Exhibit 4.2
RESTRICTION AND REGISTRATION RIGHTS AGREEMENT
RESTRICTION AND REGISTRATION RIGHTS AGREEMENT, dated as of May 26, 1998
(the "Agreement"), between ResortQuest International, Inc., a Delaware
corporation ("RQI") and __________(the "Stockholder").
WHEREAS, Stockholder has made and will make significant contributions to
RQI and currently owns a large portion of the issued and outstanding shares of
common stock, $.01 par value, of RQI (the "Common Stock"); and
WHEREAS, in connection with the proposed initial public offering (the
"Initial Public Offering") of the Common Stock, RQI wishes to grant to the
Stockholder certain registration rights with respect to the shares of Common
Stock that the Stockholder currently owns or may acquire in the future, as
provided further herein.
NOW THEREFORE, in consideration of the capital contributions made by the
Stockholder to RQI and of the promises herein contained, the parties hereto
agree as follows:
1. Definitions.
As used in this Agreement:
(i) the terms "register," "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Act (and any post-effective amendments filed or required to
be filed) and the declaration or ordering of effectiveness of such registration
statement;
(ii) the term "Registrable Securities" means (A) all shares of Common
Stock owned by the Stockholder as of the date hereof, (B) any additional shares
of Common Stock acquired by the Stockholder and (C) any capital stock of RQI
issued as a dividend or other distribution with respect to, or in exchange for
or in replacement of, the shares of Common Stock referred to in clause (A) or
(B) above;
(iii)the term "Holder" shall mean the Stockholder or any other holder
of Registrable Securities to whom the rights under this Agreement have been
assigned and the term "Holders" shall mean all such Holders collectively;
(iv) the term "Initiating Holders" shall mean any Holder or Holders
who in the aggregate are Holders of a majority of the Registrable Securities
issued to the Founding Stockholders;
(v) "Commission" shall mean the Securities and Exchange Commission or
any other federal agency at the time administering the Act;
(vi) "Registration Expenses" shall mean all third-party expenses
incurred by RQI in compliance with Sections 3 and 4 hereof, including, without
limitation, all registration and filing fees, printing expenses, fees and
disbursements of counsel for RQI and the underwriters, if any, blue sky fees and
expenses and the third-party expenses of any special audits incident to or
required by any such registration (but excluding the compensation of regular
employees of RQI, which shall be paid in any event by RQI);
(vii)"Selling Expenses" shall mean all underwriting discounts and
selling commissions applicable to the sale of Registrable Securities and all
fees and disbursements of counsel for each of the Holders;
(viii) "Act" shall mean the Securities Act of 1933, as amended; and
(ix) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
2. Restrictions. Except for transfers to affiliates of the
Stockholder, who agree to be bound by the restrictions set forth in this Section
2, for a period of one year from the completion of the Initial Public Offering,
except pursuant to this Agreement, the Stockholder shall not sell, assign,
exchange, transfer, distribute or otherwise dispose of any shares of Registrable
Securities received by the Stockholder.
3. Requested Registration.
(i) Request for Registration. If RQI shall receive from an Initiating
Holder, no sooner than two years following the completion of the Initial Public
Offering, a written request that RQI effect any registration with respect to all
or a part of the Registrable Securities, RQI will:
(A) promptly give written notice of the proposed registration,
qualification or compliance to all other Holders; and
(B) as soon as practicable, use its diligent best efforts to effect
such registration (including, without limitation, the execution of an
undertaking to file post-effective amendments, appropriate qualification
under applicable blue sky or other state securities laws and appropriate
compliance with applicable regulations issued under the Act) as may be so
requested and as would permit or facilitate the sale and distribution as
soon as is practicable of all or such portion o such Registrable Securities
as are specified in such request, together with all or such portion of the
Registrable Securities of any Holder or Holders joining in such request as
are specified in a written request received
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by RQI within 30 business days after written notice from RQI is given under
Section 3(i) (A) above; provided that RQI shall not be obligated to effect,
or take any action to effect, any such registration pursuant to this
Section 3:
(x) In any particular jurisdiction in which RQI would be
required to execute a general consent to service of process in
effecting such registration, qualification or compliance, unless
RQI is already subject to service in such jurisdiction and except
as may be required by the Act or applicable rules or regulations
thereunder;
(y) After RQI has effected three (3) such registrations
pursuant to this Section 3 and such registrations have been
declared or ordered effective and the sales of such Registrable
Securities shall have closed; or
(z) If the Registrable Securities requested by all Holders
to be registered pursuant to such request do not have an
anticipated aggregate public offering price (before any
underwriting discounts and commissions) of not less than
$10,000,000.
The registration statement filed pursuant to the request of the
Initiating Holders may, subject to the provisions of Section 3(ii) below,
include other securities of RQI which are held by officers or directors of RQI,
or which are held by persons who, by virtue of agreements with RQI are entitled
to include their securities in any such registration, but RQI shall have no
absolute right to include any of its securities in any such registration.
The registration rights set forth in this Section 3 shall be
assignable, in whole or in part, to any transferee of Common Stock (who shall be
bound by all obligations of this Section 3).
(ii) Underwriting. If the Initiating Holders intend to distribute
the Registrable Securities covered by their request by means of an underwriting,
they shall so advise RQI as a part of their request made pursuant to Section 3.
If officers or directors of RQI holding other securities of RQI
shall request inclusion in any registration pursuant to Section 3, or if holders
of securities of RQI other than Registrable Securities who are entitled, by
contract with RQI or otherwise, to have securities included in such a
registration (the "Other Stockholders") request such inclusion, the Holders
shall offer to include the securities of such officers, directors and Other
Stockholders in the underwriting and may conditio such offer on their acceptance
of the further applicable provisions of this
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Section 2. The Holders whose shares are to be included in such registration and
RQI shall (together with all officers, directors and Other Stockholders
proposing to distribute their securities through such underwriting) enter into
an underwriting agreement in customary form with the representative of the
underwriter or underwriters selected for such underwriting by the initiating
Holders and reasonably acceptable to RQI. Notwithstanding any other provision of
this Section 3, if the representative advises the Holders in writing that
marketing factors require a limitation on the number of shares to be
underwritten, the securities of RQI held by officers or directors of RQI and the
securities held by Other Stockholders shall be excluded from such registration
to the extent so required by such limitation. If, after the exclusion of such
shares, further reductions are still required, the number of shares included in
the registration by each Holder shall be reduced on a pro rata basis (based on
the number of shares proposed to be sold by such Holder), by such minimum number
of shares as is necessary to comply with such request. No Registrable Securities
or any other securities excluded from the underwriting by reason of the
underwriter's marketing limitation shall be included in such registration. If
any officer, director or Other Stockholder who has requested inclusion in such
registration as provided above disapproves of the terms of the underwriting,
such person may elect to withdraw therefrom by written notice to RQI, the
underwriter and the Initiating Holders. The securities so withdrawn shall also
be withdrawn from registration. If the underwriter has not limited the number of
Registrable Securities or other securities to be underwritten, RQI may include
its securities for its own account in such registration if the representative so
agrees and if the number of Registrable Securities and other securities which
would otherwise have been included in such registration and underwriting will
not thereby be limited.
(iii) Notwithstanding the foregoing, if RQI shall furnish to Holders
requesting the filing of a registration statement pursuant to Section 3 (i), a
certificate signed by the president or Chief Executive Officer of RQI stating
that in the good faith judgment of the Board of Directors of RQI, it would be
seriously detrimental to RQI and its stockholders for such registration
statement to be filed and it is therefore essential to defer the filing of such
registration statement, then RQI shall have the right to defer such filing for a
period of not more than 60 days after receipt of the request of the Initiating
Holders; provided, however, that RQI may not utilize this right more than once
in any twelve (12) month period.
4. RQI Registration.
(i) If RQI shall determine to register any of its equity securities
either for its own account or for the account of a security holder or holders
exercising their respective demand registration rights, other than a
registration relating solely to
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employee benefit plans, or a registration relating solely to a Commission Rule
145 transaction, or a registration on any registration form which does not
permit secondary sales or does not include substantially the same information as
would be required to be included in a registration statement covering the sale
of Registrable Securities, RQI will:
(A) promptly give to each of the Holders a written notice thereof
(which shall include a list of the jurisdictions in which RQI intends to
attempt to qualify such securities under the applicable blue sky or other
state securities laws); and
(B) include in such registration (and any related qualification under
blue sky laws or other compliance), and in any underwriting involved
therein, all the Registrable Securities specified in a written request or
requests, made by the Holders within thirty (30) days after receipt of the
written notice from RQI described in clause (i) above, except as set forth
in section 3(ii) below. Such written request may specify all or a part of
the Holders' Registrable Securities.
(ii) Underwriting. If the registration of which RQI gives notice is
for a registered public offering involving an underwriting, RQI shall so advise
each of the Holders as a part of the written notice given pursuant to Section
4(i)(A). In such event, the right of each of the Holders to registration
pursuant to this Section 4 shall be conditioned upon such Holders' participation
in such underwriting and the inclusion of such Holders' Registrable Securities
in the underwriting to the extent provided herein. The Holders whose shares are
to be included in such registration shall (together with RQI and the Other
Stockholders distributing their securities through such underwriting) enter into
an underwriting agreement in customary form with the representative of the
underwriter or underwriters selected for underwriting by RQI. Notwithstanding
any other provision of this Section 4, if the representative determines that
marketing factors require a limitation on the number of shares to be
underwritten, the representative may (subject to the allocation priority set
forth below) limit the number of Registrable Securities to be included in the
registration and underwriting. RQI shall so advise all holders of securities
requesting registration, and the number of shares of securities that are
entitled to be included in the registration and underwriting shall be allocated
in the following manner: The securities of RQI held by officers, directors and
Other Stockholders of RQI (other than securities held by holders who by
contractual right initiated the demand for such registration ("Demanding
Holders")) shall be excluded from such registration and underwriting to the
extent required by such limitation, and, if a limitation on the number of shares
is still required, the number of shares that may be included in the registration
and underwriting by each of the Holders and
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Demanding Holders shall be reduced, on a pro rata basis (based on the number of
shares proposed to be sold by such Holder or Demanding Holder), by such minimum
number of shares as is necessary to comply with such limitation. If any of the
Holders or Demanding Holders or any officer, director or Other Stockholder
disapproves of the terms of any such underwriting, he may elect to withdraw
there from by written notice to RQI and the underwriter. Any Registrable
Securities or other securities excluded or withdrawn from such underwriting
shall be withdrawn from such registration.
(iii) Number and Transferability. Each of the Holders shall be
entitled to have its shares included in an unlimited number of registrations
pursuant to this Section 4. The registration rights granted pursuant to this
Section 4 shall be assignable, in whole or in part, to any transferee of the
Common Stock (who shall be bound by all obligations of this Section 4).
5. Expenses of Registration. All Registration Expenses and Selling
Expenses incurred in connection with any registration, qualification or
compliance pursuant to Section 3 of this Agreement shall be borne by the Holders
of the securities so registered pro rata on the basis of the number of shares so
registered. Without limiting the generality of the foregoing, in the event RQI
includes shares in any registration, qualification or compliance pursuant to
Section 3 of this Agreement, RQI shall pay the Registration Expenses in
proportion to RQI's share of the total number of shares included in such
registration. All Registration Expenses incurred in connection with any
registration, qualification or compliance pursuant to Section 4 of this
Agreement shall be borne by RQI, and all Selling Expenses incurred in connection
with any such registration, qualification or compliance shall be borne by the
Holders of securities so registered pro rata on the basis of the number of
shares so registered.
6. Registration procedures. In the case of each registration effected
by RQI pursuant to this Agreement, RQI will keep the Holders, as applicable,
advised in writing as to the initiation of each registration and as to the
completion thereof. RQI will:
(i) keep such registration effective for a period of one hundred
eighty (180) days or until the Holders, as applicable, have completed the
distribution described in the registration statement relating thereto,
whichever first occurs; provided, however, that (A) such 180-day period
shall be extended for a period of time equal to the period during which the
Holders, as applicable, refrain from selling any securities included in
such registration in accordance with provisions in Section 10 hereof; and
(B) in the case of any registration of Registrable Securities on Form S-3
which are intended to be offered on a continuous or delayed basis, such
180-day period shall be extended until all such Registrable
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Securities are sold, provided that Rule 415, or any successor rule under
the Act, permits an offering on a continuous or delayed basis, and provided
further that applicable rules under the Act governing the obligation to
file a post-effective amendment permit, in lieu of filing a post-effective
amendment which (y) includes any prospectus required by Section 10(a) of
the Act or (z) reflects facts or events representing a material or
fundamental change in the information set forth in the registration
statement, the incorporation by reference of information required to be
included in (y) and (z) above to be contained in periodic reports filed
pursuant to Section 12 or 15(d) of the Exchange Act in the registration
statement; and
(ii) furnish such number of prospectuses and other documents incident
thereto as each of the Holders, as applicable, from time to time may
reasonably request;
provided, however, that the Holders, pro rata on the basis of the number of
their shares so included in such registration, reimburse RQI for expenses
incurred in performing its obligations under this Section 6
7. Indemnification.
(i) RQI will indemnify each of the Holders, as applicable, each of its
officers, directors and partners, and each person controlling each of the
Holders, with respect to each registration which has been effected pursuant to
this Agreement, and each underwriter, if any, and each person who controls any
underwriter, 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 prospectus, offering
circular or other document (including any related registration statement,
notification or the like) 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 not misleading, or any violation by RQI of the Act or any rule or
regulation thereunder applicable to RQI and relating to action or inaction
required of RQI in connection with any such registration, qualification or
compliance, and will reimburse each of the Holders, each of its officers,
directors and partners, and each person controlling each of the Holders, each
such underwriter and each person who controls any such underwriter, for any
legal and any other expenses reasonably incurred in connection with
investigating and defending any such claim, loss, damage, liability or action,
provided that RQI 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
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untrue statement or omission based upon written information furnished to RQI by
the Holders or underwriter and stated to be specifically for use therein.
(ii) Each of the Holders will, if Registrable Securities held by it
are included in the securities as to which such registration, qualification or
compliance is being effected, indemnify RQI, each of its directors and officers
and each underwriter, if any, of RQI's securities covered by such a registration
statement, each person who controls RQI or such underwriter within the meaning
of the Act and the rules and regulations thereunder, each Other Stockholder and
each of their officers, directors, and partners, and each person controlling
such Other Stockholder 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 made by such Holder,
or any omission (or alleged omission) to state therein a material fact required
to be stated therein or necessary to make the statements b such Holder therein
not misleading, and will reimburse RQI and such Other Stockholders, directors,
officers, partners, persons, underwriters or control persons for any legal or
any 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 RQI by such Holder and
stated to be specifically for use therein; provided, however, that the
obligations of each of the Holders hereunder shall be limited to an amount equal
to the net proceeds to such Holder of securities sold as contemplated herein.
(iii) Each party entitled to indemnification under this Section 7 (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 defens of such claim or any litigation resulting
therefrom, 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 (unless the Indemnified Party shall have
reasonably concluded that there may be a conflict of interest between the
Indemnifying Party and the Indemnified Party in such action, in which case the
fees and expenses of counsel shall be at the expense of the Indemnifying Party),
and provided further that the failure of any Indemnified Party to give notice as
provided
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herein shall not relieve the Indemnifying Party of its obligations under this
Section 7 unless the Indemnifying Party is materially prejudiced thereby. 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. Each
Indemnified Party shall furnish such information regarding itself or the claim
in question as an Indemnifying Party may reasonably request in writing and as
shall be reasonably required in connection with the defense of such claim and
litigation resulting therefrom.
(iv) If the indemnification provided for in this Section 7 is held by
a court of competent jurisdiction to be unavailable to an Indemnified Party with
respect to any loss, liability, claim, damage or expense referred to herein,
then the Indemnifying Party, in lieu of indemnifying such Indemnified Party
hereunder, shall contribute to the amount paid or payable by such Indemnified
Party as a result of such loss, liability, claim, damage or expense in such
proportion as is appropriate to reflect the relative fault of the Indemnifying
Party on the one hand and of the Indemnified Party on the other in connection
with the statements or omissions which resulted in such loss, liability, claim,
damage or expense, as well as any other relevant equitable considerations. The
relative fault of the Indemnifying Party and of the Indemnified Party shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission to state a material fact
relates to information supplied by the Indemnifying Party or by the Indemnified
Party and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
(v) Notwithstanding the foregoing, to the extent that the provisions
on indemnification and contribution contained in the underwriting agreement
entered into in connection with any underwritten public offering contemplated by
this Agreement are in conflict with the foregoing provisions, the provisions in
such underwriting agreement shall be controlling.
(vi) The foregoing indemnity agreement of RQI and Holders is subject
to the condition that, insofar as they relate to any loss, claim, liability or
damage made in a preliminary prospectus but eliminated or remedied in the
amended prospectus on file with the Commission at the time the registration
statement in
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question becomes effective or the amended prospectus filed with the Commission
pursuant to Commission Rule 424(b) (the "Final Prospectus"), such indemnity
agreement shall not inure to the benefit of any underwriter if a copy of the
Final Prospectus was furnished to the underwriter and was not furnished to the
person asserting the loss, liability, claim or damage at or prior to the time
such action is required by the Act.
8. Information by the Holders. Each of the Holders and each Other
Stockholder holding securities included in any registration, shall furnish to
RQI such information regarding such Holder or Other Stockholder and the
distribution opposed by such Holder or Other Stockholder as RQI may reasonably
request in writing and as shall be reasonably required in connection with any
registration, qualification or compliance referred to in this Agreement.
9. Rule 144 Reporting.
With a view to making available the benefits of certain rules
and regulations of the Commission which may permit the sale of restricted
securities to the public without registration, RQI agrees to:
(i) make and keep public information available as those terms are
understood and defined in Rule 144, at all times from and after ninety
(90) days following the effective date of the first registration under
the Act filed by RQI for an offering of its securities to the general
public;
(ii) use its best efforts to file with the Commission in a timely
manner all reports and other documents required of RQI under the Act
and the Exchange Act at any time after it has become subject to such
reporting requirements; and
(iii) so long as the Holder owns any Registrable
Securities, furnish to the Holder upon request, a written statement by
RQI as to its compliance with the reporting requirements of Rule 144
(at any time from and after ninety (90) days following the effective
date of the first registration statement filed by RQI for an offering
of its securities to the general public), and of the Act and the
Exchange Act (at any time after it has become subject to such reporting
requirements), a copy of the most recent annual or quarterly report of
RQI, and such other reports and documents so filed as the Holder may
reasonably request in availing itself of any rule or regulation of the
Commission allowing the Holder to sell any such securities without
registration.
10. "Market Stand-off" Agreement. The Stockholder agrees, if
requested by RQI and an underwriter of Common Stock (or other securities) of
RQI, not to sell or otherwise transfer or
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dispose of any Common Stock (or other securities) of RQI held by such Holder
during the 180 day period following the effective date of the initial
registration statement of RQI filed under the Act and during the 90 day period
following any subsequent registration statement filed under the Act, provided
that all executive officers and directors of RQI enter into similar agreements.
If requested by the underwriters, the Holders shall execute a
separate agreement to the foregoing effect. RQI may impose stop-transfer
instructions with respect to the shares (or securities) subject to the foregoing
restriction until the end of such period. The provisions of this Section 10
shall be binding upon any transferee who acquires Registrable Securities,
whether or not such transferee is entitled to the registration rights provided
hereunder.
11. Termination. The registration rights set forth in this
Agreement shall not be available to any Holder if, in the opinion of counsel to
RQI, all of the Registrable Securities then owned by such Holder could be sold
in any 90-day period pursuant to Rule 144 under the Act (without giving effect
to the provisions of Rule 144 (k)).
12. Notices. All communications provided for hereunder shall be
sent by first-class mail and (a) if addressed to the Stockholder, addressed to
the Stockholder, at___________ Attention: _____________, or at such other
address as such party shall have furnished to RQI in writing, or if addressed to
any other Holder of Registrable Securities, at the address that such Holder
shall have furnished to RQI in writing, or, until any such other Holder so
furnishes to the company an address, then to and at the address of the last
Holder of such Registrable Securities who has furnished an address to RQI, or
(c) if addressed to RQI, at 1355-B Lynnfield Road, Memphis, TN 38119 Attention:
President, or at such other address, or to the attention of such other officer,
as RQI shall have furnished to each Holder of Registrable Securities at the time
outstanding.
13. Assignment. This Agreement shall be binding upon and inure to
the benefit of and be enforceable by the parties hereto and, with respect to
RQI, its respective successors and assigns and, with respect to the Stockholder,
any Holder of any Registrable Securities, subject to the provisions respecting
the minimum numbers or percentages of shares of Registrable Securities required
in order to be entitled to certain rights, or take certain actions, contained
herein.
14. Descriptive Headings. The descriptive headings of the several
sections and paragraphs of this Agreement are inserted for reference only and
shall not limit or otherwise affect the meaning hereof.
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15. Governing Law. This Agreement shall be construed and enforced
in accordance with, and the rights of the parties shall be governed by, the laws
of the State of Delaware.
16. Counterparts. This Agreement may be executed simultaneously
in any number of counterparts, each of which shall be deemed an original, but
all such counterparts shall together constitute one and the same instrument.
17. Other Registration Rights. For so long as the Stockholder
holds at least 20% of the Registrable Shares, RQI shall not, without the prior
written consent of the Stockholder, enter into any agreement, understanding or
arrangement pursuant to which RQI grants registration or other similar rights to
any shareholder unless the Holders shall be entitled to have included in any
registration effected pursuant to Section 4 hereof all Registrable Shares
requested by them to be so included prior to the inclusion of any securities
requested to be registered by the shareholders entitled to any such other
registration or other similar rights.
IN WITNESS WHEREOF, the parties have caused this agreement to be
executed and delivered by their respective officers thereunto duly authorized as
of the date first above written.
RESORTQUEST INTERNATIONAL, INC.
By:
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Name:
Title:
By:
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