THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933. THESE
SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF
SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SUCH ACT.
CONTINGENT WARRANT AGREEMENT
This CONTINGENT WARRANT AGREEMENT (the "Agreement") is made and entered
into as of July 22, 1999 by and between AMPEX CORPORATION, a Delaware
corporation ("Ampex"), and INFORMATION SUPER STATION, L.L.C., a District of
Columbia limited liability company (the "Holder").
WHEREAS, the parties have entered into that certain Stock Purchase
Agreement, dated July 7, 1999 (the "Purchase Agreement"), among Ampex, the
Holder, and Executive Branch Webcasting Corporation, a Delaware corporation
("EBWC"), pursuant to which, among other things, the Holder has agreed to
contribute to EBWC certain intellectual property rights in exchange for (i)
$1,000,000, including all the Ampex Stock (as defined in the Purchase
Agreement), if any, from EBWC, and (ii) the Warrant (as defined below) from
Ampex.
WHEREAS, Ampex and the Holder have entered into that certain Registration
Rights Agreement, dated July 22, 1999 (the "Registration Rights Agreement"),
between Ampex and the Holder, pursuant to which Ampex has agreed to file a
registration statement with the Securities and Exchange Commission ("SEC")
covering the Warrant Shares (as defined below) and to use its best efforts to
register the Warrant Shares with the SEC under the Securities Act of 1933, as
amended (the "Securities Act").
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth herein, the parties hereto agree as follows:
Section 1. Grant of the Warrant. Pursuant to Section 1.2 of the Purchase
Agreement, Ampex hereby grants the Holder a warrant (the "Warrant") to purchase
at $3.90 per share (the "Exercise Price") up to 512,821 shares (the "Warrant
Shares") of Class A common stock, par value $.01 per share, of Ampex (the "Class
A Stock").
Section 2. Term. The Warrant shall expire on June 15, 2001, unless sooner
terminated pursuant to Section 3 hereof.
-1-
Section 3. Vesting. The Warrant shall vest according to the following
schedule:
Date Portion of Total Warrant
---- Which Is Exercisable
-----------------------
Upon the exercise of the March 15,
2000 Option (as defined in the
Purchase Agreement) and consummation
of the purchase of the shares of
common stock, par value $.01 per
share, of EBWC (the "EBWC Stock"),
underlying the March 15, 2000 Option. 25%
Upon the exercise of the July 15,
2000 Option (as defined in the
Purchase Agreement) and consummation
of the purchase of the EBWC Stock
underlying the July 15, 2000 Option. 75%
Notwithstanding anything herein to the contrary, the Warrant shall lapse (a) in
its entirety, on March 15, 2000, unless the March 15, 2000 Option is duly
exercised and paid for on or prior to such date, and (b) on July 15, 2000, with
respect to any unvested portion of the Warrant, unless the July 15, 2000 Option
is duly exercised and paid for on or prior to such date.
Section 4. Exercise.
(a) The vested portion of the Warrant may be exercised, in whole or in
part, but not as to any fractional shares, during the term of the Warrant by
written notice to Ampex specifying the number of Warrant Shares to be purchased
and place and date for the closing, which shall be no later than five (5)
business days from the date of the such notice.
(b) The Holder shall deliver (i) the Warrant, and (ii) unless the
Warrant Shares have been registered under the Securities Act pursuant to the
Registration Rights Agreement, a letter representing that the Warrant Shares so
acquired by it pursuant to this Agreement are being acquired for its own account
for investment and not with a view to any distribution thereof, and agreeing
that the Holder will not offer to sell or otherwise dispose of any such shares
of Class A Stock so acquired in violation of the Securities Act, or of the
securities laws of any state.
Section 5. Payment of Purchase Price and Delivery of Certificates. At any
closing hereunder with respect to the exercise of the Warrant by the Holder:
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(a) Against delivery of the Warrant Shares to be purchased free and
clear of all liens, claims, charges and encumbrances of any kind or nature
whatsoever, the Holder shall make payment to Ampex of the aggregate price for
the Warrant Shares so purchased in immediately available funds.
(b) Ampex shall deliver to the Holder a duly executed certificate or
certificates representing the number of Warrant Shares so purchased, registered
in the name of the Holder or its designee. Unless the Warrant Shares have been
registered under the Securities Act pursuant to the Registration Rights
Agreement, each certificate for the Warrant Shares will be imprinted with a
legend in substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933. THESE
SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF
SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SUCH ACT.
(c) Unless the Warrant has expired or all of the purchase rights
represented hereby have been exercised, Ampex shall prepare a new Warrant,
substantially identical hereto, representing the rights formerly represented by
the Warrant which have not expired or been exercised and shall deliver such new
Warrant, along with the certificate or certificates referred to in Section 5(b)
hereof to the Holder or its designee.
(d) The issuance of certificates for the Warrant Shares shall be made
without charge to the Holder for any issuance tax in respect thereof or other
cost incurred by Ampex in connection with the exercise of the Warrant and the
related issuance of Warrant Shares; provided, however, that Ampex shall not be
required to pay any tax or taxes which may be payable in respect of any transfer
involved in the issuance of the Warrant or any certificates for Warrant Shares
in a name other than that of the Holder, and Ampex shall not be required to
issue or deliver such Warrant or certificate for Warrant Shares unless and until
the Holder requesting the issuance thereof shall have paid to Ampex the amount
of such tax or shall have established to the reasonable satisfaction of Ampex
that such tax has been paid.
Section 6. Reservation of Warrant Shares. Ampex shall at all times reserve
and keep available out of its authorized but unissued shares of Class A Stock,
solely for the purpose of issuance upon the exercise of the Warrant, such number
of shares of Class A Stock issuable upon the exercise of the Warrant. All shares
of Class A Stock which are so issuable shall, when issued and upon the payment
of the Exercise Price therefor, be duly and validly issued, fully paid and
nonassessable. Ampex shall use its best efforts to take all such actions as may
be necessary to assure that all such Warrant Shares may be so issued without
violation of any applicable law or governmental regulation or any requirements
of any domestic securities exchange upon which shares of Class A Stock may be
listed (except for official notice of issuance which shall be immediately
delivered by Ampex upon each such issuance).
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Section 7. Adjustments, Notice Provisions and Restrictions on Issuance of
Additional Securities.
(a) Adjustment of Exercise Price. Subject to the provisions of this
Section 7, the Exercise Price in effect from time to time shall be subject to
adjustment, as follows:
(i) In case Ampex shall (A) declare a dividend or make a
distribution on the outstanding shares of its Class A Stock in shares of its
Class A Stock, (B) subdivide or reclassify the outstanding shares of its Class A
Stock into a greater number of shares, or (C) combine or reclassify the
outstanding shares of its Class A Stock into a smaller number of shares, the
Exercise Price in effect immediately after the record date for such dividend or
distribution or the effective date of such subdivision, combination or
reclassification shall be adjusted so that it shall equal the price determined
by multiplying the Exercise Price in effect immediately prior thereto by a
fraction, of which the numerator shall be the number of shares of Class A Stock
outstanding immediately before such dividend, distribution, subdivision,
combination or reclassification, and of which the denominator shall be the
number of shares of Class A Stock outstanding immediately after such dividend,
distribution, subdivision, combination or reclassification. Any shares of Class
A Stock of Ampex issuable in payment of a dividend shall be deemed to have been
issued immediately prior to the record date for such dividend for purposes of
calculating the number of outstanding shares of Class A Stock of Ampex under
Sections 7(a)(ii) and 7(a)(iii) hereof. Such adjustment shall be made
successively whenever any event specified above shall occur.
(ii) In case Ampex shall fix a record date for the issuance of
rights, options, warrants or convertible or exchangeable securities to all
holders of its Class A Stock entitling them (for a period expiring within 45
days after such record date) to subscribe for or purchase shares of its Class A
Stock at a price per share less than the Market Price (as defined below) on such
record date the Exercise Price shall be adjusted immediately thereafter so that
it shall equal the price determined by multiplying the Exercise Price in effect
immediately prior thereto by a fraction, of which the numerator shall be the
number of shares of Class A Stock outstanding on such record date plus the
number of shares of Class A Stock which the aggregate offering price of the
total number of shares of Class A Stock so offered would purchase at the Market
Price per share, and of which the denominator shall be the number of shares of
Class A Stock outstanding on such record date plus the number of additional
shares of Class A Stock offered for subscription or purchase. Such adjustment
shall be made successively whenever such a record date is fixed. To the extent
that any such rights, options, warrants or convertible or exchangeable
securities are not so issued or expire unexercised, the Exercise Price then in
effect shall be readjusted to the Exercise Price which would then be in effect
if such unissued or unexercised rights, options, warrants or convertible or
exchangeable securities had not been issuable.
(iii) In case Ampex shall fix a record date for the making of a
distribution to all holders of shares of its Class A Stock (A) of shares of any
class other than its Class A Stock, (B) of evidences of its indebtedness, (C) of
assets (excluding cash dividends or
4
distributions (other than extraordinary cash dividends or distributions), and
dividends or distributions referred to in Section 7(a)(i) hereof), or (D) of
rights, options, warrants or convertible or exchangeable securities (excluding
those rights, options, warrants or convertible or exchangeable securities
referred to in Section 7(a)(ii) hereof), then in each such case the Exercise
Price in effect immediately thereafter shall be determined by multiplying the
Exercise Price in effect immediately prior thereto by a fraction, of which the
numerator shall be the total number of shares of Class A Stock outstanding on
such record date multiplied by the Market Price per share on such record date,
less the aggregate fair market value as determined in good faith by the board of
directors of Ampex (the "Board of Directors") of said shares or evidences of
indebtedness or assets or rights, options, warrants or convertible or
exchangeable securities so distributed, and of which the denominator shall be
the total number of shares of Class A Stock outstanding on such record date
multiplied by such Market Price per share. Such adjustment shall be made
successively whenever such a record date is fixed. In the event that such
distribution is not so made, the Exercise Price then in effect shall be
readjusted to the Exercise Price which would then be in effect if such record
date had not been fixed.
(iv) For the purpose of any computation herein, the "Market
Price" per share at any date (the "Computation Date") shall be as follows: (A)
if the Class A Stock is listed on a national securities exchange or quoted on a
national quotation system, the Market Price shall be deemed to be the average of
the daily closing prices of the Class A Stock for the ten (10) consecutive
Trading Days (as defined below) ending on the Trading Day before such date;
provided, however, that if there shall have occurred prior to the Computation
Date any event described in Section 7(a)(i) or 7(a)(ii) which shall have become
effective with respect to market transactions at any time (the "Market-Effect
Date") on or after the beginning of such 10-day period, the closing price for
each Trading Day preceding the Market-Effect Date shall be adjusted, for
purposes of calculating such average, by multiplying such closing price by a
fraction the numerator of which is the Exercise Price as in effect immediately
prior to the Computation Date and the denominator of which is the Exercise Price
as in effect immediately prior to the Market-Effect Date, it being understood
that the purpose of this proviso is to ensure that the effect of such event on
the market price of the Class A Stock shall, as nearly as possible, be
eliminated in order that the distortion in the calculation of the Market Price
may be minimized; (B) if there is no public market for the Class A Stock, the
highest price at which shares of Class A Stock are offered for sale in a public
offering registered pursuant to the Securities Act or in an arms-length private
offering, if any such offering is pending (unless such offer is revoked prior to
such sale) on the date of determination of Market Price; or (C) if there is no
public market for Class A Stock and no such offering is pending, the fair market
value per share of Class A Stock as determined in good faith by the Board of
Directors; provided, however, that if the Class A Stock shall no longer be
traded on the National Market System of the National Association of Securities
Dealers, Inc. or any other national securities exchange, the term "Class A
Stock" shall mean the class or series of Class A Stock which is so traded. As
used herein the term "Trading Days" with respect to Class A Stock means (A) if
the Class A Stock is quoted on the National Market Automated Quotation System of
the National Association of Securities Dealers, Inc., or any similar system of
automated dissemination of quotations of securities prices, days on which trades
may be made on such system, or (B) if the
5
Class A Stock is listed or admitted for trading on any national securities
exchange, days on which such national securities exchange is open for business.
For all purposes of this Agreement all valuations made by the Board of Directors
shall be final and conclusive on Ampex and the Holders, their successors and
assigns, absent manifest error. In determining the Market Price, the Board of
Directors may obtain and rely on information provided by any source or sources
reasonably believed to be accurate.
(b) No Adjustments to Exercise Price. No adjustment in the Exercise
Price in accordance with the provisions of Section 7(a)(i), 7(a)(ii) or
7(a)(iii)) hereof need be made unless such adjustment would amount to a change
of at least 1% in such Exercise Price of the Warrant; provided, however, that
the amount by which any adjustment is not made by reason of the provisions of
this Section 7(b) shall be carried forward and taken into account at the time of
any subsequent adjustment in the Exercise Price.
(c) Adjustment of Number of Shares. Upon each adjustment of the
Exercise Price pursuant to Section 7(a)(i), 7(a)(ii) or 7(a)(iii) hereof, each
Warrant shall thereupon evidence the right to purchase that number of Warrant
Shares (calculated to the nearest hundredth of a share) obtained by multiplying
the number of Warrant Shares purchasable immediately prior to such adjustment
upon exercise of the Warrant by the Exercise Price in effect immediately prior
to such adjustment and dividing the product so obtained by the Exercise Price in
effect immediately after such adjustment. In the event that the Exercise Price
may not be adjusted due to the provisions of Section 7(e) hereof, the number of
Warrant Shares purchasable upon the exercise of each Warrant shall be adjusted
hereunder as if the Exercise Price had been so adjusted.
(d) Reorganizations. In case of any capital reorganization, other than
in the cases referred to in Section 7(a) hereof, or the consolidation or merger
of Ampex with or into another corporation (other than a merger or consolidation
in which Ampex is the continuing corporation and which does not result in any
reclassification of the outstanding shares of Class A Stock or the conversion of
such outstanding shares of Class A Stock into shares of other stock or other
securities or property), or the sale or conveyance of the property of Ampex as
an entirety or substantially as an entirety (collectively such actions being
hereinafter referred to as "Reorganizations"), there shall thereafter be
deliverable upon exercise of any Warrant (in lieu of the number of Warrant
Shares theretofore deliverable) the number of shares of stock or other
securities or property to which a holder of the number of Warrant Shares which
would otherwise have been deliverable upon the exercise of such Warrant would
have been entitled upon such Reorganization if such Warrant had been exercised
in full immediately prior to such Reorganization. In case of any Reorganization,
appropriate adjustment, as determined in good faith by the Board of Directors,
shall be made in the application of the provisions herein set forth with respect
to the rights and interests of Warrant holders so that the provisions set forth
herein shall thereafter be applicable, as nearly as possible, in relation to any
shares or other property thereafter deliverable upon exercise of the Warrant.
Ampex shall not effect any such Reorganization, unless upon or prior to the
consummation thereof the successor corporation, or if Ampex shall be the
surviving corporation in any such Reorganization and is not the issuer of
6
the shares of stock or other securities or property to be delivered to holders
of shares of the Class A Stock outstanding at the effective time thereof, then
such issuer, shall assume by written instrument the obligation to deliver to the
Holder of any Warrant such shares of stock, securities, cash or other property
as such Holder shall be entitled to purchase in accordance with the foregoing
provisions.
(e) Exercise Price Less Than Par Value. The Exercise Price shall not
be adjusted below the par value per share of the Class A Stock for the purpose
of making any adjustment as may be required pursuant to this Section 7.
(f) Notice of Certain Actions. In the event Ampex shall:
(i) declare any dividend payable in stock to the holders of its
Class A Stock or make any other distribution in property other than cash to the
holders of its Class A Stock; or
(ii) offer to the holders of its Class A Stock rights to
subscribe for or purchase any shares of any class of stock or any other rights
or options; or
(iii) effect any reclassification of its Class A Stock (other
than a reclassification involving merely the subdivision or combination of
outstanding shares of Class A Stock) or any capital reorganization or any
consolidation or merger (other than a merger in which no distribution of
securities or other property is made to holders of Class A Stock), or any sale,
transfer or other disposition of its property, assets and business substantially
as an entirety, or the liquidation, dissolution or winding up of Ampex; then, in
each such case, Ampex shall cause notice of such proposed action to be mailed to
the Holder at least thirty (30) days prior to such action. Such notice shall
specify the date on which the books of Ampex shall close, or a record be taken,
for determining holders of Class A Stock entitled to receive such stock dividend
or other distribution or such rights or options, or the date on which such
reclassification, reorganization, consolidation, merger, sale, transfer, other
disposition, liquidation, dissolution, winding up or exchange shall take place
or commence, as the case may be, and the date as of which it is expected that
holders of record of Class A Stock shall be entitled to receive securities or
other property deliverable upon such action, if any such date has been fixed.
Ampex shall cause copies of such notice to be mailed to each Holder. Such notice
shall be mailed in the case of any action covered by Section 7(f)(i) or (ii)
hereof, at least ten (10) days prior to the record date for determining holders
of the Class A Stock for purposes of receiving such payment or offer, and in the
case of any action covered by of this Section 7(f)(iii), at least ten (10) days
prior to the earlier of the date upon which such action is to take place or any
record date to determine holders of Class A Stock entitled to receive such
securities or other property.
(g) Warrant Amendments. Irrespective of any adjustments pursuant to
this Section 7, the Warrant theretofore or thereafter issued need not be amended
or replaced, but certificates thereafter issued shall bear an appropriate legend
or other notice of any adjustments;
7
provided Ampex may, at its option, issue certificates evidencing the new Warrant
in such form as may be approved by its Board of Directors to reflect any
adjustment in the Exercise Price and number of Warrant Shares purchasable under
the Warrant and deliver the same to the Holder in substitution for the existing
Warrant.
Section 8. No Voting Rights. The Warrant shall not entitle the Holder to
any voting rights or other rights as a stockholder of Ampex.
Section 9. Restrictions. Subject to the provisions of this Section 9, the
Warrant and all rights hereunder are transferable, in whole or in part, without
charge to the Holder (subject to Section 5(d) hereof), upon surrender of the
Warrant with a properly executed Assignment (in the form of Exhibit A hereto) at
the principal office of Ampex. The Holder agrees that it will not sell, transfer
or otherwise dispose of the Warrant, in whole or in part, except pursuant to an
effective registration statement under the Securities Act or an exemption from
registration thereunder. Each certificate evidencing each Warrant issued upon
such transfer shall bear the restrictive legends set forth in Section 5(b)
hereof.
Section 10. Listing. Ampex will use its best efforts to cause the Warrant
Shares to be listed on any domestic securities exchange upon which shares of its
Class A Stock are listed at the time of issuance.
Section 11. Warrant Register. Ampex shall maintain at its principal
executive offices books for the registration and the registration of transfer of
the Warrant. Ampex may deem and treat the Holder as the absolute owner hereof
(notwithstanding any notation of ownership or other writing thereon made by
anyone) for all purposes and shall not be affected by any notice to the
contrary.
Section 12. Fractional Shares. Ampex may, but shall not be required, to
issue a fraction of a share of a Class A Stock upon exercise of the Warrant in
whole or in part, including any which may result from adjustments in accordance
with Section 7 hereof to the Exercise Price or number of Warrant Shares
purchasable under each Warrant. With respect to any final fraction of a Warrant
Share called for upon the exercise of the Warrant, Ampex shall pay a cash
adjustment to the Holder of the Warrant in respect of such final fraction in an
amount equal to the same fraction of the Market Price of a Warrant Share as
determined by Ampex on the business day next preceding the date of such
exercise. The Holder of the Warrant, by its acceptance of the Warrant, shall
expressly waive any right to receive any fractional Warrant Share upon exercise
of the Warrant. All calculations under this Section 12 shall be made to the
nearest hundredth of a share.
Section 13. Notices. All notices or other communications under this
Agreement shall be sufficient if in writing and delivered by hand or sent by
telecopy, or sent, postage prepaid by registered, certified or express mail, or
by recognized overnight air courier service, and shall be deemed given when so
delivered by hand or telecopied, or if mailed or sent by overnight
8
courier service, on the third business day after mailing (first business day
after mailing in the case of express mail or overnight courier service) to the
parties at the following addresses:
If to Ampex:
Ampex Corporation
000 Xxxxxxxx
Xxxxxxx Xxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: General Counsel
with copies to:
Battle Xxxxxx LLP
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxxxx, Esq.
If to the Holder:
Information Super Station, L.L.C.
0000 X Xxxxxx, X.X., Xxxxx 000
Xxxxxxxxxx, X.X. 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx
with copies to:
Porter, Wright, Xxxxxx & Xxxxxx
0000 X Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000-0000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxxxx, Esq.
or to such other addresses as either party may have furnished to the other in
writing in accordance herewith.
Section 14. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without regard to
its principles of conflicts of law.
Section 15. Assigns. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns but
shall not confer any rights upon
9
any other person. This Agreement may not be assigned by any party without the
consent of the other party(ies).
Section 16. Amendments and Waivers. The provisions of this Agreement may
not be amended, modified or supplemented, and waivers or consents to departures
from the provisions hereof may not be given, without the written consent of
Ampex and unless Ampex has obtained the written consent of the Holders of at
least a majority of the Warrant Shares.
Section 17. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same agreement.
Section 18. Effect of Invalidity. Any term or provision of this Agreement
which is invalid or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement or affecting the validity or enforceability of
any of the terms or provisions of this Agreement in any other jurisdiction. If
any provision of this Agreement is so broad as to be unenforceable, such
provision shall be interpreted to be only so broad as is enforceable.
Section 19. Entire Agreement. This Agreement is intended by the parties as
a final expression of their agreement and intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein. This Agreement supersedes all
prior agreements and understandings between the parties with respect to such
subject matter.
Section 20. Miscellaneous. The headings contained in this Agreement are for
reference only and shall not in any way affect the meaning or interpretation of
this Agreement. This Agreement may be executed simultaneously in one or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument.
Section 21. Further Assurances. Each party hereto shall perform such
further acts and execute such further documents as may reasonably be required to
carry out the provisions of this Agreement.
10
IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement,
or caused this Agreement to be duly executed on its behalf on the date first
above written.
AMPEX CORPORATION
By: /s/ Xxxxxx X. Xxxxxxx
-------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Chairman
INFORMATION SUPER STATION, L.L.C.
By: /s/ Xxxxxx X. Xxxxxx
-------------------------
Name: Xxxxxx X. Xxxxxx
Title: Managing Member
11
EXHIBIT A
ASSIGNMENT
FOR VALUE RECEIVED, __________________________ hereby sells, assigns
and transfers all the rights of the undersigned under the attached Contingent
Warrant Agreement with respect to the number of shares of the Class A common
stock, par value $.01 per share, of Ampex Corporation, covered thereby set forth
below, unto:
Names of Assignee Address Number of Shares
----------------- ------- ----------------
Dated: Signature
[Name]
Witness
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