Exhibit 10.2
ESCROW AGREEMENT
This Escrow Agreement (the "Agreement"), entered into as of this 25th
day of January, 2005, is by and among Basic Empire Corporation, a Delaware
corporation (the "Company"), each of the purchasers of shares of the Company's
common stock (the "Shares") identified below (collectively, the "Purchasers")
and Securities Transfer Corporation (hereinafter referred to as "Escrow Agent").
RECITALS
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WHEREAS, the Company and the Purchasers have entered into a Stock
Purchase Agreement (the "Purchase Agreement") pursuant to which each Purchaser
has agreed to purchase from the Company, and the Company has agreed to sell to
each Purchaser, the number of Shares identified therein;
WHEREAS, pursuant to Section 3 of the Purchase Agreement, the Company
and the Purchasers have agreed to establish an escrow on the terms and
conditions set forth in this Agreement;
WHEREAS, the Escrow Agent has agreed to act as escrow agent pursuant to
the terms and conditions of this Agreement; and
WHEREAS, all capitalized terms used but not defined herein shall have
the meanings assigned them in the Purchase Agreement which is attached hereto as
Exhibit A.
AGREEMENT
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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. Each Purchaser and the Company hereby
appoints Securities Transfer Corporation as Escrow Agent to act in accordance
with the Purchase Agreement and the terms and conditions set forth in this
Agreement, and Escrow Agent hereby accepts such appointment and agrees to act in
accordance with such terms and conditions.
2. Establishment of Escrow. The Purchase Price for the transaction
shall be deposited with the Escrow Agent in immediately available funds by wire
transfer or cashiers check at Closing (the "Escrow Funds").
3. Segregation of Escrow Funds. The Escrow Funds shall be segregated
from the assets of Escrow Agent and held in trust for the benefit of the Company
and the Purchasers in accordance herewith.
4. Receipt and Investment of Funds.
(a) Escrow Agent agrees to place the Escrow Funds in a non-interest
bearing and federally insured depository account. Subject to Section 7.3 hereof,
Escrow Agent shall have no liability for any loss resulting from the deposit of
the Escrow Funds.
(b) The Escrow Agent shall cause to be prepared all income and other
tax returns and reports that the Escrow Agent, in its sole discretion, deems
necessary or advisable in order to comply with all tax and other laws, rules and
regulations applicable to the Escrow Funds. The parties agree to provide the
Escrow Agent with certified tax identification numbers for each individual
entitled to distributions from the Escrow Fund by furnishing appropriate forms
W-9 (or Forms W-8, in the case of non-U.S. persons) and other forms and
documents that the Escrow Agent may reasonably request within twenty (20) days
after the date of such request.
5. Escrow Termination Date; Disbursement of the Escrow Funds.
This Agreement shall terminate upon (i) receipt of written notice
signed by the Company and each Purchaser confirming the filing of the
Registration Statement relating to the Shares required to be filed by the
Company under the Purchase Agreement, (ii) disbursement of the Chinamerica
Expenses (as defined below), (iii) disbursement of the Program Escrow Agreement,
and (iv) disbursement of the Remaining Balance (the "Escrow Termination Date");
provided however, that the Escrow Termination Date may be extended by joint
written instructions to Escrow Agent signed by the Company and each Purchaser.
On the Escrow Termination Date, Escrow Agent shall disburse the Escrow Funds
less the Program Funds (i.e. $250,000) under the Purchase Agreement and less up
to $15,000 in expenses payable to Chinamerica Fund, LLP ("Chinamerica") or
Chinamerica's managing partner upon submission by such entity of a written
expense report (the "Chinamerica Expenses"), and release the balance in the
amount of $735,000, to the Company as set forth in Section 2 of the Purchase
Agreement (the "Remaining Balance"). The Program Funds shall be held by the
Escrow Agent pending execution of a separate escrow agreement among the Escrow
Agent, the Company and each Purchaser providing for disbursement of such funds
(the "Program Escrow Agreement"). Upon the Escrow Termination Date all of Escrow
Agent's liabilities and obligations in connection with the Escrow Funds shall
terminate
6. Interpleader. Should any controversy arise among the parties hereto
with respect to this Agreement or with respect to the right to receive the
Escrow Funds, Escrow Agent shall have the right to consult counsel and/or to
institute an appropriate interpleader action to determine the rights of the
parties. Escrow Agent is also hereby authorized to institute an appropriate
interpleader action upon receipt of a written letter of direction executed by
the parties so directing Escrow Agent. If Escrow Agent is directed to institute
an appropriate interpleader action, it shall institute such action not prior to
thirty (30) days after receipt of such letter of direction and not later than
sixty (60) days after such date. Any interpleader action instituted in
accordance with this Section 6 shall be filed in any court of competent
jurisdiction in Dallas County, Texas, and the portion of the Escrow Funds in
dispute shall be deposited with the court and in such event Escrow Agent shall
be relieved of and discharged from any and all obligations and liabilities under
and pursuant to this Agreement with respect to that portion of the Escrow Funds.
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7. Exculpation and Indemnification of Escrow Agent.
(a) Escrow Agent is not a party to, and is not bound by or charged with
notice of any agreement out of which this escrow may arise. Escrow Agent acts
under this Agreement as a depositary only and is not responsible or liable in
any manner whatsoever for the sufficiency, correctness, genuineness or validity
of the subject matter of the escrow, or any part thereof, or for the form or
execution of any notice given by any other party hereunder, or for the identity
or authority of any person executing any such notice or depositing the Escrow
Funds. Escrow Agent will have no duties or responsibilities other than those
expressly set forth herein. Escrow Agent will be under no liability to anyone by
reason of any failure on the part of any party hereto (other than Escrow Agent)
or any maker, endorser or other signatory of any document to perform such
person's or entity's obligations hereunder or under any such document. Except
for this Agreement and instructions to Escrow Agent pursuant to the terms of
this Agreement, Escrow Agent will not be obligated to recognize any agreement
between or among any or all of the persons or entities referred to herein,
notwithstanding its knowledge thereof.
(b) Escrow Agent will not be liable for any action taken or omitted by
it, or any action suffered by it to be taken or omitted, in good faith and in
the exercise of its own best judgment, and may rely conclusively on, and will be
protected in acting upon, any order, notice, demand, certificate, or opinion or
advice of counsel (including counsel chosen by Escrow Agent), statement,
instrument, report or other paper or document (not only as to its due execution
and the validity and effectiveness of its provisions, but also as to the truth
and acceptability of any information therein contained) which is reasonably
believed by Escrow Agent to be genuine and to be signed or presented by the
proper person or persons. The duties and responsibilities of the Escrow Agent
hereunder shall be governed solely by the express provisions of this Agreement
and no other or further duties or responsibilities shall be implied, including,
but not limited to, any obligation under or imposed by any laws of the State of
Texas upon fiduciaries.
(c) Escrow Agent will be indemnified and held harmless, jointly and
severally, by the Company and the Purchasers from and against any expenses,
including reasonable attorneys' fees and disbursements, damages or losses
suffered by Escrow Agent in connection with any claim or demand, which, in any
way, directly or indirectly, arises out of or relates to this Agreement or the
services of Escrow Agent hereunder; except, that if Escrow Agent is guilty of
willful misconduct, fraud or gross negligence under this Agreement, then Escrow
Agent will bear all losses, damages and expenses incurred by it, the Company and
each Purchaser, arising as a result of such willful misconduct, fraud or gross
negligence. Promptly after the receipt by Escrow Agent of notice of any such
demand or claim or the commencement of any action, suit or proceeding relating
to such demand or claim, Escrow Agent will notify the other parties hereto in
writing. For the purposes hereof, the terms "expense" and "loss" will include
all amounts paid or payable to satisfy any such claim or demand, or in
settlement of any such claim, demand, action, suit or proceeding settled with
the express written consent of the parties hereto, and all costs and expenses,
including, but not limited to, reasonable attorneys' fees and disbursements,
paid or incurred in investigating or defending against any such claim, demand,
action, suit or proceeding. The provisions of this Section 7 shall survive the
termination of this Agreement.
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8. Compensation of Escrow Agent. The Company will pay Escrow Agent an
amount equal to Escrow Agent's standard fee schedule for all services rendered
by Escrow Agent hereunder. A copy of the Escrow Agent's standard fee schedule is
attached hereto as Exhibit B.
9. 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 all monies and property held hereunder upon
presentation of a document appointing the new escrow agent and evidencing its
acceptance thereof. If, by the end of the twenty (20) day period following the
giving of notice of resignation by Escrow Agent, the Company shall have failed
to appoint a successor escrow agent, Escrow Agent may interplead the Escrow
Funds into the registry of any court having jurisdiction.
10. Method of Distribution by Escrow Agent. All disbursements by Escrow
Agent to a party to this Agreement will be made by wire transfer of immediately
available funds to an account designated in writing by the party to receive any
such payment.
11. Records. Escrow Agent shall maintain accurate records of all
transactions hereunder. Promptly after the termination of this Agreement or as
may reasonably be requested by the parties hereto from time to time before such
termination, Escrow Agent shall provide the parties hereto, as the case may be,
with a complete copy of such records, certified by Escrow Agent to be a complete
and accurate account of all such transactions. The authorized representatives of
each of the parties hereto shall have access to such books and records at all
reasonable times during normal business hours upon reasonable notice to Escrow
Agent.
12. Notice. All notices, communications and instructions required or
desired to be given under this Agreement must be in writing and shall be deemed
to be duly given if sent by registered or certified mail, return receipt
requested, or overnight courier to the following addresses:
If to Escrow Agent: Securities Transfer Corporation
0000 Xxxxxx Xxxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Xxxxx Xxxxxx
If to the Company: Basic Empire Corporation
Room 511, 5 Floor, Wing Xx Xxxxx
00 Xxxx Xxxx, Tsim Sha Xxxx, XX, Hong Kong
Attention: Xxxxx Xx
If to the Purchasers: Addresses as set forth on the signature page hereto
or to such other address and to the attention of such other person as any of the
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above may have furnished to the other parties in writing and delivered in
accordance with the provisions set forth above.
13. Execution in Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
14. Assignment and Modification. This Agreement and the rights and
obligations hereunder of any of the parties hereto may not be assigned without
the prior written consent of the other parties hereto. Subject to the foregoing,
this Agreement will be binding upon and inure to the benefit of each of the
parties hereto and their respective successors and permitted assigns. No other
person will acquire or have any rights under, or by virtue of, this Agreement.
No portion of the Escrow Funds shall be subject to interference or control by
any creditor of any party hereto, or be subject to being taken or reached by any
legal or equitable process in satisfaction of any debt or other liability of any
such party hereto prior to the disbursement thereof to such party hereto in
accordance with the provisions of this Agreement. This Agreement may be changed
or modified only in writing signed by all of the parties hereto.
15. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS APPLICABLE TO CONTRACTS MADE
AND TO BE PERFORMED THEREIN, EXCEPT THAT THE PORTIONS OF THE TEXAS TRUST CODE,
SECTION 111.001, ET SEQ. OF THE TEXAS PROPERTY CODE, CONCERNING FIDUCIARY DUTIES
AND LIABILITIES OF TRUSTEES SHALL NOT APPLY TO THIS AGREEMENT. THE PARTIES
EXPRESSLY WAIVE SUCH DUTIES AND LIABILITIES, IT BEING THEIR INTENT TO CREATE
SOLELY AN AGENCY RELATIONSHIP AND HOLD THE ESCROW AGENT LIABLE ONLY IN THE EVENT
OF ITS WILLFUL MISCONDUCT, FRAUD, OR GROSS NEGLIGENCE. ANY LITIGATION CONCERNING
THE SUBJECT MATTER OF THIS AGREEMENT SHALL BE EXCLUSIVELY PROSECUTED IN THE
COURTS OF DALLAS COUNTY, TEXAS, AND ALL PARTIES CONSENT TO THE EXCLUSIVE
JURISDICTION AND VENUE OF THOSE COURTS.
16. Headings. The headings contained in this Agreement are for
convenience of reference only and shall not affect the construction of this
Agreement.
17. Attorneys' Fees. If any action at law or in equity, including an
action for declaratory relief, is brought to enforce or interpret the provisions
of this Agreement, the prevailing party shall be entitled to recover reasonable
attorneys' fees from the other party, 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.
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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date set forth opposite their respective names.
COMPANY: BASIC EMPIRE CORPORATION
By:
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Its:
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ESCROW AGENT: SECURITIES TRANSFER CORPORATION
By:
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Its:
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PURCHASERS: PURCHASERS:
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Address
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Address
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EXHIBIT A
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PURCHASE AGREEMENT
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EXHIBIT B
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STANDARD FEE SCHEDULE
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