[Insert Company Name]
[Company name]
Response to
Commonwealth of Massachusetts
Request for Response TRE-DBT-RFR 2014 –
Swap Related Services RFR
SWAP ADVISOR
Submitted on [date of submittal]
Proposal Due Date: Friday, August 29, 2014 at 1:00 PM EDT
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[Insert Company Name]
Response Checklist
Response Item
Response
Template
Page Number
Cover Letter Instructions
4
Legal and Other Requirements
5-6
Questionnaire
7-11
Mandatory Forms and Supporting Material
11
Massachusetts Substitute W-9 Form
13
Contractor Authorized Signatory Listing
14
Tax Compliance Certification
15-16
Treasury Supplier Diversity Program
17
Invest in Massachusetts Plan
17
Certificate of Non-Collusion
18
Fidelity Bond or Certificate of Liability Insurance
18
Electronic Funds Transfer (EFT)
19
Commonwealth Terms and Conditions
20
Standard Contract Form
18
20-22
Cost Response
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[Insert Company Name]
General Instructions – MUST BE FOLLOWED
Instructions:
This is the Response Template for bidders interested in serving as Swap Advisor. There is a
separate Response Template for bidders interested in serving as Swap Monitor. Bidders
interested in serving in both roles should complete both templates completely.
The following pages are the exact form and format that all responses are to follow and use. For
each form or document there is a brief “Instructions” section that precedes the form or
document giving bidders as much information as possible explaining how to fill in the form.
Please follow these instructions exactly.
Do not change the order of the forms or documents when providing a response. If you must
separate your response into different files due to size or logistical constraints, please provide the
files in a manner that retains the sequence defined herein and name the files [Bidder Name]
Response to TRE Debt Management –Swap Related Services RFR File X of Y where “X” is the
sequence of the files and “Y” is the total number of separate files.
Please make sure that all signatures on all forms are listed in the table at the top of the form
called “Contractor Authorized Signatory Listing”. There should be no signature on any form
that is not listed in that table. Also, please make sure you fill in all required lines, boxes, etc. on
each form as the instructions dictate.
Do not put any cost related information in the main portion of the response. All cost related
information, either direct, or that can be derived, must only be in the cost proposal portion of the
response.
Do not delete any forms, do not remove any forms. All forms are REQUIRED even if in some
cases you are simply signing the form or you feel the form does not apply to your firm. There is
no form or submission that is considered optional. If you need to separate the forms in order to
get them signed and scanned either put them in the file (PDF) in the same order or add them as a
separate file as indicated above as “TRE Debt Management –Swap Related Services RFR”.
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Cover Letter Instructions
Instructions: the Cover Letter and Executive Summary (signed). The Response must include a
cover letter, limited to two pages, which must be signed by at least one individual who is
authorized to bind the firm contractually and must include:
a.
The firm name
b.
The firm address
c.
The firm telephone/fax number/email address
d.
The client contact (do not list multiple names for the “Primary Point of Contact”)
e.
The title or position which the signer of the cover letter holds in the firm
f.
An executive summary of the contents of the Response
g.
A statement to the effect that the Proposal is a firm and irrevocable offer that will be
valid until 30 days from the Contract Award Date, and if the Bidder is awarded
hereunder, until the effective date of the applicable agreement.
h.
Signature
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[Insert Company Name]
Legal and Other Requirements
Instructions: Confirm by checking each legal and other requirement. Where an item cannot be
checked as 100% compliant, provide an explanation or clarification of why the item could not be
checked or where there are stipulations on the verification of the requirement as stated. Make
sure that each and every item is checked and all requested information is provided.
 Compliance with RFR Requirements. Our firm agrees to meet every specification,
requirement, or condition set forth in the RFR.
 Licenses and Registrations. Our firm meets all applicable state and federal
requirements, and has all the licenses and registrations necessary to perform the contract.
 Pending Litigation (None): There are no pertinent judgments, criminal convictions,
investigations or litigation pending against our firm or any of its officers, directors,
employees, agents or subcontractors that our firm is aware of. The Commonwealth
reserves the right to reject a response based on this information. If separate responses are
required for different divisions or subsidiaries of the Bidder, the Bidder must submit a
separate response for each division or subsidiary.
 Pending Litigation (Yes): Our firm is aware of the following pertinent judgments,
criminal convictions, investigations and/or litigations pending against our firm and/or any
of our officers, directors, employees, agents or subcontractors.
[List and detail any pending litigation here.]
The Commonwealth reserves the right to reject a response based on this information. If separate
responses are required for different divisions or subsidiaries of the Bidder, the Bidder must
submit a separate response for each division or subsidiary.
 Conflict of Interest. No relationship exists between our firm and the State Treasurer’s
office or The Commonwealth of Massachusetts that interferes with fair competition or is
a conflict of interest, and no relationship exists between our firm and another person or
organization that constitutes a conflict of interest with respect to a state contract.
The Commonwealth may waive this provision, in writing, if these activities of the Bidder will
not be adverse to the interests of the Commonwealth. No official or employee of the
Commonwealth who exercises any function or responsibility in the review or approval of the
undertaking or carrying out of this project shall, prior to the completion of the project,
voluntarily acquire any personal interest, either directly or indirectly, in this contract or proposed
contract.
 Our firm presently has no interest and shall not acquire any interest, either directly or
indirectly, which will conflict in any manner or degree with the performance of its
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services hereunder. The Bidder shall also provide assurances that no person having any
such known interests shall be employed during the performance of this contract
 Cease and Desist: If selected for any services solicited through this RFR, our firm
agrees to immediately notify the Commonwealth of any cease and desist order issued.
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[Insert Company Name]
Questionnaire
Instructions: Each question must be answered in the space following the question.
1. Regulatory. Please specify whether or not you satisfy the requirements of CFTC
Regulation 23.450 (b), (c) and (d) and if you will enter into written agreements with the
Commonwealth and its counterparties in which you will agree to act as a qualified
independent representative to the Commonwealth and you will make the representations
and covenants required by CFTC Regulation 23.450 and, in addition, if requested by the
Commonwealth, if you will execute applicable ISDA Protocol documentation or similar
documentation as the Designated QIR to the Commonwealth. Please describe your
experience in this area.
2. Advisory. Describe how your firm evaluates proposals or ideas involving interest rate
swaps in general and their appropriateness for the Commonwealth. Please describe the
role that you feel derivatives should play within the Commonwealth’s financing structure
going forward.
Please describe your experience and ability in helping your clients assess proposals from
potential swap counterparties and in preparing a sensitivity analysis for your clients so that
they can evaluate such proposals under different economic conditions. As part of your
response, please describe the process you would develop/follow with the Commonwealth in
assessing any proposal involving a swap and how you would form a recommendation. Please
be as specific as possible.
Please describe your experience and ability in assisting clients evaluate swap pricing
proposed by counterparties (i.e. establishing mid-market pricing levels, profit spread of
counterparty, etc.) with regard to new swaps (procured for via competitive auction or
negotiated transaction), adjustments to existing swaps (shortening of the swap, termination,
or replacement of counterparty via novation or market quotation process). Please be as
specific as possible in describing the process you would set up to ensure the best possible
outcome (bets price, transparency, best execution, etc.) for the Commonwealth.
Discuss the appropriateness of using swaps, and in particular fixed-receiver swaps, as a
means of achieving the Commonwealth’s target portfolio mix of fixed-rate versus floatingrate debt. To better understand the state’s pro forma long-term financing strategy, please see
the Commonwealth’s investor presentation entitled “MA ALM Credit Presentation Final”
posted under News & Events on the state’s investor website www.massbondholder.com.
Discuss the relevant benefits and risks against other forms of floating-rate debt. Discuss the
optimal structure of such a swap to achieve floating rate exposure.
3. Swap Documents. Please describe your experience working with both clients and the
clients’ swap counsel in developing standard swap documents or in negotiating a new
swap document with a new or existing counterparty. How would you set up a document
review process?
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4. MTM & Collateral Calculations. Please describe your ability to calculate the mark-tomarket value and the value of the collateral posted or to be posted pursuant to any Credit
Support Annex of the Commonwealth’s swap transactions on a daily basis and to
calculate the termination value of a swap transaction for the Commonwealth as well as
the periodic payments to be made by or to the Commonwealth on its swap transactions.
Please also explain your experience with these calculations on other transactions for
clients. If the Commonwealth were in a situation in which the counterparty was posting
collateral, please describe your process for confirming the collateral value to be posted,
tracking that value, etc. Would you recommend that in that type of situation the
Commonwealth engage a third party to handle collateral?
5. Monitoring. Discuss your firm’s abilities to monitor the Commonwealth’s swap
portfolio on an ongoing, real-time basis. Discuss risk measures and risk management
models that your firm employs including market-to-market, expected loss, peak loss and
value at risk. Identify the data sources your firm will use in conducting its monitoring.
6. Pricing Process. Provide your firm’s criteria or policy/procedure for determining
competitive or negotiated methods of procuring swaps.
For negotiated swaps, discuss the procedures you would use in pricing a swap on behalf of
the Commonwealth to achieve the best possible execution including the minimization of fees,
credit spread and other compensation to the counterparties. Please describe the review of
potential counterparties.
For competitive swaps, discuss the bidding process you would use that will ensure that the
Commonwealth receives the best possible bids. Would you recommend an open auction or
would you recommend pre-qualifying bidders based on swap documents or counterparty risk
measures, etc.
7. Counterparty Risk. Discuss counterparty risk within the existing portfolio and provide
recommendations for how the Commonwealth can best mitigate this risk. Would you
recommend the Commonwealth calculate and monitor maximum peak exposure per
counterparty? How regularly should counterparty risk be measured and reported?
8. Accounting & GASB 53. Please describe your experience and ability in assisting your
clients in assessing the accounting rules relating to their swap transactions. As part of
your response, please discuss the impact of GASB 53 reporting requirements on the
Commonwealth and examples where your firm is providing assistance to other issuers
with GASB 53 compliance.
9. Credit. Discuss the potential credit rating impact of the Commonwealth’s use of swap
agreements and describe strategies for how the Commonwealth can use swaps to achieve
its financing goals while maintaining and/or enhancing its credit ratings.
10. Swap Market Liquidity & Swap Structures. Discuss the liquidity and depth of the
SIFMA and LIBOR swap markets in terms of fixed-to-floating swap structures and the
implications for the Commonwealth in terms of the optimal notional size swap to execute
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[Insert Company Name]
efficiently and method of sale. Are CPI-based swaps a better potential structure for the
Commonwealth?
For new swap agreements (if applicable), please discuss the pros and cons of structuring a
call option into the agreement. Identify the relevant purposes and objectives of structuring a
call option, and describe how your firm would determine the fair value. Describe the process
and/or software that your firm employs to price options. How could swap agreements
structured with call options be complementary to the Commonwealth’s long-term financing
strategy?
11. Portfolio Analysis. Provide a detailed description of the Commonwealth’s current swap
portfolio. Address the following two questions from an aggregate portfolio perspective.
First, what are the sensitivities of the Commonwealth’s current portfolio’s cash flow and
mark-to-market value to movements in interest rates and changes in the ratio between
SIFMA- and LIBOR-based indices? Second, what swap products or types of products or
swap features would reduce the inherent risk of the overall swap portfolio? Please
provide details of the portfolio theory and analytical models you would use to make these
determinations. Discuss how this model can accommodate scenario analysis in which
individual swap proposals can be evaluated on a portfolio basis. Are there benefits of
comparing how the swap portfolio performs on a quarterly basis against a relative
benchmark?
As part of its new quarterly Asset/Liability Management Committee (or “ALCO”) process,
what sort of metrics or analysis with regard to the swap portfolio should the Commonwealth
consider reporting?
12. Financing Ideas. Describe the two best ideas involving derivative products that you feel
the Commonwealth should focus on in the current market. Is now a good time to execute
these strategies? If not, what should be the Commonwealth’s execution strategy for these
ideas?
13. Experience Dealing with Lehman Brothers Bankruptcy. Please detail the firm’s
experience dealing with the Lehman Brothers bankruptcy in terms of swap agreements.
14. Experience and Organizational Support.

Relevant Experience. Please describe, in detail, five (5) engagements since 1/1/2012 where
your firm has provided relevant or similar services for other municipal issuers. Of the five
engagements, please include examples of at least four of the following: a new swap
agreement, a swap termination, a swap counterparty replacement (novation or market
quotation process), or an instance where you advised the issuer not to enter into the swap or
to adjust an existing swap agreement.
For each engagement, highlight the extent of your firm’s involvement in evaluating the
proposal and, where applicable, the pricing and execution. Please briefly describe the issuer,
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[Insert Company Name]
their ratings, the swap counterparty and their ratings, the structure of the proposed swap and
the circumstances in which it was being done (or being proposed).
For each engagement, please provide the logic behind your advice to proceed (or to not
proceed). For new swap agreements, please provide the logic behind your advice of using a
competitive or a negotiated process. For a competitive swap, please also describe the bidding
process. Explain the negotiation process for the negotiated swap. Provide a breakdown of
the components of the spread charged by the counterparties. Please summarize specific
circumstances, either procedural or in the terms of the swap, which affected the components
of the spread and discuss each component of the spread. For a swap counterparty
replacement, please provide the logic behind your advice to use market quotation or a
novation process.

Massachusetts Experience. Discuss the firm’s relevant experience with Massachusettsbased issuers specific to swaps over the past five years.

Biographies & Qualifications. Briefly discuss the firm’s personnel that would be providing
advisory services to the Commonwealth and describe in detail their professional
qualifications as swap advisors. Discuss only the people who would actually work on the
Commonwealth’s account. Specify the role each would play, as well as what backup
coverage would be available in times of conflicting engagements. Please provide resumes of
the individuals who would comprise your Swap Advisor team in a separate appendix.

References. Provide at least three verifiable references. Of the three listed references, two
should be issuers similar to the Commonwealth. By similar, we mean issuers of similar size,
purpose and credit; similar also refers to the size and complexity of the references’ swap
portfolio. For the third reference, please provide the name of a swap counsel that you and
your firm has worked with on a swap transaction since 1/1/2013. For all of the references,
please indicate the name, address, telephone number and e-mail address for each where your
firm was engaged as swap advisor.

Other information. Please discuss your firm’s organizational history. Additionally, please
provide any other substantive information about the firm that you think might be relevant to
this RFP.
15. Investor Disclosure & Other Reporting. Please review the section on derivatives in the
Commonwealth’s most recent disclosure dated July 18, 2014 as posted to the MSRB’s
EMMA website. Please provide suggestions for improving the Commonwealth’s
disclosure with regard to its swap portfolio. Is the current disclosure written in plain
English? How can we do a better job describing the portfolio and its risks? Are there
additional tables and charts that would be helpful to investors? Are there other municipal
issuers whose disclosure is potentially a model for the Commonwealth to follow?
16. Please review the Notes to the Basic Financial Statements pertaining to swaps in the
Commonwealth of Massachusetts Comprehensive Annual Financial Report for the Fiscal
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[Insert Company Name]
Year Ended June 30, 2013 (page 93). If applicable, please briefly describe how these
notes could be more insightful to investors and taxpayers.
17. Please review the Commonwealth’s investor website at www.massbondholder.com. How
could the Commonwealth enhance its transparency through its investor website with
regard to its derivative portfolio? Please provide specific examples of enhancements to
the website that the Commonwealth could make. If you are aware of another municipal
issuer or corporation or other governmental entity that does a superior job in terms of
website disclosure and reporting of derivatives, please detail what this issuer does and
why you find their website disclosure helpful.
18. Reporting. Please provide recommendations for public reporting with regard to the
Commonwealth’s swap portfolio, including regular reporting of changes to mark-tomarket valuations, counterparty risk measures, etc. If you have helped other issuers
develop regular reporting with regard to their swap portfolio, please provide examples.
19. Conclusion. Discuss why your firm is best suited to act as swap advisor for the
Commonwealth of Massachusetts.
20. Other. Please complete Attachment B (see RFR).
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[Insert Company Name]
MANDATORY FORMS AND SUPPORTING MATERIAL
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[Insert Company Name]
Massachusetts Substitute W-9 Form
Instructions: Click on the link below to open a copy of the W-9 form. Follow the instructions
and paste the filled in form on this page or provide as an attachment. Filling in the form and
signing is required. You do not need to provide a copy of the 2nd page instructions.
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[Insert Company Name]
Contractor Authorized Signatory Listing
Instructions: Please note, this form typically accounts for 80% of the cures necessary during
procurements due to bidders not following the instructions. Please read all instructions
carefully at the bottom of this page is a link to the proper Contractor Authorized Signatory
Form. Follow the instructions below and paste the filled in form on this page or provide as an
attachment. Filling in the form and signing is required. It is essential that the person signing
the cover letter and all forms is listed on this form as a signature legally authorized to bind the
firm. Please fill in your firm’s name at the top of the page where it says Contractor Legal Name.
The person or people signing any of the
proposal documents must be listed here.
This signature must be one of these
corporate officers and Bidder must
supply notarized corporate
documents showing that the
signatory has the right to delegate
binding corporate authority.
casl-form.pdf
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[Insert Company Name]
Tax Compliance Certification
Instructions: The Bidder must demonstrate that it is in compliance with all Federal and Commonwealth tax
laws (regardless of corporate locations) including M.G.L. Chapter 62C, Section 49A. The Bidder must
submit an original or photocopy of a Certificate of Tax Compliance in Good Standing, which has been issued
by the Commonwealth of Massachusetts Department of Revenue (DOR) within the past year. This Certificate
may be obtained by submitting a request to:
Taxpayer Services Division, Certificate Unit
Department of Revenue
PO Box 7066
Boston, Massachusetts 02204
(617) 887-6550
The application must list the tax types for which the business is liable, including such items as meals, room
occupancy, sales, use, withholding, corporate income and others as applicable. The issuance of the
certificate normally takes several weeks and, as such, Bidders should indicate that their request for a
certificate is sought in connection with a Commonwealth solicitation (with a deadline). If the Bidder does not
submit the requested tax certificate with the proposal, the Bidder must submit documentation evidencing that
the appropriate application has been filed. Evidence includes: facsimile transmittal, mailing receipt, receiptstamped application, etc. The Certificate must be issued and provided to the Treasury prior to the final
execution of the Standard Contract Form.
Simplified Instructions/Clarifications:
 A proper response to this requirement entails one of the following two submission requirements:
 If your firm DOES NOT HAVE A CURRENT (within the past year) Massachusetts
Compliance Certificate:


If requested via FAX You must provide 2 things:

A copy of the filled in request form that was sent to MA DOR. If this
method is used, you simply need to print a copy of the request
confirmation and insert an image or hardcopy in this response template.

A copy of the transmission request. Make sure you retain a copy of the
fax transmittal confirmation receipt and provide an image or Photocopy
of the proof of transmittal along with a copy of the original form faxed.
If you requested via the MA DOR Website at
https://wfb.dor.state.ma.us/webfile/certificate/Public/Webforms/Welcome.aspx
you only need to provide a screenshot or copy of the request confirmation
showing the request number
 If your firm DOES HAVE A CURRENT (within the past year) Massachusetts
Compliance Certificate which is has a date of certificate no more than one year from your
submission date of this proposal, then provide a copy of the certificate.
 Do not provide a copy of the Secretary of State form from Massachusetts or your state of
incorporation certifying that you are a registered corporation in your state or in Massachusetts.
The form required is a Tax Compliance form that can only come from the Commonwealth of
Massachusetts’ Department of Revenue. Even if you are not a registered tax-paying corporation
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in Massachusetts, the Massachusetts DOR will still supply a Tax Compliance certificate upon
request.
Clicking on the link below is the PDF form to be sent to the Massachusetts DOR:
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[Insert Company Name]
Treasury Supplier Diversity Program
Instructions: Firms are required to fill in and submit this form even if they choose not to
participate in the program. If a firm does not wish to participate they should fill in Part I of the
form only and sign the form. Firms are welcome to cross out the other Parts of the form to make
it clear that they are not participating. Firms are not obligated to participate in this program.
However, as much as 5% of the scoring points are allocated to a high quality TSDP.
A link for the TSDP response form is located below. Provide this form (page 1 only) along with
your response in this section. Bidder’s Supplier Diversity Program Plan must include a copy of
the TSDP certification of each Minority and Women Business Enterprise (M/WBE) company
listed for consideration. A certified Bidder may not list itself as being a Supplier Diversity
Program Partner to its own company. This form is NOT the same as the SDO certification of the
Bidder’s company.
TSDP Form.doc
Invest in Massachusetts Plan
Instructions: Firms are required to fill in and submit this form even if they choose not to
participate in the program. If a firm does not wish to participate they should fill in Part I
completely and in Part II check the “no” box. Firms are welcome to cross out the other parts of
the form to make it clear that they are not participating.
Firms are not obligated to participate in this program. However, as much as 5% of the scoring
points are allocated to a high quality Invest in Massachusetts plan. A link for the Invest in MA
response form is located below. Provide the form (not the instructions also included in a link
below) along with your response in this section.
Invest_in_MA_Instru
ctions.doc
Invest_in_MA_Data_
Form.doc
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[Insert Company Name]
Certificate of Non-Collusion
Instructions: This form must be filled in fully and provided. A link to the Certificate of NonCollusion response form is located below. Insert a signed version of this form here (either as a
pasted image or as a hardcopy).
Fidelity Bond or Certificate of Liability Insurance
Instructions: Bidders are required to provide a copy or proof of any fidelity bond or liability
insurance policy extending to any or all employees who perform work under the contract.
[Insert image of proof or copy here.]
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[Insert Company Name]
Electronic Funds Transfer
Instructions: Fill in the attached form and insert the filled in version of the form on this page of
your response or use the on-line sign-up service at
https://massfinance.state.ma.us/VendorWeb/vendor.asp
Blank EFT Form.pdf
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[Insert Company Name]
Cost Response
This response section MUST be submitted in a separate document
from the prior pages. Submit in a separate sealed envelope.
Cut and Paste the following into a separate document. 
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[Insert Company Name]
[Company name]
COST RESPONSE
to
Commonwealth of Massachusetts
Request for Response TRE-DBT-RFR 2014 – Swap Related Services
RFR
Submitted on:
Page 21
[Insert Company Name]
Please provide your firm’s lowest bid for the following types of services:
1. All-in costs associated with a swap counterparty replacement via a negotiated process
(novation)
2. All-in costs associated with a swap counterparty replacement via a competitive process
(market quotation)
3. All-in costs associated with the execution of a new swap agreement via a competitive
process
4. All-in costs associated with the execution of a new swap agreement via a negotiated
process
5. All-in costs associated with the termination of a new swap agreement
6. Annual swap accounting analysis for the Commonwealth’s audit (GASB 53, etc.)
7. Document review and/or negotiation of a new document between the Commonwealth and
a swap counterparty not associated with the transactions listed above.
Please provide your firm’s lowest hourly rate for other swap advisory work (not covered above)
that the Commonwealth may require. Please break-out the rates by title or position of the
employees (or types of employees) the firm is expected to assign to the Commonwealth
(managing director, director/vice president, analyst, etc.):
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