EXHIBIT 10.25
MARKETING AGREEMENT
This Marketing Agreement (the "Agreement"), dated as of May 12, 1998, is
between CGH SALES, INC. ("CG"), a Delaware corporation whose address is 0000
Xxxx Xxxxxx Xxxx 00, Xxxx Xxxxxx, Xxxxxxxx 00000, and INVERNADEROS LA PEQUENA
XXXX, X.X. de C.V. ("Joya"), a corporation organized and existing under the laws
of the United Mexican States, whose address is Blvd. Culiacan 2580-7, Plaza
Santa Xxxx, Culiacan, Sinaloa C.P. 80100, Mexico.
RECITALS
A. Pursuant to Subscription Agreement of even date herewith (the
"Subscription Agreement"), Colorado Greenhouse Holdings, Inc. ("CGH"), the owner
of all the outstanding capital stock of CG, has purchased 25% of the outstanding
capital stock of Grupo Xxxxx CGH S.A. de C.V., the owner of more than 90% of the
outstanding capital stock of Joya.
B. Pursuant to the terms of the Subscription Agreement, CGH and Holdings
have agreed to cause CG and Joya to enter into this Agreement.
AGREEMENT
1. Sale. Joya shall deliver to CG and CG shall accept and use all
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reasonable efforts to sell all of the "acceptable" agricultural or horticultural
products, of the varieties specified in EXHIBIT A (the "Products"), grown by or
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for Joya at its current and future facilities in Baja Mexico, together with any
other facilities built or acquired by (i) Joya, or an Affiliate of Joya, or (ii)
any other entity in which both CG, or an Affiliate of CG, and Joya, or an
Affiliate of Joya, have contributed funds. Products shall be deemed
"acceptable" for all purposes hereunder if in the sole discretion of CG such
product is of a quality and grade consistent with the other products grown or
marketed by CG or any of its Affiliates. Set forth on Exhibit A attached hereto
and made a part hereof (which exhibit may be amended or supplemented from time
to time by the mutual agreement of the parties) are specifications and
descriptions of the various quality and grades of Products. As used herein
"Affiliate" shall mean any person or entity directly or indirectly controlling,
controlled by, or under common control with such person or entity. A person or
entity shall be deemed to control another person or entity if such person or
entity possesses, directly or indirectly, the power to direct or cause the
direction of the management and policies of such person or entity, whether
through ownership of voting securities, by contract or otherwise.
2. Exclusive Dealings. Joya warrants that it has not heretofore
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contracted to sell, market, consign, or deliver any of such products to any
person, firm, or corporation, except as noted on the annexed schedule. Any
products covered by such existing contract shall be excluded from the terms of
this agreement for the period and to the extent noted. Joya shall not directly,
or indirectly through any party other than CG, sell any of its export quality
products in the United States, Canada, Europe or other agreed upon territory.
3. Term. The term of this Agreement shall commence at the start of the
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new 1998/1999 crop season, estimated to begin in October 1998, and subject to
Paragraph 4 shall extend for the greater of (i) ten years or (ii) for as long as
CG, or any Affiliate of CG, shall hold 25% or more of the stock issued by to CG,
pursuant to the Subscription Agreement, unless mutually agreed to be terminated
sooner.
4. Performance Review: There shall be a performance review of the
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Agreement at the end of five years, at which time Joya shall have the right to
terminate based on a set of mutually agreeable performance criteria, notice and
cure periods, with no less than 180 days notice provided before termination.
5. Payment. CG shall be entitled to a 10% commission (the "Commission")
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on the gross proceeds of all Products sold in the United States, Canada, Europe
or other agreed-upon territory. Payment for all sales will be collected by CG
and remitted, net of Commissions, advances and other reimbursable expenses
expressly authorized herein to Joya on an as collected basis, subject to the
following provisions:
x. Xxxx will pay the cost of freight to a receiving warehouse in the
San Diego area to be selected by CG.
b. "In and out" costs at the warehouse will be paid by CG.
c. CG will initially pay "pick and pack" each week for the product
received in the previous week. Amounts so paid will be deducted from gross
receipts of sales of Production. The pick and pack amount will be agreed to
between Joya and CG prior to the beginning of each Product season as a part of
the budgeting process set forth in Article 30, Section 1 of the Bylaws of Grupo
Xxxxx CGH, S.A. de C.V.
d. Liquidation of sales proceeds from CG to Joya to be within 28
days from date of sales.
e. CG has a responsibility to Joya to collect all accounts
receivables and any uncollected receivables shall be an expense borne by CG.
f. Transportation costs from San Diego area warehouse to final
destination on non-FOB sales will be included in the invoice and CG will be
entitled to reimbursement of such costs. However, the Commission will be paid
on an amount that excludes freight costs and pallet charges.
g. In addition to any advance payments (including, without
limitation, the pick and pack payments, materials charges and delivery costs) CG
will deduct its 10% Commission before remitting proceeds to Joya on each
liquidation.
h. CG will be responsible for all advertising, marketing and
promotion and other sales expenses not otherwise expressly allocated hereunder.
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i. To the extent insurance covering damage during transportation and
storage plus general calamity insurance covering the Product is not obtained by
Joya, CGH may obtain such insurance and deduct the cost thereof before remitting
proceeds to Joya, provided that Joya shall be a loss payee on any such policy.
6. Sale and Pricing. CG may contract in advance for the sale of all or
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part of Joya's products; fix a fair and reasonable price or prices at which such
products or by-products may be sold and below which none shall be sold;
determine the manner of sale; and fix whatever terms and conditions it deems
advisable; provided, however, in no event may CG sell any Products at prices
less than those received by CG or its Affiliates for its products of equivalent
quality in all respects. Any determination of quality as provided in the prior
sentence shall be made by the senior sales officer of CG in consultation with
the Management Committee and with reference to the specifications set forth in
Exhibit A.
7. Management Committee. A management committee (the "Management
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Committee") composed of four members will be created to supervise the activities
conducted pursuant to this Agreement. Joya shall be entitled to have two
representatives on the Management Committee. The initial members of the
Management Committee shall be Xxxxx X. Xxxxxxx, Xxxx Xxxxxxxxxxx, Xxxx Xxxxx
Xxxxxxx and Xxxxx Xxxxxxxxx Xxxxx Xxxxxxx.
8. Warranties. All products delivered hereunder by Joya shall be free
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from damage and in good marketable and merchantable condition and shall be
delivered to CG, as directed. CG may make rules and regulations and provide
inspectors to standardize the quality, method, and manner of harvesting,
handling, packing, and shipping of such products or for any particular purpose.
Joya shall observe and perform all such rules and regulations. All products
delivered to or at the order of CG shall be of the standard and conform to the
regulations as to quality and otherwise that are prescribed by state and federal
authorities and by CG. Any deduction, allowance, or loss that CG may make or
suffer on account of inferior quality or standard, or condition at delivery,
shall be charged against Joya and be deducted from its net returns hereunder.
9. Packaging. Joya shall ship and return all boxes, delivered to it for
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its use and convenience, as agreed upon by the parties. If Joya fails to do so,
it shall pay CG CG's actual cost of each box that is not shipped or returned as
ordered. CG may deduct all such charges from Joya's net returns under this
Agreement. All Products covered hereby shall be packaged and shipped in cartons
approved by CG and such Products shall have only those marks or labels as may be
approved by CG.
10. Chemicals Use. Joya shall insure that no substance shall be
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introduced or applied (including, without limitation, chemicals, pesticides or
growth regulators) to the Products, or on the land on which the Products are to
be grown, which will be in violation of established toxic tolerance levels set
by the United States Food and Drug Administration, by the United States
Department of Agriculture, or by any other applicable federal, state or local
law, or which are not authorized by CG for the Products being grown. Joya will
provide to CG for its review and approval prior to each harvesting season a list
of all chemicals used on the Products together with
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the rate of application for each such Chemical. CG shall have the right to cause
the Products to be residue tested.
11. Additional Products. If during the term hereof Joya produces any
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agricultural or horticultural products that come within the scope of CG's
activities as established by contracts or acquires or owns an interest in them,
CG shall have the right to market all such products pursuant to the terms of
this Agreement.
12. Indemnity. Each party (the "Indemnifying Party") agrees to indemnify
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and hold harmless the other party, and its officers, directors, employees,
agents and consultants (collectively the "Indemnified Party") from and against
any and all claims, liabilities, costs and expenses arising from or relating to
the negligent actions or omissions of the Indemnifying Party and its employees,
agents and consultants.
13. Personnel. CG agrees to hire all appropriate personnel necessary to
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market the Products and otherwise perform its obligations hereunder. At the
option of Joya, such personnel shall include an employee designated by Joya,
provided that the terms of such employment shall be compatible with those
prevalent in the relevant industry. CG agrees that it shall provide or shall
cause its Affiliates to provide all necessary technical assistance to Joya to
assist Joya in reaching the goal of producing the maximum yield, highest quality
and most effective packing and distribution of the Products. If deemed
necessary by CG, CG or its Affiliates will have the right to place on site at
Joya's facilities, such personnel as it deems necessary to perform the functions
described in this paragraph. Any costs of such personnel shall be paid by Joya
to CG on a monthly basis, provided that such costs shall be reasonable and are
reflected in the annual budgets prepared pursuant to the Subscription Agreement.
14. Trade Names. All trade names and marketing campaigns used will be at
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the sole discretion of CG and shall remain the property of CG without any
implication and there shall not be deemed to be an implied license to use such
marks.
15. Marking. All Product sold will identify point of origin on its
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shipping containers and point of purchase displays as specified by applicable
laws and by CG.
16. Information/Forecast. Joya will provide to CG all information deemed
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necessary by CG to effectively market the product including, among other things,
production forecasts and daily inventory and shipping forecasts on a form to be
provided by CG.
17. Arbitration. Except as provided for in Paragraph 18, and herein, any
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dispute or claim in law or equity arising out of this Agreement or any resulting
transaction shall be decided by neutral binding arbitration in accordance with
the rules of the CCI, and not by court action except as provided by Colorado law
for judicial review of arbitration proceedings. There shall be three
arbitrators, with each party choosing one arbitrator and those two picking the
third. Unless otherwise agreed by the parties all arbitration hereto shall be
conducted in San Diego, California. Arbitration shall be conducted in the
English language. Judgment upon the award rendered by the arbitrator(s) may be
entered in any court having jurisdiction thereof. The parties shall have
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the right to discovery. The filing of a mechanic's lien or a judicial action to
enforce a mechanic's lien or to enable the recording of a notice of pending
action, for order of attachment, receivership, injunction, or other provisional
remedies, shall be allowed but shall not constitute a waiver of the right to
arbitrate under this paragraph.
18. Remedies. If either party breaches any material provision hereof, the
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non-breaching party shall, upon instituting a proper action, be entitled to an
injunction to prevent further breach and a decree for specific performance of
this Agreement according to its terms.
19. Force Majeure. Neither party to this Agreement shall be required to
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perform, or be liable for failure to perform, its obligations under this
Agreement during any period in which non-performance is caused by (i) strikes,
work stoppages, labor shortages or inability to procure labor, (ii) shortages of
equipment, materials, or supplies, (iii) shortages or lack of cooling or
processing facilities, (iv) car or truck shortages, or other transportation
difficulties, (v) war, hostilities, or national emergencies, (vi) acts of God,
the elements, mechanical breakdowns, or power failure, or (vii) causes beyond
the control of the party unable to perform. The non-performing party will
exercise reasonable due diligence to correct any correctable cause of non-
performance and will resume performance as soon as possible.
20. Binding Effect. This Agreement is binding upon and shall inure to the
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benefit of both parties and their respective heirs, legal representatives,
successors, and assigns.
21. Non-Waiver. No delay or failure by either party to exercise any right
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hereunder, and no partial or single exercise of such right, shall constitute a
waiver of that or any other right, unless otherwise expressly provided herein.
22. Headings. Headings in this Agreement are for convenience only and
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shall not be used to interpret or construe its provisions.
23. Governing Law. This Agreement shall be construed in accordance with
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and governed by the laws of the State of Colorado (as applied to contracts
entered into wholly within such state).
24. Counterparts. This Agreement may be executed in two or more
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counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
25. Time of Essence. Time is of the essence of this Agreement.
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26. Entire Agreement; No Modification. This Agreement constitutes the
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sole agreement between the parties hereto with regarding to the subject matter
hereof and supersedes all prior agreements between the parties concerning the
same. It may not be amended or modified other than by an instrument signed by
both parties or their duly authorized representatives.
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27. Notices. All notices hereunder shall be in writing and delivered
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personally or mailed by certified mail, postage prepaid, addressed to the
parties at their last known addresses.
28. Joint Venture. This Agreement is not, and nothing contained herein
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shall be deemed to constitute, a joint venture, partnership, agency or similar
arrangement between the parties hereto.
29. Successor Agreement. In the event this Agreement is terminated and
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Joya or any of its Affiliates sells or intends to sell, directly or indirectly,
Products in the United States, Europe or Canada through a marketing company
("Newco") to be formed by Joya or its Affiliate, then CG shall have the option
to acquire a minimum of 25% and a maximum of 50% of the outstanding capital
stock of Newco for the same consideration per share as is paid or contributed by
Joya or its Affiliate.
CGH SALES, INC., a Delaware corporation
By: /s/ Xxxxx X. Xxxxxxx
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Xxxxx X. Xxxxxxx
INVERNADEROS LA PEQUENA XXXX,
X.X. de C.V., a Mexican corporation
By: /s/ Xxxxx Xxxxxxxxx Xxxxx Xxxxxxx
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Xxxxx Xxxxxxxxx Xxxxx Xxxxxxx,
attorney-in-fact
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ANNEX "A"
QUALITY STANDARDS
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Exportable volumes of produce will be utilized on pallets and labeled per
Colorado Greenhouse specifications with grade, size and color and will be
classified into the following categories:
A) BEEFSTEAK TOMATOES
1. All Beefsteak ("Beef") tomatoes will be washed, hand placed into
preformed plastic liners (inserts) placed in corrugated 40cm x 60cm
cartons per Colorado Greenhouse specifications on design, construction
and printing with each tomato uniformly labeled after packing. Each
carton must have a net weight of not less than 15.4 lbs at the point
of delivery in the USA.
2. a. All Beef tomatoes will be sorted by size, color and grade. Only
one grade or color or size is permitted in any one box, and only
like boxes are permitted on the same pallet.
b. Boxes will be palletized 2/3 on a 48" x 40" class A, four way
entry hardwood pallet stacked 15 to 20 high per instructions from
Colorado Greenhouse. Each pallet will be unitized with four
cardboard corner boards and three horizontal evenly spaced
plastic bands.
3. All Beef tomatoes will be sorted into one of the following sizes:
a. Premium MXL and Standard MXL and #2.
18, 20, 22, 25, 28, and 32 count tomatoes per tray.
b. Premium XL and Standard XL
35 and 39 count tomatoes per tray.
c. Premium L and Standard L
45 count tomatoes per tray.
d. Premium S
52 count tomatoes per tray (min. 110 grams each).
4. All Beef tomatoes will be harvested at color stage 3 or more and will
be sorted into one of the following colors according to the Kleur-
Stadia Tomaten color chart: 3, 4, 5 & 6. Tomatoes color range 7 or
more will NOT be exported to the USA but sold elsewhere by Greenver,
S.A. de C.V. Only one color is permitted on a pallet.
5. All Beef tomatoes for export will be sorted in Premium, Standard US #1
and US #2 grades.
a. Premium grade tomatoes must meet the following minimum quality
levels:
Shape: Round, smooth shoulder, no flat spots or indentations.
Well formed, smooth blossom end may be indented but not
more than 1/16".
A-1
Calyx: In place, trimmed and not damaged.
Appearance: Must be free from all scars, marks, cuts, bruises,
punctures, blotchy ripening and translucent or
soft conditions
Cleanliness: Must be free from all insects and contaminates such
as dirt, dust or other residues from any source.
Russeting: Only minor amounts of russeting is permitted in the
area 1/2" from the center of the calyx and none
beyond that.
Punctures: Must be free from any skin punctures or breaks.
b. Standard US #1 and US #2 grade tomatoes are qualified by the same
criteria with defect levels allowable per "U.S. Standards for
Grades of Greenhouse Tomatoes," a copy of which is attached
hereto and expressly made a part hereof.
B) VINE CLUSTER TOMATOES
1. All Vine Cluster tomatoes will be washed, hand placed into net bags
with closures, both per Colorado Greenhouse specifications. Bags with
a loose tail of less than 2" long will be placed into cartons that
meet the specifications of Colorado Greenhouse in size, design,
construction and printing. Each carton must have a net weight of not
less than 11.3 lbs. at the point of delivery in the USA.
2. All Vine tomatoes will be sorted and graded by size and quality.
a. Only premium (same standards previously defined) will be exported
to the USA.
b. Only tomatoes with a minimum weight of 100 grams can be packed in
this category.
c. Only clusters with a minimum of 3 tomatoes may be packed in this
category. Each package must have a minimum of 4 tomatoes.
d. All tomatoes must be color stage 3 or more. In each package, one
tomato must be color stage 7.
3. All vine tomatoes will palletized per instructions from Colorado
Greenhouse and with the palletizing specifications in A2b.
4. Depending on market demand, vine tomatoes may also be required to be
packed as loose pack and the specifications will be developed for this
form of packing as required.
A-2
C) PREPACK TOMATOES (CONSUMER PACK)
1. All Prepack tomatoes will be washed, graded and packed according to
the premium standards. Any tomatoes that fail to grade "Premium" will
be packed as US#1 or US#2 grades.
2. Prepack tomatoes will be packed according to size specifications from
Colorado Greenhouse in container specified by Colorado Greenhouse.
3. Prepack tomato containers will be packed into master cartons meeting
Colorado Greenhouse specifications in size, construction and printing.
4. Prepack master cartons will be unitized according to the
specifications in A2b.
A-3
COLORADO GREENHOUSE TOMATO GRADING STANDARDS
The following document is designed to provide a brief description of the quality
requirements for all of the products that are grown, packed and shipped by
Colorado Greenhouse.
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RUSSETING
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GRADING TOLERANCES
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Premium (mxl,xl,prepacks) Standard Grade (mxl,xl) Substandard (no2/15, Trash
45ct or larger
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Russeting: Premium tomatoes (#1) can Standard grade tomatoes Russeting in Russeting
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Russeting refers only have minor levels of (#2) can contain russeting Substandard (#3) may which
to "micro" russeting confined to an levels extending between not exceed 1.5 inches extends
cracking of area extending 1/2 inch from 1/2 inch and 1 inch from the from the calyx. beyond
tomato skin. the center of the calyx. calyx. 1.5 inches
The severity from the
and calyx is
susceptibility to severe and
decay varies must be
greatly from culled.
tomato to Severe
tomato and russeting is
variety to associated
variety. with
"greyness,
dullness,
softness and
wrinkling."
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A-4
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STEM PUNCTURES AND SKIN BREAKS
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GRADING TOLERANCES
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Premium(mxl,xl,prepacks) Standard Grade(mxl,xl) Substandard(no2/15, Trash
45ct or larger
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Stem No Tolerance: Any tomato Stem punctures and skin Stem punctures and All fresh/wet
Punctures and containing a skin break breaks must be small skin breaks must be skin breaks
Skin Breaks or puncture must be (pea sized or smaller) less than 1 cm, closed must be
(open and Closed) downgraded to standard closed ("healed/dry/ ("healed/dry/scarred culled!!!!!
must be minimized grade or substandard(no2 scarred over) and over") and minimal
due to the extreme /15) if the break is minimal (one or less (one or less per box).
potential for healed or scarred over. per box. Larger rates Larger rates result
bacterial growth result from improper from improper handling
and decay. All fresh/wet skin breaks handling and the source and the source should
must be culled!!!!! should be corrected. be corrected.
All fresh/wet skin breaks All fresh/wet skin
must be culled!!!!! breaks must be culled!!!!!
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A-5
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GROWTH CRACKS
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GRADING TOLERANCES
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Premium (mxl,xl, prepacks) Standard Grade (mxl,xl) Substandard (no2/15, Trash
45ct or larger
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NO TOLERANCE: All Single cracks that are less Single or multiple Any tomato
tomatoes with growth than 1/2 cm are acceptable. cracks which do not with a
cracks must be downgraded exceed 1cm are growth crack
or culled. acceptable. which
All products with deep exceeds
growth cracks (greater than 1cm.
4mm must be discarded). All products with deep
growth cracks (greater
than 4mm must be All products
discarded). with deep
growth
cracks
(greater than
4mm must
be
discarded).
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A-6
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BLOSSOM END ROT
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GRADING TOLERANCES
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QUALITATIVE ISSUES PREMIUM (MXL,XL, PREPACKS) STANDARD GRADE (MXL,XL) SUBSTANDARD (NO2/15) TRASH
BLOSSOM END
ROT: NO TOLERANCE: All tomatoes NO TOLERANCE: All tomatoes Single or multiple cracks Any tomato with a
Tomatoes exhibiting black scars must exhibiting black scars must be which do not exceed 1cm growth crack which
with this be downgraded to downgraded to substandard if the are acceptable. exceeds 1 cm.
condition are substandard if the affected affected area is less than 1
characterized area is less than 1 centimeter. All products with deep All products with
by dark black centimeter. growth cracks (greater deep growth cracks
scars and/or If black scars are greater than than 4mm must be (greater than 4mm
indentations 1 cm the tomato must be culled. discarded). must be discarded).
on the blossom
end, in some
cases, the Products with inflamed scars of
border of the any size must be culled.
scarred area
appears to be
inflamed.
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A-7
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PUSHERS
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GRADING TOLERANCES
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QUALITATIVE ISSUES PREMIUM (MXL,XL,PREPACKS) STANDARD GRADE (MXL,XL) SUBSTANDARD (NO2/15) TRASH
"Pushers" are
blemishes which occur The affected area must be The affected area must be Tomatoes which have an All tomatoes with
on the blossom end of less than 1/2 cm and must less than 1/2 cm and must opaque, tan, scar-like opaque blemishes
a tomato. be nearly translucent so be nearly translucent so appearance must be downgraded which exceed 1 cm.
The color (light and that the overall premium that the overall premium to substandard or culled if
translucent, light appearance of the tomato appearance of the tomato the blemish exceeds 1 cm.
tan, opaque tan) and is not compromised. is not compromised.
size of the affected
area can vary Tomatoes which have an Tomatoes which have an
greatly from tomato opaque, tan, scar-like opaque, tan, scar-like
to tomato. appearance must be appearance must be
downgraded to substandard downgraded to substandard
or culled if the blemish or culled if the blemish
exceeds 1 cm. exceeds 1 cm.
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A-8
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SOFTNESS
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GRADING TOLERANCES
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QUALITATIVE PREMIUM (MXL,XL, PREPACKS) STANDARD GRADE (MXL,XL) SUBSTANDARD (NO 2/15) TRASH
ISSUES
In order to NO TOLERANCE: soft NO TOLERANCE: soft NO TOLERANCE: soft All soft tomatoes
reach the tomatoes are not acceptable tomatoes are not acceptable tomatoes are not acceptable must be culled
retailers in any grade and must be in any grade and must be in any grade and must be
shelves, all culled. culled. culled.
CGH products
must be firm.
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A-9
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DECAY AND MOLD
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GRADING TOLERANCES
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QUALITATIVE PREMIUM (MXL,XL, PREPACKS) STANDARD GRADE (MXL,XL) SUBSTANDARD (NO2/15) TRASH
ISSUES
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Decay and mold NO TOLERANCE NO TOLERANCE NO TOLERANCE All tomatoes
on the fruit or with signs of
calyx due to post decay and
harvest conditions mold.
is not tolerated in
any product and
must be culled.
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A-10
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PITS
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GRADING TOLERANCES
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QUALITATIVE PREMIUM (MXL,XL, PREPACKS) STANDARD GRADE (MXL,XL) SUBSTANDARD (NO2/15) TRASH
ISSUES
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Pits, NO TOLERANCE. All NO TOLERANCE. All Small pits (less than 1 All tomatoes
indentations or tomatoes with pits must be tomatoes with pits must be centimeter wide and with
openings which downgraded to Substandard downgraded to Substandard less than 1/2 cm deep openings
usually occur or culled depending on the or culled depending on the can be salvaged in the which
near the size and severity of the size and severity of the substandard grade. exceed 1 cm
blossom end of opening. opening. Pits which exceed in width and
the tomato and these parameters must 1/4 cm in
may be be culled. depth.
characterized by
seed visibility.
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A-11
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SCARS
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GRADING TOLERANCES
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QUALITATIVE PREMIUM (MXL,XL,PREPACKS) STANDARD GRADE (MXL,XL) SUBSTANDARD (NO2/15) TRASH
ISSUES
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Scars are superficial Single, small (less than 1/2 cm These tomatoes can have More pronounced scarring Severely
blemishes or marks in diameter) affected areas are up to 2 scarred areas is acceptable as long as deformed
on tomatoes which acceptable as long as the which are small (1 cm shelf life and taste are fruit.
detract from the overall appearance is premium or less). not affected. Severely
overall fruit ("relatively" blemish free). deformed fruit resulting
appearance without from scarring should be
affecting shelf culled.
life or taste.
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A-12
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SIZE
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GRADING TOLERANCES
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QUALITATIVE PREMIUM (MXL,XL, PREPACKS) STANDARD GRADE (MXL,XL) SUBSTANDARD (NO2/15) TRASH
ISSUES
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Sorting by size Uniform Uniform Uniform
must be uniform
within each box
and all cells in a
box must be
filled.
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A-13
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SHAPE
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GRADING TOLERANCES
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To fit in the premium Only slight variations from Qualitative Issues Premium
grade all tomatoes a circular fruit are (mx1,x1,
must be round. acceptable in this grade. prepacks)
Oval shaped fruit must be
downgraded to substandard.
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A-14
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COLOR STAGE AT HARVEST
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GRADING TOLERANCES
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QUALITATIVE PREMIUM (MXL,XL,PREPACKS) STANDARD GRADE (MXL,XL) SUBSTANDARD (NO2/15) TRASH
ISSUES
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All fruit should Uniformity per box and Uniformity per box and Uniformity per box
be picked pallet is crucial for all pallet is crucial for all and pallet is crucial for
between stage 5 grades. grades. all grades.
and 6 as
depicted on a 12
color chart.
Quality
problems
stemming from
russetting and
storage can be
minimized if the
target color is
maintained.
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A-15
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CALYX
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GRADING TOLERANCES
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QUALITATIVE ISSUES PREMIUM (MXL,XL, PREPACKS) STANDARD GRADE (MXL,XL) SUBSTANDARD (NO2/15) TRASH
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The calyx is a Calyx retention is Calyx retention is Calyx retention is
feature recognized imperative. A box which imperative. A box which imperative. A box
by consumers as an contains more than three contains more than three which contains more
indication of tomatoes without a calyx tomatoes without a calyx than three tomatoes
premium quality. indicates possible picking indicates possible picking without a calyx
problems and should be problems and should be indicates possible
corrected. When packing, corrected. When packing, picking problems and
all tomatoes without a all tomatoes without a should be corrected.
calyx should be made less calyx should be made less When packing, all
visible by lacing them visible by lacing them tomatoes without a
along the outer perimeter along the outer perimeter calyx should be made
of each box. of each box. less visible by lacing
them along the outer
Prepacks which are covered perimeter of each box.
Prepacks which are in plastic wrap must be
covered in plastic wrap packed without the calyx
must be packed without due to potential stem mold Prepacks which are
the calyx due to potential covered in plastic
stem mold wrap must be packed
without the calyx due
to potential stem mold
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A-16
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LABELING
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GRADING TOLERANCES
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QUALITATIVE ISSUES PREMIUM (MXL,XL, PREPACKS) STANDARD GRADE (MXL,XL) SUBSTANDARD (NO 2/15) TRASH
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All tomatoes Premium labels (4 color) Garden Fresh boxes require No labels
must be labeled are required. the generic label.
on the shoulder
with the
appropriate label Labels must be uniformly Standard grade tomatoes in
except for oriented on each tomato the CGH box require the
prepack tomatoes within each box. two color standard grade
which are labeled label (CGH) or the generic
on the container. label.
Labeling on the calyx is
preventable and should
not be tolerated. Labeling on the calyx is
preventable and should not
be tolerated.
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A-17
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BOX CODES
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GRADING TOLERANCES
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QUALITATIVE ISSUES PREMIUM (MXL,XL, PREPACKS) STANDARD GRADE (MXL,XL) SUBSTANDARD (NO2/15) TRASH
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Legible box Box codes depicting the Box codes depicting the Box codes depicting
codes depicting harvest date and site are harvest date and site are the harvest date and
the harvest date required for all finished required for all finished site are required for all
and site are goods. goods. finished goods.
required for all
finished goods.
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A-18
[TO COME]
EXHIBIT 10.25
UNITED STATES STANDARDS FOR GRADES OF
GREENHOUSE TOMATOES/1/
(31 F.R. 5939)
Effective April 19, 1966
GRADES
Sec.
51.3345 U.S. No. 1.
51.3346 U.S. No. 2.
UNCLASSIFIED
51.3347 Unclassified.
TOLERANCES
51.3348 Tolerances.
APPLICATION OF TOLERANCES
51.3349 Application of tolerances.
SIZE CLASSIFICATION
51.3350 Size classification.
STANDARD PACK
51.3351 Standard pack.
DEFINITIONS
51.3352 Similar varietal characteristics.
51.3353 Mature.
51.3354 Soft.
51.3355 Clean.
51.3356 Fairly well formed.
51.3357 Reasonably well formed.
51.3358 Damage.
51.3359 Serious damage.
51.3360 Metric conversion table.
AUTHORITY. The provisions of this subpart issued under sect. 203, 205,
60 Stat. 1087, as amended, 1090 as amended; 7 U.S.C. 1622, 1624.
GRADES
(S) 51.3345 U.S. No. 1.
"U.S. No. 1" consists of tomatoes of similar varietal characteristics
which are mature but not overripe or soft, clean, fairly well formed; which are
free from decay, sunscaled, and freezing injury, and free from damage caused by
bruises, cuts, shriveling, puffiness, catfaces, growth cracks, scars, disease,
insects, or other means. (See (S) 51.3348.)
(S) 51.3346 U.S. No. 2.
"U.S. No. 2" consists of tomatoes of similar varietal characteristics
which are mature but not overripe or soft, clean, reasonably well formed; which
are free from decay, sunscald, and freezing injury, and free from serious damage
caused by cuts, shriveling, puffiness, catfaces, growth cracks, scars, disease,
insects, or other means. (See (S) 51.3348.)
UNCLASSIFIED
(S) 51.3347 Unclassified.
"Unclassified" consists of tomatoes which have not been classified in
accordance with any of the foregoing grades. The term "unclassified" is not a
grade within the meaning of these standards but is provided as a designation to
show that no grade has been applied to the lot.
TOLERANCES
(S) 51.3348 Tolerances.
In order to allow for variations incident to proper grading and handling
in each of the foregoing grades, the following tolerances, by weight, are
provided as specified:
(a) Defects--(1) U.S. 1 grade. Ten percent of the tomatoes to any lot
may fail to meet the requirements of the grade, but not more than one-half of
this amount, or 5 percent, shall be allowed to serious damage, including in this
latter amount not more than 1 percent for tomatoes which are soft or affected by
decay.
(2) U.S. No. 2 grade. Ten percent of the tomatoes in any lot may fail to
meet the requirements of the grade, but not more than one-tenth of this amount
or 1 percent shall be allowed for tomatoes which are soft or affected by decay.
(b) Offsize. Fifteen percent of the tomatoes in any lot may vary from
the specified size, including therein no more than 5 percent for tomatoes which
fail to meet any specified minimum size.
APPLICATION OF TOLERANCES
(S) 51.3349 Application of tolerances.
The contents of individual packages in the lot are subject to the
following limitations:
(a) For a tolerance of 10 percent or more, individual packages shall
have not more than one and one-half times the tolerance specified; Provided,
That when the package contains 15 specimens or less, any individual package
shall have not more than double the tolerance specified, except that at lease
one defective and one off-size specimen may be permitted in any package; And
provided further, That the averages for the entire lot are within the tolerances
specified for the grade.
(b) For a tolerance of less than 10 percent, individual packages in
any lot shall have not more than double the tolerance specified, except that at
least one defective and one off-size specimen may be permitted in any packages;
Provided, That the averages for the entire lot are within the tolerances
specified for the grade.
SIZE CLASSIFICATION
(S) 51.3350 Size classification.
The size of tomatoes may be specified in accordance with one of the
following classifications:
(a) "Small" under 3-1/2 ounces;
(b) "Medium" from 3-1/2 to 9 ounces;
and,
(c) "Large" over 9 ounces.
STANDARD PACK
(S) 51.3351 Standard pack.
Tomatoes shall be fairly uniform in size when packed in containers.
(a) "Fairly uniform in size" means that not more than 10 percent, by
weight, of the tomatoes in any container may vary more than the following within
the applicable size classification:
(1) 4 ounces for "Medium," "Small to Medium" or "Medium to Large"; and,
(2) 6 ounces for "Large" size.
DEFINITIONS
(S) 51.3352 Similar varietal characteristics.
"Similar varietal characteristics" means that the tomatoes are alike as
to character of color (bright red varieties shall not be mixed with varieties
having a purplish tinge).
(S) 51.3353 Mature.
"Mature" means that the contents of two or more seed cavities have
developed a jellylike consistency and the seeds are well developed. External
color shows at least a definite break from green to tannish-yellow, pink or red
color on not less than 10 percent of the surface.
(S) 51.3354 Soft.
"Soft" means that the tomato yields readily to slight pressure.
(S) 51.3355 Clean.
"Clean" means that the individual tomato is practically free from dirt
and other foreign matter.
(S) 51.3356 Fairly well formed.
"Fairly well formed" means that the tomato is not more than slightly
kidney-shaped, lopsided, elongated, angular, or otherwise slightly deformed.
(S) 51.3357 Reasonably well formed.
"Reasonably well formed" means that the tomato is not more than
moderately kidney-shaped, lopsided, elongated, angular, or otherwise moderately
deformed.
(S) 51.3358 Damage.
"Damage" means any specific defect described in this section; or any
equally objectionable variation of any one of these defects, any other defect,
or any combination of defects, which materially detracts from the appearance, or
the edible or marketing quality of the tomato. The following specific defects
shall be considered as damage:
(a) Puffiness when the open space in one or more locules materially
detracts from the appearance of the tomato when cut through the center at right
angles to a line running from the stem to the blossom end;
(b) Catfaces when scars are rough or deep, when channels are very deep
or wide, when channels extend into a locule, or when affecting the appearance to
a greater extent than the following:
(1) A small size tomato having a fairly smooth catface equivalent in
area to a circle 3/8-inch diameter; or
(2) A medium size tomato having a fairly smooth catface equivalent in
area to a circle 1/2-inch in diameter; or
(3) A large size tomato having a fairly smooth catface equivalent in
area to a circle 3/4-inch diameter;
(c) Growth cracks (radiating from or concentric to the stem scar) when
not well healed, when more than one-eighth inch in depth; or when affecting the
appearance or marketing quality of the tomato to a greater extent than that of a
tomato 5 ounces in weight having any individual radial crack one-half inch in
length, or having more than a 1 inch aggregate length of all radial cracks,
measured from the edge of the stem scar;
(d) Scars (other than catfaces) when the appearance of the tomato is
affected to a greater extent than that of a tomato 5 ounces in weight having a
scar with no depth which has an area equivalent to that of a circle
three-eighths inch in diameter; and,
(e) Cuts, not well healed, not shallow, or which affect the appearance
or marketing quality of the tomato to a greater extent than that of a tomato 5
ounces in weight having a cut one-half inch in length.
------------
/1/ Packing of the product in conformity with the requirements of these
standards shall not excuse failure to comply with the provisions of the Federal
Food, Drug, and Cosmetic Act or with applicable State laws and regulations.
(S) 51.3359 Serious damage.
"Serious damage" means any specific defect described in this section; or
an equally objectionable variation of any one of these defects, any other
defect, or any combination of defects, which seriously detracts from the
appearance or the edible or marketing quality of the tomato. The following
specific defects shall be considered as serious damage:
(a) Puffiness when the open space in one or more locules seriously
detracts from the appearance of the tomato when cut through the center at right
angles to a line running from the stem to the blossom end;
(b) Catfaces when channels extend into the locule, when the wall has
been weakened to the extent that slight pressure will cause the tomato to leak,
or when the appearance of the tomato is affected to a greater extent than that
of a tomato 5 ounces in which having a fairly smooth catface with an area
equivalent to that of a circle 1 inch in diameter;
(c) Growth cracks (radiating from or concentric to the stem scar) when
not well healed, when more than one-eighth inch in depth, or when affecting the
appearance or marketing quality of the tomato to a greater extent than that of a
tomato 5 ounces in weight having individual radial cracks three-fourths inch in
length, or having more than a 1-1/2-inch aggregate length of all radial cracks,
measured from the edge of the stem scar;
(d) Scars (other than catfaces) when the appearance of the tomato is
affected to a greater extent than that of a tomato 5 ounces in weight having a
scar with no depth which has an area equivalent to that of a circle 1 inch in
diameter; and,
(e) Cuts, not well healed, not shallow, or which affect the appearance
or marketing quality of the tomato to a greater extent than that of a tomato 5
ounces in weight having a cut one-half inch in length.
(S) 51.3360 Metric conversion table.
METRIC CONVERSION TABLE
Inches Millimeters (mm)
1/8 equals .................................... 3.2
1/4 equals .................................... 6.4
3/8 equals .................................... 9.5
1/2 equals .................................... 12.7
5/8 equals .................................... 15.9
3/4 equals .................................... 19.1
7/8 equals .................................... 22.2
1 equals .................................... 25.4
1-1/4 equals .................................... 31.8
1-1/2 equals .................................... 38.1
1-3/4 equals .................................... 44.5
2 equals .................................... 50.8
3 equals .................................... 76.2
4 equals .................................... 101.6
The U.S. Standards for Grades of Greenhouse Tomatoes contained for this
subpart shall become effective April 12, 1966, and will thereupon supersede the
U.S. Standards for Grades of Greenhouse Tomatoes which have been in effect since
April 16, 1962 (7 CPR, (SS) 51.3345 -- 51.3261).
Dated: April 14, 1966
G.R. GRANGE,
Deputy Administrator,
Marketing Services
[F.R. Doc. 56-4246: Filed Apr. 18, 1966; 8:49 a.m.]
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UNITED STATES STANDARDS
FOR GRADES OF
GREENHOUSE TOMATOES
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EFFECTIVE APRIL 19, 1966
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[SEAL OF THE U.S. DEPARTMENT OF AGRICULTURE APPEARS HERE]
U.S. DEPARTMENT OF AGRICULTURE
AGRICULTURAL MARKETING SERVICE
WASHINGTON, D.C.
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