Exhibit 10.10
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made as of November 30,
2004 (the "Effective Date"), by and between Q COMM INTERNATIONAL, INC., a Utah
corporation (the "Company"), having its principal place of business at 000 Xxxx
Xxxxxxxxxx Xxx. Xxxxxxxx X, Xxxx, Xxxx 00000, and XXXXXXX X. XXXXXX, residing at
0000 Xxxxx Xxxx, Xxxx Xxxx Xxxx, XX 00000 (the "Executive").
W I T N E S S E T H:
WHEREAS, the Company, recognizing the unique skills and abilities of
the Executive, wishes to hire the Executive on a permanent and full-time basis;
and
WHEREAS, the Executive desires to be employed by the Company; and
WHEREAS, the Company and the Executive desire to set forth the terms
and conditions of their employment relationship.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants in this Agreement, the Company and the Executive agree as follows:
1. Employment as Chief Executive Officer/President - Elect. The
Company hereby employs the Executive as its Chief Executive Officer/President -
Elect for a period of 17 days, commencing on November 30, 2004 and terminating
on December 16, 2004 on the terms and conditions provided in this Agreement and
Executive agrees to accept such employment subject to the terms and conditions
of this Agreement. During this period, the Executive shall work directly with
the current CEO, Xxxxx Xxxxxx, in the transitioning of the duties and
responsibilities of the CEO/President from Xxxxxx to the Executive.
2. Employment as Chief Executive Officer/President. Effective as
of December 17, 2004, the Company shall employ the Executive as its Chief
Executive Officer/President on the terms and conditions provided in this
Agreement and Executive agrees to accept such employment subject to the terms
and conditions of this Agreement. The Executive shall be responsible for the
overall management and operations of the Company and shall perform the duties
and responsibilities as are customary for the officer of a corporation in such
positions and perform such other duties and responsibilities as are reasonably
determined from time to time by the Company's Board of Directors (the "Board").
The Executive shall report to and be supervised by the Board.
3. Other Directorships and Activities. The Executive may engage
in the following activities (and shall be entitled to retain all economic
benefits thereof including fees paid in connection therewith) as long as they do
not interfere in any material respect with the performance of the Executive's
duties and responsibilities hereunder: (i) serve on corporate, civic, religious,
educational and/or charitable boards or committees, provided that the Executive
shall not serve on any board or committee of any corporation or other business
which competes with the Business (as defined in Section 12(a) below); (ii)
deliver lectures, fulfill speaking engagements or teach on a part-time basis at
educational institutions; and (iii) make investments in businesses or
enterprises and manage his personal investments; provided that with respect to
such activities Executive shall comply with any business conduct and ethics
policy applicable to employees of the Company. During the Employment Term the
Executive may not join the board of directors of any company or any committee
appointed by the board of directors of any company without the prior consent of
a majority of the Board, which consent may not be unreasonably withheld. The
Executive has provided the Company with a list of entities on whose boards he
serves and the Company agrees that he may continue to serve on these boards.
4. Place of Performance. In connection with the Executive's
employment by the Company and unless the parties hereto mutually agree
otherwise, the Executive shall be based at the Company's Offices in Orem, Utah,
or such other location within the Wasatch Front, except for required travel on
Company business.
5. Term. The term of this Agreement shall commence on November
30, 2004 (the "Commencement Date"), and shall terminate on December 31, 2006,
unless extended or earlier terminated in accordance with the terms of this
Agreement (the "Termination Date"). This Agreement shall renew automatically for
successive one-year periods unless either party notifies the other in writing at
least 90 days before the Termination Date, or any anniversary of the Termination
Date, as the case may be, that he or it chooses not to extend the Employment
Term. The period beginning on the Commencement Date and ending on the
Termination Date is herein referred to as the "Employment Term."
6. Compensation. As compensation for performing the services
required by this Agreement, and during the term of this Agreement, the Executive
shall be compensated as follows:
(a) Base Compensation. The Company shall pay to the
Executive an annual salary of $200,000 (the "Base Compensation"). The Base
Compensation shall be payable in equal installments pursuant to the Company's
customary payroll procedures in effect for its executive personnel at the time
of payment, but in no event less frequently than monthly, subject to withholding
for applicable federal, state, and local income and employment related taxes.
(b) Cash Bonuses. In addition to the Base Compensation,
the Executive will be eligible to receive additional compensation in an amount
equal to 75% of the Base Compensation (the "Cash Bonus"). The Cash Bonus will be
adjusted based on whether and to what extent the Company achieves or falls short
of certain operational and/or financial targets (the "Targets") set forth in a
business plan adopted and approved by the Board and the Executive. All Cash
Bonuses shall be paid to the Executive by March 31 of the year following the
year in which they were earned and shall be subject to applicable withholding
for federal, state and local income and employment related taxes. Subject to the
terms of the Termination provision below, should Executive's employment
termination result in a partial year of employment, Executive shall be entitled
to his Cash Bonus on a pro rata basis.
(c) Stock Options. Subject to the approval of the Board
and the Company's stockholders, on December 6, 2004, the Company shall grant
Executive stock options covering 150,000 shares of the Company's common stock,
the vesting and exercisability of which shall be set forth in a separate stock
option agreement, substantially in the form of Exhibit A hereto (the "Stock
Option Agreement").
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7. Employee Benefits. During the Employment Term the Executive
and his eligible dependants shall be entitled to such benefits (including but
not limited to, the right to participate in any retirement plans (qualified and
non-qualified), pension, insurance, health, disability or other benefit plan or
program that has been or is hereafter adopted by the Company (or in which the
Company participates), as shall be determined by the Board from time to time;
provided, however, that the Executive shall always be entitled to such benefits
as are generally made available to the senior executives of the Company. The
Company shall, in accordance with standard Company policy and practices in
effect from time to time, reimburse the Executive for all reasonable business
expenses incurred by him in connection with the performance of his duties
hereunder.
8. Personal Time Off. The Executive shall be entitled to the
normal and customary amount of paid vacation, sick leave, and personal days
(vacation, sick leave, personal days collectively referred to as "PTO") provided
to senior executive officers of the Company. Executive agrees to give reasonable
notice of his PTO scheduling requests, which shall be allowed subject to the
Company's reasonable business needs. Executive's PTO shall be limited to 22
business days per calendar year. (For this purpose, 2004 shall be counted as a
partial year and prorated accordingly). Upon any termination of this Agreement
for any reason whatsoever, any accrued and unused vacation shall be dealt with
in accordance with Company policy.
9. Indemnification. The rights of the Executive to
indemnification from the Company for acts or omissions in connection with his
employment by the Company are set forth in the Indemnification Agreement, dated
November 30, 2004, between the Company and the Executive ( the "Indemnification
Agreement").
10. Termination and Termination Benefits.
(a) Termination by the Company.
(i) For Cause. Notwithstanding any provision
contained herein, the Company may terminate this Agreement at any time during
the Employment Term for "Cause." For purposes of this subsection 10(a)(i),
"Cause" shall mean (w) if the Company fails to achieve a majority of the Targets
by 30% or more in any calendar year; (x) the willful failure by the Executive to
substantially perform his duties hereunder for any reason other than total or
partial incapacity due to physical or mental illness, (y) a conviction (or plea
of no contest) of Executive of any crime (other than a routine traffic
violation) that constitutes a felony in the jurisdiction in which the crime was
committed or the conviction (or plea of no contest) of Executive of any act that
constitutes moral turpitude or (z) Executive having committed any act
constituting fraud, theft or conversion of property as determined by a court of
competent jurisdiction or by the reasonable judgment of a majority of the Board
after a good faith investigation. Termination pursuant to this subsection
10(a)(i) shall be effective immediately upon the delivery of written notice
thereof from the Company to the Executive specifying the acts or omissions
constituting the failure and requesting that they be remedied; provided,
however, that in the case of a termination pursuant to clause (x) the Executive
shall have 15 days from the date of such notice to cure the failure specified in
such notice and termination shall occur immediately upon the expiration of such
15-day cure period if the Executive has not cured such failure in the good faith
judgment of a majority of the Board. In the event of a termination pursuant to
this subsection 10(a)(i), the Executive shall be entitled to payment of his Base
Compensation and the benefits pursuant to Section 7 hereof up to the effective
date of such termination.
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(ii) Disability. If due to illness, physical or
mental disability, or other incapacity, the Executive shall fail, for a total of
any six consecutive months ("Disability"), to substantially perform the
principal duties required by this Agreement as determined in good faith by a
majority of the Board, the Company may terminate this Agreement upon 30 days'
written notice to the Executive. In such event, the Executive shall (A) be paid
his Base Compensation and pro rata Cash Bonus until the Termination Date, and
(B) be provided with employee benefits pursuant to Section 7 (other than
transportation and hotel accommodations), to the extent available, for the
remainder of the Employment Term; provided, however, that any compensation to be
paid to the Executive pursuant to this subsection 10(a)(ii) shall be offset
against any payments received by the Executive pursuant to any policy of
disability insurance, the premiums of which are paid for by the Company under
normal Company policies.
(iii) Without Cause. The Company may terminate the
Executive's employment hereunder at any time without Cause. If the Company
terminates the Executive's employment hereunder without Cause, other than due to
death or Disability, the Executive shall (i) be paid the Base Compensation and
the target annual Cash Bonus to which he would have been entitled had the
Company not terminated this Agreement and (ii) be provided with the employee
benefits pursuant to Section 7, to the extent available, for a period ending on
the later of (A) the one-year anniversary of the Termination Date or (B) the
date on which the Employment Term would have terminated had the Company not
terminated this Agreement without Cause (the "Benefit Period"); provided,
however, if the Executive obtains new employment and such employment makes the
Executive eligible for health and welfare or long-term disability benefits which
are equal to or greater in scope than the benefits then being offered by the
Company, then the Company shall no longer be required to provide such benefits
to the Executive pursuant to Section 7.
(b) Termination by the Executive. The Executive may
terminate this Agreement at any time upon ninety (90) days prior written notice
to the Company. Unless such termination is for Good Reason (as defined below),
in such event the Company's sole obligation to the Executive shall be to pay the
Executive the Base Compensation and the benefits described in Section 10 hereof,
up to the date of such termination. In addition, the Executive shall be entitled
to receive a pro rata portion (computed on a per diem basis) of the Cash Bonus
he would have received had he not terminated this Agreement. If the Executive
terminates this Agreement for Good Reason, such termination shall be treated as
if the Company had terminated this Agreement without Cause and the provisions of
Section 10(a)(iii) shall apply.
As used herein, "Good Reason" means and shall be deemed to exist if,
without the prior express written consent of the Executive, (a) the Company
breaches this Agreement in any material respect; (b) the Company fails to obtain
the full assumption of this Agreement by a successor; (c) the Company employs
another senior executive and requests that the Executive report to such officer;
(d) the Company materially reduces the Executive's responsibilities, as set
forth herein; (e) the Company reduces the Base Compensation without the
Executive's prior consent; or (f) the Company materially reduces the benefits to
which the executive is entitled to pursuant to Section 10 of this Agreement as
of the date hereof, except if such reduction applies to all senior executives of
the Company; provided, however, that with respect to items (a) - (f) above,
within fifteen (15) days of written notice of termination by the Executive, the
Company has not cured, or commenced to cure, such failure or breach.
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(c) Vesting of Stock Grants and Stock Options. In the
event of any termination of this Agreement, Executive's rights with regard to
any stock grants or stock options shall be as set forth in the respective
agreement containing the terms and conditions pertaining thereto.
Notwithstanding the foregoing, in the event that the Executive is terminated for
reasons other than for "Cause," or in the event the Executive terminates this
Agreement for "Good Reason," or in the event this Agreement is terminated by
reason of Executive's death, any stock options then held by the Executive shall
immediately vest in the Executive and shall remain exercisable for the period
specified in the grant agreement.
(d) Death Benefit. Notwithstanding any other provision of
this Agreement, this Agreement shall terminate on the date of the Executive's
death. In such event, any stock options granted to the Executive that have
previously vested or that would have vested before the end of the calendar year
in which his death occurs, shall immediately vest in the executive's estate and
shall remain exercisable for the period specified in the Stock Option Agreement
notwithstanding any provision therein to the contrary, and the Base Compensation
and Cash Bonus that would have been payable to the Executive through the end of
the calendar year in which his death occurs shall be payable to his estate. Any
benefits to which members of the Executive's immediate family would have been
entitled by reason of kinship shall continue to be provided to them through the
end of the calendar year in which his death occurs.
11. Company Property. All advertising, promotional, sales,
suppliers, manufacturers and other materials or articles or information,
including without limitation data processing reports, customer lists, customer
sales analyses, invoices, product lists, price lists or information, samples, or
any other materials or data of any kind furnished to the Executive by the
Company or developed by the Executive on behalf of the Company or at the
Company's direction or for the Company's use or otherwise in connection with the
Executive's employment hereunder, are and shall remain the sole and confidential
property of the Company. If the Company requests the return of such materials at
any time during or at or after the termination of the Executive's employment,
the Executive shall immediately deliver the same to the Company.
12. Covenant Not To Compete.
(a) Covenants Against Competition. As of the date of this
Employment Agreement (i) the Company is engaged in the business of selling
prepaid products and services, providing electronic transaction processing for
prepaid products and services, and selling or licensing an integrated electronic
point of sale activation system or any other related areas into which the
Company may expand (the "Business"); (ii) the Company's Business is conducted
currently throughout the United States, Canada and in certain countries in
Europe and Asia and may be expanded to other locations; (iii) the Executive's
employment with the Company will have given him access to confidential
information concerning the Company; and (iv) the agreements and covenants
contained in this Agreement are essential to protect the business and goodwill
of the Company. Accordingly, the Executive covenants and agrees as follows:
(i) Non-Compete. Without the prior written
consent of the Board, the Executive shall not during the Restricted Period (as
defined below) within the Restricted Area (as defined below) (except in the
Executive's capacity as an officer of the Company or any of its affiliates), (a)
engage or participate in the Business; (b) enter the employ of, or render any
services (whether or not for a fee or other compensation) to, any person engaged
in the Business; or (c) acquire an equity interest in any such person; provided,
however, that during the Restricted Period the Executive may own, directly or
indirectly, up to 1%, solely as a passive investment, of the securities of any
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company traded on any national securities exchange or on the National
Association of Securities Dealers Automated Quotation System.
As used herein, "Restricted Period" shall mean the
period commencing on the Effective Date and ending on the second anniversary of
the Executive's termination of employment. In the event the Company elects not
to renew the Agreement, pursuant to Section 5, above, the Restricted Period
shall be shortened to the period commencing on the Effective Date and ending on
the first anniversary of the Executive's termination of employment.
"Restricted Area" shall mean any geographic area in
which the Company is conducting its Business or is actively seeking to conduct
its Business
(ii) Confidential Information; Personal
Relationships. The Executive acknowledges that the Company has a legitimate and
continuing proprietary interest in the protection of its confidential
information and has invested substantial sums and will continue to invest
substantial sums to develop, maintain and protect its confidential information.
The Executive agrees that, without the prior written consent of the Board, the
Executive shall keep secret, shall retain in strictest confidence, and shall not
knowingly use for the benefit of himself or others all confidential matters
relating to the Company's business including, without limitation, operational
methods, marketing or development plans or strategies, business acquisition
plans, joint venture proposals or plans, and new personnel acquisition plans,
learned by the Executive heretofore or hereafter (such information shall be
referred to herein collectively as "Confidential Information"); provided, that
nothing in this Agreement shall prohibit the Executive from disclosing or using
any Confidential Information (A) in the performance of his duties hereunder, (B)
as required by applicable law, (C) in connection with the enforcement of his
rights under this Agreement or any other agreement with the Company, or (D) in
connection with the defense or settlement of any claim, suit, or action brought
or threatened against the Executive by or in the right of the Company.
Notwithstanding any provision contained herein to the contrary, the term
Confidential Information shall not be deemed to include any general knowledge,
skills, or experience acquired by the Executive or any knowledge or information
known or available to the public in general. Moreover, the Executive shall be
permitted to retain copies of, or have access to, all such Confidential
Information relating to any disagreement, dispute, or litigation (pending or
threatened) involving the Executive.
(iii) Employees of the Company and its Affiliates.
During the Restricted Period, without the prior written consent of the Board,
the Executive shall not, directly or indirectly, hire or solicit, or cause
others to hire or solicit, for employment by any person other than the Company
or any affiliate or successor thereof, any employee of, or person employed
within the two years preceding the Executive's hiring or solicitation of such
person by, the Company and its affiliates or successors or encourage any such
employee to leave his employment. For this purpose, any person whose employment
has been terminated involuntarily by the Company shall he excluded from those
persons protected by this Section for the benefit of the Company.
(iv) Business Relationships. During the
Restricted Period, the Executive shall not, directly or indirectly, request or
advise a person that has a business relationship with the Company to curtail or
cancel such person's business relationship with the Company.
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(b) Rights and Remedies Upon Breach. If the Executive
breaches, threatens to commit a breach of, any of the provisions contained in
Section 12 of this Agreement (the "Restrictive Covenants"), the Company shall
have the following rights and remedies, each of which rights and remedies shall
be independent of the others and severally enforceable, and each of which is in
addition to, and not in lieu of, any other rights and remedies available to the
Company under law or in equity:
(i) Specific Performance and Injunctive Relief.
The right and remedy to have the Restrictive Covenants specifically enforced by
any court of competent jurisdiction, it being agreed that any breach or
threatened breach of the Restrictive Covenants would cause irreparable injury to
the Company and that money damages would not provide an adequate remedy to the
Company. Therefore, Executive agrees that the Company shall be entitled to an
injunction, restraining order or such other equitable relief (without the
requirement to post bond) as a court of competent jurisdiction may deem
necessary or appropriate to restrain Executive from committing any violation of
the Restrictive Covenants. These injunctive remedies are cumulative and in
addition to any other rights and remedies the Company may have.
(ii) Accounting. The right and remedy to require
the Executive to account for and pay over to the Company all compensation,
profits, monies, accruals, increments or other benefits derived or received by
the Executive as the result of any action constituting a breach of Restrictive
Covenants.
(c) Severability of Covenants. The Executive acknowledges
and agrees that the Restrictive Covenants are reasonable and valid in duration
and geographical scope and in all other respects. If any court determines that
any of the Restrictive Covenants, or any part thereof, is invalid or
unenforceable, the remainder of the Restrictive Covenants shall not thereby be
affected and shall be given full effect without regard to the invalid portions.
The provisions set forth in this Section 12 above shall be in addition to any
other provisions of the business conduct and ethics policy applicable to
employees of the Company and its subsidiaries during the term of Executive's
employment.
(d) Saving Clause. If the period of time or the area
specified in subsection (a) above should be adjudged unreasonable in any
proceeding, then the period of time shall be reduced by such number of months or
the area shall be reduced by the elimination of such portion thereof or both so
that such restrictions may be enforced in such area and for such time as is
adjudged to be reasonable.
13. Executive's Representation and Warranties. Executive
represents and warrants that he has the full right and authority to enter into
this Agreement and fully perform his obligations hereunder, that he is not
subject to any non-competition agreement other than with the Company, and that
his past, present and anticipated future activities have not and will not
infringe on the proprietary rights of others. Executive further represents and
warrants that he is not obligated under any contract (including, but not limited
to, licenses, covenants or commitments of any nature) or other agreement or
subject to any judgment, decree or order of any court or administrative agency
which would conflict with his obligation to use his best efforts to perform his
duties hereunder or which would conflict with the Company's business and
operations as presently conducted or proposed to be conducted. The Executive has
provided the Company with an accurate and complete list of all boards of
directors, boards of trustees, boards of advisors and committees thereof of
which he is a member as of the date hereof. Neither the execution nor delivery
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of this Agreement, nor the carrying on of the Company's business as officer and
employee by Executive will conflict with or result in a breach of the terms,
conditions or provisions of or constitute a default under any contract, covenant
or instrument to which Executive is currently a party.
14. Miscellaneous.
(a) Integration; Amendment. This Agreement, the Stock
Option Agreement and the Indemnification Agreement are the only agreements
between the parties hereto with respect to the matters set forth herein and
supersede and render of no force and effect all prior understandings and
agreements between the parties with respect to the matters set forth herein. No
amendments or additions to this Agreement shall be binding unless in writing and
signed by both parties.
(b) Severability. If any part of this Agreement is
contrary to, prohibited by, or deemed invalid under applicable law or
regulations, such provision shall be inapplicable and deemed omitted to the
extent so contrary, prohibited, or invalid, but the remainder of this Agreement
shall not be invalid and shall be given full force and effect so far as
possible.
(c) Waivers. The failure or delay of any party at any
time to require performance by the other party of any provision of this
Agreement, even if known, shall not affect the right of such party to require
performance of that provision or to exercise any right, power, or remedy
hereunder, and any waiver by any party of any breach of any provision of this
Agreement shall not be construed as a waiver of any continuing or succeeding
breach of such provision, a waiver of the provision itself, or a waiver of any
right, power, or remedy under this Agreement. No notice to or demand on any
party in any case shall, of itself, entitle such party to other or further
notice or demand in similar or other circumstances.
(d) Power and Authority. The Company represents and
warrants to the Executive that it has the requisite corporate power to enter
into this Agreement and perform the terms hereof; that the execution, delivery
and performance of this Agreement by it has been duly authorized by all
appropriate corporate action; and that this Agreement represents the valid and
legally binding obligation of the Company and is enforceable against it in
accordance with its terms.
(e) Successors and Assigns; Survival. This Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective heirs, executors, personal and legal representatives, successors and
assigns. In addition to, and not in limitation of, anything contained in this
Agreement, it is expressly understood and agreed that Sections 10-14 above,
shall survive any termination of this Agreement.
(f) Governing Law; Headings. This Agreement and its
construction, performance, and enforceability shall be governed by, and
construed in accordance with, the laws of the State of Utah. Headings and titles
herein are included solely for convenience and shall not affect, or be used in
connection with, the interpretation of this Agreement.
(g) Jurisdiction. Except as otherwise provided for
herein, each of the parties (a) submits to the exclusive jurisdiction of any
state court sitting in Utah County, Utah or federal court sitting in Utah in any
action or proceeding arising out of or relating to this Agreement, (b) agrees
that all claims in respect of the action or proceeding may be heard and
determined in any such court and (c) agrees not to bring any action or
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proceeding arising out of or relating to this Agreement in any other court. Each
of the parties waives any defense of inconvenient forum to the maintenance of
any action or proceeding so brought and waives any bond, surety or other
security that might be required of any other party with respect thereto. Any
party may make service on another party by sending or delivering a copy of the
process to the party to be served at the address and in the manner provided for
giving of notices in Section 14(h). Nothing in this Section, however, shall
affect the right of any party to serve legal process in any other manner
permitted by law.
(h) Notices. All notices called for under this Agreement
shall be in writing and shall be deemed given upon receipt if delivered
personally or by confirmed facsimile transmission and followed promptly by mail,
or mailed by registered or certified mail (return receipt requested), postage
prepaid, to the parties at their respective addresses as set forth in the
preamble to this Agreement or to any other address or addressee as any party
entitled to receive notice under this Agreement shall designate, from time to
time, to others in the manner provided in this subsection 14(h) for the service
of notices.
Any notice delivered to the party hereto to whom it is
addressed shall be deemed to have been given and received on the day it was
received; provided, however, that if such day is not a business day then the
notice shall be deemed to have been given and received on the business day next
following such day. Any notice sent by facsimile transmission shall be deemed to
have been given and received on the business day next following the day of
transmission.
(i) Number of Days. In computing the number of days for
purposes of this Agreement, all days shall be counted, including Saturdays,
Sundays and holidays; provided, however, that if the final day of any time
period falls on a Saturday, Sunday or holiday on which federal banks are or may
elect to be closed, then the final day shall be deemed to be the next day which
is not a Saturday, Sunday or such holiday.
(j) Construction. The Parties have participated jointly
in the negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first above written.
Q COMM INTERNATIONAL, INC.
By:
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Name: Xxxxxxx X. Xxxxxx
Title: Chairman of the Board
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XXXXXXX X. XXXXXX
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