Document:

Exhibit 10.3

 

EXECUTION COPY

 

Retention
of Net Economic Interest Letter

 

August 13, 2014

 

Natixis, New York Branch, as Facility Agent

1251 Avenue of the Americas

New York, New York 10020

Attention: Yazmin Vasconez

Versailles Assets LLC, as Lender

c/o Global Securitization Services LLC

68 South Service Road, Suite 120

Melville, NY 11747

Attention: Andrew Stidd

 

		Re:	Retention of Net Economic Interest

 

This Retention of Net
Economic Interest Letter is being delivered in connection with the Amended and Restated Credit and Security Agreement dated as
of August 13, 2014 (as the same has been and may further be amended, amended and restated, supplemented, waived or otherwise modified
from time to time, the "Credit Agreement"), among WhiteHorse Finance Warehouse, LLC, as borrower (the "Borrower"),
Versailles Assets LLC, as lender (the "Lender" and together with the Lenders from time to time parties thereto,
collectively, the "Lenders"), Natixis, New York Branch, as facility agent (the "Facility Agent")
and The Bank of New York Mellon Trust Company, N.A., as collateral agent (the "Collateral Agent"). All capitalized terms
used but not defined herein have the respective meanings give to such terms in the Credit Agreement as in effect on the date hereof.

 

For purposes of this Retention of
Net Economic Interest Letter:

 

"AIFMD" means
EU Directive 2011/61/EU on Alternative Investment Fund Managers (as amended from time to time and as implemented by Member States
of the European Union) together with any implemented or delegated regulation, technical standards and guidance related thereto
as may be amended, supplemented  or replaced from time to time.

 

"AIFMD Retention Requirements"
means Article 17 of the AIFMD, as implemented by Section 5 of the European Union Commission Delegated Regulation (EU) No 231/2013
of December 19, 2012 supplementing the AIFMD, including any guidance published in relation thereto and any implementing laws or
regulations in force in any Member State of the European Union, provide that references to AIFMD Retention Requirements shall be
deemed to include any successor or replacement provisions of Section 5 included in any European Union directive or regulation subsequent
to AIFMD or the European Union Delegated Regulation (EU) No 231/2013.

 

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"CRR Retention Requirements"
means Articles 404-410 of Regulation (EU) No. 575/2013 of the European Parliament and of the Council of June 21, 2013 on prudential
requirements for credit institutions and investment firms and amending Regulation (EU) No. 648/2102 (as amended from time to time
and as implemented by the Member States of the European Union, "Article 404"), together with any guidelines and
technical standards published in relation thereto by the European Commission or the European Banking Authority (or any successor
or replacement agency or authority) as may be effective from time to time, provided that any reference to the CRR Retention Requirements
shall be deemed to include any successor or replacement provisions of Article 404 included in any European Union directive or regulation.

 

"Retention Requirements"
means together, the CRR Retention Requirements and the AIFMD Retention Requirements.

 

		1.	REPRESENTATIONS

 

WhiteHorse Finance,
Inc. (the "Retention Provider"), acting in its capacity as originator, hereby makes the following representations
for the benefit of the Facility Agent, the Lender and each other Lender that may become a party to the Credit Agreement after the
date hereof, for so long as the Payment in Full Date has not occurred:

 

		(a)	it is duly organized, validly existing and in good standing under the laws of the jurisdiction
in which it is organized;

 

		(b)	it has full power and authority and has taken all action necessary to execute and deliver this
Retention of Net Economic Interest Letter and to fulfill its obligations hereunder and to consummate the transactions hereby;

 

		(c)	no consent of any other person and no licence, permit, approval or authorization of, exemption
by, notice or report to, or registration, filing (other than any filings required to be made by the Retention Provider after the
Restatement Effective Date under the Investment Company Act, the Investment Advisers Act of 1940, as amended, the Securities Act
or the Exchange Act, which shall be made in accordance with Applicable Law) or declaration with, any governmental authority, other
than those that have been or shall be obtained in connection with this Retention of Net Economic Interest Letter, is required by
the Retention Provider in connection with this Retention of Net Economic Interest Letter or the execution, delivery, performance,
validity or enforceability of this Retention of Net Economic Interest Letter or the obligations imposed upon it hereunder or thereunder;
and

 

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		(d)	this Retention of Net Economic Interest Letter constitutes the legally valid and binding obligations
of the Retention Provider enforceable against the Retention Provider in accordance with its terms (except to the extent that the
enforceability thereof may be limited by bankruptcy, insolvency or other similar laws of general applicability affecting the enforcement
of creditors' rights generally and by a court's discretion in relation to equitable remedies).

 

		2.	Covenants

 

The Retention Provider
hereby agrees, undertakes and covenants for the benefit of the Facility Agent, the Lender and each other Lender that may become
a party to the Credit Agreement after the date hereof, for so long as the Payment in Full Date has not occurred:

 

		(a)	to retain on an ongoing basis a net economic interest in the securitised exposures (as such term
is used in Article 404), which will be comprised of an interest in the first loss tranche and, if necessary, other tranches having
the same or a more severe risk profile than those transferred or sold to investors (being the Lenders) and not maturing any earlier
than those transferred or sold to investors within the meaning of paragraph (d) of Article 405(1) of the CRR and Article 51(d)
of the AIFMD Level 2 Regulation;

 

		(b)	to retain the net economic interest referred to in clause (a) above in the minimum principal amount
currently required by the Retention Requirements, such amount being at least equal to 5% of the nominal value of the Collateral
calculated based on the Aggregate Principal Balance of all of the Collateral Obligations, the outstanding principal amount of all
Eligible Investments and any other non-cash assets, in each case at the time of determination without taking into account any deduction
pursuant to the proviso to the definition of "Principal Balance" of any Collateral Obligation or any deduction or discount
in respect of the purchase price paid for such Collateral Obligation or Eligible Investment by the Borrower (such interest, the
"Retention Interest");

 

		(c)	that its retention of the Retention Interest will be measured at origination (being the occasion
of each origination or acquisition of a Collateral Obligation, Eligible Investment or any other non-cash asset) on the basis of
the nominal value (without taking into account acquisition prices) and shall be maintained on an ongoing basis;

 

		(d)	not to sell, hedge or otherwise mitigate its credit risk under or associated with the Retention
Interest or the Collateral, except to the extent permitted in accordance with the Retention Requirements;

 

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		(e)	that it will remain, directly or indirectly, the 100% owner of all of the equity interests in WhiteHorse
Finance Warehouse, LLC;

 

		(f)	that the Board of Directors (i) has reviewed the terms and conditions of the credit facility documented
by the Credit Agreement, (ii) in connection with the preparation of the Transferor's quarterly financial statements, reviewed the
Collateral Obligations held by the Borrower and (iii) must receive not less than 2 Business Days prior notice of any proposed material
amendment or waiver to the Eligibility Criteria and Concentration Limitations specified in the Credit Agreement and an opportunity
to veto such proposed amendment or waiver (provided that such right to veto may be deemed to be waived if no response to such proposed
amendment or waiver has been given within 2 Business Days);

 

		(g)	to confirm its continued compliance with the covenants set out at paragraphs (a) and (b) above
(i) on a monthly basis to the Collateral Agent so that the Collateral Agent may state that it has received such confirmation in
the Monthly Report (which may be by way of email) and (ii) upon written request therefor by and to the Borrower in writing (which
may be by way of email), which request is delivered as a result of (1) a material change in (x) the performance of the Facility,
(y) the risk characteristics of the transaction or (z) the Collateral or (2) the breach of this Retention of Net Economic Interest
Letter or any Facility Document to which it is a party;

 

		(h)	that, promptly upon a Responsible Officer becoming aware thereof, it shall notify each of its subsidiaries
and its investment adviser of the Retention of Net Economic Interest Letter and its contents and in particular the requirements
set out in (d) above and shall procure that each of its subsidiaries and its investment adviser complies with such paragraph (d);

 

		(i)	that, promptly upon a Responsible Officer becoming aware thereof, it shall immediately notify the
Facility Agent (who shall give notice to the Lenders) if for any reason it: (i) ceases to hold the Retention Interest in accordance
with clauses (a) and (b) above; (ii) fails to comply with the covenants set out in (d) or (h) above; or (iii) any of the representations
contained in this Retention of Net Economic Interest Letter fail to be true in any material respect on any date;

 

		(j)	with respect to each Collateral Obligation it sells or transfers to the Borrower that (i) it was
involved or will be involved in, directly or indirectly, by itself or through related entities (including the Borrower), the original
agreement which created or will create the Collateral Obligation or (ii) that it purchased or will purchase such Collateral Obligation
for its own account prior to selling such Collateral Obligation to the Borrower;

 

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		(k)	except as set out in clause (l) below, with respect to each Collateral Obligation sold or transferred
to the Borrower, that it shall use a degree of skill and attention in the acquisition of such obligations no less than that which
the Retention Provider exercises with respect to comparable assets that it acquires for itself and for others, in accordance with
its customary standards, policies, practices and procedures relating to assets of the nature and character of the Collateral Obligations;

 

		(l)	with respect to each Collateral Obligation that it sells or transfers to the Borrower in respect
of which it has not undertaken the original credit-granting or is not active in credit-granting the specific type of obligation,
that it has sufficient information to undertake its own credit analysis of the Collateral Obligation using the criteria it would
apply to non-securitized obligations;

 

		(m)	that it will invest in and hold loans, securities and other investments (excluding obligations
that will be sold, or are intended to be sold, to the Borrower or any other collateralized loan obligation issuer managed by an
Investment Adviser Affiliate of the Retention Provider) expected to be in an aggregate principal amount of 20% (but in no event
less than 10%) of the principal amount of the Retention Interest (it being understood that, for this purpose, such percentage will
be based upon the purchase price of each such investment and that the valuation of obligations will fluctuate over time);

 

		(n)	with respect to each Collateral Obligation that it sells to the Borrower (including any acquisition
by the Borrower in which such Collateral Obligation is settled directly with the Borrower), that (i) where such Collateral Obligation
was acquired in the secondary market it has held (including via a commitment to purchase), directly or indirectly by way of holding
a beneficial interest, such Collateral Obligation for a period of at least two Business Days before such settlement or acquisition
by the Borrower and (ii) on and after the Restatement Effective Date, it shall sell 100% of the Collateral Obligations to the Borrower
pursuant to the terms of the Master Transfer Agreement;

 

		(o)	that it will take such further actions and provide such information as may be requested by any
Lender or the Facility Agent so as to ensure compliance with the provisions of the Retention Requirements (and any such Lender
or the Facility Agent may share such information with any Authority (including any bank regulatory agency) as may be necessary
to ensure compliance with the provisions of the Retention Requirements) and enter into such agreements as it may reasonably determine
to be required to satisfy the Retention Requirements as of (i) the Original Closing Date and (ii) following the Original Closing
Date, solely as regards the provision of information in the possession of the Retention Provider and to the extent the same is
not subject to a duty of confidentiality, any time prior to the Final Maturity Date; and

 

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		(p)	that it will, promptly following a request by the Borrower, provide a refreshed letter on the same
terms as the existing letter in substantially the form hereof in connection with a material amendment of any Facility Document.

 

		3.	Miscellaneous

 

		3.1	[Reserved].

 

		3.2	Governing Law

 

This Retention of Net Economic
Interest Letter (i) shall be governed by and construed in accordance with the laws of the State of New York, without giving effect
to any provisions thereof relating to conflicts of law and (ii) incorporates the entire understanding of the parties with respect
to the subject matter hereof and supersedes all previous agreements should they exist with respect thereto. The parties hereto
hereby consent to jurisdiction, service and venue in any court proceeding in New York, New York, for which any claim, action, proceeding
or counterclaim subject to this agreement is brought. THE PARTIES HERETO FURTHER AGREE TO WAIVE TRIAL BY JURY IN ANY SUCH CLAIM,
ACTION, PROCEEDING OR COUNTERCLAIM. Nothing in this Retention of Net Economic Interest Letter is intended to confer any rights
or remedies hereunder or by reason hereof upon any Person not a signatory hereto (or their successors and assigns).

 

		3.3	Execution in Counterparts

 

This Retention of Net Economic
Interest Letter may be executed in any number of counterparts by facsimile or other written form of communication, each of which
shall be deemed to be an original as against any party whose signature appears thereon, and all of which shall together constitute
one and the same instrument. This Retention of Net Economic Interest Letter shall become binding when one or more counterparts
hereof, individually or taken together, shall bear the signatures of all of the parties reflected hereon as the signatories.

 

		3.4	Benefit

 

The Lender and the Facility
Agent, on behalf of any other Lender that may become a party to the Credit Agreement after the date hereof, are parties to (and
any such other Lender is a beneficiary of) this Retention of Net Economic Interest Letter solely for the purposes of obtaining
the benefit of the representations, warranties and covenants contained herein and under no circumstances shall any of them be deemed
to have undertaken any obligations by virtue of their becoming a party to or beneficiary of this Retention of Net Economic Interest
Letter except as provided herein.

 

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		3.5	Notices

 

Any notice or demand to any
party to this Retention of Net Economic Interest Letter to be given, made or served for any purposes under this Retention of Net
Economic Interest Letter shall be given, made or served in accordance with the provisions of Section 12.02 of the Credit Agreement.

 

[Remainder of page intentionally left blank]

 

    	 

    	 

    

 

IN WITNESS WHEREOF, the parties
hereto have executed this Retention of Net Economic Interest Letter as of the date first written above.

 

	 	 	 	WhiteHorse Finance, INC.
	 	 	 	 	 
	 	 	 	By:	 
	 	 	 	 	Name:
	 	 	 	 	Title:
	 	 	 	 	 
	ACKNOWLEDGED AND AGREED:	 	 	 
	 	 	 	 	 
	NATIXIS, NEW YORK BRANCH, 	 	 	 
	as Facility Agent	 	 	 
	 	 	 	 	 
	By:	 	 	 	 
	 	Name:	 	 	 
	 	Title:	 	 	 
	 	 	 	 	 
	By:	 	 	 	 
	 	Name:	 	 	 
	 	Title:	 	 	 
	 	 	 	 	 
	VERSAILLES ASSETS LLC,	 	 	 
	as Lender	 	 	 
	 	 	 	 	 
	By:	 	 	 	 
	 	Name:	 	 	 
	 	Title:EX-4.15

 Exhibit 4.15 

SECOND SUPPLEMENTAL INDENTURE 

Second Supplemental Indenture (this “Supplemental Indenture”), dated as of July 24, 2014, among Thoroughfare
Mining, LLC, a Delaware limited liability company (the “Guaranteeing Subsidiary”), a Subsidiary of Armstrong Energy, Inc., a Delaware corporation (the “Company”), the Company, and Wells Fargo Bank, National
Association, as trustee under the Indenture referred to below (the “Trustee”). 

W I T N E S S E T H 

WHEREAS, the Company has heretofore executed and delivered to the Trustee an indenture (as amended, the “Indenture”), dated
as of December 21, 2012, providing for the issuance of 11.75% Senior Secured Notes due 2019 (the “Notes”); 
 WHEREAS,
the Indenture provides that under certain circumstances the Guaranteeing Subsidiary shall execute and deliver to the Trustee a supplemental indenture pursuant to which the Guaranteeing Subsidiary shall unconditionally guarantee all of the
Company’s Obligations under the Notes and the Indenture on the terms and conditions set forth herein (the “Note Guarantee”); and 

WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is authorized to execute and deliver this Supplemental Indenture. 

NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged,
the Guaranteeing Subsidiary, the Company, and the Trustee mutually covenant and agree for the benefit of each other and for the equal and ratable benefit of the Holders of the Notes as follows: 

ARTICLE I 

DEFINITIONS 

Section 1.01. Capitalized Terms. Capitalized terms used herein without definition shall have the meanings assigned to them
in the Indenture. 
 ARTICLE II 

GUARANTEES 

Section 2.01. The Guarantees. Subject to the provisions of this Article, the Guaranteeing Subsidiary hereby irrevocably and
unconditionally guarantees, jointly and severally, on a senior secured basis, the full and punctual payment (whether at maturity, upon any redemption, by declaration or acceleration, or otherwise) of the principal of, premium, if any, and interest
on, and all other amounts payable under the Notes, and the full and punctual payment of all other amounts payable by the Company under the Indenture. Upon failure by the Company to pay punctually any such amount, the Guaranteeing Subsidiary shall
forthwith pay the amount not so 

 
paid at the place and in the manner specified in the Indenture. The Guaranteeing Subsidiary further agrees to pay any and all expenses (including reasonable counsel fees and expenses) incurred by
the Trustee or the Agent in enforcing or exercising any rights under this Note Guarantee. 
 Section 2.02. Guarantee
Unconditional. (a) The obligations of the Guaranteeing Subsidiary hereunder are direct, unsubordinated, unconditional and absolute and, without limiting the generality of the foregoing, shall not be released, discharged or otherwise
affected by: 
 (1) any extension, renewal, settlement, compromise, failure to enforce, waiver or release in respect of
any obligation of the Company under the Indenture, this Supplemental Indenture or under the Notes, by operation of law or otherwise; 

(2) any rescission, waiver or, subject to Section 12.03 of the Indenture, any modification or amendment of or
supplement to, the Indenture or the Notes; 
 (3) the occurrence or notice of any default or event of default under the
Indenture or under any other agreement; 
 (4) any change in the corporate existence, structure or ownership of the
Company, or any insolvency, bankruptcy, reorganization or other similar proceeding affecting the Company or their assets or any resulting release or discharge of any obligation of the Company contained under the Indenture or under the Notes; 

(5) the existence of any claim, set-off or other rights which the Guaranteeing
Subsidiary may have at any time against the Company, the Trustee or any other Person, whether in connection with the Indenture or any unrelated transactions, provided that nothing herein prevents the assertion of any such claim by separate
suit or compulsory counterclaim; 
 (6) any invalidity or unenforceability relating to or against the Company for any reason
of the Indenture or any Note, or any provision of applicable law or regulation purporting to prohibit the payment by the Company of the principal of or interest on the Notes or any other amount payable by the Company under the Indenture; or 

(7) any other act or omission to act or delay of any kind by the Company, the Trustee or any other Person or any other
circumstance whatsoever which might, but for the provisions of this paragraph, constitute a legal or equitable discharge of or defense to such Guaranteeing Subsidiary’s obligations hereunder. 

Section 2.03. Discharge; Reinstatement. The Guaranteeing Subsidiary’s obligations hereunder will remain in full force and
effect until the principal of, premium, if any, and interest on the Notes and all other amounts payable by the Company under the Indenture have been paid in full. If at any time any payment of the principal of, premium, if any, or interest on any
Note or any other amount payable by the Company under the Indenture is rescinded or must be otherwise restored or returned upon the insolvency, bankruptcy or reorganization of the Company or otherwise, the Guaranteeing Subsidiary’s obligations
hereunder with respect to such payment will be reinstated as though such payment had been due but not made at such time. 

  
 2 

 Section 2.04. Waiver by the Guaranteeing Subsidiary. The Guaranteeing Subsidiary
irrevocably waives acceptance hereof, presentment, demand, protest and any notice not provided for under the Indenture or herein, as well as any requirement that at any time any action be taken by any Person against the Company or any other Person.

 Section 2.05. Subrogation and Contribution. Upon making any payment with respect to any obligation of the Company under this
Article, the Guaranteeing Subsidiary will be subrogated to the rights of the payee against the Company with respect to such obligation, provided that the Guaranteeing Subsidiary may not enforce either any right of subrogation, or any right to
receive payment in the nature of contribution, or otherwise, from any other Guarantor (including any Guaranteeing Subsidiary), with respect to such payment so long as any amount payable by the Company hereunder or under the Notes remains unpaid.

 Section 2.06. Stay of Acceleration. If acceleration of the time for payment of any amount payable by the Company under the
Indenture or the Notes is stayed upon the insolvency, bankruptcy or reorganization of the Company, all such amounts otherwise subject to acceleration under the terms of the Indenture are nonetheless payable by the Guaranteeing Subsidiary hereunder
forthwith on demand by the Trustee or the Holders. 
 Section 2.07. Limitation on Amount of Guarantee. Notwithstanding anything
to the contrary in this Article, the Guaranteeing Subsidiary, and by its acceptance of Notes, each Holder hereby confirms that it is the intention of all such parties that the Note Guarantee of such Guaranteeing Subsidiary not constitute a
fraudulent conveyance under applicable fraudulent conveyance provisions of the United States Bankruptcy Code or any comparable provision of state law. To effectuate that intention, the Trustee, the Holders and the Guaranteeing Subsidiary hereby
irrevocably agree that the obligations of the Guaranteeing Subsidiary under its Note Guarantee are limited to the maximum amount that would not render the Guaranteeing Subsidiary’s obligations subject to avoidance under applicable fraudulent
conveyance provisions of the United States Bankruptcy Code or any comparable provision of state law. 
 Section 2.08. Execution and
Delivery of Guaranty. The execution by the Guaranteeing Subsidiary of this Supplemental Indenture evidences the Note Guarantee of the Guaranteeing Subsidiary, whether or not the person signing as an officer of the Guaranteeing Subsidiary still
holds that office at the time of authentication of any Note. The delivery of any Note by the Trustee after authentication constitutes due delivery of the Note Guarantee set forth in this Supplemental Indenture on behalf of the Guaranteeing
Subsidiary. 
 ARTICLE III 

MISCELLANEOUS 

Section 3.01. Incorporators, Stockholders, Officers and Directors of Company Exempt from Individual Liability. No recourse
under or upon any obligation, covenant or agreement contained in the Indenture or in this Note Guarantee, or because of any indebtedness evidenced thereby, shall be had against any incorporator, as such or against any past, present or future

  
 3 

 
stockholder, officer or director, as such, of a Company or the Guaranteeing Subsidiary, or of any successor, either directly or through a Company, Guaranteeing Subsidiary or any successor, under
any rule of law, statute or constitutional provision or by the enforcement of any assessment or by any legal or equitable proceeding or otherwise, all such liability being expressly waived and released by the acceptance of the Notes by the Holders
thereof and as part of the consideration for the issue of the Notes. 
 Section 3.02. Governing Law. The internal law of the
State of New York shall govern and be used to construe this Supplemental Indenture, the Indenture and the Notes, without giving effect to applicable principles of conflict of law to the extent that the application of the laws of another jurisdiction
would be required thereby. 
 Section 3.03. Counterparts. The parties may sign any number of copies of this Supplemental
Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. The exchange of copies of this Supplemental Indenture and of signature pages by facsimile or portable document format (“PDF”)
transmission shall constitute effective execution and delivery of this Supplemental Indenture as to the parties hereto and may be used in lieu of the original Supplemental Indenture for all purposes. Signatures of the parties hereto transmitted by
facsimile or PDF shall be deemed to be their original signatures for all purposes. 
 Section 3.04. Effect of Headings.
The Section headings herein are for convenience only and shall not affect the construction hereof. 
 Section 3.05. The
Trustee and Agent. Neither the Trustee nor the Paying Agent shall be responsible in any manner whatsoever for or in respect of the validity, sufficiency or adequacy of this Supplemental Indenture or Note Guarantee or for or in respect of the
recitals contained herein, all of which recitals are made solely by the Guaranteeing Subsidiary and the Company. All of the provisions contained in the Indenture in respect of the rights, privileges, immunities, powers, and duties of the Trustee
shall be applicable in respect of this Supplemental Indenture as fully and with like force and effect as though fully set forth in full herein. 

  
 4 

 IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly
executed and attested, all as of the date first above written. 
 Dated: July 24, 2014 

 

			
	Thoroughfare Mining, LLC
		
	By:	 	 /s/ Martin D. Wilson

	Name:	 	Martin D. Wilson
	Title:	 	Manager
	
	Armstrong Energy, Inc.
		
	By:	 	 /s/ Martin D. Wilson

	Name:	 	Martin D. Wilson
	Title:	 	President
	
	Wells Fargo Bank, National Association, as Trustee
		
	By:	 	 /s/ Gregory S. Clarke

	Name:	 	Gregory S. Clarke
	Title:	 	Vice President

  
 5

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