EX-10.8 3 ea125143ex10-8_hitekglobal.htm FORM OF INDEMNIFICATION ESCROW AGREEMENT

Exhibit 10.8

INDEMNIFICATION ESCROW AGREEMENT

This INDEMNIFICATION ESCROW AGREEMENT (this “Agreement”) dated as of August [●], 2020 is entered into by and among Hitek Global, Inc. (the “Company”), Newbridge Securities Corporation, as representative of the several underwriters named in the Underwriting Agreement (defined below) (the “Underwriters”), and Continental Stock Transfer & Trust Company (the “Escrow Agent”).

WITNESSETH:

WHEREAS, the Company is offering (the “Offering”) on a firm commitment basis up to 4,600,000 ordinary shares of the Company, par value $0.0001 (including up to 600,000 ordinary shares that the Underwriters in the offering have the option to purchase) (the “Shares”), at an offering price of $5.00, per share;

WHEREAS, the Company and Underwriters expect that the Offering will close on or before the close of business on August 18, 2020 (the “Closing Date”);

WHEREAS, upon the closing of the Offering, the Company has agreed to deposit an aggregate amount of Five Hundred Thousand Dollars ($500,000) (the “Escrowed Funds”) from the proceeds of the Offering to be received by the Company with the Escrow Agent in a non-interest bearing escrow account, to be held, uninvested and disbursed by the Escrow Agent pursuant to the terms and conditions of this Agreement. While on deposit, the Escrow Agent may earn bank credits or other consideration;

WHEREAS, the Escrow Agent is willing to hold the Escrowed Funds in escrow pursuant to and subject to the terms and conditions of this Agreement; and

NOW, THEREFORE, in consideration of the mutual promises herein contained and intending to be legally bound hereby, the parties hereto hereby agree as follows:

Appointment of Escrow Agent. The Company and the Underwriters hereby appoint the Escrow Agent as escrow agent in accordance with the terms and subject to the conditions set forth herein and the Escrow Agent hereby accepts such appointment.

Delivery of the Escrowed Funds. Upon the closing of the Offering, the Escrowed Funds shall be delivered on behalf of the Company to the Escrow Agent, as escrow agent, into a non-interest bearing escrow account maintained by the Escrow Agent (the “Escrow Account”) by wire transfer paid directly from the closing proceeds from the Offering in accordance with the wire transfer instructions set forth on Schedule A hereto. In no event shall the aggregate amount of Escrowed Funds delivered to the Escrow Account be less than Five Hundred Thousand Dollars ($500,000).

Escrow Agent to Hold and Disburse the Escrowed Funds. The Escrow Agent will retain the Escrowed Funds in an escrow account and disburse the Escrowed Funds pursuant to the terms of this Agreement, as follows:

a. The Escrowed Funds shall be held by the Escrow Agent for the purpose of satisfying the initial $500,000 of the indemnification obligations of the Company, with respect to the Escrowed Funds, pursuant to Section 3 of the Underwriting Agreement dated August [●], 2020 by and between the Company and the Underwriters (the “Underwriting Agreement”), for a period of eighteen (18) months from the closing of the Offering. Disbursement of such Escrowed Funds by written instruction to the Escrow Agent shall be determined by an independent third-party trustee, to be chosen by mutual consent of the Company and the Underwriters.

b. Notwithstanding the last sentence of the prior paragraph, in the event that any litigation or proceeding arising out of any matter in connection with the Offering in connection to any Underwriter acting in their capacity as underwriter within eighteen (18) months following the Closing Date and in which the Company, any Underwriter, the Escrow Agent or the Escrowed Funds becomes the subject of such litigation or proceeding, the Underwriters and the Company hereby authorize the Escrow Agent, at the affected Underwriter’s sole instruction upon affected Underwriter’s written notice to the Escrow Agent if not otherwise so required, to release and deposit the Escrowed Funds by interpleader with the clerk of the court in which the litigation is pending for the purpose of indemnifying and defending the Underwriter in such litigation and proceeding, and thereupon the Escrow Agent shall be relieved and discharged of any further responsibility with regard thereto to the extent determined by any such court. The Company and any affected Underwriter further hereby authorize the Escrow Agent, if it receives conflicting claims to any of the Escrowed Funds or is threatened with litigation in its capacity as escrow agent under this Agreement, to interplead all interested parties in any court of competent jurisdiction and to deposit the Escrowed Funds with the clerk of that court by interpleader and thereupon the Escrow Agent shall be relieved and discharged of any further responsibility hereunder to the parties from which they were received to the extent determined by such court.

c. In all instances, if either (i) no claim for indemnity is made by the Underwriters during the 18-month period from the closing of the Offering or (ii) it is finally determined that the Underwriters are not entitled to any disbursement (or any further disbursement, as the case may be) of Escrowed Funds by the conclusion of the 18-month period from the closing of the Offering, the Escrow Agent shall, upon joint written instruction from the Company and the Underwriters, disburse to the Company the full balance of the Escrowed Funds then held by wire transfer of immediately available funds to an account designated by the Company.

Exculpation and Indemnification of Escrow Agent.

a. The Escrow Agent shall have 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 other than as set forth herein, 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 Agreement referenced below, and except for written instructions given to the Escrow Agent by the Company and the Underwriters relating to the Escrowed Funds, the Escrow Agent shall not be obligated to recognize any agreement between or among any of the Company and the Underwriters, notwithstanding that references thereto may be made herein and the Escrow Agent has knowledge thereof.

b. The Escrow Agent shall not be liable to the Company, the Underwriters, 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 reasonably believed by the Escrow Agent to be genuine and to be signed or presented by the proper party or parties hereunder. 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 hereunder and, if the duties or rights of the Escrow Agent are affected, unless it shall give its prior written consent thereto.

c. 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 Underwriters, 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 Agreement. Except as otherwise set forth herein, the Escrow Agent shall have no responsibility with respect to the use or application of the Escrowed Funds pursuant to the provisions hereof.

d. The Escrow Agent shall have the right to assume, in the absence of written notice to the contrary from the proper party or parties hereunder, 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 Underwriters, 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.

e. To the extent that the Escrow Agent becomes liable for the payment of taxes, including withholding taxes, in respect of any payment made hereunder, the Escrow Agent may pay such taxes from the Escrowed Funds; 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(f).

f. 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 proceeding 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 Agreement, the services of the Escrow Agent hereunder, except for claims relating to gross negligence or willful misconduct by the Escrow Agent. Promptly, but no later than ten (10) business days, after the receipt by 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 by the Escrow Agent against the Company, notify the Company in writing, but the failure by the Escrow Agent to give such notice shall not relieve the Company from any liability which the Company may have to the Escrow Agent hereunder, unless the failure of the Escrow Agent to give such notice prejudices or otherwise impairs the Company’s ability to defend any demand, claim, action suit or proceeding

g. 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.

Omitted

Termination of Agreement and Resignation of Escrow Agent.

a. This 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 Underwriters under Section 4 shall survive the termination hereof.

b. The Escrow Agent may resign at any time and be discharged from its duties as Escrow Agent hereunder by giving the Company and the Underwriters at least fifteen (15) 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 Underwriters within the Notice Period, turn over to a successor escrow agent appointed by the Company and the Underwriters all Escrowed Funds 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 Company without interest or deduction.

Form of Payments by Escrow Agent.

a. Any payments of the Escrowed Funds by the Escrow Agent pursuant to the terms of this Agreement shall be made by wire transfer unless directed to be made by check by the Underwriters and/or Company.

b. All amounts referred to herein are expressed in United States Dollars and all payments by the Escrow Agent shall be made in such dollars.

Compensation. Escrow Agent shall be entitled to $4,500 as compensation for its services rendered under this Agreement for the first 18 months ($350 per month thereafter), which amount shall be delivered by the Company to an account designated by the Escrow Agent on the same date when the Escrowed Funds are delivered into the Escrow Account.

Notices. All notices, demands, consents, requests, instructions and other communications to be given or delivered or permitted under or by reason of the provisions of this Agreement or in connection with the transactions contemplated hereby shall be in writing and shall be deemed to be delivered and received by the intended recipient as follows: (i) if personally delivered, on the business day of such delivery (as evidenced by the receipt of the personal delivery service), (ii) if mailed certified or registered mail return receipt requested, on the business day of such delivery (as evidenced by the signed certified mail card), (iii) if delivered by overnight courier (with all charges having been prepaid), on the business day of such delivery (as evidenced by the receipt of the overnight courier service of recognized standing), (iv) if delivered by facsimile transmission, on the business day of such delivery if sent by 6:00 p.m. in the time zone of the recipient, or if sent after that time, on the next succeeding business day (as evidenced by the printed confirmation of delivery generated by the sending party’s telecopier machine), or (v) if delivered by email on the business day of such delivery (as evidenced by delivery confirmation). If any notice, demand, consent, request, instruction or other communication cannot be delivered because of a changed address of which no notice was given (in accordance with this Section 9), or the refusal to accept same, the notice, demand, consent, request, instruction or other communication shall be deemed received on the second business day the notice is sent (as evidenced by a sworn affidavit of the sender). All such notices, demands, consents, requests, instructions and other communications will be sent to addresses or facsimile numbers as applicable set forth hereunder.

If to the Company, to:

Hitek Global Inc.

Unit 304, No. 30 Guanri Road, Siming District
Xiamen City, Fujian Province

People’s Republic of China

Attention: Xiaoyang Huang

Email: hxy0101@yeah.net

with a copy to (which shall not constitute notice):

Hunter Taubman Fischer & Li, LLC

800 Third Avenue, Suite 2800
New York, NY 10018

Attention: Joan Wu, Esq.

Email: jwu@htflawyers.com

If to the Underwriters, to:

Newbridge Securities Corporation
5220 Town Center Circle

Tower 1, Suite 306

Boca Raton, Florida 33486

Attention: Bruce Jordan

Email: bjordan@newbridgesecurities.com

Attention: John McAuliffe

Email: jmcauliffe@newbridgesecurities.com

with a copy to (which shall not constitute notice):

Haneberg Hurlbert PLC

1111 East Main St., Suite 2010

Richmond, VA 23219

Attention: Bradley A. Haneberg, Esq.

Email: brad@hbhblaw.com

If to the Escrow Agent, to:

Continental Stock Transfer & Trust Company

1 State Street, 30^th Floor

New York, NY 10004

Attention: Francis E. Wolf, Jr. & Patrick Small

Email: fwolf@continentalstock.com

Email: psmall@continentalstock.com

10.

Further Assurances. From time to time on and after the date hereof, the Company and the Underwriter 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 Agreement, to evidence compliance herewith or to assure itself that it is protected in acting hereunder.

11.

Consent to Service of Process. The Company, the Underwriter and the Escrow Agent hereby irrevocably consent to the jurisdiction of the courts of the State of New York and of any Federal court located in such state in connection with any action, suit or proceedings arising out of or relating to this 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 hereto.

12.

Miscellaneous.

a. This 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 Agreement, refer to the Escrow Agreement in its entirety and not only to the particular portion of this 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 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 Agreement shall not be admissible in evidence to construe the provisions of any prior agreement.

b. This Agreement and the rights and obligations hereunder of the Company and the Underwriter may not be assigned without the consent of the Escrow Agent, other than by laws of descent or operation of law. This Agreement and the rights and obligations hereunder of the Escrow Agent may be assigned by the Escrow Agent, with the prior consent of the Company. This 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 Agreement. This 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 Underwriter, which consent shall not be unreasonably withheld. This 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 Agreement are intended to be, nor shall they be construed to be, for the benefit of any third person.

c. This Agreement shall be governed by, and construed in accordance with, the internal laws of the State of New York. The representations and warranties contained in this Agreement shall survive the execution and delivery hereof and any investigations made by any party. The headings in this Agreement are for purposes of reference only and shall not limit or otherwise affect any of the terms thereof.

13.

Execution of Counterparts. This Agreement may be executed in any number of counterparts, by facsimile or other form of electronic transmission, 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 Agreement shall become binding when one or more of the counterparts hereof, individually or taken together, are signed by all parties hereto.

[THE REMAINDER OF THE PAGE IS INTENTIONALLY LEFT BLANK]

IN WITNESS WHEREOF, the parties have executed and delivered this Agreement on the day and year first above written.

ESCROW AGENT:

CONTINENTAL STOCK TRANSFER & TRUST COMPANY

By:
Name:
Title:

COMPANY:

HITEK GLOBAL INC.

By:
Name:	Xiaoyang Huang
Title:	CEO

UNDERWRITERS:

NEWBRIDGE SECURITIES CORPORATION, as

representative of the several underwriters named in the

Underwriting Agreement

By:
Name:
Title:

Indemnification Escrow Agreement

Schedule A

ACCOUNT NAME:

Continental Stock Transfer & Trust Company

ACCOUNT NO.:

ABA ROUTING NO.:

SWIFT CODE:

BANK:

TO BE WIRED IN U.S. DOLLARS