Document:

exv10w1

 

Exhibit 10.1

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

     THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “Agreement”) is entered into to be
effective as of March 21, 2007, (the “Effective Date”), between PEERLESS MFG. CO. (“Employer”), and
PETER J. BURLAGE (“Employee”). This Agreement amends and restates that certain Employment
Agreement by and between the Employers and the Employee dated October 31, 2005. The Agreement
supersedes and replaces that October 31, 2005 Employment Agreement.

Section 1. Employment.

     1.1 Employment and Term. Subject to the terms and conditions of this Agreement,
Employer agrees to employ Employee as the Chief Executive Officer of the Employer pursuant to this
Agreement for a term beginning on the Effective Date and ending on the February 28, 2009, (the
“Term”) unless Employee’s employment is terminated earlier as provided in Section 4 below.
The Term will be automatically extended for an additional one year period unless either Party gives
notice to the other of its intent not to extend the Term no later than 30 days prior to October 31,
2008. Notwithstanding the foregoing, in no event will the term of Employee’s employment hereunder
be less than 90 days from the Effective Date. Sections 2, 3, and 5 of this
Agreement shall survive any termination of Employee’s employment with Employer.

     1.2 Duties. At all times during the course of Employee’s employment with Employer,
Employee agrees to perform the duties associated with his position diligently and to devote all of
his business time, attention and efforts to the business of Employer. Employee agrees to comply
with the policies, procedures and guidelines established by Employer from time to time. Employee
agrees to perform his duties faithfully and loyally and to the best of his abilities, and shall use
his best efforts to promote the business of Employer. Employee understands and agrees that both
the business and personal standards and ethics of Employer’s employees must at all times be above
reproach. Employee agrees to act at all times so as to reflect this high standard. Employee
further agrees to abide by all rules, policies, or procedures established by Employer from time to
time. Subject to the approval of the Board of Directors, which shall not be unreasonably withheld,
Employee may serve on boards of directors or similar management bodies of other businesses or
entities provided that such service does not violate the provisions of Section 3 and 4 below and
does not materially affect Employee’s time and attention to his duties under this Agreement.

     1.3 Compensation.. During Employee’s employment, Employer will pay Employee a base
annualized salary of Two Hundred Seventy Five Thousand Dollars ($275,000.00) (“Base Salary”), less
all applicable withholding as required by law and/or voluntarily elected by Employee, to be paid in
installments in accordance with Employer’s standard payroll practice and schedule. The Board of
Directors may adjust the Employee’s annualized salary from time to time at its sole discretion, but
Employee’s annualized salary shall never be reduced below
$275,000.00 without his consent. Employer will provide Employee with Employee benefits
generally made available by Employer to other similarly situated employees, as per company policy.
During Employee’s employment, Employer shall reimburse Employee for all reasonable and necessary
expenses incurred by Employee in furtherance in Employer’s business interests

 

 

upon appropriate
documentation of such expenditures in accordance with Employer’s general policy.

Section 2. Non-Competition.

     2.1 Non Competition.

     (a) In consideration of his employment under this Agreement and Employer’s agreement to
provide Employee with Confidential Information under Section 3 below, Employee agrees that
during the term of his employment and for a period of one (1) year following termination of
his employment (regardless of whether Employee is terminated without Cause (as defined in
Section 4.1(c) below), for Cause, voluntarily resigns or otherwise), neither
Employee nor any person or entity directly or indirectly controlling, controlled by or under
common control with Employee, shall directly or indirectly, on his own behalf or as an
employee or other agent of or an investor in another person:

     (i) engage in any business conducted by Employer during Employee’s term of
employment with Employer (collectively, the “Business”);

     (ii) influence or attempt to influence any customer or supplier of Employer or
any affiliate of Employer to purchase goods or services related to the Business from
any person other than Employer or such affiliate; or

     (iii) employ or attempt to employ any individuals who are then or have been
employees of Employer or any affiliate of Employer during the preceding 12 months,
or influence or seek to influence any such employees to leave Employer’s or such
affiliate’s employment.

     (b) Employee specifically acknowledges that Employer’s products are sold in a world
market and that Employee has been engaged with regard to Employer’s products and Employer’s
customers throughout the world without geographic limitation, and accordingly that the
restrictive covenant regarding competition contained in this Section 2.1 shall apply
without geographic limitation.

     (c) Employee acknowledges that his obligations under this Section 2.1 are a
material inducement and condition to Employer’s entering into this Agreement and a material
inducement and condition to Employee receiving or having access to Confidential Information
(as defined in Section 3.1). Employee acknowledges and agrees that the terms and
provisions of this Agreement (including the severance provisions of Section 4.1) and
Employee’s receipt and access to Confidential Information are sufficient consideration for
the restrictions set forth in this Section 2.1. Employee acknowledges and agrees
further that such restrictions are reasonable as to time, geographic area and scope of
activity and do not impose a greater restraint than is
necessary to protect the goodwill and other business interests of Employer, and
Employee agrees that Employer is justified in believing the foregoing.

     (d) If any provision of this Section 2.1 should be found by any court of
competent jurisdiction to be unenforceable by reason of its being too broad as to the

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period
of time, territory, and/or scope, then, and in that event, such provision shall nevertheless
remain valid and fully effective, but shall be considered to be amended so that the period
of time, territory, and/or scope set forth shall be changed to be the maximum period of
time, the largest territory, and/or the broadest scope, as the case may be, which would be
found enforceable by such court

     (e) Employee acknowledges that Employee’s violation or attempted violation of this
Section 2.1 will cause irreparable damage to Employer or its affiliates, and
Employee therefore agrees that Employer shall be entitled as a matter of right to an
injunction, out of any court of competent jurisdiction, restraining any violation or further
violation of such agreements by Employee or others acting on his behalf. Employer’s right
to injunctive relief will be cumulative and in addition to any other remedies provided by
law or equity.

     (f) Employee shall not be subject to the provisions of this Section 2 if Employer fails
to pay any uncontested amounts due to Employee under Section 4 and such failure is not cured
within thirty (30) days after written notice to Employer.

Section 3. Confidentiality; Nondisparagement; Conflict of Interest.

     3.1 Confidentiality.

     (a) In the course of his employment with Employer, Employer shall provide Employee with
access to commercially valuable, confidential or proprietary information of the
Employer(“Confidential Information”). Confidential Information means all information,
whether oral or written, previously or hereafter developed, acquired or used by Employer and
relating to the business of Employer that is not generally known to the public or others in
Employer’s area of business, including without limitation (i) any trade secrets, work
product, processes, analyses or know-how of Employer; (ii) Employer’s advertising, product
development, strategic and business plans and information, including customer and prospect
lists; (iii) the prices at which Employer has sold or offered to sell its products or
services; and (iv) Employer’s internal financial statements, budgets, cost information,
pricing information and other financial information.

     (b) Employee acknowledges and agrees that the Confidential Information is and shall be
the sole and exclusive property of Employer. Employee shall not use any Confidential
Information for his own benefit or disclose any Confidential Information to any third party
(except in the course of performing his authorized duties for Employer under this
Agreement), either during or subsequent to his employment with Employer.

     (c) Specifically, Employee agrees that, except as expressly authorized in writing by
Employer, or as may be required by law or court order, Employee shall (i) not
disclose Confidential Information to any third party, (ii) not copy Confidential
Information for any reason, and (iii) not remove Confidential Information from Employer’s
premises. Upon termination of his employment with Employer, Employee shall promptly deliver
to the Employer all Confidential Information, including documents, computer disks and other
computer storage devices and other papers and

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materials (including all copies thereof in
whatever form) containing or incorporating any Confidential Information or otherwise
relating in any way to the Employer’s business that are in his possession or under his
control.

     (d) Employee acknowledges that Employee’s violation or attempted violation of this
Section 3.1 will cause irreparable damage to Employer or its affiliates, and
Employee therefore agrees that Employer shall be entitled as a matter of right to an
injunction, out of any court of competent jurisdiction, restraining any violation or further
violation of such agreements by Employee or others acting on his behalf. Employer’s right
to injunctive relief will be cumulative and in addition to any other remedies provided by
law or equity.

     3.2. Covenant of Nondisparagement. In consideration of this Agreement, Employee
agrees and promises that, during the term of and at all times after the termination of this
Agreement (regardless of whether Employee is terminated without Cause, for Cause, voluntarily
resigns or otherwise), not to make any libelous, disparaging or otherwise injurious statements
about or concerning Employer or any of its affiliates, their officers, employees or
representatives. Such prohibited statements include any statement that is injurious to the
business or business reputation of any of Employer, its affiliates or their employees or
representatives, but does not include reasonable statements of disagreement that Employee makes for
the purpose of protecting or enforcing any of his rights or interests hereunder or defending
against any claim or claims of Employer, so long as such statements are not slanderous or libelous
and are delivered in terms as would ordinarily be considered customary and appropriate.

     3.3. Conflict of Interest. Employee agrees that during the term of this Agreement
without the prior approval of the Board of Directors of Employer, Employee shall not engage, either
directly or indirectly, in any activity which may involve a conflict of interest with Employer or
its affiliates (a “Conflict of Interest”), including ownership in any supplier, contractor,
subcontractor, customer or other entity with which Employer does business (other than as a
shareholder of less than one percent of a publicly traded class of securities) or accept any
material payment, service, loan, gift, trip, entertainment or other favor from a supplier,
contractor, subcontractor, customer or other entity with which Employer does business and that
Employee shall promptly inform the Board of Directors of Employer as to each offer received by
Employee to engage in any such activity. Employee further agrees to disclose to Employer any other
facts of which Employee becomes aware which might involve or give rise to a Conflict of Interest or
potential Conflict of Interest.

Section 4. Termination.

     4.1 Termination by Employer.

     (a) Employer may terminate Employee’s employment without Cause upon no less than 30
days prior notice of termination to Employee. In the event of any such termination without
Cause, on the effective date of such termination Employer shall pay Employee as severance
compensation, a lump sum payment in an amount equal to the difference of (i) 100% of
Employee’s then current base salary annualized less (ii) the amount of base salary paid to
Employee from the date of Employer’s notice of

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termination to the effective date of such
termination. In the event of any such termination without Cause, except as aforesaid,
Employer shall have no other obligations to pay any base salary, incentive compensation or
bonus or provide for any benefits to Employee after the effective date of such termination.
As used herein, “base salary” excludes any bonus or incentive compensation.

     (b) Employer may discharge Employee for Cause at any time without prior notice. In the
event of any such termination for Cause, Employer’s obligations to pay any base salary,
incentive compensation or bonus or provide for any benefits to Employee shall terminate
immediately upon the effective date of such termination.

     (c) As used herein, “Cause” shall mean any of the following:

     (i) the conviction of Employee by a court of competent jurisdiction of any
felony or crime involving moral turpitude;

     (ii) commission by Employee of an act of fraud or other act reflecting
unfavorably upon the public image of Employer as reasonably determined by Employer’s
Board of Directors;

     (iii) the failure by Employee to substantially perform his duties hereunder, or
the wrongdoing by Employee resulting in injury to Employer, in each case as
reasonably determined by Employer’s Board of Directors;

     (iv) the failure by Employee to follow a directive of the Board of Directors of
Employer; or

     (v) violation of any policies or procedures of Employer, including without
limitation, any human relations policy.

     4.2 Termination by Employee. Employee may resign from Employee’s employment hereunder
(whether for voluntary retirement or otherwise) upon no less than 30 days prior notice of
resignation to Employer, unless such prior notice is otherwise waived by Employer in its absolute
and sole discretion. The effective date of Employee’s resignation shall be as stated in Employee’s
notice of resignation or at the sole option of Employer, such earlier date as determined by
Employer in its sole discretion. If Employee voluntarily resigns from his employment with Employer
during the term hereof (whether for voluntary retirement or otherwise), Employer’s obligations to
pay any base salary, incentive compensation or bonus or provide for any benefits shall terminate
immediately upon the effective date of such resignation.
Upon retirement, Employee shall be entitled to all benefits (if any) provided by Employer in
the ordinary course to other executive officers of Employer at comparable retirement age.

     4.3 Termination on Death of Employee. This Agreement shall terminate automatically
upon the death of Employee and all rights of Employee, his heirs, executors and administrators to
salary, bonus, incentive compensation or benefits shall terminate immediately, except as otherwise
provided in Employer’s benefit plans in effect at such time.

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     4.4 Termination by Disability. Employer may terminate Employee’s employment
hereunder upon Employee becoming Disabled (as defined below). Upon such termination, Employer
shall pay Employee an amount equal to his then current monthly base salary for a period of six
months, which payment amounts will be reduced by any disability payments Employee receives during
such period from the disability insurance provided through Employer, if any. Employee shall be
entitled to all other disability benefits then in effect (if any) provided by Employer to all other
executive officers of Employer. In the event of termination due to Employee being Disabled, except
as aforesaid, Employer shall have no other obligation to pay any base salary, incentive
compensation or bonus or provide for any benefits to Employee after the effective date of
termination. For purposes of this Agreement, “Disabled” means any mental or physical impairment
lasting (or that will last) more than 180 consecutive or non-consecutive calendar days that
prevents Employee from performing the essential functions of his position with or without
reasonable accommodation as determined by a competent physician chosen by Employer and consented to
by Employee or his legal representatives, which consent will not be unreasonably withheld or
delayed. Employee agrees to submit to appropriate medical examinations and authorize his
physicians to release medical information necessary to determine whether Employee is Disabled for
purposes of this Agreement.

Section 5. Termination Following a Change in Control

     5.1 Definitions. For Purposes of this Section 5, the following definitions apply.

	 	(a)	 	Acquiring Person. An “Acquiring Person” shall mean any person that,
together with all Affiliates and Associates of such person, is the beneficial owner of
50.1% or more of the outstanding Common Stock. The term “Acquiring Person” shall not
include the Employer, any subsidiary of the Employer, any employee benefit plan of the
Employer (or trust with respect thereto) or subsidiary of the Employer, or any person
holding Common Stock of the Employer for or pursuant to the terms of any such plan.
	 
	 	(b)	 	Affiliate and Associate. “Affiliate” and “Associate” shall have the
respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)
in effect on the date of this Agreement.
	 
	 	(c)	 	Cause. For “Cause” shall have the meaning set forth in Section 4.1(c) above.
	 
	 	(d)	 	Change in Control. A “Change in Control” of the Employer shall have
occurred if at any time during the term of this Agreement any of the following events
shall occur:

	 	(i)	 	The Employer is merged, consolidated or reorganized into or
with another corporation or other legal person and as a result of such merger,
consolidation or reorganization less than 50.1% of the combined voting power to
elect Directors of the then outstanding securities of the remaining corporation
or legal person or its ultimate parent immediately after such transaction is
available to be received by all stockholders on a pro rata

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	 	 	 	basis and is actually received in respect of or exchange for voting
securities of the Employer pursuant to such transaction;

	 	(ii)	 	The Employer sells all or substantially all of its assets to
any other corporation or other legal person not controlled by or under common
control with the Employer;
	 
	 	(iii)	 	Any person or group (including any “person” as such term is
used in Section 13(d)(3) or Section 14(d)(2) of the Exchange Act has become the
beneficial owner (as the term “beneficial owner” is defined under Rule 13d-3 or
any successor rule or regulation promulgated under the Exchange Act) of
securities which when added to any securities already owned by such person
would represent in the aggregate 50% or more of the then outstanding securities
of the Employer which are entitled to vote to elect Directors;
	 
	 	(iv)	 	If at any time, the Continuing Directors then serving on the
Board cease for any reason to constitute at least a majority thereof;
	 
	 	(v)	 	Any occurrence that would be required to be reported in
response to Item 6(e) of Schedule 14A of Regulation 14A or any successor rule
or regulation promulgated under the Exchange Act; or
	 
	 	(vi)	 	Such other events that cause a change in control of the
Employer, as determined by the Board in its sole discretion;

	 	 	 	provided, however, a Change in Control of the Employer shall not be
deemed to have occurred as the result of any transaction having one or more of the
foregoing effects if such transaction is both (1) proposed by, and (2) includes a
significant equity participation of, executive officers of the Employer as
constituted immediately prior to the occurrence of such transaction or any Employer
employee stock ownership plan or pension plan.
	 
	 	(e)	 	Code. The “Code” shall mean the Internal Revenue Code of 1986, as
amended.
	 
	 	(f)	 	Continuing Director. A “Continuing Director” shall mean a Director of
the Employer who (i) is not an Acquiring Person, an Affiliate or Associate, a
representative of an Acquiring Person or nominated for election by an Acquiring Person,
and (ii) was either a member of the Board of Directors of the Employer on the date of
this Agreement or subsequently became a Director of the Employer and whose initial
election or initial nomination for election by the Employer’s stockholders was approved
by a majority of the Continuing Directors then on the Board of Directors of the
Employer.
	 
	 	(g)	 	Disabled. “Disabled” shall have the meaning defined in Section 4.4
above.
	 
	 	(h)	 	Severance Compensation. The “Severance Compensation” shall be:

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	 	(i)	 	A lump sum amount equal to 150% of an amount calculated by
adding the Employee’s then current annualized salary plus any bonus paid in the
fiscal year preceding the Termination Date ; and
	 
	 	(ii)	 	For a period of 12 months, provide Employee with benefits
substantially similar to those which Employee was entitled to receive
immediately prior to the date of termination under all of the Employer’s
“employee welfare benefit plans” within the meaning of Section 3(1) of The
Employee Retirement Income Security Act of 1974, as amended.

	 	(i)	 	Termination Date. The “Termination Date” shall be the effective date
upon which Employee or the Employer terminates the employment of Employee with the
Employer within one year following a Change in Control.

     5.2. Rights of Employee Upon Change in Control and Subsequent Termination.

	 	(a)	 	The Employer shall provide Employee, within ten days following the Termination
Date, Severance Compensation, but without affecting the rights of Employee or the
Employer at law or in equity, if, within one year following the occurrence of a Change
in Control, any of the following two events shall occur:

	 	(1)	 	the Employer terminates Employee’s employment during the
Employment Term except for any of the following reasons:

	 	(i)	 	Employee dies;
	 
	 	(ii)	 	Employee becomes Disabled; or
	 
	 	(iii)	 	The Employer terminates the Employee for
Cause; or

	 	(2)	 	Employee terminates his employment after such Change in Control
and the occurrence of at least one of the following events:

	 	(i)	 	an adverse change in the positions held by
Employee or an adverse change in the nature or scope of the
authorities, functions or duties attached to the positions with the
Employer that Employee had immediately prior to the Change in Control,
any reduction in Employee’s base salary (excluding bonus and incentive
compensation) during the Employment Term or any adverse change in the
calculation of the annual bonus or incentive compensation or a
significant reduction in scope or value of the aggregate other monetary
or nonmonetary benefits to which Employee was entitled from the
Employer immediately prior to the Change in Control, any of which is
not remedied within ten calendar days after receipt by the Employer of
written notice from Employee of such change, reduction, alteration or
termination, as the case may be;

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	 	(ii)	 	a determination by Employee made in good faith
that as a result of a Change in Control and a change in circumstances
thereafter significantly affecting his position, changes in the
composition or policies of the Board, or of other events of material
effect, he has been rendered substantially unable to carry out, or has
been substantially hindered in the performance of, the authorities,
functions or duties attached to his position immediately prior to the
Change in Control, which situation is not remedied within ten calendar
days after receipt by the Employer of written notice from Employee of
such determination;
	 
	 	(iii)	 	the relocation of the Employer’s principal
executive offices, or the requirement by the Employer that Employee
have as his principal location of work any location not within the
greater Dallas, Texas metropolitan area or that he travel away from his
office in the course of discharging his duties hereunder significantly
more (in terms of either consecutive days or aggregate days in any
calendar year) than required of him prior to the Change in Control; or
	 
	 	(iv)	 	the Employer commits any breach of this
Agreement, which is not cured within ten calendar days after receipt by
the Employer of written notice from Employee of such breach.

	 	(b)	 	Upon written notice given by Employee to the Employer prior to the receipt of
Severance Compensation, Employee, at his sole option, may elect to have all or any part
of any such amount paid to him, without interest, on an installment basis selected by
him.
	 
	 	(c)	 	The payment of Severance Compensation by the Employer to Employee shall not
affect any rights and benefits which Employee may have pursuant to any other agreement,
policy, plan, program or arrangement with the Employer prior to the Termination Date,
which rights shall be governed by the terms thereof, except that payments hereunder
after termination under this Section 5 shall reduce by an equal amount any sums payable
after termination of employment under Section 4.1(a) above, as may be amended, restated
or modified.
	 
	 	(d)	 	If any of the events set forth in Section 5.2(a)(1) or
5.2(a)(2) occurs prior to a Change in Control but following the commencement of
any discussion authorized by the Board with a third person that ultimately results in a
Change in Control involving that person or a different third party, such event shall be
deemed to be a termination or removal of Employee after a Change in Control for
purposes of this Agreement and shall entitle Employee to all benefits under this
Agreement.

     5.3 No Mitigation Required. In the event that this Agreement or the employment of
Employee hereunder is terminated, Employee shall not be obligated to mitigate his damages nor the
amount of any payment provided for in this Agreement by seeking other employment or

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otherwise, and the acceptance of employment elsewhere after termination shall in no way reduce
the amount of Severance Compensation payable under this Section 5.

Section 6. Miscellaneous.

     6.1 Section 409A. For purposes of Section 4 or 5, whether a “termination of
employment” has occurred shall be determined as set forth in Proposed Regulation §1.409A-3(h)(1) or
any successor regulations. Notwithstanding the foregoing provisions of this Section 4 or 5, in the
event as of the date of termination of employment, Executive is a “specified employee” as such term
is defined under Section 409A of the Internal Revenue Code of 1986 (the “Code”)(or any regulations
or proposed regulations promulgated thereunder) each payment that would have been due to be made to
employee during the first six (6) months after such termination shall be delayed to the extent
required and all such delayed payments shall be made in a single lump sum on the first business day
after the six —month anniversary of such termination unless an exception to such delay is
otherwise applicable under the Code or regulations thereunder.

     6.2 Notice. Except as set forth below in this Section 5.1, any notice under
this Agreement must be in writing and shall be deemed to have been given when delivered personally
or by overnight courier service or three days after being sent by mail, postage prepaid, at the
address indicated below or to such changed address as such person may subsequently give such notice
of:

     if to Employer:

Peerless Mfg. Co.

2819 Walnut Hill Lane

Dallas, Texas 75229

Attn: Chairman, Board of Directors

     if to Employee:

Peter J. Burlage

5704 Danmire Court

Plano, Texas 75093

With a copy to:

James T. Drakeley, Esq.

Hiersche, Hayward, Drakeley & Urbach, P.C.

15303 Dallas Parkway, Suite 700

Addison, Texas 75001

Notwithstanding the foregoing, the party receiving notice may waive any provisions of this
Section 6.2 in its sole and absolute discretion.

     6.3 Assignment. This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective heirs, personal representatives, successors, and assigns.
Except as otherwise provided herein, this Agreement may not be assigned by any party hereto

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without the prior written consent of the other party hereto. Employer shall require any
successor, and any corporation or other person which is in control of such successor, to all or
substantially all of the business and/or assets of Employer (by purchase, merger, consolidation or
otherwise), by agreement in form and substance reasonably satisfactory to Employee, to expressly
assume and agree to perform this Agreement in the same manner and to the same extent that Employer
would be required to perform it if no such succession had taken place. Failure of Employer to
obtain such agreement prior to the effectiveness of any such succession shall be a material breach
of this Agreement by Employer. As used in this Agreement, “Employer” shall mean Employer as herein
before defined and any successor to its business and/or all or part of its assets as aforesaid
which executes and delivers the assumption agreement provided for in this Section 6.3 or
which otherwise becomes bound by all the terms and provisions of this Agreement by operation of
law.

     6.4 Headings. The section headings used herein are for reference and convenience only
and shall not enter into the interpretation hereof.

     6.5 Counterparts. This Agreement may be executed in one or more counterparts for the
convenience of the parties hereto, all of which together shall constitute one and the same
instrument.

     6.6 Amendment and Waiver. The provisions of this Agreement may be amended or waived
only by written agreement of Employer and Employee, and no course of conduct, failure or delay in
enforcing the provisions of this Agreement shall effect the validity, binding effect or
enforceability of this Agreement.

     6.7 Severability. Any provision or portion of a provision of this Agreement that is
held to be invalid or unenforceable will be severable, and this Agreement will be construed and
enforced as if such provision, or portion thereof, did not comprise a part hereof, and the
remaining provisions or portions of provisions will remain in full force and effect. In lieu of
each invalid or unenforceable provision there will be added automatically as part of this Agreement
a provision as similar in terms to such invalid or unenforceable provision as may be possible and
be legal, valid, and enforceable.

     6.8 Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of Texas, without giving effect to any conflicts of law rule or
principle that might require the application of the laws of another jurisdiction.

     6.9 Expenses. Employer will reimburse Employee for reasonable legal fees and expenses
incurred by Employee in the preparation of and negotiation of this Agreement, subject to review and
approval by the Chair of the Employer’s Compensation Committee.

     6.10 Indemnification. Employee shall be subject to, and entitled to the benefit of,
the indemnification provisions contained in the Employer’s Articles of Incorporation and Bylaws, as
amended, to the same extent and degree as other similarly situated officers and/or directors of
Employer.

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     6.11 Disputes. The parties to this Agreement agree that in the event there is a
dispute or controversy between them that cannot be settled through direct discussions, it is in the
best interests of all for such dispute or controversy to be resolved in the shortest time and with
the lowest cost of resolution as practicable. Consequently, any such dispute, controversy or claim
between the parties to this Agreement will not be litigated, but instead will be resolved by
arbitration in accordance with Title 9 of the U.S. Code (United States Arbitration Act) and the
Commercial Arbitration Rules of the American Arbitration Association (the “Rules”), and judgment
upon the award rendered by the arbitrator may be entered in any court having jurisdiction thereof.
The arbitration will be before one neutral arbitrator and will proceed under the Expedited
Procedures of said Rules. The arbitration will be held in Dallas, Texas, or such other place as
may be selected by mutual agreement. The arbitrator will have the discretion to order a prehearing
exchange of information by the parties, and to set limits for both the scope and time period of
such exchange. All issues regarding exchange requests will be decided by the arbitrator. Neither
party nor the arbitrator may disclose the existence, content or results of any arbitration
hereunder, unless required to do so by court or regulatory order, without the prior written consent
of both parties. Administrative fees and expenses of the arbitration itself will be borne by the
parties equally unless otherwise required by law, a court of competent jurisdiction or the Rules;
provided, that, in no event will Employee be required to pay in excess of $1,000 of such fees and
expenses. The arbitrator will also be authorized to award to the prevailing party all or that
fraction of its reasonable costs and fees as is deemed equitable. Costs of a party’s
representation by counsel or preparation costs for hearing are not considered administrative fees
and expenses for purposes hereof. This provision will not apply to any claim for injunctive relief
sought by the Employer or any of its affiliates under Section 2 or 3 of this
Agreement.

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     6.12 Entire Agreement. This Agreement embodies the complete agreement between
Employer and Employee regarding the subject matter hereof and supersedes all prior agreements or
understandings, whether oral, written or otherwise, between the parties hereto that may have
related in any way to the subject matter hereof.

	 	 	 	 	 
	 	EMPLOYER:

PEERLESS MFG. CO.

 	 
	 	/s/ Sherrill Stone
 	 
	 	Sherrill Stone, 	 
	 	Chairman of the Board 	 
	 
	 	EMPLOYEE:

 	 
	 	/s/ Peter J. Burlage
 	 
	 	Peter J. Burlage 	 

Page 13 of 13exv4w1

 

EXHIBIT 4.1

NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE
SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED
FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF
COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY ACCEPTABLE FORM, THAT
REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A
UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A
BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.

TOREADOR RESOURCES CORPORATION

Warrant To Purchase Common Stock

Warrant No.: 033

Number of Shares: 163,052

March 23, 2007 (“Issuance Date”)

          Toreador Resources Corporation, a Delaware corporation (the “Company”), hereby certifies that,
for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged,
CAPITAL VENTURES INTERNATIONAL LP, the registered holder hereof or its permitted assigns (the
“Holder”), is entitled, subject to the terms set forth below, to purchase from the Company, at the
Exercise Price (as defined below) then in effect, upon surrender of this Warrant to Purchase Common
Stock (including any Warrants to Purchase Common Stock issued in exchange, transfer or replacement
hereof, the “Warrant”), at any time or times on or after the date hereof, but not after 11:59 p.m.,
New York time, on the Expiration Date (as defined below), One Hundred Sixty Three Thousand
Fifty-Two (163,052) fully paid nonassessable shares of Common Stock (as defined below) (the
“Warrant Shares”). To the extent any holder of SPA Warrants (as defined below) has not exercised
its SPA Warrants in full (such unexercised number of Warrant Shares, collectively, the “Remaining
Shares”) on or prior to 11:59 p.m., New York time, on the Expiration Date, the number of Warrant
Shares for which the SPA Warrants of each other holder of SPA Warrants who has exercised its SPA
Warrants in full on such date (the “Fully Exercised Holders”) shall be increased by such Fully
Exercised Holder’s pro rata portion of the Remaining Shares and the Expiration Date of the SPA
Warrants held by the Fully Exercised Holders shall be extended by five Trading Days (as defined in
the Securities Purchase Agreement). Except as otherwise defined herein, capitalized terms in this
Warrant shall have the meanings set forth in Section 12. This Warrant is one of the Warrants to
purchase Common Stock (the “SPA Warrants”) issued pursuant to Section 1 of that certain Securities
Purchase Agreement, dated as of March 21, 2007

 

 

(the “Subscription Date”), by and among the Company and the investors (the “Buyers”) referred
to therein (the “Securities Purchase Agreement”).

     1. EXERCISE OF WARRANT.

          (a) Mechanics of Exercise. Subject to the terms and conditions hereof, this Warrant
may be exercised by the Holder on any day on or after the date hereof, in whole or in part, by (i)
delivery of a written notice, in the form attached hereto as Exhibit A (the “Exercise
Notice”), of the Holder’s election to exercise this Warrant and (ii) payment to the Company of an
amount equal to the applicable Exercise Price multiplied by the number of Warrant Shares as to
which this Warrant is being exercised (the “Aggregate Exercise Price”) in cash or by wire transfer
of immediately available funds. The Holder shall not be required to deliver the original Warrant
in order to effect an exercise hereunder. Execution and delivery of the Exercise Notice with
respect to less than all of the Warrant Shares shall have the same effect as cancellation of the
original Warrant and issuance of a new Warrant evidencing the right to purchase the remaining
number of Warrant Shares. On or before the first (1st) Business Day following the date
on which the Company has received each of the Exercise Notice and the Aggregate Exercise Price (the
“Exercise Delivery Documents”), the Company shall transmit by facsimile an acknowledgment of
confirmation of receipt of the Exercise Delivery Documents to the Holder and the Company’s transfer
agent (the “Transfer Agent”). On or before the third (3rd) Business Day following the
date on which the Company has received all of the Exercise Delivery Documents (the “Share Delivery
Date”), the Company shall issue and dispatch by overnight courier to the address as specified in
the Exercise Notice, a certificate, registered in the Company’s share register in the name of the
Holder or its designee, for the number of shares of Common Stock to which the Holder is entitled
pursuant to such exercise. Upon delivery of the Exercise Notice and Aggregate Exercise Price
referred to in clause (ii) above, the Holder shall be deemed for all corporate purposes to have
become the holder of record of the Warrant Shares with respect to which this Warrant has been
exercised, irrespective of the date of delivery of the certificates evidencing such Warrant Shares.
If this Warrant is submitted in connection with any exercise pursuant to this Section 1(a) and the
number of Warrant Shares represented by this Warrant submitted for exercise is greater than the
number of Warrant Shares being acquired upon an exercise, then the Company shall as soon as
practicable and in no event later than three Business Days after any exercise and at its own
expense, issue a new Warrant (in accordance with Section 5(d)) representing the right to purchase
the number of Warrant Shares purchasable immediately prior to such exercise under this Warrant,
less the number of Warrant Shares with respect to which this Warrant is exercised. No fractional
shares of Common Stock are to be issued upon the exercise of this Warrant, but rather the number of
shares of Common Stock to be issued shall be rounded up to the nearest whole number. The Company
shall pay any and all taxes which may be payable with respect to the issuance and delivery of
Warrant Shares upon exercise of this Warrant.

          (b) Exercise Price. For purposes of this Warrant, “Exercise Price” means $16.60,
subject to adjustment as provided herein.

          (c) Disputes. In the case of a dispute as to the determination of the Exercise Price
or the arithmetic calculation of the Warrant Shares, the Company shall promptly

- 2 -

 

issue to the Holder the number of Warrant Shares that are not disputed and resolve such
dispute in accordance with Section 9(p) of the Securities Purchase Agreement.

     2. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES. The Exercise Price and
the number of Warrant Shares shall be adjusted from time to time as follows:

          (a) Adjustment upon Subdivision or Combination of Common Stock. If the Company at any
time on or after the Subscription Date subdivides (by any stock split, stock dividend,
recapitalization or otherwise) one or more classes of its outstanding shares of Common Stock into a
greater number of shares, the Exercise Price in effect immediately prior to such subdivision will
be proportionately reduced and the number of Warrant Shares will be proportionately increased. If
the Company at any time on or after the Subscription Date combines (by combination, reverse stock
split or otherwise) one or more classes of its outstanding shares of Common Stock into a smaller
number of shares, the Exercise Price in effect immediately prior to such combination will be
proportionately increased and the number of Warrant Shares will be proportionately decreased. Any
adjustment under this Section 2(a) shall become effective at the close of business on the date the
subdivision or combination becomes effective.

     3. NONCIRCUMVENTION. The Company hereby covenants and agrees that the Company will
not, by amendment of its Certificate of Incorporation, Bylaws or through any reorganization,
transfer of assets, consolidation, merger, scheme of arrangement, dissolution, issue or sale of
securities, or any other voluntary action, avoid or seek to avoid the observance or performance of
any of the terms of this Warrant, and will at all times in good faith carry out all the provisions
of this Warrant and take all action as may be required to protect the rights of the Holder.
Without limiting the generality of the foregoing, the Company (i) shall not increase the par value
of any shares of Common Stock receivable upon the exercise of this Warrant above the Exercise Price
then in effect, (ii) shall take all such actions as may be necessary or appropriate in order that
the Company may validly and legally issue fully paid and nonassessable shares of Common Stock upon
the exercise of this Warrant, and (iii) shall, so long as any of the SPA Warrants are outstanding,
take all action necessary to reserve and keep available out of its authorized and unissued shares
of Common Stock, solely for the purpose of effecting the exercise of the SPA Warrants, the number
of shares of Common Stock as shall from time to time be necessary to effect the exercise of the SPA
Warrants then outstanding (without regard to any limitations on exercise).

     4. WARRANT HOLDER NOT DEEMED A STOCKHOLDER. Except as otherwise specifically provided
herein, the Holder, solely in such Person’s capacity as a holder of this Warrant, shall not be
entitled to vote or receive dividends or be deemed the holder of share capital of the Company for
any purpose, nor shall anything contained in this Warrant be construed to confer upon the Holder,
solely in such Person’s capacity as the Holder of this Warrant, any of the rights of a stockholder
of the Company or any right to vote, give or withhold consent to any corporate action (whether any
reorganization, issue of stock, reclassification of stock, consolidation, merger, conveyance or
otherwise), receive notice of meetings, receive dividends or subscription rights, or otherwise,
prior to the issuance to the Holder of the Warrant Shares which such Person is then entitled to
receive upon the due exercise of this Warrant. In

- 3 -

 

addition, nothing contained in this Warrant shall be construed as imposing any liabilities on
the Holder to purchase any securities (upon exercise of this Warrant or otherwise) or as a
stockholder of the Company, whether such liabilities are asserted by the Company or by creditors of
the Company. Notwithstanding this Section 4, the Company shall provide the Holder with copies of
the same notices and other information given to the stockholders of the Company generally,
contemporaneously with the giving thereof to the stockholders.

     5. REISSUANCE OF WARRANTS.

          (a) Transfer of Warrant. If this Warrant is to be transferred in accordance with
Section 11, the Holder shall surrender this Warrant to the Company, whereupon the Company will
forthwith issue and deliver upon the order of the Holder a new Warrant (in accordance with Section
5(d)), registered as the Holder may request, representing the right to purchase the number of
Warrant Shares being transferred by the Holder and, if less then the total number of Warrant Shares
then underlying this Warrant is being transferred, a new Warrant (in accordance with Section 5(d))
to the Holder representing the right to purchase the number of Warrant Shares not being
transferred.

          (b) Lost, Stolen or Mutilated Warrant. Upon receipt by the Company of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this
Warrant, and, in the case of loss, theft or destruction, of any indemnification undertaking by the
Holder to the Company in customary form and, in the case of mutilation, upon surrender and
cancellation of this Warrant, the Company shall execute and deliver to the Holder a new Warrant (in
accordance with Section 5(d)) representing the right to purchase the Warrant Shares then underlying
this Warrant.

          (c) Exchangeable for Multiple Warrants. This Warrant is exchangeable, upon the
surrender hereof by the Holder at the principal office of the Company, for a new Warrant or
Warrants (in accordance with Section 5(d)) representing in the aggregate the right to purchase the
number of Warrant Shares then underlying this Warrant, and each such new Warrant will represent the
right to purchase such portion of such Warrant Shares as is designated by the Holder at the time of
such surrender; provided, however, that no Warrants for fractional shares of Common Stock shall be
given.

          (d) Issuance of New Warrants. Whenever the Company is required to issue a new Warrant
pursuant to the terms of this Warrant, such new Warrant (i) shall be of like tenor with this
Warrant, (ii) shall represent, as indicated on the face of such new Warrant, the right to purchase
the Warrant Shares then underlying this Warrant (or in the case of a new Warrant being issued
pursuant to Section 5(a) or Section 5(c), the Warrant Shares designated by the Holder which, when
added to the number of shares of Common Stock underlying the other new Warrants issued in
connection with such issuance, does not exceed the number of Warrant Shares then underlying this
Warrant), (iii) shall have an issuance date, as indicated on the face of such new Warrant which is
the same as the Issuance Date, and (iv) shall have the same rights and conditions as this Warrant.

     6. NOTICES. Whenever notice is required to be given under this Warrant, unless
otherwise provided herein, such notice shall be given in accordance with Section 9(f) of

- 4 -

 

the Securities Purchase Agreement. The Company shall provide the Holder with prompt written
notice of all actions taken pursuant to this Warrant, including in reasonable detail a description
of such action and the reason therefore. Without limiting the generality of the foregoing, the
Company will give written notice to the Holder (i) immediately upon any adjustment of the Exercise
Price, setting forth in reasonable detail, and certifying, the calculation of such adjustment and
(ii) at least fifteen days prior to the date on which the Company closes its books or takes a
record (A) with respect to any dividend or distribution upon the shares of Common Stock, (B) with
respect to any grants, issuances or sales of any Options, Convertible Securities or rights to
purchase stock, warrants, securities or other property to holders of shares of Common Stock, as a
whole, or (C) for determining rights to vote with respect to any Fundamental Transaction,
dissolution or liquidation, provided in each case that such information shall be made known to the
public prior to or in conjunction with such notice being provided to the Holder.

     7. AMENDMENT AND WAIVER. Except as otherwise provided herein, the provisions of this
Warrant may be amended and the Company may take any action herein prohibited, or omit to perform
any act herein required to be performed by it, only if the Company has obtained the written consent
of the Required Holders; provided that no such action may increase the exercise price of any SPA
Warrant or decrease the number of shares or class of stock obtainable upon exercise of any SPA
Warrant without the written consent of the Holder. No such amendment shall be effective to the
extent that it applies to less than all of the holders of the SPA Warrants then outstanding.

     8. GOVERNING LAW. This Warrant shall be governed by and construed and enforced in
accordance with, and all questions concerning the construction, validity, interpretation and
performance of this Warrant shall be governed by, the internal laws of the State of New York,
without giving effect to any choice of law or conflict of law provision or rule (whether of the
State of New York or any other jurisdictions) that would cause the application of the laws of any
jurisdictions other than the State of New York.

     9. CONSTRUCTION; HEADINGS. This Warrant shall be deemed to be jointly drafted by the
Company and all the Buyers and shall not be construed against any person as the drafter hereof.
The headings of this Warrant are for convenience of reference and shall not form part of, or affect
the interpretation of, this Warrant.

     10. REMEDIES, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF. The remedies
provided in this Warrant shall be cumulative and in addition to all other remedies available under
this Warrant and the other Transaction Documents, at law or in equity (including a decree of
specific performance and/or other injunctive relief), and nothing herein shall limit the right of
the Holder right to pursue actual damages for any failure by the Company to comply with the terms
of this Warrant. The Company acknowledges that a breach by it of its obligations hereunder will
cause irreparable harm to the Holder and that the remedy at law for any such breach may be
inadequate. The Company therefore agrees that, in the event of any such breach or threatened
breach, the holder of this Warrant shall be entitled, in addition to all other available remedies,
to an injunction restraining any breach, without the necessity of showing economic loss and without
any bond or other security being required.

- 5 -

 

     11. TRANSFER. This Warrant may not be offered for sale, sold, transferred or assigned
without the consent of the Company.

     12. CERTAIN DEFINITIONS. For purposes of this Warrant, the following terms shall have
the following meanings:

          (a) “Business Day” means any day other than Saturday, Sunday or other day on which commercial
banks in the City of New York are authorized or required by law to remain closed.

          (b) “Common Stock” means (i) the Company’s shares of Common Stock, par value $0.15625 per
share, and (ii) any share capital into which such Common Stock shall have been changed or any share
capital resulting from a reclassification of such Common Stock.

          (c) “Convertible Securities” means any stock or securities (other than Options) directly or
indirectly convertible into or exercisable or exchangeable for shares of Common Stock.

          (d) “Eligible Market” means the Principal Market, The New York Stock Exchange, Inc., the
American Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Capital Market.

          (e) “Expiration Date” means the date thirty (30) days after the Issuance Date or, if such date
falls on a day other than a Business Day or on which trading does not take place on the Principal
Market (a “Holiday”), the next date that is not a Holiday.

          (f) “Fundamental Transaction” means that the Company shall, directly or indirectly, in one or
more related transactions, (i) consolidate or merge with or into (whether or not the Company is the
surviving corporation) another Person, or (ii) sell, assign, transfer, convey or otherwise dispose
of all or substantially all of the properties or assets of the Company to another Person, or (iii)
allow another Person to make a purchase, tender or exchange offer that is accepted by the holders
of more than the 50% of the outstanding shares of Common Stock (not including any shares of Common
Stock held by the Person or Persons making or party to, or associated or affiliated with the
Persons making or party to, such purchase, tender or exchange offer), or (iv) consummate a stock
purchase agreement or other business combination (including, without limitation, a reorganization,
recapitalization, spin-off or scheme of arrangement) with another Person whereby such other Person
acquires more than the 50% of the outstanding shares of Common Stock (not including any shares of
Common Stock held by the other Person or other Persons making or party to, or associated or
affiliated with the other Persons making or party to, such stock purchase agreement or other
business combination), (v) reorganize, recapitalize or reclassify its Common Stock, or (vi) any
“person” or “group” (as these terms are used for purposes of Sections 13(d) and 14(d) of the
Exchange Act) is or shall become the “beneficial owner” (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of 50% of the aggregate ordinary voting power represented by
issued and outstanding Common Stock.

          (g) “Options” means any rights, warrants or options to subscribe for or purchase shares of
Common Stock or Convertible Securities.

- 6 -

 

          (h) “Person” means an individual, a limited liability company, a partnership, a joint venture,
a corporation, a trust, an unincorporated organization, any other entity and a government or any
department or agency thereof.

          (i) “Principal Market” means The NASDAQ Global Market.

          (j) “Registration Rights Agreement” means that certain registration rights agreement by and
among the Company and the Buyers.

          (k) “Required Holders” means the holders of the SPA Warrants representing at least two-thirds
of shares of Common Stock underlying the SPA Warrants then outstanding.

[Signature Page Follows]

- 7 -

 

     IN WITNESS WHEREOF, the Company has caused this Warrant to Purchase Common Stock to be duly
executed as of the Issuance Date set out above.

	 	 	 	 	 
	 	TOREADOR RESOURCES CORPORATION 

 	 
	 	By:  	/s/ Douglas W. Weir
 	 
	 	Name:  	Douglas W. Weir 	 
	 	Title:  	Senior Vice President and
Chief Financial Officer 	 

 

 

	 	 	 	 	 

EXHIBIT A

EXERCISE NOTICE

TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS

WARRANT TO PURCHASE COMMON STOCK

TOREADOR RESOURCES CORPORATION

     The undersigned holder hereby exercises the right to purchase                      of the shares
of Common Stock (“Warrant Shares”) of Toreador Resources Corporation, a Delaware corporation (the
“Company”), evidenced by the attached Warrant to Purchase Common Stock (the “Warrant”).
Capitalized terms used herein and not otherwise defined shall have the respective meanings set
forth in the Warrant.

     1. Form of Exercise Price. The Holder intends that payment of the Exercise Price shall be
made as a “Cash Exercise” with respect to                      Warrant Shares.

     2. Payment of Exercise Price. In the event that the holder has elected a Cash Exercise with
respect to some or all of the Warrant Shares to be issued pursuant hereto, the holder shall pay the
Aggregate Exercise Price in the sum of $                     to the Company in accordance with the
terms of the Warrant.

     3. Delivery of Warrant Shares. The Company shall deliver to the holder                      Warrant
Shares in accordance with the terms of the Warrant.

Date: _______________ __, ______

	 	 	 	 
	   Name of Registered Holder

 	 
	By:  	 	 
	 	Name:  	 	 
	 	Title:  	 	 

 

 

	 	 	 	 	 

ACKNOWLEDGMENT

     The Company hereby acknowledges this Exercise Notice and hereby directs American Stock
Transfer & Trust Company to issue the above indicated number of shares of Common Stock in
accordance with the Transfer Agent Instructions dated March 23, 2007 from the Company and
acknowledged and agreed to by American Stock Transfer & Trust Company.

	 	 	 	 	 
	 	TOREADOR RESOURCES CORPORATION

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:

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