EXHIBIT 10.5
MASTER SETTLEMENT AND RELEASE AGREEMENT BY AND AMONG
THE REGISTRANT, FUSION THREE, LLC, XXXX
FAMILY PARTNERS, LLC, AND CAPITAL MANAGEMENT
GROUP, INC., DATED FEBRUARY 3, 2004
MASTER SETTLEMENT AND RELEASE AGREEMENT
This Master Settlement and Release Agreement (the "Agreement") is entered
into by and between New Millennium Media International, Inc., a Colorado
corporation ("NMMI"), Fusion Three, LLC, a Florida limited liability company
("F3"), Xxxx Family Partners, LLC, a Louisiana limited liability company
("RFP"), and Capital Management Group, Inc., a Wyoming Corporation ("CMG").
NMMI, F3 RFP, and CMG may collectively be referred to as the "Parties," and
individually referred to as a "Party."
WHEREAS, F3 is wholly owned by RFP and CMG;
WHEREAS, RFP and CMG are neither guarantors or warrantors of this
Agreement except that they own F3;
WHEREAS, OnScreen Large Scale Video display ("OSD") is a radical new type
of LED video display technology that provides greatly reduced cost, weight and
volume when compared to past systems, and allows for the manufacture of
electronic video displays with greatly increased brightness and resolution (the
"Technology");
WHEREAS, NMMI and Xxxx Xxxxxxxx ("Xxxxxxxx") entered into a License
Agreement on July 23, 2001 (the "License Agreement") (attached hereto as Exhibit
A), which grants NMMI the exclusive rights to commercialize the Technology;
WHEREAS, NMMI and F3 entered into a contract entitled "3Contract" on
August 28, 2002 (the "3Contract") (attached hereto as Exhibit B);
WHEREAS, NMMI and F3 entered into an addendum to the 3Contract on December
4, 2002 (the "3Contract Addendum") (attached hereto as Exhibit C);
WHEREAS, F3 and Xxxxxxxx entered into an Option to Purchase Contract
Rights, on July 13, 2003, which includes an Assignment attached as Exhibit B
(collectively, the "Option Contract") (attached hereto as Exhibit D);
WHEREAS, NMMI, F3, and Xxxxxxxx entered into a NMMI Acceptance of
Contractual Assignment on July 11, 2003 (the "NMMI Acceptance") (attached hereto
as Exhibit E); and
WHEREAS, after discussion and negotiation, it is determined that the
Parties wish to enter into this Agreement;
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Parties hereby agree as
follows:
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1. Recitals. The recitals, as stated above, unless in direct conflict
with the covenants herein, shall be included as part of this Agreement. In the
event of any such direct conflict in terms, the terms set forth below shall
govern.
2. Definitions. If any defined term set forth in this Agreement
conflicts or is inconsistent with any terms in the Superseded Contracts, this
Agreement will govern.
2.1. Change of Control Event. The sale of all or substantially all
of NMMI's assets, or any merger or consolidation of NMMI with or into another
corporation, but not including a merger or consolidation in which the holders of
more than fifty percent (50%) of the shares of capital stock of NMMI outstanding
immediately prior to such transaction continue to hold (either by the voting
securities remaining outstanding or by their being converted into voting
securities of the surviving entity) more than fifty percent (50%) of the total
voting power represented by the voting securities of such surviving entity
outstanding immediately after such transaction.
A Change of Control Event does not apply to any financings of
NMMI, so long as said financing encumbers all assets of NMMI and does not
encumber a specific asset (such as OSD) independent from other NMMI assets, nor
does it apply to any strategic partnerships entered into by NMMI, regardless of
whether or not the holders of more than fifty percent (50%) of the shares of
capital stock of NMMI outstanding immediately prior to such transaction continue
to hold (either by the voting securities remaining outstanding or by their being
converted into voting securities of the surviving entity) more than fifty
percent (50%) of the total voting power represented by the voting securities of
NMMI, or such surviving entity, outstanding immediately after such transaction.
A change of Control Event does not apply to a merger or
acquisition whereby NMMI is the surviving entity.
2.2. Revenue. Gross revenue of NMMMI as reported in NMMI's quarterly
and annual public filings.
2.3. Transaction Fee. Any consideration paid by NMMI to F3 in
connection with a Change of Control Event.
3. Intent of the Parties. It is the express intent of the Parties that
this Agreement shall supersede and cancel the 3Contract, the 3Contract Addendum,
the Option Contract, and the NMMI Acceptance, and all other contracts or
agreements, whether written or oral, between two or more of the Parties, which
contain terms that conflict with the terms provided herein (the "Superseded
Contracts").
4. F3 Waiver and Release. In exchange for the benefits set forth in this
Agreement, which are given to F3 specifically in exchange for assent to this
Agreement, and obtained by F3 as a result of negotiations between the Parties,
F3 agrees to the following:
4.1. F3 agrees to forgo, relinquish, and waive all right, title, and
interest it has in the Superseded Contracts (the "F3 Waiver"); and
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4.2. F3 agrees to forever release and hold harmless NMMI, its
affiliates and predecessor organizations, its current and former directors,
officers, agents, employees and attorneys, and each of their respective
successors and assigns (the "Released Parties") from any and all claims,
charges, causes of action and damages (including attorney's fees and costs
actually incurred of any type), know and unknown, and in any way related to any
of F3's, RFP's, or CMG's contractual rights or any other rights held by F3 in
the Superseded Contracts (the "F3 Claims").
For the purposes of implementing a full and complete release and
discharge of the Released Parties, and each of them, as provided herein, F3
expressly acknowledges that this Agreement is intended to include in its effect,
without limitation, all F3 Claims that it does not know or suspect to exist in
its favor at the time it signs this Agreement, and that this Agreement is
intended to fully and finally resolve any such F3 Claims.
5. RFP Waiver and Release. In exchange for the benefits set forth in
this Agreement, RFP agrees to the following:
5.1. RFP agrees to forgo, relinquish, and waive any and all right,
title, and interest it has in the Superseded Contracts (the "RFP Waiver"); and
5.2. RFP agrees to forever release and hold harmless NMMI, its
affiliates and predecessor organizations, its current and former directors,
officers, agents, employees and attorneys, and each of their respective
successors and assigns (the "Released Parties") from any and all claims,
charges, causes of action and damages (including attorney's fees and costs
actually incurred of any type), know and unknown, and in any way related to any
of F3's, RFP's, or CMG's contractual rights or any other rights held by RFP in
the Superseded Contracts (the "RFP Claims").
For the purposes of implementing a full and complete release and
discharge of the Released Parties, and each of them, as provided herein, RFP
expressly acknowledges that this Agreement is intended to include in its effect,
without limitation, all RFP Claims that it does not know or suspect to exist in
its favor at the time it signs this Agreement, and that this Agreement is
intended to fully and finally resolve any such RFP Claims.
6. CMG Waiver and Release. In exchange for the benefits set forth in this
Agreement, CMG agrees to the following:
6.1. CMG agrees to forgo, relinquish, and waive any and all right,
title, and interest it has in the Superseded Contracts (the "CMG Waiver"); and
6.2. CMG agrees to forever release and hold harmless NMMI, its
affiliates and predecessor organizations, its current and former directors,
officers, agents, employees and attorneys, and each of their respective
successors and assigns (the "Released Parties") from any and all claims,
charges, causes of action and damages (including attorney's fees and costs
actually incurred of any type), known and unknown, and in any way related to any
of F3's, RFP's, or CMG's contractual rights or any other rights held by CMG in
the Superseded Contracts (the "CMG Claims").
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For purposes of implementing a full and complete release and
discharge of the Released Parties, and each of them, as provided herein, CMG
expressly acknowledges that this Agreement is intended to include in its effect,
without limitation, all CMG Claims that it does not know or suspect to exist in
its favor at the time it signs this Agreement, and that this Agreement is
intended to fully and finally resolve any such CMG Claims.
7. NMMI Waiver and Release. In exchange for the benefits set forth in
this Agreement, NMMI agrees to the following:
7.1. NMMI agrees to forgo, relinquish, and waive any and all right,
title, and interest it has in the Superseded Contracts (the "NMMI Superceded
Contracts Waiver"); and
7.2. NMMI agrees to forever release and hold harmless F3, RFP, and
CMG and its affiliates and predecessor organizations, its current and former
directors, officers, agents, employees and attorneys, and each of their
respective successors and assigns from any and all claims, charges, causes of
action and damages (including attorney's fees and costs actually incurred of any
type), known and unknown, and in any way related to any of NMMI's contractual
rights and any other rights held by NMMI in the Superseded Contracts (the "NMMI
Superceded Contracts Claims").
For the purposes of implementing a full and complete release and
discharge of F3, RFP, and CMG, NMMI expressly acknowledges that this Agreement
is intended to include in its effect, without limitation, all NMMI Superceded
Contracts Claims that it does not know or suspect to exist in its favor at the
time it signs this Agreement, and that this Agreement is intended to fully and
finally resolve any such NMMI Superceded Contracts Claims.
8. Consideration of NMMI. In consideration for the F3 Waiver, the RFP
Waiver, the CMG Waiver, F3's release of the F3 Claims against the Released
Parties (the "F3 Release"), RFP's release of the RFP Claims against the Released
Parties (the "RFP Release"), and CMG's release of the CMG Claims against the
Released Parties (the "CMG Release"), NMMI agrees to compensate F3 as follows:
8.1. Unit Financing Payment. NMMI shall pay to F3 one hundred fifty
thousand dollars ($150,000) within five (5) business days of receipt by NMMI of
the currently contemplated seven million two hundred thousand dollars
($7,200,000) to be received by NMMMI pursuant to NMMI's existing unit financing
(the "Unit Financing"). F3 acknowledges and agrees that the Unit Financing may
include a change in the investment group and/or a change in the currently
contemplated amount to be received by NMMI.
8.2. Revenue Sharing. NMMI shall pay to F3 the following revenue
sharing payments (collectively, the "Revenue Sharing Payments") as set forth
below:
8.2.1. In NMMI's fiscal year ending December 31, 2004, F3 shall
receive no compensation for revenue derived from commercialization of the
Technology.
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8.2.2. In NMMI's fiscal year ending December 31, 2005, F3 shall
receive five percent (5%) of revenue derived from commercialization of the
Technology (the "2005 Revenue Payment"). NMMI shall pay the 2005 Revenue Payment
on a semi-annual basis, with the first payment due sixty (60) days after June
30, 2005 and the second payment due sixty (60) days after December 31, 2005.
8.2.3. In NMMI's fiscal year ending December 31, 2006, F3 shall
receive four percent (4%) of revenue derived from commercialization of the
Technology (the "2006 Revenue Payment"). NMMI shall pay the 2006 Revenue Payment
on a quarterly basis, with the first payment due sixty (60) days after March 31,
2006, the second payment due sixty (60) days after June 30, 2006, the third
payment due sixty (60) days after September 30, 2006, and the fourth payment due
sixty (60) days after December 31, 2006.
8.2.4. In NMMI's fiscal year ending December 31, 2007, F3 shall
receive three percent (3%) of revenue derived from commercializations of the
Technology (the "2007 Revenue Payment"). NMMI shall pay the 2007 Revenue Payment
on a quarterly basis, with the first payment due sixty (60) days after March 31,
2007, the second payment due sixty (60) days after June 30, 2007, the third
payment due sixty (60) days after September 30, 2007, and the fourth payment due
sixty (60) days after December 31, 2007.
8.2.5. In NMMI's fiscal year ending December 31, 2008, and in
each fiscal year thereafter, F3 shall receive two percent (2%) of revenue
derived from commercialization of the Technology (the "Perpetual Revenue
Payment"). NMMI shall pay the Perpetual Revenue Payment on a quarterly basis,
with the first payment due sixty (60) days after March 31 of the fiscal year in
which the Perpetual Revenue Payment is due, the second payment due sixty (60)
days after June 30 of the fiscal year in which the Perpetual Revenue Payment is
due, the third payment due sixty (60) days after September 30 of the fiscal year
in which the Perpetual Revenue Payment is due, and the fourth payment due sixty
(60) days after December 31 of the fiscal year in which the Perpetual Revenue
Payment is due. In the event that one or more of the above dates not exist, the
due date shall be moved to the next earliest existing calendar day.
8.2.6. Late Penalty. In the event that NMMI does not pay F3 a
Revenue Sharing Payment on or by its respective due date, NMMI shall pay F3 an
additional escalating interest penalty (the "Late Penalty") as set forth below:
8.2.6.1. Ten percent (10%) of the Revenue Sharing
Payment owed to F3 if the Revenue Sharing Payment plus the Late Penalty is paid
thirty (30) days after the due date;
8.2.8.2. Twenty percent (20%) of the Revenue Sharing
Payment owed to F3 if the Revenue Sharing Payment plus the Late Penalty is paid
one hundred and twenty (120) days after the due date;
8.2.8.3. Thirty percent (30%) of the Revenue Sharing
Payment owed to F3 if the Revenue Sharing Payment plus the Late Penalty is paid
two hundred and ten (210) days after the due date; and
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8.2.6.4. Forty percent (40%) of the Revenue Sharing
Payment owed to F3 if the Revenue Sharing Payment plus the Late Penalty is paid
any time after two hundred ten (210) days after the due date. The Interest
Penalty cannot exceed forty percent (40%) and shall remain at forty percent
(40%) of the Revenue Sharing Payment owed to F3 until the Revenue Sharing
Payment and Interest Penalty are paid in full.
8.2.6.5. Each respective Revenue Sharing Payment and
its corresponding Late Penalty shall be treated independently from other Revenue
Sharing Payments and their corresponding Late Penalties and shall be separately
and independently calculated. Late Penalties pertaining to a particular Revenue
Sharing Payment shall not be capitalized upon each other; therefore, only the
largest applicable Late Penalty shall apply to the entire Revenue Sharing
Payment owed to F3.
8.3 Transaction Fee. If a Change of Control Event occurs at any
time during any fiscal calendar quarter of NMMI, F3's entitlement to a
percentage of NMMI's revenue from that particular fiscal calendar quarter and
any fiscal calendar quarters thereafter that is derived from commercialization
of the Technology (the "Revenue Sharing") shall terminate. NMMI shall secure an
independent appraisal of its business prior to consummating any such Change of
Control Event. Upon the consummation by NMMI of a Change of Control Event, F3
shall be entitled to the following (the "Transaction Fee"):
8.3.1. Ten percent (10%) of all consideration received by NMMI
in connection with the Change of Control Event up to the first one hundred
million dollar value ($100,000,000); and
8.3.2. Seven and one half percent (7.5%) of all consideration
received by NMMI in connection with the Change of Control Event equal to the
dollar value between one hundred million and one dollars ($100,000,001) and two
hundred million dollars ($200,000,000); and
8.3.3. Five percent (5%) of all consideration received by NMMI
in connection with the Change of Control Event equal to the dollar value between
two hundred million and one dollars ($200,000,001) and three hundred million
($300,000,000); and
8.3.4. Four percent (4%) of all consideration received by NMMI
in connection with the Change of Control Event equal to the dollar value between
three hundred million and one dollars ($300,000,001) and four hundred million
dollars ($400,000,000); and
8.3.5. Three percent (3%) of all consideration received by NMMI
in connection with the Change of Control Event equal to the dollar value between
four hundred million and one dollars ($400,000,001) and five hundred million
dollars ($500,000,000); and
8.3.6. Two percent (2%) of all consideration received by NMMI
in connection with the Change of Control Event equal to the dollar value between
five
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hundred million and one dollars ($500,000,001) and six hundred million dollars
($600,000,000).
8.3.7. F3 shall not be entitled to receive any percentage of
the consideration received by NMMI in connection with a Change of Control Event
whereby NMMI receives consideration in excess of six hundred million dollars
($600,000,000).
8.3.8. In the event of a Change of Control Event, any
Transaction Fee shall be paid by NMMI to F3 with the same type or types of
consideration received by NMMI, and shall be paid to F3 on a pro-rata basis by
the same type or types of consideration received by NMMI. Further, NMMI shall
pay F3 the Transaction Fee in accordance with the same time frame as NMMI agrees
to receive payment as set forth in the terms of the Change of Control Event.
9. Termination. If NMMI has not received or closed the Unit Financing
on or before April 30, 2004 (the "Termination Date"), this Agreement
automatically terminates; provided, however, that in the event that NMMI has not
received or closed the Unit Financing by the Termination Date, this Agreement
shall be automatically extended an additional sixty (60) days from the
Termination Date upon written request provided by NMMI to F3 prior to the
Termination Date. The Parties acknowledge that NMMI is holding in escrow four
million eight hundred thousand dollars ($4,800,000) of the Unit Financing and
the remaining amount to complete the Unit Financing is approximately two million
four hundred thousand dollars ($2,400,000). F3 acknowledges and agrees that the
Unit Financing may include a change in the investment group and/or a change in
the currently contemplated amount to be received by NMMI.
10. Rights and Obligations In the License Agreement. The Parties
acknowledge and agree that all rights and obligations arising out of the License
Agreement shall remain intact and shall remain the rights and obligations of
NMMI.
11. Third Party Claims, Agreements, Understandings, and Obligations. Any
third party claims, agreements, understandings, arrangements, or obligations
entered into by the Parties shall become the exclusive and sole responsibility
of the Party that has entered into such claim, agreement, understanding, or
obligation.
12. Representations and Warranties of the Parties.
12.1 Authority. Each of the Parties has full power and authority to
enter into this agreement. All action on the part of each of the Parties
necessary for the authorization, execution and delivery of this Agreement, and
the performance of all obligations of each of the Parties hereunder has been
taken.
12.2 Duly Organized and Validly Existing. F3 represents and warrants
that it is a duly organized and validly existing entity in the state in which it
organized. Prior to execution of this Agreement, F3 shall provide proof that it
is duly organized and validly existing by providing NMMI with a Certificate of
Good Standing or a Certificate of Authority (whichever is applicable) and such
other documentation as is necessary.
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12.3. F3 Operating Agreement. Prior to execution of this Agreement,
F3 shall provide a copy of its Operating Agreement to NMMI as proof of
its signatory's authority to bind F3 to this Agreement.
12.4. NMMI Representation. NMMI represents and warrants that it has
acquired Xxxxxxxx'x interest in the revenue derived from the commercialization
of OSD (the "Xxxxxxxx Interest").
12.5. Consents and Approvals: No Conflict. The execution and
delivery of this Agreement by each of the Parties does not, and the performance
of this Agreement by the Parties will not, require any consent, approval,
authorization or other action by, or filing with or notification to, any
governmental or regulatory authority. The execution, delivery and performance
of this Agreement by the Parties does not (i) conflict with or violate the
charter or by-laws, partnership or other governing documents of any of the
Parties, or (ii) conflict with or violate any law, rule, regulation, order,
writ, judgment, injunction, decree, determination, contract or award applicable
to any of the Parties.
12.6. Effectiveness of Representations and Warranties. Each of the
Parties' representations and warranties contained in this Agreement are true and
correct.
13. Miscellaneous Provisions.
13.1. Integration. This Agreement constitutes the complete and
exclusive agreement of the Parties and supersedes and cancels any other prior
oral and/or written agreements or understandings of the Parties in connection
with such subject matter.
13.2. Compromising. The Parties understand that this Agreement
constitutes a compromise. No action taken by the Parties hereto, or any of them,
either previously or in connection with this Agreement shall be deemed to be (a)
an admission of the truth or falsity of any claims heretofore made or (b) an
acknowledgement or admission by either party of any fault or liability
whatsoever to the other Party or to any third party.
13.3. Confidentiality. Each of the Parties agrees not to disclose
to or discuss with any person, except as where such disclosure may be required
by law, court order, government agency request or subpoena, or in connection
with a legal proceeding, the substance of this Agreement or matters relating to
any act or omission of any Party in connection with any other Party.
13.4. Governing Law. This Agreement shall be construed, interpreted
and applied in accordance with the substantive laws of the State of Florida,
without reference to its conflict of law rules.
Any dispute between the Parties pertaining to this Agreement shall be
resolved through binding arbitration conducted by the American Arbitration
Association. The Parties agree that any arbitration proceeding shall be
conducted in Florida and consent to exclusive jurisdiction and venue there. The
award of the arbitrator(s) shall be final and binding, and the Parties waive any
right to appeal the arbitral award, to the extent that a right to appeal may be
lawfully waived. Each Party retains the right to see judicial assistance (a)
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to compel arbitration, (b) to obtain injunctive relief and interim measures of
protection pending arbitration, and (c) to enforce any decision of the
arbitrator(s), including but not limited to the final award.
13.5. Successors and Assigns. No Party may assign any of its
rights under this Agreement without the prior written consent of the other
Parties. Subject to the preceding sentence, this Agreement shall apply to, be
binding in all respects upon, and inure to the benefit of the successors and
permitted assigns of the Parties. Nothing expressed or referred to in this
Agreement shall be construed to give any person other than the Parties to this
Agreement any legal or equitable right, remedy, or claim under or with respect
to this Agreement or any provision of this Agreement. This Agreement and all of
its provisions and conditions are for the sole and exclusive benefit of the
Parties to this Agreement and their successors and assigns.
13.6. Notices. All notices, demands and communications hereunder
shall be in writing and personally delivered or sent by first class mail,
certified or registered, postage prepaid, return receipt requested, addressed to
the parties at the address below set forth, or at such other address as any
Party shall have furnished to the other party in writing, or shall be given by
telegram, telex, facsimile transmission, overnight courier or hand delivery, in
any case to be effective when received, provided that actual receipt shall
constitute notice regardless of method of delivery.
If to NMMI: New Millennium Media International, Inc.
000 Xxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxx Xxxxxx, Xxxxxxx 00000
With a copy to: Xxxxx X. Xxxx
The Xxxx Law Group, PLLC
000 Xxxxxx Xxx., Xxxxx 0000
Xxxxxxx, XX 00000
If to F3: As set forth on the signature page attached
hereto.
If to RFP: As set forth on the signature page attached
hereto.
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If to CMG: As set forth on the signature page attached
hereto.
13.7. Severability. If any term or provision of this Agreement or
any application thereof shall be invalid or unenforceable, such term or
provision shall be deemed to be severed and the remainder of this Agreement and
any other application of such term or provision shall not be affected or
invalidated thereby.
13.8. Counterparts. This Agreement may be executed by facsimile and
in one or more counterparts, all of which taken together shall constitute one
and the same instrument.
13.9. Amendments. All amendments to this Agreement shall be made in
writing, signed by the Parties, and no oral amendment shall be binding upon the
Parties.
13.10. Headings. The headings or titles in this Agreement are for
the purpose of reference only and shall not in any way affect the interpretation
or construction of this Agreement.
13.11. Attorney's Fees. In the event of litigation to enforce this
Agreement, the prevailing party will be entitled to recover its reasonable
attorney's fees as determined by the court.
13.12. Construction. Whenever the singular number is used in this
Agreement and when required by the context, the same shall include the plural
and vice versa, and the masculine gender shall include the feminine and neuter
genders and vice versa.
[Signature page follows]
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IN WITNESS WHEREOF, the parties to this Agreement hereby execute this
Agreement on this 28th day of January, 2004.
NEW MILLENNIUM MEDIA INTERNATIONAL, INC.
/s/ Xxxx Xxxxxx
----------------------------
By: Xxxx "JJ" Thatch
----------------------------
Its: President
----------------------------
FUSION THREE, LLC ADDRESS:
/s/ Xxxxx Xxxxx
----------------------------
By: Xxxxx Xxxxx 0000 Xxxxxxxxx Xxxx.
Its: Manager Xxxxx 000
Xxxxx, XX 00000
XXXX FAMILY PARTNERS, LLC ADDRESS:
/s/ Xxxxxxx Xxxx
-----------------------------
By: Xxxxxxx Xxxx 0000 Xxxxxxxxxx Xxxx.
Its: Manager Xxx Xxxxxxx, XX 00000
CAPITAL MANAGEMENT GROUP, INC. ADDRESS:
/s/ Xxxx Xxxxxx
-----------------------------
By: Xxxx Xxxxxx 0000 Xxxxxxx Xxx.
Its: Vice President Xxxxx 000
Xxxxxxxx, XX 0000-0000
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