Act 2: Secret Path

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Sensei praises shadow for his victory. Then he tells the Group about his disciple who left to try the new schools in the next town. He says that the town is Known for its fighting academies and the group travels there. However, when they reach the town sensei finds the academies in rains and is distressed. He is shocked to find that there is only one functional fighting school there which is being run by a man called Hermit.
Shadow fights Hermit's disciple Dragon. Dragon reveals his malevolent intentions and his reasons for training under Hermit. However when he is defeated, Dragon is humbled and seems to give up his plans. Shadow continues to participates in new tournaments and challenges regularly to accumulate funds in order to purchase devastating equipment and weapons.
He also defeats more and more of Hermit's disciples, all the while learning more about Hermit, his school, his teachings and the disciples themselves. Shadow and team also encounter Sly a shady character who offers to sell them the secret to Hermit's power. Regardless of whether or not shadow buys the "secret" he will find out that Hermit uses arcane battle magic which is even more powerful than that of the much greater demons. Shadow finally meets Crane, Sensei's old disciple who is now training under Hermit in hopes of learning the secrets to his power. Sensei is shattered upon finding out what crane has done. When shadow bests crane in a fight, the latter comes to his senses and apologizes to sensei. At last, shadow meets Hermit himself. Hermit invites shadow to do battle against him and test his skills. During the fight, Hermit immediately steps up his game, using extremely advanced techniques. Hermit then introduces his legendary magic, firing electric bolts and water blasts. He also unleashes his own self controlled thunderstorm which makes lightning Zap the ground. Shadow, however, still manages to defeat Hermit. Hermit is impressed and negotiates with shadow. He asks shadow to visit the next town, battle the band of outlaws there, and eliminate their leader. Who is none other than the murderer Butcher. He states the secret to his combat prowess. Shadow now unlocks the use of magic

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