ESCROW AGREEMENT
Exhibit
10.5
THIS
ESCROW AGREEMENT (“Agreement”) is made as of October 23, 2007 by and between
International Imaging Systems, Inc. (“ the “Company”), each of the Purchasers
whose names are set forth on Exhibit A to the Series A Convertible Preferred
Stock Purchase Agreement dated this same date (individually, a “Purchaser”
and
collectively, the “Purchasers”
and
together with the Company, the “Parties”)and Loeb & Loeb LLP, with offices
at 000 Xxxx Xxxxxx, Xxx Xxxx, XX 00000 (the “Escrow Agent”).
RECITALS:
|
(1)
|
Pursuant
to that certain Series A Preferred Stock Purchase Agreement, dated
as of
October 23, 2007 by and among the Company and the Purchasers (the
“Purchase Agreement”), a copy of which is attached hereto as Exhibit
A
and incorporated herein by reference, the Purchasers purchased shares
of
the Company’s Series A Preferred Stock in the amount of $10,000,000 (the
“Gross Proceeds”). Capitalized terms used in this Agreement without
definition, have the meaning assigned to those terms in the Purchase
Agreement;
|
|
(2)
|
To
induce the Purchasers to enter into the Purchase Agreement, the Company
agreed to deposit $200,000 of the Gross Proceeds (the “Escrow Funds”) into
an escrow account at the Closing, to be held by the Escrow Agent
for
disbursement in accordance with the terms and conditions set forth
herein;
|
|
(3)
|
This
Agreement constitutes the Escrow Agreement referred to in the Purchase
Agreement pursuant to which the Escrow Agent shall receive and disburse
the Escrow Funds.
|
NOW,
THEREFORE, in consideration of the covenants and mutual promises contained
herein and other good and valuable consideration, the receipt and legal
sufficiency of which are hereby acknowledged and intending to be legally bound
hereby, the parties agree as follows:
ARTICLE
1
TERMS
OF
THE ESCROW
1.1 Appointment
of Escrow Holder.
The
parties hereby agree to have Loeb & Loeb LLP act as Escrow Agent whereby the
Escrow Agent shall receive the Escrow Funds in escrow and distribute the same
as
set forth in this Agreement.
1.2 Escrow
Deposit
(a) In
accordance with the terms of the Purchase Agreement, immediately after the
Closing, the Escrow Funds shall be wired to the Escrow Agent; and,
1
Exhibit
10.5
(b) The
Escrow Agent shall hold the Escrow Funds at all times until such Escrow Funds
are disbursed in accordance herewith.
1.3 Escrow
Release
|
(a)
|
If
the Company determines that it needs all or a portion of the Escrow
Funds,
it shall cause its Chief Financial Officer to prepare and execute
a
certificate setting forth, in reasonable detail, the reason such
funds are
needed, the use of such funds and the amount of funds so needed,
and shall
cause copies of such certificate to be delivered to the Purchasers
promptly after such determination (the “Funds Notice”); provided however,
that in no event
shall the Company need or use the Escrow Funds for any reason other
than
in connection with investor relations and public relations services
or
activities. The Purchasers shall have five (5) Business Days, as
hereinafter defined, from the date of the Funds Notice to notify
the
Company that it objects to the use of funds as set forth in the Funds
Notice, by delivering a written letter of objection to the Company
(the
“Objection Letter”). If Company does not receive an Objection Letter by
the seventh (7th)
Business Day following the date of the Funds Notice, it shall submit
a
Release Notice, as hereinafter defined to the Escrow Agent, signed
only by
any or all of the authorized signatories of the Company as specified
in
Exhibit B hereto and only for such amounts and for such purpose as
specified in the Funds Notice sent to the Purchaser without objection.
In
no event may the Company submit a Release Notice to the Escrow Agent
until
it submits a Funds Notice to the Purchaser and does not receive an
Objection Letter in response thereto. Business
Day
means any day except Saturday, Sunday and any day which shall be
a legal
holiday or a day on which banking institutions in the State of New
York
generally are authorized or required by law or other government actions
to
close.
|
|
(b)
|
The
Escrow Agent shall hold the Escrow Funds until such time as it receives
written
instructions in the form of Exhibit A attached hereto and made a
part
hereof, or in a form and substance satisfactory to the Escrow Agent,
signed by the Parties directing the Escrow Agent to release the Escrow
Funds as specified therein (the “Release Notice”).
|
|
(c)
|
Upon
receipt of the Release Notice, the
Escrow Agent shall release the Escrow Funds as specified therein.
The
names and true signatures of each individual authorized to act singly
on
behalf of each of the Parties are stated in Exhibit B, which is attached
hereto and made a part hereof. The Parties may each remove or add
one or
more of its authorized signers stated on Exhibit B by notifying the
Escrow
Agent of such change in accordance with this Agreement, which notice
shall
include the true signature for any new authorized
signatories
|
2
Exhibit
10.5
|
(d)
|
If
any Escrow Funds remain in the escrow account after December 31,
2008, the
Escrow Agent shall release all of the funds remaining in the escrow
account to the Company.
|
|
(e)
|
Upon
the Escrow Agent’s completion of its obligations under Sections 1.3, this
Agreement shall terminate and the Escrow Agent shall have no further
liability hereunder.
|
1.5 This
Agreement may be altered or amended only with the written consent of all of
the
parties hereto. Should any of the Parties attempt to change this Agreement
in a
manner, which, in the Escrow Agent’s discretion, shall be undesirable, the
Escrow Agent may resign as Escrow Agent by notifying the Parties in writing
five
days in advance. In the case of the Escrow Agent’s resignation or removal
pursuant to the foregoing, its only duty, until receipt of notice from the
Parties that a successor escrow agent has been appointed, shall be to hold
and
preserve the Escrow Funds that are in his possession. Upon receipt by the Escrow
Agent of said notice from the Parties of the appointment of a successor escrow
agent, the name of a successor escrow account and a direction to transfer the
Escrow Funds, the Escrow Agent shall promptly thereafter transfer all of the
Escrow Funds that it is still holding in escrow, to said successor escrow agent.
Immediately after said transfer of the Escrow Funds, the Escrow Agent shall
furnish the Parties with proof of such transfer. The Escrow Agent is authorized
to disregard any notices, requests, instructions or demands received by it
from
the Parties after the Escrow Agent promptly transfers all of the Escrow Funds
that it is still holding in escrow, to the above said successor escrow agent.
1.5
The
Escrow Agent shall be reimbursed by the Parties for any reasonable expenses
incurred in the event there is a conflict between the parties and the Escrow
Agent shall deem it necessary to retain counsel, upon whose advice the Escrow
Agent may rely. The Escrow Agent shall not be liable for any action taken or
omitted by him in good faith and in no event shall the Escrow Agent be liable
or
responsible except for the Escrow Agent’s own gross negligence or willful
misconduct. The Escrow Agent has made no representations or warranties to the
Parties in connection with this transaction. The Escrow Agent has no liability
hereunder to either party other than to hold the Escrow Funds and to deliver
them under the terms hereof. Each party hereto agrees to indemnify and hold
harmless the Escrow Agent from and with respect to any suits, claims, actions
or
liabilities arising in any way out of this transaction including the obligation
to defend any legal action brought which in any way arises out of or is related
to this Agreement or the investment being made by Seller. The
Purchasers acknowledge and represent that they are not being represented in
a
legal capacity by Loeb & Loeb LLP and have had the opportunity to consult
with their own legal advisors prior to the signing of this Agreement. The
Purchasers acknowledge that the Escrow Agent is not rendering securities advice
to them with respect to this Agreement. The Escrow Agent is acting as legal
counsel for the Company in connection with the Share Exchange Agreement,
Purchase Agreement and related Transaction Documents and may continue to act
as
legal counsel for the Company, from time to time, notwithstanding its duties
as
the Escrow Agent hereunder. The Purchasers consent to the Escrow Agent acting
in
such capacity as legal counsel for the Company and waive any claim that such
representation represents a conflict of interest on the part of the Escrow
Agent. The Purchasers understand that the Escrow Agent is relying explicitly
on
the foregoing provisions contained in this Section 1.5 in entering into this
Agreement.
3
Exhibit
10.5
1.6 The
Escrow Agent shall be obligated only for the performance of such duties as
are
specifically set forth herein and may rely and shall be protected in relying
or
refraining from acting on any instrument reasonably believed by the Escrow
Agent
to be genuine and to have been signed or presented by the proper party or
parties. The Escrow Agent shall not be personally liable for any act the Escrow
Agent may do or omit to do hereunder as the Escrow Agent while acting in good
faith, and any act done or omitted by the Escrow Agent pursuant to the advice
of
the Escrow Agent's attorneys-at-law shall be conclusive evidence of such good
faith.
1.7 The
Escrow Agent is hereby expressly authorized to disregard any and all warnings
given by any of the parties hereto or by any other person or corporation,
excepting only orders or process of courts of law and is hereby expressly
authorized to comply with and obey orders, judgments or decrees of any court. In
case the Escrow Agent obeys or complies with any such order, judgment or decree,
the Escrow Agent shall not be liable to any of the parties hereto or to any
other person, firm or corporation by reason of such decree being subsequently
reversed, modified, annulled, set aside, vacated or found to have been entered
without jurisdiction.
1.8 The
Escrow Agent shall not be liable in any respect on account of the identity,
authorities or rights of the parties executing or delivering or purporting
to
execute or deliver the Agreement or any documents or papers deposited or called
for hereunder.
1.9 If
the
Escrow Agent reasonably requires other or further documents in connection with
this Agreement, the necessary parties hereto shall join in furnishing such
documents.
1.10 It
is
understood and agreed that should any dispute arise with respect to the Escrow
Funds held by the Escrow Agent hereunder, the Escrow Agent is authorized and
directed in the Escrow Agent's sole discretion (a) to retain in the Escrow
Agent's possession without liability to anyone , the Escrow Funds until such
disputes shall have been settled either by mutual written agreement of the
parties concerned or by a final order, decree or judgment of a court of
competent jurisdiction after the time for appeal has expired and no appeal
has
been perfected, but the Escrow Agent shall be under no duty whatsoever to
institute or defend any such proceedings or (b) to deliver the Escrow Funds
and
any other property and documents held by the Escrow Agent hereunder to a state
or federal court having competent subject matter jurisdiction and located in
the
State of New York in accordance with the applicable procedure
therefor.
4
Exhibit
10.5
ARTICLE
2
MISCELLANEOUS
2.1
No
waiver
of any breach of any covenant or provision herein contained shall be deemed
a
waiver of any preceding or succeeding breach thereof, or of any other covenant
or provision herein contained. No extension of time for performance of any
obligation or act shall be deemed any extension of the time for performance
of
any other obligation or act.
2.2 This
Agreement shall be binding upon and shall inure to the benefit of the permitted
successors and assigns of the parties hereto.
2.3
This
Agreement is the final expression of, and contains the entire agreement between,
the parties with respect to the subject matter hereof and supersedes all prior
understandings with respect thereto. This Agreement may not be modified,
changed, supplemented or terminated, nor may any obligations hereunder be
waived, except by written instrument signed by the parties to be charged or
by
its agent duly authorized in writing or as otherwise expressly permitted
herein.
2.4
Whenever
required by the context of this Agreement, the singular shall include the plural
and masculine shall include the feminine. This Agreement may be executed in
two
or more counterparts, all of which taken together shall constitute one
instrument. Execution and delivery of this Agreement by exchange of facsimile
copies bearing the facsimile signature of a party shall constitute a valid
and
binding execution and delivery of this Agreement by such party. Such facsimile
copies shall constitute enforceable original documents.
2.5 The
parties hereto expressly agree that this Agreement shall be governed by,
interpreted under, and construed and enforced in accordance of the laws of
the
State of New York. The parties agree that any dispute arising under or with
respect to or in connection with this Agreement, whether during the term of
this
Agreement or at any subsequent time, shall be resolved fully and exclusively
in
the federal or state courts resident in New York County, New York.
2.6 Any
notice required or permitted hereunder shall be in writing and shall be
effective (a) upon hand delivery by telex (with correct answer back received),
telecopy, email or facsimile at the address or number designated below (if
delivered on a business day during normal business hours where such notice
is to
be received), or the first business day following such delivery (if delivered
other than on a business day during normal business hours where such notice
is
to be received) or (b) sent by commercial overnight courier such as UPS or
Fedex
The addresses for such communications shall be:
|
If
to the Company:
|
International
Imaging Systems, Inc.
c/oXi'an
Baorun Industrial Development Co. Ltd.
Dongxin
Century Square, 7th Floor
Xi'an
East Xxxx Xxxx-tech Industrial Development Park
Shannxi
Province, P.R. China
Attn:
Xx. Xxx Xincheng
Tel:
00 00 00000000
Fax:
00 00 00000000
|
5
Exhibit
10.5
|
with
copies to (which shall not constitute notice):
|
Loeb
& Loeb
000
Xxxx Xxxxxx
Xxx
Xxxx, XX00000
Attn:
Xxxxxxxx X. Xxxxxxxx
Tel:
000.000.0000
Fax:
212.407-4990
|
||
|
If
to any Purchaser:
|
|
||
|
with
copies to
(which
shall not constitute notice):
|
Lesser,
Hunter, Taubman & Taubman
00
Xxxxx Xxxxxx, Xxx 00
Xxx
Xxxx, XX 00000
Attn:
Xxxxx Xxxxxxx
Tel:
212.732-7184
Fax:
212.202-6380
Email:
xxx@xxxxxxx.xxx
|
||
|
If
to the Escrow Agent:
|
Loeb
& Loeb LLP
000
Xxxx Xxxxxx
Xxx
Xxxx, XX 00000
Attention:
Xxxxxxxx X. Xxxxxxxx. Esq.
Telephone
Number: 000-000-0000
Facsimile
Number: 212-4-7-4990
|
2.7 By
signing this Agreement, the Escrow Agent becomes a party hereto only for the
purpose of this Agreement; the Escrow Agent does not become a party to the
Purchase Agreement or any related agreements.
2.8 Each
party acknowledges and agrees that this Agreement shall not be deemed prepared
or drafted by any one party. In the event of any dispute between the Parties
concerning this Agreement, the Parties agree that any rule of construction,
to
the effect that any ambiguity in the language of the Agreement is to be resolved
against the drafting party, shall not apply.
(Signature
Page to Follow)
6
Exhibit
10.5
IN
WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the
date
first set forth above.
Executed:
International
Imaging Systems, Inc.
By:
Name:
Gao Xincheng
Title:
Chief Executive Officer
By:
Name:
Title:
Escrow
Agent
Loeb
& Loeb LLP
By:
Name:
Xxxxxxxx X. Xxxxxxxx
Title:
Partner
7
Exhibit
10.5
Exhibit
A
FORM
OF ESCROW RELEASE NOTICE
Date:
Escrow
Agent
Dear
_________:
In
accordance with the terms of Section 1.3 of the Escrow Agreement dated as of
October__, 2007 (the "Escrow Agreement"), by and among International Imaging
Systems, Inc. (the “Company”), and each of the Purchasers whose names are set
forth on Exhibit
A
to the
Series A Convertible Preferred Stock Purchase Agreement dated October __, 2007
(the “Purchasers,”
and
together with the Company, the “Parties”), the Company hereby notifies the
Escrow Agent that it has submitted a Funds Notice, dated [7 days prior to the
date hereof] to the Purchasers without objection thereto.
PLEASE
DISTRIBUTE FUNDS BY WIRE TRANSFER AS FOLLOWS (wire instructions
attached):
|
Recipient
Information
|
Amount
|
|
Very
truly yours,
INTERNATIONAL
IMAGING SYSTEMS, INC.
By:
Name:
Title:
8
Exhibit
10.5
Exhibit
B
The
Escrow Agent is authorized to accept instructions signed or believed by the
Escrow Agent to be signed by any or all of the following individuals on behalf
of the Company:
|
Name
|
True
Signature
|
|
|
Gao
Xincheng
|
_____________________
|
|
|
Li
Gaihong
|
_____________________
|
9
