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EXHIBIT 10.76
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Registration Rights
Agreement") is made as of December 16, 1997, by and between Intelect
Communications, Inc., a Delaware corporation (the"Company"), and Navesink
Equity Derivative Fund LDC, a Cayman Island limited duration company
("Purchaser").
WHEREAS, on the date hereof, Purchaser acquired from the Company
914,286 shares of the Company's $4.375 10% Cumulative Convertible Preferred
Stock, Series B, $.01 par value (the "Preferred Shares"), pursuant to that
certain Purchase Agreement dated of even date herewith by and between the
parties (the "Purchase Agreement");
WHEREAS, the Company wishes to grant Purchaser certain registration
rights in respect of the shares of the Company's Common Stock, $.01 par value
issuable upon conversion of or as dividends on the Preferred Stock (the
"Shares"), as set forth herein.
NOW, THEREFORE, in consideration of the mutual promises and covenants
set forth herein, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, the following terms shall have the meanings
set forth below:
"Commission" shall mean the Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act.
"Common Stock" shall mean the Company's Common Stock, $.01 par value.
"Company" shall have the meaning given in the Preamble.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Indemnified Party" shall have the meaning given in Section 2.5.3.
"Indemnifying Party" shall have the meaning given in Section 2.5.3.
"Preferred Shares" shall have the meaning given in the first recital.
"Purchase Agreement" shall have the meaning set forth in the first
recital.
"Purchaser" shall have the meaning given in the Preamble.
The terms "register," "registered," and "registration" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering by the
Commission of the effectiveness of such registration statement.
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"Registration Expenses" shall mean all expenses, other than Selling
Expenses (as defined below), incurred by the Company in complying with this
Registration Rights Agreement, including, without limitation, all registration,
qualification and filing fees, exchange listing fees, printing expenses, escrow
fees, fees and disbursements of counsel for the Company, blue sky fees and
expenses, and the expense of any special audits incident to or required by any
such registration (but excluding the compensation of regular employees of the
Company which shall be paid in any event by the Company).
"Securities Act" shall mean the Securities Act of 1933, as amended, or
any similar federal statute and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Selling Expenses" shall mean all underwriting discounts, selling
commissions and stock transfer taxes applicable to the securities registered by
the holders of the Registrable Securities and, except as set forth above, all
fees and disbursements of counsel for such holders.
"Selling Security Holder" shall have the meaning given in Section
2.4.4.
"Shares" shall mean all Common Stock issued upon conversion of the
Preferred Stock and any Common Stock issued as dividends on the Preferred
Stock.
"Underwritten Public Offering" shall mean a public offering in which
the Common Stock is offered and sold on a firm commitment basis through one or
more underwriters, all pursuant to (i) an effective registration statement
under the Securities Act and (ii) an underwriting agreement between the Company
and such underwriters.
ARTICLE II
REGISTRATION RIGHTS
2.1 Demand Registration.
2.1.1 Demand Rights Only. The Purchaser shall be entitled to
a one time written demand of the Company to file with the Commission within 60
days after such demand is made a registration statement on Form S-1, Form S-2,
or Form S-3, as appropriate (the "Registration Statement") providing for the
resale of those Shares which have been issued upon conversion of the Preferred
Shares, but in no event can such demand be made until the first to occur of (a)
90 days following the closing (including the closing of any over-allotment
options exercised by the underwriters) of a firm commitment underwritten public
offering by the Company of its Common Stock or (b) May 31, 1998.
Notwithstanding the foregoing, no such demand shall be made until 30 days after
the Purchaser shall have first exercised its conversion rights of such
Preferred Shares under the Purchase Agreement. The Company will use its
reasonable best efforts to cause such Registration Statement to be declared
effective and will take all reasonable steps necessary to keep the Registration
Statement effective until the earlier of (i) two years after the date hereof,
(ii) until the Shares registered thereby are transferrable pursuant to Rule 144
under the Securities Act, or (iii) until all of the Shares registered thereby
have been sold under such Registration Statement.
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2.1.2 Limitations and Restrictions.
2.1.2.1 The Company may suspend or restrict any
transfer of Shares under the Registration Statement if it determines in good
faith that it is required to amend the Registration Statement in order to
comply with the Securities Act and in such case, if requested, the Purchaser
will immediately cease making offers of such Shares and promptly return all
prospectuses to the Company. In such a case, the Company will take all
reasonable steps to amend such Registration Statement and will promptly provide
the Purchaser with revised prospectuses and, following receipt of the revised
prospectuses, the Purchaser shall be free to resume making offers of the
Shares.
2.1.2.2 The Company shall be entitled to require
that the Purchaser refrain from making any public sales or distributions of the
Shares if the board of directors of the Company reasonably determines that such
sales or distributions would interfere with any proposed or pending material
transaction involving the Company or any of its subsidiaries or would require
premature disclosure thereof or would require the Company to disclose
information that the Company has not otherwise made public and the Company
reasonably determines that is in the best interests of the Company to not
disclose at such time, or the Company is engaged in any other activity which
the Board of Directors of the Company determines in good faith may be adversely
affected by the required registration or the registration and distribution of
the Shares, provided in no event shall any requirement that the Purchaser
refrain from effecting sales or distributions of the Shares extend for more
than 180 days.
2.1.2.3 Notwithstanding the provisions of this
Section 2.1, the one-time demand registration rights provided in Section 2.1.1
shall be subject to the following additional limitations: (a) the Company shall
not be obligated to file a Form S-3 or Form S-2 Registration Statement on such
Form if it does not meet the requirements of such Form, and if the Company is
required to file a Form S-1, it shall not be obligated to file the Form S-1
until it shall have prepared current financial statements as required by Form
S-1, or (b) if, upon receipt of any request for registration of Shares pursuant
to Section 2.1.1, the Company is then engaged by a reputable and nationally or
regionally recognized investment banking firm regarding a good faith proposed
Underwritten Public Offering (other than for the underwritten offering
referred to in Section 2.1.1 hereof), then the Company shall give notice of
such negotiations to the Purchaser within 15 days of the date upon which the
Company receives such request and the Company shall not, for 90 days after
giving such notice, be required to undertake a required registration of the
Shares pursuant to Section 2.1.1 in response to the Purchaser's request;
provided, however, that if such registration statement of such proposed
Underwritten Public Offering is not filed within 90 days after the Company
gives such notice to the Purchaser, the Company shall respond to the
Purchaser's request for registration of the Shares and, unless otherwise
required by the provisions of this Section 2.1, register such Shares, no later
than 30 days after the expiration of such 90 days period. In no event shall
the Company be obligated to include the Shares in any registration statement or
notification under Section 2.1.1 if: (i) in the written opinion of the
underwriter, the inclusion of the Shares in such registration statement or
notification would be materially detrimental to the proposed offering of debt
or equity securities pursuant to which the Company gave notice to the Purchaser
under this paragraph; or (ii) in the opinion of counsel for the Company that
the Shares are not considered "restricted securities" within the meaning of
Rule 144 promulgated under the Securities Act and that registration under the
Securities Act is therefore not required.
2.1.2.4 Notwithstanding anything herein to the
contrary, the Company shall not be required to effect more than one
registration statement pursuant to this Section 2.1.
2.1.3 Additional Covenants. In connection with the filing of
a Registration Statement, notification, or post-effective amendment under this
section, the Company covenants and agrees:
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2.1.3.1 to pay all expenses of such Registration
Statement, notification, or post-effective amendment, including, without
limitation, printing charges, legal fees and disbursements of counsel for the
Company, blue sky expenses, accounting fees and filing fees, but not including
legal fees and disbursements of counsel to the Purchaser and any sales
commissions on Shares offered and sold; and
2.1.3.2 to take all necessary action which may
reasonably be required in qualifying or registering the Shares included in a
Registration Statement, notification or post-effective amendment for the offer
and sale under the securities or blue sky laws of such states as requested by
the Purchaser; provided that the Company shall not be obligated to execute or
file any general consent to service of process or to qualify as a foreign
corporation to do business under the laws of any such jurisdiction.
2.2 Expenses of Registration. All Registration Expenses shall be
borne by the Company. Unless otherwise stated herein, all Selling Expenses
relating to the Shares registered on behalf of the Purchases shall be borne by
the Purchaser.
2.3 Registration Procedures. In the case of registration,
qualification or compliance effected by the Company pursuant to this
Registration Rights Agreement, the Company will keep the Purchaser advised as
to the initiation of the registration, qualification and compliance and as to
the completion thereof. At its expense, the Company will furnish to the
Purchaser such number of copies of the prospectus and such other documents as
the Purchaser may reasonably request in order to facilitate the public sale of
the Shares, and promptly furnish to the Purchaser notice of any stop- order or
similar notice issued by the Commission or any state agency charged with the
regulation of securities, and notice of any Nasdaq or securities exchange
listing. Further, the Company shall use its best efforts to cause the Shares
to be listed on the Nasdaq Stock Market or a securities exchange on which the
Common Stock is approved for listing.
2.4 Indemnification.
2.4.1 To the extent permitted by law, the Company will
indemnify the Purchaser, each of its officers and directors and partners, and
each person controlling the Purchaser within the meaning of Section 15 of the
Securities Act, with respect to which registration, qualification or compliance
has been effected pursuant to this Agreement, and each underwriter, if any, and
each person who controls any underwriter within the meaning of Section 15 of
the Securities Act, against all expenses, claims, losses, damages or
liabilities (or actions in respect thereof), including any of the foregoing
incurred in settlement of any litigation, commenced or threatened, to the
extent such expenses, claims, losses, damages or liabilities arise out of or
are based on any untrue statement (or alleged untrue statement) of a material
fact contained in any registration statement, prospectus, offering circular or
other similar document, or any amendment or supplement thereto, incident to any
such registration, qualification or compliance, or based on any omission (or
alleged omission) to state therein a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading, or any violation by the
Company of the Securities Act or any rule or regulation promulgated under the
Securities Act applicable to the Company in connection with any such
registration, qualification or compliance, and the Company will reimburse the
Purchaser, each of its officers and directors and partners, and each person
controlling the Purchaser, each such underwriter and each person who controls
any such underwriter, for any legal and any other expenses reasonably incurred
in connection with
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investigating, preparing or defending any such claim, loss, damage, liability
or action; provided, however, that the indemnity contained herein shall not
apply to amounts paid in settlement of any claim, loss, damage, liability or
expense if settlement is effected without the consent of the Company (which
consent shall not unreasonably be withheld); provided, further, that the
Company will not be liable in any such case to the extent that any such claim,
loss, damage, liability or expense arises out of or is based on any untrue
statement or omission or alleged untrue statement or omission, made in reliance
upon and in conformity with written information furnished to the Company by the
Purchaser, such controlling person or such underwriter specifically for use
therein; provided, however, that the indemnity contained herein shall not apply
to amounts paid in settlement of any claim, loss, damage, liability, or expense
if settlement is effected without the consent of the Purchaser (which consent
shall not be unreasonably withheld). Notwithstanding the foregoing, insofar as
the foregoing indemnity relates to any such untrue statement (or alleged untrue
statement) or omission (or alleged omission) made in the preliminary prospectus
but eliminated or remedied in the amended prospectus on file with the
Commission at the time the registration statement becomes effective or in the
final prospectus filed with the Commission pursuant to the applicable rules of
the Commission or in any supplement or addendum thereto, the indemnity
agreement herein shall not inure to the benefit of any underwriter if a copy of
the final prospectus filed pursuant to such rules, together with all
supplements and addenda thereto, was not furnished to the person or entity
asserting the loss, liability, claim or damage at or prior to the time such
furnishing is required by the Securities Act.
2.4.2 To the extent permitted by law, the Purchaser will, if
securities held by the Purchaser are included in the securities as to which
such registration, qualification or compliance is being effected pursuant to
terms hereof, indemnify the Company, each of its directors and officers, each
underwriter, if any, of the Company's securities covered by such a registration
statement, each person who controls the Company or such underwriter within the
meaning of Section 15 of the Securities Act, and each other person selling the
Company's securities covered by such registration statement, each of such
person's officers and directors and each person controlling such persons within
the meaning of Section 15 of the Securities Act, against all claims, losses,
damages and liabilities (or actions in respect thereof) arising out of or based
on any untrue statement (or alleged untrue statement) of a material fact
contained in any such registration statement, prospectus, offering circular or
other document, or any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, or any violation by the Purchaser of any rule or
regulation promulgated under the Securities Act applicable to the Purchaser and
relating to action or inaction required of the Purchaser in connection with any
such registration, qualification or compliance, and will reimburse the Company,
such other persons, such directors, officers, persons, underwriters or control
persons for any legal or other expenses reasonably incurred in connection with
investigating or defending any such claim, loss, damage, liability or action,
in each case to the extent, but only to the extent, that such untrue statement
(or alleged untrue statement) or omission (or alleged omission) is made in such
registration statement, prospectus, offering circular or other document in
reliance upon and in conformity with written information furnished to the
Company by the Purchaser specifically for use therein; provided, however, that
the indemnity contained herein shall not apply to amounts paid in settlement of
any claim, loss, damage, liability or expense if settlement is effected without
the consent of such holder of Registrable Securities (which consent shall not
be unreasonably withheld). Notwithstanding the foregoing, the liability of the
Purchaser under this Section 2.4.2 shall be limited in an amount equal to the
net proceeds from the sale of the Shares sold by the Purchaser, unless such
liability arises out of or is based on willful conduct by the Purchaser. In
addition, insofar as the foregoing indemnity relates to any such untrue
statement (or alleged untrue statement) or omission (or alleged omission) made
in the preliminary prospectus but eliminated or remedied in the amended
prospectus on file with the Commission at the time the registration statement
becomes
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effective or in the final prospectus filed pursuant to applicable rules of the
Commission or in any supplement or addendum thereto, the indemnity agreement
herein shall not inure to the benefit of the Company or any underwriter, if a
copy of the final prospectus filed pursuant to such rules, together with all
supplements and addenda thereto, was not furnished to the person or entity
asserting the loss, liability, claim or damage at or prior to the time such
furnishing is required by the Securities Act.
2.4.3 Notwithstanding the foregoing paragraphs 2.4.1 and
2.4.2, each party entitled to indemnification under this Section (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified
Party has actual knowledge of any claim as to which indemnity may be sought,
and shall permit the Indemnifying Party to assume the defense of any such claim
or any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or litigation,
shall be approved by the Indemnified Party (whose approval shall not
unreasonably be withheld), and the Indemnified Party may participate in such
defense at such party's expense, and provided further that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Agreement unless the failure
to give such notice is materially prejudicial to an Indemnifying Party's
ability to defend such action and provided further, that the Indemnifying Party
shall not assume the defense for matters as to which there is a conflict of
interest or as to which the Indemnifying Party is asserting separate or
different defenses, which defenses are inconsistent with the defenses of the
Indemnified Party. No Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the consent of each Indemnified Party, consent
to entry of any judgment or enter into any settlement which does not include as
an unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation. No Indemnified Party shall consent to entry of any judgment or
enter into any settlement without the consent of each Indemnifying Party.
2.4.4 If the indemnification provided for in this Section is
unavailable to the Indemnified Party in respect of any losses, claims, damages
or liabilities referred to therein, then the Indemnifying Party, in lieu of
indemnifying such Indemnified Party, shall contribute to the amount paid or
payable by such Indemnified Party as a result of such losses, claims, damages
or liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and all shareholders offering
securities in the offering (the "Selling Security Holders") on the other from
the offering of the Company's securities, or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company on the one hand and the
Selling Security Holders on the other in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities, as
well as any other relevant equitable considerations. The relative benefits
received by the Company on the one hand and the Selling Security Holders on the
other shall be the net proceeds from the offering (before deducting expenses)
received by the Company on the one hand and the Selling Security Holders on the
other. The relative fault of the Company on the one hand and the Selling
Security Holders on the other shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or by the Selling Security Holders and the parties'
relevant intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Company and the Selling Security
Holders agree that it would not be just and equitable if contribution pursuant
to this Section were based solely upon the number of entities from whom
contribution was requested or by any other method of allocation which does not
take account of the equitable considerations referred to above in this Section.
The amount paid or payable by an Indemnified Party as a result of the losses,
claims,
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damages and liabilities referred to above in this Section shall be deemed to
include any legal or other expenses reasonably incurred by such Indemnified
Party in connection with investigating or defending any such action or claim,
subject to the provisions hereof. Notwithstanding the provisions of this
Section, no Selling Shareholder shall be required to contribute any amount or
make any other payments under this Agreement which in the aggregate exceed the
proceeds received by such Selling Shareholder. No person guilty of fraudulent
misrepresentation (within the meaning of the Securities Act) shall be entitled
to contribution from any person who was not guilty of such fraudulent
misrepresentation.
2.5 Certain Information. The Purchaser agrees, with respect to any
Shares included in any registration, to furnish to the Company such information
regarding the Purchaser, the Shares and the distribution proposed by the
Purchaser as the Company may reasonably request in writing and as shall be
required in connection with any registration, qualification or compliance
referred to herein.
2.6 Rule 144 Reporting. With a view to making available the benefits
of certain rules and regulations of the Commission which may at any time permit
the sale of Restricted Securities (used herein as defined in Rule 144 under the
Securities Act) to the public without registration, the Company agrees to use
its best lawful efforts to:
2.6.1 Make and keep public information available, as those
terms are understood and defined in Rule 144 under the Securities Act, at all
times during which the Company is subject to the reporting requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act");
2.6.2 File with the Commission in a timely manner all reports
and other documents required of the Company under the Securities Act and the
Exchange Act (at all times during which the Company is subject to such
reporting requirements); and
2.6.3 So long as the Purchaser owns any Shares constituting
Restricted Securities (as defined in Rule 144 promulgated under the Securities
Act), to furnish to the Purchaser forthwith upon request a written statement by
the Company as to its compliance with the reporting requirements of said Rule
144 and with regard to the Securities Act and the Exchange Act (at all times
during which the Company is subject to such reporting requirements), a copy of
the most recent annual or quarterly report of the Company, and such other
reports and documents of the Company and other information in the possession of
or reasonably obtainable by the Company as the Purchaser may reasonably request
in availing itself of any rule or regulation of the Commission allowing the
Purchaser to sell any such securities without registration.
2.7 Transferability. The rights conferred by this Agreement shall be
freely transferable to a recipient of Shares.
2.8 Governing Law. This Registration Rights Agreement shall be
governed in all respects by the laws of the State of Texas.
2.9 Entire Agreement; Amendment. This Registration Rights Agreement
constitutes the full and entire understanding and agreement between the parties
with regard to the subject hereof. This Registration Rights Agreement, or any
provision hereof, may be amended, waived, discharged or terminated upon the
written consent of the Company and the Purchaser.
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2.10 Notices, etc. Except as otherwise specified herein, all notices,
requests, demands or other communications to or upon the respective parties
hereto shall be deemed to have been duly given or made when delivered or within
three (3) days after having been sent via U.S. certified or registered mail,
postage prepaid, return receipt requested, addressed to the party to which such
notice, request, demand or other communication is required or permitted to be
given or made under this Registration Rights Agreement, as set forth below or
at such other address as either of the parties hereby may hereafter notify the
other in writing in accordance with the provision hereof.
To Company: INTELECT COMMUNICATIONS, INC.
1100 Executive Drive
Richardson, Texas 75081
Telephone: 972-367-2100
Telecopy: 972-367-2271
Attention: Herman M. Frietsch, Chairman and CEO
with a copy to: Philip P. Sudan, Jr.
Ryan & Sudan, L.L.P.
909 Fannin, 39th Floor
Houston, Texas 77010
Telephone: 713-652-0501
Telecopy: 713-652-0503
To Purchaser: NAVESINK EQUITY DERIVATIVE FUND LDC
c/o RUMSON CAPITAL, L.L.C.
The Galleria Building One
3rd Floor
2 Bridge Ave.
Red Bank, New Jersey 07001-1106
Telephone: (732) 747-7716
Telecopy: (732) 747-3687
Attn: Mr. John Burke
2.11 Delays or Omissions. Except as expressly provided herein, no
delay or omission to exercise any right, power or remedy accruing to any party
to this Registration Rights Agreement shall impair any such right, power or
remedy of such party nor shall it be construed to be a waiver of any such
breach or default, or an acquiescence therein, or of or in any similar breach
or default thereafter occurring; nor shall any waiver of any single breach or
default be deemed a waiver of any other breach or default theretofore or
thereafter occurring. Any waiver, permit, consent or approval of any kind or
character on the part of any party of any breach or default under this
Registration Rights Agreement, or any waiver on the part of any party of any
provisions or conditions of this Registration Rights Agreement, must be in
writing and shall be effective only to the extent specifically set forth in
such writing. All remedies, either under this Registration Rights Agreement or
by law or otherwise afforded to any party to this Registration Rights
Agreement, shall be cumulative and not alternative.
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2.12 Counterparts. This Registration Rights Agreement may be executed
in any number of counterparts, each of which shall be enforceable against the
parties actually executing such counterparts, and all of which together shall
constitute one instrument.
2.13 Severability. In the event that any provision of this
Registration Rights Agreement becomes or is declared by a court of competent
jurisdiction to be illegal, unenforceable or void, this Registration Rights
Agreement shall continue in full force and effect without said provision.
2.14 Titles and Subtitles. The titles and subtitles used in this
Registration Rights Agreement are used for convenience only and are not
considered in construing or interpreting this Registration Rights Agreement.
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THE COMPANY'S SIGNATURE PAGE
IN WITNESS WHEREOF, the Company has executed this agreement effective
upon the date first set forth above.
INTELECT COMMUNICATIONS, INC.
/s/ HERMAN M. FRIETSCH
-------------------------------------------
Herman M. Frietsch
Chairman and Chief Executive Officer
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THE PURCHASER'S SIGNATURE PAGE
IN WITNESS WHEREOF, the Purchaser has signed this Agreement as of the
date first written above.
NAVESINK EQUITY DERIVATIVE
FUND LDC
By: RUMSON CAPITAL, L.L.C.
By: /s/ JOHN BURKE
-----------------------------------
John Burke, Managing Member
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