Exhibit 10.1
AMENDED AND RESTATED
EMPLOYMENT
AGREEMENT
THIS AGREEMENT,
(“Agreement”) made and entered into as of
August 27, 2009 (the “Effective Date”), by and
between LAURENCE S. GELLER (the “Executive”) and
STRATEGIC HOTELS & RESORTS, INC. (the
“Company”);
WITNESSETH THAT
:
WHEREAS, the Company and the
Executive are parties to an Amended and Restated Employment
Agreement dated as of September 7, 2006 (the “Prior
Agreement”), pursuant to which the terms and conditions of
the Executive’s employment were set forth; and
NOW THEREFORE, the Company and the
Executive hereby agree that the Prior Agreement shall be amended
and restated as set forth herein effective as of the Effective
Date:
1. Performance of Services .
The Executive’s employment with the Company shall be subject
to the following:
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(a)
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Subject to the
terms of this Agreement, the Company hereby agrees to employ the
Executive as its chief executive officer, with the titles of
President and Chief Executive Officer during the Agreement Term (as
defined below), and the Executive hereby agrees to accept such
employment during the Agreement Term. During the Agreement Term,
while he is employed by the Company, the Executive shall be
nominated for election to the Board of Directors of the Company
(the “Board”), so long as he is Chief Executive
Officer. If elected to and serving on the Board, the Executive
agrees to resign from the Board effective on his Date of
Termination (as defined in paragraph 3(h)), unless the Executive
and the Board otherwise agree. The “Agreement Term”
shall be the period beginning on the Effective Date and ending on
December 31, 2012. Thereafter, the Agreement Term will be
automatically extended for 12-month periods, unless either the
Company or the Executive shall give the other party notice of the
intention to not extend the Agreement by October 1, 2012 or by
October 1 of any succeeding year, if applicable, except that
upon a Change in Control (as defined in paragraph 4(d)) the
remaining Agreement Term shall be 24 months from the date the
Change in Control occurred.
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(b)
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During the
Agreement Term, while the Executive is employed by the Company, the
Executive shall devote his full time, energies and talents to
serving as its President and Chief Executive Officer.
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(c)
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The Executive agrees that he
shall perform his duties faithfully and to the best of his
abilities subject to the directions of the Board. The
Executive’s duties may include providing services for both
the Company and the Subsidiaries (as defined below), as determined
by the Board; provided, however, that the Executive shall not,
without his consent, be assigned tasks that would be inconsistent
with those of President and Chief Executive Officer of the Company.
The Executive will have such authority, power, responsibilities and
duties as are inherent to his positions (and the undertakings
applicable to his
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positions) and necessary to carry
out his responsibilities and the duties required of him hereunder.
For purposes of this Agreement, the term “Subsidiary”
shall mean any corporation, partnership, joint venture or other
entity during any period, in which at least a majority interest in
such entity is owned, directly or indirectly, by the Company (or a
successor to the Company).
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(d)
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Notwithstanding
the foregoing provisions of this paragraph 1, during the Agreement
Term, the Executive may devote reasonable time to activities other
than those required under this Agreement, including management of
his personal investments and activities involving professional,
charitable, educational, religious and similar types of
organizations, to the extent that such other activities do not, in
the reasonable judgment of the Board, inhibit or prohibit the
performance of the Executive’s duties under this Agreement,
or conflict in any material way with the business of the Company or
any Subsidiary; provided, however, that the Executive shall obtain
approval of the Board prior to nomination or seeking election to
the board of directors of any other company, and such approval
shall not be unreasonably withheld.
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(e)
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The Company
shall, to the maximum extent permitted by applicable law, protect,
defend, indemnify and hold harmless the Executive against any
costs, losses, expenses, claims, suits, proceedings,
investigations, damages or liabilities to which the Executive may
become subject which arise out of, are based upon or relate to, or
are alleged to so arise, be based upon or to relate to the
Executive’s employment by the Company (and any Subsidiary) or
the Executive’s service to the Company (and any Subsidiary)
as an employee, officer or member of the Board, including, without
limitation, reimbursement on a current basis, upon submission of
invoices, for any legal or other expenses reasonably incurred by
the Executive in connection with investigation and defending
against any such costs, losses, expenses, claims, suits,
proceedings, investigations, damages or liabilities; provided,
however, that the Company shall not be required to pay any amounts
under this paragraph except upon receipt of an unsecured
undertaking by the Executive to repay any such amounts as to which
it shall ultimately be determined by a court of competent
jurisdiction that the Executive is not entitled to indemnification
by the Company. The Executive will be covered under the
Company’s directors and officers insurance policy during the
Agreement Term and for such period following the Date of
Termination during which any action may be brought against the
Executive related to the matters above, so long as the Company
maintains such coverage for any director or officer of the
Company.
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2. Compensation . Subject to the terms of
this Agreement, during the Agreement Term, while the Executive is
employed by the Company, the Company shall compensate him for his
services as follows:
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(i)
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During the
Agreement Term, the Executive shall receive an annual base salary
(the “Salary”) of not less than $750,000, subject to
annual review by the Compensation Committee of the Board (the
“Committee”), which, in the discretion of such
Committee, may be increased from time to time. Once increased, such
Salary may not be decreased. Such Salary shall be payable in
arrears, in accordance with the payroll practices of the
Company.
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(ii)
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For fiscal year 2009 and each
subsequent fiscal year of the Company during the Agreement Term,
the Executive shall be eligible to receive an annual cash
performance-based bonus (the “Bonus”) from the Company,
with a target bonus opportunity of 100% of Salary (“Target
Bonus”), a threshold bonus opportunity of 66-
2
/ 3 % of
Salary (“Threshold Bonus”), and a maximum bonus
opportunity of 200% of Salary (“Maximum Bonus”). For
each fiscal year during the Agreement Term, the Executive shall
have the opportunity to earn a bonus determined by the Committee
which will make such a determination based on the applicable
parameters as set forth in Schedule I. The Bonus shall be paid in
cash between January 1 and March 15th of the fiscal year
following the fiscal year to which the Bonus relates.
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(iii)
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In addition,
the Committee may, in its discretion, award additional incentive
compensation from time to time to Executive during the Agreement
Term.
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(b)
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Benefits . The Executive shall be eligible to participate
in any employee pension and welfare benefit plans and programs made
available to the Company’s senior level executives, on terms
which are no less favorable than the terms provided generally for
the Company’s senior level executives from time to time,
including, without limitation, pension, profit sharing, savings and
other retirement plans or programs, medical, dental,
hospitalization, short-term and long-term disability and life
insurance plans, accidental death and dismemberment protection,
travel accident insurance, and any other pension or retirement
plans or programs and any other employee welfare benefit plans or
programs that may be sponsored by the Company from time to time,
including any plans that supplement the above-listed types of plans
or programs, whether funded or unfunded.
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(c)
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Vacation . The Executive shall be entitled to four weeks
of paid vacation each calendar year (or a pro rata portion thereof
with respect to any period during the Agreement Term which does not
encompass a full calendar year). Any unused vacation may be rolled
over to the next calendar year, if permitted under the
Company’s regular vacation policy as in effect from time to
time.
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(d)
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Business
Expenses . The Company
will reimburse the Executive for reasonable expenses incurred by
the Executive on company business, pursuant to the Company’s
standard expense reimbursement policy as in effect from time to
time, so long as the Executive provides proper documentation
establishing the amount, date and business purpose of those
expenses.
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(e)
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Stock-Based
Compensation .
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(i)
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Value
Creation Plan Award
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Upon the Effective Date, the
Executive shall receive an award of 600,000 Units providing
Executive with the opportunity to earn an amount equal to 1.5% of
the Company’s market capitalization under the Company’s
Value Creation Plan, as attached to this Agreement as Exhibit B
(the “Value Creation Plan”). The award will be earned
and vested only to the extent of the achievement of certain
performance goals, as set forth in the Value Creation Plan.
Notwithstanding anything in this Agreement or the Value Creation
Plan to the contrary, if a Change in Control as defined in the
Value Creation Plan occurs or Executive’s employment is
terminated because of death or Disability, the Company terminates
Executive’s employment without Cause or Executive’s
employment is terminated due to Constructive Termination, all of
Executive’s Units under the Value Creation Plan shall become
immediately vested and non-forfeitable.
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(ii)
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Restricted Stock Unit Awards
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Upon the Effective Date, the
Executive shall receive an award of seventy-five thousand
(75,000) time-vesting restricted stock units. Unless otherwise
accelerated pursuant to this Agreement, the restrictions shall
lapse on such restricted stock unit grant as follows and the
underlying shares of the Company shall be deliverable in accordance
with the Company’s standard form of restricted stock unit
award agreement (other than vesting provisions) in effect as of the
Effective Date under the Company’s Amended and Restated 2004
Incentive Plan as in effect on the Effective Date (“Incentive
Plan”):
1
/ 3 of the
Restricted Stock Unit grant shall vest on August 27,
2010
1
/ 3 of the
Restricted Stock Unit grant shall vest on August 27,
2011
1
/ 3 of the
Restricted Stock Unit grant shall vest on August 27,
2012
In addition, during the first
quarter of each fiscal year during the Agreement Term, the Company
shall grant to Executive restricted stock units with respect to a
number of shares of Common Stock of the Company equal to the lower
of (i) 120% of Executive’s Salary divided by the closing
price of a share of Common Stock on the date of grant of the
restricted stock unit or (ii) 125,000 (with such number
adjusted in accordance with Section 14.1 of the Incentive
Plan). Unless otherwise accelerated pursuant to this Agreement, the
restrictions on such restricted stock units shall lapse
1
/ 3 on the
first January 1st following such grant date and on each
January 1st thereafter (for 100%
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vesting on the third
January 1st occurring after the grant date) and the underlying
shares of the Company shall be deliverable in accordance with the
Company’s standard form of restricted stock unit award
agreement (other than vesting provisions) in effect as of the
Effective Date under the Incentive Plan. If there are not
sufficient shares under the Incentive Plan or any other equity plan
of the Company to provide any grant required by this paragraph and
shareholder approval of additional shares of Common Stock for the
Incentive Plan or another equity plan of the Company is not being
sought or not obtained for a retroactive grant, equivalent
alternative compensation shall be provided Executive.
In addition, the Committee may, in
its discretion, award additional stock-based compensation from time
to time to Executive during the Agreement Term.
Any stock-based awards granted to
Executive prior to the Effective Date (“Prior Awards”)
shall continue to be governed by the terms and conditions of their
respective grant agreements and the Incentive Plan, as appropriate,
provided, however, that paragraphs 3(c), 3(d), 4(b)(v), 4(c)(v) and
4(d) of this Agreement shall govern the treatment of such Prior
Awards upon termination of Executive’s employment.
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(iv)
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Dividend
Equivalents
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Each restricted stock unit award
under this paragraph 2(e) (“RSU”) and each Prior Award
other than options shall provide for accrual of dividend
equivalents until the delivery date, as follows. As of each
dividend date with respect to shares of Common Stock, a dollar
amount equal to the amount of the dividend that would have been
paid on the number of shares of Common Stock equal to the number of
RSUs held by the Executive as of the close of business on the
record date for such dividend shall be converted into a number of
RSUs equal to the number of whole and fractional shares of Common
Stock that could have been purchased at the closing price on the
dividend payment date with such dollar amount. In the case of any
dividend declared on shares of Common Stock which is payable in
shares of Common Stock, Executive shall be credited with an
additional number of RSUs equal to the product of (x) the
number of his RSUs then held on the related dividend record date
and the (y) the number of shares of Common Stock (including
any fraction thereof) distributable as a dividend on a share of
Common Stock. Such dividend equivalents shall be paid to the
Executive in shares of Common Stock, at such time as shares are
delivered for payment of the RSUs. For avoidance of doubt,
dividends equivalents shall be accrued on a retroactive basis to
September 1, 2006 based on Performance Shares as they are actually
earned, as specified in Schedule II of the Prior
Agreement.
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(v)
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Timing of
Delivery of Shares – Generally . Except as otherwise provided in this
Agreement, (a) RSUs awarded upon the Effective Date and the
annual RSU grants shall vest and be delivered as described in
paragraph 2(e)(ii); (b) Prior Awards described in paragraph
2(e)(iii) above shall be delivered in accordance with that
paragraph; (c) RSUs delivered pursuant to dividend equivalents
described in paragraph 2(e)(iv) above shall be delivered in
accordance with that paragraph; (d) Performance Shares under
the Prior Agreement shall vest and be delivered in accordance with
the terms of the Prior Agreement; and (e) except as otherwise
provided in a separate agreement, all other equity awards shall
vest and be delivered at the time specified in, and in accordance
with the Company’s standard form of award agreement under the
Company’s Incentive Plan.
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3. Termination . The
Executive’s employment with the Company during the Agreement
Term may be terminated by the Company or the Executive without any
breach of this Agreement under the circumstances described in
paragraphs 3(a) through 3(g):
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(a)
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Death . The Executive’s employment hereunder
will terminate upon his death.
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(b)
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Disability . The Company may terminate the
Executive’s employment due to the Executive’s
Disability. For purposes of this Agreement “Disability”
means the absence of the Executive from the Executive’s
duties with the Company on a full-time basis for ninety
(90) days (which need not be continuous) during any
consecutive twelve-month period as a result of incapacity due to a
physical or mental illness which, in the opinion of the Board,
renders the Executive incapable, after reasonable accommodation, of
performing his duties under this Agreement. If the Executive
disputes the Company’s determination of Disability, the
Executive (or his designated physician) and the Company (or its
designated physician) shall jointly appoint a third-party physician
to examine the Executive and determine whether the Executive has a
Disability.
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(c)
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Termination
by Company for Cause .
The Company may terminate the Executive’s employment
hereunder at any time for Cause (“Termination for
Cause”). For purposes of this Agreement, the term
“Cause” shall mean:
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(i)
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any conduct
related to the Company involving gross negligence, gross
mismanagement, or the unauthorized disclosure of confidential
information or trade secrets;
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(ii)
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dishonesty or a
violation of the Company’s Code of Business Conduct and
Ethics that has or reasonably could be expected to result in a
detrimental impact on the reputation, goodwill or business position
of the Company or any Subsidiary;
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(iii)
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gross
obstruction of business operations or illegal or disreputable
conduct by Executive that impairs or reasonably could be expected
to impair the reputation, goodwill or business position of the
Company or any Subsidiary, and any acts that violate any policy of
the Company relating to discrimination or harassment;
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(iv)
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commission of a
felony or a crime involving moral turpitude or the entrance of a
plea of guilty or nolo contendere to a felony or a crime involving
moral turpitude; or
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(v)
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any action
involving a material breach of the terms of this Agreement
including material inattention to or material neglect of duties and
Executive shall not have remedied such breach within 30 days after
receiving written notice from the Board specifying the details
thereof.
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(d)
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Constructive
Termination . The
Executive shall be considered to have terminated his employment as
a result of a constructive termination (“Constructive
Termination”) if, without the written consent of the
Executive,
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(i)
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the Company
materially reduces Executive’s Salary or bonus opportunity or
the Company materially breaches this Agreement;
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(ii)
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the Company
materially reduces the Executive’s duties or authority, fails
to nominate the Executive to the Board, or requires the Executive
to report other than to the Board or a committee of the
Board;
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(iii)
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the Company
relocates its principal offices, or the Executive’s principal
place of employment, outside the Chicago metropolitan area;
or
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(iv)
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any successor
to the Company (or the Company itself, following a Change in
Control as defined in paragraph 4(d)) fails to assume this
Agreement or affirm its obligations hereunder in any material
respect.
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Notwithstanding the foregoing, at
the direction of the Board, certain of the Executive’s duties
may be reassigned to another director or officer for up to 30 days
to permit an investigation of whether there is a basis to terminate
the Executive for Cause. Such reassignment shall not constitute
Constructive Termination as long as the reassigned duties are
directly and materially related to the subject of the
investigation. Further, suspending the Executive’s duties,
with full pay, bonus eligibility, welfare benefits and continued
vesting of equity awards and other benefits, after Executive has
provided a notice of non-renewal of this Agreement shall not
constitute Constructive Termination. A termination by the Executive
shall not be deemed to be as a result of a Constructive Termination
unless the Executive shall have provided notice of the Constructive
Termination event within 90 days of its occurrence and the Company
shall have a reasonable opportunity to cure such conduct or
event.
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(e)
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Voluntary
Resignation . The
Executive may terminate his employment hereunder at any time for
any reason by giving the Company prior written notice of his
resignation, which shall be effective 30 days after receipt
(provided, that, the Company may accelerate the Date of Termination
to an earlier date by providing the Executive with notice of such
action, or, alternatively, the Company may place the Executive on
paid leave during such period) (“Voluntary
Resignation”). The Executive shall not be required to specify
a reason for any such termination under this paragraph 3(e) unless
the Executive intends for such termination to be subject to
paragraph 3(d).
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(f)
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Mutual
Agreement . This
Agreement may be terminated at any time by the mutual agreement of
the parties (“Mutual Agreement”). Any termination of
the Executive’s employment by mutual agreement of the parties
will be memorialized by an agreement which is reduced to writing
and signed by the Executive and a duly appointed officer of the
Company.
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(g)
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Termination
by Company without Cause . The Company may terminate the
Executive’s employment hereunder at any time for any reason,
by giving the Executive prior written notice of his termination,
which shall be effective immediately or as of such later time as is
specified in such notice (“Termination without Cause”).
Termination of the Executive’s employment by the Company
shall be deemed to have occurred under this paragraph 3(g) unless
the notice of termination provided to the Executive by the Company
specifies that the Executive’s termination is for reasons
described in paragraphs 3(b), 3(c) or 3(f).
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(h)
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Date of
Termination . “Date
of Termination” means the last day the Executive is employed
by the Company, whether by reason of the expiration of the
Agreement Term, termination of employment in accordance with the
foregoing provisions of this paragraph 3, or under any other
circumstances. Notwithstanding anything contained in this Agreement
to the contrary, the date on which a “separation from
service” pursuant to section 409A of the Internal Revenue
Code of 1986, as amended (“Section 409A”)
(“Separation from Service”) occurs shall be the
“Date of Termination” or termination of employment for
purposes of determining the timing of payments and benefits under
this Agreement to the extent necessary to have such payments and
benefits under this Agreement be exempt from the requirements of
Section 409A or comply with the requirements of
Section 409A.
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4. Rights Upon Termination .
The rights and obligations of the Company and the Executive with
respect to compensation and benefits under this Agreement for
periods after his Date of Termination shall be determined in
accordance with the following provisions of this paragraph
4:
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(a)
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Termination
for Cause; Voluntary Resignation; Mutual Agreement; Non-Renewal by
Either Party . If the
Executive’s employment terminates under circumstances
described in paragraph 3(c), 3(e) or 3(f) or if the
Executive’s employment with the Company terminates at the end
of the Agreement Term due to non-renewal of the Agreement Term by
either party, then, except as otherwise expressly provided in this
Agreement or otherwise agreed in writing between the Executive and
the Company, the Company’s only obligation to Executive after
the Executive’s Date of Termination is payment of the
following:
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(i)
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The
Executive’s Salary for the period ending on the Date of
Termination and, if applicable, any earned but unpaid Bonus for the
fiscal year ending on or before the Date of Termination;
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(ii)
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Payment for
unused vacation days, as determined in accordance with the Company
policy as in effect from time to time; and
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(iii)
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Any other
payments or benefits to be provided to the Executive by the Company
pursuant to any employee benefit plans or arrangements adopted by
the Company, to the extent such amounts are due from the Company
(with paragraphs 4(a)(i), (ii) and this subsection
(iii) referred to collectively herein as “Accrued
Benefits”).
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(b)
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During the
Agreement Term, Termination due to Death or Disability; Prior to or
more than 24 months following a Change in Control, Constructive
Termination or Termination by the Company without Cause
. If the Executive’s
employment terminates under circumstances described in paragraph
3(a) or 3(b) at any time during the Agreement Term, or if the
Executive’s employment terminates under circumstances
described in 3(d) or 3(g) either prior to a Change in Control (as
defined herein) or more than twenty-four (24) months following
a Change in Control, the Executive (or, in the event of his death,
his estate) shall be entitled to the following from the
Company:
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(ii)
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A lump sum
amount equal to two (2) times the sum of (w) the current
Salary then in effect, plus (x) the higher of his Target Bonus
or the average of the most three recent annual Bonuses
earned;
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(iii)
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A pro-rata
Target Bonus for the elapsed portion of the calendar year through
the Date of Termination, payable in a lump sum;
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(iv)
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Continued
medical coverage under the Company’s medical plan for the
Executive and his family during the twenty-four (24) months
following the Date of Termination, with benefits no less favorable
in any material respect than the level of coverage applicable to
them immediately prior to such Date of Termination, and the Company
shall pay all premium amounts thereto. The continued medical
coverage during the twenty-four (24) months following the Date
of Termination at the Company’s expense shall run
concurrently with the time period for which the Executive and his
family members are entitled to continued medical coverage under the
provisions of section 4980B of the Internal Revenue Code of 1986,
as amended (the “Code”), and section 601 of the
Employee Retirement Income Security Act of 1974, as amended
(“ERISA”), if applicable, or any similar state law
continuation coverage requirements; and
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(v)
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The
Executive’s RSUs and Prior Awards which are restricted stock
units shall become immediately payable, all restrictions on any
restricted stock and any other share-based awards shall lapse; all
Options shall become immediately vested and continue to be
exercisable for the lesser of five years from such Date of
Termination or the remaining term of the Option if there had not
been a Date of Termination; the earned Performance Shares and
related dividend equivalent RSUs shall become immediately vested;
and for an employment termination prior to January 1, 2010,
the Performance Shares and related dividend equivalent RSUs shall
be earned as of the Date of Termination such that the sum of the
Performance Shares earned as of the Date of Termination and the
previously earned Performance Shares equals 100% of Target Shares
(as described in Schedule II of the Prior Agreement) (or if
greater, the number of shares calculated pursuant to the following
sentence (“Severance Performance Share Number”)) and
all such earned Performance Shares shall also become immediately
vested. Severance Performance Share Number is such number equal to
the sum of (i) if Performance Shares were earned at more than
100% of the applicable Target Shares for any Earning Date (as
defined in the Prior Agreement), the total number of Performance
Shares earned for such Earning Date and (ii) 100% of the
applicable Target Shares for any Earning Date which has not yet
occurred or for which no more than 100% of the applicable Target
Shares were earned.
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(c)
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Termination
due to Constructive Termination or Termination by the Company
without Cause on or after a Change in Control
. If the Executive’s
employment terminates on or within twenty-four months following a
Change in Control under circumstances described in paragraphs 3(d)
or 3(g), the Executive (or, in the event of his death, his estate)
shall be entitled to the following from the Company:
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(ii)
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A lump sum
amount equal to three (3) times the sum of (x) the
current Salary then in effect, plus (y) the higher of his
Target Bonus or the average of the most three recent annual Bonuses
earned;
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(iii)
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A pro-rata
Target Bonus for the elapsed portion of the calendar year through
the Date of Termination, payable in lump sum;
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(iv)
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Continued
medical coverage under the Company’s medical plan for the
Executive and his family during the thirty-six (36) months
following the Date of Termination, with benefits no less favorable
in any material respect than the level of coverage applicable to
them immediately prior to such Date of Termination, and the Company
shall pay all premium amounts thereto. The continued medical
coverage during such thirty-six months at the Company’s
expense shall run concurrently with the time period for which the
Executive and his family members are entitled to continued medical
coverage under the provisions of section 4980B the Code, and
section 601 of ERISA, if applicable, or any similar state law
continuation coverage requirements; and
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(v)
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The
Executive’s RSUs and Prior Awards which are restricted stock
units shall become immediately payable, all restrictions on any
restricted stock and any other share-based awards shall lapse; all
Options shall become immediately vested and continue to be
exercisable for the lesser of five (5) years following the
Date of Termination or the remaining term of the Option if there
had not been a Date of Termination; the earned Performance Shares
and related dividend equivalent RSUs shall become immediately
vested; and for an employment termination prior to January 1,
2010, the Performance Shares and related dividend equivalent RSUs
shall be earned as of the Date of Termination such that the sum of
the Performance Shares earned as of the Date of Termination and the
previously earned Performance Shares equals 100% of Target Shares
(as described in Schedule II of the Prior Agreement) (or if
greater, the Severance Performance Share Number) and all such
earned Performance Shares shall also become immediately
vested.
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(d)
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Change in
Control . For purposes of
this Agreement the term “Change in Control” means the
happening of any of the following:
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(i)
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Any
“Person” (having the meaning ascribed to such term in
Section 3(a)(9) of the Exchange Act and used in Sections 13(d)
and 14(d) thereof, including a “group” within the
meaning of Section 13(d)(3)) has or acquires Beneficial
Ownership of twenty-five percent (25%) or more of the combined
voting power of the Company’s then outstanding voting
securities entitled to vote generally in the election of directors
(“Voting Securities”); provided, however, that in
determining whether a Change in Control has occurred, Voting
Securities which are held or acquired by the following:
(i) the Company or any of its Related Companies (as defined in
paragraph 4(d)(iv) below) or (ii) an employee benefit plan (or
a trust forming a part thereof) maintained by the Company or any of
its Related Companies (the persons or entities described in
(i) and (ii) shall collectively be referred to as the
“Excluded Group”), shall not constitute a Change in
Control. For purposes of this Agreement, “Beneficial
Ownership” shall mean beneficial ownership within the meaning
of Rule 13d-3 promulgated under the Exchange Act.
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(ii)
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The individuals who are members
of the Incumbent Board cease for any reason to constitute more than
fifty percent (50%) of the Board. For purposes of this
Agreement, “Incumbent Board” shall mean the individuals
who, as of the beginning of the period commencing two years prior
to the determination date, constitute the Board; provided, however,
that for purposes of this definition, any individual who becomes a
member of the Board subsequent to the beginning of such two-year
period, whose election, or nomination for election by the
Company’s stockholders, was
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approved by a vote of at least
two-thirds of those individuals who are members of the Board and
who were also members of the Incumbent Board (or deemed to be such
pursuant to this proviso) shall be considered as though such
individual were a member of the Incumbent Board; and provided
further, however, that any such individual whose initial assumption
of office occurs as a result of or in connection with an actual or
threatened solicitation of proxies or consents by or on behalf of a
Person other than the Board shall not be considered a member of the
Incumbent Board.
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(iii)
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A consummation
of a merger, consolidation or reorganization or similar event
involving the Company, whether in a single transaction or in a
series of transactions (“Business Combination”),
unless, following such Business Combination:
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(a)
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the Persons
with Beneficial Ownership of the Company, immediately before such
Business Combination, have Beneficial Ownership of more than fifty
percent (50%) of the combined voting power of the then
outstanding voting securities entitled to vote generally in the
election of directors of the corporation (or in the election of a
comparable governing body of any other type of entity) resulting
from such Business Combination (including, without limitation, an
entity which as a result of such transaction owns the Company or
all or substantially all of the Company’s assets either
directly or through one or more subsidiaries) (the “Surviving
Company”) in substantially the same proportions as their
Beneficial Ownership of the Voting Securities immediately before
such Business Combination;
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(b)
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the individuals
who were members of the Incumbent Board immediately prior to the
execution of the initial agreement providing for such Business
Combination constitute more than fifty percent (50%) of the
members of the board of directors (or comparable governing body of
a noncorporate entity) of the Surviving Company; and
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(c)
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no Person
(other than a member of the Excluded Group or any Person who
immediately prior to such Business Combination had Beneficial
Ownership of twenty-five percent (25%) or more of the then
Voting Securities) has Beneficial Ownership of twenty-five percent
(25%) or more of the then combined voting power of the
Surviving Company’s then outstanding voting
securities.
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(iv)
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The assignment, sale, conveyance,
transfer, lease or other disposition of all or substantially all of
the assets of the Company to any Person (other than the Company,
any Related Company or an employee benefit plan (or related trust)
sponsored or maintained by the Company or any Related Company)
unless, immediately following such
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disposition, the conditions set
forth in paragraph (iii)(a), (b) and (c) above will be
satisfied with respect to the entity which acquires such assets.
For purposes of this Agreement, “Related Company” shall
mean any entity that is directly or indirectly controlled by, in
control of or under common control with the Company.
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(v)
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The occurrence
of a liquidation or dissolution of the Company.
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Notwithstanding the provisions of
this paragraph (d), a Change in Control that results from a
transaction consummated by a Person in which the Executive has an
equity or debt interest (other than passive ownership of the
securities of a publicly traded company acquired in the open market
with personal funds) or with which the Executive is associated as a
director, officer, employee, consultant or advisor, shall not be
considered a Change in Control unless the Executive’s duties
and responsibilities following such transaction are substantially
and materially different from the duties and responsibilities
contemplated by this Agreement for the role of a chief executive
officer.
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(e)
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In the event of
the Executive’s death before payment of any amount that had
become due and payable to or on behalf of the Executive pursuant to
the terms of this Agreement, payment of that amount shall be made
to the Executive’s estate.
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(f)
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The Company shall not be required
to make the payments and provide the benefits specified in
paragraphs 4(a), 4(b) or 4(c) unless the Executive executes and
delivers to the Company an agreement releasing the Company, its
affiliates and its officers, directors and employees from all
liability (other than the payments and benefits under this
Agreement) substantially in the form set forth attached hereto as
Exhibit A and such agreement has become effective and irrevocable.
To the extent that any such payments or benefits under this
Agreement are intended to be exempt from Section 409A as a
short-term deferral pursuant to Treasury Regulations
§1.409A-1(b)(4) or any successor thereto, such release
required for such payment or benefit must be provided no later than
March 7th of the calendar year following the calendar year of
the Executive’s Separation from Service and the Company shall
make such payments on the day following the date the release
becomes effective and irrevocable. Subject to paragraph 4(h), to
the extent that Executive is required to execute and deliver a
release to receive a payment or benefit that constitutes a
“deferral of compensation” subject to Section 409A
(after taking into account to the maximum extent possible any
applicable exemptions) (“409A Payment”), such 409A
Payment will be provided upon the 30th day following
Executive’s Separation from Service provided the release in
the form mutually agreed upon between Executive and the Company or
in substantially the form set forth as Exhibit A has been executed,
delivered, effective and irrevocable prior to such time. If a
release is required for a 409A Payment and such release is not
executed, delivered, effective and irrevocable by the 30th day
following Executive’s Separation from Service, such 409A
Payment shall not be provided to the Executive to the extent that
providing such 409A Payment would cause such 409A
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Payment to fail to comply with
Section 409A. Should this paragraph 4(f) result in the delay
of benefits under this Agreement, any such benefit shall be made
available to the Executive by the Company during such delay period
at Executive’s expense. On the first day any such benefits
may be made without incurring additional tax pursuant to
Section 409A, the Company shall provide such benefits as
provided for in this Agreement as well reimbursement of the amount
Executive paid for benefits pursuant to the preceding
sentence.
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(g)
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Except as may
otherwise be expressly provided to the contrary in this Agreement,
nothing in this Agreement shall be construed as requiring the
Executive to be treated as employed by the Company for purposes of
any employee benefit plan or arrangement following the date of the
Executive’s Date of Termination.
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(h)
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To the extent
that any payment or benefit pursuant to this Agreement constitutes
a 409A Payment treated as payable upon Separation from Service,
then, if on the date of the Executive’s Separation from
Service, the Executive is a Specified Employee, then to the extent
required for Executive not to incur additional taxes pursuant to
Section 409A, no such 409A Payment shall be made to the
Executive earlier than the earlier of (i) six (6) months
after the Executive’s Separation from Service; or
(ii) the date of his death. Should this paragraph 4(h) result
in the delay of benefits, any such benefit shall be made available
to the Executive by the Company during such delay period at
Executive’s expense. Should this paragraph 4(h) result in a
delay of payments or benefits to Executive, on the first day any
such payments or benefits may be made without incurring additional
tax pursuant to Section 409A (the “409A Payment
Date”), the Company shall make such payments and provide such
benefits as provided for in this Agreement, provided that any
amounts that would have been payable earlier but for the
application of this paragraph 4(h) as well reimbursement of the
amount Executive paid for benefits pursuant to the preceding
sentence, shall be paid in lump-sum on the 409A Payment Date. For
purposes of this paragraph 4(h), the term “Specified
Employee” shall have the meaning set forth in
Section 409A, as determined in accordance with the methodology
established by the Company. For purposes of determining whether a
Separation from Service has occurred for purposes of
Section 409A, a Separation from Service is deemed to include a
reasonably anticipated permanent reduction in the level of services
performed by the Executive to less than fifty percent (50%) of
the average level of services performed by the Executive during the
immediately preceding 36-month period.
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5. Duties on Termination .
Subject to the terms and conditions of this Agreement, during the
period beginning on the date of delivery of a notice of resignation
by the Executive or notice of termination of the Executive’s
employment by the Company, and ending on the Date of Termination,
the Executive shall continue to perform his duties as set forth in
this Agreement, and during such period shall also perform such
reasonable services for the Company as are necessary and
appropriate for a smooth transition to the Executive’s
successor, if any. Notwithstanding the foregoing provisions of this
paragraph 5, the Company may suspend the Executive from performing
his duties under this Agreement following the delivery of any such
notice of resignation or termination; provided,
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however, that during the period of suspension
(which shall end on the Date of Termination), the Executive shall
continue to be treated as employed by the Company for other
purposes, and his rights to compensation or benefits shall not be
reduced by reason of the suspension.
6. Non-solicitation . While
the Executive is employed by the Company, and for a period of 12
months after the Executive’s Date of Termination, the
Executive agrees that he will not in any manner, directly or
indirectly (without prior written consent of the Company) employ or
solicit for employment for himself or any other business entity
(other than the Company and its Subsidiaries) any individual (other
than a current or former executive assistant (secretary) of the
Executive), who is an employee, officer, agent or representative of
the Company (or any successor corporation into which the Company
may be merged or consolidated) at the time of such solicitation or
employment. Nothing in this paragraph 6 or paragraph 7 shall be
construed as limiting the Executive’s duty of loyalty to the
Company while he is employed by the Company, or any other duty he
may otherwise have to the Company while he is employed by the
Company.
7. Confidential Information and
Non-Disparagement . The Executive agrees that:
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(a)
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Except as may
be required by the lawful order of a court or agency of competent
jurisdiction, or except to the extent that the Executive has
express authorization from the Company, the Executive agrees to
keep secret and confidential indefinitely all non-public
information (including, without limitation, information regarding
litigation and pending litigation) concerning the Company and the
Subsidiaries which was acquired by or disclosed to the Executive
during the course of his employment with or negotiations for
employment with the Company, or during the course of any
consultation with the Company following his termination of
employment pursuant to paragraph 8, and not to disclose the same,
either directly or indirectly, to any other person, firm, or
business entity, or to use it in any way.
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(b)
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To the extent
that any court or agency seeks to have the Executive disclose
confidential information, he shall promptly inform the Company, and
he shall take such reasonable steps to prevent disclosure of
confidential information until the Company has been informed of
such requested disclosure, and the Company has an opportunity to
respond to such court or agency. To the extent that the Executive
obtains information on behalf of the Company or any of the
Subsidiaries that may be subject to attorney-client privilege as to
the Company’s attorneys, the Executive shall take reasonable
steps to maintain the confidentiality of such information and to
preserve such privilege.
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(c)
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Nothing in the
foregoing provisions of this paragraph 7 shall be construed so as
to prevent the Executive from using, in connection with his
employment for himself or an employer other than the Company or any
of the Subsidiaries, knowledge which is generally known (other than
by reason of a violation of this paragraph 7) to persons of his
experience in other companies in the same industry.
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(d)
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During the
Agreement Term and thereafter (including following
Executive’s termination of employment for any reason) he will
not make statements or representations, or otherwise communicate,
directly or indirectly, in writing, orally, or otherwise, or take
any action which may, directly or indirectly, disparage the Company
or its respective officers, directors, employees, advisors,
businesses or reputations. The Company agrees that, during the
Agreement Term and thereafter, (including following
Executive’s termination of employment for any reason) the
Company (including, but not limited to any executives, officers,
Directors or employees of the Company) will not make s
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