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EXHIBIT E-2
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INVESTOR RIGHTS AGREEMENT
BETWEEN
DEVON ENERGY CORPORATION
AND
XXXXXX X. XXXXXXXX
AND
XXXXXXX XXXXX XXXXXXXX
DATED AS OF
AUGUST 13, 2001
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INVESTOR RIGHTS AGREEMENT
This Investor Rights Agreement (this "Agreement") is made as of August
13, 2001 by and between Devon Energy Corporation, a Delaware corporation (the
"Parent") Xxxxxx X. Xxxxxxxx and Xxxxxxx Xxxxx Xxxxxxxx ("Investors").
RECITALS
WHEREAS, pursuant to the merger contemplated by the Agreement and Plan
of Merger, dated as of August 13, 2001 (the "Merger Agreement"), by and among
Parent, Devon Newco Corporation, and Xxxxxxxx Energy & Development Corp. (the
"Company") ("Merger Agreement"), Investors may acquire shares (the "Shares") of
Parent's common stock, par value $0.10 per share ("Parent Common Stock") in
exchange for their shares of common stock, par value $0.10 per share, of the
Company; and
WHEREAS, Parent is granting Investors certain demand and piggyback
registration rights in connection with Investors' receipt of the Shares pursuant
to the terms and conditions of this Agreement;
NOW, THEREFORE, in consideration of the mutual promises and covenants
hereinafter set forth, the parties hereto agree as follows:
1. Certain Definitions. As used in this Agreement, the following terms shall
have the following respective meanings:
"Affiliate" shall mean, with respect to any person, each of such
person's officers, directors, employees and agents, and each other person
controlling such person within the meaning of the Securities Act.
"Commission" shall mean the Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any similar federal statute and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
"Register", "registered" and "registration" refer to a registration
effected by preparing and filing a registration statement in compliance with the
Securities Act, and the declaration or ordering of the effectiveness of such
registration statement.
"Registrable Securities" shall mean the Shares and any shares of Parent
Common Stock issued or issuable in respect of the Shares upon any stock split,
stock dividend, recapitalization, or similar event and held by Investors until
such time as (i) a registration statement covering such securities has been
declared effective by the Commission and such securities have been disposed of
pursuant to such effective registration statement, or (ii) such securities may
be sold pursuant to Rule 145 or Rule 144 (or any successor or similar rule)
under the Securities Act without regard to the volume of sale restrictions
referred to therein, or (iii) such securities have been transferred and may be
sold by the
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transferee without registration under the Securities Act, after which such
securities shall no longer be Registrable Securities.
"Registration Expenses" shall mean all expenses incurred by Parent in
complying with Sections 2 and 3 hereof, including all registration,
qualification and filing fees, printing expenses, escrow fees, fees and
disbursements of counsel and of the accountants for Parent, blue sky fees and
expenses and the expense of any special audits incident to or required by any
such compliance.
"Securities Act" shall mean the Securities Act of 1933, as amended, or
any similar federal statute and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Selling Expenses" shall mean all underwriting discounts, selling
commissions and stock transfer taxes applicable to the Registrable Securities
registered by Investors and all fees and disbursements of counsel for Investors.
Capitalized terms used and not defined herein shall have the respective
meanings ascribed to the in the Merger Agreement.
2. Requested Registration.
a. Request for Registration. In case Parent shall receive from
Investors a written request that Parent effect any registration with respect to
any of the Registrable Securities, Parent shall, as soon as practicable, use
reasonable best efforts to effect such registration (including appropriate
qualification under applicable blue sky or other state securities laws and
appropriate compliance with applicable regulations issued under the Securities
Act and any other governmental requirements or regulations) on Form S-3 or, if
Form S-3 is not available, then on Form S-1 (or any successor forms of
registration statements to such Forms S-3 or S-1 or other available registration
statements) and as would permit or facilitate the sale and distribution of the
Registrable Securities for which registration is requested. The registration
statement filed pursuant to the request of Investors under this Section 2(a) may
include securities of Parent held by other securityholders of Parent who, by
virtue of agreements with Parent, are entitled to include their securities in
any such registration, but Parent shall have no absolute right to include
securities for its own account in any such registration.
b. Notwithstanding the foregoing, Parent shall not be obligated to file
a registration statement to effect any such registration pursuant to this
Section 2:
i. unless the amount of Registrable Securities for which
registration is requested is at least 5,000,000 shares (as adjusted for
any stock split, stock dividend, recapitalization or similar event);
provided, however, that if the total number of Registrable Securities
held by Investors (but not a transferee of Investors) is less than
5,000,000 shares (as adjusted to give effect to any stock split,
reverse stock split, stock dividend, recapitalization or any similar
event or transaction), then Investors (but not a transferee of
Investors) may request
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registration under this Section 2 as to all but not less than all of
such Registrable Securities as may then be held by Investors; and
ii. after Parent has initiated two such registrations pursuant
to this Section 2 (counting for these purposes only registrations that
have been declared effective).
c. Underwriting. Any offering of securities made under this Section 2
shall be pursuant to a "firm commitment" underwriting. Parent (together with
Investors) shall enter into an underwriting agreement in customary form with the
managing underwriter selected for such underwriting by the Investors with the
consent of Parent, which consent shall not be unreasonably withheld.
Notwithstanding any other provision of this Section 2, if the managing
underwriter determines that marketing factors require a limitation of the number
of shares to be underwritten, the managing underwriter may limit the number of
Registrable Securities to be included in such registration to the extent
required by such limitation. If the managing underwriter has not limited the
number of Registrable Securities to be included in such registration, Parent may
include securities for its own account or for the account of others in such
registration if the number of Registrable Securities to be included in such
registration will not thereby be limited.
3. Parent Registration.
a. Notice of Registration. If Parent shall determine to register any of
its securities, either for its own account or the account of a security holder
or holders exercising their respective registration rights, other than (i) a
registration relating solely to employee benefit plans on Form S-8 (or similar
successor form), or (ii) a registration on Form S-4 (or similar successor form)
relating solely to a Commission Rule 145 transaction, Parent will:
i. promptly give Investors written notice thereof; and
ii. use its reasonable best efforts to include in such
registration (and any related qualification under blue sky laws or
other compliance), and in any underwriting involved therein, all
Registrable Securities specified in a written request to Parent made
within 15 business days after receipt of such written notice by
Investors.
b. Underwriting. If the registration of securities pursuant to this
Section 3 is underwritten, Parent shall so advise Investors as a part of the
written notice given under Section 3(a). In such event, Investors' right to
registration pursuant to this Section 3 shall be conditioned upon Investors'
participation in such underwriting and the inclusion of Registrable Securities
in the underwriting shall be subject to the limitations provided herein. Parent
(together with Investors) shall enter into an underwriting agreement in
customary form with the managing underwriter selected for such underwriting by
Parent. Notwithstanding any other provision of this Section 3, if the managing
underwriter determines that marketing factors require a limitation of the number
of shares to be underwritten, Parent shall so advise the holders of securities
who have requested to
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include their securities in such registration, and the number of shares to be
included in such registration shall be reduced by such minimum number of shares
as is necessary to comply with such limitation, as follows:
i. if the registration was initiated for the account of any
security holder or holders other than Investors (the "Initiating
Holders"), the number of shares reduced shall be (A) first, any shares
sought to be registered by Parent for its own account, (B) second, if
further reductions are required, any shares sought to be registered by
holders of securities other than the Initiating Holders who have
requested to include their securities in such registration, pro rata
based on the number of shares requested to be included in such
registration, and (C) third, if still further reductions are required,
any securities sought to be registered by the Initiating Holders.
ii. if the registration was initiated by Parent for its own
account, the number of shares reduced shall be (A) first, any shares
sought to be registered by holders of securities who have requested to
include their securities in such registration, pro rata based on the
number of shares requested to be included in such registration and (B)
second, if further reductions are required, shares sought to be
registered by Parent for its own account.
4. Black Out. In the event Parent determines, after a request for registration
has been received from an Investor and prior to the completion of such
registered offering, that it may be in possession of material undisclosed
information with respect to Parent or its securities, (i) Parent shall notify
Investors and request that Investors refrain from selling any Registrable
Securities, and Investors shall refrain from selling any Registrable Securities,
and (ii) Parent shall not be obligated to file a registration statement or
effect any registration, qualification or compliance of Registrable Securities
under Section 2 for a period of not more than 120 days from the date of such
notice (the "Black Out Period"). A Black Out Period shall end upon the earlier
to occur of (i) the full public disclosure of the material information giving
rise to such Black Out Period, (ii) Parent notifying Investors in writing that
the Black Out Period is terminated and (iii) the 120th day after the date of
Parent's notice of the commencement of the Black Out Period. Notwithstanding the
foregoing, Parent shall not be entitled to declare a Black Out Period prior to
twelve months from the end of a previous Black Out Period if more than 180 days
of the immediately preceding 365 days have been subject to a Black Out Period,
and Parent shall only exercise its rights under this Section 4 in good faith and
shall not exercise such rights in an effort to frustrate the Investors' ability
to offer to sell and sell their Registrable Securities.
5. Expenses of Registration. All Registration Expenses incurred in connection
with a registration pursuant to Sections 2 and 3 shall be borne by Parent. All
Selling Expenses relating to the Registrable Securities which are registered
shall be borne by Investors.
6. Registration Procedures. In the case of each registration effected by Parent
pursuant to this Agreement, Parent will keep Investors advised in writing, if
Investors are
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participating in such registration, as to the initiation of each registration
and as to the completion thereof. At its expense, Parent will:
a. prepare and file with the Commission a registration statement with
respect to such securities and use reasonable best efforts to cause such
registration statement to become and remain effective for at least 60 days or
until the distribution described in the registration statement has been
completed, whichever first occurs;
b. furnish to Investors, if Investors are participating in such
registration, such reasonable number of copies of the registration statement,
preliminary prospectus, final prospectus and such other documents as Investors
may reasonably request, including correspondence with the Commission and any
exchanges on which Registrable Securities are listed; and
c. notify Investors, if Investors are participating in such
registration, of any updates or amendments to the prospectus and furnish to
Investors any such updated and/or amended prospectuses.
7. Indemnification.
a. Parent will indemnify Investors with respect to any registration,
qualification or compliance which has been effected pursuant to this Agreement,
and each underwriter, if any, and each person who controls any underwriter
within the meaning of the Securities Act (the "Underwriters"), against all
expenses, claims, losses, damages or liabilities (or actions in respect
thereof), including any of the foregoing incurred in settlement of any
litigation commenced or threatened arising out of or based on any untrue
statement (or alleged untrue statement) of a material fact contained in any
registration statement, prospectus, offering circular or other document, or any
amendment or supplement thereto, incident to any such registration, or based on
any omission (or alleged omission) to state therein a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading, or any violation by
Parent of the Securities Act or any state securities law, or any rule or
regulation promulgated thereunder, applicable to Parent in connection with any
such registration, and Parent will reimburse Investors and the Underwriters for
any legal and any other expenses reasonably incurred in connection with
investigating, preparing or defending any such claim, loss, damage, liability or
action; provided, however, that Parent will not be liable in any such case to
the extent that any such expense, claim, loss, damage or liability arises out of
or is based on any untrue statement or omission, or alleged untrue statement or
omission, made in reliance upon and in conformity with written information
furnished to Parent by Investors specifically for use therein.
b. Investors will, if Registrable Securities are included in a
registration being effected, indemnify Parent and each of its Affiliates and the
Underwriters, if any, of Parent's securities covered by such a registration
against all expenses, claims, losses, damages and liabilities (or actions in
respect thereof), including any of the foregoing incurred in settlement of any
litigation commenced or threatened arising out of or based
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on any untrue statement (or alleged untrue statement) of a material fact
contained in any registration statement, prospectus, offering circular or other
document, or any amendment or supplement thereto, incident to any such
registration, or based on any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances in which they were made, not misleading,
or any violation by Investors of the Securities Act or any state securities law,
or any rule or regulation promulgated thereunder, applicable in connection with
any such registration, and Investors will reimburse Parent, such Affiliates and
the Underwriters for any legal and any other expenses reasonably incurred in
connection with investigating or defending any such claim, loss, damage,
liability or action, in each case to the extent that such untrue statement or
omission, or alleged untrue statement or omission, is made in such registration
statement, prospectus, offering circular or other document incident to any such
registration in reliance upon and in conformity with written information
furnished to Parent by Investors specifically for use therein. Notwithstanding
the foregoing, the liability of Investors under this subsection (b) shall be
limited in an amount equal to the public offering price of the Shares sold by
Investors, unless such liability arises out of or is based on willful misconduct
by Investors.
c. Each party entitled to indemnification under this Section 7 (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and the
Indemnifying Party shall have the option to assume the defense of any such claim
or any litigation resulting therefrom; provided, however, that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or litigation,
shall be approved by the Indemnified Party (whose approval shall not
unreasonably be withheld); and provided, further, that the Indemnified Party may
participate in such defense at such party's own expense. The failure of an
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Agreement unless the failure to
give such notice is materially prejudicial to an Indemnifying Party's ability to
defend such action. The Indemnifying Party shall not assume such defense for
matters as to which there is a conflict of interest or separate and different
defenses. In the event of a conflict of interest or separate or different
defenses, as determined in the reasonable opinion of counsel to the Indemnified
Party, the Indemnifying Party will pay the reasonable legal fees and expenses of
one counsel to the Indemnified Party. No claim may be settled without the
consent of the Indemnifying Party (which consent shall not be unreasonably
withheld). No Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the consent of each Indemnified Party, consent to
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation.
d. If the indemnification provided for in Section 7.a. or 7.b. is
unavailable to or insufficient to hold harmless an indemnified party under
Section 7.a. or 7.b. in respect of any expenses, claims, losses, damages or
liabilities (or actions in respect thereof), then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a result
of such expenses, claims, losses, damages or liabilities (or
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actions in respect thereof) in such proportion as is appropriate to reflect the
relative fault of the indemnifying party on the one hand and the indemnified
party on the other hand in connection with the statements or omissions which
resulted in such expenses, claims, losses, damages or liabilities (or actions in
respect thereof), as well as any other relevant equitable considerations.
8. Information from Investors. Investors shall furnish to Parent such
information regarding Registrable Securities being included in any registration
and the distribution proposed by Investors as Parent may request in writing and
as shall be required in connection with any registration referred to in this
Agreement.
9. Rule 144 Reporting. With a view to making available the benefits of certain
rules and regulations of the Commission which may at any time permit the sale of
Registrable Securities to the public without registration, Parent agrees to use
its best efforts to:
a. make and keep public information available, as those terms are
understood and defined in Rule 144 (or any successor or similar rule)
promulgated by the Securities and Exchange Commission under the Securities Act;
b. file with the Commission in a timely manner all reports and other
documents required of Parent under the Securities Act and the Exchange Act; and
c. so long as Investors own any Registrable Securities, promptly
furnish to Investors upon request (i) a statement by Parent as to its compliance
with the reporting requirements of Rule 144 (or any successor or similar rule),
the Securities Act and the Exchange Act, (ii) a copy of the most recent annual
or quarterly report of Parent, and such other publicly filed reports and
documents of Parent, and (iii) such other information in the possession of
Parent as Investors may reasonably request in availing themselves of any rule or
regulation of the Commission allowing Investors to sell any Shares without
registration.
10. Amendment. Any provision of this Agreement may be amended or the observance
thereof may be waived (either generally or in particular instance and either
retroactively or prospectively) only with the written consent of each of the
parties hereto.
11. Lockup. Investors agree that they will not, prior to the date which is nine
months from the Closing Date (as defined in the Merger Agreement) (the "Lockup
Date"), directly or indirectly sell, offer to sell, grant any option for the
sale of, or otherwise dispose of any Shares other than pursuant to an
underwritten registered offering made pursuant hereto or to a Permitted
Transferee (as defined in the Principal Shareholders Agreement of even date
among the Company and the Investors). From and after the Lockup Date, Investors
shall not dispose of Shares in amounts exceeding 1,000,000 Shares per calendar
quarter, except pursuant to a registration statement or to a Permitted
Transferee.
12. Termination. This Agreement shall terminate at such time as Investors can
sell all of their remaining Registrable Securities within a single three-month
period pursuant to Rule 144 under the Securities Act (or any successor or
similar rule).
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13. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS. PARENT AND INVESTORS EACH HEREBY
IRREVOCABLY AND UNCONDITIONALLY CONSENTS TO SUBMIT TO THE EXCLUSIVE JURISDICTION
OF THE COURTS OF THE STATE OF TEXAS AND OF THE UNITED STATES OF AMERICA, IN
EITHER CASE LOCATED IN DALLAS COUNTY, TEXAS (THE "TEXAS COURTS") FOR ANY
LITIGATION ARISING OUT OF OR RELATING TO THIS AGREEMENT AND THE TRANSACTIONS
CONTEMPLATED HEREBY (AND AGREES NOT TO COMMENCE ANY LITIGATION RELATING THERETO
EXCEPT IN SUCH COURTS), WAIVES ANY OBJECTION TO THE LAYING OF VENUE OF ANY SUCH
LITIGATION IN THE TEXAS COURTS AND AGREES NOT TO PLEAD OR CLAIM IN ANY TEXAS
COURT THAT SUCH LITIGATION BROUGHT THEREIN HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM. EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH
PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY ACTION, PROCEEDING OR
COUNTERCLAIM DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS
AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED HEREBY.
14. Entire Agreement. This Agreement constitutes the full and entire
understanding and agreement between the parties regarding rights to
registration. Except as otherwise expressly provided herein, the provisions
hereof shall inure to the benefit of, and be binding upon the successors and
assigns of the parties hereto.
15. Notices and Dates. Any notice required to be given hereunder shall be
sufficient if in writing, and sent by facsimile transmission or by courier
service (with proof of service), hand delivery or certified or registered mail
(return receipt requested and first-class postage prepaid), addressed as
follows:
if to Parent, to:
Devon Energy Corporation
00 Xxxxx Xxxxxxxx
Xxxxx 0000
Xxxxxxxx Xxxx, XX 00000
Attention: J. Xxxxx Xxxxxxx
Facsimile: (000) 000-0000
and
Duke X. Xxxxx
Facsimile: (000) 000-0000
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with a copy to:
Xxxxx, Xxxxx & Xxxxx
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxx
if to Investors, to:
Xxxxxx X. Xxxxxxxx
Xxxxxxx Xxxxx Xxxxxxxx
c/o J. Xxxx Xxxxxxxx
000 Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
with a copy to:
Xxxxxxxxx & Xxxxxxxxx LLP
711 Louisiana, 27th Floor
South Tower Pennzoil Place
Houston, TX 77002
Attention: Xxxxx X. Xxxxxxx III
Facsimile: (000) 000-0000
Each such notice or other communication shall for all purposes of this
Agreement be treated as effective or having been given when delivered, if
delivered personally, by messenger or by courier, or upon confirmation of
receipt if sent by facsimile.
16. Counterparts; Facsimiles. This Agreement may be executed in several
counterparts (by facsimile or original signature), each of which shall be deemed
to be an original, but all of which together shall be deemed to be one and the
same instrument. A signature transmitted by facsimile shall be treated for all
purposes by the parties hereto as an original and shall be binding upon the
party transmitting such signature without limitation.
17. Further Assurances. The parties hereto shall do and perform or cause to be
done and performed all such further acts and things and shall execute and
deliver all such other agreements, certificates, instruments or documents as any
other party may reasonably request from time to time in order to carry out the
intent and purposes of this Agreement and the consummation of the transactions
contemplated thereby. Neither Parent nor Investors shall voluntarily undertake
any course of action inconsistent with satisfaction of the requirements
applicable to them set forth in this Agreement, and each shall promptly do all
such acts and take all such measures as may be appropriate to enable them to
perform as early as practicable the obligations herein and therein required to
be performed by them.
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18. Severability. Any term or provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective
to the extent of such invalidity or unenforceability without rendering invalid
or unenforceable the remaining terms and provisions of this Agreement or
affecting the validity or enforceability of any of the terms or provisions of
this Agreement in any other jurisdiction. If any provision of this Agreement is
so broad as to be unenforceable, the provision shall be interpreted to be only
so broad as is enforceable.
19. Interpretation. When a reference is made in this Agreement to Sections, such
references shall be to a Section to this Agreement unless otherwise indicated.
The words "include," "includes" and "including" when used herein shall be deemed
in each case to be followed by the words "without limitation." Use of any gender
herein to refer to any person shall be deemed to comprehend masculine, feminine,
and neuter unless the context clearly requires otherwise.
20. Mutual Drafting. This Agreement is the joint product of Investors and
Parent, and each provision hereof has been subject to the mutual consultation,
negotiation and agreement of Investors and Parent and their respective legal
counsel and advisers and any rule of construction that a document shall be
interpreted or construed against the drafting party shall not be applicable.
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IN WITNESS WHEREOF, the undersigned have executed this Investor Rights
Agreement as of the date set forth above.
DEVON ENERGY CORPORATION
By: /s/ J. Xxxxx Xxxxxxx
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Name: J. Xxxxx Xxxxxxx
Title: Chairman, President and Chief Executive Officer
THE SHAREHOLDERS
/s/Xxxxxx X. Xxxxxxxx
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Xxxxxx X. Xxxxxxxx
/s/Xxxxxxx Xxxxx Xxxxxxxx
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Xxxxxxx Xxxxx Xxxxxxxx
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