Exhibit 10.15
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "Security Agreement") is made as of May 2,
2007, by SOUTHWEST IOWA RENEWABLE ENERGY, LLC, an Iowa limited liability company
("Debtor"), in favor of AGSTAR FINANCIAL SERVICES, PCA, and its successors and
assigns, as Agent (in such capacity, the "Secured Party") for the benefit of the
Banks in connection with that certain Credit Agreement of even date herewith (as
amended, restated, supplemented or otherwise modified from time to time, the
"Credit Agreement") among the Debtor, the commercial, banking or financial
institutions and other entities from time to time parties thereto as Banks, and
the Secured Party.
RECITALS
A. Pursuant to the Credit Agreement, the Banks have severally agreed to
make extensions of credit and other financial accommodations to the Debtor upon
the terms and subject to the conditions set forth in the Credit Agreement; and
B. It is a condition precedent to the obligations of the Banks to make
their respective extensions of credit to the Debtor under the Credit Agreement
that the Debtor shall have executed and delivered this Security Agreement to the
Secured Party for the benefit of the Banks.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. Definitions. All capitalized terms used in this Security Agreement shall
have the meaning as set forth in the Credit Agreement or in the Uniform
Commercial Code (the "UCC"), as enacted in the State of Minnesota, and as
amended from time to time and such meanings shall automatically change at the
time that any amendment to the UCC, which changes such meanings, shall become
effective.
2. Grant of Security Interest. To secure the payment and performance of the
Obligations, the Debtor grants the Secured Party for the benefit of the Banks a
security interest (the "Security Interest") in the following property (the
"Collateral"):
All of the personal property of the Debtor, wherever located, and now owned
or hereafter acquired, including, but not limited to:
All Accounts and other rights to payment whether or not earned by
performance, and including, but not limited to, payment for property
sold, leased, rented, licensed or assigned or services rendered or to
be rendered; Goods; Farm Products; Fixtures, Chattel Paper; Inventory;
Equipment; Instruments; Investment Property; Documents; Deposit
Accounts; Commodity Accounts; Commercial Tort Claims, Securities
Accounts, Money; Letter-of-
Credit Rights; General Intangibles; Payment Intangibles; Software;
Supporting Obligations; and to the extent not included in the
foregoing as original collateral, the Proceeds and Products of the
foregoing.
All payments, rights to payment whether or not earned by performance,
Accounts, General Intangibles and benefits, including, but not limited
to, payments in kind, deficiency payments, letters of entitlement,
storage payments, emergency assistance, diversion payments, production
flexibility contracts, contract reserve payments, ethanol incentive
funds, bioenergy programs, under or from any preexisting, current or
future federal or state government program and, to the extent not
included in the foregoing as original collateral, the Proceeds and
Products of the foregoing.
All books and records pertaining to the foregoing.
3. Representations, Warranties, Covenants and Agreements. The Debtor
represents, warrants, covenants and agrees as follows:
a. As of the date hereof (i) the legal name of the Debtor is as set forth
in the preamble of this Security Agreement, and (ii) the Debtor has
not used any trade name, assumed name or other name except the
Debtor's name stated above. The Debtor shall give the Secured Party
prior written notice of any change in its name or if the Debtor uses
any other name.
b. The Debtor is a limited liability company whose state of organization
is Iowa. The Debtor shall not change its state of organization without
the prior written consent of the Secured Party.
c. The address of the Debtor's chief executive office as of the date
hereof is set forth beneath the Debtor's signature line at the end of
this Security Agreement. The Debtor shall give the Secured Party prior
written notice of any change in such address. The Debtor has authority
to execute and perform this Security Agreement.
d. The Debtor hereby authorizes the Secured Party to file all financing
statements and amendments to financing statements describing the
Collateral in any offices as Secured Party, in its sole discretion,
may determine necessary to perfect the Security Interest in the
Collateral. The Debtor hereby further authorizes the Secured Party to
file a financing statement describing any agricultural liens or other
statutory liens held by Secured Party for the benefit of the Banks in
any offices as Secured Party, in its sole discretion, may determine
necessary to perfect the security interest in the Collateral.
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e. The Debtor is the owner of the Collateral, will be the owner of the
Collateral hereafter acquired, or has sufficient rights in the
Collateral to transfer an interest, free of all security interests,
liens and encumbrances other than the Security Interest and any other
security of the Secured Party or the Banks. The Debtor shall not
permit any security interest, lien or encumbrance, other than liens
permitted by the Credit Agreement, to attach to any Collateral without
the prior written consent of the Secured Party. The Debtor shall
defend the Collateral against the claims and demands of all persons
other than the Secured Party and the Banks, and shall promptly pay all
taxes, assessments and other government charges upon or against the
Debtor, any Collateral and the Security Interest. No financing
statement covering any Collateral other than related to liens
subordinated to the Banks is on file in any public office. If any
Collateral is or will become a fixture, the Debtor, at the request of
the Secured Party, shall furnish the Secured Party with a statement or
statements executed by all persons who have or claim an interest in
the real estate, in form acceptable to the Secured Party, which
statement or statements shall provide that such persons consent to the
Security Interest.
f. The Debtor shall not sell or otherwise dispose of any Collateral or
any interest therein without the prior written consent of the Secured
Party, except that, until the occurrence of any Event of Default and
subject to the provisions of this Security Agreement, the Debtor may
sell or lease any Collateral constituting Inventory or Farm Products
in the ordinary course of business at prices constituting the fair
market value thereof or as otherwise permitted in the Credit
Agreement. For purposes of this Security Agreement, a transfer in
partial or total satisfaction of a debt, obligation or liability shall
not constitute a sale or lease in the ordinary course of business.
g. For each Deposit Account that the Debtor at any time opens or
maintains, the Debtor shall, at the Secured Party's request and
option, pursuant to an agreement in form and substance reasonably
satisfactory to the Secured Party, either (a) cause the depositary
bank to comply at any time with instructions from the Secured Party to
such depositary bank directing the disposition of funds from time to
time credited to such Deposit Account, without further consent of the
Debtor, or (b) arrange for the Secured Party to become the customer of
the depositary bank with respect to the Deposit Account, with the
Debtor being permitted, only with the consent of the Secured Party, to
exercise rights to withdraw funds from such Deposit Account. The
Secured Party agrees with the Debtor that the Secured Party shall not
give any such instructions or withhold any withdrawal rights from the
Debtor, unless an Event of Default has occurred and is continuing, or
would occur, if effect were given to any withdrawal not otherwise
permitted by the Loan Documents. The provisions of this paragraph
shall not apply to (i) any Deposit Account for which the Debtor, the
depositary bank and the Secured Party have entered into a cash
collateral agreement specially negotiated among the Debtor, the
depositary bank and the Secured Party for the specific purpose set
forth therein, (ii) a Deposit Account for which the Secured Party is
the depositary bank
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and is in automatic Control, and (iii) Deposit Accounts specially and
exclusively used for payroll, payroll taxes and other employee wage
and benefit payments to or for the benefit of the Debtor's salaried
employees. The Debtor shall not grant any other person a security
interest, lien or other encumbrance in any such Deposit Accounts.
h. The Debtor shall execute and deliver to the Secured Party all
assignments, transfers and other documents required by the Secured
Party to transfer, convey and assign to the Secured Party for the
benefit of the Banks all federal and state government program
payments, rights to payment whether or not earned by performance,
Accounts, General Intangibles and benefits.
i. Each Account, Instrument, Chattel Paper, other right to payment and
General Intangible constituting Collateral is, or will be when
acquired, the valid, genuine and legally enforceable obligation of the
Account Debtor or other obligor named therein or in the Debtor's
records pertaining thereto as being obligated to pay such obligation,
subject to no defense, setoff or counterclaim. The Debtor shall not,
without the prior written consent of the Secured Party, agree to any
material modification or amendment of any such obligation or agree to
any subordination or cancellation of any such obligation.
j. All tangible Collateral shall be located at the Debtor's address(es)
set forth at the beginning of this Security Agreement, or as disclosed
in writing to the Secured Party. No such Collateral shall be located
at any other address without the prior written consent of the Secured
Party. At the request of the Secured Party, the Debtor shall provide
the Secured Party with the location of all Farm Products, machinery
and Equipment on a quarterly basis so long as the Loan Obligations
remain unpaid. Notwithstanding the foregoing, Collateral may be
located away from Debtor's location for shipping purposes in the
ordinary course of business.
k. The Debtor shall: (1) keep all tangible Collateral in good condition
and repair, normal wear and tear and depreciation excepted; (2) from
time to time replace any worn, broken or defective parts thereof if
necessary for the Debtor's operations; (3) promptly notify the Secured
Party of any material loss of or material damage to any Collateral or
of any adverse change in the prospect of payment of any Account,
Instrument, Chattel Paper, other right to payment or General
Intangible constituting Collateral; (4) not permit any Collateral to
be used or kept for any unlawful purpose or in violation of any
federal, state or local law; (5) keep all tangible Collateral insured
in such amounts, against such risks and in such companies as shall be
reasonably acceptable to the Secured Party, with loss payable clauses
in favor of the Secured Party for the benefit of the Banks to the
extent of its interest in form reasonably acceptable to the Secured
Party (including without limitation a provision for at least ten (10)
days' prior written notice to the Secured Party of any cancellation or
modification of such insurance), and deliver policies or certificates
of such insurance to the Secured Party; (6) at the Debtor's chief
executive office, keep accurate and complete records pertaining to the
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Collateral and the Debtor's financial condition, business and
property, and submit to the Secured Party such periodic reports
concerning the Collateral and the Debtor's financial condition,
business and property as the Secured Party may from time to time
request; (7) at all reasonable times permit the Secured Party and its
representatives to examine and inspect any Collateral, and to examine,
inspect and copy the Debtor's records pertaining to the Collateral and
the Debtor's financial condition, business and property; (8) at the
Secured Party's request, promptly execute, endorse and deliver such
financing statements and other Instruments, documents, Chattel Paper
and writings and take such other actions deemed by the Secured Party
to be necessary or desirable to establish, protect, perfect or enforce
the Security Interest and the rights of the Secured Party and the
Banks under this Security Agreement and applicable law, and pay all
costs of filing financing statements and other writings in all public
offices where filing is deemed by the Secured Party to be necessary or
desirable.
l. Debtor will cooperate with Secured Party in obtaining control with
respect to Collateral consisting of Deposit Accounts, investment
property, letter-of-credit rights, and electronic Chattel Paper.
Debtor will not create any Chattel Paper without placing a legend on
the Chattel Paper acceptable to the Secured Party indicating that
Secured Party has a security interest in the Chattel Paper.
m. To the extent Debtor uses the Proceeds of loan(s) extended by the
Banks to purchase Collateral, Debtor's repayment of said loan(s) shall
apply on a "first-in-first-out" basis so that the portion of the
loan(s) used to purchase a particular item of Collateral shall be paid
in the chronological order the Debtor purchased the Collateral.
n. The Debtor shall comply, in all material respects, with the provisions
of all federal or state government programs, agreements and contracts
to which it is a party.
o. In the Secured Party's discretion, if the Debtor fails to do so, the
Secured Party may for the benefit of the Banks discharge taxes and
other encumbrances at any time levied or placed on any of the
Collateral, maintain any of the Collateral, make repairs thereto and
pay any necessary filing fees or insurance premiums. The Debtor agrees
to reimburse the Secured Party on demand for all expenditures so made.
The Secured Party shall have no obligation to the Debtor to make any
such expenditures, nor shall the making thereof be construed as the
waiver or cure of any Default or Event of Default.
p. Anything herein to the contrary notwithstanding, the Debtor shall
remain obligated and liable under each contract or agreement comprised
in the Collateral to be observed or performed by the Debtor
thereunder. The Secured Party shall not have any obligation or
liability under any such contract or agreement by reason of or arising
out of this Security Agreement or the receipt by the Secured Party
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of any payment relating to any of the Collateral, nor shall the
Secured Party be obligated in any manner to perform any of the
obligations of the Debtor under or pursuant to any such contract or
agreement, to make inquiry as to the nature or sufficiency of any
payment received by the Secured Party in respect of the Collateral or
as to the sufficiency of any performance by any party under any such
contract or agreement, to present or file any claim, to take any
action to enforce any performance or to collect the payment of any
amounts which may have been assigned to the Secured Party or the Banks
or to which the Secured Party or the Banks may be entitled at any time
or times. The Secured Party's sole duty with respect to the custody,
safe keeping and physical preservation of the Collateral in its
possession shall be to deal with such Collateral in the same manner as
the Secured Party deals with similar property for its own account.
q. The powers conferred on the Secured Party hereunder are solely to
protect the Banks interest in the Collateral and shall not impose any
duty upon it to exercise any such powers. The Secured Party and the
Banks shall be accountable only for the amounts that they actually
receive as a result of the exercise of such powers, and neither the
Secured Party, nor the Banks, nor any of their officers, directors,
employees or agents shall be responsible to the Debtor for any act or
failure to act, except for their own gross negligence or willful
misconduct.
4. Collection Rights. At any time after an Event of Default has occurred
and is continuing, the Secured Party may, and at the request of the Secured
Party the Debtor shall, promptly notify any Account Debtor or obligor of any
Account, Instrument, Chattel Paper, Payment Intangible, other right to payment
or General Intangible or Commercial Tort Claim constituting Collateral that the
same has been assigned to the Secured Party and shall direct such Account Debtor
or obligor to make all future payments to the Secured Party. At any time after
an Event of Default has occurred and is continuing, the Secured Party may notify
any governmental agency or unit of government which is obligated to the Debtor
under any federal or state governmental program that the same has been assigned
to the Secured Party, and direct such governmental agency or unit of government
to make all future payments to the Secured Party. In connection with any such
notice, the Secured Party is authorized to forward to such government agency or
unit of government any and all instruments of assignment or notices of
assignment required by such government agency or unit of government previously
executed and delivered to Secured Party by the Debtor.
5. Limited Power of Attorney. If the Debtor at any time fails to perform or
observe any agreement herein, the Secured Party, in the name and on behalf of
the Debtor or, at its option, in its own name, may perform or observe such
agreement and take any action which the Secured Party may deem necessary or
desirable to cure or correct such failure. The Debtor irrevocably authorizes
Secured Party and grants the Secured Party a limited power of attorney in the
name and on behalf of the Debtor or, at its option, in its own name, upon an
Event of Default, to collect, receive, receipt for, create, prepare, complete,
execute, endorse, deliver, and file any and all financing statements, insurance
applications, remittances, Instruments, documents, Chattel Paper, and other
writings, to grant an extension to, compromise, settle, waive, notify, amend,
adjust, change, and release any obligation of any Account Debtor, obligor,
insurer, or other person pertaining to any Collateral, and take any other action
deemed by the Secured Party
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to be necessary or desirable to establish, perfect, protect, or enforce the
Security Interest. All of the Secured Party's advances, charges, costs, and
expenses, including without limitation reasonable attorneys' fees, in connection
with the Loan Obligations and in the protection and exercise of any rights or
remedies hereunder, together with interest thereon at the highest rate then
applicable to any of the Loan Obligations, shall be secured hereunder and shall
be paid by the Debtor to the Secured Party on demand.
6. Remedies. Upon the occurrence of any Event of Default and at any time
thereafter, the Secured Party may exercise any one or more of the following
rights and remedies: (a) declare all Loan Obligations to be immediately due and
payable, and the same shall thereupon be immediately due and payable, without
presentment or other notice or demand, all of which are hereby waived by the
Debtor; (b) require the Debtor to assemble all or any part of the Collateral and
make it available to the Secured Party at a place to be designated by the
Secured Party which is reasonably convenient to both parties; (c) exercise and
enforce any and all rights and remedies available upon default under the Credit
Agreement, this Security Agreement, the UCC, and any other applicable agreements
and laws. If notice to the Debtor of any intended disposition of Collateral or
other action is required, such notice shall be deemed reasonably and properly
given if mailed by regular or certified mail, postage prepaid, to the Debtor at
the address stated at the beginning of this Security Agreement or at the most
recent address shown in the Secured Party's records, at least ten (10) days
prior to the action described in such notice. The Debtor hereby irrevocably
submits and consents to the jurisdiction of the state and federal courts located
in the State of Minnesota over any controversy, action or proceeding arising out
of or relating to this Security Agreement, the Collateral, the Security
Interest, the Loan Obligations and any Instrument, agreement or document related
hereto or thereto, and the Debtor hereby irrevocably agrees that all claims in
respect of such action or proceeding may be heard and determined in such
Minnesota state or federal court. The Debtor hereby irrevocably waives, to the
fullest extent it may effectively do so, the defense of an inconvenient forum to
the maintenance of such action or proceeding. Nothing in this Security Agreement
shall affect the right of the Secured Party to bring any action or proceeding
against the Debtor or its property in the courts of any other jurisdiction to
the extent permitted by law.
7. Standards for Exercising Rights and Remedies. To the extent that
applicable law imposes duties on the Secured Party to exercise remedies in a
commercially reasonable manner, the Debtor acknowledges and agrees that it is
not commercially unreasonable for the Secured Party (a) to fail to incur
expenses reasonably deemed significant by the Secured Party to prepare
Collateral for disposition or otherwise to fail to complete raw material or work
in process into finished goods or other finished products for disposition, (b)
to fail to obtain third party consents for access to Collateral to be disposed
of, or to obtain or, if not required by other law, to fail to obtain
governmental or third party consents for the collection or disposition of
Collateral to be collected or disposed of, (c) to fail to exercise collection
remedies against Account Debtors or other persons obligated on Collateral or to
fail to remove liens or encumbrances on or any adverse claims against
Collateral, (d) to exercise collection remedies against Account Debtors and
other persons obligated on Collateral directly or through the use of collection
agencies and other collection specialists, (e) to advertise dispositions of
Collateral through publications or media of general circulation, whether or not
the Collateral is of a specialized nature, (f) to contact other persons, whether
or not in the same business as the Debtor, for expressions of
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interest in acquiring all or any portion of the Collateral, (g) to hire one or
more professional auctioneers to assist in the disposition of Collateral,
whether or not the Collateral is of a specialized nature, (h) to dispose of
Collateral by utilizing Internet sites that provide for the auction of assets of
the types included in the Collateral or that have the reasonable capability of
doing so, or that match buyers and sellers of assets, (i) to dispose of assets
in wholesale rather than retail markets, (j) to disclaim disposition warranties,
(k) to purchase insurance or credit enhancements to insure the Secured Party
against risks of loss, collection or disposition of Collateral or to provide to
the Secured Party a guaranteed return from the collection or disposition of
Collateral, or (l) to the extent deemed appropriate by the Secured Party, to
obtain the services of other brokers, investment bankers, consultants and other
professionals to assist the Secured Party in the collection or disposition of
any of the Collateral. The Debtor acknowledges that the purpose of this Section
7 is to provide non-exhaustive indications of what actions or omissions by the
Secured Party would fulfill the Secured Party's duties under the UCC or other
applicable law in the Secured Party's exercise of remedies against the
Collateral and that other actions or omissions by the Secured Party shall not be
deemed to fail to fulfill such duties solely on account of not being indicated
in this Section 7. Without limitation upon the foregoing, nothing contained in
this Section 7 shall be construed to grant any rights to the Debtor or to impose
any duties on the Secured Party that would not have been granted or imposed by
this Security Agreement or by applicable law in the absence of this Section 7.
8. Suretyship Waivers by Debtor. The Debtor waives demand, notice, protest,
notice of acceptance of this Security Agreement, notice of loans made, credit
extended, Collateral received or delivered or other action taken in reliance
hereon, notice of acceleration, notice of intent to accelerate, and all other
demands and notices of any description. With respect to both the Loan
Obligations and the Collateral, the Debtor assents to any extension or
postponement of the time of payment or any other indulgence, to any
substitution, exchange or release of or failure to perfect any security interest
in any Collateral, to the addition or release of any party or person primarily
or secondarily liable, to the acceptance of partial payment thereon and the
settlement, compromising or adjusting of any thereof, all in such manner and at
such time or times as the Secured Party may deem advisable. The Secured Party
shall have no duty as to the collection or protection of the Collateral or any
income therefrom, the preservation of rights against prior parties, or the
preservation of any rights pertaining thereto beyond the safe custody of such
Collateral. The Debtor further waives any and all other suretyship defenses.
9. Marshalling. The Secured Party shall not be required to marshal any
present or future collateral security (including but not limited to the
Collateral) for, or other assurances of payment of, the Loan Obligations or any
of them or to resort to such collateral security or other assurances of payment
in any particular order, and all of its rights and remedies hereunder and in
respect of such collateral security and other assurances of payment shall be
cumulative and in addition to all other rights and remedies, however existing or
arising. To the extent that it lawfully may, the Debtor hereby agrees that it
will not invoke any law relating to the marshalling of Collateral which might
cause delay in or impede the enforcement of the Secured Party's or the Banks'
rights and remedies under this Security Agreement or under any other instrument
creating or evidencing any of the Loan Obligations or under which any of the
Loan Obligations is outstanding or by which any of the Loan Obligations is
secured or payment thereof is
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otherwise assured, and, to the extent that it lawfully may, the Debtor hereby
irrevocably waives the benefits of all such laws.
10. Miscellaneous. Each Bank agrees that all rights and remedies hereunder
shall be exercised by the Agent, or any successor Agent, for the benefit of the
Banks in accordance with the terms of this Security Agreement. A carbon,
photographic, or other reproduction of this Security Agreement is sufficient as
a financing statement. This Security Agreement cannot be waived, modified,
amended, abridged, supplemented, terminated, or discharged, and the Security
Interest cannot be released or terminated, except by a writing duly executed by
the Secured Party and Debtor. A waiver shall be effective only in the specific
instance and for the specific purpose given. No delay or failure to act shall
preclude the exercise or enforcement of any of the Secured Party's or Banks'
rights or remedies. All rights and remedies of the Secured Party and the Banks
shall be cumulative and may be exercised singularly, concurrently, or
successively at the Secured Party's option, and the exercise or enforcement of
any one such right or remedy shall not be a condition to or bar the exercise or
enforcement of any other. This Security Agreement shall be binding upon and
inure to the benefit of the heirs, legatees, executors, administrators,
successors and assigns of Secured Party and the Banks and shall bind all persons
and parties who become bound as a debtor to this Security Agreement. If any
provision or application of this Security Agreement is held unlawful or
unenforceable in any respect, such illegality or unenforceability shall not
affect other provisions or applications which can be given effect, and this
Security Agreement shall be construed as if the unlawful or unenforceable
provision or application had never been contained herein or prescribed hereby.
All representations and warranties contained in this Security Agreement shall
survive the execution, delivery, and performance of this Security Agreement and
the creation, payment, and performance of the Loan Obligations. This Security
Agreement shall be governed by and construed in accordance with the laws of the
State of Minnesota.
11. Severability. The unenforceability or invalidity of any provision or
provisions hereof shall not render any other provision or provisions herein
contained unenforceable or invalid.
THE DEBTOR REPRESENTS, CERTIFIES, WARRANTS, AND AGREES THAT THE DEBTOR HAS READ
ALL OF THIS SECURITY AGREEMENT AND UNDERSTANDS ALL OF THE PROVISIONS OF THIS
SECURITY AGREEMENT.
[SIGNATURE PAGE FOLLOWS]
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SIGNATURE PAGE TO
SECURITY AGREEMENT
BY
SOUTHWEST IOWA RENEWABLE ENERGY, LLC
DATED: May 2, 0000
XXXXXXXXX XXXX RENEWABLE ENERGY, LLC, an
Iowa limited liability company
By /s/ Xxxx Xxxxx
--------------------------------------
Xxxx Xxxxx
Its: General Manager
By /s/ Xxxxx Xxxx
--------------------------------------
Xxxxx Xxxx
Its: Board Chairman
Address:
Southwest Iowa Renewable Energy, LLC
00000 000xx Xxxxxx
Xxxxxxx Xxxxxx, XX 00000
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