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EXHIBIT 10.17
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT (the "Agreement") is entered into as of this
21st day of April, 1997, by and among AVALON ENTERTAINMENT GROUP, INC., a
Tennessee corporation ("AEG"), NASHVILLE COUNTRY CLUB, INC., a Tennessee
corporation ("NCCI"), and XXXXXX XXXXXXXXXXX (the "Consultant"). NCCI, together
with its subsidiaries and affiliates, including AEG, are hereinafter referred
to collectively as the "NCCI Group."
R E C I T A L S:
WHEREAS, pursuant to that certain Merger Agreement (the "Merger
Agreement"), dated as of April 21, 1997, by and among NCCI, Avalon Acquisition
Corp., Inc., a Tennessee corporation and a wholly-owned subsidiary of NCCI
("AAC"), AEG and Messrs. Xxxxxx X. Xxxxxx, Xxxxxx Xxxxxxxxxxx, Xxxx X. Xxxxxx,
Xxxx X. Xxxxxx and Xxxxx X. Xxxxxx (collectively, the "Avalon Group"), AAC has,
concurrently herewith, acquired by merger all of the assets and liabilities of
AEG. Immediately subsequent to the merger, AAC shall change its name to Avalon
Entertainment Group, Inc. and such entity, as it shall exist subsequent to said
merger, shall hereinafter be defined as "Avalon."
WHEREAS, the Consultant has heretofore provided executive services to
AEG, and, through such service, has acquired special and unique knowledge,
abilities and expertise.
WHEREAS, the parties hereto acknowledge that the Consultant will
receive significant benefits if the transactions contemplated by the Merger
Agreement are consummated. It is further acknowledged that the execution and
delivery of this Agreement are conditions to the obligations of NCCI and AAC to
consummate the transactions contemplated by the Merger Agreement.
WHEREAS, the parties to this Agreement mutually acknowledge that if
the Consultant either directly or indirectly was to become involved in the
ownership and operation of any business which competes with the NCCI Group,
that such business involvement could adversely impact the NCCI Group in the
operation of its business and, in particular, the operation and management of
Avalon.
WHEREAS, Avalon desires to retain the services of the Consultant as a
consultant and advisor to Avalon in the operation and management of its
business, and the Consultant desires to provide services as a consultant and
advisor with regard to the operation and management of the business of Avalon,
on the terms and conditions set forth in this Agreement.
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A G R E E M E N T:
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Avalon and the Consultant agree as follows:
1. SERVICES.
(a) Subject to the terms and conditions set forth in this
Agreement, Avalon hereby retains the Consultant to render consulting
and advisory services regarding the management and operation of
Avalon. During the term hereof, the Consultant shall make available at
least fifteen percent (15%) of his full business time and his best
efforts, business judgment, skill and knowledge to the advancement of
the business and interests of the NCCI Group and to the discharge of
his duties and responsibilities hereunder. The Consultant shall use
his best efforts and skills to preserve the business of the NCCI Group
and the goodwill of its employees and persons having business
relations with the NCCI Group.
(b) Avalon engages the services of the Consultant as an
independent contractor and not as an employee. As such, Consultant
shall not be eligible to participate in any benefits provided by
Avalon to its employees.
(c) The Consultant shall not hold himself out as an agent of
Avalon, nor shall he act in any manner so as to bind Avalon.
2. TERM. Subject to earlier termination as hereinafter provided,
the term of the Agreement shall commence on the effective date hereof and shall
continue through December 31, 2002.
3. COMPENSATION. As compensation for all services performed by
the Consultant under and during the term hereof:
(a) Base compensation. Avalon shall pay the Consultant
base compensation at the rate of Fifty Thousand Dollars ($50,000) per
annum, with cost of living adjustments as reasonably determined by the
Board of Directors of NCCI (the "NCCI Board") for 1999, 2000, 2001 and
2002, payable monthly in arrears.
(b) Incentive compensation. In addition to the base
compensation, the Consultant will, at his option exercisable
separately with respect to each calendar year ended after December 31,
1996, be entitled to incentive compensation as follows:
(i) an Incentive Bonus (herein so called) of
$16,333 for such calendar year in which the Pre-Tax Net Income
of Avalon (as hereinafter defined) equals or exceeds
$1,000,000, and, if the applicable income level is achieved,
either:
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(ii) a Partial Participating Bonus (herein so
called) of 1.667% of the amount by which the Pre-Tax Net
Income of Avalon for such calendar year exceeds seventy-five
percent (75%) of the Projected Pre-Tax Net Income of Avalon
(as hereinafter defined) for such year, or
(iii) a Full Participating Bonus (herein so called)
of 1.667% of the Pre-Tax Net Income of Avalon for such
calendar year if the Projected Pre-Tax Net Income for such
year is realized.
For purposes of this subparagraph (b), "Pre-Tax Net Income of
Avalon" shall mean, for a calendar year, the annual net income before
taxes realized by Avalon as calculated in accordance with generally
accepted accounting principles, calculated without the allocation of
(i) any costs and expenses incurred by AEG, Avalon or NCCI in
connection with the transactions contemplated by the Merger Agreement,
or (ii) any general overhead or management fees of NCCI or any
affiliate, but deducting the executive compensation and consulting
fees payable to Messrs. Geddes, Miserendino, Xxxxxx and Xxxxxx
pursuant to this Agreement and employment agreements or consulting
agreements of even date herewith among Avalon, NCCI and such other
applicable members of the Avalon Group, and the projected Incentive
Bonus and Partial Participating Bonus or Full Participating Bonus
payable with respect to such calendar year pursuant to this Agreement
and the employment agreements of even date herewith between Avalon,
NCCI and Messrs. Xxxxxx and Xxxxxx.
For purposes of this subparagraph (b), the "Projected Pre-Tax
Net Income of Avalon" shall be as follows:
1997 $1,200,000
1998 $1,500,000
1999 $1,700,000
2000 $2,000,000
2001 $2,000,000
2002 $2,000,000
The incentive compensation payable pursuant to this
subparagraph (b) shall be paid as soon as practicable after the
Pre-Tax Net Income of Avalon shall have been determined, but in no
event later than March 30 of the subsequent year. The Partial
Participating Bonus shall not be paid for any year for which the Full
Participating Bonus is paid. The parties hereto acknowledge that the
"Projected Pre-Tax Net Income of Avalon" amounts were derived by the
parties hereto based on the assumption that Avalon would be operated
during the term hereof substantially as AEG was operated during the
three (3) years prior to the merger contemplated by the Merger
Agreement. Should the operations of Avalon during the term hereof
change materially, the parties hereto shall negotiate in good faith to
determine whether the "Projected Pre-Tax Net Income of Avalon" amounts
should be revised, and if so, such revised amounts.
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(c) Business expenses. Avalon shall pay or reimburse the
Consultant for all reasonable and customary expenses incurred or paid
by the Consultant in the performance of his duties and
responsibilities hereunder, subject to periodic review of the amount
of such expenses from time to time by Avalon, and subject to such
reasonable substantiation and documentation as may be specified by
Avalon from time to time.
(d) Guarantee of payment. NCCI hereby guarantees payment
of the amounts to be paid to the Consultant under Paragraphs 3(a) and
3(b) hereof.
(e) No participation in benefit plans. The Consultant
shall not be entitled to participate in any pension, profit sharing,
bonus, supplemental compensation, group insurance or other employee
benefit plan now in effect or hereafter established by Avalon.
(f) Form 1099. Avalon shall issue a Form 1099 to the
Consultant for the amounts paid to the Consultant hereunder.
(g) Taxes. The Consultant shall pay all taxes, including
without limitation federal, state and local taxes, and contributions
required by social security and unemployment compensation laws with
respect to the compensation paid pursuant to this Agreement.
4. TERMINATION.
(a) Death or Disability. This Agreement shall terminate
upon the death or Disability (as hereinafter defined) of the
Consultant. The term "Disability" shall mean the Consultant is unable
to perform his duties under this Agreement for 90 consecutive days or
for 120 days out of 150 consecutive days due to the Consultant's
physical or mental illness as determined (after expiration of either
such periods) by a qualified physician selected by Avalon in its sole
discretion.
(b) Termination by Avalon for Cause. Avalon may terminate
this Agreement for Cause upon notice to the Consultant setting forth
in reasonable detail the nature of such cause. The following, as
determined by the Avalon Board in its reasonable judgment, shall
constitute Cause for termination:
(i) The Consultant's failure to perform (other
than by reason of disability), or gross negligence or willful
misconduct in the performance of, his duties and
responsibilities to the NCCI Group, such duties and
responsibilities not to be unreasonably imposed;
(ii) Breach by the Consultant of any provision of
this Agreement;
(iii) Fraud, embezzlement or other dishonesty with
respect to the NCCI Group;
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(iv) Conviction of, or a plea of nolo contendere
to, a felony or other crime involving moral turpitude;
(v) Other conduct by the Consultant that would
generally be considered seriously harmful to the business,
interests or reputation of the NCCI Group;
(vi) The Consultant's intentional failure to
comply with any instructions of Avalon, such instructions not
to be unreasonably imposed; or
(vii) Failure of Avalon to materially achieve
financial and operational performance objectives established
by the Board of Directors of Avalon, unless such failure
results from an act of God or catastrophic event beyond the
control of the Consultant;
provided, however, in the case of subparagraphs (i), (ii), (v) and
(vi), the Consultant shall have been informed in writing of the act,
or failure to act, constituting Cause for termination, and shall have
been provided with a reasonable opportunity, but in no event greater
than thirty (30) days, to cure such act or failure to act.
Notwithstanding the foregoing sentence, the Consultant shall be
entitled to written notification and opportunity to cure an act, or
failure to act, constituting Cause for termination no more than two
times. Subsequent to such second notification, the Consultant shall
have no right to cure any subsequent act, or failure to act, and
Avalon may proceed with termination for Cause as defined herein
without further notice to the Consultant.
(c) Termination by Consultant for Good Reason. The
Consultant may terminate this Agreement for "Good Reason" or without
"Good Reason" at any time. For purposes of this Agreement, "Good
Reason" shall mean (i) a material breach by NCCI of any material
provision of the Merger Agreement and related agreements executed in
conjunction with the Merger Agreement, and failure of NCCI to cure
such breach within thirty (30) days of receipt of written notification
thereof from the Consultant, and (ii) any breach by Avalon of any
material provision of this Agreement or any failure by Avalon to carry
out any of its material obligations hereunder, and the failure to cure
such breach or failure within thirty (30) days' written notice thereof
from the Consultant. Notwithstanding the foregoing sentence, Avalon
shall be entitled to written notification and opportunity to cure an
act, or failure to act, providing the Consultant Good Reason for
termination no more than two times. Subsequent to such second
notification, Avalon shall have no right to cure any subsequent act,
or failure to act, and the Consultant may proceed with termination for
Good Reason as defined herein without further notice to Avalon.
(d) Other termination. Any termination of this Agreement,
other than as a result of the Consultant's death, shall be
communicated by a "Notice of Termination" to the other parties to this
Agreement. For purposes of this Agreement, a "Notice of Termination"
shall mean a notice in writing which shall indicate the specific
termination
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provision in this Agreement relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide a
basis for termination of this Agreement under the provisions so
indicated.
(e) Date of termination. The Date of Termination (herein
so called) shall mean (a) if this Agreement is terminated as a result
of death, the date of the Consultant's death, (b) if this Agreement is
terminated as a result of the Consultant's Disability, the date Notice
of Termination is delivered to the Consultant, (c) if this Agreement
is terminated by Consultant, the earlier of ten (10) days following
the date on which a Notice of Termination is delivered pursuant to
Paragraph 10 or the date specified in the Notice of Termination, and
(d) if this Agreement is terminated for any other reason, then ten
(10) days following the date on which a Notice of Termination is
delivered pursuant to Paragraph 10.
5. EFFECTS ON COMPENSATION UPON DISABILITY OR TERMINATION OF
AGREEMENT.
(a) Disability. During any period that the Consultant
fails to perform his duties under this Agreement as a result of a
Disability, Avalon shall continue to pay him his base compensation
pursuant to Paragraph 3(a) until the Date of Termination.
(b) Death. If this Agreement terminates because of the
death of the Consultant, then Avalon shall pay the Consultant's estate
his base compensation pursuant to Paragraph 3(a) through the date of
his death.
(c) Termination for Cause or without Good Reason. If the
Consultant voluntarily terminates this Agreement without Good Reason
or if this Agreement is terminated by Avalon for Cause, Avalon shall
pay the Consultant his base compensation pursuant to Paragraph 3(a)
through the Date of Termination.
(d) Termination for Good Reason or without Cause. If the
Consultant terminates this Agreement for Good Reason or if Avalon
terminates this Agreement without Cause, then the Consultant shall be
entitled to receive one payment in an amount equal to the highest
total compensation paid the Consultant in a prior calendar year
pursuant to Paragraphs 3(a) and (b) for the lesser of (i) the
remaining portion of the term, or (ii) two years. Such payment shall
be paid to the Consultant within fifteen (15) days of the Date of
Termination.
(e) Incentive Compensation. Should this Agreement
terminate as a result of the Consultant's Disability or death, or
should the Consultant terminate this Agreement for Good Reason, or if
this Agreement is terminated without Cause, in addition to the
compensation set forth in subparagraphs (a), (b) and (d) of this
Paragraph 5, the Consultant (or his estate, if applicable) shall also
be entitled to incentive compensation under Paragraph 3(b) hereof
calculated on the Partial Period Amount (hereinafter defined) of the
calendar year in which the Date of Termination occurs. For purposes of
this
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Agreement, the "Partial Period Amount" shall be equal to the total
amount of the bonuses payable pursuant to Paragraph 3(b) for the year
in which the Date of Termination occurs, divided by the number of days
in such calendar year, times the number of days from the first day of
such calendar year to and including the Date of Termination. The
Consultant's incentive compensation calculated on the Partial Period
Amount shall be paid in accordance with Paragraph 3(b) hereof.
6. NONDISCLOSURE COVENANTS. During the term of this Agreement,
the Consultant will have access to and become familiar with various trade
secrets and other sensitive information belonging to the NCCI Group consisting
of, but not limited to, processes, computer programs, compilations of
information, records, sales procedures, customer requirements, pricing
techniques, customer lists, technical data, know-how, market reports, consumer
investigations, methods of doing business and other confidential information
(collectively, the "Confidential Information"), which are acquired, developed
and used by the NCCI Group and regularly used in the operation of its business.
The Consultant acknowledges and agrees that all Confidential Information is and
shall remain the property of the NCCI Group. The Consultant further agrees that
he shall not use in any way or disclose any of the Confidential Information,
directly or indirectly, either during the term of this Agreement or at any time
thereafter, except as required in the course of his services under this
Agreement or to the extent such Confidential Information is publicly known. All
files, records, documents, information, data, and similar items relating to the
business of the NCCI Group, whether prepared by the Consultant or otherwise
coming into his possession, shall remain the exclusive property of NCCI and
shall not be removed from the premises of the NCCI Group under any
circumstances without the prior written consent of the NCCI Board (except in
the ordinary course of business during the term of this Agreement), and in any
event shall be promptly delivered to NCCI (without the Consultant retaining any
copies) upon termination of this Agreement.
7. NONCOMPETITION COVENANT. Except in the case of the termination
of this Agreement other than (i) for Cause, or (ii) for Good Reason, without
the prior written consent of NCCI, the Consultant shall not, prior to January
1, 2003, directly or indirectly, as a director, officer, agent, employee,
consultant or independent contractor, or in any other individual or
representative capacity, (i) invest (other than investments in publicly-owned
companies which constitute not more than one percent (1%) of the outstanding
securities of any such company) or engage in any business or activity that is
competitive with the business of the NCCI Group in the same geographic areas in
which the NCCI Group primarily operates or (ii) accept employment with or
render services to a direct competitor of the NCCI Group which competitor
operates in the same geographic areas as the NCCI Group.
8. COVENANT NOT TO HIRE. During the term of this Agreement and
for a period of one (1) year after the termination of this Agreement for any
reason, the Consultant shall not, on his own behalf or on behalf of any other
person, partnership, association, corporation or other entity, hire, or solicit
for employment any employee of the NCCI Group, or in any manner attempt to
influence or induce any employee of the NCCI Group, to leave the employment of
the NCCI Group, nor shall the Consultant use or disclose to any person,
partnership, association,
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corporation or other entity any information obtained during the term of this
Agreement, concerning the names and addresses of the NCCI Group employees;
provided, however, if the Consultant terminates this Agreement for Good Reason
or if Avalon terminates this Agreement without Cause, the Consultant may hire
or solicit for employment any employee of Avalon who was an employee of AEG on
the effective date of the merger contemplated by the Merger Agreement.
9. SEVERABILITY. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under present or future laws effective during
the term hereof, such provision shall be fully severable and this Agreement
shall be construed and enforced as if such illegal, invalid or unenforceable
provision never comprised a part of this Agreement; and the remaining
provisions of this Agreement shall remain in full force and effect and shall
not be affected by the illegal, invalid or unenforceable provision or by its
severance herefrom. Furthermore, in lieu of such illegal, invalid or
unenforceable provision, there shall be added automatically as part of this
Agreement a provision as similar in its terms to such illegal, invalid or
unenforceable provision as may be possible and be legal, valid and enforceable.
10. NOTICE. All notices, demands, requests or other communications
that may be or are required to be given, served or sent by any party to any
other party pursuant to this Agreement shall be in writing and shall be mailed
by first-class, registered or certified mail, return receipt requested, postage
prepaid, or transmitted by hand delivery, telegram or facsimile transmission
addressed as set forth on the signature pages hereof. Each party may designate
by notice in writing a new address to which any notice, demand, request or
communication may thereafter be so given, served or sent. Each notice, demand,
request or communication that is mailed, delivered or transmitted in the manner
described above shall be deemed sufficiently given, served, sent and received
for all purposes at such time as it is delivered to the addressee with the
return receipt, the delivery receipt, the affidavit of messenger or (with
respect to a facsimile transmission) the answer back being deemed conclusive
evidence of such delivery or at such time as delivery is refused by the
addressee upon presentation.
11. AMENDMENT; WAIVER. No provisions of this Agreement may be
modified, waived or amended unless such waiver, modification or amendment is
agreed to in writing and signed by the Consultant and such officers as may be
specifically designated by the Avalon Board and the NCCI Board, respectively,
and such provisions shall be modified, waived or amended only to the extent set
forth in such writing.
12. VALIDITY. The invalidity or unenforceability of any provision
of this Agreement shall not effect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
13. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
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14. ARBITRATION. Any dispute arising from this Agreement shall be
settled by arbitration in accordance with the commercial rules then in effect
of the American Arbitration Association, except as modified in this Paragraph
14 and, except that the arbitrator(s) shall be selected in accordance with the
following procedure: such dispute shall be referred to and decided by a single
arbitrator if the parties can agree upon one within thirty (30) days after
either of the parties shall notify the other that it wishes to avail itself of
the provisions of this Paragraph 14; otherwise, such dispute shall be referred
to and decided by three arbitrators, one to be appointed by Avalon and one to
be appointed by the Consultant, each such appointment to be made within twenty
(20) days after the expiration of the thirty (30) day period referred to above,
and the third arbitrator to be appointed by the first two arbitrators within
thirty (30) days after the expiration of such twenty (20) day period. If the
first two arbitrators cannot reach agreement on the third arbitrator within
said thirty (30) day period, the third arbitrator shall be an impartial
arbitrator appointed by the President of the American Arbitration Association
within twenty (20) days after the expiration of said thirty (30) day period.
Hearings of the arbitrator(s) shall be held in Nashville, Tennessee, unless the
parties agree otherwise. The presentations of the parties in the arbitration
proceeding shall be commenced and completed within sixty (60) days after
selection of the arbitration panel, and the arbitration panel shall render its
decision in writing within thirty (30) days after completion of such
presentations. Any decision concurred in by any two (2) of the arbitrators
shall constitute the decision of the arbitration panel, and unanimity shall not
be required. Judgment upon an award rendered by the arbitrator(s) may be
entered in any court of competent jurisdiction. Any award so rendered shall be
final and binding upon the parties hereto. All costs and expenses of the
arbitrator(s) shall be paid as determined by such arbitrator(s), and all costs
and expenses of experts, witnesses and other persons retained by the parties
shall be borne by them respectively.
15. GENERAL CREDITOR. Nothing contained in this Agreement and no
action taken pursuant to the provisions of this Agreement shall create or be
construed to create a trust relationship between Avalon and the Consultant or
any other person, nor shall any money or property of Avalon or NCCI be
segregated for the benefit of the Consultant to satisfy the obligations of
Avalon or NCCI hereunder.
16. NO ASSIGNMENT. The right of the Consultant or any other person
to the payment of amounts or other benefits under this Agreement shall not be
assigned, alienated, hypothecated, placed in trust, disposed of, transferred,
pledged or encumbered (except by will or by the laws of descent and
distribution), and, to the extent permitted by law, no such amount or payment
shall in any way be subject to any legal process to subject the same to the
payments of any claim against the Consultant or any other person.
17. INJUNCTIVE RELIEF. Notwithstanding the provisions of Paragraph
14, if there is a breach or threatened breach by a party to this Agreement of
the provisions of this Agreement, any other party to this Agreement shall be
entitled to an injunction to prevent irreparable injury to said party.
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18. INTEGRATION. This Agreement represents the entire
understanding and agreement between the parties with respect to the subject
matter of this Agreement, and all other written or oral agreements relating to
the subject matter hereof are hereby superseded.
19. GOVERNING LAW. The terms and provisions of this Agreement,
including without limitation the provisions for arbitration under Xxxxxxxxx 00,
xxxxx xx construed in accordance with, and governed by, the laws of the State
of Tennessee.
20. SURVIVAL. Notwithstanding the termination of this Agreement,
the provisions of Paragraphs 6 through 12 and Paragraphs 14 through 16 shall
survive and continue in full force and effect in accordance with their terms.
21. INDEPENDENT CONSULTANT. Notwithstanding the provisions of this
Agreement, Consultant is providing consulting services to Avalon pursuant to
this Agreement as an independent consultant and nothing contained in this
Agreement shall under any circumstances be construed to imply or otherwise
suggest that Consultant is acting as an employee of Avalon in his performance
of services pursuant hereto.
IN WITNESS WHEREOF, the parties have executed this Agreement to be
effective as of the 21st day of April, 1997.
AEG:
AVALON ENTERTAINMENT GROUP, INC.,
a Tennessee corporation
By: /s/ Xxxxxx Xxxxxxx Xxxxxx III
------------------------------------
Xxxxxx Xxxxxxx Xxxxxx III, President
0000 00xx Xxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
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NCCI:
NASHVILLE COUNTRY CLUB, INC.,
a Tennessee corporation
By: /s/ Xxxxxx Xxxxxxx Xxxxxx III
---------------------------------
Xxxxxx Xxxxxxx Xxxxxx III, President
000 Xxxxxxxx Xxxxxxxxxx Xxx
Xxxxxxx Xxxxxx, Xxxxxxxxx 00000
CONSULTANT:
/s/ Xxxxxx Xxxxxxxxxxx
---------------------------------------
Xxxxxx Xxxxxxxxxxx
c/o Avalon Entertainment Group, Inc.
00000 Xxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000
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