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EXHIBIT 2.4
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into as of March
4, 1998, by and among BLOOMFIELD ACCEPTANCE COMPANY, L.L.C., a Michigan limited
liability company ("BAC"), BLOOMFIELD SERVICING COMPANY, L.L.C., a Michigan
limited liability company ("BSC") (BAC and BSC shall together be referred to as
the "Subsidiaries"), XXXXXXX FINANCIAL SERVICES CORPORATION, a Michigan
corporation ("Xxxxxxx"), and XXXXXX X. XXXXX (the "Executive").
W I T N E S S E T H:
WHEREAS, the Executive has been jointly employed by BAC and BSC;
WHEREAS, as of the date of this Agreement, the Subsidiaries have been
acquired by Xxxxxxx, and each has become a wholly-owned subsidiary of Xxxxxxx;
WHEREAS, Xxxxxxx and the Subsidiaries desire to continue the employment of
the Executive by the Subsidiaries, and the Executive desires to be employed by
the Subsidiaries, on the terms and subject to the conditions set forth below.
All rights and obligations of the Subsidiaries hereunder shall be joint and
several among BAC and BSC;
WHEREAS, Xxxxxxx has agreed to guarantee payment of the Subsidiaries'
obligations to the Executive under this Agreement and to provide certain stock
options as provided herein.
NOW, THEREFORE, in consideration of the mutual promises contained in this
Agreement, the parties agree as follows:
1. Employment.
(a) The Subsidiaries agree to employ the Executive and the Executive
accepts the employment, on the terms and subject to the conditions set forth
below. During the term of employment hereunder, the Executive shall serve as
the President of each of the Subsidiaries, and shall do and perform diligently
all such services, acts and things as are customarily done and performed by the
President of companies in similar business and in size to the Subsidiaries,
together with such other duties as may reasonably be requested from time to
time by the Managers of the Subsidiaries (the "Managers"), which duties shall
be consistent with the Executive's positions as set forth above.
(b) For service as an officer and employee of the Subsidiaries, the
Executive shall be entitled to the full protection of the applicable
indemnification provisions of the Articles of Organization and Operating
Agreements of the Subsidiaries, as they may be amended from time to time. The
Subsidiaries agree that the Executive will be named as an additional insured
under the Subsidiaries' Directors' and Officers' Errors and Omissions Insurance
during his employment hereunder.
2. Term of Employment.
Subject to the provisions for termination provided below, the term of the
Executive's employment under this Agreement shall commence on the date of this
Agreement and shall continue thereafter for a period of three (3) years.
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3. Devotion to the Subsidiaries' Business.
The Executive shall devote his entire productive time, ability and
attention to the business of the Subsidiaries during the term of this
Agreement; however, the expenditure of reasonable amounts of time to various
charitable and other community activities, or to the Executive's own, personal
investments, provided the amount of time so devoted does not materially impair,
detract or adversely affect the performance of the Executive's duties under
this Agreement, shall not be deemed a breach of this Agreement.
4. Compensation.
(a) During the term of this Agreement, the Subsidiaries shall pay or
provide, as the case may be, to the Executive the compensation and other
benefits and rights set forth in Sections 4, 5 and 6 of this Agreement.
(b) Base Compensation. As compensation for the services to be performed
hereafter, the Subsidiaries shall pay to the Executive, during his employment
hereunder, a base salary (the "Base Salary") payable in accordance with the
Subsidiaries' usual pay practices (and in any event no less frequently than
monthly) at the rate of One Hundred Fifty Thousand Dollars ($150,000.00) per
year.
(c) Annual Salary Increase. On January 1 of each year, commencing January
1, 1999, the Base Salary shall be increased by five percent (5%) of the Base
Salary for the immediately prior year or such greater increase as may be deemed
appropriate by the Managers of the Subsidiaries, in their sole discretion.
(d) Annuity Contribution. During the Executive's employment hereunder,
the Subsidiaries will contribute premiums toward the annuity plan of the
Executive's choice, with an aggregate maximum contribution by the Subsidiaries
of $25,000 per year.
(e) Bonus. The Managers shall prepare and adopt an executive bonus plan
(the "Bonus Plan") which shall be established for the payment of an incentive
bonus to the Executive based on the Subsidiaries achieving certain performance
criteria to be established by the Subsidiaries and the Executive, but in any
event to include the following terms:
(i) An incentive bonus opportunity of One Hundred Fifty
Thousand Dollars ($150,000.00) per year upon the attainment of
mutually agreed-upon, reasonable, planned objective financial
performance by the Subsidiaries; and
(ii) An incentive super-bonus opportunity of an amount to be
agreed upon between the Executive and the Subsidiaries, contingent
upon the attainment of mutually agreed-upon, reasonable, planned
objective financial performance by the Subsidiaries.
(f) Disability. During any period that the Executive fails to perform his
duties hereunder as a result of incapacity due to physical or mental illness
(the "Disability Period"), the Executive shall continue to receive his full
Base Salary, bonuses and other benefits at the rate in effect for such period
until his employment is terminated by the Subsidiaries pursuant to Section
8(b)(ii) hereof; provided, however, that payments so made to the Executive
during the Disability Period shall be reduced by the sum of the amounts, if
any, which were paid to the Executive at or prior to the time of any such
payment under disability benefit plans of the Subsidiaries.
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5. Benefits.
(a) Insurance. The Subsidiaries shall provide to the Executive life,
disability, medical, hospitalization and dental insurance for himself, his
spouse and eligible family members as may be determined by the Managers to be
consistent with industry standards.
(b) Benefit Plans. The Executive, at his election, may participate,
during his employment hereunder, in all retirement plans, 401(K) plans and
other benefit plans of the Subsidiaries generally available from time to time
to other executive employees of Xxxxxxx or the Subsidiaries and for which the
Executive qualifies under the terms of the plans (and nothing in this Agreement
shall or shall be deemed to in any way affect the Executive's right and
benefits under any such plan except as expressly provided herein). The
Executive shall also be entitled to participate in any equity, stock option or
other employee benefit plan that is generally available to senior executives,
as distinguished from general management, of Xxxxxxx or the Subsidiaries. The
Executive's participation in and benefits under any such plan shall be on the
terms and subject to the conditions specified in the governing document of the
particular plan.
(c) Annual Vacation. The Executive shall be entitled to four (4) weeks
vacation time each year without loss of compensation. The Executive may be
absent from his employment for vacation on dates to be mutually agreed upon by
the Subsidiaries and the Executive, and approval of the Subsidiaries shall not
be unreasonably withheld. In the event that the Executive is unable for any
reason to take the total amount of vacation time authorized herein during any
year, he may accrue such unused time and add it to the vacation time for any
following year. Upon any termination of this Agreement for any reason
whatsoever, accrued and unused vacation time shall be paid to the Executive
within ten (10) days of such termination based on the Base Salary in effect on
the date of such termination; provided, however, that no more than twenty (20)
days of accrued vacation time may be carried over at any time.
6. Reimbursement of Business Expenses.
The Subsidiaries shall reimburse the Executive or provide him with an
expense allowance during the term of this Agreement for travel, entertainment,
and other expenses reasonably and necessarily incurred by the Executive in
connection with the Subsidiaries' business. The Executive shall furnish such
documentation with respect to reimbursement to be paid hereunder as the
Subsidiaries shall reasonably request.
7. Payment in the Event of Death or Permanent Disability.
(a) In the event of the Executive's death or "permanent disability" (as
defined below) during the term of this Agreement, the Subsidiaries shall pay to
the Executive (or his successors and assigns in the event of his death) an
amount equal to two times the Executive's then effective per annum rate of Base
Salary, plus a pro rata portion of the incentive bonus applicable to the year
in which such death or permanent disability occurs, as such bonus is determined
under the Bonus Plan, less the sum of all amounts paid to the Executive from
any disability plan or policy of the Subsidiaries for any disability related to
the Executive's death or permanent disability.
(b) The pro rata portion of the incentive bonus described in Section 4(d)
shall be paid when and as provided in the Bonus Plan. The remainder of the
benefit to be paid pursuant to Section 4(d) shall be paid within ninety (90)
days after the date of death or permanent disability, as the case may be.
(c) Except as otherwise provided in Sections 7(a) and 7(b), in the event
of the Executive's death or permanent disability, the Executive's employment
hereunder shall terminate
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and the Executive shall be entitled to no further compensation or other
benefits under this Agreement, except as to that portion of any unpaid salary
and other benefits accrued and earned by him hereunder up to and including the
date of such death or permanent disability, as the case may be.
(d) For purposes of this Agreement, the Executive's "permanent disability"
shall be deemed to have occurred after one hundred eighty (180) consecutive
days during which the Executive, by reason of his physical or mental disability
or illness, shall have been unable to discharge his duties under this
Agreement. The date of permanent disability shall be such one hundred
eightieth (180th) day. In the event either the Subsidiaries or the Executive,
after receipt of notice of the Executive's permanent disability from the other,
dispute that the Executive's permanent disability shall have occurred, the
Executive shall promptly submit to a physical examination by the chief of
medicine of any major accredited hospital in Michigan and, unless such
physician shall issue his written statement to the effect that in his opinion,
based on his diagnosis, the Executive is capable of resuming his employment and
devoting his full time and energy to discharging his duties within thirty (30)
days after the date of such statement, such permanent disability shall be
deemed to have occurred.
8. Termination of Employment.
(a) Termination for Cause.
(i) The Subsidiaries shall have the right to terminate this Agreement
if
(A) the Executive commits acts or omissions constituting
active and deliberate dishonesty established by a final
judgment or actual receipt of an improper benefit or profit
in money, property or services, or
(B) if the Executive continuously fails to perform his
duties under this Agreement in any material manner and has
not cured such failure within 60 days following his receipt
of notice of such failure from the Subsidiaries specifying
how he has so failed to perform. The mere fact that the
Subsidiaries do not achieve Business Plan goals and/or the
Executive does not achieve Bonus Plan goals established under
this Agreement, shall not, in and of themselves, constitute
cause for termination of this Agreement.
(ii) The Subsidiaries may at their option terminate this Agreement
for the reasons stated in this section 8(a) by giving written notice of
termination to the Executive without prejudice to any other remedy to which
the Subsidiaries may be entitled at law, in equity, or under this Agreement.
(iii) The notice of termination required by section 8(a)(ii)
shall specify the ground for the termination and shall be supported by a
statement of all relevant facts.
(iv) Termination under this Section 8(a) shall be considered "for
cause" for the purposes of this Agreement.
(v) In the event of termination of this Agreement "for cause," or a
termination on account of the Executive voluntarily terminating his employment
hereunder (other than for "good reason" under Section 8(c) below), the
Executive shall be entitled to no further compensation or other benefits under
this Agreement, except as to that portion of any unpaid salary and other
benefits accrued and earned by him hereunder up to and including the effective
date of such termination.
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(b) Termination Without Cause.
(i) This Agreement shall be terminated upon the death of the Executive.
(ii) This Agreement shall be terminated upon the permanent disability
(as defined in Section 7(d)) of the Executive. Such termination shall be
effected by giving 10 days' written notice of termination to the Executive.
Termination pursuant to this provision shall not prejudice the Executive's
rights to continued compensation pursuant to Section 7 of this Agreement.
(iii) This Agreement may be terminated by either Executive or the
Subsidiaries at any time after the initial term on not less than sixty (60)
days prior written notice.
(iv) Termination under this Section 8(b) shall not be considered "for
cause" for the purposes of this Agreement.
(c) Termination for Good Reason. The Executive may terminate this
Agreement for any of the following reasons: (i) the Subsidiaries' material
breach of the Agreement, if the Subsidiaries have not cured such breach within
60 days following their receipt of written notice from the Executive's
specifying the breach; (ii) the assignment of the Executive without his consent
to a position, responsibilities or duties of a materially lesser status or
degree of responsibility than his position, responsibilities or duties upon the
commencement of his employment hereunder; (iii) the relocation of the
Subsidiaries' offices outside of the metropolitan Detroit, Michigan area
without the Executive's consent; or (iv) the requirement by the Subsidiaries
that the Executive be based anywhere other than the Subsidiaries principal
executive offices without the Executive's consent. Termination by the
Executive upon any of the foregoing bases shall be deemed a termination for
"good reason".
(d) Resignation of Executive. Upon any termination of this Agreement, the
Executive shall be deemed to have resigned from all offices and directorships
held by the Executive in the Subsidiaries.
(e) Payment on Termination. Notwithstanding any provision of this
Agreement, if the Subsidiaries terminate this Agreement without cause, other
than pursuant to Sections 8(b)(i) and 8(b)(ii), or if the Executive terminates
this Agreement for good reason under Section 8(c), the Subsidiaries shall pay
the Executive his Base Salary and any bonus and benefits accruing up to the
effective date of the termination, plus: $325,000 if the termination occurs
during the initial six (6) months of employment hereunder; or $250,000 if the
termination occurs during the term of this Agreement but not during the initial
six (6) months of employment.
9. Effect of the Subsidiaries' Merger, Transfer of Assets, or Dissolution.
In the event of any voluntary or involuntary dissolution of both of the
Subsidiaries resulting from either a merger or consolidation in which neither
of the Subsidiaries are the consolidated or surviving company, or a transfer of
all or substantially all of the assets of both of the Subsidiaries, pursuant to
which the Executive's employment under this Agreement is terminated, the
Subsidiaries shall pay to the Executive, immediately prior to such merger,
consolidation, or transfer of assets, an amount equal to the sum of (a) the
portion of any unpaid salary, a pro rata portion of the incentive bonus
applicable to the year in which the termination takes place and benefits
accrued and earned by the Executive hereunder, up to and including the
effective date of such change in control; and (b) the greater of (i) an amount
equal to two (2) years' Base Salary at the rate in effect on the date of such
termination; or (ii) the full Base Salary and other benefits (excluding
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any bonus) which would otherwise have been paid to the Executive for the
remainder of the term of this Agreement.
10. Stock Options. In the event of termination of the Executive's
employment under this Agreement for "cause", all stock options in Xxxxxxx or
other stock-based compensation awarded to the Executive shall lapse and be of
no further force or effect whatsoever in accordance with Xxxxxxx'x 1997 Stock
Option Plan. In the event that the Subsidiaries terminate the Executive's
employment under this Agreement without "cause", or upon the death or permanent
disability of the Executive, or in the event of the termination of this
Agreement for "good reason" under Section 8(c) hereof, or upon the occurrence
of an event giving rise to the Executive's right of payment under Section 9
hereof, all stock options and other stock based compensation awarded to the
Executive shall become fully vested and immediately exercisable, provided,
however, that such options and other stock based compensation shall be
automatically forfeited upon the Executive's breach of any of the provisions of
Section 11 hereof. Any Stock Option Agreements between Xxxxxxx and the
Executive shall be amended to conform to the provisions of this Section 10.
11. Covenant Not To Compete and Confidentiality.
(a) The Executive acknowledges the Subsidiaries' reliance and expectation
of the Executive's continued commitment to performance of his duties and
responsibilities under this Agreement. In light of such reliance and
expectation on the part of the Subsidiaries, the Executive agrees that:
(i) for a period commencing on the date of this Agreement and
ending upon the expiration of the Executive's employment under
this Agreement for any reason, the Executive shall not, directly
or indirectly, engage in, or have an interest in or be associated
with (whether as an officer, director, stockholder, partner,
associate, employee, consultant, owner or otherwise) any
corporation, firm or enterprise which is engaged in any business
which is materially similar to or which is competitive with the
business then or at any time during the term of this Agreement
conducted or actively proposed to be conducted by the
Subsidiaries, or any company owned or controlled by Xxxxxxx or
under common control with Xxxxxxx or the Subsidiaries
("Affiliate"), anywhere within the continental United States or
Canada (the "Business"); provided, however, that the Executive
shall be permitted to make passive investments in real estate,
active investments in real estate that do not interfere or
conflict with the performance of the Executive's duties or
directly compete with the Business, and passive investments in the
stock of any publicly traded business (including a competitive
business), so long as the stock investment in any competitive
business does not rise above one percent (1%) of the outstanding
shares of such business;
(ii) for a two year period commencing upon the termination
for any reason of Executive's employment under this Agreement, the
Executive shall not, in the continental United States or Canada,
engage in the Business;
(iii) the Executive will not at any time, for so long as any
Confidential Information (as defined below) shall remain
confidential or otherwise remain wholly or partially protectable,
either during the term of this Agreement or thereafter, use or
disclose, directly or indirectly, to any person outside of the
Subsidiaries or any Affiliate any Confidential Information;
(iv) promptly upon the termination of this Agreement for any
reason, the Executive (or in the event of the Executive's death,
his personal
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representative) shall return to the Subsidiaries any and all
copies (whether prepared by or at the direction of the
Subsidiaries or the Executive) of all records, drawings,
materials, memoranda and other data constituting or pertaining to
Confidential Information;
(v) for a period commencing on the date of this Agreement and
ending upon the expiration of one (1) year from the termination of
this Agreement for any reason, the Executive shall not directly or
indirectly divert, or by aid to others, do anything which would
tend to divert, from the Subsidiaries or any Affiliate any trade
or business with any customer or supplier with whom the Executive
had any contact or association during the term of the Executive's
employment with the Subsidiaries or with any party whose identity
or potential as a customer or supplier was confidential or learned
by the Executive during his employment by the Subsidiaries; and
(vi) for a period commencing on the date of this Agreement
and ending upon the expiration of one (1) year from the
termination of this Agreement for any reason, the Executive shall
not, either directly or indirectly, induce or attempt to induce
any person with whom the Executive was acquainted while in the
Subsidiaries' employ to leave the employment of the Subsidiaries
or any of the Affiliates.
As used in this Agreement, the term "Confidential Information" shall mean
all business information of any nature and in any form which at the time or
times concerned is not generally known or available to those persons engaged in
business similar to that conducted or contemplated by the Subsidiaries or any
Affiliate (other than by the act or acts of an employee not authorized by the
Subsidiaries to disclose such information) and which relates to any one or more
of the aspects of the present or past business of the Subsidiaries or any of
the Affiliates or any of their respective predecessors, including, without
limitation, patents and patent applications, inventions and improvements
(whether or not patentable), development projects, policies, processes,
formulas, techniques, know-how, and other facts relating to sales, advertising,
promotions, financial matters, customers, customer lists, customer purchases or
requirements, and other trade secrets.
(b) The Executive agrees and understands that the remedy at law for any
breach by him of this Section 11 will be inadequate and that the damages
flowing from such breach are not readily susceptible to being measured in
monetary terms. Accordingly, it is acknowledged that, upon adequate proof of
the Executive's violation of any legally enforceable provision of this Section
11, the Subsidiaries shall be entitled to immediate injunctive relief and may
obtain a temporary order restraining any threatened or further breach. Nothing
in this Section 11 shall be deemed to limit the Subsidiaries' remedies at law
or in equity for any breach by the Executive of any of the provisions of this
Section 11 which may be pursued or availed of by the Subsidiaries.
12. No Conflicting Agreements. The Executive represents and warrants
that he is not a party to any agreements, contracts, understandings or
arrangements, whether written or oral, in effect which would prevent him from
rendering exclusive services to the Subsidiaries during the term hereof, and
that he has not made and will not make any commitment to do any act in conflict
with this Agreement.
13. Arbitration. Any dispute or controversy arising out of or relating to
this Agreement shall be settled finally and exclusively by arbitration in the
State of Michigan in accordance with the rules of the American Arbitration
Association then in effect. Such arbitration shall be conducted by an
arbitrator(s) appointed by the American Arbitration
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Association in accordance with its rules and any finding by such arbitrator(s)
shall be final and binding upon the parties. Judgment upon any award rendered
by the arbitrator(s) may be entered in any court having jurisdiction thereof,
and the parties consent to the jurisdiction of the Oakland County, Michigan
Circuit Court for this purpose. Nothing contained in this Section 13 shall be
construed to preclude the Subsidiaries from obtaining injunctive or other
equitable relief to secure specific performance or to otherwise prevent a
breach or contemplated breach of this Agreement by the Executive as provided in
Section 11 hereof.
14. Notice. All notices, requests, consents and other communications,
required or permitted to be given hereunder to be given under this Agreement
shall be personally delivered in writing or shall have been deemed duly given
when received after it is posted in the United States mail, postage prepaid,
registered or certified, return receipt requested addressed as follows:
If to the Subsidiaries:
Bloomfield Acceptance Company and
Bloomfield Servicing Company
c/x Xxxxxxx Financial Services Corporation
00000 Xxxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx Xxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxxx
If to the Executive:
Xxxxxx X. Xxxxx
000 Xxxx Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
In all events, with a copy to:
Jaffe, Raitt, Heuer & Xxxxx,
Professional Corporation
Xxx Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxxx
15. Guarantee by Xxxxxxx. Following a default by the Subsidiaries of
their obligation to make any payment to the Executive in accordance with the
terms of this Agreement, Xxxxxxx agrees that it shall make such payment to the
Executive in satisfaction of such obligation, provided, that in no event shall
Xxxxxxx be liable for or obligated to make any payment to the Executive unless
and until the Subsidiaries have first defaulted in fulfilling such obligation.
16. Miscellaneous.
(a) The provisions of this Agreement are severable and if any one or more
provisions may be determined to be illegal or otherwise unenforceable, in whole
or in part, the remaining provisions and any partially unenforceable provision
to the extent enforceable in any jurisdiction nevertheless shall be binding and
enforceable.
(b) The rights and obligations of the Subsidiaries under this Agreement
shall inure to the benefit of, and shall be binding on, the Subsidiaries and
their respective successors and assigns, and the rights and obligations (other
than obligations to perform services) of the
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Executive under this Agreement shall inure to the benefit of, and shall be
binding upon, the Executive and his heirs, personal representatives and
assigns. This Agreement is personal to Executive and he may not assign his
obligations under this Agreement in any manner whatsoever.
(c) The failure of any party to enforce any provision or protections of
this Agreement shall not in any way be construed as a waiver of any such
provision or provisions as to any future violations thereof, nor prevent that
party thereafter from enforcing each and every other provision of this
Agreement. The rights granted the parties herein are cumulative and the waiver
of any single remedy shall not constitute a waiver of such party's right to
assert all other legal remedies available to it under the circumstances.
(d) This Agreement supersedes all agreements and understandings between
the parties and may not be modified or terminated orally. No modification,
termination or attempted waiver shall be valid unless in writing and signed by
the party against whom the same is sought to be enforced.
(e) This Agreement shall be governed by and construed according to the
laws of the State of Michigan.
(f) Captions and section headings used herein are for convenience and are
not a part of this Agreement and shall not be used in construing it.
(g) This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Employment Agreement on
the date first written above.
SUBSIDIARIES: EXECUTIVE:
BLOOMFIELD ACCEPTANCE COMPANY, L.L.C.,
a Michigan limited liability company
By: /s/ Xxxxxxx X. Xxxxxxxx /s/ XXXXXX X. XXXXX
---------------------------------- ----------------------------------------
Xxxxxxx X. Xxxxxxxx, Manager XXXXXX X. XXXXX
BLOOMFIELD SERVICING COMPANY, L.L.C., XXXXXXX:
a Michigan limited liability company
XXXXXXX FINANCIAL SERVICES CORPORATION,
a Michigan corporation,
By: /s/ Xxxxxxx X. Xxxxxxxx as to Sections 10 and 15 only
----------------------------------
Xxxxxxx X. Xxxxxxxx, Manager
By: /s/ Xxxxxxx X. Xxxxxxxx
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Xxxxxxx X. Xxxxxxxx, its President
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