Exhibit 2
EXECUTION VERSION
CONTRIBUTION AGREEMENT
THIS CONTRIBUTION AGREEMENT (this "AGREEMENT") is made and entered into
as of May 11, 2003, by and among TDG HOLDING COMPANY, a Delaware corporation
("PARENT"), 2000 RIVERSIDE CAPITAL APPRECIATION FUND, L.P. ("RIVERSIDE"), and
the stockholders of THE XXXXX GROUP, INC., a Delaware corporation (the
"COMPANY"), listed on the signature pages hereto (collectively, the "ROLLOVER
STOCKHOLDERS").
BACKGROUND INFORMATION
A. This Agreement is being entered into simultaneously with the
Agreement and Plan of Merger (the "MERGER AGREEMENT"), by and among Parent, TDG
Merger Co., a Delaware corporation and wholly owned subsidiary of Parent
("PURCHASER"), and the Company. In accordance with the Merger Agreement,
Purchaser will merge with and into the Company, with the Company as the
Surviving Corporation becoming a wholly owned subsidiary of Parent.
B. Riverside and its affiliates desire to effect an equity capital
investment in Parent on the terms and conditions set forth in this Agreement.
C. Riverside and the Rollover Stockholders desire the Rollover
Stockholders to effect an equity capital investment in Parent by means of an
exchange of the Rollover Stockholders equity interests in the Company on the
terms and conditions set forth in this Agreement.
D. The Rollover Stockholders, Riverside and Parent intend that the
transfer of property by the Rollover Stockholders and Riverside to the Parent as
set forth herein will constitute the transfer of property within the meaning of
section 351(a) of the Internal Revenue Code of 1986, as amended (the "CODE").
E. Capitalized terms that are not defined in this Agreement are used as
defined in the Purchase Agreement.
STATEMENT OF AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises and subject to
the terms and conditions herein contained, and other good and valuable
consideration, had and received, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE 1: CONTRIBUTION
1.1 Contribution by the Rollover Stockholders.
(a) Immediately prior to the Effective Time, each Rollover
Stockholder shall contribute, transfer, assign, convey and deliver to Parent the
number of shares of common stock, $.10 par value per share, of the Company (the
"CONVERTED SHARES") having the aggregate value listed opposite such Rollover
Stockholder's respective name on EXHIBIT A attached hereto (such
value for each Rollover Stockholder, the "ROLLOVER INVESTMENT COMMITMENT"), and
Parent, in exchange for such Converted Shares, shall issue and deliver to such
Rollover Stockholder the number of shares of common stock, $.01 par value per
share, of Parent (the "PARENT STOCK") listed opposite such Rollover
Stockholder's respective name on EXHIBIT A (collectively, the "EXCHANGE"). For
purposes of the Exchange, each (a) Converted Share shall be valued at $6.75, and
(b) share of Parent Stock shall be valued at $100.00 per share (the "PARENT
SHARE PRICE").
(b) If any Rollover Shareholder does not own Converted Shares
with an aggregate value equal to such stockholder's Rollover Investment
Commitment, such stockholder will purchase for cash at the Parent Share Price
that number of additional shares of Parent Stock necessary to fulfill such
stockholder's Rollover Investment Commitment.
1.2 Contribution by Riverside. Subject to the satisfaction or waiver of
the conditions set forth in Sections 6.1 and 6.2 of the Merger Agreement
immediately prior to the Effective Time: (a) Riverside will and will cause its
affiliates to provide all of the equity capital necessary to consummate the
transactions contemplated by the Merger Agreement other than the equity capital
that will be provided by the Rollover Stockholders as described in Section 1.1
hereof, and (b) Riverside will and will cause its affiliates to provide such
equity capital by means of the issuance to and purchase by Riverside and its
affiliates of shares of Parent Stock at the Parent Share Price payable solely in
cash.
ARTICLE 2: REPRESENTATIONS AND WARRANTIES OF PARENT
Parent hereby represents and warrants to the Rollover Stockholders and
Riverside as follows:
2.1 Existence and Good Standing. Parent is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware.
2.2 Power. Parent has the corporate power and authority to execute,
deliver and perform fully its obligations under this Agreement.
2.3 Validity and Enforceability. Parent has the capacity to execute,
deliver and perform its obligations under this Agreement. This Agreement has
been duly executed and delivered by Parent and, assuming due authorization,
execution and delivery by Riverside and each of the Rollover Stockholders
represents the legal, valid and binding obligation of Parent, enforceable
against Parent in accordance with its respective terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation, fraudulent
conveyance and other similar Laws and principles of equity affecting creditors'
rights and remedies generally. No further action on the part of Parent is or
will be required in connection with the transactions contemplated hereby.
2.4 No Conflict. Neither the execution of this Agreement nor the
performance by Parent of its obligations hereunder will (a) violate or conflict
with Parent's certificate of incorporation or bylaws or any Law, order, judgment
or decree (b) violate, conflict with or result in a breach or termination of, or
otherwise give any Person additional rights or compensation under, or the right
to terminate or accelerate, or constitute (with notice or lapse of time, or
both) a default under the terms of any note, deed, lease, instrument, security
agreement, mortgage,
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commitment, contract, agreement, license or other instrument or oral
understanding to which Parent is a party or (c) result in the creation or
imposition of any Lien with respect to, or otherwise have an adverse effect
upon, any of the assets or properties of Parent.
2.5 Consents. No consent, approval or authorization of any Person or
Governmental Entity is required in connection with the execution and delivery by
Parent of this Agreement or the consummation of the transactions contemplated
hereby.
2.6 Litigation. There is no instance in which Parent is or has been (a)
subject to any unsatisfied order, judgment or decree or (b) a party or, to the
knowledge of Parent, is threatened to be made a party, to any complaint, action,
suit, proceeding, hearing or investigation of any Person or Governmental Entity.
There are no judicial or administrative actions, proceedings or investigations
pending or, to the knowledge of Parent, threatened that question the validity of
this Agreement, or any of the transactions contemplated hereby.
2.7 Compliance with Laws. Parent is now, and has been, in compliance
with all Laws, orders, judgments and decrees. Parent has no knowledge of any
proposed Law, order, judgment or decree that would be applicable to it and that
would adversely affect any of Parent's assets, properties, liabilities or
operations.
2.8 Employee Benefit Plans. Except for Parent's 2003 Equity and
Performance Incentive Plan, Parent does not have any (a) "employee benefit
plans," as defined in Section 3(3) of ERISA, (b) severance pay, salary
continuation, bonus, incentive, stock option, retirement, pension, profit
sharing or deferred compensation plans, contracts, programs, funds or
arrangements of any kind or (c) other employee benefit plans, contracts,
programs, funds or arrangements (whether written or oral, qualified or
nonqualified, funded or unfunded, foreign or domestic, currently effective or
terminated) and any trust, escrow or similar agreement related thereto, in
respect of any present or former employees, directors, officers, stockholders,
consultants or independent contractors of Parent.
2.9 General. Parent (a) has not conducted any business activities other
than the negotiation and execution of this Agreement and the documents
contemplated by the Merger Agreement; (b) does not have any employees; (c) does
not own any property; (d) has not entered into any contracts, agreements,
arrangements or understandings except for this Agreement and the documents
contemplated by the Merger Agreement; and (e) does not have any liabilities,
except for liabilities incurred in connection with the negotiation and
preparation of this Agreement and the agreements contemplated by the Merger
Agreement.
2.10 No Redemption or Reacquisition. There is no plan or intention on
the part of Parent to redeem or otherwise reacquire any Parent stock to be
issued pursuant to this Agreement.
2.11 Section 368(c) Control. Taking into account any issuance of
additional shares of Parent's stock or any issuance of Parent's stock for
services to persons other than Riverside or the Rollover Stockholders in
connection with the Merger Agreement or this Agreement, including the exercise
of any Parent Stock rights, warrants, or subscriptions, Riverside, Riverside's
affiliates and the Rollover Stockholders will be in "control" of Parent within
the meaning of
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section 368(c) of the Code immediately after Riverside, Riverside's affiliates
and the Rollover Stockholders transfer their cash and Converted Shares,
respectively, to Parent.
ARTICLE 3: REPRESENTATIONS AND WARRANTIES OF THE ROLLOVER STOCKHOLDERS
Each Rollover Stockholder severally and not jointly represents and
warrants, as applied solely to such Rollover Stockholder to Parent and Riverside
as follows:
3.1 Validity and Enforceability. Each Rollover Stockholder has the
capacity or the requisite power and authority, as the case may be, to execute,
deliver and perform such Person's obligations under this Agreement. This
Agreement has been duly executed and delivered by each Rollover Stockholder and,
assuming due authorization, execution and delivery by each of Parent and
Riverside, represents the legal, valid and binding obligation of each Person
enforceable against such Person in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation,
fraudulent conveyance and other similar Laws and principles of equity affecting
creditors' rights and remedies generally. No further action on the part of such
Rollover Stockholder is or will be required in connection with the transactions
contemplated hereby.
3.2 Title. Each Rollover Stockholder has good and marketable title to
the number of shares of Common Stock of the Company set forth opposite such
Rollover Stockholder's name on EXHIBIT B hereto, free and clear of all Liens.
Upon the consummation of the transactions contemplated by this Agreement, Parent
will acquire good and valid title to the Converted Shares contributed by such
Rollover Stockholder, free and clear of all Liens.
3.3 Investment and Representations.
(a) The shares of Parent Stock acquired by the Rollover
Stockholders pursuant to this Agreement will be acquired for investment only and
not with a view of any distribution thereof that would violate the Securities
Act of 1933, as amended (the "SECURITIES ACT") or the applicable state
securities laws of any state.
(b) Each Rollover Stockholder understands that the shares of
Parent Stock have not been registered under the Securities Act or the securities
laws of any state and must be held indefinitely unless subsequently registered
under the Securities Act and any applicable state securities laws or unless an
exemption from registration becomes or is available. The Rollover Stockholder
will not distribute any of the shares of Parent Stock in violation of the
Securities Act or the applicable securities laws of any state.
(c) Each Rollover Stockholder (i) is financially able to hold
the shares of Parent Stock for long-term investment, (ii) understands that the
nature and amount of Parent Stock being purchased is consistent with such
Person's overall investment program and financial position and (iii) recognizes
that there are substantial risks involved in the purchase of the shares of
Parent Stock.
(d) Each Rollover Stockholder confirms that such Rollover
Stockholder (i) is familiar with Parent, (ii) has been given the opportunity to
ask questions of the officers and
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directors of Parent and to obtain (and has received to such Person's
satisfaction) such information about the business and financial condition of
Parent as such Person has reasonably requested and (iii) has such knowledge and
experience in financial and business matters that such Person is capable of
evaluating the merits and risks of the prospective investment in Parent Stock.
(e) In formulating a decision to enter into this Agreement, (i)
each Rollover Stockholder has relied solely upon an independent investigation of
Parent and upon consultations with such Person's legal and financial advisors
with respect to this Agreement and the nature of this investment and (ii) no
reliance was placed by such Rollover Stockholder upon any representations or
warranties other than those of Parent contained herein.
3.4 Accredited Investor Determination. Each Rollover Stockholder
confirms (i) the execution by such Person of an accredited investor
determination form in the form on EXHIBIT C attached hereto and (ii) that such
executed accredited investor determination form sets forth a true, correct and
complete statement of the accredited investor status of such Rollover
Stockholder.
ARTICLE 4: REPRESENTATIONS AND WARRANTIES OF RIVERSIDE
Riverside hereby represents to Parent and the Rollover Stockholders as
follows:
4.1 Validity and Enforceability. Riverside has the requisite power and
authority to execute, deliver and perform its obligations under this Agreement.
This Agreement has been duly executed and delivered by Riverside and, assuming
due authorization, execution and delivery by each of Parent and each of the
Rollover Stockholders represents the legal, valid and binding obligation of
Riverside enforceable against Riverside in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation,
fraudulent conveyance and other similar Laws and principles of equity affecting
creditors' rights and remedies generally. No further action on the part of
Riverside is or will be required in connection with the transactions
contemplated hereby.
4.2 Investment and Representations.
(a) The shares of Parent Stock acquired by Riverside pursuant to
this Agreement will be acquired for investment only and not with a view of any
distribution thereof that would violate the Securities Act or the applicable
state securities laws of any state.
(b) Riverside understands that the shares of Parent Stock have
not been registered under the Securities Act or the securities laws of any state
and must be held indefinitely unless subsequently registered under the
Securities Act and any applicable state securities laws or unless an exemption
from registration becomes or is available. Riverside shall not distribute any of
the shares of Parent Stock in violation of the Securities Act or the applicable
securities laws of any state.
(c) Riverside is (i) financially able to hold the shares of
Parent Stock for long-term investment, (ii) understands that the nature and
amount of the shares of Parent Stock being purchased are consistent with
Riverside's overall investment program and financial position and
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(iii) recognizes that there are substantial risks involved in the purchase of
the shares of Parent Stock.
(d) Riverside confirms that (i) it is familiar with Parent, (ii)
it has been given the opportunity to ask questions of the officers and directors
of Parent and to obtain (and that it has received to its satisfaction) such
information about the business and financial condition of Parent as it has
reasonably requested and (iii) it has such knowledge and experience in financial
and business matters that it is capable of evaluating the merits and risks of
the prospective investment in Parent Stock.
(e) In formulating a decision to enter into this Agreement, (i)
Riverside has relied solely upon an independent investigation of Parent and upon
consultations with its legal and financial advisors with respect to this
Agreement and the nature of its investment and (ii) no reliance was placed by
Riverside upon any representations or warranties other than those of Parent
contained herein.
(f) Riverside is qualified as an "accredited investor" within
the meaning of Rule 501(a) of Regulation D promulgated under the Securities Act.
(g) Riverside has no present intention to transfer or otherwise
dispose of its Parent Stock.
(h) Pursuant to this Agreement, Riverside will receive Parent
Stock having a fair market value approximately equal to the cash that it
transfers to Parent.
ARTICLE 5: MISCELLANEOUS
5.1 Stockholders Agreement. As of the date hereof, each of the Rollover
Stockholders, Riverside and Parent will execute and deliver the Stockholders
Agreement, attached as EXHIBIT D hereto (the "STOCKHOLDERS AGREEMENT"), which
shall become effective immediately following the Closing.
5.2 Termination. This Agreement shall terminate upon the termination of
the Merger Agreement in accordance with its terms or upon the effectiveness of
the Stockholders Agreement in accordance with its terms. In the event of the
termination of this Agreement in accordance with this Section 5.2, each of the
undersigned, on behalf of the undersigned and their respective affiliates,
hereby fully, finally and forever releases, discharges, quit claims and
covenants not to xxx and otherwise agrees not to enforce any claim, cause of
action, right, title or interest against any other party hereto, including their
respective affiliates, successors and assigns, of, from and with respect to any
claims, counterclaims, debts, covenants, agreements, obligations, liabilities,
actions or demands of any kind relating to the transactions contemplated by this
Agreement and the Merger Agreement.
5.3 Entire Agreement. This Agreement sets forth the entire agreement and
understanding between the parties as to the subject matter hereof and merges and
supersedes all prior discussions, agreements and understandings of any and every
nature among them.
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5.4 No Assignment. The rights and obligations of the parties under this
Agreement may not be assigned without the prior written consent of the other
parties. Notwithstanding the previous sentence, Parent may, without the consent
of the Rollover Stockholders, assign its rights under this Agreement to any
lender of Parent or to any Affiliate of Parent.
5.5 Governing Law. The validity, performance, construction and effect of
this Agreement shall be governed by and construed in accordance with the
internal law of the State of Delaware, without giving effect to principles of
conflicts of law and all parties, including their successors and assigns,
consent to the jurisdiction of the state and federal courts of Delaware.
5.6 Headings and Counterparts. The headings in this Agreement are for
convenience of reference only and shall not constitute a part of this Agreement,
nor shall they affect the meaning, construction or effect of this Agreement.
This Agreement may be executed in two or more counterparts and by the parties in
separate counterparts, each of which when so executed shall be deemed to be an
original, and all of which taken together shall constitute one and the same
instrument.
5.7 Section 351(a) Compliance. The transfers by the Rollover
Stockholders and Riverside of Converted Shares and cash, respectively, to Parent
will occur under a single plan and on approximately the same date. The parties
hereto agree to report the transfer to Parent of Converted Shares by the
Rollover Stockholders and the transfer of cash by Riverside as satisfying
section 351(a) of the Code, and no party to this Agreement will do or omit to do
any action that might cause these transfers not to be described in section
351(a) of the Code.
5.8 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, effective when
delivered, or by express courier service, effective one business day after
delivery to such courier, or by registered or certified mail (postage prepaid
and return receipt requested), effective when received or three business days
after the mailing, whichever occurs first, or by telecopy, effective when
transmitted and a confirmation is received, provided the same is on a Business
Day, and, if not, on the next Business Day, to the parties at the following
addresses (or at such other address for a party or to such other Person's
attention as shall be specified by like notice):
If to a Rollover Stockholder, at the respective address set
forth on the signature page hereto.
If to Parent or Riverside:
The Riverside Company
000 Xxxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Attn: Xxxxx Xxxxxxxxx
Fax: 000.000.0000
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With a copy to:
Xxxxx Day
0000 Xxxx Xxxx Xxxx
Xxxxx 000
Xxxxx Xxxx, XX 00000-0000
Attn: Xxxx X. XxXxxx
Facsimile: 650.739.3900
5.9 Severability. If any provision of this Agreement or any part of any
such provision is held under any circumstances to be invalid or unenforceable in
any jurisdiction, then (a) such provision or part thereof shall, with respect to
such circumstances and in such jurisdiction, be deemed amended to conform to
applicable Laws so as to be valid and enforceable to the fullest possible
extent, (b) the invalidity or unenforceability of such provision or part thereof
under such circumstances and in such jurisdiction shall not affect the validity
or enforceability of such provision or part thereof under any other
circumstances or in any other jurisdiction, and (c) the invalidity or
unenforceability of such provision or part thereof shall not affect the validity
or enforceability of the remainder of such provision or the validity or
enforceability of any other provision of this Agreement. Each provision of this
Agreement is separable from every other provision of this Agreement, and each
part of each provision of this Agreement is separable from every other part of
such provision.
[SIGNATURES ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement the
day and year first above written.
TDG Holding Company
By: /s/ Xxxxxx Xxxxxx
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Name: Xxxxxx Xxxxxx
Title: President
2000 RIVERSIDE CAPITAL APPRECIATION FUND, L.P.
By: Riverside Capital Associates 2000, LLC,
its General Partner
By: /s/ Xxxx Xxxxxxxx
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Name: Xxxx Xxxxxxxx
Title: CEO
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the
day and year first above written.
Xxxxx Investments Ltd.
By: /s/ Xxxxxxx Xxxxx
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Name: Xxxxxxx Xxxxx
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Title: Managing Partner
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Address:
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By: /s/ Xxxx Xxxxx-Xxxxx
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Name: Xxxx Xxxxx-Xxxxx
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Address:
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By: /s/ Xxxxxx Xxxxx
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Name: Xxxxxx Xxxxx
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Address:
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By: /s/ Xxxxx Xxxxx
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Name: Xxxxx Xxxxx
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Address:
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By: /s/ Xxxxxxx Xxxxxx-Hood
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Name: Xxxxxxx Xxxxxx-Hood
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Address:
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By: /s/ Xxxxxx Xxxxxxx
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Name: Xxxxxx Xxxxxxx
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Address:
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By: /s/ Xxxxxx X. Xxxxx
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Name: Xxxxxx X. Xxxxx
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Address:
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By: /s/ Xxxxxxx Xxxxxxx
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Name: Xxxxxxx Xxxxxxx
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Address:
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By: /s/ Xxxxxx X. Xxxxxxx
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Name: Xxxxxx X. Xxxxxxx
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Address:
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By: /s/ Xxxxxxx Xxxxxxx
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Name: Xxxxxxx Xxxxxxx
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Address:
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By: /s/ Xxxxx Xxxxxx
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Name: Xxxxx Xxxxxx
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Address:
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By: /s/ Xxxxx Xxxxxxxx, Jr.
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Name: Xxxxx Xxxxxxxx, Jr.
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Address:
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