RICHARD M. FRANK
Exhibit
10.2
XXXXXXX
X. XXXXX
2010
EMPLOYMENT AGREEMENT
This
Xxxxxxx X. Xxxxx 2010 Employment Agreement (“Agreement”) is executed as of the
23rd day of February, 2010, by and between XXXXXXX X. XXXXX (“Employee”) and CEC
ENTERTAINMENT, INC., a Kansas corporation (“Company”).
RECITALS:
WHEREAS,
Employee and the Company have heretofore entered into an agreement whereby
Employee is employed by the Company pursuant to certain terms and conditions;
and
WHEREAS,
the Board of Directors of the Company (the “Board of Directors”) has offered
Employee continued employment in consideration for the compensation and the
other benefits hereinafter set forth, and Employee is willing to continue in the
employ of the Company on these terms;
NOW,
THEREFORE, in consideration of the mutual promises hereinafter contained and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, it is agreed:
1. Current Employment
Agreement. The Company and Employee heretofore entered into an
employment agreement dated March 29, 2005, which was amended by an amendment
dated December 17, 2007 (the “Current Employment Agreement”). The
term of the Current Employment Agreement expires on the last day of the fiscal
year of the Company ending on or about December 31, 2010. The Company
and Employee hereby agree and affirm that the Current Employment Agreement shall
be in full force and effect through February 23, 2010.
2. Term. Following
the expiration of the Current Employment Agreement, the Company employs Employee
and Employee accepts employment from the Company upon the terms and conditions
specified in this Agreement. Subject to the provisions regarding
termination set forth in Sections 16 and 17 hereof, the term of this Agreement
shall begin as of February 23, 2010 (the “Effective Date”) and shall terminate
on March 31, 2014 (the “Term”).
3. Basic
Salary. For services rendered by Employee under this
Agreement, the Company shall pay Employee the “Basic Salary,” provided for in
this Section 3, as follows:
(a) During the
Term of Employee’s employment under this Agreement, Employee shall receive as
Basic Salary the amount of Seven Hundred Fifty Thousand Dollars ($750,000.00)
per year. Payment of the Basic Salary shall be made at periodic
times, no less frequently than monthly, in accordance with the Company’s normal
payroll practices. The Basic Salary may be increased in such amounts
and on such dates as the Compensation Committee of the Board of Directors (the
“Compensation Committee”) may determine from time to time.
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(b) The Basic
Salary provided for in this Section 3 shall be in addition to any other
compensation and/or benefits provided to Employee (i) pursuant to this Agreement
or (ii) otherwise at the discretion of the Compensation Committee, including,
but not limited to, the annual bonus opportunity available to support center
employees and officers of the Company at a level commensurate with his position
as Executive Chairman of the Board of Directors of the Company.
4. Restricted Stock
Grants. During the Term of this Agreement, Employee shall be
entitled to receive grants of Common Stock, par value $ .10 per share (“Common
Stock”) of the Company pursuant to restricted stock or restricted stock unit
awards (“Restricted Stock Awards”) in accordance with the terms of the Company’s
Second Amended and Restated 2004 Restricted Stock Plan or any successor plan
(the “Restricted Stock Plan”) in such number of shares and under such terms as
may be determined by the Compensation Committee, in accordance with the terms of
the Restricted Stock Plan. Such Restricted Stock Awards shall vest,
to the extent otherwise permitted under the Restricted Stock Plan, over the Term
of this Agreement.
5. Deferred
Compensation. Upon the earlier of (i) the date Employee’s
employment with the Company is terminated for any reason, either prior to or
following a “Change of Control” (as hereinafter defined) (including retirement,
death, disability or “Significant Medical Condition” (as hereinafter defined)),
or (ii) the end of the Term of this Agreement, Employee shall be entitled to
receive the sum of $250,000.00. Said amount shall be paid to Employee
(or his estate, if applicable) in cash in 10 equal installments, without
interest, with the first such installment being paid within five (5) business
days of his date of employment termination and each subsequent installment being
paid on the anniversary of his date of employment termination.
For all
purposes of this Agreement, the date of Employee's employment termination shall
be the date of Employee’s “separation from service,” as defined in Section 409A
of the Internal Revenue Code of 1986, as amended, (the “Code”) and the
regulations issued thereunder.
For
purposes of this Agreement, “Significant Medical Condition” means a major
medical event involving Employee that causes Employee and the Board of Directors
of the Company mutually to agree that Employee should no longer be employed by
the Company.
6. Severance Pay and Vesting of
Restricted Stock.
(a) If the
Company terminates the employment of Employee during the Term of this Agreement
for any reason other than for Cause (as hereinafter defined) or pursuant to
Section 17, the Company shall pay Employee severance pay in the amount of Two
Million Dollars ($2,000,000.00). Such severance pay shall be paid to
Employee in cash in a lump sum within five (5) business days of his date of
employment termination.
(b) If Company
terminates Employee’s employment for any reason (including death or disability),
if Employee's employment is terminated due to a Significant Medical Condition
during the Term of this Agreement or if there is a Change of Control,
any
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Restricted
Stock Awards granted to Employee pursuant to the Restricted Stock Plan as
provided in Section 4 that otherwise are not vested shall become immediately
vested at Employee’s termination of employment if they were granted at least one
year prior to Employee’s termination of employment, subject to any requirements
of the Restricted Stock Plan and satisfaction of any applicable
performance-based criteria.
(c) For
purposes of this Agreement, “Cause” shall mean (a) Employee’s conviction of, or
entry by Employee of a guilty plea to, a felony involving dishonesty or theft
under any laws of the U.S. or any state thereof, (b) Employee’s conduct that
amounts to fraud or embezzlement against the Company (intending to result in
personal enrichment and constituting a criminal offense for which Employee is
convicted or enters a guilty plea), (c) Employee’s willful breach of the
provisions of Section 11 of this Agreement. For purposes of clause
(c) of this definition, no act, or failure to act, on Employee’s part shall be
deemed “willful” unless done, or omitted to be done, by Employee not in good
faith and without reasonable belief that Employee’s act, or failure to act, was
in the best interests of the Company. Notwithstanding the foregoing,
Employee shall not be deemed to have been terminated for Cause unless and until
there shall have been delivered to him a copy of a resolution duly adopted by
the affirmative vote of not less than three-quarters (3/4) of the entire
authorized membership of the Board of Directors at a meeting of the Board of
Directors called and held for that purpose (after reasonable notice to Employee
and an opportunity for Employee, together with counsel, to be heard before the
Board of Directors), finding that in the good faith opinion of the Board of
Directors Employee was guilty of conduct set forth above in clause (a), (b) or
(c) of the first sentence of this definition, and specifying the
particulars thereof in detail.
7. Change of
Control. If, following a “Change of Control” and during the
Term of this Agreement, the Company terminates Employee’s employment for any
reason or Employee voluntarily terminates his employment with the Company within
one year after such Change of Control, then the Company shall pay Employee in
cash in a lump sum the amount of Three Million Dollars ($3,000,000.00) within
five (5) business days of the date of Employee's termination of
employment.
If
Company terminates Employee’s employment for any reason prior to the date on
which a Change of Control occurs (whether or not the Change of Control ever
occurs), and such termination either (1) was at the request or direction of a
person who has entered into an agreement with the Company, the consummation of
which would constitute a Change of Control, or (2) was otherwise in connection
with or in anticipation of a Change of Control (whether or not the Change of
Control ever occurs), then for all purposes hereof, such termination shall be
deemed to have occurred immediately following a Change of Control.
For
purposes of this Agreement, a “Change of Control” means any of the following:
(i) any consolidation, merger or share exchange of the Company in which the
Company is not the continuing or surviving corporation or pursuant to which
shares of the Company’s common stock would be converted into cash, securities or
other property, other than a consolidation, merger or share exchange of the
Company in which the holders of the Company’s common stock
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immediately
prior to such transaction have the same proportionate ownership of common stock
of the surviving corporation immediately after such transaction; (ii) any
sale, lease, exchange or other transfer (excluding transfer by way of pledge or
hypothecation) in one transaction or a series of related transactions, of all or
substantially all of the assets of the Company; (iii) the stockholders of
the Company approve any plan or proposal for the liquidation or dissolution of
the Company; (iv) the cessation of control (by virtue of their not
constituting a majority of directors) of the Board of Directors by the
individuals (the “Continuing Directors”) who were members of the Board of
Directors for the immediately preceding two (2) years (unless the election,
or the nomination for election by the Company’s stockholders, of each new
director was approved by a vote of at least two-thirds (2/3) of the
directors then still in office who were directors at the beginning of such a
period); (v) the acquisition of beneficial ownership (within the meaning of
Rule 13d-3 under the Securities Exchange Act of 1934, as amended, and any
successor statute) of an aggregate of 30% of the voting power of the Company’s
outstanding voting securities by any person or group (as such term is used in
Rule 13d-5 under the Securities Exchange Act of 1934, as amended, and any
successor statute) who beneficially owned less than 15% of the voting power of
the Company’s outstanding voting securities on the effective date of the
Company’s Restricted Stock Plan, or the acquisition of beneficial ownership of
an additional 15% of the voting power of the Company’s outstanding voting
securities by any person or group who beneficially owned at least 15% of the
voting power of the Company’s outstanding voting securities on the effective
date of the Company’s Restricted Stock Plan, provided, however, that
notwithstanding the foregoing, an acquisition shall not constitute a Change of
Control hereunder if the acquirer is (A) a trustee or other fiduciary
holding securities under an employee benefit plan of the Company and acting in
such capacity, (B) a subsidiary of the Company or a corporation owned,
directly or indirectly, by the stockholders of the Company in substantially the
same proportions as their ownership of voting securities of the Company or
(C) any other person whose acquisition of shares of voting securities is
approved in advance by a majority of the Continuing Directors; or (vi) in a
Title 11 bankruptcy proceeding, the appointment of a trustee or the conversion
of a case involving the Company to a case under Chapter 7.
8. Expenses. Subject
to the rules and procedures the Company may specify from time to time, the
Company shall reimburse Employee for all reasonable business expenses incurred
by Employee on behalf of the Company during the Term of this Agreement and as
identified in the Company’s rules and procedures regarding reimbursement of
business expenses, which are incorporated herein by reference. The
amount of expenses eligible for reimbursement during a calendar year shall not
affect the expenses eligible for reimbursement in any other calendar
year. Reimbursement of eligible expenses shall be made on or before
the last day of the calendar year following the calendar year in which the
expenses were incurred.
9. Automobile. Employer
shall pay to Employee the sum of Two Thousand Dollars ($2,000.00) per month
(subject to adjustment from time to time in direct proportion to generally
applicable adjustments by the Company to its automobile allowances) to reimburse
Employee for the use of Employee’s automobile in the performance of his duties
under this Agreement, and the Company shall further pay directly or by
reimbursement to Employee One Thousand Dollars ($1,000) annually, or such other
amount as the Company and Employee may from time to time agree, toward the
premiums upon a policy of collision and liability insurance covering
such
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automobile. Payment
or reimbursement of such insurance premiums during the Term of this Agreement
shall be made on or before the last day of the calendar year following the
calendar year in which the premiums are due, and such payment or reimbursement
during a calendar year shall not affect the premiums eligible for payment or
reimbursement in any other calendar year. All other cost and expenses
incurred in the operation and maintenance of Employee’s automobile, including
but not limited to the cost of all fuel, oil, maintenance and repairs, shall be
paid solely by Employee.
10. Duties of
Employee. In accepting continued employment by the Company,
Employee agrees to continue the responsibility, subject to the general direction
and control of the Board of Directors, of performing for and on behalf of the
Company the duties of Executive Chairman of the Board of Directors of the
Company and such other duties as are assigned to him by the Board of
Directors. In addition, if requested, Employee shall serve as an
employee, officer and/or director of any affiliates of the Company without
additional compensation, although such affiliates may assume some or all of the
payments due to Employee hereunder.
11. Exclusive
Service. Employee shall devote substantially his full time and
attention to rendering services to the Company, provided that Employee may make
and manage his personal passive investments. During the Term of this
Agreement, other than as an employee, officer and/or director of an affiliate of
the Company, Employee shall not be employed by any other person or engage in any
other business or occupation; provided that Employee may engage in the business
of making and managing his personal passive investments.
12. Medical and Disability
Insurance. The Company shall provide Employee and his family
with insurance coverage and/or cost reimbursement benefits which provide for
100% of the health, medical, hospitalization, prescription drug and dental costs
and expenses incurred by or on behalf of Employee and his Family, whether
through existing insurance and/or reimbursement plans covering the Company’s
employees or if only a portion of the benefit coverage described above can be
provided through such existing insurance and/or reimbursement plans, the Company
shall have the obligation to provide the remaining portion through special plans
relating specifically to Employee, including plans requiring the Company to
provide all or part of the remaining portion. To the extent provision
of such insurance coverage or cost reimbursement benefits during the Term of
this Agreement are taxable to Employee, the provision of such in-kind benefits
during a calendar year shall not affect the in-kind benefits to be provided in
any other calendar year, unless the insurance coverage or cost reimbursement
benefits provide for a limit on the amount of expenses that may be reimbursed
under such arrangement over some or all of the period in which such arrangement
remains in effect. To the extent the Company directly provides to
Employee any cost reimbursement benefits, payment of such benefits shall be made
on or before the last day of the calendar year following the calendar year in
which such costs are incurred. For purposes of this Agreement,
Employee’s “Family” shall include his spouse, as well as his children and step
children until such time that his children and step children are no longer
eligible for coverage under the health insurance plans covering the Company’s
employees or until they become covered under a policy or plan provided by their
employer which provides substantially similar coverage and
benefits.
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The
Company shall also take the necessary action to (a) include Employee under a
Company sponsored disability plan for executives, (b) acquire a specific
disability insurance policy for Employee and/or (c) assist Employee in acquiring
or paying for a disability plan or insurance policy, which action results in
Employee having coverage providing total disability income benefits of at least
50% of Employee’s Basic Salary which benefits will be payable if Employee became
disabled until the expiration of the Term of this Agreement. To the
extent the Company provides such disability insurance coverage during the Term
of this Agreement, the provision of such in-kind benefits during a calendar year
shall not affect the in-kind benefits to be provided, in any other calendar
year. To the extent the Company reimburses Employee or pays on
Employee’s behalf for such disability insurance coverage, payment or
reimbursement of such insurance premiums shall be made on or before
the last day of the calendar year following the calendar year in which the
premiums are due, and such payment or reimbursement during a calendar year shall
not affect the premiums eligible for payment or reimbursement in any other
calendar year. If only a portion of the disability income benefits
described above can be provided by insurance policies or plans, the Company
shall have the obligation to provide the remaining portion. To the
extent the Company directly provides any disability income benefits which can
only be provided in part by insurance policies or plans, the payment of said
benefits shall be made monthly only upon a disability as defined in said
insurance policies or plans, provided that the definition of disability applied
under such disability insurance policies or plans otherwise complies with the
requirements of Section 1.409A-3(i)(4) of the Final Regulations under Section
409A of the Code.
13. Continuation of Medical
Benefit Coverage. Upon the earlier of (i) the date Employee’s
employment with the Company is terminated for any reason, either prior to or
following a Change of Control (including retirement, death, disability or
Significant Medical Condition), or (ii) the end of the Term of this Agreement,
the Company shall provide Employee and his Family the health, medical,
hospitalization, prescription drug and dental insurance coverage and/or cost
reimbursement benefits set forth in Section 12 hereof, for a period not to
exceed the earlier of (a) ten (10) years from the date of termination of
employment (or death, disability or Significant Medical Condition), or (b) the
date on which Employee and his Family become covered under a policy or plan paid
for by a new employer of Employee providing substantially similar coverage and
benefits. In the event Employee’s employment terminates and this
Section 13 becomes effective, and thereafter Employee dies while the benefits
provided herein are still in effect, such benefits shall continue for Employee’s
Family until ten (10) years have passed following his termination of employment
or disability. The benefits set forth under this Section 13 shall be
provided in addition to any other payments, benefits or compensation, if any, to
which Employee, his estate of his designated beneficiary is entitled due to his
termination of employment as set forth in this Agreement. To the
extent provision of such insurance coverage or cost reimbursement benefits are
taxable to Employee and/or his Family and the provision of such benefits extend
beyond the applicable period of time during which Employee would be entitled (or
would, but for this Agreement, be entitled) to continuation coverage under the
Company’s group health plan pursuant to Section 4980B of the Code ( the “COBRA
period”), (i) the provision of such in-kind benefits during a calendar year
shall not affect the in-kind benefits to be provided in any other calendar year,
unless the insurance coverage or cost reimbursement benefits provide for a limit
on the amount of expenses that may be reimbursed under such arrangement over
some or all of the period in which such arrangement remains in
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effect,
and (ii) to the extent the Company directly provides to Employee any cost
reimbursement benefits, payment of such benefits shall be made on or before the
last day of the calendar year following the calendar year in which such costs
are incurred.
14. Life
Insurance. The Company shall maintain and pay the premiums on
one or more life insurance policies on Employee’s life, which may include
insurance on Employee’s life under any group term life insurance plan maintained
from time to time by the Company for its employees. The aggregate
face amount(s) of such policy or policies shall be at least Five Hundred
Thousand Dollars ($500,000.00). To the extent provision of such
insurance coverage during the Term of this Agreement is taxable to Employee, the
provision of such in-kind benefits during a calendar year shall not affect the
in-kind benefits to be provided in any other calendar year.
Any
policy of insurance or certificate of insurance under a group term policy
maintained by the Company to provide the death benefits described pursuant to
this Section 14 shall be owned by the Company, and Employee (or his assignee)
shall have the sole right to designate the beneficiary or beneficiaries of the
proceeds payable thereunder upon the death of Employee.
15. Vacation and Days
Off. Employee may take reasonable vacations and days off
agreeable to the Company and Employee; provided, however, that Employee shall be
entitled to at least five (5) weeks of paid vacation per calendar year, which
Employee may use at any time during each year, and to the extent not used,
during a subsequent calendar year.
16. Termination After
Notice. Either Employee or the Company may terminate the
employment of Employee at any time during the Term of this Agreement upon at
least ninety (90) calendar days’ prior written notice, and for the purposes of
said Section 18, except as otherwise provided in Section 7, the “Termination
Date” shall be the effective date of termination set forth in the ninety (90)
calendar days prior written notice referred to in the preceding sentence, but in
no event shall said effective date of termination be later than one hundred
twenty (120) calendar days following the giving of such written
notice.
17. Termination Upon Death,
Disability or Significant Medical Condition.
(a) Upon
the termination of Employee’s employment due to the death of Employee, the
Company shall pay to the estate of Employee certain compensation that otherwise
would have been payable to Employee, as provided in Section 18 hereof, and for
the purposes of said section, the “Termination Date” shall be the date of
Employee’s death. Employee shall not be entitled to the severance
payment described in Section 6 if his employment is terminated by death;
provided, however, if the ninety (90) calendar days prior written notice of
termination has been given by the Company, as described in Section 16, but
Employee dies prior to the effective date of termination set forth in said
notice and Employee otherwise would have been entitled to the severance payment
in accordance with Section 6(a) had he survived, then his estate shall be paid
such severance payment.
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(b) (i) During
any period of disability, illness or incapacity during the Term of this
Agreement, which renders Employee temporarily unable to perform the services
required under
this Agreement, Employee shall continue to receive the compensation payable
under this Agreement. Employee’s employment under this Agreement may
be terminated as provided below upon Employee’s permanent disability (as defined
below).
(ii) Employee
shall be deemed to have suffered “permanent disability” if Employee is unable by
reason of any medically determined physical or mental impairment to perform the
duties required of him under this Agreement for a period of one hundred eighty
(180) consecutive calendar days in any twelve-month period. Periods
of disability arising from unrelated causes shall not be
combined. Upon a determination of permanent disability, the Board of
Directors may terminate Employee’s employment upon thirty (30) calendar days’
prior written notice. In the event of such termination, the Company
shall pay to Employee certain compensation that would otherwise have been
payable to Employee, as provided in Section 18, and for the purposes of said
Section, the “Termination Date” shall be the effective date of termination
following the Company’s notice under the preceding sentence, but Employee shall
not be entitled to the severance payment described in Section 6 in such event of
termination.
(c) Upon
the termination of Employee’s employment due to a Significant Medical Condition,
the Company shall pay to Employee certain compensation that would otherwise have
been payable to Employee, as provided in Section 18 hereof, and for the purposes
of said section, the “Termination Date” shall be the date mutually agreed upon
by Employee and the Board of Directors as the date of termination of Employee’s
employment. Employee shall not be entitled to the severance payment
described in Section 6 if his employment is terminated due to a Significant
Medical Condition; provided, however, if the ninety (90) calendar days prior
written notice of termination has been given by the Company, as described in
Section 16, but Employee incurs a Significant Medical Condition prior to the
effective date of termination set forth in said notice and Employee otherwise
would have been entitled to the severance payment in accordance with Section
6(a), then Employee shall be paid such severance payment.
18. Payments Due Upon
Termination of Employee’s Employment.
(a) In
the event of termination of Employee’s employment under this Agreement pursuant
to Sections 16 or 17 hereof, the Company shall pay Employee or his estate, as
the case may be, the following payments or other items of compensation, for
which purpose the “Termination Date” shall be the Termination Date specified in
Sections 7, 16 or 17 hereof, whichever is applicable:
(i) Basic
Salary that would otherwise have been payable to Employee under Section 3(a)
hereof through the Termination Date;
(ii) all
payments, if any, payable pursuant to Sections 5, 6 and 7 hereof.
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19. Waiver of
Breach. The waiver by the Company of a breach of any of the
provisions of this Agreement by Employee shall not be construed as a waiver of
any subsequent breach of Employee.
20. Binding Effect:
Assignment. The rights and obligations of the Company under
this Agreement shall inure to the benefit of and shall be binding upon the
successors and assigns of the Company, whether by reason of merger,
consolidation, acquisition or other business combination, or
otherwise. This Agreement is a personal employment contract that may
not be sold, assigned, transferred or pledged as collateral by
Employee.
21. Invalid
Provisions. It is understood and agreed that in the event any
paragraph, provision or clause of this Agreement or any combination thereof is
found to be unenforceable at law, in equity, or under any presently existing or
hereafter enacted legislation, regulation or order of the United States, any
state of subdivision thereof or any municipality, those findings shall not in
any way affect the other paragraphs, provisions or clauses in this Agreement,
which shall continue in full force and effect.
22. Performance. This
Agreement shall be performed in Dallas, County, Texas.
23. Governing
Law. This Agreement shall be construed and enforced in
accordance with the laws of the State of Texas.
24. Entire
Agreement. This Agreement contains the entire agreement of the
parties and supersedes all prior agreements and understandings, oral or written,
with respect to the subject matter hereof, except to the extent that provisions
of the Current Employment Agreement are expressly stated herein to be
effective. This Agreement may be changed only by an agreement in
writing signed by the party against whom any waiver, change, amendment,
modification or discharge is sought.
25. Headings. The
headings contained in this Agreement are for reference purposed only and shall
not affect the meaning or interpretation of this Agreement.
26. Notice. Any
notice required or permitted to be given under this Agreement to the Company
shall be sufficient if in writing and if sent by certified or registered mail,
first class, return receipt requested, to the registered office of the
Company. Any notice required or
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27. Gender. When
the context in which words are used in this Agreement indicate that such is the
intent, words in the singular number shall include the plural and vice versa and
words in the masculine gender shall include the feminine and neuter genders and
vice versa.
In
WITNESS WHEREOF, the parties have executed this Agreement, effective as of the
date and year first above written.
|
COMPANY:
|
|
|
CEC
ENTERTAINMENT, INC.
|
|
| By: /s/ Xxxxxxx X. Xxxxxxxx | |
| Xxxxxxx X. Xxxxxxxx | |
| President and Chief Executive Officer | |
|
EMPLOYEE:
|
|
| /s/ Xxxxxxx X. Xxxxx | |
| Xxxxxxx X. Xxxxx |
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