Document:

exv10w1

 

EXHIBIT 10.1

***
Indicates omitted material that is the subject of a confidential
request filed separately with the Commission

SECOND AMENDMENT TO SUPPLY AGREEMENT

          This Second Amendment amends that certain Supply Agreement, dated as of November 3, 2000, and
amended previously as of April 9, 2004, between Carrington Laboratories, Inc. (“Carrington”) and
Medline Industries, Inc. (“Medline”) (the “Supply Agreement”). This Amendment is effective as of
August 14, 2007.

          WHEREAS, the parties desire to extend the Term of the Supply Agreement and to make other
amendments to such agreements as specified herein.

          NOW, THEREFORE, the parties agree as follows:

          1. Limited Amendment; Interpretation. The Supply Agreement is not amended except as
specified in this Amendment. Capitalized terms in this Amendment shall have the same meanings as
in the Supply Agreement, as the context may require.

          2. Extended Term. Specifically amending Section 7 of the Supply Agreement, the Term
shall be extended through and including November 30, 2009.

          3. Prices. Specifically amending Section 1.4 of the Supply Agreement and Exhibit A
thereto, the prices of the Medline Products shall be as set forth on Exhibit A to this Second
Amendment. Prices may only be modified in the event of change in petroleum raw material prices,
which such modification must be agreed upon in a writing signed by both parties.

          4. Purchase Requirements. Specifically amending Section 1.1 of the Supply Agreement,
the phrase “the majority of Medline Products” shall be replaced with “60% of Medline’s requirements
for the Medline Products identified on Exhibit A, provided that any order for Medline Products that
is back ordered or delivered late shall count toward satisfaction of the 60% requirement, even if
such order is ultimately filled by a supplier other than Carrington.”

          5. Miscellaneous Terms. Specifically amending any provision in the Supply Agreement
to the contrary: (a) Medline shall pays freight on all orders, except exceeding $5,000; (b)
payment terms are net 30 days.

          6. No Breaches; Release. The parties agree and acknowledge that there are no uncured
material breaches under the Supply Agreement as of the effective date of this Second Amendment.
The parties hereby release each other from any and all liabilities and claims of any kind, other
than liabilities under outstanding or unpaid for orders, whether known or unknown, that may have
arisen or accrued from the relationship between the parties as described in the Supply Agreement,
from the effective date of the first amendment to the Supply Agreement to the effective date of
this Second Amendment. Except as specifically set forth in this Section 6, the parties agree that
no modification or amendment of the Supply Agreement shall be deemed to
have occurred by act, failure to act or waiver of any right by Carrington or Medline, other
than set forth in a writing executed by both parties.

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     IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their duly
authorized representatives.

	 	 	 	 	 	 
	 

	 	CARRINGTON LABORATORIES, INC.	 	 
	 
	 	 	 	 	 
	 

	 	By: 	/s/ Carlton E. Turner
 

	 	 
	 

	 	Name: Carlton E. Turner,
Ph.D., D.Sc.
	 	 
	 

	 	Title:    President & CEO	 	 
	 
	 	 	 	 	 
	 

	 	MEDLINE INDUSTRIES, INC.	 	 
	 
	 	 	 	 	 
	 

	 	By: 	/s/ Jonathan Primer
 

	 	 
	 

	 	Name: Jonathan Primer
	 	 
	 

	 	Title:   President, DMS Division	 	 

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EXHIBIT A

***exv10w1

 

Exhibit 10.1

Limited Liability Company Merger

and

Equity Reallocation Agreement

     This Limited Liability Company Equity Reallocation Agreement (“Agreement”) is entered into as
of July 15, 2007 among those members and officers as listed in Exhibit A.

     In consideration of the mutual promises made and for other good and valuable consideration,
the parties agree as follows:

	1.	 	Definitions

     For purposes of this Agreement, the following terms will have the indicated definitions:

     “Agreement.” This Limited Liability Company Agreement by and between the Members and
Officers.

     “Bankruptcy.” A bankruptcy will be deemed to occur when the LLC files a petition in
bankruptcy, voluntarily takes any advantage of any bankruptcy or insolvency law, is adjudicated a
bankrupt, or, if a petition or an answer is filed proposing the adjudication of the LLC as a
bankrupt, its officers consent to the filing or does not object within 60 days of the filing,
unless the petition or answer was discharged or denied prior. “Bankruptcy” includes chapter
proceedings under the federal bankruptcy or receivership laws and any comparable proceedings under
state law, or any compromise, settlement, composition, workout, or similar arrangement with
creditors, whether or not court supervised.

     “Capital.” Initial equity capital, additional and recontributed capital, and receipts from the
sale, exchange, or other disposition of LLC property out of the ordinary course of business and any
proceeds of financing and refinancing.

     “Cosmerich.” Short for “cosmetic lifestyle enrichment”, Cosmerich refers to an emerging market
that at the moment is difficult to limit, as it includes such enterprises as spas, resorts, cruise
ships, hair salons, barber shops, nail salons, beauty supply stores and more.

     “Loss.” The LLC’s loss arising from the ordinary day-to-day operation of the LLC’s business.

     “Net cash receipts.” All receipts of the LLC net of the items listed in Section 12 and
distributed to the Members and/or Officers.

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     “Officers.” Equity-holding Officers who participate in the daily operation of the LLC.

     “Members.” Equity holders who do not participate in the daily operation of the LLC.

     “LLC.” This Limited Liability Company.

     “Percentage Participation.” The interest of a Member or Officer in the capital, profit or
loss, and net cash receipts of the LLC.

     “Profit.” Net operating receipts derived from the operation of the business, sales in the
ordinary course of business, and receipts from related services and facilities.

Agreement

	2.	 	Formation. This Limited Liability Company is formed pursuant to the laws of the State of
Florida.
	 
	3.	 	Name. The name of the LLC is Innovative Medical & Dental Solutions, LLC, AKA IMDS, LLC.
The LLC may conduct its business under any other names that the Officers select.
	 
	4.	 	Purposes. The purposes of the LLC are the development, sourcing, finding and creating of
products for the practice of medicine and/or dentistry as well as those for the enhancement of
personal grooming and appearance in the spa, personal care, grooming and specialty retail market
spaces, and to carry out the activities that are essential, advisable, or appropriate in
connection with, or incidental to, such business.
	 
	5.	 	Principal Office. The principal office of the LLC will be located at 45 West Crossville Road
Suite 514, Roswell, GA 30075 USA or any other place designated by the Officers.
	 
	6.	 	Merger of and Reallocation of Shares of Existing LLCs. IMDS, LLC is a going concern and is
registered with the Secretary of State of Florida as an LLC and with the Secretary of State of
California as a foreign corporation authorized to operate in California. It is merging with White
Science World Wide, LLC, a limited liability company organized under the laws of the State of
Georgia. The merged companies will operate as a single entity as IMDS, LLC, a Florida Limited
Liability Company.
	 
	7.	 	Member Status and Equity Share in Merged Company
	 
	7.1	 	The Members and Officers hold equity shares in the reformed LLC as follows:

	 	 	 	 	 	 	 
	Member or Officer	 	Equity Share	 	Status	 	 
	George Nelson
	 	42%	 	Officer	 	 
	Ron Topper
	 	20%	 	Officer	 	 

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	Irwin Zucker
	 	10%	 	Officer	 	 
	Remedent NV
	 	10%	 	Member	 	 
	Stephen Ross
	 	5%	 	Member	 	 
	Allan Rubenstein
	 	2%	 	Member	 	 
	Roy Hart
	 	1%	 	Member	 	 
	Investor Group (Members listed in Exhibit B)
	 	10%	 	Member	 	 

	7.2	 	If additional capital is needed and is solicited as an equity-allocating investment, new
investor shares shall come only from the equity shares of George Nelson and Ron Topper.
	 
	7.3	 	Loans to the LLC by the Members or Officers will bear such rate of interest as is agreed upon
when the loan is made, but if agreement cannot be reached between the lenders and the Officers,
the interest rate will be the lowest rate of interest allowed by law. These loans by the Members
or Officers will be repaid by agreement, but before any capital is distributed to the Members or
Officers.
	 
	8	 	Accountings, Carryover of Debt, Royalties and Working Capital

	8.1	 	Unpaid or deferred salary shall remain as a bonafide payable to be dispersed to employees as
determined by the Officers.
	 
	8.2	 	Monies loaned to the LLC by Members shall be repaid within 60 days of this agreement. Members
may waive repayment and continue to accrue interest, if agreed to in writing by the member and
Officers.
	 
	8.3	 	Monies loaned to the LLC by Officers shall be repaid prior to the declaration of dividends or
bonuses to Members or Officers.
	 
	8.4	 	Monies payable to vendors repaid prior to the declaration of dividends or bonuses to Members
or Officers. Dividends or bonuses shall not be declared on funds necessary to meet trade
payables, but on excess cash flow and profits only.
	 
	8.5	 	All payable items on the books of IMDS, LLC shall remain a bonafide payable of the reformed
LLC. Repayment and negotiation of payables shall be the responsibility of George Nelson and
Ron Topper as an executive committee.
	 
	8.6	 	Royalty payments to investors shall be accelerated through a 50% increase in the royalty
rate until initial investments have been repaid.
	 
	8.7	 	Working capital retained in both firms shall be pooled under the supervision of a Certified
Public Accountant for disbursements consistent with this agreement and accepted accounting
practices.
	 
	8.8	 	IMDS, LLC and White Science World Wide will provide copies of their current accountings to a
Certified Public Accountant, agreed to mutually, as well as to each other. Such copies may be
on paper or electronic.
	 
	8.9	 	White Science World Wide will pay amounts to creditors listed in Exhibit A as a
condition of closing this agreement.

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	9	 	Officers’ Salaries, Allocation of Profits and Performance Bonuses
	 
	9.1	 	Salaries. Officers’ salaries will be reviewed annually. Minimum salaries will be
paid until positive cash flow is maintained for a minimum of three months. For
the current year, officers will receive monthly minimum to maximum salaries as
follows:

	 	 	 	 	 	 	 	 	 
	Officer	 	Minimum Monthly Salary	 	Maximum Monthly Salary
	 
	 	 	 	 	 	 	 	 
	George Nelson
	 	$	6,000	 	 	$	10,000	 
	Ron Topper
	 	$	6,000	 	 	$	10,000	 
	Irwin Zucker
	 	$	6,000	 	 	$	10,000	 

	9.2	 	If the LLC operates at a taxable profit or has taxable gain, the net cash receipts
distributed to a Member or Officer are composed of both ordinary income and capital gains,
each Member or Officer participating in the distribution of net cash receipts, will be deemed
to participate according to the ratio that the net cash receipts distributed to him vis a vis
that item, bears to the total of all net cash receipts distributed and attributable to such
item.
	 
	9.3	 	Whenever the Officers vote on day-to-day operational issues, the following percentage
participation’s will apply:

	 	 	 	 	 
	Officers	 	Percentage Participation
	George Nelson
	 	 	331/3	%
	Ron Topper
	 	 	331/3	%
	Irwin Zucker
	 	 	331/3	%
	Total
	 	 	100	%

	9.4	 	Performance bonuses. Officers, as individuals who contribute to the daily success of the
business through their personal efforts, shall be incentivized through performance-based
bonuses. Such bonuses shall be based on certain sales and profit targets being achieved, such
targets to be determined, and shall be independent of net earnings or division of income to
equity holders. However, no performance bonuses shall be paid unless all trade payables and
investor royalties are current and sufficient cash reserves are available to maintain positive
cash flow and there is no debt other than a bank working capital line of credit.
	 
	9.5	 	Division of earnings. All equity holders shall be entitled to share of profits. However, no
division of earnings shall be made until initial capital raised through royalty-bearing
investments have been repaid and royalty levels revert to minimum levels. Additionally, no
such division of earnings shall be paid unless all trade payables and investor royalties are
current and sufficient cash reserves are available to maintain positive cash flow and there is
no debt other than a bank working capital line of credit.

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	9.	 	Powers of Officers
	 
	9.1	 	The Officers will possess all of the general powers and rights of a Officers under the
LLC law prevalent in the State of Florida including the power, in the Officers’ absolute
discretion and on behalf of the LLC, to:
	 
	9.1.1	 	Sell, assign, convey, or transfer title to any portion of the LLC’s real and personal
property;
	 
	9.1.2	 	Lease the LLC’s real or personal property;
	 
	9.1.3	 	Borrow money for the LLC;
	 
	9.1.4	 	Prepay, refinance, increase, or otherwise modify any mortgages affecting the LLC’s real or
personal property;
	 
	9.1.5	 	Employ on fair terms and proper compensation persons, including Members and Officers, to
operate and manage the LLC’s affairs, including real and personal property;
	 
	9.1.6	 	Set aside LLC capital or other funds for payment of past, current, and future
liabilities of the LLC;
	 
	9.1.7	 	Unless otherwise provided, determine whether items of income, gain, loss, etc. will be
treated as capital or extraordinary, or, alternatively, as profit or loss;
	 
	9.1.8	 	Select and open LLC bank accounts;
	 
	9.1.9	 	Retain an independent Public Accounting Firm to keep and audit books of accounts. These
books will be open to reasonable inspection and examination by the Members and their
representatives;
	 
	9.1.10	 	Oversee the LLC’s accountants who will prepare monthly, quarterly and annual financial
reports. The Officers will promptly deliver to the Members reports of operations.
	 
	9.1.11	 	Execute, acknowledge, and deliver any and all instruments to effectuate any of the foregoing
powers.
	 
	9.2	 	Remedent has first rights to purchase equity. No Officer will offer for sale any of his equity
other than as an inducement to raise investment capital for the running of the business
unless he first offers that equity to Remedent, NV. Should Remedent, NV or its authorized agents
decline to purchase the equity, then the Officer shall be free to sell or trade his equity as he
sees fit.
	 
	9.3	 	Each Member irrevocably constitutes and appoints the Officers his true and lawful attorney to
make, execute, acknowledge, and file in his name, place, and stead:

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	9.3.1	 	A Certificate of Limited Liability Company under applicable laws;
	 
	9.3.2	 	Any certificate or other instrument, including registrations or filings concerning the use
of fictitious names and filings under the federal and state Securities Acts that may be required;
	 
	9.3.3	 	Documents required to effectuate the dissolution and termination of the LLC; and
	 
	9.3.4	 	Amendments and modifications of the instruments described above.
	 
	10.	 	Services and Limitations of Officers
	 
	10.1	 	The Officers will devote whatever time and effort may be necessary or appropriate
to the business and affairs of the LLC.
	 
	10.2	 	The Officers are authorized to manage the LLC’s assets and operations for a reasonable salary.
When dealing with any other person or entity in which an Officer has a financial interest, the
Officer is required to deal with that party upon terms equal to, or better than, those obtainable
in the marketplace from unrelated parties.
	 
	10.3	 	The Officers expressly acknowledges that the attorney, the accountant, and other professional
advisors for the LLC will represent the LLC and all Officers, and expressly waives any claim of
privilege or defense founded on any alleged professional-client relationship based upon the fact
that the Officers engaged them for this LLC.
	 
	10.4	 	The Officers may not engage in new businesses which are in conflict with or competitive to
IMDS or Remedent. Any such business opportunities shall be operated through IMDS.
	 
	11.	 	Limitations of Members. No Members will take any part in the conduct of the business or control
of the assets or have any right or authority to act for or bind the LLC without the express written
authorization of a majority of the Officers. Members will not become liable as a General Members
nor will he be liable to creditors of the LLC. No interest will be due, paid, or payable on capital
contributions.
	 
	12.	 	Disbursements and Distributions
	 
	12.1	 	The cash receipts from operations, profits, income items, factored receivables, and other
funds, resulting from refinancing, sales, exchanges, roll-overs of LLC assets, and other dealings,
that are earned or received by the LLC will be disbursed and distributed as follows:

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	12.1.1	 	On behalf of the LLC, in payment or as reserves for all expenses, charges, and costs and
for all indebtedness including royalties in accordance with the provisions and terms in this
Agreement.
	 
	12.1.2	 	All cash receipts not required for the payments or reserves provided for in Section 12.1.1
will be disbursed by the Officers to the Members according to their percentage participation’s, as
allocated in Section 7.1.
	 
	13.	 	Exchange of Equity for Distribution Rights, Development Assets. Remedent, NV will receive
ten percent (10%) equity in the reformed IMDS, LLC as consideration for the following:
	 
	13.1	 	Remedent, NV, which currently supplies various products to IMDS, has developed an advanced
technology intended to replace the technology currently being marketed by IMDS, LLC as
“SpaWhite” and “SolarWhite.” This development is valued currently at $300,000 (USD). In
consideration of the above inducements and equity, Remedent, NV will transfer ownership of
this new technology to the LLC for exclusive manufacturing and sales world wide.
	 
	13.2	 	Remedent, NV further grants to LLC first right of refusal to exclusive distribution rights
for all products developed or sourced by Remedent which are suitable for the cosmerich
markets, such exclusivity extending to North America. Additionally, the LLC shall not be
barred from selling any such items in any market on a non-exclusive basis on a case-by-case
basis where no distribution agreement exists between Remedent and a local distributor.
	 
	14	 	Additional distribution rights granted to Remedent, NV. In addition to the quid
detailed in Section 13, LLC grants to Remedent NV:
	 
	14.1	 	Rights to sell the product known as “White Ice” in various forms in markets not served by
IMDS, LLC;
	 
	14.2	 	Rights to purchase at standard cost the DayLight 5K whitening light and its
accessories and to sell such lights in markets not served by the LLC;
	 
	15.	 	Assistance with Legal Support. Remedent will make available its corporate counsel and other
legal assets to the LLC for the purposes of defending LLC’s rights to trade in markets where it may
be challenged by local governments or other legal or quasi-legal bodies who allege that sale,
dispensing or use of LLC’s products by LLC, its agents or customers constitutes the illegal
practice of dentistry. Remedent will also provide legal support to identify and remedy the sale of
any of its products which conflict with the exclusivity arrangement in Section 13.8 and Section 14.
	 
	16.	 	Other Interests of a Member or Officer. Any Member or Officer may engage or possess interests
in other business ventures of every nature and description, independently or with others. Neither
the LLC nor any Member or Officer will have any right to any independent ventures of any other
Member or Officer, or to the income or

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	 	 	profits derived from them. Any dealings between the LLC and the Officers or any of its affiliates
will be conducted by the Officers upon the terms and in a manner that will be fair and reasonable
to the interests of the LLC and the Members.

	18.	 	Limitation of Liability of Officers
	 
	18.1	 	The Officers will not be personally liable to the Members for the return of capital
contributions, the repayment of the purchase price for a percentage participation by the Members,
the repayment of any loans or advances to the LLC by the Members, or the payment of interest.
	 
	18.2	 	The Officers will not be liable to any Member for any act, omission, or decision that did not
constitute a breach of this Agreement or that was in good faith and without intent to defraud. The
Officers will be held harmless against loss, damages, or liability as Officers only to the extent
that the assets are not applied to the creditors of the LLC.
	 
	19.	 	Waiver, Amendment, Modification. No waiver, amendment or modification, including those by
custom, usage of trade, or course of dealing, of any provision of this Agreement will be effective
unless in writing and signed by the Officers. No waiver by any party of any default in performance
by the other party under this Agreement or of any breach or series of breaches by the other party
of any of the terms or conditions of this Agreement will constitute a waiver of any subsequent
default in performance under this Agreement or any subsequent breach of any terms or conditions of
that Agreement. Performance of any obligation required of a party under this Agreement may be
waived only by a written waiver signed by a duly authorized officer of the other party, that waiver
will be effective only with respect to the specific obligation described in that waiver.
	 
	20.	 	Settlement of Disputes
	 
	20.1	 	Each party acknowledges and agrees that, if there is any breach of this Agreement, including,
without limitation, unauthorized use or disclosure of Confidential Information or other information
of the other party, the non-breaching party will suffer irreparable injury that cannot be
compensated by money damages and therefore will not have an adequate remedy at law. Accordingly, if
either party institutes an action or proceeding to enforce the provisions of this Agreement, such
party will be entitled to obtain such injunctive relief, specific performance, or other equitable
remedy from a court of competent jurisdiction as may be necessary or appropriate to prevent or
curtail any such breach, threatened or actual. These will be in addition to and without prejudice
to such other rights as such party may have in law or in equity.
	 
	20.2	 	Any dispute, controversy, or claim arising out of or related to this Agreement, or the
creation, validity, interpretation, breach, or termination of this Agreement will be referred to
mediation before, and as a condition precedent to, the initiation of any adjudicative action or
proceeding, including arbitration. The mediation will be held in Atlanta, Georgia. Either party may
demand mediation in writing, serving on the other

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	 	 	party a statement of the dispute, controversy, or claim, and the facts relating to it, in
reasonable detail. Furthermore, if within thirty (30) days after such demand, the parties have not
agreed upon a mediator and commenced mediation, the matter will be referred to arbitration under
Section 20.3. Furthermore, if, within forty-five (45) days after such demand the matter has not
been resolved to the satisfaction of both parties, then the matter will be referred to arbitration
under Section 20.3.

	20.3	 	Any dispute, controversy, or claim arising out of or related to this Agreement, or the
creation, validity, interpretation, breach, or termination of this Agreement that has not been
resolved amicably among the parties by mediation under Section 20.2 will be submitted to binding
arbitration using the following procedure:
	 
	20.3.1	 	The arbitration will be held in Atlanta, Georgia, before a panel of three arbitrators.
Either party may demand arbitration in writing, serving on the other party a statement of the
dispute, controversy, or claim, and the facts relating to it, in reasonable detail, and the
arbitrator nominated by that party.
	 
	20.3.2	 	Within thirty (30) days after such demand, the other party will name its arbitrate, and the
two arbitrators named by the parties will, within ten (10) days, select a third arbitrator.
	 
	20.3.3	 	The arbitration will be governed by the Commercial Arbitration Rules of the American
Arbitration Association (the “AAA”), except as expressly provided in this Agreement. The
arbitration will be administered by the AAA. The arbitrators may not amend or disregard any
provision of this section.
	 
	20.3.4	 	The expenses of arbitration will be borne by the party against whom the decision is
rendered, or apportioned in accordance with the decision of the arbitrators if there is a
compromise decision. Judgment upon any award may be entered in any court of competent
jurisdiction. All notices from one party to the other relating to any arbitration under this
Agreement will be in writing and will be effective if given in accordance with Section 24 below.
	 
	21.	 	Governing Law and Construction. This Agreement will be governed by the laws of the State of
Florida applicable to agreements made and fully performed in Florida by Florida residents.
Arbitration and any disputes not determined by arbitrators will be heard in the appropriate general
and state courts in Fulton County, Georgia. The substantial prevailing party in any suit will be
entitled to reimbursement of reasonable costs and fees from the other party to such action.
	 
	22.	 	Entire Agreement. The parties acknowledge that this Agreement expresses their entire
understanding and agreement, and that there have been no warranties, representations, covenants or
understandings made by either party to the other except such as are expressly set forth in this
section. The parties further acknowledge that this Agreement supersedes, terminates and otherwise
renders null and void any and all prior

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	 	 	agreements or contracts, whether written or oral, entered into between the Officers and the
Members with respect to the matters expressly set forth in this Agreement.

	23.	 	Compliance With Law. Both parties agree to comply with all applicable federal, state, and local
laws and regulations in performing their duties.
	 
	24.	 	Notices. All notices, demands or consents required or permitted under this Agreement will be in
writing and will be delivered, sent by facsimile or mailed certified return receipt requested to
the Partners at the addresses set forth in the Certificate of Limited LLC, as amended from time to
time. Any notice required or permitted to be given by the provisions of this Agreement will be
conclusively deemed to have been received on the day it is delivered to that party by facsimile or
by U.S. Mail with acknowledgment of receipt or by any commercial courier providing equivalent
acknowledgment of receipt.
	 
	25.	 	Benefits. Except as otherwise specifically provided, this Agreement will be binding upon
and inure to the benefit of the parties hereto and their personal representatives and
assigns.

     Captions and section headings used in this Agreement are for convenience only and are not a
part of this Agreement and will not be used in construing it.

     We have carefully reviewed this contract and agree to and accept its terms and conditions. We
are executing this Agreement as of the day and year first written above.

	 	 	 	 	 
	/s/ George Nelson
	 	 	 	 
	 

George Nelson,
 President, IMDS, LLC

	 	 	 	 
	 
	 	 	 	 
	/s/ Ron Topper
	 	 	 	 
	 

Ron Topper 

National Sales Director, Consumer Products
	 	 	 	 
	 
	 	 	 	 
	/s/ Irwin Zucker
	 	 	 	 
	 

Irwin Zucker 

Chief Operating Officer
	 	 	 	 
	 
	 	 	 	 
	/s/ Guy de Vreese

 

Guy de Vreese, Chairman, Remedent NV 

Member
	 	 	 	 

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