Exhibit 10.21

 

AVINGER, INC.

 

CHANGE OF CONTROL AND SEVERANCE AGREEMENT

 

This Change of Control and Severance Agreement (the “Agreement”) is entered into
as of March 29, 2018 (the “Effective Date”) by and between Avinger, Inc. (the
“Company”), and Jeff Soinski (“Executive”).

 

1.             Severance.

 

(a)           Termination for other than Cause, Death or Disability or Good
Reason in the Event of a Change of Control.  If upon or within eighteen (18)
months following a Change of Control (i) the Company (or any parent or
subsidiary or successor of the Company) terminates Executive’s employment with
the Company other than for Cause, death or disability, or (ii) the Executive
resigns from such employment for Good Reason, then, subject to Section 2,
Executive will be entitled to: (A) receive continuing payments of severance pay
at a rate equal to Executive’s base salary and target bonus, as then in effect,
for twelve (12) months from the date of such termination, which will be paid in
accordance with the Company’s regular payroll procedures; (B) if Executive
timely elects continuation coverage pursuant to the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended (“COBRA”) for Executive and Executive’s
dependents, within the time period prescribed pursuant to COBRA, the Company
will reimburse Executive for the COBRA premiums for such coverage for Executive
and his covered dependents for twelve (12) months from the date of Executive’s
termination of employment or such earlier date if Executive no longer
constitutes a “Qualified Beneficiary” (as such term is defined in
Section 4980B(g) of the Code); (C) accelerated vesting as to 100% of Executive’s
outstanding unvested stock options and/or restricted stock; and (D) the
extension of the post-termination exercise period for any options held by
Executive for a period of one (1) year.

 

(b)           Termination for Cause, Death or Disability; Resignation without
Good Reason.  If Executive’s employment with the Company (or any parent or
subsidiary or successor of the Company) terminates voluntarily by Executive
(except upon resignation for Good Reason upon or within eighteen (18) months
following a Change of Control), for Cause by the Company or due to Executive’s
death or disability, then (i) all vesting will terminate immediately with
respect to Executive’s outstanding equity awards, (ii) all payments of
compensation by the Company to Executive hereunder will terminate immediately
(except as to amounts already earned), and (iii) Executive will only be eligible
for severance benefits in accordance with the Company’s established policies, if
any, as then in effect.

 

(c)           Option/Stock Acceleration in the Event of a Change of Control. 
Upon a Change of Control of the Company, Executive will be entitled to
accelerated vesting as to 50% of Executive’s outstanding unvested stock options
and/or restricted stock, provided that any remaining shares shall continue to
vest per the schedules previously implemented by the Company.  For purposes of
clarification, upon a Change of Control, Executive will not be entitled to
receive any additional vesting acceleration pursuant to the terms of Section 5
of the Offer Letter.

 

(d)           Exclusive Remedy.  In the event of a termination of Executive’s
employment with the Company (or any parent or subsidiary or successor of the
Company), the provisions of this

 

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Section 1 are intended to be and are exclusive and in lieu of any other rights
or remedies to which Executive or the Company may otherwise be entitled, whether
at law, tort or contract, in equity, or under this Agreement, provided that
Executive will be eligible to receive the severance benefits set forth in
Section 6 of the Offer Letter pursuant to the terms of the Offer Letter in the
event of Executive’s termination other than for “Cause” (as such term is defined
in the Offer Letter), death or disability either prior to a Change of Control or
more than eighteen (18) months following a Change of Control.  Except as
specified in the preceding sentence, Executive will be entitled to no severance
or other benefits upon termination of employment with respect to acceleration of
award vesting or severance pay other than those benefits expressly set forth in
this Section 1.  For purposes of clarification, Executive will be eligible to
receive severance benefits pursuant to either this Agreement or the terms of the
Offer Letter, but will not be eligible to receive severance benefits under both
this Agreement and the Offer Letter.

 

2.             Conditions to Receipt of Severance; No Duty to Mitigate.

 

(a)           Separation Agreement and Release of Claims.  The receipt of any
severance pursuant to Section 1(a) will be subject to Executive signing and not
revoking a standard separation agreement and release of claims with the Company
(the “Release”) and provided that such Release becomes effective and irrevocable
no later than sixty (60) days following the termination date (such deadline, the
“Release Deadline”).  If the Release does not become effective and irrevocable
by the Release Deadline, Executive will forfeit any rights to severance or
benefits under this Agreement.  In no event will severance payments or benefits
be paid or provided until the Release becomes effective and irrevocable.

 

(b)           Nonsolicitation.  The receipt of any severance benefits pursuant
to Section 1(a) will be subject to Executive not violating the provisions of
Section 4.  In the event Executive breaches the provisions of Section 4, all
continuing payments and benefits to which Executive may otherwise be entitled
pursuant to Section 1(a) will immediately cease.

 

(c)           Section 409A.

 

(i)    Notwithstanding anything to the contrary in this Agreement, no severance
pay or benefits to be paid or provided to Executive, if any, pursuant to this
Agreement that, when considered together with any other severance payments or
separation benefits, are considered deferred compensation under Code
Section 409A, and the final regulations and any guidance promulgated thereunder
(“Section 409A”) (together, the “Deferred Payments”) will be paid or otherwise
provided until Executive has a “separation from service” within the meaning of
Section 409A.  Similarly, no severance payable to Executive, if any, pursuant to
this Agreement that otherwise would be exempt from Section 409A pursuant to
Treasury Regulation Section 1.409A-1(b)(9) will be payable until Executive has a
“separation from service” within the meaning of Section 409A.

 

(ii)   Any severance payments or benefits under this Agreement that would be
considered Deferred Payments will be paid on, or, in the case of installments,
will not commence until, the sixtieth (60th) day following Executive’s
separation from service, or, if later, such time as required by
Section 2(c)(iii).  Any installment payments that would have been made to
Executive during the sixty (60) day period immediately following Executive’s
separation from service but for

 

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the preceding sentence will be paid to Executive on the sixtieth (60th) day
following Executive’s separation from service and the remaining payments shall
be made as provided in this Agreement.

 

(iii)  Notwithstanding anything to the contrary in this Agreement, if Executive
is a “specified employee” within the meaning of Section 409A at the time of
Executive’s termination (other than due to death), then the Deferred Payments
that are payable within the first six (6) months following Executive’s
separation from service, will become payable on the first payroll date that
occurs on or after the date six (6) months and one (1) day following the date of
Executive’s separation from service.  All subsequent Deferred Payments, if any,
will be payable in accordance with the payment schedule applicable to each
payment or benefit.  Notwithstanding anything herein to the contrary, if
Executive dies following Executive’s separation from service, but prior to the
six (6) month anniversary of the separation from service, then any payments
delayed in accordance with this paragraph will be payable in a lump sum as soon
as administratively practicable after the date of Executive’s death and all
other Deferred Payments will be payable in accordance with the payment schedule
applicable to each payment or benefit.  Each payment and benefit payable under
this Agreement is intended to constitute a separate payment for purposes of
Section 1.409A-2(b)(2) of the Treasury Regulations.

 

(iv)  Any amount paid under this Agreement that satisfies the requirements of
the “short-term deferral” rule set forth in Section 1.409A-1(b)(4) of the
Treasury Regulations will not constitute Deferred Payments for purposes of
clause (i) above.

 

(v)   Any amount paid under this Agreement that qualifies as a payment made as a
result of an involuntary separation from service pursuant to
Section 1.409A-1(b)(9)(iii) of the Treasury Regulations that does not exceed the
Section 409A Limit (as defined below) will not constitute Deferred Payments for
purposes of clause (i) above.

 

(vi)  The foregoing provisions are intended to comply with the requirements of
Section 409A so that none of the severance payments and benefits to be provided
hereunder will be subject to the additional tax imposed under Section 409A, and
any ambiguities herein will be interpreted to so comply.  The Company and
Executive agree to work together in good faith to consider amendments to this
Agreement and to take such reasonable actions which are necessary, appropriate
or desirable to avoid imposition of any additional tax or income recognition
prior to actual payment to Executive under Section 409A.

 

(d)           No Duty to Mitigate.  Executive will not be required to mitigate
the amount of any payment contemplated by this Agreement, nor will any earnings
that Executive may receive from any other source reduce any such payment.

 

3.             Definitions.

 

(a)           Cause.  For purposes of this Agreement, “Cause” is defined as
(i) an act of dishonesty made by Executive in connection with Executive’s
responsibilities as an employee, (ii) Executive’s conviction of, or plea of nolo
contendere to, a felony or any crime involving fraud, embezzlement or any other
act of moral turpitude, causing material harm to the standing and reputation of
the Company, in each case as determined in good faith by the board of directors
of the Company (the “Board”); (iii) Executive’s gross misconduct,
(iv) Executive’s unauthorized use or disclosure of

 

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any proprietary information or trade secrets of the Company or any other party
to whom Executive owes an obligation of nondisclosure as a result of Executive’s
relationship with the Company; (v) Executive’s willful breach of any obligations
under any written agreement or covenant with the Company; (vi) Executive’s
continued failure to perform his employment duties after Executive has received
a written demand of performance from the Company which specifically sets forth
the factual basis for the Company’s belief that Executive has not substantially
performed his duties and has failed to cure such non-performance to the
Company’s satisfaction within 10 business days after receiving such notice
provided that such nonperformance has resulted or is likely to result in
substantial and material damage to the Company or its subsidiaries; or
(vii) Executive’s repeated unexplained or unjustified absence from the Company.

 

(b)           Change of Control.  For purposes of this Agreement, “Change of
Control” of the Company is defined as:

 

(i)            any “person” (as such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended) is or becomes the “beneficial
owner” (as defined in Rule 13d-3 under said Act), directly or indirectly, of
securities of the Company representing more than 50% of the total voting power
represented by the Company’s then outstanding voting securities; or

 

(ii)           the date of the consummation of a merger or consolidation of the
Company with any other corporation that has been approved by the stockholders of
the Company, other than a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity or its parent) at least fifty
percent (50%) of the total voting power represented by the voting securities of
the Company or such surviving entity or its parent outstanding immediately after
such merger or consolidation;

 

(iii)          the date of the consummation of the sale or disposition by the
Company of all or substantially all the Company’s assets; or

 

(iv)          the date that a majority of members of the Board is replaced
during any twelve (12) month period by directors whose appointment or election
is not endorsed by a majority of the members of the Board prior to the date of
the appointment or election.  For purposes of this clause (iv), if any person is
considered to be in effective control of the Company, the acquisition of
additional control of the Company by the same person will not be considered a
Change of Control.

 

Notwithstanding the foregoing provisions of this definition, a transaction will
not be deemed a Change of Control unless the transaction qualifies as a “change
in control event” within the meaning of Section 409A.

 

Further, notwithstanding the foregoing provisions of this definition, the
following shall not constitute a Change of Control:

 

(w)  any transfer by Dr. John B. Simpson or affiliated entities (“Simpson”) of
shares held by Simpson;

 

(x)  any bona fide equity financing for capital raising purposes;

 

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(y)  any merger or acquisition done exclusively to effect a change of domicile
of the Company; and

 

(z)  any transfer of assets by the Company to a new company for tax planning
purposes.

 

(c)           Code.  For purposes of this Agreement, “Code” means the Internal
Revenue Code of 1986, as amended.

 

(d)           Good Reason.  For the purposes of this Agreement, “Good Reason”
means Executive’s resignation within ninety (90) days following the expiration
of any Company cure period (discussed below) following the occurrence of one or
more of the following, without Executive’s express written consent: (i) a
material reduction of Executive’s duties, position or responsibilities, or the
removal of Executive from such position and responsibilities, either of which
results in a material diminution of Executive’s authority, duties or
responsibilities, unless Executive is provided with a comparable position (i.e.,
a position of equal or greater organizational level, duties, authority,
compensation and status); provided, however, that a reduction in duties,
position or responsibilities solely by virtue of the Company being acquired and
made part of a larger entity (as, for example, when the Chief Executive Officer
of the Company remains as such following a Change of Control but is not made the
Chief Executive Officer of the acquiring corporation) will not constitute “Good
Reason”; (ii) a material reduction in Executive’s base salary (in other words, a
reduction of more than ten percent (10%) of Executive’s base salary in any one
year); (iii) a material change in the geographic location of Executive’s primary
work facility or location; provided, that a relocation of less than fifty (50)
miles from Executive’s then present location will not be considered a material
change in geographic location; or (iv) a material breach of this Agreement by
the Company.  Executive will not resign for Good Reason without first providing
the Company with written notice of the acts or omissions constituting the
grounds for “Good Reason” within ninety (90) days of the initial existence of
the grounds for “Good Reason” and a reasonable cure period of not less than
thirty (30) days following the date of such notice.

 

(e)           Offer Letter.  For purposes of this Agreement, “Offer Letter”
means the Offer Letter executed December 18, 2014 by and between Executive and
the Company.

 

(f)            Section 409A Limit.  For purposes of this Agreement,
“Section 409A Limit” will mean the lesser of two (2) times: (i) Executive’s
annualized compensation based upon the annual rate of pay paid to Executive
during the Executive’s taxable year preceding the Executive’s taxable year of
his or her termination of employment as determined under Treasury Regulation
Section 1.409A-1(b)(9)(iii)(A)(1) and any Internal Revenue Service guidance
issued with respect thereto; or (ii) the maximum amount that may be taken into
account under a qualified plan pursuant to Section 401(a)(17) of the Internal
Revenue Code for the year in which Executive’s employment is terminated.

 

4.             Non-Solicitation.  Until the date one (1) year after the
termination of Executive’s employment with the Company for any reason, Executive
agrees not, either directly or indirectly, to solicit, induce, attempt to
solicit, recruit, or encourage any employee of the Company (or any parent or
subsidiary of the Company) to leave his or her employment either for Executive
or for any other entity or person.  Executive represents that he (i) is familiar
with the foregoing covenant not to solicit,

 

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and (ii) is fully aware of his obligations hereunder, including, without
limitation, the reasonableness of the length of time, scope and geographic
coverage of these covenants.  This Section 4 supersedes all prior or
contemporaneous agreements whether written or oral as to the subject matter
herein.

 

5.             Assignment.  This Agreement will be binding upon and inure to the
benefit of (a) the heirs, executors and legal representatives of Executive upon
Executive’s death and (b) any successor of the Company.  Any such successor of
the Company will be deemed substituted for the Company under the terms of this
Agreement for all purposes.  For this purpose, “successor” means any person,
firm, corporation or other business entity which at any time, whether by
purchase, merger or otherwise, directly or indirectly acquires all or
substantially all of the assets or business of the Company.  None of the rights
of Executive to receive any form of compensation payable pursuant to this
Agreement may be assigned or transferred except by will or the laws of descent
and distribution.  Any other attempted assignment, transfer, conveyance or other
disposition of Executive’s right to compensation or other benefits will be null
and void.

 

6.             Notices.  All notices, requests, demands and other communications
called for hereunder will be in writing and will be deemed given (i) on the date
of delivery if delivered personally, (ii) one (1) day after being sent by a well
established commercial overnight service, or (iii) four (4) days after being
mailed by registered or certified mail, return receipt requested, prepaid and
addressed to the parties or their successors at the following addresses, or at
such other addresses as the parties may later designate in writing:

 

If to the Company:

 

Avinger, Inc.

Attn: Chief Financial Officer at the time

 

400 Chesapeake Drive

Redwood City, CA 94063

 

If to Executive:

 

at the last residential address known by the Company.

 

7.             Severability.  In the event that any provision hereof becomes or
is declared by a court of competent jurisdiction to be illegal, unenforceable or
void, this Agreement will continue in full force and effect without said
provision.

 

8.             Arbitration.

 

(a)           Arbitration.  In consideration of Executive’s employment with the
Company, its promise to arbitrate all employment-related disputes, and
Executive’s receipt of the compensation, pay raises and other benefits paid to
Executive by the Company, at present and in the future, Executive agrees that
any and all controversies, claims, or disputes with anyone (including the
Company and any employee, officer, director, shareholder or benefit plan of the
Company in their capacity as such or otherwise) arising out of, relating to, or
resulting from Executive’s employment with the Company or termination thereof,
including any breach of this Agreement, will be subject to binding arbitration
under the Arbitration Rules set forth in California Code of Civil Procedure
Section 1280 through

 

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1294.2, including Section 1281.8 (the “Act”), and pursuant to California law. 
The Federal Arbitration Act shall also apply with full force and effect,
notwithstanding the application of procedural rules set forth under the Act.

 

(b)           Dispute Resolution.  Disputes that Executive agrees to arbitrate,
and thereby agrees to waive any right to a trial by jury, include any statutory
claims under local, state, or federal law, including, but not limited to, claims
under Title VII of the Civil Rights Act of 1964, the Americans with Disabilities
Act of 1990, the Age Discrimination in Employment Act of 1967, the Older Workers
Benefit Protection Act, the Sarbanes Oxley Act, the Worker Adjustment and
Retraining Notification Act, the California Fair Employment and Housing Act, the
Family and Medical Leave Act, the California Family Rights Act, the California
Labor Code, claims of harassment, discrimination, and wrongful termination, and
any statutory or common law claims.  Executive further understands that this
Agreement to arbitrate also applies to any disputes that the Company may have
with Executive.

 

(c)           Procedure.  Executive agrees that any arbitration will be
administered by the Judicial Arbitration & Mediation Services, Inc. (“JAMS”),
pursuant to its Employment Arbitration Rules & Procedures (the “JAMS Rules”). 
The arbitrator shall have the power to decide any motions brought by any party
to the arbitration, including motions for summary judgment and/or adjudication,
motions to dismiss and demurrers, and motions for class certification, prior to
any arbitration hearing.  The arbitrator shall have the power to award any
remedies available under applicable law, and the arbitrator shall award
attorneys’ fees and costs to the prevailing party, except as prohibited by law. 
The Company will pay for any administrative or hearing fees charged by the
administrator or JAMS, and all arbitrator’s fees, except that Executive shall
pay any filing fees associated with any arbitration that Executive initiates,
but only so much of the filing fee as Executive would have instead paid had
Executive filed a complaint in a court of law.  Executive agrees that the
arbitrator shall administer and conduct any arbitration in accordance with
California law, including the California Code of Civil Procedure and the
California Evidence Code, and that the arbitrator shall apply substantive and
procedural California law to any dispute or claim, without reference to the
rules of conflict of law.  To the extent that the JAMS Rules conflict with
California law, California law shall take precedence.  The decision of the
arbitrator shall be in writing.  Any arbitration under this Agreement shall be
conducted in Santa Clara County, California.

 

(d)           Remedy.  Except as provided by the Act, arbitration shall be the
sole, exclusive, and final remedy for any dispute between Executive and the
Company.  Accordingly, except as provided by the Act and this Agreement, neither
Executive nor the Company will be permitted to pursue court action regarding
claims that are subject to arbitration.  Notwithstanding, the arbitrator will
not have the authority to disregard or refuse to enforce any lawful Company
policy, and the arbitrator will not order or require the Company to adopt a
policy not otherwise required by law which the Company has not adopted.

 

(e)           Administrative Relief.  Executive is not prohibited from pursuing
an administrative claim with a local, state, or federal administrative body or
government agency that is authorized to enforce or administer laws related to
employment, including, but not limited to, the Department of Fair Employment and
Housing, the Equal Employment Opportunity Commission, the National Labor
Relations Board, or the Workers’ Compensation Board.  However, Executive may not
pursue court action regarding any such claim, except as permitted by law.

 

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(f)            Voluntary Nature of Agreement.  Executive acknowledges and agrees
that Executive is executing this Agreement voluntarily and without any duress or
undue influence by the Company or anyone else.  Executive further acknowledges
and agrees that Executive has carefully read this Agreement and that Executive
has asked any questions needed for Executive to understand the terms,
consequences and binding effect of this Agreement and fully understands it,
including that EXECUTIVE IS WAIVING EXECUTIVE’S RIGHT TO A JURY TRIAL.  Finally,
Executive agrees that Executive has been provided an opportunity to seek the
advice of an attorney of Executive’s choice before signing this Agreement.

 

9.             Integration.  This Agreement and the provisions of the Offer
Letter specified in Section 1(d) of this Agreement that are not otherwise
superseded by this Agreement represent the entire agreement and understanding
between the parties as to the subject matter herein and supersedes all prior or
contemporaneous agreements whether written or oral.  Accordingly, by executing
this Agreement, upon a Change of Control or a termination of employment under
the circumstances described in Section 1(a) of this Agreement, Executive hereby
forfeits and waives any right to severance or change of control benefits set
forth in his Offer Letter.  For purposes of clarification, upon a termination of
Executives employment under circumstances that are not described in
Section 1(a) of this Agreement and subject to the terms of the Offer Letter,
Executive remains eligible to receive the severance benefits set forth in his
Offer Letter. With respect to stock options granted on or after the date of this
Agreement, the acceleration of vesting provisions provided herein will apply to
such stock options except to the extent otherwise explicitly provided in the
applicable stock option agreement.  This Agreement may be modified only by
agreement of the parties by a written instrument executed by the parties that is
designated as an amendment to this Agreement.

 

This Agreement constitutes the entire agreement of the parties hereto and
supersedes in their entirety all prior representations, understandings,
undertakings or agreements (whether oral or written and whether expressed or
implied) of the parties with respect to the subject matter hereof.  Accordingly,
by executing this Agreement and during the Term only, Executive hereby forfeits
and waives any rights to severance or change of control benefits set forth in
any employment agreement, offer letter and/or Equity Award agreement, except as
set forth in this Agreement.  For purposes of clarification, following the Term,
Executive remains eligible to receive severance or change of control benefits
set forth in any employment agreement, offer letter and/or Equity Award
agreement.  No waiver, alteration, or modification of any of the provisions of
this Agreement will be binding unless in writing and signed by duly authorized
representatives of the parties hereto and which specifically mention this
Agreement

 

10.          Waiver of Breach.  The waiver of a breach of any term or provision
of this Agreement, which must be in writing, will not operate as or be construed
to be a waiver of any other previous or subsequent breach of this Agreement. 
Notwithstanding anything to the contrary in this Agreement, the failure of the
Company to obtain the assumption of this Agreement by a successor and/or
acquirer shall be a material breach of this Agreement.

 

11.          Headings.  All captions and section headings used in this Agreement
are for convenient reference only and do not form a part of this Agreement.

 

12.          Tax Withholding.  All payments made pursuant to this Agreement will
be subject to withholding of applicable taxes.

 

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13.          Governing Law.  This Agreement will be governed by the laws of the
State of California (with the exception of its conflict of laws provisions).

 

14.          Acknowledgment.  Executive acknowledges that he has had the
opportunity to discuss this matter with and obtain advice from his private
attorney, has had sufficient time to, and has carefully read and fully
understands all the provisions of this Agreement, and is knowingly and
voluntarily entering into this Agreement.

 

15.          Counterparts.  This Agreement may be executed in counterparts, and
each counterpart will have the same force and effect as an original and will
constitute an effective, binding agreement on the part of each of the
undersigned.

 

[Signature Page Follows]

 

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IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case
of the Company by their duly authorized officers, as of the day and year first
above written.

 

COMPANY:

 

 

 

 

 

AVINGER, INC.

 

 

 

 

 

 

 

By:

/s/ Matthew B. Ferguson

 

Date:

March 29, 2018

 

 

 

 

Title:

Chief Business Officer and Chief Financial Officer

 

 

 

 

 

 

 

 

EXECUTIVE:

 

 

 

 

 

/s/ Jeffrey M. Soinski

 

Date:

March 29, 2018

Jeff Soinski

 

 

 

 

[SIGNATURE PAGE TO AVINGER, INC. CHANGE OF CONTROL AND SEVERANCE AGREEMENT]

 

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