Exhibit








AMENDED AND RESTATED NOTE
(Revolving Line of Credit)
Date:  October 11, 2018
For Value Received, on October 1, 2023 (the “Loan Maturity Date”), Borrower, as defined below, as principal, jointly and severally, promises to pay NORTHWEST FARM CREDIT SERVICES, PCA (“Lender”) or order, at its office in Spokane, Washington, or such other place as the holder of this Amended and Restated Note (Revolving Line of Credit) (this “Note”) may designate in writing, the principal balance of Thirty Million and no/100’s Dollars ($30,000,000.00) (the “Total Commitment Amount”), or so much thereof as may be outstanding, plus interest thereon from and after any Disbursement Date, at interest rates as provided for hereafter.  For all intents and purposes, all Loan Segments are treated as one obligation under this Note and the other Loan Documents.
1.    Definitions.  For purposes of this Note, the following definitions apply.  Capitalized terms not otherwise defined herein shall have the meanings given in the Loan Agreement.
“Applicable Margin” means the per annum percentage set forth below that corresponds to the Borrower’s “Pricing Level” (as set forth in the table below) as of the most recent Calculation Date (as defined in the Loan Agreement):
	
					
	Pricing
Level
	Adjusted Consolidated Interest Coverage Ratio
	Applicable Margin
	Unused Commitment Fee

	for Base Rate
	for LIBOR Point to Point Fixed Rate Options

	I
	≥ 3.00 : 1.00
	1.60%
	1.60%
	0.20%

	II
	< 3.00 : 1.00 and ≥ 2.00 : 1.00
	1.70%
	1.70%
	0.25%

	III
	< 2.00 : 1.00 and ≥ 1.25 : 1.00
	1.90%
	1.90%
	0.30%

	IV
	≤ 1.25 : 1.00
	2.20%
	2.20%
	0.35%




The Pricing Level shall be determined and adjusted on the date ten (10) Business Days after the date Borrower provides Lender the Compliance Certificate as required under the Loan Agreement for Borrower’s most recently ended first through third Fiscal Quarter-Ends and Fiscal Year-End (the “Adjustment Date”); provided however, that (i) the initial Applicable Margin shall be based on Pricing Level I and shall remain at Pricing Level I until the first Adjustment Date occurring after the first Calculation Date following the date hereof and, on such Adjustment Date and thereafter, the Pricing Level shall be determined by the Adjusted Consolidated Interest Coverage Ratio as of the most recent Calculation Date, and (ii) if Borrower fails to timely provide Lender the Compliance Certificate (excluding any grace and/or cure period) for such most recent Calculation Date, the Applicable Margin commencing the day after the due date thereof shall be based on the highest Pricing Level which shall remain in effect until subsequently adjusted ten (10) Business Days after the delivery of the required Compliance Certificate.  Any adjustment in the Applicable Margin shall be applicable to all existing Loan Segments.  Provided, however, in the Event of Default, Lender shall have the right at any time to change the Applicable Margin to the highest Pricing Level.
“Base Rate” shall have the meaning given in Paragraph 3.01 hereof. 
“Base Rate Loan Segment” means the principal portion of the Loan plus accrued interest priced using the Base Rate.
“Borrower” means Pope Resources, A Delaware Limited Partnership.
“Commitment Period” means the period from the date of this Note through the Loan Maturity Date.


Amended and Restated Note
(Pope Resources, A Delaware Limited Partnership/Note No. 6037359)
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“Disbursement Date” means any Business Day when Loan principal is advanced under this Note to or on the account of Borrower.
“Index Source” means the Index Source identified for a given pricing option described herein.
“LIBOR” means the rate per annum as of 11:00 a.m. (London time) on the day that is two (2) Business Days prior to the first day of such interest period (the “Index”), at which deposits in Dollars for the relevant interest period are offered as determined by the ICE Benchmark Administration (or any successor thereto or any other readily available service selected by Lender that has been approved by the ICE Benchmark Administration as an authorized information vendor for purposes of displaying rates) (the “LIBOR Index Source”) provided, that in the event the ICE Benchmark Administration ceases to provide such quotations, the foregoing rate of interest shall mean any similar successor rate designated by Lender in its reasonable discretion.  If such rate is less than zero, such rate shall be deemed to be zero.
“LIBOR Point to Point Fixed Rate Option” means any of the LIBOR Point to Point Fixed Rate Options defined in Paragraph 3.02 hereof.
“LIBOR Point to Point Loan Segment” means each principal portion of the Loan, plus interest accrued thereon, with all the following attributes that distinguish such LIBOR Point to Point Loan Segment from other Loan Segments:  a different LIBOR Point to Point Maturity Date and or a different date to which a given LIBOR Point to Point Fixed Rate Option was assigned to the LIBOR Point to Point Loan Segment except as otherwise provided herein.
“Loan Agreement” means the Second Amended and Restated Master Loan Agreement between Borrower and Lender dated July 20, 2016, as the same may be amended, modified, extended, restated or replaced from time to time.
“Loan Purpose” means (a) for agricultural and/or business purposes (including distributions to Borrower’s unitholders in the ordinary course of business and re-purchases of partnership units as may be approved by Borrower’s board of directors), and (b) to pay Loan fees and all Lender’s reasonable transaction costs.
“Loan Segment” means the Base Rate Loan Segment or a LIBOR Point to Point Loan Segment.
“Notice” shall have the meaning given in Paragraph 2.04 hereof.
“Pricing Date” means the date a given Loan Segment begins to accrue interest under a given Rate Option or a day when there is a change in the Base Rate.
“Quarter” means the three-month periods beginning on July 1, October 1, January 1 and April 1 of each year.
“Rate Option” means the Base Rate or one of the LIBOR Point to Point Fixed Rate Options.
2.    Advances, Fees and Notice.
2.01    Advances.  So long as no Default or Event of Default has occurred and is continuing, Lender will advance Loan proceeds to or on account of Borrower during the Commitment Period on a Disbursement Date for a Loan Purpose, provided that, after giving effect to any requested advance, the aggregate principal amount of such advances made hereunder will not exceed the Total Commitment Amount.  The advances constitute a revolving line of credit.  During the Commitment Period, Borrower may borrow, repay and reborrow principal on the terms and conditions contained herein.
2.02    Drafts.  Lender has made Credit Line Drafts (“Drafts”) available to Borrower as one means of advancing proceeds for this Note.  Borrower may only write Drafts prior to the Loan Maturity Date within the Total Commitment Amount for a Loan Purpose and so long as there is no Default under the Loan Documents.  Any Draft written prior to 


Amended and Restated Note
(Pope Resources, A Delaware Limited Partnership/Note No. 6037359)
2


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the Loan Maturity Date, including but not limited to those Drafts tendered for payment after the Loan Maturity Date will be considered to be an advance under this Note and the other Loan Documents and will be fully due and payable under the terms and conditions of this Note and the other Loan Documents.  Borrower shall be responsible for payment of all fees associated with the use of Drafts.  Lender will honor Drafts signed by those authorized herein under the terms and conditions described herein, unless Lender is notified otherwise as to signatory authority in writing as indicated herein.  Provided however, Lender may refuse payment on all Drafts that do not meet Lender’s terms and conditions concerning Drafts.  Provided further, Borrower bears full responsibility for the authenticity of each draft, unless Lender is notified otherwise by 9:00 a.m. Spokane time on the Business Day Borrower receives the Daily Draft Report from Lender.  Provided further, notwithstanding anything to the contrary herein or in the other Loan Documents, in the Event of Default, Lender may upon prior written notice to Borrower, terminate any right of Borrower to use Drafts and refuse payment of all Drafts.  Lender also retains the right to make changes to the procedures governing the use of Drafts at any time.
2.03    Loan Fees.  Borrower shall pay Lender an unused commitment fee during the Commitment Period, calculated based on the unused commitment fee that corresponds to Borrower’s Pricing Level as of the most recent Calculation Date, multiplied by the difference between the daily Loan balance and the Total Commitment Amount calculated quarterly in arrears on the basis of the actual number of days elapsed for the actual number of days in the year until the Loan Maturity Date.  The unused commitment fee shall be due on the first day of the next quarter and on the first day of each quarter thereafter.  Borrower shall also pay Loan fees as set forth in a separate loan fee letter.
2.04    Notice of Prepayment and Pricing.  
a.    Prepayment of Principal.  Borrower shall provide Lender with Notice of the amount of any prepayment of a LIBOR Point to Point Loan Segment no later than 10:00 a.m. Spokane time three Business Days prior to the Business Day the prepayment will be made.
b.    Pricing.  Borrower shall provide Lender irrevocable Notice of pricing of a LIBOR Point to Point Loan Segment by 10:00 a.m. Spokane time three Business Days prior to the Pricing Date.  
c.    Form of Notice.  Borrower may provide Lender any Notice required under this Note by use of the Notice in form substantially as set forth in Exhibit A hereto or other documentation as may be prescribed by Lender.  Alternatively, Borrower may telephone Lender at the numbers designated on Exhibit A or as may be provided by Lender from time to time.  If Notice is by telephone, Lender will confirm to Borrower the elected prepayment or pricing in writing.  All such Notices are deemed irrevocable when given and are subject to Breakage Fees.
3.    Interest Rate and Pricing Elections.
3.01    LIBOR Variable Base.  The “Base Rate” is the LIBOR Variable Base.  The “LIBOR Variable Base” for any day during a given month means the one-month LIBOR rate, as made available by the LIBOR Index Source, rounded up to the nearest .05 percent, plus the Applicable Margin.  The LIBOR Variable Base shall be effective on the first day of the month and remain constant for such month.  
3.02    1-, 3-, or 6- Month LIBOR Point to Point Fixed Rate Options.  A LIBOR Point to Point Loan Segment may be priced at a fixed rate equal to the 1-, 3-, or 6- Month LIBOR as made available by the LIBOR Index Source, plus the Applicable Margin.  With the LIBOR Point to Point Fixed Rate Option: (i) rates may be fixed for an “Interest Period” as defined herein of 1-, 3-, or 6-months; and (ii) rates take effect on the Pricing Date.  For purposes hereof, the “Interest Period” shall mean a period commencing on the Pricing Date and ending on the LIBOR Point to Point Maturity Date for such LIBOR Point to Point Fixed Rate Option.  The “LIBOR Point to Point Maturity Date” means, for a given 1-, 3- or 6-Month LIBOR Point to Point Fixed Rate Option, the numerically corresponding day of the month that is 1, 3 or 6 months, as applicable, after the Pricing Date, provided however, that if there is no such numerically 


Amended and Restated Note
(Pope Resources, A Delaware Limited Partnership/Note No. 6037359)
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corresponding day in such first, third or sixth succeeding month, such LIBOR Point to Point Maturity Date shall end on the last day of such first, third or sixth succeeding month.  If a LIBOR Point to Point Maturity Date is not a Business Day, then the LIBOR Point to Point Maturity Date shall be deemed to be the preceding Business Day, unless such Business Day falls in another calendar month, in which case the LIBOR Point to Point Maturity Date shall be deemed to be the succeeding Business Day.
3.03    Pricing Elections.  Upon irrevocable Notice to Lender in accordance with Paragraph 2.04 above, as to principal (i) in the  amount of an advance, (ii)  in the Base Rate Loan Segment, or (iii) in a LIBOR Point to Point Loan Segment on a LIBOR Point to Point Maturity Date, Borrower may elect to designate all or any part of an advance or the unpaid principal balance of such Loan Segment on such Pricing Date to bear interest at any Rate Option described herein; provided however, that (1) there is no Event of Default, (2) Borrower shall price Loan principal in Loan Segments in initial minimum principal amounts of $1,000,000.00, (3) no LIBOR Point to Point Fixed Rate Option may be selected which would have for its LIBOR Point to Point Maturity Date a date later than the Loan Maturity Date, and (4) there are no more than five (5) LIBOR Point to Point Loan Segments at any one time.  If Borrower does not provide Lender irrevocable Notice of election of a Rate Option on a LIBOR Point to Point Maturity Date for a LIBOR Point to Point Loan Segment, the unpaid principal balance of such Loan Segment will be priced at the Base Rate effective on such Pricing Date.
3.04    Single Base Rate Loan Segment.  If on a Pricing Date, any Loan Segment is priced under the Base Rate resulting in more than one Loan Segment priced under the Base Rate, all Loan principal priced under the Base Rate will be treated as a single Base Rate Loan Segment by combining the principal balances of such Loan Segments on such Pricing Date.
3.05    Interest Rates.  The interest rates used herein do not necessarily represent the lowest rates charged by Lender on its loans.  The interest rates described herein are per annum rates.  Interest rates using the LIBOR Index Source are calculated on the basis of the actual number of days elapsed for a 360 day year.  Interest rates using any other Index are calculated on the basis of the actual number of days elapsed during the year for the actual number of days in the year.
3.06    Index or Index Source.  If any Index or Index Source provided for herein cannot be ascertained during the Note term, Lender will choose a new Index or Index Source which it determines, in its reasonable discretion, is comparable to be effective upon notification thereof to Borrower.
3.07    Additional Pricing Options.  In the event Borrower should desire to price a Loan Segment using an Index, Pricing Date and margin other than as provided for herein, Borrower may request Lender to quote a rate and lock-in fee for an identified principal amount and desired pricing option.  Lender will provide Borrower such a quote if available under Lender’s then existing policies and procedures, and shall provide Borrower the option to elect such a rate upon payment of the lock-in fee, if required, which rate shall be effective on the Pricing Date for the Loan Segment, upon terms and conditions and within timeframes as Lender may prescribe at the time of the quote.
4.    Payment.
4.01    Interest Payments.  Borrower shall make quarterly interest only payments on the first day of each Quarter beginning January 1, 2019, or the first day of the next Quarter as Lender shall determine, which payments shall consist of interest that accrued during such prior period on the unpaid principal balance of each Loan Segment.  
4.02    Payment in Full on Loan Maturity Date.  The unpaid principal balance, unpaid interest thereon, and other amounts due under this Note and the other Loan Documents shall be paid in full on the Loan Maturity Date.


Amended and Restated Note
(Pope Resources, A Delaware Limited Partnership/Note No. 6037359)
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4.03    Application of Payments.  Lender may apply any payment received from or on behalf of Borrower to principal, interest, or any part of the indebtedness, including any fees and expenses due under this Note or any other Loan Document, as Lender, in its sole discretion, may choose.  Subject to the preceding sentence, Borrower may at any time pay any amount of principal in advance of its maturity subject to the Prepayment Fee described herein.
5.    Prepayment and Breakage Fees.
5.01    Prepayment Fee.
a.    Prepayment.  As used herein, “Prepayment” shall mean any instance wherein the indebtedness herein is partially or fully paid in any manner prior to a payment due date, whether voluntarily or involuntarily.  Prepayment shall include, but not be limited to:  (i) any payment after an Event of Default under the Loan Documents; (ii) any payment to Lender by any holder of an interest in any Collateral; (iii) any payment after the Loan Maturity Date is accelerated for any reason; (iv) any payment resulting from any sale or transfer of Collateral pursuant to foreclosure, sale under power, judicial order or trustee’s sale; (v) any payment by any person which reduces the principal amount of the Loan (excluding scheduled payments) prior to the Loan Maturity Date; and (vi) any payment by sale, transfer or offsetting credit in connection with or under any bankruptcy, insolvency, reorganization, assignment for the benefit of creditors or receivership or similar proceedings under any statute of the United States or any state thereof involving Borrower and or the Collateral.  In the event of any acceleration of the Loan Maturity Date, the amount due hereunder shall include the Prepayment Fee in the event of a voluntary Prepayment at the time of such acceleration, and the date of acceleration of the Loan Maturity Date will be deemed to be the date of Prepayment.
b.    Prepayment Fee.  As used herein, the “Prepayment Fee” is an amount intended to reasonably compensate Lender for the loss of the intended benefit of Lender’s bargain in the case of a Prepayment.  Borrower and Lender intend that the principal balance of the Loan will yield to Lender an annual return after the date the Loan is prepaid of not less than the annual return for the period when the interest rate is fixed.  In the event of a Prepayment, Lender will lose the intended benefit of its bargain.  Accordingly, the Prepayment Fee is intended to reasonably compensate Lender for such loss and costs.  The Prepayment Fee shall be payable on demand, and shall be an amount calculated on a make-whole basis, as determined under Lender’s then current methodology.  The Prepayment Fee, if any, payable under this Paragraph 5.01, shall be added to the balance of the Loan as of the date of acceleration and may be included in any credit bid by Lender at a foreclosure sale.  The Lender shall not be obligated to accept any Prepayment, unless it is accompanied by the Prepayment Fee due in connection therewith.
c.    Exceptions to Prepayment Fee.  If interest upon all or a portion of the Loan is determined at the Base Rate, that portion of the Loan may be prepaid, in part or in whole, at any time, and from time to time, without the payment of a Prepayment Fee.  Furthermore, if a Prepayment is received on a LIBOR Point to Point Maturity Date, the applicable portion of the Loan may be prepaid without the payment of a Prepayment Fee.  All other Prepayments shall be subject to a Prepayment Fee.
d.    ACKNOWLEDGMENT OF PREPAYMENT FEE OBLIGATION. BORROWER ACKNOWLEDGES THAT IT UNDERSTANDS THAT A PREPAYMENT MAY RESULT IN A SUBSTANTIAL PREPAYMENT FEE.  BORROWER CERTIFIES THAT IT HAS HAD THE OPPORTUNITY TO CONSULT WITH ITS LEGAL, FINANCIAL AND OTHER COUNSEL, AND HAS MADE THE DECISION TO ENTER INTO THIS LOAN SUBJECT TO THE PREPAYMENT FEE IN RELIANCE ONLY UPON ITS LEGAL, FINANCIAL AND OTHER COUNSEL AND NOT UPON LENDER, ITS EMPLOYEES, AGENTS OR AFFILIATES.
5.02    Breakage Fee.  In the event of an occurrence under subparagraph a. or b. below, then Borrower shall immediately pay Lender, on demand, a “Breakage Fee” in an amount calculated on a make-whole basis, as determined under Lender’s then current methodology:


Amended and Restated Note
(Pope Resources, A Delaware Limited Partnership/Note No. 6037359)
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a.    Borrower provides Lender Notice that Loan principal is to be priced using a LIBOR Point to Point Fixed Rate Option, after which Borrower revokes such Notice; or
b.    Borrower provides Lender Notice that Loan principal priced under a LIBOR Point to Point Fixed Rate Option is to be repriced or prepaid on other than a Pricing Date, after which Borrower revokes such Notice or fails to prepay pursuant to the Notice.
5.03    Participation.  Participant(s), if any, may calculate a Prepayment Fee or Breakage Fee on a make-whole basis using a different methodology than Lender.
6.    Default.
6.01    Events of Default.  Time is of the essence in the performance of this Note.  The occurrence of any one or more of the Events of Default in Section 8.01 of the Master Loan Agreement shall constitute an “Event of Default” under this Note.
6.02    Acceleration.  In the event of any uncured Event of Default beyond any applicable cure periods provided for in the Loan Documents, at Lender’s option, without notice or demand, the unpaid principal balance of the Loan, plus all accrued and unpaid interest thereon and all other amounts due shall immediately become due and payable and bear interest thereafter at the per annum rate in effect at the time of acceleration.
6.03    Notice and Opportunity to Cure.  Any notice and opportunity to cure shall be administered in accordance with Section 8.02 of the Master Loan Agreement.
7.    Loan Terms, Provisions and Covenants.  This Note is subject to the terms, provisions and covenants of the Loan Agreement, and Borrower’s obligations hereunder are secured by a lien and security interest in Property as described in the Loan Agreement.
8.    Miscellaneous.
8.01    Funds Management Services.  Lender may provide funds management services to Borrower.  Borrower shall comply with all funds management authorizations and agreements during the term of this Note.  All fees incurred shall be considered a request for an advance under this Note.  The funds management services and fees may be adjusted upon reasonable notice.
8.02    Governing Law.  The substantive laws of the State of Washington shall apply to govern the construction of the Loan Documents and the rights and remedies of the parties, except where the location of the Collateral for the Loan may require the application of the laws of another state or where federal laws, including the Farm Credit Act of 1971, as amended, may be applicable.
8.03    General Provisions.  Borrower waives presentment for payment, demand, notice of nonpayment, protest, notice of protest and diligence in enforcing payment of this Note.  This Note and the other Loan Documents constitute the entire agreement between Borrower and Lender and supersede all prior oral negotiations and promises which are merged into such writings.  Upon written agreement of the parties, the interest rate, payment terms or balances due under this Note may be indexed, adjusted, renewed or renegotiated.  Lender shall not be obligated to renew the Note or any part thereof or to make additional or future loans to Borrower.  All Exhibits hereto are incorporated herein and made a part of this Note.  This Note may be executed in any number of counterparts, each of which shall be deemed to be an original, but all of which together, shall constitute but one and the same instrument.


Amended and Restated Note
(Pope Resources, A Delaware Limited Partnership/Note No. 6037359)
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Borrower agrees that the Note described herein shall be in default should any proceeds be used for a purpose that will contribute to excessive erosion of highly erodible land or to the conversion of wetlands to produce or to make possible the production of an agricultural commodity, as further explained in 7 CFR Part 12.
8.04    Waiver of Jury Trial.  BORROWER HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS LOAN DOCUMENT AND ANY FUTURE MODIFICATIONS, AMENDMENTS, EXTENSIONS, RESTATEMENTS AND SERVICING ACTIONS RELATING TO THIS LOAN DOCUMENT.  IT IS INTENDED THAT THIS JURY WAIVER WILL BE ENFORCED TO THE MAXIMUM EXTENT ALLOWED BY LAW.
[Signature Page Follows]




Amended and Restated Note
(Pope Resources, A Delaware Limited Partnership/Note No. 6037359)
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ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT, OR TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON LAW.
BORROWER:
POPE RESOURCES, A DELAWARE LIMITED PARTNERSHIP
By:    Pope MGP Inc., a Delaware corporation, its Managing General Partner
By:                              
Thomas M. Ringo, President and CEO    


Amended and Restated Note
(Pope Resources, A Delaware Limited Partnership/Note No. 6037359)
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EXHIBIT A
NOTICE/CONFIRMATION
	
			
	To:
Loan Accounting and Operations
Northwest Farm Credit Services, PCA
2001 South Flint Road
Spokane, WA 99224-9198
	



P. O. Box 2515
Spokane, WA 99220-2515
	



Fax: 509-340-5508
Tel.: 1-800-216-4535






NOTICE
This Notice is provided pursuant to the Amended and Restated Note (Revolving Line of Credit) dated October 11, 2018, as extended, renewed, amended or restated.


  PRICING.  If checked, Borrower elects to price or reprice principal in a Loan Segment as follows:
	
	
	New Advance
Base Rate Loan Segment
Loan Segment Currently Priced Under LIBOR Point to Point Fixed Rate Option 
Principal Amount 
To New LIBOR Point to Point Option 
To be Effective (Date) 






  PREPAYMENT OF PRINCIPAL.  If checked, Borrower elects to prepay principal as follows:
	
	
	Base Rate Loan Segment
LIBOR Point to Point Loan Segment Priced
  Under Option 
  Principal Amount 
  To be Effective (Date) 






BORROWER
POPE RESOURCES, A DELAWARE LIMITED PARTNERSHIP
By:    Pope MGP Inc., a Delaware corporation, its Managing General Partner


By:                        
Authorized Agent


CONFIRMATION
Lender confirms that the above actions were taken or modified as provided for below:
                                                    
                                                    
                                                    
                                                    
                                                    


NORTHWEST FARM CREDIT SERVICES, PCA


Date:                        By:                        
                




Amended and Restated Note
(Pope Resources, A Delaware Limited Partnership/Note No. 6037359)
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