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Exhibit 10.4
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement"), dated as of
December 17, 1997, is by and between Environmental Safeguards, Inc., a Nevada
corporation ("Company"), and ________________________ (the "Holder").
W I T N E S E T H:
WHEREAS, the Company has entered into a Purchase Agreement dated
December 17, 1997 (the "Purchase Agreement"), pursuant to which it has offered
and sold shares of its Series B Convertible Preferred Stock (the "Preferred
Stock") to certain participants thereto; and
WHEREAS, the Company has sold shares of its Preferred Stock to the
Holder pursuant to the Purchase Agreement; and
WHEREAS, the shares of Preferred Stock purchased by Holder are
convertible into shares of the Company's common stock, $0.001 par value per
share ("Common Stock"); and
WHEREAS, in connection with Holder's purchase of the Preferred Stock,
the Company agreed to grant certain registration rights in respect of the
shares of Common Stock underlying the Preferred Stock (the "Shares").
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
ARTICLE ONE
REGISTRATION RIGHTS
Section 1.1 Registration Rights Available. The Company agrees to
provide Holder and its transferees or distributees (collectively the "Holders")
with the following registration rights with respect to the Shares and any other
securities issued or issuable at any time or from time to time in respect of
the Shares upon a stock split, stock dividend, recapitalization or other
similar event involving the Company (collectively, the "Registered Shares") (a)
two rights to demand registration in a secondary offering by means of shelf
registration under Rule 415 of the Securities Act of 1933, as amended (the
"Act"), and (b) "piggyback" registration in a firm commitment underwritten
offering of Company securities, all subject to the rights and limitations of
the provisions of this Agreement (the rights to two demand and unlimited
piggyback registrations granted hereunder are referred to herein as
"Registration Rights").
Section 1.2 Demand Registration.
(a) Subject to the restrictions of Section 1.2(b) below, upon the
written request of at least a majority of the Holders of the Preferred Stock
requesting that the Company effect a registration under the Act and specifying
the intended method of distribution thereof, the Company
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shall promptly use its best efforts to file with the Securities and Exchange
Commission (the "Commission") and cause to become effective as soon as
practicable thereafter, a Registration Statement on an appropriate form
relating to the offer and sale of the Registered Shares by the Holders. The
Company shall promptly give written notice of such requested registration to
all Holders of record of shares of Preferred Stock which were purchased in
connection with the Purchase Agreement. The Registration Statement will include
the Registered Shares, all other shares for which written notice was given by
the Company which are requested to be included by the Holders thereof by
written notice to the Company within 15 days of the giving of written notice by
the Company and may include shares of common stock other than the foregoing,
either for the Company's account or for the account of other selling
shareholders. The Company shall not be obligated to effect more than two
registrations on behalf of the Holders under this Section 1.2.
(b) The Company shall not be required to file any registration
statement pursuant to Section 1.1(a): (i) when the Company is engaged in
discussions with an underwriter concerning a contemplated underwritten public
offering of its securities and the managing underwriter thereof has advised
Holders in writing that such filing would have a material adverse effect on the
contemplated offering; (ii) if the Company is engaged in negotiations in
respect of an acquisition or financing transaction and, in the good faith
judgment of the Board of Directors such transaction would be adversely affected
by the filing of the Registration Statement, provided clause (i) and (ii) shall
not delay the Company's obligations under this Section beyond 90 days after
completion of the contemplated offering or financing or notice of cancellation
of such contemplated offering or financing; or (iii) if the Company is in the
possession of material nonpublic information the disclosure of which, in the
good faith judgment of the Company's board of directors, would materially
adversely affect or materially interfere with its business; provided, however,
that if the Company's obligation to file a registration statement under this
Section is tolled by reason of one of the preceding clauses (i) - (iii) and a
registration request is made hereunder during such time, the Company shall
promptly notify Holder when the Company is able to file a registration
statement without conflicting with clauses (i) - (iii) above.
Section 1.3 Piggyback Registration. With respect to Holders rights to
piggyback registration in a firm commitment underwriting of the Company
securities pursuant to Section 1.1 (b), the parties agree as follows:
(a) Pursuant to Section 1.1(b), the Company will (i) promptly give to
Holders written notice of any registration relating to a firm commitment public
offering of the Company's securities; and (ii) include in such registration,
and in the underwriting involved therein, all the Registered Shares specified
in Holders written request delivered in accordance with Section 6.1 herein
within 15 days after the date of such written notice from the Company.
(b) The right of the Holders to registration pursuant to Section
1.1(b) shall be conditioned upon Holders participation in such underwriting,
and the inclusion of the Registered Shares in the underwriting shall be limited
to the extent provided herein. The Holders proposing to distribute its
securities through such underwriting shall enter into an underwriting agreement
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in customary form with the managing underwriter selected for such underwriting
by the Company. Notwithstanding any other provision of this Agreement, if the
managing underwriter determines that marketing factors require a limitation of
the number of shares to be underwritten, the managing underwriter may limit some
or all of the Registered Shares that may be included in the registration and
underwriting provided, however, the Holders shall have priority rights to
piggyback registration over any and all other persons. If Holder disapproves of
the terms of any such underwriting, it may elect to withdraw therefrom by
written notice to the Company and the managing underwriter, delivered not less
than seven days before the effective date. Any Registered Shares excluded or
withdrawn from such underwriting shall be withdrawn from such registration, and
shall not be transferred in a public distribution prior to 90 days after the
effective date of the registration statement relating thereto, or such other
shorter period of time as the underwriters may require.
Section 1.4 Exception to Registration. The Company shall not be
required to effect a registration under this Article One if (i) in the written
opinion of counsel for the Company, which counsel and the opinion so rendered
shall be reasonably acceptable to Holders, such Holders may sell without
registration under the Act all Registered Shares which it requested
registration under the provisions of the Act and in the manner and in the
quantity in which the Registered Shares were proposed to be sold, or (ii) the
Company shall have obtained from the Commission a "no-action" letter to that
effect.
ARTICLE TWO
REGISTRATION PROCEDURES
Section 2.1 Registration Obligations. In performing its obligations
under Article One to register the Registered Shares, Company will, subject to
the limitations provided herein, as expeditiously as possible:
(a) prepare and file with the Commission the Registration Statement and
use its best efforts to cause such registration to become and remain effective
for the term specified herein;
(b) prepare and file with the Commission such amendments and supplements
to the Registration Statement and the Prospectus used in connection therewith
as may be necessary to keep the Registration Statement effective in accordance
with the terms of this Agreement and to comply with the provisions of the Act
with respect to the disposition of all Registered Shares covered by the
Registration Statement;
(c) furnish to the Holder one conformed copy of the Registration
Statement and of each such amendment and supplement thereto (in each case
including all exhibits), one copy of the Prospectus (including each preliminary
prospectus and any summary prospectus) and any other Prospectus filed under
Rule 424 under the Act, and such other documents, as the Holder may reasonably
request;
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(d) use its best efforts to (i) register or qualify the Registered
Shares under such other securities or blue sky laws of such jurisdictions as
the Holder shall reasonably request, (ii) keep such
registration or qualification in effect for so long as the Registration
Statement remains in effect, and (iii) take any other action which may be
reasonably necessary or advisable to enable the Holder to consummate the
disposition of the Registered Shares in such jurisdictions, except that the
Company shall not for any such purpose be required to qualify generally to do
business as a foreign corporation in any jurisdiction wherein it would not but
for the requirements of this Section 2.1(d) be obligated to be so qualified, to
consent to general service of process in any such jurisdiction, or to take any
such action which would impose unreasonable expense on the Company;
(e) notify the Holders at any time when a Prospectus relating to the
Shares is required to be delivered under the Act, upon discovery that, or upon
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 any material fact required to be stated therein
or necessary to make the statements therein not misleading in the light of the
circumstances under which they were made, and prepare and furnish to the
Holders one copy of a supplement to or an amendment of such Prospectus as may
be necessary so that, as thereafter delivered to the purchasers of such
securities, such Prospectus shall not include an 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 not misleading in the light of the
circumstances under which they were made;
(f) provide and cause to be maintained a transfer agent for the Common
Stock from and after a date not later than the effective date of the
Registration Statement;
(g) properly notify any securities exchange on which any of the
Company's Common Stock is listed of the registration of any of the Registered
Shares, and use its best efforts to satisfy all prerequisites and regulations
of any such exchange relating to the trading of such Registered Shares on such
exchange; and
(h) make available for inspection by the Holders, and any one attorney,
accountant or other agent retained by the Holders of Registered Shares, as a
group, (the "Inspector"), all financial and other records, pertinent corporate
documents and properties of the Company (collectively, the "Records"), as shall
be reasonably necessary to enable them to exercise their due diligence
responsibility, and cause the Company's officers, directors and employees to
supply all information reasonably requested by any such Inspector in connection
with such registration statement; provided that records which the Company
determines, in good faith, to be confidential and which it notifies the
Inspector are confidential shall not be disclosed by the Inspector unless (i)
the disclosure of such Records is necessary to avoid or correct a misstatement
or omission in the Registration Statement or (ii) the release of such Records
is ordered pursuant to a subpoena or other order from a court of competent
jurisdiction; provided, further, the Holders agree that they will, upon
learning that disclosure of such Records is sought in a court of competent
jurisdiction, give notice to the Company and allow the Company, at its expense,
to undertake appropriate action and to prevent disclosure of the Records deemed
confidential.
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Section 2.2 Registration Obligations of Holder. As a condition to the
Company performing its obligations under Article One to register the Registered
Shares, the Holder will, as expeditiously as possible:
(a) furnish the Company in writing such information regarding the
Holder, the Registered Shares and other securities of the Company held by the
Holder, and the distribution of such Registered Shares as the Company may from
time to time reasonably request in writing. If the Holder refuses to provide
the Company with any of such information on the grounds that it is not
necessary to include such information in the Registration Statement, the
Company may exclude the Holder's Registered Shares from the Registration
Statement if the Company provides the Holder with an opinion of counsel to the
effect that such information must be included in the Registration Statement and
the Holder thereafter continues to withhold such information.
(b) agree to promptly notify the Company as and when any Registered
Shares are sold and when the Holder elects to terminate all further offers and
sales of Shares pursuant to the Registration Statement.
(c) upon receipt of any notice from the Company of the happening of any
event of the kind described in Section 2.1(e), the Holder will forthwith
discontinue the Holder's disposition of the Registered Shares pursuant to the
Registration Statement until the Holder's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 2.1(e) and, if so
directed by the Company, will deliver to the Company (at the Company's expense)
all copies, other than permanent file copies then in such Holder's possession,
of the current Prospectus at the time of receipt of such notice.
Section 2.3 Expenses. All expenses incident to the Company's performance
of its obligations under this Agreement, including without limitation, all
registration and filing fees, fees and expenses of compliance with securities
and Blue Sky laws, printing expenses, fees and disbursements of the Company's
counsel, independent certified public accountants, and other persons retained
by the Company (all such expenses being herein called "Registration Expenses")
will be borne by the Company. The Holders shall be responsible for all selling
fees, expenses, discounts and commissions relating to the Registered Shares and
for the fees and expenses of counsel and other persons engaged by the Holders
(as well as any costs for any interim audit if requested by the Holder pursuant
to Section 1.2(b)).
ARTICLE THREE
REPORTING REQUIREMENTS
With a view to making available to the Holders the benefits of certain
rules and regulations of the Commission which may at any time permit the sale
of the Registered Shares to the public without registration, the Company agrees
to use its best efforts to (i) make and keep public information available, as
those terms are understood and defined in Rule 144 under the Act and (ii) file
with the Commission in a timely manner all reports and other documents required
of the Company under the Act and the Securities Exchange Act of 1934, as
amended (the "Exchange Act");
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and (iii) take such further action as any Holder may reasonably request, to the
extent required from time to time to enable such Holder to sell the Registered
Shares without registration under the Act pursuant to the exemptions provided
by Rule 144 or any similar rule or regulation adopted by the Commission.
ARTICLE FOUR
LIMITATIONS ON REGISTRATION RIGHTS TO OTHER PARTIES
From and after the date of this Agreement, the Company shall not enter
into any agreement with any holder or prospective holder of any securities of
the Company giving such holder or prospective holder (a) the right to require
the Company, upon any registration of any of its securities, to include, among
the securities which the Company is then registering, securities owned by such
holder, unless under the terms of such agreement, such holder or prospective
holder may include such securities in any such registration only to the extent
that the inclusion of its securities will not limit the number of shares sought
to be included by Holder or reduce the offering price thereof; or (b) the right
to require the Company to initiate any registration of any securities of the
Company. The foregoing limitation shall not apply to registration rights
previously granted by the Company pursuant to its Confidential Private
Placement Memorandum dated September 18, 1996.
ARTICLE FIVE
INDEMNIFICATION
Section 5.1 Indemnification by the Company. In the event of any
registration of the Shares under the Act, the Company agrees to indemnify and
hold harmless Holder and each other person who participates as an underwriter
in the offering or sale of such securities against any and all claims, demands,
losses, costs, expenses, obligations, liabilities, joint or several, damages,
recoveries and deficiencies, including interest, penalties and attorneys' fees
(collectively, "Claims"), to which Holder or underwriter may become subject
under the Act or otherwise, insofar as such Claims (or actions or proceedings,
whether commenced or threatened, in respect thereof) arise out of or are based
on any untrue statement or alleged untrue statement of any material fact
contained in any registration statement under which Holder's Shares were
registered under the Act, any preliminary prospectus, final prospectus or
summary prospectus contained therein, or any amendment or supplement thereto,
or any omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, and the Company will reimburse Holder and each such underwriter for
any legal or any other expenses reasonably incurred by them in connection with
investigating or defending any such Claim (or action or proceeding in respect
thereof); provided that the Company shall not be liable in any such case to the
extent that any such Claim (or action or proceeding in respect thereof) or
expense arises out of or is based on an untrue statement or alleged untrue
statement or omission or alleged omission made in such registration statement,
any such preliminary prospectus, final prospectus, summary prospectus,
amendment or supplement in reliance on and in conformity with written
information furnished to the Company by the Holder expressly for use in the
preparation thereof, and provided, further, that the Company shall not be
liable to any
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person who participates as an underwriter in the offering or sale of Registered
Shares or any other person, if any, who controls such underwriter within the
meaning of the Act, in any such case to the extent that any such loss, claim,
damage, liability (or action or proceeding in respect thereof) or expense
arises out of such person's failure to send or give a copy of the Prospectus,
as the same may be then supplemented or amended, to the person asserting an
untrue statement or alleged untrue statement or omission or alleged omission at
or prior to the written confirmation of the sale of Registered Shares to such
person if such statement or omission was corrected in such Prospectus so long
as such Prospectus, and any amendments or supplements thereto, have been
furnished to such underwriter in sufficient numbers and in a timely manner to
permit distribution thereof. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of Holder or any
such underwriter and shall survive the transfer of the Registered Shares by
Holder.
Section 5.2 Indemnification by Holder. In the event of any registration
of the Registered Shares under the Act, the Holder agrees to indemnify and hold
harmless (in the same manner and to the same extent as set forth in Section
5.1) the Company, each director of the Company, each officer of the Company and
each other person, if any, who controls the Company, within the meaning of the
Act, with respect to any statement or alleged statement in or omission or
alleged omission from such registration statement, any preliminary prospectus
contained therein, or any amendment or supplement thereto, if such statement or
alleged statement or omission or alleged omission was made in reliance on and
in conformity with written information furnished to the Company by the Holder
expressly for use in the preparation of such registration statement,
preliminary prospectus, final prospectus, summary prospectus, amendment or
supplement. Such indemnity shall remain in full force and effect, regardless of
any investigation made by or on behalf of the Company or any such director,
officer or controlling person and shall survive the transfer of the Registered
Shares by Holder.
Section 5.3 Notices of Claims, etc. Promptly after receipt by an
indemnified party of notice of the commencement of any action or proceeding
involving a Claim referred to in this Article Five, such indemnified party
will, if a claim in respect thereof is to be made against an indemnifying
party, give written notice to the latter of the commencement of such action,
provided that the failure of any indemnified party to give notice as provided
herein shall not relieve the indemnifying party of its obligations under this
Article Five, except to the extent that the indemnifying party is actually
prejudiced by such failure to give notice. In case any such action is brought
against an indemnifying party, unless in such indemnified party's reasonable
judgment a conflict of interest between such indemnified and indemnifying
parties may exist in respect of such Claim, the indemnifying party shall be
entitled to participate in and to assume the defense thereof, jointly with any
other indemnifying party similarly notified to the extent that it may wish,
with counsel reasonably satisfactory to such indemnified party, and after
notice from the indemnifying party to such indemnified party of its election so
to assume the defense thereof, the indemnifying party shall not be liable to
such indemnified party for any legal or other expenses subsequently incurred by
the latter in connection with the defense thereof other than reasonable costs
of investigation. No indemnifying party shall, without the consent of the
indemnified party, consent to entry of any judgment or enter into any
settlement that does not include as an
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unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect of such Claim.
Section 5.4 Indemnification Payments. The indemnification required by
this Article Five shall be made by periodic payments of the amount thereof
during the course of the investigation or defense, as and when bills are
received or expense, loss, damage or liability is incurred.
ARTICLE SIX
MISCELLANEOUS
Section 6.1 Notices. All notices required or permitted herein must be in
writing and shall be deemed to have been duly given the first business day
following the date of service if served personally, on the first business day
following the date of actual receipt if delivered by telecopier, telex or other
similar communication to the party or parties to whom notice is to be given, on
the first business day following delivery to an air courier, if sent by
overnight air courier guaranteeing next day delivery, or on the third business
day after mailing if mailed to the party or parties to whom notice is to be
given by registered or certified mail, return receipt requested, postage
prepaid, to the parties at the addresses set forth below, or to such other
addresses as either party hereto may designate to the other by notice from time
to time for this purpose.
ENVIRONMENTAL SAFEGUARDS, INC.
0000 Xxxxx Xxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attn: Xxxxx X. Xxxxxxx, President
Telephone No. 000-000-0000
Facsimile No: 000-000-0000
With a copy to:
Xxxxxxx, Xxxxx & Xxxxxxxxx
0000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attn: Xxxxxx Xxxxxxx
Telephone No.: 000-000-0000
Facsimile No.: 000-000-0000
HOLDER
c/x Xxxxxx, Xxxxxxx & Company
Xxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxx X. Xxxxxxx
Telephone No.: 000-000-0000
Facsimile No.: 000-000-0000
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With a copy to:
Xxxxxx, Xxxxxx & Xxxxxxxxx
000 Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxx, Esq.
Telephone No.: 000-000-0000
Facsimile No.: 000-000-0000
Section 6.2 Term of the Agreement. This Agreement shall terminate with
respect to Holder on the earlier to occur of (i) all of the Registered Shares
having been registered as provided in Article One or (ii) two years after the
Preferred Stock is converted in full; provided, however, that the provisions of
Article One shall not terminate if Holder makes a registration request pursuant
to this Agreement which request is currently tolled by reason of one of the
clauses (i) - (iv) in Section 1.2(b), but shall terminate 30 days after notice
of the suspension of such tolling shall have been given to Holder.
Section 6.3 Mergers, Etc. The Company shall not, directly or indirectly,
enter into any merger, consolidation, or reorganization in which the Company
shall not be the surviving corporation unless the proposed surviving
corporation shall, prior to such merger, consolidation, or reorganization,
agree in writing to assume the obligations of the Company under this Agreement,
and for this purpose references hereunder to "Registered Shares" shall be
deemed to be references to the securities that the Holders would be entitled to
receive in exchange for Registered Shares under any such merger, consolidation,
or reorganization.
Section 6.4 Entire Agreement. This Agreement contains and constitutes
the entire agreement between and among the parties with respect to the matters
set forth herein and supersedes all prior agreements and understandings between
the parties hereto relating to the subject matter hereof. There are no
agreements, understandings, restrictions, warranties or representations among
the parties relating to the subject matter hereof other than those set forth or
referred to herein. This instrument is not intended to have any legal effect
whatsoever, or to be a legally binding agreement or any evidence thereof, until
it has been signed by all parties hereto.
Section 6.5 Binding Effect. This Agreement shall be binding on and
enforceable by the Holder and by the Company and its successors. No transferee
of Registered Shares shall acquire any rights under this Agreement except with
the written consent of the Company, which may be withheld for any reason. In
the event the Company is a party to a merger or consolidation in a transaction
in which the Registered Shares are converted into equity securities of another
entity, then the Company shall cause such other entity to assume the Company's
obligations under this Agreement such that this Agreement shall apply to the
equity securities received by the Holder in exchange for the Registered Shares,
unless such equity securities are, upon receipt and without further action by
the Holder, readily salable without registration under the Act.
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Section 6.6 Construction. This Agreement shall be construed, enforced
and governed in accordance with the laws of the State of Texas. All pronouns
and any variations thereof shall be deemed to refer to the masculine, feminine
or neuter gender thereof or to the plurals of each, as the identity of the
person or persons or the context may require. The descriptive headings
contained in this Agreement are for reference purposes only and are not
intended to describe, interpret, define or limit the scope, extent or intent of
this Agreement or any provision contained herein.
Section 6.7 Amendments and Waivers. The provisions of this Agreement may
not be amended, modified or supplemented, and waivers or consents to or
departures from the provisions hereof may not be given unless agreed to in
writing by both the Company and the Holder.
Section 6.8 Severability. Whenever possible, each provision of this
Agreement will be interpreted in such a manner as to be effective and valid
under applicable law, but if any provision of this Agreement is held to be
prohibited by or invalid under applicable law, such provision will be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of this Agreement.
Section 6.9 Successors and Assigns. Except as otherwise provided herein,
the provisions shall inure to the benefit of, and be binding upon, the
successors and permitted assigns of the parties hereto. No party hereto may
assign its rights or delegate its obligations under this Agreement without the
prior written consent of the other parties hereto.
Section 6.10 Counterparts. This Agreement may be executed in any number
of Counterparts and by the parties hereto in separate Counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
dates shown below.
HOLDER: /s/ HOLDER
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Date
COMPANY: ENVIRONMENTAL SAFEGUARDS, INC.
By: /s/ Xxxxx X. Xxxxxxx
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Xxxxx X. Xxxxxxx, President
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Date
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