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Exhibit 10.4

 

MAKE GOOD ESCROW AGREEMENT

     This Make Good Escrow Agreement (the “Make Good Agreement”), dated effective as of October 8, 2009, is entered into by and among L & L International Holdings, Inc., a Nevada corporation (the “Company”), the Investors (as defined below), Dickson V. Lee (the “Make Good Pledgor”) and Richardson & Patel, LLP, with an office at 10900 Wilshire Blvd., Suite 500, Los Angeles, CA 90024, as escrow agent (“Escrow Agent”). The Company and Investors are referred to collectively as the “Interested Parties.”

     WHEREAS, each of the investors in the private offering of securities of the Company (the “Investors”) has entered into a Securities Purchase Agreement, dated October 8, 2009 (the “SPA”), evidencing their participation in the Company's private offering (the “Offering”) of securities. As an inducement to the Investors to participate in the Offering and as set forth in the SPA, Make Good Pledgor agreed to place certain shares of the Company’s common stock, par value $0.001 per share (the “Common Stock”) into escrow for the benefit of the Investors in the event the Company fails to satisfy certain financial thresholds.

     WHEREAS, pursuant to the requirements of the SPA, the Company and the Make Good Pledgor have agreed to establish an escrow on the terms and conditions set forth in this Make Good Agreement;

     WHEREAS, the Escrow Agent has agreed to act as escrow agent pursuant to the terms and conditions of this Make Good Agreement; and

     WHEREAS, all capitalized terms used but not defined herein shall have the meanings assigned them in the SPA;

     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. Make Good Pledgor and the Company hereby appoint Escrow Agent to act in accordance with the terms and conditions set forth in this Make Good Agreement, and Escrow Agent hereby accepts such appointment and agrees to act in accordance with such terms and conditions.

      2. Establishment of Escrow. Within three Trading Days (defined below) following the Closing, Make Good Pledgor shall deliver, or cause to be delivered, to the Escrow Agent certificates evidencing an aggregate of 1,500,000 shares of the Company’s Common Stock (the “Escrow Shares”).

     As used in this Agreement, “Trading Day” means (i) a day on which the Company’s common stock is traded on a Trading Market or (ii) if the common stock is not quoted on any trading market, a day on which the common stock is quoted in the


over-the-counter market as reported by the OTC Bulletin Board (or any similar organization or agency succeeding to its functions of reporting prices); provided, that in the event that the common stock is not listed or quoted as set forth in (i) and (ii) hereof, then Trading Day shall mean a business day. “Trading Market” means whichever of the New York Stock Exchange, the American Stock Exchange, the NASDAQ Global Select Market, the NASDAQ Global Market, the NASDAQ Capital Market or OTC Bulletin Board on which the Company’s common stock is listed or quoted for trading on the date in question. As used in this Make Good Agreement, “Transfer Agent” means Signature Stock Transfer with an address at 2301 Ohio Drive, Suite 100, Plano, TX 75093, at telephone number (972) 612-4120 and fax number (972) 612-4122 or such other entity hereafter retained by the Company as its stock transfer agent as specified in a writing from the Company to the Escrow Agent.

     The Make Good Pledgor hereby agrees that their obligation to transfer shares of Common Stock to Investors pursuant to Section 4 of the SPA and this Make Good Agreement shall continue to run to the benefit of each Investor even if such Investor shall have transferred or sold all or any portion of its Securities, and that Investors shall have the right to assign its rights to receive all or any such shares of Common Stock to other Persons in conjunction with negotiated sales or transfers of any of its Common Stock. The Make Good Pledgor hereby irrevocably agrees that other than in accordance with Section 4 of the SPA and this Make Good Agreement, the Make Good Pledgor will not offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase or otherwise transfer or dispose of, directly or indirectly, or announce the offering of any of the Escrow Shares (including any securities convertible into, or exchangeable for, or representing the rights to receive Escrow Shares). In furtherance thereof, the Company will (x) place a stop order on all Escrow Shares covered by any registration statements, (y) notify the Transfer Agent in writing of the stop order and the restrictions on such Escrow Shares under this Make Good Agreement and direct the Transfer Agent not to process any attempts by the Make Good Pledgor to resell or transfer any Escrow Shares under such registration statements or otherwise in violation of Section 4 of the SPA and this Make Good Agreement.

      3. Representations of Make Good Pledgor and the Company. Make Good Pledgor and the Company hereby represent and warrant, severally and not jointly, as to itself only, to the Investors as follows:

     a. All of the Escrow Shares are validly issued, fully paid and nonassessable shares of the Company, and free and clear of all pledges, liens and encumbrances. Upon any transfer of Escrow Shares to Investors hereunder, Investors will receive full right, title and authority to such shares as holders of Common Stock of the Company.

     b. Performance of this Make Good 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

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encumbrance upon, any of the properties or assets of Make Good Pledgor pursuant to the terms of any indenture, mortgage, deed of trust or other agreement or instrument binding upon Make Good Pledgor, 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 Make Good Pledgor agrees that in the event that:

    a. Make Good Escrow . In the event that either:

     (i) the after tax net income before minority interest (calculated in accordance with GAAP) reported in the Annual Report on Form 10-K or 10-KSB of the Company for the fiscal year ending April 30, 2010, as filed with the Commission (the “2010 Annual Report”), is less than $32,040,000 (the “2010 Guaranteed ATNI”), the Make Good Pledgor will provide written instruction to the Escrow Agent to transfer to the Investors on a pro rata basis (determined by dividing each Investor’s Purchase Price by the aggregate of all Purchase Prices delivered to the Company by the Investors under the SPA) for no consideration other than payment of their respective Purchase Price paid at Closing, 750,000 Make Good Shares (as equitably adjusted for any stock splits, stock combinations, stock dividends or similar transactions) (the “ATNI Make Good Shares”) or

     (ii) the net revenues (calculated in accordance with GAAP) reported in the 2010 Annual Report, is less than $108,118,950 (the “2010 Guaranteed Revenue”), the Make Good Pledgor will provide written instruction to the Escrow Agent to transfer to the Investors on a pro rata basis (determined by dividing each Investor’s Purchase Price by the aggregate of all Purchase Prices delivered to the Company by the Investors under the SPA) for no consideration other than payment of their respective Purchase Price paid at Closing, 750,000 Make Good Shares (as equitably adjusted for any stock splits, stock combinations, stock dividends or similar transactions) (the “Revenue Make Good Shares”).

   b. Notwithstanding the foregoing, the parties agree that for purposes of determining whether or not the 2010 Guaranteed ATNI or the 2010 Guaranteed Revenue have been achieved, neither (i) the release of the ATNI Make Good Shares or the Revenue Make Good Shares to the Make Good Pledgor or the Investors as a result of the operation of this Make Good Agreement or (ii) the Warrants shall be deemed to be an expense, charge, or other deduction from revenues or net income even though GAAP may require contrary treatment. Notwithstanding anything to the contrary contained herein, any direct or indirect tax breaks, tax holidays, tax credits or similar tax benefit(s), compensation, grant or any other remuneration or deduction granted or benefiting any of the Company or its Subsidiaries by any governmental authority or body, which are beyond and in addition to benefits that may exist on the Closing date, shall be excluded for purposes of determining whether or not the 2010 Guaranteed ATNI or 2010 Guaranteed Revenue, as the case may be, has been achieved by the Company. In the event that the after tax net income before minority interest (calculated in accordance with GAAP) reported in the 2010 Annual Report, is equal to or greater than the 2010

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Guaranteed ATNI, no transfer of the ATNI Make Good Shares shall be required by the Make Good Pledgor to the Investors under this Section and such ATNI Make Good Shares shall be returned to the Make Good Pledgor in accordance with this Make Good Agreement. In the event that the net revenue (calculated in accordance with GAAP) reported in the 2010 Annual Report, is equal to or greater than the 2010 Guaranteed Revenue, no transfer of the Revenue Make Good Shares shall b


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