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MAKE GOOD ESCROW AGREEMENT
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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