SECURITIES ESCROW AGREEMENT
THIS
SECURITIES ESCROW AGREEMENT (the
“Agreement”),
dated
August 9, 2007, is entered into by and among Jpak Group, Inc., a Nevada
corporation (f/k/a Rx Staffing, Inc., the “Company”),
Vision Opportunity Master Fund, Ltd., a Cayman Islands company (“Vision”),
QVT
Fund LP, a Cayman Island limited partnership (“QVT”),
Quintessence Fund L.P., a Cayman Island limited partnership (“Quintessence”,
and
together with Vision and QVT, the “Purchasers”),
certain stockholders of the Company set forth on Schedule
A
(the
“Principal
Stockholders”),
and
Xxxxxx Xxxxx Xxxxxxxx & Xxxxxxx LLP, with an address at 0000 Xxxxxx xx xxx
Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (the “Escrow
Agent”).
W
I T N E S S E T H:
WHEREAS,
the Purchasers will be acquiring from the Company shares of Series A convertible
preferred stock (the “Preferred
Shares”),
convertible into shares of the Company’s common stock, par value $0.001 per
share (the “Common
Stock”)
upon
conversion of certain notes held by the Purchasers (the “Notes”);
WHEREAS,
as an inducement to the Purchasers to acquire the Preferred Shares, the
Principal Stockholders have agreed to place the Escrow Shares (as hereinafter
defined) into escrow for the benefit of the Purchasers in the event the Company
fails to achieve net income for the fiscal year ended June 30, 2008
(“Fiscal
2008”)
of
$3.955 million (the “Fiscal
2008 Performance Threshold”),
as
reported by the Company in its audited financial statements for Fiscal 2008
prepared in accordance with US GAAP (the “Fiscal
2008 Financial Statements”),
as
more fully described in Section 1.3; and
WHEREAS,
the Company and the Purchasers have requested that the Escrow Agent hold the
Escrow Shares on the terms and conditions set forth in this Agreement and the
Escrow Agent has agreed to act as escrow agent pursuant to the terms and
conditions of this Agreement.
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
I
TERMS
OF
THE ESCROW
1.1 The
parties hereby agree to establish an escrow account with the Escrow Agent
whereby the Escrow Agent shall hold the Escrow Shares as contemplated by this
Agreement.
1.2 Upon
the
execution of this Agreement, the Principal Stockholders shall deliver to the
Escrow Agent stock certificates evidencing an aggregate of 7,200,000 shares
of
Common Stock, along with undated stock powers executed in blank with signature
medallion guaranteed, as set forth on Schedule
A
(the
“Escrow
Shares”).
1.3 The
parties hereby agree that the Escrow Shares shall be delivered as set forth
below:
(i) If
the
Company’s net income for Fiscal 2008, as disclosed in the Company’s Fiscal 2008
Financial Statements, is less than 59.99% of the Fiscal 2008 Performance
Threshold, all of the Escrow Shares shall be distributed on
a pro
rata basis to the Purchasers based on the number of Preferred Shares owned
by
such Purchasers as of the date thereof.
Within
three (3) business days of the Purchasers’ receipt of the Fiscal 2008 Financial
Statements, the Company and the Purchasers shall provide joint written
instructions to the Escrow Agent instructing the Escrow Agent to deliver the
Escrow Shares to the Purchasers on a pro rata basis based on the number of
Preferred Shares owned by such Purchasers as of the date thereof in accordance
with the terms of this Section 1.3(i).
(ii) If
the
Company’s net income for Fiscal 2008, as disclosed in the Company’s Fiscal 2008
Financial Statements, is equal to or greater than 60% but less than 69.99%
of
the Fiscal 2008 Performance Threshold, the Escrow Agent shall deliver to (A)
the
Purchasers, on a pro rata basis based on the number of Preferred Shares owned
by
such Purchasers as of the date thereof, 5,400,000 Escrow Shares
and (B)
the Principal Stockholders 1,800,000 Escrow Shares, on a pro rata basis. Within
three (3) business days of the Purchasers’ receipt of the Fiscal 2008 Financial
Statements, the Company and the Purchasers shall provide joint written
instructions to the Escrow Agent instructing the Escrow Agent to deliver the
Escrow Shares to the Purchasers, on a pro rata basis based on the number of
Preferred Shares owned by such Purchasers as of the date thereof, and the
Principal Stockholders in accordance with the terms of this Section
1.3(ii).
(iii) If
the
Company’s net income for Fiscal 2008, as disclosed in the Company’s Fiscal 2008
Financial Statements, is equal to or greater than 70% but less than 79.99%
of
the Fiscal 2008 Performance Threshold, the Escrow Agent shall deliver to (A)
the
Purchasers, on a pro rata basis based on the number of Preferred Shares owned
by
such Purchasers as of the date thereof, 3,600,000 Escrow Shares and (B) the
Principal Stockholders 3,600,000 Escrow Shares, on a pro rata basis. Within
three (3) business days of the Purchasers’ receipt of the Fiscal 2008 Financial
Statements, the Company and the Purchasers shall provide joint written
instructions to the Escrow Agent instructing the Escrow Agent to deliver the
Escrow Shares to the Purchasers, on a pro rata basis based on the number of
Preferred Shares owned by such Purchasers as of the date thereof, and the
Principal Stockholders in accordance with the terms of this Section
1.3(iii).
(iv) If
the
Company’s net income for Fiscal 2008, as disclosed in the Company’s Fiscal 2008
Financial Statements, is equal to or greater than 80% but less than or equal
to
90% of the Fiscal 2008 Performance Threshold, the Escrow Agent shall deliver
to
(A) the Purchasers, on a pro rata basis based on the number of Preferred Shares
owned by such Purchasers as of the date thereof, 1,800,000 Escrow Shares and
(B)
the Principal Stockholders 5,400,000 Escrow Shares, on a pro rata basis. Within
three (3) business days of the Purchasers’ receipt of the Fiscal 2008 Financial
Statements, the Company and the Purchasers shall provide joint written
instructions to the Escrow Agent instructing the Escrow Agent to deliver the
Escrow Shares to the Purchasers, on a pro rata basis based on the number of
Preferred Shares owned by such Purchasers as of the date thereof, and the
Principal Stockholders in accordance with the terms of this Section
1.3(iv).
2
(v) If
the
Company’s net income for Fiscal 2008, as disclosed in the Company’s Fiscal 2008
Financial Statements, is equal to or greater than 90.01% of the Fiscal 2008
Performance Threshold, the Escrow Agent shall return and deliver all of the
Escrow Shares to the Principal Stockholders at the address set forth in Section
4.3 hereof. Within three (3) business days of the Purchasers’ receipt of the
Fiscal 2008 Financial Statements, the Company and the Purchasers shall provide
joint written instructions to the Escrow Agent instructing the Escrow Agent
to
deliver the Escrow Shares to the Principal Stockholders in accordance with
the
terms of this Section 1.3(v).
Notwithstanding
anything to the contrary herein, only those Purchasers who own Preferred Shares
acquired pursuant to conversion of the Notes and remain shareholders of the
Company at the time that any Escrow Shares become deliverable hereunder shall
be
entitled to their pro rata portion of such Escrow Shares.
1.4 If
the
Company does not achieve at least 90.01% of the Fiscal 2008 Performance
Threshold, the Company shall use its reasonable best efforts to promptly cause
the Escrow Shares to be delivered to the Purchasers, including causing its
transfer agent promptly to issue the certificates in the names of the Purchasers
and causing its securities counsel to provide any written instruction required
by the Escrow Agent in a timely manner so that the issuances and delivery
contemplated above can be achieved as soon as practicable following delivery
of
the Fiscal 2008 Financial Statements to the Purchasers.
1.5 The
Company will provide the Purchasers with the Company’s Fiscal 2008 Financial
Statements, on or before October 31, 2008, so as to allow the Purchasers the
opportunity to evaluate whether the Fiscal 2008 Performance Threshold was
attained.
1.6 Upon
the
joint written request of the Company and the Purchasers, the Escrow Agent shall
deliver the Escrow Shares to each Purchaser and/or each Principal Stockholder
pursuant to the joint written instructions of the Company and the
Purchasers.
ARTICLE
II
REPRESENTATIONS
OF THE PRINCIPAL STOCKHOLDERS
2.1 Each
of
the Principal Stockholders hereby represents and warrants to the Purchasers
as
follows:
(i) The
Principal Stockholder is the record and beneficial owner of the Escrow Shares
set forth next to such Principal Stockholder’s name on Schedule
A
and has
good title to such Escrow Shares, free and clear of all pledges, liens, claims
and encumbrances, except encumbrances created by this Agreement. There are
no
restrictions on the ability of the Principal Stockholder to transfer such Escrow
Shares or to enter into this Agreement other than transfer restrictions under
applicable federal and state securities laws. Upon any delivery of Escrow Shares
to the Purchasers hereunder, the Purchasers will acquire good and valid title
to
such Escrow Shares, free and clear of any pledges, liens, claims and
encumbrances.
(ii) The
performance of this Agreement and compliance with the provisions hereof will
not
violate any provision of any law applicable to the Principal Stockholder 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, charge or encumbrance upon, any of the properties or
assets of the Principal Stockholder pursuant to the terms of the certificate
of
incorporation or by-laws of the Company or any indenture, mortgage, deed of
trust or other agreement or instrument binding upon the Principal Stockholder
or
affecting such Escrow Shares. No notice to, filing with, or authorization,
registration, consent or approval of any governmental authority or other person
is necessary for the execution, delivery or performance of this Agreement or
the
consummation of the transactions contemplated hereby by the Principal
Stockholder.
3
ARTICLE
III
COVENANTS
3.1 If
any
Escrow Shares are distributed to the Purchasers hereunder, then the Company
shall use commercially reasonable efforts to file a registration statement
relating to the resale by the Purchasers of the Escrow Shares so distributed
within 30 days following the date that the Escrow Agent is obligated hereunder
to deliver any such Escrow Shares to the Purchasers and the Company shall
thereafter use commercially reasonable efforts to cause such registration
statement to become effective. The Purchasers shall provide such information
to
the Company as the Company may reasonably request in order to prepare such
registration statement, including, without limitation, delivery to the Company
of selling stockholder questionnaires. The Company shall cause such registration
statement to remain effective until each Purchaser has sold any Escrow Shares
received by it thereunder or until each Purchaser is permitted to resell all
of
the Escrow Shares received hereunder at one time pursuant to Rule 144(k) of
the
Securities Act of 1933, as amended.
ARTICLE
IV
MISCELLANEOUS
4.1 [Intentionally
Omitted].
4.2 No
waiver
or 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 an extension of the time for performance
of
any other obligation or act.
4.3 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: Xxxxxx
Xxxxx Xxxxxxxx & Xxxxxxx LLP
0000
Xxxxxx xx xxx Xxxxxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Attention:
Xxxxxxxxxxx X. Xxxxxxx, Esq.
Tel
No.:
(000) 000-0000
Fax
No.:
(000) 000-0000
4
If
to the
Company or the Principal Stockholder:
Jpak
Group, Inc.
c/o
Qingdao Renmin Printing Co., Ltd.
Xx.
00,
Xxxxxxx Xxxx
Xxxxxxx,
Xxxxxxxx Xxxxxxxx
Postal
Code 266401
P.R.
China
Attention:
Xx. Xxxxx Xxxx
Tel.
No.:
(000) 0000 0000
Fax
No.:
(000) 0000 0000
With
a
copy
to:
Xxxxxxxxxx
Xxxxxxx PC
00
Xxxxxxxxxx Xxxxxx
Xxxxxxxx,
Xxx Xxxxxx 00000
Attention:
Xxxxxx X. Xxxxxxxx, Esq.
Tel
No.:
(000) 000-0000
Fax
No.:
(000) 000-0000
If
to the
Purchasers:
Vision
Opportunity Master Fund, Ltd.
00
X.
00xx
Xxxxxx,
0xx
Xxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Attention:
Xxxxxx Xxx
Tel.
No.:
(000) 000-0000
Fax
No.:
(000) 000-0000
QVT
Fund
LP
c/o
QVT
Financial LP
1177
Avenue of the Xxxxxxxx
0xx
Xxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Attention:
Yi Cen
Tel.
No.:
(000) 000-0000
Fax
No.:
(000) 000-0000
Quintessence
Fund L.P.
c/o
QVT
Financial LP
1177
Avenue of the Xxxxxxxx
0xx
Xxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Attention:
Yi Cen
Tel.
No.:
(000) 000-0000
Fax
No.:
(000) 000-0000
5
or
to
such other address and to the attention of such other person as any of the
above
may have furnished to the other parties in writing and delivered in accordance
with the provisions set forth above.
4.4 This
Escrow Agreement shall be binding upon and shall inure to the benefit of the
permitted successors and permitted assigns of the parties hereto.
4.5 This
Escrow 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 Escrow 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.
4.6 Whenever
required by the context of this Escrow Agreement, the singular shall include
the
plural and masculine shall include the feminine. This Escrow Agreement shall
not
be construed as if it had been prepared by one of the parties, but rather as
if
both parties had prepared the same. Unless otherwise indicated, all references
to Articles are to this Escrow Agreement.
4.7 The
parties hereto expressly agree that this Escrow Agreement shall be governed
by,
interpreted under and construed and enforced in accordance with the laws of
the
State of New York, without regard to conflicts of law principles that would
result in the application of the substantive laws of another jurisdiction.
Any
action to enforce, arising out of, or relating in any way to, any provisions
of
this Escrow Agreement shall only be brought in a state or Federal court sitting
in New York City, Borough of Manhattan.
4.8 The
Escrow Agent’s duties hereunder may be altered, amended, modified or revoked
only by a writing signed by the Company, the Principal Stockholders, the
Purchasers and the Escrow Agent.
4.9 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 in the absence of gross negligence, fraud and willful misconduct,
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, in the
absence of gross negligence, fraud and willful misconduct.
4.10 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.
6
4.11 The
Escrow Agent shall not be liable in any respect on account of the identity,
authorization or rights of the parties executing or delivering or purporting
to
execute or deliver any documents or papers deposited or called for thereunder
in
the absence of gross negligence, fraud and willful misconduct.
4.12 The
Escrow Agent shall be entitled to employ such legal counsel and other experts
as
the Escrow Agent may deem necessary properly to advise the Escrow Agent in
connection with the Escrow Agent’s duties hereunder, may rely upon the advice of
such counsel, and may pay such counsel reasonable compensation therefor which
shall be paid by the Escrow Agent. The
Escrow Agent has acted as legal counsel for one of the Purchasers and may
continue to act as legal counsel for such Purchaser from time to time,
notwithstanding its duties as the Escrow Agent hereunder. The Company and the
Purchasers consent to the Escrow Agent in such capacity as legal counsel for
one
of the Purchasers and waive any claim that such representation represents a
conflict of interest on the part of the Escrow Agent. The Company and the
Purchasers understand that the Escrow Agent is relying explicitly on the
foregoing provision in entering into this Escrow
Agreement.
4.13 The
Escrow Agent’s responsibilities as escrow agent hereunder shall terminate if the
Escrow Agent shall resign by giving written notice to the Company and the
Purchasers. In the event of any such resignation, the Purchasers and the Company
shall appoint a successor Escrow Agent and the Escrow Agent shall deliver to
such successor Escrow Agent any Escrow Shares and other documents held by the
Escrow Agent. In addition, the Escrow Agent shall resign and be discharged
from
its duties as escrow agent hereunder if so requested in writing at any time
by
the Company and the Purchasers, jointly, provided,
however,
that
such resignation shall become effective only upon acceptance of appointment
by a
successor escrow agent as provided above.
4.14 If
the
Escrow Agent reasonably requires other or further instruments in connection
with
this Escrow Agreement or obligations in respect hereto, the necessary parties
hereto shall join in furnishing such instruments.
4.15 It
is
understood and agreed that should any dispute arise with respect to the delivery
and/or ownership or right of possession of the documents or the Escrow Shares
held by the Escrow Agent hereunder, the Escrow Agent is authorized and directed
in the Escrow Agent’s sole discretion (1) to retain in the Escrow Agent’s
possession without liability to anyone all or any part of said documents or
the
Escrow Shares until such disputes shall have been settled either by mutual
written agreement of the parties concerned by a final order, decree or judgment
or 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 (2) to deliver the
Escrow Shares 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 City of New York, Borough of Manhattan, in
accordance with the applicable procedure therefor.
4.16 The
Company and each Purchaser agree jointly and severally to indemnify and hold
harmless the Escrow Agent and its partners, employees, agents and
representatives from any and all claims, liabilities, costs or expenses in
any
way arising from or relating to the duties or performance of the Escrow Agent
hereunder or the transactions contemplated hereby other than any such claim,
liability, cost or expense to the extent the same shall have been determined
by
final, unappealable judgment of a court of competent jurisdiction to have
resulted from the gross negligence, fraud or willful misconduct of the Escrow
Agent.
[Signature
Page Follows]
7
[SIGNATURE
PAGE TO SECURITIES ESCROW AGREEMENT]
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of this
___
day of August, 2007.
|
JPAK
GROUP, INC.
By:__________________________________
Name:
Title:
PRINCIPAL
STOCKHOLDERS:
JOYRICH
GROUP LIMITED
By:____________________________________
Name:
Title:
FABREGAS
GROUP LIMITED
By:____________________________________
Name:
Title:
STATEPRO
INVESTMENTS LTD.
By:____________________________________
Name:
Title:
ESCROW
AGENT:
XXXXXX
XXXXX XXXXXXXX & XXXXXXX LLP
By:____________________________________
Name:
Title:
|
PURCHASERS:
VISION
OPPORTUNITY MASTER FUND, LTD.
By:_________________________________
Name:
Title:
QVT
FUND LP,
By
its general partner, QVT Associates GP LLC
By:_________________________________
Name:
Title:
By:_________________________________
Name:
Title:
QUINTESSENCE
FUND, L.P.,
By
its general partner, QVT Associates GP LLC
By:_________________________________
Name:
Title:
By:_________________________________
Name:
Title:
|
8
|
Schedule
A
|
|
| Name of Principal Stockholder: |
Number
of Escrow Shares:
|
| Joyrich Group Limited |
5,738,400
|
| Fabregas Group Limited |
1,065,600
|
| Statepro Investments Ltd. |
396,000
|
