EMPLOYMENT AGREEMENT
Exhibit 10.1
THIS Employment Agreement is entered into as of this 9th day of March 2006 (the “Commencement Date”), by and between Xxxxxx X. Xxxxxxx, (“Xxxxxxx”) and Cutter & Buck Inc., a Washington corporation (“Cutter & Buck”).
WHEREAS, Xxxxxxx is currently employed by Cutter & Buck as its Chief Financial Officer and Senior Vice President; and
WHEREAS, Cutter & Buck now wishes to employ Xxxxxxx as its Chief Executive Officer, and Xxxxxxx desires to accept Cutter & Buck’s employment in that capacity;
NOW, THEREFORE, in consideration of the mutual agreements set forth below, the parties agree as follows:
1. Employment Duties. Cutter & Buck hereby employs Xxxxxxx and Xxxxxxx hereby accepts employment on the terms and conditions set forth by this Agreement. Xxxxxxx shall serve as Chief Executive Officer. In that capacity, subject to the direction and control of the Cutter & Buck’s Board of Directors (the “Board”), Xxxxxxx shall exercise general supervision and control over Cutter & Buck’s property, business and affairs. Xxxxxxx shall devote his full-time efforts to Cutter & Buck and shall not undertake self-employment, nor shall he perform any services or undertake employment for any other employer except as may be approved in advance by the Board. Xxxxxxx further agrees to participate in no other activities during his employment that may conflict with the best interest of Cutter & Buck.
2. Compensation.
a. Base Compensation. Cutter & Buck agrees to pay Xxxxxxx a base salary of Four Hundred Thousand Dollars ($400,000) per annum, less all lawful and applicable withholdings and deductions, payable on a basis conforming to the established payroll practices of Cutter & Buck.
b. Incentive Compensation in Addition to Base Salary. In addition to the basic compensation set forth above, Xxxxxxx shall be entitled to receive such performance-based incentive compensation as shall be determined by the Compensation Committee of the Board.
3. Term. This Agreement shall continue through July 31, 2007, subject to earlier termination in accordance with its provisions. Upon its expiration, unless earlier terminated in accordance with its provisions, this Agreement, shall be renewed automatically upon the same terms and conditions for successive periods of one year, commencing August 1, unless otherwise negotiated and agreed upon by the parties. The successive one year renewals shall also be subject to the earlier termination provisions of this Agreement.
4. Retirement Plans. Subject to the satisfaction of eligibility requirements, Xxxxxxx shall participate in Cutter & Buck’s qualified pension, profit-sharing or other deferred
compensation plan or combination thereof, if any as offered or amended at Cutter & Buck’s discretion.
5. Time Off. Xxxxxxx shall receive time off for holidays in accordance with Cutter & Buck’s policies. Subject to Cutter & Buck’s policies regarding limits on accrual and payout, Xxxxxxx shall be entitled to sixteen (16) days of paid time off per year, accruable at the rate of 4.92 hours per pay period.
6. Reimbursable Expenses. Xxxxxxx shall be entitled to reimbursement for all reasonable and necessary expenses including cell phone charges incurred by Xxxxxxx and approved by Cutter & Buck in connection with Cutter & Buck’s business, including (i) the cost of up to two season tickets for any two Seattle-based professional sports franchises; (ii) entertainment and promotional expenses; and (iii) other direct expenses approved by Cutter & Buck. All such reimbursements shall be paid monthly, provided Xxxxxxx has furnished to Cutter & Buck such supporting documentation as Cutter & Buck may reasonably require.
7. Insurance. Xxxxxxx shall receive similar medical, dental, group disability and life insurance coverage provided to all other employees of Cutter & Buck and upon the same terms and conditions.
8. Termination Notwithstanding the Term of this Agreement or any renewals, this Agreement may be terminated by either party as set forth below:
a. Termination Without Cause. Cutter & Buck may terminate Xxxxxxx’x employment hereunder without Cause upon written notice to Xxxxxxx. In the event of termination of Xxxxxxx by Cutter & Buck without Cause, and contingent upon Xxxxxxx’x execution of a release of all claims against Cutter & Buck and its officers, directors, employees and agents, Cutter & Buck shall pay Xxxxxxx as a separation payment a sum equal to twelve (12) months of his base compensation as of the date of his termination, less all appropriate deductions (the “Separation Benefit”). Such sum shall be payable in twelve (12) equal monthly installments. Notwithstanding the foregoing, in the event that Xxxxxxx is terminated without cause under circumstances that would give rise to a right to a Severance Payment under the provisions of the Amended and Restated Change in Control Agreement executed contemporaneously with this Agreement (the “Change in Control Agreement”), Xxxxxxx’x right to receive a Separation Benefit under this Agreement, will be subject to the provisions of the Change in Control Agreement. Under no circumstances xxxx Xxxxxxx be entitled to receive both a Separation Benefit under this Agreement and a Severance Payment under the Change in Control Agreement that would exceed the amount to which he would be entitled under the Change in Control Agreement.
b. Termination for Cause. Cutter & Buck may terminate Xxxxxxx’x employment hereunder for “Cause” as that term is defined below:
(i) Xxxxxxx’x failure to perform substantially his responsibilities under this Agreement, after demand for substantial performance has been given by Cutter & Buck that specifically identifies how Xxxxxxx has not substantially performed his responsibilities,
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(ii) Xxxxxxx’x conviction of any felony or of a misdemeanor involving fraud, dishonesty or moral turpitude or the entry against him of any civil judgment arising from allegations of fraud, dishonesty or moral turpitude, or any violation of law which has a material adverse effect on Cutter & Buck,
(iii) Xxxxxxx’x breach of this Agreement that results in financial or reputational detriment to Cutter & Buck,
(iv) Xxxxxxx’x misconduct in the performance of his duties under the Agreement that results in financial or reputational detriment to Cutter & Buck,
(v) Xxxxxxx’x breach of Cutter & Buck’s Code of Ethics or Xxxxxxx Xxxxxxx Policy, as now in effect or as modified in the future,
(vi) Xxxxxxx’x theft or embezzlement from Cutter & Buck, or
(vii) Xxxxxxx’x attempt to obstruct or failure to cooperate with any investigation authorized by Cutter & Buck or any governmental or self-regulatory entity.
In the event of termination “for Cause,” all obligations of Cutter & Buck to pay compensation under this Agreement will immediately cease and Xxxxxxx shall be entitled to no further compensation of any kind with the exception of base compensation accrued to the date of termination.
c. Resignation without Good Reason. Should Xxxxxxx wish to terminate his employment with Cutter & Buck without Good Reason (as defined below) during the term of this Agreement, Xxxxxxx shall give sixty (60) days prior written notice to Cutter & Buck specifying the date on which such resignation is to become effective. In the event of a resignation without Good Reason, Cutter & Buck shall have no further obligations to pay compensation to Xxxxxxx under this Agreement other than to pay Xxxxxxx his base compensation through the date of resignation. At Cutter & Buck’s sole option, it may elect to end Xxxxxxx’x service at a date earlier than specified in Xxxxxxx’x written notice and pay his compensation through the end of a sixty (60) day notice period.
d. Resignation with Good Reason. Xxxxxxx may terminate his employment hereunder for “Good Reason” as that term is defined below:
(i) The material diminution of Xxxxxxx’x position, duties, responsibilities or status with Cutter & Buck,
(ii) Cutter & Buck’s assignment of Xxxxxxx on a substantially full-time basis to work at a location where the distance between the new location and Xxxxxxx’x principal residence is at least 30 miles greater than the distance between the former location and such residence,
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(iii) Any reduction in Xxxxxxx’x base salary, or a material reduction in benefits payable to Xxxxxxx or the failure of Cutter & Buck to pay Xxxxxxx any earned salary, bonus or benefits except with Xxxxxxx’x prior written consent,
(iv) Cutter & Buck’s failure to obtain an assumption of the obligations incumbent upon Cutter & Buck under this Agreement by any successor to Cutter & Buck,
(v) The exclusion or limitation of Xxxxxxx from participating in some form of variable compensation plan which provides Xxxxxxx the opportunity to achieve a level of total compensation consistent with Xxxxxxx’x potential compensation under this Agreement, or
(vi) Any demand by any director of the Company that Xxxxxxx take any action or refrain from taking any action where such action or inaction, as the case may be, would violate any law, rule, regulation or other governmental pronouncement, court order, decree or judgment, or breach any agreement or fiduciary duty.
In the event of a resignation by Xxxxxxx for Good Reason, and contingent upon Xxxxxxx’x execution of a release of all claims against Cutter & Buck and its officers, directors, employees and agents, Cutter & Buck shall pay Xxxxxxx a sum equal to twelve (12) months of his base compensation as of the date of his resignation, less all appropriate deductions (the “Separation Benefit”). Such sum shall be payable in twelve (12) equal monthly installments. Notwithstanding the foregoing, in the event that Xxxxxxx resigns for good reason under circumstances that would give rise to a right to a Severance Payment under the provisions of the Change Control Agreement executed contemporaneously with this Agreement, Xxxxxxx’x right to receive a Separation Benefit under this Agreement, will be subject to the provisions of the Change in Control Agreement. Under no circumstances xxxx Xxxxxxx be entitled to receive both a Separation Benefit under this Agreement and a Severance Payment under the Change in Control Agreement that would exceed the amount to which he would be entitled under the Change in Control Agreement.
e. Death. This Agreement, Xxxxxxx’x employment hereunder, and Cutter & Buck’s obligations hereunder shall terminate forthwith upon the death of Xxxxxxx and Cutter & Buck shall have no further obligation to pay compensation to Xxxxxxx or Xxxxxxx’x estate, successors or beneficiaries under this Agreement other than to pay Xxxxxxx’x base salary through the date of death.
f. Disability. If Xxxxxxx shall fail or be unable to perform this services required under this Agreement, with or without reasonable accommodation, because of any physical or mental disability, and such failure or inability shall continue for three consecutive months or for a total of ninety (90) days during any consecutive twelve (12) month period, Cutter & Buck shall have the right to terminate this Agreement thirty days after delivering written notice of such termination to Xxxxxxx; provided, however, that Xxxxxxx shall continue to receive his base compensation to the date of termination.
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9. Trade Secrets and Confidential Information.
x. Xxxxxxx agrees that both during and after the Term of the Agreement he will keep confidential and not disclose or use confidential information relating to Cutter & Buck’s customers, personnel, designs, pricing, sourcing, manufacturing and distribution policies, methods of doing business, sales volume information, business prospects or plans, or any other proprietary information which is not otherwise available to the general public, including, but not limited to, information covered under the Uniform Trade Secrets Act, RCW 19.108 et. seq., except in furtherance of the interests of Cutter & Buck.
x. Xxxxxxx acknowledges that Cutter & Buck’s business and future success depend upon the preservation of the trade secrets and other confidential information of Cutter & Buck, its subsidiaries, and their suppliers and customers (the “Secrets”). The Secrets may include, without limitation, existing and to-be-developed or acquired product designs, new product plans or ideas, market surveys, the identities of past, present or potential customers, business and financial information, pricing methods or data, terms of contracts with present or past customers, proposals or bids, marketing plans, personnel information, procedural and technical manuals and practices, servicing routines, and parts and supplier lists proprietary to Cutter & Buck, its subsidiaries or their customers or suppliers, and any other sorts of items or information of Cutter & Buck or its subsidiaries or their customers or suppliers which are not generally known to the public at large. Xxxxxxx agrees to protect and to preserve as confidential during and after the Term all of the Secrets at any time known to Xxxxxxx or in his possession or control (whether wholly or partially developed by Xxxxxxx or provided to Xxxxxxx, and whether embodied in any tangible medium or merely remembered).
x. Xxxxxxx shall neither use nor allow any other person to use any of the Secrets in any way, except for the benefit of Cutter & Buck. All material containing or disclosing any portion of the Secrets shall be and remain the property of Cutter & Buck, and shall be returned to Cutter & Buck upon the termination of Xxxxxxx’x employment or at the earlier request of the Board of Directors. At such time, Xxxxxxx shall also assemble all materials in his possession or control that contain any of the Secrets, and promptly deliver such items to Cutter & Buck.
10. Intellectual Properties.
a. All ownership, copyright, patent, trade secrecy and other rights in all works, designs, inventions, ideas, manuals, improvements, discoveries, processes, customer lists or other properties (the “Intellectual Properties”) made or conceived by Xxxxxxx during the Term and in connection with Xxxxxxx’x employment with Cutter & Buck shall be the right and property solely of Cutter & Buck, whether developed independently by Xxxxxxx or jointly with others, and whether or not developed or conceived during regular working hours or at Cutter & Buck’s facilities, and whether or not Cutter & Buck uses, registers, or markets the same.
b. If and to the extent that Xxxxxxx makes use, in the course of his employment, of any items or Intellectual Properties previously developed by Xxxxxxx or developed by Xxxxxxx outside the scope of this Agreement, Xxxxxxx hereby grants Cutter &
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Buck a nonexclusive, royalty-free, perpetual, irrevocable, worldwide license (with right to sublicense) to make, use, sell, copy, distribute, modify, and otherwise to practice and exploit any and all such items and Intellectual Properties.
c. In accordance with Cutter & Buck’s policy and Washington law, this section does not apply to, and Xxxxxxx has no obligation to assign to Cutter & Buck, any invention for which no Cutter & Buck trade secrets and no equipment, supplies or facilities of Cutter & Buck were used and which was developed entirely on Xxxxxxx’x own time, unless (i) the invention relates directly to the business of Cutter & Buck; (ii) the invention relates to actual or demonstrably anticipated research or development work of Cutter & Buck; or (iii) the invention results from any work performed by Xxxxxxx for Cutter & Buck.
x. Xxxxxxx will assist Cutter & Buck as reasonably requested during and after the term of his employment to further evidence and perfect, and to enforce, Cutter & Buck’s rights in and ownership of the Intellectual Properties covered hereby, including without limitation, the execution of additional instruments of conveyance and assisting Cutter & Buck with applications for patents or copyright or other registrations.
11. Authority and Non-Infringement. Xxxxxxx warrants that to the best of his knowledge any and all items, technology and Intellectual Properties of any nature developed or provided by him under this Agreement and in any way for or related to Cutter & Buck will be original to Xxxxxxx and will not, as provided to Cutter & Buck or when used and exploited by Cutter & Buck and its contractors and customers and its and their successors and assigns, infringe in any respect on the rights or property of any third party. Xxxxxxx will not, without prior authorization by the Board, use any equipment, supplies, facilities or proprietary information of any other party. Xxxxxxx warrants that he is fully authorized to enter into employment with Cutter & Buck and to perform under this Agreement, without conflicting with any other commitments, understandings, agreements or duties, whether to prior employers or otherwise. Xxxxxxx agrees to indemnify Cutter & Buck for all losses, claims and expenses (including reasonable attorneys’ fees) arising from claims brought against Cutter & Buck as a result of any breach by Xxxxxxx of this section.
12. Noncompetition, Nonsolicitation and Non-Hire.
a. Subject to the provisions of Section 12.d., below, Xxxxxxx agrees that, both during the term and for a period of twelve (12) months following the termination of Xxxxxxx’x employment with Cutter & Buck, Xxxxxxx will not in any capacity, directly or indirectly, engage or invest in, own, manage, operate, finance, control or participate in the ownership, management, operation, financing or control of, be employed by, associated with, or in any manner connected with, lend his name or any similar name to, lend his credit to, render services or advice to, or assist others to engage in or own a material interest in any business or activity that is, or is preparing to be, in competition with Cutter & Buck, its subsidiaries or licensees with respect to any product or any service sold or provided by Cutter & Buck directly or through a subsidiary or a licensee of the Cutter & Buck brand in any geographical area in which such product or service is sold or is actively engaged in. Notwithstanding any other provision of this section, however, Xxxxxxx shall be permitted to maintain an equity ownership
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interest in a competing business if that business is subject to reporting obligations under the Securities Exchange Act of 1934 and Xxxxxxx’x ownership interest does not exceed two percent (2%) of that entity’s outstanding equity securities.
b. Subject to the provisions of Section 12.d., below, Xxxxxxx further agrees that both during the Term of this Agreement and for a period of twelve (12) months following the termination of Xxxxxxx’x employment with Cutter & Buck, Xxxxxxx will not: (i) directly or indirectly solicit or accept business from any actual or identified potential customer of Cutter & Buck or its subsidiaries which might reasonably be foreseen to decrease such customer’s likelihood to transact future business with Cutter & Buck in a volume consistent with its historical practices or reasonably anticipated future volume; or (ii) attempt to entice away from Cutter & Buck or its subsidiaries any actual or identified potential customer of Cutter & Buck or its subsidiaries, nor xxxx Xxxxxxx assist others in doing so. Xxxxxxx further agrees that during the Term of this Agreement and for a period of twelve (12) months following termination of his employment with Cutter & Buck, he will not induce or attempt to induce any customer, supplier, licensee, shareholder, investor, or business relation of Cutter & Buck to sever or diminish its relationship with Cutter & Buck, or refrain from doing business with Cutter & Buck, its subsidiaries, or its licensees or in any way interfere with the relationship between Cutter & Buck and any customer, supplier, licensee, shareholder, investor or business relation of Cutter & Buck.
c. Subject to the provisions of Section 12.d., below, Xxxxxxx further agrees that both during the Term of this Agreement and for a period of twelve (12) months following the termination of his employment with Cutter & Buck, he will not, directly or indirectly, for himself or any other person or entity; (i) induce or attempt to induce any employee, consultant, independent sales representative or independent contractor of Cutter & Buck to leave the employ of or terminate his, her or its contract with Cutter & Buck; (ii) in any way interfere with the relationship between Cutter & Buck and any employee, consultant, independent sales representative or independent contractor of Cutter & Buck; or (iii) employ, or otherwise engage as an employee, consultant, independent sales representative or independent contractor, or otherwise, any individual serving as an employee, consultant, independent sales representative or independent contractor of Cutter & Buck or its subsidiaries on the date this Agreement is executed.
d. In the event that Xxxxxxx receives a Severance Payment under the Change in Control Agreement, then the restrictions set forth in Sections 12.a., 12.b., and 12.c., above, shall be extended to require Xxxxxxx to comply with those Sections for a period of twenty-four (24) months from the termination of his employment.
e. Nothing in this Agreement prohibits Xxxxxxx from providing truthful testimony to governmental, regulatory or self regulatory authorities.
x. Xxxxxxx acknowledges that the covenants contained in this section are necessary and reasonable to protect Cutter & Buck in the conduct of its business and that compliance with such covenants will not prevent him from pursuing his livelihood. However, should any court find that any provision of such covenants is unreasonable, invalid or unenforceable, whether in period of time, geographical area or otherwise, then in that event the
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parties hereby agree that such covenants shall be interpreted and enforced to the maximum extent which the court deems reasonable.
13. Remedies. Xxxxxxx acknowledges that any breach by him of the provisions of Sections 9, 10, 11 or 12 may be wholly or partly irreparable and not fully compensable by damages. Xxxxxxx hereby agrees that such obligations may be enforced by injunctive relief and other appropriate remedies, as well as by damages. The remedies available to Cutter & Buck for violations of Sections 9, 10, 11 and 12 are cumulative and not alternative.
14. Amendment; Waivers. This Agreement may be amended only by a written instrument signed by both parties. No breach of any agreement, warranty or representation shall be deemed waived unless expressly waived in writing and signed by the party who might assert such breach. No failure or delay by either party in exercising any right under this Agreement shall operate as a waiver of such right nor shall any single or partial exercise of any right preclude any other or further exercise of such right or the exercise of any other right.
15. Assignment Prohibited. Xxxxxxx may not assign any of his rights nor delegate any of his duties hereunder. Cutter & Buck may assign this Agreement and delegate its duties hereunder in connection with any merger, consolidation, or sale of assets, or to any of its affiliates at any time owned by, or under common ownership with, Cutter & Buck, provided that any such successor or assignee expressly assumes in writing Cutter & Buck’s obligations hereunder .
16. Governing Law. This Agreement, including all matters of construction, validity and performance, shall be governed by, and construed and enforced in accordance with, the laws of the State of Washington without regard to its choice of law provisions.
17. Arbitration. Except for Cutter & Buck’s right to seek injunctive and other relief in any court of competent jurisdiction for alleged violations of Paragraphs 9, 10, 11 and 12 of this Agreement, all disputes and controversies of every kind between the parties hereto arising out of or in connection with this Agreement and their employment relationship shall be submitted to binding arbitration. The arbitrator shall be appointed by an arbitration service agreed upon by the parties, or if the parties cannot agree upon an arbitration service, by the Judicial Dispute Resolution of Seattle, Washington. The arbitration shall take place in King County, Washington. The determination made by the arbitrator shall be final and binding upon the parties hereto, subject only to the right to appeal such decision to the Superior Court on any basis authorized by the Federal Arbitration Act.
18. Notices. All notices and other communications called for or required by this Agreement shall be in writing to the parties at their respective addresses stated below, or to such other address as a party may subsequently specify and shall be deemed to have been received (i) upon delivery in person, (ii) upon the passage of seventy-two hours following post by the first class registered or certified mail, return receipt requested, with postage prepaid, (iii) upon passage of twenty-four hours following post by overnight receipted courier service, or (iv) upon transmittal by confirmed telex or facsimile provide that if sent by facsimile a copy of such notice
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shall be concurrently sent by U.S. certified mail, return receipt requested and postage prepaid, with an indication that the original was sent facsimile and the date of its transmittal.
19. Savings Clause. If any provision of this Agreement, is held to be invalid or unenforceable to any extent in any context, it shall nevertheless be enforced to the fullest extent allowed by law in that and other contexts, and the validity and force of the remainder of this Agreement shall not be affected thereby.
20. Counterparts. This Agreement may be signed in several counterparts, each of which shall be an original, but all of which together shall constitute the same instrument.
21. Complete Agreement. This Agreement comprises the entire agreement between the parties. It supersedes and merges within it all prior agreements, discussions or understandings between the parties, whether written or oral, express or implied. In interpreting and construing this Agreement, the fact that any particular party may have drafted this Agreement or any provision hereof shall not be given any weight or relevance.
22. Costs and Expenses of Enforcement. If any legal action or arbitration is brought to interpret or enforce any term or provision of this Agreement, then, subject to applicable law, the prevailing party shall, in addition to any other relief to which such party may be entitled, be awarded against the nonprevailing party, his or its attorney’s fees and costs reasonably and actually incurred.
By his signature below, Xxxxxxx acknowledges that he has read and understood this Agreement, that its terms have been fully and fairly negotiated between himself and Cutter & Buck, that he has had the opportunity to seek independent legal advice and has obtained such independent legal advice about the terms and conditions of this Agreement as he sees fit, and that he signs it and accepts its terms, covenants and restrictions voluntarily.
Executed by the parties as of the date first written above.
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CUTTER & BUCK INC. |
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XXXXXX X. XXXXXXX |
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/s/ Xxxxxxx X. Southern |
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/s/ XXXXXX X. XXXXXXX |
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By Xxxxxxx X. Southern |
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Its Chairman |
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Notice Address: |
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Notice Address: |
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000 Xxxxx 00xx Xxxxxx, Xxxxx 000 Xxxxxxx, XX 00000 Attn: Chairman |
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c/o Cutter & Buck Inc. 000 Xxxxx 00xx Xxxxxx, Xxxxx 000 Xxxxxxx, XX 00000 |
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