MANAGEMENT AND SERVICES AGREEMENT
This Management and Services Agreement (the "Agreement") is entered into
effective as of October 30, 1998, by and between JPJ ARCHITECTS, INC., a Texas
corporation (hereinafter referred to as "JPJ"), and HLM DESIGN, INC., a Delaware
corporation (hereinafter referred to as "Design").
RECITALS
WHEREAS, JPJ has heretofore provided architectural services through the
services of duly licensed architects engaged by JPJ as employees or independent
contractors, and may in the future provide engineering services through the
services of duly licensed engineers engaged by JPJ as employees or independent
contractors;
WHEREAS, Design is in the business of providing comprehensive management
services to architectural and engineering firms, including the provision of
office space and equipment, the recruitment, hiring and employment of
architectural and engineering personnel and support personnel, and the provision
of billing and collection services;
WHEREAS, Design has special expertise and experience in the operation,
management and marketing of the non-architectural and
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non-engineering aspects of architectural and engineering firms of the type
intended to be operated by JPJ; and
WHEREAS, JPJ desires that Design provide the above-described services to
JPJ, and Design desires to provide such services to JPJ, pursuant to the
provisions of this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual promises
of the parties hereto and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound, do hereby agree as follows:
1. Term of Agreement; Termination. Commencing on the effective date set
forth above, and subject to the termination provisions set forth below, this
Agreement shall continue in effect until the fortieth (40th) annual anniversary
of the effective date hereof. Thereafter, this Agreement shall automatically
renew for successive one (1) year terms, unless either party shall provide the
other with written notice of termination at least thirty (30) days prior to the
expiration of the then current term hereof. Notwithstanding the foregoing,
either party hereto may terminate this Agreement at any time upon written notice
to the other in the event of any of the following:
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a. The filing of a petition in voluntary bankruptcy or an assignment
for the benefit of creditors by the other, or upon other action taken or
suffered, voluntarily or involuntarily, under any federal or state law for
the benefit of debtors by the other, except for the filing of a petition
in involuntary bankruptcy against the other which is dismissed within
thirty (30) days thereafter; or
b. In the event the other shall materially default in the
performance of any duty or obligation imposed upon it by this Agreement
and such default shall continue for a period of thirty (30) days after
written notice thereof has been given to the defaulting party by the
non-defaulting party.
c. Notwithstanding anything to the contrary in this Section 1
provided, Design may terminate this Agreement at any time with or without
cause upon the giving of at least sixty (60) days prior written notice to
JPJ.
2. Obligations of Design.
a. General. JPJ hereby appoints Design as its sole and exclusive
manager and administrator of all of JPJ's day-to-day business functions.
JPJ acknowledges and agrees that the purpose and intent of this Agreement
is to relieve JPJ to the maximum extent possible of the administrative,
accounting,
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personnel and business aspects of JPJ's operations, with Design assuming
responsibility and being given any and all necessary authority to perform
these functions. In connection with the foregoing, JPJ hereby agrees that
Design shall have the authority, duties and obligations set forth in
Sections 2.b. through 2.d. below, and JPJ agrees to take no actions in
contravention thereof without the express prior written consent of Design.
b. Financial Planning. Design shall prepare such budgets, plans and
policies as are necessary and appropriate in connection with the
operations of JPJ, reflecting the anticipated sources and uses of capital
for JPJ, and JPJ's anticipated revenues and expenses. All operations of
JPJ shall be conducted in accordance with such budgets, plans and
policies, which shall establish, by way of example and not limitation, the
following:
(1) the amounts, purpose and priority of all
capital expenditures;
(2) the amounts and sources of all additional capital,
including without way of limitation the issuance of any and all
additional capital stock and the incurring of any and all
indebtedness;
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(3) the amounts, manner of payment and timing of all
dividends; and
(4) the amount, form and manner of payment of all employee
compensation and benefits, including without way of limitation all
compensation and benefits pertaining to personnel employed or
engaged by JPJ, or pertaining to personnel employed or engaged by
Design on JPJ's behalf.
c. Facilities, Equipment and Supplies. During the term of this
Agreement, and all renewals and extensions hereof, Design shall analyze,
select and negotiate for the lease and/or purchase by JPJ or Design, as
the case may be, of (1) suitable office facilities ("Offices") in which
JPJ can provide architectural and engineering services, (2) such
architectural and engineering equipment, office equipment, furniture,
fixtures, furnishings and leasehold improvements (collectively,
"Equipment") as necessary for the performance by JPJ of its architectural
and engineering services, and (3) business supplies of every kind, name or
nature, which may reasonably be required by JPJ for its operations. Design
shall have the authority to negotiate for the purchase or lease of any or
all such items on JPJ's behalf, either in JPJ's or Design's name, as shall
be deemed appropriate by Design in its sole discretion, and all such items
shall in all
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events be subject to, and leased or purchased in accordance with, the
budgets, plans and policies referenced in Section 2.b. above.
d. Development, Management and Administrative Services. During the
term of this Agreement, and all renewals and extensions hereof, Design
shall furnish to JPJ, or assist JPJ in obtaining, as deemed appropriate by
Design in its sole discretion, all of the non-architectural and
non-engineering development, management and administrative services as may
be needed by JPJ in connection with JPJ's operations. Additionally, Design
shall provide JPJ with such advice and supervision regarding all aspects
of JPJ's architectural and engineering services as JPJ may request from
time to time, subject in all events to the limitations set forth in
Section 4 hereof. Such non-architectural and non-engineering development,
management and administrative services shall include, by way of example
and not limitation, the following:
(1) Bookkeeping and Accounts. Design shall establish and
maintain all bookkeeping and accounting services necessary and
appropriate to support the Offices, including, without limitation,
maintenance, custody and supervision of all business records,
papers, documents, ledgers, journals and reports, and the
preparation, distribution and recordation of all bills and
statements for professional services rendered by JPJ
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(collectively, "Books and Records"). Notwithstanding the foregoing,
JPJ shall be responsible for maintaining full and accurate
accounting records of all services rendered and such additional
information as may be required in order for JPJ to satisfy any and
all applicable reporting requirements.
(2) General Administrative Services. Design shall provide JPJ
with overall supervision and management, including the maintenance
and repair, of the Offices, and of all Equipment located in or at
the Offices.
(3) Contract Negotiation and Administration. Design shall
negotiate and administer all non-architectural and non-engineering
aspects of all agreements pertaining to the provision of
architectural and engineering services by JPJ to third parties
("Architectural and Engineering Agreements"). By way of example and
not limitation, Design shall have the authority to negotiate and
administer the provisions of the Architectural and Engineering
Agreements pertaining to such matters as pricing and scheduling, and
shall also provide JPJ with such advice and supervision regarding
all other aspects of the Architectural and Engineering Agreements as
JPJ may request from time to time, subject in all events to the
limitations set forth in Section 4
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hereof. Additionally, Design administer all aspects of JPJ's
agreements which do not pertain directly to the provision of
architectural or engineering services by JPJ to third parties
("General Business Contracts").
(4) Personnel. Subject to the provisions of Section 4 hereof,
Design shall provide such personnel to JPJ as Design shall determine
in its sole discretion to be necessary to enable JPJ to perform all
services contemplated under the Architectural and Engineering
Agreements and the General Business Contracts. Design shall provide
such personnel by either (1) engaging such personnel directly on
JPJ's behalf (for example, as employees or independent contractors
of JPJ), or (2) engaging such personnel directly (for example, as
employees or independent contractors of Design) and then leasing or
subcontracting such personnel to JPJ. Design shall have the sole
discretion to determine the manner in which such personnel are
provided to JPJ. In no event shall Design provide or be required to
provide architect or engineer employees or independent contractors
(whether licensed or unlicensed) to JPJ in any manner not in
compliance with all applicable codes, rules and regulations adopted
by any authority regulating the licensing of architects or engineers
for the applicable
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jurisdiction. Design shall advise JPJ with the hiring and
termination of all JPJ personnel, and shall determine compensation
for all JPJ and all Design personnel, including determination of
salaries, fringe benefits, bonuses, health and disability insurance,
workers' compensation insurance, and any other benefits that each
such employee shall receive. JPJ shall compensate all JPJ personnel
(including those leased or subcontracted to JPJ by Design) and make
any and all applicable withholding filings and payments in
connection therewith. Additionally, Design shall manage and
supervise any licensed personnel employed or engaged by JPJ, or
employed or engaged by Design on behalf of JPJ, regarding those
aspects of their employment that do not involve performance under
the scope of their licensure; provided, however, that JPJ shall
manage and supervise all activities of such licensed personnel
performed under the scope of their licensure.
(5) Security and Maintenance. Design shall advise JPJ with
respect to all services and personnel necessary to provide JPJ with
proper security, maintenance, and cleanliness of the Offices and the
Equipment.
(6) Architectural and Engineering Recruiting and Training.
Design shall, in its sole discretion, either
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perform on JPJ's behalf, or assist JPJ in performing, all
recruiting, screening and evaluating of prospective architect and
engineer employees and contractors for JPJ, and Design shall assist
JPJ in training JPJ's architects and engineers in the delivery of
architectural and engineering services at the Offices in a manner
consistent with JPJ's and Design's established standards, practices,
procedures and policies.
(7) Insurance. Design shall, in its sole discretion, either
provide directly or advise and direct JPJ with respect to selecting
and negotiating for the provision of professional liability,
commercial general liability and property insurance to protect
against loss in the nature of fire, other catastrophe, theft,
business interruption, general liability, and non-architectural and
non-engineering negligence.
(8) Billing and Collections. In order to relieve JPJ of the
administrative burden of handling the billing and collection of sums
due under Architectural and Engineering Agreements, Design shall be
responsible, on behalf of and for JPJ, for billing and collecting
the charges made with respect to Architectural and Engineering
Agreements and any or all other services provided at the Offices;
provided that responsibility for
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specific accounts may be retained by JPJ at the mutual agreement of
JPJ and Design. In such event JPJ agrees that it will keep and
provide to Design all invoices, documents, evidence and records
necessary for the purpose of supporting the fees charged for all
architectural and engineering services from time to time. It is
expressly understood that the extent to which Design will endeavor
to collect such charges, the methods of collecting, the settling of
disputes with respect to charges, and the writing off of charges
that may be or appear to be uncollectible shall at all times be
within the sole discretion of Design (but subject to all applicable
governmental regulations and the terms and conditions of applicable
agreements), and that Design does not guarantee the extent to which
any charges billed will be collected. At JPJ's request, Design will
reassign to JPJ for collection by JPJ, any accounts which Design has
determined to be uncollectible.
(9) Bank Accounts and Disbursements. During the term of this
Agreement, Design shall have access to any and all bank accounts of
JPJ, and in connection therewith JPJ hereby appoints Design for the
term hereof as its lawful attorney-in-fact to deposit in such
accounts fees generated from JPJ's architectural and engineering
practice which are collected by Design, and to make
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withdrawals from such accounts for the payment of expenses arising
from or relating to JPJ's operations, for Design's compensation
hereunder, and for all other costs, expenses and disbursements which
are required or authorized by this Agreement. Such withdrawals and
payments may be made by Design at any time and from time to time as
Design deems appropriate in its sole discretion. For administrative
convenience, JPJ shall not make any withdrawal(s) from such accounts
without the prior written consent of Design. JPJ agrees to execute
from time to time any and all additional documents required by the
banks at which JPJ's accounts are maintained to effectuate the power
of attorney granted above.
(10) Approval of Stock Transfers. Design shall have the sole
authority and discretion to approve or deny on behalf of JPJ any and
all proposals by stockholders of JPJ to encumber, sell, pledge, give
or otherwise transfer JPJ capital stock.
(11) Marketing Support. Design shall provide JPJ with such
marketing support as Design in its sole discretion deems appropriate
to develop, enhance and continue JPJ's practice. Such support may
include, by way of example and not limitation, making available such
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brochures, literature and sales aids as Design develops,
providing JPJ with access to pertinent economic and market data
acquired or developed by Design, and developing and implementing a
comprehensive marketing plan designed to xxxxxx client relations and
enhance JPJ's name recognition as a high quality provider of
professional architectural and engineering services.
3. Compliance with Architectural and Engineering Agreements. Design agrees
to perform its duties hereunder so as to comply with JPJ's obligations under the
Architectural and Engineering Agreements.
4. Conduct of Architectural and Engineering Practice. JPJ agrees to assign
a duly licensed architect and, to the extent engineering services are provided,
a duly licensed engineer to assure that its Offices are adequately staffed with
such architectural and engineering personnel as may be necessary to efficiently
perform architectural and engineering services at such Offices. Notwithstanding
any provision in this Agreement to the contrary, Design shall have no authority,
directly or indirectly, to perform, and shall not perform, any function of JPJ's
operations pertaining to services ("Professional Services") which are required
to be performed by duly licensed architects and/or engineers pursuant to any and
all applicable codes, or rules or regulations adopted by any authority
regulating the licensing of
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architects (the "Architecture Board") or engineers (the "Engineering Board").
Design may, however, advise JPJ as to the relationship between JPJ's performance
of Professional Services and the overall administrative and business functions
of JPJ's operations. To the extent Design assists JPJ in performing Professional
Services, all personnel employed or engaged by JPJ or by Design on JPJ's behalf
shall be subject to the professional direction and supervision of JPJ, and in
the performance of such Professional Services, such personnel shall not be
subject to any direction or control by, or liability to, Design, except as may
be specifically authorized by JPJ in accordance with applicable codes, rules or
regulations.
To the extent any provision of this Agreement is determined to violate any
provision of the applicable codes, or any rule or regulation of the Architecture
Board or of the Engineering Board, then such provision of this Agreement shall
be deemed modified to the minimum extent necessary to cure such violation.
5. Non-Exclusive Nature of Design's Duties. The parties acknowledge that
Design is in the business of providing services of the nature provided to JPJ
hereunder to architectural and engineering firms located throughout the United
States, and that Design may currently be a party to or may at any time hereafter
enter into contracts with other architectural and engineering firms in that
regard. Additionally, Design may also directly or
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indirectly provide architectural and engineering services from time to time. No
such activities by Design shall be deemed a breach of or a conflict with the
duties of Design hereunder.
6. Design's Compensation. As compensation for the provision of its
services hereunder, Design shall be paid, no less frequently than on a quarterly
basis, an estimate of the balance, if any, of JPJ's cash flow (as determined in
accordance with generally accepted accounting principles applied on a consistent
basis) following the payment by JPJ or by Design on JPJ's behalf of all of JPJ's
expenses, and the deduction from such cash flow of an amount equal to one
percent (1.00%) of JPJ's net profits (as determined in accordance with generally
accepted accounting principles applied on a consistent basis) for such time
period as has elapsed subsequent to the last payment to Design (such deducted
amount to be retained by JPJ as compensation for services provided to JPJ by JPJ
or by JPJ's personnel, and to be distributed or retained by JPJ as JPJ deems
appropriate in its sole discretion).
7. Ownership of Books and Records. The books and records generated and
maintained by each of the parties hereto shall be and remain the property of
each such party. JPJ agrees to make all of its books and records (subject to
applicable ethical and legal confidentiality requirements) available for
inspection, examination or copying by duly authorized representatives of Design
from time to time throughout the term hereof, and upon written request by
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Design to JPJ following the termination hereof, all to enable Design to better
perform its duties hereunder.
8. Liability and Indemnification. Neither Design nor its stockholders,
directors, officers, employees or agents shall have any liability for action
taken or omitted by such person(s) in the performance of its duties hereunder if
such action or omission is taken in good faith and without negligence. Each
party to this Agreement respectively assumes responsibility for liability,
actual or alleged, arising from its respective activities performed pursuant to
this Agreement. JPJ agrees, during the term of this Agreement and thereafter, to
the extent necessary to effectuate the purpose hereof, to indemnify and hold
harmless Design against any claims or liabilities arising under this Agreement
which arise out of or in connection with the Architectural and Engineering
Agreements, the General Business Contracts or the actions of JPJ's architect and
engineer employees or contractors (including, without way of limitation, those
employees and contractors employed or engaged by Design on JPJ's behalf or
otherwise).
9. Confidentiality. JPJ acknowledges that due to the nature of this
Agreement, JPJ will have access to information of a proprietary nature owned by
Design including, but not limited to, any and all computer programs (whether or
not completed or in use) and any and all operating manuals or similar materials
which constitute the non-architectural and non-engineering systems,
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policies and procedures, and methods of doing business, developed by Design for
the operation of facilities managed by Design. Consequently, JPJ acknowledges
and agrees that Design has a proprietary interest in all such information and
that all such information constitutes confidential and proprietary information
and the trade secret property of Design. JPJ hereby waives any and all right,
title and interest in and to such confidential information and trade secrets and
agrees to return all copies of such confidential information and trade secrets
to Design, at JPJ's expense, upon the termination of the Agreement.
JPJ further acknowledges and agrees that Design is entitled to prevent its
competitors from obtaining and utilizing its confidential information and trade
secrets. Therefore, JPJ agrees to hold Design's confidential information and
trade secrets in strictest confidence and not to disclose them to or allow them
to be disclosed to or used by, directly or indirectly, any person or entity
other than those persons or entities who are employed by or affiliated with
Design or JPJ, either during the term of this Agreement, or at any time after
the expiration or sooner termination of this Agreement, without the prior
written consent of Design. JPJ agrees to require each independent contractor and
employee of JPJ, and any such persons or entities to whom such information is
disclosed for the purpose of performance of Design's or JPJ's obligations under
this Agreement, to execute a
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"Confidentiality Agreement" in a form acceptable to Design, upon
the request of Design.
JPJ acknowledges and agrees that a breach of this Section 9 will result in
irreparable harm to Design which cannot be reasonably or adequately compensated
in damages, and therefore Design shall be entitled to injunctive and equitable
relief to prevent a breach and to secure enforcement thereof, in addition to any
other relief or award to which Design may be entitled.
10. Cooperation. JPJ and Design agree that they shall at all times
maintain an effective liaison and close cooperation with each other to
facilitate the provision of high quality and cost effective architectural and
engineering services. Each of the parties agrees to cooperate fully with each
other in connection with the performance of their respective obligations under
this Agreement, and both parties agree to employ their best efforts to resolve
any dispute that may arise under or in connection with this Agreement. JPJ shall
provide to Design full and complete access to JPJ's premises, and to JPJ's Books
and Records (as defined in Section 2.d.(1) hereof), in order that Design may
perform its functions hereunder. Notwithstanding any other provisions contained
herein, Design shall not be liable to JPJ, and shall not be deemed to be in
default hereunder, for the failure to perform or provide any of the supplies,
services, personnel, or other obligations to be performed or provided by Design
pursuant to this
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Agreement if such failure is a result of a labor dispute, act of God, or any
other event which is beyond the reasonable control of Design.
11. Arbitration. If a dispute or matter in controversy arises between the
parties hereto which they are unable to resolve to their mutual satisfaction
within ten (10) days of written notice from one to the other of the existence of
such dispute, then either party may notify the other party in writing (the
"Notice") that the dispute be submitted to binding arbitration as provided
herein. Such arbitration shall take place in Charlotte, North Carolina, in
accordance with the Rules of Commercial Arbitration of the American Arbitration
Association, or its successor. The provisions of xx.xx. 1-567.1 et seq. of the
General Statutes of North Carolina, or any successor or amended statute or law
containing similar provisions, shall apply in any such arbitration. Any
arbitration pursuant to this Agreement shall be conducted by one (1) arbitrator.
The judgment upon the award rendered in any such arbitration shall be final and
binding upon the parties and may be entered in any court having jurisdiction
over any party.
12. Waiver of Violation. The waiver by either party of a breach or
violation of any provision of this Agreement shall not operate as or be
construed as a waiver of any subsequent breach thereof.
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13. Miscellaneous.
a. Notices. All notices, offers and acceptances or rejections
thereof required to be given hereunder, shall be given by certified mail
to the parties hereto at the addresses listed below, or at such other
address as may be stated from time to time, and shall be deemed delivered
upon deposit in the United States mail, postage prepaid:
To JPJ: JPJ Architects, Inc.
C/O HLM Design, Inc.
000 Xxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, XX 00000
ATTN: Xxxxxx X. Xxxxxxx
To Design: HLM Design, Inc.
000 Xxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, XX 00000
ATTN: Xxxxxx X. Xxxxxxx
With a Copy to: Xxxxxxx X. Xxxx, Esq.
Xxxxxxxxx Xxxxxx Xxxxxx & Xxxxxx, P.A.
0000 Xxxxxxxxx Xxxxx
000 X. Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000-0000
b. Severability. The provisions of this Agreement shall be separable
and a determination that any provision of this Agreement, or subpart
thereof, is either unenforceable or void shall not affect the validity of
any other provision of this Agreement, or subpart thereof. Wherever
possible all provisions shall be interpreted so as not to be unenforceable
and any court of competent jurisdiction is authorized and directed by the
parties hereto to enforce any otherwise
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unenforceable provision in part, to modify it, to enforce it only to a
degree and not fully, or otherwise to enforce that provision only in a
manner and to an extent, that renders the provision valid or enforceable.
The intent of the parties is that this Agreement be enforceable and
enforced to the maximum extent possible after excising (or deeming
excised) all invalid or unenforceable provisions, whether or not the
remaining provisions are grammatically correct.
c. Amendments or Modifications. This Agreement constitutes the
entire understanding between the parties hereto with respect to the
subject matter hereof, and no changes, amendments or alterations shall be
effective unless agreed to in writing by both parties hereto, provided
that no such amendment shall conflict with applicable laws or regulations.
d. Relationship of the Parties. The relationship of the parties
hereto shall at all times be that of independent contractors. Except as
expressly provided herein, nothing contained in this Agreement shall be
construed to constitute either party as an agent, legal representative,
partner, joint venturer or employee of the other, and neither party hereto
shall have the power to bind the other with respect to any obligation to
any third party.
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e. Assignability. Design may assign this Agreement, and/or transfer,
assign or delegate any or all of its rights, obligations and
responsibilities under this Agreement, without the consent of JPJ. This
Agreement is not transferrable or assignable by JPJ without the prior
written consent of Design.
f. Governing Law. This Agreement shall be construed in
accordance with the laws of the State of North Carolina.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives.
HLM DESIGN, INC.
By: /s/ XXXXXX X. XXXXXX
-------------------------------
Title: President
JPJ ARCHITECTS, INC.
By: /s/XXXXXX X. XXXXXXX
-------------------------------
Title:
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