EXHIBIT 99
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SEVERANCE AND RELEASE AGREEMENT
The employee, Xxxxx X. Xxxxxxx (hereinafter "Xx. Xxxxxxx"), and
Employers Mutual Casualty Company, and any and all of its other affiliated or
related businesses or entities, which are collectively known as EMC Insurance
Companies, any past and current members of the boards of directors of any
such businesses or entities, their past and current officers and officials,
employees, agents and representatives, as well as their heirs, executors,
administrators, successors and assigns (hereinafter collectively referred to
as the "Company"), do now covenant and agree to this Severance and Release
Agreement (the "Agreement") according to the following terms:
WHEREAS, the parties to this Agreement are mutually desirous of
codifying their understandings with regard to the severance of Xx. Xxxxxxx'x
employment and any claims, controversies and disputes which may have arisen
and are related in any way to Xx. Xxxxxxx'x hiring, tenure of employment,
terms of employment or the severance of his employment from any position or
appointment held with the Company, including, but not limited to, his most
recently held position as Senior Vice President of Employers Mutual Casualty
Company;
NOW, THEREFORE, Xx. Xxxxxxx and the Company, in consideration of the
foregoing, and the payments and mutual promises contained herein, do now
covenant and agree as follows:
1. Resignation. Xx. Xxxxxxx shall resign as a Senior Vice President of
Employers Mutual Casualty Company and its affiliated companies, as
President and Chief Operating Officer of EMC Risk Services, Inc., and
as an employee of the Company. Xx. Xxxxxxx shall also resign as a
Director of EMCASCO Insurance Company, EMC Property & Casualty Company,
EMC Risk Services, Inc., EMC Underwriters, LLC, Farm and City Insurance
Company, and Union Insurance Company of Providence. Such resignations
shall be effective on March 1, 2005, regardless of the date upon which
this Agreement is eventually executed by the parties hereto. Under
this Agreement, the terms "resignation," "severance," "termination
date" and "separation of employment" all refer to the effective date of
March 1, 2005.
2. Representation. Xx. Xxxxxxx acknowledges that he has been advised of
the following: (1) his opportunity to retain legal counsel in
connection with this matter; (2) his right to consider this matter for
twenty one (21) days, within which time he must communicate his
decision on whether to sign this Agreement to the Company; and (3) his
right to revoke this Agreement (including the release and waiver set
forth in paragraph 4, below) within seven (7) days of his execution of
this Agreement. Xx. Xxxxxxx acknowledges that he and his
representatives have had an opportunity to read and review the
provisions of this Agreement, that this Agreement in its present form
represents the final agreement of the parties; and that he has executed
this Agreement of his own volition, after having been fully advised by
his representatives of any legal rights he may have in this matter and
the scope and effect of this Agreement.
3. Nonadmission of Liability. This Agreement shall not be construed as an
admission by the Company of any acts of discrimination or other
wrongful conduct whatsoever against Xx. Xxxxxxx, and the Company
specifically disclaims any liability to Xx. Xxxxxxx pertaining to any
claim or fact which may be asserted by him concerning the terms and/or
conditions of his employment, or the severance of his employment with
the Company. Further, payment of any sums as are articulated in this
Agreement do not constitute an admission of liability on the part of
the Company.
4. Waiver and Release of Claims. With the express exception of the
promises made herein, Xx. Xxxxxxx expressly releases and discharges the
Company, as that term is more specifically described in the preamble of
this Agreement, from any and all actions, causes of action, suits,
claims, controversies, promises, agreements, contracts, expenses,
costs, claims for attorneys fees, claims for exemplary and/or
liquidated damages, or demands of any kind whatsoever, including, but
not limited to, claims for defamation, wrongful discharge, intentional
infliction of emotional distress, breach of contract and any civil
rights or employment related claims including claims under the federal
Age Discrimination in Employment Act as amended by the Older Workers
Benefit Protection Act, (29 U.S.C. Section 601, et seq.); the Americans
with Disabilities Act (42 U.S.C. Section 12101, et seq.); the Fair Labor
Standards Act (including the Equal Pay Act); the Employee Retirement
Income Security Act of 1974; the Family and Medical Leave Act; Title VII
of the federal Civil Rights Act; the Iowa Civil Rights Act of 1965 (Iowa
Code Chapter 216); Iowa's Wage Payment Collection Law (Iowa Code
Chapter 91A); or any other federal, state or local ordinance, statute
or regulation of any variety whatsoever, upon which Xx. Xxxxxxx may
seek to rely, now or in the future, concerning, connected with, or
related in any way to, the circumstances of any appointments or his
hiring, the tenure of his employment and the severance of his
employment from any position, currently or formerly held, with the
Company. The parties expressly recognize that the aforementioned
release shall not apply to any statutory or common law claims of any
variety arising out of, or related in any way to, Xx. Xxxxxxx'x
interest and current participation in the Company's pension or
retirement plans, or to any rights or claims which may arise after the
date of execution of this Agreement.
5. Considerations and Recitals. The Company agrees, in consideration of
the mutual terms and promises contained herein, to provide to Xx.
Xxxxxxx the following:
X. Xxxxxxxxx Pay. A severance payment equal to eighteen months
(calculated as 78 weeks) of Xx. Xxxxxxx'x current annual salary
shall be made bi-weekly through the Company's payroll process,
commencing as soon as practicable after March 1, 2005. These bi-
weekly severance payments shall be subject to all applicable
withholdings for federal and state income taxes and Social Security
taxes, as set forth in paragraph 10 hereof. After his date of
severance, Xx. Xxxxxxx shall not be eligible to make additional
contributions to the Company-sponsored 401(k) Plan. Additional sums
may be included in, and additional taxes withheld from, such bi-
weekly payments in accordance with the provisions of Subsection 5(C)
hereof. Any advances made by the Company to Xx. Xxxxxxx in
anticipation of Company-related expenses not yet incurred shall be
deducted from said total. Xx. Xxxxxxx shall also be eligible for a
one-time additional severance payment pursuant to Subsection 5(E)
hereof.
B. Life Insurance. The Company shall provide life insurance coverage
to Xx. Xxxxxxx in an amount equal to that in place at the time of
his resignation through March 1, 2006, or until life insurance is
provided under another group program, whichever occurs first. Xx.
Xxxxxxx acknowledges that such Company-paid benefit shall be a
taxable benefit to him, with the payment of such taxes to be handled
through withholdings by, or the responsibility for such payment may
be given to Xx. Xxxxxxx at the discretion of, the Company's Payroll
Department. Xx. Xxxxxxx shall immediately notify the Company if
another group life insurance policy goes into effect prior to March
1, 2006.
C. Medical Insurance. Immediately after the termination of his
employment, Xx. Xxxxxxx may complete and submit the forms necessary
to continue the medical/health insurance coverage Xx. Xxxxxxx and
his dependents were receiving at the time of his resignation. Xx.
Xxxxxxx may continue that coverage for an additional period to the
extent permitted by, and in accordance with, COBRA. During the
first twelve months of continued coverage (or any shorter period of
COBRA coverage elected by him), the Company shall pay the portion of
the monthly COBRA premium directly to Xx. Xxxxxxx that equals the
subsidy the Company was incurring with respect to his medical/health
coverage when his employment terminated. This amount shall be paid
as an additional sum added to his bi-weekly severance installment
payments (or added to such payments once per month, at the option of
the Company), with Xx. Xxxxxxx then to issue a monthly check or
initiate a monthly funds transfer sufficient to cover the full
monthly COBRA premium, to be paid or directed as prescribed by the
Company. Xx. Xxxxxxx further acknowledges that such Company-paid
amount shall be a taxable benefit to him, with taxes on such benefit
to be withheld through the Company's Payroll Department. At the
conclusion of such twelve month period, Xx. Xxxxxxx may thereafter
continue medical/health insurance coverage through the Company's
group plans at his own expense in accordance with all federal
statutory requirements under COBRA for the balance of the COBRA
period.
D. Support Services, E-Mail. The Company shall continue to provide Xx.
Xxxxxxx with reasonable levels of secretarial and administrative
support (including typing, forwarding mail, and re-directing phone
calls) until June 1, 2005. Due to privacy concerns, the Company
and Xx. Xxxxxxx have agreed that his access to Company e-mail
shall cease as of his date of termination. Any e-mail personal to
Xx. Xxxxxxx which is received by his successor shall be promptly
forwarded by such individual to Xx. Xxxxxxx at such e-mail
address as Xx. Xxxxxxx shall provide.
E. Additional Severance. In recognition of the cessation of
Xx. Xxxxxxx'x participation in any and all employee compensation
programs of the Company following his date of termination
(equating to employment for one-sixth of calendar year 2005),
including any bonus programs or contingent salary plans instituted
by the Company, Xx. Xxxxxxx shall also be entitled to a one-time
payment of $8,000.00 (subject to all applicable tax and other
withholdings), to be paid through the Company's payroll process as
soon as practicable after March 1, 2005.
6. Retirement and Deferred Compensation Plans. Xx. Xxxxxxx'x rights with
respect to his participation in, and benefits under, the Company's
retirement and deferred compensation plans shall be as set forth in, or
as limited by, the terms of, or any elections he has made under, each
plan. The retirement and deferred compensation plans covered by this
paragraph are as follows: (1) the Employers Mutual Casualty Company
Retirement Plan; (2) the Employers Mutual Casualty Company 401(k)
Savings Plan; (3) the Employers Mutual Casualty Company Supplemental
Retirement Plan (which became effective October 1, 2004); (4) the
Executive Nonqualified Excess Plan; (5) the Excess Retirement Benefit
Agreement; and (6) the EMCC Option It! Deferred Compensation Plan.
7. Other Payments and Rights.
A. Vacation. The balance of any unused vacation accrued by Xx. Xxxxxxx
at the time of his severance shall be paid in full.
B. Executive Compensation Bonus. The Company and Xx. Xxxxxxx
acknowledge that no payments are owing to him under the 2004
Senior Executive Compensation Bonus Program, in which he
participated. Xx. Xxxxxxx shall not be eligible to receive payments
under any bonus program the Company establishes for 2005.
C. Stock Options. Xx. Xxxxxxx'x rights with respect to his
participation in the 2003 Employers Mutual Casualty Company
Incentive Stock Option Plan, or any predecessor plan, shall be as
set forth in, or as limited by, the terms of such Plan.
Notwithstanding the previous sentence, however, Xx. Xxxxxxx shall
have the option of foregoing the exercise of his stock options which
are vested as of his termination date, and applying the gain which
he otherwise could have received by exercising such options (based
upon the "fair market value" of EMC Insurance Group Inc. common
stock, as defined in the 2003 EMCC Incentive Stock Option Plan, on
the termination date) against (i) the purchase price of the Company
car which Xx. Xxxxxxx has the option to purchase (as covered by
subsection 7(D) of this Agreement) and/or (ii) the purchase price of
the office furniture which Xx. Xxxxxxx has the option to purchase
(as addressed in Subsection 7(E) of this Agreement), with Xx.
Xxxxxxx making up any difference in price to the extent the purchase
price of the Company car and/or the office furniture, respectively,
exceeds the fair market value of the gain which Xx. Xxxxxxx could
achieve by exercising 100% of his vested stock options in accordance
with the terms of such Plan. Any such stock option gain that is
foregone and used against the purchase price of the Company car or
furniture shall be reported as taxable income on Xx. Xxxxxxx'x 2005
Form W-2.
D. Company Car. Upon separation, the Company shall provide Xx. Xxxxxxx
with the opportunity to purchase the Company car he is currently
driving at the wholesale Blue Book price in effect on March 1, 2005,
or at such price as the Company, in the reasonable exercise of its
discretion, determines to be most equivalent to such price, if a
wholesale Blue Book price is not available on such date. If he
elects to purchase the car, Xx. Xxxxxxx must advise the Company of
that decision within thirty (30) days after he signs this Agreement.
In addition, he must provide the Company with full payment on or
before March 15, 2005, or provide the Company by that date with a
written statement authorizing the Company either (i) to apply
foregone gains from his vested stock options toward the purchase
price of such car, as described in Subsection 7(C) hereof, and
provide the Company with the full balance still owing, if any, or
(ii) to deduct the full amount (or any remaining amount) from the
next succeeding installment severance payments described in
paragraph 5(A) of this Agreement, until the balance owing is paid in
full.
E. Office Furniture. Upon separation, the Company shall provide Xx.
Xxxxxxx with the opportunity to purchase the office furniture
located in his current office at the furniture's appraised value,
which has been established at $2,425.00 for the articles described
in the appraisal attached hereto as Exhibit A, plus $100.00 each for
two additional, newer wooden bookcases. If he elects to purchase
the furniture, Xx. Xxxxxxx must advise the Company of that decision
within thirty (30) days after he signs this Agreement. In addition,
he must provide the Company with full payment on or before March 15,
2005, or provide the Company by that date with a written statement
authorizing the Company either (i) to apply foregone gains from his
vested stock options toward the purchase price of such furniture, as
described in Subsection 7(C) hereof, and provide the Company with
the full balance still owing, if any, or (ii) to deduct the amount
(or any remaining amount) from the next succeeding installment
severance payments described in paragraph 5(A) of this Agreement,
until the balance owing is paid in full. If he elects to purchase
the furniture, Xx. Xxxxxxx shall also make arrangements to have the
office furniture removed from the office within one week of his
separation. He shall also bear all costs and expenses associated
with moving the office furniture.
F. Employment Inquiries. The Company shall provide Xx. Xxxxxxx with a
reference letter containing language agreed upon by the parties. An
appropriate Company representative will sign and send the pre-
approved reference letter to prospective employers as directed by
Xx. Xxxxxxx. The Company's Human Resources Department shall also
keep a copy of the reference letter on file and shall not disclose
to prospective employers any information not contained in the
reference letter without Xx. Xxxxxxx'x prior authorization.
G. Outplacement Services; Mediator Training. The Company agrees to
provide Xx. Xxxxxxx with career transition services from an executive
placement firm or similar entity of his choosing valued at up to
$5,000.00, or, in the alternative, to reimburse his tuition at an
accredited mediator training school or program in an amount up to
$6,500.00. Reimbursement up to the applicable amount shall be paid
to Xx. Xxxxxxx upon his submission of a written statement from the
placement firm or from the mediator training school or program, as
the case may be, detailing the services or training provided,
including the fees charged for those services or the tuition charged
for such program.
H. Financial Planning Services. As a member of the Company's Policy
Committee, Xx. Xxxxxxx has been entitled to receive financial
planning services and tax advice at Company expense in amounts up to
$1,000 annually. Xx. Xxxxxxx'x eligibility for this benefit shall
continue until June 1, 2005 and the Company shall reimburse Xx.
Xxxxxxx for any financial planning or tax advice he receives prior to
June 1, 2005 subject to the $1,000 cap previously mentioned in this
paragraph. To receive reimbursement, Xx. Xxxxxxx must, however,
submit an invoice from the entity providing such financial planning
or tax advice and said invoice must be submitted within sixty days
after June 1, 2005.
8. Public Disclosure. Traditionally, confidentiality would be of the
essence in agreements such as this, and the parties would normally
agree that they would not disseminate the substance of this Agreement
in whole or in part, in any form, written or oral, to any current or
former Company employees, directors, officers or officials, or to any
current or former employees, directors, officers or officials of any
affiliated, parent, or related companies, businesses or entities, or to
members of the general public, the media, or to any other person or
entity, subject to certain exceptions. Recognized exceptions would
include any discussions which Xx. Xxxxxxx might have with his legal
representatives, or his tax or financial advisors, concerning this
Agreement, as well as statements about it made pursuant to any court
order or judicial process. Similarly, the Company could disclose the
substance of this Agreement to certain Company employees or
representatives, but only on a "need to know" basis, or as might be
required pursuant to any court order or judicial process.
The parties acknowledge that newly applicable corporate
governance and disclosure requirements preclude the maintenance of
confidentiality in this instance. While it remains the goal of both
parties that neither be the subject of harmful or injurious rumor or
speculation in the public forum, the parties hereto acknowledge that
the terms of this Agreement will need to be publicly disclosed in an
8-K filing to be made by the Company with the Securities and Exchange
Commission immediately following the expiration of the seven-day
revocation period described in paragraph 2 hereof. The Company is
hereby authorized and permitted to make all disclosures it may deem
necessary or appropriate under federal securities laws, including
filing a copy of this Agreement as an exhibit to the 8-K.
9. Non-Disclosure and Return of Company Property. In accordance with the
provisions of the Company's Employee Handbook and applicable law, it is
expected that Xx. Xxxxxxx will not, and Xx. Xxxxxxx agrees not to,
repeat, discuss, disclose or make use of confidential or proprietary
information of the Company, such as customer lists or customer-specific
personal information, or vendor-specific information, which may have
come into Xx. Xxxxxxx'x possession during his tenure of employment with
the Company. Xx. Xxxxxxx further verifies that as promptly as
practicable after March 1, 2005, he will return to the Company all
documents, files or other written, graphic, pictorial, video or
recorded materials, whether auditory or visual, as well as any and all
physical equipment, materials or supplies reasonably construed as the
property of the Company (including, but not limited to, his building
pass/identification card, building keys, office, desk and file keys,
communications devices, parking garage card, etc.).
10. Miscellaneous Provisions. All payments to Xx. Xxxxxxx made pursuant to
this Agreement shall be subject to any and all applicable tax
withholding regulations and rules. Xx. Xxxxxxx agrees that he shall
refrain from making any statements, or taking any actions, which could
be reasonably construed as contrary to the best interests of the
Company, including, but not limited to, the making of disparaging
comments or remarks, whether written or verbal. Xx. Xxxxxxx hereby
acknowledges that the collective considerations enumerated in paragraph
5, above, exceed anything to which he is otherwise entitled, and Xx.
Xxxxxxx further acknowledges that any outstanding expense advance(s) to
him may be properly deducted by the Company from certain of the
considerations for this Agreement set forth in paragraph 5 hereof.
11. Successors and Assigns. This Agreement shall be binding upon Xx.
Xxxxxxx and his heirs, administrators, representatives, executors,
successors and assigns, and shall enure to the benefit of the Company,
as that term is more specifically described in the preamble herein.
12. Enforcement Under the Laws of the State of Iowa. This Agreement is
made and entered into in the State of Iowa and shall in all respects be
interpreted, enforced and governed under the laws of the State of Iowa.
The language of all parts of this 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. Should any provision of this
Agreement be declared or be determined by any court of competent
jurisdiction to be illegal or invalid, the validity of the remaining
parts, terms or provisions hereunder shall not be affected thereby, and
said illegal or invalid part, term or provision shall be deemed not to
be a part of this Agreement.
13. Effect of Waiver. In the event any provision contained in this
Agreement should be breached by either party and thereafter waived by
the other party, such waiver shall be limited to the particular breach
so waived and shall not be deemed to waive any other breach hereunder.
14. Execution Counterparts. This Agreement may be simultaneously executed
in several counterparts, each of which shall be an original and all of
which shall constitute but one and the same instrument.
15. Voluntary Execution and Understanding. This Agreement sets forth the
entire agreement and understanding between the parties hereto, and
fully supersedes any and all prior agreements or understandings between
the parties hereto pertaining to the subject matter hereof. Xx.
Xxxxxxx acknowledges that the terms of this Agreement have been
completely read and are fully understood and voluntarily accepted by
him for the purpose of making a full and final adjustment and
settlement of any and all potential claims, whether disputed or
otherwise, known or unknown, on account of or associated with Xx.
Xxxxxxx'x (a) hiring, (b) tenure, or (c) the severance of his
employment with the Company.
16. Enforceability Date. This Agreement shall not be enforceable against
either party hereto until the expiration of the seven (7) day period in
which Xx. Xxxxxxx has the right to revoke his acceptance of the
Agreement, as set forth in Section 2, subpart (3) hereof and in the
cautionary statement set forth immediately below.
IN WITNESS WHEREOF, the parties to this Severance and Release Agreement
do hereby execute the aforesaid Agreement.
CAUTION -- THIS IS A RELEASE!! YOU ARE ADVISED TO CONSULT WITH
AN ATTORNEY PRIOR TO EXECUTING THIS SEVERANCE AND RELEASE
AGREEMENT. YOU HAVE UNTIL 4:00 P.M. (C.S.T.) ON MARCH 14, 2005,
TO DECIDE WHETHER TO SIGN THIS AGREEMENT. FOLLOWING SIGNING, YOU
THEREAFTER HAVE SEVEN (7) DAYS IN WHICH YOU MAY REVOKE THIS
AGREEMENT. PLEASE READ CAREFULLY BEFORE SIGNING.
EMPLOYERS MUTUAL CASUALTY COMPANY XXXXX X. XXXXXXX
By: /s/ Xxxxx X. Xxxxxx /s/ Xxxxx X. Xxxxxxx
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Xxxxx X. Xxxxxxx
Its President and Chief Executive Officer
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(Type or print name and title)
STATE OF IOWA
COUNTY OF Polk
On this 21st day of February, 2005, before me, a Notary Public
in and for the State of Iowa, personally appeared Xxxxx X. Xxxxxxx, to me
known to be the person named in and who executed for foregoing
Severance and Release Agreement, and Xxxxx X. Xxxxxxx acknowledged his
execution of the foregoing Severance and Release Agreement to be
his free and voluntary act and deed.
(Seal)
/s/ Xxxxxx X. Xxxxx
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Notary Public in and for the State of Iowa
My Commission Expires: January 15, 2007.
STATE OF IOWA
COUNTY OF POLK
On this 21st day of February, 2005, before me, a Notary Public in
and for the State of Iowa, personally appeared a representative of Employers
Mutual Casualty Company, Xxxxx X. Xxxxxx, to me known to be the person who
executed the foregoing Severance and Release Agreement on behalf of said
Company, and acknowledged his execution of the foregoing Severance and
Release Agreement to be his, and said Company's, free and voluntary act and
deed.
(Seal)
/s/ Xxxxxx X. Xxxxx
------------------------------------------
Notary Public in and for the State of Iowa
My Commission Expires: January 15, 2007.
Exhibit A
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Property in the name of XXXXX XXXX
EMC Insurance Companies Appraisals
000 Xxxxxxxx Xxxxxxxx
Xxx Xxxxxx, XX 00000 Residential
Page 1 of 2
Inspection and appraisal of Stow Xxxxx office furniture in a "Fair
Market Value" basis. Fair market value is defined as: "the price at which
the property would change hands between a willing buyer and a willing seller,
neither being under any compulsion to buy or sell and both having reasonable
knowledge of relevant facts."
ARTICLE DESCRIPTION APPRAISED VALUE
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Desk American light walnut partner's desk with a long
narrow drawer above the knee-hole, three drawers on
one side and two drawers on the other; one split
to look like two drawers. Above the side drawers
there is a pull-out writing board. The front is
closed, there is a sunflower quatrefoil medallion
on the top of each side and a burled border below
the top. Turned and fluted legs. There is some
burn damage on the top, otherwise the condition is
good. 29" h x 67" w x 42" d. $1,275
Cabinet American light walnut liquor cabinet/bookcase,
matches the desk with the same medallion, xxxx and
legs. Two paneled doors, two shelves inside. Good
condition. 50"h x 42" w x 14" d. $ 610
Cabinet American light walnut file cabinet, matches above
pieces with the same medallion xxxx and legs. With
two drawers. Good condition. 23"h x 30" w x 32" d. $ 200
Chairs American light walnut, two pair of guest armchairs
and one desk chair. These chairs don't match exactly
but were made to complement various office sets in
the Stow Xxxxx line. All three have upholstered seats
and backs. All three are in good condition.
Arm chairs $ 240pr
Desk chair $ 100
All of the above pieces are from the Stow Xxxxx
Furniture Company and were bought in 1938.
TOTAL VALUE $2,425
The appraiser certifies and agrees:
1. The appraiser has no present or contemplated future interest in the
property appraised; and neither the employment to make the appraisal, nor the
compensation for it, is contingent upon the appraised value of the property.
Page 2 of 2
2. The appraiser has personally inspected the subject property. To the
best of the appraiser's knowledge and belief, all statements and information
in the Appraisal Report are true and correct, and the appraiser has not
knowingly withheld any significant information.
3. All conclusions and opinions set forth in the Appraisal Report were
prepared by this appraiser. No change of any item in the Appraisal Report
shall be made by anyone other than the appraiser, and the appraiser shall have
no responsibility for any such unauthorized change.
4. Unless otherwise stated, the value given in the Appraisal Report
represents the opinion of value as of the date of contribution which is
January 21, 2005.
/s/ Xxxxx X. Xxxx
Xxxxx X. Xxxx
Xxxx'x Antiques Appraisals
000-000-0000
Member: International Society of Appraisers
