EXHIBIT 2.01
HEADS OF AGREEMENT
AMERICAN SOUTH WEST HOLDINGS INCORPORATED
AND
METAL SANDS LIMITED
HEADS OF AGREEMENT
This Heads of Agreement is dated 15 September 2003.
BETWEEN:
AMERICAN XXXXX XXXX XXXXXXXX XXXXXXXXXXXX xx Xxxxxxx, Xxxxxxx, Xxxxxx Xxxxxx of
America ("ASW"), and
METAL SANDS LIMITED ACN 094 423 551 of Xxxxx 0, 000 Xxx Xxxxxx Xxxx Xxxxx,
Xxxxxxx Xxxxxxxxx ("MSA")
RECITALS:
A. ASW is a public company, listed on the Over The Counter Bulletin Board
market, in the United States of America, which carries on the business of
mineral exploration and investment in companies undertaking mineral
exploration.
B. MSA is an unlisted public company that carries on the business of mineral
exploration for mineral sands.
C. The persons named in Schedule 1 (each being a "Shareholder") are or are
entitled to be the legal and beneficial holders of all of the issued share
and option capital in MSA.
D. ASW wishes to acquire the whole of the issued capital of MSA from the
Shareholders by the allotment to the Shareholders of shares in ASW ("ASW
Shares") in return for shares in MSA ("MSA Shares") and options to acquire
MSA Shares ("MSA Options"), subject to the conduct of a due diligence
investigation into the assets and affairs of each company by the other.
E. The parties enter into this Heads of Agreement ("HOA") to set out the terms
on which each company may carry out the investigation referred to in
recital D and, subject to the results of the investigation not being
negative (as described in this HOA), ASW will acquire the issued capital in
MSA.
F. $ means United States of America Dollars.
AGREED as follows:
1. CONDITIONS PRECEDENT
1.1 The rights and obligations of the parties under this HOA (other than this
clause 1) are conditional upon, as conditions precedent ("Conditions
Precedent"):
(a) ASW raising no less than $400,000 prior to 30 October 2003, by the
issue of 20,000,000 fully paid ordinary shares at $0.02. Current MSA
shareholders will have a right to participate in this placing;
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(b) The directors of ASW warranting that ASW complies with and is up to
date with all its regulatory, statutory and legal documentation and
requirements;
(c) The directors of ASW undertaking reasonable endeavours to ensure that
ASW will be listed on a stock exchange reasonably acceptable to MSA;
(d) ASW shareholders approving the raising of capital referred to in (a)
above and this HOA;
(e) Shareholders holding not less than 76% of MSA Shares and 76% of the
MSA Options accepting this HOA and agreeing to assign their MSA Shares
and, where relevant, their MSA Options to ASW in accordance with the
terms of this HOA, as further described in clause 1.2;
(f) ASW converting its warrants to shares on the basis described in clause
4.5.
1.2 It is acknowledged that clause 1(b) is for the benefit of MSA and may be
waived by MSA. If the Conditions Precedent are not satisfied or waived by
30 October 2003 (or such later date as is mutually agreed) then the HOA and
all the rights and obligations of the parties hereunder shall automatically
terminate. Upon termination of this HOA, no party shall have any claim
whatsoever against any other party pursuant to this HOA, unless such claim
arose prior to the termination.
1.3 MSA shall use best endeavours to procure that all Shareholders agree to be
bound by the terms of this HOA by executing and delivering an undertaking
substantially in the form set out in Schedule 2.
2. REPRESENTATIONS AND WARRANTIES
2.1 The directors of ASW and ASW warrant that at the date of this HOA:
(a) subject to the receipt of any necessary approvals described in clause
1, ASW does and at Settlement will have full power and authority to
issue ASW Shares to the Shareholders in return for MSA Shares and MSA
Options, free and clear of encumbrances and third party interests;
(b) ASW is duly incorporated with limited liability and validly existing
under the laws of the State of Delaware;
(c) the execution of this HOA will not constitute a default under any
agreement, instrument, law or order by which ASW is bound;
(d) ASW is not:
(i) wound up, no resolution for ASW's winding up been passed and no
meeting of members or creditors has been convened for that
purpose;
(ii) the subject of a winding up application which has been made to a
court, and no event has occurred which would entitle any person
to apply to a court to wind it up;
(iii) a party to a composition or arrangement with any of its
creditors; or
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(iv) in receivership or subject to administration and none of its
assets is in the possession of or under the control of a
mortgagee or chargee;
(e) to the best of their information, knowledge and belief, there is not
pending against ASW any action, suit, claim, dispute or other
proceeding affecting or in any way concerning ASW or its related
companies that may prevent ASW from completing its obligations as
described in this HOA, and ASW has no notice of any such proceeding or
in contemplation by any person; and
(f) there is no debt or other obligation (contingent or otherwise, and
including without limitation environmental liabilities or obligations)
owed by ASW to any third party (including any shareholder, officer or
employee), which has the potential materially to reduce its value and
which is not reflected in its accounts,
and they are not aware of any fact of circumstance which would indicate
that the description set out in paragraphs (a) through (f) above will not
apply at Settlement and undertake to inform MSA forthwith of any such fact
or circumstance.
2.2 The directors of MSA and MSA warrant that at the date of this HOA:
(a) MSA is duly incorporated with limited liability and validly existing
under the Corporations Xxx 0000;
(b) the execution of this HOA will not constitute a default under any
agreement, instrument, law or order by which MSA is bound; and
(c) MSA is not:
(i) wound up, no resolution for its winding up has been passed and
no meeting of members or creditors has been convened for
that purpose;
(ii) the subject of a winding up application which has been made to a
court, and no event has occurred which would entitle any person
to apply to a court to wind it up;
(iii) a party to a composition or arrangement with any of its
creditors; or
(iv) in receivership or subject to administration and none of its
assets is in the possession of or under the control of a
mortgagee or chargee;
(d) to the best of their information, knowledge and belief, there is not
pending against MSA any action, suit, claim, dispute or other
proceeding affecting or in any way concerning MSA or its related
companies that may prevent MSA from completing its obligations as
described in this HOA, and MSA has no notice of any such proceeding
now or in contemplation by any person; and
(e) there is no debt or other obligation (contingent or otherwise, and
including without limitation environmental liabilities or obligations)
owed by MSA to any third party (including any shareholder, officer or
employee), which has the potential materially to reduce MSA's value
and which is not reflected in MSA's accounts,
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and they are not aware of any fact of circumstance which would indicate
that the description set out in paragraphs (a) through (e) above will not
apply at Settlement and undertake to inform ASW forthwith of any such fact
or circumstance.
3. DUE DILIGENCE INVESTIGATIONS
3.1 ASW shall be entitled, at its own cost, to conduct a due diligence review
of MSA and its assets in order to confirm that it will proceed with the
proposed acquisition of MSA.
3.2 MSA shall be entitled, at its own cost, to conduct a due diligence review
of ASW and its assets to determine whether it wishes to proceed with the
transaction contemplated by this HOA.
3.3 For the purposes of allowing ASW and MSA to conduct their respective due
diligence investigations, each of ASW and MSA agrees to provide the other
with access to their mining and other information, books, records and
accounts.
3.4 At any time prior to 30 days after the Conditions Precedent have been met
ASW or MSA may give notice to the other of them advising that it wishes to
proceed with the transaction contemplated by this HOA. If neither ASW nor
MSA gives notice within that time that it has in its due diligence
investigation of the other become aware of:
(a) a liability, commitment or other fact or circumstance, which has not
been disclosed to it by the other as at the date of this HOA and which
has a material adverse effect on the value of the other; or
(b) a material breach of warranty given under clause 2 by the other,
then each of ASW and MSA will be deemed to have given notice at the end of
that period that it wishes to proceed with the transaction contemplated by
this HOA, provided that if a notice given for the purposes of paragraph (a)
or paragraph (b) is withdrawn by the party giving it, it will be deemed not
to have been given. The date by which each of ASW and MSA has given (or are
deemed to have given) a notice that they wish to proceed with the
transaction contemplated by this HOA is referred to as the "Effective
Date".
3.5 If the Conditions Precedent are not satisfied or waived both as provided in
clause 1.2 or if ASW or MSA validly gives notice in accordance with the
provisions of clause 3.4(a) or (b) (which is not withdrawn within the
timeframe as provided for in that clause) then this HOA shall come to an
end and each of ASW and MSA must return to the other all copies of all
mining and other information, data, documents or other materials (in
whatever form) provided to them for the purposes of the due diligence
investigations.
4. AGREEMENT TO ACQUIRE
4.1 Subject to the provisions of clauses 1 and 3, ASW agrees to acquire from
the Shareholders their MSA Shares and MSA Options. In return ASW will issue
2.2 ordinary fully paid shares in ASW for every one MSA share on issue as
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at the Settlement Date and 1 fully paid share in ASW for every 2.5 MSA
Options on issue as at the Settlement Date ("Payment").
4.2 In terms of the placing referred to in 1.1(a) MSA shareholders will have a
right to subscribe for one share in ASW at $0.02 for every MSA share held.
4.3 Settlement shall occur on the date which is 2 business days after the
Effective Date or such other date as may be agreed between the parties in
writing ("Settlement Date").
4.4 (a) It is acknowledged that MSA may wish to raise further funds prior to
settlement occurring. The parties agree that for the purpose of
raising those further funds, MSA may issue shares and options such
that the total number of ordinary MSA Shares on issue is 13,500,000
and the total number of MSA Options on issue is 8,750,000.
(b) MSA at the date of this HOA has issued 12,625,000 ordinary shares;
(c) MSA at the date of this HOA has issued 8,312,500 MSA Options;
4.5 As at the date of this HOA, ASW has issued 28,163,950 ASW Shares and
13,050,000 warrants to acquire ASW Shares ("ASW Warrants"). ASW will
convert these warrants to shares on the basis that as at the Effective Date
there will be 30,000,000 ASW Shares on issue.
4.6 From the date of this HOA until the Settlement Date, ASW must continue to
carry on its business in the ordinary course and take all reasonable steps
to protect and maintain each of its assets so as to comply with all
applicable laws, regulations, ordinances and codes and must not, without
the prior written approval of MSA:
(a) issue or agree to issue any further securities in the capital of ASW
including any warrants, options or rights of conversion without the
prior written consent of MSA other than shares issued upon the
exercise of any outstanding ASW Warrants as provided for in clause
4.5;
(b) acquire or agree to acquire or dispose or agree to dispose of any
material asset or enter into any agreement under which a material
commitment or other obligation is assumed; or
(c) alter its Constitution.
4.7 From the date of this HOA until the Settlement Date, MSA must continue to
carry on its business in the ordinary course and take all reasonable steps
to protect and maintain each of its assets so as to comply with all
applicable laws, regulations, ordinances and codes and must not, without
the prior written approval of ASW:
(d) issue or agree to issue any further securities in the capital of MSA
including any options or rights of conversation without the prior
consent of ASW other than shares issued upon the exercise of any of
the MSA Options currently on issue and the shares and options referred
to in clause 4.4;
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(e) acquire or agree to acquire or dispose or agree to dispose of any
material asset or enter into any agreement under which a material
commitment or other obligation is assumed; or
(f) alter its Constitution.
4.8 For the purposes of clause 4.6 and 4.7, an asset or commitment or
obligation will be deemed to be material if it involves, either alone or in
combination with other related transactions, involves a consideration or
liability of $10,000 or more.
5. SETTLEMENT
5.1 On the Settlement Date ASW must:
(a) allot the ASW Shares comprising the Payment to the Shareholders on the
basis that each Shareholder is to receive 2.2 ASW Shares for every 1
MSA Share held by that Shareholder on the Settlement Date and 1 ASW
share for every 2.5 MSA Options held by that Shareholder on the
Settlement Date (the number of ASW Shares will be rounded up or down
to the nearest share); and
(b) procure its directors to offer to the Shareholders the opportunity to
nominate at least 2 people who will be invited forthwith to join the
board of ASW and ASW will forthwith procure that 1 of the current 2
board members of ASW will resign. In addition, an additional director
will be appointed by the shareholders of ASW making 4 the total number
of directors on the board of ASW.
6. CONFIDENTIALITY
6.1 The terms of this HOA and the information provided by ASW and MSA to each
other for the purposes of clause 2 are to remain strictly confidential to
the Parties and may only be disclosed by a Party:
(a) as is necessary to enforce a Party's respective rights and obligations
under this HOA;
(b) to their legal, accounting or financial advisers;
(c) with the written consent of the other Party;
(d) as required by law;
(e) by ASW to the SEC, provided that the wording of any disclosure to the
SEC has first been provided to and agreed with MSA.
6.2 The obligations under clause 6.1 shall survive termination of this HOA.
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7. GENERAL
7.1 The parties intend to create legal relations between themselves in terms of
this HOA and that it shall be binding unless and until replaced by a more
comprehensive agreement.
7.2 This HOA constitutes the entire agreement and understandings between the
parties and is in substitution of all prior agreements, offers or
undertakings.
7.3 This HOA shall be governed by and construed in accordance with the laws of
Western Australia and the parties hereby irrevocably submit to the
jurisdiction of the courts of Western Australia.
7.4 This HOA may be signed in counterparts, including by facsimile.
7.5 Each party shall bear its own costs in relation to the preparation of this
HOA.
7.6 ASW shall bear the stamp duty payable on this HOA and any further documents
contemplated by this HOA.
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SCHEDULE 1: SHAREHOLDERS
Shareholder Name
Xxxxxx Xxxxxxxxxxx Xxxxxxx
Xxxxxxxxxx Capital Markets Pty Ltd.
Xxxxx Xxxx XxXxxxx
Xxxxx Xxxxxxxx & Xxxxxxxx Xxxx Xxxxxx
Elsinore Nominees Pty Ltd.
Gamma Corporation Pty Ltd.
Xxxx Xxxxxxx Xxxxxx
Xxxxxxxx Xxxxxxx Xxxxx
Xxxxxxxx Xxxxx & Xxxxx Xxxxxxx Xxx
Hope Investments (WA) Pty Ltd.
Xxxxx Xxxx ATF Xxxx Family Super Fund
Xxxxxxx Xxxxxxx Xxxxx
Xxxxxx Xxxxxxxxx Xxxxxxxxxx
Xxxxxxxxx Xxxxxx
Xxxxxxxx Pty Ltd.
Kyeema Pty Ltd.
Xxxxx Xxxxxxx Xxxxxxx
Xxxxx Xxxxxx Xxxxxx
Xxxx Xxxx Xxxxxx Xxxxx
Xxxxx Xxxxxxx
Morcator Metals Pty Ltd.
Xxxxxx Xxxxx XxXxxxx
Xxxx Xxxxx ATF NB Family Trust
Perth Select Seafoods Pty Ltd.
Xxxxxxx Xxxxx Xxxxxxxx
Richmond Resources Pty Ltd.
Richmond Resources Pty Ltd. Corporate Account
Rocant Pty Ltd ATF Glenfare Superfund
Rojex Mining Services Pty Ltd. ATF Rojex Mining
Services Pty Ltd. Superfund
SCHEDULE 2 - UNDERTAKING
THIS DEED IS ENTERED INTO BY THE PERSON NAMED BELOW ("ASSIGNEE"), being a
Shareholder, as that term is defined in a Heads of Agreement dated August 2003
between American South West Holdings Incorporated and Metal Sands Limited
relating to the acquisition by the former of the shares in the latter ("HOA").
1. ASSIGNEE hereby agrees to sell to ASW all of ASSIGNEE's MSA Shares and MSA
Options (as those terms are defined in the HOA) subject to the terms and
conditions set out therein.
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2. ASSIGNEE warrants that at the date hereof this HOA and at Settlement he,
she or it has power to transfer his, her or its MSA Shares and, if
relevant, his, her or its MSA Options to ASW as contemplated by the HOA,
free and clear of encumbrances and third party interests.
3. ASSIGNEE confirms that:
(a) in relation to MSA and other Shareholders, he, she or it and they are
independent and non-associated entities and exercise independent
judgment and make independent decisions; and
(b) except for this HOA, there is no agreement or arrangement to act in
concert in relation to MSA's affairs and rights attaching to the MSA
Shares and MSA Options including voting rights and the power of
disposal.
IN WITNESS WHEREOF ASSIGNEE has executed these presents as a deed poll.
SIGNED SEALED AND )
DELIVERED by )
) /s/ Xxxxxxx Xxxxxx
----------------------- )
in the presence of: )
Witness: /s/ Xxxx Xxxxxx
Name: Xxxx Xxxxxx
Justice of the Peace (No 1454)
Address: 000 Xxxxxxx Xx. Xxxxxxxxxxx XX
Occupation: Chief Executive Officer
Town of Xxxxxxx
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EXECUTED by the parties.
SIGNED for an on behalf of ) /s/ Xxxx Xxxxx /s/ Xxxxx Xxxxxxxxx
AMERICAN SOUTH WEST ) ------------------- -------------------
by authority of its Directors in ) Director Director
)
) Xxxx Xxxxx Xxxxx Xxxxxxxxx
) ------------------- -------------------
) Print name Print name
SIGNED for and on behalf of ) /s/ Xxxxxx Xxxxxxx /s/ Xxxxx Xxxxxxx
METAL XXXXX LTD. ) ------------------- -------------------
by authority of its Directors in ) Director Director
accordance with section 127 of )
the Corporations Act ) Xxxxxx Xxxxxxx Xxxxx Xxxxxxx
) ------------------- -------------------
) Print name Print name
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AMENDMENT TO HEADS OF AGREEMENT
Further to the Heads of Agreement is dated
BETWEEN:
AMERICAN XXXXX XXXX XXXXXXXX XXXXXXXXXXXX xx Xxxxxxx, Xxxxxxx, Xxxxxx Xxxxxx of
America ("ASW"); and
METAL SANDS LIMITED ACN 094 423 551 of Xxxxx 0, 000 Xxx Xxxxxx Xxxx Xxxxx,
Xxxxxxx Xxxxxxxxx ("MSA")
A. The Parties entered into an agreement dated 15/9 (the "Agreement");
B. The Parties agree that the date of the capital raising in terms of 1.1(a)
of the Agreement be extended to 8 December 2003; and
C. The maximum number of shares that ASW can have in issue on the Effective
Date per clause 4.5 of the Agreement be increased from 30,000,000 to
30,338,950.
EXECUTED by the parties on 10 October 2003.
SIGNED for an on behalf of ) /s/ Xxxx Xxxxx
AMERICAN SOUTH WEST ) ------------------- -------------------
HOLDINGS INC. ) Director Secretary/Director
by authority of its Directors in )
) Xxxx Xxxxx
) ------------------- -------------------
) Print name Print name
SIGNED for and on behalf of ) /s/ Xxxxxx Xxxxxxx
METAL XXXXX LTD ) ------------------- -------------------
by authority of its Directors in ) Director Director
accordance with section 127 of )
the Corporations Act ) Xxxxxx Xxxxxxx
) ------------------- -------------------
) Print name Print name
ADDENDUM TO THE HEADS OF AGREEMENT
AMERICAN SOUTH WEST HOLDINGS INCORPORATED
AND
METAL SANDS LIMITED
ADDENDUM TO THE HEADS OF AGREEMENT
DATE: 12 NOVEMBER 2003
BETWEEN:
AMERICAN SOUTH WEST HOLDINGS INCORPORATED of Phoenix, Arizona, United States of
America ("ASW"), and
METAL SANDS LIMITED ACN 094 423 551 of Xxxxx 0, 000 Xxx Xxxxxx Xxxx Xxxxx,
Xxxxxxx Xxxxxxxxx ("MSA") ("the Parties")
RECITALS:
A. A Heads of Agreement ("HOA") setting out the terms of an acquisition by ASW
of the shares of MSA was executed by the Parties.
B. An addendum to the HOA was signed on 10 October 2003.
C. ASW has completed its due diligence of MSA in accordance with clause 3.1
and is not aware of any liability, commitment or other fact or
circumstance, which had not been disclosed to it by MSA as at the date of
the HOA and which has a material adverse effect on the value of MSA, or of
a material breach of warranty given under clause 2 by MSA.
NOW IT IS AGREED that, in terms of clause 1.2 of the HOA, the date of the
requirement to satisfy the conditions precedent (clause 1.1) is changed to 31
January 2004.
EXECUTED by the parties.
SIGNED for an on behalf of ) /s/ Xxxx Xxxxx
AMERICAN SOUTH WEST ) ------------------- -------------------
by authority of its Directors ) Director/President Secretary/Director
)
) Xxxx Xxxxx
) ------------------- -------------------
) Print name Print name
1
SIGNED for and on behalf of ) /s/ Xxxxxx Xxxxxxx /s/ Xxxxxx XxXxxxx
METAL XXXXX LTD ) ------------------- -------------------
by authority of its Directors in ) Director Director
accordance with section 127 of )
the Corporations Act ) Xxxxxx Xxxxxxx Xxxxxx XxXxxxx
) ------------------- -------------------
) Print name Print name
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ADDENDUM TO THE HEADS OF AGREEMENT
DATE: 9 FEBRUARY 2004
BETWEEN:
AMERICAN SOUTH WEST HOLDINGS INCORPORATED of Phoenix, Arizona, United States of
America ("ASW"), and
METAL SANDS LIMITED ACN 094 423 551 of Xxxxx 0, 00 Xxxxxx Xxxxx Xxxxxxxxxxx,
Xxxxxxx Xxxxxxxxx ("MSA") ("the Parties")
RECITALS:
A. A Heads of Agreement ("HOA") setting out the terms of an acquisition by ASW
of the shares of MSA was executed by the Parties.
B. Addenda to the HOA were signed on 10 October 2003 and on 12 November 2003.
IT IS AGREED
1. In terms of clause 1.2 of the HOA, the parties agree that:
(a) the date for satisfying or waiving the Conditions Precedent detailed
in clause 1.1 of the HOA is hereby extended to 23 February 2004;
(b) the date for satisfying or waiving the Conditions Precedent detailed
in clause 1.1 of the HOA will be deemed to have been further extended
to 30 April 2004 if ASW supplies or causes to be supplied to MSA the
Financial Accommodation, as described in clause 2; and
(c) as between the Parties the HOA shall be regarded as being of full
force and effect.
2. For the purposes of clause 1(b), the Financial Accommodation consists of a
non-interest bearing loan from ASW to MSA of not less than AUD$70,000.00 in
cleared funds for value not later than 23 February 2004, deposited into a
bank account nominated by MSA to ASW. The loan will not be repayable to ASW
unless and until one of the following has occurred:
(a) Settlement has taken place in terms of clause 4 of the HOA and MSA is
a subsidiary of ASW; or
(b) the condition precedent described in clause 1(c) of the HOA has not
been met by 30 April 2004 (or such other date as is mutually agreed),
with Shareholders having received an offer from ASW to acquire their
MSA Shares and, where relevant, their MSA Options within a designated
period (the offer acceptance period being sufficient for Shareholders
to consider and accept the offer) and such offer acceptance period
having expired.
3. Time is and remains of the essence to this Addendum.
4. In terms of section 4.6 of the HOA, MSA hereby grants approval to ASW
issuing up to 30,000,000 shares at US2c/share (including the shares
referred to in clause 1(a) of the HOA).
5. The effective date of this addendum shall be 31 January 2004
notwithstanding the date of signature hereof.
EXECUTED by the parties.
SIGNED for an on behalf of ) /s/ Xxxx Xxxxx
AMERICAN SOUTH WEST ) ------------------- -------------------
HOLDINGS INCORPORATED ) Director/President Secretary/Director
by authority of its Director )
) Xxxx Xxxxx
) ------------------- -------------------
) Print name Print name
SIGNED for and on behalf of ) /s/ Xxxxxx Xxxxxxx /s/ Xxxxx Xxxxxxx
METAL XXXXX LIMITED ) ------------------- -------------------
By authority of its Directors ) Director/President Secretary/Director
)
) Xxxxxx Xxxxxxx Xxxxx Xxxxxxx
) ------------------- -------------------
) Print name Print name
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