ESCROW AGREEMENT
ESCROW AGREEMENT (this "Escrow Agreement") dated as of December 28, 2001,
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by and among Amnis Systems Inc., a Delaware corporation (the "Company"), the
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investors listed on Schedule A attached hereto (the "Investors") and Xxxxx &
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Schloss LLP, as escrow agent (the "Escrow Agent").
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W I T N E S S E T H:
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WHEREAS, pursuant to a Securities Purchase Agreement, dated as of December
28, 2001, by and among the Company and the Investors (the "Securities Purchase
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Agreement"), the Company and the Investors desire to have (i) secured
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convertible debentures (the "Debentures"); (ii) warrants (the "Warrants") to
purchase shares of the Company's common stock, $0.0001 par value per share (the
"Common Stock"); and (iii) shares of Common Stock representing 200% of the
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maximum number of shares of Common Stock (the "Escrow Share Minimum") underlying
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the Debentures and the Warrants and any interest accrued and outstanding thereon
(collectively, the "Escrow Shares"), delivered to the Escrow Agent to hold,
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along with immediately available funds for the purchase of the Debentures and
Warrants (the "Escrow Funds"), and the Escrow Agent has agreed to receive, hold
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and redeliver the Debentures, Warrants, Escrow Shares and the Escrow Funds, all
upon the terms and subject to the conditions hereinafter set forth;
WHEREAS, the Securities Purchase Agreement contemplates that the Escrow
Funds shall be paid into escrow and the Debentures, Warrants and Escrow Shares
to be purchased by the Investors shall be held in escrow and the Escrow Agent
has agreed to receive, hold and pay such Escrow Funds and to receive and deliver
the Debentures, Warrants and Escrow Shares, upon the terms and subject to the
conditions hereinafter set forth; and
WHEREAS, the Company acknowledges and agrees that this Escrow Agreement
shall serve as irrevocable authorization and direction by the Company to the
Escrow Agent to receive, hold, and ultimately deliver the Escrow Funds,
Debentures, Warrants and Escrow Shares, upon the terms and subject to the
conditions of this Escrow Agreement.
NOW, THEREFORE, in consideration of the mutual covenants herein contained, and
for other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties to this Escrow Agreement hereby agree as
follows:
1. Defined Terms. Capitalized terms used and not otherwise defined
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herein shall have the meanings respectively assigned to them in the Securities
Purchase Agreement.
2. Escrow of Debentures and Warrants. The Investors shall deliver or
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cause to be delivered to the Escrow Agent the Debentures, Warrants and
applicable Escrow Funds on the Closing Date. On the Closing Date, the Escrow
Agent shall wire transfer the Escrow Funds in accordance with the Disbursement
of Funds memorandum. With respect to the subsequent investment, on the
Effective Date, the Company shall deliver the Additional Debentures to the
Escrow Agent, the Investors shall wire transfer the Escrow Funds in accordance
with the Disbursement of Funds memorandum. Subject to the terms of this Escrow
Agreement and the Securities Purchase Agreement, on or before the tenth (10th)
business day after the Effective Date, the Escrow Agent shall wire transfer the
Escrow Funds to the Company. Prior to the wiring of the Escrow Funds for each
Closing, the Investors shall confirm to the Escrow Agent that the conditions
contained in Section 7 of the Securities Purchase Agreement have been either met
by the Company or waived by the Investors.
3. Escrow Shares. On the Closing Date, the Company shall deliver or
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cause to be delivered to the Escrow Agent the common stock share certificates
representing the Escrow Shares (the "Certificates"), registered in the name of
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the Investors (or any nominee designated by Investors), free and clear of all
liens, claims, charges and encumbrances, representing 200% of the maximum number
of shares of Common Stock underlying the Debentures and the Warrants and any
interest accrued and outstanding thereon. The Company shall maintain the Escrow
Share Minimum in the Escrow Account (as defined below) at all times throughout
the term of this Escrow Agreement. If the number of Escrow Shares falls below
175% of the maximum number of shares of Common Stock underlying the Debentures
and the Warrants and any interest accrued and outstanding thereon, the Company
shall replenish the Escrow Account with such number of additional shares to
maintain the Escrow Share Minimum (the "Replenishment Shares") by delivering the
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Replenishment Shares to the Escrow Agent by the second (2nd) business day of
each month. Upon conversion of the Debentures and/or upon exercise of the
Warrants, the Investors shall deliver a copy of the duly executed notice of
exercise or notice of conversion, as the case may be, to the Escrow Agent.
Within one (1) business day after receipt of such notice, the Escrow Agent shall
deliver one or more Certificates to Interwest Transfer Company, Inc., the
transfer agent for the Company (the "Transfer Agent"), for removal of any
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restrictive legends pursuant to the Irrevocable Transfer Agent Instructions, and
upon receipt of such Certificates, shall cause same to be delivered to or for
the benefit of the Investors pursuant to written instructions of the Investors.
4. Escrow Period. The Certificates delivered to the Escrow Agent
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pursuant to this Escrow Agreement shall be deposited for safekeeping with the
Escrow Agent (the "Escrow Account"). During the period beginning on the Closing
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Date and continuing until all shares of Common Stock issuable upon conversion of
the Debentures and exercise of the Warrants are sold pursuant to the
Registration Statement (as defined in the Registration Rights Agreement) (the
"Escrow Period"), none of such Escrow Shares deposited in the Escrow Account
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shall become the property of the Investors or any other entity or be subject to
the debts of the Investors or any other entity except as expressly provided
herein, and the Escrow Agent shall neither make nor permit any disbursements or
deliveries from the Escrow Account except as expressly provided herein.
Notwithstanding the foregoing, if any Escrow Shares remain in the Escrow
Account, all such Escrow Shares then remaining in the Escrow Account shall be
forwarded to the Transfer Agent within five (5) business days thereafter upon
written request given to Escrow Agent by the Company.
5. Holding of Shares. The Escrow Agent shall hold the Escrow Shares in
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a segregated escrow account where it normally holds such Escrow Shares.
6. Further Assurances. The Company and the Investors agree to do such
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further acts and to execute and deliver such statements, assignments,
agreements, instruments and other documents as the Escrow Agent, from time to
time, may reasonably request in connection with the administration, maintenance,
enforcement or adjudication of this Escrow Agreement in order (a) to give the
Escrow Agent confirmation and assurance of the Escrow Agent's rights, powers,
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privileges, remedies and interests under this Escrow Agreement and applicable
law, (b) to better enable the Escrow Agent to exercise any such right, power,
privilege, remedy or interest, or (c) to otherwise effectuate the purpose and
the terms and provisions of this Escrow Agreement, each in such form and
substance as may be reasonably acceptable to the Escrow Agent.
7. Conflicting Demands. If conflicting or adverse claims or demands
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are made or notices served upon the Escrow Agent with respect to the escrow
provided for herein, the Company and the Investors agree that the Escrow Agent
shall refuse to comply with any such claim or demand and withhold and stop all
further performance of this escrow so long as such disagreement shall continue.
In so doing, the Escrow Agent shall not be or become liable for damages, losses,
costs, expenses or interest to any person for its failure to comply with such
conflicting or adverse demands. The Escrow Agent shall be entitled to continue
to so refrain and refuse to so act until such conflicting claims or demands
shall have been finally determined by a court or arbitrator of competent
jurisdiction or shall have been settled by agreement of the parties to such
controversy, in which case the Escrow Agent shall be notified thereof in a
notice signed by such parties. The Escrow Agent may also elect to commence an
interpleader or other action for declaratory judgment for the purpose of having
the respective rights of the claimants adjudicated, and may deposit with the
court the Escrow Shares and the Escrow Funds held hereunder pursuant to this
Escrow Agreement; and if it so commences and deposits, the Escrow Agent shall be
relieved and discharged from any further duties and obligations under this
Escrow Agreement.
8. Disputes. Each of the parties hereto hereby covenants and agrees
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that the Federal or state courts located in the County of New York, State of New
York shall have jurisdiction over any dispute with the Escrow Agent or relating
to this Escrow Agreement.
9. Expenses of the Escrow Agent. The Company agrees to pay any and all
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out-of-pocket costs and expenses up to $5,000 per year (excluding the costs and
expenses incurred by the Escrow Agent in connection with the commencement of an
interpleader pursuant to Section 7 hereof) incurred by the Escrow Agent in
connection with all waivers, releases, discharges, satisfactions, modifications
and amendments of this Escrow Agreement, the administration and holding of the
Escrow Shares and the investment of the Escrow Funds, and the enforcement,
protection and adjudication of the Escrow Agent's rights hereunder by the Escrow
Agent, including, without limitation, the out-of-pocket disbursements of the
Escrow Agent itself and expenses and costs of other attorneys it may retain, if
any. The Company shall be liable to the Escrow Agent for any expenses payable
by the Escrow Agent.
10. Reliance on Documents and Experts. The Escrow Agent shall be
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entitled to rely upon any notice, consent, certificate, affidavit, statement,
paper, document, writing or communication (which to the extent permitted
hereunder may be by telegram, cable, telecopier, or telephone) reasonably
believed by it to be genuine and to have been signed, sent or made by the proper
person or persons, and upon opinions and advice of legal counsel (including
itself or counsel for any party hereto), independent public accountants and
other experts selected by the Escrow Agent and mutually acceptable to the
Company and the Investors.
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11. Status of the Escrow Agent, Etc. The Escrow Agent is acting under
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this Escrow Agreement as a stakeholder only. No term or provision of this
Escrow Agreement is intended to create, nor shall any such term or provision be
deemed to have created, any joint venture, partnership or attorney-client
relationship between or among the Escrow Agent and the Company or the Investors.
This Escrow Agreement shall not be deemed to prohibit or in any way restrict the
Escrow Agent's representation of the Investors, who may be advised by the Escrow
Agent on any and all matters pertaining to this Escrow Agreement. To the extent
the Investors have been represented by the Escrow Agent, each Investor hereby
waives any conflict of interest and irrevocably authorizes and directs the
Escrow Agent to carry out the terms and provisions of this Escrow Agreement
fairly as to all parties, without regard to any such representation and
irrespective of the impact upon such Investor. The Escrow Agent's only duties
are those expressly set forth in this Escrow Agreement, and the Company and the
Investors authorize the Escrow Agent to perform those duties in accordance with
its usual practices in holding funds of its own or those of other escrows. The
Escrow Agent may exercise or otherwise enforce any of its rights, powers,
privileges, remedies and interests under this Escrow Agreement and applicable
law or perform any of its duties under this Escrow Agreement by or through its
partners, employees, attorneys, agents or designees.
12. Exculpation. The Escrow Agent and its designees, and their
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respective partners, employees, attorneys and agents, shall not incur any
liability whatsoever for the investment or disposition of the Escrow Shares or
the Escrow Funds or the taking of any other action in accordance with the terms
and provisions of this Escrow Agreement, for any mistake or error in judgment,
for compliance with any applicable law or any attachment, order or other
directive of any court or other authority (irrespective of any conflicting term
or provision of this Escrow Agreement), or for any act or omission of any other
person selected with reasonable care and engaged by the Escrow Agent in
connection with this Escrow Agreement (other than for such Escrow Agent's or
such person's own acts or omissions breaching a duty owed to the claimant under
this Escrow Agreement and amounting to gross negligence or willful misconduct as
finally determined pursuant to applicable law by a governmental authority having
jurisdiction); and the Company and the Investors hereby waive any and all claims
and actions whatsoever against the Escrow Agent and its designees, and their
respective partners, employees, attorneys and agents, arising out of or related
directly or indirectly to any and all of the foregoing acts, omissions and
circumstances. Furthermore, the Escrow Agent and its designees, and their
respective partners, employees, attorneys and agents, shall not incur any
liability (other than for a person's own acts or omissions breaching a duty owed
to the claimant under this Escrow Agreement and amounting to gross negligence or
willful misconduct as finally determined pursuant to applicable law by a
governmental authority having jurisdiction) for other acts and omissions arising
out of or related directly or indirectly to this Escrow Agreement; and the
Company and the Investors hereby expressly waive any and all claims and actions
(other than the Escrow Agent's or such person's own acts or omissions breaching
a duty owed to the claimant and amounting to gross negligence or willful
misconduct as finally determined pursuant to applicable law by a governmental
authority having jurisdiction) against the Escrow Agent and its designees, and
their respective partners, employees, attorneys and agents, arising out of or
related directly or indirectly to any and all of the foregoing acts, omissions
and circumstances.
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13. Indemnification. The Escrow Agent and its designees, and their
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respective partners, employees, attorneys and agents, shall be indemnified,
reimbursed, held harmless and, at the request of the Escrow Agent, defended, by
the Company from and against any and all claims, liabilities, losses and
expenses (including, without limitation, the reasonable disbursements, expenses
and fees of their respective attorneys) that may be imposed upon, incurred by,
or asserted against any of them, arising out of or related directly or
indirectly to this Escrow Agreement or the Escrow Shares, except such as are
occasioned by the indemnified person's own acts and omissions breaching a duty
owed to the claimant under this Escrow Agreement and amounting to gross
negligence or willful misconduct as finally determined pursuant to applicable
law by a governmental authority having jurisdiction.
14. Notices. Any notice, request, demand or other communication
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permitted or required to be given hereunder shall be in writing, shall be sent
by one of the following means to the addressee at the address set forth below
(or at such other address as shall be designated hereunder by notice to the
other parties and persons receiving copies, effective upon actual receipt) and
shall be deemed conclusively to have been given: (a) upon hand delivery by
telecopy or facsimile 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), (b) on the second (2nd) business day following the date of mailing by
express courier service, fully prepaid, addressed to such address, or (c) upon
actual receipt of such mailing, whichever shall first occur.
If to the Company: Amnis Systems Inc.
0000 Xxxxxxxx Xxxxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx, President and Chief
Financial Officer
Telecopier: 000-000-0000
Telephone: 000-000-0000
with a copy to: Xxxxxx, Parachini, Steinberg, Matzger, Melnick, LLP
000 Xxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esquire
Telecopier: 415-957-1800
Telephone: 000-000-0000
If to any Investor: at the address of such Investor set forth on Schedule A
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to this Escrow Agreement, with a copy to the Investor's
counsel as set forth on Schedule A or as specified in
writing by such Investor.
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If to the Escrow Agent: Xxxxx & Schloss LLP
0 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx X Xxxxx
Telecopier:: 000-000-0000
Telephone: 000-000-0000
15. Section and Other Headings. The section and other headings
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contained in this Escrow Agreement are for convenience only, shall not be deemed
a part of this Escrow Agreement and shall not affect the meaning or
interpretation of this Escrow Agreement.
16. Governing Law. This Escrow Agreement shall be governed by, and
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construed and enforced in accordance with, the laws of the State of New York,
without regard to principles of conflicts of law. The Company and the Investors
(i) hereby irrevocably submit to the jurisdiction of the United States District
Court sitting in the Southern District of New York for the purposes of any suit,
action or proceeding arising out of or relating to this Agreement or the
Securities Purchase Agreement and (ii) hereby waive, and agree 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. The Company and the Investors consent to process being
served in any such suit, action or proceeding by mailing a copy thereof to such
party at the address in effect for notices to it under this Agreement and agrees
that such service shall constitute good and sufficient service of process and
notice thereof. Nothing in this Section 16 shall affect or limit any right to
serve process in any other manner permitted by law.
17. Counterparts. This Escrow Agreement may be executed by the parties
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hereto in separate counterparts, each of which when so executed and delivered
shall be an original but all such counterparts shall together constitute one and
the same agreement.
18. Resignation of Escrow Agent. The Escrow Agent may, at any time, at
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its option, elect to resign its duties as Escrow Agent under this Escrow
Agreement by providing notice thereof to the Company and the Investors. In such
event, the Escrow Agent shall deposit the Escrow Shares and the Escrow Funds
with a successor independent escrow agent to be appointed by (a) the Company and
the Investors within thirty (30) days following the receipt of notice of
resignation from the Escrow Agent, or (b) the Escrow Agent if the Company and
the Investors shall have not agreed on a successor escrow agent within the
aforesaid 30-day period, upon which appointment and delivery of the Escrow Funds
and the Escrow Shares, the Escrow Agent shall be released of and from all
liability under this Escrow Agreement.
19. Successors and Assigns; Assignment. Whenever in this Escrow
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Agreement reference is made to any party, such reference shall be deemed to
include the successors, assigns and legal representatives of such party, and,
without limiting the generality of the foregoing, all representations,
warranties, covenants and other agreements made by or on behalf of the Company
and the Investors in this Escrow Agreement shall inure to the benefit of any
successor escrow agent hereunder; provided, however, that nothing herein shall
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be deemed to authorize or permit the Company or the Investors to assign any of
their rights or obligations hereunder to any other person (whether or not an
affiliate of the Company or the Investors) without the written consent of each
of the other parties nor to authorize or permit the Escrow Agent to assign any
of its duties or obligations hereunder except as provided in this Section 19
hereof.
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20. No Third Party Rights. The representations, warranties and other
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terms and provisions of this Escrow Agreement are for the exclusive benefit of
the parties hereto, and no other person, including the creditors of the Company
or the Investors, shall have any right or claim against any party by reason of
any of those terms and provisions or be entitled to enforce any of those terms
and provisions against any party.
21. No Waiver by Action, Etc. Any waiver or consent respecting any
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representation, warranty, covenant or other term or provision of this Escrow
Agreement shall be effective only in the specific instance and for the specific
purpose for which given and shall not be deemed, regardless of frequency given,
to be a further or continuing waiver or consent. The failure or delay of a
party at any time or times to require performance of, or to exercise its rights
with respect to, any representation, warranty, covenant or other term or
provision of this Escrow Agreement in any manner (except as otherwise expressly
provided herein) shall affect its right at a later time to enforce any such term
or provision. No notice to or demand on the Company or the Investors in any
case shall entitle such party to any other or further notice or demand in the
same, similar or other circumstances. All rights, powers, privileges, remedies
and interests of the parties under this Escrow Agreement are cumulative and not
alternatives, and they are in addition to and shall not limit (except as
otherwise expressly provided herein) any other right, power, privilege, remedy
or interest of the parties under this Escrow Agreement or applicable law.
22. Modification, Amendment, Etc. Each and every modification and
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amendment of this Escrow Agreement shall be in writing and signed by all of the
parties hereto, and each and every waiver of, or consent to any departure from,
any covenant, representation, warranty or other provision of this Escrow
Agreement shall be in writing and signed by the party granting such waiver or
consent.
23. Entire Agreement. This Escrow Agreement contains the entire
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agreement of the parties with respect to the matters contained herein and
supersedes all prior representations, agreements and understandings, oral or
otherwise, among the parties with respect to the matters contained herein.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have executed this Escrow Agreement on
the date first written above.
AMNIS SYSTEMS INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
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Name: Xxxxxxx X. Xxxxxxxx
Title: C.E.O.
XXXXX & XXXXXXX LLP, as escrow agent
By: /s/ Xxxxxxx X Xxxxx
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Name: Xxxxxxx X Xxxxx
Title:
BRISTOL INVESTMENT FUND, LTD.
By: /s/ Xxxxx Xxxxxx Xxxxxxx
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Xxxxx Xxxxxx Xxxxxxx
Director
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Schedule A
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Names and Addresses of Investors
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Bristol Investment Fund, Ltd.
Caledonian House
Xxxxxxx Street
Xxxxxx Town
Grand Cayman, Cayman Islands
Telephone: 000-000-0000
Facsimile: 000-000-0000
with a copy to:
Bristol DLP, LLC
Investment Manager
0000 Xxxxxx Xxxx., Xxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxx Xxxx, Esq.
Telephone: 000-000-0000
Facsimile: 000-000-0000
Email: xxx@xxxxxxxxxxxxxxxx.xxx
Xxxxx & Schloss LLP
0 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx X Xxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
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