EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered
into as of April 1, 1998 by and between VIATEL, INC., a Delaware corporation
with an office at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (the "Company"),
and XXXXXXX X. XXXXXXX, an individual currently residing at 00 Xxxxxxxx,
Xxxxxxxxx, Xxx Xxxx 00000 (the "Executive").
W I T N E S S E T H:
WHEREAS, the Company desires to provide certain incentive to
Executive to remain in the Company's employ; and
WHEREAS, the Company and the Executive desire that Company
employs the Executive as the Senior Vice President, Business Affairs and General
Counsel.
NOW THEREFORE, each of the Company and Executive, intending to
be legally bound, hereby mutually covenant and agree as follows:
ARTICLE I
DEFINITIONS
The following terms used in this Agreement shall have the
meanings set forth below.
1.1 "Accrued Obligations" shall mean, as of the date of
Termination, the sum of Executive's aggregate accrued but unpaid (A) Base
Salary, (B) Bonus Award, (C) other cash compensation and (D) vacation pay,
expense reimbursements and other cash entitlements, all determined through the
date of Termination.
1.2 "Base Salary" shall mean the amount set forth in Section
3.1 hereof, or if the Executive has received different Base Salaries during the
course of a year, the average of such Base Salaries.
1.3 "Bonus Agreement" shall mean the Bonus Agreement entered
into by the parties in the form attached hereto as Exhibit A.
1.4 "Bonus Award" shall have the meaning specified in the
Bonus Agreement.
1.5 "Cause" shall mean Executive's (i) material violation of
Section 2.3 hereof, which violation has not been cured within 15 days of the
date that written notice thereof is received by Executive from the Board; (ii)
material violation of Section 4.1 or 4.2 hereof; (iii) violation of Section 4.3
hereof; (iv) gross negligence or dishonesty in the performance of his duties
hereunder; PROVIDED, HOWEVER, that the Board undertakes a comprehensive review
and determines that such conduct is materially injurious or
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materially damaging to the Company or its reputation; or (vi) conviction of any
felony or a misdemeanor involving fraud, misrepresentation or dishonesty.
1.6 "Change of Control" is defined to mean such time as (i) a
"person" or "group" (within the meaning of Sections 13(d) and 14(d)(2) of the
Exchange Act), becomes the ultimate "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act) of more than 50% of the total voting power of the then
outstanding Voting Stock of the Company on a fully diluted basis or (ii)
individuals who at the beginning of any period of two consecutive calendar years
constituted the Board (together with any new directors whose election by the
Board or whose nomination for election by the Company's stockholders was
approved by a vote of at least two-thirds of the members of the Board then still
in office who either were members of the Board at the beginning of such period
or whose election or nomination for election was previously so approved) cease
for any reason to constitute a majority of the members of the Board then in
office.
1.7 "Common Stock" shall mean the common stock, par value
$.01 a share, of the Company.
1.8 "Competitive Activities" shall have the meaning set forth
in Section 4.3 hereof.
1.9 "Confidential Material" shall have the meaning set forth
in Section 4.2 hereof.
1.10 "Control" (including, with correlative meanings, the
terms "controlling," "controlled by," and "under common control with"), as used
with respect to any Person, shall mean the possession, directly or indirectly,
of the power to direct or cause the direction of the management or policies of
such Person, whether through ownership of voting securities, by contract or
otherwise.
1.11 "Disability" shall mean Executive's death or inability to
perform his material duties to the Company by reason of a physical or mental
disability which has existed for an aggregate of nine months during any
twelve-month period.
1.12 "Disability Payment" shall mean, for purposes of Section
5.3(d) hereof, an amount equal to 60% of the Base Salary in effect for the
calendar year in which such Disability occurred (or the average Base Salary if
such Disability occurred over more than one calendar year).
1.13 "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
1.14 "Good Reason" shall mean any (i) reduction in Executive's
Base Salary or material diminution in Executive's authority, duty,
responsibility, function or position with the Company (which diminution
continues after 15 days of the date that written notice thereof is given by
Executive), (ii) either the failure by the Company to continue any material
benefit or compensation plan, life insurance plan, health and accident plan,
disability plan (or plan providing Executive with substantially similar
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benefits) in which Executive is participating or the material reduction by the
Company of Executive's benefits under any such plan, (iii) failure by the
Company to obtain an assumption of this Agreement by any successor of the
Company (as contemplated in Section 6.2 hereof) or (iv) Change of Control, if
Executive has provided written notice to the Company within 60 days of such
Change of Control of his intentions to cease employment hereunder.
1.15 "Intellectual Property" shall mean any idea, process,
trademark, service xxxx, trade or business secret, invention, technology,
computer program or hardware, original work of authorship, design, formula,
discovery, patent or copyright, application, record, design, plan or
specification and any improvement, right or claim related to the foregoing.
1.16 "Participation" shall mean the direct or indirect
participation in any Competitive Activity, whether as an operator, manager,
consultant, and whether individually or jointly.
1.17 "Performance Year" shall mean each calendar year
beginning on January 1 and ending on December 31.
1.18 "Person" shall mean any individual or entity, whether a
governmental or other agency or political subdivision thereof or otherwise.
1.19 "Severance Amount" shall mean, for purposes of Section
5.3(b) hereof, an amount equal to (i) the sum of (A) the Base Salary for the
calendar year in the Term in which the date of Termination occurs plus (B) the
prior year's Bonus Award (not to be less than $50,000) multiplied by (ii) the
Severance Period Multiple.
1.20 "Severance Period Multiple" shall mean, the quotient
obtained by dividing (i) the Severance Period by (ii) 12; PROVIDED, HOWEVER,
that the Severance Period Multiple shall not be less than one, except that in
the case of a Change of Control, the Severance Period Multiple shall not be less
than two.
1.21 "Severance Period" shall mean the number of full calendar
months remaining in the Term on the date of any Termination.
1.22 "Term" shall have the meaning set forth in Section 2.2
hereof and shall include any renewal or extension as set forth therein.
1.23 "Termination" shall mean termination of Executive's
employment with the Company for any reason, including (i) for Disability, (ii)
with or without Cause, (iii) resignation by Executive with or without Good
Reason (including a Voluntary Resignation) or (iv) upon the expiration of the
Term.
1.24 "Voting Stock" shall mean with respect to any share,
interest, participation or other equivalent (however designated, whether voting
or non-voting) in equity of the Company, whether now outstanding or issued after
the date hereof, including, without limitation, any Common Stock, any preferred
stock and any class or kind ordinarily having the power to vote for the election
of directors, managers or other voting members of the Board.
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ARTICLE II
EMPLOYMENT AND TERM
2.1 EMPLOYMENT. The Executive shall be employed as the
Senior Vice President, Business Affairs and General Counsel and as Secretary
to the Company, and Executive hereby accepts such employment. In addition,
Executive agrees that he will serve in any similar capacity on behalf of any
existing or future subsidiary of the Company as reasonably requested by the
Board.
2.2 TERM. (a) The Term shall commence on the date
hereof and shall end on the earlier of (i) one week after the second anniversary
hereof and (ii) the date of any Termination.
(b) Subject to Section 5.2 hereof, if four months' advance
written notice terminating this Agreement is not received by either party from
the other party before the second anniversary hereof, then this Agreement shall
be automatically renewed for successive one year-periods.
2.3 DUTIES. The Executive shall serve as General Counsel to
the Company and shall be directly responsible for the Company's legal and
regulatory affairs and shall have all powers, duties and responsibilities
commensurate with his position as set forth in Section 2.1 hereof or as may be
assigned by the Board from time to time; PROVIDED, HOWEVER, that any such
powers, duties and responsibilities assigned by the Board are commensurate with
such position. The Executive shall use his best efforts and devote all of his
business time, attention and energy in performing his duties hereunder.
Notwithstanding the foregoing, nothing in this Agreement shall restrict
Executive from managing his personal investments, personal business affairs and
other personal matters, or serving on civic or charitable boards or committees,
if such activities do not interfere with the performance of his duties hereunder
or conflict with the Company's interests.
ARTICLE III
COMPENSATION AND BENEFITS
3.1 BASE SALARY. For services performed by Executive for the
Company and its subsidiaries hereunder, the Company shall pay Executive an
annual Base Salary of $185,000 in accordance with the Company's regular payroll
practices. The Base Salary shall be increased in the sole and absolute
discretion of the Board.
3.2 BONUSES. Executive shall be eligible to receive an annual
cash bonus in accordance with the Bonus Agreement. Any compensation which may be
otherwise authorized from time to time by the Board (or an appropriate committee
thereof) shall be in addition to the Base Salary and any Bonus Award.
3.3 STOCK OPTIONS. Executive shall be entitled to receive
annual grants of stock options or restricted stock in amounts determined by the
Board (or any committee thereof) in its sole and absolute discretion.
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3.4 OTHER BENEFITS. In addition to the Base Salary and the
Bonus Award, Executive shall also be entitled to the following:
(a) PARTICIPATION IN BENEFIT PLANS. Executive shall be
entitled to participate in and receive benefits under all present and future
life, accident, disability, medical, pension, and savings plan and all similar
benefits made available to senior executive officers of the Company. Executive
shall also be entitled to participate in all other welfare and benefit plans
maintained by the Company and/or its subsidiaries, as the case may be, for their
respective employees generally.
(b) VACATION. Executive shall be entitled to vacation
and paid holidays consistent with the Company's practices as adopted from time
to time; PROVIDED, HOWEVER, that such vacation shall not be less than 20 days
each year.
(c) EXPENSES. The Company shall reimburse Executive for
reasonable travel, out of pocket business expenses incurred by Executive in the
performance of his duties hereunder, provided appropriate documentation
supporting such expenses is submitted in accordance with the Company's governing
policies.
ARTICLE IV
COVENANTS
4.1 NON-INTERFERENCE. During the Term and a period of two
years thereafter, Executive agrees not to solicit or encourage any employee of
the Company who is employed in an executive, managerial, administrative or
professional capacity or who possesses Confidential Material to leave the
employment of the Company.
4.2 NONDISCLOSURE OF CONFIDENTIAL MATERIAL. (a) In the
performance of his duties hereunder, Executive shall have access to confidential
records and information, including, but not limited to, information relating to
(i) any Intellectual Property or (ii) the Company's business practices,
finances, developments, customers, affairs, marketing or purchasing strategy or
other secret information (collectively, clauses (i) and (ii) of this Section
4.2(a) are referred to as the "Confidential Material").
(b) All Confidential Material shall be disclosed to
Executive in confidence. Except in performing his duties hereunder, Executive
shall not, during the Term and at all times thereafter, disclose or use any
Confidential Material.
(c) All records, files, drawings, documents, equipment
and other tangible items containing Confidential Material shall be the Company's
exclusive property, and, upon termination of this Agreement, or whenever
requested by the Company, Executive shall promptly deliver to the Company all of
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the Confidential Material (and copies thereof) that may be in Executive's
possession or control. The Company hereby represents and warrants that it shall
give custody of such Confidential Material to an escrow agent, with terms
acceptable to both the Company and the Executive, for a three-year period at an
annual cost not to exceed $500.
(d) The foregoing restrictions shall not apply if (i)
such Confidential Material has been publicly disclosed (not due to a breach by
Executive of his obligations hereunder or by breach of any other person of a
fiduciary or confidential obligation to the Company) or (ii) Executive is
required to disclose Confidential Material by or to any court of competent
jurisdiction or any governmental or quasi-governmental agency, authority or
instrumentality of competent jurisdiction; PROVIDED, HOWEVER, that Executive
shall, prior to any such disclosure, immediately notify the Company of such
requirement; PROVIDED, FURTHER, that the Company shall have the right, at its
expense, to object to such disclosures and to seek confidential treatment of any
Confidential Material to be so disclosed on such terms as it shall determine.
4.3 NON-COMPETITION. (a) The Executive shall not, during the
Term, Control any Person which is engaged, directly or indirectly, or
Participate in any business that is competitive with the Company's business of
developing, operating or expanding facilities-based telecommunications
services within any country in any European Union member state or Switzerland or
any other country in Europe in which the Company is physically present at the
time of the Termination (including the solicitation of any customer of the
Company on behalf of any Competitor or any other business, directly, indirectly
on behalf of himself or any other Person) (collectively, "Competitive
Activities"); PROVIDED, HOWEVER, that nothing in this Agreement shall preclude
Executive from owning less than 5% of any class of publicly traded equity of any
Person engaged in any Competitive Activity. Notwithstanding the immediately
preceding sentence, if the Company has ceased to so provide such services within
any such country at the time of Executive's Termination (or any time
thereafter), the covenant set forth in the immediately preceding sentence shall
no longer be applicable to any such business in such country.
(b) Upon Termination for Disability or Cause or without
Good Reason the Executive shall not, for himself or any third party, directly or
indirectly, for a period of one year following the date of such Termination
engage in Competitive Activities.
(c) Upon Termination either without Cause or for Good
Reason the Executive shall not, for himself or any third party, directly or
indirectly, engage in Competitive Activities for a period equal to the greater
of (i) the Severance Period and (ii) one year following the date of Termination.
4.4 EXECUTIVE INVENTIONS AND IDEAS.
(a) Executive hereby agrees to assign to the Company,
without further consideration, his entire right, title and interest (within the
United States and all
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foreign jurisdictions), to any Intellectual Property created, conceived,
developed or reduced to practice by Executive (alone or with others), free and
clear of any lien or encumbrance. If any Intellectual Property shall be deemed
patentable or otherwise registrable, Executive shall assist the Company (at its
expense) in obtaining letters patent or other applicable registration therein
and shall execute all documents and do all things (including testifying at the
Company's expense) necessary or appropriate to obtain letters patent or other
applicable registration therein and to vest in the Company, or any affiliate
specified by the Board.
(b) Should Company be unable to secure Executive's
signature on any document necessary to apply for, prosecute, obtain or enforce
any patent, copyright or other right or protection relating to any Intellectual
Property, whether due to Executive's Disability or other cause, Executive hereby
irrevocably designates and appoints the Company and each of its duly authorized
officers and agents as Executive's agent and attorney-in-fact to act for and on
Executive's behalf and stead and to execute and file any such document and to do
all other lawfully permitted acts to further the prosecution, issuance and other
enforcement of patents, copyrights or other rights or protections with the same
effect as if executed and delivered by Executive.
4.5 ENFORCEMENT.
(a) Executive acknowledges that violation of any
covenant or agreement set forth in this Article IV would cause the Company
irreparable damage for which the Company cannot be reasonably compensated in
damages in an action at law, and, therefore, upon any breach by Executive of
this Article IV, the Company shall be entitled to make application to a court of
competent jurisdiction for equitable relief by way of injunction or otherwise
(without being required to post a bond). This provision shall not, however, be
construed as a waiver of any of the rights which the Company may have for
damages, and all of the Company's rights and remedies shall be unrestricted.
(b) If any provision of this Agreement, or application
thereof to any person, place or circumstance, shall be held by a court of
competent jurisdiction or be found in an arbitration proceeding to be invalid,
unenforceable or void, the remainder of this Agreement and such provisions as
applied to any other person, place and circumstance shall remain in full force
and effect. It is the intention of the parties hereto that the covenants
contained herein shall be enforced to the maximum extent (but no greater extent)
in time, area, and degree of participation as is permitted by the law of the
jurisdiction whose law is found to be applicable to the acts allegedly in breach
of this Agreement, and the parties hereby agree that the court making any such
determination shall have the power to so reform the Agreement.
(c) The Executive understands that the provisions of this
Article IV may limit his ability to earn a livelihood in a business similar to
the business of the Company but nevertheless agrees and hereby acknowledges that
(i) such provisions do not impose a greater restraint than is necessary to
protect the goodwill or other
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business interests of the Company; (ii) such provisions contain reasonable
limitations as to time and the scope of activity to be restrained; and (iii) the
consideration provided under this Agreement, including, without limitation, any
amounts or benefits provided under Article V hereof, is sufficient to compensate
Executive for the restrictions contained in this Article IV. In consideration of
the foregoing and in light of Executive's education, skills and abilities,
Executive agrees that he will not assert, and it should not be considered, that
any provisions of this Article IV prevented him from earning a living or
otherwise are void, voidable or unenforceable or should be voided or held
unenforceable.
(d) Each of the covenants of this Article IV is given by
Executive as part of the consideration for this Agreement and as an inducement
to the Company to enter into this Agreement and accept the obligations
hereunder.
ARTICLE V
TERMINATION
5.1 TERMINATION OF AGREEMENT. Except for those provisions of
this Agreement that survive Termination, this Agreement shall terminate upon any
Termination.
5.2 PROCEDURES APPLICABLE TO TERMINATION.
(a) TERMINATION FOR CAUSE. The Executive may be
terminated for Cause, upon at least 30 days' prior written notice from the Board
to Executive for termination for Cause provided that Executive, with his
counsel, shall have had the opportunity during such period to be heard at a
meeting of the Board concerning such determination.
(b) RESIGNATION FOR GOOD REASON. The Executive may
terminate his employment for Good Reason upon at least 30 days' prior written
notice from Executive to the Board of his intent to resign for Good Reason
provided that Executive, with his counsel, shall have met with the Board, if
requested by the Board, during such period with respect to his intent to resign.
(c) TERMINATION WITHOUT CAUSE OR FOR DISABILITY. The
Executive may be terminated without Cause or for Disability, upon at least 30
days' prior written notice from the Board to Executive, by a vote of the Board,
provided that Executive, with his counsel, shall have had the opportunity during
such period to be heard at a meeting of the Board with respect to such
determination.
(d) NO EFFECT ON RIGHTs. The Executive's right or
obligation to be heard in connection with a Termination shall not otherwise
effect the rights and obligations of the Executive and the Company hereunder.
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5.3 OBLIGATIONS OF THE COMPANY UPON TERMINATION.
(a) ACCRUED OBLIGATIONS AND OTHER BENEFITS. Upon any
Termination, the Company shall pay to Executive, or, upon Executive's
Disability, to his heirs, estate or legal representatives, as the case may be,
the following:
(i) all Accrued Obligations in a lump sum
within 10 days after the date of Termination; and
(ii) all benefits accrued by Executive as of the date
of Termination under all qualified and nonqualified retirement, pension, profit
sharing and similar plans of the Company to such extent, in such manner and at
such time as are provided under the terms of such plans and arrangements.
(b) TERMINATION WITHOUT CAUSE OR RESIGNATION FOR GOOD
REASON. If the Board terminates Executive's employment without Cause (excluding
Termination because of Disability), or if Executive resigns for Good Reason, in
addition to the amounts payable under Section 5.3(a) hereof:
(i) The Company shall pay Executive the Severance
Amount in a lump sum within 10 days after the date of Termination; and
(ii) The Company shall continue all benefits coverage
of Executive and any dependents then provided under its benefit plans or
policies for the unexpired portion of the Term.
(c) TERMINATION FOR CAUSE OR RESIGNATION WITHOUT GOOD
REASON. If the Board terminates Executive's employment for Cause, or if
Executive resigns without Good Reason, Executive shall only be entitled to the
amounts payable under Section 5.3(a) hereof:
(d) TERMINATION FOR DISABILITY. Upon Termination of
Executive because of a Disability, in addition to the amounts payable under
Section 5.3(a) hereof, the Company shall pay the aggregate Disability Payment
for three years in accordance with the Company's regular payroll practices then
in existence.
(e) EXCLUSIVITY. Any amount payable to Executive pursuant
to this Article V shall be Executive's sole remedy upon a Termination, and
Executive waives any and all rights to pursue any other remedy at law or in
equity; PROVIDED, HOWEVER, that Executive does not hereby waive any right
provided under any federal, state or local law or regulation relating to
employment discrimination.
ARTICLE VI
MISCELLANEOUS
6.1 EXECUTIVE ACKNOWLEDGMENT. The Executive acknowledges that
he has consulted with or has had the opportunity to consult with independent
counsel of his own choice concerning this Agreement and has been advised to do
so by the Company, and that he has read and understands the Agreement, is fully
aware of its legal effect, and has entered into it freely based on his own
judgment.
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6.2 BINDING EFFECT. This Agreement shall be binding upon and
inure to the benefit of Executive's heirs and representatives and the Company's
successors and assigns. The Company shall require any successor (whether direct
or indirect, by purchase, merger, reorganization, consolidation, acquisition of
assets or stock, liquidation, or otherwise), by agreement in form and substance
reasonably satisfactory to Executive, to assume performance of this Agreement in
the same manner that the Company would have been required to perform this
Agreement if no such succession had taken place. Regardless of whether such
agreement is executed, this Agreement shall be binding upon any successor of the
Company in accordance with the operation of law.
6.3 NOTICES. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if delivered by hand or mailed within the continental United States
by first class certified mail, return receipt requested, postage prepaid,
addressed as follows:
(a) if to the Board or the Company, to:
Viatel, Inc.
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: President
(b) if to Executive, to:
00 Xxxxxxxx
Xxxxxxxxx, Xxx Xxxx, 00000
Any such address may be changed by written notice sent to the other party at the
last recorded address of that party.
6.4 TAX WITHHOLDING. The Company shall provide for the
withholding of any taxes required to be withheld under federal, state and local
law (other than the employer's portion of such taxes) with respect to any
payment in cash and/or other property made by or on behalf of the Company to or
for the benefit of Executive under this Agreement or otherwise. The Company may,
at its option: (i) withhold such taxes from any cash payments owing from the
Company to Executive, (ii) require Executive to pay to the Company in cash such
amount as may be required to satisfy such withholding obligations and/or (iii)
make other satisfactory arrangements with Executive to satisfy such withholding
obligations.
6.5 No ASSIGNMENT; NO THIRD PARTY BENEFICIARIES. Except as
otherwise expressly provided in Section 6.2 hereof, this Agreement is not
assignable by any party, and no payment to be made hereunder shall be subject to
alienation, sale, transfer, assignment, pledge, encumbrance or other charge.
Except for the Company and its existing and future subsidiaries, no Person shall
be, or deemed to be, a third party beneficiary of this Agreement.
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6.6 EXECUTION IN COUNTERPARTS. This Agreement may be executed
by the parties hereto in one or more counterparts, each of which shall be deemed
to be an original, but all such counterparts shall constitute one and the same
instrument, and all signatures need not appear on any one counterpart.
6.7 JURISDICTION AND GOVERNING LAW. Jurisdiction over disputes
with regard to this Agreement shall be exclusively in the courts of the State of
New York, and this Agreement shall be construed and interpreted in accordance
with and governed by the laws of the State of New York as applied to contracts
capable of being wholly performed in such State.
6.8 ENTIRE AGREEMENT; AMENDMENT. Except as otherwise provided
in Section 3.3 hereof, this Agreement and the Exhibits attached hereto embody
the entire understanding of the parties hereto, and supersede all prior
agreements regarding the subject matter hereof. No change, alteration or
modification hereof may be made except in a writing, signed by both of the
parties hereto.
6.9 HEADINGS. The headings in this Agreement are for
convenience of reference only and shall not be construed as part of this
Agreement or to limit or otherwise affect the meaning hereof.
6.10 SURVIVAL. Notwithstanding anything to the contrary
herein, Article IV, Section 5.3 and Article VI of this Agreement shall
survive termination of this Agreement or Termination for any reason whatsoever.
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement as of the day first written above.
VIATEL, INC.
/s/ Xxxxxxx X. Xxxxxxx
By:_____________________________
EXECUTIVE
/s/ Xxxxxxx X. Xxxxxxx
_____________________________
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