EXECUTIVE EMPLOYMENT AGREEMENT
Exhibit
10.1
THIS EXECUTIVE EMPLOYMENT AGREEMENT is
entered into and effective as of March 3, 2008 (“Effective Date”), by and
between LAPOLLA INDUSTRIES, INC., a Delaware Corporation (“Company”) and Xxxx
Xxxxxxxx (“Executive”).
W I T N E
S S E T H:
WHEREAS, Company desires to employ
Executive and Executive desires to accept such employment in an executive
capacity, subject to the terms and conditions hereinafter set
forth.
NOW THEREFORE, the parties hereto, in
consideration of the premises and mutual promises contained herein and for other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, agree as follows:
1. EMPLOYMENT
TERM. Company hereby agrees to employ the Executive, and the
Executive hereby accepts such employment for a period beginning on the Effective
Date and ending December 31, 2010, unless sooner terminated in accordance with
Section 6 hereof (“Employment Period”).
2. POSITION;
DUTIES. During the Employment Period, Executive shall hold the
title and position of Chief Financial Officer and Treasurer of the Company and
shall have the duties and responsibilities usually vested in such capacity, as
determined from time to time by the Chairman of the Board, Board of Directors,
Chief Executive Officer, and By-laws.
3. MANNER OF
PERFORMANCE. Executive shall serve the Company and devote all
his business time, his best efforts and all his skill and ability in the
performance of his duties hereunder. Executive shall carry out his
duties in a competent and professional manner, to the reasonable satisfaction of
the Chairman of the Board, Board of Directors and Chief Executive Officer of the
Company, and shall work with other Executives of the Company and generally
promote the best interests of the Company and its stockholders. Executive shall
not, in any capacity engage in any activity which is, or may be, contrary to the
welfare, interest or benefit of the business now or hereafter conducted by the
Company.
4. COMPENSATION AND RELATED
MATTERS. Executive’s compensation for his services shall be as
follows:
4.1 Base
Compensation. During the Employment Period, Executive shall
receive an annual base salary ("Annual Base Salary") of $160,000, payable in
accordance with the Corporation’s normal payroll practices. Executive’s Annual
Base Salary will be reviewed on an annual basis by the Compensation Committee of
the Board of Directors and may be increased from time to time, in the discretion
of the Compensation Committee. The term Annual Base Salary as
utilized in this Agreement shall refer to Annual Base Salary as adjusted from
time to time.
4.2 Annual
Bonus. As determined by the Compensation Committee of the
Board of Directors, Executive shall be eligible for bonus consideration
(“Bonus”) as and if bonuses are paid to other Executives on an annual
basis.
4.3 Awards. During
the Employment Period, Executive shall be entitled to earn awards under equity
or other plans or programs that the Company may from time to time, in its
discretion, determine to put into effect. The administrator of these plans or
programs shall determine the terms, conditions, performance criteria and
restrictions of the awards.
4.4 Compensation and Benefit
Programs. During the term of Executive’s employment hereunder, Executive
shall be entitled to participate in the following plans as they may exist from
time to time during the term hereof, to wit, any and all medical, dental,
hospitalization, accidental death and dismemberment, disability, travel and life
insurance plans, and any and all other plans as offered by the Company from time
to time to its Executives, including savings, pension, profit-sharing, stock
options, and deferred compensation plans, subject to the general eligibility and
participation provisions set forth in such plans.
4.5 Vacation Time and Other
Benefits. Executive shall be entitled to three weeks of
vacation without loss of compensation each year during the Employment
Period. For the purposes of this Section 4.5, a year shall begin on
January 1, 2008. Vacation will be taken at such times as the
Executive and the Corporation shall mutually determine and provided that no
vacation time shall interfere with the duties required to be rendered by
Executive hereunder. Notwithstanding the foregoing, as an officer of
Corporation, Executive is expected to utilize his vacation time judiciously and
so as not to jeopardize the business of the Corporation. Unused
vacation may not be carried forth to the next calendar year without prior
written consent by the Corporation, except that no written consent is required
for carrying over a maximum of five (5) days to any subsequent year.
Additionally, if the Company is profitable for the 2008 calendar year, then
Executive will be provided a “No Cost” vehicle by the Company for the remainder
of the Employment Term.
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4.6 Expense
Reimbursement. Company shall provide the Executive reasonable
reimbursement of out-of-pocket expenses incurred by him in connection with his
duties hereunder, upon submission of appropriate documentation.
4.7 Withholding
Taxes. Company shall have the right to deduct or withhold from
all payments due to Executive hereunder any and all sums required for any and
all federal, social security, state and local taxes, assessments or charges now
applicable or that may be enacted and become applicable in the
future.
5. NON-COMPETITION;
NON-DISCLOSURE; AND RELATED MATTERS.
5.1 Non-Competition. During
the Employment Period and for a period of two (2) years after the termination of
Executive’s employment with Company for any reason (collectively the
“Restriction Period”), the Executive shall not, either directly or indirectly,
for himself or any third party, anywhere within or outside the United States (a)
engage in or have any interest in any activity that directly or indirectly
competes with the business of the Company or of any of its affiliates (which for
purposes hereof shall include all subsidiaries or parent companies of the
Company, now or in the future during the Employment Period), as conducted at any
time during the Employment Period, including without limitation, accepting
employment from or providing consulting services to any such competitor, owning
any interest in or being a partner, shareholder or owner of any such competitor,
(b) solicit, induce, recruit, or cause another person in the employ of the
Company or its affiliates or who is a consultant or independent contractor for
the Company or its affiliates to terminate his employment, engagement or other
relationship with the Company or its affiliates, or (c) solicit or accept
business from any individual or entity which shall have obtained the goods or
services of, or purchased goods or services from, the Company or its affiliates
during the two year period immediately prior to the end of the Employment Period
or which otherwise competes with or engages in a business which is competitive
with or similar to the business of the Company or any of its affiliates, (d)
call on, solicit or accept any business from any of the actual or targeted
prospective customers of the Company or its affiliates (the identity of and
information concerning which constitute trade secrets and Confidential
Information of the Company) on behalf of any person or entity in connection with
any business competitive with the business of the Company, nor shall the
Executive make known the names and addresses of such customers or any
information relating in any manner to the Company’s trade or business
relationships with such customers, other than in connection with the performance
of Executive’s duties under this Agreement.
5.2 Non-Disclosure. The
Executive shall not at any time during the term hereof or thereafter divulge,
communicate, or use in any way, any Confidential Information (as hereinafter
defined) pertaining to the business of the Company. Any Confidential Information
or data now or hereafter acquired by the Executive with respect to the business
of the Company (which shall include, but not be limited to information
concerning the Company’s financial condition, prospects, technology, customers,
suppliers, sources of leads and methods of doing business) shall be deemed a
valuable, special and unique asset of the Company that is received by the
Executive in confidence and as a fiduciary, and Executive shall remain a
fiduciary to the Company with respect to all of such information. For purposes
of this Agreement, the term “Confidential Information” includes, but is not
limited to, information disclosed to the Executive or known by the Executive as
a consequence of or through his employment by the Company (including information
conceived, originated, discovered or developed by the Executive) prior to or
after the date hereof, and not generally known, about the Company or its
business. Notwithstanding the foregoing, nothing herein shall be deemed to
restrict the Executive from disclosing Confidential Information to the extent
required by law provided that prior to disclosing any such information required
by law, Executive shall give prior written notice thereof to Company and provide
Company with the opportunity to contest the disclosure. The Executive
shall not disclose, without limitation as to time, Confidential Information to
any person, firm, Company, association or other entity for any purpose or reason
whatsoever, except (i) to authorized representatives of the Company, (ii) during
the Employment Period, such information may be disclosed by the Executive as is
specifically required by Company in the course of performing his duties for the
Company, and (iii) to counsel and other advisers of Company subject to Company’s
prior approval and provided that such advisers agree to the confidentiality
provisions of this Section 5.2.
5.3 Ownership of
Developments. All copyrights, patents, trade secrets, or other
intellectual property rights associated with any ideas, concepts, techniques,
inventions, processes or works of authorship developed or created by Executive
during the course of performing work for the Company or its customers
(collectively, the “Work Product”) shall belong exclusively to the Company and
shall, to the extent possible, be considered a work made by the Executive for
hire for the Company within the meaning of Title 17 of the United States
Code. To the extent the Work Product may not be considered work made
by the Executive for hire for the Company, the Executive agrees to assign, and
automatically assign at the time of creation of the Work Product, without any
requirement of further consideration, any right, title, or interest the
Executive may have in such Work Product. Upon the request of the
Company, the Executive shall take such further actions, including execution and
delivery of instruments of conveyance, as may be appropriate to give full and
proper effect to such assignment. All of the foregoing shall also be
deemed Confidential Information for the purposes of Section 5.2,
above.
5.4 Books and Records.
All books, records, and accounts relating in any manner to the Company (i.e.,
financial information, customer, supplier, vendor identity, etc.), whether
prepared by the Executive or otherwise coming into the Executive’s possession,
shall be the exclusive property of the Company and shall be returned immediately
to the Company on termination of the Executive’s employment hereunder or
otherwise on the Company’s request at any time.
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5.5 Definition of
Company. Solely for purposes of this Agreement, the term
“Company” also shall include any existing or future subsidiaries of the Company
that are operating during the time periods described herein and any other
entities that directly or indirectly, through one or more intermediaries,
control, are controlled by or are under common control with the Company during
the periods described herein.
5.6 Acknowledgment by
Executive. The Executive acknowledges and confirms that (i)
the restrictive covenants contained in this Section 5 are reasonably necessary
to protect the legitimate business interests of the Company, and (ii) the
restrictions contained in this Section 5 (including without limitation the
geographic area and length of the term of the provisions of this Section 5) are
not overbroad, overlong, or unfair and are not the result of overreaching,
duress or coercion of any kind. The Executive acknowledges and confirms that his
special knowledge of the business of the Company is or will be such as would
cause the Company serious injury or loss if he were to use such ability and
knowledge to the benefit of a competitor or were to compete with the Company in
violation of the terms of this Section 5. The Executive further acknowledges
that the restrictions contained in this Section 5 are intended to be, and shall
be, for the benefit of and shall be enforceable by, the Company’s successors and
assigns and shall be enforced to the fullest extent of the law applicable at the
time that Company deems it necessary or advisable to enforce the restrictive
covenants and other provisions of this Section 5.
5.7 Injunctive Relief;
Damages. Because of the difficulty of measuring economic
losses to the Company as a result of a breach of the foregoing covenants in this
Section 5, and because of the immediate and irreparable damage that could be
caused to the Company for which it would have no other adequate remedy, the
Executive agrees that the foregoing covenants may be enforced by the Company in
the event of breach by the Executive, by injunctions and restraining
orders. Nothing herein shall be construed as prohibiting the Company
from pursuing any other available remedy for such breach or threatened breach,
including the recovery of damages.
5.8 Severability; Reformation;
Independent Covenants. The covenants in this Section 5 are severable and
separate, and the unenforceability of any specific covenant shall not affect the
provisions of any other covenant. Moreover, in the event any court of competent
jurisdiction shall determine that the scope, time or territorial restrictions
set forth are unreasonable, then it is the intention of the parties that such
restrictions be enforced to the fullest extent which the court deems reasonable,
and the Agreement shall thereby be reformed. Each covenant and agreement of
Executive in this Section 5 shall be construed as an agreement independent of
any other provision in this Agreement, and the existence of any claim or cause
of action by the Executive against the Company (including the affiliates
thereof), whether predicated on this Agreement or otherwise, shall not
constitute a defense to the enforcement by the Company of such covenants or
agreements. It is specifically agreed that the periods of restriction
during which the agreements and covenants of the Executive made in this Section
5 shall be effective, shall be computed by extending such periods by the amount
of time during which the Executive is in violation of any provision of Section
5. The covenants contained in this Section 5 shall not be affected by any breach
of any other provision hereof by any party hereto.
5.9 Survival. The
obligations of the parties under this Section 5 shall survive the termination of
this Agreement.
6. TERMINATION OF THE
AGREEMENT.
6.1 Termination for
Cause. The Company may terminate Executive’s employment under
this Agreement for “Cause,” at any time, for any of the following reasons: (i)
Executive’s commission of any act of fraud, embezzlement or dishonesty, (ii)
Executive’s unauthorized use or disclosure of any confidential information or
trade secrets of the Company, (iii) any intentional misconduct or violation of
the Company’s Code of Business Ethics and Conduct by Executive which has a
materially adverse effect upon the Company’s business or reputation, (iv)
Executive’s continued failure to perform the major duties, functions and
responsibilities of Executive’s position after written notice from the Company
identifying the deficiencies in Executive’s performance and a reasonable cure
period of not less than thirty (30) days or (v) a material breach of Executive’s
fiduciary duties as an officer of the Company.
6.2 Effect of Termination for
Cause. In the event of termination of Executive for cause as
set forth in Section 6.1, or a voluntary termination by Executive, Executive
shall have no right to any bonuses, salaries, benefits or entitlements other
than those accrued or required by law or specifically provided under the terms
of the applicable agreement, instrument or plan document. Payment of
any further bonuses or other salaries claimed by Executive will be in the sole
and absolute discretion of the Board of Directors of the Company and Executive
will have no entitlement thereto.
6.3 Disability and
Death. If during the Employment Period Executive should die or
suffer any physical or mental illness that renders him incapable of fulfilling
his obligations under this Agreement, and such incapacity exists or may properly
and reasonably be expected to exist for more than ninety (90) calendar days in
the aggregate, the Company may, upon five (5) calendar days written notice to
Executive, terminate this Agreement. The determination of the Company that
Executive is incapable of fulfilling his obligations under this Agreement shall
be final and binding in the absence of fraud or manifest error. In
the event of termination under this Section 6.3, Executive, or his estate, shall
be entitled to an amount equal to two (2) months Salary and any other accrued
compensation, plus such additional benefits, if any, as may be approved by the
Company’s Board of Directors. Executive, or his estate, shall, upon termination
under the terms of this Section 6.3, be further entitled to additional
compensation, to be calculated on a pro rata basis according to the number of
accrued vacation days, if any, not taken by Executive during the year defined
for the purposes of vacation, in which Executive was
terminated.
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6.4 Voluntary Termination by
Executive at the End of the Employment Term. Subject to
Section 6.4 of this Section 6, in the event of voluntary termination by
Executive at the end of the Employment Period, Executive shall be entitled only
to those amounts that have accrued to the date of termination or are expressly
payable under the terms of the Company’s applicable benefit plans or are
required by applicable law. The Company may, in its sole and absolute
discretion, confer such other benefits or payments as it determines, but
Executive shall have no entitlement thereto.
6.5 Termination by Company
during the Employment Term. Subject to Section 6.5 of this
Section 6, in the event of termination by the Company other than at the end of
the Employment Term, other than for Cause under Section 6.1, Executive shall be
entitled to (i) an amount equal to two (2) months annual base salary paid in
accordance with the Company’s regular payroll practices, (ii) the product of (I)
any Awards described in Section 4.3 which Executive can show that he reasonably
would have received had Executive remained in such Executive capacity with the
Company through the end of the calendar year or two (2) months after the Date of
Termination, whichever is greater, in which occurs Executive’s Date of
Termination, multiplied by (II) a fraction, the numerator of which is the number
of days in the calendar year in which the Date of Termination occurs through the
Date of Termination and the denominator of which is 365, but only to the extent
not previously vested, exercise and/or paid; provided that any payments pursuant
to this Section 6.5(ii) shall be made within 30 days following the end of the
calendar year in which occurs Executive’s Date of Termination; (iii) for two (2)
months following the Date of Termination, Company shall continue to provide
medical and dental benefits only to Executive on the same basis as such benefits
are provided during such period to the senior executive officers of Company;
provided, however, that if Company’s welfare plans do not permit such coverage,
Company will provide Executive the medical benefits (with the same after tax
effect) outside of such plans, and (iv) to the extent not theretofore paid or
provided, Company shall timely pay or provide to Executive any other amounts or
benefits which Executive is entitled to receive through the Date of Termination
under any plan, program, policy or practice or contract or agreement, including
accrued vacation to the extent unpaid (such other amounts and benefits shall be
hereinafter referred to as the "Other Benefits").
6.6 Termination Following Change
in Control. If the Company or any successor terminates this
Agreement at any time during the Employment Period following a Change in Control
of the Company: (i) Executive shall be entitled to an amount equal to the Salary
which would otherwise be payable over the remaining term of this Agreement; and
(ii) any outstanding Awards (including substituted shares of the acquiring or
surviving Company in the case of a merger or acquisition) held by Executive or
other benefits under any Company plan or program, which have not vested in
accordance with their terms will become fully vested and exercisable at the time
of such termination.
7. DEFINITIONS. As
used in this Agreement, the following terms shall have the following
meanings:
7.1 "Change
in Control" means an Ownership Change Event or series of related Ownership
Change Events (collectively, a "Transaction") in which the
stockholders of the Company immediately before the Transaction do not retain
immediately after the Transaction, direct or indirect beneficial ownership of
more than fifty percent (50%) of the total combined voting power of the
outstanding voting securities of the Company or, in the case of an Ownership
Change Event, the entity to which the assets of the Company were
transferred. An "Ownership Change Event"
shall be deemed to have occurred if any of the following occurs with respect to
the Company: (i) the direct or indirect sale or exchange by the
stockholders of the Company of all or substantially all of the voting stock of
the Company; (ii) a merger or consolidation in which the Company is a
party; (iii) the sale, exchange, or transfer of all or substantially all of
the assets of the Company (other than a sale, exchange or transfer to one or
more subsidiaries of the Company); or (iv) a liquidation or dissolution of
the Company. The sole exception to Change in Control and Ownership Change Event
as described above shall be any Change in Control or Ownership Change Event that
may result from the death or incapacity of Xxxxxxx X. Xxxxx wherein his interest
is transferred to his heirs only. In such event for the purposes
hereof, no Change in Control or Ownership Change Event shall be deemed to have
occurred.
7.2 "Disability"
means Executive’s absence from his duties with Company on a full-time basis for
90 days during any consecutive twelve-month period as a result of incapacity due
to mental or physical illness as determined by a physician selected by Company
and acceptable to Executive. If Company determines in good faith that
Executive’s Disability has occurred during the Employment Period, it may give
Executive written notice in accordance with Section 6.3 of this Agreement of its
intention to terminate Executive’s employment. In such event, Executive’s
employment shall terminate effective on the thirtieth (30th) day after
Executive’s receipt of such notice (the "Disability Effective Date"), unless,
within the thirty (30) days after such receipt, Executive shall have been
cleared by the physician to return to work and has returned to full-time
performance of his duties.
8. ASSIGNMENT. Executive
shall not have the right to assign or delegate his rights or obligations
hereunder, or any portion thereof, to any other person.
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9. GOVERNING LAW. This
Agreement shall be governed by and construed in accordance with the laws of the
State of Texas without regard to its conflict of laws principles to the extent
that such principles would require the application of laws other than the laws
of the State of Texas. Venue for any action brought hereunder shall
be exclusively in Xxxxxx County, Texas and the parties hereto waive any claim
that such forum is inconvenient.
10. ARBITRATION. Any
dispute between the parties to this Agreement in connection with, arising out of
or asserting breach of this Agreement, or any statutory or common law claim by
Executive relating to Executive's employment hereunder, shall be exclusively
resolved by binding statutory arbitration. Such dispute shall be submitted to
arbitration in the city of Houston, County of Xxxxxx, state of Texas, before a
panel of three neutral arbitrators in accordance with the Commercial Rules of
the American Arbitration Association then in effect, and the arbitration
determination resulting from any such submission shall be final and binding upon
the parties hereto. Judgment upon any arbitration award may be entered in any
court of competent jurisdiction.
11. ENTIRE AGREEMENT.
This Agreement constitutes the entire agreement between the parties hereto with
respect to the subject matter hereof and, upon its effectiveness, shall
supersede all prior agreements, understandings and arrangements, both oral and
written, between the Executive and the Company with respect to such subject
matter. This Agreement may not be modified in any way unless by
written instrument signed by both the Company and the Executive. No provision of
this Agreement may be modified or waived unless such modification or waiver is
agreed to in writing and signed by Executive and by a duly authorized officer of
the Company. No waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. Failure by Executive or the Company to insist upon strict
compliance with any provision of this Agreement or to assert any right Executive
or the Company may have hereunder shall not be deemed to be a waiver of such
provision or right or any other provision or right of this
Agreement.
12. NOTICES. All notices
required or permitted to be given hereunder shall be in writing and shall be
personally delivered by courier, sent by registered or certified mail, return
receipt requested or sent by confirmed facsimile transmission addressed as set
forth herein. Notices personally delivered, sent by facsimile or sent by
overnight courier shall be deemed given on the date of delivery and notices
mailed in accordance with the foregoing shall be deemed given upon the earlier
of receipt by the addressee, as evidenced by the return receipt thereof, or
three (3) days after deposit in the U.S. mail. Notice shall be sent (i) if to
Company, addressed to Corporate Secretary at Intercontinental Business Park,
00000 Xxxxxxx Xxxxxxx Xxxx, Xxxxx 000, Xxxxxxx, Xxxxx 00000, and (ii) if to
Executive, to his address as reflected on the payroll records of the Company, or
to such other address as either party hereto may from time to time give notice
of to the other.
13. BENEFITS; BINDING
EFFECT. This Agreement shall be for the benefit of and binding upon the
parties hereto and their respective heirs, personal representatives, legal
representatives, successors and, where applicable, assigns, including, without
limitation, any successor to the Company, whether by merger, consolidation, sale
of stock, sale of assets or otherwise.
14. SEVERABILITY. The
invalidity of any one or more of the words, phrases, sentences, clauses or
sections contained in this Agreement shall not affect the enforceability of the
remaining portions of this Agreement or any part thereof. If any
invalidity is caused by length of time or size of area, or both, the otherwise
invalid provision will be considered to be reduced to a period or area which
would cure such invalidity.
15. CONSTRUCTION. This
Agreement shall be construed without regard to any presumption or other rule
requiring construction against the party causing the drafting hereof, each party
having been given the opportunity to be represented by counsel of their choice
in connection with the negotiation of this Agreement.
IN WITNESS WHEREOF, the undersigned
have executed this Agreement as of the date first above written.
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LAPOLLA
INDUSTRIES, INC.
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WITNESS
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/s/ Xxxxxxx X.
Xxxxx
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By:
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/s/ Xxxxxxx X. Xxxxxx,
CEO
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Name:
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Xxxxxxx
X. Xxxxxx
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Title:
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CEO
and President
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WITNESS
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EXECUTIVE
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/s/ Xxxxxxx X.
Xxxxx
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By:
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/s/ Xxxx
Xxxxxxxx
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Name:
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Xxxx
Xxxxxxxx
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