Contract
PURCHASE AGREEMENT, dated as
of December 31, 2008 (the “Agreement”), among
STI GROUP, INC., a
Delaware corporation (“STIG”), SYSTEMS EVOLUTION, INC., an
Idaho corporation (“SEI”).
WHEREAS the SEI is the owner
of 100% of the issued and outstanding shares (the “SEIT Shares”) of
common stock of Systems Evolution Incorporated, a Texas corporation (“SEIT”);
and
WHEREAS, SEI conducts,
directly and indirectly through SEIT, a business which provides software
development services, managed network support services and other consulting
services (the “Business”);
and
WHEREAS, STIG desires to
purchase the SEIT Shares and all of the other assets of the Business (including
the SEIT Shares) from SEI, and SEI desires to sell the SEIT Shares and all of
the other assets of the Business to STIG, upon the terms and subject to the
conditions hereinafter set forth;
NOW, THEREFORE, in
consideration of the premises and mutual representations, warranties and
covenants herein contained, the parties hereby agree as follows:
ARTICLE
I
PURCHASE
AND SALE
Section 1.01 Purchase
and Sale. Upon the terms and subject to the conditions of this
Agreement, STIG agrees to purchase from SEI and SEI agree to sell, transfer,
assign and deliver, or cause to be sold, transferred, assigned and delivered, to
STIG at Closing (as defined below), free and clear of all mortgages, liens,
pledges, charges, security interests or encumbrances of any kind (“Liens”), all of the
assets, properties and business, other than the Excluded Assets (as defined
below), of every kind and description, wherever located, real, personal or
mixed, tangible or intangible, owned, held or used in the conduct of the
Business by any SEI as the same shall exist as of the date of the Closing (the
“Purchased
Assets”), and including, without limitation, all right, title and
interest of SEI in, to and under:
(a) All
personal property and interest therein, including equipment, furniture, office
equipment, communications equipment,
(b) All
rights under all contracts, agreements, leases, licenses, commitments, sales and
purchase orders and other instruments;
(c) All
accounts, notes and other receivables, including (without limitation) those set
forth in Schedule
A hereto;
(d) All
prepaid expenses to the extent relating to the operation of the
Business;
(e) All
of SEI’s rights, claims, credits, causes of action or rights of set-off against
third parties relating to the Purchased Assets, including (without limitation)
un-liquidated rights under manufacturers’ and vendors’ warranties;
(f) All
patents, copyrights, trademarks, trade names, service marks, service names,
technology know-how, processes, trade secrets, inventions, proprietary data,
formulae, research and development data, computer software programs and other
intangible property and any applications for the same used in the
Business;
(g)
All transferable licenses, permits or other governmental authorizations
affecting, or relating in any way to, the Business;
(h) All
books, records, files and papers, whether in hard copy or computer format, used
in the Business, including (without limitation) engineering information, sales
and promotional literature, manuals and data, sales and purchase correspondence,
lists of present and former suppliers, lists of present and former customers,
personnel and employment records, and any information relating to taxes imposed
on the Purchased Assets;
(i) All
computer software programs and data used in connection with the
Business;
(j) All
of the SEIT Shares;
(k) the
shares of common stock of DataLogic International, Inc. identified on Schedule A hereto;
and
(l) All
goodwill associated with the Business or the Purchased Assets, together with the
right to represent to third parties that STIG is the successor to the
Business.
Section 1.02 Excluded
Assets. STIG expressly understands and agrees that the
following assets and properties of SEI (the “Excluded Assets”)
will be excluded from the Purchased Assets:
(a) All
assets acquired by SEI pursuant to the Asset Purchase Agreement, of even date
herewith, between SEI and DealerAdvance, Inc.
(b) All
of SEI’s tax-loss carry forwards; and
(c) All
records to be delivered by SEI under the Asset Purchase Agreement pursuant to
the Asset Purchase Agreement of even date herewith.
Section 1.03 Assumption
of Liabilities. Upon the terms and subject to the conditions
of this Agreement, STIG agrees, effective at the time of the Closing to assume
the liabilities identified on Schedule B hereto
(the “Assumed
Liabilities”).
Section 1.04 Excluded
Liabilities. Notwithstanding any provision in this Agreement
or any other writing to the contrary, STIG is assuming only the Assumed
Liabilities and is not assuming any other liability or obligation of SEI (or any
predecessor owner of all or part of its business and assets) of whatever nature
whether presently in existence or arising hereafter. All such other
liabilities and obligations shall be retained by and remain obligations and
liabilities of SEI.
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Section 1.05 Assignment
of Contracts and Rights. Anything in this Agreement to the
contrary notwithstanding, this Agreement shall not constitute an agreement to
assign any Purchased Asset or any claim or right or any benefit arising
thereunder or resulting therefrom if an attempted assignment thereof, without
the consent of a third party thereto, would constitute a breach or other
contravention thereof to in any way adversely affect the rights of STIG or SEI
thereunder. Each of SEI and STIG will use their best efforts (but
without any payment of money by SEI or STIG) to obtain the consent of the other
parties to any such Purchased Asset or any claim or right or any benefit arising
thereunder for the assignment thereof to STIG as STIG may request. If
such consent is not obtained, or if an attempted assignment thereof would be
ineffective or would adversely affect the rights of SEI thereunder so that STIG
would not in fact receive all such rights, each of SEI and STIG will cooperate
in a mutually agreeable arrangement under which STIG would obtain the benefits
and assume the obligations thereunder in accordance with this Agreement,
including subcontracting, sublicensing, or subleasing to STIG, or under which
SEI would enforce for the benefit of STIG, with STIG assuming SEI’s obligations,
any and all rights of each Seller against a third party thereto. SEI
will promptly pay to STIG when received all monies received by SEI under any
Purchased Asset or any claim or right or any benefit arising
thereunder.
Section 1.06 Closing. The
closing (the “Closing”) of the
purchase and sale of the Purchased Assets and the assumption of the Assumed
Liabilities hereunder shall take place at the offices of STIG in San Juan
Capistrano, California on December 31, 2008, subject to the satisfaction of the
conditions set forth in Article V, or at such other time or place as SEI and
STIG may agree. At the Closing,
(a) SEI
and STIG shall enter into an Assignment and Assumption Agreement substantially
in the form attached hereto as Exhibit A;
and
(b) SEI
shall deliver to STIG such deeds, bills of sale, assignment, certificates or
title, documents and other instruments of transfer and conveyance as may
reasonably be requested by STIG, each in form and substance satisfactory to STIG
and its legal counsel and executed by SEI.
ARTICLE
II
REPRESENTATIONS
AND WARRANTIES OF SEI
SEI
hereby represents and warrants to STIG that:
Section 2.01 Organization. Each
of SEI and SEIT is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has all
requisite power and authority to own, lease and operate its properties and to
carry on its business as now being conducted.
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Section
2.02 Capitalization.
(a) The
authorized capital stock of the SEIT consists of 1500 shares of common stock, no
par value (“SEIT
Common Stock”). All the issued and outstanding shares of SEIT
Common Stock are validly issued, fully paid and nonassessable and free of
preemptive rights. Except as set forth above, there are not now, and
at the date of the Closing (the “Closing Date”) there
will not be, any shares of capital stock (or securities substantially equivalent
to capital stock) of SEIT issued or outstanding or any subscriptions, options,
warrants, calls, rights, convertible securities or other agreements or
commitments of any character obligating the SEIT to issue, transfer or sell any
of its securities.
(b) SEIT
does not own, directly or indirectly, any capital stock or other equity
securities of any corporation or have any direct or indirect equity or ownership
interest in any business.
Section 2.03 Title to
Purchased Assets. Upon consummation of the transaction
contemplated hereby, STIG will have acquired good and marketable title in and
to, or a valid leasehold interest in, each of the Purchased Assets, free and
clear of all Liens. SEI owns beneficially all of the SEIT
Shares. Such shares are not subject to any claims as to the
ownership thereof, or any rights, powers or interest therein, by any third party
and are not subject to any preemptive or similar rights of
stockholders.
Section 2.04 Corporate
Authorization. The execution, delivery and performance by SEI
of this Agreement and the consummation by SEI of the transactions contemplated
hereby are within SEI’s corporate powers and have been duly authorized by all
necessary corporate action of SEI. This Agreement has been duly and
validly executed and delivered by SEI and constitutes a valid and binding
agreement of SEI, enforceable against SEI in accordance with its
terms.
Section 2.05 Governmental
Authorization; Consents.
(a) The
execution, delivery and performance by SEI of this Agreement require no action
by or in respect of, or filing with, any governmental body, agency, official or
authority (a “Governmental
Entity”).
(b) No
consent, approval, waiver or other action by an person or entity (other than any
Governmental Entity referred to in (a) above) under any contract, agreement,
indenture, lease, instrument, or other document to which either SEI or SEIT is a
party or by which either of them is bound is required or necessary for the
execution, delivery and performance of this Agreement by SEI or the consummation
of the transactions contemplated hereby, other than the consent of the holders
of SEI’s secured noteholders.
Section 2.06 Non-Contravention. The
execution, delivery and performance by SEI of this Agreement do not and will not
(i) contravene or conflict with the certificate of incorporation or bylaws of
SEI, (ii) contravene or conflict with or constitute a violation of any provision
of any law, regulation, judgment, injunction, order or decree binding upon or
applicable to SEI or SEIT; (iii) constitute a default under or give rise to any
right of termination, cancellation or acceleration of any right or obligation of
SEI or SEIT or to a loss of any benefit to which SEI or SEIT is entitled under
any provision of any agreement, contract, or other instrument binding upon SEI
or SEIT or any license, franchise, permit or other similar authorization held by
SEI or SEIT or (iv) result in the creation or imposition of any Lien on any
asset of SEI or SEIT.
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ARTICLE
III
REPRESENTATIONS
AND WARRANTIES OF STIG
STIG
hereby represents and warrants to SEI that:
Section 3.01 Organization. STIG
is a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation and has all requisite power and
authority to own, lease and operate its properties and to carry on its business
as now being conducted.
Section 3.02 Corporate
Authorization. The execution, delivery and performance by STIG
of this Agreement and the consummation by STIG of the transactions contemplated
hereby are within STIG’s corporate powers and have been duly authorized by all
necessary corporate action of STIG. This Agreement has been duly and
validly executed and delivered by STIG and constitutes a valid and binding
agreement of STIG, enforceable against STIG in accordance with its
terms.
Section 3.03 Governmental
Authorization; Consents.
(a) The
execution, delivery and performance by STIG of this Agreement require no action
by or in respect of, or filing with, any Governmental Entity.
(b) No
consent, approval, waiver or other action by an person or entity (other than any
Governmental Entity referred to in (a) above) under any contract, agreement,
indenture, lease, instrument, or other document to which STIG is a party or by
which either of them is bound is required or necessary for the execution,
delivery and performance of this Agreement by STIG or the consummation of the
transactions contemplated hereby.
Section 3.04 Non-Contravention. The
execution, delivery and performance by STIG of this Agreement do not and will
not (i) contravene or conflict with the certificate of incorporation or bylaws
of STIG, (ii) contravene or conflict with or constitute a violation of any
provision of any law, regulation, judgment, injunction, order or decree binding
upon or applicable to STIG; (iii) constitute a default under or give rise to any
right of termination, cancellation or acceleration of any right or obligation of
STIG or to a loss of any benefit to which STIG is entitled under any provision
of any agreement, contract, or other instrument binding upon STIG or any
license, franchise, permit or other similar authorization held by STIG or (iv)
result in the creation or imposition of any Lien on any asset of
STIG.
ARTICLE
IV
COVENANTS
Section
4.01 Covenants
of SEI. SEI agrees that:
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(a) Conduct
of the Business. During the period from the date of this
Agreement and continuing until the Closing Date, SEI shall conduct the Business
in the ordinary course consistent with past practices and to use its best
efforts to preserve intact its business organizations and relationships with
third parties and to keep available the services of its present officers and
employees.
(b) Stockholders’
Meeting. SEI will take all necessary action, to the extent
permitted by applicable law, to obtain stockholder ratification of the
transactions contemplated by this Agreement at the Special Meeting of
Stockholders of SEI called (by action of SEI’s Board of Directors) for January
20, 2009 or any adjournment thereof (the “Special Meeting”). Without
limiting the foregoing, SEI will (a) mail a notice of special meeting in
compliance with applicable law, (b) submit for ratification of its stockholder
the transactions contemplated by this Agreement and (c) not modify the record
date of December 30, 2008 established for the Special Meeting.
Section 4.02 Additional
Covenants of the Parties. Each party hereto agrees
that:
(a) Best
Efforts. Subject to the terms and conditions of this
Agreement, each of the parties hereto agrees (i) to use its best efforts to
take, or cause to be taken, all actions, and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement,
and (ii) to execute and deliver such other documents, certificates, agreements
and other writings and to take such other actions as may be necessary or
desirable in order to consummate or implement expeditiously the transactions
contemplated by this Agreement.
(b) Public
Announcements. The parties shall consult with each other before issuing
any press releases or otherwise making public statements with respect to the
transactions contemplated hereby and in making any filings with any federal or
state governmental or regulatory agency or with any national securities exchange
with respect there
(c) Tax
Matters.
(i) As
used herein, "Taxes" means any net income, alternative or add-on minimum tax,
gross income, gross receipts, sales, uses, ad valorem, franchise, capital,
paid-up capital, profits, greenmail, license, withholding, payroll, employment,
excise, severance, stamp, occupation, premium, property, environmental or
windfall profit tax, custom, duty or other tax, governmental fee or other like
assessment or charge of any kind whatsoever, together with any interest or any
penalty, addition to tax or additional amount imposed by any governmental
authority (domestic or foreign) responsible for the imposition of any such
tax.
(ii) SEI
and STIG agree to furnish or cause to be furnished to each other, upon request,
as promptly as practicable, such information and assistance relating to the
Purchased Assets and the Business as is reasonably necessary for the filing of
all Tax returns, and making of any election related to Taxes, the preparation
for any audit by any taxing authority, and the prosecution or defense of any
claim, suit or proceeding relating to any Tax return. SEI and STIG
shall cooperate with each other in the conduct of any audit or other proceeding
related to Taxes involving the Business and each shall execute and deliver such
powers of attorney and other documents as are necessary to carry out the intent
of this Section
4.02(c).
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(iii) All
real property, personal property and similar ad valorem obligations levied with
respect to the Purchased Assets for a taxable period which includes (but does
not end on) the Closing Date shall be apportioned between SEI and STIG as of the
Closing Date based on the number of days of such taxable period included in the
any Tax period (or portion thereof) ending after the Closing Date (the “Pre-Closing Tax
Period”) and the number of days of such taxable period included in any
Tax period (or portion thereof) ending on or before the close of business on the
Closing Date (the “Post-Closing Tax
Period”). SEI shall be liable for the proportionate amount of
such taxes that is attributable to the Pre-Closing Tax Period, and STIG shall be
liable for the proportionate amount of such taxes that is attributable to the
Post-Closing Tax Period.
(iv) Any
transfer, documentary, sales, use or other Taxes assessed upon or with respect
to the transfer of the Purchased Assets to STIG and any recording or filing fees
with respect thereto shall be the responsibility of SEI.
ARTICLE
V
CONDITIONS
Section 5.01 Conditions
to Each Party's Obligation. The obligation of each party to
consummate the Closing is subject to the satisfaction of the following
conditions:
(a) All
authorizations, consents, orders or approvals of, or declarations or filings
with, or expirations or terminations of waiting periods imposed by, any
Governmental Entity, and all required third party consents, shall have been
filed, occurred or been obtained.
(b) No
statute, rule, regulation, executive order, decree or injunction shall have been
enacted, entered, promulgated or enforced by any court or governmental authority
which prohibits the consummation of the Closing and shall be in
effect.
Section 5.02 Conditions
to Obligation of STIG. The obligation of STIG to consummate
the Closing is subject to the satisfaction of the following further
conditions:
(a) The
representations and warranties of SEI set forth in this Agreement shall be true
and correct as of the date of this Agreement, and shall also be true in all
material respects on and as of the Closing Date with the same force and effect
as though made on and as of the Closing Date
(b) SEI
shall have performed in all material respects all obligations required to be
performed by it under this Agreement at or prior to the Closing
Date.
(d) STIG
shall have received (i) resolutions duly adopted by the Board of Directors
of the SEI approving the execution and delivery of this Agreement and all other
necessary or proper corporate action to enable SEI to comply with the terms of
this Agreement, and (ii) all other documents it may reasonably request
relating to the existence of SEI and the authority of SEI for this Agreement,
all in form and substance reasonable satisfactory to STIG.
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Section 5.03 Conditions
to Obligations of SEI. The obligations of SEI to consummate
the Closing are subject to the following further conditions:
(a) The
representations and warranties of STIG set forth in this Agreement shall be true
and correct as of the date of this Agreement, and shall also be true in all
material respects on and as of the Closing Date with the same force and effect
as though made on and as of the Closing Date.
(b) STIG
shall have performed in all material respects all obligations required to be
performed by it under this Agreement at or prior to the Closing
Date.
(d) SEI
shall have received (i) resolutions duly adopted by the Board of Directors
of STIG approving the execution and delivery of this Agreement and all other
necessary or proper corporate action to enable STIG to comply with the terms of
this Agreement, and (ii) all other documents it may reasonably request
relating to the existence of STIG and the authority of STIG for this Agreement,
all in form and substance reasonable satisfactory to SEI.
ARTICLE
VI
TERMINATION
AND AMENDMENT
Section 6.01 Termination. This
Agreement may be terminated at any time prior to the Closing Date:
(a) by
mutual consent of STIG and SEI; or
(b) by
either STIG or SEI if the Closing shall not have been consummated before
December 31, 2008 (unless the failure to consummate the Closing by such date
shall be due to the action or failure to act of the party seeking to terminate
this Agreement).
Section 6.02 Effect of
Termination. In the event of the termination and abandonment
of this Agreement pursuant to Section 6.01
hereof, this Agreement shall forthwith become void and have no effect, without
any liability on the part of any party hereto or its affiliates, directors,
officers or stockholders. Nothing contained in this Section 6.02
shall relieve any party from liability for any breach of this
Agreement.
Section 6.03 Amendment. This
Agreement may not be amended except by an instrument in writing signed on behalf
of each of the parties hereto.
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Section 6.04 Extension;
Waiver. At any time prior to the Closing Date, the parties
hereto may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto and (iii) waive
compliance with any of the agreements or conditions contained herein. Any
agreement on the part of a party hereto to any such extension or waiver shall be
valid only if set forth in a written instrument signed on behalf of such
party.
ARTICLE
VII
SURVIVAL;
INDEMNIFICATION
Section 7.01 Survival. The
covenants, agreements, representations and warranties of the parties hereto
contained in this Agreement or in any certificate or other writing delivered
pursuant hereto or in connection herewith shall survive the Closing until the
second anniversary of the Closing Date.
ARTICLE
VIII
MISCELLANEOUS
Section 8.01 Entire
Agreement; Assignment. This Agreement
(a) constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof (other than any confidentiality agreement between the
parties; any provisions of such agreements which are inconsistent with the
transactions contemplated by this Agreement being waived hereby) and (b) shall
not be assigned by operation of law or otherwise.
Section 8.02 Expenses. Whether or not
the transactions contemplated in this Agreement are consummated, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby, will be paid by the party incurring such expense or as
otherwise agreed to herein.
Section 8.03 Notices. All notices and
other communications hereunder shall be in writing and shall be deemed given if
delivered by hand sent via a reputable nationwide courier service or mailed by
registered or certified mail (return receipt requested) to a party at the
address of such party set forth in the signature pages to this Agreement (or at
such other address for a party as shall be specified by like notice) and shall
be deemed given on the date on which so hand-delivered or on the third business
day following the date on which so mailed or sent.
Section 8.04 Parties
in Interest. This Agreement
will inure to the benefit of and be binding upon the parties hereto and the
respective successors and assigns. Nothing in this Agreement is
intended to confer, expressly or by implication, upon any other person any
rights or remedies under or by reason of this Agreement.
Section 8.05 Counterparts. This
Agreement may be executed in two or more counterparts, each of which will be
deemed an original and all together will constitute one document. The
delivery by facsimile of an executed counterpart of this Agreement will be
deemed to be an original and will have the full force and effect of an original
executed copy.
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Section 8.06 Severability. Any provision of
this Agreement that is prohibited or unenforceable in any jurisdiction shall, as
to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
Section 8.07 Specific
Performance. The parties
hereto acknowledge that damages alone may not adequately compensate a party for
violation by another party of this Agreement. Accordingly, in addition to all
other remedies that may be available hereunder or under applicable law, any
party shall have the right to any equitable relief that may be appropriate to
remedy a breach or threatened breach by any other party hereunder, including the
right to enforce specifically the terms of this Agreement by obtaining
injunctive relief in respect of any violation or non-performance
hereof.
Section 8.08 Governing
Law; Jurisdiction. This Agreement
will be deemed to be made in and in all respects will be interpreted, construed
and governed by and in accordance with the law of the State of California
without regard to any applicable principles of conflicts of law. This Agreement
shall not be interpreted or construed with any presumption against the party
causing this Agreement to be drafted. The parties agree that venue
for any dispute arising under this Agreement will lie exclusively in the state
or federal courts located in Orange County, California, and the parties
irrevocably waive any right to raise forum non conveniens or any other argument
that Orange County, California is not the proper venue. The parties
irrevocably consent to personal jurisdiction in the state and federal courts of
the state of California. The parties consent to process being served
in any such suit, action or proceeding by mailing a copy thereof to such party
at the address in effect for notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing in this Section 10.08 shall
affect or limit any right to serve process in any other manner permitted by
law. The parties hereby agree that the prevailing party in any suit,
action or proceeding arising out of or relating to this Agreement shall be
entitled to reimbursement for reasonable legal fees from the non-prevailing
party. The parties hereby waive all rights to a trial by
jury.
[REMAINDER
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IN WITNESS WHEREOF, the
parties hereto have executed and delivered this Agreement in a manner legally
binding upon them as of the date first above written.
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STI
GROUP, INC.
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By
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Name:
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Xxxxx
Xxxxxxx
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Title:
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Chief
Executive Officer
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Address:
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00000
Xxxxxx Xxxxx Xxxx
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Xxx
Xxxx Xxxxxxxxxx, XX 00000
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SYSTEMS
EVOLUTION, INC.
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By
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Name:
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Xxxxx
Xxxxxxx
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Title:
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Chief
Executive Officer
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Address:
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00000
Xxxxxx Xxxxx Xxxx
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Xxx
Xxxx Xxxxxxxxxx, XX
00000
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