WARRANT EXCHANGE AGREEMENT
Exhibit
10.2
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”) and the
undersigned holders of the Company’s Series A Warrants and/or Series B Warrants
(collectively, the “Holders”).
WITNESSETH
WHEREAS,
the Company currently has Series A and B warrants outstanding (the “Warrants”)
representing the right to purchase an aggregate of 9,993,977 shares of the
Company’s common stock, $0.0001 par value per share (the “Warrant
Stock”);
WHEREAS,
the Company has offered to exchange all or part of each Holder’s Warrant for the
issuance by the Company of 0.5 shares of the Company’s common stock, $0.0001 par
value per share (the “Common Stock”), per
share of Warrant Stock underlying the Warrant;
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. Each
Holder agrees to transfer the number of shares of Warrant Stock underlying its
Series A Warrant and/or the number of shares of Warrant Stock underlying its
Series B Warrant indicated on such Holder’s signature page hereto (the “Elected Warrant
Stock”) for the issuance by the Company of 0.5 shares of the Company’s
Common Stock per share of 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. In
connection with the Transaction, (i) each Holder that also holds the Company’s
Series A Convertible Preferred Stock, $0.0001 par value per share, has signed
and delivered the Waiver, of even date herewith (the “Waiver”), of the
Lock-Up Agreement, dated February 7, 2007, between the Company and Fame Good
International Limited (“Fame Good”) and (ii)
certain of the Holders have signed and delivered the Stockholders Agreement, of
even date herewith, with the Company, Fame Good and Xx Xxx (the “Stockholders
Agreement”).
3. Each
Holder hereby represents and warrants that:
a. it
acknowledges and agrees to the terms and conditions of the Transaction as
provided for herein;
b. it
is duly incorporated or organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation or organization;
c. it
has the requisite power and authority to enter into and perform this Agreement
and, if applicable, the Stockholders Agreement and the Waiver, and to consummate
the transactions contemplated hereby and thereby. The execution, delivery and
performance of this Agreement and, if applicable, the Stockholders Agreement and
the Waiver, by such Holder and the consummation by it of the transactions
contemplated hereby and thereby 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. Each of this Agreement and, if applicable, the Stockholders
Agreement and the Waiver, 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 thereof;
d. the
execution, delivery and performance of this Agreement and, if applicable, the
Stockholders Agreement and the Waiver, and the consummation by such Holder of
the transactions contemplated hereby and thereby or relating hereto do not and
will not (i) 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 or, if
applicable, the Stockholders Agreement and the Waiver;
e. 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;
2
f. 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;
g. 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;
h. 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;
i. it
has not agreed to act with any other Holder for the purpose of acquiring,
holding, voting or disposing of the Common Stock purchased 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;
j. it
has not exercised, assigned, pledged or hypothecated the Warrants (or the
Elected Warrant Stock), in part or in whole; and
k. it
has delivered this Agreement together with its Series A and/or Series B Warrant
certificate(s) exercisable for the Elected Warrant Stock to Xxxxxx X. Xx at
Xxxxxxxx Xxxxxxx LLP, 000 Xxxxxxxxx Xxxxxx, X.X., Xxxxx 0000, Xxxxxxx, Xxxxxxx
00000.
4. The
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:
a. it
is duly incorporated, validly existing and in good standing under the laws of
the State of Nevada;
3
b. it
has the requisite power and authority to enter into and perform this Agreement
and the Stockholders Agreement and to consummate the transactions contemplated
hereby and thereby. The execution, delivery and performance of this Agreement
and the Stockholders Agreement by the Company and the consummation by it of the
transactions contemplated hereby and thereby 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. Each of this Agreement and the
Stockholders 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 thereof;
c. the
execution, delivery and performance of this Agreement and the Stockholders
Agreement and the consummation by the Company of the transactions contemplated
hereby and thereby 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 or the Stockholders 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. The Company shall consummate the
Transaction described herein and issue Common Stock immediately upon the date
hereof with respect to Blue Ridge Investments, L.L.C., Old Lane Cayman Master
Fund, LP, Old Lane US Master Fund, LP, Old Lane HMA Master Fund, LP, QVT Fund
LP, Quintessence Fund L.P., TCW Americas Development Association, L.P.
and Lighthouse Consulting Limited. With respect to Fame Good, the
Company shall consummate the Transaction described herein and issue Common Stock
upon receipt of the approval of at least a majority of its stockholders of the
Company’s issuance of its Common Stock in the Transaction to Fame
Good.
7. 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.
4
b. This
Agreement and, if applicable, the Stockholders Agreement and the Waiver
constitute 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 Xx
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Name: Xxxxxx
Xx
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Title: Chief
Financial Officer
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[Signature
Page to Warrant Exchange Agreement]
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BLUE
RIDGE INVESTMENTS, L.L.C.
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By:
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/s/ Xxxx Xxxx Teoh
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Name: Xxxx
Xxxx Teoh
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Title: Authorized
Signatory
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Address:
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c/o
Bank of America
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000
X. Xxxxx Xxxxxx, Xxxxx 25
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Bank
of America Corporate Center
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Xxxxxxxxx,
XX 00000
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Number
of shares of Warrant Stock underlying
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1,287,554
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Series
A Warrant to be exchanged under
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Number
of shares of Warrant Stock underlying
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257,511
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Series
B 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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772,532.50
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[Signature
Page to Warrant Exchange Agreement]
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OLD
LANE CAYMAN MASTER FUND, LP
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By:
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/s/ Xxxxxx Xxxxx
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Name: Xxxxxx
Xxxxx
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Title: Managing
Director
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Address:
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000
Xxxx Xxx.
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Xxx
Xxxx, XX 00000
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Number
of shares of Warrant Stock underlying
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737,454
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Series
A Warrant to be exchanged under
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Number
of shares of Warrant Stock underlying
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737,454
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Series
B Warrant to be exchanged under
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Number
of shares of Common Stock to be issued
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737,454
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in
exchange for Warrant Stock:
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OLD
LANE US MASTER FUND, LP
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By:
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/s/ Xxxxxx Xxxxx
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Name: Xxxxxx
Xxxxx
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Title: Managing
Director
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Address:
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000
Xxxx Xxx.
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Xxx
Xxxx, XX 00000
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Number
of shares of Warrant Stock underlying
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290,775
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Series
A Warrant to be exchanged under
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Number
of shares of Warrant Stock underlying
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290,775
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Series
B Warrant to be exchanged under
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Number
of shares of Common Stock to be issued
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290,775
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in
exchange for Warrant Stock:
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[Signature
Page to Warrant Exchange Agreement]
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OLD
LANE HMA MASTER FUND, LP
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By:
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/s/ Xxxxxx Xxxxx
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Name: Xxxxxx
Xxxxx
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Title: Managing
Director
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Address:
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000
Xxxx Xxx.
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Xxx
Xxxx, XX 00000
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Number
of shares of Warrant Stock underlying
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209,110
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Series
A 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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209,110
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Series
B 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
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209,110
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in
exchange for Warrant Stock:
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[Signature
Page to Warrant Exchange Agreement]
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QVT
FUND LP, by its general partner,
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QVT
Associates GP LLC
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By:
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/s/ Xxxxx Xx
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By:
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/s/ Yi Cen
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Name: Xxxxx
Xx and Yi Cen
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Title: Authorized
Signatory
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Address:
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c/o
QVT Financial LP
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1177
Avenue of the Americas, 0xx
Xxxxx
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Xxx
Xxxx, XX 00000
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Number
of shares of Warrant Stock underlying
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694,227
Shares
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Series
A 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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8,088
Shares
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Series
B 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
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351,158
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exchange
for Warrant Stock:
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QUINTESSENCE
FUND L.P., by its general partner,
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QVT
Associates GP LLC
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By:
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/s/ Xxxxx Xx
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By:
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/s/ Yi Cen
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Name: Xxxxx
Xx and Yi Cen
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Title: Authorized
Signatory
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Address:
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c/o
QVT Financial LP
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1177
Avenue of the Americas, 0xx
Xxxxx
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Xxx
Xxxx, XX 00000
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Number
of shares of Warrant Stock underlying
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78,305
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Series
A 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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912
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Series
B 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
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39,609
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exchange
for Warrant Stock:
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[Signature
Page to Warrant Exchange Agreement]
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TCW
AMERICAS DEVELOPMENT ASSOCIATION, L.P.
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By:
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/s/ Xxxxxxxx X. Xxxxx
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Name: Xxxxxxxx
X. Xxxxx
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Title: Managing
Director
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Address:
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0000
Xxxxxx xx xxx Xxxxxxxx
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Xxxxx
0000
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Xxx
Xxxx, XX 00000
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Number
of shares of Warrant Stock underlying
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515,021
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Series
A Warrant to be exchanged under
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Certificate
# W-A-07-07
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the
Warrant Exchange Agreement:
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Number
of shares of Warrant Stock underlying
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515,021
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Series
B Warrant to be exchanged under
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Certificate
# W-B-07-07
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the
Warrant Exchange Agreement:
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Number
of shares of Common Stock to be issued
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515,021
Common
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in
exchange for Warrant Stock:
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[Signature
Page to Warrant Exchange Agreement]
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LIGHTHOUSE
CONSULTING LIMITED
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By:
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/s/ Bai Ye Feng
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Name: Bai
Ye Feng
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Title: Director
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Address:
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Xxxx
0000, Xxxx Xxxx Xxxx.
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00
Xxxxxxxxxx Xxxxxx
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Xxxxxxx,
Xxxx Xxxx
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Number
of shares of Warrant Stock underlying
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120,000
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Series
A 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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Series
B 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
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60,000
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in
exchange for Warrant Stock:
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[Signature
Page to Warrant Exchange Agreement]
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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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Address:
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Canglongdao
Science Park of Wuhan
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East
Lake Hi-Tech Development Zone
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Wuhan,
Hubei 430200, PRC
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Number
of shares of Warrant Stock underlying
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2,111,330
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Series
A 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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1,802,575
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Series
B 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
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1,956,952
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in
exchange for Warrant Stock:
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[Signature
Page to Warrant Exchange Agreement]
