EMPLOYMENT AGREEMENT
Exhibit 10.19
This Employment Agreement (the “Agreement”), dated as of July 9, 2021, is entered into between Cadre Holdings, Inc., a Delaware corporation (the “Company”) and Xxxxxx X. Xxxxxxx (the “Employee”).
W I T N E S S E T H :
WHEREAS, each of the Company and its subsidiaries, including Safariland, LLC, desires to continue to employ the Employee as Chief Executive Officer and Executive Chairman of the Board of the Company and to be assured of his services on the terms and conditions hereinafter set forth; and
WHEREAS, the Employee is willing to continue to be employed as Chief Executive Officer and Executive Chairman of the Board of the Company on such terms and conditions; and
WHEREAS, the Compensation Committee of the Company’s Board of Directors (the “Compensation Committee”) and the Company’s Board of Directors (the “Board”), at meetings duly called and held, have each authorized and approved the execution and delivery of this Agreement by the Company.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth in this Agreement, the Company and the Employee hereby agree as follows:
1. EMPLOYMENT. The Company hereby continues to employ the Employee as the Chief Executive Officer and Executive Chairman of the Board of the Company, and the Employee accepts such continued employment, upon the terms and subject to the conditions set forth in this Agreement. The Employee’s office shall be located in Palm Beach, Florida or such other location as the Employee shall determine.
2. TERM. The term of this Agreement shall commence and be effective only upon the closing of the Company’s initial public offering of shares of its common stock provided that Employee remains in the employ of the Company and this Agreement has not been terminated as of such date (the “Commencement Date”), and shall terminate on the fifth anniversary of the Commencement Date (the “Term”), subject to earlier termination as provided herein. This Agreement shall automatically terminate prior to the Commencement Date (x) if the Employee is not employed by the Company at any time between the date hereof and the Commencement Date, or (y) if the Company does not complete its initial public offering on or before September 30, 2021.
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(c) | Stock Options; Restricted Stock. |
(i) Generally. The Employee shall also be entitled to participate, at the sole and absolute discretion of the Compensation Committee, in the Company’s 2021 Stock Incentive Plan, or such other stock incentive plan as the Company may have in effect from time to time (the “Stock Incentive Plan”). Such participation and awards shall be based upon, among other things, the Employee’s performance and the Company’s performance, all as determined by the Compensation Committee. In addition, the Employee may be entitled, during the Term of this Agreement, to receive additional options, restricted stock and Stock Bonus Awards at such prices and other terms, and/or to participate in such other bonus plans, whether during the term of this Agreement or upon termination pursuant to Section 10 hereof, as the Compensation Committee may, in its sole and absolute discretion, determine.
(ii) Grants Effected Hereby. Furthermore, and without limiting the foregoing, on the Commencement Date, the Company shall issue to the Employee 2,000,000 restricted shares of Common Stock (the “Restricted Stock”), which shall be subject to the vesting and lapse of restrictions on such Restricted Stock based on the timing set forth below:
(A) The Restricted Stock shall vest upon the achievement of a closing price of at least $40.00 per share of Common Stock on the New York Stock Exchange or other national or regional stock exchange on which such securities are then listed for a period of twenty (20) consecutive trading days;
(B) Any shares not vested based on the foregoing closing share price of Common Stock prior to the tenth anniversary of the Commencement Date shall be forfeited and be null and void; and
(C) The vesting, and/or forfeiture, of the Restricted Stock, may be accelerated in accordance with the terms of this Agreement.
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The terms and provisions of the Restricted Stock shall be set forth in a restricted stock agreement in form and substance satisfactory to the Company.
(iii) Availability. The Company shall use its commercially reasonable efforts to keep the requisite number of options and shares of Common Stock available under the Stock Incentive Plan to fulfill the grants and options referenced herein.
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(i) (A) All of Employee’s benefits accrued under any employee pension, retirement, savings and deferred compensation plans of the Company shall become vested in full upon the date of such Section 4(g) Termination (other than with respect to unvested stock options, restricted stock and other equity or equity-based awards, the terms of which are separately addressed in the next succeeding clause); provided, however, that to the extent such accelerated vesting of benefits cannot be provided under one or more of such plans consistent with applicable provisions of the Code, such benefits shall be paid to Employee in a lump sum within 10 days after termination of employment outside the applicable plan to the extent permitted by Section 409A of the Code; (B) any and all unvested stock options, restricted stock and other equity or equity-based awards (including, but not limited to, the Restricted Stock) shall immediately vest as of the date of such Section 4(g) Termination; and (C) amounts which are vested or which Employee is otherwise entitled to receive under the terms of or in accordance with any plan, policy, practice or program of, or any contract or agreement with, the Company or any of its subsidiaries, at or subsequent to the date of his termination without regard to the performance by Employee of further services or the resolution of a contingency shall be payable in accordance with the terms of the plan, policy, practice, program, contract or agreement under which such benefits have been awarded or accrued. Furthermore, and notwithstanding anything to the contrary otherwise herein provided, the benefits set forth in clause (C), which are applicable to Employee, shall also be payable to Employee in the event he is terminated for Cause, or if Employee terminates this Agreement without Good Reason.
(ii) Employee (and his dependents, if any) will be entitled to continue participation in all of the Company’s medical, dental and vision care plans (the “Health Benefit Plans”), for the period for which the Employee could elect COBRA continuation coverage under the Company’s Health Benefit Plans as a result of his termination of employment; provided that Employee’s participation in the Company’s Health Benefit Plans shall cease on any earlier date that Employee (and his dependents, if any) becomes eligible for comparable benefits from a subsequent employer. Employee’s participation in the Health Benefit Plans will be on the same terms and conditions (including, without limitation, any contributions that would be required from Employee) that would apply to other similarly situated former employees of the Company; provided that the Company shall reimburse Employee an amount equal to Employee’s monthly COBRA cost for the period for which Employee elects COBRA continuation coverage under the Company’s Health Benefit Plans as a result of his termination of employment. To the extent any such benefits cannot be provided under the terms of the applicable plan, policy or program, the Company shall provide a comparable benefit under another plan or from the Company’s general assets. In addition, except in the case of termination due to death, Employee will be entitled to receive a cash payment in a lump sum within ten (10) days after termination of employment, or, if, on the date of such termination of employment, the Employee is a “specified employee” within the meaning of Section 409A of the Code (“Section 409A”), on the day after the expiration of six (6) months following such termination of employment. The amount of such payment shall be the actuarially determined value of the cost of coverage under the Company’s medical, dental and vision care plans for a period equal to the difference between thirty-six (36) months and the period for which the Employee could elect COBRA continuation coverage under such plans.
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(iii) Employee will be entitled to continued personal use of the Company owned or leased aircraft, not to exceed one hundred (100) hours in any calendar year, at the Company’s sole cost and expense until the third (3rd) anniversary of Employee’s termination of employment; provided, that, at Employee’s option, in lieu of the foregoing use of the aircraft, Employee will be entitled to purchase any Company-owned aircraft from the Company within seventy-five (75) days of Employee’s termination of employment at its depreciated book value for federal income tax purposes as of the time of such termination of employment. Notwithstanding the foregoing, if Employee is a “specified employee” within the meaning of Section 409A at the time of his termination of employment, the Employee may not use the Company’s aircraft during the six-month period beginning on the date of such termination of employment.
(iv) Employee will have the right to have the Company’s (or applicable subsidiary’s) office lease located in Palm Beach, Florida (or such other place as it may then be located) that is used by Employee assigned to Employee, and the Company will pay the lease payments (including any amounts as additional rent, utilities, taxes, common charges and the like) for a period of five years from the date of such termination. Employee shall have the right to purchase any fixed assets in connection therewith (including but not limited to automobiles) that Employee enjoyed the use of during the Term at such assets’ depreciated book value for federal income tax purposes as of the time of such termination of employment.
(k) Key Man Life Insurance. The Employee acknowledges that during the Term the Company may, in the Company’s discretion, seek to obtain a key man life insurance policy on his life with the Company as the named beneficiary in an amount to be determined by the Board up to a maximum amount of $10 million. If requested by the Company, the Employee hereby agrees to provide such information and to submit to such medical examinations and otherwise use his best efforts to cooperate as may be required to assist the Company in obtaining such policy.
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5. REIMBURSEMENT OF BUSINESS EXPENSES. Without limiting any of the other terms in this Agreement with respect to reimbursement and/or expenses for the benefit of Employee, during the term of this Agreement, upon submission of proper invoices, receipts or other supporting documentation satisfactory to the Company and in specific accordance with such guidelines as may be established from time to time by the Board, the Employee shall be reimbursed by the Company for all reasonable business expenses actually and necessarily incurred by the Employee on behalf of the Company in connection with the performance of services under this Agreement, including, without limitation, the Office Expense Reimbursement to the Employee or his affiliate. In addition, the Company shall provide the Employee with a non-accountable supplemental expense reimbursement allowance equal to 7.5% of the Base Compensation of the Employee per year for each year during the Term.
6. REPRESENTATIONS OF EMPLOYEE The Employee represents and warrants that he is not party to, or bound by, any agreement or commitment, or subject to any restriction, including but not limited to agreements related to previous employment containing confidentiality or noncompete covenants, which in the future may have a possibility of adversely affecting the business of the Company or the performance by the Employee of his duties under this Agreement. The Employee further represents and warrants that he is not aware of any criminal activity or a violation of Company policy by any employee or agent of the Company that has not been disclosed to the Company, and covenants and agrees that upon his obtaining any such information, the Employee shall promptly disclose such information to a responsible officer of the Company and to the Company’s outside counsel as set forth in Section 12(f)(ii) hereof.
7. CONFIDENTIALITY; INTELLECTUAL PROPERTY. For purposes of this Section 7, all references to the Company shall be deemed to include all of the Company’s affiliates and subsidiaries.
(a) Confidential Information. The Employee acknowledges that as a result of his employment with the Company, the Employee has and will continue to have knowledge of, and access to, proprietary and confidential information of the Company (in written, graphic, oral and/or other forms, and in electronic, magnetic, paper and other media), including, without limitation, information regarding the Company’s assets, properties, business, plans, strategies, operations, business and product development, including without limitation, acquisitions and new lines of business, trade secrets, novel ideas, inventions, know-how, customers, business affiliates, techniques, training materials, algorithms, computer programs (including source code and object code), designs, formulas, test plans, data, analyses and results, services, costs, finances, financial statements and projections, financial and marketing information, markets, sales, vendors, suppliers, personnel, pricing policies, plans for future developments, acquisition or disposition strategies, specifications, technology, research and development, and other similar information in respect of the Company (collectively, the “Confidential Information”), and that such information, even though it may be contributed to, developed or acquired by the Employee, constitutes valuable, special and unique assets of the Company developed at great expense, which are the exclusive property of the Company. Accordingly, the Employee shall not, at any time, either during or subsequent to the term of his employment with the Company, use (whether for personal gain or otherwise), reveal, report, publish, transfer or otherwise disclose to any person, corporation or other entity, any of the Confidential Information without the prior written consent of the Company, except to responsible officers and employees of the Company and other responsible persons who are in a contractual or fiduciary relationship with the Company who have a need for such information for purposes in the best interests of the Company, and except (i) for such information which is or becomes of general public knowledge from authorized sources other than the Employee, or (ii) as may be required by law, regulation, legal proceeding or court order. The Employee acknowledges that the Company would not enter into this Agreement without the assurance that all such Confidential Information will be used for the exclusive benefit of the Company.
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(b) Return of Confidential Information. Confidential Information or other information relating to the Company’s business or products which come into the possession of the Employee shall remain the sole property of the Company, and shall not be copied, photocopied, reprinted or otherwise reproduced or disseminated by the Employee except in the performance of his duties as an employee of the Company and then only at the direction of the Company. Upon the earlier of the Company’s request therefor, or the termination of the Employee’s employment by the Company, the Employee shall return to the Company all such information, and all copies, facsimiles, replicas, photocopies, and reproductions of them.
(c) Applicable Law. Employee shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret (as defined in section 1839 of title 18, United States Code) that (A) is made (i) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. If Employee files a lawsuit for retaliation by the Company for reporting a suspected violation of law, Employee may disclose the trade secret to Employee’s attorney and use the trade secret information in the court proceeding if Employee (A) files any document containing the trade secret under seal; and (B) does not disclose the trade secret, except as permitted by court order.
(d) Intellectual Property. (i) Employee expressly agrees that any products, works of authorship, deliverables, designs, processes, drawings or inventions created by him during the Term, at the request or on behalf of the Company (the “Materials”), shall be the property of the Company. The Company shall own all right, title and interest in and to the Materials, and all additions to, deletions from, alterations of or revisions to, and each part thereof, including all tools and work in progress with respect thereto, and all other materials provided to Employee by or at the expense of the Company. Without limiting the foregoing, Employee hereby acknowledges that his work and services for the Company and all results thereof are “works made for hire” for the Company as that term is defined by the Copyright Act of 1976, as amended (the “Copyright Act”), and the Company shall own all right, title and interest therein. The Company shall be considered the author of the Materials for purposes of copyright and shall own all the rights in and to the copyright to the Materials, and, as between Employee and the Company, only the Company shall have the right to obtain copyright registration of the Materials which the Company may do in its name, its trade name or the name of its nominee. The Company shall have the sole and exclusive rights to do and authorize any and all of the acts set forth in Section 106 of the Copyright Act with respect to the Materials and any derivatives thereof, and to secure any extensions or renewals of such copyrights. Employee retains no rights to the Materials and agrees not to challenge the validity of the Company’s ownership of the Materials.
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(ii) To the extent that the Materials are determined by a court of competent jurisdiction or the Register of Copyrights not to be a work made for hire and/or for purposes of ownership of any inventions or patent rights in and to the Materials, Employee hereby irrevocably assigns, transfers, releases and conveys to the Company all right, title and interest (including all patent, copyright, trade secret and trademark rights) of Employee in and to the Materials. The rights hereby conveyed to the Company hereunder include without limitation all rights to any and all inventions relating to or described in the Materials. Employee further agrees to execute (and to cause its principals, employees and agents to execute) any and all documents deemed necessary or appropriate by the Company to effectuate a complete transfer of ownership of all rights in the Materials to the Company throughout the world.
(iii) The Employee will promptly disclose to the Company all Materials conceived, developed or acquired by him alone or with others during the term of his employment with the Company, whether or not conceived during regular working hours, through the use of Company time, material or facilities or otherwise. Without limiting the scope of this Section 7, all such Materials shall be the sole and exclusive property of the Company, and upon the Company’s request, the Employee shall deliver to the Company all drawings, models and other data and records relating to such Materials. In the event any such Materials shall be deemed by the Company to be patentable or copyrightable, the Employee shall, at the expense of the Company, assist the Company in obtaining any patents or copyrights thereon and execute all documents and do all other things necessary or proper to obtain letters patent and copyright registrations and to vest the Company with full title thereto.
(iv) The Employee irrevocably designates and appoints the Company and each of its duly authorized officers or agents, individually, as his agent and attorney-in-fact, to act for and in his behalf and stead to execute and file any such document and to do all other lawfully permitted acts to further the prosecution, issuance, and enforcement of patents, copyrights, or other rights or protection with the same force and effect as if executed and delivered by the Employee.
8. NON-COMPETITION. For purposes of this Section 8, all references to the Company shall be deemed to include all of the Company’s subsidiaries. The Employee will not utilize his special knowledge of the business of the Company and his relationships with customers, suppliers of the Company and others to compete with the Company as hereinafter set forth. During his employment by the Company and for a period of (a) eighteen months after the expiration of this Agreement without renewal or (b) three years after the termination of this Agreement for any reason (the “Restricted Period”), the Employee shall not engage, directly or indirectly, or have an interest, directly or indirectly, anywhere in the United States of America or any other geographic area where the Company does business or in which its products or services are marketed, alone or in association with others, as principal, officer, agent, employee, director, partner or stockholder (except with respect to his employment by the Company), or through the investment of capital, lending of money or property, rendering of services or otherwise, in any business which directly competes with any principal product line of the Company; namely, any product that accounts for at least five (5%) percent of the consolidated net sales of any of the Company’s product lines. Notwithstanding anything to the contrary otherwise herein provided, Employee’s ownership of 5% or less of the stock of any company shall not be deemed a violation of this Section 8, and furthermore, Employee may (y) manage, operate, be employed by, participate in, or provide services to a company that engages in such restricted activities if Employee does not personally participate or advise as to such restricted activities and Employee’s involvement within such company is limited to business units that do not engage in such activities; and (z) own (or hold a direct or indirect ownership interest in), manage, operate, control, be employed by, participate in or, provide services or financial assistance to any company or business that he is permitted during the Term, pursuant to this Agreement or otherwise, to own (or hold a direct or indirect ownership interest in), manage, operate, control, be employed by, participate in or, provide services or financial assistance to. Notwithstanding anything to the contrary otherwise herein provided, Employee shall not be subject to any obligations under this Section 8 following the termination of this Agreement if the Agreement is terminated pursuant to a Section 4(g) Termination.
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9. REMEDIES. The restrictions set forth in Sections 7 and 8 are considered by the parties to be fair and reasonable. The Employee acknowledges that the restrictions contained in Sections 7 and 8 will not prevent him from earning a livelihood. The Employee further acknowledges that the Company would be irreparably harmed and that monetary damages would not provide an adequate remedy in the event of a breach of the provisions of Sections 7 or 8. Accordingly, the Employee agrees that, in addition to any other remedies available to the Company, the Company (a) shall be entitled to specific performance, injunction, and other equitable relief to secure the enforcement of such provisions, (b) shall not be required to post bond or other security in connection with seeking any such equitable remedies, and (c) shall be entitled to receive reimbursement from the Employee for all attorneys’ fees and expenses incurred by the Company in enforcing such provisions. If any provisions of Sections 7, 8, or 9 relating to the time period, scope of activities or geographic area of restrictions is declared by a court of competent jurisdiction to exceed the maximum permissible time period, scope of activities or geographic area, the maximum time period, scope of activities or geographic area, as the case may be, shall be reduced to the maximum which such court deems enforceable. If any provisions of Sections 7, 8, or 9 other than those described in the preceding sentence are adjudicated to be invalid or unenforceable, the invalid or unenforceable provisions shall be deemed amended (with respect only to the jurisdiction in which adjudication is made) in such manner as to render them enforceable and to effectuate as nearly as possible the original intentions and agreement of the parties.
10. TERMINATION. This Agreement may be terminated prior to the expiration of the Term set forth in Section 2 upon the occurrence of any of the events set forth in, and subject to the terms of, this Section 10.
(a) Death. This Agreement will terminate immediately and automatically upon the death of the Employee.
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(i) Subject to the provisions of clause (ii) of this Section 10(e), the Employee may terminate this Agreement at anytime upon providing the Company with six weeks prior written notice. If this Agreement is terminated by the Employee pursuant to this Section 10(e)(i), then the Employee shall be entitled to receive his accrued Base Compensation and benefits through the effective date of such termination, any unvested stock options and unvested restricted stock awards will terminate and be null and void and the Employee shall have no further entitlement to Base Compensation, bonus, or benefits from the Company following the effective date of such termination.
(ii) The Employee may terminate this Agreement upon the occurrence of any of the following without any advance notice: (A) a breach by the Company of any material provision of this Agreement and the expiration of a 10-business day cure period for such breach after written notice thereof has been given to the Company by the Employee; (B) any material diminution in the authority or responsibilities delegated to the Employee as the chief executive officer and/or chairman of the Board of the Company; or (C) any reduction in the Employee’s Base Compensation (collectively, “Good Reason”).
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11. ADDITIONAL DISCRETIONARY BENEFITS. At the sole and absolute discretion of the Board of Directors of the Company, the Board of Directors may grant to the Employee additional benefits, including, without limitation, (a) the right to receive a gross-up payment to the extent of any applicable excise taxes imposed by Section 4999 of the Code; and (b) the right to participate in any Supplemental Executive Retirement Plan that may be adopted by the Board of Directors in its sole and absolute discretion.
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(i) | To the Company: | Cadre Holdings, Inc. |
00000 Xxxxxxxxxxxxx Xxxxxxx | ||
Xxxxxxxxxxxx, Xxxxxxx 00000 | ||
Attention: Board of Directors | ||
(ii) | With a copy to: | Xxxx Xxxxxxx, P.C. |
000 Xxxxx Xxxxxx, 00xx Xxxxx | ||
Xxx Xxxx, Xxx Xxxx 00000 | ||
Attention: Xxxxxx X. Xxxxxxxx, Esq. | ||
(iii) | To the Employee: | Xxxxxx X. Xxxxxxx |
000 Xxxxx Xxxx Xxx, Xxxxx 000 | ||
Xxxx Xxxxx, Xxxxxxx 00000 |
(h) Jurisdiction; Venue; Waiver of Jury Trial. This Agreement shall be subject to the exclusive jurisdiction of the courts located in New Castle County, Delaware. Any breach of any provisions of this Agreement shall be deemed to be a breach occurring in the State of Delaware by virtue of a failure to perform an act required to be performed in the State of Delaware, and the parties irrevocably and expressly agree to submit to the jurisdiction of the courts located in New Castle County, Delaware for the purpose of resolving any disputes among them relating to this Agreement or the transactions contemplated by this Agreement and waive any objections on the grounds of forum non conveniens or otherwise. The parties hereto agree to service of process by certified or registered United States mail, postage prepaid, addressed to the party in question. The parties hereto irrevocably waive the right to a jury trial in connection with any action arising under this Agreement or the employment of Employee.
(i) Governing Law. This Agreement is made and executed and shall be governed by the laws of the State of Delaware, without regard to the conflicts of law principles thereof.
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(i) Notwithstanding any other provisions of this Agreement or any other Company plan, arrangement or agreement (“Company Arrangement”), in the event that any payment or benefit by the Company or otherwise to or for the benefit of Employee, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (all such payments and benefits, including, without limitation, any payments or benefits received by the Employee as a result of a Section 4(g) Termination, being hereinafter referred to as the “Total Payments”), would be subject (in whole or in part) to the excise tax (the “Excise Tax”) imposed by Section 4999 of the Code, then the Total Payments shall be reduced (but not below zero) to the minimum extent necessary to avoid the imposition of the Excise Tax on the Total Payments. Any such reduction shall be made by the Company in its sole discretion consistent with the requirements of Section 409A.
(ii) Any determination required under this Section 12(k), including whether any payments or benefits are parachute payments, shall be made by the Company in its sole discretion. The Employee shall provide the Company with such information and documents as the Company may reasonably request in order to make a determination under this Section 12(k). The Company’s determinations shall be final and binding on the Company and the Employee.
(iii) In the event it is later determined that to implement the objective and intent of this Section 12(k), (i) a greater reduction in the Total Payments should have been made, the excess amount shall be returned promptly by Employee to the Company or (ii) a lesser reduction in the Total Payments should have been made, the excess amount shall be paid or provided promptly by the Company to Employee, except to the extent the Company reasonably determines would result in imposition of an excise tax under Section 409A.
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[Signature Page Follows]
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In Witness Whereof, each of the parties hereto has duly executed this Agreement as of the date set forth above.
Cadre Holdings, Inc. | ||
By: | /s/ XXXXXX XXXXXXX | |
Name: Xxxxxx Xxxxxxx | ||
Title: Chief Financial Officer | ||
/s/ XXXXXX X. XXXXXXX | ||
Xxxxxx X. Xxxxxxx |