EMPLOYMENT AGREEMENT
This is an Employment Agreement dated as of May 1, 2006, between Xxxxx
Xxxxxx, an individual residing at 000 Xxx Xxxx, Xxxxxxxxxx, Xxx Xxxxxx 00000
(the "Employee"), and Kent Financial Services, Inc., a Delaware Corporation,
with principal offices at X.X. Xxx 00, 000 Xxxx Xxxxxx, Xxxxxxxxxx, Xxx Xxxxxx
00000 (the "Company").
RECITALS
The Company desires that the Company employs the Employee and the Employee
desires to be employed by the Company, on the terms and conditions set forth in
this Agreement.
NOW, THEREFORE, the parties agree as follows:
1.0 Employment. The Company offers, and the Employee accepts, employment
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under the terms and conditions stated in this Agreement, which terms and
conditions shall supersede any other prior oral or written employment agreements
between the Company (and any predecessors) and the Employee. The Employee shall
assume such responsibilities and perform such duties as the Company shall from
time to time assign to the Employee. The Employee's initial title shall be Vice
President and Chief Financial Officer. The Employee shall report to the Chairman
of the Board and to the President of the Company. The Employee shall perform his
duties to the best of his ability, experience, and talents, all to the
reasonable satisfaction of the Company, and shall use his best efforts to
promote the interests of the Company. During the term (as defined in Section 2)
of this Agreement, the Employee shall not engage in any capacity or activity
which is contrary to the welfare, interest or benefit of the business conducted
by the Company. The Employee shall devote all of his business time, ability and
attention to the business of the Company, unless otherwise authorized in writing
by the Board of Directors of the Company. The Employee shall engage in such
travel on behalf of the Company as may reasonably be required in connection with
the performance of his duties hereunder.
2.0 Term of Agreement. The term of the employment under the Employment
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Agreement (the "Term") shall be two years, commencing May 15, 2006 (the
"Effective Date") and shall extend until May 15, 2008, unless sooner terminated
pursuant to Section 5 hereof, or unless otherwise modified pursuant to Section
2.1.
2.1 Unless the Company gives thirty (30) days written notice prior to May
15, 2007, the two year term of this employment agreement shall be automatically
extended for one day for each day elapsed after May 15, 2007, it being the
intention of the parties to convert the Term of this agreement to a contract
with a two year "evergreen" term, commencing on May 15, 2007.
3.0 Compensation.
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3.1 Amount. In connection with his employment, the Employee shall be paid
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an annual gross salary of one hundred and forty thousand dollars ($140,000) (the
"Base Salary") during the Term and thereafter as mutually agreed upon by the
Company and the Employee.
The Employee shall be paid in the same periodic installments customary for
other employees of the Company. In addition, the Board of Directors of the
Company shall from time to time review the Base Salary to be paid to the
Employee under this Agreement and shall increase (but not decrease) the Base
Salary in such amounts, if any, as the Board of Directors determines. Also, the
Employee may be granted bonuses at the discretion of the Board of Directors.
3.2 Benefits Plans. The Company shall provide the Employee with such
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medical and disability insurance, hospital insurance and group life insurance
and other benefits made available to executive level employees of the Company,
subject to the terms and conditions of such benefit plans and arrangements.
3.3 Vacations. The Employee shall be entitled each year to a vacation of
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fifteen (15) working days, during which time his compensation shall be paid in
full. He shall also be compensated for such holidays and other non-working days
as are consistent with the policies of the Company for executives generally. All
vacations shall be scheduled so as to cause minimal interference with the
operations of the Company. No vacation days may be carried over to the
subsequent calendar year except upon express agreement of the parties.
3.4 Reimbursement of Expenses. Any reasonable expenses incurred by the
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Employee in promoting the business of the Company will be promptly paid directly
or promptly reimbursed to the Employee upon receipt of receipts or other
documentation evidencing the date, amount and business reason for the
expenditure.
4.0 Death or Disability.
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4.1 Death or Disability. In the event of the Employee's death or permanent
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disability, this Agreement shall terminate. For purposes of this subsection,
permanent disability shall mean the failure to perform the prescribed duties
assigned to the Employee by virtue of a health condition for a continuous period
of three months.
4.2 Disability Payments. In the event of the Employee's permanent
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disability as defined in this Agreement, the Employee shall be paid such
benefits to which he is entitled under the terms of such long-term disability
insurance as the Company has provided him or 80% of his salary for the remainder
of the two year Term under Section 2 of this contract, whichever is greater, in
accordance with his regular payment schedule.
4.3 Death During Disability Period. In the event of the Employee's death
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during the period in which Disability Payments are being paid, the Company shall
pay any remaining Disability Payments due for the remainder of the Term under
Section 2 to such beneficiaries as the Employee designates in writing before his
death, or upon his failure to designate a beneficiary, to his surviving spouse
or, if none, then the Employee's estate. Such payments shall be paid in lieu of
any and all payments provided for in the Death Benefits Section of the
Agreement.
4.4 Death Benefits. Subject to the provisions of Section 5.1 of this
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Agreement, in the event of the Employee's death while he is actively serving his
prescribed duties as Vice President and Chief Financial Officer and during the
term of his employment, the Company shall pay to such beneficiaries as the
Employee shall designate in writing prior to the Employee's death, or if he
fails to designate a beneficiary, to the Employee's spouse or, if none, to the
Employee's estate, an annual benefit equal to his then current annual salary
(the "Death Benefit"). The Death Benefit shall be payable in equal monthly
installments for the remainder of the Term under Section 2 of this contract,
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commencing on the first day of the next month following the month in which the
Employee's death occurs. Payments made pursuant to this Section 4 shall be made
in lieu of any and all payments provided for in Section 2 and Sections 4.1 - 4.3
of the Agreement.
5.0 Termination. The Employee's employment hereunder may be terminated only
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under the following circumstances:
5.1 By the Company for Cause. The Company may terminate the Employee's
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employment hereunder for "cause" upon not less than five days' prior written
notice of such termination. For purposes of this Agreement, the Company shall
have "cause" to terminate the Employee's employment hereunder upon:
(i) The continued failure by the Employee to substantially perform his
duties hereunder (other than any such failure resulting from the
Employee's incapacity due to physical or mental illness)) within three
days after a written demand for substantial performance is delivered
to the Employee by the Company that specifically identifies the manner
in which the Company believes the Employee has not substantially
performed his duties (the "Three Day Period").
(ii) The Employee's conviction of any criminal act or fraud.
(iii) Notwithstanding the foregoing, the Employee's employment may not be
terminated for cause unless and until the Company has delivered to the
Employee a copy of a resolution duly adopted by the affirmative vote
of not less than 75 percent of the entire Board of Directors at a
meeting of the Board (of which the Employee was given at least 20 days
prior written notice and an opportunity, together with his counsel, to
be heard before the Board), finding that in the good faith opinion of
the Board, the Employee has not substantially performed his duties
(which failure shall be described in detail) and such failure has not
been cured within the period described in (ii) above. In addition, the
Company shall not have cause to terminate the Employee's employment
hereunder as a result of any event occurring prior to the date hereof
and previously disclosed to the Company. The burden of establishing
cause shall be upon the Company.
5.2 Termination Without Cause. The Company may terminate the Employee's
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employment without cause, by giving not less than ninety days written notice. If
the Company terminates the Employee's employment without cause, then
notwithstanding anything contained herein to the contrary, or otherwise provided
by law, the Employee shall be entitled to receive all compensation described in
Section 3.1 for the remainder of the Term under Section 2 of this contract in
accordance with his regular payment schedule.
5.3 Termination by the Employee Without Cause. The Employee may terminate
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his employment hereunder for any reason. In this event, the Company is not
required to make any further payments to the Employee. The Employee may also
terminate his employment for the Company's failure to make the payments
specified herein, if the Company fails to make such payments for a period of
five days after the Employee has given notice of such failure. In this event,
the Employee will be entitled to receive all compensation described in Section
3.1 for the remainder of the Term under Section 2 of this contract in accordance
with his regular payment schedule.
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5.4 Termination of the Employee Based Upon Change in Control.
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(i) The Executive may terminate his employment under this Agreement at any
time for "good reason" (as defined below) within 36 months after the
date of a Change in Control (as defined below) of Kent Financial
Services, Inc.
(ii) A "Change in Control" of the Company shall be deemed to have occurred
if:
(A) any "person" (as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934 (the "Exchange Act") as in effect on
the date hereof), other than an entity beneficially owning, directly
or indirectly, common stock of the Company representing 50.1% or more
of the Company's issue and outstanding common stock as of the
Effective Date, is or becomes the beneficial owner, directly or
indirectly, of common stock of the Company representing 50.1% or more
of the Company then issued and outstanding common stock; or
(B) individuals who constitute the Company's Board of Directors on the
date hereof (the "Incumbent Board") cease for any reason to constitute
at least a majority thereof, provided that any person becoming a
Director subsequent to the date hereof whose election, or nomination
for election by the Company's stockholders, was approved by a vote of
at least a majority of the Directors comprising the Incumbent Board
(either by a specific vote or by approval of the proxy statement of
the Company in which such person is named as a nominee for Director,
without objection to such nomination) shall be, for purposes of this
clause, considered as though such person were a member of the
Incumbent Board. For purposes of this Section 5.4(A), "good reason"
shall mean a determination solely by the Employee, in good faith, that
as a result of the change of control of the Company he may be
adversely affected (i) in carrying out his duties and powers in the
fashion he previously enjoyed or (ii) in his future prospects with the
Company.
(iii) If the Executive terminates his employment after a Change of Control
of the Company, he shall notify the Company in writing of the
Termination Date and he shall be paid all compensation described in
Section 3.1 of this contract for the remainder of the Term under
Section 2 of this contract in accordance with his regular payment
schedule.
6.0 Covenant Not to Compete
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6.1 When the Covenant Applies
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(i) If the Employee is terminated under Section 5.2 without cause or if
the Employee terminates based on a change of control under Section 5.4
prior to the contract becoming an "evergreen" contract under Section
2.1, the Employee will be subject to the convenant set forth in
Section 6.2 through the end of the Term only, i.e., through May 15,
2008.
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(ii) If the Employee is terminated without cause under Section 5.2 or if
the Employee terminates based on a change of control after the
contract becomes an "evergreen" contract under Section 2.1. the
Employee will be subject to the covenant set forth in Section 6.2
during the Term for which he continues to be paid under Section 2,
i.e., for two years from the date of Termination
(iii) If the Employee terminates under the second and third sentences of
Section 5.3, the Employee will be subject to the covenant set forth in
Section 6.2 during the time he continues to be paid under Section 2.
6.2 Subject to Sections 1, 6.1 and 6.2, during the Term under Section 2,
the Employee agrees not to do any of the following:
(i) Engage, directly or indirectly, in a business or projects undertaken
during the Term of this contract by the Company. The projects covered
by this covenant will be the subject of an appendix to this Agreement
or a separate memorandum agreement which shall be agreed upon from
time to time, but at a minimum, once per year at the beginning of the
fiscal year.
(ii) Engage, directly or indirectly, in any way in the solicitation of
employees or independent contractors of the Company or its affiliates
in connection with any job, venture or other employment opportunity of
any nature.
(iii) Interfere in any material way, directly or indirectly, whether for
his own account or for the account of any other person, firm,
corporation or other business organization, with the Company's
relationship with, or endeavor to entice away from the Company, any
person, firm, corporation or other entity who or which was an
executive, employee, consultant, distributor, agent, contractor,
supplier, source, of material and/or product or customer of, the
Company.
6.3 Engagement in Business. For purposes of this Section 6, the Employee
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shall be deemed directly or indirectly engaged in a business or activity if he
participates in such business or activity as a material proprietor, partner,
joint venture, stockholder, director, officer, manager, employee, consultant,
advisor or agent or if he controls such business or entity. Notwithstanding the
above, the Employee shall not be deemed a stockholder merely by reason of
holding less than five percent (5%) of the outstanding equity of any publicly
owned corporation, provided that the Employee shall not be in a control position
with regard to such corporation.
7.0 Confidential Information.
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7.1 No Disclosure: Definition of Confidential Information. The Employee
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shall not at any time during the term or thereafter use for his own benefit
and/or reveal, divulge or publish or make known, directly or indirectly, to any
person, including for example and not by way of limitation, any information
contained in the Company's books and records, any customers of the Company and
any other business information relating to the business of the Company, whether
written or oral, that the Employee has acquired during the Term (hereinafter
referred to as "Confidential Information"). Notwithstanding the above, the term
Confidential Information shall not include: (i) any information which is in the
public domain and could readily be known or determined without being employed by
the Company or which enters the public domain through no breach of the
Employee's obligation hereunder; and (ii) any information which the Employee
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acquires through or from parties independent of the Company, but only to the
extent the Employee can verify the independence of his information or knowledge
to the reasonable satisfaction of the Company; (iii) any information required to
be disclosed by law or regulation; and (iv) any information disclosed for the
purpose of completing and filing any tax returns of the Employee.
7.2 Information Held in Trust. The Employee shall hold in trust and
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confidence for the benefit of the Company all Confidential Information of the
Company, and the Employee shall not disclose such Confidential Information for
any purpose other than on behalf of the Company in accordance with his duties
under this Agreement. The Employee shall not make any copies of the Confidential
Information without the express prior written consent of the Company. It is
hereby expressly understood that by disclosing the Confidential Information to
the Employee, the Company does not grant any express, implied or other license
or right of any nature to the Employee with respect to the Confidential
Information.
7.3 Duties Upon Termination. Upon expiration of the Term or termination of
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the Employer's services for the Company irrespective of the time, manner or
cause of such termination, the Employee shall surrender to the Company all
lists, books, records and documents provided by, belonging to, relating to or
used in connection with the Company's business and/or all other property
belonging to the Company or to the Company's customers.
8.0 Information from the Employee. The Company does not wish to receive any
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confidential information from the Employee. Any and all information disclosed by
the Employee to the Company shall not be deemed Confidential, and the Company
shall be under no obligation to retain any such information in confidence.
9.0 Interest and Counsel Fees.
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9.1 Interest. All amounts payable to the Executive under this Agreement
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shall be due and payable at the time specified herein and any payment which is
not made within five days of the date of written demand shall be made with
interest on the amount due from the due date in full at an annual rate of 2%
over the prime or base rate of interest generally offered or charged by
Citibank, N.A. to its commercial customers for short-term unsecured loans, as in
effect from time to time during the period from such due date until the date
such payment is made.
9.2 Counsel Fees. The Company hereby irrevocably authorizes the Executive
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from time to time to retain counsel of his choice at the expense of the
Company's to represent the Executive in connection with the Executive's defense
of any litigation, arbitration or other legal action relating to this Agreement
or any provision hereof (whether such action is by or against the Company or any
director, officer, stockholder or other person affiliated with the Company, or
in any jurisdiction). Notwithstanding any existing or prior attorney-client
relationship between the Company and such counsel, the Company irrevocably
consents to the Executive entering into an attorney-client relationship with
such counsel, and in that connection the Company and the Executive agree that a
confidential relationship shall exist between the Executives and such counsel.
The reasonable fees and expenses of counsel selected by the Executive shall be
paid or reimbursed to the Executive by the Company on a regular, periodic basis
upon presentation by the Executive of a statement or statements prepared by such
counsel in accordance with its customary practices, up to a maximum aggregate
amount of $250,000, which sum may be increased upon application of the Executive
to the Board of Directors
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10.0 The Employee's Representation and Warranties.
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The Employee hereby represents and warrants to the Company that the
execution and delivery by him of this Agreement, and the performance by him of
his duties and responsibilities on behalf of the Company as set forth in this
Agreement will not constitute a breach, violation or default by him under any
employment agreement, confidentiality agreement, non-competition agreement, or
any other agreement or any judgment or other instrument to which he is a party
or by which he is otherwise bound or subject.
11.0 Equitable Relief and Limits of Liability. The parties recognize that
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irreparable harm will result to either party if the other party fails or refuses
to perform the obligations under this Agreement and that the remedy at law for
such failure or refusal will be inadequate. Accordingly, in addition to any
other remedies and damages available, the Company and the Employee shall be
entitled to injunctive relief, and other appropriate equitable relief. Nothing
herein shall be construed as prohibiting the Company or the Employee from
pursuing any other remedies in addition to equitable relief, including the
recovery of damages; provided, however, that the Company's damages for breach of
this Agreement shall be limited, in all respects, to a maximum amount equal to
the remaining amount to be paid to the Employee hereunder following the date of
breach. Notwithstanding anything to the contrary set forth herein, in no event
shall the Company be entitled to consequential or punitive damages as a result
of such breach.
12.0 Invalidity and Severability. If any provisions of this Agreement are
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held invalid or unenforceable, such invalidity or unenforceability shall not
affect the other provisions of this Agreement, and, to the extent, the
provisions of this Agreement are intended to be and shall be deemed severable.
In particular and without limiting the foregoing sentence, in the event that any
provision of Section 6 of this Agreement shall be held to be invalid or
unenforceable by reason of the geographic or business scope or the duration
thereof, such invalidity or unenforceability shall attach only to such provision
and shall not affect or render invalid or unenforceable any other provision of
this Agreement. This Agreement and such provisions of Section 6 shall be
construed as if the geographic or business scope or the duration of such
provision had been more narrowly drawn so as not to be invalid or unenforceable.
13.0 Notices. All notices hereunder shall be in writing and personally
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delivered or mailed by registered or certified mail, return receipt requested,
to the following address:
If to the Company:
Kent Financial Services, Inc.
000 Xxxx Xxxxxx
X.X. Xxx 00 Xxxxxxxxxx, XX 00000
If to the Employee:
Xxxxx Xxxxxx
000 Xxx Xxxx
Xxxxxxxxxx, XX 00000
The Company or the Employee may hereafter designate another address to the
other in writing for purposes of notices under the Amended Employment Agreement.
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14.0 Waivers. Any waiver by any party of any violation of, breach of or
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default under any provision of this Agreement by the other party shall not be
construed as, or constitute, a continuing waiver of such provision, or waiver of
any other violation of, breach of or default under any other provision of this
Agreement.
15.0 Assignability. The Agreement shall not be assignable by the Company
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without the written consent of the Employee, except that if the Company shall
merge or consolidate with or into, or transfer substantially all of its assets
to, another corporation or other form of business organization, this Agreement
shall be binding on the Employee and be for the benefit of and binding upon the
successor of the Company resulting from such, merger, consolidation or transfer
without the Employee's consent, unless this Agreement is terminated pursuant to
Section 5.2. the Employee may not assign, pledge or encumber any interest in
this Agreement or any part thereof without the express written consent of the
Company, this Agreement being personal to the Employee.
16.0 Severability. Each provision of the Employment Agreement constitutes a
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separate and distinct undertaking, covenant and/or provision hereof. In the
event that any provision of the Employment Agreement shall finally be determined
to be unlawful, such provision shall be deemed severed from the Employment
Agreement, but every other provision of the Employment Agreement shall remain in
full force and effect, and in substitution for any such provision held unlawful,
there shall be substituted a provision of similar import reflecting the original
intent of the parties hereto to the extent permissible under law.
17.0 Benefits of Affiliates. Any protection, benefits, rights or other
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provisions given to the Company in this Agreement shall be deemed to apply to,
protect and inure to the benefit of the Company ' subsidiaries and affiliates.
18.0 Entire Agreement. This Agreement contains the entire agreement of the
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parties as to the subject matter hereof and supersedes any and all other
agreements of the parties as to the subject matter hereof. This Agreement and
its terms may not be waived, changed, modified, extended or discharged orally,
except by an agreement in writing signed by the party against whom enforcement
of such waiver, change, modification, extension or discharge is sought.
19.0. Applicable Law. This Agreement shall be construed in accordance with
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the laws of the State of New Jersey.
20.0. Construction. The section and subsection headings used herein are for
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convenience of reference only, are not a part of this Agreement and are not to
affect the construction of, or be taken into consideration in interpreting, any
provision of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first written above.
KENT FINANCIAL SERVICES, INC.
By: /s/ Xxxx X. Xxxxxxx
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Xxxx X. Xxxxxxx, Chairman
EMPLOYEE
/s/ Xxxxx Xxxxxx
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Xxxxx Xxxxxx
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