WARRANT EXCHANGE AGREEMENT
Exhibit
10.3
THIS
WARRANT EXCHANGE AGREEMENT, dated as of December 13, 2010 (this “Agreement”) is
entered into by and among Wuhan General Group (China), Inc., a Nevada
corporation (the “Company”), Fame Good
International Limited, a British Virgin Islands Company (“Fame Good”), and the
undersigned holders of the Company’s Series C, AA, BB and/or JJ Warrants
(collectively, the “Holders”).
WITNESSETH
WHEREAS,
the Company currently has Series C, AA, BB and JJ warrants outstanding (the
“Warrants”)
representing the right to purchase an aggregate of 2,272,016 shares (the “Warrant Stock”) of
the Company’s common stock, $0.0001 par value per share (the “Common
Stock”);
WHEREAS,
the Company has offered to exchange all or part of each Holder’s Warrants for
the issuance by the Company of shares of the Company’s Common Stock, in
accordance with the exchange ratios set forth herein;
WHEREAS,
the Transaction (as defined below) shall be made pursuant to an exemption under
the Securities Act of 1933, as amended (the “Securities Act”);
and
WHEREAS,
the parties desire to enter into the Transaction upon the terms and conditions
herein.
NOW,
THEREFORE, in consideration of the mutual covenants contained in this Agreement
and for other good and valuable consideration, the receipt and adequacy of which
are hereby acknowledged, intending to be legally bound hereby, the parties
hereto agree as follows:
1. On
the Closing Date (as hereinafter defined), each Holder agrees to transfer the
number of shares of Warrant Stock underlying its Warrants as indicated on such
Holder’s signature page hereto (the “Elected Warrant
Stock”) for the issuance by the Company of (i) 1.372921615 shares of the
Company’s Common Stock per share of Series C Elected Warrant Stock; (ii) 0.8203
shares of the Company’s Common Stock per share of Series AA and Series BB
Elected Warrant Stock; and (iii) 0.8288 shares of the Company’s Common Stock per
share of Series JJ Elected Warrant Stock (the “Transaction”). Each
Holder shall relinquish such Holder’s right, title and interest in the Elected
Warrant Stock to the Company.
2. The
consummation of the Transaction is referred to in this Agreement as the “Closing.” The
“Closing Date”
will be the date on which the Closing occurs. The Closing will occur
within five (5) business days following the satisfaction or waiver of the
condition set forth in paragraph 8. The Closing will take place at
the offices of Xxxxxxxx Xxxxxxx LLP, 000 Xxxxxxxxx Xx., Xxxxx 0000, Xxxxxxx,
Xxxxxxx, 00000 or at such other place as the Company and the Holders may
agree.
3. Each
Holder hereby represents and warrants that as of the date hereof:
a. it
acknowledges and agrees to the terms and conditions of the Transaction as
provided for herein;
b. if
the Holder is a natural person, the execution, delivery and performance by such
person of this Agreement are within such person’s legal right, power and
capacity, require no action by or in respect of or filing with, any governmental
body, agency, or official and do not and will not contravene, or constitute a
default under, any provision of applicable law or regulation or of any
agreement, judgment, injunction, order, decree or other instrument to which such
person is a party or by which such person or any of such person’s properties are
bound. The signature on the signature page of this Agreement is
genuine, and the Holder has legal competence and capacity to execute the same,
and this Agreement constitutes a valid and binding agreement of the Holder,
enforceable against the Holder in accordance with its terms;
c. if
the holder is a corporation, limited liability company, trust, partnership or
other entity, it is duly incorporated or organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or
organization;
d. if
the holder is a corporation, limited liability company, trust, partnership or
other entity, it has the requisite power and authority to enter into and perform
this Agreement and to consummate the transactions contemplated hereby. The
execution, delivery and performance of this Agreement by such Holder and the
consummation by it of the transactions contemplated hereby have been duly
authorized by all necessary corporate or partnership action, and no further
consent or authorization of such Holder or its Board of Directors, stockholders,
or partners, as the case may be, is required. This Agreement has been duly
authorized, executed and delivered by such Holder and constitutes, or shall
constitute when executed and delivered, a valid and binding obligation of the
Holder enforceable against the Holder in accordance with the terms
hereof;
e. the
execution, delivery and performance of this Agreement and the consummation by
such Holder of the transactions contemplated hereby or relating hereto do not
and will not (i) if the Holder is a corporation, limited liability company,
trust, partnership or other entity, result in a violation of such Holder’s
charter documents or bylaws or other organizational documents or (ii) conflict
with, or constitute a default (or an event which with notice or lapse of time or
both would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of any agreement, indenture or
instrument or obligation to which such Holder is a party or by which its
properties or assets are bound, or result in a violation of any law, rule, or
regulation, or any order, judgment or decree of any court or governmental agency
applicable to such Holder or its properties (except for such conflicts, defaults
and violations as would not, individually or in the aggregate, have a material
adverse effect on such Holder). Such Holder is not required to obtain any
consent, authorization or order of, or make any filing or registration with, any
court or governmental agency in order for it to execute, deliver or perform any
of its obligations under this Agreement;
2
f. it
is acquiring the Common Stock solely for its own account for the purpose of
investment and not with a view to or for sale in connection with distribution.
Each Holder does not have a present intention to sell the Common Stock, nor a
present arrangement (whether or not legally binding) or intention to effect any
distribution of the Common Stock to or through any person or entity; provided, however, that by
making the representations herein and subject to Section 3(g) below, such Holder
does not agree to hold the Common Stock for any minimum or other specific term
and reserves the right to dispose of the Common Stock at any time in accordance
with Federal and state securities laws applicable to such disposition. Each
Holder acknowledges that it is able to bear the financial risks associated with
an investment in the Common Stock and has sufficient knowledge and experience in
investing in companies similar to the Company in terms of the Company’s stage of
development so as to be able to evaluate the risks and merits of its investment
in the Company;
g. it
is an “accredited investor” as defined in Regulation D promulgated under the
Securities Act. Such Holder is not required to be registered as a
broker-dealer under Section 15 of the Securities Exchange Act of 1934, as
amended (the “Exchange
Act”), and such Holder is not a broker-dealer;
h. it
understands that the Common Stock must be held indefinitely unless such Common
Stock is registered under the Securities Act or an exemption from registration
is available. Such Holder acknowledges that such Holder is familiar with Rule
144, promulgated pursuant to the Securities Act (“Rule 144”), and that
such person has been advised that Rule 144 permits resales only under certain
circumstances. Such Holder understands that to the extent that Rule 144 is not
available, such Holder will be unable to sell any of the Common Stock without
either registration under the Securities Act or the existence of another
exemption from such registration requirement;
i. such
Holder understands that the Common Stock is being offered and sold in reliance
on a transactional exemption from the registration requirement of Federal and
state securities laws and the Company is relying upon the truth and accuracy of
the representations, warranties, agreements, acknowledgments and understandings
of such Holder set forth herein in order to determine the applicability of such
exemptions and the suitability of such Holder to acquire the Common
Stock;
j. it
has not agreed to act with any other Holder for the purpose of acquiring,
holding, voting or disposing of the Common Stock acquired hereunder for purposes
of Section 13(d) under the Exchange Act, and each Holder is acting independently
with respect to its investment in the Common Stock;
k. it
has not exercised, assigned, pledged or hypothecated the Warrants (or the
Elected Warrant Stock), in part or in whole; and
l. it
has delivered this Agreement together with its Series C, AA, BB and/or JJ
Warrant certificate(s) (or a properly completed Affidavit of Lost, Stolen or
Destroyed Securities) exercisable for the Elected Warrant Stock to Xxxxxx X. Xx
at Xxxxxxxx Xxxxxxx LLP, 000 Xxxxxxxxx Xxxxxx, X.X., Xxxxx 0000, Xxxxxxx,
Xxxxxxx 00000.
3
4. Each
Holder hereby agrees to indemnify and hold harmless the Company, its officers,
directors, successors and assigns, and any person now or hereafter acting as the
Company’s transfer agent or acting in any similar capacity, from and against any
and all liability, loss, damage and expense in connection with, or arising out
of such person’s actions in accordance with the terms of this
Agreement.
5. The
Company hereby represents and warrants that as of the date hereof:
a. it
is duly incorporated, validly existing and in good standing under the laws of
the State of Nevada;
b. it
has the requisite power and authority to enter into and perform this Agreement
and to consummate the transactions contemplated hereby. The execution, delivery
and performance of this Agreement by the Company and the consummation by it of
the transactions contemplated hereby have been duly authorized by all necessary
corporate action, and no further consent or authorization of the Company or its
Board of Directors is required. This Agreement has been duly authorized,
executed and delivered by the Company and constitutes, or shall constitute when
executed and delivered, a valid and binding obligation of the Company
enforceable against the Company in accordance with the terms
hereof;
c. the
execution, delivery and performance of this Agreement and the consummation by
the Company of the transactions contemplated hereby or relating hereto do not
and will not (i) result in a violation of the Company’s organizational documents
or (ii) conflict with, or constitute a default (or an event which with notice or
lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of any agreement,
indenture or instrument or obligation to which the Company is a party or by
which its properties or assets are bound, or result in a violation of any law,
rule, or regulation, or any order, judgment or decree of any court or
governmental agency applicable to the Company or its properties (except for such
conflicts, defaults and violations as would not, individually or in the
aggregate, have a material adverse effect on the Company). The Company is not
required to obtain any consent, authorization or order of, or make any filing or
registration with, any court or governmental agency in order for it to execute,
deliver or perform any of its obligations under this Agreement; and
d. it
has not provided any of the Holders with any material non-public information
concerning the Company in connection with this Agreement and the transactions
contemplated hereby.
6. Each
Holder hereby covenants that:
a. between
the date hereof and the Closing Date, such Holder shall not take any action that
would, or that could reasonably be expected to, result in any of the
representations and warranties of the Holder set forth in this Agreement
becoming untrue; and
4
b. if
the holder is a corporation, limited liability company, trust, partnership or
other entity, it will, between the date hereof and the Closing Date, maintain
its existence and good standing in its jurisdiction of organization and in each
jurisdiction in which the ownership or leasing of its property or the conduct of
its business requires such qualification, and that it will not amend or modify
its charter documents.
7. The
Company hereby covenants that between the date hereof and the Closing Date, the
Company shall not take any action that would, or that could reasonably be
expected to, result in any of the representations and warranties of the Company
set forth in this Agreement becoming untrue.
8. The
respective obligations of each party to effect the transactions contemplated by
this Agreement will be subject to the Company obtaining, at or prior to the
Closing, the approval of at least a majority of its stockholders of the
Company’s issuance of its Common Stock in the Transaction.
9. Fame
Good hereby agrees to vote all of its shares of Common Stock in favor of
approving the Transaction when and at such time as the Company shall seek the
approval of its stockholders to issue Common Stock as contemplated by the
Transaction.
10. Miscellaneous.
a. This
Agreement and the rights of the parties hereunder shall be governed by and
construed in accordance with the laws of the State of New York without regard to
conflict of law principles.
b. This
Agreement constitutes the entire agreement between the parties regarding the
subject transaction, superseding any prior agreements or understandings between
them, and shall be binding upon the Holder and Holder’s permitted assigns and
shall inure to the benefit of the Company and its successors and
assigns.
c. This
Agreement may be executed in several counterparts, including by way of facsimile
or electronic transmission, each of which shall be deemed an original but all of
which shall constitute one and the same instrument.
[SIGNATURE
PAGES FOLLOW]
5
IN
WITNESS WHEREOF, this Agreement is accepted as of the date first written
above.
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“Company”
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By:
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/s/ Xxxxxx
Lo_______________________
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Name: Xxxxxx
Xx
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Title: Chief
Financial Officer
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“Fame
Good”
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FAME
GOOD INTERNATIONAL LIMITED
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By:
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/s/ Xx Xxx
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Name: Xx
Xxx
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Title: Director
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XXXXXX
X. XXXXXXX and XXXXX X. XXXXXXX,
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as
Tenants by the Entirety
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/s/ Xxxxxx X. Xxxxxxx and Xxxxx X. Xxxxxxx as
TBE
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Address:
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0000
XX 000 Xxxxxx
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Xxxxx,
XX 00000
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Number
of shares of Warrant Stock underlying
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0
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Series
C Warrant to be exchanged under
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Number
of shares of Warrant Stock underlying
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24,691
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Series
AA Warrant to be exchanged under
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Number
of shares of Warrant Stock underlying
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15,286
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Series
BB Warrant to be exchanged under
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Number
of shares of Warrant Stock underlying
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25,476
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Series
JJ Warrant to be exchanged under
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Number
of shares of Common Stock to be issued in exchange for Warrant
Stock:
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53,908
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X.
XXXXXX XXXX
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/s/ X. Xxxxxx
Xxxx
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Address:
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000
Xxxxxx Xxxx Xxxxx
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Xxxxxxxx,
XX 00000
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Number
of shares of Warrant Stock underlying
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41,150
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Series
C Warrant to be exchanged under
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Number
of shares of Warrant Stock underlying
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24,691
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Series
AA Warrant to be exchanged under
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Number
of shares of Warrant Stock underlying
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15,286
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Series
BB Warrant to be exchanged under
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Number
of shares of Warrant Stock underlying
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25,476
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Series
JJ Warrant to be exchanged under
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Number
of shares of Common Stock to be issued in exchange for Warrant
Stock:
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110,403
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XXXXXX
XXXXXXX
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/s/ Xxxxxx
Xxxxxxx
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Address:
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00000
Xxxxxx Xxxxx Xxxxx Xxxxx
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Xxxxxxxx
Xxxx, XX 00000
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Number
of shares of Warrant Stock underlying
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20,575
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Series
C Warrant to be exchanged under
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the
Warrant Exchange Agreement:
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Number
of shares of Warrant Stock underlying
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12,345
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Series
AA Warrant to be exchanged under
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the
Warrant Exchange Agreement:
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Number
of shares of Warrant Stock underlying
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7,643
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Series
BB Warrant to be exchanged under
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the
Warrant Exchange Agreement:
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Number
of shares of Warrant Stock underlying
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12,738
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Series
JJ Warrant to be exchanged under
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the
Warrant Exchange Agreement:
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Number
of shares of Common Stock to be issued in exchange for Warrant
Stock:
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55,201
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XX
XXX
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/s/ Xx
Xxx
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Address:
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Rm
0000, Xxxxxxxx #00
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Xxxx
0000 Xxxxxxxx Xxxx
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Xxxxxx
Xxxxxxxx
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Xxxxxxxx
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XX
Xxxxx
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Number
of shares of Warrant Stock underlying
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0
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Series
C Warrant to be exchanged under
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the
Warrant Exchange Agreement:
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Number
of shares of Warrant Stock underlying
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123,451
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Series
AA Warrant to be exchanged under
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the
Warrant Exchange Agreement:
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Number
of shares of Warrant Stock underlying
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76,429
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Series
BB Warrant to be exchanged under
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the
Warrant Exchange Agreement:
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Number
of shares of Warrant Stock underlying
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127,381
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Series
JJ Warrant to be exchanged under
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|
the
Warrant Exchange Agreement:
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Number
of shares of Common Stock to be issued in exchange for Warrant
Stock:
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269,535
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XXXX
XXXXX and XXXXXXXXX XXXXX,
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as
Tenants by the Entirety
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/s/ Xxxx Xxxxx and Xxxxxxxxx
Xxxxx
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Address:
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000
Xxxxxx Xxxxx Xxxx
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Xxxxxxxxx,
XX 00000
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Number
of shares of Warrant Stock underlying
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265,380
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Series
C Warrant to be exchanged under
|
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the
Warrant Exchange Agreement:
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Number
of shares of Warrant Stock underlying
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159,228
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Series
AA Warrant to be exchanged under
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|
the
Warrant Exchange Agreement:
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Number
of shares of Warrant Stock underlying
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98,579
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Series
BB Warrant to be exchanged under
|
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|
the
Warrant Exchange Agreement:
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Number
of shares of Warrant Stock underlying
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164,298
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Series
JJ Warrant to be exchanged under
|
||
|
the
Warrant Exchange Agreement:
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Number
of shares of Common Stock to be issued in exchange for Warrant
Stock:
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711,995
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XXX
XXXXXXXXX and XXXXX XXXXXXXXX,
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as
Tenants by the Entirety
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/s/ Xxx Xxxxxxxxx and Xxxxx
Xxxxxxxxx
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Address:
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Number
of shares of Warrant Stock underlying
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20,000
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Series
C Warrant to be exchanged under
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the
Warrant Exchange Agreement:
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Number
of shares of Warrant Stock underlying
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99,686
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Series
AA Warrant to be exchanged under
|
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|
the
Warrant Exchange Agreement:
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Number
of shares of Warrant Stock underlying
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61,716
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Series
BB Warrant to be exchanged under
|
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|
the
Warrant Exchange Agreement:
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Number
of shares of Warrant Stock underlying
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102,861
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Series
JJ Warrant to be exchanged under
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||
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the
Warrant Exchange Agreement:
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Number
of shares of Common Stock to be issued in exchange for Warrant
Stock:
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245,108
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XXXXX
XXXXX
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/s/ Xxxxx
Xxxxx
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Address:
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Number
of shares of Warrant Stock underlying
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100,000
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Series
C Warrant to be exchanged under
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the
Warrant Exchange Agreement:
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Number
of shares of Warrant Stock underlying
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59,999
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Series
AA Warrant to be exchanged under
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the
Warrant Exchange Agreement:
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Number
of shares of Warrant Stock underlying
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37,146
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Series
BB Warrant to be exchanged under
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the
Warrant Exchange Agreement:
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Number
of shares of Warrant Stock underlying
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61,911
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Series
JJ Warrant to be exchanged under
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the
Warrant Exchange Agreement:
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Number
of shares of Common Stock to be issued in exchange for Warrant
Stock:
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268,292
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SPRING
HOUSE CAPITAL, LLC
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By:
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/s/ Xxxx X. Xxxxx |
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Name: Xxxx
X. Xxxxx
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Title: President
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Address:
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000
Xxxxxx Xxxxx Xxxx
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Xxxxxxxxx,
XX 00000
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Number
of shares of Warrant Stock underlying
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188,605
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Series
C Warrant to be exchanged under
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||
|
the
Warrant Exchange Agreement:
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Number
of shares of Warrant Stock underlying
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113,162
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Series
AA Warrant to be exchanged under
|
||
|
the
Warrant Exchange Agreement:
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Number
of shares of Warrant Stock underlying
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70,060
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Series
BB Warrant to be exchanged under
|
||
|
the
Warrant Exchange Agreement:
|
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Number
of shares of Warrant Stock underlying
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116,767
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|
Series
JJ Warrant to be exchanged under
|
||
|
the
Warrant Exchange Agreement:
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Number
of shares of Common Stock to be issued in exchange for Warrant
Stock:
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506,014
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