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Exhibit 10.78

SETTLEMENT AGREEMENT AND MUTUAL GENERAL RELEASE

    THIS SETTLEMENT AGREEMENT AND MUTUAL RELEASE (the "Agreement") is entered
into by and between NULAID FOODS, INC., VALLEY FRESH FOODS, INC., and NULAID
NEST-BEST, on the one hand, and NORTH CAROLINA STATE UNIVERSITY ("NCSU") and
MICHAEL FOODS, INC. ("Michael Foods"), on the other hand. The "Effective Date"
of this Agreement shall be the date by which the last party executes the
agreement and the Pre-Settlement Royalties are paid.

RECITALS

    A.  NCSU is the holder, and Michael Foods is the exclusive licensee, of U.S.
Patents Nos. 4,808,425 (the "425 Patent"), 4,957,759 (the "759 Patent"),
4,994,291 (the "291 Patent"), 5,019,408 (the "408 Patent"), and reissue
application, U.S. Serial No. 08/061,985 ("Reissue Application") and the
associated re-examination certificates (collectively the "Patents-In-Suit"),
which patents relate to the manufacture of extended shelf life liquid whole egg
product (as disclosed in the "425 patent at column 8 lines 45-68) (the
"Product").

    B.  On August 12, 1993, Nulaid Foods, Inc. filed a declaratory relief action
in the United States District Court, Eastern District of California, Civil
Action No. CIV-S-93-1314 WBS (PAN), seeking a judgment that the Patents-In-Suit
are invalid, unenforceable and not infringed by Nulaid Foods, Inc. NCSU and
Michael Foods answered Nulaid Foods, Inc.'s complaint denying the allegations,
asserting various affirmative defenses, and asserting a counterclaim against
Nulaid Foods, Inc. for damages and injunctive relief alleging that Nulaid
Foods, Inc. infringed the Patents-In-Suit.

    C.  On August 13, 1993, Michael Foods and NCSU filed an action for damages
and injunctive relief against Nulaid Foods, Inc. alleging that Nulaid
Foods, Inc. infringed the four Patents-In-Suit. Nulaid Foods, Inc. answered
Michael Foods' and NCSU's complaint denying the allegations, asserting various
affirmative defenses, and asserting a counterclaim for declaratory judgment that
the Patents-In-Suit are invalid, unenforceable and not infringed by Nulaid
Foods, Inc.

    D.  The two actions were consolidated under Case No. CIV-S-93-1314 WBS (PAN)
(the "Pending Litigation").

    E.  On or about July 1, 1994, the pleadings were amended to add Valley Fresh
Foods and Nulaid Nest-Best as plaintiffs and cross-defendants.

    F.  Nulaid Nest-Best, a general partnership between Nulaid Foods, Inc and
Valley Fresh Foods, Inc. was formed on or about February 27, 1994. Nulaid
Nest-Best sold 1,727,144 pounds of the Product. Nulaid Nest-Best ceased doing
business, wound-up and dissolved on or about July 31, 1994.

    G.  The parties to this Agreement wish to reach full and final settlement of
the disputes noted above.

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AGREEMENT

    In consideration of the mutual covenants and promises set forth below, and
for good and fair consideration, receipt of which is hereby acknowledged, the
parties agree and stipulate as follows:

    1.  Warranties and Disclosures

    a.  NCSU Warranty.

    NCSU represents and warrants that it is the owner of the right, title and
interest in the Patents-In-Suit and is authorized to enter into this Agreement
and has the right to grant the rights granted herein.

    b.  Michael Foods Warranty.

    Michael Foods represents and warrants that it is the holder of an exclusive
license to use the Patents-In-Suit and is authorized to enter into this
Agreement and has the right to grant the rights granted herein.

    c.  Disclosure by Nulaid.

    In connection with the disclosure requirements as set forth below, the
parties agree that the protective order in the Pending Litigation shall remain
in full force and effect during the term of this Agreement. Nulaid Foods, Inc.
shall mark all material produced with the appropriate level of confidentiality
identifying any claimed trade secret information as such on the face of the
material.

      i. Within five days of the execution of this Agreement, Nulaid Foods, Inc.
and Valley Fresh Foods shall disclose to counsel for Michael Foods and NCSU in
the Pending Litigation, on an attorneys' eyes only basis subject to the
protective order in the Pending Litigation, their current and contemplated
processes for pasteurizing and packaging liquid whole egg products with a shelf
life in excess of four weeks.

     ii. Within five days of the execution of this Agreement, Nulaid Foods, Inc.
and Valley Fresh Foods shall disclose to counsel for Michael Foods and NCSU in
the Pending Litigation, on an attorneys' eyes only basis subject to the
protective order in the Pending Litigation, any and all of their pending patent
applications or applications to the United States Department of Agriculture
("USDA") for pasteurizing and packaging liquid whole egg products with a shelf
life in excess of four weeks.

     iii. Nulaid Foods, Inc. shall promptly disclose in writing to counsel for
Michael Foods and NCSU in the Pending Litigation, on an attorneys' eyes only
basis subject to the protective order in the Pending Litigation, any changes in
the process or equipment used by Nulaid Foods, Inc. to pasteurize or package
liquid whole egg products with a USDA approved or requested shelf life in excess
of four weeks made at anytime after the date hereof and before expiration of the
last of the Patents-in-Suit. Nulaid Foods, Inc. shall also promptly disclose, on
an attorneys' eyes only basis subject to the protective order in the Pending
Litigation, any additional procedures, processes or equipment used to pasteurize
or package liquid whole egg product with USDA approved shelf life in excess of
four weeks made at anytime after the date hereof and before expiration of the
last of the Patents-in-Suit. The written disclosure shall be made within 30 days
of implementation of the change and/or addition.

    2.  Non-exclusive Sublicense.

    a.  Michael Foods grants to Nulaid Foods, Inc. on the Effective Date a
non-exclusive sublicense to make, use and sell, ***. Nulaid Foods, Inc. will not
be precluded from having Michael Foods co-pack the Product. The sublicense
granted herein does not extend to the manufacture of Product ***.

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*** Redacted text.

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    b.  This non-exclusive sublicense shall apply to all production, use and
sale by Nulaid Foods, Inc. of Product prior to and through the term of this
Agreement.

    c.  After current inventories of containers of the Product are used up or
within 120 days of the Effective Date, whichever is sooner, Nulaid Foods, Inc.
shall mark all containers in the manner prescribed below.

    The marking shall include the following in easily legible type: "Covered by
one or more of the following U.S. Patents 4,808,425; 4,957,759; 4,994,291;
5,019,408." Should a subsequent patent issue from the Reissue Application,
Nulaid Foods, Inc. shall include that patent number in its patent marking within
120 days of notification of issue

    d.  This non-exclusive sublicense granted to Nulaid Foods, Inc. is
non-assignable, even with a sale of Nulaid Foods, Inc.'s business or assets.
Nulaid Foods, Inc. may not directly or indirectly assign, license, sublicense,
or otherwise convey this non-exclusive sublicense nor any of the rights or
licenses granted herein to any third party without the prior written consent of
Michael Foods. A direct or indirect change of new membership or new ownership of
greater than 35% of the equity interests of Nulaid Foods, Inc. (a "Material
Change of Membership ") pursuant to a transaction or series of transactions
regarding the same Person shall be deemed an assignment. In the event of a
Material Change of Membership of Nulaid Foods, Inc. in respect to a Person who
is not engaged in, or subject to the control of a Person engaged in, the
manufacture or sale of extended shelf life liquid whole egg product prior to the
proposed assignment, the written consent of Michael Foods shall not be
unreasonably withheld and a determination in respect thereto shall be made and
communicated within 5 business days of receiving complete information concerning
the proposed assignee. This agreement does not restrict changes of ownership of
a member of Nulaid Foods, Inc. and such a change shall not constitute an
assignment unless the new owner of a Nulaid Foods, Inc. member is engaged or is
controlled by a Person who is engaged in the manufacture or sale of extended
shelf life liquid whole egg product. ***.

    3.  Royalty and Reports.

    a.  For the sales or Transfers, less returns, ("Transfer, Transferred or
Transfers" for this agreement means exchange of Product for non-monetary
consideration) of Product prior to January 1, 2000 by Nulaid Foods, Inc., and/or
Nulaid Nest-Best, Nulaid Foods, Inc. agrees to pay an amount equal to *** for
all sales or Transfers, less returns, of Product that occurred prior to 1/1/00
(Pre-Settlement Royalties). The number of pounds sold, less returns, on which
Pre-Settlement Royalties are due shall be certified in writing marked
appropriately on the face of the document as to confidentiality pursuant to the
protective order, including designation as a trade secret if appropriate, and
delivered to Michael Foods' and NCSU's counsel prior to the Effective Date.
Nulaid Foods, Inc. shall pay Michael Foods the Pre-Settlement Royalties in one
lump-sum payment on the Effective Date of this Agreement.

    The Pre-Settlement Royalties shall not be adjusted, forgiven or returnable
if the Patents-in-Suit, or any of them, are subsequently found invalid,
unenforceable or not infringed.

    b.  For the sale or Transfer, of all Product on or after January 1, 2000,
until the expiration of the last of the Patents-In-Suit, Nulaid Foods, Inc., on
behalf of itself, its brokers, distributors and customers, shall pay a royalty
on the number of pounds sold or Transferred, less returns, at the rate of ***:

    ***

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*** Redacted text.

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Said royalties under this Paragraph 3(b) of this Agreement (Paragraph 3(b)
Royalties) shall be due and payable with respect to all sales or Transfers of
the Product using Nulaid Foods, Inc.'s current process or any process or product
covered by any claim or claims of the Patents-in-Suit. Nulaid Foods, Inc. agrees
and acknowledges that its future manufacture, sale or Transfer of extended shelf
life liquid whole egg products is covered by one or more of the Patents-in-Suit.

    c.  Paragraph 3(b) Royalties shall be paid solely to Michael Foods, payable
on the last day of April, July, October and January for the preceding quarter.
Nonpayment of any such royalty within the 30 day cure period as provided in
paragraph 6 below shall constitute breach of this Agreement. Regardless of
whether any royalties are due, Nulaid Foods, Inc. shall report on the last day
of April, July, October, and January the amount of Product sold or Transferred
in the prior quarter by both pounds and by net sales. Net Sales is defined as
Nulaid Foods Inc.'s billings for the Product less: discounts; sales and/or use
taxes; tariff duties or taxes directly imposed on sales of the product; prepaid
outbound transportation; and returns. On the effective date of this agreement,
Nulaid Foods, Inc. shall tender the royalty report and check under this section
for 1/1/2000-6/30/2000.

    d.  With respect to the Paragraph 3(b) Royalties, Nulaid Foods, Inc. shall
provide to Michael Foods a certified public accountant's verified audit of each
year's production within six months following the close of the year. Shortages
shall be paid with the provision of the CPA's verified audit. Overages shall be
posted to the current year. All information contained in such verified audit
shall be kept confidential by Michael Foods and shall not be disclosed to anyone
outside Michael Foods.

    4.  Audit.

    a.  At Michael Foods' sole cost and expense, and upon reasonable notice,
Nulaid Foods, Inc. agrees to allow an independent, certified public accountant
selected by Michael Foods to audit Nulaid Foods, Inc.'s books and records,
during Nulaid Foods, Inc.'s normal business hours, to ascertain compliance with
Nulaid Foods, Inc.'s reporting and royalty payment obligations under this
Agreement, provided, however, that said certified public accountant shall first
agree in writing (1) to retain Nulaid Foods, Inc.'s confidential customer
information in confidence and not disclose it to Michael Foods or any other
party and (2) to retain all other information in confidence and not disclose it
to any party other than Michael Foods. All information reviewed during, and all
reports based on the audit shall be kept confidential by Michael Foods and shall
not be disclosed to anyone outside Michael Foods. Michael Foods will only audit
for the time periods covered by or previous to the last verified audit provided
by Nulaid Foods, Inc. pursuant to paragraph 3(d).

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    b.  Although allowed to audit, Michael Foods is not required to audit and
may rely upon figures and reports submitted on behalf of Nulaid Foods, Inc.
Nulaid Foods, Inc. will report in good faith. Should an audit disclose that
Nulaid has underreported annual amounts due by more than 10% or $10,000 of
royalties due, Nulaid Foods, Inc. shall reimburse Michael Foods for the
reasonable costs of the audit. If Michael Foods elects to use an accounting firm
not located in Northern California, Nulaid Foods, Inc. shall not be required to
pay the travel related expenses incurred by that firm.

    5.  Adjustment of Royalties.  Royalties shall not be adjusted based on any
future license or settlement absent written consent of each of Nulaid
Foods, Inc., Michael Foods and NCSU.

    6.  Termination of Sublicense.  The sublicense terminates automatically on
the filing of bankruptcy by Nulaid Foods, Inc. or upon the assignment of the
license or any rights under it to the benefit of creditors or any pledge or
hypothecation of the license. Michael Foods shall have the right to terminate
the sublicense granted by this Agreement by giving written notice upon the
failure of Nulaid Foods, Inc. to make any payment required under this agreement
when due, provided that Michael Foods shall first have given written notice of
said failure to Nulaid Foods, Inc. and Nulaid Foods, Inc. shall have failed to
cure the non-payment within thirty (30) days of receipt of said notice. In order
to preserve its right to contest whether a disputed payment is due, Nulaid
Foods, Inc. shall have the right to cure any default in payment by paying
Michael Foods under protest.

    7.  Cooperation.  Nulaid Foods, Inc. and Valley Fresh Foods will not aid
third parties in subsequent suits or proceedings where those third parties are
trying to prove the Patents-in-Suit, or any of them, are invalid, unenforceable
or not infringed, except in accordance with service of process or court order
and after notification to Michael Foods and NCSU.

    8.  Agreement To Have Preclusive Effect.  Nulaid Foods, Inc. and Valley
Fresh Foods will not contest the validity or enforceability of any claim or
claims of the Patents-in-Suit in any subsequent suit or proceeding. Nulaid
Foods, Inc. and Valley Fresh Foods will not contest their infringement of the
claims of the Patents-in-Suit by its current and previous methods in any
subsequent suits or proceedings. The parties intend this resolution of validity,
enforceability, and infringement to be res judicata between the parties and to
have preclusive effect so any party is foreclosed from challenging validity,
enforceability, and/or infringement in a subsequent suit under the doctrine of
collateral estoppel.

    9.  Michael Foods' General Release.  In consideration of the promises and
covenants set forth in this Agreement, Michael Foods hereby fully releases and
forever discharges Nulaid Foods, Inc., Valley Fresh Foods, Nulaid Nest-Best,
their successors, assigns, officers, and directors, from any and all
liabilities, claims, demands, contracts, debts, obligations, arbitrations,
actions, or causes of action, known or unknown, in law or equity, asserted or
unasserted, arising out of, or in any way connected with, or related to the
claims alleged in the Pending Litigation, including but not limited to any claim
of liability for any alleged past infringement of the Patents-in-Suit.

    10.  NCSU's General Release.  In consideration of the promises and covenants
set forth in this Agreement, NCSU hereby fully releases and forever discharges
Nulaid Foods, Inc., Valley Fresh Foods, Nulaid Nest-Best, their successors,
assigns, officers, and directors, from any and all liabilities, claims, demands,
contracts, debts, obligations, arbitrations, actions, or causes of action, known
or unknown, in law or equity, asserted or unasserted, arising out of, or in any
way connected with, or related to the claims alleged in the Pending Litigation,
including but not limited to any claim of liability for any alleged past
infringement of the Patents-in-Suit.

    11.  Nulaid Foods, Inc.'s General Release.  In consideration of the promises
and covenants set forth in this Agreement, Nulaid Foods, Inc. hereby fully
releases and forever discharges Michael Foods, NCSU, their affiliates,
successors, assigns, officers, and directors from any and all liabilities,
claims,

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demands, contracts, debts, obligations, arbitrations, actions, or causes of
action, known or unknown, in law or equity, asserted or unasserted, arising out
of, or in any way connected with, or related to the claims alleged in the
Pending Litigation, including but not limited to any claims for declaratory
relief regarding the validity, infringement, or enforceability of the
Patents-in-Suit.

    12.  Valley Fresh Foods' General Release.  In consideration of the promises
and covenants set forth in this Agreement, Valley Fresh Foods hereby fully
releases and forever discharges Michael Foods, NCSU, their affiliates,
successors, assigns, officers, and directors from any and all liabilities,
claims, demands, contracts, debts, obligations, arbitrations, actions, or causes
of action, known or unknown, in law or equity, asserted or unasserted, arising
out of, or in any way connected with, or related to the claims alleged in the
Pending Litigation, including but not limited to any claims for declaratory
relief regarding the validity, infringement, or enforceability of the
Patents-in-Suit.

    13.  Consent Judgment and Dismissal of the Pending Litigation.  With the
execution of this Agreement, Nulaid Foods, Inc., Valley Fresh Foods, and a
representative for the now defunct entity Nulaid Nest-Best shall execute the
Consent Judgement and Injunction in the form of Attachment A and deliver it to
counsel for Michael Foods and NCSU in the Pending Litigation upon receipt of the
Agreement executed by Michael Foods and NCSU. Within two (2) business days of
the execution of the consent judgment, Michael Foods and/or NCSU shall file the
executed Consent Judgment and Injunction with the Court for entry.

    14.  No Other Pending Claims.  The parties hereto hereby represent and
warrant that they have not filed or served any claim, demand, suit or legal
proceeding against any other party hereto which is now pending, other than the
Pending Litigation.

    15.  No Prior Assignments.  The parties hereto represent and warrant that
they have not heretofore assigned or transferred, or purported to assign or
transfer, to any other person, entity, firm or corporation whatsoever, any
claim, debt, liability, demand, obligation, expense, action or cause of action
herein released.

    16.  Confidentiality.  The parties shall have the right to disclose the
existence of this Agreement; however, the parties, including their counsel and
employees, shall keep the specific terms of this Agreement confidential and
shall not now or hereafter divulge these terms to any third party except
(a) with the prior written consent of the other parties; or (b) to any
governmental body having jurisdiction to call therefor; or (c) in confidence to
their legal counsel, accountants, banks and financing sources and their advisors
solely in connection with complying with financial transactions; or (d) as
otherwise may be required by law or legal process, including to legal and
financial advisors in their capacity of advising a party in such matters, except
that if disclosure is sought in any legal proceeding, it shall be pursuant to a
court-endorsed protective order.

    17.  Advice of Counsel.  The parties hereto have made such investigation of
the facts pertaining to the settlement and this Agreement, and all matters
pertaining thereto, as they deem necessary. The parties represent that: (1) they
are represented by the attorneys of their choice; (2) prior to the execution of
this Agreement each party's attorney reviewed this Agreement, made all desired
changes, and approved this Agreement as to substance and form; (3) the terms of
this Agreement and its consequences (including risks, complications, and costs)
have been fully explained to them by their attorneys; (4) they fully understand
the terms and consequences of this Agreement; (5) they are not relying upon any
representation or statement made by any other party hereto, or by such other
party's employees, agents, representatives or attorneys regarding this Agreement
or its preparation except to the extent such representations are expressly and
explicitly incorporated herein; (6) they are not relying upon a legal duty, if
one exists, on the part of any other party, or upon the part of such other
party's employees, agents, representatives or attorneys, to disclose any
information in connection with the execution of this Agreement or its
preparation; and (7) they have freely signed this Agreement. It is

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expressly understood that no party shall ever assert any failure to disclose
information by any other party as a ground for challenging this Agreement.

    18.  Construction.  The language used in this Agreement shall be deemed to
be the language chosen by the parties to express their mutual intent, and no
rule of strict construction shall be applied against any party.

    19.  Captions.  The parties acknowledge, agree and understand that the
captions of the various portions of this Agreement are for convenience and
organization only, are not intended to constitute the substance of this
Agreement, and are not intended to be referred to in construing or interpreting
any provision contained in this Agreement.

    20.  Terms.  The terms of this Agreement are contractual in nature and not a
mere recital.

    21.  Authority.  Each signer of this Agreement hereby represents and
covenants that he or she is authorized to execute this Agreement on behalf of
the party for which he or she is signing and that all necessary approvals have
been obtained.

    22.  Successors Bound.  

    This Settlement Agreement is binding upon and inures to the benefit of
Michael Foods and NCSU, as well as their successors, assigns, officers,
directors, agents, servants, employees, and representatives.

    23.  Severability.  If any provision of this Agreement is found to be
unenforceable in any respect, such unenforceability shall not affect any other
provision of this Agreement, and this Agreement shall be construed as if the
unenforceable provision had not been contained herein.

    24.  Integrated Agreement.  This Agreement supersedes all prior agreements,
if any, whether oral or written, pertaining to all or any portion of its
provisions. This Agreement may not be changed, modified, altered, interlineated,
or supplemented, nor may any covenant, representation, warranty, or other
provision be waived, except by agreement in writing signed by the party against
whom enforcement of the change, modification, alteration, interlineation,
supplementation or waiver is charged.

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    25.  Notices.  All notices required under this Agreement must be in writing,
and may be given either personally or by registered or certified (return receipt
requested) mail as follows:

For Nulaid:   Chief Executive Officer
Nulaid Foods, Inc.
200 W. Fifth St.
Ripon, CA 95366 For Valley Fresh Foods:   Chief Executive Officer
Valley Fresh Foods, Inc.
P.O. Box 910
Turlock, CA 95381 For Michael Foods:   Chief Executive Officer
Michael Foods, Inc.
324 Park National Bank Bldg.
5353 Wayzata Blvd.
Minneapolis, MN 55416 For NCSU:   Associate Vice Chancellor for Technology
Transfer
North Carolina State University
Box 7003
Raleigh, North Carolina 27695-7003     With copy to:
Office of Legal Affairs
North Carolina State University
Box 7008
Raleigh, North Carolina 27695-7008

    26.  Choice of Law and Forum Selection.  This Agreement shall be governed by
and interpreted pursuant to North Carolina law. The parties hereto submit to
venue and personal jurisdiction in North Carolina for any enforcement action
under this Agreement.

    Any action for violation of the Consent Judgement and Injunction is subject
to the full enforcement powers of the Federal Court for the Eastern District of
California.

    27.  Attorneys Fees and Costs.  The parties agree that they will each bear
their own attorneys' fees and cost related to the Pending Agreement and this
Agreement. In the event of any dispute under this Agreement in which either the
claimed amount or the award is less than One Hundred Thousand dollars
($100,000), the prevailing party shall be entitled to recover its reasonable
attorneys' fees, costs, costs of investigation, expert expenses, and other
related expenses.

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    28.  Counterparts.  This Agreement may be executed in one or more
counterparts, including by facsimile copies, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.

DATED: August  , 2000   NULAID NEST-BEST, a California partnership
By Nulaid Foods, Inc. Its General Partner  
   
   
By  
   

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    Its  

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DATED: August  , 2000.  
   
NULAID FOODS, INC.  
   
   
By  
   

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    Its  

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DATED: August  , 2000.  
   
VALLEY FRESH FOODS, INC.  
   
   
By  
   

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    Its  

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DATED: August  , 2000.  
   
MICHAEL FOODS, INC.  
   
   
By  
   

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    Its  

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DATED: August  , 2000.  
   
NORTH CAROLINA STATE UNIVERSITY  
   
   
By  
   

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    Its  

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