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EXHIBIT 10.37
SEPARATION AND CONSULTING AGREEMENT
AND GENERAL RELEASE
This SEPARATION AND CONSULTING AGREEMENT AND GENERAL RELEASE
of claims ("Agreement") is entered into by and between Accelerated Networks,
Inc. (the "Company") on the one hand, and Xxxxxx Xxxxxxxx ("Employee"), on the
other hand.
RECITALS
WHEREAS, Employee has resigned as the Chairman and Chief
Executive Officer of the Company and as a member of the Company's Board of
Directors;
WHEREAS, the Company desires to continue Employee's employment
pursuant to the consulting arrangement hereunder; and
WHEREAS, the parties wish to preserve the good will which
exists between them and settle any and all disputes which may exist between them
arising from or related to Employee's employment with the Company and/or his
resignation from employment.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises
contained herein, and for other good and sufficient consideration, receipt of
which is hereby acknowledged, the parties agree as follows:
A. AGREEMENT BY EMPLOYEE. Employee for himself, his heirs, executors,
administrators, assigns, and successors, agrees as follows:
1. The Company, through its Board of Directors, hereby accepts
Employee's resignation as Chief Executive Officer ("CEO") of the Company
effective February 13, 2001.
2. The Company, through its Board of Directors, hereby accepts
Employee's resignation as Chairman of the Board of Directors and as a member of
the Board of Directors effective February 13, 2001.
3. The Company, through its Board of Directors, hereby accepts
Employee's resignation from employment with the Company effective February 12,
2002 (or any earlier date upon which this Agreement is terminated in accordance
with the terms herein, the "Termination Date"). Employee agrees that he will
have no right to employment with the Company after the Termination Date.
4. At all times during his continued employment, Employee will
reasonably cooperate with and assist the Company's new Chairman and CEO, as such
cooperation and assistance may reasonably be requested by the Company's Board of
Directors and Employee will faithfully and competently execute any duties
assigned to him as provided in Section B.1 hereof.
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5. Employee agrees that prior to the execution of this
Agreement, Employee was not entitled to receive any further monetary payments
from the Company, other than accrued and unpaid base salary for the period from
February 1, 2001 through February 13, 2001, accrued vacation pay and previously
unreimbursed business expenses incurred by Employee on behalf of the Company in
accordance with the Company's policies. Employee further agrees that the only
payments and benefits he is entitled to receive from the Company in the future
are those specified in this Agreement.
6. Employee hereby expressly waives, releases, acquits and
forever discharges the Company and its parents, successors, assigns, divisions,
subsidiaries, affiliates, partners, officers, directors, executives, investors,
stockholders, managers, supervisors, employees, agents, attorneys and
representatives, from any and all claims, demands, and causes of action which
Employee has or claims to have, whether known or unknown, of whatever nature,
which exist or may exist as of the date of Employee's execution of this
Agreement. As used in this paragraph, "claims," "demands," and "causes of
action" include, but are not limited to, contract claims, equitable claims,
fraud claims, tort claims, discrimination claims, harassment claims, retaliation
claims, personal injury claims, constructive discharge claims, emotional
distress claims, public policy claims, wage claims, claims for debts, accounts,
attorneys' fees, compensatory damages, punitive damages, and/or liquidated
damages, claims for vesting or accelerated vesting of options to purchase the
Company's Common Stock, claims for defamation, and any and all claims arising
under the Americans with Disabilities Act, the Family Medical Leave Act, or any
other federal or state statute governing employment, including but not limited
to Title VII of the Civil Rights Act of 1964, the Age Discrimination in
Employment Act, 29 U.S.C. Section 621 et seq, as such statutes may have been or
may be amended from time to time. The foregoing release shall not include claims
for (i) any indemnification Employee shall be entitled to pursuant to the
Company's bylaws, certificate of incorporation, that certain Director's
Indemnification Agreement dated as of June 14, 2000, between Employee and the
Company, or insurance policies in effect as of the date of execution of this
Agreement, (ii) recovery of reimbursable business expenses incurred on behalf of
the Company, (iii) breach of the terms of this Agreement or (iv) recovery of
Employee's personal property located on the Company's premises.
7. Without in any way limiting the generality or scope of
Section A.6 of this Agreement, Employee hereby understands and agrees to release
and hereby does release any and all claims, rights or benefits Employee has or
may have for age discrimination arising out of or under the Age Discrimination
in Employment Act of 1967 ("ADEA"), 29 U.S.C. Section 621, et seq., as the ADEA
may have been or may be amended, as well as any equivalent or comparable
provision of state or local law.
8. In compliance with any statute or ordinance which requires
a specific release of unknown claims or benefits, this Agreement includes a
release of unknown claims, and Employee hereby expressly waives and relinquishes
any and all claims, rights or benefits that Employee may have which are unknown
to Employee at the time of the execution of this Agreement.
9. Employee acknowledges and agrees that given the extent and
nature of the confidential and proprietary information he has and will obtain
during the course of his
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employment with the Company, it would be inevitable that such confidential
information would be disclosed or utilized by Employee should he obtain
employment from, or otherwise provide services to, an entity or person that is
engaged in a Competitive business. As used herein, the businesses and
enterprises set forth on Schedule A hereto shall be deemed to be a "Competitive
business." Consequently, if, during the Consulting Period, Employee commences
employment with any other person, business or entity, Employee agrees that he
will notify the Company in writing within ten (10) calendar days of (a) his
commencement of such employment and (b) of any change of his duties with such
employer. If within ten (10) calendar days of the Company's actual receipt of
such notification (or at any later time if Employee's employment duties with
such other employer are changed or if such employer acquires, or is acquired by,
any entity which operates a Competitive business) the Committee reasonably
determines that such employment is with a Competitive business, the Company may
immediately terminate Employee's employment hereunder with "Cause", as defined
in Section C.6. As used in this Section 9, the "Committee" shall mean a
committee of the Company's Board of Directors, as mutually agreed to in writing
by the Company and Employee.
10. During the Consulting Period, and for one year following
termination or expiration thereof, Employee shall not encourage or solicit any
of the Company's employees to leave the Company's employ for any reason or
knowingly interfere in any other manner with employment relationships at the
time existing between the Company and its employees. In addition, during the
Consulting Period, and for one year following termination or expiration thereof,
Employee shall not solicit, directly or indirectly, Competing business from any
client of the Company, induce any of the Company's clients to terminate their
existing business relationship with the Company, or knowingly interfere in any
other manner with any existing business relationship between the Company and any
client or other third party. As used herein, "Competing business" shall mean any
part of a "Competitive business" as defined in Schedule A hereto.
11. Employee understands that, during the course of his work
as an employee of the Company, he has had and will have access to Proprietary
Information (as defined below) concerning the Company and parties with which the
Company has a business relationship. Employee acknowledges that the Company has
developed, compiled, and otherwise obtained, at great expense, its Proprietary
Information. Employee hereby agrees to hold in strict confidence all Proprietary
Information and, unless he receives written permission from the Company's Chief
Executive Officer, will not disclose any Proprietary Information to anyone
outside of the Company, except as required by law or as necessary to carry out
his responsibilities hereunder. Employee further agrees he will not use, copy,
publish, summarize, or remove from Company premises Proprietary Information
except during his employment to the extent necessary to carry out his
responsibilities hereunder or as required by law. As used herein, the term
"Proprietary Information" means all information and any idea in whatever form,
written or oral, tangible or intangible, whether disclosed to or learned or
developed by me, pertaining in any manner to the current or proposed business of
the Company or parties with which the Company has a business relationship, but
only to the extent that the Company imposes reasonable safeguards to protect the
confidentiality of such information and does not include information which: (i)
is publicly known through lawful means; (ii) was rightfully in Employee's
possession prior to his employment with the Company as demonstrated by written
documents currently in existence; or (iii) is disclosed to Employee without
restriction by a third party who rightfully possesses and
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discloses the information and who did not learn of it directly from the Company.
Without limiting the scope of the definition, Employee understands that the
Company considers the following to be included in the definition of Proprietary
Information: (i) all client/customer lists and all lists or other compilations
containing client, customer or vendor information; (ii) information about
products, proposed products, research, product development, techniques,
processes, costs, profits, product pricing, markets, marketing plans,
strategies, forecasts, sales and commissions; (iii) plans for the future
development and new product concepts; (iv) the compensation and terms of
employment of other employees; (v) all other information that has been or will
be given to Employee in confidence by the Company; and (vi) software in various
stages of development, designs, drawings, specifications, techniques, models,
data, source code, algorithms, object code, documentation, diagrams, flow
charts, computer programs, databases, and other data of any kind and
description, including electronic data recorded or retrieved by any means.
Proprietary Information also includes any information described above which the
Company obtains from another party and which the Company treats as proprietary
or designates as Proprietary Information whether or not owned or developed by
the Company or the other party.
12. Employee acknowledges that monetary damages may not be
sufficient to compensate the Company for any economic loss which may be incurred
by reason of his breach of the restrictive covenants set forth in Sections A.10
or A.11. Accordingly, in the event of any such breach, the Company shall, in
addition to the termination of this Agreement and any remedies available to the
Company at law, be entitled to obtain equitable relief in the form of an
injunction precluding Employee from continuing such breach.
13. Employee and Company will not, except as may be mandated
by statutory or regulatory requirements or as may be required by legal process,
or in the event of a material transaction by the Company in which similar
contracts are commonly disclosed to others, disclose the terms of this
settlement, the amounts referred to in this Agreement, or the fact of the
payment of said amounts, except that they may disclose to their attorneys,
accountants or other professional advisors to whom the disclosure is necessary
to effectuate the purposes for which they have consulted with such professional
advisors; and provided that Employee and Company may each disclose that
Employee's resignation as the Company's Chief Executive Officer and Chairman was
on amicable terms. Each party understands that this covenant of non-disclosure
is a material inducement to the other party for the making of this settlement
and that, for the breach thereof the other party will be entitled to pursue its
legal and equitable remedies, including, without limitation, the right to seek
injunctive relief. Employee may disclose the fact and terms of this settlement
to his spouse provided she signs a written agreement to help the fact and terms
of this Agreement confidential.
B. AGREEMENT BY THE COMPANY. In exchange for the Employee's agreement
to the releases and other terms and conditions of this Agreement, the Company
agrees as follows:
1. From February 13, 2001 through the Termination Date (the
"Consulting Period"), the Company will continue Employee's employment in an
advisory position and Employee will have such duties as are reasonably assigned
or delegated by the Board of Directors of the Company. Throughout this period,
Employee shall not be required to work more than twenty (20) hours in any
calendar month during the first six months and more than
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fifteen (15) hours in any calendar month in the second six months and his duties
shall be consistent with his duties during the last two years of employment with
the Company, including, as requested, assisting in maintaining relations with
customers, advising on general business matters, working on special projects and
making periodic reports to the Board of Directors in the advancement of the best
interests of the Company. Employee's employment will be subject to the policies
maintained and established by the Company from time to time, however, nothing in
this Section B.1 will prevent Employee from (i) employment with a person or an
entity that is not a Competitor, (ii) engaging in additional activities in
connection with passive personal investments and community affairs that are not
inconsistent with Employee's duties under this Agreement. Additionally, nothing
in this Section B.1 will prevent Employee from serving on the board of directors
of other companies or organizations, or engaging in other activities, so long as
such participation does not require such involvement as to interfere with the
performance of Employee's duties hereunder and so long as the company or
organization is not a Competitive Business. The Company shall provide Employee
at least seventy-two (72) hours notice of the specific duties assigned to him
during the Consulting Period and Employee shall have the right to reschedule
commitments to the Company to accommodate his outside interests so long as he
makes himself available by telephone during the seventy-two (72) hour period.
Employee acknowledges and agrees that he owes a fiduciary duty of loyalty,
fidelity and allegiance to act at all times in the best interests of the
Company.
2. During the Consulting Period, Employee shall earn a monthly
salary (the "Base Salary") of Thirteen Thousand Five Hundred Ninety Dollars
($13,590.00) less all applicable deductions, payable in accordance with the
Company's standard payroll schedule. Employee and his immediate family will
continue to receive the health and welfare benefits he received as of the date
of execution of this Agreement through the Company's payment of Employee's
wife's health and dental benefits through COBRA until August 13, 2002; provided,
however, neither Employee nor Employee's wife shall be entitled to participate
in any other employee benefit plan, including without limitation, the Company's
401(k) plan or any executive incentive plans; provided further, that if this
Agreement is terminated prior to February 13, 2002, the Company shall
nonetheless continue making the foregoing COBRA payments until February 13, 2002
and shall thereafter be relieved of further COBRA payments.
3. Within ten (10) days after execution of this Agreement,
Company shall pay Employee a one-time lump sum payment (the "Separation
Payment") of Ninety-Eight Thousand Five Hundred Thirty-Six Dollars ($98,536.00),
less all applicable deductions (it being understood that Five Thousand Dollars
($5,000) of the foregoing amount represents reimbursement of legal fees and
shall be subject only to income tax withholding); provided, that Employee does
not elect to revoke this Agreement pursuant to Section C.13(b) of this
Agreement. Within ten (10) days after execution of this Agreement, Company shall
also pay Employee a one-time lump sum payment (the "Vacation Payment") of
$17,836.89, which Employee and Company hereby agree represents full compensation
for all accrued and unused vacation due to Employee. Notwithstanding anything
herein to the contrary, Employee shall not be entitled to receive any bonus or
other payment, other than Base Salary, the Separation Payment, the Vacation Pay,
payment of premiums for continuing health and welfare benefits and reimbursement
of unpaid business-related expenses incurred on behalf of the Company in
accordance with Company's policies.
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4. The Company forever fully releases and discharges Employee
from any claims, damages and causes of action it may have against him and
covenants not to xxx or otherwise institute or cause to be instituted or in any
way participate in legal or administrative proceedings against Employee (except
as required by law) with respect to any matter arising out of or connected with
his employment with the Company or the termination of that employment, including
any and all liabilities, claims, demands, contracts, debts, obligations and
causes of action of every nature, kind and description, in law, equity or
otherwise, whether or not now known or ascertained, which heretofore do or may
exist.
5. The Company shall, to the extent reasonably practicable,
assign to Employee, as soon as reasonably practicable, all of its rights, title
and interest in and to Employee's existing life insurance policy 978206706PR
with Metropolitan Life; provided, that Employee shall first arrange or otherwise
guarantee that Company receives a pro-rated refund of any pre-paid premiums for
the period from the date of such assignment through October 7, 2001.
C. JOINT AGREEMENTS. Company and Employee, for himself, his heirs,
executors, administrators, assigns, and successors, jointly agree as follows:
1. Nothing contained in this Agreement shall constitute or be
treated as an admission by the Company or Employee of liability, of any
wrongdoing, or of any violation of law.
2. If any provision of this Agreement is found to be
unenforceable, it shall not affect the enforceability of the remaining
provisions and a court shall enforce all remaining provisions to the extent
permitted by law.
3. The Company's Purchase Option, as set forth in that certain
Founder/Employee Shareholder Agreement dated as of March 28, 1997, and amended
as of April 14, 1997 by and between Employee and the Company, as amended to
date, shall automatically lapse upon execution of this Agreement, provided that
this Agreement is not revoked or terminated by Employee pursuant to Section
C.13(b) hereof. In the event Employee revokes this Agreement pursuant to Section
C.13(b) hereof, the Purchase Option shall automatically be reinstated in
accordance with its terms.
4. On January 10, 2000, Employee was granted two separate
options to purchase an aggregate of 690,200 shares (the "Option Shares") of the
Company's Common Stock at an exercise price per share of Seven Dollars ($7.00).
Of those shares, 14,285 are Incentive Stock Options and 675,915 are
Non-statutory Stock Options or non-qualified options. As of the date of this
Agreement, Employee has vested in 27.08% of the Option Shares. The Company and
Employee hereby agree that the Option Shares shall continue to vest in
accordance with their terms during the Consulting Period; provided, that if the
Company terminates this Agreement pursuant to Section A.9 herein, Employee's
Option Shares shall vest on an accelerated basis such that Employee shall be
immediately be entitled to an additional four (4) months of vesting; provided
further, that after such accelerated vesting, Employee shall be vested in a
maximum of 52.08% of the Option Shares, on a pro-rata basis. For the sake of
clarity, the Company agrees that the provisions of section 6 of the Stock Option
Agreements governing the Option Shares shall continue to apply up to and
including the Termination Date. Employee
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understands and agrees that he must exercise any vested Option Shares within
three (3) months after the Termination Date. Furthermore, Employee understands
and agrees that notwithstanding anything herein to the contrary, the Option
Shares shall immediately terminate and cease to be exercisable if Employee
breaches the provisions of Sections A.10 or A.11 hereof.
5. Employee shall have the right to terminate the employment
relationship upon written notice at anytime prior to the Termination Date.
6. If (i) Employee terminates his employment for any reason
prior to the Termination Date, (ii) Company terminates Employee's employment for
Cause (as defined below), or (iii) Employee's employment terminates pursuant to
Section A.10 above, Employee will not be entitled to any additional compensation
or other rights or benefits from the Company and as a result the Company shall
be obligated to pay Employee only that portion of his Base Salary earned prior
to the date of the termination of his employment with the Company. In the case
of such a termination, all other covenants in this Agreement shall remain in
full force and effect, to the extent that they are not inconsistent with the
foregoing. For purposes of this Agreement, "Cause" shall exist if Employee (i)
embezzles or otherwise criminally misappropriates funds or property belonging to
the Company; (ii) is convicted by a court of law, or admits that he is guilty,
of fraud or any crime involving moral turpitude; (iii) continues to neglect the
performance of his duties after a written demand for substantial performance is
delivered to him by the Company's Board of Directors, which demand specifically
identifies the manner in which the Board of Directors believes Employee has not
substantially performed his duties; or (iv) makes slanderous, libelous or
defamatory statements about the Company or its officers, directors, employees,
investors, stockholders, administrators, affiliates, divisions, subsidiaries,
predecessor and successor corporations and assigns. The Company may not
terminate Employee's employment for Cause except upon a determination by the
Board at a meeting duly called for such purpose that Cause exists for
termination after Employee has been given written notice by the Company of the
specific reason for such termination and an opportunity for Employee, together
with his counsel, to be heard in person before the Company's Board of Directors.
7. Except for Employee's Stock Option Agreements, to the
extent that they are consistent with this Agreement, and that certain Directors
Indemnification Agreement dated as of June 14, 2000, between the Company and
Employee, this Agreement shall supersede and render null and void any and all
prior agreements between the parties.
8. Employee and the Company expressly waive and release any
and all rights and benefits under Section 1542 of the CIVIL CODE OF THE STATE OF
CALIFORNIA (or any analogous law of any other state), which reads as follows: "A
GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH, IF
KNOWN BY HIM, MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR."
Furthermore, both parties agree and understand that if, hereafter, they discover
facts different from or in addition to those which they now know or believe to
be true, that this waiver shall be and remain effective in all respects
notwithstanding such different or additional facts or the discovery thereof.
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9. This Agreement shall bind and benefit Employee's heirs,
executors, administrators, successors, assigns, and each of them; it shall also
bind and benefit Company and its successors and assigns.
10. This Agreement shall, in all respects, be interpreted,
enforced and governed under the laws of the State of California without giving
effect to conflicts of law principles.
11. Each party hereby agrees to accept and assume the risk
that any fact with respect to any matter covered by this Agreement may hereafter
be found to be other than or different from the facts it believes at the time of
this Agreement to be true, and agrees that this Agreement shall be and will
remain effective notwithstanding any such difference in fact.
12. This Agreement may be executed in counterparts, each of
which shall be an original, but all of which together shall constitute one
agreement.
13. Employee hereby acknowledges and understands and Employee
agrees that:
(a) Employee may have, and has had, at least
twenty-one (21) days after receipt of this Agreement within which he may review
and consider it, discuss it with an attorney of his own choosing, and decide to
execute or not execute this Agreement and Employee represents that this
Agreement was first presented on February 13, 2001 and is the product of
negotiations between the parties;
(b) Employee has seven (7) days after the execution
of this Agreement within which he may revoke this Agreement;
(c) in order to revoke this Agreement, Employee must
deliver by personal service to the Company's Chief Financial Officer, on or
before seven (7) days after the execution of this Agreement, a letter stating
that he is revoking this Agreement, and;
(d) that this Agreement shall not become effective or
enforceable until after the expiration of seven (7) days following the date
Employee executes this Agreement.
14. All notices required or given pursuant to this Consulting
Agreement shall be addressed to the Company or Consultant at the designated
addresses shown below by registered mail, special delivery, or by certified
courier service or by confirmed facsimile to the numbers set forth below, as may
be changed by either party from time to time by prior written notice to the
other party:
To the Company: To Consultant:
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Accelerated Networks, Inc. Xxxxxx Xxxxxxxx
301 Science Drive, 00000 Xxxxxxxxx Xx.
Xxxxxxxx, Xxxxxxxxxx 00000 Xxxxxxxx, XX 00000
Attention: Chief Financial Officer Telephone/Facsimile: (000) 000-0000
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
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Notices shall be effective when deposited in the United States
mail in the manner required by this paragraph, or in the case of notices by
facsimile, upon confirmation of transmission thereof.
This Agreement may be executed in several counterparts, each
of which shall constitute an original and all of which, when taken together,
shall constitute one agreement.
The parties hereto have read and understand this Agreement and
affix their signatures hereto voluntarily and without coercion. Employee
acknowledges that the waivers he has made and the terms he has agreed to herein
are knowing, conscious and with full appreciation that he is forever foreclosed
from pursuing any of the rights so waived.
Employee:
Dated: March 16, 2001 /s/ Xxxxxx Xxxxxxxx
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Xxxxxx Xxxxxxxx
Dated: March 13, 2001 Company:
By: /s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx, Director
APPROVED AS TO FORM:
Dated: March 16, 2001 /s/ Xxxxx Xxxxxxx
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Xxxxx Xxxxxxx
O'Melveny & Xxxxx
Attorneys for Xxxxxx Xxxxxxxx
I agree to hold the terms of this Agreement confidential and to be bound by the
provisions of Section A.13 of this Agreement to the same extent as Employee.
/s/ Xxxxxx Xxxxxxxx
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Xxxxxx Xxxxxxxx
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SCHEDULE A
COMPETITIVE BUSINESSES
As used in the Agreement, any business, enterprise or activity involving the
development, manufacture or sale of any of the following products shall be
deemed to be a "Competitive Business":
o IAD - Any integrated access device capable of transporting voice and/or
data over XDSL or conventional T1, DS3, or OC-3, including but not limited
to, native ATM, Frame Relay, or Ethernet line-side interfaces or ATM or
Ethernet trunk side interfaces for voice and/or data services.
o MSAP - Any ATM-based concentrator, DSLAM or gateway, including but not
limited to XX 000, XX 00, X0.0, native ATM or Ethernet interfaces and MGCP,
H.248, or other service level managed gateways capable of interoperating
with a call agent soft switch or service management application.
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