TENTH ADDITIONAL ISSUANCE AGREEMENT AND WAIVER
EXHIBIT
99.20
AND
WAIVER
This
Tenth Additional Issuance Agreement (this “Agreement”) is made pursuant
to that certain Securities Purchase Agreement, dated as of June 30, 2006, as
amended (the “Purchase Agreement”), by and between Arkados Group, Inc.
(formerly ▇▇▇▇▇▇.▇▇▇, Inc., the “Company”), ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Family
Limited Partnership (“Typaldos LP”), ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, individually
(“Typaldos”), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (“▇▇▇▇▇▇”), ▇▇▇▇▇▇▇ Vendome
(“Vendome” and, together with Typaldos LP, Typaldos and ▇▇▇▇▇▇, the
“New Purchasers”), Bushido Capital Master Fund, LP (“Bushido”),
▇▇▇▇▇▇ Diversified Strategy Master Fund, LLC – Series BUS (“▇▇▇▇▇▇”),
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, individually (“K Typaldos”), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
(“▇▇▇▇▇▇”), ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ (“▇▇▇▇▇▇▇▇▇”) and Crucian
Transition, Inc. (“Crucian”) for the purchase of the Company’s 6% Secured
Convertible Debenture due December 28, 2008 (the “Debenture”) and the
Common Stock purchase warrant issued in connection therewith (the
“Warrant”). This Agreement is dated as of the date it is
executed by the Company. Capitalized terms used and not
otherwise defined herein that are defined in the Purchase Agreement shall have
the meanings given such terms in the Purchase Agreement.
For
good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
1. Issuance
of New Debenture and New Warrants. The Company hereby agrees to issue
against payment to the New Purchasers up to $905,000 (a) debentures of the
Company in the aggregate principal amount of $905,000 (of which up to $50,000
is
a cash investment to be made on or before January 31, 2008
and $855,000 is in lieu of repayment of certain advances made to the
Company) in the amounts set forth on the signature page hereto, which debenture
shall be in the form of Exhibit A attached hereto (a “New
Debentures”) and (b) Warrants to purchase an aggregate of up to 851,765
shares of Common Stock, which warrant shall be in the form of Exhibit B
attached hereto (the “New Warrants”). The total purchase price
to the New Purchaser for the purchase of the New Debenture and the New Warrants
is the principal amount of the Debentures issued (the “New Subscription
Amount”). The Company shall promptly deliver to the New
Purchasers the New Debentures the and the New Warrants. The Company
hereby acknowledges its receipt of the New Subscription Amounts from each of
the
New Purchasers on the dates set forth on the signature page hereto.
2. Documents. The
rights and obligations of the New Purchasers and of the Company with respect
to
the New Debentures, the New Warrants and the shares of Common Stock issuable
under the New Debentures and New Warrants (the “New Underlying Shares”)
shall be identical in all respects to the rights and obligations of such New
Purchaser and of the Company with respect to the Debentures, the Warrants and
the Underlying Shares issued and issuable pursuant to the Purchase
Agreement. Any rights of a New Purchaser or covenants of the Company
which are dependant on such New Purchaser holding securities of the Company
or
which are determined in magnitude by such New Purchaser’s purchase of securities
pursuant to the Purchase Agreement shall be
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deemed
to
include any securities purchased or issuable hereunder. The Purchase Agreement
is hereby amended so that the term “Debentures” includes the New Debenture
issued hereunder and “Underlying Shares” includes the New Underlying
Shares. The Registration Rights Agreement entered into in connection
with the Purchase Agreement is hereby amended so that the term “Registrable
Securities” includes in the calculation thereof the New Underlying
Shares. The Security Agreement is hereby amended so that the term
“Debentures” includes the New Debenture. The Inter-Creditor and
Waiver Agreement, dated as of June 30, 2006, is hereby amended so that the
term
“New Creditors” includes the New Purchaser and the term “New Debentures” (as
defined in the Inter-Creditor and Waiver Agreement) includes the New Debentures
(as defined herein).
3.
Waivers and Amendments.
(a) Each
Purchaser hereby waives compliance by the Company with the obligations imposed
by Section 4.13 of the Purchase Agreement regarding such Purchaser’s right to
participate in the purchase of the New Debenture, as well as any advance made
to
the Company prior to the Closing that is either repaid from the proceeds or
is
given as full or partial consideration by the New Purchasers under this
Agreement. This Waiver shall not effect the rights set forth in
Section 4.13 with respect to future financing.
(b) Each
Purchaser hereby waives the Company’s compliance with the restrictions imposed
by Section 4.14 of the Purchase Agreement with respect to (i) the issuance
of
the New Debentures and New Warrants under this Additional Issuance Agreement,
and acknowledges that issuances of additional New Debentures and New Warrants
will not constitute transactions which result in an adjustment of the respective
conversion or exercise prices of the Debentures or
Warrants. Notwithstanding the foregoing, this Waiver shall
not have any effect and the Company expressly acknowledges that its proposed
issuance of shares of common stock, warrants and any future issuances of
securities shall continue to be subject to the anti-dilution provisions of
the
Debentures and Warrants.
(c) The
“Termination Date” of all common stock purchase warrants held by each Holder
(whether Short Term, Long Term or otherwise) (collectively, the
“Warrants”) shall be extended to the later of the date set forth therein as the
“Termination Date” and December 28, 2012 and the Warrants shall be exercisable
immediately. Additionally, the Warrants are hereby amended such that
they are exercisable via the “cashless exercise” provisions of Section 2(c) at
any time notwithstanding whether or not there then exists and effective
registration statement. As a result of the forgoing, the Short and
Long Term warrants are hereafter identical and represent a single class of
securities and the Company acknowledges that, for purposes of Rule 144, the
date
that the holding period begins to run for Warrant Shares is the date that such
securities were nnpurchased by the Holder.
(d) Any
holder may request from the Company, and the Company shall deliver to the Holder
within 5 Trading Days, an amended and restated Debenture or Warrant reflecting
the terms of this Amendment.
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4.
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Representations
and Warranties of the Company. The Company hereby makes to
the New Purchaser the following representations and
warranties:
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(a) Authorization;
Enforcement. The Company has the requisite corporate power and
authority to enter into and to consummate the transactions contemplated by
this
Agreement and otherwise to carry out its obligations hereunder and
thereunder. The execution and delivery of this Agreement by the
Company and the consummation by the Company of the transactions contemplated
hereby have been duly authorized by all necessary action on the part of the
Company and no further action is required by the Company, its board of directors
or its stockholders in connection therewith other than in connection with the
Required Approvals. This Agreement has been duly executed by the
Company and, when delivered in accordance with the terms hereof, will constitute
the valid and binding obligation of the Company enforceable against the Company
in accordance with its terms, except (i) as limited by general equitable
principles and applicable bankruptcy, insolvency, reorganization, moratorium
and
other laws of general application affecting enforcement of creditors’ rights
generally, (ii) as limited by laws relating to the availability of specific
performance, injunctive relief or other equitable remedies and (iii) insofar
as
indemnification and contribution provisions may be limited by applicable
law.
(b) No
Conflicts. The execution, delivery and performance of this
Agreement by the Company and the consummation by the Company of the transactions
contemplated hereby do not and will not: (i) conflict with or violate any
provision of the Company’s certificate or articles of incorporation, bylaws or
other organizational or charter documents; or (ii) conflict with, or constitute
a default (or an event that with notice or lapse of time or both would become
a
default) under, result in the creation of any Lien (except as contemplated
by
the Security Documents) upon any of the properties or assets of the Company
in
connection with, or give to others any rights of termination, amendment,
acceleration or cancellation (with or without notice, lapse of time or both)
of,
any material agreement, credit facility, debt or other material instrument
(evidencing Company debt or otherwise) or other material understanding to which
such Company is a party or by which any property or asset of the Company is
bound or affected; or (iii) subject to the Required Approvals, conflict with
or
result in a violation of any law, rule, regulation, order, judgment, injunction,
decree or other restriction of any court or governmental authority to which
the
Company is subject (including federal and state securities laws and
regulations), or by which any property or asset of the Company is bound or
affected, except, in the case of each of clauses (ii) and (iii), such as could
not have or reasonably be expected to result in a Material Adverse
Effect.
(c) Issuance
of the New Debenture. The New Debenture and New Warrants are duly
authorized and, upon the execution of this Agreement by a New Purchaser, will
be
duly and validly issued, fully paid and nonassessable, free and clear of all
Liens imposed by the Company other than restrictions on transfer
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provided
for in the Transaction Documents. The New Underlying Shares, when
issued in accordance with the terms of the New Debenture and New Warrants,
will
be validly issued, fully paid and nonassessable, free and clear of all Liens
imposed by the Company. The Company has reserved from its duly
authorized capital stock a number of shares of Common Stock for issuance of
the
New Underlying Shares at least equal to the Required Minimum on the date
hereof.
(d) Equal
Consideration. Except as set forth in this Agreement, no
consideration has been offered or paid to any person to amend or consent to
a
waiver, modification, forbearance or otherwise of any provision of any of the
Transaction Documents.
(e) Affirmation
of Prior Representations and Warranties. The Company hereby
represents and warrants to each New Purchaser that the Company’s representations
and warranties listed in Section 3.1 of the Purchase Agreement are true and
correct as of the date hereof, provided that the Company’s representation in
Section 3.1(h) of the Purchase Agreement is qualified by the Company’s late
filing of the 2006 Form 10-KSB on October 10, 2006.
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5.
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Representations
and Warranties of the New Purchaser. The New Purchaser
hereby represents and warrants as of the date hereof to the Company
as
follows:
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(a) Authority. The
execution, delivery and performance by such New Purchaser of the transactions
contemplated by this Agreement have been duly authorized by all necessary
corporate or similar action on the part of such New Purchaser. This
Agreement has been duly executed by such New Purchaser and, when delivered
by
such Purchaser in accordance with the terms hereof, will constitute the valid
and legally binding obligation of such New Purchaser, enforceable against it
in
accordance with its terms, except (i) as limited by general equitable principles
and applicable bankruptcy, insolvency, reorganization, moratorium and other
laws
of general application affecting enforcement of creditors’ rights generally,
(ii) as limited by laws relating to the availability of specific performance,
injunctive relief or other equitable remedies and (iii) insofar as
indemnification and contribution provisions may be limited by applicable
law.
(b) Own
Account. Such New Purchaser (i) understands that the New
Debentures and New Warrants are “restricted securities” and have not been
registered under the Securities Act or any applicable state securities law,
(ii)
is acquiring the Additional Debenture and New Warrants as principal for its
own
account and not with a view to or for distributing or reselling such Additional
Debentures or New Warrants or any part thereof in violation of the Securities
Act or any applicable state securities law, (iii) has no present intention
of
distributing any of such Securities in violation of the Securities Act or any
applicable state securities law and (iv) has no arrangement or understanding
with any other persons regarding the distribution of such New Debentures and
New
Warrants (this representation and warranty not limiting such New Purchaser’s
right to sell the New Underlying Shares pursuant to the Registration Statement
or otherwise in
4
compliance
with applicable federal and state securities laws) in violation of the
Securities Act or any applicable state securities law. Such New
Purchaser is acquiring the Additional Debentures and New Warrants hereunder
in
the ordinary course of its business. Such New Purchaser does not have any
agreement or understanding, directly or indirectly, with any Person to
distribute any of the New Debenture, New Warrants or New Underlying
Shares.
(c) Purchaser
Status. Such New Purchaser is an “accredited investor” as defined
in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities
Act. Such New Purchaser is not required to be registered as a
broker-dealer under Section 15 of the Exchange Act.
(d) General
Solicitation. Such New Purchaser is not purchasing the New
Debenture or New Warrants as a result of any advertisement, article, notice
or
other communication regarding the New Debenture or New Warrants published in
any
newspaper, magazine or similar media or broadcast over television or radio
or
presented at any seminar or any other general solicitation or general
advertisement.
(e) Affirmation
of Prior Representations and Warranties. Such New Purchaser
hereby represents and warrants to the Company that its representations and
warranties listed in Section 3.2 of the Purchase Agreement are true and correct
as of the date hereof.
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6.
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Public
Disclosure. The Company shall, on the Trading Day following
the date of payment of the New Subscription Amounts, issue a Current
Report on Form 8-K, reasonably acceptable to the New Purchaser, disclosing
the material terms of the transactions contemplated hereby and attaching
this Agreement as an exhibit thereto. The Company shall consult
with the New Purchaser in issuing any other press releases with respect
to
the transactions contemplated
hereby.
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7.
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Other
Purchaser Consent. The other Purchasers hereby consent to
the execution by the Company of this Agreement and the issuance of
the New
Debenture and New Warrants to the New
Purchaser.
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8.
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Effect
on Transaction Documents. Except as expressly set forth
above, all of the terms and conditions of the Transaction Documents
shall
continue in full force and effect after the execution of this Agreement
and shall not be in any way changed, modified or superseded by the
terms
set forth herein, including, but not limited to, any other obligations
the
Company may have to the New Purchaser under the Transaction
Documents. Notwithstanding the foregoing, this Agreement shall
be deemed for all purposes as an amendment to any Transaction Document
as
required to serve the purposes hereof, and in the event of any conflict
between the terms and provisions of the Debentures, the Registration
Rights Agreement or any other Transaction Document, on the one hand,
and
the terms and provisions of this Agreement, on the other hand, the
terms
and provisions of this Agreement shall
prevail.
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5
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9.
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Expenses. The
Company agrees to pay to each New Purchaser upon demand any and all
reasonable out-of-pocket costs or expenses (including, without limitation,
reasonable legal fees and disbursements) incurred or sustained by
such New
Purchaser, in connection with the preparation of this Agreement and
related matters.
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10.
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Amendments
and Waivers. The provisions of this Agreement, including
the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions
hereof may not be given, unless the same shall be in writing and
signed by
the Company and each New Purchaser.
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11.
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Notices. Any
and all notices or other communications or deliveries required or
permitted to be provided hereunder shall be delivered as set forth
in the
Purchase Agreement.
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12.
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Successors
and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors and permitted assigns of each
of the
parties and shall inure to the benefit of each Purchaser. The Company
may
not assign (except by merger) its rights or obligations hereunder
without
the prior written consent of all of the New Purchasers of the
then-outstanding Securities. Each New Purchaser may assign
their respective rights hereunder in the manner and to the Persons
as
permitted under the Purchase
Agreement.
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13.
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Execution
and Counterparts. This Agreement may be executed in two or
more counterparts, all of which when taken together shall be considered
one and the same agreement and shall become effective when counterparts
have been signed by each party and delivered to the other party,
it being
understood that both parties need not sign the same
counterpart. In the event that any signature is delivered by
facsimile transmission or by e-mail delivery of a “.pdf” format data file,
such signature shall create a valid and binding obligation of the
party
executing (or on whose behalf such signature is executed) with the
same
force and effect as if such facsimile or “.pdf” signature page were an
original thereof.
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14.
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Governing
Law. All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be determined
in
accordance with the provisions of the Purchase
Agreement.
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15.
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Severability. If
any term, provision, covenant or restriction of this Agreement is
held by
a court of competent jurisdiction to be invalid, illegal, void or
unenforceable, the remainder of the terms, provisions, covenants
and
restrictions set forth herein shall remain in full force and effect
and
shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their commercially reasonable efforts to find and
employ
an alternative means to achieve the same or substantially the same
result
as that contemplated by such
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term,
provision, covenant or restriction. It is hereby stipulated and declared
to be
the intention of the parties that they would have executed the remaining
terms,
provisions, covenants and restrictions without including any of such that
may be
hereafter declared invalid, illegal, void or unenforceable.
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16.
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Headings. The
headings in this Agreement are for convenience only, do not constitute
a
part of the Agreement and shall not be deemed to limit or affect
any of
the provisions hereof.
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[SIGNATURE
PAGE FOLLOWS]
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Executed
as of December 15, 2007 by the undersigned.
By: /s/
▇▇▇▇▇▇▇
▇▇▇▇-▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇▇▇▇-▇▇▇▇▇
Title: Chief Financial Officer
▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ Family Limited Partnership
Signature
of Authorized signatory for Typaldos LP: /s/ ▇▇▇▇▇
▇▇▇▇▇▇▇▇
Name
of
Authorized Signatory: ▇▇▇▇▇
▇▇▇▇▇▇▇▇
Title
of
Authorized Signatory: Managing
Partner
Amount
of
Debenture: $835,000
Warrants: 785,883
Payments:
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Date
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Amount
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July
10, 2007
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$ 215,000
|
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August
3, 2007
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150,000
|
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August
31, 2007
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50,000
|
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September
28, 2007
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100,000
|
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October
16, 2007
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60,000
|
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October
30, 2007
|
90,000
|
|
November
7, 2007
|
70,000
|
|
November
19, 2007
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50,000
|
|
Pending
|
50,000
|
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TOTAL
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$ 835,000
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▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇
Signature
of Authorized signatory for Typaldos: /s/ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇
Name
of
Authorized Signatory: ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇
Title
of
Authorized Signatory:
N/A
8
▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇
Signature
of Authorized signatory for ▇▇▇▇▇▇: /s/ ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇
Name
of
Authorized Signatory: ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇
Title
of
Authorized Signatory:
N/A
Amount
of
Debenture: $ 50,000
Warrants: 47,059
Payments:
$50,000 on August 27, 2007
Gennaro
Vendome
Signature
of Authorized signatory for Vendome: /s/ Gennaro
Vendome
Name
of
Authorized Signatory: Gennaro
Vendome
Title
of
Authorized Signatory:
N/A
Amount
of
Debenture: $ 20,000
Warrants: 18,824
Payments:
$ 20,000 on August 27, 2007
As
to
Sections 1, 3 and 7 only:
Bushido
Capital Master Fund, LP
Signature
of Authorized Signatory of Bushido: /s/ ▇▇▇▇▇▇ ▇.
▇▇▇▇▇
Name
of
Authorized Signatory: ▇▇▇▇▇▇ ▇.
▇▇▇▇▇
Title
of
Authorized Signatory: Partner, Bushido Capital Partners, Ltd., its General
Partner
[SIGNATURE
PAGE CONTINUES]
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▇▇▇▇▇▇
Diversified Strategy Master Fund, LLC – Series BUS
Signature
of Authorized Signatory of ▇▇▇▇▇▇: /s/ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇
Name
of
Authorized Signatory: ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇
Title
of
Authorized Signatory:
Attorney-In-Fact
[SIGNATURE
PAGES CONTINUE]
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▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇:
/s/
▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇:
/s/
▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇
▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇:
/s/
▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇
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Crucian
Transition, Inc.
Signature
of Authorized signatory for Crucian: /s/ ▇▇▇▇▇▇▇▇
▇.
▇▇▇▇▇▇
Name
of
Authorized Signatory: ▇▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇
Title
of
Authorized Signatory:
President
[LAST
SIGNATURE PAGE]
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