EXHIBIT 10.35
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement"), dated as of May 19,
2006, is by and between BigString Corporation, a corporation incorporated and
organized under the laws of the State of Delaware, with its principal executive
offices at 0 Xxxxxxx Xxxx, Xxxxx X, Xxx Xxxx, Xxx Xxxxxx 00000 ("Buyer"), and
Xxxx Xxxx, an individual with a mailing address of X.X. Xxx 000, Xxxxxxx, Xxx
Xxxxxx 00000 ("Seller"). Buyer and Seller shall be individually referred to
herein at times as a "Party" or together as the "Parties."
R E C I T A L S
WHEREAS, Seller owns, operates and is developing the websites,
XxxxXxXxx.xxx, an event search engine, and XxxxxxxxXxXxxx.xxx, a photo sharing
website designed to let friends and family view each other's pictures, post
comments and win various prizes (collectively, the "Websites"); and
WHEREAS, Buyer desires to purchase and Seller desires to sell the
Websites and all of the assets of Seller used in connection with the Websites,
upon the terms and subject to the conditions provided herein.
NOW, THEREFORE, in consideration of the premises and of the respective
covenants and agreements contained herein, and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
Parties hereto agree as follows:
ARTICLE I
PURCHASE AND SALE OF ASSETS
1.01 Purchase and Sale. At the Closing (as defined below), upon the
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terms and subject to the conditions set forth in this Agreement, Seller shall
sell to Buyer, and Buyer shall purchase from Seller, the Websites and all of the
assets of Seller used to operate the Websites (the "Purchased Assets"),
including, but not limited to: (i) all of Seller's right, title and interest in
the Websites and domain names "xxx.XxxxXxXxx.xxx" and "xxx.XxxxxxxxXxXxxx.xxx,"
including all registrations with respect thereto (the "Registrations"); (ii) all
customer contracts, member lists, and member files, records and other similar
information relating to the Websites; (iii) all source code relating to the
Websites; and (iv) all warranty rights and causes of action with respect to the
Purchased Assets. The Purchased Assets are being sold by Seller in "as is"
condition.
1.02 Liabilities. Except as otherwise provided herein, Buyer is not
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assuming and it shall not be held responsible for any liabilities of Seller, of
any kind or nature whatsoever, which have accrued or arisen out of actions
occurring prior to the Closing, including, without limitation, accounts payable,
notes payable, taxes payable, judgments, awards, warranty claims, lease
obligations, salaries, wages, severance, separation or vacation pay, profit
sharing, retirement, pension, bonus or other employee benefits relating to
Seller's employees, agents and/or consultants, or any liabilities or obligations
arising out of the operation of the Websites prior to Closing.
ARTICLE II
PURCHASE PRICE
2.01 Purchase Price. The purchase price (the "Purchase Price") for the
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Purchased Assets shall be Seven Hundred Fifty Thousand (750,000) shares (the
"Shares") of the Buyer's common stock, par value $.0001 per share ("Common
Stock"). The Purchase Price shall be delivered at Closing.
2.02 Allocation of Purchase Price. The Purchase Price shall be
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allocated among the Purchased Assets as agreed to by the Parties.
ARTICLE III
CLOSING DELIVERIES
3.01 Closing. Subject to the conditions set forth in this Agreement,
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the purchase and sale of the Purchased Assets pursuant to this Agreement (the
"Closing") shall take place at the offices of Xxxxxxxx, Xxxxxxxx & Xxxxxx, P.C.,
000 Xxxx Xxxx Xxxx, Xxx Xxxx, Xxx Xxxxxx at 10:00 a.m. on May 19, 2006, or at
such other time and place as may be agreed to by the Parties hereto (the
"Closing Date").
3.02 Buyer's Deliveries. At the Closing, Buyer shall deliver to Seller
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all of the following:
(a) a stock certificate representing the Shares, which is issued in
the name of Seller;
(b) resolutions of the board of directors of Buyer approving this
Agreement and the transactions contemplated hereby;
(c) the Registration Rights Agreement attached hereto as Exhibit A,
executed by a duly authorized officer of Buyer; and
(d) without limitation by specific enumeration of the foregoing, all
other documents reasonably required to consummate the transactions contemplated
hereby, including any documents necessary for the Registrations to be assigned
to Buyer.
3.03 Seller's Deliveries. At the Closing, Seller shall deliver to Buyer
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all of the following:
(a) all customer contracts, member lists, and member files, records
and other similar information relating to the Websites;
(b) all documents evidencing Seller's interest in the domain names
relating to the Websites and all applicable passwords and source codes relating
to, or required to operate, the Websites;
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(c) the Registration Rights Agreement attached hereto as Exhibit A,
executed by Seller;
(d) the Investor Suitability Questionnaire attached hereto as
Exhibit B, executed by Seller; and
(e) without limitation by specific enumeration of the foregoing, all
other documents reasonably required to consummate the transactions contemplated
hereby, including any documents necessary for the Registrations to be assigned
to Buyer.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.01 Seller. Seller represents and warrants to Buyer as follows:
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(a) Seller's Authority, Approvals and Consents. Seller has full
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power and authority to execute, deliver and perform this Agreement and to
consummate the transactions contemplated hereby; and this Agreement constitutes
the valid and binding obligation of the Seller, enforceable in accordance with
its terms, except as may be limited by (i) applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or similar laws relating to or
affecting the rights and remedies of creditors and debtors, and (ii) equitable
principles generally, regardless of whether such principles are considered in a
proceeding at equity or at law.
(b) No Consents Required. No consent of any other party is needed to
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enable Seller to consummate the transactions contemplated under this Agreement,
including any consent under any agreement, note, mortgage, lease or other
contract.
(c) General Warranty of Title; Condition of Assets. Seller has good
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and marketable title to all of the Purchased Assets being transferred under this
Agreement. The Purchased Assets are free and clear of all liens, encumbrances
and restrictions of any nature.
(d) Governmental Filings; No Violations. Except as may be
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contemplated herein, no notices, reports or other filings are required to be
made by Seller, nor are any consents, registrations, approvals, permits or
authorizations required to be obtained by Seller, from any governmental or
regulatory authority, court, agency, commission, body or other governmental
entity ("Governmental Entity"), in connection with the execution and delivery of
this Agreement by Seller and the consummation by Seller of the transactions
contemplated hereby.
(e) Litigation and Liabilities. There are no (i) civil, criminal or
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state or federal administrative actions, suits, claims, hearings, investigations
or proceedings pending or, to the knowledge of Seller, threatened against
Seller, or (ii) obligations or liabilities, whether or not accrued, contingent
or otherwise, or any other facts or circumstances, in either such case, that are
reasonably likely to result in any claims against or obligations or liabilities
of Seller.
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(f) Compliance with Laws. The Websites have not been, and are not
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being, operated in violation of any law, statute, ordinance, regulation,
judgment, order, injunction, arbitration award, license or permit of any
Governmental Entity (collectively, "Laws") which has had or could reasonably be
expected to have a material adverse effect on Seller or the Purchased Assets. No
investigation or review by any Governmental Entity with respect to Seller is
pending or, to the knowledge of Seller, threatened, nor has any Governmental
Entity indicated an intention to conduct the same. Seller has not received any
written notice of any noncompliance with any such Laws that has not been cured
as of the date hereof. Seller has all permits, licenses, variances, exemptions,
orders and other governmental authorizations, consents and approvals, necessary
to operate the Websites.
(g) No Default. Seller is not in violation or breach of or in
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default under, and no conditions exist that, with the giving of notice or the
lapse of time or both, would constitute a default under any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, lease, license,
contract, agreement or other instrument or obligation to which Seller is a party
or by which Seller or any of his properties or assets may be bound.
(h) Contracts. There are no material contracts, notes, mortgages,
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indentures or leases which relate to or affect the Websites or to which the
Websites are subject or bound.
(i) Advice of Counsel. In connection with the execution and delivery
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of this Agreement, Seller acknowledges that (i) Buyer has advised him to seek
the advice of counsel and other advisors in connection with the execution and
delivery of this Agreement, (ii) Seller has carefully read and fully understands
all of the provisions of this Agreement, and (iii) Seller is entering into this
Agreement knowingly, freely and voluntarily in exchange for good and valuable
consideration.
(j) Accredited Investor. Seller is an "accredited investor" (as such
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term is defined in Rule 501 of Regulation D promulgated under the Securities Act
of 1933, as amended (the "Securities Act")), and has completed and signed the
Investor Suitability Questionnaire attached hereto as Exhibit B attesting to
that fact.
(k) Investor Intent. Seller is acquiring the Shares for his own
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account, for investment and not with a view to, or for resale in connection
with, any distribution thereof, nor with any present intention of distributing
or reselling the same or any part thereof in any transactions that would be in
violation of the Securities Act or any state securities or "blue-sky" Laws.
(l) Restricted Securities. Seller understands that (i) the Shares
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currently are not registered under the Securities Act or any state securities or
"blue-sky" Laws and have been issued in a transaction exempt from the
registration requirements of the Securities Act and any state securities or
"blue-sky" Laws, (ii) the Shares must be held indefinitely unless a subsequent
disposition thereof is registered under the Securities Act and any state
securities or "blue-sky" Laws or is exempt from such registration, and (iii) the
certificate(s) evidencing the Shares will be imprinted with a legend that
prohibits the transfer substantially as set forth in Section 5.04(b) hereof
unless they are registered or such registration is not required.
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(m) Rule 144. Seller understands that the exemption from
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registration afforded by Rule 144 (the provisions of which are known to such
person) promulgated under the Securities Act ("Rule 144") depends on the
satisfaction of various conditions and that, if applicable, Rule 144 may only
afford the basis for sales under certain circumstances and only in limited
amounts.
(n) Access to Information; Experience. Seller has been furnished
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with or has had access during the course of this transaction and prior to sale
of the Shares to all information necessary to enable Seller to evaluate the
merits and risks of a prospective investment in Buyer and Seller has had an
opportunity to discuss with representatives of Buyer the business and financial
affairs of Buyer and the terms and conditions of the investment and to obtain
such additional information, to the extent that Buyer possesses such information
or could acquire it without unreasonable effort or expense, necessary to verify
the accuracy of the information to which Seller has had access and all questions
raised by Seller have been answered to the full satisfaction of Seller. Seller
has conducted his own investigation and analysis of Buyer's business. Seller has
substantial experience in evaluating and investing in private placement
transactions of securities in companies similar to Buyer so that he is capable
of evaluating the merits and the risks of his investment in Buyer and has the
capacity to protect his own interests in making his investment in Buyer. Seller
can afford to suffer a complete loss of his investment in the Shares.
(o) Speculative Investment. Seller understands that Buyer has a
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limited financial and operating history, that the Shares are a speculative
investment which involve a high degree of financial risk, and that there is no
assurance of any economic, income or tax benefit from such investment.
(p) Review of Agreement. Seller has carefully read and reviewed this
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Agreement and, to the extent he believed necessary, Seller has discussed with
his legal, accounting and other professional advisors the representations,
warranties and agreements which the Seller is making herein and the terms and
conditions of the investment contemplated hereby.
(q) Broker's or Finder's Fees. No agent, broker, person or firm
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acting on behalf of the Seller is, or shall be, entitled to any commission or
broker's or finder's fees from either Party, in connection with any of the
transactions contemplated herein.
4.02 Buyer's Representations. Buyer represents and warrants to Seller
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as follows:
(a) Buyer's Authority, Approval and Consents. Buyer hereby
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represents and warrants to Seller that it has all requisite power, capacity and
authority to enter into this Agreement, consummate the transactions contemplated
herein and perform its obligations contemplated herein. The Agreement has been
duly executed and delivered by, and constitutes a valid and binding obligation
of Buyer, enforceable against Buyer in accordance with its terms, except as may
be limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or similar laws relating to or affecting the rights and
remedies of creditors and debtors, and (ii) equitable principles generally,
regardless of whether such principles are considered in a proceeding at equity
or at law. The execution and delivery and performance of
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this Agreement by Buyer and the consummation of the transactions contemplated
hereby do not and will not conflict with any agreement to which Buyer is a
party.
(b) No Consents Required. No consent of any other party or
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Governmental Entity is needed to enable Buyer to consummate the transactions
contemplated under this Agreement.
(c) Broker's or Finder's Fees. No agent, broker, person or firm
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acting on behalf of the Seller is, or shall be, entitled to any commission or
broker's or finder's fees from either Party, in connection with any of the
transactions contemplated herein.
ARTICLE V
COVENANTS
5.01 Additional Agreements. Subject to the terms and conditions of this
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Agreement, each of the Parties hereto agrees to use its or his best efforts at
its or his own expense to take, or cause to be taken, proper or advisable action
under applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement. In case at any time after the
Closing further action is necessary or desirable to carry out the purposes of
this Agreement, the Parties shall take all such appropriate action.
5.02 Confidentiality. Seller hereby agrees not to disclose or divulge
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any confidential, proprietary or secret information which Seller may obtain from
Buyer, including, by way of example and not in limitation thereof, financial
statements, reports and other materials submitted by Buyer as required
hereunder, unless required to be disclosed by Law or pursuant to any judgment,
order, subpoena or decree of any court having competent jurisdiction, or unless
such information is or becomes publicly known (other than as a result of this
Section 5.02), or unless Buyer gives its written consent to Seller's release of
such information, except that no such written consent shall be required (and
Seller shall be free to release such information) if such information is to be
provided to Seller's lawyers or accountants who are instructed to comply with
this provision. Seller shall be responsible for making sure his lawyers and
accountants comply.
5.03 Registration of Shares. Pursuant to the Registration Rights
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Agreement, attached hereto as Exhibit A, Buyer shall, as soon as practicable,
but not later than 90 calendar days following the Closing, at Buyer's expense,
file with the Securities and Exchange Commission a Registration Statement on
Form SB-2, or such other form of registration statement which may be available,
covering the sale of all of the Shares, which Registration Statement shall state
that, in accordance with Rule 416 promulgated under the Securities Act, such
Registration Statement also covers such indeterminate number of additional
shares of Common Stock as may become issuable upon stock splits, stock dividends
or similar transactions.
5.04 Transfer of Securities.
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(a) Restrictions on Transfer. Seller acknowledges that the Shares to
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be issued to him pursuant to this Agreement have not been registered under the
Securities Act, that such Shares are being or will be issued pursuant to an
exemption from registration under the
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Securities Act and that such Shares constitute "restricted securities" under
Rule 144. Accordingly, the Shares shall not be sold, transferred, assigned,
pledged, encumbered or otherwise disposed of by Seller (each, a "Transfer")
except upon the conditions specified in this Section 5.04, which conditions are
intended to ensure compliance with the provisions of the Securities Act and this
Agreement.
(b) Restrictive Legend. Each certificate representing the Shares
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which are issued to the Seller and each certificate for any such Shares issued
to subsequent transferees of any such certificate shall (unless otherwise
permitted by the provisions of Sections 5.04(c) and 5.04(d)) be stamped or
otherwise imprinted with a legend in substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR ANY STATE SECURITIES LAWS, AND MAY NOT BE OFFERED,
SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE
DISPOSED OF EXCEPT PURSUANT TO (I) AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT, (II) TO THE EXTENT APPLICABLE, RULE
144 UNDER THE ACT (OR ANY SIMILAR RULE UNDER THE ACT RELATING
TO THE DISPOSITION OF SECURITIES), OR (III) AN OPINION OF
COUNSEL, IF SUCH OPINION SHALL BE REASONABLY SATISFACTORY TO
COUNSEL TO THE ISSUER, THAT AN EXEMPTION FROM REGISTRATION
UNDER SUCH ACT IS AVAILABLE.
(c) Notice of Transfer. Seller agrees, prior to any Transfer of
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Shares, to give written notice to Buyer of Seller's intention to effect such
Transfer and to comply in all other respects with the provisions of this Section
5.04. Each such notice shall describe the manner and circumstances of the
proposed Transfer and shall be accompanied by the written opinion, addressed to
Buyer, of counsel for the holder of such Shares, stating that in the opinion of
such counsel (which opinion and counsel shall be reasonably satisfactory to
Buyer), the proposed Transfer does not involve any transaction requiring
registration or qualification of such Shares under the Securities Act or the
securities or blue sky Laws of any relevant state of the United States. The
Seller shall thereupon be entitled to Transfer such Shares in accordance with
the terms of the notice delivered by it to Buyer. Each certificate or other
instrument evidencing the securities issued upon the Transfer of any Shares (and
each certificate or other instrument evidencing any untransferred balance of
such Shares) shall bear the legend set forth in Section 5.04(b) unless, (i) in
the opinion of counsel to the holder of such Shares, registration of any future
Transfer is not required by the applicable provisions of the Securities Act and
applicable state securities Laws, or (ii) Buyer shall have waived the
requirement of such legends. Seller shall not Transfer any Shares until such
opinion of counsel has been given (unless waived by Buyer or unless such opinion
is not required in accordance with the provisions of this Section 5.04).
(d) Removal of Legends, Etc. Notwithstanding the foregoing
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provisions of this Section 5.04, the restrictions imposed by this Section 5.04
upon the transferability of any Shares held by Seller shall cease and terminate
when (i) any such Shares are sold or otherwise
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disposed of pursuant to an effective registration statement under the Securities
Act or as otherwise contemplated by Section 5.04(c) and, pursuant to Section
5.04(c), the securities so transferred are not required to bear the legend set
forth in Section 5.04(b), or (ii) the holder of such Shares has received an
opinion of counsel stating that such holder has met the requirements for
Transfer of the Shares pursuant to subparagraph (k) of Rule 144. Whenever the
restrictions imposed by this Section 5.04 shall terminate, as herein provided,
Seller shall be entitled to receive from Buyer, without expense, a new
certificate not bearing the restrictive legend set forth in Section 5.04(b), and
not containing any other reference to the restrictions imposed by this Section
5.04.
ARTICLE VI
ASSIGNMENT OF REGISTRATIONS
6.01 Assignment. At Closing, Seller shall hereby transfer and assign to
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Buyer, free and clear of all known claims, liens and encumbrances, any and all
of Seller's right, title and interest in and to the Registrations and any other
rights associated with such Registrations, including, without limitation, any
intellectual property rights and associated goodwill.
6.02 Further Actions. Seller will cooperate in good faith with Buyer
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and take any and all actions necessary to transfer ownership of the
Registrations to Buyer, including, without limitation, preparing any and all
necessary transfer authorizations with any applicable Internet domain name
registration authority.
ARTICLE VII
INDEMNIFICATION
7.01 Indemnification by Seller. Seller covenants and agrees to defend,
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indemnify and hold harmless Buyer and its respective officers, directors,
employees, shareholders, agents, advisers and representatives (collectively, the
"Buyer Indemnitees") from and against, and pay or reimburse Buyer Indemnitees
for, any and all claims, demands, liabilities, obligations, losses, fines,
costs, expenses, royalties, litigation, deficiencies or damages (whether
absolute, accrued, contingent or otherwise and whether or not resulting from
third party claims), including interest and penalties with respect thereto and
out-of-pocket expenses and reasonable attorneys' and accountants' fees and
expenses incurred in the investigation or defense of any of the same or in
asserting, preserving or enforcing any of their respective rights hereunder,
resulting from or arising out of:
(a) any breach of any representation or warranty made by Seller
herein;
(b) any failure of Seller to perform any covenant or agreement
hereunder;
(c) any transaction, liability or obligation of Seller that occurs
or arises out of actions or events occurring prior to or after the Closing,
including any liability or obligation arising out of Seller's failure to pay any
taxes, whether federal, state or local, owed by him; or
(d) the operation of the Websites prior to the Closing.
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7.02 Indemnification by Buyer. Buyer, covenants and agrees to defend,
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indemnify and hold harmless Seller and his agents, advisers and representatives
(collectively, the "Seller Indemnitees"), from and against any and all claims,
demands, liabilities, obligations, losses, fines, costs, expenses, royalties,
litigation, deficiencies or damages (whether absolute, accrued, contingent or
otherwise and whether or not resulting from third party claims), including
interest and penalties with respect thereto and out-of-pocket expenses and
reasonable attorneys' and accountants' fees and expenses incurred in the
investigation or defense of any of the same or in asserting, preserving or
enforcing any of their respective rights hereunder, resulting from or arising
out of:
(a) any breach of any representation or warranty made by Buyer
herein;
(b) any failure of Buyer to perform any covenant or agreement
hereunder; or
(c) any transaction, liability or obligation of Buyer that arises
out of the operation of the Websites or the use of the Purchased Assets after
the Closing.
ARTICLE VIII
MISCELLANEOUS
8.01 Survival. All representations, warranties and covenants contained
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in this Agreement shall survive for a period of two (2) years following the
Closing Date.
8.02 Expenses. Each of the Parties hereto shall pay its or his own fees
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and expenses (including the fees of any attorneys, accountants, or others
engaged by such Party) in connection with this Agreement and the transactions
contemplated hereby whether or not the transactions contemplated hereby are
consummated.
8.03 Assignments. This Agreement and all of the provisions hereof shall
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be binding upon and inure to the benefit of the Parties hereto and their
respective successors, heirs, legal representatives and assigns.
8.04 Entire Agreement. This Agreement (including the Exhibits hereto)
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embodies the entire agreement and understanding of the Parties with respect to
the transactions contemplated hereby and supercedes all prior written or oral
commitments, arrangements or understandings with respect thereto.
8.05 Headings. The headings contained in this Agreement are for
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purposes of convenience only and shall not affect the meaning or interpretation
of this Agreement.
8.06 Modifications, Amendments and Waivers. The Parties may, by written
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agreement, modify, amend or supplement any term or provision of this Agreement
and any term or provision of this Agreement may be waived in writing by the
Party which is entitled to the benefits thereof.
8.07 Counterparts. This Agreement may be executed in one or more
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counterparts, all of which shall be considered one and the same agreement and
each of which shall be deemed an
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original. In the event that any signature is delivered by facsimile
transmission, such signature shall create a valid and binding obligation of the
Party executing same (or on whose behalf such signature is executed) with the
same force and effect as if such facsimile signature page were an original
thereof.
8.08 Governing Law. This Agreement shall be governed by the laws of the
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State of New Jersey (regardless of the laws that might be applicable under
principles of conflicts of law) as to all matters including, but not limited to,
matters of validity, construction, effect and performance. The Parties consent
to the exclusive jurisdiction of the state or federal courts sitting in the
State of New Jersey to resolve any disputes which may arise under this
Agreement.
8.09 Severability. If any one or more of the provisions of this
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Agreement shall be held to be invalid, illegal or unenforceable, the validity,
legality or enforceability of the remaining provisions of this Agreement shall
not be affected thereby. To the extent permitted by applicable law, each Party
waives any provision of law which renders any provision of this Agreement
invalid, illegal or unenforceable in any respect.
8.10 Notices. All notices or other communications required or permitted
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hereunder shall be given in writing and shall be deemed sufficient if delivered
by hand, mailed by registered or certified mail, postage prepaid (return receipt
requested), or delivered by overnight delivery service with proof of delivery to
a Party at the address first provided above for such Party or such other address
as shall be furnished in writing by such Party, and any such notice or
communication shall be effective and be deemed to have been given as of the date
so delivered or three (3) days after the date so mailed.
[Signature Page Follows.]
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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
BIGSTRING CORPORATION
By: /s/ Xxxxx Xxxxx
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Name: Xxxxx Xxxxx
Title: President and Chief Executive Officer
XXXX XXXX
/s/ Xxxx Xxxx
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Exhibit A
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REGISTRATION RIGHTS AGREEMENT
[Omitted]
Exhibit B
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BIGSTRING CORPORATION
INVESTOR SUITABILITY QUESTIONNAIRE
[Omitted]