FOLLOW ON FUNDING WAIVER OF RIGHTS AGREEMENT
Exhibit
10.29
FOLLOW
ON FUNDING
This
Waiver of Rights Agreement (the “Agreement”)
is
made and entered into as of ___, 2007 (the “Effective
Date”),
by
and between XA,
Inc.,
a
Nevada corporation (“XA”)
and
Sands
Brothers Venture Capital LLC,
Sands
Brothers Venture Capital II LLC,
Sands
Brothers Venture Capital III LLC,
Sands
Brothers Venture Capital IV LLC,
Katie
& Xxxx Bridge Partners, L.P.,
G.
Xxxxx Xxxxxxxx,
Xxxx X. Xxxxxx
and
Vision
Opportunity Master Fund, Ltd. (each
a
“Purchaser”
and
collectively the “Purchasers”),
and
Mastodon
Ventures, Inc.,
Gusrae
Xxxxxx Xxxxx & Xxxxxxx, PLLC
and
Xxxxx
X. Xxxx
(the
“Interested
Parties”
and
collectively with the Purchasers, the “Warrant
Holders”)
each
individually a “Party”
and
collectively the “Parties.”
WHEREAS,
pursuant to Securities Purchase Agreements entered into with the Purchasers
on
August 8, 2006, September 26, 2006, and October 23, 2006 (the “Prior
Purchase Agreements”),
XA
sold the Purchasers an aggregate of $2,700,000 in 11% Senior Secured Convertible
Promissory Notes (the “Prior
Notes”)
and
granted the Warrant Holders various warrants to purchase shares of XA’s common
stock as described in greater detail on Exhibit
A,
attached hereto (the “Prior Warrants”);
WHEREAS,
the
Purchasers entered into Registration Rights Agreements in connection with the
Prior Purchase Agreements, which provided among other things, that XA would
register all of the shares of common stock issuable in connection with the
conversion of the Notes and the exercise of the Warrants (each a “Prior
Rights Agreement”
and
collectively the “Prior
Rights Agreements”)
pursuant to a Registration Statement (the “Registration Statement”)
which
was to be declared effective by the SEC by May 24, 2007, which deadline was
not
met (the “Effectiveness
Date”);
WHEREAS,
XA has
been prevented from registering all of the Registrable Securities due to
limitations put on the total number of shares of common stock which XA can
register pursuant to Rule 415(a)(1);
WHEREAS,
XA
plans to sell additional Notes on substantially similar terms to the Purchasers
(the “Follow
On Notes”
and
collectively with the Prior Notes, the “Notes”)
and
issue additional Warrants to the Purchasers in connection with the Follow On
Notes on similar terms as the Warrants (the “Follow
On Warrants”
and
collectively with the Prior Warrants, the “Warrants”),
in
connection with and pursuant to Securities Purchase Agreements, which shares
issuable in connection with the conversion of the Follow On Notes and issuable
in connection with the exercise of the Follow On Warrants XA has agreed to
register pursuant to Registration Rights Agreements (each a “Follow
On Rights Agreement”
and
collectively the “Follow
On Rights Agreements”;
the
transactions pursuant to which the Follow On Notes and the Follow On Warrants
are to be issued, the “Follow
On Funding”);
and
WHEREAS,
due to
the sale of the Follow On Warrants and the Follow On Notes, and the other
related transactions as described therein, XA is required to withdraw its
currently pending Registration Statement.
NOW,
THEREFORE,
in
consideration for the promises and pledges contained below and other good and
valuable consideration, which consideration the Parties acknowledge receipt
of,
and the premises and the mutual covenants, agreements, and considerations herein
contained, the Parties hereto agree as follows:
(a)
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The
Purchasers agree (and any of the Interested Parties holding the power
to
do so) to waive the default caused by XA’s inability to meet the required
Effectiveness Date and waive any default which may occur due to XA’s need
to withdraw the Registration Statement.
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(b)
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The
Purchasers, the Interested Parties and XA further agree that each
Prior
Rights Agreement and the terms and conditions set forth therein shall
be
replaced and superseded in its entirety, with the terms and conditions
of
the Follow On Rights Agreement entered into between XA and such party,
as
the case may be..
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The
Purchasers and XA agree that in connection with the issuance of the Follow
On
Notes, the Prior Notes shall be re-priced, i.e., the Conversion Price of such
Prior Notes shall be equal to the Conversion Price of the Follow On Notes,
as
such term is defined in the Follow On Notes.
The
Warrant Holders and XA agree that the Purchase Price (as defined in the
Warrants) of the $1.10 exercise price Prior Warrants shall be adjusted to the
Purchase Price of the Follow On Warrants.
The
Purchasers agree that after this Agreement is executed by each party hereto,
that XA shall not be in default of any of the agreements entered into in
connection with the Prior Purchase Agreements and/or Follow On Purchase
Agreements.
The
Parties agree and acknowledge that the Follow On Funding will cause the
previously granted 250,000 Class A Warrants to purchase shares of XA’s common
stock at $9.60 per share (prior to the re-pricing) to re-price and/or adjust
to
$0.30 per share, based on the current exercise price of the Follow On Warrants
(the “Re-Pricing”)
in
connection with the anti-dilution rights contained therein. The Purchasers
agree
to waive any default and/or dilution rights which may exist in connection with
the Notes and/or Warrants in connection such Re-Pricing.
(a)
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Assignment.
All of the terms, provisions and conditions of this Agreement shall
be
binding upon and shall inure to the benefit of and be enforceable
by the
Parties hereto and their respective successors and permitted assigns.
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(b)
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Applicable
Law.
This Agreement shall be construed in accordance with and governed
by the
laws of the State of Nevada, California, Illinois, New Jersey and
New
York, excluding any provision of this Agreement which would require
the
application of the laws of any other
jurisdiction.
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(c)
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Amendments
and Waivers.
No variations, modifications, changes or extensions of this Agreement
or
any other terms hereof shall be binding upon any Party hereto unless
set
forth in a document duly executed by such Party or an authorized
agent or
such Party.
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(d)
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Waiver.
No
failure on the part of any Party to enforce any provisions of this
Agreement will act as a waiver of the right to enforce that
provision.
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(e)
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Section
Headings.
Section headings are for convenience only and shall not define or
limit
the provisions of this Agreement.
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(f)
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Counterparts;
Effect of Facsimile and Photocopied Signatures.
This Agreement may be executed in several counterparts, each of which
is
an original. It shall not be necessary in making proof of this Agreement
or any counterpart hereof to produce or account for any of the other
counterparts. A copy of this Agreement signed by one Party and faxed
to
another Party shall be deemed to have been executed and delivered
by the
signing Party as though an original. A photocopy of this Agreement
shall
be effective as an original for all
purposes.
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[Remainder
of page left intentionally blank. Signature page follows.]
This
Agreement has been executed by the Parties on the date first written above,
with
an Effective Date as provided above.
/s/
Xxxxxx Xxxxxx
Xxxxxx
Xxxxxx
Chief
Executive Officer
Purchasers:
Sands
Brothers Venture Capital LLC
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Sands
Brothers Venture Capital II LLC
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By:/s/
Xxxxx
Xxxxx
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By:/s/
Xxxxx
Xxxxx
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Its:
COO
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Its:COO
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Printed
Name:
Xxxxx
Xxxxx
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Printed
Name:
Xxxxx
Xxxxx
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Sands
Brothers Venture Capital III LLC
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Sands
Brothers Venture Capital IV LLC
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By:/s/
Xxxxx
Xxxxx
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By:/s/
Xxxxx
Xxxxx
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Its:COO
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Its:COO
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Printed
Name:
Xxxxx
Xxxxx
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Printed
Name:
Xxxxx
Xxxxx
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Katie
& Xxxx Bridge Partners, L.P.
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Vision
Opportunity Master Fund, Ltd.
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By:/s/
Xxxxx
Xxxxx
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By:/s/
Xxxx
Xxxxxxxx
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Its:COO
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Its:Porfolio
Manager
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Printed
Name:
Xxxxx
Xxxxx
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Printed
Name:
Xxxx
Xxxxxxxx
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/s/
G. Xxxxx
Xxxxxxxx
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/s/
Xxxx X.
Xxxxxx
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G.
Xxxxx Xxxxxxxx
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Xxxx
X. Xxxxxx
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Interested
Parties:
Mastodon
Ventures, Inc.
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Gusrae
Xxxxxx Xxxxx & Xxxxxxx, PLLC
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By:/s/
Xxxxxx
Xxxxxx
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By:______________________
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Its:President
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Its:_______________________
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Printed
Name:
Xxxxxx
Xxxxxx
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Printed
Name:
________________________
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/s/
Xxxxx X.
Xxxx
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Xxxxx
X. Xxxx
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Exhibit
A
XA,
Inc. Prior Warrants
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||||||||||
As
Granted
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Currently
Held (1)
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|||||||||
Grant
Date
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Vesting
Date
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Exercisable
until
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Exercise
Price
|
Warrants
|
Warrants
|
Warrants
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||||
$0.30
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$0.30
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|||||||||
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|||||||||
Vision
Opportunity Master Fund, Ltd.
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10/23/06
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10/23/06
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10/23/11
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$1.10
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187,500
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|
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|||
10/23/06
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10/23/06
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10/23/11
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$0.30
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100,000
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100,000
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333,333
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(1)
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|||
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|||||||||
Xxxx
X. Xxxxxx
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9/26/06
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9/26/06
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10/26/11
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$1.10
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15,000
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0
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0
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|||
G.
Xxxxx Xxxxxxxx
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9/26/06
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9/26/06
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10/26/11
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$1.10
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15,000
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0
|
0
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|||
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|||||||||
Sands
Brothers Venture Capital LLC
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8/8/06
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8/8/06
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08/08/11
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$1.10
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3,500
|
|
|
|||
8/8/06
|
8/8/06
|
08/08/11
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$0.30
|
6,667
|
6,667
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4,000
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||||
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|||||||||
Sands
Brothers Venture Capital II LLC
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8/8/06
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8/8/06
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08/08/11
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$1.10
|
14,000
|
|
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|||
8/8/06
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8/8/06
|
08/08/11
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$0.30
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26,667
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26,667
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16,000
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||||
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|||||||||
Sands
Brothers Venture Capital III LLC
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8/8/06
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8/8/06
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08/08/11
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$1.10
|
108,500
|
|
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|||
8/8/06
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8/8/06
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08/08/11
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$0.30
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206,666
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206,666
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124,000
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||||
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|||||||||
Sands
Brothers Venture Capital IV LLC
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8/8/06
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8/8/06
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08/08/11
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$1.10
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35,000
|
|
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|||
8/8/06
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8/8/06
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08/08/11
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$0.30
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66,666
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66,666
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39,999
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||||
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|||||||||
Katie
& Xxxx Bridge Partners, L.P.
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8/8/06
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8/8/06
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08/08/11
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$1.10
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14,000
|
|
|
|||
8/8/06
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8/8/06
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08/08/11
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$0.30
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26,667
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26,667
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16,001
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||||
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|||||||||
Mastodon
Ventures, Inc.
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8/8/06
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8/8/06
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08/08/11
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$0.30
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666,667
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666,667
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429,334
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(1)
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||
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|||||||||
Xxxxx
X. Xxxx
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8/8/2006
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8/8/2006
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08/08/11
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$0.30
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25,000
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|||
11/2/2006
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11/2/2006
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11/02/11
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$0.30
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75,000
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||||||
(1)
Note: The Sands Brothers entities transferred 133,333 $0.30 warrants
to
Vision, and Mastodon transferred 100,000 $0.30 warrants to Vision
in
connection with the Vision closing. Additionally, Mastodon transferred
54,933 $0.30 warrants to Xxxxx Xxxx and 82,400 $0.30 warrants to
Gusrae
Xxxxxx Xxxxx & Xxxxxxx as disclosed in the Company's
filings.
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