AMENDED AND RESTATED ESCROW AGREEMENT
AMENDED
AND RESTATED ESCROW AGREEMENT
This
Amended and Restated Escrow Agreement, dated as of May 20, 2008 (this
“Agreement”),
is
entered into by and among Wo Xxxx Xx, (the “Seller”),
Xxxxxx Bay Fund, LP, a Delaware limited partnership and Xxxxxx Bay Overseas
Fund, Ltd., a
company
with limited liability organized under the laws of the Cayman Islands
(collectively, "Xxxxxx"
and
together with the Seller sometimes referred to collectively as the "Parties")
and
Tri-State Title & Escrow, LLC (the “Escrow
Agent”).
The
principal address of each party hereto is set forth on Exhibit
A.
WITNESSETH:
WHEREAS,
the Seller owns shares of Ordinary Stock, $0.001 par value per share (the
"Ordinary
Stock"),
of
China Precision Steel, Inc., a Delaware corporation (the "Company")
and is
the Chairman of the Board, Chief Executive Officer and President of the
Company.
WHEREAS,
Xxxxxx and Enable Growth Partners LP ("Enable")
seek
to purchase from the Seller, and the Seller seeks to sell to Xxxxxx and Enable,
Three Million, Five Hundred Twenty Four Thousand, Eight Hundred Ten (3,524,810)
shares of Ordinary Stock currently owned by the Seller (the "Initial
Purchased Shares")
and an
additional One Million (1,000,000) shares of Ordinary Stock currently owned
by
the Seller (the "Additional
Purchased Shares",
and
collectively with the Initial Purchased Shares, the "Purchased
Shares")
in
reliance upon available exemptions from the registration requirements of the
U.S. Securities Act of 1933, as amended (the “Act”)
and
pursuant to the Amended and Restated Stock Purchase Agreement (the “Stock
Purchase Agreement”)
by and
among the Seller, Xxxxxx and Enable, for an aggregate amount of $13,218,037.50
for the Initial Purchased Shares and an aggregate amount of $6,700,000 for
the
Additional Purchased Shares (each, a “Purchase
Price”).
Capitalized items, not defined herein, shall have the same meanings as set
forth
in the Stock Purchase Agreement; and
WHEREAS,
upon each Closing pursuant to by Stock Purchase Agreement, Xxxxxx and Enable
each desire to deposit with the Escrow Agent 10% of the applicable Purchase
Price (the “Escrowed
Funds”)
to be
paid at such Closing, to be held in escrow until written instructions are
received by the Escrow Agent from Xxxxxx, at which time the Escrow Agent will
disburse the Escrowed Funds in accordance with such instructions (the
“Escrow
Release");
and
WHEREAS,
pursuant to that certain existing Escrow Agreement, dated as of March 13, 2008
(the "Existing
Escrow Agreement")
entered into by and among the Parties and the Escrow Agent, the Initial
Purchased Shares (the "Escrow
Shares")
have
been deposited into escrow on the terms and conditions set forth in the Existing
Escrow Agreement; and
WHEREAS,
the Parties have agreed to amend and restate the Existing Escrow Agreement
in
its entirety to (a) provide for the release of the Escrow Shares from the escrow
created in Section 2 thereof in accordance with the terms and conditions of
the
Existing Escrow Agreement and (b) include in the Escrowed Funds to be deposited
with the Escrow Agent 10% of the Purchase Price paid by Xxxxxx and Enable in
connection with the purchase of the Additional Purchased Shares simultaneously
with the consummation of the purchase of the Additional Purchased Shares, and
WHEREAS,
Escrow Agent is willing to hold the Escrowed Funds in escrow subject to the
terms and conditions of this Agreement.
NOW,
THEREFORE, in consideration of the mutual promises herein contained and
intending to be legally bound, the parties hereby agree as follows:
1.
Appointment
of Escrow Agent.
The
Seller and Xxxxxx hereby appoint Escrow Agent as escrow agent in accordance
with
the terms and conditions set forth herein and the Escrow Agent hereby accepts
such appointment.
2. [Intentionally
Omitted.]
3.
Delivery
of the Escrowed Funds.
3.1
At
each
of the Initial Closing and the Additional Closing, Xxxxxx will deliver, and
will
request Enable to deliver, the Escrowed Funds to the Escrow Agent’s account as
follows:
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Bank
Name:
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Cardinal
Bank
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Bank
Address:
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0000
Xxxxxxxxxx Xx., XxXxxx, XX
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Account
Name:
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Tri-State
Title & Escrow, LLC
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ABA
Number:
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056
008 849
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Account
Number:
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5060024931
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3.2 Escrowed
Funds shall be forwarded to the Escrow Agent by check or by wire transfer,
together with the written account of the applicable Purchase Price in the form
attached hereto as Exhibit B (the “Purchase
Price Information”),
in
accordance with the following:
(a)
Escrowed Funds to be deposited by check shall be made payable to “TRI-STATE
TITLE & ESCROW, LLC” and shall be delivered to the Escrow Agent at the
address set forth on Exhibit
A
hereto
and shall be
accompanied by the Purchase
Price Information.
The
Escrow
Agent shall, upon receipt of the Purchase Price Information, together with
the
Escrowed Funds, deposit the monies so received in the Escrow Account.
(b)
Escrowed Funds to be wired shall be wired to the account set forth in Section
3.1 above and the Purchase Price Information shall be faxed or emailed to the
Escrow Agent in accordance with the information provided on Exhibit
A.
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3.3 Any
checks which are received by the Escrow Agent that are made payable to a party
other than the Escrow Agent shall be returned directly to the sender together
with any documents delivered therewith. Simultaneously with each deposit, Xxxxxx
shall provide the Escrow Agent with the Purchase Price Information, including
the name, address and taxpayer identification number of each Purchaser and
the
applicable Purchase Price. The Escrow Agent is not obligated, and may refuse,
to
accept checks that are not accompanied by the Purchase Price Information
containing the requisite information.
3.4 In
the
event a wire transfer is received by the Escrow Agent and the Escrow Agent
has
not received Purchase Price Information, the Escrow Agent shall notify Xxxxxx.
If the Escrow Agent does not receive the Purchase Price Information from Xxxxxx
prior to close of business on the fifth 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 Virginia) after notifying Xxxxxx of receipt of said wire, the Escrow
Agent shall return the funds to the sender.
4.
Release
of Escrow Shares.
On the
date hereof, the Escrow Agent shall immediately forward the Escrow Shares to
the
Company’s Transfer Agent for reissuance to Xxxxxx and/or Enable as set forth in
column (3) to the Schedule of Buyers of the Stock Purchase Agreement. As used
in
this Agreement, “Transfer Agent” means Tri-State Title & Escrow, LLC, or
such other entity hereafter retained by the Company as its stock transfer agent
as specified in a writing from the Seller to the Escrow Agent and
Xxxxxx.
5.
Escrow
Agent to Hold and Disburse Escrowed Funds.
The
Escrow Agent will hold and disburse the Escrowed Funds received by it pursuant
to the terms of this Escrow Agreement, as follows:
5.1 Xxxxxx
may deliver written instructions to the Escrow Agent and the Seller instructing
the Escrow Agent to release some or all of the Escrowed Funds to satisfy any
payment obligations of the Seller to Xxxxxx and/or Enable pursuant to the Stock
Purchase Agreement and/or the Registration Rights Agreement. Upon receipt of
written instructions from Xxxxxx, in substantially the form of Exhibit
C
hereto,
the Escrow Agent shall release the Escrowed Funds as directed in such
instructions.
5.2 This
Agreement shall terminate and be of no further force or effect as to the
Escrowed Funds at such time as all of the Escrowed Funds have been disbursed.
5.3 In
the
event this Agreement, the Escrowed Funds or the Escrow Agent becomes the subject
of litigation, or if the Escrow Agent shall desire to do so for any other
reason, the Parties hereby authorize the Escrow Agent, at its option, to deposit
the Escrowed Funds with the clerk of the court in which the litigation is
pending, or a court of competent jurisdiction if no litigation is pending,
and
thereupon the Escrow Agent shall be fully relieved and discharged of any further
responsibility with regard thereto. The Parties hereby also authorize the Escrow
Agent, if it is threatened with litigation or if the Escrow Agent shall desire
to do so for any other reason, to interplead all interested parties in any
court
of competent jurisdiction and to deposit the Escrowed Funds with the clerk
of
that court and thereupon the Escrow Agent shall be fully relieved and discharged
of any further responsibility hereunder to the parties from which they were
received.
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6.
Exculpation
and Indemnification of Escrow Agent
6.1
The
Escrow Agent shall have no duties or responsibilities other than those expressly
set forth herein. The Escrow Agent shall have no duty to enforce any obligation
of any person to make any payment or delivery, or to direct or cause any payment
or delivery to be made (other than payments or deliveries set forth hereunder),
or to enforce any obligation of any person to perform any other act. The Escrow
Agent shall be under no liability to the other parties hereto or anyone else,
by
reason of any failure, on the part of any party hereto or any maker, guarantor,
endorser or other signatory of a document or any other person, to perform such
person’s obligations under any such document. Except for amendments to this
Escrow Agreement referenced below, and except for written instructions given
to
the Escrow Agent by Xxxxxx relating to the Escrowed Funds, the Escrow Agent
shall not be obligated to recognize any other agreement by the Parties,
notwithstanding that references hereto may be made herein and whether or not
it
has knowledge thereof.
6.2 Absent
gross negligence, willful misconduct, bad faith or fraud by the Escrow Agent,
the Escrow Agent shall not be liable to Parties or to anyone else for any action
taken or omitted by it, or any action suffered by it to be taken or omitted,
in
good faith and acting upon any order, notice, demand, certificate, opinion
or
advice of counsel (including counsel chosen by the Escrow Agent), statement,
instrument, report, or other paper or document (not only as to its due execution
and the validity and effectiveness of its provisions, but also as to the truth
and acceptability of any information therein contained), which is believed
by
the Escrow Agent to be genuine and to be signed or presented by the proper
person or persons. The Escrow Agent shall not be bound by any of the terms
thereof, unless evidenced by written notice delivered to the Escrow Agent signed
by the proper party or parties and, if the duties or rights of the Escrow Agent
are affected, unless it shall give its prior written consent
thereto.
6.3 Absent
gross negligence, willful misconduct, bad faith or fraud by the Escrow Agent,
the Escrow Agent shall not be responsible for the sufficiency or accuracy of
the
form, or of the execution, validity, value or genuineness of, any document
or
property received, held or delivered to it hereunder, or of any signature or
endorsement thereon, or for any lack of endorsement thereon, or for any
description therein; nor shall the Escrow Agent be responsible or liable to
the
Seller or to anyone else in any respect on account of the identity, authority
or
rights, of the person executing or delivering or purporting to execute or
deliver any document or property or this Escrow Agreement. The Escrow Agent
shall have no responsibility with respect to the use or application of the
Escrowed Funds pursuant to the provisions hereof.
6.4 The
Escrow Agent shall have the right to assume, in the absence of written notice
to
the contrary from the proper person or persons, that a fact or an event, by
reason of which an action would or might be taken by the Escrow Agent, does
not
exist or has not occurred, without incurring liability to the Seller or to
anyone else for any action taken or omitted to be taken or omitted, in good
faith and in the exercise of its own best judgment, in reliance upon such
assumption.
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6.5 To
the
extent that the Escrow Agent becomes liable for the payment of taxes, including
withholding taxes, in respect of income derived from the investment of the
Escrowed Funds, or any payment made hereunder, the Escrow Agent may pay such
taxes; and the Escrow Agent may withhold from any payment of the Escrowed Funds
such amount as the Escrow Agent estimates to be sufficient to provide for the
payment of such taxes not yet paid, and may use the sum withheld for that
purpose. The Escrow Agent shall be indemnified and held harmless against any
liability for taxes and for any penalties in respect of taxes, on such
investment income or payments in the manner provided in Section 6.6
6.6 The
Escrow Agent will be indemnified and held harmless by the Seller from and
against all expenses, including all counsel fees and disbursements, or loss
suffered by the Escrow Agent in connection with any action, suit or proceedings
involving any claim, or in connection with any claim or demand, which in any
way, directly or indirectly, arises out of or relates to this Escrow Agreement,
the services of the Escrow Agent hereunder, except for claims relating to gross
negligence, willful misconduct, bad faith or fraud by Escrow Agent or breach
of
this Escrow Agreement by the Escrow Agent, or the monies or other property
held
by it hereunder. Promptly after the receipt by the Escrow Agent of notice of
any
demand or claim or the commencement of any action, suit or proceeding, the
Escrow Agent shall, if a claim in respect thereof is to be made against the
Seller, notify it thereof in writing, but the failure by the Escrow Agent to
give such notice shall not relieve any such party from any liability which
the
Seller may have to the Escrow Agent hereunder. Notwithstanding any obligation
to
make payments and deliveries hereunder, the Escrow Agent may retain and hold
for
such time as it deems necessary such amount of monies or property as it shall,
from time to time, in its sole discretion, seem sufficient to indemnify itself
for any such loss or expense and for any amounts due it under Section 9.
6.7 For
purposes hereof, the term “expense or loss” shall include all amounts paid or
payable to satisfy any claim, demand or liability, or in settlement of any
claim, demand, action, suit or proceeding settled with the express written
consent of the Escrow Agent, and all costs and expenses, including, but not
limited to, counsel fees and disbursements, paid or incurred in investigating
or
defending against any such claim, demand, action, suit or proceeding.
7.
Termination
of Agreement and Resignation of Escrow Agent
7.1 This
Escrow Agreement shall terminate upon disbursement of all of the Escrowed Funds,
provided that the rights of the Escrow Agent and the obligations of the Seller
under Section 6 shall survive the termination hereof.
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7.2 The
Escrow Agent may resign at any time and be discharged from its duties as Escrow
Agent hereunder by giving the Seller at least five (5) business days written
notice thereof (the “Notice
Period”).
As
soon as practicable after its resignation, the Escrow Agent shall, if it
receives a joint notice from the Parties within the Notice Period, turn over
to
a successor escrow agent appointed jointly by the Parties all Escrowed Funds
(less such amount as the Escrow Agent is entitled to retain pursuant to Section
9) upon presentation of the document appointing the new escrow agent and its
acceptance thereof. If no new agent is so appointed within the Notice Period,
the Escrow Agent shall return the Escrowed Funds to the parties from which
they
were received without interest or deduction.
8.
Form
of Payments by Escrow Agent
8.1 Any
payments of the Escrowed Funds by the Escrow Agent pursuant to the terms of
this
Escrow Agreement shall be made by wire transfer unless directed to be made
by
check by the Seller.
8.2
All
amounts referred to herein are expressed in United States Dollars and all
payments by the Escrow Agent shall be made in such dollars.
9. Compensation.
Escrow
Agent shall be entitled to the following compensation from the
Seller:
9.1 Documentation
Fee:
The
Seller has paid a documentation fee to the Escrow Agent of $4,000.00 receipt
of
which is hereby acknowledged by Escrow Agent.
9.2 Closing
Fee:
The
Seller shall pay a fee of $500 to the Escrow Agent at the Escrow Release.
9.3 Interest :
During
the term of this Agreement, the Escrowed Funds shall be invested in a money
market deposit account, unless otherwise instructed in writing by the Parties
and shall be acceptable to the Escrow Agent. The
Escrowed Funds shall accrue interest (the “Accrued
Interest”)
at the
available rate obtained by the Escrow Agent with respect to the period during
which such funds are held in the Escrow Agent’s account set forth in Section 3.1
above. In connection with an Escrow Release, the Seller shall be paid Accrued
Interest determined by multiplying the available rate obtained by the Escrow
Agent by 0.5 per annum on the aggregate amount of Escrowed Funds in the Escrow
Agent’s account on the date of such Escrow Release; provided,
that,
the
Escrowed Funds will have been held by the Escrow Agent for at least one (1)
day
(the “Accrual
Period”).
No
Accrued Interest shall be paid to the Seller if the Escrowed Funds have been
held by the Escrow Agent for a period of time less than the Accrual
Period.
10. Notices.
All
notices, requests, demands, and other communications provided herein shall
be in
writing, shall be delivered by hand or by first-class mail, shall be deemed
given when received and shall be addressed to parties hereto at their respective
addresses first set forth on Exhibit
A
hereto.
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11. Further
Assurances. From
time
to time on and after the date hereof, the Seller shall deliver or cause to
be
delivered to the Escrow Agent such further documents and instruments and shall
do and cause to be done such further acts as the Escrow Agent shall reasonably
request (it being understood that the Escrow Agent shall have no obligation
to
make any such request) to carry out more effectively the provisions and purposes
of this Escrow Agreement, to evidence compliance herewith or to assure itself
that it is protected in acting hereunder.
12. Consent
to Service of Process .
The
Seller hereby irrevocably consents to the jurisdiction of the courts of the
State of Virginia and of any Federal court located in such state in connection
with any action, suit or proceedings arising out of or relating to this Escrow
Agreement or any action taken or omitted hereunder, and waives personal service
of any summons, complaint or other process and agrees that the service thereof
may be made by certified or registered mail directed to it at the address listed
on Exhibit A hereto.
13. Miscellaneous
13.1 This
Escrow Agreement shall be construed without regard to any presumption or other
rule requiring construction against the party causing such instrument to be
drafted. The terms “hereby,” “hereof,” “hereunder,” and any similar terms, as
used in this Escrow Agreement, refer to the Escrow Agreement in its entirety
and
not only to the particular portion of this Escrow Agreement where the term
is
used. The word “person” shall mean any natural person, partnership, corporation,
government and any other form of business of legal entity. All words or terms
used in this Escrow Agreement, regardless of the number or gender in which
they
were used, shall be deemed to include any other number and any other gender
as
the context may require. This Escrow Agreement shall not be admissible in
evidence to construe the provisions of any prior agreement.
13.2 This
Escrow Agreement and the rights and obligations hereunder of the Seller may
not
be assigned. This Escrow Agreement and the rights and obligations hereunder
of
the Escrow Agent may be assigned by the Escrow Agent, with the prior joint
consent of the Parties. This Escrow Agreement shall be binding upon and inure
to
the benefit of each party’s respective successors, heirs and permitted assigns.
No other person shall acquire or have any rights under or by virtue of this
Escrow Agreement. This Escrow Agreement may not be changed orally or modified,
amended or supplemented without an express written agreement executed by the
Escrow Agent, the Seller and Xxxxxx. This Escrow Agreement is intended to be
for
the sole benefit of the parties hereto and their respective successors, heirs
and permitted assigns, and none of the provisions of this Escrow Agreement
are
intended to be, nor shall they be construed to be, for the benefit of any third
person. The Parties further hereby waive any right to a trial by jury with
respect to any lawsuit or judicial proceeding arising or relating to this
Agreement. All signatures of the parties to this Agreement may be transmitted
by
facsimile, and such facsimile will, for all purposes, be deemed to be the
original signature of such party whose signature it reproduces, and will be
binding upon such party. A person who is not a party to this Agreement shall
have no right to enforce any term of this Agreement.
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13.3 This
Escrow Agreement shall be governed by, and construed in accordance with, the
internal laws of the State of Virginia. The representations and warranties
contained in this Escrow Agreement shall survive the execution and delivery
hereof and any investigations made by any party. The headings in this Escrow
Agreement are for purposes of reference only and shall not limit or otherwise
affect any of the terms thereof.
13.4 If
any
provision of this Agreement is prohibited by law or otherwise determined to
be
invalid or unenforceable by a court of competent jurisdiction, the provision
that would otherwise be prohibited, invalid or unenforceable shall be deemed
amended to apply to the broadest extent that it would be valid and enforceable,
and the invalidity or unenforceability of such provision shall not affect the
validity of the remaining provisions of this Agreement so long as this Agreement
as so modified continues to express, without material change, the original
intentions of the parties as to the subject matter hereof and the prohibited
nature, invalidity or unenforceability of the provision(s) in question does
not
substantially impair the respective expectations or reciprocal obligations
of
the parties or the practical realization of the benefits that would otherwise
be
conferred upon the parties. The parties will endeavor in good faith negotiations
to replace the prohibited, invalid or unenforceable provision(s) with a valid
provision(s), the effect of which comes as close as possible to that of the
prohibited, invalid or unenforceable provision(s).
14.
Execution
of Counterparts This
Escrow Agreement may be executed in a number of counterparts, by facsimile,
each
of which shall be deemed to be an original as of those whose signature appears
thereon, and all of which shall together constitute one and the same instrument.
This Escrow Agreement shall become binding when one or more of the counterparts
hereof, individually or taken together, are signed by all the
parties.
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IN
WITNESS WHEREOF, the parties have executed and delivered this Escrow Agreement
on the day and year first above written.
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ESCROW
AGENT:
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TRI-STATE
TITLE & ESCROW, LLC
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By:
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Name:
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Title:
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Wo
Hing Xx
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XXXXXX
BAY FUND, LP
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By:
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Name:
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Title:
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XXXXXX
BAY OVERSEAS FUND, LTD.
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By:
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Name:
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Title:
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EXHIBIT
A
PARTIES
TO AGREEMENT
Tri-State
Title & Escrow, LLC
000
Xxxx
Xxxxxx
X.X.
Xxx
000
Xxxxxxxxxx,
XX 00000
(000)
000-0000
Attention:
Xxxxxxx X. Xxxxxxx
Telephone:
(000) 000-0000
Fax: (000)
000-0000
Email
xxxxxx@xxxxxxxxxxxxx.xxx
Wo
Xxxx
Xx
x/x
Xxxxx
Precision Steel, Inc.
0xx
Xxxxx, Xxxx Xxxxxxxx
00
Xxxx
Xxx Xxxxxx
Xxxxxx
Xxx
Hong
Kong, The People's Republic of China
Telephone:
x000-0000-0000
Facsimile:
x000-00000000
Xxxxxx
Bay Fund, LP
000
Xxxxxxxx, 00xx Xxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Telephone:
000-000-0000
Facsimile:
000-000-0000
Attention:
Xxxx Xxxx
Xxxxxx
Bay Overseas Fund, Ltd.
000
Xxxxxxxx, 00xx Xxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Telephone:
000-000-0000
Facsimile:
000-000-0000
Attention:
Xxxx Xxxx
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EXHIBIT
B
PURCHASE
PRICE INFORMATION
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Name
of Purchaser
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Address
of Purchaser
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Purchase
Price (US$)
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Amount
Submitted
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Herewith
(US$)
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Taxpayer
ID Number
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EXHIBIT
C
DISBURSEMENT
REQUEST
Pursuant
to that certain Amended and Restated Escrow Agreement dated effective as of
May
20, 2008, among Wo Xxxx Xx, (the “Seller”),
Xxxxxx Bay Fund, LP, a Delaware limited partnership and Xxxxxx Bay Overseas
Fund, Ltd., a
company
with limited liability organized under the laws of the Cayman Islands
(collectively, "Xxxxxx")
and
Tri-State Title & Escrow, LLC (the “Escrow
Agent”),
Xxxxxx hereby requests disbursement of funds in the amount and manner described
below from account number 5060024931, styled Tri-State Title & Escrow, LLC
Escrow Account.
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Please
disburse to:
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Amount
to disburse:
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Form
of distribution:
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Payee:
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Name:
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Address:
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City/State:
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Zip:
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Statement
of event or condition which calls for this request for
disbursement:
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Date:
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By:
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Name:
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Title:
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XXXXXX
BAY OVERSEAS FUND, LTD.
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By:
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Name:
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Title:
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12
