Document:

Exhibit 10.2

 

EXECUTIVE EMPLOYMENT AGREEMENT

 

This Executive Employment Agreement (“Agreement”) is by and between TeleTech Services Corporation, including its subsidiaries, affiliates, their successors and assigns, their directors, officers, employees and agents (the “Company” or “TeleTech”) and Keith Gallacher (“Employee”), and shall be effective as of the Start Date of employment (“Effective Date”).

 

1.                                      Appointment.

 

a.                                      TeleTech hereby employs Employee as Executive Vice President, Global Markets and Industries, reporting to the Chairman and Chief Executive Officer, Kenneth Tuchman of TeleTech Holdings, Inc.  Employee hereby accepts such employment with TeleTech to begin on June 3, 2013 (“Start Date”).

 

b.                                      Employee shall devote his full-time and best efforts to the performance of all duties as shall be assigned to Employee from time to time by TeleTech.  Unless otherwise specifically authorized in writing by TeleTech, Employee shall not engage in any other business activity, or otherwise be gainfully employed.  This shall not preclude Employee from serving on Boards of Directors with Company’s prior written approval or from managing his own investment portfolio in accordance with the provisions of the Company’s Code of Conduct and any other applicable policy or law.

 

c.                                       Employee acknowledges that, as part of Employee’s employment duties hereunder, Employee may be required to perform services for, and serve as an officer and/or director of, subsidiaries and affiliates of TeleTech, on behalf of and as requested by TeleTech, and Employee agrees to perform such duties to the extent they are consistent with his position.  Employee shall render such services as are necessary and desirable to protect and advance the best interests of the Company, acting, in all instances, in accordance with the Code of Conduct and all Company policies.

 

2.                                      Compensation.

 

a.                                      Salary and Salary Review.  Employee’s base salary shall be $400,000 per year, payable in equal installments in accordance with the Company’s standard payroll practice, less legally required deductions and withholdings.  The Compensation Committee of the Company’s Board of Directors (the “Compensation Committee”) may, in its sole discretion, increase, or decrease Employee’s base salary, as and when the Compensation Committee deems appropriate.  In the event of a salary decrease, Employee’s written consent is required.

 

b.                                      Signing Bonus.  On or about July 31, 2013, TeleTech will pay Employee a signing bonus of $85,000.00 less federal, state, local and payroll withholdings.  Employee will receive an additional $85,000 less applicable withholdings in March 2014, provided, however, if Employee voluntarily leaves TeleTech within 18

 

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months after his Start Date, or Employee is terminated “for cause” (with the exception of job performance, as set forth in 8(f)(2)(viii), in which case the Signing Bonus shall not be repayable to the Company), then Employee must repay, on a pro rata basis, any portion that Employee has received at the time of resignation or termination “for cause”.

 

c.                                       Guaranteed First Year Bonus.  Provided that Employee remains employed with TeleTech through the actual bonus payout date to occur in March 2014, Employee shall receive a minimum Guaranteed Bonus of at least $350,000 in that same month, exclusive of any additional bonus(es) he may be eligible to receive under the Variable Incentive Plan referenced below or any other bonus.

 

d.                                      Annual Incentive.  Beginning May 1, 2013, and on a yearly basis thereafter on January 1 of the new year, Employee will be eligible to participate in an annual discretionary performance based incentive award, currently referred to as the Company’s Variable Incentive Plan (“VIP”) consisting of both a cash and equity component with payouts tied to varying achievement levels of the Company (e.g., operating income as % of revenue), and vertical targets (e.g., bookings, revenue, operating income, and NPS for which Employee will have oversight), and individual targets. This paragraph 2(d) and its subparts generally describe the VIP and cash and equity components. The final terms and conditions of the VIP for 2013 will be set forth in a separate document to be presented to Employee during the second quarter of 2013 and shall supersede and replace this paragraph 2(d) and its subparts.

 

(i)                                    Cash Component:  Employee shall be eligible to receive a cash incentive through discretionary performance based incentive awards of up to two (2) times Employee’s then current base salary per year, commencing in 2013 with the cash incentive for the first year being payable in March 2014, based on the following and as set-forth by the Company for each year in which Employee is eligible to participate in VIP: (1) Company-wide business results; (2) business-segment results; (3) execution against strategy to deliver on a long-term plan to meet revenue and operating income goals; and, (4) individual performance. Any cash incentive issued in the Year 2014 for achievements obtained in the Year 2013 by Employee, shall be pro-rated based on Employee’s Start Date.  In certain circumstances, and as set forth in the VIP, Employee may be eligible for a larger cash bonus in the event of overachievement.

 

(ii)                                Equity Component.  Employee shall be eligible to receive Fair Market Value equity grants with a cash value of up to two (2) times Employee’s base salary, if all Employee’s and the Company’s annual targets are fully met on an annual basis, commencing in March 2014 with equal vesting over five years on the anniversary date of issue. The Fair Market Value equity grant will be determined based on a variety of performance criteria including but not limited to: Company and business unit revenue and operating income; signings revenue, operating income and NPS; and individual performance goals and objectives set forth by the Company for Employee.  Any Fair Market Value equity grant issued in the Year 2014 for

 

 

achievements obtained in the Year 2013 by Employee and the Company shall be pro-rated based on Employee’s Start Date.

 

4.                                      Restricted Stock Units.

 

a.                                      Time-Based RSU Grant.  TeleTech Holdings, Inc. (“TeleTech Holdings”), the parent company of TeleTech, shall grant Employee 75,000 restricted stock units (“RSUs”) contingent upon the approval of the Compensation Committee.  The Time-Based RSUs shall vest in accordance with the terms and conditions set forth in the Restricted Stock Unit Agreement, attached hereto as Exhibit A.  Employee will be eligible for additional annual RSU grants as recommended by the CEO and as approved by the Compensation Committee.

 

5.                                      Benefits.

 

a.                                      Medical, Vision, Dental, Insurance and Long-Term Disability Insurance.  Employee and his dependents shall be eligible for coverage under the group medical, vision, and dental insurance and other insurance plans made available to the Company’s employees, beginning on the first of the month after 30 days from the Effective Date.  In the time period between Employee’s Start Date and when Employee and his dependents are eligible for coverage (“the Waiting Period”), the Company shall pay Employee’s portion of COBRA during the Waiting Period.  In the event the Company does not offer an employer-sponsored health plan to its employees, the Company shall reimburse Employee’s reasonable premiums for private health care coverage for himself and his dependents, during his employment and while such coverage is not offered, up to $1,500.00, grossed up, per month.

 

b.                                      Miscellaneous benefits.  Employee shall receive benefits generally applicable to the Company’s management employees that are from time to time in effect, such as the Company’s 401(k) and Deferred Compensation Plans.

 

6.                                      Paid Leave.

 

Employee shall receive Paid Time Off (PTO) pursuant to the then current PTO Policy (or any other vacation/sick policy then in effect).  Employee will also be paid for time off for certain holidays as set forth in Company’s then current Company Holiday Policy.  In the event the PTO Policy changes during the course of Employee’s employment, Employee shall immediately and automatically accrue no less than twenty (20) days of PTO.

 

7.                                      Relationship Between this Agreement and Other Company Agreements.

 

In the event of any direct conflict between any term of this Agreement and any TeleTech contract, policy, procedure, guideline or other publication addressing the

 

 

same terms and conditions contained in this Agreement, the terms of this Agreement shall control in regards to Employee’s employment.

 

8.                                      Termination.

 

a.                                      Termination by Either Party.  Except as set forth in paragraphs 8(c), (d) and (e) below, upon 30 days written notice, either party may terminate the employment relationship.  Both parties may mutually agree to a shorter period.

 

b.                                      Termination by the Company Without Cause.  Upon 30 days written notice, the Company, in its sole discretion, may terminate Employee’s employment without “Cause” (as “Cause” is defined in paragraph 8(f), below).  In this instance, if Employee executes a separation agreement identical to or substantially similar to the agreement set forth in Exhibit B (attached hereto), releasing all legal claims except for those that cannot legally be released and Employee continues to comply with all terms of such Separation Agreement, and any other agreement signed by Employee, as severance compensation TeleTech shall pay Employee the sum of 12 months of Employee’s then-current Annual Base Pay (i.e., $400,000), measured on the then current monthly basis and payable over a 12 month period in accordance with TeleTech’s then current regular pay periods and policies, less legally required deductions and withholdings.   No other compensation or bonuses will be deemed “earned” and/or payable at or following termination, such as any bonuses, equity grants, accelerated vesting, or any other pay.

 

If TeleTech terminates this Agreement without Cause under this paragraph 8(b), and TeleTech pays Employee all salary and compensation earned as of the termination date, and provides Employee severance compensation and severance benefits in the amount and on the terms specified in this paragraph 8(b), TeleTech’s acts in doing so shall be in complete accord and satisfaction of any claim that Employee has or may at any time have for compensation or payments of any kind from TeleTech arising from or relating in whole or part to Employee’s employment with TeleTech and/or this Agreement. If the Separation Agreement and legal release referenced above is not signed within thirty (30) days from when the agreement is presented to Employee, then Employee waives his right to receive any severance compensation or severance benefits, even if Employee were to successfully litigate any claim against Company.  Employee is not entitled to severance compensation or severance benefits if Employee terminates his own employment with Company with the exception of the terms set forth in paragraph 8(g).  Employee shall remain subject to the Company’s Confidentiality and Arbitration agreements and any other similar agreements executed shortly prior to, or during his employment, all of which survive termination of employment.

 

c.                                             Termination by the Company for Cause.  The Company may terminate this Agreement effective immediately for Cause, as set forth in paragraph 8(f), upon notice to Employee, with the Company’s only obligation being the payment of any

 

 

salary and compensation earned as of the date of termination, and any continuing obligations under Company or benefit plans then in effect, and without liability for severance compensation of any kind, including the base pay severance set forth in paragraph 8(b) above.

 

d.                                      Termination Upon Employee’s Death.  This Agreement shall terminate immediately upon Employee’s death.  Thereafter, the Company shall pay to Employee’s estate all compensation fully earned, and benefits fully vested as of the last date of Employee’s continuous, full-time active employment with the Company.  For purposes of this Agreement, continuous, full-time active employment shall be defined as the last date upon which Employee continuously performed his job responsibilities on a regular, full-time basis consisting of 35 hours or more per week, and in the usual course of the Company’s business (“Continuous Full-Time Active Employment”).  The Company shall not be required to pay any form of severance, severance benefits, or other compensation concerning or on account of Employee’s employment with the Company or the termination thereof,

 

e.                                       Termination Following Disability.  During the first ninety (90) calendar days after a mental or physical condition that renders Employee unable to perform the essential functions of his position with reasonable accommodation (the “Initial Disability Period”), Employee shall continue to receive his base salary pursuant to paragraph 2(a).  Thereafter, if Employee qualifies for benefits under the Company’s long term disability insurance plan (the “LTD Plan”), then Employee shall remain on leave for as long as Employee continues to qualify for such benefits, up to a maximum of 180 consecutive days (the “Long Term Leave Period”).  The Long Term Leave Period shall begin on the first day following the end of the Initial Disability Period.  During the Long Term Leave Period, Employee shall be entitled to any benefits to which the LTD Plan entitles Employee, but no additional compensation from the Company in the form of salary, performance bonus, equity grants, allowances or otherwise. If during or at the end of the Long Term Leave Period Employee remains unable to perform the essential functions of his position, then the Company may terminate this Agreement and/or Employee’s employment. If the Company terminates this Agreement or Employee’s employment under this paragraph 8(e), the Company’s payment obligation to Employee shall be limited to all compensation fully earned, and benefits fully vested as of the last date of Employee’s Continuous, Full-Time Active Employment with the Company.

 

f.                                        Definition of “Cause”.

 

(1)                                 Years One and Two: For the first two full years of employment commencing from Employee’s Time-Based RSU grant date and up until the first day upon which the Time-Based RSU’s vest, “Cause” shall only include any the following acts: (i) fraud, theft (or attempted theft), embezzlement, (or attempted embezzlement), dishonest acts or illegal conduct; (ii) similar acts of willful misconduct of the Employee resulting in material damage to the Company; (iii) a material breach by the Employee of this Agreement that is not cured within fifteen (15) days following the

 

 

Employee’s receipt of written notice of such breach from the Company; (iv) use of any unlawful controlled substance or use of alcohol to an extent that it interferes on a continuing and material basis with the performance of his duties under this Agreement, (v) a breach of a fiduciary duty that results in material impact to the Company and/or that results in personal profit to the Employee (as determined by the Company in its sole discretion); (vi) unauthorized use of trade secrets or confidential information (or the Company’s reasonable belief that Employee has or attempted to do so); or (vii) aiding a competitor of the Company or any of its affiliates or subsidiaries.  .

 

(2)                                 After Year Two: Following the first vesting date on Employee’s new hire RSU grant date (i.e., commencement of Employee’s third full year of employment and the day after the first vesting of Time-Based RSU’s)  “Cause” shall include all of the acts set forth above in paragraph 8(f)(1), and shall also include: (viii) failure by the Employee in the performance of his duties that results in a material adverse effect on the Company, which, in the case of such failure is capable of being cured, is not cured to the satisfaction of the Company within thirty (30) days after the Company gives the Employee notice of such failure.  Employee’s failure to perform his job duties may include, but is not limited to, failure to meet individual or Company goals, metrics, revenue and other targets set forth by the Company with input and/or collaboration by Employee; and/or Employee’s placement on any performance improvement plan or disciplinary action at the time of Termination.

 

For purposes of this Agreement, “material” shall mean any event, occurrence, incident, condition, act or omission of an act, which has, or could reasonably be expected to result in an adverse consequence to the Company, or its shareholders, including but not limited to, its core business, prospects for business, operations, financial condition and legal claims and defenses.

 

g.                                      Change in Base Pay, Reporting, Job Level, and Bonus Target Amount.  The Employee shall be employed in the capacity of Executive Vice President, Global Markets & Industries.  Employee and the Company agree that any reduction in Employee’s base pay, any change in Employee’s reporting to someone other than the Company CEO, any material reduction in job level in the Company, or any reduction in Employee’s annual incentive bonus target amount (Cash and Equity), constitutes termination without “Cause” under Paragraph 8 and severance compensation will be due to Employee in accordance with those terms within 30 days from the date of this change(s).  Employee must provide written notice within 30 days to the CEO requesting severance under paragraph 8(g).  For clarity sake, nothing in this provision 8(g) shall prohibit the Company from modifying Employee’s job duties from time to time in accordance with business needs, provided there is no change in Employee’s pay, status, and reporting structure, as determined by TeleTech.

 

9.                                      Relocation not Required.  The Company shall not require Employee to relocate until such time as is mutually agreed to by both Employee and the Company.

 

 

10.                               Travel Required.  Company agrees that Employee will be permitted to travel on business class for international travel and red-eye US flights.

 

11.                               Successors and Assigns.  The Company, its successors and assigns may in their sole discretion assign this Agreement to any person or entity in connection with the acquisition of all or substantially all the assets of the Company, with or without Employee’s consent as long as Employee is guaranteed that the terms in this Employment Agreement will be adhered to by any successors or assignees.  This Agreement thereafter fully shall bind, and inure to the benefit of the Company’s successors or assigns and in the event of a sale of all or a portion of the Company’s stock or assets, this Agreement shall continue in full force and effect.  Employee shall not assign either this Agreement or any right or obligation arising hereunder.

 

12.                               Dispute Resolution.

 

Employee and the Company agree that in the event of any controversy or claim arising out of or relating to Employee’s employment with and/or separation from the Company, they shall negotiate in good faith to resolve the controversy or claim privately, amicably and confidentially.  Each party may consult with counsel in connection with such negotiations.  All controversies and claims arising from or relating to Employee’s employment with the Company and/or the termination of that employment that cannot be resolved by good-faith negotiations shall be resolved only by final and binding arbitration.  Employee agrees to execute, simultaneously with the execution of this Agreement, the Company’s current Arbitration Agreement.

 

13.                               Non-Disclosure, Non-Competition and Non-Solicitation.

 

Employee agrees to execute, simultaneously with the execution of this Agreement, the Company’s current Agreement to Protect Confidential Information, Assign Inventions and Prevent Unfair Competition and Unfair Solicitation (“Confidentiality Agreement”), which, among other things, restricts Employee from engaging in any activity in competition with the Company for a one-year period following Employee’s termination or resignation from Employment.

 

14.                               Section 409A.

 

a.                                      Interpretation.  This Agreement shall be interpreted and administered in a manner so that any amount or benefit payable hereunder shall be paid or provided in a manner that is either exempt from, or complies with, the requirements of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) and the Internal Revenue Service guidance and Treasury Regulations thereunder (“Section 409A”).

 

b.                                      Separation from Service; Separate Payments.  Notwithstanding anything in this Agreement to the contrary, to the extent that any payment or benefit constitutes non-exempt “nonqualified deferred compensation” for purposes of Section 409A, and such payment or benefit would otherwise be payable or distributable

 

 

hereunder by reason of Employee’s termination of employment, all references to Employee’s “termination of employment” shall be construed to mean a “separation from service,” as defined in Treasury Regulation Section 1.409A-1(h), and Employee shall not be considered to have had a termination of employment unless such termination constitutes a “separation from service” with respect to Employee.  If under this Agreement, an amount is to be paid in two or more installments, for purposes of Section 409A, each installment shall be treated as a separate payment.

 

c.                                       Specified Employee.  Notwithstanding anything in this Agreement to the contrary, if Employee is a “specified employee” (within the meaning of Treasury Regulation Section 1.409A-1(i)) on the date of Employee’s “separation from service”, any benefit or payment that constitutes non-exempt “nonqualified deferred compensation” (within the meaning of Section 409A) shall be delayed in order to avoid a prohibited distribution under Section 409A(a)(2)(B)(i), and any such delayed payment shall be paid to Employee in a lump sum during the ten (10) day period commencing on the earlier of (i) the expiration of the six-month period from the date of Employee’s “separation from service,” or (ii) Employee’s death.  To the greatest extent permitted under Section 409A, any separate payment or benefit under the Agreement will not be deemed to constitute “nonqualified deferred compensation” subject to Section 409A and the six-month delay requirement to the extent provided in the exceptions in Treasury Regulation Sections 1.409A-1(b)(4) or 1.409A-1(b)(9), or in any other applicable exception or provision of Section 409A.

 

d.                                      Reimbursements.  With regard to any provision in this Agreement that provides for reimbursement of costs and expenses or in-kind benefits, except as permitted by Section 409A, (i) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit, (ii) the amount of expenses eligible for reimbursement, or in-kind benefits, provided during any taxable year shall not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other taxable year, provided that the foregoing clause (ii) shall not be violated with regard to expenses reimbursed under any arrangement covered by Section 105(b) of the Code solely because such arrangement provides for a limit on the amount of expenses that may be reimbursed over some or all of the period the arrangement is in effect and (iii) such payments shall be made on or before the last day of Employee’s taxable year following the taxable year in which the expenses were incurred.

 

e.                                       Cooperation.  If the parties hereto determine that any payments or benefits payable under this Agreement intended to comply with Section 409A do not so comply, Employee and the Company agree to amend this Agreement, or take such other actions as Employee and the Company deem necessary or appropriate, to comply with the requirements of Section 409A, while preserving benefits that are, in the aggregate, no less favorable than the benefits as provided to Employee under this Agreement.  If any provision of this Agreement would cause such payments or benefits to fail to so comply, such provision shall not be effective and shall be null and void with respect to such payments or benefits, and such provision shall otherwise remain in full force and effect.

 

 

15.                               Miscellaneous.

 

a.                                      Governing Law.  This Agreement, and all other disputes or issues arising from or relating in any way to the Employee’s relationship with Employee, shall be governed by the internal laws of the State of Colorado, irrespective of the choice of law rules of any jurisdiction.

 

b.                                      Severability. If any court of competent jurisdiction declares any provision of this Agreement invalid or unenforceable, the remainder of the Agreement shall remain fully enforceable.  To the extent that any court concludes that any provision of this Agreement is void or voidable, the court shall reform such provision(s) to render the provision(s) enforceable, but only to the extent absolutely necessary to render the provision(s) enforceable.

 

c.                                       Modification of Agreement.  This Agreement or any other term or condition of employment shall not be modified by word or deed, except in writing signed by Employee and Executive Vice President of Human Capital for TeleTech.

 

d.                                      Waiver.  No provision of this Agreement shall be deemed waived, nor shall there be an estoppel against the enforcement of any such provision, except by a writing signed by the party charged with the waiver or estoppel.  No waiver shall be deemed continuing unless specifically stated therein, and the written waiver shall operate only as to the specific term or condition waived, and not for the future or as to any act other than that specifically waived.

 

e.                                       Construction.  Whenever applicable, masculine and neutral pronouns shall equally apply to the feminine genders; the singular shall include the plural and the plural shall include the singular.  The parties have reviewed and understand this Agreement, and each has had a full opportunity to negotiate the agreement’s terms and to consult with counsel of their own choosing.  Therefore, the parties expressly waive all applicable common law and statutory rules of construction that any provision of this Agreement should be construed against the agreement’s drafter, and agree that this Agreement and all amendments thereto shall be construed as a whole, according to the fair meaning of the language used.

 

f.                                        Employee’s Representations and Warranties.  Employee represents and warrants, to the best of his knowledge, that the Employee is not a party to any other employment, non-competition or other agreement or restriction which could interfere with Employee’s employment with the Company or Employee’s or the Company’s rights and obligations hereunder, and that Employee’s acceptance of employment with the Company and the performance of Employee’s duties hereunder will not breach the provisions of any contract, agreement, or understanding to which Employee is a party or any duty owed by Employee to any other person.

 

 

g.                                      Counterparts, Telecopies and PDFs.  This Agreement may be executed in counterparts, or by copies transmitted by pdf or telecopier, which counterparts and/or facsimile transmissions shall have the same force and effect as had the contract been executed in person and in original form.

 

h.                                      Return and/or Forfeiture of Compensation and Equity Grants.  Notwithstanding any other provision in this Agreement or in the Equity Agreements, in the event that pursuant to the terms or requirements of the Sarbanes-Oxley Act of 2002, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, or of any applicable laws, rules or regulations promulgated by the Securities and Exchange Commission or any listing requirements of any stock exchange or stock market on which any securities of TeleTech trade, from time to time, and in the event any bonus payment, stock award or other payment is based upon the satisfaction of financial performance metrics which are subsequently reversed due to a restatement or reclassification of financial results of TeleTech, then any payments made or awards granted shall be returned and forfeited to the extent required and as provided by applicable laws, rules, regulations or listing requirements.  This Section 15(h) shall survive any expiration or termination of this Agreement for any reason.

 

Employee acknowledges and agrees: that he understands this Agreement; that he enters into it freely, knowingly, and mindful of the fact that it creates important legal obligations and affects his legal rights; and that he understands the need to consult concerning this Agreement with legal counsel of his own choosing, and has had a full and fair opportunity to do so.

 

[SIGNATURES FOLLOW]

 

 

	
Employee:
    	
 
    	
TeleTech   Services Corporation:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
By:
    	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Name:
    	
Keith Gallacher
    	
 
    	
Name:
    	
Regina   Paolillo
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Its:
    	
Executive   Vice President and Chief Financial and Administrative Officer,
    

 

 

Exhibit A

To

Executive Employment Agreement

(Time-Based RSU Grant)

 

See attached.

 

 

Exhibit B

To

Executive Employment Agreement

(Sample Severance Agreement and Release of Claims)

 

See attached.SIP 2011 Amendment

Exhibit 10.1

As Amended May 17, 2013

AMENDED AETNA INC.
2010 STOCK INCENTIVE PLAN 

SECTION 1. PURPOSE. 
The purposes of this Plan are to promote the interests of the Company and its shareholders and align the interests of shareholders and Participants by: 

(i) motivating Participants through Awards tied to total return to shareholders (i.e., stock price appreciation and dividends); 

(ii) attracting and retaining high performing individuals as Participants; 

(iii) enabling Participants to acquire additional equity interests in the Company; and 

(iv) providing compensation opportunities dependent upon the Company's performance relative to its competitors and changes in its own performance over time. 
 
SECTION 2. DEFINITIONS. 

“AFFILIATE” shall mean any corporation or other entity (other than the Company or one of its Subsidiaries) in which the Company directly or indirectly owns at least twenty percent (20%) of the combined voting power of all classes of stock of such entity or at least twenty percent (20%) of the ownership interests in such entity. 

“AWARD” shall mean a grant or award under the Plan, as evidenced in a written document delivered to a Participant as provided in Section 12(b). 

“BOARD” shall mean the Board of Directors of the Company. 

“CAUSE” shall mean (i) the willful failure by the Participant to perform substantially the Participant's duties as an employee of the Company (other than due to physical or mental illness) after reasonable notice to the Participant, (ii) the Participant's engagement in serious misconduct that is injurious to the Company, any Subsidiary or any Affiliate, (iii) the Participant's conviction of, or entrance of a plea of nolo contendere to, a crime that constitutes a felony, (iv) the breach by the Participant of any written covenant or agreement not to compete with the Company, any Subsidiary or any Affiliate or (v) the breach by the Participant of his or her duty of loyalty to the Company which shall include, without limitation, (A) any disclosure by the Participant of any confidential information pertaining to the Company, any Subsidiary or any Affiliate, (B) any harmful interference by the Participant in the business or operations of the Company, any Subsidiary or any Affiliate, (C) any attempt by the Participant directly or indirectly to induce any employee, insurance agent, insurance broker or broker-dealer of the Company, any Subsidiary or any Affiliate to be employed or perform services elsewhere, (D) any attempt by the Participant directly or indirectly to solicit the trade of any customer or supplier, or prospective customer or supplier, of the Company or (E) any breach or violation of the Company's Code of Conduct. 

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“CODE” shall mean the Internal Revenue Code of 1986, as amended, and the regulations thereunder. 

“COMMITTEE” shall mean a committee of the Board as may be designated by the Board to administer the Plan, which shall consist of at least three directors of the Company chosen by the Board each of whom has satisfied such criteria for independence as the Board may establish and such additional regulatory or listing requirements as the Board may determine to be applicable or appropriate. 

“COMMON STOCK” shall mean the common shares, $.01 par value, of the Company. 

“COMPANY” shall mean Aetna Inc., a Pennsylvania corporation. 

“ELIGIBLE EMPLOYEE” shall mean each employee of the Company, its Subsidiaries or its Affiliates, but shall not include directors who are not employees of such entities. Any individual the Company designates as, or otherwise determines to be, an independent contractor shall not be considered an Eligible Employee, and such designation or determination shall govern regardless of whether such individual is ultimately determined to be an employee pursuant to the Code or any other applicable law. 

“EMPLOYMENT” shall mean, for purposes of determining whether a termination of employment has occurred under the Plan, continuous and regular salaried employment with the Company, a Subsidiary or an Affiliate, which shall include (unless the Committee shall otherwise determine) any period of paid time off, any approved leave of absence or any salary continuation or severance pay period and, at the discretion of the Committee, may include service with any former Subsidiary or Affiliate of the Company. For this purpose, regular salaried employment means scheduled employment of at least 20 hours per week. 

“EXCHANGE ACT” shall mean the Securities Exchange Act of 1934, as amended from time to time. 

“EXECUTIVE OFFICER” shall mean those persons who are officers of the Company within the meaning of Rule 16a-l(f) of the Exchange Act. 

“FAIR MARKET VALUE” shall mean on any date, with respect to a share of Common Stock, the closing price of a share of Common Stock as reported by the Consolidated Tape of New York Stock Exchange Listed Shares on such date, or, if no shares were traded on such Exchange on such date, on the next date on which the Common Stock is traded on such Exchange. 

“FUNDAMENTAL CORPORATE EVENT” shall mean any stock dividend, extraordinary cash dividend, recapitalization, reorganization, merger, consolidation, split-up, spin-off, combination, exchange of shares, offering to purchase Common Stock at a price substantially below fair market value, or other similar event. 

“INCENTIVE STOCK” shall mean an Award of Common Stock granted under Section 7 which may become vested and nonforfeitable upon the passage of time and/or the attainment, in whole or in part, of performance objectives determined by the Committee. 

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“INCENTIVE STOCK OPTION” shall mean an option which is intended to meet the requirements of Section 422 of the Code. 

“INCENTIVE UNIT” shall mean an Award of a contractual right granted under Section 7 to receive Common Stock (or, at the discretion of the Committee, cash based on the Fair Market Value of the Common Stock) which may become vested and nonforfeitable upon either the passage of time and/or the attainment, in whole or in part, of performance objectives determined by the Committee. 

“NONSTATUTORY STOCK OPTION” shall mean an Option which is not intended to be an Incentive Stock Option. 

“OPTION” shall mean the right granted under Section 5 to purchase the number of shares of Common Stock specified by the Committee, at a price and for the term fixed by the Committee in accordance with the Plan and subject to any other limitations and restrictions as this Plan and the Committee shall impose, and shall include both Incentive Stock Options and Nonstatutory Stock Options. 

“OTHER STOCK-BASED AWARD” shall mean any right granted under Section 8. 

“PARTICIPANT” shall mean an Eligible Employee who is selected by the Committee to receive an Award under the Plan and any recipient of a Substitute Award. 

“PLAN” shall mean the Aetna Inc. 2010 Stock Incentive Plan, described herein, and as may be amended from time to time. 

“RESTRICTED PERIOD” shall mean the period during which a grant of Incentive Stock or Incentive Units is subject to forfeiture. 

“SECTION 409A” shall mean Section 409A of the Code and the regulations issued thereunder, as may be amended from time to time. 

“STOCK APPRECIATION RIGHT”or “SAR” shall mean a right granted under Section 6. 

“SUBSIDIARY” shall mean any entity of which the Company possesses directly or indirectly fifty percent (50%) or more of the total combined voting power of all classes of stock of such entity. 

“SUBSTITUTE AWARD” shall mean an Award granted in assumption of, or in substitution for, an outstanding award previously granted by a company acquired by the Company or with which the Company combines. 

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SECTION 3. ADMINISTRATION. 
The Plan shall be administered by the Committee. The Committee shall have the responsibility of construing and interpreting the Plan and of establishing and amending such rules and regulations as it deems necessary or desirable for the proper administration of the Plan. Any decision or action taken or to be taken by the Committee, arising out of or in connection with the construction, administration, interpretation and effect of the Plan and of its rules and regulations, shall, to the maximum extent permitted by applicable law, be within its absolute discretion (except as otherwise specifically provided herein) and shall be conclusive and binding upon all Participants and any person claiming under or through any Participant. 

Subject to the terms of the Plan and applicable law, and in addition to other express powers and authorizations conferred on the Committee by the Plan, the Committee shall have full power and authority to: (i) designate Participants; (ii) determine the type or types of Awards, if any, to be granted to an Eligible Employee; (iii) determine the number of shares of Common Stock to be covered by, or with respect to which payments, rights, or other matters are to be calculated in connection with, Awards; (iv) determine the terms and conditions of any Award; (v) determine whether, to what extent, and under what circumstances Awards may be settled or exercised in cash, Common Stock, other securities, other Awards or other property, or canceled, forfeited, or suspended and the method or methods by which Awards may be settled, exercised, canceled, forfeited, or suspended; (vi) determine whether, to what extent, and under what circumstances, cash, Common Stock, other securities, other Awards, other property, and other amounts payable with respect to an Award shall be deferred either automatically or at the election of the holder thereof or of the Committee; (vii) interpret and administer the Plan and any instrument or agreement relating to, or Award made under, the Plan; (viii) establish, amend, suspend, or waive such rules and regulations and appoint such agents as it shall deem appropriate for the proper administration of the Plan; and (ix) make any other determination and take any other action that the Committee deems necessary or desirable for the administration of the Plan (including authorizing another committee of the Board to designate Participants or make Awards under the Plan within limits prescribed by the Committee). 

Except with respect to any action or adjustment taken in connection with a Fundamental Corporate Event, any amendment or action that would, directly or indirectly, reduce the exercise price of any outstanding option or SAR previously granted under the Plan, including through an exchange or cancellation of awards for cash or other awards, shall be subject to the approval of the Company's shareholders. 

SECTION 4. SHARES AVAILABLE FOR AWARDS. 
(a) Shares Available for Issuance. The maximum number of shares of Common Stock in respect of which Awards may be made under the Plan shall be a total of 22,000,000 shares of Common Stock. Shares of Common Stock may be made available from the authorized but unissued shares of the Company or from shares held in the Company's treasury and not reserved for some other purpose. In the event that any Award is paid solely in cash, no shares shall be deducted from the number of shares available for issuance by reason of such Award. Shares of Common Stock

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subject to Awards that are forfeited, terminated, canceled or settled, in whole or in part, without the delivery of Common Stock under the Plan will again be available for Awards under the Plan, as will shares of Common Stock tendered (either actually or by attestation) to the Company in satisfaction or partial satisfaction of the exercise price of any Award under the Plan, and shares withheld by the Company to pay applicable withholding in accordance with Section 12. 

(b) Adjustment for Corporate Transactions. In the event that the Committee shall determine that any Fundamental Corporate Event affects the Common Stock such that an adjustment is required to preserve, or to prevent enlargement of, the benefits or potential benefits made available under this Plan, then the Committee shall, in such manner as the Committee may deem equitable, adjust any or all of (i) the number and kind of shares which thereafter may be awarded or optioned and sold or made the subject of Awards under the Plan, (ii) the number and kinds of shares subject to outstanding Awards and (iii) the grant, exercise or conversion price with respect to any of the foregoing. Additionally, the Committee may make provisions for a cash payment to a Participant or a person who has an outstanding Award; provided, however, that to the extent such an Award constitutes “deferred compensation” within the meaning of Section 409A, no such provision for a cash payment shall change the timing of payment of such Award unless such change is permitted under Section 409A. However, the number of shares subject to any Award shall always be a whole number. 

SECTION 5. STOCK OPTIONS. 

(a) Grant. Subject to the provisions of the Plan, the Committee shall have the authority to grant Options to an Eligible Employee and to determine (i) the number of shares to be covered by each Option, (ii) subject to Section 5(b), the exercise price of the Option and (iii) the conditions and limitations applicable to the exercise of the Option. Notwithstanding the foregoing, in no event shall the Committee grant any Participant Options (i) for more than 2,000,000 shares of Common Stock in respect of any year in which the Plan is in effect, as such number may be adjusted pursuant to Section 4(b) or (ii) with a term of exceeding 10 years. In the case of Incentive Stock Options, the terms and conditions of such grants shall be subject to and comply with Section 422 of the Code and the regulations thereunder. 

(b) Exercise Price. Except in the case of a Substitute Award, the exercise price of an Option shall not be less than 100% of the Fair Market Value on the date of grant. 

(c) Exercise. Each Option shall be exercised at such times and subject to such terms and conditions as the Committee may specify at the time of the applicable Award or thereafter. No shares shall be delivered pursuant to any exercise of an Option unless arrangements satisfactory to the Committee have been made to assure full payment of the exercise price therefor. Without limiting the generality of the foregoing, payment of the exercise price may be made in cash or its equivalent or, if and to the extent permitted by the Committee, by exchanging shares of Common Stock owned by the optionee (which are not the subject of any pledge or other security interest or which, in the case of Incentive Stock, are fully vested) either actually or by attestation, or by a combination of the foregoing, provided that the combined value of all cash and cash equivalents and the Fair Market Value of any such Common Stock so tendered to the Company, valued as of the date of such tender, is at least equal to such exercise price. 

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(d) Incentive Stock Option Annual Limit. The aggregate Fair Market Value (determined as of the date the Incentive Stock Option is granted) of the Common Stock with respect to which Incentive Stock Options are exercisable for the first time by an Eligible Employee during any calendar year (counting Incentive Stock Options under this Plan and under any other stock option plan of the Company or a subsidiary) shall not exceed $100,000. If an Option intended to be an Incentive Stock Option is granted to an Eligible Employee and the Option may not be treated in whole or in part as an Incentive Stock Option pursuant to the $100,000 limitation, the Option shall be treated as an Incentive Stock Option to the extent it may be so treated under the limitation and as a Nonstatutory Stock Option as to the remainder. For purposes of determining whether an Incentive Stock Option would cause the limitation to be exceeded, Incentive Stock Options shall be taken into account in the order granted. The annual limit set forth above shall not apply to Nonstatutory Stock Options. 

SECTION 6. STOCK APPRECIATION RIGHTS. 
(a) Grant of Stock Appreciation Rights. The Committee shall have the authority to grant Stock Appreciation Rights in tandem with an Option, in addition to an Option, or freestanding and unrelated to an Option. Notwithstanding the foregoing, in no event shall the Committee grant any Participant Stock Appreciation Rights (i) for more than 2,000,000 shares of Common Stock in respect of any year in which the Plan is in effect, as such number may be adjusted pursuant to Section 4(b), and (ii) with a term exceeding 10 years (or the term of the underlying Incentive Stock Option in the case of a Stock Appreciation Right granted in tandem with an Incentive Stock Option). Stock Appreciation Rights granted in tandem with an Option may be granted either at the same time as the Option or at a later time. 

(b) Exercise Price. The exercise price of a Stock Appreciation Right shall not be less than 100% of the Fair Market Value of a share of Common Stock on the date the Stock Appreciation Right was granted; provided that if a Stock Appreciation Right is granted retroactively in tandem with or in substitution for an Option, the exercise price may be the exercise price of the Option to which it is related. 

(c) Exercise of Stock Appreciation Rights. A Stock Appreciation Right shall entitle the Participant to receive from the Company an amount equal to the excess of the Fair Market Value of a share of Common Stock on the date of exercise of the Stock Appreciation Right over the base price thereof. The Committee shall determine the time or times at which or the event or events (including, without limitation, a change of control) upon which a Stock Appreciation Right may be exercised in whole or in part, the method of exercise and whether such Stock Appreciation Right shall be settled in cash, shares of Common Stock or a combination of cash and shares of Common Stock; provided, however, that unless otherwise specified by the Committee at or after grant, a Stock Appreciation Right granted in tandem with an Option shall be exercisable at the same time or times as the related Option is exercisable. 

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SECTION 7. INCENTIVE AWARDS. 

(a) Incentive Stock and Incentive Units. Subject to the provisions of the Plan, the Committee shall have the authority to grant time vesting and/or performance vesting Incentive Stock or Incentive Units to any Eligible Employee and to determine (i) the number of shares of Incentive Stock and/or the number of Incentive Units to be granted to each Participant and (ii) the other terms and conditions of such Awards; provided that, to the extent necessary to comply with applicable law, Incentive Stock shall only be awarded to an Eligible Employee who has been employed for such minimum period of time as shall be determined by the Committee. The Restricted Period related to Incentive Stock or Incentive Units shall lapse upon the passage of time and/or the determination by the Committee that the performance objectives established by the Committee have been attained, in whole or in part. The maximum number of shares of Common Stock that may be subject to any performance-based Awards of Incentive Stock and/or Incentive Units (whether payable in cash or shares) granted to an Executive Officer with respect to any year in which the Plan is in effect shall not exceed 2,000,000 shares, as such number may be adjusted pursuant to Section 4(b). If the award is intended to qualify under Section 162(m) of the Code, the performance objectives with respect to an Award made to an Executive Officer shall be related to at least one of the following criteria, which may be determined solely by reference to the performance of the Company, a Subsidiary or an Affiliate (or any business unit thereof) or based on comparative performance relative to other companies: (i) net income; (ii) earnings before income taxes; (iii) earnings per share; (iv) return on shareholders equity; (v) expense management; (vi) profitability of an identifiable business unit or product; (vii) ratio of claims to revenues; (viii) revenue growth; (ix) earnings growth; (x) total shareholder return; (xi) cash flow; (xii) return on assets; (xiii) pretax operating income; (xiv) net economic profit (operating earnings minus a charge for capital); (xv) customer satisfaction; (xvi) provider satisfaction; (xvii) employee satisfaction; (xviii) quality of networks; (xix) strategic innovation or (xx) any combination of the foregoing. 

SECTION 8. OTHER STOCK-BASED AWARDS. 
The Committee shall have authority to grant to eligible Employees an “Other Stock-Based Award”, which shall consist of any right which is (i) not an Award described in Sections 5 through 7 above and (ii) an Award of Common Stock or an Award denominated or payable in, valued in whole or in part by reference to, or otherwise based on or related to, Common Stock (including, without limitation, securities convertible into Common Stock), as deemed by the Committee to be consistent with the purposes of the Plan; provided that any such rights must comply, to the extent deemed desirable by the Committee, with Rule 16b-3 under the Exchange Act and applicable law. Subject to the terms of the Plan and any applicable Award Agreement, the Committee shall determine the terms and conditions of any such Other Stock-Based Award. 

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SECTION 9. DIVIDENDS AND DIVIDEND EQUIVALENTS. 
The Committee may provide that any Award shall include dividends or dividend equivalents, payable in cash, Common Stock, securities or other property on a current or deferred basis, including payment contingencies provided, however, in no event shall any such dividend or dividend equivalent become payable prior to the date on which an award is vested in accordance with its terms. The preceding sentence to the contrary notwithstanding, no dividends or dividend equivalents will be payable on options or stock appreciation rights.

SECTION 10. STOCK IN LIEU OF CASH. 
The Committee may grant Awards in lieu of all or a portion of compensation or an Award otherwise payable in cash to an Executive Officer pursuant to any bonus or incentive compensation plan of the Company. 

SECTION 11. DEFERRAL. 
The Committee shall have the discretion to determine whether, to what extent, and under what circumstances cash, shares of Common Stock, other securities, other Awards, other property, and other amounts payable with respect to an Award shall be deferred either automatically or at the election of the Participant or of the Committee. The timing of any elective deferral shall comply with Section 409A. At the time of any automatic or elective deferral, the time and form of payment shall be established consistent with the requirements of Section 409A. If the time or form of payment is not so established, the form of payment shall be a lump sum and the time of payment shall be the date the Participant experiences a “separation from service” within the meaning of Section 409A. Gains from the exercise of Options and Stock Appreciation Rights shall not be eligible for automatic or elective deferral. 

SECTION 12. GENERAL PROVISIONS. 
(a) Withholding. The Company shall have the right to deduct from all amounts paid to a Participant in cash (whether under this Plan or otherwise) any taxes required by law to be withheld in respect of Awards under this Plan. In the case of any Award satisfied in the form of Common Stock, no shares shall be issued unless and until arrangements satisfactory to the Company shall have been made to satisfy any withholding tax obligations applicable with respect to such Award. 

(b) Award Agreement. Each Award hereunder shall be evidenced in writing. The written agreement shall be delivered to the Participant and shall incorporate the terms of the Plan by reference and specify the terms and conditions thereof and any rules applicable thereto. 

(c) Nontransferability. Unless the Committee shall permit (on such terms and conditions as it shall establish) an Award to be transferred to a member of the Participant's immediate family or to a trust or similar vehicle for the benefit of such immediate family members (collectively, the “Permitted Transferees”), no Award shall be assignable or transferable except by will or the laws of descent and distribution, and except to the extent required by law, no right or interest of any 

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Participant shall be subject to any lien, obligation or liability of the Participant. All rights with respect to Awards granted to a Participant under the Plan shall be exercisable during the Participant's lifetime only by such Participant or, if applicable, the Permitted Transferees or the Participant's legal representative. 

(d) No Right to Employment. The grant of an Award shall not be construed as giving a Participant the right to be retained in the employ of the Company, any Subsidiary or any Affiliate. Further, the Company and each Subsidiary and Affiliate expressly reserves the right at any time to dismiss a Participant free from any liability, or any claim under the Plan, except as provided herein or in any Award Agreement. 

(e) No Rights to Awards, No Shareholder Rights. No Participant or Eligible Employee shall have any claim to be granted any Award under the Plan, and there is no obligation of uniformity of treatment of Participants and Eligible Employees. Subject to the provisions of the Plan and the applicable Award, no person shall have any rights as a shareholder with respect to any shares of Common Stock to be issued under the Plan prior to the issuance thereof. 
(f) Applicable Law. The validity, construction, interpretation, administration and effect of the Plan and of its rules and regulations, and rights relating to the Plan, shall be determined solely in accordance with the laws of the State of Connecticut. 

(g) Effective Date. The Plan shall be effective upon approval by the Company's shareholders. 

(h) Amendment or Termination of Plan. The Board or the Committee may terminate or suspend the Plan at any time, but the termination or suspension will not adversely affect any vested Awards then outstanding under the Plan. No Award may be granted under the Plan after May 21, 2020 or such earlier date as the Plan is terminated by action of the Board or the Committee. The Plan may be amended or terminated at any time by the Board, except that no amendment may be made without shareholder approval if the Committee determines that such approval is necessary to comply with any tax or regulatory requirement, including any approval requirement which is a prerequisite for exemptive relief from Section 16 of the Exchange Act, for which or with which the Committee determines that it is desirable to qualify or comply; and, the Committee may amend the term of any Award or Option granted, retroactively or prospectively, but no amendment may adversely affect any vested Award or Option without the holder's consent. 

(i) Compliance with Legal and Exchange Requirements. The Plan, the granting and exercising of Awards thereunder and the other obligations of the Company under the Plan, shall be subject to all applicable federal and state laws, rules, and regulations, and to such approvals by any regulatory or governmental agency as may be required. The Company, in its discretion, may postpone the granting and exercising of Awards, the issuance or delivery of Common Stock under any Award or any other action permitted under the Plan to permit the Company, with reasonable diligence, to complete such stock exchange listing or registration or qualification of such Common Stock or other required action under any federal or state law, rule, or regulation and may require any Participant to make such representations and furnish such information as it may consider appropriate in connection with the issuance or delivery of Common Stock in compliance with applicable laws, rules, and regulations. The Company shall not be obligated by virtue of any provision of the Plan to recognize the exercise of any Award or to otherwise sell or issue Common Stock in violation of any such laws, rules, or regulations; and any postponement 

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of the exercise or settlement of any Award under this provision shall not extend the term of such Awards, and neither the Company nor its directors or officers shall have any obligations or liability to the Participant with respect to any Award (or stock issuable thereunder) that shall lapse because of such postponement. 

(j) Severability of Provisions. If any provision of this Plan shall be held invalid or unenforceable, such invalidity or unenforceability shall not affect any other provisions hereof, and this Plan shall be construed and enforced as if such provision had not been included. 

(k) Incapacity. Any benefit payable to or for the benefit of a minor, an incompetent person or other person incapable of providing a receipt therefore shall be deemed paid when paid to such person's guardian or to the party providing or reasonably appearing to provide for the care of such person, and such payment shall fully discharge any liability or obligation of the Committee, the Board, the Company and all other parties with respect thereto. 

(l) Headings and Captions. The headings and captions herein are provided for reference and convenience only, shall not be considered part of this Plan, and shall not be employed in the construction of this Plan. 

(m) Compliance with Section 409A. All Awards granted under the Plan are intended to be either exempt from the requirements of Section 409A or, if not exempt, to satisfy the requirements of Section 409A. The provisions of the Plan and any Awards granted under the Plan shall be construed in a manner consistent with such intent. In addition, notwithstanding any other provision of this Plan or an Award agreement to the contrary, the Company will not pay or accelerate the payment of any amount that constitutes “deferred compensation” within the meaning of Section 409A, in violation of Section 409A. To the extent any amount of “deferred compensation” as defined in Section 409A would otherwise vest and become payable upon a Change in Control or upon a disability, as set forth herein or in an Award Agreement, any such Award may vest but payment shall not be accelerated unless the Change in Control or the disability also satisfies the definition of “change in control” or “disability” as set forth in Section 409A. 

Any amount that constitutes “deferred compensation” within the meaning of Section 409A and is payable under the Plan solely by reason of a Participant's termination of employment shall be payable only if the Participant has experienced a “separation from service” within the meaning of Section 409A, provided that if the Participant is a “specified employee” within the meaning of Section 409A at the time of such separation from service, as determined by the Company in accordance with Section 409A, no payments shall be made before the six-month anniversary of the Participant's separation from service, at which time all payments that would otherwise have been made during such six-month period shall be paid to the Participant in a lump sum. 

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