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EXHIBIT 10.13
STANDSTILL AGREEMENT
This STANDSTILL AGREEMENT dated as of March 19, 1996 (this "Standstill
Agreement") is entered into by and among Medical Imaging Centers of America,
Inc., a California corporation ("MICA"), ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, on the one hand, and Arrowhead Holdings
Corporation, a Delaware corporation ("Arrowhead"), on the other hand.
WHEREAS, MICA, Steel Partners II, L.P., a Delaware limited partnership
("Steel") and certain other persons are party to that certain Agreement of
Compromise and Settlement dated as of the date hereof (the "Settlement
Agreement");
WHEREAS, the Settlement Agreement contemplates that contemporaneously
with the execution of the Settlement Agreement, the parties hereto will execute
this Standstill Agreement.
FOR AND IN CONSIDERATION of the mutual covenants contained herein, the
parties, intending to be legally bound hereby, agree as follows:
1. Certain Defined Terms . As used in this Standstill Agreement, the
following terms (whether or not capitalized) shall have the following meanings:
"Action" means Medical Imaging Centers of America, Inc. ▇.
▇▇▇▇▇▇▇▇▇▇▇▇, et al., Case No. 96-0039B (AJB) filed in the United States
District Court for the Southern District of California.
"Auction Period" means the period commencing with the date hereof and
ending with the earlier to occur of (i) in the event that MICA has not made a
public announcement stating that an agreement has been reached with respect to
an Auction Transaction prior to June 19, 1996 (the third monthly anniversary of
the date hereof), the close of business on such date, (the date of such public
announcement shall be referred to herein as the "Announcement Date"), (ii) in
the event a definitive agreement (the "Definitive Agreement") relating to an
Auction Transaction is not entered into prior to the earlier to occur of (A) 30
days after the Announcement Date and (B) July 19, 1996 (the fourth monthly
anniversary of the date hereof) (the earlier of such dates, the "Definitive
Agreement Date"), the close of business on the Definitive Agreement Date, (iii)
in the event an Auction Transaction is not consummated prior to the close of
business on the Consummation Date, the close of business on the Consummation
Date and (iv) the effective date, if any, of the resignation of ▇▇. ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇ from the Board or as an employee or officer of MICA.
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"Auction Process" means the auction process described in Section 5 of
the Settlement Agreement.
"Auction Transaction" means a Sale Transaction recommended by the Board
pursuant to the Auction Process.
"Board" means the Board of Directors of MICA.
"Common Stock" means the common stock, no par value, of MICA.
"Consummation Date" means November 19, 1996 (the eighth monthly
anniversary of the date hereof), provided that if on such date, the parties to
an Auction Transaction are working in good faith to complete an Auction
Transaction but are unable to do so as a result of any undue delay resulting
from any governmental regulatory process which is required as a condition to
consummate the Auction Transaction, the Consummation Date shall be extended
until the ninth monthly anniversary of the date hereof.
"Effective Date" means March 19, 1996.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Financial Advisor" means ▇▇▇▇▇▇▇▇▇▇ & Partners, Inc.
"MICA Securities" means any securities issued by MICA or any of its
direct or indirect subsidiaries, including the Common Stock and any other debt
or equity securities of MICA or any of its direct or indirect subsidiaries that
are outstanding as of the date hereof or may hereafter be issued.
"Parties" mean MICA and Arrowhead.
"Person" means any individual, corporation, association, general or
limited partnership, limited liability company, limited liability partnership,
joint venture, trust, estate, other entity or organization or group.
"Sale Transaction" means any transaction, whether by tender offer,
merger or otherwise, and whether for cash or securities of the other party to
the Sale Transaction, pursuant to which MICA will be sold, merged or combined
with another entity if as a result thereof the shareholders of MICA immediately
prior to such transaction would own less than 50% of the voting equity on a
fully diluted basis of the merged or combined entity immediately after the
consummation of the Sale Transaction or any comparable or similar type
transaction which would not constitute an "ownership change" within the meaning
of Section 382 of the Internal Revenue Code of 1986, as amended.
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"SEC" means the United States Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Solicitation Action" means any of the following: (i) giving notice
pursuant to MICA's By-Laws of an intention to nominate directors, or cause the
taking of any other action by MICA, at a meeting of shareholders or by consent;
(ii) filing with the SEC any proxy or consent solicitation materials (whether
preliminary, definitive or as described in Rule 14a-11 or 14a-12 under the
Exchange Act) with respect to such meeting or consent; (iii) mailing or
otherwise disseminating to shareholders any such solicitation materials; (iv)
otherwise engaging in a solicitation of proxies or consents with respect to such
meeting or consent; (v) nominating at such meeting candidates for election as
directors; (vi) engaging in or taking any of the other actions set forth in
Section 4(c) hereof; or (vii) casting votes or ballots at such meeting or by
consent pursuant to proxies or consents so solicited (but the term "Solicitation
Action" shall not include the casting of votes or ballots by the Arrowhead with
respect to shares of Common Stock beneficially owned by it so long as Arrowhead
has not engaged in or taken any of the actions specified in clauses (i) through
(vi) above).
"Transaction" means any business combination involving MICA, including
without limitation an acquisition, merger, spin-off, spin-out, consolidation,
tender offer, share exchange or exchange offer.
"Voting Securities" means any capital stock of MICA having the right to
vote in the election of directors, plus convertible securities, options,
warrants or rights that may be converted, exchanged or exercised to acquire such
stock; and excludes preferred stock having no voting rights in the election of
directors other than a normal and customary right to elect a specified number of
directors in the event of a default in the payment of interest.
The terms "participant," "proxy" and "solicitation" shall be used as
defined in Regulation 14A under the Exchange Act (whether or not the pertinent
securities are subject to Regulation 14A). The terms "beneficial ownership" and
"group" shall be used as defined in Regulation 13D-G under the Exchange Act. The
terms "affiliate" and "associate" shall be used as defined in Rule 12b-2 under
the Exchange Act.
2. Representations and Warranties of Arrowhead . Arrowhead represents
and warrants to MICA as follows:
(a) It has the requisite legal power and authority to execute, deliver
and carry out this Standstill Agreement and has taken all necessary legal action
to
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authorize the execution, delivery and performance of this Standstill Agreement
and the transactions contemplated hereby.
(b) This Standstill Agreement has been duly and validly authorized,
executed and delivered by it and constitutes its valid and binding obligation,
enforceable against it in accordance with its terms.
(c) Neither Arrowhead nor any of its affiliates beneficially owns, or
has any direct, indirect or contingent pecuniary interest in, any MICA
Securities other than as disclosed in Schedule 1 hereto.
(d) Neither Arrowhead nor any of its affiliates is a member of any
group with respect to MICA Securities and there are no other persons who are
part of such a group with it or any of its affiliates, except as MICA has
alleged in the Action and, to the extent Arrowhead may be part of a group with
Steel and its affiliates.
3. Representations and Warranties of MICA . MICA represents and
warrants to Arrowhead as follows:
(a) MICA is duly organized and validly existing and in good standing
under the laws of the State of California, has the requisite corporate power and
authority to execute, deliver and carry out this Standstill Agreement and has
taken all necessary corporate action to authorize the execution, delivery and
performance of this Standstill Agreement and the transactions contemplated
hereby.
(b) This Standstill Agreement has been duly and validly authorized,
executed and delivered by MICA and constitutes its valid and binding obligation,
enforceable against MICA in accordance with its terms.
4. Restrictions on Purchase and Sale of MICA Securities and Certain
Other Actions . Arrowhead agrees that it will not, and it will cause its
respective affiliates not to, except as specified in Section 7(n) and pursuant
to the Auction Process, without the prior written consent of MICA, for a period
commencing on the date hereof and ending at the close of business of the last
day of the Auction Period:
(a) (i) acquire, offer to acquire, directly or indirectly, by purchase
or otherwise, beneficial ownership of MICA Securities (or any direct or indirect
rights, options or warrants for any MICA Securities) or (ii) encourage any
Person to acquire, or advise any Person with respect to the acquisition or
proposed acquisition of MICA Securities;
(b) knowingly sell or otherwise convey in a transaction other than an
open market transaction (either singly or collectively) MICA Securities to a
single
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Person or group which owns more than 5% of the then currently outstanding MICA
Securities or, as a result of such sale will own more than 5% of MICA's then
currently outstanding Securities;
(c) solicit, or encourage any other Person to solicit, or advise any
Person with respect to the solicitation of, proxies or consents with respect to
any MICA Securities, or become a participant or otherwise engage in any
solicitation of proxies or consents (A) with respect to any matter submitted or
to be submitted to the vote of the holders of any MICA Securities at any annual
or special meeting or by written consent, including, without limitation, with
respect to the election of directors of MICA in opposition to the nominees
recommended by the Board or otherwise for the purpose of acquiring control of
the Board or management of MICA, or (B) for the purpose of calling a special
meeting of MICA's shareholders or the holders of any MICA Securities; or advise
or seek to advise any Person with respect to the voting of any MICA Securities;
or submit, or encourage any other Person to submit, or advise or assist any
Person with respect to the submission of, any nominations or proposals to MICA
or to the holders of MICA Securities for consideration by its shareholders or
the holders of any MICA Securities at any annual or special meeting of such
holders or in any action to be taken by written consent pursuant to MICA's
articles of incorporation or bylaws, Rule 14a-8 under the Exchange Act, the
provisions of any document governing the terms of any such MICA Securities or
governing the rights of the holders thereof, or otherwise; engage in any
Solicitation Action; or otherwise take any action to request a special meeting
of the holders of any MICA Securities;
(d) deposit any MICA Securities in a voting trust or subject them to a
voting agreement or other agreement or arrangement of similar effect or
otherwise join or form a partnership, limited partnership, syndicate or other
group (except insofar as a group consisting solely of Steel and Arrowhead is
alleged to exist by MICA at the date hereof) for the purpose of acquiring,
holding, voting or disposing of any MICA Securities;
(e) engage in, or offer, agree or propose to engage in, any
Transaction; or arrange, or in any way participate, directly or indirectly, in
any financing for any Transaction or for the purchase by any person of any MICA
Securities or any assets of MICA;
(f) otherwise act alone or in concert with others to seek
representation on the Board or to acquire control of MICA or any of its
securities or assets;
(g) request any amendment or waiver of any of the terms of this
Standstill Agreement (other than a request to discuss its position with
participants in the Auction Process);
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(h) institute, prosecute or pursue against MICA (or any of its
officers, directors, representatives, trustees, employees, attorneys, advisors,
agents, affiliates or associates) (a) any claim with respect to any action
hereafter duly approved by the Board or (b) any claim on behalf of a class of
holders of MICA's Securities;
(i) publicly oppose any duly authorized Board action or recommendation;
and
(j) assist or advise, or enter into any agreement or arrangement to
assist or advise any other person in taking any action referenced in any of
paragraphs (a) through (i) above.
Nothing contained in this Section 4 shall prohibit Arrowhead from
casting votes or ballots with respect to shares of Common Stock beneficially
owned by it so long as Arrowhead has not engaged in or taken any of the actions
specified in clauses (a) through (j) above.
5. Redemption of Rights; Amendments to Certain Severance Packages .
Effective as of the Effective Date, MICA shall redeem all outstanding rights
issued pursuant to the Rights Agreement dated as of October 2, 1991, between
MICA and Union Bank, as amended (with a record date for such redemption on the
close of business on the date ten days after the public announcement of such
redemption).
6. Mutual Releases . For and in consideration of the agreements
contained herein, the Parties hereto release one another as follows:
(a) Arrowhead . Arrowhead, on behalf of itself and of all its
affiliates, successors and assigns ("related parties"), hereby releases, acquits
and forever discharges MICA, together with its present and former affiliates,
officers, directors, employees, agents, advisors, attorneys, successors and
assigns, of and from any and all claims, causes of action (whether at law or
equity), demands, expenses and damages which Arrowhead or its related parties
may have had, or may now have, or may hereafter have (whether through operation
of law, assignment or subrogation), from the beginning of time to the Effective
Date, real or suspected, known or unknown, actual or contingent, direct or
derivative, excepting only any action, cause of action or suit arising by virtue
of the breach of this Standstill Agreement.
(b) MICA . MICA, on behalf of itself and all of its affiliates,
successors and assigns ("related parties"), hereby releases, acquits and forever
discharges Arrowhead, together with its present and former affiliates, officers,
directors, employees, agents, attorneys, successors and assigns, of and from any
and all claims, causes of action (whether at law or equity), demands, expenses
and damages which MICA may have had, or may now have, or may hereafter have
(whether through
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operation of law, assignment or subrogation), from the beginning of time to the
Effective Date, real or suspected, known or unknown, actual or contingent,
direct or derivative, excepting only any action, cause of action or suit arising
by virtue of the breach of this Standstill Agreement.
With respect to each of the releases set forth above, each person or entity
granting or receiving such a release (i) agrees that such releases do not
preclude any Party hereto from seeking to enforce any undertaking or promise
contained in this Standstill Agreement or from seeking redress for the breach of
any representation or warranty contained in this Standstill Agreement; (ii)
agrees not to challenge, and shall use its best efforts to cause each of its
affiliates, associates and representatives not to challenge, the validity of any
provisions of this Standstill Agreement; and (iii) expressly waives all rights
and benefits each may have under and by virtue of the terms of Section 1542 of
the California Civil Code, which provides as follows:
A general release does not extend to claims which
the creditor does not know or suspect to exist in
his favor at the time of executing the release,
which if known by him must have materially affected
his settlement with the debtor.
Except as may be otherwise required by law, Arrowhead will not encourage or
cooperate with plaintiffs in any derivative, class action or shareholder
litigation related to MICA or its directors with respect to any claim released
hereunder. Except as may be otherwise required by law, MICA will not encourage
or cooperate with plaintiffs in any pending or subsequently initiated
derivative, class action or shareholder litigation related to MICA to which
Arrowhead is a party, with respect to any claim released hereunder. In the event
that any part of this Standstill Agreement is temporarily, preliminarily or
permanently enjoined or restrained by a court of competent jurisdiction, the
Parties hereto shall use their reasonable best efforts to cause any such
injunction or restraining order to be vacated or dissolved or otherwise declared
or determined to be of no further force or effect.
7. Miscellaneous.
(a) No Admission of Liability or Wrongdoing . This Standstill Agreement
and any proceedings taken hereunder are not and shall not in any way be
construed as or deemed to be evidence of any admission or concession on the part
of any Party of any liability or wrongdoing whatsoever, which liability and
wrongdoing are hereby expressly denied and disclaimed by each of the Parties.
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(b) No Duress, Etc. The Parties agree that this Standstill Agreement is
entered into without duress, in good faith and for sufficient consideration, and
that it is fair, just and reasonable to all Parties.
(c) Full Knowledge, Independent Advice, Etc. This Standstill Agreement
is entered into with full knowledge of any and all rights which the Parties may
have by reason of the pending litigation. All Parties have received or have had
made available to them all financial and other information they or their counsel
considered necessary to make an informed judgment concerning this Standstill
Agreement. Each Party has received independent legal advice, has conducted such
investigation as he or his counsel thought appropriate, and has consulted with
such other independent advisors as each of them and their counsel deemed
appropriate, regarding this Standstill Agreement and their rights and asserted
rights in connection therewith. None of the Parties is relying upon any
representations or statements made by any other Party, or such other Party's
employees, agents, representatives or attorneys, regarding this Standstill
Agreement or its preparation except to the extent such representations are
expressly set forth herein.
(d) Successors . This Standstill Agreement shall be binding upon and
inure to the benefit of the Parties hereto and their respective heirs,
successors and assigns, and upon any corporation or other entity into or with
which any Party hereto may merge, combine or consolidate (provided that the
Party is the survivor in such merger, combination or consolidation).
(e) Governing Law . This Standstill Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of California,
without reference to the conflict of laws principles thereof.
(f) Amendment and Waiver . No waiver or amendment of any other
provision hereof shall be effective as against any Party unless such Party
agrees to such amendment or waiver in writing.
(g) Authority . Each person executing this Standstill Agreement
represents that he or it has read and fully understands this Standstill
Agreement and that he or it has the authority to execute this Standstill
Agreement in his individual capacity or in the capacity identified on the
signature page below.
(h) Notices . All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given or made (and
shall be deemed to have been duly given or made upon receipt) by delivery in
person, by courier service, by telecopy or by registered or certified mail
(postage prepaid, return receipt requested) to the respective parties at the
addresses set forth on Exhibit A (or at
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such other address for a party as shall be specified in a notice given in
accordance with this paragraph). Each such notice, request, claim, demand or
other communication shall be effective (i) if given by telecopy transmission,
when such transmission to the telecopy number specified in Schedule 7(h) hereto
has been made and the appropriate electronic confirmation that the entire
communication has been received by the recipient equipment has been received by
the sender or (ii) if given by any other means, when actually received at the
address specified in this paragraph; provided, in each case, that a notice given
other than during normal business hours or on a day other than on a business day
at the place of receipt shall not be effective until the opening of business on
the next business day at the place of receipt.
(i) Specific Performance . Each of the Parties acknowledges and agrees
that irreparable harm would occur if any provision of this Standstill Agreement
were not performed in accordance with the terms thereof, or were otherwise
breached, and that such harm could not be remedied by an award of money damages.
Accordingly, the Parties hereto agree that any non-breaching party shall be
entitled to an injunction to prevent breaches of this Standstill Agreement and
to enforce specifically the terms and provisions hereof. More specifically, each
of the Parties hereto hereby agrees that any action or proceeding brought under
or to enforce any provision of this Standstill Agreement shall be commenced
exclusively in the United States District Court for the Southern District of
California and each Party hereto hereby consents to the personal jurisdiction of
and venue in such United States District Court and agrees further that service
of process or notice in any such action or proceeding shall be effective if
given in the manner set forth in Section 7(h) hereof.
(j) Counterparts . This Standstill Agreement may be executed in one or
more counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
(k) Effectiveness . This Standstill Agreement shall become effective on
the Effective Date.
(l) Severability . If one or more provisions of this Standstill
Agreement are held to be unenforceable under applicable law, such provision
shall be excluded from this Agreement and the balance of the Standstill
Agreement shall be interpreted as if such provision were so excluded and shall
be enforceable in accordance with its terms.
(m) Construction . The headings used herein are for reference only and
shall not affect the construction of this Standstill Agreement.
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(n) Auction Process . Arrowhead will be invited to participate as a
bidder in the Auction Process, including as part of a group with Steel,on the
same terms and conditions, including, terms and conditions relating to due
diligence and discussions and contacts with financing sources, permitted for
other bidders and, Arrowhead shall not, and shall cause its affiliates and
associates not to, interfere with the Auction Process.
(o) Arrowhead and its affiliates shall not have any liability to MICA
and its affiliates pursuant to this Standstill Agreement, the Settlement
Agreement or otherwise, for actions or omissions of Steel prior to or subsequent
to the execution of this Standstill Agreement (so long as Arrowhead does not
violate the terms of this Standstill Agreement); provided, however, that nothing
contained herein shall constitute an admission by Arrowhead that Arrowhead has
any liability for actions of Steel and its affiliates.
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IN WITNESS WHEREOF, the Parties hereto have caused this Standstill
Agreement to be executed as of the date first above written.
Medical Imaging Centers of America, Inc.
By: /s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Its: Chairman, Chief Executive Officer
and President
Arrowhead Holdings Corporation
By: /s/▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇.
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Name:
Its:
/s/▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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/s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
/s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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Schedule 1
Beneficial Ownership of MICA Securities
Arrowhead and its affiliates are the beneficial owners of 130,680 shares of
Common Stock.
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Schedule 7(h)
Notice Information
If to: Medical Imaging Centers of America, Inc.,
to:
Medical Imaging Centers of America, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Chief Executive Officer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ "▇" ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Fried, Frank, Harris, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to: Arrowhead Holdings Corporation
to:
Arrowhead Holdings Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇
Telephone:
Telecopy:
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with a copy to:
Klehr, Harrison, ▇▇▇▇▇▇, Branzburg & ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
