Exhibit 10.18
SUBSCRIPTION AGREEMENT MADE AND ENTERED INTO IN XXX XXXX XXX XXXXXXXX XX
XXXXXXXX, XX THE 2ND DAY OF MAY, 1997
BY AND BETWEEN: H POWER CORP., a Delaware corporation, having its head office
and principal place of business in the City of Belleville,
State of New Jersey,
(hereinafter referred to as "H Power")
PARTY OF THE FIRST PART
AND: 3362469 CANADA INC., a body politic and corporate, duly
incorporated according to the Canada Business Corporations
Act, having its head office and principal place of business in
the City of Montreal, Province of Quebec,
(hereinafter referred to as the "Corporation")
PARTY OF THE SECOND PART
SECTION 1 - PREAMBLE
1.1 WHEREAS H Power wishes to subscribe for shares from the treasury of the
Corporation at the price set forth hereinafter, the whole on the terms and
conditions hereinafter set out in this Agreement.
1.2 WHEREAS concurrently with the execution of this Agreement, the Investors
entered into a Subscription Agreement with the Corporation (the "Investors'
Subscription Agreement") providing for the subscription by the Investors for
shares from the treasury of the Corporation.
NOW, THEREFORE, THIS AGREEMENT WITNESSETH:
SECTION 2 - INTERPRETATION
2.1 Definitions. In this Agreement:
2.1.1 "Agreement" means this Subscription Agreement and all instruments
supplemental hereto or in amendment or confirmation hereof; "herein",
"hereof", "hereto", "hereunder" and similar expressions mean and refer to
this Agreement and not to any particular Section, subsection or other
subdivision; "Section", "subsection" or other subdivision of this
Agreement means and refers to the specified Section, subsection or other
subdivision of this Agreement;
2.1.2 "Applicable Law" means any domestic or foreign federal, state,
provincial, county, local, municipal and regional statute, law,
ordinance, rule, regulation, restriction, regulatory policy or guideline,
by-law (zoning or otherwise), principles of common law, civil law or
equity, as well as Permits, Orders, decrees and rules (having the force
of law); and any judgments or injunctions issued, prolongated, approved
or entered thereunder;
2.1.3 "Business Day" means any day, other than a Saturday or Sunday or a day on
which the principal commercial banks in the Province of Quebec are not
open for business during normal banking hours;
2.1.4 "Class B Common Shares" has the meaning ascribed thereto in the Articles
of Incorporation of the Corporation;
2.1.5 "dollar", "dollars" and the sign "$", unless otherwise indicated, each
mean lawful money of the United States of America;
2.1.6 "Governmental Body" means (i) any domestic or foreign national, federal,
provincial, state, municipal or other government or body, (ii) any
multinational, multilateral or international body, (iii) any subdivision,
agent, commission, board, instrumentality or authority of any of the
foregoing governments or bodies, (iv) any quasi-governmental or private
body exercising any regulatory, expropriation or taxing authority under
or for the account of any of the foregoing governments or bodies, or (v)
any domestic, foreign, international, multilateral or multinational
judicial, quasi-judicial, arbitration or administrative court, tribunal,
commission, board or panel;
2.1.7 "H Power License Agreement" means the license agreement entered into
between the Corporation and H Power on the date hereof by which H Power
licenses and/or sub-licenses to the Corporation all of its technology in
connection with Stationary Fuel-Cell-Power Systems for Xxxxx Xxxxxxx,
Xxxxxxx Xxxxxxx xxx Xxxxx Xxxxxxx (other than the States of Pennsylvania,
Ohio and West Virginia);
2.1.8 "H Power Shares" has the meaning ascribed thereto in subsection 3.1;
2.1.9 "Investors" means Societe Innovatech du Grand Montreal, Sofinov Societe
Financiere d'Innovation Inc. and 0000-0000 Xxxxxx Inc., collectively, and
"Investor" means any of them;
2.1.10 "Investors' Subscription Agreement" has the meaning ascribed thereto in
subsection 1.2;
2.1.11 "Person" means an individual, corporation, company, cooperative,
partnership, trust, unincorporated association, entity with judicial
personality, Governmental Body; and pronouns when they refer to a Person
have a similarly extended meaning;
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2.1.12 "Prime Rate" means the interest rate quoted publicly by the Corporation's
regular bankers as the reference rate of interest for commercial demand
loans made in Canadian dollars and commonly known as such bank's prime
rate, as adjusted from time to time, on the basis of the Prime Rate in
effect on the first day of each month;
2.1.13 "Shareholders Agreement" means the Shareholders Agreement of even date
among the parties hereto and the Investors, setting forth the terms and
conditions which will govern the relationship of H Power and the
Investors as shareholders of the Corporation.
2.2 Gender. Any reference in this Agreement to any gender shall include both
genders and the neutral, and words used herein importing the singular number
only shall include the plural and vice versa.
2.3 Headings. The division of this Agreement into Sections, subsections and
other subdivisions, and the insertion of headings are for convenience of
reference only and shall not affect or be utilized in the construction or
interpretation of this Agreement.
2.4 Severability. Any Section, subsection or other subdivision of this Agreement
or any other provision of this Agreement which is, or becomes, illegal, invalid
or unenforceable shall be severed therefrom and shall be ineffective to the
extent of such illegality, invalidity or unenforceability and shall not affect
or impair the remaining provisions hereof, which provisions shall be severed
from an illegal or unenforceable Section, subsection or other subdivision of
this Agreement or any other provisions of this Agreement.
2.5 Entire Agreement. This Agreement, together with any other instruments to be
delivered pursuant hereto, constitute the entire agreement among the parties
pertaining to the subject matter hereof and supersede all prior agreements,
understandings, negotiations, and discussions, whether oral or written, among
any or all of the parties.
2.6 Amendments. No amendment of this Agreement shall be binding unless otherwise
expressly provided in an instrument duly executed by each of the parties hereto.
2.7 Waiver. Except as otherwise provided in this Agreement, no waiver of any of
the provisions of this Agreement shall be deemed to constitute a waiver of any
other provisions (whether or not similar), nor shall such waiver constitute a
continuing waiver unless otherwise expressly provided in an instrument duly
executed by the parties.
2.8 Delays. When calculating the period of time within which or following which
any act is to be done or step taken pursuant to this Agreement, the day which is
the reference day in calculating such period shall be excluded. If the day on
which such delay expires is not a Business Day, then the delay shall be extended
to the next succeeding Business Day.
2.9 Preamble. The preamble hereof shall form an integral part of this Agreement.
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2.10 Governing Law. This Agreement shall be governed by and interpreted and
enforced in accordance with the laws of the Province of Quebec and the laws of
Canada applicable therein.
SECTION 3 - SUBSCRIPTIONS
3.1 H Power Subscription. H Power hereby subscribes for 333,333 Class B Common
Shares (collectively the "H Power Shares") of the Corporation's share capital in
consideration of the signing by H Power of and the granting by H Power to the
Corporation of rights pursuant to the H Power License Agreement. The parties
hereby agree that the fair market value of such consideration is $5,000,000. The
Corporation hereby accepts the subscription of H Power for the H Power Shares
subject to the terms and conditions contained herein.
3.2 Payment and Issue of H Power Shares. H Power hereby agrees to sign the H
Power License Agreement and grant the rights contemplated thereby to the
Corporation on the date hereof, and the Corporation shall, upon the signature by
H Power of the H Power License Agreement, issue the H Power Shares to H Power
and deliver share certificates representing same.
SECTION 4 - REPRESENTATIONS AND WARRANTIES
4.1 Representations and Warranties of H Power. H Power hereby represents and
warrants to the Corporation and acknowledges and confirms that the Corporation
is relying upon such representations and warranties in connection herewith and
would not have entered into this Agreement without such representations and
warranties:
4.1.1 H Power is duly incorporated, validly existing and in good standing under
the laws of its jurisdiction of incorporation;
4.1.2 H Power has the necessary corporate power and authority to execute this
Agreement and to perform its obligations hereunder. The execution of this
Agreement by H Power and the performance by H Power of its obligations
hereunder have been duly authorized by all necessary action on its part
and do not require any action or consent of, any registration with, or
notification to any Person, or any action or consent under any laws to
which H Power is subject;
4.1.3 the execution of this Agreement, the consummation of the transactions
contemplated herein, the performance by H Power of its obligations
hereunder and the compliance by it with this Agreement do not:
4.1.3.1 violate, contravene or breach, or constitute a default under, the
constating documents or by-laws of H Power;
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4.1.3.2 violate, contravene or breach, or constitute a default under any
contract, agreement, indenture, instruments, or commitment to which H
Power may be a party, or its properties may be subject, or by which it is
bound or affected; or
4.1.3.3 violate, contravene or breach any laws to which H Power is
subject;
4.1.4 neither H Power nor any of its respective shareholders, directors,
officers, employees or agents has employed or incurred any liability to
any broker, finder or agent for any brokerage fees, finder's fees,
commissions or other amounts with respect to this Agreement or any of the
transactions contemplated hereby except for the commitment fee payable by
H Power to the Investors.
4.2 Representations and Warranties of the Corporation. The Corporation hereby
represents and warrants as follows to H Power and acknowledges and confirms that
H Power is relying upon such representations and warranties in connection
herewith and would not have entered into this Agreement without such
representations and warranties:
4.2.1 the Corporation:
4.2.1.1 is duly incorporated, validly existing and in good standing under
the laws of its jurisdiction of incorporation; and
4.2.1.2 has not carried on any business since its incorporation;
4.2.2 the Corporation has the necessary corporate power and authority to
execute this Agreement and to perform its obligations hereunder. The
execution of this Agreement by the Corporation and the performance by the
Corporation of its obligations hereunder have been duly authorized by all
necessary action on its part and do not require any actions or consent
of, any registration with, or notification to, any Person, or any action
or consent under any laws to which the Corporation is subject;
4.2.3 the execution of this Agreement, the consummation of the transactions
contemplated herein, the performance by the Corporation of its
obligations hereunder and the compliance by it with this Agreement do
not:
4.2.3.1 violate, contravene or breach, or constitute a default under, the
constating documents or by-laws of the Corporation;
4.2.3.2 violate, contravene or breach, or constitute a default under any
contract, agreement, indenture, instruments, or commitment to which the
Corporation may be a party, or its properties may be subject, or by which
it is bound or affected; or
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4.2.3.3 violate, contravene or breach any applicable laws to which the
Corporation is subject;
4.2.4 the authorized capital of the Corporation consists of an unlimited number
of Class A Common Shares and Class B Common Shares. After giving effect
to this Agreement and the Investors' Subscription Agreement, the only
shares of the Corporation which will be issued and outstanding will be
the H Power Shares, the Sofinov Shares (as defined in the Investors'
Subscription Agreement), the Innovatech Shares (as defined in the
Investors' Subscription Agreement) and the 9042-0175 Shares (as defined
in the Investors' Subscription Agreement), and upon receipt by the
Corporation of payment therefor in full, such shares will be issued and
outstanding as fully paid and non-assessable;
4.2.5 no Person has any agreement, option, right or privilege (whether
pre-emptive or contractual) capable of becoming an agreement for the
purchase from the Corporation of any securities of the Corporation, other
than as provided in the Investors' Subscription Agreement and in the
Shareholders Agreement;
4.2.6 neither the Corporation nor any of its respective directors, officers,
employees or agents has employed or incurred any liability to any broker,
finder or agent for any brokerage fees, finder's fees, commissions or
other amounts with respect to this Agreement or any of the transactions
contemplated hereby;
4.2.7 the Corporation is not a non-resident of Canada within the meaning of the
Income Tax Act (Canada).
4.3 Reliance on Representations and Warranties. Notwithstanding any
investigation conducted prior or subsequent to the date hereof, the parties
shall be entitled to rely upon the representations and warranties set forth
herein and the obligations of the parties with respect thereto shall survive the
execution of this Agreement for a period of two (2) years except for the
representations and warranties set forth in subsections 4.2.4 and 4.2.5 which
shall survive indefinitely.
SECTION 5 - INDEMNIFICATION
5.1 Definitions. As used in this Section 5:
5.1.1 "Additional Indemnity" means indirect damages;
5.1.2 "Claim" means any act, omission or state of facts and any demand, action,
suit, proceeding, investigation, arbitration, trial, claim, assessment,
judgment, settlement or compromise relating thereto which may give rise
to a right to indemnification under subsection 5.2 or 5.3 hereof;
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5.1.3 "Direct Claim" means any Claim by an Indemnified Party against an
Indemnifying Party which does not result from a Third Party Claim;
5.1.4 "Indemnifying Party" means any party obligated to provide indemnification
under this Agreement;
5.1.5 "Indemnified Party" means any party entitled to indemnification under
this Agreement;
5.1.6 "Indemnity Payment" means the aggregate amount of each Loss and
Additional Indemnity required to be paid pursuant to subsection 5.2 or
the amount of each Loss required to be paid pursuant to subsection 5.3
hereof;
5.1.7 "Loss" means any and all loss, liability, damage, cost, expense, charge,
fine, penalty or assessment, resulting from or arising out of any Claim,
including the costs and expenses of any action, suit, proceeding, demand,
assessment, judgment, settlement or compromise relating thereto and all
interest, punitive damages, fines and penalties and reasonable
attorneys', accountants' and experts' fees and expenses incurred in
connection therewith; and
5.1.8 "Third Party Claim" means any Claim asserted against an Indemnified Party
by any Person who is not a party to this Agreement.
5.2 Indemnification by the Corporation. The Corporation hereby agrees to
indemnify and save and hold harmless H Power from and against any Loss suffered
or incurred, directly or indirectly, by H Power as a result of, arising out of
or relating to:
5.2.1 any violation, contravention or breach of any covenant, agreement or
obligation of the Corporation under or pursuant to this Agreement or any
other document or certificate delivered to H Power by or on behalf of the
Corporation in connection therewith, as well as any Claim by any Person
containing allegations which, if true, would constitute such an event;
and
5.2.2 any incorrectness in, or breach of, any representation or warranty made
by the Corporation in this Agreement, or made or to be made in any other
document or certificate delivered or to be delivered to H Power by or on
behalf of the Corporation in connection therewith, as well as any Claim
by any Person containing allegations which, if true, would constitute
such an event.
5.3 Indemnification by H Power. H Power hereby agrees to indemnify and save and
hold harmless the Corporation from and against any Loss suffered or incurred,
directly or indirectly, by it as a result of, arising out of or relating to:
5.3.1 any violation, contravention or breach of any covenant, agreement or
obligation of such Investor under or pursuant to this Agreement or any
other document or certificate delivered
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to the Corporation by or on behalf of H Power in connection therewith, as
well as any Claim by any Person containing allegations which, if true,
would constitute such an event; and
5.3.2 any incorrectness in, or breach of, any representation or warranty made
by H Power in this Agreement, or made or to be made in any other document
or certificate delivered or to be delivered to the Corporation by or on
behalf of H Power in connection therewith, as well as any Claim by any
Person containing allegations which, if true, would constitute such an
event.
5.4 Payment and Interest. The Indemnifying Party shall reimburse, on demand, to
the Indemnified Party the amount of each Loss suffered or incurred by the
Indemnified Party and, in the event that subsection 5.5 applies, shall pay, on
demand, to the Indemnified Party the amount of the Additional Indemnity, the
whole as of the date that the Indemnified Party incurs such Loss, together with
interest on such amount(s) from the aforesaid date until payment in full at a
rate per annum equal to the Prime Rate, plus three (3) percentage points.
Interest shall be calculated and payable monthly on the last day of each month
during which any amount in respect of any Loss and/or any Additional Indemnity,
if applicable, remained unpaid, both before and after an arbitration award
and/or judgment, with interest on overdue interest calculated and payable at the
same rate.
5.5 Additional Indemnity. If the Corporation is the Indemnifying Party, in
addition to the reimbursement to the Indemnified Party of the amount of each
Loss suffered or incurred by the Indemnified Party as provided in subsection 5.4
hereof, the Indemnifying Party shall pay, on demand to the Indemnified Party the
Additional Indemnity, the whole as provided in subsection 5.4 hereof.
5.6 Notification. Promptly upon obtaining knowledge thereof, the Indemnified
Party shall notify the Indemnifying Party of each Claim which the Indemnified
Party has determined has given or could give rise to indemnification under this
Section 5, describing such Claim in reasonable detail. In circumstances where
the Indemnifying Party is notified of such Claim but not promptly, the
Indemnifying Party shall not be relieved from any duty to indemnify and save and
hold harmless which otherwise might exist with respect to such Claim unless (and
only to that extent) the omission to notify promptly materially prejudices the
ability of the Indemnifying Party to exercise its right to defend provided in
this Section 5.
5.7 Defense of Third Party Claims. The Indemnifying Party shall have the right,
after receipt of the Indemnified Party's notice under subsection 5.6 hereof with
respect to a Third Party Claim and upon giving written notice to the Indemnified
Party within ten (10) Business Days of such receipt, and subject to the rights
of any insurer or other third party having potential liability therefor, to
defend the Third Party Claim at its own cost and expense with counsel of its own
selection, provided that:
5.7.1 the Indemnified Party shall at all times have the right to fully
participate in the defense at its own expense;
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5.7.2 the Third Party Claim seeks only monetary damages and does not seek any
injunctive or other relief against the Indemnified Party;
5.7.3 the Indemnifying Party unconditionally acknowledges in writing its
obligation to indemnify and save and hold the Indemnified Party harmless
with respect to the Third Party Claim, if it is found that such
obligation exists;
5.7.4 legal counsel chosen by the Indemnifying Party is satisfactory to the
Indemnified Party, acting reasonably; and
5.7.5 if required to be delivered by Applicable Law or in order to prevent the
Indemnified Party from losing its right to proceed with its defense of
the Third Party Claim as a result of the intervention of the Indemnifying
Party, the Indemnifying Party delivers a letter of credit, surety bond or
such other security in an amount and in form and substance as is so
required. Amounts payable by the Indemnifying Party pursuant to a Third
Party Claim shall be paid in accordance with the terms of the settlement
or judgment, as applicable, but in any event prior to the expiry of any
delay for a judgment to become executory.
5.8 Waiver of Right to Defend Third Party Claims. If the Indemnifying Party
fails:
5.8.1 within fifteen (15) Business Days from receipt of the notice of a Third
Party Claim to give notice of its intention to defend the Third Party
Claim in accordance with subsection 5.7 hereof, or
5.8.2 to comply, at any time and in any material respect, with any of
subsections 5.7.1 through 5.7.5 (inclusively) hereof,
then the Indemnifying Party shall be deemed to have waived its right to defend
the Third Party Claim and the Indemnified Party shall have the right (but not
the obligation) to undertake the defense of the Third Party Claim and compromise
and settle the Third Party Claim on behalf, for the account and at the risk and
expense of the Indemnifying Party.
5.9 Direct Claims. If the Indemnifying Party fails to respond in writing to any
written notice of a Direct Claim given by the Indemnified Party pursuant to
subsection 5.5 hereof, and fails to make an Indemnity Payment to the Indemnified
Party within ten (10) Business Days thereof, the Indemnifying Party shall be
deemed to have rejected such Direct Claim, in which event the Indemnified Party
shall be free to pursue such rights, recourses and remedies as may be available
to it.
5.10 Deductible. Notwithstanding anything contained herein, neither of the
parties shall be entitled to indemnification pursuant to this Section 5 until
the aggregate amount of all sums payable by the Indemnifying Party in connection
with its indemnification obligations pursuant to this Section
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5 exceeds $100,000, after which point such minimum threshold will no longer
apply with respect to such Indemnifying Party.
5.11 Maximum Liability. Notwithstanding anything contained herein, the liability
of either Indemnifying Party pursuant to the provisions of this Section 5 shall
in no event exceed $5,000,000.
5.12 Right of Offset. Without in any way limiting the terms of this Section 5,
each party shall have the right to offset against all amounts payable from time
to time by it to any other party, howsoever arising, including under this
Agreement, any amount owing by such other party pursuant to the indemnification
obligations contained in this Agreement to the party intending to offset.
5.13 Cumulative Rights. The rights, recourses and remedies provided to an
Indemnified Party under this Section 5 are cumulative with any other right,
recourse and remedy such Indemnified Party may have or may hereafter acquire
under Applicable Law, and any right, recourse or remedy of such Indemnified
Party may be asserted completely against the Indemnifying Party, without regard
to the rights, recourses or remedies the Indemnified Party may have against any
other Person.
SECTION 6 - GENERAL PROVISIONS
6.1 Further Assurances. Each party, upon the request of the other, shall do,
execute, acknowledge and deliver or cause to be done, executed, acknowledged or
delivered all such further acts, deeds, documents, assignments, transfers,
conveyances, powers of attorney and assurances as may be reasonably necessary or
desirable to effect complete consummation of the transactions contemplated by
this Agreement.
6.2 Default Interest. Subject to subsection 5.4 hereof, if any party fails to
pay to the other party any amounts due hereunder within ten (10) days of the due
date, the party owing such money shall pay to the party owed such money, from
the date such amount was due, interest at the Prime Rate, plus three (3)
percentage points, compounded monthly and payable on demand.
6.3 Successors in Interest. This Agreement and the provisions hereof shall enure
to the benefit of and be binding upon the parties and their respective
successors and permitted assigns.
6.4 Arbitration. Any dispute or controversy between the Corporation and H Power
relating to any matter arising out of or connected with the rights and
obligations of the parties hereto under this Agreement shall be settled in
accordance with the provisions of Section 19 of the Shareholders Agreement.
6.5 Notices. All offers, acceptances, rejections, notices, requests,
authorizations, permissions directions, demands and other communications
hereunder shall be given in writing and shall be given by telecopier, or
delivered by hand, to the other party at the following addresses:
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if to H Power: H POWER CORP.
00 Xxxxxxxxxx Xxxxxx
Xxxxxxxxxx, Xxx Xxxxxx
00000, X.X.X.
Attention: the President
Telecopier: (000) 000-0000
if to the
Corporation: 3362469 CANADA INC.
x/x Xxxxxxxx Xxxxxxxxxx
0000 Xxxx-Xxxxxxxx Blvd. West
Suite 1400
Xxxxxxxx, Xxxxxx
X0X 0X0
Attention: Xxxxxx Xxxxxxxx
Telecopier: (000) 000-0000
with a copy in
all cases to: XXXXXXXX XXXXXXXXXX
0000 Xxxx-Xxxxxxxx Blvd. West
Suite 1400
Xxxxxxxx, Xxxxxx
X0X 0X0
Attention: Xxxxxx Xxxxxxxx
Telecopier: (000) 000-0000
with a copy in
all cases to: XXXXX XXXXXXXXXXXX ET AL
000 Xxxx 00xx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx Xxxxxxx
Telecopier: (000) 000-0000
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or at such other address as a party may have previously indicated to the other
party in writing in conformity with the foregoing. Any such notice, request,
demand or other communication shall be deemed to have been received on the date
of delivery if delivered by hand, or the next Business Day immediately following
the date of transmission if sent by telecopier. The original copy of any notice
sent by telecopier shall be forwarded to the other party by registered mail,
receipt return requested.
6.6 Time of the essence. Time shall be of the essence in this Agreement.
6.7 Counterparts. This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original, but all of which together shall
constitute one and the same document.
6.8 Language. The parties hereto state their express wish that this version of
this Agreement as well as all documentation contemplated hereby or pertaining
hereto or to be executed in connection herewith be drawn up in English; les
parties expriment leur xxxxx explicite a l'effet que cette version de cette
convention de meme que tous documents envisages par les presentes ou y ayant
trait ou qui seront signes relativement aux presentes soient rediges en anglais.
IN WITNESS WHEREOF, the parties have signed at the place and on the
date first herein above mentioned.
H POWER CORP. 3362469 CANADA INC.
Per: /s/ H. Xxxxx Xxxxxxx Per: /s/ Xxxxxx Xxxxxxxx
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H. Xxxxx Xxxxxxx Xxxxxx Xxxxxxxx
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