EXHIBIT 10.11
EMPLOYMENT AGREEMENT
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THIS EMPLOYMENT AGREEMENT (this "Agreement"), is made and entered into
as of July 1, 1999, by and between Xxxxx X. Xxxxxxxx, a resident of the State of
Georgia ("Employee"), and Community Loan Company ("CLC"), an industrial loan
subsidiary of Community Trust Financial Services ("CTFS"), a Georgia bank
holding company.
W I T N E S S E T H:
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WHEREAS, CLC wishes to obtain assurances from Employee that CLC will
have the benefit of Employee's services on the terms and subject to the
conditions set forth herein; and
WHEREAS, Employee wishes to obtain assurances from CLC on the terms
and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements contained herein, CLC and Employee agree as follows:
1. Employment. CLC hereby employs Employee, and Employee hereby
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accepts such employment and agrees to perform services for CLC, for the period
and upon the other terms and conditions set forth in this Agreement.
2. Term. The term (the "Term") of Employee's employment hereunder
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shall be for a period of five (5) years, commencing as of the date of this
Agreement and ending on June 30, 2004, subject to earlier termination as
hereinafter specified. Unless notified in writing by the other party thirty
(30) days in advance of the next scheduled termination date, this contract shall
renew automatically for a one year term until the employee's seventieth (70)
birthday, January 23, 2007, at which time the contract will expire.
3. Position and Duties.
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3.01 Service with CLC. During the term of this Agreement,
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Employee shall serve as, and his title shall be, President of Community Loan
Company. In such position, Employee agrees to perform such employment duties
consistent with such position as the CEO of CTFS shall assign to him from time
to time. Employee also agrees to serve, during the Term hereof, as requested by
the Board of Directors of CTFS as a Director of CTFS and/or a Director of CLC.
3.02 Performance of Duties. Employee agrees to serve CLC
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faithfully and to the best of his ability and to devote all of his time, energy
and skill during regular and assigned business hours to such employment. During
the Term hereof, Employee shall not serve as an officer, director or employee of
any other entity not affiliated with CLC without the prior written consent of
the CEO of CTFS. Notwithstanding the foregoing, (i) Employee may pursue such
personal investment and financial matters as do not conflict with his
obligations and commitments to CLC, (ii) Employee
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may participate in charitable, religious or civic activities such as serving on
a school board, church board or community fund committee and (iii) Employee may
participate in such other activities as the CEO of CTFS may from time to time
approve in writing. Employee hereby confirms that he is under no contractual
commitments inconsistent with his obligations set forth in this Agreement.
4. Compensation.
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4.01 Base Salary. As compensation for all services to be
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rendered by Employee under this Agreement, CLC shall pay to Employee an initial
annual base salary for the period from July 1, 1999 through and including June
30, 2000, of $85,000.00. The base salary shall be subject to annual increase by
an amount equal to the product of (i) the "CPI Adjustment" (hereinafter defined)
multiplied by (ii) the base salary in effect immediately prior to such increase.
The effective date of all such increases shall be July 1 of the year in which
the adjustment takes effect. The base salary described in this Section 4.01, as
it may be increased from time to time, is referred to herein as the "Base
Salary." The Base Salary shall be paid in bi-weekly installments in accordance
with CLC' normal payroll procedures and policies.
For purposes of this Section 4.01, "CPI Adjustment" shall mean the
lesser of (i) 7.5% or (ii) the percentage increase, if any, in the "CPI-U Index"
(hereinafter defined) between (a) the average CPI-U Index for the year
immediately preceding the year in which the Base Salary adjustment in question
is to take effect and (b) the average CPI-U Index for the immediately preceding
year. "CPI-U Index" shall mean the "Consumer Price Index For All Urban
Consumers, Atlanta, Georgia (1982-84=100) as published by the Bureau of Labor
Statistics of the United States Department of Labor. If the CPI Adjustment is
zero or a negative number, the amount of the CPI Adjustment shall, for purposes
of this Section 4.01, be deemed to be zero.
By way of example, if: (i) Employee's Base Salary in effect on
December 31, 1998 is $85,000; (ii) the average CPI-U Index for 1998 (as
published by the Bureau of Labor Statistics in February, 1999) is 158.4; and
(iii) the average CPI-U Index for 1997 (as published by the Bureau of Labor
Statistics in February, 1998) is 156.0, then, effective January 1, 1999, the
Base Salary increase would be calculated as follows:
CPI Adjustment = 1.54% (158.4 - 156.0 = 2.4; 2.4 /156.0 =1.54%)
Base Salary Increase = $1,309 ( $85,000 x 1.54%)
New Base Salary = $86,309 ( $85,000 + 1,309)
4.02 Incentive Compensation. Employee shall be eligible for
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incentive pay equal to fifteen percent of salary if performance goals set by the
CEO of CTFS are met.
4.03 Section Not Used
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4.04 Participation in Benefit Plans. Employee shall also be
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entitled to participate, on a comparable basis with other senior executives of
CLC, in all employee benefit plans or
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programs of CLC in effect from time to time including, but not limited to,
medical, dental, life and disability insurance programs. Employee's
participation in any such plan or program shall be subject to all provisions,
rules and regulations applicable thereto. Notwithstanding anything in this
Section 4.04 to the contrary, Employee's participation in bonus or incentive
compensation programs and stock option programs shall be governed by the
specific provisions of Section 4.02 hereof and not by this Section 4.04.
4.05 Expenses. In accordance with CLC' policies established from time
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to time, CLC shall pay or reimburse Employee for all reasonable and necessary
out-of-pocket expenses incurred by him in the performance of his duties under
this Agreement, subject to the presentment of appropriate vouchers and receipts.
5. Confidentiality.
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5.01 General. In Employee's position as an employee of CLC, Employee
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has had and will have access to confidential information, trade secrets and
other proprietary information of vital importance to CLC. CLC requires as a
condition to Employee's employment with CLC that Employee agrees to certain
restrictions on Employee's use of the proprietary information and valuable
relationships developed during Employee's employment with CLC. In consideration
of the terms and conditions contained herein, the parties hereby agree as
follows:
5.02 Fiduciary Responsibility. CLC and Employee mutually agree and
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acknowledge that CLC may entrust Employee with highly sensitive confidential,
restricted and proprietary information concerning various "Business
Opportunities" (hereinafter defined), customer lists, and personnel matters.
Employee acknowledges that, as an essential element of Employee's employment
with CLC, Employee shall bear a fiduciary responsibility to CLC to protect such
information from use or disclosure that is not necessary for the performance of
Employee's duties hereunder.
5.03 Definitions. For the purposes of this Agreement, the following
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definitions shall apply:
(a) "Trade Secret" means information, without regard to form, including,
but not limited to, technical or non-technical data, formulas, patterns,
compilations, programs, devices, methods, techniques, drawings, processes,
financial data, financial plans, product plans, or lists of actual or potential
customers or suppliers, which (i) are not commonly known by or available to the
public, (ii) derives economic value, actual or potential, from not being
generally known to, and not being readily ascertainable by proper means by,
other persons who can obtain economic value from its disclosure or use and (iii)
is the subject of efforts that are reasonable under the circumstances to
maintain its secrecy. Trade Secret also shall include any other information
defined as a "trade secret" under the Georgia Trade Secrets Act of 1990,
O.C.G.A. Section 10-1-760 through Section 10-1-767.
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(b) "Confidential Information" shall mean any data or information, other
than Trade Secrets, which is material to CLC and which is not generally known by
the public. Confidential Information shall include, but not be limited to, data
or information related to (i) the loaning of money in amounts of $3,000 or less
pursuant to the Georgia Industrial Loan Act (O.C.G.A. Section 7-3-1 et seq.)
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("Business of CLC"), (ii) any information pertaining to the identity of the
customers, depositors or borrowers served by, or Business Opportunities
(hereinafter defined) of CLC, (iii) the details of this Agreement, CLC's
respective business, marketing and acquisition plans and (iv) financial
statements and projections, and the costs of the services the CLC may offer or
provide to the customers they serve, to the extent such information is material
to CLC and not generally known by the public.
(c) "Business Opportunities" shall mean any specialized information or
plans of CLC concerning the business of CLC, including, but not limited to, the
financing of or investment in CLC, any target person, business or project,
together with all related information concerning the specifics of any
contemplated financing, investment, acquisition or purchase (including pricing,
terms, and the identity of such person, business or project) regardless of
whether CLC has entered any agreement, made any commitment, or issued any bid or
offer to such person, business or project.
(d) Notwithstanding the definitions of Trade Secrets, Confidential
Information and Business Opportunities set forth above, Trade Secrets,
Confidential Information and Business Opportunities shall not include any
information:
(i) that is or becomes generally known to the public (other than as
a result of a breach of this Agreement by Employee);
(ii) that is developed by Employee after termination of employment
through entirely independent efforts;
(iii) that Employee obtains from an independent source having a bona
fide right to use and disclose such information;
(iv) that is required to be disclosed by law, except to the extent
eligible for special treatment under an appropriate protective
order; or
(v) that the respective Boards of Directors of CTFS or CLC approve
for unrestricted release by express written authorization.
5.04 Trade Secrets. Employee shall not, without the prior written
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consent of the CEO of CTFS , during his employment with CLC and for so long
thereafter as the information or data remain Trade Secrets, use or disclose, or
negligently permit any unauthorized person who is not an employee of CLC to use,
disclose, or gain access to, any Trade Secrets of CLC, or of any of their
subsidiaries or affiliates, or of any other person or entity making Trade
Secrets available for CLC's (or any of their subsidiaries' or affiliates') use.
5.05 Confidential Information. Employee shall not, without the prior
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written consent of the CEO of CTFS , during his employment with CLC and for a
period of two (2) years after termination of his employment for any reason, as
long as the information or data remain
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competitively sensitive, use or disclose, or negligently permit any unauthorized
person who is not employed by CTFS or CLC to use, disclose, or gain access to,
any Confidential Information to which the employee obtained access by virtue of
his employment with CLC.
5.06 Observance of Security Measures. During Employee's employment
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with CLC, Employee is required to observe all security measures adopted to
protect Trade Secrets, Confidential Information and Business Opportunities of
CTFS or the Bank or CLC.
6. Solicitation of Customers, Borrowers or Depositors
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6.01 After Termination of Employment. Upon termination of this
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Agreement for any reason, Employee shall not, directly or indirectly, as
principal, agent, trustee or consultant or through the agency of any
corporation, partnership, association, trust or other entity or person, on
Employee's own behalf or for others, within two (2) years after such termination
actively solicit, divert, or take away, or attempt to actively solicit, divert,
or take away any customers of CTFS or CLC whom Employee had served during his
term of employment for the purpose of providing services which constitute the
Business of CLC (in each case as defined above).
6.02 During Employment. During Employee's employment with CLC,
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Employee shall not, except on behalf of CLC, solicit, divert, take away or
accept the business of, or attempt to solicit, divert or take away the business
of, any of the customers, depositors or borrowers of CTFS or CLC for the purpose
of performing the or Business of CLC for such customers.
7. Non-Interference with Personnel Relations.
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Employee shall not, during his employment with CLC and for a period of two
(2) years after the termination of his employment with CLC for any reason,
knowingly solicit, entice or persuade any other employees or agents of CTFS or
CLC (or of any of their subsidiaries or affiliates) to leave the services of
CTFS or CLC (or such subsidiary or affiliate).
8. Notification of Subsequent Employment.
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During a period of two (2) years after the termination of Employee's
employment with CTFS, Employee shall notify CLC in writing, within thirty (30)
days after accepting employment with any other corporation, partnership,
association, person, organization or other entity, of the name and address of
Employee's new employer and Employee's functions with his new employer.
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9. Covenant Not to Compete.
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9.01 Non-Competition. Employee covenants and agrees that for a period
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of one (1) year after the termination of his employment with CLC for any reason,
Employee shall not directly or indirectly, as principal, agent, trustee,
consultant or through the agency of any corporation, partnership, association,
trust or other entity or person, on Employee's own behalf or for others, provide
services that are the same as or similar to the services provided by Employee
under this agreement to or for the benefit of any person or entity conducting
the business of CLC within a geographic area covered by a circle having a radius
of twenty (20) miles from the location of each office of CLC as set forth on
Exhibit "A" to this agreement.
10. Termination.
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10.01 Grounds for Termination. This Agreement shall terminate prior
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to the expiration of the initial Term set forth in Section 2 or any extension
thereof in the event that at any time during such initial Term or any extension
thereof:
(a) CLC shall give notice to Employee that CLC is terminating this
Agreement without cause, which notice shall specify the effective date of
Employee's termination;
(b) Employee shall die or the Board of Directors of CLC shall
determine that Employee has become disabled (as defined in Section 10.02); or
(c) The Board of Directors of CLC shall determine that Cause exists.
"Cause" means (i) having been convicted under the laws of any governmental
jurisdiction of (A) a felony or (B) a criminal offense which is not a felony but
which has a material adverse effect on CLC (or any of its subsidiaries or
affiliates) or on the ability of Employee to carry out his duties hereunder
(provided, however, that in no event shall minor traffic violations constitute
"Cause"), (ii) having committed any action constituting theft or fraud against
CLC (or any of its subsidiaries or affiliates), (iii) the breach of any of the
Employee's covenants or obligations hereunder, (iv) the knowing failure of the
Employee to follow specific directives of the CEO of CTFS consistent with
Employee's duties or (v) the termination by Employee of his employment hereunder
prior to the expiration of the term of this Agreement, unless such termination
is pursuant to Section 10.01(d) or 10.01(e) hereof.
(d) Employee shall determine that CLC has breached this Agreement in
any material respect (including, but not limited to, CLC' failure to make any
payment required under this Agreement), which breach is not cured by CLC within
thirty (30) days after written notice of such breach is delivered to CLC by the
Employee.
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(e) Employee, within thirty (30) days following the occurrence of a
"Change in Control" (as defined in Section 10.03), notifies CLC, in writing,
that he is electing to terminate this Agreement pursuant to this Section
10.01(e).
(f) Employee purchases all or part of the assets of Community Loan
Company.
Notwithstanding any termination of this Agreement, in consideration of his
employment hereunder to the date of such termination, to the extent specifically
provided for herein, the Employee shall remain bound by the provisions of this
Agreement which specifically relate to periods subsequent to the termination of
Employee's employment hereunder.
10.02 "Disability" Defined. The Board of Directors of CLC may, in
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its discretion reasonably exercised, determine that Employee has become
disabled, for the purpose of Section 10.01(b) of this Agreement, in the event
that Employee shall fail, in one or more material respects, because of illness
or other physical or mental incapacity, to render services of the character
contemplated by this Agreement for an aggregate of more than ninety (90)
calendar days during any period of twelve (12) consecutive months.
10.03 "Change in Control" Defined. For purposes of this Agreement, a
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"Change in Control" shall be deemed to have occurred if more than fifty percent
(50%) of CTFS' outstanding common stock or equivalent in voting power of any
class or classes of outstanding securities of CTFS entitled to vote in elections
of its Directors, shall be acquired by any person or group of persons acting in
concert. Additionally, a Change in Control shall be deemed to have occurred if
(i) more than fifty percent (50%) of CTFS' outstanding common stock or
equivalent in voting power of any class or classes of outstanding securities of
CTFS entitled to vote in elections of its Directors, shall be acquired by any
person or group of persons acting in concert or (ii) substantially all of the
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assets of CTFS shall be sold to another person or (iii) substantially all of
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the assets of Community Loan Company shall be sold to someone other than the
Employee and (iv) at the time of the occurrence of (i), (ii) or (iii) Employee
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is serving as President of Community Loan Company.
10.04 Surrender of Records and Property. Upon the request of CLC
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and, in any event, upon termination of his employment with CLC, Employee shall
deliver promptly to CLC all records, manuals, books, blank forms, documents,
letters, memoranda, notes, notebooks, reports, data, tables, calculations or
copies thereof, which are the property of CTFS or CLC (or any of their
subsidiaries of affiliates) and which relate in any way to the business,
products, practices or techniques of CTFS or CLC (or any of their subsidiaries
or affiliates), and all other property, Trade Secrets and Confidential
Information of CTFS or CLC (or any of their subsidiaries or affiliates),
including, but not limited to, all documents which in whole or in part contain
any Trade Secrets or Confidential Information of CTFS or CLC (or any of their
subsidiaries or affiliates), which in any of these cases are in his possession
or under his control.
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11. Compensation Upon Termination.
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(a) In the event this Agreement is terminated pursuant to Section
10.01(a), 10.01(d) or 10.01(e) hereof, Employee will receive a lump sum payment
equal to the "Severance Amount" (hereinafter defined), in addition to (i)
payment to Employee of bi-weekly installments of his then current Base Salary
through the effective date of termination and (ii) reimbursement of expenses
incurred by Employee in accordance with Section 4.05 hereof. Additionally, in
the event this Agreement is terminated pursuant to Section 10.01(d) or 10.01(e)
hereof, Employee shall be entitled to receive any bonus, or pro rata portion
thereof, to which Employee may be entitled pursuant to Section 4.02 hereof,
provided that any such bonus shall be paid in accordance with Section 4.02, and
not upon Employee's termination, and provided, further, that Employee
acknowledges and agrees that Employee is not entitled to any such bonus, or pro
rata portion thereof, for the fiscal year in which this Agreement is terminated
if this Agreement is terminated pursuant to Section 10.01(a). For purposes of
this Section 11(a) "Severance Amount" shall mean an amount equal to the annual
Base Salary in effect on the date of termination.
(b) In the event this Agreement is terminated pursuant to any provision
hereof other than Sections 10.01(a), 10.01(d) or 10.01(e), Employee shall not be
entitled to any compensation other than (i) bi-weekly installments of his then
current Base Salary accrued through the effective date of termination and (ii)
reimbursement of expenses incurred by Employee in accordance with Section 4.05
hereof, and all rights of Employee to further compensation shall thereupon cease
and be terminated.
12. Assignment and Inurement. This Agreement shall inure to the benefit
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of and be binding upon the parties hereto and their respective heirs,
successors, administrators, and permitted assigns. This is a personal service
contract and, except to the extent specifically contemplated hereby, may not be
assigned by Employee without the prior written consent of CLC.
13. Injunctive Relief. Employee agrees that it would be difficult to
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compensate CLC fully for damages for any violation of the provisions of this
Agreement, including without limitation the provisions of Sections 5, 6, 7, 8, 9
and 10.04. Accordingly, Employee specifically agrees that CLC shall be entitled
to temporary and permanent injunctive relief to enforce the provisions of this
Agreement. This provision with respect to injunctive relief shall not, however,
diminish the right of CLC to claim and recover damages in addition to injunctive
relief.
Notwithstanding anything in Section 15 hereof to the contrary, any party to
this Agreement may petition the Superior Court of Paulding County, Georgia for
temporary injunctive relief. All disputes, controversies or claims arising out
of or related to this Agreement, other than a request for temporary injunctive
relief, shall be resolved in accordance with the provisions of Section 15
hereof. The parties hereby agree that jurisdiction and venue for any action
seeking temporary injunctive relief pursuant to this Section 13 shall lie in the
Superior Court of Paulding County, Georgia. The parties hereby agree, further,
that any temporary restraining order entered pursuant to this Section 13 shall
remain in effect until the dispute giving rise thereto is resolved pursuant to
the provisions
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of Section 15 and the parties agree to enter into any and all consent orders
required to maintain such temporary restraining order in effect until such time.
14. Miscellaneous.
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14.01 Governing Law. This Agreement is made under and shall be
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governed by and construed in accordance with the laws of Georgia.
14.02 Prior Agreements. This Agreement contains the entire agreement
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of the parties relating to the subject matter hereof and supersedes all prior
agreements and understandings with respect to such subject matter, and the
parties hereto have made no agreements, representations or warranties relating
to the subject matter of this Agreement which are not set forth herein.
14.03 Withholding Taxes. CLC may withhold from any benefits payable
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under this Agreement all federal, state, city and other taxes as shall be
required pursuant to any law or governmental regulation or ruling.
14.04 Amendments. No amendment, modification or waiver of this
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Agreement or any provision hereof shall be deemed effective unless made in
writing signed by the party against whom enforcement of the amendment,
modification or waiver is sought. Any written waiver shall not be deemed a
continuing waiver unless specifically stated and shall operate only as to the
specific term or condition waived.
14.05 Notices. Any notice, request, demand or other document to be
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given hereunder shall be in writing, and shall be delivered personally or sent
by registered, certified or express mail or facsimile followed by mail as
follows:
If to CLC:
Community Loan Company
0000 Xxxxxxx Xxxxxxx
Xxxxx, Xxxxxxx 00000
Attention: Chairman
If to Employee:
Xxxxx X. Xxxxxxxx
000 Xxxxxxxx Xxxx Xxxx, X.X.
Xxxx, XX 00000
or to such other address as either party hereto may hereafter duly give to the
other.
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14.06 Severability. To the extent any provision of this Agreement
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shall be invalid or unenforceable, it shall be considered deleted herefrom and
the remainder of such provision and of this Agreement shall be unaffected and
shall continue in full force and effect. In furtherance and not in limitation
of the foregoing, should the duration or geographical extent of, or business
activities covered by any provision of this Agreement be in excess of that which
is valid or enforceable under applicable law, then such provision shall be
construed to cover only that duration, extent or activities which may validly
and enforceably be covered. Employee acknowledges the uncertainty of the law in
this respect and expressly stipulates that this Agreement be given the
construction which renders its provisions valid and enforceable to the maximum
extent (not exceeding its express terms) possible under applicable law.
15. Arbitration. Any and all disputes, controversies or claims arising
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out of or related to this Agreement (other than a request for a temporary
restraining order pursuant to Section 13 hereof), shall be resolved by binding
arbitration in accordance with the Commercial Arbitration Rules of the American
Arbitration Association ("AAA"). Judgement upon the award rendered by the
arbitrators may be entered in any court having jurisdiction thereof. In the
event of any inconsistency between the provisions of this Section 15 and AAA's
Commercial Arbitration Rules, the provisions of this Section 15 shall govern.
Any party may initiate arbitration by serving written notice of its intention to
arbitrate on the other parties. The venue of any such arbitration shall be
Atlanta, Georgia. The arbitration panel shall consist of three arbitrators
selected as follows. Within thirty (30) days following the date on which the
arbitration provision of this Section 15 is invoked by a party, Employee, on the
one hand, and CLC, on the other, shall each select an arbitrator from a list of
arbitrators provided by AAA. The lists from which Employee and CLC select their
respective arbitrators shall be identical. If either Employee or CLC fails to
select its arbitrator within the time required, the other shall be entitled to
select its arbitrator for it. Within fifteen (15) days following the selection
of the last to be selected of the two (2) arbitrators, the two (2) arbitrators
so selected shall select a third arbitrator. A preliminary arbitration hearing
shall be held within thirty (30) days following the selection of the third
arbitrator for the purpose of scheduling discovery and the evidentiary
hearing(s). The first evidentiary hearing shall be held within thirty (30) days
following the preliminary hearing. The arbitration panel shall deliver its
award in writing, including findings of facts, to the parties within thirty (30)
days following the final arbitration hearing. Evidence and testimony shall be
admitted in accordance with the Federal Rules of Evidence. The arbitration
panel shall have authority to grant temporary or permanent injunctive relief or
other equitable remedies. Each party shall bear its own costs and expenses of
the arbitration proceeding.
16. Right of First Refusal. In the event that CLC receives an offer to
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sell all or substantially all of its assets (the "Assets") to an independent
third party not affiliated with CLC or CTFS (the "Third Party"), CLC shall
deliver to Employee written notification of the offer and the terms of the offer
(the "Third Party Offer"). Employee shall have 30 days from the date of receipt
of such notification to provide CLC with a written offer to purchase such Assets
(the "Employee's Offer"). If the terms of the Employee's Offer are at least
equivalent to the Third Party Offer in the opinion of the CTFS Board of
Directors, then CLC shall accept Employee's Offer. If the Employee's Offer is
less than the equivalence of the Third Party Offer in the opinion of the CTFS'
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Board of Directors, then CLC may sell the Assets to the Third Party in
accordance with the terms of the Third Party Offer.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first set forth above.
Xxxxx X. Xxxxxxxx
/s/ Xxxxx X. Xxxxxxxx
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COMMUNITY LOAN COMPANY
By /s/ Xxxxxx X. Xxxxxx
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Title: Chairman
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