MAKE GOOD ESCROW AGREEMENT
This
Make
Good Escrow Agreement (the "Make Good Agreement"), dated effective as of March
12, 2008, is entered into by and among First
Growth Investors, Inc., a Nevada corporation
(the
"Company"), the Investors (as defined below), Xx. Xxxxx Xxxxxxxx, in his
individual capacity ("Make Good Pledgor"), Xxxx Capital Partners, LLC ("Xxxx")
and Tri-State Title & Escrow, LLC, as escrow agent ("Escrow Agent").
WHEREAS,
each of the investors in the private offering of securities of the Company
(the
"Investors") has entered into a Securities Purchase Agreement, dated March
12,
2008 (the "SPA"), evidencing their participation in the Company's private
offering (the "Offering")
of
securities. As an inducement to the Investors to participate in the Offering
and
as set forth in the SPA, Make Good Pledgor agreed to place certain shares of
the
Company’s common stock, par value $0.001 per share (the “Common Stock”) into
escrow for the benefit of the Investors in the event the Company fails to
satisfy certain financial thresholds.
WHEREAS,
pursuant to the requirements of the SPA, the Company and Make Good Pledgor
have
agreed to establish an escrow on the terms and conditions set forth in this
Make
Good Agreement;
WHEREAS,
the Escrow Agent has agreed to act as escrow agent pursuant to the terms and
conditions of this Make Good Agreement; and
WHEREAS,
all capitalized terms used but not defined herein shall have the meanings
assigned them in the SPA;
NOW,
THEREFORE, in consideration of the mutual promises of the parties and the terms
and conditions hereof, the parties hereby agree as follows:
1.
Appointment of Escrow Agent.
Make
Good Pledgor and the Company hereby appoint Escrow Agent to act in accordance
with the terms and conditions set forth in this Make Good Agreement, and Escrow
Agent hereby accepts such appointment and agrees to act in accordance with
such
terms and conditions.
2.
Establishment of Escrow.
Within
three Trading Days following the Closing, Make Good Pledgor shall deliver,
or
cause to be delivered, to the Escrow Agent certificates evidencing an aggregate
of 49,411,763 shares
of
the Company’s Common Stock (the "Escrow Shares"), along with stock powers
executed in blank (or such other signed instrument of transfer acceptable to
the
Company’s Transfer Agent). As used in this Make Good Agreement, “Transfer Agent”
means Interwest Transfer Company, Inc., or such other entity hereafter retained
by the Company as its stock transfer agent as specified in a writing from the
Company to the Escrow Agent. The Make Good Pledgor understands and agrees that
the Investors’ right to receive 2008 Make Good Shares (as defined below) and
2009 Make Good Shares (as defined below) pursuant to Section 4.11 of the SPA
and
this Make Good Agreement shall continue to run to the benefit of each Investor
even if such Investor shall have transferred or sold all or any portion of
its
Shares, and that each Investor shall have the right to assign its rights to
receive all or any such shares of Common Stock to other Persons in conjunction
with negotiated sales or transfers of any of its Shares. The Make Good Pledgor
hereby irrevocably agrees that other than in accordance with Section 4.11 of
the
SPA and this Make Good Agreement, the Make Good Pledgor will not offer, pledge,
sell, contract to sell, sell any option or contract to purchase, purchase any
option or contract to sell, grant any option, right or warrant to purchase
or
otherwise transfer or dispose of, directly or indirectly, or announce the
offering of any of the Escrow Shares (including any securities convertible
into,
or exchangeable for, or representing the rights to receive Escrow Shares) or
engage in any Short Sales with respect to any security of the Company. In
furtherance thereof, the Company will (x) place a stop order on all Escrow
Shares which shall expire on the date the Escrow Shares are delivered to the
Investors or returned to the Make Good Pledgor, (y) notify the Transfer Agent
in
writing of the stop order and the restrictions on such Escrow Shares under
this
Make Good Agreement and direct the Transfer Agent not to process any attempts
by
the Make Good Pledgor to resell or transfer any Escrow Shares before the date
the Escrow Shares delivered to the Investors are delivered to the Investors
or
returned to the Make Good Pledgor, or otherwise in violation of Section 4.11
of
the SPA and this Make Good Agreement. The Company shall notify the Investors
as
soon as the 2008 Make Good Shares and 2009 Make Good Shares have been deposited
with the Escrow Agent. For purposes hereof, “Short
Sales”
include,
without limitation, all “short sales” as defined in Rule 200 promulgated under
Regulation SHO under the Exchange Act and all types of direct and indirect
stock
pledges, forward sale contracts, options, puts, calls, swaps and similar
arrangements (including on a total return basis), and sales and other
transactions through non-US broker dealers or foreign regulated
brokers.
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3. Representations
of Make Good Pledgor and the Company.
Make
Good Pledgor and the Company hereby represent and warrant, severally and not
jointly, as to itself only, to the Investors as follows:
(i)
All
of the Escrow Shares are validly issued, fully paid and nonassessable shares
of
the Company, and free and clear of all pledges, liens and encumbrances. Upon
any
transfer of Escrow Shares to Investors hereunder, Investors will receive full
right, title and authority to such shares as holders of Common Stock of the
Company.
(ii) Performance
of this Make Good Agreement and compliance with the provisions hereof will
not
violate any provision of any applicable law and will not conflict with or result
in any breach of any of the terms, conditions or provisions of, or constitute
a
default under, or result in the creation or imposition of any lien, charge
or
encumbrance upon, any of the properties or assets of Make Good Pledgor pursuant
to the terms of any indenture, mortgage, deed of trust or other agreement or
instrument binding upon Make Good Pledgor, other than such breaches, defaults
or
liens which would not have a material adverse effect taken as a
whole.
(iii)
The
Make Good Pledgor has carefully considered and understands its obligations
and
rights under Section 4.11 of the SPA and this Make Good Agreement, and in
furtherance thereof (x) has consulted with its legal and other advisors with
respect thereto and (y) hereby forever waives and agrees that it may not assert
any equitable defenses in any Proceeding involving the Escrow
Shares.
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4.
Disbursement of Escrow Shares.
a. The
Make
Good Pledgor agrees
that in
the
event that the After Tax Net Income (as defined below) reported in the Annual
Report of the Company for the fiscal year ending December 31, 2008, as filed
with the Commission on Form 10-K (or such other form appropriate for such
purpose as promulgated by the Commission) (the “2008 Annual Report”), is less
than $9,000,000 (the “2008 Guaranteed ATNI”), the
Escrow Agent (on behalf of the Make Good Pledgor) will
transfer all of the 2008 Make Good Shares to the Investors on a pro rata
basis
(determined by dividing each Investor’s Investment Amount by the aggregate of
all Investment Amounts delivered to the Company by the Investors under the
SPA)
for no consideration other than payment of their respective Investment Amount
paid to the Company at Closing.
The
“2008 Make Good Shares” means 24,705,889 shares of Common Stock (as
equitably adjusted for any stock splits, stock combinations, stock dividends
or
similar transactions)
required
to be deposited with the Escrow Agent pursuant to the terms of this Make Good
Agreement. In
the
event that either (i) the Earnings Per Share (as defined below) reported in
the
2009 Annual Report is less than $0.740 on a fully diluted basis (as equitably
adjusted for any stock splits, stock combinations, stock dividends or similar
transactions) (the “2009 Guaranteed EPS”) or (ii) the After Tax Net Income
reported in the 2009 Annual Report is less than 95% of $13,000,000 (the
“2009
Guaranteed ATNI”),
the
Escrow Agent (on behalf of the Make Good Pledgor) will transfer all of the
2009
Make Good Shares to the Investors on a pro rata basis (determined by dividing
each Investor’s Investment Amount by the aggregate of all Investment Amounts
delivered to the Company by the Investors under the SPA) for no consideration
other than payment of their respective Investment Amount paid to the Company
at
Closing. The “2009 Make Good Shares” means the 24,705,874 shares of Common Stock
(as equitably adjusted for any stock splits, stock combinations, stock dividends
or similar transactions) required to be deposited with the Escrow Agent pursuant
to the terms of this Make Good Agreement. Notwithstanding
the foregoing or anything else to the contrary herein, for purposes of
determining whether or not the 2008 Guaranteed ATNI, 2009 Guaranteed EPS and
2009 Guaranteed ATNI have been met, the following items shall not be deemed
to
be an expense, charge, or any other deduction from revenues even though GAAP
may
require contrary treatment or the Annual Report for the respective fiscal years
filed with the Commission by the Company may report otherwise:
(a) the
release of any of the 2008 Make Good Shares and/or 2009 Make Good Shares to
the
Make Good Pledgor as a result of the operation of this Section 4 (for
additional clarity, the Company may disregard any compensation charge or expense
required to be recognized by the Company under GAAP resulting from the release
of the 2008 Make Good Shares or 2009 Make Good Shares (as relevant) to Make
Good
Pledgor if and to the extent such charge or expense is specified in the
Company's audited financial statements for the relevant year, as filed with
the
Commission);
and
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(b) any
penalty or liquidated damage the Company has accrued or may accrue in the future
(A) for failing to comply with the terms of Section 4.14(d) of the SPA or (B)
pursuant to Section 2(f) of the Registration Rights Agreement.
No
other
exclusions shall be made for any non-recurring expenses of the Company in
determining whether any of the 2008 Guaranteed ATNI, 2009 Guaranteed EPS, or
2009 Guaranteed ATNI have been achieved. For
purposes of determining whether any of the 2008 Guaranteed ATNI, 2009
Guaranteed EPS,
or 2009
Guaranteed ATNI have been achieved, the Company may not include any
non-operating income including, but not limited to, government grants, research
grants, proceeds from asset sales, etc. in the calculation of the 2008
Guaranteed ATNI, 2009
Guaranteed EPS,
or 2009
Guaranteed ATNI, as applicable. If
prior
to the second anniversary of the filing of either of the 2008 Annual Report
or
the 2009 Annual Report (as relevant), the Company or their auditors report
or
recognize that the financial statements contained in such report are subject
to
amendment or restatement such that the Company would recognize or report
adjusted After Tax Net Income of less than either of the 2008 Guarantee ATNI
or
the 2009 Guaranteed ATNI (as relevant) or Earnings Per Share of less than the
2009 Guaranteed EPS, then notwithstanding any prior return of
2008
Make Good Shares or 2009 Make Good Shares
to the
Make Good Pledgor, the Make Good Pledgor will, within 10 Business Days following
the earlier of the filing of such amendment or restatement or recognition,
deliver the relevant 2008 Make Good Shares or 2009 Make Good Shares to the
Investors.
In
the
event that the After Tax Net Income reported in the 2008 Annual Report, is
equal
to or greater than the 2008 Guaranteed ATNI,
no
transfer of the 2008 Make Good Shares shall be required by the Make
Good
Pledgor
to the
Investors under this Section and such 2008 Make Good Shares shall be returned
to
the Make
Good
Pledgor
in
accordance with this Make Good Agreement. In
the
event that the After Tax Net Income reported in the 2009 Annual Report is equal
to or greater than the 2009 Guaranteed ATNI and the Earnings Per Share reported
in the 2009 Annual Report is equal to or greater than the 2009
Guaranteed EPS,
no
transfer of the 2009 Make Good Shares shall be required by the Make
Good
Pledgor
to the
Investors under this Section and such 2009 Make Good Shares shall be returned
to
the Make
Good
Pledgor
in
accordance with the Make Good Agreement. Any
such
transfer or return of the 2008 Make Good Shares or the 2009 Make Good Shares
under this Section shall be made to the Investors or the Make Good Pledgor,
as
applicable, within 10
Business
Days after
the date
which
the
2008
Annual Report or 2009 Annual Report, as applicable, is
filed
with the Commission and otherwise in accordance with this Make Good Agreement.
In
the
event that the After Tax Net Income reported in the 2008 Annual Report is less
than the 2008 Guaranteed ATNI, the Company has agreed that Xxxx will provide
prompt written instruction to the Escrow Agent with regard to the distribution
of the 2008 Make Good Shares in an amount to each Investor as set forth on
Exhibit
A
attached
hereto (as determined as set forth above). In
the
event that the After Tax Net Income reported in the 2009 Annual Report is less
than the 2009 Guaranteed ATNI or the Earnings Per Share reported in the 2009
Annual Report is less than the 2009
Guaranteed EPS,
the
Company has agreed that Xxxx will provide prompt written instruction to the
Escrow Agent with regard to the distribution of the 2009 Make Good Shares in
an
amount to each Investor as set forth on Exhibit
A
attached
hereto (as determined as set forth above). The Escrow Agent need only rely
on
the letter of instruction from Xxxx in this regard and notwithstanding anything
to the contrary contained herein will disregard any contrary instructions.
In
the
event that the After Tax Net Income reported in the 2008 Annual Report is equal
to or greater than the 2008 Guaranteed ATNI, Xxxx shall provide prompt written
instructions to the Escrow Agent for the release of the 2008 Make Good Shares
to
the Make Good Pledgor. In
the
event that the After Tax Net Income reported in the 2009 Annual Report is equal
to or greater than the 2009 Guaranteed ATNI and the Earnings Per Share reported
in the 2009 Annual Report is equal to or greater than the 2009
Guaranteed EPS,
Xxxx
shall provide prompt written instructions to the Escrow Agent for the release
of
the 2009 Make Good Shares to the Make Good Pledgor. For purposes hereof,
“After
Tax Net Income” shall mean the Company’s operating income after taxes for the
fiscal year ending December 31, 2008 or December 31, 2009 (as relevant) in
each
case determined in accordance with GAAP as reported in the 2008 Annual Report
or
2009 Annual Report (as relevant). For purposes hereof, “Earnings
Per Share” shall mean the Company’s After Tax Net Income (for the relevant
fiscal year) divided by the weighted average number of shares of Common Stock
of
the Company outstanding during
the calculation period, calculated on a fully diluted basis.
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b. Pursuant
to Section 4(a), if Xxxx delivers a notice to the Escrow Agent that the Escrow
Shares are to be transferred to the Investors, then the Escrow Agent shall
immediately forward either the 2008 Make Good Shares or 2009 Make Good Shares,
as the case may be, to the Company’s Transfer Agent for reissuance to the
Investors in an amount to each Investor as set forth on Exhibit
A
attached
hereto and otherwise in accordance with this Make Good Agreement. The Company
covenants and agrees that upon any transfer of 2008 Make Good Shares or 2009
Make Good Shares to the Investors in accordance with this Make Good Agreement,
the Company shall promptly instruct its Transfer Agent to reissue such 2008
Make
Good Shares or 2009 Make Good Shares in the applicable Investor’s name and
deliver the same, or cause the same to be delivered as directed by such Investor
in an amount to each Investor as set forth on Exhibit
A
attached
hereto. If the Company does not promptly provide such instructions to the
Transfer Agent of the Company, then Xxxx is hereby authorized to give such
re-issuance instruction to the Transfer Agent of the Company. If a notice from
Xxxx pursuant to Section 4(a) indicates that the Escrow Shares are to be
returned to the Make Good Pledgor, then the Escrow Agent will promptly deliver
either the 2008 Make Good Shares or 2009 Make Good Shares, as the case may
be,
to the Make Good Pledgor.
c. The
Company and Make Good Pledgor covenant and agree to provide the Escrow Agent
with certified tax identification numbers by furnishing appropriate forms W-9
or
W-8 and such other forms and documents that the Escrow Agent may request,
including appropriate W-9 or W-8 forms for each Investor. The Company, Make
Good
Pledgor and the Investors understand that if such tax reporting documentation
is
not provided and certified to the Escrow Agent, the Escrow Agent may be required
by the Internal Revenue Code of 1986, as amended, and the Regulations
promulgated thereunder, to withhold a portion of any interest or other income
earned on the investment of the Escrow Property.
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5.
Duration.
This
Make Good Agreement shall terminate upon the distribution of all the Escrow
Shares in accordance with the terms of this Make Good Agreement. The Company
agrees to promptly provide the Escrow Agent written notice of the filing with
the Commission of any financial statements or reports referenced
herein.
6.
Escrow Shares.
If any
Escrow Shares are deliverable to the Investors pursuant to the SPA and in
accordance with this Make Good Agreement, (i) Make Good Pledgor covenants and
agrees to execute all such instruments of transfer (including stock powers
and
assignment documents) as are customarily executed to evidence and consummate
the
transfer of the Escrow Shares from Make Good Pledgor to the Investors, to the
extent not done so in accordance with Section 2, and (ii) following its receipt
of the documents referenced in Section 6(i), the Company and Escrow Agent
covenant and agree to cooperate with the Transfer Agent so that the Transfer
Agent promptly reissues such Escrow Shares in the applicable Investor’s name and
delivers the same as directed by such Investor. Until such time as (if at all)
the Escrow Shares are required to be delivered pursuant to the SPA and in
accordance with this Make Good Agreement, (i) any dividends payable in respect
of the Escrow Shares and all voting rights applicable to the Escrow Shares
shall
be retained by Make Good Pledgor and (ii) should the Escrow Agent receive
dividends or voting materials, such items shall not be held by the Escrow Agent,
but shall be passed immediately on to the Make Good Pledgor and shall not be
invested or held for any time longer than is needed to effectively re-route
such
items to the Make Good Pledgor. In the event that the Escrow Agent receives
a communication requiring the conversion of the Escrow Shares to cash
or the exchange of the Escrow Shares for that of an acquiring company, the
Escrow Agent shall solicit and follow the written instructions of the Make
Good Pledgor; provided,
that
the cash or exchanged shares are instructed to be redeposited into the Escrow
Account. Make Good Pledgor shall be responsible for all taxes resulting from
any
such conversion or exchange.
7.
Interpleader.
Should
any controversy arise among the parties hereto with respect to this Make Good
Agreement or with respect to the right to receive the Escrow Shares, Escrow
Agent and/or Xxxx shall have the right to consult and hire counsel and/or to
institute an appropriate interpleader action to determine the rights of the
parties. Escrow Agent and/or Xxxx are also each hereby authorized to institute
an appropriate interpleader action upon receipt of a written letter of direction
executed by the parties so directing either Escrow Agent or Xxxx. If Escrow
Agent or Xxxx is directed to institute an appropriate interpleader 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 7 shall be filed
in any court of competent jurisdiction in the State of New York, and the Escrow
Shares in dispute shall be deposited with the court and in such event Escrow
Agent and Xxxx shall be relieved of and discharged from any and all obligations
and liabilities under and pursuant to this Make Good Agreement with respect
to
the Escrow Shares and any other obligations hereunder.
8. Exculpation
and Indemnification of Escrow Agent and Xxxx.
a. Escrow
Agent is not a party to, and is not bound by or charged with notice of any
agreement out of which this escrow may arise. Escrow Agent acts under this
Make
Good 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. 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 Make Good Agreement and
instructions to Escrow Agent pursuant to the terms of this Make Good 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. Xxxx’x sole obligation under this Make Good Agreement is to
provide written instructions to Escrow Agent (following such time as the Company
files certain periodic financial reports as specified in Section 4 hereof)
directing the distribution of the Escrow Shares. Xxxx will provide such written
instructions upon review of the relevant After Tax Net Income and Earnings
Per
Share amounts reported in such periodic financial reports as specified in
Section 4 hereof. Xxxx is not charged with any obligation to conduct any
investigation into the financial reports or make any other investigation related
thereto. In the event of any actual or alleged mistake or fraud of the Company,
its auditors or any other person (other than Xxxx) in connection with such
financial reports of the Company, Xxxx shall have no obligation or liability
to
any party hereunder.
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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, absent gross negligence or willful
misconduct. Escrow Agent 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 Make Good 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
New
York upon fiduciaries. THE
ESCROW AGENT SHALL NOT BE LIABLE, DIRECTLY OR INDIRECTLY, FOR ANY (I) DAMAGES,
LOSSES OR EXPENSES ARISING OUT OF THE SERVICES PROVIDED HEREUNDER, OTHER THAN
DAMAGES, LOSSES OR EXPENSES WHICH HAVE BEEN FINALLY ADJUDICATED TO HAVE DIRECTLY
RESULTED FROM THE ESCROW AGENT’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, OR (II)
SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGES OR LOSSES OF ANY KIND WHATSOEVER
(INCLUDING, WITHOUT LIMITATION, LOST PROFITS), EVEN IF THE ESCROW AGENT HAS
BEEN
ADVISED OF THE POSSIBILITY OF SUCH LOSSES OR DAMAGES AND REGARDLESS OF THE
FORM
OF ACTION.
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c. The
Company and Make Good Pledgor each hereby, jointly and severally, indemnify
and
hold harmless each of Escrow Agent, Xxxx and any of their principals, partners,
agents, employees and affiliates from
and
against any expenses, including reasonable attorneys' fees and disbursements,
damages or losses suffered by Escrow Agent or Xxxx in connection with any claim
or demand, which, in any way, directly or indirectly, arises out of or relates
to this Make Good Agreement or the services of Escrow Agent or Xxxx hereunder;
except, that if Escrow Agent or Xxxx is guilty of willful misconduct or gross
negligence under this Make Good Agreement, then Escrow Agent or Xxxx, as the
case may be, will bear all losses, damages and expenses arising as a result
of
its own willful misconduct or gross negligence. Promptly after the receipt
by
Escrow Agent or Xxxx 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
or Xxxx, as the case may be, 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 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 8 shall survive the termination
of
this Make Good Agreement, and the resignation or removal of the Escrow
Agent.
9.
Compensation of Escrow Agent.
Escrow
Agent shall be entitled to compensation for its services as stated in the fee
schedule attached hereto as Exhibit
B,
which
compensation shall be paid by the Company. The fee agreed upon for the services
rendered hereunder is intended as full compensation for Escrow Agent's services
as contemplated by this Make Good Agreement; provided,
however,
that in
the event that Escrow Agent renders any material service not contemplated in
this Make Good Agreement, or there is any assignment of interest in the subject
matter of this Make Good Agreement, or any material modification hereof, or
if
any material controversy arises hereunder, or Escrow Agent is made a party
to
any litigation pertaining to this Make Good Agreement, or the subject matter
hereof, then Escrow Agent shall be reasonably compensated by the Company for
such extraordinary services and reimbursed for all costs and expenses, including
reasonable attorney's fees, occasioned by any delay, controversy, litigation
or
event, and the same shall be recoverable from the Company. Prior
to
incurring any costs and/or expenses in connection with the foregoing sentence,
Escrow Agent shall be required to provide written notice to the Company of
such
costs and/or expenses and the relevancy thereof and Escrow Agent shall not
be
permitted to incur any such costs and/or expenses which are not related to
litigation prior to receiving written approval from the Company, which approval
shall not be unreasonably withheld.
10.
Resignation of Escrow Agent.
At any
time, upon ten (10) Business Days' written notice to the Company and the
Investors, 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 the
Escrow Shares held hereunder upon presentation of a document appointing the
new
escrow agent and evidencing its acceptance thereof. If, by the end of the
10-Business 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 shall deposit the Escrow Shares as directed by Xxxx with the understanding
that such Escrow Shares will continue to be subject to the provisions of this
Make Good Agreement.
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11.
Records.
Escrow
Agent shall maintain accurate records of all transactions hereunder. Promptly
after the termination of this Make Good 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 and at the requesting party’s expense.
12.
Notice.
All
notices, communications and instructions required or desired to be given under
this Make Good 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 addresses listed on the signature pages hereto.
13.
Execution in Counterparts.
This
Make Good 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.
14.
Assignment and Modification.
This
Make Good Agreement and the rights and obligations hereunder of the Company
may
be assigned by the Company only following the prior written consent of Xxxx.
This Make Good Agreement and the rights and obligations hereunder of the Escrow
Agent may be assigned by the Escrow Agent only with the prior consent of the
Company and Xxxx. This Make Good Agreement and the rights and obligations
hereunder of the Make Good Pledgor may not be assigned by the Make Good Pledgor.
Subject to the requirements under federal and state securities laws, an Investor
may assign its rights under this Make Good Agreement without any consent from
any other party. This Make Good Agreement may not be changed orally or modified,
amended or supplemented without an express written agreement executed by the
Escrow Agent, the Company, the Make Good Pledgor and Xxxx. This Make Good
Agreement is binding upon and 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 Make Good Agreement are intended to be, nor shall they
be
construed to be, for the benefit of any third person. No portion of the Escrow
Shares 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 Make Good Agreement.
9
15.
Applicable Law.
This
Make Good Agreement shall be governed by, and construed in accordance with,
the
internal laws of the State of New York. The representations and warranties
contained in this Make Good Agreement shall survive the execution and delivery
hereof and any investigations made by any party. Each party agrees that all
legal proceedings concerning the interpretations, enforcement and defense of
the
transactions contemplated by this Make Good Agreement shall be commenced
exclusively in the state and federal courts sitting in the City of New York,
Borough of Manhattan (the “New York Courts”). Each party hereto hereby
irrevocably submits to the exclusive jurisdiction of the New York Courts for
the
adjudication of any dispute hereunder or in connection herewith, and hereby
irrevocably waives, and agrees not to assert in any such proceeding, any claim
that it is not personally subject to the jurisdiction of any such New York
Court, or that such proceeding has been commenced in an improper or inconvenient
forum. Each party hereto hereby irrevocably waives personal service of process
and consents to process being served in any such proceeding by mailing a copy
thereof via registered or certified mail or overnight delivery (with evidence
of
delivery) to such party at the address in effect for notices to it under this
Make Good Agreement and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing contained herein
shall
be deemed to limit in any way any right to serve process in any manner permitted
by law.
16.
Headings.
The
headings contained in this Make Good Agreement are for convenience of reference
only and shall not affect the construction of this Make Good 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 Make Good 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.
18.
Merger or Consolidation.
Any
corporation or association into which the Escrow Agent may be converted or
merged, or with which it may be consolidated, or to which it may sell or
transfer all or substantially all of its corporate trust business and assets
as
a whole or substantially as a whole, or any corporation or association resulting
from any such conversion, sale, merger, consolidation or transfer to which
the
Escrow Agent is a party, shall be and become the successor escrow agent under
this Make Good Agreement and shall have and succeed to the rights, powers,
duties, immunities and privileges as its predecessor, without the execution
or
filing of any instrument or paper or the performance of any further act.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
10
IN
WITNESS WHEREOF, the parties have duly executed this Make Good Agreement as
of
the date set forth opposite their respective names.
| COMPANY: | ||
| FIRST GROWTH INVESTORS, INC. | ||
| |
|
|
| By: | /s/ Gao Zhentao | |
|
Name: Gao Zhentao
Title: Director
|
||
| |
Address:
000
Xxxxxxx Xxxxxx
Hanting
District, Weifang, Shandong
Province,
People's Republic of China 261101
Facsimile:
00-000-0000000
Attn.:
President
Email:
xxxxxxxxxxx0000@000.xxx
|
|
| MAKE GOOD PLEDGOR: | ||
| |
|
|
| By: | /s/ Xxxxx Xxxxxxxx | |
|
Xx. Xxxxx Xxxxxxxx |
||
| |
Address:
000
Xxxxxxx Xxxxxx
Hanting District, Weifang, Shandong
Province, People's Republic of China
c/o:
First Growth Investors, Inc.
Telephone: 00 000 000
0000
|
|
[REMAINDER
OF THIS PAGE INTENTIONALLY LEFT BLANK -
SIGNATURE
PAGE FOR OTHER PARTIES FOLLOWS]
11
| ESCROW AGENT: | ||
| Tri-State Title & Escrow, LLC, as Escrow Agent | ||
| |
|
|
| By: | /s/ Xxx X. Xxxxxx | |
|
Name: Xxx X. Xxxxxx
Title: President
|
||
| |
Address:
000
Xxxx Xxxxxx
X.X.
Xxx 000
Xxxxxxxxxx,
XX 00000
Attention:
Xxxxxxx X. Xxxxxxx
Telephone:
(000) 000-0000 Fax: (000) 000-0000
Email
xxxxxx@xxxxxxxxxxxxx.xxx
|
|
| XXXX CAPITAL PARTNERS, LLC | ||
| |
|
|
| By: | Xxxxx X. Xxxxxxxx | |
|
Name: Xxxxx X. Xxxxxxxx
Title: Managing Director, Equity Capital Markets
|
||
| |
Address:
00
Xxxxxxxxx Xxxxx
Xxxxxxx
Xxxxx, XX 00000
Facsimile:
(000) 000-0000
Attn.:
Xxxxx X. Xxxxxxxx
|
|
| INVESTORS: | ||
| |
|
|
| By: | First Growth Investors, Inc. | |
|
Name:
Gao Zhentao
Title:
Director
|
||
| |
Address:
000 Xxxxxxx Xxxxxx, Xxxxxxx
District,
Weifang, Shandong Province,
People's
Republic of China
Facsimile:
00-000-0000000
Attn.:
|
|
12
Exhibit
A
(attached as a MS Excel spreadsheet)
ESCROW
SHARES TO BE ISSUED TO INVESTORS
|
Investor’s
Legal Name
|
Investor’s
Investment Amount
|
Make
Good (2008)
|
Make
Good (2009)
|
|||
13
Exhibit
B
FEE
SCHEDULE
14
