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EXHIBIT 10.9
SENIOR MANAGEMENT EMPLOYMENT AGREEMENT
SENIOR MANAGEMENT EMPLOYMENT AGREEMENT, dated the 14th day of June, 1996,
between SHURGARD STORAGE CENTERS, INC., a Delaware corporation (the "Company"),
and [name1] ("Executive").
RECITALS
A. Executive is currently employed by the Company or one of its
Subsidiaries.
B. The Board of Directors of the Company (the "Board") has determined
that it is appropriate to reinforce the continued attention and dedication of
certain members of the Company's management, including Executive, to their
assigned duties without distraction in potentially disturbing circumstances
arising from the possibility of a Business Combination of the Company, as
defined in Schedule A attached hereto.
AGREEMENTS
NOW, THEREFORE, in consideration of the covenants and agreements
hereinafter set forth, the Company and Executive agree as follows:
1. DEFINITIONS
Terms capitalized in this Agreement which are not otherwise defined
shall have the meanings assigned to such terms in Schedule A attached hereto.
2. EMPLOYMENT FOLLOWING A BUSINESS COMBINATION.
Once a Business Combination has occurred, no termination of Executive's
employment with the Company, other than on account of death, shall be effective
unless the party causing such termination of employment provides the other party
30 days' prior written notice of such termination, which shall indicate those
specific provisions in this Agreement relied upon and which sets forth in
reasonable detail the facts and circumstances claimed to provide a basis for the
termination of Executive's employment constituting a Termination, if any, under
the provision so indicated.
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3. BENEFITS UPON BUSINESS COMBINATION
Executive shall be entitled to the following payments and benefits
following a Business Combination, whether or not a Termination occurs:
(a) SALARY AND BENEFITS. Executive shall (i) receive an annual base
salary no less than the Executive's annual base salary in effect immediately
prior to the date that the Business Combination occurs, including any salary
which has been earned but deferred, and an annual bonus equal to at least the
average of the two annual bonuses paid to Executive in the two years prior to
the Business Combination, and (ii) be entitled to participate in all employee
expense reimbursement, incentive, savings and retirement plans, practices,
policies and programs (including any Company plan qualified under Section 401(a)
of the Code) available to other peer executives of the Company and its
Subsidiaries, but in no event shall the benefits provided to Executive under
this item (ii) be less favorable, in the aggregate, than the most favorable of
those plans, practices, policies or programs in effect immediately prior to the
date that the Business Combination occurs.
(b) WELFARE BENEFITS. The Company shall at the Company's expense
(except for the amount, if any, of any required employee contribution which
would have been necessary for Executive to contribute as an active employee
under the plan or program as in effect on the date of the Business Combination)
continue to cover Executive (and his or her dependents) under, or provide
Executive (and his or her dependents) with insurance coverage no less favorable
than, the Company's life, disability, health, dental and any other employee
welfare benefit plans or programs, as in effect on the date of the Business
Combination (such benefits, the "Welfare Benefits").
(c) DEATH OF EXECUTIVE. In the event of Executive's death prior to
Termination, but while employed by the Company or any Subsidiary, as the case
may be, his or her spouse, if any, or otherwise the personal representative of
his or her estate shall be entitled to receive (i) Executive's salary at the
rate then in effect through the date of death, as provided under the Company's
pay policy, and (ii) any Accrued Benefits for the periods of service prior to
the date of death.
(d) DISABILITY OF EXECUTIVE. In the event of Executive's Disability
prior to Termination, but while employed by the Company or any Subsidiary, as
the case may be, Executive shall be entitled to receive (i) his or her salary at
the rate then in effect through the date of the determination of Disability, as
provided under the Company's pay policy, (ii) any Accrued Benefits for the
periods of service prior to the date of the determination of Disability, (iii)
payments under the Company's short and
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long term disability plans following the determination of Disability, and (iv)
Welfare Benefits for a period of one year following the determination of
Disability.
(e) CAUSE; UPON EXPIRATION OF THIS AGREEMENT; OTHER THAN FOR GOOD
REASON. If Executive's employment shall be terminated by the Company for Cause
or upon expiration of this Agreement or by Executive other than for Good Reason,
Executive shall be entitled to receive only (i) his or her salary at the rate
then in effect through the date of such termination, as provided under the
Company's pay policy, and (ii) any Accrued Benefits for the periods of service
prior to the date of such termination.
(f) WITHHOLDING. All payments under this Section 4 are subject to
applicable federal and state payroll withholding or other applicable taxes.
4. PAYMENTS AND BENEFITS UPON TERMINATION
Executive shall be entitled to the following payments and benefits
following Termination:
(a) TERMINATION PAYMENT. Subject to Section 4(b)(i), in recognition
of past services to the Company by Executive, the Company shall make a lump sum
payment in cash to Executive as severance pay within ten (10) business days
following the date of Termination equal to two and one-half (2-1/2) times the
sum of: (i) Executive's annual base salary in effect immediately prior to the
date that either a Business Combination shall occur or such date of Termination,
whichever salary is higher; plus (ii) Executive's target bonus for the current
fiscal year as determined by the Compensation Committee; provided, however, that
if Termination occurs prior to the determination of such target bonus for a
fiscal year, such bonus shall be the target bonus for the prior fiscal year.
(b) TERMINATION BENEFITS; CERTAIN ADDITIONAL PAYMENTS BY THE
COMPANY.
(i) Notwithstanding anything to the contrary in this
Agreement, if Executive's Termination Benefits would otherwise exceed an amount
equal to three times the Base Amount plus $100,000 (the "Benefits Cap"), then
the Company shall reduce the termination payment described in paragraph (a) or
the Gross-Up Payment, or both, so that the Executive's Termination Benefits do
not exceed the Benefits Cap. If the Executive's Termination Benefits would still
exceed the Benefits Cap even after elimination of such termination payment and
the Gross-Up Payment, then no termination payment or Gross-Up Payment shall be
paid to the
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Executive and no further reduction in payments or benefits shall occur.
"Termination Benefits" shall mean the payments or benefits provided under
Section 4(a) either alone or together with all other payments and benefits that
Executive receives or is then entitled to receive (pursuant to this Agreement or
otherwise) from the Company or any Subsidiary and that would be considered in
determining whether or not Executive had received a Parachute Payment.
(ii) Subject only to subparagraph (i) above, if all or any
portion of Termination Benefits would constitute a Parachute Payment and be
subject to Excise Tax, then the payments to Executive under Section 4(a) shall
be increased (such increase, a "Gross-Up Payment"), but only to the extent
necessary to ensure that, after payment by the Executive of all taxes (including
any interest or penalties imposed with respect to such taxes), including,
without limitation, any income taxes and Excise Tax imposed upon the Gross-Up
Payment, the Executive retains an amount of the Gross-Up Payment equal to the
Excise Tax imposed upon the Termination Benefits. The foregoing calculations
shall be made by the Company and Executive. If no agreement on the calculations
is reached within ten (10) business days after the date of Termination, then the
accounting firm which regularly audits the financial statements of the Company
(the "Auditors") shall review the calculations, and report their determination
of the amount due to both Executive and the Company within thirty (30) days of
the Termination. The determination of such firm shall be conclusive and binding
on all parties and the expense for such accountants shall be paid by the
Company. Pending such determination, the Company shall continue to make all
other required payments to Executive at the time and in the manner provided
herein.
(iii) As a result of the uncertainty in the application of
Section 280G and Section 4999 of the Code, it is possible that the Company will
make a Payment (including a Gross-Up Payment) under this Agreement that should
not have been made (an "Overpayment") or that the Company will fail to make a
payment (including a Gross-Up Payment) under this Agreement that should have
been made (an "Underpayment"). If the Company and Executive, or, if no agreement
is reached by the Company and Executive, the Auditors, determine that
Overpayment has been made, such Overpayment shall be treated for all purposes as
a loan to the Executive which he shall repay to the Company, together with
interest at the applicable federal rate provided for in section 7872(f)(2)(A) of
the Code. If the Company and Executive, or, if no agreement is reached by the
Company and Executive, the Auditors, determine that an Underpayment has
occurred, such Underpayment shall promptly be paid by the Company to Executive,
together with interest at the applicable federal rate provided for in section
7872(f)(2)(A) of the Code. The
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Company and Executive agree to give each other prompt written notice of any
information or taxing authority inquiry that could reasonably result in the
determination that an Overpayment or Underpayment has been made.
(c) ACCRUED BENEFITS. Within ten (10) business days following the
date of Termination, the Company shall make a lump sum payment in cash to
Executive in the amount of any Accrued Benefits for the periods of service prior
to the date of Termination.
(d) WELFARE BENEFITS. The Company shall, at its sole option and
expense (except for the amount, if any, of any required employee contribution
that would have been necessary for Executive to contribute as an active employee
under the plan or program as in effect on the date of Termination) either (i)
continue to cover Executive (and his or her dependents) under, or provide
Executive (and his or her dependents) with Welfare Benefits (as in effect on the
date of the Business Combination or, at the option of Executive, on the date of
Termination) for a period of two and one-half (2-1/2) years following the date
of Termination, or (ii) pay Executive a lump sum cash payment within ten (10)
business days following the date of Termination equal to the then-present value
of the cost to the Company of such Welfare Benefits; provided, however, that if
Executive is provided by another employer during such two and one-half-year
period with benefits substantially comparable to the Welfare Benefits, the
benefits provided by the Company shall, unless a lump sum payment has been made
by the Company (in which case Executive shall not, for any reason, be required
to return any part of such payment), be reduced by the benefits provided by such
other employer, but only to the extent of, and with respect to, the Welfare
Benefits otherwise payable by the Company to Executive.
(e) DEATH OF EXECUTIVE. In the event of Executive's death subsequent
to Termination and prior to receiving all benefits and payments provided for by
this Section 4, such benefits and payments shall be paid to his or her spouse,
if any, or otherwise to the personal representative of his or her estate, unless
Executive has otherwise directed the Company in writing prior to his or her
death.
(f) EXCLUSIVE SOURCE OF SEVERANCE PAY. Benefits provided hereunder
shall replace the amount of any severance payments to which Executive would
otherwise be entitled under any severance plan or policy generally available to
employees of the Company.
(g) NONSEGREGATION. No assets of the Company need be segregated or
earmarked to represent the liability for benefits payable hereunder. The rights
of
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any person to receive benefits hereunder shall be only those of a general
unsecured creditor.
(h) WITHHOLDING. All payments under this Section 4 are subject to
applicable federal and state payroll withholding or other applicable taxes.
5. NONCOMPETITION
(a) NONCOMPETITION. In the event that this Agreement is terminated
by the Company or by Executive for any reason, and provided that any payments
due Executive upon such termination are paid when due, then for a period of one
year after such termination, Executive shall not, within any standard
metropolitan statistical area in which the Company has ten or more self storage
facilities, engage in any activities (including, without limitation, activities
for any subsequent employer of Executive) directly competitive with the
self-storage business of the Company.
(b) COMPANY REMEDY. In the event of any breach by Executive of the
obligations set forth in Section 5(a), the Company shall be entitled to recover
an amount equal to the total of all amounts paid to Executive pursuant to
Sections 4(a) and 4(b) of this Agreement in addition to any other remedies
available to the Company at law or in equity.
6. ARBITRATION
Any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration in Seattle, Washington, in
accordance with the Rules of the American Arbitration Association then in
effect. Judgment may be entered on the arbitrator's award in any jurisdiction.
7. CONFLICT IN BENEFITS
This Agreement is not intended to and shall not adversely affect, limit or
terminate any other agreement or arrangement between Executive and the Company
presently in effect or hereafter entered into, including any employee benefit
plan under which Executive is entitled to benefits.
8. TERM, TERMINATION AND AMENDMENT
(a) The initial term of this Agreement shall be from the date hereof until
the anniversary date of this Agreement. On each such annual anniversary date,
this Agreement shall automatically be renewed for a period of one year, unless
60 days prior to such anniversary date the Company shall give notice to
Executive that the
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Agreement is terminated or amended, provided that no Business Combination has
occurred prior to such anniversary. Notwithstanding such termination, the
Company shall remain liable for any rights or payments arising prior to such
termination to which Executive is entitled under this Agreement. During each
such one year term, this Agreement may not be amended or terminated except by
written agreement between Executive and the Company.
(b) In the event of a Business Combination, unless earlier terminated as
provided herein, this Agreement shall continue in effect until for a period of
30 months from the date of the Business Combination at which time this Agreement
shall expire. For a 30 month period following a Business Combination, (i) this
Agreement may not be terminated, and (ii) no amendment or other action of the
Board which adversely affects the rights of Executive hereunder is valid and
enforceable without the prior written consent of Executive. After the 30 month
period from the date of the Business Combination, the Board may terminate or
amend this Agreement without the prior written consent of Executive.
9. MISCELLANEOUS
(a) AMENDMENT. This Agreement may not be amended except by written
agreement between Executive and the Company.
(b) NO MITIGATION. All payments and benefits to which Executive is
entitled under this Agreement shall be made and provided without offset,
deduction or mitigation on account of income Executive could or may receive from
other employment or otherwise, except as provided in Section 4(d) and Section
5(b) hereof.
(c) EMPLOYMENT NOT GUARANTEED. Nothing contained in this Agreement,
and no decision as to the eligibility for benefits or the determination of the
amount of any benefits hereunder, shall give Executive any right to be retained
in the employ of the Company or rehired, and the right and power of the Company
to dismiss or discharge any employee for any reason is specifically reserved.
Except as expressly provided herein, no employee or any person claiming under or
through him or her shall have any right or interest herein, or in any benefit
hereunder.
(d) LEGAL EXPENSES. In connection with any litigation, arbitration
or similar proceeding, whether or not instituted by the Company or Executive,
with respect to the interpretation or enforcement of any provision of this
Agreement, the prevailing party shall be entitled to recover from the other
party all costs and expenses, including reasonable attorneys' fees and
disbursements, in connection with such litigation, arbitration or similar
proceeding. The Company shall pay
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prejudgment interest on any money judgment obtained by Executive as a result of
such proceedings, calculated at the published commercial interest rate of
Seattle-First National Bank for its best customers, as in effect from time to
time from the date that payment should have been made to Executive under this
Agreement.
(e) NOTICES. Any notices required under the terms of this Agreement
shall be effective when mailed, postage prepaid, by certified mail and addressed
to, in the case of the Company:
Shurgard Storage Centers, Inc.
0000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attention: Chief Executive Officer
and to, in the case of Executive
[name1]
------------------------------
[add1]
------------------------------
[add2]
------------------------------
Either party may designate a different address by giving written notice of
change of address in the manner provided above.
(f) WAIVER; CURE. No waiver or modification in whole or in part of
this Agreement, or any term or condition hereof, shall be effective against any
party unless in writing and duly signed by the party sought to be bound. Any
waiver of any breach of any provision hereof or any right or power by any party
on one occasion shall not be construed as a waiver of, or a bar to, the exercise
of such right or power on any other occasion or as a waiver of any subsequent
breach. Other than a breach of the provisions of Section 5, any breach of this
Agreement may be cured by the breaching party within ten days of the date that
such breaching party shall have received written notice of such breach from the
party asserting such breach.
(g) BINDING EFFECT; SUCCESSORS. Subject to the provisions hereof,
nothing in this Agreement shall prevent the consolidation of the Company with,
or its merger into, any other corporation, or the sale by the Company of all or
substantially all of its properties and assets, or the assignment of this
Agreement by the Company in connection with any of the foregoing actions. This
Agreement shall be binding upon, inure to the benefit of and be enforceable by
the Company and Executive and their respective heirs, legal representatives,
successors and assigns. If the Company shall be merged into or consolidated with
another entity, the provisions of this Agreement
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shall be binding upon and inure to the benefit of the entity surviving such
merger or resulting from such consolidation. The Company shall require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business or assets of the Company,
including the successor to all or substantially all of the business or assets of
any Subsidiary, division or profit center of the Company, to expressly assume
and agree to perform this Agreement in the same manner and to the same extent
that the Company would be required to perform it if no such succession had taken
place. The provisions of this Section 9(g) shall continue to apply to each
subsequent employer of Executive hereunder in the event of any subsequent
merger, consolidation or transfer of assets of such subsequent employer.
(h) SEPARABILITY. Any provision of this Agreement which is held to
be unenforceable or invalid in any respect in any jurisdiction shall be
ineffective in such jurisdiction to the extent that it is unenforceable or
invalid without affecting the remaining provisions hereof, which shall continue
in full force and effect. The enforceability or invalidity of a provision of
this Agreement in one jurisdiction shall not invalidate or render unenforceable
such provision in any other jurisdiction.
(i) CONTROLLING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the state of Washington applicable to
contracts made and to be performed therein.
IN WITNESS WHEREOF, the Company and Executive have executed this Agreement
as of the day and year first above written.
SHURGARD STORAGE CENTERS, INC.
By:
------------------------------
Title:
--------------------------
EXECUTIVE:
[name2]
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Schedule A
CERTAIN DEFINITIONS
As used in this Agreement, and unless the context requires a different
meaning, the following terms have the meanings indicated:
"Accrued Benefits" means the aggregate of any compensation previously
deferred by Executive (together with any accrued interest or earnings thereon),
any accrued vacation pay and, if the date of Termination occurs after the end of
a Fiscal Year for which a bonus is payable to Executive, such bonus, in each
case to the extent previously earned and not paid.
"Base Amount" shall mean the "base amount" of Executive as defined in
Section 280G of the Code.
"Benefits Cap" shall have the meaning set forth in Section 4(b).
"Business Combination" means, and shall be deemed to occur upon the
happening of, any one of the following:
(a) The occupying of a majority of the seats (other than vacant seats) on
the Board by individuals who were neither nominated or appointed by a majority
of the Incumbent Directors;
(b) The acquisition, directly or indirectly, by any Person of beneficial
ownership of 15% or more of the combined voting power of the then outstanding
voting securities of the Company entitled to vote generally in the election of
directors, which acquisition is not approved in advance by a majority of the
Incumbent Directors;
(c) The first purchase of the Company's Common Stock pursuant to a tender
or exchange offer (other than a tender or exchange offer made by the Company);
(d) The approval by the stockholders of the Company of a reorganization,
merger or consolidation or sale of substantially all of the assets of the
Company (an "Acquisition Transaction") unless, following such Acquisition
Transaction, all or substantially all of the individuals and entities who were
the beneficial owners of the outstanding voting securities of the Company
immediately prior to such Acquisition Transaction beneficially own, directly or
indirectly, more than 50% of the then outstanding voting securities of the
corporation resulting from such Acquisition Transaction (including, without
limitation, a corporation which as a result of such
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transaction owns the Company or all or substantially all of the Company's assets
either directly or through one or more subsidiaries) in substantially the same
proportions as their ownership, immediately prior to such Acquisition
Transaction of the outstanding voting securities of the Company; or
(e) Approval by the stockholders of the Company of a liquidation or
dissolution of the Company.
(f) For purposes of this definition, (i) the terms "beneficial owner" and
"beneficial ownership" shall have the meanings set forth in Rules 13d-3 and
13d-5 of the General Rules and Regulations promulgated under the Exchange Act,
and the term "voting securities" shall mean the voting securities of a
corporation entitled to vote generally in the election of directors.
"Cause" means (a) willful misconduct on the part of Executive that has a
materially adverse effect on the Company and its Subsidiaries, taken as a whole,
(b) Executive's engaging in conduct which could reasonably result in his or her
conviction of a felony or a crime against the Company or involving substance
abuse, fraud or moral turpitude, or which would materially compromise the
Company's reputation, as determined in good faith by a written resolution duly
adopted by the affirmative vote of not less than two-thirds of all of the
directors who are not employees or officers of the Company, or (c) unreasonable
refusal by Executive to perform the duties and responsibilities of his or her
position in any material respect. No action, or failure to act, shall be
considered "willful" if it is done by Executive in good faith and with
reasonable belief that his or her action or omission was in the best interests
of the Company.
"Code" means the Internal Revenue Code of 1986, as amended.
"Disability" means that (a) a person has been incapacitated by bodily
injury or physical or mental disease so as to be prevented thereby from
performance of his or her duties with the Company for 120 days in any 12-month
period, and (b) such person is disabled for purposes of any and all of the plans
or programs of the Company or any Subsidiary that employs Executive under which
benefits, compensation or awards are contingent upon a finding of disability.
The determination with respect to whether Executive is suffering from such a
Disability will be determined by a mutually acceptable physician or, if there is
no physician mutually acceptable to the Company and Executive, by a physician
selected by the then Xxxx of the University of Washington Medical School.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
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"Excise Tax" means the excise tax, including any interest or penalties
thereon, imposed on Executive by Section 4999 of the Code.
"Fiscal Year" means the 12-month period ending on December 31 in each year
(or such other fiscal year period established by the Board).
"Good Reason" means, without Executive's express written consent:
(a) (i) the assignment to Executive of duties, or limitation of
Executive's responsibilities, inconsistent with Executive's title,
position, duties, responsibilities and status with the Company
Executive as such duties and responsibilities existed immediately
prior to the date of the Business Combination, or (ii) removal of
Executive from, or failure to re-elect Executive to, Executive's
positions with the Company or any Subsidiary that employs Executive
immediately prior to the Business Combination, except in connection
with the involuntary termination of Executive's employment by the
Company for Cause or as a result of Executive's death or Disability;
(b) failure by the Company to pay, or reduction by the Company of,
Executive's annual base salary, as reflected in the Company's
payroll records for Executive's last pay period immediately prior to
the Business Combination;
(c) failure by the Company to pay, or reduction by the Company of,
Executive's bonus;
(d) the relocation of the principal place of Executive's employment to a
location that is more than 25 miles further from Executive's
principal residence than such principal place of employment
immediately prior to the Business Combination; or
(e) the breach of any material provision of this Agreement by the
Company, including, without limitation, failure by the Company to
bind any successor to the Company to the terms and provisions of
this Agreement in accordance with Section 10(g).
"Gross-Up Payment" shall have the meaning set forth in Section 4(b).
"Incumbent Director" means a member of the Board who has been either (a)
nominated by a majority of the directors of the Company then in office or (b)
appointed by directors so nominated, but excluding, for this purpose, any such
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individual whose initial assumption of office occurs as a result of either an
actual or threatened election contest (as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act) or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than the
Board.
"Parachute Payment" means any payment deemed to constitute a "parachute
payment" as defined in Section 280G of the Code.
"Person" means any individual, entity or group (as such term is used in
Section 13(d)(3) or 14(d)(2) of the Exchange Act).
"Subsidiary" means an Person controlled by the Company directly, or
indirectly through one or more intermediaries.
"Termination" means, following the occurrence of any Business Combination
by the Company, (a) the involuntary termination of the employment of Executive
for any reason other than death, Disability or for Cause or (b) the termination
of employment by Executive for Good Reason.
"Termination Benefits" shall have the meaning set forth in
Section 4(b)(i).
"Welfare Benefits" shall have the meaning set forth in Section 3(b).
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NAME1 ADD1 ADD2 NAME2
Xxxxxxx X. Xxxxx 000 XxXxxxxx Xxxx. X. Xxxxxxx, XX 00000 Xxxxxxx
Xxxxxxx Xxxx 0000 00xx Xxxxxx XX Xxxxxx Xxxxxx, XX 00000 Xxxxxxx Xxxx
Xxxxxxx X. Xxxx 0000 XX Xxxxxxx Xxx Xxxxxxx, XX 00000 Xxxxxxx
Xxxxxxx X. Xxxxx 0000 00xx Xxxxxx XX Xxxxxxx, XX 00000 Xxxxxxx
Xxxx Xxxx 0000 X. Xxxxxx Xxx Xxxxxx Xxxxxx, XX 00000 Xxxx Xxxx
Xxxxxx Xxxxxx 0000 Xxxxxxx Xxx Xxxxxxxx, XX 00000 Xxxxxx Xxxxxx
Xxxxxx Xxxxxxx 0000 Xxxx Xxxxxx Xxxx, XX 00000 Xxxxxx Xxxxxxx
