EMPLOYMENT AGREEMENT
Exhibit
10.2
EMPLOYMENT AGREEMENT, made and entered into as of the 1st day of January, 2007, by
and between Ceramic Protection Corporation a Calgary corporation (together with its successors and
assigns permitted under this Agreement, the “Company”), and Xxxxx Xxxxxxxxxxx (the “Executive”).
W I T N E S S E T H:
WHEREAS, the Company will employ the Executive and the Company desires to enter into an
employment agreement (the “Agreement”) embodying the terms of the Executive’s employment with the
Company; and
WHEREAS, the Executive desires to enter into the Agreement and to begin such employment,
subject to the terms and provisions of this Agreement.
NOW, THEREFORE, in consideration of the premises and mutual covenants contained herein and
for other good and valuable consideration, the receipt of which is mutually acknowledged, the
Company and the Executive (individually a “Party” and together the “Parties”) agree as follows:
1. Definitions.
(a) “Affiliate” shall mean, with respect to any Person, (i) each Person that, directly or
indirectly, owns or controls, whether beneficially, or as a trustee, guardian or other fiduciary
of such person, such Person, (ii) each Person that controls, is controlled by or is under common control with such Person or any Affiliate of such Person, (iii) each of such Person’s officers,
directors, joint venturers and partners and (iv) each member of the immediate or extended family
of any Person that is a natural person. For the purpose of this definition, “control” of a Person
shall mean the possession, directly or indirectly, of the power to direct or cause the direction
of its management or policies, whether through the ownership of voting shares, by contract or
otherwise.
(b) “Base Salary” shall mean the Executive’s base salary in accordance with Section 4 below.
(c) “Board” shall mean the Board of Directors of the Company.
(d) “Business Day” shall mean any day other than a Saturday, Sunday or any other day on which
commercial banks in the State of Delaware are required or authorized to be closed.
(e) “Cause” shall mean:
| (1) | the Executive is indicted for a felony or a crime of moral turpitude, dishonesty, breach of trust or unethical business conduct; |
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| (2) | the Executive engages in misconduct, breach of any fiduciary duty owed to the Company or gross negligence, fraud, insubordination, misappropriation or embezzlement; | ||
| (3) | the Executive uses illegal drugs or abuses alcohol or drugs; or | ||
| (4) | the Executive breaches in any material respect the terms and provisions of this Agreement and fails to cure such breach within 20 days following written notice from the Company specifying such breach. |
(f) “Chairman” shall mean the Chairman of the Company.
(g) “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time,
including applicable regulations thereunder.
(h) “Disability” shall mean a disability as determined under the Company’s long-term
disability plans, programs and/or arrangements in effect on the date such disability first occurs.
(i) “Effective Date” shall mean January 1, 2007.
(j) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended
from time to time, including applicable regulations thereunder.
(k) “Person” includes an individual, partnership, firm, trust, body corporate, governmental
authority, unincorporated body of persons or association, and any other form of entity.
(l) “Term of Employment” shall mean the period specified in Section 2 below.
(m) “Voting Stock” shall mean capital stock of any class or classes having general voting
power under ordinary circumstances, in the absence of contingencies, to elect the directors of a
corporation.
(n) “$” shall mean United States dollars.
2. Term of Employment.
The Company hereby employs the Executive, and the Executive hereby accepts such employment,
for the period commencing on the Effective Date and ending on the third anniversary of the
Effective Date (the “Term of Employment”), subject to earlier termination of the Term of
Employment in accordance with the terms of the Agreement. The Term of Employment shall be
automatically renewed for a one-year period (“Renewal Period”) on each anniversary of the
Effective Date following the expiration of the Term of Employment, unless, in each case, either
Party has notified the other Party in writing in accordance with Section 23
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below at least 90 days prior to the expiration of the then Term of Employment or Renewal Period, as
the case may be, that he or it does not want the Term of Employment or Renewal Period, as the case
may be, to so renew.
3. Position, Duties and Responsibilities.
The Executive shall serve as Chief Executive Officer of the Company and President of
Protective Products International (“PPI”). The Board shall also appoint the Executive to serve as
a director of the Company during the term of his employment hereunder. In each of the foregoing
capacities, the Executive shall faithfully perform for the Company the duties of said office and
shall perform such other duties of an executive, managerial or administrative nature as shall be
specified and designated from time to time by the Board. The Executive shall devote substantially
all of his business time and effort to the performance of his duties hereunder and shall perform
his duties at PPI’s principal office located in Sunrise, FL, except for periodic travel necessary
to carry out his duties. The Executive, in carrying out his duties under this Agreement, shall
report to the Board of Directors. Notwithstanding anything in this Section 3 to the contrary,
nothing shall preclude the Executive from:
| (1) | serving on the boards of directors of a reasonable number of other corporations or the boards of a reasonable number of trade associations and/or charitable organizations; | ||
| (2) | engaging in charitable activities and community affairs; and | ||
| (3) | managing his personal investments and affairs; |
provided, however, that such activities do not materially interfere with the
proper performance of his duties and responsibilities hereunder.
4. Base Salary.
During the Term of Employment, the Executive shall be paid an annual Base Salary, payable in
accordance with the regular payroll practices of the Company, of $500,000.00. The Base Salary may
be increased (but not decreased) at any time and from time to time by action of the Board or by
any committee thereof or any individual having authority to take such action in accordance with
the Company’s regular practices. Once increased, any reference to Base Salary herein shall be a
reference to such increased amount.
5. Bonus/Incentive Compensation.
(a) The Executive shall be entitled to a one-time bonus of $2,000,000 if (a) the EBITDA of
PPI exceeds $20,000,000 for the twenty-four month period beginning on May 25, 2006 (b) the
Executive remains continuously employed hereunder for the entirety of such twenty-four month
period. Such bonus amount shall not be subject to pro ration or other partial payment if the
EBITDA of PPI does not exceed $20,000,000 during such period.
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(b) The Executive shall be eligible to receive stock option grants pursuant to the Company’s
incentive stock option plan when and as adjusted by the Company. The Company shall grant the
Executive Incentive Stock Options to acquire shares equal to one (1) percent of the issued and
outstanding shares of the Company’s common stock annually for each of the three (3) years of this
Agreement providing Executive remains employed by the Company.
6. Employee Benefit Programs. During the Term of Employment, the Executive, to the
extent he is eligible, shall be entitled to participate in those employee pension and welfare
benefit plans, programs and/or arrangements applicable to the Executive and made available to the
Company’s senior-level executives or to its employees generally, as such plans, programs and/or
arrangements may be in effect from time to time, including, without limitation, pension,
profit-sharing, savings, medical, dental, hospitalization, short-term disability, long-term
disability, life insurance, accidental death and dismemberment protection, travel accident
insurance, and other employee pension and welfare benefit plans, programs and/or arrangements
according to the Company’s policy and as approved by the Board from time to time.
7. Reimbursement of Business Expenses.
The Executive is authorized to incur ordinary and reasonable business expenses in carrying
out his duties and responsibilities under the Agreement, and the Company shall reimburse him for
all such ordinary and reasonable business expenses incurred in connection with carrying out the
business of the Company, provided he submits receipts and other supporting documentation in
accordance with the Company’s policy.
8. Vacation.
The Executive shall be entitled to four weeks paid vacation during each twelve-month period.
9. Automobile.
Executive shall be provided with an automobile during the term of this Agreement. The
automobile provided shall be equal to that presently provided to Executive.
10. Termination of Employment.
(a) Termination of Employment Due to Death. In the event of the Executive’s death
during the Term of Employment, the Term of Employment shall end as of the date of the Executive’s
death and his estate and/or beneficiaries, as the case may be, shall be entitled to the following:
| (1) | Base Salary earned but not paid prior to the date of his death; and | ||
| (2) | any amounts earned, accrued or owing to the Executive but not yet paid under Sections 6, 7, or 8 above. |
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(b) Termination of Employment Due to Disability. If the Executive’s employment is
terminated due to Disability during the Term of Employment, either by the Company or by the
Executive, the Term of Employment shall end as of the date of the Executive’s termination of
employment and the Executive shall be entitled to the following (but in no event shall the
Executive be entitled to less than the benefits due him under any disability program of the Company
for which he becomes eligible):
| (1) | Base Salary earned but not paid prior to the date of the termination of the Executive’s employment; | ||
| (2) | any benefits the Executive is entitled to in accordance to a disability plan to be established by the Company and approved by the Board; and | ||
| (3) | any amounts earned, accrued or owing to the Executive but not yet paid under Sections 6, 7, or 8 above. |
In no event shall a termination of the Executive’s employment for Disability occur unless the
Party terminating his employment gives written notice to the other Party in accordance with
Section 24 below.
(c) Termination of Employment by the Company for Cause. If
the Company terminates the Executive’s employment for Cause, the Executive
shall be entitled to the following:
| (1) | Base Salary earned but not paid prior to the date of the termination of his employment; and | ||
| (2) | any amounts earned, accrued or owing to the Executive but not yet paid under Sections 6, 7, or 8 above. |
(d) Termination of Employment by the Company Without Cause. If the Executive’s
employment is terminated by the Company without Cause, other than due to death or Disability, the
Executive shall be entitled to the following:
| (1) | Base Salary earned but not paid prior to the date of the termination of his employment; | ||
| (2) | an amount equal to the aggregate Base Salary (based on the Base Salary in effect on the date of the termination of the Executive’s employment) (the “Salary Continuation Benefits”) for the balance of Term of Employment payable over the period in accordance with the regular payroll practices of the Company; | ||
| (3) | continued accrual of credited service through a period ending on that date that would have been the end of the Term of Employment |
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| for the purpose of any Company pension plan, program or arrangement; | |||
| (4) | any amounts earned, accrued or owing to the Executive but not yet paid under Sections 6, 7, or 8 above; | ||
| (5) | continued participation, as if he were still an employee, in the Company’s medical, dental, hospitalization and life insurance plans, programs and/or arrangements and in other employee benefit plans, programs and/or arrangements (excluding long-term disability programs) in which he was participating on the date of the termination of his employment until the earlier of: |
| (A) | the end of the period used to determine the Salary Continuation Benefits; or | ||
| (B) | the date, or dates, he receives equivalent coverage and benefits under the plans, programs and/or arrangements of a subsequent employer (such coverage and benefits to be determined on a coverage-by-coverage or benefit-by-benefit basis); |
| (6) | other or additional benefits in accordance with applicable plans, programs and/or arrangements of the Company. |
(e) Termination of Employment by the Executive. (i) If the Executive terminates his
employment, other than a termination of employment due to death or retirement or Disability, the
Executive shall have the same entitlements as provided in Section 9(c) above; or (ii) If the
Executive terminates his employment as a result of a change of his duties, title or work location,
he shall have the same entitlements as provided in Section 9(d) above. (iii) A termination of the
Executive’s employment under this Section 9(e) shall be effective upon 30 days prior written
notice to the Company and shall not be deemed a breach of this Agreement.
(g) Nature of Payments. Any amounts due under this Section 9 are in the nature of
severance payments considered to be reasonable by the Company and are not in the nature of a
penalty.
11. Confidentiality: Assignment of Rights.
(a) During the Term of Employment and thereafter, the Executive shall not disclose to anyone
or make use of any trade secret or proprietary or confidential information of the Company,
including such trade secret or proprietary or confidential information of any customer or other
entity to which the Company owes an obligation not to disclose such information, which he acquires
during the Term of Employment, including but not limited to records kept in the ordinary course of
business, except (i) as such disclosure or use may be required or appropriate in connection with
his work as an employee of the Company, (ii) when
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required to do so by a court of law, by any governmental agency having supervisory authority over
the business of the Company or by any administrative or legislative body (including a committee
thereof) with apparent jurisdiction to order him to divulge, disclose or make accessible such
information, or (iii) as to such confidential information that becomes generally known to the
public or trade without violation of this Section 10(a).
(b) The Executive hereby sells, assigns and transfers to the Company all of his right, title
and interest in and to all inventions, discoveries, improvements and copyrightable subject matter
(the “rights”) which during the Term of Employment are made or conceived by him, alone or with
others, and which are within or arise out of any general field of the Company’s business or arise
out of any work he performs or information he receives regarding the business of the Company while
employed by the Company. The Executive shall fully disclose to the Company as promptly as available
all information known or possessed by him concerning the rights referred to in the preceding
sentence, and upon request by the Company and without any further remuneration in any form to him
by the Company, but at the expense of the Company, execute all applications for patents and for
copyright registration, assignments thereof and other instruments and do all things which the
Company may deem necessary to vest and maintain in it the entire right, title and interest in and
to all such rights.
12. Noncompetition and Nonsolicitation. The Executive shall be subject to the
following covenants:
(a) Executive agrees, on behalf of himself and his Affiliates, that during Executive’s
employment with the Company or any of its Affiliates and for a period of twelve months thereafter,
neither Executive nor any of his Affiliates will own, manage, operate or control, or participate
in the ownership, management, operation or control of, any Person engaged in the business carried
on by the Company or any of its Affiliates during the Executive’s employment with the Company or
any of its Affiliates, including, without limitation, by diverting or attempting to divert any
account or customer of the Company or any of its Affiliates.
(b) Executive agrees, on behalf of itself and his Affiliates, that during Executive’s
employment with the Company or any of its Affiliates and for a period of twelve months thereafter,
neither Executive nor any of his Affiliates will solicit, attempt to solicit, induce or encourage
any Person who is in the employ or service of the Company or any of its Affiliates, or any of
their respective consultants or independent contractors, to terminate his or her relationship with
the Company or any of its Affiliates (as the case may be) or become employed by Executive, any of
his Affiliates, or any other Person.
(c) It is expressly understood and agreed that the restrictions contained in this Section 11
are reasonable and necessary to protect the business of the Company and its Affiliates.
Accordingly, if a final judicial determination is made that the time, territory, scope or any
other restriction contained in this Section 11 is unreasonable or otherwise unenforceable, neither
this Agreement nor the provisions of this Section 11 shall be rendered void, but shall be deemed
amended to apply as to such maximum scope, time and territory and to such other extent as such
court may judicially determine or indicate to be reasonable, or if the court or other
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governmental authority does not so determine or indicate, to the maximum extent which any
pertinent statute or judicial decision may indicate to be a reasonable restriction under the
circumstances involved, and as so modified, the restrictions contained in this Section shall be
binding and enforceable.
(d) Executive agrees and acknowledges that remedies at law for any breach of its obligations
under this Section 11 are inadequate and that in addition thereto the Company and its Affiliates
shall be entitled to seek equitable relief, including injunction and specific performance, in the
event of any such actual or threatened breach. Executive acknowledges that the covenants set forth
in this Section 11 are an essential element of this Agreement and that, but for the agreement of
Executive to comply with these covenants, the Company would not have entered into this Agreement.
Executive acknowledges that this Section 11 constitutes an independent covenant and shall not be
affected by performance or nonperformance of any other provision of this Agreement by the Company.
(e) Executive acknowledges that he is also legally bound by Section 11.5 of the Agreement and
Plan of Merger dated May 25, 2006 by and among Executive and the Company and its Affiliates, among
others, which provided for the sale by Executive of his interest in Protective Products
International Corp. to the Company or its Affiliates.
13. Indemnification.
(a) The Company agrees that if the Executive is made a party, or is threatened to be made a
party, to any action, suit or proceeding, whether civil, criminal, administrative or investigative
(a “Proceeding”), by reason of the fact that he is or was a director, officer or employee of the
Company or is or was serving at the request of the Company as a director, officer, member,
employee or agent of another corporation, partnership, joint venture, trust or other enterprise,
including service with respect to employee benefit plans, whether or not the basis of such
Proceeding is the Executive’s alleged action in an official capacity while serving as a director,
officer, member, employee or agent, the Executive shall be indemnified and held harmless by the
Company to the fullest extent legally permitted or authorized by the Company’s certificate of
incorporation or bylaws or resolutions of the Company’s Board of Directors or, if greater, by the
laws of the State of Delaware, against all cost, expense, liability and loss (including, without
limitation, reasonable attorney’s fees, judgments, fines, ERISA excise taxes or penalties and
amounts paid or to be paid in settlement) reasonably incurred or suffered by the Executive in
connection therewith, and such indemnification shall continue as to the Executive even if he has
ceased to be a director, member, employee or agent of the Company or other entity and shall inure
to the benefit of the Executive’s heirs, executors and administrators. The Company shall advance
to the Executive all reasonable costs and expenses incurred by him in connection with a Proceeding
within 20 days after receipt by the Company of a written request for such advance. Such request
shall include an undertaking by the Executive to repay the amount of such advance if it shall
ultimately be determined that he is not entitled to be indemnified against such costs and
expenses. Notwithstanding the foregoing, the Executive shall not enter into any settlement or
compromise in respect of any Proceeding for which the
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Company is obligated to indemnify the Executive under this Section 12 without the Company’s prior
written approval of the terms of such settlement or compromise.
(b) Neither the failure of the Company (including the Board, independent legal counsel or
stockholders) to have made a determination prior to the commencement of any Proceeding concerning
payment of amounts claimed by the Executive under Section 12(a) above that indemnification of the
Executive is proper because he has met the applicable standard of conduct, nor a determination by
the Company (including the Board, independent legal counsel or stockholders) that the Executive has
not met such applicable standard of conduct, shall create a presumption that the Executive has not
met the applicable standard of conduct.
(c) Notwithstanding anything to the contrary set forth herein, the Executive shall not be
entitled to indemnification or advancement of expenses with respect to any matter for which the
Company or any of its Affiliates may seek indemnification pursuant to that certain Agreement and
Plan of Merger dated as of May 25, 2006 by and among the Company, Ceramic Protection Corporation
of America, PPI and the Executive.
14. Effect of Agreement on Other Benefits.
Except as specifically provided in this Agreement, the existence of this Agreement shall not
prohibit or restrict the Executive’s entitlement to full participation in the Company’s employee
benefit plans, programs and arrangements applicable to the Company’s senior-level executives and
as approved by the Board from time to time.
15. Assignability; Binding Nature.
This Agreement shall be binding upon and inure to the benefit of the Parties and their
respective successors, heirs (in the case of the Executive) and assigns. No rights or obligations
of the Company under this Agreement may be assigned or transferred by the Company except that such
rights or obligations may be assigned or transferred pursuant to a merger or consolidation in
which the Company is not the continuing entity, or the sale or liquidation of all or substantially
all of the assets of the Company; provided, however, that the assignee or
transferee is the successor to all or substantially all of the assets of the Company and such
assignee or transferee assumes the liabilities, obligations and duties of the Company, as
contained in this Agreement, either contractually or as a matter of law. The Company further
agrees that, in the event of a sale of assets or liquidation as described in the preceding
sentence, it shall use its commercially reasonably efforts to cause such assignee or transferee to
expressly assume the liabilities, obligations and duties of the Company hereunder or under any
other plan or benefit program referred to herein. No rights or obligations of the Executive under
this Agreement may be assigned or transferred by the Executive other than his rights to
compensation and benefits, which may be transferred only by will or operation of law, except as
provided in Section 23 below.
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16. Representation.
The Company represents and warrants that it is fully authorized and empowered to enter into
this Agreement and that the performance of its obligations under this Agreement will not violate
any agreement between it and any other Person. The Executive represents that there is no agreement
between him and any other Person that would be violated by the performance of his obligations under
this Agreement.
17. Entire Agreement.
This Agreement contains the entire understanding and agreement between the Parties concerning
the subject matter hereof and supersedes all prior agreements, understandings, discussions,
negotiations and undertakings, whether written or oral, between the Parties, with respect thereto.
18. Amendment or Waiver.
No provision in this Agreement may be amended unless such amendment is agreed to in writing
and signed by the Executive and an authorized officer of the Company. No waiver by either Party of
any breach by the other Party of any condition or provision contained in this Agreement to be
performed by such other Party shall be deemed a waiver of a similar or dissimilar condition or
provision at the same or any prior or subsequent time. Any waiver must be in writing and signed by
the Executive or an authorized officer of the Company, as the case may be.
19. Severability.
In the event that any provision or portion of this Agreement shall be determined to be
invalid or unenforceable for any reason, in whole or in part, the remaining provisions of this
Agreement shall be unaffected thereby and shall remain in full force and effect and such provision
or portion of this Agreement shall remain in effect to the fullest extent permitted by law.
20. Survivorship.
The respective rights and obligations of the Parties hereunder shall survive any termination
of the Executive’s employment to the extent necessary to the intended preservation of such rights
and obligations.
21. Beneficiaries/References.
The Executive shall be entitled, to the extent permitted under any applicable law, to select
and change a beneficiary or beneficiaries to receive any compensation or benefit payable hereunder
following the Executive’s death by giving the Company written notice thereof. In the event of
the Executive’s death or a judicial determination of his incompetence,
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reference in this Agreement to the Executive shall be deemed, where appropriate, to refer to his
beneficiary, estate or other legal representative.
22. Governing Law/Submission to Jurisdiction.
This Agreement shall be governed by and construed and interpreted in accordance with the laws
of Delaware without reference to principles of conflict of laws. Each of the Company and the
Executive hereby irrevocably and unconditionally: (i) submits for itself or himself, as applicable,
and its or his property in any legal action or proceeding relating to this Agreement, or for
recognition and enforcement of any judgment in respect thereof, to the non-exclusive general
jurisdiction of the courts of the State of Delaware (ii) consents that any such action or
proceeding may be brought in such courts, and waives any objection that it or he may now or
hereafter have to the venue of any such action or proceeding in any such court or that such action
or proceeding was brought in an inconvenient forum and agrees not to plead or claim the same; (iii)
agrees that service of process in any such action or proceeding may be effected by mailing a copy
thereof by registered or certified mail (or any substantially similar form of mail), postage
prepaid, at its or his address set forth in or designated pursuant to Section 23 hereof; and (iv)
agrees that nothing herein shall affect the right to effect service of process in any other manner
permitted by law or shall limit the right to xxx in any other jurisdiction.
23. Resolution of Disputes.
Any disputes arising under or in connection with the Agreement, other than disputes arising in
connection with Sections 11 or 12 hereof, may, at the election of the Executive or the Company, be
resolved by binding arbitration, to be held in the State of Delaware in accordance with the rules
and procedures of the American Arbitration Association. If arbitration is elected, the Executive
and the Company shall mutually select the arbitrator. If the Executive and the Company cannot agree
on the selection of an arbitrator, each Party shall select an arbitrator and the two arbitrators
shall select a third arbitrator, and the three arbitrators shall form an arbitration panel which
shall resolve the dispute by majority vote. Judgment upon the award rendered by the arbitrator(s)
may be entered in any court having jurisdiction thereof. Costs of the arbitration or litigation,
including, without limitation, reasonable attorneys’ fees of both Parties, shall be borne by the
Company; provided, however, that, if a dispute is resolved in favor of the Company, the
Executive shall bear his own costs of the arbitration or litigation and shall reimburse the Company
for the Executive’s costs of the arbitration or litigation previously paid by the Company. Pending
the resolution of any arbitration or court proceeding, the Company shall continue payment of all
amounts due the Executive under this Agreement and all benefits to which the Executive is entitled
at the time the dispute arises.
24. Notices.
Any notice given to a Party shall be in writing and shall be deemed to have been given when
delivered personally or sent by certified or registered mail, postage prepaid, return receipt
requested, duly addressed to the Party concerned at the address indicated below or to such changed
address as such Party may subsequently give such notice of:
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If to the Company:
|
Ceramic Protection Corp. | |
| 000 Xxxx Xxxxx | ||
| Xxxxxx, XX 00000 | ||
If to the Executive:
|
Xxxxx Xxxxxxxxxxx | |
| c/o Protective Products International Corporation | ||
| 000 Xxxxxxxx Xxxxxxxxx Xxxxxxx Xxxxxxx, Xxxxxxx 00000 |
25. Headings.
The headings of the sections contained in this Agreement are for convenience only and shall
not be deemed to control or affect the meaning or construction of any provision of this Agreement.
26. Counterparts.
This Agreement may be executed in two or more counterparts.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first
written above.
| CERAMIC PROTECTION CORP. | AGREED AND ACCEPTED | |||||
By: |
/s/ Xxxxx Xxxxxxx | |||||
Name:
|
Xxxxx Xxxxxxx
|
/s/ Xxxxx Xxxxxxxxxxx | ||||
Title:
|
Chairman | Xxxxx Xxxxxxxxxxx | ||||
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