AMENDED AND RESTATED TAX CONSOLIDATION AGREEMENT OF MORRIS PUBLISHING GROUP, LLC
Exhibit
10.06
AMENDED
AND RESTATED TAX CONSOLIDATION AGREEMENT
OF
XXXXXX PUBLISHING GROUP, LLC
This
AMENDED
AND RESTATED TAX CONSOLIDATION AGREEMENT (this “Agreement”),
dated with an effective date of January 6, 2010, is made by and among XXXXXX
PUBLISHING GROUP, LLC, a Georgia limited liability company (the “Company”),
XXXXXX COMMUNICATIONS COMPANY, LLC, a Georgia limited liability company (“Xxxxxx”),
XXXXXXX TRADING & OPERATING COMPANY, a Georgia corporation (“Xxxxxxx”),
QUESTO, INC., a Georgia corporation (“Questo”)
and MPG NEWSPAPER HOLDING, LLC, a Georgia limited liability company (“MPG
Holding”). This Agreement hereby amends and restates that certain Tax
Consolidation Agreement dated as of August 7, 2003 among the Company, Xxxxxx and
Xxxxxxx, as amended by that certain Amendment No. 1 to Tax Consolidation
Agreement dated as of January 28, 2009 (the “Reorganization
Date”) among the Company, Morris, Shivers, Questo and MPG
Holding.
WHEREAS,
as of the Reorganization Date, the Company is a single-member limited liability
company which is wholly owned by MPG Holding, and treated as a disregarded
entity for federal income tax purposes. MPG Holding is a single-member limited
liability company which is wholly owned by Xxxxxxx, and treated as a disregarded
entity for federal income tax purposes. Xxxxxxx is a wholly-owned subsidiary of
Questo;
WHEREAS,
Xxxxxx is a single-member limited liability company which is wholly owned by
Xxxxxx Communications Holding Company, LLC (“Xxxxxx
Holding”). Prior to the Reorganization Date, Xxxxxx Holding was wholly
owned by Xxxxxxx. As of the Reorganization Date, Xxxxxx Holding is wholly owned
by Pesto Inc., a Georgia corporation (“Pesto”).
Xxxxxx and Xxxxxx Holding are treated as disregarded entities for federal income
tax purposes and, thus, are treated as part of Pesto as of the Reorganization
Date (and are treated as part of Shivers prior to the Reorganization Date).
Pesto is a wholly-owned subsidiary of Questo;
WHEREAS,
prior to the Reorganization Date, Xxxxxxx was the common parent, and commencing
on the Reorganization Date, Questo was the common parent, with Xxxxxxx and Pesto
as members, of an affiliated group of corporations (collectively, the “Group”)
as defined in Section 1504 of the Internal Revenue Code of 1986 (as amended, the
“Code”),
and will file consolidated federal income tax returns pursuant to Treas. Reg.
§1.1502-75(a)(2). In addition, the Company, Morris, Shivers, MPG Holding and
Questo (together with their respective subsidiaries) may be eligible to file
consolidated or combined state or local income or franchise tax returns and may
wish to file consolidated or combined state or local income or franchise tax
returns;
WHEREAS,
prior to the Reorganization Date, Xxxxxxx was a member of an affiliated group of
corporations as defined in Section l504 of the Code, of which Xxxxxxx was the
common parent, and filed consolidated federal income tax returns pursuant to
Treas. Reg. §1.1502-75(a)(2) (and for all periods prior to the Reorganization
Date, the term “Group”
shall refer to the group of which Xxxxxxx was the common
parent);
WHEREAS,
commencing on the Reorganization Date, Questo will file consolidated returns and
will include all items of income or loss of Xxxxxxx (including items of income
or loss of the Company) and Pesto as part of Questo’s returns, but will not
treat the Company as a separate member of the Group. For purposes of this
Agreement, a return (including a return with respect to other tax liabilities of
the Group, such as employment, excise, sales taxes) in which Questo includes on
Questo’s return all items of income, loss or other activities of the Company (as
a disregarded entity) shall be treated as a consolidated
return;
WHEREAS,
the Company, Xxxxxxx and Questo desire to allocate among themselves the
benefits and burdens which arise from filing of consolidated federal tax returns
and which may arise from filing of consolidated or combined state and local tax
returns, as if each entity was treated as a corporation taxed under Subchapter C
of the Code;
WHEREAS,
the Company has entered into that certain Amended and Restated Credit Agreement
dated as of October 15, 2009 (the “Credit
Agreement”), by and among the Company, Xxxxxx, the lenders party thereto
(the “Lenders”),
and Tranche Manager, LLC, as administrative agent (the “Agent”);
WHEREAS,
the Company has $278,478,000 in aggregate principal amount outstanding of
the 7% Senior Subordinated Notes due 2013 (the “Notes”)
under that certain Indenture dated as of August 7, 2003, and amended by that
certain First Supplemental Indenture dated as of July 20, 2004, by and among the
Company, each of the subsidiaries of the Company, and Wilmington Trust FSB, as
successor trustee (the “Existing
Indenture Trustee”);
WHEREAS,
the Company has entered into that certain Restructuring Support Agreement
(“Restructuring
Support Agreement”) dated as of October 30, 2009, by and among the
Company, each of the subsidiaries of the Company, and certain holders of the
Notes, pursuant to which the Company has agreed to commence an exchange offer of
$278,478,000 in principal amount of Notes for $100,000,000 in principal amount
of new secured notes (the “New
Notes”) as set forth in that certain Restructuring Term Sheet, dated as
of September 23, 2009, as amended by that certain Amendment to Restructuring
Term Sheet, dated as of October 15, 2009 (as amended, the “Restructuring
Term Sheet”); and
WHEREAS,
the Company has agreed in the Restructuring Support Agreement to enter
into this Agreement.
NOW,
THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company, Morris, Shivers, MPG
Holding, and Questo hereby agree as follows:
Section
1. Tax
Allocations.
1.01 Consolidated
Tax Returns. For periods commencing on the Restructuring Effective Date,
Questo will file a consolidated federal income tax return for all taxable
periods for which the Group is permitted to file such a return. For periods
prior to the Restructuring Effective Date, Xxxxxxx filed or will file a
consolidated federal income tax return for all taxable periods for which the
Group is permitted to file such a return. Shivers, Morris, MPG Holding, and the
Company agree (and agree to cause their respective subsidiaries) to file such
consents, elections and other documents and to take such other action as may be
necessary or appropriate to carry out the purposes of this Section
1.01.
1.02 Payment
of Tax Liability. Questo will timely pay the Group’s federal tax
liability. For each period during which the Company’s tax items are included in
a consolidated federal tax return with Questo or Xxxxxxx, the Company shall pay
to MPG Holding an amount equal to the federal income tax liability that the
Company would pay (taking into account net operating loss carry forwards and
carry backs) if it were filing its federal tax returns separately as a C
corporation for that period and had filed separate tax returns for all other
periods (including, without limitation, for all periods prior to the date
hereof); provided,
however,
that any indebtedness of MPG Holding shall be treated for purposes of the
computation of payments under this Section 1.02 of this Agreement as if it were
a direct obligation of the Company and no other affiliate. In computing the
federal income taxes payable by the Company under this Section 1.02, each of
Questo, Xxxxxxx and the Company shall be deemed to have made any elections,
taken any deductions and credits, and adopted any methods of reporting income
and expense that (i) the Company would be permitted to make, take or adopt under
the Code if it was filing its federal income tax returns separately as a C
corporation for that period, and (ii) minimize the separate liability, or
increase any refunds, of the Company.
1.03 Estimated
Taxes. Payments due pursuant to Section 1.02 hereof shall be made on an
estimated basis, such estimates being calculated, to the extent not inconsistent
with said Section 1.02, in accordance with conventions used by Questo to compute
its estimated tax (or, with respect to the first fiscal quarter of each fiscal
year of the Company, at the Company’s option, on a three-month annualized basis,
whether or not the estimated payment of Questo for the corresponding period is
based upon such convention). Estimated payments shall be made prior to the due
date of the corresponding estimated payments of Questo. Questo shall calculate
the amount payable by the Company pursuant to this Section 1.03 and shall
provide the Company with notice of any payments prior to the due date therefor.
The difference, if any, between the liability of the Company for any taxable
period, computed in accordance with Section 1.02 hereof, and the estimated
payments made by the Company to MPG Holding pursuant to this Section 1.03 shall
be payable by or refundable to the Company prior to the date of filing of the
consolidated federal income tax returns of the Group for the taxable period.
Questo shall calculate such amount and, if any amount is payable by the Company,
shall provide the Company with notice of the amount due prior to the due date
therefor and the Company shall make such payment to MPG Holding. If such amount
is payable to the Company, Questo shall pay Xxxxxxx, Xxxxxxx shall pay MPG
Holding, and MPG Holding shall pay the Company, such
amounts.
1.04 Refunds.
If on the basis of the computation made by the Company in accordance with
Section 1.02 hereof, the Company would have been entitled to a refund of federal
taxes, Questo shall pay Xxxxxxx, Xxxxxxx shall pay MPG Holding, and MPG Holding
shall pay the Company the amount of that refund at the time that, if a refund
has been applied for, the Internal Revenue Service makes the refund and, if a
refund has not been applied for, at the time the Internal Revenue Service would
have made the refund if it had been timely applied for. For example, if the
Company has a net operating loss that, on a separate return basis, it could
carry back and be entitled to a refund, Questo shall pay Xxxxxxx, Xxxxxxx shall
pay MPG Holding, and MPG Holding shall pay the Company the amount of the refund
even if no refund was actually received from the Internal Revenue Service
because the net operating loss was used against income of Questo or because no
taxes were paid in a prior year because of losses of Questo and/or its
affiliates. Conversely, if the Company has a net operating loss that, on a
separate return basis, it could not carry back but would have to carry forward,
it shall not be entitled to a refund until it could, on a separate basis, use
the carry forward even if, as a result of Questo’s income the Group in fact
carried back the loss and obtained a refund. Notwithstanding the foregoing, the
Company shall not be entitled to any refund in excess of the amounts it has paid
pursuant to Section 1.02 hereof, as redetermined pursuant to Section 1.05
hereof. The payments and refunds of such amounts shall be treated analogously to
the treatment in Sections 1.02 through 1.04 hereof.
1.05 Redeterminations.
In the event of any adjustment to the tax return of the Group as filed (by
reason of an amended return, claim for refund or an audit by the Internal
Revenue Service), the liability of Questo or Xxxxxxx and the Company shall be
redetermined to give effect to any such adjustment as if it had been made as
part of the original computation of tax liability. Payments between Questo,
Xxxxxxx, MPG Holding, and the Company shall be made to reflect the results of
this redetermination. The payments shall be made promptly before any
corresponding payments to the Internal Revenue Service or promptly after the
receipt of any refund from the Internal Revenue Service. Any payments shall
include interest and penalties equal to the amount actually paid to, or received
from, the Internal Revenue Service with respect to the redetermination of tax
liabilities. Questo shall calculate the amounts of any payments and shall give
Xxxxxxx, MPG Holding, and the Company at least 10 days’ notice of any amounts
payable by the Company.
1.06 State
and Local Taxes. If Questo, any affiliate of Questo (other than the
Company and the subsidiaries of the Company) or the Company, or any of them, are
eligible, but not required, to file consolidated or combined state or local
income, franchise or other tax returns, Questo shall determine, in its sole
discretion, whether to file any such return. If Questo, any affiliate of Questo
(other than the Company and the subsidiaries of the Company) or the Company, or
any of them, file consolidated or combined state or local tax returns, the
Company shall pay to MPG Holding amounts equal to the amount of state or local
tax that the Company would pay as a separate corporation. Questo shall pay
Xxxxxxx, Xxxxxxx shall pay MPG Holding, and MPG Holding shall pay the Company
the amount of any refunds the Company would have received from any state or
local authority were it a separate corporation. The computations of such
amounts, their payments, any refunds, all elections, and any adjustments shall
be treated analogously to the treatment of federal taxes in Sections 1.02
through 1.05 hereof.
1.07 Indemnification.
Questo shall indemnify the Company for any federal, state or local tax liability
of Questo or any affiliate of Questo other than the Company, whether imposed
pursuant to Treas. Reg. §1.1502-6, any state or local counterparts to that
provision or otherwise. Any indemnification payments are to be made on an
after-tax basis, within 10 days of the Company’s notifying Questo of its
liability.
1.08 Information.
The Company shall provide Questo with any information Questo may need in
connection with Questo’s federal tax return and with any state or local tax
consolidated or combined returns. Questo shall prepare, or have prepared at its
expense, the federal consolidated income tax return and any state or local
consolidated or combined income or franchise tax returns. Questo, Xxxxxxx, MPG
Holding, and the Company shall cooperate with each other in the preparation of
all federal, state or local income tax returns.
1.09 Audits.
Questo shall act as Company’s agent in the event of any audit of Questo’s
federal consolidated tax return and any state or local consolidated or combined
tax returns and in any administrative or judicial proceedings with respect to
such returns. Questo, Xxxxxxx, MPG Holding and the Company shall cooperate with
each other in such audits, administrative or judicial
proceedings.
1.10 Participation
in Proceedings. Questo shall inform Xxxxxxx, MPG Holding, and the Company
of any audits, administrative or judicial proceedings that may affect the
Company’s tax liability. The Company shall have the right, at its own expense,
to participate in such proceedings as to issues that affect the Company’s tax
liability or that may affect the Company’s tax liability in future years. Questo
shall not settle any such issues without the Company’s consent, which consent
may not unreasonably be withheld.
1.11 Certain
Limitations on Company’s Obligation. For the avoidance of doubt, and
notwithstanding anything to the contrary contained or implied in this Agreement,
the parties acknowledge and agree that the Company shall not be required to make
any payments to MPG Holding, Questo or any other entity whose income is included
in a consolidated or combined income or franchise tax return of the Group, and
shall be indemnified against the making of any payments to the Internal Revenue
Service or other state or local taxing authority, with respect to any tax
consequences or liabilities arising from or attributable to either (i) the Plan
of Reorganization attached as Schedule VIII to that certain Amendment No. 4 and
Waiver No. 2 to the Credit Agreement, dated as of January 28, 2009, among the
Company, Morris, Shivers, MPG Holding, the guarantors and lenders party there,
and JPMorgan Chase Bank, N.A., as administrative agent, or (ii) the transactions
contemplated by that certain term sheet and related diagram attached as
Attachment A (and described therein as the “Senior Refinancing Transaction”, the
“Senior
Refinancing Documentation”) to the Restructuring Term Sheet; provided,
however,
that in calculating the obligations of the Company under this Agreement, there
shall be taken into account the tax consequences and liabilities arising from or
attributable to the refinancing or satisfaction of the Company’s senior secured
debt and the issuance of the new MPG Holding debt as described in the Senior
Refinancing Documentation, the issuance of the New Notes in exchange for the
Notes, and the payment of related fees and expenses, all as provided for in
connection with the Senior Refinancing Transaction (as defined in the
Restructuring Support Agreement).
Section
2. Representations
and Warranties. Each of Questo, Xxxxxxx, MPG Holding, Xxxxxx and the
Company (each being herein called an “Obligor”)
represents and warrants to the other that:
2.01 Corporate
Existence. Questo and Xxxxxxx are corporations and MPG Holding, Xxxxxx
and the Company are limited liability companies, in each case duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization, and each has all requisite corporate or other power, and has all
material governmental licenses, authorization, consents and approvals necessary
to own its assets and carry on its business as now being or as proposed to be
conducted.
2.02 No
Breach. None of the execution and delivery of this Agreement, the
consummation of the transactions herein contemplated or compliance with the
terms and provisions hereof will conflict with or result in a breach of, or
require any consent under, the charter, by-laws or operating agreement of such
Obligor or any of its subsidiaries, or any applicable law or regulation, or any
order, writ, injunction or decree of any court or governmental authority or
agency, or any agreement or instrument to which such Obligor or any of its
subsidiaries is a party or by which they are bound or to which they are subject,
or constitute a default under any such agreement or instrument, or result in the
creation or imposition of any lien upon any property of such Obligor or any of
its subsidiaries pursuant to the terms of any such agreement or
instrument.
2.03 Corporate
Action. Such Obligor has all necessary corporate or limited liability
company power, authority and legal right to execute, deliver and perform its
obligations under this Agreement; the execution, delivery and performance by
such Obligor of this Agreement has been duly authorized by all necessary
corporate or limited liability company action on its part (including, without
limitation, any required shareholder or member approvals); and this Agreement
has been duly and validly executed and delivered by such Obligor and constitutes
its legal, valid and binding obligation, enforceable in accordance with its
terms, except as such enforceability may be limited by (a) bankruptcy,
insolvency, reorganization, moratorium or similar laws of general applicability
affecting the enforcement of creditors’ rights and (b) the application of
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
2.04 Approvals.
No authorizations, approvals or consents of, and no filings or registrations
with, any governmental or regulatory authority or agency are necessary for the
execution, delivery or performance by such Obligor of this Agreement or for the
validity or enforceability hereof.
Section
3. Third
Party Beneficiaries. Each of Questo, Shivers, Morris, MPG Holding, and
the Company, for itself and its successors, covenants and agrees that the
provisions of this Agreement are for the benefit, inter
alia,
of the trustee under the Indenture (the “New
Indenture Trustee”) (or, prior to the issuance of the New Notes, the
Existing Indenture Trustee), the holders of the New Notes (or, prior to the
issuance of the New Notes, holders of the Notes), the Lenders, the Agent, any
lenders of the Refinanced Debt as defined in the Indenture, and their respective
successors and assigns; and each of the New Indenture Trustee (or, prior to the
issuance of the New Notes, the Existing Indenture Trustee), the holders of the
New Notes (or, prior to the issuance of the New Notes, holders of the Notes),
the Lenders, the Agent and any lenders of the Refinanced Debt are hereby made an
obligee hereunder and any one of them may enforce the provisions of this
Agreement.
Section
4. Tax
Elections. From and after the date the Indenture (as defined in the
Restructuring Support Agreement) is issued:
4.01 The New
Indenture Trustee shall have an approval right as more fully specified in
Section 4.02 below with respect to elections made or positions taken for tax
return purposes, and, in the case of subclause (D), actions taken, to the extent
those elections, positions or actions taken could reasonably be expected to have
any adverse consequence on the New Notes or the Company, related to (A) the
exchange of the New Notes for the Notes (as defined in the Restructuring Support
Agreement), (B) the Plan of Reorganization attached as Schedule VIII to that
certain Amendment No. 4 and Waiver No. 2 to the Credit Agreement, dated as of
January 28, 2009, among the Company, Morris, Shivers, MPG Holding, the
guarantors and lenders party there, and JPMorgan Chase Bank, N.A., as
administrative agent, (C) the Senior Refinancing Transaction, or (D) the
indebtedness of MPG Holding.
4.02 At least
twenty (20) business days prior to making any election or taking any position or
action as described in Section 4.01 above, the Company shall provide the New
Indenture Trustee with notice of such proposed election to be made, or position
or action to be taken, setting forth in reasonable detail a description of such
election, position or action the circumstances surrounding such election,
position or action and the anticipated results of taking such election, position
or action, and request that the New Indenture Trustee notify holders of the New
Notes of such proposed election, position or action and request such holders of
the New Notes notify the New Indenture Trustee in writing if such holders object
to such proposed election, position or action. The Company shall request that
the New Indenture Trustee notify it of any objections received from the holders
of the New Notes. Unless the New Indenture Trustee notifies the Company that it
has received written objections from the Required Noteholders (as defined in the
Indenture) during such twenty (20) business day period (in which case the
Company shall not make such election or take such position or action), the
Company may then make such election or take such position or
action.
4.03 For
purposes of this Section 4, it is understood and agreed that this Section 4
shall apply to elections made or positions taken that could reasonably be
expected to have any adverse consequence on the New Notes or the Company, only
to the extent that such elections or positions are subject to the discretion of
the Company, and shall not apply to any position taken if such position is
required by applicable law or regulation. For this purpose, a position shall be
deemed to be required by applicable law or regulation if the Company has
received written advice from either (x) a nationally recognized law firm, or (y)
a “Big Four” accounting firm, that such position is required by law or
regulation.
Section
5. Miscellaneous.
5.01 No
Impairment. No right, power or remedy of any holder of the New Notes (or,
prior to the issuance of the New Notes, any holder of the Notes), any Lender,
any lenders of the Refinanced Debt, the Agent, the New Indenture Trustee (or,
prior to the issuance of the New Notes, the Existing Indenture Trustee)
hereunder shall at any time in any way be prejudiced or impaired by any act or
failure to act on the part of the Company, Questo, Xxxxxx, MPG Holding or
Shivers.
5.02 Governing
Law. This Agreement shall be governed by, and construed in accordance
with, the law of the State of Georgia.
5.03 Waivers,
Etc. The terms of this Agreement may be waived, altered or amended only
by an instrument in writing duly executed by Questo, Morris, Shivers, MPG
Holding, and the Company so long as such amendments do not disadvantage the
holders of the New Notes (or, prior to the issuance of the New Notes, holders of
the Notes) in any material way with respect to the original indenture as in
effect on the issue date and otherwise only with the consent of the Trustee. Any
such amendment or waiver shall be binding upon Questo, Shivers, Morris, MPG
Holding, the Company, the Existing Indenture Trustee, the New Indenture Trustee
and each holder of the Notes or the New Notes.
5.04 Successors
and Assigns. This Agreement shall be binding upon and inure to the
benefit of the respective successors and assigns of Questo, Morris, Shivers, MPG
Holding, the Company, the Existing Indenture Trustee, the New Indenture Trustee
and the holders of the Notes or the New Notes.
5.05 Counterparts.
This Agreement may be executed in any number of counterparts, all of which taken
together shall constitute one and the same instrument; and any of the parties
hereto may execute this Agreement by signing any such
counterpart.
5.06 Severability.
If any provision hereof is invalid and unenforceable in any jurisdiction, then,
to the fullest extent permitted by law, (a) the other provisions hereof shall
remain in full force and effect in such jurisdiction and shall be liberally
construed in favor of the Company and the New Indenture Trustee and the holders
of the New Notes in order to carry out the intentions of the parties hereto as
nearly as may be possible and (b) the invalidity or unenforceability of any
provision hereof in any jurisdiction shall not affect the validity or
enforceability of such provision in any other
jurisdiction.
--
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered as of the day and year first above written.
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XXXXXX
PUBLISHING GROUP, LLC
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By:
1/6/2010
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/s/ Xxxxx. X. Xxxxx |
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Name:
Xxxxx X. Xxxxx
Title:
Sr. Vice President/CFO
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XXXXXX
COMMUNICATIONS COMPANY, LLC
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By:
1/6/2010
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/s/ Xxxxx. X. Xxxxx |
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Name:
Xxxxx X. Xxxxx
Title:
Sr. Vice President/CFO
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XXXXXXX
TRADING & OPERATING COMPANY
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By:
1/6/2010
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/s/ Xxxxx. X. Xxxxx |
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Name:
Xxxxx X. Xxxxx
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Title:
Sr. Vice President/CFO
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MPG
NEWSPAPER HOLDING, LLC
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By:
1/6/2010
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/s/ Xxxxx. X. Xxxxx |
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Name:
Xxxxx X. Xxxxx
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Title:
Sr. Vice President/CFO
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QUESTO,
INC.
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By:
1/6/2010
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/s/ Xxxxx. X. Xxxxx |
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Name:
Xxxxx X. Xxxxx
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Title:
Sr. Vice President/CFO
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