Stock Purchase Agreement
------------------------
THIS AGREEMENT is entered into as of October 5, 1998, between Riverside
Group, Inc., a Florida corporation (the "Seller"), and Imagine Investments,
Inc., a Delaware corporation ("Purchaser").
Preamble
--------
The Seller owns an aggregate of 4,059,113 shares (the "Seller's Shares") of
the common stock, $.01 par value per share ("Wickes Common Stock"), of Wickes
Inc. ("Wickes").
The parties hereto desire to effect the following transactions, on the
terms hereof:
a. The sale by the Seller of 250,000 of the Seller's Shares (the "Sale
Shares") to the Purchaser.
b. The grant of an option to the Purchaser to acquire up to an additional
750,000 (the "Option Shares") of the Seller's Shares.
c. The grant of a right of first refusal by the Seller to the Purchaser
with respect to up to all of the Seller's Shares other than the Sale
Shares (subject to the limitations set forth herein).
NOW THEREFORE, in consideration of the mutual covenants herein contained
and for other good and valuable consideration hereinafter set forth, the parties
hereto agree as follows:
ARTICLE I
Purchase and Sale and the Option
--------------------------------
Section 1.01 Sale and Purchase of Sale Shares. On the terms and subject
to the conditions of this Agreement, the Seller agrees to transfer and sell the
Sale Shares to the Purchaser, and the Purchaser agrees to purchase such shares
from the Seller, in exchange for an aggregate of $812,500.00, $750,000 of which
shall be payable in cash at closing and the balance of which shall be payable on
or before October 7, 1998.
Section 1.02 The Option. (a) Effective on the Closing Date (as
hereinafter defined), subject to the terms and conditions of this Agreement the
Seller hereby grants to the Purchaser the option to purchase (the "Option") in
whole or in part of the Option Shares in exchange for an exercise price in cash
equal to $3.25 per share. Notwithstanding the foregoing, the Option shall not be
exercisable to the extent that such exercise would cause the Purchaser to be
deemed an Interested Stockholder within the meaning of Section 203 of the
Delaware General Corporation Law (an "Interested Stockholder"), unless, prior to
exercise of the Option the Board of Directors of Wickes approves the Purchaser's
acquiring more than 15% of the outstanding shares of Wickes Common Stock so as
to prevent the Purchaser and its affiliates from becoming an Interested
Stockholder.
(b) The Option may be exercised in whole or in part and from time to time
only by notice given by the Purchaser to the Seller at any time after the
Closing Date and on or before November 4, 1998, except that to the extent that
the Option is not exercisable by virtue of the last sentence of Section 1.02(a)
hereof, the Option may be exercised in whole or in part by notice given by the
Purchaser to the Seller on or before the earlier to occur of (i) October 5, 1999
or (ii) 30 days after the Purchaser has received written notice from the Seller
certifying that the Wickes Board of Directors has approved the Purchaser and its
affiliates purchasing more than 15% of the outstanding Wickes Common Stock so
that the Purchaser will not be deemed an Interested Stockholder. The Seller
agrees to use its best efforts to cause Wickes' Board of Directors to approve
the matter referred to in clause (ii) of the preceding sentence. If on November
4, 1998, the Purchaser has not exercised the Option as to at least 200,000
shares, the Seller shall have the option to cause the Purchaser to be obligated
to purchase the number of the Option shares equal to the difference between
200,000 shares and the number of Option Shares as to which the Option shall have
previously been exercised. This "put" option (the "Put Option") may be
exercised by the Seller at any time after November 4 and on or before November
14, 1998. The purchase and sale of the Option Shares pursuant to the Option
and/or the Put Option shall take place at the offices of the Seller's counsel on
the tenth day (or sooner at the Purchaser's option) after the date of such
notice (the "Option Closing Date").
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Section 1.03 Closing. If this Agreement shall not have been terminated
pursuant to Section 7.03 hereof, the sale and purchase of the Sale Shares, shall
take place at a closing (the "Closing") to be held at the offices of the
Seller's counsel on October 5, 1998 or at such other time and place as the
parties hereto shall mutually agree. The time of Closing is referred to herein
as the "Closing Date." At the Closing,
i. The Seller will deliver to the Purchaser certificates representing the
Sale Shares, duly endorsed for transfer (with medallion or other
reasonably acceptable signature guarantee), with all transfer and
other taxes paid, free and clear of all liens, encumbrances and
claims.
ii. The Purchaser will deliver to the Seller the cash consideration
described in Section 1.01 hereof.
ARTICLE II
Representations and Warranties of the Seller
--------------------------------------------
The Seller hereby jointly and severally makes the following representations
and warranties to the Purchaser:
Section 2.01 Organization, Power, etc. The Seller is a corporation duly
formed, validly existing and in good standing under the laws of the State of
Florida and has all requisite power and authority to execute, deliver and
perform this Agreement and all other documents and agreements contemplated
hereby to be executed by it (collectively, the "Seller's Documents"). The
execution, delivery and performance of the Seller's Documents by the Seller has
been duly authorized by all requisite action on behalf of the Seller, and no
other action is required for such execution, delivery and performance. The
agreements of the Seller contained in the Seller's Documents constitute and will
constitute valid and legally binding obligations of the Seller enforceable in
accordance with their respective terms. The Seller owns all of the Seller's
Shares.
Section 2.02 Conflicts. The execution and delivery of the Seller's
Documents by the Seller and the consummation of the
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transactions contemplated thereby in accordance with the terms thereof, do not
and will not violate any existing provision of any law or violate any existing
term or provision of any order, writ, judgment, injunction or decree of any
court or any other governmental department, commission, board, bureau, agency or
instrumentality applicable to the Seller or conflict with or result in a breach
of any of the terms, conditions, or provisions of the organizational documents
of the Seller or any agreement, instrument or right to which it or (on the date
hereof) Wickes is a party or by which any of its or (on the date hereof) Wickes'
assets are bound, or constitute an event that might permit an early termination
of or acceleration under any document or instrument applicable, or binding on,
the Seller or any of its assets, or on (on the date hereof) Wickes or any of its
assets, or otherwise adversely affect the Seller or Wickes.
Section 2.03 Consents. The execution, delivery and performance of the
Seller's Documents by the Seller and the performance of its obligations
thereunder do not require any consent or approval of, or action or filing with,
or notice to, any corporation or any person, firm or governmental department,
commission, board, bureau, agency or instrumentality.
Section 2.04 Ownership of Shares. Except for (i) a pledge of 1,824,682
shares of Wickes Common Stock (which do not include the Sale Shares or the
Option Shares), and a requirement to pledge additional shares under certain
circumstances, to American Founders Life Insurance Company pursuant to that
certain pledge agreement dated as of June 6, 1996, as amended (the "AFL Pledge
Agreement"), and (ii) a pledge of 125,000 shares of Wickes Common Stock (which
do not include the Sale Shares or the Option Shares) to Liberty Savings Bank,
the Seller owns the Seller's Shares, beneficially and of record, free and clear
of all liens, charges, security interests and other encumbrances and of claims
or possible claims, and of any options or rights to purchase, of any
corporation, person or firm, and none of such shares is the subject of any
agreement other than this Agreement and the AFL Pledge Agreement under which any
such lien, charge, security interest, encumbrance or claim might arise.
Section 2.05 Outstanding Shares. As of September 30, 1998, there were
8,202,264 shares of Wickes Common Stock outstanding. All of the Seller's Shares
are approved for quotation on NASDAQ.
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Wickes has not adopted a "poison pill" or similar shareholder rights plan.
Section 2.06 Wickes Commission Filings. The Seller has made available to
the Purchaser a true and complete copy of the reports and filings made by Wickes
since January 1, 1998 with the Securities and Exchange Commission (the
"Commission"). The Commission Filings complied in all material respects with the
laws and rules and regulations of the Commission pursuant to which they were
filed by Wickes. The Commission Filings do not include any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading.
Section 2.07 Restatement of Representations. Each of the representations
and warranties contained in Sections 2.01, 2.02 or 2.03 hereof shall be deemed
to be restated as of the Closing of the purchase by the Purchaser of the Sale
Shares, the Option Shares and the Seller's Shares pursuant to Article IV hereof
and shall be true and correct on each of such closing dates just as if made on
each such date.
ARTICLE III
Representations and Warranties of the Purchaser
-----------------------------------------------
The Purchaser hereby makes the following representations and warranties to
the Seller:
Section 3.01 Organization, Power, etc. The Purchaser is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of Delaware and has all requisite power and authority to execute, deliver
and perform this Agreement and the agreements and documents contemplated hereby
to be executed by it (collectively, the "Purchaser's Documents"). The execution,
delivery and performance of the Purchaser's Documents by the Purchaser have been
duly authorized by all requisite corporate action on behalf of the Purchaser,
and no other corporate action is required for such execution, delivery and
performance. The agreements of the Purchaser contained in the Purchaser's
Documents constitute or will constitute valid and legally binding obligations of
the Purchaser enforceable in accordance with their respective terms.
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Section 3.02 Conflicts. The execution and delivery of the Purchaser's
Documents by the Purchaser and the consummation of the transactions contemplated
thereby in accordance with the terms thereof, will not violate any existing
provision of any law or violate any existing term or provision of any order,
writ, judgment, injunction or decree of any court or any other governmental
department, commission, board, bureau, agency or instrumentality applicable to
the Purchaser or conflict with or result in a breach of any of the terms,
conditions, or provisions of the Articles of Incorporation, Bylaws or other
organizational documents of the Purchaser or any agreement, instrument or right
to which it is a party or by which any of its assets are bound, or constitute an
event that might permit an early termination of or acceleration under any
document or instrument applicable, or binding on, the Purchaser or any of its
assets, or otherwise adversely affect the Purchaser.
Section 3.03 Consents. The execution and delivery of the Purchaser's
Documents by the Purchaser and the performance of its obligations thereunder do
not require any consent or approval of, or action or filing with, or notice to,
any corporation or any person, firm or governmental department, commission,
board, bureau, agency or instrumentality.
Section 3.04 Securities Laws. The Purchaser understands that the purchase
and sale of the Seller's Shares hereunder will not be registered under the
Securities Act of 1933, as amended (the "1933 Act"), or any securities act of
any state or other jurisdiction, in reliance on registration exemptions under
such statutes. The Seller's Shares will be acquired solely for the Purchaser's
own account, for investment. The Purchaser will not sell or otherwise transfer
the Seller's Shares except in accordance with the 1933 Act and all other
applicable securities laws, and prior to any transfer (other than pursuant to an
effective registration statement under the 1933 Act or otherwise in compliance
with applicable law) the Purchaser will furnish to Wickes a written opinion of
counsel in form and substance reasonably satisfactory to Wickes to the effect
that registration under the 1933 Act is not required or that all requisite
action has been taken under all applicable securities laws in connection with
the proposed transfer. The Purchaser acknowledges its understanding that the
Seller's Shares will bear an appropriate legend with respect to the foregoing
matters until Wickes's counsel reasonably determines that the legend is no
longer
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advisable. The Purchaser also acknowledges that appropriate stop transfer
orders will be noted on Wickes' records with respect to the Seller's Shares.
The Purchaser constitutes an "accredited investor" within the meaning of
Regulation D promulgated under the 1933 Act.
ARTICLE IV
Other Agreements
----------------
Section 4.01 Right of First Refusal. (a) The following terms have the
following meanings, as used in this Article IV:
"Dispose" means to effect a Disposition.
"Disposition" means any voluntary sale, transfer, assignment, pledge,
hypothecation, gift, bequest, or other disposition of any of the Seller's
Shares (other than the Sale Shares).
"Offer" shall have the meaning set forth in Section 4.01(c) hereof.
"Permitted Transferee" means any shareholder or affiliate of the
Seller.
"Permitted Dispositions" means (i) a Disposition to a Permitted
Transferee, provided that such Permitted Transferee agrees to the terms of
this Article IV by a writing reasonably acceptable in form and substance to
the Purchaser, (ii) any existing pledge or security interest and any
Disposition by or to any holder thereof upon foreclosure thereof (provided,
that the Seller shall give the Purchaser prompt notice of any acceleration
of any indebtedness so secured and use its best efforts upon request by the
Purchaser to permit the Purchaser to acquire the secured indebtedness),
(iii) any Disposition required by the AFL Pledge Agreement, (iv) any bona
fide pledge to a lender in connection with a bona fide loan, and any
Disposition by or to such lender after default thereunder, but such pledge
must be subject to the Purchaser's right of first refusal under this
Article IV after a default under such pledge pursuant to an agreement
between the pledgee and the Purchaser reasonably satisfactory to the
Purchaser, (v) a Disposition pursuant to a merger or other business
combination
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transaction, (vi) Dispositions pursuant to Rule 144 under the 1933 Act, and
(vii) Disposition upon exercise of the Option; provided, that Dispositions
under clauses (iv) and (vi) in excess of 1,000,000 shares in the aggregate
shall not be Permitted Dispositions.
(b) Prior to the date eighteen months after the date hereof, the Seller
shall not effect any Disposition (other than a Permitted Disposition), except in
compliance with the provisions of this Article IV.
(c) Prior to making any Disposition (other than a Permitted Disposition),
the Seller shall first make an offer (an "Offer") to Dispose of all of the
Wickes Shares of which it desires to Dispose to the Purchaser. Such offer shall
specify in reasonable detail the nature of the transaction in which the Seller
wishes to Dispose of such shares, including without limitation the number of
shares, the name or names of other parties to any proposed transaction, and the
price per share in dollars and terms.
(d) If the Purchaser accepts an Offer within 15 days of the Offer (and
which it may do so as to any or all of the Shares subject to the Offer), the
Seller shall be obligated to Dispose of such shares described in the Offer to
the Purchaser, free and clear of all liens, pledges, encumbrances and claims,
and the Purchaser shall be obligated to acquire such shares from the Seller, on
the terms and conditions set forth in the Offer. Such sale and purchase shall
take place at the offices of the Seller on the tenth day after the Purchaser
accepts the Offer (or sooner at the Purchaser's election).
(e) If the Purchaser does not accept an Offer within 15 days of the Offer,
the Seller may at any time between the 16th day and the close of business on the
106th day after the Offer make the Disposition described in the Offer, but only
on the specific terms and conditions set forth therein. If the Seller does not
effect such Disposition within such time, the Seller shall be obligated once
again to comply with the provisions of this Article IV before effecting a
Disposition (other than a Permitted Disposition).
(f) Notwithstanding anything elsewhere contained herein, the Purchaser
shall not be permitted to exercise the right of first refused set forth in this
Section 4.01 to the extent that such
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exercise would cause any Person or Group (as defined in Wickes' indenture
related to its 11 5/8% Senior subordinated Note due 2003 (the "Wickes
Indenture")), other than Riverside (as defined in the Wickes Indenture), to
beneficially own (within the meaning of Rule 13d-3 under the Securities Exchange
Act of 1934, as amended) any securities of Wickes such that, as a result of such
exercise, such Person or Group beneficially owns, directly or indirectly, at
least 30% of Wickes' then outstanding voting securities entitled to vote on a
regular basis for a majority of the Board of Directors or other equivalent
governing body thereof, unless at such time Riverside beneficially owns an
amount of voting securities greater than the amount so held by such Person or
Group.
Section 4.02 Agreement with Respect to Wickes. The Seller does not intend
at any time within the next three years to cause Wickes to issue any share of,
or any securities or rights convertible into or exchangeable or exercisable for,
Wickes' voting capital stock, other than pursuant to existing or future
incentive, compensation, benefit or similar plans and programs.
Section 4.03 Assignment of Registration Rights. Riverside hereby assigns
its rights with respect to the Sale Shares and (upon their purchase also the
Option Shares and any shares purchased under Article IV hereof) under that
certain registration rights agreement dated September 2, 1993 between Riverside
and Wickes with respect to such shares.
Section 4.04 Securities Filing. The Seller shall, and shall use its best
efforts to cause Wickes to, coordinate the various filings with the Commission
necessary or appropriate with respect to the subject matter hereof and related
matters.
Section 4.05 Registration Rights. Upon request by the Purchaser, the
Seller shall use its best efforts to cause Wickes to effect the registration of
the Seller's Shares held by the Purchaser under the 1933 Act and "blue sky"
laws.
ARTICLE V
Closing Conditions Precedent
----------------------------
The obligation of the Purchaser and the Seller to consummate the
transactions contemplated hereby on the Closing Date and each subsequent closing
contemplated by this Agreement is subject to
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satisfaction, or waiver by them, at or prior to the Closing, of each of the
following conditions precedent:
Section 5.01 Performance of Agreements. The Purchaser (in the case of the
Seller) and the Seller (in the case of the Purchaser) shall have performed and
complied with all of its or their agreements, covenants and obligations
hereunder.
Section 5.02 Representation True. All of the representations and
warranties made by the Purchaser (in the case of the Seller) and the Seller (in
the case of the Purchaser) shall be true and accurate as of the Closing Date
with the same force and effect as though made on and as of the Closing Date.
Section 5.03 Board Matters. The Seller shall have created two vacancies
on its Board of Directors, and ▇▇▇▇▇▇ ▇. ▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇ shall have been
elected to fill such vacancies.
Section 5.04 Proceedings and Documents. All proceedings taken in
connection with the transactions contemplated hereby and all documents incident
to such transactions shall be reasonably satisfactory in form and substance to
the party and its counsel; the party shall have received all documents that it
or its counsel may have reasonably requested in connection with such
transaction, in form and substance satisfactory to the party. The Purchaser
shall have received the opinion of Seller's counsel in the form of Exhibit A
hereto.
ARTICLE VI
Survival of Representations and
-------------------------------
Warranties; Indemnification
---------------------------
Section 6.01 Survival. All representations and warranties contained in
this Agreement or any certificate, exhibit, financial statement or other
document or instrument furnished pursuant to the express terms of this Agreement
to the Purchaser by or on behalf of the Seller or to the Seller by or on behalf
of the Purchaser, in
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connection with the transactions contemplated hereby shall survive any
investigation made at any time with respect to any of the foregoing and shall
survive the execution, delivery and performance of this Agreement. All
certificates, exhibits, financial statements or other documents or instruments
furnished to the parties hereto pursuant to this Agreement by or on behalf of
another party hereto shall constitute representations and warranties hereunder.
Section 6.02 Indemnification. The Purchaser agrees to indemnify and hold
harmless the Seller, and the Seller agree to indemnify and hold harmless the
Purchaser, against, and in respect of, liabilities, losses, claims, costs or
damages (including attorneys' fees incurred in connection with any of the
foregoing) resulting from or arising out of (i) any breach of any representation
or warranty made by it herein and (ii) any failure to perform any of their
obligations or agreements hereunder.
ARTICLE VII
Miscellaneous
-------------
Section 7.01 Expenses. Each of the parties to this Agreement shall pay
its own expenses in connection with the transactions contemplated hereby, except
that the Seller shall reimburse the Purchaser for its reasonable attorney's fees
and costs incurred in connection with the transactions contemplated hereby. The
Purchaser may withhold from the purchase price for the Sale Shares $20,000 to
apply towards such fees and costs with any unused balance to be remitted to the
Seller.
Section 7.02 Brokers. The parties hereto each represent to the others
that no broker was involved in the transactions contemplated hereby and that
there is no obligation for any sales commission due to any party.
Section 7.03 Termination. This Agreement may be terminated prior to the
Closing at any time after the close of business on October 15, 1998 by any party
who shall not have defaulted in its obligations hereunder on such date if any of
the conditions to such party's obligations set forth in Article V hereof shall
not have been met at the time of such termination.
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Section 7.04 Effect of Termination. If this Agreement is terminated it
shall no longer be of any force or effect and there shall be no further
liability on the part of any party in respect of the subject matter hereof,
except for a breach of any covenant or obligation hereunder.
Section 7.05 Waiver. The terms and provisions of this Agreement may be
waived at any time by the party which is entitled to the benefit thereof, but
only by a written instrument executed by the party waiving compliance.
Section 7.06 Amendment, etc. Anything herein or elsewhere to the
contrary notwithstanding, to the extent permitted by law this Agreement may be
amended or supplemented at any time, but only by a written instrument executed
by the Purchaser and the Seller.
Section 7.07 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given (i) upon being
delivered personally (or by confirmed telefax or other electronic delivery
method); or (ii) upon receipt if mailed by certified mail, return receipt
requested, postage prepaid; or (iii) upon receipt if sent by overnight delivery
service providing delivery confirmation, in each case to the parties at the
following address (or at such other address for a party as shall be specified by
like notice):
If to the Seller, to:
Riverside Group, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: J. ▇▇▇▇▇▇ ▇▇▇▇▇▇
FAX: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Holland & Knight LLP
One Independent Drive, Suite 2000
Post Office Box 1559
Jacksonville, Florida 32201-1559 (32202 for
street address)
Attention: T. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
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FAX: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Purchaser:
Imagine Investments, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇, General Counsel
With a copy to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Section 7.08 Miscellaneous. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. This Agreement
supersedes all prior negotiations and agreements (written or oral) among the
parties with respect to the subject matter covered hereby and constitutes the
entire understanding among the parties hereto. This Agreement shall inure to
the benefit of and be binding upon the parties named herein and their respective
successors. This Agreement may not be assigned by Seller, but Purchaser may
assign any or all of its rights under this Agreement to a person who makes to
the Seller the representations and warranties contained in Article III hereof,
and nothing in this Agreement, express or implied, is intended to confer upon
any other person (other than an assignee of Purchaser), any rights or remedies
under or by reason of this Agreement. The section headings contained in this
Agreement are for convenience only and shall not control or affect the meaning
or construction of any of the provisions of this Agreement. This Agreement
shall be construed and enforced in accordance with the laws of the State of
Florida, without giving effect to the laws thereof concerning conflicts of law.
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IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed on its behalf, by an officer thereunto duly authorized, all as of
the date first above written.
IMAGINE INVESTMENTS, INC.
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: President
"Purchaser"
RIVERSIDE GROUP, INC.
By J. ▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------
Name: J. ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: President
"Seller"
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