EXHIBIT 10.2
EXECUTION VERSION
AMENDED AND RESTATED
REGISTRATION RIGHTS AGREEMENT
THIS AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT (the
"Agreement") is made and effective as of June 29, 1999, by Applied Magnetics
Corporation, a Delaware corporation (the "Company"), and Kennilworth Partners II
LP, a Delaware limited partnership ("Kennilworth").
RECITALS
A. Upon the terms and subject to the conditions of an Amended and
Restated Exchange Agreement, dated as of June 29, 1999 (the "Exchange
Agreement"), by the Company and Kennilworth, Kennilworth has agreed to
purchase six million (6,000,000) shares of the common stock, $0.10 par value
("Common Stock"), and to loan to the Company an aggregate principal amount of
twenty-five million dollars ($25,000,000) pursuant to the terms of a Senior
Subordinated Convertible Promissory Note (the "Note"), by Company in favor of
Kennilworth. Such Note shall be in the aggregate principal amount of
thirty-seven million seven hundred seventy-six thousand seven hundred sixteen
dollars ($37,776,716), reflecting zero coupon interest through the third
anniversary of the issuance date thereof.
B. A material inducement for the parties to execute the Exchange
Agreement is that the Company enter into this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements of the parties contained herein, the parties agree as
follows:
1. DEFINITIONS. As used herein, the terms below shall have the
following meanings. Any such term, unless the context otherwise requires, may
be used in the singular or plural, depending upon the reference.
"AFFILIATE" shall have the meaning provided in the Exchange Act and
the rules and regulations of the Commission promulgated thereunder.
"AGREEMENT" shall mean this Registration Rights Agreement.
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"COMMISSION" shall mean the United States Securities and Exchange
Commission.
"COMMON STOCK" shall have the meaning provided in Recital A.
"COMPANY" shall mean Applied Magnetics Corporation.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended, or any successor law, and the rules and regulations issued pursuant to
that Act or any successor law.
"EXCHANGE AGREEMENT" shall have the meaning provided in Recital A.
"FORM S-3" shall mean such form under the Securities Act as in effect
on the date hereof or any registration form under the Securities Act
subsequently adopted by the Commission which permits inclusion or incorporation
of comparable information by reference to other documents filed by the Company
with the Commission.
"HOLDER" shall mean Kennilworth or any other Person who is the record
owner of Registrable Shares.
"INITIAL CLOSING DATE" shall have the meaning provided in the
Exchange Agreement.
"KENNILWORTH" shall have the meaning provided in the first paragraph
of this Agreement.
"NOTE" shall have the meaning provided in Recital A.
"PERSON" shall mean an individual, partnership, limited liability
company, joint venture, corporation, trust or unincorporated organization or any
other similar entity
"REGISTER," "REGISTERED" and "REGISTRATION" shall refer to a
registration effected by preparing and filing a registration statement or
similar document in compliance with the Securities Act, and the declaration or
ordering of effectiveness of such registration statement or document by the
Commission.
"REGISTRATION EXPENSES" shall mean all expenses incident to the
Company's performance of its obligations under this Agreement, including:
(1) registration and filing fees with the Commission; (2) fees and expenses of
compliance with state securities or
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blue sky laws (including reasonable fees and disbursements of blue sky
counsel); (3) printing expenses, messenger and delivery expenses; (4) fees
and expenses incurred in connection with the listing of the Registrable
Securities on the New York Stock Exchange or on such securities exchange as
the Common Stock may then be principally traded; and (5) fees and expenses of
counsel for the Company and its independent certified accountants, including
the expenses of any special audits or "cold comfort" letters.
"REGISTRABLE SHARES" shall mean (a) the Shares, (b) any Common Stock
of the Company issued to a Holder as a dividend or other distribution with
respect to, or in exchange for or in replacement of, any of the Shares or
(c) any other shares of Common Stock of the Company held by a Holder; PROVIDED,
HOWEVER, that shares of Common Stock shall only be treated as Registrable Shares
if and so long as (i) they have not been sold by Kennilworth to or through a
broker or dealer or underwriter in a public distribution or otherwise, all
pursuant to an effective Registration Statement under the Securities Act
covering the sale of such shares, (ii) they have not been sold in a transaction
exempt from the registration and prospectus delivery requirements of the
Securities Act under Section 4(l) thereof (including any sale pursuant to
Rule 144 under the Securities Act or any similar provision) so that all transfer
restrictions and restrictive legends with respect thereto are removed upon the
consummation of such sale, or (iii) the Holder shall not have received from the
Company an opinion of counsel reasonably acceptable to the Holder stating that
they may immediately be resold by the Holder pursuant to Rule 144(k) under the
Securities Act without any volume limitation and without any additional
unreasonable expense.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended, or
any successor law, and the rules and regulations issued pursuant to that Act or
any successor law.
"SHARES" shall mean (i) the 6,000,000 shares of Common Stock to be
issued and sold by the Company to Kennilworth pursuant to the Exchange Agreement
and (ii) the shares of Common Stock issuable upon conversion of the (A) Senior
Subordinated Convertible Promissory Note in the aggregate principal amount of
thirty-seven million seven hundred seventy-six thousand seven hundred sixteen
dollars ($37,776,716) to be issued and sold by the Company to Kennilworth
pursuant to the Exchange Agreement or (B) Class B Convertible Preferred Stock
of the Company issuable upon conversion of the Senior Subordinated
Convertible Promissory Note pursuant to Section 2.2.3 of the Note.
"VIOLATION" shall have the meaning provided in Section 9(a).
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2. REGISTRATION. The Company shall, prior to the Initial Closing
Date (as defined in the Exchange Agreement):
(a) COMMISSION FILING. Prepare and file with the Commission a
registration statement (the "Registration Statement") on a form for which
the Company then qualifies and which shall be available for the sale of the
Registrable Shares in accordance with the intended methods of disposition
thereof, and use its reasonable efforts to cause the Registration Statement
to be declared effective as promptly as reasonably practicable.
(b) AMENDMENTS. Prepare and file with the Commission such
amendments and supplements to such registration statement and the
prospectus used in connection with such registration statement as may be
necessary to keep the Registration Statement effective and to comply with
the provisions of the Securities Act with respect to the disposition of all
Registrable Securities covered by the Registration Statement until the
earlier of (1) such time as the Registrable Shares have been disposed of in
accordance with the intended methods of disposition thereof as set forth in
the Registration Statement or (2) the expiration of one year following the
effective date of the Registration Statement.
(c) PROSPECTUS. Furnish to the Holders such number of conformed
copies of the Registration Statement and of each amendment and supplement
thereto (in each case including all exhibits), and such numbers of copies
of the prospectus included in the Registration Statement (including each
preliminary prospectus) and such other documents as they may reasonably
request in order to facilitate the disposition of Registrable Shares owned
by them in accordance with the intended method of disposition thereof as
set forth in the Registration Statement, and cause all related filings to
be made with the Commission as required by Rule 424.
(d) BLUE SKY QUALIFICATION. Register and qualify the
Registrable Shares covered by the Registration Statement under such
securities or Blue Sky laws of such jurisdictions as shall be reasonably
requested by the Holders (given the intended method of distribution), and
do any and all other acts and things which may be reasonably necessary or
advisable to enable the Holders to consummate the disposition in such
jurisdictions of the Registrable Shares covered by the Registration
Statement; PROVIDED, HOWEVER, that the Company shall not be required in
connection therewith or as a condition thereto to qualify to do business as
a foreign corporation or to take any action that would subject it to
service of process
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in any such states or jurisdictions in suits other than those arising out
the offer and sale of the Registrable Securities covered by the
Registration Statement.
(e) PROSPECTUS DELIVERY. Promptly notify each Holder of
Registrable Shares covered by the Registration Statement at any time when
the Company becomes aware of the happening of any event as a result of
which the Registration Statement or the prospectus included in the
Registration Statement or any supplement to the prospectus (as then in
effect) contains any untrue statement of a material fact or omits to state
a material fact necessary to make the statements therein (in the case of
the prospectus, in light of the circumstances under which they were made)
not misleading or, if for any other reason it shall be necessary during
such time period to amend or supplement the Registration Statement or the
prospectus in order to comply with the Securities Act, whereupon, in either
case, each Holder shall immediately cease to use the Registration Statement
or prospectus for any purpose and, as promptly as practicable thereafter,
the Company shall prepare and file with the Commission, and furnish without
charge to the appropriate Holders, a supplement to or amendment of the
Registration Statement or prospectus which will correct such statement or
omission or effect such compliance and such copies thereof as the Holders
may reasonably request.
(f) Cause the Registrable Securities to be listed on the New
York Stock Exchange or such other securities exchange on which the Common
Stock is principally traded at the time of the filing of the Registration
Statement.
3. The Company shall promptly notify the Holders of the issuance of,
or, to the Company's knowledge, the threatened issuance of any stop order by the
Commission suspending the effectiveness of the Registration Statement or of the
receipt by the Company of any notification with respect to the suspension or
threatened suspension of the qualification of any of the Registrable Securities
for sale under the securities or blue sky laws of any jurisdiction, and the
Company shall take all commercially reasonable action necessary (1) to prevent
the entry of any threatened stop order or any threatened suspension or (2) to
remove any stop order or lift any suspensions once entered.
4. The Company shall use its reasonable best efforts to comply with
all applicable rules and regulations of the Commission.
5. The Company shall pay all Registration Expenses in connection
with the registration of the Registrable Shares pursuant to this Agreement.
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6. In connection with the preparation and filing of the Registration
Statement, the Holders shall have the opportunity to provide comments to counsel
to the Company during the preparation of the Registration Statement, each
prospectus included therein or filed with the Commission, and each amendment
thereof or supplement thereto. The Company shall not file the Registration
Statement, any prospectus included therein or any amendment thereof or
supplement thereto with the Commission over the reasonable written objections of
counsel for the Holders, if any; provided, that, if the Company fails to file
the Registration Statement, any prospectus included therein or any amendment
thereof or supplement thereto due to objections raised in accordance with the
terms of this Section 6, the Company shall be relieved of its obligation to file
such Registration Statement, prospectus, amendment or supplement pursuant to
Section 2 hereof until such objections have been resolved to the reasonable
satisfaction of the Company and the Holders.
7. FURNISH INFORMATION. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Agreement with
respect to the Registrable Shares of any selling Holder that each Holder shall
furnish to the Company such information regarding itself, the Registrable Shares
held by it, and the intended method of disposition of such securities as the
Company may from time to time reasonably request to prepare the Registration
Statement and maintain its effectiveness.
8. DELAY OF REGISTRATION. No Holder shall have any right to obtain
or seek an injunction restraining or otherwise delaying any such registration as
the result of any controversy that might arise with respect to the
interpretation or implementation of this Agreement.
9. INDEMNIFICATION.
(a) INDEMNIFICATION BY THE COMPANY. To the full extent
permitted by law, the Company will indemnify and hold harmless each Holder,
each of its directors and officers, any underwriter (as defined in the
Securities Act) for such Holder and each person, if any, who controls such
Holder or underwriter within the meaning of the Securities Act or the
Exchange Act, against any losses, claims, damages, or liabilities (joint or
several) and reasonable expenses to which they may become subject under the
Securities Act, the Exchange Act, or other federal or state law, insofar as
such losses, claims, damages, or liabilities (or actions or proceedings in
respect thereof) arise out of or are based upon any of the following
statements, omissions or violations (collectively a "VIOLATION"): (i) any
untrue statement or alleged untrue statement of a material fact contained
in the Registration Statement, including any preliminary prospectus or
final prospectus
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contained therein or any amendments or supplements thereto, (ii) 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, or (iii) any violation or alleged violation of the
Securities Act, the Exchange Act, or any state securities law or any
rule or regulation promulgated under the Securities Act, the Exchange
Act, or any state securities law, and the Company will pay to each such
Holder, director, officer, underwriter or controlling person, as
incurred, any legal or other expenses reasonably incurred by them,
including the fees and expenses of one law firm retained by them, plus
appropriate local counsel, in connection with investigating or defending
any such loss, claim, damage, liability, action or proceeding; PROVIDED,
HOWEVER, that the indemnity agreement contained in this Section 9(a)
shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability, action or proceeding if such settlement is effected
without the consent of the Company (which consent shall not be
unreasonably withheld), nor shall the Company be liable in any such case
for any such loss, claim, damage, liability, or proceeding to which any
Holder, director, officer, underwriter or controlling person may become
subject to the extent that it arises out of or is based upon a Violation
which occurs in reliance upon and in conformity with written information
furnished expressly for use in connection with such registration by such
Holder, underwriter or controlling person to the Company. This right to
indemnification shall remain in full force and effect notwithstanding
any investigation made by or on behalf of such Holder or underwriter and
shall survive the transfer of such securities by such Holder.
(b) INDEMNIFICATION BY HOLDER. To the full extent permitted by
law, each selling Holder severally, but not jointly, will indemnify and
hold harmless the Company, each of its directors, each of its officers who
has signed the registration statement, each person, if any, who controls
the Company within the meaning of the Securities Act or the Exchange Act,
any underwriter (as defined in the Securities Act), any other Holder
selling securities pursuant to the Registration Statement and each person,
if any, who controls any such underwriter or other Holder within the
meaning of the Securities Act or the Exchange Act, against any losses,
claims, damages, or liabilities (joint or several) and reasonable expenses
to which any of the foregoing persons may become subject, under the
Securities Act, the Exchange Act or other federal or state law, insofar as
such losses, claims, damages, or liabilities (or actions or proceedings in
respect thereto) arise out of or are based upon any Violation, in each case
to the extent (and only to the extent) that such Violation occurs in
reliance upon and in conformity with written information furnished by such
Holder expressly for use in connection with the preparation of the
Registration Statement; PROVIDED, HOWEVER, that the indemnity
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agreement contained in this Section 9(b) shall not apply to amounts paid
in settlement of any such loss, claim, damage, liability or action if
such settlement is effected without the consent of the Holder, which
consent shall not be unreasonably withheld; PROVIDED, FURTHER, that in
no event shall any indemnity under this Section 9(b) exceed the net
proceeds from the offering received by such Holder.
(c) PROCEDURES. Promptly after receipt by an indemnified party
under this Section 9 of notice of the commencement of any action (including
any governmental action), such indemnified party will, if a claim in
respect thereof is to be made against any indemnifying party under this
Section 9, deliver to the indemnifying party a written notice of the
commencement thereof and the indemnifying party shall have the right to
participate in, and, to the extent the indemnifying party so desires,
jointly with any other indemnifying party similarly noticed, to assume the
defense thereof with counsel mutually satisfactory to the parties;
PROVIDED, HOWEVER, that an indemnified party (together with all other
indemnified parties which may be represented without conflict by one
counsel) shall have the right to retain one separate counsel (plus
appropriate local counsel), with the fees and expenses to be paid by the
indemnifying party, if representation of such indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to
actual or potential differing interests between such indemnified party and
any other party represented by such counsel in such proceeding. The
failure to deliver written notice to the indemnifying party within a
reasonable time of the commencement of any such action, if prejudicial in
any material respect to its ability to defend such action, shall to the
extent prejudicial relieve such indemnifying party of any liability to the
indemnified party under this Section 9, but the omission so to deliver
written notice to the indemnifying party will not relieve it of any
liability that it may have to any indemnified party otherwise than under
this Section 9. No indemnifying party shall consent to the entry of any
judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or the plaintiff to
such indemnifying party of a release from all liability in respect of such
action.
(d) CONTRIBUTION. If the indemnification provided for in this
Section 9 from the indemnifying party is unavailable to an indemnified
party hereunder in respect of any losses, claims, damages, liabilities or
expenses referred to therein for any reason other than as specified
therein, then the indemnifying 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
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reflect the relative fault of the indemnifying party on the one hand and
the indemnified parties on the other 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 related 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;
PROVIDED, HOWEVER, that in no event shall the liability of any selling
Holder hereunder be greater in amount than the difference between the
dollar amount of the proceeds received by such Holder upon the sale of
the Registrable Shares giving rise to such contribution obligation and
all amounts previously contributed by such Holder with respect to such
losses, claims, damages, liabilities and expenses. The amount paid or
payable to 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 9(d) were determined by PRO RATA
allocation or by any other method of allocation which does not take into account
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.
(e) SURVIVAL. The obligations of the Company and Holders under
this Section 9 shall survive the completion of any offering of Registrable
Shares in a registration statement under this Agreement, and otherwise.
10. REPORTS UNDER EXCHANGE ACT. With a view to making available to
the Holders the benefits of Rule 144 promulgated under the Securities Act and
any other rule or regulation of the Commission that may at any time permit a
Holder to sell securities of the Company to the public without registration
generally or pursuant to an effective registration statement, the Company agrees
to use reasonable commercial efforts to:
(a) make and keep public information available, as those terms
are understood and defined in Rule 144;
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(b) qualify for registration for the sale of Registrable Shares;
(c) 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; and
(d) furnish to any Holder, so long as the Holder owns any
Registrable Shares, promptly upon request (i) a written statement by the
Company that it has complied with the reporting requirements of Rule 144,
the Securities Act and the Exchange Act, or that it qualifies as a
registrant whose securities may be resold pursuant to Form S-3, (ii) a copy
of the most recent annual and/or quarterly report of the Company and such
other reports and documents so filed by the Company, and (iii) such other
information as may be reasonably requested in availing any Holder of any
rule or regulation of the Commission which permits the selling of any
Registrable Shares without registration or pursuant to such form.
11. AMENDMENT OF REGISTRATION RIGHTS. Any provision of this
Agreement may be amended and the observance thereof may be waived (either
generally or in a particular instance and either retroactively or prospectively
only with the written consent of the Company and the holders of sixty-six
percent (66%) of the Registrable Shares then outstanding. Any amendment or
waiver effected in accordance with this Section shall be binding upon each
Holder of any Registrable Shares then outstanding, each future holder of all
such Registrable Shares and the Company.
12. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED, INTERPRETED
AND THE RIGHTS OF THE PARTIES DETERMINED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF CALIFORNIA (WITHOUT REGARD TO THE CONFLICT OF LAWS PROVISIONS THEREOF).
13. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
14. TITLES AND SUBTITLES. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
15. NEGOTIATION OF AGREEMENT. Each of the parties acknowledges that
it has been represented by independent counsel of its choice throughout all
negotiations that
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have preceded the execution of this Agreement and that it has executed the
same with consent and upon the advice of said independent counsel. Each party
and its counsel cooperated in the drafting and preparation of this Agreement
and the documents referred to herein, and any and all drafts relating thereto
shall be deemed the work product of the parties and may not be construed
against any party by reason of its preparation. Accordingly, any rule of law
or any legal decision that would require interpretation of any ambiguities in
this Agreement against the party that drafted it is of no application and is
hereby expressly waived. The provisions of this Agreement shall be
interpreted in a reasonable manner to effect the intentions of the parties
and this Agreement.
16. NOTICES. Any notice, request, instruction or other document to
be given hereunder by any party hereto to another party hereto shall be in
writing, shall be deemed to have been duly given or delivered when delivered
personally or telecopied (receipt confirmed, with a copy sent by reputable
overnight courier), or one business day after delivery to a reputable overnight
courier, postage prepaid, to the address of the party set forth below such
person's signature on this Agreement or to such address as the party to whom
notice is to be given may provide in a written notice to each of the other
parties to this Agreement, a copy of which written notice shall be on file with
the Secretary of the Company.
17. SEVERABILITY. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, such provision shall be excluded
from this Agreement and the balance of the Agreement shall be interpreted as if
such provision were so excluded and shall be enforceable in accordance with its
terms to the fullest extent permitted by law.
18. FURTHER ASSURANCES. Each of the parties shall, without further
consideration, use reasonable efforts to execute and deliver such additional
documents and take such other action as the other parties, or any of them may
reasonably request to carry out the intent of this Agreement and the
transactions contemplated hereby.
19. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon,
and all rights hereto shall inure to the benefit of, the parties hereto, and
their respective successors and permitted assigns.
20. ENTIRE AGREEMENT. This Agreement embodies the entire agreement
and understanding of the parties hereto in respect of the actions and
transactions contemplated by this Agreement. The parties agree that the terms of
this Agreement supercede any and all prior agreements between the parties,
including without limitation that certain Registration Rights Agreement dated as
of May 10, 1999, which, upon
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execution and delivery of this Agreement, shall be of no further force or
effect. There are no restrictions, promises, inducements, representations,
warranties, covenants or undertakings with regard to the registration of the
Company's capital stock pursuant to the Securities Act, other than those
expressly set forth or referred to in this Agreement.
21. RECAPITALIZATIONS, ETC. The provisions of this Agreement
(including any calculation of share ownership) shall apply, to the full extent
set forth herein with respect to the Registrable Shares, to any and all shares
of capital stock of the Company or any capital stock, partnership units or, any
other security evidencing ownership interests in any successor or assign of the
Company (whether by merger, consolidation, sale of assets or otherwise) that may
be issued in respect of, in exchange for, or in substitution of the Common Stock
by reason of any stock dividend, split, combination, recapitalization,
liquidation, reclassification, merger, consolidation or otherwise.
(Signature Pages Follow)
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date first above written.
APPLIED MAGNETICS CORPORATION
By: /s/ Xxxxx X. Xxxxxxx
-----------------------------------
Xxxxx X. Xxxxxxx,
Chairman of the Board and
Chief Executive Officer
ADDRESS:
00 Xxxxx Xxxx Xxxx
Xxxxxx, Xxxxxxxxxx 00000
Attention: Chief Executive Officer
TELECOPIER: (000) 000-0000
KENNILWORTH PARTNERS II LP
By: Kennilworth Advisors LLC, general partner
By: /s/ Xxxxxxx Xxxxxx
---------------------------------
Xxxxxxx Xxxxxx
Its: Managing Member
ADDRESS:
00 Xxxxxxxxxx Xxxx, Xxxxx 000
Xxxxx Xxxx, Xxx Xxxx 00000
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