Contract
This Make Good Escrow Agreement (the
"Make Good Agreement"), dated effective as of December 21, 2010, is entered into
by and among CFO Consultants, Inc., a Nevada corporation (the "Company"), Kai Bo
Holdings Ltd., (the “Make Good Pledgor”), and Collateral Agents, LLC, as escrow
agent ("Escrow Agent").
WHEREAS, each of the investors in the
private offering of securities of the Company (the "Investors") has entered into
a Securities Purchase Agreement, dated December 21, 2010 (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, the Make Good Pledgor has 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 After-Tax Net Income (as defined below)
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. The Company and the Make Good Pledgor 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 eight (8) Business Days following the closing
of the Offering, the Make Good Pledgor shall deliver, to the Escrow Agent
original certificates evidencing an aggregate of 4,600,000 shares of the Company’s
Common Stock (the “Escrow Shares”), along with original bank signature stamped
stock powers executed in blank (or such other signed instrument of transfer
acceptable to the Company’s Transfer Agent). As used in this Make
Good Agreement, “Transfer Agent” means Action Stock Transfer Corporation, 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 and
Agent.
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3. Representations of the Make Good
Pledgor and the Company. The Make Good Pledgor and the Company
hereby represent and warrant, severally and not jointly, as to itself only, to
Escrow Agent as follows:
(i) 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.
(ii) 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
encumbrance upon, any of the properties or assets of the Make Good Pledgor
pursuant to the terms of any indenture, mortgage, deed of trust or other
agreement or instrument binding upon the 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.
a. Fiscal
Year Ended December 31, 2010. The Make Good
Pledgor agrees that if the after-tax net income (excluding any expense item
(other than tax expense and interest expense) deducted in determining net income
not appearing under the heading “Operating expenses” on the Company’s
Consolidated Statement of Operations, including but not limited to fair value
change on derivatives, warrants and make good shares (“Non-Operating Expenses”))
(“After-Tax Net Income” ) (calculated in accordance with Exhibit A attached
hereto) for the fiscal year ended December 31, 2010, based on the Company’s
results reported in the Company’s Annual Report on Form 10-K for the fiscal year
ending December 31, 2010, as filed with the Commission (the “2010 Annual
Report”), is less than 95% of $25,882,536 (95% of such amount being the “2010
Guaranteed ATNI”), Escrow Agent shall, within seven (7) business days after the
date which the 2010 Annual Report is filed with the Commission, provide written
instruction (with a copy to the Company) and direct the Transfer
Agent to transfer to each Investor (in such Investor’s name) on a pro rata basis
(based upon such Investor’s Investment Amount specified on Exhibit B attached
hereto relative to the aggregate Investment Amounts of all Investors specified
on Exhibit B attached hereto) for no additional consideration a number of Escrow
Shares that is equal to 115,000 Escrow Shares for each full percentage point by
which the 2010 Guaranteed ATNI was not achieved up to a maximum of 2,300,000
Escrow Shares. In the event the Escrow Agent shall determine that the
2010 Guaranteed ATNI was not achieved, it shall provide notice to the Company
and Make Good Pledgor of such determination within three (3) business days prior
to providing instructions to the Transfer Agent regarding the transfers of
Escrow Shares to the Investors. If the Company’s audited consolidated
financial statements for the fiscal year ended December 31, 2010 reflect that
the 2010 Guaranteed ATNI shall have been achieved, no transfer of the 2010
Investor Shares to the Investors shall be required by this Section, Escrow Agent
shall, within five (5) business days after the date which the 2010 Annual Report
is filed with the Commission, return 2,300,000 Escrow Shares that have been
deposited with the Escrow Agent to the Make Good Pledgor Notwithstanding
anything to the contrary contained herein, if the 2010 Annual Report is not
filed within sixty (60) days of its original due date in accordance with the
applicable rules and regulations of the Commission, the 2010 Guaranteed ATNI
shall be deemed not to have been achieved and the maximum of 2,300,000 Escrow
Shares shall be transferred to the Investors in accordance with this
section.
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b. Fiscal
Year Ended December 31, 2011. The Company
agrees that if the After-Tax Net Income (excluding Non-Operating Expenses),
based on the Company’s results for the fiscal year ended December 31, 2011
reported in the Company’s Annual Report on Form 10-K for the fiscal year ending
December 31, 2011, as filed with the Commission (the “2011 Annual Report”), is
less than 95% of $33,382,670 (95% of such amount being the “2011 Guaranteed
ATNI”), Escrow Agent shall, within seven (7) business days after the date which
the 2011 Annual Report is filed with the Commission, provide written instruction
(with a copy to the Company) and direct the Transfer Agent to transfer to each
Investor (in such Investor’s name) on a pro rata basis (based upon such
Investor’s Investment Amount specified on Exhibit B attached
hereto relative to the aggregate Investment Amounts of all Investors specified
on Exhibit B attached hereto) for no additional consideration a number of Escrow
Shares that is equal to 115,000 Escrow Shares for each full percentage point by
which the 2011 Guaranteed ATNI was not achieved up to a maximum of 2,300,000
Escrow Shares. In the event the Escrow Agent shall determine that the
2011 Guaranteed ATNI was not achieved, it shall provide notice to the Company
and Make Good Pledgor of such determination within three (3) business days prior
to providing instructions to the Transfer Agent regarding the transfers of
Escrow Shares to the Investors. If the Company’s audited consolidated
financial statements for the fiscal year ended December 31, 2011 reflect that
the 2010 Guaranteed ATNI shall have been achieved, no transfer of the 2011
Investor Shares to the Investors shall be required by this Section and Agent
shall, within five (5) business days after the date which the 2011 Annual Report
is filed with the Commission, provide written instruction (with a copy to the
Company) to the Escrow Agent to return all remaining Escrow Shares that have
been deposited with the Escrow Agent to the Make Good Pledgor. Notwithstanding
anything to the contrary contained herein, if the 2011 Annual Report is not
filed within sixty (60) days of its original due date in accordance with the
applicable rules and regulations of the Commission, the 2011 Guaranteed ATNI
shall be deemed not to have been achieved and the maximum of 2,300,000 Escrow
Shares shall be transferred to the Investors in accordance with this
section.
c. Notwithstanding anything
to the contrary contained herein, in the event that the release of any
of the Escrow Shares to the Investors or any other party is deemed to be an
expense or deduction from revenues/income of the Company for the applicable
year, as required under GAAP, then such expense or deduction shall be
excluded for purposes of determining whether or not the 2010 Guaranteed
ATNI or the 2011 Guaranteed ATNI has been achieved by the Company to the
extent not already excluded pursuant to the definition of “Non-Operating
Expenses.”
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d. The
Make Good Pledgor’s obligation to transfer shares of Common Stock to Investors
pursuant to Section 4.11 of the SPA shall continue to run to the benefit of an
Investor who shall have transferred or sold all or any portion of its
Securities, and 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 Securities.
e. If
prior to the second anniversary of the filing of either of the 2010 Annual
Report or the 2011 Annual Report (as applicable), the Company or their auditors
report or recognize that the financial statements contained in such report are
subject to amendment or restatement such that the Company would recognize or
report adjusted After-Tax Net Income of less than either of the 2010 Guaranteed
ATNI or the 2011 Guaranteed ATNI (as applicable), then notwithstanding any prior
return of Escrow Shares to the Make Good Pledgor, the Make Good Pledgor will,
within ten (10) business days following the earlier of the filing of such
amendment or restatement or recognition, deliver the relevant Escrow Shares to
the Investors.
f. The
Company and the Make Good Pledgor covenant and agree to provide the Escrow Agent
with certified tax identification numbers by furnishing appropriate forms W-9 or
W-8 and such other forms and documents that the Escrow Agent may request,
including appropriate W-9 or W-8 forms for each Investor. The Company
and the Make Good Pledgor understand that if such tax reporting documentation
are not provided and certified to the Escrow Agent, the Escrow Agent may be
required by the Internal Revenue Code of 1986, as amended, and the Regulations
promulgated thereunder, to withhold a portion of any interest or other income
earned on the investment of the Escrow Property.
5. Duration. This Make Good
Agreement shall terminate upon the distribution of all the Escrow Shares in
accordance with the terms of this Make Good Agreement. The Company
agrees to promptly provide the Escrow Agent written notice of the filing with
the Commission of any financial statements or reports referenced
herein.
6. Escrow
Shares. If any Escrow Shares are deliverable to the Investors
pursuant to the SPA and in accordance with this Make Good Agreement, (i) the
Make Good Pledgor covenants and agrees to execute all such instruments of
transfer (including stock powers and assignment documents) as are customarily
executed to evidence and consummate the transfer of the Escrow Shares from the
Make Good Pledgor to the Investors, to the extent not done so in accordance with
Section 2, and (ii) following its receipt of the documents referenced in Section
6(i), the Company and Escrow Agent covenant and agree to cooperate with the
Transfer Agent so that the Transfer Agent promptly reissues such Escrow Shares
in the applicable Investor’s name and delivers the same as directed by such
Investor. Until such time as (if at all) the Escrow Shares are
required to be delivered pursuant to the SPA and in accordance with this Make
Good Agreement (i) any dividends payable in respect of the Escrow Shares and all
voting rights applicable to the Escrow Shares shall be retained by the Make Good
Pledgor and (ii) should the Escrow Agent receive dividends or voting materials,
such items shall not be held by the Escrow Agent, but shall be passed
immediately on to Make Good Pledgor and shall not be invested or held for any
time longer than is needed to effectively re-route such items to the Make Good
Pledgor. In the event that the Escrow Agent receives a
communication requiring the conversion of the Escrow Shares to cash or
the exchange of the Escrow Shares for that of an acquiring company, the Escrow
Agent shall solicit and follow the written instructions of the Make Good
Pledgor; provided that (i) the exchanged shares are instructed to be redeposited
into an escrow account controlled by the Escrow Agent, and (ii) the cash is
instructed to be deposited into a newly established, non-interest-bearing bank
account at the branch of the bank selected by the Escrow Agent. The
Make Good Pledgor shall be responsible for all taxes resulting from any such
conversion or exchange.
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7.
Interpleader. Should any controversy arise among the parties
hereto with respect to this Make Good Agreement or with respect to the right to
receive the Escrow Shares, Escrow Agent shall have the right to consult and hire
counsel and/or to institute an appropriate interpleader action to determine the
rights of the parties. Escrow Agent are also each hereby authorized to institute
an appropriate interpleader action upon receipt of a written letter of direction
executed by the parties so directing Escrow Agent. If Escrow Agent is directed
to institute an appropriate interpleader action, it shall institute such action
not prior to thirty (30) days after receipt of such letter of direction and not
later than sixty (60) days after such date. Any interpleader action instituted
in accordance with this Section 7 shall be filed in any court of competent
jurisdiction in the State of New York, and the Escrow Shares in dispute shall be
deposited with the court and in such event Escrow Agent shall be relieved of and
discharged from any and all obligations and liabilities under and pursuant to
this Make Good Agreement with respect to the Escrow Shares and any other
obligations hereunder.
8. Exculpation and Indemnification of
Escrow Agent.
a. Escrow
Agent is not a party to, and is not bound by or charged with notice of any
agreement out of which this escrow may arise. Escrow Agent acts under
this Make Good Agreement as a depositary only and is not responsible or liable
in any manner whatsoever for the sufficiency, correctness, genuineness or
validity of the subject matter of the escrow, or any part thereof, or for the
form or execution of any notice given by any other party hereunder, or for the
identity or authority of any person executing any such notice. Escrow Agent will
have no duties or responsibilities other than those expressly set forth
herein. Escrow Agent will be under no liability to anyone by reason
of any failure on the part of any party hereto (other than Escrow Agent) or any
maker, endorser or other signatory of any document to perform such person's or
entity's obligations hereunder or under any such document. Except for
this Make Good Agreement and instructions to Escrow Agent pursuant to the terms
of this Make Good Agreement, Escrow Agent will not be obligated to recognize any
agreement between or among any or all of the persons or entities referred to
herein, notwithstanding its knowledge thereof. Escrow Agent is not
charged with any obligation to conduct any investigation into the financial
reports or make any other investigation related thereto. In the event
of any actual or alleged mistake or fraud of the Company, its auditors or any
other person (other than Escrow Agent) in connection with such financial reports
of the Company, Escrow Agent shall have no obligation or liability to any party
hereunder.
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b. Escrow
Agent will not be liable for any action taken or omitted by it, or any action
suffered by it to be taken or omitted, absent gross negligence or willful
misconduct. Escrow Agent may rely conclusively on, and will be
protected in acting upon, any order, notice, demand, certificate, or opinion or
advice of counsel (including counsel chosen by 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 Escrow Agent to be genuine and to be signed or presented by the
proper person or persons. The duties and responsibilities of the
Escrow Agent hereunder shall be determined solely by the express provisions of
this Make Good Agreement and no other or further duties or responsibilities
shall be implied, including, but not limited to, any obligation under or imposed
by any laws of the State of New York upon fiduciaries. THE ESCROW
AGENT SHALL NOT BE LIABLE, DIRECTLY OR INDIRECTLY, FOR ANY (I) DAMAGES, LOSSES
OR EXPENSES ARISING OUT OF THE SERVICES PROVIDED HEREUNDER, OTHER THAN DAMAGES,
LOSSES OR EXPENSES WHICH HAVE BEEN FINALLY ADJUDICATED TO HAVE DIRECTLY RESULTED
FROM THE ESCROW AGENT’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, OR (II) SPECIAL,
INDIRECT OR CONSEQUENTIAL DAMAGES OR LOSSES OF ANY KIND WHATSOEVER (INCLUDING,
WITHOUT LIMITATION, LOST PROFITS), EVEN IF THE ESCROW AGENT HAS BEEN ADVISED OF
THE POSSIBILITY OF SUCH LOSSES OR DAMAGES AND REGARDLESS OF THE FORM OF
ACTION.
c. The
Company and the Make Good Pledgor hereby, jointly and severally, indemnify and
hold harmless each of Escrow Agent and any of its principals, partners, agents,
employees and affiliates from and against any
expenses, including reasonable attorneys' fees and disbursements, damages or
losses suffered by Escrow Agent or Agent in connection with any claim or demand,
which, in any way, directly or indirectly, arises out of or relates to this Make
Good Agreement or the services of Escrow Agent hereunder; except, that if Escrow
Agent is guilty of willful misconduct or gross negligence under this Make Good
Agreement, then Escrow Agent will bear all losses, damages and expenses arising
as a result of its own willful misconduct or gross
negligence. Promptly after the receipt by Escrow Agent of notice of
any such demand or claim or the commencement of any action, suit or proceeding
relating to such demand or claim, Escrow Agent as the case may be, will notify
the other parties hereto in writing. For the purposes hereof, the
terms "expense" and "loss" will include all amounts paid or payable to satisfy
any such claim or demand, or in settlement of any such claim, demand, action,
suit or proceeding settled with the express written consent of the parties
hereto, and all costs and expenses, including, but not limited to, reasonable
attorneys' fees and disbursements, paid or incurred in investigating or
defending against any such claim, demand, action, suit or
proceeding. The provisions of this Section 8 shall survive the
termination of this Make Good Agreement, and the resignation or removal of the
Escrow Agent.
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d. If
at any time the Escrow Agent is served with any judicial or administrative
order, judgment, decree, writ or other form of judicial or administrative
process which in any way affects the Escrow Shares (including but not limited to
orders of attachment or garnishment or other forms of levies or injunctions or
stays relating to the transfer of the Escrow Shares), the Escrow Agent is
authorized to comply therewith in any manner it or legal counsel of its own
choosing deems appropriate; and if the Escrow Agent complies with any such
judicial or administrative order, judgment, decree, writ or other form of
judicial or administrative process, Escrow Agent shall not be liable to any of
the parties hereto or to any other person or entity even though such order,
judgment, decree, writ or process may be subsequently modified or vacated or
otherwise determined to have been without legal force or effect.
e. The
Escrow Agent may consult with legal counsel of its own choosing as to any matter
relating to this Agreement, and the Escrow Agent shall not incur any liability
in acting in good faith in accordance with any advice from such
counsel.
f. The
Escrow Agent shall not incur any liability for not performing any act or
fulfilling any duty, obligation or responsibility hereunder by reason of any
occurrence beyond the control of the Escrow Agent (including but not limited to
any act or provision of any present or future law or regulation or governmental
authority, any act of God or war, civil unrest, local or national disturbance or
disaster, any act of terrorism, or the unavailability of the Federal Reserve
Bank wire or facsimile or other wire or communication facility).
g. The
Escrow Agent shall not be called upon to advise any party as to the wisdom in
retaining or taking or refraining from any action with respect to the Escrow
Shares deposited hereunder.
h. Escrow
Agent may generally engage in any kind of business with the Company, the Agent,
Investor or Make Good Pledgor or any subsidiary or affiliate thereof as if it
had not entered into this Agreement or any other agreement with them. Escrow
Agent and its affiliates and their officers, directors, employees, and agents
(including legal counsel) may now or hereafter be engaged in one or more
transactions with the Company, the Agent, the Investor, or Make Good Pledgor or
any subsidiary or affiliate thereof or may act as trustee, agent or
representative of either the foregoing parties or otherwise be engaged in other
transactions with such parties (collectively, the “Other
Activities”). Without limiting the forgoing, Escrow Agent and its
affiliates and their officers, directors, employees, and agents (including legal
counsel) shall not be responsible to account to the Company, the Agent, the
Investor or the Make Good Pledgor or any subsidiary or affiliate thereof for
such Other Activities.
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9. Compensation of Escrow
Agent. Escrow Agent shall be entitled to compensation for its
services as stated in the fee schedule attached hereto as Exhibit C, which
compensation shall be paid by the Company. The fee agreed upon for the services
rendered hereunder is intended as full compensation for Escrow Agent's services
as contemplated by this Make Good Agreement; provided, however, that in the
event that Escrow Agent renders any material service not contemplated in this
Make Good Agreement, or there is any assignment of interest in the subject
matter of this Make Good Agreement, or any material modification hereof, or if
any material controversy arises hereunder, or Escrow Agent is made a party to
any litigation pertaining to this Make Good Agreement, or the subject matter
hereof, then Escrow Agent shall be reasonably compensated by the Company for
such extraordinary services and reimbursed for all costs and expenses, including
reasonable attorney's fees, occasioned by any delay, controversy, litigation or
event, and the same shall be recoverable from the Company. Prior to
incurring any costs and/or expenses in connection with the foregoing sentence,
Escrow Agent shall be required to provide written notice to the Company of such
costs and/or expenses and the relevancy thereof and Escrow Agent shall not be
permitted to incur any such costs and/or expenses which are not related to
litigation prior to receiving written approval from the Company, which approval
shall not be unreasonably withheld. In addition, the Company agrees
to pay the Escrow Agent’s reasonable and documented costs and expenses,
including all wire fees (both international and domestic), packaging and postal
fees and expenses (including FedEx).
10. Resignation of Escrow
Agent. At any time, upon ten (10) days' written notice to the
Company and return of a proportional amount of the fees paid upon entering into
this Agreement representing the remaining term hereof, Escrow Agent may resign
and be discharged from its duties as Escrow Agent hereunder. As soon as
practicable after its resignation, Escrow Agent will promptly turn over to a
successor escrow agent appointed by the Company the Escrow Shares held hereunder
upon presentation of a document appointing the new escrow agent and evidencing
its acceptance thereof. If, by the end of the 10-day period following
the giving of notice of resignation by Escrow Agent, the Company shall have
failed to appoint a successor escrow agent, Escrow Agent may interplead the
Escrow Shares into the registry of any court having jurisdiction.
11. Records. Escrow
Agent shall maintain accurate records of all transactions
hereunder. Promptly after the termination of this Make Good Agreement
or as may reasonably be requested by the parties hereto from time to time before
such termination, Escrow Agent shall provide the parties hereto, as the case may
be, with a complete copy of such records, certified by Escrow Agent to be a
complete and accurate account of all such transactions. The
authorized representatives of each of the parties hereto shall have access to
such books and records at all reasonable times during normal business hours upon
reasonable notice to Escrow Agent and at the requesting party’s
expense.
12. Notice. All
notices, communications and instructions required or desired to be given under
this Make Good Agreement must be in writing and shall be deemed to be duly given
if sent by registered or certified mail, return receipt requested, or overnight
courier, to the addresses listed on the signature pages hereto.
13. Execution in
Counterparts. This Make Good Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
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14. Assignment and
Modification. This Make Good Agreement and the rights and
obligations hereunder of any of the parties hereto may not be assigned without
the prior written consent of the other parties hereto. Subject to the
foregoing, this Make Good Agreement will be binding upon and inure to the
benefit of each of the parties hereto and their respective successors and
permitted assigns. No other person will acquire or have any rights
under, or by virtue of, this Make Good Agreement. No portion of the
Escrow Shares shall be subject to interference or control by any creditor of any
party hereto, or be subject to being taken or reached by any legal or equitable
process in satisfaction of any debt or other liability of any such party hereto
prior to the disbursement thereof to such party hereto in accordance with the
provisions of this Make Good Agreement. This Make Good Agreement may
be amended or modified only in writing signed by all of the parties
hereto.
15. Applicable
Law. This Make Good Agreement shall be governed by and
construed in accordance with the laws of the State of New York without giving
effect to the principles of conflicts of laws thereof. Any action brought by
either party against the other concerning the transactions contemplated by this
Agreement shall be brought only in the state courts of New York or in the
federal courts located in the state of New York. Each of Parties
agree to submit to the jurisdiction of such courts and waive trial by
jury.
16. Headings. The
headings contained in this Make Good Agreement are for convenience of reference
only and shall not affect the construction of this Make Good
Agreement.
17. Attorneys'
Fees. If any action at law or in equity, including an action
for declaratory relief, is brought to enforce or interpret the provisions of
this Make Good Agreement, the prevailing party shall be entitled to recover
reasonable attorneys' fees from the other party (unless such other party is the
Escrow Agent), which fees may be set by the court in the trial of such action or
may be enforced in a separate action brought for that purpose, and which fees
shall be in addition to any other relief that may be awarded.
18. Merger or
Consolidation. Any corporation or association into which the
Escrow Agent may be converted or merged, or with which it may be consolidated,
or to which it may sell or transfer all or substantially all of its corporate
trust business and assets as a whole or substantially as a whole, or any
corporation or association resulting from any such conversion, sale, merger,
consolidation or transfer to which the Escrow Agent is a party, shall be and
become the successor escrow agent under this Make Good Agreement and shall have
and succeed to the rights, powers, duties, immunities and privileges as its
predecessor, without the execution or filing of any instrument or paper or the
performance of any further act.
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IN WITNESS WHEREOF, the parties have
duly executed this Make Good Agreement as of the date set forth opposite their
respective names.
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COMPANY:
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By:
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Name:
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Title:
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Address:
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Xx.
0000 X & X, Xxx Xxxx Xxxxxx
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000-000
Xxxxxx Xxxx Xx.
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Xxxxx
Xxx, X.X., Xxxx Xxxx
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Attn: Chairman
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Facsimile: 000-0000-0000
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MAKE
GOOD PLEDGOR:
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KAI
BO HOLDINGS LIMITED
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By:
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Name:
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Title:
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Address:
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Xx.
0000 X & X, Xxx Xxxx Xxxxxx
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000-000
Xxxxxx Xxxx Xx.
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Xxxxx
Xxx, X.X., Xxxx Xxxx
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Attn: Chairman
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Facsimile: 000-0000-0000
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[REMAINDER
OF THIS PAGE INTENTIONALLY LEFT BLANK SIGNATURE PAGE FOR OTHER PARTIES
FOLLOWS]
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ESCROW
AGENT:
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COLLATERAL
AGENTS, LLC, as Escrow Agent
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By:
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Name:
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Title:
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Address:
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Collateral
Agents, LLC
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000
Xxxx 00xx
Xxxxxx, 0xx
Xxxxx
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Xxx
Xxxx, Xxx Xxxx 00000
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Attn.: General
Counsel
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Facsimile: 000-000-0000
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Exhibit
A
The
determination of “After-Tax Net Income” shall be made consistent with the
following examples:
Example
1: No Expenses excluded as part of “Non-Operating
Expenses”
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Year Ended
December 31,
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2009
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Sales
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$ | 64,463 | ||
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Cost
of sales
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(36,452 | ) | ||
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Gross
margin
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28,011 | |||
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Operating
expenses
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(3,487 | ) | ||
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Income
from operations
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24,524 | |||
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Interest
expense
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(187 | ) | ||
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Interest
income and other
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133 | |||
| (54 | ) | |||
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Income
before income taxes
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24,470 | |||
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Income
tax expense
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(2,625 | ) | ||
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Net
income
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$ | 21,845 | ||
“After-Tax
Net Income” shall equal $21,845,000
Example
2: Exclude Change in Fair Value of Derivative Liabilities as
“Non-Operating Expenses”
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Year Ended
December 31,
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2009
|
||||
|
Sales
|
$ | 64,463 | ||
|
Cost
of sales
|
(36,452 | ) | ||
|
Gross
margin
|
28,011 | |||
|
Operating
expenses
|
(3,487 | ) | ||
|
Income
from operations
|
24,524 | |||
|
Other
income/(expense)
|
||||
|
Interest
expense
|
(187 | ) | ||
|
Change
in fair value of derivative liabilities
|
(5,100 | ) | ||
|
Interest
income and other
|
133 | |||
| (5,154 | ) | |||
|
Income
before income taxes
|
19,370 | |||
|
Income
tax expense
|
(2,625 | ) | ||
|
Net
income
|
$ | 16,745 | ||
“After-Tax
Net Income” shall equal $16,745,000 + $5,100,000 = $21,845,000
12
Exhibit
B
INVESTMENT
AMOUNTS
13
Exhibit
C
ESCROW
AGENT FEES
$20,000
payable upon entering into this Agreement
14
