SECURITIES EXCHANGE AGREEMENT
This SECURITIES EXCHANGE AGREEMENT (this “Agreement”), dated as of November 14, 2012, is by and among American Strategic Minerals Corporation, a Nevada corporation (the “Parent”), Sampo IP, LLC a Virginia Limited Liability Company (the “Company”), and members of the Company signatory hereto (the “Members”) and each other person or entity executing this Agreement. Each of the parties to this Agreement is individually referred to herein as a “Party” and collectively as the “Parties.”
The Company has Nine Hundred Twenty-five (925) membership units (the “Membership Units”) outstanding, all of which are held by the Members. The Members have agreed to transfer the Membership Units to the Parent in exchange for an aggregate of Nine Million Two Hundred and Fifty Thousand (9,250,000) newly issued shares of common stock, par value $0.0001 per share, of the Parent, (the “Parent Stock”) and the additional consideration described herein.
The exchange of Membership Units for the Parent Stock is intended to constitute a reorganization within the meaning of the Internal Revenue Code of 1986, as amended (the “Code”), or such other tax free reorganization or restructuring provisions as may be available under the Code.
The Board of Directors of each of the Parent and the Company has determined that it is desirable to effect this plan of reorganization and share exchange.
ARTICLE I
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ARTICLE II
Each Member hereby represents and warrants to the Parent, as follows:
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THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.
THESE SECURITIES ARE SUBJECT TO THE TERMS OF A LOCK-UP AGREEMENT AND MAY NOT BE TRASFERRED, SOLD OR ASSIGNED OTHER THAN A PERMITTED THEREIN, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY.
and any legend required by the “blue sky” laws of any state to the extent such laws are applicable to the securities represented by the certificate so legended.
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Member acknowledges and confirms: that the Parent may have, and later may come into possession of, information with respect to the Parent, its business affairs and financial condition, its immediate and long term prospects, its resources and ability to raise additional capital as well as its financing and opportunities generally, that is not known to Member and that may, if known by Member, be material to a decision to transfer the Membership Units to Parent; that Member has determined to sell the Membership Units notwithstanding its lack of knowledge of the Parent information that may be in possession of or may later come into possession of Parent; and neither Parent, Company or any other person shall have any liability to Member or any other person or entity, and Member waives and releases any claims that it might have against Parent or any other party that is based, in whole or in part, on any disparity in access to the Parent, knowledge, information or beliefs, including, without limitation, under any federal or state securities laws, common law or statute, rule or regulation. Member has been made aware of such disparity of information, and has received satisfactory answers to any questions Member has asked and desires to complete the exchange of the Membership Units contemplated under this Agreement. The Member acknowledges that it has read the representations and warranties of the Company set forth in Article III herein and such representations and warranties are, to the best of its knowledge, true and correct as of the date hereof.
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ARTICLE III
The Company and each of the Members, jointly and severally, represent and warrant to the Parent, except as set forth in a schedule (the “Company Disclosure Schedule”), regardless of whether or not the Company Disclosure Schedule is referenced with respect to any particular representation or warranty, as follows:
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(a) The execution and delivery by the Company of this Agreement does not, and the consummation of the Transactions and compliance with the terms hereof and thereof will not, conflict with, or result in any violation of or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of any obligation or to loss of a material benefit under, or result in the creation of any Lien upon any of the properties or assets of the Company under any provision of (i) the Company Charter Documents, (ii) any material contract, lease, license, indenture, note, bond, agreement, permit, concession, franchise or other instrument (a “Contract”) to which the Company is a party or by which any of its respective properties or assets is bound or (iii) subject to the filings and other matters referred to in Section 3.04(b), any material judgment, order or decree (“Judgment”) or material Law applicable to the Company or its properties or assets, other than, in the case of clauses (ii) and (iii) above, any such items that, individually or in the aggregate, have not had and would not reasonably be expected to have a Company Material Adverse Effect.
(b) Except for required filings with the Securities and Exchange Commission (the “SEC”) and applicable “Blue Sky” or state securities commissions, no material consent, approval, license, permit, order or authorization (“Consent”) of, or registration, declaration or filing with, or permit from, any Governmental Entity is required to be obtained or made by or with respect to the Company in connection with the execution, delivery and performance of this Agreement or the consummation of the Transactions.
(a) The Company has timely filed, or has caused to be timely filed on its behalf, all Tax Returns required to be filed by it, and all such Tax Returns are true, complete and accurate, except to the extent any failure to file or any inaccuracies in any filed Tax Returns, individually or in the aggregate, have not had and would not reasonably be expected to have a Company Material Adverse Effect. All Taxes shown to be due on such Tax Returns, or otherwise owed, have been timely paid, except to the extent that any failure to pay, individually or in the aggregate, has not had and would not reasonably be expected to have a Company Material Adverse Effect. There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company know of no basis for any such claim.
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(b) If applicable, the Company has established an adequate reserve reflected on its financial statements for all Taxes payable by the Company (in addition to any reserve for deferred Taxes to reflect timing differences between book and Tax items) for all Taxable periods and portions thereof through the date of such financial statements. No deficiency with respect to any Taxes has been proposed, asserted or assessed against the Company, and no requests for waivers of the time to assess any such Taxes are pending, except to the extent any such deficiency or request for waiver, individually or in the aggregate, has not had and would not reasonably be expected to have a Company Material Adverse Effect.
(c) For purposes of this Agreement:
“Taxes” includes all forms of taxation, whenever created or imposed, and whether of the United States or elsewhere, and whether imposed by a local, municipal, governmental, state, foreign, federal or other Governmental Entity, or in connection with any agreement with respect to Taxes, including all interest, penalties and additions imposed with respect to such amounts.
“Tax Return” means all federal, state, local, provincial and foreign Tax returns, declarations, statements, reports, schedules, forms and information returns and any amended Tax return relating to Taxes.
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(a) any change in the assets, liabilities, financial condition or operating results of the Company, except changes in the ordinary course of business that have not caused, in the aggregate, a Company Material Adverse Effect;
(b) any damage, destruction or loss, whether or not covered by insurance, that would have a Company Material Adverse Effect;
(c) any waiver or compromise by the Company of a valuable right or of a material debt owed to it;
(d) any satisfaction or discharge of any lien, claim, or encumbrance or payment of any obligation by the Company, except in the ordinary course of business and the satisfaction or discharge of which would not have a Company Material Adverse Effect;
(e) any material change to a material Contract by which the Company or any of its assets is bound or subject;
(f) any mortgage, pledge, transfer of a security interest in, or lien, created by the Company, with respect to any of its material properties or assets, except liens for taxes not yet due or payable and liens that arise in the ordinary course of business and does not materially impair the Company’s ownership or use of such property or assets;
(g) any loans or guarantees made by the Company to or for the benefit of its employees, officers or directors, or any members of their immediate families, other than travel advances and other advances made in the ordinary course of its business;
(h) any alteration of the Company’s method of accounting or the identity of its auditors;
(i) any declaration or payment of dividend or distribution of cash or other property to the Members or any purchase, redemption or agreements to purchase or redeem any Membership Units;
(j) any issuance of equity securities to any officer, director or affiliate; or
(k) any arrangement or commitment by the Company to do any of the things described in this Section.
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SECTION 3.25 Indebtedness. Except as disclosed in the Company Disclosure Schedule, neither the Company nor any Subsidiary (i) has any outstanding Indebtedness (as defined below), (ii) is in violation of any term of or is in default under any contract, agreement or instrument relating to any Indebtedness, except where such violations and defaults would not result, individually or in the aggregate, in a Company Material Adverse Effect, and (iii) is a party to any contract, agreement or instrument relating to any Indebtedness, the performance of which, in the judgment of the Company's officers, has or is expected to have a Company Material Adverse Effect. For purposes of this Agreement: (x) “Indebtedness” of any Person means, without duplication (A) all indebtedness for borrowed money, (B) all obligations issued, undertaken or assumed as the deferred purchase price of property or services (other than trade payables entered into in the ordinary course of business), (C) all reimbursement or payment obligations with respect to letters of credit, surety bonds and other similar instruments, (D) all obligations evidenced by notes, bonds, debentures or similar instruments, including obligations so evidenced incurred in connection with the acquisition of property, assets or businesses, (E) all indebtedness created or arising under any conditional sale or other title retention agreement, or incurred as financing, in either case with respect to any property or assets acquired with the proceeds of such indebtedness (even though the rights and remedies of the seller or bank under such agreement in the event of default are limited to repossession or sale of such property), (F) all monetary obligations under any leasing or similar arrangement which, in connection with generally accepted accounting principles, consistently applied for the periods covered thereby, is classified as a capital lease, (G) all indebtedness referred to in clauses (A) through (F) above secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any mortgage, lien, pledge, charge, security interest or other encumbrance upon or in any property or assets (including accounts and contract rights) owned by any Person, even though the Person which owns such assets or property has not assumed or become liable for the payment of such indebtedness, and (H) all Contingent Obligations in respect of indebtedness or obligations of others of the kinds referred to in clauses (A) through (G) above; (y) “Contingent Obligation” means, as to any Person, any direct or indirect liability, contingent or otherwise, of that Person with respect to any indebtedness, lease, dividend or other obligation of another Person if the primary purpose or intent of the Person incurring such liability, or the primary effect thereof, is to provide assurance to the obligee of such liability that such liability will be paid or discharged, or that any agreements relating thereto will be complied with, or that the holders of such liability will be protected (in whole or in part) against loss with respect thereto; and (z) “Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, a government or any department or agency thereof and any other legal entity.
ARTICLE IV
The Parent represents and warrants as follows to the Members and the Company, that, except as set forth in Parent SEC Documents (as defined in Section 4.06(a) herein) or in a Disclosure Schedule delivered by the Parent to the Company and the Members (the “Parent Disclosure Schedule”):
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(a) The execution and delivery by the Parent of this Agreement, does not, and the consummation of Transactions and compliance with the terms hereof and thereof will not, conflict with, or result in any violation of or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of any obligation or to loss of a material benefit under, or to increased, additional, accelerated or guaranteed rights or entitlements of any person under, or result in the creation of any Lien upon any of the properties or assets of the Parent under, any provision of (i) the Parent Charter or Parent Bylaws, (ii) any material Contract to which the Parent is a party or by which any of its properties or assets is bound or (iii) subject to the filings and other matters referred to in Section 4.05(b), any material Judgment or material Law applicable to the Parent or its properties or assets, other than, in the case of clauses (ii) and (iii) above, any such items that, individually or in the aggregate, have not had and would not reasonably be expected to have a Parent Material Adverse Effect.
(b) No Consent of, or registration, declaration or filing with, or permit from, any Governmental Entity is required to be obtained or made by or with respect to the Parent in connection with the execution, delivery and performance of this Agreement or the consummation of the Transactions, other than the (A) filing with the SEC of reports under Sections 13 and 16 of the Exchange Act, and (B) filings under state “blue sky” laws, as each may be required in connection with this Agreement and the Transactions.
(a) The Parent has filed all Parent SEC Documents since August 24, 2012, pursuant to Sections 13 and 15 of the Exchange Act, as applicable (the “Parent SEC Documents”).
(b) As of its respective filing date, each Parent SEC Document complied in all material respects with the requirements of the Exchange Act and the rules and regulations of the SEC promulgated thereunder applicable to such Parent SEC Document, and did not 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 light of the circumstances under which they were made, not misleading. Except to the extent that information contained in any Parent SEC Document has been revised or superseded by a later filed Parent SEC Document, none of the Parent SEC Documents contains any untrue statement of a material fact or omits to state any 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. The financial statements of the Parent included in the Parent SEC Documents comply as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto, have been prepared in accordance with the U.S. generally accepted accounting principles (“GAAP”) (except, in the case of unaudited statements, as permitted by the rules and regulations of the SEC) applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto) and fairly present the financial position of Parent as of the dates thereof and the results of its operations and cash flows for the periods shown (subject, in the case of unaudited statements, to normal year-end audit adjustments).
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(c) Except as set forth in the Parent SEC Documents, the Parent has no liabilities or obligations of any nature (whether accrued, absolute, contingent or otherwise) required by GAAP to be set forth on a balance sheet of the Parent or in the notes thereto. The Parent SEC Documents set forth all financial and contractual obligations and liabilities (including any obligations to issue capital stock or other securities of the Parent) due after the date hereof.
(a) any change in the assets, liabilities, financial condition or operating results of the Parent from that reflected in the Parent SEC Documents, except changes in the ordinary course of business that have not caused, in the aggregate, a Parent Material Adverse Effect;
(b) any damage, destruction or loss, whether or not covered by insurance, that would have a Parent Material Adverse Effect;
(c) any waiver or compromise by the Parent of a valuable right or of a material debt owed to it;
(d) any satisfaction or discharge of any lien, claim, or encumbrance or payment of any obligation by the Parent, except in the ordinary course of business and the satisfaction or discharge of which would not have a Parent Material Adverse Effect;
(e) any material change to a material Contract by which the Parent or any of its assets is bound or subject;
(f) any material change in any compensation arrangement or agreement with any employee, officer, director or stockholder;
(g) any resignation or termination of employment of any officer of the Parent;
(h) any mortgage, pledge, transfer of a security interest in, or lien, created by the Parent, with respect to any of its material properties or assets, except liens for taxes not yet due or payable and liens that arise in the ordinary course of business and do not materially impair the Parent’s ownership or use of such property or assets;
(i) any loans or guarantees made by the Parent to or for the benefit of its employees, officers or directors, or any members of their immediate families, other than travel advances and other advances made in the ordinary course of its business;
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(j) any declaration, setting aside or payment or other distribution in respect of any of the Parent’s capital stock, or any direct or indirect redemption, purchase, or other acquisition of any of such stock by the Parent;
(k) any alteration of the Parent’s method of accounting or the identity of its auditors;
(l) any issuance of equity securities to any officer, director or affiliate, except pursuant to existing Parent stock option plans; or
(m) any arrangement or commitment by the Parent to do any of the things described in this Section 4.08.
(a) The Parent has timely filed, or has caused to be timely filed on its behalf, all Tax Returns required to be filed by it, and all such Tax Returns are true, complete and accurate, except to the extent any failure to file, any delinquency in filing or any inaccuracies in any filed Tax Returns, individually or in the aggregate, have not had and would not reasonably be expected to have a Parent Material Adverse Effect. All Taxes shown to be due on such Tax Returns, or otherwise owed, has been timely paid, except to the extent that any failure to pay, individually or in the aggregate, has not had and would not reasonably be expected to have a Parent Material Adverse Effect.
(b) The most recent financial statements contained in the Parent SEC Documents reflect an adequate reserve for all Taxes payable by the Parent (in addition to any reserve for deferred Taxes to reflect timing differences between book and Tax items) for all Taxable periods and portions thereof through the date of such financial statements. No deficiency with respect to any Taxes has been proposed, asserted or assessed against the Parent, and no requests for waivers of the time to assess any such Taxes are pending, except to the extent any such deficiency or request for waiver, individually or in the aggregate, has not had and would not reasonably be expected to have a Parent Material Adverse Effect.
(c) There are no Liens for Taxes (other than for current Taxes not yet due and payable) on the assets of the Parent. The Parent is not bound by any agreement with respect to Taxes.
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ARTICLE V
(a) Unless such deliveries are waived by Parent, in whole or in part, at Closing as a further condition thereof, concurrently with the Closing, the Company shall deliver to the Parent: (A) this Agreement executed by all of the Members as such Members are constituted on the date of Closing; (executed counterparts hereof by each of the Assignees or original subscribers for the Company Membership Units (or their designees reasonably acceptable to Parent), with a certificate executed by each Member confirming the accuracy of each of the representations and warranties herein as of the Closing Date) and covering such additional matters as the Parent may request, including an opinion of counsel in customary form; (B) fully executed assignment or subscription agreements or other evidence of the ownership of the Membership Units and that upon Closing such persons shall have the rights to receive the Parent Shares referenced below (the “Assignees”); (C) subject to (D) below, such persons shall be the only owners of the Membership Units (or any other ownership interest of any class or character) of the Company;
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(i)
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LVL Patent Group, LLC (400 A Units)
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(ii)
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1960480 BT, LLC (200 B Units)
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(iii)
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Xxxxx Xxxxxxxxxx (100 B Units)
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(iv)
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Xxxx Xxxxxxx (50 B Units)
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(v)
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Palladium Capital Advisors, LLC (75 B Units); and
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(vi)
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C&H Capital, Inc. (100 B Units).
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(D)
(b) At or prior to the Closing, the Members shall deliver to the Parent (i) certificates representing the Members’ Membership Units along with duly executed medallion guaranteed stock powers for transfer to the Parent and (ii) a Lockup Agreement, substantially in the form attached hereto as Exhibit A executed by the Company, each of its Members and each of the Assignees, which Lockup Agreements may only be released by the Board of Directors of Parent
(c) At or prior to the Closing, the Company shall own and possess valid title to each of the patents and applications set forth on the Company Disclosure Schedule and all of the Intellectual Property Rights.
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(a) Concurrently with the execution and delivery of this Agreement by each of the parties hereto, Parent shall pay to Company $100,000 as a refundable xxxxxxx money deposit to Company and at Closing Parent will pay to Company an additional $400,000. If the Closing Conditions above have not been satisfied and the Closing occurs on or prior to November 9, 2012, unless extended by the parties, (the “Termination Date”), then this Agreement may be terminated by either party at any time thereafter by giving written notice of termination to the other and thereupon the Xxxxxxx Money deposit shall be refunded to the Company, without interest or deduction. Concurrently herewith, the Parent is delivering to the Company and the Members, a copy of this Agreement executed by the Parent. The Company covenants and agrees the xxxxxxx money deposit shall be used exclusively for acquisition of the patents and intellectual property to be conveyed to the Company and acquired by Parent pursuant to this Exchange Agreement.
(b) At or prior to the Closing, the Parent shall deliver to the Company:
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(i)
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a certificate from the Parent, signed by its Secretary or Assistant Secretary certifying that the attached copies of the Parent Charter, Parent Bylaws and resolutions of the Board of Directors of the Parent and of the stockholders of the Parent approving this Agreement and the transactions contemplated hereunder, are all true, complete and correct and remain in full force and effect; and
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(ii)
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evidence of the election of Xxxx Xxxxxxx as the President, Chief Executive Officer and Chairman of the Parent and of Xxxx Xxxxxxx as Chief Financial Officer, effective on the Closing Date and evidence of the resignations of Xxxx Xxxxxxx as the Parent’s President and Chief Operating Officer and Xxxx Xxxxxxxxx as the Parent’s Chief Executive Officer.
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(iii)
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the Executive Employment Agreement by and between Parent and Xxxx Xxxxxxx attached hereto as Exhibit A.
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(c) Promptly following the Closing, the Parent shall deliver to the Members, certificates representing the new shares of Parent Stock issued to the Members.
(a) Concurrently herewith, the Company is delivering to the Parent this Agreement executed by the Company.
(b) At or prior to the Closing, the Company shall deliver to the Parent:
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(i)
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a certificate from the Company, signed by its Secretary or Assistant Secretary certifying that the attached copies of the Company’s Charter Documents and resolutions of the Board of Directors of the Company approving this Agreement and the Transactions, are all true, complete and correct and remain in full force and effect; and
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(ii)
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if requested, the results of UCC, judgment lien and tax lien searches with respect to the Company, the results of which indicate no liens on the assets of the Company.
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ARTICLE VI
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ARTICLE VII
ARTICLE VIII
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If to the Parent, to:
American Strategic Minerals Corporation.
C/o National Corporate Research Ltd.
000 Xxxxx Xxxxxxxxx Xxxxxx
Xxxxxx Xxxx, XX 00000
Attn: Chief Executive Officer
With a copy to:
Xxxxxx Xxxxxx, Esq.
00 Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
xxxxxxx@xxxx.xxx
212-930-9700
If to the Company, to:
Sampo IP, LLC
0000 Xxxx Xxxx
Xxxxx 000
Xxxxxxxxxx, XX 00000
Att: Xxxx Xxxxxxx
xxxx@xxxxx.xxx
000-000-0000 (facsimile)
With a copy to:
Xxxxxxxxxx & Xxxxx LLP
0000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxxx, XX 00000
Attn: Xxxx Xxx Xxxxxx, Esq.
xxxxxxx@xxxxxxxxxxxxxxx.xxx
000-000-0000
If to the Members to the address set forth on the signature page hereto
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SECTION 8.09. Governing Law. This Agreement shall be governed by, and construed in accordance with, the internal laws of the State of New York, without reference to principles of conflicts of laws. Any action or proceeding brought for the purpose of enforcement of any term or provision of this Agreement shall be brought only in the Federal or state courts sitting in New York and the parties hereby waive any and all rights to trial by jury.
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The Parent:
By: ________________________
Name: Xxxx Xxxxxxxxx
Title: Chief Executive Officer
The Company
SAMPO IP, LLC
By:______________________
Name:
Title:
AGREED AND ACCEPTED:
The Members:
LVL PATENT GROUP, LLC
__________________________
Name: Xxxx Xxxxxxx, individually and on behalf of the foregoing entity
Address:
1960480 BT, LLC
__________________________
Name: Xxxxx Xxxxxxxxxxx, Trustee
Address:
_______________________
XXXXX XXXXXXXXXX
Address:
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PALLADIUM CAPITAL ADVISORS, LLC
By: _______________________
Name:
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Xxxx Xxxxxxxx
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Title:
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CEO
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Address:
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_______________________
XXXX XXXXXXX
Address:
C&H Capital, Inc.
By: _______________________
Name:
Title:
Agreement