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EXHIBIT 3
STOCKHOLDERS AGREEMENT
STOCKHOLDERS AGREEMENT dated as of November 26, 1997, among SubMicron
Systems Corporation, a Delaware corporation (the "Company"), The KB Mezzanine
Fund II, L.P., a Delaware limited partnership ("KB"), Celerity Silicon, L.L.C.,
a Delaware limited liability company ("Celerity," and together with KB and their
respective successors and assigns, the "Investors"), and the stockholders of the
Company that have executed this Agreement or have otherwise agreed to be bound
by the provisions hereof (the "Management Stockholders" and, together with the
Investors, the "Stockholders").
The parties hereby agree as follows:
SECTION 1. DEFINITIONS. For purposes of this Agreement, the following
terms have the indicated meanings:
"AFFILIATE" means with respect to a Person, any other Person that
directly or indirectly, through one or more intermediaries, controls, or is
controlled by, or is under common control with, such Person. For the purposes of
this definition, "control" (including, with correlative meanings, the terms
"controlled by" and "under common control with"), as used with respect to any
Person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of such Person,
whether through the ownership of voting securities, by agreement or otherwise.
Without limiting the foregoing, all directors and executive officers of a Person
that is a corporation, and all managing members of a Person that is a limited
liability company, shall be deemed Affiliates of such Person for all purposes
hereunder.
"COMMON STOCK" means the Company's Common Stock, par value $0.0001 per
share.
"EQUITY SECURITIES" means the Warrants and the Warrant Stock.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"INDEPENDENT THIRD PARTY" means any person who does not own, and is not
a member of a "group" (as defined in the Exchange Act) that owns, in excess of
10% of the Common Stock on a fully-diluted basis, who is not an Affiliate of any
such 10% owner of Common Stock and who is not the spouse, ancestor or descendant
(by birth or adoption) of any such 10% owner of Common Stock.
"MANAGEMENT STOCKHOLDERS" means the original signatories to this
Agreement, other than the Company and the Investors, and their Permitted
Transferees.
"MANAGEMENT STOCKHOLDER SHARES" means (i) all shares of Common Stock
held or acquired by the Management Stockholders, including all shares of Common
Stock acquired pursuant to exercise of Options and (ii) all shares of Common
Stock or other equity securities issued or issuable directly or indirectly with
respect to the securities referred to in clause (i) by
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way of stock dividend or stock split or in connection with a combination of
shares, recapitalization, merger, consolidation or other reorganization;
provided, however, that for purposes of Section 2(b), (c), (d) and (e) hereof,
shares held by non-employee members of the Company's Board of Directors shall
not be deemed Management Stockholder Shares.
"NOTES" means the Senior Subordinated Notes due February 1, 2002 issued
by the Company to the Investors pursuant to the Purchase Agreement.
"OPTIONS" means options to purchase shares of Common Stock granted
pursuant to the Company's 1991 Amended and Restated Stock Option Plan, Executive
Stock Option Plan, Stock Option Plan for Non-Employee Directors or otherwise.
"PERMITTED TRANSFEREE" means (i) a person who has acquired Management
Stockholder Shares by will or pursuant to the laws of descent and distribution
or a marital property settlement order or (ii) a family trust, family
partnership or other entity created by a Management Stockholder for estate
planning purposes, who or which (in either case (i) or (ii)) has agreed in
writing to be bound by this Agreement as a Management Stockholder hereunder.
"PERSON" means an individual, partnership, association, joint venture,
corporation, trust or unincorporated organization, a government or any
department, agency or political subdivision thereof or other entity.
"PURCHASE AGREEMENT" means the Purchase Agreement dated the date hereof
among the Company and the Investors.
"SALE OF THE COMPANY" means the proposed acquisition (by stock
purchase, merger or otherwise) of all of the outstanding voting securities of
the Company by any person or "group" (as that term is used in Regulation 13D
under the Exchange Act) other than any stockholder of the Company as of the date
hereof and their respective Affiliates.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"VESTED OPTIONS" means Options that are exercisable by the holder
thereof on the date of determination.
"WARRANTS" means warrants to purchase shares of the Company's Common
Stock issued to the Investors pursuant to the Warrant Agreement of even date
herewith between the Company and the Investors, including the Initial Warrants
and the Incremental Warrants.
"WARRANT STOCK" means the Common Stock issued or issuable upon exercise
of the Warrants.
Capitalized terms used but not otherwise defined herein have the meanings given
in the Purchase Agreement.
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SECTION 2. RESTRICTIONS ON TRANSFER.
(a) STOCK LEGEND. The certificates representing Management Stockholder
Shares shall bear the following legend in addition to any other legend required
pursuant to any other agreement:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
RESTRICTIONS ON TRANSFER, VOTING AGREEMENTS AND CERTAIN OTHER
AGREEMENTS SET FORTH IN A STOCKHOLDERS AGREEMENT DATED AS OF NOVEMBER
26, 1997, AMONG SUBMICRON SYSTEMS CORPORATION (THE "COMPANY") AND
CERTAIN STOCKHOLDERS THEREOF, A COPY OF WHICH MAY BE OBTAINED WITHOUT
CHARGE BY THE HOLDER HEREOF AT THE COMPANY'S PRINCIPAL PLACE OF
BUSINESS.
(b) RESTRICTIONS ON TRANSFER. Any purported transfer of Management
Stockholder Shares or any right or interest therein, except in strict compliance
with the terms of this Agreement, shall be null and void, and the Company will
not record any such transfer on its books or treat the purported transferee as
the owner of such shares for any purpose.
(c) THREE-YEAR PROHIBITION ON SALE. At any time prior to the third
anniversary hereof, no Management Stockholder may sell, transfer, pledge or
otherwise dispose of any Management Stockholder Shares, or any right or interest
therein, except to a Permitted Transferee and except that Xxxxx Xxxxxxxx may
sell, transfer, pledge or otherwise dispose of Management Stockholder Shares so
long as he continues to own at least 1,173,000 Management Stockholder Shares
and/or Options at all times prior to the first anniversary hereof, 823,000
Management Stockholder Shares and/or Options at all times prior to the second
anniversary hereof, and 473,000 Management Stockholder Shares and/or Options at
all times prior to the third anniversary hereof. The provisions of the foregoing
sentence shall terminate on any date prior to the third anniversary hereof on
which the Investors (or their Affiliates) cease to own any Warrants or shares of
Warrant Stock. Following such third anniversary, a Management Stockholder may
sell any Management Stockholder Shares (the disposition of which was restricted
by the foregoing sentence) only if: (i) all of the consideration for such sale
is in the form of cash, (ii) the Management Stockholder offers to the Company a
right of first refusal set forth in Section 2(d) and (iii) the Management
Stockholder offers to the Investors the co-sale right set forth in Section 2(e),
provided that the foregoing requirements (ii) and (iii) shall apply only if the
sale price of shares sold (in one transaction or a series of related
transactions) is greater than $100,000, and in no event shall the foregoing
requirements (ii) and (iii) apply to sales made pursuant to a public offering,
in "brokers' transactions" as defined in Rule 144(g) under the Securities Act or
any successor provisions or pursuant to Rule 144(k) or any successor provision.
The provisions of the foregoing sentence and Section 2(d) and 2(e) hereof shall
terminate at such time as the Investors (or their Affiliates) cease to own a
majority of the number of Initial Warrants or shares of Warrant Stock issuable
thereunder.
(d) RIGHT OF FIRST REFUSAL. Not less than 30 days prior to any proposed
sale of Management Stockholder Shares, except as otherwise provided in Section
2(c) above, the
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Management Stockholder shall first give written notice (the "Notice") to the
Company and the Investors specifying (1) the name and address of the proposed
purchaser(s), (2) the number of Management Stockholder Shares proposed to be
sold (the "Offered Shares"), (3) the price for which he or she proposes to sell
the Offered Shares, (4) all other material terms and conditions of the proposed
sale and (5) a copy of the offer document, if any, by which such Offered Shares
are to be sold. Subject to Section 2(e) below, within 15 days of the receipt of
the Notice, the Company, with the consent of the holders of a majority of the
Warrants and Warrant Stock, may elect to purchase any or all of the Offered
Shares at the price and on the terms and conditions set forth in the Notice. The
Company shall exercise the election under this Section 2(d) by delivery of
written notice to the Management Stockholder. Within five days after delivery of
such notice, the Company shall deliver to the Management Stockholder a check,
payable to the Management Stockholder, in the amount of the purchase price of
the Offered Shares to be purchased. The Management Stockholder shall be entitled
to sell any Offered Shares not purchased by the Company, subject to Section 2(e)
below, to the purchaser(s) named in the Notice at the price specified in the
Notice or at a higher price and on the terms and conditions set forth in the
Notice; provided, however, that such sale must be consummated within 75 days
from the date of the Notice, and any proposed sale after such 75 day period may
be made only by again complying with the procedures set forth in this Section
2(d).
(e) CO-SALE RIGHT. Each Investor may elect to participate in the
proposed sale of Management Stockholder Shares (except as otherwise provided in
Section 2(c) above), by delivering to the selling Management Stockholder a
written notice of such election within the 15-day period following delivery of
the Notice. If any Investors elect to participate in such transfer, the
Management Stockholder and each such participating Investor will be entitled to
sell in such proposed transfer, at the same price and on the same terms, a
number of shares of Common Stock equal to the product of (i) the quotient
determined by dividing the fully-diluted percentage of the Company's Common
Stock then held by such Management Stockholder or such participating Investor,
as the case may be, by the aggregate fully-diluted percentage of the Common
Stock then held by such Management Stockholder and all participating Investors,
multiplied by (ii) the number of shares of Common Stock to be sold in such
proposed transfer. For purposes of this Section 2(e), the Management Stockholder
and each participating Investor shall be deemed to hold all shares of Common
Stock then acquirable pursuant to the exercise of Vested Options or Warrants
then held by such Stockholder. The participating Investors shall pay a pro rata
portion of the transaction expenses associated with such transfer that are
payable by the Management Stockholder.
SECTION 3. WAIVER BY MANAGEMENT STOCKHOLDERS. Each Management
Stockholder agrees that the acquisition of Common Stock by the Investors,
pursuant to the exercise of Warrants or otherwise, shall not be deemed a "change
of control" for purposes of any Options, and will not result in the acceleration
of vesting of any such Options. Any such provisions to the contrary in
agreements or plan documents governing outstanding Options are waived by the
Management Stockholders.
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SECTION 4. CORPORATE GOVERNANCE.
(a) BOARD REPRESENTATION. At the Company's next Board of Directors
meeting after the date hereof (currently scheduled for January 20, 1998) (the
"Date of Election"), the Board of Directors of the Company will elect as
directors of the Company of such class as the Company may determine two
individuals (the "Nominees") designated by the Representative (as defined below)
for a minimum term of one year, to the extent consistent with the staggered
board requirements of the Company's Certificate of Incorporation. Unless
otherwise designated by the Representative, the initial Nominees shall be
Xxxxxxx X. Xxxxxxx and Xxxx X. Xxxxxx. Upon the expiration of the term of either
such Nominee, if either a majority of the initial principal amount of the Notes,
or a majority of the number of Initial Warrants or shares of Warrant Stock
issuable thereunder, continues to be owned by KB and/or Celerity (or their
Affiliates) at the expiration of such term, the Company will, at the request of
the Representative, nominate such Nominee, or another nominee designated by the
Representative, for reelection as a director of the Company. The foregoing
obligations of the Company are subject to the Nominees agreeing, prior to
service on the Board, that each such Nominee will resign as a director effective
on the date that neither a majority of the initial principal amount of the
Notes, nor a majority of the number of Initial Warrants or shares of Warrant
Stock issuable thereunder, continues to be owned by KB and/or Celerity (or their
Affiliates).
(b) "REPRESENTATIVE" DEFINED. For purposes of this Section 4, the term
"Representative" shall mean that person designated by the holders of a majority
of the outstanding Warrants and shares of Warrant Stock as the Representative of
the Investors for purposes of this Section 4. If the Representative is an
Affiliate of an Investor and at any time after his designation such Investor
shall no longer hold any Notes or Warrants, the holders of a majority of the
outstanding Warrants and shares of Warrant Stock will designate a new
Representative. If a Representative is not designated as aforesaid, the
Representative shall be the holder of the largest number of outstanding Warrants
and shares of Warrant Stock at the time the Nominees are required to be
designated.
(c) SIZE OF BOARD; COMMITTEES. Subject to Section 4(d) below, so long
as the rights of the Investors under Section 4(a) continue in effect, the
Company shall have a Board of Directors comprised of no more than seven members,
unless the Representative otherwise agrees; provided that the maximum size of
the Board of Directors may be increased without the consent of the
Representative by the number of directors (but not more than two, for a total
number of nine members) which the holders of the Company's 8% Convertible
Subordinated Notes due March 15, 2002 have the contractual right to nominate to
the Board of Directors, for so long as such right remains in effect. One Nominee
shall have the right to serve on all committees of the Board of Directors, other
than a stock option committee constituted for the purpose of making equity
grants to executive officers, to the extent that both Nominees are prohibited by
the rules and regulations under Section 16 of the Exchange Act or Section 162(m)
of the Internal Revenue Code from serving on such committee.
(d) DEFAULT ON NOTES. If at any time, any payment of principal or
interest due under the Notes remains unpaid in whole or in part for a period of
90 days (a "Payment Default"), or the listing of the Common Stock on the Nasdaq
Stock Market is suspended or terminated at any
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time that Notes remain outstanding, and such suspension or termination continues
for a period of 90 days without the Common Stock having been accepted for
listing on the New York or American Stock Exchanges (a "Delisting"), (i) the
number of directors constituting the Board of Directors shall be increased by
the requisite number so that the holders of a majority in outstanding principal
amount of the Notes (the "Majority Noteholders") shall have the ability to elect
a majority of the directors constituting the Board of Directors of the Company,
(ii) the Majority Noteholders shall appoint directors to fill such newly created
directorships (the "Majority Nominees"), and (iii) the Board of Directors of the
Company will elect as directors the Majority Nominees; provided, that if at the
time of such appointment the rules of any national securities exchange on which
the Common Stock is listed or authorized for quotation so require, the election
of the Majority Nominees will be subject to a vote of the Company's stockholders
in accordance with the Company's Certificate of Incorporation and bylaws;
provided, further, that, in each instance that the Majority Noteholders are
entitled to appoint directors pursuant to this Section 4(d), such rights of
appointment shall continue until such time as all Payment Defaults have been
cured or the Common Stock has been re-listed on the Nasdaq Stock Market or the
New York or American Stock Exchanges, at which time such rights of appointment
will terminate, the directors elected pursuant to this Section 4(d) shall
resign, and the number of directors constituting the Board of Directors shall
revert to the number prior to such appointment (subject to the rights of the
Majority Noteholders to again exercise their rights under this Section 4(d), if
applicable, at any later date).
(e) STOCKHOLDER VOTE. Each Stockholder agrees to vote all securities of
the Company over which such Stockholder has voting control and to take all other
necessary or desirable actions within its control (whether as a stockholder,
director or officer of the Company or otherwise, and including without
limitation attendance at meetings in person or by proxy for purposes of
obtaining a quorum and execution of written consents in lieu of meetings), and
the Company shall take all necessary and desirable actions within its control
(including, without limitation, calling special board and stockholder meetings),
to give effect to the foregoing provisions of this Section 4, including without
limitation by voting for the removal of members of the Board of Directors
(subject to the Company's other contractual requirements) in order to create
vacancies for Nominees or Majority Nominees as contemplated above, by voting for
any charter amendment necessary to increase the size of the Board, and by voting
for the election or re-election, as applicable, of the Nominees or Majority
Nominees. In addition, if at any time while the Majority Nominees are entitled
to serve on the Board of Directors as provided in Section 4(d), the stockholders
are entitled to vote upon a sale, restructuring or refinancing transaction
approved by the Board of Directors, each Stockholder agrees to vote for such
transaction.
(f) RESIGNATION, REMOVAL OR DEATH. In the event that any Nominee or
Majority Nominee for any reason ceases to serve as a member of the Board of
Directors during his term of office, the resulting vacancy on the Board of
Directors shall be filled by a designee of the Representative or the Majority
Noteholders as provided in Sections 4(a) or (d) above, as the case may be.
(g) OTHER. All persons designated as Nominees or Majority Nominees
hereunder shall be reasonably acceptable to the Company, provided that all
principals of KB (or its
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investment advisor Equinox Investment Partners, L.L.C.) and Celerity shall be
deemed acceptable to the Company. To the extent that any provision of the
Company's Certificate of Incorporation or By-laws is inconsistent with the
provisions of this Agreement, the Stockholders agree to use reasonable efforts
to take all actions necessary to effect such amendments to the Certificate of
Incorporation or By-laws as may be necessary and appropriate to give full effect
to the provisions of this Agreement.
SECTION 5. AMENDMENT AND WAIVER. Except as otherwise provided herein,
no amendment or waiver of any provision of this Agreement shall be effective
against the Company or any Stockholder unless such amendment or waiver is
approved in writing by the Company or such Stockholder, as the case may be;
provided that KB and Celerity, acting together (or, if KB and Celerity together
do not continue to own a majority of the Warrants and shares of Warrant Stock
that have not been distributed pursuant to a registration statement or Rule 144,
the holder or holders of a majority of the Warrants and such Warrant Stock) may
waive any provision contained in Section 2 hereof. The failure of any party to
enforce any provision of this Agreement shall not be construed as a waiver of
such provision and shall not affect the right of such party thereafter to
enforce each provision of this Agreement in accordance with its terms.
SECTION 6. SEVERABILITY. If any provision of this Agreement is held to
be invalid, illegal or unenforceable in any respect under any applicable law or
rule in any jurisdiction, such invalidity, illegality or unenforceability shall
not affect any other provision or any other jurisdiction, but this Agreement
shall be reformed, construed and enforced in such jurisdiction as if such
invalid, illegal or unenforceable provision had never been contained herein.
SECTION 7. ENTIRE AGREEMENT. Except as otherwise expressly set forth
herein, this Agreement embodies the complete agreement and understanding among
the parties hereto with respect to the subject matter hereof and supersedes and
preempts any prior understandings, agreements or representations by or among the
parties, written or oral, which may have related to the subject matter hereof in
any way.
SECTION 8. SUCCESSORS AND ASSIGNS. This Agreement shall bind and inure
to the benefit of and be enforceable by the Company and the Stockholders and
their respective successors and permitted assigns.
SECTION 9. COUNTERPARTS. This Agreement may be executed in separate
counterparts each of which shall be an original and all of which taken together
shall constitute one and the same agreement.
SECTION 10. REMEDIES. The Company, the Investor and the Management
Stockholders shall be entitled to enforce their rights under this Agreement
specifically to recover damages by reason of any breach of any provision of this
Agreement and to exercise all other rights existing in their favor. The parties
hereto agree and acknowledge that money damages may not be an adequate remedy
for any breach of the provisions of this Agreement and that the Company, the
Investor or any Management Stockholder may in its sole discretion apply to any
court of law or equity of competent jurisdiction for specific performance and/or
injunctive relief (without
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posting a bond or other security) in order to enforce or prevent any violation
of the provisions of this Agreement.
SECTION 11. NOTICES. Any notice provided for in this Agreement shall be
in writing and shall be either personally delivered, or mailed first class mail
(postage prepaid) or sent by reputable overnight courier service (charges paid)
to the Company or the Investor at their respective addresses set forth below and
to any other Stockholder subject to this Agreement at such address as indicated
by the Company's records, or at such address or to the attention of such other
person as the recipient party has specified by prior written notice to the
sending party. Notices will be deemed to have been given hereunder when
delivered personally, three days after deposit in the U.S. mail and one day
after deposit with a reputable overnight courier service.
The Company's address is:
SubMicron Systems Corporation
0000 Xxxxxxxxx Xxxxx, Xx. 000
Xxxxxxxxx, XX 00000
Attention: Chief Executive Officer
The Investors' addresses are:
The KB Mezzanine Fund II, L.P.
c/o Equinox Investment Partners, L.L.C.
000 Xxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxx
and
Celerity Silicon, L.L.C.
00000 Xxxxx Xxxxxx Xxxx.
Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxx
SECTION 12. GOVERNING LAW. All other questions concerning the
construction, validity and interpretation of this Agreement shall be governed by
the internal law, and not the law of conflicts, of Delaware.
SECTION 13. TERMINATION; SURVIVAL. The provisions of this Agreement
shall terminate in accordance with the applicable termination provisions
expressly set forth in any Section hereof. This Agreement shall terminate in its
entirety on the tenth anniversary of the date hereof.
[Signature Page to Follow]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
COMPANY:
SUBMICRON SYSTEMS CORPORATION
By: /s/ Xxxx X. Xxxxx
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Name: Xxxx X. Xxxxx
Title: Vice President Finance and CFO
INVESTORS:
THE KB MEZZANINE FUND II, L.P.
By: EIP Capital Partners, L.P.,
its General Partner
By: Equinox Investment Partners, L.L.C.,
its General Partner
By: /s/ Xxxxxxx X. Xxxxxxx
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Name: Xxxxxxx X. Xxxxxxx
Title: Managing Member
CELERITY SILICON, L.L.C.
By: /s/ Xxxx X. Xxxxxx
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Name: Xxxx X. Xxxxxx
Title: Partner
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MANAGEMENT STOCKHOLDERS:
/s/ Xxxxx Xxxxxx
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Xxxxx Xxxxxx
/s/ Xxxxxxx Xxxxxxxx
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Xxxxxxx Xxxxxxxx
/s/ Xxxxx Xxxxxxx
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Xxxxx Xxxxxxx
/s/ Xxxxxx Xxxxx
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Xxxxxx Xxxxx
/s/ Xxxxx Xxxxxx
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Xxxxx Xxxxxx
/s/ Xxxx Xxxxx
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Xxxx Xxxxx
/s/ Xxxxxxx Xxxxx
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Xxxxxxx Xxxxx
/s/ Xxxxxxx Xxxxxxxxx
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Xxxxxxx Xxxxxxxxx
/s/ Xxxxx Xxxxxxxx
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Xxxxx Xxxxxxxx
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