LOCKBOX ESCROW AGREEMENT
Exhibit
10.5
This
Agreement is dated as of the 18th day of December, 2007 among VoIP, Inc., a
Texas corporation (the "Borrower"), the parties identified on Schedule A hereto
(each
a
“Lender”, and collectively “Lenders”), and
Grushko & Xxxxxxx, P.C. (the "Escrow Agent"):
WITNESSETH:
WHEREAS,
Lenders have and are loaning to the Borrower (“Loans”), which are referred to as
the Lockbox Notes, as that terms is defined in the Intercreditor Agreement
dated
as of this date (“Intercreditor Agreement”) and are entering into a a “Loan
Agreement” dated as of this date (“Loan Agreement”); and
WHEREAS,
the parties hereto require the Borrower to repay the Loans with the proceeds
of
the Receivables to be received in the Lockbox Account to be delivered to the
Escrow Agent to be held in escrow in the Lockbox Account and released by the
Escrow Agent in accordance with the terms and conditions of this Agreement
and
the Loan Agreement; and
WHEREAS,
the Escrow Agent is willing to serve as escrow agent pursuant to the terms
and
conditions of this Agreement and Escrow Agreement;
NOW
THEREFORE, the parties agree as follows:
ARTICLE
I
INTERPRETATION
1.1. Definitions.
Whenever used in this Agreement, the following terms shall have the following
respective meanings:
§ "Agreement"
means this Agreement and Loan Agreement and all amendments made hereto and
thereto by written agreement between the parties;
§ "Escrowed
Payment" shall mean the Receivables as defined below;
§ "Receivables"
means all rights to the payment of money now owned or hereafter acquired by
Borrower, whether due or to become due and whether or not earned by performance
including, but not limited to, Accounts, chattel paper, instruments, general
intangibles, and all guaranties and security therefor and all contracts relating
thereto and all returned and repossessed goods; provided that the same arise
in
connection with the extension of credit provided to Borrower by Lender pursuant
to the Loan Agreement.
1.2. Entire
Agreement.
This
Agreement along with the Loan Agreement constitute the entire agreement between
the parties hereto relating to the Receivables and the Lockbox Accont and
supersedes all prior agreements, understandings, negotiations and discussions,
whether oral or written, of the parties. There are no warranties,
representations and other agreements made by the parties in connection with
the
subject matter hereof except as specifically set forth in this
Agreement.
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1.3. Extended
Meanings.
In this
Agreement words importing the singular number include the plural and vice versa;
words importing the masculine gender include the feminine and neuter genders.
The word "person" includes an individual, body corporate, partnership, trustee
or trust or unincorporated association, executor, administrator or legal
representative.
1.4. Waivers
and Amendments.
This
Agreement may be amended, modified, superseded, cancelled, renewed or extended,
and the terms and conditions hereof may be waived, only by a written instrument
signed by all parties, or, in the case of a waiver, by the party waiving
compliance. Except as expressly stated herein, no delay on the part of any
party
in exercising any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any waiver on the part of any party of any right, power
or
privilege hereunder preclude any other or future exercise of any other right,
power or privilege hereunder.
1.5. Headings.
The
division of this Agreement into articles, sections, subsections and paragraphs
and the insertion of headings are for convenience of reference only and shall
not affect the construction or interpretation of this Agreement.
1.6. Law
Governing this Agreement.
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of New York without regard to principles of conflicts of laws. Any action
brought by either party against the other concerning the transactions
contemplated by this Agreement shall be brought only in the state and federal
courts located in the state and county of New York. Both parties and the
individuals executing this Agreement and other agreements on behalf of the
Borrower agree to submit to the jurisdiction of such courts and waive trial
by
jury. The prevailing party (which shall be the party which receives an award
most closely resembling the remedy or action sought) shall be entitled to
recover from the other party its reasonable attorney's fees and costs. In the
event that any provision of this Agreement or any other agreement delivered
in
connection herewith is invalid or unenforceable under any applicable statute
or
rule of law, then such provision shall be deemed inoperative to the extent
that
it may conflict therewith and shall be deemed modified to conform with such
statute or rule of law. Any such provision which may prove invalid or
unenforceable under any law shall not affect the validity or enforceability
of
any other provision of any agreement.
1.7. Specific
Enforcement, Consent to Jurisdiction.
The
Borrower and Lender acknowledge and agree that irreparable damage would occur
in
the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injuction or
injunctions to prevent or cure breaches of the provisions of this Agreement
and
to enforce specifically the terms and provisions hereof or thereof, this being
in addition to any other remedy to which any of them may be entitled by law
or
equity. Subject to Section 1.6 hereof, each of the Borrower and Lender hereby
waives, and agrees not to assert in any such suit, action or proceeding, any
claim that it is not personally subject to the jurisdiction of such court,
that
the suit, action or proceeding is brought in an inconvenient forum or that
the
venue of the suit, action or proceeding is improper. Nothing in this Section
shall affect or limit any right to serve process in any other manner permitted
by law.
ARTICLE
II
DELIVERIES
TO THE ESCROW AGENT
2.1. Borrower
Deliveries.
The
Escrowed Payment will be delivered pursuant to the following wire transfer
instructions:
2
Citibank,
N.A.
0000
0xx
Xxxxxx
Xxx
Xxxx,
XX 00000, XXX
ABA
Number: 0210-00089
For
Credit to: Grushko & Xxxxxxx, P.C., Special Lockbox for VoIP,
Inc.
Account
Number: ***
2.2. Intention
to Create Escrow Over Escrowed Payment.
The
Lender and Borrower intend that the Escrowed Payment shall be held in escrow
by
the Escrow Agent pursuant to this Agreement for their benefit as set forth
herein.
2.3. Escrow
Agent to Deliver Escrowed Payment.
The
Escrow Agent shall hold and release the Escrowed Payment only in accordance
with
the terms and conditions of this Agreement.
ARTICLE
III
RELEASE
OF ESCROWED PAYMENT
3.1. Release
of Escrow.
Subject
to the provisions of Section 4.2, the Escrow Agent shall release the Escrowed
Payment as follows:
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(a)
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Upon
receipt of the Receiveable they shall be
released:
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(i) For
ninety (90) days from the date of this Agreement the funds in the Lockbox
Account shall be released for the expenses of the Borrower, other than the
Lockbox Notes, solely as directed by the Lenders in their absolute
discretion.
(ii) Commencing
ninety one (91) days from the date of this Agreement the funds in the Lockbox
Account shall be released for any expenses of the Borrower, including repayment
of the Lockbox Notes, solely as directed by the Lenders in their absolute
discretion.
(b) Notwithstanding
the above, upon receipt by the Escrow Agent of joint written instructions
("Joint Instructions") signed by the Borrower and the Lender, it shall deliver
the Escrowed Payment in accordance with the terms of the Joint
Instructions.
(c) Notwithstanding
the above, upon receipt by the Escrow Agent of a final and non-appealable
judgment, order, decree or award of a court of competent jurisdiction (a "Court
Order"), the Escrow Agent shall deliver the Escrowed Payment in accordance
with
the Court Order. Any Court Order shall be accompanied by an opinion of counsel
for the party presenting the Court Order to the Escrow Agent (which opinion
shall be satisfactory to the Escrow Agent) to the effect that the court issuing
the Court Order has competent jurisdiction and that the Court Order is final
and
non-appealable.
3.2. Acknowledgement
of Borrower and Lender; Disputes.
The
Borrower and the Lender acknowledge that the only terms and conditions upon
which the Escrowed Payment are to be released are set forth in Sections 3 and
4
of this Agreement. The Borrower and the Lender reaffirm their agreement to
abide
by the terms and conditions of this Agreement with respect to the release of
the
Escrowed Payment. Any dispute with respect to the release of the Escrowed
Payment shall be resolved pursuant to Section 4.2 or by agreement between the
Borrower and Lender.
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ARTICLE
IV
CONCERNING
THE ESCROW AGENT
4.1. Duties
and Responsibilities of the Escrow Agent.
The
Escrow Agent's duties and responsibilities shall be subject to the following
terms and conditions:
(a) The
Lender and Borrower acknowledge and agree that the Escrow Agent (i) shall not
be
responsible for or bound by, and shall not be required to inquire into whether
either the Lender or Borrower is entitled to receipt of the Escrowed Payment
pursuant to, any other agreement or otherwise; (ii) shall be obligated only
for
the performance of such duties as are specifically assumed by the Escrow Agent
pursuant to this Agreement; (iii) may rely on and shall be protected in acting
or refraining from acting upon any written notice, instruction, instrument,
statement, request or document furnished to it hereunder and believed by the
Escrow Agent in good faith to be genuine and to have been signed or presented
by
the proper person or party, without being required to determine the authenticity
or correctness of any fact stated therein or the propriety or validity or the
service thereof; (iv) may assume that any person believed by the Escrow Agent
in
good faith to be authorized to give notice or make any statement or execute
any
document in connection with the provisions hereof is so authorized; (v) shall
not be under any duty to give the property held by Escrow Agent hereunder any
greater degree of care than Escrow Agent gives its own similar property; and
(vi) may consult counsel satisfactory to Escrow Agent, the opinion of such
counsel to be full and complete authorization and protection in respect of
any
action taken, suffered or omitted by Escrow Agent hereunder in good faith and
in
accordance with the opinion of such counsel.
(b) The
Lender and Borrower acknowledge that the Escrow Agent is acting solely as a
stakeholder at their request and that the Escrow Agent shall not be liable
for
any action taken by Escrow Agent in good faith and believed by Escrow Agent
to
be authorized or within the rights or powers conferred upon Escrow Agent by
this
Agreement. The Lender and Borrower, jointly and severally, agree to indemnify
and hold harmless the Escrow Agent and any of Escrow Agent's partners,
employees, agents and representatives for any action taken or omitted to be
taken by Escrow Agent or any of them hereunder, including the fees of outside
counsel and other costs and expenses of defending itself against any claim
or
liability under this Agreement, except in the case of gross negligence or
willful misconduct on Escrow Agent's part committed in its capacity as Escrow
Agent under this Agreement. The Escrow Agent shall owe a duty only to the Lender
and Borrower under this Agreement and to no other person.
(c) The
Lender and Borrower jointly and severally agree to reimburse the Escrow Agent
for outside counsel fees, to the extent authorized hereunder and incurred in
connection with the performance of its duties and responsibilities
hereunder.
(d) The
Escrow Agent may at any time resign as Escrow Agent hereunder by giving five
(5)
days prior written notice of resignation to the Lender and the Borrower during
which five day period, Escrow Agent is not obligated nor required to take any
action, whatsoever and may refrain from taking any action. Prior to the
effective date of the resignation as specified in such notice, the Lender and
Borrower will issue to the Escrow Agent a Joint Instruction authorizing delivery
of the Escrowed Payment to a substitute Escrow Agent selected by the Lender
and
Borrower. If no successor Escrow Agent is named by the Lender and Borrower,
the
Escrow Agent may apply to a court of competent jurisdiction in the State of
New
York for appointment of a successor Escrow Agent, and to deposit the Escrowed
Payment with the clerk of any such court.
(e) The
Escrow Agent does not have and will not have any interest in the Escrowed
Payment, but is serving only as escrow agent, having only possession thereof.
The Escrow Agent shall not be liable for any loss resulting from the making
or
retention of any investment in accordance with this Escrow
Agreement.
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(f) The
Lender and Borrower jointly and severally agree to indemnify the Escrow Agent
for outside counsel fees, to the extent authorized hereunder and incurred in
connection with the performance of its duties and responsibilities
hereunder.
(g) This
Agreement sets forth exclusively the duties of the Escrow Agent with respect
to
any and all matters pertinent thereto and no implied duties or obligations
shall
be read into this Agreement.
(h) The
Escrow Agent shall be permitted to act as counsel for the Lender in any dispute
as to the disposition of the Escrowed Payment, in any other dispute between
the
Lender and Borrower, whether or not the Escrow Agent is then holding the
Escrowed Payment and continues to act as the Escrow Agent
hereunder.
(i) The
provisions of this Section 4.1 shall survive the resignation of the Escrow
Agent
or the termination of this Agreement.
4.2. Dispute
Resolution: Judgments.
Resolution of disputes arising under this Agreement shall be subject to the
following terms and conditions:
(a) If
any
dispute shall arise with respect to the delivery, ownership, right of possession
or disposition of the Escrowed Payment, or if the Escrow Agent shall in good
faith be uncertain as to its duties or rights hereunder, the Escrow Agent shall
be authorized, without liability to anyone, to (i) refrain from taking any
action other than to continue to hold the Escrowed Payment pending receipt
of a
Joint Instruction from the Lender and Borrower, or (ii) deposit the Escrowed
Payment with any court of competent jurisdiction in the State of New York,
in
which event the Escrow Agent shall give written notice thereof to the Lender
and
the Borrower and shall thereupon be relieved and discharged from all further
obligations pursuant to this Agreement. The Escrow Agent may, but shall be
under
no duty to, institute or defend any legal proceedings which relate to the
Escrowed Payment. The Escrow Agent shall have the right to retain counsel if
it
becomes involved in any disagreement, dispute or litigation on account of this
Agreement or otherwise determines that it is necessary to consult
counsel.
(b) The
Escrow Agent is hereby expressly authorized to comply with and obey any Court
Order. In case the Escrow Agent obeys or complies with a Court Order, the Escrow
Agent shall not be liable to the Lender and Borrower or to any other person,
firm, corporation or entity by reason of such compliance.
4.3 Payment. The
Escrow Agent will be paid $2,500 a month for performing its services under
this
Agreement (“Escrow Agent Fee”). The Borrower shall be reposnsible for payment
Escrow Agent Fee. If the Borrower fails to pay the Escrow Agent Fee, the Lenders
agree to pay any pastdue Escrow Agent Fees.
ARTICLE
V
GENERAL
MATTERS
5.1. Term
and Termination.
(a) This
Agreement, which shall inure to the benefit of and shall be binding upon the
respective successors and permitted assigns of Borrower and Lender, shall become
effective on the date hereof and shall continue in full force and effect until
the earliest to occur of (a) 60-months from the date hereof, (b) a date not
less
than thirty (30) days after Lender gives notice of such date to Borrower of
termination, (c) the date on which this Agreement shall be terminated in
accordance with the provisions hereof; (d) the Lockbox Debt (as that term is
defined in the Intercreditor Agreement entered into between the Lenders and
the
Borrower on or about the date of this Agreement) have been satisified (the
“Termination Date”; such period referred to herein as the “Term”).
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(b) The
termination of this Agreement shall not affect Lender’s rights, or any of the
Obligations (as that term is defined in the Intercreditor Agreement entered
into
between the Lenders and the Borrower on or about the date of this Agreement)
having their inception prior to the effective date of such termination, and
the
provisions hereof shall continue to be fully operative until all transactions
entered into, rights or interests created or Obligations have been fully
disposed of, concluded or liquidated. The rights granted to Lender hereunder
shall continue in full force and effect, notwithstanding the termination of
this
Agreement or the fact that Borrower’s Account may from time to time be
temporarily in a zero or credit position, until all of the Obligations of
Borrower have been paid or performed in full. Accordingly, Borrower waives
any
rights which it may have under Section 9-513 of the UCC to demand the filing
of
termination statements with respect to the Accounts, and Lender shall not be
required to send such termination statements to Borrower, or to file them with
any filing office, unless and until this Agreement shall have been terminated
in
accordance with its terms and all Obligations paid in full in immediately
available funds. All representations, warranties, waivers and agreements
contained herein shall survive termination hereof until all Obligations are
paid
or performed in full.
5.2. Notices.
All
notices, demands, requests, consents, approvals, and other communications
required or permitted hereunder shall be in writing and, unless otherwise
specified herein, shall be (i) personally served, (ii) deposited in the mail,
registered or certified, return receipt requested, postage prepaid, (iii)
delivered by reputable air courier service with charges prepaid, or (iv)
transmitted by hand delivery, telegram, or facsimile, addressed as set forth
below or to such other address as such party shall have specified most recently
by written notice. Any notice or other communication required or permitted
to be
given hereunder shall be deemed effective (a) upon hand delivery or delivery
by
facsimile, with accurate confirmation generated by the transmitting facsimile
machine, at the address or number designated below (if delivered on a business
day during normal business hours where such notice is to be received), or the
first business day following such delivery (if delivered other than on a
business day during normal business hours where such notice is to be received)
or (b) on the second business day following the date of mailing by express
courier service, fully prepaid, addressed to such address, or upon actual
receipt of such mailing, whichever shall first occur. The addresses for such
communications shall be:
(a) If
to the
Borrower, to:
VoIP,
Inc.
151
So.
Xxxxxx Road, Suite 3000
Xxxxxxxxx
Xxxxxxx, XX 00000
Attn:
Xxxxxxx Xxxxxxx, CEO
Fax:
(000) 000-0000
6
With
a
copy by telecopier only to:
Sichenzia
Xxxx Xxxxxxxx Xxxxxxx LLP
00
Xxxxxxxx, 00xx
Xxxxx
Xxx
Xxxx,
XX 00000
Attn:
Xxxx Xxxx, Esq. .
Fax:
(000)
000-0000
(b) If
to the
Lender, to: the addresses and fax numbers listed on Schedule A
hereto.
(c) If
to the
Escrow Agent, to:
Grushko
& Xxxxxxx, P.C.
000
Xxxxx
Xxxxxx, Xxxxx 0000
Xxx
Xxxx,
Xxx Xxxx 00000
Fax:
000-000-0000
or
to
such other address as any of them shall give to the others by notice made
pursuant to this Section 5.2.
5.3. Interest.
The
Escrowed Payment shall not be held in an interest bearing account nor will
interest be payable in connection therewith. In the event the Escrowed Payment
is deposited in an interest bearing account, the Lender shall be entitled to
receive any accrued interest thereon, but only if the Escrow Agent receives
from
the Lender the Lender’s United States taxpayer identification number and other
requested information and forms.
5.4. Assignment;
Binding Agreement.
Neither
this Agreement nor any right or obligation hereunder shall be assignable by
any
party without the prior written consent of the other parties hereto. This
Agreement shall enure to the benefit of and be binding upon the parties hereto
and their respective legal representatives, successors and assigns.
5.5. Invalidity.
In the
event that any one or more of the provisions contained herein, or the
application thereof in any circumstance, is held invalid, illegal, or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be in any way impaired thereby, it being
intended that all of the rights and privileges of the parties hereto shall
be
enforceable to the fullest extent permitted by law.
5.6. Counterparts/Execution.
This
Agreement may be executed in any number of counterparts and by different
signatories hereto on separate counterparts, each of which, when so executed,
shall be deemed an original, but all such counterparts shall constitute but
one
and the same instrument. This Agreement may be executed by facsimile
transmission and delivered by facsimile transmission.
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5.7. Agreement.
Each of
the undersigned states that he has read the foregoing Funds Escrow Agreement
and
understands and agrees to it.
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VOIP,
INC.
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the
“Borrower”
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By:___________________________________
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“LENDERS”
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________________________________________
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ALPHA
CAPITAL ANSTALT f/k/a ALPHA CAPITAL AKTIENGESELLSCHAFT
|
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________________________________________
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_______________________________________
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BRIO
CAPITAL L.P.
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BRISTOL
INVESTMENT FUND, LTD.
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________________________________________
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_______________________________________
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CENTURION
MICROCAP, X.X.
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XXXXXXXX
RIDGE PARTNERS LP
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________________________________________
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_______________________________________
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GRUSHKO
& XXXXXXX, P.C. .
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CMS
CAPITAL
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________________________________________
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_______________________________________
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DOUBLE
U MASTER FUND X.X.
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XXXXX
INTERNATIONAL LTD.
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________________________________________
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_______________________________________
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OSHER
CAPITAL INC.
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PLATINUM
LONG TERM GROWTH I INC.
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_______________________________________
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WHALEHAVEN
CAPITAL FUND LTD.
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ESCROW
AGENT:
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_______________________________________
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GRUSHKO
& XXXXXXX, P.C.
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8
SCHEDULE
A TO FUNDS ESCROW AGREEMENT
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Iroquois
Capital
|
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Pradafant
7
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000
Xxxxxxxxx Xxxxxx, 00xx Floor
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0000
Xxxxxxxxxxx
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Xxx
Xxxx, XX 00000
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Vaduz,
Lichtenstein
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***
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Fax:
***
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Osher
Capital
|
|
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Brio
Capital, L.P.
|
0
Xxxxxxxxx Xxxx
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000
Xxxxxxxxx Xxxx
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Xxxxxx
Xxxxxx, XX 00000
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Xxxxxxxxxx,
XX 00000
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***
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Fax:
***
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Platinum
Long term Growth II, Inc.
|
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Bristol
Investment Fund, Ltd.
|
000
Xxxx 00xx Xxxxxx
|
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c/o
Bristol Capital Advisers, LLC
|
Xxx
Xxxx, XX 00000
|
|
00000
Xxxxxxxx Xxxxxxxxx, Xxxxx 0000
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***
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Xxx
Xxxxxxx, Xxxxxxxxxx 00000
|
|
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Fax:
(000) 000-0000
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Whalehaven
Capital Fund Limited
|
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Attn:
***
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c/o
FWS Capital Ltd.
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0xx
Xxxxx, 00 Xxx-Xxxxxxx Xxxx
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Centurion
Microcap, X.X.
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Xxxxxxxx,
Bermuda HM08
|
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0000
Xxxxxx X
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***
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Xxxxxxxx,
XX 00000
|
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Fax:
***
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Chestnut
Ridge Partners, L.P.
|
|
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00
Xxxx Xxxxxxxxx
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|
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Xxxxxxxxx
Xxxx, XX 00000
|
|
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Fax:
***
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CMS
Capital
|
|
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0000
Xxx Xxxx Xxxxxxxxx, Xxxxx 000
|
|
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Xxxxxxxx
Xxxx, XX 00000
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***
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Double
U Master Fund, L.P.
|
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c/o
Navigator Management, Ltd.
|
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Harbor
House, Xxxxxxxxxx Xxxxx, X.X Xxx 000
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Xxxx
Xxxx BVI
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***
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Xxxxx
International Ltd.
|
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53rd
Street Urbanizacion Obarrio
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Swiss
Tower, 16th Floor, Panama
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Republic
of Panama
|
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***
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Grushko
& Xxxxxxx, P.C.
|
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000
Xxxxx Xxxxxx, Xxxxx 0000
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Xxx
Xxxx, Xxx Xxxx 00000
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***
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9
