EXHIBIT 10.23
EMPLOYMENT AGREEMENT
dated as of November 5, 1992
between
America's Favorite Chicken Company (the "Company")
and
Xxxx X. Xxxxxxxx ("Employee")
WHEREAS, the Company desires to employ Employee and to enter into an
agreement embodying the terms of such employment; and
WHEREAS, Employee desires to accept such employment and to enter into such
agreement;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein and for other good and valuable consideration, the parties
agree as follows:
1. Term of Agreement.
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This Agreement shall be effective as of the date hereof and, unless earlier
terminated pursuant to Section 9 hereof, shall terminate on the fifth
anniversary of the Commencement Date (the "Termination Date").
2. Employment.
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2.01 Position. Employee shall serve as Executive Vice President and
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Chief Operating Officer of the Company and shall perform such duties consistent
with his position as may be assigned to him from time to time by the Board of
Directors of the Company.
2.02 Time and Efforts. Employee, so long as he is employed
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hereunder, shall devote his full business time and attention to the services
required of him hereunder, except as otherwise agreed and for vacation time and
reasonable periods of absence due to sickness or personal injury, and shall use
his best efforts, judgment and energy to perform, improve and advance the
business and interests of the Company in a manner consistent with the duties of
his position.
3. Base Salary.
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Beginning on the Commencement Date and continuing during the term hereof,
the Company shall pay Employee, in equal installments no less frequently than
monthly, a base salary at the rate of no less than Two Hundred Thousand Dollars
(U.S.$200,000.00) per annum. The Employee's base salary shall be reviewed by the
Board of Directors of the Company on an annual basis.
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4. BONUS.
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4.01 Grant of Bonus. Employee shal1 be entitled to an annual bonus
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(the "Bonus") determined as hereinafter provided.
4.02 Determination of Amount of Bonuses. The amount of the Bonus, if
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any, payable to Employee with respect to any fiscal year of the Company shall be
the percentage (set forth in Column B below) of the Base Salary for such fiscal
year that conforms to the "Operating Result" for such fiscal year set forth in
Column A. For any fiscal year of the Company, the "Operating Result" shall be
the result obtained from the following calculation:
Operating Result = Performance Earnings Before Interest and Taxes
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Target Earnings Before Interest and Taxes
A B
Percent of Annual Base Salary
Operating Result Payable to Employee as a Bonus
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less than 0.80 0%
0.80 or greater but less than 40%
0.85
0.85 or greater but less than 45%
0.90
0.90 or greater but less than 50%
0.95
0.95 or greater but less than 55%
1.00
1.00 or greater 60% plus one and one-half (1-1/2%)
percent of each dollar of
Performance Earnings before
Interest and Taxes, or fraction
thereof, in excess of Target
Earnings before Interest and
Taxes up to a maximum bonus of
100% of Annual Base Salary.
4.03 Determination of Performance Earnings before Interest and Taxes.
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Performance Earnings before Interest and Taxes for purposes of Section 4 is
defined to mean net income before extraordinary and nonrecurring items,
interest, income taxes and
cumulative effects of changes in accounting principles determined in accordance
with generally accepted accounting principles ("GAAP") consistent with prior
periods and such principles used in determining Target Earnings before Interest
and Taxes. Performance Earnings before Interest and Taxes shall be determined
annually by the Company and reviewed by the accounting firm auditing the
financial statements of the Company. Any charge against earnings resulting from
a difference in the fair market value of the Stock Options referred to in
Section 5.01 and the option price thereof shall be considered an "extraordinary
item" for purposes of determining Performance Earnings before Interest and
Taxes.
4.04 Determination of Target Earnings before Interest and Taxes.
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Target Earnings before Interest and Taxes for any period shall be the projected
Target Earnings before Interest and Taxes for such period as set forth in the
Company's annual operating plan approved by the Board of Directors of the
Company.
4.05 Payment of Bonuses. If Employee is entitled to a bonus for any
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fiscal year, an accounting will be furnished and payment will be made to
Employee within fifteen (15) days following completion of the annual audit, but
in no event later than 105 days following the end of each fiscal year.
4.06 First Bonus Period. Notwithstanding anything herein to the
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contrary, at the end of the fiscal year of the Company in which the Commencement
Date occurs, Employee shall be entitled to a Bonus equal to 60% of base salary
of Employee prorated for the number of months or portion thereof from the
Commencement Date to the end of the then-current fiscal year, but in no event
less than three (3) months.
4.07 Termination of Employment. If Employee's employment hereunder
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shall terminate other than pursuant to Section 9.04 and on or before the first
anniversary of the Commencement Date, the Bonus to which the Employee would have
been entitled for the fiscal year in which such termination occurs shall be
prorated for the number of full months elapsed in such fiscal year prior to such
termination. If Employee's employment hereunder shall terminate other than
pursuant to Section 9.04 and following the first anniversary of the Commencement
Date, the Employee shall receive the Bonus to which he would have been entitled
for the entire fiscal year in which such termination occurs. If Employee's
employment hereunder shall terminate pursuant to Section 9.04, no Bonus shall be
payable to Employee for the fiscal year in which such termination occurs.
5. Stock Options; Registration RightS; Shareholder's Agreement.
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5.01 Stock Options. The Company will grant to Employee options (the
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"Options") to purchase 170,500 shares of the Company's common stock, par value
$0.01 per share (the "Common Stock"), representing 1.5% of the fully diluted
Common Stock, on and as of the Commencement Date. The Options shall be granted
pursuant to the terms of the Company's 1992 Stock Option Plan (the "Plan"), a
copy of which is attached hereto as Exhibit "A," and the Nonqualified Stock
Option Agreement (the "Stock Option Agreement"), a copy of which is attached
hereto as Exhibit "B." The Company shall execute and deliver to Employee the
Stock Option Agreement simultaneous with the execution of this Agreement.
5.02 Registration Rights. The Company and Employee shall enter into
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the Registration Rights Agreement (the "Registration Rights Agreement"), a copy
of which is attached hereto as Exhibit "C," simultaneous with the execution of
this Agreement.
5.03 Shareholders' Agreement. The Employee shall enter into the
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Shareholders' Agreement (the "Shareholders' Agreement), a copy of which is
attached hereto as Exhibit "D," simultaneous with the execution of this
Agreement.
6. Employee Benefits.
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Employee shall be provided employee benefits, including $500,000.00 face
amount of life insurance, (assuming standard rates), health, accident and
disability insurance under the Company's plans, policies and programs available
to senior executive officers of the Company, in accordance with the provisions
of such plans, policies and programs governing eligibility and participation.
7. Perquisites.
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7.01 Automobile and Car Phone Allowances. The Company shall provide
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Employee with an automobile allowance in the amount of $750.00 per month and a
car phone allowance in the amount of $150.00 per month.
7.02 Vacation. Employee shall be entitled to four (4) weeks paid
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vacation each year during the term hereof.
7.03 Other Perquisites. Employee shall be provided additional
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perquisites in accordance with the Company's policies for similarly situated
senior executives of the Company.
8. BUSINESS EXPENSES.
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All reasonable and customary business expenses incurred by Employee in the
performance of his duties hereunder shall be paid or reimbursed by the Company
in accordance with the Company's policies.
9. Termination of Employment.
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9.01 Definitions. For purposes of this Section 9, the following terms
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shall have the following meanings:
(a) Cause. The term "Cause" shall mean (i) Employee commits fraud or
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is convicted (all appeals final) of a crime involving moral turpitude, (ii)
Employee, in carrying out his duties hereunder, has been guilty of gross neglect
or gross misconduct resulting in material harm to the Company or any of its
affiliates, (iii) Employee shall have repeatedly refused to follow or comply
with the duly promulgated directives (consistent with his position) of the board
of directors of the Company or the President, or (iv) Employee otherwise
materially breaches this agreement and, if such breach is susceptible to cure,
fails to cure such breach within thirty (30) days of receipt of written notice
thereof from the Company.
(b) Disability. The term "Disability" shall mean the good faith
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determination of the board of directors of the Company that Employee has failed
to or has been unable to perform his duties as the result of any physical or
mental disability for an aggregate of ninety (90) calendar days in any period of
365 calendar days.
9.02. Termination upon Death or Disability. If Employee's employment is
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terminated due to his death or Disability, the Company shall pay to the estate
of Employee or to the Employee, as the case may be, within fifteen (15) days
following Employee's death or upon his termination in the event of Disability,
all amounts payable to Employee through the date of termination pursuant to
Sections 3, 4, 5, 6, 7 and 8. In addition the Company shall pay to Employee the
Bonus payable pursuant to Section 4.07 hereof.
9.03 Termination for other than Death or Disability or for Cause. If
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Employee's employment is terminated by the Company other than (i) by reason of
his death or Disability or (ii) for Cause, the Company shall pay to Employee, in
addition to any amounts unpaid under Sections 3, 4, 5, 6, 7 and 8, severance
pay, as shown below:
Date of Termination Severance Pay
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On or before second anniversary of 1 times Base Salary
Commencement Date
After second anniversary and on or 1 1/2 times Base Salary
before third anniversary of
Commencement Date
After third anniversary and on or 2 times Base Salary
before fourth anniversary of
Commencement Date
After fourth anniversary of 2 1/2 times Base Salary
Commencement Date
In addition, all other employee benefits then being provided to Employee as
of the date of termination shall be continued for one year, and the Company
shall pay to Employee the Bonus payable to the Employee pursuant to Section 4.07
hereof.
9.04 Voluntary Termination by Employee or Termination for Cause.
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Employee may terminate his employment hereunder at any time whatsoever, with or
without cause, upon thirty (30) days written notice to the Company. The
Company may terminate Employee's employment hereunder at any time without notice
for Cause. In the event Employee's employment is terminated voluntarily by
Employee or by the Company for Cause:
(a) The Company shall pay to Employee upon such termination all
amounts then due under Sections 3, 4, 5, 6, 7 and 8, prorated through the date
of termination for the year in which he is terminated; and
(b) The Company shall be under no obligation to make severance
payments to Employee.
9.05 Additional Termination Benefits. Any further benefits
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payable following any termination of Employee's employment shall be determined
in accordance with plans, policies and practices of the Company at the time of
termination.
10. Change of Control; Change in Responsibilities.
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Upon the occurrence of any of the following events:
(a) the dissolution or liquidation of the Company, or a
reorganization, merger or consolidation of the Company with one or more
corporations as a result of which the owners of all of the outstanding shares of
Common Stock immediately prior to such reorganization, merger or consolidation
own in the aggregate less than 50% of the outstanding shares of Common Stock of
the Company
or any other entity into which the Company shall be merged or consolidated
immediately following the consummation thereof, or the sale, transfer or other
disposition of all or substantially all of the assets or more than 50% of the
then outstanding shares of Common Stock of the Company (a "Change in Control");
(b) there is a material diminution of or change in Employee's
responsibilities, duties, title, or reporting relationship that is not initiated
or consented to by Xxxxx X. Xxxxxxx, or the Company's principal office is
relocated more than forty-five (45) miles from its location immediately prior to
such event (a "Change in Responsibilities"); provided that a relocation of
principal office to Atlanta, Georgia shall not be deemed a Change of
Responsibilities hereunder;
at Employee's election within ninety (90) days following the occurrence of any
such event, Employee may terminate this Agreement and in such event Employee
shall be deemed to have been terminated by the Company other than for Cause and
all amounts payable to Employee pursuant to Section 9.03 shall become
immediately due and payable.
Except as expressly contemplated by this Agreement, or in any other
agreement referred to in Section 5 hereof, no merger, reorganization,
recapitalization, sale of stock, sale of assets or other change in the capital
structure of the Company or in the identity of the legal or beneficial owners of
the Company shall affect the obligations of the Company or Employee hereunder.
11. Representations and Warranties of Company. The Company hereby
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represents, warrants, covenants and agrees as follows:
11.01 Organization. The Company is a corporation, duly organized,
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validly existing, and in good standing under the laws of Minnesota and all other
jurisdictions in which it transacts business, and has full power and authority
to own or lease and operate its properties as now being owned or leased and
operated and to carry on its business as now being conducted.
11.02 Authority. The Company has the power, legal capacity and
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authority to enter into and perform this Agreement. The execution, delivery, and
performance of this Agreement the Belatti Non-Qualified Stock Option Agreement,
the Registration Rights Agreement and Shareholders Agreement, of even date
herewith, have been duly and validly authorized and approved by all necessary
corporate action on the part of the Company and each such Agreement constitutes
and will constitute the valid, legal and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium
or other laws of general applicability relating to or affecting creditors'
rights, or by general equitable principles.
11.03 Stock Reserve. The Company has set aside and shall maintain, and
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in the future shall set aside and maintain, if necessary, a sufficient number of
authorized but unissued shares of its Common Stock as may be necessary to
satisfy the rights of Employee under the Belatti Non-Qualified Stock Option
Agreement.
12. Indemnification.
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(a) The Company hereby indemnifies and agrees to hold harmless Employee
against all liabilities, obligations, claims, demands, actions, causes of
action, lawsuits, judgments, expenses and costs, including but not limited to
the reasonable costs of investigation and attorney's fees, incurred by the
Employee as a result of any threat, demand, claim, action or lawsuit, made,
instituted or initiated against the Employee by Xxxxx X. Xxxxxxxx, Xx., or any
relative of Xxxxx X. Xxxxxxxx, Xx. by blood or by marriage, A1 Xxxxxxxx
Enterprises, Inc., Diversified Foods and Seasonings, Inc., or any other person
or entity controlling, controlled by, or under common control with such persons
or entities which arises out of, results from, or relates to this Agreement or
any action taken or omitted by the Employee as a result of the relationship
created by this Agreement, except for Employee's own gross negligence or willful
misconduct.
(b) If any claim suit or other legal proceeding shall be commenced, or any
claim or demand be asserted against the Employee and Employee desires
indemnification pursuant to this paragraph, Employee shall be notified to such
effect with reasonable promptness and shall have the right to assume at its full
cost and expense the entire control of any legal proceeding, subject to the
right of the Employee to participate (at his full cost and expense and with
counsel of his choice) in the defense, compromise or settlement thereof. The
Employee shall cooperate fully in all respects with the Company in any such
defense, compromise or settlement, including, without limitation, making
available to the Company all pertinent information under the control of the
Employee. The Company will not compromise or settle any such action, suit,
proceeding, claim or demand without the prior written approval of the Employee
which approval will not be unreasonably withheld or delayed.
(c) The provisions of this paragraph 12 shall survive the termination of
this Agreement for any reason whatsoever for a period of twenty (20) years.
13. Arbitration.
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In the event that any dispute should arise between the parties under or in
connection with any aspect of this Agreement, and such dispute shall not have
been resolved by the parties within sixty (60) days after it arose, then either
party may submit such dispute
to arbitration. An election to submit a dispute to arbitration shall be deemed
to have been made if either party shall give the other party written notice,
within seventy-five (75) days after the dispute arose, of its election to
arbitrate. In the event arbitration is so elected, such arbitration shall be
conducted by a single arbitrator agreeable to Employee and the Company. If the
parties are unable to agree upon a single arbitrator, they shall each select an
arbitrator, and the two (2) arbitrators shall choose a third arbitrator. A
majority of the three (3) arbitrators shall determine the dispute or
controversy. Each party shall pay the expenses of any arbitrator chosen by it,
and the parties shall share equally in the expenses of any arbitrator chosen by
the two (2) arbitrators. Such arbitration shall be conducted in a mutually
agreeable location (or if a location cannot be agreed upon, in the city of the
Company's principal office), under the rules of the American Arbitration
Association. The award rendered by the arbitrators shall specify the findings of
fact upon which it is based and the reasons for such award with reference to and
reliance on applicable laws. Judgment upon such award may be entered in any
court having jurisdiction thereof. The Company and the Employee consent to the
jurisdiction of the state where the arbitration proceeding is to be held
pursuant to the terms hereof, for the purposes of entering judgment with respect
to such award. Once any judgment, determination, order or award shall be made
hereunder by a court or a panel of arbitrators, as the case may be (and shall
become "final" as hereinafter defined), the parties shall promptly comply with
the terms of such judgment, determination, order or award. A judgment,
determination, order or award shall be "final" if any and all appeals available
therefrom shall have been resolved or if twenty (20) days shall have elapsed
from the rendering or issuance of any such judgment, determination, order or
award (or of any decision of any appeal therefrom) and neither party shall have
commenced and be continuing to diligently prosecute any such appeal or further
appeal.
14. Attorney's Fees and Expenses.
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Except as otherwise provided in Section 12 above, in the event of any
dispute arising under or in connection with any aspect of this Agreement, the
prevailing party shall recover from the other party all costs and expenses,
including attorney's fees, incurred in connection with resolving such dispute.
15. Amendments.
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This agreement may not be altered, modified or amended except by a written
instrument signed by each of the parties hereto.
16. Successors.
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As used in this agreement, the term the Company shall include any
successors to all or substantially all of the business and/or
assets of the Company which assume and agree to perform this agreement.
17. Assignment.
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Neither this agreement nor any of the rights or obligations of either party
hereunder shall be assigned or delegated by any party hereto without the prior
written consent of the other party, except that the Company may without the
consent of Employee assign its rights and delegate its duties hereunder to any
successor to the business of the Company. No such assignment however, shall
relieve the Company from any of its liabilities hereunder.
18. Waiver.
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Waiver by any party hereto of any breach or default by any other party of
any of the terms of this agreement shall not operate as a waiver of any other
breach or default, whether similar to or different from the breach or default
waived.
19. Severability.
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In the event that any one or more of the provisions of this agreement shall
be or become invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein shall
not be affected thereby.
20. Survival.
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Notwithstanding anything herein to the contrary, the provisions of Sections
3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14 and 17 survive the termination of this
Agreement.
21. Entire Agreement.
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This agreement contains the entire understanding of the parties with
respect to the employment of Employee by the Company. There are no restrictions,
agreements, promises, warranties, covenants or undertakings other than those
expressly set forth herein. This agreement supersedes all prior agreements,
arrangements and understandings between the parties, whether oral or written,
with respect to the employment of Employee.
22. Notices.
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Notices and all other communications provided for in this agreement shall
be in writing and shall be deemed to have been duly given when personally
delivered or when mailed by United States registered mail, return receipt
requested, postage prepaid, addressed as follows:
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If to Employee to:.
If to the Company to:
America's Favorite Chicken Company
Suite 1570
0000 Xxxxx Xxxxx Xxxxxxx
Xxxxxxxx, XX 00000
or to such other address or such other person as Employee or the Company shall
designate in writing in accordance with this Section 21 except that notices
regarding changes in notices shall be effective only upon receipt.
23. Headings.
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Headings to Sections in this agreement are for the convenience of the
parties only and are not intended to be a part of, or to affect the meaning or
interpretation of, this agreement.
24. Governing Law.
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The agreement shall be governed by the laws of the State Minnesota without
reference to the principles of conflict of laws.
IN WITNESS WHEREOF, the Company has caused this agreement to be executed
and Employee has hereunto set his hand as of the day and year first above
written.
COMPANY:
AMERICA'S FAVORITE CHICKEN
COMPANY
By: /s/ Xxxxx X. Xxxxxxx
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Title: ________________________
Employee:
/s/ Xxxx X. Xxxxxxxx
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XXXX X. XXXXXXXX
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