EX-10.10
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l16251aexv10w10.htm
EX-10.10: COMISSION AGREEMENT
Exhibit 10.10
COMMISSION AGREEMENT
This
Commission Agreement (“Agreement”) is entered into this___26th___day of August,
2005, but shall be effective as of August 1, 2005 subject to paragraph 15. This Agreement is made
by and between Xxxxx X. Xxxx, an individual residing at 000 Xxxxxxxxx Xxxx, Xxxxxx, Xxx Xxxx 000000
(hereinafter “Agent” or “Xx. Xxxx”), and Horizon Energy Development, Inc., a
New York corporation
with U.S. offices at 0000 Xxxx Xxxxxx, Xxxxxxxxxxxxx, Xxx Xxxx 00000 (“Horizon”).
WHEREAS, Xx. Xxxx has been employed by National Fuel Gas Company and/or its various
subsidiaries (including Horizon) from 1971 through July 31, 2005, and among other things, has
worked on and provided advice and expertise on matters relating to international investments and
overseas project development, specifically in the Czech Republic, Italy and Bulgaria; for purposes
of this Agreement, “National Fuel” shall refer, collectively, to National Fuel Gas Company, and all
of its affiliates and/or direct and indirect subsidiaries, including but not limited to Horizon;
WHEREAS, Horizon owns, indirectly, interests in the following two projects (collectively the
“Projects”):
| | (a) | | The development of a new combined cycle gas turbine electric generating
facility, with a nominal capacity of 400 Mwe, to be located on a site in the area of
Montenero xx Xxxxxxxx, Regione Molise, Italy, and developed through Montenero Energia
S.r.l. which Horizon established with ACEA spa, an Italian electric utility, (the
“Italian Project”); and |
| |
| | (b) | | The development of new combined cycle gas turbine cogeneration facilities
with a nominal capacity of 160 Mwe to be located on sites adjacent to the existing
Sofia and Sofia East cogeneration plants in Sofia, Bulgaria, and developed through
Sofia Energy EAD, a Bulgarian joint stock company, which Horizon established with
Toplofikacia Sofia EAD , (the “Bulgarian Project”); |
WHEREAS, Horizon desires to sell its interests in the Projects for cash, and desires to retain
Agent to facilitate that sale, subject to the terms and conditions of this Agreement;
WHEREAS, during the course of Xx. Xxxx’x employment with National Fuel, Xx. Xxxx had access to
and became acquainted with National Fuel’s trade secrets and confidential and proprietary
information and materials, including but not limited to investment plans and strategies;
WHEREAS, during the course of Xx. Xxxx’x employment with National Fuel, Xx. Xxxx was aware
that the confidentiality of National Fuel’s trade secrets and
confidential and proprietary information was required to be maintained by National Fuel’s
employees;
WHEREAS, during the course of Xx. Xxxx’x employment with National Fuel, Xx. Xxxx was aware
that National Fuel’s international energy investment plans, oil and gas exploration and development
activities, and other business strategies were subject to restricted use and disclosure;
WHEREAS, during the course of Xx. Xxxx’x employment with National Fuel, National Fuel took
steps to protect its trade secrets and confidential and proprietary information;
WHEREAS, Xx. Xxxx recognizes that National Fuel’s business and goodwill are dependent upon
National Fuel’s trade secrets and confidential and proprietary information;
WHEREAS, National Fuel will sustain great loss and damage if Xx. Xxxx discloses, utilizes or
causes to be disclosed or utilized National Fuel’s trade secrets and/or confidential and
proprietary information to third parties or for Xx. Xxxx’x own benefit;
WHEREAS, in the absence of this Agreement, National Fuel would not otherwise continue to
disclose such confidential and proprietary information to Xx. Xxxx, or permit access to the same by
Xx. Xxxx.
NOW THEREFORE, in consideration of the premises, mutual covenants, conditions, and terms to be
kept and performed, the parties hereto agree as follows:
1. APPOINTMENT OF AGENT. Horizon hereby appoints Xx. Xxxx as Horizon’s agent to engage in
negotiations for, and otherwise facilitate, the sale of Horizon’s interest in the Italian Project
and the Bulgarian Project for cash. Xx. Xxxx shall not have the authority to sign binding
documents or make binding promises on behalf of Horizon or any affiliate of Horizon, except to the
extent provided in separate written instructions or authorizations signed by an officer of Horizon.
2. TERM OF AGREEMENT. This Agreement shall become effective on August 1, 2005, and continue
for a period of one (1) year (the “initial period” or “initial term”), subject to the rights of
earlier termination set forth below, and subject to Xx. Xxxx’x right to receive a commission as set
forth below. This Agreement shall be renewable at the option of the parties for successive 1 year
periods, provided that the parties have executed an agreement regarding the terms of such renewal
at least 30 days prior to the end of the initial period or any successive period. Horizon shall
not refuse to extend this Agreement upon the same terms if active negotiations are underway at the
end of the initial term or any subsequent term. Agent shall have the option, upon thirty (30)
days’ written notice, to terminate this Agreement at any time, for whatever reason. In the event
that Agent fails to perform any of the terms and conditions of this Agreement, Horizon shall have
the option to give notice and immediately terminate this Agreement.
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Upon termination by either party before the end of the initial term or any subsequent term,
Agent shall be entitled to reimbursement of reasonable expenses incurred through the date of
termination, provided the expenses are not in dispute at the time of termination. Upon termination
of this Agreement or upon Agent’s business failure, bankruptcy, receivership, etc., Agent will
immediately forward to Horizon all records furnished by Horizon under the terms of this Agreement.
3. SCOPE OF WORK. Agent shall perform his obligations under this Agreement for Horizon as an
independent contractor with the fiduciary duties of loyalty and diligence to negotiate the best
sale prices and terms practicable for the Projects. Horizon will use its best efforts to assure
that Agent has access to information and the opportunity to discuss information and issues with
certain members of management (within the confidentiality provisions set forth herein), in order
that Agent may carry out his obligations hereunder. Agent shall provide reports to the individual
within the corporate structure of National Fuel and its affiliated companies who may be designated
from time to time. As of the effective date of this Agreement, Agent shall provide reports to
Xxxxxx X. Xxxxxxxx, President of National Fuel Gas Company. Before making any written or oral
representation to third parties on behalf of Horizon or any of its affiliated companies, Agent
warrants and agrees that he will receive specific, prior approval from an authorized officer of
Horizon or National Fuel Gas Company.
4. COMMISSION. Horizon shall pay Agent a commission (the “Commission”) upon the terms
provided in this Agreement. Agent’s right to receive the Commission is expressly conditioned on,
and the Commission shall be earned by and paid to Agent if and only if, the sale of the Projects,
or either of them, is consummated prior to the expiration of this Agreement, or thereafter as
provided in Section 6 below, at a price and upon terms and conditions acceptable to Horizon in its
sole and absolute discretion. The Commission shall be paid only as and when the sale of the
Projects is consummated and sales proceeds are actually received by Horizon. For example, if the
Projects are sold under agreements which provide for the payment of some money at the closing,
adjusted by a working capital adjustment three months after the closing, and additional money two
years after the closing if a Project is in operation at that time, part of the Commission would be
calculated and paid at the closing based on the amount actually received by Horizon at the closing,
adjusted three months later in proportion to the working capital adjustment, and an additional
portion of the Commission would be calculated and paid two years after the closing based on the
actual receipt of that money as described in Section 4 below. A partial Commission may be earned
and paid upon the sale of one of the Projects as set forth below. The Commission shall constitute
the total and maximum compensation which shall be earned by and paid to Agent for his services
(other reimbursement of certain expenses as set forth in Section 7 below). If no sale of a Project
is consummated, Agent shall be entitled to a portion of xxxxxxx money, non-refundable or other
deposit retained by Horizon in connection with any sale transaction that is not consummated,
calculated in the same manner as set forth in Section 5 below.
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5 CALCULATION OF COMMISSION. The Commission shall be calculated on a sliding scale based on
the Total Net Sale Proceeds from the sale of the Projects, as defined below:
| | (a) | | The Total Net Sale Proceeds from the sale of the Projects shall be equal to the gross
sales proceeds actually received, converted into U.S. dollars as of the date funds are
received by Horizon, less: |
| | (i) | | all expenses of sale, including, but not limited to, attorney fees,
consultant fees and government fees, other than expenses for which Agent is entitled
to reimbursement pursuant to Section 6 below; |
| |
| | (ii) | | all foreign or domestic income taxes, excise taxes, and other taxes which
Horizon or its affiliates are required to pay related to the sale of the Projects; and |
| |
| | (iii) | | the “Post 8/1/05 Net Project Development Costs” defined as follows: for
purposes of this Agreement, the Post 8/1/05 Net Project Development Costs consist of
all expenses related to the Italian Project and the Bulgarian Project first accrued by
Horizon or its affiliates in connection with the Projects on or after August 1, 2005
after reduction by the amount of any such expenses for which Horizon or its affiliates
are reimbursed by any unaffiliated party. |
| | (b) | | the Commission will be calculated as follows: |
| | (i) | | one percent (1%) of the Total Net Sales Proceeds up to Total Net Sales
Proceeds of one million dollars ($1,000,000); plus |
| |
| | (ii) | | two percent (2%) of the Total Net Sales Proceeds greater than one million
dollars ($1,000,000) up to Total Net Sales Proceeds of two million dollars
($2,000,000); plus |
| |
| | (iii) | | three percent (3%) of the Total Net Sales Proceeds greater than two
million dollars ($2,000,000) up to Total Net Sales Proceeds of three million dollars
($3,000,000); plus |
| |
| | (iv) | | an additional similarly increasing percentage of the Total Net Sales
Proceeds from each successive increment of one million dollars ($1,000,000) of Total
Net Sales Proceeds up to a maximum of 50 percent of the Total Net Sales Proceeds
greater than forty-nine million dollars ($49,000,000) up to the Total Net Sales
Proceeds of fifty million dollars ($50,000,000); plus |
| |
| | (v) | | if any proceeds from the sale of one of the Projects are received by
Horizon more than three months after the closing of the sale of a Project, |
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| | | | such as pursuant to an “earn-out” or similar provision, those sale proceeds shall
be discounted by a prorated annual percentage rate of eight percent (8%) per year,
and then added to the Net Sales Proceeds as of the Closing, and the Commission
shall then be increased by applying the above formula to the Net Sales Proceeds as
so increased; less |
| |
| | (vi) | | one-half (1/2) of the total expenses for which Horizon has reimbursed
Agent pursuant to Section 6 below. |
| | (c) | | If the sale of one of the Projects is consummated before the sale of the other
Project, then a portion of the Commission shall be paid based on the formula set out in
paragraphs 5(a) and 5(b) above, provided that the Net Sales Proceeds from that project
exceed the Accumulated Net Project Development Costs related to both projects. Upon the
closing of the sale of the other Project, the remainder of the Commission shall be
calculated and paid as though both closings had occurred at the same time (except as
otherwise provided in paragraph 5(b)(v) above). |
6. SUBSEQUENT SALE. If Horizon declines to extend this Agreement when Agent is willing to
extend on the same terms beyond the initial term or beyond any subsequent term, and one or both of
the sales of the Projects are consummated within one hundred eighty (180) days after termination of
this Agreement to any buyer with whom Agent has had negotiations prior to such termination, then
Horizon will pay the Commission on such sale or sales. If Agent terminates this Agreement or
declines to extend it when Horizon is willing to extend on the same terms, then Horizon will owe
Agent no Commission on any sale consummated after termination of this Agreement.
7. BUSINESS AND TRAVEL EXPENSES. Horizon shall reimburse Agent’s normal reasonable travel,
lodging, long distance communication, computer connection, and out of pocket expenses incurred in
connection with performance of services hereunder, subject to the reduction of the Commission by an
amount equal to one-half (1/2) of Agent’s expenses as set forth in paragraph 5(b)(vi) above. When
renting any vehicle for the purpose of performing services under this Agreement, Assignee will
purchase the available liability insurance, which is hereby deemed to be a normal reasonable travel
expense.
8. NO CHANGE IN PENSION BENEFITS. The providing of services by Agent hereunder shall neither
decrease, nor increase, the calculation or payment of pension or other retirement benefits normally
payable to Xx. Xxxx as a result of his retirement as of August 1, 2005.
9. TAXES.
| | (a) | | Agent shall be responsible for the payment of any and all local, state and federal
taxes, or other fees, imposed on the amounts made payable to Agent as a result of the
services rendered hereunder. |
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| | (b) | | Agent shall be responsible for the withholding and/or payment of any and all
applicable local, state and federal employment, payroll and/or income taxes associated
with any and all of Agent’s employees, provided that Agent shall not use any employees on
any of the work to be performed under this Agreement without the prior written consent of
Horizon. Agent agrees to indemnify and hold harmless National Fuel for or from any
failure, on the part of Agent, to withhold or remit such applicable taxes. |
| |
| | (c) | | Upon request by Horizon, Agent shall provide documented proof that the
above-referenced taxes were paid, as required. |
10. INDEPENDENT CONTRACTOR. It is understood and agreed that, in performing all work
hereunder, Agent shall be an independent contractor, responsible for accomplishing the results
contracted for under this Agreement, and, as such, shall control the detail, manner and means of
providing consulting services pursuant to this Agreement. Accordingly, Agent shall not be required
to work any particular schedule, but shall use his best efforts to meet Horizon’s deadlines.
Further, Agent shall not, within reason, be required to work at any particular location. However,
Horizon shall provide reasonable and sufficient temporary office space and clerical and office
services support when Consultant’s presence is required at any of National Fuel’s offices in North
America. Neither party shall in any way represent that it is an employer or employee of the other
party. In certain circumstances, as specifically authorized by Horizon, Agent may act as an agent
of a National Fuel entity. As an independent contractor, Agent is not authorized to make any
contract, agreement, warranty or representation on behalf of Horizon or National Fuel, unless
specifically authorized in writing by a Horizon officer to do so.
11. PROHIBITION AGAINST SUBCONTRACTING. Agent shall not subcontract out any of the work to
be performed by him under this Agreement without the prior written consent of Horizon.
12. INDEMNITY.
| | (a) | | Agent will indemnify and hold National Fuel harmless from and against any and all
loss, damage, injury, suits, penalties, costs, liabilities and expenses (including, but
not limited to, legal expenses) arising out of any claim for loss of or damage to
property, including property of National Fuel or Agent, liability to, injury to, or death
of any person, including Agent, or an employee of National Fuel or Agent, caused by the
grossly negligent, reckless or intentionally tortious acts of Agent, or his officers,
employees, subcontractors or other agents, including but not limited to failure to comply
with federal, state and local laws, ordinances and regulations, both foreign and domestic,
applicable to services to be performed hereunder and all other applicable local, state
and federal laws, ordinances and regulations, both foreign and domestic. For purposes of
this paragraph only, “National Fuel” shall |
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| | | | include National Fuel Gas Company and all of its direct and indirect subsidiaries, along
with any officer or employee of these entities. |
| | (b) | | Horizon will indemnify and hold Agent harmless from and against any and all loss,
damage, injury, suits, penalties, costs, liabilities and expenses (including, but not
limited to, legal expenses) arising out of any claim related to the services performed
under this Agreement for loss of or damage to property, including property of National
Fuel or Agent, liability to, injury to, or death of any person, including Agent, or an
employee of National Fuel or Agent, unless caused by the grossly negligent, reckless or
intentionally tortious acts of Agent, or his officers, employees, subcontractors or other
agents, including but not limited to failure to comply with federal, state and local laws,
ordinances and regulations, both foreign and domestic, applicable to services to be
performed hereunder and all other applicable local, state and federal laws, ordinances and
regulations, both foreign and domestic. |
13. INSURANCE. Horizon shall carry statutory workers’ compensation insurance coverage,
commercial general liability insurance coverage, international commercial insurance coverage and
executive risk insurance coverage in an amount not less than $1,000,000. Horizon shall have Agent
named as additional insured (with the exception of the workers’ compensation policy) under the
above insurance policies in connection with any claims arising out of the services provided under
this Agreement. Each insurance policy provided by Horizon shall contain a waiver of the right of
subrogation, and the coverage will be provided (except as otherwise described in the immediately
following sentence) on a primary non-contributing basis and the limits will be exhausted before any
other insurance is to apply. The coverage provided by Horizon will, however, be on a secondary
non-contributing basis excess of any other applicable primary auto insurance policies carried by
Agent or his Assignee (as defined in paragraph 21) and the limits of any such primary auto
insurance will be exhausted before the coverage provided by Horizon hereunder is to apply. Horizon
shall maintain this insurance at all times during performance of this Agreement, provided however,
that in the event Horizon elects to not renew its international commercial insurance coverage upon
its expiration on June 6, 2006, Agent would no longer be covered under such policy and nothing
herein shall obligate Horizon to continue to renew or replace such policy.
14. CONFIDENTIALITY.
| | (a) | | In performing his obligations under this Agreement, Agent and his employees,
officers, members and agents, if any, shall maintain all information gathered, developed
or communicated to Agent by National Fuel or any of their directors, officers, employees
or agents, in connection with the work performed hereunder in a confidential manner,
whether or not identified as a trade secret or as proprietary and confidential by National
Fuel. Agent agrees that Agent and his employees, officers, members and agents, if any,
will not duplicate, distribute, disclose, or otherwise provide such information, or
National Fuel’s trade secrets or proprietary and confidential information to anyone
without prior written |
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| | | | authorization of a Horizon officer. The obligations created by this paragraph shall remain
in effect indefinitely and shall survive the termination of this Agreement. |
| | (b) | | National Fuel’s “trade secrets” and “confidential and proprietary information”
include information and material concerning National Fuel which is not generally known to
the public, including but not limited to, any and all memoranda, software, data bases,
computer programs, interface systems, pricing and client information, and records
pertaining to National Fuel’s methods or practices of doing business and marketing its
services and products, whether or not developed or prepared by Agent during the term of
his employment with National Fuel or in connection with his providing consulting service
to National Fuel. National Fuel’s trade secrets and confidential and proprietary
information also include “writing” or “writings” which shall mean and include all works,
expressed in words, numbers or other verbal or numerical symbols, regardless of the
physical manner in which they are embodied, including, but not limited to, books,
articles, manuscripts, memoranda, computer programs, computer software systems, maps,
charts, diagrams, technical drawings, manuals, video and audio tape recordings, and
photographs, whether or not developed or prepared by Agent during the term of his
employment with National Fuel or in connection with his providing consulting services to
National Fuel. National Fuel’s trade secrets and confidential and proprietary information
do not include any information or material which is or becomes generally known to the
public (other than by act of Agent or his representatives in breach of this Agreement). |
15. BOARD APPROVAL. This Agreement is made subject to approval and ratification by the Board
of Directors of National Fuel Gas Company, to whom it will be presented and favorably recommended
by management at the next meeting of that Board, scheduled for September 8, 2005. If this
Agreement is not so approved and ratified, then the parties will negotiate in good faith to restore
the parties as nearly as possible to the positions in which they would have been if this Agreement
had never been executed, or to reach some other mutually agreeable arrangement.
16. COMMUNICATIONS. All notices and other communications under this Agreement shall be in
writing and shall be given by hand delivery to the other party or by registered or certified mail,
return receipt requested, postage prepaid, to the appropriate party at the addresses specified
below or at such other addresses as either party shall have furnished to the other in writing in
accordance herewith. Notices and communications shall be effective when actually received by the
addressee.
| | (a) | | With respect to Agent: |
Xxxxx X. Xxxx
000 Xxxxxxxxx Xxxx
Xxxxxx, Xxx Xxxx 00000
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| | (b) | | With respect to Horizon: |
P.C. Xxxxxxxx, President
Horizon Energy Development, Inc.
0000 Xxxx Xxxxxx
Xxxxxxxxxxxxx, XX 00000
17. AUDIT. Horizon shall have the right, upon reasonable notice, to examine and audit all of
Agent’s xxxxxxxx and all of the backup support data for those xxxxxxxx. Agent shall make available
said information to Horizon, upon request, at the offices of National Fuel.
18. SOCIAL SECURITY AND FAIR LABOR STANDARDS. Agent covenants and agrees that it is bound by
and will observe and perform all duties required under the Social Security Act and the United
States Fair Labor Standards Act, and all other applicable local, state, and federal laws,
ordinances, and regulations.
19. EQUAL EMPLOYMENT OPPORTUNITY. The Equal Opportunity clause in Section 202, Paragraphs 1
through 7 of Executive Order 11246, as amended; and Section 503 of the Rehabilitation Act of 1973,
29 U.S.C. §793, as amended; and Section 402 of the Vietnam Era Veterans Readjustment Assistance Act
of 1974, 38 U.S.C. §§42l1-12; and the Americans with Disabilities Act of 1990, 42 U.S.C. §12101,
et. seq., as amended, relating to equal employment opportunity; and the
implementing Rules and Regulations of the Office of Federal Contracts Compliance Programs as set
forth in 41 C.F.R. Chapter 60 are incorporated herein by specific reference.
20. NON-WAIVER. Failure of either party to act or exercise its rights under this Agreement
upon the breach of any of the terms hereof by the other party shall not be construed as a waiver of
such a breach or prevent said party from thereafter enforcing strict compliance with any or all of
their terms hereof.
21. NON-ASSIGNABILITY. The obligations of Agent hereunder are personal and cannot be
assigned or delegated to subcontractors or employees except as provided in this paragraph 21.
Agent may assign this Agreement to a limited liability company or other entity wholly owned by
Agent (“Assignee”), effective upon notice to Horizon signed by both Agent and the Assignee, which
notice must include:
| | (a) | | the full legal name, address and state of organization of the Assignee; |
| |
| | (b) | | evidence of Agent’s sole ownership of the Assignee; and |
| |
| | (c) | | the Assignee’s commitments that (i) the Assignee assumes all rights and
obligations under this Agreement, and (ii) all the Assignee’s services under this
Agreement must be performed by Agent individually unless Horizon expressly consents
otherwise in writing. |
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Upon the effective date of such an assignment, Agent shall individually be relieved of all direct
obligations under this Agreement, which shall become the direct obligations of the Assignee
(although Agent as an officer/employee of Assignee will continue to comply and help Assignee comply
with the confidentiality provisions of paragraph 14 of this Agreement). Horizon may not assign
this Agreement without the express written consent of Agent. Said consent shall not be
unreasonably withheld.
22. GOVERNING LAW. This Agreement shall be governed by the laws of the State of
New York
without giving effect to the conflict of laws provisions thereof.
23. SEVERABILITY. If any clause, sentence, paragraph, provision or other part hereof shall
be adjudged by any court of competent jurisdiction to be invalid, the remainder hereof shall be
interpreted so as to achieve as closely as possible the intent of the parties as originally
expressed in this Agreement.
24. CAPTIONS AND HEADINGS. The captions and headings herein are for convenience only and are
not to be construed as a part of this Agreement, nor shall the same be construed as defining or
limiting in any way the scope or intent of the provisions hereof.
25. ENTIRE AGREEMENT. This Agreement contains and states the entire agreement of the parties
hereto and supersedes and cancels all prior written and oral agreements and understandings with
respect to the subject matter of this Agreement. Any modification to this Agreement must be agreed
upon in writing and signed by both parties.
26. BINDING CONSIDERATION. Agent understands, represents, warrants, and agrees that the
consideration provided under this Agreement is in addition to anything of value to which he is
entitled.
27. BINDING AGREEMENT. This Agreement is and shall be binding upon and inure to the benefit
of the parties hereto and their respective successors, heirs, executors, administrators and
assigns. Agent represents, warrants and agrees that he has read, understands and intends to be
bound by this Agreement and its recitals, terms, conditions and representations.
IN WITNESS WHEREOF, the parties hereto have made and entered into this Agreement as of August
1, 2005.
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| | | | | | | | | |
| HORIZON ENERGY DEVELOPMENT, INC. | | | | XXXXX X. XXXX | | |
|
| | | | | | | | |
| By:
| | /s/ P. C. Xxxxxxxx
| | | | /s/ Xxxxx X. Xxxx | | |
|
| |
| | | | | | |
| Name: P. C. Xxxxxxxx | | | | | | |
| Title: President | | | | | | |
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