EXCHANGE AGREEMENT
This
EXCHANGE AGREEMENT (this “Agreement”) dated as of December 21, 2007, by and
among Sentra Consulting Corp., a Nevada corporation (“Sentra”), Karat Platinum,
LLC, a New York limited liability company (“Karat”), and each of the holders of
membership interests of Karat (collectively, the “KP Holders,” and each a “XX
Xxxxxx”).
RECITALS
A. Sentra,
Karat and all the KP Holders have determined that it is advisable and for the
respective benefit of Sentra and Karat that Sentra acquire KP.
B.
Pursuant
to the terms and conditions of this Agreement., the KP Holders, who in the
aggregate own all of the outstanding and issued membership interests of Karat’s
capital stock (the “KP Membership Interests”), shall exchange the KP Membership
Interests owned by them for 30,000,000 newly issued restricted shares of common
stock of Sentra (the “Exchange Shares”). It is intended that the Exchange Shares
to be issued pursuant hereto will be issued to the KP Holders under Section
4(2)
of the Securities Act of 1933, as amended (the “Securities Act”) and shall not
be registered under the Securities Act or any other relevant laws or
regulations.
C.
The
parties hereto intend that the transaction described herein qualify as a
tax-free reorganization under Section 368 of the Internal Revenue Code of 1986,
as amended (the "Code").
NOW,
THEREFORE, in consideration of the covenants, promises and representations
set
forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, and intending to be legally bound
hereby, the parties agree as follows:
ARTICLE
I
DEFINITIONS
1.1
Certain
Definitions.
As used
in this Agreement and the schedules hereto, the following terms have the
respective meanings set forth below.
(a)
"Action"
means any administrative, regulatory, judicial or other proceeding by or before
any Governmental Authority or arbitrator.
(b)
"Affiliate"
means, with respect to any Person, any other Person that, directly or
indirectly, through one or more intermediaries, controls, is controlled by,
or
is under common control with, such Person. The term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise, including the ability
to elect the members of the board of directors or other governing body of a
Person, and the terms "controlled" and "controlling" have correlative
meanings.
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(d)
"Claims"
means any and all claims, demands or causes of action, relating to or resulting
from an Action.
(e)
"Contract"
means any contract, agreement, indenture, deed of trust, license, note, bond,
mortgage, lease, guarantee and any similar understanding or arrangement, whether
written or oral.
(f)
"Employees"
means individuals who provide employment or employment-type services to Karat
as
of the date hereof, other than any such individuals who cease such employment
prior to the Closing, but including any such individuals hired after the date
hereof and prior to the Closing.
(g)
"Employee
Benefit Plan" means any employee benefit plan, program, policy, practices,
or
other arrangement providing benefits to any current or former employee, officer
or director of Karat or any beneficiary or dependent thereof that is sponsored
or maintained by Karat or contribute or are obligated to contribute, whether
or
not written, including without limitation any employee welfare benefit plan
within the meaning of Section 3(1) of ERISA, any employee pension benefit plan
within the meaning of Section 3(2) of ERISA (whether or not such plan is subject
to ERISA) and any bonus, incentive, deferred compensation, vacation, stock
purchase, stock option, severance, employment, change of control or fringe
benefit plan, program or policy.
(h)
"Employment
Agreement" means a written Contract or offer letter of Karat with or addressed
to any Employee or Former Employee pursuant to which Karat shall, directly
or
indirectly, have any actual or contingent liability or obligation to provide
compensation and/or benefits on or after the Closing Date in consideration
for
past, present or future services.
(i)
"Encumbrances"
means security interests, liens, Claims, charges, title defects, deficiencies
or
exceptions (including, with respect to Real Property, defects, deficiencies
or
exceptions in, or relating to, marketability of title, or leases, subleases
or
the like affecting title), mortgages, pledges, easements, encroachments,
restrictions on use, rights of-way, rights of first refusal, conditional sales
or other title retention agreements, covenants, conditions or other similar
restrictions (including restrictions on transfer) or other encumbrances of
any
nature whatsoever.
(j)
"Environmental
Laws" means all Laws relating to pollution or protection of human health and
safety or the environment (including ambient air, surface water, groundwater,
land surface, natural resources or subsurface strata), including all such Laws
relating to Releases or threatened Releases of Regulated Substances into the
environment or work place, or otherwise relating to the environmental or worker
health and safety aspects of manufacturing, processing, distribution,
importation, use, treatment, storage, disposal, transport or handling of
Regulated Substances, including, but not limited to, chemical inventories in
all
relevant jurisdictions, and all such Laws relating to the registration of
products of Karat under the Federal Insecticide, Fungicide and Rodenticide
Act,
the Food Drug and Cosmetic Act, the Toxic Substances Control Act, the European
List of Notified Chemical Substances, the European Inventory of Existing
Commercial Chemical Substances or similar Laws.
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(k)
"Environmental
Permit" means any permit, registration, approval, identification number, license
or other authorization or filing required under or issued pursuant to any
applicable Environmental Law.
(l)
"ERISA"
means the Employee Retirement Income Security Act of 1974, as amended.
(m)
"ERISA
Affiliate" means any entity which would be aggregated with Karat under Section
414 of the Code or Section 4001(b) of ERISA.
(n)
"Former
Employee" means individuals who, prior to the Closing, provided employment
or
employment-type services to Karat.
(o)
"GAAP"
means United States generally accepted accounting principles.
(p) "Governmental
Authority" means any supranational, national, federal, state or local
government, foreign or domestic, or the government of any political subdivision
of any of the foregoing, or any entity, authority, agency, ministry or other
similar body exercising executive, legislative, judicial, regulatory or
administrative authority or functions of or pertaining to government, including
any authority or other quasi-governmental entity established by a Governmental
Authority to perform any of such functions.
(q)
"Indebtedness"
of any Person means, without duplication, (i) all obligations of such Person
for
money borrowed; (ii) all obligations of such Person evidenced by notes,
debentures, bonds or other similar instruments for the payment of which such
Person is responsible or liable; (iii) all obligations of such Person issued
or
assumed for deferred purchase price payments associated with acquisitions,
divestments or other transactions; (iv) all obligations of such Person under
leases required to be capitalized in accordance with GAAP, as consistently
applied by such Person, (v) all obligations of such Person for the reimbursement
of any obligor on any letter of credit, banker's acceptance, guarantees or
similar credit transaction, excluding in all cases in clauses (i) through (v)
current accounts payable, trade payables and accrued liabilities incurred in
the
ordinary course of business.
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(r)
"IRS"
means the Internal Revenue Service of the United States of America.
(s)
"Laws"
means all United States federal, state or local or foreign laws, constitutions,
statutes, codes, rules, regulations, ordinances, executive orders, decrees
or
edicts by a Governmental Authority having the force of law.
(t)
"Leased
Real Property" means any real property leased or subleased to Karat and set
forth (and designated as leased) in Schedule
4.18.
(u)
"Liabilities"
means any and all debts, liabilities, commitments and obligations, whether
or
not fixed, contingent or absolute, matured or unmatured, direct or indirect,
liquidated or unliquidated, accrued or unaccrued, known or unknown, whether
or
not required by GAAP to be reflected in financial statements or disclosed in
the
notes thereto.
(v)
"Material
Adverse Effect" means, with respect to a Person, any change, effect, event,
occurrence or state of facts which would reasonably be expected to be materially
adverse to the business, operations or financial condition of such Person,
and
its Subsidiaries, taken as a whole, or on the ability of such Person to
consummate the transactions contemplated by this Agreement, other than any
change, effect, event, occurrence or state of facts (1) that is generally
applicable in the economy of the United States, (2) that is generally applicable
in the United States securities markets, (3) generally affecting the industry
in
which Karat operates,,(4) arising from or related to an act of international
terrorism, or (5) relating to the announcement or disclosure of this Agreement
and the transactions contemplated hereby.
(w)
"Person"
means an individual, partnership, corporation, limited liability company, joint
stock company, unincorporated organization or association, trust, joint venture
or Governmental Authority.
(x)
"Regulated
Substances" means any substance which is listed, defined or regulated as a
pollutant, contaminant, hazardous, dangerous or toxic substance, material or
waste, or is otherwise classified as hazardous, dangerous or toxic in or
pursuant to any Environmental Law or which is or contains any explosives, radon,
radioactive materials, asbestos, urea formaldehyde foam insulation,
polychlorinated biphenyls, petroleum and petroleum products (including waste
petroleum and petroleum products) as regulated under any applicable
Environmental Law.
(y)
"Release"
means any release, spill, emission, discharge, leaking, pumping, injection,
deposit, disposal, dispersal, leaching or migration into the indoor or outdoor
environment (including ambient air, surface water, groundwater and surface
or
subsurface strata) or into or out of any property, including the movement of
Regulated Substances through or in the air, soil, surface water, groundwater
or
property.
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(z)
"Required
Consents" means, collectively, (1) each consent or novation with respect to
any
Contract to which Karat is a party or by which any of its assets are bound
required to be obtained from the other parties thereto by virtue of the
execution and delivery of this Agreement or the consummation of the transactions
contemplated hereby in order to avoid the invalidity of the transfer of such
Contract, the termination or acceleration thereof, giving rise to any obligation
to make a payment thereunder or to any increased, additional or guaranteed
rights of any person thereunder, a breach or default thereunder or any other
change or modification to the terms thereof, and (2) each registration, filing,
application, notice, transfer, consent, approval, order, qualification and
waiver required from any third party or Governmental Authority by virtue of
the
execution and delivery of this Agreement or the consummation of the transactions
contemplated hereby.
(aa)
“SEC”
means the Securities and Exchange Commission.
(bb) "Subsidiaries"
of any entity means, at any date, any Person (a) the accounts of which would
be
consolidated with those of the applicable entity in such entity's consolidated
financial statements if such financial statements were prepared in accordance
with GAAP as of such date, or (b) of which securities or other ownership
interests representing more than 50% of the equity or more than 50% of the
ordinary voting power or, in the case of a partnership, more than 50% of the
general partnership interests or more than 50% of the profits or losses of
which
are, as of such date, owned, controlled or held by the applicable entity or
one
or more subsidiaries of such entity.
(cc)
"Tax"
means any federal, state, local or foreign taxes, including but not limited
to
any income, gross receipts, payroll, employment, excise, severance, stamp,
business, premium, windfall profits, environmental (including taxes under
section 59A of the Code), capital stock, franchise, profits, withholding, social
security (or similar), unemployment, disability, real property, personal
property, sales, use, service, service use, lease, lease use, transfer,
registration, value added tax, or similar tax, any alternative or add-on minimum
tax, and any estimated tax, in each case, including any interest, penalty,
or
addition thereto, whether disputed or not.
(dd)
"Tax
Benefit" means the Tax effect of any item of loss, deduction or credit or any
other item (including increases in Tax basis) which decreases Taxes paid or
required to be paid, including any interest with respect thereto or interest
that would have been payable but for such item.
(ee)
"Tax
Returns" means all returns, declarations, reports, estimates, information
returns and statements required to be filed in respect of Taxes.
(ff)
"Taxing
Authority" means any Governmental Authority having jurisdiction over the
assessment, determination, collection or other imposition of Taxes.
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1.2
References
and Title.
All
references in this Agreement to articles, sections, subsections and other
subdivisions refer to the articles, sections, subsections and other subdivisions
of this Agreement unless expressly provided otherwise. Titles appearing at
the
beginning of any section or subdivision are for convenience only and do not
constitute any part of such subdivisions and shall be disregarded in construing
the language contained in such subdivisions. The words “this Agreement,” “this
instrument,” “herein,” “hereof,” “hereby,” “hereunder” and words of similar
import refer to this Agreement as a whole and not to any particular subdivision
unless expressly so limited. The phrases “this Section” and “this subsection”
and similar phrases refer only to the sections or subsections hereof in which
such phrases occur. Pronouns in masculine, feminine and neuter genders shall
be
construed to include any other gender, and words in the singular form shall
be
construed to include the plural and vice versa, unless the context otherwise
requires.
1.3 Independent
Counsel.
Each
party acknowledges that it has reviewed this Agreement and has had the
opportunity to have it reviewed by legal counsel of its own choosing. Each
of
the parties hereto acknowledges that this Agreement has been prepared jointly
by
the parties hereto and shall not be strictly construed against any party
hereto.
ARTICLE
II
EXCHANGE;
ADMINISTRATIVE STOCKHOLDER
2.1
Exchange.
Subject
to the terms and conditions stated herein, at the Closing:
(a)
the
KP
Holders shall assign, transfer, convey, and deliver to Sentra the KP Membership
Interests and any
and
all rights in such membership interests to which they are entitled, and by
doing
so will be deemed to have assigned all of their respective right, title and
interest in and to all such KP Membership Interests to Sentra;
and
(b)
in
exchange for the KP Membership Interests, Sentra shall issue to the KP Holders,
and the KP Holders shall accept and acquire from Sentra, the Exchange Shares
(collectively, the “Exchange”). For avoidance of doubt, Sentra will not be
required to consummate the Exchange unless all, and not less than all, of the
KP
Membership Interests are transferred and assigned pursuant to the foregoing
(or
less amount as determined in the sole and absolute discretion of Sentra) and
the
KP Holders will not be required to consummate the Exchange unless all, and
not
less than all, of the Exchange Shares are issued to the KP Holders (unless
a XX
Xxxxxx does not execute this Agreement or the Lock-Up Letter, in which case
only
the pro rata amount of Exchange Shares shall be issued).
2.2
Exchange
Ratio.
Sentra
shall issue to each XX Xxxxxx the number of shares set forth opposite their
name
on Schedule
2.2
attached
hereto. Each issued and outstanding KP Membership Interest shall be converted
into one (1) share of common stock of Sentra.
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2.3
Restrictions
on Transfer.
Each XX
Xxxxxx agrees that, during the period commencing on the date hereof and ending
on the Closing Date, such
Holder will not, directly or indirectly, offer, sell, assign, transfer, grant
a
participation in, pledge, or otherwise dispose or Encumber or agree to dispose
or Encumber in any manner any of its KP Membership Interests except in
accordance with the terms of this Agreement. Any
attempt by a XX Xxxxxx to transfer or Encumber any of its KP Membership
Interests in violation of the terms of this Agreement shall be void and
ineffective. Karat shall refuse to effect any such attempted transfer or
Encumbrance in its records or otherwise, and refuse to treat any alleged
transferee(s) as the holder(s) of such KP Membership Interests.
2.4
Tax
Consequences.
It is
intended by the parties hereto that the transactions contemplated by this
Agreement shall constitute a tax-free reorganization within the meaning of
Section 368 of the Code. The parties hereto adopt this Agreement as a "plan
of
reorganization" within the meaning of Sections 1.368-2(g) and 1.368-3(a) of
the
regulations promulgated under the Code.
2.5 Appointment
of Administrative Shareholder.
Each XX
Xxxxxx hereby irrevocably constitutes and appoints, effective as of the date
hereof, Xxxx Xxxxxx or Xxxxx Xxxxxxx, acting individually (together with his
permitted successors, the “Administrative Stockholder”), as the true and lawful
agent and attorney-in-fact to: (i) enter into any agreement in connection with
the Exchange and the transactions contemplated by this Agreement, (ii) exercise
any or all of the powers, authority and discretion conferred on him under this
Agreement and any such agreement, (iii) sign stock powers and any other
instruments effecting the transfer of the KP Membership Interests at the Closing
under the terms and conditions of this Agreement, and to enter into any
amendments thereto as approved by the Administrative Stockholder, Karat and
Sentra; (iv) accept delivery of and to submit for exchange and cancellation
any
KP Membership Interests, waive or amend any terms and conditions of any
agreement in connection with the Exchange and any transactions contemplated
by
this Agreement, to give and receive notices on such Stockholder’s behalf and to
be his, her or its exclusive representative with respect to any matter or Claim
arising with respect to any transaction contemplated by any such agreement,
including, without limitation, the defense, settlement or compromise of any
Claim for which any Sentra Indemnitee may be entitled to indemnification, and
the Administrative Stockholder agrees to act as, and to undertake the duties
and
responsibilities of, such agent and attorney-in-fact.
2.6 Exclusive
Interface.
Sentra
and the other Sentra Indemnitees shall be entitled to deal exclusively with
the
Administrative Stockholder on all matters in connection with the Exchange and
the transactions contemplated herein, and shall be entitled to rely exclusively
(without further evidence of any kind whatsoever) on any document executed
or
purported to be executed on behalf of any XX Xxxxxx by the Administrative
Stockholder, and on any other action taken or purported to be taken on behalf
of
any XX Xxxxxx by the Administrative Stockholder, as fully binding upon the
XX
Xxxxxx with respect to the Exchange.
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2.7 Limit
on Liability.
The
Administrative Stockholder shall not be liable to any Person for any action
taken or not taken by him in good faith or for any mistake of fact or law for
anything that he may do or refrain from doing in connection with his obligations
under this Agreement (i) with the consent of KP Holders who, as of the date
of
this Agreement, owned a majority of the outstanding shares of the KP Membership
Interests, or (ii) in the absence of his own gross negligence or willful
misconduct. Any action taken or not taken pursuant to the advice of counsel
shall be conclusive evidence of the absence of gross negligence or willful
misconduct. The KP Holders shall, jointly and severally, indemnify and hold
the
Administrative Stockholder harmless from any and all liability and expenses
that
may arise out of any action taken or omitted by him as Administrative
Stockholder in accordance with this Agreement, except such liability and expense
as may result from the gross negligence or willful misconduct of the
Administrative Stockholder.
2.8 Reliance
on Signatures.
The
Administrative Stockholder may rely and shall be protected in relying or
refraining from acting on any instrument reasonably believed to be genuine
and
to have been signed or presented by the proper party or parties. The
Administrative Stockholder shall not be liable for any other parties’ forgeries,
fraud or false representations.
2.9
Replacement.
If the
Administrative Stockholder shall be unable or unwilling to serve in such
capacity, his successor shall be named by those Persons holding a majority
of
the shares of the KP Membership Interests outstanding immediately prior to
the
Closing, subject to the approval of Sentra in its reasonable discretion, and
such successor shall serve and exercise the powers of the Administrative
Stockholder hereunder. If for any reason there is no Administrative Stockholder
at any time, all references herein to the Administrative Stockholder shall
be
deemed to refer to KP Holders who hold a majority of the KP Membership Interests
outstanding immediately prior to the Closing.
ARTICLE
III
CLOSING
3.1
Date
and Location of the Closing.
Unless
this Agreement shall have been terminated pursuant to Article IX, the closing
(the "Closing") of the transactions contemplated hereunder shall take place
at
the offices of Karat, 00 Xxxxxx Xxxxxx, Xxxxxx XX 00000 on or as promptly as
practicable following satisfaction or waiver of the conditions set forth in
Sections 8.1 and 8.2, or at such other time and place as is mutually agreed
in
writing by the parties hereto. The date of the Closing is referred to herein
as
the "Closing Date."
3.2 Deliveries.
At the
Closing, (a) the Administrative Stockholder shall deliver to Sentra, (i) an
Assignment instrument, in the form attached hereto as Exhibit A, transferring
all the KP Membership Interests, in proper form for transfer to Sentra, (ii)
the
Lock-Up Letter executed by each XX Xxxxxx in the form attached hereto as Exhibit
B and (iii) such other documents as may be required under applicable law or
requested by Sentra, including without limitation, any Required Consents, as
listed in Schedule 3.2, whereupon (b) Sentra will deliver to the Administrative
Stockholder in exchange therefor, certificates evidencing the Exchange Shares
to
which each XX Xxxxxx is entitled to hereunder in the amounts indicated on
Schedule
2.2.
If
Sentra is not able to deliver the certificates evidencing the Exchange Shares
at
Closing, the Company shall accept delivery of an irrevocable instruction letter
from counsel to Sentra addressed to the transfer agent of Sentra authorizing
the
issuance of the Exchange Shares with delivery thereof directly to the
Administrative Stockholder. The Administrative Stockholder will thereafter
immediately deliver such certificates to each respective XX Xxxxxx. The Exchange
Shares issued upon the surrender for exchange of the KP Membership Interests
in
accordance with the terms hereof shall be deemed to have been issued in full
satisfaction of all rights of the KP Holders pertaining to such Shares.
Simultaneous or as soon as practicable following the Closing, Sentra shall
cause
the Exchange to be memorialized and disclosed by making all filings or
recordings required under applicable law. The Administrative Stockholder and
each of the KP Holders hereby covenant and agree to aid Sentra, as specifically
requested by Sentra, in preparing and making such filings or recordings, at
Sentra’s expense. Sentra agrees that the certificates representing the Exchange
Shares shall be delivered to the Admininstrative Stockholder no later than
30
Business Days after Closing.
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3.3 Wholly-Owned
Subsidiary.
At and
after the Closing, the Exchange will have the effects set forth in this
Agreement, and Karat shall become a wholly-owned subsidiary of Sentra if all
the
KP Membership Interests are delivered.
3.4
Restrictive Legends.
Certificates evidencing the Exchange Shares pursuant to this Agreement may
bear
one or more of the following legends, including without limitation, any legend
required by the laws of any jurisdiction in which a XX Xxxxxx resides, and
any
legend required by any applicable law, including without limitation, any legend
that will be useful to aid compliance with Regulation D or other regulations
adopted by the SEC under the Securities Act:
“THESE
SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN
THE
ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES
UNDER SUCH ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED OR UNLESS TRANSFERRED PURSUANT TO ANY VALID
EXEMPTION FROM REGISTRATION AVAILABLE UNDER SUCH ACT.”
ARTICLE
IV
REPRESENTATIONS
AND WARRANTIES OF KARAT
As
an
inducement to Sentra to enter into this Agreement and to consummate the
transactions contemplated herein, Karat, Xxxxx Xxxxxxx, Xxxxxx Xxxxxxxxxx and
Xxxx Xxxxxx, jointly and severally, represent and warrant, to the best of their
respective knowledge, as of the date of this Agreement and as of the Closing
Date, to Sentra as follows:
4.1 Organization.
Karat
is a limited liability company duly organized, validly existing, and in good
standing under the laws of the State of New York. Karat has all requisite power
to own, operate and lease its business and assets and carry on its business
as
the same is now being conducted.
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4.2
Capital
Structure.
(a)
The
KP
Holders own all of the issued and outstanding shares of Karat beneficially
and
of record, free and clear of any Encumbrances. There will, as of the Closing,
be
no equity interests of Karat issued or outstanding other than the KP Membership
Interests. Schedule
2.2
lists
all the KP Holders, and no other Person owns, legally or beneficially, any
equity of Karat. As of the Closing, the KP Holders shall have the sole, absolute
and unrestricted right, power and capacity to exchange, assign and transfer
all
of the KP Membership Interests to Sentra. Upon delivery to Sentra of the
certificates representing the KP Membership Interests at the Closing, Sentra
will acquire good and valid title to the KP Membership Interests, free and
clear
of any Encumbrances.
(b)
All
of
the KP Membership Interests are duly authorized, validly issued, fully paid
and
nonassessable, and were not issued in violation of any preemptive or similar
rights. As of the Closing, there shall be no outstanding subscriptions, options,
warrants, puts, calls, agreements or other rights of any type or other
securities (a) requiring the issuance, sale, transfer, repurchase, redemption
or
other acquisition of any membership interests or other equity interests of
Karat, other than the warrant issued to ABN Amro Bank N.V., a copy of which
has
been reviewed by Sentra, (b) restricting the transfer of any membership
interests of Karat, or (c) relating to the voting of any membership interests
of
Karat. As of the Closing, there shall be no issued or outstanding Indebtedness
of Karat having the right to vote (or convertible into, or exchangeable for,
securities having the right to vote), upon the happening of a certain event
or
otherwise, on any matters on which the equity holders of Karat may
vote.
(c) The
offer
and sale of the KP Membership Interests to the KP Holders was done in compliance
with all applicable Laws.
4.3
Power
and Authority.
Karat
has all requisite power and authority to enter into and deliver this Agreement
and to consummate the transactions contemplated hereby. The execution, delivery,
and performance of this Agreement by Karat and the consummation by it of the
transactions contemplated hereby, and the execution, delivery and performance
of
the other agreements, documents and instruments to be executed and delivered
in
connection with this Agreement by Karat and the consummation of the transactions
contemplated thereby, have been duly authorized by all necessary action on
the
part of Karat and no other action or corporate proceeding on the part of Karat
is necessary to authorize the execution, delivery, and performance by Karat
of
this Agreement and the consummation of the transactions contemplated hereby.
This Agreement has been duly executed and delivered by Karat and constitutes
the
legal, valid and binding obligation of Karat, enforceable against it in
accordance with its terms.
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4.4
Conflicts;
Consents and Approvals.
Neither
the execution and delivery by Karat of this Agreement and the other agreements,
documents and instruments to be executed and delivered by it in connection
with
this Agreement, nor the consummation of the transactions contemplated hereby
and
thereby, will:
(a)
conflict
with, or result in a breach of any provision of, the organizational documents
of
Karat;
(b)
violate,
or conflict with, or result in a breach of any provision of, or constitute
a
default (or an event that, with the giving of notice, the passage of time or
otherwise, would constitute a default) under, or entitle any Person (with the
giving of notice, the passage of time or otherwise) to terminate, accelerate,
modify or call a default under, or give rise to any obligation to make a payment
under, or to any increased, additional or guaranteed rights of any Person under,
or result in the creation of any Encumbrance upon any of the properties or
assets of Karat or the KP Membership Interests under any of the terms,
conditions or provisions of (1) the organizational documents of Karat, (2)
any
Contract to which Karat is a party or to which any of its properties or assets
may be bound, or (3) any permit, registration, approval, license or other
authorization or filing to which Karat is subject or to which any of its
properties or assets may be subject;
(c)
require
any Required Consent; or
(d)
violate
any order, writ, or injunction, or any decree, or Law applicable to Karat or
any
of its properties or assets.
4.5
Subsidiaries.
Karat
does not own, directly or indirectly, nor entered into any agreement,
arrangement or understanding to purchase or sell any capital stock or other
equity interests in any Person or is a member of or participant in any Person.
Karat does not have any Subsidiaries.
4.6
No
Material Adverse Effect.
Other
than as disclosed on Schedule 4.6, (a) Karat has (1) maintained its books and
records in accordance with past accounting practice, and (2) used all reasonable
commercial efforts to preserve intact the assets and the business organization
and operations of Karat, to keep available the services of its employees and
to
preserve its relationships with customers, suppliers, licensors, licensees,
contractors and other persons with whom Karat have business relations, (b)
no
Material Adverse Effect on Karat has occurred, and (c) there has been no event,
occurrence or development that has had, or would reasonably be expected to
have,
a Material Adverse Effect on the ability of KP Holders or Karat to timely
consummate the transactions contemplated hereby.
11
4.7
Title
to Properties.
Schedule
4.7
lists
all properties and assets of Karat. With
the
exception of Intellectual Property, as to which only the representations and
warranties included in Section 4.10 shall apply, Karat
has
good and marketable title to all of its properties and assets, real and
personal, free and clear of all Encumbrances. All equipment used by Karat is
generally in good operating condition and repair, and is adequate for the uses
to which it is being put.
4.8
Taxes.
Karat
has (a) duly and timely filed all Tax Returns relating to Karat that it was
required to file (taking into account any extensions of the filing deadlines
which have been validly granted) and ((b) paid all Taxes that are shown thereon
as owing or that are otherwise due and payable by it. Such filed Tax Returns
are
true, correct and complete in all material respects. The charges, accruals
and
reserves on the Financial Statements as of September 30, 2007 in respect of
Taxes for all open fiscal periods are adequate for the payment of all
Liabilities of Karat for Taxes, and there are no unpaid assessments for
additional Taxes for any such fiscal period, which are not reflected on the
Financial Statements as of September 30, 2007.) There are no disputes pending
or
threatened as to Taxes payable by Karat. There are no outstanding agreements
or
waivers extending the statutory period of limitation applicable to any Taxes
of
Karat for any period. Karat (v) has not filed a consent to the application
of
Section 341(f) of the Code, (w) has not been a "distributing corporation" or
a
"controlled corporation" in a distribution intended to qualify under Section
355(a) of the Code within the past five years, (x) is not a party to any Tax
sharing, allocation or indemnification agreement or arrangement, (y) is not
required to make any adjustments under Section 481(a) of the Code (or any
similar provision of state, local or foreign Tax law) for any taxable year
ending after the Closing Date, and (z) has not been a member of an affiliated
group filing a consolidated, combined or unitary Tax Return or has any liability
for the Taxes of any Person (other than Karat) under Treasury Regulation
§1.15026 (or any similar provision of state, local or foreign law).
4.9
Compliance
with Law.
Karat
and each of the officers, managers, directors, employees and agents of Karat,
to
the best of their knowledge, has complied in all respects with all Laws
applicable to Karat and its products and operations. Neither Karat nor any
KP
Holders has received any notice from any Governmental Authority that Karat
has
been or is being conducted in violation of any applicable Law or that an
investigation or inquiry into any noncompliance with any applicable Law is
ongoing, pending or threatened.
4.10
Intellectual
Property.
(a) |
For
the purposes of this Agreement, the following terms have the following
definitions:
|
“Intellectual
Property”
shall
mean any or all of the following and all rights in, arising out of, or
associated therewith: (i) all patents and applications therefor throughout
the
world, and all reissues, divisions, renewals, extensions, provisionals,
continuations and continuations-in-part thereof; (ii) all inventions (whether
patentable or not), invention disclosures, improvements, trade secrets,
proprietary information, know how, technology, technical data and customer
lists, and all documentation relating to any of the foregoing; (iii) all
copyrights, copyrights registrations and applications therefor, and all other
rights corresponding thereto throughout the world; (iv) all industrial designs
and any registrations and applications therefor throughout the world, (v) all
trade names, logos, URLs, common law trademarks and service marks, trademark
and
service xxxx registrations and applications therefor throughout the world;
(vi)
all databases and data collections and all rights therein throughout the world;
(vii) all moral and economic rights of authors and inventors, however
denominated, throughout the world, and (viii) any similar or equivalent rights
to any of the foregoing anywhere in the world.
12
“Registered
Intellectual Property”
means
all: (i) registered patents and applications for patent registration (including
provisional applications); (ii) registered trademarks, applications to register
trademarks, intent-to-use applications, or other registrations or applications
related to trademarks; (iii) registered copyrights and applications for
copyright registration; and (iv) any other Intellectual Property that is the
subject of an application, certificate, filing, registration or other document
issued, filed with, or recorded by any state, government or other public legal
authority.
“Karat
Intellectual Property”
shall
mean any Intellectual Property or Registered Intellectual Property that is
owned
by, or licensed to Karat.
(b) |
Except
as disclosed on Schedule
4.10(b),
no Karat Intellectual Property or product or service of Karat is
subject
to any Action or Claim, agreement, or stipulation restricting in
any
manner the use, transfer, or licensing thereof by Karat, or which
may
affect the validity, use or enforceability of such Karat Intellectual
Property.
|
(c) |
Schedule
4.10
is
a complete and accurate list or general description of all the Karat
Intellectual Property and specifies, where applicable, the jurisdictions
in which each such item of the Registered Intellectual Property has
been
issued or registered or in which an application for such issuance
and
registration have been filed, including the respective registration
or
application numbers. Each item of the Registered Intellectual Property
is
subsisting, all necessary registration, maintenance and renewal fees
currently due in connection with such Registered Intellectual Property
have been made and all necessary documents, recordations and certificates
in connection with such Registered Intellectual Property have been
filed
with the relevant patent, copyright, trademark or other authorities
in the
United States or foreign jurisdictions, as the case may be, for the
purposes of maintaining such Registered Intellectual
Property.
|
13
(d) |
Except
as disclosed on Schedule 4.10(c), Karat is
the registered and/or record owner of,
or
has license (sufficient for the conduct of its business as currently
conducted and as proposed to be conducted) to, use each item of the
Karat
Intellectual Property free and clear of any Encumbrances (excluding
licenses and related restrictions).
|
(e) |
Schedule
4.10
lists all Contracts to which Karat is a party (i) with respect to
the
Karat Intellectual Property licensed or transferred to any Person
or (ii)
pursuant to which a Person has licensed or transferred any Intellectual
Property to Karat.
|
(f) |
All
Contracts relating to the Karat Intellectual Property are in full
force
and effect. The consummation of the transactions contemplated by
this
Agreement will neither violate nor result in the breach, modification,
cancellation, termination, or suspension of such Contracts. Karat
is in
compliance with, and has not breached any term of such Contracts
and, to
the knowledge of Karat, all other parties to such Contracts are in
compliance with, and have not breached any term of, such Contracts.
Following the Closing, Sentra will be permitted to exercise all the
rights
of Karat under such Contracts to the same extent Karat would have
been
able to had the transactions contemplated by this Agreement not occurred
and without the payment of any additional amounts or consideration
other
than ongoing fees, royalties or payments which Karat would otherwise
be
required to pay.
|
(g) |
To
the best of its knowledge, Karat possesses all the Intellectual Property
rights necessary to effectuate the business and operations of Karat.
To
the best of its knowledge, Karat has not infringed or misappropriated
any
Intellectual Property of any third Person or engaged in unfair competition
or any unlawful trade practice. Except
as disclosed on Schedule 4.10(b), Karat has not received notice from
any
third party that the operation of the business of Karat, or any act,
product or service of Karat, infringes or misappropriates the Intellectual
Property of any third party or constitutes unfair competition or
trade
practices under the laws of any jurisdiction. To Karat’s knowledge, no
Person has infringed or misappropriated or is infringing or
misappropriating any of the Karat Intellectual
Property.
|
(h) |
In
the exercise of its independent business judgment, Karat has taken
all
reasonably prudent steps to protect the rights of Karat in its
confidential information and trade secrets that it wishes to protect
or
any trade secrets or confidential information of third parties provided
to
Karat, and, without limiting the foregoing, Karat has and enforces
a
policy requiring each employee and contractor to execute a proprietary
information/confidentiality agreement substantially in the form provided
to Sentra and all current and former employees and contractors of
Karat
have executed such an agreement, except where the failure to do so
is not
reasonably expected to be material to
Karat.
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14
4.11
Environmental
Matters.
(a)
Karat
is
in compliance with, and has at all times complied with, all applicable
Environmental Laws, and there are no facts, circumstances or conditions,
including requirements of current Environmental Laws that have been adopted
but
are not yet effective, for which reserves or accruals would be required under
GAAP, as consistently applied.
(b)
Karat
is
not subject to any existing, pending, or threatened Action or Claim by any
Person under any Environmental Laws.
(c)
The
Environmental Permits that are required for the conduct of Karat’s business are
valid, in full force and effect and enforceable according to their terms, no
proceeding is pending or threatened, to revoke, modify or terminate such
permits, and Karat is in compliance with, and have at all times complied with,
all such Environmental Permits.
4.12
Litigation.
There
is no Action pending or threatened against Karat, or any executive officer,
member, manager or director thereof in each case that (a) relates to Karat,
its
assets, or its business other than as set forth on Schedule 4.12, or (b) as
of
the date hereof, seeks, or could reasonably be expected, to prohibit or restrain
the ability of Karat to enter into this Agreement or to timely consummate any
of
the transactions contemplated hereby, and there is no reasonable basis for
any
such Action. There are no judgments, decrees, agreements, memoranda of
understanding or orders of any Governmental Authority outstanding against Karat.
4.13 Contracts.
Schedule
4.13
contains
a complete list, as of the date hereof, of all Contracts to which Karat is,
or
will be at Closing, a party or bound, or that otherwise relate to its business
or assets. Karat have made available to Sentra or its representatives correct
and complete copies of all such Contracts with all amendments thereof. Each
such
Contract is, and will at Closing be, valid, binding, and enforceable against
Karat and the other parties thereto in accordance with its terms, and is, and
will at Closing be, in full force and effect. Karat is not in default under
or
in breach of or is, or as of the Closing will be, otherwise delinquent in
performance under any such Contract, and no event has occurred, or will as
of
the Closing occur, that, with notice or lapse of time, or both, would constitute
such a default. Each of the other parties thereto has performed in all respects
all of the obligations required to be performed by it under, and is not in
default under, any such Contract and no event has occurred that, with notice
or
lapse of time, or both, would constitute such a default. Other than as disclosed
on Schedule 4.13, there are no disputes pending or threatened in writing with
respect to any such Contracts. Neither Karat nor any other party to any such
Contract has exercised any option granted to it to terminate or shorten or
extend the term of such Contract, and Karat has not given notice or received
notice to such effect. All of such Contracts will continue to be valid, binding,
enforceable and in full force and effect on substantially identical terms
following the consummation of the transactions contemplated hereby.
15
4.14
Employee
Benefit Plans.
(a)
As
of the
Closing, Karat will not sponsor, maintain, contribute to, or have any Liability
under, for or with respect to, any Employee Benefit Plans (including
multiemployer plans) or any Employment Agreements other than listed on Schedule
4.14. From and after the Closing, Sentra will not directly or indirectly have
or
incur any Liabilities, whether by virtue of the transactions contemplated by
this Agreement or otherwise, with respect to or in connection with (i) any
Employee Benefit Plans or any Employment Agreements; and (ii) the Employees
or
any other individuals who do or did at any time provide employment or
employment-type services for or with respect to Karat, which arose or were
incurred at any time prior to the Closing.
(b)
There
does not now exist, nor do any circumstances exist that could result in, any
liability to Karat or its Affiliates following the Closing with respect to
the
Employee Benefit Plans, other than as set forth on Schedule 4.14.
(c)
Karat
has
no liability for life, health, medical or other welfare benefits to Former
Employees or beneficiaries or dependents thereof.
(d)
Neither
the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will (either alone or in conjunction with
any
other event) result in, cause the accelerated vesting, funding or delivery
of,
or increase the amount or value of, any payment or benefit to any employee,
member, manager, officer or director of Karat, or result in any limitation
on
the right of Karat to amend, merge, terminate or receive a reversion of assets
from any Employee Benefit Plan or related trust or any Employment Agreement
or
related trust. Without limiting the generality of the foregoing, no amount
paid
or payable (whether in cash, in property, or in the form of benefits) by Karat
in connection with the transactions contemplated hereby (either solely as a
result thereof or as a result of such transactions in conjunction with any
other
event) will be an "excess parachute payment" within the meaning of Section
280G
of the Code.
(e)
None
of
the KP Holders or its ERISA Affiliates nor any other Person, including any
fiduciary, has engaged in any "prohibited transaction" (as defined in Section
4975 of the Code or Section 406 of ERISA), which could subject any of the
Employee Benefit Plans or their related trusts, the KP Holders or its ERISA
Affiliates, or any person that the KP Holders or Karat has an obligation to
indemnify, to any tax or penalty imposed under Section 4975 of the Code or
Section 502 of ERISA.
(f)
There
are
no pending or threatened Claims, lawsuits or arbitrations which have been
asserted or instituted, and no set of circumstances exists which may reasonably
give rise to a claim or lawsuit, against the Plans, any fiduciaries thereof
with
respect to their duties to the Plans or the assets of any of the trusts under
any of the Plans which could reasonably be expected to result in any liability
of the KP Holders or Karat to the Pension Benefit Guaranty Corporation, the
Department of Treasury, the Department of Labor, any Multiemployer Plan, any
Plan, any participant in a Plan, or any other party.
16
4.15
Labor
and Employment Matters.
(a)
There
are
no collective bargaining agreements, union contracts or similar agreements
or
arrangements in effect that cover any Employee or Former Employee (each, a
"Collective Bargaining Agreement"). With respect to any Employee, (a) there
is
no labor strike, dispute, slowdown, lockout or stoppage pending or threatened
against Karat or with respect to any Employees, and Karat has not experienced
any labor strike, dispute, slowdown, lockout or stoppage; (b) there is no unfair
labor practice charge or complaint against Karat or threatened before the
National Labor Relations Board or before any similar state or foreign agency;
(c) there is no grievance or arbitration arising out of any Collective
Bargaining Agreement or other grievance procedure; and (d) no charges are
pending before the Equal Employment Opportunity Commission or any other agency
responsible for the prevention of unlawful employment practices.
(b)
Karat
is
in compliance in all respects with all Laws, regulations and orders relating
to
the employment of labor, including all such Laws, regulations and orders
relating to wages, hours, and any similar state or local "mass layoff" or "plant
closing" Law, collective bargaining, discrimination, civil rights, safety and
health, workers' compensation and the collection and payment of withholding
and/or social security taxes and any similar tax.
4.16
Financial
Statements.
(a)
Schedule
4.16
contains
true, correct and complete copies of the audited financial statements of Karat
for the years ended as of March 31, 2007 and as of March 31, 2006 and reviewed
financial statements of Karat for the six-month period ended as of September
30,
2007. Such financial statements (the "Financial Statements") present fairly
the
financial condition of Karat as of the dates thereof and its consolidated
statements of operations and deficit and cash flows for the periods then ended
and have been prepared in accordance with GAAP applied on a consistent basis
and
in conformity with all applicable rules and regulations of the SEC.
(b)
Except
(i) as disclosed or reserved against in the balance sheet portion of the
Financial Statements or (ii) as incurred after such date without violation
of
Section 7.3, to the best of its knowledge Karat, its business, and its assets
are not subject to any Liabilities.
(d)
Since
September 30, 2007, there has been no Material Adverse Change in the business,
operations or financial condition of Karat or any event, condition or
contingency that could reasonably be expected to result in such a Material
Adverse Effect with respect to Karat or its business other than as set forth
on
Schedule 4.16.
17
4.17 Permits;
Compliance.
Karat is
in possession of all franchises, grants, authorizations, licenses, permits,
easements, variances, exemptions, consents, certificates, approvals and orders
necessary to own, lease and operate its properties and assets and to carry
on
its business as it is now being conducted and as it will be conducted through
to
the Closing (collectively, the "Permits"). There is no Action pending, or
threatened, regarding any of the Permits and each such Permit is in full force
and effect. Karat is not in conflict with, or in material default (or would
be
in default with the giving of notice, the passage of time, or both) with, or
in
violation of, any of the Permits.
4.18
Real
Estate.
(a)
Schedule
4.18
sets
forth a list, complete and accurate in all respects, of all real property that
is, as of the date hereof, and will be as of the Closing, owned, leased, or
subleased to Karat. Karat has provided Sentra with true and correct copies
of
all leases for the Leased Real Property.
(b)
Each
Real
Property Lease is and will be at the Closing valid, binding and enforceable
against Karat and, to the KP Holders’ knowledge, the other parties thereto in
accordance with its terms, and is in full force and effect.
(c)
As
of the
Closing, Karat will not be in default under, in breach of or otherwise
delinquent in performance under any Real Property Lease and, no event has
occurred, or as of the Closing will occur, which, with due notice or lapse
of
time, or both, would constitute such a default.
(d) There
are
no leases or subleases to which Karat will be a party or bound at Closing,
as
lessor, and third parties, as lessees, with respect to any of the Real Property,
except as disclosed in Schedule
4.18.
(e)
There
does not exist any actual, threatened or contemplated condemnation or eminent
domain proceedings that affect any Leased Real Property.
(f)
The
current use and occupancy of the Leased Real Property and the improvements
located thereon are not in violation of any material recorded covenants,
conditions, restrictions, reservations, easements or agreements affecting the
Leased Real Property.
(g)
No
part
of any improvement located on the Leased Real Property which is material to
its
operation is dependent for its access, operation or utility on any land,
building or other improvements not included in the Real Property, and all the
Leased Real Property has sufficient access to public roads.
18
4.19
Intercompany
Services.
Other
than as set forth on Schedule 4.19, There are no Contracts pursuant to which
any
goods, services, materials or supplies are provided (a) by Karat, on the one
hand, to the KP Holders or their Affiliates (other than Karat), on the other
hand, or (b) by the KP Holders or any of its Affiliates (other than Karat),
on
the one hand, to Karat, on the other hand.
4.20
Guaranties.
Karat
is not directly or indirectly (a) liable, by guarantee or otherwise, upon or
with respect to, (b) obligated to provide funds with respect to, or to guarantee
or assume, any Indebtedness or other obligation of any Person.
4.21 Full
Disclosure.
No
representation or warranty of Karat or the KP Holders in this Agreement omits
to
state a material fact necessary to make the statements herein, in light of
the
circumstances in which they were made, not misleading. There is no fact known
to
Karat or the KP Holders that has specific application to Sentra and that
materially adversely affects or, as far as can be reasonably foreseen,
materially threatens, the assets, business, prospects, financial condition,
or
results of operations of Karat that has not been set forth in this
Agreement.
Any
representations made herein “to the best of the knowledge” or words of similar
import shall mean the knowledge of Xxxxx Xxxxxxx, Xxxxxx Xxxxxxxxxx or Xxxx
Xxxxxx.
ARTICLE
V
REPRESENTATIONS
AND WARRANTIES OF THE KP HOLDERS
As
an
inducement to Sentra to enter into this Agreement and to consummate the
transactions contemplated herein, each XX Xxxxxx, severally and not jointly,
represent and warrant, as of the date of this Agreement and as of the Closing
Date, to Sentra as follows:
5.1 |
Authority.
The XX Xxxxxx has the right, power, authority and capacity to execute
and
deliver this Agreement to which it is or will become a party, to
consummate the Exchange and the other transactions contemplated hereby
and
thereby and to perform its respective obligations under this Agreement
to
which it is or will become a party. This Agreement has been duly
authorized, executed and delivered by it and is enforceable against
it in
accordance with the terms hereof. It has all authorizations and consents
necessary for the execution and delivery of this Agreement, and for
the
performance of its obligations hereunder. If such Holder is not a
natural
Person, it is and at the Closing will be duly organized, validly
existing
and in good standing under the laws of the jurisdiction of its
organization with corporate power and authority to own, lease and
operate
its properties and to conduct its business. This Agreement constitutes
the
legal, valid and binding obligations of the respective XX Xxxxxx,
enforceable against such holder in accordance with the terms
hereof.
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19
5.2 |
Ownership.
The XX Xxxxxx has, and at the Closing will have, (i) good and marketable
title to all the KP Membership Interests listed beside its name in
Schedule
2.2
(as to the applicable Holder, the “Applicable Securities”), free and clear
of all Encumbrances, and (ii) full legal right and power to sell,
transfer
and deliver the Applicable Securities to Sentra in accordance with
this
Agreement. The Applicable Securities are the only securities of Karat
held
by the XX Xxxxxx. Upon delivery of the Applicable Securities to be
exchanged by it to Sentra in accordance with this Agreement, Sentra
will
receive good and marketable title to all the Applicable Securities,
free
and clear of all Encumbrances.
|
5.3 |
Taxes.
As
of the Closing there are no Taxes that are required to be paid in
connection with the exchange and transfer of the KP Membership Interests
to Sentra; all Laws imposing such Taxes will have been fully complied
with.
|
5.4 |
No
Conflict.
None
of the execution, delivery or performance of this Agreement to which
the
XX Xxxxxx is or will become a party, and the consummation of the
Exchange
by such Holder conflicts or will conflict with or results or will
result
in any breach or violation of any of the terms or provisions of,
or
constitute a default under, or result in the creation or imposition
of any
Encumbrance upon, any of its properties or assets pursuant to (i)
the
terms of its organizational documents; (ii) the terms of any Contract
to
which it is a party or by which it is bound or to which any of its
properties is subject, which conflict, breach, violation or default
would
adversely affect the Holder's ability to perform its obligations
hereunder; (iii) any statute, rule or regulation of any Governmental
Authority having jurisdiction over it or any of its activities or
properties; or (iv) the terms of any order of any arbitrator or any
Governmental Authority having such
jurisdiction.
|
5.5 |
No
Consent.
No
consent, approval, authorization or order of, or any filing or declaration
with any Governmental Authority or any other Person is required for
the
consummation by the XX Xxxxxx of any of the transactions on its part
contemplated under this Agreement.
|
5.6 |
Investment.
The XX Xxxxxx is acquiring the Exchange Shares for investment, for
such
Stockholder’s own account as principal, not as a nominee or agent and not
with a view to, or for, resale, distribution or fractionalization
thereof
in whole or in part. No other person has a direct or indirect interest
in
the Exchange Shares to be received by the XX Xxxxxx. Further, the
XX
Xxxxxx does not have any contract, undertaking, agreement or arrangement
with any person to sell, transfer or grant participations to any
third
person with respect to the Exchange Shares or any portion thereof
to which
the XX Xxxxxx is receiving.
|
5.7 |
No
Liquidity.
The XX Xxxxxx acknowledges that the Exchange Shares delivered pursuant
to
the Exchange will not be registered under the Securities Act and
may only
be transferred if the shares are registered or if an applicable exemption
exists for the transfer under securities Laws. The Stockholder understands
and acknowledges that the offering of the Exchange Shares pursuant
to this
Agreement is made on the basis of an exemption from registration
pursuant
to Section 4(2) and/or Section 3(b) of the Securities Act and Regulation
D
thereunder and that Sentra's reliance upon such exemption is predicated
upon such Stockholder's representations as set forth in this Agreement.
The Stockholder acknowledges that due to this lack of registration
as well
as the provisions of the Lock-Up Agreement to which the XX Xxxxxx
is
bound, there may not be a market for the Exchange Shares. Accordingly,
the
XX Xxxxxx has the financial ability to bear the economic risk of
the
exchange, has adequate means for providing for its current needs
and
personal contingencies and has no need for liquidity with respect
to the
Exchange Shares.
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20
5.8 |
Experience;
Information.
The
XX Xxxxxx represents that: (a) it has such knowledge and experience
in
financial and business matters as to be capable of evaluating the
merits
and risks of its prospective investment in the Exchange Shares or
is able,
by reason of the business and financial experience of its advisors
to
protect its interests in connection with the Exchange contemplated
herein;
and (b) it has received all the information it has requested from
either
the Company or Sentra and considers necessary or appropriate for
deciding
whether to obtain the Exchange Shares, including without limitation,
the
draft of the Current Report on Form 8-K to be filed by Sentra upon
the
Closing which includes, among other information, risk factors with
respect
to the Company as well as certain financial information of the Company.
Moreover, the XX Xxxxxx has been provided an opportunity for a reasonable
period of time prior to the date hereof to obtain additional information
about the Company, Sentra and the transactions contemplated hereby
and all
other information it has requested. The XX Xxxxxx is not relying
on the
Company, Sentra or its respective affiliates or agents with respect
to the
economic considerations involved in this transaction but has relied
solely
on its own advisors. The XX Xxxxxx further understands that an investment
in the Exchange Shares is a speculative investment which involves
a high
degree of risk and the potential loss of its entire
investment.
|
5.9 |
Agreements
Regarding Membership Interests.
There are no voting trusts or other Contracts or understandings to
which
the XX Xxxxxx is a party with respect to the transfer, Encumbrance,
voting
or registration of any the KP Membership Interests and there are
no
Contracts relating to the issuance, sale or transfer of any equity
securities or other securities of Karat.
|
ARTICLE
VI
REPRESENTATIONS
AND WARRANTIES OF SENTRA
As
an
inducement to the KP Holders and Karat to enter into this Agreement and to
consummate the transactions contemplated herein, Sentra represents and warrants,
as of the date of this Agreement and as of the Closing Date, to the KP Holders
and Karat as follows:
6.1 Organization.
Sentra
is a corporation duly organized, validly existing, and in good standing under
the laws of the State of Nevada. Sentra has all requisite power to own, operate
and lease its business and assets and carry on its business as the same is
now
being conducted.
21
6.2
Corporate
Power and Authority.
Sentra
has all requisite corporate power and authority to enter into and deliver this
Agreement and to consummate the transactions contemplated hereby. The execution,
delivery, and performance of this Agreement by Sentra and the consummation
of
the transactions contemplated hereby, have been duly authorized by all necessary
action and no other corporate action or corporate proceeding on the part of
Sentra is necessary to authorize the execution, delivery, and performance by
Sentra of this Agreement and the consummation by Sentra of the transactions
contemplated hereby. This Agreement has been duly executed and delivered by
Sentra and constitutes the legal, valid and binding obligation of Sentra,
enforceable against Sentra in accordance with its terms.
6.3
Conflicts;
Consents and Approvals.
Neither
the execution and delivery by the Sentra of this Agreement and the other
agreements, documents and instruments to be executed and delivered by any of
them in connection with this Agreement, nor the consummation of the transactions
contemplated hereby and thereby, will:
(a)
conflict
with, or result in a breach of any provision of, the organizational documents
of
Sentra;
(b)
violate,
or conflict with, or result in a breach of any provision of, or constitute
a
default (or an event that, with the giving of notice, the passage of time or
otherwise, would constitute a default) under, or entitle any Person (with the
giving of notice, the passage of time or otherwise) to terminate, accelerate,
modify or call a default under, or give rise to any obligation to make a payment
under, or to any increased, additional or guaranteed rights of any Person under,
or result in the creation of any Encumbrance upon any of the properties or
assets of Sentra or the Exchange Shares under any of the terms, conditions
or
provisions of (1) the organizational documents of Sentra, (2) any Contract
to
which Sentra is a party or to which any of their respective properties or assets
may be bound which, if so affected, would either have a Material Adverse Effect
or be reasonably likely to prevent the consummation of the transactions
contemplated herein, or (3) any permit, registration, approval, license or
other
authorization or filing to which Sentra is subject or to which any of its
properties or assets may be subject;
(c)
require
any action, consent or approval of any non-governmental third party;
(d)
violate
any order, writ, or injunction, or any material decree, or material Law
applicable to Sentra or any of its, business, properties, or assets;
or
(e)
require
any action, consent or approval of, or review by, or registration or filing
by
Sentra with any Governmental Authority.
22
6.4
Exchange
Shares.
As of
the Closing, all of the Exchange Shares shall be duly authorized, validly
issued, fully paid and nonassessable, and not issued in violation of any
preemptive or similar rights. Upon delivery to the Administrative Stockholder
of
the certificates representing the Exchange Shares at the Closing, the KP Holders
will acquire good and valid title to such shares, free and clear of any
Encumbrances, other than restrictions under applicable securities
laws.
6.5
SEC
Documents.
Sentra
has timely filed all reports, schedules, forms, statements and other documents
required to be filed by it with the SEC pursuant to the reporting requirements
of the Exchange Act (all of the foregoing filed prior to the date hereof and
all
exhibits included therein and financial statements and schedules thereto and
documents (other than exhibits to such documents) incorporated by reference
therein, being hereinafter referred to herein as the “SEC Documents”). As of
their respective dates, the SEC Documents complied in all material respects
with
the requirements of the Securities Act and the Securities Exchange Act of 1934,
as applicable, and none of the SEC Documents, when filed, contained any untrue
statement of a material fact or omitted 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. Since
the
date of the last filed SEC Document, there has been no event, occurrence or
development that has had or that could reasonably be expected to result in
a
material adverse effect on Sentra or on Sentra’s ability to consummate the
transactions contemplated hereby.
ARTICLE
VII
ADDITIONAL
AGREEMENTS AND COVENANTS
7.1
Access
and Information.
Prior
to the Closing, except to the extent prohibited by applicable Law, Sentra,
on
one hand, and the KP Holders and Karat, on the other hand, shall permit
representatives of the other to have reasonable access during normal business
hours and upon reasonable notice to all premises, properties, personnel, books,
records, Contracts, commitments, reports of examination and documents of or
pertaining to, as may be necessary to permit the other to, at its sole expense,
make, or cause to be made, such investigations thereof as the other reasonably
deems necessary or advisable in connection with the consummation of the
transactions contemplated by this Agreement, and Sentra, Karat, and the KP
Holders shall reasonably cooperate with any such investigations. No
investigation by a party or its representatives or advisors prior to or after
the date of this Agreement (including any information obtained by a party
pursuant to this Section 7.1) shall diminish, obviate or cure any breach of
any
representation, warranty, covenant or agreement contained in this Agreement
nor
shall the conduct or completion of any such investigation be a condition to
any
of such party's obligations under this Agreement.
7.2
Confidentiality.
Each of
the parties shall use reasonable efforts to cause their respective Affiliates,
officers, directors, employees, auditors, attorneys, consultants, advisors
and
agents, to treat as confidential and hold in strict confidence, unless compelled
to disclose by judicial or administrative process or, in the opinion of its
counsel, by other requirements of Law, and after prior written notice to the
other parties, all confidential information of Sentra or Karat, as the case
may
be, that is made available in connection with this Agreement, and will not
release or disclose such confidential information to any other Person, except
their respective auditors, attorneys, financial advisors and other consultants,
agents, and advisors in connection with this Agreement. If the Closing does
not
occur (a) such confidence shall be maintained by the Parties and each Party
shall use reasonable efforts to cause its officers, directors, Affiliates and
such other Persons to maintain such confidence, except to the extent such
information comes into the public domain (other than as a result of an action
by
such Party, its officers, directors or such other Persons in contravention
of
this Agreement), and (b) upon the request of any Party, the other Party shall
promptly return to the requesting Party any written materials remaining in
its
possession, which materials it has received from the requesting Party or its
representatives, together with any analyses or other written materials based
upon the materials provided.
23
7.3 Conduct
of Business.
From
and after the date hereof until the Closing, except as otherwise expressly
contemplated by this Agreement, Karat shall:
(a)
use
reasonable commercial efforts to preserve its business, operations, physical
facilities, working conditions and its business relationships with customers,
suppliers, licensors, licensees, contractors and other persons with whom it
has
significant business relations;
(b)
not
knowingly take any action that would cause the representations and warranties
contained herein to be untrue in any respect.
(c)
not
amend
its Articles of Organization or Operating Agreement (or other similar governing
instrument);
(d)
not
split, combine or reclassify any shares of its membership interests, declare,
set aside or pay any dividend or other distribution (whether in cash, stock
or
property or any combination thereof) in respect of its equity interests, make
any other actual or constructive distribution in respect of its interests stock
or otherwise make any payments to holders in their capacity as such, or redeem
or otherwise acquire any of its securities or any other securities;
(e)
not
adopt
a plan of complete or partial liquidation, dissolution, merger, consolidation,
restructuring, recapitalization or other reorganization or otherwise permit
its
corporate existence to be suspended, lapsed or revoked;
(f)
not
create or form any Subsidiary;
(g)
not
(1)
incur or assume any Liability in excess of $100,000, other than the borrowings
by Karat from Sentra; (2) assume, guarantee, endorse or otherwise become liable
or responsible (whether directly, contingently or otherwise) for the obligations
of any other Person; (3) make any loans, advances or capital contributions
to or
investments in any other Person; nor (4) pledge or otherwise Encumber its
membership interests;
24
(h)
not
acquire, sell, lease, license, transfer or otherwise dispose of any assets
in
any single transaction or series of related transactions having a fair market
value in excess of $10,000 in the aggregate other than transactions listed
on
Schedule 7.3(h)or that are otherwise material to it other than sales of its
products in the ordinary course of business;
(i)
not
(1)
acquire (by merger, consolidation or acquisition of stock or assets) any
corporation, partnership or other entity or division thereof or any equity
interest therein; (2) amend, modify, waive or terminate any right under any
material contract in any material way; nor (3) authorize any new capital
expenditure or expenditures that individually is in excess of $10,000 or in
the
aggregate are in excess of $30,000;
(j)
not
enter
into any Contract other than in the ordinary course of business; or
(k)
not
make
any change with respect to the compensation or benefits of any officer, director
or Employee or Former Employee.
From
and
after the date hereof until the Closing, except as otherwise expressly
contemplated by this Agreement, Sentra shall:
(a)
not
knowingly take any action that would cause the representations and warranties
contained herein to be untrue in any respect.
(b)
not
amend
its Articles of Incorporation (or other similar governing
instrument);
(c)
not
split, combine or reclassify any shares of its membership interests, declare,
set aside or pay any dividend or other distribution (whether in cash, stock
or
property or any combination thereof) in respect of its equity interests, make
any other actual or constructive distribution in respect of its interests stock
or otherwise make any payments to holders in their capacity as such, or redeem
or otherwise acquire any of its securities or any other securities;
(d)
not
adopt
a plan of complete or partial liquidation, dissolution, merger, consolidation,
restructuring, recapitalization or other reorganization or otherwise permit
its
corporate existence to be suspended, lapsed or revoked; or
(e) not
acquire (by merger, consolidation or acquisition of stock or assets) any
corporation, partnership or other entity or division thereof or any equity
interest therein.
25
(f)
not
create or form any Subsidiary;
(g)
not
(1)
incur or assume any Liability in excess of $100,000; (2) assume, guarantee,
endorse or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other Person; (3) make
any
loans, advances or capital contributions to or investments in any other Person;
nor (4) pledge or otherwise Encumber its membership interests;
(h) not
acquire, sell, lease, license, transfer or otherwise dispose of any assets
in
any single transaction or series of related transactions having a fair market
value in excess of $10,000 in the aggregate or that are otherwise material
to it
other than sales of its products in the ordinary course of business;
(i) not
enter
into any Contract other than in the ordinary course of business; or
(j) not
make
any change with respect to the compensation or benefits of any officer, director
or Employee or Former Employee.
7.4
Efforts
to Consummate.
Subject
to the terms and conditions of this Agreement, each party hereto shall use
reasonable commercial efforts to take, or to cause to be taken, all actions
and
to do, or to cause to be done, all things necessary, proper or advisable as
promptly as practicable to satisfy the conditions set forth in Article VIII,
and
to consummate the transactions contemplated hereby.
7.5
Further
Assurances.
From
time to time whether before, at or following the Closing, each party shall
make
reasonable commercial efforts to take, or cause to be taken, all actions, and
to
do, or cause to be done, all things reasonably necessary, proper or advisable,
including as required by applicable Laws, to consummate and make effective
as
promptly as practicable the transactions contemplated by this
Agreement.
7.6 No-Shop.
From
the date hereof until earlier of the Closing Date or the date of the termination
of this Agreement in accordance with the terms hereof, neither the KP Holders,
Karat nor its officers, managers, directors, employees, agents, representatives
and Affiliates, shall, directly or indirectly, make, solicit, initiate or
encourage submission of proposals or offers from any Persons relating to an
Acquisition Proposal (as defined below). As used herein, “Acquisition Proposal”
means any proposal or offer involving a liquidation, dissolution,
re-capitalization, merger, consolidation or acquisition or purchase of all
or
substantially all of the assets of, or equity interest in, Karat or any other
similar transaction or business combination involving the same. Each of Karat
and each XX Xxxxxx shall immediately cease and cause to be terminated all
discussions or negotiations with third parties with respect to any Acquisition
Proposal, if any, exiting on the date hereof.
26
From
the
date hereof until earlier of the Closing Date or the date of the termination
of
this Agreement in accordance with the terms hereof, neither Sentra nor its
officers, directors, employees, agents, representatives and Affiliates, shall,
directly or indirectly, make, solicit, initiate or encourage submission of
proposals or offers from any Persons relating to any proposal or offer involving
a liquidation, dissolution, re-capitalization, merger, consolidation or
acquisition or purchase of all or substantially all of the assets of, or equity
interest in, Sentra or any other similar transaction or business combination
involving the same.
7.7
Notification
by the Parties.
Each
party hereto shall use its reasonable commercial efforts to as promptly as
practicable inform the other parties hereto in writing if, prior to the
consummation of the Closing, it obtains knowledge that any of the
representations and warranties made by such party in this Agreement ceases
to be
accurate and complete in any material respect (except for any representation
and
warranty that is qualified hereunder as to materiality or Material Adverse
Effect, as to which such notification shall be given if the notifying party
obtains knowledge that such representation and warranty ceases to be accurate
and complete in any respect). Each party hereto shall also use its reasonable
commercial efforts to promptly inform the other parties hereto in writing if,
prior to the consummation of the Closing, it becomes aware of any fact or
condition that constitutes, in its reasonable judgment, a breach of any covenant
of such party as of the date of this Agreement or that would reasonably be
expected to cause any of its covenants to be breached as of the Closing Date.
Any such notification shall not be deemed to have cured any breach of any
representation, warranty, covenant or agreement made in this Agreement for
any
purposes of this Agreement.
7.8
Cooperation
with Respect to Financial Reporting.
After
the date of this Agreement, the KP Holders and Karat shall reasonably cooperate
with Sentra in connection with Sentra's preparation of historical financial
statements and other information as required for Sentra's filings under the
Exchange Act.
7.9 Release
of Claims By Each Shareholder.
In
consideration of the transactions contemplated hereby, as of the Closing, the
KP
Holders and their respective heirs, executors, successors and assigns (the
"Waiving Parties"), release, waive and forever discharge, in all capacities,
including as owners of Karat, from and after the Closing any and all Claims,
known or unknown, that the Waiving Parties ever had, now have or may have
against Karat and its officers, directors, members, managers, employees or
agents in connection with or arising out of any act or omission of Karat or
its
officers, directors, members, managers, employees, advisers or agents, in such
capacity, at or prior to the Closing; provided, however, that nothing in this
Section 7.9 shall be deemed a waiver by the Waiving Parties of any rights under
this Agreement.
27
ARTICLE
VIII
CONDITIONS
TO CLOSING
8.1 Conditions
to KP Holders’ and Sentra’s Obligations to Close.
All
obligations of the KP Holders and Karat to consummate the transactions
contemplated hereunder are subject to the fulfillment or waiver prior to or
at
the Closing of each of the following conditions:
(a)
All
representations and warranties of Sentra contained in this Agreement shall
be
true and correct in all respects when made and shall be deemed to have been
made
again at and as of the Closing and shall then be true and correct in all
respects (except that representations and warranties made as of a specified
date, shall be true and correct only as of such specified date);
(b)
Since
the
date hereof, there shall not have been any Material Adverse Effect with respect
to Sentra;
If
requested by the Administrative Stockholder, he shall have received a
certificate, executed by the President of Sentra, dated as of the Closing Date,
to the foregoing effect and as to such other matters as may be reasonably
requested by the Administrative Stockholder.
(c)
Prior
to
or at the Closing, Sentra shall have delivered to the KP Holders the items
to be
delivered pursuant to Section 3.2(b);
(d)
Sentra
shall have performed in all material respects each obligation and agreement
to
be performed by it, and shall have complied in all material respects with each
covenant required by this Agreement to be performed or complied with by it
at or
prior to the Closing; and
(e)
The
KP
Holders and Karat shall have completed to their reasonable satisfaction their
business and legal due diligence investigation of Sentra, its property, business
and subsidiaries, shall not have discovered any facts, circumstances,
liabilities or conditions that, in the KP Holders' reasonable discretion, may
adversely affect the value or prospects of Sentra or that may expose Sentra
to
any liability not heretofore fully disclosed to the KP Holders.
(f) The
KP
Holders and Karat shall have received any agreements, instruments, certificates
and any other documentation requested.
8.2
Conditions
to Sentra’s Obligations to Close.
All
obligations of Sentra to consummate the transactions contemplated hereunder
are
subject to the fulfillment or waiver prior to or at the Closing of each of
the
following conditions:
(a)
All
representations and warranties of the KP Holders and Karat contained in this
Agreement shall be true and correct in all respects when made and shall be
deemed to have been made again at and as of the Closing and shall then be true
and correct in all respects (except that representations and warranties made
as
of a specified date, shall be true and correct only as of such specified
date);
28
(b)
Since
the
date hereof, there shall not have been any Material Adverse Effect with respect
to Karat;
Sentra
shall have received a certificate, executed by the KP Holders and the President
of Karat, dated as of the Closing Date, to the foregoing effect and as to such
other matters as may be requested by Sentra.
(c)
Prior
to
or at the Closing, the KP Holders and Karat shall have delivered to Sentra
the
items to be delivered pursuant to Section 3.2(a);
(d)
The
KP
Holders and Karat shall have performed in all respects each obligation and
agreement to be performed by them, and shall have complied in all respects
with
each covenant required by this Agreement to be performed or complied with by
them at or prior to the Closing;
(e)
The
Administrative Stockholder shall have provided to Sentra a certificate of good
standing from the Secretary of State of New York and certified copies of its
Articles of Organization;
(f) Sentra
shall have completed to its reasonable satisfaction its business and legal
due
diligence investigation of Karat, its property, business and subsidiaries,
shall
not have discovered any facts, circumstances, liabilities or conditions that,
in
Sentra’s discretion, may adversely affect the value or prospects of Karat or
that may expose Karat to any liability not heretofore fully disclosed to Sentra;
and
(g) Sentra
shall have received any agreements, instruments, certificates and any other
documentation requested, including without limitation, the legal opinion of
counsel to Karat substantially in the form of Exhibit C.
ARTICLE
IX
TERMINATION
9.1
Termination.
This
Agreement may be terminated at any time prior to the consummation of the Closing
under the following circumstances:
(a)
by
mutual
written consent of Sentra and Karat or a majority of the KP
Holders;
29
(b)
by
Sentra, Karat or by a majority of the KP Holders, if the Closing shall not
have
been consummated on or before December 28, 2007; provided that the right to
terminate this Agreement under this Section 9.1 shall not be available to a
party if such party's or such party's Affiliate's willful act or willful failure
to act has been the cause of or resulted in the failure of the Closing to be
consummated on or before such date;
(c
) by
Sentra, if its due diligence investigation indicates that any of the information
provided for in the Agreement or in any of the information provided by Karat
or
its members is inaccurate, incomplete or untrue in any way;
(d
) by
Karat,
if its due diligence investigation indicates that any of the information
provided for in the Agreement or in any of the information provided by Sentra
is
inaccurate, incomplete or untrue in any way; or
(e)
by
any
party, if there shall be in effect a final, non-appealable order of a court
or
government administrative agency of competent jurisdiction permanently
prohibiting the consummation of the transactions contemplated hereby.
9.2
Termination
Procedure.
Written
notice of any termination (Termination Notice”) pursuant to this Article IX
shall be given by the party electing termination of this Agreement (Terminating
Party”) to the other parties (collectively, the “Terminated Party”), and such
notice shall state the reason for termination. The party or parties receiving
Termination Notice shall have a period of ten (10) days after receipt of
Termination Notice to cure the matters giving rise to such termination to the
reasonable satisfaction of the Terminating Party. If the matters giving rise
to
termination are not cured as required hereby, this Agreement shall be terminated
effective as of the close of business on the tenth (10th) day following the
Terminated Party’s receipt of Termination Notice.
9.3
Effect
of Termination.
Upon
termination of this Agreement prior to the consummation of the Closing and
in
accordance with the terms hereof, this Agreement shall become void and of no
effect, and none of the parties shall have any liability to the others, except
that nothing contained herein shall relieve any party from liability for its
intentional breach of any representation, warranty or covenant contained herein,
or its intentional failure to comply with the terms and conditions of this
Agreement or to perform its obligations hereunder. If it shall be finally
judicially determined that termination of this Agreement was caused by an
intentional and deliberate breach of this Agreement, then, in addition to other
remedies at Law or equity for breach of this Agreement, the party so found
to
have intentionally and deliberately breached this Agreement shall indemnify
and
hold harmless the other parties hereto for their respective out-of-pocket costs,
including the reasonable fees and expenses of their counsel, accountants,
financial advisors and other experts and advisors, as well as reasonable fees
and expenses incident to the negotiation, preparation and execution of this
Agreement and related documentation.
30
9.4 Expenses.
The
parties shall each bear their own respective expenses incurred in connection
with this Agreement and the contemplated Exchange.
ARTICLE
X
INDEMNIFICATION;
SURVIVAL
10.1 Indemnification
by Karat and Neuberg.
Karat
and Neuberg, jointly and severally, shall indemnify and hold harmless Sentra
and
its Affiliates, officers, directors, stockholders, employees and agents and
the
successors and assigns of all of them (the "Sentra Indemnified Parties"), and
shall reimburse the Sentra Indemnified Parties for, any loss, liability, claim,
damage, expense (including, but not limited to, costs of investigation and
defense and attorneys' fees) (collectively, "Damages"), arising from or in
connection with (a) any inaccuracy or breach of any of the representations
and
warranties, of Karat or the KP Holders in this Agreement or in any certificate
or document delivered by Karat or the KP Holders pursuant to this Agreement,
or
any actions, omissions or statements of fact inconsistent with in any respect
any such representation or warranty, (b) any failure by Karat or the KP Holders
to perform or comply with any agreement, covenant or obligation in this
Agreement or in any certificate or document delivered by Karat or the KP Holders
pursuant to this Agreement to be performed by or complied with by Karat or
the
KP Holders, (c) any claims made by a third Person against a Sentra Indemnified
Party based upon a Contractual obligation of Karat or the KP Holders for
services performed prior to the Closing Date, (d) any claims made at any time
arising out of, or in connection with, any Environmental Laws or environmental
conditions which are based upon conditions existing prior to the Closing Date,
(e) Taxes attributable to the ownership of Karat prior to the Closing, (f)
Taxes
attributable to the conduct by Karat of the business of Karat or the KP Holders’
operation or ownership of its assets with respect to all periods existing prior
to the Closing Date, (g) any claims for severance or any other compensation
made
by an Employee or Former Employee with respect to all periods prior to the
Closing Date, (h) any claim made at any time by any Governmental Authority
in
respect of the business of Karat for all periods prior to the Closing Date,
(i)
any Liability or obligation of Karat arising or relating to the periods prior
to
the Closing Date or (j) any Action or investigation by any Person relating
to or
arising out of the business or operations of Karat prior to the Closing
Date.
10.2 Indemnification
by Sentra.
Sentra
shall indemnify and hold harmless Karat Platinum and its Affiliates, members,
officers, directors, employees and agents and the successors and assigns of
all
of them (the "Karat Indemnified Parties"), and shall reimburse the Karat
Indemnified Parties for, any Damages, arising from or in connection with (a)
any
inaccuracy or breach of any of the representations and warranties, of Sentra
in
this Agreement or in any certificate or document delivered by Sentra pursuant
to
this Agreement, or any actions, omissions or statements of fact inconsistent
with in any respect any such representation or warranty or (b) any failure
by
Sentra to perform or comply with any agreement, covenant or obligation in this
Agreement or in any certificate or document delivered by Sentra pursuant to
this
Agreement to be performed by or complied with by Sentra (c) any claims made
by a
third Person against a Karat Indemnified Party based upon a Contractual
obligation of Sentra for services performed prior to the Closing Date, (f)
Taxes
attributable to the conduct by Sentra of the business of Sentra or the ownership
of its assets with respect to all periods existing prior to the Closing Date,
(g) any claims for severance or any other compensation made by an Employee
or
Former Employee of Sentra with respect to all periods prior to the Closing
Date,
(h) any claim made at any time by any Governmental Authority in respect of
the
business of Sentra for all periods prior to the Closing Date, (i) any Liability
or obligation of Sentra arising or relating to the periods prior to the Closing
Date or (j) any Action or investigation by any Person relating to or arising
out
of the business or operations of Sentra prior to the Closing Date.
31
10.3 Survival.
All
representations, warranties, covenants and agreements of the parties contained
herein or in any other certificate or document delivered pursuant hereto shall
survive the Closing for three years from the Closing Date, except the
representations and warranties set forth in Sections 4.8 and 4.11 which shall
survive until the expiration of the applicable statute of
limitations.
ARTICLE
XI
MISCELLANEOUS
11.1
Notices.
All
notices or other communications required or permitted hereunder shall be in
writing. Any notice, request, demand, claim or other communication hereunder
shall be deemed duly given (a) if by personal delivery, when so delivered,
(b)
if mailed, three (3) Business Days after having been sent by registered or
certified mail, return receipt requested, postage prepaid and addressed to
the
intended recipient as set forth below, or (c) if sent through an overnight
delivery service in circumstances to which such service guarantees next day
delivery, the day following being so sent:
(1) If
to
Sentra:
000
Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx,
XX 00000
Attn:
President
With
a
copy to:
Xxxxx
Xxxxx & Associates, PLLC
00
Xxxxxxxxx Xxxxxx
Xxxxxx
Xxxxxx, Xxx Xxxx 00000
Attn:
Xxxxx Xxxxx, Esq.
(2) If
to
Karat:
Karat
Platinum, LLC
00
Xxxxxx
Xxxxxx
Xxxxxx,
Xxx Xxxx 00000
Attn:
___________________
32
With
a
copy to:
Xxxxxx
Xxxxxx, Esq.
Xxxxxxxx
& Xxxxxx
00
Xxxxx
Xxxxxx
Xxx
Xxxx,
XX 00000
(3)
If
to a
XX Xxxxxx, at the address of such XX Xxxxxx set forth on Schedule 2.2, with
a
copy to:
Xxxxxx
Xxxxxx, Esq.
Xxxxxxxx
& Xxxxxx
00
Xxxxx
Xxxxxx
Xxx
Xxxx,
XX 00000
Any
party
may change the address to which notices and other communications hereunder
are
to be delivered by giving the other parties notice in the manner herein set
forth.
11.2
Choice
of Law.
This
Agreement shall be governed, construed and enforced in accordance with the
laws
of the State of New York, without giving effect to principles of conflicts
of
law.
11.3
Arbitration;
Jurisdiction.
Any
dispute between or, action or proceeding against any of the parties hereto
under, arising out of or in any manner relating to, this Agreement and the
transactions contemplated herein shall be submitted to and adjudicated by
binding arbitration under the rules of the American Arbitration Association
(“AAA”). Such arbitration shall be in New York, New York. If there is any
litigation regarding the arbitration or otherwise relating to this section
11.3,
the parties hereto irrevocably consent to the jurisdiction of the courts of
the
State of New York and of any federal court located in such State in connection
with any action or proceeding arising out of or relating to this Agreement,
any
document or instrument delivered pursuant to, in connection with or
simultaneously with this Agreement, or a breach of this Agreement or any such
document or instrument. In any such action or proceeding, each party hereto
waives personal service of any summons, complaint or other process and agrees
that service thereof may be made in accordance with Section 11.1. Within 30
days
after such service, or such other time as may be mutually agreed upon in writing
by the attorneys for the parties to such action or proceeding, the party so
served shall appear or answer such summons, complaint or other
process.
33
11.4 Waiver
of any and all Rights to a Trial by Jury.
All
parties to this Agreement unconditionally, irrevocably and expressly waive
all
rights to trial by jury in any action, proceeding, suit, counterclaim or
cross-claim in any matter (whether sounding in tort, contract or otherwise)
in
any way arising out of or otherwise relating to this Agreement or the
transaction or the relationships established hereunder. All parties confirm
that
the foregoing waiver of a trial by jury is informed and freely
made.
11.5 Entire
Agreement.
This
Agreement and such other agreements related to this transaction executed
simultaneously herewith set forth the entire agreement and understanding of
the
parties in respect of the transactions contemplated hereby and supersedes all
prior agreements, arrangements and understandings of the parties relating to
the
subject matter hereof. No representation, promise, inducement, waiver of rights,
agreement or statement of intention has been made by any of the parties which
is
not expressly embodied in this Agreement, such other agreements, notes or
instruments related to this transaction executed simultaneously herewith, or
the
written statements, certificates, schedules or other documents delivered
pursuant to this Agreement or in connection with the transactions contemplated
hereby.
11.6 Assignment.
Each
party's rights and obligations under this Agreement shall not be assigned or
delegated, by operation of law or otherwise, without the other party's prior
consent, and any such assignment or attempted assignment shall be void, of
no
force or effect, and shall constitute a material default by such
party.
z
11.7
Amendments.
This
Agreement may be amended, modified, superseded or cancelled, and any of the
terms, covenants, representations, warranties or conditions hereof may be
waived, only by a written instrument executed by Sentra, Karat and either the
Administrative Stockholder or a majority of the KP Holders, in the case of
a
waiver, by the party waiving compliance.
11.8 Waivers.
The
failure of any party at any time or times to require performance of any
provision hereof shall in no manner affect the right at a later time to enforce
the same. No waiver by any party of any condition, or the breach of any term,
covenant, representation or warranty contained in this Agreement, whether by
conduct or otherwise, in any one or more instances shall be deemed to be or
construed as a further or continuing waiver of any such condition or breach
or a
waiver of any other term, covenant, representation or warranty of this
Agreement.
11.9 Counterparts.
This
Agreement may be executed simultaneously in two or more counterparts and by
facsimile, each of which shall be deemed an original, but all of which together
shall constitute one and the same instrument.
34
11.10
Brokers.
The
parties hereto, covenant, represent, and warrant that they have not dealt with
any broker or finder in connection with this Agreement or the transactions
contemplated hereby, and no broker is entitled to receive any brokerage
commission, finder's fee, or similar compensation in connection with this
Agreement or the transactions contemplated hereby. Each of the parties shall
indemnify and hold the other parties harmless from and against all liability,
claim, loss, damage, or expense, including reasonable attorney's fees,
pertaining to any broker, finder, or other person with whom such party has
dealt.
11.11 Severability.
If any
term, provisions, covenant or restriction of this Agreement is held by a court
of competent jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination, the parties shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner in order
that the transactions contemplated hereby be consummated as originally
contemplated to the fullest extent possible.
11.12
Publicity.
Karat
and the KP Holders shall not issue or cause the publication of any press release
or other public announcement with respect to the transactions contemplated
by
this Agreement without the written consent of Sentra.
[Remainder
of Page Intentionally Omitted; Signature Pages to Follow]
35
IN
WITNESS WHEREOF, the parties have duly executed this Exchange Agreement as
of
the date first above written.
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By: | /s/ Xxxxxx Xxxxxxxx | |
Name: Xxxxxx Xxxxxxxx |
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Title: President |
KARAT
PLATINUM, LLC
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By: | /s/ Xxxxx Xxxxxxx | |
Name: Xxxxx Xxxxxxx |
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Title: CEO |
By: | /s/ Xxxxxx Xxxxxxxxxx | |
Name: Xxxxxx Xxxxxxxxxx |
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Title:
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KP
HOLDERS:
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KARAT
HOLDERS:
/s/
Xxxxx Xxxxxxx
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By:
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/s/
Xxxxxx Slochowksy
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Name:
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Xxxxx
Xxxxxxx
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Name:
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Xxxxxx
Xxxxxxxxxx
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By:
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/s/
Xxxxxx Xxxxxxxxx
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By:
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/s/
Xxxxxx Xxxxxxx
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Name:
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Xxxxxx
Xxxxxxxxx
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Name:
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Xxxxxx
Xxxxxxx
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By:
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/s/
Xxxxx Xxxxxxxxxx
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By:
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/s/
Xxxx X. Xxxxxx
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Name:
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Xxxxx
Xxxxxxxxxx
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Name:
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Xxxx
X. Xxxxxx
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By:
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/s/
Xxxxxx Xxxxxx
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By:
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/s/
Xxxxxx Xxxxxx
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Name:
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Xxxxxx
Xxxxxx
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Name:
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Xxxxxx
Xxxxxx
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By:
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/s/
Xxxxxx Xxxxxxxx
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By:
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/s/
Xxxxx Xxxxxxxx
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Name:
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Xxxxxx
Xxxxxxxx
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Name:
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Xxxxx
Xxxxxxxx
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By:
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/s/
Xxx Xxxxxxxx
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By:
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/s/
Xxxxxx Xxxxxxxx
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Name:
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Xxx
Xxxxxxxx
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Name:
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Xxxxxx
Xxxxxxxx
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By:
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/s/
Xxxxx Xxxxxxxx
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By:
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/s/
Xxxxxxx Xxxxxxxx
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Name:
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Xxxxx
Xxxxxxxx
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Name:
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Abigail
Septims
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By:
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/s/
Xxxxxx Xxxxxx
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By:
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/s/
Xxxxx Xxxxxxxx
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Name:
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Xxxxxx
Xxxxxx
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Name:
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Xxxxx
Xxxxxxxx
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By:
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/s/
Xxxxxxxx Xxxxx
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By:
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/s/
Xxxxxx Xxxxx
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Name:
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Xxxxxxxx
Xxxxx
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Name:
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Xxxxxx
Xxxxx
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By:
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/s/
Xxxxxx Xxxxx
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By:
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/s/
Xxxxxx Xxxxxxx
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Name:
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Xxxxxx
Xxxxx
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Name:
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Xxxxxx
Xxxxxxx
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By:
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/s/
Xxxxxxx Xxxxxx
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By:
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/s/
Xxxxxxxx Xxxxx
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Name:
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Xxxxxxx
Xxxxxx
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Name:
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Xxxxxxxx
Xxxxx
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By:
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/s/
Xxxxxx Xxxxxxxxxx
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By:
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/s/
Xxx Xxxxxxx
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Name:
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Xxxxxx
Xxxxxxxxxx
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Name:
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Xxx
Xxxxxxx
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By:
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/s/
Xxx Xxxxxxx
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By:
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/s/
Xxxx Xxxxxxxxx
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Name:
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Xxx
Xxxxxxx
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Name:
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Xxxx
Xxxxxxxxx
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By:
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/s/
Xxxxxx Xxxxxxxxx
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By:
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/s/
Xxxx Xxxxxx
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Name:
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Xxxxxx
Xxxxxxxxx
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Name:
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Xxxx Xxxxxx |
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By:
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/s/
Xxx Xxxxxxx
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By:
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/s/
Xxxxxx Xxxxxxx
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Name:
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Xxx
Xxxxxxx
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Name:
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Xxxxxx
Xxxxxxx
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By:
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/s/
Xxxxxx Xxxxxxxx
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By:
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/s/
Xxxxxx Xxxxxxxx
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Name:
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Xxxxxx
Xxxxxxxx
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Name:
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Xxxxxx
Xxxxxxxx
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By:
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/s/
Xxxxx Xxxxxx
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By:
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/s/
Xxxxx Xxxxxxxxx
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Name:
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Xxxxx
Xxxxxx
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Name:
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Xxxxx
Xxxxxxxxx
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By:
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/s/
Xxxxx Xxxxxx
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By:
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/s/
Xxxx Xxxxx
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Name:
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Xxxxx
Xxxxxx
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Name:
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Xxxx
Xxxxx
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By:
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/s/
Xxxx Xxxxxxxx
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By:
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/s/
Xxxxxx Xxxxxx
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Name:
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Xxxx
Xxxxxxxx
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Name:
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Xxxxxx
Xxxxxx
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By:
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/s/
Xxxxxx Xxxxxxx
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Name:
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Xxxxxx
Xxxxxxx
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