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EXHIBIT 10.73
GUARANTEE AND POSTPONEMENT OF CLAIM
("this Guarantee")
THIS GUARANTEE is dated as of December 14, 2000, and made by the
undersigned Canadian Subsidiary in favour of Foothill Capital Corporation, a
California corporation.
WHEREAS:
A. Pursuant to the terms of a loan and security agreement as amended, restated,
supplemented or otherwise modified from time to time (the "Loan Agreement")
dated the date of this Guarantee by and between Foothill Capital Corporation, a
California corporation, of Xxxxx 0000 Xxxx 0000 Xxxxxxxx Xxxxxx., Xxxxx Xxxxxx,
Xxxxxxxxxx, 00000 (the "Lender") and FutureLink Corp., a Delaware corporation
(the "Borrower"), and certain other subsidiaries of the Borrower identified in
the Loan Agreement, the Lender has agreed to make Advances (as such term is
defined in the Loan Agreement) to the Borrower;
B. 3045207 Nova Scotia Company (the "Canadian Subsidiary"), a corporation
incorporated under the laws of Nova Scotia pursuant to the Companies Act with
its registered and records office located at Summit Place, 1601 Lower Water
Street, XX Xxx 000, Xxxxxxx, Xxxx Xxxxxx X0X 0X0, is a subsidiary of the
Borrower and as such derives economic benefit from the Advances to the Borrower;
C. As a condition of and as security for the Advances, the Lender requires the
Canadian Subsidiary to guarantee repayment of the Advances , interest thereon
calculated in accordance with the Loan Agreement and all other Obligations (as
such term is defined in the Loan Agreement) (collectively the "Debt") and to
guarantee the observance, payment and performance by the Borrower of all the
obligations, payments and otherwise to the Lender under the Loan Agreement, the
UK Loan Documents (as such term is defined in the Loan Agreement) and the Loan
Documents (as such term is defined in the Loan Agreement) (together with the
Debt, collectively the "Guaranteed Obligations");
FOR VALUABLE CONSIDERATION, the receipt and sufficiency of which
are hereby acknowledged, the Canadian Subsidiary hereby agrees with the Lender
as follows:
1. The Canadian Subsidiary irrevocably, absolutely and unconditionally
guarantees to the Lender the due payment by the Borrower to the Lender of the
Guaranteed Obligations and the due performance by the Borrower of the Guaranteed
Obligations.
2. This Guarantee is a continuing guarantee and is not limited by amount, time
or otherwise.
3. The Canadian Subsidiary hereby acknowledges that certain of the rights of
interest applicable as to the Guaranteed Obligations may be computed on the
basis of a year of 360 days or 365 days, as the case may be, and paid for the
actual number of days elapsed. For the purposes of the Interest Act (Canada),
whenever any interest is calculated using a rate based on a year of 360 days or
365 days, as the case may be, such rate determined pursuant to such calculation,
when expressed as an annual rate is equivalent to:
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(a) the applicable rate based on a year of 360 days or 365 days, as
the case may be,
(b) multiplied by the actual number of days in a calender year in
which the period for such interest is payable (or compounded),
and
(c) divided by 360 days or 365 days, as the case may be.
4. The liability of the Canadian Subsidiary hereunder shall bear interest from
the date written demand for payment is deemed to have been given by the Lender
to the Canadian Subsidiary at the Prime Interest Rate (defined below) plus 4%
per annum (the "Interest Rate"). "Prime Interest Rate" as used in this Guarantee
shall mean the annual rate of interest announced from time to time by Royal Bank
of Canada as a reference rate then in effect for determining interest rates on
Canadian dollar commercial loans in Canada.
5. The Canadian Subsidiary will provide and grant forthwith to the Lender the
security described in the Loan Agreement, including, without limitation, a
Canadian Security Agreement (as such term is defined in the Loan Agreement) as
security for the obligations of the Canadian Subsidiary hereunder to the Lender.
6. Without releasing, discharging, limiting or otherwise affecting in whole or
in part the obligations and liabilities of the Canadian Subsidiary hereunder and
without the consent of or notice to the Canadian Subsidiary, the Lender may as
it sees fit and regardless of whether the Canadian Subsidiary's risk is
increased:
(a) grant time, renewals, extensions, indulgences, releases and
discharges to the Borrower or any other person or persons now or
hereafter liable to the Lender in respect of the Guaranteed
Obligations,
(b) take or refrain from taking securities or collateral from the
Borrower or any other person or persons or from perfecting such
securities or collateral in connection with the Guaranteed
Obligations,
(c) give up, modify, exchange, renew, release, discharge,
compromise, realize, enforce or otherwise deal with or do any
act or thing in respect of (with or without consideration) any
and all collateral, mortgages or other security given by the
Borrower or any other person or persons with respect to the
Guaranteed Obligations,
(d) accept compromises, settlements or arrangements from the
Borrower or any other person or persons,
(e) exercise any right or remedy which it may have against the
Borrower or any other person or persons or with respect to any
security for the Guaranteed Obligations, including judicial and
nonjudicial foreclosure,
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(f) apply money at any time received from the Borrower or any other
person or persons or from securities upon such part of the
Guaranteed Obligations as the Lender may see fit or change any
such application in whole or in part from time to time as the
Lender may see fit,
(g) give credit or make loans or advances to the Borrower, any
guarantor or any other person, and discontinue, release,
increase or otherwise vary such credit, or
(h) otherwise deal with, or waive or modify its right to deal with,
the Borrower and any other person or persons and securities as
the Lender may see fit,
and in no case shall the Lender be responsible for nor the Canadian Subsidiary
released from its obligations hereunder by any neglect or omission of the Lender
with respect to any of the foregoing.
7. The Canadian Subsidiary renounces all benefits of discussion and division.
8. This Guarantee will not be considered as wholly or partially satisfied by the
payment or liquidation at any time or times of any sum or sums of money for the
time being due or remaining unpaid to the Lender, and all dividends,
compositions, proceeds of security valued and payments received by the Lender
from the Borrower or from others or from estates shall be regarded for all
purposes as payments in gross without any right on the part of the Canadian
Subsidiary to claim in reduction of the liability under this Guarantee the
benefit of any such dividends, compositions, proceeds or payments or any
securities held by the Lender or proceeds thereof. Nothing but the performance
and payment in full of the Guaranteed Obligations shall release the Canadian
Subsidiary of its liability under the Guarantee.
9. All monies, advances, renewals and credits in fact borrowed or obtained by
the Borrower from the Lender under the Loan Agreement or any other Loan Document
(as defined in the Loan Agreement) or under any security held from time to time
by the Lender for the Guaranteed Obligations will be deemed to form part of the
Guaranteed Obligations, notwithstanding any lack or limitation of status or of
power, incapacity or disability of the Borrower or of the directors, partners or
agents thereof, or that the Borrower may not be a legal or suable entity, or any
irregularity, defect or informality in the borrowing or obtaining of such money,
advances, renewals or credits, the whole whether known to the Lender or not, and
any sum which may not be recoverable from the Canadian Subsidiary as guarantor
shall be recoverable from the Canadian Subsidiary as sole or principal debtor in
respect thereof and vice versa and shall be paid to the Lender as aforesaid.
10. This Guarantee is in addition to and not in substitution for any other
guarantee by any other person(s), at any time held by the Lender, and any
present or future obligation to the Lender incurred or arising otherwise than
under a guarantee provided by the Canadian Subsidiary or of any other obligant,
whether bound with or apart from the Borrower.
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11. The Canadian Subsidiary hereby expressly authorizes and consents to the
Lender, from time to time, without giving notice to the Canadian Subsidiary, and
without in any way discharging, limiting or lessening the liability of the
Canadian Subsidiary under this Guarantee, omitting or refraining from proving
its full claim or any claim or omitting or refraining from valuing any security
held by it, in the event of the bankruptcy, liquidation, winding-up or other
distribution of assets of the Borrower or of any surety or guarantor for the
Guaranteed Obligations or if the Borrower or any surety or guarantor for the
Guaranteed Obligations shall make a bulk sale of its assets within the bulk
transfer provisions of any applicable legislation or any composition with
creditors or scheme of arrangement.
12. The Canadian Subsidiary will be bound by any account settled between the
Lender and the Borrower, and if no such account has been so settled any account
stated by the Lender will be accepted by the Canadian Subsidiary as prima facie
evidence of the amount which at the date of the account so stated is due by the
Borrower to the Lender or remains unpaid by the Borrower to the Lender, in the
absence of manifest error.
13. The Canadian Subsidiary will not at any time claim to be subrogated in any
manner to the rights and position of the Lender and will not claim the benefit
of any security at any time held by the Lender until the Lender has received
payment in full of all monies, interest and other amounts due to the Lender
under or relating to the Guaranteed Obligations.
14. The Lender will not be bound to exhaust its recourse against the Borrower or
any other person or persons or the security or other securities it may hold, or
any of them, before requiring payment by the Canadian Subsidiary, and the Lender
may enforce the various remedies available to it and may realize upon the
various securities or any part of such securities in such order as the Lender
may determine.
15. No suit based upon this Guarantee shall be instituted until demand for
payment has been made, and demand for payment shall be deemed to have been
effectively made upon the Canadian Subsidiary by delivery of written demand to
the Canadian Subsidiary at the address of the Canadian Subsidiary last known to
the Lender. Moreover, when demand for payment has been made, the Canadian
Subsidiary shall also be liable to the Lender for all legal fees and
disbursements (on a solicitor and his own client basis) incurred by or on behalf
of the Lender resulting from any action instituted on the basis of this
Guarantee.
16. All indebtedness of every nature and kind, whether now or hereafter in
existence, of the Borrower to the Canadian Subsidiary is hereby postponed to the
indebtedness of the Borrower to the Lender and, following the occurrence and
during the continuation of an Event of Default (as defined in the Loan
Agreement), all money received by the Canadian Subsidiary in respect of or on
account of any of the said indebtedness shall be received and held in trust for
the Lender and shall forthwith be paid to the Lender without the necessity of
demand. The assignment and postponement contained in this Guarantee is
independent of and severable from this Guarantee and shall remain in full force
and effect until repayment in full to the Lender of all of the Guaranteed
Obligations, notwithstanding that the liability of the Canadian Subsidiary under
this Guarantee may have been
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discharged or terminated. No duty, obligation or liability shall arise on the
part of the Lender in connection with the aforesaid assignment, including,
without limitation, the obligation to ensure that the indebtedness and liability
of the Borrower to the Canadian Subsidiary does not become prescribed by statute
or otherwise invalidated or rendered unenforceable.
17. This Guarantee shall not be discharged, limited or otherwise affected by
anything done, suffered or permitted by the Lender in connection with the
Borrower, the Guaranteed Obligations or any security held by or granted to the
Lender to secure payment of the Guaranteed Obligations or otherwise. Without
limiting the generality of the foregoing, the obligations and liabilities of the
Canadian Subsidiary hereunder shall not be released, limited or otherwise
affected by:
(a) the insolvency or bankruptcy or ceasing to exist of the Borrower
or any other person or persons,
(b) the appointment of a receiver for the assets of the Borrower or
any other person or persons,
(c) any change in the name of the Borrower or in the reorganization,
merger or amalgamation of the Borrower,
(d) the acquisition of the Borrower's business by any person or a
change in control of the Borrower,
(e) any change whatsoever in the objects, capital structure,
constitution or constating documents of the Borrower,
(f) any defect in, omission from, failure to file or register or
defective filing or registration of any instrument under which
the Lender has taken any security or collateral for payment of
or performance or observance of any of the Guaranteed
Obligations or of any other person who is or may become liable
in respect of the Guaranteed Obligations, or
(g) any other circumstance which might otherwise constitute a legal
or equitable defence available to, or a complete or partial
discharge of, the Borrower in respect of the Guaranteed
Obligations, or both,
but shall, notwithstanding the happening of any such event before or after the
execution of this Guarantee, continue to apply to the Guaranteed Obligations.
18. This Guarantee will be operative and binding upon the Canadian Subsidiary,
and possession of this instrument by the Lender or its assigns will be
conclusive evidence against the Canadian Subsidiary that this Guarantee was not
delivered in escrow or pursuant to any agreement that it should not be effective
until any conditions precedent or subsequent had been complied with.
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19. The Canadian Subsidiary hereby waives notice of its acceptance of this
Guarantee, notice of transactions or obligations contracted or incurred by the
Borrower under this Guarantee, notice of default of the Borrower and demand for
payment upon the Borrower and the Canadian Subsidiary.
20. Taxes and Other Taxes
(a) Any and all payments to the Lender shall be made free and clear
of and without deduction or withholding for any and all present
or future taxes, levies, imposts, deductions, charges or
withholdings, and liabilities with respect thereto (as such
taxes, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter referred to as "Taxes") imposed by
the government of Canada (or any political subdivision or taxing
authority thereof or therein), unless such Taxes are required by
law or the administration thereof to be deducted or withheld. If
the Canadian Subsidiary shall be required by law or the
administration thereof to deduct or withhold any such Taxes from
or in respect of any amount payable hereunder, then:
(i) the amount payable shall be increased as may be
necessary so that after making all required deductions
or withholdings (including deductions or withholdings
applicable to additional amounts paid under this
paragraph), the Lender shall receive an amount equal to
the sum it would have received if no such deduction or
withholding had been made, and
(ii) the Canadian Subsidiary forthwith shall pay the full
amount deducted or withheld to the relevant taxation or
other authority in accordance with applicable law.
(b) The Canadian Subsidiary agrees to pay forthwith any present or
future stamp or documentary taxes or any other excise or
property taxes, charges or similar levies (all such taxes,
charges and levies being herein referred to as "Other Taxes")
imposed by the government of Canada (or any political
subdivision or taxing authority thereof or therein) which arise
from any payment made by the Canadian Subsidiary hereunder or
from the execution, delivery or registration of, or otherwise
with respect to this Guarantee.
(c) The Canadian Subsidiary agrees to indemnify the Lender for the
full amount of Taxes or Other Taxes not deducted or withheld and
paid by the Canadian Subsidiary in accordance with subparagraphs
20(a) or (b) hereof to the relevant taxation or other authority
and any Taxes or Other Taxes imposed by any jurisdiction on the
amounts payable by the Canadian Subsidiary under this paragraph
20 paid by the Lender and any liability (including penalties,
interest and expenses) arising therefrom or with respect
thereto, whether or
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not any such Taxes or Other Taxes were correctly or legally
asserted. Payment under this indemnification shall be made
within fifteen (15) days from the date the Lender makes written
demand therefor. A certificate as to the amount of such Taxes or
Other Taxes and evidence of payment thereof submitted to the
Canadian Subsidiary by the Lender shall be prima facie evidence
of the amount due from the Canadian Subsidiary to the Lender.
(d) The Canadian Subsidiary shall furnish to the Lender the original
or a certified copy of a receipt evidencing any payment of Taxes
or Other Taxes made by the Canadian Subsidiary as soon as such
receipt becomes available, together with a certificate of an
officer of the Canadian Subsidiary, which certificate indicates
the amount of Taxes or Other Taxes, as the case may be, withheld
by the Canadian Subsidiary in respect of payments made
hereunder.
(e) Without prejudice to the survival of any other agreement or
obligation of the Canadian Subsidiary hereunder, the obligations
of the Canadian Subsidiary under this paragraph 20 shall survive
the termination of this Guarantee and the payment of the
Guaranteed Obligations.
21. This Guarantee covers all agreements between the parties hereto concerning
the subject matter hereof, and none of the parties shall be bound by any
representation or promise made by any person relative thereto which is not
expressly embodied herein.
22. This Guarantee is governed by and shall be construed in accordance with the
laws of the Province of Nova Scotia, and the Canadian Subsidiary attorns to the
exclusive jurisdiction of the courts of Nova Scotia in respect of all disputes
which may arise under this Guarantee, and irrevocably agrees that such actions
and proceedings may be heard and determined in such courts, agrees to be bound
by any judgment thereof and irrevocably waives, to the fullest extent possible,
the defence of forum non conveniens, provided, however, that the Lender may
serve legal process in any manner permitted by law and that nothing herein shall
limit the Lender's right to bring proceedings against the Canadian Subsidiary or
the property or assets of the Canadian Subsidiary in the courts of any other
jurisdiction.
23. So long as any part of the Guaranteed Obligations or any related amounts
due, owing or accrued to the Lender remains unpaid or outstanding, the Canadian
Subsidiary assumes all responsibility for being and keeping itself informed of
the financial condition of the Borrower and of all circumstances bearing upon
the nature, scope and extent of the risk which the Canadian Subsidiary assumes
and incurs under this Guarantee.
24. The Canadian Subsidiary represents and warrants to the Lender, and
acknowledges that the Lender is, in part, relying upon such representations and
warranties that:
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(a) the Canadian Subsidiary has full power and capacity to enter
into this Guarantee and to carry out the obligations
contemplated herein,
(b) this Guarantee has been approved by all necessary corporate
action on the part of the Canadian Subsidiary, and, when
executed and delivered, will constitute a legal, valid and
binding obligation of the Canadian Subsidiary, enforceable in
accordance with the terms of this Guarantee,
(c) the execution of this Guarantee will not contravene any
provision of law, regulation, order or permit applicable to the
Canadian Subsidiary, or result in a breach of or constitute a
default under or require any consent under any agreement or
instrument to which the Canadian Subsidiary is a party or by
which the Canadian Subsidiary is bound,
(d) the Canadian Subsidiary is not in default under any agreement or
instrument to which it is a party which in any way materially
and adversely affects its business and there are no suits or
judicial proceedings or proceedings before any governmental
commission, board or other agency pending or to the knowledge of
the Canadian Subsidiary threatened against the Canadian
Subsidiary, and
(e) FutureLink Corp. is the registered holder of all of the issued
and outstanding shares of the Canadian Subsidiary.
25. The Lender may assign its rights under this Guarantee without notice to the
Canadian Subsidiary, provided that the assignee has also obtained the rights and
obligations of the Lender under the Loan Agreement.
26. The Canadian Subsidiary acknowledges that there are reasonable grounds for
believing that, and the directors of the Canadian Subsidiary are of the opinion
that, the giving of the financial assistance provided by this Guarantee is in
the best interests of the Canadian Subsidiary.
27. This Guarantee enures to the benefit of the Lender and its respective
successors and assigns and is binding on the Canadian Subsidiary and its
respective successors and assigns.
28. This Agreement may be executed in any number of counterparts and by
different parties on separate counterparts, each of which, when executed and
delivered, shall be deemed to be an original, and all of which, when taken
together, shall constitute but one and the same Agreement. Delivery of an
executed counterpart of this Agreement by facsimile transmission shall be
equally as effective as delivery of an original executed counterpart of this
Agreement. Any party delivering an executed counterpart of this Agreement by
facsimile transmission also shall deliver an original executed counterpart of
this Agreement but the failure to deliver an original executed counterpart shall
not affect the validity, enforceability, and binding effect of this Agreement.
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29. In the event that the Lender obtains any judgment in Canadian dollars in
respect of any liability of the Canadian Subsidiary in United States dollars,
the Lender and the Canadian Subsidiary agree that the rate of exchange to be
used to determine the amount of the judgment shall be the rate of exchange
quoted by the bankers of the Lender as the rate at which the Lender could
purchase United States dollars with Canadian dollars on the banking day
preceding the date on which the judgment is rendered. The liability of the
Canadian Subsidiary in respect of any amount due in United States dollars shall,
despite any judgment in Canadian dollars, be discharged only to the extent that
on the banking day following receipt of the payment or satisfaction of the
judgment, the Lender, through its bankers, is able to purchase United States
dollars with Canadian dollars. If the amount of United States dollars purchased
by the Lender is less than the amount of United States dollars originally due to
it, the Canadian Subsidiary agrees, as a separate obligation, to indemnify the
Lender against such loss, and if the amount so purchased exceeds the sum
originally due to the Lender, the Lender agrees to remit such excess to the
Canadian Subsidiary.
30. If any provision herein is determined to be void, voidable or unenforceable,
in whole or in part, such determination shall not affect or impair or be deemed
to affect or impair the validity of any other provision hereof and all the
provisions hereof are hereby declared to be separate, severable and distinct.
31. In the event of a direct conflict between the terms and provisions of this
Guarantee and the Loan Agreement, it is the intention of the parties hereto that
both such documents shall be read together and construed, to the fullest extent
possible, to be in concert with each other. In the event of any actual
irreconcilable conflict that cannot be resolved as aforesaid, the terms and
provisions of the Loan Agreement shall control and govern; provided, however,
that the inclusion of additional obligations on the part of any Borrower (as
such term is defined in the Loan Agreement) and supplemental rights and remedies
in favour of the Lender shall not be deemed a conflict with the Loan Agreement.
32. The Lender's rights or remedies hereunder shall not be exhausted by the
exercise of any such rights or remedies or by any action or by any number of
successive actions against the Canadian Subsidiary in respect of the Canadian
Subsidiary's obligations hereunder.
33. Upon the bankruptcy, liquidation, winding-up or other distribution of assets
of the Borrower or any surety or guarantor for the Guaranteed Obligations, or in
the event that the Borrower or any surety or guarantor for the Guaranteed
Obligations shall make a bulk sale of its assets within the bulk transfer
provisions of any applicable legislation or any composition with creditors or
scheme of arrangement, the Lender shall have the right to prove and rank for the
full amount of the Guaranteed Obligations, including in its claim all sums paid
by the Canadian Subsidiary to the Lender under this Guarantee, and to receive
all dividends or other payments in respect of such claim, until all of the
Guaranteed Obligations has been paid in full, the Canadian Subsidiary hereby
assigning and transferring to the Lender until such time as all of the
Guaranteed Obligations has been paid in full all of its rights to prove and rank
for such sums paid by the Canadian Subsidiary to the Lender and to receive the
full amount of all dividends and payments in respect thereto.
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34. The Canadian Subsidiary shall continue to be liable, up to the limit of the
liability under this Guarantee, less any payments made by the Canadian
Subsidiary to the Lender, for any balance which may be owing to the Lender by
the Borrower after payment of such dividends or other payments to the Lender. In
the event of the valuation by the Lender of any of its security and/or retention
thereof by the Lender, such valuation and/or retention shall not, as between the
Lender and the Canadian Subsidiary, be considered as payment or satisfaction or
reduction of the Guaranteed Obligations or any part thereof.
35. Waiver, etc.: No failure or delay on the part of the Lender to exercise any
right provided for in or contemplated by this Guarantee shall operate as a
waiver thereof unless made in writing and signed by the Lender and, in that
event, such waiver shall operate only as a waiver of the right expressly
referred to therein.
36. No Amendment: This Guarantee may not be amended, altered or qualified except
by a memorandum in writing signed by all of the parties hereto and any
amendment, alteration or qualification hereof shall be null and void and shall
not be binding upon any party who has not signed such memorandum.
37. Further Assurances: The Canadian Subsidiary shall and will, from time to
time and at all times hereafter upon every reasonable written request so to do,
cause such meetings to be held, resolutions passed and by-laws enacted, exercise
its vote and influence, make, do, execute and deliver, or cause to be made,
done, executed and delivered, all such further papers, acts, deeds, assurances
and things as may be necessary or desirable in the opinion of the Lender or its
counsel, acting reasonably, for implementing and carrying out more effectually
the true intent and meaning of this Guarantee.
38. Time of Essence: Time shall be strictly of the essence of this Guarantee and
of every part thereof and no extension or variation of this Guarantee shall
operate as a waiver of this provision.
39. Receipt: The Canadian Subsidiary hereby acknowledges receipt of a fully
signed copy of this Guarantee.
IN WITNESS WHEREOF the Canadian Subsidiary has executed, and
delivered this Guarantee under its corporate seal as of the date given above.
THE CORPORATE SEAL of 3045207 NOVA SCOTIA )
COMPANY was hereunto affixed in the )
presence of: )
) c/s
/s/ XXXXX X. XXXXXXX )
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Authorized Signatory )
)
)
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Authorized Signatory )
