ESCROW AGREEMENT
EXHIBIT
4.6
This
Escrow Agreement (the “Agreement”), entered into as of this 19th day of July,
2006, is by and among GRC Holdings, Inc., a Texas corporation (the “Company”),
each of the purchasers of shares of the Company’s common stock (the “Shares”)
identified below (collectively, the “Purchasers”), the selling stockholders
identified on the signature pages hereto (each, a “Selling Stockholder,” and
collectively, the “Selling Stockholders”) and Securities Transfer Corporation
(hereinafter referred to as “Escrow Agent”).
WHEREAS,
the Company, the Selling Stockholders and the Purchasers have entered into
a
Securities Purchase Agreement (the “Purchase Agreement”) pursuant to which each
Purchaser has agreed to purchase from the Company and the Selling Stockholders,
and the Company and each Selling Stockholder has agreed to sell to each
Purchaser, the number of Shares identified therein;
WHEREAS,
pursuant to the Purchase Agreement, the Company, the Selling Stockholders and
the Purchasers have agreed to establish an escrow on the terms and conditions
set forth in this Agreement;
WHEREAS,
the Escrow Agent has agreed to act as escrow agent pursuant to the terms and
conditions of this Agreement; and
WHEREAS,
all capitalized terms used but not defined herein shall have the meanings
assigned them in the Purchase Agreement.
NOW,
THEREFORE, in consideration of the promises of the parties and the terms and
conditions hereof, the parties hereby agree as follows:
1. Appointment
of Escrow Agent.
Each
Purchaser, Selling Stockholder and the Company hereby appoints Securities
Transfer Corporation as Escrow Agent to act in accordance with the Purchase
Agreement and the terms and conditions set forth in this Agreement, and Escrow
Agent hereby accepts such appointment and agrees to act in accordance with
such
terms and conditions.
2. Establishment
of Escrow.
$4
million of the aggregate Investment Amount provided by the Purchasers in
connection with their acquisitions of the Securities as set forth in the
Purchase Agreement shall be deposited in an account maintained by the Escrow
Agent with Xxxxx Fargo Bank, N.A. in immediately available funds by federal
wire
transfer, such funds being referred to herein as the “Escrow Funds”. The wire
transfer details relating to such account are:
Xxxxx
Fargo Bank, N.A. 000 Xxxxxxxxxx Xxxxxx
|
Xxxx/Xxxxx
Xxx Xxxxxxxxx, XX 00000
ABA
NO: 000000000
Credit
to : Securities Transfer Corporation Trust account
Account
Number: 3101032101
|
-1-
3. Segregation
of Escrow Funds.
The
Escrow Funds shall be segregated from the assets of Escrow Agent and held in
trust for the benefit of the Company, the Selling Stockholders and the
Purchasers in accordance herewith. It is hereby acknowledged and understood
by
all parties hereto (including, without limitation, the Purchasers who shall
have
provided funds in respect of their Investment Amount) that the Escrow Funds
represent funds deposited into the account referred to in Section 2 above by
only one of the Purchasers, but that the deposit shall have been made by such
Purchaser by and on behalf of the other Purchasers to the extent of their
percentage interest in the total Investment Amount, as more fully described
in
Exhibit B hereto
4. Receipt
and Investment of Funds.
(a) Escrow
Agent agrees that the Escrow Funds shall at all times be maintained in a
non-interest bearing and federally insured depository account. Subject to
Section 7(c) hereof, Escrow Agent shall have no liability for any loss resulting
from the deposit of the Escrow Funds.
(b) The
Escrow Agent shall cause to be prepared all income and other tax returns and
reports the Escrow Agent, in its sole discretion, deems necessary or advisable
in order to comply with all tax and other laws, rules and regulations applicable
to the Escrow Funds.
5. Disbursement
of the Escrow Funds.
Upon
receipt by the Escrow Agent of a certificate in the form of Exhibit A, duly
signed by both the Company and Pinnacle China Fund, L.P., the Escrow Funds
shall
be disbursed in accordance with Exhibit A.
This
Agreement shall terminate upon the earlier of (a) disbursement of all Escrow
Funds in accordance with Exhibit A, or (b) July 31, 2006 (each such event being
referred to herein as the “Termination Date”). The Termination Date may be
extended by joint written instructions to Escrow Agent by the Company and
Pinnacle China Fund, L.P., on behalf of the Purchasers.
Upon
the
Termination Date, Escrow Agent shall release the Escrow Funds in the Escrow
Account to the Purchasers in accordance with Exhibit B if the certificate
referred to in the first paragraph of this Section 5 shall not have been
delivered to it by such date. Immediately following any such disbursement to
the
Purchasers in accordance with Exhibit B, each such Purchaser shall return to
the
Company that amount of Securities purchased by it under the Purchase Agreement
equal to the amount of such disbursement received by it, divided by the Per
Unit
Purchase Price.
6. Interpleader.
Should
any controversy arise among the parties hereto with respect to this Agreement
or
with respect to the right to receive the Escrow Funds, Escrow Agent shall have
the right to consult counsel and/or to institute an appropriate interpleader
action to determine the rights of the parties. Escrow Agent is also hereby
authorized to institute an appropriate interpleader action upon receipt of
a
written letter of direction executed by the parties so directing Escrow Agent.
If Escrow Agent is directed to institute an appropriate
interpleader
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action,
it shall institute such action not prior to thirty (30) days after receipt
of
such letter of direction and not later than sixty (60) days after such date.
Any
interpleader action instituted in accordance with this Section 6 shall be filed
in any court of competent jurisdiction in Dallas, Texas, and the portion of
the
Escrow Funds in dispute shall be deposited with the court and in such event
Escrow Agent shall be relieved of and discharged from any and all obligations
and liabilities under and pursuant to this Agreement with respect to that
portion of the Escrow Funds.
7. Exculpation
and Indemnification of Escrow Agent.
(a) Escrow
Agent is not a party to, and is not bound by or charged with notice of any
agreement (other than the Purchase Agreement) out of which this escrow may
arise. Escrow Agent acts under this Agreement as a depositary only and is not
responsible or liable in any manner whatsoever for the sufficiency, correctness,
genuineness or validity of the subject matter of the escrow, or any part
thereof, or for the form or execution of any notice given by any other party
hereunder, or for the identity or authority of any person executing any such
notice or depositing the Escrow Funds. Escrow Agent will have no duties or
responsibilities other than those expressly set forth herein. Escrow Agent
will
be under no liability to anyone by reason of any failure on the part of any
party hereto (other than Escrow Agent) or any maker, endorser or other signatory
of any document to perform such person’s or entity’s obligations hereunder or
under any such document. Except for this Agreement and instructions to Escrow
Agent pursuant to the terms of this Agreement, Escrow Agent will not be
obligated to recognize any agreement between or among any or all of the persons
or entities referred to herein, notwithstanding its knowledge
thereof.
(b) Escrow
Agent will not be liable for any action taken or omitted by it, or any action
suffered by it to be taken or omitted, in good faith and in the exercise of
its
own best judgment, and may rely conclusively on, and will be protected in acting
upon, any order, notice, demand, certificate, or opinion or advice of counsel
(including counsel chosen by 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 reasonably believed by Escrow Agent
to be genuine and to be signed or presented by the proper person or persons.
The
duties and responsibilities of the Escrow Agent hereunder shall be determined
solely by the express provisions of this Agreement and no other or further
duties or responsibilities shall be implied, including, but not limited to,
any
obligation under or imposed by any laws of the State of Texas upon
fiduciaries.
(c) Escrow
Agent will be indemnified and held harmless, jointly and severally, by the
Company and the Selling Stockholders from and against any expenses, including
reasonable attorneys’ fees and disbursements, damages or losses suffered by
Escrow Agent in connection with any claim or demand, which, in any way, directly
or indirectly, arises out of or relates to this Agreement or the services of
Escrow Agent hereunder; except, that if Escrow Agent is guilty of willful
misconduct, fraud or gross negligence under this Agreement, then Escrow Agent
will bear all losses, damages and expenses arising as a result of such willful
misconduct, fraud or gross negligence. Promptly after the receipt by Escrow
Agent of notice of any such demand or claim or the commencement of any action,
suit or proceeding relating to such demand or claim, Escrow Agent will notify
the other parties hereto in writing. For the purposes hereof, the terms
“expense” and “loss” will include all amounts paid or payable to
-3-
satisfy
any such claim or demand, or in settlement of any such claim, demand, action,
suit or proceeding settled with the express written consent of the parties
hereto, and all costs and expenses, including, but not limited to, reasonable
attorneys’ fees and disbursements, paid or incurred in investigating or
defending against any such claim, demand, action, suit or proceeding. The
provisions of this Section 7 shall survive the termination of this
Agreement.
8. Compensation
of Escrow Agent.
The
Selling Stockholders will pay Escrow Agent $1,500 for all services rendered
by
Escrow Agent hereunder.
9. Resignation
of Escrow Agent.
At any
time, upon ten (10) days’ written notice to the Company, Escrow Agent may resign
and be discharged from its duties as Escrow Agent hereunder. As soon as
practicable after its resignation, Escrow Agent will promptly turn over to
a
successor escrow agent appointed by the Company all monies and property held
hereunder upon presentation of a document appointing the new escrow agent and
evidencing its acceptance thereof. If, by the end of the 10-day period following
the giving of notice of resignation by Escrow Agent, the Company shall have
failed to appoint a successor escrow agent, Escrow Agent may interplead the
Escrow Funds into the registry of any court having jurisdiction.
10. Method
of Distribution by Escrow Agent.
All
disbursements by Escrow Agent to a party to this Agreement will be made by
wire
transfer of immediately available funds to an account designated in writing
by
the party (it being understood that the Exhibits hereto constitute such
writings) to receive any such payment.
11. Records.
Escrow
Agent shall maintain accurate records of all transactions hereunder. Promptly
after the termination of this Agreement or as may reasonably be requested by
the
parties hereto from time to time before such termination, Escrow Agent shall
provide the parties hereto, as the case may be, with a complete copy of such
records, certified by Escrow Agent to be a complete and accurate account of
all
such transactions. The authorized representatives of each of the parties hereto
shall have access to such books and records at all reasonable times during
normal business hours upon reasonable notice to Escrow Agent.
12. Notice.
All
notices, communications and instructions required or desired to be given under
this Agreement must be in writing and shall be deemed to be duly given if sent
by registered or certified mail, return receipt requested, or overnight courier
to the following addresses:
If
to
Escrow Agent:
Securities
Transfer Corporation
0000
Xxxxxx Xxxxxxx, Xxxxx 000
Xxxxxx,
Xxxxx 00000
Attention:
Xxxxx Xxxxxx
If
to the
Company:
Xx.
00
Xxxx Xxxxxx Xxxx
Xx’ian
City, Xxxxxxxx Xxxxxxxx
X.X.
000000, Xxxxx
Attention:
Xxxxxxx Xx
-4-
With
a
copy to:
Loeb
& Loeb LLP
000
Xxxx
Xxxxxx
Xxx
Xxxx,
XX 00000
Facsimile:
(000) 000-0000
Attention:
Xxxxxxxx X. Xxxxxxxx, Esq.
If
to a
Purchaser:
To
the
address set forth on such Purchaser’s signature
page to the Purchase Agreement
If
to a
Selling Stockholder:
To
the
address set forth on such Selling Stockholder’s
signature page to the Purchase Agreement
or
to
such other address and to the attention of such other person as any of the
above
may have furnished to the other parties in writing and delivered in accordance
with the provisions set forth above.
13. Execution
in Counterparts.
This
Agreement may be executed in counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument. In the event that any signature is delivered by facsimile
transmission, such signature shall create a valid and binding obligation of
the
party executing (or on whose behalf such signature is executed) with the same
force and effect as if such facsimile signature page were an original
thereof.
14. Assignment
and Modification.
This
Agreement and the rights and obligations hereunder of any of the parties hereto
may not be assigned without the prior written consent of the other parties
hereto. Subject to the foregoing, this Agreement will be binding upon and inure
to the benefit of each of the parties hereto and their respective successors
and
permitted assigns. No other person will acquire or have any rights under, or
by
virtue of, this Agreement. No portion of the Escrow Funds shall be subject
to
interference or control by any creditor of any party hereto, or be subject
to
being taken or reached by any legal or equitable process in satisfaction of
any
debt or other liability of any such party hereto prior to the disbursement
thereof to such party hereto in accordance with the provisions of this
Agreement. This Agreement may be changed or modified only in writing signed
by
all of the parties hereto.
15. APPLICABLE
LAW.
THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE
STATE OF TEXAS, USA APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED THEREIN.
THE PARTIES EXPRESSLY WAIVE SUCH DUTIES AND LIABILITIES, IT BEING THEIR INTENT
TO CREATE SOLELY AN AGENCY RELATIONSHIP AND HOLD THE ESCROW AGENT LIABLE ONLY
IN
THE EVENT OF ITS WILLFUL MISCONDUCT, FRAUD, OR GROSS NEGLIGENCE. ANY LITIGATION
CONCERNING THE SUBJECT MATTER OF THIS AGREEMENT SHALL BE EXCLUSIVELY PROSECUTED
IN THE COURTS OF DALLAS, TEXAS, USA, AND ALL PARTIES CONSENT TO THE EXCLUSIVE
JURISDICTION AND VENUE OF THOSE COURTS.
-5-
16. Headings.
The
headings contained in this Agreement are for convenience of reference only
and
shall not affect the construction of this Agreement.
17. Attorneys’
Fees.
If any
action at law or in equity, including an action for declaratory relief, is
brought to enforce or interpret the provisions of this Agreement, the prevailing
party shall be entitled to recover reasonable attorneys’ fees from the other
party (unless such other party is the Escrow Agent), which fees may be set
by
the court in the trial of such action or may be enforced in a separate action
brought for that purpose, and which fees shall be in addition to any other
relief that may be awarded.
-6-
IN
WITNESS WHEREOF, the parties have duly executed this Agreement as of the date
set forth opposite their respective names.
GRC
HOLDINGS, INC.
By: /s/ Xxxxxxx Xx
CEO
SECURITIES
TRANSFER CORPORATION
By: /s/ Xxxxx Xxxxxx
Xxxxx Xxxxxx
President
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IN
WITNESS WHEREOF, the parties have duly executed this Agreement as of the date
set forth opposite their respective names.
PURCHASER:
Pinnacle China Fund, LP
By: /s/ Xxxxx X. Xxxx
Name: Xxxxx X. Xxxx
Title: General Partner
-8-
IN
WITNESS WHEREOF, the parties have duly executed this Agreement as of the date
set forth opposite their respective names.
SELLING
STOCKHOLDER:
/s/ Xxxx Xxx Ling
Name: Chan,
Xxx
Xxxx
SELLING
STOCKHOLDER:
/s/ Li Xxx Xxxx
Name: Li,
Xxx
Xxxx
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EXHIBIT
A
July
__,
2006
Securities
Transfer Corporation
0000
Xxxxxx Xxxxxxx, xxxxx 000
Xxxxxx,
Xxxxx 00000
Attn:
Xxxxx Xxxxxx
Ladies
and Gentlemen:
Reference
is hereby made to the Escrow Agreement dated July 18, 2006 between and among
GRC
Holdings, Inc., a Texas corporation (the “Company”), each of the purchasers of
shares of the Company’s common stock (collectively, the “Purchasers”) and the
selling stockholders (each, a “Selling Stockholder,” and collectively, the
“Selling Stockholders”), in each case identified on the signature pages thereto
and Securities Transfer Corporation (hereinafter referred to as “Escrow Agent”).
Each term used, but not defined, herein has the meaning assigned to it in the
Escrow Agreement.
We
hereby
confirm that the covenant contained in Section 4.14 of the Securities Purchase
Agreement has been complied with and you are hereby instructed to release the
Escrow Funds as follows:
|
1.
LANE
CAPITAL MARKETS US$ 817,046
|
|
|
Financial
Institution:
|
PEOPLES
BANK
|
|
0000
Xxxx Xxxx Xx. & Xxxxxxx Xxx.
|
|
|
Xxxxx
Xxxxx, XX 00000
|
|
|
Phone
#:
|
(000)
000-0000
|
|
ABA#:
|
000-0-00000
|
|
For
the Benefit of:
|
Lane
Capital Markets LLC
|
|
Account
#:
|
010
0000000
|
|
2.
LOGIC EXPRESS US$
3,100,000
|
|
|
For
Crediting:
|
BANK
of
CHINA (Hong Kong) Limited
|
|
Phone
#:
|
Fax
#:
|
|
SWIFT
Code:
|
BKCH
HK
HH XXX
|
|
The
Payee:
|
Logic
Express Limited
|
|
US$
Account:
|
000-000-00000000
|
3.
$82,954 to the account of GRC Holdings, Inc. as follows:
HSBC
NY,
NY
ABA#
000-0-00000
Account
Name: GRC Holding Inc.
Account
#
619 760354
-10-
GRC
HOLDINGS, INC.
By:_____________________
Name:
Title:
PINNACLE
CHINA FUND, L.P.
By:______________________
Name:
Title:
-11-
EXHIBIT
B
PINNACLE
CHINA FUND, L.P.
Beneficiary
Bank:
Bank
of
America NA
000
Xxxx
00xx
Xxxxxx,
XX, XX 00000
ABA
Number:
0260
0959
3
CHIPS
Address:
0959
SWIFT
Address:
BOFA
XX
0X
Xxxxxxxxxxx:
Xxxx
xx
Xxxxxxx Securities LLC
000
Xxxxxxxxxx Xxxxxx, XX, XX 00000
Account
Number:
00
12339
32118
For
Further Credit:
Client
Account Number & Name
118-01855
The
Pinnacle China Fund, L.P.
$4,000,000
Investment Amount out of aggregate Investment Amount of $8,110,600 = 49.32%
of
Escrow Funds.
JAYHAWK
CHINA FUND (CAYMAN) LTD.
Bank
of
New York
ABA
No.:
021
000
018
BIC
Code:
XXXXXX0X
First
Beneficiary:
CSFB
(Europe) Ltd.
Account
Number:
000-0000-000
BIC
Code:
CSFBG2L
Second
Beneficiary:
Jayhawk
China Fund
Account
Number:
0ZD4
$3,000,000
Investment Amount out of aggregate Investment Amount of $8,110,600 = 36.99%
of
Escrow Funds.
CAPITAL
VENTURES INTERNATIONAL, BY HEIGHTS CAPITAL MANAGEMENT, INC., IT’S AUTHORIZED
AGENT
Chase
Manhattan Bank, NY
Swift:
XXXXXX00
ABA:
021 000 021
A/C
Xxxxxxx Xxxxx International EFG
A/C
number: 066612489
$610,600
Investment Amount out of aggregate Investment Amount of $8,110,600 = 7.53%
of
Escrow Funds.
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XXXXXX
BAY FUND LP
JPMorgan
Chase Bank, NY
ABA
#
000000000
F/B/O
ML
PRO
A/C
# 066
024 390
Further
Credit - Xxxxxx Bay Fund LP
A/C
#
510-53703-D4
$375,000
Investment Amount out of aggregate Investment Amount of $8,110,600 = 4.62%
of
Escrow Funds.
XXXXXX
BAY OVERSEAS FUND LTD.
JPMorgan
Chase Bank, NY
ABA
#
000000000
F/B/O
ML
PRO
A/C
# 066
024 390
Further
Credit - Xxxxxx Bay Overseas Fund LTD
A/C
#
507-52316-D1
$125,000
Investment Amount out of aggregate Investment Amount of $8,110,600 = 1.54%
of
Escrow Funds
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