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"), HFG International, Limited, a Hong Kong company (“HFG”), Xx. Xxxxx
Xxxxxxxx, in his individual capacity ("Make Good Pledgor") and Interwest
Transfer Company, Inc., as escrow agent ("Escrow Agent").
WHEREAS,
each of the investors in a private offering of securities of the Company 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 (the “Investors” as
defined in the SPA) to participate in the Offering and as set forth in the
SPA,
Make Good Pledgor has 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,
to facilitate such arrangements described above, a Make Good Escrow Agreement
(the “PIPE Make Good Escrow Agreement”), dated effective as of March 12, 2008,
has been entered into by and among the Company, the Investors, Xx. Xxxxx
Xxxxxxxx, in his individual capacity as a make good pledgor therein,
Xxxx Capital
Partners, LLC (“Xxxx”) and Tri-State Title & Escrow, LLC (“Tri-State”), as
escrow agent therein.
WHEREAS,
HFG and Make Good Pledgor now agree that, for the purpose of this Make Good
Agreement, the Escrow Agent herein shall conclusively refer to the instructions
by Xxxx made
in
accordance with the PIPE Make Good Escrow Agreement;
WHEREAS,
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 6,917,540 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 HFG’s right to receive 2008 Make Good Shares
(as defined below) and 2009 Make Good Shares (as defined below) pursuant to
and
this Make Good Agreement shall continue to run to the benefit of HFG
even if
such Investor shall have transferred or sold all or any portion of its Shares,
and that HFG 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 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 HFG 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 HFG are delivered
to HFG or returned to the Make Good Pledgor, or otherwise in violation of this
Make Good Agreement. The Company shall notify HFG 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.
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 HFG 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 HFG hereunder, HFG 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 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.
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 HFG on a pro rata basis
(determined by dividing HFG’s Investment Amount by the aggregate of all
Investment Amounts delivered to the Company by HFG 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 3,458,770 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 HFG on a pro rata basis (determined
by dividing HFG’s
Investment Amount by the aggregate of all Investment Amounts delivered to the
Company by HFG 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 3,458,770 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
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
HFG.
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 HFG
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 HFG
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 HFG 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 Tri-State with regard to the distribution
of certain make good shares in 2008 pursuant to the PIPE Make Good Escrow
Agreement. 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 provides
written instruction to Tri-State with regard to the distribution of certain
make
good shares in 2009 pursuant to the PIPE Make Good Escrow Agreement.
Once
Xxxx
makes such written instructions, the Escrow Agent herein will act in accordance
with this Make Good Escrow Agreement. The Escrow Agent herein need only rely
on
the letter of instruction from Xxxx in
that
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 will provide written
instructions to Tri-State for the release of certain make good share of 2008
under the PIPE Make Escrow Agreement to Xx. Xxxxx Xxxxxxxx. 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
will
provide written instructions to Tri-State for the release of the certain make
good share of 2009 under the PIPE Make Good Escrow Agreement to Xx. Xxxxx
Xxxxxxxx. Once Xxxx provides such instructions pursuant to the PIPE Make Good
Escrow Agreement, the Escrow Agent shall automatically release 2008 Make Good
Shares and 2009 Make Good Shares to Make Good Pledgor under this Make Good
Escrow Agreement.
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.
b. Pursuant
to Section 4(a), if Xxxx delivers a notice to Tri-State that the Escrow Shares
under PIPE Make Good Escrow Agreement are to be transferred to HFG, 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 HFG 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 HFG 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 HFG’s name and deliver the same, or cause the same
to be delivered. If the Company does not promptly provide such instructions
to
the Transfer Agent of the Company, then HFG is hereby authorized to directly
give such re-issuance instruction to the Transfer Agent of the Company. If
a
notice from Xxxx pursuant to Section 4(a) of the PIPE Make Good Escrow Agreement
indicates that the escrow shares therein are to be returned to the Make Good
Pledgor, then the Escrow Agent herein 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 HFG.
The
Company, Make Good Pledgor and HFG 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.
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 HFG pursuant to 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 HFG, 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 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 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 is also each 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 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
Utah, and the Escrow Shares 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 Make Good Agreement
with
respect to the Escrow Shares and any other obligations hereunder.
8. 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 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.
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.
c. The
Company and Make Good Pledgor each hereby, jointly and severally, indemnify
and
hold harmless Escrow Agent 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 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 hereunder;
except, that if Escrow Agent is guilty of willful misconduct or gross negligence
under this Make Good Agreement, then Escrow Agent, 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 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 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 HFG. 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 HFG, 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 HFG with the understanding that such Escrow Shares
will continue to be subject to the provisions of this Make Good
Agreement.
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 HFG.
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 HFG. 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 HFG. 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.
15.
Applicable Law.
This
Make Good Agreement shall be governed by, and construed in accordance with,
the
internal laws of the State of Utah. 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 Salt Lake City (the
“Utah Courts”). Each party hereto hereby irrevocably submits to the exclusive
jurisdiction of the Utah 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 Utah 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]
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/ Xxxxxxxx Xxxxx | |
|
|
||
|
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]
|
ESCROW
AGENT:
|
||
| Interwest Transfer Company, Inc., as Escrow Agent | ||
| |
|
|
| By: | /s/ Xxxxxx Xxxxxx | |
|
Name: Xxxxxx Xxxxxx Title:
Vice President
|
||
|
Address:
0000
Xxxx Xxxxxx Xxxxxxxx Road, Suite 100, X.X. Xxx 00000, Xxxx Xxxx Xxxx,
Xxxx
00000
Attention:
Xxxxxx Xxxxxx
Telephone:
(000)000 0000
Fax:
(000)000-0000
|
||
|
HFG
INTERNATIONAL, LIMITED:
|
||
| |
|
|
| By: | /s/ Xxxxxxx X. Xxxxxx | |
|
Name: Xxxxxxx X. Xxxxxx Title:
President
|
||
|
Address:
c/o Deacons Law Firm
5th
Floor
Xxxxxxxxx
Xxxxx
00
Xxxxxx Xxxx
Xxxxxxx
Xxxx
Xxxx
Facsimile:
000-0000-0000
Attn.:
Xxxxx Xxxx
|
||
Exhibit
A
ESCROW
SHARES TO BE ISSUED TO HFG
|
Make
Good (2008)
|
Make
Good (2009)
|
|
3,458,770
|
3,458,770
|
Exhibit
B
FEE
SCHEDULE
