<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-KSB/A
(AMENDMENT NO. 1)
[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the Fiscal Year Ended December 31, 1999.
0r
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the Transition Period From __________ to _________
Commission File Number 000-29032
CHAMPION COMMUNICATION SERVICES, INC.
DELAWARE 76-0448005
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1610 WOODSTEAD COURT, SUITE 330
THE WOODLANDS, TEXAS 77380
(Address of Principal Offices) (Zip Code)
(281) 362-0144
(Issuer's Telephone Number, including area code.)
Securities registered under Section 12(b) of the Exchange Act:
Title of Each Class Name of Exchange on which Registered
NONE NONE
Securities registered under Section 12(g) of the Exchange Act:
Title of Each Class Name of Exchange on which Registered
COMMON STOCK, PAR VALUE $.01 PER SHARE NONE
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter periods that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days.
Yes [X] No [ ]
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B, and no disclosure will be contained, to the best of the
registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of the Form 10-KSB or any amendment to
this Form 10-KSB.
Yes [X] No [ ]
State issuer's revenues for its most recent fiscal year. $7,897,105
State the aggregate market value of the voting stock held by non-affiliates
computed by reference to the price at which the stock was sold, or the average
bid and ask prices of such stock, as of a specified date within the past 60
days. (See definition of affiliate in Rule 12b-2 of the Exchange Act.)
As of March 17, 2000, there were 6,150,622 shares of common stock, $0.01 par
value, of the registrant issued and outstanding. The aggregate market value of
the voting stock held by non-affiliates of the registrant as of March 17, 2000
was $1,723,223 based upon the average bid and ask price of the common stock on
such date of U.S. $0.713 per share. For purposes of this computation, all
executive officers, directors and 10% shareholders were deemed affiliates. Such
a determination should not be an admission that such executive officers,
directors or 10% shareholders are affiliates.
<PAGE> 2
Champion Communication Services, Inc. (The "Company") hereby amends its Annual
Report on Form 10- KSB for the fiscal year ended December 31, 1999 with respect
to Items 9 through 12 set forth below.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.
The directors and executive officers of the Company and their
respective ages and positions are as follows:
<TABLE>
<CAPTION>
Name Age Position
----- --- --------
<S> <C> <C>
Albert F. Richmond (2) 58 Chairman of the Board and
Houston, Texas Chief Executive Officer
David A. Terman 56 President
The Woodlands, Texas Director
Mary F. Garner 46 Secretary
The Woodlands, Texas
Pamela R. Cooper 47 Chief Financial Officer,
Spring, Texas Treasurer and Controller
Peter F. Dicks (1)(2) 57 Director
London, England
Randel R. Young (1)(2) 44 Director
Houston, Texas
</TABLE>
- ----------------------------
(1) Member of Audit Committee
(2) Member of Compensation Committee
ALBERT F. RICHMOND has served as Chairman of the Board, Chief Executive
Officer and a director of the Company since September 29, 1994. From May 1986 to
February 1996, he was Chairman of the Board of Olympic Natural Gas Company, and
from 1981 to 1986, he served as Chief Financial Officer and a director of
American Oil and Gas Corporation. Mr. Richmond received a Bachelor of Business
Administration degree from Texas Christian University in 1965.
DAVID A. TERMAN has been President of the Company since November 1,
1994 and a director since September 29, 1994. Mr. Terman was employed by
Motorola from 1970 to 1994 where he held several management positions, including
positions in direct sales, indirect distribution and network services
operations, all of which are directly related to the wireless radio
communications industry. Mr. Terman received his Bachelor of Science degree in
Aviation Management from Auburn University in 1968.
MARY F. GARNER has served as Corporate Secretary of the Company since
September 29, 1994, and has been human resources manager of the Company since
August 1995. From January 1990 to February 1996, she was Corporate Secretary of
Olympic Natural Gas Company, and also served as Office Manager of Olympic
Natural Gas Company from June 1986 to July 1995.
<PAGE> 3
PAMELA R. COOPER has been Treasurer and Controller of the Company since
April 1, 1995, and Chief Financial Officer since March 1996. From 1988 to 1995,
she was the owner of PRC Consulting, an accounting firm in Dallas, Texas. Ms.
Cooper graduated from Southern Methodist University in 1974 with a Bachelor of
Business Administration degree.
PETER F. DICKS has been a director of the Company since October 24,
1994. He has also served as a director of Standard Microsystems Corporation, a
publicly-traded company, since June 1992. Mr. Dicks serves as director for
several companies in the United Kingdom, including The East German Investment
Trust PLC, Action Computer Supplies Holdings PLC, Henderson Technology Trust
PLC, The Personal Number Company PLC and Second London American Growth Trust
PLC, all of which are publicly traded companies. From 1973 to 1991, he was a
founder and director of Abingworth Management Holdings, Ltd., a company that
provided venture capital investment management services.
RANDEL R. YOUNG has been a director since May 7, 1996. Mr. Young
currently serves as vice president and assistant general counsel for an NYSE
energy company, based in Houston, Texas. From April 1991 to October 1993, Mr.
Young was an attorney in his own Houston law firm. From October 1993 to December
1995, he was a partner with the New York-based law firm of Haight Gardner Poor &
Havens, resident in its Houston office. From December 1995 to April 1996, he was
a partner with the law firm of Gardere & Wynne, L.L.P., resident in its Houston
office. Mr. Young received his Bachelor of Arts degree, with highest honors,
from the University of Houston in 1977. Mr. Young received his law degree, with
honors, from the University of Houston Law Center in 1980.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has established standing Audit and Compensation
Committees. The Audit Committee will annually recommend to the Board the
appointment of independent certified accountants as auditors for the Company,
discuss and review the scope of and fees for the prospective annual audit and
review the results with the auditors, review the Company's compliance with its
existing accounting and financial policies, review the adequacy of the financial
organization of the Company and consider comments by the auditors regarding
internal controls and accounting procedures and management's response to those
comments. The Audit Committee currently is comprised of Messrs. Dicks and Young.
The Compensation Committee reviews and makes recommendations to the
Board regarding salaries, compensation and benefits of executive officers and
employees of the Company and administers the Company's 1996 Incentive Plan. The
Compensation Committee currently is comprised of Messrs. Dicks, Richmond and
Young.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Based on a review of Forms 3, 4, and 5 furnished to the Company, all of
the Company's officers and directors and beneficial owners of ten percent of the
Company's common stock were in compliance with the reporting requirements of
Section 16(a) during the fiscal year ended December 31, 1999.
ITEM 10. EXECUTIVE COMPENSATION
The following tables sets forth certain information with respect to the
compensation paid to the Company's Chief Executive Officer and each other
executive officer who received compensation in excess of $100,000 for the year
ended December 31, 1999 (collectively, the "Named Executive Officers").
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SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Long Term
Compensation Bonus Compensation
------------ ----- ------------
Securities
Fiscal Year Underlying
Name and Principal Ended Salary Options/
Position Dec. 31 ($) SARs(#)
- ------------------------- ----------- --------- ------- ------------
<S> <C> <C> <C> <C>
Albert F. Richmond, 1999 $ 133,125 -- --
Chairman of the Board and 1998 $ 125,000 -- --
Chief Executive Officer 1997 $ 125,000 -- --
David A. Terman, 1999 $ 133,125 -- --
President and Director 1998 $ 125,000 -- --
1997 $ 125,000 $20,000 --
</TABLE>
A total of 500,000 shares of the Company's Common Stock have been
reserved for issuance under the Company's 1996 Incentive Plan (the "1996 Plan")
which was adopted in February 1996. At March 1, 2000, options to acquire 520,000
shares of Common Stock had been granted under the 1996 Plan, of which 132,000
have expired because of employee termination, and all remaining options issuable
thereunder were available for future grant. The 1996 Plan provides for the grant
to employees, including officers of the Company, of "incentive stock options"
within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code"), nonstatutory stock options, stock appreciation rights and
restricted shares of Common Stock (collectively, "Awards"). In addition,
non-employee directors ("Outside Directors") and consultants are eligible to
receive nonstatutory stock options.
The 1996 Plan is currently administered by the Compensation Committee
of the Board of Directors. Subject to special provisions relating to Outside
Directors, the Compensation Committee selects the employees to which Awards may
be granted and the type of Award to be granted and determines, as applicable,
the number of shares to be subject to each Award, the exercise price and the
vesting. In making such determination, the Compensation Committee takes into
account the employees' present and potential contributions to the success of the
Company and other relevant factors.
The exercise price of all incentive stock options granted under the
1996 Plan must be at least equal to the fair market value of the shares of
Common Stock on the date of grant. With respect to any participant who owns
stock representing more than 10% of the voting rights of the Company's
outstanding capital stock, the exercise price of any incentive stock option
granted under the 1996 Plan must equal at least 110% of the fair market value of
the shares of Common Stock subject to such option on the date of grant, and the
term of the option must not exceed five years. To the extent that the aggregate
fair market value of the shares with respect to which options designated as
"incentive stock options" are exercisable for the first time by any optionee
during any calendar year exceeds $100,000, such options will be reclassified in
accordance with the Code. The 1996 Plan is not a qualified deferred compensation
plan under Section 401(a) of the Code and is not subject to the provisions of
the Employee Retirement Income Security Act of 1974, as amended. Options granted
under the 1996 Plan vest pursuant to terms determined by the Board of Directors
or its designated committee. The terms of all incentive stock options and
nonstatutory stock options granted under the 1996 Plan may not exceed ten years.
However, the terms of all incentive stock options granted to an optionee who, at
the time of grant, owns stock representing more than 10% of the voting rights of
the Company's outstanding capital stock may not exceed five years.
Under the 1996 Plan, options are automatically granted to current and
future Outside Directors of the
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Company. Each person who was an Outside Director of the Company on February 1,
1996, the effective date of the 1996 Plan ("Current Directors"), received an
option to purchase 10,000 shares of Common Stock of the Company at a purchase
price of $2.00 per share, the fair market value of the Common Stock on that
date. Such options vested immediately on the date of their grant, are
exercisable for 10 years and may be exercised at any time during the option
term.
Under the 1996 Plan, individuals who are not directors, but
subsequently become Outside Directors of the Company after the adoption of the
1996 Plan (a "Future Director"), will automatically receive an option to
purchase 10,000 shares of Common Stock of the Company at a purchase price equal
to the fair market value of the stock at the date of grant. Such shares vest
immediately and are exercisable for a period of ten years. Once the Company
becomes a reporting company under the Securities Exchange Act of 1934, each
Outside Director will automatically receive an annual grant of options to
acquire 1,500 shares of Common Stock at the fair market value of the Common
Stock on the date of the grant, vested immediately upon grant, and exercisable
at any time during the 10-year term of the option.
Under the 1996 Plan, restricted shares of Common Stock ("Restricted
Stock") may be granted to employees pursuant to terms determined by the Board of
Directors or its designated committee. Restricted Stock may not be transferred
until the restrictions are removed or have expired. Conditions to the removal of
restrictions may include, but are not required to be limited to, continuing
employment or service to the Company or the achievement of certain performance
objectives.
Stock appreciation rights ("SARs") may be granted to employees, either
independent of, or in connection with, options. SARs granted in connection with
an option are subject to the terms of the Award agreement granting the option.
Upon exercise of SARs granted in connection with an option, the holder shall
receive payment (in cash, Common Stock or a combination of both at the
discretion of the Board of Directors or its designated committee) in an amount
equal to the product of (i) the fair market value of a share of Common Stock on
the date of exercise minus the exercise price per share of the option,
multiplied by (ii) the number of shares of Common Stock as to which the SAR is
being exercised. SARs granted independent of an option are exercisable in the
manner, and pursuant to the terms, determined by the Board of Directors or its
designated committee. Terms to be determined by the Board of Directors or its
designated committee include the number of shares to which the SAR applies, the
vesting schedule for the exercise of such right and the expiration date of the
right. Upon exercise of an SAR, the holder shall receive payment (in cash,
Common Stock or a combination of both at the discretion of the Board of
Directors or its designated committee) in an amount equal to the product of (i)
the fair market value of a share of Common Stock as of the date of exercise,
minus the fair market value of a share of Common Stock as of the date the SAR
was granted, multiplied by (ii) the number of shares as to which the SAR is
being exercised. The exercise of SARs granted in connection with options
requires the holder to surrender the related option (or any portion thereof, to
the extent unexercised). No SAR granted under the 1996 Plan is transferable by
the employee other than by will or by the laws of descent and distribution, and
each SAR is exercisable during the lifetime of the employee only by such
employee.
Under the 1996 Plan, if any change is made in the Company's
capitalization, such as a stock split or stock dividend, which results in a
greater or lesser number of shares of outstanding Common Stock, appropriate
adjustment shall be made in the exercise price and the number of shares subject
to options, Restricted Stock Awards and SARs.
Award agreements under the 1996 Plan may, as determined by the Board of
Directors or its designated committee, provide that, in the event of a "change
in control" of the Company, (i) the holder of a stock option will be granted a
corresponding SAR, (ii) all outstanding SARs and stock options will become
immediately and fully vested and exercisable in full and (iii) the restriction
period on any Restricted Stock will be accelerated and the restrictions will
expire. In general, a "change in control" of the Company occurs in any of five
situations: (i) a person other than (a) the Company, (b) certain affiliated
companies or benefit plans, or (C) a company a majority of which is owned
directly or indirectly by the stockholders of the Company, becomes the
beneficial owner of 50% or more of the voting power of the Company's outstanding
voting securities; (ii) a majority of the Board of Directors is not comprised of
the members of the Board of Directors at the effective date of the 1996 Plan and
persons whose elections as directors were approved by those original directors
or their approved successors; (iii) a person described in clause (i) announces a
tender offer for 50% or more
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of the Company's outstanding voting securities and the Board of Directors
approves or does not oppose the tender offer; (iv) the Company merges or
consolidates, other than mergers or consolidations in which the Company's voting
securities are converted into securities having the majority of voting power in
the surviving company; or (v) the Company liquidates or sells all or
substantially all of its assets, or the Company's stockholders approve such a
liquidation or sale, except sales to corporations having substantially the same
ownership as the Company.
If a "restructuring" of the Company occurs that does not constitute a
change in control of the Company, the Board of Directors or the committee
administering the 1996 Plan may (but need not) cause the Company to take any one
or more of the following actions: (i) accelerate in whole or in part the time of
vesting and exercisability of any outstanding stock options and SARs to permit
those stock options and SARs to be exercisable before, upon or after the
completion of the restructure; (ii) grant each option holder corresponding SARs;
(iii) accelerate in whole or in part the expiration of some or all of the
restrictions on any Restricted Stock; (iv) if the restructuring involves a
transaction in which the Company is not the surviving entity, cause the
surviving entity to assume in whole or in part any one or more of the
outstanding Awards upon such terms and provisions as the Board of Directors or
its designated committee deems desirable; or (v) redeem in whole or in part any
one or more of the outstanding Awards (whether or not then exercisable) in
consideration of a cash payment, adjusted for withholding obligations. A
restructuring generally is a merger of the Company or the direct or indirect
transfer of all or substantially all of the Company's assets (whether by sale,
merger, consolidation, liquidation or otherwise) in one transaction or a series
of transactions.
401(k) PLAN
In January 1996, the Company adopted a 401(k) Plan (the "401(k) Plan")
under which all employees of the Company who have completed three months of
service are eligible to participate. Participants may elect to defer the receipt
of up to 15% of their annual compensation (up to a maximum dollar amount
established in accordance with Section 401(k) of the Internal Revenue Code) and
have such deferred amounts contributed to the 401(k) Plan. The Company may, in
its discretion, make matching contributions to the extent it deems appropriate.
The Board of Directors at the February 9, 2000 Board meeting elected to match
1999 contributions by 50%. The Company's matching contributions vest over a
four-year period beginning when an employee has completed two years of service.
OUTSTANDING OPTIONS
As of March 1, 2000, the Company had granted options to its employees
and directors to purchase 520,000 shares of its Common Stock under its 1996
Plan. Of these, options to purchase 132,000 shares expired when employees'
employment with the Company terminated. As of March 1, 2000, options are held by
19 of its employees and directors.
Incentive stock options granted to officers and employee directors are
exercisable at $0.50 to $2.75 per share and vest over a five-year period which
began February 1, 1996. These options expire 10 years after the date they are
granted or 90 days following termination of the optionee's employment with the
Company.
The Company has issued 52,000 non-qualified options to Messrs. Dicks
and Young, its Outside Directors. The options vest immediately, 20,000 are
exercisable at $2.00 per share, 3,000 are exercisable at $2.75 per share, 3,000
are exercisable at $1.25 per share, 23,000 are exercisable at $1.00 per share,
and 3,000 are exercisable at $0.50 per share, and expire 10 years after the date
of grant.
COMPENSATION OF DIRECTORS
Directors who are not officers and employees of or consultants to the
Company receive compensation of $1,000 per board meeting, $500 for each
committee meeting on which such director serves, and a
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$500 retainer per month. Directors' expenses for attending meetings are
reimbursed by the Company.
Under the 1996 Plan, Peter F. Dicks, on February 1, 1996, December 31,
1996 and 1997, November 5, 1998, December 31, 1998 and 1999, and Randel R.
Young, on May 7, 1996, December 31, 1996 and 1997, November 5, 1998, December
31, 1998 and 1999 as outside directors, each received options to purchase 26,000
shares of the Company's Common Stock for $0.50 to $2.75 per share, the fair
market value of the Common Stock on the dates the Company issued these options.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
beneficial ownership of the Common Stock as of December 31, 1999 by (i) each
director of the Company, (ii) each Named Executive Officer, (iii) each person
known or believed by the Company to own beneficially 5% or more of the Common
Stock and (iv) all directors and executive officers as a group. Unless otherwise
indicated, each person has sole voting and dispositive power with respect to
such shares.
<TABLE>
<CAPTION>
Percent
Name of Beneficial Owner (1) Number of Shares Beneficially Owned
- ---------------------------- ---------------- ------------------
<S> <C> <C>
Albert F. Richmond 1,706,250 (2) 27.74%
David A. Terman 1,797,000 (3) 29.22%
Mary F. Garner 35,800 (4) *
Pamela R. Cooper 37,600 (5) *
Peter F. Dicks 176,000 (6) 2.85%
23 Bentinck Street
London, W1M 5RL
England
Randel R. Young 38,813 (7) *
333 Clay Street, Ste. 1800
Houston, Texas 77002
All executive officers and directors as a group 3,791,463 60.48%
</TABLE>
- -----------------------
*Less than 1%
(1) Except as otherwise noted, the address of each holder is 1610 Woodstead
Court, Suite 330, The Woodlands, Texas 77380.
(2) Includes 46,600 shares held in Richmond Holdings of which Mr. Richmond is
sole shareholder, 7,500 shares held in Guarantee & Trust Company, trustee
FBO Albert F. Richmond IRA, and 7,500 shares held in Guarantee & Trust
Company, trustee FBO Linda L. Richmond IRA.
(3) Shares held by David A. Terman and his wife, Maura B. Terman, as joint
tenants with right of survivorship.
(4) Includes shares held by Mary F. Garner and her husband, James M. Dobson,
III, as joint tenants with the right of survivorship. Includes options
granted on February 1, 1996 to acquire 2,500 shares and options granted on
February 6, 1997 to acquire 1,200 shares, which are immediately
exercisable. Does
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not include options to acquire 7,500 shares granted on February 1, 1996,
options to acquire 10,800 shares granted on February 6, 1997, options to
acquire 7,000 shares granted on November 5, 1998, and options to acquire
25,000 shares on April 16, 1999, as such options are not exercisable until
February 1, 2000, February 6, 2000, November 5, 2000, and April 16, 2001,
respectively.
(5) Includes 4,700 shares held by Charles Schwab and 7,000 shares held by
Guarantee & Trust Company, as Custodians of IRA. Includes options granted
on February 1, 1996 to acquire 2,500 shares and options granted on February
6, 1997 to acquire 1,200 shares, which are immediately exercisable. Does
not include options to acquire 7,500 shares granted on February 1, 1996,
options to acquire 10,800 shares granted on February 6, 1997, options to
acquire 10,000 shares granted on November 5, 1998, and options to acquire
50,000 shares granted on April 16, 1999, as such options are not
exercisable until February 1, 2000, February 6, 2000, November 5, 2000, and
April 16, 2001, respectively.
(6) Includes options to acquire 26,000 shares of Common Stock exercisable
immediately.
(7) Includes 5,491 shares held by Randel R. Young, Trustee for Brian C. Young
Trust; 7,322 shares held by Randel R. Young, Trustee for Shannon E. Young
Trust; and options to acquire 26,000 shares of Common Stock exercisable
immediately. Mr. Young disclaims beneficial ownership of the shares held in
trust.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On July 29, 1996, in connection with the Company's initial public
offering in Canada, Messrs. Richmond and Terman, the Company and Equity Transfer
Services, Inc. entered into an Escrow Agreement pursuant to which Mr. Richmond
placed 1,555,200 shares and Mr. Terman placed 1,532,520 of Common Stock held by
them in escrow with Equity Transfer Services, Inc. Fifty percent were released
during 1997 through 1999 and the remaining securities are to be released from
escrow as follows: 20% on April 29, 2000, and 30% on April 29, 2001. These
escrowed shares are included in the Company's earnings per share calculation and
are not considered "contingent shares issuable" for accounting purposes.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d), the Securities and
Exchange Act of 1934, the Registrant has duly caused this Form 10-KSB/A, Annual
Report, for the year ending December 31, 1999, to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of The Woodlands, and State
of Texas, on the 1st day of May, 2000.
CHAMPION COMMUNICATION SERVICES, INC.
By: /s/ Albert F. Richmond
-----------------------------------
Albert F. Richmond,
Chairman of the Board and
Chief Executive Officer
POWER OF ATTORNEY
Pursuant to the requirements of the Securities and Exchange Act of
1934, this report has been signed below by the following persons on behalf of
the Registrant in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Albert F. Richmond Chairman of the Board and May 1, 2000
- -------------------------------- Chief Executive Officer
Albert F. Richmond
/s/ David A. Terman* President and Director May 1, 2000
- --------------------------------
David A. Terman
/s/ Pamela R. Cooper* Chief Financial Officer, Treasurer, May 1, 2000
- -------------------------------- and Controller
Pamela R. Cooper
/s/ Peter F. Dicks* Director May 1, 2000
- --------------------------------
Peter F. Dicks
/s/ Randel R. Young* Director May 1, 2000
- --------------------------------
Randel R. Young
</TABLE>
* By: /s/ Albert F. Richmond
---------------------------
Attorney-in-Fact
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