EXHIBIT 10.17
STOCK OWNERSHIP AGREEMENT
THIS STOCK OWNERSHIP AGREEMENT (the "Agreement") is made and entered into
as of December 22, 1995 by and among ▇▇▇▇ ▇▇▇▇▇ ("Saban"), each of the entities
listed on Schedule 1.1(a) hereto (the "SEI Entities" and, with Saban, the "SEI
Stockholders") and FOX KIDS WORLDWIDE, L.L.C., a Delaware limited liability
company (the "Management Company").
R E C I T A L S
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A. Concurrent with the execution of this Agreement, the parties have
entered into that certain Strategic Stockholders Agreement, which agreement is
intended, among other things, to enable the SEI Stockholders and FBC to maximize
the long-term strategic values of their respective corporations. Such
agreement, as the same may be amended from time to time, is referred to herein
as the "Strategic Stockholders Agreement." Terms defined in the Strategic
Stockholders Agreement which are not defined herein shall have the same meanings
when used herein.
B. Under the provisions of Section 6 of the Strategic Stockholders
Agreement, the parties have agreed, on the terms and conditions therein set
forth, to form a Successor Entity (herein, regardless of the form of such
Successor Entity, the "Corporation") in connection with the Initial Public
Offering.
C. The Management Company desires to acquire, and the SEI
Stockholders desire to sell, an option to acquire all of the SEI Option Shares
(as defined below), all on the terms and conditions contained herein.
A G R E E M E N T
- - - - - - - - -
NOW, THEREFORE, in consideration of foregoing premises and of the mutual
covenants and agreements contained in this Agreement, and subject to the terms
and conditions set forth herein, the parties to this Agreement hereby agree as
follows:
1. Call Option.
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1.1 Call Option.
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(a) (i) In consideration for the payment in full to the SEI
Stockholders of the "Call Option Payment," as provided in Section 1.1(a)(ii)
hereof, the SEI Stockholders hereby severally grant to the Management Company
the right and option (the "Call Option") to purchase, upon the occurrence of any
of the "Call Triggering Events" described below, (x) with respect to any Call
Triggering Event which occurs prior to the Initial Public Offering, all, and not
less than all, of the SEI Common Stock owned by the SEI Stockholders or any of
their transferees (other than FBC); and (y) with respect to any Call Triggering
Event which occurs thereafter, all Shares of the Successor Entity which,
pursuant to Section 6(b) of the Strategic Stockholders Agreement, are deemed to
be shares of SEI Common Stock and which are owned by the SEI Stockholders or any
of their transferees (other than FBC and excluding Shares transferred pursuant
to Section 3(a)(i) or 3(a)(ii) of the Strategic Stockholders Agreement); (the
Shares subject to the Call Option are referred to herein as the "SEI Option
Shares").
(ii) Concurrently with the execution and delivery of this Agreement,
the Management Company has paid to the SEI Stockholders an aggregate of SIXTY-
FOUR MILLION FIVE HUNDRED THOUSAND DOLLARS ($64,500,000), in amounts set forth
on Schedule 1.1(a) hereof, by wire transfer of immediately available funds to
the bank accounts designated by the SEI Stockholders on Schedule 1.1(a) hereto
(the "Initial Payment"). The Management Company agrees to pay, without offset,
to the order of the SEI Stockholders, on or prior to June 30, 1996, an aggregate
of an additional FIFTEEN MILLION SIX HUNDRED THOUSAND DOLLARS ($15,600,000) (the
"Additional Payment"), together with interest on the unpaid balance thereof from
February 20, 1996, to the extent that such amount has not been paid in full on
or prior to February 20, 1996, at the rate of 7% per annum; any amounts paid by
the Management Company pursuant to this sentence shall be applied first to any
accrued but unpaid interest, with the balance applied against the unpaid amount
of the Additional Payment. All payments with respect to the Additional Payment
shall be made by wire transfer of immediately available funds to the bank
accounts designated by the SEI Stockholders on Schedule 1.1(a) hereto, and shall
be allocated among the SEI Stockholders pro rata in the same percentages as the
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percentage of the Initial Payment allocated to each SEI Stockholder in Schedule
1.1(a) hereto bears to the total aggregate Initial Payment. The sum of the
Initial Payment, the Additional Payment, and interest, if any, payable thereon
is referred to in this Agreement as the "Call Option Payment."
(b) The "Call Triggering Events," and the time periods for delivery of
election notices with respect thereto, shall be as follows:
(x) death of Saban prior to the 17th anniversary of the date
of this Agreement -- 12 calendar months following death;
(y) upon delivery of written notice by the Management
Company of exercise of the Call Option at any time on or after the
seventh anniversary of the date of this Agreement and on or prior to
the seventeenth anniversary of the date of this Agreement -- notice
may be given at any time during the period; or
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(z) upon receipt by FBC of written notice from Saban of his
election pursuant to Section 7(a)(i) of the Strategic Stockholders
Agreement to cause a Call Triggering Event hereunder -- notice must be
given within 20 business days after receipt of Saban's notice.
The date of the Call Triggering Event to which the exercise of the Call
Option relates shall be the "Effective Date" of the Call Option; provided,
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that the Effective Date of a Call Triggering Event under (z), above, shall
be the Effective Date of the option under Section 7(a) of the Strategic
Stockholders Agreement to which the notice effecting such Call Triggering
Event relates. The failure or decision not to exercise the Call Option
upon the occurrence of any Call Triggering Event shall not affect FBC's
right to exercise the Call Option on any subsequent Call Triggering Event.
(c) The Call Option Payment is payment in consideration for the grant
of the Call Option, and shall not be a credit against, or a deduction from, the
purchase price payable to the SEI Stockholders upon the sale of Shares pursuant
to the exercise of the Call Option.
1.2 Calculation of Purchase Price. The per share purchase price for the
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SEI Option Shares under the Call Option shall be an amount equal to:
(i) if the Effective Date of the Option is prior to the Initial
Public Offering, an amount equal to 50% of the Fair Market Value as of the
Effective Date of SEI and FCNH, including their respective subsidiaries and
other consolidated or owned operations (including the Management Company),
considered as a single entity, multiplied by a fraction, the numerator of which
is the number of SEI Option Shares, and the denominator of which is the sum of
(x) the number of SEI Option Shares, plus the number of shares of SEI Common
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Stock acquired by FBC pursuant to the provisions of Section 4 of the Strategic
Stockholders Agreement, plus 50% of the number of shares of SEI Common Stock
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issued subsequent to the date of this Agreement and on or prior to the Effective
Date pursuant to options granted at any time to officers, directors, consultants
or employees of SEI; or
(ii) if the Effective Date of the Option is on or subsequent to
the Initial Public Offering, an amount equal to the Fair Market Value of the
Successor Entity, divided by the number of shares of common stock of the
Successor Entity then issued and outstanding (and if there is more than one
class of common stock of the Successor Entity, the denominator shall be adjusted
to include on an equitable basis all then outstanding shares of all classes of
common stock);
(iii) minus, in either such case, the amount (but in any event,
no more than 10% of the amount computed pursuant to clause (A) or (B) above,
whichever is applicable) paid or payable
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by SEI with respect to United States federal or state income taxes (including
interest and penalties) for any of its taxable years ending on or prior to May
31, 1995 with respect to undistributed Saban International, N.V. income, divided
by the number of SEI Option Shares;
(iv) plus, in either such case, interest thereon at the "prime"
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or "reference" rate published by ▇▇▇▇▇ Fargo Bank at San Francisco, California,
from time to time from the Effective Date through and including the date of
closing of the purchase and sale of the SEI Option Shares.
1.3 Option Closing. The closing of the purchase and sale of the SEI
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Option Shares pursuant to this Section 1 shall take place at such time and place
as Saban and the Management Company shall mutually agree upon; provided, that
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the date of closing shall be five business days following the later of (i) the
date of final determination of Fair Market Value; and (ii) if the purchase and
sale of such Shares requires the obtaining of any material regulatory approvals
or compliance with any other material laws or regulations, the date upon which
all such approvals shall have been obtained, and such compliance effected;
provided further, however, that if through no fault of the SEI Stockholders,
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the Management Company is unable fully to satisfy all conditions of clause (ii)
within 3 calendar months of the date of final determination of Fair Market
Value, then the Management Company shall on the first business day following the
end of such 3-month period pay and deliver to the holders of the SEI Option
Shares an amount equal to the per share purchase price for such Shares, and the
holders of the SEI Option Shares shall enter into such agreements with respect
to the subsequent voting and transfer of such Shares as the Management Company
shall reasonably request, including the agreement at any time thereafter to
transfer such Shares, without receipt of further consideration, to such Person
or Persons as may be designated by the Management Company. At the closing, each
of the holders of the SEI Option Shares shall deliver to the Management Company
documents of transfer in form and substance reasonably acceptable to the
Management Company and its counsel, necessary to vest in the Management Company
good and marketable title to the SEI Option Shares so sold by the holder
thereof, free and clear of any and all Liens, other than those imposed under or
pursuant to this Agreement, against delivery by the Management Company to such
holder of the purchase price therefor, payable, at the election of Saban, by
either (x) bank cashiers' checks in immediately available funds payable to the
order of the selling holders, or (y) wire transfer of immediately available
funds to an account or accounts designated by Saban.
2. Miscellaneous Provisions.
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(a) In this Agreement, headings are for convenience only and shall not
affect interpretation, and except to the extent that the context otherwise
requires: (a) references to any legislation or to any provision of any
legislation include any modification or re-enactment of, or any legislative
provision substituted for, and all statutory instruments issued under, such
legislation or such provision; (b) words denoting the singular include the
plural and vice versa; (c) words denoting individuals include corporations and
other Persons and vice versa; (d) words denoting any gender include all genders;
(e) references to any document, agreement or other instrument (including this
Agreement) include references to such document, agreement or other instrument as
amended, novated, supplemented or replaced from time to time; (f) references to
clauses, sub-clauses, sections, sub-sections, Schedules and Exhibits are to
clauses, sub-clauses, sections, sub-sections, Schedules and Exhibits of this
Agreement; (g) "or" is not exclusive; (h) "$", and all other references to
dollar amounts, are in U. S. currency; (i) references to any party to this
Agreement or any other document, agreement or other instrument includes its
successors or permitted assigns; and (j) "writing" and cognate expressions
include all means of reproducing words in a tangible and permanently visible
form.
(b) Rights Personal to Saban. Each and every right and obligation
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which refers to "Saban" or the "Management Company" is personal to Saban and the
Management Company and shall not attach to, or be deemed to relate to or concern
the Shares held by Saban; and thus, without the prior written consent of Saban
and the Management Company, other than as provided in the Strategic Stockholders
Agreement, none of such rights or obligations may be assigned, delegated or
transferred to any other Person; provided, however, this Stock Ownership
Agreement may be assigned to FBC; provided, further, that in the event of the
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incompetency or death of Saban, all rights granted to Saban hereunder shall be
exercisable by his conservator, executor or administrator, or by a single Person
from time to time designated by SEI Stockholders then holding a majority of the
then outstanding Shares of SEI Common Stock held by all SEI Stockholders.
(c) Notices. All notices, demands or other communications hereunder
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shall be in writing and shall be deemed to have been duly given (i) if delivered
in person, upon delivery thereof, or (ii) if mailed, certified first class mail,
postage pre-paid, with return receipt requested, on the fifth day after the
mailing, or (iii) if sent by telex or facsimile transmission, with a copy mailed
on the same day in the manner provided in (ii) above, when transmitted and
receipt is confirmed by telephone or telex or facsimile response, or (iv) if
otherwise actually delivered, when delivered:
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(i) If to Saban or any of the Other SEI Stockholders:
▇▇▇▇ ▇▇▇▇▇
Saban Entertainment, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
and with a copy to:
Troop ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. Troop, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(ii) if to the Management Company, the registered agent in
the State of Delaware.
and with a copy to:
Squadron, Ellenoff, Plesent &
▇▇▇▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
or at such other address or addresses as may have been furnished by such Person
in like manner to the other parties.
(d) Severability. Should any Section or any part of a Section within
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this Agreement be rendered void, invalid or unenforceable by any court of law
for any reason, such invalidity or unenforceability shall not void or render
invalid or unenforceable any other Section or part of a Section in this
Agreement.
(e) Governing Law. THE TERMS OF THIS AGREEMENT SHALL BE GOVERNED BY
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AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA APPLICABLE
TO CONTRACTS MADE WITHIN, AND TO BE PERFORMED WITHIN, SUCH STATE, EXCLUDING
CHOICE OF LAW PRINCIPLES OF SUCH STATE THAT WOULD REQUIRE THE APPLICATION OF THE
LAWS OF A JURISDICTION OTHER THAN SUCH STATE.
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(f) No Adverse Construction. The rule that a contract is to be
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construed against the party drafting the contract is hereby waived, and shall
have no applicability in construing this Agreement or the terms of this
Agreement.
(g) Counterparts. This Agreement may be executed in one or more
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counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument. Each counterpart may
consist of a number of copies hereof, each signed by less than all, but together
signed by all, of the parties hereto.
(h) Costs and Attorneys' Fees. In the event that any action, suit, or
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other proceeding is instituted concerning or arising out of this Agreement, the
prevailing party shall recover all of such party's costs, and attorneys' fees
incurred in each and every such action, suit, or other proceeding, including any
and all appeals or petitions therefrom. As used herein, "attorneys' fees" shall
mean the full and actual costs of any legal services actually rendered in
connection with the matters involved, calculated on the basis of the usual fee
charged by the attorneys performing such services, and shall not be limited to
"reasonable attorneys' fees" as defined by any statute or rule of court.
(i) Successors and Assigns. Except as otherwise provided in this
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Agreement, all rights, covenants and agreements of the parties contained in this
Agreement shall be binding upon and inure to the benefit of their respective
successors and permitted assigns. Except as otherwise specifically set forth
herein, nothing in this Agreement, expressed or implied, is intended to confer
on any Person other than the parties to this Agreement or their respective
successors and assigns any rights, remedies, obligations or liabilities under or
by reason of this Agreement.
(j) Amendments and Waivers. Neither this Agreement nor any term
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hereof may be changed, waived, discharged or terminated orally or in writing,
except that any term of this Agreement may be amended and the observance of any
such term may be waived (either generally or in a particular instance and either
retroactively or prospectively) with (but only with) the written consent of
Saban and FBC; provided, however, that no such amendment or waiver shall extend
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to or affect any obligation not expressly waived or impair any right consequent
therein. No delay or omission to exercise any right, power or remedy accruing
to any party hereto shall impair any such right, power or remedy of such party
nor be construed to be a waiver of any such right, power or remedy nor
constitute any course of dealing or performance hereunder.
(k) Entire Agreement. This Agreement, the attached Exhibits and
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Schedules and the Alliance Agreements, and the agreements referred to herein and
therein, together contain the entire understanding of the parties, and there are
no further or other agreements or understandings, written or oral, in effect
between the parties relating to the subject matter hereof unless
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expressly referred to herein. No party to this Agreement makes any
representation or warranty except as expressly set forth herein.
(l) Specific Performance and Other Remedies. The parties hereto
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acknowledge and agree that the Shares (including the SEI Common Stock, the FCNH
Common Stock and the Successor Entity Equity Securities) are unique, and that
the parties will have no adequate remedy at law should any party hereto breach
the provisions of Sections 2 through 8 hereof. In the event of the refusal or
failure of any party hereto fully to comply with any of those provisions, the
other parties, and each of them, shall have the right, in addition to any other
rights and remedies which it or they may have hereunder, to specific
performance, and other appropriate injunctive relief with respect thereto. In
no event shall any party to any such proceeding urge or raise as a defense in
any such action that an adequate remedy at law exists.
(m) Agreement to Perform Required Acts. Each party hereto agrees to
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perform any further acts and to execute and deliver any further documents that
may be reasonably necessary to carry out the provisions hereof, that may be
required to secure performance of any party's duties hereunder or that may be
required to assure the legal and binding effect of the provisions hereof.
(n) Consent to Jurisdiction; Forum Selection. Any actions, suits or
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proceedings instituted in connection with this Agreement or the performance by
the parties of their obligations hereunder shall be instituted and maintained
exclusively in the Superior Court for the State of California, County of Los
Angeles or in the United States District Court for the Central District of
California. By execution and delivery hereof, each party hereto hereby
consents, for itself and in respect of its property, to the jurisdiction of the
aforesaid courts solely for the purpose of adjudicating its rights or
obligations under, or any disputes involving, this Agreement or any document
related hereto. Each party hereto hereby irrevocably waives, to the extent
permitted by applicable law, any objection, including, without limitation, any
objection that the other corporate party or parties lack the capacity to ▇▇▇ or
defend based upon its or their lack of a certificate of qualification to conduct
intrastate business in California, and any objection to the laying of venue or
based on the grounds of forum non conveniens, which it may now or hereafter have
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to the bringing of any action or proceeding in such jurisdiction in respect of
this Agreement or any document related hereto.
(o) Legends. Each of the SEI Stockholders hereby agree that each
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certificate or other writing evidencing any of the SEI Option Shares, shall be
stamped or otherwise imprinted with a legend, either on the face of such
certificate, or on the reverse of such certificate, with reference thereto
appearing on the face of such certificate, in substantially the following form:
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[DESCRIBE THE SHARES] REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO AN
OPTIONS TO PURCHASE UNDER THAT CERTAIN STOCK OWNERSHIP AGREEMENT DATED AS
OF DECEMBER 22, 1995, BY AND AMONG THE RECORD HOLDER OF THE SECURITIES
SUBJECT TO THIS CERTIFICATE AND FOX KIDS WORLDWIDE, L.L.C. A COPY OF THE
STOCK OWNERSHIP AGREEMENT SHALL BE FURNISHED WITHOUT CHARGE BY THE ISSUER
OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE TO THE HOLDER HEREOF UPON
SUCH HOLDER'S WRITTEN REQUEST.
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the date first above written.
FOX KIDS WORLDWIDE, L.L.C.,
a Delaware limited liability company
By: /s/ ▇▇▇▇ ▇▇▇▇▇
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Its:
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IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the date first above written.
/s/ ▇▇▇▇ ▇▇▇▇▇
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▇▇▇▇ ▇▇▇▇▇
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IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the date first above written.
QUARTZ ENTERPRISES, L.P.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
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MERLOT INVESTMENTS
By: /s/ ▇▇▇▇ ▇▇▇▇▇
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SILVERLIGHT ENTERPRISES, L.P.
By: /s/ ▇▇▇ ▇▇▇▇▇
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▇▇▇▇▇ ENTERPRISES, L.P.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
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