Exhibit 10.15
EXECUTION VERSION
THIS INSTRUMENT AND THE RIGHTS
AND OBLIGATIONS EVIDENCED HEREBY ARE SUBORDINATE IN THE MANNER AND
TO THE EXTENT SET FORTH IN THAT CERTAIN SUBORDINATION AND
INTERCREDITOR AGREEMENT (THE “ SUBORDINATION AGREEMENT
”) DATED AS OF SEPTEMBER 19, 2006 AMONG
W. ANDREW WRIGHT, III, ADDUS TERM TRUST, W. ANDREW WRIGHT
GRANTOR RETAINED ANNUITY TRUST, MARK S. HEANEY, JAMES A.
WRIGHT, COURTNEY E. PANZER, ADDUS HEALTHCARE, INC. (THE “
COMPANY ”), ADDUS HOLDING CORPORATION, ADDUS
ACQUISITION CORPORATION, ADDUS MANAGEMENT CORPORATION AND FREEPORT
FINANCIAL LLC (TOGETHER WITH ITS SUCCESSORS AND ASSIGNS, THE
“ SENIOR AGENT ”), TO THE INDEBTEDNESS
(INCLUDING INTEREST) OWED BY THE COMPANY PURSUANT TO THAT CERTAIN
CREDIT AGREEMENT DATED AS OF SEPTEMBER 19, 2006 AMONG THE COMPANY,
THE SENIOR AGENT AND THE LENDERS FROM TIME TO TIME PARTY THERETO,
AND THE OTHER LOAN DOCUMENTS (AS DEFINED IN THE CREDIT AGREEMENT)
AS SUCH CREDIT AGREEMENT AND OTHER LOAN DOCUMENTS MAY BE AMENDED,
RESTATED, SUPPLEMENTED OR OTHERWISE MODIFIED FROM TIME TO TIME AND
TO INDEBTEDNESS REFINANCING THE INDEBTEDNESS THEREUNDER AS
CONTEMPLATED BY THE SUBORDINATION AGREEMENT; AND EACH HOLDER OF
THIS INSTRUMENT, BY ITS ACCEPTANCE HEREOF, IRREVOCABLY AGREES TO BE
BOUND BY THE PROVISIONS OF THE SUBORDINATION
AGREEMENT.
CONTINGENT PAYMENT
AGREEMENT
This Contingent Payment Agreement
(this “ Agreement ”) is entered into as of
September 19, 2006 by and among Addus Holding Corporation, a
Delaware corporation (“ Holdings ”), Addus
Acquisition Corporation, a Delaware corporation (“
Acquisition Co .”), Addus Management Corporation, a
Delaware corporation (“ Management Co. ”, and
together with Holdings and Acquisition Co., the “
Purchasers ”), Addus HealthCare, Inc., an Illinois
corporation (the “ Company ”), W. Andrew Wright,
III, as Sellers’ Representative (the “
Sellers’ Representative ”) and each of the
individuals and entities identified as “Contingent Payment
Recipients” set forth on Exhibit A attached hereto
(each a “ Contingent Payment Recipient ”, and
collectively, the “ Contingent Payment Recipients
”).
RECITALS
WHEREAS , the parties hereto are party to that certain
Stock Purchase Agreement, dated as of September 19, 2006,
among the Purchasers, the Contingent Payment Recipients, the
Company and the Sellers’ Representative (the “
Purchase Agreement ”), pursuant to which, on the date
hereof, Purchasers are acquiring all of the issued and outstanding
securities of the Company (the “ Addus Acquisition
”);
WHEREAS , pursuant to the Purchase Agreement, the
execution and delivery of this Agreement is a condition precedent
to the consummation of the Addus Acquisition; and
WHEREAS , in connection with the Addus Acquisition,
Purchasers are acquiring all of the Company’s issued and
outstanding Equity Securities (the “ Original
Securities ”) from
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the Contingent Payment Recipients for a
combination of (i) cash, (ii) Holdings’ common
stock, par value $.001 per share (“ Holdings Common
Stock ”), and (iii) other consideration set forth in
the Purchase Agreement, including the right to the Contingent
Payments (as defined below).
NOW, THEREFORE
, in consideration of the premises
and of the covenants and provisions contained herein, the parties
hereby agree as follows:
ARTICLE I
CONTINGENT PAYMENT
1.1. Contingent Payments .
Pursuant to the terms and subject to the conditions set forth
herein, the Contingent Payment Recipients (in accordance with such
Contingent Payment Recipient’s Contingent Payment Percentage)
shall be eligible to receive certain contingent payments from
Management Co. as future additional, deferred consideration for the
sale of the Original Securities.
1.2. Timing and Manner of
Contingent Payment . On the Contingent Payment Date, subject to
Sections 1.3 and 1.4 hereof, Management Co. shall pay, or cause to
be paid, the Contingent Payments (or portion thereof), if any, due
to the Contingent Payment Recipients. The Contingent Payments
payable to the Contingent Payment Recipients shall be payable in
cash to the Sellers’ Representative (on behalf of the
Contingent Payment Recipients, pm rata based on their respective
Contingent Payment Percentage) in accordance with the terms and
subject to the conditions set forth in this Agreement, by wire
transfer of immediately available U.S. funds to one or more
accounts previously designated in writing by the Sellers’
Representative to Management Co. The right of the Contingent
Payment Recipients to receive the Contingent Payments shall not,
without the prior written consent of the board of directors of
Holdings, be transferable, in whole or in part, to any other Person
other than to a Permitted Family Transferee.
1.3. Right of Set-Off .
Subject to the terms and conditions hereof and of the Purchase
Agreement, Management Co. shall have the right to withhold and
set-off, against any Contingent Payment due to each Contingent
Payment Recipient under this Agreement, the amount of any Losses
that such Contingent Payment Recipient is, pursuant to a Final
Determination (as defined in the Purchase Agreement), required to
pay to the Purchasers or the Purchaser Group (as applicable, the
“ Indemnified Party ”) under Article X of
the Purchase Agreement on or prior to the Contingent Payment Date.
If Contingent Payments due under this Agreement are so set-off, the
amount of such set-off shall be treated as an adjustment to the
Purchase Price (as defined in the Purchase Agreement).
1.4. Contingent Payment
Conditions and Limitations; Remedy .
(a) Upon the occurrence of the
Contingent Payment Date, Management Co. shall make, and the
Contingent Payment Recipients shall be entitled to receive, their
respective portion of the Contingent Payment, to the extent such
Contingent Payment is due and payable pursuant to the terms and
conditions of this Agreement.
(b) Notwithstanding anything
contained herein to the contrary, Management Co. shall not be
obligated to make any Contingent Payments if, and then only to the
extent that, making such Contingent Payment would cause Management
Co. (or its directors) to violate Section 160 of the Delaware
General Corporation Law.
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(c) In the event that Management Co.
is unable to or fails to pay the full amount of the Contingent
Payments, if any, by the Outside Date, at any time after the
Outside Date, at the request of the Sellers’ Representative,
the Purchasers and the Company shall retain a nationally recognized
investment bank (which shall be reasonably acceptable to the
Sellers’ Representative and to the holders of a majority of
all then outstanding Holdings’ Equity Securities) for the
purpose of effecting a Sale of Holdings. Upon such request, each
Purchaser and the Company shall cause each of its officers to
participate actively in the sale process (including assisting with
the preparation of an offering memorandum and being available to
meet with representatives of prospective purchasers) as reasonably
requested by such investment bank. Each Purchaser and the Company
shall in such event expeditiously effect a Sale of the Company on
terms reasonably satisfactory to the Purchasers and the Company and
shall, subject to the terms of this Agreement, use the proceeds of
such Sale of the Company to pay the Contingent Payment Recipients
the full amount of all Contingent Payments due hereunder, if
any.
1.5. The Sellers’
Representative . Each of the Contingent Payment Recipients
hereby authorizes and directs the Sellers’ Representative to
take any and all action on behalf of all of the Contingent Payment
Recipients under this Agreement. As the representative of the
Contingent Payment Recipients, the Sellers’ Representative
shall act as the agent for the Contingent Payment Recipients and
shall have authority to bind each such Contingent Payment Recipient
in accordance with the terms and conditions of this Agreement. The
Purchasers and the Company may rely on such appointment and
authority until receipt of notice of the appointment of a successor
to the Sellers’ Representative upon ten (10) days prior
written notice to the Purchasers.
1.6. Subordination . The
Contingent Payment Recipients agree that in connection with the
transactions contemplated hereby, each Seller will execute the
subordination agreement in the form attached hereto as Exhibit
B .
1.7. Additional Purchase
Price . Any Contingent Payment will be treated by the parties
for all purposes as additional Purchase Price (as defined in the
Purchase Agreement) under the Purchase Agreement.
1.8. Further Assurances of the
Purchasers . Each Purchaser and the Company shall (i) take
all necessary corporate action (including, without limitation, that
of the stockholders and boards of directors of the Company and each
Purchaser) to fully effectuate and carry out the terms and
conditions of this Agreement; (ii) execute, acknowledge and
deliver, and cause to be taken, executed, acknowledged and
delivered, all such other further authorizations, consents,
approvals, agreements, assignments or assurances as may be
necessary to fully effectuate and carry out the terms and
conditions of this Agreement; and (iii) use commercially
reasonable efforts to obtain any consents, Orders, authorizations
and approvals of, or effect the notification of or filing with,
each Person, whether private or governmental, whose consent or
approval is required in order to permit the consummation of the
transactions contemplated hereby.
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ARTICLE II
CONTINGENT PAYMENT RECIPIENT
PROTECTIVE COVENANTS
2.1. Protective Covenants .
Until such time as the Contingent Payment Recipients receive the
Contingent Payments to which they are entitled under this
Agreement, the Purchasers each warrant, covenant and agree that it
shall not take any of the following actions without the prior
written approval of the Sellers’ Representative (on behalf of
the Contingent Payment Recipients):
(a) effect any changes in the
strategic direction or lines of business of (i) the Company
not specified in the business plan approved by Holdings’
board of directors or (ii) Holdings;
(b) create any subsidiary of any
Purchaser or the Company (a “ Subsidiary ”) not,
directly or indirectly, wholly-owned by Holdings, or issue any
Equity Securities or rights to acquire Equity Securities in any
such Subsidiary (other than to Holdings or a wholly-owned
Subsidiary of Holdings);
(c) create any committee of the
board of directors of Holdings (the “ Board ”),
or the board of directors of the Company or any other
Purchaser;
(d) enter into any contract or
agreement with any officer, director, stockholder, Affiliate or
employee of any Purchaser, the Company or any Subsidiary (each, a
“ Related Person ”), including, without
limitation, for the sale or repurchase of any Equity Securities of
the Company or any Purchaser (other than (i) repurchase rights
existing on or prior to the date of the Holdings
Stockholders’ Agreement, (ii) the Eos Management
Agreement or (iii) any contract or agreement entered into with
such Related Person on terms materially not less favorable to
Holdings or a Subsidiary, as the case may be, than would be
obtained in a transaction with a Person which is not a Related
Person);
(e) in any manner, directly or
indirectly, and whether in cash, securities, dividends or other
property, pay or declare or set apart for payment, any dividends or
make any other distribution on or with respect to any Equity
Securities of any Purchaser or the Company (other than (i) the
payment of dividends to the holders of the Series A Convertible
Preferred Stock of Holdings at the Series A Dividend Rate (as such
terms are defined in the Charter) or (ii) the payment of
dividends to the holders of Additional Securities, if
any);
(f) in any manner conduct or operate
the Subject Business through a Subsidiary in which Management Co.
owns, directly or indirectly, less than 80% of the issued and
outstanding Equity Securities, except in connection with a Sale of
Holdings;
(g) in any manner alter or change
the terms and conditions of this Agreement;
(h) in any manner alter or change
the terms, designations, powers, preferences or relative,
participating, optional or other special rights, or the
qualifications, limitations or restrictions, of the Series A
Convertible Preferred Stock in a manner that is adverse to the
Contingent Payment Recipients;
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(i) except as otherwise contemplated
in the Holdings Stockholders’ Agreement, alter the size of
Holding’s Board or any committee thereof;
(j) effect any changes in the
Charter, Bylaws, Stockholders’ Agreement or Registration
Rights Agreement to the extent that such change would have an
adverse impact on the rights of the Contingent Payment Recipients
hereunder (other than an amendment or modification effected solely
to provide rights to holders of Undesignated Preferred Stock (as
defined in the Charter)); or
(k) agree to take any of the
foregoing actions.
At any time that any Purchaser or
the Company has any subsidiary or committee, it shall not permit
such subsidiary or committee, as the case may be, to take any of
the actions set forth in this Article II (with all references to
such party deemed to be references to such Subsidiary or committee)
without the prior written approval of the Sellers’
Representative (on behalf of the Contingent Payment
Recipients).
ARTICLE III
DEFINITIONS
Capitalized terms that are used but
not identified herein shall have the meaning assigned to such terms
in Annex I attached hereto.
ARTICLE IV
MISCELLANEOUS
4.1. Benefit of Parties . All
the terms and provisions of this Agreement shall be binding upon
and inure to the benefit of the parties hereto, the Subject Persons
and their respective successors and permitted assigns, personal
representatives, heirs and estates, as the case may be. Neither
this Agreement nor any rights hereunder shall be assigned in whole
or in part by any party hereto without the prior written consent of
the other parties hereto; provided, however , that
Purchasers may assign any or all of their rights, obligations and
interests hereunder without any such written consent as security
for any obligations arising in connection with the financing of the
transactions contemplated by the Purchase Agreement.
4.2. Entire Agreement . This
Agreement, together with the Purchase Agreement and the
transactions and documents contemplated hereby and thereby,
contains the entire understanding of the parties with respect to
the subject matter hereof and supersedes all prior agreements and
understandings between the parties (whether written or oral) with
respect thereto; and may not be contradicted or otherwise
interpreted by evidence of any such prior or contemporaneous
agreement, draft, understanding or representation (whether written
or oral).
4.3. Severability . If any
provision or section of this Agreement is determined to be void or
otherwise unenforceable, it shall not affect the validity or
enforceability of any other provisions of this Agreement which
shall remain unenforceable in accordance with their
terms.
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4.4. Counterparts and Electronic
Signatures . This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of
which together shall constitute a single instrument. Execution and
delivery of this Agreement by electronic exchange bearing the
copies of a party’s signature shall constitute a valid and
binding execution and delivery of this Agreement by such party.
Such electronic copies shall constitute enforceable original
documents.
4.5. Taxes . Management Co.
shall withhold or cause to be withheld from any Contingent Payment
any Taxes that are required by law to be withheld. Any amounts so
withheld shall be treated for all purposes of this Agreement as
having been paid to the applicable Contingent Payment
Recipient.
4.6. Notices . All notices,
amendments, waivers or other communications pursuant to this
Agreement shall be in writing and shall be deemed to have been duly
given if personally delivered, telecopied, sent by e-mail, sent by
nationally recognized overnight courier or mailed by registered or
certified mail with postage prepaid, return receipt requested, to
the parties hereto at the following addresses (or at such other
address for a party as shall be specified by like
notice):
(a) to the Company, to:
Addus HealthCare, Inc.
2401 South Plum Grove
Road
Palatine, Illinois 60067
Attention: Edward Budy,
Esq.
Telephone:
(847) 303-5300
Facsimile:
(847) 303-5376
Email: EBudy@addus.com
with a copy to:
Eos Management, Inc.
320 Park Avenue
New York, New York 10022
Attention: Mark L. First
Telephone:
(212) 832-5800
Facsimile:
(212) 832-5815
Email:
MFirst@eospartners.com
with a copy to:
King & Spalding
LLP
1185 Avenue of the
Americas
New York, New York 10036
Attention: Dominick P. DeChiara,
Esq.
Telephone:
(212) 827-4098
Facsimile:
(212) 556-2222
Email:
DDeChiara@kslaw.com
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(b) if to Purchasers, to:
c/o Eos Management, Inc.
320 Park Avenue
New York, New York 10022
Attention: Mark L. First
Telephone:
(212) 832-5800
Facsimile:
(212) 832-5815
Email:
MFirst@eospartners.com
with a copy to:
King & Spalding
LLP
1185 Avenue of the
Americas
New York, New York 10036
Attention: Dominick P. DeChiara,
Esq.
Telephone:
(212) 827-4098
Facsimile:
(212) 556-2222
Email: DDeChiara@kslaw.com;
and
(c) if to any Contingent Payment
Recipient, to such Contingent Payment Recipient at the address set
forth on Exhibit A opposite the name of such Contingent
Payment Recipient;
with a copy to:
Foley & Lardner
LLP
777 East Wisconsin Avenue
Milwaukee, WI 53202
Attention: Patrick G. Quick,
Esq.
Telephone:
(414) 297-5678
Facsimile:
(414) 297-4900
Email: pgquick@foley.com;
4.7. Amendments: Waiver .
This Agreement may not be amended except by an instrument in
writing signed by each of the Purchasers and the Sellers’
Representative (on behalf of the Contingent Payment Recipients). By
an instrument in writing the Company, the Purchasers and the
Sellers’ Representative may waive compliance by any other
party with any term or provision of this Agreement that such other
party was or is obligated to comply with or perform.
4.8. Governing Law; Dispute
Resolution .
(a) This Agreement shall be governed
by and construed in accordance with the laws of the State of
Delaware, without giving effect to any law or rule that would cause
the laws of any jurisdiction other than the State of Delaware to be
applied.
(b) Any controversy or claim arising
out of or relating to this Agreement (including, without
limitation, as to arbitrability), or the breach thereof, shall be
settled by
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individual arbitration (as opposed to class or
collective arbitration) administered by a Person mutually selected
by the Sellers’ Representative and the Purchasers (the
“Arbitrator”). If the parties are unable to agree upon
the Arbitrator, they shall each select an arbitrator and the two
selected arbitrators shall appoint a third arbitrator to act as the
Arbitrator.
(c) In the event of any dispute,
claim, question or disagreement arising from or relating to this
Agreement, or the breach hereof or thereof, with the exception of
those items excluded above, the Purchasers and the Sellers’
Representative shall use their commercially reasonable efforts to
resolve the dispute, claim, question or disagreement. To this
effect, the Purchasers and the Sellers’ Representative will
meet in person or by telephone within ten (10) Business Days
of any party’s receipt of a written notice informing that
party of the existence of a dispute, claim, question or
disagreement. If the Purchasers and the Sellers’
Representative do not resolve or settle the matter within ten
(10) Business Days after the initial meeting, or following any
longer period as the parties may agree to in writing, the
Purchasers and the Sellers’ Representative shall then
immediately submit the dispute to binding arbitration in accordance
with this Section 4.8.
(d) The arbitration hearing shall
commence within ninety (90) calendar days after the Arbitrator
is selected, unless the Purchasers and the Sellers’
Representative agree to extend this time period. The arbitration
shall take place in New York, New York.
(e) The arbitration shall be
conducted pursuant to the Federal Rules of Procedure and the
Federal Rules of Evidence. The Arbitrator will have full power to
give directions and make such orders as the Arbitrator deems just.
Nonetheless, the Arbitrator explicitly shall not have the
authority, power, or right to alter, change, amend, modify, add, or
subtract from any provision of this Agreement.
(f) The Arbitrator shall issue a
written decision within thirty (30) days after the conclusion
of the arbitration hearing, which decision shall be rendered
without reference to the reason for the arbitrator’s decision
or any citation to precedent. The agreement to arbitrate will be
specifically enforceable. The award rendered by the arbitrator
shall be final and binding (absent fraud or manifest error), and
any arbitration award may be enforced by judgment entered in any
court of competent jurisdiction. The fees and expenses of the
arbitrator shall be allocated between the Sellers’
Representative (on behalf of the Contingent Payment Recipients), on
the one hand, and the Purchasers, on the other hand in the same
proportion that the aggregate amount of the disputed items
submitted to the Arbitrator that is unsuccessfully disputed by each
such party (as finally determined by the Arbitrator) bears to the
total amount of such disputed items so submitted.
(g) During any arbitration
proceeding, the parties shall continue to perform their respective
obligations under this Agreement.
4.9. Construction . Where
specific language is used to clarify by example a general statement
contained herein, such specific language shall not be deemed to
modify, limit or restrict in any manner the construction of the
general statement to which it relates. The language used in this
Agreement shall be deemed to be the language chosen by the parties
to express their mutual intent, and no rule of strict construction
shall be applied against any party hereto. Without limitation,
there shall be no presumption against any party on the ground that
such party was responsible for drafting this Agreement or any part
hereof.
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4.10. Captions . The captions
of the Articles and Sections of this Agreement are solely for
convenient reference and shall not be deemed to affect the meaning
or interpretation of any Article or Section hereof
4.11. Termination . This
Agreement will terminate and be of no further force and effect,
with no additional action required by any of the parties hereto,
upon the earlier to occur of the following:
(a) the mutual agreement of the
Purchasers, the Company and the Sellers’ Representative (on
behalf of the Contingent Payment Recipients);
(b) the receipt by the Contingent
Payment Recipients of the Contingent Payments to which they are
entitled; and
(c) any (i) voluntary or
involuntary liquidation, dissolution or winding up of Holdings,
other than any dissolution, liquidation or winding up in connection
with any reincorporation of Holdings in another jurisdiction, or
(ii) any Sale of Holdings, in each case, which results in a
Net Value of Holdings of less than the Target Amount.
[Signature page to
follow.]
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IN WITNESS WHEREOF
, the parties have hereunto caused
this Agreement to be executed as of the date set forth
above.
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COMPANY
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ADDUS
HEALTHCARE, INC.
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By:
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/s/ W. Andrew Wright, III
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Name:
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W. Andrew
Wright, III
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Title:
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President
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PURCHASERS
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ADDUS
HOLDING CORPORATION
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By:
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Name:
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Simon A.
Bachleda
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Title:
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Secretary
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ADDUS
MANAGEMENT CORPORATION
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By:
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Name:
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Simon A.
Bachleda
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Title:
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Secretary
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