MAKE GOOD ESCROW AGREEMENT
EXHIBIT
2
This
Make
Good Escrow Agreement (the “Make Good Agreement”), dated effective as of
September 16, 2008, is entered into by and among ASPEN RACING STABLES, INC.,
a
Nevada corporation (the “Company”), CUI XUEYN (the “Make Good Pledgor”), TRIXY
SASYNIUK-XXXX (the “Indemnitor”) and SECURITIES TRANSFER CORPORATION, as escrow
agent (“Escrow Agent”).
Pursuant
to a Stock Purchase Agreement dated August 15, 2008, Make Good Pledgor
have
acquired from the Company a total of 22,522,500
shares
of common stock, representing control of the Company, and
WHEREAS,
under the Stock Purchase Agreement, Indemnitor has agreed to indemnify Make
Good
Pledgor
against
certain claims and liabilities, and
WHEREAS,
Make Good Pledgor
may be
required to transfer to Indemnitor up to 1,000,0000 shares of common stock
of
the Company, pursuant to the terms of this Make Good Escrow
Agreement.
WHEREAS,
pursuant to the requirements of the Stock Purchase Agreement, the Company,
Indemnitor 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 which are defined in the
Stock
Purchase Agreement shall have the respective meanings given to such terms in
the
Stock Purchase Agreement;
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.
The
Make Good Pledgor,
Indemnitor and the Company hereby appoint Escrow Agent to act as Escrow Agent
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 as Escrow
Agent in accordance with such terms and conditions.
2 Establishment
of Escrow.
At the
Closing, the Make Good Pledgor shall deliver, or cause to be delivered, to
the
Escrow Agent certificates evidencing an aggregate of 1,000,000 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). Also at the Closing the Indemnitor shall surrender
for cancellation a total of 1,000,000 shares outstanding in her name. As used
in
this Make Good Agreement, “Transfer Agent” means Securities Transfer
Corporation, 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.
Make Good Pledgor agrees that the Company will (x) place a stop order on all
Escrow Shares which shall expire on the date the Escrow Shares are delivered
to
the Indemnitor 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 that should be delivered to the Indemnitor are
delivered to the Indemnitor or returned to the Make Good Pledgor , or otherwise
in violation of Section 2.02 of the Stock Purchase Agreement and this Make
Good
Agreement.
33
3 Representations
of Make Good Pledgor.
The
Make Good Pledgor (as to itself and its Escrowed Shares) hereby represents
and
warrants to the Indemnitor 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 Liens. Upon any transfer of Escrow Shares
to
Indemnitor hereunder, Indemnitor will receive full right, title and authority
to
such shares as holders of Common Stock of the Company free and clear of all
liens or restriction other than those imposed by US Federal Securities
laws.
(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 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 or such properties or assets, other than such breaches,
defaults or Liens which would not have a material adverse effect taken as a
whole.
(c) The
Make
Good Pledgor has carefully considered and understands its obligations and rights
under Section 2.02 of the Stock Purchase Agreement and this Make Good Agreement,
and in furtherance thereof (x) has consulted with its legal and other advisors
with respect thereto and (y) hereby forever waives and agrees that it may not
assert any equitable defenses in any Proceeding involving the Escrow
Shares.
4 Disbursement
of Escrow Shares.
The
Escrow Agent will hold the Escrow Shares and release them to Indemnitor or
Make
Good Pledgor
on or
before March 31, 2009, upon determination by audits of the net income of KUN
RUN
Biotechnology LTD, and its consolidated subsidiaries for the year ending
December 31, 2008. Net income shall be determined in accordance with generally
accepted accounting principles, except that there shall be added back to income
any expense resulting from (i) payments to Halter Capital Corp. under the terms
of the Consulting Agreement dated August
15, 2008,
and (ii)
release of the Escrow Shares (the “2008 Income”) to
Make
Good Pledgor.
(a) If
the
2008 Income is equal to or greater than USD 7,000,000, then all of the Escrow
Shares shall be released and returned
to Make
Good Pledgor.
(b) If
the
2008 Income is less than USD 7,000,000, but equal to or greater than USD
6,000,000, then 50% of the Escrow Shares shall be released and issued to
Indemnitor and 50% returned to Make Good Pledgor.
(c) If
the
2008 Income is less than USD 6,000,000, but equal to or greater than USD
5,000,000, then 75% of the Escrow Shares shall be released and issued to
Indemnitor and 25% returned to Make Good Pledgor.
34
(d) If
the
2008 Income is less than USD 5,000,000, then all of the Escrow Shares shall
be
released and issued to Indemnitor.
5 Tax
Information.
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
the Indemnitor. The Company, Make Good Pledgor
and the
Indemnitor understands 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.
6 Notice
of Filings.
The
Company agrees to promptly provide the Make Good Pledgor
written
notice of the filing with the Commission of any financial statements or reports
referenced herein.
7 Escrow
Shares.
If any
Escrow Shares are deliverable to the Indemnitor in accordance with this Make
Good Agreement, (i) the
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
Indemnitor, to the extent not done so in accordance with Section 2, and (ii)
following its receipt of the documents referenced in Section 7(i), the Company
and Escrow Agent covenant and agree to cooperate with the Transfer Agent so
that
the Transfer Agent may promptly reissue such Escrow Shares in the Indemnitor’s
name and deliver the same as provided herein or otherwise directed in writing
by
the Indemnitor. Until such time as (if at all) the Escrow Shares are required
to
be delivered pursuant to the Stock Purchase Agreement and in accordance with
this Make Good Agreement, (i) any dividends payable in respect of the Escrow
Shares and all voting rights applicable to the Escrow Shares shall be retained
by Make Good Pledgor and (ii) should the Escrow Agent receive dividends or
voting materials, such items shall not be held by the Escrow Agent, but shall
be
passed immediately on to the Make Good Pledgor and shall not be invested or
held
for any time longer than is needed to effectively re-route such items to the
Make Good Pledgor. In the event that the Escrow Agent receives a communication
requiring the conversion of the Escrow Shares to cash or the exchange of the
Escrow Shares for that of an acquiring company, the Escrow Agent shall solicit
and follow the written instructions of the Make Good Pledgor;
provided, that the cash or exchanged shares are instructed to be redeposited
into the Escrow Account. The
Make
Good Pledgor
shall be
responsible for all taxes resulting from any such conversion or
exchange.
Assuming
the
Make
Good Pledgor
provides
good and valid title to the Escrow Shares to be transferred and delivered on
behalf of the
Make
Good
Pledgor
to the
Indemnitor hereunder, free and clear of all liens, encumbrances, equities or
claims, the Escrow Agent will ensure that upon delivery of the Escrow Shares,
good and valid title to the Escrow Shares, free and clear of all liens,
encumbrances, equities or claims will pass to the Indemnitor. The Escrow Agent
shall not take any action which could impair Indemnitor’s rights in the Escrow
Shares. The Escrow Agent shall not sell, transfer, assign or otherwise dispose
of (by operation of law or otherwise) or grant any option with respect to any
Escrow Shares prior to the termination of this Agreement.
35
8 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 also is 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 8 shall be filed in any court of competent jurisdiction in the State
of
Texas, 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.
9 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
Nevada 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.
36
(c) The
Company and the
Make
Good Pledgor
each
hereby, jointly and severally, indemnify and hold harmless each of Escrow Agent
and any of its 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 9 shall survive the termination of this Make Good
Agreement, and the resignation or removal of the Escrow Agent.
10 Compensation
of Escrow Agent.
Escrow
Agent shall be entitled to compensation for its services as stated in the fee
schedule attached hereto as Exhibit A, which compensation shall be paid by
the
Company. The fee agreed upon for the services rendered hereunder is intended
as
full compensation for Escrow Agent’s services as contemplated by this Make Good
Agreement; provided, however, that in the event that Escrow Agent renders any
material service not contemplated in this Make Good Agreement, or there is
any
assignment of interest in the subject matter of this Make Good Agreement, or
any
material modification hereof, or if any material controversy arises hereunder,
or Escrow Agent is made a party to any litigation pertaining to this Make Good
Agreement, or the subject matter hereof, then Escrow Agent shall be reasonably
compensated by the Company for such extraordinary services and reimbursed for
all costs and expenses, including reasonable attorney’s fees, occasioned by any
delay, controversy, litigation or event, and the same shall be recoverable
from
the Company. Prior to incurring any costs and/or expenses in connection with
the
foregoing sentence, Escrow Agent shall be required to provide written notice
to
the Company of such costs and/or expenses and the relevancy thereof and Escrow
Agent shall not be permitted to incur any such costs and/or expenses which
are
not related to litigation prior to receiving written approval from the Company,
which approval shall not be unreasonably withheld.
11 Resignation
of Escrow Agent.
At any
time, upon ten (10) Business Days’ written notice to the Company, Indemnitor and
Make Good Pledgor,
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.
37
12 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.
13 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.
14 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.
15 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 the
Indemnitor and Make Good Pledgor.
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,
Indemnitor and Make Good Pledgor.
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, Indemnitor 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 the
Indemnitor. 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.
16 Applicable
Law.
This
Make Good Agreement shall be governed by, and construed in accordance with,
the
internal laws
of the
State of Nevada. The representations and warranties contained in this Make
Good
Agreement shall survive the execution and delivery hereof and any investigations
made by any party. Each party agrees that all legal proceedings concerning
the
interpretations, enforcement and defense of the transactions contemplated by
this Make Good Agreement shall be commenced exclusively in the state and federal
courts sitting in the City of Las Vegas, Nevada (the “Nevada Courts”). Each
party hereto hereby irrevocably submits to the exclusive jurisdiction of the
Nevada Courts for the adjudication of any dispute hereunder or in connection
herewith, and hereby
38
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 Nevada 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.
17 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.
18 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.
19 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]
39
IN
WITNESS WHEREOF, the parties have duly executed this Make Good Agreement as
of
the date set forth opposite their respective names.
COMPANY:
ASPEN
RACING STABLES, INC.
By:
Name:
Title:
Address:
Facsimile:
Attn.:
MAKE
GOOD PLEDGOR:
By:
Cui
Xueyun
Address:
Facsimile:
Attn.:
[REMAINDER
OF THIS PAGE INTENTIONALLY LEFT BLANK
SIGNATURE
PAGE FOR OTHER PARTIES FOLLOWS]
40
ESCROW
AGENT:
SECURITIES
TRANSFER CORPORATION, AS ESCROW AGENT
By:
Name:
Title:
Address: 0000
Xxxxxx Xxxxxxx, Xxxxx 000,
Xxxxxx,
XX 00000
Facsimile:
Attn.:
Xxxxx X. Xxxxxx, Xx.
41
INDEMNITOR:
By:
Trixi
Sasyniuk-Xxxx
Address:
Facsimile:
Attn.:
42
