DISABILITIES ACCESS CONSULTING, INC.
AXIA GROUP, INC.
STOCK EXCHANGE AGREEMENT
This Stock Exchange Agreement ("Agreement") is made as of the 18th day of
August, 2005, by and among Xxxxxxx X. Xxxxxx (the "Shareholder"), Xxxxxxx X.
Xxxxxxxx ("Xxxxxxxx") and Axia Group, Inc., a Nevada corporation (the
"Company").
RECITALS
A. The Company has authorized capital stock consisting of 5,000,000,000
shares of common stock, $0.001 par value ("Common Stock"), of which
approximately 238,215,561 shares are issued and outstanding, 5,000,000
shares of Series A Preferred Stock, $0.001 par value ("Series A Preferred
Stock") of which none are issued and outstanding, 12,000 shares of Series
B Preferred Stock, $0.001 par value ("Series B Preferred Stock") of which
none are issued and outstanding, 10,000,000 shares of Series C Preferred
Stock, $0.001 par value ("Series C Preferred Stock") of which 150,000
shares are issued and outstanding, 5,000,000 shares of Series D Preferred
Stock, $0.001 par value ("Series D Preferred Stock") of which 5,000,000
shares are issued and outstanding.
B. The Shareholder owns 1,000 shares (the "DAC Shares") of common stock, no
par value per share, of Disability Access Consultants, Inc, a California
corporation ("DAC") which constitutes 100% of the issued and outstanding
capital stock in DAC.
C. The Company is a fully reporting shell company whose Common Stock trades
on the OTC Bulletin Board (OTCBB:AXAI) with no current business, no
pending litigation, no SEC compliance issues, and a debt schedule that is
set forth in Exhibit A.
D. The Shareholder and the Company desire to exchange the DAC Shares for
2,000,000 shares of the Company's Series C Preferred Stock (the "Company
Shares"), on the terms and subject to the conditions set forth herein.
AGREEMENT
It is agreed as follows:
1. EXCHANGE OF SHARES.
1.1 Agreement to Exchange Securities. Subject to the terms and upon the
conditions set forth herein, the Shareholder agrees to exchange,
assign, transfer and deliver to the Company, and the Company agrees
to acquire from the Shareholder, the DAC Shares, in exchange for the
issuance of the Company Shares by the Company to the Shareholder.
1.2 Tax Free Reorganization. The parties intend that the transaction
under this Agreement qualify as a tax-free reorganization under
Section 368(a)(1)(B) of the Internal Revenue Code of 1986, as
amended.
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2. STRUCTURE OF DAC
2.1 Subsidiary. After closing, DAC will be a wholly owned subsidiary of
Company.
2.2 Board of Directors. DAC will have the right to maintain its own
Board of Directors.
2.3 Representation. The Company will have the right to elect one member
to the DAC Board of Directors. The parties agree to execute and
deliver such other documents and instruments and take such other
actions as the Company may reasonably request in order to effectuate
the appointment of the Company's representative to the DAC board of
directors.
3. CLOSING(S).
3.1 Date and Time. Subject to all of the terms and conditions set forth
in this Agreement being satisfied, the closing of the exchange of
Shares contemplated by this Agreement (the "Closing") shall take
place at the offices of the Shareholder's counsel or at such other
place as the Shareholder and the Company shall agree in writing
concurrently with the execution of this Agreement (the "Closing
Date").
3.2 Deliveries by Company. The Company shall deliver the following to
the Shareholder:
3.2.1 An original certificate evidencing the Company Shares, in form
and substance satisfactory to the Shareholder, in order to
effectively vest in the Shareholder all right, title and
interest in and to the Company Shares.
3.2.2 Resolutions of the board of directors appointing Xxxxxxx X.
Xxxxxx as Chief Operating Officer of the Company, subject to
the execution of an employment agreement as described in
Section 6.4.
From time to time after the Closing Date, and without further
consideration, the Company will execute and deliver such other
instruments and take such other actions as the Shareholder may
reasonably request in order to facilitate the issuance to her
of the Company Shares.
3.3 Deliveries by Shareholder. At the Closing, the Shareholder will
deliver the following to the Company:
3.3.1 The original certificate evidencing the DAC Shares along with
executed stock powers, in form and substance satisfactory to
the Company, for purposes of assigning and transferring all of
her right, title and interest in and to the DAC Shares.
3.3.2 The complete original articles of incorporation, bylaws,
minutes, and other corporate books and records, all as amended
to date, of DAC.
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From time to time after the Closing Date, and without further
consideration, the Shareholder will execute and deliver such
other instruments of transfer and take such other actions as
the Company may reasonably request in order to facilitate the
transfer to the Company of the securities intended to be
transferred hereunder.
4. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDER.
As a material inducement to the Company to enter into this Agreement and
to purchase the Shares, the Shareholder represents and warrants that the
following statements are true and correct in all material respects as of
the date hereof and will be true and correct in all material respects at
Closing, except as expressly qualified or modified herein.
4.1 Organization and Good Standing. DAC is a corporation duly organized,
validly existing, and in good standing under the laws of the State
of California and has full corporate power and authority to enter
into and perform its obligations under this Agreement, and to own
its properties and to carry on its business as presently conducted
and as proposed to be conducted. DAC is duly qualified to do
business as a foreign corporation in every jurisdiction in which the
failure to so qualify would have a material adverse effect upon DAC.
4.2 Validity of Transactions. This Agreement, and each document executed
and delivered by the Shareholder in connection with the transactions
contemplated by this Agreement, have been duly authorized, executed
and delivered by the Shareholder and is each the valid and legally
binding obligation of the Shareholder, enforceable in accordance
with its terms, except as limited by applicable bankruptcy,
insolvency reorganization and moratorium laws and other laws
affecting enforcement of creditor's rights generally and by general
principles of equity.
4.3 Valid Issuance of Shares. The DAC Shares that are being exchanged
with the Company hereunder are duly and validly issued, fully paid
and nonassessable and free of restrictions on transfer, other than
restrictions on transfer under this Agreement and under applicable
federal and state securities laws, will be free of all other liens
and adverse claims.
4.4 Title to Shares. The Shareholder is the sole record and beneficial
owner of the DAC Shares, free and clear of all liens, encumbrances,
equities, assessments and claims, and, upon delivery of the DAC
Shares by the Shareholder, the Shareholder will transfer to the
Company valid legal title to the DAC Shares, free and clear of all
liens, encumbrances, equities, assessments and claims.
4.5 No Violation. The execution, delivery and performance of this
Agreement will not violate any law or any order of any court or
government agency applicable to DAC, as the case may be, or the
Articles of Incorporation or Bylaws of DAC, and will not result in
any breach of or default under, or, except as expressly provided
herein, result in the creation of any encumbrance upon any of the
assets of DAC pursuant to the terms of any agreement or instrument
by which DAC or any of its assets may be bound. No approval of or
filing with any governmental authority is required for DAC to enter
into, execute or perform this Agreement.
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4.6 Tax Returns and Financial Statements. DAC has delivered or made
available to the Company accurate and complete copies (excluding
copies of exhibits) of each tax returns for years of 2002, 2003 and
2004 and unaudited financial statements as of June 2005. The
information in the reports and returns, taken as a whole, was true
and correct in all material respects as of the filing date and did
not contain any untrue statement of a material fact or omit to state
a material fact necessary in order to make the statements therein,
in light of the circumstances under which they were made, not
misleading.
4.7 Receipt and Review of SEC Reports. Shareholder represents that she
has received and reviewed each report, registration statement and
definitive proxy statement filed by the Company with the United
States Securities and Exchange Commission ("SEC") since January 1,
2002 (collectively, with all information incorporated by reference
therein or deemed to be incorporated by reference therein, the "SEC
Reports") and have been given full and complete access to the
Company for the purpose of obtaining such information as the
Shareholder or its qualified representative have reasonably
requested in connection with the decision to exchange the DAC Shares
for the Company Shares. The Shareholder represents that she has been
afforded the opportunity to ask questions of the officers of the
Company regarding its business prospects and the Company Shares, all
as the Shareholder or its qualified representative have found
necessary to make an informed investment decision to exchange the
DAC Shares for the Company Shares.
4.8 Restricted Securities. The Shareholder has been advised that the
Company Shares have not been registered under the Securities Act or
any other applicable securities laws and that the Company Shares are
being offered and sold pursuant to Section 4(2) of the Securities
Act, and that the Company's reliance upon Section 4(2) is predicated
in part on the Shareholder's representations as contained herein.
4.8.1 The Shareholder is an "accredited investor" as defined under
Rule 501 under the Securities Act.
4.8.2 The Shareholder acknowledges that the Company Shares have not
been registered under the Securities Act or the securities
laws of any state and are being offered, and will be sold,
pursuant to applicable exemptions from such registration for
nonpublic offerings and will be sold as "restricted
securities" as defined by Rule 144 promulgated pursuant to the
Securities Act. The Company Shares may not be resold in the
absence of an effective registration thereof under the
Securities Act and applicable state securities laws unless, in
the opinion of the Company's counsel, an applicable exemption
from registration is available.
4.8.3 The Shareholder is acquiring the Company Shares for its own
account, for investment purposes only and not with a view to,
or for sale in connection with, a distribution, as that term
is used in Section 2(11) of the Securities Act, in a manner
which would require registration under the Securities Act or
any state securities laws.
4.8.4 The Shareholder understands and acknowledges that the Company
Shares will bear the following legend:
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THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
THE SECURITIES LAWS OF ANY STATE. THE SECURITIES HAVE BEEN
ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD OR TRANSFERRED FOR
VALUE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION THEREOF
UNDER THE SECURITIES ACT OF 1933 AND/OR THE SECURITIES ACT OF
ANY STATE HAVING JURISDICTION OR AN OPINION OF COUNSEL
ACCEPTABLE TO THE CORPORATION THAT SUCH REGISTRATION IS NOT
REQUIRED UNDER SUCH ACT OR ACTS.
4.8.5 The Shareholder acknowledges that an investment in the Company
Shares is not liquid and is transferable only under limited
conditions. The Shareholder acknowledges that such securities
must be held indefinitely unless they are subsequently
registered under the Securities Act or an exemption from such
registration is available. The Shareholder is aware of the
provisions of Rule 144 promulgated under the Securities Act,
which permits limited resale of securities purchased in a
private placement subject to the satisfaction of certain
conditions and that such Rule is not now available and, in the
future, may not become available for resale of the Company
Shares.
4.9 Shareholder Sophistication and Ability to Bear Risk of Loss. The
Shareholder acknowledges that she is able to protect her interests
in connection with the acquisition of the Company Shares and can
bear the economic risk of investment in such securities without
producing a material adverse change in her financial condition. The
Shareholder otherwise has such knowledge and experience in financial
or business matters that she is capable of evaluating the merits and
risks of the investment in the Company Shares.
4.10 Purchases by Groups. The Shareholder represents, warrants, and
covenants that she is not acquiring the Company Shares as part of a
group within the meaning of Section 13(d)(3) of the Securities
Exchange Act of 1934, as amended.
4.11 Qualifications, Legal and Investment. All authorizations, approvals,
or permits, if any, of any governmental authority or regulatory body
of the United States including "blue sky" filings in any state that
are required in connection with the lawful sale of the Shares
pursuant to this Agreement have been or will be, on a timely basis,
duly obtained and are effective. No stop order or other order
enjoining the sale of the Shares have been issued and no proceedings
for such purpose are pending or, to the knowledge of the
Shareholder, threatened by the SEC, or any commissioner of
corporations or similar officer of any state having jurisdiction
over this transaction. The sale of the Shares is legally permitted
by all laws and regulations to which DAC, the Shareholder, and the
Company are subject.
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company hereby represents, warrants, and covenants with the
Shareholder as follows:
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5.1 Organization and Good Standing. The Company is a corporation duly
organized, validly existing, and in good standing under the laws of
the State of Nevada and has full corporate power and authority to
enter into and perform its obligations under this Agreement.
5.2 Legal Power. The Company has the requisite power to enter into this
Agreement, to purchase the Shares hereunder, and to carry out and
perform its obligations under the terms of this Agreement.
5.3 Due Execution. This Agreement has been duly executed and delivered
by Company, and, upon due execution and delivery by the Shareholder,
this Agreement will be a valid and binding agreement of the Company.
5.4 SEC Reports and Financial Statements.
5.4.1 The Company has delivered or made available to the Shareholder
accurate and complete copies (excluding copies of exhibits) of
the SEC Reports. All statements, reports, schedules, forms and
other documents required to have been filed by the Company
with the SEC have been so filed on a timely basis, except as
indicated in such SEC Reports. As of the time it was filed
with the SEC (or, if amended or superseded by a filing prior
to the date of this Agreement, then on the date of such
filing): (i) each of the SEC Reports complied in all material
respects with the applicable requirements of the Securities
Act of 1933, as amended, or the Securities Exchange Act of
1934, as amended; and (ii) none of the SEC Reports contained
any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
5.4.2 Except for the pro forma financial statements, the
consolidated financial statements contained in the SEC
Reports: (i) complied as to form in all material respects with
the published rules and regulations of the SEC applicable
thereto; (ii) were prepared in accordance with GAAP applied on
a consistent basis throughout the periods covered (except as
may be indicated in the notes to such financial statements
and, in the case of unaudited statements, as permitted by Form
10-QSB of the SEC, and except that unaudited financial
statements may not contain footnotes and are subject to normal
and recurring year-end audit adjustments which will not,
individually or in the aggregate, be material in amount); and
(iii) fairly present, in all material respects, the
consolidated financial position of the Company and its
consolidated subsidiaries as of the respective dates thereof
and the consolidated results of operations of the Company and
its consolidated subsidiaries for the periods covered thereby.
All adjustments considered necessary for a fair presentation
of the financial statements have been included.
5.5 Exempt Transaction. Assuming the accuracy of the representations and
warranties of DAC set forth in Section 4 of this Agreement, the
offer, sale and delivery of the Shares will constitute an exempted
transaction under the Securities Act of 1933, as amended and now in
effect ("Securities Act"), and registration of the Shares under the
Securities Act is not required. The Company shall make such filings
as may be necessary to comply with the Federal securities laws and
the blue sky laws of any state, which filings will be made in a
timely manner.
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6. COVENANTS.
6.1 Further Assurances; Cooperation. Each party hereto will, before, at,
and after the Closing, execute and deliver such instruments and take
such other actions as the other party or parties, as the case may
be, may reasonably require in order to carry out the intent of this
Agreement. Without limiting the generality of the foregoing, at any
time after the Closing, at the request of the Company or the
Company, and without further consideration, the Shareholder (a) will
execute and deliver such instruments of transfer, conveyance,
assignment and confirmation and take such action as the Company or
the Company may reasonably deem necessary or desirable in order to
more effectively transfer, convey and assign to the Company, and to
confirm the Company's title to, the Shares, and (b) will execute
such documents as and take such action as the Company or the Company
may reasonably deem necessary or desirable in order to prepare and
file any future SEC Reports that the Company seeks to file with the
Securities and Exchange Commission under the Securities Act of 1933,
as amended, or the Securities Exchange Act of 1934, as amended.
6.2 Covenants of the Shareholder. Until the conditions as set forth in
this Agreement have been fulfilled, in particular sections 3.3, the
Shareholder shall not directly or indirectly, offer, issue, sell,
contract to sell (including, without limitation, any short sale),
grant any option for the sale of, pledge, or otherwise dispose of or
transfer any of the Company Shares.
6.3 Covenants of the Company. Until the conditions as set forth in this
Agreement have been fulfilled, in particular sections 3.2, the
Company shall not do any of the following without the prior written
consent of the Shareholder, and such action taken by the Company
without the prior written consent of the Shareholder shall be void
ab initio:
6.3.1 Except as set forth in Section 6.5, amend any of the terms of
the Company's Series C Preferred Stock or Series D Preferred
Stock; or
6.3.2 Issue any shares of any class or series of preferred stock of
the Company.
6.4 Employment Agreement. As soon as practicable after the Closing Date,
the Company and the Shareholder shall enter into an executive
employment agreement to hire Xxxxxxx X. Xxxxxx as Chief Operating
Officer of the Company, on terms and conditions to be determined in
good faith between the Company and the Shareholder.
6.5 Amendment to Certificate of Designation of Series C Preferred
Shares. As soon as practicable after the Closing Date, the Company
shall amend its Certificate of Designation for the Series C
Preferred Stock, and the Shareholder shall consent to said
amendment. The Series C Preferred Stock shall be amended to contain
the following rights, preferences, and privileges:
6.5.1 Voting Rights. No voting rights
6.5.2 Conversion Rights. One (1) share of Series C Preferred Stock
may be converted to one dollar ($1.00) worth of Company Common
Stock based on the lowest average of three closing bid prices
of Common Stock twenty trading days prior to conversion date.
This shall be considered the Base Conversion Rate (Base).
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6.5.3 Modifications. The Conversion as set forth above may be
modified based on the performance of the Company following the
Exchange.
(a) If the Company averages $1.25 million or more in Gross
Revenues during the fiscal years of 2006 and 2007, the
Conversion as set forth in Section 1.1.2 shall be
modified to equal the Base multiplied by 125%.
(b) If the Company averages $1.50 million or more in Gross
Revenues during the fiscal years of 2006 and 2007, the
Conversion as set forth in Section 1.1.2 shall be
modified to equal the Base multiplied by 150%.
(c) If the Company averages $1.75 million or more in Gross
Revenues during the fiscal years of 2006 and 2007, the
Conversion as set forth in Section 1.1.2 shall be
modified to equal the Base multiplied by 175%.
(d) If the Company averages $2.0 million or more in Gross
Revenues during the fiscal years of 2006 and 2007, the
Conversion as set forth in Section 1.1.2 shall be
modified to equal the Base multiplied by 200%.
6.5.4 Redemption Rights. None.
6.6 Sale of Series D Preferred Stock. Upon the release of Xxxxxxxx'x
shares of Series D Preferred Stock from a certain pledge agreement
between Xxxxxxxx and Xxxxxxx X. Xxxxxxx, Xxxxxxxx shall agree to
sell to the Shareholder 2,500,000 shares of Series D Preferred
Stock, on terms and conditions to be determined in good faith
between Xxxxxxxx and the Shareholder and to be set forth in a
separate stock purchase agreement between Xxxxxxxx and the
Shareholder.
7. DEFAULT AND RESCISSION OF THE AGREEMENT.
7.1 DAC will be considered in default of this Agreement if any of the
following occur:
7.1.1 DAC loses more than one half of its annual revenues during the
12 months following the transaction contemplated by this
agreement,
7.1.2 DAC loses more than 50% of contracts or clients representing
more than 30% of its current business during the 12 months
following the transaction contemplated by this agreement.
7.1.3 The Shareholder breaches her employment agreement executed
under Section 6.4.
7.1.4 Either the Shareholder is not able to uphold the terms and
conditions of this Agreement.
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7.2 Company shall be considered in default of this Agreement if:
7.2.1 A suitable funding program is not implemented within 90 days
of the Agreement.
7.2.2 The Company is not able to maintain its SEC filings in a
timely fashion.
7.2.3 The Company or Xxxxxxxx is not able to uphold the terms and
conditions of this Agreement.
7.3 If such a default should occur and no reasonable cure is offered by
the defaulting party within a 90 day period, the terms, conditions
and responsibilities within this Agreement shall be rescinded and
shall be void ab initio, and both DAC and Company may return to
their pre-acquisition status without further obligation to the
other.
7.4 If Company is in default and unable to cure such default, DAC shall
not be under any obligation to repay funds received from Company if
the Agreement is rescinded.
8. MISCELLANEOUS.
8.1 Governing Law. This Agreement shall be governed by and construed
under the laws of the State of California. Each party hereby
irrevocably submits to the exclusive jurisdiction of the state and
federal courts sitting in the county of San Diego, State of
California, for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or
discussed herein and hereby irrevocably waives, and agrees not to
assert in any suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of any such court, that such
suit, action or proceeding is improper. Each party hereby
irrevocably waives personal service of process and consents 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 Note and agrees that such service shall
constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any
way any right to serve process in any manner permitted by law.
8.2 Successors and Assigns. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be
binding upon, the successors, assigns, heirs, executors, and
administrators of the parties hereto.
8.3 Entire Agreement. This Agreement and the Exhibits hereto and
thereto, and the other documents delivered pursuant hereto and
thereto, constitute the full and entire understanding and agreement
among the parties with regard to the subjects hereof and no party
shall be liable or bound to any other party in any manner by any
representations, warranties, covenants, or agreements except as
specifically set forth herein or therein. Nothing in this Agreement,
express or implied, is intended to confer upon any party, other than
the parties hereto and their respective successors and assigns, any
rights, remedies, obligations, or liabilities under or by reason of
this Agreement, except as expressly provided herein.
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8.4 Severability. In case any provision of this Agreement shall be
invalid, illegal, or unenforceable, it shall to the extent
practicable, be modified so as to make it valid, legal and
enforceable and to retain as nearly as practicable the intent of the
parties, and the validity, legality, and enforceability of the
remaining provisions shall not in any way be affected or impaired
thereby.
8.5 Amendment and Waiver. Except as otherwise provided herein, any term
of this Agreement may be amended, and the observance of any term of
this Agreement may be waived (either generally or in a particular
instance, either retroactively or prospectively, and either for a
specified period of time or indefinitely), with the written consent
of the Shareholder and the Company. Any amendment or waiver effected
in accordance with this Section shall be binding upon each future
holder of any security purchased under this Agreement (including
securities into which such securities have been converted) and the
Shareholder.
8.6 Notices. All notices and other communications required or permitted
hereunder shall be in writing and shall be effective when delivered
personally, or sent by telex or telecopier (with receipt confirmed),
provided that a copy is mailed by registered mail, return receipt
requested, or when received by the addressee, if sent by Express
Mail, Federal Express or other express delivery service (receipt
requested) in each case to the appropriate address set forth below:
If to the Shareholder: Xxxxxxx X. Xxxxxx
0000 Xxxxxxx Xxxxx Xxxx., Xxxxxxxx, XX 00000
Tel: 000-000-0000 Fax: 000-000-0000
If to the Company: Axia Group, Inc.
0000 Xxxxxxxxx Xx., Xxx 000, Xx Xxxx, XX 00000
Tel: 000-000-0000 Fax: 000-000-0000
8.7 Titles and Subtitles. The titles of the paragraphs and subparagraphs
of this Agreement are for convenience of reference only and are not
to be considered in construing this Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first set forth above.
SHAREHOLDER: Xxxxxxx X. Xxxxxx
/s/ Xxxxxxx X. Xxxxxx
-------------------------
COMPANY: Axia Group, Inc.
/s/ Xxxxxxx Xxxxxxxx
-------------------------
By: Xxxxxxx Xxxxxxxx
President
XXXXXXXX: XXXXXXX XXXXXXXX
/s/ Xxxxxxx Xxxxxxxx
-------------------------
(Signature Page to Stock Exchange Agreement)
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