ESCROW AGREEMENT
This
Escrow Agreement (this “Agreement”) is
made on June ___, 2007, by and among Deli Solar (USA), Inc., a Nevada
corporation, (the “Company”),
and
Tri-State Title & Escrow, LLC (the “Escrow
Agent”).
The
aforementioned are also referred to individually herein as a “Party”
and
collectively herein as the “Parties.”
PRELIMINARY
STATEMENTS
A. The
Company and Xxxxxx Partners, L.P., a Delaware limited partnership, Eos Holdings,
LLC and Xxxxxx Xxxxxx (the “Investors”) have entered into the Securities
Purchase Agreement dated the date hereof (the “Securities
Purchase Agreement”),
a
copy of which has been delivered to the Escrow Agent, pursuant to which the
Company will issue and sell to the Investors, and the Investors will subscribe
for and acquire from the Company, certain Company securities for an aggregate
purchase price of $2.75 million upon
the
terms and subject to the conditions set forth therein.
Capitalized terms used in this Agreement and not otherwise defined shall have
the meanings set forth in the Securities Purchase Agreement.
B. Section
6.15 of the Securities Purchase Agreement (the “Escrow
Provisions”)
provide certain rights to the Investors, to acquire additional shares of the
Company’s Series A Preferred Stock , which shares will be deposited at the
Closing in escrow by the Company as security for the Company’s obligations under
Section 6.15 of the Securities Purchase Agreement.
C. The
Escrow Provisions provide that, at the Closing, the Company shall deposit in
escrow 900,000 shares of Series A Preferred Stock, which shares shall be held
as
security in the event (i) the earnings target for 2007 (the “2007
Target”)
set
forth in Section 6.15.2 of the Securities Purchase Agreement is not met and
(ii)
the earnings target for 2008 (the “2008
Target”)
set
forth in Section 6.15.4 of the Securities Purchase Agreement is not met (the
“Escrow
Shares”).
D. The
escrow fund created by the deposit of the Escrow Shares is referred to as the
“Escrow
Fund.”
E. Pursuant
to the terms of the Securities Purchase Agreement, the Company has agreed,
as a
condition to its obligations thereunder, to enter into this Agreement and
establish the terms and conditions pursuant to which the Escrow Shares will
be
deposited, held in, and disbursed from the Escrow Fund.
F. The
Company desire to appoint the Escrow Agent to act pursuant to the terms and
conditions set forth herein and the Escrow Agent desires to accept such
appointment.
AGREEMENT
The
Parties, intending to be legally bound, agree as follows:
1. Establishment
of the Escrow Fund.
(a) Escrow
Fund.
The
Escrow Agent agrees to (i) accept delivery of the shares of Series A Preferred
Stock, consisting of 900,000 shares, (ii) hold such Escrow Shares subject to
the
terms and conditions of this Agreement and the Escrow Provisions.
(b) Escrow
Arrangements; Purpose.
The
Escrow Fund is to be held and distributed by the Escrow Agent in accordance
with
and subject to the provisions of this Agreement and the applicable Escrow
Provisions. The Escrow Fund is held for the benefit of the Investors as security
and collateral for the obligations of the Company under the Escrow Provisions,
and in the event the 2007 Target or the 2008 Target is not met.
2. Administration
of Escrow Fund and Tax Escrow Fund.
(a) Delivery
of Escrow Shares.
At
Closing, the Escrow Shares will be delivered by the Company to the Escrow Agent
in accordance with the applicable Escrow Provisions.
(b) Claims
upon the Escrow Fund.
Upon
receipt by the Escrow Agent of
a
certificate from the Company, stating that (1) the
2007
Target or 2008 Target, as the case may be, has not been met,
and (2)
the number of Escrow Shares to be delivered to the Investors pursuant to Section
6.15.3 or 6.15 .4, as the case may be of the Securities Purchase
Agreement,
the
Escrow Agent shall deliver to the Investors out of the Escrow Fund, as promptly
as practicable, in the manner and in the number of Escrow Shares as specified
by
the Company. The Escrow Agent shall not be required to determine or calculate
the number of shares to be issued and
shall
not be obligated to issue Escrowed Shares,
but
rather will only deliver the Escrow Shares as instructed in the certificate
from
the Company to the Escrow Agent. In the event that the Escrow Agent receives
a
certificate from the Company, the Escrow Agent shall deliver to the Company
such
number of Escrow Shares as specified by the Company in the
certificate
(c) No
Encumbrance.
The
Escrow Fund shall be held as a trust fund and shall not be subject to any
Encumbrance, trustee process or any other judicial process of any creditor
of
any party hereto. Except as provided in this Agreement, no Escrow Shares or
any
beneficial interest in the Escrow Shares may be pledged, sold, encumbered,
assigned or transferred, including by operation of law, by the Company or be
taken or reached by any legal or equitable process in satisfaction of any debt
or other liability of the Company, prior to the delivery to the Company of
the
Escrow Shares by the Escrow Agent, except as otherwise contemplated by this
Agreement or the Securities Purchase Agreement.
3. The
Escrow Agent; Limitation of the Escrow Agent’s Liability; Fees and
Expenses.
(a) The
Escrow Agent is hereby appointed depositary and escrow agent for the Company
with respect to the Escrow Funds. The Company agrees to pay Escrow Agent a
flat
fee of $1,000 for the services hereunder.
(b) The
Escrow Agent is not a party to, nor is it bound by nor need it give any
consideration to the terms or provisions of, any agreement among the Company
and
the Investors. The only duties and responsibilities of the Escrow Agent
hereunder shall be to hold the Escrow Funds as escrow agent according to the
terms and provisions of this Agreement and to dispose of and deliver the Escrow
Fund as provided in this Agreement.
(c) The
Escrow Agent shall be indemnified and held harmless by the Company, from and
against any and all liability, including all expenses reasonably incurred in
its
defense, to which the Escrow Agent shall be subject by reason of any action
taken or omitted or any investment or disbursement of any part of the Escrow
Fund made by the Escrow Agent pursuant to this Agreement, except as a result
of
the Escrow Agent’s willful misconduct or material breach of this Agreement,
provided, however, that under all circumstances, Escrow Agent shall be given
notice of any alleged breach of this Agreement and the reasonable opportunity
to
cure such alleged breach, which under all circumstances shall not be less than
ten (10) business days following receipt of notice. The reasonable costs and
expenses of enforcing this right of indemnification shall also be paid by the
Company. This right of indemnification shall survive the termination of this
Agreement, and the removal or resignation of the Escrow Agent.
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(d) The
Escrow Agent undertakes to perform only such duties as are specifically set
forth in this Agreement, and the Escrow Agent shall not be liable except for
the
non performance of such duties as are specifically set forth in this Agreement,
provided, however, that under all circumstances, Escrow Agent shall be given
notice of any alleged breach of this Agreement and the reasonable opportunity
to
cure such alleged breach, which under all circumstances shall not be less than
ten (10) business days following receipt of notice, and no implied covenants
or
obligations shall be read into this Agreement against the Escrow Agent. The
Escrow Agent may consult with counsel (of its choice) regarding any of its
duties or obligations hereunder, and shall be fully protected in any action
taken in good faith in accordance with such advice. The Escrow Agent shall
be
fully protected in acting in accordance with any written instructions given
to
it hereunder and believed by it to have been executed by the proper party or
parties. The Escrow Agent’s duties shall be determined only with reference to
this Agreement and the Securities Purchase Agreement and applicable Laws. The
Escrow Agent is not charged with any duties or responsibilities in connection
with any other documents or agreements.
(e) Fees
are
payable in advance as compensation for the ordinary administrative services
to
be rendered hereunder and the Company agrees to pay all the fees and expenses
of
the Escrow Agent, including the indemnity provided in Section 3(c) hereof.
(f) It
is
understood and agreed that in the event any disagreement among the parties
hereto results in adverse claims or demands being made in connection with the
Escrow Fund, or in the event the Escrow Agent in good faith is in doubt as
to
what action it should take hereunder, the Escrow Agent shall retain the Escrow
Fund until the Escrow Agent shall have received (i) an enforceable final
order of a court of competent jurisdiction which is not subject to further
appeal directing delivery of the Escrow Fund or (ii) a written agreement
executed by the Company directing delivery of the Escrow Fund, in which event
Escrow Agent shall disburse the Escrow Fund in accordance with such order or
agreement. Any court order referred to in (i) above shall be accompanied by
a legal opinion of counsel for the presenting party satisfactory to the Escrow
Agent to the effect that said court order is final and enforceable and is not
subject to further appeal. The Escrow Agent shall act on such court order and
legal opinion without further question. Notwithstanding the foregoing, if Escrow
Agent is in doubt or remains unsure of what action it should take hereunder,
Escrow Agent shall have the right to file an interpleader action and interplead
into a court of competent jurisdiction the Escrow Shares and all documents
and
instruments evidencing, pertaining or relating to the Escrow Shares and any
other item, instrument or document held in or subject to the Escrow Fund and
thereby Escrow Agent shall be released of its duties, responsibilities and
obligations arising hereunder.
(g) The
Escrow Agent may resign at any time by giving written notice thereof to the
other parties hereto. Such resignation shall become effective 10 business days
following the receipt of such notice and Escrow Agent shall deliver, within
10
business days after the effectiveness of its resignation, the Escrow Shares
and
all items, documents and instruments held pursuant to the Escrow Fund to its
successor Escrow Agent. If an instrument of acceptance by a successor Escrow
Agent shall not have been delivered to the Escrow Agent within 10 business
days after the giving of such notice of resignation, the resigning Escrow Agent
may, at the expense of Company, petition any court of competent jurisdiction
for
the appointment of a successor Escrow Agent. If any property subject hereto
is
at any time attached, garnished or levied upon, under any court order, or in
case the payment, assignment, transfer, conveyance or delivery of any such
property shall be stayed or enjoined by any court order, or in case any order,
judgment or decree shall be made or entered by any court affecting such
property, or any part thereof, then in any of such events, the Escrow Agent
is
authorized, in its sole discretion, to rely upon and comply with any such order,
writ, judgment or decree, which it is advised by legal counsel (of its own
choosing) is binding upon it, and if it complies with any such order, writ
judgment or decree, it shall not be liable to any of the parties hereto or
to
any other person, firm or corporation by reason of such compliance, even though
such order, writ, judgment or decree may be subsequently reversed, modified,
annulled, set aside or vacated.
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4. Notices.
Any
certificate or other notice to any party hereto given pursuant to this Agreement
shall be given by fax, first-class mail or nationally recognized express
overnight courier delivery service addressed as follows. Notices shall not
be
deemed to be given until actually received.
If
to the
Escrow Agent:
Tri-State
Title & Escrow, LLC
000
Xxxx
Xxxxxx
X.X.
Xxx
000
Xxxxxxxxxx,
XX 00000
(000)
000-0000
Attention:
Xxxxxxx X. Xxxxxxx
Telephone:
(000) 000-0000
Fax: (000)
000-0000
Email
xxxxxx@xxxxxxxxxxxxx.xxx
If
to the
Company:
DELI
SOLAR (USA), INC
Building
3 Xx. 00
Xxxx
Xxx
Xxxxx Xxxx
Xxxxxxx,
Xxxxx 100071
Attn:
Deli Du
Tel:
00000-00000000000 (Chinese)
Tel:
00000-00000000000
(Chinese and English)
Fax:
00000-00000000
Email:
xxxxxxxxxx@xxxxx.xxx
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with
a copy (which shall not constitute notice) to:
Guzov
Ofsink, LLC
000
Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Attention:
Xxxxxx X. Xxxxxx
Telephone
No.: (000) 000-0000
Facsimile
No.: (000) 000-0000
E-mail:
xxxxxxx@xxxxxxxxx.xxx
5. Incorporation
by Reference of Portions of the Securities Purchase
Agreement.
The
parties agree that the terms of the Escrow Provisions shall be deemed to be
incorporated by reference in this Agreement as if such Sections had been set
forth in its entirety herein. Notwithstanding the immediately preceding
sentence, the Parties agree that the Escrow Agent’s fees and expenses shall be
governed under this Agreement. The Parties acknowledge that the administration
of the Escrow Fund by the Escrow Agent will require reference to both the terms
of this Agreement as well as the terms of such Escrow Provisions. In the event
of any conflict between this Agreement and the Escrow Provisions, the provisions
of the Escrow Provisions shall govern.
6. General.
(a) Controlling
Law; Venue.
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of Virginia without regard to choice of law provisions, statutes,
regulations or principles of this or any other jurisdiction. Each Party hereby
irrevocably submits to the exclusive jurisdiction (including personal
jurisdiction) of the state and federal courts of the State of Virginia for
any
action, suit or proceeding arising in connection with this Agreement, and agrees
that any such action suit or proceeding shall be brought only in such court
(and
waives any objection based on forum non conveniens or any other jurisdiction
to
venue therein). Process
in any proceeding under this Agreement may be served on any Party anywhere
in
the world. Notwithstanding the foregoing, nothing in this Agreement shall
preclude the Investors the right to commence proceedings relating to this
Agreement in any foreign jurisdiction, including the People’s Republic of
China.
(b) Succession
and Assignment.
This
Agreement shall be binding upon and inure to the benefit of the Parties named
herein and their respective successors and permitted assigns. No Party may
assign either this Agreement or any of his or its rights, interests, or
obligations hereunder without the prior written approval of the other Parties
adversely affected by such assignment; provided,
however,
that
any Investor may assign any or all of its rights and interests hereunder to
one
or more of its Affiliates.
(c) Counterparts.
This
Agreement may be executed in one or more counterparts, each of which shall
be
deemed an original but all of which together will constitute one and the same
instrument.
(d) Entire
Agreement.
This
Agreement constitutes the entire agreement among the Parties and supersedes
any
prior understandings, agreements, or representations by or among the Parties,
written or oral, to the extent they related in any way to the subject matter
hereof.
(e) Waivers.
No
amendment of any provision of this Agreement shall be valid unless the same
shall be in writing and signed by all Parties.
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(f) Amendment.
This
Agreement may be amended with the written consent of all Parties; provided,
however,
that if
the Escrow Agent does not agree to an amendment agreed upon by the Company,
it
may resign.
(Remainder
of page intentionally left blank)
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The
Parties have executed and delivered this Agreement as of the date indicated
in
the first sentence of this Agreement.
ESCROW
AGENT:
TRI-STATE
TITLE & ESCROW, LLC
By:
Xxx Xxxxxx
Name:Xxx
X. Xxxxxx
Title:
President
DELI
SOLAR (USA), INC
By:
/s/ Deli Du
Name:
Deli Du
Title:
President and CEO
