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EXHIBIT 4.1
CKS GROUP, INC.
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement ("Agreement") is made as of January
31, 1997, between CKS Group, Inc., a Delaware corporation ("CKS"), and the
partners and former partners of XxXxxxxx & Silver, a North Carolina General
Partnership (the "Partnership"), acquiring shares of the Common Stock of CKS
pursuant to that certain Acquisition Agreement dated as of January 31, 1997,
(the "Acquisition Agreement") among CKS, Raleigh Acquisition Inc., a Delaware
corporation ("Sub") and wholly-owned subsidiary of CKS, the persons listed on
Exhibit A thereto (the "Partners"), Chemical Trust Company of California, as
Escrow Agent, and Xxxxxx X. Xxxxxxx and Xxxxxx X. Xxxxxx, as Partner
Representatives.
1. Definitions. As used in this Agreement:
(a) "1934 Act" means the Securities Exchange Act of 1934, as
amended.
(b) "1933 Act" means the Securities Act of 1933, as amended.
(c) "Closing Date" means the Closing Date as defined in Article II
of the Acquisition Agreement.
(d) "Material Event" means the happening of any event during the
period that the registration statement described in Section 2 hereof is required
to be effective as a result of which, in the judgment of CKS, such registration
statement or the related Prospectus contains or may contain any untrue statement
of a material fact or omits or may omit to state any material fact required to
be stated therein or necessary to make the statements therein not misleading.
(e) "Partner" shall mean each of the persons listed on Exhibit A to
the Acquisition Agreement.
(f) "Registrable Securities" means the shares of CKS Common Stock
issued or issuable to the Partners pursuant to Article I of the Acquisition
Agreement (including the shares deposited with the escrow agent pursuant to the
Acquisition Agreement).
(g) "Registration Statement" means such form under the 1933 Act as
in effect on the date hereof or any registration form under the 1933 Act
subsequently adopted by the SEC which permits registration of the Registrable
Securities under the 1933 Act.
(h) "SEC" means the Securities and Exchange Commission.
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Terms not otherwise defined herein have the meanings given to them
in the Acquisition Agreement.
2. Registration. CKS shall use commercially reasonable efforts to cause
the Registrable Securities held by each Partner to be registered under the 1933
Act at the times and in the amounts specified in Section 6.1 of the Acquisition
Agreement so as to permit the immediate resale thereof; provided, however, that
the Partners shall provide all such information and materials relating to the
Partners and take all such action as may be reasonably required in order to
permit CKS to comply with all the applicable requirements of the SEC and to
obtain any desired acceleration of the effective date of the Registration
Statements referred to in Section 6.1 of the Acquisition Agreement, such
provision of such information and materials to be a condition precedent to the
obligations of CKS pursuant to this Agreement and the Acquisition Agreement. The
offerings made pursuant to such registrations shall not be underwritten.
Notwithstanding the foregoing, CKS shall not be required to cause the
Registrable Securities to be registered if CKS legal counsel delivers a legal
opinion to the individual Partner seeking to sell Registrable Securities that
such sale may be effected without registration under the 1933 Act.
3. Postponement of Registration.
(a) Registration. Notwithstanding Section 2 above, CKS shall be
entitled to postpone the declaration of effectiveness of any Registration
Statement prepared and filed pursuant to Section 2 for a reasonable period of
time, but not in excess of thirty (30) calendar days after the applicable
deadline, if the Board of Directors of CKS, acting in good faith, after
consultation with its principal securities counsel, determines that there exists
material non-public information about CKS which CKS has a bona fide business
purpose for preserving as confidential and CKS provides the Partners written
notice of the postponement promptly after CKS makes such determination.
(b) Material Event. The Partners agree that, upon receipt of any
notice from CKS of the happening of a Material Event, the Partners will
forthwith discontinue disposition of the Registrable Securities pursuant to any
Registration Statement described in Section 2 until the Partners' receipt of
copies of supplemented or amended prospectuses prepared by CKS, and, if so
directed by CKS, the Partners will deliver to CKS (at the expense of CKS) all
copies in its possession, other than permanent file copies then in the Partners'
possession, of the prospectus covering such Registrable Securities current at
the time of receipt of such notice. In no event shall CKS delay causing to be
effective a supplement or post-effective amendment to a Registration Statement
filed pursuant to Section 2 or the related prospectus, for more than thirty (30)
consecutive days or one hundred twenty days (120) days during any 365
consecutive calendar day period.
4. CKS Registration.
(a) If (but without any obligation to do so) (A) CKS proposes to
register any of its Common Stock or other securities under the Act in connection
with a public offering of such securities solely for cash (not including (i) a
registration effected by CKS for stockholders other than the Partners, (ii) a
registration relating solely to CKS's employee benefit plans, (iii) a
registration relating solely to an acquisition, or (iv) a registration on any
form that does not include substantially the same information as
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would be required to be included in a registration statement covering the sale
of the Registrable Securities) and (B)(i) CKS has not previously registered the
Partner's Registrable Securities under the Act and (ii) it is prior to the third
anniversary of the Closing Date, CKS shall, at such time, promptly give each
Partner written notice of such registration. Upon the written request of each
Partner given within twenty (20) days after mailing of such notice by CKS, CKS
shall, subject to the provisions of Section 4(b) and (c) below, cause to be
registered under the Act all of the Registrable Securities that each such Holder
has requested to be registered.
(b) In connection with any offering involving an underwriting of
shares of CKS's capital stock, CKS shall not be required under Section 4(a) to
include any of the Partners' securities in such underwriting unless they accept
the terms of the underwriting as agreed upon between CKS and the underwriters
selected by it (or by other persons entitled to select the underwriters), and
then only in such quantity as the managing underwriter determines in its sole
discretion will not, due to marketing factors, jeopardize the success of the
offering by CKS.
(c) If the total amount of securities, including Registrable
Securities, requested by shareholders of CKS to be included in such offering
exceeds the amount of securities sold other than by CKS that the underwriters
determine in their sole discretion is compatible with the success of the
offering, then CKS shall be required to include in the offering only that number
of such securities, including Registrable Securities, which the underwriters
determine in their sole discretion will not jeopardize the success of the
offering (the securities so included to be apportioned pro rata among the
stockholders of CKS requesting inclusion in such registration according to the
total amount of securities entitled to be included therein owned by each such
shareholder of CKS on a pro rata basis). In no event shall any securities of CKS
be excluded from such registration prior to the cut back of all shares proposed
to be sold in such offering by the shareholders of CKS.
(d) If any Partner disapproves of the terms of any such
underwriting, such Partner may elect to withdraw therefrom by written notice to
CKS and the underwriters. If such Partner's shares are withdrawn from
registration, or if the number of shares of Registrable Securities was
previously reduced due to marketing factors, CKS shall offer to all Partners
retaining the right to include securities in the registration the right to
include additional Registrable Securities in the registration, with such shares
being allocated on a pro rata basis among the stockholders of CKS requesting
inclusion in such Registration Statement.
(e) No Partner shall have any right to obtain or seek an injunction
restraining or otherwise delaying any such registration as the result of any
controversy that might arise with respect to the interpretation or
implementation of this Section 4.
5. Obligations of CKS. Within three business days of the earlier of (i)
receipt of the Partnership's balance sheets as of December 31, 1996 and 1995,
and the related statements of income and cash flows for each of the three years
in the period ended December 31, 1996 (the "Partnership Financial Statements")
(such Partnership Financial Statements prepared in accordance with GAAP and
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consistent with the policies and reporting practices used by CKS and audited by
its prior independent public accountants), (ii) receipt of (A) the Partnership
Financial Statements audited by the Partnership's prior independent public
accountants and unaudited restated Partnership Financial Statements that include
such reclassifying entries necessary to be made by CKS in order for such
restated Partnership Financial Statements to be in accordance with GAAP and
consistent with the policies and reporting practices used by CKS, and (B)
written consent of the Partnership's prior independent public accountants given
with the knowledge that the Partnership Financial Statements will be included in
the restated consolidated financial statements of CKS giving effect to the
pooling of interests treatment of the Acquisition, and (iii) receipt of the
Partnership Financial Statements prepared in accordance with GAAP and consistent
with the policies and reporting practices used by CKS and audited by KPMG Peat
Marwick LLP, CKS shall file with the SEC a Registration Statement for the
purpose of registering an aggregate of 200,000 Registrable Securities under the
1933 Act for resale by the holders thereof and shall use commercially reasonable
efforts to cause such Registration Statement to be declared effective as soon as
practicable after the date of filing. CKS shall file a Registration Statement
with the SEC for the purpose of registering an aggregate of an additional
300,000 Registrable Securities under the 1933 Act for resale by the Partners and
use commercially reasonable efforts to cause such Registration Statement to be
declared effective on or before June 30, 1997. CKS shall file a Registration
Statement with the SEC for the purpose of registering an aggregate of an
additional 250,000 Registrable Securities under the 1933 Act for resale by the
Partners and use commercially reasonable efforts to cause such Registration
Statement to be declared effective on or before December 31, 1997. CKS shall
file a Registration Statement with the SEC for the purpose of registering the
remaining Registrable Securities issued pursuant to the Acquisition Agreement
and use commercially reasonable efforts to cause such Registration Statement to
be declared effective on or before June 30, 1998. In the case of each such
Registration Statement, the Partners shall have the right to sell a number of
Registrable Securities equal to the product of (a) the quotient of (1) the
number of Registrable Securities received by such Partner in the Acquisition and
(2) the total number of Registrable Securities issued in the Acquisition and (b)
the total number of Registrable Securities covered by the Registration Statement
then being filed. In the event CKS is required to obtain the audited Partnership
Financial Statements under Subsection (iii) above, CKS agrees to use
commercially reasonable efforts to obtain such financial statements as soon as
practicable, it being understood by the parties that the completion of the audit
of the Partnership Financial Statements by KPMG Peat Marwick LLP is expected to
require at least 30 days. Nothing in the preceding sentence shall require CKS to
obtain the audited Partnership Financial Statements specified in Subsection
(iii) above within 30 days or any other time period. CKS agrees to pay all costs
of KPMG Peat Marwick LLP in connection with any of the above services rendered
by it. Except as set forth herein, (i) CKS shall keep such Registration
Statements effective until the earlier of the sale of all the Registrable
Securities so registered or the second anniversary of the Closing Date (ii)
promptly prepare and file with the SEC such amendments and supplements to such
Registration Statements and the prospectus used in connection therewith as may
be necessary and to comply with the provisions of the 1933 Act with respect to
the sale or other disposition of all securities proposed to be registered in
such Registration Statement until the earlier of the sale of all of the shares
of Registrable Securities so registered or the second anniversary of the Closing
Date; (iii) furnish to the Partners without charge such number of copies of such
Registration Statements, each amendment and supplement thereto (in each case,
including all exhibits), and any
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prospectus (including any preliminary prospectus and any amended or supplemented
prospectus) in conformity with the requirements of the 1933 Act, and such other
documents, as the Partners may reasonably request in order to effect the
offering and sale of the shares of the Registrable Securities to be offered and
sold, but only while CKS shall be required under the provisions hereof to cause
such Registration Statement to remain current; (iv) use its commercially
reasonable efforts to register or qualify the shares of the Registrable
Securities covered by such Registration Statement under the securities or blue
sky laws of such jurisdictions as the Partners shall reasonably request
(provided that CKS shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general consent to
service of process in any such jurisdiction where it has not been qualified),
keep such registration or qualification in effect for as long as such
Registration Statement remains in effect, and do any and all other acts or
things which may be necessary or advisable to enable the Partners to consummate
the public sale or other disposition of the Registrable Securities in such
jurisdictions; (v) cause all such Registrable Securities to be listed on each
securities exchange or National Association of Securities Dealers, Inc.
Automated Quotation System on which similar securities issued by CKS are then
listed, and enter into such customary agreements as may be required in
furtherance thereof, including, without limitation, listing applications and
indemnification agreements in customary form; (vi) notify the Partners upon the
happening of any event as a result of which the prospectus included in such
Registration Statement, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of the
circumstances then existing; (vii) so long as the Registration Statement remains
effective, promptly prepare, file and furnish to the Partners a reasonable
number of copies of a supplement to or an amendment of such prospectus as may be
necessary so that, as thereafter delivered to the purchasers of the Registrable
Securities, such prospectus shall not include an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading in the light of the circumstances
then existing; (viii) notify the Partners, promptly after it shall receive
notice thereof, of the date and time the Registration Statement and each
post-effective amendment thereto has become effective or a supplement to any
prospectus forming a part of such Registration Statement has been filed; (ix)
notify the Partners promptly of any request by the SEC for the amending or
supplementing of such Registration Statement or prospectus or for additional
information; and (x) advise the Partners, promptly after it shall receive notice
or obtain knowledge thereof, of the issuance of any stop order by the SEC
suspending the effectiveness of the Registration Statement or the issuance by
any state of securities commission or other regulatory authority of any order
suspending the qualification or exemption from qualification of any of the
Registrable Securities under state securities or "blue sky" laws, or the
initiation or threatening of any proceeding for that purpose and promptly use
its commercially reasonable efforts to prevent the issuance of any stop order or
other order or to obtain its withdrawal if such stop order or other order should
be issued. In connection with any offering of shares of Registrable Securities
registered pursuant to this Agreement, CKS shall (x) furnish the Partners, at
CKS's expense, with unlegended certificates representing ownership of the shares
of Registrable Securities being sold in such denominations as the Partners shall
request and (y) instruct the transfer agent and registrar of the Registrable
Securities to release any stop transfer orders with respect to the shares of
Registrable Securities being sold.
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6. Expenses. CKS shall pay the expenses incurred by CKS in connection
with any registration of Registrable Securities pursuant to this Agreement
including all SEC, NASD and blue sky registration and filing fees, printing
expenses, transfer agents' and registrars' fees, and the fees and disbursements
of CKS's outside counsel and independent accountants. The Partners shall be
responsible for all underwriting discounts, commissions and transfer taxes
imposed on the Partners by reason of a transfer of Registrable Securities, as
well as any other expenses incurred by the Partners, including the fees and
disbursements of counsel to the Partners.
7. Indemnification. In the event of any offering registered pursuant to
this Agreement:
(a) CKS will indemnify and hold harmless, to the extent
permitted by law, each Partner, with respect to whom registration, qualification
or compliance has been effected pursuant to this Agreement, against all
expenses, claims, losses, damages and liabilities (or actions in respect
thereof), including any of the foregoing incurred in settlement of any
litigation, commenced or threatened, arising out of or based on any untrue
statement (or alleged untrue statement) of a material fact contained in any
registration statement, prospectus, offering circular or other document, or any
amendment or supplement thereto, incident to any such registration,
qualification or compliance, or based on any omission (or alleged omission) to
state therein a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances in which they are made,
not misleading, or any violation by CKS of any rule or regulation promulgated
under the 1933 Act, or state securities laws, or common law, applicable to CKS
in connection with any such registration, qualification or compliance, and will
reimburse each Partner, for any legal and any other expenses reasonably incurred
in connection with investigating, preparing or defending any such claim, loss,
damage, liability or action; provided that CKS will not be liable in any such
case (i) to the extent that any such claim, loss, damage, liability or expense
arises out of or is based on any untrue statement or omission or alleged untrue
statement or omission, made in reliance upon and in conformity with written
information furnished to CKS by an instrument duly executed by the Partners and
stated to be specifically for use therein or (ii) if a copy of the final
prospectus relating to the Registration Statement (as then amended or
supplemented if CKS shall have furnished any amendments or supplements thereto)
(the "Final Prospectus") was not sent or given by or on behalf of such Partner
to a purchaser of such Partner's Registrable Securities, if required by law so
to have been delivered, at or prior to the written confirmation of the sale of
the Registrable Securities to such purchaser, and if the final prospectus (as so
amended or supplemented) would have cured the defect giving rise to such loss,
claim, damage or liability. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of the Partner and shall
survive the transfer of such securities by the Partner.
(b) Each Partner will indemnify CKS, each of its directors and
officers, each person who controls CKS within the meaning of Section 15 of the
1933 Act, against all claims, losses, damages and liabilities (or actions in
respect thereof) solely arising out of or based on any untrue statement (or
alleged untrue statement) of a material fact contained in any such registration
statement, prospectus, offering circular or other document, or any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, but only to the
extent,
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that such untrue statement (or alleged untrue statement) or omission (or alleged
omission) is made in such registration statement, prospectus, offering circular
or other document in reliance upon and in conformity with written information
furnished to CKS by an instrument duly executed by such Partner and stated to be
specifically for use therein and will reimburse CKS, such directors, officers,
or control persons for any legal or any other expenses reasonably incurred in
connection with investigating or defending any such claim, loss, damage,
liability or action, but only to the extent, that such untrue statement (or
alleged untrue statement) or omission (or alleged omission) is made in such
registration statement, prospectus, offering circular or other document in
reliance upon and in conformity with written information furnished to CKS by an
instrument duly executed by such Partner and stated to be specifically for use
therein. Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of CKS and shall survive the transfer of such
securities by the Partner.
(c) Each party entitled to indemnification under this Section
7 (the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has written notice of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to participate in and assume the defense of any
such claim or any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or litigation,
shall be approved by the Indemnified Party (whose approval shall not be
unreasonably withheld), and the Indemnified Party may participate in such
defense at such party's expense, and provided further that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Agreement, except to the
extent, but only to the extent, that the Indemnifying Party's ability to defend
against such claim or litigation is actually impaired as a result of such
failure to give notice. No Indemnifying Party, in the defense of any such claim
or litigation, shall, except with the consent of each Indemnified Party, consent
to entry of any judgment or enter any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of an unconditional release from all liability in respect to
such claim or litigation. Whether or not the defense of any claim or action is
assumed by the Indemnifying Party, such Indemnifying Party will not be subject
to any liability for any settlement without its consent, which consent will not
be unreasonably withheld.
(d) The obligations of CKS and the Partners under this Section
7 shall survive the completion of any offering of stock in a registration
statement under this Agreement.
8. Non-Assignment of Registration Rights. The rights to cause CKS to
register Registrable Securities pursuant to this Agreement may not be assigned
by the Partners.
9. Amendment of Registration Rights. This Agreement may be amended
by the holders of a majority of the Registrable Securities and CKS at any time
by execution of an instrument in writing signed on behalf of the parties.
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10. Termination. The registration rights set forth in this Agreement
shall terminate as to any Partner at such time as all of the Registrable
Securities then held by such Partner can be sold by such Partner in a single
3-month period in accordance with Rule 144 under the 1933 Act.
11. Grant of Additional Registration Rights. The Partners
acknowledge that CKS may acquire other companies and in the course of such
acquisitions may grant the equity owners thereof registration rights with
respect to their shares of CKS on terms which would be negotiated at such time.
12. Notices. All notices and other communications required or
permitted hereunder shall be in writing and shall be deemed effectively given
upon delivery to the party to be notified in person or by courier service or
five days after deposit with the United States mail, postage prepaid, addressed
(a) if to the Partners, at the Partners' address as set forth in the securities
register of CKS or (b) if to CKS at 00000 Xxxxxxx Xxxxx, Xxxxxxxxx, Xxxxxxxxxx
00000.
13. Governing Law; Interpretation. This Registration Rights
Agreement shall be construed in accordance and governed for all purposes by the
laws of the State of California regardless of the laws that might otherwise
govern under applicable principles of conflicts of laws thereof.
14. Entire Agreement. This Registration Rights Agreement contains
the entire agreement and understanding of the parties and supersedes all prior
discussions, agreement and understandings relating to the subject matter hereof.
15. Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counter parts have been signed by each
of the parties and delivered to the other party, it being understood that all
parties need not sign the same counterpart.
16. Severability. In the event that any provision of this Agreement
or the application thereof, becomes or is declared by a court of competent
jurisdiction to be illegal, void or unenforceable, the remainder of this
Agreement will continue in full force and effect and the application of such
provision to other persons or circumstances will be interpreted so as reasonably
to effect the intent of the parties hereto. The parties further agree to replace
such void or unenforceable provision of this Agreement with a valid and
enforceable provision that will achieve, to the extent possible, the economic,
business and other purposes of such void or unenforceable provision.
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IN WITNESS WHEREOF, Parent and the Partners have caused this
Agreement to be signed, all as of the date first written above.
PARTNERS CKS GROUP, INC.
/s/ Xxxxx X. Xxxxxxx By: /s/ Xxxx X. Xxxxxx
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Xxxxx X. Xxxxxxx
Name: Xxxx X. Xxxxxx
/s/ Xxxxxxx X. Xxxxx -----------------------------------------
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Xxxxxxx X. Xxxxx Title: President and Chief Executive Officer
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/s/ Xxxx X. Xxxxx
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Xxxx X. Xxxxx
/s/ Xxxxxx X. Xxxxxxx
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Xxxxxxx X. Xxxxxxx
/s/ J. Xxxxxxx Xxxxx, III
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J. Xxxxxxx Xxxxx, III
/s Xxxxxx X. Xxxxxxx
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Xxxxxx X. Xxxxxxx
/s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx
/s/ Xxxxx Xxxxx Xxxxxx
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Xxxxx Xxxxx Xxxxxx
/s/ Xxxxx X. Xxxxxxxx
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Xxxxx X. Xxxxxxxx
/s/ Xxx X. Xxxxxx
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Xxx X. Xxxxxx
/s/ Xxxxxxx X. XxXxxxxx
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Xxxxxxx X. XxXxxxxx
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/s/ Xxxx X. XxXxxxxx
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Xxxx X. XxXxxxxx
/s/ Xxxxxxx X. Xxxxxxx
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Xxxxxxx X. Xxxxxxx
/s/ Xxxx X. Xxxxxxxxx
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Xxxx X. Xxxxxxxxx
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