Exhibit 10.6
EMPLOYMENT AGREEMENT
THIS Employment Agreement (the "Agreement") is made as of the 1st day
of April, 1999 by and between Applied Extrusion Technologies, Inc., a Delaware
corporation (the "Employer"), and Xxxx X. Xxxxxxxx (the "Executive").
RECITALS
1. The Executive is currently employed by the Employer as its Vice
President and general Manager of the Employer's Speciality Nets & Nonwovens
Division pursuant to an Employment Agreement dated as of June 1, 1996, as in
effect on the date hereof (the "Prior Employment Agreement").
2. The Prior Employment Agreement provides that, on or after June 1,
1999, the Prior Employment Agreement continues in effect from year to year
unless either the Executive or the Employer gives notice to the other that such
continuation should not occur.
3. The Employer desires to continue to employ the Executive and to make
secure for itself the experience, abilities and services of the Executive and to
prevent the loss of such experience, services and abilities.
4. In consideration of the employment to be provided hereby and the
amounts to be paid as provided herein, the Executive desires to continue to be
employed by the Employer and to agree with the Employer as further provided
herein.
NOW THEREFORE, the parties hereto hereby agree as follows:
1. EMPLOYMENT. The Employer shall continue to employ the Executive, and
the Executive shall continue to perform services for and continue in the
employment of the Employer, for the period (the "Employment Period")
beginning on the date hereof and ending on March 31, 2002, subject to
extension as set forth herein (such date, as from time to time in effect,
being referred to herein as the "Expiration Date"); PROVIDED, HOWEVER, that,
unless either the Employer or the Executive shall give notice to the other
(which notice may be given in the sole discretion of either party hereto) no
later than 90 days prior to the then-current Expiration Date (the "Current
Expiration Date") that such party does not wish to have the Employment Period
extended for another year past the Current Expiration Date, then, at the
close of business on such date which is 90 days prior to the Current
Expiration Date, the Expiration Date shall automatically become the date
which is exactly one year after the Current Expiration Date; and PROVIDED,
FURTHER, that the employment of the Executive by the Employer may be
terminated prior to the Expiration Date in accordance with all of the terms
and conditions hereof.
2. CAPACITY. During such time as the Executive is employed by the
Employer hereunder:
(a) POSITION AND DUTIES. The Executive shall serve on a full-time
basis in the capacity of Vice President and General Manager of the Employer's
Specialty Nets & Nonwovens Division or in such other senior executive
position as the Chief Executive Officer of the Employer (the "Chief Executive
Officer") may designate from time to time, and shall perform such duties and
responsibilities on behalf of the Employer as may be designated from time to
time by the Chief Executive Officer or his designee. The Executive shall
report to the Chief Executive Officer and shall be accountable to, and shall
have such other powers, duties and responsibilities, consistent with his
position and experience, as may from time to time be prescribed by the Chief
Executive Officer. The Executive shall perform and discharge, faithfully,
diligently and to the best of his ability, such duties and responsibilities.
The Executive shall devote his full time and best efforts, business
judgement, skill and knowledge to the advancement of the Employer's interests
and to the discharge of his duties and responsibilities hereunder. Executive
shall not engage in any other business activity during the term of this
Agreement, except as may be approved in advance in writing by the Chief
Executive Officer.
(b) CERTAIN RESIGNATIONS. Should Executive's employment hereunder
terminate for any reason, Executive agrees to resign from the board of
directors of each subsidiary or affiliate of the Employer on which the
Executive is then serving, immediately upon the receipt of a request for such
resignation from the Chief Executive Officer.
3. COMPENSATION.
(a) SALARY. During each year of the Employment Period, the
Executive shall receive an annual salary (the "Salary") of $200,000 which,
from time to time, shall be subject to upward adjustment only as recommended
by the Chief Executive Officer or his designee consistent with the Employer's
compensation policies and guidelines.
(b) INCENTIVE BONUS. During each year of the Employment Period, the
Executive shall be eligible to receive an incentive bonus based upon criteria
that are defined annually by the Employer.
(c) EXPENSES. During the Employment Period, the Executive shall be
entitled to receive prompt reimbursement for all reasonable business expenses
incurred by him on behalf of the Employer.
(d) FRINGE BENEFITS. During the Employment Period, (i) the
Executive shall be entitled to participate in or receive benefits under each
disability insurance, health, pension, retirement and accident plan or
arrangement made generally available by the Employer to its executives and
key management employees, subject to and on a basis consistent with the
terms, conditions and overall administration of such plans and arrangements,
and shall be entitled to four weeks of paid vacation in any fiscal year
during the Employment Period, (ii) the Executive
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shall be furnished with either an automobile, of a make and year reasonably
satisfactory to the Employer and the Executive and consistent with the past
practices of the Employer and the Executive in this regard, either owned or
leased by the Employer or an automobile allowance sufficient to permit the
Executive to obtain the use of such an automobile, the choice of providing such
automobile or allowance to be at the sole discretion of the Employer, (iii) the
Employer shall either pay the Executive's membership expenses (including fees
and dues), or otherwise make available to the Executive at no cost to the
Executive, membership at a club chosen by the Executive with the consent of the
Employer (not to be unreasonably withheld), and (iv) the Executive shall be
entitled to a physical examination each calendar year by the doctor who is the
Executive's primary care physician, either pursuant to the Employer's health or
other plans or otherwise at the expense of the Employer.
(e) CHANGE IN CONTROL. If a "Change in Control" (as such term is
defined in Exhibit A to the Employer's 1991 Stock Option Plan for Directors)
shall occur, then (i) all stock options previously granted to the Executive
which, by their terms, have not yet vested, shall immediately vest and become
exercisable, (ii) Section 4(d) hereof shall be amended by deleting clauses
4(d)(iii) and 4(d)(iv), and (iii) the Executive shall be entitled to carry
out his duties and responsibilities hereunder primarily from Executive's
current office in Middletown, Delaware (or another facility serving such
purpose and located within 15 miles of such current office) and will not be
required to locate his primary place of business outside such area without
his consent (which may be given or withheld in his sole discretion).
4. TERMINATION AND COMPENSATION THEREON.
(a) TERMINATION DATE. As used herein, the term (i) "Termination
Date" shall mean the earlier of (A) the Expiration Date or (B) if the
Executive's employment is terminated (1) by his death, the date of his death,
or (2) for any other reason, the date on which such termination is to be
effective pursuant to the notice of termination given by the party
terminating the employment relationship, and (ii) "Benefits Termination Date"
shall mean the later of (A) the Expiration Date or (B) the date which is
exactly one year after the Termination Date. The Employment Period shall
terminate on the Termination Date; PROVIDED, HOWEVER, that, unless the
Executive's employment is terminated pursuant to Section 4(d) or 4(g) hereof,
the Expiration Date shall not be changed to the Termination Date if the
Executive's employment hereunder terminates on a date other than the
Expiration Date, and, if the Executive's employment is terminated pursuant to
Section 4(d) or 4(g) hereof, the Expiration Date shall automatically be
changed and shall become the Termination Date.
(b) DEATH. The Executive's employment hereunder shall terminate
upon his death. In such event, the Employer shall pay to the Designee or, if
no such person shall have been designated, the Estate, as applicable, (i) as
promptly as practicable after the Termination Date, an amount equal to any
unpaid Salary, Bonus and benefits accrued through the Termination Date, and
(ii) the Executive shall be deemed for all vesting requirements contained in
any of the
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Employer's benefit plans, programs and offerings in which the Executive is
participating on the Termination Date to have been employed by the Employer
until the Expiration Date.
(c) INCAPACITY. If in the reasonable judgment of the Employer, as a
result of the Executive's incapacity due to physical or mental illness, the
Executive shall for at least six consecutive months during the term of this
Agreement have been unable to perform his duties under this Agreement on a
full-time basis, the Employer may terminate the Executive's employment
hereunder by notice to the Executive. In such event, (i) the Employer shall
pay the Executive as promptly as practicable after the Termination Date, an
amount equal to any unpaid Salary, Bonus and benefits accrued through the
Termination Date, (ii) during the period beginning on the Termination Date
and ending on the Benefits Termination Date, shall extend to Executive the
applicable fringe benefits referred to in Section 3(d)(i) hereof (or the
equivalent thereof in all material respects if continuation of participation
in benefit plans is not able to be continued under applicable law or the
terms of such benefit plans); and (iii) the Executive shall be deemed for all
vesting requirements contained in any of the Employer's benefit plans,
programs or offerings in which the Executive is participating on the
Termination Date to have been employed by the Employer until the Expiration
Date. Any dispute between the Employer and the Executive with respect to the
Executive's incapacity shall be settled by reference to a competent medical
authority mutually agreed to by the Employer and the Executive, whose
decision shall be binding on all parties.
(d) TERMINATION BY THE EMPLOYER FOR CAUSE. The Employer may
terminate the Executive's employment hereunder for Cause. For purposes of
this Agreement, "Cause" shall mean (i) other than by reason of Executive's
incapacity under Section 4(c) above, willful conduct by the Executive
demonstrating gross misconduct and gross unfitness to serve and which has
caused material harm to the business or interests of the Employer; (ii) the
Executive's conviction of, or entry into a consent decree or substantially
similar arrangement in connection with, a crime involving fraud, dishonesty
or other conduct which reflects materially and adversely on the Employer;
(iii) other material breach by Executive of any provision of this Agreement;
or (iv) other conduct by Executive that is materially harmful to the business
or interests of the Employer. If the Executive's employment is terminated
pursuant to this Section 4(d), the Employer shall have no further obligations
to the Executive hereunder after the Termination Date, except for unpaid
Salary, Bonus and benefits accrued through the Termination Date. For purposes
of this Section 4(d), no act, or failure to act, on Executive's part shall be
considered "willful" unless done, or omitted to be done, by him knowing and
with the intent that such action or inaction would not be in the best
interests of the Employer or otherwise was done or omitted to be done in bad
faith or with reckless disregard for the best interests of the Employer.
(e) TERMINATION BY THE EMPLOYER OTHER THAN FOR DEATH, INCAPACITY OR
CAUSE. The Employer may terminate the Executive's employment hereunder,
other than pursuant to Section 4(b) (relating to death), Section 4(c)
(relating to incapacity), or Section 4(d) (relating to Cause), at any time.
In the event of such termination, or if the Executive's employment hereunder
shall terminate on the Expiration Date because the Employer has given the
notice contemplated by the
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first proviso to Section 1 hereof, then the Employer (i) shall pay the Executive
(A) as promptly as practicable after the Termination Date, an amount equal to
any unpaid Salary, Bonus and benefits accrued through the Termination Date for
the fiscal year in which the Termination Date occurs, and (B) a lump sum
payment, within 60 days after the Termination Date, equal to the aggregate
amount of Salary that would have been payable to the Executive over the period
from the Termination Date to the Benefits Termination Date if the Executive had
continued to be employed by the Employer through the Benefits Termination Date
and received his current Salary for periods after the Termination Date, and (ii)
during the period beginning on the Termination Date and ending on the Benefits
Termination Date, shall extend to Executive the applicable fringe benefits
referred to in Section 3(d)(i) hereof on the terms referred to therein (or the
equivalent thereof in all material respects if continuation of participation in
benefit plans is not able to be continued under applicable law or the terms of
such benefit plans). In addition, the Executive shall be deemed for all vesting
requirements contained in any of the Employer's benefit plans, programs or
offerings in which the Executive is participating on the Termination Date to
have been employed by the Employer until the Expiration Date.
(f) TERMINATION BY THE EXECUTIVE FOR GOOD REASON. After a Change in
Control has occurred, the Executive may terminate his employment hereunder
for Good Reason upon notice to the Employer setting forth in reasonable
detail the nature of such Good Reason. The following shall constitute "Good
Reason" for termination by the Executive if the same has not been cured
within 30 days after written notice to the Chairman by the Executive:
(i) Failure of the Employer to continue the Executive in the
position of Vice President and General Manager of the
Employer's Specialty Nets & Nonwovens Division or in
another position of similar scope, authority and
responsibility;
(ii) Material diminution in the nature or scope of the
Executive's responsibilities, duties or authority; or
(iii) Failure to pay Executive on a timely basis, or any other
material breach by the Employer of Section 2 or 3 hereof.
In the event of termination in accordance with this Section 4(f), then the
Employer (i) shall pay to the Executive (A) as promptly as practicable after the
Termination Date, an amount equal to any unpaid Salary, Bonus and benefits
accrued through the Termination Date for the fiscal year in which the
Termination Date occurs, and (B) a lump sum payment, within 60 days after the
Termination Date, equal to the aggregate amount of Salary that would have been
payable to the Executive over the period from the Termination Date to the
Benefits Termination Date if the Executive had continued to be employed by the
Employer through the Benefits Termination Date and received his current Salary
for periods after the Termination Date, and (ii) during the period beginning on
the Termination Date and ending on the Benefits Termination Date, shall extend
to Executive the applicable fringe benefits referred to in Section 3(d)(i)
hereof on the terms referred to therein (or the equivalent thereof in all
material respects if continuation of participation in
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benefit plans is not able to be continued under applicable law or the terms of
such benefit plans). In addition, the Executive shall be deemed for all vesting
requirements contained in any of the Employer's benefit plans, programs or
offerings in which the Executive is participating on the Termination Date to
have been employed by the Employer until the Expiration Date.
(g) TERMINATION BY THE EXECUTIVE OTHER THAN FOR GOOD REASON. The
Executive may terminate his employment hereunder other than for Good Reason. In
the event of termination of the Executive's employment pursuant to this Section
4(g), or if the Executive's employment hereunder shall terminate on the
Expiration Date because the Executive has given the notice contemplated by the
first proviso to Section 1 hereof, the Employer shall have no further
obligations to the Executive hereunder after the Termination Date, except for
unpaid Salary, Bonus and benefits accrued through the Termination Date.
(h) EFFECT OF TERMINATION. Payment in full by the Employer of the
amount that it may be required to pay Executive pursuant to this Section 4 upon
termination of his employment hereunder shall constitute the entire obligation
of the Employer to Executive under this Agreement, and performance by the
Employer shall constitute full settlement of any claim that Executive might
otherwise assert against the Employer or any of those connected with it on
account of such termination; PROVIDED, HOWEVER, that the benefits provided
hereunder shall be in addition to, and not in lieu of, any benefits provided to
the Executive by the Employer under any plan in which the Executive
participates, including without limitation any stock option or supplemental
executive retirement plan or benefit, including that benefit referenced in
Exhibit A of this Agreement but excluding any severance plans or policies
administered by the Employer. The provisions of this Section 4 and of Sections
5, 6, 7, 8 and 10 hereof shall survive the Termination Date.
5. NONDISCLOSURE AND NONUSE OF CONFIDENTIAL INFORMATION. Executive shall
not disclose to any other person (except as required by applicable law or in
connection with the performance of his duties and responsibilities
hereunder), or use for his own benefit or gain, any Confidential Information
(as defined below) relating to the business conducted by the Employer.
Executive understands that this restriction shall continue to apply after
Executive's employment terminates, regardless of the reason for such
termination, and after the expiration or other termination of this Agreement.
"Confidential Information" means all confidential, proprietary or other
information relating to the Employer and its subsidiaries and affiliates and
their businesses, and includes without limitation all such information
relating to (i) the development, research, testing, manufacturing and
marketing activities of the Employer, (ii) the products manufactured, sold or
distributed by the Employer, (iii) the costs, sources of supply and strategic
plans of the Employer, (iv) the identity and special needs of the customers
of the Employer, (v) the financial arrangements and capital structure of the
Employer, (vi) the management and operation of the Employer and (vii) people
and organizations with whom the Employer has business relationships and those
relationships. Confidential Information also includes comparable information
that the Employer may receive or has received belonging to customers or
others who do business with the Employer. Confidential Information shall not
include information which (a) is publicly known,
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or becomes publicly known through no fault of Executive or (b) is generally
known or readily obtainable by the public.
6. RESTRICTED ACTIVITIES. Executive agrees that some restrictions on his
activities during and after his employment are necessary to protect the
goodwill, Confidential Information and other legitimate interests of the
Employer. While Executive is employed by the Employer and for two (2) years
after the Benefits Termination Date (or, in the event the Executive's
employment is terminated pursuant to Section 4(d), 4(g), or if the
Executive's employment hereunder shall terminate on the Expiration Date
because the Executive has given the notice contemplated by the first proviso
to Section 1 hereof, for two (2) years after the Termination Date), Executive
shall not, directly or indirectly, whether as owner, partner, investor,
consultant, agent, employee, co-venturer or otherwise, engage in any activity
that is competitive or potentially competitive with the business of the
Employer as conducted at any time during Executive's employment without the
Employer's written consent, which consent shall not be unreasonably withheld.
Executive understands that these restrictions shall continue to apply even if
this Agreement expires or otherwise terminates. The foregoing restriction
shall not prevent Executive from owing 5% or less of the equity securities of
any publicly traded company or from accepting employment from or providing
consulting services to any person who does not compete with the Employer.
7. DOCUMENTS AND MATERIAL. Upon termination of Executive's employment
with the Employer or at any other time upon the Employer's request, Executive
will promptly deliver to the Employer, without retaining any copies, all
documents and other materials furnished to Executive by the Employer,
prepared by Executive for the Employer or otherwise relating to the
Employer's business, if and to the extent that the information therein
constitutes Confidential Information.
8. RELIEF, INTERPRETATION. Executive agrees that the Employer shall, in
addition to any other remedies available to it, be entitled to preliminary
and permanent injunctive relief against any breach by him of the covenants
and agreements contained in Sections 5, 6 and 7 hereof without having to post
bond. In the event that any provision of Sections 5, 6 and 7 hereof shall be
determined by any court of competent jurisdiction to be unenforceable by
reason of its being extended over too great a time, too large a geographic
area or too great a range of activities, it shall be interpreted to extend
only over the maximum period of time, geographic area or range of activities
as to which it may be enforceable. For purposes of Sections 5, 6 and 7 hereof
the term "Employer" shall mean the Employer and any of its subsidiaries and
affiliates to the extent that such enterprises are, during the term of
Executive's employment by the Employer, engaged in the same line of business
as the Employer.
9. CONFLICTING AGREEMENTS. Executive hereby represents and warrants that
the execution of this Agreement and the performance of his obligations
hereunder will not breach or be in conflict with any other agreement to which
he is a party or is bound, and that he is not now subject to any covenants
against competition or similar covenants which would affect the performance
of his obligations hereunder. Executive will not disclose to or use on behalf
of the Employer any
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proprietary information of a third party without such party's consent. Executive
will not enter into any agreement, whether written or oral, conflicting with the
provisions of this Agreement.
10. ARBITRATION. Any dispute, controversy or claim between the parties
arising out of or related to any term or condition of the Executive's
employment or the termination of his employment shall be settled by
arbitration conducted in Boston, Massachusetts in accordance with the
Commercial Rules of the American Arbitration Association then in force (the
"Rules") and the laws of The Commonwealth of Massachusetts. In the event that
a party requests arbitration, it shall serve upon the other party (the
"Non-Requesting Party") a written demand for arbitration stating the
substance of the controversy, dispute or claim, the contention of the party
requesting arbitration and the name and address of the arbitrator appointed
by it. The Non-Requesting Party, within twenty (20) days of such demand,
shall accept the arbitrator or appoint a second arbitrator and notify the
other party of the name and address of this second arbitrator so selected, in
which case the two arbitrators shall appoint a third. The decision or award
of the single arbitrator or, in the case of three arbitrators, the decision
or award of any two arbitrators, shall be final and binding upon the parties.
In the event that the two arbitrators fail in any instance to appoint a third
arbitrator within twenty (20) days of the appointment of the second
arbitrator, either arbitrator or any party to the arbitration may apply to
the American Arbitration Association for appointment of the third arbitrator
in accordance with the Rules. Should the Non-Requesting Party (upon whom a
demand for arbitration has been served) fail or refuse to accept the
arbitrator appointed by the other party or to appoint an arbitrator within
twenty (20) days, the single arbitrator shall have the right to decide alone,
and such arbitrator's decision or award shall be final and binding upon the
parties. The decision of the arbitrator or arbitrators shall be in writing
and shall set forth the basis therefor. The parties shall abide by all awards
rendered in the arbitration proceedings, and all such awards may be enforced
and executed upon in any court having jurisdiction over the party against
whom enforcement of such award is sought. The parties involved in the dispute
shall divide equally the administrative charges, arbitrator's fees and
related expenses of the arbitration, but each party shall pay its own legal
fees incurred in connection with such arbitration.
11. TAXES. All payments made by the Employer under this Agreement shall
be reduced by any tax or other amounts required to be withheld by the
Employer under applicable law.
12. WAIVER. The waiver by either party of a breach of any provision of
this Agreement by the other party will not operate or be construed as a
waiver of any other subsequent breach by such other party.
13. AMENDMENTS. No amendment to this Agreement shall be effective unless
it shall be in writing and signed by each party hereto. No oral waiver,
amendment or modification will be effective under any circumstances
whatsoever.
14. NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed given when delivered personally or three days
after being mailed by registered or
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certified mail (return receipt requested) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
(i) if to Employer, to it at:
Applied Extrusion Technologies, Inc.
0 Xxxxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxxxxxxx 00000
Attention: President
with a copy to:
Applied Extrusion Technologies, Inc.
0 Xxxxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxxxxxxx 00000
Attention: General Counsel
and to:
Ropes & Xxxx
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxxxx X. Xxxxx
(ii) if to the Executive, to him at:
0000 Xxxxxxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000
with a copy to him at:
Applied Extrusion Technologies, Inc.
000 Xxxxxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
15. ASSIGNMENT. Neither the Employer nor Executive may make any
assignment of this Agreement or any interest herein, by operation of law or
otherwise, without the prior written consent of the other party; PROVIDED,
HOWEVER, that the Employer may assign its rights and obligations under this
Agreement without the consent of Executive in the event that the Employer
shall hereafter effect a reorganization, consolidate with, or merge into any
other person or transfer all or substantially all of its properties or assets
to any other person. This Agreement shall inure to the benefit of and be
binding upon the Employer and Executive, their respective successors,
executors, administrators, heirs and permitted assigns.
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16. MISCELLANEOUS. The Prior Employment Agreement is hereby terminated
with respect to the employment of the Executive by the Employer on and after
the date hereof, and shall be of no further force or effect with respect to
such employment; PROVIDED, HOWEVER, that the Prior Employment Agreement shall
continue to govern the terms of the Executive's employment by the Employer
with respect to all periods ending on or prior to the date hereof. This
Agreement constitutes the entire agreement between the parties and supersedes
all prior and contemporaneous communications, agreements, representations,
understandings and negotiations, whether oral or written, with respect to the
subject matter hereof. The invalidity or unenforceability of any term or
provision hereof shall not affect the validity or enforceability of any other
term or provision hereof. The headings in this Agreement are for convenience
of reference only and shall not alter or otherwise affect the meaning hereof.
This Agreement may be executed in any number of counterparts which together
shall constitute one instrument and shall be governed and construed in
accordance with the domestic substantive laws of The Commonwealth of
Massachusetts without regard to any choice or conflicts of laws rules or
principles that would cause the application of the domestic substantive laws
of any jurisdiction other than The Commonwealth of Massachusetts.
IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement as of the date first written above.
APPLIED EXTRUSION TECHNOLOGIES, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
-------------------------------------
Xxxxxx X. Xxxxxxxx
CHIEF EXECUTIVE OFFICER AND PRESIDENT
/s/ Xxxx X. Xxxxxxxx
-------------------------------------
Xxxx X. Xxxxxxxx
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