Exhibit 10.16
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made effective as of May 11,
1998, at Clovis, California, County of Fresno, State of California, by and
between CLOVIS COMMUNITY BANK (hereinafter referred to as "Employer" or
"Bank") and XXXXXX X. XXXXX (hereinafter referred to as "Employee").
Employer desires to avail itself of the skill, knowledge and experience of
Employee as President and Chief Executive Officer.
Employee, being willing to be employed by Employer as President and Chief
Executive Officer, and Employer being willing to employ Employee, on the terms,
convenants and conditions hereinafter set forth, it is agreed as follows:
1. POSITION: Employee is hereby employed as President and Chief
Executive Officer of Employer.
2. TERM: The term of this Agreement shall commence June 1, 1998, and
continue through December 31, 2001 (the "Employment Term"),
subject, however, to prior termination as set forth in Section 6
of this agreement. At the end of said term, this Agreement shall
renew automatically for an additional one year term(s) unless
either party furnishes written notice of his or her intention not
to renew by no later than sixty (60) days prior to the effective
date of the expiration of the employment term.
3. EMPLOYEE DUTIES: Upon the effective date of this Agreement and
removal of the predecessor President and Chief Executive Officer
of the Bank, Employee is hereby vested with such powers and duties
as are designated by the By-Laws of Employer, by the Board of
Directors of Employer (the"Board"), or by any duly authorized
Committee of the Board. Subject to the control of the business and
affairs of Employer and shall be senior in rank to all other
officers of Employer. As President and Chief Executive Officer,
Employee shall have the authority to sign contracts, bills, notes,
drafts and other obligations of Employer, as grated to the
President by the By-Laws or the Board and in accordance with
appropriate governmental regulation.
4. EXTENT OF SERVICES: Employee shall devote substantially all of his
time and effort to the business of Employer and shall not during
the Employment Term be engaged in any other business activities,
except personal investments, without the prior written consent of
Employer.
5. COMPENSATION AND BENEFITS: For the first year of the contract,
Employee shall receive an annual salary of $160,000 prorated for
the amount of time actually worked. Employee shall also be
entitled to receive a bonus of 25 percent of salary, pro-rated to
1998. Bonus will be based on Employee reaching certain goals,
both subjective and objective, prior to December 31, 1998. It is
the intent of the parties to reduce the specific goals to writing
within 30 days of the date of hire. For 1999, the gross salary
will be $160,000 plus a 30 percent bonus based upon specific
goals to be set by mutual agreement of the parties. For the years
2000 and 2001, the Board shall set the base salary and bonus. The
specific
goals for the bonus shall be set by mutual agreement of the
parties for the years 2000 and 2001. The annual base salary
shall not be less than $160,000.
(a) MOVING EXPENSES: Employee shall receive a net of
$25,000 for moving expenses. To the extent that
any of the amount paid by the Bank for Employee's
moving expenses is deemed to be taxable, the Bank
will pay Employee an amount such that once taxes
are withheld, Employee will receive a net of $25,
000 for this purpose. In addition, Employee will
receive a net of $25,000 for this purpose. In
addition, Employee shall be given $1,000.00 a
month for three months to cover additional costs
related to renting a home or apartment in the
Fresno/Clovis area. Employee shall use his best
efforts to obtain the best purchase price.
(b) STOCK OPTIONS SIGNING BONUS: as of the date of
the execution of this Agreement, Employee will
receive the option to purchase 20,000 shares of
stock at the current market price as a signing
bonus. The stock options will become vested over
a four-year period with 4,000 shares being vested
on the date of hire, 4,000 shares being vested on
the first anniversary of this Agreement, 4,000
shares being vested on the second anniversary of
this Agreement, and 4,000 shares becoming vested
on the fourth anniversary of this Agreement.
Additionally, the parties recognize that the
Board is committed to granting Employee
performance-based incentive stock options which
will result in Employee owning approximately five
percent (5%) of the Bank's stock, based on the
way the Bank is structured today, when Employee
reaches age 65, if he has been employed
continuously by the Bank in his
presently-described position or a higher position
within the Bank. The parties recognize that in
the event additional stock is issued that
Employee's ownership interest may be diluted
pro-rata, the same as all other existing
shareholders. The 5% shall not include any shares
the Employee purchases that are in addition to
shares granted under a stock option plan.
However, such future stock options are at the
sole discretion of the Board of Directors. A
sample copy of Employer's Stock Option Agreement
has been provided to Employee.
(c) COUNTRY CLUB EXPENSES: Employer agrees to pay
monthly dues and assessments at a country club
that is mutually agreed upon by the Board of
Directors and Employee. Employer agrees to pay
all business-related expenses at the country
club. Employee's membership in the golf and
country club shall be owned exclusively by
Employee. If, after an examination performed by
the regulators after May 1999, the State and
Federal Ceased and Desist Orders are released and
the Bank receives a CAMEL rating of 2 or higher,
the Bank will reimburse Employee for his country
club membership fee.
(d) AUTOMOBILE ALLOWANCE: employer shall provide
Employee with an automobile allowance of
$1,000.00 per month to cover Employee's cost of
an automobile and related automobile travel
expenses. The automobile shall be approved by
Board as being suitable for the Bank CEO.
Employee shall be responsible
for paying all operation expenses of any
nature whatsoever with regard to Employee's
chosen automobile. Employee shall furnish
Employer adequate records and other
documentary evidence required by the Bank.
Employee shall also procure and maintain in
force an automobile insurance policy on such
automobile, with coverage naming the Bank as
an additional insured with the minimum
coverage of $1 million combined single limit
of liability. Employee shall provide Bank with
copy of the insurance policy.
(e) INSURANCE:
i. Employer shall provide for Employee, and
his wife and dependent children, at
Employer's expense, participation in basic
medical/dental coverage, disability
coverage and life insurance coverage
equivalent to the maximum benefits
available under the California Banker's
Association Group Insurance Program for an
employee of Employee's salary level,
except that in any event, Employee shall
be provided with term life insurance
benefits of at least One Hundred Thousand
Dollars ($100,000). Said coverage shall be
in existence or shall take effect as of
the effective date hereof and shall
continue throughout the Employment Term.
ii. As provided under Sections 1161-1168 of
Title 29 of the United States Code
("COBRA") respecting continuation of any
such coverages, Employee shall, upon a
loss of any such coverages for himself
and/or his wife and dependent children who
are then covered under Employer's health,
dental, and/or vision plans (if any)
resulting from (1) termination of
Employee's employment (for any reason
other than for gross misconduct) or (2) a
reduction in his hours, be entitled to
exercise his COBRA rights.
(f) VACATION: Employee shall receive at least four
weeks paid vacation per year. Said vacation leave
shall accrue on a pro-rata monthly basis. All
vacation leave must be taken annually at such
time or times as mutually agreed upon by Employee
and the Board. Employee shall not be entitled to
vacation pay in lieu of vacation, provided,
however, that should Employee be precluded due to
his duties as President and Chief Executive
Officer from taking his full vacation by request
of the Board, any vacation time not used in
excess of the Mandatory Vacation shall be paid
for at Employee's daily rate of compensation for
the year and time in question. Any such payments
shall be due and payable within thirty (30) days
at the end of the calendar year during which the
unused vacation time accrued. Employee shall
receive such additional paid vacation as mutually
agreed upon by Employee and the Board.
(g) GENERAL EXPENSES: Employer shall upon submission
and approval of written statements and bills in
accordance with the regular procedures of
Employer relative to senior executives, pay or
reimburse Employee for any and all necessary,
customary and usual expenses incurred by him
while traveling for or on behalf of Employer and
for any and all other necessary, customary or
usual expenses (including, without limitation,
gifts and entertainment) incurred
by Employee for or on behalf of Employer in
the normal course of business. Employee agrees
that, if at any time any payment made to
Employee by employer, whether for salary or
whether as auto expense or business expense
reimbursement, shall be disallowed in whole or
in part as a deductible expense by the
appropriate taxing authorities, Employee shall
reimburse Employer to the full extent of such
disallowance.
6. TERMINATION: This Agreement may be terminated during the
Employment term in accordance with this Section 6. In the event of
such termination, Employee shall be released from all obligations
under this Agreement, except that employee shall remain subject to
Sections 7,8, 12 (c), 12(j), 13 and 14, and Employer shall be
released from all obligations under this Agreement, except as
other wise provided in this Section and Sections 12 (c), 12 (j),
13 and 14.
(a) EARLY TERMINATION BY EMPLOYER FOR CAUSE: This
Agreement may be terminated for cause by Employer
upon written notice, and Employee shall not be
entitled to receive compensation or other
benefits for any period after termination for
cause. Employee understands and agrees that
satisfactory performance of this Agreement on his
part requires conformance with the highest
standards of diligence, competence, skill,
judgement and efficiency in the banking industry
and that failure to conform to such standards is
cause for termination of the Agreement by
Employer. Termination "for cause" pursuant to
this Section 6 (a) also means: (1) termination
pursuant to Section 11 of this Agreement; (2)
termination because of Employee's negligent or
intentional violation of any law, rule or
regulation (other than a traffic violation or
similar offense); or (3) termination because of
Employee's actions causing termination of
Employer's Banker's Blanket Bond with respect to
Employee.
(b) EARLY TERMINATION UPON DISABILITY: If Employee
becomes disabled during the Employment Term
because of physical or mental disability so that
he is unable to perform his duties hereunder,
Employer may at its option terminate this
Agreement. Employee shall be entitled to the
salary provided for in Section 5 of this
Agreement for a period of one-hundred and eighty
(180) days from the date of Employee's first
absence due to this disability, plus accrued but
unused vacation leave, but not beyond the date
specified herein for the end of the Employment
Term. All other compensation and benefits
provided for under this Agreement shall cease as
of the date of termination. For purposes of this
Agreement only, physical or mental disability
shall mean the inability of Employee to fully
perform under this Agreement for a continuous
period of one-hundred and eighty (180) days, as
determined in the case of physical disability by
a physician, or in the case of mental disability
by a psychiatrist both of whom must be licensed
to practice medicine in California and are to be
selected with the approval of Employer and
Employee. Recurrent disabilities will be treated
as separate disabilities if they result from
unrelated causes or if they result from the same
or related cause or causes and are separated by a
continuous period of at least six (6) full months
during which Employee was able to perform his
duties hereunder equal to at least eighty percent
(80%) of his capacity prior to disability.
Otherwise, recurrent disabilities will be treated
as a continuation of previous disabilities for
the purpose of determining the limitations
established in this paragraph.
(c) AUTOMATIC TERMINATION UPON CLOSURE OR TAKE-OVER:
This Agreement shall terminate automatically if
Employer is closed or taken over by the
California Department of Financial Institutions
or by any other supervisory authority.
(d) MERGER OR CORPORATE DISSOLUTION:
i. In the event of a merger in which Employer
is not the surviving corporation, in the
event of a transfer of all or
substantially all of the assets of
Employer, in the event of any other
corporate reorganization in which there is
a change in ownership of the outstanding
shares of Employer wherein more than fifty
percent (50%) of the outstanding shares of
Employer and re transferred to any other
partnership, corporation, trust or
business entity, or in the event of the
dissolution of Employer, this Agreement
shall not be terminated, but instead, the
surviving or resulting corporation, the
transferee of Employer's assets, or
Employer shall be bound by and shall have
the benefit of the provisions of this
Agreement.
ii. Notwithstanding the foregoing, in the
event of any such merger, reorganization
or transfer of assets (constituting a
change in "the ownership or effective
control" or "the ownership of a
substantial portion of the Asset" of
Employer, within the meaning of Section
280G(b) (A) (i) of the Internal Revenue
Code of 1986, as amended ("IRC"), or any
successor statute, Employee may elect to
stay with or leave the new entity. If
Employee elects to leave he shall be
entitled to severance as follows. Employee
shall be paid a lump sum termination
payment equal to the average total cash
compensation paid to Employee by average
total cash compensation paid to Employee
by Employer during the most recent three
fiscal years of Employer multiplies by
two; provided, that in the event the
amounts payable to Employee would, if they
included such termination payment to be
make pursuant to this Section 6 (d) (ii),
constitute Excess Parachute Payments for
purposes of IRC Sections 280G (b) and 4999
(after application of Section 280(b) (4),
the amount payable under this Section 6(d)
(ii) shall be reduced by the amount
necessary to cause Employee to receive no
Excess Parachute Payments. Change of
control shall not include the folding of
the Bank into a holding company. If a
holding company is formed and Employee is
not retained as President or a higher
position of Clovis Community Bank or its
successor, then Employee shall have the
option of staying or leaving pursuant to
the terms of this paragraph. In the event
Employee has been employed less than three
years, the average annual compensation
shall be determined by using Employee's
compensation history with the Bank to
determine the annual compensation formula
for purposes of this paragraph.
iii. Notwithstanding anything to the
contrary provided herein, if Employer is
not the surviving entity in any
transaction referred to in Section 6 (d)
hereof and said transaction is in any
manner the result of any action taken
at the direction of any supervisory/
regulatory authority whatsoever other
than action from current regulatory
order, then in such event this
Agreement shall terminate immediately
upon the consummation of such
transaction and Employee agrees that
all rights, duties, obligations, and
benefits herein contained shall
thereupon terminate and that Employee
shall be entitled to no further
compensation or benefits from Employer
save and except those rights, duties,
obligations, benefits and/or
compensation accrued and/or earned
prior to the date of such termination.
iv. For a period of 24 months following a
change in "the ownership or effective
control," employee shall have the option
to terminate this Agreement and be
entitled to the same "lump sum termination
payment" as defined under paragraph 6(d)
(ii) if any of the following occur: (a)
change of the Employee's status as
President and Chief Executive Officer of
Clovis Community Bank or a higher position
if Employee has been serving in that
capacity, (b) any decrease in Employee's
total compensation, (c) material changes
in Employee's duties and authority, and/or
(d) change in Employee's office location
more than thirty (30) miles from Clovis,
California.
(e) TERMINATION WITHOUT CAUSE AT EMPLOYER'S OPTION:
Notwithstanding any other section of this Agreement,
Employer may terminate this Agreement at any time and
without cause by giving Employee thirty (30) days' written
notice of Employer's intent to terminate this Agreement.
In the event Employee's employment is terminated pursuant
to this Section of this Agreement, Employee shall be paid
all accrued salary, vacation, and reimbursable expenses
for which expense reports have been provided to Employer
in accordance with Employer's policies and this Agreement.
In addition to the foregoing amount , if Employee is
terminated pursuant to this Section of the Agreement, he
will be entitled to receipt of additional severance
payments as follows:
i. Employee shall be entitled to receive up to 24
payments, each in the amount equal to one-twelfth
(1/12) of Employee's annual base salary, less any
withholding required by law. Any payments due and
owing to Employee under this Section will commence
on the 15th day of the first month following
Employee's termination and shall continue until all
payments due and owing Employee are made or until
Employee obtains other comparable employment,
whichever comes first. For purposes of implementing
subparagraph (i) of this Section, employee agrees
to furnish Employer with prompt written notice
describing any subsequent employment he secures
(including his compensation for such employment)
following any termination under this Section.
ii. For purposes of subparagraph (i) of this Section,
the term "comparable employment" shall mean any
employment in which Employee's compensation
(measured by any cash or not-cash payments or
benefits) is comparable to his compensation under
this Agreement. Any compensation comparison
undertaken for the purposes of this Agreement shall
be don without regard to any vested or unvested
stock options of Employee.
iii. In addition to any severance payments due and
owing under this Section, employer may, in its sole
discretion, provide Employee with a performance
bonus prorated for the number of months between the
termination date and the end of Employer's last
fiscal year.
(f) TERMINATION BY EMPLOYEE: Employee may terminate this
Agreement for good cause.
7. PRINTED MATERIAL: All written or printed materials used by
Employee in performing duties for Employer are and shall remain
the property of Employer. Upon termination of employment,
Employee shall promptly return such written or printed materials
to Employer.
8. DISCLOSURE OF INFORMATION: employee shall not, either before or
after termination of this Agreement, disclose to anyone any
information relating to Employer or any financial information,
trade secrets or know-how germane to the business and operations
of Employer. Employee recognizes and acknowledges that any
financial information concerning any of Employer's customers, as
it may exist from time to time, is strictly confidential and is a
valuable, special and unique asset of the business of Employer.
Employee shall not, either before or after termination of this
Agreement, disclose to anyone said financial information or any
part thereof for any reason or purpose whatsoever.
9. NON-COMPETITION BY EMPLOYEE: During the term of this Agreement,
Employee shall not, directly or indirectly, either as an employee,
employer, consultant, agent, principal, partner, stockholder,
corporate officer, director, or in any other individual or
representative capacity, engage or participate in any competing
banking business; provided, however, Employee shall not be
restricted by this Section from owning securities of corporations
listed on a national securities exchange or regularly traded by
national securities dealers so long as such investment securities
of such corporation. Upon the expiration of this Agreement, for
one year Employee agrees not to solicit or hire any employees of
Employer.
10. MORAL CONDUCT: Employee agrees to conduct himself at all times
with due regard to public conventions and morals. Employee further
agrees not to do or commit any act that will reasonably tend to
degrade him or to bring him into public hatred, contempt, or
ridicule, or that will reasonably tend to shock or offend the
community, or to prejudice Employer or the banking industry in
general.
11. SURETY BOND: Employee agrees that he will furnish all information
and take any steps necessary to enable employer to obtain or
maintain a fidelity bond conditional on the rendering of a true
account by Employee of all monies, goods or other property which
may come into the custody, charge or possession of Employee during
the Employment Term.
The surety company issuing the bond and the amount of the bond
are to be paid by Employer. If Employee cannot qualify for a
surety bond at any time during the Employment Term, Employer
shall have the option to terminate this Agreement immediately.
12. GENERAL: This Agreement is further governed by the following
provisions:
(a) ENTIRE AGREEMENT: This Agreement supersedes any and all other
agreements, either oral or in writing, between the parties
hereto with respect to the employment of Employee by Employer
and contains all of the covenants and agreements among the
parties with respect to such employment. Any modification,
waiver or amendment of this Agreement will be effective only
if it is in writing and signed by the party to be charged.
(b) WAIVER: Any waiver by any party of a breach of any provision
of this Agreement shall not operate as or be construed to be a
waiver of any other breach of such provision or of any breach
of any other provision of this Agreement. The failure of a
party to insist upon strict adherence to any term of this
Agreement on one or more occasions shall not be considered a
waiver or deprive that party of the right thereafter to insist
upon strict adherence to that term or any other term of this
Agreement.
(c) CHOICE OF LAW: This Agreement shall be governed by and
construed in accordance with the laws of the State
of California.
(d) BINDING EFFECT OF AGREEMENT: This Agreement shall insure to
the benefit of and be binding upon Employer, its successors
and assigns, including without limitation, any person,
partnership or corporation which may acquire all or
substantially all of Employer's assets and business, or with
or into which Employer may be consolidated, merged or
otherwise reorganized, and this provision shall apply in the
event of any subsequent merger, consolidation, reorganization,
or transfer. The provisions of this Agreement shall be binding
upon and inure to the benefit of Employee and his heirs and
personal representatives. The rights and obligations of
Employee under this Agreement shall not be transferable by
assignment or otherwise, such rights shall not be subject to
commutation, encumbrance or the claims of Employee's
creditors, and any attempt to do any of the foregoing shall be
void.
(e) INDEMNIFICATION: Employer shall indemnify Employee to the
maximum extent permitted under the By-Laws of Employer and the
California Corporations Code. If available at reasonable
rates, Employer shall endeavor to apply for and obtain
Directors and Officers Liability Insurance to indemnify and
insure Employer and Employee from and against liability or
loss arising out of Employee's actual or asserted misfeasance
or nonfeasance in the good faith performance of his duties or
out of any actual or asserted wrongful act against, or by
Employer including, but not limited to, judgments, fines,
settlements and expenses incurred in the defense of actions,
proceedings and appeals therefrom. The provisions of this
paragraph shall inure to the benefit of Employee's estate,
executor, administrator, heirs, legatees or devisees.
(f) SEVERABILITY: In the event that any term or condition
contained in this Agreement shall, for any reason, be held by
a court of competent jurisdiction to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other term or condition
of this Agreement, but this Agreement shall be construed as if
such invalid or illegal or unenforceable term or condition had
never been contained herein.
(g) HEADINGS: The headings in this Agreement are solely for the
convenience of reference and shall be given no effect in the
construction or interpretation of this Agreement.
(h) NOTICES: Any notices to be given hereunder by one party to the
other shall be effected in writing either by personal delivery
or by mail, registered or certified, postage prepaid with
return receipt requested. Mailed notices shall be addressed to
the parties at the addresses indicated at the end of this
Agreement, but each party may change his or its address by
notice in accordance with this paragraph. Notices delivered
personally shall be deemed communicated as of actual receipt;
mailed notices shall be deemed communicated as of five (5)
days after mailing.
(i) CALENDAR DAYS--CLOSE OF BUSINESS: Unless the context otherwise
requires, all periods ending on a given day or date or upon
the lapse of a period of days shall end on the close of the
business on that day or date, and references to "days" shall
be understood to refer to calendar days.
(j) ATTORNEYS' FEES AND COSTS: If any action at law or in equity,
or any arbitration proceeding, is brought to enforce or
interpret the terms of this Agreement, the prevailing party
shall be entitled to reasonable attorneys' fees, costs and
necessary disbursements in addition to any other relief to
which he or it may be entitled.
(k) REGULATORY APPROVAL: The parties acknowledge that Employee's
employment with the Bank is subject to review and approval of
governmental regulatory authorities. The parties shall agree
to take all steps necessary to cooperate fully with said
regulators in order to expedite the approval process.
Employee's contract under this Agreement is subject to, and
shall not commence until, said regulatory approvals have been
obtained.
(l) APPROVAL BY BOARD OF DIRECTORS: The parties acknowledge that
Employee's employment with the Bank is subject to the approval
of the Bank's Board of Directors. Employee's contract under
this Agreement is subject to, and shall not commence, until
approval by the Board of Directors.
13. MEDIATION AND ARBITRATION OF DISPUTES: Any disputes regarding the
employment relationship or its termination for whatever reason or
events occurring during the employment relationship shall be
subject to mediation followed by binding arbitration, to the
extent permitted bylaw, pursuant to the Employment Dispute
Resolution rules and regulations of the American Arbitration
Association. This includes any rights or claims the employee may
have under (1) Title VII of the Civil rights Act of 1964 (race,
color, religion, sex and national origin discrimination); (2)
Section 1981 of the Civil Rights Act of 1866 (discrimination); (3)
the Age Discrimination in Employment Act (age discrimination)' (4)
the Equal Pay Act (equal pay); (5) the California Fair Employment
and Housing Act (discrimination, including race, color, national
origin, ancestry, physical handicap, medical condition, marital
status, sex or age); (6) the California Labor Code (wages,
benefits and
other matters); (7) the Fair Labor Standards Act (wage and hour
matters); (9) the Consolidated Omnibus Budget Reconciliation
Act (insurance matters); (10) Executive Order 11246
(affirmative action); (11) the Federal Rehabilitation Act
(handicap discrimination); (12) the Americans with Disabilities
Act (discrimination based on disability); and any other
federal, state or local laws or regulations regarding
employment discrimination.
Any request for arbitration must be made in writing within 365
calendar days of the occurrence-giving rise to the dispute. The
arbitrator shall apply the substantive law (and the law of
remedies, if applicable) in the state in which the claim arose, or
federal law, or both, as applicable to the claim or claims
asserted. It is the parties' intention that the arbitrator's
decision shall not be subject to judicial review except for fraud
or similar misconduct or unless an error appears on the face of
the award, or the award causes substantial injustice. Unless the
arbitrator orders otherwise, each party shall be responsible for
compensating their attorneys and witnesses and bearing any other
costs incurred by them. THE PARTIES ACKNOWLEDGE AND AGREE THEY ARE
WAIVING THIR RIGHT TO A COURT TRIAL OR A JURY TRIAL.
14. EMPLOYEE'S REPRESENTATIONS: Employee represents and warrants that
he is free to enter into this Agreement and to perform each of the
terms and covenants in it. Employee represents and warrants that
he is not restricted or prohibited, contractually or otherwise,
from entering into or performing this Agreement, and that his
execution and performance of this Agreement is not a violation or
a breach of any other agreement between Employee and any other
person or entity.
Executed this 11TH day of May 1998, at Clovis, California.
EMPLOYER: CLOVIS COMMUNITY BANK
BY: /s/ Xxxxx Xxxxxx
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XXXXX XXXXXX
Chairman of the Board
EMPLOYEE: /s/ Xxxxxx X. Xxxxx
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XXXXXX X. XXXXX
