EXHIBIT 10.7
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED AGREEMENT entered into this 24th day of February,
2003, by and between First Federal Savings Bank (the "Bank") and Xxxxx X. Xxxx
(the "Employee"), effective on the date hereof (the "Effective Date"). WHEREAS,
the Employee has heretofore been employed by the Bank as its President and Chief
Executive Officer and is experienced in all phases of the business of the Bank;
and
WHEREAS, the Board of Directors of the Bank believes it is in the best
interests of the Bank to enter into this Agreement with the Employee in order to
assure continuity of management of the Bank and to reinforce and encourage the
continued attention and dedication of the Employee to her assigned duties; and
WHEREAS, the parties desire by this writing to set forth the continuing
employment relationship of the Bank and the Employee.
NOW, THEREFORE, it is AGREED as follows:
1. Employment. The Employee is employed as the President and Chief
Executive Officer of the Bank. The Employee shall render such administrative and
management services for the Bank as are currently rendered and as are
customarily performed by persons situated in a similar executive capacity. The
Employee shall also promote, by entertainment or otherwise, as and to the extent
permitted by law, the business of the Bank. The Employee's other duties shall be
such as the Board of Directors (the "Board") of the Bank may from time to time
reasonably direct, including normal duties as an officer of the Bank.
2. Base Compensation. The Bank agrees to pay the Employee during the term
of this Agreement a salary at the rate of $76,400 per annum, payable in cash not
less frequently than monthly. The Board shall review, not less often than
annually, the rate of the Employee's salary, and in its sole discretion may
decide to increase her salary.
3. Discretionary Bonuses. The Employee shall participate in an equitable
manner with all other senior management employees of the Bank in discretionary
bonuses that the Board may award from time to time to the Bank's senior
management employees. No other compensation provided for in this Agreement shall
be deemed a substitute for the Employee's right to participate in such
discretionary bonuses.
4. (a) Participation in Retirement, Medical and Other Plans. During the
term of this Agreement, the Employee shall be eligible to participate in the
following benefit plans: group hospitalization, disability, health, dental, sick
leave, life insurance, travel and/or accident insurance, auto allowance/auto
lease, retirement, pension, and/or other present or future qualified plans
provided by the Bank, generally which benefits, taken as a whole, must be at
least as favorable as those in effect on the Effective Date.
(b) Employee Benefits; Expenses. The Employee shall be eligible to
participate in any fringe benefits which are or may become available to the
Bank's senior management employees, including for example: any stock option or
incentive compensation plans, and any other benefits which are commensurate with
the responsibilities and functions to be performed by the Employee under this
Agreement. The Employee shall be reimbursed for all reasonable out-of-pocket
business expenses which she shall incur in connection with her services under
this Agreement upon substantiation of such expenses in accordance with the
policies of the Bank.
5. Term. The Bank hereby employs the Employee, and the Employee hereby
accepts such employment under this Agreement, for the period commencing on the
Effective Date and ending thirty-six months thereafter (or such earlier date as
is determined in accordance with Section 9). Additionally, on each annual
anniversary date from the Effective Date, the Employee's term of employment
shall be extended for an additional one-year period beyond the then effective
expiration date provided the Board determines in a duly adopted resolution that
the performance of the Employee has met the Board's requirements and standards,
and that this Agreement shall be extended. Only those members of the Board of
Directors who have no personal interest in this Employment Agreement shall
discuss and vote on the approval and subsequent review of this Agreement.
6. Loyalty; Noncompetition.
(a) During the period of her employment hereunder and except for
illnesses, reasonable vacation periods, and reasonable leaves of absence, the
Employee shall devote all her full business time, attention, skill, and efforts
to the faithful performance of her duties hereunder; provided, however, from
time to time, Employee may serve on the boards of directors of, and hold any
other offices or positions in, companies or organizations, which will not
present any conflict of interest with the Bank or any of its subsidiaries or
affiliates, or unfavorably affect the performance of Employee's duties pursuant
to this Agreement, or will not violate any applicable statute or regulation.
"Full business time" is hereby defined as that amount of time usually devoted to
like companies by similarly situated executive officers. During the term of her
employment under this Agreement, the Employee shall not engage in any business
or activity contrary to the business affairs or interests of the Bank, or be
gainfully employed in any other position or job other than as provided above.
(b) Nothing contained in this Paragraph 6 shall be deemed to prevent
or limit the Employee's right to invest in the capital stock or other securities
of any business dissimilar from that of the Bank, or, solely as a passive or
minority investor, in any business.
7. Standards. The Employee shall perform her duties under this Agreement in
accordance with such reasonable standards as the Board may establish from time
to time. The Bank will provide Employee with the working facilities and staff
customary for similar executives and necessary for her to perform her duties.
8. Vacation and Sick Leave. At such reasonable times as the Board shall in
its discretion permit, the Employee shall be entitled, without loss of pay, to
absent herself voluntarily from the performance of her employment under this
Agreement, all such voluntary absences to count as vacation time, provided that:
(a) The Employee shall be entitled to an annual vacation in accordance
with the policies that the Board periodically establishes for senior management
employees of the Bank.
(b) The Employee shall not receive any additional compensation from
the Bank on account of her failure to take a vacation or sick leave, and the
Employee shall not accumulate unused vacation or sick leave from one fiscal year
to the next, except in either case to the extent authorized by the Board.
(c) In addition to the aforesaid paid vacations, the Employee shall be
entitled without loss of pay, to absent herself voluntarily from the performance
of her employment with the Bank for such additional periods of time and for such
valid and legitimate reasons as the Board may in its discretion determine.
Further, the Board may grant to the Employee a leave or leaves of
absence, with or without pay, at such time or times and upon such terms and
conditions as such Board in its discretion may determine.
(d) In addition, the Employee shall be entitled to an annual sick
leave benefit as established by the Board.
9. Termination and Termination Pay. Subject to Section 11 hereof, the
Employee's employment hereunder may be terminated under the following
circumstances:
(a) Death. The Employee's employment under this Agreement shall
terminate upon her death during the term of this Agreement, in which event the
Employee's estate shall be entitled to receive the compensation due the Employee
through the last day of the calendar month in which her death occurred.
(b) Disability. (1) The Bank may terminate the Employee's employment
after having established the Employee's Disability. For purposes of this
Agreement, "Disability" means a physical or mental infirmity which impairs the
Employee's ability to substantially perform her duties under this Agreement and
which results in the Employee becoming eligible for long-term disability
benefits under the Bank's long-term disability plan (or, if the Bank has no such
plan in effect, which impairs the Employee's ability to substantially perform
her duties under this Agreement for a period of one hundred eighty (180)
consecutive days). The Employee shall be entitled to the compensation and
benefits provided for under this Agreement for (i) any period during the term of
this Agreement and prior to the establishment of the Employee's Disability
during which the Employee is unable to work due to the physical or mental
infirmity, or (ii) any period of Disability which is prior to the Employee's
termination of employment pursuant to this Section 9(b); provided that any
benefits paid pursuant to the Bank's long term disability plan will continue as
provided in such plan.
(2) During any period that the Employee shall receive disability
benefits and to the extent that the Employee shall be physically and mentally
able to do so, she shall furnish such information, assistance and documents so
as to assist in the continued ongoing business of the Bank and, if able, shall
make herself available to the Bank to undertake reasonable assignments
consistent with her prior position and her physical and mental health. The Bank
shall pay all reasonable expenses incident to the performance of any assignment
given to the Employee during the disability period.
(c) Just Cause. The Board may, by written notice to the Employee,
immediately terminate her employment at any time, for Just Cause. The Employee
shall have no right to receive compensation or other benefits for any period
after termination for Just Cause. Termination for "Just Cause" shall mean
termination because of, in the good faith determination of the Board, the
Employee's personal dishonesty, incompetence, willful misconduct, breach of
fiduciary duty involving personal profit, intentional failure to perform stated
duties, willful violation of any law, rule or regulation (other than traffic
violations or similar offenses) or final cease-and-desist order, or material
breach of any provision of this Agreement. Notwithstanding the foregoing, in the
event of termination for Just Cause there shall be delivered to the Employee a
copy of a resolution duly adopted by the affirmative vote of not less than a
majority of the entire membership of the Board at a meeting of the Board called
and held for that purpose (after reasonable notice to the Employee and an
opportunity for the Employee, together with the Employee's counsel, to be heard
before the Board), such meeting and the opportunity to be heard to be held prior
to, or as soon as reasonably practicable following, termination, but in no event
later than 60 days following such termination, finding that in the good faith
opinion of the Board the Employee was guilty of conduct set forth above in the
second sentence of this Subsection (c) and specifying the particulars thereof in
detail. If following such meeting the Employee is reinstated, she shall be
entitled to receive back pay for the
period following termination and continuing through reinstatement.
(d) Without Just Cause; Constructive Discharge. (1) The Board may, by
written notice to the Employee, immediately terminate her employment at any time
for a reason other than Just Cause, in which event the Employee shall be
entitled to receive the following compensation and benefits (unless such
termination occurs within the time period set forth in Section 11(b) hereof in
which event the benefits and compensation provided for in Section 11 shall
apply): (i) the salary provided pursuant to Section 2 hereof, up to the date of
termination of the term as provided in Section 5 hereof (including any renewal
term) of this Agreement (the "Expiration Date"), plus said salary for an
additional 12-month period, and (ii) at the Employee's election either (A) cash
in an amount equal to the cost to the Employee of obtaining all health, life,
disability and other benefits which the Employee would have been eligible to
participate in through the Expiration Date based upon the benefit levels
substantially equal to those that the Bank provided for the Employee at the date
of termination of employment or (B) continued participation under such Bank
benefit plans through the Expiration Date, but only to the extent the Employee
continues to qualify for participation therein. All amounts payable to the
Employee shall be paid, at the option of the Employee, either (I) in periodic
payments through the Expiration Date, or (II) in one lump sum within ten (10)
days of such termination.
(2) The Employee may voluntarily terminate her employment under this
Agreement, and the Employee shall thereupon be entitled to receive the
compensation and benefits payable under Section 9(d)(1) hereof, within ninety
(90) days following the occurrence of any of the following events, which has not
been consented to in advance by the Employee in writing (unless such voluntary
termination occurs within the time period set forth in Section 11(b) hereof in
which event the benefits and compensation provided for in Section 11 shall
apply): (i) the requirement that the Employee move her personal residence, or
perform her principal executive functions, more than thirty (30) miles from her
primary office; (ii) a material reduction in the Employee's base compensation;
(iii) the failure by the Bank to continue to provide the Employee with
compensation and benefits provided for under this Agreement, as the same may be
increased from time to time, or with benefits substantially similar to those
provided to her under any of the employee benefit plans in which the Employee
now or hereafter becomes a participant, or the taking of any action by the Bank
which would directly or indirectly reduce any of such benefits or deprive the
Employee of any material fringe benefit enjoyed by him; (iv) the assignment to
the Employee of duties and responsibilities materially different from those
normally associated with her position as referenced at Section 1; (v) a failure
to elect or reelect the Employee to the Board of Directors of the Bank; (vi) a
material diminution or reduction in the Employee's responsibilities or authority
(including reporting responsibilities) in connection with her employment with
the Bank; or (vii) a material reduction in the secretarial or other
administrative support of the Employee.
(3) Notwithstanding the foregoing, but only to the extent required
under federal banking law, the amount payable under clause (d)(1)(i) hereof
shall be reduced to the extent that on the date of the Employee's termination of
employment, the present value of the benefits payable under clauses (d)(1)(i)
and (ii) hereof exceeds the limitation on severance benefits that is set forth
in Regulatory Bulletin 27a of the Office of Thrift Supervision, as in effect on
the Effective Date. In the event that Section 280G of the Internal Revenue Code
of 1986, as amended (the "Code") becomes applicable to payments made under this
Section 9(d), and the payments exceed the "Maximum Amount" as defined in Section
11(a)(1) hereof, the payments shall be reduced as provided by Section 11(a)(2)
of this Agreement.
(e) Termination or Suspension Under Federal Law. (1) If the Employee
is removed and/or permanently prohibited from participating in the conduct of
the Bank's affairs by an
order issued under Sections 8(e)(4) or 8(g)(1) of the Federal Deposit Insurance
Act ("FDIA") (12 U.S.C. 1818(e)(4) and (g)(1)), all obligations of the Bank
under this Agreement shall terminate, as of the effective date of the order, but
vested rights of the parties shall not be affected.
(2) If the Bank is in default (as defined in Section 3(x)(1) of FDIA),
all obligations under this Agreement shall terminate as of the date of default;
however, this Paragraph shall not affect the vested rights of the parties.
(3) All obligations under this Agreement shall terminate, except to
the extent that continuation of this Agreement is necessary for the continued
operation of the Bank: (i) by the Director of the Office of Thrift Supervision
("Director of OTS"), or her designee, at the time that the Federal Deposit
Insurance Corporation ("FDIC") or the Resolution Trust Corporation enters into
an agreement to provide assistance to or on behalf of the Bank under the
authority contained in Section 13(c) of FDIA; or (ii) by the Director of the
OTS, or her designee, at the time that the Director of the OTS, or her designee
approves a supervisory merger to resolve problems related to operation of the
Bank or when the Bank is determined by the Director of the OTS to be in an
unsafe or unsound condition. Such action shall not affect any vested rights of
the parties.
(4) If a notice served under Section 8(e)(3) or (g)(1) of the FDIA (12
U.S.C. 1818(e)(3) or (g)(1)) suspends and/or temporarily prohibits the Employee
from participating in the conduct of the Bank's affairs, the Bank's obligations
under this Agreement shall be suspended as of the date of such service, unless
stayed by appropriate proceedings. If the charges in the notice are dismissed,
the Bank may in its discretion (i) pay the Employee all or part of the
compensation withheld while its contract obligations were suspended, and (ii)
reinstate (in whole or in part) any of its obligations which were suspended.
(f) Voluntary Termination by Employee. Subject to Section 11 hereof,
the Employee may voluntarily terminate employment with the Bank during the term
of this Agreement, upon at least ninety (90) days' prior written notice to the
Board of Directors, in which case the Employee shall receive only her
compensation, vested rights and employee benefits up to the date of her
termination (unless such termination occurs pursuant to Section 9(d)(2) hereof
or within the time period set forth in Section 11(a) hereof in which event the
benefits and compensation provided for in Sections 9(d) or 11, as applicable,
shall apply).
10. No Mitigation. The Employee shall not be required to mitigate the
amount of any payment provided for in this Agreement by seeking other employment
or otherwise and no such payment shall be offset or reduced by the amount of any
compensation or benefits provided to the Employee in any subsequent employment.
11. Change in Control.
(a) Notwithstanding any provision herein to the contrary, if the
Employee's employment under this Agreement is terminated by the Bank, without
the Employee's prior written consent and for a reason other than Just Cause, in
connection with or within twelve (12) months after any change in control of the
Bank or Kentucky First Bancorp, Inc. (the "Company"), the Employee shall be paid
an amount equal to the difference between -
(i) the sum of -
I. the product of 2.99 times her "base amount" as defined
in Section 280G(b)(3) of the Internal Revenue Code of
1986, as amended (the "Code") and regulations
promulgated thereunder, and
II. $150,000, and
(ii) the sum of any other parachute payments (as defined under Section
280G(b)(2) of the Code) that the Employee receives on account of the change in
control. Said sum shall be paid in one lump sum within ten (10) days of such
termination. This paragraph would not apply to a termination of employment due
to death, Disability or voluntary termination by the Employee.
The term "change in control" shall mean any one of the following events:
(1) the acquisition of ownership, holding or power to vote more than 25% of the
Bank's or the Company's voting stock, (2) the acquisition of the ability to
control the election of a majority of the Bank's or the Company's directors, (3)
the acquisition of a controlling influence over the management or policies of
the Bank or the Company by any person or by persons acting as a "group" (within
the meaning of Section 13(d) of the Securities Exchange Act of 1934), (4) the
acquisition of control of the Bank or the Company within the meaning of 12
C.F.R. Part 574 or its applicable equivalent (except in the case of (1), (2),
(3) and (4) hereof, ownership or control of the Bank by the Company itself shall
not constitute a "change in control"), or (5) during any period of two
consecutive years, individuals who at the beginning of such period constitute
the Board of Directors of the Bank (the "Existing Board") (the "Continuing
Directors") cease for any reason to constitute at least a majority thereof,
provided that any individual whose election or nomination for election as a
member of the Existing Board was approved by a vote of at least a majority of
the Continuing Directors then in office shall be considered a Continuing
Director. For purposes of this subparagraph only, the term "person" refers to an
individual or a corporation, partnership, trust, association, joint venture,
pool, syndicate, sole proprietorship, unincorporated organization or any other
form of entity not specifically listed herein.
(b) Notwithstanding any other provision of this Agreement to the
contrary, the Employee may voluntarily terminate her employment under this
Agreement within twelve (12) months following a change in control of the Bank or
the Company, and the Employee shall thereupon be entitled to receive the payment
described in Section 11(a) of this Agreement, upon the occurrence of any of the
following events, or within ninety (90) days thereafter, which have not been
consented to in advance by the Employee in writing: (i) the requirement that the
Employee perform her principal executive functions more than thirty (30) miles
from her primary office or more than thirty (30) miles from her personal
residence as of the date of the change in control; (ii) a material reduction in
the Employee's base compensation as in effect on the date of the change in
control or as the same may be changed by mutual agreement from time to time;
(iii) the failure by the Bank to continue to provide the Employee with
compensation and benefits provided for under this Agreement, as the same may be
changed by mutual agreement from time to time, or with benefits substantially
similar to those provided to her under any employee benefit in which the
Employee is a participant at the time of the change in control, or the taking of
any action which would materially reduce any of such benefits or deprive the
Employee of any material fringe benefit enjoyed by her at the time of the change
in control; (iv) the assignment to the Employee of duties and responsibilities
materially different from those normally associated with her position as
referenced at Section 1; (v) a failure to elect or reelect the Employee to the
Board of the Bank or the Company, if the Employee is serving on these Boards on
the date of the change in control; or (vi) a material diminution or reduction in
the Employee's responsibilities or authority (including reporting
responsibilities) in connection with her employment with the Bank.
(c) Any payments made to the Employee pursuant to this Agreement, or
otherwise, are subject to and conditioned upon their compliance with 12 U.S.C.
Section 1828(k) and any regulations promulgated thereunder.
(d) In the event that any dispute arises between the Employee and the
Bank as to the terms or interpretation of this Agreement, including this Section
11, whether instituted by formal legal proceedings or otherwise, including any
action that the Employee takes to enforce the terms of this Section 11 or to
defend against any action taken by the Bank, the Employee shall be reimbursed
for all costs and expenses, including reasonable attorneys' fees, arising from
such dispute, proceedings or actions, provided that the Employee shall obtain a
final judgment by a court of competent jurisdiction in favor of the Employee.
Such reimbursement shall be paid within ten (10) days of Employee's furnishing
to the Bank written evidence, which may be in the form, among other things, of a
cancelled check or receipt, of any costs or expenses incurred by the Employee.
(e) Notwithstanding any other provision of this Agreement to the
contrary, the Employee may voluntarily terminate her employment for any reason
within the 30-day period beginning on the date of the change in control and the
Employee shall be entitled to receive the payment described in Section 11(a) of
this Agreement.
(f) If the Employee's employment is terminated under circumstances
described in Section 11(a), (b) or (e) of this Agreement, and in consideration
of the payments to be made to her thereunder, the Employee agrees as follows:
(i) The parties recognize that the Employee's reputation and
business and personal relationships are of significant benefit to the Bank. The
parties further recognize that the Bank is in direct competition with certain
banks and other similar institutions. Therefore, the Employee agrees that for a
period of eighteen (18) months following her termination of employment she will
not accept employment or serve in any capacity with any bank, savings bank or
savings and loan association the deposits or accounts or shares of which are
insured by the Federal Deposit Insurance Corporation or credit union the
deposits or accounts or shares of which are insured by the National Credit Union
Administration or any holding company for such bank, savings bank, savings and
loan association or credit union or other entity controlling, controlled by or
under common control with such financial institution at a principal place of
employment within thirty (30) miles of any office of the Bank open to the public
at the time of this Agreement.
(ii) For a period of two (2) years following her termination of
employment, the Employee will not solicit or induce any person who is an
employee of the Bank, or any entity controlling, controlled by or under common
control with the Bank, or any successor to either, or any person who was such
within three months prior to her termination of employment, to become employed
by any other person, firm or corporation or approach any such employee for such
purpose or authorize or knowingly approve the taking of such actions by other
persons.
(iii) The Employee acknowledges that during the course of her
employment with the Company and the Bank she has and will continue to receive,
obtain or become aware of, and will have acess to proprietary information, lists
and records of customers and trade secrets which are the property of the Company
or the Bank which are not known by competitors or generally by the public
("Proprietary Information") and recognizes that such Proprietary Information to
be valuable and unique assets of the Company or the Bank, as the case may be. At
all times following her termination of employment, the Employee agrees to hold
the Proprietary Information in the strictest confidence and agrees not to use or
disclose any Proprietary Information, directly or indirectly, at any time for
any purpose, or to use for the Employee's benefit or the benefit of any person,
firm, corporation or other entity (other than the Company or the Bank or an
affiliate of or successor to either), any Proprietary Information, and to use
Executive's best efforts to prevent such prohibited use or disclosure by any
other persons.
(iv) The Employee hereby acknowledges that her duties and
responsibilities under this Section 11(f) are unique and extraordinary and that
irreparable injury may result to the Company or the Bank or an affiliate of or
successor to either in the event of a breach of the terms and conditions of this
Section 11(f), which may be difficult to ascertain, and
that the award of damages would not be adequate relief to the Company or the
Bank or affiliate or successor. The Employee therefore agrees that in the event
of her breach of any of the terms or conditions of this Section 11(f), the
Company or the Bank or it successor shall have the right, without posting any
bond or other security, to preliminary and permanent injunctive relief as well
as damages and an equitable accounting of all earnings, profits and other
benefits arising from such violation, which rights shall be cumulative and in
addition to any other rights or remedies in law or equity to which it may be
entitled against the Employee. If at the time of the enforcement of any
provision of this Section 11(f) a court shall hold that the period or scope of
the provisions thereof are unreasonable under the circumstances then existing,
the parties hereby agree that the maximum period or scope under the
circumstances shall be substituted for the period or scope stated in such
provision.
12. Federal Income Tax Withholding. The Bank may withhold all Federal and
State income or other taxes from any benefit payable under this Agreement as
shall be required pursuant to any law or government regulation or ruling.
13. Successors and Assigns.
(a) Bank. This Agreement shall not be assignable by the Bank, provided
that this Agreement shall inure to the benefit of and be binding upon any
corporate or other successor of the Bank which shall acquire, directly or
indirectly, by merger, consolidation, purchase or otherwise, all or
substantially all of the assets or stock of the Bank.
(b) Employee. Since the Bank is contracting for the unique and
personal skills of the Employee, the Employee shall be precluded from assigning
or delegating her rights or duties hereunder without first obtaining the written
consent of the Bank; provided, however, that nothing in this paragraph shall
preclude (i) the Employee from designating a beneficiary to receive any benefit
payable hereunder upon her death, or (ii) the executors, administrators, or
other legal representatives of the Employee or her estate from assigning any
rights hereunder to the person or persons entitled thereunto.
(c) Attachment. Except as required by law, no right to receive
payments under this Agreement shall be subject to anticipation, commutation,
alienation, sale, assignment, encumbrance, charge, pledge, or hypothecation or
to exclusion, attachment, levy or similar process or assignment by operation of
law, and any attempt, voluntary or involuntary, to effect any such action shall
be null, void and of no effect.
14. Amendments. No amendments or additions to this Agreement shall be
binding unless made in writing and signed by all of the parties, except as
herein otherwise specifically provided.
15. Applicable Law. Except to the extent preempted by Federal law, the laws
of the Commonwealth of Kentucky shall govern this Agreement in all respects,
whether as to its validity, construction, capacity, performance or otherwise.
16. Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
17. Entire Agreement. This Agreement, together with any understanding or
modifications thereof as agreed to in writing by the parties, shall constitute
the entire agreement between the parties hereto.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day and
year first hereinabove written.
ATTEST: FIRST FEDERAL SAVINGS BANK
/s/ Xxxxx X. Xxxxx By: /s/ Xxxxxxx X. Xxxxxx
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Xxxxx X. Xxxxx, Secretary Its: Chairman of the Board
WITNESS:
/s/ Xxxxx X. Xxxx
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Xxxxx X. Xxxx
