SBH ASSOCIATES, Inc. SHARE EXCHANGE AGREEMENT
This Exchange Agreement (the "Agreement") is made and entered into as of the 17th day of December, 2015 between SBH Associates, Inc., a company formed under the laws of State of Nevada (hereinafter referred to as the "Company", and Xxxxxxx Group, LLC (referred to as “Xxxxxxx”), a limited liability company formed under the laws of the State of Georgia, and the persons executing this Agreement listed on the signature page hereto (referred to collectively as the “Shareholders”) who own one hundred percent (100%) of the outstanding shares of Xxxxxxx.
RECITALS
The Company desires to acquire all issued and outstanding shares of Xxxxxxx, and Xxxxxxx wishes to have all issued and outstanding shares of Xxxxxxx acquired by the Company, on the terms and conditions set forth in this Agreement in exchange for 60,000,000 shares of the Company’s common stock and 1,000,000 newly-issued shares of the Company’s preferred stock (the “Exchange”), so that Xxxxxxx will become a wholly-owned subsidiary of the Company.
The board of directors of the Company and Xxxxxxx have determined that it is in the best interest of the parties for the Company to acquire all issued and outstanding shares of Xxxxxxx pursuant to an exchangeable share transaction.
The Company, Xxxxxxx and Xxxxxxx’x shareholders desire to set forth the terms of the Exchange Offer, which is intended to constitute a tax-free reorganization.
At the closing of this Agreement, all current officers and directors of the Company will resign their positions with the Company, and Xxxxx X. Xxxxxxx will become Chief Executive Officer and Chairman of the Board of the Company. Xxxxxxx X. Xxxxxxx and Xxxxx Xxxxxxx will become executive officers and directors of the Company.
At the closing of this Agreement, Xxxxx X. Xxxxxxx, Xxxxxxx X. Xxxxxxx and Xxxxx Xxxxxxx will be the only members of the Board of Directors of the Company.
NOW, THEREFORE, in consideration of the terms, conditions, agreements and covenants contained herein (the receipt and sufficiency of which are acknowledged by each party), and in reliance upon the representations and warranties contained in this Agreement, the parties hereto agree as follows:
I. RECITALS; TRUE AND CORRECT
The above stated recitals are true and correct and are incorporated into this Agreement.
II. PURCHASE AND SALE
2.1
Purchase and Sale. Subject to all the terms and conditions of this Agreement, at the Closing, Xxxxxxx agrees to receive 60,000,000 shares of the Company’s common stock and 1,000,000 newly-issued shares of the Company’s preferred stock from the Company (collectively the “Exchange Shares”) in exchange for the transfer of all the issued and outstanding shares of Xxxxxxx (“Xxxxxxx’x shares”) to the Company. Xxxxxxx shareholders shall surrender the certificates evidencing 100% of the issued and outstanding shares of Xxxxxxx, duly endorsed with Medallion Guaranteed stock powers so as to make the Company the sole owner thereof.
At Closing:
The Company will issue and deliver the Exchange Shares in the name of the Xxxxxxx Shareholders or its assigns in accordance with this Agreement;
The existing Director(s) of the Company shall appoint Xxxxx X. Xxxxxxx, Xxxxxxx X. Xxxxxxx and Xxxxx Xxxxxxx to the Board of Directors and then all existing members of the Board of Directors and all officers shall resign.
The Closing shall be consummated by the execution and acknowledgment by the Company and Xxxxxxx of Articles of Share Exchange in accordance with applicable state law.
Xxxxxxx Shareholders will transfer all issued Xxxxxxx shares to the Company in connection with this Agreement.
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2.2
Closing. The parties shall hold the Closing as soon as the audit of Xxxxxxx is completed and concurrent with the filing of a Current Report on Form 8K describing the Agreement ("Closing Date") with the Securities and Exchange Commission (the “SEC”).
III. CONDUCT OF BUSINESS PENDING CLOSING
Xxxxxxx and Company covenant that prior to the date of the Closing:
3.1
Access to Xxxxxxx. Xxxxxxx shall (a) give to the Company and to the Company's counsel, accountants and other representatives reasonable access, during normal business hours, throughout the period prior to the Closing Date (as defined in Section 2.2), to all of the books, contracts, commitments and other records of Xxxxxxx and shall furnish the Company during such period with all information concerning Xxxxxxx that the Company may reasonably request; and (b) afford to the Company and to the Company's representatives, agents, employees and independent contractors reasonable access, during normal business hours, to the properties of Xxxxxxx, in order to conduct inspections at the Company's expense to determine that Xxxxxxx is operating in compliance with all applicable federal, state, local and foreign statutes, rules and regulations, and all material building, fire and zoning laws or regulations and that the assets of Xxxxxxx are substantially in the condition and of the capacities represented and warranted in this Agreement; provided, however, that in every instance described in (a) and (b), the Company shall make arrangements with Xxxxxxx reasonably in advance and shall use its best efforts to avoid interruption and to minimize interference with the normal business and operations of Xxxxxxx. Any such investigation or inspection by the Company shall not be deemed a waiver of, or otherwise limit, the representations, warranties or covenants of Xxxxxxx contained herein.
3.2
Conduct of Xxxxxxx’x Business. During the period from the date hereof to the Closing Date, Xxxxxxx shall use reasonable efforts, to the extent such efforts are within Xxxxxxx'x control, to cause its business to be operated in the usual and ordinary course of business and in material compliance with the terms of this Agreement.
3.3
Exclusivity to the Company. Until either this Agreement is terminated or the Exchange is closed, Xxxxxxx agrees not to solicit any other inquiries, proposals or offers to purchase or otherwise acquire, in an exchange transaction or another type of transaction, the business of Xxxxxxx or the shares of capital stock of Xxxxxxx. Any person inquiring as to the availability of the business or shares of capital stock of Xxxxxxx or making an offer therefore shall be told that Xxxxxxx is bound by the provisions of this Agreement. Xxxxxxx, as well as its officers, directors, representatives or agents further agree to advise the Company promptly of any such inquiry or offer.
3.4 Access to the Company. The Company shall provide Xxxxxxx with a copy of its latest interim report on Form 10-Q as has been filed with the SEC and furnish Xxxxxxx during such period with all information concerning the Company that Xxxxxxx may reasonably request Any such investigation or inspection by Xxxxxxx shall not be deemed a waiver of, or otherwise limit, the representations, warranties or covenants of the Company contained herein.
3.5
Conduct of the Company’s Business. During the period from the date hereof to the Closing Date, the business of the Company shall be operated by the Company in the usual and ordinary course of such business and in material compliance with the terms of this Agreement.
3.6
Exclusivity to Xxxxxxx. Until either this Agreement is terminated or the Exchange is closed, the Company agrees not to solicit any other inquiries, proposals or offers to enter into exchange or business combination negotiations with other parties. Any person inquiring as to the availability of the Company for such purposes or the making an offer therefore shall be told that the Company is bound by the provisions of this Agreement. The Company as well as its officers, directors, representatives or agents further agree to advise Xxxxxxx promptly of any such inquiry or offer.
3.7
Approval. As promptly as reasonably practicable following the date of this Agreement, Xxxxxxx shall take all action reasonably necessary in accordance with the laws of the state in which Xxxxxxx is organized and its Articles of Incorporation and Bylaws to secure the required approval and adoption of this Agreement.
3.8
Mutual Cooperation. The initial press release relating to this Agreement shall be a joint press release. Thereafter, each of Xxxxxxx and the Company agree to provide 24 hour pre-notification to the other party of any news releases or regulatory filings which the party proposes to issue or file and shall agree to consider any reasonable recommendation or suggestion of the other party with respect thereto. The Company shall be permitted to make announcements of Xxxxxxx’x newsworthy activities provided the consent of Xxxxxxx is obtained in writing, which consent shall not be unreasonably withheld. Each party shall also provide the other party with notice a reasonable time in advance of, and shall permit a representative of the other party to review or participate in, any communications, meetings, or correspondence relating to investor relations matters, including matters relating to any public offering activities.
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IV. REPRESENTATIONS AND WARRANTIES OF XXXXXXX
AND THE XXXXXXX SHAREHOLDERS
Xxxxxxx represents and warrants to the Company as follows, with the knowledge and understanding that the Company is relying materially upon such representations and warranties:
4.1
Organization and Standing. Xxxxxxx is a Limited Liability Company duly organized, validly existing and in good standing under the laws of State of Georgia. Xxxxxxx has all requisite corporate power to carry on its business as it is now being conducted and is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction where such qualification is necessary under applicable law, except where the failure to qualify (individually or in the aggregate) does not have any material adverse effect on the assets, business or financial condition of Xxxxxxx. Xxxxxxx does not own any interest in any other corporation, business trust or similar entity. The minute book of Xxxxxxx contains accurate records of all meetings of its Board of Directors and shareholders since its incorporation.
4.2
Capitalization. All of the shares of Xxxxxxx’x capital stock are duly authorized, validly issued and outstanding, fully paid and nonassessable, and were not issued in violation of the preemptive rights of any person.
4.3
Binding Effect. This Agreement constitutes, and all other agreements contemplated hereby will constitute, when executed and delivered by Xxxxxxx in accordance therewith (and assuming due execution and delivery by the other parties hereto), the valid and binding obligation of Xxxxxxx, enforceable in accordance with their respective terms, subject to general principles of equity and bankruptcy or other laws relating to or affecting the rights of creditors generally.
4.4
Properties. Xxxxxxx has good title to all of the assets which it purports to own as reflected on the balance sheet included in the Financial Statements (as hereinafter defined) or thereafter acquired. Xxxxxxx has a valid leasehold interest in all material property of which it is the lessee and each such lease is valid, binding and enforceable against Xxxxxxx and the other parties thereto, as the case may be, to the knowledge of Xxxxxxx in accordance with its terms. Neither Xxxxxxx nor the other parties thereto are in material default in the performance of any material provisions thereunder. Neither the whole nor any material portion of the assets of Xxxxxxx is subject to any governmental decree or order to be sold or is being condemned, expropriated or otherwise taken by any public authority with or without payment of compensation therefore, nor, to the knowledge of Xxxxxxx, has any such condemnation, expropriation or taking been proposed. None of the assets of Xxxxxxx is subject to any restriction which would prevent continuation of the use currently made thereof or materially adversely affect the value thereof.
4.5
Contracts Listed; No Default. Xxxxxxx is the holder of, or party to, all of Xxxxxxx Contracts. To the knowledge of Xxxxxxx, Xxxxxxx Contracts are valid, binding and enforceable by the signatory thereto against the other parties thereto in accordance with their terms. Neither Xxxxxxx nor any signatory thereto is in default or breach of any material provision of Xxxxxxx Contracts. Xxxxxxx'x operation of its business has been, is, and will, between the date hereof and the Closing Date, continue to be, consistent with the material terms and conditions of Xxxxxxx Contracts.
4.6
Litigation. There is no claim, action, proceeding or investigation pending or, to the knowledge of Xxxxxxx, threatened against or affecting Xxxxxxx before or by any court, arbitrator or governmental agency or authority which, in the reasonable judgment of Xxxxxxx, could have any materially adverse effect on Xxxxxxx. There are no decrees, injunctions or orders of any court, governmental department, agency or arbitration outstanding against Xxxxxxx.
4.7 Taxes. For purposes of this Agreement, (A) "Tax" (and, with correlative meaning, "Taxes") shall mean any federal, state, local or foreign income, alternative or add-on minimum, business, employment, franchise, occupancy, payroll, property, sales, transfer, use, value added, withholding or other tax, levy, impost, fee, imposition, assessment or similar charge, together with any related addition to tax, interest, penalty or fine thereon; and (B) "Returns" shall mean all returns (including, without limitation, information returns and other material information), reports and forms relating to Taxes or to any benefit plans as due and required.
Xxxxxxx has duly filed all Returns required by any law or regulation to be filed by it, except for extensions duly obtained. All such Returns were, when filed, and to the knowledge of Xxxxxxx are, accurate and complete in all material respects and were prepared in conformity with applicable laws and regulations in all material respects. Xxxxxxx has paid or will pay in full or has adequately reserved against all Taxes otherwise assessed against it through the Closing Date, and the assessment of any material amount of additional Taxes in excess of those paid and reported is not reasonably expected.
Xxxxxxx is not a party to any pending action or proceeding by any governmental authority for the assessment of any Tax, and no claim for assessment or collection of any Tax has been asserted against Xxxxxxx that has not been paid. There are no Tax liens upon the assets (of Xxxxxxx. There is no valid basis, to the knowledge of Xxxxxxx for any assessment, deficiency, notice, 30-day letter or similar intention to assess any Tax to be issued to Xxxxxxx by any governmental authority.
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4.8 Compliance with Laws and Regulations. To its knowledge, Xxxxxxx is in compliance, in all material respects, with all laws, rules, regulations, orders and requirements ( country or local) applicable to it in all jurisdictions where the business of Xxxxxxx is currently conducted or to which Xxxxxxx is currently subject which has a material impact on Xxxxxxx, including, without limitation, all applicable civil rights and equal opportunity employment laws and regulations, and all country antitrust and fair trade practice laws and the Occupational Health and Safety Act laws, rules and regulations. Xxxxxxx knows of no assertion by any party that Xxxxxxx is in violation of any such laws, rules, regulations, orders, restrictions or requirements with respect to its current operations, and no notice in that regard has been received by Xxxxxxx. To the knowledge of Xxxxxxx, there is not presently pending any proceeding, hearing or investigation with respect to the adoption of amendments or modifications to existing laws, rules, regulations, orders, restrictions or requirements which, if adopted, would materially adversely affect the current operations of Xxxxxxx.
4.9 Compliance with Laws.
(a) To its knowledge, the business, operations, property and assets of Xxxxxxx (and, to the knowledge of Xxxxxxx, the business of any sub-tenant or licensee which is occupying or has occupied any space on any premises of Xxxxxxx and the activities of which could result in any material adverse liability to Xxxxxxx) conform with and are in compliance in all material respects with all, (and are not in material violation of any) applicable federal, state and local laws, rules and regulations.
(b) There is no suit, action, claim, proceeding, nor investigation, review or inquiry by any court or federal, state, county, municipal or local governmental department, commission, board, bureau, agency or instrumentality, including, without limitation, any state or local health department (all of the foregoing collectively referred to as "Governmental Entity") concerning any such possible violations by Xxxxxxx is pending or, to the knowledge of Xxxxxxx, threatened, including, but not limited to, matters relating to hazardous or toxic waste, controlled substances, employment, occupational safety or tax matters. Xxxxxxx does not know of any reasonable basis or ground for any such suit, claim, investigation, inquiry or proceeding. For purposes of this Section 4.9, the term "inquiry" includes, without limitation, all pending regulatory issues (whether before federal, state, local or inter-governmental regulatory authorities) concerning any regulated product.
4.10 Information. Xxxxxxx has furnished and will continue to furnish the Company all information and the books and records of Xxxxxxx are in all material respects complete and correct and have been maintained in accordance with good business and accounting practices.
4.11 Condition of Assets. The equipment, fixtures and other personal property of Xxxxxxx, taken as a whole, is in good operating condition and repair (ordinary wear and tear excepted) for the conduct of the business of Xxxxxxx currently and as is contemplated to be conducted.
4.12 No Breaches. To its knowledge, the making and performance of this Agreement and the other agreements contemplated hereby by Xxxxxxx will not (i) conflict with or violate the Articles of Incorporation or the Bylaws of Xxxxxxx; (ii) violate any material laws, ordinances, rules or regulations, or any order, writ, injunction or decree to which Xxxxxxx is a party or by which Xxxxxxx or any of its respective assets, businesses, or operations may be bound or affected; or (iii) result in any breach or termination of, or constitute a default under, or constitute an event which, with notice or lapse of time, or both, would become a default under, or result in the creation of any encumbrance upon any asset of Xxxxxxx under, or create any rights of termination, cancellation or acceleration in any person under, any Xxxxxxx Contract.
4.13 Employees. None of the employees of Xxxxxxx is represented by any labor union or collective bargaining unit and, to the knowledge of Xxxxxxx, no discussions are taking place with respect to such representation.
4.14 Financial Statements. The Financial Statements of Xxxxxxx present fairly, in all respects, the financial position and results of operations of Xxxxxxx as of the dates and periods indicated, prepared in accordance with generally accepted accounting principles consistent with ("GAAP"). Without limiting the generality of the foregoing, (i) there is no basis for any assertion against Xxxxxxx as of the date of the Financial Statements of any debt, liability or obligation of any nature not fully reflected or reserved against in the Financial Statements; and (ii) there are no assets of Xxxxxxx as of the date of the Financial Statements, the value of which is overstated in the Financial Statements. Except as disclosed in the Financial Statements, Xxxxxxx has no known contingent liabilities (including liabilities for Taxes), forward or long-term commitments or unrealized or anticipated losses from unfavorable commitments other than in the ordinary course of business. Xxxxxxx is not a party to any contract or agreement for the forward purchase or sale of any foreign currency that is material to Xxxxxxx taken as a whole.
4.15 Absence of Certain Changes or Events. Since the date of the last financial statement, there has not been:
(a) Any material adverse change in the financial condition, properties, assets, liabilities or business of Xxxxxxx;
(b) Any material damage, destruction or loss of any material properties of Xxxxxxx, whether or not covered by insurance;
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(c) Any material change in the manner in which the business of Xxxxxxx has been conducted;
(d) Any material change in the treatment and protection of trade secrets or other confidential information of Xxxxxxx;
(e) Any material change in the business or contractual relationship of Xxxxxxx with any customer or supplier which might reasonably be expected to materially and adversely affect the business or prospects of Xxxxxxx;
(f) Any agreement by Xxxxxxx, whether written or oral, to do any of the foregoing; and
(g) Any occurrence not included in paragraphs (a) through (f) of this Section 4.15 which has resulted, or which Xxxxxxx has reason to believe, in its reasonable judgment, might be expected to result, in a material adverse change in the business or prospects of Xxxxxxx.
4.16 Governmental Licenses, Permits, Etc. To its knowledge, Xxxxxxx has all governmental licenses, permits, authorizations and approvals necessary for the conduct of its business as currently conducted ("Licenses and Permits"). All Licenses and Permits are in full force and effect, and no proceedings for the suspension or cancellation of any License or Permit is pending or threatened.
4.17 Employee Agreements. There are no employee contracts or other labor agreements.
4.18 Brokers. Xxxxxxx has not made any agreement or taken any action with any person or taken any action which would cause any person to be entitled to any agent's, broker's or finder's fee or commission in connection with the transactions contemplated by this Agreement.
4.19 Business Locations. Xxxxxxx does not own or lease any real or personal property in any location except as set forth on the information in the Schedule 4.19 or otherwise noted on its financial statements to be rendered in the audit concerning Xxxxxxx. Xxxxxxx does not have a place of business (including, without limitation, Xxxxxxx’x executive offices or place where Xxxxxxx’x books and records are kept) except as otherwise set forth on the information in Schedule 4.19 concerning Xxxxxxx.
4.20 Intellectual Property. The information in the audited financial statements concerning Xxxxxxx lists all of the Intellectual Property (as hereinafter defined) used by Xxxxxxx which constitutes a material patent, trade name, trademark, service xxxx or application for any of the foregoing. "Intellectual Property" means all of Xxxxxxx 's right, title and interest in and to all patents, trade names, assumed names, trademarks, service marks, and proprietary names, copyrights (including any registration and pending applications for any such registration for any of them), to Xxxxxxx with all the goodwill relating thereto and all other intellectual property of Xxxxxxx. Xxxxxxx does not have any licenses granted by or to it or other agreements to which it is a party, relating in whole or in part to any Intellectual Property, whether owned by Xxxxxxx or otherwise. To the knowledge of Xxxxxxx, it is not infringing upon, or otherwise violating, the rights of any third party with respect to any Intellectual Property. No proceedings have been instituted against or claims received by Xxxxxxx, nor to its knowledge are any proceedings threatened alleging any such violation, nor does Xxxxxxx know of any valid basis for any such proceeding or claim. To the knowledge of Xxxxxxx, there is no infringement or other adverse claims against any of the Intellectual Property owned or used by Xxxxxxx. To the knowledge of Xxxxxxx, its use of software does not violate or otherwise infringe the rights of any third party.
4.21 Suppliers. Except as set forth in the information in Schedule 4.21 concerning Xxxxxxx, Xxxxxxx does not know and has no reason to believe that, either as a result of the transactions contemplated hereby or for any other reason (exclusive of expiration of a contract upon the passage of time), any present material supplier of Xxxxxxx will not continue to conduct business with Xxxxxxx after the Closing Date in substantially the same manner as it has conducted business prior thereto.
4.22 Accounts Receivable. The accounts receivable reflected on the balance sheets included in the Financial Statements, or thereafter acquired by Xxxxxxx, consist, in the aggregate in all material respects, of items which are collectible in the ordinary and usual course of business.
4.23 Governmental Approvals. To its knowledge, other than as set forth herein, no authorization, license, permit, franchise, approval, order or consent of, and no registration, declaration or filing by Xxxxxxx with, any governmental authority, federal, state or local, is required in connection with Xxxxxxx 's execution, delivery and performance of this Agreement.
4.24 No Omissions or Untrue Statements. None of the information relating to Xxxxxxx supplied or to be supplied in writing by it specifically for inclusion in any filings, at the respective times that the filings are made contains or will contain any untrue statement of a material fact or omits or will omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.
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4.25 Information concerning Xxxxxxx Complete. Xxxxxxx shall promptly provide to the Company notice concerning any of the information concerning Xxxxxxx furnished hereunder if events occur prior to the Closing Date that would have been required to be disclosed had they existed at the time of executing this Agreement. The information provided to the Company concerning Xxxxxxx, as supplemented prior to the Closing Date, will contain a true, correct and complete list and description of all items required to be set forth therein. The information provided to the Company concerning Xxxxxxx, as supplemented prior to the Closing Date, is expressly incorporated herein by reference.
4.26 Acquisition of the Shares by the Xxxxxxx Shareholders. The Xxxxxxx shareholders are acquiring the Shares for their own account without the participation of any other person and with the intent of holding the Shares for investment and without the intent of participating, directly or indirectly, in a distribution of the Shares, or any portion thereof, and not with a view to, or for resale in connection with, any distribution of the Shares, or any portion thereof. The Xxxxxxx shareholders have read, understand and consulted with their legal counsel regarding the limitations and requirements of Section 5 of the 1933 Act. The Xxxxxxx shareholders will not offer, sell, convey or otherwise transfer the Shares, or any portion thereof, except pursuant to a valid exemption from registration.
4.27 Accuracy of Representations and Performance of Covenants. The representations and warranties made by Xxxxxxx in this Agreement were true when made and shall be true at the Closing Date with the same force and effect as if such representations and warranties were made at and as of the Closing Date (except for changes therein permitted by this Agreement). Xxxxxxx shall have performed or complied with all covenants and conditions required by this Agreement to be performed or complied with by Xxxxxxx prior to or at the Closing. The Company shall be furnished with a certificate, signed by a duly authorized executive officer of Xxxxxxx and dated the Closing Date, to the foregoing effect.
V. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Xxxxxxx as follows, with the knowledge and understanding that Xxxxxxx is relying materially on such representations and warranties:
5.1 Organization and Standing of the Company. The Company is a corporation duly organized, validly existing and in good standing under the laws of State of Nevada, and has the corporate power to carry on its business as now conducted and to own its assets and is not required to qualify to transact business as a foreign corporation in any state or other jurisdiction. The copies of the Articles of Association and Bylaws of the Company, delivered to Xxxxxxx, are true and complete copies of those documents as now in effect. The Company does not own any capital stock in any other corporation, business trust or similar entity, and is not engaged in a partnership, joint venture or similar arrangement with any person or entity. The minute books of the Company contain accurate records of all meetings of its incorporator, shareholders and Board of Directors since its date of incorporation to the extent available.
5.2 Company's Authority. The Company's Board of Directors has approved and adopted this Agreement and the Exchange.
5.3 Due Execution. This Agreement constitutes, and all other agreements contemplated hereby will constitute, when executed and delivered by the Company in accordance herewith (and assuming due execution and delivery by the other parties hereto), the valid and binding obligations of the Company, enforceable in accordance with their respective terms, subject to general principles of equity and bankruptcy or other laws relating to or affecting the rights of creditors generally.
5.4 No Breaches. To its knowledge, the making and performance of this Agreement (including, without limitation, the issuance of the Shares) by the Company will not (i) conflict with the Articles of Incorporation or the Bylaws of the Company; (ii) violate any order, writ, injunction, or decree applicable to the Company; or (iii) result in any breach or termination of, or constitute a default under, or constitute an event which, with notice or lapse of time, or both, would become a default under, or result in the creation of any encumbrance upon any asset of the Company under, or create any rights of termination, cancellation or acceleration in any person under, any agreement, arrangement or commitment, or violate any provisions of any laws, ordinances, rules or regulations or any order, writ, injunction or decree to which the Company is a party or by which the Company or any of its assets may be bound.
5.5 Capitalization. All issued and outstanding shares of the Company’s stock are duly authorized, validly issued, fully paid, and non-assessable and not issued in violation of any preemptive or other rights of any person. The Share Consideration to be issued upon effectiveness of the Exchange, when issued in accordance with the terms of this Agreement shall be duly authorized, validly issued, fully paid and non-assessable.
5.6 Business. The Company, since its formation, has engaged in business as set forth in the Company’s annual and quarterly filings with the SEC.
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5.7 Governmental Approval; Consents. To its knowledge, except for the reports required to be filed by the Company with the SEC, no authorization, license, permit, franchise, approval, order or consent of, and no registration, declaration or filing by the Company with any governmental authority, or local, is required in connection with the Company's execution, delivery and performance of this Agreement. No consents of any other parties are required to be received by or on the part of the Company to enable the Company to enter into and carry out this Agreement.
5.8 Financial Statements. To its knowledge, the financial statements of the Company as set forth in Company’s statements (the "Company Financial Statements") present fairly, in all material respects, the financial position of the Company as of the respective dates and the results of its operations for the periods covered in accordance with GAAP. Without limiting the generality of the foregoing, (i) there is no known basis for any assertion against the Company as of the date of said balance sheets of any material debt, liability or obligation of any nature not fully reflected or reserved against in such balance sheets or in the notes thereto; and (ii) there are no assets of the Company, the value of which (in the reasonable judgment of Company) is materially overstated in said balance sheets. Except as disclosed therein, the Company has no known material contingent liabilities (including liabilities for Taxes), unusual forward or long-term commitments or unrealized or anticipated losses from unfavorable commitments. The Company is not a party to any contract or agreement for the forward purchase or sale of any foreign currency.
5.9 Adverse Developments. Except as expressly provided or set forth in, or required by, this Agreement, or as set forth in the Company Financial Statements, since the last date of its financial information in the Company’s statements, there have been no materially adverse changes in the assets, liabilities, properties, operations or financial condition of the Company, and no event has occurred other than in the ordinary and usual course of business or as set forth in the Company's Financial Statements which could be reasonably expected to have a materially adverse effect upon the Company, and the Company does not know of any development or threatened development of a nature that will, or which could be reasonably expected to, have a materially adverse effect upon the Company's operations or future prospects.
5.10 Contracts Listed. All material contracts, agreements, licenses, leases, easements, permits, rights of way, commitments, and understandings, written or oral, connected with or relating in any respect to the present operations of the Company (the “Company Contracts”) are, with the exception of this Agreement, fully disclosed, as required in its SEC filings.
5.11 Taxes. The Company is not a party to any pending action or proceeding by any governmental authority for the assessment of any Tax, and no claim for assessment or collection of any Tax has been asserted against the Company that has not been paid. There are no Tax liens upon the assets of the Company. There is no valid basis, to the best of the Company's knowledge, for any assessment, deficiency, notice, 30-day letter or similar intention to assess any Tax to be issued to the Company by any governmental authority.
5.12 Deliberately Deleted
5.13 Litigation. There is no known claim, action, proceeding or investigation pending or, to the Company's knowledge, threatened against or affecting the Company before or by any court, arbitrator or governmental agency or authority which, in the reasonable judgment of the Company, could have a materially adverse effect on the Company. There are no decrees, injunctions or orders of any court, governmental department, agency or arbitration outstanding against the Company.
5.14 Compliance with Laws and Regulations. To its knowledge, the Company is in compliance, in all material respects, with all laws, rules, regulations, orders and requirements (federal, state and local) applicable to it in all jurisdictions in which the business of the Company is currently conducted or to which the Company is currently subject, which may have a material impact on the Company, including, without limitation, all applicable civil rights and equal opportunity employment laws and regulations, all state and federal antitrust and fair trade practice laws and the Federal Occupational Health and Safety Act. The Company does not know of any assertion by any party that the Company is in violation of any such laws, rules, regulations, orders, restrictions or requirements with respect to its current operations, and no notice in that regard has been received by the Company. To the Company's knowledge, there is not presently pending any proceeding, hearing or investigation with respect to the adoption of amendments or modifications of existing laws, rules, regulations, orders, restrictions or requirements which, if adopted, would materially adversely affect the current operations of the Company.
5.15 Compliance with Laws. (a) To its knowledge, the business operations, property and assets of the Company (and to the knowledge of the Company, the business of any sub-tenant or license which is occupying or has occupied any space on any premises of the Company and the activities of which could result in any material adverse liability to the Company) (i) conform with and are in compliance in all material respects with all, and are not in material violation of any applicable federal, state and local laws, rules and regulations, including laws, rules or regulations relating to tax, product liability, controlled substances, product registration, environmental protection, hazardous or toxic waste, employment, or occupational safety matters; and (ii) have been conducted and operated in a manner such that, to the Company's knowledge, the Company has no foreseeable potential liabilities for environmental clean-up under any law, rule, regulation or common or civil law doctrine.
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(b) To its knowledge, no predecessor-in-title to any real property now or previously owned or operated by the Company, nor any predecessor operator thereof conducted its business or operated such property in violation of any applicable, federal, state and local laws, rules and regulations relating to environmental protection or hazardous or toxic waste matters.
(c) Except as disclosed in the Company's statements, no suit, action, claim, proceeding nor investigation review or inquiry by any Government Entity (as defined in Section 4.9) concerning any such possible violations by the Company is pending or, to the Company's knowledge, threatened, including, but not limited to, matters relating to hazardous or toxic waste, controlled substances, employment, occupational safety or tax matters. The Company does not know of any reasonable basis or ground for any such suit, claim, investigation, inquiry or proceeding.
5.16 Governmental Licenses, Permits, Etc. To its knowledge, the Company has all governmental licenses, permits, authorizations and approvals necessary for the conduct of its business as currently conducted. All such licenses, permits, authorizations and approvals are in full force and effect, and no proceedings for the suspension or cancellation of any thereof is pending or threatened.
5.17 Brokers. The Company has not made any agreement or taken any action with any person or taken any action which would cause any person to be entitled to any agent's, broker's or finder's fee or commission in connection with the transactions contemplated by this Agreement.
5.18 Employee Plans. NA
5.19 Exchange Filings. The Company has filed all forms, reports and documents that are required to be filed by the Company with the SEC since the date on which it was obligated to file such reports, except as otherwise disclosed herein. All such required forms, reports and documents (including such forms, reports and documents that the Company may file subsequent to the date hereof) are referred to herein as the “Corporate Reports.” As of their respective dates, to the Company’s knowledge, the Corporate Reports (i) did not at the time they were filed (or if amended or superseded by a filing, then on the date of such filing) contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.
5.20 Liabilities. The Company acknowledges that it will have no liabilities outstanding on the Closing Date except as may be due or alleged to be due to either of the Company’s former accountants or current accountants as well as moneys due to its transfer agent and consultants.
5.21 Approval of the Exchange by the Company’s Shareholders. The transactions contemplated by this Agreement do not require the approval of the Company’s shareholders.
5.22 Approval of the Exchange Offer and related transactions by the Company’s shareholders is not required by Delaware law or the Company’s Articles of Incorporation or Bylaws or any amendments thereto.
5.23 Accuracy of Representations and Performance of Covenants. The representations and warranties made by the Company in this Agreement were true when made and shall be true at the Closing Date with the same force and effect as if such representations and warranties were made at and as of the Closing Date (except for changes therein permitted by this Agreement). The Company shall have performed or complied with all covenants and conditions required by this Agreement to be performed or complied with by the Company prior to or at the Closing.
VI. STOCKHOLDER APPROVAL; CLOSING DELIVERIES
6.1
Approval of the Exchange by the Company’s Shareholders. The transactions contemplated by this Agreement do not require the approval of the Company’s shareholders
6.2
Closing Deliveries of Xxxxxxx. At the Closing, Xxxxxxx shall deliver, or cause to be delivered, to the Company:
(a)
A certificate, dated as of the Closing Date, certifying as to the Articles of Incorporation and Bylaws of Xxxxxxx, the incumbency and signatures of the officers of Xxxxxxx and copies of the directors’ and shareholders' resolutions of Xxxxxxx approving and authorizing the execution and delivery of this Agreement, and the consummation of the transactions contemplated hereby;
(b)
Stock certificates representing all of Xxxxxxx’ shares, duly endorsed for transfer to the Company or as the Company may otherwise direct.
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(c)
A report including Xxxxxxx’x financial statements and a report prepared by an Independent Registered Public Accounting Firm.
(d)
Such other documents, at the Closing or subsequently, as may be reasonably requested by the Company as necessary for the implementation and consummation of this Agreement and the transactions contemplated hereby.
6.3
Closing Deliveries of Company. At the Closing, the Company shall deliver to Xxxxxxx:
(a)
A corporate resolution that will irrevocably instruct Action Stock Transfer about the exchange ratio representing the Shares issued as Share Consideration hereunder and instructions to issue share certificates to the Xxxxxxx shareholders in the appropriate amounts, including evidence of any share conditions attributable to the Shares.
(b)
Share certificates in the appropriate amount of Company Shares issued to the Xxxxxxx shareholders. No Shares shall be issued until the Company shall have received a certificate (or certificates) for the required number of Xxxxxxx shares.
(c)
Such other documents, at the Closing or subsequently, as may be reasonably requested by Xxxxxxx as necessary for the implementation and consummation of this Agreement and the transactions contemplated hereby.
VII. CONDITIONS TO OBLIGATIONS OF XXXXXXX
The obligation of Xxxxxxx to consummate the Closing is subject to the following conditions, any of which may be waived by Xxxxxxx in its sole discretion:
7.1 Compliance by the Company. The Company shall have performed and complied in all material respects with all agreements and conditions required by this Agreement to be performed or complied with by the Company prior to or on the Closing Date.
7.2 Accuracy of the Company's Representations. The Company's representations and warranties contained in this Agreement (including all Schedules) or any schedule, certificate or other instrument delivered pursuant to the provisions hereof or in connection with the transactions contemplated hereby shall be true and correct in all material respects at and as of the Closing Date (except for such changes permitted by this Agreement) and shall be deemed to be made again as of the Closing Date.
7.3 Documents. All documents and instruments delivered by the Company to Xxxxxxx at the Closing shall be in form and substance reasonably satisfactory to Xxxxxxx and its counsel.
VIII. CONDITIONS TO THE COMPANY'S OBLIGATIONS
The Company's obligation to consummate the closing is subject to the following conditions, any of which may be waived by the Company in its sole discretion:
8.1 Compliance by Xxxxxxx. Xxxxxxx shall have performed and complied in all material respects with all agreements and conditions required by this Agreement to be performed or complied with prior to or on the Closing Date.
8.2 Accuracy of Xxxxxxx’x Representations. Xxxxxxx ' representations and warranties contained in this Agreement (including the Schedules hereto) or any schedule, certificate or other instrument delivered pursuant to the provisions hereof or in connection with the transactions contemplated hereby shall be true and correct in all material respects at and as of the Closing Date (except for such changes permitted by this Agreement) and shall be deemed to be made again as of the Closing Date.
8.3 Material Adverse Change. No material adverse change shall have occurred subsequent to the last date of the financial statements of Xxxxxxx furnished to the Company under this Agreement in the financial position, results of operations, assets, liabilities or prospects of Xxxxxxx taken as a whole, nor shall any event or circumstance have occurred which would result in a material adverse change in the business, assets or condition, financial or otherwise, of Xxxxxxx taken as a whole, within reasonable discretion of the Company.
8.4 Litigation. No litigation seeking to enjoin the transactions contemplated by this Agreement or to obtain damages on account hereof shall be pending or, to Xxxxxxx’x knowledge, be threatened.
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IX. INDEMNIFICATION
9.1 By Xxxxxxx. Subject to Section 9.4, Xxxxxxx shall indemnify, defend and hold the Company, its directors, officers, shareholders, attorneys, agents and affiliates, harmless from and against any and all losses, costs, liabilities, damages, and expenses (including legal and other expenses incident thereto) of every kind, nature and description, including any undisclosed liabilities (collectively, "Losses") that result from or arise out of (i) the breach of any representation or warranty of Xxxxxxx set forth in this Agreement or in any certificate delivered to Company pursuant hereto; or (ii) the breach of any of the covenants of Xxxxxxx contained in or arising out of this Agreement or the transactions contemplated hereby.
9.2 By the Company. Subject to Section 9.4, The Company shall indemnify, defend, and hold Xxxxxxx its directors, officers, shareholders, attorneys, agents and affiliates harmless from and against any and all Losses that arise out of (i) the breach of any representation or warranty of the Company set forth in this Agreement or in any certificate delivered to Xxxxxxx pursuant hereto; (ii) the breach of any of the covenants of the Company contained in or arising out of this Agreement or the transactions contemplated hereby, or (iii) any material liabilities of the Company not disclosed herein or in its SEC filings which arise from any facts or circumstances prior to the date of the closing of the Exchange and which occurred through no fault of Xxxxxxx or its Affiliates
9.3 Claims Procedure. Should any claim covered by Sections 9.1 or 9.2 be asserted against a party entitled to indemnification under this Article (the "Indemnitee"), the Indemnitee shall promptly notify the party obligated to make indemnification (the "Indemnitor"); provided, however, that any delay or failure in notifying the Indemnitor shall not affect the Indemnitor's liability under this Article if such delay or failure was not prejudicial to the Indemnitor. The Indemnitor upon receipt of such notice shall assume the defense thereof with counsel reasonably satisfactory to the Indemnitee and the Indemnitee shall extend reasonable cooperation to the Indemnitor in connection with such defense. No settlement of any such claim shall be made without the consent of the Indemnitor and Indemnitee, such consent not to be unreasonably withheld or delayed, nor shall any such settlement be made by the Indemnitor which does not provide for the absolute, complete and unconditional release of the Indemnitee from such claim. In the event that the Indemnitor shall fail, within a reasonable time, to defend a claim, the Indemnitee shall have the right to assume the defense thereof without prejudice to its rights to indemnification hereunder.
9.4 Limitations on Liability. Neither Xxxxxxx nor the Company shall be liable hereunder as a result of any misrepresentation or breach of such party's representations, warranties or covenants contained in this Agreement unless and until the Losses incurred by each, as the case may be, as a result of such misrepresentations or breaches under this Agreement shall exceed, in the aggregate, US$100,000.
X. TERMINATION
10.1 Termination Prior to Closing. (a) If the Closing has not occurred by December 31, 2015 or such other date as mutually agreed upon by the parties (the "Termination Date"), any of the parties hereto may terminate this Agreement at any time thereafter by giving written notice of termination to the other parties; provided, however, that no party may terminate this Agreement if such party has willfully or materially breached any of the terms and conditions hereof.
(b) Prior to the Termination Date either party to this Agreement may terminate this Agreement following the insolvency or bankruptcy of the other, or if any one or more of the conditions to Closing set forth in Article VI, Article VII or Article VIII shall become incapable of fulfillment and shall not have been waived by the party for whose benefit the condition was established.
10.2 Consequences of Termination. Upon termination of this Agreement pursuant to this Article X or any other express right of termination provided elsewhere in this Agreement, the parties shall be relieved of any further obligation to the other. No termination of this Agreement, however, whether pursuant to this Article X hereof or under any other express right of termination provided elsewhere in this Agreement, shall operate to release any party from any liability to any other party incurred before the date of such termination or from any liability resulting from any willful misrepresentation made in connection with this Agreement or willful breach hereof.
XI. ADDITIONAL COVENANTS
11.1 Mutual Cooperation. The parties hereto will cooperate with each other, and will use all reasonable efforts to cause the fulfillment of the conditions to the parties' obligations hereunder and to obtain as promptly as possible all consents, authorizations, orders or approvals from each and every third party, whether private or governmental, required in connection with the transactions contemplated by this Agreement.
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11.2 Changes in Representations and Warranties of Xxxxxxx. Prior to the Closing Date, Xxxxxxx shall not, directly or indirectly, enter into any transaction, take any action, or by inaction permit an event to occur, which would result in any of the representations and warranties of Xxxxxxx herein contained not being true and correct at and as of (a) the time immediately following the occurrence of such transaction or event or (b) the Closing Date. Xxxxxxx shall promptly give written notice to the Company upon becoming aware of (i) any fact which, if known on the date hereof, would have been required to be set forth or disclosed pursuant to this Agreement and (ii) any impending or threatened breach in any material respect of any of the representations and warranties of Xxxxxxx contained in this Agreement and with respect to the latter shall use all reasonable efforts to remedy same.
11.3 Changes in Representations and Warranties of the Company. Between the date of this Agreement and the Closing Date, Company shall not, directly or indirectly, enter into any transaction, take any action, or by inaction permit an event to occur, which would result in any of the representations and warranties of the Company herein contained not being true and correct at and as of (a) the time immediately following the occurrence of such transaction or event or (b) the Closing Date. The Company shall promptly give written notice to Xxxxxxx upon becoming aware of (i) any fact which, if known on the date hereof, would have been required to be set forth or disclosed pursuant to this Agreement and (ii) any impending or threatened breach in any material respect of any of the representations and warranties of the Company contained in this Agreement and with respect to the latter shall use all reasonable efforts to remedy same.
XII. MISCELLANEOUS
12.1 Expenses. The Company will pay for its counsel and accountants and all their costs. Xxxxxxx will pay for its accountants and attorneys and all their costs including all expenses, fees and other costs associated with an audit of Xxxxxxx financial statements pursuant to form and content of and requirements for financial statements as provided by the Exchange within ninety-days (90) days of Closing or as practicable as possible.
12.2 Survival of Representations, Warranties and Covenants. All statements contained in this Agreement or in any certificate delivered by or on behalf of Xxxxxxx or the Company pursuant hereto or in connection with the transactions contemplated hereby shall be deemed representations, warranties and covenants by Xxxxxxx or the Company, as the case may be, hereunder. All representations, warranties and covenants made by Xxxxxxx and by the Company in this Agreement, or pursuant hereto, shall survive through the Closing Date.
12.3 Nondisclosure. The Company will not at any time after the date of this Agreement, without Xxxxxxx' consent, divulge, furnish to or make accessible to anyone (other than to its representatives as part of its due diligence or corporate investigation) any knowledge or information with respect to confidential or secret processes, inventions, discoveries, improvements, formulae, plans, material, devices or ideas or know-how, whether patentable or not, with respect to any confidential or secret aspects (including, without limitation, customers or suppliers) ("Confidential Information") of Xxxxxxx.
Xxxxxxx will not at any time after the date of this Agreement, without the Company's consent (except as may be required by law), use, divulge, furnish to or make accessible to anyone any Confidential Information (other than to its representatives as part of its due diligence or corporate investigation) with respect to the Company. The undertakings set forth in the preceding two paragraphs of this Section 12.3 shall lapse if the Closing takes place as to the Company and Xxxxxxx.
Any information, which (i) at or prior to the time of disclosure by either of Xxxxxxx or the Company was generally available to the public through no breach of this covenant, (ii) was available to the public on a non-confidential basis prior to its disclosure by either of Xxxxxxx or the Company or (iii) was made available to the public from a third party, provided that such third party did not obtain or disseminate such information in breach of any legal obligation to Xxxxxxx or the Company, shall not be deemed Confidential Information for purposes hereof, and the undertakings in this covenant with respect to Confidential Information shall not apply thereto.
12.4 Succession and Assignments; Third Party Beneficiaries. This Agreement may not be assigned (either voluntarily or involuntarily) by any party hereto without the express written consent of the other party. Any attempted assignment in violation of this Section shall be void and ineffective for all purposes. In the event of an assignment permitted by this Section, this Agreement shall be binding upon the heirs, successors and assigns of the parties hereto. Except as expressly set forth in this Section, there shall be no third party beneficiaries of this Agreement.
12.5 Notices. All notices, requests, demands or other communications with respect to this Agreement shall be in writing and shall be (i) sent by facsimile transmission, (ii) sent by the federal postal service, registered or certified mail, return receipt requested, or (iii) personally delivered by a nationally recognized express overnight courier service, charges prepaid, to the addresses specified in writing by each party.
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Any such notice shall, when sent in accordance with the preceding sentence, be deemed to have been given and received on the earliest of (i) the day delivered to such address or sent by facsimile transmission, (ii) the seventh (7th) business day following the date deposited with the United States Postal Service, or (iii) twenty-four (24) hours after shipment by such courier service.
12.6 Construction. This Agreement shall be construed and enforced in accordance with the internal laws of State of Delaware without giving effect to the principles of conflicts of law thereof.
12.7 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which shall together constitute one and the same Agreement.
12.8 No Implied Waiver; Remedies. No failure or delay on the part of the parties hereto to exercise any right, power or privilege hereunder or under any instrument executed pursuant hereto shall operate as a waiver, nor shall any single or partial exercise of any right, power or privilege preclude any other or further exercise thereof or the exercise of any other right, power or privilege. All rights, powers and privileges granted herein shall be in addition to other rights and remedies to which the parties may be entitled at law or in equity.
12.9 Entire Agreement. This Agreement, including the Exhibits and Schedules attached hereto, sets forth the entire understandings of the parties with respect to the subject matter hereof, and it incorporates and merges any and all previous communications, understandings, oral or written, as to the subject matter hereof, and cannot be amended or changed except in writing, signed by the parties.
12.10 Headings. The headings of the Sections of this Agreement, where employed, are for the convenience of reference only and do not form a part hereof and in no way modify, interpret or construe the meanings of the parties.
12.11 Severability. To the extent that any provision of this Agreement shall be invalid or unenforceable, it shall be considered deleted here from and the remainder of such provision and of this Agreement shall be unaffected and shall continue in full force and effect.
12.12 Public Disclosure. From and after the date hereof through the Closing Date, the Company shall not issue a press release or any other public announcement with respect to the transactions contemplated hereby without the prior consent of Xxxxxxx, which consent shall not be unreasonably withheld or delayed. It is understood by Xxxxxxx that the Company is required under the Exchange Act to make prompt disclosure of any material transaction.
12.13 No Bankruptcy and No Criminal Convictions. None of the Parties to this Agreement, or their officers, directors or affiliates, or control persons, or any predecessor thereof have been subject to the following:
(a)
Any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer within the past five (5) years;
(b)
Any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);
(c)
Being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; and
(d)
Being found by a court of competent jurisdiction to have violated a country, federal or state securities law, and the judgment has not been reversed, suspended, or vacated.
12.14 Faxed or Scanned Copies. For purposes of this Agreement, a faxed or scanned signature shall constitute an original signature.
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THE PARTIES TO THIS AGREEMENT HAVE READ THIS AGREEMENT, HAVE HAD THE OPPORTUNITY TO CONSULT WITH INDEPENDENT COUNSEL OF THEIR OWN CHOICE, AND UNDERSTAND EACH OF THE PROVISIONS OF THIS AGREEMENT.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day and year first above written.
“COMPANY”
By: /s/ Xxxx Xxxxxxx
Name: Xxxx Xxxxxxx
Title: President
“XXXXXXX”
Xxxxxxx Group, LLC
By: /s/ Xxxxx X. Xxxxxxx
Name: Xxxxx X. Xxxxxxx
By: /s/ Xxxxxxx X. Xxxxxxx
Name: Xxxxxxx X. Xxxxxxx
By: /s/ Xxxxx Xxxxxxx
Name: Xxxxx Xxxxxxx
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