Exhibit 10.15 (i)
PROCESSING SERVICES AGREEMENT
THIS PROCESSING SERVICES AGREEMENT (the "Agreement") is made and entered
into this 3rd day of December, 1996 by and among XX XXXXXXXX SERVICES, INC.
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("BAMSI") and BANK OF AMERICA TEXAS, N.A. ("Bank").
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RECITALS
A. Bank. Bank is an existing national banking association duly
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organized and in good standing under the laws of the United States with its
principal executive offices located in Dallas, Texas.
B. BAMSI. BAMSI is an existing corporation, formed under the laws of
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the State of Delaware, with its principal executive offices located in San
Francisco, California.
C. Corporate Approvals. Each of the parties to this Agreement has
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obtained all necessary corporate approvals for the execution and delivery of
this Agreement.
D. Arm's Length Relationship. The parties to this Agreement intend to
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conduct their relationships hereunder on an arm's length basis.
E. Related Agreements. BAMSI has entered or will enter into (1) a Non-
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Competition and Corporate Opportunities Allocation Agreement of even date
herewith between BankAmerica Corporation and BAMSI (the "Corporate Opportunities
Agreement"), (2) a Marketing Agreement of even date herewith among BAMSI, Bank
of America NT & SA ("BofA") and Bank of America NW, National Association
("BANW") (the "Marketing Agreement"), (3) a Sponsorship and Processing Services
Agreement of even date herewith with BofA (the "Sponsorship Agreement") (4)
Processing Services Agreements of even date herewith between BAMSI and other
subsidiary banking institutions of BAC (the "Affiliate Bank Processing
Agreements"), (5) a Trademark License Agreement of even date herewith between
BAC and BAMSI (the "License Agreement"), (6) a Registration Rights Agreement to
be entered into among BAMSI, BofA and BANW (the "Registration Rights
Agreement"), and (7) a Tax Allocation Agreement of even date herewith between
BAC and BAMSI (the "Tax Agreement"). The License Agreement, the Marketing
Agreement, the Sponsorship Agreement, the Affiliate Bank Processing Agreements,
the Administrative Services Agreement, the Registration Rights Agreement and the
Tax Agreement are herein collectively referred to as the "Related Agreements."
F. Merchant Processing Services. BAMSI is a member of Visa U.S.A.
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Incorporated ("Visa") and MasterCard International Incorporated ("MC") and is
authorized to provide credit, debit and charge card services to merchants under
the Visa, MC, Diners Club, AMEX, Xxxxx Xxxxxxx, JCB, Discover, Interlink and
other programs ("Merchant
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Services"). Bank has authorized BAMSI to perform certain processing services
related to the acceptance of Cards by Merchants.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth herein and for other good and valuable consideration, Bank and BAMSI agree
as follows:
1. Bank Responsibilities.
Bank will promote the availability of Merchant Services available from
BAMSI in accordance with the Marketing Agreement. Bank will not use agent or
subcontractors, other than its own employees, for these activities, without
BAMSI's written consent.
2. BAMSI Responsibilities.
Except as otherwise provided herein, during the term of this Agreement
BAMSI shall be the sole provider of, and shall satisfy all of Bank's
requirements for, the services necessary to authorize, process and settle
through the applicable Interchange systems, all card transactions effected by
Bank's Merchants and the services specified on Attachment A or other appropriate
addendum to this Agreement with respect to transactions effected by Bank's
Merchants involving any other credit cards covered hereby Such services include,
but are not limited to, the following with respect to Visa and MasterCard Card
transactions and such of the following as may hereafter be specified with
respect to other types of Card transactions:
(a) AUTHORIZATION OF ALL CARD TRANSACTIONS.
(b) DATA CAPTURE OF CARD TRANSACTIONS.
(c) COLLECTION OF FUNDS DUE FROM CARD TRANSACTIONS FROM CARD ISSUERS.
(d) SETTLEMENT OF INTERCHANGE EXPENSES.
(e) OTHER BANKCARD PROCESSING SERVICES.
(f) MERCHANT IMPLEMENTATION.
(g) PROCESSING OF CHARGEBACKS AND RETRIEVALS.
(h) CUSTOMER SERVICE.
(i) MANAGEMENT REPORTING.
(j) MARKETING/PRODUCT DEVELOPMENT.
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3. Applications from Merchants.
BAMSI will provide Bank; with general requirements for businesses to
obtain Merchant Services from BAMSI. Bank will follow the application
documentation requirements provided by BAMSI and will not submit applications to
BAMSI for approval that do not conform to BAMSI's requirements. Bank will
ascertain from its available records whether there is significant information
about any prospective Merchant or its principals and will refrain from referring
any business to BAMSI if such information exists.
4. Approval of Merchants.
In its sole discretion, BAMSI will establish fees for Merchant
Services and decide whether it will approve applications and enter into a
Merchant Agreement with each business referred by Bank and whether it will
provide each Merchant with Merchant Services for each type of card.
5. Merchant Agreements.
This Agreement does not contemplate that Bank will enter into
agreements with Merchants for Merchant Services and Bank will not be liable to
BAMSI or Merchants for Merchant Services provided by BAMSI, except for Bank's
own failures to correctly process applications, Transaction Records, or deposits
and withdrawals to Merchants' accounts. BAMSI will (a) enter into a Merchant
Agreement with each Merchant meeting the requirements of BAMSI and of each Card
Association and (b) perform all its obligations under each Merchant Agreement.
6. Support Materials and Services.
BAMSI will provide Bank with Merchant Services advertising and
promotional materials. Bank will obtain BAMSI's written consent prior to
publication or display by Bank of any advertising or promotional material not
provided by BAMSI relating to Merchant Services. BAMSI will also provide Bank
with instructional material regarding sales of Merchant Services and the option
to attend periodic training workshops that BAMSI chooses to conduct.
7. Interchange of Paper.
Bank will not be responsible for handling Transaction Records of
Merchants who deliver Transaction Records directly to Bank for entry in the
interchange systems of the Card Associations. Bank will be responsible for
following BAMSI's instructions for Merchants delivering Transaction Records to
Bank for delivery to BAMSI.
8. Settlement of Paper; Discount Fees.
(a) Bank shall maintain a depositary account (the "Depository
Account") into which settlement amounts received by BAMSI from the applicable
Associations and due to Bank pursuant to this Agreement with respect to Sales
Drafts and Cash Advances processed and
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settled by BAMSI for Bank (and Merchants) shall be deposited. Such Depository
Account may be maintained at Bank or at any other depository institution in the
United States specified by Bank. All settlement funds deposited to Bank's
Depository Account are subject to BAMSI's final audit and checking, and Bank
agrees that BAMSI may debit the Bank's Depository Account on a daily basis for
any and all fees and amounts owed BAMSI, and may debit or credit Bank's
Depository Account on a daily basis for any deficiencies and overages. Credits
to Bank's Depository Account are provisional until the expiration of the time
period for chargebacks under the Association Rules.
(b) As directed by each Merchant, BAMSI will deposit the amount due
the Merchant for Transaction Records to the Merchant's account at Bank. BAMSI's
Agreements with Merchants will authorize payment to BAMSI for Credit Vouchers
and Chargebacks from the Merchant's accounts at Bank and Bank will allow BAMSI
to withdraw funds, to the extent funds are available in the Merchants' accounts,
for all Credit Vouchers presented by Merchants to BAMSI and for all Transactions
Records BAMSI charges back to the Merchants.
(c) BAMSI will collect discount and other fees due BAMSI directly
from each Merchant, except to the extent the Merchant allows BAMSI to debit the
Merchant's account at Bank.
(d) Upon termination of this Agreement, Bank's Depository Account
shall remain open for a period of at least 280 days thereafter for the debiting
of any chargebacks which may remain valid under the Association Rules Sufficient
funds shall be held therein which are sufficient (together with the funds in any
escrow account) to cover such chargebacks. If a Bank Merchant has engaged in an
activity which may result in chargebacks for a period of time longer than 280
days, Bank's Depository Account shall remain open until the chargeback period
shall become expired.
(e) In addition to any other rights BAMSI has pursuant to this
Agreement, Bank authorizes BAMSI to debit Bank's Depository Account for, or
deduct from amounts otherwise due to Bank, amounts which BAMSI is entitled to
collect or hold in escrow pursuant to this Agreement.
(f) If Bank believes any adjustments are needed with respect to any
debits or credits effected by BAMSI with respect to Bank's Depository Account
for any amounts due to or due from Bank, Bank shall notify BAMSI in writing
within 45 days after such debit or credit is effected. If Bank fails to notify
BAMSI within such timeframe, BAMSI shall not be responsible for investigating or
effecting any required adjustments, absent BAMSI's gross negligence or their
employees' fraud or misconduct. If Bank notifies BAMSI after such time period
that it believes adjustments are needed, BAMSI may, in their discretion, assist
Bank in investigating whether any adjustments are appropriate and whether any
amounts are due to or from other parties, but BAMSI shall not have any liability
to effect any such adjustments absent BAMSI's gross negligence or their
employees' fraud or misconduct. Any voluntary efforts by BAMSI to assist Bank
in investigating such matters shall not create any obligation to continue such
investigation or assist with any investigation in response to any future notices
of possible adjustments that are not timely submitted.
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(g) BAMSI shall debit Bank's Depository Account on a daily basis for
the fees set forth in Attachment A. BAMSI, at its option, may elect to debit
the Bank's Depository Account on a less frequent basis than daily for certain
fees. Any such election at any time by BAMSI to debit the Bank's Depository
Account for certain BAMSI fees on a less frequent basis than daily, will not be
taken or held as a waiver of BAMSI's rights to debit for fees on a daily basis
at any time thereafter.
(h) The fees set forth in Attachment A shall be subject to
adjustments to accommodate the imposition of new or amended fees by third
parties including additional unforeseen processing costs arising from any
requirements imposed by third parties beyond the normal processing contemplated
hereunder or from the imposition of new or amended regulations declared by the
Associations or governmental requirements, and will be immediately effective
upon the effective date of such adjustment.
(i) Bank shall be responsible for penalty charges, including
excessive chargeback handling fees levied by the Associations attributable to
any of Bank's Merchants, but excluding penalty charges, if any, attributable to
any error, omission or other fault or failure by BAMSI.
(j) If current exception processing volumes including but not
limited to, Chargebacks and retrievals, or if current merchant call volumes
increase disproportionally to increases in Bank portfolio dimensions, BAMSI
reserves the right to request corrective action from the bank to correct the
situation or charge additional fees to compensate for increased volume.
(k) From time to time, Bank will provide to BAMSI evidence of its
proper and timely payment of any applicable taxes on services or equipment
provided by and under this Agreement (including, if applicable, evidence of
resale certificates and evidence of the jurisdictions in which it pays any such
taxes). Bank assumes all liability for the proper and timely payment of any
such taxes.
9. Security Interest in Merchant's Accounts.
Merchants will grant BAMSI security interests in their deposit
accounts held at Bank. Bank acknowledges that all accounts of Merchants at Bank
will be subject to security interests in favor of BAMSI, except to the extent
explicitly excluded in BAMSI's Agreements with the Merchants. After BAMSI
notifies Bank that BAMSI wants to block or restrict access to the accounts of
any Merchant, Bank will cooperate with BAMSI to place funds in accounts subject
to BAMSI's security interest under the control of BAMSI. If a Merchant is also
in default on an obligation to Bank for which the Merchant's deposit account at
Bank serve as collateral, Bank will share the funds in the Merchant's deposit
accounts with BAMSI pro rata.
10. Compliance with Laws and Operating Regulations.
(a) BAMSI and Bank each agrees to comply with applicable laws
and regulations and the Association Rules in performing this Agreement and in
dealing with all of Bank's Merchants. Changes in the performance of the
obligations of Bank or BAMSI under this Agreement necessitated by a change in
applicable law or regulation, the Association Rules
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or any interpretation thereof shall not constitute a breach of this Agreement,
but this shall not be construed to relieve any such party from liability
hereunder for any failure to comply with applicable laws, regulations,
Association Rules or the interpretations thereof. In the event that the
Association Rules are modified such that some or all of the activities
contemplated by this Agreement are prohibited, then all of the parties hereto
shall negotiate in good faith to make any amendments to this Agreement or to
enter into a new Agreement to provide for the continued future cooperative
relationship of BAMSI and Bank on terms as similar as possible to those
contemplated by this Agreement, provided that no party shall be obligated to
agree to any terms that are unreasonable or unduly burdensome to it.
(b) Bank shall also comply with the procedures and specific methods
of operation that BAMSI may issue from time to time.
(c) BAMSI and Bank each agrees to maintain books and records of all
transactions and investigations which such party performs hereunder and to make
such books and records available for inspection by the other party, and to the
extent required by applicable Card Association Rules to the Card Associations,
at reasonable hours and upon reasonable prior notice. Without in any way
limiting the foregoing, Bank agrees to retain for the periods required by the
Card Association Rules and to make available for inspection and copying by BAMSI
(and by the applicable Card Association, if required by applicable Card
Association Rules) records evidencing the on-site visits and credit
investigations of merchants performed on behalf of itself or BAMSI.
11. Indemnity; Limitation on Liability.
(a) BAMSI and Bank agree to indemnify each other against all claims,
actions, suits, losses, damages and liabilities (including independent
attorneys' fees, allocated costs for in-house legal services, attorneys' fees in
all bankruptcy proceedings) relating to any contention that: (i) the acts of
omissions of the indemnifying party constitute negligence or intentional
misconduct; or (ii) the indemnifying party has violated any term of this
Agreement or any provision of applicable Laws or Association Rules.
(b) BAMSI and Bank will not be liable for any consequential damages
(such as loss of business or profits) or for any failure to perform due to
causes beyond BAMSI's or Bank's control (such as earthquake or fires).
12. Compensation.
BAMSI will pay compensation to Bank in accordance with the attached
schedule. Such compensation to be fair and comparable to market rate.
13. Association Memberships.
Bank and BAMSI agree that Bank will at all times during the term of
this Agreement maintain its membership in each such Association in good standing
and fully
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comply with all requirements imposed under the applicable bylaws, articles of
incorporation and operating regulations of each such Association.
14. Independent Contractor.
(a) Bank is an independent contractor of BAMSI and not its employee.
(b) Bank will select its own employees, agents and representatives
who will be under the exclusive supervision and control of Bank and will not be
employees, agents or representatives of BAMSI. Bank is solely responsible for
determining the terms and conditions of employment for itself, its employees,
agents and representatives, including for example, hiring, termination, hours of
work, rates and payment of compensation and the payment, reporting and
withholding of all taxes and contributions. Bank will comply with all laws,
regulations and contracts regarding employment and taxes. Neither Bank nor its
employees, agents and representatives are eligible to participate in any of
BAMSI's employee benefit or similar programs and Bank will not represent that
they are eligible.
(c) Bank certifies either: (i) that it is exempt from the
requirements of Executive Order 1146 or similar federal, state or local laws or
regulations including the Equal Opportunity Clause of 41 C.F.R. 60-1.4a; or (ii)
that it is and will continue to be in compliance with them, in which case they
are considered to be part of this Agreement and included in each non-example
subcontract and purchase order permitted under this Agreement.
15. Cash Advances.
BAMSI will process cash advance transactions for Bank's customers and
credit Bank's account with BAMSI for funds received through interchange
settlement. Bank is responsible for all chargebacks, customer disputes and all
other liability concerning cash advance transactions except for losses caused by
BAMSI in processing cash advance transactions other than in accordance with
instructions conveyed by Bank that comply with Operating Regulations. Without
limiting other remedies, BAMSI may cease processing additional cash advance
transactions if Bank does not reimburse BAMSI immediately for any amounts of
BAMSI charged back to Bank.
16. Termination.
(a) Except as otherwise provided in this Agreement, this Agreement
may be terminated:
(i) With or without cause by either party upon 90 days' written
notice to the other party. Termination of this Agreement will not affect
the obligations concerning any transactions occurring or amounts due before
termination, or to Bank's obligations relating to security interests
granted to BAMSI by Merchants in accounts at Bank;
(ii) If at any time during the term hereunder the practices
hereunder are declared unlawful by federal or state authorities or by a
judicial body, or
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upon any deadline imposed by MasterCard or Visa for complying with any
Association Rule which precludes the continued performance by BAMSI or Bank
of their obligations hereunder, any party may terminate this Agreement
immediately.
(iii) If any party shall materially default in the performance of
its obligations hereunder and shall fail or refuse to remedy such default
within 30 days after written notice, the other party or parties may
terminate this Agreement on 7 days written notice.
(iv) At any time after the filing of any petition in bankruptcy or
for reorganization or debt consolidation under the federal bankruptcy laws
or receivership, or under any comparable law by or against a party hereto,
or upon a party making an assignment of its assets for the benefit of
creditors, or upon a party's application for the appointment of a receiver
or trustee of a party's assets, or upon an involuntary petition in
bankruptcy being filed against a party if such petition is not dismissed
within 60 days after it is filed, or upon the initiation by governmental
authorities of any receivership or assisted acquisition transaction, the
other party or parties may terminate this Agreement.
(v) Bank may terminate this Agreement upon expiration or
termination of the Corporate Opportunities Agreement, the Sponsorship
Agreement, the License Agreement or the Marketing Agreement.
(vi) Bank may terminate this Agreement in the event BAC and its
affiliates (other than BAMSI) beneficially own less than a majority of the
voting power of the outstanding common stock of BAMSI.
(b) Upon termination of this Agreement, Bank will return to BAMSI
or destroy the Merchant Services material provided by BAMSI as BAMSI may request
(including without limitation, unused Merchant Agreements, applications and
advertising materials). Bank will also immediately remove all decals and signs
containing any of the card service marks, or the name or any service xxxx or
trademark of BAMSI, except to the extent permissible under another continuing
relationship with BAMSI.
17. Miscellaneous.
(a) Bank will allow BAMSI and Card Associations to examine, at
reasonable times, all records of Bank relating to this Agreement or Transaction
Records of Merchants.
(b) Bank and BAMSI may each enter into other agreements to provide
Merchant Services to any business, whether or not covered by this Agreement,
even though that business may have previously entered into a similar agreement
with Bank or BAMSI. Any change in the financial institution with which a
business has an agreement for Merchant Services will be the decision of the
business. Other provisions of this Agreement to the contrary notwithstanding,
BAMSI covenants and agrees that it will not actively solicit Merchant
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Services agreements with businesses which have executed or which later execute
such agreements with Bank without prior consent of Bank.
(c) Bank and BAMSI agree to keep confidential any information about
the other party, Merchants and their respective policies, procedures or
practices obtained as a result of the relationship established pursuant to this
Agreement (including credit information on a Merchant); provided, however, that
nothing will (i) prevent BAMSI or Bank from carrying out their obligations under
this agreement, (ii) require BAMSI or Bank to violate any Laws or Operating
Regulations, (iii) restrict the ability of BAMSI to comply with any legal
process or governmental investigation, or (iv) prevent Bank of BAMSI from taking
any actions designed to prevent Merchant Services or Card fraud, or any
violation of this Agreement, a Merchant Agreement or any Operating Regulations.
(d) All notices under the Agreement will be hand-delivered or sent
by mail or facsimile transmission to the address indicated below, unless
notification in writing of a change of address is received by the other party in
advance. Unless otherwise indicated in the notice or this Agreement, a notice
will be effective upon receipt.
(e) This Agreement will be binding upon Bank and BAMSI and their
successors and assigns; provided, however, that this Agreement may not be
assigned by Bank without BAMSI's written consent. Any prohibited assignment is
void. Except as expressly provided in this Agreement, the parties hereto intend
that this Agreement shall not benefit or create any right or cause of action in
or on behalf of any person other than the parties hereto.
(f) This Agreement constitutes the entire agreement of the parties,
superseding all prior negotiations or prior oral or written understanding of the
parting relating to this subject matter. Any amendments to this Agreement must
be in writing and signed by Bank and BAMSI.
(g) This Agreement shall be governed by the laws of the State of
California without giving effect to the conflict of laws provisions thereof.
(h) Any notice or other communication hereunder must be given in
writing and either (i) delivered in person or by courier service, (ii)
transmitted by telecopy mechanism, provided that any notice so given is also
sent for delivery as provided in clause (i) or mailed by certified or registered
mail postage prepaid, as follows:
If to BAMSI: XX Xxxxxxxx Services, Inc.
Xxx Xxxxx Xxx Xxxx Xxxxxx
0xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Attn: General Counsel #3710
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If to Bank: Bank of America Texas, N.A.
000 Xxxxxxxxxx Xxxxxx
0xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Attn: Corporate Secretary #3018
With a copy to: Bank of America Texas, N.A.
0000 X. Xxxx X. Xxxxxxxxx Xxxxxxx
Xxxxxx, XX 00000-0000
Attn: Xxxxx Xxxxxxxxxx #0000
18. Arbitration.
Any dispute, controversy or claim between the Bank and BAMSI arising
out of or relating to this Agreement or any agreements or instruments relating
hereto or delivered in connection herewith, will be resolved by arbitration
conducted in San Francisco, California under the auspices and according to the
Commercial Arbitration Rules of the American Arbitration Association. The
arbitration shall be conducted in accordance with the United States Arbitration
Act (Title 9, U.S. Code), notwithstanding any choice of law provision in this
Agreement.
19. Definitions.
The following definitions apply to this Agreement:
(a) "Card Association" means the entity, such as Visa U.S.A., Inc. or
MasterCard International, responsible for the supervision of any card service.
(b) "Card" means a valid unexpired card bearing service marks owned
and licensed by a Card Association.
(c) "Chargeback" means a Transaction Record returned to a Merchant
through a Card Association for payment by the Merchant to BAMSI for credit to a
Cardholder's Account.
(d) "Credit Voucher" means a Transaction Record evidencing a refund
or price adjustment by a Merchant to be credited to a Cardholder's account.
(e) "Laws" means the Federal Consumer Credit Protection Act and
relevant regulations and any other applicable laws, judicial decisions or
regulations of the United States, state or local governments or agencies.
(f) "Merchant" means any person or entity that has a Merchant
Agreement with BAMSI to originate Transaction Records through acceptance of
Cards.
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(g) "Merchant Agreement" means any person or entity that has a
merchant Agreement with BAMSI to originate Transaction Records through
acceptance of Cards.
(h) "Operating Regulations" means (i) BAMSI's Consultant Merchant
Bank Manual; (ii) the Card Associations' Rules, Operating Regulations and
Operations Manuals and any other operations or procedures manuals published by
the Card Association from time to time; and (iii) any official notices issued by
the Card Associations, or by BAMSI concerning Merchant Services.
(i) "Transaction Record" means a record of a card transaction
commonly including "Sales Drafts," "Cash Advance Drafts" and "Credit Vouchers,"
whether in paper or electronic form.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
BANK OF AMERICA TEXAS, N.A.
By: /s/ Xxxxxxxxx X. Xxxxxxxx
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Xxxxxxxxx X. Xxxxxxxx
Assistant Secretary
XX XXXXXXXX SERVICES, INC.
By: /s/ Xxxxxx X. Xxxxxxx
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Xxxxxx X. Xxxxxxx
President
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