Exhibit 10.4

 

FORM OF ESCROW AGREEMENT

 

This ESCROW AGREEMENT, dated as of April [    ], 2004, (this “Agreement”), is by
and among Internet Capital Group, Inc., a Delaware corporation (the “Company”),
JPMorgan Chase Bank, a New York corporation, as escrow agent (the “Escrow
Agent”) and the parties set forth on Schedule I to this Agreement (each a
“Buyer” and collectively, the “Buyers”). The Company and the Buyers are
collectively referred to herein as the “Escrow Parties”.

 

WHEREAS, the Company and the Buyers have entered into that certain Securities
Purchase Agreement, dated as of March 31, 2004 (the “Securities Purchase
Agreement”);

 

WHEREAS, subject to the terms and conditions of the Securities Purchase
Agreement, the Company has agreed to sell to each Buyer, and each Buyer has
agreed to purchase from the Company, the aggregate principal amount of the
Company’s 5% Senior Convertible Notes (the “Notes”) set forth opposite such
Buyer’s name under the heading “Principal Amount” on Schedule II hereto (which
aggregate principal amount for all Buyers equals $60,000,000);

 

WHEREAS, subject to the terms and conditions of the Securities Purchase
Agreement, as consideration for the issuance of the Notes, each Buyer has agreed
to pay to the Company the purchase price set forth opposite such Buyer’s name
under the heading “Purchase Price” on Schedule I hereto (which aggregate
principal amount for all Buyers equals $60,000,000) (the “Purchase Price”);

 

WHEREAS, the Company has agreed to use a portion of the proceeds from the sale
of the Notes to redeem the Company’s outstanding 5½% Convertible Subordinated
Notes due 2004 issued pursuant to the Indenture, dated as of December 21, 1999
(the “Indenture”), between the Company and Chase Manhattan Trust Company,
National Association, as trustee (the “Trustee”);

 

WHEREAS, the Closing (as defined in the Securities Purchase Agreement) is
conditioned upon certain matters discussed in Section 7 of the Securities
Purchase Agreement;

 

WHEREAS, the Escrow Parties hereto desire the Escrow Agent to receive, hold and
dispose of the Escrow (as defined below) in accordance with the terms,
conditions and provisions of this Agreement, and the Escrow Agent desires to do
so.

 

NOW THEREFORE, in consideration of the representations, warranties and covenants
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:

 

1. Appointment and Agreement of Escrow Agent. The Escrow Parties hereby jointly
appoint the Escrow Agent to serve hereunder and the Escrow Agent hereby accepts
such appointment and agrees to perform all duties that are expressly set forth
in this Agreement to be performed by it.

 

2. Securities Purchase Agreement; Definitions. The Escrow Agent hereby
acknowledges receipt of a copy of the Securities Purchase Agreement; however,
except for

 

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reference thereto for definitions of certain words or terms not defined herein,
the Escrow Agent is not charged with knowledge of the terms thereof, or with any
duties or responsibilities with respect thereto except as stated expressly
herein. Capitalized terms used but not defined herein have the respective
meanings set forth in the Securities Purchase Agreement.

 

3. Delivery of Escrow; Investment of Escrow.

 

(a) The Escrow Agent hereby acknowledges (i) receipt from each Buyer of the
purchase price set forth opposite such Buyers name under the heading “Purchase
Price” on Schedule I hereto (the “Cash Escrow”), (ii) receipt from the Company
of the Notes set forth on Schedule II hereto, duly executed by the Company and
issued in the name of the parties set forth on Schedule II hereto in the
principal amount set forth on Schedule II hereto (the “Note Escrow”) and (iii)
receipt from the Company of a duly executed and undated notice of redemption
pursuant to Article XI of the Indenture notifying the Trustee of the Company’s
intention to redeem all of the Existing Notes then outstanding (the “Notice
Escrow”, and together with the Cash Escrow and the Note Escrow, the “Escrow”).
The Escrow Agent shall establish at its offices located at 4 New York Plaza,
15th Floor, New York, New York 10004 an interest-bearing escrow account (the
“Escrow Account”) in which it shall hold the Cash Escrow and a secure location
in which it shall hold the Note Escrow and the Notice Escrow. The Escrow Agent
agrees to hold and dispose of the Escrow, and to act as Escrow Agent, in
accordance with all the terms, conditions and provisions of this Agreement. The
Escrow Agent shall have the right to liquidate any investments held in escrow in
order to provide funds necessary to make required payments under this Agreement.
The Escrow Agent in its capacity as escrow agent hereunder shall not have any
liability for any loss sustained as a result of any investment made pursuant
hereto.

 

(b) During the term of this Agreement, the Cash Escrow shall be invested and
reinvested by the Escrow Agent in a JPMorgan Trust Deposit Account. Periodic
statements will be provided to the Escrow Parties reflecting transactions
executed on behalf of the Cash Escrow. The Escrow Parties, upon written request,
will receive a statement of transaction details upon completion of any
securities transactions in the Cash Escrow without additional cost. The Escrow
Agent shall have a right to liquidate any investments held in order to provide
funds necessary to make required payments under this Agreement.

 

4. Interest. The Escrow Agent shall create separate accounts for each Buyer’s
deposit for the purpose of allocating to each deposit all interest that accrues
on such deposit. Upon distribution of any portion of the Cash Escrow, in
accordance with Section 5 hereof, the Escrow Agent shall deliver and pay to the
party receiving such distribution all of the interest accrued on the portion of
the Cash Escrow allocated to the portion of the Cash Escrow distributed to such
party. The Escrow Agent shall file any Internal Revenue Service forms as may be
required to report payment of any such interest, and the party receiving such
interest shall execute and deliver any documents reasonably requested by the
Escrow Agent in connection therewith. Simultaneous with the execution of this
Agreement, the Buyers and the Company shall each provide the Escrow Agent with a
fully executed W-8 or W-9 IRS form, which shall include the Buyers’ and the
Company’s TIN.

 

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5. Escrow. The Escrow Agent shall not release any of the Escrow, except in
accordance with and subject to the following terms and conditions:

 

(a) Escrow Release. Immediately following the receipt by the Escrow Agent of a
notice in substantially the form of Annex I hereto (a “Escrow Release Notice”)
duly executed by the Company and Langley Capital, L.P., as a representative of
the Buyers, the Escrow Agent shall:

 

(i) release and deliver to each Buyer the Escrow Notes registered to such Buyer;

 

(ii) release and deliver to the Trustee the Notice of Redemption, which the
Escrow Agent shall date as of the date of the delivery of such Notice of
Redemption;

 

(iii) release and deliver to the Trustee (or to the paying agent specified in
the Escrow Release Notice (if any) the amount of money specified in the Escrow
Release Notice (such amount, the “Redemption Amount”); and

 

(iv) release and deliver to the Company an amount equal to the balance of the
Cash Escrow (including all interest that has accrued on the Cash Escrow) minus
the Redemption Amount.

 

(b) Escrow Termination. Immediately following the earlier to occur of (1) the
delivery to the Escrow Agent of a notice in substantially the form of Annex II
hereto (a “Escrow Termination Notice”) duly executed by the Company and Langley
Capital, L.P., as a representative of the Buyers, and (2) the failure of the
Escrow Agent to receive either the Escrow Release Notice or the Escrow
Termination Notice prior to 9:00 a.m. (New York City time) on June 22, 2004, the
Escrow Agent shall:

 

(i) release and deliver to each Buyer the portion of the Cash Escrow deposited
by such Buyer with the Escrow Agent (plus all interest that has accrued on such
amount); and

 

(ii) release and deliver to the Company the Notice of Redemption and the Notes.

 

6. Payments; Deliveries.

 

(a) Any amount of cash to be paid to an Escrow Party pursuant to this Agreement
shall be paid to such Escrow Party pursuant to the instructions set forth for
such Escrow Party in Schedule III hereto and any further instructions given by
such Escrow Party. Any amount of cash to be paid to the Trustee pursuant to this
Agreement shall be paid to the Trustee (or, if specified in the Escrow Release
Notice, the paying agent designated by the Trustee) in accordance with the
instructions set forth in the Escrow Release Notice.

 

(b) Any items to be delivered to the Company pursuant to this Agreement shall be
delivered by a nationally recognized overnight courier, or delivered by hand
against written receipt, to the address for the Company set forth in Section 8,
or at such other address as it shall have furnished to the Escrow Agent and the
Buyers in writing. Any items to be delivered to a Buyer pursuant to this
Agreement shall be delivered by a nationally recognized overnight courier, or
delivered by hand against written receipt, to the address for such Buyer set
forth in Schedule I hereto, or at such other address as it shall have furnished
to the Escrow Agent and the

 

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Company in writing. Any items to be delivered to the Trustee pursuant to this
Agreement shall be delivered by a nationally recognized overnight courier, or
delivered by hand against written receipt, to the address for the Trustee set
forth in the Escrow Release Notice.

 

7. The Escrow Agent.

 

(a) The Escrow Agent shall have no duties or obligations hereunder except those
specifically set forth herein and such duties and obligations shall be
determined solely by the express provisions of this Agreement. The Escrow Agent
shall have no liability under and no duty to inquire as to the provisions of any
agreement other than this Escrow Agreement. In connection with its duties
hereunder, the Escrow Agent shall be protected in acting or refraining from
acting upon any written notice, request, consent, certificate, order, affidavit,
letter, telegram or other document furnished to it hereunder and believed by it
to be genuine and to have been signed or sent by the proper party or parties,
and the Escrow Agent shall not be liable for anything it may do or refrain from
doing in connection with its duties hereunder, except for such liabilities as
may result from its own gross negligence or willful misconduct. In the
administration of the Escrow Account, the Escrow Agent may execute any of its
powers and perform its duties hereunder directly or through agents or attorneys
and may consult with counsel, accountants and other skilled persons to be
selected and retained by it. The Escrow Agent shall not be liable for the
performance of agents selected by it with reasonable care or for anything done,
suffered or omitted in good faith by it in accordance with the advice or opinion
of any such counsel, accountants or other skilled persons.

 

(b) In the event the Escrow Agent shall be uncertain as to its duties or rights
under this Agreement or shall receive any instruction, claim or demand that, in
the opinion of the Escrow Agent, is in conflict with the provisions of this
Agreement (any of the foregoing, an “Escrow Agent Dispute”), the Escrow Agent
shall be entitled to refrain from taking any action with respect to such Escrow
Agent Dispute until it shall be directed otherwise by a final and nonappealable
order of a court of competent jurisdiction or by an instrument signed by all of
the Escrow Parties. In the event of any Escrow Agent Dispute, the Escrow Agent
shall be entitled to petition a court of competent jurisdiction in the County of
New York, State of New York to resolve such Escrow Agent Dispute, and each of
the Escrow Parties consent to the jurisdiction of any such court with respect to
any such Escrow Agent Dispute.

 

(c) The Escrow Agent shall be reimbursed for all reasonable fees and expenses,
including without limitation those fees set forth on Schedule IV hereto and
reasonable counsel fees and disbursements, incurred by the Escrow Agent in
connection with the performance of its duties and obligations under this
Agreement. The Company shall be responsible for all such reasonable fees and
expenses. The Company shall be liable for the payment of all such fees and
expenses incurred by the Escrow Agent, except for such fees and expenses
incurred by the Escrow Agent due to (i) the failure of an Escrow Party to comply
with any of its obligations hereunder or (ii) the requirement by an Escrow Party
that the Escrow Agent perform duties outside the scope of this Agreement, which
fees and expenses set forth in the immediately preceding clauses (i) and (ii)
shall be paid by the applicable Escrow Party.

 

(d) The Escrow Agent may resign at any time by giving at least 30 days’ prior
written notice to the Escrow Parties, which resignation shall become effective
upon the acceptance of appointment by the successor Escrow Agent as provided in
this Section 6(d). The

 

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resigning Escrow Agent may appoint a successor Escrow Agent, reasonably
acceptable to the Escrow Parties. If a successor Escrow Agent shall not have
been appointed within 20 days after such notice of resignation, any of the
Escrow Parties may apply to any court of competent jurisdiction to appoint a
successor Escrow Agent. Notwithstanding the foregoing, any successor Escrow
Agent shall be a financial institution organized under the laws of the United
States of America and having a combined capital and surplus of not less than US
$100,000,000. Any successor Escrow Agent, however appointed, shall execute and
deliver to the predecessor Escrow Agent, with a copy to each of the Escrow
Parties, an instrument accepting such appointment, and thereupon such successor
Escrow Agent shall, without further act, become fully vested with all the
rights, powers, obligations and duties of the predecessor Escrow Agent hereunder
with the same effect as if originally named the Escrow Agent herein. The Escrow
Agent shall have the right to withhold an amount equal to any amount due and
owing to the Escrow Agent, plus any reasonable costs and expenses the Escrow
Agent reasonably believes may be incurred by the Escrow Agent in connection with
termination of this Agreement.

 

8. Notices. All notices, requests and other communications to any party
hereunder shall be in writing and shall be deemed to be effective and to have
been duly given only if delivered by a nationally recognized overnight courier,
or delivered by hand against written receipt, or sent by facsimile, addressed as
follows:

 

(a) if to the Company, addressed to it at the following address, or at such
other address as it shall have furnished to the Escrow Agent and the Buyers in
writing:

 

Internet Capital Group, Inc.

690 Lee Road, Suite 310

Wayne, Pennsylvania 19087

Telephone:     (610) 727-6900

Facsimile:      (610) 727-6901

Attention:       General Counsel and

    Vice President, Treasury and Tax

 

with a copy to:

 

Dechert LLP

1717 Arch Street

Philadelphia, Pennsylvania 19103

Telephone:     (215) 994-4000

Facsimile:      (215) 994-2222

Attention:       Henry N. Nassau, Esq.

     and Christopher G. Karras, Esq.

 

(b) If to Escrow Agent, addressed to it at the following address, or at such
other address as it shall have furnished to the Escrow Parties in writing:

 

JPMorgan Chase Bank

4 New York Plaza, 15th Floor

New York, New York 10004

Attention:       Ms. Vicky Caldas

Facsimile:      (212) 623-6168

 

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(c) If to a Buyer, addressed to it at the address set forth for such Buyer on
Schedule I to this Agreement, or at such other address as it shall have
furnished to the Escrow Agent and the Company in writing, with a copy to such
Buyer’s representatives as set forth on the Schedule I hereto and (for
informational purposes only) a copy to:

 

Morgan, Lewis & Bockius LLP

1701 Market Street

Philadelphia, Pennsylvania 19103

Telephone:     (215) 963-5000

Facsimile:      (215) 963-5001

Attention:       Richard A. Silfen, Esq.

     and Robert G. Robison, Esq.

 

9. Assignment. This Agreement shall be binding upon and inure to the benefit of
and be enforceable by the parties hereto and their respective successors, legal
representatives, executors, administrators and permitted assigns. None of the
Escrow Parties nor (except as otherwise provided in Section 7(d) hereof) the
Escrow Agent may assign, delegate or otherwise transfer any of its rights or
obligations under this Agreement without prior written consent of the other
Escrow Party.

 

10. Amendments; No Waivers.

 

(a) Any provision of this Agreement may be amended or waived only if such
amendment or waiver is in writing and signed, in the case of an amendment, by
the Escrow Agent and all of the Escrow Parties or, in the case of a waiver, by
the Escrow Party against whom the waiver is to be enforced.

 

(b) No failure or delay by any party hereto in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.

 

11. Descriptive Headings. The descriptive headings of the Sections and
subsections of this Agreement are inserted for convenience only and do not
constitute a part of this Agreement.

 

12. Governing Law; Waiver of Jury Trial. This Agreement shall be governed by and
construed and interpreted in accordance with the substantive Laws of the State
of New York, without giving effect to any choice of Law or conflicts of Law
provision or rule that would cause the application of the Laws of any
jurisdiction other than the State of New York. Each party hereto irrevocably
waives any objection on the grounds of venue, forum non-conveniens or any
similar grounds and irrevocably consents to service of process by mail or in any
other manner permitted by applicable Law and consents to the jurisdiction of the
courts located in the State of New York. THE PARTIES FURTHER HEREBY WAIVE ANY
RIGHT TO A TRIAL BY

 

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JURY WITH RESPECT TO ANY LAWSUIT OR JUDICIAL PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT.

 

13. Counterparts. This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original, but all of which together shall
together constitute one and the same instrument. All signatures of the parties
hereto may be transmitted by facsimile and such facsimile will, for all
purposes, be deemed to be the original signature of the party whose signature it
reproduces and will be binding upon such party.

 

14. Entire Agreement. This Agreement and the Securities Purchase Agreement sets
forth the sole and entire agreement between the parties hereto with respect to
the subject matter hereof and supersedes all prior agreements and
understandings, whether written or oral, with respect to such subject matter.
The Schedules and Annexes to this Agreement are hereby incorporated by reference
into and made a part of this Agreement for all purposes.

 

15. Indemnification. The Escrow Parties shall jointly and severally indemnify,
defend and hold harmless the Escrow Agent from any loss, liability or expense
incurred by the Escrow Agent (including the fees and expenses of in-house or
outside counsel) arising out of or in connection with (a) its execution and
performance of this Agreement, except to the extent that such loss, liability or
expense is due to the gross negligence or willful misconduct of the Escrow
Agent, or (b) its following any instructions or other directions from the Escrow
Parties, except to the extent that its following any such instruction or
direction is expressly forbidden by the terms hereof. Anything in this Agreement
to the contrary notwithstanding, in no event shall the Escrow Agent be liable
for special, indirect or consequential loss or damage of any kind whatsoever
(including but not limited to lost profits), even if the Escrow Agent has been
advised of the likelihood of such loss or damage and regardless of the form of
action. The parties hereto acknowledge that the foregoing indemnities shall
survive the resignation or removal of the Escrow Agent and the termination of
this Agreement. The Escrow Parties hereby grant the Escrow Agent a lien on,
right of set-off against and security interest in the Escrow for the payment of
any claim for indemnification, compensation, expenses and amounts due hereunder.

 

16. Compliance. Upon execution of this Agreement, the Escrow Parties shall
provide the Escrow Agent with a fully executed W-8 or W-9 Internal Revenue
Service form for each of the Escrow Parties. All interest or other income earned
under this Agreement shall be allocated and paid as provided herein and reported
by the recipient to the Internal Revenue Service as having been so allocated and
paid.

 

17. Successor Corporations. Any corporation into which the Escrow Agent in its
individual capacity may be merged or converted or with which it may be
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Escrow Agent in its individual capacity shall be a
party, or any corporation to which substantially all the corporate trust
business of the Escrow Agent in its individual capacity may be transferred,
shall constitute the Escrow Agent under this Agreement without further act.

 

18. Call-Backs; Reliance.

 

(a) In the event funds transfer instructions are given (other than in writing at
the time of execution of the Agreement), whether in writing, by facsimile or
otherwise, the

 

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Escrow Agent is authorized to seek confirmation of such instructions by
telephone call-back to the person or persons designated on Schedule V hereto,
and the Escrow Agent may rely upon the confirmations of anyone purporting to be
the person or persons so designated. The persons and telephone numbers for
call-backs may be changed only in a writing actually received and acknowledged
by the Escrow Agent. The Escrow Parties acknowledge that such security procedure
is commercially reasonable.

 

(b) It is understood that the Escrow Agent and the beneficiary’s bank in any
funds transfer may rely solely upon any account numbers or similar identifying
number provided by such beneficiary to identify (i) the beneficiary, (ii) the
beneficiary bank or (iii) an intermediary bank. The Escrow Agent may apply any
of the applicable escrowed funds for any payment order it executes using any
such identifying number, even where its use may result in a person other than
the beneficiary being paid, or the transfer of funds to a bank other than the
beneficiary’s bank or an intermediary bank designated.

 

19. Force Majeure. In the event that the Escrow Agent is unable to perform its
obligations under the terms of this Agreement because of acts of God, strikes,
equipment or transmission failure or damage reasonably beyond its control or
other cause reasonably beyond its control, the Escrow Agent shall not be liable
for damages to the other parties for any unforeseeable damages resulting from
such failure to perform or otherwise from such causes. In such event,
performance by the Escrow Agent under this Agreement shall resume when the
Escrow Agent is able to perform substantially its duties.

 

[Signature page follows.]

 

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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of
the date first written above.

 

THE COMPANY:

 

INTERNET CAPITAL GROUP, INC.

By:        

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Name:

   

Title:

          ESCROW AGENT:

 

JPMORGAN CHASE BANK

By:        

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Name:

   

Title:

          BUYERS:

 

BEAR STEARNS SECURITIES CORP. CUSTODIAN FOR JEFFREY THORP IRA ROLLOVER

By:        

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Name:

 

Jeffrey Thorp

      COHANZICK ABSOLUTE RETURN MASTER FUND, LTD. By:        

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Name:

 

David K. Sherman

Title:

 

Authorized Agent

      COHANZICK CREDIT OPPORTUNITIES FUND, LTD. By:        

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Name:

 

David K. Sherman

Title:

 

Authorized Agent

 

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COHANZICK HIGH YIELD PARTNERS, L.P.

By:        

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Name:

 

David K. Sherman

Title:

 

Authorized Agent

     

GABRIEL CAPITAL, L.P.

By:        

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Name:

 

David K. Sherman

Title:

 

Authorized Agent

     

JMB CAPITAL PARTNERS, LP

By:        

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Name:

   

Title:

         

JMG CAPITAL PARTNERS, LP

By:        

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Name:

   

Title:

         

JMG TRTION OFFSHORE FUND, LTD

By:        

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Name:

   

Title:

   

 

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LANGLEY PARTNERS, L.P.

by: Langley Capital, LLC, its General Partner

By:        

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Name:

 

Jeffrey Thorp

Title:

 

Managing Member

     

MANCHESTER SECURITIES CORPORATION

By:        

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Name:

   

Title:

     

MASON CAPITAL, LP

MASON CAPITAL, LTD

GUGGENHEIM PORTFOLIO COMPANY X, LLC

By:

 

Mason Capital Management LLC,

Investment Manager

By:        

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Name: John C. Grizzetti

   

Title: Chief Financial Officer

     

NORTHWOOD CAPITAL PARTNERS LP

By:

  NwCapital Management LP, its General Partner By:        

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Name:

   

Title:

      PORTSIDE GROWTH AND OPPORTUNITY FUND By:        

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Name:

   

Title:

 

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SCOGGIN CAPITAL MANAGEMENT, LP II

By:

  S&E Partners, LP, its general partner

By:

  Scoggin, Inc., its general partner By:        

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Name: Craig Effron

   

Title: President

     

SCOGGIN INTERNATIONAL FUND, LTD.

By:

  Scoggin, LLC, its trading advisor By:        

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Name: Craig Effron

   

Title: Managing Member

     

TOPAZ PARTNERS LP

By:        

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Name:

   

Title: