Exhibit 10.15
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (this "Agreement") is made and entered into as of
April 27, 2005 STRIKEFORCE TECHNOLOGIES, INC., a New Jersey corporation (the
"Company"); the Buyer(s) listed on the Securities Purchase Agreement, dated the
date hereof (also referred to as the "Investor(s)"), and Gottbetter & Partners,
LLP, as Escrow Agent hereunder ("Escrow Agent").
BACKGROUND
WHEREAS, the Company and the Investor(s) have entered into a Securities
Purchase Agreement (the "Securities Purchase Agreement"), dated as of the date
hereof, pursuant to which the Company proposes to sell secured convertible
debentures (the "Convertible Debentures") which shall be convertible into the
Company's Common Stock, par value $0.0001 per share (the "Common Stock"), for
the Purchase Price, as that term is defined in the Securities Purchase
Agreement. The Securities Purchase Agreement provides that the Investor(s) shall
deposit the purchase amount in a segregated escrow account to be held by Escrow
Agent in order to effectuate a disbursement to the Company at a closing to be
held as set forth in the Securities Purchase Agreement (the "Closing").
WHEREAS, the Company intends to sell Convertible Securities (the
"Offering").
WHEREAS, Escrow Agent has agreed to accept, hold, and disburse the funds
deposited with it in accordance with the terms of this Agreement.
WHEREAS, in order to establish the escrow of funds and to effect the
provisions of the Securities Purchase Agreement, the parties hereto have entered
into this Agreement.
NOW THEREFORE, in consideration of the foregoing, it is hereby agreed as
follows:
1. Definitions. The following terms shall have the following meanings when
used herein:
a. "Escrow Funds" shall mean the funds deposited with Escrow Agent
pursuant to this Agreement.
b. "Joint Written Direction" shall mean a written direction executed by
the Investor(s) and the Company directing Escrow Agent to disburse all or a
portion of the Escrow Funds or to take or refrain from taking any action
pursuant to this Agreement.
c. "Escrow Period" shall begin with the commencement of the Offering and
shall terminate upon the earlier to occur of the following dates:
(i) The date upon which Escrow Agent confirms that it has received in the Escrow
Account all of the proceeds of the sale of the Convertible Debentures;
(ii) The expiration of twenty (20) days from the date of commencement of the
Offering (unless extended by mutual written agreement between the Company and
the Investor(s) with a copy of such extension to Escrow Agent); or
(iii) The date upon which a determination is made by the Company and the
Investor(s) to terminate the Offering prior to the sale of all the Convertible
Debentures.
During the Escrow Period, the Company and the Investor(s) are aware that
they are not entitled to any funds received into escrow and no amounts deposited
in the Escrow Account shall become the property of the Company or the
Investor(s) or any other entity, or be subject to the debts of the Company or
the Investor(s) or any other entity.
2. Appointment of and Acceptance by Escrow Agent. The Investor(s) and the
Company hereby appoint Escrow Agent to serve as Escrow Agent hereunder. Escrow
Agent hereby accepts such appointment and, upon receipt by wire transfer of the
Escrow Funds in accordance with Section 3 below, agrees to hold, invest and
disburse the Escrow Funds in accordance with this Agreement.
a. The Company hereby acknowledges that Escrow Agent is general counsel
to the Investor(s), the managing partner of the Escrow Agent is a director of
the Investor(s), and counsel to the Investor(s) in connection with the
transactions contemplated and referred herein. The Company agrees that in the
event of any dispute arising in connection with this Escrow Agreement or
otherwise in connection with any transaction or agreement contemplated and
referred herein, Escrow Agent shall be permitted to continue to represent the
Investor(s) and the Company will not seek to disqualify such counsel.
3. Creation of Escrow Funds. On or prior to the date of the commencement of
the Offering, the parties shall establish an escrow account with Escrow Agent,
which escrow account shall be entitled as follows: StrikeForce Technologies,
Inc./Highgate House Funds, Ltd. Escrow Account for the deposit of the Escrow
Funds. The Investor(s) will instruct subscribers to wire funds to the account of
Escrow Agent as follows:
Bank: Citibank, N.A
Routing #: 000000000
Account #: 00000000
Name on Account: Gottbetter & Partners, LLP Trust Account
Name on Sub-Account: StrikeForce Technologies, Inc./Highgate House Funds,
Ltd. Escrow account
4. Deposits into the Escrow Account. The Investor(s) agree(s) that they
shall promptly deliver funds for the payment of the Convertible Debentures to
Escrow Agent for deposit in the Escrow Account.
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5. Disbursements from the Escrow Account.
a. Escrow Agent will continue to hold such funds until Highgate House
Funds, Ltd. on behalf of the Investor(s) and Company execute a Joint Written
Direction directing Escrow Agent to disburse the Escrow Funds pursuant to Joint
Written Direction signed by the Company and the Investor(s). In disbursing such
funds, Escrow Agent is authorized to rely upon such Joint Written Direction from
the Company and the Investor(s) and may accept any signatory from the Company
listed on the signature page to this Agreement and any signature from the
Investor(s) that Escrow Agent already has on file.
b. In the event Escrow Agent does not receive the amount of the Escrow
Funds from the Investor(s), Escrow Agent shall notify the Company and the
Investor(s). Upon receipt of payment instructions from the Company, Escrow Agent
shall refund to each subscriber without interest the amount received from each
Investor(s), without deduction, penalty, or expense to the subscriber. The
purchase money returned to each subscriber shall be free and clear of any and
all claims of the Company, the Investor(s) or any of their creditors.
c. In the event Escrow Agent does receive the amount of the Escrow Funds
prior to expiration of the Escrow Period, in no event will the Escrow Funds be
released to the Company until such amount is received by Escrow Agent in
collected funds. For purposes of this Agreement, the term "collected funds"
shall mean all funds received by Escrow Agent which have cleared normal banking
channels and are in the form of cash.
6. Collection Procedure. Escrow Agent is hereby authorized to deposit the
proceeds of each wire in the Escrow Account.
7. Suspension of Performance: Disbursement Into Court. If at any time,
there shall exist any dispute between the Company and the Investor(s) with
respect to holding or disposition of any portion of the Escrow Funds or any
other obligations of Escrow Agent hereunder, or if at any time Escrow Agent is
unable to determine, to Escrow Agent's sole satisfaction, the proper disposition
of any portion of the Escrow Funds or Escrow Agent's proper actions with respect
to its obligations hereunder, or if the parties have not within thirty (30) days
of the furnishing by Escrow Agent of a notice of resignation pursuant to Section
9 hereof, appointed a successor Escrow Agent to act hereunder, then Escrow Agent
may, in its sole discretion, take either or both of the following actions:
a. suspend the performance of any of its obligations (including without
limitation any disbursement obligations) under this Escrow Agreement until such
dispute or uncertainty shall be resolved to the sole satisfaction of Escrow
Agent or until a successor Escrow Agent shall be appointed (as the case may be);
provided however, Escrow Agent shall continue to invest the Escrow Funds in
accordance with Section 8 hereof; and/or
b. petition (by means of an interpleader action or any other appropriate
method) any court of competent jurisdiction in any venue convenient to Escrow
Agent, for instructions with respect to such dispute or uncertainty, and to the
extent required by law, pay into such court, for holding and disposition in
accordance with the instructions of such court, all funds held by it in the
Escrow Funds, after deduction and payment to Escrow Agent of all fees and
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expenses (including court costs and attorneys' fees) payable to, incurred by, or
expected to be incurred by Escrow Agent in connection with performance of its
duties and the exercise of its rights hereunder.
c. Escrow Agent shall have no liability to the Company, the Investor(s),
or any person with respect to any such suspension of performance or disbursement
into court, specifically including any liability or claimed liability that may
arise, or be alleged to have arisen, out of or as a result of any delay in the
disbursement of funds held in the Escrow Funds or any delay in with respect to
any other action required or requested of Escrow Agent.
8. Investment of Escrow Funds. Escrow Agent shall deposit the Escrow Funds
in a non-interest bearing account.
If Escrow Agent has not received a Joint Written Direction at any time that
an investment decision must be made, Escrow Agent shall maintain the Escrow
Funds, or such portion thereof, as to which no Joint Written Direction has been
received, in a non-interest bearing account.
9. Resignation and Removal of Escrow Agent. Escrow Agent may resign from
the performance of its duties hereunder at any time by giving thirty (30) days'
prior written notice to the parties or may be removed, with or without cause, by
the parties, acting jointly, by furnishing a Joint Written Direction to Escrow
Agent, at any time by the giving of ten (10) days' prior written notice to
Escrow Agent as provided herein below. Upon any such notice of resignation or
removal, the representatives of the Investor(s) and the Company identified in
Sections 13a.(iv) and 13b.(iv), below, jointly shall appoint a successor Escrow
Agent hereunder, which shall be a commercial bank, trust company or other
financial institution with a combined capital and surplus in excess of
$10,000,000.00. Upon the acceptance in writing of any appointment of Escrow
Agent hereunder by a successor Escrow Agent, such successor Escrow Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Escrow Agent, and the retiring Escrow Agent shall be
discharged from its duties and obligations under this Escrow Agreement, but
shall not be discharged from any liability for actions taken as Escrow Agent
hereunder prior to such succession. After any retiring Escrow Agent's
resignation or removal, the provisions of this Escrow Agreement shall inure to
its benefit as to any actions taken or omitted to be taken by it while it was
Escrow Agent under this Escrow Agreement. The retiring Escrow Agent shall
transmit all records pertaining to the Escrow Funds and shall pay all funds held
by it in the Escrow Funds to the successor Escrow Agent, after making copies of
such records as the retiring Escrow Agent deems advisable and after deduction
and payment to the retiring Escrow Agent of all fees and expenses (including
court costs and attorneys' fees) payable to, incurred by, or expected to be
incurred by the retiring Escrow Agent in connection with the performance of its
duties and the exercise of its rights hereunder.
10. Liability of Escrow Agent.
a. Escrow Agent shall have no liability or obligation with respect to
the Escrow Funds except for Escrow Agent's willful misconduct or gross
negligence. Escrow Agent's sole responsibility shall be for the safekeeping,
investment, and disbursement of the Escrow Funds in accordance with the terms of
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this Agreement. Escrow Agent shall have no implied duties or obligations and
shall not be charged with knowledge or notice or any fact or circumstance not
specifically set forth herein. Escrow Agent may rely upon any instrument, not
only as to its due execution, validity and effectiveness, but also as to the
truth and accuracy of any information contained herein, which Escrow Agent shall
in good faith believe to be genuine, to have been signed or presented by the
person or parties purporting to sign the same and conform to the provisions of
this Agreement. In no event shall Escrow Agent be liable for incidental,
indirect, special, and consequential or punitive damages. Escrow Agent shall not
be obligated to take any legal action or commence any proceeding in connection
with the Escrow Funds, any account in which Escrow Funds are deposited, this
Agreement or the Purchase Agreement, or to appear in, prosecute or defend any
such legal action or proceeding. Escrow Agent may consult legal counsel selected
by it in any event of any dispute or question as to construction of any of the
provisions hereof or of any other agreement or its duties hereunder, or relating
to any dispute involving any party hereto, and shall incur no liability and
shall be fully indemnified from any liability whatsoever in acting in accordance
with the opinion or instructions of such counsel. The Company and the
Investor(s) jointly and severally shall promptly pay, upon demand, the
reasonable fees and expenses of any such counsel.
b. Escrow Agent is hereby authorized, in its sole discretion, to comply
with orders issued or process entered by any court with respect to the Escrow
Funds, without determination by Escrow Agent of such court's jurisdiction in the
matter. If any portion of the Escrow Funds is at any time attached, garnished or
levied upon under any court order, or in case the payment, assignment, transfer,
conveyance or delivery of any such property shall be stayed or enjoined by any
court order, or in any case any order judgment or decree shall be made or
entered by any court affecting such property or any part thereof, then and in
any such event, Escrow Agent is authorized, in its sole discretion, to rely upon
and comply with any such order, writ judgment or decree which it is advised by
legal counsel selected by it, binding upon it, without the need for appeal or
other action; and if Escrow Agent complies with any such order, writ, judgment
or decree, it shall not be liable to any of the parties hereto or to any other
person or entity by reason of such compliance even though such order, writ
judgment or decree may be subsequently reversed, modified, annulled, set aside
or vacated.
11. Indemnification of Escrow Agent. From and at all times after the date
of this Agreement, the parties jointly and severally, shall, to the fullest
extent permitted by law and to the extent provided herein, indemnify and hold
harmless Escrow Agent and each director, officer, employee, attorney, agent and
affiliate of Escrow Agent (collectively, the "Indemnified Parties") against any
and all actions, claims (whether or not valid), losses, damages, liabilities,
costs and expenses of any kind or nature whatsoever (including without
limitation reasonable attorney's fees, costs and expenses) incurred by or
asserted against any of the Indemnified Parties from and after the date hereof,
whether direct, indirect or consequential, as a result of or arising from or in
any way relating to any claim, demand, suit, action, or proceeding (including
any inquiry or investigation) by any person, including without limitation the
parties to this Agreement, whether threatened or initiated, asserting a claim
for any legal or equitable remedy against any person under any statute or
regulation, including, but not limited to, any federal or state securities laws,
or under any common law or equitable cause or otherwise, arising from or in
connection with the negotiation, preparation, execution, performance or failure
of performance of this Agreement or any transaction contemplated herein, whether
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or not any such Indemnified Party is a party to any such action or proceeding,
suit or the target of any such inquiry or investigation; provided, however, that
no Indemnified Party shall have the right to be indemnified hereunder for
liability finally determined by a court of competent jurisdiction, subject to no
further appeal, to have resulted from the gross negligence or willful misconduct
of such Indemnified Party. If any such action or claim shall be brought or
asserted against any Indemnified Party, such Indemnified Party shall promptly
notify the Company and the Investor(s) hereunder in writing, and the Investor(s)
and the Company shall assume the defense thereof, including the employment of
counsel and the payment of all expenses. Such Indemnified Party shall, in its
sole discretion, have the right to employ separate counsel (who may be selected
by such Indemnified Party in its sole discretion) in any such action and to
participate and to participate in the defense thereof, and the fees and expenses
of such counsel shall be paid by such Indemnified Party, except that the
Investor(s) and/or the Company shall be required to pay such fees and expense if
(a) the Investor(s) or the Company agree to pay such fees and expenses, or (b)
the Investor(s) and/or the Company shall fail to assume the defense of such
action or proceeding or shall fail, in the sole discretion of such Indemnified
Party, to employ counsel reasonably satisfactory to the Indemnified Party in any
such action or proceeding, (c) the Investor(s) and the Company are the plaintiff
in any such action or proceeding or (d) the named or potential parties to any
such action or proceeding (including any potentially impleaded parties) include
both the Indemnified Party, the Company and/or the Investor(s) and the
Indemnified Party shall have been advised by counsel that there may be one or
more legal defenses available to it which are different from or additional to
those available to the Company or the Investor(s). The Investor(s) and the
Company shall be jointly and severally liable to pay fees and expenses of
counsel pursuant to the preceding sentence, except that any obligation to pay
under clause (a) shall apply only to the party so agreeing. All such fees and
expenses payable by the Company and/or the Investor(s) pursuant to the foregoing
sentence shall be paid from time to time as incurred, both in advance of and
after the final disposition of such action or claim. The obligations of the
parties under this section shall survive any termination of this Agreement, and
resignation or removal of Escrow Agent shall be independent of any obligation of
Escrow Agent.
The parties agree that neither payment by the Company or the Investor(s) of
any claim by Escrow Agent for indemnification hereunder shall impair, limit,
modify, or affect, as between the Investor(s) and the Company, the respective
rights and obligations of Investor(s), on the one hand, and the Company, on the
other hand.
12. Expenses of Escrow Agent. Except as set forth in Section 11 the Company
shall reimburse Escrow Agent for all of its reasonable out-of-pocket expenses,
including attorneys' fees, travel expenses, telephone and facsimile transmission
costs, postage (including express mail and overnight delivery charges), copying
charges and the like. All of the compensation and reimbursement obligations set
forth in this Section shall be payable by the Company, upon demand by Escrow
Agent. The obligations of the Company under this Section shall survive any
termination of this Agreement and the resignation or removal of Escrow Agent.
13. Warranties.
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a. The Investor(s) makes the following representations and warranties to
Escrow Agent:
(i) The Investor(s) has full power and authority to execute and
deliver this Agreement and to perform its obligations hereunder.
(ii) This Agreement has been duly approved by all necessary action of
the Investor(s), including any necessary approval of the limited partner of the
Investor(s) or necessary corporate approval, as applicable, has been executed by
duly authorized officers of the Investor(s), enforceable in accordance with its
terms.
(iii) The execution, delivery, and performance of the Investor(s) of
this Agreement will not violate, conflict with, or cause a default under any
agreement of limited partnership of Investor(s) or the articles of incorporation
or bylaws of the Investor(s) (as applicable), any applicable law or regulation,
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any court order or administrative ruling or degree to which the Investor(s) is a
party or any of its property is subject, or any agreement, contract, indenture,
or other binding arrangement.
(iv) Xxxx X. Xxxxxxxxxx has been duly appointed to act as the
representative of the Investor(s) hereunder and has full power and authority to
execute, deliver, and perform this Escrow Agreement, to execute and deliver any
Joint Written Direction, to amend, modify, or waive any provision of this
Agreement, and to take any and all other actions as the Investor(s)'s
representative under this Agreement, all without further consent or direction
form, or notice to, the Investor(s) or any other party.
(v) No party other than the parties hereto and the Investor(s)
has/have, or shall have, any lien, claim or security interest in the Escrow
Funds or any part thereof. No financing statement under the Uniform Commercial
Code is on file in any jurisdiction claiming a security interest in or
describing (whether specifically or generally) the Escrow Funds or any part
thereof.
(vi) All of the representations and warranties of the Investor(s)
contained herein are true and complete as of the date hereof and will be true
and complete at the time of any disbursement from the Escrow Funds.
b. The Company makes the following representations and warranties to
Escrow Agent:
(i) The Company is a corporation duly organized, validly existing, and in good
standing under the laws of the State of New Jersey and has full power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder.
(ii) This Agreement has been duly approved by all necessary corporate
action of the Company, including any necessary shareholder approval, has been
executed by duly authorized officers of the Company, enforceable in accordance
with its terms.
(iii) The execution, delivery, and performance by the Company of this
Agreement is in accordance with the Securities Purchase Agreement and will not
violate, conflict with, or cause a default under the certificate of
incorporation or bylaws of the Company, any applicable law or regulation, any
court order or administrative ruling or decree to which the Company is a party
or any of its property is subject, or any agreement, contract, indenture, or
other binding arrangement, including without limitation to the Securities
Purchase Agreement, to which the Company is a party.
(iv) Xxxx X. Xxx has been duly appointed to act as the representative
of the Company hereunder and has full power and authority to execute, deliver,
and perform this Agreement, to execute and deliver any Joint Written Direction,
to amend, modify or waive any provision of this Agreement and to take all other
actions as the Company's Representative under this Agreement, all without
further consent or direction from, or notice to, the Company or any other party.
(v) No party other than the parties hereto and the Investor(s)s have,
or shall have, any lien, claim or security interest in the Escrow Funds or any
part thereof. No financing statement under the Uniform Commercial Code is on
file in any jurisdiction claiming a security interest in or describing (whether
specifically or generally) the Escrow Funds or any part thereof.
(vi) All of the representations and warranties of the Company
contained herein are true and complete as of the date hereof and will be true
and complete at the time of any disbursement from the Escrow Funds.
14. Consent to Jurisdiction and Venue; Governing Law. The parties hereto
acknowledge that the transactions contemplated by this Agreement and the
exhibits hereto bear a reasonable relation to the State of New York. The parties
hereto agree that the internal laws of the State of New York shall govern this
Agreement and the exhibits hereto, including, but not limited to, all issues
related to usury. Any action to enforce the terms of this Agreement or any of
its exhibits shall be brought exclusively in the state and/or federal courts
situated in the County and State of New York. Service of process in any action
by any of the parties to enforce the terms of this Agreement may be made by
serving a copy of the summons and complaint, in addition to any other relevant
documents, by commercial overnight courier to the Company at its principal
address set forth in this Agreement.
15. Notice. All notices and other communications hereunder shall be in
writing and shall be deemed to have been validly served, given or delivered five
(5) days after deposit in the United States mails, by certified mail with return
receipt requested and postage prepaid, when delivered personally, one (1) day
delivered to any overnight courier, or when transmitted by facsimile
transmission and upon confirmation of receipt and addressed to the party to be
notified as follows:
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If to Investor(s), to: Highgate House Funds, Ltd.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx X. Xxxxxxxxxx
Portfolio Manager
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to Escrow Agent, to: Gottbetter & Partners, LLP
000 Xxxxxxx Xxxxxx,
Xxx Xxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Company, to: StrikeForce Technologies Inc.,
0000 Xxxx Xxxxxxx Xxxx Xxxx,
Xxxxxx, XX, 00000.
Attention: Xxxx X. Xxx
Telephone: (000) 000 0000
Facsimile: (000) 000-0000
With a copy to: Sichenzia, Ross, Xxxxxxxx and Xxxxxxx, LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxx X. XxXxxxxx
Telephone: (000) 000-0000
Or to such other address as each party may designate for itself by like notice.
16. Amendments or Waiver. This Agreement may be changed, waived, discharged
or terminated only by a writing signed by the parties hereto. No delay or
omission by any party in exercising any right with respect hereto shall operate
as waiver. A waiver on any one occasion shall not be construed as a bar to, or
waiver of, any right or remedy on any future occasion.
17. Severability. To the extent any provision of this Agreement is
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition, or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.
18. Entire Agreement. This Agreement constitutes the entire Agreement
between the parties relating to the holding, investment, and disbursement of the
Escrow Funds and sets forth in their entirety the obligations and duties of
Escrow Agent with respect to the Escrow Funds.
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19. Binding Effect. All of the terms of this Agreement, as amended from
time to time, shall be binding upon, inure to the benefit of and be enforceable
by the respective heirs, successors and assigns of the Investor(s), the Company,
or Escrow Agent.
20. Execution of Counterparts. This Agreement and any Joint Written
Direction may be executed in counter parts, which when so executed shall
constitute one and same agreement or direction.
21. Termination. Upon the first to occur of the disbursement of all amounts
in the Escrow Funds pursuant to Joint Written Directions or the disbursement of
all amounts in the Escrow Funds into court pursuant to Section 7 hereof, this
Agreement shall terminate and Escrow Agent shall have no further obligation or
liability whatsoever with respect to this Agreement or the Escrow Funds.
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IN WITNESS WHEREOF the parties have hereunto set their hands and seals the
day and year above set forth.
STRIKEFORCE TECHNOLOGIES, INC.
By: /s/ Xxxx Xxx
------------
Name: Xxxx Xxx
Title: Chief Executive Officer
HIGHGATE HOUSE FUNDS, LTD.
By: Yorkville Advisors, LLC
Its: General Partner
By: /s/ Xxxx X. Xxxxxxxxxx
----------------------
Name: Xxxx X. Xxxxxxxxxx
Title: Portfolio Manager
GOTTBETTER & PARNTERS, LLP
By: /s/ Xxxx X. Xxxxxxxxxx
----------------------
Name: Xxxx X. Xxxxxxxxxx
Title: Managing Partner
