EXHIBIT 10.10
RENEWAL EMPLOYMENT AGREEMENT
AGREEMENT dated as of September 6, 1998 between XXXXXX
XXXXXX, residing at 0 Xxxxxx Xxxxx Xxxx, Xxxxxx, Xxxxxxxxxxx 00000
("Executive"), and WINSTAR COMMUNICATIONS, INC., a Delaware corporation having
its principal office at 000 Xxxx Xxxxxx, Xxxxx 0000, Xxx Xxxx, Xxx Xxxx 00000
("Company").
WHEREAS, the Executive has been employed by the Company
pursuant to an Employment Agreement dated as of September 5, 1995 which
expired by its terms as of September 5, 1998; and
WHEREAS, the Company and Executive desire to renew the
Agreement in accordance with the terms set forth herein;
IT IS AGREED:
1. Employment, Duties and Acceptance.
1.1 Effective as of September 6, 1998 the Company agrees to
the continued employment of Executive as its President and Chief Operating
Officer ("COO") and Executive hereby accepts such continued employment on the
terms and conditions contained in the Agreement. All of Executive's powers and
authority in any capacity shall at all times be subject to the direction and
control of the Company's Board of Directors. Executive shall report directly
to the Chairman of the Board and Chief Executive Officer of the Company
("CEO").
1.2 The Board and the CEO may assign to Executive such
general management and supervisory responsibilities and executive duties for
the Company or any subsidiary of the Company, including serving as a director,
as are consistent with Executive's status as President and COO. The Company
and Executive acknowledge that Executive's primary functions and duties as
President and COO shall be the overall supervision of, and oversight over, all
the operations and employees of the Company and its subsidiaries, affiliates
and divisions; provided, however, that Executive shall not supervise the CEO,
the Vice Chairman and a Senior Vice President responsible for - capital
markets and/or strategic planning of the Company (or one or more officers
performing equivalent functions) and their staffs.
1.3 Executive accepts such employment and agrees to devote
substantially all of his business time, energies and attention to the
performance of his duties hereunder, except as set forth in the next sentence.
The Company agrees that Executive may devote up to 25% of his business time to
his duties as Chairman of the Board of Directors and Chief Executive Officer
of Image Telecommunications Corp. ("Image Telecom"), as long as performing
such duties does not violate the provisions of Section 5.4 hereof. Nothing
herein shall be construed as preventing Executive from making and supervising
personal investments, provided they will not interfere with the performance of
Executive's duties hereunder or violate the provisions of paragraph 5.4
hereof.
2. Compensation and Benefits.
2.1 The Company shall pay to Executive a minimum annual base
salary of not less than $518,358.64 with annual increases as agreed upon by
the Company and Executive. Executive's compensation shall be paid in equal,
periodic installments in accordance with the Company's normal payroll
procedures.
2.2 The Company shall also pay to Executive such bonuses as
may be determined from time to time by the Chief Executive Officer and the
Board of Directors. The amount of the annual cash bonus payable to Executive
may vary at the discretion of the Compensation Committee of the Board of
Directors provided, however, that the total bonus shall not exceed 125% of
Executive's annual base salary then in effect.
2.3 As additional compensation for services to be rendered
by Executive hereunder, the Company shall issue to Executive options to
purchase 500,000 shares of Common Stock under the 1995 Performance Equity Plan
which options shall vest in accordance with the following two sentences except
for certain acceleration events as set forth in the Stock Option Agreements or
this Agreement. These options ("Agreement Options") shall be evidenced by
three (3) Stock Option Agreements of even date herewith between the Company
and Executive. Two hundred seventy seven thousand seven hundred and seventy
nine (277,779) of the Agreement Options will have an exercise price of $26.00
per share and will vest one hundred sixty six thousand one hundred sixty seven
(166,167) on the Renewal Date and fifty five thousand eight hundred six
(55,806) on each anniversary date thereof. One hundred eleven thousand one
hundred eleven (111, 111) of the Agreement Options will have an exercise price
of $39.00 per share and will vest on the first anniversary date of the Renewal
Date and the final one hundred eleven thousand one hundred ten (111,110) of
the Agreement Options will have an exercise price of $52.00 per share and will
vest on the second anniversary date of the Renewal Date.
2.4 Executive shall be entitled to such medical, life,
disability and other benefits as are generally afforded to other senior
executives of the Company, subject to applicable waiting periods and other
conditions.
2.5 Executive shall be entitled to four weeks of vacation in
each calendar year and to a reasonable number of other days off for religious
and personal reasons.
2.6 The Company will pay or reimburse Executive for all
transportation, hotel and other expenses reasonably incurred by Executive on
business trips and for all other ordinary and reasonable out-of-pocket
expenses actually incurred by him in the conduct of the business of the
Company against itemized vouchers submitted with respect to any such expenses
and approved in accordance with customary procedures.
2.7 Executive acknowledges that he will be obligated to
render services hereunder wherever such services are reasonably required by
the Company, which will necessitate substantial travel by Executive, primarily
in North America. During the term hereof, the Company shall reimburse
Executive for the rent for a suitable office for Executive in Westport,
Connecticut. During the term hereof, the Company shall provide Executive with
a suitable apartment in Washington, D.C. and an appropriate automobile for
Executive's use while in the Washington, D.C. area on Company business;
provided, however, that this obligation shall terminate if the Company, in its
reasonable discretion, determines that Executive is not required to spend a
substantial portion of his time in the Washington, D.C. area; and provided
further, however, that, if so terminated, the Company shall reimburse
Executive for the costs under his then existing leases of such apartment and
car ("Executive's Leases") until such leases can be terminated (it being
agreed that Executive shall not enter into any such leases without the consent
of the CEO).
3. Term and Termination.
3.1 The term of this Agreement commences as of September 6,
1998 and shall continue until September 5, 2001, unless sooner terminated as
herein provided.
3.2 If Executive dies during the term of this Agreement,
this Agreement shall thereupon terminate, except that the Company shall pay to
the legal representative of Executive's estate (i) the base salary due
Executive pursuant to paragraph 2.1 hereof through the date of Executive's
death, (ii) a pro rata allocation of bonus payments under paragraph 2.2 during
the year of death through the date of Executive's death, (iii) all earned and
previously approved but unpaid bonuses, (iv) all valid expense reimbursements
through the date of
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the termination of this Agreement and any costs under Executive's Leases, (v)
all accrued but unused vacation pay, and Executive shall retain his rights under
paragraph 2.3 hereof and under the Stock Option Agreements executed
simultaneously herewith, in accordance with their terms.
3.3 The Company, by notice to Executive, may terminate this
Agreement if Executive shall fail because of illness or incapacity to render,
for six consecutive months, services of the character contemplated by this
Agreement. Notwithstanding such termination, the Company shall pay to
Executive (i) the base salary due Executive pursuant to paragraph 2.1 hereof
through the date of such notice, less any amount Executive receives for such
period from any Company-sponsored or Company-paid source of insurance,
disability compensation or government program, (ii) a pro rata allocation of
bonus payments under paragraph 2.2 during the year in which the disability
commenced through the date of such notice, (iii) all earned and previously
approved but unpaid bonuses, (iv) all valid expense reimbursements through the
date of the termination of this Agreement and any costs under Executive's
Leases, (v) all accrued but unused vacation pay, and Executive shall retain
his rights under paragraph 2.3 hereof and under the Stock Option Agreements
executed simultaneously herewith, in accordance with their terms.
3.4 The Company, by notice to Executive, may terminate this
Agreement for cause. As used herein, "Cause" shall mean: (a) the refusal or
failure by Executive to carry out specific directions of the Board or the CEO
which are of a material nature and consistent with his status as President and
COO, or the refusal or failure by Executive to perform a material part of
Executive's duties hereunder; (b) the commission by Executive of a material
breach of any of the provisions of this Agreement; (c) fraud or dishonest
action by Executive in his relations with the Company or any of its
subsidiaries or affiliates, or with any customer or business contact of the
Company or any of its subsidiaries or affiliates ("dishonest" for these
purposes shall mean Executive's knowingly or recklessly making of a material
misstatement or omission for his personal benefit); or (d) the conviction of
Executive of any crime involving an act of moral turpitude. Notwithstanding
the foregoing, no "Cause" for termination shall be deemed to exist with
respect to Executive's acts described in clauses (a) or (b) above, unless the
Company shall have given written notice to Executive specifying the "Cause"
with reasonable particularity and, within thirty calendar days after such
notice, Executive shall not have cured or eliminated the problem or thing
giving rise to such "Cause;" provided, however, that a repeated breach after
notice and cure of any provision of clauses (a) or (b) above involving the
same or substantially similar actions or conduct, shall be grounds for
termination for "Cause" without any additional notice from the Company.
3.5 If Executive's employment hereunder is terminated for
any reason, then Executive shall, at the Company's request, resign as a
director of the Company and all of its subsidiaries, effective upon the
occurrence of such termination.
3.6 The Executive, by notice to the Company, may terminate
this Agreement if a "Good Reason" exists. For purposes of this Agreement,
"Good Reason" shall mean the occurrence of any of the following circumstances
without the Executive's prior express written consent: (a) a substantial and
material adverse change in the nature of Executive's title, duties or
responsibilities with the Company that represents a demotion from his title,
duties or responsibilities as in effect immediately prior to such change; (b)
Executive is not nominated to serve as a director by the Company or is removed
from service as a director of the Company; (c) a substantial and material
breach of this Agreement by the Company; (d) a failure by the Company to make
any payment to Executive when due, unless the payment is not material and is
being contested by the Company, in good faith; (e) an occurrence of an
"Acceleration Event" occurs within the meaning of the parties' Stock Option
Agreement with respect to the Vesting Options; or (f) a liquidation,
bankruptcy or receivership of the Company. Notwithstanding the foregoing, no
Good Reason shall be deemed to exist with respect to the Company's acts
described in clauses (a), (b), (c) or (d) above, unless the Executive shall
have given written notice to the Company specifying the Good Reason with
reasonable particularity and, within thirty
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calendar days after such notice, the Company shall not have cured or
eliminated the problem or thing giving rise to such Good Reason; provided,
however, that a repeated breach after notice and cure of any provision of
clauses (a), (b), (c) or (d) above involving the same or substantially similar
actions or conduct, shall be grounds for termination for Good Reason without
any additional notice from the Executive.
3.7 In the event that Executive terminates this Agreement
for Good Reason, pursuant to the provisions of paragraph 3.6, or the Company
terminates this Agreement without "Cause," as defined in paragraph 3.4, the
Company shall continue to pay to Executive (or in the case of his death, the
legal representative of Executive's estate or such other person or persons as
Executive shall have designated by written notice to the Company), all
payments, compensation and benefits required under paragraph 2 hereof through
the term of this Agreement; provided, however, that (i) a minimum bonus of no
less than $180,000 per annum shall be paid through the term of this Agreement;
(ii) Executive's insurance coverage shall terminate upon the Executive
becoming covered under a similar program by reason of employment elsewhere;
and (iii) Executive shall use his best efforts to obtain employment elsewhere
as an employee or consultant and all compensation for services paid or earned
and deferred in connection therewith shall be a reduction against the
Company's then future obligations hereunder.
4. Executive Indemnity
4.1 The Company agrees to indemnify Executive and hold
Executive harmless against all costs, expenses (including, without limitation,
reasonable attorneys' fees) and liabilities (other than settlements to which
the Company does not consent, which consent shall not be unreasonably
withheld) (collectively, "Losses") reasonably incurred by Executive in
connection with any claim, action, proceeding or investigation brought against
or involving Executive with respect to, arising out of or in any way relating
to Executive's employment with the Company or Executive's service as a
director of the Company; provided, however, that the Company shall not be
required to indemnify Executive for Losses incurred as a result of Executive's
intentional misconduct or gross negligence (other than matters where Executive
acted in good faith and in a manner he reasonably believed to be in and not
opposed to the Company's best interests). Executive shall promptly notify the
Company of any claim, action, proceeding or investigation under this paragraph
and the Company shall be entitled to participate in the defense of any such
claim, action, proceeding or investigation and, if it so chooses, to assume
the defense with counsel selected by the Company; provided that Executive
shall have the right to employ counsel to represent him (at the Company's
expense) if Company counsel would have a "conflict of interest" in
representing both the Company and Executive. The Company shall not settle or
compromise any claim, action, proceeding or investigation without Executive's
consent, which consent shall not be unreasonably withheld; provided, however,
that such consent shall not be required if the settlement entails only the
payment of money and the Company fully indemnifies Executive in connection
therewith. The Company further agrees to advance any and all expenses
(including, without limitation, the fees and expenses of counsel) reasonably
incurred by the Executive in connection with any such claim, action,
proceeding or investigation, provided Executive first enters into an
appropriate agreement for repayment of such advances if indemnification is
found not to have been available.
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5. Protection of Confidential Information; Non-Competition.
5.1 Executive acknowledges that:
(a) As a result of his current employment with,
and prior retention (as an employee of a consultant) by, the Company,
Executive has obtained and will obtain secret and confidential information
concerning the business of the Company and its subsidiaries and affiliates
(referred to collectively in this paragraph 5 as the "Company"), including,
without limitation, financial information, designs and other proprietary
rights, trade secrets and "know-how," customers and sources ("Confidential
Information").
(b) The Company will suffer substantial damage
which will be difficult to compute if, during the period of his employment
with the Company or thereafter, Executive should enter a business competitive
with the Company or divulge Confidential Information.
(c) The provisions of this Agreement are
reasonable and necessary for the protection of the business of the Company.
5.2 Executive agrees that he will not at any time, either
during the term of this Agreement or thereafter, divulge to any person or
entity any Confidential Information obtained or learned by him as a result of
his employment with, or prior retention by, the Company, except (i) in the
course of performing his duties hereunder, (ii) with the Company's express
written consent; (iii) to the extent that any such information is in the
public domain other than as a result of Executive's breach of any of his
obligations hereunder; or (iv) where required to be disclosed by court order,
subpoena or other government process. If Executive shall be required to make
disclosure pursuant to the provisions of clause (iv) of the preceding
sentence, Executive promptly, but in no event more than 72 hours after
learning of such subpoena, court order, or other government process, shall
notify, by personal delivery or by electronic means, confirmed by mail, the
Company and, at the Company's expense, Executive shall: (a) take all
reasonably necessary and lawful steps required by the Company to defend
against the enforcement of such subpoena, court order or other government
process, and (b) permit the Company to intervene and participate with counsel
of its choice in any proceeding relating to the enforcement thereof.
5.3 Upon termination of his employment with the Company,
Executive will promptly deliver to the Company all memoranda, notes, records,
reports, manuals, drawings, blueprints and other documents (and all copies
thereof) relating to the business of the Company and all property associated
therewith, which he may then possess or have under his control; provided,
however, that Executive shall be entitled to retain copies of such documents
reasonably necessary to document his financial relationship (both past and
future) with the Company.
5.4 (a) During the period commencing on the date hereof and
ending on the date Executive's employment hereunder is terminated (and, if
Executive is terminated with "Cause" or Executive terminates this Agreement
without "Good Reason," until September 5, 2001), Executive, without the prior
written permission of the Company, shall not, anywhere in the world, (i) be
employed by, or render any services to, any person, firm or corporation
engaged in any business which is directly or indirectly in competition with
the Company ("Competitive Business"); (ii) engage in any Competitive Business
for his or its own account; (iii) be associated with or interested in any
Competitive Business as an individual, partner, shareholder, creditor,
director, officer, principal, agent, employee, trustee, consultant, advisor or
in any other relationship or capacity; (iv) employ or retain, or have or cause
any other person or entity to employ or retain, any person who was employed or
retained by the Company while Executive was employed by the Company; or (v)
solicit, interfere with, or endeavor to entice away from the Company, for the
benefit of a Competitive Business, any of its
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customers or other persons with whom the Company has a contractual
relationship. Notwithstanding the foregoing, nothing in this Agreement shall
preclude Executive from (a) continuing to be the Chairman of the Board and the
owner of 100% of the stock of ITC Group, Inc. ("ITC"); provided, however, that
Executive shall not personally participate in any ITC activities, other than
attendance at Shareholder and Board of Director meetings; (b) investing his
personal assets and those of ITC in the securities of any corporation or other
business entity which is engaged in a Competitive Business if such securities
are traded on a national stock exchange or in the over-the-counter market and
if such investment does not result in his beneficially owning, at any time,
more than 4.9% of the publicly-traded equity securities of such Competitive
Business; (c) continuing to be Chairman, Chief Executive Officer and the owner
of 51% of the stock of Image Telecom as long as Image Telecom engages only in
those business activities currently engaged in by Image Telecom, as described
on Schedule 5.4 hereof, or (d) engaging, through Image Telecom, in those
business activities currently engaged in by Image Telecom, as described on
Schedule 5.4 hereof.
(b) Executive and ITC agree that Section 2
of the Non-Compete and Confidentiality Agreement dated June 1, 1994 between
the Company and ITC ("ITC Non-Compete Agreement") is hereby modified and
amended to read as follows:
"2. Non-competition.
2.1 During the term of the Employment Agreement between
Xxxxxx Xxxxxx and WinStar, dated September 5, 1995 as renewed by the
Employment Agreement dated as of September 6, 1998 collectively, the
("Employment Agreement"), neither ITC nor Executive shall provide services to
any segment of a business which (i) provides any or all of the wireless
services offered by WinStar or any of its subsidiaries, or to be offered by
WinStar or any of its subsidiaries pursuant to its Operating Plans, including,
but not limited to, wireless services used in local bypass, competitive access
service and 38GHZ, and (ii) directly and materially competes with WinStar or
any of its subsidiaries; provided that ITC and Executive shall have the right
to provide and shall not be in violation of this agreement or the Employment
Agreement by providing (a) services to any business which provides cellular,
SMR and PCS end user applications, and (b) services outside the United States.
2.2 During the term of the Employment Agreement, neither ITC
nor Executive shall provide services (i) to the long-distance business
segments of any company with company-wide annual revenues of less than $100
million, and (ii) which directly and materially competes with WinStar or any
of its subsidiaries.
2.3 ITC and the Executive each agree that, during the term
of the Employment Agreement and for a period of 24 months thereafter, they
will not, directly or indirectly, solicit for employment any officer,
employee, agent, lessor, lessee, customer, prospective customer or supplier of
any business operated by WinStar or any of its subsidiaries as of the date of
termination or expiration of the Employment Agreement, or otherwise persuade
or attempt to persuade any such person or entity to terminate its relationship
with any business operated by WinStar or any of its subsidiaries as of the
date of termination or expiration of the Employment Agreement.
2.4 For a period of one year after the termination or the
expiration of the Employment Agreement, neither ITC nor Executive shall
provide services to any business segment which competes directly and
materially with those wireless services then offered by WinStar or any of its
subsidiaries as of the date of termination of the Employment Agreement,
provided that ITC and Executive shall have the right to provide and shall not
be in violation of this agreement or the Employment Agreement by providing (a)
services to any business which provides cellular, SMR and PCS end user
applications, and (b) services outside the United
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States.
2.5 Notwithstanding the foregoing, (i) if WinStar terminates
the Employment Agreement without "Cause" or if Executive terminates his
employment with "Good Reason," the term of the covenants in Sections 2.1 -
2.4, above, shall terminate upon termination of employment; and (ii) if
WinStar terminates the Employment Agreement with "Cause" or if Executive
terminates his employment without "Good Reason," the term of the covenants in
Sections 2.1, 2.2, 2.3 and 2.4, above, shall expire, respectively, on
September 5, 2001, September 5, 2001, September 5, 2003 and September 5,
2002."
5.5 If Executive or ITC commits a breach, or threatens to
commit a breach, of any of the provisions of Sections 5.2 or 5.4, the Company
shall have the right and remedy:
(a) to have the provisions of this Agreement
specifically enforced by any court having equity jurisdiction, it being
acknowledged and agreed by Executive that the services being rendered
hereunder to the Company are of a special, unique and extraordinary character
and that any such breach or threatened breach will cause irreparable injury to
the Company and that money damages will not provide an adequate remedy to the
Company; and
(b) to require Executive and ITC to account
for and pay over to the Company all monetary damages suffered by the Company
as the result of any transactions constituting a breach of any of the
provisions of Sections 5.2 or 5.4, and Executive and ITC hereby agree to
account for and pay over such damages to the Company.
Each of the rights and remedies enumerated in this Section
5.5 shall be independent of the other, and shall be severally enforceable, and
such rights and remedies shall be in addition to, and not in lieu of, any
other rights and remedies available to the Company under law or equity.
In connection with any legal action or proceeding arising
out of or relating to this Agreement, the prevailing party in such action or
proceeding shall be entitled to be reimbursed by the other party for the
reasonable attorneys' fees and costs incurred by the prevailing party.
5.6 If Executive or ITC shall violate any covenant contained
in Section 5.4, the duration of such covenant so violated shall be
automatically extended for a period of time equal to the period of such
violation.
5.7 If any provision of Sections 5.2 or 5.4 is held to be
unenforceable because of the scope, duration or area of its applicability, the
tribunal making such determination shall have the power to modify such scope,
duration, or area, or all of them, and such provision or provisions shall then
be applicable in such modified form.
5.8 The provisions of this paragraph 5 shall survive the
termination of this Agreement for any reason.
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6. Miscellaneous Provisions.
6.1 All notices provided for in this Agreement shall be in
writing, and shall be deemed to have been duly given when (i) delivered
personally to the party to receive the same, or (ii) when mailed first class
postage prepaid, by certified mail, return receipt requested, addressed to the
party to receive the same at his or its address set forth below, or such other
address as the party to receive the same shall have specified by written
notice given in the manner provided for in this Section 6.1. All notices shall
be deemed to have been given as of the date of personal delivery or mailing
thereof.
If to Executive:
Xxxxxx Xxxxxx
0 Xxxxxx Xxxxx Xxxx
Xxxxxx, Xxxxxxxxxxx 00000
With a copy to:
Xxxxxx X. Xxxxxxx, Esq.
Xxxxxx, Xxxxx & Bockius
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
If to the Company:
WinStar Communications, Inc.
000 Xxxx Xxxxxx
Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attn: Chairman of the Board
6.2 This Agreement, the Stock Option Agreements executed
simultaneously herewith and the ITC Non-Compete Agreement set forth the entire
agreement of the parties relating to the employment of Executive and are
intended to supersede all prior negotiations, understandings and agreements.
No provisions of this Agreement, the Stock Option Agreements or the ITC
Non-Compete Agreement may be waived or changed except by a writing by the
party against whom such waiver or change is sought to be enforced. The failure
of any party to require performance of any provision hereof or thereof shall
in no manner affect the right at a later time to enforce such provision.
6.3 All questions with respect to the construction of this
Agreement, and the rights and obligations of the parties hereunder, shall be
determined in accordance with the law of the State of New York applicable to
agreements made and to be performed entirely in New York.
6.4 This Agreement shall inure to the benefit of and be
binding upon the successors and assigns of the Company. This Agreement shall
not be assignable by Executive, but shall inure to the benefit of and be
binding upon Executive's heirs and legal representatives.
6.5 Should any provision of this Agreement become legally
unenforceable, no other provision of this Agreement shall be affected, and
this Agreement shall continue as if the Agreement had been
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executed absent the unenforceable provision.
6.6 If, during the term hereof, Executive is nominated to
serve as a director of the Company but fails to be elected, he shall
nonetheless be invited to attend each meeting of the Board of Directors of the
Company through the remainder of the term hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement
on the date first above written.
-----------------------------------
XXXXXX XXXXXX
WINSTAR COMMUNICATIONS, INC.
-----------------------------------
By: Xxxxxxx X. Xxxxxxx, Xx.
Chairman of the Board and Chief
Executive Officer
Paragraphs 5.4 - 5.8 accepted and
agreed to:
ITC GROUP, INC.
By:_________________________
Xxxxxx Xxxxxx,
President
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SCHEDULE 5.4
The development of an information server for interactive
dissemination of video and other information over wireline and wireless
communications media.
29
