ESCROW AGREEMENT
This
Escrow Agreement, dated as of October 7, 2009 (this “
Escrow Agreement ”), is entered into by and among
Orient Paper, Inc., a Nevada corporation, with headquarters located
at Nansan Gongli, Nanhuan Road, Xushui County, Baoding City, Hebei
Province, The People’s Republic of China 072550 (the “
Company ”), the investors listed on the Schedule of
Buyers in the Securities Purchase Agreement dated October 7, 2009
(the “ Buyers ”), Zhenyong Liu (the “
Principal Shareholder ”) and Sichenzia Ross Friedman
Ference LLP with an address at 61 Broadway, 32 nd Floor,
New York, NY 10006 (the “ Escrow Agent
”).
Capitalized
terms used but not defined herein shall have the meanings set forth
in the Securities Purchase Agreement (as defined below).
WITNESSETH:
WHEREAS,
the Buyers will be purchasing from the Company and the Company will
be selling to the Buyers an aggregate of 8,333,332 shares of the
Company’s common stock, par value $0.001 per share (“
Common Stock ”) for a total aggregate purchase price
of approximately $5,000,000 in a private placement financing
transaction (the “ Financing Transaction ”)
pursuant to a Securities Purchase Agreement dated of the date
hereof (the “Closing Date” ) by and among the
Company and the Buyers (the “Securities Purchase
Agreement” );
WHEREAS,
the Company and the Buyers desire to deposit all proceeds received
from the Buyers in the Financing Transaction (the “
Escrowed Funds ”) with the Escrow Agent, to be held
and disbursed by the Escrow Agent pursuant to this 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 each Buyer
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 .
a.
The Company will direct each Buyer to deliver the Escrowed Funds to
the Escrow Agent as follows:
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Citibank
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New York, NY
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A/C of Sichenzia Ross Friedman
Ference LLP
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A/C#:
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92883436
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ABA#:
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021000089
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SWIFT Code:
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CITIUS33
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REMARK: [COMPANY NAME/BUYER
NAME]
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b.
The Escrowed Funds shall be forwarded to the Escrow Agent by wire
transfer, together with the written account of subscription (the
“ Subscription ”) in the form attached hereto as
Exhibit B (the “ Subscription Information
”). The Escrowed Funds to be wired shall be wired to the
account set forth in Section 2(a) above and the Subscription shall
be faxed or emailed to the Escrow Agent in accordance with the
information provided on Exhibit A .
c.
Simultaneously with each deposit, each Buyer shall provide the
Escrow Agent with the Subscription Information, including the name,
address and taxpayer identification number of each Buyer and of the
aggregate principal amount of shares of Common Stock and attached
warrants subscribed for by such Buyer.
d.
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 Buyer. If the Escrow Agent does not
receive the Subscription Information by such Buyer prior to close
of business on the fifth (5 th ) 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 New York) after
notifying the Buyer of receipt of said wire, the Escrow Agent shall
return the funds to the Buyer.
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 Agreement, as follows:
a.
Prior to any disbursement of the Escrowed Funds, the Escrow Agent
shall allocate a portion of the Escrowed Funds and hold such
portion in a separate escrow account to pay the fees and expenses
in connection with investor relations and financial communications
in the aggregate amount of $300,000 (the “ Public
Relations Held-Back Escrowed Portion ”). Additionally,
the Escrow Agent shall allocate and hold $2,000,000 of the Escrowed
Funds until the Company shall have identified and engaged such
number of additional independent director(s) acceptable to the
representative of the Buyers (“ Representative
”) so that its board of directors shall comprise a majority
of the board of directors (the “ Director Held-Back
Escrowed Portion ”).
Unless
otherwise specified herein, the term “Escrowed Funds”
shall include the aggregate amount of the Public Relations
Held-Back Escrowed Portion and Director Held-Back Escrowed
Portion.
b.
At such time that Five Million Dollars ($5,000,000) is deposited
and upon receipt of joint instructions from the Company and the
Representative, in substantially the forms of Exhibit C
hereto, following the consummation of the Financing Transaction,
the Escrow Agent shall release the Escrowed Funds, less the Public
Relations Held-Back Escrowed Portion and the Director Held-Back
Escrowed Portion, to the Company. Thereafter, the Escrow Agent
shall disburse the Public Relations Held-Back Escrowed Portion,
from time to time, and the Director Held-Back Escrowed Portion upon
receiving the joint instructions from the Company and the
Representative substantially the form of Exhibit C hereto.
Access America Investments, LLC is hereby appointed the
representative of the Buyers for purposes of this paragraph
3(b).
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c.
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, each of the Company and
the Buyers authorizes the Escrow Agent, at its option, to deposit
the Escrowed Funds (including the Public Relations Held-Back
Escrowed Portion and the Director Held-Back Escrow Portion) 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. Each of the
Company, and the Buyers further authorizes the Escrow Agent, if it
receives conflicting claims to any of the Escrowed 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