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EXHIBIT 8
SHAREHOLDERS' AGREEMENT
THIS SHAREHOLERS' AGREEMENT (this "Agreement") is dated as of the 12th
day of January, 2001, by and among the shareholders set forth on EXHIBIT A
attached hereto (hereinafter each individually referred to as "Shareholder" and
collectively referred to as "Shareholders"), Xxxxxx X. Xxxxxx ("Xxxxxx"), R. Xxx
Xxxxx ("Xxxxx"), Fortune Financial, Inc., a Florida corporation ("FFI"), The
Crown Group, Inc., a Florida corporation ("CGI"), Hawkeye, Inc., a Florida
corporation ("Hawkeye") and Mid-Ohio Securities Corp., FBO R. Xxx Xxxxx (Acct.
15051) ("Xxxxx XXX").
W I T N E S S E T H :
WHEREAS, Shareholders collectively own, or have voting power with
respect to, in excess of 51% of the outstanding common stock of FFI ("Common
Stock");
WHEREAS, Shareholders desire to terminate that certain Shareholders'
Agreement dated November 15, 2000 among FFI and the Shareholders (the "Previous
Shareholders' Agreement"); and
WHEREAS, Shareholders and FFI believe it to be in their respective best
interests to enter into an agreement pursuant to Florida Statute ss. 607.0731 to
provide for the manner in which the Shareholders will vote their shares with
respect to: (i) approval or ratification of a transaction involving the
investment by Hawkeye and Xxxxx XXX in certain convertible notes and warrants
exercisable for the acquisition of Common Stock as set forth in that certain
Securities Purchase Agreement dated November 15, 2000 among FFI, Hawkeye and
Xxxxx XXX (the "Phase I Transaction"); (ii) approval or ratification of a
transaction involving CGI's investment in FFI pursuant the purchase of FFI
Series A Convertible Preferred Stock ("Preferred Stock") as set forth in that
certain Preferred Stock Purchase Agreement effective as of December 29, 2000
between FFI and the Investors (the "Phase II Transaction," together with the
Phase I Transaction hereinafter referred to as the "Transactions"); (iii)
expansion and reduction of the number of directors that comprise the FFI Board
of Directors (the "Board") and filling the vacancy on the Board created by the
expansion and thereafter creating a staggered Board and agreeing on FFI director
nominees; and (iv) authorization of additional shares of Common Stock.
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In consideration of the mutual benefits to be derived from the
covenants and agreements herein contained, and for other good and valuable
consideration, receipt of which is hereby acknowledged, the parties hereto agree
as follows:
1. TERMINATION OF PREVIOUS SHAREHOLDER AGREEMENT. The Shareholders
hereby terminate the Previous Shareholders' Agreement.
2. APPROVAL OF TRANSACTIONS. FFI agrees to cause ratification and/or
approval of the Transactions to be placed on the agenda and proxy statement for
a special meeting of FFI's shareholders ("Special Meeting") or the 2001 Annual
Meeting of FFI's shareholders (the "2001 Annual Meeting") to be held in 2001,
whichever occurs first. At the Special Meeting or the 2001 Annual Meeting, each
Shareholder agrees (pursuant to Florida Statute ss. 607.0731) to vote all of the
shares of Common Stock then owned (beneficially or otherwise) by such
Shareholder and all such shares as to which such Shareholder is then entitled to
exercise voting power in favor of ratification and/or approval of the
Transactions.
3. AUTHORIZATION OF ADDITIONAL SHARES. FFI agrees to cause
authorization of an additional 17,000,000 shares (the "Additional Shares") of
Common Stock (such that the total authorized shares of Common Stock, $.025 par
value, shall be increased to 35,000,000) to be placed on the agenda and proxy
statement for a Special Meeting or the 2001 Annual Meeting, whichever occurs
first. At the Special Meeting or the 2001 Annual Meeting, each Shareholder
agrees (pursuant to Florida Statute ss. 607.0731) to vote all of the shares of
Common Stock then owned (beneficially or otherwise) by such Shareholder and all
such shares as to which such Shareholder is then entitled to exercise voting
power in favor of authorization of the Additional Shares.
4. EXPANSION AND REDUCTION OF THE BOARD; STAGGERED BOARD; ELECTION OF
DIRECTORS.
(a) Prior to the 2001 Annual Meeting, each Shareholder shall use its
best efforts to cause its designee(s) on the Board to: (i) increase by one the
number of directors that serve on the Board such that the total number of FFI
directors shall be nine until the 2001 Annual Meeting, at which time the number
of FFI directors shall decrease by one such that the total number of FFI
directors shall be eight, and (ii) fill the vacancy caused by such increase in
the number of directors by appointing Xxxx X. Xxxxxx to serve as an FFI director
until the 2001 Annual Meeting.
(b) FFI agrees to cause a proposed amendment to FFI's bylaws that
provides for the election of directors to staggered terms of three years (the
"Bylaw Amendment") to be placed on the agenda and proxy statement for a Special
Meeting or the 2001 Annual Meeting, whichever occurs first. At the Special
Meeting or the
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2001 Annual Meeting, whichever occurs first, each Shareholder agrees (pursuant
to Florida Statute ss. 607.0731) to vote all of the shares of Common Stock then
owned (beneficially or otherwise) by such Shareholder and all such shares as to
which such Shareholder is then entitled to exercise voting power in favor of
approval of the Bylaw Amendment.
(c) Prior to the 2001 Annual Meeting, each Shareholder shall use its
best efforts to cause its designee(s) on the Board to propose the following
slate of directors for election to the Board:
-------------------------- ------------------------ ----------------------------- --------------------
DIRECTOR CLASS BOARD SEATS COMPOSITION TERM EXPIRES
-------------------------- ------------------------ ----------------------------- --------------------
I 2 1 XxXxxxxx Nominee 2002
1 Xxxxx Nominee
-------------------------- ------------------------ ----------------------------- --------------------
II 3 1 XxXxxxxx Nominee 2003
1 Xxxxx Nominee
Xxxxxx
-------------------------- ------------------------ ----------------------------- --------------------
III 3 3 CGI nominees 2004
-------------------------- ------------------------ ----------------------------- --------------------
The nominees listed in this table immediately above in this Section 4(c) shall
be hereinafter referred to as the "Director Nominees."
(d) At the 2001 Annual Meeting, each party to this Agreement that
beneficially owns any capital stock of FFI at any time during the term of this
Agreement hereby agrees (pursuant to Florida Statute ss. 607.0731) to vote all
of the shares of capital stock of FFI then owned (beneficially or otherwise) by
such Shareholder and all such shares as to which such party is then entitled to
exercise voting power in favor of election of the Director Nominees to the
Board.
(e) As long as the XxXxxxxx Family (as defined below) owns
(beneficially or otherwise) at least fifteen percent (15%) of the outstanding
shares of Common Stock, each party to this Agreement that beneficially owns any
capital stock of FFI at any time during the term of this Agreement hereby agrees
to (i) use its best efforts to cause its designee(s) on the Board to make
nominations of persons for election to the Board and (ii) vote all of the shares
of capital stock of FFI then owned (beneficially or otherwise) by such party and
all such shares as to which such party is then entitled to exercise voting power
in a manner so that at all times the Board is composed of: the XxXxxxxx Nominees
(as defined below), at least two persons nominated by Xxxxx ("Xxxxx Nominee")
and Xxxxxx. For purposes of this Agreement, the following definitions shall
apply: (w) "XxXxxxxx Nominees" shall mean two nominees of Xxxxx X. XxXxxxxx (or
in the event he is deceased or declared
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incompetent, the two nominees designated jointly by Xxxxx X. XxXxxxxx and the
trustees of the marital trust established by Xxxxx X. XxXxxxxx); (x)
"XxXxxxxx Family" shall mean each member of the family of Xxxxx X. XxXxxxxx,
each Affiliate (as defined below) of Xxxxx X. XxXxxxxx, and any entity
(including trusts) in which Xxxxx X. XxXxxxxx or any member of his family
owns in excess of a five percent (5%) beneficial interest in Common Stock or
over which Xxxxx X. XxXxxxxx or any member of his family has the power to
exercise control; (y) the term "member of the family" shall include any
person related directly or indirectly, by blood, marriage, adoption or any
combination thereof, to Xxxxx X. XxXxxxxx or Xxxxx X. XxXxxxxx; and (z)
"Affiliate" shall have the meaning attributed thereto under Rule 12b-2 under
the Securities Exchange Act of 1934, as amended. This Section 4(e) shall
survive termination and expiration of this Agreement as long as the XxXxxxxx
Family owns (beneficially or otherwise) at least fifteen percent (15%) of the
outstanding shares of Common Stock.
5. NO PROXY CONTESTS. During the term of this Agreement, each
Shareholder agrees (i) not to solicit, initiate, encourage or participate in any
solicitation of proxies or take any action by written consent as a Shareholder
the purpose of which would be inconsistent with the provisions of this
Agreement, and (ii) not to assist, advise, encourage or act in concert with any
person with respect to any such conduct.
6. TERM. This Agreement shall begin on the date hereof and shall
continue until the first to occur of (i) the sale by CGI of more than 50% of the
shares of Preferred Stock acquired by CGI in connection with the Phase II
Transaction to a non-Affiliate of CGI or (ii) the conversion of any such shares
of Preferred Stock held by CGI into Common Stock. Notwithstanding the foregoing,
the term of this Agreement shall not end prior to the conclusion of the 2001
Annual Meeting and in any event shall expire on December 31, 2003.
7. TRANSFERS. Until the conclusion of the 2001 Annual Meeting: (i) this
Agreement shall be binding upon the transferees, direct or indirect, of any
shares of Common Stock held by Shareholders; (ii) any transferor Shareholder
shall, as a condition to such transfer, require the transferee to acknowledge in
writing that such transferee agrees to all the terms and conditions of this
Agreement and promptly deliver a copy of such writing to the Investors and FFI;
(iii) Shareholders agree to maintain, in aggregate, ownership or voting power
for at least 51% of the outstanding Common Stock; and (iv) each Shareholder
agrees not to sell, gift, transfer or convey any shares of Common Stock in
excess of such Shareholder's pro rata share of the shares of Common Stock owned
by the Shareholders in excess of 51% of the outstanding shares of Common Stock.
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8. NOTICE TO TRANSFER AGENT. FFI and Shareholders shall jointly notify
the Company's transfer agent of the existence of this Agreement.
9. SPECIFIC PERFORMANCE. Shareholders, the Investors and FFI
acknowledge that the parties hereto would not have an adequate remedy at law for
money damages in the event that this Agreement is not performed in accordance
with its terms, and therefore the parties agree that any party hereto shall be
entitled to specific performance of the terms hereof in addition to any other
remedy to which the parties may be entitled at law or in equity.
10. FURTHER ASSURANCES. Each Shareholder agrees, upon the request of
FFI or the Investors, to execute such further documents, including proxies, as
FFI or the Investors may reasonably request from time to time and to take such
other actions as may be reasonably necessary or desirable to carry out the
intent of this Agreement. The parties acknowledge that any proxies so executed
and delivered constitute proxies coupled with interest and may not be revoked
during the term of this Agreement.
11. NOTICES. Any notice or other communication required or permitted to
be delivered under this Agreement shall be (i) in writing, (ii) delivered
personally, by nationally recognized overnight courier service or by certified
or registered mail, first-class postage prepaid and return receipt requested,
(iii) deemed to have been received on the date of delivery, and (iv) addressed
as follows (or to such other address as the party entitled to notice shall
hereafter designate in accordance with the terms hereof):
If to Company, to:
Fortune Financial, Inc.
00000 Xxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxxxxxx, Xxxxxxx 00000
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Attention: President
Facsimile: (000) 000-0000
If to CGI, to:
The Crown Group, Inc.
000 Xxxx Xxxx Xxxxxxx
Xxxxxxxxxxx, Xxxxxxx 00000
Attention: President
Facsimile: (000) 000-0000
If to Hawkeye:
Hawkeye, Inc.
c/o Xxxxxx X. Xxxxxx or R. Xxx Xxxxx
Rock Creek Capital
0000 Xxxxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxxxxxx, Xxxxxxx 00000
Facsimile: (000) 000-0000
If to Xxxxx XXX:
Mid-Ohio Securities Corp., FBO R. Xxx Xxxxx
0000 Xxxxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx, Vice-President
Facsimile: (000) 000-0000
If to a Shareholder, to the respective Shareholder's as set
forth on EXHIBIT A attached hereto.
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12. INVALID PROVISION. The invalidity or unenforceability of any
particular provision of this Agreement shall not affect other provisions hereof,
and the Agreement shall be construed in all respects as if such invalid,
unenforceable provisions were omitted.
13. MODIFICATION. No change or modification of this Agreement shall be
valid unless the same be in writing and signed by all of the parties hereto.
14. CONFLICT. In the event of a conflict between the provisions of this
Agreement and that certain Shareholder Agreement dated May 24, 1999 among FFI,
Xxxxx X. XxXxxxxx and R. Xxx Xxxxx (the "Other Shareholder Agreement"), the
provisions of this Agreement shall govern. FFI, Xxxxx X. XxXxxxxx and R. Xxx
Xxxxx hereby agree that the Other Shareholder Agreement is and has been in full
force and effect continuously since its inception.
15. AMENDMENT OF OTHER SHAREHOLDER AGREEMENT. FFI, Xxxxx X. XxXxxxxx
and R. Xxx Xxxxx hereby agree that this Agreement hereby amends the Other
Shareholder Agreement as follows and such amendment shall survive termination of
this Agreement:
(a) Section 2 is deleted and replaced in its entirety with the
following language:
VOTING OF SHARES. At each annual or special meeting of the
Company's shareholders at which directors are to be elected,
each Shareholder agrees to vote all of the shares of common
stock of the Company then beneficially owned by the
Shareholder and all such shares as to which the Shareholder is
then entitled to exercise voting power as follows (and to use
best efforts to cause to be voted all shares other than
Excluded Shares as to which the Shareholder shares voting
power as follows):
a. AGREED DIRECTOR NOMINEES. In favor of the nomination and
election of director nominees (the "AGREED DIRECTOR NOMINEES")
such that at all times the Company's Board of Directors is
composed of: (i) two nominees of XxXxxxxx (or in the event he
is deceased or declared incompetent, the two nominees
designated jointly by Xxxxx X. XxXxxxxx and the trustees of
the marital trust established by XxXxxxxx), collectively, the
"XXXXXXXX NOMINEES"); (ii) two nominees of R. Xxx Xxxxx
(referred to
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herein collectively as the "XXXXX NOMINEES"); and (iii) Xxxxxx
X. Xxxxxx ("Xxxxxx").
b. VACANCIES. In the event of a vacancy on the Board of
Directors with respect to the Xxxxx Nominees, in favor of an
individual nominated in writing by 75% of a group comprised of
the remaining Xxxxx Nominee directors and Xxxxxx; in the event
of a vacancy on the Board of Directors with respect to the
XxXxxxxx Nominee directors, in favor of an individual nominated
in writing by XxXxxxxx (or in the event he is deceased or
declared incompetent, the two nominees designated jointly by
Xxxxx X. XxXxxxxx and the trustees of the marital trust
established by XxXxxxxx);
c. ANTI-TAKEOVER MEASURES. Against any anti-takeover measures
such as a common stock dividend or distribution plan intended
to dilute the interest of a purchaser of the Company's stock,
contracts providing for golden parachute payments to the Xxxxx
Nominee directors, limitations on shareholder rights to act by
written consent or to otherwise propose or take corporate
action (other than 30 days notice of any nominee for election
as a director), or amend or repeal Article II, Section 8 of the
Bylaws, which measures the Company hereby agrees not to adopt
without the consent of the Shareholders.
d. DEFINITION OF "XXXXXXXX FAMILY". For purposes of this
Agreement, the term "XxXxxxxx Family" shall mean each member
of the family of XxXxxxxx, each affiliate (as that term is
defined under Rule 12b-2 under the Securities Exchange Act of
1934, as amended) of XxXxxxxx, and any entity (including
trusts) in which XxXxxxxx or any member of his family owns in
excess of a five percent (5%) beneficial interest or over
which XxXxxxxx or any member of his family has the power to
exercise control. A "member of the family" includes any person
related directly or indirectly, by blood, marriage, adoption
or any combination thereof, to XxXxxxxx or Xxxxx X. XxXxxxxx.
For purposes of this Agreement, the term "Affiliate" shall
have the meaning attributed thereto under Rule 12b-2 under the
Securities Exchange Act of 1934, as amended.
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(b) Section 5 of the Other Shareholder Agreement is deleted and
replaced in its entirety with the following language:
TERM. This Agreement shall begin on the date hereof and shall
continue until the first to occur of the following events: (i)
the XxXxxxxx Family owns (beneficially or otherwise) less than
fifteen percent (15%) of the outstanding shares of common
stock of the Company; (ii) at the option of XxXxxxxx, evidence
by written notice to the Company and Xxxxx, default by the
Company under its Consulting and Non-Competition Agreement
(the "CONSULTING AGREEMENT") or Director Indemnification with
XxXxxxxx, each dated the date hereof, after receipt of written
notice thereof and a failure to cure within the later of 10
days of receipt of such notice by the Company or 10 days after
resolution of any bona fide dispute with respect thereto;
(iii) at the option of XxXxxxxx, evidence by written notice to
the Company and Xxxxx, the occurrence of a Material Adverse
Change; or (iv) at the option of XxXxxxxx, evidence by written
notice to the Company and Xxxxx, the Company's Board fails to
nominate the XxXxxxxx Nominees and Xxxxxx, or his successor
selected pursuant to this Section, for election at an Annual
Meeting.
For purposes of the foregoing, Material Adverse Change shall
mean (i) if any time after the closing of The Crown Group,
Inc.'s investment of at least $10,000,000 in the Company
pursuant to that certain Preferred Stock Purchase Agreement
effective as of December 29, 2000 between the Company and The
Crown Group, Inc., the Company's shareholders' equity as
reflected in the Company's quarterly or annual financial
statements filed with the Securities and Exchange Commission
in its Form 10-Q or 10-K is less than such shareholders'
equity as of December 31, 2000 (x) plus $10,000,000 and minus
(y) 20% multiplied by the sum of such shareholders' equity as
of December 31, 2000 and $10,000,000; (ii) the Company is in
default under an Employment Agreement or Consulting and
Non-Competition Agreement with Xxxxxx X. XxXxxxxx, both of
even date herewith, after receipt of written notice thereof
and a failure to cure
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within the later of 10 days of receipt of such notice by the
Company or 10 days after resolution of any bona fide dispute
with respect thereto; (iii) any local, state or federal
regulatory authority takes control of the Company or Fortune
Insurance Company under administrative supervision or
receivership; (iv) any outstanding indebtedness of the Company
for money borrowed is accelerated or matures and is not paid,
extended or reinstated with 60 days; (v) the Company files a
petition for relief under federal bankruptcy laws or an
involuntary petition is filed against the Company and is not
dismissed within 90 days; or (vi) Xxxxxx resigns, is removed,
dies or otherwise ceases to serve as Chairman of the Board or
as director of the Company and the Board fails to appoint a
successor reasonably satisfactory to XxXxxxxx.
16. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, and all of which shall
together constitute one and the same instrument.
17. APPLICABLE LAW. This Agreement shall be interpreted and enforced
pursuant to the laws of the State of Florida, without application of principles
of conflicts of laws.
18. CONSTRUCTION. Wherever the context shall permit, the singular shall
include the plural, the plural shall include the singular, and the use of any
gender shall be deemed to include all or no genders.
[signatures on next page]
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IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement on the date first above written.
\s\ XXXXX X. XXXXXXXX /s/ J. XXXXXXX XXXXXXX
------------------------------------------------------ -------------------------------------------------------
Xxxxx X. XxXxxxxx J. Xxxxxxx Xxxxxxx
\s\ R. XXX XXXXX \s\ XXXXXX X. XXXXX
------------------------------------------------------ -------------------------------------------------------
X. Xxx Xxxxx Xxxxxx X. Xxxxx
\s\ XXXXXX XXXXXX III \s\ XXXXX X. XXXXXXXX
------------------------------------------------------ -------------------------------------------------------
Xxxxxx Xxxxxx III Xxxxx X. XxXxxxxx
\s\ XXXXXX X. XXXXXXXX \s\ XXXXXX X. XXXXXX
------------------------------------------------------ -------------------------------------------------------
Xxxxxx X. XxXxxxxx Xxxxxx X. Xxxxxx
THE CROWN GROUP, INC., a Florida corporation FORTUNE FINANCIAL, INC., a Florida corporation
By: \s\ XXXX X. XXXXXX By: \s\ J. XXXX XXXXXXX
------------------------------------------------- -----------------------------------------------------
Xxxx X. Xxxxxx J. Xxxx Xxxxxxx,
President President and Chief Executive Officer
HAWKEYE, INC., a Florida corporation MID-OHIO SECURITIES CORP., FBO
R. XXX XXXXX (Acct. 15051)
By: \s\ XXXXXX X. XXXXXX By: \s\ XXXXXXX X. XXXXX
------------------------------------------------- -----------------------------------------------------
Xxxxxx X. Xxxxxx Xxxxxxx X. Xxxxx
President Vice-President
\s\ J. XXXX XXXXXXX
-----------------------------------------------------
J. Xxxx Xxxxxxx
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EXHIBIT A
SHAREHOLDERS
Xxxxx X. XxXxxxxx J. Xxxxxxx Xxxxxxx
00000 Xxxxxxx Xxxx 000 Xxxxx Xxxxxx Xxxxx, Xxxx 0000
Xxxxxxxxxxxx, Xxxxxxx 00000 Xxxxxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000 Telephone: (000) 000-0000
Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
X. Xxx Xxxxx Xxxxxx X. Xxxxx
0000 Xxxxxxxxxx Xxxxxxxxx, Xxxxx 000 000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000 Xxxxxxxxxxx, XX 00000
Telephone: (000) 000-0000 Telephone: (000) 000-0000
Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
Xxxxxx Xxxxxx III Xxxxx X. XxXxxxxx
000 Xxxxx Xxxxx Xxxxxx 00000 Xxx Xxxx Xxxxxxxxx
Xxxxxxxxxxx, Xxxxxxx 00000 Xxxxxxxxxxxx, Xxxxxxx 00000
Telephone: (000) 000-0000 Telephone: (000) 000-0000
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Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
Xxxxxx X. XxXxxxxx Xxxxxx X. Xxxxxx
0000 Xxxxx Xxxxxxxxxx Xxxxx 0000 Xxxxxxxxxx Xxxxxxxxx, Xxxxx 000
Bldg. 1, Apt. 208 Jacksonville, Florida 32207
Xxxxxxx, Xxxxxxx 00000 Telephone: (000) 000-0000
Telephone: (000) 000-0000 Facsimile: (000) 000-0000
Facsimile: (000) 000-0000
J. Xxxx Xxxxxxx
00000 Xxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxxxxxx, Xxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
