Document:

China Public Security Technology Inc.: Exhibit 10.2 - Prepared by TNT Filings Inc.

  

Exhibit 10.2

 

CLOSING ESCROW AGREEMENT

 

CLOSING ESCROW AGREEMENT, dated as of October 25, 2007 (“Agreement”), among Thelen Reid Brown Raysman & Steiner LLP (the “Escrow Agent”), the investors set forth on the signature pages hereto (each, an “Investor” and collectively, the “Investors”), and China Public Security Technology, Inc., a Florida corporation (the “Company”).  The Escrow Agent, the Investors and the Company are sometimes individually referred to herein as a “Party” and collectively, as the “Parties”.  

 

BACKGROUND

 

The Investors and the Company are entering into a Purchase Agreement on the date hereof (the “Purchase Agreement”) pursuant to which the Investors are to acquire a number of shares of the Company’s common stock as specified therein (capitalized terms used and not otherwise defined herein shall have the meanings given such terms in the Purchase Agreement).

 

Pursuant to the Purchase Agreement, the Company and the Investors have agreed to establish an escrow on the terms and conditions set forth in this Agreement and the Escrow Agent is willing to accept appointment as Escrow Agent for only the expressed duties outlined herein.

 

AGREEMENT

 

NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby agree as follows:

1.

Appointment of Escrow Agent; Establishment of Escrow Account.

(a)

The Investors and the Company each hereby appoint the Escrow Agent as escrow agent and the Escrow Agent accepts that appointment and agrees to hold and dispose of the Escrow Funds (as hereinafter defined) in accordance with the terms of this Agreement.  Escrow Agent acknowledges receipt of fair and reasonable consideration for its services.

(b)

All amounts provided by the Investors in connection with their acquisition of the Shares as set forth in the Purchase Agreement shall be deposited directly with the Escrow Agent in immediately available funds by federal wire transfer (such funds being referred to herein as the “Escrow Funds”) in an escrow account that is segregated from all other accounts, in accordance with the Section 2.2(b)(ii) the Purchase Agreement.

2.

Release of the Escrow Funds.

(a)

Subject to Section 2(c) of this Agreement, the Escrow Agent shall continue to hold the Escrow Funds delivered for deposit hereunder by an Investor until the earlier of: (1) receipt of a joint written notice from the Company and the Investors evidencing termination under Section 6.5(a) of the Purchase Agreement, (2) receipt of a written notice from the Company or an Investor evidencing termination under Section 6.5(b) of the Purchase Agreement (each of (1) and (2), a “Termination Election”) and (3) receipt of both (x) written notice from the Company that the conditions to closing under Section 5.1 of the Purchase Agreement shall have been satisfied and (y) joint written notice from the Company and Roth Capital Partners, LLC, who acted as a placement agent in connection with the transactions contemplated by the Purchase Agreement, to effect the Closing.

(b)

If the Escrow Agent receives a Termination Election prior to its receipt of the notices contemplated under Section 2(a)(3), then the Escrow Agent shall return the Escrow Funds delivered by such Investor as directed by such Investor.  If the Escrow Agent receives the notices contemplated under Section 2(a)(3) prior to a Termination Election, then the Escrow Agent shall disburse the portion of the Escrow Funds for which the foregoing is the case in accordance with Exhibit A to this Agreement.

(c)

This Agreement shall terminate and be of no further force or effect on the earlier of (i) disbursement of the entire amount of the Escrow Funds by the Escrow Agent and (ii) the one year anniversary of the Closing Date.

3.

Interpleader.  The Escrow Agent may at any time commence an action in the nature of interpleader or other legal proceedings and may deposit the Escrow Funds with the clerk of the court.  In the event of any dispute regarding who is entitled to the Escrow Funds at any time, the Escrow Agent may determine not to release the Escrow Funds to either any Investor or the Company and may commence an interpleader action as aforesaid or may cause the Escrow Funds to be deposited with a court of competent jurisdiction whereupon it shall cease to have any further obligation hereunder.  Upon any delivery or deposit of the Escrow Funds as provided in this Section 3, the Escrow Agent shall be released and discharged from any further obligation under this Agreement.

4.

Concerning the Escrow Agent.

(a)

The Escrow Agent shall not have any liability to any of the Parties to this Agreement or to any third party arising out of its services as Escrow Agent under this Agreement, except for damages directly resulting from the Escrow Agent's gross negligence or willful misconduct.  

(b)

The Company and the Investors jointly and severally shall indemnify the Escrow Agent and hold it harmless against any loss, liability, damage or expense (including reasonable attorneys’ fees) that the Escrow Agent may incur as a result of acting as escrow agent under this Agreement, except for any loss, liability, damage or expense arising from its own gross negligence or willful misconduct.  As between the Company and the Investors, such obligations shall be borne equally by the Company and the Investors.  For this purpose, the term “attorneys’ fees” includes fees payable to any counsel retained by the Escrow Agent in connection with its services under this Agreement and, with respect to any matter arising under this Agreement as to which the Escrow Agent performs legal services, if and to the extent that the Escrow Agent itself is a law firm, its standard hourly rates and charges then in effect.

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(c)

The Escrow Agent shall be entitled to rely upon any judgment, notice, instrument or other writing delivered to it under this Agreement without being required to determine the authenticity of, or the correctness of any fact stated in, that document and irrespective of any facts the Escrow Agent may know or be deemed to know in any other capacity.  The Escrow Agent may act in reliance upon any instrument or signature believed by it to be genuine and may assume that any person purporting to give any notice or receipt or advice or make any statement or execute any document in connection with this Agreement has been duly authorized to do so.

(d)

The Escrow Agent shall have no duties or responsibilities except those expressly set forth in this Agreement.  The Escrow Agent shall not have any obligations arising out of or be bound by the provisions of any other agreement, written or oral, including, but not limited to, the Stock Purchase Agreement.

(e)

All of the Escrow Agent's rights of indemnification provided for in this Agreement shall survive the resignation of the Escrow Agent, its replacement by a successor Escrow Agent, its delivery or deposit of the Escrow Funds in accordance with this Agreement, the termination of this Agreement, and any other event that occurs after this date.

(f)

The Escrow Agent shall have no responsibility with respect to the sufficiency of the arrangements contemplated by this Agreement to accomplish the intentions of the Parties.

(g)

The Investors acknowledge that they are aware that the Escrow Agent has represented the Company in connection with the Purchase Agreement and this Escrow Agreement and that the Escrow Agent may continue to represent the Company in that connection and in connection with the transactions contemplated by those agreements, including, but not limited to, in connection with any disputes that may arise under either of those agreements.  The Escrow Agent shall not be precluded from or restricted from representing the Company or any of its affiliates or otherwise acting as attorneys for the Company or any of its affiliates in any matter, including, but not limited to, any court proceeding or other matter related to the Purchase Agreement or the transactions contemplated by the Purchase Agreement, or this Escrow Agreement or the Escrow Funds, whether or not there is a dispute between the Investors and/or the Company with respect to any such matter.

5.

Representations.

Each Investor and the Company each represents and warrants to the Escrow Agent that each has full power and authority to enter into and perform this Agreement; that this Agreement was duly authorized by all necessary corporate or other action; and that this Agreement is enforceable against each Party in accordance with its terms.
 

 

6.

Resignation; Successor Escrow Agent.

The Escrow Agent (and any successor escrow agent) may at any time resign as such upon 30 days prior notice to each of the other Parties.  Upon receipt of a notice of resignation, each of the other Parties shall use their best efforts to select a successor agent within 15 days, but if within that 15 day period the Escrow Agent has not received a notice signed by both of them appointing a successor escrow agent and setting forth its name and address, the Escrow Agent may (but shall not be obligated to) select on their behalf a bank or trust company to act as successor escrow agent, for such compensation as that bank or trust company customarily charges and on such terms and conditions not inconsistent with this Agreement as that bank or trust company reasonably requires.  The fees and charges of any successor escrow agent shall be payable out of the Escrow Funds.  A successor escrow agent selected by the resigning Escrow Agent may become the Escrow Agent by confirming in writing its acceptance of the position.  The Investors and the Company shall sign such other documents as the successor escrow agent reasonably requests in connection with its appointment.

 

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7.

Notices.

All notices, instructions, objections or other communications under this Agreement shall be in writing and shall be deemed given when sent by United States registered mail, return receipt requested, to the respective Parties as follows:

 

If to the Company:

China Public Security Technology, Inc.

21st Floor, Everbright Bank Building, 

Zhuzilin, Futian District, 

Shenzhen, Guangdong, 518040 

People’s Republic of China  

Attn: Chief Executive Officer

Facsimile: (+86) 755-8370-9333

 

If to the Escrow Agent:

Thelen Reid Brown Raysman and Steiner LLP

701 Eighth Street, NW

Washington, D.C. 20001

Facsimile:  (202) 508-4321

Attn.:  Louis A. Bevilacqua, Esq.

 

If to an Investor:

To the address set forth under such Investor’s name on its signature page hereto.

 

8.

Miscellaneous.

(a)

The Company and the Investors shall jointly and severally pay to the Escrow Agent on demand all costs and expenses, including, without limitation, the costs of any interpleader or similar action, incurred by the Escrow Agent in performing its services under this Agreement.  As between the Company and the Investors, such obligations shall be borne equally by the Company and the Investors.

(b)

If any provision of this Agreement is determined by any court of competent jurisdiction to be invalid or unenforceable in any jurisdiction the remaining provisions of this Agreement shall not be affected thereby, and the invalidity or unenforceability in any jurisdiction shall not invalidate or render unenforceable that provision in any other jurisdiction.  It is understood, however, that the parties intend each provision of this Agreement to be valid and enforceable and each of them waives all rights to object to any provision of this Agreement.

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(c)

This Agreement may be amended or modified, and any of the terms, covenants, representations, warranties, or conditions hereof may be waived, only by a written instrument executed by each of the Company, the Escrow Agent, Roth Capital Partners, LLC and each Investor. Any waiver by any party of any condition, or of the breach of any provision, term, covenant, representation, or warranty contained in this Agreement, in any one or more instances, shall not be deemed to be nor construed as further or continuing waiver of any such condition, or of the breach of any other provision, term, covenant, representation, or warranty of this Agreement.  The Company agrees that any requested waiver, modification or amendment of this Agreement shall be consistent with the terms of the Purchase Agreement.

(d)

This Agreement shall be binding upon and inure solely to the benefit of the Parties and their respective successors and permitted assigns, and shall not be enforceable by or inure to the benefit of any third party, except for the Investors and Roth Capital Partners, LLC.  No Party may assign its rights or obligations under this Agreement or any interest in the Escrow Funds without the written consent of the other Parties unless otherwise specified herein, and any other purported assignment shall be void.  In no event shall the Escrow Agent be required to act upon, or be bound by, any notice, instruction, objection or other communication given by a person other than, nor shall the Escrow Agent be required to deliver the Escrow Funds to any person other than, the Company or the Investors.
 

(e)

This Agreement shall be governed by and construed in accordance with the law of the State of New York applicable to agreements made and to be performed in New York.

(f)

The courts of New York State and the United States District Courts for New York shall have exclusive jurisdiction over the parties (and the subject matter) with respect to any dispute or controversy arising under or in connection with this Agreement.  A summons or complaint or other process in any such action or proceeding served by mail in accordance with the notice provisions of this Agreement or in such other manner as may be permitted by law shall be valid and sufficient service.

(g)

This Agreement contains a complete statement of all of the arrangements among the Parties with respect to its subject matter and cannot be changed or terminated orally.  Any waiver must be in writing.

(h)

This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original and all of which taken together shall constitute one and the same instrument.  Facsimile execution and delivery of this Agreement is legal, valid and binding for all purposes.

(i)

The section headings used herein are for convenience of reference only and shall not affect the construction or interpretation of this Agreement.

[Signature Page Follows]

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IN WITNESS WHEREOF, the respective parties have executed this Closing Escrow Agreement as of the date first above written.

  	CHINA
      PUBLIC SECURITY TECHNOLOGY, INC.
	 
	 
	By:	 
	Name:	 
	Title:	 
	 
	 
	 
	
      THELEN REID BROWN RAYSMAN & STEINER LLP
	 
	 
	By:	 
	Name:	 
	Title:	 
	 
	NAME
      OF INVESTOR
	 
	 
	By:	 
	Name:	 
	Title:	 
	 
	
      ADDRESS FOR NOTICE
	c/o:	 
	Street:	 
	City/State/Zip:	 
	Attention:	 
	Tel:	 
	Fax:EX-10.1

September 28, 2007

Melvin L. Keating

18 Driftwood Drive

Livingston, New Jersey

Dear Mel:

On behalf of LCC International, Inc. (the “Company”), I am pleased to formally invite you to join
our Board of Directors. We expect you will serve a vital role as one of the Company’s “outside”
directors. We also expect you will serve on one or more of the Board’s Committees, following the
recommendations of the Board’s Nominating & Corporate Governance Committee.

I intend to submit your candidacy to the Board for approval promptly after receiving your
acceptance of this invitation to join the Board. This will be an interim appointment commencing on
the date the Board approves your election and continuing until the Company’s next Annual
Shareholders’ Meeting in December 2007. We expect the Board will concurrently approve your
inclusion in Company’s 2007 Proxy Statement for election as a member of the Board. The Company’s
Directors are elected for one-year term(s) at each Annual Shareholders’ Meeting.

Historically, the Board holds four regular meetings each year and one Annual Meeting immediately
following the Annual Shareholders’ Meeting. Although the Annual Meeting has been delayed in 2007,
the Annual Meeting is normally held during the third week of May, and the regular meetings are
normally scheduled in the third or fourth week following the close of each fiscal quarter.

The Board also holds special meetings as needed during the year to consider matters that demand
more immediate attention given the needs of the business.

In consideration of your services, we are offering you the following compensation package:

	 	•	 	An annual retainer of $30,000 paid in four equal quarterly installments, in arrears, at
each regular meeting of the Board.

	 	•	 	An annual retainer of $2,000 for each Committee that you serve on with an additional
$3,000 in the event you serve as Chair of the Committee.

Page 2

Melvin L. Keating Letter

September 28, 2007

	 	•	 	A fee of $1,000 for each Board and Board Committee meeting that you attend, together
with reimbursement of all reasonable out-of-pocket expenses you incur in connection with
your service.

You are also eligible to receive options to purchase shares of the Company’s Class “A” Common Stock
under the Company’s Amended and Restated Equity Incentive Plan (the “Plan”). Directors of the
Company are eligible to receive an annual grant at each Annual Board Meeting of options to purchase
10,000 shares, and a grant upon joining the Board equal to a pro rata portion of 10,000 based on
the portion of a year remaining until the next Annual Board Meeting. Assuming you accept on or
before October 1, and given that the next Annual Meeting will be in mid-December, this amounts to
an initial grant of 2,050 shares.

The options are granted at the fair market value of the Company’s Class “A” Common Stock on the
date of grant (i.e., the date approved by the Board), which is defined as the closing price
reported on NASDAQ on the date prior to the date of grant. The options normally have a three-year
vesting schedule with one third vesting on each anniversary of the date of grant. The options are
subject to the terms and conditions of the Plan and the form of Non-Qualified Stock Option
Agreement adopted by the Board for grants under the Plan.

You will also be entitled to indemnification from the Company for certain claims that you may be
subject to in connection with your service to the Company. You will be provided an indemnification
agreement in the form adopted by the Board for its members. A copy of the form agreement is
attached for your reference. The Company maintains standard D&O Liability coverage that provides
coverage for certain risks under the terms of the policy.

You will be subject to the normal SEC and NASDAQ rules applicable to directors of public companies
including restrictions on your ability to execute transactions involving Company securities and
certain disclosure obligations with respect to your trading activities. The Company has adopted
certain policies applicable to its officers and directors, including trading windows and
pre-clearance procedures, which will assist in your compliance with these requirements.

I have also enclosed a Questionnaire for Directors and Executive Officers, which I would greatly
appreciate you completing and returning to LCC’s General Counsel, Peter Deliso, at your earliest
possible convenience. The D&O Questionnaire ensures that the Company has certain information
regarding its directors and officers necessary for periodic SEC reporting purposes.

Page 3

Melvin L. Keating Letter

September 28, 2007

Again, we are very pleased to offer you this position and look forward to a long and mutually
beneficial relationship. If you wish to accept this offer, please sign this letter in the space
provided below and return one fully executed copy to me. This offer is contingent upon approval by
the Board of Directors, your submission of the attached Questionnaire, as well as satisfactory
completion of the Board’s due diligence with respect to your background, your qualification as an
“independent” director, and the information provided in your Questionnaire.

If you have any questions, please feel free to call me.

Best regards,

/s/ Susan Ness

Susan Ness

Chair, Nominating & Corporate Governance Committee

LCC International, Inc.

Board of Directors

ACCEPTED AND AGREED

As of the 29th day of September 2007

/s/ Melvin L. Keating     

Melvin L. Keating

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