Exhibit 10.25
NEWS COMMUNICATIONS, INC.
STANDBY AGREEMENT
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December __, 1998
Xx. Xxxxxx X. Xxxx, Xx.
Xxxxxxxxxx, Inc.
1251 Avenue of the Xxxxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Xxxxxx X. Xxxxx, Esq.
Xxxxxxx Xxxxx Xxxxxxx Xxxxx & Xxxxxx LLP
Xxx Xxxxxxxxxxxx Xxxxx
Xxx Xxxx, X.X. 00000
Mr. J. Xxxxxx Xxxxx
X.X. Xxxxx Investment Banking Corp.
00 Xxxx Xxxxxx
Xxx Xxxx, X.X. 00000
Dear Sirs:
News Communications, Inc., a Nevada corporation (the "Company"), proposes
to offer to its existing holders of Common Stock and $10 Convertible Preferred
Stock non-transferable rights to subscribe for an aggregate of 3,833,333 shares
(the "Shares") of the Company's Common Stock, $.01 par value on the basis of a
minimum of one and a maximum of two shares (as available) for every share owned
on _________, 1998, the record date, by each stockholder, at a subscription
price of $1.50 per share (the "Subscription Price"). Such offering to existing
shareholders shall be referred to herein as the "Rights Offering." In this
regard, the Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement (No. 333-67407) with respect to the
Rights Offering (the "Registration Statement"). The Rights Offering will last
for a period of thirty (30) days. The Company desires to make arrangements
pursuant to which Xxxxxx X. Xxxx, Xx., Xxxxxx X. Xxxxx and J. Xxxxxx Xxxxx
(collectively, the "Purchasers") will purchase from the Company, on the terms
and subject to the conditions set forth herein, such number of shares of Common
Stock, if any (the "Standby Shares"), that are not subscribed for in the Rights
Offering as follows:
Xx. Xxxx 15%
Xx. Xxxxx 35%
Xx. Xxxxx 50%
The Company confirms its agreements with the Purchasers as follows:
1. Agreement to Sell and Purchase.
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Upon and subject to all the terms and conditions of this Standby Agreement
(this "Agreement"), the Company agrees to sell to the Purchasers, and the
Purchasers agree to purchase from the Company, all of the Standby Shares at the
Subscription Price.
2. Delivery and Payment. (a) Delivery of the Standby Shares shall be
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made to the Purchasers against payment of the purchase price by wire transfer to
the Company of immediately available funds. Such payment shall be made by 10:00
a.m., Eastern time, on the third business day following closing of the Rights
Offering (such date is hereinafter referred to as the "Closing Date"). The
Company shall advise the Purchasers in writing no later than 7:00 p.m., New York
City time, on the business day after the Closing Date of the number of shares of
Common Stock that will comprise the Standby Shares. At the Closing Date, the
Company shall deliver to the Purchasers three certificates, one registered in
the name of each of the Purchasers, representing the total number of Standby
Shares.
The cost of original issue and stamp tax, if any, in connection with the
issuance and delivery of the Standby Shares by the Company to the Purchasers
shall be borne by the Company. The Company will pay and hold the Purchasers and
any subsequent holder of the Standby Shares harmless from any and all
liabilities with respect to or resulting from any failure or delay in paying
federal and state stamp and other transfer taxes, if any, which may be payable
or determined to be payable in connection with the original issuance or sale to
the Purchasers of the Standby Shares.
(b) As compensation for their commitment to purchase the Standby
Shares, on the Closing Date the Company will pay the Purchasers by wire transfer
of immediately available fund to accounts designated by the Purchasers a standby
fee equal to 2.5% of the aggregate offering price of the Shares offered in the
Rights Offering.
3. Representations and Warranties of the Company.
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The Company represents, warrants and covenants to the Purchasers as
follows:
(a) Prior to the effective date (the "Effective Date") of the
Registration Statement, the Company will take all actions necessary to effect a
one-for-three reverse stock split of its Common Stock, after which there will be
approximately 2,735,791 shares of Common Stock issued and outstanding, excluding
1,579,926 shares issuable upon exercise of convertible securities, options or
warrants, subject to adjustment for the elimination of fractional shares
resulting from the reverse stock split.
(b) No consent, approval, authorization or order of, or any filing or
declaration with, any court or governmental agency or body is required in
connection with the (i) authorization, issuance, transfer, sale or delivery of
the Standby Shares by the Company; (ii) execution, delivery and performance of
this Agreement by the Company; or (iii) taking by the
Company of any action contemplated hereby, except as have been obtained under
the Securities Act of 1933, as amended (the "Act") or the rules and regulations
promulgated thereunder (the "Rules and Regulations") and as may be required
under state securities or Blue Sky laws or the by-laws and rules of the National
Association of Securities Dealers, Inc. (the "NASD"), in connection with the
purchase of the Standby Shares.
(c) The Company has full corporate power and authority to enter into
this Agreement. This Agreement has been duly authorized, executed and delivered
by the Company and constitutes the valid and binding agreement or obligation of
the Company and is enforceable against the Company in accordance with its terms
except to the extent that the enforceability thereof may be limited by any
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
from time to time in effect affecting generally the enforcement of creditors'
rights and remedies and by general principles of equity. The Company has full
corporate power and authority to issue the Standby Shares, all as described in
the Registration Statement, and all such actions have been duly authorized by
the Company. The Standby Shares, when issued in accordance with the terms of
this Agreement and the Registration Statement, will be duly and validly issued,
fully paid and non-assessable. Neither the performance of this Agreement nor
the consummation of the transactions contemplated hereby will result in the
creation or imposition of any lien, charge or encumbrance upon any of the assets
of the Company pursuant to the terms or provisions of, or result in a breach or
violation of any of the terms or provisions of, or constitute a default under,
or give any other party a right to terminate any of the obligations under, or
result in the acceleration of any obligation under, the Articles of
Incorporation or By-Laws of the Company, any contract or other agreement to
which the Company or any of its properties is bound or affected, or violate or
conflict with any judgment, ruling, decree, order, statute, rule or regulation
of any court or other governmental agency or body applicable to the business or
properties of the Company.
4. Representations and Warranties of the Purchasers. Each of the
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Purchasers, severally and not jointly, represents and warrants to the Company as
follows:
(a) Each Purchaser is of majority age and has the legal capacity to
enter into this Agreement and to carry out the transactions contemplated hereby,
and this Agreement constitutes the valid and binding obligation of the each
Purchaser enforceable in accordance with its terms.
(b) The execution and delivery of this Agreement do not, and the
consummation of the transactions contemplated hereby will not (i) conflict with
or violate any law, regulation, court order, judgment or decree applicable to
each Purchaser, (ii) result in any breach of or constitute a default (or an
event which with notice or lapse of time or both would become a default) under,
or (iii) give to others any rights of termination or cancellation of any
contract, permit, license or franchise to which each Purchaser is a party or is
bound or affected.
(c) The execution, delivery or performance of this Agreement do not,
and the consummation of the transactions contemplated hereby will not, require
any notice, report or other filing with any governmental authority, domestic or
foreign, or require any waiver,
consent, approval or authorization of any person or any governmental or
regulatory authority, domestic or foreign.
(d) Each Purchaser understands and acknowledges that, notwithstanding
the effectiveness of the Registration Statement, the Purchaser may be deemed to
be an "underwriter" within the meaning of the Securities Act. Accordingly, each
Purchaser confirms that (i) the Standby Shares are being acquired for investment
purposes and for an indefinite period for each Purchaser's own account and not
with a view to sell or distribute any part thereof, (ii) that each Purchaser has
no present intention of selling or otherwise distributing the Standby Shares,
and (iii) that each Purchaser does not have any contract, undertaking, agreement
or arrangement with any person to sell or transfer to such person any of the
Standby Shares.
(e) Each Purchaser has reached the age of majority in the state in
which such Purchaser resides, has adequate means of providing for the
Purchaser's current financial needs and contingencies, is able to bear the
substantial economic risks of an investment in the Standby Shares for an
indefinite period of time, has no need for liquidity in such investment, has
made commitments to investments that are not readily marketable which are
reasonable in relation to the Purchaser's net worth and, at the present time,
could afford a complete loss of such investment.
5. Agreement of the Company. The Company agrees with the Purchasers as
------------------------
follows:
(a) During the five-year period commencing on the Effective Date, the
Company will furnish to the Purchasers copies of such financial statements and
other periodic and special reports as the Company may from time to time
distribute generally to the holders of any class of its capital stock, and will
furnish to the Purchasers a copy of each annual or other report it shall be
required to file with the Commission.
(b) The Company will make generally available to holders of its
securities as soon as may be practicable, but in no event later than the last
day of the fifteenth full calendar month following the calendar quarter in which
the Effective Date falls, an earnings statement (which need not be audited but
shall be in reasonable detail) for a period of 12 months commencing after the
Effective Date, and satisfying the provisions of Section 11(a) of the Act
(including Rule 158 of the Rules and Regulations).
(c) The Company will apply the net proceeds from the sale of the
Standby Shares to the Purchasers in the manner set forth in the Registration
Statement under "Use of Proceeds."
(d) The Company will mail or cause to be mailed to the existing
shareholders of the Company the Notice of Rights Offering, together with a
letter of transmittal, within three days after the expiration of the thirty-day
period referred to in the first paragraph of this Agreement.
6. Conditions to the Obligations of the Purchasers.
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The obligations of the Purchasers hereunder are subject to the following
conditions:
(a) The Notice of Rights Offering shall have been given to all
existing shareholders as contemplated herein.
(b) Notification that the Registration Statement has become effective
shall be received by the Purchasers no later than 5:00 p.m., Eastern time, on
the date and time as shall be consented to in writing by the Purchasers, and all
filings required by Rule 424 of the Rules and Regulations shall have been made
within the time required by such rule.
(c) (i) No stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall be pending or threatened by the Commission, (ii) no order
suspending the effectiveness of the Registration Statement or the qualification
or registration of the Shares and no proceeding for such purpose shall be
pending before or threatened or contemplated by the Commission or the
authorities of any such jurisdiction, (iii) any request for additional
information on the part of the staff of the Commission or any such authorities
shall have been complied with to the satisfaction of such staff and (iv) after
the date hereof no amendment or supplement to the Registration Statement or the
prospectus included in the Registration Statement (the "Prospectus") shall have
been filed unless a copy thereof was first submitted to the Purchasers, and the
Purchasers did not object thereto in good faith.
(d) At the Closing Date, (i) other than as set forth in or
contemplated by the Registration Statement and the Prospectus, there shall not
have been a material adverse change in the general affairs, business, business
prospects, properties, management, condition (financial or otherwise) or results
of operations of the Company, taken as a whole, whether or not arising from
transactions in the ordinary course of business, since the date as of which such
information is given in the Registration Statement and the Prospectus and (ii)
the Company shall not have sustained, since the date as of which such
information is given in the Registration Statement and the Prospectus, any
material loss or interference with its business or properties from fire,
explosion, flood or other casualty, whether or not covered by insurance, or from
any labor dispute or any court or legislative or other governmental action,
order or decree, which is not set forth in the Registration Statement and the
Prospectus, if, in the judgment of the Purchasers, any such development makes it
impracticable or inadvisable to proceed with the transactions contemplated
hereby on the terms and in the manner contemplated by the Registration Statement
and the Prospectus.
(e) At the Closing Date, there shall have been, since the date as of
which such information is given in the Registration Statement and the
Prospectus, no litigation or other proceeding instituted against the Company or
any of its officers or directors in their capacities as such, before or by any
federal, state or local court, commission, regulatory body, administrative
agency or other governmental body, domestic or foreign, that might reasonably
materially and adversely affect the business, properties, business prospects,
condition (financial or otherwise) or results of operations of the Company,
taken as a whole.
(f) Each of the representations and warranties of the Company
contained herein shall be true and correct at the Closing Date, as if made on
the Closing Date, and all covenants and agreements herein contained to be
performed on the part of the Company and all conditions herein contained to be
fulfilled or complied with by the Company at or prior to the Closing Date shall
have been duly performed, fulfilled or complied with.
(g) Prior to the Closing Date, the Shares will have been listed on
Nasdaq.
7. Indemnification.
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(a) The Company agrees to indemnify and hold harmless the Purchasers
against any losses, claims, damages, liabilities or expenses, joint or several,
to which the Purchasers may become subject, under the Act, the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), or other federal or state
statutory law or regulations, or at common law or otherwise (including in
settlement of any litigation, if such settlement is effected with the written
consent of the Company), insofar as such losses, claims, damages, liabilities or
expenses (or actions in respect thereof as contemplated below) arise out of or
are based upon (i) any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement, any preliminary
prospectus, the Prospectus, or any amendment or supplement thereto, or arise out
of or are based upon the omission or alleged omission to state in any of them a
material fact required to be stated therein or necessary to make the statements
in any of them not misleading, (ii) in whole or in part, any inaccuracy in the
representations and warranties of the Company contained herein, or (iii) any
failure of the Company to perform its obligations hereunder or under law; and
will reimburse the Purchasers for any legal and other expenses as such expenses
are reasonably incurred by the Purchasers in connection with investigating,
defending, settling, compromising or paying any such loss, claim, damage,
liability, expense or action; provided, however, that the Company will not be
liable in any such case to the extent that any such loss, claim, damage,
liability or expense arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in the
Registration Statement, any preliminary prospectus, the Prospectus or any
amendment or supplement thereto in reliance upon and in conformity with
information furnished to the Company by each of the Purchasers expressly for the
inclusion in the Registration Statement, any preliminary prospectus or the
Prospectus. This indemnity agreement will be in addition to any liability that
the Company may otherwise have. The Company will not, without the prior written
consent of the Purchasers, settle or compromise or consent to the entry of any
judgment in any pending or threatened action or claim or related cause of action
or portion of such cause of action in respect of which indemnification may be
sought hereunder (whether or not the Purchasers are parties to such action or
claim), unless such settlement, compromise or consent includes an unconditional
release of the Purchasers from all liability arising out of such action or claim
(or related cause of action or portion thereof).
(b) The Purchasers, severally and not jointly, agree to indemnify and
hold harmless the Company, each of its directors, each of its officers who
signed the Registration Statement, and each person, if any, who controls the
Company within the meaning of the Act, against any losses, claims, damages,
liabilities or expenses to which the Company, or any such
director, officer, or controlling person may become subject, under the Act, the
Exchange Act, or other federal or state statutory law or regulation, or at
common law or otherwise (including in settlement of any litigation, if such
settlement is effected with the written consent of the Purchasers), insofar as
such losses, claims, damages, liabilities or expenses (or actions in respect
thereof as contemplated below) arise out of or are based upon (i) any untrue or
alleged untrue statement of any material fact contained in the Registration
Statement, any preliminary prospectus, the Prospectus, or any amendment or
supplement thereto, or (ii) the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission was made in the Registration Statement, any preliminary prospectus, the
Prospectus, or any amendment or supplement thereto, in reliance upon and in
conformity with information furnished to the Company by a Purchaser expressly
for the use in the Registration Statement, any preliminary prospectus or the
Prospectus; and will reimburse the Company, or any such director, officer, or
controlling person for any legal and other expense reasonably incurred by the
Company, or any such director, officer, or controlling person in connection with
investigating, defending, settling, compromising or paying any such loss, claim,
damage, liability, expense or action. This indemnity agreement will be in
addition to any liability which each Purchaser may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section
7 of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against an indemnifying party under this
Section, notify the indemnifying party in writing of the commencement thereof;
but the omission so to notify the indemnifying party will not relieve it from
any liability that it may have to any indemnified party for contribution or
otherwise than under the indemnity agreement contained in this Section or to the
extent it is not prejudiced as a proximate result of such failure. In case any
such action is brought against any indemnified party and such indemnified party
seeks or intends to seek indemnity from an indemnifying party, the indemnifying
party will be entitled to participate in, and, to the extent that it may wish,
jointly with all other indemnifying parties similarly notified, to assume the
defense thereof with counsel reasonably satisfactory to such indemnified party;
provided, however, that if the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be a conflict between the positions of
the indemnifying party and the indemnified parties which are different from or
additional to those available to the indemnifying party, the indemnified party
or parties shall have the right to select separate counsel to assume such legal
defenses and to otherwise participate in the defense of such action on behalf of
such indemnified party or parties. Upon receipt of notice from the indemnifying
party to such indemnified party of its election so to assume the defense of such
action and approval by the indemnified party of counsel, the indemnifying party
will not be liable to such indemnified party under this Section for any legal or
other expenses subsequently incurred by such indemnified party in connection
with the defense thereof unless (i) the indemnified party shall have employed
such counsel in connection with the assumption of legal defenses in accordance
with the proviso to the preceding sentence (it being understood, however, that
the indemnifying party shall not be liable for the expenses of more than one
separate counsel, approved by the Purchasers in the case of paragraph
(a), representing the indemnified parties who are parties to such action) or
(ii) the indemnifying party shall not have employed counsel reasonably
satisfactory to the indemnified party to represent the indemnified party within
a reasonable time after notice of commencement of the action, in each of which
cases the fees and expenses of counsel shall be at the expense of the
indemnifying party.
(d) If the indemnification provided for in this Section 7 is required
but is for any reason held to be unavailable to or otherwise insufficient to
hold harmless an indemnified party under subparagraphs (a), (b) or (c) in
respect of any losses, claims, damages, liabilities or expenses referred to
herein, then each applicable indemnifying party shall contribute to the amount
paid or payable by such indemnified party as a result of any losses, claims,
damages, liabilities or expenses referred to herein (including any
investigative, legal and other expenses reasonably incurred in connection with,
and any amount paid in settlement of, any action, suit or proceeding or any
claim asserted, but after deducting any contribution received by the Company and
the Purchasers from any other persons, such as persons who control the Company
within the meaning of the Act, officers of the Company who signed the
Registration Statement and directors of the Company who also may be liable for
contribution) (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company and the Purchasers from the offering of the
Shares or (ii) if the allocation provided by clause (i) above is not permitted
by applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Company and the Purchasers in connection with the statements or omissions or
inaccuracies in the representations and warranties herein which resulted in such
losses, claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative benefits received by the Company, on the
one hand, and the Purchasers, on the other, shall be deemed to be in the same
proportion as the total net proceeds from the sale of the Standby Shares (before
deducting expenses) received by the Company bear to the total compensation
received by the Purchasers hereunder. The relative fault of the Company and the
Purchasers shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact or the inaccurate or the alleged inaccurate
representation and/or warranty relates to information supplied by the Company or
the Purchasers and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The amount paid or payable by a party as a result of the losses, claims,
damages, liabilities and expenses referred to above shall be deemed to include,
subject to the limitations set forth in subparagraph (c) of this Section 7, any
legal or other fees or expenses reasonably incurred by such party in connection
with investigating or defending any action or claim. The provisions set forth
in subparagraph (c) of this Section 7 with respect to notice of commencement of
any actions shall apply if a claim for contribution is to be made under this
subparagraph (d); provided, however, that no additional notice shall be required
with respect to any action for which notice has been given under subparagraph
(c) for purposes of indemnification. The Company and the Purchasers agree that
it would not be just and equitable if contribution pursuant to this Section 7
were determined solely by pro rata allocation or by any other method of
allocation that does not take account of the equitable considerations referred
to in this Section. Notwithstanding the provisions of this Section 7, the
Purchasers shall not be required to contribute any amount in excess of the
amount of compensation received by each of
them. No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Act) shall be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation.
8. Termination.
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(a) The obligations of the Purchasers under this Agreement may be
terminated at any time on or prior to the Closing Date, by notice to the Company
from the Purchasers, without liability on the part of the Purchasers to the
Company, if, prior to delivery and payment for the Standby Shares, (i) trading
in any of the equity securities of the Company shall have been suspended by the
Commission, by an exchange that lists the Common Stock or by the National
Association of Securities Dealers Automated Quotation System, (ii) trading in
securities generally on the New York Stock Exchange, the American Stock Exchange
or the Nasdaq National Market shall have been suspended or limited or minimum or
maximum prices shall have been generally established on such exchange, or
additional material governmental restrictions, not in force on the date of this
Agreement, shall have been imposed upon trading in securities generally by such
exchange or by order of the Commission or any court or other governmental
authority, (iii) a general banking moratorium shall have been declared by either
federal or New York State authorities, or (iv) the enactment, publication,
decree or other promulgation of any statute, regulation, rule or order of any
court or other governmental authority shall have occurred that, in the
Purchasers' opinion, materially and adversely affects or may materially and
adversely affect the business or operations of the Company.
(b) This Agreement shall expire automatically on February 15, 1999.
Upon the expiration of this Agreement, neither the Company nor the Purchasers
shall have any further rights or obligations hereunder except as may be
expressly contemplated herein.
9. Miscellaneous.
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Notice given pursuant to any of the provisions of this Agreement shall be
in writing and, unless otherwise specified, shall be mailed, delivered,
telecopied, telegraphed and confirmed (a) if to the Company, 174-15 Xxxxxx
Xxxxxxx Expressway, Xxxxx Xxxxxxx, Xxx Xxxx 00000, Attention: ________________,
or (b) if to the Purchasers, to them at the address first set forth above. Any
such notice shall be effective only upon receipt.
This Agreement has been and is made solely for the benefit of the
Purchasers and the Company and of the controlling persons, directors and
officers referred to in Section 7, and their respective successors and assigns,
and no other person shall acquire or have any right under or by virtue of this
Agreement.
This Agreement shall be governed by and construed in accordance with the
laws of the State of New York.
This Agreement may be signed in two or more counterparts with the same
effect as if the signatures thereto and hereto were upon the same instrument.
In case any provision in this Agreement shall be held invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
The Company and the Purchasers each hereby irrevocably waive any right they
may have to a trial by jury in respect of any claim based upon or arising out of
this Agreement or the transactions contemplated hereby.
The reimbursement, indemnification and contribution agreements contained in
this Agreement and the representations, warranties and covenants in this
Agreement shall remain in full force and effect regardless of (a) any
termination of this Agreement, (b) any investigation made by or on behalf of
the Purchasers or controlling person thereof, or by or on behalf of the Company
or its directors or officers and (c) delivery of and payment for the Standby
Shares under this Agreement.
Please confirm that the foregoing correctly sets forth the Standby
Agreement between the Company and the Purchasers.
Very truly yours
NEWS COMMUNICATIONS, INC.
By:______________________
Name:
Title:
Confirmed as of the date first
above mentioned:
By:___________________________
Xxxxxx X. Xxxx, Xx.
By:___________________________
Xxxxxx X. Xxxxx
By:___________________________
J. Xxxxxx Xxxxx
