ESCROW AGREEMENT
EXHIBIT 10.5
THIS ESCROW AGREEMENT (this
“Agreement”) is
made and entered into as of January 26, 2010, by and among Novo Energies Corp., a Florida
corporation, with headquarters located Europa Place x’Xxxxx 000 Xxxx xx Xxxxx
x’Xxxxx Xxxxx 00, Xxxxxxxx XX X0X 0X0, Xxxxxx (the “Company”), Trafalgar Capital Specialized
Investment Fund, FIS (the “Buyer”) and K&L Gates LLP, as escrow
agent hereunder (the “Escrow
Agent”).
RECITALS:
WHEREAS, the Company and the
Buyer are a party to that certain Securities Purchase Agreement (the “Securities Purchase
Agreement”), dated as of January 26, 2010, pursuant to which the Company
agreed to sell Five Hundred Thousand United States Dollars (US$500,000) of
secured convertible bridge debentures (the “Debentures”) to the
Buyer (the “Offering”);
and
WHEREAS, pursuant to the
Securities Purchase Agreement, the Buyer shall deposit the proceeds of the sale
of the Debentures in a segregated escrow account (the “Escrow Account”) held
by the Escrow Agent which shall be used solely in order to effectuate a
disbursement to the Company and the Buyer at Closing (as defined in the
Securities Purchase Agreement); and
WHEREAS, pursuant to the
Securities Purchase Agreement, the Company and the Buyer have requested that the
Escrow Agent hold the Escrow Funds (defined below) received from the Buyer and
the Commitment Shares with the Debentures provided by the Company in escrow
until the Escrow Agent has received the Joint Written Direction (defined below);
and
WHEREAS, Escrow Agent has
agreed to accept, hold, and disburse the funds and shares deposited with it in
accordance with the terms of this Agreement; and
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.
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” means
the funds deposited with Escrow Agent pursuant to this Agreement.
b. “Joint Written
Direction” means a written direction executed by
the Buyer and the Company directing the Escrow Agent to disburse all or a
portion of the Escrow Funds, Commitment Shares and Debentures 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 the Escrow Agent confirms that it has received in the Escrow
Account (as defined herein below) all of the proceeds of the sale of the
applicable Debentures;
(ii) The
date upon which a determination is made by the Company and the Buyer to
terminate the Offering prior to the sale of the applicable
Debentures.
During
the Escrow Period, the Company and the Buyer hereby acknowledge and agree 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 Buyer or
of any other entity, or be subject to the debts of the Company or the Buyer or
any other entity.
2. Appointment
of and Acceptance by the Escrow Agent.
a. The
Buyer and the Company hereby appoint the Escrow Agent to serve as the escrow
agent hereunder. The Escrow Agent hereby accepts such appointment
and, upon receipt by wire transfer of the Escrow Funds in accordance with
Section 3 below, the Commitment Shares and the Debentures, agrees to accept,
hold and disburse the Escrow Funds in accordance with this
Agreement.
b. The
Company hereby acknowledges that the Escrow Agent is counsel to the Buyer in
connection with the transactions contemplated by the Securities Purchase
Agreement and referenced 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,
the Escrow Agent shall be permitted to continue to represent the Buyer and the
Company will not seek to disqualify such counsel.
3. Creation of Escrow
Account. On or
prior to the date of the commencement of the Offering, the parties hereto shall
establish an escrow account with the Escrow Agent, which escrow account shall be
described below. The Buyer shall wire funds to the account of the
Escrow Agent as follows:
4. Deposits
into the Escrow Account. The Buyer agrees
that it shall promptly deliver funds for the payment of the Debentures to Escrow
Agent for deposit in the Escrow Account. The Company agrees that it
shall promptly deliver the Commitment shares and Debentures pursuant to Section
4(ii) of the Securities Purchase Agreement.
5. Disbursements
from the Escrow Account.
a. The
Escrow Agent shall hold the Escrow Funds until the Buyer and the Company execute
a Joint Written Direction directing the Escrow Agent to disburse the Escrow
Funds, the Commitment Shares and the Debentures pursuant to such Joint Written
Direction signed by the Company and the Buyer. The Escrow Agent is
obligated to disburse the Escrow Funds, the Commitment Shares and the Debentures
in accordance with the Joint Written Direction and has no discretion to withhold
disbursement of the Escrow Funds, the Commitment Shares or the Debentures for
any reason upon receipt of such Joint Written Direction. In
disbursing such funds and shares, the Escrow Agent is authorized to rely upon
such Joint Written Direction from the Company and the Buyer and may accept any
signatory from the Company listed on the signature page to this Agreement and
any signature from the Buyer that the Escrow Agent already has on
file.
b. In
the event the Escrow Agent does not receive the amount of the Escrow Funds from
the Buyer, Escrow Agent shall notify the Company and the Buyer. Upon
receipt of payment instructions from the Company, the Escrow Agent shall refund
to each subscriber without interest the amount received from the Buyer, 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 Buyer or any of their creditors.
c. In
no event shall the Escrow Funds be released to the Company until the Escrow
Funds are received by the Escrow Agent in Collected Funds. For purposes of this
Agreement, the term “Collected Funds”
means the Escrow Funds received by Escrow Agent shall have cleared normal
banking channels and are in the form of cash.
d. Upon
instruction by the Joint Written Direction, Collected Funds shall be wired
to:
WTL
Renewable Energies Inc.
000 Xxxx
xx xx Xxxxx x’Xxxxx
Xxxxx
00
Xxxxxxxx,
Xxxxxx, X0X 0X0
6. Collection
Procedure. The 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 Buyer with respect to
holding or disposition of any portion of the Escrow Funds or any other
obligations of the Escrow Agent hereunder, or if at any time the Escrow Agent is
unable to determine, to the Escrow Agent’s sole satisfaction, the proper
disposition of any portion of the Escrow Funds or the Escrow Agent’s proper
actions with respect to its obligations hereunder, or if the parties have not
within thirty (30) calendar days of the furnishing by the Escrow Agent of a
notice of resignation pursuant to Section 9 hereof, appointed a successor escrow
agent to act hereunder, then the 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 the Escrow Agent or
until a successor escrow agent shall be appointed (as the case may be); provided
however, the Escrow Agent shall continue to hold the Escrow Funds in the
meantime; 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 the 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 the Escrow Agent of all fees and expenses
(including court costs and attorneys’ fees) payable to, incurred by, or expected
to be incurred by the Escrow Agent in connection with performance of its duties
and the exercise of its rights hereunder.
c. The
Escrow Agent shall have no liability to the Company, the Buyer, 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 the Escrow Agent.
8. [Reserved]
9. Resignation
and Removal of Escrow Agent. The Escrow Agent
may resign from the performance of its duties hereunder at any time by giving
thirty (30) calendar 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 the Escrow Agent, at any time by the giving of ten
(10) calendar days’ prior written notice to Escrow Agent as provided herein
below. Upon any such notice of resignation or removal, the
representatives of the Buyer and the Company identified in Sections 13(a)(iv)
and 13(b)(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
US$10,000,000.00. Upon the acceptance in writing of any appointment
of the 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 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 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
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. The
Escrow Agent shall have no liability or obligation with respect to the Escrow
Funds except for the Escrow Agent’s willful misconduct or gross
negligence. The Escrow Agent’s sole responsibility shall be for the
acceptance, holding and disbursement of the Escrow Funds in accordance with the
terms of this Agreement. The 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. The 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 the 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 the Escrow Agent be liable for incidental, indirect, special, and
consequential or punitive damages. The 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 Securities Purchase Agreement, or to appear in, prosecute or
defend any such legal action or proceeding. The 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 Buyer jointly and severally shall
promptly pay, upon demand, the actual fees and expenses incurred of any such
counsel.
b. The
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 the 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, the 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 the 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 Company and the Buyer jointly and
severally, shall, to the fullest extent permitted by law and to the extent
provided herein, indemnify and hold harmless the Escrow Agent and each partner,
associate, director, officer, employee, attorney, agent and affiliate of the
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 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 Buyer
hereunder in writing, and the Buyer 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 Buyer and/or the
Company shall be required to pay such fees and expenses if (a) the Buyer or the
Company agree to pay such fees and expenses, or (b) the Buyer 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
Buyer 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 Buyer 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 Buyer. The Buyer 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 Buyer 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 the Escrow Agent shall be independent of any obligation of the Escrow
Agent.
The
parties hereto hereby agree that neither payment by the Company or the Buyer of
any claim by the Escrow Agent for indemnification hereunder shall impair, limit,
modify, or affect, as between the Buyer and the Company, the respective rights
and obligations of Buyer, on the one hand, and the Company, on the other
hand.
12. Expenses
of Escrow Agent. Except as set
forth in Section 11 herein, the Company shall reimburse the Escrow Agent for all
of its reasonable out-of-pocket expenses, including attorney’s 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 the Escrow
Agent. The obligations of the Company under this Section shall
survive any termination of this Agreement and the resignation or removal of the
Escrow Agent.
13. Warranties.
a. The
Buyer makes the following representations and warranties to the Escrow
Agent:
(i) The
Buyer 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 Buyer, including
any necessary approval of the limited partner of the Buyer or necessary
corporate approval, as applicable, has been executed by duly authorized officers
of the Buyer, enforceable in accordance with its terms.
(iii) The
execution, delivery, and performance of the Buyer of this Agreement will not
violate, conflict with, or cause a default under any agreement of limited
partnership of Buyer or the certificate of incorporation or bylaws of the
Buyer (as applicable), any applicable law or regulation, any court order or
administrative ruling or degree to which the Buyer is a party or any of its
property is subject, or any agreement, contract, indenture, or other binding
arrangement.
(iv) Xxxxxx
Xxxxx and Xxxxxx Press each has been duly appointed to act individually as the
representative of the Buyer 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 Buyer’s representative
under this Agreement, all without further consent or direction form, or notice
to, the Buyer or any other party.
(v) No
party other than the parties hereto and the Buyer 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 Buyer 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 the Escrow
Agent:
(i) The
Company is a
corporation duly organized, validly existing, and in good standing under the
laws of Florida 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 articles 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) Xxxxxxx
Xxxxxxxx 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) Other
than the parties hereto, no other party has 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 other than any UCC filed by
the Buyer against the Company.
(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. Governing
Law; Consent to Jurisdiction and Venue. This Agreement
shall be deemed to be made under and shall be construed in accordance with the
laws of the State of Florida without giving effect to the principals of conflict
of laws thereof. Each of the parties consents to the jurisdiction of
the U.S. District Court sitting in the Southern District of the State of
Florida or the state courts of the State of Florida sitting in Miami-Dade
County, Florida, in connection with any dispute arising under this Agreement and
hereby waives, to the maximum extent permitted by law, any objection, including
any objection based on forum non conveniens to the
bringing of any such proceeding in such jurisdictions.
15. Notices. 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 the Company, to:
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Europa
Place x’Xxxxx 000 Xxxx xx Xxxxx x’Xxxxx Xxxxx 00
Xxxxxxxx,
XX X0X 0X0, Xxxxxx
Attention: Xxxxxxx
Xxxxxxxx, CEO
Facsimile:
(000) 000-0000
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With
a copy to:
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Xxxxxxx
Ortoli Xxxxxx-Xxxx Xxxxxxxxxx LLP
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000
Xxxxxxx Xxxxxx, 00xx
Xxxxx
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Xxx
Xxxx, XX 00000
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Attention:
Xxxxxxx X. Xxxxxxxxxx, Esq.
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Telephone:
(000) 000-0000
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Facsimile:
(000) 000-0000
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If
to the Buyer:
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Trafalgar
Capital Specialized Investment Fund
The
Xxxxxxx, Xxxx Street
00
Xxxxxxxxxxx Xxxxxx
Xxxxxx
XX0X 0XX
Attention:
Xxxxxx Xxxxx, Chairman of the Board of Trafalgar Capital Sarl, General
Partner
Facsimile: 011-44-207-405-0161
and
001-786-323-1651
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If
to the Escrow Agent, to:
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K&L
Gates LLP
000
X. Xxxxxxxx Xxxx., Xxxxx 0000
Xxxxx,
Xxxxxxx 00000
Attention:
Xxxxxxx X. Xxxxxx, Esq.
Telephone:
(000) 000-0000
Facsimile: (000)
000-0000
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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 the Escrow Agent with respect to the
Escrow Funds.
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 Buyer, the Company or the 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 Direction 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.
22. Recitals. The
Recitals herein above are hereby incorporated into this Agreement as if fully
stated herein.
[remainder
of page intentionally left blank]
IN WITNESS WHEREOF the parties
have hereunto set their hands and seals the day and year above set
forth.
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By:
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Name: Xxxxxxx
Xxxxxxxx
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Title: CEO
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TRAFALGAR
CAPITAL SPECIALIZED
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INVESTMENT
FUND, FIS
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By: Trafalgar
Capital Sarl
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Its: General
Partner
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By:
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Name: ______________________________
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Title: ______________________________
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K&L
GATES LLP
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By:
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Name: ______________________________
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Title: ______________________________
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