REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement dated 19th day of November, 1998 (this
"Agreement"), among INTELLICELL CORP., a Delaware corporation (the
"Corporation"), and the SECURITYHOLDERS (as herein defined).
WHEREAS, the Securityholders own or have the right to purchase or otherwise
acquire shares of the Common Stock (as hereinafter defined) of the Corporation;
and
WHEREAS, the Corporation and the Securityholders deem it to be in their
respective best interests to set forth the rights of the Securityholders in
connection with public offerings and sales of the Common Stock.
NOW, THEREFORE, in consideration of the premises and mutual covenants and
obligations hereinafter set forth, the Corporation and the Securityholders
hereby agree as follows:
SECTION 1. DEFINITIONS. As used in this Agreement, the following terms
shall have the following meanings:
(a) "Advisor Shares" means those shares of Common Stock issuable or
issued to Sands upon exercise of the warrants issued to Sands in connection with
the Offering, which shall be included as Registrable Shares for purposes of this
Agreement.
(b) "Closing" means the date of closing of the Offering.
(c) "Commission" means the Securities and Exchange Commission or any
other Federal agency at the time administering the Securities Act.
(d) "Common Stock" means the common stock, $0.01 par value per share,
of the Corporation.
(e) "Exchange Act" means the Securities Exchange Act of 1934 or any
successor Federal statute, and the rules and regulations of the Commission
promulgated thereunder, all as the same shall be in effect from time to time.
(f) "Offering" means the offering of subordinated convertible notes
by the Corporation pursuant to a Confidential Private Placement Memorandum dated
November 11, 1998.
(g) "Other Shares" means at any time those shares of Common Stock
held by any person (or issuable upon exercise or conversion of any security held
by any person) that do not constitute Primary Shares or Registrable Shares.
(h) "Primary Shares" means at any time the authorized but unissued
shares of Common Stock and shares of Common Stock held by the Corporation in its
treasury.
(i) "Registrable Shares" means Restricted Shares that constitute
Common Stock.
(j) "Restricted Shares" means shares of Common Stock issued and
outstanding or issuable upon exercise or conversion of warrants or other
securities to purchase Common Stock held by the Securityholders. As to any
particular Restricted Shares, once issued, such Restricted Shares shall cease to
be Restricted Shares when (i) they have been registered under the Securities
Act, the registration statement in
1.
connection therewith has been declared effective and they have been disposed
of pursuant to such effective registration statement, (ii) they are eligible
to be sold or distributed pursuant to Rule 144 within any consecutive three
month period (including, without limitation, Rule 144(k)) without volume
limitations, or (iii) they shall have ceased to be outstanding.
(k) "Rule 144" means Rule 144 promulgated under the Securities Act or
any successor rule thereto or any complementary rule thereto (such as Rule
144A).
(l) "Sands" means Sands Brothers & Co., Ltd.
(m) "Securities Act" means the Securities Act of 1933 or any
successor Federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect from time to time.
(n) "Securityholders" means the purchasers of the Corporation's
securities in the Offering, Xxx Xxxxx, Xxxxx and each additional person
receiving warrants or options as a finder in connection with the Offering who
shall execute a counterpart signature page hereto, and includes any successor
to, or assignee or transferee of, any such person who or which agrees in writing
to be treated as a Securityholder hereunder and to be bound by the terms and
comply with all applicable provisions hereof.
SECTION 2. REGISTRATION. The Corporation agrees to file a registration
statement covering the Registrable Shares within 90 days after the Closing (the
"Filing Date") and to use its reasonable best efforts to cause the registration
statement to become effective under the Securities Act; PROVIDED, HOWEVER, that
the Corporation shall not be obligated to effect any registration under the
Securities Act except in accordance with the following provisions:
(a) the Corporation shall not be obligated to use its reasonable best
efforts to file (i) any registration statement at any time unless the
Corporation's stockholders approve the Offering, (ii) more than one registration
statement pursuant to this Section 2;
(b) the Corporation may delay the filing or effectiveness of any
registration statement for a period of up to 120 days after the Filing Date
pursuant to this Section 2 if during the Filing Date the Corporation is engaged,
or has fixed plans to engage within 90 days of the time of such request, in a
firm commitment underwritten public offering of Primary Shares in which the
Company may include Registrable Shares pursuant to Section 3;
(c) with respect to any registration pursuant to this Section 2, the
Corporation shall give notice of such registration to the Securityholders
hereunder and to the holders of all Other Shares which are entitled to
registration rights and the Corporation may include in such registration any
Primary Shares or Other Shares;
(d) If the method of disposition requested by the holders, pursuant
to this Section 2, is an underwritten public offering, the majority of the
holders of Registrable Shares shall have the right to designate the managing
underwriter of such offering, which underwriter shall be reasonably acceptable
to the Corporation; and
(e) At any time before the registration statement covering
Registrable Shares becomes effective, the holders of a majority of such shares
may request the Corporation to withdraw or not to file the registration
statement. In that event, if such request of withdrawal shall not have been
caused by, or made in response to, the material adverse effect of an event on
the business, properties, condition, financial or otherwise, or operations of
the Corporation, the Company shall have no further obligations with respect to
the registration of Registrable Shares under this Section 2 unless the holders
shall pay to the Corporation the expenses incurred by the Corporation through
the date of such request.
2.
SECTION 3. PIGGYBACK REGISTRATION. If the Corporation at any time
proposes for any reason to register Primary Shares or Other Shares under the
Securities Act (other than on Form S-4 or Form S-8 promulgated under the
Securities Act or any successor forms thereto), it shall promptly give written
notice to Sands of its intention to so register such Primary Shares or Other
Shares and, upon the written request, delivered to the Corporation within 30
days after delivery of any such notice by the Corporation, of Sands to include
in such registration Advisor Shares (which request shall specify the number of
Advisor Shares proposed to be included in such registration), the Corporation
shall use its best efforts to cause all such Advisor Shares to be included in
such registration on the same terms and conditions as the securities otherwise
being sold in such registration; PROVIDED, HOWEVER, that if the managing
underwriter advises the Corporation that the inclusion of all Advisor Shares
requested to be included in such registration would interfere with the
successful marketing (including pricing) of the Primary Shares or Other Shares
proposed to be registered by the Corporation, then the number of Primary Shares,
Advisor Shares and Other Shares proposed to be included in such registration
shall be included in the following order:
(a) if the Corporation proposes to register Primary Shares:
(i) FIRST, the Primary Shares; and
(ii) SECOND, the Advisor Shares and Other Shares requested to be
included in such registration (or, if necessary, such Advisor Shares and Other
Shares PRO RATA among the holders thereof based upon the number of Advisor
Shares and Other Shares requested to be registered by each such holder); or
(b) if the Corporation proposes to register Other Shares pursuant to
a request for registration by the holders of such Other Shares:
(i) FIRST, the Other Shares held by the parties demanding such
registration;
(ii) SECOND, the Advisor Shares and Other Shares (other than
shares registered pursuant to Section 3(b)(i) hereof) requested to be registered
by the holders hereof (or, if necessary, PRO RATA among the holders thereof
based on the number of Advisor Shares and Other Shares requested to be
registered by such holders); and
(iii) THIRD, the Primary Shares.
SECTION 4. PREPARATION AND FILING. If and whenever the Corporation is
under an obligation pursuant to the provisions of this Agreement to use its
reasonable best efforts to effect the registration of any Registrable Shares,
the Corporation shall, as expeditiously as practicable:
(a) use its reasonable best efforts to cause a registration statement
that registers such Registrable Shares to become and remain effective until the
earlier of the date that is four years after the Closing or until all of such
Registrable Shares have been disposed of (it being understood that the
Corporation may discontinue at any time any registration that is described in
Section 3);
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective
until the earlier of the date that is four years after the Closing or until all
of such Registrable Shares have been disposed of and to comply with the
provisions of the Securities Act with respect to the sale or other disposition
of such Registrable Shares (it being understood that the Corporation may
discontinue at any time any registration that is described in Section 3);
(c) use its reasonable best efforts to register or qualify such
Registrable Shares under such other securities or blue sky laws of such
jurisdictions as the Securityholders reasonably request and do any
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and all other acts and things which may be reasonably necessary or advisable
to enable the Securityholders to consummate the disposition in such
jurisdictions of the Registrable Shares owned by the Securityholders;
PROVIDED, HOWEVER, that the Corporation will not be required to qualify
generally to do business, subject itself to general taxation or consent to
general service of process in any jurisdiction where it would not otherwise
be required to do so but for this paragraph (c) or to provide any material
undertaking or make any changes in its By-laws or Certificate of
Incorporation which the Board of Directors determines to be contrary to the
best interests of the Corporation;
(d) furnish to the Securityholders holding such Registrable Shares
such number of copies of a summary prospectus, if any, or other prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Securities Act, and such other documents as such Securityholders may reasonably
request in order to facilitate the public sale or other disposition of such
Registrable Shares;
(e) use its reasonable best efforts to cause such Registrable Shares
to be registered with or approved by such other governmental agencies or
authorities as may be necessary by virtue of the business and operations of the
Corporation to enable the Securityholders holding such Registrable Shares to
consummate the disposition of such Registrable Shares;
(f) notify the Securityholders holding such Registrable Shares on a
timely basis at any time when a prospectus relating to such Registrable Shares
is required to be delivered under the Securities Act within the appropriate
period mentioned in subparagraph (a) of this Section 4, of the happening of any
event as a result of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the circumstances then
existing and, at the request of the Securityholders, prepare and furnish to such
Securityholders a reasonable number of copies of a supplement to or an amendment
of such prospectus as may be necessary so that, as thereafter delivered to the
offerees of such shares, such prospectus shall not include an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in light of
the circumstances then existing;
(g) subject to the execution of confidentiality agreements in form
and substance satisfactory to the Corporation, make available upon reasonable
notice and during normal business hours, for inspection by the Securityholders
holding such Registrable Shares, any underwriter participating in any
disposition pursuant to such registration statement and any attorney, accountant
or other agent retained by the Securityholders or underwriter (collectively, the
"Inspectors"), all pertinent financial and other records, pertinent corporate
documents and properties of the Corporation (collectively, the "Records"), as
shall be reasonably necessary to enable them to exercise their due diligence
responsibility, and cause the Corporation's officers, directors and employees to
supply all information (together with the Records, the "Information") reasonably
requested by any such Inspector in connection with such registration statement.
Any of the Information which the Corporation determines in good faith to be
confidential, and of which determination the Inspectors are so notified, shall
not be disclosed by the Inspectors unless (i) the disclosure of such Information
is necessary to avoid or correct a misstatement or omission in the registration
statement, (ii) the release of such Information is ordered pursuant to a
subpoena or other order from a court of competent jurisdiction or (iii) such
Information has been made generally available to the public; the Securityholders
agree that they will, upon learning that disclosure of such Information is
sought in a court of competent jurisdiction, give notice to the Corporation and
allow the Corporation, at the Corporation's expense, to undertake appropriate
action to prevent disclosure of the Information deemed confidential;
(h) use its best efforts to obtain from its independent certified
public accountants "cold comfort" letters in customary form and at customary
times and covering matters of the type customarily covered by cold comfort
letters;
(i) use its best efforts to obtain from its counsel an opinion or
opinions in customary
4.
form;
(j) provide a transfer agent and registrar (which may be the same
entity and which may be the Corporation) for such Registrable Shares;
(k) issue to any underwriter to which the Securityholders holding
such Registrable Shares may sell shares in such offering certificates evidencing
such Registrable Shares;
(l) list such Registrable Shares on any national securities exchange
on which any shares of the Common Stock are listed or, if the Common Stock is
not listed on a national securities exchange, use its best efforts to qualify
such Registrable Shares for inclusion on the automated quotation system of the
National Association of Securities Dealers, Inc. (the "NASD"), or such other
national securities exchange as the holders of a majority of such Registrable
Shares shall reasonably request;
(m) use its reasonable best efforts to take all other steps necessary
to effect the registration of such Registrable Shares contemplated hereby.
Each holder of the Registrable Shares, upon receipt of any notice from the
Corporation of any event of the kind described in Section 4(f) hereof, shall
forthwith discontinue disposition of the Registrable Shares pursuant to the
registration statement covering such Registrable Shares until such holder's
receipt of the copies of the supplemented or amended prospectus contemplated by
Section 4(f) hereof, and, if so directed by the Corporation, such holder shall
deliver to the Corporation all copies, other than permanent file copies then in
such holder's possession, of the prospectus covering such Registrable Shares at
the time of receipt of such notice.
SECTION 5. EXPENSES. All expenses (other than underwriting discounts and
commissions relating to the Registrable Shares, as provided in the last sentence
of this Section 5) incurred by the Corporation in complying with Section 4,
including, without limitation, all registration and filing fees (including all
expenses incident to filing with the NASD), fees and expenses of complying with
securities and blue sky laws, printing expenses, and fees and expenses of the
Corporation's counsel and accountants shall be paid by the Corporation;
PROVIDED, HOWEVER, that all underwriting discounts and selling commissions
applicable to the Registrable Shares and Other Shares shall be borne by the
holders selling such Registrable Shares and Other Shares, in proportion to the
number of Registrable Shares and Other Shares sold by each such holder.
SECTION 6. INDEMNIFICATION.
(a) In connection with any registration of any Registrable Shares
under the Securities Act pursuant to this Agreement, the Corporation shall
indemnify and hold harmless the holders of Registrable Shares, each underwriter,
broker or any other person acting on behalf of the holders of Registrable Shares
and each other person, if any, who controls any of the foregoing persons within
the meaning of the Securities Act against any losses, claims, damages or
liabilities, joint or several (or actions in respect thereof), to which any of
the foregoing persons may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon (i) an untrue statement or allegedly
untrue statement of a material fact contained in the registration statement
under which such Registrable Shares were registered under the Securities Act,
any preliminary prospectus or final prospectus contained therein or otherwise
filed with the Commission, any amendment or supplement thereto or any document
incident to registration or qualification of any Registrable Shares, or (ii) the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading or,
with respect to any prospectus, necessary to make the statements therein in
light of the circumstances under which they were made not misleading, or any
violation by the Corporation of the Securities Act or state securities or blue
sky laws applicable to the Corporation and relating to action or inaction
required of the Corporation in connection with such registration or
qualification under such state securities or blue sky laws. The Corporation
shall reimburse the holders of Registrable Shares, any
5.
underwriter or broker or such other person acting on behalf of the holders of
Registrable Shares and each controlling person of such underwriters, brokers
or other persons for any legal or other expenses reasonably incurred by an of
them in connection with investigating or defending any such loss, claim,
damage, liability or action; PROVIDED, HOWEVER, that the Corporation shall
not be liable in any such case to the extent that any such loss, claim,
damage, liability or action (including any legal or other expenses incurred)
arises out of or is based upon an untrue statement or allegedly untrue
statement or omission or alleged omission made in said registration
statement, preliminary prospectus, final prospectus, amendment, supplement or
document incident to registration or qualification of any Registrable Shares
in reliance upon and in conformity with written information furnished to the
Corporation through an instrument duly executed by the holders of Registrable
Shares or their counsel or underwriter specifically for use in the
preparation thereof; PROVIDED FURTHER, HOWEVER, that the foregoing indemnity
agreement is subject to the condition that, insofar as it relates to any
untrue statement, allegedly untrue statement, omission or alleged omission
made in any preliminary prospectus but eliminated or remedied in the final
prospectus (filed pursuant to Rule 424 of the Securities Act), such indemnity
agreement shall not inure to the benefit of any Securityholder, underwriter,
broker or other person acting on behalf of holders of the Restricted Shares
from whom the person asserting any loss, claim, damage, liability or expense
purchased the Restricted Shares which are the subject thereof, if a copy of
such final prospectus had been made available to such selling person and such
Securityholder, underwriter, broker or other person acting on his behalf and
such final prospectus was not delivered to the purchaser with or prior to the
written confirmation of the sale of such Registrable Shares to such purchaser.
(b) In connection with any registration of Registrable Shares under
the Securities Act pursuant to this Agreement, each holder of Registrable Shares
shall severally and not jointly indemnify and hold harmless (in the same manner
and to the same extent as set forth in the preceding paragraph of this Section
6) the Corporation, each director of the Corporation, each officer of the
Corporation who shall sign such registration statement, each underwriter, broker
or other person acting on behalf of the holders of Registrable Shares and each
person who controls any of the foregoing persons within the meaning of the
Securities Act with respect to any statement or omission from such registration
statement, any preliminary prospectus or final prospectus contained therein or
otherwise filed with the Commission, any amendment or supplement thereto or any
document incident to registration or qualification of any Registrable Shares, if
such statement or omission was made in reliance upon and in conformity with
written information furnished by the holders of Registrable Shares to the
Corporation or such underwriter specifically for use in connection with the
preparation of such registration statement, preliminary prospectus, final
prospectus, amendment, supplement or document; PROVIDED, HOWEVER, that the
maximum amount of liability in respect of such indemnification shall be limited,
in the case of each seller of Registrable Shares, to an amount equal to the net
proceeds actually received by such Seller from the sale of Registrable Shares
effected pursuant to such registration.
(c) Promptly after receipt by an indemnified party of notice of the
commencement of any action involving a claim referred to in the preceding
paragraphs of this Section 6, such indemnified party will, if a claim in respect
thereof is made against an indemnifying party, give written notice to the latter
of the commencement of such action. In case any such action is brought against
an indemnified party, the indemnifying party will be entitled to participate in
and to assume the defense thereof, jointly with any other indemnifying party
similarly notified to the extent that it may wish, with counsel reasonably
satisfactory to such indemnified party, and after notice from the indemnifying
party to such indemnified party of its election so to assume the defense
thereof, the indemnifying party shall not be responsible for any legal or other
expenses subsequently incurred by the indemnified party in connection with the
defense thereof; PROVIDED, HOWEVER, that if any indemnified party shall have
reasonably concluded, based upon the advice of counsel, that there may be one or
more legal or equitable defenses available to such indemnified party which are
additional to or conflict with those available to the indemnifying party, or
that such claim or litigation involves or could have an effect upon matters
beyond the scope of the indemnity agreement provided in this Section 6, the
indemnifying party shall not have the right to assume the defense of such action
on behalf of such indemnified party and such indemnifying party shall reimburse
such indemnified party and any person controlling such indemnified party for
that portion of the reasonable fees and expenses of any one counsel retained by
the indemnified party which is reasonably related to the matters covered by the
indemnity agreement provided in this Section 6.
6.
(d) If the indemnification provided for in this Section 6 is held by
a court of competent jurisdiction to be unavailable to an indemnified party with
respect to any loss, claim, damage, liability or action referred to herein, then
the indemnifying party, in lieu of indemnifying such indemnified party
hereunder, shall contribute to the amounts paid or payable by such indemnified
party as a result of such loss, claim, damage, liability or action in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party on the one hand and of the indemnified party on the other in connection
with the statements or omissions which resulted in such loss, claim, damage,
liability or action as well as any other relevant equitable considerations. The
relative fault of the indemnifying party and of the indemnified party shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the indemnifying party or by
the indemnified party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
SECTION 7. INFORMATION BY HOLDER. The Securityholders shall furnish to
the Corporation such written information regarding the Securityholders and the
distribution proposed by the Securityholders as the Corporation may reasonably
request in writing and as shall be reasonably required in connection with any
registration, qualification or compliance referred to in this Agreement.
SECTION 8. EXCHANGE ACT COMPLIANCE. The Corporation shall use its best
efforts to comply with all of the reporting requirements of the Exchange Act
applicable to it (whether or not it shall be required to do so, but specifically
excluding Section 14 of the Exchange Act if not then applicable to the
Corporation) and shall comply with all other public information reporting
requirements of the Commission which are conditions to the availability of Rule
144 for the sale of the Common Stock. The Corporation shall cooperate with the
Securityholders in supplying such information as may be necessary for the
Securityholders to complete and file any information reporting forms presently
or hereafter required by the Commission as a condition to the availability of
Rule 144.
SECTION 9. SUCCESSORS AND ASSIGNS. This Agreement shall bind and inure to
the benefit of the Corporation and the Securityholders and, subject to Section
9, the respective successors and assigns of the Corporation and the
Securityholders.
SECTION 10. ASSIGNMENT. Each Securityholder may assign its rights
hereunder to any purchaser or transferee of Registrable Shares; PROVIDED,
HOWEVER, that such purchaser or transferee shall, as a condition to the
effectiveness of such assignment, be required to execute a counterpart to this
Agreement agreeing to be treated as a Securityholder whereupon such purchaser or
transferee shall have the benefits of, and shall be subject to the restrictions
contained in, this Agreement as if such purchaser or transferee was originally
included in the definition of an Securityholder herein and had originally been a
party hereto.
SECTION 11. ENTIRE AGREEMENT. This Agreement contains the entire
agreement among the Corporation and the Securityholders with respect to the
subject matter hereof and supersedes all prior and contemporaneous arrangements
or understandings with respect thereto.
SECTION 12. NOTICES. All notices, requests, consents and other
communications hereunder to any party shall be deemed to be sufficient if
contained in a written instrument delivered in person or sent by telecopy,
nationally-recognized overnight courier or first class registered or certified
mail, return receipt requested, postage prepaid, addressed to such party at the
address set forth below or such other address as may hereafter be designated in
writing by such party to the other parties:
7.
(i) if to the Corporation, to:
Intellicell Corp.
0000 Xxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Chief Financial Officer
with a copy to:
Xxxx & Xxxxx, Professional Corporation
0000 Xxxxxxx Xxxx Xxxx, 00xx Xxxxx
Xxx Xxxxxxx, XX
Telecopy: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxxxx, Esq.; and
(ii) if to the Securityholders, to each such Securityholder at his
name and address as set forth in the records of the Company.
All such notices, requests, consents and other communications shall be deemed to
have been delivered (a) in the case of personal delivery or delivery by
telecopy, on the date of such delivery, (b) in the case of dispatch by
nationally-recognized overnight courier, on the next business day following such
dispatch and (c) in the case of mailing, on the third business day after the
posting thereof.
SECTION 13. MODIFICATIONS; AMENDMENTS; WAIVERS. The terms and provisions
of this Agreement may not be modified or amended, nor may any provision be
waived, except pursuant to a writing signed by the Corporation and the holders
of at least a majority of the Registrable Shares then outstanding; PROVIDED,
HOWEVER, that any amendment to or modification of this Agreement which would
have a disproportionate adverse affect on the rights of any Securityholder shall
require the written consent of such Securityholder.
SECTION 14. COUNTERPARTS; FACSIMILE SIGNATURES. This Agreement may be
executed in any number of counterparts, and each such counterpart hereof shall
be deemed to be an original instrument, but all such counterparts together shall
constitute but one agreement.
SECTION 15. HEADINGS. The headings of the various sections of this
Agreement have been inserted for convenience of reference only and shall not be
deemed to be a part of this Agreement.
SECTION 16. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of California applicable to
contracts made and to be performed wholly therein.
8.
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement on the date first written above.
INTELLICELL CORP.
By:
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Name:
Title:
SECURITYHOLDERS
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Name:
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Name:
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Name:
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Name:
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Name:
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Name:
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Name:
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Name:
SANDS BROTHERS & CO., LTD.
By:
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Name:
Title:
9.
