STOCKHOLDERS AGREEMENT
Exhibit 10.4
THIS STOCKHOLDERS AGREEMENT (this
“Agreement”), is
dated as of December 1, 2016, by and among Majesco Entertainment
Company, a Delaware corporation (the “Parent”), Denver
Lough (“Lough”),
Xxxxxx Xxxxxxx (“Xxxxxxx”), and Polarityte, Inc, a
Nevada corporation (the “Company”), and the undersigned
stockholders ("Stockholders") of
Parent.
WHEREAS, on December 1, 2016 the Parent,
Lough and Company entered into an Agreement and Plan of
Reorganization (as the same may be amended from time to time, the
("Merger Agreement"),
providing, among other things, for the sale, assignment, transfer
and conveyance to the Company of the right, title and interest in
and to the Purchased Intellectual Property (as defined in the
Merger Agreement) and the acquisition of the Company by Purchaser
and issuance of Parent securities to Lough (collectively with
Xxxxxxx, the “Restricted
Stockholders”) pursuant to the terms and conditions of
the Merger Agreement (the “Acquisition”) in
consideration for an aggregate of 7,050 shares of Series E
Preferred Stock, par value $0.001 per share, of the Parent,
convertible into Seven Million Fifty Thousand (7,050,000) shares
(the “Shares”)
of the Parent’s common stock, par value $0.001 per share (the
“Common
Stock”);
WHEREAS, on December 1, 2016 the Parent
and each of Lough and Xxxxxxx entered into employment agreements
(each, and “Employment
Agreement”) pursuant to which each of Lough and
Xxxxxxx received a non-qualified incentive option award (each, an
“Option Award”
exercisable into Common Stock, such Option Awards, Common Stock,
collectively with the Shares, the “Seller Stock”), as set forth on
Schedule I hereto,
in consideration of the agreement of Parent and each of Lough and
Xxxxxxx for employment by the Parent;
NOW, THEREFORE, in consideration of the
mutual covenants, representations, warranties and obligations set
forth in this Agreement, Parent, Lough, Xxxxxxx and Company hereby
agree as follows:
1.
Restrictions on Transfer
of Stock.
1.1 Restrictions on Transfers to Third
Parties of Seller Stock. No Seller Stock or any interest
therein now or hereafter owned may be Transferred, unless such
transfer conforms with the provisions of this Agreement, and each
share of Restricted Stock shall contain an appropriate Stock
Certificate Legend.
1.2 Permitted
Transferees.
(a)
Affiliates, Trusts, etc. Seller
Stock may be Transferred to an Affiliate of the holder, or any
spouse or member of the holder’s immediate family, or to a
custodian, trustee (including a trustee of a voting trust),
executor or other fiduciary for the account of the holder’s
spouse or members of the holder’s immediate family, or to a
trust for the holder’s own self, or a charitable remainder
trust (each, a “Permitted
Transferee”). In addition to the foregoing, any
Permitted Transferee may Transfer Seller Stock back to the
transferring holder or to another Permitted Transferee of such
transferring holder. Prior to the completion of any sale, transfer
or assignment pursuant to this Section 1.2, the Permitted
Transferee shall have executed documents assuming the obligations
of the applicable holder under this Agreement with respect to the
transferred securities.
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2.
Right of Parent and
Stockholders to Re-Purchase.
2.1 Right to Purchase. Subject to
the termination provisions of Section 9 herein and the Right to
Purchase under Section 3 hereof, the Parent and the Stockholders of
Parent signatory hereto shall have the right to purchase from each
Restricted Stockholder and such Restricted Stockholder shall have
the obligation to sell, all, but not less than all, of such
Restricted Stockholder’s Seller Stock if such Restricted
Stockholder’s employment with the Company is terminated
“with Cause” or
by the Restricted Stockholder “without Good Reason” (as such
terms are defined in the respective Employment Agreements) at the
Fair Market Value of the Seller Stock to be purchased.
2.2 Notice. If the Parent desires
to purchase Seller Stock from a Restricted Stockholder pursuant to
Section 2.1, it shall notify such Restricted Stockholder (or
such Restricted Stockholder’s estate, trust or corporation,
as the case may be) not more than thirty (30) days after the
occurrence of the event giving rise to the Company’s right to
acquire such Restricted Stockholder’s shares of Seller Stock.
If Parent does not notify the Restricted Stockholders of its
intention to purchase Seller Stock, within such thirty (30) day
period, Parent shall notify the undersigned Stockholders who shall
notify such Restricted Stockholder (or such Restricted
Stockholder’s estate, trust or corporation, as the case may
be) not more than fifteen (15) days after the notice from
Parent of the election to repurchase such Seller Stock, pro rata.
Any Stockholder who does elect shall also have the pro rata right
to purchase Seller Stock with respect to the Stockholder who does
not elect, on a pro rata basis.
2.3 Payment. Payment for shares of
Seller Stock purchased pursuant to Section 2.1 or 2.2 shall be
made on the date thirty (30) days (or the first business day
thereafter if the thirtieth (30th) day is not a
business day) following the date of the determination of Fair
Market Value. Such payment will be made by wire transfer of funds
or certified or official bank check against surrender of the
certificates for such shares. Any payments based on Fair Market
Value required to be made by the Company under Section 2 shall
accrue simple interest at five percent (5%) per annum from the
due date for payment to the date Parent has paid in full for all of
the Seller Stock being purchased. All payments of interest accrued
hereunder shall be paid only at the date of payment by the Parent
for the Seller Stock being purchased.
2.4 Rights. From and after the date
of election to purchase Seller Stock by Parent or Stockholders, the
rights of the Restricted Stockholder as a stockholder of Parent, to
hold, vote or otherwise dispose of Seller Stock, shall immediately
terminate and be vested in the purchaser(s) thereof, and ownership
thereof shall be vested in the purchaser and recorded on the
transfer records of the Parent. Any Stockholder who may exercise
the right to repurchase Seller Stock as provided herein, may
designate one or more third-parties as purchaser of such Seller
Stock.
3.
Right of Parent to
Re-Purchase Seller Stock Upon Breach – Employment
Agreement/Merger Agreement Breach..
3.1
Right to Purchase.
Subject to the termination provisions of Section 9 herein, Parent
shall have the right to purchase from each Restricted Stockholder
and such Restricted Stockholder shall have the obligation to sell,
all, but not less than all, of such Restricted Stockholder’s
Seller Stock if: (A) such Restricted Stockholder breaches Section
13 of such Restricted Stockholder’s Employment Agreement or
(B) such Restricted Stockholder breaches Article IX of the Merger
Agreement, at a per share price of $0.001 per share to be purchased
(the “Par
Value”).
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3.2 Notice. If the Company desires
to purchase shares of Seller Stock from a Restricted Stockholder
pursuant to Section 4.1, it shall notify such Restricted
Stockholder (or such Restricted Stockholder’s estate, trust
or corporation, as the case may be) not more than thirty (30)
days after the occurrence of the event giving rise to the
Parent’s right to acquire such Restricted Stockholder’s
Seller Stock.
3.3 Payment. Payment for shares of
Seller Stock purchased by the Parent pursuant to Section 3.1
based on Par Value shall be made within ten (10) days of
determination of such breach. Such payment will be made by wire
transfer of funds or certified or official bank check against
surrender of the certificates for such shares.
3.4
Rights. From and
after the date of election to purchase Seller Stock by Parent, the
rights of the Restricted Stockholder as a stockholder of Parent, to
hold, vote or otherwise dispose of Seller Stock, shall immediately
terminate and be vested in the purchaser(s) thereof, and ownership
thereof shall be vested in the purchaser and recorded on the
transfer records of the Parent.
4.
Determination of Fair
Market Value.
4.1 Appraisals. The Parent and the
Restricted Stockholder shall seek to determine Fair Market Value be
agreement within fifteen (15) days of the date any such
determination is required and, in the absence of agreement, shall,
submit to an expert in valuation or appraiser the determination of
Fair Market Value. The Parent shall engage an independent valuation
expert or appraiser of recognized national standing reasonably
acceptable to the Restricted Stockholder who’s shares of
Stock are subject to repurchase to appraise the Fair Market Value
of the shares of Seller Stock as of the last day of the fiscal
period then most recently ended or, at the request of the Parent,
as of any more recent date (the “Appraisal Date”), and to prepare
and deliver a report to the Company describing the results of such
appraisal (the “Appraisal”). The cost of Appraisal
shall be shared equally between the Parent and the Restricted
Stockholder(s) subject to the determination.
4.2 Calculation.
“Fair Market
Value” of any share of Common Stock (or preferred
stock on an “as converted” basis) shall be the fair
market value per share of the entire Common Stock equity interest
of the Company taken as a whole, after giving effect to any
increase or option price in respect of all then outstanding
warrants, options, convertible stock or other rights or securities
to purchase shares of Common Stock, together with the number of
shares of Common Stock into which any issued and outstanding
warrants, options, or other rights or securities to purchase or
acquire shares of Common Stock would be convertible as of the most
recent Appraisal Date, without premiums for control or discounts
for minority interests or restrictions on transfer, and shall be as
of the most recent Appraisal Date and determined with reference to
the most recent Appraisal, and after giving effect to any agreement
breach or termination of the Restricted Stockholder’s
employment.
4.3 Notice to Stockholders. After
receipt of each Appraisal, the Parent shall promptly deliver to
each Restricted Stockholder a copy of the report as to value
included with such Appraisal.
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5.
Defined Terms. As
used in this Agreement, the following terms shall have the meanings
ascribed to them below:
(a)
Affiliate. The term
“Affiliate” means, with respect to any Person, any
Person who, directly or indirectly, controls, is controlled by or
is under common control with that Person. For purposes of this
definition, “control” when used with respect to any
Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership
of voting securities, by contract or otherwise, including any
subsidiary, parent, partner, limited partner, retired partner or
shareholder of such Person, with the exception of any of those
subsidiaries, parents, partners, limited partners, retired partners
or shareholders of such Person which are direct competitors of the
Company.
(b)
Board. The term
“Board” shall mean the Board of Directors of the Parent
from time to time.
(c)
Certificate of
Incorporation. The term “Certificate of
Incorporation” shall mean the Restated Certificate of
Incorporation of the Parent filed with the Secretary of State of
the State of Delaware, as amended, amended and restated, modified
or otherwise supplemented from time to time in accordance with the
terms of this Agreement
(d)
Person. The term
“Person” means an individual, corporation, partnership,
limited liability company, association, trust or other entity or
organization, including a government or political subdivision or an
agency or instrumentality thereof.
(e)
Transaction
Documents. The term “Transaction Documents”
means any agreement pursuant to which any Restricted Stockholder
acquired or acquires Seller Stock or as to which such Seller Stock
is subject.
(f)
Transfer. The term
“Transfer” means any direct or indirect sale,
assignment, mortgage, transfer, pledge, hypothecation or other
disposition or transfer.
5.
Stock Certificate
Legends. A copy of this Agreement shall be filed with the
Secretary of the Parent and kept with the records of the Parent.
Each certificate representing shares of Seller Stock owned by the
Restricted Stockholders shall bear the following
legends:
(i) The
securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended, or any
state securities laws, and may not be sold, transferred, offered
for sale, pledged, hypothecated or otherwise disposed of without
registration under the Securities Act of 1933, as amended, and
under applicable state securities law, unless the issuer shall have
received an opinion of counsel reasonably satisfactory to the
issuer that the securities represented by this certificate may be
legally sold or distributed pursuant to exemption from registration
under the Securities Act of 1933, as amended, and without
registration under then applicable state and federal
laws.
(ii)
The securities represented by this certificate are also subject to
certain restriction on transfer contained in a Stockholders
Agreement dated as of December 1, 2016, copies of which may be
obtained from the issuer or from the holder of this certificate, as
well as the rights of certain persons under such Stockholders
Agreement to purchase such securities on the terms and conditions
set forth therein. No transfer of such securities will be made on
the books of the issuer unless accompanied by evidence of
compliance with the terms of such Stockholders
Agreement.
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6.
No Other Arrangements or
Agreements. Each of the Restricted Stockholders hereby
represents and warrants to the Parent, that he has not entered into
or agreed to be bound by any other arrangements or agreements of
any kind with any other Person (other than the Parent) with respect
to his shares of Seller Stock, or any interest therein, including,
but not limited to, arrangements or agreements with respect to the
acquisition, disposition or voting of shares of Seller Stock
(whether or not such agreements and arrangements are with the
Parent, other Stockholders or other Persons), except for the
Transaction Documents. Each of the Restricted Stockholders agrees
with the Parent that he will not be a party to or enter into any
such other arrangements or agreements as described above with any
other Person as long as any of the terms of this Agreement remain
in effect without the prior written consent of the
Parent.
7.
Amendment and
Modification. This Agreement may be amended, modified or
supplemented only by written agreement of the Parent and a majority
of the Stockholders signatory hereto. Upon amendment, modification
or supplement of this Agreement, the Parent shall notify all
Restricted Stockholders promptly of such amendment, modification or
supplement.
8.
Assignment.
8.1 Assignment Generally. The
provisions of this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, legal
representatives, successors and assigns; provided that, except in
connection with Transfers explicitly permitted hereunder, no
Restricted Stockholder shall assign any of its rights pursuant to
this Agreement without the prior written agreement of the
Parent.
8.2 Agreements to be Bound.
Notwithstanding anything to the contrary contained in this
Agreement, any Transfer by the Restricted Stockholders to any
Permitted Transferee or other third party (whether or not such
third party is Affiliated with such transferor), shall be permitted
under the terms of this Agreement only if such Permitted Transferee
or third party, as the case may be, shall agree in writing to be
bound by the terms and conditions of this Agreement pursuant to an
instrument of assumption reasonably satisfactory in substance and
form to the Parent. Upon the execution of such instrument by such
third party, such third party shall be deemed to be a Restricted
Stockholder for all purposes of this Agreement, subject to the same
obligations as the other Stockholders; provided further, that the requirement
to execute and deliver an assumption agreement shall not apply in
the case of any Transfer pursuant to which the transferee is
entitled to have the legend removed.
9.
Termination.
9.1 Termination Generally. Any
party to, or Person who is subject to, this Agreement who ceases to
own any shares of Restricted Stock or any interest therein in
accordance with the terms of this Agreement shall cease to be a
party to, or Person who is subject to, this Agreement and
thereafter shall have no rights or obligations hereunder;
provided that any
Transfer of shares of Stock by any Restricted Stockholder in breach
of this Agreement shall not relieve such Restricted Stockholder of
liability for any such breach.
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9.2 Termination of Rights and
Obligations. All rights and obligations of this
Agreement shall terminate (other than obligations which have arisen
and are outstanding prior to termination) with respect to any given
Restricted Stockholder on the date that such Restricted Stockholder
has satisfied each of his or its obligations to the Parent,
pursuant to any Transaction Documents.
9.3 Termination upon Purchase. Upon
purchase of any Seller Stock by Parent or any other Stockholder
signatory hereto (or their designee) such Seller Stock shall not be
subject to the terms and provisions of this Agreement.
10.
Tag-Along Rights,
Drag-Along Rights.
10.1 Tag-Along Rights. No Restricted
Stockholder (for purposes of this Section 11.1, the
“Offering
Stockholder”) may sell any shares of Seller Stock to
any third party, unless the Parent and the Stockholders signatory
hereto are first offered the right to participate in any such sale
for a purchase price per share of Common Stock and on other terms
and conditions not less favorable to the Parent and those
Stockholders signatory hereto, than those applicable to the
Offering Stockholder.
11.
Recapitalization,
Exchanges, etc. Affecting the Stock. The provisions of
this Agreement shall apply to any and all shares of capital stock
of the Parent or any successor or assignee of the Parent (whether
by merger, consolidation, sale of assets or otherwise) which may be
issued in respect of, in exchange for, or in substitution for the
shares of Stock, by reason of any stock dividend, split, reverse
split, combination, recapitalization, reclassification, merger,
consolidation, or otherwise in such a manner as to reflect the
intent and meaning of the provisions hereof.
12.
Third-Party
Beneficiaries. This Agreement is not intended to confer upon
any Person, except for the parties hereto, any rights or remedies
hereunder.
13.
Transfer of Stock.
If at any time the Parent purchases any shares of Stock pursuant to
this Agreement, the Parent may pay the purchase price determined
under this Agreement for the shares of Seller Stock it purchases by
wire transfer of funds or bank check in the amount of the purchase
price, and upon receipt of such purchase price, the Restricted
Stockholder shall deliver the certificates representing the number
of shares of Seller Stock being purchased in a form suitable for
transfer, duly endorsed in blank, and free and clear of any lien,
claim or encumbrance. Notwithstanding anything in this Agreement to
the contrary, the Parent shall not be required to make any payment
for shares of Seller Stock purchased hereunder until delivery to it
of the certificates representing such shares. If the purchaser is
purchasing less than all of the shares of Seller Stock represented
by a single certificate, the Parent shall deliver to the Restricted
Stockholder a certificate for any unpurchased shares of Seller
Stock.
14.
Further Assurances.
Each party hereto shall do and perform or cause to be done and
performed all such further acts and things and shall execute and
deliver all such other agreements, certificates, instruments and
documents as any other party hereto or Person subject hereto may
reasonably request in order to carry out the intent and accomplish
the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
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15.
Governing Law. This
Agreement shall be governed by and construed in accordance with the
laws of the State of New York irrespective of any conflict of laws
principles. The parties hereby agree that any action or proceeding
with respect to this Agreement (and any action or proceeding with
respect to any amendments or replacements hereof or transactions
relating hereto) may be brought only in a federal or state court
located in New York, State of New York and having jurisdiction with
respect to such action or proceeding. Each of the parties hereto
irrevocably consents and submits to the jurisdiction of such
courts.
16.
Invalidity of
Provision. The invalidity or unenforceability of any
provision of this Agreement in any jurisdiction shall not affect
the validity or enforceability of the remainder of this Agreement
in that jurisdiction or the validity or enforceability of this
Agreement, including that provision, in any other
jurisdiction.
17.
Notices. All
notices, requests, demands, waivers and other communications
required or permitted to be given under this Agreement shall be in
writing and shall be deemed to have been duly given if
(a) delivered personally, (b) mailed, certified or
registered mail with postage prepaid, (c) sent by next-day or
overnight mail or delivery or (d) sent by telecopier as
follows:
(i)
If to the
Company:
Majesco
Entertainment Company
0000X-X
Xxxxxx Xxxx.
S.
Xxxxxxxxxx, XX 00000
Attn.:
Chief Executive Officer
Facsimile:
with a copy to:
Sichenzia Xxxx
Xxxxxxx Xxxxxx, LLP
00
Xxxxxxxx
Xxxxx
0000
Xxx
Xxxx, Xxx Xxxx 00000
Attn.:
Xxxxxx Xxxxxx, Esq.
Facsimile: (000) 000-0000
(ii) If
to any Restricted Stockholder or Stockholder, to its address or
telecopier number as listed on the signature pages hereto or set
forth in the Transaction Documents; provided, that if for any
reason such address is not listed on the signature pages hereto, to
such Restricted Stockholder or Stockholder’s address or
telecopier number as is shown on the books and records of the
Parent.
(iii)
If to any other Person who becomes a Restricted Stockholder after
the date hereof, to its address or telecopier number set forth in
the counterpart of this Agreement executed and delivered by such
Stockholder or to such other person or address as any party shall
specify by notice in writing to the Company.
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All such
notices, requests, demands, waivers and other communications shall
be deemed to have been received (w) if by personal delivery on
the day of such delivery, (x) if by certified or registered
mail, on the third (3rd) business day after
the mailing thereof, (y) if by next-day or overnight mail or
delivery, on the day after deposit with such overnight mail or
delivery courier, (z) if by telecopier on the day on which
such telecopy was sent, provided that a copy is also
sent by certified or registered mail.
18.
Headings; Execution in
Counterparts. The headings and captions contained herein are
for convenience and shall not control or affect the meaning or
construction of any provision hereof. This Agreement may be
executed in any number of counterparts, each of which shall be
deemed to be an original and which together shall constitute one
and the same instrument.
19.
Entire Agreement.
This Agreement embodies the entire agreement and understanding of
the parties hereto in respect of the subject matter contained
herein and supersedes all prior agreements and understandings among
the parties with respect to such subject matter. There are no
restrictions, promises, representations, warranties, covenants or
undertakings relating to the shares of Seller Stock, other than
those expressly set forth or referred to herein or in the foregoing
agreements, the Transaction Documents, and the Certificate of
Incorporation or By-Laws.
20.
Injunctive Relief.
The shares of Seller Stock cannot readily be purchased or sold in
the open market, and for that reason, among others, the Parent and
Stockholders signatory hereto will be irreparably damaged in the
event this Agreement is not specifically enforced. Each of the
parties therefore agrees that in the event of a breach of any
provision of this Agreement the aggrieved party may elect to
institute and prosecute proceedings in any court of competent
jurisdiction to enforce specific performance or to enjoin the
continuing breach of this Agreement. Such remedies shall, however,
be cumulative and not exclusive, and shall be in addition to any
other remedy which the Parent or any Stockholder signatory hereto
may have. Each Restricted Stockholder hereby irrevocably
submits to the non-exclusive jurisdiction of the state and federal
courts in New York for the purposes of any suit, action or other
proceeding arising out of or based upon this Agreement or the
subject matter hereof. Each Restricted Stockholder hereby consents
to service of process by mail made in accordance with
Section 17.
[SIGNATURES APPEAR ON THE FOLLOWING PAGES]
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IN
WITNESS WHEREOF, the parties have executed this Agreement on the
date first above written.
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COMPANY:
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Attest:
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MAJESCO
ENTERTAINMENT
COMPANY
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By:_________________________________
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By:________________________________
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Chief
Executive Officer
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IN
WITNESS WHEREOF, the parties have executed this Agreement on the
date first above written.
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OTHER STOCKHOLDERS:
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Address:
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___________________________________
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Address:
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RESTRICTED STOCKHOLDERS:
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___________________________________
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Address:
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___________________________________
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Address:
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___________________________________
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Address:
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___________________________________
Address:
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