar year following the calendar year in which the expense was incurred, and (iii) the right to reimbursement is not subject to liquidation or exchange for any other benefit.
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3. Confidential Information and Restricted Activities.
(a) Confidential Information. During the course of your employment with the Company, you have and will learn of Confidential Information, as defined below, and you have and may develop Confidential Information on behalf of the Company and its Affiliates. You agree that you will not use or disclose to any Person (except as required by applicable law or for the proper performance of your regular duties and responsibilities for the Company) any Confidential Information obtained by you incident to your employment or any other association with the Company or any of its Affiliates. You agree that this restriction shall continue to apply after your employment terminates, regardless of the reason for such termination.
(b) Protection of Documents. All documents, records and files, in any media of whatever kind and description, relating to the business, present or otherwise, of the Company or any of its Affiliates, and any copies, in whole or in part, thereof (the “Documents”), whether or not prepared by you, shall be the sole and exclusive property of the Company. You agree to safeguard all Documents and to surrender to the Company, at the time your employment terminates or at such earlier time or times as the Board or its designee may specify, all Documents then in your possession or control. You also agree to disclose to the Company, at the time your employment terminates or at such earlier time or times as the Board or its designee may specify, all passwords necessary or desirable to access any Company information you have stored on the Company’s systems.
(c) Assignment of Rights to Intellectual Property. You shall promptly and fully disclose all Intellectual Property to the Company. You hereby assign and agree to assign to the Company (or as otherwise directed by the Company) your full right, title and interest in and to all Intellectual Property. You agree to execute any and all applications for domestic and foreign patents, copyrights or other proprietary rights and to do such other acts (including without limitation the execution and delivery of instruments of further assurance or confirmation) requested by the Company to assign the Intellectual Property to the Company and to permit the Company to enforce any patents, copyrights or other proprietary rights to the Intellectual Property. You will not charge the Company for time spent in complying with these obligations. All copyrightable works that you create during your employment shall be considered “work made for hire” and shall, upon creation, be owned exclusively by the Company.
(d) Restricted Activities. You agree that the following restrictions on your activities during your employment are necessary to protect the good will, Confidential Information, trade secrets and other legitimate interests of the Company and its Affiliates:
(i) While you are employed by the Company (the “Restricted Period”), you will not, directly or indirectly, whether as owner, partner, investor, consultant, agent, employee, co-venturer or otherwise, engage in the Business of the Company or undertake
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any planning to engage in the Business of the Company, as long as the Buyer continues to carry on the Business of the Company, in any geographic area anywhere in the world. For purposes of this Agreement, the “Business of the Company” shall mean owning, franchising or operating low-price health and fitness clubs and “low-price health and fitness clubs” shall mean health and fitness clubs that charge membership fees of thirty dollars ($30) or less per month. The foregoing, however, shall not prevent your passive ownership of five percent (5%) or less of the equity securities of any publicly traded company.
(ii) During the Restricted Period, you will not, directly or indirectly, (a) solicit or encourage any franchisee of the Company or any of its Affiliates to terminate or diminish its relationship with them; or (b) seek to persuade any such franchisee or prospective franchisee of the Company or any of its Affiliates to conduct with anyone else any business or activity which such franchisee or prospective franchisee conducts or could conduct with the Company or any of its Affiliates.
(iii) During the Restricted Period, you will not, directly or indirectly, (a) hire or solicit for hiring any employee of the Company or any of its Affiliates or seek to persuade any employee of the Company or any of its Affiliates to discontinue employment or (b) solicit or encourage any independent contractor providing services to the Company or any of its Affiliates to terminate or diminish its relationship with them; provided, however, that these restrictions shall apply only to employees and independent contractors who have provided services to the Company at any time within the immediately preceding two year period.
(iv) In signing this Agreement, you give the Company assurance that you have carefully read and considered all the terms and conditions of this Agreement, including the restraints imposed on you under this Section 3. You agree without reservation that these restraints are necessary for the reasonable and proper protection of the Company and its Affiliates, and that each and every one of the restraints is reasonable in respect to subject matter, length of time and geographic area. You further agree that, were you to breach any of the covenants contained in this Section 3, the damage to the Company and its Affiliates would be irreparable. You therefore agree that the Company, in addition to any other remedies available to it, shall be entitled to preliminary and permanent injunctive relief against any breach or threatened breach by you of any of those covenants, without having to post bond. You and the Company agree that, in the event of any dispute under this Agreement, the prevailing party shall be entitled to recover its reasonable attorney’s fees and costs from the other party. You and the Company further agree that, in the event that any provision of this Section 3 is determined by any court of competent jurisdiction to be unenforceable by reason of its being extended over too great a time, too large a geographic area or too great a range of activities, that provision shall be deemed to be modified to permit its enforcement to the maximum extent permitted by law. It is also agreed that each of the Company’s Affiliates shall have the right to enforce all of your obligations to that Affiliate under this Agreement, including without limitation pursuant to this Section 3. Finally, no claimed breach of this Agreement or other violation of law attributed to the Company, or change in the nature or scope of your employment relationship with the Company, shall operate to excuse you from the performance of your obligations under this Section 3.
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4. Termination of Employment. Your employment under this Agreement shall continue until terminated pursuant to this Section 4.
(a) By the Company For Cause. The Company may terminate your employment for Cause upon notice to you setting forth in reasonable detail the nature of the cause. For the purposes of this Agreement, “Cause” is defined as any one of the following: (i) your intentional breach of this Agreement or of any fiduciary duty owed by you to the Company or any of its Affiliates, (ii) your conviction of, or plea of nolo contendere to, a felony, (iii) your conviction of a crime of moral turpitude, (iv) your commission of a fraud, or engaging in embezzlement, theft or material dishonesty, with respect to the Company or any of its Affiliates or (v) your failure to follow lawful directions of the Board consistent with this Agreement, which failure remains uncured for a period of fifteen (15) days following the Company’s written notice to you. Notwithstanding the foregoing, the Company will not have to provide more than one notice and opportunity to cure under Section 5(a)(v) hereof with respect to any multiple, repeated, related or substantially similar events or circumstances.
(b) By the Company Without Cause. The Company may terminate your employment at any time other than for Cause upon notice to you.
(c) By You For Good Reason. You may terminate your employment for Good Reason upon notice to the Company setting forth in reasonable detail the nature of the good reason. For the purposes of this Agreement, “Good Reason” is defined as any one of the following occurring without your written consent: (i) the Company’s relocation of you to an office located more than 35 miles from Newington, New Hampshire, (ii) a material diminution in Base Salary or (iii) a material breach by the Company of this Agreement; provided that, in the case of either (i), (ii) or (iii), notice of the claimed Good Reason is provided within 60 days of the condition being known to you and the applicable relocation, diminution or breach remains uncured for a period of 30 days following your written notice to the Company. You must terminate your employment, if at all, not later than 120 days following the occurrence giving rise to Good Reason; provided, however, that in the event the Company provides you with the notice referred to in Section 5(a)(v) hereof, you may not seek to terminate your employment hereunder for Good Reason after receipt of such notice and prior to the date that is 2 days following the expiration of the 15 day cure period.
(d) By You Without Good Reason. You may terminate your employment at any time upon 30 days’ notice to the Company. The Board may elect to waive such notice period or any portion thereof; but in that event, the Company shall pay you your base salary for that portion of the notice period so waived.
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(e) Death and Disability. Your employment hereunder shall automatically terminate in the event of your death during employment. In the event you become disabled during employment and, as a result, are unable to continue to perform substantially all of your duties and responsibilities under this Agreement, either with or without any reasonable accommodation that may be due, the Company will continue to pay you your base salary, reduced by any disability income benefits to which you are entitled, and to provide you benefits in accordance with Section 2(c) above, to the extent permitted by plan terms, for up to 90 consecutive days or 120 non-consecutive days of disability during any period of 365 consecutive calendar days. If you are unable to return to work after 90 consecutive days or 120 non-consecutive days of disability, the Company may terminate your employment, upon notice to you. If any question shall arise as to whether you are disabled to the extent that you are unable to perform substantially all of your duties and responsibilities for the Company and its Affiliates, you shall, at the Company’s request, submit to a medical examination by a physician selected by the Company to whom you or your guardian, if any, has no reasonable objection to determine whether you are so disabled, and such determination shall for purposes of this Agreement be conclusive of the issue. If such a question arises and you fail to submit to the requested medical examination, the Company’s determination of the issue shall be binding on you.
5. Other Matters Related to Termination.
(a) Final Compensation. In the event of termination of your employment with the Company, howsoever occurring, the Company shall pay you (i) your base salary for the final payroll period of your employment, through the date your employment terminates; (ii) compensation at the rate of your base salary for any vacation time earned but not used as of the date your employment terminates; (iii) subject to the timing rules of Section 2(b) above, any bonus awarded but not yet paid for the bonus year preceding the year in which termination occurs; and (iv) reimbursement for business expenses incurred by you but not yet paid to you as of the date your employment terminates; provided you submit all expenses and supporting documentation required within 30 days of the date your employment terminates, and provided further that such expenses are re-imburseable under Company policies as then in effect (all of the foregoing, “Final Compensation”). All Final Compensation shall be paid to you at the time prescribed by law or applicable Company Policy for such payment, but, other than any bonus described in Section 5(a)(iii), in no event more than 60 days following the termination of your employment.
(b) Severance. In the event of your separation from service in connection with any termination of your employment pursuant to Section 4(b) or Section 4(c) above, subject to Section 5(c) and 5(e) below, the Company will pay you, in addition to Final Compensation, twelve (12) months of your Base Salary (the “Severance”) plus a pro rata portion of the annual bonus you would have earned for the fiscal year in which your separation from service occurs had your employment continued for the full year (based on the actual average bonus percentage paid to other similarly situated employees of the Company) (the, “Target Bonus” and together with the Severance, the “Severance Payment”).
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(c) Conditions To And Timing Of Severance Payment. Any obligation of the Company to provide you the Severance Payment is conditioned, however, on your signing and returning to the Company a timely and effective separation agreement containing a release of claims and non-disparagement provision in the form appended hereto as Exhibit A (the “Release of Claims”). The Release of Claims must become effective, if at all, by the 60th calendar day following the date your employment is terminated. Any Severance to which you are entitled will be in the form of salary continuation, payable during the twelve (12) month period following the date your employment is terminated in accordance with the normal payroll practices of the Company. The first payment, which shall be retroactive to the date immediately following the date your employment is terminated, will be made on the first regularly scheduled payroll date that follows the expiration of 60 days from the date your employment is terminated (the “Payment Date”). Any Target Bonus to which you are entitled will be payable at such time when bonuses are payable to executives of the Company generally or, if later, on the Payment Date (and in all events in the fiscal year following the fiscal year for which it is earned).
(d) Benefits Termination. Except for any right you may have under the federal law known as “COBRA” to continued participation in the Company’s group health and dental plans at your cost, your participation in all employee benefit plans shall terminate in accordance with the terms of the applicable benefit plans based on the date of termination of your employment, without regard to any continuation of base salary or other payment to you following termination and you shall not be eligible to earn vacation or other paid time off following the termination of your employment.
(e) Survival. Provisions of this Agreement shall survive any termination of employment if so provided in this Agreement or if necessary or desirable to accomplish the purposes of other surviving provisions, including without limitation your obligations under Section 3 of this Agreement. The obligation of the Company to make payments to you under Section 5(b), and your right to retain the same, are expressly conditioned upon your continued full performance of your obligations under Section 3 hereof. Upon termination by either you or the Company, all rights, duties and obligations of you and the Company to each other shall cease, except as otherwise expressly provided in this Agreement.
6. Timing of Payments and Section 409A.
(a) Notwithstanding anything to the contrary in this Agreement, if at the time your employment terminates, you are a “specified employee,” as defined below, any and all amounts payable under this Agreement on account of such separation from service that would (but for this provision) be payable within six (6) months following the date of termination, shall
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instead be paid on the next business day following the expiration of such six (6) month period or, if earlier, upon your death; except (A) to the extent of amounts that do not constitute a deferral of compensation within the meaning of Treasury regulation Section 1.409A-1(b) (including without limitation by reason of the safe harbor set forth in Section 1.409A-1(b)(9)(iii), as determined by the Company in its reasonable good faith discretion); (B) benefits which qualify as excepted welfare benefits pursuant to Treasury regulation Section 1.409A-1(a)(5); or (C) other amounts or benefits that are not subject to the requirements of Section 409A of the Internal Revenue Code of 1986, as amended.
(b) For purposes of this Agreement, all references to “termination of employment” and correlative phrases shall be construed to require a “separation from service” (as defined in Section 1.409A-1(h) of the Treasury regulations after giving effect to the presumptions contained therein), and the term “specified employee” means an individual determined by the Company to be a specified employee under Treasury regulation Section 1.409A-1(i).
(c) Each payment made under this Agreement shall be treated as a separate payment and the right to a series of installment payments under this Agreement is to be treated as a right to a series of separate payments.
7. Definitions. For purposes of this Agreement, the following definitions apply:
“Affiliates” means all persons and entities directly or indirectly controlling, controlled by or under common control with the Company, where control may be by management authority, equity interest or otherwise.
“Confidential Information” means any and all information of the Company and its Affiliates that is not generally available to the public. Confidential Information also includes any information received by the Company or any of its Affiliates from any Person with any understanding, express or implied, that it will not be disclosed. Confidential Information does not include information that enters the public domain, other than through your breach of your obligations under this Agreement.
“Intellectual Property” means inventions, discoveries, developments, methods, processes, compositions, works, concepts and ideas (whether or not patentable or copyrightable or constituting trade secrets) conceived, made, created, developed or reduced to practice by you (whether alone or with others, whether or not during normal business hours or on or off Company premises) during your employment that relate either to the business of the Company or to any prospective activity of the Company or any of its Affiliates or that result from any work performed by the Executive for the Company or any of its Affiliates or that make use of Confidential Information or any of the equipment or facilities of the Company or any of its Affiliates.
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“Person” means an individual, a corporation, a limited liability company, an association, a partnership, an estate, a trust or any other entity or organization, other than the Company or any of its Affiliates.
8. Conflicting Agreements. You hereby represent and warrant that your signing of this Agreement and the performance of your obligations under it will not breach or be in conflict with any other agreement to which you are a party or are bound, and that you are not now subject to any covenants against competition or similar covenants or any court order that could affect the performance of your obligations under this Agreement. You agree that you will not disclose to or use on behalf of the Company any confidential or proprietary information of a third party without that party’s consent.
9. Withholding. All payments made by the Company under this Agreement shall be reduced by any tax or other amounts that are required to be withheld by the Company under applicable law.
10. Assignment. Neither you nor the Company may make any assignment of this Agreement or any interest in it, by operation of law or otherwise, without the prior written consent of the other; provided, however, the Company may assign its rights and obligations under this Agreement without your consent to one of its Affiliates or to any Person with whom the Company shall hereafter effect a reorganization, consolidate with, or merge into or to whom it transfers all or substantially all of its properties or assets. This Agreement shall inure to the benefit of and be binding upon you and the Company, and each of our respective successors, executors, administrators, heirs and permitted assigns.
11. Severability. If any portion or provision of this Agreement shall to any extent be declared illegal or unenforceable by a court of competent jurisdiction, then the remainder of this Agreement, or the application of such portion or provision in circumstances other than those as to which it is so declared illegal or unenforceable, shall not be affected thereby, and each portion and provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law.
12. Miscellaneous. This Agreement sets forth the entire agreement between you and the Company, and replaces all prior and contemporaneous communications, agreements and understandings, written or oral, with respect to the terms and conditions of your employment. This Agreement may not be modified or amended, and no breach shall be deemed to be waived, unless agreed to in writing by you and an expressly authorized representative of the Board. The headings and captions in this Agreement are for convenience only and in no way define or describe the scope or content of any provision of this Agreement. This Agreement may be executed in two or more counterparts, each of which shall be an original and all of which together shall constitute one and the same instrument. This is a New Hampshire contract and shall be governed and construed in accordance with the laws of the State of New Hampshire, without regard to the conflict of laws principles thereof.
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13. Notices. Any notices provided for in this Agreement shall be in writing and shall be effective when delivered in person or deposited in the United States mail, postage prepaid, and addressed to you at your last known address on the books of the Company or, in the case of the Company, to it at its principal place of business, attention of the Chair of the Board, or to such other address as either party may specify by notice to the other actually received.
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If the foregoing is acceptable to you, please sign this letter in the space provided and return it to me no later than the Closing Date. As of the Closing Date, this letter will take effect as a binding agreement between you and the Company on the basis set forth above. The enclosed copy is for your records.
| Sincerely yours, | ||
| /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ | ||
| ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ | ||
| Chief Executive Officer | ||
| Accepted and Agreed: | ||
| /s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ | ||
| ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ | ||
| Date: |
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[Signature Page to ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Employment Agreement]
EXHIBIT A
RELEASE OF CLAIMS
For and in consideration of certain benefits to be provided me, which are conditioned on my signing and not revoking this Release of Claims and to which I am not otherwise entitled, and other good and valuable consideration, the receipt and sufficiency of which I hereby acknowledge, on my own behalf and on behalf of my heirs, executors, administrators, beneficiaries, representatives and assigns, and all others connected with or claiming through me, I hereby release and forever discharge Planet Fitness Holdings, LLC (the “Company”) and its parent and affiliated entities, and all of their respective present and former officers, directors, shareholders, employees, employee benefits plans, administrators, trustees, agents, representatives, consultants, successors and assigns, and all those connected with any of them, in their official and individual capacities (collectively, the “Released Parties”), from any and all suits, claims, demands, debts, sums of money, damages, interest, attorneys’ fees, expenses, actions, causes of action, judgments, accounts, promises, contracts, agreements, and any and all claims at law or in equity, whether now known or unknown, which I now have or ever have had against the Released Parties, or any of them, including, but not limited to, any claims under Title VII of the Civil Rights Act of 1964, the Americans With Disabilities Act, the Family and Medical Leave Act, the Age Discrimination in Employment Act, the Older Worker Benefits Protection Act, the Genetic Information Nondiscrimination Act of 2008, the fair employment practices laws of the state or states in which I have provided services to the Company, and any other federal, state or local statute, regulation, ordinance or common law, and all claims related to or arising out of my employment or the termination of my employment with the Company (collectively, the “Claims”). I also waive any right I may have to recover any compensation or damages in any action against any of the Released Parties brought by any governmental entity on my behalf or on behalf of any class of which I may be a member. I hereby represent that I have not previously filed or joined in any complaints, charges or lawsuits against the Company pending before any governmental agency or court of law relating to my employment and/or the termination thereof. This Release of Claims shall not apply to any Claim (a) that arises after I sign this Release of Claims; (b) that may not be waived pursuant to applicable law; or (c) by me to enforce the provisions of this Release of Claims.
I further agree that I will not disparage or criticize the Released Parties, or the business, management or services of the Company or any of its affiliates, and that I will not otherwise do or say anything that could disrupt the good morale of employees of the Company or any of its affiliates or harm the interests or reputation of the Company or any of its affiliates.
I acknowledge that I may consider the terms of this Release of Claims to decide whether to sign it for up to [twenty-one (21)/forty-five (45)1] days from my receipt of this Release of Claims. I acknowledge, however, that I may not sign this Release of Claims until after the date my employment with the Company terminates. I acknowledge that I will have seven (7) days after signing this Release of Claims to revoke my signature, and that, if I intend to revoke my signature, I must do so in writing addressed and delivered to [Contact Name] prior to the end of the seven-day revocation period. I understand that this Release of Claims shall become effective upon the eighth (8th) day following the day I sign it, provided I do not revoke my acceptance.
| 1 | Note to Draft: Consideration period to be determined by the Company at the time of termination of employment. |
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I also acknowledge that I am advised by the Company to seek the advice of an attorney prior to signing this Release of Claims; that I have had sufficient time to consider this Release of Claims and to consult with an attorney, if I wished to do so, or to consult with any other person of my choosing before signing; and that I am signing this Release of Claims voluntarily and with a full understanding of its terms
| Accepted and agreed: | ||
| Signature: |
| |
| Date: |
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