CONFIDENTIAL SETTLEMENT AGREEMENT
Exhibit
10.43
This
Confidential
Settlement Agreement
(the
“Agreement”) is made effective as of the 12thst day of February, 2007, by and
between OXIS International, Inc. (“OXIS”) and Xxxxxx X. Xxxxxxx (“Xxxxxxx”). The
Agreement is based upon the following recitals of fact, which are hereby
incorporated into this Agreement by reference:
X. Xxxxxxx
has been employed by OXIS as President and Chief Executive Officer pursuant
to a
written Employment Agreement dated February 28, 2005 ("Employment
Agreement");
B. Pursuant
to the terms of the Employment Agreement, Xxxxxxx was issued Stock Options
under
the OXIS 2003 Stock Incentive Plan for 600,000 shares of Rule 144 Common Stock
of OXIS (the "Stock Options") of which 300,000 were unvested at the time of
his
termination by OXIS. In addition, in December of 2005 Xxxxxxx was issued
additional options, (“Bonus Options”), of which options 300,000 were unvested at
the time of his termination by OXIS;
X. Xxxxxxx’x
employment with OXIS was terminated on September 15, 2006;
D. On
or
about October 16, 2006, Xxxxxxx filed a complaint against OXIS in the Superior
Court of the State of California, County of San Mateo, Case No. CW 458335,
alleging claims for breach of contract, breach of the covenant of good faith
and
fair dealing, violation of Labor Code section 203 and wrongful termination,
which complaint was not been served (the “Complaint”);
E. On
or
about December 5, 2006, OXIS and Xxxxxxx agreed in principle to a settlement
which was executed by Xxxxxxx but not by OXIS, and which was only partially
performed by OXIS. The parties disagree whether this partially executed and
performed agreement is enforceable;
F. OXIS
and
Xxxxxxx have agreed enter into this Confidential Settlement Agreement as
provided herein
in order
to effect a full and final adjustment of all their rights, duties, interests
and
claims, if any, arising out of the Employment Agreement, the Stock Options,
the
Bonus Options, and their partially executed prior settlement.. Additionally,
the
parties will retain certain indemnifications and releases, all as provided
below, which may exist now or in the future, be had on the terms and conditions
set forth herein.
NOW,
THEREFORE, IN CONSIDERATION OF THE PROMISES AND COVENANTS SET FORTH BELOW,
THE
PARTIES MUTUALLY AGREE AS FOLLOWS:
1. Payment
of Separation Benefit.
(a) Following
the execution of this Agreement, OXIS will pay Xxxxxxx the sum of Two Hundred
Fifty Thousand Dollars ($250,000) in monthly installments of Ten Thousand
Dollars ($10,000) each by automatic bank deposit, subject to standard payroll
deductions and withholdings (the "Separation Benefit"). The first such
installment covering the period February 15, 2007 through March 15, 2007 shall
be made upon execution of this Agreement. Thereafter each monthly installment
shall be paid by direct deposit no later than the 17th
day of
each month, commencing March 17.
(b) Upon
execution of this Agreement and expiration of the execution and revocation
period set forth in Section 19 hereof, all of the Stock Options and Bonus
Options will immediately vest and any portion of the Stock Options and Bonus
Options that have not been registered will carry piggyback registration rights
subject to the restrictions set forth as part of the debenture financing that
closed on October 25, 2006.
(c) Following
the execution of this Agreement and expiration of the execution and revocation
period set forth in Section 19 hereof, Xxxxxxx will be able to exercise the
Stock Options and Bonus Options until the later of either the fifth
(5th)
anniversary of the date the Compensation Committee initially approved the Stock
Options and Bonus Options, respectively, or February 15, 2010.
(d) As
part
of the Separation Benefit, OXIS shall pay Xxxxxxx’x health insurance premiums
under the Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA")
or
its California equivalent for employers with 20 or fewer employees
(“Cal-COBRA”), on the same basis as these benefits were paid prior to Xxxxxxx’x
termination (a maximum of $800 per month with Xxxxxxx paying the same portion
of
the benefits as he did during his employment), during 12-month period commencing
on Xxxxxxx’x date of termination specified above, such payments to be terminated
in the event Xxxxxxx obtains new health insurance through new employment or
otherwise becomes ineligible to receive such benefits. Thereafter, Xxxxxxx
must
pay for whatever group health plan continuation coverage Xxxxxxx elects and
to
which Xxxxxxx and his dependants are entitled pursuant to COBRA or Cal-COBRA.
The “qualifying event” with respect to Xxxxxxx'x COBRA or Cal-COBRA rights shall
be the termination of employment on the date specified above. The unpaid health
insurance premiums for the period September 15, 2006 to March 15, 2007 in the
maximum total amount of $4800, shall be paid at the time of execution of this
Agreement.
(e) In
event
that OXIS obtains additional financing in the amount of $1 million or more
after
February 12, 2007, whether in one transaction or multiple transactions and
whether in the form of debt or equity, or in the event of a change in control
as
defined in the Employment Agreement, then no later than 10 days thereafter,
OXIS
shall pay Xxxxxxx an amount equal to $10,833.33 multiplied by the number of
months that he has been paid $10,000 toward the Separation Benefit (the “First
Catch-Up Payment”), and thereafter will be paid $20,833.33 per month, provided
that the total Separation Benefit, including any Catch-Up Payment shall not
exceed $250,000. In the event that the total additional financing received
after
February 12, 2007 reaches $2 million or more, then no later than 10 days
thereafter, OXIS shall pay Xxxxxxx up to an additional $104,166.65 (the “Second
Catch-Up Payment” representing amounts which might have been paid on the
Separation Benefit prior to the execution of this Agreement), provided that
in
no event shall the total amount of monthly payments toward the Separation
Benefit and the First and Second Catch-Up Payments exceed the $250,000 total
amount due as Separation Benefit pursuant to Paragraph 1(a).
(f) Although
not part of the consideration for this Agreement, Xxxxxxx was entitled to
receive certain additional sums from OXIS. Specifically, Xxxxxxx was entitled
to
receive payment of the interest and principal on the Promissory Note dated
March
10, 2006 between Xxxxxxx and OXIS. In addition, Xxxxxxx also received pay for
any unused vacation time through the date of his termination, and was fully
paid
for any and all expenses incurred on behalf of OXIS, as well as any unpaid
salary accrued prior to the close of business on September 15, 2006, along
with
interest and penalties pursuant to Labor Code section 203. These sums were
paid
on or before November 2, 2006. In addition, on or about January 16, 2007,
Xxxxxxx was paid $3500 in partial payment of attorneys fees incurred pursuant
to
the terms of the original settlement contemplated by the parties. The
Compensation Committee of OXIS met on September 26, 2006 and determined that
Xxxxxxx is not entitled to any bonus for the year 2006. Xxxxxxx has contested
the validity of that determination.
2. Xxxxxxx
Covenants, Promises and Acknowledgments.
Xxxxxxx
agrees to the following:
Upon
execution of this Agreement, payment of sums due herein, execution of documents
sufficient to vest the Stock Options and Bonus Options and expiration of the
execution and revocation period set forth in Section 20 hereof, Xxxxxxx will
promptly resign from OXIS Board of Directors. In addition, to the extent he
has
not already done so, Xxxxxxx will promptly return the original and all copies
of
all OXIS files, records, documents, client lists, financial data, plans,
drawings, specifications, equipment, pictures, videotapes, or any property
or
other items concerning the business of OXIS, whether prepared by Xxxxxxx or
otherwise coming into Xxxxxxx'x possession or control by virtue of his
employment with OXIS.
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3. Mutual
Release.
(a) Except
as
expressly provided herein, Xxxxxxx, on his own behalf and on behalf of his
heirs, spouse, executors, administrators, principals,
agents, attorneys, parents and employees, as appropriate, (the “Xxxxxxx
Releasing Parties”), hereby releases and absolutely forever discharges OXIS,
together with its administrators, principals, agents, attorneys, officers,
directors, employees, subsidiaries, parents and affiliates, as appropriate
(the
“OXIS Released Parties”), individually and collectively, of and from any and all
known or unknown liabilities, claims, demands for damages, costs,
indemnification, contribution, or any other thing for which they or any of
them
have or may have a known or unknown cause of action, claim, or demand for
damages, costs, indemnification, or contribution, whether certain or
speculative, which may have at any time prior hereto come into existence or
which may be brought in the future in connection with any acts or omissions
which have arisen at any time prior to the effective date of this Agreement,
including, but not limited to, the Complaint and any and all claims Xxxxxxx
has
or may have relating to, or arising out of the Employment Agreement or
employment of Xxxxxxx with OXIS or the partially executed settlement, or any
claim by Xxxxxxx for breach of the Employment Agreement or any claim that
Xxxxxxx has been wrongfully terminated by OXIS, including any claim for tortuous
conduct resulting in personal injuries, any claim for harassment or
discrimination on the basis of race, color, national origin, religion, sex,
age,
sexual orientation, ancestry, medical condition, marital status, physical or
mental disability, or other protected class, discharge in violation of public
policy and/or violation of any state and federal laws, including without
limitation, the Age
Discrimination in Employment Act
and its
amendment, the Older
Workers Benefits Protection Act,
the
Fair Employment and Housing Act,
the
Americans with Disabilities Act,
Title
VII of the Civil Rights Act of 1964,
as
amended, The
Fair Labor Standards Acts,
as
amended, the
National Labor Relations Act,
as
amended, the
Labor - Management Relations Act,
as
amended, the
Worker Adjustment and Retraining Notification Act of 1988,
as
amended, the
Rehabilitation Act of 1973,
as
amended, the
Equal Pay Act,
the
Pregnancy Discrimination Act,
the
Employee Retirement Income Security Act of 1974,
as
amended, the
Family Medical Leave Act of 1993,
the
California Family Rights Act,
as
amended and the
California Labor Code.
Provided
however, that nothing in this Agreement or in paragraphs 3 (a) and 3 (b) shall
release or relinquish in any way any rights, entitlements, claims or demands
for
indemnity or contribution which a Xxxxxxx Releasing Party has, may have or
may
assert against any OXIS Released Party arising from or in connection with any
third party claim relating to Xxxxxxx’x prior employment by OXIS or service as
an officer and/or director of OXIS (including coverage under OXIS’ directors and
officers liability insurance, if any, to the fullest extent permitted
thereunder).
(b) The
Xxxxxxx Releasing Parties acknowledge the existence of and, with respect to
the
matters released in paragraph 3(a) above, expressly waive and relinquish any
and
all rights and benefits they have or may have under California Civil Code,
Section 1542, which provides:
A
GENERAL
RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT
TO
EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN
BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE
DEBTOR.
The
Xxxxxxx Releasing Parties acknowledge that they are aware that they may
hereafter discover facts different from or in addition to those which he or
his
attorneys now know or believe to be true with respect to the matters released
in
paragraph (a) above, and agree that the release so given in paragraph 3(a),
above, shall be and remain in effect as a full and complete release of the
respective claims, notwithstanding any such different or additional
facts.
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(c) Except
as
expressly provided herein, OXIS, on its own behalf and on behalf of its
administrators, principals, agents, officers, directors, employees,
subsidiaries, parents and affiliates, as appropriate, (the “OXIS Releasing
Parties”), hereby releases and absolutely forever discharges Xxxxxxx, together
with his heirs, spouse, executors, administrators, as
appropriate, (the “Xxxxxxx Released Parties”), individually and collectively, of
and from any and all known or unknown liabilities, claims, demands for damages,
costs, indemnification, contribution, or any other thing for which they or
any
of them have or may have a known or unknown cause of action, claim, or demand
for damages, costs, indemnification, or contribution, whether certain or
speculative, which may have at any time prior hereto come into existence or
which may be brought in the future in connection with any acts or omissions
which have occurred at any time prior to the date of this Agreement, including,
but not limited to, any and all claims the OXIS Releasing Parties have or may
have relating to, or arising out of the employment of Xxxxxxx with OXIS or
his
service on the OXIS Board of Directors, or any claim by the OXIS Releasing
Parties for breach of the Employment Agreement.
(d) The
OXIS
Releasing Parties acknowledge the existence of and, with respect to the matters
released in paragraph 3(c) above, expressly waive and relinquish any and all
rights and benefits they have or may have under California Civil Code, Section
1542, which provides:
A
GENERAL
RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT
TO
EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN
BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE
DEBTOR.
The
OXIS
Releasing Parties acknowledge that they are aware that they may hereafter
discover facts different from or in addition to those which they or their
attorneys now know or believe to be true with respect to the matters released
in
paragraph 3(c), and agree that the release so given in paragraph 3(c), shall
be
and remain in effect as a full and complete release of the matters released
in
paragraph 3(c), notwithstanding any such different or additional facts.
4. Conditional
Dismissal and Covenant Not to Xxx. Upon
execution of this Agreement, the Stipulation for Entry of Judgment, payment
of
the sums due herein, execution of documents sufficient to vest the Stock Options
and Bonus Options and expiration of the execution and revocation period set
forth in Paragraph 20 hereof, Xxxxxxx will file a Notice of Settlement including
a conditional dismissal of the Complaint in the form attached hereto as Exhibit
“A”. Although OXIS has not answered the Complaint, it stipulates to jurisdiction
over the matter and the parties personally and further stipulates that the
Court
will retain such jurisdiction until final performance of all the terms of the
Settlement Agreement, including tolling of any applicable statute, rule or
court
order affecting timely prosecution of an this action. Xxxxxxx further represents
that he has no other lawsuits, claims or actions pending in his name, or on
behalf of any other person or entity, against OXIS or any Released Parties
herein. The parties covenant not to bring any future action to enforce any
of
the claims released herein.
5. Default.
(a) If
any
payment of the Separation Benefit required pursuant to paragraph 1(a) is not
received by direct deposit on or before the 17th
of each
month (unless such date falls on a weekend or bank holiday, in which case the
payment shall be due on the next business day), Xxxxxxx shall provide OXIS
with
written notice to cure. In the event that the required payment is not paid
within five (5) business days after written notice is given, then OXIS
will
incur a penalty equal to 10% of such monthly payment. In the event that OXIS
fails to make the required payment and the 10% penalty within 20 days of the
date the Separation Benefit payment was due and following written notice to
cure, an “Event of Default” shall be deemed to have occurred and the remaining
balance of Separation Payments will be accelerated, becoming due and payable
immediately.
(b) Concurrently
with the execution of this Agreement, OXIS will execute and deliver to the
office of Xxxxxxx’x legal counsel, an executed Stipulation for Entry of Judgment
in the form attached hereto as Exhibit “B”. Xxxxxxx’x counsel shall hold the
Stipulated Judgment in escrow which Xxxxxxx’x counsel is authorized to file only
in the case of an Event of Default which has not been timely cured.
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6. Enforcement/Attorneys’
Fees. In
any
action brought to interpret or enforce the terms of this Agreement the
prevailing party shall be entitled to recover its reasonable attorneys’ fees and
costs incurred.
7. Entire
Agreement.
This
Agreement supercedes and replaces the Confidential Settlement Agreement
negotiated and partly performed by the parties and upon execution shall
constitute the sole and entire agreement and understanding of the parties with
respect to the entire subject matter hereof, and no other agreement (including
the Confidential Settlement Agreement), oral or written, shall be deemed to
exist or to bind either of the parties hereto.
8. Nonadmission
of Liability.
This
Agreement, and its performance, does not constitute and will not be construed
as
an admission by OXIS or Xxxxxxx of the truth of any contested matter, or of
any
liability, wrongful act, or omission.
9. Confidentiality
of Agreement.
The
content of this Agreement, and of the parties' discussions pertaining to it,
are
confidential, and Xxxxxxx and OXIS will not disclose or allow the disclosure
of
any information concerning this Agreement and its performance to anyone, except
that the Agreement may be disclosed by either party to his/her/its attorney(s),
accountant(s) or spouse(s), and, as required, by subpoena or court order or
to
governmental taxing authorities or to enforce the rights contained in this
Agreement in an appropriate legal proceeding, and notwithstanding anything
to
the contrary herein, OXIS may disclose the contents of this agreement in filings
it makes with the Securities and Exchange Commission, including filing this
Agreement as an exhibit to filings it makes with the Securities and Exchange
Commission, as required by applicable laws and OXIS may also disclose the
contents of this Agreement to third parties conducting due diligence on the
Company.
10. Confidentiality
of Employment.
(a) The
parties recognize and agree that, during the course of Xxxxxxx'x employment
with
OXIS, Xxxxxxx had access to and became acquainted with OXIS’ lists of clients,
projects, computer programs, business plans and strategies, prices, budgets,
techniques, inventions, improvements and similar confidential or proprietary
materials or information respecting OXIS’ or its clients’ business affairs. In
addition, Xxxxxxx had access to and became acquainted with confidential
information of a personal nature of OXIS and its employees, officers and
directors, including, but not limited to, such persons’ salary and benefits,
special skills and knowledge, identities and job performance. The parties agree
that such business information and information concerning OXIS and/or its
employees, officers and directors as set forth above and any other information
concerning OXIS reasonably understood to be confidential constitutes
“Confidential Information.” All Confidential Information which came into
Xxxxxxx’x possession shall remain the exclusive property of OXIS. Under no
circumstances can such Confidential Information be disclosed, disseminated
or
published in any manner without the prior written consent of OXIS. Any such
unauthorized disclosure shall entitle OXIS and/or any of their directors and
officers to all the remedies at law and equity, including the right to seek
and
obtain a preliminary and permanent injunction. This Agreement is in addition
to,
and does not supersede or affect, any prior confidentiality agreement which
may
have been signed by Xxxxxxx which shall remain in full force and effect.
Notwithstanding the foregoing, “Confidential Information” shall not include any
information which (i) becomes generally available to the public or the sweeper
industry by any means other than disclosure by Xxxxxxx, (ii) becomes available
to Xxxxxxx in documents form on a non-confidential basis from a source other
OXIS, which source is not prohibited from disclosing such information to Xxxxxxx
by contractual, legal or fiduciary obligation to OXIS, or (iii) was
independently acquired by Xxxxxxx prior to his employment by OXIS as evidenced
by written records.
(b) Xxxxxxx
agrees that he shall not disparage OXIS to clients or other third parties.
Oxis
on behalf its officers and directors agrees that they shall not disparage
Xxxxxxx to clients or other third parties.
(c) The
parties acknowledge that a breach of the covenants contained in Paragraphs
9 and
10 may not be compensable by monetary damages and therefore that the aggrieved
party may pursue all available equitable remedies, including injunctive
relief.
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11. Future
Cooperation Clause. Xxxxxxx
agrees that he will not counsel or assist in any material manner any attorneys
or their clients in the presentation or prosecution of any disputes,
differences, grievances, claims, charges or complaints by any third party
against OXIS and/or any OXIS Released Parties, unless under subpoena or other
court or administrative order or legal process to do so. Xxxxxxx further agrees
both to notify OXIS within a reasonable period of time upon receipt of any
court
order, subpoena, or other legal discovery device that seeks or might require
the
disclosure or production of the existence or terms of this Agreement, and to
mail a copy of such subpoena or legal discovery device to OXIS. In addition,
Xxxxxxx will use reasonable efforts to cooperate with OXIS in connection with
any business matters in which he was involved or any existing or potential
claims, investigations, administrative proceedings, lawsuits or other legal
and
business matters which arose during Xxxxxxx’x employment as reasonably requested
by OXIS, provided that such cooperation does not expose Xxxxxxx to any liability
or prejudice his ability to defend himself with respect to any such
liability.
12. Response
to Solicitation for References.
Xxxxxxx
agrees to refer all persons making inquiries of or seeking employment references
regarding Xxxxxxx from OXIS to its Human Resources Department. OXIS agrees
that
its Human Resources Department shall respond to all such inquiries by providing
only dates of employment and position held.
13. Waiver,
Modification and Amendment.
No
provision hereof may be waived unless in writing signed by both parties hereto.
Waiver of any one provision herein shall not be deemed to be a waiver of any
other provision herein. This Agreement may be modified or amended only by a
written agreement executed by the parties affected thereby.
14. Collaborative
Effort.
No
party hereto or their respective attorneys shall be deemed to have drafted
this
Agreement, or any portion thereof, for purposes of construing or interpreting
any of the terms or provisions in any action or proceeding which may hereinafter
arise between them. Except as set forth herein, each party shall bear their
own
attorneys’ fees and costs incurred in connection with the Complaint, the
partially executed settlement and in drafting this Agreement.
15. Execution.
This
Agreement may be executed in one or more counterparts, each of which shall
be
deemed an original but all of which together shall constitute a single
document.
16. Successors
and Assigns.
This
Agreement shall inure to the benefit of and shall be binding upon the
predecessors, successors, heirs and assigns of the parties hereto, and each
of
them. This Agreement is not intended to constitute a third-party beneficiary
contract.
17. Authority.
OXIS
hereby represents and warrants that the undersigned has the authority to act
on
behalf of OXIS and its officers and directors who might claim through it and
to
bind OXIS and its officers and directors and all who may claim through it to
the
terms and conditions of this Agreement. Xxxxxxx represents and warrants that
he
has the capacity to act on his own behalf and on behalf of all who might claim
through him to bind them to the terms and conditions of this Agreement. Each
party warrants and represents that there are no liens or claims of liens or
assignments in law or equity or otherwise of or against any of the claims or
cause of action or matters released herein.
18. Severability.
If any
term, provision, covenant, or condition of this Agreement (the "Provision")
is
held by an arbitrator or a court of competent jurisdiction to be invalid, void,
or unenforceable, the remaining provisions of this Agreement shall remain in
full force and effect and in no way shall be affected, impaired, or invalidated.
If possible, the Provision shall remain in effect but shall be modified by
the
court or arbitrator only to the extent necessary to make it
reasonable.
19. Independent
Counsel.
OXIS
has advised Xxxxxxx to consult with independent legal counsel prior to executing
this Agreement.
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20. Execution
and Revocation.
Xxxxxxx
has the right to review and consider this Agreement for a period of twenty-one
(21) days prior to execution. Execution prior to the conclusion of said
twenty-one (21) day period indicates an express and knowing waiver of the
remaining portion of said twenty one (21) day review period and a willingness
to
enter into this Agreement voluntarily. Further, Xxxxxxx has the right to revoke
this Agreement within seven (7) days after execution. For such revocation to
be
effective it shall: (a) be in writing; and (b) be received by OXIS within seven
(7) days after execution of this Agreement by Xxxxxxx.
21. Notice.
Any
notice required herein shall be provided to OXIS at its regular business address
by facsimile during regular business hours and U.S. Mail, with a copy to Xxxxx
X. Xxxxx, Esq., Xxxxx, Xxxxx & Xxxxxx LLP, 0000 Xxxxxxxx Xxxxxxxxx, Xxxxx
Xxxxx, Xxxxxxx Xxxxx, Xxxxxxxxxx 00000-0000, facsimile number (000) 000-0000.
Notice shall be provided to Xxxxxxx at his last known address by facsimile
and
U.S. Mail, with a copy to Xxxx X. Xxxxxx, Esq., Law Offices of Xxxx X. Xxxxxx,
000 Xxxx Xxxxxx, 00xx
Xxxxx,
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000, facsimile number (000) 000-0000.
| Dated: February 27, 2007 | XXXXXX X. XXXXXXX | |
| |
|
|
| /s/ Xxxxxx X. Xxxxxxx | ||
| Dated: Xxxxx 0, 0000 | XXXX INTERNATIONAL, INC. | |
| |
|
|
| By: | /s/ Xxxxxx X. Xxxxxxx, M.D. | |
| CEO | ||
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