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Exhibit 10.56    
    

 
 

SECOND AMENDMENT TO AMENDED EMPLOYMENT AGREEMENT    
    

        THIS SECOND AMENDMENT (this "Second Amendment") TO AMENDED EMPLOYMENT AGREEMENT (the "Original Agreement") is made and entered into this 30th day of July, 2004,
by and between Peregrine Systems, Inc., a Delaware corporation (the "Company" or "Peregrine") and Kenneth A. Sexton ("Employee"). 

 
 

RECITALS    
    

        A.    Company
and Employee are parties to the Original Agreement, which was made and entered into on March 6, 2003 effective as of June 24, 2002, and as approved
by the bankruptcy court on February 27, 2003, as amended by the First Amendment dated as of April 5, 2004 (the "First Amendment") (as so amended, the "Existing Agreement"), pursuant to
which Employee is employed as the Company's Executive Vice President and Chief Financial Officer. 

        B.    The
Company and Employee desire to modify certain terms of the Existing Agreement, as provided herein, and to continue the employment of Employee through the Termination
Date (defined below). 

        NOW,
THEREFORE, for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties agree as follows: 

        1.     All
defined terms used herein but not defined shall have the meaning set forth in the Existing Agreement. 

        2.     Subject
to Sections 7(B) and 7(D) of the Existing Agreement, the "Termination Date" shall be defined as 30 days after the latest to occur of (i) the date
that PricewaterhouseCoopers delivers to the Company an audit opinion with respect to fiscal 2004 and consent for inclusion in the Annual Report on Form 10-K for the year ended
March 31, 2004 (the "PWC Delivery Date"), (ii) the completion by Employee of the portions of the Company's Quarterly Reports on Form 10-Q for the quarters ended
June 30, 2003, September 30, 2003 and December 31, 2003 and Annual Report on Form 10-K for the year ended March 31, 2004 (the "Fiscal 2004 SEC Filings")
for which he is responsible, and (iii) Employee's delivery to the Company of all certifications and representation letters required under Section 4(a) of this Second Amendment. For
purposes of determining whether the PWC Delivery Date has occurred, if PricewaterhouseCoopers notifies the Company that it will not deliver an audit opinion solely as a result of the failure of a
Company officer, other than Employee, to provide necessary certifications or representation letters, such notification date shall be deemed to be the PWC Delivery Date. Notwithstanding the foregoing,
in no event shall the Termination Date be later than October 31, 2004. On the Termination Date, if the Company does not have "Cause" for termination as of the Termination Date (as such is
defined in the Existing Agreement), Employee's employment as Executive Vice President and Chief Financial Officer of the Company will be deemed terminated without "Cause" (the "Termination"). 

        3.     The
provisions of the Existing Agreement are modified, not modified, or not applicable as follows: 

        Section 1.    Employment.    Section 1 of the Existing
Agreement is amended to read in its entirety as follows. 

        "Employment. The Company hereby employs the Employee as Executive Vice President and Chief Financial Officer of Peregrine to perform such
duties as are customarily performed by the Executive Vice President and Chief Financial Officer of a company, provided that if the Termination Date has not occurred on or prior to October 1,
2004, the Employee shall serve only as Executive Vice President and shall no longer serve as Chief Financial Officer or perform the duties of the Chief Financial Officer. 

 

        Section 2.    Term.    Section 2 of the Existing
Agreement is amended to read in its entirety as follows. 

        Term. The term of this Agreement commenced on June 24, 2002, and shall continue until the Termination Date (the "Term"). 

        Section 3.    Compensation/Benefits.    

        (A)    Base Salary    Section 3A of the Agreement is not modified. 

        (B)    Bonuses.    Section 3(B) of the Agreement is amended to read in its entirety as follows. 

Employee
shall be eligible to participate in the Company's Management Incentive Compensation Program ("MICP") for fiscal year 2004 and fiscal year 2005 as follows: 

        (i)    MICP Fiscal Year 2004:    

Employee's
fiscal year 2004 MICP target bonus of $275,000 will be deemed to have been earned, and shall be paid to Employee, in the amount of $255,750, which has been calculated as follows: 

First
Half Target Payout: $82,500 (30%) paid at 100% of target;

Second Half Target Payout: $82,500 (30%) paid at 90% of target; and

Full Year Target Payout: $110,000 (40%) paid at 90% of target. 

Employee
shall be entitled to receive additional payments, representing the portion of the Second Half Target Payout and the Full Year Target Payout not paid (which, if each are paid at 100%, would
result in a payment of an aggregate of $19,250) when audited financial statements for fiscal 2004 are available, if the Company determines that such additional payments under the MICP are payable to
similarly situated executive MICP participants based on the Company's audited 2004 results. 

        (ii)    MICP Fiscal Year 2005:    

For
fiscal year 2005, Employee shall be eligible for MICP participation only for the first half of the fiscal year, or for up to 60% of the annual target bonus of $275,000, payable as follows: 

First
Half Target: $165,000 (60%) to be paid at the same financial achievement rate as similarly situated executive MICP participants if Employee is actively employed on September 30, 2004, or
is terminated without "Cause" prior to September 30, 2004; and

Second Half Target: $110,000 (40%) will not apply and will not be paid. 

        (C)    Benefits.    Section 3C of the Existing Agreement is not modified. 

        (D)    Share Options.    Section 3D of the Existing Agreement is not modified. 

        (E)    Restricted Shares.    Section 3(E) of the Existing Agreement is not modified. 

        Section 4.    Expenses/Costs.    Section 4 of the
Existing Agreement is not modified. 

        Section 5.    No Setoffs.    Section 5 of the Existing
Agreement is not modified. 

        Section 6.    Protection of the Company.    Section 6 of
the Existing Agreement is not modified. 

        Section 7.    Termination.    Section 7 of the Existing
Agreement is not modified. 

        Section 8.    Additional Payments.    Section 8 of the
Existing Agreement is not modified. 

        Section 9.    Indemnification and
Insurance.    Section 9 of the Existing Agreement is not modified. 

2

 

        Section 10.    Miscellaneous.    Section 10 of the
Existing Agreement is not modified. 

        4.    Additional Provisions.    (a) Section 4(a) of the First Amendment is
amended to read in full as follows: 

        "(a)
Whether or not Employee is Chief Financial Officer at the time, Employee agrees to provide certifications required by federal securities laws by the principal financial officer in
connection with the Fiscal 2004 SEC Filings and any amendments thereto, as well as certifications and/or representation letters required by the Company and PricewaterhouseCoopers in connection with
the Company's audited financial statements and Fiscal 2004 SEC Filings and any amendments thereto. Employee will not be expected to execute any certifications or representation letters the form and
content of which Employee believes is not accurate." 

        (b)   Section 4(b)
of the First Amendment is amended to read in full as follows: 

        "(b)
Employee agrees to be available for consultation and will reasonably cooperate with the Company from time to time as requested by the Company in connection with any investigation of
the Company or its former employees or directors by the SEC, DOJ, or FBI, or during any review by the SEC of the SEC Filings (as defined in the First Amendment) and the Fiscal 2004 SEC Filings or any
amendment or restatement of the SEC Filings or the Fiscal 2004 SEC Filings if required for the period from which he leaves the employment of the Company until December 31, 2005, or such earlier
date on which the Company terminates such consulting period in writing (the "Consulting Period"). Company agrees to compensate Employee at a rate of $225 per hour, plus reimburse expenses incurred as
a result of this consultation. For purposes of clarification, Employee shall be considered a "Consultant" under the terms of the Stock Option Agreement and the Plan during the Consulting Period and to
have a continuous status as Employee or Consultant during the transition from Employee to Consultant for the Consulting Period. Employee shall be allowed to keep the computer that was provided to him
by the Company through this consultation period. At the conclusion of the consultation period, the computer will be returned to Peregrine." 

        (c)   Section 4.(c)
of the First Amendment is not modified. 

        5.     The
Existing Agreement remains in full force and effect, as modified by this Second Amendment. 

        IN
WITNESS WHEREOF, this Second Amendment has been signed on the date first written above. 

	 	 	COMPANY:
	
 	
 	

Peregrine Systems, Inc.
	

 	
 	

By:	
 	

/s/  JOHN MUTCH      8/30/04
 John Mutch
	

 	
 	
EMPLOYEE:
	
 	
 	

/s/  KENNETH SEXTON      8/30/04
 Kenneth Sexton

3

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Exhibit 10.56

SECOND AMENDMENT TO AMENDED EMPLOYMENT AGREEMENT

RECITALSQuickLinks
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Exhibit 10.57    
    

[Logo]  

July 12, 2004 

Mr. Russ
Mann

39651 Via Cacho

Temecula, CA 92592 

Dear
Russ: 

        On
behalf of Peregrine Systems, Inc. ("PSI") we would like to offer you the position of Senior Vice President, Strategic Initiatives reporting to John Mutch, President and Chief
Executive Officer, effective on or about August 2, 2004 ("Commencement Date"), subject to the following terms and conditions: 

        1.    BASE SALARY.    Your starting salary will be $11,041.67 per semi-monthly pay period effective with
your Commencement Date. 

        2.    EMPLOYMENT TERM.    The term of your employment under this letter agreement (the "Employment Term") will begin
on your Commencement Date and end when it is terminated in accordance with Section 6. 

        3.    BONUS.    Additionally, you will be eligible to participate in the Management Incentive Compensation Plan (MICP)
with an annual target of $50,000. This bonus is paid semi-annually, prorated from your hire date. A copy of the summary plan description is attached. 

        4.    BENEFITS.    You will be eligible to participate in PSI's employee benefit plans of general application,
including, without limitation, those plans covering medical, disability and life insurance in accordance with the rules established for individual participation in any such plan and under applicable
law. You will be eligible for paid time off ("PTO") in accordance with PSI policies in effect during the term of this letter agreement and will receive such other benefits as PSI generally provides to
its other employees of comparable position and experience. 

        5.    OPTIONS.    Subject to formal approval by the Compensation Committee of the Board of Directors, you will be
granted an option to purchase up to 65,000 shares of PSI common stock, subject to execution of this letter agreement and your executing a stock option agreement consistent with the terms and
conditions of the 2003 Equity Incentive Plan (the "Plan"). The date of grant of the Options will be the Commencement Date or date of formal approval by the Compensation Committee, whichever is later
(the "Grant Date"), and the exercise price per share of the Options will be the fair market value of PSI's common stock on the Grant Date as determined under the Plan. The right to exercise the
Options will vest 25% after the first 12 months, and in 36 equal monthly installments thereafter. Notwithstanding any provisions of the Plan or the stock option grant agreement evidencing the
Options to the contrary, if you terminate your employment with PSI for Good Reason (as defined below) or are subject to a Termination without Cause (as defined below), in each case in connection with
or within twelve (12) months after the occurrence of a Change in Control (as defined in the Plan), 100% of the portion of this Option which would otherwise be unvested as of the date of your
termination under the provisions set forth in the stock option grant agreement shall become vested as of the date of your termination. 

        6.    TERMINATION.    Peregrine Systems is an "at-will" employer, and as such the employer/employee
relationship is subject to termination by either party at any time with or without cause as follows: 

	a)
	You
may terminate your employment upon written notice to PSI at any time in your discretion ("Voluntary Termination") by providing 60 days' written notice to the President and
CEO; 

 

	b)
	PSI
may terminate your employment upon written notice to you at any time following a determination that there is "Cause" as defined below, for such termination ("Termination for
Cause");

	c)
	PSI
may terminate your employment upon written notice to you at any time without a determination that there is Cause for such termination ("Termination without Cause").

	d)
	You
may terminate your employment upon written notice to PSI upon 30 days' prior written notice to the President and CEO ("Notice Period") following a determination by you that
there is "Good Reason" (as defined below) for such termination ("Termination for Good Reason"). Such termination will be effective at the end of the Notice Period if PSI has not substantially remedied
the Good Reason for such termination.

	e)
	Your
employment will automatically terminate upon your death or upon your Disability (as defined below) ("Termination for Death or Disability"). 

For
purposes of this letter agreement, the term "Disability" shall mean your inability to substantially perform your job responsibilities for a period of 180 consecutive days or 180 days in the
aggregate in any 12-month period. For purposes of this letter agreement, "Cause" means (i) gross negligence or willful misconduct in the performance of your duties to PSI (other
than as a result of a Disability); (ii) repeated and continued failure to perform your duties and responsibilities as a PSI employee (including, but not limited to your compliance with any
written policy of PSI) in good faith after having a reasonable opportunity to cure such failure; (iii) commission of any act of fraud or violation of any federal or state securities laws or any
SEC rules and regulations with respect to PSI; or (iv) conviction of a felony or a crime involving moral turpitude if such felony or crime could cause material harm to the business affairs or
reputation of PSI in the reasonable determination of PSI's Board of Directors. No act or failure to act by you shall be considered "willful" if done or omitted by you in good faith with reasonable
belief that your action or omission was in the best interests of PSI. "Good Reason" shall mean (i) a significant reduction of your duties, title, position, or responsibilities relative to your
duties, title, position, or responsibilities in effect immediately prior to such reduction (including a material change in your reporting structure which shall include, but not be limited to, your no
longer reporting to the President and CEO) that is effected without your consent or agreement; (ii) a substantial reduction without good business reasons of the facilities and perquisites
available to you immediately prior to such reduction if such reduction is effected without your consent or agreement; (iii) a reduction by PSI in your Base Salary and Target Bonus in effect
immediately prior to such reduction if such reduction is effected without your consent or agreement (other than any such reduction that is effected on substantially a company-wide basis in order to
reduce PSI's operating expenses); (iv) the relocation of your primary office at PSI to a facility or location that is more than fifty (50) miles away from your primary office location
immediately prior to such relocation, if such relocation is effected without your consent or agreement. 

        7.    SEPARATION BENEFITS.    Upon termination of your employment with PSI for any reason, you will receive payment
for all salary and unpaid PTO (paid time off) accrued to the date of your termination of employment. Your benefits will be continued under PSI's then existing benefit plans and policies for
so long as provided under the terms of such plans and policies and as required by applicable law. Under certain circumstances, you will also be entitled to receive severance benefits as set forth
below, but you will not be entitled to any other compensation, award or damages with respect to your employment or termination. 

	a.
	In
the event of your Voluntary Termination or Termination for Cause, you will not be entitled to any cash severance benefits or additional vesting of shares of stock options.

	b.
	Subject
to your compliance with Section 8, in the event of your Termination for Good Reason or Termination without Cause, you will be entitled to a severance payment equal to
your 

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annual
base salary paid in twenty four semi-monthly installments plus one (1) year of COBRA coverage, reimbursed by PSI, for medical, dental, and vision insurance subject to the
same coverage levels and employee contribution rate as in effect prior to your termination. 

	c.
	Subject
to your compliance with Section 8, in the event of a Change of Control in conjunction with either a Termination for Good Reason or Termination without Cause during the
twelve (12) month period following a Change of Control, you will be paid a lump sum cash payment equal to your annual base salary plus one (1) year of COBRA coverage, reimbursed by PSI,
for medical, dental, and vision insurance subject to the same coverage levels and employee contribution rate as in effect prior to termination. The lump sum payment will be due in full on your last
day of employment with PSI. In the event of your termination by PSI or any successor corporation for any reason in connection with or following a Change of Control, you will only be entitled to the
payment set forth in this Subsection (c) (for purposes of clarity, you will not be entitled to any additional severance payment pursuant to Subsection (b)). 

        8.    RELEASE.    You agree that the severance payments you may be entitled to upon Termination for Good Reason,
Termination without Cause or upon a Change of Control (assuming your employment is terminated in connection with or within twelve (12) months following such Change of Control) will not apply
unless you (i) have executed a general release (in a form customarily used by PSI) of all known and unknown claims that you may then have against PSI and/or persons or entities affiliated with
PSI, (ii) have agreed not to prosecute or bring any legal action or other proceeding based upon any of such claims and (iii) have agreed to provide reasonable transition assistance to
PSI (or the surviving corporation) for three (3) months following termination of employment. 

        9.    CONFIDENTIALITY, NONSOLICITATION.    In light of the fact that the confidential information that you have
acquired, and will acquire, is inextricably bound with your knowledge regarding the conduct of PSI's business activities and that therefore you would necessarily use confidential information if you
were to compete with PSI, you agree that during the Employment Term, and for a period of one (1) year thereafter, you will not provide any services, whether as an officer, director, proprietor,
employee, partner, consultant, advisor, agent, sales representative or otherwise, nor will you own beneficially securities of any entity (except that, in the case of any entity whose equity securities
are publicly-held, you may beneficially own up to 2% of the outstanding equity securities of such entity or any mutual fund holding securities of such entity) that, directly or indirectly,
competes with any of PSI's present or future (up to the date of termination) business activities. You further agree that in light of the nature of PSI's business, and the life-cycle of
product development, the one-year period provided for above shall apply in regardless of the nature or reason for your termination and that it is reasonable and necessary in order to
protect the confidential, proprietary and trade-secret information that you will acquire as a result of being Senior Vice President, Strategic Initiatives of PSI. Notwithstanding the foregoing, such
restrictions shall not preclude you from providing any services to a distinct business unit of an entity if such unit does not compete with PSI's business activities, regardless of whether any other
distinct business unit of such entity competes with PSI's business activities. You also, further and independently, agree that during your employment with PSI, and for a period of one (1) year
after termination of your employment with PSI, you will not for any reason, whether directly or indirectly: (a) solicit, recruit, take away or attempt to take away, any employee or consultant
of PSI or any of its affiliates, or induce (or attempt to induce) any employee or consultant of PSI or any of its affiliates to terminate his or its employment or services with PSI or any of PSI's
affiliates; or (b) directly or indirectly, solicit any customer of PSI or any of its affiliates or induce any customer of PSI or its affiliates to terminate its relationship with PSI or any PSI
affiliate; provided, however, that this non-solicitation provision shall not prevent you from hiring any employee or consultant of PSI or any of its affiliates that you can demonstrate
either (i) approached you independently without any prior direct or indirect solicitation or encouragement by you or on your part, or (ii) replied to a solicitation 

3

 

made
to the general public without any direct or indirect solicitation or encouragement by you or on your part. 

        10.    GOVERNING LAW.    This letter agreement will be governed by the internal laws of the State of California
without reference to its conflict of laws provisions. 

        11.    ARBITRATION.    

        (a)    General.    Any controversy, dispute, or claim between the parties to this agreement, including any claim
arising out of, in connection with, or in relation to the formation, interpretation, performance or breach of this agreement shall be settled exclusively by arbitration, before a single arbitrator, in
accordance with these provisions and the then most applicable rules of the American Arbitration Association. Judgment upon any award rendered by the arbitrator may be entered by any state or federal
court having jurisdiction thereof. Such arbitration shall be administered by the American Arbitration Association. Arbitration shall be the exclusive remedy for determining any such dispute,
regardless of its nature. Notwithstanding the foregoing, either party may in an appropriate matter apply to a court for provisional relief, including a temporary restraining order or a preliminary
injunction, on the ground that the award to which the applicant may be entitled in arbitration may be rendered ineffectual without provisional relief. Unless mutually agreed by the parties otherwise,
any arbitration shall take place in the City of San Diego, California. 

        (b)    Selection of Arbitrator.    In the event the parties are unable to agree upon an arbitrator, the parties shall
select a single arbitrator from a list of nine arbitrators drawn by the parties at random from the "Independent" (or "Gold Card") list of retired judges or, at your option, from a list of nine persons
(which shall be retired judges or corporate or litigation attorneys experienced in stock options and buy-sell agreements) provided by the office of the American Arbitration Association
having jurisdiction over San Diego, California. If the parties are unable to agree upon an arbitrator from the list so drawn, then the parties shall each strike names alternately from the list, with
the first to strike being determined by lot. After each party has used four strikes, the remaining name on the list shall be the arbitrator. If such person is unable to serve for any reason, the
parties shall repeat this process until an arbitrator is selected. 

        (c)    Applicability of Arbitration; Remedial Authority.    This agreement to resolve any disputes by binding
arbitration shall extend to claims against any parent, subsidiary or affiliate of each party, and, when acting within such capacity, any officer, director, shareholder, employee or agent of each
party, or of any of the above, and shall apply as well to claims arising out of state and federal statutes and local ordinances as well as to claims arising under the common law. In the event of a
dispute subject to this paragraph the parties shall be entitled to reasonable discovery subject to the discretion of the arbitrator. The remedial authority of the arbitrator (which shall include the
right to grant injunctive or other equitable relief) shall be the same as, but no greater than, would be the remedial power of a court having jurisdiction over the parties and their dispute. The
arbitrator shall, upon an appropriate motion, dismiss any claim without an evidentiary hearing if the party bringing the motion establishes that he or it would be entitled to summary judgment if the
matter had been pursued in court litigation. In the event of a conflict between the applicable rules of the American Arbitration Association and these procedures, the provisions of these procedures
shall govern. 

        (d)    Fees and Costs.    Any filing or administrative fees shall be borne initially by the party requesting
arbitration. PSI shall be responsible for the costs and fees of the arbitration, unless you wish to contribute (up to 50%) to the costs and fees of the arbitration. Notwithstanding the foregoing, the
prevailing party in such arbitration, as determined by the arbitrator, and in any enforcement or other court proceedings, shall be entitled, to the extent permitted by law, to 

4

 

reimbursement
from the other party for all of the prevailing party's costs (including but not limited to the arbitrator's compensation), expenses, and attorneys' fees. 

        (e)    Award Final and Binding.    The arbitrator shall render an award and written opinion, and the award shall be
final and binding upon the parties. If any of these arbitration provisions, or of this agreement,
are determined to be unlawful or otherwise unenforceable, in whole or in part, such determination shall not affect the validity of the remainder of this agreement, and this agreement shall be reformed
to the extent necessary to carry out its provisions to the greatest extent possible and to insure that the resolution of all conflicts between the parties, including those arising out of statutory
claims, shall be resolved by neutral, binding arbitration. If a court should find that the arbitration provisions of this agreement are not absolutely binding, then the parties intend any arbitration
decision and award to be fully admissible in evidence in any subsequent action, given great weight by any finder of fact, and treated as determinative to the maximum extent permitted by law. 

        12.    ENTIRE AGREEMENT.    This letter agreement, your stock option agreement, and your Invention and
Non-Disclosure Agreement with PSI contain the entire agreement and understanding of the parties with respect to the subject matter hereof. Except as provided in this letter agreement, no
other agreements, representations or understandings (whether oral or written and whether expressed or implied) which are not expressly set forth in this letter agreement have been made or entered into
by either party with respect to the subject matter hereof. 

        13.    SUCCESSORS AND ASSIGNS.    This letter agreement will be binding upon you (and your successors, heirs and
assigns) and any successor (whether direct or indirect and whether by purchase, lease, merger, consolidation, liquidation or otherwise) to all or substantially all of PSI's business and/or assets. For
all purposes of this letter agreement, the term "PSI" shall include any successor to PSI's business and/or asserts which becomes bound by this letter agreement. 

        In
compliance with the Immigration Control and Reform Act, this offer of employment is contingent upon your showing proof, within three days of commencing work, of eligibility and right
to work in the United States. Proof is comprised of original documents that establish your identity and your eligibility to work in this country. 

        Your
employment would not be effective until we receive an executed Invention and Non-Disclosure Agreement, a copy of which is attached. Additionally, this employment offer
is contingent upon your execution and return of all employment documents as well as satisfactory reference and background checks. 

        We
are anxious to receive your response to this offer as soon as possible. If you decide to accept, please sign a copy of this letter in the space indicated below, and return it. If we
do not receive your response to this job offer within five days of receipt of this letter, the offer will be rescinded. If you have any questions about the offer details outlined in this letter,
please call me. 

        Russ,
we look forward to having you join the Peregrine Team and to your contributions to the success of Peregrine. 

Sincerely,

Mary
Lou O'Keefe

Sr. Vice President, Human Resources 

cc:
Compensation Committee 

5

 

        IN
WITNESS WHEREOF, each of the parties has executed this Agreement, in the case of PSI by its duly authorized officer, as of the day and year first above written. 

	PSI:	 	Peregrine Systems, Inc.
	

 	
 	

 	

By:	

 
	 	 	 	 	

	 	 	 	Title:	Sr. Vice President, Human Resources
	

 	
 	

 	

Date:	

 
	 	 	 	 	

	

EMPLOYEE:	
 	

 	

 Russell Mann
	

 	
 	

 	

Date:	

 
	 	 	 	 	

6

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Exhibit 10.57

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