Exhibit 10.55
FORBEARANCE AND AMENDMENT NUMBER THREE TO
DEBTOR-IN-POSSESSION REVOLVING CREDIT AGREEMENT
FORBEARANCE AND AMENDMENT NUMBER THREE TO DEBTOR-IN-POSSESSION
REVOLVING CREDIT AGREEMENT, dated as of January 11, 2002 (this "AGREEMENT"), by
and among (a) REPUBLIC TECHNOLOGIES INTERNATIONAL, LLC, a debtor and
debtor-in-possession and a Delaware limited liability company (the "BORROWER"),
(b) REPUBLIC TECHNOLOGIES INTERNATIONAL HOLDINGS, LLC, a debtor and
debtor-in-possession and a Delaware limited liability company, RTI CAPITAL
CORP., a debtor and debtor-in-possession and a Delaware corporation, CANADIAN
DRAWN STEEL COMPANY INC., a Canadian corporation, and NIMISHILLEN AND
TUSCARAWAS, LLC, a Delaware limited liability company (collectively, the
"GUARANTORS"), (c) FLEET CAPITAL CORPORATION and the other lending institutions
listed on the signature pages hereof (collectively the "LENDERS"), (d) FLEET
CAPITAL CORPORATION, as Administrative Agent (in such capacity, the
"ADMINISTRATIVE AGENT") for the Lenders, (e) BANK OF AMERICA, N.A., as
syndication agent (the "SYNDICATION AGENT"), and (f) XX XXXXXX XXXXX BANK
(formerly known as The Chase Manhattan Bank), as documentation agent (the
"DOCUMENTATION AGENT", and together with the Administrative Agent and the
Syndication Agent, the "AGENTS").
WHEREAS, the Borrower, the Guarantors, the Lenders, the Administrative
Agent, the Syndication Agent and the Documentation Agent are parties to that
certain Debtor-in-Possession Revolving Credit Agreement, dated as of April 3,
2001 (as amended and in effect from time to time, the "CREDIT AGREEMENT");
WHEREAS, the Borrower has informed the Agents and the Lenders that the
Borrower has failed to comply with Section 10.2 of the Credit Agreement for the
Test Periods ending during the period commencing on September 30, 2001 through
December 31, 2001 and is likely to fail to comply with Section 10.2 of the
Credit Agreement for the Test Periods ending during the period commencing on
January 1, 2002 through May 31, 2002, each such failure to comply, when
occurring to constitute an Event of Default; and
WHEREAS, the Borrower has informed the Agents and the Lenders that the
Borrower has failed to comply with the Maximum Amount limitation on borrowings
under the Credit Agreement due to the failure to comply with Section 10.4 of the
Credit Agreement for the period from November 30, 2001 through December 31, 2001
and is likely to fail to comply with the Maximum Amount limitation on borrowings
under the Credit Agreement for the period from January 1, 2002 through May 31,
2002, each such failure to comply, when occurring, to constitute an Event of
Default; and
WHEREAS, the Borrower has informed the Agents and the Lenders that the
Borrower is further likely to fail to comply with the requirements of Sections
10.3 and 10.4 of the Credit Agreement for the period from January 1, 2002
through May 31, 2002, if the Eligible Fixed Asset Cap and the Special Inventory
Advance are reduced in accordance with the terms of the Credit Agreement (the
Events of Default and Identified Events of Default specified in these recitals
being herein referred to as the "SPECIFIED DEFAULTS");
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WHEREAS, at the request of the Borrower, the Guarantors, the Agents and
the Lenders have agreed to continue to fund Loans and to continue to forbear
from exercising remedies until May 31, 2002, notwithstanding the occurrence of
the Specified Defaults, and to modify certain other terms and conditions of the
Credit Agreement, all as specifically set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual agreements contained in
the Credit Agreement, herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
SECTION 1. FORBEARANCE. Upon the effectiveness of this Agreement and
until the Forbearance Termination Date (as hereinafter defined) (the
"Forbearance Period"), the Administrative Agent and the Lenders shall forbear
from making demand upon the Notes or pursuing their remedies under the Credit
Agreement, the Security Documents or the other Loan Documents and the Lenders
shall continue to advance Revolving Credit Loans to the Borrower, subject to the
other conditions contained in the Credit Agreement; PROVIDED, that during the
period from January 11, 2002 through January 31, 2002, the sum of the
outstanding Revolving Credit Loans, the Maximum Drawing Amount and the Unpaid
Reimbursement Obligations may exceed the Maximum Amount (but not any other
component of Adjusted Availability) so long as such sum does not exceed
$340,000,000; from February 1, 2002 through March 28, 2002, the sum of the
outstanding Revolving Credit Loans, the Maximum Drawing Amount and the Unpaid
Reimbursement Obligations may exceed the Maximum Amount (but not any other
component of Adjusted Availability) so long as such sum does not exceed
$345,000,000; from March 29, 2002 through April 30, 2002, the sum of the
outstanding Revolving Credit Loans, the Maximum Drawing Amount and the Unpaid
Reimbursement Obligations may exceed the Maximum Amount (but not any other
component of Adjusted Availability) so long as such sum does not exceed
$342,500,000; and thereafter, the sum of the outstanding Revolving Credit Loans,
the Maximum Drawing Amount and the Unpaid Reimbursement Obligations may not
exceed the Maximum Amount (i.e. $337,000,000); PROVIDED, FURTHER, that during
the period from January 11, 2002 through May 31, 2002, the sum of the
outstanding Revolving Credit Loans, the Maximum Drawing Amount and the Unpaid
Reimbursement Obligations attributable to Eligible Fixed Assets may exceed the
Eligible Fixed Asset Cap so long as such amount does not exceed $100,000,000;
and PROVIDED, FURTHER, that, during the period from January 11, 2002 through May
31, 2002, the sum of the outstanding Revolving Credit Loans, the Maximum Drawing
Amount and the Unpaid Reimbursement Obligations attributable to the Special
Inventory Advance may exceed the Special Inventory Advance so long as such
amount does not exceed ten percent (10%) of Eligible Inventory. If at any time
the sum of the outstanding Revolving Credit Loans, the Maximum Drawing Amount
and the Unpaid Reimbursement Obligations exceeds the Maximum Amount or the
Borrowing Base, notwithstanding the provisions hereof, an Event of Default, and
as applicable, an Identified Event of Default shall have occurred. From and
after November 30, 2001 through the end of the Forbearance Period, the Revolving
Credit Loans will bear interest at the rate specified in Section 5.10.2 of the
Credit Agreement; however, the Agents and the Lenders agree that such increase
(2.0%) shall be fully earned and accrue on a daily basis, but shall be payable
on the earliest of (a) May 31, 2002, (b) the date of confirmation of a
Reorganization Plan, (c) the date the Agents and the Lenders, after stay
termination exercise relief from stay or otherwise pursue their remedies against
their Collateral, or (d) the date any of the Cases are converted to Chapter 7.
Nothing contained in this Section 1 shall be construed to imply a willingness on
the part of
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any Lender to grant any similar or other future forbearance or waiver of any of
the terms and conditions of the Credit Agreement or any other Loan Documents.
SECTION 2. OTHER DEFAULTS. The forbearance agreement set forth in
Section 1 shall apply only to the Specified Defaults. No forbearance or waiver
with respect to any other Default or Event of Default, whether presently
existing or hereafter arising, is granted hereby. Except to the extent
specifically modified by Section 1 hereof, any obligation of the Lenders to make
Revolving Credit Loans or of the Issuing Bank to issue, extend or renew Letters
of Credit shall at all times be subject to the satisfaction of all of the terms
and conditions of the Credit Agreement, including, without limitation, the
conditions precedent set forth in the Credit Agreement. The Lenders and the
Agents shall, at all times, retain all of the rights and remedies in respect of
any Default or Event of Default (other than the Specified Defaults during the
Forbearance Period) under the Credit Agreement and the other Loan Documents.
SECTION 3. AMENDMENTS TO THE CREDIT AGREEMENT. The Credit Agreement is
hereby amended in the following respects:
(a) The definition of "Security Documents" contained in Section 1.1 of
the Credit Agreement is hereby amended by inserting after the words ", the
Mortgage" the words ", the Rail Mortgages".
(b) Section 1.1 of the Credit Agreement is hereby amended by inserting
the following new definitions in the appropriate alphabetical sequence:
"NET SALES. With respect to the Borrower and its Subsidiaries
for any period, the "Net Sales" of the Borrower and its Subsidiaries
for such period as reported in the financial statements required to be
delivered by the Borrower pursuant to Section 8.4(i).
"RAIL MORTGAGES. Collectively, the several Open-End Mortgages,
Security Agreements, Assignments of Rents, income and Proceeds, dated
as of December 28, 2001 and any date thereafter made by Nimishillen and
Tuscarawas, LLC ("Nimishillen") in favor of the Administrative Agent,
in each case as the same may be subsequently amended."
(c) Section 2.1 of the Credit Agreement is hereby amended by restating
the last sentence thereof in its entirety as follows:
"Notwithstanding the foregoing, from and after October 1, 2001, the
aggregate outstanding amount of Revolving Credit Loans PLUS the Maximum
Drawing Amount and all Unpaid Reimbursement Obligations MINUS the
aggregate amount of cash held in any Swept Accounts shall not exceed
the Adjusted Availability Amount.
(d) Section 5.1.4 of the Credit Agreement is hereby amended by deleting
the words "the remaining portion shall be payable on March 31, 2002." at the end
of the second sentence thereof and replacing them with the words "the remaining
portion (the "March Amendment Fee") shall be payable on March 31, 2002.
Notwithstanding the foregoing, payment of the
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March Amendment Fee shall be deferred until May 31, 2002, if, after giving
effect to the payment of the March Amendment Fee, the Borrower would not be in
compliance with Sections 10.3 and 10.4 hereof.".
(e) Section 5.1.5 of the Credit Agreement is hereby amended by
inserting the following new sentence at the end thereof:
"Notwithstanding the foregoing, payment of the structuring fee shall be
deferred until May 31, 2002 if, as of March 31, 2002, after giving
effect to the payment of such structuring fee, the Borrower would not
be in compliance with Sections 10.3 and 10.4 hereof."
(f) Section 10.4 of the Credit Agreement is hereby amended by deleting
the table contained therein in its entirety and replacing it with the following:
PERIOD: AMOUNT:
------- -------
January 14, 2002 through January 31, 2002 $6,500,000
February 1, 2002 through March 28, 2002 $5,000,000
March 29, 2002 through April 20, 2002 $6,500,000
Thereafter $8,000,000
(g) Section 10 of the Credit Agreement is hereby amended by inserting
the following new Section 10.5 at the end thereof:
"10.5. MINIMUM SALES. The Borrower will not permit Net Sales as at the
end of any period set forth below to be less than the amount set forth opposite
such period:"
PERIOD: AMOUNT:
------- -------
January 1, 2002 through February 28, 2002 $140,000,000
February 1, 2002 through March 31, 2002 $135,000,000
March 1, 2002 through April 30, 2002 $143,000,000
April 1, 2002 through May 31, 2002 $148,000,000
SECTION 4. FORBEARANCE FEE. The Borrower hereby agrees to pay to the
Administrative Agent, for the ratable accounts of the Lenders, the Forbearance
Fee (as defined in the Forbearance and Amendment Number Two, dated as of
November 30, 2001, among the Borrower, the Guarantors, the Agents and the
Lenders) on May 31, 2002. The Forbearance Fee was fully earned on November 30,
2001 and shall be nonrefundable when paid.
SECTION 5. REPRESENTATIONS AND WARRANTIES. The Borrower and each
Guarantor hereby represents and warrants to the Agents and the Lenders as
follows:
(a) Each of the representations and warranties of the Borrower or such
Guarantor contained in the Credit Agreement as modified hereby or in any
document or instrument delivered pursuant to or in connection with the Credit
Agreement as modified hereby are true
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as of the date hereof and except for the Specified Defaults, no Default or Event
of Default has occurred and is continuing; and
(b) The execution, delivery and performance of this Agreement and the
transactions contemplated hereby (i) are within the corporate or limited
liability company authority of the Borrower or such Guarantor, (ii) have been
duly authorized by all necessary corporate or limited liability company
proceedings, (iii) do not conflict with or result in any material breach or
contravention of any provision of law, statute, rule or regulation to which the
Borrower or such Guarantor is subject or any judgment, order, writ, injunction,
license or permit applicable to the Borrower or such Guarantor so as to
materially adversely affect the assets, business or any activity of the Borrower
or such Guarantor, and (iv) do not conflict with any provision of the corporate
charter or bylaws of the Borrower or such Guarantor or any agreement or other
instrument binding upon it. The execution, delivery and performance of this
Agreement will result in valid and legally binding obligations of the Borrower
or such Guarantor enforceable against the Borrower or such Guarantor in
accordance with the respective terms and provisions hereof.
SECTION 6. COVENANTS AND AGREEMENTS.
(a) So long as this Agreement is in effect, the Borrower and each
Guarantor covenants and agrees that it shall comply and continue to comply with
all of the terms, covenants and provisions contained in the Loan Documents,
except to the extent such terms, covenants and provisions are expressly modified
by this Agreement.
(b) The Borrower and Nimishillen and Tuscarawas, LLC shall have
provided to the Administrative Agent, for the benefit of the Lenders not later
than January 15, 2002, a perfected mortgage and security interest in all real
property and fixtures associated with the railroad operated by Nimishillen and
Tuscarawas, LLC not previously delivered to the Administrative Agent.
(c) The parties hereto hereby agree, without prejudice to the
characterization of any other Event of Default under the Credit Agreement, that
Identified Events of Default shall constitute "material defaults" under the
modified collective bargaining agreement between the Borrower and the United
Steelworkers of America (the "USWA") covering the five-month period from
December 31, 2001 through May 31, 2002, such agreement to be in substantially
the form previously delivered to the Agents (the "Modified Labor Agreement").
SECTION 7. CONDITIONS TO EFFECTIVENESS. This Agreement shall become
effective only upon the satisfaction of the following conditions on or prior to
January 10, 2002:
(a) this Agreement shall have been executed and delivered by the
Borrower, each Guarantor and the Lenders;
(b) the Borrower shall have paid all reasonable unpaid fees and
expenses of Xxxxxxx Xxxx LLP, Xxxxx & Xxxxx, E & E Corporation and all other
advisors and professionals retained by the Administrative Agent to the extent
that copies of invoices have been presented to the Borrower;
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(c) the Borrower and the Guarantors shall have delivered to the
Administrative Agent and the Administrative Agent's Special CounseL all closing
documents reasonably requested by the Administrative Agent, such documents to be
satisfactory in form and substance to the Administrative Agent and the
Administrative Agent's Special Counsel; and
(d) the Administrative Agent shall have received a signed copy of a
Bankruptcy Court order, satisfactory to the Administrative Agent, approving and
authorizing the Borrower and the Guarantors to enter into this Agreement, and
such order shall be in full force and effect and shall not have been reversed,
modified or amended in any respect.
SECTION 8. TERMINATION. This Agreement shall terminate on the date (the
"Forbearance Termination Date") which is the earliest to occur of (i) the date
on which any Default or Event of Default (other than a Specified Default)
occurs, (ii) May 31, 2002, (iii) the earlier of the date on which the members of
the USWA vote not to ratify the Modified Labor Agreement or, unless the members
of the USWA have ratified the Modified Labor Agreement on or prior to such date,
January 25, 2002, and (iv) the date on which the Borrower fails to comply with
any of its covenants contained herein, at which time the Lenders and the Agents
shall be relieved of their forbearance obligations set forth herein, and,
subject to obtaining relief from the automatic stay where required under the
Credit Agreement, shall be entitled to pursue all remedies provided upon the
occurrence of Events of Default under the Credit Agreement.
SECTION 9. RATIFICATION, ETC. The Borrower and each Guarantor hereby
adopts again, ratifies and confirms in all respects, as its own act and deed,
each of the Credit Agreement and the other Loan Documents to which such Person
is a party; the Borrower and each Guarantor hereby adopts again, ratifies and
confirms in all respects, as its own act and deed, the grant of a security
interest under the Security Agreement to which such Person is a party, in the
case of the Borrower, the Mortgage and, in the case of Nimishillen and
Tuscarawas, LLC, the Rail Mortgages, in all of the existing and after-acquired
or arising inventory, including raw materials, work in progress and finished
goods, accounts, including accounts receivable, chattel paper, and insurance
refund claims and all other insurance claims and proceeds to which the
Administrative Agent is entitled pursuant to the provisions of Section 8.7 of
the Credit Agreement; all general intangibles, including, without limitation,
all rights to the payment of money, to the extent relating to the Collateral
described above; all rights to all short term Investments described in Section
9.3 of the Credit Agreement constituting Collateral described above or proceeds
thereof, and to the extent such Investments do not constitute Collateral for the
Notes, together with all income therefrom and increases therein; the Canton
Fixed Assets and all insurance refund claims and all other insurance claims,
tort claims, chattel paper and all general intangibles related to the Canton
Fixed Assets; the Pledged Trademarks (as defined in the Trademark Agreement);
and all real and personal property, and any proceeds and products therefrom,
that was not encumbered as of the date on which the Borrower filed for
Bankruptcy under Chapter 11 of the Bankruptcy Code, together with any and all
Uniform Commercial Code financing statements and other instruments or documents
previously executed in connection therewith to create, evidence, perfect or
preserve the priority of such security interest in favor of the Administrative
Agent for the benefit of the Lenders and the Administrative Agent; the Borrower
and each Guarantor hereby adopts again, ratifies and confirms in all respects,
as its own act and deed, any and all Uniform Commercial Code financing
statements executed by the Administrative Agent in the name of such Person,
pursuant to the power of attorney provisions contained in the Security Agreement
to which
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such Person is a party, to perfect, preserve the perfection, or insure the
priority of such security interest in favor of the Administrative Agent for the
benefit of the Lenders and the Administrative Agent; each of the Borrower under
the Mortgage and Nimishillen and Tuscarawas, LLC under the Rail Mortgages,
hereby adopts again, ratifies and confirms, as its own act and deed, the
mortgage of certain real estate assets in which such Person has an ownership or
other rights; each pledgor under the Master Pledge Agreement hereby adopts
again, ratifies and confirms in all respects, as its own act and deed, each
pledge granted by such pledgor thereunder; and the Borrower and each Guarantor
hereby adopts again, ratifies and confirms, as its own act and deed, each of the
other instruments or documents delivered in connection with the Credit Agreement
or any of the Loan Documents and purported to be executed by it and acknowledges
that all of the foregoing Loan Documents and other instruments, documents,
filings and recordings shall continue in full force and effect. To the extent
that it has not already done so, the Borrower and each Guarantor hereby waives
all suretyship defenses of whatsoever nature, whether arising out of any Agents'
or any Lender's dealings with the Borrower or any Guarantor, as the case may be,
in respect of the Credit Agreement, any other Loan Document or otherwise. By its
signature below, the Borrower and each Guarantor hereby consents to this
Agreement, and after taking into account this Agreement, acknowledges that this
Agreement shall not alter, release, discharge or otherwise affect any of its
obligations under any Loan Document.
SECTION 10. RELEASE. In order to induce the Agents and the Lenders to
enter into this Agreement, the Borrower and each Guarantor acknowledges and
agrees that: (a) neither the Borrower nor any Guarantor has any claim or cause
of action against any Agent or any Lender (or any of its respective directors,
officers, employees or agents); (b) neither the Borrower nor any Guarantor has
any offset right, counterclaim or defense of any kind against any of its
respective obligations, indebtedness or liabilities to any Agent or any Lender;
and (c) each of the Agents and the Lenders has heretofore properly performed and
satisfied in a timely manner all of its obligations to the Borrower and each
Guarantor. The Borrower and each Guarantor wishes to eliminate any possibility
that any past conditions, acts, omissions, events, circumstances or matters
would impair or otherwise adversely affect any of the Agents' and the Lenders'
rights, interests, contracts, collateral security or remedies. Therefore, the
Borrower and each Guarantor unconditionally releases, waives and forever
discharges (i) any and all liabilities, obligations, duties, promises or
indebtedness of any kind of any Agent or any Lender to the Borrower or such
Guarantor, except the obligations to be performed by any Agent or any Lender on
or after the date hereof as expressly stated in this Agreement, the Credit
Agreement and the other Loan Documents, and (ii) all claims, offsets, causes of
action, suits or defenses of any kind whatsoever (if any), whether arising at
law or in equity, whether known or unknown, which the Borrower or any Guarantor
might otherwise have against any Agent, any Lender or any of its directors,
officers, employees or agent, in either case (i) or (ii), on account of any past
or presently existing condition, act, omission, event, contract, liability,
obligation, indebtedness, claim, cause of action, defense, circumstance or
matter of any kind.
SECTION 11. EFFECT OF AGREEMENT. Except as expressly set forth herein,
this Agreement does not constitute an amendment or waiver of any term or
condition of the Credit Agreement or any other Loan Document, and all such terms
and conditions shall remain in full force and effect and are hereby ratified and
confirmed in all respects. Nothing contained in this Agreement shall be
construed to imply a willingness on the part of the Lenders to grant any similar
or other future waivers of any of the terms and conditions of the Credit
Agreement or the other
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Loan Documents. Nothing contained herein shall in any way prejudice, impair or
otherwise adversely affect any rights or remedies of the Agents and the Lenders
under the Credit Agreement, as amended, or any other Loan Document. This
Agreement shall constitute a Loan Document.
SECTION 12. REIMBURSEMENT OF EXPENSES. The Borrower acknowledges that all
reasonable out of pocket costs and expenses incurred by the Agents and the
Lenders in connection with (a) the preparation, negotiation, execution, delivery
and monitoring of this Agreement, and (b) the discussions and meetings that
preceded this Agreement (including, without limitation, the fees and
disbursements of any investment banker, consultant or appraiser retained by the
Administrative Agent, allocable costs of in-house counsel, and all legal and
other professional and consultant's fees and disbursements) shall constitute
Obligations and shall be due and payable by the Borrower upon presentation of
invoices therefor.
SECTION 13. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Massachusetts.
SECTION 14. COUNTERPARTS. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
IN WITNESS WHEREOF, the undersigned have duly executed this Amendment
as a sealed instrument as of the date first above written.
REPUBLIC TECHNOLOGIES
INTERNATIONAL, LLC
By: /s/ Xxxxxx X. Xxxxxxxx
-------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: President & CEO
REPUBLIC TECHNOLOGIES
INTERNATIONAL HOLDINGS, LLC
By: /s/ Xxxxxx X. Xxxxxxxx
-------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: President & CEO
RTI CAPITAL CORP.
By: /s/ Xxxxxx X. Xxxxxxxx
-------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: President & CEO
CANADIAN DRAWN STEEL COMPANY INC.
By: /s/ Xxxxxx X. Xxxxxxxx
-------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: President & CEO
NIMISHILLEN & TUSCARAWAS, LLC
By: /s/ Xxxxxx X. Xxxxxxxx
-------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: President & CEO
FLEET CAPITAL CORPORATION,
individually and as Administrative Agent
By: /s/ Xxxxxx X. Xxxxxxx, Xx.
-------------------------------------
Xxxxxx X. Xxxxxxx, Xx.
BANK OF AMERICA, N.A., individually
and as Syndication Agent
By:
-------------------------------------
Name:
Title:
XX XXXXXX XXXXX BANK (formerly known as
The Chase Manhattan Bank), individually
and as Documentation Agent
By:
-------------------------------------
Name:
Title:
FOOTHILL CAPITAL CORPORATION
By:
-------------------------------------
Name:
Title:
XXXXXX FINANCIAL, INC.
By:
-------------------------------------
Name:
Title:
