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Note: Links to our free templates are at the bottom of this long guide.
Also note: This is not legal advice

Introduction

Last chance agreements (LCAs) have become a key tool for both employers and employees when attempting to resolve issues and come to a positive outcome. What is an LCA? It’s a legally binding contract between employer and employee - offering the latter a ‘last chance’ to remain employed on certain conditions, such as additional training or reduced hours of work. These LCAs are beneficial for both parties, providing clarity, certainty and the opportunity to save time and money should any dispute arise. But even more than that, LCAs help maintain a respectful workplace atmosphere where employers show they’re willing to invest in their workforce; this fosters trust between all parties which is essential for productivity.

If you’re considering implementing an LCA but don’t know where to start, ��������Ƶ provides free easy-to-customise template agreements alongside step-by-step guidance so that anyone can create high quality legal documents without spending money on lawyers or wasting time trying figure out how it all works - no ��������Ƶ account required! All you need is access to the world’s largest open source legal template library; our millions of data points teach us what makes up a market standard agreement. So why not read on below for more information on how you can access our library today?

Definitions

Last Chance Agreement (LCA): A legally binding contract between an employer and an employee who is at risk of being terminated.

Relevant state and federal labor and employment laws: Laws that govern the workplace and must be followed while creating an LCA.

Fair Labor Standards Act: Sets the minimum wage and overtime pay requirements.

Family and Medical Leave Act: Provides job-protected leave for employees.

Occupational Safety and Health Act: Regulates safety and health in the workplace.

Equal Pay Act: Prohibits pay discrimination based on gender.

Reprimand or suspension: A less severe form of discipline can still be effective in correcting the employee’s behavior.

Last Warning Agreements (LWAs): Similar to Last Chance Agreements, but used in less severe situations.

Early Intervention Programs (EIPs): Designed to help employees improve their performance or behavior before it becomes a problem.

Training and Development Programs (TDPs): Designed to help employees develop their skills and knowledge in order to improve their performance and behavior.

Formal record: A copy of the agreement, as well as any supporting documentation such as performance reviews or disciplinary action.

Secure location: A place to store the agreement in order to keep it confidential and away from unauthorized individuals.

Contents

1. Overview of Last Chance Agreements
2. Definition, Purpose and Benefits
3. Understanding the Legal Requirements for Last Chance Agreements
4. Research and review relevant state and federal laws
5. Familiarize yourself with key labor and employment laws
6. Crafting a Last Chance Agreement
7. Terms and Conditions
   #1. Clearly define the terms and conditions in writing
   #1. Include a timeline for the agreement
   #1. Identify the consequences of non-compliance
   #1. Include signature blocks for both parties
8. Implementing and Monitoring Last Chance Agreements
9. Distribute the agreement to the employee
10. Train and educate supervisors on the agreement
11. Provide the employee with a copy of the signed agreement
12. Monitor the employee’s performance and progress
13. Potential Consequences of Breach of a Last Chance Agreement
14. Termination of employment
15. Loss of wages or benefits
16. Civil or criminal penalties
17. Alternatives to Last Chance Agreements
18. Reprimand or suspension
19. Last Warning Agreements
20. Early Intervention Programs
21. Training and Development Programs
22. Documenting the Last Chance Agreement
23. Create a formal record of the agreement
24. Store the agreement in a secure location
25. Reviewing Last Chance Agreements
26. Periodically review the agreement
27. Consider revising the agreement if needed
28. Update the agreement if any changes occur
29. Communicating the Last Chance Agreement
30. Ensure the employee understands the agreement
31. Explain the consequences of non-compliance
32. Finalizing the Last Chance Agreement
33. Have the employee sign the agreement
34. File the original agreement in a secure location

Get started

Overview of Last Chance Agreements

• Understand how Last Chance Agreements (LCAs) can be used to allow employees another chance to resolve performance or conduct issues
• Learn the potential benefits of using LCAs
• Discover the potential risks associated with LCAs
• Understand how LCAs fit into the overall performance management process
• Gain an understanding of the key components of an effective LCA
• Know when LCAs should and should not be used

When you can check this off your list:
Once you understand the overview of Last Chance Agreements, you can move on to the next step.

Definition, Purpose and Benefits

• Understand what a Last Chance Agreement is and its purpose
• Learn the benefits of having a Last Chance Agreement in place
• Research and understand the legal requirements for Last Chance Agreements
• Identify the key elements of a Last Chance Agreement
• Analyze the potential risks and benefits of a Last Chance Agreement
• When you have completed the research, you will have a clear understanding of the definition, purpose, and benefits of Last Chance Agreements.

Understanding the Legal Requirements for Last Chance Agreements

• Research and review relevant state and federal laws to ensure the Last Chance Agreement is legally binding
• Check with a lawyer or legal counsel to ensure the agreement is legally binding and meets all legal requirements
• Make sure the agreement does not violate any state or federal laws
• Ensure the agreement meets all current legal standards
• Once you are confident that the Last Chance Agreement meets the legal requirements, you can move on to the next step.

Research and review relevant state and federal laws

• Review the applicable state and federal labor and employment laws that could apply to Last Chance Agreements.
• Research case law and legal precedent related to Last Chance Agreements to ensure that you are up-to-date on the current legal landscape.
• Familiarize yourself with relevant state and federal statutes that could impact the terms of Last Chance Agreements.
• Become familiar with any related administrative regulations that could be applicable.
• When you have completed your research and review of relevant state and federal laws, you will be able to move on to the next step.

Familiarize yourself with key labor and employment laws

• Review the Fair Labor Standards Act (FLSA) to understand the federal law requirements for minimum wage and overtime
• Become familiar with the Occupational Safety and Health Administration (OSHA) to understand the safety laws and regulations
• Understand the Americans with Disabilities Act (ADA) and how it impacts the workplace
• Read up on the Family and Medical Leave Act (FMLA) to understand the eligibility and the requirements
• Learn the basics of the Equal Employment Opportunity Commission (EEOC) to understand anti-discrimination laws

When you have a good understanding of the key labor and employment laws, you can check this off your list and move on to the next step of crafting a Last Chance Agreement.

Crafting a Last Chance Agreement

• Consult with a labor and employment attorney to ensure your Last Chance Agreement is legally compliant
• Draft a Last Chance Agreement that outlines the terms of the employee’s continued employment
• Include a list of expectations and violations that may result in immediate termination
• Specify the length of time the employee will be on probationary period
• Outline any disciplinary action that may result in termination
• Get the employee’s signature on the Last Chance Agreement
• File the Last Chance Agreement with your HR team

Once you have consulted with a labor and employment attorney, drafted the Last Chance Agreement, specified the probationary period and disciplinary actions, obtained the employee’s signature and filed the agreement with your HR team, you can check this step off your list and move on to the next step.

Terms and Conditions

• Brainstorm potential terms and conditions with supervisor and/or other appropriate personnel
• Identify potential risks and liabilities associated with Last Chance Agreement
• Draft terms and conditions that are fair and reasonable for both the employee and employer
• Confirm that terms and conditions are in compliance with relevant laws and regulations
• Revise terms and conditions based on feedback from supervisor and/or other appropriate personnel
• Finalize terms and conditions in writing
• Check this off your list and move on to the next step when you have finalized the terms and conditions in writing.

Clearly define the terms and conditions in writing

• Write out the terms and conditions of the Last Chance Agreement in clear, concise language.
• Document any and all expectations of the employee and the organization.
• Include any relevant and applicable state or federal laws.
• Make sure the terms and conditions are fair and reasonable.

You will know you have completed this step when all the terms and conditions have been written out clearly and comprehensively.

Include a timeline for the agreement

• Discuss the timeline for the agreement with all parties involved and document the timeline in writing
• Include when the agreement will take effect and when it will end
• Address any specific deadlines that need to be met in order for the agreement to remain valid
• Once the timeline is established and agreed upon, make sure all parties involved sign off on the document
• When all parties have signed off, you have completed this step and can move on to the next step: Identifying the consequences of non-compliance.

Identify the consequences of non-compliance

• Understand the specific expectations of the Last Chance Agreement that must be adhered to.
• Determine what the consequences will be if the employee fails to comply with the terms of the agreement.
• Outline the consequences in the Last Chance Agreement document.
• Ensure the consequences are specific and tailored to the employee’s circumstances.
• Ensure the consequences are reasonable, and not punitive.
• Review the agreement with the employee to ensure they understand the consequences of non-compliance.
• Once the consequences are identified, you can check this off your list and move on to the next step.

Include signature blocks for both parties

• Collect and review the signatures of both parties involved in the Last Chance Agreement.
• Make sure all signatures are legible and are authorized by the parties involved.
• All signatures must be collected on the same document.
• Once all parties have signed the document, you can check this off your list and move on to the next step.

Implementing and Monitoring Last Chance Agreements

• Distribute the agreement to the employee, either in person or via email
• Have the employee sign electronically or with a hard copy
• Ensure the signed agreement is stored securely in the employee’s file
• Monitor the employee’s performance and behavior over the course of the agreement
• Make sure that any expectations from the agreement are enforced (e.g. attendance, productivity, etc.)
• Communicate regularly with the employee about their progress and provide support as needed

Once you have distributed the signed agreement to the employee and are monitoring their progress, you can move on to the next step.

Distribute the agreement to the employee

• Ensure the employee has signed the agreement and has a copy of it
• Send a copy of the agreement to the employee’s supervisor
• Document the date and time the agreement was distributed to the employee
• When all of these steps are completed, you can move on to the next step of training and educating supervisors on the agreement.

Train and educate supervisors on the agreement

• Hold a training session for supervisors on the Last Chance Agreement.
• Ensure that supervisors understand each point in the agreement and are able to explain it to employees.
• Cover the consequences of breaching the agreement and what will happen if the employee does not comply with the terms.
• Provide supervisors with any resources or guidance they may need to be able to answer any questions about the agreement.

How you’ll know when you can check this off your list and move on to the next step:

• When all supervisors have received the training and demonstrate understanding of the agreement.
• When supervisors can explain the agreement and its consequences to employees.

Provide the employee with a copy of the signed agreement

• Give the employee a copy of the signed agreement.
• Ensure that the employee has read and understood the agreement.
• Ask the employee to sign the agreement to acknowledge that they have read, understood, and accepted it.
• Make sure to keep a copy of the signed agreement along with the employee’s record.
• You can check off this step when the employee has signed the agreement.

Monitor the employee’s performance and progress

• Observe employee to determine if behaviors have improved
• Monitor employee attendance
• Review employee’s work performance
• Review employee’s punctuality
• Note employee’s level of engagement
• Verify that employee is following company policies
• Discuss employee’s progress with supervisor on a regular basis

Once you’ve monitored the employee’s performance and progress, you can check this step off the list and move on to the next step.

Potential Consequences of Breach of a Last Chance Agreement

• Familiarize yourself with the company’s policies and procedures on how to handle a breach of a Last Chance Agreement
• Consider relevant factors, such as the employee’s role, the nature of the breach, and the severity of the breach when deciding on an appropriate consequence
• Consult with other stakeholders, such as Human Resources and your legal team, to ensure all consequences are appropriate and in line with any relevant laws
• Set out the potential consequences of a breach of the Last Chance Agreement in writing and communicate them to the employee, ensuring they understand the expectations
• Once the potential consequences of a breach of the Last Chance Agreement have been determined and communicated to the employee, you can check this off your list and move on to the next step in creating the Last Chance Agreement.

Termination of employment

• Determine the circumstances that will result in termination of employment (e.g., continued violations of the agreement, failure to meet performance standards, etc.)
• Discuss the terms of the termination with the employee, including any severance packages, vacation pay, etc.
• Ensure that any termination of employment is consistent with any applicable laws, regulations, and policies.
• Draft and execute a termination agreement that outlines the terms of the severance package, vacation pay, and any other relevant details.
• Once the termination agreement is signed, notify the employee of the termination and provide them with any applicable paperwork.

Check off when: All of the above steps have been completed and the termination agreement has been signed.

Loss of wages or benefits

• Notify the employee of their impending loss of wages or benefits in writing
• Specify the date that their wages or benefits will end
• Ensure the employee understands their rights and obligations as they relate to their loss of wages or benefits
• Follow all applicable state and federal laws regarding the termination of an employee’s wages or benefits
• Ensure that all necessary paperwork is completed and filed
• When all the paperwork is complete, the employee can be checked off the list and the next step, civil or criminal penalties, can be addressed.

Civil or criminal penalties

• Research applicable civil and criminal laws to ensure you are in compliance
• Research any applicable regulations for the jurisdiction where the Last Chance Agreement is being created
• Consult with a lawyer if necessary to ensure you are aware of any potential legal liabilities
• Once you have completed your research and consulted with a lawyer if necessary, you can check off this step and move on to the next step.

Alternatives to Last Chance Agreements

• Consider alternatives to Last Chance Agreements such as reprimands, suspensions, civil or criminal penalties, or other corrective measures.
• Research laws and regulations to understand any legal implications of alternative measures.
• Determine which alternative is the most appropriate in the situation.
• When you have identified the alternative that is most suitable, you can check this off your list and move on to the next step.

Reprimand or suspension

• Review the employee’s file to determine if they have been previously reprimanded or suspended.
• If they have, consider including language in the Last Chance Agreement that references the earlier discipline.
• Notify the employee in writing that they are being given a reprimand or suspension.
• Make sure to include the reason for the reprimand or suspension and the duration of the suspension.
• Document the suspension and the employee’s response in the employee’s file.
• You will know you can move on to the next step when the employee has been reprimanded or suspended.

Last Warning Agreements

• Draft a Last Warning Agreement: This should include the employee’s acknowledgement of the issue and their agreement to take the necessary steps to change their behaviour, as well as a timeline for when progress should be seen.

• Present the Last Warning Agreement to the employee: During this meeting, make it clear that any failure to adhere to the terms of the agreement can result in further disciplinary action.

• Follow-up with the employee: Keep in regular contact with the employee to ensure they are taking the necessary steps to improve their behaviour.

• Document any progress or lack thereof: Document any progress made by the employee, as well as any lack thereof, throughout the process.

• Take the appropriate disciplinary action: If the employee does not show any improvement, take the necessary disciplinary action in accordance with the company’s policies.

You will know when you can check this off your list and move on to the next step when the employee has either improved their behaviour or been terminated due to failure to comply with the Last Warning Agreement.

Early Intervention Programs

• Identify potential employees that require early intervention
• Develop an Early Intervention Plan for each identified employee
• Ensure the Early Intervention Plan is tailored to the individual employee’s needs
• Schedule regular reviews of the Early Intervention Plan with the employee
• Monitor the progress of each employee against the Early Intervention Plan
• Provide additional support as needed
• Document progress of the Early Intervention Plan
• When the desired outcome of the Early Intervention Plan is achieved, check off this step and move on to the next step of Training and Development Programs.

Training and Development Programs

• Identify the areas in which employees need additional training or development
• Outline the specific types of training or development that will be provided
• Establish timelines for employee completion of the training or development
• Develop a system to track employee progress
• Set a timeline for the Last Chance Agreement and include the date by which the employee must complete the training or development

Once all of the above steps are complete, you can move on to the next step of Documenting the Last Chance Agreement.

Documenting the Last Chance Agreement

• Draft a Last Chance Agreement outlining the expectations, consequences, and timeline of the agreement
• Include details such as the employee’s job responsibilities, performance expectations, and the timeline of the agreement
• Have the employee read and sign the agreement
• Make a copy of the agreement for the employee and for the employer
• You will know that you have completed this step when you have a signed copy of the Last Chance Agreement from the employee.

Create a formal record of the agreement

• Make sure you have the necessary signatures from all parties involved
• Prepare a written document that outlines the agreement
• Include the names of all participants, the date, and the details of the agreement
• Make sure the document is signed and dated by both parties
• When all signatures are collected, you can move on to the next step of storing the agreement in a secure location.

Store the agreement in a secure location

• Make sure to have multiple copies of the agreement.
• Store physical copies of the agreement in a secure, locked environment.
• Create digital copies of the agreement and store them in a secure cloud-based storage system.
• Make sure to have a secure backup system for digital copies.
• Make sure that only those authorized to have access to the agreement have access to it.
• You will know you have completed this step when you have multiple copies of the agreement stored in secure locations.

Reviewing Last Chance Agreements

• Review the Last Chance Agreement to ensure that it is up to date and reflects the current circumstances.
• Ensure that the terms of the agreement are clear and that all parties have agreed to them.
• Ensure that the agreement is in compliance with any applicable laws and regulations.
• Review the agreement periodically to make sure it is still valid and relevant.
• When you are confident that the Last Chance Agreement is in order, you can move on to the next step.

Periodically review the agreement

• Schedule regular reviews of the agreement. This could be on a monthly, quarterly, or annual basis, depending on your needs.
• During the review, review the document and ensure that all elements of the agreement are still valid.
• Make any necessary revisions based on the review and update the agreement accordingly.
• Once you have completed the review, document the changes and store them in a secure location.
• You’ll know that you can check this step off your list when the review is complete and the agreement has been updated with any necessary revisions.

Consider revising the agreement if needed

• Review the agreement to determine if any changes are needed
• Assess any changes and adjust the agreement accordingly
• Consult with colleagues for feedback and approval
• Once any necessary changes have been made and approved, you can move on to the next step of periodically reviewing the agreement.

Update the agreement if any changes occur

• Review the agreement periodically to determine if any changes need to be made
• If changes are needed, update the agreement according to the changes
• Make sure all stakeholders are aware of the changes
• Once the changes have been made, sign and date the updated agreement
• You have completed this step when all stakeholders have signed and dated the updated agreement

Communicating the Last Chance Agreement

• Make sure that the agreement is ready and finalized before you communicate it to the employee
• Set up a meeting with the employee and explain the terms and conditions of the Last Chance Agreement
• Make sure to provide hard copies of the agreement for the employee to keep
• Ensure the employee is aware that any violation of the agreement may result in immediate termination
• Have the employee sign and date the agreement to confirm understanding
• File the agreement in the employee’s personnel records
• Once the employee has signed and dated the agreement, you can check off this step and move on to the next.

Ensure the employee understands the agreement

• Explain the terms of the Last Chance Agreement to the employee in detail
• Confirm the employee understands the terms of the agreement
• Ask the employee to sign the agreement
• Obtain a signed copy of the agreement for your records
• When the employee has signed the agreement, you can move on to the next step: Explaining the consequences of non-compliance.

Explain the consequences of non-compliance

• Describe the consequences the employee will face if they fail to comply with the agreement, such as disciplinary action, suspension, and/or termination.
• Make sure the employee understands that there is a very real possibility of termination if they fail to comply.
• Emphasize that this agreement is the last chance the employee has to make changes to their behavior.
• Once you have explained the consequences of non-compliance and the employee understands them, you can move on to the next step.

Finalizing the Last Chance Agreement

• Obtain signatures from both the employee and the employer as evidence that both parties agree to the terms of the Last Chance Agreement
• Have the employee read and initial each page of the agreement
• Make sure to keep a copy for the employer and provide a copy to the employee
• Once both parties have signed the agreement, you can check this off your list and move on to the next step.

Have the employee sign the agreement

• Have the employee read and sign the Last Chance Agreement.
• Make sure that the employee’s signature is witnessed by a third party.
• Have the employee and witness date the signature.
• Once the employee has signed the agreement, you can check this off your list.

File the original agreement in a secure location

• Review the original agreement to ensure it has been signed by both parties
• Get a physical or digital copy of the agreement and store it in a secure location (e.g. file cabinet or cloud storage)
• Ensure the secure location used to store the agreement is accessible only to authorized personnel
• When complete, check off this step from your list and move on to the next step

FAQ

Q: What is the difference between a Last Chance Agreement and a Settlement Agreement?

Asked by Jaxon on June 3rd 2022.
A: Last Chance Agreements (LCAs) and Settlement Agreements (SAs) have one big difference: while LCAs are a warning to an employee that they are in breach of contract and could face further disciplinary action if they do not improve, SAs are used to terminate a contract of employment. Think of an LCA as a pre-emptive measure and an SA as final action. However, both documents can be used to record agreed changes in an employee’s rights and obligations, the payment of compensation, and the terms upon which an employee’s employment is ended.

Q: What kind of language should I use in my Last Chance Agreement?

Asked by Asher on October 1st 2022.
A: When drafting a Last Chance Agreement, it is important to choose language that is clear and unambiguous. It should be written in plain English, without any jargon or legalese, so that all parties understand the agreement. It should also be direct and specific; all of the terms agreed upon should be included, as well as the consequences if any of those terms are not met. Lastly, it should be reasonable; for example, you may want to include confidentiality clauses, but these should not be restrictive enough to unduly limit legitimate activities by the employee.

Q: What is the legal standing of Last Chance Agreements?

Asked by Abigail on April 10th 2022.
A: In most jurisdictions, Last Chance Agreements are considered legally binding contracts. This means that if either party fails to abide by their obligations as set out in the agreement, they may face legal action from the other party in order to enforce the agreement. Therefore it is important that both parties thoroughly read and understand the agreement before signing it. Additionally, it is also important to ensure that each party has independent legal advice before signing a Last Chance Agreement in order to protect their interests.

Q: Are there any restrictions on who can sign Last Chance Agreements?

Asked by Gabriel on March 7th 2022.
A: Generally speaking, Last Chance Agreements can only be signed by employees who have reached the age of majority in their jurisdiction (usually 18). Furthermore, they must have full capacity to understand and agree to the terms of the agreement; this means they must have a basic understanding of what they are signing and must not have been coerced into signing it. Additionally, employers must take care to ensure that Last Chance Agreements do not violate any anti-discrimination laws or other employment laws in their jurisdiction when drafting them for their employees.

Q: What happens if an employee breaches a Last Chance Agreement?

Asked by Elijah on December 12th 2022.
A: If an employee breaches a Last Chance Agreement then the employer may choose to pursue disciplinary action up to and including dismissal. This is because Last Chance Agreements are legally binding contracts; therefore if one party does not abide by its terms then the other party may take steps to enforce it. It is important for employers to obtain legal advice before taking such action however; this will ensure that all necessary steps are taken correctly and that any action taken is fair and reasonable in light of the breach committed by the employee.

Q: How long does a Last Chance Agreement usually last?

Asked by Mia on August 6th 2022.
A: The length of time that a Last Chance Agreement lasts will depend on its terms; however typically they will last for six months or less. During this period both parties should monitor progress towards meeting the goals set out in the agreement and review them regularly to ensure that they remain relevant and achievable. It is important that both parties have realistic expectations when entering into such an agreement as failure to meet its goals can lead to further disciplinary action being taken against the employee in question.

Q: Are there any restrictions on what can be included in a Last Chance Agreement?

Asked by Michael on November 4th 2022.
A: Yes, there are certain restrictions on what can be included in a Last Chance Agreement; these vary depending on jurisdiction but generally speaking any provisions included must not breach any relevant employment laws or anti-discrimination laws in force at the time that it is drafted or signed. Additionally, all terms must be reasonable in order for them to be enforceable; for example, employers cannot include clauses which unreasonably restrict an employee’s right to work elsewhere during their period of employment under the agreement or which unreasonably limit their rights upon termination or expiry of their contract with their current employer.

Q: Are there any specific requirements which must be included when creating a Last Chance Agreement?

Asked by Emma on May 15th 2022.
A: Yes, there are certain requirements which must be included when creating a Last Chance Agreement; these vary depending on jurisdiction but typically they will include details about who has signed it (including names and job titles), when it was signed (including dates), what actions are covered by its terms and conditions (including any performance targets), what happens if those targets are not met (including possible outcomes) and how long it will last (including start date). Additionally employers may wish to include clauses about confidentiality or dispute resolution processes within their agreements too depending on their particular circumstances.

Q: Can I use existing templates when creating my own Last Chance Agreement?

Asked by Noah on July 24th 2022.
A: Yes, you can use existing templates when creating your own Last Chance Agreement; however you should always check with your lawyer first before using them as such templates may not necessarily comply with all relevant laws applicable in your jurisdiction or match your particular circumstances exactly. Additionally, while templates can provide helpful guidance they cannot replace proper legal advice so always consult your lawyer prior to signing any agreement of this kind no matter what template you choose to use if any at all!

Example dispute

Suing a Company for Breach of Last Chance Agreement:

• Review the contract to determine if a last chance agreement was signed by both parties.
• Investigate whether the company failed to uphold its obligations and responsibilities under the agreement.
• Bring a lawsuit for breach of contract if the company violated the last chance agreement.
• Provide evidence to support your claims (such as witnesses or documents).
• Calculate any damages that the company caused by breaching the last chance agreement.
• Negotiate a settlement with the company, if possible, to avoid a lawsuit.
• If a lawsuit is necessary, argue that the company breached the agreement and seek compensation for any losses that occurred as a result.

Templates available (free to use)

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