Exhibit 10.14
XXXXX X. XXXXXXXX
EMPLOYMENT AGREEMENT
WITH
GOLFSMITH INTERNATIONAL, INC.
This is an Employment Agreement entered into between Golfsmith
International, Inc., a Delaware corporation (the "COMPANY"), and Xxxxx X.
Xxxxxxxx ("EXECUTIVE").
RECITALS:
WHEREAS, the Company and Executive desire that Executive provide the
Company employment services upon the terms and conditions set forth below;
WHEREAS, this Employment Agreement is entered into as a condition of the
parties consummating their obligations under the Agreement and Plan of Merger
(the "MERGER AGREEMENT") dated as of September 23, 2002, by and among the
Company, Golfsmith International Holdings, Inc., a Delaware corporation
("PARENT"), and BGA Acquisition Corporation, a Delaware corporation and a
wholly-owned Subsidiary of Parent ("SUB").
NOW, THEREFORE, in consideration of the promises and mutual covenants
contained herein, the parties, intending to be legally bound, agree as follows:
AGREEMENT:
SECTION 1. TERM OF EMPLOYMENT
(a) Effective Date. Subject to the terms and conditions set forth in this
Employment Agreement, the Company agrees to employ Executive, and Executive
agrees to be employed by the Company for the three year period which starts on
the Closing Date (as defined in the Merger Agreement) (the "EFFECTIVE DATE").
(b) Term. The term of this Employment Agreement is subject to automatic
one year extensions starting on the third anniversary of the Effective Date of
this Employment Agreement and on each subsequent anniversary date, unless
Executive or the Company cancels the automatic extension at least 30 days prior
to the anniversary date.
SECTION 2. DEFINITIONS
"CAUSE" means
(1) Executive's (i) fraud, (ii) embezzlement, or (iii)
misappropriation of funds, in each case involving or against the Company
or any of its subsidiaries or affiliates,
(2) Executive's indictment for or conviction of any felony or any
crime which involves dishonesty or a breach of trust,
(3) Executive's gross negligence or willful misconduct with respect
to the Company or any of its subsidiaries or affiliates which causes
material detriment to the Company or any of its subsidiaries,
(4) Executive commits a material violation of the United States'
Foreign Corrupt Practices Act of 1977, as amended, and such violation is
not cured, or is not capable of being cured, within thirty days of written
notice to Executive from the Company,
(5) the debarment of Executive from engaging in contracting or
sub-contracting activities with the United States Government if such
debarment is the result of a final determination by an agency of such
government that Executive knowingly acted in a manner justifying such
debarment,
(6) Executive commits a material violation of the Company's code of
ethics, or any similar written statement or policy of the Company setting
forth reasonable standards for employee conduct of which Executive had
prior notice, which the Board of Directors of the Company reasonably
determines makes him no longer able or fit to fulfill his responsibilities
under this Employment Agreement, and which is not cured, or is not capable
of being cured, within thirty days after written notice thereof is given
to the Executive by the Company,
(7) Executive engages in any material breach of the terms of this
Employment Agreement or fails to fulfill his responsibilities under this
Employment Agreement and such breach or failure, as the case may be, is
not cured, or is not capable of being cured, within thirty days after
written notice thereof is given to the Executive by the Company, or
(8) Executive (i) is censured by any agency of the United States
Government or (ii) fails to satisfy any requirement of any agency of the
United States Government which the Board of Directors of the Company
reasonably determines has a material and adverse effect on his ability to
fulfill his responsibilities under this Employment Agreement and such
failure is not cured within thirty days after written notice thereof is
given to the Executive by the Company.
"COMPETING BUSINESS" means any business which designs, distributes, sells
or markets golf equipment and golf related products, or any other business in
which the Company or any of its subsidiaries is substantially engaged at the
time of the termination of Executive's employment
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and in which Executive was substantially engaged on behalf of the Company or any
of its subsidiaries during the last year of Executive's employment.
Notwithstanding the foregoing, a Competing Business shall not include (i)
suppliers of the Company or any of its subsidiaries and (ii) any company or
organization that receives less than 25% of its revenue from retail sales of
golf equipment or golf related products.
"DISABILITY" means a condition which renders Executive unable (as
determined by the Board of Directors of the Company in good faith after
consultation with a physician mutually selected by the Executive and the Board
of Directors of the Company) to regularly perform his duties hereunder by reason
of illness or injury for a period of more than six consecutive months.
"EARNED BONUS" means the bonus, determined based on the actual performance
of the Company for the full fiscal year in which Executive's employment
terminates, that Executive would have earned for the year in which his
employment terminates had he remained employed for the entire year, prorated
based on the ratio of the number of days during such year that Executive was
employed to 365. Such Earned Bonus will be determined and paid to Executive no
later than sixty (60) days following the delivery of the auditor's report for
the fiscal year in which Executive's employment terminates.
"GOOD REASON" means (i) a material and continuing failure to pay to
Executive compensation or benefits (as described in Section 4) that have been
earned, if any, by Executive, (ii) a material reduction in Executive's
compensation or benefits (as described in Section 4), (iii) a material reduction
in Executive's title, position or responsibilities, (iv) relocation of
Executive's principle worksite to a location greater than 50 miles from Austin,
Texas, (v) any breach by the Company of this Employment Agreement which is
material and which is not cured within thirty days after written notice thereof
to the Company from Executive, or (vi) any attempt to require Executive to
perform duties that, in the good faith professional judgment of Executive, after
consultation with the Board of Directors of the Company, are inconsistent with
ethical business practices.
"ISP" means the Golfsmith International, Inc. 2003 Incentive Stock Plan,
as amended from time to time, and any successor to such plan.
"RESTRICTED PERIOD" means the longer of (x) one year following the
termination of any payments to Executive made under this Employment Agreement or
(y) three years from the Effective Date.
"TERM" means the one year period described in Section 1(b).
SECTION 3. TITLE, POWERS AND RESPONSIBILITIES
(a) Title. Executive shall be the President and Chief Executive Officer of
the Company.
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(b) Powers and Responsibilities.
(1) Executive in fulfilling his responsibilities shall have such
powers as are normally and customarily associated with a president and
chief executive officer in a company of similar size and operating in a
similar industry, including the power to hire and fire employees and
executives of the Company reporting to Executive and such other powers as
authorized by the Board of Directors of the Company.
(2) Executive, as a condition to his employment under this
Employment Agreement, represents and warrants that he can assume and
fulfill responsibilities described in Section 3(b)(1) without any risk of
violating any non-compete or other restrictive covenant or other agreement
to which he is a party.
(c) Reporting Relationship. Executive shall report to the Board of
Directors of the Company.
(d) Full Time Basis. Executive shall undertake to perform all his
responsibilities and exercise all his powers in good faith and on a full-time
basis.
(e) Geographic Area. Executive shall perform his duties and
responsibilities principally in the Austin, Texas metropolitan area and shall be
required to travel outside of that area as determined in the good faith judgment
of the Board of Directors of the Company.
SECTION 4. COMPENSATION AND BENEFITS
(a) Annual Base Salary. Executive's base salary shall be $297,000 per
year, which amount may be reviewed and increased at the discretion of the Board
of Directors of the Company or any committee of the Board of Directors of the
Company duly authorized to take such action. Executive's base salary shall be
payable in accordance with the Company's standard payroll practices and policies
for executives and shall be subject to such withholdings as required by law or
as otherwise permissible under such practices or policies.
(b) Annual Bonus. The Company shall pay an annual bonus to Executive no
later than sixty (60) days following the delivery of the auditor's report for
the applicable fiscal year, in the amount, and subject to the terms and
conditions, set forth in Schedule A attached hereto.
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(c) Employee Benefit Plans. Executive shall be eligible to participate, on
terms no less favorable to Executive than the terms for participation of any
other executive of the Company at the same level within the Company as
Executive, in the employee benefit plans, programs and policies maintained by
the Company in accordance with the terms and conditions to participate in such
plans, programs and policies as in effect from time to time. The employee
benefit plans described in this paragraph shall include (if and for as long as
the Company sponsors such plans):
(A) 401(k) retirement savings plan;
(B) disability plan;
(C) health plan; and
(D) ISP.
(d) Stock Options. Executive shall receive stock options at the discretion
of the Board of Directors of the Company, subject to the terms and conditions
set forth in the ISP and any corresponding option certificate granted to
Executive under the ISP.
(e) Vacation. Executive shall have the right to three weeks of vacation
during each successive one year period in the Term, which vacation time shall be
taken at such time or times in each such one year period so as not to materially
and adversely interfere with the performance of his responsibilities under this
Employment Agreement. Executive in addition shall have the right to the same
holidays as other employees of the Company.
(f) Expense Reimbursements. Executive shall have the right to expense
reimbursements in accordance with the Company's standard policy on expense
reimbursements.
(g) Indemnification. With respect to Executive's acts or failures to act
during his employment in his capacity as a director, officer, employee or agent
of the Company, Executive shall be entitled to indemnification from the Company,
and to liability insurance coverage (if any), on the same basis as other
officers of the Company.
SECTION 5. TERMINATION OF EMPLOYMENT
(a) General. The Board of Directors of the Company shall have the right to
terminate Executive's employment at any time with or without Cause, and
Executive shall have the right to terminate his employment at any time with or
without Good Reason.
(b) Termination by Board of Directors without Cause or by Executive for
Good Reason. If the Board of Directors terminates Executive's employment without
Cause or Executive resigns for Good Reason, the Company shall pay Executive his
earned but unpaid base salary plus 100% of his current total annual base salary
(subject to such withholdings as required by law) payable in twelve equal
monthly installments during the twelve month period immediately following such
termination and, when actually determined, the Executive's Earned Bonus for the
fiscal year of termination. This obligation shall remain in effect even if
Executive accepts other employment. In addition, the Company shall make any
COBRA continuation
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coverage premium payments (not only for Executive, but for Executive's
dependents), for the one year period following the termination of Executive's
employment or, if earlier, until Executive is eligible to be covered under
another substantially equivalent medical insurance plan by a subsequent
employer.
(c) Termination by the Board of Directors for Cause or by Executive
without Good Reason. If the Board of Directors of the Company terminates
Executive's employment for Cause or Executive resigns without Good Reason, the
Company's only obligation to Executive under this Employment Agreement shall be
to pay Executive his earned but unpaid base salary, if any, up to the date
Executive's employment terminates, and Executive shall have no right to any
Earned Bonus or any bonus payment whatsoever. The Company shall only be
obligated to make such payments and provide such benefits under any employee
benefit plan, program or policy in which Executive was a participant as are
explicitly required to be paid to Executive by the terms of any such benefit
plan, program or policy following the date on which Executive's employment
terminates.
(d) Termination for Disability. The Board of Directors of the Company
shall have the right to terminate Executive's employment on or after the date
Executive has a Disability, and such a termination shall not be treated as a
termination without Cause under this Employment Agreement. If Executive's
employment is terminated on account of a Disability, the Company shall:
(1) pay Executive his base salary through the end of the month
in which his employment terminates as soon as practicable after his
employment terminates,
(2) pay Executive his Earned Bonus for the fiscal year in
which such termination of employment occurs,
(3) pay or cause the payment of benefits to which Executive is
entitled under the terms of the disability plan of the Company
covering the Executive at the time of such Disability,
(4) make such payments and provide such benefits as otherwise
called for under the terms of the ISP and each other employee
benefit plan, program and policy in which Executive was a
participant; provided no payments made under Section 5(d)(1),
Section 5(d)(2), or Section 5(d)(3) shall be taken into account in
computing any payments or benefits described in this Section
5(d)(4), and
(5) make any COBRA continuation coverage premium payments (not
only for Executive, but also for Executive's dependents), for the
one year period following the termination of Executive's employment
or, if earlier, until Executive is eligible to be covered under
another substantially equivalent medical insurance plan by a
subsequent employer.
(e) Death. If Executive's employment terminates as a result of his death,
the Company shall:
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(1) pay Executive his base salary through the end of the month
in which his employment terminates as soon as practicable after his
employment terminates,
(2) pay Executive his Earned Bonus, when actually determined,
for the year in which Executive's death occurs,
(3) make such payments and provide such benefits as otherwise
called for under the terms of the ISP and each other employee
benefit plan, program and policy in which Executive was a
participant; provided no payments made under Section 5(e)(1) or
Section 5(e)(2) shall be taken into account in computing any
payments or benefits described in this Section 5(e)(3), and
(4) make any COBRA continuation coverage premium payments for
Executive's dependents, for the one year period following
Executive's death or, if earlier, until such dependents are eligible
to be covered under another substantially equivalent medical
insurance plan.
SECTION 6. COVENANTS BY EXECUTIVE
(a) Company Property. Executive upon the termination of Executive's
employment for any reason or, if earlier, upon the Company's request shall
promptly return all Company Property which had been entrusted or made available
to Executive by the Company, where the term "PROPERTY" means all records, files,
memoranda, reports, price lists, customer lists, drawings, plans, sketches,
keys, codes, computer hardware and software and other property of any kind or
description prepared, used or possessed by Executive during Executive's
employment by the Company (and any duplicates of any such Property) together
with any and all information, ideas, concepts, discoveries, and inventions and
the like conceived, made, developed or acquired at any time by Executive
individually or, with others during Executive's employment which relate to the
Company or its products or services.
(b) Trade Secrets. Executive agrees that Executive shall hold in a
fiduciary capacity for the benefit of the Company and its affiliates and shall
not directly or indirectly use or disclose any Trade Secret that Executive may
have acquired during the term of Executive's employment by the Company or any of
its predecessors for so long as such information remains a Trade Secret, where
the term "TRADE SECRET" means information, including, but not limited to,
technical or non-technical data, a formula, a pattern, a compilation, a program,
a device, a method, a technique, a drawing or a process that (1) derives
economic value, actual or potential, from not being generally known to, and not
being generally readily ascertainable by proper means by, other persons who can
obtain economic value from its disclosure or use and (2) is the subject of
reasonable efforts by the Company and any of its affiliates to maintain its
secrecy. This Section 6(b) is intended to provide rights to the Company and its
affiliates which are in addition to, not in lieu of, those rights the Company
and its affiliates have under the common law or applicable statutes for the
protection of trade secrets.
(c) Confidential Information. Executive while employed by the Company or
its affiliates and thereafter during the Restricted Period shall hold in a
fiduciary capacity for the
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benefit of the Company and its affiliates, and shall not directly or indirectly
use or disclose, any Confidential Information that Executive may have acquired
(whether or not developed or compiled by Executive and whether or not Executive
is authorized to have access to such information) during the term of, and in the
course of, or as a result of Executive's employment by the Company or its
predecessors without the prior written consent of the Board of Directors of the
Company unless and except to the extent that such disclosure is (i) made in the
ordinary course of Executive's performance of his duties under this Employment
Agreement or (ii) required by any subpoena or other legal process (in which
event Executive will give the Company prompt notice of such subpoena or other
legal process in order to permit the Company to seek appropriate protective
orders). For the purposes of this Employment Agreement, the term "CONFIDENTIAL
INFORMATION" means any secret, confidential or proprietary information possessed
by the Company or any of its affiliates, including, without limitation, trade
secrets, customer or supplier lists, details of client or consultant contracts,
current and anticipated customer requirements, pricing policies, price lists,
market studies, business plans, operational methods, marketing plans or
strategies, product development techniques or flaws, computer software programs
(including object code and source code), data and documentation data, base
technologies, systems, structures and architectures, inventions and ideas, past
current and planned research and development, compilations, devices, methods,
techniques, processes, financial information and data, business acquisition
plans and new personnel acquisition plans (not otherwise included as a Trade
Secret under this Employment Agreement) that has not become generally available
to the public, and the term "Confidential Information" may include, but not be
limited to, future business plans, licensing strategies, advertising campaigns,
information regarding customers or suppliers, executives and independent
contractors and the terms and conditions of this Employment Agreement.
Notwithstanding the provisions of this Section 6(c) to the contrary, Executive
shall be permitted to furnish this Employment Agreement to a subsequent employer
or prospective employer.
(d) Non-solicitation of Customers or Employees.
(1) Executive (i) while employed by the Company or any of its
affiliates shall not, on Executive's own behalf or on behalf of any
person, firm, partnership, association, corporation or business
organization, entity or enterprise (other than the Company or one of its
affiliates), solicit Competing Business from customers of the Company or
any of its affiliates and (ii) during the Restricted Period shall not, on
Executive's own behalf or on behalf of any person, firm, partnership,
association, corporation or business organization, entity or enterprise,
solicit Competing Business from customers or suppliers of the Company or
any of its affiliates with whom Executive within the twenty-four month
period immediately preceding the beginning of the Restricted Period had or
made contact with in the course of Executive's employment by the Company.
(2) Executive (i) while employed by the Company or any of its
affiliates shall not, either directly or indirectly, call on, solicit or
attempt to induce any other officer, employee or independent contractor of
the Company or any of its affiliates to terminate his or her employment
with such business and shall not assist any other person or entity in such
a solicitation (regardless of whether any such officer, employee or
independent contractor would commit a breach of contract by terminating
his or her employment), and (ii) during the Restricted Period, shall not,
either directly or indirectly, call on, solicit or
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attempt to induce any other officer, employee or independent contractor of
such business with whom Executive had contact, knowledge of, or
association in the course of Executive's employment with the Company or
any of its predecessors or affiliates, as the case may be, during the
twelve month period immediately preceding the beginning of the Restricted
Period, to terminate his or her employment with the Company or any of its
affiliates and shall not assist any other person or entity in such a
solicitation (regardless of whether any such officer, employee or
independent contractor would commit a breach of contract by terminating
his or her employment). Notwithstanding the foregoing, nothing shall
prohibit any person from contacting Executive about employment or other
engagement during the restricted period, provided that Executive does not
solicit the contact.
(e) Non-competition Obligation. Executive, while employed by the Company
or any of its affiliates and thereafter until the end of the Restricted Period
will not, for himself or on behalf of any other person, partnership, company or
corporation, directly or indirectly, acquire any financial or beneficial
interest in (except as provided in the next sentence), be employed by, or own,
manage, operate or control, or become a director, officer, partner, employee,
agent or consultant of, any entity which is primarily engaged in a Competing
Business. Notwithstanding the preceding sentence, Executive will not be
prohibited from owning less than five (5%) percent of any publicly traded
corporation, whether or not such corporation is in a Competing Business.
(f) Reasonable and Continuing Obligations. Executive agrees that
Executive's obligations under this Section 6 are obligations which will continue
beyond the date Executive's employment terminates and that such obligations are
reasonable, fair and equitable in scope, terms and duration, are necessary to
protect the Company's legitimate business interests and are a material
inducement to the Company to enter into this Employment Agreement.
(g) Remedy for Breach. Executive agrees that the remedies at law of the
Company for any actual or threatened breach by Executive of the covenants in
this Section 6 would be inadequate and that the Company shall be entitled to
specific performance of the covenants in this Section 6, including entry of a
temporary restraining order in state or federal court, preliminary and permanent
injunctive relief against activities in violation of this Section 6, or both, or
other appropriate judicial remedy, writ or order, in addition to any damages and
legal expenses which the Company may be legally entitled to recover. The Company
agrees, however, to give Executive and, if known, Executive's attorney
reasonable advance notice of any legal proceeding, including any application for
a temporary restraining order, relating to an attempt to enforce the covenants
in this Section 6 against Executive. Executive acknowledges and agrees that the
covenants in this Section 6 shall be construed as agreements independent of any
other provision of this Employment Agreement or any other agreement between the
Company and Executive, and that the existence of any claim or cause of action by
Executive against the Company, whether predicated upon this Employment Agreement
or any other agreement, shall not constitute a defense to the enforcement by the
Company of such covenants.
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SECTION 7. MISCELLANEOUS
(a) Notices. Notices and all other communications shall be in writing and
shall be deemed to have been duly given when personally delivered or when mailed
by United States registered or certified mail. Notices to the Company shall be
sent to:
GOLFSMITH INTERNATIONAL, INC..
c/o First Atlantic Capital, Ltd.
000 X. 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxxx
Facsimile: (000) 000-0000
Notices and communications to Executive shall be sent to the address
Executive most recently provided to the Company.
(b) No Waiver. Except for the notice described in Section 7(a), no failure
by either the Company or Executive at any time to give notice of any breach by
the other of, or to require compliance with, any condition or provision of this
Employment Agreement shall be deemed a waiver of any provisions or conditions of
this Employment Agreement.
(c) Texas Law. This Employment Agreement shall be governed by Texas law
without reference to the choice of law principles thereof. Any litigation that
may be brought by either the Company or Executive involving the enforcement of
this Employment Agreement or any rights, duties, or obligations under this
Employment Agreement, shall be brought exclusively in a Texas state court or
United States District Court in Texas.
(d) Assignment. This Employment Agreement shall be binding upon and inure
to the benefit of the Company and any successor in interest to the Company or
any segment of such business. The Company may assign this Employment Agreement
to any affiliate or successor that acquires all or substantially all of the
assets and business of the Company or a majority of the voting interests of the
Company, and no such assignment shall be treated as a termination of Executive's
employment under this Employment Agreement. Executive's rights and obligations
under this Employment Agreement are personal and shall not be assigned or
transferred.
(e) Other Agreements. This Employment Agreement replaces and merges any
and all previous agreements and understandings regarding all the terms and
conditions of Executive's employment relationship with the Company, and this
Employment Agreement constitutes the entire agreement between the Company and
Executive with respect to such terms and conditions.
(f) Amendment. No amendment to this Employment Agreement shall be
effective unless it is in writing and signed by the Company and by Executive.
(g) Invalidity. If any part of this Employment Agreement is held by a
court of competent jurisdiction to be invalid or otherwise unenforceable, the
remaining part shall be unaffected and shall continue in full force and effect,
and the invalid or otherwise unenforceable part shall be deemed not to be part
of this Employment Agreement.
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(h) Litigation. In the event that either party to this Employment
Agreement institutes litigation against the other party to enforce his or its
respective rights under this Employment Agreement, each party shall pay its own
costs and expenses incurred in connection with such litigation.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.]
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IN WITNESS WHEREOF, the Company and Executive have executed this
Employment Agreement in multiple originals effective as of the Effective Date.
GOLFSMITH INTERNATIONAL, INC. EXECUTIVE
By: /s/ XXXXXXXX X. XXXX /s/ XXXXX X. XXXXXXXX
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Name: Xxxxxxxx X. Xxxx Name: Xxxxx X. Xxxxxxxx
Title: President
Date: 10/12/02 Date: 10/14/02
-------------------------- -----------------------
ACCEPTED AND APPROVED BY:
GOLFSMITH INTERNATIONAL
HOLDINGS, INC.
By: /s/ XXXX X. XXXXXX
----------------------------------------
Name: Xxxx X. Xxxxxx
Title: Vice-President
Date: 10/15/02
------------------------
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SCHEDULE A
BONUS PROGRAM
For purposes of this Employment Agreement, the Executive's annual bonus shall be
calculated based upon the Company attaining mutually agreed upon EBITDA targets
for that fiscal year in accordance with the following:
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% of EBITDA 90.00- 95.00- 100.00- 105.00- 110.00- 115.00- 120% or
Target 94.99% 99.99% 104.99% 109.99% 114.99% 119.99% greater
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% of Current
Annual Base
Salary 50% 60% 75% 87.5% 100% 105% 110%
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