Exhibit 4.2
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (the "Agreement") dated as of April
17, 2001, as amended on September 26, 2001, among NOVAZYME PHARMACEUTICALS,
INC., a Delaware corporation (the "COMPANY") and THE SEVERAL PURCHASERS NAMED IN
SCHEDULE 2.1 (each a "PURCHASER" and collectively, the "PURCHASERS").
WHEREAS, the Company wishes to issue and sell to the Purchasers, an
aggregate of up to 1,780,000 shares of the Company's authorized but unissued
Series B Convertible Participating Preferred Stock (collectively, the "PURCHASED
SECURITIES") and
WHEREAS, the Purchasers, severally and not jointly, wish to purchase
such securities on the terms and subject to the conditions set forth in this
Agreement;
NOW THEREFORE, in consideration of the premises and the mutual
covenants contained in this Agreement, the parties agree as follows:
ARTICLE I
DEFINITIONS
For all purposes of this Agreement the following terms shall have the
meanings set forth in this Article I:
"ACCREDITED INVESTOR" means an "accredited investor" as defined in Rule
501 of the Securities Act (as defined herein).
"ADDITIONAL PURCHASER(S)" means the Purchasers identified as
"Additional Purchasers" on SCHEDULE 2.1 to this Agreement.
"ADDITIONAL PURCHASER CLOSING" has the meaning specified in Section
2.1(b) of this Agreement.
"ADDITIONAL PURCHASER CLOSING DATES" has the meaning specified in
Section 2.2(b) of this Agreement.
"ADDITIONAL PURCHASER AGREEMENT" has the meaning specified in Section
2.1(b) of this Agreement.
"AFFILIATE" means, as applied to the Company or any other specified
Person, any Person directly or indirectly controlling, controlled by or under
direct or indirect common control with the Company (or other specified Person)
and shall also include (a) any Person who is a director or beneficial owner of
at least 5% of the Company's then outstanding Capital Securities (or other
specified Person) and Family Members of any such Person, (b) any Person of which
the
Company (or other specified Person) or an Affiliate, as defined in clause (a)
above, of the Company (or other specified Person) shall, directly or indirectly,
either beneficially own at least 10% of the Company's then outstanding Capital
Securities or constitute at least a 10% equity participant, and (c) in the case
of a specified Person who is an individual, any Family Member of such Person.
Notwithstanding the foregoing, the Purchasers shall not be considered
"Affiliates" of the Company under this Agreement.
"BLUE SKY FILINGS" has the meaning specified in Section 3.5 of this
Agreement.
"BUDGET" means the budget approved by the Board of Directors in
accordance with the Certificate of Designation.
"BUSINESS DAY" means any day other than a Saturday, Sunday or a legal
holiday in Boston, Massachusetts or any other day on which commercial banks in
such State are authorized by law or government decree to close.
"CAPITAL SECURITIES" means, as to any Person that is a corporation, the
authorized shares of such Person's capital stock, including all classes of
common, preferred, voting and nonvoting capital stock, and, as to any Person
that is not a corporation or an individual, the ownership shares in such Person,
including, without limitation, the right to share in profits and losses, the
right to receive distributions of cash and property, and the right to receive
allocations of items of income, gain, less, deduction and credit and similar
items from such Person, whether or not such shares include voting or similar
rights entitling the holder thereof to exercise control over such Person.
"CERTIFICATE OF DESIGNATION" means the Amended Certificate of
Designation of Series A Convertible Participating Preferred Stock and
Certificate of Designation of Series B Convertible Participating Preferred Stock
of Novazyme Pharmaceuticals, Inc., as filed with the Delaware Secretary of State
on or before the date hereof, in the form of EXHIBIT A hereto.
"CHARTER" means, as to a corporation, the articles or certificate of
incorporation, as to a general or limited partnership, the joint venture or
partnership agreement or articles or other organizational document, as to a
limited liability company, the operating or limited liability company agreement
or articles or certificate of formation, and as to any other Person other than
an individual, any statute, articles or other organizational document, each as
from time to time amended or modified.
"CLINICAL TRIAL CLEARANCE AMOUNT" means the number of shares of Series
B Preferred Stock specified in SCHEDULE 2.1 to be purchased by a Purchaser
pursuant to Section 2.1(a)(iv). In the case of the Initial Purchasers, such
amount shall equal fifty percent (50%) of the Initial Purchased Securities, and
in the case of the Additional Purchasers, such amount shall not exceed the
number of shares to which such Additional Purchasers shall have the right to
purchase under Section 5.2 of the Stockholders' Agreement.
"CLINICAL TRIAL CLEARANCE NOTICE" means the date upon which the Company
gives written notice to the Purchasers that the Company has received clearance
under U.S. Food and Drug Administration regulations and controlling statutory
provisions to commence human clinical trials for a therapeutic for Pompe
Disease.
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"CLOSING" shall mean, collectively, the Initial Closing and any
Subsequent Closings and/or Additional Purchaser Closings (each as defined
herein).
"CLOSING DATE" shall mean, collectively, the Initial Closing Date and
any of the Subsequent Closing Dates or Additional Purchaser Closing Dates (each
as defined herein).
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMON STOCK" has the meaning specified in Section 3.4 of this
Agreement.
"COMPANY" has the meaning specified in the introduction to this
Agreement.
"CONSOLIDATED" or "CONSOLIDATED" means, with reference to any term
defined herein, that term as applied to the Company's accounts and all of its
Subsidiaries' accounts that may in accordance with GAAP be consolidated with the
Company.
"CONTRACTS" has the meaning specified in Section 3.12 of this
Agreement.
"CONVERTIBLE DEBENTURES" means any of the series of 8% convertible
debentures of the Company issued to Neose pursuant to that certain Securities
Purchase Agreement dated as of May 18, 2000 by and between the Company and
Neose.
"CONVERTIBLE SECURITIES" means securities or obligations, that are
exercisable for, convertible into or exchangeable for shares of Common Stock,
including without limitation all shares of the Series B Preferred Stock, shares
of the Series A Preferred Stock, Convertible Debentures, options, warrants or
other rights to subscribe for or purchase Common Stock or to subscribe for or
purchase other Capital Securities or obligations that are, directly or
indirectly, convertible into or exchangeable for Common Stock.
"DAMAGES" has the meaning specified in Section 9.1 of this Agreement.
"DELIVERY DATE" has the meaning specified in Section 16.2 of this
Agreement.
"DOLLARS" and the sign "$" mean lawful money of the United States of
America.
"EFFECTIVE TIME" shall have the meaning set forth in the Merger
Agreement.
"EMPLOYEE BENEFIT PLAN" means any employee benefit plan within the
meaning of Section 3(3) of ERISA maintained or contributed to by the Company or
any ERISA Affiliate, other than a Multiemployer Plan.
"EMPLOYEE OPTIONS" has the meaning specified in Section 3.4(e) of this
Agreement.
"ERISA" means the Employee Retirement Income Security Act of 1974, any
successor statute of similar import, and the rules and regulations thereunder,
collectively, and from time to time amended and in effect.
"ERISA AFFILIATE" means any Person, which is treated as a single
employer with the Company under Section 414 of the Code.
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"FAMILY MEMBER" means, as applied to any individual, such individual's
spouse, child (including a stepchild or an adopted child) grandchild, parent,
brother or sister thereof or any spouse of any of the foregoing, and each trust
created for the exclusive, benefit of one or more of them.
"FOUNDER" means Xxxxxxx X. Xxxxxxxx, M.D., Ph.D.
"FULLY DILUTED BASIS" has the meaning specified in Section 3.4(1) of
this Agreement.
"GENERALLY ACCEPTED ACCOUNTING PRINCIPLES" or "GAAP" means accounting
principles which are (a) consistent with the principles promulgated or adopted
by the United States Financial Accounting Standards Board and its predecessors
and other recognized principle setting bodies, in effect from time to time, (b)
applied on a basis consistent with prior periods, and (c) such that a certified
public accountant would, insofar as the use of accounting principles is
pertinent, be in a position to base an opinion as to financial statements in
which such principles have been properly applied.
"GENZYME" shall mean Genzyme Corporation, a Massachusetts corporation.
"GENZYME TRANSACTION" shall mean the acquisition of the Company by
Genzyme through a merger of a wholly owned subsidiary of Genzyme with and into
the Company in accordance with the terms and conditions of the Merger Agreement.
"GUARANTEED PENSION PLAN" means any employee pension benefit plan
within the meaning of Section 3(2) of ERISA maintained or contributed to by the
Company or any ERISA Affiliate, the benefits of which are guaranteed on
termination in full or in part by the Pension Benefit Guaranty Corporation
pursuant to Title IV of ERISA, other than a Multiemployer Plan.
"HISTORICAL FINANCIAL STATEMENTS" means, on a consolidated and
consolidating basis for each of the Company and its Subsidiaries, the audited
balance sheet and statement of operations, statement of cash flows and statement
of stockholders' equity for the year ended December 31, 2000, and the unaudited
balance sheet and statement of operations, statement of cash flows and.
statement of stockholders' equity for the two months ended February 28, 2001.
"IND FILING NOTICE" means the date upon which the Company gives written
notice to the Purchasers that the Company has filed an Investigational New Drug
Application with the U.S. Food and Drug Administration for a therapeutic for
Pompe Disease.
"IND FILING PURCHASE AMOUNT" means the number of shares of Series B
Preferred Stock specified in SCHEDULE 2.1 to be purchased by a Purchaser
pursuant to Section 2.1(a)(iii). In the case of the Initial Purchasers, such
amount shall equal fifty percent (50%) of the Initial Purchased Securities for
such Initial Purchaser, and in the case of the Additional Purchasers, such
amount shall not exceed the number of shares to which such Additional Purchasers
shall have the right to purchase under Section 5.2 of the Stockholders'
Agreement.
"INDEBTEDNESS" means all obligations, contingent and otherwise, which
in accordance with GAAP should be classified on the obligor's balance sheet as
liabilities, or to which reference should be made by footnote thereto, including
without limitation, in any event and
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whether or not so classified: (i) all debt and similar monetary obligations,
whether direct or indirect; (ii) all liabilities secured by any mortgage,
pledge, security interest, lien, charge or other encumbrance existing on
property owned or acquired subject thereto, whether or not the liability secured
thereby shall have been assumed; (iii) all guaranties, endorsements and other
contingent obligations whether direct or indirect in respect of Indebtedness or
performance of others, including any obligation to supply funds to or in any
manner to invest in, directly or indirectly, the debtor, to purchase
Indebtedness, or to assure the owner of Indebtedness against loss, through an
agreement to purchase goods, supplies or services for the purpose of enabling
the debtor to make payment of the indebtedness held by such owner or otherwise;
and (iv) obligations to reimburse issuers of any letters of credit.
"INDEMNITEE" has the meaning specified in Section 9.1 of this
Agreement.
"INITIAL CLOSING" has the meaning specified in Section 2.2(a) of this
Agreement.
"INITIAL CLOSING DATE" has the meaning specified in Section 2.2(a) of
this Agreement. "INITIAL PURCHASED SECURITIES" has the meaning specified in
Section 2.1 (a) of this Agreement.
"INITIAL PURCHASER" means those Purchasers identified as "Initial
Purchasers" on SCHEDULE 2.1 to this Agreement.
"INTANGIBLE PROPERTY" has the meaning specified in Section 3.15 of this
Agreement.
"KNOWLEDGE" or "KNOWLEDGE" means, the good faith actual knowledge of
such Person, after due and proper inquiry and such due diligence as is
reasonably required for such Person to make an informed representation or
warranty as to such Person's "knowledge" of a matter.
"LETTER" has the meaning specified in Section 16.2 of this Agreement.
"LICENSES" has the meaning specified in Section 3.17 of this Agreement.
"LIEN" means (a) any encumbrance, mortgage, pledge, lien, charge or
other security interest of any kind upon any property or assets of any
character, or upon the income or profits therefrom; (b) any acquisition of or
agreement to have an option to acquire any property or assets upon conditional
sale or other title retention agreement, device or arrangement (including a
capitalized lease); or (c) any sale, assignment, pledge or other transfer for
security of any accounts, general intangibles or chattel paper, with or without
recourse.
"MATERIAL ADVERSE EFFECT" means (a) an adverse effect on the validity
or enforceability of this Agreement or any of the Related Agreements in any
material respect; (b) an adverse effect on the condition (financial or other),
business, results of operations, ability to conduct business or properties of
the Company and its Subsidiaries, taken as a whole; or (c) an impairment of the
ability of the Company to fulfill its obligations under this Agreement or any of
the Related Agreements in any material respect.
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"MERGER AGREEMENT" shall mean that certain Agreement and Plan of
Merger, by and among the Company, Genzyme and Rodeo Merger Corp, a wholly owned
subsidiary of Genzyme, dated as of August 6, 2001, a copy of which is attached
hereto as EXHIBIT A.
"MULTIEMPLOYER PLAN" means a multiemployer plan within the meaning of
Section 3(37) of ERISA.
"NEOSE" means Neose Technologies, Inc., a Delaware corporation.
"NEOSE RIGHTS AGREEMENT" means that certain Amended and Restated Rights
Agreement between the Company and Neose dated February 26, 2001.
"OPTIONAL PURCHASE NOTICE" has the meaning specified in Section 2.1(a)
of this Agreement.
"PARENT COMMON STOCK" shall have the meaning set forth in the Merger
Agreement.
"PER SHARE PRICE" has the meaning specified in Section 2.1(a) of this
Agreement.
"PERSON" means an individual, partnership, corporation, association,
trust, joint venture, unincorporated organization, and any government,
governmental department or agency or political subdivision thereof.
"PURCHASED SECURITIES" has the meaning specified in the introduction to
this Agreement.
"PURCHASERS" means the several purchasers named in SCHEDULE 2.1,
including the Initial Purchasers and any Additional Purchasers subsequently
named therein, and a "PURCHASER" means any one of them.
"REGISTRABLE SECURITIES" means those shares of Common Stock issuable
upon conversion of the Series B Preferred Stock.
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights Agreement
dated as of September 13, 2000, among the Company and the holders named therein,
as amended by Amendment No. 1 to Registration Rights Agreement dated April 17,
2001, in the form of Exhibit C hereto.
"RELATED AGREEMENTS" means the Registration Rights Agreement, the
Stockholders' Agreement, the Certificate of Designation and any Additional
Purchaser Agreements.
"SECURITIES ACT" means the Securities Act of 1933, as amended, or any
successor federal statute, and the rules and regulations of the Securities and
Exchange Commission thereunder, all as the same shall be in effect at the time.
"SERIES A PREFERRED STOCK" has the meaning specified in Section 3.4(a)
of this Agreement.
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"SERIES A PURCHASE AGREEMENT" has the meaning specified in Section 3.10
of this Agreement.
"SERIES B PREFERRED STOCK" has the meaning specified in Section 3.4(a)
of this Agreement.
"STOCK OPTION PLAN" has the meaning specified in Section 3.4(e) of this
Agreement.
"STOCKHOLDERS' AGREEMENT" means the Amended and Restated Stockholders'
Agreement dated as of April 17, 2001, among the Company and each of the parties
named therein as "Holders", a copy of which is attached as EXHIBIT B hereto.
"SUBSEQUENT CLOSINGS" has the meaning specified in Section 2.2(c) of
this Agreement.
"SUBSEQUENT CLOSING DATES" has the meaning specified in Section 2.2(c)
of this Agreement.
"SUBSIDIARY" means any Person of which the Company or other specified
Person now or hereafter shall at the time own directly or indirectly through a
Subsidiary or another Person at least a majority of the outstanding Capital
Securities (or other shares of beneficial interest) entitled to vote generally;
and the term "Subsidiaries" means all such Persons collectively.
"TAXES" or "TAX" means (a) all net income, gross income, gross
receipts, sales, use, ad valorem, transfer, franchise, profits, license,
withholding, payroll, employment, excise, severance, stamp, occupation, premium,
property or windfall profits taxes, or other taxes of any kind whatsoever,
together with any interest and any penalties, additions to tax or additional
amounts imposed by any taxing authority (domestic or foreign) upon the Company
with respect to all periods or portions thereof ending on or before the date
hereof, and/or (b) any liability of the Company for the payment of any amounts
of the type described in the immediately preceding clause (a) as a result of
being a member of an affiliated or combined group.
"THIRD PARTY CLAIMS" has the meaning specified in Section 9.1 of this
Agreement.
"USRPHC" has the meaning specified in Section 16.2 of this Agreement.
ARTICLE II
SALE AND PURCHASE OF PURCHASED SECURITIES
SECTION 2.1. SALE AND PURCHASE OF PURCHASED SECURITIES.
(a) PREVIOUS PURCHASES. Each Purchaser has previously purchased, and
the Company has previously issued to such Purchaser, the number of shares of
Series B Preferred Stock set forth on SCHEDULE 2.1 in the column captioned
"Initial Purchased Securities" (the "INITIAL PURCHASED SECURITIES") opposite the
name of such Purchaser. Each Purchaser hereby acknowledges that except as
provided in this Section 2.1, such Purchaser has no other rights to purchase by
additional shares of Series B Preferred Stock.
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(b) FUTURE PURCHASES.
(i) MANDATORY IND FILING PURCHASES. No later than fifteen (15)
days following the IND Filing Notice, each Purchaser shall
purchase (the "REQUIRED IND PURCHASE") the number of shares of
Series B Preferred Stock (subject to appropriate adjustment
for any stock split, stock dividend, split-up, subdivision,
reverse stock split, combination or reclassification of Series
B Preferred Stock) set forth on SCHEDULE 2.1 in the column
captioned "IND Filing Purchase Amount" opposite the name of
such Purchaser (the "IND FILING PURCHASE AMOUNT"), at a price
per share of $10.399 (the "PER SHARE PRICE"). Notwithstanding
anything to the contrary stated above, the IND Filing Purchase
Amount shall be reduced by the number of shares of Series B
Preferred Stock that shall equal the difference of (A) the
Clinical Trial Clearance Amount (as defined in 2.1(b)(ii)
below) less (B) the number of shares of Series B Preferred
Stock, if any, that such Purchaser purchased pursuant to
2.1(b)(iii) below, such number not to be less than zero.
(ii) MANDATORY CLINICAL TRIAL CLEARANCE PURCHASES. No later than
fifteen (15) days following the Clinical Trial Clearance
Notice, each Purchaser shall purchase (the "REQUIRED CLINICAL
TRIAL PURCHASE") the number of shares of Series B Preferred
Stock (subject to appropriate adjustment for any stock split,
stock dividend, split-up, subdivision, reverse stock split,
combination or reclassification of Common Stock) set forth on
SCHEDULE 2.1 in the column captioned "Clinical Trial Clearance
Amount" opposite the name of such Purchaser (the "CLINICAL
TRIAL CLEARANCE AMOUNT"), less any number of shares of Series
B Preferred Stock purchased pursuant to 2.1(b)(i) and
2.1(b)(iii), at the Per Share Price, such number not to be
less than zero;
(iii) VOLUNTARY PURCHASES. Notwithstanding any of the foregoing, at
any time or from time to time, each Purchaser shall have the
option (the "OPTIONAL PURCHASE RIGHT") to require the Company,
by delivering written notice to the Company (the "OPTIONAL
PURCHASE NOTICE") set forth as EXHIBIT B-1 (if before the
Effective Time of the Genzyme Transaction) or EXHIBIT B-2 (if
after the Effective Time of the Genzyme Transaction), attached
hereto, as applicable, to issue and sell to such Purchaser on
a date mutually agreed upon by the Company and such Purchaser,
but in no event later than 5 business days following the date
of the Optional Purchase Notice, the number of shares of
Series B Preferred Stock, subject to Section 2(c), (subject to
appropriate adjustment for any stock split, stock dividend,
split-up, subdivision, reverse stock split, combination or
reclassification of Common Stock) set forth on SCHEDULE 2.1 in
the column captioned "Voluntary Purchase Amount" opposite the
name of such Purchaser (the "VOLUNTARY PURCHASE AMOUNT"), less
any number of shares of Series B Preferred Stock purchased
pursuant to 2.1(b)(i) and 2.1(b)(ii), at the Per Share Price,
such number not to be less than zero.
(iv) LIMITATION ON NUMBER OF SHARES. No Purchaser shall be required
to, nor have the right to, purchase pursuant to this Section
2.1 more than that number of shares of Series B Preferred
Stock equal to the Voluntary Purchase Amount.
(c) RIGHT TO ACQUIRE PARENT COMMON STOCK FOLLOWING THE GENZYME
TRANSACTION. Notwithstanding any of the foregoing, immediately following the
Effective Time of the Genzyme Transaction, and pursuant to the terms of the
Merger Agreement, the Required IND Purchase, the Required Clinical Trial
Purchase and the Optional Purchase Right shall,
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automatically and without any action by the Company or any Purchaser, become the
right (the "ASSUMED PREFERRED STOCK PURCHASE RIGHT") to purchase shares of
Parent Common Stock, and, upon exercise of such Assumed Preferred Stock Purchase
Right, Genzyme shall issue, that number of shares of Parent Common Stock in each
case, as determined pursuant to Section 1.7(e) of the Merger Agreement (the
"ASSUMED PURCHASE RIGHT SHARES"), at a purchase price per share as determined
pursuant to Section 1.7(e) of the Merger Agreement (the "ASSUMED PREFERRED STOCK
PURCHASE PRICE").
(d) ADJUSTMENT UPON CERTAIN EVENTS. If after the Effective Time there
is a change in the number of issued and outstanding shares of Parent Common
Stock as the result of a reclassification, subdivision, recapitalization,
combination, exchange, stock split (including reverse stock split), stock
dividend or distribution or other similar transaction, the number of shares of
Parent Common Stock a Purchaser shall have the obligation or the right to
purchase pursuant to this Agreement shall be equitably adjusted to give effect
to such event.
(e) NET EXERCISE. In lieu of making a cash payment for the Exercise
Price (as defined below) of an Assumed Preferred Stock Purchase Right, the
Purchaser may pay all or such portion of such Exercise Price by electing not to
receive all of such Assumed Purchase Right Shares but only to receive that
number of such Assumed Purchase Right Shares as shall be determined in
accordance with the following formula:
X = Y(A-B)
------
A
Where: X = the number of shares of Parent Common Stock to
be issued to the Purchaser pursuant to this
Section 2.1(e)
Y = the number of Assumed Purchase Right
Shares for which the Assumed Preferred Stock
Purchase Right is being exercised as of the
date the Assumed Preferred Stock Purchase
Right is being exercised (the "EXERCISE DATE")
A = the closing price per share of Parent Common
Stock as reported by The Nasdaq National
Market, rounded to the fourth decimal place as
of the applicable Exercise Date of a share of
Parent Common Stock constituting such Assumed
Purchase Right Shares
B = the exercise price in effect as of the
applicable Exercise Date of a share of Parent
Common Stock constituting such Assumed Purchase
Right Shares
For purposes of this Section 2(e), the "Exercise Price" for all or any
portion of the Assumed Purchase Right Shares held by a Purchaser shall equal (a)
the Assumed Preferred Stock Purchase Price, multiplied by (b) the number of
Assumed Purchase Right Shares payable in respect of the number of shares of
Parent Common Stock for which the Assumed Preferred Stock Purchase Right is
being exercised.
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The Purchaser may elect to make payment of all or any portion of such
aggregate Exercise Price pursuant to, and in the manner set forth in this
Section 2.1(e) by submitting to Genzyme after the Effective Time at its
principal office a notice of such net issue exercise, which is attached hereto
as EXHIBIT C.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, this Securities Purchase Agreement has been
executed under seal by the parties hereto as of the day and year first above
written.
"COMPANY": NOVAZYME PHARMACEUTICALS, INC.
f/k/a Targeted Therapy, Inc.
By: /s/ XXXX X. XXXXXXX
-------------------------------------
Xxxx X. Xxxxxxx
President and Chief Executive Officer
"PURCHASERS":
By:
-------------------------------------
Name:
Title:
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