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EXHIBIT 2.1
EXCHANGE AGREEMENT
This EXCHANGE AGREEMENT (this "AGREEMENT") is entered into as of
February 26, 1997, by and among XXXXXXX EXPLORATION COMPANY, a Delaware
corporation ("CORPORATION"), XXXXXXX OIL & GAS, L.P., a Delaware limited
partnership ("PARTNERSHIP"), XXXXXXX, INC. (f/k/a Xxxxxxx Exploration Company),
a Texas corporation ("OLD BEC"), GENERAL ATLANTIC PARTNERS III, L.P., a
Delaware limited partnership ("GAP"), GAP-XXXXXXX PARTNERS, L.P., a Delaware
limited partnership ("GBP"), XXX X. XXXXXXX, XXXX X. XXXXXXX, XXXXXX X. XXXXXX,
XXXXX X. XXXXXXX, XXXXX X. XXXXXXX, XXX X. XXXXX, RIMCO PARTNERS, X.X. XX
("RPII"), RIMCO PARTNERS, L.P. III ("RPIII") and RIMCO PARTNERS, X.X. XX
("RPIV").
RECITALS:
WHEREAS, Xxx X. Xxxxxxx and Xxxx X. Xxxxxxx own, in the aggregate, all
of the outstanding shares of capital stock of Old BEC (the "OLD BEC STOCK") (in
such capacity such persons are referred to herein as the "SHAREHOLDERS");
WHEREAS, Old BEC and GAP are the only general partners of the
Partnership;
WHEREAS, RPII, RPIII and RPIV (collectively, "RIMCO") are the owners
of certain 5% Convertible Subordinated Notes Due September 1, 2002 ("RIMCO
NOTES") issued pursuant to that certain Note Purchase Agreement dated as of
August 24, 1995 between the Partnership and RIMCO (the "RIMCO NOTE AGREEMENT");
WHEREAS, Xxxxx X. Xxxxxxx, Xxxxx X. Xxxxxxx and Xxx X. Xxxxx
(collectively, the "EMPLOYEE LIMITED PARTNERS") each own limited partnership
interests in the Partnership (the "EMPLOYEE LIMITED PARTNERSHIP INTERESTS"),
subject to forfeiture in accordance with the terms of the Partnership
Participating Agreements (as defined herein);
WHEREAS, GBP and Xxxxxx X. Xxxxxx (collectively, the "NON-EMPLOYEE
LIMITED PARTNERS") are limited partners in the Partnership;
WHEREAS, the Shareholders, GAP, RIMCO, the Employee Limited Partners
and the Non-Employee Limited Partners desire to consolidate in the Corporation
their interests in Old BEC and the Partnership by means of the Exchange (as
defined herein below);
WHEREAS, the parties hereto intend that Section 351(a) of the Internal
Revenue Code of 1986, as amended, will apply to the Exchange;
NOW, THEREFORE, in consideration of the premises and of the mutual
representations, warranties and covenants herein contained, the parties hereto
hereby agree as follows:
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ARTICLE I
DEFINITIONS
1.1 As used herein, the terms defined above shall have the meaning
set forth above and the following terms shall have the following meanings:
"Aggregate Exchange Shares" has the meaning set forth in Annex 1
hereto.
"Closing" has the meaning set forth in Section 5.2 hereof.
"Closing Date" means the date on which the Closing occurs.
"Code" means the Internal Revenue Code of 1986, as amended.
"Corporation Common Stock" means the Common Stock, $.01 par value per
share, of the Corporation.
"Corporation Participating Agreements" has the meaning set forth in
Section 2.3.
"Daily Accrual Amount" means an amount equal to (i) 3%, times (ii)
$16,000,000, divided by (iii) 360.
"Deferred Interest" has the meaning set forth in the RIMCO Note
Agreement.
"Encumbrances" has the meaning set forth in Section 4.1.
"Exchange" means, collectively, the transactions contemplated by
Sections 3.1, 3.2 and 3.3.
"Governmental Body" has the meaning set forth in Section 4.1.
"Partnership Plan" the Partnership Employee Equity Interests Plan of
the Partnership dated as of July 1, 1994.
"Partnership Participating Agreements" means the Employee Equity
Interests Plan Participating Agreement between the Partnership and each
Employee Limited Partner, entered into in connection with the Partnership Plan.
"Partnership Agreement" means the Agreement of Limited Partnership of
the Partnership, as amended.
"Permitted Encumbrances" has the meaning set forth in Section 4.1.
"Plan" has the meaning set forth in Section 2.3.
"Public Offering Condition" has the meaning set forth for such term in
Section 5.1.
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"Securities" means collectively, the Old BEC Stock, the RIMCO Notes
and the interests in the Partnership to be transferred to the Corporation
pursuant to the Exchange.
"Securities Act" means the Securities Act of 1933, as amended.
"Security Holders" means collectively, the Shareholders, GAP, RIMCO,
the Non-Employee Limited Partners and the Employee Limited Partners.
"Transfer Letter" means a letter from a Security Holder stating that
such person is transferring securities to the Corporation pursuant to this
Agreement and confirming the continuing accuracy of such persons's
representations and warranties set forth herein.
1.2 Capitalized terms which are used but not defined herein shall
have the meanings set forth for such terms in the Partnership Agreement.
ARTICLE II
AGREEMENTS RELATING TO THE EXCHANGE
2.1 Achievement of Threshold Value. Each of the parties hereto
acknowledges and agrees that upon satisfaction of the Public Offering Condition
(i) the Partnership will have achieved Threshold Value during the current
fiscal year, and (ii) the fair market value of the assets of the Partnership is
such that if any liquidating distributions were to be made to the Partners
pursuant to Article XI of the Partnership Agreement such distributions would be
in accordance with the Post Threshold Ratios.
2.2 RIMCO Notes. On the Closing Date, the Partnership shall pay
to RIMCO an amount equal to the accrued and unpaid interest on the RIMCO Notes,
excluding "Deferred Interest" (as defined in the RIMCO Note Agreement), as of
such date. In addition, on the earlier of (i) the date of the closing of the
initial public offering of shares of Corporation Common Stock, or (ii)
September 30, 1997, the Partnership shall pay to RIMCO an amount equal to the
Daily Accrual Amount multiplied by the number of days from the Closing Date to
such payment date.
2.3 Incentive Plan; Termination of Partnership Plan; Employee
Restricted Stock.
(a) The Corporation shall adopt an omnibus incentive plan for its
directors, officers and employees (the "PLAN"), in substantially the form set
forth as Exhibit A hereto, to be effective as of the Closing Date.
(b) Each of the Employee Limited Partners shall enter into an
agreement with the Corporation (the "CORPORATION PARTICIPATING AGREEMENTS"), to
be effective as of the Closing Date, which provides that the Corporation Common
Stock issued to such Employee Limited Partner in exchange for Employee Limited
Partnership Interests shall be subject to forfeiture under circumstances
similar to those set forth in the Partnership Participating Agreements. Upon
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consummation of the Exchange, the Partnership's Employee Equity Interests Plan
shall terminate and be of no further force and effect.
(c) The parties acknowledge that immediately following the
Closing, the Corporation will grant options under the Plan to certain of its
employees to purchase shares of Corporation Common Stock equal to approximately
13% of the total number of outstanding shares of Corporation Common Stock or
1,530,669 shares.
2.4 Employment Agreement. Xxx X. Xxxxxxx shall have executed and
delivered to the Corporation an employment agreement in substantially the form
set forth in Exhibit B hereto.
2.5 Registration Rights Agreement. Each of the parties hereto
shall have entered into a Registration Rights Agreement with the Corporation,
in substantially the form set forth in Exhibit C hereto.
2.6 Agreement Re: Exchange. Each of the Shareholders, the
Partnership, the Corporation, and the General Partners and RIMCO shall have
entered into a letter agreement, in substantially the form set forth in Exhibit
D hereto.
2.7 Other Actions. The parties hereto shall take such other
actions as shall be necessary to effect the Exchange and to satisfy all of the
conditions set forth in Article V of this Agreement.
ARTICLE III
THE EXCHANGE
3.1 Exchange of Old BEC Common Stock. At the Closing, each
Shareholder shall transfer to the Corporation all of the shares of Old BEC
Stock held by such Shareholder. Such transfer shall be effected by delivery to
the Corporation of a duly executed Transfer Letter together with the
certificates representing such shares duly endorsed for transfer to the
Corporation. In exchange for such transfer, each Shareholder shall be entitled
to receive such number of shares of Corporation Common Stock set forth opposite
such Shareholder's name in Attachment I hereto, which is equal to the number of
Aggregate Exchange Shares times the percentage set forth opposite such
Shareholder's name in Attachment I (rounded to the nearest whole share).
3.2 Exchange of Employee Limited Partnership Interests. At the
Closing, each Employee Limited Partner shall transfer to the Corporation all of
the Employee Limited Partnership Interests held by such Partner. Such transfer
shall be effected by such Partner's delivery to the Corporation of a duly
executed Transfer Letter, whereupon the Corporation Participating Agreement
with such Partner shall become effective and the Partnership Participating
Agreement with such Partner shall terminate and be of no further force and
effect. In exchange for such transfer, each Employee Limited Partner shall be
entitled to receive such number of shares of Corporation Common Stock set forth
opposite such Employee Limited Partner's name in Attachment I hereto, which is
equal to the number of Aggregate Exchange
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Shares times the percentage set forth opposite such Employee Limited Partner's
name in Attachment I (rounded to the nearest whole share).
3.3 Exchange of Other Partnership Interests. At the Closing, GAP
and each Non-Employee Limited Partner shall transfer to the Corporation all of
the partnership interests held by such Partner. Such transfers shall be
effected by such Partner's delivery to the Corporation of a duly executed
Transfer Letter. In exchange for such transfer, each transferring Partner
shall be entitled to receive such number of shares of Corporation Common Stock
set forth opposite such partner's name in Attachment I hereto, which is equal
to the number of Aggregate Exchange Shares times the percentage set forth
opposite such partner's name in Attachment I (rounded to the nearest whole
share).
3.4 Exchange of RIMCO Notes. At the Closing, RIMCO shall transfer
to the Corporation all of the RIMCO Notes held by RIMCO. Such transfer shall
be effected by RIMCO's delivery to the Corporation of a duly executed Transfer
Letter together with the RIMCO Notes duly endorsed for transfer to the
Corporation. In exchange for such transfer, each holder of the RIMCO Notes
shall be entitled to receive such number of shares of Corporation Common Stock
set forth opposite RIMCO's name in Attachment I hereto, which is equal to the
number of Aggregate Exchange Shares times the percentage set forth opposite
such RIMCO's name in Attachment I (rounded to the nearest whole share).
3.5 Issuance of Certificates. The Corporation shall cause
certificates representing the shares of Corporation Common Stock issued to the
Security holders pursuant to Section 3.1 - 3.4 to be delivered as promptly as
possible following the Closing.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 Security Holder Representations. Each Security Holder hereby
represents and warrants to, and covenants and agrees with, the Corporation as
follows:
(a) Such Security Holder has been afforded access to, and given an
opportunity to review, all information relating to the Corporation and the
Exchange which Security Holder deemed necessary in order to make an informed
decision concerning participation in the Exchange.
(b) Such Security Holder acknowledges that (i) the shares of
Corporation Common Stock to be issued in the Exchange are being issued under
exemptions from registration provided for in the Securities Act and that
further transfers of such shares will not be permitted except pursuant to an
effective registration under the Securities Act or in a transaction pursuant to
which Corporation has received evidence reasonably satisfactory to it of
compliance with the Securities Act and other applicable securities laws, and
(ii) a legend indicating that the shares of Corporation Common Stock have not
been registered under applicable federal and state securities
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laws and referring to the restrictions on transferability and sale of the
shares of Corporation Common Stock may be placed on any certificate(s) for such
shares.
(c) Such Security Holder has no present plan or intent to sell,
transfer or otherwise dispose of the shares of Corporation Common Stock to be
received by (he/she/it) in the Exchange, other than a sale of Corporation
Common Stock pursuant to the registration statement filed by the Corporation in
connection with the initial public offering of shares of Corporation Common
Stock.
(d) Such Security Holder has (i) valid title to the Securities to
be transferred by (him/her/it) in the Exchange, free and clear of all security
interests, liens, encumbrances, options, calls, pledges, trusts, voting trusts
and other stockholder agreements, assessments, covenants, restrictions,
reservations, commitments, obligations and other burdens (collectively,
"ENCUMBRANCES"), except for restrictions (A) imposed by applicable federal and
state securities laws, and (B) arising under existing agreements among the
parties hereto, including, without limitation, those under the Partnership
Agreement and the Partnership Participating Agreements (such encumbrances
described in clauses (A) and (B) are referred to herein as "PERMITTED
ENCUMBRANCES"), and (ii) full right, power and authority to assign, transfer
and deliver the Securities hereunder. Upon the issuance and delivery to the
Corporation of the Securities, the Corporation will acquire valid title to such
Securities, subject to no Encumbrances other than Permitted Encumbrances.
(e) This Agreement has been duly executed and delivered by such
Security Holder and constitutes a valid and legally binding obligation of such
Security Holder enforceable against such Security Holder in accordance with its
terms, except to the extent enforcement may be limited by (i) applicable
bankruptcy, insolvency, moratorium, reorganization, fraudulent conveyance or
similar laws from time to time in effect which affect creditors' rights
generally, and (ii) legal and equitable limitations on the availability of
equitable remedies.
(f) The execution, delivery and performance of this Agreement by
such Security Holder will not (i) conflict with or result in a violation of any
provision of, or constitute (with or without the giving of notice or the
passage of time or both) a default under, or give rise (with or without the
giving of notice or the passage of time or both) to any right of termination,
cancellation or acceleration under, any bond, debenture, note, mortgage,
indenture, lease, agreement or other instrument or obligation to which such
Security Holder is a party or may be bound, (ii) result in the creation or
imposition of any Encumbrance upon the Securities, or (iii) result in a
violation by such Security Holder of any statute or law or any judgment, order,
decree, rule or regulation of any federal, state, municipal or any other
governmental department, commission, board, bureau, agency or instrumentality
(a "GOVERNMENTAL BODY"), to which such Security Holder is subject.
(g) No consent, order, approval or authorization of, or
declaration, filing or registration with, any Governmental Body is required to
be obtained or made by such Security Holder in connection with the execution,
delivery or performance by such Security Holder of this Agreement.
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4.2 Corporation Representations. The Corporation represents and
warrants to, and covenants and agrees with, each Security Holder as follows:
(a) The shares of Corporation Common Stock have been duly
authorized for issuance pursuant to this Agreement and, when issued and
delivered to the Security Holders in exchange for the Securities transferred
pursuant hereto, will be validly issued, fully paid and nonassessable. The
issuance of Corporation Common Stock under this Agreement is not subject to any
preemptive rights.
(b) The Corporation is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware. The
Corporation has the corporate power to enter into and be bound by the terms and
conditions of this Agreement, and to carry out its obligations hereunder, and
the execution and delivery by the Corporation of this Agreement and the
performance by the Corporation of its obligations hereunder have been duly
authorized by all necessary corporate action. This Agreement has been duly
executed and delivered by the Corporation and constitutes a valid and legally
binding obligation of the Corporation enforceable against it in accordance with
its terms, except to the extent enforcement may be limited (i) by applicable
bankruptcy, insolvency, moratorium, reorganization, fraudulent conveyance or
similar laws from time to time in effect which affect creditors' rights
generally and (ii) by legal and equitable limitations on the availability of
equitable remedies.
(c) The execution, delivery and performance of this Agreement by
the Corporation will not (i) conflict with or result in a violation of any
provision of the Corporation's charter or bylaws, (ii) conflict with or result
in a violation of any provision of, or constitute (with or without the giving
of notice or the passage of time or both) a default under, or give rise (with
or without the giving of notice or the passage of time or both) to any right of
termination, cancellation, or acceleration under, any bond, debenture, note,
mortgage, indenture, lease, agreement or other instrument or obligation to
which the Corporation is a party or by which it or any of its properties or
assets may be bound, or (iii) result in a violation by the Corporation of any
statute or law or any judgment, order, decree, rule or regulation of any court
or Governmental Body to which the Corporation is subject.
(d) No consent, order, approval or authorization of, or
declaration, filing or registration with, any Governmental Body is required to
be obtained or made by the Corporation in connection with the execution,
delivery or performance by the Corporation of this Agreement.
4.3 Survival of Representations and Warranties. The
representations, warranties and covenants of the parties hereto shall not
survive the Closing.
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ARTICLE V
CONDITIONS TO THE EXCHANGE; CLOSING; AND TERMINATION
5.1 Conditions to the Exchange. The obligations of each party
hereto to consummate the Exchange are subject to the satisfaction on or before
the Closing Date of the following conditions:
(a) All the representations and warranties of the parties hereto
contained in this Agreement shall be true and correct in all material respects
on and as of the Closing Date as if made on and as of the Closing Date;
(b) Each of the agreements set forth in Article II which are
required to be performed on or before the Closing Date shall have been fully
performed; and
(c) Each of the following shall have been satisfied: (i) the
Corporation shall have filed a registration statement pursuant to the
Securities Act with respect to an initial public offering of shares of
Corporation Common Stock, (ii) the Corporation shall have received a letter
from the proposed lead managing underwriter of such offering which sets forth
its estimates of the market value of the Corporation immediately following such
offering (which may be stated as a range) and the estimated amount of equity to
be raised in the offering, (iii) the lowest estimated post- offering market
value of the Corporation less the estimated amount of equity to be raised in
the offering, as set forth in such letter, shall be at least equal to
$87,500,000 (such condition is referred to herein as the "PUBLIC OFFERING
CONDITION").
5.2 Closing. The closing of the Exchange (the "CLOSING") shall
occur on such date and at such time and place as specified by the Shareholders,
but in no event later than the second business day following the satisfaction
of all of the conditions in Section 5.1 hereof.
5.3 Termination. This Agreement may be terminated at any time
prior to the Closing (a) by the mutual consent of the parties hereto; or (ii)
by any party hereto, if the Public Offering Condition has not been satisfied
before September 30, 1997. In the event of the termination of this Agreement
pursuant to this Section 5.3, this Agreement shall become void and have no
effect.
ARTICLE VI
MISCELLANEOUS
6.1 Consent and Agreement of the General Partners. The General
Partners hereby consent to the transactions contemplated hereby pursuant to
which the Corporation will become the owner of the Old BEC Stock and the owner
of the general partnership interest of GAP and all limited partnership interest
in the Partnership and consent to the substitution of the Corporation as a
Limited Partner in accordance with Article IX of the Partnership Agreement.
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6.2 Modification or Amendment. Subject to applicable law, at any
time prior to the Closing, this Agreement may be modified or amended by the
mutual consent in writing of all of the parties hereto.
6.3 Waiver of Conditions. The conditions to the parties'
obligations to consummate the Exchange may be waived in whole or in part, to
the extent permitted by applicable law, by the mutual consent in writing of all
of the parties hereto.
6.4 Expenses. Whether or not the Exchange contemplated by this
Agreement shall be consummated, any fees and expenses incurred by GAP or RIMCO
in connection with this Agreement, up to a maximum of $15,000 for such Security
Holder, shall be borne by the Partnership.
6.5 Counterparts. For the convenience of the parties hereto, this
Agreement may be executed in any number of counterparts, each such counterpart
being deemed to be an original instrument, and all such counterparts shall
together constitute the same agreement.
6.6 Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS, WITHOUT GIVING
EFFECT TO THE PRINCIPLES OF CONFLICT OF LAWS THEREOF.
6.7 Headings. The article and section headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
6.8 Entire Agreement. This Agreement and the agreements referred
to in Article II hereof constitute the entire agreement between the parties
with respect to the transactions contemplated hereby and shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns. This Agreement and the agreements referred to in Article II
hereof supersede all prior agreements, arrangements and understandings related
to the subject matter hereof.
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IN WITNESS WHEREOF, the parties have executed this Agreement or caused
the same to be executed by their duly authorized corporate officers, all as of
the day and year first above written.
XXXXXXX EXPLORATION COMPANY, a Delaware corporation
By: /s/ XXX X. XXXXXXX
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Name: Xxx X. Xxxxxxx
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Title: President
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XXXXXXX OIL & GAS, L.P., a Delaware limited partnership
By: Xxxxxxx Inc., its Managing General Partner
By: /s/ XXX X. XXXXXXX
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Name: Xxx X. Xxxxxxx
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Title: President
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XXXXXXX, Inc., a Texas corporation
By: /s/ XXX X. XXXXXXX
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Name: Xxx X. Xxxxxxx
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Title: President
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GENERAL ATLANTIC PARTNERS III, L.P., a Delaware limited
partnership
By: /s/ XXXXXXX X. XXXXXXXX
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Name: Xxxxxxx X. Xxxxxxxx
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Title: President
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GAP-XXXXXXX PARTNERS, L.P., a
Delaware limited partnership
By: /s/ XXXXXXX X. XXXXXXXX
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Name: Xxxxxxx X. Xxxxxxxx
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Title: General Partner
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/s/ XXX X. XXXXXXX
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XXX X. XXXXXXX
/s/ XXXX X. XXXXXXX
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XXXX X. XXXXXXX
/s/ XXXXXX X. XXXXXX
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XXXXXX X. XXXXXX
/s/ XXXXX X. XXXXXXX
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XXXXX X. XXXXXXX
/s/ XXXXX X. XXXXXXX
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XXXXX X. XXXXXXX
/s/ XXX X. XXXXX
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XXX X. XXXXX
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RIMCO PARTNERS, X.X. XX
RIMCO PARTNERS, L.P. III
RIMCO PARTNERS, X.X. XX
By: Resource Investors Management Company Limited
Partnership, the General Partner of each
By: RIMCO Associates, Inc., its General Partner
By: /s/ XXXX X. XXXXXXX
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Xxxx X. Xxxxxxx, Vice President
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