Exhibit 10.24
SERVICE CONTINUATION AGREEMENT
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This Service Continuation Agreement ("Agreement") is effective as of
December 29, 1997 by and between Frontier Corporation ("Frontier"), a New York
corporation with its principal offices at 000 Xxxxx Xxxxxxx Xxxxxx, Xxxxxxxxx,
Xxx Xxxx 00000 ("Frontier Center"), and Xxxxx X. Xxxxxxx, of 19 Mile Post Lane,
Pittsford, New York, 14534 ("Xxxxxxx").
WHEREAS, Frontier and Xxxxxxx are parties to a certain employment and change
of control agreement ("Employment Agreement") entered into as of August 16,
1995; and
WHEREAS, Xxxxxxx has valuable specific knowledge of the operations of
Frontier, and Frontier seeks to maintain the availability of Xxxxxxx, during a
period in which Xxxxxxx'x knowledge is expected to be of special value to
Frontier, and
WHEREAS, Xxxxxxx and Frontier are willing to establish arrangements to
maintain the availability to Frontier of Xxxxxxx'x knowledge and information,
and agree that this Agreement accurately reflects such arrangements,
NOW, THEREFORE, in consideration of the promises and mutual agreements
hereinafter set forth, the parties hereto agree as follows:
ARTICLE I. EMPLOYMENT CONTINUATION AND POSTEMPLOYMENT
AVAILABILITY.
1. Employment Continuation. Xxxxxxx and Frontier agree that Xxxxxxx
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shall continue to perform services as an employee and senior executive of
Frontier between the date of this Agreement (the "Effective Date") and the close
of business on February 28, 1998, the date on which Xxxxxxx has indicated his
intent to retire, or such other date as shall be mutually agreed upon by
Frontier and Xxxxxxx (the date upon which Xxxxxxx actually retires to be
referred to herein as the "Retirement Date"). The period from the Effective
Date through and including the Retirement Date shall constitute the "Retention
Term". Xxxxxxx'x existing Employment Agreement shall terminate on the
Retirement Date, except such provisions as may otherwise be addressed herein.
Effective on the first day after the Retirement Date, Xxxxxxx resigns any
position he may hold as an officer or director of Frontier or of any subsidiary
or affiliate of Frontier, and from which he has not previously resigned.
2. Postemployment Consulting. For a period commencing the day after the
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Retirement Date and ending February 28, 1999, Frontier agrees to retain the
services of Xxxxxxx as a consultant to Frontier, and Xxxxxxx agrees to provide
consulting services ("Services") to Frontier, under the terms and conditions
stated herein. The period from the end of the Retention Term through and
including February 28, 1999 shall constitute the "Consulting Term".
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ARTICLE II. EMPLOYEE RETENTION PROVISIONS
1. Employee Services. Xxxxxxx agrees to continue to perform the duties
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and obligations required of him in his current role as an employee and senior
executive of Frontier through the end of the Retention Term, and as provided for
in the Employment Agreement, it is the intent of this Agreement to continue to
encourage his complete dedication to Frontier during the Retention Term so as to
assure Frontier of continuity in its relationships with customers and employees.
Except as set forth in this Agreement and the Employment Agreement, Xxxxxxx'x
employment continues to be "at will" through the end of the Retention Term.
2. Base Compensation and Cash Transition Incentive. Frontier agrees to
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modify Xxxxxxx'x base compensation under the Employment Agreement, and shall pay
Xxxxxxx, effective November 1, 1997 and through the end of the Retention Term,
at a base compensation rate of Three Hundred Twenty-Five Thousand Dollars
($325,000) per annum, in installments in accordance with Frontier's policies
that are in effect during such period. In addition, Frontier agrees to pay to
Xxxxxxx, prior to the end of the fourth quarter of 1997, as a one-time
transition incentive, the sum of One Hundred Thousand Dollars ($100,000). This
transition incentive shall not be deemed a part of Xxxxxxx'x base compensation
but shall be taken into account for purposes of Xxxxxxx'x pension benefit
calculation.
3. Stock Transition Incentive. Frontier has elected to grant to Xxxxxxx
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one hundred thousand (100,000) options to purchase common stock of Frontier, at
a price set as of November 17, 1997, which options are granted under the
Frontier Management Stock Incentive Plan, and which shall have the three-year
vesting schedule and other terms and conditions established under that Plan.
To accept the grant, Xxxxxxx agrees to execute an option agreement in its
prevailing form. Such options shall continue to vest according to the
applicable plan vesting schedule during the stated period, including such part
of the period that occurs after Xxxxxxx'x retirement, subject to termination
under the conditions stated in the option agreement. Such options will
accelerate in the event of a Change of Control according to the provisions of
the applicable plan. In the event Xxxxxxx violates the non-competition
provision of such option agreement between the execution date of this Agreement
and February 28, 1999, inclusive, all options granted under this Section and
that are not exercised as of the date such violation is claimed may be
terminated by Frontier pursuant to the provisions of the option agreement,
subject to the procedures set out in Section 8 of Article IV of this Agreement.
4. Retirement Credit. Frontier agrees to credit Xxxxxxx with an
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additional 24 months of service for the purposes of determining the level of his
retirement benefits under such defined benefit retirement or pension plans as
are maintained by Frontier and under which Xxxxxxx may be a covered employee.
Xxxxxxx will be eligible for regular retirement benefits, including medical
benefits, under the applicable provisions of such employee retiree and/or
executive retiree programs as are applicable to Xxxxxxx. No new benefit is
intended to be created from the additional retirement credit. Applicable
payments will commence on the fifteenth day of the first full calendar month
after Xxxxxxx retires. Xxxxxxx also will be provided with the option to choose
a 100% joint and survivor benefit related thereto.
Xxxxxxx also shall be entitled to select COBRA coverage that is made
available generally to departing employees and which will remain available for a
period of eighteen (18) months. In addition, but in lieu of the additional
life insurance, disability, medical, dental, vision
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and hospitalization benefits that would be provided for an additional 24 months
after the end of employment under the Employment Agreement, Xxxxxxx also may
elect to receive a one-time cash payment of Twenty-Five Thousand Dollars
($25,000), which shall not be deemed a part of Xxxxxxx'x base compensation, nor
be taken into account with respect to the calculation of any benefits.
In the event Xxxxxxx should die or become disabled within the terms of any
benefit plan during the Retention Term, Xxxxxxx shall be deemed to have retired
one day prior to his death or disability, and he, or his estate or spouse, as
may be designated by Xxxxxxx, shall receive the full benefits available to them
in such capacity, from such circumstance. Any existing options and restricted
stock currently held by Xxxxxxx and which are provided under a plan that
provides for vesting into retirement will continue to vest into Xxxxxxx'x
retirement to the extent provided in the applicable plan.
5. Provisions Related to Non-Competition, Non-Solicitation and Protection
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of Frontier Confidential Information. Xxxxxxx agrees to continue to honor
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fully the provisions of the Employment Agreement with respect to his access to
and use of Frontier information, to non-competition with Frontier, and to non-
solicitation of Frontier customers and employees, as such provisions,
incorporated herein by reference, are modified or clarified by this Agreement.
Xxxxxxx further agrees that, in consideration of the additional and
expanded benefits provided him under this Agreement, the Restricted Period, as
defined in the Employment Agreement, shall be restated as 24 months for purposes
of Section 4.1(ii) of the Agreement (non-solicitation) and of this Agreement,
and shall terminate February 29, 2000. Frontier and Xxxxxxx agree that the
Restricted Period, as defined in the Employment Agreement, shall be reduced to
12 months for purposes of Section 4.1(i) of the Agreement (non-competition) and
of this Agreement, and shall terminate February 28, 1999. Solicitation,
competitive activity or disclosure of information that is not in violation of
this Agreement or the Employment Agreement, as modified herein, will not be
deemed to be inimical to Frontier within the terms of any other plan or
agreement involving Xxxxxxx. Frontier agrees that it will waive, as to Xxxxxxx,
such part of the time limit of any non-compete provision of any option agreement
or restricted stock agreement or supplemental pension plan currently in place
with or affecting Xxxxxxx to the extent that such provision would extend beyond
the 12 month period of section 4.1(i) and (ii) of the Employment Agreement. All
such non-compete and non-solicitation provisions applicable to Xxxxxxx shall
terminate upon a Change of Control, consistent with the Employment Agreement, if
such Change of Control occurs earlier. Xxxxxxx reiterates and confirms the
continued applicability of Sections 4.3 and 5 of the Employment Agreement. In
the absence of any earlier termination of such provisions, if Xxxxxxx complies
with the non-compete and non-solicitation provisions of the Employment
Agreement, as they are modified here, through and including February 28, 1999,
for the purposes of Section 4.1(i) and February 29, 2000, for the purposes of
Section 4.1(ii), his responsibilities with respect to such provisions shall be
deemed fully satisfied.
6. Payments After Retirement. Provided that Xxxxxxx remains in
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compliance with the terms and conditions of this Agreement, Frontier and Xxxxxxx
agree that, promptly after the end of the Retention Term, or his death or
disability, as defined by the applicable benefit plans, whichever is earlier,
Xxxxxxx (or his estate, as applicable) shall be paid: (a) such compensation as
has and will accrue through the end of the Retention Term and which has not been
paid to Xxxxxxx by such date, including compensation for banked and unused
vacation time identified
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below; and (b) the sum of Seven Hundred Ten Thousand Dollars ($710,000) promptly
after Xxxxxxx'x retirement; both of which shall be subject to applicable
withholdings. Such payment is in lieu of all sums that are or may be due to
Xxxxxxx under section 6 of the Employment Agreement and any other obligation of
Frontier or expectation of Xxxxxxx not otherwise addressed specifically by this
Agreement. In the event of a Change of Control, and Xxxxxxx receives payments
that would qualify as "parachute payments" under Section 280G(b)(2) of the
Internal Revenue Code of 1986, as amended (the "Code"), the amount calculated
under this Agreement may be reduced by the present value (determined as provided
in Section 280G(d)(4) of the Code) of any other amount of severance relating to
salary or bonus continuation to be received by Xxxxxxx upon termination of
employment under any Frontier severance plan, policy or arrangement, if such
provision is triggered by any event(s) after the Effective Date, but Xxxxxxx
shall continue to have the benefit of the "gross-up" provision of the Employment
Agreement for such Change of Control as stated in section 7 of the Employment
Agreement and the Addendum to the Employment Agreement.
The Change of Control provisions set out in Sections 6 and 11 of the
Employment Agreement between Frontier and Xxxxxxx remain in full force and
effect through the end of the Retention Term. No sums will be payable to
Xxxxxxx under this Article or the Employment Agreement for any Change of Control
event within the terms of the Employment Agreement that first occurs after the
end of the Retention Term other than such amounts as may be payable under
Section 7 of the Employment Agreement.
If an event constituting a Change of Control within the terms of the
Employment Agreement should occur before the end of the Retention Term, and
Xxxxxxx'x employment is terminated: (a) for Good Reason as defined in the
Employment Agreement prior to the end of the Retention Term, or (b) by Frontier
following Change of Control but prior to the end of the Retention Term, then in
either event Xxxxxxx shall be entitled to the appropriate payments set out in
Section 6.4 of the Employment Agreement, rather than any payment under this
Section. Payment shall be made to Xxxxxxx under either Section 6.4 of the
Employment Agreement or this Section, but not both, whether or not a Change of
Control should occur with respect to Frontier.
In the event that Xxxxxxx'x employment is terminated by Frontier without
Cause prior to March 1, 1998, or prior to such later Retirement Date as the
parties agree upon in writing: (a) Xxxxxxx shall be entitled to receive all
payments to which he would otherwise become entitled under this Article II had
he not been terminated without Cause, and (b) Xxxxxxx shall become entitled to
such additional payments under Article III as he would have become entitled had
he not been terminated without Cause.
7. Other Benefits and Perquisites. Frontier shall pay to Xxxxxxx the
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value of any vacation time that has been banked under any preexisting Frontier
program, and any vacation time that is unused as of the Retirement Date.
Xxxxxxx agrees that, for 1998, until the end of the Retention Term, he shall be
entitled to such proportion of the total annual vacation/PTO time that would
have been available to him for all of 1998 as equals the proportion of days that
actually occur through the Retirement Date to the total number of days in 1998,
rounded up to the nearest vacation/PTO day.
Xxxxxxx and Frontier agree that title to the leased auto which is currently
made available to Xxxxxxx by Frontier will be obtained by Frontier and the auto
will be transferred to
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him, AS IS, including the existing installed cellular telephone. This transfer
will result in imputed income to Xxxxxxx.
Certain other executive perquisites made available to Xxxxxxx, such as
payments or reimbursements related to club memberships, telecommunications
services, and financial counseling, will terminate at the end of the Retention
Term, except that Frontier will continue Xxxxxxx'x current financial planning
arrangements through the completion of Xxxxxxx'x tax filings in 1999 for
calendar year 1998, and will permit Xxxxxxx to keep the Frontier telephone
system, facsimile and modem that are currently installed in his home.
ARTICLE III. POSTEMPLOYMENT CONSULTING SERVICE PROVISIONS.
1. Services. After his retirement, Xxxxxxx shall provide the Services
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to Frontier from time to time as they are reasonably requested during the
Consulting Term, on any matters on which Frontier seeks assistance, including
matters with which Xxxxxxx had direct experience as an employee, had received
information or had considered in an employment or executive capacity while at
Frontier, and including consultation and advice on the operations, finances,
strategies, plans and capabilities of Frontier. Xxxxxxx shall make himself
available on reasonable notice to assist Frontier to improve the ongoing conduct
of the business, to evaluate potential transactions, to resolve customer and
other controversies, and to represent Frontier from time to time in discussions
with third parties. It is not anticipated that Xxxxxxx'x Services will be
required on a full time basis; however, there may be one or more periods in
which Xxxxxxx may be requested to undertake Services that could require full day
commitments.
Xxxxxxx may undertake other engagements during the Consulting Term, provided
such engagements are not prohibited under any other provision of this Agreement;
and provided further, that Frontier work is given priority (and first priority
on reasonable request of Frontier), and such engagements neither interfere with
nor are inconsistent with his duties hereunder.
In performing the Services, Xxxxxxx shall comply with applicable local,
county, state and federal laws, ordinances and regulations, and with the
applicable ethics and safety practices and policies of Frontier.
2. Frontier Support. Frontier shall provide reasonable support at
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Frontier Center (or such alternative Frontier or other site as the parties deem
appropriate) as is reasonably requested from time to time by Xxxxxxx, so as to
allow Xxxxxxx to complete the Services, including reasonable office space,
reasonable secretarial support, and assistance in making travel and other
arrangements to perform the Services.
3. Modification in the Consulting Term. The Consulting Term commences
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on the day after the Retirement Date, and ends on February 28, 1999. Should
Xxxxxxx seek substantial relief from the non-compete provisions of the
Employment Agreement and this Agreement, and should Frontier agree to such
relief, the Consulting Term and the Price may be reduced accordingly by mutual
agreement as a condition of such relief so that a different Price (or no Price)
is paid after the substantially reduced non-compete provision becomes effective.
Should Xxxxxxx seek relief from the non-compete provisions of the Employment
Agreement and this Agreement that the parties agree is not substantial, no
adjustment in the Price shall be made.
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Xxxxxxx may seek modification or substantial relief from the non-compete
provision of the Employment Agreement, as modified by this Agreement, by
forwarding a letter requesting such relief to the Chief Executive Officer of
Frontier, with a copy to the General Counsel of Frontier. Such letter shall
fully and accurately identify the nature of the relief sought and the reason for
seeking such relief. Frontier will seek in good faith to respond promptly,
within 15 business days.
This Agreement may be renewed in a writing executed by Xxxxxxx and the Chief
Executive Officer of Frontier, for such additional Term and upon such terms and
conditions as Frontier and Xxxxxxx agree is appropriate, not exceeding one (1)
year at any time, but this Agreement does not renew automatically.
If a Change of Control event occurs prior to Xxxxxxx'x Retirement Date, and
Xxxxxxx is eligible for payments under Section 6.4 of the Employment Agreement,
those provisions of this Agreement that call for the provision of postemployment
Services shall be void and of no effect, and no consulting relationship shall be
initiated between Frontier and Xxxxxxx. Thereafter, and upon his retirement,
Xxxxxxx shall be under no obligation to perform the Services, and Frontier shall
be under no obligation to pay Xxxxxxx any compensation for such Services. If
the Employment Agreement and this Agreement are unclear about the application of
their terms to a particular Change of Control situation, the parties shall
confer promptly and shall seek a resolution that is appropriate to the
circumstances.
4. Price. Frontier shall pay Xxxxxxx a total price ("Price") for the
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Services performed during the Consulting Term of Three Hundred Fifty-Five
Thousand Dollars ($355,000.00), to be allocated over the number of months
between the end of the Retention Term and the end of the Consulting Term as
established by Section 3 of this Article III. An allocated portion of the Price
shall be paid, without any deductions or withholdings, periodically but no less
often than every third month during the Consulting Term.
Frontier shall reimburse Xxxxxxx for such reasonable business expenses as
are incurred by Xxxxxxx in the performance of the Services, such as travel and
lodging expense, telephone and mail expense, duplication and printing services,
and premiums for any insurance procured by Xxxxxxx and required by Frontier,
provided that all such expenses are authorized by Frontier and appropriate
documentation is provided to Frontier to substantiate each expense item.
If, on the Retirement Date, Frontier is in active, continuing discussions
with another entity for the purpose of executing a written agreement to
consummate a transaction that would constitute a Change of Control event within
the terms of Sections 11.2.1 through 11.2.4, inclusive, of the Employment
Agreement, or if another entity has made an unsolicited offer prior to the
Retirement Date to complete a transaction that would constitute a Change of
Control event within the terms of Section 11.2.1 through 11.2.4, inclusive, of
the Employment Agreement, then in either event, if the Retention Term is not
extended, Xxxxxxx agrees to include as part of the Services all such timely
knowledge, judgment, personal involvement, counseling and allegiance to Frontier
as is requested by the Chief Executive Officer of Frontier at any and all points
through the completion of all activity related to the Change of Control event.
If such discussions or activity result within one hundred twenty (120) days of
Xxxxxxx'x Retirement Date in a definitive agreement for a Change of Control of
Frontier, the Price paid to Xxxxxxx shall be increased to reflect the
difference between the amount paid to Xxxxxxx under
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Article II, Section 6(b), less $60,000, on one hand, and that specific amount
that would have been payable to Xxxxxxx as a multiple of his salary under
Section 6.4.3 of the Employment Agreement had a Change of Control event been
completed during the Retention Term, using the base compensation set out in
Article II, Section 2 of this Agreement, on the other, but not to exceed such
base compensation that would have been paid over one year. If such activity
occurs prior to the Retirement Date and does not result within one hundred
twenty (120) days of Xxxxxxx'x Retirement Date in a definitive agreement for a
Change of Control of Frontier, and Xxxxxxx has nevertheless remained available
to provide, on request, all of the additional Services for use by Frontier at
its discretion, and assistance is requested by the Chief Executive Officer of
Frontier, the Price paid to Xxxxxxx shall be increased to reflect the difference
between the amount paid to Xxxxxxx under Article II, Section 6(b) of this
Agreement, less $60,000, on one hand, and that specific amount that would have
been payable to Xxxxxxx as a multiple of his salary under Section 6.4.3 of the
Employment Agreement had a Change of Control event been completed during the
Retention Term, using the base compensation set out in Article II, Section 2 of
this Agreement, on the other, but not to exceed such base compensation that
would have been paid over one year. If such discussions with another entity
commence or become active and continuing at any time after the Retirement Date,
or there is an unsolicited offer to complete a transaction initiated at any time
after the Retirement Date, but in either case before the end of the Consulting
Term, then if Xxxxxxx remains available to provide as part of the Services all
such timely knowledge, judgment, personal involvement, counseling and allegiance
to Frontier as is requested by the Chief Executive Officer of Frontier at any
and all points through the completion of all activity related to the Change of
Control event, and if such assistance is requested by the Chief Executive
Officer of Frontier, the Price shall be increased by mutual agreement up to a
point that reflects the difference between the amount paid to Xxxxxxx under
Article II, Section 6(b) of this Agreement, less $60,000, on one hand, and that
specific amount that would have been payable to Xxxxxxx as a multiple of his
salary under Section 6.4.3 of the Employment Agreement had a Change of Control
event been completed during the Retention Term, using the base compensation set
out in Article II, Section 2 of this Agreement, on the other, but taking into
account the extent to which Xxxxxxx'x assistance is required, in any event not
to exceed such base compensation as would have been paid over one year. It is
understood that, if Xxxxxxx has become employed with another firm at any time
after the Retirement Date under circumstances not in violation of his non-
compete provisions (other than in consulting work which would not interfere with
the provision of the Services), then Frontier, in its sole discretion, may or
may not elect to utilize the additional Services Xxxxxxx may otherwise be
willing to provide, notwithstanding what is set out above. The Price may
continue to be subject to the provisions of Section 280G(d)(4) of the Code.
If a Change of Control is completed during the Consulting Term, the
remaining amount of the Price payable for the Consulting Term and that remains
unpaid under this Agreement shall be accelerated and paid within a reasonable
time not to exceed thirty (30) days after such completion, and the Consulting
Term shall be deemed completed as of the effective date of the Change of
Control. This Agreement anticipates that Xxxxxxx shall not be required to
provide Services to Frontier or to any successor to Frontier after a Change of
Control is completed. In the event of a Change of Control during the Consulting
Term, Frontier shall be entitled to take such action as is required of it by the
Code with respect to Section 280(G), but Xxxxxxx shall continue to have such
benefit of the "gross-up" provision as would have been available under Section 7
of the Employment Agreement for such Change of Control.
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5. Independent Contractor. It is understood that in performing the
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Services, Xxxxxxx is an independent contractor and has no authority to act for
Frontier or to bind Frontier to any contract or in any manner, except as
provided herein, without the prior written approval of Frontier. In dealing
with persons who may not otherwise be aware of Xxxxxxx'x retirement from
Frontier, and for whom such knowledge may be materially significant, Xxxxxxx
will seek to provide such notice of his status as he reasonably deems
appropriate in the circumstances.
Xxxxxxx shall be responsible for all taxes and other assessments that are
required to be paid on any amounts received by Xxxxxxx related to the provision
of Services during the Consulting Term.
6. Events of Termination. Article III of this Agreement shall
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terminate upon the death of Xxxxxxx, with no further obligation on the part of
either party, except that Frontier shall pro rate any amount payable for
Services during that quarter, and pay to Xxxxxxx'x spouse or estate, as Xxxxxxx
may have elected, that portion that would be payable for the period during which
Xxxxxxx was available to work.
Frontier may terminate Article III of this Agreement otherwise, with no
further obligation to pay Xxxxxxx, upon: (a) any material default or breach by
Xxxxxxx in the terms and conditions set forth in this Agreement which continues
without cure after written notice from Frontier to correct such a default or
breach and such other steps as are outlined in Article IV, Section 8, or (b) a
showing that, during the Consulting Term, Xxxxxxx has: (i) intentionally
committed any act(s) or made any public statement(s) that may reasonably be
viewed as wrongful, illegal or otherwise significantly adverse to the reputation
or image of Frontier; or (ii) intentionally taken actions that promote the
interests of a competitor of Frontier or its affiliates without prior written
approval of Frontier.
In the event Frontier terminates the Agreement during the Consulting Term
for material default or breach, Xxxxxxx shall be paid such prorated amount as
relates to the time until notice of breach or termination is given, subject to
the completion of (or failure to utilize) any steps established by Article IV,
Section 8, where applicable. In the event Frontier lawfully terminates the
Agreement during the Consulting Term for any other reason, no further payment is
to be made to Xxxxxxx.
Termination of this Agreement by Frontier for breach during the Consulting
Term shall not release Xxxxxxx from his obligations related to non-solicitation,
non-competition and maintenance of confidential Frontier information through the
period established by Section 5 of Article II of this Agreement, and Frontier
shall be entitled to take or refuse to take any and all such action as is
permitted by law to protect such interests hereunder. In the event a Change of
Control of Frontier is culminated, Xxxxxxx'x non-competition and non-
solicitation covenants shall terminate in accordance with the Employment
Agreement.
Except where there has been active, continuing discussion related to a
Change of Control of Frontier, or an unsolicited offer that could lead to a
Change of Control of Frontier, and Xxxxxxx provides the Services contemplated by
Section 4 of this Article III related to such events, or is providing such
Services, Xxxxxxx may terminate Article III of this Agreement and end the
Consulting Term on thirty (30) days' notice to Frontier, subject to the
provisions of Section 5 of Article II of this Agreement, to the extent such
remain in force. Should Xxxxxxx provide such notice to Frontier, Frontier may
elect to terminate the Consulting Term at a time
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within the thirty (30) day period, rather than at the end of such period, on
notice to Xxxxxxx prior to such termination date, provided Xxxxxxx is paid the
remainder of the Price, but no right to additional payment related to a Change
of Control shall subsequently accrue. Any election by Frontier to terminate
Article III of this Agreement earlier than the thirty (30) day period set out in
Xxxxxxx'x notice shall not be deemed to terminate section 5 of Article II if
such section otherwise remains in effect. If Xxxxxxx is engaged in Services
that, in Frontier's reasonable judgment, cannot be completed before the end of
the thirty (30) day termination period, the parties shall establish such
additional minimum time as is appropriate either to complete the Services or to
provide a transition to another person. Xxxxxxx shall be paid such prorated
amount of the Price as may be payable to the date termination becomes effective.
7. Confidentiality. To the extent any non-public information, records
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or other documents, related in any way to Frontier or to an entity with whom
Frontier has or is considering a business relationship, are made available to
Xxxxxxx in connection with the Retention Term or the Consulting Term, or
Frontier or such entity identifies information, records or documents as
confidential (in each case, "Confidential Information"), Xxxxxxx shall treat all
such information, records or other documents as confidential and proprietary to
Frontier. Xxxxxxx shall not directly or indirectly use, disseminate, copy or
disclose in any manner, the Confidential Information or any other non-public
knowledge relating to Frontier which may become known to Xxxxxxx during the
Retention Term or the Consulting Term. This provision shall survive the
expiration or earlier termination of this Agreement, and shall be in force for a
period of two (2) years after the end of the Consulting Term, as stated here or
as extended, notwithstanding any provision of the Employment Agreement to the
contrary.
8. Insurance. As required by law, or upon request of Frontier, Xxxxxxx
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shall procure and carry, and maintain in full force and effect during the
Consulting Term adequate insurance coverage, including: (a) workers'
compensation coverage at or above the minimum statutory limits, if it is
required of Xxxxxxx by law; (b) comprehensive general liability coverage; and
(c) comprehensive automobile liability for any owned, hired and non-owned
vehicles of Xxxxxxx covering the period(s) such vehicle is used in providing the
Services. If Frontier itself maintains such insurance, the coverage may be
procured through Frontier, including inclusion as an additional insured on a
Frontier policy. Frontier will offer Xxxxxxx reasonable assistance in procuring
insurance required to provide the Services. Xxxxxxx shall allocate the costs of
such insurance among himself, Frontier and any other consulting clients, based
on a reasonable factor or factors acceptable to Frontier. The reasonable costs
of such insurance costs as are allocated to Frontier shall be reimbursed to
Xxxxxxx by Frontier.
All such coverage shall be issued by insurance companies licensed to do
business in New York. Xxxxxxx agrees to look first to his insurance for
payment or reimbursement of any claims or occurrences that are covered by such
insurance, and in the absence of such insurance, shall not make any claims
against Frontier for damages, liability or loss against which he reasonably
could have been insured.
9. Assignment and Subcontracting. No part of his performance of the
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Services may be assigned and no part of his duties hereunder may be delegated by
Xxxxxxx. Any purported assignment or delegation without the express written
consent of the Chief Executive Officer of Frontier shall be void. Should
Frontier consent to any assignment or delegation, Xxxxxxx shall remain
responsible for performance of the obligations hereunder.
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Xxxxxxx may not subcontract any part of the Services to be performed during
the Consulting Term without the prior written approval of the Chief Executive
Officer of Frontier.
10. Additions To Or Deletions From Work. Frontier reserves the right to
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increase or decrease the scope of Services to be performed by Xxxxxxx hereunder,
provided Xxxxxxx agrees as to any increase in such scope. No diminution of the
scope of Services shall affect the Price, absent Xxxxxxx'x consent.
12. Limitation of Liability. Neither party shall be liable to the other
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for any indirect, incidental, special or consequential damages (including,
without limitation, loss of revenues or profits) arising during the Consulting
Term.
ARTICLE IV. PROVISIONS APPLICABLE TO BOTH EMPLOYEE RETENTION
AND POSTEMPLOYMENT CONSULTING SERVICES.
1. Modification. This Agreement shall not be modified, waived or
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supplemented except by written agreement signed by authorized representatives of
both parties, including where stated, the Chief Executive Officer of Frontier.
2. Waiver. Failure on the part of either party to enforce any provision
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of this Agreement, or the waiver thereof, in any instance, shall not be
construed as a general waiver or relinquishment on its part of any such
provision, but the same shall nevertheless be and remain in full force and
effect.
3. Severability. If any provision of this Agreement shall be held to be
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invalid, illegal or unenforceable, the validity, legality, and enforceability of
the remaining provisions shall in no way be affected or impaired thereby.
4. New York Law. This Agreement shall be governed by and construed
------------
under New York state law.
5. Survival. This Agreement shall inure to the benefit of Frontier, and
--------
to all of its subsidiaries and other affiliates. Such of Frontier's rights and
obligations as would continue under this Agreement shall pass by operation of
law to any assignee or any successor in interest to Frontier. Xxxxxxx'x rights
and obligations under this Agreement shall not pass to any person or entity,
other than such rights as would pass by this Agreement or the Employment
Agreement to Xxxxxxx'x spouse or estate. Frontier's rights under this Agreement
shall survive the Agreement's termination or expiration.
6. Survival of Other Agreements. The provisions of this Agreement
----------------------------
supersede the provisions of the Employment Agreement to the extent the duties
and responsibilities of the parties are addressed herein, or as is required by
necessary inference, with all other provisions of the Employment Agreement
remaining in effect.
7. Cooperation After Retirement and After End of Consulting Term.
-------------------------------------------------------------
Xxxxxxx agrees that he will accept service of process designed to elicit his
testimony with respect to any litigation about which he may have knowledge, and
that he will be available on reasonable notice under this Agreement with respect
to similar matters in arbitration. Frontier shall pay for
10
the reasonable costs of travel and related expenses if Xxxxxxx is to appear in
court or to testify. To the extent that Xxxxxxx requires counsel in providing
testimony, Frontier will afford Xxxxxxx the services of its counsel, or where
such shared counsel is inappropriate in the circumstances, will pay for or
reimburse the reasonable costs of separate counsel for Xxxxxxx. Frontier will
use its best efforts to seek arrangements that are minimally intrusive on
Xxxxxxx'x schedule and that address any conflicting work obligations and other
considerations after the end of the Consulting Term.
8. Resolution of Issues Related to Claimed Violations of Non-Compete
-----------------------------------------------------------------
Provisions or Other Actions of Xxxxxxx That May Result In Denial of Benefits.
----------------------------------------------------------------------------
Except with respect to circumstances in which Frontier concludes that it is
appropriate to seek equitable relief, in the event Frontier claims there has
been a breach of the non-compete provisions of this Agreement, or Frontier
otherwise seeks to terminate any payment(s) to Xxxxxxx under this Agreement, it
shall provide at least fifteen (15) calendar days prior written notice before
acting, and a statement of the basis for such claim or action. Xxxxxxx may: (a)
contest such claim or action by notifying Frontier before the expiration of such
period; or (b) advise Frontier before the expiration of such period that he will
cure such breach or resolve the claim within an additional fifteen (15) calendar
days thereafter; or (c) advise Frontier before the expiration of such period
that, in the absence of any ability to cure the breach or resolve the claim
fully, he will take such action as is necessary to initiate meaningful action to
effect such cure or resolution; or (d) complete more than one of options (a)-
(c). Xxxxxxx shall advise Frontier promptly as to the progress and completion
of any curative activity he takes.
If Xxxxxxx contests the claim or action, he may seek an opportunity to
discuss the issue with an appropriate Frontier executive, which request shall be
included in his response to Frontier. The parties shall meet within seven (7)
days after the request is received. In the event the parties are unable to
resolve such dispute within seven (7) days after such meeting, either party may
seek arbitration to determine the applicable facts, using an arbitrator selected
from the Center for Dispute Resolution who is acceptable to both parties. All
costs of arbitration, including the fees of the arbitrator, shall be shared
equally by the parties.
Consistent with contract law, Xxxxxxx shall take such action as is necessary
in the interim to mitigate the impact on Frontier of the claimed breach pending
its resolution; however, the dates available to Xxxxxxx for curative action
shall be extended while the discussion and arbitration period is underway.
Payment of sums due under the first and third paragraph of Section 4 of Article
III may be suspended at Frontier's election pending discussion and completion of
the claim resolution process.
9. Confidentiality. Frontier and Xxxxxxx agree to use their best
---------------
efforts to keep confidential the existence, terms and conditions of this
Agreement and the fact of Xxxxxxx'x intent to retire, until such time as
Frontier and Xxxxxxx agree that a retirement announcement will be made, and such
announcement is in fact made. Individual exceptions may be made with the
concurrence of Frontier and Xxxxxxx that are not inconsistent with law or
disclosure obligations of either party. Xxxxxxx agrees that he will not
disclose these items to any person other than his legal and/or financial
advisor(s) and immediate family, unless compelled by law to do so. If a person
not a party to this Agreement requests or demands, by subpoena or otherwise,
that Xxxxxxx disclose or produce this Agreement or any terms or conditions
thereof, Xxxxxxx agrees to notify Frontier and provide Frontier with reasonable
time to respond before taking any action or making any disclosure.
11
Frontier will make those disclosures required of it, including filing of
this document with the Securities and Exchange Commission at the appropriate
time, at which point the parties will no longer be required to maintain the
confidentiality of this Agreement. In the event that Xxxxxxx seeks to make a
third party aware of the existence, or any terms and conditions of this
Agreement or the fact of Xxxxxxx'x retirement prior to the time of public
disclosure, he shall first seek authorization of Frontier, which shall not be
unreasonably withheld, and which may include a request that the third party
agree to maintain such information in confidence until public disclosure.
10. Successors to Frontier; Xxxxxxx Representatives and Survivors.
-------------------------------------------------------------
Frontier shall require any successor or assignee to all or substantially all of
its business and/or assets, whether by merger, sale of assets or otherwise, to
assume and agree to perform Frontier's obligations under this Agreement in the
same manner and to the same extent that Frontier would be required to perform
them if such succession or assignment had not taken place. Xxxxxxx agrees that
all of Frontier's rights under the Agreement that would survive shall pass by
operation of law to such successor or assignee.
This Agreement shall inure to the benefit of, and be enforceable by
Xxxxxxx'x personal and legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. Should Xxxxxxx die
while any amounts are still payable to him, all such amounts, unless otherwise
provided herein, shall be paid in accordance with the terms of this Agreement to
Xxxxxxx'x devisee(s), legatee(s) or other designee(s) or, in the absence of such
designee(s), to his estate.
11. Notice. Unless otherwise specifically stated herein, Xxxxxxx and
------
Frontier agree that the same notice provisions apply to this Agreement as are
set out in the Employment Agreement. All notices and other communications
required or permitted under this Agreement shall be in writing and shall be
deemed given when mailed by Express or similar mail or certified mail, return
receipt requested, or by nationally recognized overnight courier, receipt
requested, when addressed to a party at his or her official business address
when employed by Frontier, or at Xxxxxxx'x home address as reflected in the
Frontier's records from time to time and when addressed to Frontier at its
corporate headquarters, to the attention of Frontier's Chief Executive Officer,
with a copy to the Company's General Counsel.
Questions by Xxxxxxx to Frontier about implementation of this Agreement
shall be directed to Xxx Xxxxxxxxxx at 000-000-0000.
12. Counterparts. This Agreement may be signed by Xxxxxxx and on behalf
------------
of Frontier in one or more counterparts, each of which shall be recognized as an
original.
13. Waivers Related to Statutory and Other Rights When Employment Status
--------------------------------------------------------------------
Is To Change. Xxxxxxx specifically represents and warrants that he has read
------------
all of the following disclosure, and agrees to the provisions of the following
paragraphs specifically:
Xxxxxxx releases Frontier from any claims, actions or causes of action
asserted or which could have been asserted under the Age Discrimination in
Employment Act of 1967, as amended, Title VIII of the Civil Rights Act of 1964,
the New York Human Rights Law, the Employee Retirement Income Security Act, and
the Americans with Disabilities Act, as any
12
have been amended, and any claims, actions or causes of action for wrongful
discharge, unjust dismissal, constructive discharge, breach of any written, oral
or implied promise or agreement related to employment, salary, severance
payments, benefits, other compensation, or attorneys' fees or costs related to
employment or compensation which accrued or could have been made prior to the
execution of this Agreement.
In executing this Agreement, Xxxxxxx agrees that he has been given the
opportunity to have at least 45 days in which to consider signing this Agreement
and the release set out just above, even though he may execute it within that
time. Xxxxxxx acknowledges and agrees that he has had the opportunity to
consult with an attorney of his choice concerning this Agreement. Xxxxxxx
agrees that he has carefully read and fully understood all provisions, and is
entering into this Agreement voluntarily. Xxxxxxx represents that, in
negotiating and executing this Agreement, he has not relied upon any
representation or statement, written or oral, not set forth in this Agreement
and that this Agreement, with the Employment Agreement, constitutes the entire
agreement between Frontier and Xxxxxxx.
Xxxxxxx acknowledges that he has had the right to revoke this Agreement
within 7 days of signing it, and it will not become effective until the 7 day
period has expired. If Xxxxxxx receives any compensation in connection with
this Agreement within this 7 day period, he agrees to return such compensation
to Frontier immediately after any revocation.
14. Insider Status. Xxxxxxx specifically recognizes that he is and will
--------------
remain for a period of time a Section 16 "insider" for purposes of federal
securities laws and regulations, that there are related obligations related to
the securities laws, and that there are significant obligations with respect to
holding Section 16 status that shall continue for a period of six months (and
such additional period as Frontier's Office of the Secretary shall advise
Xxxxxxx) after Xxxxxxx'x retirement. Xxxxxxx specifically agrees that he will
comply with all state and federal securities laws and regulations that may apply
to him, including the rules applicable to Section 16 status. Xxxxxxx shall
execute such affiliate letters as are requested of him with respect to
transactions of Frontier until Xxxxxxx'x affiliate status ceases, such letters
to be in a form consistent with the affiliate conditions applicable to him.
Frontier requires and Xxxxxxx agrees that this provision is not waivable, and
that any action intended to be taken by Xxxxxxx that may be required or
prohibited as a result of his continued insider status shall be addressed
beforehand with counsel for Frontier.
WHEREFORE, the parties have read, understand and agree to the terms set
forth above, and are willing to be bound thereby, as of the Effective Date set
forth above.
FRONTIER CORPORATION XXXXX X. XXXXXXX
By: /s/ Xxxxxx X. Xxxxxxx /s/ Xxxxx X. Xxxxxxx
--------------------- --------------------
Name: Xxxxxx X. Xxxxxxx Xxxxx X. Xxxxxxx
Title: Chief Executive Officer
Date: 1/23/98 Date: 1/23/98
------- -------
13
Frontier Corporation
LOGO Xxxxxx X. XxXxx 000 Xxxxx Xxxxxxx Xxxxxx
frontier Vice President and Xxxxxxxxx, XX 00000
General Counsel 000-000-0000
000-000-0000 fax
December 29, 0000
Xxxxx X. Xxxxxxx
00 Xxxx Xxxx Xxxx
Xxxxxxxxx, Xxx Xxxx 00000
Dear Xx. Xxxxxxx,
This side letter is intended to address a contingency with respect to the
date of your retirement.
Section 1 of Article I and Section 1 of Article IV of the Retention and
Consulting Agreement between you and Frontier together provide that your
Retirement Date may be modified by mutual agreement in writing. We have already
addressed a circumstance in which we would agree to move the Retirement Date up
a short time. Section 4 of Article III also provides that Frontier and you may
or may not extend the Retention Term in the event that another entity has made
an unsolicited offer prior to the Retirement Date to complete a transaction that
would constitute a Change of Control event within the terms of Section 11.2.1
through 11.2.4, inclusive, of your Employment Agreement.
To address this issue and to protect shareowner interests, you and Frontier
agree that if there is an unsolicited offer that is made for Frontier and
remains pending on February 28, 1998, or such other mutually agreed Retirement
Date, and the chief executive officer of Frontier, after such consultation as he
determines is necessary, deems it a bona fide offer that must be addressed
seriously by the Company, the chief executive officer of Frontier will permit
you to continue as an employee for a period to be defined jointly, consistent
with the Retention and Consulting Agreement, for the specific purpose of
assisting the chief executive officer in responding to the offer and in such
action as he and the board determine is appropriate to protect shareowner
interests. Assuming that such offer leads, after active and continuing
discussions, to a change of control, you would be entitled to such additional
benefits as you might be otherwise be entitled to as an employee.
If this is consistent with your understanding, please place your signature
in the space below your name at the end of this letter.
Very truly yours
/s/ Xxxxxx X. XxXxx
-------------------
Xxxxxx X. XxXxx
Agreed:
/s/ Xxxxx X. Xxxxxxx
--------------------
Xxxxx X. Xxxxxxx
cc: X. X. Xxxxxxx
X. X. Xxxxxxx
X. X. Xxxxxxxxxx
ASSIGNMENT
----------
This Assignment ("Assignment"), of a portion of a certain Service
Continuation Agreement ("Agreement") dated as of December 29, 1997 by and
between Frontier Corporation ("Frontier"), a New York corporation with its
principal offices at 000 Xxxxx Xxxxxxx Xxxxxx, Xxxxxxxxx, Xxx Xxxx 00000
("Frontier Center"), and Xxxxx X. Xxxxxxx, of 19 Mile Post Lane, Pittsford, New
York, 14534 ("Xxxxxxx"), is made this 26th day of February, 1998 (the "Effective
Date") from Xxxxxxx to L. L. Xxxxxxx Associates, Inc. ("LLM"), a New York
limited liability corporation, with the express consent of Frontier.
In consideration of the promises and mutual agreements hereinafter set
forth, Xxxxxxx, LLM, and Frontier agree as follows:
1. Under Article III of the Agreement between Xxxxxxx and Frontier,
Frontier agreed to retain the services of Xxxxxxx as a consultant to Frontier,
and Xxxxxxx agreed to provide postemployment consulting services ("Services") to
Frontier, under the applicable terms and conditions of the Agreement. The
period from Xxxxxxx'x retirement at the close of business of Frontier on
Thursday, February 26, 1998 through and including February 28, 1999 constitutes
the "Consulting Term".
2. Xxxxxxx has agreed in Article II of the Agreement to certain non-
solicitation and non-competition covenants, and has made commitments related to
the continued protection of Frontier proprietary information, as defined in that
Agreement (together, the "Protective Covenants"). The Protective Covenants will
continue to run during all or some portion of the Consulting Term, as such
periods are established by the Agreement.
3. Frontier agrees to permit Xxxxxxx to assign that portion of the
Agreement that anticipates the provision of the Services from Xxxxxxx to LLM
upon the following terms and conditions:
a. LLM shall continue during the Consulting Term to be owned or
controlled by Xxxxxxx as a shareowner, and LLM shall assure that any Services to
be performed for Frontier under the Agreement shall be performed only by
individuals affiliated with LLM who have been approved in writing by Frontier's
Chief Executive Officer or General Counsel.
b. LLM shall fully perform all of the Services defined in and
contemplated by the Agreement to the same extent and with the same conditions as
Frontier would have been entitled to receive such Services from Xxxxxxx under
the Agreement.
c. LLM and Xxxxxxx shall each comply fully with the terms and
conditions of Article III of the Agreement, those portions of Article IV as are
applicable to the performance of the Services, and the Protective Covenants, and
with such applicable laws and regulations as are contemplated by the Agreement.
LLM shall do nothing as a corporation that is prohibited of, or not permitted to
be done by Xxxxxxx under the Agreement. To assure that Frontier is fully
protected with respect to the Protective Covenants and other applicable terms
and conditions of the Agreement, any breach or failure on the part of Xxxxxxx
with respect to the Protective Covenants of the Agreement
-1-
shall be deemed a breach or failure on the part of LLM, and any breach or
failure with respect to the Protective Covenants on the part of LLM with respect
to the Agreement shall be deemed a failure on the part of Xxxxxxx.
d. Frontier shall cooperate with LLM to provide for reasonable
treatment of taxes and assessments with respect to the Agreement and payments
for the Services, but LLM shall remain primarily responsible at all times for
the payment of taxes or assessments due to any jurisdiction by it or Xxxxxxx, or
on its or his behalf.
e. There shall be no change in the Agreement with respect to the
events of termination as they are defined and described therein, including
termination of the Agreement upon the death of Xxxxxxx, but all other provisions
related to events of termination, cure and dispute resolution shall apply
equally to LLM and Xxxxxxx.
f. LLM and Xxxxxxx (and any authorized affiliated individual) shall
maintain the confidentiality of Frontier Confidential Information as
contemplated by the Agreement.
g. The Chief Executive Officer of Frontier consents to this
Assignment under Article III, Section 9 of the Agreement. Xxxxxxx and LLM each
agree that no further assignment or subcontracting of any aspect of performance
under the Agreement is contemplated by this Assignment.
h. This Assignment shall be governed by New York law.
WHEREFORE, the parties have read, understand and agree to the terms set
forth above, and are willing to be bound thereby, as of the Effective Date set
forth above.
FRONTIER CORPORATION XXXXX X. XXXXXXX
By: /s/ Xxxxxx X. XxXxx /s/ Xxxxx X. Xxxxxxx
------------------- --------------------
Name: Xxxxxx X. XxXxx Xxxxx X. Xxxxxxx
Title: Vice President
Date: 2/26/98 Date: 2/26/98
------- -------
L. L. XXXXXXX ASSOCIATES, INC.
By: /s/ Xxxxx X. Xxxxxxx
--------------------
Name: Xxxxx X. Xxxxxxx
Title: President
Date: 2/26/98
-------
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