MAKE GOOD ESCROW AGREEMENT
This
Make
Good Escrow Agreement (the “Make Good Agreement”), dated effective as of
December 31, 2007, is entered into by and among Energroup
Holdings Corporation, a Nevada corporation
(the
“Company”), the Investors (as defined below), Shine Gold Holdings Limited, a
British Virgin Islands company (“Make Good Pledgor”) and U.S. Bank National
Association, with an office at 000 Xxxxxx Xxxxxx, 00xx Xxxxx,
Xxxxxxxx, XX 00000, as escrow agent (“Escrow Agent”). The
Company and Investors are referred to collectively as the “Interested
Parties.”
WHEREAS,
each of the investors in the private offering of securities of the Company
(the
“Investors”) has entered into a Securities Purchase Agreement, dated December
31, 2007 (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 (defined below) following
the Closing, Make Good Pledgor shall deliver, or cause to be delivered, to
the
Escrow Agent certificates evidencing an aggregate of 3,863,635 shares
of
the Company’s Common Stock (the “Escrow Shares”), along with bank signature
stamped stock powers executed in blank (or such other signed instrument of
transfer acceptable to the Company’s Transfer Agent).
As
used
in this Agreement, “Trading Day” means (i) a day on which the Company’s common
stock is traded on a Trading Market or (ii) if the common stock is not quoted
on
any trading market, a day on which the common stock is quoted in the
over-the-counter market as reported by the OTC Bulletin Board (or any similar
organization or agency succeeding to its functions of reporting prices);
provided, that in the event that the common stock is not listed or quoted as
set
forth in (i) and (ii) hereof, then Trading Day shall mean a business day.
“Trading Market” means whichever of the New York Stock Exchange, the American
Stock Exchange, the NASDAQ Global Select Market, the NASDAQ Global Market,
the
NASDAQ Capital Market or OTC Bulletin Board on which the Company’s common stock
is listed or quoted for trading on the date in question. As used in this Make
Good Agreement, “Transfer Agent” means Western States Transfer & Registrar,
Inc. with an address at 0000 Xxxx Xxxx Xxxxxx, Xxxxx, Xxxx 00000, at telephone
number (000) 000-0000 and fax number (000) 000-0000, 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 hereby agrees that their obligation to transfer shares of Common
Stock to Investors 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 Investors 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).
In
furtherance thereof, the Company will (x) place a stop order on all Escrow
Shares covered by any registration statements, (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 under such
registration statements or otherwise in violation of Section 4.11 of the SPA
and
this Make Good Agreement. If within ten (10) days following the Closing,
the
Make
Good Pledgor shall
not
have deposited all potential 2008 Make Good Shares and 2009 Make Good Shares
into escrow in accordance with this Make Good Agreement along with bank
signature stamped stock powers executed in blank (or such other signed
instrument of transfer acceptable to the Company’s transfer agent), then, upon
written demand from an Investor, the Company shall promptly, and in any event
within thirty (30) days from the date of such written demand, pay to that
Investor, as liquidated damages, an amount equal to that Investor’s entire
Investment Amount without interest thereon. As a condition to the receipt of
such payment, the Investor shall return to the Company for cancellation the
certificates evidencing the Shares acquired by the Investor under the
SPA.
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:
a.
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.
b.
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.
4.
Disbursement of Escrow Shares. The
Make
Good Pledgor agrees
that in
the
event that:
a.
2008
Make Good Escrow.
If the
after tax net income (calculated in accordance with GAAP) reported in the Annual
Report on Form 10-K or 10-KSB of the Company for the fiscal year ending December
31, 2008, as filed with the Commission (the “2008 Annual Report”), is less than
$15,900,000 (the “2008 Guaranteed ATNI”), the
Make
Good Pledgor will
provide
written instruction to the Escrow Agent to transfer
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 at Closing,
1,931,818 shares of Common Stock (as
equitably adjusted for any stock splits, stock combinations, stock dividends
or
similar transactions)
(the
“2008 Make Good Shares”).
b.
2009
Make Good Escrow.
If
in
the
event that either:
(i)
the
earnings per share (calculated in accordance with GAAP) reported in the Annual
Report on Form 10-K or 10-KSB of the Company for the fiscal year ending December
31, 2009, as filed with the Commission (the “2009 Annual Report”), is less than
$0.99 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 (calculated in accordance with GAAP) reported in the 2009 Annual
Report, is less than $20,900,000
(the
“2009 Guaranteed ATNI”),
the
Make
Good
Pledgor
will
provide written instruction to the Escrow Agent to transfer 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 at Closing, 1,931,818 shares of Common Stock
(as
equitably adjusted for any stock splits, stock combinations, stock dividends
or
similar transactions)
(the
“2009 Make Good Shares”).
c.
Notwithstanding the foregoing, the parties agree that for purposes of
determining whether or not the 2008 Guaranteed ATNI, the 2009 Guaranteed EPS
or
the 2009 Guaranteed ATNI have been achieved, the release of the 2008 Make Good
Shares or the 2009 Make Good Shares to the Make Good Pledgor as a result of
the
operation of this Make Good Agreement shall not be deemed to be an expense,
charge, or other deduction from revenues even though GAAP may require contrary
treatment. Notwithstanding
anything to the contrary contained herein, any direct or indirect tax breaks,
tax holidays, tax credits or similar tax benefit(s), compensation, grant or
any
other remuneration or deduction granted or benefiting any of the Company
Entities by any governmental authority or body, which are beyond and in addition
to benefits that may exist on the Closing date, shall be excluded for
purposes of determining whether or not the 2008 Guaranteed ATNI, 2009 Guaranteed
ATNI, or 2009 Guaranteed EPS, as the case may be, has been achieved by
the Company.
In
the
event that the after tax net income (calculated in accordance with GAAP)
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.
d.
In
the
event that (i) the earnings per share (calculated in accordance with GAAP)
reported in the 2009 Annual Report is equal to or greater than the 2009
Guaranteed EPS and (ii) the after tax net income (calculated in accordance
with
GAAP) reported in the 2009 Annual Report is equal to or greater than the 2009
Guaranteed ATNI,
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.
e.
Any
such transfer 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
or 2009, as applicable, Annual Report on Form 10-KSB for the
Company
is filed
with the Commission and otherwise in accordance with this Make Good Agreement.
f.
Escrow
Rules.
The
Escrow Agent shall release the 2008 Make Good Shares and 2009 Make Good Shares
as follows:
(i)
In
the
event that the after tax net income (calculated in accordance with GAAP)
reported in the 2008 Annual Report is less than the 2008 Guaranteed ATNI, the
Company has agreed that the Company and Investors that have invested a majority
in interest of the Investment Amount (or their authorized representatives)
(a
“Majority of Investors”) will jointly 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).
(ii)
In
the
event that either (i) the earnings per share (calculated in accordance with
GAAP) reported in the 2009 Annual Report is less than the 2009 Guaranteed EPS
or
(ii) the after tax net income (calculated in accordance with GAAP) reported
in
the 2009 Annual Report is less than the 2009 Guaranteed ATNI, the
Company has agreed that the Company and Majority of Investors will jointly
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).
(iii)
In
the
event that the after tax net income (calculated in accordance with GAAP)
reported in the 2008 Annual Report is equal to or greater than the 2008
Guaranteed ATNI, the
Company has agreed that the Company and Majority of Investors will jointly
provide prompt written instruction to the Escrow Agent to release of the 2008
Make Good Shares to the Make Good Pledgor.
(iv)
In
the
event that (i) the earnings per share (calculated in accordance with GAAP)
reported in the 2009 Annual Report is equal to or greater than the 2009
Guaranteed EPS and the after tax net income (calculated in accordance with
GAAP)
reported in the 2009 Annual Report is equal to or greater than the 2009
Guaranteed ATNI,
the
Company has agreed that the Company and Majority of Investors will jointly
provide prompt written instruction to the Escrow Agent to release of the 2009
Make Good Shares to the Make Good Pledgor.
The
Escrow Agent need only rely on the letter of instruction from the Company and
Majority of Investors in this regard and notwithstanding anything to the
contrary contained herein will disregard any contrary instructions, and shall
not be bound by the time constraints or other trigger dates noted herein.
g. Pursuant
to Section 4, if the Company and Majority of Investors deliver a written
instruction pursuant to Section 4(f)(i) or 4(f)(ii) to the Escrow Agent that
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 as directed by such Investor in an amount to each Investor
as
set forth on Exhibit
A
attached
hereto. If a notice from if the Company and Majority of Investors pursuant
to
Section 4 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.
h.
If
the
Company does not provide such instructions to the Transfer Agent of the Company
to deliver the 2008 Make Good Shares or 2009 Make Good Shares to the Investors
pursuant to Section 4(g) within 10 days of the public release of the earnings
and net income for 2008 or 2009 in the Company’s 2008 Annual Report and 2009
Annual Report, respectively, then a Majority of Investors are hereby authorized
to deliver such re-issuance instruction to the Transfer Agent of the Company.
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, 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. 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, the Company and/or the Investors 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, the Company and/or the Investors 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, the Company and/or the Investors. If Escrow Agent, the
Company and/or the Investors 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, the Company and/or the Investors 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. Certain
Terms Concerning Escrowed Property.
a.
No
Duty to Vote or Preserve Rights in Escrow Stock.
Neither
the Escrow Agent nor its nominee shall be under any duty to take any action
to
preserve, protect, exercise or enforce any rights or remedies under or with
respect to the Escrow Property (including without limitation with respect to
the
exercise of any voting or consent rights, conversion or exchange rights, defense
of title, preservation of rights against prior matters or otherwise).
b.
Distribution
Of Escrow Shares.
Any
distribution of all or a portion of the Escrow Shares shall be made by delivery
of the stock certificate held by the Escrow Agent representing the Escrow Shares
to the Company’s Transfer Agent, endorsed for transfer, with instruction to the
Transfer Agent to transfer the aggregate number of Escrow Shares being
distributed in accordance with the instructions to be provided by the Company,
as described in Section 4(g) hereof, allocated among the Investors based upon
their pro rata shares according to the percentages set forth on Exhibit
A
(as
nearly as practicable), in each case by issuing to each such Investor a stock
certificate representing such allocated shares, registered in his or her name
set forth on Exhibit
A
and
mailed by first class mail to each such Investor’s address set forth on
Exhibit
A
(or to
such other address as such Indemnifying Stockholder may have previously
instructed the Escrow Agent in writing), or returned to the Make Good Pledgor,
as applicable. The Escrow Agent shall have no liability for the actions or
omissions of, or any delay on the part of, the Company, the Transfer Agent,
the
Make Good Pledgor or the Investors in connection with the
foregoing.
c.
Dividends
and Proceeds.
(i)
Dividends
Held In Escrow.
Any
dividends, whether cash dividends or stock dividends, stock splits, and any
other distributions from or under the Escrow Shares, received by the Escrow
Agent from time to time during the term of this Make Good Agreement shall be
retained by the Make Good Pledgor.
(ii) [Reserved.]
(iii) Transaction
Confirmations.
The
parties hereto acknowledge that, to the extent regulations of the Comptroller
of
the Currency, or other applicable regulatory entity, grant the parties the
right
to receive individual confirmations of security transactions at no additional
cost, as they occur, the parties specifically waive receipt of such
confirmations to the extent permitted by law. The Escrow Agent will furnish
the
parties hereto with periodic cash transaction statements that include detail
for
all investment transactions made by the Escrow Agent hereunder.
(iv) Tax
Reporting.
The
Company, the Make Good Pledgor and the Investors agree that, for tax reporting
purposes, all interest or other income earned from the investment of the Escrow
Property shall be reported by the Escrow Agent as allocated to the party to
whom
such interest or income is distributed.
(v) Certification
of Taxpayer Identification Number.
Each of
the Company, the Make Good Pledgor and the Investors hereto agrees to provide
the Escrow Agent with a certified tax identification number by signing and
returning a Form W-9 (or Form W-8 BEN, in case of non-U.S. persons) to the
Escrow Agent, upon the execution and delivery of this Make Good Agreement.
The
Interested Parties understand that, in the event their tax identification
numbers are not certified to the Escrow Agent, the Internal Revenue Code, as
amended from time to time, may require withholding of a portion of any interest
or other income earned on the investment of the Escrow Property. Each
of
the Interested Parties agrees
to
instruct the Escrow Agent in writing with respect to the Escrow Agent’s
responsibility for withholding and other taxes, assessments or other
governmental charges, and to instruct the Escrow Agent with respect to any
certifications and governmental reporting that may be required under any laws
or
regulations that may be applicable in connection with its acting as Escrow
Agent
under this Make Good Agreement.
d.
Restricted
Securities.
The
Company, Investors and the Make Good Pledgor agree that the Company shall be
solely responsible for providing, at their cost and expense, any certification,
opinion of counsel or other instrument or document necessary to comply with
or
satisfy any transfer restrictions to which the Escrow Shares are subject,
including without limitation any opinion of counsel required to be delivered
pursuant to any restrictive legend appearing on the certificate evidencing
the
Escrow Shares in connection with any distribution of Escrow Shares to be made
by
the Escrow Agent under or pursuant to this Make Good Agreement. Any such opinion
of counsel shall include the Escrow Agent as an addressee or shall expressly
consent to the Escrow Agent’s reliance thereon.
9.
Concerning the Escrow Agent.
a. Each
Interested Party acknowledges and agrees that the Escrow Agent (i) shall not
be
responsible for any of the agreements referred to or described herein (including
without limitation the SPA), or for determining or compelling compliance
therewith, and shall not otherwise be bound thereby, (ii) shall be obligated
only for the performance of such duties as are expressly and specifically set
forth in this Make Good Agreement on its part to be performed, each of which
is
ministerial (and shall not be construed to be fiduciary) in nature, and no
implied duties or obligations of any kind shall be read into this Make Good
Agreement against or on the part of the Escrow Agent, (iii) shall not be
obligated to take any legal or other action hereunder which might in its
judgment involve or cause it to incur any expense or liability unless it shall
have been furnished with acceptable indemnification, (iv) may rely on and shall
be protected in acting or refraining from acting upon any written notice,
instruction (including, without limitation, wire transfer instructions, whether
incorporated herein or provided in a separate written instruction), instrument,
statement, certificate, request or other document furnished to it hereunder
and
believed by it to be genuine and to have been signed or presented by the proper
person, and shall have no responsibility to make inquiry as to or to determine
the genuineness, accuracy or validity thereof (or any signature appearing
thereon), or of the authority of the person signing or presenting the same,
and
(v) may consult counsel satisfactory to it, including in-house counsel, and
the
opinion or advice of such counsel in any instance shall be full and complete
authorization and protection in respect of any action taken, suffered or omitted
by it hereunder in good faith and in accordance with the opinion or advice
of
such counsel.
b. The
Escrow Agent shall not be liable to anyone for any action taken or omitted
to be
taken by it hereunder except in the case of the Escrow Agent’s gross negligence
or willful misconduct in breach of the terms of this Make Good Agreement. In
no
event shall the Escrow Agent be liable for indirect, punitive, special or
consequential damage or loss (including but not limited to lost profits)
whatsoever, even if the Escrow Agent has been informed of the likelihood of
such
loss or damage and regardless of the form of action.
c. The
Escrow Agent shall have no more or less responsibility or liability on account
of any action or omission of any book-entry depository, securities intermediary
or other subescrow agent employed by the Escrow Agent than any such book-entry
depository, securities intermediary or other subescrow agent has to the Escrow
Agent, except to the extent that such action or omission of any book-entry
depository, securities intermediary or other subescrow agent was caused by
the
Escrow Agent’s own gross negligence or willful misconduct in breach of this Make
Good Agreement.
d. The
Escrow Agent is hereby authorized, in making or disposing of any investment
permitted by this Make Good Agreement, or in carrying out any sale of the Escrow
Property permitted by this Make Good Agreement, to deal with itself (in its
individual capacity) or with any one or more of its affiliates, whether it
or
such affiliate is acting as a subagent of the Escrow Agent or for any third
person or dealing as principal for its own account.
e. Notwithstanding
any term appearing in this Make Good Agreement to the contrary, in no instance
shall the Escrow Agent be required or obligated to distribute any Escrow
Property (or take other action that may be called for hereunder to be taken
by
the Escrow Agent) sooner than two (2) Business Days after (i) it has received
the applicable documents required under this Make Good Agreement in good form,
or (ii) passage of the applicable time period (or both, as applicable under
the
terms of this Make Good Agreement), as the case may be.
f. All
payments to the Escrow Agent hereunder shall be in U.S. dollars.
10.
Compensation of Escrow Agent.
a. The
Company hereby agrees to be the responsible party for payment of the Escrow
Agent’s fees and expenses hereunder, including: (i) to pay or reimburse the
Escrow Agent for its attorney’s fees and expenses incurred in connection with
the enforcement of this Make Good Agreement, and (ii) to pay the Escrow Agent’s
compensation for its normal services hereunder in accordance with the fee
schedule attached hereto as Exhibit
B
and made
a part hereof, which may be subject to change hereafter by the Escrow Agent
on
an annual basis.
b. The
Company agrees to reimburse the Escrow Agent on demand for all costs and
expenses incurred in connection with the administration of this Make Good
Agreement or the escrow created hereby or the performance or observance of
its
duties hereunder which are in excess of its compensation for normal services
hereunder, including payment of any reasonable legal fees and expenses incurred
by the Escrow Agent in connection with resolution of any claim by any party
hereunder.
c. Each
of
the Company and the Make Good Pledgor covenant and agree, jointly and severally,
to indemnify the Escrow Agent (and its directors, officers and employees) and
hold it (and such directors, officers and employees) harmless from and against
any loss, liability, damage, cost and expense of any nature incurred by the
Escrow Agent arising out of or in connection with this Make Good Agreement
or
with the administration of its duties hereunder, including but not limited
to
attorney’s fees,
tax
liabilities (other than income tax liabilities associated with the Escrow
Agent’s fees), any liabilities or damages that may result from any inaccuracy or
misrepresentation made in any tax certification provided to the Escrow
Agent,
and any
wrongly act of any such party,
and
other costs and expenses of defending or preparing to defend
against any claim of liability unless and except to the extent such loss,
liability, damage, cost and expense shall be caused by the Escrow Agent’s gross
negligence, or willful misconduct. The foregoing indemnification and agreement
to hold harmless shall survive the termination of this Make Good
Agreement.
11.
Resignation of Escrow Agent.
At any
time, upon twenty (20) 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 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 20-day period following the giving
of notice of resignation by Escrow Agent, the Company shall have failed to
appoint a successor escrow agent, a Majority of Investors shall entitled to
appoint a successor escrow agent, or if no successor is named, the Escrow Agent
may apply to a court of competent jurisdiction for appointment of a successor
escrow agent.
12.
Dispute Resolution.
It is
understood and agreed that, should any dispute arise with respect to the
delivery, ownership, right of possession, and/or disposition of the Escrow
Property, or should any claim be made upon the Escrow Agent or the Escrow
Property by a third party, the Escrow Agent upon receipt of notice of such
dispute or claim is authorized and shall be entitled (at its sole option and
election) to retain in its possession without liability to anyone, all or any
of
the Escrow Property until such dispute shall have been settled either by the
mutual written agreement of the parties involved or by a final order, decree
or
judgment of a court in the United States of America, the time for perfection
of
an appeal of such order, decree or judgment having expired. The Escrow Agent
may, but shall be under no duty whatsoever to, institute or defend any legal
proceedings which relate to the Escrow Property.
13.
Consent to Jurisdiction and Service.
Each of
the Company, the Investors and the Make Good Pledgor hereby absolutely and
irrevocably consents and submits to the jurisdiction of the courts in the State
of New York and of any Federal court located in said State in connection with
any actions or proceedings brought against said parties (or any of them) by
the
Escrow Agent arising out of or relating to this Escrow Agreement. In any such
action or proceeding, the Company, the Investors and the Make Good Pledgor
each
hereby absolutely and irrevocably (i) waives any objection to jurisdiction
or
venue, (ii) waives personal service of any summons, complaint, declaration
or
other process, and (iii) agrees that the service thereof may be made by
certified or registered first-class mail directed to such party, as the case
may
be, at their respective addresses in accordance with Section 17
hereof.
14.
Waiver of Jury Trial. THE
PARTIES HEREBY WAIVE A TRIAL BY JURY OF ANY AND ALL ISSUES ARISING IN ANY ACTION
OR PROCEEDING BETWEEN THEM OR THEIR SUCCESSORS OR ASSIGNS, UNDER OR IN
CONNECTION WITH THIS AGREEMENT OR ANY OF ITS PROVISIONS OR ANY NEGOTIATIONS
IN
CONNECTION HEREWITH.
15.
Force Majeure.
The
Escrow Agent shall not be responsible for delays or failures in performance
resulting from acts beyond its control. Such acts shall include but not be
limited to acts of God, strikes, lockouts, riots, acts of war, terrorism,
epidemics, governmental regulations superimposed after the fact, fire,
communication line failures, computer viruses, power failures, earthquakes
or
other disasters.
16.
Records.
The
Escrow Agent shall maintain accurate records of all transactions hereunder.
The
Escrow Agent will provide each of the Interested Parties monthly transaction
statements for the duration of the Escrow, detailing all deposit and withdrawal
activity, including a final statement at the termination of the Escrow showing
the final distribution of Escrow Shares. The authorized representatives of
each
of the parties hereto shall have access to such books and records at all
reasonable times during Escrow Agent’s normal business hours upon reasonable
notice to Escrow Agent and at the requesting party’s expense.
17.
Notices.
Any and
all notices or other communications or deliveries required or permitted to
be
provided hereunder shall be in writing and shall be deemed given and effective
on the earliest of (a) the date of transmission, if such notice or communication
is delivered via facsimile (provided the sender receives a machine-generated
confirmation of successful transmission) at the facsimile number specified
in
this Section prior to 6:30 p.m. (New York City time) on a Trading Day, (b)
the
next Trading Day after the date of transmission, if such notice or communication
is delivered via facsimile at the facsimile number specified in this Section
on
a day that is not a Trading Day or later than 6:30 p.m. (New York City time)
on
any Trading Day, or (c) upon actual receipt by the party to whom such notice
is
required to be given, if sent by any means other than facsimile transmission.
The address for such notices and communications shall be as
follows:
|
If
to the Company:
|
|
|
Xx.
0, Xxx Xx Xxxxxx, Xxxxxxxxx Xxxxxxxx
|
|
|
Dalian
City, Liaoning Province
|
|
|
PRC
116039
|
|
|
Facsimile:
x00 000 000 000 00
|
|
|
Attn.:
President
|
|
|
With
a copy to:
|
Xxxxxxxxxx
& Xxxxx, LLP
|
|
Xxxxxxx
Plaza
|
|
|
00000
Xxxxxxxx Xxxxxxxxx, Xxxxx 000
|
|
|
Xxx
Xxxxxxx, Xxxxxxxxxx 00000
|
|
|
Facsimile:
(000) 000-0000
|
|
|
Attn.:
Xxxxx X. Xxxxx, Esq.
|
|
|
If
to an Investor:
|
To
the address set forth under such Investor’s name
on
the signature pages hereof;
|
|
With
a copy to
|
Xxxxx
Xxxx LLP
|
|
Lead
Investor Counsel:
|
0000
Xxxxxx xx xxx Xxxxxxxx
|
|
Xxx
Xxxx, Xxx Xxxx 00000
|
|
|
Facsimile:
(000) 000-0000
|
|
|
Attn.:
Xxxx X. Xxxxx, Esq.
|
|
|
If
to the Escrow Agent:
|
XX
Xxxx X.X.
|
|
Xxxxxx Xxxxxx, 00xx Xxxxx
|
|
|
Xxxxxxxx, XX 00000
|
|
|
Facsimile:
(000) 000-0000
|
|
|
Attn:
Xxxxxx X. Xxxxxxxxx
|
or
such
other address as may be designated in writing hereafter, in the same manner,
by
such Person. Notwithstanding the foregoing, notices addressed to the Escrow
Agent shall be effective only upon receipt. If any notice or document is
required to be delivered to the Escrow Agent and any other person, the Escrow
Agent may assume without inquiry that each notice or document was received
by
such other person when it is received by the Escrow Agent.
18.
Wiring Instructions. Any
funds
to be paid to or by the Escrow Agent hereunder shall be sent by wire transfer
pursuant to the following instructions (or by such method of payment and
pursuant to such instruction as may have been given in advance and in writing
to
or by the Escrow Agent, as the case may be, in accordance with Section 17
above):
If
to
the Escrow Agent:
|
Bank:
|
U.S.
Bank National Association
|
|
ABA
#:
|
000000000
|
|
A/C#:
|
180121167365
|
|
OBI:
|
Corporate
Trust
|
|
Beneficiary:
|
U.S.
Bank Trust N.A.
|
|
Shine
Gold Holdings Limited
|
|
|
Attn:
|
Art
Xxxxxxxxx
|
19.
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.
20.
Assignment and Modification.
This
Make Good 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 Make Good 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 Make Good Agreement. 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. This Make Good
Agreement may be amended or modified only in writing signed by all of the
parties hereto.
21.
Applicable Law.
This
Make Good Agreement shall be governed by and construed in accordance with the
laws of the State of New York without giving effect to the principles of
conflicts of laws thereof.
22.
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.
23.
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.
24.
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.
25.
Customer
Identification Program.
Each of
the Interested Parties acknowledge receipt of the notice set forth on
Exhibit
C
attached
hereto and made part hereof and that information may be requested to verify
their identities.
IN
WITNESS WHEREOF, the parties have duly executed this Make Good Agreement as
of
the date set forth opposite their respective names.
COMPANY:
|
By:
|
||
|
Shi
Huashan
|
||
|
Chief
Executive Officer
|
||
|
Address:
|
Xx.
0, Xxx Xx Xxxxxx
|
|
|
Xxxxxxxxx
Xxxxxxxx
|
||
|
Dalian
City, Liaoning Province
|
||
|
PRC
116039
|
||
|
Facsimile:
|
x00 000 000 000 00
|
|
|
MAKE
GOOD PLEDGOR:
|
||
|
SHINE
GOLD HOLDINGS LIMITED
|
||
|
|
||
|
Xxxxx
Xxxx, Director
|
||
|
Address:
|
00/X,
Xxxxxx Xxxxxx
|
|
|
00
Xxxxx’x Xxxx
|
||
|
Xxxxxxx,
Xxxx Xxxx SAR
|
||
|
Facsimile:
|
x00 000 0000 0000
|
|
[REMAINDER
OF THIS PAGE INTENTIONALLY LEFT BLANK -
SIGNATURE
PAGE FOR OTHER PARTIES FOLLOWS]
ESCROW
AGENT:
|
U.S.
BANK NATIONAL ASSOCIATION
|
|
|
By:
|
|
|
Xxxxxx
X. Xxxxxxxxx
|
|
|
Vice
President
|
|
|
Address:
|
000
Xxxxxx Xxxxxx, 00xx Xxxxx
|
|
Xxxxxxxx,
XX 00000
|
|
|
Facsimile:
|
(000)
000-0000
|
[REMAINDER
OF THIS PAGE INTENTIONALLY LEFT BLANK -
SIGNATURE
PAGE FOR OTHER PARTIES FOLLOWS]
INVESTORS:
|
Name
of Investor
|
|
|
By:
|
______________________________ |
|
Name:
|
|
|
Title:
|
|
|
Investment Amount: $______________________
|
|
|
Tax
ID No.:
|
|
|
ADDRESS
FOR NOTICE
|
|
|
c/o:_________________________________
|
|
|
Street:_______________________________
|
|
|
City/State/Zip:___________________________
|
|
|
Attention:______________________________
|
|
|
Tel:_________________________________
|
|
|
Fax:_________________________________
|
|
|
DELIVERY
INSTRUCTIONS
|
|
|
(if
different from above)
|
|
|
c/o:_________________________________
|
|
|
Street:________________________________
|
|
|
City/State/Zip:____________________________
|
|
|
Attention:______________________________
|
|
|
Tel:__________________________________
|
|
