EXHIBIT 10.3
2003 RELATIONSHIP AGREEMENT
BETWEEN
FORD MOTOR COMPANY
AND
VISTEON CORPORATION
DATED
DECEMBER 19, 2003
2003 RELATIONSHIP AGREEMENT
THIS 2003 RELATIONSHIP AGREEMENT is dated as of December 19, 2003 (this
"Agreement") between Ford Motor Company, a Delaware corporation, ("Ford") and
Visteon Corporation, a Delaware corporation ("Visteon").
R E C I T A L S
A. Visteon and Ford have the following common goals (the "Goals"):
i. That Visteon achieves the goal of becoming a profitable and
growing business and remains a top-quality supplier to
Ford;
ii. That Ford achieves competitive price reductions and
achieves fully competitive prices from Visteon, over time,
contributing to its profitable growth;
iii. That Ford and Visteon work collaboratively to meet the
commitments made in the UAW settlement in September 2003;
and
iv. That Ford and Visteon will establish a basic framework for
working cooperatively on their ongoing commercial
relationship.
B. To further the Goals, the Parties have agreed on several
actions that are described in this Agreement.
C. To monitor the implementation of each of these actions, the
Parties have agreed to establish a governance process that is designed to ensure
that the intention of this Agreement, the Master Transfer Agreements and the
Detailed Agreements is achieved.
The Parties have agreed as follows:
1. DEFINITIONS
All terms with initial capitalization used herein shall have the
meanings specified below, except as otherwise specifically stated.
"AFFILIATE" means any Person directly or indirectly Controlling, Controlled by,
or under common Control with, such Person. For purposes of this definition, the
terms Control, Controlling, and Controlled mean having the right to elect a
majority of the board of directors or other comparable body responsible for
management and direction of a Person by contract, by virtue of share ownership,
or otherwise.
"AGREEMENT" means this 2003 Relationship Agreement.
"AMENDED AND RESTATED EMPLOYEE TRANSITION AGREEMENT" means that certain Amended
and Restated Employee Transition Agreement dated as of the date hereof between
the Parties.
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"AMENDED AND RESTATED HOURLY EMPLOYEE ASSIGNMENT AGREEMENT" means that certain
Amended and Restated Hourly Employee Assignment Agreement dated as of the date
hereof between the Parties.
"CHESTERFIELD AGREEMENTS" means the Chesterfield Transition and Stewardship
Agreement dated as of April 1, 2003 among Xxxxxxx Controls, Inc. and the Parties
and the related agreements referenced therein.
"CLONE AND GO AGREEMENT" means that certain Clone and Go Cost Sharing Agreement
dated as of the date hereof between the Parties.
"DETAILED AGREEMENTS" means the Purchase and Supply Agreement, the Amended and
Restated Hourly Employee Assignment Agreement, the Amended and Restated Employee
Transition Agreement, the Hourly Employee Conversion Agreement, the Ford/Visteon
Level 4 Support Amendment and the Clone and Go Agreement.
"HOURLY EMPLOYEE CONVERSION AGREEMENT" means that certain Hourly Employee
Conversion Agreement dated as of the date hereof between the Parties.
"FORD" means Ford Motor Company, a Delaware corporation.
"FORD/VISTEON LEVEL 4 SUPPORT AMENDMENT" means that certain amendment to the (1)
Software and Information Technology License Agreement, effective September 2,
2003 among the Parties and Ford Global Technologies, LLC and (2) Information
Technology Services Agreement, effective June 27, 2000 between the Parties.
"MASTER AGREEMENT" means the collective bargaining agreement and all supplements
thereto between Ford and the UAW dated September 15, 2003.
"MASTER TRANSFER AGREEMENTS" means the following agreements between the Parties:
Master Transfer Agreement dated March 30, 2000, Master Separation Agreement
dated June 1, 2000, the Information Technology Services Agreement dated as of
June 27, 2000, the Software and Information Technology License Agreement
effective September 2, 2003, and the Relationship Agreement dated January 1,
2000 between the Automotive Consumer Services Group (now Ford Customer Services
Division) of Ford and Visteon.
"NEW VISTEON CBA AND SUPPLEMENT" means the new collective bargaining agreement
and supplement under negotiation between the UAW and Visteon which negotiation
is expected to be completed by March 5, 2004.
"OPEB LIABILITY" has the meaning specified in Section 3.4.
"PARTY" or "PARTIES" refers to Ford or Visteon individually or collectively.
"PERSON" means an individual, a partnership, a corporation, a limited liability
company, an association, a joint stock company, a trust, a joint venture, an
unincorporated organization or a governmental entity or any department, agency
or political subdivision thereof.
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"PURCHASE AND SUPPLY AGREEMENT" means the Purchase and Supply Agreement dated as
of the date hereof between Ford and Visteon.
"UAW" means the International Union, United Automobile, Aerospace and
Agricultural Implement Workers of America.
"UTICA AGREEMENT" means the Utica Agreement dated as of the date hereof between
Visteon and Ford that relates to the purchase and supply of products produced by
Visteon at its Utica Trim Plant.
"VISTEON" means Visteon Corporation, a Delaware corporation.
2. PURCHASE AND SUPPLY
2.1 Pursuant to the Purchase and Supply Agreement, (a) Ford has agreed to
terms and conditions under which Ford will source components and
systems and services to Visteon in North America, including payment
terms as described in Section 4.1 hereof, investment sharing and
pricing on certain business that takes into consideration labor cost
differential issues; and (b) Visteon has agreed to terms and conditions
related to components and systems and services sourced to Visteon,
including productivity price reductions, design changes, competitive
price gap closure, and capital investments. The Purchase and Supply
Agreement also includes incentives designed to reduce the number of
Ford hourly employees assigned to Visteon. The terms and conditions
agreed by the Parties in the Purchase and Supply Agreement are designed
to assist the Parties in reaching the Goals and shall govern with
respect to these issues.
2.2 The Parties will enter into joint operating agreements with respect to
various commodities that will include protocols with respect to
engineering, design, and testing (ED&T) rates, component xxxx-ups and
related terms, and general requirements relating to Visteon's support
of Ford vehicle and component programs. The Parties will use good faith
efforts to finalize these joint operating agreements by March 31, 2004.
3. EMPLOYEE MATTERS
3.1 The Parties and the UAW have agreed that, in addition to the New
Visteon CBA and Supplement, Visteon will use its best efforts to
negotiate with the UAW for the implementation of operating practices at
the local level that are competitive with the U.S. automotive component
and truck component industry at Visteon's facilities whose hourly
employees are represented by the UAW under the Master Agreement. Upon
and after the effective date of the New Visteon CBA and Supplement,
persons who are hired by Visteon as hourly employees at applicable
Visteon facilities will be solely Visteon employees and subject to the
New Visteon CBA and Supplement. The Parties and the UAW also have
agreed that certain active hourly employees of Visteon who are
UAW-represented will become hourly employees of Ford as of December 22,
2003 under the conditions of the Hourly Employee Conversion Agreement.
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3.2 The Parties also have agreed to make certain amendments to the Employee
Transition Agreement dated as of April 1, 2000 between the Parties.
Such amendments are reflected in the Amended and Restated Employee
Transition Agreement.
3.3 The Parties also have agreed to make certain amendments to the Hourly
Employee Assignment Agreement dated as of April 1, 2000 between the
Parties. Such amendments are reflected in the Amended and Restated
Hourly Employee Assignment Agreement.
3.4 The Amended and Restated Hourly Employee Assignment Agreement provides
that at December 31, 2003 Ford will bear a significant portion of the
OPEB SFAS 106 balance sheet liability (the "OPEB Liability") related to
pre-separation service of Ford hourly employees assigned to work at
Visteon.
3.5 The time period for pre-funding Visteon's post-separation OPEB
liability to Ford hourly employees assigned to work at Visteon has been
extended from 2020 to December 31, 2049. The Amended and Restated
Hourly Employee Assignment Agreement contains the specifics of the
foregoing agreement.
3.6 Visteon will transfer assets and obligations relating to the pensions
and other benefits for those hourly employees of Visteon who become
hourly employees of Ford as of December 22, 2003. The Hourly Employee
Conversion Agreement contains the specifics of the foregoing agreement.
3.7 Visteon will reimburse Ford for the amount of profit sharing paid by
Ford to its hourly employees who are assigned to work at Visteon up to
a maximum amount. The Amended and Restated Hourly Employee Assignment
Agreement contains the specifics of the foregoing agreement.
3.8 The Parties intend that over time there will be no Ford employees
working at Visteon plants and the Parties will cooperate to facilitate
this goal. At present conditions, Ford has identified a need for
incremental hourly employees to meet its operating requirements for the
2004-2007 period. It is intended that flowing Ford hourly employees
from Visteon to Ford (subject to the Master Agreement), and replacing
them at Visteon as required with Visteon hourly employees will assist
in meeting this requirement. Subject to the requirements of the Master
Agreement, the Parties intend for no more Ford hourly employees to be
assigned from Ford to Visteon.
4. OTHER MATTERS
4.1 Ford has agreed to change the payment terms for certain payables to
Visteon in order to facilitate Visteon's near-term investment in the
UAW plants. The Purchase and Supply Agreement contains the specifics of
the foregoing agreement.
4.2 Ford and Visteon have agreed to productivity price reductions due from
Visteon for calendar year 2003 in lieu of any additional 2003
productivity price reductions; provided that this settlement does not
include productivity commitments that have already been
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separately agreed by the Parties. The Purchase and Supply Agreement
contains the specifics of the foregoing agreement.
5. IT SEPARATION
5.1 The Parties have agreed to a process and cost-sharing for the creation
of a separate IT environment for Visteon through the cloning of Ford's
IT systems and other actions. The Clone and Go Agreement contains the
specifics of the foregoing agreement.
5.2 The Parties have entered into the Ford/Visteon Level 4 Support
Amendment whereby Ford agrees to provide limited Xxxxx 0 information
technology support services to Visteon, and Visteon agrees to pay for
such services in connection with the creation of a separate IT
environment through cloning Ford's IT systems and other actions.
5.3 The Parties also have agreed to a mutual release of all claims related
to IT activities since the separation of Visteon from Ford. This
release is found in the Clone and Go Agreement.
6. GOVERNANCE
6.1 In order to monitor the performance of the Parties toward achievement
of the Goals under the Detailed Agreements, Ford and Visteon shall
establish a governance council (the "Governance Council"). The
membership, objectives, responsibilities and process for the Governance
Council are set forth on Exhibit A attached hereto.
7. CHESTERFIELD AND UTICA
7.1 The Parties have entered into the Chesterfield Agreements and Utica
Agreement which agreements reflect their understandings related to the
Chesterfield Plant and the Utica Plant. None of the Detailed Agreements
are intended to modify or amend either of the Chesterfield Agreements
or the Utica Agreement.
8. SETTLEMENT OF MATTERS IN DISPUTE
8.1 The Parties have resolved certain matters (the "Claims") and will
undertake such measures as may be necessary to reflect such resolution
and to dismiss any outstanding litigation or arbitration proceeding
currently in process with respect to such Claims.
9. COVENANTS AND REMEDIES
9.1. A Party (a "Non-Defaulting Party") may give notice to the other Party
(the "Defaulting Party"), upon occurrence of any of the following
events, any one of which will be considered to be an "Event of
Default":
(a) Default by a Party. Any default by the Defaulting Party in the
performance of any obligation or in the observance of any
restriction (i) in this Agreement, or (ii) in any Detailed
Agreement, or (iii) in any of the Master Transfer Agreements
which default may not be cured or is not effectively cured
after a period of 30
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days after written notice thereof has been given by the
Non-Defaulting Party; provided that if such default cannot be
cured within 30 days, then the Defaulting Party shall have a
reasonable period to cure the default (not to exceed 90 days),
during which period the Defaulting Party shall at all times
diligently pursue a cure;
(b) Termination of Existence Initiated by a Party. The Defaulting
Party commences any Proceeding to wind up, dissolve, or
otherwise terminate its legal existence;
(c) Termination of Existence Initiated by Another Person. Any
proceeding is commenced against the Defaulting Party that
seeks or requires the winding up, dissolution, or other
termination of its legal existence, unless the proceeding is
defended or contested in good faith by the Defaulting Party
within 30 days of the commencement of the proceeding in a
manner that stays it and such defense or contest is pursued
diligently thereafter;
(d) Bankruptcy. Either (a) the Defaulting Party seeks relief by
any proceedings of any nature under any applicable laws for
the relief of debtors; or (b) the institution against the
Defaulting Party of a proceeding under any applicable
bankruptcy or similar law of any jurisdiction in which the
Defaulting Party carries on its business, unless the
proceeding is defended or contested in good faith by the
Defaulting Party within 15 days of the commencement of the
proceeding in a manner that stays the proceedings and then
only so long as such defense or contest is pursued diligently
thereafter;
(e) Appointment of a Receiver. The appointment of a receiver,
receiver-manager, trustee, custodian or like officer for all
or a substantial part of the business or assets of the
Defaulting Party, unless the appointment is defended or
contested in good faith by the Defaulting Party within 30 days
of the commencement of the appointment in a manner that stays
the appointment and then only so long as such defense or
contest is pursued diligently thereafter; or
(f) Assignment for Benefit of Creditors. The Defaulting Party
makes an assignment of a substantial part of its assets for
the benefit of its creditors.
9.2. Upon the occurrence of an Event of Default, the Non-Defaulting Party
may elect one or more of the following remedies:
(a) Termination of this Agreement, in whole or in part, and any
such termination shall not be deemed a waiver or release of,
or otherwise prejudice or affect, any rights, remedies or
claims, whether for Damages or otherwise, which the Non-
Defaulting Party may then possess under this Agreement or
which arise as a result of such termination; and
(b) Termination of any Detailed Agreement, in whole or in part,
and any such termination shall not be deemed a waiver or
release of, or otherwise prejudice or affect, any rights,
remedies or claims, whether for Damages or otherwise, which
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the Non-Defaulting Party may then possess under this Agreement
or which arise as a result of such termination; and
(c) Recovery of Damages arising from the Default.
9.3 Ford may terminate this Agreement in the event that thirty-five percent
or more of the voting shares of Visteon become owned or controlled,
directly or indirectly, by a competitor of Ford in the business of
manufacturing motor vehicles.
9.4 A Non-Defaulting Party intending to terminate this Agreement pursuant
to this Article 9 as a result of an Event of Default occurring under
Subsections 9.1(a) or (b) shall first notify the Governance Council and
the Defaulting Party of the grounds for the intended termination. If
the Defaulting Party fails to remedy such grounds for termination
within sixty (60) days of such notice (or any longer period of time as
mutually agreed by the Parties), then the Non-Defaulting Party may
terminate this Agreement effective upon notice to the Defaulting Party
without the need for any judicial action.
9.5 The provisions of this Article 9 are without prejudice to any other
rights or remedies either Party may have by reason of the default of
the other party.
10. TERM
10.1 The term of this Agreement shall continue until the last of the
Detailed Agreements has expired or been terminated.
11. MISCELLANEOUS
11.1 No Agency. Except as specifically provided in any of the Detailed
Agreements, neither this Agreement nor any Detailed Agreement makes
either Party the agent or legal representative of the other Party.
Neither Party is authorized to create any obligation on behalf of the
other Party.
11.2 Notices. Any notice under this Agreement must be in writing (letter,
facsimile) and will be effective when received by the addressee at its
address indicated below.
(a) Notice sent to Visteon will be addressed as follows:
Visteon Corporation
290 Town Center Dr.
00xx Xxxxx, Xxxxxxxx Xxxxx Xxxxx
Xxxxxxxx, XX 00000
Attention: General Counsel
Fax: (000) 000-0000
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(b) Notice sent to Ford will be addressed as follows:
Ford Motor Company
Office of the Secretary
One American Road
00xx Xxxxx Xxxxx Xxxxxxxxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Fax: (000) 000-0000
(c) The Parties by notice hereunder may designate other addresses
to which notices will be sent.
11.3 Amendments. No amendment to this Agreement will be binding upon either
Party unless it is in writing and is signed by a duly authorized
representative of each Party. This Agreement supersedes any prior
agreements between the Parties concerning the subject matter herein.
11.4 Assignments. This Agreement shall be binding upon and inure to the
benefit of the Parties, and their respective successors and permitted
assigns, but no rights, interests or obligations of either Party herein
may be assigned without the prior written consent of the other, which
consent shall not be unreasonably withheld.
11.6 Severability. If any provision of this Agreement, or portion thereof,
is invalid or unenforceable under any statute, regulation, ordinance,
executive order or other rule of law, such provision, or portion
thereof, shall be deemed reformed or deleted, but only to the extent
necessary to comply with such statute, regulation, ordinance, order or
rule, and the remaining provisions of this Agreement shall remain in
full force and effect.
11.7 Governing Law. This Agreement will be construed and enforced in
accordance with the laws of the State of Michigan, excluding its
conflict of laws rules. Each Party consents, for purposes of enforcing
this Agreement, to personal jurisdiction, service of process and venue
in any state or federal court within the State of Michigan having
jurisdiction over the subject matter. The Parties exclude the
application of the 1980 United Nations Convention on Contracts for the
International Sale of Goods, if otherwise applicable.
11.8 Agreement Conflicts. In the event of a conflict between the terms of
this Agreement and any Detailed Agreement, the terms of the Detailed
Agreement shall control.
11.9 Disputes. If a dispute arises between the Parties relating to this
Agreement, the following shall be the sole and exclusive procedure for
enforcing the terms hereof and for seeking relief, including but not
limited to damages, hereunder; provided, however, that a Party may seek
injunctive relief from a court where appropriate solely for the purpose
of maintaining the status quo while this procedure is being followed:
(a) The Parties promptly shall hold a meeting of the Governance
Council to attempt in good faith to negotiate a mutually
satisfactory resolution of the dispute; provided, however,
that no Party shall be under any obligation whatsoever to
reach, accept or agree to any such resolution; provided
further, that no such
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meeting shall be deemed to vitiate or reduce the obligations
and liabilities of the Parties or be deemed a waiver by a
Party hereto of any remedies to which such Party would
otherwise be entitled.
(b) If the Parties are unable to negotiate a mutually satisfactory
resolution as provided above, any Party may so notify the
other. In that event, the Parties agree to participate in good
faith in mediation of the dispute. Such mediation shall
conclude no later than forty-five (45) days from the date that
the mediator is appointed. If the Parties are not successful
in resolving the dispute through mediation, then the Parties
agree to submit the matter to binding arbitration before a
sole arbitrator in accordance with the CPR Rules for
Non-Administered Arbitration. Within five business days after
the selection of the arbitrator, each Party shall submit its
requested relief to the other Party and to the arbitrator with
a view toward settling the matter prior to commencement of
discovery. If no settlement is reached, then discovery shall
proceed. Upon the conclusion of discovery, each Party shall
again submit to the arbitrator its requested relief (which may
be modified from the initial submission) and the arbitrator
shall select only the entire requested relief submitted by one
Party or the other, as the arbitrator deems most appropriate.
The arbitrator shall not select one Party's requested relief
as to certain claims or counterclaims and the other Party's
requested relief as to other claims or counterclaims. Rather,
the arbitrator must only select one or the other Party's
entire requested relief on all of the asserted claims and
counterclaims, and the arbitrator will enter a final ruling
that adopts in whole such requested relief. The arbitrator
will limit his/her final ruling to selecting the entire
requested relief he/she considers the most appropriate from
those submitted by the Parties.
(c) Mediation and, if necessary, arbitration shall take
place in the City of Dearborn, Michigan unless the Parties
agree otherwise or the mediator or the arbitrator selected by
the Parties orders otherwise. Punitive or exemplary damages
shall not be awarded. This clause is subject to the Federal
Arbitration Act, 28 U.S.C.A. Section 1, et seq., or comparable
legislation in non-U.S. jurisdictions, and judgment upon the
award rendered by the arbitrator may be entered by any court
having jurisdiction.
11.10 Counterparts. This Agreement may be executed by the Parties in separate
counterparts, each of which when so executed and delivered will be an
original, but all such counterparts will together constitute one and
the same instrument.
11.11 Binding Agreement. To the extent that a Detailed Agreement is binding
upon or inures to the benefit of one or more subsidiaries or affiliates
one of the Parties to this Agreement, then a default under such
Detailed Agreement by or against one of such subsidiaries or affiliates
shall be deemed a default under this Agreement and shall give rise to
the rights hereunder with respect to the Governance Council and under
Article 9 hereunder.
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IN WITNESS WHEREOF, Ford and Visteon have caused this Agreement to be executed
in multiple counterparts by their duly authorized representatives.
VISTEON CORPORATION FORD MOTOR COMPANY
By: /s/ Xxxxxx X. Xxxxxxx By: /s/ Xxx Xxxxxxx
------------------------------ ------------------------------
Title: Executive Vice President Title: Group Vice President & CFO
and Chief Financial Officer
Date: 12/19/03 Date: 12/19/03
EXHIBIT A
Governance Council
CHARTER
- Provide a forum in which senior members of the Ford and Visteon leadership
teams will:
- Monitor the Ford-Visteon relationship on a global basis-with a
particular emphasis on sourcing and pricing decisions in North
America;
- Assess progress toward the goals of the 2003 Relationship Agreement,
including:
- That Visteon achieves the goal of becoming a profitable and
growing business and remains a top-quality supplier to Ford, as
was contemplated at the time of Visteon's spin-off from Ford;
- That Ford achieves competitive price reductions and achieves
fully competitive prices from Visteon, over time, contributing to
its profitable growth.
- That Ford and Visteon work collaboratively to meet the
commitments made in the UAW settlement in September 2003.
- That Ford and Visteon will establish a basic framework for
working cooperatively on their ongoing commercial relationship.
- Recommend actions to their respective teams to support achievement of
the goals stated above.
- Resolve interpretations of the 2003 Relationship Agreement and
resultant policy when required.
AUTHORITY
- It is expected that the co-chairs of the Council will be delegated
authority, as appropriate, from their respective CEO's to commit their
companies to actions to carry out the intent of the agreement.
WHAT THE GOVERNANCE COUNCIL WILL DO
- Set the standards for the relationship between Ford and Visteon by ensuring
that both Parties meet the letter and spirit of the agreement; monitor the
relationship between the companies, and take action if required.
- Review, on a regular basis, decisions made by both Parties for alignment
with the 2003 Relationship Agreement-with a particular emphasis on
sourcing decisions by Ford and pricing actions by Visteon; discuss emerging
issues and progress toward near-term objectives.
- Conduct quarterly business reviews to assess each Party's progress toward
the goals of the 2003 Relationship Agreement.
- Communications coordination.
- Review major new actions that could accelerate accomplishment of the goals
in the 2003 Relationship Agreement and assign joint work teams to pursue
actions requiring collaboration between the companies.
- Review disputes or potential issues that involve interpretation of policy
or actions deemed by either Party to be inconsistent with the intent of the
2003 Relationship Agreement and provide guidance to the appropriate
executives in resolving them.
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WHAT THE GOVERNANCE COUNCIL XXXX NOT DO
- Negotiate prices, terms, or conditions or intervene in normal commercial
negotiations.
- Approve individual sourcing decisions.
- Exceptions to the above include disputes about interpretation of policy or
consistency with the intent of the agreement, or compliance with the terms
of the Purchase and Supply Agreement.
RECOMMENDED MEMBERSHIP
- Ford: Chief Financial Officer (co-chair), President, North American
Operations, Vice President-Labor Affairs
- Visteon: Chief Financial Officer (co-chair), President and Chief Operating
Officer, Senior Vice President-Corporate Relations
- Co-Secretaries: One appointee from each of Ford and Visteon
MEETING FREQUENCY
- Monthly
- It is expected that after the meetings and review process are well
established, the meeting frequency could be reduced to quarterly. If this
occurs, the co-secretaries would monitor selected data and decisions and
keep committee members advised, as appropriate, with periodic (e.g.
monthly) status reports between meetings.
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