Exhibit 10.10
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement is made effective as of October 4,
2004, by and between Franklin Credit Management Corporation, a Delaware
corporation (the "Company"), and Xxxxxxx X. Xxxxxxx, a New York resident.
WHEREAS, Holder has acquired shares of Common Stock of the Company; and
WHEREAS, the Company has agreed to grant to Holder the rights and benefits
provided herein.
NOW THEREFORE, for and in consideration of the covenants contained herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto do hereby agree as follows:
1. Certain Definitions. As used in this Agreement, the following terms
shall have the following respective meanings:
(a) "Commission" shall mean the Securities and Exchange Commission
or any other federal agency at the time administering the Securities Act.
(b) "Common Stock" shall mean the Company's $0.01 par value per
share common stock.
(c) "Exchanne Act" shall mean the Securities Exchange Act of 1934,
as amended, or any similar federal statute, and the rules and regulations
of the Commission issued under such Act, as they each may, from time to
time, be in effect.
(d) "Holder" shall mean Xxxxxxx X. Xxxxxxx, so long as he holds
at least 25% of the Shares originally issued to HIM and any transferee of
Xxxxxxx X. Xxxxxxx so long as the Shares held by such transferee represent
at least 1% of the outstanding capital stock of the Company and provided
such transferee agreed in writing with the Company at the time of receipt
of the Shares to hold such stock subject to all the restrictions of this
Agreement.
(e) "Registrable Securities" shall mean (i) the Shares of Common
Stock of the Company and (ii) any securities issued as a dividend or other
distribution with respect to, or in exchange or in replacement of, the
securities referred to in subsection (i). For purposes of this Agreement,
a Registrable Security ceases to be a Registrable Security when it has
been effectively registered under the Securities Act and sold or
distributed to the public in accordance with an effective registration
statement covering it.
(f) "Registration Expenses" shall mean all expenses (except for
"Selling Expenses" as defined below) incurred by the Company in complying
with Sections 2 or 3 of this Agreement, including, without limitation, all
registration and fling fees, printing expenses, reasonable fees and
disbursements of counsel for the Company and, subject to Section 4, in the
case of a registration referred to in subsection 2(a) or Section 3, the
reasonable fees and disbursements of one counsel for Holder.
(g) The terms "register", "registered" and "registration" shall
refer to a registration effected by preparing and filing a Registration
Statement in compliance with
the Securities Act, and the declaration or ordering of the effectiveness
of such Registration Statement.
(h) "Registration Statement" shall mean a registration statement
on Form S-3 or Form S-8 filed by the Company with the Commission for a
public offering and sale of securities of the Company.
(i) "Securities Act" shall mean the Securities Act of 1933, as
amended, or any similar federal statute, and the RULES and regulations of
the Commission issued under such Act, as they each may, from time to time,
be in effect.
(j) "Selling Expenses" shall mean all underwriting discounts and
selling commissions, applicable to the sale of Registrable Securities
pursuant to Sections 2 or 3, and all fees and disbursements of one counsel
for Holder not included in Registration Expenses and any and all fees,
expenses and other costs arising from the engagement of an underwriter
requested by Holder pursuant to Section 2(a).
(k) "Shares" shall mean: (i) the 100,000 shares of Common Stock
outstanding on the date hereof issued to the Holder pursuant to Section
4.c of the Employment Agreement, effective October 1,2004 between the
Holder and the Company (the "Employment Agreement"), to the extent such
shares have then vested and (ii) the 20,000 shares of Common Stock
outstanding on the date hereof issued to the Holder pursuant to the
Section 4.c.6 of the Employment Agreement].
2. Required Registrations.
(a) If at any time the Company shall be requested in writing by a
Holder or Holders representing a majority of the Registrable Securities
then outstanding to effect the registration under the Securities Act of
Registrable Securities, the Company shall, as expeditiously as
practicable, use reasonable efforts to effect the registration on a
Registration Statement of all shares of Registrable Securities which the
Company has been requested to register. At the request of Holder, the
Company shall seek to have each offering pursuant to this Section 2(a)
managed, on a basis requested by Holder, by a recognized regional or
national underwriter selected by Holder and approved by the Company, such
approval not to be unreasonably withheld. The Company shall not be
obligated to cause to become effective more than two registration
statements pursuant to which Registrable Securities are registered under
this Section 2(a).
Notwithstanding the foregoing, if the Company shall furnish to the
Holder a certificate signed by the Chairman of the Board, Chief Executive
Officer or Chief Financial Officer of the Company stating that the Board
has made the good faith judgment that it would be detrimental to the
Company and its stockholders for such registration statement to be filed
in the near future, then the Company's obligation to use its reasonable
efforts to file and cause to become effective such registration statement
may be deferred for a reasonable period of time. This deferral right may
not be exercised by the Company on more than two occasions in any 12-month
period or exceed 180 days in the aggregate in any 12-month period.
(b) The Company may include in a registration requested under this
Section 2: (i) any authorized but unissued shares of Common Stock for sale
by the Company, and (ii) any issued shares of its Common Stock and with
respect to which
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registration rights have been granted by the Company ("Management Stock");
provided, however, that such shares shall not be included to the extent
that the managing underwriter of the shares so proposed to be registered
determines in good faith that the inclusion of such shares will interfere
with the successful marketing of the shares of Registrable Securities to
be included therein. If the offering to which a Registration Statement
under this Section 2 relates is an underwritten offering, and if, after
all shares of Common Stock proposed to be offered by the Company and all
such shares of Management Stock have been excluded from such registration,
a greater number of shares of Registrable Securities is offered for
participation in such underwriting than in the opinion of the managing
underwriter can be accommodated without adversely affecting the
underwriting, the amount of Registrable Securities held by Holder and
proposed to be included in such underwriting shall be reduced to a number
deemed satisfactory by the managing underwriter.
3. Incidental Registrations.
(a) If at any time or from time to time the Company shall
determine to register any of its Common Stock ("Initially Proposed
Shares"), for its own account or for the account of any of its
stockholders (other than Holder), other than a registration relating
solely to employee benefit plans, or a registration relating solely to a
Commission Rule 145 transaction or any Rule adopted by the Commission in
substitution therefor or in amendment thereto, or a registration on any
registration form on which the Shares are eligible to be registered or
which does not include substantially the same information as would be
required to be included in a Registration Statement covering the sale of
Registrable Securities, the Company will:
(i) promptly give to Holder written notice thereof (which
shall include a list of the jurisdictions in which the
Company intends to attempt to qualify such securities
under the applicable Blue sky or other state securities
laws if any); and
(ii) include in such registration (and any related
qualification under Blue Sky laws or other compliance),
and in any underwriting involved therein, all of the
Registrable Securities requested by the Holder in a
written request within ten (10) days after the giving of
such written notice by the Company, subject to the
limitations set forth in Section 3(b).
(b) If the registration of which the Company gives notice is for a
registered public offering involving an underwritten public offering, the
Company shall so advise Holder as a part of the written notice given
pursuant to Section 3(a)(i). In such event the right of Holder to
registration pursuant to this Section 3 shall be conditioned upon Holder's
participation in such underwritten public offering and the inclusion of
Holder's Registrable Securities in the underwritten public offering to the
extent provided herein. If Holder proposes to distribute his securities
through such underwritten public offering, he shall (together with the
Company) enter into an underwriting agreement in customary form with the
underwriter or underwriters selected for such underwritten public offering
by the Company. Notwithstanding any other provision of this Section 3, if
the underwriter determines that marketing factors require a limitation of
the number of shares to be underwritten, all of the Initially Proposed
Shares shall be included in such offering before any Registrable
Securities are so included, and further, the underwriter otherwise
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may limit the number of Registrable Securities to be included in the
registration and underwritten public offering, provided that such
limitation shall be applied to all Holders and holders of Management Stock
seeking to include shares in such underwriting on the basis of
"incidental" or piggy-back registration rights pro rata based on the
number of shares they are seeking to have included in the registration.
The Company shall so advise Holder of such limitation (unless Holder has
not elected to distribute any of his Registrable Securities through such
underwritten public offering), and the number of shares of Registrable
Securities that may be included in the registration. No Registrable
Securities or shares of Management Stock excluded from the underwritten
public offering by reason of the underwriter's marketing limitation shall
be included in such registration. If the terms of any such underwritten
public offering differ materially from the terms (including range of
offering price) previously communicated to Holder, Holder may elect to
withdraw therefrom by written notice to the Company and the underwriter,
which notice, to be effective, must be received by the Company at least
two (2) business days before the anticipated effective date of the
Registration Statement. In the event that the contemplated sale does not
involve an underwritten public offering and a determination that the
inclusion of the Registrable Securities adversely affects the marketing of
the shares shall be made by the Board of Directors of the Company in its
good faith discretion, then no Registrable Securities are required hereby
to be included in the contemplated sale.
(c) The Company may at any time withdraw or abandon any
Registration Statement which triggers the provisions of this Section 3
without any liability to Holder.
4. Expenses of Registration. All Registration Expenses incurred in
connection with any registration, qualification and compliance pursuant to
subsection 2(a) and Section 3 shall be paid by the Company. All Selling Expenses
incurred in connection with any registration pursuant to subsection 2(a) and
Section 3 shall be paid by the Holders.
5. Registration Procedures. In the case of each registration,
qualification or compliance effected by the Company pursuant to this Agreement,
the Company will keep Holder advised in writing as to the initiation of each
registration, qualification and compliance and as to the completion thereof. At
its expense the Company will:
(a) prepare and file with the Commission a Registration Statement
with respect to such Registrable Securities, and use its reasonable
efforts in good faith to cause such Registration Statement to become and
remain effective as provided herein;
(b) prepare and file with the Commission such amendments and
supplements to such Registration Statement and the prospectus included in
such Registration Statement as may be necessary or advisable to comply in
all material respects with the provisions of the Securities Act with
respect to the disposition of all Registrable Securities covered by such
Registration Statement or as may be necessary to keep such Registration
Statement effective and current, but for no longer than six (6) months
subsequent to the effective date of such registration;
(c) furnish to Holder such number of copies of such Registration
Statement, each amendment and supplement thereto (in each case including
all exhibits thereto), the prospectus included in such Registration
Statement (including each preliminary prospectus), and such other
documents as Holder may reasonably request in order to facilitate the
disposition of such Registrable Securities held by Holder;
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(d) enter into such customary agreements and take all such other
action in connection therewith as Holder may reasonably request in order
to expedite or facilitate the disposition of such Registrable Securities;
(e) use its reasonable efforts in good faith to register and
qualify the Registrable Securities covered by such Registration Statement
under such securities or Blue Sky laws of such jurisdictions as Holder
shall reasonably request and do any and all such other acts and things as
may be reasonably necessary or advisable to enable Holder to consummate
the disposition in such jurisdictions of the Registrable Securities held
by Holder; provided, however, that the Company shall not be required in
connection therewith to qualify to do business or file a general consent
to service of process in any such jurisdiction nor shall the Company be
required to take any position or change in accounting methods in order to
effect such registration if the Board of Directors determines in good
faith that the same would be materially detrimental to the Company;
(f) furnish to Holder a signed counterpart, addressed to Holder,
of (i) an opinion of counsel for the Company, dated the effective date of
the Registration Statement, and, to the extent available to Holder from
the independent auditors of the Company, (ii) a "comfort" letter signed by
the independent public accountants who have certified the Company's
financial statements included in the Registration Statement, covering
substantially the same matters with respect to the Registration Statement
(and the prospectus included therein) and (in the case of the "comfort"
letter) with respect to events subsequent to the date of the financial
statements, as are customarily covered (at the time of such registration)
in opinions of issuer's counsel and in "comfort" letters delivered to the
underwriters in underwritten public offerings of securities; provided,
that the requirements of this subsection (f) shall apply only to Holder if
he is including at least 100,000 shares (such number to be appropriately
adjusted in the event of stock splits, stock combinations, stock dividends
or similar recapitalizations) of Registrable Securities in such
registration;
(g) use its reasonable efforts in good faith to cause the
Registrable Securities covered by such Registration Statement: (i) to be
listed on any securities exchange or any automated quotation system on
which similar securities issued by the Company are then listed, to the
extent the Company satisfies applicable listing requirements; or (ii) if
not then listed on any exchange or automated quotation system, to be
eligible for trading in any over-the-counter market or trading system in
which the securities of the same class are then traded; and
(h) cooperate with Holder to facilitate the timely preparation and
delivery of certificates representing Registrable Securities to be
distributed or sold and not bearing any restrictive legends and enable
such Registrable Securities to be issued in such denominations and
registered in such names as Holder may reasonably request at least one
business day prior to the closing of any distribution or sale of
Registrable Securities.
Notwithstanding the foregoing provisions of this Section 5, (1)
Holder will not (until further notice) effect sales thereof after receipt
of electronic, facsimile or written notice from the Company to suspend
sales to permit the Company to correct or update such Registration
Statement or prospectus; provided, the obligations of the Company with
respect to maintaining any Registration Statement current and effective
shall be extended by a period of days equal to the period such suspension
is in effect; and (2) at the end of any period during which the Company is
obligated to keep any Registration
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Statement current and effective as provided by this Section 5 (and any
extensions thereof required by subsection 5(f)(l), Holder shall
discontinue sales of shares pursuant to such Registration Statement upon
notice from the Company of its intention to remove from registration the
Registrable Securities covered by such Registration Statement which remain
unsold, and Holder shall notify the Company of the number of shares
registered which remain unsold promptly after receipt of such notice from
the Company.
6. Indemnification.
(a) The Company will indemnify Holder if Registrable Securities
held by Holder are included in the securities with respect to which
registration, qualification or compliance has been effected pursuant to
this Agreement, and each underwriter of such Registrable Securities, if
any, and each person who controls such underwriter, against all claims,
losses, damages and liabilities (or actions in respect thereof) arising
out of or based on (i) any untrue statement (or alleged untrue statement)
of a material fact contained in any prospectus, offering circular or other
similar document (including any related Registration Statement,
notification or the like) incident to any such registration, qualification
or compliance, or based on any omission (or alleged omission) to state
therein a material fact required to be stated therein or necessary to make
the statements therein not misleading in the light of the circumstances
under which they were made, or (ii) any violation by the Company of any
federal, state or common law rule or regulation applicable to the Company
and relating to action or inaction required of the Company in connection
with any such registration, qualification or compliance, and will
reimburse Holder, such underwriter and each person who controls such
underwriter, for any legal and any other expenses reasonably incurred in
connection with investigating or defending any such claim, loss, damage,
liability or action, provided that the Company will not be liable to
Holder or underwriter in any such case to the extent that such claim,
loss, damage, liability or expense arises out of or is based on (i) any
untrue statement or omission made in reliance upon and in conformance with
written information furnished to the Company by or on behalf of Holder or
such underwriter and which was furnished specifically for the purpose of
being used therein or (ii) a failure by Holder to deliver a final
prospectus to his transferee if any material change has been made to the
preliminary prospectus.
(b) Holder will, if Registrable Securities held by Holder are
included in the securities as to which such registration, qualification or
compliance is being effected, indemnify the Company, each of its directors
and officers, each underwriter, if any, of the Company's securities
covered by such registration, qualification or compliance, each person who
controls the Company or such underwriter within the meaning of the
Securities Act, against all claims, losses, damages and liabilities (or
actions in respect thereof) arising out of or based on any untrue
statement (or alleged untrue statement) of a material fact contained in
any such Registration Statement, prospectus, offering circular or other
similar document, or any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances under
which they were made, and will reimburse the Company, such directors,
officers, partners, persons, underwriters or control persons for any legal
or any other expenses reasonably incurred in connection with investigating
or defending any such claim, loss, damage, liability or action, in each
case to the extent, but only to the extent, that such untrue statement or
omission is made in such Registration Statement, prospectus, offering
circular or other document in reliance upon and in conformity with written
information furnished to the Company by or
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on behalf of Holder and which was furnished specifically for the purpose
of being used therein; provided, however, that the liability of Holder
under this Section 6 shall be limited to an amount equal to the proceeds
to Holder of Registrable Securities sold as contemplated herein.
(c) Each party entitled to indemnification under this Section 6
(the "Indemnified Party") shall give notice to the party required to
provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity
may be sought, and shall permit the Indemnifying Party, at such party's
expense, to assume the defense of any such claim or any litigation
resulting therefrom, provided that counsel for the Indemnifying Party, who
shall conduct the defense of such claim or litigation, shall be approved
by the Indemnified Party (whose approval shall not unreasonably be
withheld), and the Indemnified Party may participate in such defense at
such party's expense (except for the payment of fees, costs and expenses
provided for below), and provided further that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Agreement, unless such
failure to give notice shall materially and adversely affect the
Indemnifying Party's defense of any such claim or any such litigation. No
Indemnifying Party, in the defense of any such claim or litigation shall,
except with the consent of each Indemnified Party, consent to entry of any
judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim
or litigation. Notwithstanding the election of the Indemnifying Party to
assume the defense of any such claim or litigation, the Indemnified Party
shall have the right to employ separate counsel and to participate in the
defense of such claim or litigation, and the Indemnifying Party shall bear
the reasonable fees, costs and expenses of such separate counsel if (i)
the use of the counsel chosen by the Indemnifying Party to represent the
Indemnified Party would present such counsel with a conflict of interest;
(ii) the defendants in, or targets of, any such claim or litigation
include both the Indemnified Party and the Indemnifying Party and the
Indemnified Party shall have been advised by counsel in writing that there
may be legal defenses available to it or to other Indemnified Parties
which are different from or additional to those available to the
Indemnifying Party (in which case the Indemnifying Party shall not have
the right to direct the defense of such action on behalf of the
Indemnified Party); (iii) in the exercise of the Indemnified Party's
reasonable judgment, the Indemnifying Party shall not have employed
satisfactory counsel to represent the Indemnified Party within a
reasonable time after notice of the institution of such claim or
litigation; or (iv) the Indemnifying Party shall authorize the Indemnified
Party to employ separate counsel at the expense of the Indemnifying Party.
The Indemnified Party shall not settle any such claim or litigation
without the consent of the Indemnifying Party such consent not to be
unreasonably withheld.
(d) Notwithstanding the foregoing provisions of this Section 6, if
a registration is subject to a firm commitment underwriting, neither the
Company nor Holder shall be required to indemnify any other party to a
greater extent than the obligation of the Company or Holder to the
underwriters pursuant to the underwriting agreement pertaining to such
registration.
(e) If the indemnification provided for in this Section 6 from the
Indemnifying Party is unavailable to an Indemnified Party hereunder in
respect of any losses, claims, damages, liabilities or expenses referred
to therein, then the Indemnifying
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Party, in lieu of indemnifying such Indemnified Party, shall contribute to
the amount paid or payable by such Indemnified Party as a result of such
losses, claims, damages, liabilities or expenses in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party and
Indemnified Parties in connection with the actions which resulted in such
losses, claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. The relative fault of such Indemnifying
Party and Indemnified Parties shall be determined by reference to, among
other things, whether any action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged
omission to state a material fact, has been made by, or relates to
information supplied by, such Indemnifying Party or Indemnified Parties,
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such action. The amount paid or payable
by a party as a result of the losses, claims, damages, liabilities and
expenses referred to above shall be deemed to include any legal or other
fees or expenses reasonably incurred by such party in connection with any
investigation or proceeding. The parties hereto agree that it would not be
just and equitable if contribution pursuant to this Section 6(e) were
determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred to in
the immediately preceding paragraph. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities
Act) shall be entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation.
7. Information by Holder. In connection with any registration
hereunder, Holder shall furnish to the Company in writing such information
regarding Holder and the distribution proposed by Holder as the Company may
reasonably request in writing and as shall be required in connection with any
registration, qualification or compliance referred to in this Agreement.
8. Rule 144 Reporting. With a view to making available the benefits of
certain rules and regulations of the Commission which may at any time permit the
sale of the Company's capital stock to the public without registration, the
Company agrees to use its reasonable efforts to file with the Commission in a
timely manner all reports and other documents required of the Company under the
Securities Act and the Exchange Act.
9. Rule 144 Sales. Notwithstanding anything contained in this Sections
2 and 3 to the contrary, Holder shall not have any registration rights pursuant
to Sections 2 or 3 herein if all of Holder's Registrable Securities may then be
sold within a single three-month period pursuant to Rule 144 under the
Securities Act.
10. Notices. All notices, requests, consents and other communications
required or permitted hereunder shall be in writing and shall be hand delivered
or mailed postage prepaid by registered or certified mail or transmitted by
facsimile transmission (with immediate telephonic confirmation thereafter),
If to the Company, to:
Franklin Credit Management Corporation
Six Xxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: General Counsel
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
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Attention: General Counsel with a copy (which shall not constitute
notice) to:
Kramer, Levin, Naftalis & Xxxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: J. Xxxxxxx Xxxxxxxxx, Esq.
Facsimile No.: (000) 000-0000
If to the Executive, to:
Xxxxxxx X. Xxxxxxx
000 Xxxxx Xxxxxx #0X
Xxx Xxxx, XX 00000
Telephone No.: Facsimile No.: 000-000-0000
If to any other Holder,
to such name at such address as such Holder shall have indicated in
a written notice delivered to the other parties to this Agreement,
or at such other address as the Company or the Executive may specify
by written notice to the other, and each such notice, request,
consent and other communication shall for all purposes of the
Agreement be treated as being effective or having been given when
delivered if delivered personally, upon receipt of facsimile
confirmation if transmitted by facsimile, or, if sent by mail, at
the earlier of its receipt or 72 hours after the same has been
deposited in a regularly maintained receptacle for the deposit of
United States mail, addressed and postage prepaid as aforesaid.
11. Lockup. If the Company shall so deliver such a request in writing to
the Holders, each Holder shall not effect any public or private sale or
distribution of any Registrable Securities (other than the Holder Shares) during
the 15-day period prior to, and during the 180-day period (or such longer period
as the managing underwriter(s) of such offering shall require of the Company's
officers and directors generally) beginning on, the closing date of any
underwritten public offering of shares of Common Stock made for the Company's
own account.
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12. Miscellaneous. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware and may not be amended or
modified without the prior written consent of the Company and Holder. Each of
the parties hereto hereby irrevocably waives any and all right to trial by jury
in any legal proceeding arising out of or related to this agreement or the
transactions contemplated hereby. This Agreement reflects the entire
understanding of the parties hereto with respect to the subject matter hereof.
This Agreement may be executed in one or more counterparts, All of which taken
together shall constitute one and same instrument. The Company may add
additional parties hereto from time to time by execution of a counterpart
signature page.
IN WITNESS WHEREOF, the parties have hereunto affixed their hands and
seals as of the date first above written.
Holder: Franklin Credit Management Corporation
/s/ Xxxxxxx X. Xxxxxxx By: /s/ Xxxxxx X. Xxxx
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XXXXXXX X. XXXXXXX Name: Xxxxxx X. Xxxx
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Title: Chairman
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