Maximum
Amount Guarantee Contract

     

    Mortgagor
: Caopu Arts & Crafts Co., Ltd.

    No. of
Business License: Qi He Lu He Zong Fu An No. 000074

    Legal
Representative/Principal: Li Jinliang

    Domicile:
2888 Qinghe Rd., Qinghe Office, Cao County, Shandong

    Post
Code: 274400

    Banker
and Account No.: Bank of China Limited, Cao County Branch
08055022418091001

    Tel:
0530-3432456   Fax: 0530-3431221

    


    Mortgagee:Bank of China Limited,
Cao County Branch

    Legal
Representative/Principal: Tian Wenjian

    Domicile:
1668 E. Section, Gongye Rd., Cao County

    Post
Code: 274400

    Tel:
0530-3211721   Fax: 0530-3212488

     

    In order
to fulfill the obligations as prescribed in master contracts mentioned in
Article 1 hereof, the mortgagor shall take voluntarily its property with the
legal disposition of property shown in the attached List of Mortgaged Property
as the mortgagee's claim to establish a mortgage. Both parties enter into this
contract upon an equal footing. Unless otherwise stipulated hereof, the
interpretation of terms hereof is pursuant to the master contracts.

     

    Article
1  Master Contracts

    The
master contracts of this contract cover:

    Contracts
in regard to loan, acceptance bill, trade financing, letter of indemnity,
capital business and other credit business (generally called as single contract)
and their amendments or supplements concluded between the mortgagee and the
debtor, Caopu Arts & Crafts Co., Ltd. from Dec. 20, 2006 to May 14, 2009,
including master contracts that are agreed to put under this
contract.

     

    Article
2  Principal Claim and the Time Limit

    The
financial claims factually occurred during the following period, unless
otherwise established or stipulated, under master contracts may become principal
claims of this contract:


    
      
         


      

      
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13 页

        
          

        

      

      
         


      

    


    from
December 20, 2006 to May 14, 2009, as prescribed in Article 1
hereof.

     

    Article
3  Secured Maximum Amount of Claim

    
      	
              1.

            	
              The
      principal balance of the secured claims hereof
  is:

            


    

    Type of
Currency: RMB

    Amount
(in word): Nineteen Million Seventy Thousand

    (in
figure): 19700000.00.

     

    
      	
              2.

            	
              Where
      the principal claims as stipulated in Article 2 hereof comes to the
      maturity, the principal claims are identified as secured hereof, and the
      principal and accrued interest (including statutory interest, conventional
      interest, compound interest, penalty interest), liquidated damage,
      damages, expenses for enforcing claims (including but not limited to legal
      costs, lawyer's fees, notary fees, execution costs), losses aroused by the
      mortgagor’s breach to the mortgagee and all other payables generated based
      on principal claims also belong to secured claims and their detailed
      amounts may be assessed when
liquidated.

            


    

    The total
amounts of above-mentioned two types of claims are set as the maximum amount of
claim.

     

    Article
4  Mortgaged Property

    The
mortgaged property is subject to the attached List of Mortgaged
Property.

    Where the
mortgaged property is impaired, lost or damaged during the period of mortgage,
the mortgagee is entitled to enjoy the priority of having its claim satisfied
with insurance money, indemnity or compensatory payment. Where the secured claim
is not at maturity, the mortgagee may also draw insurance money, indemnity or
compensatory payment.

     

    Article
5  Mortgage Registration

    Where
mortgage registration is required by law, the mortgagor and the mortgagee shall,
within ten days following this contract is entered into, register the changes
with the relevant registration authority within five days from the date on which
the particulars are changed.


    
      
         


      

      
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    Article
6  Possession and Custody of Mortgaged Property

    The
mortgaged property hereof shall be in the possession and custody of the
mortgagor, while the document of title shall be put entirely under the custody
of the mortgagee. The mortgagor may agree to accept and positively coordinate
with the inspection of the mortgaged property at any time carried out by the
mortgagor and the designated institutions and individuals.

    The
mortgagor shall have the obligation to maintain, keep and preserve the mortgaged
property in good condition, and take effective measures to protect the mortgaged
property safe and intact. In case the mortgaged property is in need of repair or
maintenance, the mortgagor shall do it timely and bear corresponding
expenses.

    Without
the consent in written form of the mortgagee, the mortgagor shall not transfer,
lease, lend, contribute in kind, transform, reconstruct, or in any other way
dispose of the mortgaged property in part or as a whole; upon the written
consent of the mortgagor, the proceeds from disposition of mortgaged property
shall be used in discharge of debt or it shall be deposited with a third party
designated by the mortgagee.

     

    Article
7  Disposition of Loss in the Value of Mortgaged Property

    Prior to
the complete satisfaction of the principal claim hereof, where the mortgagor's
acts are likely to cause the value of the mortgaged property to decline, the
mortgagee shall be entitled to demand that the mortgagor cease and deist from
such acts. Where the value of the mortgaged property has declined, the mortgagee
shall be entitled to demand that the mortgagor restore the original value of the
mortgaged property or provide security corresponding to the amount of the lost
value or security that is agreed by the mortgagee.

    In case
of loss, destruction or decline in the value of mortgaged property caused by
natural disasters, accidents, torts, and other reasons, the mortgagor shall take
immediate measures to prevent losses from expanding further, and immediately
notify the mortgagee in writing.

     

    Article
8  Fruits

    If the
mortgaged property is seized by a People's Court because of the mortgagor’s
failure to pay his due debts or occurrence of enforcement of the right to
mortgage in other means as stipulated hereof, the mortgagee shall, from the date
of seizure, be entitled to collect the natural fruits or legal fruits generated
from the mortgaged property, except that the mortgagee fails to notify the
person who has the obligation to pay legal fruits.


    
      
         


      

      
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    The
fruits provided for in the preceding paragraph shall be first used to offset the
expenses for collecting the fruits.

     

    Article
9  Suretyship Liability

    Where the
mortgagor fails to perform discharge to the mortgagee on any normal or earlier
repayment date specified hereof, the mortgagee shall have the right to enforce
the mortgage right in accordance with law or this contractual agreement,
enjoying the priority of satisfying the claim in maximum amount as prescribed in
Article 3 of hereof.

    The
normal payment date in the preceding paragraph refers to the date, as stipulated
in master contracts, for repayment of principal, of interest, or of any sum that
the mortgagor shall repay to the mortgagee pursuant to this contract. Earlier
repayment date provided in the preceding paragraph means the date for repayment
in advance that is put forward by the mortgagor and accepted by the mortgagee,
and that the mortgagor is demanded by the mortgagee pursuant to contracts to
repay the debt principal and/or other any sum.

     

    Article
10  Mode and Duration of Enforcement of Mortgage

    Where the
suretyship liability becomes effective, the mortgagee is entitled to the
enforcement of mortgage right of the mortgaged property, as a whole, partial,
multiple or single sum, that is at the maturity of the obligation in accordance
with laws and regulations in regard to general mortgage.

    Concerning
each main claim, the mortgagee shall exercise the mortgage right during the
prescription; where such claim is to be liquidated in installments, the
mortgagee shall enforce the mortgage right prior to the prescription starting
from the last claim.


    
      
         


      

      
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    Article
11  Enforcement of Mortgage Right

    Where the
suretyship liability becomes effective, the mortgagee may, through agreement
with the mortgagor, enjoy the priority of satisfying the main claim with
proceeds from the conversion of the mortgaged property or from the auction or
sale of the mortgaged property. If they fail to reach an agreement, the
mortgagee may bring a lawsuit in a People's Court, claiming an auction or sale
of the mortgaged property. The proceeds from disposition of the mortgaged
property shall be used for liquidation of the main claim after paying, in
advance, disposition cost of mortgaged property and expenses that the mortgagor
shall pay or repay the mortgagor.

    Where the
main claim co-exists security or guaranty of other objects in addition to this
contract, any of mortgagee’s right prescribed hereof or the enforcement shall
not be affected and the mortgagor shall not defense the mortgagee as
such.

     

    Article
12  Relationship Between This Contract and Master
Contracts

    Where
Credit Line Agreement/General Agreement of Credit Business is included in master
contracts, extension of use period of credit line/business cooperation period
shall receive written consent of the mortgagor. If without consent or with
refusal of the mortgagor, the mortgagor may only assume security responsibility
for the main claim within secured maximum amount to the mortgaged property
occurred during original use period of credit line/business cooperation period
pursuant to Article 3 hereof.

    There is
no need to get consent of the mortgagor in alterations to other contents or
matters, and to single agreement under such in Credit Line Agreement/General
Agreement of Credit Business, or to single master contract. The mortgagor shall
still assume secured liability for the mortgaged property pursuant to Article 3
hereof.

    Upon
consensus between the mortgagor and the mortgagee, change to the maximum amount
of secured claims as prescribed in Article 3 hereof may be made in written
form.

    Where
other mortgagee(s) of the mortgaged property indicated hereof exist(s), if
without written consent from it/them, above change shall not exert any adverse
effect on it/them.

    The
mortgagee may not get consent of the mortgagor if the mortgagee would like to
entrust to enforce whole or partial rights and obligations under master
contracts to Bank of China Limited’s institution or transfer claims of master
contracts to a third party. The secured liabilities shall not be reduced or
exempted from such. The mortgagor shall assist the mortgagee and its third party
to go through necessary legal procedures for mortgage change or
registration.


    
      
         


      

      
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    Article
13  Declaration and Commitment

    Declaration
and commitment are made by the mortgagor as follows:

    
      	
              1.

            	
              The
      mortgagor has been legally registered and exists and has full capacity for
      civil rights and for civil conduct required for entering into and perform
      this contract, and enjoy lawful ownership or disposition of the mortgaged
      property.

            


    

    
      	
              2.

            	
              The
      mortgagor guarantees no other joint owner for this mortgaged property
      exists, or there are still other co-owner(s) who has/have already issued
      written permission. The mortgagor has made a commitment to have the
      mortgagee keep this written permission prior to concluding this
      contract.

            


    

    
      	
              3.

            	
              The
      mortgagor fully understands the contents of the master contracts, and
      conclusion and enforcement of this contract are based on the true
      intention of the mortgagor, and the mortgagor has acquired legal and
      effective authorization as per requirements prescribed in its Articles of
      Association or other internal management
  documentation.

            


    

    Where the
mortgagor is a third party and enterprise, the mortgagor has adopted the
resolution of providing this guarantee by the board of directors or board of
shareholders, shareholder assembly in compliance with in the Articles of
Association; where the limitation of total amount of surety and amount of each
single surety are set, the secured amount under this contract does not exceed
the prescribed limitation.

    Conclusion
and enforcement of this contract may not violate any contract, agreement or
other legal documentation that has the binding force to the mortgagor. The
mortgagor has acquired or is to acquire every related approval, permit, filing
or registration for setting of this mortgage.

    
      	
              4.

            	
              All
      documentation and information provided by the mortgagor are accurate,
      authentic, complete and valid.

            


    

    
      	
              5.

            	
              The
      mortgagor has not concealed any security interest concerning the mortgaged
      property by the date when this contract is
  concluded.

            


    

    
      	
              6.

            	
              The
      mortgagor shall inform of the mortgagee in time, where the mortgaged
      property is set a new security interest, the mortgaged property is
      sequestrated or involved in severe lawsuit or arbitration
      case.

            


    

    
      	
              7.

            	
              Where
      the mortgaged property is under construction, the mortgagor shall make a
      commitment that no third party enjoys the priority right to be repaid;
      where the third party enjoying the priority right to be repaid does exist,
      the mortgagor shall promise to have the third party issue an announcement
      in written form stating to abdicate the priority right to be repaid, and
      to have the written announcement under the custody of the
      mortgagee.

            


    


    
      
         


      

      
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    Article
14  Contractual Negligence

     

    In case
the mortgagor refuses to go through or delay mortgage registration, or this
contract could not take effect and mortgage right could not become effective due
to the mortgagor’s other causes following this contract is concluded, the
contractual negligence is thus constituted. The mortgagor shall be liable for
any losses thereof caused to the mortgagee.

     

    Article
15  Exposure of Mortgagor’s Affiliated Enterprises and Related
Trading

    Both
parties agrees that the mortgagor does not belong to the group-type customer
according as Guidelines for the Risk Management by Commercial Banks for Granting
Credit to Customer Groups (shortened as the Guideline).

     

    Article
16  Default Incident and Disposition

    Any of
the following shall constitute or be deemed as the mortgagor’s breach of
agreement hereof:

    
      	
              1.

            	
              The
      mortgagor breaks the contract to transfer, lease, lend, contribute in
      kind, transform, reconstruct, or in any other way dispose of, without
      authorization, the mortgaged property in part or as a
    whole.

            


    

    
      	
              2.

            	
              The
      mortgagor impede the mortgagee to dispose of, in accordance with law
      and/or this contract, the mortgaged
property;

            


    

    
      	
              3.

            	
              Where
      the value of the mortgaged property is reduced as stated in Article 7
      hereof, the mortgagor does not recover the value of the mortgaged property
      nor provide guarantee as demanded.

            


    

    
      	
              4.

            	
              The
      mortgagor makes his statement inauthentic or acts against commitment
      hereof.

            


    

    
      	
              5.

            	
              The
      mortgagor breaks other promises in regard to rights and obligations of
      related parties hereof.

            


    

    
      	
              6.

            	
              The
      mortgagor terminates business operation or involves such occurrences as
      dissolution, revocation or bankruptcy
happens.

            


    

    
      	
              7.

            	
              The
      mortgagor is involved in default with the mortgagee or other institution
      of Bank of China Limited.

            


    


    
      
         


      

      
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    Where
defaults as mentioned in the preceding paragraph occur, the mortgagee is
entitled to take, either separately or simultaneously, the following measures
depending on actual situations:

    
      	
              1.

            	
              Demanding
      the mortgagor to rectify its default within a specified time
      limit.

            


    

    
      	
              2.

            	
              Reducing,
      suspending or terminating the credit line to the mortgagor on entire or
      partial basis;

            


    

    
      	
              3.

            	
              Suspending
      or terminating the mortgagor’s applications in hand for services under
      other contracts on entire or partial basis; suspending or terminating
      trade financing service on entire or partial basis for those have not been
      granted or have not applied for;

            


    

    
      	
              4.

            	
              Announcing
      the mortgagor’s outstanding loan/principal and other payables of trade
      financing under other contracts as a whole or in part fall due
      immediately;

            


    

    
      	
              5.

            	
              Demanding
      the mortgagor compensate for losses caused by its default to the
      mortgagee;

            


    

    
      	
              6.

            	
              Enforcing
      the mortgage right;

            


    

    
      	
              7.

            	
              Other
      measures that the mortgagee believe
necessary;

            


    

     

    Article
17  Reservation of Right

    Although
one party fails to exercise partial or entire rights hereof, or to demand the
other party to perform and bear partial duties and responsibilities, it does not
mean this party may renounce the claim or release from the duties and
responsibilities.

    One
party’s any tolerance, extension, or delay of exercising rights hereof against
the other party may not affect any right in accordance with this contract, laws,
rules and regulations, nor be deemed as renouncement of the right.

     

    Article
18  Alteration, Amendment and Termination

    Upon
agreement reached by both parties, any alteration or amendment in written form
shall be permitted, and any alteration or amendment shall compose an integral
part of this contract.

    Unless
otherwise specified by law or regulation or otherwise stipulated by parties
concerned, this contract shall not be terminated until obligations hereof have
been completely enforced.


    
      
         


      

      
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    Unless
otherwise specified by law or regulation or otherwise stipulated by parties
concerned, The invalidity of any clause under this contract shall not affect the
legal effect of any other clause.

     

    Article
19  Legal Applicability and Dispute Settlement

    This
contract is applicable to any law of People's Republic of China.

    Any
controversy or dispute aroused from enforcing this contract may be settled
through negotiations. In case any negotiation fails, both sides shall reach an
agreement to adopt the same solution as stipulated in master
contracts.

    Where the
dispute that is now being solved does not affect the enforcement of other
clauses hereof, other clauses shall continue to be exercised.

     

    Article
20  Expenditure

    Unless
otherwise established or stipulated by parties concerned, the expenses generated
from conclusion, enforcement of this contract and dispute settlement (including
legal fees) shall be borne by the mortgagor.

     

    Article
21  Appendix

    The
following appendix or other appendices acknowledged by both parties constitute
an integral part of this contract and have the same force of law as this
contract.

    
      	
              1.

            	
              List
      of Mortgaged Property

            


    

     

    Article
22  Other Stipulation

    
      	
              1.

            	
              Unless
      with the written consent of the mortgagee, the mortgagor shall not
      transfer any right or obligation hereof to a third
  party.

            


    

    
      	
              2.

            	
              Where
      the mortgagee, due to business needs, has to entrust other institution of
      Bank of China Limited to enforce rights and obligations hereof, the
      mortgagor may acknowledge such act and the authorized institution of Bank
      of China Limited shall be entitled to execute all rights
      hereof.

            


    

    
      	
              3.

            	
              On
      the condition of not affecting other stipulation hereof, this contract
      shall be legally binding to both sides, respective heirs and grantees
      generated according to the law.

            


    

    
      	
              4.

            	
              Unless
      otherwise stipulated, both parties may take the domiciles mentioned hereof
      for mailing and contact and shall inform of the other party in written
      form where the changes to mailing and contact addresses
      happen.

            


    


    
      
         


      

      
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              5.

            	
              The
      headlines and names of services indicated hereof are only for convenient
      use and may not be used as explanation of clauses or obligations of
      parties concerned.

            


    

     

    Article
23  Effectiveness and Establishment of Mortgage Right

    This
contract takes effect as of the date on which legal representatives,
persons-in-charge or their authorized signatories autographed and the official
seals affixed. Where mortgage registration is required according to law, it
shall come into force until registration formalities have been
undergone.

     

    The
mortgage right is set once this contract becomes effective.

     

    This
contract has three original copies that are respectively under the custody of
both parties and the registration authority and have the same legal
effect.

     

    Mortgagor:
                                                     Mortgagee:
Bank of China Limited

     

    Authorized
Signer: _______________     Authorized
Signer:

     

     May 15, 2008
                                                 May 15,
2008


    
      
         


      

      
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                List
      of Mortgaged Property

              
	
                Number:
      2008 Ya Dai Zi
      003

              
	 
      	 
      	 
      	 
      	 
      	
                Page
      1 of 2

              
	
                Mortgaged
      Property

              	
                Area

              	
                Valuation

              	
                Ownership/

                Use
      Right

                (No.
      of

                Document
      of

                Title)

              	
                Location

              	
                Registration
      Authority

              
	
                Housing

              	
                3209.33 sq.m.

              	
                2459648

              	
                Cao Fang Quan Zheng Pu Lian Ji Zi
      2500025870

              	
                E. of QingheRd., Cao County

              	
                Cao County  Real Estate
      Administration

              
	
                Housing

              	
                9292.92 sq.m.

              	
                9343871

              	
                Cao Fang Quan Zheng Pu Lian Ji Zi
      2500023301

              	
                Huadian Village, Nanlong, Zhongkou, Pulianji Town,
      Cao County

              	
                Cao County  Real Estate
      Administration

              
	
                Housing

              	
                2339.1 sq.m.

              	
                2917143

              	
                Cao Fang Quan Zheng Pu Lian Ji Zi
      2500023113

              	
                S. of Xizhongkou Village, Heshang Rd., Cao
      County

              	
                Cao County  Real Estate
      Administration

              
	
                Housing

              	
                1511.73 sq.m.

              	
                1318380

              	
                Cao Fang Quan Zheng Pu Lian Ji Zi
      2500025871

              	
                W. of Qinghe Rd., Cao
County

              	
                Cao County  Real Estate
      Administration

              
	
                Housing

              	
                16222.2 sq.m.

              	
                15191289

              	
                Cao Fang Quan Zheng Pu Lian Ji Zi
      2500023114

              	
                Zhongkou Village, E. of Heshang Rd., Pulianji
      Town, Cao County

              	
                Cao County  Real Estate
      Administration

              
	
                Housing

              	
                4238.79 sq.m.

              	
                2383968

              	
                Cao Fang Quan Zheng Pu Lian Ji Zi
      2500023115

              	
                Zhongkou Village, E. of Heshang Rd., Pulianji
      Town, Cao County

              	
                Cao County  Real Estate
      Administration

              


      

    


    
      
         


      

      
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                      Structure

                    	
                      4004.33 sq.m.

                    	
                      2288910

                    	 
      	
                      Zhongkou Village, E. of Heshang Rd., Pulianji
      Town, Cao County

                    	
                      Cao County  Real Estate
      Administration

                    
	
                      Annex

                    	 
      	
                      991671

                    	 
      	
                      Zhongkou Village, E. of Heshang Rd., Pulianji
      Town, Cao County

                    	
                      Cao County  Real Estate
      Administration

                    
	
                      Housing

                    	
                      11973.42 sq.m.

                    	
                      8888698

                    	
                      Cao Fang Quan Zheng Pu Lian Ji Zi
      0000002102

                    	
                      N. of Caoyu Rd. Cao County (1km away from E. of
      Zhongkou)

                    	
                      Cao County  Real Estate
      Administration

                    
	
                      Housing

                    	
                      1200.53 sq.m.

                    	
                      635080

                    	
                      Cao Fang Quan Zheng Pu Lian Ji Zi
      0000002103

                    	
                      N. of Caoyu Rd. Cao County (1km away from E. of
      Zhongkou)

                    	
                      Cao County  Real Estate
      Administration

                    
	
                      Housing

                    	
                      1609.86 sq.m.

                    	
                      609405

                    	
                      Cao Fang Quan Zheng Pu Lian Ji Zi
      0000002116

                    	
                      N. of Caoyu Rd. Cao County (1km away from E. of
      Zhongkou)

                    	
                      Cao County  Real Estate
      Administration

                    
	
                      Structure

                    	
                      1453 sq.m.

                    	
                      868137

                    	 
      	
                      N. of Caoyu Rd. Cao County (1km away from E. of
      Zhongkou)

                    	
                      Cao County  Real Estate
      Administration

                    
	
                      Annex

                    	 
      	
                      1411114

                    	 
      	
                      N. of Caoyu Rd. Cao County (1km away from E. of
      Zhongkou)

                    	
                      Cao County  Real Estate
      Administration

                    


            

          

        

      

    


    
      
         


      

      
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              Page
      2 of 2

            
	
              Mortgaged
      Property

            	
              Area

            	
              Valuation

            	
              Ownership/

              Use
      Right

              (No.
      of

              Document
      of

              Title)

            	
              Location

            	
              Registration
      Authority

            
	
              Land

            	
              68329.32 sq.m.

            	
               

            	
              Cao Guo Yong 2006 No. 0176

            	
              Zhongkou Village, Pulianji
    Town

            	
              Cao County Bureau of Land and
      Resources

            
	
              Land

            	
              41752.46 sq.m.

            	
               

            	
              Cao Guo Yong 2003 No. 080

            	
              Zhongkou Village, Pulianji
    Town

            	
              Cao County Bureau of Land and
      Resources

            
	
              Land

            	
              98435.32 sq.m.

            	
               

            	
              Cao Guo Yong 2006 No. 189

            	
              Zhongkou Village, Pulianji
    Town

            	
              Cao County Bureau of Land and
      Resources

            
	
              Land

            	
              13150 sq.m.

            	
               

            	
              Cao Guo Yong 2001 No. 0106

            	
              Zhongkou Village, Pulianji
    Town

            	
              Cao County Bureau of Land and
      Resources

            
	
              Land

            	
              39637.04 sq.m.

            	
               

            	
              Cao Guo Yong 2001 No. 0105

            	
              Zhongkou Village, Pulianji
    Town

            	
              Cao County Bureau of Land and
      Resources

            


    


    
      
         


      

      
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