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Exhibit 1
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AGREEMENT
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THIS AGREEMENT, dated as of July 19, 2000 (this "Agreement"), is made
by and among The Elder-Beerman Stores Corp., an Ohio corporation ("Elder-
Beerman"); PPM America Special Investments Fund, L.P., a Delaware limited
partnership ("SIF I"); PPM America Special Investments CBO II, L.P., a Delaware
limited partnership ("CBO II"); PPM America, Inc., a Delaware corporation ("PPM
America" and, collectively, with SIF I and CBO II, "PPM"); Snyder Capital
Management, Inc., a Delaware corporation ("Snyder"); Dennis S. Bookshester;
Stewart M. Kasen; Charles Macaluso; Steven C. Mason; Frederick J. Mershad;
Thomas J. Noonan, Jr.; Bernard Olsoff; Laura H. Pomerantz; Jack A. Staph and
John J. Wiesner (Bookshester, Kasen, Macaluso, Mason, Mershad, Noonan, Olsoff,
Pomerantz, Staph and Wiesner are collectively referred to herein as the
"Directors").
WHEREAS, PPM currently beneficially owns, in the aggregate,
approximately 13.15% of Elder-Beerman's outstanding common shares, without par
value (the "Common Shares"), Snyder currently beneficially owns, in the
aggregate, approximately 20.87% of the outstanding Common Shares, and the
Directors currently beneficially own, in the aggregate, approximately 2.85% of
the outstanding Common Shares;
WHEREAS, Elder-Beerman and PPM have been engaged in a proxy contest,
which they desire to end; and
WHEREAS, Elder-Beerman and the Directors have agreed to support four
nominees selected by PPM and Snyder for election to Elder-Beerman's Board of
Directors (the "Board of Directors") and to support certain proposals of PPM to
be acted upon by Elder-Beerman's shareholders at Elder-Beerman's 2000 Annual
Meeting (as defined below); and
WHEREAS, Elder-Beerman, PPM, Snyder and the Directors desire to
provide for certain agreements with respect to the voting by PPM, Snyder and the
Directors of the Common Shares they own and regarding other matters.
NOW, THEREFORE, in consideration of the covenants and agreements set
forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
Section 1. Special Meeting of the Board of Directors. Elder-Beerman
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and the Directors represent and warrant that the Board of Directors of Elder-
Beerman has heretofore duly and validly approved the following items:
(a) the nomination at the 2000 Annual Meeting of the
Shareholders of Elder-Beerman to be held on August 24, 2000, or such later
date as shall be determined by Elder-Beerman solely in order to facilitate
effectuation of the provisions of this Agreement (the "2000 Annual
Meeting") of new candidates for election to the Board of Directors (the
"New Nominees"), which New Nominees will consist of Mark F.C. Berner,
Dennis S. Bookshester, Eugene I. Davis and Charles H. Turner, each of whom
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will serve for an initial term of three years and until such time as his
successor has been duly elected and qualified (unless the amendment to
Article IX of Elder-Beerman's Amended Articles of Incorporation (the
"Articles") is approved by the shareholders at the 2000 Annual Meeting, in
which case the entire Board of Directors must be re-elected at the annual
meeting of shareholders in 2001 (the "2001 Annual Meeting")), and the
submission of the New Nominees at the 2000 Annual Meeting with the
recommendation of the Board of Directors for election as directors by the
shareholders; provided, however, that in the event that any of the New
Nominees is unable at the 2000 Annual Meeting to stand for election for any
reason, his replacement shall be designated as follows: (i) Snyder shall
have the right to designate a replacement for Mr. Bookshester and/or for
Mr. Turner, and (ii) PPM shall have the right to designate a replacement
for Mr. Berner and/or for Mr. Davis;
(b) the amendment of Article X of Elder-Beerman's Articles to
reduce from 72% to a simple majority the shareholder approval required to
amend or repeal any section of the Articles including those dealing with
cumulative voting rights, preemptive rights to acquire shares, share
repurchases by Elder-Beerman, the classification of and staggered election
system for the Board of Directors and the amendment of Article X of the
Articles itself, and submission of the proposed amendment for approval to
Elder-Beerman's shareholders at the 2000 Annual Meeting;
(c) the amendment of Article IX of Elder-Beerman's Articles to
eliminate classification of the Board of Directors, which currently is
divided into three separate classes and elected on a staggered basis and to
replace this structure with a single class board of directors under which
all directors of Elder-Beerman are elected by the shareholders on an annual
basis, and submission of the proposed amendment for approval to Elder-
Beerman's shareholders at the 2000 Annual Meeting;
(d) the adoption of a new Article XIV to Elder-Beerman's
Articles pursuant to which Elder-Beerman would opt out of the provisions of
Chapter 1704 of the Ohio Revised Code, which Chapter sets forth certain
restrictions on the ability of an Ohio corporation to engage in certain
business combinations and other transactions that involve shareholders that
have the ability to exercise 10% or more of the voting power of such
corporation, and submission of the proposed adoption for approval to Elder-
Beerman's shareholders at the 2000 Annual Meeting;
(e) the amendment of Regulation 34 of Elder-Beerman's Amended
Code of Regulations (the "Code of Regulations") to lower from 72% to a
simple majority the shareholder approval required to amend or repeal any
Regulation in the Code of Regulations including those dealing with the time
and place of shareholder meetings, who may call special meetings of
shareholders, the order of business (including advance notice of business
to be brought) at shareholder meetings, the size of the Board of Directors,
the filling of newly-created directorships and Board of Directors
vacancies, the removal of directors, the nomination of directors (including
advance notice of the intent to nominate directors) and the amendment of
the Code of Regulations, and submission of the proposed amendment for
approval to Elder-Beerman's shareholders at the 2000 Annual Meeting;
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(f) the amendment of Regulation 3(a) of Elder-Beerman's Code of
Regulations to permit a shareholder or shareholders who own 10% rather than
50% of the outstanding Common Shares to call special meetings of
shareholders, and submission of the proposed amendment for approval to
Elder-Beerman's shareholders at the 2000 Annual Meeting;
(g) the amendment of Regulation 7(c) of Elder-Beerman's Code of
Regulations to provide that any shareholder who desires to bring business
before an annual meeting of Elder-Beerman's shareholders must notify Elder-
Beerman not more than 90 days, but not less than 45 days (rather than not
less than 60 days), in advance of such meeting of its intent to do so and
of the nature of such business, and submission of the proposed amendment
for approval to Elder-Beerman's shareholders at the 2000 Annual Meeting;
(h) the amendment of Regulation 12 of Elder-Beerman's Code of
Regulations to provide that any shareholder who desires to propose any
nominees for election to Elder-Beerman's Board of Directors must notify
Elder-Beerman not more than 90 days, but not less than 45 days (rather than
not less than 60 days), in advance of such meeting of its intent to do so
and of the identity of its proposed nominees, and submission of the
proposed amendment for approval to Elder-Beerman's shareholders at the 2000
Annual Meeting;
(i) the amendment of Regulation 9 of Elder-Beerman's Code of
Regulations to lower from 72% to a simple majority the shareholder approval
required to alter the size of the Board of Directors, and submission of the
proposed amendment for approval to Elder-Beerman's shareholders at the 2000
Annual Meeting;
(j) the adoption of a new Regulation 35 to Elder-Beerman's Code
of Regulations, pursuant to which Elder-Beerman would opt out of the
provisions of the Ohio Control Share Acquisition Act, which Act sets forth
certain restrictions on the ability of persons to acquire 20% or more of
the stock of an Ohio corporation, and submission of the proposed adoption
for approval to Elder-Beerman's shareholders at the 2000 Annual Meeting;
(k) the execution, delivery and performance of this Agreement by
Elder-Beerman; and
(l) the agreement and confirmation of the Board of Directors
that, under the Company's Rights Agreement, dated as of December 30, 1997,
as amended by Amendment No. 1 dated as of November 11, 1998, by and between
Elder-Beerman and Norwest Bank Minnesota, N.A. (the "Rights Agreement"),
(i) none of the parties to this Agreement is an Acquiring Person (as
defined in the Rights Agreement) and (ii) a Distribution Date, a Triggering
Event or a Share Acquisition Date (as such terms are defined in the Rights
Agreement ) will not occur by reason of either the execution of this
Agreement or the consummation of the transactions contemplated hereby.
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PPM and Snyder shall have the right to review and reasonably approve the forms
of the proposed amendments to Elder-Beerman's Articles and Code of Regulations
described in Sections 1(b) through 1(j) hereof.
Section 2. Joint Press Release. Elder-Beerman, PPM and Snyder agree
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that, as promptly as practicable after the execution of this Agreement, they
shall issue a joint press release regarding the matters contemplated in this
Agreement, which press release is substantially in the form attached hereto as
Annex A. Until the date of the 2000 Annual Meeting, the parties agree that no
other public release or announcement concerning the matters contemplated herein
shall be issued without the prior consent of Elder-Beerman, PPM and Snyder, and
any such announcement shall be a joint announcement.
Section 3. Revised Proxy Materials. Elder-Beerman agrees that, as
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promptly as practicable after the date of this Agreement, it shall prepare and
file with the Securities and Exchange Commission (the "SEC") revised proxy
materials pursuant to which the Board of Directors will: (a) propose and
recommend for approval of the shareholders at the 2000 Annual Meeting the
amendments to Elder-Beerman's Articles and Code of Regulations described in
Sections 1(b) through 1(j) hereof, and (b) nominate and recommend the New
Nominees for election to the Board of Directors at the 2000 Annual Meeting.
Elder-Beerman agrees that PPM and Snyder shall have the right to review and
reasonably approve the revised proxy materials, including without limitation the
text and order of presentation of the proposed amendments to Elder-Beerman's
Articles and Code of Regulations, prior to the filing thereof with the SEC.
Elder-Beerman shall have the right to adjourn or postpone the 2000 Annual
Meeting for such reasonable period of time not to exceed 30 days as may be
necessary to permit clearance of revised proxy materials with the SEC and/or to
permit adequate opportunity for the timely mailing of such revised proxy
materials to the shareholders of Elder-Beerman. If the 2000 Annual Meeting is so
adjourned or postponed in accordance with the immediately preceding sentence,
Elder-Beerman, PPM and Snyder agree that they shall issue a joint press release
regarding the reason for the adjournment or postponement and the date the 2000
Annual Meeting will be re-convened or held. Elder-Beerman, PPM and Snyder agree
to actively seek shareholder approval of each of the items set forth in Section
1 hereof. The Directors agree to vote their respective shares in favor of each
of the items set forth in Section 1 hereof. If asked to do so by Elder-Beerman,
the Directors agree to make telephone calls in order to solicit and otherwise
support the amendments to Elder-Beerman's Articles and Code of Regulations
described in Sections 1(b) through 1(j) hereof and the election of the New
Nominees. During the term of this Agreement, the Directors shall refrain from
making any negative or critical comments, oral or written, regarding the
amendments described in Sections 1(b) through 1(j) hereof or about the New
Nominees.
Section 4. 2000 Annual Meeting of Shareholders.
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(a) Each party to this Agreement (other than Elder-Beerman) (i)
shall cause all Common Shares beneficially owned (within the meaning of
Section 13(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the rules and regulations promulgated thereunder) by
such party to be voted at the 2000 Annual Meeting in favor of (x) the
amendments to Elder-Beerman's Articles and Code of Regulations described in
Sections 1(b) through 1(j) hereof, and (y) the election as
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aforesaid of the New Nominees to the Board of Directors and (ii) other than
the proposed amendment to Elder-Beerman's Equity and Performance Plan to
increase by 500,000 the number of Common Shares available under such plan,
shall not bring any business before the 2000 Annual Meeting except as
expressly contemplated hereby.
(b) Elder-Beerman agrees that it shall as promptly as
practicable either during or after the 2000 Annual Meeting (i) duly file
with the Secretary of State of the State of Ohio a Certificate of Amendment
to its Articles setting forth such of the amendments to the Articles
referred to in Sections 1(b) through 1(d) hereof that have been approved by
the shareholders at the 2000 Annual Meeting and (ii) implement such of the
amendments to its Code of Regulations referred to in Sections 1(e) through
1(j) hereof.
Section 5. Termination of Proxy Contest; Other Activities Related to
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2000 Annual Meeting. Except as otherwise permitted in this Section 5, PPM
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agrees that it shall immediately terminate all activities with respect to its
solicitation of proxies in connection with the 2000 Annual Meeting or any
adjournment thereof. PPM and Snyder each agrees that it (a) shall not solicit,
directly or indirectly, any proxies or participate in any "solicitation" of any
"proxy" (as such terms are defined in Rule 14a-1 under the Exchange Act) with
respect to matters to be presented at the 2000 Annual Meeting, other than
solicitations in favor of the approval of each of the matters set forth in
Sections 1(a) through 1(j) hereof, (b) shall not become a "participant" (as such
term is used in Rule 14a-11 under the Exchange Act) in any election contest
relating to the 2000 Annual Meeting, (c) shall promptly file an amendment to its
Schedule 13D to reflect the termination of PPM's proxy contest and the
provisions of this Agreement and (d) shall not take any other actions
inconsistent with the matters contemplated hereby. Elder-Beerman shall bear the
reasonable, documented costs and expenses incurred by PPM and its
representatives in connection with (w) PPM's activities with respect to its
solicitation of proxies in connection with the 2000 Annual Meeting prior to the
date hereof, (x) PPM's activities with respect to the review and revision of
Elder-Beerman's proxy materials prior to the date on which Elder-Beerman files
final, definitive proxy materials with the SEC, (y) the execution and delivery
of this Agreement and (z) the consummation of the transactions contemplated
hereby, such costs and expenses not to exceed $250,000. Such amounts shall be
paid by Elder-Beerman within five business days after receipt of appropriate
evidence of such costs and expenses.
Section 6. No Proxy Contests; Limitations on Other Shareholder
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Actions. During the period commencing on the date hereof and ending on the date
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that is 75 days prior to the first anniversary of the date of the 2000 Annual
Meeting, each party to this Agreement (other than Elder-Beerman):
(a) shall cause all shares of capital stock of Elder-Beerman
that have the right to vote generally in the election of directors, that
are beneficially owned (within the meaning of Regulation 13D and Rules 13d-
3 and 13d-5 under the Exchange Act) by such party (i) to be present, in
person or by proxy, at the 2000 Annual Meeting so that all such shares may
be counted for the purpose of determining if a quorum is present at the
2000 Annual Meeting and (ii) to be voted in favor of the New Nominees and
in favor of each
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of the proposals set forth in Sections 1(a) through 1(j) hereof at the 2000
Annual Meeting;
(b) shall not (i) form, join or otherwise participate in any
"group" (within the meaning of Section 13(d)(3) of the Exchange Act or Rule
13d-5 thereunder) or (ii) otherwise act in concert with any other person
for the purpose of holding or voting Common Shares if the purpose of such
action is to circumvent any provisions of this Agreement;
(c) shall not directly or indirectly (except through Elder-
Beerman pursuant to due authorization) solicit any proxies or consents or
in any way participate in any "solicitation" of any "proxy" (as such terms
are defined in Rule 14a-11 under the Exchange Act) with respect to Common
Shares in any election contest with respect to the Board of Directors of
Elder-Beerman or become a "participant" (as such term is used in Rule 14a-1
under the Exchange Act) in any election contest with respect to the Board
of Directors of Elder-Beerman or request or induce or attempt to induce any
other person to take any such actions with respect to an election contest
related to the Board of Directors of Elder-Beerman;
(d) shall not call, request the call of, or seek to call, any
special meeting of shareholders for the purpose of an election contest with
respect to the Board of Directors of Elder-Beerman, and, if a shareholder
not party to this Agreement calls any special meeting of shareholders for
the purpose of an election contest with respect to the Board of Directors
of Elder-Beerman, shall oppose such shareholder's election contest efforts;
(e) shall not enter into any discussions, negotiations,
arrangements or understandings with any other person with respect to any of
the foregoing matters referred to in this Section 6; and
(f) shall not make any public announcement critical of the
composition of the Board of Directors (including, without limitation by
means of a press release or commentary in a Schedule 13D or other SEC
filings).
During the period commencing on the date that is 75 days prior to the first
anniversary of the date of the 2000 Annual Meeting and ending on the date of the
2001 Annual Meeting, each party to this Agreement (other than Elder-Beerman)
shall refrain from calling, requesting the call of, or seeking to call, any
special meeting of shareholders.
Section 7. 2001 Annual Meeting. Each of the parties hereto agrees
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that it shall seek to cause the 2001 Annual Meeting to be held no less than
twelve months from the date of the 2000 Annual Meeting, but no more than
thirteen months from the date of the 2000 Annual Meeting.
Section 8. Termination of the Agreement. In the event that the
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shareholders fail to elect of each of the New Nominees to the Board of Directors
at the 2000 Annual Meeting or in the event that Elder-Beerman or any of the
Directors fails to exercise good faith in fulfilling the obligations (as set
forth in Section 3) to actively seek shareholder approval of each of the items
set forth in Sections 1(a) through (j) hereof, all obligations of the parties
hereunder (other
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than the obligations set forth in Section 4(b) hereof) shall automatically
terminate immediately after the 2000 Annual Meeting.
Section 9. Waiver. Elder-Beerman hereby waives the notice
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requirements set forth in Regulation 7(c) of Elder-Beerman's Regulations so that
the New Nominees can stand for election to Elder-Beerman's Board of Directors at
the 2000 Annual Meeting.
Section 10. Miscellaneous.
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(a) All notices, requests or instruction hereunder shall be in
writing and delivered personally or sent by registered or certified mail,
postage prepaid or by telecopy (or like transmission), as follows:
(1) if to Elder-Beerman:
The Elder-Beerman Stores Corp.
3155 El-Bee Road
Dayton, OH 45439
Attention: Secretary
Fax: (937) 296-4625
with a copy to:
Lyle G. Ganske, Esq.
Jones Day Reavis & Pogue
North Point
901 Lakeside Avenue
Cleveland, OH 44114
Fax: (216) 579-0212
(2) if to PPM:
Stuart J. Lissner
Managing Director
PPM America, Inc.
225 West Wacker Drive
Suite 1200
Chicago, IL 60606
Fax: (312) 634-0741
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(3) if to Snyder:
Margot Murtaugh
Snyder Capital Management, Inc.
350 California Street
Suite 1460
San Francisco, CA 94104
Fax: (415) 391-9437
with copies to:
Eugene I. Davis
Pirinate Consulting Group, L.L.C.
5 Canoe Brook Drive
Livingston, NJ 07039
Fax: (973) 535-1843
J. Andrew Rahl, Jr., Esq.
Anderson Kill & Olick, P.C.
1251 Avenue of the Americas
New York, NY 10020-1182
Fax: (212) 278-1733
(4) if to any other party hereto, at its address set
forth in the records of Elder-Beerman.
Any of the above addresses may be changed at any time by notice given as
provided above; provided, however, that any such notice of change of
address shall be effective only upon receipt. All notices and other
communications given to any party hereto in accordance with the provisions
hereof shall be deemed to have been given on the date of receipt, provided
that any notice or other communication that is received other than during
regular business hours of the recipient shall be deemed to have been given
at the opening of business on the next business day of the recipient.
(b) This Agreement contains the entire agreement between the
parties hereto with respect to the transactions contemplated hereby and
supersedes and amends all prior understandings, arrangements and agreements
with respect to the subject matter hereof. No modification hereof shall be
effective unless in writing and signed by the party against which it is
sought to be enforced. The parties hereto, by written agreement, may make
any modification or amendment of this Agreement, but no such modification
or amendment will be effective unless signed by all of the parties hereto.
The captions appearing herein are for the convenience of the parties only
and shall not be construed to affect the meaning of the provisions of this
Agreement.
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(c) Each of the parties hereto shall use such party's reasonable
best efforts to take such actions as may be necessary or reasonably
requested by the other parties hereto to carry out and consummate the
transactions contemplated by this Agreement. No party to this Agreement
directly or indirectly shall (i) challenge the validity or enforceability
of any provision of this Agreement or the matters contemplated hereby or
(ii) commence any lawsuit or other legal proceeding, or take any other
action, that seeks to frustrate the performance of this Agreement in
accordance with its terms.
(d) This Agreement shall be governed by and construed in
accordance with the laws of the State of Ohio applicable in the case of
agreements made and to be performed entirely within such State.
(e) Each of the parties hereto recognizes that any breach of the
terms of this Agreement may give rise to irreparable harm for which money
damages would not be an adequate remedy, and accordingly agree that, in
addition to other remedies, any non-breaching party shall be entitled to an
injunction or injunctions to prevent breaches of the provisions of this
Agreement and to enforce the terms and provisions of this Agreement by a
decree of specific performance in any action instituted in any court of the
United States or any state hereof having jurisdiction without the necessity
of proving the inadequacy as a remedy of money damages.
(f) This Agreement and all of the provisions hereof shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors, heirs, legal representatives and permitted assigns,
but neither this Agreement nor any of the rights, interests, or obligations
hereunder may be assigned by any of the parties hereto without the prior
written consent of the other parties and any such attempted assignment
without consent shall be void.
(g) This Agreement is not intended, and shall not be construed,
to confer any rights or remedies hereunder upon any party other than the
parties hereto, and those parties designated as directors pursuant to
Section 1(a), which parties shall be entitled to enforce their rights under
such provisions to which they are entitled to benefits.
(h) Any term or provision of this Agreement that is invalid or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of
this Agreement, or any such terms in any other jurisdiction. If any
provision of this Agreement is so broad as to be unenforceable, such
provision shall be interpreted to be only so broad as is enforceable.
(i) This Agreement may be executed in counterparts, each of
which shall be deemed an original, but all of which taken together shall
constitute one and the same instrument.
(j) Each party hereto (other than Elder-Beerman) is signing this
Agreement in its or his/her capacity as a shareholder and not in a capacity
as a director or officer (except on behalf of Elder-Beerman), it being
understood that this Agreement is
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not intended to limit or abridge the fiduciary responsibility of the
directors of Elder-Beerman.
IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties hereto as of the date first above written.
THE ELDER-BEERMAN STORES CORP.
By: /s/ Frederick J. Mershad
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Name: Frederick J. Mershad
Title: Chairman of the Board and Chief
Executive Officer
/s/ Dennis S. Bookshester
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Dennis S. Bookshester
/s/ Stewart M. Kasen
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Stewart M. Kasen
/s/ Charles Macaluso
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Charles Macaluso
/s/ Steven C. Mason
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Steven C. Mason
/s/ Frederick J. Mershad
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Frederick J. Mershad
/s/ Thomas J. Noonan, Jr.
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Thomas J. Noonan, Jr.
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/s/ Bernard Olsoff
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Bernard Olsoff
/s/ Laura H. Pomerantz
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Laura H. Pomerantz
/s/ Jack A. Staph
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Jack A. Staph
/s/ John J. Wiesner
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John J. Wiesner
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PPM AMERICA, INC.
By: /s/ Stuart J. Lissner
-------------------------------
Name: Stuart J. Lissner
Title: Managing Director
PPM AMERICA SPECIAL INVESTMENTS
CBO II, L.P.
By: PPM America CBO II Management Company
its General Partner
By: /s/ Stuart J. Lissner
-----------------------------
Name: Stuart J. Lissner
Title: Vice President
PPM AMERICA SPECIAL INVESTMENTS
FUND, L.P.
By: PPM America Fund Management GP, Inc.
its Managing General Partner
By: /s/ Stuart J. Lissner
-----------------------------
Name: Stuart J. Lissner
Title: Vice President
SNYDER CAPITAL MANAGEMENT, INC.
By: /s/ Alan Snyder
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Name: Alan Snyder
Title: President
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ANNEX A
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FORM OF JOINT PRESS RELEASE
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