Exhibit 10.1
FORBEARANCE AGREEMENT
THIS FORBEARANCE AGREEMENT ("Agreement") is effective as of the 30th day of
June, 2002, (the "Effective Date") among Isomet Corporation ("Borrower") and
Bank of America, N.A., a national banking association ("Bank").
RECITALS:
A. Borrower is indebted to Bank (the "Loan") as evidenced by that Note
dated June 30, 2001 in the amount of $750,000.00, payable to the Bank (as
modified, the "Note").
B. The Note is secured by among other things that certain Security
Agreement dated June 30, 2001 executed by Borrower, covering certain property
more particularly described therein ("Security Agreement") and the appropriate
UCC-1 Financing Statements.
C. The Note, and all other written documents executed in connection
therewith, together with any written renewals, modifications and/or extensions
thereof are collectively referred to as the "Loan Documents."
D. The Note matured June 30, 2002, and remains unpaid as of this date.
E. Obligor has requested that Bank forebear from exercising its rights and
remedies under the Loan Documents for a period of time as specified herein in
reliance upon the covenants, representations, and warranties of Obligor herein
and for other consideration.
AGREEMENT:
For and in consideration of the mutual covenants herein, Ten Dollars ($10.00),
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Obligor and Bank agree as follows:
1. Recitals. The foregoing recitals are confirmed by the parties as true
and correct and are incorporated herein by reference. The recitals are a
substantive, contractual part of this Agreement.
2. No Waiver. The execution, delivery and performance of this Agreement by
Bank and the acceptance by Bank of performance of Obligor hereunder (a) shall
not constitute a waiver or release by Bank of any default that may now or
hereafter exist under the Loan Documents, (b) shall not constitute a novation of
the Loan Documents and (c) except as expressly provided in this Agreement, shall
be without prejudice to, and is not a waiver or release of Bank's rights at any
time in the future to exercise any and all rights conferred upon Bank by the
Loan Documents or otherwise at law or in equity, including but not limited to
the right to institute foreclosure proceedings against the Property, institute
collection or arbitration proceedings against Obligor or to exercise any right
against any other person or entity not a party to this Agreement.
3. Forbearance. So long as this Agreement is not terminated earlier
as provided herein, Bank agrees not to foreclose or attempt to foreclose any
collateral securing the Note, institute suit or arbitration proceedings for
collection of the Loan against Obligor, or exercise any other remedies available
to it under the Loan Documents or under applicable law from the Effective Date
until September 30, 2002 (the "Termination Date"). The period of time from the
Effective Date through the Termination Date shall be referred to as the
Forbearance Period. If all amounts due and owing under the Loan are not paid in
full on or before the Termination Period or the earlier termination of this
Agreement, then Bank may seek to foreclose upon any collateral for the Note and
to exercise any other remedies to which Bank may be entitled under the Loan
Documents or applicable law to collect amounts due under the Note or other Loan
Documents. Obligor agrees not to initiate any action of any kind against Bank
with respect to the Note, exercise any remedy available under the Loan Documents
or otherwise, or make any type of demand upon Bank with respect to the
indebtedness evidenced by the Note during the Forbearance Period.
4. Payment. Obligor convenants and agrees to make the following
payments to Bank:
(a) Forbearance Fee. Contemporaneously with the execution of this
Agreement, Obligor shall pay Bank a nonrefundable forbearance fee in the amount
of $3,500.00 in partial consideration for Bank entering into this Agreement.
(b) Scheduled Payments. During the Forbearance Period, Obligor shall
pay each installment of interest required by the Note subsequent to the date
hereof. In addition, on the Termination Date, a final payment of all unpaid
principal and interest on the Loan will be due and payable. Interest will
continue to accrue and be computed on the outstanding principal balance of the
Note from time to time during the Forbearance Period in accordance with the
terms of the Note.
5. Acknowledgment of Default, Amounts Due and Maturity Date. Bank and
Obligor acknowledge that, prior to giving effect to the payment or payments
specified in this Agreement, the aggregate outstanding unpaid principal balance
of the Note as of June 30, 2002 is $700,000.00. The maturity date for the Note
was June 30, 2002, and therefore, subject to the terms of this Agreement, the
Note is due in full. Obligor waives any and all rights to other notice of
payment default or any other default, protest and notice of protest, dishonor,
diligence in collecting and the bringing of suit or arbitration proceedings
against any party, notice of intention to accelerate, notice of acceleration,
demand for payment and any other notices whatsoever regarding the Note or the
other Loan Documents, and further waive any claims that any notices previously
given are insufficient for any reason.
6. Additional Fees. If Obligor does not pay the outstanding balance
due and owing under the Note in full by September 30, 2002, Obligor shall pay
Bank an additional fee in the amount of $25,000.00 which will immediately be due
and payable on that date.
7. Limitation on Interest. No provision of this Agreement, the Note,
any of the other Loan Documents, or any instrument evidencing or securing the
Note, or otherwise relating to the indebtedness evidenced by the Note, shall
require the payment or permit the collection,
application or receipt of interest in excess of the maximum rate permitted by
applicable state or federal law. If any excess of interest in such respect is
herein or in any such other instrument provided for, or shall be adjudicated to
be so provided for herein or in any such instrument, the provisions of this
paragraph shall govern, and neither Obligor nor any endorsers of the Note nor
their respective heirs, personal representatives, successors or assigns shall be
obligated to pay the amount of such interest to the extent it is in excess of
the amount permitted by applicable law. 1t is expressly stipulated and agreed to
be the intent of Obligor and Bank at all times to comply with the usury and
other laws relating to the Note and the other Loan Documents and any subsequent
revisions, repeals or judicial interpretations thereof, to the extent applicable
to the Note or the other Loan Documents. In the event Bank ever receives,
collects or applies as interest any such excess, such amount which would be
excessive interest shall be applied to the reduction of the unpaid principal
balance of the Note, and, if upon such application the principal balance of the
Note is paid in full, any remaining excess shall be paid forthwith to Obligor
and the provisions of the Note, the other Loan Documents and any demand or other
charging document shall immediately be deemed reformed and the amounts
thereafter collectible thereunder reduced, without the necessity of execution of
any new document, so as to comply with the then applicable law, but so as
otherwise to permit the recovery of the fullest amount called for thereunder. In
determining whether or not the interest paid or payable under any specific
contingency exceeds the maximum rate of interest allowed to be charged by
applicable law, Obligor and Bank shall, to the maximum extent permitted under
applicable law, amortize, prorate, allocate and spread the total amount of
interest throughout the entire term of the respective Note so that the amount or
rate of interest charged for any and all periods of time during the term of the
Note is to the greatest extent possible less than the maximum amount or rate of
interest allowed to be charged by law during the relevant period of time.
Notwithstanding any of the foregoing, if at any time applicable laws shall be
changed so as to permit a higher rate or amount of interest to be charged than
that permitted prior to such change, then unless prohibited by law, references
in the Note to "applicable law" for purposes of determining the maximum interest
or rate of interest that can be charged shall be deemed to refer to such
applicable law as to amended to allow the greater amount or rate of interest.
8. Representations and Warranties. In order to induce Bank to execute,
deliver, and perform this Agreement, Obligor warrants and represents to Bank
that:
ii) This Agreement is not being made or entered into with the actual
intent to hinder, delay, or defraud any entity or person, and each
obligor is solvent and not bankrupt;
iii) This Agreement is not intended by the parties to be a novation of the
Loan Documents and, except as expressly modified herein, all terms,
conditions, rights and obligations as set out in the Loan Documents
are hereby reaffirmed and shall otherwise remain in full force and
effect as originally written and agreed;
iv) No action or proceeding, including, without limitation, a voluntary or
involuntary petition for bankruptcy under any chapter of the Federal
Bankruptcy Code, has been instituted or threatened by or against
Obligor.
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v) The execution of this Agreement by Obligor and the performance by
Obligor of their obligations hereunder will not violate or result in a
breach or constitute a default under any agreements to which any of
them is a party;
vi) All information provided by Obligor to Bank prior to the date hereof,
including, without limitation, all financial statements, balance
sheets, and cash flow statements, was, at the date of delivery, and
is, as of the date hereof, true and correct in all respects. Obligor
recognizes and acknowledges that Bank is entering into this Agreement
based in part on the financial information provided to Bank by each of
them and that the truth and correctness of that financial information
is a material inducement to Bank in entering into this Agreement.
During the term of this Agreement, Obligor agrees to advise Bank
promptly in writing of any and all new information, facts, or
occurrences which would in any way materially supplement, contradict,
or affect any financial statements, balance sheets, cash flow
statements, or similar items furnished to Bank; and
vii) This Agreement and the Loan Documents constitute the entire agreement
between Bank and Obligor with respect to this matter.
9. Termination of this Agreement. This Agreement will terminate upon
the expiration of the Forbearance Period unless terminated earlier by Bank, at
Bank's sole option, upon written notice to Obligor of the occurrence of any of
the following:
(a) Any Obligor files a petition for bankruptcy under any chapter
of the Federal Bankruptcy Code or takes advantage of any other debtor relief
law, or an involuntary petition for bankruptcy under any chapter of the Federal
Bankruptcy Code is filed against any Obligor or any other judicial action is
taken with respect to or any Obligor by any creditor;
(b) Bank discovers that any representation or warranty made
herein by Obligor was or is untrue, incorrect or misleading in any material
respect;
(c) An event of default occurs under the Loan Documents, other
than the defaults known by Bank to exist as of this date; or
(d) Obligor breaches or defaults in performance of any covenant
or agreement contained in this Agreement.
10. Waiver and Release of Claims. Obligor warrants and represents to
Bank that the Note is not subject to any credits, charges, claims, or rights of
offset or deduction of any kind or character whatsoever; and Obligor releases
and discharges Bank and its predecessors, successors, assigns, officers,
employees, agents, subsidiaries and affiliates (collectively "Affiliates") from
any and all claims and causes of action, whether known or unknown and whether
now existing or hereafter arising, including without limitation, any usury
claims, that have at any time been owned, or that are hereafter owned, in tort
or in contract by any Obligor and that arise out of any one or more
circumstances or events that occurred prior to the date of this Agreement.
Moreover, Obligor jointly and severally, waives any and all claims now or
hereafter arising from or related to any and all claims now on hereafter
arising from or related to any
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delay by Bank or its Affiliates in exercising any rights or remedies under the
Loan Documents, including, without limitation, any delay in foreclosing any
collateral securing the Loan.
11. Bankruptcy.
(a) In entering into this Agreement, Obligor and Bank hereby
stipulate, acknowledge and agree that Bank gave up valuable rights and agreed
to forbear from exercising legal remedies available to it in exchange for the
promises, representations, acknowledgments and warranties of Obligor as
contained herein and that Bank would not have entered into this Agreement but
for such promises, representations, acknowledgments, agreements, and warranties,
all of which have been accepted by Bank in good faith, the breach of which by
Obligor in any way, at any time, now or in the future, would admittedly and
confessedly constitute cause for dismissal of any such bankruptcy petition
pursuant to 11 U.S.C. ss. 1112(b).
(b) As additional consideration for Bank agreeing to forbear
from immediately enforcing its rights and remedies under this Agreement, the
Note and in the Loan Documents, including but not limited to the institution of
foreclosure proceedings, Obligor agrees that in the event a bankruptcy petition
under any Chapter of the Bankruptcy Code (11 U.S.C. ss.101, et seq.) is filed by
or against any obligor at any time after the execution of this Agreement, Bank
shall be entitled to the immediate entry of an order from the appropriate
bankruptcy court granting Bank complete relief from the automatic stay imposed
by ss.362 of the Bankruptcy Code (11 U.S.C. ss.362) to exercise its foreclosure
and other rights, including but not limited to obtaining a foreclosure judgment
and foreclosure sale, upon the filing with the appropriate court of a motion for
relief from the automatic stay with a copy of this Agreement attached thereto.
Obligor specifically agrees (i) that upon filing a motion for relief from the
automatic stay, Bank shall be entitled to relief from the stay without the
necessity of an evidentiary hearing and without the necessity or requirement of
the Bank to establish or prove the value of the Property, the lack of adequate
protection of its interest in the Property, or the lack of equity in the
Property; (ii) that the lifting of the automatic stay hereunder by the
appropriate bankruptcy court shall be deemed to be "for cause" pursuant to
section 362(d)(1) of the Bankruptcy Code (11 U.S.C. ss.362(d)(1)); and (iii)
that Obligor will not directly or indirectly oppose or otherwise defend against
Bank's efforts to gain relief from the automatic stay. This provision is not
intended to preclude Obligor from filing for protection under any Chapter of the
Bankruptcy Code. The remedies prescribed in this paragraph are not exclusive and
shall not limit Bank's rights under the Loan Documents, this Agreement or under
any law.
(c) All of the above terms and conditions have been freely
bargained for and are all supported by reasonable and adequate consideration
and the provisions herein are material inducements for Bank entering into this
Agreement.
12. ARBITRATION. THE LOAN DOCUMENTS ARE HEREBY AMENDED TO INCLUDE
AND THIS AGREEMENT SHALL BE SUBJECT TO THE FOLLOWING PROVISION:
ARBITRATION. EXCEPT AS SET OUT BELOW, ANY CONTROVERSY OR CLAIM BETWEEN OR
AMONG THE PARTIES HERETO INCLUDING BUT NOT LIMITED TO
THOSE ARISING OUT OF OR RELATING TO THIS DOCUMENT OR ANY RELATED DOCUMENTS,
INCLUDING ANY CLAIM BASED ON OR ARISING FROM AN ALLEGED TORT (COLLECTIVELY,
"CLAIM"), SHALL BE DETERMINED BY BINDING ARBITRATION IN ACCORDANCE WITH THE
FEDERAL ARBITRATION ACT (OR IF NOT APPLICABLE, THE APPLICABLE STATE LAW), THE
APPLICABLE RULES OF PRACTICE AND PROCEDURE FOR THE ARBITRATION OF DISPUTES OF
JAMS OR ANY SUCCESSOR THEREOF ("JAMS"), AND THE "SPECIAL RULES" SET FORTH BELOW.
IN THE EVENT OF ANY INCONSISTENCY, THE SPECIAL RULES SHALL CONTROL, JUDGMENT
UPON ANY ARBITRATION AWARD MAY BE ENTERED IN ANY COURT HAVING JURISDICTION. ANY
PARTY TO THIS DOCUMENT MAY BRING AN ACTION, INCLUDING A SUMMARY OR EXPEDITED
PROCEEDING, TO COMPEL ARBITRATION OF ANY CLAIM IN ANY COURT HAVING JURISDICTION
OVER SUCH ACTION. THE INSTITUTION AND MAINTENANCE OF AN ACTION FOR ANY JUDICIAL
RELIEF SHALL NOT CONSTITUTE A WAIVER OF THE RIGHT OF ANY PARTY, INCLUDING THE
PLAINTIFF, TO SUBMIT THE CLAIM TO ARBITRATION IF ANY OTHER PARTY CONTESTS SUCH
ACTION FOR JUDICIAL RELIEF.
a. SPECIAL RULES. ANY ARBITRATION SHALL BE CONDUCTED IN THE COUNTY OF ANY
BORROWER'S DOMICILE AT THE TIME OF THE EXECUTION OF THIS DOCUMENT, OR IF THERE
IS REAL OR PERSONAL PROPERTY COLLATERAL, IN THE COUNTY WHERE SUCH REAL OR
PERSONAL PROPERTY IS LOCATED, AND ADMINISTERED BY JAMS WHO WILL APPOINT AN
ARBITRATOR; IF JAMS IS UNABLE OR LEGALLY PRECLUDED FROM ADMINISTERING THE
ARBITRATION, THEN THE AMERICAN ARBITRATION ASSOCIATION WILL SERVE. ALL
ARBITRATION HEARINGS WILL BE COMMENCED WITHIN 90 DAYS OF THE DEMAND FOR
ARBITRATION; FURTHER, THE ARBITRATOR SHALL ONLY, UPON A SHOWING OF CAUSE, BE
PERMITTED TO EXTEND THE COMMENCEMENT OF SUCH HEARING FOR UP TO AN ADDITIONAL 60
DAYS. ANY DISPUTE CONCERNING THIS ARBITRATION PROVISION OR WHETHER A CLAIM IS
ARBITRABLE SHALL BE DETERMINED BY THE ARBITRATOR. THE ARBITRATOR SHALL HAVE THE
POWER TO AWARD LEGAL FEES PURSUANT TO THE TERMS OF THIS DOCUMENT.
b. RESERVATION OF RIGHTS. NOTHING IN THIS ARBITRATION PROVISION SHALL BE
DEEMED TO (I) LIMIT THE APPLICABILITY OF ANY OTHERWISE APPLICABLE STATUTES OF
LIMITATION OR REPOSE AND ANY WAIVERS CONTAINED IN THIS DOCUMENT; OR (II) BE A
WAIVER BY BANK OF THE PROTECTION AFFORDED TO IT BY 12 U.S.C. SEC. 91 OR ANY
SUBSTANTIALLY EQUIVALENT STATE LAW; OR (III) LIMIT THE RIGHT OF ANY PARTY HERETO
(A) TO EXERCISE SELF HELP REMEDIES SUCH AS (BUT NOT LIMITED TO) SETOFF, OR (B)
TO FORECLOSE AGAINST OR SELL ANY REAL OR PERSONAL PROPERTY COLLATERAL, OR (C) TO
OBTAIN FROM A COURT PROVISIONAL OR ANCILLARY REMEDIES SUCH AS (BUT NOT LIMITED
TO) INJUNCTIVE RELIEF, WRIT OF POSSESSION OR THE APPOINTMENT OF A RECEIVER. ANY
PARTY MAY EXERCISE SUCH SELF HELP RIGHTS, FORECLOSE OR SELL COLLATERAL OR OBTAIN
SUCH PROVISIONAL OR ANCILLARY REMEDIES BEFORE, DURING OR AFTER THE PENDENCY OF
ANY
Page 6
ARBITRATION PROCEEDING BROUGHT PURSUANT TO THIS DOCUMENT. NONE OF THESE ACTIONS
SHALL CONSTITUTE A WAIVER OF THE RIGHT OF ANY PARTY, INCLUDING THE CLAIMANT IN
ANY SUCH ACTION, TO ARBITRATE THE MERITS OF THE CLAIM OCCASIONING RESORT TO SUCH
REMEDIES OR PROCEDURES.
c. WAIVER OF CERTAIN DAMAGES. THE PARTIES HERETO WAIVE ANY RIGHT OR REMEDY
EITHER MAY HAVE AGAINST THE OTHER TO RECOVER PUNITIVE OR EXEMPLARY DAMAGES
ARISING OUT OF ANY CLAIM WHETHER THE CLAIM IS RESOLVED BY ARBITRATION OR BY
JUDICIAL ACTION.
13. Miscellaneous
(a) This Agreement may be executed in a number of identical
counterparts which, taken together, shall constitute collectively one (1)
agreement; but in making proof of this Agreement, it shall not be necessary to
produce or account for more than one such counterpart executed by the party to
be charged.
(c) Any future waiver, alteration, amendment or modification of
any of the provisions of the Loan Documents or this Agreement shall not be valid
or enforceable unless in writing and signed by all parties, it being expressly
agreed that neither the Loan Documents, or this Agreement can be modified
orally, by course of dealing or by implied agreement. Moreover, any delay by
Bank in enforcing its rights after an event of default shall not be a release or
waiver of the event of default and shall not be relied upon by the Obligor as a
release or waiver of the default.
(c) This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto, their heirs, executors, administrators,
successors, legal representatives, and assigns.
(d) The headings of paragraphs in this Agreement are for
convenience of reference only and shall not in any way affect the interpretation
or construction of this Agreement.
(e) THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE
OF MARYLAND AND FEDERAL LAW, AS APPLICABLE.
(f) The warranties and representations of the parties in this
Agreement shall survive the termination of this Agreement.
(g) The terms and conditions set forth in this Agreement are
the product of joint draftsmanship by all parties, each being represented by
counsel, and any ambiguities in this Agreement or any documentation prepared
pursuant to or in connection with this Agreement shall not be construed against
any of the parties because of draftsmanship.
(h) For purposes of this Agreement and the Loan Documents, the
addresses for notice are as follows:
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BORROWER:
Isomet Corporation
0000 Xxxx Xxxxx Xxxx
Xxxxxxxxxxx, XX 00000-0000
BANK:
Bank of America, N.A.
Mail Code: NC1-001-07-06
000 X. Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attn: Xxxxxx Xxxxxx
Notice shall be in writing, and shall be deemed to have been given (i) 72 hours
after being sent by certified or registered mail, return receipt requested,
postage prepaid and addressed as set forth above; or (ii) if by personal
delivery (a) to Obligor when personally delivered to such Obligor or any other
officer, partner, agent or employee of such Obligor at its respective address
set forth above, or (b) if to Bank, when personally delivered to an officer of
the Commercial Bank Special Assets Department of Bank at the address set forth
above. Rejection or other refusal to accept or inability to deliver because of
a changed address of which no notice has been received shall also constitute
service of notice. Obligor and Bank may change such address by sending written
notice to the other in accordance with the foregoing; however, no written notice
of change of address shall be effective until the date of receipt thereof. The
parties hereto agree that any notice sent to an Obligor shall be deemed notice
to all general partners in the event such Obligor is a partnership.
14. FINAL AGREEMENT. THIS AGREEMENT REPRESENTS THE FINAL AGREEMENT
AMONG THE PARTIES WITH RESPECT TO THE SUBJECT MATTER HEREOF AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR ORAL OR WRITTEN, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS AMONG THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS AMONG THE PARTIES.
[Signature page follows]
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EXECUTED under seal as of the Effective Date.
ATTEST: BORROWER:
/s/ Xxxxxx X. Xxxxx Isomet Corporation
-------------------------------------
Name: Xxxxxx X. Xxxxx
--------------------------------
Title: Vice President By: /s/ Xxxxx X. Xxxxxxx
------------------------------- ------------------------------------
Name: Xxxxx X. Xxxxxxx
----------------------------------
Title: Executive Vice President
---------------------------------
BORROWER ACKNOWLEDGMENT
STATE OF VIRGINIA (S)
(S)
COUNTY OF FAIRFAX (S)
I, Xxxxx Xxxxx, a Notary Public for said County and State, do certify that
Xxxxxx Xxxxxx Xxxxx & Xxxxx X. Xxxxxxx, personally appeared before me this day
and acknowledged that he/she is the _______________ V.P. of Isomet Corporation,
and that by authority duly given and as the act of said corporation, the
foregoing instrument was signed in its name by _____________________, its
____________________ Exec. V.P., sealed with its corporate seal, and attested by
himself/herself as its Assistant Secretary.
Witness my hand and official seal, this 19th day of July, 2002.
/s/ Xxxxx Xxxxx
---------------------------------------
Notary Public
[NOTARIAL SEAL]
My Commission Expires:
Nov. 30, 2005
---------------------------------
BANK:
Bank of America Page 9
ATTEST Bank of America, N.A.
a national banking association
Xxxxxx X. Xxxxxxxxx
---------------------------- By: Xxxxxx Xxxxxx
Name: Xxxxxx X. Xxxxxxxxx --------------------
---------------------- Name: Xxxxxx Xxxxxx
Title: Assistant Secretary ------------------
Title: Vice President
------------------
BANK ACKNOWLEDGMENT
STATE OF NORTH CAROLINA (S)
(S)
COUNTY OF MECKLESBURG (S)
I, Xxxx X. Xxxxx, a Notary Public for said County and State, do certify
that Xxxxxx X. Xxxxxxxxx, personally appeared before me this day and
acknowledged that he/she is the Assistant Secretary of Bank of America, N.A.,
and that by authority duly given and as the act of Bank of America, N.A., the
foregoing instrument was signed in its name by Xxxxxx X. Xxxxxxxxx, its
Assistant Vice President, sealed with its corporate seal, and attested by
himself/herself as its Assistant Secretary.
Witness my hand and official seal, this 23rd day of July, 2002
/s/ Xxxx X. Xxxxx
--------------------
Notary Public
[NOTARIAL SEAL]
My Commission Expires:
8/25/06
Bank of America Page 10
