Exhibit 10.6

ESCROW AGREEMENT

THIS ESCROW AGREEMENT (this “Agreement”) is made and entered into as of January
13, 2006 by and among TRANSAX INTERNATIONAL, LTD., a corporation organized and
existing under the laws of the state of Colorado (the “Company”); CORNELL
CAPITAL PARTNERS, LP (the “Investor”), and DAVID GONZALEZ, ESQ., as Escrow Agent
hereunder (the “Escrow Agent”). Capitalized terms appearing herein but not
defined herein shall have the meanings ascribed to such terms in the Investment
Agreement (defined below).

BACKGROUND

WHEREAS, the Company and the Investor have entered into a Investment Agreement
(the “Investment Agreement”), dated as of the date hereof, pursuant to which the
Company shall sell to the Investor and the Investor shall purchase Series A
Preferred Shares (the “Series A Preferred Shares “) which shall be convertible
into the Company’s Common Stock, par value $.00001 per share (the “Common
Stock”), for a total purchase price of up to One Million Six Hundred Thousand
Dollars ($1,600,000) (the “Purchase Price”). The Investment Agreement provides
that the Investor shall deposit the Purchase Price in a segregated escrow
account to be held by the Escrow Agent in order to effectuate a disbursement to
the Company at closings to be held as set forth in the Investment Agreement (the
“Closing”);

WHEREAS, Escrow Agent has agreed to accept, hold, and disburse the funds
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 Investment Agreement, the parties hereto have entered into this
Agreement.

NOW THEREFORE, in consideration of the foregoing, it is hereby agreed as
follows:

1.            Definitions. The following terms shall have the following meanings
when used herein:

a.            “Escrow Funds” shall mean the Purchase Price deposited with Escrow
Agent pursuant to this Agreement.

b.            “Joint Written Direction” shall mean a written direction executed
by the Investor and the Company directing Escrow Agent to disburse the Escrow
Funds and the Series A Preferred Shares or to take or refrain from taking any
action pursuant to this Agreement.

c.            “Escrow Period” shall begin with the commencement of the Offering
and shall terminate upon the earlier to occur of the following dates:

(i)           The date upon which Escrow Agent has disbursed the Escrow Funds in
accordance with the terms of the Joint Written Direction to be executed between
the Investor and the Company; or

 

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(ii)          The date upon which a determination is made by the Company and the
Investor to terminate the Investment Agreement in which event the Escrow Agent
shall return the Escrow Funds to the Investor and the Series A Preferred Shares
to the Company.

During the period from the date hereof until the Closing, the Company and the
Investor are aware that they are not entitled to any funds received into escrow
and no amounts deposited in the Escrow Account shall become the property of the
Company or the Investor or any other entity, or be subject to the debts of the
Company or the Investor or any other entity.

2.            Appointment of and Acceptance by Escrow Agent. The Investor and
the Company hereby appoint Escrow Agent to serve as Escrow Agent hereunder.
Escrow Agent hereby accepts such appointment and, upon receipt by wire transfer
of the Escrow Funds in accordance with Section 3 below, agrees to hold and
disburse the Escrow Funds in accordance with this Agreement.

a.            The parties hereto acknowledge that the Escrow Agent is general
counsel to the Investor, a partner in the general partner of the Investor, and
counsel to the Investor in connection with the transactions contemplated and
referred herein. The parties hereto agree 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 Investor and the Company will
not seek to disqualify such counsel.

3.            Creation of Escrow Funds. On or prior to the date of the
commencement of the Offering, the parties shall establish an escrow account with
the Escrow Agent, which escrow account shall be entitled as follows: Transax
International, Ltd./Cornell Capital Partners, LP Escrow Account for the deposit
of the Escrow Funds. The Investor will wire the Purchase Price to the account of
the Escrow Agent as follows:

Bank:

Wachovia, N.A. of New Jersey

Routing #:

031201467

Account #:

2000014931134

Name on Account:

David Gonzalez Attorney Trust Account

Name on Sub-Account:

Transax International, Ltd./Cornell Capital Partners, LP Escrow account

 

 

4.            Deposits into the Escrow Account. The Investor agree that it shall
promptly deliver the Purchase Price for the payment of the Series A Preferred
Shares to the Escrow Agent for deposit in the Escrow Account.

5.            Disbursements from the Escrow Account

a.            Upon execution of the Investment Agreement and all related
transaction documents, and pending the Closing, the Investor shall deliver to
the Escrow Agent the Purchase

 

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Price and the company shall deliver to the Escrow Agent the Series A Preferred
Shares. Upon receipt of the Purchase Price and the Series A Preferred Shares,
the Escrow Agent shall notify the Company and the Investor. On the Closing Date,
on the terms and subject to the conditions contained in the Investment
Agreement, the Investor and the Company shall execute and deliver a Joint
Written Direction directing the Escrow Agent to disburse the Escrow Funds and
deliver the Series A Preferred Shares pursuant to such Joint Written Direction,
at which time the Escrow Agent shall (i) wire the Escrow Funds, minus the unpaid
structuring fees and expenses of Yorkville Advisors, LLC, and in accordance with
the Joint Written Direction, to the Company, and (ii) deliver the Series A
Preferred Shares to the Investor. In disbursing the Escrow Funds and delivering
the Series A Preferred Shares, the Escrow Agent is authorized to rely upon such
Joint Written Direction from the Company and the Investor and may accept any
signatory from the Company listed on the signature page to this Agreement and
any signature from the Investor that Escrow Agent already has on file.

b.            In the event the parties terminate the Investment Agreement or the
conditions to the Closing contained in the Investment Agreement are not
fulfilled, the Escrow Agent shall, upon written notification to the parties,
return the Escrow Funds to Investor and return the Series A Preferred Shares to
the Company.

6.            Collection Procedure. Escrow Agent is hereby authorized to deposit
the proceeds of each wire in the Escrow Account.

7.            Suspension of Performance: Disbursement Into Court. If at any
time, there shall exist any dispute between the Company and the Investor with
respect to holding or disposition of any portion of the Escrow Funds or any
other obligations of Escrow Agent hereunder, or if at any time Escrow Agent is
unable to determine, to Escrow Agent’s sole satisfaction, the proper disposition
of any portion of the Escrow Funds or Escrow Agent’s proper actions with respect
to its obligations hereunder, or if the parties have not within thirty (30) days
of the furnishing by Escrow Agent of a notice of resignation pursuant to Section
9 hereof, appointed a successor Escrow Agent to act hereunder, then Escrow Agent
may, in its sole discretion, take either or both of the following actions:

a.            Suspend the performance of any of its obligations (including
without limitation any disbursement obligations) under this Escrow Agreement
until such dispute or uncertainty shall be resolved to the sole satisfaction of
Escrow Agent or until a successor Escrow Agent shall be appointed (as the case
may be); provided however, Escrow Agent shall continue to invest the Escrow
Funds in accordance with Section 8 hereof; and/or

b.            Petition (by means of an interpleader action or any other
appropriate method) any court of competent jurisdiction in any venue convenient
to Escrow Agent, for instructions with respect to such dispute or uncertainty,
and to the extent required by law, pay into such court, for holding and
disposition in accordance with the instructions of such court, all funds held by
it in the Escrow Funds, after deduction and payment to Escrow Agent of all fees
and expenses (including court costs and attorneys’ fees) payable to, incurred
by, or expected to be incurred by Escrow Agent in connection with performance of
its duties and the exercise of its rights hereunder.

 

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c.            Escrow Agent shall have no liability to the Company, the Investor,
or any person with respect to any such suspension of performance or disbursement
into court, specifically including any liability or claimed liability that may
arise, or be alleged to have arisen, out of or as a result of any delay in the
disbursement of funds held in the Escrow Funds or any delay in with respect to
any other action required or requested of Escrow Agent.

8.            Investment of Escrow Funds. Escrow Agent shall deposit the Escrow
Funds in a non-interest bearing account.

If Escrow Agent has not received a Joint Written Direction at any time that an
investment decision must be made, Escrow Agent shall maintain the Escrow Funds,
or such portion thereof, as to which no Joint Written Direction has been
received, in a non-interest bearing account.

9.            Resignation and Removal of Escrow Agent. Escrow Agent may resign
from the performance of its duties hereunder at any time by giving thirty (30)
days’ prior written notice to the parties or may be removed, with or without
cause, by the parties, acting jointly, by furnishing a Joint Written Direction
to Escrow Agent, at any time by the giving of ten (10) days’ prior written
notice to Escrow Agent as provided herein below. Upon any such notice of
resignation or removal, the representatives of the Investor and the Company
identified in Sections 13a.(iv) and 13b.(iv), below, jointly shall appoint a
successor Escrow Agent hereunder, which shall be a commercial bank, trust
company or other financial institution with a combined capital and surplus in
excess of $10,000,000.00. Upon the acceptance in writing of any appointment of
Escrow Agent hereunder by a successor Escrow Agent, such successor Escrow Agent
shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Escrow Agent, and the retiring Escrow
Agent shall be discharged from its duties and obligations under this Escrow
Agreement, but shall not be discharged from any liability for actions taken as
Escrow Agent hereunder prior to such succession. After any retiring Escrow
Agent’s resignation or removal, the provisions of this Escrow Agreement shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was Escrow Agent under this Escrow Agreement. The retiring Escrow Agent shall
transmit all records pertaining to the Escrow Funds and shall pay all funds held
by it in the Escrow Funds to the successor Escrow Agent, after making copies of
such records as the retiring Escrow Agent deems advisable and after deduction
and payment to the retiring Escrow Agent of all fees and expenses (including
court costs and attorneys’ fees) payable to, incurred by, or expected to be
incurred by the retiring Escrow Agent in connection with the performance of its
duties and the exercise of its rights hereunder.

10.            Liability of Escrow Agent

a.            Escrow Agent shall have no liability or obligation with respect to
the Escrow Funds except for Escrow Agent’s willful misconduct or gross
negligence. Escrow Agent’s sole responsibility shall be for the safekeeping,
investment, and disbursement of the Escrow Funds in accordance with the terms of
this Agreement. Escrow Agent shall have no implied duties or obligations and
shall not be charged with knowledge or notice or any fact or circumstance not
specifically set forth herein. Escrow Agent may rely upon any instrument, not
only as to its due execution, validity and effectiveness, but also as to the
truth and accuracy of any information contained herein, which Escrow Agent shall
in good faith believe to be genuine,

 

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to have been signed or presented by the person or parties purporting to sign the
same and conform to the provisions of this Agreement. In no event shall Escrow
Agent be liable for incidental, indirect, special, and consequential or punitive
damages. Escrow Agent shall not be obligated to take any legal action or
commence any proceeding in connection with the Escrow Funds, any account in
which Escrow Funds are deposited, this Agreement or the Purchase Agreement, or
to appear in, prosecute or defend any such legal action or proceeding. Escrow
Agent may consult legal counsel selected by it in any event of any dispute or
question as to construction of any of the provisions hereof or of any other
agreement or its duties hereunder, or relating to any dispute involving any
party hereto, and shall incur no liability and shall be fully indemnified from
any liability whatsoever in acting in accordance with the opinion or
instructions of such counsel. The Company and the Investor jointly and severally
shall promptly pay, upon demand, the reasonable fees and expenses of any such
counsel.

b.            Escrow Agent is hereby authorized, in its sole discretion, to
comply with orders issued or process entered by any court with respect to the
Escrow Funds, without determination by Escrow Agent of such court’s jurisdiction
in the matter. If any portion of the Escrow Funds is at any time attached,
garnished or levied upon under any court order, or in case the payment,
assignment, transfer, conveyance or delivery of any such property shall be
stayed or enjoined by any court order, or in any case any order judgment or
decree shall be made or entered by any court affecting such property or any part
thereof, then and in any such event, Escrow Agent is authorized, in its sole
discretion, to rely upon and comply with any such order, writ judgment or decree
which it is advised by legal counsel selected by it, binding upon it, without
the need for appeal or other action; and if Escrow Agent complies with any such
order, writ, judgment or decree, it shall not be liable to any of the parties
hereto or to any other person or entity by reason of such compliance even though
such order, writ judgment or decree may be subsequently reversed, modified,
annulled, set aside or vacated.

11.          Indemnification of Escrow Agent. From and at all times after the
date of this Agreement, the parties jointly and severally, shall, to the fullest
extent permitted by law and to the extent provided herein, indemnify and hold
harmless Escrow Agent and each director, officer, employee, attorney, agent and
affiliate of Escrow Agent (collectively, the “Indemnified Parties”) against any
and all actions, claims (whether or not valid), losses, damages, liabilities,
costs and expenses of any kind or nature whatsoever (including without
limitation reasonable attorney’s fees, costs and expenses) incurred by or
asserted against any of the Indemnified Parties from and after the date hereof,
whether direct, indirect or consequential, as a result of or arising from or in
any way relating to any claim, demand, suit, action, or proceeding (including
any inquiry or investigation) by any person, including without limitation the
parties to this Agreement, whether threatened or initiated, asserting a claim
for any legal or equitable remedy against any person under any statute or
regulation, including, but not limited to, any federal or state securities laws,
or under any common law or equitable cause or otherwise, arising from or in
connection with the negotiation, preparation, execution, performance or failure
of performance of this Agreement or any transaction contemplated herein, whether
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

 

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Indemnified Party, such Indemnified Party shall promptly notify the Company and
the Investor hereunder in writing, and the Investor and the Company shall assume
the defense thereof, including the employment of counsel and the payment of all
expenses. Such Indemnified Party shall, in its sole discretion, have the right
to employ separate counsel (who may be selected by such Indemnified Party in its
sole discretion) in any such action and to participate and to participate in the
defense thereof, and the fees and expenses of such counsel shall be paid by such
Indemnified Party, except that the Investor and/or the Company shall be required
to pay such fees and expense if (a) the Investor or the Company agree to pay
such fees and expenses, or (b) the Investor and/or the Company shall fail to
assume the defense of such action or proceeding or shall fail, in the sole
discretion of such Indemnified Party, to employ counsel reasonably satisfactory
to the Indemnified Party in any such action or proceeding, (c) the Investor and
the Company are the plaintiff in any such action or proceeding or (d) the named
or potential parties to any such action or proceeding (including any potentially
impleaded parties) include both the Indemnified Party, the Company and/or the
Investor and the Indemnified Party shall have been advised by counsel that there
may be one or more legal defenses available to it which are different from or
additional to those available to the Company or the Investor. The Investor and
the Company shall be jointly and severally liable to pay fees and expenses of
counsel pursuant to the preceding sentence, except that any obligation to pay
under clause (a) shall apply only to the party so agreeing. All such fees and
expenses payable by the Company and/or the Investor 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 Escrow Agent.

The parties agree that neither payment by the Company or the Investor of any
claim by Escrow Agent for indemnification hereunder shall impair, limit, modify,
or affect, as between the Investor and the Company, the respective rights and
obligations of Investor, on the one hand, and the Company, on the other hand.

12.          Expenses of Escrow Agent. Except as set forth in Section 11 the
Company shall reimburse Escrow Agent for all of its reasonable out-of-pocket
expenses, including attorneys’ fees, travel expenses, telephone and facsimile
transmission costs, postage (including express mail and overnight delivery
charges), copying charges and the like. All of the compensation and
reimbursement obligations set forth in this Section shall be payable by the
Company, upon demand by Escrow Agent. The obligations of the Company under this
Section shall survive any termination of this Agreement and the resignation or
removal of Escrow Agent.

 

13.

Representations and Warranties.

a.            The Investor makes the following representations and warranties to
Escrow Agent:

(i)           The Investor has full power and authority to execute and deliver
this Agreement and to perform its obligations hereunder.

(ii)          This Agreement has been duly approved by all necessary action of
the Investor, including any necessary approval of the limited partners of the
Investor or

 

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necessary corporate approval, as applicable, has been executed by duly
authorized officers of the Investor, enforceable in accordance with its terms.

(iii)        The execution, delivery, and performance of the Investor of this
Agreement will not violate, conflict with, or cause a default under any
agreement of limited partnership of Investor or the articles of incorporation or
bylaws of the Investor (as applicable), any applicable law or regulation, any
court order or administrative ruling or degree to which the Investor is a party
or any of its property is subject, or any agreement, contract, indenture, or
other binding arrangement.

(iv)         Mark Angelo has been duly appointed to act as the representative of
the Investor hereunder and has full power and authority to execute, deliver, and
perform this Escrow Agreement, to execute and deliver any Joint Written
Direction, to amend, modify, or waive any provision of this Agreement, and to
take any and all other actions as the Investor’ representatives under this
Agreement, all without further consent or direction form, or notice to, the
Investor or any other party.

(v)          No party other than the parties hereto and the Investor 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.

(vi)         All of the representations and warranties of the Investor 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 the state of its incorporation 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 Investment Agreement and will not violate,
conflict with, or cause a default under the certificate of incorporation or
bylaws of the Company, any applicable law or regulation, any court order or
administrative ruling or decree to which the Company is a party or any of its
property is subject, or any agreement, contract, indenture, or other binding
arrangement, including without limitation to the Investment Agreement, to which
the Company is a party.

(iv)         Stephen Walters has been duly appointed to act as the
representative of the Company hereunder and has full power and authority to
execute, deliver,

 

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and perform this Agreement, to execute and deliver any Joint Written Direction,
to amend, modify or waive any provision of this Agreement and to take all other
actions as the Company’s Representative under this Agreement, all without
further consent or direction from, or notice to, the Company or any other party.

(v)          No party other than the parties hereto and the Investor 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.

(vi)         All of the representations and warranties of the Company contained
herein are true and complete as of the date hereof and will be true and complete
at the time of any disbursement from the Escrow Funds.

14.          Consent to Jurisdiction and Venue. In the event that any party
hereto commences a lawsuit or other proceeding relating to or arising from this
Agreement, the parties hereto agree that the United States District Court for
the District of New Jersey shall have the sole and exclusive jurisdiction over
any such proceeding. If all such courts lack federal subject matter
jurisdiction, the parties agree that the Superior Court Division of New Jersey,
Chancery Division of Hudson County shall have sole and exclusive jurisdiction.
Any of these courts shall be proper venue for any such lawsuit or judicial
proceeding and the parties hereto waive any objection to such venue. The parties
hereto consent to and agree to submit to the jurisdiction of any of the courts
specified herein and agree to accept the service of process to vest personal
jurisdiction over them in any of these courts.

15.          Notice. All notices and other communications hereunder shall be in
writing and shall be deemed to have been validly served, given or delivered five
(5) days after deposit in the United States mails, by certified mail with return
receipt requested and postage prepaid, when delivered personally, one (1) day
delivered to any overnight courier, or when transmitted by facsimile
transmission and upon confirmation of receipt and addressed to the party to be
notified as follows:

If to Investor, to:

Cornell Capital Partners, LP

 

101 Hudson Street – Suite 3700

 

Jersey City, NJ 07302

 

Attention:         Mark Angelo

 

Portfolio Manager

 

Telephone:       (201) 985-8300

 

Facsimile:        (201) 985-8266

 

 

If to the Escrow Agent:

David Gonzalez, Esq.

 

101 Hudson Street – Suite 3700

 

Jersey City, NJ 07302

 

Telephone:       (201) 985-8300

 

Facsimile:        (201) 985-8266

 

 

 

 

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If to the Company, to:

Transax International, Ltd.

 

5201 Blue Lagoon Drive, 8th Floor

 

Miami, FL 33126

 

Attention:         Chief Executive Officer

 

 

With a copy to:

Kirkpatrick & Lockhart Nicholson Graham, LLP

 

201 South Biscayne Boulevard, Suite 2000

 

Miami, Florida 33131

 

Attention:         Clayton E. Parker, Esq.

 

Telephone:       (305) 539-3306

 

Facsimile:        (305) 328-7095

 

 

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.          Governing Law. This Agreement shall be construed and interpreted in
accordance with the internal laws of the State of New Jersey without giving
effect to the conflict of laws principles thereof.

19.          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.

20.          Binding Effect. All of the terms of this Agreement, as amended from
time to time, shall be binding upon, inure to the benefit of and be enforceable
by the respective heirs, successors and assigns of the Investor, the Company, or
the Escrow Agent.

21.          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.

22.          Termination. Upon the first to occur of the disbursement of all
amounts in the Escrow Funds pursuant to Joint Written Directions or the
disbursement of all amounts in the Escrow Funds into court pursuant to Section 7
hereof, this Agreement shall terminate and Escrow Agent shall have no further
obligation or liability whatsoever with respect to this Agreement or the Escrow
Funds.

 

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IN WITNESS WHEREOF the parties have hereunto set their hands and seals the day
and year above set forth.

 

TRANSAX INTERNATIONAL, LTD.

 

 

 

By:  /s/ Stephen Walters

 

Name: Stephen Walters

 

Title:   President and CEO

 

 

 

 

 

INVESTOR

 

CORNELL CAPITAL PARTNERS, LP

 

 

 

By:       Yorkville Advisors, LLC

 

Its:        General Partner

 

 

 

By: ___________________________________

 

Name: Mark Angelo

 

Title:   President and Portfolio Manager

 

 

 

 

 

By: ___________________________________

 

Name: David Gonzalez, Esq.

 

 

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