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EXHIBIT 2.4.2
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT dated as of December 31, 1997,
between WHEELS SPORTS GROUP, INC., a North Carolina corporation (the
"Company"), and the Holders listed on Schedule A attached hereto (the
"Holders").
Reference is made to the Merger Agreement and Plan of Reorganization,
dated October 3, 1997, among the Company, SM Acquisition Company, J/B
Acquisition Company, Synergy Marketing, Inc. and J/B Press Pass, Inc. (the
"Merger Agreement"), whereby the Company has agreed to provide the registration
rights set forth in this Agreement. The execution and delivery of this
Agreement is a condition to Closing under the Merger Agreement.
The parties hereto agree as follows:
SECTION 1. DEFINITIONS. For purposes of this Agreement:
(a) The term "Common Shares" means the Company's Common
Stock, $.01 par value;
(b) The term "Company" means Wheels Sports Group, Inc., a
North Carolina corporation, its successors and assigns, and any other
issuer of Registerable Securities;
(c) The term "Holders" has the meaning given to it in the
preamble;
(d) The term "Merger Agreement" has the meaning given to
it in the preamble;
(e) The term "Piggyback Registration" has the meaning
given to it in Section 2(a);
(f) The term "Registrable Securities" means (i) the Share
Consideration, as defined under the Merger Agreement, (ii) any Common
Shares of the Company issued as (or issuable upon the conversion or
exercise of any warrant, right or other security which is issued as) a
dividend or other distribution with respect to, or in exchange for or
in replacement of, the Share Consideration, in each case held by any
Holder, and (iii) any security into which the Share Consideration or
any Common Shares described in clause (ii) of the Company may be
converted or exchanged in a merger or other business combination; and
(g) The terms "register," "registered," and
"registration" refer to a registration effected by preparing and
filing a registration statement or similar document in compliance with
the Securities Act, and the declaration or ordering of effectiveness
of such registration statement or document;
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(h) The term "Securities Act" means the Securities Act of
1933, as amended; and
(i) The term "Securities Exchange Act" means the
Securities Exchange Act of 1934, as amended.
SECTION 2. PIGGYBACK REGISTRATIONS.
(a) Right to Piggyback. Whenever the Company proposes to
register any of its securities under the Securities Act (including
secondary registrations on behalf of the holders of its securities)
and the registration forms to be used may be used for the registration
of Registrable Securities (a "Piggyback Registration"), the Company
shall give prompt written notice to all holders of Registrable
Securities of its intention to effect such a registration no less than
twenty (20) days prior to the date of filing of the registration
statement and shall include in such registration all Registrable
Securities with respect to which the Company has received written
requests for inclusion therein within fifteen (15) days after receipt
of the Company's notice.
(b) Piggyback Expenses. The expenses of registration of
the Holders of Registrable Securities shall be paid by the Company in
all Piggyback Registrations.
(c) Priority on Primary Registrations. If a Piggyback
Registration is an underwritten primary registration on behalf of the
Company, and the managing underwriter advises the Company in writing
that in its opinion the number of securities requested to be included
in such registration exceeds the number which can be sold in such
offering without materially and adversely affecting the marketability
of the offering, the Company shall include in such registration,
first, the securities the Company proposes to sell and second, the
Registrable Securities requested to be included in such registration,
pro rata among the holders of such Registrable Securities and all
other selling shareholders participating in such offering, on the
basis of the number of shares owned by each such holder.
(d) Priority on Secondary Registrations. If a Piggyback
Registration is an underwritten secondary registration on behalf of
holders of the Company's securities, and the managing underwriter
advises the Company in writing that in its opinion the number of
securities requested to be included in such registration exceeds the
number which can be sold in such offering without materially and
adversely affecting the marketability of the offering, the Company
shall include in such registration, the securities requested to be
included therein by the holders requesting such registration and the
Registrable Securities requested to be included in such registration,
pro rata among the such requesting holders and the holders of such
Registrable Securities, on the basis of the number of shares owned by
each such holder.
(e) Termination of Registration. Notwithstanding the
rights granted hereunder to the Holders, the Company, in its sole
discretion, shall have the right to (i) withdraw any Piggyback
Registration prior to obtaining an order of effectiveness or (ii)
delay the effectiveness of any Piggyback Registration due to market
conditions or other circumstances which cause the Company to conclude
that it is inadvisable to
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proceed with registration at that time. Any such withdrawal or delay
may be made without the prior consent of the Holders and without
violation of any rights of the Holders hereunder.
SECTION 3. HOLDBACK AGREEMENT. The Company agrees not to effect
any public sale or distribution of its equity securities, or any securities
convertible into or exchangeable or exercisable for such securities, during the
seven (7) days prior to and during the ninety (90) day period beginning on the
effective date of any underwritten Piggyback Registration (except as part of
such underwritten registration or pursuant to registrations on Form S-8 or any
successor form), unless the underwriter managing the registered public offering
otherwise agrees.
SECTION 4. REGISTRATION PROCEDURE. Whenever required under this
Agreement to effect the registration of any Registrable Securities, the Company
shall use its best efforts to effect the registration of such Registrable
Securities in accordance with the intended method of disposition thereof and
shall, as expeditiously as is reasonably possible:
(a) prepare and file with the Securities and Exchange
Commission a registration statement with respect to such Registrable
Securities and use its best efforts to cause such registration
statement to become effective (provided that before filing a
registration statement or prospectus or any amendments or supplements
thereto, the Company will furnish to each Holder of Registrable
Securities, each underwriter participating in any disposition pursuant
to such registration and to the counsel selected by the holders of a
majority of the Registrable Securities covered by such registration
statement copies of all such documents proposed to be filed, which
documents will be subject to the review and, comment of such counsel
to the extent such documents relate, to the Holders or to the
Registrable Securities);
(b) prepare and file with the Securities and Exchange
Commission such amendments and supplements to such registration
statement and the prospectus used in connection therewith as may be
necessary to keep such registration statement effective for a period
of not less than six (6) months and comply with the provisions of the
Securities Act with respect to the disposition of all securities
covered by such registration statement during such period in
accordance with the intended methods of disposition by the sellers
thereof set forth in such registration statement;
(c) furnish to each Holder of Registrable Securities such
number of copies of such registration statement, each amendment and
supplement thereto, the prospectus included in such registration
statement (including each preliminary prospectus) and such other
documents as such Holder may reasonably request in order to facilitate
the disposition of the Registrable Securities owned by such Holder;
(d) use its best efforts to register or qualify such
Registrable Securities under such other securities or blue sky laws of
such jurisdictions as any Holder reasonably requests and do any and
all other acts and things which may be reasonably necessary or
advisable to enable such Holder to consummate the disposition in such
jurisdictions of the Registrable Securities owned by such Holder
(provided that the Company shall not be required to (i) qualify
generally to do
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business in any jurisdiction where it would not otherwise be required
to qualify but for this subparagraph, (ii) subject itself to taxation
in any such jurisdiction, or (iii) consent to general service of
process in any such jurisdiction);
(e) notify each Holder of such Registrable Securities, at
any time when a prospectus relating thereto is required to be
delivered under the Securities Act, of the happening of any event as a
result of which the prospectus included in such registration statement
contains an untrue statement of a material fact or omits any fact
necessary to make the statements therein not misleading, and, at the
request of any such Holder, the Company shall promptly prepare a
supplement or amendment to such prospectus so that, as thereafter
delivered to the purchasers of such Registrable Securities, such
prospectus shall not contain an untrue statement of a material fact or
omit to state any fact necessary to make the statements therein not
misleading;
(f) cause all such Registrable Securities to be listed on
each securities exchange on which similar securities issued by the
Company are then listed;
(g) provide a transfer agent and registrar for all such
Registrable Securities not later than the effective date of such
registration statement;
(h) enter into such customary agreements (including
underwriting agreements in customary form) on terms and conditions
which are acceptable to the Company and take all such other actions as
the holders of a majority of the Registrable Securities being sold or
the underwriters, if any, reasonably request in order to expedite or
facilitate the disposition of such Registrable Securities;
(i) request that the underwriters for the Company or
other selling shareholders, if any, to include the Registrable
Securities in the offering on the same terms as those being sold by
the Company and the other selling shareholders;
(j) in the event of the issuance of any stop order
suspending the effectiveness of a registration statement, or of any
order suspending or preventing the use of any related prospectus or
suspending the qualification of any Common Shares included in such
registration statement for sale of any jurisdiction, the Company will
use its reasonable best efforts promptly to obtain the withdrawal of
such order;
(k) otherwise use its best efforts to comply with all
applicable rules and regulations of the Securities and Exchange
Commission, and make available to its security holders, as soon as
reasonably practicable, an earnings statement covering the period of
at least twelve (12) months beginning with the first day of the
Company's first full calendar quarter after the effective date of the
registration statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act and Rule 158
thereunder;
(l) provide each Holder with a copy of all cold comfort
letters which are obtained by the Company or the underwriters, if any,
from the Company's independent public accountants in connection with
the registration statement and the offering of securities thereunder;
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(m) provide a legal opinion of the Company's outside
counsel with respect to the registration statement, each amendment and
supplement thereto, the prospectus included therein (including the
preliminary prospectus) and such other documents relating thereto in
such form as is delivered to the underwriter, if any, or other selling
shareholder, participating in such offering;
(n) if requested by the managing underwriter or
underwriters or a holder of Registrable Securities being sold in
connection with an underwritten offering, promptly incorporate in a
prospectus supplement or post-effective amendment such information as
the managing underwriters and the holders of a majority of the
Registrable Securities being sold agree should be included therein
relating to the plan of distribution with respect to such Registrable
Securities, including, without limitation, information with respect to
the number of Registrable Securities being sold to such underwriters,
the purchase price being paid thereof by such underwriters and with
respect to any other terms of the underwritten (or best efforts
underwriter) offering of the Registrable Securities to be sold in such
offering; and make all required filings of such prospectus supplement
or post-effective amendment as soon as notified of the matters to be
incorporated in such prospectus supplement or post-effective
amendment; and
(o) cooperate with the selling Holders of Registrable
Securities and the managing underwriters, if any, to facilitate the
timely preparation and delivery of certificates representing
Registrable Securities to be sold and not bearing any restrictive
legends; and enable such Registrable Securities to be in such
denominations and registered in such names as the managing
underwriters may request at least two (2) business days prior to any
sale of Registrable Securities to the underwriters.
SECTION 5. FURNISH INFORMATION. The Holders shall promptly furnish
to the Company in writing such reasonable information regarding themselves, the
Registrable Securities held by them, and the intended method of disposition of
such securities as shall be required to effect the registration of their
Registrable Securities.
SECTION 6. EXPENSES OF REGISTRATION. All expenses, other than
underwriting discounts or selling commissions, relating to Registrable
Securities incurred in connection with registration, filing or qualification
pursuant to Section 2 of this Agreement, including (without limitation) all
registration, filing and qualification fees, printers' bills, mailing and
delivery expenses, accounting fees, and the fees and disbursements of counsel
for the Company, shall be borne by the Company.
SECTION 7. CURRENT PUBLIC INFORMATION. The Company will use
reasonable best efforts to file all reports required to be filed by it under
the Securities Act and the Securities Exchange Act and the rules and
regulations adopted by the Securities and Exchange Commission thereunder, and
will take such further action as any Holder or Holders of Registrable
Securities may reasonably request, all to the extent required to enable such
Holders to sell Registrable Securities pursuant to Rule 144 adopted by the
Securities and Exchange Commission under the Securities Act (as such rule may
be amended from time
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to time) or any similar rule or regulation hereafter adopted by the Securities
and Exchange Commission.
SECTION 8. INDEMNIFICATION AND CONTRIBUTION. In the event any
Registrable Securities are included in a registration statement under this
Agreement:
(a) To the extent permitted by law, the Company will
indemnify and hold harmless each Holder, its officers and directors,
any underwriter (as defined in the Securities Act) for such Holder,
and each person, if any, who controls such Holder or underwriter
within the meaning of the Securities Act or the Securities Exchange
Act, against any losses, claims, damages, or liabilities (joint or
several) to which they may become subject under the Securities Act,
the Exchange Act or other federal or state law, insofar as such
losses, claims, damages, or liabilities (or actions in respect
thereto) arise out of or are based upon any untrue statement or
alleged untrue statement of a material fact contained in such
registration statement, including any preliminary prospectus or final
prospectus contained therein or any amendments or supplements thereto,
or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading; and the
Company will reimburse each such Holder, underwriter or controlling
person for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim,
damage, liability, or action; provided, however, that the Company
shall not be liable in any such case for any such loss, claim, damage,
liability, or action to the extent that it arises out of or is based
upon an untrue statement or alleged untrue statement or omission or
alleged omission made in such registration statement, preliminary
prospectus or final prospectus or any amendment or supplement thereto
in reliance upon and in conformity with written information furnished
expressly for use in connection with such registration by any such
Holder, underwriter or controlling person; provided, further, however,
that if any losses, claims, damages or liabilities arise out of or are
based upon any untrue statement, alleged untrue statement, omission or
alleged omission contained in any preliminary prospectus which did not
appear in the final prospectus, the Company shall not have any such
liability with respect thereto to such Holder, or any person who
controls such Holder within the meaning of the Securities Act, if such
Holder delivered a copy of the preliminary prospectus to the person
alleging such losses, claims, damages or liabilities and failed to
deliver a copy of the final prospectus, as amended or supplemented if
it has been amended or supplemented, to such person at or prior to the
written confirmation of the sale to such person, provided that such
Holder had an obligation to deliver a copy of the final prospectus to
such person and was furnished copies of such final prospectus by the
Company; and
(b) To the extent permitted by law, each selling Holder
will severally indemnify and hold harmless the Company, each of its
directors, each of its officers who has signed the registration
statement, each person, if any, who controls the Company within the
meaning of the Securities Act, any underwriter and any other Holder
selling securities in such registration statement or any person who
controls such Holder or underwriter, against any losses, claims,
damages or liabilities (joint or several) to which the Company or any
such director, officer, controlling person, or
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underwriter or controlling person, or other such Holder or controlling
person may become subject, under the Securities Act, the Exchange Act
or other federal or state law, insofar as such losses, claims, damages
or liabilities (or actions in respect thereto) arise out of or are
based upon any untrue statement or alleged untrue statement of a
material fact contained in such registration statement, including any
preliminary prospectus or final prospectus contained therein or any
amendments or supplements thereto, or arise out of or are based upon
the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, if the untrue statement or omission or alleged
untrue statement or omission in respect of which such loss, claim,
damage or liability is asserted was made in reliance upon and in
conformity with written information furnished by such Holder expressly
for use in connection with such registration; and each such Holder
will reimburse any legal or other expenses reasonably incurred by the
Company or any such director, officer, controlling person, underwriter
or controlling person, or other Holder or controlling person in
connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that the obligation to
indemnify shall be individual to each Holder and the maximum liability
of any selling Holder under this Section 8(b) in regard to any
registration statement shall in no event exceed the amount of the net
proceeds received by such selling Holder from the sale of securities
under such registration statement; provided, further, however, that if
any losses, claims, damages or liabilities arise out of or are based
upon an untrue statement, alleged untrue statement, omission or
alleged omission contained in any preliminary prospectus which did not
appear in the final prospectus, such seller shall not have any such
liability with respect thereto to the Company, any person who controls
the Company within the meaning of the Securities Act, any officer of
the Company who signed the registration statement or any director of
the Company, if the Company delivered a copy of the preliminary
prospectus to the person alleging such losses, claims, damages or
liabilities and failed to deliver a copy of the final prospectus, as
amended or supplemented if it has been amended or supplemented, to
such person at or prior to the written confirmation of the sale to
such person, provided that the Company had an obligation to deliver a
copy of the final prospectus to such person.
(c) Promptly after receipt by an indemnified party under
this Section 8 of notice of the commencement of any action (including
any governmental action), such indemnified party will, if a claim in
respect thereof is to be made against any indemnifying party under
this Section 8, deliver to the indemnifying party a written notice of
the commencement thereof, and the indemnifying party shall have the
right to participate in and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly notified,
to assume the defense thereof with counsel mutually satisfactory to
the parties. An indemnified party shall have the right to retain its
own counsel, however, the fees and expenses of such counsel shall be
at the expense of the indemnified party, unless (iii) the employment
of such counsel has been specifically authorized in writing by the
indemnifying party, (iv) the indemnifying party has failed to assume
the defense and employ counsel, or (v) the named parties to any such
action (including any impleaded parties) include both the indemnified
party and the indemnifying party, and the indemnified party shall have
been advised by such counsel that there may be one or more legal
defenses available to it which
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are different from or additional to those available to the
indemnifying party (in which case the indemnifying party shall not
have the right to assume the defense of such action on behalf of such
indemnified party, it being understood, however, that the
indemnifying party shall not, in connection with any one such action
or separate but substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of more
than one separate firm of attorneys for all indemnified parties). The
failure to deliver written notice to the indemnifying party will not
relieve it of any liability that it may have to any indemnified party
under this Agreement.
(d) If it is judicially determined (by the entry of a
final judgment or decree of a court of competent jurisdiction and the
expiration of time to appeal or the denial of the last right of
appeal) that the indemnification provided for in this Section 8 is
unenforceable, then each indemnifying party shall in lieu of
indemnifying such indemnified party contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims,
damages, liabilities or actions in such proportion as is appropriate
to reflect the relative fault of the Company, on the one hand, and
each selling Holder, on the other, in connection with the statements
or omissions which resulted in such losses, claims, damages,
liabilities or actions as well as any other relevant equitable
considerations, including the failure to give any required notice.
The relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company, on the one hand, or by
such selling Holders on the other, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent
such statement or omission. The parties hereto acknowledge and agree
that it would not be just and equitable if contribution pursuant to
this subparagraph (d) were determined by pro rata allocation (even if
all of the selling Holders were treated as one entity for such
purpose) or by any other method of allocation which does not take
account of the equitable considerations referred to above in this
subparagraph (d). The amount paid or payable by an indemnified party
as a result of the losses, claims, damages, liabilities or actions in
respect thereof referred to above in this subparagraph (d) shall be
deemed to include any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending
any such action or claim. Notwithstanding the provisions of this
subparagraph (d), the amount each selling Holder shall be required to
contribute shall not exceed the amount of the net proceeds received by
such selling Holder from the sale of securities hereunder exceeds the
amount of any damages which they would have otherwise been required to
pay by reason of such untrue or alleged untrue statement or omission
or alleged omission, or other violation of law. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person
who was not guilty of fraudulent misrepresentation.
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SECTION 9. MISCELLANEOUS.
(a) No Inconsistent Agreements. The Company will not
hereafter enter into any agreement with respect to its securities
which is inconsistent with or violates the rights granted to the
Holders of Registrable Securities in this Agreement.
(b) Adjustments Affecting Registrable Securities. The
Company will not take any action, or permit any change to occur, with
respect to its securities which would materially and adversely affect
the ability of the Holders of Registrable Securities to include such
Registrable Securities in a registration undertaken pursuant to this
Agreement or which would adversely affect the marketability of such
Registrable Securities in any such registration.
(c) Remedies. Any Person having rights under any
provision of this Agreement will be entitled to enforce such rights
specifically to recover damages caused by reason of any breach of any
provision of this Agreement and to exercise all other rights granted
by law. The parties hereto agree and acknowledge that money damages
may not be an adequate remedy for any breach of the provisions of this
Agreement and that any party may in its sole discretion apply to any
court of law or equity of competent jurisdiction (without posting any
bond or other security) for specific performance and for other
injunctive relief in order to enforce or prevent violation of the
provisions of this Agreement.
(d) Successors and Assigns. All covenants and agreements
in this Agreement by or on behalf of any of the parties hereto will
bind and inure to the benefit of the respective successors and assigns
of the parties hereto whether so expressed or not. In addition,
whether or not any express assignment has been made, the provisions of
this Agreement which are for the benefit of Holders of Registrable
Securities are also for the benefit of, and enforceable by, any
subsequent holder of Registrable Securities. In the event of a merger
or business combination where the Common Shares of the Company are
converted into other securities, the Company will cause the issuer of
such securities to assume the Company's obligations under this
Agreement.
(e) Severability. Whenever possible, each provision of
this Agreement will be interpreted in such manner as to be effective
and valid under applicable law, but if any provision of this Agreement
is held to be prohibited by or invalid under applicable law, such
provision will be ineffective only to the extent of such prohibition
or invalidity, without invalidating the remainder of this Agreement.
(f) Notices. Except as otherwise provided herein, any
notice, consent or request to be given in connection with any term or
provision of this Agreement shall be in writing and shall be deemed to
have been delivered if delivered personally, sent by registered or
certified mail, postage prepaid, or courier, postage prepaid (next day
delivery), to the Company or to each Holder at its address as
designated in, or from time to time pursuant to, Article 12.1 of the
Merger Agreement or to such other address as shall have been furnished
in writing.
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(g) Integration. This Agreement and the Merger Agreement
contain the entire agreement between the parties with respect to the
transactions contemplated hereby and no party shall be bound by, nor
shall any party be deemed to have made, any covenants,
representations, warranties, undertakings or agreements except those
contained in such entire Agreement and the Merger Agreement. The
section and paragraph headings contained in this Agreement are for the
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
(h) Counterparts. This Agreement may be executed in one
or more counterparts, each of which shall be deemed to be an original,
but all of which together shall constitute one and the same Agreement.
(i) Amendments and Waivers. The provisions of this
Agreement may be amended or waived only upon the prior written consent
of the Company and the holders of at seventy-five percent (75%) of the
Registrable Securities.
(j) Governing Law. This Agreement and the rights and
remedies of the parties hereto shall be governed by and construed and
enforced in accordance with the laws of the State of Delaware without
regard to conflicts of laws principles.
IN WITNESS WHEREOF, this Agreement has been executed effective as of
the date first above written.
WHEELS SPORTS GROUP, INC.
By: /s/ Xxxxxx X. Xxxxxxx, Xx.
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Xxxxxx X. Xxxxxxx, Xx.,
Chief Executive Officer
/s/ Xxxxxx X. Xxxxxxx
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Xxxxxx X. Xxxxxxx
/s/ Xxxxxx Xxxx
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Xxxxxx Xxxx
/s/ Xxxxx X. Xxxxxx
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Xxxxx X. Xxxxxx
/s/ Xxxxxx X. Xxxx
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Xxxxxx X. Xxxx
/s/ Xxxx X. Xxxxxxx
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Xxxx X. Xxxxxxx
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