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Exhibit 10.40
EXECUTION COPY
AMENDMENT NO. 9, dated as of May 23, 1997 ("Amendment No. 9") to CREDIT
AGREEMENT dated as of February 10, 1993 (as amended through the date hereof,
the "Credit Agreement") among DI GIORGIO CORPORATION, as Borrower, the
financial institutions parties thereto as LENDERS, BT COMMERCIAL CORPORATION,
as Agent for the Lenders, and BANKERS TRUST COMPANY, as Issuing Bank. Terms
which are capitalized herein and not otherwise defined shall have the meanings
given to such terms in the Credit Agreement.
WHEREAS, the Borrower has requested that the Lenders, among other
things, extend the Expiration Date and modify various terms and provisions of
the Credit Agreement; and
WHEREAS, the Lenders have agreed to the foregoing on the terms and
subject to the fulfillment of the conditions set forth in this Amendment No. 9;
NOW, THEREFORE, in consideration of the mutual promises contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Borrower and the Lenders
hereby agree as follows:
SECTION ONE. AMENDMENT. Upon the fulfillment of the conditions
precedent set forth in Section Three hereof, effective as of May 23, 1997 the
Credit Agreement is hereby amended as follows:
(a) Section 1.1 of the Credit Agreement is amended by deleting the
definition of the term "Applicable Margin" in its entirety and by substituting
the following in lieu thereof:
"Applicable Margin" shall mean 2.25% in the case of Eurodollar
Rate Loans and .75% in the case of Prime Rate Loans; provided,
however, that if the ratio of EBITDA to Interest Expense as at the
last day of any period consisting of four consecutive fiscal
quarters, based on the financial statements as and for such period,
delivered pursuant to subsection 7.1(a) and (b) hereof and as
certified pursuant to a certificate executed and delivered by the
chief financial officer of the Borrower setting forth in reasonable
detail the calculation of such ratio for such period (the "Interest
Coverage Certificate", which, for purposes hereof, may be
combined with the compliance certificate in the form of Exhibit C)
shall be equal to or greater than 2.5 to 1.0, then for the period
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from the fifth day after such financial statements and Interest Coverage
Certificate are delivered to the Agent and the Lenders until the fifth
day after an Interest Coverage Certificate (together with the related
financial statements) are delivered to the Agent and the Lenders,
certifying that the ratio of EBITDA to Interest Expense for the
immediately preceding period consisting of four consecutive fiscal
quarters is less than 2.5 to 1.0, so long as no Event of Default shall
have occurred and then be continuing, the Applicable Margin shall mean
2.00% in the case of Eurodollar Rate Loans and 0.50% in the case of
Prime Rate Loans, provided further, that if the financial statements and
Interest Coverage Certificate for any fiscal quarter are not delivered
on or before the date delivery is required pursuant to subsections
7.1(a) and (b) then, during the period from the date which is five days
after such date of required delivery until five days after such
financial statements and Interest Coverage Certificate are delivered to
the Agent and the Lenders, the Applicable Margin shall mean 2.25% in the
case of Eurodollar Rate Loans and .75% in the case of Prime Rate
Loans."
(b) Section 1.1 of the Credit Agreement is amended by deleting the
definition of "Expiration Date" in its entirety and by substituting the
following in lieu thereof:
"Expiration Date shall mean June 30, 2000."
(c) Section 5.6 of the Credit Agreement is amended in its entirety to
read as follows:
"5.6 Unused Line Fee. At the end of each month the Borrower shall pay
to the Agent for the ratable benefit of each of the Lenders a
non-refundable fee (the "Unused Line Fee") on the unused portion of such
Lender's Revolving Credit Commitment, which fee shall equal (i) for the
period from the Closing Date until May 22, 1997, one-half of one percent
(.50%) per annum and (ii) for the period from May 23, 1997 until the
Expiration Date, three-eighths of one percent (.375%) per annum. The
Unused Line Fee shall accrue from the Closing Date until the Expiration
Date and shall be due and payable monthly and on the Expiration Date".
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(d) Section 5.7 (a) of the Credit Agreement is amended in its
entirety to read as follows:
"5.7 Letter of Credit Fee. (a) The Agent, for the ratable benefit of the
Lenders, shall be entitled to charge to the account of the Borrower (i)
on the first business day of each month, a fee (the "Letter of Credit
Fee"), in an amount equal to (A) one and three-quarters percent (1.75%)
per annum of the daily average amount of outstanding documentary Letter
of Credit Obligations during the immediately preceding month and (B) two
percent (2.00%) per annum of the daily average amount of outstanding
standby Letter of Credit Obligations during the immediately preceding
month; provided, however that if the ratio of EBITDA to Interest Expense
as at the last day of any period consisting of four consecutive fiscal
quarters, based on the financial statements as and for such period,
delivered pursuant to subsection 7.1(a) and (b) hereof and as certified
pursuant to an Interest Coverage Certificate shall be equal to or
greater than 2.5 to 1.0, then for the period (the "referenced period")
from the fifth day after such financial statements and Interest Coverage
Certificate are delivered to the Agent and the Lenders until the fifth
day after an Interest Coverage Certificate (together with the related
financial statements) are delivered to the Agent and the Lenders,
certifying that the ratio of EBITDA to Interest Expense for the
immediately preceding period consisting of four consecutive fiscal
quarters is less than 2.5 to 1.0 so long as no Event of Default shall be
incurred and then be continuing, the Letter of Credit Fee for standby
Letter of Credit Obligations shall equal one and three-quarters percent
(1.75%) per annum (calculated as hereinabove provided) with respect to
each month (or portion thereof) occurring during the referenced period,
provided, further, that if the financial statements and Interest
Coverage Certificate for any fiscal quarter are not delivered on or
before the date delivery is required pursuant to subsections 7.1(a) and
(b) then, during the period (the "alternate referenced period") from the
date which is five days after such date of required delivery until five
days after such financial statements and Interest Coverage Certificate
are delivered to the Agent and the Lenders, the Letter of Credit Fee for
standby Letter of Credit Obligations shall equal two percent (2%) per
annum (calculated as hereinabove provided) with respect to each month
(or portion thereof) occurring during the alternate referenced period,
and (ii) as and when incurred by the Agent or any Lender, any charges,
fees, costs and
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expenses charged to the Agent or any Lender for the Borrower's account
by any Issuing Bank (other than any fees charged to the Agent or any
Lender which would be duplicative of the Letter of Credit Fee paid to
the Agent for the benefit of the Lenders)(the "Issuing Bank Fees") in
connection with the issuance of any Letters of Credit by the Issuing
Bank. Each determination by the Agent of Letter of Credit Fees
hereunder shall be conclusive and binding for all purposes, absent
manifest error."
(e) Section 7.1(c) of the Credit Agreement is amended to read in its
entirety as follows:
"(c) Monthly Financial Statements: as soon as available and in any
event within thirty (30) days after the end of each of the fiscal
months of January, February, April, May, July, August, October and
November, within forty-five (45) days after the end of each of the
fiscal months of March, June and September, and within ninety (90)
days after the end of the fiscal month of December, a consolidated
balance sheet for the Borrower as at the end of such fiscal month and
for the fiscal year to date and statements of operations (on a
divisional basis, consistent with the Borrower's historical
practices), and cash flows for such fiscal month and for the fiscal
year to date, together with a comparison to the consolidated balance
sheet and statements of operations for the same periods in the prior
fiscal year, all in reasonable detail and duly certified (subject to
year-end audit adjustments) by the chief executive officer or chief
financial officer of the Borrower as having been prepared in
accordance with GAAP;"
(f) Section 7.1(d) of the Credit Agreement is amended to read in its
entirety as follows:
"(d) Budgets: Not later than sixty (60) days after the end of each
fiscal year, the Budget for the following fiscal year and for each
subsequent fiscal year through and including the fiscal year in which
the Expiration Date occurs;"
(g) Section 7.1(e) of the Credit Agreement is amended to read in its
entirety as follows:
"(e) Borrowing Base Certificates: upon request by the Agent at any
time, and in any event no later than 5:00 p.m. on Monday of each week
(or such other day as the Agent may specify in such request), a
borrowing base certificate (the "Borrowing Base Certificate") in
substantially the form of Exhibit D, duly completed, detailing the
Borrower's Eligible Accounts Receivable and Eligible
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Inventory as of the close of business on the previous Thursday,
certified by the Borrower's chief financial officer or treasurer
and subject only to adjustment upon completion of the normal
year end audit of physical inventory; provided, however, that
during the period commencing on the date, if any, that Unused
Availability shall be less than $10,000,000, and ending on the
date, if any, that Unused Availability shall equal or exceed
$10,000,000, the Agent may request and in such event the
Borrower shall provide to the Agent, Borrowing Base Certificates
twice each week, on Tuesday with respect to the Borrower's
Eligible Accounts Receivable and Eligible Inventory as of the
close of business on the previous Thursday, and on Thursday,
with respect to the Borrower's Eligible Accounts Receivable and
Eligible Inventory as of the close of business on the previous
Tuesday. In addition, each Borrowing Base Certificate provided
hereunder shall have attached to it such additional schedules
and/or other information as the Agent may reasonably request;"
(h) Section 7.1(g) of the Credit Agreement is amended to read
in its entirety as follows:
"(g) Customer Notes: Promptly upon request from the Agent, a
schedule prepared and certified by the Borrower's chief
financial officer or treasurer with respect to the Borrower's
Customer Notes indicating the principal amount and final
maturity date of all such Customer Notes outstanding as of the
end of the previous fiscal quarter, listed according to the
obligors thereof;"
(i) Section 8.1 of the Credit Agreement is amended by (i)
deleting subsections (r) and (s) thereof in their entirety, (ii) substituting
the following in lieu thereof and (iii) adding subsections (t) through (dd)
thereto, so that subsection (r) through (dd), together with the introductory
portion of Section 8.1, shall read as follows:
"8.1 Net Worth. The Borrower shall not at any time during any
period set forth below permit its Net Worth to be less than the
amount set forth below opposite such period, provided that
solely for purposes of calculating such Net Worth: (a) the
amount of all net losses of the Borrower, on a consolidated
basis, arising from the sale, transfer or other disposition
permitted hereunder of any fixed assets (such as plant,
property, equipment, land or other similar capital assets,
including the Farmingdale Lease), up to an aggregate amount of
$5,000,000 of such net losses, shall be excluded from such
calculation; and (b) the cumulative amount of all dividends
which have been paid in cash after the Closing Date as permitted
under Section 8.10(a)(iv) hereof as of the date of determination
of Net Worth shall be added to Net Worth, and provided further
that solely for purposes of calculating Net Income pursuant to
this Section 8.1, Net Income of a negative amount shall be
deemed to be an amount equal to zero (0).
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PERIOD AMOUNT
------ ------
(r) last day of fiscal March, $39,000,000
1997 through second-to-last
day of fiscal June, 1997
(s) last day of fiscal June, $39,000,000 plus
1997 through second-to-last seventy-five percent
day of fiscal September, (75%) of the Net Income
1997 for the preceding fiscal
quarter
(t) last day of fiscal $39,000,000 plus
September, 1997 through seventy-five (75%) of the
second-to-last day of fiscal Net Income for the two
December, 1997 preceding fiscal quarters
(u) last day of fiscal $39,000,000 plus
December, 1997 through seventy-five percent
second-to-last day of fiscal (75%) of the Net Income
March, 1998 for three preceding fiscal
quarters
(v) last day of fiscal March, $39,000,000 plus
1998 through second-to-last seventy-five percent
day of fiscal June, 1998 (75%) of the Net Income
for the four preceding
fiscal quarters
(w) last day of fiscal June, $39,000,000 plus
1998 through second-to-last seventy-five percent
day of fiscal September, (75%) of the Net Income
1998 for the five preceding
fiscal quarters
(x) last day of fiscal $39,000,000 plus
September, 1998 through seventy-five percent
second-to-last day of fiscal (75%) of the Net Income
December, 1998 for the six preceding
fiscal quarters
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PERIOD AMOUNT
------ ------
(y) last day of fiscal $39,000,000 plus
December, 1998 through seventy-five percent
second-to-last day of fiscal (75%) of the Net Income
March, 1999 for the seven preceding
fiscal quarters
(z) last day of fiscal March, $39,000,000 plus
1999 through second-to-last seventy-five percent
day of fiscal June, 1999 (75%) of the Net Income
for the eight preceding
fiscal quarters
(aa) last day of fiscal June, $39,000,000 plus
1999 through second-to-last seventy-five (75%) of the
day of fiscal September, Net Income for the nine
1999 preceding fiscal quarters
(bb) last day of fiscal $39,000,000 plus
September, 1999 through seventy-five (75%) of the
second-to-last day of fiscal Net Income for the ten
December, 1999 preceding fiscal quarters
(cc) last day of fiscal $39,000,000 plus
December, 1999 through seventy-five (75%) of the
second-to-last day of fiscal Net Income for the
March, 2000 eleven preceding fiscal
quarters
(dd) last day of fiscal March, $39,000,000 plus
2000 through the Expiration seventy-five percent
Date (75%) of the Net Income
for the twelve preceding
fiscal quarters."
(j) Section 8.2 of the Credit Agreement is amended by deleting
subsection (r) thereof and by adding subsections (r) through (u) thereof, so
that such subsections (s) through (u), together with the introductory portion
of Section 8.2, shall read as follows:
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"8.2 Interest Coverage Ratio. The Borrower shall not permit its
ratio of EBITDA to Interest Expense as of the end of each of the
following periods to be less than the ratio set forth below
opposite each such period in the applicable column:
Minimum
Interest
Coverage
Period Ratio
----------------------------------------------------
(r) the fiscal quarter ending in 1.85 to 1.00
June, 1997, together with the three
preceding fiscal quarters
(s) the fiscal quarter ending in 1.85 to 1.00
September, 1997, together with the
three preceding fiscal quarters
(t) the fiscal quarter ending in 1.85 to 1.00
December, 1997, together with the
three preceding fiscal quarters
(u) the fiscal quarter ending in 2.00 to 1.00"
Xxxxx, 0000, and each fiscal quarter
thereafter, in each case together
with the three preceding fiscal
quarters
(k) Section 8.3 of the Credit Agreement is amended by
deleting such Section in its entirety and by substituting the bracketed phrase
"[intentionally deleted]" in lieu of the text of such Section.
(l) Section 8.8 of the Credit Agreement is amended by
deleting such Section in its entirety and by substituting the following in lieu
thereof:
"8.8 No Corporate Changes. The Borrower will not, and shall not
permit any of the Restricted Subsidiaries to, directly or
indirectly, merge, consolidate or otherwise alter or modify the
Borrower's or any Restricted Subsidiary's structure, status or
existence, provided, however, that any Restricted Subsidiary may
be merged or consolidated with or into the Borrower (so long as
the Borrower shall be the continuing or surviving corporation)
or any one of the other Restricted Subsidiaries, and provided
further that the Farmingdale Subsidiary may not be merged or
consolidated with or into the Borrower. The Borrower will not
directly or indirectly enter into or engage in any operation or
activity that is unrelated to the warehousing, trucking and
distribution of food and related
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unrelated to the warehousing, trucking and distribution of food and
related products. The Borrower shall give the Agent at least ten (10)
Business Days prior written notice of any operation or activity which
any Subsidiary shall enter into or engage in if such operation or
activity is unrelated to the warehousing, trucking or distribution of
food and related products. Unless the Borrower shall have given the
Agent at least ten (10) Business Days prior written notice of any of the
following changes, but only to the extent any such change may adversely
affect the Agent's or the Lenders' rights and remedies hereunder, the
Borrower will not, and shall not, permit any of the Restricted
Subsidiaries to, directly or indirectly, alter or modify the Borrower's
or any Restricted Subsidiary's Articles or Certificate of Incorporation,
corporate names, mailing addresses, or principal places of business."
(m) Section 8.10(b) of the Credit Agreement is amended in its entirety
to read as follows:
"(b) make any optional payment or prepayment on or redemption
(including, without limitation, by making payments to a sinking or
analogous fund) or repurchase of any Indebtedness (other than
Indebtedness pursuant to this Credit Agreement), including, without
limitation, the Senior Notes; provided that (i) the Borrower may
refinance Indebtedness permitted to be incurred under Section 8.5(e);
(ii) the Borrower may make mandatory redemptions of the Senior Notes
with the net proceeds of certain Asset Sales (as defined in the Senior
Note Indenture), and (iii) any Subsidiary may make payments on account
of Indebtedness owing by it to the Borrower or to any other Subsidiary,
and provided further that the Borrower may prepay, purchase or
repurchase the Indebtedness in respect of the Senior Notes at any time
after the first anniversary of the Closing Date, so long as (A) no
Default or Event of Default has occurred and is continuing or would
result therefrom and (B) after giving effect to any such proposed
prepayment, purchase or repurchase, there shall be an aggregate amount
of Unused Availability of at least $15,000,000, provided further that
in determining Unused Availability for the purpose of this Section
8.10(b), the Borrower shall certify to the Agent and the Lenders that
its trade payables have been paid in a manner consistent with the
Borrower's historical practices."
(n) Section 8.11(k)(ii) of the Credit Agreement is amended in its
entirety to read as follows:
"(ii) advances or loans made in the ordinary course of the Borrower's
business to its other Subsidiaries, provided that (A) the aggregate principal
amount of such loans and advances to such other Subsidiaries outstanding at any
one time does not exceed in the case of this clause (ii) the sum of $500,000
and (B) after giving
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effect to any such advance or loan, the Borrower shall have Unused
Availability of at least $15,000,000."
(o) Section 11.5 of the Credit Agreement is amended by deleting the
first sentence thereof and by substituting the following in lieu thereof:
"11.5 Notices. Except as otherwise provided herein, all notices and
correspondences hereunder shall be in writing and sent by certified or
registered mail, return receipt requested, or by overnight delivery
service, with all charges prepaid, if to or by overnight delivery
service, with all charges prepaid, if to the Agent, or any of the
Lenders, then to BT Commercial Corporation, 00 Xxxx Xxxxxx, Xxx Xxxx, XX
00000, Attention: Xxxxxxxx Xxxxxx, if to the Issuing Bank, then to
Bankers Trust Company, 1 BT Plaza, 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000, Attention: Xxxx Xxxxxx, and if to the Borrower, then to (i)
Borrower at 000 Xxxxxxxxx Xxxxxx, Xxxxxxxx, Xxx Xxxxxx 00000, Attention:
Xxxxxxx Xxxx, or by facsimile transmission, promptly confirmed in
writing sent by first class mail, of the Agent, or any of the Lenders,
at (000) 000-0000, and if to the Borrower at (000) 000-0000."
(p) Schedule B to the Credit Agreement is deleted in its entirety and
Schedule B hereto is substituted in lieu thereof.
SECTION TWO. REPRESENTATIONS AND WARRANTIES. To induce the Lenders to
enter into this Amendment No. 9, the Borrower warrants and represents to the
Lenders as follows:
(a) the recitals contained in this Amendment No. 9 are true and
correct in all respects;
(b) after giving effect to this Amendment No. 9, all of the
representations and warranties contained in the Credit Agreement and each other
Credit Document to which the Borrower is a party continue to be true and
correct in all material respects as of the date hereof, as if repeated as of
the date hereof, except for such representations and warranties which, by their
terms, are only made as of a previous date;
(c) the execution, delivery and performance of this Amendment No. 9 by
the Borrower is within its corporate powers, has been duly authorized by all
necessary corporate action, the Borrower has received all necessary consents to
and approvals for the execution, delivery and performance of this Amendment No.
9 (if any shall be required) and this Amendment No. 9 does not and will not
contravene or conflict with any provision of law or of the charter or by-laws
of the Borrower or with the terms or provisions of any other document or
agreement to which the Borrower is a party or by which the Borrower or its
property may be bound; and
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(d) upon its execution, this Amendment No. 9 shall be a legal,
valid and binding obligation of the Borrower, enforceable against the Borrower
in accordance with its terms.
SECTION THREE. CONDITIONS PRECEDENT. This Amendment No. 9 shall
become effective upon the date that the last of the following events shall have
occurred:
(a) the Agent shall have received a fully executed counterpart of
this Amendment No. 9;
(b) no Default shall have occurred and be continuing which
constitutes an Event of Default or would constitute an Event of Default upon
the giving of notice or lapse of time or both, and no event or development
which has had or is reasonably likely to have a Material Adverse Effect shall
have occurred, in each case since the date of delivery to the Agent and the
Lenders of the Borrower's most recent financial statement, and the Agent and
the Lenders shall have received a certificate from the Borrower, executed by
its Chief Financial Officer, as to the truth and accuracy of this paragraph (b);
(c) the Borrower shall have paid in cash to the Agent, for the
ratable benefit of each of the Lenders, a non-refundable fee in the amount of
$300,000;
(d) the Borrower shall have delivered to the Agent a copy of the
corporate resolutions of the Borrower's Board of Directors authorizing the
execution, delivery and performance of this Amendment No. 9 by the Borrower; and
(e) the Agent and the Lenders shall have received such additional
documents to further effectuate the purpose of this Amendment No. 9 as any of
them or their respective counsel may reasonably request.
SECTION FOUR. GENERAL PROVISIONS.
(a) Except as herein expressly amended, the Credit Agreement and
all other agreements, documents, instruments and certificates executed in
connection therewith are ratified and confirmed in all respects and shall
remain in full force and effect in accordance with their respective terms.
(b) All references to the Credit Agreement shall mean the Credit
Agreement as amended as of the effective date hereof, and as amended hereby and
as hereafter amended, supplemented and modified from time to time.
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(c) This Amendment No. 9 may be executed by the parties hereto individually
or in combination, in one or more counterparts, each of which shall be an
original and all which shall constitute one and the same agreement.
(d) This Amendment No. 9 shall be governed by, construed and interpreted in
accordance with the internal laws of the State of New York, without regard to
the conflicts of law principles thereof.
IN WITNESS WHEREOF, each of the Borrower, the Lenders, the Issuing Bank and
the Agent has signed below to indicate its agreement with the foregoing and its
intent to be bound thereby.
DI GIORGIO CORPORATION
By: /s/ Xxxxxx X. Xxxx
--------------------------------
Name: Xxxxxx X. Xxxx
Title: Senior Vice President and
Treasurer
BT COMMERCIAL CORPORATION, as
Agent and as a Lender
By: /s/ Xxxxxxxx X. Xxxxxx, Xx.
--------------------------------
Name: Xxxxxxxx X. Xxxxxx, Xx.
Title: Vice President
LASALLE NATIONAL BANK, as a Lender
By: /s/ Xxxxxxxxxxx X. Xxxxxxxx
--------------------------------
Name: Xxxxxxxxxxx X. Xxxxxxxx
Title: Senior Vice President
IBJ XXXXXXXX BANK & TRUST COMPANY,
as a Lender
By: /s/ Wing X. Xxxxx
--------------------------------
Name: Wing X. Xxxxx
Title: Vice President
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CONGRESS FINANCIAL
CORPORATION, as a Lender
By: /s/ Xxxxxxxxx Xxxxxx
----------------------------
Name: Xxxxxxxxx Xxxxxx
Title: Vice President
PNC BANK, as a Lender
By: /s/ Xxxxxxx Xxxxxxxx
-----------------------------
Name: Xxxxxxx Xxxxxxxx
Title: Vice President
GIBRALTAR CORPORATION, as a Lender
By: /s/ Xxxxx X. Xxxxxxxxxxx
------------------------------
Name: Xxxxx X. Xxxxxxxxxxx
Title: Vice President
BANKERS TRUST COMPANY, as Issuing
Bank
By: /s/ Xxxxxxxx X. Xxxxxx Xx.
-------------------------------
Name: Xxxxxxxx X. Xxxxxx Xx.
Title: Vice President
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