EMPLOYMENT AGREEMENT
Exhibit 10.1
THIS EMPLOYMENT AGREEMENT (“Agreement”) is made and entered into as of the 26th day of February, 2013 by and between XXXXXX X. XXXX (hereinafter “Employee”), whose address is 0000 X. Xxxxxxx Xxxxx, Xxx Xxxxx, Xxxxxx 00000, and ALLEGIANT TRAVEL COMPANY, a Nevada corporation (hereinafter “the Company”), whose address is 0000 X. Xxxxxxx Xxxxx, Xxx Xxxxx, Xxxxxx 00000.
W I T N E S S E T H
WHEREAS, the Company desires to employ Employee as its president and Employee desires to be so employed pursuant to and in accordance with the terms and conditions hereinafter set forth; and
NOW, THEREFORE, for and in consideration of the above premises, the terms and covenants herein contained, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by Employee and the Company, it is hereby agreed as follows:
1. Employment. The Company hereby employs Employee and Employee hereby accepts employment by the Company upon all of the terms and conditions as are hereinafter set forth. This Agreement supersedes and terminates that certain Employment Agreement dated October 16, 2009, between the parties hereto. Terms of employment with the Company are also governed by the Company’s employment policies in effect from time to time. The Company shall provide a copy of such employment policies to Employee upon request. In the event of any conflict between the terms of this Agreement and the generally applicable employment policies, the terms of this Agreement shall prevail.
A. Employee shall be employed by the Company as the president of the Company and its operating subsidiaries. Employee shall report to the Company’s Chief Executive Officer (“CEO”) and the Board of Directors of the Company (the “Board”). Employee’s duties shall include those indicated above and such other duties assigned to him by the CEO or the Board from time to time.
Employee’s services are mutually agreed to be unique personal services. Employee acknowledges that the Company is relying upon Employee’s experience, expertise and other qualifications in entering into this Agreement. Employee shall not assign or delegate any right, obligation or duty hereunder to any other person or entity without the express written consent of the Company.
B. During Employee’s period of service hereunder, Employee agrees to perform such services not inconsistent with Employee’s position as shall from time to time be assigned to Employee by the Company’s CEO or Board. During the term of this Agreement, except for disability, illness and vacation periods, Employee shall devote Employee’s full productive time, attention and energies to the position of president of the Company and its operating subsidiaries.
C. Employee’s expenditure of reasonable amounts of time in connection with outside activities, not competitive with the business of the Company, such as outside directorships or charitable activities, shall not be considered in contravention of this Agreement so long as such activities do not interfere with his performance of this Agreement. Further, it is understood and agreed by the parties hereto that Employee is entitled to engage in passive and personal investment activities not interfering with his performance of this Agreement.
A. Take part in activities detrimental to the best interests of the Company, including rendering any services to any other firm or entity which conflict or interfere with the performance of Employee’s duties hereunder.
B. Exceed any limitations on his authority that may be established by the Board.
C. Enter into any contract, oral or written, in the name of, for or on behalf of the Company other than in the ordinary course of business.
D. Use any money belonging to the Company or pledge its credit other than in the ordinary course of business.
E. Commit or suffer to be committed any act whereby the Company’s property may be subject to attachment or seizure.
F. Cause the Company to become a guarantor, surety or endorser or give any note for the benefit of any other person whomsoever.
Upon a breach of any provision under this Item 3, the Company shall have the right to terminate this Agreement for cause as set forth in Item 6E hereof and to pursue any other remedies available to the Company as a result of such breach.
Employee shall indemnify and hold the Company harmless from and against any and all damages, actions, causes of action, claims and other liabilities, contingent or otherwise, directed toward the Company by others as a result of Employee’s violation of any of the provisions of this Item 3.
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A. This Agreement shall be terminated upon Employee’s death or upon a physician certified disability which permanently or indefinitely renders Employee unable to perform his usual duties on behalf of the Company.
B. Employee may, without “Good Reason” (as defined in paragraph D below), terminate this Agreement by giving to the Company sixty (60) days written notice and such termination shall be effective on the date specified by Employee but in no event earlier than the sixtieth (60th) day following the date of such notice. In such event, Employee shall continue to render his services up to the Termination Date (as hereinafter defined) if so requested by the Company. For all purposes of this Agreement, it shall be deemed that Employee terminated this Agreement without cause if this Agreement expires at the end of the initial or any extended term of this Agreement as a result of a notice from Employee not to extend the term of this Agreement.
C. The Company may, without “Cause” (as defined in paragraph E below), terminate this Agreement at any time by giving to Employee written notice and such termination shall be effective on the date specified by the Company. At the option of the Company, Employee shall immediately cease performing his duties hereunder upon receipt of the notice. For all purposes of this Agreement, it shall be deemed that the Company terminated this Agreement without cause if this Agreement expires at the end of the initial or any extended term of this Agreement as a result of a notice from the Company not to extend the term of this Agreement. If terminated without Cause pursuant to this paragraph C, the Company shall pay to Employee severance pay in an amount equal to Six Hundred Fifty Thousand Dollars ($650,000) to be paid by the Company in a lump sum within one month of the date of termination of employment: provided, however, that as a condition to receipt of such severance pay, Employee shall execute and deliver to the Company a separation agreement (releasing the Company from any further liability to Employee except to the extent of accrued obligations set forth in the agreement and acknowledging the validity of the noncompete provisions of this Agreement) in a reasonably customary form. In addition, Employee shall be entitled to continue to participate in the Company’s fringe benefits for twenty-four (24) months following Employee’s termination and notwithstanding anything in any equity grant agreement to the contrary, all outstanding stock options, restricted stock grants and stock appreciation rights held by Employee at the time shall become immediately vested.
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D. Employee may terminate this Agreement immediately for “Good Reason”. For purposes of this Agreement, Good Reason shall be defined as (i) failure of the Company to make any payment or provide any benefit to Employee hereunder, which failure is not cured within thirty (30) days after the Company’s receipt of written notice of such default, or (ii) a material diminution of Employee’s duties and responsibilities or his title without Employee’s consent; (iii) the imposition of a requirement on Employee to report to a new CEO or to another officer unless approved by Employee, or (iv) the principal location at which Employee is to perform his duties is relocated to a place more than fifty (50) miles from Las Vegas, Nevada. Any termination under this paragraph D shall take effect immediately upon the Company’s receipt of written notice from Employee after the expiration of any applicable cure period. If Employee terminates this Agreement for “Good Reason” pursuant to this paragraph D, the Company shall pay to Employee severance pay in an amount equal to Six Hundred Fifty Thousand Dollars ($650,000) to be paid by the Company in a lump sum within one month of the date of termination of employment: provided, however, that as a condition to receipt of such severance pay, Employee shall execute and deliver to the Company a separation agreement (releasing the Company from any further liability to Employee except to the extent of accrued obligations set forth in the agreement and acknowledging the validity of the noncompete provisions of this Agreement) in a reasonably customary form. In addition, Employee shall be entitled to continue to participate in the Company’s fringe benefits for twenty-four (24) months following Employee’s termination and notwithstanding anything in any equity grant agreement to the contrary, all outstanding stock options, restricted stock grants and stock appreciation rights held by Employee at the time shall become immediately vested.
E. The Company may terminate this Agreement immediately for “Cause”. For purposes of this Agreement, “Cause” shall be defined as any of the following: (i) Employee shall commit a felony or other act involving moral turpitude, which other act is materially detrimental to the Company; (ii) Employee shall knowingly commit any act of prohibited conduct as set forth in Item 3 of this Agreement; (iii) Employee shall commit any act, specifically including but not limited to drug or alcohol abuse, which act is materially harmful to the Company, or which in the reasonable opinion of the Company’s Board brings the Company into disrepute; (iv) Employee shall commit any act of fraud, dishonesty, theft or misappropriation, whether or not related to his activities on behalf of the Company, including providing false reports or accounts to the Company or deliberately making false statements about the Company, its services, employees, customers or suppliers; (v) intentional or repeated material neglect of Employee’s duties; (vi) breach by Employee of any other material provision of this Agreement; (vii) Employee shall become the subject of a bankruptcy proceeding or otherwise make an arrangement or composition with creditors generally; (viii) Employee shall engage in anti-social behavior (such as fighting, indecency, harassment, sexual or racial harassment or discrimination, intimidation of others, physical violence or assault) during the course of performing duties for the Company or against another employee outside of work; (ix) Employee shall have possession of illegal drugs at the Company’s workplace; or (x) Employee shall perform duties in a negligent or dangerous manner which causes or is likely to cause material loss or injury. This Agreement may not be terminated by the Company under subclause (v), (vi) or (x) of this Item unless and until the Company has provided Employee with written notice of such violative conduct and Employee has failed to cure (or fails to commence and thereafter diligently pursue the cure) such act within thirty (30) days after Employee’s receipt of such written notice; provided, however, that no right to cure shall be available for a second or subsequent violation of the same provision within any twelve (12) month period. Any termination under this paragraph E shall take effect immediately upon Employee’s receipt of written notice from the Company or expiration of any applicable cure period, whichever is later. The failure of the Company to terminate this Agreement for cause as a result of any of the foregoing at any one or more times shall not affect the Company’s ability to terminate this Agreement for cause as a result of the subsequent occurrence of any act giving rise to “cause” hereunder, provided that Employee is still provided with a notice to cure if applicable in accordance with the above.
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F. Upon termination, Employee shall have no obligation to provide any additional services, and except as expressly provided above, the Company shall only be obligated pay to Employee the portion of any amounts due as of the termination date, together with all unreimbursed out-of-pocket expenses incurred by Employee.
A. For purposes of this Item, the following terms and provisions shall have the following meanings:
(i) “Prohibited Time Period” shall mean the period beginning on the date of execution hereof and ending on the date that is the earlier of: (i) two (2) years after the termination of employment for any reason whatsoever of Employee; or (ii) February 26, 2018.
(ii) “Prohibited Business” shall mean the business of providing charter or scheduled airline service. The Prohibited Business shall include, but is not limited to, employment with an existing airline or with a group which within two (2) years prior to the termination of Employee’s employment or after the termination of employment, begins to take steps to form a start-up airline.
(iii) “Prohibited Geographic Area” shall mean the conduct of the Prohibited Business within the United States or to the United States from Mexico, whether he is physically located in the Prohibited Geographic Area or whether he is in contact with others located in the Prohibited Geographic Area. Employee acknowledges that he and the Company have agreed that Employee’s services will benefit the Company throughout the Prohibited Geographic Area.
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(iv) “Prohibited Capacity” shall mean service in the capacity of an executive or board member or in such other management position or as a significant equity owner, in all of which capacities Employee acknowledges that he has served and will serve the Company and its subsidiaries during the course of his employment for the Company.
(v) “Prohibited Party” shall mean all travel partners of the Company who (a) have contracted for regular chartered air service with the Company during the one (1) year period prior to the date of termination of employment, or (b) have been solicited as potential travel partners of the Company at a meeting held at any time during the one (1) year period prior to the date of termination of employment of Employee.
(vi) “Prohibited Employee” means any employee of the Company who worked for the Company at any time within six (6) months prior to the termination of employment of Employee; provided, however, that the term “Prohibited Employee” shall not include any employee who had not been employed by the Company within the six (6) month period immediately preceding the date contacted by Employee for subsequent employment.
(vii) An “Exempt Airline” shall mean any airline with prior year revenues in excess of $5 billion.
B. Employee agrees that during the Prohibited Time Period, he shall not, for any reason, without the prior written consent of the Company, on his own behalf or in the service or on behalf of others, serve in a Prohibited Capacity in the Prohibited Business in the Prohibited Geographic Area; provided, however, that this restriction shall not preclude Employee from working (in any capacity) for an Exempt Airline.
C. Employee covenants and agrees that during the Prohibited Time Period, he shall not, for any reason, directly or indirectly (whether as officer, director, consultant, employee, representative, agent, partner, owner, stockholder or otherwise), (i) solicit charter air services from, or market charter air services to, any Prohibited Party, or (ii) enter into a transaction with such Prohibited Party as a result of which the Prohibited Party does, or is likely to, reduce the amount of business between the Prohibited Party and the Company.
D. Employee agrees that during the Prohibited Time Period, he shall not, for any reason, without the prior written consent of the Company, on his own behalf or in the service or on behalf of others, hire any Prohibited Employee or request or induce any Prohibited Employee to terminate that person’s employment or relationship with the Company or to accept employment with any other person.
E. The parties agree that: (i) the covenants and agreements of Employee contained in this Item are reasonably necessary to protect the interests of the Company in whose favor said covenants and agreements are imposed in light of the nature of the Company’s business and the professional involvement of Employee in such business; (ii) the restrictions imposed by this Item are not greater than are necessary for the protection of the Company in light of the substantial harm that the Company will suffer should Employee breach any of the provisions of said covenants or agreements; (iii) the covenants and agreements of Employee contained in this Item have been independently negotiated between the parties and served as a material inducement for the Company to enter into this Agreement; (iv) the period and geographical area of restriction referred to in this Item are fair and reasonably required for the protection of the Company; and (v) the nature, kind and character of the activities Employee is prohibited to engage in are reasonable and necessary to protect the Company in that the Company will rely on Employee for those important aspects of its business.
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F. Employee acknowledges that a material breach by Employee of any part of this Item will result in irreparable and continuing damage to the Company and any material breach or threatened breach of the covenants provided in this Item shall be subject to specific performance by temporary as well as permanent injunction or any other equitable remedies of any court of competent jurisdiction without any requirement of the Company to post bond or prove actual economic damage.
G. The covenants and agreements on the part of Employee contained in this Item shall be construed as agreements independent of any other agreement between Employee and the Company. The existence of any claim or cause of action of Employee against the Company, whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement by the Company of each of such covenants and agreements or otherwise affect the remedies to which the Company is entitled hereunder.
H. If the provisions of this Item 7 should ever be adjudicated to exceed the time, geographic or other limitations permitted by applicable law in any jurisdiction, then such provisions shall be deemed reformed in such jurisdiction to the maximum time, geographic or other limitation permitted by applicable law.
I. Nothing contained in this Item shall restrict Employee from being a not more than 1% stockholder (but not an officer, director, employee, consultant or advisor) of any corporation that directly or indirectly competes with the Company provided the stock of such competing corporation is publicly held and listed on a national stock exchange.
A. During the period beginning on the execution date of this Agreement and ending on the third (3rd) anniversary of any termination or expiration of this Agreement, Employee agrees that he shall not, except in pursuit of the Company’s business or with the prior written consent of the Company, for his own benefit or for the benefit of any other person or entity:
(i) directly or indirectly disclose, reveal, report, duplicate or transfer any Confidential Information to any other person or entity outside of the Company;
(ii) directly or indirectly aid, encourage, direct or allow any other person or entity outside of the Company to gain possession of or access to Confidential Information;
(iii) directly or indirectly copy or reproduce Confidential Information, except as required as part of Employee’s duties; or
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(iv) directly or indirectly use, sell or exploit any Confidential Information or aid, encourage, direct or allow any other person or entity to use, sell or exploit any Confidential Information.
This covenant shall not apply to any Confidential Information now or hereafter voluntarily disseminated by the Company to the public, or which otherwise has become part of the public domain through means other than a breach of Employee’s duty of confidentiality hereunder. “Confidential Information”, for purposes of this Agreement, shall mean information of the Company that constitutes a trade secret or confidential information under Nevada law and shall include, but not be limited to, all relevant information (whether or not reduced to writing and in any and all stages of development), concerning the Company and its services, plans, business practices, methods of operation, financial information, names or lists of names of employees, contractors, suppliers and customers, employee compensation and benefits, other personal employee information, interpretations, surveys, forecasts, marketing plans, development plans, notes, reports, market analyses, specialized software and databases and other information related to suppliers and customers that could be used as a competitive advantage by competitors if revealed or disclosed to such competitors or to persons or entities revealing or disclosing same to such competitors; together with any and all extracts, summaries and photo, electronic or other copies or reproductions, in whole or in part, stored in whatever medium. Employee acknowledges that the Confidential Information is secret, confidential and proprietary to the Company and has been or will be disclosed to and/or obtained by Employee in confidence and trust for the sole purpose of using the same for the sole benefit of the Company.
B. Employee hereby acknowledges and agrees that (i) the Company has expended considerable and substantial time, effort and capital resources to develop the Confidential Information, (ii) the Confidential Information is innovative and must receive confidential treatment to protect the Company's competitive position in the market and the Company's proprietary interest therein from irreparable damage, (iii) Employee, by virtue of his relationship with the Company, has had and will have access to the Confidential Information, and (iv) the Confidential Information and all physical embodiments or other repositories of the same shall be and at all times remain the sole and exclusive property of the Company.
C. Since irreparable harm will otherwise result to the Company in the event of a breach or threatened breach by Employee of the provisions of Item 8A, the Company shall be entitled to an injunction restraining Employee from disclosing, in whole or in part, any Confidential Information, or from rendering any services to any person, firm, company, association or other entity to whom such Confidential Information, in whole or in part, has been disclosed or is threatened to be disclosed. Employee waives any requirement for the Company to post a bond or prove actual economic damage prior to seeking injunctive relief.
A. Employee acknowledges that all recorded information, including without limitation all notes, memoranda, records, laboratory reports, documents, papers, computer disks, tapes or other storage media and all other papers and documents whatsoever which may have been prepared by Employee or have come into Employee’s possession or control in the course of employment with the Company (the “Documents”) and other materials owned or used by the Company shall at all times remain the sole property of the Company.
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B. Employee agrees to promptly, upon request of the Company and in any event upon the termination of Employee’s employment with the Company for any reason whatsoever, forthwith return to the Company all property whatsoever belonging to the Company including, without limitation, any laptop computer belonging to the Company, security passes, credit cards and all copies of the Documents which have come into Employee’s possession or control in the course of employment with the Company and Employee shall not be entitled to and shall not retain any copies thereof.
A. Employee agrees that he will provide in connection with the performance of all services under this Agreement the skill and diligence normally provided by competent professionals in the performance of services similar to that contemplated by this Agreement.
B. Both parties acknowledge and agree that a fiduciary and confidential relationship has commenced and will continue to exist between them and that said relationship will continue during the term of this Agreement.
C. Employee represents that he has no conflicts of interest in rendering his professional services to the Company.
D. Employee shall not during the course of his employment (except as a representative or nominee of the Company or otherwise with the prior consent in writing of the Board) be directly or indirectly engaged, concerned or interested in any other business which: (i) is wholly or partly in competition with any business carried on by the Company by itself or in partnership, common ownership or as a joint venture with any third party; or (ii) is a supplier to or customer of the Company, provided that Employee may own not more than one percent (1%) of the issued shares of any company which is publicly held and listed on a national stock exchange or on the Nasdaq Stock Market.
E. Subject to any regulations from time to time issued by the Company, Employee shall not receive or obtain directly or indirectly any discount, rebate, commission or other inducement in respect of any sale or purchase of any goods or services effected or other business transacted (whether or not by Employee) by or on behalf of the Company and if Employee (or any firm or company in which Employee is directly or indirectly engaged, concerned or interested) shall obtain any such discount, rebate, commission or inducement, Employee shall account to the Company for the amount received by Employee or the amount received by such firm or company.
F. As an inducement to the Company to enter into this Agreement, Employee represents and warrants that: (i) he is not a party to any other agreement or obligation for personal services; (ii) there exist no impediments or restraints, contractual or otherwise, on Employee’s power, right or ability to enter into this Agreement and to perform his duties and obligations hereunder; (iii) the performance of his obligations under this Agreement do not and will not violate or conflict with any agreement relating to confidentiality, non-competition or exclusive employment to which Employee is or was subject; and (iv) Employee has not been involved in any legal proceedings that would be required to be disclosed in response to Item 401(f) of Regulation S-K promulgated under the Securities Act of 1933, as amended. As an inducement to Employee to enter into this Agreement, the Company represents and warrants that there exist no impediments or restraints, contractual or otherwise, on the Company’s power, right or ability to enter into this Agreement and to perform its duties and obligations hereunder.
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A. The Company reserves the right to stop and search any employee or property of any employee when entering or leaving the Company’s premises.
B. The Company reserves the right to monitor at any time telephone calls, electronic communications and information transmitted on Company networks or on computer equipment which is owned by the Company or on computers on Company premises that are used for Company business.
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17. Jurisdiction. Each of the undersigned further agrees that any action or proceeding brought or initiated in respect of this Agreement may be brought or initiated in the United States District Court for the State of Nevada or in any District Court located in Xxxxx County, Nevada, and each of the undersigned consents to the exercise of personal jurisdiction and the placement of venue in any of such courts, or in any jurisdiction allowed by law, in any such action or proceeding and further consents that service of process may be effected in any such action or proceeding in the manner provided in Section 14.065 of the Nevada Revised Statutes or in such other manner as may be permitted by law. Each of the undersigned further agrees that no such action shall be brought against any party hereunder except in one of the courts above named.
19. Miscellaneous. This Agreement shall be construed under and governed by the laws of the State of Nevada other than its conflicts of laws principles. This Agreement contains the complete understanding of the parties with respect to the subject matter of this Agreement and supersedes and terminates that certain Employment Agreement dated as of October 16, 2009, between the parties and all other prior agreements, understandings and negotiations relating to the same subject matter. This Agreement may only be modified by a written instrument signed by each of the parties hereto. No provisions of this Agreement will be interpreted in favor of, or against, any of the parties hereto by reason of the extent to which any such party or its counsel participated in the drafting thereof or by reason of the extent to which any such provision is inconsistent with any prior draft hereof or thereof. Failure to require strict compliance with any term or provision of this Agreement shall not constitute a waiver of a party’s right to insist upon strict compliance with each and every provision of this Agreement. No waiver of any terms and conditions of this Agreement shall be deemed to be a waiver of any subsequent breach of that or any other term of condition. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and same instrument. The provisions of Item 3 (the last paragraph), 4I, 6H, 7, 8, 9 and 12 through 19 shall survive the termination of this Agreement and Employee’s employment with the Company. This Agreement may be executed by any party by delivery of a facsimile signature, which signature shall have the same force as an original signature. Any party which delivers a facsimile signature shall promptly thereafter deliver an originally executed signature to the other party; provided, however, that the failure to deliver an original signature page shall not affect the validity of any signature delivered by facsimile. The paragraph headings contained in this Agreement are for reference only and shall not be deemed to impart substantive meeting to any provision of this Agreement. Each party has had the opportunity to be represented by counsel of its choice in negotiating this Agreement. This Agreement shall therefore be deemed to have been negotiated and prepared at the joint request and direction of the parties, at arm’s length, with the advice and participation of counsel, and shall be interpreted in accordance with its terms and without favor to any party.
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IN WITNESS WHEREOF, this Agreement has been signed, sealed and delivered as of the date and year first above written.
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EMPLOYEE:
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| /s/ Xxxxxx X. Xxxx | ||
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XXXXXX X. XXXX
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COMPANY:
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ALLEGIANT TRAVEL COMPANY
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By:
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/s/ Xxxxxxx X. Xxxxxxxxx, Xx. | ||
| Title: | Chairman & CEO | ||
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