SEPARATION AGREEMENT AND GENERAL RELEASE
EXHIBIT 10.1
SEPARATION AGREEMENT AND GENERAL RELEASE
This Separation Agreement and General Release (hereinafter, “Separation Agreement”) is made
and entered into by and between Xxxxxxxx X. Xxxxxx (“Xxxxxx”), on the one hand, and Dura Automotive
Systems, Inc. and all of its subsidiaries, related entities and affiliates (collectively referred
to as “Dura” and/or “Company”), on the other hand.
RECITALS
A. Dura employed Xxxxxx as its Chief Executive Officer pursuant to a Letter Agreement dated
December 23, 2002 (“Letter Agreement”), and amended May 8, 2008 (“Letter Agreement Amendment”).
B. Dura and Xxxxxx entered into a Change of Control Agreement dated June 16, 2004 (“Change of
Control Agreement”), and amended May 8, 2008 (“Change of Control Amendment”).
C. Dura established the 2003 Supplemental Executive Retirement Plan, which was amended on and
as of January 15, 2003 and further amended on May 8, 2008 (“2003 SERP”) which Plan covered Denton.
On July 15, 2008, Xxxxxx’x employment at Dura as its CEO (as well as an Officer and Director in all
capacities) ended, and his employment in any capacity with Dura will end on December 31, 2008.
Dura acknowledges that Xxxxxx was not terminated for gross misconduct (as that term is used in the
Letter Agreement) or Cause (as that term is used in the 2003 SERP), and was unrelated to either a
Sale of the Company (as that term is defined in the Letter Agreement Amendment) or a Change of
Control (as that term is defined in the Change of Control Agreement), nor in contemplation of a
Change of Control (as that term is defined in the Change of Control Agreement).
X. Xxxxxx is entitled to certain compensation, benefits and severance payments in connection with
his termination of employment with Dura, and Xxxxxx is subject to certain non-competition,
confidentiality and other restrictions; all of these entitlements and restrictions are solely as
provided in this Separation Agreement.
X. Xxxxxx and Dura desire to enter into this Seperation Agreement to settle fully and finally
all differences between them, including those arising in any way out of Xxxxxx’x employment with
Dura and the cessation thereof, including releases of claims against each other as set forth in
this Separation Agreement.
F. On July 16, 2008, Xxxxxx and Dura entered into a signed, written term sheet (“Term Sheet”)
regarding Xxxxxx’x separation from Dura, which term sheet called for the parties to reduce the
terms to this formal Separation Agreement.
NOW, THEREFORE, in consideration of the premises and promises herein contained, IT IS AGREED
AS FOLLOWS:
AGREEMENT
1. No Admission of Liability: It is agreed that this Agreement is not to be construed
in any way as an admission of any liability whatsoever by the Released Parties or Xxxxxx, and that
any such liability has been expressly denied.
2. Transition Date/Separation Date: Dura and Denton agree that Xxxxxx’x employment at
Dura as its CEO ended by July 15, 2008 (“Transition Date”), and Xxxxxx has transitioned to a
consulting role within the Company which role shall continue until December 31, 2008 (“Separation
Date”). As of the Separation Date, Xxxxxx will cease to be employed by the Company. His cessation
of employment will be characterized as
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a voluntary resignation. In conjunction with Xxxxxx’x transition, Xxxxxx has resigned his
membership on Dura’s Board of Directors, as well as being a Director or Officer of any and all Dura
entities/subsidiaries, and by signing this Separation Agreement hereby reiterates those
resignations.
3. Consulting Position: Xxxxxx will continue as an employee consultant to Dura, and
will continue to be paid his current monthly rate of base salary (annualized at a gross amount of
$844,000.00 inclusive of flex pay) and to receive all employee benefits and executive perquisites
(including flex pay), from the Transition Date through and including the Separation Date (the
Transition Date through and including the Separation Date hereinafter being referenced as the
“Consulting Period”). As a consultant during the Consulting Period, Xxxxxx will perform such
duties as reasonably directed by Dura’s Board of Directors in its sole discretion; provided,
however, Xxxxxx shall not be prohibited from obtaining new employment during the Consulting Period
as long as it does not unreasonably prevent him from performing his duties as a consultant to Dura.
During the Consulting Period, Xxxxxx agrees to reasonably cooperate with the Company and its Board
of Directors. During the Consulting Period, Xxxxxx shall be permitted to maintain his current home
offices and Dura shall continue to support such offices with its current level of office equipment,
email address and access, and technology support, including secretarial assistance; provided,
however, that if Xxxxxx obtains new employment during the Consulting Period, then Dura’s
obligations to support such offices with its current level of office equipment, email address and
access, and technology support, including secretarial assistance, shall immediately cease, and it
shall be Dura’s sole option whether or not to continue such (with the understanding that if Dura
does not so continue, then Xxxxxx will not be required to
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perform consulting services that would require the use of such home equipment or services).
At the Separation Date, Xxxxxx shall be entitled to retain any home office equipment at his
discretion. As soon as practicable after the Transition Date, Xxxxxx shall return to Dura the two
(2) Company-provided computers/laptops in his possession (the computers/laptops in his home offices
in Birmingham, MI and Aspen, CO), and Dura shall contemporaneously provide Xxxxxx with two (2)
equivalent computers/laptops.
4. Bonus: Dura will pay Xxxxxx a one-time bonus in the gross amount of $800,000.00
for having led the Company out of bankruptcy. This bonus will be paid on the next regularly
scheduled Company pay date following the Transition Date.
5. Benefits: Upon the Separation Date, Dura will pay Xxxxxx all vested accrued
employee benefits as of the Separation Date in accordance with their terms and conditions,
including but not limited to his vested account balance under the Company’s 401K Plan and his
vested accrued pension benefit under the Company’s qualified defined benefit plan. Xxxxxx shall
retain the right to convert any Company-owned life insurance as of the Separation Date.
6. SERP: In consideration for Xxxxxx’x compliance with the conditions under Section
2.8 of the SERP (including the modified non-competition and non-solicitation restrictions), as well
as the terms of this Separation Agreement, Xxxxxx will receive his vested accrued benefits under
the 2003 SERP, in accordance with its terms and conditions, except as modified herein. Such
benefits will be payable as a single life annuity (with 10 years certain) commencing on January 1,
2009. Notwithstanding the foregoing, such annuity payments will be delayed for a period not to
exceed six months and one day; provided, such delayed payments shall be payable in a lump sum
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payment immediately following the period of delay (which is July 2, 2009), and the remaining
annuity payments shall continue to be paid on their original annuity payment schedule. In the
event of a change in the ownership or effective control of the Company, or a change in the
ownership of a substantial portion of the assets of the Company, which qualifies as a “change in
control event” as described in Treasury Regulation Section 1.409A-3(i)(5), the lump sum present
value (calculated using the actuarial factors specified in the 2003 SERP for lump sum calculations)
of Xxxxxx’x remaining unpaid vested accrued benefits under the 2003 SERP shall be paid to Xxxxxx in
a lump sum on the date of such change in control event.
7. Severance Pay: Xxxxxx will receive a gross amount of $1,688,000.00 (twenty-four
(24) months of base salary, at his current monthly rate of base salary, inclusive of flex pay) as
severance pay. Of that amount, the gross amount of $626,667 will be payable in a lump sum on
January 2, 2009, and the remainder will be payable in a lump sum on July 2, 2009.
8. Company Car: Dura will convey title to Xxxxxx’x company car to Xxxxxx on January
1, 2009, without charge.
9. Continuation of Group Health Plan Coverage: Xxxxxx will be eligible for COBRA
group health plan continuation coverage as of January 1, 2009 for himself and his eligible covered
dependents at the same coverage options then available to other active executive employees at the
same group health plan coverage cost as other active executive employees for a period of up to (but
not more than) 18 months.
10. Attorneys’ Fees: Dura will reimburse Xxxxxx his reasonable attorneys’ fees in
connection with advice and counseling regarding the Term Sheet and this Separation Agreement. In
addition, to the extent that Dura breaches the terms of this
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Separation Agreement, then it will reimburse Xxxxxx his attorneys’ fees incurred in connection
with the enforcement thereof.
11. Full Payment and Taxes: All payments required to be made by Dura hereunder shall
be subject to any and all applicable withholdings, including any withholdings for any related
federal, state or local taxes. Xxxxxx acknowledges that he shall be responsible for any and all
income taxes or other taxes incurred by him as a result of his receipt of any payments from Dura
pursuant to the terms of this Separation Agreement.
12. D&O Coverage: Prior to the Separation Date, Xxxxxx will remain covered by Dura’s
current D&O insurance policy in accordance with its terms. Following the Separation Date and for a
period of not less than six (6) years thereafter, Xxxxxx will remain covered as a former director
and officer under Dura’s D&O insurance policies as in effect from time to time. If Dura terminates
its D&O insurance during the foregoing six-year period, Dura will purchase tail coverage insuring
claims involving Xxxxxx made prior to the expiration of such six-year period. In addition, Dura
shall continue to indemnify Xxxxxx pursuant to the provisions contained in Dura’s bylaws as in
effect as of the date of this Agreement (without amendment).
13. Non-Disparagement: Xxxxxx agrees and promises that he will not, at anytime
hereafter, disparage (in any way) the Company and/or its Board of Directors, officers, employees,
agents, and affiliates. Likewise, members of the Company’s Board of Directors, as well as the
Company’s Section 16 officers, agree and promise that they will not disparage (in any way) Xxxxxx.
14. Non-Competition/Non-Solicitation: During the Transition Period, and for the
consecutive twelve (12) month period immediately following the Separation Date,
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Xxxxxx reaffirms and agrees that he will remain subject to the terms of Sections 4.8 of the
2003 SERP, as modified herein. Xxxxxx acknowledges that his breach of any of the restrictive
covenants contained or referenced in this Section 14 of this Separation Agreement can cause
irreparable damage to Dura for which the remedy at law would not be adequate; accordingly, in
addition to any other remedy provided by law or in equity, the Company shall be entitled to
injunctive relief restraining Xxxxxx from any actual or threatened violation of this section or to
any other appropriate decree of specific performance. Xxxxxx acknowledges and agrees that the
scope described above is necessary and reasonable in order to protect Dura in the conduct of its
business and that, if Xxxxxx becomes employed by another employer operating a business directly
competitive with Dura within the restricted period, he shall be required to disclose the existence
of this Section 14 of this Separation Agreement to such employer and Xxxxxx hereby consents to and
gives permission to Dura to disclose the existence of this Section 14 of this Separation Agreement
to such employer. Notwithstanding the foregoing, Xxxxxx may serve as a member of the Board of
Directors of any company, and such service shall not be deemed to be a violation of this Section 14
of this Separation Agreement. For purposes of clarification, Xxxxxx and Dura, solely for purposes
of the restrictive covenants referenced in this Section 14 of the Separation Agreement (and for
purposes of the SERP), hereby agree that the term “directly competitive” as used in Section 4.8(a)
of the 2003 SERP means a business with a primary product line similar to a primary product line of
Dura (including, but not limited to, shifters, cables, structural doors, and encapsulated glass).
15. Xxxxxx’x Release of Dura: Xxxxxx hereby irrevocably and unconditionally releases,
acquits and forever discharges Dura, its current and former subsidiaries,
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parent companies, affiliates, divisions, successors, predecessors, related entities, assigns,
and all of its and their owners, stockholders, partners, directors, officers, employees, agents,
representatives, attorneys and all persons acting by, through, under or in concert with any of them
(collectively “Released Parties”), from any and all charges, complaints, claims, liabilities,
obligations, promises, agreements, damages, actions, causes of action, suits, rights, demands,
costs, losses, debts and expenses (including attorneys’ fees and costs) actually incurred of any
nature whatsoever, known or unknown, suspected or unsuspected (“Claim” or “Claims”) which Xxxxxx
now has, owns or holds, or claims to have, own or hold, or which Xxxxxx at any time heretofore had,
owned or held, or claimed to have had, owned or held, or which Xxxxxx at any time hereafter may
have, own or hold, or claim to have, own or hold, against any of the Released Parties relating to
any event, act or omission that has occurred as of the date of this Separation Agreement. Without
limitation, this release specifically applies to any Claims Xxxxxx may have with respect to
payments and benefits pursuant to the Term Sheet, the Letter Agreement, the Letter Agreement
Amendment, the 2003 SERP (as modified herein), the Change of Control Agreement, or the Change of
Control Amendment. Xxxxxx agrees that, as a condition of this Separation Agreement, he will
reiterate and re-execute his full release of Claims by signing a document in the form of Exhibit A
hereto upon the Separation Date.
16. OWBPA/ADEA: Xxxxxx specifically waives and releases all rights, claims, including
claims for attorneys’ fees, demands and causes of action under the Age Discrimination in Employment
Act of 1967 (“ADEA”), as amended; Title VII of the Civil Rights Act of 1964, as amended; the
Employee Retirement Income Security Act of 1974, as amended (but excluding claims relating to
benefits that have not been paid as
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of the date hereof, including but not limited to Xxxxxx’x 401(k) account, pension benefit,
SERP benefits and COBRA continuation coverage rights); the Rehabilitation Act of 1973, as amended;
the Workers Adjustment Retraining and Notification Act; the Older Workers Benefit Protection Act;
the Americans with Disabilities Act; and any comparable federal, state, or local laws, concerning
Xxxxxx’x relationship and association with any of the Released Parties and the creation and
termination of such relationship. Xxxxxx acknowledges and understands that the release of claims
under the ADEA is subject to special waiver protection under 29 U.S.C. § 626(f). In accordance
with that section, Xxxxxx specifically agrees he is knowingly and voluntarily releasing and waiving
any right or claims of discrimination under the ADEA. In particular, he acknowledges and
understands the following: (i) he is not waiving rights or claims for age discrimination under the
ADEA that may arise after the date he signs this Separation Agreement; (ii) he is not waiving his
right to file a complaint or charge with the Equal Employment Opportunity Commission (“EEOC”) or
participate in any investigation or proceeding conducted by the EEOC; (iii) he is waiving rights or
claims for age discrimination under the ADEA in exchange for the payments and benefits described
herein, which are in addition to anything of value to which he otherwise is entitled; (iv) he has
been advised to consult with an attorney of his choice before signing this Separation Agreement,
and that he has freely and voluntarily entered into this Separation Agreement without any threat,
coercion, or intimidation by any person; (v) he has been given the opportunity to take at least
twenty-one (21) days to consider whether to sign this Separation Agreement, although he is not
required to wait twenty-one (21) days; and (vi) he will have seven (7) days after the date he signs
this Separation Agreement within which to revoke it, and the Separation Agreement shall
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not become effective or enforceable as to any party until that revocation period has expired
without Xxxxxx having revoked (the “Effective Date”). Any such revocation shall be in writing and
shall be sent and received by facsimile to Xxxxxxx X. Xxxxxx, Chief Administrative Officer,
facsimile (000) 000-0000.
17. No Assignment: Xxxxxx represents that he has not heretofore assigned or
transferred, or purported to assign or transfer, to any person or entity, any Claim or any portion
thereof, or interest therein, and agrees to indemnify, defend and hold Released Parties harmless
from and against any and all Claims, based on or arising out of any such assignment or transfer, or
purported assignment or transfer of any Claims or any portion thereof or interest therein.
18. No Reliance: Xxxxxx represents and acknowledges that in executing this Agreement
he does not rely and has not relied upon any representation or statement not set forth herein made
by any of the Released Parties or by any of the Released Parties’ agents, representatives, or
attorneys with regard to the subject matter, basis or effect of this Separation Agreement or
otherwise.
19. Binding on Heirs: This Agreement shall be binding upon Xxxxxx and upon his
respective heirs, administrators, representatives, executors, successors and assigns, and shall
inure to the benefit of Released Parties and each of them, and to their heirs, administrators,
representatives, executors, successors and assigns.
20. No Pending Claims: Xxxxxx represents that he has not filed any complaints,
charges or lawsuits against Dura, or against (a) any current or former officers, directors or
employees of Dura, (b) any current or former affiliate or related entity of Dura (including
subsidiaries and divisions), or (c) the current or former officers, directors and employees of said
affiliates or related entities (including subsidiaries and
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divisions); that, to the fullest extent permitted by law, he will not file any lawsuit or
claim against any of these entities or persons at any time hereafter for any event occurring prior
to the date of this Separation Agreement, and that if any court assumes jurisdiction of any lawsuit
or claim against any of these entities or persons on behalf of Xxxxxx, he will request that the
matter be dismissed with prejudice and hereby forever assigns any and all rights of recovery over
to Dura.
21. No Re-Employment: Xxxxxx expressly waives and relinquishes any and all rights to
re-employment following the Separation Date by Dura or any of its subsidiaries or affiliated
entities.
22. Dura’s Release of Xxxxxx: Dura (including any affiliate, subsidiaries, divisions,
successors, predecessors, and assigns) hereby irrevocably and unconditionally releases, acquits and
forever discharges Xxxxxx (including his heirs, executors, administrators, personal
representatives, assigns, and legal representatives) from any and all charges, complaints, claims,
liabilities, obligations, promises, agreements, damages, actions, causes of action, suits, rights,
demands, costs, losses, debts and expenses (including attorneys’ fees and costs) actually incurred
of any nature whatsoever, known or unknown, suspected or unsuspected (“Claim” or “Claims”) which
Dura now has, owns or holds, or claims to have, own or hold, or which Dura at any time heretofore
had, owned or held, or claimed to have had, owned or held, or which Dura at any time hereafter may
have, own or hold, or claim to have, own or hold, against Xxxxxx relating to any event, act or
omission that has occurred as of the date of this Separation Agreement. Notwithstanding the
foregoing, expressly excluded from Dura’s release of Xxxxxx are any and all criminal acts and
fraud. Dura agrees that, as a
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condition of this Separation Agreement, it will reiterate and re-execute its full release of
Claims by signing a document in the form of Exhibit A hereto upon the Separation Date.
23. Headings: The headings in this Separation Agreement are inserted for convenience
only and are not to be considered a construction of the provisions hereof.
24. Execution of Agreement. This Separation Agreement may be executed in several
counterparts, each of which shall be considered an original, but which when taken together, shall
constitute one agreement.
25. Code Section 409A:
(a) General. The parties intend that this Separation Agreement comply with Section
409A of the Internal Revenue Code of 1986, as amended (the “Code”), and the guidance and Treasury
regulations issued thereunder (“Section 409A”), to the extent applicable thereto.
(b) Distributions on Account of Separation from Service. If and to the extent
required to comply with Section 409A, no payment or benefit required to be paid under this
Separation Agreement on account of termination of Xxxxxx’x employment shall be made unless and
until Xxxxxx incurs a “separation from service”, within the meaning of Section 409A.
(c) Change in Time and Form of Payment. This Separation Agreement shall be considered
an election and amendment pursuant to Notice 2005-1, Q&A-19(c), as modified by section XI.C of the
preamble to the Proposed Treasury Regulations under Code Section 409A, as further modified by
Section 3.02 of Notice 2007-86, to change the time and form of payment of amounts subject to Section
409A that are payable under the Letter Agreement, the Letter Agreement Amendment or the 2003
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SERP, to the extent necessary to do so; provided, this election and amendment shall apply only
to amounts that would not otherwise be payable in 2008 and may not cause an amount to be paid in
2008 that would not otherwise be payable in 2008.
(d) Treatment of Each Installment as a Separate Payment. For purposes of applying the
provisions of Section 409A, each separately identified amount to which Xxxxxx is entitled under the
Letter Agreement, the Letter Agreement Amendment, the 2003 SERP or this Separation Agreement shall
be treated as a separate payment. In addition, to the extent permissible under Section 409A, any
series of installment payments under the Letter Agreement or the Letter Agreement Amendment shall
be treated as a right to a series of separate payments.
(e) Reimbursements and In-Kind Benefits.
(i) Any reimbursements by Dura to Xxxxxx of any eligible expenses pursuant to
Section 3, 5, or 10 of this Separation Agreement (“Reimbursements”) shall be made
promptly and, in any event, by March 15 of the taxable year of Xxxxxx following the
taxable year in which the expense was incurred.
(ii) The amount of any Reimbursements and the value of any in-kind benefits to
be provided to Xxxxxx under this Separation Agreement during any taxable year of
Xxxxxx shall not affect the expenses eligible for reimbursement, or in-kind benefits
to be provided, in any other taxable year of Xxxxxx, except for any limit on the
amount of expenses that may be reimbursed under an arrangement described in Code
Section 105(b).
(iii) The right to Reimbursements, or in-kind benefits, shall not be subject to
liquidation or exchange for another benefit.
26. Voluntary Agreement: Xxxxxx represents and agrees that he fully understands his
right to discuss all aspects of this Separation Agreement with his private attorney, that he has
carefully read and fully understands all of the provisions of
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this Separation Agreement, and that he is voluntarily entering into this Separation Agreement.
27. Governing Law and Forum; Miscellaneous: This Separation Agreement is made and
entered into in the State of Michigan and shall in all respects be interpreted, adjudicated,
enforced and governed in and under the laws of the State of Michigan; Xxxxxx and Dura waive any
challenges to personal jurisdiction regarding the enforcement of this Separation Agreement within
the State of Michigan. The language of all parts of this Separation Agreement shall in all cases
be construed as a whole, according to its fair meaning, and not strictly for or against any of the
parties. It is agreed that this Separation Agreement shall be construed with the understanding
that both parties were responsible for drafting it.
28. Survival: Should any of the provisions of this Separation Agreement be declared
or be determined to be illegal or invalid, the validity of the remaining parts, terms or provisions
shall not be affected thereby and said illegal or invalid part, term or provision shall be deemed
not to be a part of this Separation Agreement.
29. Entire Agreement; No Amendment: This Separation Agreement sets forth the entire
agreement between the parties hereto and supersedes all prior or contemporaneous discussions,
communications or agreements, expressed or implied, written or oral, by or between the parties.
Except as otherwise stated in this Separation Agreement, this Separation Agreement without
limitation supersedes, ends, and forever terminates any and all rights or obligations under any of
the following and all of the following cease immediately to be of any effect: the Letter
Agreement, the Letter Agreement Amendment, the Change of Control Agreement, the Change of Control
Amendment; and the Term Sheet. This Separation Agreement may not be modified or
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amended except in a writing signed by all the parties. Any waiver of one or more provisions
of this Separation Agreement shall not constitute a waiver of any of the remaining provisions
hereto.
PLEASE READ CAREFULLY. THIS SEPARATION AGREEMENT AND GENERAL RELEASE INCLUDES A RELEASE OF
ALL KNOWN OR UNKNOWN CLAIMS.
Executed
at
,
Michigan this day of August, 2008.
| /s/ Xxxxxxxx X. Xxxxxx | ||||
| XXXXXXXX X. XXXXXX | ||||
Executed
at Rochester Hills, Michigan this
day of August, 2008.
| DURA AUTOMOTIVE SYSTEMS, INC. |
||||
| By: | /s/ Xxxxxxx X. Xxxxxx | |||
| XXXXXXX X. XXXXXX | ||||
| CHIEF ADMINISTRATIVE OFFICER | ||||
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Exhibit A
Dura and Xxxxxx hereby reiterate and renew their respective releases against each other
contained in the Separation Agreement (including all rights stated therein under the ADEA/OWBPA)
through the date of signature on this Exhibit A (except that Dura’s release of Xxxxxx continues to
expressly exempt any and all criminal acts and fraud).
HEREBY RECONFIRMED AND AGREED:
Executed at , Michigan this day of , 2008.
| XXXXXXXX X. XXXXXX | ||||
Executed at , Michigan this day of , 2008.
| DURA AUTOMOTIVE SYSTEMS, INC. |
||||
| By: | ||||
| XXXXXXX X. XXXXXX | ||||
| CHIEF ADMINISTRATIVE OFFICER | ||||
