ESCROW AGREEMENT
This
Escrow Agreement, dated as of January 17, 2007 (this “Agreement”),
is
entered into by and between Long-E International, Inc., a Utah corporation,
with
its principal offices located at C-6F HUHAN CHUANGXIN BLOCK, KEYUAN ROAD,
HI-TECH INDUSTRY ZONE, SHENZHEN GUANDONG F4 5180000 (the “Company),
WestPark Capital, Inc. a Colorado corporation with its principal offices located
at 0000 Xxxxxx xx Xxx Xxxxx, Xxxxx 000 Xxx Xxxxxxx, XX 00000 (the “Placement
Agent”)
and
Law Offices of Xxxxx X. Xxxxx, A Professional Corporation, with offices at
0000
Xxxxxxx Xxxx Xxxx, Xxxxx 0000, Xxx Xxxxxxx, XX 00000 (the “Escrow
Agent”).
WHEREAS,
Placement Agent and the Company have entered into an Engagement Agreement (the
“Engagement”),
dated
as of June 20, 2006 regarding certain financing (the “Offering”)
in the
form of Convertible Notes, which are convertible into shares of the Company’s
preferred stock of the Company, (the “Securities”)
and
Regulation D of the General Rules and Regulations under the Securities Act
of
1933, as amended (the “Act”)
such
placement to be made solely to accredited investors, as that term is defined
in
the Act;
WHEREAS,
the Placement Agent, as agent for the Company, proposes to offer the Securities
on a best efforts basis, a maximum of $6,000,000 (“Maximum
Offering”),
which
Securities of convertible debt are being offered with a conversion price of
$0.40 (the “Purchase
Price”);
WHEREAS,
the proceeds to the Company from the sale of the Securities (the “Subscription
Funds”)
are to
be held in escrow pending the Company’s receipt of subscriptions, consisting of
the full Purchase Price of Securities subscribed for and a related subscription
agreement, (each a “Subscription”)
from
subscribers for Securities (each a “Subscriber”),
until
the expiration of the Offering Period as defined herein; and
WHEREAS,
the Company and the Placement Agent propose to establish an escrow account
with
the Escrow Agent whereby the Escrow Agent will serve as escrow agent pursuant
to
the terms and subject to the conditions provided for in this
Agreement.
NOW,
THEREFORE, in consideration of the premises and the mutual covenants contained
in this Agreement, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. Appointment
of Escrow Agent:
The
Company and the Placement Agent hereby appoint the Escrow Agent as agent and
custodian for the purposes of this Agreement, and the Escrow Agent accepts
such
appointment, each upon the terms and subject to the conditions set forth in
this
Agreement.
2. Establishment
of the Escrow Account:
The
Company and the Placement Agent hereby establish (the “Escrow Agreement”) with
the Escrow Agent under Escrow Agent’s client trust account at Xxxxx Fargo Bank
located at 0000 Xxxxxx xx xxx Xxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000 (the
“Bank”),
to
receive, hold and disburse Subscription Funds as set forth herein (the
“Escrow
Account”).
The
Placement Agent shall instruct each Subscriber to make the Subscription Funds
payable to the Escrow Account.
3. The
Escrow Period:
The
Offering shall expire on February 28, 2007, unless extended for an additional
period of up to 45 days at the sole discretion of the Company, and upon at
least
five (5) business days written notice to the Escrow Agent (said initial or
extended period is defined as the “Offering
Period.”)
4. Deposits
into the Escrow Account:
(a) All
Subscribers’ checks and wire transfer funds shall be made payable to “Law
Offices of Xxxxx X. Xxxxx, Prof. Corp. Subscription Escrow Account No. 3” as
escrow agent for the Company. Checks may be delivered to the Placement
Agent, who in turn will deliver them to an Account Representative at the Bank
for deposit into the Escrow Account. The Placement Agent will promptly
furnish to the Escrow Agent copies of all checks and related deposit slips
so
delivered to the Bank. All Subscription Funds shall be accompanied by
written subscription information in the form attached hereto as Exhibit B.
The Escrow Agent shall, upon receipt of a Subscription, together with the
related Purchase Price therefor, deposit the Purchase Price of said Subscription
in the Escrow Account for collection.
(b) Any
checks which are received by Escrow Agent that are made payable to a party
other
than the Escrow Agent shall be returned directly to the proposed purchaser,
together with any documents delivered therewith. In the event the Escrow Agent
does not have sufficient Information to return such deposit to the proposed
purchaser, the Escrow Agent shall return such deposit and documents to the
Placement Agent. Simultaneously with each deposit, the Placement Agent shall
provide the Escrow Agent with a copy of a fully executed Subscription containing
the name, address and taxpayer identification number of each Subscriber and
of
the aggregate principal amount of Securities subscribed for by such Subscriber.
The Escrow Agent is not obligated, and may refuse, to accept checks that are
not
accompanied by a Subscription containing the requisite information.
(c) In
the
event a wire transfer is received by the Escrow Agent and the Escrow Agent
has
not received a related subscription agreement, fully executed, the Escrow Agent
shall notify the Placement Agent. If the Escrow Agent does not receive a fully
executed copy of the subscription agreement containing the name, address and
taxpayer identification number of the Subscriber and the Purchase Price of
the
Securities subscribed for by such Subscriber prior to close of business on
the
second business day (days other than a Saturday or Sunday or other day on which
the Escrow Agent is not open for business in the State of New York) after
notifying Placement Agent of receipt of said wire, the Escrow Agent shall return
the funds to the prospective purchaser.
5. The
Offering Period:
During
the Offering Period, the Escrow Agent shall maintain a list of (i) the name,
address and taxpayer identification number of each Subscriber, (ii) the number
of Securities subscribed for by such Subscriber, as accepted, and (iii) the
aggregate Purchase Price received from each Subscriber.
6. Delivery
of the
Offering Proceeds:
A
request for disbursement from the Escrow Account shall be signed by an
authorized representative of both the Company and the Placement Agent and shall
be substantially the same form as Exhibit C attached hereto and made a part
hereof. The Escrow Agent shall not be responsible for evaluating the truth
or
sufficiency of any request for disbursement. The Escrow Agent shall disburse
and
deliver all Subscription Funds deposited in the Escrow Account for Subscriptions
accepted by the Company and available for distribution to the Company (the
“Offering
Proceeds”)
as
follows:
(a) In
the
event that the Proceeds are not received by the Escrow Agent on or prior to
the
termination of the Offering Period, promptly to the applicable Subscriber (in
the amount received from such Subscriber when tendering the Subscriber’s
Subscription); or
(b) In
the
event that at least the Proceeds are received by the Escrow Agent on or prior
to
the termination of the Offering Period, in accordance with the written
instructions of the Company and the Placement Agent; however, in no event shall
the Escrow Agent distribute the funds without the documentation as may be
necessary in the opinion of the Escrow Agent.
(c) Notwithstanding
the foregoing, the distribution of funds pursuant to Sections 6(a) and (b)
shall
not occur until the date on which said funds have cleared.
7. In
the event that
Proceeds from less than the Maximum Offering are disbursed to the Company in
accordance with Section 6(b) of this Agreement, the Escrow Agent shall deposit
any additional funds received during the Offering Period in the Escrow Account
until given further instructions by the Company and the Placement Agent as
to
disposition of the funds; however, in no event shall the Escrow Agent make
a
distribution under this Section 7 until the date on which said funds have
cleared.
2
8. Upon
the
disbursement of all funds in the Escrow Account in accordance with the terms
of
this Agreement, the Escrow Agent will have no further responsibility. In this
regard, it is expressly agreed and understood that in no event shall the
aggregate amount of payments made by the Escrow Agent exceed the amount of
the
funds in the Escrow Account.
9. The
Escrow Agent hereby accepts its obligations under this Agreement, and represents
and warrants that the Escrow Agent has the power and legal authority to enter
into this Agreement and to perform the Escrow Agent’s obligations under this
Agreement. The Escrow Agent covenants and agrees that all property held by
the
Escrow Agent pursuant to this Agreement shall be identified as being held in
escrow in connection with this Agreement. The Escrow Agent further covenants
and
agrees that all documents and records with respect to the matters subject to
and
transactions contemplated by this Agreement will be available, upon reasonable
written notice, for examination by the Company, the SEC or any state “blue sky”
securities authorities. The Company and the Placement Agent agree that the
Escrow Agent may be a Subscriber to the Offering.
10. For
its
services hereunder, the Escrow Agent shall be entitled to receive from the
Company upon demand: (a) a fee of $2,000 upon the execution and delivery of
this
Agreement, and (b) reimbursement for any reasonable expenses incurred by the
Escrow Agent in connection with the services provided in accordance with this
Agreement.
11. For
its
services hereunder, the Placement Agent shall be entitled to receive from the
Company upon demand reimbursement for any reasonable expenses incurred by the
Placement Agent in connection with the services provided in accordance with
this
Agreement.
12. The
parties hereto, for themselves, their successors and assigns, do hereby
acknowledge and agree that:
(a) This
Escrow Agreement expressly sets forth all the duties and obligations of the
Escrow Agent with respect to any and all matters pertinent to this Agreement.
The Escrow Agent shall not have any additional duties or responsibilities except
as expressly set forth in this Agreement and no implied duties or obligations
shall be read into this Agreement against the Escrow Agent;
(b) The
Escrow Agent shall be
under no duty or obligation to enforce the collection of any check, draft or
other instrument for the payment of money delivered to it hereunder, but the
Escrow Agent, within a reasonable time, shall return to the Subscriber any
check, draft or other instrument received which is dishonored, together with
the
Subscription Agreement;
(c) The
Escrow Agent shall
have no responsibility at any time to ascertain whether or not any security
interest exists in the funds in the Account or any part thereof or to file
any
financing statement under the Uniform Commercial Code with respect to the funds
in the Account or any part thereof;
(d) The
Escrow Agent does not have any interest in the amounts deposited hereunder
but
is serving as escrow holder only and having only possession thereof; except
to
the extent that the Escrow Agent shall become a Subscriber.
(e) The
Escrow Agent shall
not be required to enforce any of the terms or conditions of any agreement
between the Company and a member of the NASD, nor shall it be responsible for
the performance by the Company or a member of the NASD of their obligations
under any agreement between them;
3
(f) The
Escrow Agent shall not have any investment responsibility with respect to funds
held under this Agreement;
(g) The
Escrow Agent shall not be responsible for the identity, authority or rights
of
any person, firm or corporation executing or delivering or purporting to execute
or deliver this Agreement or any document or amount deposited hereunder or
any
endorsement thereon or assignment thereof;
(h) The
Escrow Agent shall not be responsible for the sufficiency, genuineness or
validity of, or title to, any document, instrument or amount deposited or to
be
deposited with it pursuant to this Agreement;
(i) The
Escrow Agent may rely and shall be protected in acting or refraining from acting
upon any written notice, instruction or request furnished to it hereunder and
believed by it to be genuine and to have been signed or presented by the proper
party or parties and the Escrow Agent shall be under no duty to inquire into
or
investigate the validity, accuracy or content of any such document;
(j) The
Escrow Agent shall not have any duty to preserve rights against any parties
with
respect to any funds held by the Escrow Agent pursuant to this Agreement,
whether or not the Escrow Agent has or is deemed to have knowledge or notice
of
such matters;
(k) The
Escrow Agent shall not be liable for any action taken in accordance with the
terms of this Agreement, including, without limitation, any release of amounts
held by the Escrow Agent pursuant to this Agreement;
(l) The
Escrow Agent’s duties hereunder are purely ministerial in nature and the Escrow
Agent shall not be liable or responsible for any act it may do or omit except
to
the extent a court of competent jurisdiction located within the State of
California determines its actions or inactions constituted gross negligence
or
willful misconduct, and 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;
(m) The
Escrow Agent shall not be required to institute legal proceedings of any kind
and shall not be required to defend any legal proceedings which may be
instituted against it in respect of the subject matter of this Agreement and
the
instructions set forth herein, unless requested to do so and indemnified to
its
satisfaction against the cost and expense of such defense;
(n) In
case any funds held by
the Escrow Agent hereunder shall be attached, garnished or levied upon pursuant
to any order of court, or the delivery thereof shall be stayed or enjoined
by
any order of court, or any other writ, order, judgment or decree shall be
entered or issued by any court affecting such property, or any part thereof,
or
any act of the Escrow Agent, the Escrow Agent is hereby expressly authorized,
in
its sole discretion and notwithstanding anything in this Agreement to the
contrary, to obey and comply with all writs, orders, judgments or decrees so
entered or issued, whether with or without jurisdiction and, in case the Escrow
Agent obeys and complies with any such writ, order, judgment or decree, it
shall
not be liable to any of the parties hereto, their affiliates, principals,
successors or assigns, any Subscriber or prospective purchaser or to any other
person, firm or corporation, by reason of such compliance notwithstanding that
such writ, order, judgment or decree may subsequently be reversed, modified,
annulled, set aside or vacated;
(o) The
Escrow Agent at the sole expense of the Company may employ agents, attorneys
and
accountants in connection with its duties hereunder and shall not be liable
for
any action taken or omitted in good faith in accordance with the advice of
counsel, accountants or other skilled persons; and
4
(p) By
entering into this Agreement, there is no establishment of an attorney client
relationship neither between the Company and the Escrow Agent nor between the
Placement Agent and the Escrow Agent.
13. In
the
event of any disagreement between the Company, the Placement Agent and the
Subscribers, or any other person, or any of them, resulting in an adverse claim
to funds held by the Escrow Agent pursuant to this Agreement, the Escrow Agent
shall be entitled, at the Escrow Agent’s sole option, to refuse to comply with
any such claim and shall not be liable for damages or interest to any such
person or persons for its failure to comply with such adverse claims, and the
Escrow Agent shall be entitled to continue to so refrain until:
(a) the
rights of the adverse claimants shall have been finally adjudicated by a court
of competent jurisdiction; or
(b) all
differences shall have been adjusted by agreement and the Escrow Agent shall
have been notified of such in a writing signed by all interested
persons.
In
the
event of such disagreement, the Escrow Agent, in the Escrow Agent’s sole
discretion, may file a suit in interpleader for the purpose of having the
respective rights of the claimants of such funds or other property adjudicated
at the sole expense of the Company.
14. The
Company and the
Placement Agent hereby agree to indemnify the Escrow Agent and hold the Escrow
Agent harmless, from and against any and all claims, costs, expenses, demands,
judgments, losses, damages and liabilities (including, without limitation,
reasonable attorneys’ fees and expenses) arising out of or in connection with
this Agreement.
15. The
Escrow Agent may at any time resign by giving prior written notice of such
resignation to the Placement Agent and the Company. The Escrow Agent shall
not
be discharged from its duties and obligations under this Agreement until a
successor escrow agent shall have been designated by the Company and such
successor escrow agent shall have executed and delivered an escrow agreement
in
substantially the form of this Agreement, and all property then held by the
Escrow Agent pursuant to this Agreement shall have been delivered to such
successor escrow agent. However, in no event will the Escrow Agent’s obligations
hereunder extend beyond ninety (90) days after providing written notice of
resignation to the Placement Agent and the Company.
16. The
term of this
Agreement shall commence as of the date of this Agreement and shall terminate
upon the earliest to occur of the following:
(a) disbursement
of all
amounts held by the Escrow Agent pursuant to Section 6 of this Agreement and
satisfaction of the Escrow Agent’s other duties and responsibilities under this
Agreement; or
(b) the
appointment of, and
acceptance of such appointment by, the successor escrow agent under Section
14.
Upon
termination of this Agreement, Exhibit D attached hereto and made a part hereof
is required to be executed and delivered by the Company to the Escrow Agent,
provided that failure to do so shall not effect the termination of this
Agreement.
17. Except
as
otherwise specifically provided elsewhere in this Agreement, all requests,
demands, notices and other communications required or otherwise given under
this
Agreement shall be sufficiently given if in writing and (a) delivered by hand
against written receipt therefore, (b) forwarded by nationally recognized
overnight courier requiring acknowledgment of receipt, (c) mailed by registered
or certified mail, return receipt requested addressed or (d) facsimile, in
each
case with delivery charges prepaid or (e) as a PDF scan and email, as
follows:
5
If
to the
Company, to:
C-6F
HUHAN CHUANGXIN BLOCK
KEYUAN
ROAD, HI-TECH INDUSTRY ZONE
SHENZHEN
GUANDONG F4 0000000
Telephone:
x00 000 0000 0000
Email:
xxxxxxxxx@xxx.xxx
If
to the
Placement Agent, to:
Xxxxxxx
Xxxxxxxxx
WestPark
Capital, Inc.
0000
Xxxxxx xx xxx Xxxxx, Xxx. 000
Xxx
Xxxxxxx, XX 00000
Facsimile:
(000) 000-0000
Email:
x@xxxxxxxxx.xxx
If
to the
Escrow Agent, to:
Xxxxx
X.
Xxxxx, Esq.
Law
Offices of Xxxxx X. Xxxxx, A Professional Corporation
0000
Xxxxxxx Xxxx Xxxx
Xxxxx
0000
Xxx
Xxxxxxx, XX 00000
Facsimile:
(000) 000-0000
Email:
xxxxxx@xxxxxxxxx.xxx
or,
in
the case of any of the parties hereto, at such other address as such party
shall
have furnished in writing, in accordance with this section, to the other party
to this Agreement. Each such request, demand, notice or other communication
shall be deemed given (x) on the date of delivery by hand, (y) on the first
business day following the date of delivery to the nationally recognized
overnight courier or (z) three business days following mailing by registered
or
certified mail.
18. This
Agreement shall be
binding and inure to the benefit of the parties to this Agreement and their
respective successors and assigns. Nothing in this Agreement is intended or
shall be construed to give any other person any right, remedy or claim under,
in
or with respect to this Agreement or any funds held pursuant to this Agreement,
except as specifically set forth in this Agreement.
19. This
Agreement contains
the entire agreement of the parties and supersedes all prior written or oral
understandings pertaining to any of the subject matter hereof. This Agreement
may be modified or amended only in a writing signed by all of the parties
hereto.
20. This
Agreement shall be
governed by, and be construed and interpreted in accordance with, the internal
laws of the State of California. The parties hereby consent to the jurisdiction
of the Superior Court of the State of California in Los Angeles County and
the
United States District Court for the Central District of California, and any
proceeding arising between the parties hereto in any manner pertaining or
related to this Agreement shall to the extent permitted by law, be held in
Los
Angles County, California.
21. This
Agreement may be
entered into in any number of counterparts and by different parties hereto
in
separate counterparts, each of which, when so executed, shall be deemed to
be an
original and all of which taken together shall constitute one and the same
agreement.
[Signature
Page Follows]
6
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date
first above written.
| LONG-E INTERNATIONAL, INC. | ||
| |
|
|
| By: | /s/ Bu Shengfu | |
|
Name: Bu Shengfu |
||
| Title: Chief Executive Officer | ||
| WESTPARK CAPITAL, INC | ||
| |
|
|
| By: | /s/ Xxxxxxx Xxxxxxxxx | |
|
Name: Xxxxxxx Xxxxxxxxx |
||
| Title: Chief Executive Officer | ||
| LAW OFFICES OF XXXXX X. XXXXX, | ||
| A Professional Corporation | ||
| |
|
|
| By: | /s/ Xxxxx Xxxxx | |
|
Name: Xxxxx X. Xxxxx, President |
||
7
Exhibit
A
Names
and
Titles of Placement Agent Contact:
Xxxxx
XxXxxxxx
Vice
President, Corporate Finance
WestPark
Capital, Inc.
0000
Xxxxxx xx xxx Xxxxx,
Xxxxx
000
Xxx
Xxxxxxx, XX 00000
(000)
000-0000 Telephone
(000)
000-0000 Facsimile
xxxxxxxxx@xxxxxxxxx.xxx
8
Exhibit
B
SUBSCRIPTION
INFORMATION
For:
________________________
| Name of Subscriber | ||||
| Address of Subscriber | ||||
| Principal Amount of | ||||
| Notes Subscribed For | ||||
| Subscription Amount | ||||
| Submitted Herewith | ||||
| Taxpayer ID Number/ | ||||
| Social Security Number |
9
Exhibit
C
DISBURSEMENT
REQUEST
VIA
FACSIMILE
Law
Offices of Xxxxx X. Xxxxx, A Professional Corporation: (000)
000-0000
Date:_______________________
Xxxxx
X.
Xxxxx, Esq.
0000
Xxxxxxx Xxxx Xxxx, Xxxxx 0000
Xxx
Xxxxxxx, XX 00000
Re:
Account Name: Law Offices of Xxxxx X. Xxxxx, Prof. Corp. Subscription Escrow
Account No. 3 (Long-E International, Inc.)
Account
Number: _____________________
Dear
Escrow Agent:
We,
the
undersigned representatives, acknowledge that the proceeds of _______________
have been received in the Law Offices of Xxxxx X. Xxxxx, Prof. Corp.
Subscription Escrow Account No. 3 and are eligible for distribution on this
date. The Company, WestPark Capital and Xxxxx X. Xxxxx are satisfied that all
requirements to effect a distribution of available funds have been met and
want
to disburse _______________________; however, the Escrow Agent will retain
____________ related to fees for maintaining the Escrow Account.
Please
disburse the proceeds immediately via wire transfer as follows:
| WestPark Capital, Inc. | Bank Information | ||
| Long-E International, Inc. | Bank Information |
| WestPark Capital, Inc.: | Long-E International, Inc.: | ||
|
By: Xxxxxxx Xxxxxxxxx |
By: Bu Shengfu |
||
| Its: Chief Executive Officer | Its: Chief Executive Officer |
10
Exhibit
D
RELEASE
AND DISCHARGE
The
undersigned hereby releases and discharges LAW OFFICES OF XXXXX X. XXXXX, A
Professional Corporation, as Escrow Agent, from all further responsibility
or
liability as Escrow Agent under the Escrow Agreement dated January 17, 2007.
Please accept this as authorization to close our escrow account as of this
date.
Executed
this ________ day of ___________, 2007.
__________________________________
By:
_________________________
Name:
_______________________
Title:
________________________
11
