Exhibit 10.18
November 24, 2004
Xx. Xxxxx X. Xxxxxxxx
00 Xxxxx Xxxx Xxxx
Xxxxxxx, XX 00000
Dear Xxxxx:
The purpose of this letter agreement ("Agreement") is to set forth the
terms of your separation from Altus Pharmaceuticals Inc. (the "Company"). The
Company's provision of Separation Pay and Benefits (as defined in Section 5
below) is subject to the terms and conditions set forth in this Agreement. In
consideration of the promises, conditions and representations set forth herein,
and other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged by you and the Company, you and the Company agree as
follows:
1. SEPARATION OF EMPLOYMENT. Your employment with the Company ended on
October 29, 2004 (the "Separation Date"). Effective as of the Separation Date,
you resigned from your positions as Chairman of the Board, Chief Executive
Officer of the Company ("CEO") and President of the Company. You hereby resign,
also effective as of the Separation Date, from all committees of the Board of
Directors of the Company (the "Board") and from all other positions held in the
Company or any Company subsidiary, other than as set forth in Section 2 below.
You acknowledge that from and after the Separation Date, you will have no
authority to, and will not, represent yourself as an officer or employee of the
Company.
2. BOARD DESIGNATION AND MEMBERSHIP. As of the Effective Date (as defined
in Section 5 below), you will be appointed as Vice-Chairman of the Board, to
provide Services (as defined in Section 3 below), and, in your capacity as
Vice-Chairman of the Board, you will report to the Chairman of the Board. In
addition, you will continue as a member of the Board, subject to the provisions
of Section 4 below.
3. SERVICES. As may be requested by the Chairman of the Board or the CEO
from time to time, you will provide the following services (collectively, the
"Services"): (i) supporting the Company's management transition internally, and
externally to all constituents, including, but not limited to, the Company's
investors, partners, customers, suppliers and affiliates; (ii) supporting the
Chairman of the Board, (iii) successfully maintaining and transitioning the
Amano, Cystic Fibrosis Foundation, and Xx. Xxxx Pharma relationships, (iv)
otherwise fulfilling the obligations of this Agreement, and (v) such other
services as may be reasonably requested by the Chairman or the CEO. In
connection with performing the Services and serving on the Board, you agree to
abide by all applicable Company policies and procedures as in effect from time
to time, including, but not limited to, the Company's Code of Conduct and other
similar policies.
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November 24, 2004
Page -2-
4. SERVICE TERM AND TERMINATION.
(i) You and the Company agree that your service to the Company will
continue from the Effective Date through October 31, 2005, unless
otherwise earlier terminated by the Company pursuant to the terms
of this Agreement (this period, as it may be reduced in
accordance with Section 9 below, being hereinafter referred to as
the "Service Term"). The Chairman of the Board, in his sole
discretion, may at any time following the Effective Date request
that you resign from the Board, and you hereby agree to resign
from the Board upon such request. Notwithstanding any provision
of this Agreement to the contrary, in the event you are requested
to resign from the Board, you will continue to provide Services
as may be reasonably requested from time to time until October
31, 2005 in exchange for continued payment of the Separation Pay
and Benefits, subject to earlier termination in accordance with
Section 9 below.
(ii) At the end of the Service Term, the Company may consider, in its
sole discretion, extending the Service Term for an additional
period, upon terms and conditions to be agreed upon at such time.
5. SEPARATION PAY AND BENEFITS. In exchange for your performance of the
Services and your promises set forth in this Agreement, and beginning as soon as
practicable after the eighth (8th) day following your submission of a signed
version of this Agreement in accordance with Section 10 below (the "Effective
Date"), the Company agrees to provide you with the following payments and
benefits (the "Separation Pay and Benefits"):
(i) Fee payments at a rate equal to your most recent monthly base
salary amount in effect prior to the Separation Date, which
amounts will be paid during the Service Term in monthly
installments on the last business day of each month commencing on
November 30, 2004.
(ii) Eligibility for 2004 annual bonus, as determined by the
Compensation Committee of the Board in its sole discretion, the
amount of which will be based on the Compensation Committee's
assessment of (a) your performance in relation to previously
agreed CEO objectives for the period from January 1, 2004 through
October 29, 2004, and (b) your performance as Vice-Chairman for
the period from the Effective Date through December 31, 2004. To
the extent the Compensation Committee of the Board determines to
award you a 2004 annual bonus, such bonus will be paid to you at
the same time that 2004 annual bonuses are paid to senior
executives of the Company.
(iii) Continuation of vesting of your stock options during the Service
Term; all vested options will remain exercisable for a period of
3 months after the Service Term.
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November 24, 2004
Page -3-
(iv) Upon completion of the appropriate COBRA(1/) forms, and subject
to all the requirements of COBRA, during the Service Term,
continuation of your participation in the Company's medical
insurance plans at the Company's cost. After the Service Term,
you will have the right to continue your medical insurance,
subject to the requirements of COBRA, at your own cost. The
"qualifying event" under COBRA shall be deemed to have occurred
on the Separation Date.
You acknowledge that, except for (x) the specific financial consideration
set forth in this Agreement, and (y) your final wages and any pay for accrued
but unused vacation, which have been paid to you in accordance with the
Company's regular payroll practices and applicable law, you are not now and will
not in the future be entitled to any other compensation from the Company,
including, without limitation, other wages, commissions, bonuses, vacation pay,
holiday pay, paid time off or any other form of compensation or benefit.
6. REIMBURSEMENT OF EXPENSES. You hereby acknowledge receipt of all expense
reimbursements due to you in connection with all services performed, and
expenses incurred, prior to the Separation Date. Upon presentation of proper
documentation submitted to the Company on a timely basis, the Company will
reimburse you, in accordance with Company policy with respect thereto as in
effect from time to time, for all ordinary and reasonable out-of-pocket business
expenses incurred by you in performing the Services after the Separation Date.
7. EQUITY. You expressly agree to the following:
(i) to modify your existing option agreements with the Company to the
extent necessary to comply with Section 5(iii) above; and
(ii) to be bound by any standard underwriter "lock up" provisions that
may be requested of the directors, officers or stockholders of
the Company at any time.
8. COVENANTS BY YOU. You expressly acknowledge and agree to the following:
(i) that for a period of two years following the Effective Date, you
will not, without the prior written consent of the Company:
(a) for yourself or on behalf of any other person or entity,
directly or indirectly, either as principal, partner,
stockholder, officer, director, member, employee,
consultant, agent, representative or in any other capacity,
own, manage, operate or control, or be connected with or
employed by, or otherwise associate in any manner with,
engage in or have a financial interest in, any business or
business activity which is related to the research,
development, manufacture, marketing, selling or servicing of
products or services that are competitive with the products
or services being
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(1/) "COBRA" is the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended.
Xx. Xxxxx X. Xxxxxxxx
November 24, 2004
Page -4-
marketed, sold, serviced or under research or development by
or on behalf of the Company, including, but not limited to,
services and products related to the crystallization of
proteins or antibodies (the "Restricted Business"), except
that nothing contained herein will preclude you from
purchasing or owning securities of any such business if such
securities are publicly traded, and provided that your
holdings do not exceed one percent (1%)of the issued and
outstanding securities of any class of securities of such
business; or
(b) either individually or on behalf of or through any third
party, directly or indirectly, solicit, divert or
appropriate, or attempt to solicit, divert or appropriate,
for the purpose of competing with or disrupting the
relationship with the Company or any present or future
parent, subsidiary or other affiliate of the Company that is
engaged in the Restricted Business, any persons or entities
that are, or were, customers, clients, collaborative
partners, or vendors of the Company, or any prospective
customers, clients, collaborative partners, or vendors with
respect to which the Company has developed, made or received
a presentation for the purpose of offering or obtaining
services or engaging in a collaborative relationship at any
time in the 12-month period immediately preceding the
Effective Date or during the Service Term; or
(c) either individually or on behalf of or through any third
party, directly or indirectly, (1) hire, retain, solicit,
entice, encourage or persuade, or attempt to hire, retain,
solicit, entice, encourage or persuade any director or
employee of, or consultant to, the Company to leave the
service of the Company for any reason, or (2) employ, cause
to be employed, or solicit the employment or service of, any
director or employee of, or consultant to, the Company, in
each case while any such person is providing services to the
Company or within six months after any such person has
ceased providing services to the Company; or
(d) either individually or on behalf of or through any third
party, directly or indirectly, interfere with, or attempt to
interfere with, the relations between the Company and any
collaborative partner of, or vendor or supplier to, the
Company;
(ii) that, as soon as reasonably possible following the Effective
Date, you will provide to the Company an inventory of all Company
property in your possession and that on the last day of the
Service Term you will return to the Company all material Company
documents (and any copies thereof) and all Company property
(regardless how such documents (or copies thereof) or property
are maintained, including whether or not in electronic form or
otherwise), and that you will abide by the provisions of the
Xx. Xxxxx X. Xxxxxxxx
November 24, 2004
Page -5-
Company's Non-Disclosure and Assignment of Inventions Agreement
(copy attached) previously signed by you, the terms of which are
hereby incorporated by reference and which shall survive the
signing of this Agreement; further, you agree that you will abide
by any and all common law and/or statutory obligations relating
to protection and non-disclosure of the Company's trade secrets
and/or confidential and proprietary documents and information;
(iii) that all information relating in any way to the negotiation of
this Agreement, including the terms and amount of financial
consideration provided for in this Agreement, shall be held
confidential by you and shall not be publicized or disclosed to
any person (other than an immediate family member, legal counsel
or financial advisor, provided that any such individual to whom
disclosure is made agrees to be bound by these confidentiality
obligations), business entity or government agency (except as
mandated by state or federal law), except that nothing in this
paragraph will prohibit you from participating in an
investigation with a state or federal agency if requested by the
agency to do so;
(iv) that you will perform and make yourself generally available to
the Company during the Service Term to perform the Services; you
further agree that you will cooperate fully with the Company in
the defense or prosecution of any claims or actions now in
existence or which may be brought or threatened in the future
against or on behalf of the Company, its directors, shareholders,
officers, or employees; the Company will reimburse you for
reasonable, documented expenses incurred should your presence be
required in person, in accordance with Company policy and as
determined by the Chairman of the Board, in his discretion; you
further agree that should you be contacted by any individual or
any person representing an individual or entity that is or may be
legally or competitively adverse to the Company in connection
with any claims or legal proceedings, you will promptly notify
the Chairman of the Board (or the Chairman's designee) of that
fact in writing; and
(v) you further recognize and acknowledge that (a) the types of
employment which are prohibited by this Section 8 are narrow and
reasonable in relation to the skills which represent your
principal salable asset both to the Company and to your other
prospective employers and (b) the time period and scope of the
provisions of this Section 8 are reasonable, legitimate and fair
to you in light of the Company's need to continue its therapeutic
product research and development efforts, including seeking
collaborative partnerships, and in light of the limited
restrictions on the type of employment prohibited herein compared
to the types of employment for which you are qualified to earn
your livelihood.
Your acknowledgements and agreements set forth in this Section 8 supersede
any acknowledgements and agreements related to the same subject matter contained
in any other
Xx. Xxxxx X. Xxxxxxxx
November 24, 2004
Page -6-
agreement that you have previously entered into with the Company, and this
Section 8 will survive the termination of the Service Term or of this Agreement
for any reason or for no reason.
9. MATERIAL BREACH. Notwithstanding any other provision of this Agreement
to the contrary, if the Board determines in its sole discretion that you (a) are
not, or have not been, performing (or are not, or have not been, generally
available to perform) the Services in good faith, or (b) have otherwise
materially breached the terms of this Agreement, then, in addition to any other
legal or equitable remedy that may be available to the Company, (x) if such
determination is made during the Service Term, the Company may terminate the
Service Term at any time thereafter, and all Separation Pay and Benefits
hereunder will immediately cease, and (y) regardless of whether such
determination is made during or after the Service Term, you will immediately
refund to the Company all Separation Pay and Benefits already paid to you, and
you will immediately forfeit any additional vesting of your stock options (or
stock received upon exercise of the additionally vested portion thereof)
following the Separation Date, without, in all cases, any consideration paid to
you (other than the Company's repayment to you of the exercise price of any
shares purchased by you upon exercise of the additionally vested portion of your
options).
10. RELEASE OF CLAIMS. You hereby agree and acknowledge that by signing
this Agreement and accepting the Separation Pay and Benefits and for other good
and valuable consideration, you are waiving your right to assert any and all
forms of legal Claims (as defined below) against the Company(2/) of any kind
whatsoever, whether known or unknown, arising from the beginning of time through
the date you execute this Agreement (the "Execution Date"). Except as set forth
below, your waiver and release herein is intended to bar any form of legal
claim, charge, complaint or any other form of action (jointly referred to as
"Claims") against the Company seeking any form of relief, including, without
limitation, equitable relief (whether declaratory, injunctive or otherwise), the
recovery of any damages, or any other form of monetary recovery whatsoever
(including, without limitation, back pay, compensatory damages, emotional
distress damages, punitive damages, attorneys fees and any other costs) against
the Company, for any alleged action, inaction or circumstance existing or
arising through the Execution Date.
Without limiting the foregoing general waiver and release, you specifically
waive and release the Company from any Claim arising from or related to your
relationship with the Company or the termination thereof, including, without
limitation:
(i) Claims under any state or federal discrimination, fair employment
practices or other employment-related statute, regulation or
executive order (as they may have been amended through the
Execution Date) prohibiting discrimination or harassment based
upon any protected status, including, without limitation, race,
national origin, age, gender, marital status, disability, veteran
status or sexual orientation. Without limitation, specifically
included in this paragraph are any
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(2/) For purposes of this Section, the "Company" includes Altus Pharmaceuticals
Inc. and any of its divisions, affiliates (which means all persons and
entities directly or indirectly controlling, controlled by or under common
control with the Company), subsidiaries and all other related entities, and
its and their directors, officers, employees, shareholders,
representatives, and their respective assigns.
Xx. Xxxxx X. Xxxxxxxx
November 24, 2004
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Claims arising under the federal Age Discrimination in Employment
Act, the Older Workers Benefit Protection Act, the Civil Rights
Acts of 1866 and 1871, Title VII of the Civil Rights Act of 1964,
the Civil Rights Act of 1991, the Equal Pay Act, the Americans
With Disabilities Act, and any similar Massachusetts or other
federal, state or local statute.
(ii) Claims under any other federal, state or local employment-related
statute, regulation or executive order (as they may have been
amended through the Execution Date) relating to wages, hours or
any other terms and conditions of employment. Without limitation,
specifically included in this paragraph are any Claims arising
under the Fair Labor Standards Act, the Family and Medical Leave
Act of 1993, the National Labor Relations Act, the Employee
Retirement Income Security Act of 1974, the Consolidated Omnibus
Budget Reconciliation Act of 1985 ("COBRA"), and any similar
Massachusetts or other federal, state or local statute.
(iii) Claims under any federal, state or local common law theory
including, without limitation, wrongful discharge, breach of
express or implied contract, promissory estoppel, unjust
enrichment, breach of a covenant of good faith and fair dealing,
violation of public policy, defamation, interference with
contractual relations, intentional or negligent infliction of
emotional distress, invasion of privacy, misrepresentation,
deceit, fraud or negligence.
(iv) Claims under any federal, state or local securities law,
including, without limitation, the Securities Act of 1933, as
amended, the Securities Exchange Act of 1934, as amended, and any
Massachusetts, Delaware or other federal, state or local
securities statutes and regulations.
(v) Any other Claim arising under federal, state or local law.
You acknowledge and agree that, but for providing this waiver and release,
you would not be receiving the economic benefits being provided to you under the
terms of this Agreement. Notwithstanding the foregoing, this Section 10 does not
release the Company from any obligation expressly set forth in this Agreement.
You explicitly acknowledge that because you are over forty (40) years of
age, you have specific rights under the Age Discrimination in Employment Act
("ADEA") and the Older Workers Benefit Protection Act ("OWBPA"), which prohibit
discrimination on the basis of age, and that the releases set forth in this
Section 10 are intended to waive any right that you may have to file a claim
against the Company alleging discrimination on the basis of age.
It is the Company's desire and intention to make certain that you fully
understand the provisions and effects of this Agreement. To that end, you have
been encouraged and given the opportunity to consult with legal counsel for the
purpose of reviewing the terms of this Agreement. Also, consistent with the
provisions of the OWBPA and ADEA, the Company is providing you with twenty-one
(21) days in which to consider and accept the terms of this
Xx. Xxxxx X. Xxxxxxxx
November 24, 2004
Page -8-
Agreement by signing below and returning it to Xxxxxxxx X. Xxxxxxx, Esq., c/o
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., Xxx Xxxxxxxxx Xxxxxx,
Xxxxxx, XX 00000, or such other address as the Company may designate by written
notice to you. In addition, you may rescind your acceptance of this Agreement
if, within seven (7) days after you sign and return this Agreement, you deliver
by hand or by facsimile a notice of rescission to Xxxxxxxx X. Xxxxxxx, Esq. at
the above-referenced address, or, if by facsimile, to (000) 000-0000.
Also, consistent with the provisions of the ADEA and other federal
discrimination laws, nothing in this release shall be deemed to prohibit you
from challenging the validity of this release under the federal age or other
discrimination laws (the "Federal Discrimination Laws") or from filing a charge
or complaint of age or other employment related discrimination with the Equal
Employment Opportunity Commission ("EEOC"), or from participating in any
investigation or proceeding conducted by the EEOC. Further, nothing in this
release or Agreement shall be deemed to limit the Company's right to seek
immediate dismissal of such charge or complaint on the basis that your signing
of this Agreement constitutes a full release of any individual rights under the
Federal Discrimination Laws, or to seek restitution to the extent permitted by
law of the economic benefits provided to you under this Agreement in the event
that you successfully challenge the validity of this release and prevail in any
claim under the Federal Discrimination Laws.
11. SUPPLEMENTAL RELEASE OF CLAIMS. In consideration of the promises,
conditions and representations set forth herein, and other good and valuable
consideration, the receipt and sufficiency of which you hereby acknowledge, at
the end of the Service Term, you agree to execute an additional release in which
you waive your right to assert any and all forms of legal Claims against the
Company (as specifically defined in Section 10 above) of any kind whatsoever,
whether known or unknown, arising from the Execution Date through the date on
which the Service Term terminates. You acknowledge and agree that such release
shall be substantially similar in form and substance to Section 10 of this
Agreement.
12. ATTORNEY FEES. The Company will reimburse you up to a maximum of $2,500
for review of this Agreement (and any drafts hereof) by your legal counsel,
payable upon presentation of an applicable invoice for services rendered.
13. NO CONFLICT. By signing this Agreement, you represent that you have no
agreement with or other legal obligation to any prior employer or any other
person or entity that restricts your ability to enter into this Agreement, or to
perform the Services hereunder.
14. ASSIGNMENT. The Company may assign its rights and obligations under
this Agreement at its sole discretion. As this Agreement is personal to you, you
may not assign your rights and obligations under this Agreement. This Agreement
shall be binding on you and the Company, and shall inure to the benefit of any
successors and/or permitted assigns of you and the Company.
15. HEADINGS. The headings in this Agreement are for convenience only, and
you and the Company agree that they shall not be construed or interpreted to
modify or affect the construction or interpretation of any provision of this
Agreement.
Xx. Xxxxx X. Xxxxxxxx
November 24, 2004
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16. INJUNCTIVE RELIEF. You acknowledge and agree that a breach or
threatened breach by you of any terms of this Agreement, including, but not
limited to, your covenants and/or obligations under Sections 7 and 8 above,
would pose the risk of irreparable harm to the Company, and that in the event of
a breach or threatened breach of any of such terms, in addition to such other
remedies that the Company may have at law, without posting any bond or security,
the Company shall be entitled to seek and obtain equitable relief in the form of
specific performance, or temporary, preliminary or permanent injunctive relief,
or any other equitable remedy which then may be available, and that the seeking
of such injunction or order shall not affect the Company's right to seek and
obtain damages or other equitable relief on account of any such actual or
threatened breach.
17. ENTIRE AGREEMENT/MODIFICATION/WAIVER/CHOICE OF LAW/ENFORCEABILITY. You
acknowledge and agree that this Agreement supersedes the terms and provisions of
the term sheet, dated and delivered to you on October 28, 2004 (the "Term
Sheet"), and any and all prior or contemporaneous oral or written agreements,
representations, covenants or understandings between you and the Company with
respect to the subject matter of the Term Sheet. All other agreements to which
you are a party shall continue in full force and effect, except to the extent
otherwise provided herein. No variations or modifications hereof shall be deemed
valid unless reduced to writing and signed by the parties hereto. The failure of
either party to this Agreement to seek enforcement of any provision of this
Agreement in any instance or for any period of time will not be construed as a
waiver of such provision or of such party's right to seek enforcement of such
provision in the future. This Agreement shall be deemed to have been made in
Massachusetts, shall take effect as an instrument under seal within
Massachusetts, and shall be governed by and construed in accordance with the
laws of Massachusetts, without giving effect to conflict of law principles. You
agree that any action, demand, claim or counterclaim relating to the terms and
provisions of this Agreement, or to its breach, will be commenced in
Massachusetts in a court of competent jurisdiction, and you further acknowledge
that venue for such actions will lie exclusively in Massachusetts and that
material witnesses and documents would be located in Massachusetts. Both parties
hereby waive and renounce in advance any right to a trial by jury in connection
with such legal action. The provisions of this Agreement are severable, and if
for any reason any part hereof shall be found to be unenforceable, the remaining
provisions shall be enforced in full.
18. MUTUAL NON-DISPARAGEMENT.
(i) You agree that you will not make any statements that are
professionally or personally disparaging about, or adverse to,
the interests of the Company (including, but not limited to, its
current or former officers, directors, employees, shareholders,
consultants, collaborative partners, vendors, representatives and
agents) including, but not limited to, any statements that
disparage any person, product, service, finances, financial
condition, capability or any other aspect of the business of the
Company or such other person or entity, and that you will not
engage in any conduct which could reasonably be
Xx. Xxxxx X. Xxxxxxxx
November 24, 2004
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expected to harm professionally or personally the reputation of
the Company (including, but not limited to, its current or former
officers, directors, employees, shareholders, consultants,
collaborative partners, vendors, representatives and agents); and
(ii) The Company agrees that neither it or any officer or director
will make any statements that are professionally or personally
disparaging about, or adverse to, your interests including, but
not limited to, any statements that disparage you, your
capabilities or any other aspect of your performance for the
Company, and that neither the Company nor its officers or
directors will engage in any conduct which could reasonably be
expected to harm your personal or professional reputation. You
may refer any reference requests to either the Chairman of the
Board or any member of the Compensation Committee, who shall
respond to any such inquiry in a manner consistent with the
requirements of this subsection (ii).
(iii) Nothing in this Section 18 shall prevent the parties from (A)
complying with compulsory legal process or otherwise making
disclosures in connection with litigation or administrative
proceedings, (B) making such disclosures as are necessary to
obtain legal advice, (C) making disclosures as are required by
federal, state or local regulatory authorities, and (D) making
disclosures which by law are required or cannot be prohibited.
By executing this Agreement, you are acknowledging that you have been
afforded sufficient time to understand the terms and effects of this Agreement,
that your agreements and obligations hereunder are made voluntarily, knowingly
and without duress, and that neither the Company nor its agents or
representatives have made any representations inconsistent with the provisions
of this Agreement.
If the foregoing correctly sets forth our understanding, please sign and
date the enclosed copy of this Agreement in the spaces provided below, and
return the executed copy to Xxxxxxxx X. Xxxxxxx, Esq. at the above-referenced
address.
Sincerely,
ALTUS PHARMACEUTICALS INC.
By: /s/ Xxxxxxxx Xxxx
------------------------------------
Name: Xxxxxxxx Xxxx
Title: Chairman of the Compensation
Committee
Confirmed, Acknowledged and Agreed:
/s/ Xxxxx X. Xxxxxxxx
-------------------------------------
Xxxxx X. Xxxxxxxx
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November 24, 2004
Page -11-
Dated:
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