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Private Equity
argonautpe.com

Investments

60

Portfolio Exits

14

Funds

4

About Argonaut Private Equity

Argonaut Partners is a private equity financing firm that focuses on growth capital, middle market, early venture, mid venture, late venture, turnaround, and buyout investments. The firm's primary areas of focus include consumer electronics, energy, materials, telecom, drug discovery and delivery, medical devices, aviation, healthcare services, technology, manufacturing, and financial services. It prefers to invest between $1 million and $500 million over the life of its investments. Argonaut was founded in 2002 and is led by billionaire George Kaiser.

Headquarters Location

7030 South Yale Ave Suite 810

Tulsa, Oklahoma, 74136,

United States

918-392-9611

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Latest Argonaut Private Equity News

Cypress Environmental Partners, L.P. – Notifies Court of June 22nd Plan Effectiveness Date; Debt-for-Equity Swap Leaves Tulsa-Based Argonaut Private Equity as New Owners

Jun 23, 2022

First Name * Submit June 22, 2022 – The Debtors notified the Court that their Second Modified Prepackaged Plan of Reorganization had become effective as of June 22, 2022 [Docket No. 265]. The Court had previously confirmed the Debtors’ Plan on June 21, 2022 [Docket No. 260]. On May 8, 2022, Cypress Environmental Partners, L.P. and 18 affiliated debtors (NYSE: CELP; together “Cypress” or the “Debtors”) filed for Chapter 11 protection (on a “prepackaged” basis) with the U.S. Bankruptcy Court in the Southern District of Texas, lead case number 22-90039 (Judge Isgur). The Debtors’ lead petition noted estimated assets of $97.0mn; and estimated liabilities of $62.4mn ($58.9mn of funded debt). In a subsequently filed Schedule A/B, the lead Debtor noted $36.8mn of assets and $73.3mn of liabilities [Docket No. 197]. At filing, the Debtors, who provide environmental services to the O&G sector, noted: "The Debtors have faced back-to-back energy downturns starting with an OPEC price war from 2015-2017, and then…Saudi Arabia initiated a price war on oil with Russia, facilitating a 65% quarterly fall in the price of oil….These market events, the start of a global pandemic, and material litigation under the Fair Labor Standards Act (the ‘FLSA’) had a material adverse impact on the Debtors…[and] created the perfect storm that forced the Debtors to commence these Chapter 11 Cases.” The Debtors were represented by (i) Paul Hastings LLP as bankruptcy counsel (ii) FTI Consulting, Inc. as restructuring advisors, (iii) Piper Sandler & Co. as investment bankers and (iv) KCC as claims agent. A deadline to file professional fee claims has been set for August 6, 2022. Plan Summary The centerpiece of this prepackaged Plan is the transfer of the Debtors' equity to Argonaut Private Equity in exchange for the cancellation of @$59.0mn of debt owed in respect of the Debtors' Prepetition First Lien Credit Facility and which Argonaut had purchased on April 22, 2022 before entering into negotiations that resulted in a May 6th restructuring support agreement (see further below). The Debtors' memorandum in support of Plan confirmation (the "Memorandum") [Docket No. 244] provides: “The Plan represents a comprehensive restructuring that maximizes the value of the Debtors’ estates for the benefit of all stakeholders. Pursuant to the Plan, the Debtors will eliminate more than $59 million in funded indebtedness and will gain access to up to $15 million in post-Effective Date funding, either through an equity investment or debt financing, that will allow the Reorganized Debtors to fund operations upon emergence from bankruptcy. The Plan allows the Debtors to avoid a value-destructive, piecemeal liquidation and instead to continue as a going concern and to preserve hundreds of good paying jobs, including those of its inspector workforce. For these reasons, the Debtors respectfully submit that the Plan, and the restructuring transactions contemplated therein, are in the best interests of the Debtors, their estates, and all stakeholders, and should be confirmed." The Memorandum adds as to a later agreed "General Unsecured Claims Pool": "On May 10, 2022, the Debtors filed the First Modified Plan and a redline [Docket No. 56] showing the changes against the Initial Plan….The First Modified Plan included, among other things, the addition of the General Unsecured Claims Pool, consisting of $250,000, net of Plan Administrator Expenses, to be funded on the Effective Date and distributed pursuant to the Plan to holders of claims in Class 5 (General Unsecured Claims) (such modification, the “Class 5 Treatment Modification”). The Initial Plan originally provided that claims in Class 5 would be discharged and extinguished and that the holders of such claims would receive no recovery under the Plan on account of such claims." The Memorandum continues: "The Plan facilitates the reorganization of the Debtors on terms that provide a new, deleveraged capital structure for the Reorganized Debtors, which will allow the Reorganized Debtors to emerge from chapter 11 as a going concern and to preserve hundreds of good-paying jobs for its workforce. The Plan also provides meaningful recoveries for unsecured creditors who would otherwise receive no recovery under a chapter 7 liquidation scenario. More specifically, the Plan provides, among other things, for: the elimination of approximately $59 million in secured debt obligations; and access for the Reorganized Debtors to up to $15 million of funding after the Effective Date pursuant to the Commitment. The Plan also provides for the following treatment of claims and interests: holders of Professional Fee Claims will be compensated or reimbursed in the event that final requests for payment of Professional Fee Claims are properly filed and served no later than the first Business Day that is 45 days after the Effective Date and no objections are filed within 21 days of the filing of the final fee application; holders of DIP Claims will receive New Interests in Reorganized CEP; holders of Priority Tax Claims will receive either (a) Cash in full, (b) Cash in annual installments over a period of not later than five years after the Petition Date, or (c) treatment in a manner not less favorable than the most favored non-priority unsecured Claim provided for by the Plan; holders of Allowed Administrative Expense Claims other than Priority Tax Claims or Professional Fee Claims will be paid in full in Cash on the later of (i) the initial distribution date under the Plan or the date such Administrative Expense Claim is Allowed, and (ii) the date such Allowed Administrative Expense Claim becomes due and payable, or as soon thereafter as is practicable; holders of Allowed Other Priority Claims, if any, will be paid in full in Cash, have such claims Reinstated, or otherwise be rendered Unimpaired; holders of Allowed Other Secured Claims, if any, will be paid in full in Cash, have such claims Reinstated, receive delivery of the collateral securing their claims, or otherwise be rendered Unimpaired; holders of Allowed Prepetition First Lien Credit Agreement Claims will receive New Interests in Reorganized CEP; holders of Trade Claims will have such claims Reinstated or will be paid in full in Cash; holders of General Unsecured Claims will receive a pro rata share of the [$250k] General Unsecured Claims Pool; holders of Intercompany Claims shall either have such claims (i) Reinstated or (ii) released without any distribution on account of such claims; holders of Intercompany Interests shall either have such interests (i) Reinstated for administrative convenience or (ii) extinguished without any recovery on account of such interests; holders of Interests in CELP will have such interests extinguished and the holders of such interests shall not receive or retain any distribution, property, or other value on account of such interests; and holders of Section 510(b) Claims shall have such claims discharged and extinguished and shall not receive or retain any property under the Plan on account of such Section 510(b) Claims." The following is a summary of classes, claims, voting rights and expected recoveries showing (defined terms are as defined in the Plan and/or Disclosure Statement; see also the Liquidation Analysis below): Class 1 (“Other Priority Claims”) is unimpaired, deemed to accept and not entitled to vote on the Plan. Class 2 (“Other Secured Claims) is unimpaired, deemed to accept and not entitled to vote on the Plan. Class 3 (“Prepetition First Lien Credit Agreement Claims”) is impaired and entitled to vote on the Plan. The Prepetition First Lien Credit Agreement Claims will be deemed Allowed on the Effective Date in the principal amount of $59,194,225.05 including interest, fees and expenses accrued through the Effective Date. Each Holder will receive New Interests equal to its Pro Rata New Interest Allocation, subject to dilution by the Management Incentive Plan, in accordance with the Restructuring Support Agreement. Class 4 (“Trade Claims”) is unimpaired, deemed to accept and not entitled to vote on the Plan. Class 5 (“General Unsecured Claims”) is impaired, deemed to reject and not entitled to vote on the Plan. On the Effective Date, each holder of an Allowed General Unsecured Claim shall receive its pro rata share of the $250k General Unsecured Claims Pool. Class 6 (“Intercompany Claims”) is impaired/unimpaired, deemed to accept/deemed to reject and not entitled to vote on the Plan. Class 7 (“Intercompany Interests”) is impaired/unimpaired, deemed to accept/deemed to reject and not entitled to vote on the Plan. Class 8 (“Interests in CELP”) is impaired, deemed to reject and not entitled to vote on the Plan. Class 9 (“Section 510(b) Claims”) is impaired, deemed to reject and not entitled to vote on the Plan. Voting Results On June 16, 2022, the Debtors' claims agent notified the Court of the Plan voting results [Docket No. 248], which were as follows: Class 3 (“Prepetition First Lien Credit Agreement Claims”): 1 claim holder, representing $59,194,225.05 (100%) in amount and 100% in number, voted in favor of the Plan. Key Documents Petition Date Perspective: Filing Date Highlights Service Provider to Energy and Municipal Water Industries Files Prepackaged Chapter 11 with $59.0mn of Funded Debt Debtors Cite "Perfect Storm" of Back-to-Back Energy Downturns, Pandemic and FLSA litigation as Compelling Bankruptcy Argonaut Private Equity, Having Recently Acquired Senior Debt from Deutsche Bank Led Syndicate, to Serve as Stalking Horse Restructuring Support Agreement has Debtors Emerge within 55 Days of Filing Argonaut to Provide $5mn of DIP Financing In a press release announcing the Chapter 11 filing ( 8-K here ), the Debtors stated: "On May 8, 2022, Cypress entered into a Restructuring Support Agreement (the 'RSA') with Argonaut Private Equity (“Argonaut”), a Tulsa-based private equity firm and the sole senior secured lender of the Company, pursuant to which Argonaut agreed to vote in favor of a joint pre-packaged plan of reorganization of the Company and its subsidiaries (the 'Plan') under Chapter 11 of the U.S. Bankruptcy Code (“Chapter 11”)….The RSA and the Plan contemplate a debt-to-equity recapitalization transaction, whereby Argonaut will receive 100% of the new equity interests of the reorganized company ('Reorganized Company') in exchange for extinguishing the obligations to Argonaut remaining under the Company’s credit agreement (the 'Reorganization Transaction'). In addition, the Plan provides for the payment in full of priority and trade claims and an equity commitment from Argonaut to provide working capital to the Reorganized Company upon emergence. Argonaut will also provide a Debtor-In-Possession loan (the 'DIP Facility') to Cypress to fund operations, if necessary." Goals of the Chapter 11 Filings The Boylan Declaration (defined below) provides: “The Debtors commenced these Chapter 11 Cases to implement the Restructuring Support Agreement…which contemplates eliminating nearly $60 million in prepetition secured debt, paying substantially all of the unsecured creditors in full, and is supported by the Debtors’ prepetition lender. The Debtors entered into the Restructuring Support Agreement principally because for several years they have been unable to refinance their sole funded debt obligation with an outstanding principal amount as of the Petition Date in the amount of $58,853,976….The Credit Agreement [governing that debt] matures on May 31, 2022 and in the months leading up to the filing of these Chapter 11 Cases, it became clear that a forbearance, renewal or extension of the Credit Agreement with the Former Lenders [led by various Deutsche Bank entities] would not be possible. The Restructuring Support Agreement, and the Plan, contemplate a debt-to-equity recapitalization transaction, whereby Argonaut* will receive 100% of the new equity interests of reorganized CEP…subject to dilution by a management incentive plan, in exchange for extinguishing the obligations remaining under the Credit Agreement (the ‘Reorganization Transaction’). The Restructuring Transaction will provide the Debtors and their business a fresh start, deleveraging their balance sheet, providing a stable platform to grow post-emergence and preserving over 350 quality high paying jobs.” * Argonaut Private Equity which had submitted a bid during the Debtors’ prepetition sale process; with that bid (and others) rejected by the Debtors in consultation with the Former Lenders. Restructuring Support Agreement (the “RSA”) and Proposed Sale Process The Boylan Declaration continues: “On April 22, 2022, the Former Lenders sold all of their right, title, and interest in and to the loan and loan documents related to the Credit Agreement to Argonaut (the ‘Loan Sale’) and Argonaut succeeded as collateral agent, administrative agent and Lender under the Credit Agreement…. Immediately after completion of the Loan Sale, the Debtors and Argonaut commenced negotiations regarding a comprehensive reorganization of the Debtors’ business and capital structure. The Debtors engaged with Argonaut and discussed the various options available for Argonaut to acquire the Debtors’ assets, focusing on a stalking horse bid that would establish a baseline value for the Debtors’ assets against which the Debtors could solicit higher or better offers from alternative buyers to be effectuated through a chapter 11 section 363 sale process or a chapter 11 plan of reorganization pursuant to which Argonaut would exchange its debt for the Debtors’ equity. Those discussions culminated in the execution of the Restructuring Support Agreement (the ‘Restructuring Support Agreement’) on May 6, 2022 that provides the Debtors with a clear and expedited path to a confirmable chapter 11 plan of reorganization and a significantly deleveraged balance sheet, leaving mainly disputed general unsecured claims and rejection damage claims only…. The Restructuring Support Agreement, and the Plan, contemplate a debt-to-equity recapitalization transaction, whereby Argonaut will receive 100% of the new equity interests of reorganized CEP (as defined below), subject to dilution by a management incentive plan, in exchange for extinguishing the obligations remaining under the Credit Agreement (the “Reorganization Transaction”). The Restructuring Transaction will provide the Debtors and their business a fresh start, deleveraging their balance sheet, providing a stable platform to grow post-emergence and preserving over 350 quality high paying jobs.” RSA milestones in respect of the Prepackaged Plan include confirmation within 40 days of filing and Plan effectiveness within 15 days of a confirmation order. Events Leading to the Chapter 11 Filing In a declaration in support of first day filings (the “Boylan” Declaration), Peter C. Boylan III, the Debtors’ Co-founder, Chairman, Chief Executive Officer, and President provides: “The Debtors have faced back-to-back energy downturns starting with an OPEC price war from 2015-2017, and then on March 8, 2020, Saudi Arabia initiated a price war on oil with Russia, facilitating a 65% quarterly fall in the price of oil. In the first few weeks of March 2020, US oil prices fell by 34%, crude oil fell by 26%, and Brent oil fell by 24%. The price war was triggered by a break-up in dialogue between the Organization of the Petroleum Exporting Countries (“OPEC”) and Russia over proposed oil-production cuts in the midst of the COVID-19 pandemic. Then in early April 2020 and again in June 2020, Saudi Arabia and Russia agreed to oil production cuts. Oil production can be slowed, but not stopped completely, and even the lowest possible production level resulted in greater supply than demand and those holding oil futures actually began to pay money to sell their oil contracts due to their inability to store the oil. These market events, the start of a global pandemic, and material litigation under the Fair Labor Standards Act (the ‘FLSA’) had a material adverse impact on the Debtors. These factors…created the perfect storm that forced the Debtors to commence these Chapter 11 Cases.” Prepetition Indebtedness As at the Petition date, the Debtors have approximately $59.2mn in outstanding debt obligations, consisting of approximately: (i) $58.9mn outstanding under their Prepetition First Lien Credit Agreement; (ii) $250k in Trade Payables outstanding; and (iii) $74k in General Unsecured Claims. Liquidation Analysis (Please see Exhibit C to the Disclosure Statement for notes) About the Debtors According to the Debtors: Cypress Environmental Partners, L.P. (‘Cypress’) and its affiliates provide essential environmental services to the energy and municipal water industries. Our suite of services include inspection, testing, recycling, survey, water treatment, and other environmental services that help our customers protect people, property, infrastructure, and the environment with a focus on safety and sustainability. Cypress is a publicly traded company on the New York Stock Exchange (NYSE: CELP). We are master limited partnership (‘MLP’) that is controlled by a Cypress Environmental GP who’s owners interests are fully aligned with our minority investors with management and insiders owning approximately 74% of CELP. We hold ourselves to the higher standards of the Securities and Exchange Commission (‘SEC’), Environmental Protection Agency (‘EPA’), Department of Transportation (‘DOT’), various state regulators, and the NYSE. Cypress also has a code of conduct that requires us to operate ethically, honestly, and with integrity. We provide a wide range of environmental services including inspection, testing, integrity, and support services for energy infrastructure owners and operators, public utilities, and the municipal water industry. Cypress also provides water pipelines, water treatment, filtration, separation, hydrocarbon recovery, and injection services for upstream energy companies. The Disclosure Statement adds: “Headquartered in Tulsa, Oklahoma, CELP is a publicly traded limited partnership that was formed in 2013. Trading of CELP’s common units began in January 2014 on the New York Stock Exchange under the symbol “CELP”. CELP is the direct parent of, and owns 100% of the equity interests in, Cypress Environmental Partners, LLC (‘CEP’). In turn, CEP is the direct or indirect parent of all of the remaining Debtor entities, controlling (either directly or indirectly) 100 percent of the equity interests of all of the remaining Debtors except for Cypress Brown Integrity, LLC, of which CEP owns 51 percent. Cypress Environmental Partners GP, LLC (the ‘General Partner’), a non-debtor, is the general partner of CELP. All of the equity interests in the General Partner are indirectly owned by Cypress Environmental Holdings, LLC (‘Holdings’), a non-debtor. Holdings is owned by Charles C. Stephenson, Jr., entities related to Mr. Stephenson’s family, Mr. Stephenson’s daughter, Cynthia A. Field, and a company controlled by CELP’s CEO, Peter Boylan. The Debtors offer various services to the energy and utility industries, including inspection, water treatment, and other environmental services that help their customers protect people, property, infrastructure, and the environment with a focus on safety and sustainability. The Debtors’ services also help their clients comply with increasingly complex federal and state environmental and safety rules and regulations . The substantial majority of the Debtors’ environmental services are required services under various federal and state laws. The Debtors’ business is organized into two reportable segments: (1) inspection services (‘Inspection Services’), comprising the operations of the ‘Inspection Entities’ (as noted on the Structure Chart); and (2) water and environmental services (“Environmental Services”), representing the water treatment operations of the ‘Salt Water Disposal Entities’ (as noted on the Structure Chart).” Corporate Structure Chart

Argonaut Private Equity Investments

60 Investments

Argonaut Private Equity has made 60 investments. Their latest investment was in Alkami Technology as part of their Series E on June 6, 2019.

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Argonaut Private Equity Investments Activity

investments chart

Date

Round

Company

Amount

New?

Co-Investors

Sources

6/5/2019

Series E

Alkami Technology

$55M

No

6

2/28/2019

Private Equity

Mammoth Carbon Products

Yes

1

1/9/2018

Series D

Alkami Technology

$32M

Yes

4

3/15/2016

Series H

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$99M

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10

8/19/2015

Series D

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$99M

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10

Date

6/5/2019

2/28/2019

1/9/2018

3/15/2016

8/19/2015

Round

Series E

Private Equity

Series D

Series H

Series D

Company

Alkami Technology

Mammoth Carbon Products

Alkami Technology

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Amount

$55M

$32M

$99M

$99M

New?

No

Yes

Yes

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Co-Investors

Sources

6

1

4

10

10

Argonaut Private Equity Portfolio Exits

14 Portfolio Exits

Argonaut Private Equity has 14 portfolio exits. Their latest portfolio exit was Pivot3 on July 20, 2021.

Date

Exit

Companies

Valuation
Valuations are submitted by companies, mined from state filings or news, provided by VentureSource, or based on a comparables valuation model.

Acquirer

Sources

7/20/2021

Acquired

$99M

2

4/14/2021

IPO

$99M

Public

1

6/10/2020

Acquired

$99M

3

11/12/2018

Acquired

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$99M

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10

5/31/2018

Acq - P2P

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$99M

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10

Date

7/20/2021

4/14/2021

6/10/2020

11/12/2018

5/31/2018

Exit

Acquired

IPO

Acquired

Acquired

Acq - P2P

Companies

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Valuation

$99M

$99M

$99M

$99M

$99M

Acquirer

Public

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Sources

2

1

3

10

10

Argonaut Private Equity Acquisitions

8 Acquisitions

Argonaut Private Equity acquired 8 companies. Their latest acquisition was Bandera Utility Contractors on May 06, 2022.

Date

Investment Stage

Companies

Valuation
Valuations are submitted by companies, mined from state filings or news, provided by VentureSource, or based on a comparables valuation model.

Total Funding

Note

Sources

5/6/2022

$99M

Acq - Fin

1

8/2/2021

Other

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$99M

$99M

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10

3/22/2021

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$99M

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10

9/4/2020

Debt

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$99M

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10

9/3/2020

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$99M

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10

Date

5/6/2022

8/2/2021

3/22/2021

9/4/2020

9/3/2020

Investment Stage

Other

Debt

Companies

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Valuation

$99M

$99M

$99M

$99M

$99M

Total Funding

$99M

Note

Acq - Fin

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Sources

1

10

10

10

10

Argonaut Private Equity Fund History

4 Fund Histories

Argonaut Private Equity has 4 funds, including Argonaut Private Equity Fund V.

Closing Date

Fund

Fund Type

Status

Amount

Sources

2/10/2022

Argonaut Private Equity Fund V

1

8/19/2019

Argonaut Private Equity Fund IV

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10

7/15/2019

Argonaut Private Equity Fund IV

$99M

10

7/31/2016

Argonaut Private Equity Fund III

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$99M

10

Closing Date

2/10/2022

8/19/2019

7/15/2019

7/31/2016

Fund

Argonaut Private Equity Fund V

Argonaut Private Equity Fund IV

Argonaut Private Equity Fund IV

Argonaut Private Equity Fund III

Fund Type

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Status

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Amount

$99M

$99M

Sources

1

10

10

10

Argonaut Private Equity Team

5 Team Members

Argonaut Private Equity has 5 team members, including , .

Name

Work History

Title

Status

Jason Martin

Williams Communications, and Oklahoma State Regents for Higher Education

Founder

Current

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Name

Jason Martin

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Work History

Williams Communications, and Oklahoma State Regents for Higher Education

Title

Founder

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Status

Current

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