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EXHIBIT 10.3
EXECUTIVE EMPLOYMENT AGREEMENT
THIS EXECUTIVE EMPLOYMENT AGREEMENT (the "Agreement") is made and
entered into this 15th day of November, 2000, to be effective as of November 15,
2000 between TASER International, Incorporated (the "Company"), located at 0000
Xxxx Xxxxx Xxxx, Xxxxxxxxxx, Xxxxxxx 00000 and Xxxxxxxx X. Xxxxxxxx (the
"Executive"), residing at 0000 Xxxx Xxxxxxxxx Xxxxx, Xxxxxx, XX 00000.
RECITALS:
WHEREAS, the Company wishes to provide for the continued employment of
Executive as its Chief Financial Officer for the term, and on the conditions,
set forth herein; and
WHEREAS, Executive desires to be assured of certain minimum
compensation from Company for Executive's services during the term hereof and to
be protected, and compensated, in the event of any change in the control
affecting the Company; and,
WHEREAS, Company desires reasonable protection of Company's
confidential business and technical information which has been developed by the
Company in recent years at substantial expense.
NOW, THEREFORE, in consideration of the mutual promises contained
herein, the Company and Executive each intend to be legally bound, covenant and
agree as follows:
1. EMPLOYMENT. Upon the terms and conditions set forth in this Agreement,
Company hereby employs Executive as its Chief Financial Officer, and Executive
accepts such employment. Except as expressly provided herein, the termination of
this Agreement by either party shall also terminate Executive's employment by
Company.
2. DUTIES. Executive shall devote her full-time and best efforts to the
Company and shall fulfill the duties of her position which shall include such
duties as may, from time to time, be assigned to him by the Board of Directors
of the Company, provided such duties are reasonably consistent with Executive's
education, experience and background.
3. TERM. Subject to the provisions of Sections 6 and 11 hereof,
Executive's employment shall commence on the effective date hereof ("Employment
Date") and continue through November 14, 2002, but shall be automatically
extended, unless otherwise terminated in accordance herewith, for an additional
two (2) year term commencing on November 15, 2002 through November 15, 2004, and
thereafter, shall be automatically extended for additional consecutive two (2)
year terms on each November 15, thereafter, unless either party gives written
notice to the other of termination in accordance herewith. In any event, the
Agreement shall automatically terminate, without notice, when Executive reaches
70 years of age. If employment is continued after the age of 70 by mutual
agreement, it shall be terminable at will by either party.
4. COMPENSATION.
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(a) 2000-2002 Annual Base Salary. For services rendered under this
Agreement during the first year (November 15, 2000 through
November 14, 2002) of this Agreement, Company shall pay
Executive a minimum Base Salary ("Base Salary") (Base Salary
shall mean regular cash compensation paid on a periodic basis
exclusive of any and all benefits, bonuses or other incentive
payments made or obligated by Company to Executive hereunder)
at an annual rate of $75,000, payable in accordance with
existing payroll practices of the Company. On November 15,
2001, Executive's Base Salary shall be increased at the
discretion of the Board of Directors based on performance. In
subsequent years, based upon extensions of this Agreement,
Executive's Base Salary shall be adjusted annually based upon
a performance and compensation review conducted by the
Compensation Committee of the Company's Board of Directors,
and negotiated and mutually agreed to, in good faith, between
Executive and the Company's Board of Directors. Such review
will be based upon both individual and Company performance and
shall be completed by December 15 of each subsequent year. The
foregoing 2000-2002 minimum Base Salary for Executive shall
not prohibit Company's Board of Directors (or the Compensation
Committee of Company's Board of Directors ), to set
Executive's Base Salary during such initial two (2) year term
at an annual rate greater than that prescribed above; however,
in no instance shall Executive's Base Salary be less than that
set forth above.
(b) Annual Year-End Cash Bonus. Executive shall also be eligible
to earn an annual year-end cash bonus which shall be
determined by a review at the discretion of the Company's
Board of Directors.
(c) Fringe Benefits. In addition to the compensation and incentive
payments payable to Executive as provided in Sections 4(a) and
(b) above:
(i) Vacation. Executive shall be entitled to four (4)
weeks paid vacation each calendar year. All such paid
vacation shall accumulate, so that if Executive's
full vacation is not taken in a particular calendar
year, any unused portion shall be carried into
subsequent years; however, such accumulation shall
not exceed an aggregate of four (4) calendar weeks.
(ii) Long Term Disability. The Company shall also maintain
(so long as such insurance is available at
commercially standard rates) long-term disability
policy on Executive providing for the payment to age
65 of benefit equivalent to seventy percent (70%) of
Executive's annual Base Salary in the event Executive
becomes permanently disabled as defined in Section
6(b)(ii).
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(iii) Other Benefits. The Executive shall be entitled to
participate in all other benefit programs offered by
the Company to its full-time executive employees,
including, but not limited to, health, medical,
dental and eye care; Southwest Airlines travel
benefits; retirement benefits through the Company's
pension and/or profit sharing plans; sick leave
benefits; and accidental death and dismemberment
coverages.
5. BUSINESS EXPENSES. The Company shall, in accordance with, and to the
extent of, its policies in effect from time to time, bear all customary business
expenses (including the advancement of certain expenses) incurred by the
Executive in performing her duties as an executive of the Company, provided that
Executive accounts promptly such expenses to Company in the manner prescribed
from time to time by the Company.
6. TERMINATION. Subject to the respective continuing obligations of the
parties pursuant to Sections 7, 8, 9, 10,11, 12 and 13, this Agreement may be
terminated prior to the expiration of its then remaining applicable term only as
follows:
(a) By the Company. The Company may terminate this Agreement under
the following circumstances:
(i) For "Cause". Company may terminate this Agreement on
thirty (30) days written notice to Executive for
"cause", including, fraud, misrepresentation, theft
or embezzlement of Company assets, material
intentional violations of law or Company policies, or
a material breach of the provisions of this
Agreement, including specifically the repeated
failure to perform her duties as required by Section
2 hereof after written notice of such failure from
Company; however, in the event of termination related
to Executive's performance, Executive's termination
shall only be effective upon the expiration of a
sixty (60) day cure period following a lack of
corrective action having been undertaken by Executive
during said cure period.
(ii) Without "Cause". The Company may terminate this
Agreement upon six (6) months written notice without
"cause." The Base Salary compensation due and owing
by the Company to Executive following either of such
early terminations of this Agreement shall be paid as
set forth at Section 7(a)(iv) hereof.
(b) Death and Disability.
(i) Death. If Executive should die during the term of
this Agreement, this Agreement shall thereupon
terminate; provided, however, that the Company shall
pay to the Executive's beneficiary or estate the
compensation provided in Section 7(a)(ii) below.
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(ii) Permanent Disability. In the event the Executive
should become permanently disabled during the term of
this Agreement, this Agreement shall also terminate.
For the purposes hereof, a permanent disability shall
mean that disability resulting from injury, disease
or other cause, whether mental or physical, which
incapacitates the Executive from performing her
normal duties as an employee, appears to be permanent
in nature and contemplates the continuous, necessary
and substantially complete loss of all management and
professional activities for a continuous period of
six (6) months.
(iii) Partial Disability. If the Executive should become
partially disabled, he shall be entitled to her
salary as provided herein for a period of nine (9)
months. At the end of said period of time, if such
Executive remains partially disabled, the disabled
Executive's salary shall be reduced according to the
amount of time the disabled Executive is able to
devote to the Company's business.
(iv) Temporary Disability. In the event the Executive
should become disabled, but such disability is not
permanent, as defined above, such disabled Executive
shall be entitled to her salary for a period of nine
(9) months. If such temporary disability continues
longer than said period of time, then the disabled
Executive shall be deemed to have become permanently
disabled for the purposes of this Agreement at the
end of said nine (9) month period.
7. COMPENSATION PAYABLE FOLLOWING EARLY TERMINATION.
(a) In the event of any termination pursuant to Section 6,
Executive's Base Salary shall be paid as follows:
(i) In the event of termination pursuant to Section
6(a)(i) (for "cause"), Executive's Base Salary shall
continue to be paid on a semi-monthly basis for sixty
(60) days from the effective date of such termination
and Executive shall also be entitled to continue to
participate in those benefit programs provided by
subsections 4(e)(iv-viii) (inclusive), for twelve
(12) months following such termination, at
Executive's expense;
(ii) In the event of termination of this Agreement by
reason of Executive's death, Executive's Base Salary
shall terminate as of the end of the eighteenth
(18th) month following the Executive's death;
(iii) In the event of termination of this Agreement by
reason of disability, Executive's Base Salary shall
be terminated as of the end the eighteenth (18th)
month period following Executive's inability to
perform her duties occurs; and
(iv) In the event of any termination by the Company
pursuant to Section 6(a)(ii) (without "cause"),
Executive's Base Salary shall be continued to be paid
on a
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semi-monthly basis, but shall terminate at the end of
the twelve (12) month period following such written
notice of termination by the Company. In lieu of such
continued semi-monthly Base Salary, the Company and
Executive may agree to a lump-sum distribution to
Executive pursuant to such termination in a form,
substance and manner mutually acceptable to Company
and Executive, pursuant to a written Severance
Agreement then mutually negotiated between the
Company and Executive in connection with such
termination.
(b) In the event of termination by reason of Executive's death,
disability, termination without cause, or any Change in
Control, as defined at Section 11:
(i) Executive shall receive a pro rata portion (prorated
through the last day Base Salary is payable pursuant
to clauses (a)(ii), (a)(iii) and (a)(iv),
respectively) of any bonus or incentive payment (for
the year in which death, disability or termination
occurred), to which he would have been entitled had
he remained continuously employed for the full fiscal
year in which death, disability or termination
occurred and continued to perform her duties in the
same manner as they were performed immediately prior
to the death, disability or termination;
(ii) The right to exercise any unexpired and non-vested
stock options previously granted Executive shall
immediately vest and accelerate; and
(iii) Any and all payments owing to Executive arising from
a termination of this Agreement resulting from a
permanent or partial disability of Executive shall
first be provided and paid pursuant to the Company's
existing disability policy, as then in effect, but
shall be further supplemented to the extent provided
by this Agreement but all such payments due and owing
to Executive arising from such permanent or partial
disability shall not be cumulative or aggregated.
8. CONFIDENTIAL INFORMATION.
(a) For purposes of this Section 8, the term "Confidential
Information" means information which is not generally known
and which is proprietary to Company, including: (i) trade
secret information about Company and its services; and (ii)
information relating to the business of Company as conducted
at any time within the previous two (2) years or anticipated
to be conducted by Company, and to any of its past, current or
anticipated products, including, without limitation,
information about Company's research, development, services,
purchasing, accounting, engineering, marketing, selling,
leasing or servicing. All information which Executive has a
reasonable basis to consider Confidential Information or which
is treated by Company as being Confidential Information shall
be presumed to be Confidential Information, whether originated
by Executive, or by others, and without regard to the manner
in which Executive obtains access to such information.
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(b) Executive will not during the term of this Agreement and
following expiration or termination of this Agreement, use or
disclose any Confidential Information to any person not
employed by Company without the prior authorization of Company
and will use reasonably prudent care to safeguard, protect and
to prevent the unauthorized disclosure of, all of such
Confidential Information.
9. INVENTIONS.
(a) For purposes of this Section 9, the term "Inventions" means
discoveries, improvements and ideas (whether or not in writing
or reduced to practice) and works of authorship, whether or
not patentable or copyrightable: (1) which relate directly to
the business of Company, or to Company's actual or
demonstrably anticipated research or development; (2) which
result from any work performed by Executive for Company; (3)
for which equipment, supplies, facilities or trade secret
information of Company is utilized; or (4) which were
conceived or developed during the time Executive was obligated
to perform the duties described in Section 2.
(b) Executive agrees that all Inventions made, authored or
conceived by Executive, either solely or jointly with others,
during Executive's employment with Company (except as
otherwise provided above), shall be the sole and exclusive
property of Company. Upon termination of this Agreement,
Executive shall turn over to a designated representative of
Company all property in Executive's possession and custody
belonging to Company. Executive shall not retain any copies or
reproductions of correspondence, memoranda, reports,
notebooks, drawings, photographs or other documents relating
in any way to the affairs of Company which came into
Executive's possession at any time during the term of this
Agreement.
Executive is hereby notified that this Agreement does not apply to any
invention for which no equipment, supplies, facility, or trade secret
information of Company was used and which was developed initially on the
Executive's own time and: (1) which does not relate: (a) directly to the
business of Company; or (b) to Company's actual or demonstrably anticipated
research or development; or (2) which does not result from any work performed by
Executive for the Company.
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10. NON-COMPETITION. Executive agrees that for a period of eighteen (18)
months following termination of this Agreement for any reason (except in the
case of termination of this Agreement pursuant to Section 11 because of a Change
in Control or any Business Combination or any termination of this Agreement
without cause), he will not directly or indirectly, alone or as a partner,
officer, director, or shareholder of any other firm or entity, engage in any
commercial activity in the United States in competition with any part of
Company's business: (a) that was under the Executive's management or supervision
during the last year of employment by Company; or (b) with respect to which
Executive has Confidential Information as defined in Section 8 of this
Agreement.
11. "BUSINESS COMBINATION" OR "CHANGE IN CONTROL".
(a) Change in Control. For purposes of this Section 11, a
"Business Combination" or "Change in Control" with respect to,
or concerning, the Company shall mean the following:
(i) the sale, lease, exchange or other transfer, directly
or indirectly of all or substantially all of the
assets of the Company (in one transaction or in a
series of related transactions) to a person or entity
that is not controlled by the Company;
(ii) the approval by the shareholders of the Company of
any plan or proposal for the liquidation or
dissolution of the Company;
(iii) a merger or consolidation to which the Company is a
party if the shareholders of the Company immediately
prior to effective date of such merger or
consolidation have "beneficial ownership" (as defined
in Rule 13d-3 under the Securities Exchange Act of
1934, as amended (the "Exchange Act")), immediately
following the effective date of such merger or
consolidation, of securities of the surviving
corporation representing: (A) more than 50%, but not
more than 80%, of the combined voting power of the
surviving corporation's then outstanding securities
ordinarily having the right to vote at elections of
directors, unless such merger or consolidation has
been approved in advance by the Incumbent Directors;
or (B) 50% or less of the combined voting power of
the surviving corporation's then outstanding
securities ordinarily having the right to vote at
elections of directors (regardless of any approval by
the Incumbent Directors);
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(iv) any person becomes after the effective date of this
Agreement the "beneficial owner" (as defined in Rule
13d-3 of the Exchange Act), directly or indirectly,
of: (A) 20% or more, but not 50% or more, of the
combined voting power of the Company's outstanding
securities ordinarily having the right to vote at
elections of directors, unless the transaction
resulting in such ownership has been approved in
advance by the Incumbent Directors; or (B) 50% or
more of the combined voting power of the Company's
outstanding securities ordinarily having the right to
vote at elections of directors (regardless of any
approval by the Incumbent Directors);
(v) the Incumbent Directors cease, for any reason, to
constitute at least a majority of the Company's
Board; or
(vi) a change in control of the Company of a nature that
would be required to be reported pursuant to Section
13 or 15(d) of the Exchange Act, whether or not the
Company is then subject to such reporting
requirements.
(b) Incumbent Directors. For purposes of this Section 11, the term
"Incumbent Directors" shall mean any individual who is a
member of the Board of the Company on the effective date of
this Agreement, as well as any individual who subsequently
becomes a member of the Board whose election, or nomination
for election by the Company's shareholders, was approved by a
vote of at least a majority of the then Incumbent Directors
(either by specific vote or by approval of the Proxy Statement
of the Company in which such individual is named as a nominee
for director without objection to such nomination).
(c) Executive's Option to Terminate This Agreement. It is
expressly recognized by the parties that a Business
Combination would necessarily result in material alteration or
diminishment of Executive's position and responsibilities.
Therefore, if, during the term of this Agreement, there shall
occur, with or without the consent of Company, any Business
Combination or Change in Control, Executive shall have an
exclusive option to terminate this Agreement on twenty (20)
calendar days' notice to the Company.
(d) Compensation Payable to Executive Upon Termination Following a
Change in Control. It is expressly recognized that Executive's
position with Company and agreement to be bound by the terms
of this Agreement represent a commitment in terms of
Executive's personal and professional career which cannot be
reduced to monetary terms, and thus, necessarily constitutes a
forbearance of options now and in the future open to Executive
in Company's areas of endeavor. Accordingly, in the event
Executive elects to terminate this Agreement in connection
with any Business Combination or Change in Control under this
Section 11:
(i) Executive shall be under no obligation whatever to
seek other employment opportunities during any period between
termination of this Agreement under this Section 11 and the
expiration of Executive's then unexpired two (2) year term of
this Agreement as it existed at the time of termination, or
twenty-four (24) months,
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whichever is longer, and Executive shall not be obligated to
accept any other employment opportunity which may be offered
to Executive during such period;
(ii) During such unexpired term of this Agreement, or for
twenty-four (24) months thereafter, whichever is longer,
Executive shall continue to receive on a semimonthly basis,
Executive's Base Salary then in effect upon the date of such
notice to the Company hereunder;
(iii) In lieu of the continued cash compensation provided
in Section 11(d)(ii) above, Executive may elect, in writing,
to receive from the Company a lump sum cash settlement in an
amount equal to 199% of Executive's then existing Base Salary
(at the rate in effect immediately prior to such Business
Combination); provided, however, Executive's election to
receive a lump sum cash settlement from the Company, in lieu
of the semi-monthly payments specified above, shall occur and
be paid within 90 days of the termination of this Agreement
arising from any such Business Combination or any Change in
Control.
(iv) Executive's termination of this Agreement by reason
of a Change in Control described in this Section 11 and the
receipt by Executive of any amounts pursuant to subsection
11(d), shall not preclude Executive' continued employment with
Company, or the surviving entity in any Business Combination,
on such terms as shall then be mutually negotiated between
Company (or any such surviving entity) and Executive following
such termination;
(v) The right to exercise all unexpired and non-vested
stock options in favor of Executive shall immediately vest and
accelerate;
(vi) Executive shall be entitled to continue to
participate in those benefit programs and perquisites provided
by subsection 4(c) hereof, for twenty-four (24) months
following termination, at the Company's expense; and
(vii) Notwithstanding any other provisions of this
Agreement, or any other agreement, contract or understanding
heretofore, or hereafter, entered into between the Company and
Executive, if any "payments" (including without limitation,
any benefits or transfers of property or the acceleration of
the vesting of any benefits) and the nature of compensation
under any arrangement that is considered contingent on a
change in control for purpose of Section 2800 of the Internal
Revenue Code of 1986, as amended (the "Code"), together with
any other payments that Executive has the right to receive
from the Company, or any corporation that is a member of an
"affiliated group" (as defined in Section 1504A of the Code
without regard to Section 1504B of the Code), of which the
Company is a member, would constitute a "parachute payment"
(as defined in Section 2800 of the Code), the aggregate amount
of such payments shall be reduced to equal the largest amount
as would result in no portion of such payments being subject
to the excise tax imposed by Section 4999 of the Code;
provided however, Executive shall be entitled to designate and
select among such payments that will be reduced, and/or
eliminated, in order to comply with the forgoing provision of
the Code.
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12. NO ADEQUATE REMEDY. The parties declare that is impossible to measure
in money the damages which will accrue to either party by reason of a failure to
perform any of the obligations under this Agreement. Therefore, if either party
shall institute any action or proceeding to enforce the provisions hereof, such
person against whom such action or proceeding is brought hereby waives the claim
or defense that such party has an adequate remedy at law, and such person shall
not urge in any such action or proceeding the claim or defense that such party
has an adequate remedy at law.
13. MISCELLANEOUS.
(a) Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of all successors and assigns of the
Company, whether by way of merger, consolidation, operation of
law, assignment, purchase or other acquisition of
substantially all of the assets or business of Company and
shall only be assignable under the foregoing circumstances and
shall be deemed to be materially breached by Company if any
such successor or assign does not absolutely and
unconditionally assume all of Company's obligations to
Executive hereunder. Any such successor or assign shall be
included in the term "Company" as used in this Agreement.
(b) Notices. All notices, requests and demands given to, or made,
pursuant hereto shall, except as otherwise specified herein,
be in writing and be delivered or mailed to any such party at
its address which:
(i) In the case of Company shall be:
TASER International, Incorporated
0000 Xxxx Xxxxx Xxxx
Xxxxxxxxxx, Xxxxxxx 00000
With a copy to:
Xxxxxx X. Xxxxxx, Esq.
Xxxxxx Xxxx, LLP
1600 Pioneer Tower
000 XX Xxxxx Xxxxxx
Xxxxxxxx, Xxxxxx 00000
(ii) In the case of the Executive shall be:
Xxxxxxxx X. Xxxxxxxx
0000 Xxxx Xxxxxxxxx Xxxxx
Xxxxxx, XX 00000.
Either party may, by notice hereunder, designate a change of address.
Any notice, if mailed properly addressed, postage prepaid, registered or
certified mail, shall be deemed dispatched on the registered date or that
stamped on the certified mail receipt, and shall be deemed received within the
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fifth business day thereafter, or when it is actually received, whichever is
sooner.
(c) Captions. The various headings or captions in this Agreement
are for convenience only and shall not affect the meaning or
interpretation of this Agreement.
(d) Governing Law. The validity, construction and performance of
this Agreement shall be governed by the laws of the State of
Arizona. Any dispute involving or affecting this agreement, or
the services to be performed shall be determined and resolved
by binding arbitration in the County of Maricopa, State of
Arizona, in accordance with the Commercial Arbitration Rules
of the American Arbitration Association.
(e) Construction. Wherever possible, each provision of this
Agreement shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision
of this Agreement shall be prohibited by or invalid under
applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity without
invalidating the remainder of such provision or the remaining
provisions of this Agreement.
(f) Waivers. No failure on the part of either party to exercise,
and no delay in exercising, any right or remedy hereunder
shall operate as a waiver thereof, nor shall any single or
partial exercise of any right or remedy hereunder preclude any
other or further exercise thereof or the exercise of any right
or remedy granted hereby or by any related document or by law.
(g) Modification. This Agreement may not be, and shall not be,
modified or amended except by a written instrument signed by
both parties hereto.
(h) No Conflicting Business. Executive agrees that he will not,
during the term of this Agreement, transact business with the
Company personally, or as an agent, owner, partner,
shareholder of any other entity; provided, however, Executive
may enter into any business transaction that is, in the
opinion of the Company's Board of Directors, reasonable,
prudent or beneficial to the Company, so long as any such
business transaction is at arms-length as though between
independent and prudent individuals and is ratified and
approved by the designated members of the Company's Board of
Directors.
(i) Entire Agreement. This Agreement constitutes the entire
Agreement and understanding between the parties hereto in
reference to all the matters herein agreed upon; provided,
however, that this Agreement shall not deprive Executive of
any other rights Executive may have now, or in the future,
pursuant to law or the provisions of Company benefit plans.
(j) Counterparts. This Agreement shall be executed in at least two
counterparts, each of which shall constitute an original, but
both of which, when taken together, will constitute one in the
same instrument.
(k) Amendment. This Agreement may be modified only by written
agreement executed
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by both parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered the day and year first above written.
TASER INTERNATIONAL, INCORPORATED
By: /s/ Xxxx Xxxxx
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Its: Chairman
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EXECUTIVE
/s/ Xxxxxxxx X. Xxxxxxxx
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Xxxxxxxx X. Xxxxxxxx
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