EXHIBIT 10.10
EMPLOYMENT AGREEMENT
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THIS EMPLOYMENT AGREEMENT (the "Employment Agreement"), dated as of
this 12th day of June, 1998 is entered into by and between Cedro Group, Inc.
(the "Company"), and ▇▇▇▇▇▇ ▇▇▇▇ ("Executive"). This Employment Agreement shall
only become enforceable and effective on the calendar date on which the Company
closes its venture financing in the amount of approximately $4,500,000 (the
"Effective Date"). In consideration of the mutual covenants and agreements
hereinafter set forth, the parties agree as follows:
1. EMPLOYMENT.
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1.1 Position. During the Employment Term (as hereinafter
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defined) and subject to the terms and conditions set forth herein, the Company
agrees to employ Executive as its Vice President of Technology, reporting
directly to the Company's President and Chief Operating Officer.
1.2 Duties. Executive will be employed as Vice President of
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Technology. Executive shall diligently, and to the best of his ability, perform
all such duties incident to his position and use his best efforts to promote the
interests of the Company.
1.3 Time to be Devoted to Employment. During the Employment
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Term, Executive shall devote his full time and energy to the business of the
Company. Executive hereby represents that he is not a party to any agreement
which would be an impediment to entering into this Employment Agreement and that
he is permitted to enter into this Employment Agreement and perform the
obligations hereunder.
2. COMPENSATION AND BENEFITS.
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2.1 Annual Salary. In consideration of and as compensation for
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the services agreed to be performed by Executive hereunder, the Company agrees
to pay Executive a starting annual base salary of $90,000, payable in accordance
with the Company's regular payroll schedule ("Base Salary"), less applicable
withholdings and deductions. The Base Salary will be subject to change at the
sole discretion of the Board of Directors of the Company (the "Board").
2.2 Bonus Plan. Executive will be eligible to receive an annual
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bonus payment of up to 25% of his current base salary. Payment of the bonus will
be at the sole discretion of the Board and will be based on achievement of
certain milestones to be determined by the Board.
2.3 Stock Option. Subject to approval by the Board at the first
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regularly scheduled Board meeting held after the Effective Date, Executive will
be granted an option under the Company's 1996 Stock Option Plan (the "Plan") to
purchase 50,000 shares of the Company's Common Stock (the "Option"). The option
exercise price per share will be the fair market value per share of the
Company's Common Stock on the option grant date, as
determined by the Board. The Option will be an incentive stock option to the
maximum extent permissible under the Federal tax laws. 12,500 of the option
shares will vest effective January 1, 1999 and the remainder will vest in 36
equal monthly installments thereafter over Executive's period of service with
the Company measured from January 1, 1999. Subject to Section 4.4, the remaining
terms of the Option will be set forth in the Plan and the form option
agreements.
2.4 Repurchase Right. Executive and the Company agree that the
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Company shall be permitted to purchase from Executive up to 500,000 shares
(subject to adjustment for stock splits, dividends, recapitalizations and the
like) of the Company's Common Stock owned by Executive on the date hereof (the
"Shares") at the Fair Market Value thereof if at any time during the Employment
Term Executive terminates this Employment Agreement pursuant to Section 4.1(iv)
hereof (voluntary departure without Good Reason) (the "Repurchase Right"). The
Repurchase Right shall lapse with respect to 1/30th of the Shares at the end of
each month of the Employment Term; provided, however, that the Repurchase Right
shall lapse with respect to all of the Shares (a) immediately prior to an
initial public offering of the Company or the acquisition of the Company in a
Corporate Transaction (as defined in Section 11.3.1 of the Plan), (b) upon
termination of this Employment Agreement pursuant to Sections 4.1(i) (death),
4.1(ii) (disability) or 4.1(v) (by Executive for Good Reason), or (c) upon the
Company hiring a technology officer with a title, duties and responsibilities
senior to those of Executive. The Repurchase Right shall be exercisable by
written notice delivered by the Company within thirty (30) days after
Executive's termination of employment pursuant to Section 4.1(iv). The notice
shall indicate the date set for the closing of the repurchase, which shall not
be more than ten (10) business days after the end of the thirty (30)-day
exercise period, and at the closing the Company shall pay the purchase price of
the repurchased shares in cash, and the Executive shall concurrently deliver the
stock certificates for the repurchased shares, each duly-endorsed by him for
transfer. If the Repurchase Right is not exercised during such thirty (30)-day
exercise period, the Repurchase Right shall lapse in its entirety. The
Repurchase Right shall be assignable by the Company.
For purposes of this Employment Agreement, "Fair Market Value" shall
mean the value of the Shares being repurchased hereunder based upon the exercise
price which the Board would then assign to incentive stock options granted under
the Plan.
2.5 Participation in Benefit Plans. During the Employment Term,
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Executive shall be entitled to participate in the Company's health insurance,
life insurance and disability insurance plans to the extent permitted by law,
that may from time to time be adopted by the Board. The Company reserves the
right to amend, modify or terminate any employee benefits at any time for any
reason.
2.6 Reimbursement of Expenses. The Company shall reimburse
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Executive for all reasonable professional development expenses, such as classes
and seminars, and for all reasonable business expenses, such as a mobile phone,
incurred by Executive on behalf of the Company, provided that: (i) such
reasonable expenses are ordinary and necessary expenses incurred on behalf of
the Company, and (ii) Executive provides the Company with itemized accounts,
receipts and other documentation for such reasonable expenses as are required by
the Company.
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2.7 Vacation. During the Employment Term, Executive will be
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entitled to 15 days of paid vacation per annum, which may be carried over and
used in any year during the Employment Term.
3. EMPLOYMENT TERM.
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3.1 Employment Term. The "Employment Term" means the period
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commencing on the Effective Date and terminating on the earlier of two years and
six months from the Effective Date or as set forth in Section 4.1.
3.2 Notice of Renewal. At least sixty (60) days prior to the
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natural expiration of the period ending two years and six months from the
Effective Date and sixty (60) days prior to each one year anniversary
thereafter, if applicable, the Company shall give Executive written notice of
whether the Company will be seeking a one-year extension of Executive's services
under this Employment Agreement or subsequent one-year period, if applicable.
Unless such notice indicates that there will be no extension, the terms of this
Employment Agreement (other than Section 2.4) shall be automatically renewed for
successive one-year periods. However, Executive's employment with the Company
will continue unless terminated by Executive or the Company as set forth in
Section 4.1.
4. TERMINATION OF EMPLOYMENT.
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4.1 Method of Termination. Executive's employment pursuant to
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this Employment Agreement and the Employment Term provided for herein shall
terminate upon the first of the following to occur:
(i) Executive's death;
(ii) Date that written notice is deemed given or made by the
Company to Executive that as a result of any physical or mental injury or
disability, he is unable to perform the essential functions of his job, with or
without reasonable accommodation. Such notice may be issued when the Board has
reasonably determined that Executive has become unable to perform substantially
his services and duties hereunder with or without reasonable accommodation
because of any physical or mental injury or disability, and that it is
reasonably likely that he will not be able to resume substantially performing
his services and duties on substantially the terms and conditions as set forth
in this Employment Agreement;
(iii) Date that written notice is deemed given or made by the
Company to Executive of termination for "cause." For purposes of this Employment
Agreement, "cause" shall mean any one of the following:
(A) Gross negligence or the repeated failure of
Executive, following the receipt of written notice from the Board of its
dissatisfaction with Executive's performance, to perform his duties and
responsibilities to the reasonable satisfaction of the Board, or any breach by
Executive of his fiduciary duties to the Company or any material term of this
Employment Agreement. For purposes of this Employment Agreement, any act or acts
or omission or omissions by Executive that have a material adverse effect on the
Company's
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operations, prospects, reputation or business shall be deemed to be a breach of
his duties and responsibilities to the Company; or
(B) The conviction of Executive for a felony.
(iv) Date that written notice is deemed given or made by
Executive of his resignation or voluntary departure from the Company without
Good Reason (as hereinafter defined); or
(v) Date that written notice is deemed given or made by
Executive of his resignation or voluntary departure from the Company for Good
Reason. For purposes of this Employment Agreement, "Good Reason" shall mean
Executive's resignation or departure by reason of:
(A) a change in Executive's position with the
Company which materially reduces Executive's level of responsibilities or title;
(B) a material reduction in Executive's level of
compensation (including base salary, fringe benefits and any bonus award
(unrelated to any executive officer-wide reduction to save expenses)); or
(C) a relocation of Executive's principal place
of employment with the Company by more than seventy-five (75) miles.
(vi) Date that written notice is deemed given or made by the
Company to Executive of Executive's termination without "cause."
Nothing herein alters Executive and the Company's separate right to
terminate the employment relationship at any time, for any reason, with or
without cause.
4.2 Effect of Termination for Cause, Executive's Resignation or
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Voluntary Departure Without Good Reason. Upon (i) the termination of Executive
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for cause; or (ii) Executive's resignation or voluntary departure without Good
Reason; Executive will not be entitled to any additional compensation or other
rights or benefits from the Company; and, as a result, the Company shall be
obligated to pay Executive only that portion of his Base Salary that Executive
has earned prior to the effective date of the termination of Executive's
employment with the Company.
4.3 Effect of Executive's Death or Disability. Other than as set
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forth in Section 2.4, upon Executive's departure pursuant to Section 4.1(i)
(death) or 4.1(ii) (disability) of this Employment Agreement, Executive will not
be entitled to any additional compensation or other rights or benefits from the
Company; and, as a result, the Company shall be obligated to pay Executive only
that portion of his Base Salary that Executive has earned prior to the effective
date of the termination of Executive's employment with the Company.
4.4 Effect of Termination Without Cause or Executive's Voluntary
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Departure from the Company for Good Reason. In the event the Company terminates
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Executive's employment with the Company without cause or Executive voluntarily
departs from
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the Company for Good Reason, the Company's Repurchase Right shall lapse as set
forth in Section 2.4, and Executive will be entitled to his then existing Base
Salary for a period of twelve (12) weeks from the date of termination payable in
accordance with the Company's regular payroll schedule and the Company will also
reimburse Executive for his COBRA premiums to continue his medical insurance
coverage pursuant to COBRA for the period of twelve (12) weeks from the date of
termination. In addition, the Option shall accelerate and vest as to six
additional monthly installments immediately prior to such termination.
4.5 Resignation as an Officer and Director. In the event Executive's
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employment with the Company terminates for any reason, Executive agrees to
immediately resign as an officer and/or director of the Company.
5. CONFIDENTIAL INFORMATION AND COVENANT NOT TO COMPETE.
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5.1 Executive understands that the Company and its affiliates
possess Proprietary Information (as defined below) which is important to its
business and that this Employment Agreement creates a relationship of confidence
and trust between Executive and the Company and its affiliates with regard to
Proprietary Information. Nothing in this Section 5 shall be deemed modified or
terminated in the event of the termination or expiration of this Employment
Agreement.
5.2 For purposes of this Employment Agreement, "Proprietary
Information" is information that was or will be developed, created, or
discovered by or on behalf of the Company and its affiliates and predecessors,
or is developed, created or discovered by Executive while performing services
under this Employment Agreement, or which became or will become known by, or was
or is conveyed to the Company and its affiliates which has commercial value in
the Company's and its affiliates' business. "Proprietary Information" includes,
but is not limited to, trade secrets, ideas, techniques, business, product, or
franchise development plans, customer information, franchisee information and
any other information concerning the Company's and its affiliates' actual or
anticipated business, development, personnel information, or which is received
in confidence by or for the Company and its affiliates from any other person.
5.3 At all times, both during the term of this Employment Agreement
and after its termination, Executive will keep in confidence and trust, and will
not use or disclose, any Proprietary Information without the prior written
consent of the Board.
5.4 Executive understands that the Company and its affiliates
possess or will possess "Company Documents" which are important to its business.
For purposes of this Employment Agreement, "Company Documents" are documents or
other media that contain or embody Proprietary Information or any other
information concerning the business, operations or plans of the Company and its
affiliates, whether such documents have been prepared by Executive or by others.
"Company Documents" include, but are not limited to, blueprints, drawings,
photographs, charts, graphs, notebooks, customer lists, computer disks,
personnel files, tapes or printouts and other printed, typewritten or
handwritten documents. All Company Documents are and shall remain the sole
property of the Company. Executive agrees not to
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remove any Company Documents from the business premises of the Company or
deliver any Company Documents to any person or entity outside the Company,
except as required to do in connection with performance of the services under
this Employment Agreement. Executive further agrees that, immediately upon the
Company's request and in any event upon completion of Executive's services,
Executive shall deliver to the Company all Company Documents, apparatus,
equipment and other physical property or any reproduction of such property.
5.5 During the term of this Employment Agreement and for one year
thereafter, Executive will not encourage or solicit any employee of the Company
or any affiliate to leave the Company or any affiliate for any reason.
5.6 Non-Competition. During the Employment Term and for one year
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thereafter, Executive shall not directly or indirectly:
(i) own, manage, operate, join, control or participate in the
ownership, management, operation or control of, or be employed by or connected
in any manner with, any enterprise which is engaged in any business competitive
with that which the Company is at the time conducting or proposing to conduct;
provided, however, that such restriction shall not apply to any passive
investment representing an interest of less than two percent (2%) of an
outstanding class of publicly traded securities of any corporation or other
enterprise which is not, at the time of such investment, engaged in a business
geographically competitive with the Company's business; or
(ii) encourage or solicit any Company employee to leave the
Company's employ for any reason or interfere in any material manner with
employment relationships at the time existing between the Company and its
current employees, except as may be required in any bona fide termination
decision regarding any Company employee.
5.7 Executive acknowledges that the specialized nature of his
knowledge of the Company's Proprietary Information, trade secrets and other
intellectual property are such that a breach of his covenant not to compete or
confidentiality obligations contained in this Section 5 of this Employment
Agreement would necessarily and inevitably result in a disclosure,
misappropriation and misuse of such Proprietary Information, trade secrets and
other intellectual property. Accordingly, Executive acknowledges and agrees that
such a breach would inflict unique and irreparable harm upon the Company and
that the Company shall be entitled, in addition to its other rights and
available remedies, to enforce, by injunction or decree of specific performance,
Executive's obligations set forth herein.
6. RESTRICTIVE COVENANT.
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During the Employment Term:
6.1 Executive shall devote substantially all of his time and energy
to the performance of Executive's duties described herein, except during periods
of illness or vacation periods.
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6.2 Executive shall not directly or indirectly provide services to
or through any person, firm or other entity except the Company, unless otherwise
authorized by the Company in writing.
6.3 Executive shall not render any services of any kind or character
for Executive's own account or for any other person, firm or entity without
first obtaining the Company's written consent.
6.4 Notwithstanding the foregoing, Executive shall have the right to
perform such incidental services as are necessary in connection with (i) his
private passive investments, but only if Executive is not obligated or required
to (and shall not in fact) devote any managerial efforts which interfere with
the services required to be performed by him hereunder, (ii) his charitable or
community activities or (iii) participation in trade or professional
organizations, but only if such incidental services do not significantly
interfere with the performance of Executive's services hereunder.
7. MISCELLANEOUS.
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7.1 Notices. All notices, demands and requests required by this
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Employment Agreement shall be in writing and shall be deemed to have been given
or made for all purposes (i) upon personal delivery, (ii) one day after being
sent, when sent by professional overnight courier service, (iii) five days after
posting when sent by registered or certified mail, or (iv) on the date of
transmission when sent by telegraph, telegram, telex, or other form of "hard
copy" transmission, to either party hereto at the address set forth below or at
such other address as either party may designate by notice pursuant to this
Section 7.
If to the Company, to:
▇▇▇▇▇ ▇▇▇▇▇▇
Cedro Group, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
And a Copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇, Phleger & ▇▇▇▇▇▇▇▇ LLP
Two Embarcadero Place
▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
If to Executive, to:
▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
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7.2 Assignment. This Employment Agreement shall be binding on, and
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shall inure to the benefit of, the parties hereto and their respective heirs,
legal representatives, successors and assigns; provided, however, that Executive
may not assign, transfer or delegate his rights or obligations hereunder and any
attempt to do so shall be void.
7.3 Deductions. All amounts paid to Executive hereunder are subject
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to all withholdings and deductions required by law, as authorized under this
Employment Agreement, and as authorized from time to time.
7.4 Entire Agreement. This Employment Agreement contains the entire
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agreement of the parties with respect to the subject matter hereof.
7.5 Amendment. This Employment Agreement may be modified or amended
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only by a written agreement signed by the Board and Executive.
7.6 Waivers. No waiver of any term or provision of this Employment
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Agreement will be valid unless such waiver is in writing signed by the party
against whom enforcement of the waiver is sought. The waiver of any term or
provision of this Employment Agreement shall not apply to any subsequent breach
of this Employment Agreement.
7.7 Counterparts. This Employment Agreement may be executed in
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several counterparts, each of which shall be deemed an original, but together
they shall constitute one and the same instrument.
7.8 Severability. The provisions of this Employment Agreement shall
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be deemed severable, and if any part of any provision is held illegal, void or
invalid under applicable law, such provision may be changed to the extent
reasonably necessary to make the provision, as so changed, legal, valid and
binding. If any provision of this Employment Agreement is held illegal, void or
invalid in its entirety, the remaining provisions of this Employment Agreement
shall not in any way be affected or impaired but shall remain binding in
accordance with their terms.
7.9 Governing Law. THIS EMPLOYMENT AGREEMENT AND THE RIGHTS AND
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OBLIGATIONS OF THE COMPANY AND EXECUTIVE HEREUNDER SHALL BE DETERMINED UNDER,
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA
AS APPLIED TO AGREEMENTS AMONG CALIFORNIA RESIDENTS ENTERED INTO AND TO BE
PERFORMED ENTIRELY WITHIN CALIFORNIA.
7.10 Arbitration. The Executive understands and agrees that, as a
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condition of his employment with the Company, any and all disputes that the
Executive may have with the Company, or any of its employees, officers,
directors, agents or assigns, which arise out of the Executive's employment or
investment or compensation shall be resolved through final and binding
arbitration, as specified in this Employment Agreement. This shall include,
without limitation, any controversy, claim or dispute of any kind, including
disputes relating to any employment by the Company or the termination thereof,
claims for breach of contract or breach of the covenant of good faith and fair
dealing, infliction of emotional distress, defamation and any claims of
discrimination, harassment or other claims under Title VII of the
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Civil Rights Act of 1964, the Age Discrimination in Employment Act, the
Americans With Disabilities Act, the Employee Retirement Income Securities Act,
or any other federal, state or local law or regulation now in existence or
hereinafter enacted and as amended from time to time concerning in any way the
subject of the Executive's employment with the Company or its termination. The
only claims not covered by this Employment Agreement are claims for benefits
under the unemployment insurance or workers' compensation laws, and any claims
pursuant to paragraph 5 of this Employment Agreement which will be resolved
pursuant to those laws. Any disputes and/or claims covered by this Employment
Agreement shall be submitted to final and binding arbitration to be conducted in
Santa ▇▇▇▇▇ County, California, in accordance with the rules and regulations of
the American Arbitration Association. The Executive and the Company will split
the cost of the arbitration filing and hearing fees and the cost of the
arbitrator, provided that the arbitrator will have authority to award these fees
to the prevailing party. Each side will bear its own attorneys' fees, provided
that the arbitrator will have authority to award attorneys' fees to the
prevailing party unless a statutory section at issue in the dispute authorizes
the award of attorneys' fees, in which case the arbitrator has authority to make
such award as permitted by the statute in question. The arbitration shall be
instead of any civil litigation; this means that the Executive is waiving any
right to a jury trial, and that the arbitrator's decision shall be final and
binding to the fullest extent permitted by law and enforceable by any court
having jurisdiction thereof.
IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement as of the date first above written.
"COMPANY"
Cedro Group, Inc.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Chief Executive Officer
"EXECUTIVE"
/s/ ▇▇▇▇▇▇ ▇▇▇▇
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