EXHIBIT 10.3
EMPLOYMENT AGREEMENT
AGREEMENT made as of this 1st day of February, 2006 ("Agreement") by and
between Valley National Gases, Inc. ("Company"), a West Virginia corporation and
Xxxxxx X. Xxxxxx ("Employee").
In consideration of the premises and of the mutual covenants contained
herein, the parties hereto agree as follows:
1. Duties. The Employee shall serve as Vice President and Chief Operating
Officer ("COO") of the Company, and shall perform such duties, services and
responsibilities as are consistent with such position and with the practices of
the Company as prescribed by the President of the Company. With respect thereto
and not by way of limitation, the Employee's position will be subject to the
following Reporting Requirements, Responsibilities and Personnel Policies:
(a) Reporting. The Employee shall report directly to the President
of the Company. The following positions are representative of those which will
report to the COO: Marketing Area Manager, Region Area Manager; and any other
positions the Employee deems appropriate.
(b) Responsibilities. The Employee will have operational and certain
financial responsibility for the Company and will coordinate and optimize the
current collection of businesses while continuing to support acquisition and
consolidation at a pace consistent with the strategy and with capital
availability. The Employee will improve the cost position and productivity of
the operations. The Employee will be responsible for developing a unified
culture within the Company that is aligned with the strategic direction of the
Company; leading an integrated effort to provide a common platform for the
Company's procurement, distribution, and supply chain services; and building
confidence in the Company internally. During his employment with the Company,
the Employee shall devote substantially all of his time, attention and skill as
necessary to the performance of his duties, services and responsibilities
hereunder and will use his best efforts to promote the interests of the Company.
(c) Personnel Policies. The Employee shall be subject to and abide
by all rules and regulations as set forth in VALLEY NATIONAL GASES, INC.
PERSONNEL POLICIES, GENERAL WORK RULES & BENEFITS PORTFOLIO [COMMONLY REFERRED
TO AS EMPLOYEE HANDBOOK OR MANUAL], as same may be modified from time to time.
2. Term. The Employee's employment by the Company ("Initial Term") shall
commence as of the date hereof and shall continue in full force and effect,
unless earlier terminated as provided hereinafter in Section 6., until the third
(3rd) anniversary thereof. At the conclusion of the Initial Term, Employee's
employment with the Company may, at the Company's election, continue thereafter,
until terminated as provided hereinafter in Section 6., on the terms and
conditions as set forth in this Agreement. The Initial Term and all time of
employment thereafter shall collectively be referred to as the "Employment
Term."
3. Compensation.
(a) Salary. In consideration of the performance by the Employee of
the Employee's obligations during the Initial Term (including any services as an
officer, employee, member of any committee of the Company or any of its
affiliates, or otherwise), the Company will pay the Employee a base salary
("Salary") at an annual rate of One Hundred Fifty Thousand Dollars
($150,000.00), payable in equal bi-weekly monthly installments, commencing on
the 1st day of February, 2006. The Salary will be reviewed annually based upon
the Employee's performance as well as the performance of the Company and changes
in the relevant market for the Employee's skills; and in that respect, after the
Initial Term, the Salary may be adjusted, from time to time, as proposed by the
Compensation Committee of the VLG Board of Directors and approved by the Board.
(b) Incentive. The Employee is eligible for an annual cash incentive
bonus targeted at thirty percent (30%) of the Salary, with no maximum
stipulated, but rather dependent on net income after tax earnings above plan,
with the specific objectives set by the Board annually.
Additionally, the Employee will qualify for VLG and the
Company's annual stock option plan after completion of his first year of
employment, (participation in which is at the discretion of the Board and the
Board of Directors of VLG) for VLG stock.
(c) Benefits.
(i) In addition to the payment of the Salary, the Employee
shall be entitled to participate in all employee benefit plans in effect to the
extent the Employee meets the eligibility requirements for any such plan; in
accordance with the Benefits Summary attached hereto as Schedule 3.(e)(i).
(ii) The Employee shall be entitled to paid vacation and
holidays in accordance with Company policy; which at the commencement of this
Agreement is ten (10) business days of vacation per year and eight (8) national
holidays.
(iii) The Employee will be furnished a Company automobile or
an automobile allowance in accordance with Company policy in effect, from time
to time.
(e) Expenses. The Company will reimburse the Employee in accordance
with Company Policy, for all normal and reasonable business expenses upon
presentation of an approved expense report and related receipts to the President
or in his absence the Vice Chairman of the Board.
(f) Taxes. The Salary, Incentive, Benefits and all other forms of
compensation paid to the Employee shall be subject to all applicable taxes
required to be withheld by the Company pursuant to federal, state or local law.
The Employee shall be solely responsible for all income or other taxes imposed
on the Employee by reason of any cash or non-cash compensation and benefits
provided hereunder.
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(g) Relocation Expense Reimbursement. The Company will reimburse
Employee, grossed up to accommodate taxes net of deductions, "out of pocket"
expenses associated with living in the Washington, Pennsylvania area. The
Company will pay Employee's temporary living expenses for up to twelve months,
which includes, housing ( not to exceed $1,660 per month), automobile allowance
($450 per month) and telephone, real estate taxes, condo fees, including closing
costs not to exceed $12,000, and utility expenses, as incurred.
4. Travel. The Employee shall, in the scope of his employment, travel
(domestically) on behalf of the Company on Company business. It is estimated
that this travel will range from thirty percent (30%) to thirty-five percent
(35%) of a typical work month, but will vary according to the needs of the
Company. Travel will be more intensive during the initial one hundred eighty
(180) days of employment due to the need to orient the Employee with customers,
remote employees, and key strategic relationships.
5. Termination.
(a) Instances of Termination. This Agreement and Employee's
employment with the Company may be terminated at any time after date of this
Agreement as follows:
(i) By death or Disability (as defined in Section 5.(d)
hereinafter) of Employee at the close of business on the date of the Employee's
death or Disability;
(ii) By the Company, at the close of business on the day
specified in the Date of Termination (as defined in Section 5.(f) hereinafter)
in the Notice of Termination (as defined in Section 6.(e) hereinafter) notifying
Employee of the Company's election to terminate his employment for "Cause" (as
defined in Section 6.(b) hereinafter);
(iii) By the Company, at the close of business on the day
specified as the Date of the Termination (as defined in Section 6.(f)
hereinafter) in the Notice of Termination (as defined in Section 5.(e)
hereinafter) notifying Employee of the Notice of Termination of the Company's
election to terminate his employment for any reason other than for "Cause" (as
defined in Section 5.(d) hereinafter);
(iv) By the Employee, at the close of business on the day
specified as the Date of the Termination (as defined in Section 5.(f)
hereinafter) which shall not be less than sixty (60) days after the Employee
shall have delivered the Notice of Termination (as defined in Section 5.(e)
hereinafter) to the Company notifying the company of the Employee's election to
terminate his employment. In the event, the Date of Termination set forth in
Employee's Notice of Termination is less than sixty (60) days from the delivery
of the Notice of Termination to the Company, then and in such event, termination
of this Agreement and Employee's employment with the company shall become
effective immediately upon delivery of the Notice of Termination; or
(v) By the Company or the Employee, at the close of business
on any other date as mutually agreed to as Date of the Termination (as defined
in Section 5.(f) hereinafter) in writing by the Company and the Employee.
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(b) Cause. For purposes of this Agreement, termination of employment
for "Cause" shall mean termination based on
(i) willful and continued failure to use reasonable best
efforts to substantially perform his duties (other than such failure resulting
from the Employee's physical or mental illness, in the reasonable opinion of a
qualified physician), and if such failure is not cured by the Employee within
ten (10) days after written notice from the Company (or if such breach is not
susceptible to cure within ten (10) days, reasonable steps have been taken to
cure such breach as soon as reasonably practicable);
(ii) willful misconduct that is materially and demonstrably
injurious to the financial condition or business reputation of the Company or
VLG;
(iii) breach of Section 5 of this Agreement that is materially
and demonstrably injurious to the financial condition or business reputation of
the Company or VLG; or
(iv) conviction or plea of guilty or nolo contendere to a
felony or to any other crime involving moral turpitude.
For purposes of this Section 5, no act or failure to act by
Employee shall be considered "willful" unless committed in bad faith and without
a reasonable basis to form a belief that the act or omission was in the best
interests of the Company. This Agreement shall not prevent Employee from
challenging the Company's determination that Cause exists or that Employee has
failed to cure any act (or failure to act) that purportedly formed the basis for
the Board's determination. The Company must provide notice to Employee that it
is intending to terminate his employment for Cause within one hundred and twenty
(120) days after the Company has knowledge of the occurrence of the event it
believes constitutes Cause.
(c) Cooperation with Company After Termination. In the event of
termination of employment, for whatever reason, the Employee agrees to cooperate
with the Company and to be reasonably available to the Company with respect to
continuing and/or future matters arising out of the Employee's employment or any
other relationship with the Company, whether such matters are business-related,
legal or otherwise provided, however, that when requesting such cooperation,
Company shall accommodate the requirements of Employee's business or employment
and other obligations. The Company agrees to reimburse the Employee for the
Employee's reasonable time charges and travel expenses incurred in complying
with the terms of this paragraph upon delivery by the Employee to the Company of
valid receipts for such expenses. The provisions of this paragraph shall survive
termination of employment for a period of one year.
(d) Disability. For purposes of this Agreement, "Disability" shall
mean the incapacity or inability of Employee to perform his required duties, in
the reasonable opinion of a qualified physician (mutually acceptable to Employee
and Company), for a period of ninety (90) consecutive days, due to a disability,
and such qualified physician reasonably determines that it
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is unlikely that Employee will be able to return to full performance of
Employee's duties within thirty (30) days thereafter.
(e) Notice of Termination. Any purported termination of this
Agreement and Employee's employment by Employer or by Employee, shall be
communicated by written Notice of Termination to the other party hereto. For
purposes of this Agreement, a "Notice of Termination" shall mean a notice, which
shall set forth in reasonable detail the Date of Termination and the reason for
termination of Employee's employment. No purported termination which is not
effected pursuant to this Section 5(e) shall be effective.
(f) Date of Termination. "Date of Termination" shall mean the date
specified in the Notice of Termination as the effective date for the termination
of this Agreement and Employee's employment with the Company.
(g) Termination Pursuant to Section 5(a)(iii). In the event, the
Company terminates the Agreement and Employee's employment with the Company
pursuant to Section 5(a)(iii), the Company shall pay COBRA expenses for the
Employee's health insurance for the twelve (12) month period following the Date
of Termination; and
(h) Effect of Termination. Except as required by applicable law, all
Compensation, whether Salary, Incentive, Stock Options, Benefits or otherwise
and Employee's right to same shall terminate as of the Date of Termination;
provided, however, and notwithstanding, the foregoing, any grant of Stock
Options to Employee will continue in effect according to the terms of the Stock
Option Agreement (Exhibit 3.(c)(i) hereto) in the event and in the event, only
that the Company terminates the Agreement and Employee's employment with the
Company, pursuant to Section 5.(a)(iii). Further, as of the Date of Termination,
the Employee shall no longer be an Officer or Director of the Company, and the
Employee shall tender to the Board his resignation as Vice President and Chief
Operating Officer effective as of the Date of Termination.
6. Employee Covenants.
(a) Unauthorized Disclosure. The Employee agrees and understands
that, in the Employee's position with the Company, the Employee will be exposed
to and receive information relating to the confidential affairs of the Company,
including but not limited to technical information, business and marketing
plans, strategies, customer information, other information concerning the
Company's services and products, promotions, development, financing, expansion
plans, business policies and practices, and other forms of information
considered by the Company to be confidential and in the nature of trade secrets.
Except to the extent that the proper performance of the Employee's duties,
services and responsibilities hereunder may require disclosure, and except as
such information (i) was known to the Employee prior to his employment by the
Company, (ii) was or becomes generally available to the public other than as a
result of the disclosure by the Employee in violation of the provisions of this
Section 6. (a), or (iii) is compelled to be disclosed by a court (or similar
tribunal) of competent jurisdiction, the Employee agrees that during the
Employment Term and thereafter the Employee will keep such information
confidential and not disclose such information, either
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directly or indirectly, to any third person or entity without the prior written
consent of the Company, except as may be required by legal process from a court
of competent jurisdiction. This confidentiality covenant has no temporal,
geographical or territorial restriction. Upon termination of this Agreement, the
Employee will promptly supply to the Company all property, keys, notes,
memoranda, writings, lists, files, reports, customer lists, correspondence,
tapes, disks, cards, surveys, maps, logs, machines, technical data or any other
tangible product or document which has been produced by, received by or
otherwise submitted to the Employee in his capacity as an employee, officer,
director, agent or stockholder of the Company during or prior to the Employment
Term.
(b) Inventions. The Employee agrees that any and all inventions,
discoveries, improvements, processes, software, patents, copyrights and
trademarks made, developed, discovered or acquired by him during the Employment
Term, solely or jointly with others or otherwise and which relate to the
business of the Company and all knowledge possessed by the Employee relating
thereto (collectively, the "Inventions"), shall be fully and promptly disclosed
to the Board and to such person or persons as the Board shall direct and shall
be the sole and absolute property of the Company and the Company shall be the
sole and absolute owner thereof. The Employee agrees that he will at all times
keep all of the same secret from everyone except the Company and such persons as
the Board may from time to time direct. The Employee shall, as requested by the
Company at any time and from time to time, whether prior to or after the
expiration of the Employment Term, execute and deliver to the Company any
instruments deemed necessary by the Company to effect disclosure and assignment
of the Inventions to the Company or its designees and any patent applications
(United States or foreign) and renewals with respect thereto, including any
other instruments deemed necessary by the Company for the prosecution of patent
applications or the acquisition of letters patent.
(c) Non-competition.
(i) By and in consideration of the Company's entering into
this Agreement and the Salary and benefits to be provided by the Company, and
further in consideration of the Employee's exposure to the proprietary
information of the Company, the Employee agrees that the Employee will not,
during the period ("Non-compete Period") beginning on the date of this Agreement
and ending (A) one (1) year after Employee's termination of employment, engage
in any business which competes with Company (including acting as director,
officer, employee, partner or stockholder of, or consultant or agent to, any
entity engaged in such business), within any county, city, province, parish or
similar geographic region in which the Company or any of its subsidiaries is
carrying on its business.
(ii) In the event (A) the Company terminates the Employee's
employment with the Company pursuant to Section 5.(a)(iii), (B), Employee's
employment with the Company is terminated pursuant to Section 5.(a)(i) or (C)
Employee's employment with the Company is terminated by agreement providing for
payment for this Non-competition covenant of Employer and Employee pursuant to
Section 5.(a)(v) and so long as Employee is not in continuing default under or
in breach of Section 5., the Company shall additionally pay Employee the sum of
One Hundred Fifty Thousand Dollars ($150,000.00) payable in twelve (12)
consecutive monthly installments of Twelve Thousand Five Hundred Dollars
($12,500.00),
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commencing one (1) month after the Date of Termination and terminating twelve
(12) months after Date of Termination. In the event Employee's employment is
terminated because of his death pursuant to Section 5.(a)(i) or if he dies after
termination of employment pursuant to Section 5.(a)(i), 5.(a)(iii) or 5.(a)(v),
if applicable, Employer shall nevertheless make payment of the balance of unpaid
compensation hereunder when otherwise due as provided for hereunder to his
widow, and if he has no widow, then to his estate, heirs or assigns or as
otherwise directed by his fiduciary representative.
(iii) In the event, the Employee's employment with the Company
is terminated for any reason other than pursuant to Section 5.(a)(i), Section
5.(a)(iii), Section 5.(a)(v), if applicable, Employee shall not be entitled to
any additional payment for the Non-competition Covenants under this Section
5.(c), and all Employee Covenants under this Section 5.(c), shall nevertheless
remain in full force and effect, fully binding upon Employee and fully
enforceable by the Company in accordance with the terms of this Agreement.
(d) Non-solicitation. During the period beginning on the date of
this Agreement and ending two (2) years after termination of Employee's
employment, the Employee shall not interfere with the Company's relationship
with, or endeavor to entice away from the Company, any person who at any time
during the Employment Term was a customer or employee of the Company or
otherwise has a material business relationship with the Company.
(e) Remedies. The Employee agrees that any breach of the terms of
this Section 6. will result in irreparable injury and damage to the Company for
which the Company would have no adequate remedy at law; the Employee, therefore,
also agrees that in the event of said breach or any threat of breach, the
Company shall be entitled to an immediate injunction and restraining order to
prevent such breach and/or threatened breach and/or continued breach by the
Employee, and/or any and all persons and/or entities acting for and/or with the
Employee without having to prove damages, in addition to any other remedies to
which the Company may be entitled at law or in equity. The terms of this
paragraph shall not prevent the Company from pursuing any other available
remedies for any breach or threatened breach hereof, including but not limited
to the recovery of damages from the Employee.
(f) Survival. The provisions of this Section 7 shall survive any
termination of Employee's employment with the Company or this Agreement. The
existence of any claim or cause of action by the Employee against the Company,
whether predicated on this Agreement or otherwise, shall not constitute a
defense to the enforcement by the Company of the covenants and agreements of
this Section 6.
(g) Company. For the purposes of this Section 6., the term "Company"
shall mean, collectively, each of the Company, VLG and their successors, assigns
and nominees, and all individuals, corporations and other entities that directly
or indirectly through one or more intermediaries, control or are controlled by
or are under common control with any of the foregoing.
(h) Reasonableness of Covenants. Employee has carefully considered
the nature and extent of the restrictions upon him and the rights and remedies
conferred upon the
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Company under this Section 6., and Employee hereby acknowledges and agrees that,
in light of the material consideration furnished the Employee pursuant to and
under this Agreement, the same are reasonable in time and territory, are
designed to eliminate circumstances which would be unfair to the Company, are
fully required to protect the legitimate interests of the Company and do not
confer a benefit upon the Company disproportionate to any detriment to Employee.
(i) Severability of Provisions. If any covenant set forth in this
Section 6. is determined by any court to be unenforceable by reason of its
extending for too great a period of time or over too great a geographical area,
or by reason of its being too extensive in any other respect, such covenant
shall be interpreted to extend only for the longest period of time and over the
greatest geographical area, and to otherwise have the broadest application, as
shall be enforceable. The invalidity or unenfroceability of any particular
provision of this Section 7 shall not affect the other provisions hereof, which
shall continue in full force and effect.
7. Non-Exclusivity Rights. Nothing in this Agreement shall prevent or
limit Employee's continuing or future participation in any benefit, bonus,
incentive or other plan or program provided by Employer and for which Employee
may qualify, nor shall anything herein limit or otherwise adversely affect such
rights as Employee may have under any stock option or other agreements with
Employer.
8. Notices. Any notice or other communication required or permitted
hereunder shall be in writing and shall be deemed to have been given (i) if
delivered personally or by recognized courier, when so delivered, or (ii) if
mailed, three (3) business days after having been placed in the United States
mail, registered or certified, postage prepaid, addressed to the party to whom
it is directed at the address set forth below or such other address as a party
may specify in writing:
IF TO THE COMPANY:
Valley National Gases, Inc.
000 Xxxx Xxxx Xxxxxx
Xxxxx 000
Xxxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxxxxx, CEO
IF TO THE EMPLOYEE:
Xxxxxx X. Xxxxxx
_________________________________
_________________________________
9. Arbitration.
(a) Any controversy or dispute arising under this Agreement or with
respect to the performance or non-performance of any activities by the parties
hereto, whether based upon contract or tort, which the parties are unable to
resolve through negotiation in good faith,
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shall be resolved by final and binding arbitration in Wheeling, West Virginia in
accordance with the procedure and requirements set forth in this subsection, and
(except as modified herein) the Commercial Arbitration Rules of the American
Arbitration Association (the "Rules"). Such resolution shall be final and
conclusive as to matters submitted to arbitration, and may be enforced in any
court of competent jurisdiction.
(b) Each party shall give written notice in sufficient detail to the
other of the existence and nature of any dispute proposed to be arbitrated. If,
within fifteen (15) calendar days, the dispute is not resolved through
negotiations pursued diligently in good faith, then either party may initiate
arbitration by notice to the other party in writing. Within ten (10) calendar
days thereafter, the parties shall agree upon a single arbitrator. If the
parties fail to agree upon the selection of such arbitrator, then either of the
parties upon written notice to the other may require such appointment from the
American Arbitration Association pursuant to the Rules.
(c) The parties shall have thirty (30) calendar days to perform
discovery and present evidence and argument to the arbitrator. During that
period, the arbitrator shall be available to receive and consider all such
evidence as is relevant and, within reasonable limits due to the restricted time
period, to hear as much of such argument as possible, giving a fair allocation
of time to each party to the arbitration. The arbitrator shall not consider any
evidence or argument not presented during such period and shall not extend such
period except by the written consent of both parties. At the conclusion of such
period, the arbitrator shall have twenty (20) calendar days to reach a
determination.
(d) The arbitrator shall have the right only to interpret and apply
the terms of the Agreement and may not change any such terms, deprive any party
thereto of any right or remedy expressly provided thereunder, or provide any
right or remedy that has been excluded thereunder. The determination of the
arbitrator shall be binding upon the parties. The arbitrator shall given written
notice to the parties stating the determination and the findings of fact and
conclusions of law, and shall furnish to each party a signed copy thereof within
ten (10) calendar days from the date of such determination. This determination
shall be final and conclusive as to matters submitted to arbitration, and may be
enforced in any court of competent jurisdiction.
(e) Costs. The costs, excluding attorneys' fees, of any dispute
resolution under this paragraph shall be paid by the non-prevailing party,
unless the arbitrator, as appropriate, shall determine for good cause on a
case-by-case basis that costs should be allocated differently. If the arbitrator
or a court enforcing the arbitrator's decision determines that a party has acted
unreasonably, the arbitrator may award reasonable attorneys' fees to the
prevailing party.
10. Binding Effect/Assignment. This Agreement shall inure to the benefit
of and be binding upon the parties hereto and their respective heirs, executors,
personal representatives, estates, successors (including, without limitation, by
way of merger) and assigns. Notwithstanding the provisions of the immediately
preceding sentence, the Employee acknowledges that his services are unique and
personal, and accordingly, the Employee may not assign his rights or delegate
his duties or obligations under the Agreement.
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11. Entire Employment Agreement. This Employment Agreement together with
the Schedules and Exhibits hereto sets forth the entire understanding of the
parties hereto with respect to the subject matter hereof and supersedes all
prior agreements, understandings or representations, written or oral, between
them as to such subject matter. This Employment Agreement may not be amended,
nor may any provision hereof be modified or waived, except by an instrument in
writing duly signed by the party to be charged.
12. Severability. If any provision of this Agreement, or any application
thereof to any circumstances, is invalid, in whole or in part, such provision or
application shall to that extent be severable and shall not affect other
provisions or applications of this Agreement.
13. Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Pennsylvania, without
reference to the principles of conflict of laws.
14. Modifications and Waivers. No provision of this Agreement may be
modified, altered or amended except by an instrument in writing and executed by
the parties hereto. No waiver by either party hereto of any breach by the other
party hereto of any provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions at the time
or at any prior or subsequent time.
15. Headings. The headings contained herein are solely for the purposes of
reference, and are not part of this Agreement and shall not in any way affect
the meaning or interpretation of this Agreement.
16. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
by authority of its Board of Directors, and the Employee has hereunto set his
hand, as of the day and year first written above.
Valley National Gases, Inc.
WITNESS:
______________________________
______________________________ By: /s/ Xxxxxxx X. Xxxxxxxxxx
------------------------------------------
Its: Chief Executive Officer
WITNESS:
______________________________
______________________________ /s/ Xxxxxx X. Xxxxxx
----------------------------------------------
Xxxxxx X. Xxxxxx
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Schedule 3.(b)
Incentive
(TO BE PROVIDED)
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Schedule 3.(e)(i)
Benefits Summary
(TO BE PROVIDED)
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