AFFILIATE AGREEMENT
EXHIBIT B
THIS AFFILIATE AGREEMENT is made and effective as of
February ___, 1998, by and among KEYSTONE AUTOMOTIVE INDUSTRIES,
INC., a California corporation ("Keystone"), REPUBLIC AUTOMOTIVE
PARTS, INC., a Delaware corporation ("Republic"), and Xxxxxxx X.
Ballhaus, Xxxxx X. Xxxxxx, Xxxxxxx X. Xxxxxx, Xxxxxxxx X.
Xxxxxxx, Xxxxxx X. Xxxxx, Xx., Xxxxxx X. Xxxx, Xxxxx X. Xxxxxx,
Xxxxxxx X. Xxxxx, Xxxxx X. Xxxxxxxx, Xxxxxxx X. Xxxxxxx,
Xxxxxx X. Xxxxxxxxx and Xxxxxxx X. Xxxxxxx, (collectively, the
"Shareholders" and individually, a "Shareholder").
A. Republic and the Shareholders desire that Keystone, KAI
Merger, Inc., a wholly owned subsidiary of Keystone (the
"Subsidiary"), and Republic enter into that certain Agreement and
Plan of Merger (as the same may be amended or supplemented, the
"Merger Agreement"), pursuant to which, among other things, (i)
the Subsidiary will be merged with and into Republic (the
"Merger") and (ii) all shares of the capital stock of Republic
issued and outstanding immediately prior to the Merger will be
converted into the right to receive shares of the Common Stock of
Keystone.
B. Republic and the Shareholders are entering into this
Agreement (i) as a material inducement to Keystone to enter into,
and to cause the Subsidiary to enter into, the Merger Agreement
and (ii) to provide Keystone with a reasonable basis for its
belief, as it relates to Republic, that the merger transaction
may be accounted for as a pooling-of-interests.
C. The Shareholders are affiliates of Republic as that
term is defined in Rule 405 promulgated under the Securities Act
of 1933, as amended (the "Securities Act").
NOW, THEREFORE, in consideration of the premises and of the
respective representations, warranties, covenants, agreements and
conditions contained herein and in the Merger Agreement, and
intending to be legally bound hereby, the parties agree as
follows:
1. Representations and Warranties. Each Shareholder
hereby represents and warrants to Keystone as follows:
(a) The Shareholder is the holder of record, and has
the sole power to vote, or to direct the voting of, and to
dispose of, or to direct the disposition of, that number of
shares of the Common Stock of Republic set forth below such
Shareholder's name on the signature page hereof. Except for such
shares, and any stock options and performance shares held by the
Shareholder pursuant to Stock Plans (as that term is defined in
the Merger Agreement), the Shareholder has no right, title or
interest of any kind whatsoever in any shares of the capital
stock or other securities of Republic. Since January 31, 1996,
the Shareholder has not engaged in the sale, exchange, transfer,
redemption, reduction in any way of his risk of ownership, short
sale or other disposition, directly or indirectly, of any
interest in any shares of the capital stock or other securities
of Republic in contemplation of the Merger Agreement or the
transactions contemplated thereby.
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(b) All shares of the capital stock of Republic held
by the Shareholder are free and clear of all (i) liens, claims,
charges, encumbrances, security interests, equities, restrictions
on transfer or any other defects in title of any kind or
description whatsoever and (ii) preemptive rights, options,
proxies, voting trusts or other agreements, understandings or
arrangements regarding the voting or the disposition of such
shares, except for any such encumbrances or proxies arising
hereunder or under the Securities Act of 1933, as amended (the
"Securities Act").
(c) The Shareholder has the legal right, power,
capacity and authority to execute, deliver and perform this
Agreement without obtaining the approval or consent of any
person, and this Agreement is the legal, valid and binding
obligation of the Shareholder and is enforceable against the
Shareholder in accordance with its terms.
(d) Neither the execution and delivery of this
Agreement nor the consummation by the Shareholder of the
transactions contemplated hereby (i) will, to the knowledge of
the Shareholder, result in a violation of, constitute a default
under, conflict with or require any consent, approval or notice
under, any contract, trust, commitment, agreement, understanding,
arrangement or restriction of any kind, or any judgment, order,
decree, statute, law, rule or regulation, to which the
Shareholder is a party or by which the Shareholder is bound or
(ii) will, to the knowledge of the Shareholder, result in the
creation or imposition of any lien, claim, charge, security
interest, encumbrance or restriction on any shares of the capital
stock of Republic. If the Shareholder is married and any shares
of the capital stock of Republic held by the Shareholder
constitute community property, this Agreement has been duly
executed and delivered by, and constitutes the legal, valid and
binding agreement of, the Shareholder's spouse, enforceable
against such person in accordance with its terms.
(e) No broker, investment banker, financial adviser or
other person is entitled to any broker's, finder's, financial
adviser's or other similar fee or commission in connection with
the transactions contemplated hereby or by the Merger Agreement
based upon arrangements made by or on behalf of the Shareholder.
(f) The Shareholder understands and acknowledges that
Keystone is entering into, and is causing the Subsidiary to enter
into, the Merger Agreement in reliance upon the Shareholder's
execution and delivery of this Agreement.
2. Voting of Republic Shares. Each Shareholder hereby
covenants and agrees as follows:
(a) At any meeting of shareholders of Republic called
to vote upon the Merger Agreement, the Merger or the other
transactions contemplated by the Merger Agreement, or at any
adjournment thereof, or in any other circumstances in which a
vote, consent or other approval with respect to the Merger
Agreement, the Merger or the other transactions contemplated by
the Merger Agreement is sought, the Shareholder shall vote (or
cause to be voted) all shares of the capital stock of Republic as
to which he has the sole or shared voting power, as of the record
date established to
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determine the persons who have the right to
vote at such meeting or to grant such vote, consent or approval,
in favor of the Merger, the execution and delivery by Republic of
the Merger Agreement and the approval of the terms of the Merger
Agreement, the Merger and each other transaction contemplated by
the Merger Agreement.
(b) At any meeting of shareholders of Republic, or at
any adjournment thereof, or in any other circumstances in which
the vote, consent or other approval of shareholders of Republic
is sought, the Shareholder shall vote (or cause to be voted) all
shares of the capital stock of Republic as to which he has the
sole or shared voting power as of the record date established to
determine the persons who have the right to vote at such meeting
or to grant such vote, consent or the approval against (i) any
merger agreement or merger (other than the Merger Agreement and
the Merger), consolidation, combination, sale or acquisition of
any debt or equity security or of any assets, reorganization,
recapitalization, dissolution, liquidation or winding up of or by
Republic or (ii) any amendment of Republic's Articles of
Incorporation or Bylaws or (iii) any other proposal or
transaction involving Republic, which amendment or other proposal
or transaction would in any manner impede, frustrate, prevent or
nullify the Merger, the Merger Agreement or any of the other
transactions contemplated by the Merger Agreement (each of the
foregoing matters set forth in clause (i), (ii) or (iii) above, a
"Competing Transaction").
(c) The Shareholder shall retain at all times the
right to vote any shares of the capital stock of Republic, in his
sole discretion, on all matters (other than those set forth in
this Section 2) which are at any time or from time to time
presented to the shareholders of Republic generally.
(d) The Shareholder shall not, without the prior
written consent of Keystone in each instance, take any action
that would alter or affect in any way the right to vote any
shares of the capital stock of Republic as to which the
Shareholder has the sole or shared voting power, including, but
not limited to, (i) transferring (whether by sale, gift, pledge
or otherwise), or consenting to the transfer of, any interest in
any such shares, (ii) entering into any contract, option or other
agreement or understanding with respect to the voting of such
shares, (iii) granting any proxy, power of attorney or other
authorization in or with respect to the voting of such shares or
(iv) depositing such shares into a voting trust or entering into
a voting agreement or arrangement with respect thereto.
3. Recommendations to Shareholders. Unless the board of
directors of Republic determines in good faith after consultation
with outside legal counsel that to do so would result in a
failure to comply with its fiduciary duties under applicable law,
each Shareholder, in his capacity as a director of Republic, (i)
shall recommend to the shareholders of Republic that they approve
the Merger Agreement, the Merger and the transactions
contemplated by the Merger Agreement at the Republic Meeting or
at any other meeting of the shareholders of Republic, or in any
other circumstances in which the vote, consent or approval of
shareholders of Republic is sought with respect thereto, and (ii)
shall advise the shareholders of Republic to reject any Competing
Transaction. The obligations of the Shareholder under this
Section 3 shall cease at such time as
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Republic or Keystone shall have terminated the Merger Agreement
pursuant to Sections 8.2 or 8.3 thereof.
4. Accounting Treatment. Notwithstanding any other
provision of this Agreement to the contrary, a Shareholder shall
not knowingly take any action which, either alone or together
with any action by any other person, could reasonably be expected
by such Shareholder to preclude Keystone from accounting for the
business combination to be effected by the Merger as a pooling of
interests, including, but not limited to, (i) selling, assigning,
transferring or otherwise disposing of any shares of the capital
stock or other securities of Republic prior to the Merger, (ii)
selling, assigning, transferring or otherwise disposing of any
interest in any shares of the Common Stock of Keystone to be
received by such Shareholder in the Merger or (iii) taking any
other action which, either alone or together with any other
action by any other person, could in any way reduce such
Shareholder's risk of ownership or investment in any shares of
the capital stock of Republic prior to the Merger or of Keystone
received by such Shareholder in the Merger; provided, however,
that the foregoing restrictions on the shares of Keystone
received in the Merger shall terminate upon the earlier of (i)
the date of Keystone's publication of financial results covering
a period of at least thirty (30) days of combined operations of
Keystone and Republic following the Effective Time (as defined in
the Merger Agreement) and (ii) the date that the merger fails to
qualify for pooling of interest accounting treatment for any
reason other than a material breach of this Section 4 by such
Shareholder.
5. Competing Transactions. Each Shareholder shall
refrain, and shall use its reasonable best efforts to cause any
investment banker, attorney or other adviser or representative of
the Shareholder or Republic to refrain, directly or indirectly,
from (i) soliciting, initiating or encouraging the submission of
any Competing Transaction or (ii) participating in any
discussions or negotiations regarding, or furnishing to any
person any information with respect to, or taking any other
action to facilitate any inquiries or the making of any Competing
Transaction, except to the extent that the Shareholder undertakes
such activities in his capacity as an officer or director of
Republic in accordance with the provisions of Section 6.2 of the
Merger Agreement.
6. Exchange of Stock. Upon the satisfaction or waiver of
the conditions to the obligation of Republic to consummate the
Merger, which conditions are set forth in Article VII of the
Merger Agreement, each Shareholder shall exchange all shares of
the capital stock of Republic held by him for the consideration
provided in the Merger Agreement.
7. Restrictions on Disposition of Keystone Shares.
(a) Each Shareholder acknowledges that he has been
advised that (i) the Merger constitutes a transaction covered by
Rule 145 promulgated under the Securities Act, (ii) prior to the
Merger such Shareholder may be deemed to be an "affiliate" of
Republic within the meaning of Rule 145 and (iii) the transfer of
any shares of the Common Stock of Keystone held by such
Shareholder, whether received by him in the Merger or otherwise,
may be restricted in accordance with the provisions of Rule 145.
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(b) A Shareholder shall not sell, transfer, pledge,
hypothecate or otherwise dispose of any interest in any shares of
the capital stock or other securities of Keystone, including,
but not limited to, any shares of Common Stock received in the
Merger or any securities which may be issued as a dividend or
otherwise distributed thereon or with respect thereto or issued
or delivered in exchange or substitution therefor, unless (i)
such sale, transfer or disposition is effected pursuant to an
effective registration statement under, and in compliance with,
the Securities Act or (ii) such Shareholder shall deliver to
Keystone an opinion of legal counsel, which opinion shall be in
form or substance reasonably satisfactory to Keystone, to the
effect that such sale, transfer or disposition is exempt from the
registration requirements of the Securities Act pursuant to the
provisions of Rule 145 or another applicable exemption; provided,
however, that the Shareholder may make bona fide gifts or
distributions without consideration of such securities so long as
the recipients thereof agree not to sell, transfer or otherwise
dispose of such securities except as provided herein.
(c) Each Shareholder has consulted such legal counsel
and financial advisors as he has deemed appropriate, in his sole
discretion, with respect to his obligations under this Section 7.
8. Legend.
(a) Each Shareholder shall stamp, print or type, or
shall cause to be stamped, printed or typed, the following legend
on the face of any certificate evidencing shares of the Common
Stock or other securities of Republic held by such Shareholder or
of Keystone received in the Merger:
"THE VOTING, SALE, ASSIGNMENT, TRANSFER,
PLEDGE, HYPOTHECATION OR OTHER ENCUMBRANCE OR
DISPOSITION OF THE SECURITIES REPRESENTED BY
THIS CERTIFICATE IS SUBJECT TO AN AFFILIATE
AGREEMENT DATED AS OF FEBRUARY ___, 1998, A
COPY OF WHICH IS ON FILE AT THE OFFICES OF
THE COMPANY."
(b) The foregoing legend shall be removed promptly
after Keystone's publication of financial results covering a
period of at least thirty (30) days of combined operations of
Keystone and Republic following the Effective Time and replaced
with a legend reasonably acceptable to counsel for Keystone and
counsel for the Shareholders referring to restrictions under Rule
145. Such Rule 145 legend shall be removed upon receipt of a
legal opinion from counsel to the Shareholder, reasonably
acceptable in form and substance to Keystone, to the effect that
such Rule 145 legend is no longer required.
9. Stop Transfer Orders.
(a) Republic shall not register the transfer of any
certificate representing any shares of the capital stock or other
securities of Republic now held or hereafter acquired by any
Shareholder, unless such transfer is made pursuant to the Merger
Agreement.
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(b) Keystone shall not register the transfer of any
certificate representing any shares of the Common Stock of
Keystone received by a Shareholder in the Merger, except as
expressly permitted by this Agreement.
10. Termination. All rights and obligations of the parties
under this Agreement shall terminate upon the date upon which the
Merger Agreement is terminated in accordance with Article VIII
thereof.
11. Successors and Assigns. Neither this Agreement nor any
of the rights or duties hereunder shall be assigned, in whole or
in part, by operation of law or otherwise, by any of the parties
without the prior written consent of each other party affected by
such assignment. Any assignment in violation of the foregoing
shall be void. This Agreement and the obligations of a
Shareholder hereunder shall attach to all shares of the capital
stock of Republic now held or hereafter acquired by such
Shareholder and shall inure to the benefit of and shall be
binding upon any person to which legal or beneficial ownership of
such shares shall pass by operation of law including, but not
limited to, the Shareholder's permitted heirs, representatives or
successors. In the event of any stock split, stock dividend,
merger, reorganization, recapitalization or other change in the
capital structure of Republic, or the acquisition of any interest
in additional shares of the capital stock of Republic by any
Shareholder, the number of shares subject to the terms of this
Agreement shall be adjusted appropriately and this Agreement and
the obligations hereunder shall attach to any interest in any
additional shares of the capital stock of Republic issued to or
acquired by such Shareholder.
12. Indemnification.
(a) Each of the Shareholders, solely with respect to
himself, with respect to Keystone on the one hand, and Keystone
with respect to each of the Shareholders, on the other hand,
shall indemnify the other and hold it harmless against and in
respect of any and all payments, damages, demands, claims,
losses, expenses, costs, obligations and liabilities (including,
but not limited to, reasonable attorneys' fees and costs) which
arise or result from or are related to any material breach by
such indemnifying party or material failure by such indemnifying
party to perform any of its representations, warranties,
commitments, obligations, covenants or conditions hereunder;
provided, however, that no party shall be entitled to seek
indemnification from any other party pursuant to this Section 12
unless the party from whom indemnification is sought is given
written notice of the existence of a claim for indemnification
within six months of the Effective Time of the Merger.
Consummation of the transactions contemplated hereby shall not
be deemed or construed to be a waiver of any right or remedy of
the indemnified party nor shall this section or any other
provision of this Agreement be deemed or construed to be a waiver
of any ground of defense by the indemnified party.
(b) The party indemnified hereunder (the "Indemnitee")
shall promptly notify the indemnifying party (the "Indemnitor")
of the existence of any claim, demand or other matter involving
liabilities to third parties to which the Indemnitor's
indemnification obligations would apply and shall give the
Indemnitor a reasonable opportunity to defend the same at its own
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expense and with counsel of its own selection (who shall be
approved by the Indemnitee, which approval shall not be
unreasonably withheld or delayed); provided, however, that the
Indemnitee at all times also shall have the right to fully
participate in the defense at its own expense. If the Indemnitor
within a reasonable time after such notice fails to defend such
claim, or fails to adequately pursue such defense once commenced,
the Indemnitee shall have the right, but not the obligation, to
undertake the defense of, and to compromise or settle (exercising
reasonable business judgment) the claim or other matter on
behalf, for the account and at the risk and expense of the
Indemnitor. Except as provided in the preceding sentence, the
Indemnitee shall not compromise or settle the claim or other
matter without the prior written consent of the Indemnitor in
each instance. If the claim is one that cannot by its nature be
defended solely by the Indemnitor, the Indemnitee shall make
available all information and assistance that the Indemnitor
reasonably may request; provided, however, that any associated
expenses shall be paid by the Indemnitor.
13. Survival of Representations, Warranties and Agreements.
All representations, warranties and agreements made by the
parties hereto in this Agreement (including, but not limited to,
statements contained in any schedule or certificate or other
instrument delivered by or on behalf of any party hereto or in
connection with the transactions contemplated hereby) shall
survive the date hereof and any investigations, inspections,
examinations or audits made by or on behalf of any party.
14. Entire Agreement. This Agreement constitutes the
entire agreement between the parties hereto pertaining to the
subject matter hereof, and supersedes all prior agreements,
understandings, negotiations and discussions, whether oral or
written, relating to the subject matter of this Agreement. No
supplement, modification, waiver or termination of this Agreement
shall be valid unless executed by the party to be bound thereby.
No waiver of any of the provisions of this Agreement shall be
deemed or shall constitute a waiver of any other provisions
hereof (whether or not similar), nor shall such waiver constitute
a continuing waiver unless otherwise expressly provided.
15. Notices. Any notice or other communication required or
permitted hereunder shall be in writing and shall be deemed to
have been given (i) if personally delivered, when so delivered,
(ii) if mailed, one (1) week after having been placed in the
mail, registered or certified, postage prepaid, addressed to the
party to whom it is directed at the address set forth on the
signature page hereof or (iii) if given by telex or telecopier,
when such notice or other communication is transmitted to the
telex or telecopier number specified on the signature page hereof
and the appropriate answer back or telephonic confirmation is
received. Any party may change the address to which such notices
are to be addressed by giving the other parties notice in the
manner herein set forth.
16. Governing Law. The validity, construction and
interpretation of this Agreement shall be governed in all
respects by the laws of the State of Delaware applicable to
contracts made and to be performed wholly within that State.
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17. Headings. Section and subsection headings are not to
be considered part of this Agreement and are included solely for
convenience and reference and in no way define, limit or describe
the scope of this Agreement or the intent of any provisions
hereof.
18. Third Parties. Nothing in this Agreement, expressed or
implied, is intended to confer upon any person other than the
parties hereto and their successors and assigns any rights or
remedies under or by reason of this Agreement.
19. Injunctive Relief. Republic and the Shareholders each
hereby acknowledge and agree that the obligations of the
Shareholders hereunder are unique and Keystone would not have an
adequate remedy at law for money damages in the event of the
breach or threatened breach of any provision of this Agreement.
Accordingly, Keystone shall be entitled to temporary and
injunctive relief, including temporary restraining orders,
preliminary injunctions and permanent injunctions, to enforce
such provisions without the necessity of proving actual damages
or being required to post any bond or undertaking in connection
with any such action. This provision with respect to injunctive
relief shall not diminish, however, the right of Keystone to any
other relief or to claim and recover damages.
20. Counterparts. This Agreement may be executed
simultaneously in two or more counterparts, each one of which
shall be deemed an original, but all of which shall constitute
one and the same instrument.
21. Further Assurances. Each party hereto shall, from time
to time at and after the date hereof, execute and deliver such
instruments, documents and assurances and take such further
actions as the other party may reasonably request to carry out
the purpose and intent of this Agreement.
22. Jurisdiction.
(a) Each party hereto irrevocably submits to the
non-exclusive jurisdiction of any court of the State of Delaware
over any suit, action or proceeding arising out of or relating to
this Agreement. To the fullest extent it may effectively do so
under applicable law, each party irrevocably waives and agrees
not to assert, by way of motion, as a defense or otherwise, any
claim that it is not subject to the jurisdiction of any such
court, any objection that it may now or hereafter have to the
establishment of the venue of any such suit, action or proceeding
brought in any such court and any claim that any such suit,
action or proceeding brought in any such court has been brought
in an inconvenient forum.
(b) Each party hereto agrees, to the fullest extent it
may effectively do so under applicable law, that a judgment in
any suit, action or proceeding of the nature referred to
hereinabove brought in any such court shall be conclusive and
binding upon such person and its successors and assigns and may
be enforced in the courts of the State of Delaware (or any other
courts to the jurisdiction of which such person is or may be
subject) by a suit upon such judgment.
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(c) Each party hereto consents to process being served
in any suit, action or proceeding of the nature referred to
hereinabove by mailing a copy thereof by registered or certified
mail, postage prepaid, return receipt requested, to the address
of the other set forth in Section 15. Each party agrees that
such service (i) shall be deemed in every respect effective
service of process upon such person in any such suit, action or
proceeding and (ii) shall, to the fullest extent permitted by
law, be taken and held to be valid personal service upon and
personal delivery to such person.
23. Defined Terms. Capitalized terms used and not
otherwise defined in this Agreement shall have the respective
meanings assigned to them in the Merger Agreement.
24. Severable Provisions. If any term, provision, covenant
or restriction herein, or the application thereof to any
circumstance, shall, to any extent, be held by a court of
competent jurisdiction to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions
herein and the application thereof to any other circumstances,
shall remain in full force and effect, shall not in any way be
affected, impaired or invalidated, and shall be enforced to the
fullest extent permitted by law.
IN WITNESS WHEREOF, the undersigned parties have executed
and delivered this Agreement as of the day and year first above
written.
KEYSTONE: KEYSTONE AUTOMOTIVE INDUSTRIES, INC.
By:____________________________________
Xxxxxxx X. Xxxxxxx,
Chief Executive Officer
000 Xxxx Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxx 00000
REPUBLIC: REPUBLIC AUTOMOTIVE PARTS, INC.
By:____________________________________
Xxxxx X. Xxxxxxxx, President
000 Xxxxxx Xxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxxx 00000
SHAREHOLDERS:
_______________________________________
Xxxxxxx X. Ballhaus
Number of shares:
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_______________________________________
Xxxxx X. Xxxxxx
Number of shares:
_______________________________________
Xxxxxxx X. Xxxxxx
Number of shares:
_______________________________________
Xxxxxxxx X. Xxxxxxx
Number of shares:
_______________________________________
Xxxxxx X. Xxxxx, Xx.
Number of shares:
_______________________________________
Xxxxxx X. Xxxx
Number of shares:
_______________________________________
Xxxxx X. Xxxxxx
Number of shares:
_______________________________________
Xxxxxxx X. Xxxxx
Number of shares:
_______________________________________
Xxxxx X. Xxxxxxxx
Number of shares:
_______________________________________
Xxxxxxx X. Xxxxxxx
Number of shares:
10
_______________________________________
Xxxxxx X. Xxxxxxxxx
Number of shares:
_______________________________________
Xxxxxxx X. Xxxxxxx
Number of shares:
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SPOUSAL CONSENT
I am the spouse of __________________, a Shareholder in
the above Agreement. I understand that I may consult independent
legal counsel as to the effect of this Agreement and the
consequences of my execution of this Agreement and, to the extent
I felt it necessary, I have discussed it with legal counsel. I
hereby confirm this Agreement and agree that it shall bind my
interest in the Shares, if any.
___________________________________________
(Print Name)
____________________________________________
(Signature)
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