STOCK PURCHASE AND ESCROW AGREEMENT
STOCK PURCHASE AND ESCROW AGREEMENT (this "AGREEMENT"), dated as of
December 31, 2003, by and among Professional Traders Fund, LLC (the "INVESTOR"),
a New York limited liability company doing business at 000 Xxxxxxx Xxxxxx, 0xx
Xxxxx, Xxxxxx Xxxx, Xxx Xxxx 00000; Orient Financial Services Limited and Xx. Xx
Wing Kei of 18/F, One International Finance Centre, 0 Xxxxxxxxxxx Xxxxxx,
Xxxxxxx, Xxxx Xxxx together with Emerging Growth Partners, Inc., a Nevada
Corporation (collectively, the "GUARANTORS"); the law firm of Xxxxxxxx &
Worcester LLP (the "ESCROW AGENT"), a Massachusetts Limited Liability
Partnership, having an office at 0000 Xxxxxx xx xxx Xxxxxxxx, 00xx Xxxxx, Xxx
Xxxx, XX 00000.
WITNESSETH:
WHEREAS, ACL Semiconductors Inc. (the "COMPANY"), a Delaware
Corporation, issued to Investors a certain 12% Senior Subordinated Convertible
Note in the principal amount of $250,000 dated December 31, 2003 (the "NOTE")
pursuant to a certain Note Subscription Agreement date December 31, 2003 (the
"SUBSCRIPTION AGREEMENT");
WHEREAS, The Company and Investor entered into a certain side letter
agreement (the "SIDE LETTER") dated December 31, 2003 concerning the Note and
the Subscription Agreement;
WHEREAS, the Guarantors guaranteed payment under the Note in a certain
Limited Guarantee and Security Agreement (the "GUARANTEE") dated December 31,
2003, with the Guarantee obligation collateralized by and limited to 1,200,000
shares (the "SHARES") of common stock of the Company held legally and
beneficially by Guarantors, 700,000 of which are restricted securities (the
"RESTRICTED SHARES") and 500,000 of which are unrestricted and freely tradable
securities (the "UNRESTRICTED SHARES");
WHEREAS, pursuant to Section 1.07 of the Guarantee, Guarantors agreed
to deliver into escrow the Shares;
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants and agreements contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, and upon the terms and subject to the conditions hereinafter set
forth, the parties do hereby agree as follows:
Article I. ESCROW
Section 1.01 Guarantors shall deliver to Escrow Agent the Shares, in
certificated form. The Shares, when delivered, shall be accompanied by a
"medallion signature guarantee" or an equivalent signature guarantee, in which
case the transfer agent for the Shares must confirm in writing that the
equivalent signature guarantee will be accepted.
Section 1.02 Guarantors shall also deliver to Escrow Agent: (i) a
duly executed letter from the Company, or its authorized corporate counsel,
approving the transfer of the Restricted Securities to Investor pursuant to this
Escrow Agreement and (ii) an opinion of counsel, addressed to Investor, in a
form satisfactory to Investor, confirming (a) that Guarantors' transfer
of the Restricted Shares is permissible under Rule 144 and (b) that the
Restricted Shares have been properly registered in Investor's name and (c) that
Investor can transfer the Restricted Shares, subject to the terms of this Escrow
Agreement, pursuant to Rule 144, on the following dates:
(a) 254,800 Restricted Shares, belonging to Orient Financial Services
Limited, on October 14, 2004.
(b) 254,800 Restricted Shares, belonging to Xx. Xx Wing Kei, on October
14, 2004.
(c) 190,400 Restricted Shares, belonging to Emerging Growth Partners,
Inc., on October 14, 2004.
Section 1.03 NO STOP PROVISION. Upon execution of this Agreement the
Company shall deliver to Investor and the Company's stock transfer agent an
irrevocable "No-Stop Letter" that shall state that the Shares are free and clear
of any stop that may be issued by the Company and that the Company shall not
under any event issue a stop on the Shares, and that, absent a court order, the
Transfer Agent must immediately implement any transfer of Shares directed by the
Escrow Agent pursuant to this Agreement.
Section 1.04 Within two business days of Guarantors' satisfaction of
the provisions of Section 1.01, Section 1.02 and Section 1.03, Investor shall
transfer by wire the sum of $250,000, less any deductions authorized under the
Side Letter, to the Company in accordance with the following wiring
instructions:
Fleet Bank
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx
ABA Number 021 202162
For credit to the account of
Reitler Xxxxx LLC - Funding Escrow Account
Account number 9417716224
For further credit to the account of
Atlantic Components
[Please specify originator]
Attn: Xxxxx Xxxxxxxxx
Reference: RSB.
Section 1.05 Escrow Agent will hold the Shares in the name of the
Guarantors until and unless the Shares are released from escrow in accordance
with Section 4.03.
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Article II. REPRESENTATIONS AND WARRANTIES OF GUARANTORS
Guarantors hereby represents and warrants to Investor as follows:
Section 2.01 AUTHORIZATION; ENFORCEMENT. This Agreement has been
duly executed and delivered by Guarantors and is a legal, valid and binding
obligation of Guarantors enforceable against Guarantors in accordance with its
terms.
Section 2.02 NO INSIDER/NO AFFILIATE. For the ninety-day period
prior to the date of this Agreement, none of the Guarantors, nor any company
owned or controlled by the Guarantors, nor any relative of the Guarantors, has
been an officer, director or holder, direct or indirect, of a beneficial
interest of ten percent (10%) or more of the common shares outstanding in The
Company.
Section 2.03 NO CONFLICTS. The execution, delivery and performance
of this Agreement by Guarantors and the consummation by Guarantors of the
transactions contemplated hereby do not and will not (i) conflict with, or
constitute a default, or trigger any rights of termination, amendment,
acceleration or cancellation of, any agreement, indenture or instrument
(evidencing a debt or otherwise) to which any of the Guarantors is a party or by
which any property or asset of Guarantors is bound or affected, or (ii) result
in a violation of any law, rule, regulation, order, judgment, injunction, decree
or other restriction of any court or governmental authority to which any of the
Guarantors is subject (including all applicable United States and state
securities laws and regulations) or by which the Shares are bound or affected.
Section 2.04 CONSENTS AND APPROVALS. Guarantors are not required to
obtain any consent, waiver, authorization or order of, or make any filing or
registration with, any third party, self-regulatory organization, or any court
or other federal, state, local, foreign or other governmental authority in
connection with the execution, delivery and performance by Guarantors of this
Agreement.
Section 2.05 DISCLOSURE. No representation or warranty by Guarantors
contained in this Agreement contains or will contain any untrue statement of a
material fact or omits or will omit to state a material fact necessary in order
to make the statements contained herein or therein not misleading in light of
the circumstances under which they were made.
Section 2.06 SHARES ACQUIRED.
(a) Guarantor Orient Financial Services Limited represents and warrants
that it lawfully acquired 956,666 Restricted Shares on October 14,
2003 and that the Shares were fully paid for on that date and have
been owned continuously since then.
(b) Guarantor Xx. Xx Wing Kei represents and warrants that he lawfully
acquired 956,666 Restricted Shares on October 14, 2003 and that the
Shares were fully paid for on that date and have been owned
continuously since then.
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(c) Guarantor Emerging Growth Partners, Inc. represents and warrants that
it lawfully acquired 706,666 Restricted Shares on October 14, 2003 and
that the Shares were fully paid for on that date and have been owned
continuously since then.
Section 2.07 ABSENCE OF LIENS AND ENCUMBRANCES. Guarantors represents
that as of the date of this Agreement, the Shares are free and clear of all
liens and encumbrances, and have not been sold, assigned, pledged or otherwise
conveyed to a third party.
Article III. REPRESENTATIONS AND WARRANTIES OF INVESTOR
Investor hereby represents and warrants to Guarantors as follows:
Section 3.01 AUTHORITY OF INVESTOR. Investor has the legal capacity
and power to execute, deliver and perform this Agreement and to consummate the
contemplated transaction. This Agreement has been duly and validly executed and
delivered by Investor and is the legal, valid and binding obligation of
Investor, enforceable against him in accordance with its terms.
Section 3.02 NO CONFLICTS. The execution, delivery and performance
by Investor of this Agreement and the consummation of the contemplated
transactions will not conflict with or violate (i) any provision of law, rule or
regulation, or (ii) any order, judgment or decree applicable to Investor or
binding upon its assets or properties.
Section 3.03 CONSENTS AND APPROVALS. Investor is not required to
obtain any consent, waiver, authorization or order of, or make any filing or
registration with, any third party or any court or other federal, state, local,
foreign or other governmental authority in connection with the execution,
delivery and performance by Investor of this Agreement.
Article IV. ESCROW AGREEMENT--ESCROW AGENT
Section 4.01 DELIVERY OF SHARES. In accordance with Section 1.01 of
this Agreement, Guarantors shall deliver to the Escrow Agent the physical
certificates evidencing the Shares.
Section 4.02 INTENTION TO CREATE ESCROW OVER ESCROWED SHARES.
Investor and Guarantors intend that the Shares be held in escrow by the Escrow
Agent. Escrow Agent shall hold and release the escrowed Shares only in
accordance with the terms and conditions of this Agreement.
Section 4.03 RELEASE OF ESCROW. The Escrow Agent shall release the
Shares as follows:
(a) In accordance with Section 1.07 of the Guarantee, and notwithstanding
any provision to the contrary in the Note, the Guarantee, the
Subscription Agreement, and the Side Letter, Investor has the right,
in its sole and absolute discretion, to elect to withdraw Shares in
connection with its conversion rights under the Note, in part or in
whole, from the Shares in Escrow, regardless of whether a default has
occurred, and as if and in lieu of the Company delivering Common Stock
in satisfaction of its obligations under Section 8 of the Note. If
Investor makes such an election under this Section 4.03(a), Investor
shall receive from Escrow, in its sole and absolute discretion, either
Restricted or Unrestricted
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Shares, on the same basis as the Company would have had to have
delivered Common Stock under Section 8 of the Note, and for each such
Share delivered from Escrow, the Company shall be relieved
concomitantly of its obligation to deliver Common Stock on a
share-for-share basis under Section 8 of the Note. Investor shall
notify the Company of an election under this Section 4.03(a) in the
Notice provided pursuant to Section 8(c) of the Note, with a copy of
such Notice to be provided to the Escrow Agent and the Stock Escrow
Agent. Nothing in this Section 4.03 shall act to limit the
registration rights of the Investor as fully set for in Section vi of
the Side Letter or relieve the Company from any of its obligations
regarding registration of the Shares.
(b) Any objection by the Company to the release of Shares from Escrow in
accordance with Section 4.03(a) must be delivered, in accordance with
Section 5.08(b), to the Escrow Agent within two (2) business days of
the date of such Notice. If the Escrow Agent does NOT receive such
objection within the time provided, time being of the essence, it
shall release the Shares in accordance with the Notice. If the Escrow
Agent receives a timely objection, it shall retain the Shares subject
to further written instructions signed by the Company and the Investor
or subject to any dispute resolution provided under Section 4.05. For
purposes of this provision, a Notice shall not be deemed to have been
delivered to the Escrow Agent on a particular day, if it is received
by the Escrow Agent after 5:00 p.m. New York time.
(c) The Shares shall be held in escrow by the Escrow Agent until the
Company has satisfied all of its obligations under the Note, the
Guarantee, the Subscription Agreement and the Side Letter. The Escrow
Agent may not return to the Guarantors the remainder of the Shares
held in escrow pursuant to this Escrow Agreement unless and until they
are notified in writing by all parties with a direction to do so. Any
dispute as to the return of the Shares to the Guarantors shall be
resolved in accordance with Section 4.05. It shall be the Guarantors'
sole responsibility to allocate the return of shares, if any, as among
them.
Section 4.04 DUTIES AND RESPONSIBILITIES OF THE ESCROW AGENT. The
duties and responsibilities of the Escrow Agent shall be subject to the
following terms and conditions:
(a) Investor and Guarantors acknowledge and agree that the Escrow Agent
(i) shall be obligated only for the performance of such duties as are
specifically assumed by the Escrow Agent, respectively, pursuant to
this Agreement; (ii) may rely on and shall be protected in acting or
refraining from acting upon any written notice, instruction,
instrument, statement, request or document furnished hereunder and
believed by Escrow Agent in good faith to be genuine and to have been
signed or presented by the proper person or party, without being
required to determine the authenticity or correctness of any fact
stated therein or the propriety or validity or the service thereof,
and, without limiting the foregoing, the Escrow Agent may rely on
faxed copies of signatures as if they were originals and may rely on
e-mailed communications, as if they were written; (iii) may assume
that any person purporting to give notice or make any statement or
execute any document in connection with the provisions hereof has been
duly authorized to do so, and shall be under no obligation to verify
or compare signatures; (iv) shall not be under any duty to give the
property held by the Escrow Agent, respectively, any greater degree of
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care beyond what they ordinarily use for their own similar property;
and (v) may retain and consult with counsel with respect to any issues
under this Agreement, at the Investor's and Guarantors' joint expense,
and their reliance on the opinion of such counsel shall be deemed to
be full and complete authorization and protection in respect of any
action taken, suffered or omitted by the Escrow Agent, respectively,
hereunder in good faith and in accordance with the opinion of such
counsel.
(b) Guarantors and Investor acknowledge that the Escrow Agent is acting
solely as a stakeholder at Guarantors' and Investor's request and that
the Escrow Agent shall not be liable for any action taken in good
faith and believed by them to be authorized or within the rights or
powers conferred by this Agreement. Investor and Guarantors, jointly
and severally, agree to indemnify and hold harmless the Escrow Agent
and any of its partners, employees, agents and representatives for any
action taken or omitted to be taken by them or any of them hereunder,
including the fees of outside counsel and other costs and expenses of
defending itself against any claim or liability under this Agreement,
except in the case of gross negligence or willful misconduct.
(c) Guarantors and Investor agree that in any lawsuit, action or other
legal proceeding arising out of or relating to this Agreement,
including an action against the Escrow Agent, Guarantors and Investor
shall pay their indemnification obligations to the Escrow Agent for
attorneys' fees and costs, in equal shares and in advance (to be
supplemented thereafter on an on-going basis), regardless of the
nature of the allegations against the Escrow Agent. Escrow Agent shall
not be required to return any such indemnification amounts unless it
is conclusively determined by a court of competent jurisdiction that
it acted with gross negligence or engaged in willful misconduct.
(d) The Escrow Agent does not have and will not have any interest in the
Shares, but is serving only as escrow agent, having only possession
thereof. The Escrow Agent shall not be liable for any loss resulting
from the making or retention of any investment in accordance with this
Escrow Agreement.
(e) This Agreement sets forth exclusively the duties of the Escrow Agent
with respect to any and all matters pertinent thereto and no implied
duties or obligations shall be read into this Agreement.
(f) These provisions of Section 4.04 shall survive the resignation of the
Escrow Agent or the termination of this Agreement.
Section 4.05 DISPUTE RESOLUTION: JUDGMENTS. Resolution of disputes
arising under this Agreement shall be subject to the following terms and
conditions:
(a) If any dispute shall arise with respect to the delivery, ownership,
right of possession or disposition of the Shares or Funds in escrow,
or if the Escrow Agent shall in good faith be uncertain as to its
duties or rights hereunder, the Escrow Agent shall be authorized,
without liability to anyone, but shall be under no duty, to (i)
refrain from taking any action other than to continue to hold the
Shares pending receipt of a joint written instruction from Investor
and Guarantors, or (ii) deposit the Shares with any court of
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competent jurisdiction in the State of New York, in which event the
Escrow Agent shall give written notice thereof to Investor and
Guarantors and shall thereupon be relieved and discharged from all
further obligations pursuant to this Agreement. The Escrow Agent may,
but shall be under no duty to, institute or defend any legal
proceedings, which relate to the Shares.
(b) The Escrow Agent is hereby expressly authorized to comply with and
obey any Court order, and may, in its sole and absolute discretion
elect to obey any such order without waiting for Guarantors of
Investor to appeal such ruling, move for a stay, or seek
reconsideration or rehearing. In case the Escrow Agent obeys or
complies with a Court Order, the Escrow Agent shall not be liable to
Investor and Guarantors or to any other person, firm, corporation or
entity by reason of such compliance.
Article V. MISCELLANEOUS
Section 5.01 LAW GOVERNING THIS AGREEMENT. Any dispute, whether in
contract or tort, relating to or arising from this Agreement shall be governed
by and construed in accordance with the laws of the State of New York, without
regard to principles of conflicts of laws. Any such dispute shall be brought
exclusively in a state or federal court situated in New York County, New York.
The parties executing this Agreement agree to submit to the exclusive
jurisdiction of such courts, waive any objections on forum non conveniens or
similar grounds, and waive trial by jury.
Section 5.02 CONSENT TO SERVICE OF PROCESS BY CERTIFIED MAIL. The
parties to this Agreement consent to service of any process in connection with
this Agreement, by certified mail, provided that the certified mailing is made
in accordance with the Notice provisions of this Agreement as set forth in
Section 5.08, below. It is the duty of each party hereunder to advise the other
parties of any change of address.
Section 5.03 ATTORNEYS' FEES. With respect to any dispute arising
under this Agreement as between the Investor and the Guarantors, the prevailing
party (which shall be the party which receives an award most closely resembling
the remedy or action sought) shall be entitled to recover from the other party
its reasonable attorneys' fees and costs. Under no circumstances can the Escrow
Agent be liable for Guarantors' or Investor's attorneys' fees or costs.
Section 5.04 PROVISIONS SEPARABLE. In the event that any provision
of this Agreement is invalid or unenforceable under any applicable statute or
rule of law, then such provision shall be deemed inoperative to the extent that
it may conflict therewith and shall be deemed modified to conform with such
statute or rule of law. Any such provision which may prove invalid or
unenforceable under any law shall not affect the validity or enforceability of
any other provision of the Agreement.
Section 5.05 ENTIRE AGREEMENT. This Agreement constitutes the sole
understanding of the parties with respect to the subject matter hereof and
supersedes all other agreements, written or oral, between the parties with
respect thereto.
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Section 5.06 SUCCESSORS AND ASSIGNS. The terms and conditions of
this Agreement shall inure to the benefit of and be binding upon the respective
successors and assigns of the parties hereto; provided, however, that neither
this Agreement nor any of the rights or obligations of the parties hereto shall
be assignable by any party hereto without the prior written consent of the other
parties. The Escrow Agent shall be deemed an intended third-party beneficiary of
this Agreement.
Section 5.07 MODIFICATION AND WAIVER. No amendment, modification or
alteration of the terms or provisions of this Agreement shall be binding unless
the same shall be in writing and duly executed by the parties hereto, except
that any of the terms or provisions of this Agreement may be waived in writing
at any time by the party which is entitled to the benefits of such waived terms
or provisions. No waiver of any of the provisions of this Agreement shall be
deemed to or shall constitute a waiver of any other provision hereof (whether or
not similar). No delay on the part of any party in exercising any right, power
or privilege hereunder shall operate as a wavier thereof.
Section 5.08 NOTICES. Any notice, request, instruction or other
document to be given hereunder by any party hereto, or by the Escrow Agent, to
any other party shall be in writing and shall be deemed to have been duly given
(a) upon receipt, if delivery is (i) in person, (ii) by electronic facsimile
transmission or e-mail (provided a copy is concurrently mailed), (iii) by
overnight courier, (b) on acknowledgement of receipt, if delivery is by e-mail
and the recipient responds by e-mail acknowledging receipt (a replied to e-mail
with the original message's text shall be deemed such an acknowledgement); and
(c) three days after mailing, if delivery is by certified mail, return receipt
requested, postage prepaid, in each case addressed as follows:
(a) if to Investor: Professional Traders Fund, LLC, 000 Xxxxxxx Xxx.,
Xxxxx 000, Xxxxxx Xxxx, Xxx Xxxx 00000, Attention: Xxxx X. Xxxxxxx,
Telecopier: 000-000-0000; e-mail: XXXXXXXX@XXXXXXXXXXXXXXXXXXXXX.XXX;
(b) if to Escrow Agent to: Xxxxxxxx & Worcester LLP, 0000 Xxxxxx xx xxx
Xxxxxxxx, 00xx Xxxxx, Xxx Xxxx, XX 00000, Attn: Xxxxxx X. Xxxxxxx;
Telecopier: 000-000-0000; e-mail: XXXXXXXX@XXXXX.XXX.
(c) If to the Company and the Guarantors to: Reitler Xxxxx LLC, 000 Xxxxx
Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxxx Xxxxxx
Xxxxx; Telecopy: (000) 000-0000; XXXXXX@XXXXXXXXXXXX.XXX.
Section 5.09 APPOINTMENT OF ATTORNEY-IN-FACT. For purposes of any
notices or instructions under this Agreement, the Guarantors appoint the Company
as their attorney-in-fact. The Investor and the Escrow Agent shall have no
obligation to communicate with or take direction from the Guarantors, unless and
until they receive actual notice of the revocation of this appointment.
Section 5.10 COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall for all purposes be deemed to be an
original and all of which shall constitute the same instrument.
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Section 5.11 HEADINGS. Headings used in this Agreement are for
convenience only, and are not a part of the Agreement, nor can they be used to
assist in the interpretation of this Agreement.
Section 5.12 SURVIVAL. The provisions of Article V shall survive
termination of this Agreement.
[INTENTIONALLY BLANK]
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IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed on its behalf as of the date first above written.
PROFESSIONAL TRADERS FUND, LLC,
Investor
By: /S/ XXXX X. XXXXXXX
--------------------------------
Name: Xxxx X. Xxxxxxx
Title: Managing Member
XXXXXXXX & WORCESTER LLP, Escrow Agent
By: /S/ XXXXXX X. XXXXXXX
--------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Attorney
ACL SEMICONDUCTORS INC.
By: /S/ XXXXX-LUNG XXXX
--------------------------------
Name: Xxxxx-Xxx Xxxx
Title: Chief Executive Officer
THE GUARANTORS:
ORIENT FINANCIAL SERVICES LIMITED
By: /S/ XXXX X. XXXXXXXX
--------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Director
/S/ LI WING KEI
--------------------------------
LI WING KEI
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EMERGING GROWTH PARTNERS, INC.
By: /S/ XXXXX XXXXX
--------------------------------
Name: Xxxxx Xxxxx
Title:
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