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Exhibit 10.20
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made by and
among ZymeTx, Inc. (the "Company"), and the investors listed on Schedule I
hereto (collectively, the "Investors" and each an "Investor"), each of whom has
executed a signature page hereto.
RECITALS
A. The Investors desire to purchase from the Company, and the
Company desires to issue and sell to the Investors up to an aggregate 40.25
Units (including the Units available to cover over-subscriptions, if any), each
Unit consisting of 25,000 shares of the Company's Series C Convertible
Preferred Stock, par value $.001 per share (the "Series C Preferred"), all upon
the terms set forth in the Company's Confidential Private Placement Memorandum
dated July 2, 1997 (the "Memorandum").
B. To induce Investors to purchase Units, the Company has
undertaken to register under the Securities Act of 1933, as amended, and the
rules and regulations thereunder (collectively, the "Securities Act"), the
common stock, par value $.001 per share (the "Common Stock"), underlying the
Series C Preferred contained in the Units to be purchased by the Investors.
This Agreement sets forth the terms and conditions of such undertaking.
C. In connection with the sale of units of Series A Convertible
Preferred Stock (the "Series A Preferred") in 1996, the Company granted to the
holders of the Series A Preferred registration rights similar to those set
forth herein, which rights would take precedence over any rights granted
hereunder in the event of a conflict between the two.
AGREEMENTS
The Company and the Investors covenant and agree as follows:
1. Definitions. For purposes of this Agreement:
(a) The terms "register", "registered" and "registration"
refer to a registration effected by preparing and filing a registration
statement or statements or similar documents in compliance with the Securities
Act and, when applicable, the rules and regulations promulgated thereunder, and
the declaration or ordering of effectiveness of such registration statement or
statements or similar document by the Securities and Exchange Commission (the
"SEC");
(b) The term "Registrable Securities" means (i) the
Common Stock underlying the Series C Preferred contained in the Units purchased
by the Investors; and (ii) any Common Stock of the Company issued as a dividend
or other distribution with respect to, or in exchange for or in replacement of,
such Common Stock, excluding in all cases, however, any Registrable Securities
sold by an Investor in a transaction in which its registration rights under
this Agreement are not assigned; and
(c) Capitalized terms not defined herein shall have the
meanings set forth in the Memorandum.
2. Registration.
(a) In the event that the Company completes an initial
public offering of its securities prior to the second anniversary of the
closing of the Offering, the Company shall give notice in writing to such
effect to the Holders, as such term is defined below, within 30 days after the
effective
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date of the registration statement filed with respect thereto and will effect
the registration under the Securities Act of all Registrable Securities not
later than 180 days after the closing date of such initial public offering;
provided, however, that a holder of Registrable Securities (collectively, the
"Holders" and each a "Holder") may inform the Company in writing within 10 days
after the receipt of notice from the Company of the initial public offering
that such Holder wishes to exclude all or a portion of its Registrable
Securities from such registration.
(b) In the event that the Company has not filed a
registration statement under the Securities Act prior to the third anniversary
of the closing date of the Offering, the Company shall, upon the request of the
Holders of a majority in interest of the Registrable Securities, effect the
registration under the Securities Act of all Registrable Securities not later
than 90 days after receipt of such request. Any such request shall include a
statement of such Holder's intended method of distribution. The Company shall
send prompt written notice to all Holders of any request for registration
received hereunder and each such Holder shall have the right to include its
Registrable Securities therein by so requesting in writing within 15 days after
receipt of such notice from the Company. Any Holder not electing to include its
Registrable Securities in such registration will have no further rights to have
such Registrable Securities registered by the Company. The Company shall be
entitled to postpone for a reasonable period of time, not to exceed 90 days,
after receipt of a request hereunder to file a Registration Statement, the
filing of any Registration Statement otherwise required to be prepared and
filed by it if, at the time it receives a request for registration, the Company
determines, in its reasonable judgment, that such registration and offering
would materially interfere with any material transaction involving the Company
or any of its affiliates (as defined in Rule 405 of the Securities Act) and
promptly gives the Holders of Registrable Securities written notice of such
determination.
(c) If at any time the Company shall propose to file a
registration statement under the Securities Act in connection with the proposed
offer and sale by it of any of its equity securities (other than a registration
statement on a form, such as Form S-4 or Form S-8, that does not permit the
inclusion of shares by its security holders), the Company will give notice in
writing to such effect to the Holders at least 30 days prior to such filing,
and, at the written request of any such Holder made within 10 days after the
receipt of such notice, will include therein at the Company's cost and expense
(except for the fees and expenses of counsel to such Holders and underwriting
discounts, commissions and filing fees attributable to the Registrable
Securities included in such registration statement), such of the Registrable
Securities as the Holders thereof so request. Notwithstanding the foregoing:
(i) if the offering being registered by the Company is underwritten, and if in
the good faith judgment of the representative of the underwriters of such
offering, the inclusion therein of all or any of such Registrable Securities
would reduce the number of shares to be offered by the Company, the number of
Registrable Securities otherwise to be included in the underwritten public
offering may be reduced pro rata among the Holders thereof requesting such
registration and any other selling security holders having piggyback
registration rights; and (ii) if a registration statement is filed by the
Company by reason of a demand registration request made by the holders of other
securities, then the underwriter of such offering shall not reduce the number
of shares being offered by the holders of such other securities seeking such
registration by reason of the inclusion of any Registrable Securities in such
offering pursuant to the rights granted to the Holders by this Section 2(c).
(d) To the extent the holders of Series A Preferred have
not already done so, the Holders of a majority in interest of the Registrable
Securities shall have the right to select the managing underwriters, if any,
for any registration effected pursuant to Section 2(a) or 2(b) hereof, subject
to the approval of the Company, which shall not be unreasonably withheld.
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(e) The Company is obligated to effect only one
registration pursuant to Section 2(b) of this Agreement.
(f) In the event that the Company fails to fulfill its
registration responsibilities pursuant to Section 2(a), (b) or (c) hereof, the
Company agrees to repurchase the Registrable Securities from the Holders
thereof at the Fair Market Value (as defined below) of such Securities, to the
extent that the Company shall have funds legally available therefor. To the
extent that the Company shall not have funds legally available to repurchase
such Registrable Securities, the Holders thereof shall have the right to elect
a majority of the Board of Directors of the Company, to the extent the holders
of Series A Preferred who are similarly entitled have not already done so. The
Fair Market Value of the Registrable Securities shall be the sum of (i) the
appraised value thereof calculated by each of two independent appraisal firms
selected by Xxxxxxx Xxxxx Securities Incorporated (ii) divided by two.
3. Obligation of the Company. When required under this Agreement
to effect the registration of the Registrable Securities, the Company shall, as
expeditiously as reasonably possible:
(a) In the case of a registration effected pursuant to
Section 2(a) or 2(b) hereof, prepare and file with the SEC as soon as
reasonably practicable, a registration statement or similar documents (the
"Registration Statement") with respect to, in the case of Section 2(a), all
Registrable Securities and, in the case of Section 2(b), all Registrable
Securities requested to be registered by the Holders thereof, other than any
Registrable Securities excluded by Holders pursuant to Section 2(a) hereof, use
its best efforts to cause such Registration Statement to become effective not
later than 45 days after the date of its initial filing, and keep the
Registration Statement effective for the longer of (i) a period of 120 days or
(ii) until the third anniversary of the closing of the Offering. The
Registration Statement (including any amendments or supplements thereto and
prospectuses contained therein) shall not contain any untrue statement of a
material fact or omit to state 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. Notwithstanding the foregoing or
anything to the contrary contained herein: (A) the Company shall not be
required to undergo an audit other than in the ordinary course of business; and
(B) the Company may defer any demand for registration for up to 90 days for
valid business reasons.
(b) Prepare and file with the SEC such amendments
(including post-effective amendments) and supplements to the Registration
Statement and the prospectus used in connection with the Registration Statement
as may be necessary to keep the Registration Statement effective for the period
required under Section 3(a) hereof in the case of a registration effected
pursuant to Section 2(a) hereof and, in the case of a registration effected
pursuant to Section 2(b) hereof, for a period of 120 days or until the
underwriter and the Holders have completed the distribution described in the
registration statement, whichever first occurs, and comply with the provisions
of the Securities Act with respect to the disposition of all securities covered
by the Registration Statement.
(c) Furnish promptly to the Holders such numbers of
copies of a prospectus, including a preliminary prospectus, and all amendments
and supplements thereto, in conformity with the requirements of the Securities
Act, and such other documents as the Holders may reasonably request in writing
in order to facilitate the disposition of Registrable Securities.
(d) Use its best efforts to register and qualify the
securities covered by the Registration Statement under such other securities or
Blue Sky laws of such jurisdictions as shall be reasonably requested by the
Holders, and to prepare and file in those jurisdictions such amendments
(including post-effective amendments) and supplements and to take such other
actions as may be
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necessary to maintain such registration and qualification in effect at all
times required hereunder and to take all other actions necessary or advisable
to enable the disposition of such securities in such jurisdictions, provided
that the Company shall not be required in connection therewith or as a
condition thereto (i) to qualify to do business or (ii) to provide any
undertaking or make any change in its charter or bylaws which the Board of
Director determines to be contrary to the best interests of the Company and it
stockholders.
(e) In the event the Holders of a majority in interest of
the Registrable Securities select underwriters for the offering pursuant to
Section 2(d) hereof, enter into and perform its obligations under an
underwriting agreement, in usual and customary form, including, without
limitation, customary indemnification and contribution obligations, with the
managing underwriter of such offering. The Holders hereby agree to enter into
and perform their customary obligations under any such agreement including,
without limitation, customary indemnification and contribution obligations.
(f) Notify the Holders, at any time when a prospectus
relating to Registrable Securities covered by the Registration Statement is
required to be delivered under the Securities Act, of the happening of any
event as a result of which the prospectus included in the Registration
Statement, as then in effect, includes an untrue statement of a material fact
or omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the circumstances then
existing. The Company shall promptly amend or supplement the Registration
Statement to correct any such untrue statement or omission.
(g) Notify the Holders of the issuance by the SEC of any
stop order suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose. The Company will make every
reasonable effort to prevent the issuance of any stop order and, if any stop
order is issued, to obtain the lifting thereof at the earliest possible time.
(h) To the extent the holders of Series A Preferred have
not already done so, permit a single firm of counsel designated as selling
stockholders' counsel by the Holders of a majority in interest of the
Registrable Securities to review the Registration Statement and all amendments
and supplements thereto for a reasonable period of time prior to their filing,
and shall not file any document in a form to which such counsel reasonably
objects.
(i) Make generally available to its security holders as
soon as practicable, but not later than 90 days after the close of the period
covered thereby, an earnings statement (in form complying with the provisions
of Rule 158 under the Securities Act) covering the 12-month period beginning
not later than the first day of the Company's next fiscal quarter following the
effective date of the Registration Statement.
(j) At the request of the Holders, furnish on the date
that Registrable Securities are delivered to the underwriters for sale in
connection with a registration pursuant to this Agreement (i) an opinion
addressed to the underwriters, dated such date, of the counsel representing the
Company for the purposes of such registration, in form and substance as is
customarily given to underwriters in an underwritten public offering, addressed
to the underwrites and (ii) a letter dated such date, from the independent
certified public accountants of the Company, in form and substance as is
customarily given by independent certified public accountants to underwriters
in an underwritten public offering, addressed to the underwriters.
(k) Make available for inspection by the Holders, any
underwriters participating in the offering pursuant to the registration and the
counsel, accountants or other agents retained by the
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Holders or any such underwriter, all pertinent financial and other records,
corporate documents and properties of the Company, and cause the Company's
officers, directors and employees to supply all information reasonably
requested by the Holders or any such underwriters in connection with the
registration.
(l) If the Common Stock is listed on a national
securities exchange, use its best efforts to cause the Registrable Securities
to be listed on such exchange. If the Common Stock is not listed on a national
securities exchange, use its best efforts to facilitate the quotation of the
Registrable Securities on The Nasdaq Stock Market, Inc.
(m) Provide a transfer agent and registrar, which may be
a single entity, for the Registrable Securities not later than the effective
date of the Registration Statement.
(n) Take all actions reasonably necessary to facilitate
the timely preparation and delivery of certificates (not bearing any legend
restricting the sale or transfer of such securities) representing the
Registrable Securities to be sold pursuant to the Registration Statement and to
enable such certificates to be in such denominations and registered in such
names as the Holders or any underwriters may reasonably request.
(o) Take all other reasonable actions necessary to
expedite and facilitate the registration of the Registrable Securities pursuant
to the Registration Statement.
4. Furnish Information. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Agreement with
respect to each Holder that such Holder shall furnish to the Company such
information regarding itself, the Registrable Securities held by it, and the
intended method of disposition of such securities as shall be reasonably
required to effect the registration of the Registrable Securities and shall
execute such documents in connection with such registration as the Company may
reasonably request.
5. Expenses of Registration. All expenses other than
underwriting discounts and commissions incurred in connection with
registrations, filings or qualifications pursuant to Sections 2 and 3 hereof,
including, without limitation, all registration, listing, filing and
qualification fees, printers and accounting fees, the fees and disbursements of
counsel for the Company and the reasonable fees and disbursements of one firm
of counsel for the Holders shall be borne by the Company.
6. Indemnification. In the event any Registrable Securities are
included in a Registration Statement under this Agreement:
(a) To the extent permitted by law, the Company will
indemnify and hold harmless each Holder, the directors, if any, of such Holder,
the officers, if any, of such Holder who sign the Registration Statement, each
person, if any, who controls such Holder, any underwriter (as defined in the
Securities Act) for the Holders and each person, if any, who controls any such
underwriter within the meaning of the Securities Act or the Securities Exchange
Act of 1934 (the "Exchange Act"), against, and pay or reimburse any such
persons for, any losses, claims, damages, expenses or liabilities (joint or
several) to which any of them may become subject under the Securities Act, the
Exchange Act or otherwise, insofar as such losses, claims, damages, expenses or
liabilities (or actions or proceedings, whether commenced or threatened, in
respect thereof) arise out of or are based upon any of the following
statements, omissions or violations (collectively, a "Violation") (i) any
untrue statement or alleged untrue statement of a material fact contained in
the Registration Statement, including any preliminary prospectus or final
prospectus contained therein or any amendments or supplements thereof, (ii) the
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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 (iii) any Violation or
alleged Violation by the Company of the Securities Act, the Exchange Act, any
state securities law or any rule or regulation promulgated thereunder, and the
Company will reimburse the Holders and each such underwriter or controlling
persons, promptly as such expenses are incurred, for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability, action or proceeding;
provided, however, that the indemnity agreement contained in this Section 6(a)
shall not apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent of the
Company, which consent shall not be unreasonably withheld, nor shall the
Company be liable in any such case for any such loss, claim, damage, liability
or action to the extent that it arises out of or is based upon a Violation
which occurs in reliance upon and in conformity with written information
furnished expressly for use in connection with such registration by the
Holders, directors or officers of the Holders or any such underwriter or
controlling person, as the case may be. Such indemnity shall remain in full
force and effect regardless of any investigation made by or on behalf of the
Holders or any such underwriter or controlling person or the Company and shall
survive the transfer of the Registrable Securities by Holders.
(b) To the extent permitted by law, each Holder whose
Registrable Securities are included in a Registration Statement, severally and
not jointly, will indemnify and hold harmless the Company, each of its
directors, each of its officers who have signed the Registration Statement,
each person, if any, who controls the Company within the meaning of the
Securities Act or the Exchange Act, any underwriter and any other stockholder
selling securities pursuant to the Registration Statement or any of its
directors or officers or any person who controls such holder or underwriter,
against, and pay or reimburse any of such persons for, any losses, claims,
damages or liabilities (joint or several) to which any of them may become
subject, under the Securities Act, the Exchange Act or any state securities law
or any rule or regulation promulgated thereunder, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any Violation, in each case to the extent (and only to the
extent) that such Violation occurs in reliance upon and in conformity with
written information furnished by such Holder expressly for use in connection
with such registration; and such Holder will reimburse any legal or other
expense reasonably incurred by any of them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that the indemnity agreement contained in this Section 6(b) shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability or action
if such settlement is effected without the consent of such Holder, which
consent shall not be unreasonably withheld, conditioned or delayed.
(c) Promptly after receipt by an indemnified party under
this Section 6 of notice of the commencement of any action, proceeding or
investigation, such indemnified party, if a claim in respect thereof is to be
made against the indemnifying party under this Section 6, will notify the
indemnifying party of the commencement thereof, but the omission to so notify
the indemnifying party will not relieve it from any liability which it may have
to any indemnified party under this Section 6 unless the indemnifying party has
been substantially prejudiced by such omission. In case any such action is
brought against any indemnified party and it notifies the indemnifying party of
the commencement thereof, the indemnifying party will be entitled to
participate in, and, to the extent that it may wish, jointly with any other
indemnifying party, to assume the defense thereof subject to the provisions
herein stated, with counsel reasonably satisfactory to such indemnified party,
and after notice from the indemnifying party to such indemnified party of its
election so to assure the defense thereof, then notwithstanding anything to the
contrary contained herein, the indemnifying party will not be liable under this
Section 6 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation. The indemnified party
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will have the right to employ separate counsel in any such action and to
participate in the defense thereof, but the fees and expenses of such counsel
will not be at the expense of the indemnifying party if the indemnifying party
has assumed the defense of the action with counsel reasonably satisfactory to
the indemnified party. No settlement of any action against an indemnified party
will be made without the consent of the indemnifying party and the indemnified
party, which consent shall not be unreasonably withheld or delayed in light of
all factors of importance to such party and no indemnifying party shall be
liable to indemnify any person for any settlement of any such claim effected
without such indemnifying party's consent.
(d) To the extent any indemnification by an indemnifying
party is prohibited or limited by law, the indemnifying party agrees to make
the maximum contribution with respect to any amounts for which it would
otherwise be liable under this Section 6 to the extent permitted by law,
provided that (i) no contribution shall be made under circumstances where the
maker would not have been liable for indemnification under the fault standards
set forth in this Section 6, (ii) no seller of Registrable Securities guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any seller of
Registrable Securities who was not guilty of such fraudulent misrepresentation
and (iii) contribution by any seller of Registrable Securities shall be limited
in amount to the next amount of proceeds received by such seller from the sale
of such Registrable Securities.
7. Reports Under Securities Exchange Act of 1934. With a view to
making available to the Holders the benefits of Rule 144 promulgated under the
Securities Act or any other rule or regulation of the SEC that may at anytime
permit the Holders to sell securities of the Company to the public without
registration, the Company agrees to:
(a) make and keep public information available, as those
terms are understood and defined in Rule 144, at all times for 90 days after
the date the first registration statement by the Company under Section 2 of
this agreement is declared effective of the offering of its securities to the
general public;
(b) file with the SEC in a timely manner all reports and
other documents required of the Company under the Securities Act and the
Exchange Act; and
(c) furnish to each Holder, so long as such Holder owns
any Registrable Securities, forthwith upon request (i) a written statement by
the Company that it has complied with the reporting requirements of Rule 144
(at any time for 90 days after the effective date of the first registration
statement filed by the Company under Section 2 of this Agreement), the
Securities Act and the Exchange Act (at any time after it has become subject to
such reporting requirements), (ii) a copy of the most recent annual or
quarterly report of the Company and such other reports and documents so filed
by the Company and (iii) such information as may be reasonably requested in
availing the Holders of any rule or regulation of the SEC which permits the
selling of any such securities without registration.
8. Assignment of Registration Rights. The rights to have the
Company register Registrable Securities pursuant to this Agreement may be
assigned by the Holders to transferees or assignees of such securities;
provided, however, that the Company must be, within a reasonable time after
such transfers, furnished with written notice of the name and address of such
transferee or assignee and the securities with respect to which such
registration rights are being assigned; and, provided, further, that such
assignment shall be effective only if immediately following such transfer the
further disposition of such securities by the transferee or assignee is
restricted under the Securities Act. The term "Holders" as used in this
agreement shall include permitted assignees.
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9. Miscellaneous.
(a) Notices required or permitted to be given hereunder
shall be in writing and shall be deemed to be received when personally
delivered or sent by overnight courier or registered mail, return receipt
requested, addressed (i) if to the Company, at ZymeTx, Inc., 000 Xxxxxxxx
Xxxxxxx, Xxxxx 000, Xxxxxxxx Xxxx, Xxxxxxxx 00000, Attention: President; and
(ii) if to a Holder, at the address set forth under its name on the signature
page hereto, or at such other address as each party furnishes by notice given
in accordance with this Section 9(a).
(b) Failure of any party to exercise any right or remedy
under this Agreement or otherwise, or delay by a party in exercising such right
or remedy, will not operate as a waiver thereof. No waiver will be effective
unless and until it is in writing and signed by the party giving the waiver.
(c) This Agreement shall be enforced, governed and
construed in all respects in accordance with the laws of the State of New York,
as such laws are applied by New York courts to agreements entered into and to
be performed in New York by and between residents of New York. In the event
that any provision of this agreement is invalid or unenforceable under any
applicable statute or rule of law, then such provision shall be deemed
inoperative to the extent that it may conflict therewith and shall be deemed
modified to conform with any such statute or rule of law. Any provision hereof
which may prove invalid or unenforceable under any law shall not affect the
validity or enforceability of any other provision hereof.
(d) This Agreement constitutes the entire agreement
between the parties hereto with respect to the subject matter hereof and may be
amended only by a writing executed by the Company and the Holders of a majority
interest of the Registrable Securities.
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SIGNATURE PAGE
IN WITNESS WHEREOF, the undersigned has executed this Registration
Rights Agreement this _____________ day of ____________________________, 1997.
If the Holder is an INDIVIDUAL:
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Print Name
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Signature of Purchaser
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Address
If the Holder is a PARTNERSHIP, CORPORATION OR TRUST:
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Name of Partnership, Corporation or
Trust
By:
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Name:
Title:
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Address
ACCEPTED AND AGREED to this
day of , 1997
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ZYMETX, INC.
By:
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Name:
Title:
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