SHARE ESCROW AGREEMENT
EXHIBIT
4.5
This
Escrow Agreement (the “Agreement”),
dated
July 19, 2006, is entered into by and among GRC Holdings, Inc., a Texas
corporation (the “Company”),
Lane
Capital Markets, LLC, as representative of the Investors (the “Investor
Representative”),
Xx. XX
Xxx Xxxx and Xx. XXXX Xxx Xxxx (collectively, the “Stockholders”),
and
Securities Transfer Corporation (hereinafter referred to as “Escrow
Agent”).
All
capitalized terms used but not defined herein shall have the meanings assigned
them in that certain Securities Purchase Agreement, dated July 18, 2006
(“Purchase
Agreement”),
between the Company, the Stockholders and each Investor in the offering the
subject of the Purchase Agreement (each an “Investor”
and
collectively, the “Investors”).
BACKGROUND
As
an
inducement to the Investors to enter into the Purchase Agreement, the
Stockholders agreed that the Stockholders would place the “Escrow Shares” (as
hereinafter defined) into escrow for the benefit of the Investors in the event
the Company failed to satisfy the “Performance Thresholds” (as hereinafter
defined). Pursuant to the requirements of the Purchase Agreement, the Company,
the Stockholders and the Investor Representative have agreed to establish an
escrow 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.
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
Investor Representative (on behalf of the Investors), the Stockholders and
the
Company hereby appoint Securities Transfer Corporation as Escrow Agent to act
in
accordance with 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.
Upon the
execution of this Agreement, the Stockholders shall deliver to the Escrow Agent
two sets of stock certificates evidencing in the aggregate 4,280,000 shares
of
the Company’s common stock, par value $0.0001 per share (collectively, the
“Escrow
Shares”),
along with stock powers executed in blank. The first set of certificates (from
each Stockholder in the amounts set forth on Exhibit
A
hereto)
shall represent 2,140,000 Escrow Shares (the “2006
Escrow Shares”)
and
the second set of certificates (from each Stockholder in the amounts set forth
on Exhibit
A
hereto)
shall evidence 2,140,000 Escrow Shares (the “2007
Escrow Shares”).
3. Representations
of the Stockholders.
The
Stockholders hereby represent and warrant to the Investors and the Investor
Representative as follows:
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(i)
The
Escrow Shares are validly issued, fully paid and nonassessable shares of the
Company, and free and clear of all pledges, liens and encumbrances.
(ii) Performance
of this 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, charge or
encumbrance upon, any of the properties or assets of the Stockholders pursuant
to the terms of any indenture, mortgage, deed of trust or other agreement or
instrument binding upon the Stockholders, other than such breaches, defaults
or
liens which would not have a material adverse effect taken as a whole.
4. Disbursement
of Escrow Shares. The
Stockholders covenanted to the Investors that the Company would attain the
following financial performance thresholds (the “Performance
Thresholds”):
$4,819,500
of
after-tax net income or $5,823,465 of after-tax net income before the minority
interest for the fiscal year ending December 31, 2006 (the “2006
Threshold”)
and
$8,302,000 of after-tax net income or $10,031,416 of after-tax net income before
the minority interest for the fiscal year ending December 31, 2007 (the
“2007
Threshold”).
The
Company will provide the Investor Representative with (a) its audited financial
statements, prepared in accordance with United States generally accepted
accounting principles, on or before March 31, 2007 so as to allow the Investor
Representative the opportunity to evaluate whether the 2006 Threshold was
attained and (b) its audited financial statements, prepared in accordance with
United States generally accepted accounting principles, on or before March
31,
2008 so as to allow the Investor Representative the opportunity to evaluate
whether the 2007 Threshold was attained. If such audited financial statements
do
not evidence that the 2006 Threshold has been achieved, the Investor
Representative shall request that the Company cause its counsel, Loeb & Loeb
LLP, to provide written instruction to the Escrow Agent instructing the Escrow
Agent to issue and deliver within ten business days following delivery of such
request of the Investor Representative certificates registered in the name
of
each Investor evidencing the Investor’s pro rata portion of the 2006 Escrow
Shares based on such Investor’s original Investment Amount. If such audited
financial statements do not evidence that the 2007 Threshold has been achieved,
the Investor Representative shall request that the Company shall cause its
counsel, Loeb & Loeb LLP, to provide written instruction to the Escrow Agent
to issue and deliver within ten business days following delivery of the fiscal
year 2007 financial statements to the Investor Representative certificates
registered in the name of each Investor evidencing the Investor’s pro rata
portion of the 2007 Escrow Shares based on such Investor’s original Investment
Amount. The Investor Representative shall thereafter promptly deliver to the
Investors such certificates. The Escrow Agent need only rely on the letter
of
instruction from Loeb & Loeb LLP in this regard. If the Investor
Representative has not requested that the Company cause its counsel Loeb &
Loeb LLP to so instruct the Escrow Agent to release such Escrow Shares to the
Investor Representative by the 10th
business
day following the delivery of the relevant audited financial statements of
the
Company referred to above to the Investor Representative, then the Company
shall
cause Loeb & Loeb LLP to provide written instruction to the Escrow Agent,
for the release of the 2006 Escrow Shares or 2007 Escrow Shares, respectively,
as applicable, to the Stockholders.
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5. Duration.
This
Agreement shall terminate on the distribution of all the Escrow Shares in
accordance with Section 4 above.
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 Shares, 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 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 Agreement with respect to the Escrow
Shares.
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. 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 determined
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 Stockholders from and against any expenses, including reasonable
attorneys’ fees and disbursements, damages or losses suffered by Escrow Agent
in
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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 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.
8. Compensation
of Escrow Agent.
The
Company will pay Escrow Agent $1,000 for all services rendered by Escrow Agent
hereunder.
9. Resignation
of Escrow Agent.
At any
time, upon ten (10) 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 the Escrow Shares held hereunder
upon presentation of a document appointing the new escrow agent and evidencing
its acceptance thereof. If, by the end of the 10-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 Shares
into the registry of any court having jurisdiction.
10. 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.
11. 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:
Xx.
00
Xxxx Xxxxxx Xxxx
Xx’ian
City, Xxxxxxxx Xxxxxxxx
X.X.
000000, Xxxxx
Attention:
Xxxxxxx Xx
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With
a
copy to:
Loeb
& Loeb LLP
000
Xxxx
Xxxxxx
Xxx
Xxxx,
XX 00000
Facsimile:
(000) 000-0000
Attention:
Xxxxxxxx X. Xxxxxxxx, Esq.
If
to the
Investor Representative:
Lane
Capital Markets, LLC
000
Xxxxxxxx, Xxxxx 0000
Xxx
Xxxx,
XX 00000
Facsimile:
(000) 000-0000
Attention:
Xxxx X. Xxxx
If
to an
Investor:
To
the
address set forth on such Investor’s signature page
to
the Purchase Agreement
If
to a
Stockholder:
To
the
address set forth on such Stockholder’s signature
page to the Purchase Agreement
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.
12. 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. Facsimile execution and delivery of this Agreement is legal, valid
and binding for all purposes.
13. 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 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
Agreement. This Agreement may be changed or modified only in writing signed
by
all of the parties hereto.
14. 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
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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.
15. Headings.
The
headings contained in this Agreement are for convenience of reference only
and
shall not affect the construction of this Agreement.
16. 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 (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.
17. Registration
Rights. If
any
Escrow Shares are distributed to the Investors hereunder, then the Company
shall
use commercially reasonable efforts to file a registration statement relating
to
the resale by the Investors of the Escrow Shares so distributed within 30 days
following the date that the Company is obligated hereunder to deliver any such
Escrow Shares to the Investors and the Company shall thereafter use commercially
reasonable efforts to cause such registration statement to become effective.
The
Investors 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 Investor has sold all Escrow Shares received by it
thereunder or until each Investor 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.
[Signature
Page Follows]
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IN
WITNESS WHEREOF, the parties have duly executed this Agreement as of the date
first indicated above.
GRC
HOLDINGS, INC.
By: /s/ Xxxxxxx Xx
Its: CEO
Dated:
7-12-06
Xx.
XX
Xxx Xxxx
By: /s/ Li Xxx Xxxx
Xx.
XXXX
Xxx Xxxx
By: /s/ Xxxx Xxx Ling
SECURITIES
TRANSFER CORPORATION
By: /s/
Xxxxx Xxxxxx
Xxxxx
Xxxxxx
President
LANE
CAPITAL MARKETS, LLC
As
representative of the Investors
By: /s/ Xxxx X. Xxxx
Xxxx X.
Xxxx
Partner
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