ESCROW AGREEMENT
This
Escrow Agreement, dated as of October 26, 2007 (this “Agreement”),
is
entered into by and among Fushi International, Inc., a corporation organized
under the laws of the State of Nevada (the “Company”),
Xxxx
Capital Partners, LLC, a California limited liability company (the “Placement
Agent”)
and
Tri-State Title & Escrow, LLC, with its principal offices located at 000
Xxxx Xxxxxx, X.X. Xxx 000, Xxxxxxxxxx, XX 00000 (the “Escrow
Agent”).
The
Placement Agent and the Company are sometimes referred to herein as the
Escrowing Parties.
WITNESSETH:
WHEREAS,
the Company, with the assistance of the Placement Agent, proposes to raise
approximately THIRTY MILLION DOLLARS ($30,000,000) through a private offering
of
its common stock pursuant to Regulation D of the Securities Act of 1933, as
amended (the “Offering”
and
the
“Act,”
respectively) on a “best efforts” basis pursuant to a Securities Purchase
Agreement between the Company and the investors in such Offering (the
“Purchase
Agreement”),
such
Offering to be made solely to accredited investors, as that term is defined
in
the Act; and
WHEREAS,
the Company and the Placement Agent desire to deposit all proceeds received
from
subscriptions for the common stock and warrant exercises in the Offering (the
“Escrowed
Funds”)
with
the Escrow Agent, to be held in escrow until joint written instructions are
received by the Escrow Agent from the Company and the Placement Agent, from
time
to time, at which time the Escrow Agent will disburse the Escrowed Funds in
accordance with the instructions on Exhibit
C
hereto(a
“Closing”);
WHEREAS,
capitalized terms used and not otherwise defined herein that are defined in
the
Purchase Agreement will have the respective meanings given such terms in the
Purchase Agreement; and
WHEREAS,
Escrow Agent is willing to hold the Escrowed Funds in escrow subject to the
terms and conditions of this Agreement.
NOW,
THEREFORE, in consideration of the mutual promises herein contained and
intending to be legally bound, the parties hereby agree as follows:
1.
Appointment
of Escrow Agent.
The
Company and the Placement Agent hereby appoint Escrow Agent as escrow agent
in
accordance with the terms and conditions set forth herein and the Escrow Agent
hereby accepts such appointment.
2.
Delivery
of the Escrowed Funds.
2.1
The
Placement Agent and/or the Company will direct subscribers in the Offering
to
deliver the Escrowed Funds to the Escrow Agent, addressed to following account
of the Escrow Agent:
Account
Name: Tri-State Title & Escrow, LLC
Bank:
Access National Bank, Xxxxxx, XX 00000
Account
No.: 0000000
ABA
No:
.000000000
2.2 (a)
All
Subscribers’ checks shall be made payable to “TRI-STATE TITLE & ESCROW, LLC”
and shall be delivered to the Escrow Agent at the address set forth on
Exhibit
A
hereto
and shall be
accompanied by a written account of subscription in the form attached hereto
as
Exhibit
B
(the “Subscription
Information”)
The
Escrow
Agent shall, upon receipt of a Subscription, together with the related
Investment Amount therefore, deposit the related Investment Amount of said
Subscription in the Escrow Account for collection; or (b) all funds to be wired
shall be wired to the account set forth in Section 2.1 above and written
Subscription Information shall be faxed or emailed to the Escrow Agent in
accordance with the information provided on Exhibit
A.
2.3 Any
checks which are received by Escrow Agent that are made payable to a party
other
than the Escrow Agent shall be returned directly to the Placement Agent together
with any documents delivered therewith. Simultaneously with each deposit, the
Placement Agent shall provide the Escrow Agent with the Subscription Information
to include the name, address and taxpayer identification number of each
Subscriber and of the aggregate principal amount of Securities subscribed for
by
such Subscriber. The Escrow Agent is not obligated, and may refuse, to accept
checks that are not accompanied by a Subscription containing the requisite
information.
2.4 In
the
event a wire transfer is received by the Escrow Agent and the Escrow Agent
has
not received Subscription Information, the Escrow Agent shall notify the
Placement Agent. If the Escrow Agent does not receive the Subscription
Information by such Subscriber prior to close of business on the third business
day (days other than a Saturday or Sunday or other day on which the Escrow
Agent
is not open for business in the State of Virginia) after notifying Placement
Agent of receipt of said wire, the Escrow Agent shall return the funds to the
prospective purchaser.
3.
Escrow
Agent to Hold and Disburse Escrowed Funds.
The
Escrow Agent will hold and disburse the Escrowed Funds received by it pursuant
to the terms of this Escrow Agreement, as follows:
3.1 Upon
receipt of joint instructions from the Company and the Placement Agent, in
substantially the form of Exhibit
C
hereto,
the Escrow Agent shall release the Escrowed Funds as directed in such
instructions.
2
3.2 In
the
event this Agreement, the Escrowed Funds or the Escrow Agent becomes the subject
of litigation, or if the Escrow Agent shall desire to do so for any other
reason, the Company authorizes the Escrow Agent, at its option, to deposit
the
Escrowed Funds with the clerk of the court in which the litigation is pending,
or a court of competent jurisdiction if no litigation is pending, and thereupon
the Escrow Agent shall be fully relieved and discharged of any further
responsibility with regard thereto. The Company also authorizes the Escrow
Agent, if it receives conflicting claims to the Escrow Funds, is threatened
with
litigation or if the Escrow Agent shall desire to do so for any other reason,
to
interplead all interested parties in any court of competent jurisdiction and
to
deposit the Escrowed Funds with the clerk of that court and thereupon the Escrow
Agent shall be fully relieved and discharged of any further responsibility
hereunder to the parties from which they were received.
3.3 In
the
event that the Escrow Agent does not receive any instructions by a date that
is
90 days from the date of this Agreement (the “Escrow
Termination Date”),
all
Escrowed Funds shall be returned to the parties from which they were received,
without interest thereon or deduction therefrom.
4.
Exculpation
and Indemnification of Escrow Agent.
4.1
The
Escrow Agent shall haven no duties or responsibilities other than those
expressly set forth herein. The Escrow Agent shall have no duty to enforce
any
obligation of any person to make any payment or delivery, or to direct or cause
any payment or delivery to be made, or to enforce any obligation of any person
to perform any other act. The Escrow Agent shall be under no liability to the
other parties hereto or anyone else, by reason of any failure on the part of
any
party hereto or any maker, guarantor, endorser or other signatory of a document
or any other person, to perform such person’s obligations under any such
document. Except for amendments to this Escrow Agreement referenced below,
and
except for written instructions given to the Escrow Agent by the Escrowing
Parties relating to the Escrowed funds, the Escrow Agent shall not be obligated
to recognize any agreement between or among any of the Escrowing Parties,
notwithstanding that references hereto may be made herein and whether or not
it
has knowledge thereof.
4.2 The
Escrow Agent shall not be liable to the Company, the Placement Agent or to
anyone else for any action taken or omitted by it, or any action suffered by
it
to be taken or omitted, in good faith and acting upon any order, notice, demand,
certificate, opinion or advice of counsel (including counsel chosen by the
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 believed by the Escrow Agent to be genuine and
to
be signed or presented by the proper person or persons. The Escrow Agent shall
not be bound by any of the terms thereof, unless evidenced by written notice
delivered to the Escrow Agent signed by the proper party or parties and, if
the
duties or rights of the Escrow Agent are affected, unless it shall give its
prior written consent thereto.
3
4.3 The
Escrow Agent shall not be responsible for the sufficiency or accuracy of the
form, or of the execution, validity, value or genuineness of, any document
or
property received, held or delivered to it hereunder, or of any signature or
endorsement thereon, or for any lack of endorsement thereon, or for any
description therein; nor shall the Escrow Agent be responsible or liable to
the
Company, the Placement Agent or to anyone else in any respect on account of
the
identity, authority or rights, of the person executing or delivering or
purporting to execute or deliver any document or property or this Escrow
Agreement. The Escrow Agent shall have no responsibility with respect to the
use
or application of the Escrowed Funds pursuant to the provisions
hereof.
4.4 The
Escrow Agent shall have the right to assume, in the absence of written notice
to
the contrary from the proper person or persons, that a fact or an event, by
reason of which an action would or might be taken by the Escrow Agent, does
not
exist or has not occurred, without incurring liability to the Company, the
Placement Agent or to anyone else for any action taken or omitted to be taken
or
omitted, in good faith and in the exercise of its own best judgment, in reliance
upon such assumption.
4.5 To
the
extent that the Escrow Agent becomes liable for the payment of taxes, including
withholding taxes, in respect of income derived from the investment of the
Escrowed Funds, or any payment made hereunder, the Escrow Agent may pay such
taxes; and the Escrow Agent may withhold from any payment of the Escrowed Funds
such amount as the Escrow Agent estimates to be sufficient to provide for the
payment of such taxes not yet paid, and may use the sum withheld for that
purpose. The Escrow Agent shall be indemnified and held harmless against any
liability for taxes and for any penalties in respect of taxes, on such
investment income or payments in the manner provided in Section 4.6
4.6 The
Escrow Agent will be indemnified and held harmless by the Company from and
against all expenses, including all counsel fees and disbursements, or loss
suffered by the Escrow Agent in connection with any action, suit or proceedings
involving any claim, or in connection with any claim or demand, which in any
way, directly or indirectly, arises out of or relates to this Escrow Agreement,
the services of the Escrow Agent hereunder, except for claims relating to gross
negligence by Escrow Agent or breach of this Escrow Agreement by the Escrow
Agent, or the monies or other property held by it hereunder. Promptly after
the
receipt of the Escrow Agent of notice of any demand or claim or the commencement
of any action, suit or proceeding, the Escrow Agent shall, if a claim in respect
thereof is to be made against an Escrowing Party, notify each of them thereof
in
writing, but the failure by the Escrow Agent to give such notice shall not
relieve any such party from any liability which an Escrowing Party may have
to
the Escrow Agent hereunder. Notwithstanding any obligation to make payments
and
deliveries hereunder, the Escrow Agent may retain and hold for such time as
it
deems necessary such amount of monies or property as it shall, from time to
time, in its sole discretion, seem sufficient to indemnify itself for any such
loss or expense and for any amounts due it under Section 7.
4
4.7 For
purposes hereof, the term “expense or loss” shall include all amounts paid or
payable to satisfy any claim, demand or liability, or in settlement of any
claim, demand, action, suit or proceeding settled with the express written
consent of the Escrow Agent, and all costs and expenses, including, but not
limited to, counsel fees and disbursements, paid or incurred in investigating
or
defending against any such claim, demand, action, suit or proceeding.
5.
Termination
of Agreement and Resignation of Escrow Agent.
5.1 This
Escrow Agreement shall terminate upon disbursement of all of the Escrowed Funds,
provided that the rights of the Escrow Agent and the obligations of the Company
and the Placement Agent under Section 4 shall survive the termination
hereof.
5.2 The
Escrow Agent may resign at any time and be discharged from its duties as Escrow
Agent hereunder by giving the Company and the Placement Agent at least five
(5)
business days written notice thereof (the “Notice
Period”).
As
soon as practicable after its resignation, the Escrow Agent shall, if it
receives notice from the Company and the Placement Agent within the Notice
Period, turn over to a successor escrow agent appointed by the Company and
the
Placement Agent all Escrowed Funds (less such amount as the Escrow Agent is
entitled to retain pursuant to Section 7) upon presentation of the document
appointing the new escrow agent and its acceptance thereof. If no new agent
is
so appointed within the Notice Period, the Escrow Agent shall return the
Escrowed Funds to the parties from which they were received without interest
or
decoction.
6.
Form
of Payments by Escrow Agent.
6.1 Any
payments of the Escrowed Funds by the Escrow Agent pursuant to the terms of
this
Escrow Agreement shall be made by wire transfer unless directed to be made
by
check by the Escrowing Parties.
6.2
All
amounts referred to herein are expressed in United States Dollars and all
payments by the Escrow Agent shall be made in such dollars.
7. Compensation.
Escrow
Agent shall be entitled to the following compensation from the
Company:
7.1 Documentation
Fee: The
Company shall pay a documentation fee to the Escrow Agent of $4,500, out of
the
first Closing.
7.2 Interest:
The
Escrowed Fund shall accrue interest at the available rate obtained by the Escrow
Agent with respect to the period during which such funds are held in the Escrow
Agent’s account set forth in Section 2.1 above. In connection with a closing or
a return of the funds, the party or parties receiving the Escrowed Funds shall
be paid Accrued Interest of 2.5% per annum on the aggregate amount of the
Escrowed Funds in the Escrow Agent’s account on the date of such Closing or
return of funds and the balance of Accrued Interest, if any, shall be retained
by the Escrow Agent.
5
8. Notices.
All
notices, requests, demands, and other communications provided herein shall
be in
writing, shall be delivered by hand or by first-class mail, shall be deemed
given when received and shall be addressed to parties hereto at their respective
addresses first set forth on Exhibit
A
hereto.
9. Further
Assurances From
time
to time on and after the date hereof, the Company and the Placement Agent shall
deliver or cause to be delivered to the Escrow Agent such further documents
and
instruments and shall do and cause to be done such further acts as the Escrow
Agent shall reasonably request (it being understood that the Escrow Agent shall
have no obligation to make any such request) to carry out more effectively
the
provisions and purposes of this Escrow Agreement, to evidence compliance
herewith or to assure itself that it is protected in acting
hereunder.
10. Consent
to Service of Process
The
Company and the Placement Agent hereby irrevocably consent to the jurisdiction
of the courts of the State of Virginia and of any Federal court located in
such
state in connection with any action, suit or proceedings arising out of or
relating to this Escrow Agreement or any action taken or omitted hereunder,
and
waives personal service of any summons, complaint or other process and agrees
that the service thereof may be made by
certified or registered mail directed to it at the address listed on
Exhibit
A
hereto.
11. Miscellaneous
11.1 This
Escrow Agreement shall be construed without regard to any presumption or other
rule requiring construction against the party causing such instrument to be
drafted. The terms “hereby,” “hereof,” “hereunder,” and any similar terms, as
used in this Escrow Agreement, refer to the Escrow Agreement in its entirety
and
not only to the particular portion of this Escrow Agreement where the term
is
used. The word “person” shall mean any natural person, partnership, corporation,
government and any other form of business of legal entity. All words or terms
used in this Escrow Agreement, regardless of the number or gender in which
they
were used, shall be deemed to include any other number and any other gender
as
the context may require. This Escrow Agreement shall not be admissible in
evidence to construe the provisions of any prior agreement.
11.2 This
Escrow Agreement and the rights and obligations hereunder of the Company and
Placement Agent may not be assigned. This Escrow Agreement and the rights and
obligations hereunder of the Escrow Agent may be assigned by the Escrow Agent.
This Escrow Agreement shall be binding upon and inure to the benefit of each
party’s respective successors, heirs and permitted assigns. No other person
shall acquire or have any rights under or by virtue of this Escrow Agreement.
This Escrow Agreement may not be changed orally or modified, amended or
supplemented without an express written agreement executed by the Escrow Agent,
the Company and the Placement Agent. This Escrow Agreement is 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 Escrow Agreement
are
intended to be, nor shall they be construed to be, for the benefit of any third
person.
6
11.3 This
Escrow Agreement shall be governed by, and construed in accordance with, the
internal laws of the State of Virginia. The representations and warranties
contained in this Escrow Agreement shall survive the execution and delivery
hereof and any investigations made by any party. The headings in this Escrow
Agreement are for purposes of reference only and shall not limit or otherwise
affect any of the terms thereof.
12.
Execution
of Counterparts.
This
Escrow Agreement may be executed in a number of counterparts, by facsimile,
each
of which shall be deemed to be an original as of those whose signature appears
thereon, and all of which shall together constitute one and the same instrument.
This Escrow Agreement shall become binding when one or more of the counterparts
hereof, individually or taken together, are signed by all the
parties.
IN
WITNESS WHEREOF, the parties have executed and delivered this Escrow Agreement
on the day and year first above written.
| ESCROW AGENT: | |||
| TRI-STATE TITLE & ESCROW, LLC | |||
| By: /s/ Xxx Xxxxxx | |||
|
Name:
Xxx
Xxxxxx
|
|||
|
Title:
President
|
| FUSHI INTERNATIONAL, INC. | |||
| By: /s/ Li Fu | |||
|
Name:
Li Fu
|
|||
|
Title:
CEO
|
|
XXXX
CAPITAL PARTNERS, LLC
|
|||
| By: /s/ Xxxxx X. Xxxxxxxx | |||
|
Name:
Xxxxx X. Xxxxxxxx
|
|||
|
Title:
Managing Director, Equity Capital Market
|
7
EXHIBIT
A
PARTIES
TO AGREEMENT
Tri-State
Title & Escrow, LLC
000
Xxxx
Xxxxxx
X.X.
Xxx
000
Xxxxxxxxxx,
XX 00000
Attention:
Xxxxxxx X. Xxxxxxx
Telephone:
(000) 000-0000
Fax: (000)
000-0000
Email
xxxxxx@xxxxxxxxxxxxx.xxx
Fushi
International, Inc.
1
Shuang
Qiang Road
Jinzhou,
Dalian 116100
People's
Republic of China
Facsimile:
[ ]
Attention:
President
XXXX
CAPITAL PARTNERS, LLC
|
Address:
|
00
Xxxxxxxxx Xxxxx
|
|
Xxxxxxx
Xxxxx, XX 00000
|
|
|
Attention:
|
Xxxxx
Xxxxxxxx
|
|
Tel:
|
(000)
000-0000
|
|
Fax:
|
(000)
000-0000
|
|
Email:
|
xxxxxxxxx@xxxx.xxx
|
8
EXHIBIT
B
SUBCRIPTION
INFORMATION
|
Name
of Subscriber
|
________________________________
|
||
|
Address
of Subscriber
|
________________________________
|
||
|
|
________________________________
|
||
|
|
________________________________
|
||
|
$
Amount of Securities
|
|||
|
Subscribed
|
________________________________
|
||
|
Subscription
Amount
|
|||
|
Submitted
Herewith
|
________________________________
|
||
|
Taxpayer
ID Number/
|
|||
|
Social
Security Number
|
________________________________
|
9
EXHIBIT
C
DISBURSEMENT
REQUEST
Pursuant
to that certain Escrow Agreement dated effective as of October 26, 2007 by
and
among Fushi International, Inc., Xxxx Capital Partners, LLC and Tri-State Title
& Escrow, LLC, Fushi International, Inc. and Xxxx Capital Partners, LLC
hereby requests disbursement of funds in the amount and manner described below
from account number 0000000,
styled
Tri-State Title & Escrow, LLC Escrow Account.
|
Please
disburse to:
|
________________________________
|
|
|
Amount
to disburse:
|
________________________________
|
|
|
Form
of distribution:
|
________________________________
|
|
|
Payee:
|
||
|
Name:
|
________________________________
|
|
|
Address:
|
________________________________
|
|
|
City/State:
|
________________________________
|
|
|
Zip:
|
________________________________
|
|
|
Please
disburse to:
|
________________________________
|
|
|
Amount
to disburse:
|
________________________________
|
|
|
Form
of distribution:
|
________________________________
|
|
|
Payee:
|
||
|
Name:
|
________________________________
|
|
|
Address:
|
________________________________
|
|
|
City/State:
|
________________________________
|
|
|
Zip:
|
________________________________
|
|
Subscriptions
Accepted From
Subscriber
Amount
___________________________ __________________________
___________________________ __________________________
___________________________ __________________________
___________________________ __________________________
Total:
__________________________
10
Statement
of event or condition which calls for this request for
disbursement:
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
FUSHI
INTERNATIONAL, INC.
By:
_________________________
Name:
________________________
Title:
_________________________
Date:
_________________________
XXXX
CAPITAL PARTNERS, LLC
By:
__________________________
Name:
________________________
Title:
_________________________
Date:
_________________________
11
