SECURITIES PURCHASE AGREEMENT
EXHIBIT
4.1
This
Securities Purchase Agreement (this “Agreement”) is dated as of October 24,
2006, among Asian Financial, Inc., a Wyoming corporation (the “Company”) and the
investors identified on the signature pages hereto (each, an “Investor” and
collectively, the “Investors”).
ARTICLE
1.
1.1. Definitions.
In
addition to the terms defined elsewhere in this Agreement, for all purposes
of
this Agreement, the following terms shall have the meanings indicated in this
Section 1.1:
“2006
Make Good Shares” has the meaning set forth in Section 4.10(a).
“2007
ATNI” has the meaning set forth in Section 4.10(b).
“2007
EPS” has the meaning set forth in Section 4.10(b).
“2007
Make Good Shares” has the meaning set forth in Section 4.10(b).
“2008
ATNI” has the meaning set forth in Section 4.10(b).
“2008
EPS” has the meaning set forth in Section 4.10(b).
“2008
Make Good Shares” has the meaning set forth in Section 4.10(b).
“Action”
means any action, suit, inquiry, notice of violation, proceeding (including
any
partial proceeding such as a deposition) or investigation pending or threatened
in writing against or affecting the Company, any Subsidiary or any of their
respective properties before or by any court, arbitrator, governmental or
administrative agency, regulatory authority (federal, state, county, local
or
foreign), stock market, stock exchange or trading facility.
“Additional
Shares” has the meaning set forth in Section 4.16.
“Adjusted
Unaudited Working Capital Amount” has the meaning set forth in Section
4.16.
“Affiliate”
means any Person that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with
a
Person, as such terms are used in and construed under Rule 144.
“Business
Day” means any day except Saturday, Sunday and any day which is a federal legal
holiday or a day on which banking institutions in the State of New York or
the
State of California are authorized or required by law or other governmental
action to close.
“Buy-In”
has the meaning set forth in Section 4.1(c).
“Closing”
means the closing of the purchase and sale of the Shares pursuant to Article
II.
“Closing
Date” means the Business Day on which all of the conditions set forth in
Sections 5.1 and 5.2 hereof are satisfied, or such other date as the parties
may
agree.
“Commission”
means the Securities and Exchange Commission.
“Common
Stock” means the common stock of the Company, par value $0.001 per share, and
any securities into which such common stock may hereafter be
reclassified.
“Common
Stock Equivalents” means any securities of the Company or any Subsidiary which
entitle the holder thereof to acquire Common Stock at any time, including
without limitation, any debt, preferred stock, rights, options, warrants or
other instrument that is at any time convertible into or exchangeable for,
or
otherwise entitles the holder thereof to receive, Common Stock or other
securities that entitle the holder to receive, directly or indirectly, Common
Stock.
“Company
Deliverables” has the meaning set forth in Section 2.2(a).
“Current
Assets” means the current assets of the Company, as determined in accordance
with GAAP applying consistent principles, practices, methodologies and policies,
as set forth in the audited consolidated financial statements of the Company
for
the fiscal year ended June 30, 2006.
“Current
Liabilities” means the current Liabilities of the Company, as determined in
accordance with GAAP applying consistent principles, practices, methodologies
and policies, as set forth in the audited consolidated financial statements
of
the Company for the fiscal year ended June 30, 2006.
“Disclosure
Materials” has the meaning set forth in Section 3.1(h).
“Effective
Date” means the date that the Registration Statement required by Section 2(a) of
the Registration Rights Agreement is first declared effective by the
Commission.
"Escrow
Agreement" means the Escrow Agreement, dated as of the date hereof, between
the
Company and the escrow agent (the “Escrow Agent”) set forth therein, in the form
of Exhibit
A
hereto.
“Event
Date” has the meaning set forth in Section 4.11.
“Exchange
Act” means the Securities Exchange Act of 1934, as amended.
“GAAP”
means U.S. generally accepted accounting principles.
“Guaranteed
NI” has the meaning set forth in Section 4.10(a).
“Intellectual
Property Rights” has the meaning set forth in Section 3.1(n).
“Investment
Amount” means, with respect to each Investor, the Investment Amount indicated on
such Investor’s signature page to this Agreement.
“Investor
Deliverables” has the meaning set forth in Section 2.2(b).
“Investor
Party” has the meaning set forth in Section 4.6.
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“June
30th
Audited
Working Capital Amount” means the dollar amount of Current Assets minus Current
Liabilities, as reflected in the audited consolidated financial statements
of
the Company for the fiscal year ended June 30, 2006.
“Liabilities”
means any and all debts, liabilities, commitments and obligations of any kind
of
the Company, whether fixed, contingent or absolute, matured or unmatured,
liquidated or unliquidated, accrued or not accrued, asserted or not asserted,
known or unknown, determined, determinable or otherwise, whenever or however
arising (including, whether arising out of any contract or tort based on
negligence or strict liability) and whether or not the same would be required
by
GAAP to be reflected in financial statements or disclosed in the notes
thereto.
“Lien”
means any lien, charge, encumbrance, security interest, right of first refusal
or other restrictions of any kind.
“Make
Good Escrow Agreement” means the Make Good Escrow Agreement, dated as of the
date hereof, among the Company, Xxxx Capital Partners, LLC, as agent, the escrow
agent (the “Make Good Escrow Agent”) set forth therein and Xxxxxx Xxx, in the
form of Exhibit
B
hereto.
“Material
Adverse Effect” means any of (i) a material and adverse effect on the legality,
validity or enforceability of any Transaction Document, (ii) a material and
adverse effect on the results of operations, assets, prospects, business or
condition (financial or otherwise) of the Company and the Subsidiaries, taken
as
a whole, or (iii) a material and adverse impairment to the Company’s ability to
perform on a timely basis its material obligations under any Transaction
Document.
“New
York
Courts” means the state and federal courts sitting in the City of New York,
Borough of Manhattan.
“Outside
Date” means November 17, 2006.
“Per
Share Purchase Price” equals $1.43182.
“Person”
means an individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability company, joint
stock company, government (or an agency or subdivision thereof) or other entity
of any kind.
“Proceeding”
means an action, claim, suit, investigation or proceeding (including, without
limitation, an investigation or partial proceeding, such as a deposition),
whether commenced or to the knowledge of the Company threatened.
“Registration
Rights Agreement” means the Registration Rights Agreement, dated as of the date
of this Agreement, among the Company and the Investors, in the form of
Exhibit
C
hereto.
“Registration
Statement” means a registration statement meeting the requirements set forth in
the Registration Rights Agreement and covering the resale by the Investors
of
the Shares.
“Reorganization”
means the transfer by Duoyuan Investments Limited, a British Virgin Islands
company (“DIL”) of all of its equity interest in Duoyuan Digital Printing
Technology Industry (China) Co., Ltd. (“Duoyuan China”) to the Company pursuant
to the Equity Transfer Agreement, dated August 31, 2006, entered into by and
among the Company (for purposes hereof, including the predecessor of the
Company) and DIL, as a result of which Duoyuan China and its subsidiaries became
a wholly-owned subsidiary of the Company, and Xxxxxx Xxx, the sole shareholder
of DIL, became the controlling shareholder of the Company.
“Rule
144” means Rule 144 promulgated by the Commission pursuant to the Securities
Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the Commission having substantially the same
effect as such Rule.
“SEC
Reports” has the meaning set forth in Section 3.1(h).
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“Securities
Act” means the Securities Act of 1933, as amended.
“Share
Delivery Date” has the meaning set forth in Section 4.1(c).
“Shares”
means the shares of Common Stock issued or issuable to the Investors pursuant
to
this Agreement.
“Short
Sales” include, without limitation, all “short sales” as defined in Rule 200
promulgated under Regulation SHO under the Exchange Act and all types of direct
and indirect stock pledges, forward sale contracts, options, puts, calls, swaps
and similar arrangements (including on a total return basis), and sales and
other transactions through non-US broker dealers or foreign regulated
brokers.
“Subsidiary”
means any “significant subsidiary” as defined in Rule 1-02(w) of the Regulation
S-X promulgated by the Commission under the Exchange Act.
“Trading
Day” means (i) a day on which the Common Stock is traded on a Trading Market
(other than the OTC Bulletin Board), or (ii) if the Common Stock is not listed
on a Trading Market (other than the OTC Bulletin Board), a day on which the
Common Stock is traded in the over-the-counter market, as reported by the OTC
Bulletin Board, or (iii) 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 Pink Sheets LLC (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), (ii) and
(iii) 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 Common Stock is listed or
quoted for trading on the date in question.
“Transaction
Documents” means this Agreement, the Registration Rights Agreement, the Escrow
Agreement, the Make Good Escrow Agreement and any other documents or agreements
executed in connection with the transactions contemplated
hereunder.
ARTICLE
2.
2.1. Closing.
Subject
to the terms and conditions set forth in this Agreement, at the Closing the
Company shall issue and sell to each Investor, and each Investor shall,
severally and not jointly, purchase from the Company, the Shares representing
such Investor’s Investment Amount. The Closing shall take place at the offices
of Xxxxx Xxxx LLP, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, XX 00000 on the
Closing Date or at such other location or time as the parties may
agree.
2.2. Closing
Deliveries.
(a) At
the Closing, the Company shall deliver or cause to be delivered to each Investor
the following (the “Company Deliverables”):
(i) a
certificate evidencing a number of Shares equal to such Investor’s Investment
Amount divided by the Per Share Purchase Price, registered in the name of such
Investor;
(ii) the
legal opinions, in agreed form, addressed to the Investors (which will include
opinions reasonably acceptable to the Investors with respect to the
Reorganization);
(iii) the
Registration Rights Agreement, duly executed by the Company;
(iv) the
Make Good Escrow Agreement, duly executed by the Company; and
(v) the
Escrow Agreement, duly executed by the Company.
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(b) At
the Closing, each Investor shall deliver or cause to be delivered to the Company
the following (the “Investor Deliverables”):
(i) the
Registration Rights Agreement, duly executed by such Investor; and
(ii) a
completed Investor Questionnaire in the form attached to this Agreement as
Exhibit
D.
(c) Within
one Business Day following the date of this Agreement, each Investor shall
cause
to be delivered to the Escrow Agent, its Investment Amount, in United States
dollars and in immediately available funds, by wire transfer to an account
designated in writing by the Company for such purpose in accordance with the
terms of the Escrow Agreement.
ARTICLE
3.
3.1. Representations
and Warranties of the Company.
The
Company hereby makes the following representations and warranties to each
Investor:
(a) Subsidiaries.
The
Company has no direct or indirect Subsidiaries other than as disclosed in the
SEC Reports. Except as disclosed in the SEC Reports, the Company owns, directly
or indirectly, all of the capital stock of each Subsidiary free and clear of
any
and all Liens, and all the issued and outstanding shares of capital stock of
each Subsidiary are validly issued and are fully paid, non-assessable and free
of preemptive and similar rights.
(b) Organization
and Qualification.
The
Company and each Subsidiary are duly incorporated or otherwise organized,
validly existing and in good standing under the laws of the jurisdiction of
its
incorporation or organization (as applicable), with the requisite power and
authority to own and use its properties and assets and to carry on its business
as currently conducted. Neither the Company nor any Subsidiary is in violation
of any of the provisions of its respective certificate or articles of
incorporation, bylaws or other organizational or charter documents. The Company
and each Subsidiary are duly qualified to conduct its respective businesses
and
are in good standing as a foreign corporation or other entity in each
jurisdiction in which the nature of the business conducted or property owned
by
it makes such qualification necessary, except where the failure to be so
qualified or in good standing, as the case may be, could not, individually
or in
the aggregate, have or reasonably be expected to result in a Material Adverse
Effect.
(c) Authorization;
Enforcement.
The
Company has the requisite corporate power and authority to enter into and to
consummate the transactions contemplated by each of the Transaction Documents
and otherwise to carry out its obligations thereunder. The execution and
delivery of each of the Transaction Documents by the Company and the
consummation by it of the transactions contemplated thereby have been duly
authorized by all necessary action on the part of the Company and no further
action is required by the Company in connection therewith. Each Transaction
Document has been (or upon delivery will have been) duly executed by the Company
and, when delivered in accordance with the terms hereof, will constitute the
valid and binding obligation of the Company enforceable against the Company
in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation
or
similar laws relating to, or affecting generally the enforcement of, creditors’
rights and remedies or by other equitable principles of general
application.
(d) No
Conflicts.
The
execution, delivery and performance of the Transaction Documents by the Company
and the consummation by the Company of the transactions contemplated thereby
do
not and will not (i) conflict with or violate any provision of the Company’s or
any Subsidiary’s certificate or articles of incorporation, bylaws or other
organizational or charter documents, or (ii) conflict with, or constitute a
default (or an event that with notice or lapse of time or both would become
a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation (with or without notice, lapse of time or both)
of,
any agreement, credit facility, debt or other instrument (evidencing a Company
or Subsidiary debt or otherwise) or other understanding to which the Company
or
any Subsidiary is a party or by which any property or asset of the Company
or
any Subsidiary is bound or affected and which is filed as an exhibit to the
SEC
Reports, or (iii) result in a violation of any law, rule, regulation, order,
judgment, injunction, decree or other restriction of any court or governmental
authority to which the Company or a Subsidiary is subject (including federal
and
state securities laws and regulations), or by which any property or asset of
the
Company or a Subsidiary is bound or affected; except in the case of each of
clauses (ii) and (iii), such as could not, individually or in the aggregate,
have or reasonably be expected to result in a Material Adverse
Effect.
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(e) Filings,
Consents and Approvals.
Neither
the Company nor any Subsidiary is required to obtain any consent, waiver,
authorization or order of, give any notice to, or make any filing or
registration with, any court or other federal, state, local or other
governmental authority or other Person in connection with the execution,
delivery and performance by the Company of the Transaction Documents, other
than
(i) the filing by the Company with the Commission of one or more Registration
Statements in accordance with the requirements of the Registration Rights
Agreement, (ii) filings required by state securities laws, (iii) the filing
by
the Company of a Notice of Sale of Securities on Form D with the Commission
under Regulation D of the Securities Act, (iv) the filings required in
accordance with Section 4.5, (v) those that have been made or obtained prior
to
the date of this Agreement, (vi) registrations, notices or filings required
to
be made in order to comply with the currency and exchange control requirements
imposed by the Chinese government and/or Chinese law, if any, and (vii)
post-closing securities filings or notifications required to be made under
federal or state securities laws. Duoyuan China and the Company (as applicable)
have made all filings and received all approvals required under the laws of
the
People’s Republic of China to duly effect the Reorganization.
(f) Issuance
of the Shares.
The
Shares have been duly authorized and, when issued and paid for in accordance
with the Transaction Documents, will be duly and validly issued, fully paid
and
nonassessable, free and clear of all Liens. As of the Closing, the Company
has
reserved from its duly authorized capital stock the shares of Common Stock
issuable pursuant to this Agreement in order to issue the Shares.
(g) Capitalization.
The
number of shares and type of all authorized, issued and outstanding capital
stock of the Company, and all shares of Common Stock reserved for issuance
under
the Company’s various option and incentive plans, is specified in the SEC
Reports. Except as specified in the SEC Reports, no securities of the Company
are entitled to preemptive or similar rights, and no Person has any right of
first refusal, preemptive right, right of participation, or any similar right
to
participate in the transactions contemplated by the Transaction Documents.
Except as specified in the SEC Reports, there are no outstanding options,
warrants, scrip rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities, rights or obligations convertible into
or
exchangeable for, or giving any Person any right to subscribe for or acquire,
any shares of Common Stock, or contracts, commitments, understandings or
arrangements by which the Company or any Subsidiary is or may become bound
to
issue additional shares of Common Stock, or securities or rights convertible
or
exchangeable into shares of Common Stock. The issue and sale of the Shares
will
not, immediately or with the passage of time, obligate the Company to issue
shares of Common Stock or other securities to any Person (other than the
Investors) and will not result in a right of any holder of Company securities
to
adjust the exercise, conversion, exchange or reset price under such
securities.
(h) SEC
Reports; Financial Statements.
Except
as disclosed in the SEC Reports, the Company has filed all reports required
to
be filed by it under the Securities Act and the Exchange Act, including pursuant
to Section 13(a) or 15(d) thereof, for the twelve months preceding the date
hereof (or such shorter period as the Company was required by law to file such
reports) (the foregoing materials being collectively referred to herein as
the
“SEC Reports” and, together with the Schedules to this Agreement (if any), the
“Disclosure Materials”) on a timely basis or has timely filed a valid extension
of such time of filing and has filed any such SEC Reports prior to the
expiration of any such extension. As of their respective dates, to the knowledge
of the Company, the SEC Reports complied in all material respects with the
requirements of the Securities Act and the Exchange Act and the rules and
regulations of the Commission promulgated thereunder, and none of the SEC
Reports, when filed, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary
in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading in connection with the Subsidiaries. The
financial statements of the Company and the Subsidiaries included in the SEC
Reports comply in all material respects with applicable accounting requirements
and the rules and regulations of the Commission with respect thereto as in
effect at the time of filing. Such financial statements have been prepared
in
accordance with GAAP applied on a consistent basis during the periods involved,
except as may be otherwise specified in such financial statements or the notes
thereto, and fairly present in all material respects the financial position
of
the Company and its Subsidiaries as of and for the dates thereof and the results
of operations and cash flows for the periods then ended, subject, in the case
of
unaudited statements, to normal, immaterial, year-end audit
adjustments.
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(i) Litigation.
There
is no Action which (i) adversely affects or challenges the legality, validity
or
enforceability of any of the Transaction Documents or the Shares or (ii) except
as specifically disclosed in the SEC Reports, could, if there were an
unfavorable decision, individually or in the aggregate, have or reasonably
be
expected to result in a Material Adverse Effect. Neither the Company nor any
Subsidiary, nor any director or officer thereof (in his or her capacity as
such), is or has been the subject of any Action involving a claim of violation
of or liability under federal or state securities laws or a claim of breach
of
fiduciary duty, except as specifically disclosed in the SEC Reports. There
has
not been, and to the knowledge of the Company, there is not pending any
investigation by the Commission involving the Company or any Subsidiary or
any
current or former director or officer of the Company or any Subsidiary (in
his
or her capacity as such).
(j) Labor
Relations.
No
material labor dispute exists or, to the knowledge of the Company, is imminent
with respect to any of the employees of the Company or any
Subsidiary.
(k) Compliance.
Neither
the Company nor any Subsidiary (i) is in default under or in violation of (and
no event has occurred that has not been waived that, with notice or lapse of
time or both, would result in a default by the Company or any Subsidiary under),
nor has the Company or any Subsidiary received notice of a claim that it is
in
default under or that it is in violation of, any indenture, loan or credit
agreement or any other agreement or instrument to which it is a party or by
which it or any of its properties is bound (whether or not such default or
violation has been waived), (ii) is in violation of any order of any court,
arbitrator or governmental body, or (iii) is or has been in violation of any
statute, rule or regulation of any governmental authority, including without
limitation all foreign, federal, state and local laws relating to taxes,
environmental protection, occupational health and safety, product quality and
safety and employment and labor matters, except in each case as could not,
individually or in the aggregate, have or reasonably be expected to result
in a
Material Adverse Effect.
(l) Regulatory
Permits.
The
Company and the Subsidiaries possess all certificates, authorizations and
permits issued by the appropriate federal, state, local or foreign regulatory
authorities necessary to conduct their respective businesses as described in
the
SEC Reports, except where the failure to possess such permits could not,
individually or in the aggregate, have or reasonably be expected to result
in a
Material Adverse Effect, and neither the Company nor any Subsidiary has received
any notice of proceedings relating to the revocation or modification of any
such
permits.
(m) Title
to Assets.
The
Company and the Subsidiaries have good and marketable title to all real property
owned by them that is material to their respective businesses and good and
marketable title in all personal property owned by them that is material to
their respective businesses, in each case free and clear of all Liens, except
for Liens as do not materially affect the value of such property and do not
materially interfere with the use made and proposed to be made of such property
by the Company and the Subsidiaries. Any real property and facilities held
under
lease by the Company and the Subsidiaries are held by them under valid,
subsisting and enforceable leases of which the Company and the Subsidiaries
are
in compliance, except as could not, individually or in the aggregate, have
or
reasonably be expected to result in a Material Adverse Effect.
(n) Patents
and Trademarks.
The
Company and the Subsidiaries have, or have rights to use, all patents, patent
applications, trademarks, trademark applications, service marks, trade names,
copyrights, licenses and other similar rights that are necessary or material
for
use in connection with their respective businesses as described in the SEC
Reports and which the failure to so have could, individually or in the
aggregate, have or reasonably be expected to result in a Material Adverse Effect
(collectively, the “Intellectual Property Rights”). Neither the Company nor any
Subsidiary has received a written notice that the Intellectual Property Rights
used by the Company or any Subsidiary violates or infringes upon the rights
of
any Person. To the knowledge of the Company, all such Intellectual Property
Rights are enforceable and there is no existing infringement by another Person
of any of the Intellectual Property Rights.
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(o) Insurance.
The
Company and the Subsidiaries are insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as are prudent
and customary in the businesses and in the country in which the Company and
the
Subsidiaries operate. The Company has no reason to believe that it will not
be
able to renew its and the Subsidiaries’ existing insurance coverage as and when
such coverage expires or to obtain similar coverage from similar insurers as
may
be necessary to continue its business on terms consistent with market for the
Company’s and such Subsidiaries’ respective lines of business.
(p) Transactions
With Affiliates and Employees.
Except
as set forth on Schedule
3.1(p),
none of
the officers or directors of the Company or any Subsidiary and, to the knowledge
of the Company, none of the employees of the Company or any Subsidiary is
presently a party to any transaction with the Company or any Subsidiary (other
than for services as employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of services to
or
by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any officer, director or such employee or, to
the
knowledge of the Company or any Subsidiary, any entity in which any officer,
director, or any such employee has a substantial interest or is an officer,
director, trustee or partner.
(q) Internal
Accounting Controls.
The
Company and the Subsidiaries maintain a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are executed
in
accordance with management’s general or specific authorizations, (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with GAAP and to maintain asset accountability, (iii)
access to assets is permitted only in accordance with management’s general or
specific authorization, and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences. The Company is establishing disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) for the Company and is designing such disclosure controls and
procedures to ensure that material information relating to the Company,
including its Subsidiaries, is made known to the certifying officers by others
within those entities, particularly during the period in which the Company’s
Form 10-KSB or 10-QSB, as the case may be, is being prepared.
(r) Solvency.
Based
on the financial condition of the Company as of the Closing Date (and assuming
that the Closing shall have occurred), (i) the Company’s assets do not
constitute unreasonably small capital to carry on its business for the current
fiscal year as now conducted and as proposed to be conducted including its
capital needs taking into account the particular capital requirements of the
business conducted by the Company, and projected capital requirements and
capital availability thereof, and (ii) the current cash flow of the Company,
together with the proceeds the Company would receive, were it to liquidate
all
of its assets, after taking into account all anticipated uses of the cash,
would
generally be sufficient to pay the amounts on or in respect of its debt. The
Company does not intend to incur debts beyond its ability to pay such debts
as
they mature (taking into account the timing and amounts of cash to be payable
on
or in respect of its debt).
(s) Certain
Fees.
Except
as described in Schedule
3.1(s),
no
brokerage or finder’s fees or commissions are or will be payable by the Company
to any broker, financial advisor or consultant, finder, placement agent,
investment banker, bank or other Person with respect to the transactions
contemplated by this Agreement. The Investors shall have no obligation with
respect to any fees or with respect to any claims (other than such fees or
commissions owed by an Investor pursuant to written agreements executed by
such
Investor which fees or commissions shall be the sole responsibility of such
Investor) made by or on behalf of other Persons for fees of a type contemplated
in this Section that may be due in connection with the transactions contemplated
by this Agreement.
(t) Certain
Registration Matters.
Assuming the accuracy of the Investors’ representations and warranties set forth
in Section 3.2(b)-(e), no registration under the Securities Act is required
for
the offer and sale of the Shares by the Company to the Investors under the
Transaction Documents. The Company is eligible to register its Common Stock
for
resale by the Investors under Form SB-2 promulgated under the Securities Act.
Except as specified in Schedule
3.1(t),
the
Company has not granted or agreed to grant to any Person any rights (including
“piggy-back” registration rights) to have any securities of the Company
registered with the Commission or any other governmental authority that have
not
been satisfied.
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(u) Investment
Company.
The
Company is not, and is not an Affiliate of, and immediately following the
Closing will not have become, an “investment company” within the meaning of the
Investment Company Act of 1940, as amended.
(v) Application
of Takeover Protections.
The
Company has taken all necessary action, if any, in order to render inapplicable
any control share acquisition, business combination, poison pill (including
any
distribution under a rights agreement) or other similar anti-takeover provision
under the Company’s Articles of Incorporation (or similar charter documents) or
the laws of its state of incorporation that is or could become applicable to
the
Investors as a result of the Investors and the Company fulfilling their
obligations or exercising their rights under the Transaction Documents,
including without limitation the Company’s issuance of the Shares and the
Investors’ ownership of the Shares.
(w) No
Additional Agreements.
The
Company does not have any agreement or understanding with any Investor with
respect to the transactions contemplated by the Transaction Documents other
than
as specified in the Transaction Documents.
(x) Consultation
with Auditors.
The
Company has consulted its independent auditors concerning the accounting
treatment of the transactions contemplated by the Transaction Documents, and
in
connection therewith has furnished such auditors complete copies of the
Transaction Documents.
(y) Disclosure.
The
Company confirms that neither it nor any Person acting on its behalf has
provided any Investor or its respective agents or counsel with any information
that the Company believes constitutes material, non-public information, except
insofar as the existence and terms of the proposed transactions contemplated
hereunder may constitute such information. The Company understands and confirms
that the Investors will rely on the foregoing representations and covenants
in
effecting transactions in securities of the Company. All disclosure provided
to
the Investors regarding the Company, its business and the transactions
contemplated hereby, furnished by or on behalf of the Company (including the
Company’s representations and warranties set forth in this Agreement) are true
and correct and do not contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements made
therein, in light of the circumstances under which they were made, not
misleading.
3.2. Representations
and Warranties of the Investors.
Each
Investor hereby, for itself and for no other Investor, represents and warrants
to the Company as follows:
(a) Organization;
Authority.
Such
Investor is an entity duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization with the requisite
corporate or partnership power and authority to enter into and to consummate
the
transactions contemplated by the applicable Transaction Documents and otherwise
to carry out its obligations thereunder. The execution, delivery and performance
by such Investor of the transactions contemplated by this Agreement has been
duly authorized by all necessary corporate or, if such Investor is not a
corporation, such partnership, limited liability company or other applicable
like action, on the part of such Investor. Each of this Agreement and the
Registration Rights Agreement has been duly executed by such Investor, and
when
delivered by such Investor in accordance with the terms hereof, will constitute
the valid and legally binding obligation of such Investor, enforceable against
it in accordance with its terms, except as such enforceability may be limited
by
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation
or
similar laws relating to, or affecting generally the enforcement of, creditors’
rights and remedies or by other equitable principles of general
application.
(b) Investment
Intent.
Such
Investor is acquiring the Shares as principal for its own account for investment
purposes only and not with a view to or for distributing or reselling such
Shares or any part thereof, without prejudice, however, to such Investor’s right
at all times to sell or otherwise dispose of all or any part of such Shares
in
compliance with applicable federal and state securities laws. Subject to the
immediately preceding sentence, nothing contained herein shall be deemed a
representation or warranty by such Investor to hold the Shares for any period
of
time. Such Investor is acquiring the Shares hereunder in the ordinary course
of
its business. Such Investor does not have any agreement or understanding,
directly or indirectly, with any Person to distribute any of the
Shares.
9
(c) Investor
Status.
At the
time such Investor was offered the Shares, it was, and at the date hereof it
is,
an “accredited investor” as defined in Rule 501(a) under the Securities Act.
Such Investor is not a registered broker-dealer under Section 15 of the Exchange
Act. Such Investor has such experience in business and financial matters that
it
is capable of evaluating the merits and risks of an investment in the Shares.
Such Investor acknowledges that an investment in the Shares is speculative
and
involves a high degree of risk.
(d) General
Solicitation.
Such
Investor is not purchasing the Shares as a result of any advertisement, article,
notice, meeting or other communication regarding the Shares published in any
newspaper, magazine or similar media or broadcast over television or radio
or
presented at any seminar or any other general solicitation or general
advertisement.
(e) Access
to Information.
Such
Investor acknowledges that it has reviewed the Disclosure Materials and has
been
afforded (i) the opportunity to ask such questions as it has deemed necessary
of, and to receive answers from, representatives of the Company concerning
the
terms and conditions of the offering of the Shares and the merits and risks
of
investing in the Shares; (ii) access to information about the Company and the
Subsidiaries and their respective financial condition, results of operations,
business, properties, management and prospects sufficient to enable it to
evaluate its investment; and (iii) the opportunity to obtain such additional
information that the Company possesses or can acquire without unreasonable
effort or expense that is necessary to make an informed investment decision
with
respect to the investment. Neither such inquiries nor any other investigation
conducted by or on behalf of such Investor or its representatives or counsel
shall modify, amend or affect such Investor’s right to rely on the truth,
accuracy and completeness of the Disclosure Materials and the Company’s
representations and warranties contained in the Transaction
Documents.
(f) Certain
Trading Activities.
Such
Investor has not directly or indirectly, nor has any Person acting on behalf
of
or pursuant to any understanding with such Investor, engaged in any transactions
in the securities of the Company (including, without limitations, any Short
Sales involving the Company’s securities) since the earlier to occur of (1) the
time that such Investor was first contacted by the Company or Xxxx Capital
Partners, LLC regarding an investment in the Company and (2) the 30th
day
prior to the date of this Agreement. Such Investor covenants that neither it
nor
any Person acting on its behalf or pursuant to any understanding with it will
engage in any transactions in the securities of the Company (including Short
Sales) prior to the time that the transactions contemplated by this Agreement
are publicly disclosed.
(g) Independent
Investment Decision.
Such
Investor has independently evaluated the merits of its decision to purchase
the
Shares pursuant to the Transaction Documents, and such Investor confirms that
it
has not relied on the advice of any other Investor’s business and/or legal
counsel in making such decision. Such Investor has not relied on the business
or
legal advice of Xxxx Capital Partners, LLC or any of its agents, counsel or
Affiliates in making its investment decision hereunder, and confirms that none
of such Persons has made any representations or warranties to such Investor
in
connection with the transactions contemplated by the Transaction
Documents.
(h) Rule
144.
Such
Investor understands that the Shares (including the Additional Shares) must
be
held indefinitely unless such Shares and/or Additional Shares are registered
under the Securities Act or an exemption from registration is available. Such
Investor acknowledges that it is familiar with Rule 144 and that such Investor
has been advised that Rule 144 permits resales only under certain circumstances.
Such Investor understands that to the extent that Rule 144 is not available,
such Investor will be unable to sell any Shares and/or Additional Shares without
either registration under the Securities Act or the existence of another
exemption from such registration requirement.
(i) General.
Such
Investor understands that the Shares are being offered and sold in reliance
on a
transactional exemption from the registration requirements of federal and state
securities laws and the Company is relying upon the truth and accuracy of the
representations, warranties, agreements, acknowledgments and understandings
of
such Investor set forth herein in order to determine the applicability of such
exemptions and the suitability of such Investor to acquire the Shares. Such
Investor understands that no United States federal or state agency or any
government or governmental agency has passed upon or made any recommendation
or
endorsement of the Shares.
10
The
Company acknowledges and agrees that no Investor has made or makes any
representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in this Section 3.2.
ARTICLE
4.
4.1. Transferability;
Certificate. Shares
may only be disposed of in compliance with state and federal securities laws.
In
connection with any transfer of the Shares other than pursuant to an effective
registration statement, to the Company, to an Affiliate of an Investor or in
connection with a pledge as contemplated in Section 4.1(b), the Company may
require the transferor thereof to provide to the Company an opinion of counsel
selected by the transferor, the form and substance of which opinion shall be
reasonably satisfactory to the Company, to the effect that such transfer does
not require registration of such transferred Shares under the Securities Act.
Certificates evidencing the Shares will contain the following legend, until
such
time as they are not required under Section 4.1(c):
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED WITH THE
SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE
IN
RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT
OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT
TO,
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL
TO
THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY
ACCEPTABLE TO THE COMPANY. THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH
A
BONA FIDE MARGIN ACCOUNT SECURED BY SUCH SECURITIES.
The
Company acknowledges and agrees that an Investor may from time to time pledge,
and/or grant a security interest in some or all of the Shares pursuant to a
bona
fide margin agreement in connection with a bona fide margin account and, if
required under the terms of such agreement or account, such Investor may
transfer pledged or secured Shares to the pledgees or secured parties. Such
a
pledge or transfer would not be subject to approval or consent of the Company
and no legal opinion of legal counsel to the pledgee, secured party or pledgor
shall be required in connection with the pledge, but such legal opinion may
be
required in connection with a subsequent transfer following default by the
Investor transferee of the pledge. No notice shall be required of such pledge.
At the appropriate Investor’s expense, the Company will execute and deliver such
reasonable documentation as a pledgee or secured party of Shares may reasonably
request in connection with a pledge or transfer of the Shares including the
preparation and filing of any required prospectus supplement under Rule
424(b)(3) of the Securities Act or other applicable provision of the Securities
Act to appropriately amend the list of Selling Stockholders thereunder. Except
as otherwise provided in Section 4.1(c), any Shares subject to a pledge or
security interest as contemplated by this Section 4.1(b) shall continue to
bear
the legend set forth in this Section 4.1(b) and be subject to the restrictions
on transfer set forth in Section 4.1(a).
(c) Certificates
evidencing Shares shall not contain any legend (including the legend set forth
in Section 4.1(b)): (i) following a sale or transfer of such Shares pursuant
to
an effective registration statement (including a Registration Statement), or
(ii) following a sale or transfer of such Shares pursuant to Rule 144 (assuming
the transferee is not an Affiliate of the Company), or (iii) while such Shares
are eligible for sale under Rule 144(k). If an Investor shall make a sale or
transfer of Shares either (x) pursuant to Rule 144 or (y) pursuant to a
registration statement and in each case shall have delivered to the Company
or
the Company’s transfer agent the certificate representing Shares containing a
restrictive legend which are the subject of such sale or transfer and a
representation letter in customary form (the date of such sale or transfer
and Share delivery being the “Share Delivery Date”) and (1) the Company shall
fail to deliver or cause to be delivered to such Investor a certificate
representing such Shares that is free from all restrictive or other legends
by
the fifth Trading Day following the Share Delivery Date and (2) following such
fifth Trading Day after the Share Delivery Date and prior to the time such
Shares are received free from restrictive legends, the Investor, or any third
party on behalf of such Investor, purchases (in an open market transaction
or
otherwise) shares of Common Stock to deliver in satisfaction of a sale by the
Investor of such Shares (a "Buy-In"), then the Company shall pay in cash to
the
Investor (for costs incurred either directly by such Investor or on behalf
of a
third party) the amount by which the total purchase price paid for Common Stock
as a result of the Buy-In (including brokerage commissions, if any) exceed
the
proceeds received by such Investor as a result of the sale to which such Buy-In
relates. The Investor shall provide the Company written notice indicating the
amounts payable to the Investor in respect of the Buy-In.
11
4.2. Furnishing
of Information.
As long
as any Investor owns the Shares, the Company covenants to timely file (or obtain
extensions in respect thereof and file within the applicable grace period)
all
reports required to be filed by the Company after the date hereof pursuant
to
the Exchange Act. As long as any Investor owns Shares, if the Company is not
required to file reports pursuant to such laws, it will prepare and furnish
to
the Investors and make publicly available in accordance with Rule 144(c) such
information as is required for the Investors to sell the Shares under Rule
144.
The Company further covenants that it will take such further action as any
holder of Shares may reasonably request, all to the extent required from time
to
time to enable such Person to sell the Shares without registration under the
Securities Act within the limitation of the exemptions provided by Rule
144.
4.3. Integration.
The
Company shall not, and shall use its best efforts to ensure that no Affiliate
of
the Company shall, sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any security (as defined in Section 2 of the Securities
Act) that would be integrated with the offer or sale of the Shares in a manner
that would require the registration under the Securities Act of the sale of
the
Shares to the Investors, or that would be integrated with the offer or sale
of
the Shares for purposes of the rules and regulations of any Trading Market
in a
manner that would require stockholder approval of the sale of the Shares to
the
Investors.
4.4. Subsequent
Registrations.
Other
than pursuant to the Registration Statement, prior to the Effective Date, the
Company may not file any registration statement (other than on Form S-8) with
the Commission with respect to any securities of the Company.
4.5. Securities
Laws Disclosure; Publicity.
By 9:00
a.m. (New York time) on the Trading Day following the execution of this
Agreement, and by 9:00 a.m. (New York time) on the Trading Day following the
Closing Date, the Company shall issue press releases disclosing the transactions
contemplated hereby and the Closing. On the Trading Day following the execution
of this Agreement the Company will file a Current Report on Form 8-K disclosing
the material terms of the Transaction Documents (and attach as exhibits thereto
the Transaction Documents), and on the Trading Day following the Closing Date
the Company will file an additional Current Report on Form 8-K to disclose
the
Closing. In addition, the Company will make such other filings and notices
in
the manner and time required by the Commission and the Trading Market on which
the Common Stock is listed. Notwithstanding the foregoing, the Company shall
not
publicly disclose the name of any Investor, or include the name of any Investor
in any filing with the Commission (other than the Registration Statement and
any
exhibits to filings made in respect of this transaction in accordance with
periodic filing requirements under the Exchange Act) or any regulatory agency
or
Trading Market, without the prior written consent of such Investor, except
to
the extent such disclosure is required by law or Trading Market
regulations.
4.6. Indemnification
of Investors.
In
addition to the indemnity provided in the Registration Rights Agreement, the
Company will indemnify and hold the Investors and their directors, officers,
shareholders, partners, employees and agents (each, an “Investor Party”)
harmless from any and all losses, liabilities, obligations, claims,
contingencies, damages, costs and expenses, including all judgments, amounts
paid in settlements, court costs and reasonable attorneys’ fees and costs of
investigation (in respect thereof, only those that lead to an allegation of
indemnity hereunder) (collectively, “Losses”) that any such Investor Party may
suffer or incur as a result of or relating to any misrepresentation, breach
or
inaccuracy of any representation, warranty, covenant or agreement made by the
Company in any Transaction Document. In addition to the indemnity contained
herein, the Company will reimburse each Investor Party for its reasonable legal
and other expenses (including the cost of any investigation, preparation and
travel in connection therewith if an allegation for indemnity hereunder follows)
incurred in connection therewith, as such expenses are incurred. Except as
otherwise set forth herein, the mechanics and procedures with respect to the
rights and obligations under this Section 4.6 shall be the same as those set
forth in Section 5 of the Registration Rights Agreement.
4.7. Non-Public
Information.
The
Company covenants and agrees that neither it nor any other Person acting on
its
behalf will provide any Investor or its agents or counsel with any information
that the Company believes constitutes material non-public information, unless
prior thereto such Investor shall have executed a written agreement regarding
the confidentiality and use of such information. The Company understands and
confirms that each Investor shall be relying on the foregoing representations
in
effecting transactions in securities of the Company.
12
4.8. Listing
of Securities.
The
Company shall apply to have the Common Stock, including the Shares, traded
on a
Trading Market, and will take such other action as is necessary or desirable
to
cause the Shares to be listed on such Trading Market as promptly as possible,
but in no event later than the Effective Date. The Company further covenants
and
agrees that following the time that the Common Stock, including the Shares,
is
traded on a Trading Market and before all the Shares are sold pursuant to a
Registration Statement or applicable exemption under securities law, the Company
will take all action reasonably necessary to continue the listing and trading
of
its Common Stock on a Trading Market and will comply in all material respects
with the Company’s reporting, filing and other obligations under the bylaws or
rules of such Trading Market.
4.9. Use
of
Proceeds.
The
Company will use the net proceeds from the sale of the Shares hereunder for
working capital purposes and not for the satisfaction of any portion of the
Company’s debt (other than payment of trade payables and accrued expenses in the
ordinary course of the Company’s business and consistent with prior practices),
or to redeem any Common Stock or Common Stock Equivalents.
4.10.
Make
Good Shares.
(a)
Xxxxxx Xxx agrees that in the event the consolidated financial statements of
the
Company reflect less than $12,000,000.00 of After-Tax Net Income for the fiscal
year ended June 30, 2006 (the “Guaranteed NI”), he will transfer to the
Investors (through the Make Good Escrow Agent) on a pro rata basis for no
consideration other than their part of their respective Investment Amount at
Closing 37.5% of the number of Shares issued at Closing (the “2006 Make Good
Shares”). In the event the audited consolidated financial statements of the
Company reflect $12,000,000 or more of After-Tax Net Income for the fiscal
year
ended June 30, 2006, no transfer of the 2006 Make Good Shares shall be required
by Xxxxxx Xxx (through the Make Good Escrow Agent) to the Investors under this
Section and such 2006 Make Good Shares shall be returned to Xxxxxx Xxx in
accordance with the Make Good Escrow Agreement. Any such transfer of the
2006 Make Good Shares under this Section shall be made to an Investor within
10
Business Days after the date which the 2006 audit report for the Company is
filed with the Commission and otherwise in accordance with the Make Good Escrow
Agreement.
(b) Xxxxxx
Xxx agrees that in the event that either (i) the earnings per share reported
in
the Annual Report on Form 10-KSB of the Company for the fiscal year ending
June
30, 2007, as filed with the Commission, is less than $0.60 on a fully diluted
basis (the “2007 EPS”) or (ii) the after tax net income reported in the Annual
Report on Form 10-KSB of the Company for the fiscal year ending June 30, 2007,
as filed with the Commission, is less than $16,000,000.00 (the “2007 ATNI”), he
will transfer to the Investors (through the Make Good Escrow Agent) on a pro
rata basis for no consideration other than their part of their respective
Investment Amount at Closing 37.5% of the number of Shares issued at Closing
(the “2007 Make Good Shares”). In the event that either (i) the earnings per
share reported in the Annual Report on Form 10-KSB of the Company for the fiscal
year ending June 30, 2008, as filed with the Commission, is less than $0.89
on a
fully diluted basis (the “2008 EPS”) or (ii) the after tax net income reported
in the Annual Report on Form 10-KSB of the Company for the fiscal year ending
June 30, 2008, as filed with the Commission, is less than $23,900,000.00 (the
“2008 ATNI”), Xxxxxx Xxx agrees to transfer to the Investors (through the Make
Good Escrow Agent) on a pro rata basis for no consideration other than their
part of their respective Investment Amount at Closing 37.5% of the number of
Shares issued at Closing (the “2008 Make Good Shares”). In the event that both
the earnings per share reported in the Annual Report on Form 10-KSB of the
Company for the fiscal year ending June 30, 2007, as filed with the Commission,
is equal to or greater than the 2007 EPS and the after tax net income reported
in the Annual Report on Form 10-KSB of the Company for the fiscal year ending
June 30, 2007, as filed with the Commission, is equal to or greater than the
2007 ATNI, no transfer of the 2007 Make Good Shares shall be required by Xxxxxx
Xxx (through the Make Good Escrow Agent) to the Investors under this Section
and
such 2007 Make Good Shares shall be returned to Xxxxxx Xxx in accordance with
the Make Good Escrow Agreement. In the event that both the earnings per
share reported in the Annual Report on Form 10-KSB of the Company for the fiscal
year ending June 30, 2008, as filed with the Commission, is equal to or greater
than the 2008 EPS and the after tax net income reported in the Annual Report
on
Form 10-KSB of the Company for the fiscal year ending June 30, 2008, as filed
with the Commission, is equal to or greater than the 2008 ATNI, no transfer
of
the 2008 Make Good Shares shall be required by Xxxxxx Xxx (through the Make
Good
Escrow Agent) to the Investors under this Section and such 2008 Make Good Shares
shall be returned to Xxxxxx Xxx in accordance with the Make Good Escrow
Agreement. Any such transfer of the 2007 Make Good Shares or the 2008 Make
Good
Shares under this Section shall be made to an Investor within 10 Business Days
after the date which the 2007, or 2008, as applicable, Annual Report on Form
10-KSB for the Company is filed with the Commission and otherwise in accordance
with the Make Good Escrow Agreement.
13
(c) In
connection with the foregoing, Xxxxxx Xxx agrees that prior to the Closing,
Xxxxxx Xxx will deposit all potential 2006 Make Good Shares, 2007 Make Good
Shares and 2008 Make Good Shares into escrow in accordance with the Make Good
Escrow Agreement and the handling and disposition of the 2006 Make Good Shares,
2007 Make Good Shares and 2008 Make Good Shares shall be governed by this
Section 4.10 and such Make Good Escrow Agreement.
4.11. Related
Party Transactions.
By 9:00
a.m. (New York time) on the first Trading Day following December 31, 2006 (the
“Event Date”), the Company shall issue a press release disclosing that any
receivables and/or payables which are owing or owed to the Company by any
related parties as of the date hereof shall have been satisfied in full.
Following the Event Date, the Company shall no longer be a party to, or take
part in, any related party transactions except those which (i) may be existing
on the date hereof and (ii) which are set forth on Schedule 4.11. In the event
of a failure to comply with the terms of this Section 4.11, then in addition
to
any other rights the Investors may have hereunder or under applicable law:
on
each monthly anniversary of the Event Date (if not cured by such date) until
the
Company is in compliance with this Section 4.11, the Company shall pay to each
Investor an amount in cash, as partial liquidated damages and not as a penalty,
equal to 1.0% of the aggregate Investment Amount paid by such Investor for
Shares pursuant to this Agreement; provided, however, that the total amount
of
partial liquidated damages payable by the Company pursuant to this Section
4.11
shall be capped at an aggregate of 4% of the aggregate Investment Amount paid
by
the Investors under this Agreement. In no event will the Company be liable
for
liquidated damages under this Agreement in excess of 1.0% of the aggregate
Investment Amount of the Investors in any 30-day period.
4.12. Independent
Board of Directors.
The
Company covenants and agrees that no later than (i) 180 days following the
Closing Date and (ii) 30 days following the Effective Date, the Board of
Directors of the Company shall be comprised of a majority of “independent
directors” as such term is defined in NASDAQ Marketplace Rule
4200(a)(15).
4.13. Chief
Financial Officer.
No
later than 120 days following the Closing Date, the Company will hire a chief
financial officer who is an expert in (i) United States generally accepted
accounting principles and (ii) auditing procedures and compliance for United
States public companies who has either previously acted as chief financial
officer of a United States public company or been a partner in a United States
accounting firm including its’ overseas offices and in such capacity was an
audit partner for United States public companies. Such chief financial officer
shall be entitled to an annual salary of no less than $130,000.00. By 9:00
a.m.
(New York time) on the first Trading Day following the hiring of such chief
financial officer, the Company will file a Current Report on Form 8-K disclosing
the information required by Item 5.02 of Form 8-K.
4.14. Investor
Relations Firm.
The
Company will use commercially reasonable efforts to retain, by the
90th
day
following the Closing Date, a nationally recognized investor relations firm,
including its’ overseas offices or subsidiaries.
4.15. Dividends.
Prior
to the Closing Date, the Company shall not issue dividends on any of its capital
stock.
4.16. Additional
Shares.
If the
June 30th
Audited
Working Capital Amount is less than $3,500,000 (the “Adjusted Unaudited Working
Capital Amount”) then the Company shall immediately issue additional shares of
Common Stock (the “Additional Shares”) to each Investor for no additional
consideration, determined as follows: (a) the amount by which the Adjusted
Unaudited Working Capital Amount exceeds the June 30th
Audited
Working Capital Amount, divided by (b) the Per Share Purchase Price.
The number of Additional Shares issuable to each Investor shall be determined
on
a pro rata basis based on such Investor's Investment Amount. The Company shall
notify the Investors in writing, no later than the Trading Day following the
date on which the audit yielding the June 30th
Audited
Working Capital Amount has been completed, indicating therein the June
30th
Audited
Working Capital Amount and the amount, if any, of Additional Shares resulting
therefrom. The Additional Shares shall be entitled to the registration and
other rights set forth in the Registration Rights Agreement and any Additional
Shares not registered for resale shall also be afforded piggyback registration
rights pursuant to Section 6(e) of the Registration Rights Agreement such that
such Additional Shares may be included in any registration statement (other
than
on Form S-4 or Form S-8 (each as promulgated under the Securities Act) or their
then equivalents relating to equity securities to be issued solely in connection
with any acquisition of any entity or business or equity securities issuable
in
connection with stock option or other employee benefit plans) filed by the
Company.
14
ARTICLE
5.
5.1. Conditions
Precedent to the Obligations of the Investors to Purchase Shares.
The
obligation of each Investor to acquire Shares at the Closing is subject to
the
satisfaction or waiver by such Investor, at or before the Closing, of each
of
the following conditions:
(a) Representations
and Warranties.
The
representations and warranties of the Company contained herein shall be true
and
correct in all material respects as of the date when made and as of the Closing
as though made on and as of such date;
(b) Performance.
The
Company shall have performed, satisfied and complied in all material respects
with all covenants, agreements and conditions required by the Transaction
Documents to be performed, satisfied or complied with by it at or prior to
the
Closing;
(c) No
Injunction.
No
statute, rule, regulation, executive order, decree, ruling or injunction shall
have been enacted, entered, promulgated or endorsed by any court or governmental
authority of competent jurisdiction that prohibits the consummation of any
of
the transactions contemplated by the Transaction Documents;
(d) Adverse
Changes.
Since
the date of execution of this Agreement, no event or series of events shall
have
occurred that reasonably could have or result in a Material Adverse
Effect;
(e) Company
Deliverables.
The
Company shall have delivered the Company Deliverables in accordance with Section
2.2(a);
(f) Termination.
This
Agreement shall not have been terminated as to such Investor in accordance
with
Section 6.5;
(g) Equity
Transfer.
The
Company shall have publicly disclosed via Xxxxx in a Form 8-K that the equity
transfer contemplated by that certain Equity Transfer Agreement, dated August
31, 2006, by and between the Company (for purposes hereof, including the
predecessor of the Company) and DIL, shall have occurred and the transactions
contemplated by such Equity Transfer Agreement shall have closed;
and
(h) Make
Good Shares.
Xxxxxx
Xxx shall deliver, or cause to be delivered, (i) to the Make Good Escrow Agent
a
stock certificate evidencing 18,502,896 shares of the Company's Common Stock,
along with a stock power executed in blank and (ii) to the Company, the Make
Good Escrow Agreement, duly executed by Xx. Xxx.
5.2. Conditions
Precedent to the Obligations of the Company to sell Shares.
The
obligation of the Company to sell Shares at the Closing is subject to the
satisfaction or waiver by the Company, at or before the Closing, of each of
the
following conditions:
(a) Representations
and Warranties.
The
representations and warranties of each Investor contained herein shall be true
and correct in all material respects as of the date when made and as of the
Closing Date as though made on and as of such date;
(b) Performance.
Each
Investor shall have performed, satisfied and complied in all material respects
with all covenants, agreements and conditions required by the Transaction
Documents to be performed, satisfied or complied with by such Investor at or
prior to the Closing;
15
(c) No
Injunction.
No
statute, rule, regulation, executive order, decree, ruling or injunction shall
have been enacted, entered, promulgated or endorsed by any court or governmental
authority of competent jurisdiction that prohibits the consummation of any
of
the transactions contemplated by the Transaction Documents;
(d) Investors
Deliverables.
Each
Investor shall have delivered its Investors Deliverables in accordance with
Section 2.2(b); and
(e) Termination.
This
Agreement shall not have been terminated as to such Investor in accordance
with
Section 6.5.
ARTICLE
6.
6.1. Fees
and Expenses.
Each
party shall pay the fees and expenses of its advisers, counsel, accountants
and
other experts, if any, and all other expenses incurred by such party incident
to
the negotiation, preparation, execution, delivery and performance of the
Transaction Documents. The Company shall pay all stamp and other taxes and
duties levied in connection with the sale of the Shares.
6.2. Entire
Agreement.
The
Transaction Documents, together with the Exhibits and Schedules thereto, contain
the entire understanding of the parties with respect to the subject matter
hereof and supersede all prior agreements, understandings, discussions and
representations, oral or written, with respect to such matters, which the
parties acknowledge have been merged into such documents, exhibits and
schedules.
6.3. Notices.
Any and
all notices or other communications or deliveries required or permitted to
be
provided hereunder shall be in writing and shall be deemed given and effective
on the earliest of (a) the date of transmission, if such notice or communication
is delivered via (i) facsimile (provided the sender receives a machine-generated
confirmation of successful transmission) at the facsimile number specified
in
this Section or (ii) electronic mail (i.e., Email) prior to 6:30 p.m. (New
York
City time) on a Trading Day, (b) the next Trading Day after the date of
transmission, if such notice or communication is delivered via (i) facsimile
at
the facsimile number specified in this Section or (ii) electronic mail (i.e.,
Email) on a day that is not a Trading Day or later than 6:30 p.m. (New York
City
time) on any Trading Day, (c) the Trading Day following the date of mailing,
if
sent by U.S. nationally recognized overnight courier service, or (d) upon actual
receipt by the party to whom such notice is required to be given. The address
for such notices and communications shall be as follows:
|
|
If
to the Company:
|
Asian
Financial, Inc.
No.
3 Jinyuan Road
Daxing
District Industrial Development Xxxx
Xxxxxxx,
Xxxxx 000000
Facsimile:
861060216825
Email:
xxxxxxxxx@xxx.xxxx.xxx
Attn.:
Xxxxx Xxxx
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|
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|
|
|
|
With
a copy to:
|
Xxxxxx
Xxxxxx LLP
00xx
Xxxxx
Xxx
Xxxxxxxx Xxxxxx
0
Xxxxxxxxx Xxxxx
Xxxxxxx
Xxxx
Xxxx
Facsimile:
852 2292-2200
Email:
Xxxxx.Xxx@xxxxxxxxxxxx.xxx
Attn.:
Xxxxx Xxx
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|
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|
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|
|
If
to an Investor:
|
To
the address set forth under such Investor’s name on the signature pages
hereof;
|
or
such
other address as may be designated in writing hereafter, in the same manner,
by
such Person.
16
6.4. Amendments;
Waivers; No Additional Consideration.
No
provision of this Agreement may be waived or amended except in a written
instrument signed by the Company and the Investors holding a majority of the
Shares. No waiver of any default with respect to any provision, condition or
requirement of this Agreement shall be deemed to be a continuing waiver in
the
future or a waiver of any subsequent default or a waiver of any other provision,
condition or requirement hereof, nor shall any delay or omission of either
party
to exercise any right hereunder in any manner impair the exercise of any such
right. No consideration shall be offered or paid to any Investor to amend or
consent to a waiver or modification of any provision of any Transaction Document
unless the same consideration is also offered to all Investors who then hold
Shares.
6.5. Termination.
This
Agreement may be terminated prior to Closing:
(a) by
written agreement of the Investors and the Company, a copy of which shall be
provided to the Escrow Agent; and
(b) by
the Company or an Investor (as to itself but no other Investor) upon written
notice to the other and to the Escrow Agent, if the Closing shall not have
taken
place by 6:30 p.m. Eastern time on the Outside Date; provided,
that
the right to terminate this Agreement under this Section 6.5(b) shall not
be available to any Person whose failure to comply with its obligations under
this Agreement has been the cause of or resulted in the failure of the Closing
to occur on or before such time.
In
the
event of a termination pursuant to this Section, the Company shall promptly
notify all non-terminating Investors. Upon a termination in accordance with
this
Section 6.5, the Company and the terminating Investor(s) shall not have any
further obligation or liability (including as arising from such termination)
to
the other and no Investor will have any liability to any other Investor under
the Transaction Documents as a result therefrom.
6.6. Construction.
The
headings herein are for convenience only, do not constitute a part of this
Agreement and shall not be deemed to limit or affect any of the provisions
hereof. The language used in this Agreement will be deemed to be the language
chosen by the parties to express their mutual intent, and no rules of strict
construction will be applied against any party. This Agreement shall be
construed as if drafted jointly by the parties, and no presumption or burden
of
proof shall arise favoring or disfavoring any party by virtue of the authorship
of any provisions of this Agreement or any of the Transaction
Documents.
6.7. Successors
and Assigns.
This
Agreement shall be binding upon and inure to the benefit of the parties and
their successors and permitted assigns. The Company may not assign this
Agreement or any rights or obligations hereunder without the prior written
consent of the Investors. Any Investor may assign any or all of its rights
under
this Agreement to any Person to whom such Investor assigns or transfers any
Shares, provided such transferee agrees in writing to be bound, with respect
to
the transferred Shares, by the provisions hereof that apply to the
“Investors.”
6.8. No
Third-Party Beneficiaries.
This
Agreement is intended for the benefit of the parties hereto and their respective
successors and permitted assigns and is not for the benefit of, nor may any
provision hereof be enforced by, any other Person, except as otherwise set
forth
in Section 4.6 (as to each Investor Party).
6.9. Governing
Law.
All
questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be governed by and construed and enforced in accordance
with the internal laws of the State of New York, without regard to the
principles of conflicts of law thereof. Each party agrees that all Proceedings
concerning the interpretations, enforcement and defense of the transactions
contemplated by this Agreement and any other Transaction Documents (whether
brought against a party hereto or its respective Affiliates, employees or
agents) shall be commenced exclusively in the New York Courts. Each party hereto
hereby irrevocably submits to the exclusive jurisdiction of the New York Courts
for the adjudication of any dispute hereunder or in connection herewith or
with
any transaction contemplated hereby or discussed herein (including with respect
to the enforcement of the any of the Transaction Documents), and hereby
irrevocably waives, and agrees not to assert in any Proceeding, any claim that
it is not personally subject to the jurisdiction of any such New York Court,
or
that such Proceeding has been commenced in an improper or inconvenient forum.
Each party hereto hereby irrevocably waives personal service of process and
consents to process being served in any such Proceeding by mailing a copy
thereof via registered or certified mail or overnight delivery (with evidence
of
delivery) to such party at the address in effect for notices to it under this
Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.
Each party hereto hereby irrevocably waives, to the fullest extent permitted
by
applicable law, any and all right to trial by jury in any legal proceeding
arising out of or relating to this Agreement or the transactions contemplated
hereby. If either party shall commence a Proceeding to enforce any provisions
of
a Transaction Document, then the prevailing party in such Proceeding shall
be
reimbursed by the other party for its reasonable attorneys’ fees and other costs
and expenses incurred with the investigation, preparation and prosecution of
such Proceeding.
17
6.10. Survival.
The
representations, warranties, agreements and covenants contained herein shall
survive the Closing and the delivery of the Shares.
6.11. Execution.
This
Agreement may be executed in two or more counterparts, all of which when taken
together shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered to
the
other party, it being understood that both parties need not sign the same
counterpart. In the event that any signature is delivered by facsimile
transmission, such signature shall create a valid and binding obligation of
the
party executing (or on whose behalf such signature is executed) with the same
force and effect as if such facsimile signature page were an original
thereof.
6.12. Severability.
If any
provision of this Agreement is held to be invalid or unenforceable in any
respect, the validity and enforceability of the remaining terms and provisions
of this Agreement shall not in any way be affected or impaired thereby and
the
parties will attempt to agree upon a valid and enforceable provision that is
a
reasonable substitute therefor, and upon so agreeing, shall incorporate such
substitute provision in this Agreement.
6.13. Rescission
and Withdrawal Right.
Notwithstanding anything to the contrary contained in (and without limiting
any
similar provisions of) the Transaction Documents, whenever any Investor
exercises a right, election, demand or option under a Transaction Document
and
the Company does not timely perform its related obligations within the periods
therein provided, then such Investor may rescind or withdraw, in its sole
discretion from time to time upon written notice to the Company, any relevant
notice, demand or election in whole or in part without prejudice to its future
actions and rights.
6.14. Replacement
of Securities.
If any
certificate or instrument evidencing any Shares is mutilated, lost, stolen
or
destroyed, the Company shall issue or cause to be issued in exchange and
substitution for and upon cancellation thereof, or in lieu of and substitution
therefor, a new certificate or instrument, but only upon receipt of evidence
reasonably satisfactory to the Company of such loss, theft or destruction and
customary and reasonable indemnity, if requested. The applicants for a new
certificate or instrument under such circumstances shall also pay any reasonable
third-party costs associated with the issuance of such replacement Shares.
If a
replacement certificate or instrument evidencing any Shares is requested due
to
a mutilation thereof, the Company may require delivery of such mutilated
certificate or instrument as a condition precedent to any issuance of a
replacement.
6.15. Remedies.
In
addition to being entitled to exercise all rights provided herein or granted
by
law, including recovery of damages, each of the Investors and the Company will
be entitled to specific performance under the Transaction Documents. The parties
agree that monetary damages may not be adequate compensation for any loss
incurred by reason of any breach of obligations described in the foregoing
sentence and hereby agrees to waive in any action for specific performance
of
any such obligation the defense that a remedy at law would be
adequate.
6.16. Payment
Set Aside.
To the
extent that the Company makes a payment or payments to any Investor pursuant
to
any Transaction Document or an Investor enforces or exercises its rights
thereunder, and such payment or payments or the proceeds of such enforcement
or
exercise or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside, recovered from, disgorged by or are
required to be refunded, repaid or otherwise restored to the Company, a trustee,
receiver or any other person under any law (including, without limitation,
any
bankruptcy law, state or federal law, common law or equitable cause of action),
then to the extent of any such restoration the obligation or part thereof
originally intended to be satisfied shall be revived and continued in full
force
and effect as if such payment had not been made or such enforcement or setoff
had not occurred.
18
6.17. Independent
Nature of Investors’ Obligations and Rights.
The
obligations of each Investor under any Transaction Document are several and not
joint with the obligations of any other Investor, and no Investor shall be
responsible in any way for the performance of the obligations of any other
Investor under any Transaction Document. The decision of each Investor to
purchase Shares pursuant to the Transaction Documents has been made by such
Investor independently of any other Investor. Nothing contained herein or in
any
Transaction Document, and no action taken by any Investor pursuant thereto,
shall be deemed to constitute the Investors as a partnership, an association,
a
joint venture or any other kind of entity, or create a presumption that the
Investors are in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated by the Transaction Documents.
Each
Investor acknowledges that no other Investor has acted as agent for such
Investor in connection with making its investment hereunder and that no Investor
will be acting as agent of such Investor in connection with monitoring its
investment in the Shares or enforcing its rights under the Transaction
Documents. Each Investor shall be entitled to independently protect and enforce
its rights, including without limitation the rights arising out of this
Agreement or out of the other Transaction Documents, and it shall not be
necessary for any other Investor to be joined as an additional party in any
proceeding for such purpose. The Company acknowledges that each of the Investors
has been provided with the same Transaction Documents for the purpose of closing
a transaction with multiple Investors and not because it was required or
requested to do so by any Investor.
6.18. Limitation
of Liability.
Notwithstanding anything herein to the contrary, the Company acknowledges and
agrees that the liability of an Investor arising directly or indirectly, under
any Transaction Document of any and every nature whatsoever shall be satisfied
solely out of the assets of such Investor, and that no trustee, officer, other
investment vehicle or any other Affiliate of such Investor or any investor,
shareholder or holder of shares of beneficial interest of such a Investor shall
be personally liable for any liabilities of such Investor.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE
PAGES FOLLOW]
19
DISCLOSURE
SCHEDULES
TO
THE
BETWEEN
ASIAN
FINANCIAL, INC.
AND
THE
INVESTORS IDENTIFIED ON
THE
SIGNATURE PAGES THERETO
DATED
AS OF OCTOBER 24, 2006
These
Disclosure Schedules are delivered pursuant to Article 3 and Article 4 of that
certain Securities Purchase Agreement by and between Asian Financial, Inc.
(the
“ Company ”) and the investors identified on the signature pages thereto (the “
Investors ”) dated as of October 24, 2006, (the “ Agreement
”).
The
section numbers in these Disclosure Schedules correspond to the section numbers
in the Agreement; however, any information disclosed under any section number
of
these Disclosure Schedules shall be deemed to be disclosed and incorporated
into
any other sections under the Agreement to which it pertains, whether or not
the
specific section numbers are indicated below. Capitalized terms not otherwise
defined in these Disclosure Schedules have the meanings assigned to them in
the
Agreement.
Detailed
descriptions of contracts, agreements, or other arrangements referred to herein
(the “ Arrangements ”) have been made available to the Investors through the SEC
Reports of the Company. The descriptions of the Arrangements contained in these
Disclosure Schedules are intended to be summaries and are qualified by the
detailed descriptions or exhibits contained in the SEC Reports.
DISCLOSURE
SCHEDULES
TO
THE
BETWEEN
ASIAN
FINANCIAL, INC.
AND
THE
INVESTORS IDENTIFIED ON
THE
SIGNATURE PAGES THERETO
DATED
AS OF OCTOBER 24, 2006
|
Schedule:
|
|
Description:
|
|
Schedule
3.1(p)
|
|
Transactions
with Affiliates and Employees
|
|
Schedule
3.1(s)
|
|
Certain
Fees
|
|
Schedule
3.1(t)
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Certain
Registration Matters
|
|
Schedule
4.11
|
|
Related
Party Transactions
|
SCHEDULE
3.1(p)
TRANSACTIONS
WITH AFFILIATES AND EMPLOYEES
|
1.
|
Duoyuan
China leases 4,500 square meters of space, located at Xx. 0 Xxxxxxx
Xxxx, Xxxxxx Xxxxxxxx Industrial Development Area, Beijing, China,
from
Duoyuan Water Environment Technology Co., Ltd., of which Xxxxxx Xxx
is a
sole shareholder. The property is used as an office building and
research
and development center. The lease has a five-year term which runs
from
January 1, 2003 to December 31, 2007. The annual rent is
$136,022.
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2.
|
Duoyuan
China uses the trademark “Duoyuan” under a license arrangement with
Duoyuan Water Environment Company, of which Xxxxxx Xxx is a sole
shareholder. The trademark license does not have a term. The license
is
provided to Duoyuan China at no
charge.
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3.
|
Duoyuan
China uses the patent, “an automatic offset press printing oil supply
quick clearing devise” under a license arrangement with Huiyuan Duoyuan,
of which Xxxxxx Xxx is a sole shareholder. The patent license does
not
have a term. The license is provided to Duoyuan China at no
charge.
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4.
|
Duoyuan
used to use Tianjin Automobile Water Pump Co., Ltd., of which Xxxxxx
Xxx
is a sole shareholder, as supplier of certain key parts of the offset
presses, such as frame panels and rollers. Duoyuan pre-paid Tianjin
Water
Pump Company for these key parts, and as at June 30, 2005, there
were
$445,751 left with Tianjin Water Pump Company as related party
receivables. Tianjin Water Pump Company will continue to provide
certain
parts or goods worth $445,751 in the
future.
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5.
|
After
Langfang Duoyuan built its plant, there were construction materials
worth
$442,019. When Duoyuan Langfang Water Recycle Equipment Manufacturing
Co.,
Ltd., of which Xxxxxx Xxx is a sole shareholder, needed to build
its own
plants, Langfang Duoyuan gave these construction materials to it.
Duoyuan
Langfang Water Recycle Equipment Manufacturing Co., Ltd. has not
paid
Langfang Duoyuan and the money owed to Langfang Duoyuan became $422,019
related party receivable.
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6.
|
Duoyuan
China rents an office building from Duoyuan China Water Recycle Technology
Industry Co., Ltd., of which Xxxxxx Xxx is a sole shareholder. During
the
term of the lease, Duoyuan China Water Recycle Technology Industry
Co.,
Ltd. paid Duoyuan China’s portion of electricity and water xxxx associated
to the office lease. The amount of electricity and water xxxx became
Duoyuan China’s payable to Duoyuan China Water Recycle Technology Industry
Co., Ltd. Duoyuan China also transferred some of its employees to
Duoyuan
China Water Recycle Technology Industry Co., Ltd. Social welfare
associated to these transferred employees occurred before their transfer
became Duoyuan China’s payable to Duoyuan China Water Recycle Technology
Industry Co., Ltd. As of Xxxxx 00, 0000, Xxxxxxx Xxxxx’s payment to
Duoyuan China Water Recycle Technology Industry Co., Ltd. amounted
to
$1,041,001.
|
|
7.
|
When
Langfang Duoyuan was established and was building its plants, Duoyuan
China Information Technology Industry Co., Ltd., of which Xxxxxx
Xxx is a
sole shareholder, helped Langfang Duoyuan pay the municipal infrastructure
allocation fee and helped pay utilities bills such as electricity,
water,
heat steam, waster water treatment, etc. The total amount accumulated
to
$4,598,000, which became related-party payable by Duoyuan China to
Duoyuan
China Information Technology Industry Co.,
Ltd.
|
SCHEDULE
3.1(s)
CERTAIN
FEES
|
1.
|
The
Company is required to pay Xxxx Capital Partners, LLC certain cash
fees
and warrants as compensation for its services as placement agent,
pursuant
to its engagement letter with the
Company.
|
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2.
|
The
Company is required to pay Millennium Capital Partners certain fee
as
compensation for its advisory services pursuant to an arrangement
between
the Company and Millennium Capital
Partners.
|
SCHEDULE
3.1(t)
|
1.
|
Pursuant
to the Equity Transfer Agreement by and between the Company (the
predecessor of the Company prior to the Reorganization) and DIL,
if the
Company proposes to register any of the Company’s stock for resale or
otherwise under the Securities Act, other than a registration statement
relating solely to the sale of securities of participants in a Company
stock plan, a registration relating to a corporate reorganization
or
transaction under Rule 145 of the Securities Act, or a registration
in
which the only Common Stock being registered is Common Stock issuable
upon
conversion of debt securities which are also being registered, the
Company
shall, at such time, promptly give holders of an aggregate of 3,500,000
shares of Common Stock of the Company notice of such registration.
Upon
the written request of each such holder, given within 20 days after
mailing of such notice by the Company, the Company shall use all
commercially reasonable efforts to cause to be registered under the
Securities Act all such registrable securities that each such holder
has
requested to be registered if any stock of the Company is
registered.
|
SCHEDULE
4.11
RELATED
PARTY TRANSACTIONS
|
1.
|
The
transactions as disclosed under Schedule 3.1(p) hereof and transactions
that may derive from the Company’s efforts to complete and terminate such
transactions.
|
EXHIBIT
A
ESCROW
AGREEMENT
THIS
ESCROW AGREEMENT, dated October __, 2006 (“Escrow Agreement”), is entered into
by and between Asian Financial, Inc., a Wyoming corporation (the "Company")
and
Xxxxx Fargo Bank, National Association (the "Escrow Agent").
WHEREAS,
the Company and Investors are entering into concurrently herewith a Securities
Purchase Agreement, dated as of the date hereof (the "Purchase Agreement"),
pursuant to which each Investor has agreed to purchase from the Company, and
the
Company has agreed to sell to each Investor, the number of Shares identified
therein (capitalized terms used and not otherwise defined herein shall have
the
meanings given such terms on Annex
A
to this
Escrow Agreement);
1.
Proceeds to be Escrowed. A copy of the Purchase Agreement is attached as
Exhibit
A.
All
amounts provided by the Investors in connection with their acquisition of the
Shares as set forth in the Purchase Agreement shall be deposited with the Escrow
Agent in immediately available funds by federal wire transfer, such funds being
referred to herein as the “Escrow Funds.” In addition, certificates representing
the Shares (the “Escrowed Certificates”) shall be deposited by the Company with
the Escrow Agent. The Escrow Funds shall be retained in escrow by the Escrow
Agent in a separate account and invested as stated below. Pursuant to the
Purchase Agreement, the Investors will be required to deposit their respective
Escrow Funds directly to the Escrow Agent.
2.
Identity of Investors. Concurrently with the execution of the Escrow Agreement,
the Company shall furnish to the Escrow Agent the information comprising the
identity of the Investors in the format set forth in the “List of Investors”,
attached as Exhibit
B,
or in
electronic spreadsheet format with the same information. All Escrow Funds shall
remain the property of the Investors and shall not be subject to any liens
or
charges by the Company, or the Escrow Agent, or judgments or creditors' claims
against the Company, until released to the Company as hereinafter provided.
Escrow Agent will not use the information provided to it by the Company for
any
purpose other than to fulfill its obligations as Escrow Agent. The Company
and
the Escrow Agent will treat all Investor information as
confidential.
3.
Disbursement of Funds.
(a) The
Escrow Agent shall continue to hold the Escrow Funds (other than the
$4,000,000.00 referenced in Section 3(c) below) delivered for deposit hereunder
by an Investor until the earlier of: (1) receipt of such Investor’s written
notice evidencing termination under Section 6.5 of the Purchase Agreement (a
“Termination Election”), and (2) 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 Xxxx Capital Partners, LLC, who acted as placement agent in
connection with the transactions contemplated by the Purchase Agreement, to
effect the Closing.
(b) If
the
Escrow Agent shall receive the Termination Election of an Investor prior to
its
receipt of the notices contemplated under Section 3(a)(2), then the Escrow
Agent
shall return the Escrow Funds delivered by such Investor as directed by such
Investor and shall return the Escrowed Certificates in respect of such Investor
to the Company. If the Escrow Agent shall receive the notices contemplated
under
Section 3(a)(2) prior to the Termination Election of an Investor, then the
Escrow Agent shall disburse the portion of the Escrow Funds for which the
foregoing is the case in accordance with Exhibit
C
to this
Escrow Agreement and shall deliver the Escrowed Certificates as per the
instructions of the non-terminated Investors to the address for each such
Investor specified in Exhibit
B
to this
Escrow Agreement.
(c) Following
the Closing, if any, an aggregate of $4,000,000.00 (which shall form a part
of
the Escrow Funds) shall continue to be held in the escrow account following
disbursement of the balance of the Escrow Funds in accordance with Exhibit
C
to this
Escrow Agreement. The $4,000,000.00 shall be released and disbursed as follows:
(i) $2,000,000.00 shall be released by the Escrow Agent to the Company upon
the
Escrow Agent’s receipt of joint written notice from the Company and Xxxx Capital
Partners, LLC that the Company has complied with Section 4.12 of the Purchase
Agreement (the “Director Escrow Amount”) and (ii) $2,000,000.00 shall be
released by the Escrow Agent to the Company upon the Escrow Agent’s receipt of
joint written notice from the Company and Xxxx Capital Partners, LLC that the
Company has complied with Section 4.13 of the Purchase Agreement (the “CFO
Escrow Amount”). If for any reason, or for no reason whatsoever, the Escrow
Agent does not receive the joint written notice relating to the Director Escrow
Amount prior to the two year anniversary of the Closing Date, the Escrow Agent
shall disburse such Director Escrow Amount pro-rata among the Investors in
accordance with their relative Investment Amounts on the Closing Date as set
forth on Exhibit
B
to this
Escrow Agreement. If for any reason, or for no reason whatsoever, the Escrow
Agent does not receive the joint written notice relating to the CFO Escrow
Amount prior to the two year anniversary of the Closing Date, the Escrow Agent
shall disburse such CFO Escrow Amount pro-rata among the Investors in accordance
with their relative Investment Amounts on the Closing Date as set forth on
Exhibit
B
to this
Escrow Agreement.
(d) This
Escrow Agreement shall terminate and be of no further force or effect on the
earlier of (i) disbursement of both the Director Escrow Amount and the CFO
Escrow Amount to the Company and (ii) the two year anniversary of the Closing
Date.
4.
Duty
and Limitation on Liability of the Escrow Agent. The sole duty of the Escrow
Agent shall be to receive the Escrow Funds and the Escrowed Certificates and
to
hold them subject to release, in accordance herewith, and the Escrow Agent
shall
be under no duty to determine whether the Company is complying with requirements
of the Escrow Agreement or the Purchase Agreement. The Escrow Agent may
conclusively rely upon and shall be protected in acting upon any statement,
certificate, notice, request, consent, order or other document believed by
it to
be genuine and to have been signed or presented by the proper party or parties.
The Escrow Agent shall have no duty or liability to verify any such statement,
certificate, notice, request, consent, order or other document, and its sole
responsibility shall be to act only as expressly set forth in the Escrow
Agreement. The Escrow Agent shall be under no obligation to institute or defend
any action, suit or proceeding in connection with the Escrow Agreement unless
first indemnified to its satisfaction. The Escrow Agent may consult counsel
of
its own choice with respect to any question arising under the Escrow Agreement
and the Escrow Agent shall not be liable for any action taken or omitted in
good
faith upon advice of such counsel.
In
no
event shall the Escrow Agent be liable, directly or indirectly, for any (i)
damages or expenses arising out of the services provided hereunder, other than
damages which result from the Escrow Agent’s gross negligence or willful
misconduct, or (ii) special or consequential damages, even if the Escrow Agent
has been advised of the possibility of such damages.
The
Escrow Agent shall be obligated only to perform the duties specifically set
forth in this Escrow Agreement, which shall be deemed purely ministerial in
nature, and shall under no circumstances be deemed to be a fiduciary to the
Company, Xxxx Capital Partners, LLC or any other person. The Escrow Agent shall
not assume any responsibility for the failure of the Company to perform in
accordance with this Escrow Agreement. This Escrow Agreement sets forth all
matters pertinent to the escrow contemplated hereunder, and no additional
obligations of the Escrow Agent shall be implied by nor inferred from the terms
of any other agreement, including, without limitation, the Purchase
Agreement.
Under
no
circumstances shall the Escrow Agent be expected or required to use, risk or
advance its own funds in the performance of its duties or exercise of its rights
hereunder.
5.
Escrow
Agent's Fee. The Escrow Agent shall be entitled to compensation for its services
as stated in the fee schedule attached hereto as Exhibit
D,
which
compensation shall be paid by the Company. The fee agreed upon for the services
rendered hereunder is intended as full compensation for the Escrow Agent's
services as contemplated by the Escrow Agreement; provided,
however,
that in
the event that the conditions for the disbursement of funds under the Escrow
Agreement are not fulfilled, or the Escrow Agent renders any material service
not contemplated in the Escrow Agreement, or there is any assignment of interest
in the subject matter of the Escrow Agreement, or any material modification
hereof, or if any material controversy arises hereunder, or the Escrow Agent
is
made a party to any litigation pertaining to the Escrow Agreement, or the
subject matter hereof, then the 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.
6.
Investment of Proceeds. The Escrow Funds shall be credited by Escrow Agent
and recorded in an escrow account. During the period of this escrow as
contemplated in Section 3(d), Escrow Agent is hereby authorized by the Company
to deposit, transfer, hold and invest all funds received under this Escrow
Agreement, including principal and interest in Xxxxx Fargo Money Market Deposit
Account Fund in accordance with Exhibit
F
to this
Escrow Agreement. Escrow Agent may invest the Escrow Funds in alternative
investments in accordance with written instructions as may from time to time
be
provided to Escrow Agent and signed by the Company. Any interest received by
Escrow Agent with respect to the Escrow Funds, including reinvested interest
shall become part of the Escrow Funds, and shall be disbursed to the Company
as
directed in writing by the Company. For tax reporting purposes, all interest
or
other taxable income earned on the Escrow Funds in any tax year shall be taxable
to the Company.
The
Company shall within thirty (30) days after the date hereof, provide Escrow
Agent with certified tax identification numbers by furnishing appropriate IRS
forms W-9 or W-8 and other forms and documents that Escrow Agent may reasonably
request. The Company understands that if such tax reporting documentation is
not
so certified to Escrow Agent, Escrow Agent may be required by the Internal
Revenue Code of 1986, as amended, to withhold a portion of any interest or
other
income earned on the Escrow Funds pursuant to this Escrow
Agreement.
To
the
extent that Escrow Agent becomes liable for the payment of any taxes in respect
of income derived from the investment of funds held or payments made hereunder,
Escrow Agent shall satisfy such liability to the extent possible from the Escrow
Funds. The Company agrees to indemnify and hold Escrow Agent harmless from
and
against any taxes, additions for late payment, interest, penalties and other
expenses that may be assessed against Escrow Agent on or with respect to any
payment or other activities under this Escrow Agreement unless any such tax,
addition for late payment, interest, penalties and other expenses shall arise
out of or be caused by the gross negligence or willful misconduct of the Escrow
Agent.
The
Company acknowledges that Escrow Agent is not providing investment supervision,
recommendations or advice.
7.
Notices. All notices, requests, demands, and other communications under the
Escrow Agreement shall be in writing and shall be deemed to have been duly
given
(a) on the date of service if served personally on the party to whom notice
is
to be given, (b) on the day of transmission if sent by facsimile/email
transmission to the facsimile number/email address given below, and telephonic
confirmation of receipt is obtained promptly after completion of transmission,
(c) on the day after delivery to Federal Express or similar overnight courier
or
the Express Mail service maintained by the United States Postal Service, or
(d)
on the fifth day after mailing, if mailed to the party to whom notice is to
be
given, by first class mail, registered or certified, postage prepaid, and
properly addressed, return receipt requested, to the party as
follows:
|
|
If
to the Company:
|
Asian
Financial, Inc.
No.
3 Jinyuan Road
Daxing
District Industrial Development Xxxx
Xxxxxxx,
Xxxxx 000000
Attention:
Xxxxx Xxxx
Facsimile:
861060216825
|
|
|
If
to Escrow Agent:
|
Xxxxx
Fargo Bank, National Association
Corporate
Trust Services
000
Xxxxxxxx Xxxx., 00xx
Xxxxx
Xxx
Xxxxxxx, XX 00000
Attention:
Xxxx Xxx
Facsimile: (000)
000-0000
|
Any
party
may change its address for purposes of this paragraph by giving the other party
written notice of the new address in the manner set forth above.
17.
Authorized Signers. The Company will execute Exhibit
E-1
and
deliver an executed Exhibit
E-2
to this
Escrow Agreement concurrent with the execution hereof.
[Signature
page follows]
Asian
Financial, Inc.
By:
Xxxxxx Xxx
Its:
Chief Executive Officer
Xxxxx
Fargo Bank, National Association, as Escrow Agent
By:
Xxxx
Xxx
Its:
Assistant Vice President
EXHIBIT
A
Purchase
Agreement
Exhibit
B
List
of Investors
Pursuant
to the Escrow Agreement dated October , 2006 by and between Asian Financial,
mc:, a Wyoming corporation (the “Company”) and Xxxxx Fargo Bank, National
Association (the “Escrow Agent”), the Company hereby certifies that the
following investors have paid money for the purchase of the shares of common
stock, par value $0.001 per share, of the Company issued or issuable to
the
investors pursuant to the Securities Purchase Agreement, dated October __, 2006,
by and between the Company and the investors signatory thereto and the
money has
been deposited with the Escrow Agent:
|
|
1.
|
Name
of Investor
|
|
|
|
Address
|
|
|
|
Tax
Identification Number
|
|
|
|
Amount
of Shares
|
|
|
|
Amount
of money paid and deposited with Escrow Agent
|
|
|
|
|
|
|
2.
|
Name
of Investor
|
|
|
|
Address
|
|
|
|
Tax
Identification Number
|
|
|
|
Amount
of Shares
|
|
|
|
Amount
of money paid and deposited with Escrow
Agent
|
|
Company:
Asian Financial, Inc.
|
||
|
By:
|
|
|
|
Its:
|
|
|
|
Date:
|
|
|
Exhibit
C
FLOW
OF FUNDS
Closing
Statement - Flow of Funds
|
Investors
|
Shares
|
Total
|
Xxxx Capital
Fee
(6.0%)
|
Net
Xxxxxxxx
|
||||||||||||
|
0
|
Xxxxxxxx Xxxxx Fund, L.P. |
3,486,472.00
|
$
|
4,992,000.00
|
$
|
(299,520.00
|
)
|
$
|
4,692,480.00
|
|||||||
|
2
|
Renaissance US Growth Investment Trust PLC |
1,047,617.00
|
1,500,000.00
|
(90,000.00
|
)
|
1,410,000.00
|
||||||||||
|
3
|
US Special Opportunities Trust PLC |
1,047,617.00
|
1,500,000.00
|
(90,000.00
|
)
|
1,410,000.00
|
||||||||||
|
4
|
Renaissance Capital Growth & Income Fund III, Inc. |
349,205.00
|
500,000.00
|
(30,000.00
|
)
|
470,000.00
|
||||||||||
|
5
|
Premier XXXX US Emerging Growth Fund Limited |
349,205.00
|
500,000.00
|
(30,000.00
|
)
|
470,000.00
|
||||||||||
|
6
|
Jayhawk Private Equity Fund, L.P. |
-
|
-
|
-
|
-
|
|||||||||||
|
7
|
Bear Xxxxxxx Security Corp FBO J Xxxxxx Xxxxxxx Xxxx XXX |
698,411.00
|
1,000,000.00
|
(60,000.00
|
)
|
940,000.00
|
||||||||||
|
8
|
Bear Xxxxxxx Security Corp FBO J Xxxxxx Xxxxxxx XXX R/O II |
698,411.00
|
1,000,000.00
|
(60,000.00
|
)
|
940,000.00
|
||||||||||
|
9
|
Bear Xxxxxxx Security Corp FBO Xxxxxxx Family Foundation |
139,682.00
|
200,000.00
|
(12,000.00
|
)
|
188,000.00
|
||||||||||
|
00
|
Xxxx Xxxxxx Fund, L.P. |
698,411.00
|
1,000,000.00
|
(60,000.00
|
)
|
940,000.00
|
||||||||||
|
11
|
Xxxx X. Xxxxxx Wedbush Securities Inc. Cust XXX R/O Holding 10/31/92 |
279,364.00
|
400,000.00
|
(24,000.00
|
)
|
376,000.00
|
||||||||||
|
12
|
Xxxxxxx Xxxx Wedbush Sec Ctdn XXX Contributory 01-16-02 |
52,380.00
|
75,000.00
|
(4,500.00
|
)
|
70,500.00
|
||||||||||
|
00
|
Xxxxxx Xxxxxx Xxxxxxx Xxx Xxxx XXX SEP 12-16-92 |
34,920.00
|
50,000.00
|
(3,000.00
|
)
|
47,000.00
|
||||||||||
|
14
|
Xxxx Xxxxx Xxxxx Wedbush Sec Ctdn XXX Cont 08-27-96 |
34,920.00
|
50,000.00
|
(3,000.00
|
)
|
47,000.00
|
||||||||||
|
15
|
Xxxxxx Xxxxxxx Xxxxxxxxxxx Wedbush Sec Ctdn XXX Rollover 01-12-06 |
30,031.00
|
43,000.00
|
(2,580.00
|
)
|
40,420.00
|
||||||||||
|
16
|
The Xxxxxxxx X. Xxxxxx Trust |
20,952.00
|
30,000.00
|
(1,800.00
|
)
|
28,200.00
|
||||||||||
|
17
|
Chinamerica Fund, L.P. |
698,411.00
|
1,000,000.00
|
(60,000.00
|
)
|
940,000.00
|
||||||||||
|
00
|
Xxxxxxxx Xxxxxxx, X.X. |
698,411.00
|
1,000,000.00
|
(60,000.00
|
)
|
940,000.00
|
||||||||||
|
19
|
Centaur Value Fund, L.P. |
338,729.00
|
485,000.00
|
(29,100.00
|
)
|
455,900.00
|
||||||||||
|
20
|
United Centaur Master Fund |
185,079.00
|
265,000.00
|
(15,900.00
|
)
|
249,100.00
|
||||||||||
|
21
|
Xxxxxx Capital Investments, LLC |
418,376.00
|
600,000.00
|
(36,000.00
|
)
|
564,000.00
|
||||||||||
|
22
|
Whitebox Intermarket Partners, L.P. |
349,205.00
|
499,999.50
|
(29,999.97
|
)
|
469,999.53
|
||||||||||
|
00
|
Xxxxxx Xxxxxxx Xxxxxx, L.P. |
349,205.00
|
500,000.00
|
(30,000.00
|
)
|
470,000.00
|
||||||||||
|
24
|
Lighthouse Consulting Limited |
-
|
-
|
-
|
-
|
|||||||||||
|
25
|
Precept Capital Master Fund, G.P. |
349,205.00
|
500,000.00
|
(30,000.00
|
)
|
470,000.00
|
||||||||||
|
26
|
MidSouth Investor Fund LP |
348,647.00
|
499,200.00
|
(29,952.00
|
)
|
469,248.00
|
||||||||||
|
27
|
Sandor Capital Master Fund, L.P. |
335,237.00
|
480,000.00
|
(28,800.00
|
)
|
451,200.00
|
||||||||||
|
28
|
Crescent International Ltd. |
209,523.00
|
300,000.00
|
(18,000.00
|
)
|
282,000.00
|
||||||||||
|
29
|
Diamond Opportunity Fund, LLC |
174,602.00
|
250,000.00
|
(15,000.00
|
)
|
235,000.00
|
||||||||||
|
30
|
Guerrilla Partners LP |
167,618.00
|
240,000.00
|
(14,400.00
|
)
|
225,600.00
|
||||||||||
|
31
|
The Xxxxxxx Family Trust dtd 03/24/2004 |
139,682.00
|
200,000.00
|
(12,000.00
|
)
|
188,000.00
|
||||||||||
|
32
|
Nite Capital LP |
139,682.00
|
200,000.00
|
(12,000.00
|
)
|
188,000.00
|
||||||||||
|
33
|
Cascata Long / Short Fund, LP |
69,841.00
|
100,000.00
|
(6,000.00
|
)
|
94,000.00
|
||||||||||
|
34
|
Outpoint Capital LP |
-
|
-
|
-
|
-
|
|||||||||||
|
|
TOTAL
|
13,939,051.00
|
$
|
19,959,199.50
|
$
|
(1,197,551.97
|
)
|
$
|
18,761,647.53
|
|||||||
|
Balance
to be left in escrow
|
$
|
(4,000,000.00
|
)
|
|
|
Expenses:
Placement Agent - Fee
|
(1,197,551.97
|
)
|
||
|
Expenses:
Company Legal - Xxxxxx Xxxxxx
|
(220,000.00
|
)
|
||
|
Expenses:
Management Travel Charged to Xxxx
|
(35,503.92
|
)
|
||
|
Expenses:
Xxxxx Fargo Escrow Fee
|
(5,000.00
|
)
|
||
|
Expenses:
Placement Agent Legal - Xxxxx Xxxx (Company Portion)
|
(50,000.00
|
)
|
||
|
Expenses:
Placement Agent Legal - Xxxxx Xxxx (Xxxx Portion)
|
(10,000.00
|
)
|
||
|
Please
arrange for funds to be sent as follows:
|
||||
|
Duoyuan
Printing
Intermediary
Bank ABA: 000000000
Bnf
Bank (SWIFT): DBSSCNBJ
Bnf
Bank A/C #: 8900347910
BNF
Bank A/C Name: DBS Bank Ltd, Beijing Branch
FFC:
A/C 10372130010160 Asian Financial Inc.
|
$
|
14,451,143.61
|
||
|
Xxxx
Capital Partners, LLC
California
Bank & Trust
0000
Xxxxxxx Xxxx Xxxx
Xxx
Xxxxxxx, XX 00000
XXX#
000000000
XXX
Xxxx Capital Partners, LLC
Account
# 3640012901
|
$
|
1,223,055.89
|
||
|
Xxxxxx
Xxxxxx
Standard
Chartered Bank Hong Kong
Bank
Address: Standard Chartered Bank Xxxxxxxx
0-0X
Xxx Xxxxx Xxxx Xxxxxxx
Xxxx
Xxxx
Swift
Code: XXXXXXXXXXX
Beneficiary
Name: Xxxxxx Xxxxxx
Account
No.: 447-1-095127-5 (USD)
|
$
|
220,000.00
|
||
|
Xxxxx
Xxxx
The
Bank of New York
Xxx
Xxxx Xxxxxx
Xxx
Xxxx, XX 00000
Account
Name - Xxxxx Xxxx LLP Operating Account
ABA#
000000000
Account
#6302387166
Reference:
0203155
|
$
|
60,000.00
|
Closing
Statement - Flow of Funds
|
|
Investors
|
Shares
|
|
|
Total
|
|
|
Xxxx Capital
Fee
(6.0%)
|
|
|
Net Proceeds
|
|
1
|
Jayhawk
Private Equity Fund, L.P.
|
2,095,235.00
|
|
$
|
3,000,000.00
|
|
$
|
(180,000.00
|
)
|
$
|
2,820,000.00
|
|
2
|
Lighthouse
Consulting Limited
|
349,205.00
|
|
|
500,000.00
|
|
|
(30,000.00
|
)
|
|
470,000.00
|
|
3
|
Outpoint
Capital LP
|
62,857.00
|
|
|
90,000.00
|
|
|
(5,400.00
|
)
|
|
84,600.00
|
|
|
TOTAL
|
2,507,297.00
|
|
$
|
3,590,000.00
|
|
$
|
(215,400.00
|
)
|
$
|
3,374,600.00
|
|
Expenses:
Placement Agent – Fee
|
(215,400.00
|
)
|
||
|
Please
arrange for funds to be sent as follows:
|
||||
|
Intermediary
Bank ABA: 000000000
Bnf
Bank (SWIFT): DBSSCNBJ
Bnf
Bank A/C #: 8900347910
BNF
Bank A/C Name: DBS Bank Ltd, Beijing Branch
FFC:
A/C 10372130010160
Beneficiary:
Asian Financial Inc.
|
$
|
3,374,600.00
|
||
|
Xxxx
Capital Partners, LLC
California
Bank & Trust
0000
Xxxxxxx Xxxx Xxxx
Xxx
Xxxxxxx, XX 00000
XXX#
000000000
XXX
Xxxx Capital Partners, LLC
Account
# 3640012901
|
$
|
215,400.00
|
Exhibit
D
ESCROW
AGENT FEES
|
[LOGO]
Xxxxx Fargo Bank
|
|
Xxxx
X. Xxxxxxx
|
|
|
|
Corporate
Trust
|
|
Vice
President/Business
|
|
|
Services
|
|
Development
|
|
|
|
|
Tel.
(000) 000-0000
|
|
|
|
|
Fax:
(000) 000-0000
|
|
|
|
|
xxxx.xxxxxxx@xxxxxxxxxx.xxx
|
SCHEDULE
OF FEES
to
act as ESCROW AGENT for
Asian
Financial, Inc. Escrow Account
Acceptance
Fee
:
Waived
Initial
Fees as they relate to Xxxxx Fargo Bank acting in the capacity of Escrow Agent
—
includes creation and examination of the Escrow Agreement; acceptance of the
Escrow appointment; setting up of Escrow Account(s) and accounting records;
and
coordination of receipt of funds for deposit to the Escrow Account.
Acceptance
Fee payable at time of Escrow Agreement execution.
|
Escrow
Agent Administration Fee
:
|
$2,000.00
|
For
ordinary administration services by Escrow Agent — includes daily routine
account management; investment transactions; cash transaction processing
(including wires and check processing); monitoring claim notices pursuant to
the
agreement; disbursement of the funds in accordance with the agreement; and
mailing of trust account statements to all applicable parties.
Tax
reporting is included for up to Five (5) entities. Should additional reportings
be necessary, a $25 per reporting charge will be assessed.
This
fee
is Payable in advance, with the first installment due at the time of Escrow
Agreement execution. Fee will not be prorated in case of early
termination.
Xxxxx
Fargo’s bid is based on the following assumptions:
|
·
|
Number
of escrow funds/accounts to be established: One
(1)
|
|
·
|
Number
of Deposits to Escrow Account: Not more than Thirty
(30)
|
|
·
|
Number
of Withdrawals from Escrow Fund: Not more than Ten
(10)
|
|
·
|
Term
of Escrow: Not more than One (1)
month
|
|
·
|
THIS
FEE SCHEDULE ASSUMES THAT BALANCES IN THE ESCROW ACCOUNT WILL BE
INVESTED
IN MONEY MARKET FUNDS THAT XXXXX FARGO HAS A RELATIONSHIP
WITH
|
|
·
|
ALL
FUNDS WILL BE RECEIVED FROM OR DISTRIBUTED TO A DOMESTIC OR AN APPROVED
FOREIGN ENTITY
|
|
·
|
THE
ACCOUNT(S) DOES NOT OPEN WITHIN THREE (3) MONTHS OF TITLE DATE SHOWN
BELOW, THIS PROPOSAL WILL BE DEEMED TO BE NULL AND
VOID
|
|
Out-of
Pocket Expenses
:
|
At
Cost
|
We
only
charge for out-of-pocket expenses in response to specific tasks assigned by
the
client. Therefore, we cannot anticipate what specific out-of-pocket items will
be needed or what corresponding expenses will be incurred. Possible expenses
would be, but are not limited to, express mail and messenger charges, travel
expenses to attend closing or other meetings. There are no charges for indirect
out-of- pocket expenses.
This
fee schedule is based upon the assumptions listed above which pertain to the
responsibilities and risks involved in Xxxxx Fargo undertaking the role of
Escrow Agent. These assumptions are based on information provided to us as
of
the date of this fee schedule. Our fee schedule is subject to review and
acceptance of the final documents. Should any of the assumptions, duties or
responsibilities change, we reserve the right to affirm, modify or rescind
our
fee schedule.
Submitted
on: October 11, 2006
Exhibit
E
CERTIFICATE
AS TO AUTHORIZED SIGNATURES
Account
Name:
Account
Number:
The
specimen signatures shown below are the specimen signatures of the individuals
who have been designated as authorized representatives of the Company and are
authorized to initiate and approve transactions of all types for the
above-mentioned account on behalf of the Company.
|
Name
/ Title
|
|
Specimen
Signature
|
|
|
|
|
|
|
|
Xxxxxx
Xxx
|
|
|
|
|
Name
|
|
Signature
|
|
|
|
|
|
|
|
Chief
Executive Officer
|
|
|
|
|
Title
|
|
|
|
|
|
|
|
|
|
Name
|
|
Signature
|
|
|
|
|
|
|
|
Title
|
|
|
|
|
|
|
|
|
|
Name
|
|
Signature
|
|
|
|
|
|
|
|
Title
|
|
|
|
Exhibit
E-2
CERTIFICATE
AS TO AUTHORIZED SIGNATURES
Account
Name:
Account
Number:
The
specimen signatures shown below are the specimen signatures of the individuals
who have been designated as authorized representatives of Xxxx Capital Partners,
LLC and are authorized to provide the documents, instruments and/or consents,
including the written consents specified in Section 3(a) and
Section 3(c), relating to Xxxx Capital Partners, LLC and specified in the
Escrow Agreement.
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Exhibit
F
Agency
and Custody Account Direction
For
Cash Balances
Xxxxx
Fargo Money Market Deposit Accounts
Direction
to use the following money market fund(s) for Cash Balances for the following
account(s):
Account
Name: Asian Financial Inc. Subscription Escrow
Account
Number(s): 00000000
You
are
hereby directed to invest, as indicated below or as I shall direct further
from
time to time, all cash in the Account(s) in the following money market deposit
account:
x
Xxxxx
Fargo Money Market Deposit Account (MMDA)
I
understand that deposits in a Xxxxx Fargo money market deposit account is a
deposit of Xxxxx Fargo Bank, N.A. and amounts over $100,000 are not insured
by
the Federal Deposit Insurance Corporation. Xxxxx Fargo has a Long Term Deposit
rating of A ++ by Xxxxx’x and a Short Term rating of A-1+ by
S&P.
I
acknowledge that I have full power to direct investments of the
Account(s).
I
understand that I may change this direction at any time and that it shall
continue in effect until revoked or modified by me by written notice to
you.
|
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Asian
Financial, Inc.
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By:
|
/s/
Xxxxxx Xxx
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Name:
Xxxxxx Xxx
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Title:
Chief Executive Officer
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Date:
October 25, 2006
|
Annex
A
DEFINED
TERMS
“Business
Day”
means
any day except Saturday, Sunday and any day which is a federal legal holiday
or
a day on which banking institutions in the State of New York or the State of
California are authorized or required by law or other governmental action to
close.
“Closing”
means
the closing of the purchase and sale of the Shares pursuant to Article II
of the Purchase Agreement.
“Closing
Date”
means
the Business Day on which all of the conditions set forth in Sections 5.1
and 5.2 of the Purchase Agreement are satisfied, or such other date as the
parties thereto may agree.
“Investment
Amounts”
means,
with respect to each Investor, the Investment Amount indicated on such
Investor’s signature page to the Purchase Agreement.
“Investors”
means
the investors identified on the signature pages to the Purchase
Agreement.
“Shares”
means
the shares of common stock, par value $0.001 per share, of the Company issued
or
issuable to the Investors pursuant to the Purchase Agreement.
EXHIBIT
B
MAKE
GOOD
ESCROW AGREEMENT
This
Make
Good Escrow Agreement (the "Make Good Agreement"), dated effective as of October
__, 2006, is entered into by and among Asian Financial, Inc., a Wyoming
corporation (the "Company"), Xxxx Capital Partners, LLC, as agent (“Xxxx”),
Xxxxxx Xxx in his individual capacity ("Guo"), and Xxxxx Fargo Bank, National
Association (hereinafter referred to as "Escrow Agent").
WHEREAS,
each of the investors (the “Investors”) to the private offering of securities of
the Company has entered into a Securities Purchase Agreement, dated October
__,
2006 (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, Guo agreed to place
the
"Escrow Shares" (as hereinafter defined) into escrow for the benefit of the
Investors in the event the Company failed to satisfy certain earnings per share
and/or After-Tax Net Income thresholds.
1.
Appointment of Escrow Agent. Guo and the Company hereby appoint Xxxxx Fargo
Bank, National Association as 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. Upon the execution of this Make Good Agreement, Guo
shall deliver, or cause to be delivered, to the Escrow Agent a stock certificate
evidencing 18,502,896 shares (the "Escrow Shares") of the Company's common
stock, par value $0.001 per share, along with a stock power executed in blank.
(i)
The
Escrow Shares are validly issued, fully paid and nonassessable shares of the
Company, and free and clear of all pledges, liens and encumbrances.
(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 Guo pursuant to the terms of any indenture, mortgage, deed of trust
or
other agreement or instrument binding upon Guo, other than such breaches,
defaults or liens which would not have a material adverse effect taken as a
whole.
a. Fiscal
Year Ended June 30, 2006.
Guo
agreed with the Investors that in the event the consolidated financial
statements of the Company reflect less than $12,000,000.00 of After-Tax Net
Income for the fiscal year ended June 30, 2006 (the "Guaranteed NI"), Guo would
transfer, or cause to be transferred, to the Investors on a pro rata basis
for
no consideration other than their part of their respective Investment Amount
at
Closing 37.5% of the number of Shares issued at Closing. In the event that
the
Guaranteed NI is not achieved based on the Company's consolidated financial
statements for the fiscal year ended June 30, 2006, as filed with the
Commission, the Company has agreed that Xxxx will provide written instruction
to
the Escrow Agent to issue and deliver certificates evidencing a total of
6,167,632 of the Escrow Shares to the Investors, in an amount to each Investor
as set forth on Exhibit
A
attached
hereto, on a pro rata basis (based upon each Investor’s Investment Amount
indicated on such Investor’s signature page to the SPA) within ten (10) business
days after the date which the 2006 audit report for the Company is filed with
the Commission. The Escrow Agent need only rely on the letter of instruction
from Xxxx in this regard and will disregard any contrary instructions. If the
consolidated financial statements of the Company reflect $12,000,000 or more
of
After-Tax Net Income for the fiscal year ended June 30, 2006, Xxxx shall provide
written instructions to the Escrow Agent for the release of 6,167,632 of the
Escrow Shares to Guo or to the registered holder of such shares who originally
deposited such shares with the Escrow Agent.
b. Fiscal
Year Ending June 30, 2007.
Guo
agreed with the Investors that in the event either: (i) the earnings per share
reported in the Annual Report on Form 10-KSB of the Company for the fiscal
year
ending June 30, 2007, as filed with the Commission, is less than $0.60 on a
fully diluted basis (the “2007 EPS”) or (ii) the after tax net income reported
in the Annual Report on Form 10-KSB of the Company for the fiscal year ending
June 30, 2007, as filed with the Commission, is less than $16,000,000.00 (the
“2007 ATNI”), Guo would transfer, or cause to be transferred, to the Investors
on a pro rata basis for no consideration other than their part of their
respective Investment Amount at Closing 37.5% of the number of Shares issued
at
Closing. In the event that either (i) the earnings per share reported in the
Annual Report on Form 10-KSB of the Company for the fiscal year ending June
30,
2007, as filed with the Commission, is less than the 2007 EPS or (ii) the after
tax net income reported in the Annual Report on Form 10-KSB of the Company
for
the fiscal year ending June 30, 2007, as filed with the Commission, is less
than
the 2007 ATNI, the Company has agreed that Xxxx will provide written instruction
to the Escrow Agent instructing the Escrow Agent to issue and deliver
certificates evidencing a total of 6,167,632 of the Escrow Shares to the
Investors, in an amount to each Investor as set forth on Exhibit
A
attached
hereto, on a pro rata basis (based upon each Investor’s Investment Amount
indicated on such Investor’s signature page to the SPA) within 10 Business Days
after the date which the Annual Report on Form 10-KSB for the Company for the
fiscal year ending June 30, 2007 is filed with the Commission. The Escrow Agent
need only rely on the letter of instruction from Xxxx in this regard and will
disregard any contrary instructions. In the event that both the (i) earnings
per
share reported in the Annual Report on Form 10-KSB of the Company for the fiscal
year ending June 30, 2007, as filed with the Commission, is equal to or greater
than the 2007 EPS and (ii) the after tax net income reported in the Annual
Report on Form 10-KSB of the Company for the fiscal year ending June 30, 2007,
as filed with the Commission, is equal to or greater than the 2007 ATNI, Xxxx
shall provide written instructions to the Escrow Agent for the release of
6,167,632 of the Escrow Shares to Guo or to the registered holder of such shares
who originally deposited such shares with the Escrow Agent.
c.
Fiscal
Year Ending June 30, 2008.
Guo
agreed with Investors that in the event either: (i) the earnings per share
reported in the Annual Report on Form 10-KSB of the Company for the fiscal
year
ending June 30, 2008, as filed with the Commission, is less than $0.89 on a
fully diluted basis (the “2008 EPS”) or (ii) the after tax net income reported
in the Annual Report on Form 10-KSB of the Company for the fiscal year ending
June 30, 2008, as filed with the Commission, is less than $23,900,000.00 (the
“2008 ATNI”), Guo would transfer, or cause to be transferred, to the Investors
on a pro rata basis for no consideration other than their part of their
respective Investment Amount at Closing 37.5% of the number of Shares issued
at
Closing. In the event that either (i) the earnings per share reported in the
Annual Report on Form 10-KSB of the Company for the fiscal year ending June
30,
2008, as filed with the Commission, is less than the 2008 EPS or (ii) the after
tax net income reported in the Annual Report on Form 10-KSB of the Company
for
the fiscal year ending June 30, 2008, as filed with the Commission, is less
than
the 2008 ATNI, the Company has agreed that Xxxx will provide written instruction
to the Escrow Agent instructing the Escrow Agent to issue and deliver
certificates evidencing a total of 6,167,632 of the Escrow Shares to the
Investors, in an amount to each Investor as set forth on Exhibit
A
attached
hereto, on a pro rata basis (based upon each Investor’s Investment Amount
indicated on such Investor’s signature page to the SPA) within 10 Business Days
after the date which the Annual Report on Form 10-KSB for the Company for the
fiscal year ending June 30, 2008 is filed with the Commission. The Escrow Agent
need only rely on the letter of instruction from Xxxx in this regard and will
disregard any contrary instructions. In the event that both the (i) earnings
per
share reported in the Annual Report on Form 10-KSB of the Company for the fiscal
year ending June 30, 2008, as filed with the Commission, is equal to or greater
than the 2008 EPS and (ii) the after tax net income reported in the Annual
Report on Form 10-KSB of the Company for the fiscal year ending June 30, 2008,
as filed with the Commission, is equal to or greater than the 2008 ATNI, Xxxx
shall provide written instructions to the Escrow Agent for the release of
6,167,632 of the Escrow Shares to Guo or to the registered holder of such shares
who originally deposited such shares with the 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. Xxxx’x sole obligation under this Make Good Agreement is to
provide written instruction to Escrow Agent (following such time as the Company
files certain periodic financial reports as specified in Section 4 hereof)
directing the distribution of the Escrow Shares. Xxxx will provide such written
instructions upon review of the relevant earnings per share and/or After-Tax
Net
Income amount reported in such periodic financial reports as specified in
Section 4 hereof. Xxxx 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 Xxxx) in connection with such
financial reports of the Company, Xxxx shall have no obligation or liability
to
any party hereunder.
(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.
(c)
The
Company and Guo each hereby, jointly and severally, indemnify and hold harmless
each of Escrow Agent, Xxxx and any of their 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 Xxxx 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 or Xxxx hereunder; except, that if Escrow Agent
or
Xxxx is guilty of willful misconduct, gross negligence or fraud under this
Make
Good Agreement, then Escrow Agent or Xxxx, as the case may be, will bear all
losses, damages and expenses arising as a result of such willful misconduct,
gross negligence or fraud. Promptly after the receipt by Escrow Agent or Xxxx
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 or Xxxx, 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.
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
B,
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 prior to receiving written
approval from the Company, which approval shall not be unreasonably
withheld.
18.
Authorized Signers. The Company will execute Exhibit
C-1
and
deliver an executed Exhibit
C-2
to this
Make Good Agreement concurrent with the execution hereof.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
|
|
COMPANY:
ASIAN
FINANCIAL, INC.
|
||||
|
|
|
|
|||
|
By:
|
|||||
|
|
Name: Xxxxxx Xxx |
||||
|
Title:
Chief Executive Officer
|
|||||
|
|
Address:
XXXXXX
XXX:
Address:
|
||||
[REMAINDER
OF THIS PAGE INTENTIONALLY LEFT BLANK SIGNATURE PAGE FOR OTHER PARTIES
FOLLOWS]
|
|
ESCROW
AGENT:
XXXXX
FARGO BANK, NATIONAL ASSOCIATION
|
||
|
|
|
|
|
|
By:
|
|||
|
|
Name:
Xxxx Xxx
Title:
Assistant Vice President
|
||
|
|
Address:
000 Xxxxxxxx Xxxx, 00xx
Xxxxx
Xxx Xxxxxxx, XX 00000 AGENT:
XXXX
CAPITAL PARTNERS, LLC
|
||
|
|
By:
|
|
|
|
|
Name:
Title:
|
||
|
|
Address:
|
||
Exhibit
A
ESCROW
SHARES TO BE ISSUED TO INVESTORS
|
|
Make Good (2006)
|
Make Good (2007)
|
Make Good (2008)
|
|||||||
|
Institution
Legal Name
|
37.50%
|
37.50%
|
37.50%
|
|||||||
|
Pinnacle
China Fund, L.P.
|
1,307,427.00
|
1,307,427.00
|
1,307,427.00
|
|||||||
|
Jayhawk
Private equity Fund, L.P.
|
785,713.00
|
785,713.00
|
785,713.00
|
|||||||
|
US
Special Opportunities Trust PLC
|
392,856.00
|
392,856.00
|
392,856.00
|
|||||||
|
Renaissance
US Growth Investment Trust PLC
|
392,856.00
|
392,856.00
|
392,856.00
|
|||||||
|
Westpark
Capital, L.P.
|
261,904.00
|
261,904.00`
|
261,904.00
|
|||||||
|
Lake
Street Fund, L.P.
|
261,904.00
|
261,904.00
|
261,904.00
|
|||||||
|
Chinamerica
Fund, L.P.
|
261,904.00
|
261,904.00
|
261,904.00
|
|||||||
|
Bear
Xxxxxxx Security Corp
FBO
J Xxxxxx Xxxxxxx Xxxx XXX
|
261,904.00
|
261,904.00
|
261,904.00
|
|||||||
|
Bear
Xxxxxxx Security Corp
FBO
J Xxxxxx Xxxxxxx XXX R/O II
|
261,904.00
|
261,904.00
|
261,904.00
|
|||||||
|
Xxxxxx
Capital Investments, LLC
|
157,143.00
|
157,143.00
|
157,143.00
|
|||||||
|
Whitebox
Intermarket Partners, L.P.
|
130,952.00
|
130,952.00
|
130,952.00
|
|||||||
|
Precept
Capital Master Fund, G.P.
|
130,952.00
|
130,952.00
|
130,952.00
|
|||||||
|
Lighthouse
Consulting Limited
|
130,952.00
|
130,952.00
|
130,952.00
|
|||||||
|
X.
Xxxxxx Investments, LLC
|
130,952.00
|
130,952.00
|
130,952.00
|
|||||||
|
Renaissance
Capital Growth & Income Fund III, Inc.
|
130,951.00
|
130,951.00
|
130,951.00
|
|||||||
|
Premier
Xxxx US Emerging Growth Fund Limited
|
130,951.00
|
130,951.00
|
130,951.00
|
|||||||
|
MidSouth
Investor Fund LP
|
130,743.00
|
130,743.00
|
130,743.00
|
|||||||
|
Centaur
Value Fund, L.P.
|
127,023.00
|
127,023.00
|
127,023.00
|
|||||||
|
Sandor
Capital Master Fund, L.P.
|
125,714.00
|
125,714.00
|
125,714.00
|
|||||||
|
Xxxx
X. Xxxxxx Wedbush Securities Inc. Cust XXX R/O Holding
10/31/92
|
104,762.00
|
104,762.00
|
104,762.00
|
|||||||
|
Crescent
International Ltd.
|
78,571.00
|
78,571.00
|
78,571.00
|
|||||||
|
United
Centaur Master Fund
|
69,405.00
|
69,405.00
|
69,405.00
|
|||||||
|
Diamond
Opportunity Fund, LLC
|
65,476.00
|
65,476.00
|
65,476.00
|
|||||||
|
Guerrilla
Partners LP
|
62,857.00
|
62,857.00
|
62,857.00
|
|||||||
|
Nite
Capital, LP
|
52,381.00
|
52,381.00
|
52,381.00
|
|||||||
|
Xxxxxxxx
Family Trust dtd 03/24/2004
|
52,381.00
|
52,381.00
|
52,381.00
|
|||||||
|
Bear
Xxxxxxx Security Corp
FBO
Xxxxxxx Family Foundation
|
52,381.00
|
52,381.00
|
52,381.00
|
|||||||
|
Cascata
Long / Short Fund, LP
|
26,190.00
|
26,190.00
|
26,190.00
|
|||||||
|
Outpoint
Capital LP
|
23,571.00
|
23,571.00
|
23,571.00
|
|||||||
|
Xxxxxxx
Xxxx Wedbush Sec Ctdn XXX Contributory 01-16-02
|
19,643.00
|
19,643.00
|
19,643.00
|
|||||||
|
Xxxx
Xxxxx Xxxxx Wedbush Sec Ctdn XXX Cont 08-27-96
|
13,095.00
|
13,095.00
|
13,095.00
|
|||||||
|
Xxxxxx
Xxxxxx Wedbush Sec Ctdn XXX SEP 12-16-92
|
13,095.00
|
13,095.00
|
13,095.00
|
|||||||
|
Xxxxxx
Xxxxxxx Xxxxxxxxxxx Wedbush Sec Ctdn XXX Rollover 01-12-06
|
11,262.00
|
11,262.00
|
11,262.00
|
|||||||
|
The
Xxxxxxxx X. Xxxxxx Trust
|
7,857.00
|
7,857.00
|
7,857.00
|
|||||||
|
|
6,167,632.00
|
6,167,632.00
|
6,167,632.00
|
|||||||
Exhibit
B
SCHEDULE
OF FEES
to
act as ESCROW AGENT for
Asian
Financial Make Good Escrow
|
[LOGO]
Xxxxx Fargo Bank
|
|
Xxxx
X. Xxxxxxx
|
|
|
Corporate
Trust
|
|
Vice
President/Business
|
|
|
Services
|
|
Development
|
|
|
|
|
|
Tel.
(000) 000-0000
|
|
|
|
|
Fax:
(000) 000-0000
|
|
|
|
|
xxxx.xxxxxxx@xxxxxxxxxx.xxx
|
Acceptance
Fee
:
$500.00
Initial
Fees as they relate to Xxxxx Fargo Bank acting in the capacity of Escrow Agent
—
includes creation and examination of the Escrow Agreement; acceptance of the
Escrow appointment; setting up of Escrow Account(s) and accounting records;
and
coordination of receipt of funds for deposit to the Escrow Account.
Acceptance
Fee payable at time of Escrow Agreement execution.
|
Escrow
Agent Administration Fee
:
|
$2,500.00
|
For
ordinary administration services by Escrow Agent — includes daily routine
account management; investment transactions; cash transaction processing
(including wires and check processing); monitoring claim notices pursuant to
the
agreement; disbursement of the funds in accordance with the agreement; and
mailing of trust account statements to all applicable parties.
Tax
reporting is included for up to Five (5) entities. Should additional reportings
be necessary, a $25 per reporting charge will be assessed.
This
fee
is Payable in advance, with the first installment due at the time of Escrow
Agreement execution. Fee will not be prorated in case of early
termination.
Xxxxx
Fargo’s bid is based on the following assumptions:
|
·
|
Number
of escrow funds/accounts to be established: One
(1)
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Number
of Deposits to Escrow Account: Not more than Three
(3)
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Number
of Withdrawals from Escrow Fund: Not more than Three
(3)
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Term
of Escrow: Not more than Three (3)
years
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THIS
FEE SCHEDULE ASSUMES THAT BALANCES IN THE ESCROW ACCOUNT WILL BE
INVESTED
IN MONEY MARKET FUNDS THAT XXXXX FARGO HAS A RELATIONSHIP
WITH
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ALL
FUNDS WILL BE RECEIVED FROM OR DISTRIBUTED TO A DOMESTIC OR AN APPROVED
FOREIGN ENTITY
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THE
ACCOUNT(S) DOES NOT OPEN WITHIN THREE (3) MONTHS OF TITLE DATE SHOWN
BELOW, THIS PROPOSAL WILL BE DEEMED TO BE NULL AND
VOID
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| Out-of Pocket Expenses : |
At
Cost
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We
only
charge for out-of-pocket expenses in response to specific tasks assigned by
the
client. Therefore, we cannot anticipate what specific out-of-pocket items will
be needed or what corresponding expenses will be incurred. Possible expenses
would be, but are not limited to, express mail and messenger charges, travel
expenses to attend closing or other meetings. There are no charges for indirect
out-of- pocket expenses.
This
fee schedule is based upon the assumptions listed above which pertain to the
responsibilities and risks involved in Xxxxx Fargo undertaking the role of
Escrow Agent. These assumptions are based on information provided to us as
of
the date of this fee schedule. Our fee schedule is subject to review and
acceptance of the final documents. Should any of the assumptions, duties or
responsibilities change, we reserve the right to affirm, modify or rescind
our
fee schedule.
Submitted
on: October 16, 2006
Exhibit
C-1
CERTIFICATE
AS TO AUTHORIZED SIGNATURES
Account
Name:
Account
Number:
The
specimen signatures shown below are the specimen signatures of the individuals
who have been designated as authorized representatives of the Company and are
authorized to initiate and approve transactions of all types for the
above-mentioned account on behalf of the Company.
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Exhibit
C-2
CERTIFICATE
AS TO AUTHORIZED SIGNATURES
Account
Name:
Account
Number:
The
specimen signatures shown below are the specimen signatures of the individuals
who have been designated as authorized representatives of Xxxx Capital Partners,
LLC and are authorized to provide the documents, instruments and/or consents,
including the written consents specified in Section 4, relating to Xxxx Capital
Partners, LLC and specified in the Make Good Agreement.
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EXHIBIT
C
REGISTRATION
RIGHTS AGREEMENT
This
Registration Rights Agreement (this "Agreement") is made and entered into as
of
October 24, 2006, by and among Asian Financial, Inc., a Wyoming corporation
(the
"Company"), and the investors signatory hereto (each a "Investor" and
collectively, the "Investors").
This
Agreement is made pursuant to the Securities Purchase Agreement, dated as of
the
date hereof among the Company and the Investors (the "Purchase
Agreement").
The
Company and the Investors hereby agree as follows:
1. Definitions.
Capitalized terms used and not otherwise defined herein that are defined in
the
Purchase Agreement will have the meanings given such terms in the Purchase
Agreement. As used in this Agreement, the following terms have the respective
meanings set forth in this Section 1:
“2007
Delivery Date” means the date on which the 2007 Make Good Shares are required to
be delivered to the Investors by Xx. Xxxxxx Xxx pursuant to Section 4.10(b)
of
the Purchase Agreement.
“2008
Delivery Date” means the date on which the 2008 Make Good Shares are required to
be delivered to the Investors by Xx. Xxxxxx Xxx pursuant to Section 4.10(b)
of
the Purchase Agreement.
“Advice”
has the meaning set forth in Section 6(d).
"Effective
Date" means, as to a Registration Statement, the date on which such Registration
Statement is first declared effective by the Commission.
“Effectiveness
Date” means (a) with respect to the Registration Statement required to be filed
under Section 2(a), the earlier of (i) the 150th
day
following the Closing Date, and (ii) the fifth Trading Day following the date
on
which the Company is notified by the Commission that such Registration Statement
will not be reviewed or is no longer subject to further review and comments,
(b)
with respect to a Registration Statement required to be filed under Section
2(b), the earlier of: (b)(i) the 60th
day
following the date on which the Company becomes eligible to utilize Form S-3
to
register the resale of Common Stock; provided,
that,
if the Commission reviews and has written comments to such filed Registration
Statement that would require the filing of a pre-effective amendment thereto
with the Commission, then the Effectiveness Date under this clause (b)(i) shall
be the 90th
day
following the date on which the Company becomes eligible to utilize Form S-3
to
register the resale of Common Stock, and (ii) the fifth Trading Day following
the date on which the Company is notified by the Commission that the
Registration Statement will not be reviewed or is no longer subject to further
review and comments, (c) with respect to a Registration Statement required
to be
filed under Section 2(c), the earlier of: (c)(i) the 120th
day
following the 2007 Delivery Date; provided,
that,
if the Commission reviews and has written comments to such filed Registration
Statement that would require the filing of a pre-effective amendment thereto
with the Commission, then the Effectiveness Date under this clause (c)(i) shall
be the 150th
day
following the 2007 Delivery Date, and (ii) the fifth Trading Day following
the
date on which the Company is notified by the Commission that the Registration
Statement will not be reviewed or is no longer subject to further review and
comments and (d) with respect to a Registration Statement required to be filed
under Section 2(d), the earlier of: (d)(i) the 120th
day
following the 2008 Delivery Date; provided,
that,
if the Commission reviews and has written comments to such filed Registration
Statement that would require the filing of a pre-effective amendment thereto
with the Commission, then the Effectiveness Date under this clause (c)(i) shall
be the 150th
day
following the 2008 Delivery Date, and (ii) the fifth Trading Day following
the
date on which the Company is notified by the Commission that the Registration
Statement will not be reviewed or is no longer subject to further review and
comments.
"Effectiveness
Period" has the meaning set forth in Section 2(a).
"Exchange
Act" means the Securities Exchange Act of 1934, as amended.
"Filing
Date" means (a) with respect to the Registration Statement required to be filed
under Section 2(a), the earlier of the (i) 90th
day
following the Closing Date and (ii) 20th
day
following the completion of the audit of Duoyuan Digital Printing Technology
Industry (China) Co., Ltd.’s financial statements for the fiscal year ended June
30, 2006 as conducted by the Company’s independent accounting firm, (b) with
respect to a Registration Statement required to be filed under Section 2(b),
the
30th
day
following the date on which the Company becomes eligible to utilize Form S-3
to
register the resale of Common Stock, (c) with respect to the Registration
Statement required to be filed under Section 2(c), the 60th
day
following the 2007 Delivery Date (provided that if the Company is then eligible
to utilize Form S-3 to register the resale of Common Stock, the Filing Date
under this clause (c) shall be 45 days following the 2007 Delivery Date) and
(d)
with respect to the Registration Statement required to be filed under Section
2(d), the 60th
day
following the 2008 Delivery Date (provided that if the Company is then eligible
to utilize Form S-3 to register the resale of Common Stock, the Filing Date
under this clause (d) shall be 45 days following the 2008 Delivery
Date).
"Holder"
or "Holders" means the holder or holders, as the case may be, from time to
time
of Registrable Securities.
“Indemnified
Party” has the meaning set forth in Section 5(c).
“Indemnifying
Party” has the meaning set forth in Section 5(c).
“Losses”
has the meaning set forth in Section 5(a).
“New
York
Courts” means the state and federal courts sitting in the City of New York,
Borough of Manhattan.
"Proceeding"
means an action, claim, suit, investigation or proceeding (including, without
limitation, an investigation or partial proceeding, such as a deposition),
whether commenced or threatened.
“Prospectus”
means the prospectus included in a Registration Statement (including, without
limitation, a prospectus that includes any information previously omitted from
a
prospectus filed as part of an effective registration statement in reliance
upon
Rule 430A promulgated under the Securities Act), as amended or supplemented
by
any prospectus supplement, with respect to the terms of the offering of any
portion of the Registrable Securities covered by a Registration Statement,
and
all other amendments and supplements to the Prospectus, including post-effective
amendments, and all material incorporated by reference or deemed to be
incorporated by reference in such Prospectus.
“Registrable
Securities” means: (i) the Shares, (ii) any shares of Common Stock issuable upon
the exercise of warrants issued to any placement agent (the “Placement Agent
Warrants”) as compensation in connection with the financing that is the subject
of the Purchase Agreement, (iii), the Additional Shares, (iv) the 2006 Make
Good
Shares, as applicable, (iv) the 2007 Make Good Shares, as applicable, (v) the
2008 Make Good Shares, as applicable and (vi) any securities issued or issuable
upon any stock split, dividend or other distribution, recapitalization or
similar event, or any price adjustment as a result of such stock splits, reverse
stock splits or similar events with respect to any of the securities referenced
in (i), (ii), (iii), (iv) or (v) above.
"Registration
Statement" means the registration statement required to be filed in accordance
with Section 2(a) and any additional registration statement(s) required to
be
filed under Section 2(b), Section 2(c) or Section 2(d), including (in each
case)
the Prospectus, amendments and supplements to such registration statements
or
Prospectus, including pre- and post-effective amendments, all exhibits thereto,
and all material incorporated by reference or deemed to be incorporated by
reference therein.
"Rule
144" means Rule 144 promulgated by the Commission pursuant to the Securities
Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the Commission having substantially the same
effect as such Rule.
"Rule
415" means Rule 415 promulgated by the Commission pursuant to the Securities
Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the Commission having substantially the same
effect as such Rule.
"Rule
424" means Rule 424 promulgated by the Commission pursuant to the Securities
Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the Commission having substantially the same
effect as such Rule.
"Securities
Act" means the Securities Act of 1933, as amended.
"Shares"
means the shares of Common Stock issued or issuable to the Investors pursuant
to
the Purchase Agreement.
2. Registration.
(a) On
or
prior to the applicable Filing Date, the Company shall prepare and file with
the
Commission a Registration Statement covering the resale of all Registrable
Securities (other than the 2007 Make Good Shares and the 2008 Make Good Shares)
not already covered by an existing and effective Registration Statement for
an
offering to be made on a continuous basis pursuant to Rule 415, on Form SB-2
(or
on such other form appropriate for such purpose). Such Registration Statement
shall contain (except if otherwise required pursuant to written comments
received from the Commission upon a review of such Registration Statement)
the
"Plan of Distribution" attached hereto as Annex
A.
The
Company shall cause such Registration Statement to be declared effective under
the Securities Act as soon as possible but, in any event, no later than its
Effectiveness Date, and shall use its reasonable best efforts to keep the
Registration Statement continuously effective under the Securities Act until
the
date which is the earliest of (i) two years after its Effective Date (and for
purposes of a Registration Statement contemplated in Section 2(c) and/or Section
2(d) hereof, two years after the Effective Date therefor), (ii) such time as
all
of the Registrable Securities covered by such Registration Statement have been
publicly sold by the Holders, or (iii) such time as all of the Registrable
Securities covered by such Registration Statement may be sold by the Holders
pursuant to Rule 144(k) as determined by the counsel to the Company pursuant
to
a written opinion letter to such effect, addressed and acceptable to the
Company's transfer agent and the affected Holders (the "Effectiveness Period").
By 5:00 p.m. (New York City time) on the Business Day immediately following
the
Effective Date of such Registration Statement, the Company shall file with
the
Commission in accordance with Rule 424 under the Securities Act the final
prospectus to be used in connection with sales pursuant to such Registration
Statement (whether or not such filing is technically required under such
Rule).
(b) Promptly
following any date on which the Company becomes eligible to use a registration
statement on Form S-3 to register Registrable Securities for resale, the Company
shall file a Registration Statement on Form S-3 covering all such Registrable
Securities (or a post-effective amendment on Form S-3 to the then effective
Registration Statement) and shall cause such Registration Statement to be filed
by the Filing Date for such Registration Statement and declared effective under
the Securities Act as soon as possible thereafter, but in any event prior to
the
Effectiveness Date therefor. Such Registration Statement shall contain (except
if otherwise required pursuant to written comments received from the Commission
upon a review of such Registration Statement) the "Plan of Distribution"
attached hereto as Annex
A.
The
Company shall use its reasonable best efforts to keep such Registration
Statement continuously effective under the Securities Act during the entire
Effectiveness Period. By 5:00 p.m. (New York City time) on the Business Day
immediately following the Effective Date of such Registration Statement, the
Company shall file with the Commission in accordance with Rule 424 under the
Securities Act the final prospectus to be used in connection with sales pursuant
to such Registration Statement (whether or not such filing is technically
required under such Rule).
(c) On
or
prior to the applicable Filing Date, the Company shall prepare and file with
the
Commission a Registration Statement covering the resale of the 2007 Make Good
Shares on Form SB-2 or Form S-3 if the Company is then eligible to utilize
such
Form (or on such other form appropriate for such purpose) and shall cause such
Registration Statement to be filed by the Filing Date for such Registration
Statement and declared effective under the Securities Act as soon as possible
thereafter, but in any event prior to the Effectiveness Date therefor. Such
Registration Statement shall contain (except if otherwise required pursuant
to
written comments received from the Commission upon a review of such Registration
Statement) the "Plan of Distribution" attached hereto as Annex
A.
The
Company shall use its reasonable best efforts to keep such Registration
Statement continuously effective under the Securities Act during the entire
Effectiveness Period which is applicable to it. By 5:00 p.m. (New York City
time) on the Business Day immediately following the Effective Date of such
Registration Statement, the Company shall file with the Commission in accordance
with Rule 424 under the Securities Act the final prospectus to be used in
connection with sales pursuant to such Registration Statement (whether or not
such filing is technically required under such Rule).
(d) On
or
prior to the applicable Filing Date, the Company shall prepare and file with
the
Commission a Registration Statement covering the resale of the 2008 Make Good
Shares on Form SB-2 or Form S-3 if the Company is then eligible to utilize
such
Form (or on such other form appropriate for such purpose) and shall cause such
Registration Statement to be filed by the Filing Date for such Registration
Statement and declared effective under the Securities Act as soon as possible
thereafter, but in any event prior to the Effectiveness Date therefor. Such
Registration Statement shall contain (except if otherwise required pursuant
to
written comments received from the Commission upon a review of such Registration
Statement) the "Plan of Distribution" attached hereto as Annex
A.
The
Company shall use its reasonable best efforts to keep such Registration
Statement continuously effective under the Securities Act during the entire
Effectiveness Period which is applicable to it. By 5:00 p.m. (New York City
time) on the Business Day immediately following the Effective Date of such
Registration Statement, the Company shall file with the Commission in accordance
with Rule 424 under the Securities Act the final prospectus to be used in
connection with sales pursuant to such Registration Statement (whether or not
such filing is technically required under such Rule).
(e) If:
(i) a
Registration Statement is not filed on or prior to its Filing Date covering
all
of the Registrable Securities required under this Agreement to be included
therein (if the Company files a Registration Statement without affording the
Holders the opportunity to review and comment on the same as required by Section
3(a) hereof, the Company shall not be deemed to have satisfied this clause
(i)),
or (ii) a Registration Statement is not declared effective by the Commission
on
or prior to its required Effectiveness Date or if by the Business Day
immediately following the Effective Date the Company shall not have filed a
“final” prospectus for the Registration Statement with the Commission under Rule
424(b) (whether or not such a prospectus is technically required by such Rule),
or (iii) after its Effective Date, without regard for the reason thereunder
or
efforts therefore, such Registration Statement ceases for any reason to be
effective and available to the Holders as to all Registrable Securities to
which
it is required to cover at any time prior to the expiration of its Effectiveness
Period for more than an aggregate of 45 Trading Days (which need not be
consecutive) (any such failure or breach being referred to as an "Event," and
for purposes of clauses (i) or (ii) the date on which such Event occurs, or
for
purposes of clause (iii) the date which such 45 Trading Day-period is exceeded,
being referred to as "Event Date"), then in addition to any other rights the
Holders may have hereunder or under applicable law: on each such Event Date,
and
on each monthly anniversary of each such Event Date (if the applicable Event
shall not have been cured by such date) until the applicable Event is cured,
the
Company shall pay to each Holder an amount in cash, as partial liquidated
damages and not as a penalty, equal to 1.0% of the aggregate Investment Amount
paid by such Holder for Shares pursuant to the Purchase Agreement; provided,
however,
that
the total amount of partial liquidated damages payable by the Company pursuant
to all Events under this Section shall be capped at an aggregate of 8% of the
aggregate Investment Amount paid by the Investors under the Purchase Agreement.
The partial liquidated damages pursuant to the terms hereof shall apply on
a
daily pro-rata basis for any portion of a month prior to the cure of an Event,
except in the case of the first Event Date. In no event will the Company be
liable for liquidated damages under this Agreement in excess of 1.0% of the
aggregate Investment Amount of the Investors in any 30-day period. The Company
will not be liable for liquidated damages under this Agreement with respect
to
any Placement Agent Warrants or any shares of Common Stock issuable upon
exercise of the Placement Agent Warrants.
(f) Each
Holder agrees to furnish to the Company a completed Questionnaire in the form
attached to this Agreement as Annex
B
(a
“Selling Holder Questionnaire”). The Company shall not be required to include
the Registrable Securities of a Holder in a Registration Statement and shall
not
be required to pay any liquidated or other damages under Section 2(e) to any
Holder who fails to furnish to the Company a fully completed Selling Holder
Questionnaire at least two Trading Days prior to the Filing Date (subject to
the
requirements set forth in Section 3(a)).
In
connection with the Company's registration obligations hereunder, the Company
shall:
(a) Unless
waived by a Holder, not less than four Trading Days prior to the filing of
a
Registration Statement or any related Prospectus or any amendment or supplement
thereto, the Company shall furnish to such Holder copies of the “Selling
Stockholders” section of such document, the “Plan of Distribution” and any risk
factor contained in such document that addresses specifically this transaction
or the Selling Stockholders, as proposed to be filed which documents will be
subject to the review of such Holder. Such documents may be delivered to such
Holder via electronic mail (i.e., Email). The Company shall not file a
Registration Statement, any Prospectus or any amendments or supplements thereto
in which the “Selling Stockholder” section thereof differs from the disclosure
received from a Holder in its Selling Holder Questionnaire (as amended or
supplemented).
(b) (i)
Prepare and file with the Commission such amendments, including post-effective
amendments, to each Registration Statement and the Prospectus used in connection
therewith as may be necessary to keep such Registration Statement continuously
effective as to the applicable Registrable Securities for its Effectiveness
Period and prepare and file with the Commission such additional Registration
Statements in order to register for resale under the Securities Act all of
the
Registrable Securities; (ii) cause the related Prospectus to be amended or
supplemented by any required Prospectus supplement, and as so supplemented
or
amended to be filed pursuant to Rule 424; (iii) respond as promptly as
reasonably possible to any comments received from the Commission with respect
to
each Registration Statement or any amendment thereto and, as promptly as
reasonably possible provide the Holders true and complete copies of all
correspondence from and to the Commission relating to such Registration
Statement that would not result in the disclosure to the Holders of material
and
non-public information concerning the Company; and (iv) comply in all material
respects with the provisions of the Securities Act and the Exchange Act with
respect to the Registration Statements and the disposition of all Registrable
Securities covered by each Registration Statement.
(c) Notify
the Holders as promptly as reasonably possible (and, in the case of (i)(A)
below, not less than three Trading Days prior to such filing and, in the case
of
(v) below, not less than three Trading Days prior to the financial statements
in
any Registration Statement becoming ineligible for inclusion therein) and (if
requested by any such Person) confirm such notice in writing no later than
one
Trading Day following the day (i)(A) when a Prospectus or any Prospectus
supplement or post-effective amendment to a Registration Statement is proposed
to be filed; (B) when the Commission notifies the Company whether there will
be
a "review" of such Registration Statement and whenever the Commission comments
in writing on such Registration Statement (the Company shall provide true and
complete copies thereof and all written responses thereto to each of the Holders
that pertain to the Holders as a Selling Stockholder or to the Plan of
Distribution, but not information which the Company believes would constitute
material and non-public information); and (C) with respect to each Registration
Statement or any post-effective amendment, when the same has become effective;
(ii) of any request by the Commission or any other Federal or state governmental
authority for amendments or supplements to a Registration Statement or
Prospectus or for additional information; (iii) of the issuance by the
Commission of any stop order suspending the effectiveness of a Registration
Statement covering any or all of the Registrable Securities or the initiation
of
any Proceedings for that purpose; (iv) of the receipt by the Company of any
notification with respect to the suspension of the qualification or exemption
from qualification of any of the Registrable Securities for sale in any
jurisdiction, or the initiation or threatening of any Proceeding for such
purpose; and (v) of the occurrence of any event or passage of time that makes
the financial statements included in a Registration Statement ineligible for
inclusion therein or any statement made in such Registration Statement or
Prospectus or any document incorporated or deemed to be incorporated therein
by
reference untrue in any material respect or that requires any revisions to
such
Registration Statement, Prospectus or other documents so that, in the case
of
such Registration Statement or the Prospectus, as the case may be, it will
not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not
misleading.
(d) Use
its
reasonable best efforts to avoid the issuance of, or, if issued, obtain the
withdrawal of (i) any order suspending the effectiveness of a Registration
Statement, or (ii) any suspension of the qualification (or exemption from
qualification) of any of the Registrable Securities for sale in any
jurisdiction, at the earliest practicable moment.
(e) Furnish
to each Holder, without charge and at the option of the Company in electronic
format, at least one conformed copy of each Registration Statement and each
amendment thereto and all exhibits to the extent requested by such Person
(including those previously furnished) promptly after the filing of such
documents with the Commission.
(f) Promptly
deliver to each Holder, without charge, as many copies of each Prospectus or
Prospectuses (including each form of prospectus) and each amendment or
supplement thereto as such Persons may reasonably request. The Company hereby
consents to the use of such Prospectus and each amendment or supplement thereto
by each of the selling Holders in connection with the offering and sale of
the
Registrable Securities covered by such Prospectus and any amendment or
supplement thereto.
(g) Prior
to
any public offering of Registrable Securities, register or qualify such
Registrable Securities for offer and sale under the securities or Blue Sky
laws
of such jurisdictions within the United States as any Holder may request, to
keep each such registration or qualification (or exemption therefrom) effective
during the Effectiveness Period and to do any and all other acts or things
necessary or advisable to enable the disposition in such jurisdictions of the
Registrable Securities covered by the Registration Statements; provided,
however,
in
connection with any such registration or qualification, the Company shall not
be
required to (i) qualify to do business in any jurisdiction where the Company
would not otherwise be required to qualify, (ii) subject itself to general
taxation in any such jurisdiction, (iii) file a general consent to service
of
process in any jurisdiction, or (iv) make any change to the Company’s Articles
of Incorporation or bylaws.
(h) Cooperate
with the Holders to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be delivered to a transferee
pursuant to the Registration Statements, which certificates shall be free,
to
the extent permitted by the Purchase Agreement, of all restrictive legends,
and
to enable such Registrable Securities to be in such denominations and registered
in such names as any such Holders may request.
(i) Upon
the
occurrence of any event contemplated by Section 3(c)(v), as promptly as
reasonably possible, prepare a supplement or amendment, including a
post-effective amendment, to the affected Registration Statements or a
supplement to the related Prospectus or any document incorporated or deemed
to
be incorporated therein by reference, and file any other required document
so
that, as thereafter delivered, no Registration Statement nor any Prospectus
will
contain an untrue statement of a material fact or omit to state a material
fact
required to be stated therein or necessary to make the statements therein,
in
light of the circumstances under which they were made, not
misleading.
4. Registration
Expenses.
All
fees and expenses incident to the performance of or compliance with this
Agreement by the Company shall be borne by the Company whether or not any
Registrable Securities are sold pursuant to a Registration Statement. The fees
and expenses referred to in the foregoing sentence shall include, without
limitation, (i) all registration and filing fees (including, without limitation,
fees and expenses (A) with respect to filings required to be made with any
Trading Market on which the Common Stock is then listed for trading, and (B)
in
compliance with applicable state securities or Blue Sky laws), (ii) printing
expenses (including, without limitation, expenses of printing certificates
for
Registrable Securities and of printing prospectuses if the printing of
prospectuses is reasonably requested by the holders of a majority of the
Registrable Securities included in the Registration Statement), (iii) messenger,
telephone and delivery expenses, (iv) fees and disbursements of counsel for
the
Company, (v) Securities Act liability insurance, if the Company so desires
such
insurance, and (vi) fees and expenses of all other Persons retained by the
Company in connection with the consummation of the transactions contemplated
by
this Agreement. In addition, the Company shall be responsible for all of its
internal expenses incurred in connection with the consummation of the
transactions contemplated by this Agreement (including, without limitation,
all
salaries and expenses of its officers and employees performing legal or
accounting duties), the expense of any annual audit and the fees and expenses
incurred in connection with the listing of the Registrable Securities on any
securities exchange as required hereunder. In no event shall the Company be
responsible for any broker or similar commissions incurred by any Holder or,
except to the extent provided for in the Transaction Documents, any legal fees
or other cost of the Holders in connection with this Agreement.
5. Indemnification.
(a) Indemnification
by the Company.
The
Company shall, notwithstanding any termination of this Agreement, indemnify
and
hold harmless each Holder, the officers, directors, agents, investment advisors,
partners, members and employees of each of them, each Person who controls any
such Holder (within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act) and the officers, directors, agents and employees of
each such controlling Person, to the fullest extent permitted by applicable
law,
from and against any and all losses, claims, damages, liabilities, costs
(including, without limitation, reasonable costs of preparation that lead to
an
allegation of indemnity hereunder and reasonable attorneys' fees) and expenses
(collectively, "Losses"), as incurred, arising out of or relating to any untrue
or alleged untrue statement of a material fact contained in any Registration
Statement, any Prospectus or any form of prospectus or in any amendment or
supplement thereto or in any preliminary prospectus, or arising out of or
relating to any omission or alleged omission of a material fact required to
be
stated therein or necessary to make the statements therein (in the case of
any
Prospectus or form of prospectus or supplement thereto, in light of the
circumstances under which they were made) not misleading, except to the extent,
but only to the extent, that (1) such untrue statements or omissions are based
solely upon information regarding such Holder furnished in writing to the
Company by such Holder expressly for use therein, or to the extent that such
information relates to such Holder or such Holder's proposed method of
distribution of Registrable Securities and was reviewed and expressly approved
in writing by such Holder expressly for use in the Registration Statement,
such
Prospectus or such form of Prospectus or in any amendment or supplement thereto
(it being understood that the Holder has approved Annex A hereto for this
purpose) or (2) in the case of an occurrence of an event of the type specified
in Section 3(c)(ii)-(v), the use by such Holder of an outdated or defective
Prospectus after the Company has notified such Holder in writing that the
Prospectus is outdated or defective and prior to the receipt by such Holder
of
an Advice or an amended or supplemented Prospectus, but only if and to the
extent that following the receipt of the Advice or the amended or supplemented
Prospectus the misstatement or omission giving rise to such Loss would have
been
corrected. The Company shall notify the Holders promptly of the institution,
threat or assertion of any Proceeding of which the Company is aware in
connection with the transactions contemplated by this Agreement.
(b) Indemnification
by Holders.
Each
Holder shall, severally and not jointly, indemnify and hold harmless the
Company, its directors, officers, agents and employees, each Person who controls
the Company (within the meaning of Section 15 of the Securities Act and Section
20 of the Exchange Act), and the directors, officers, agents or employees of
such controlling Persons, to the fullest extent permitted by applicable law,
from and against all Losses, as incurred, arising solely out of or based solely
upon: (x) such Holder's failure to comply with the prospectus delivery
requirements of the Securities Act or (y) any untrue statement of a material
fact contained in any Registration Statement, any Prospectus, or any form of
prospectus, or in any amendment or supplement thereto, or arising solely out
of
or based solely upon any omission of a material fact required to be stated
therein or necessary to make the statements therein not misleading to the
extent, but only to the extent that, (1) such untrue statements or omissions
are
based solely upon information regarding such Holder furnished in writing to
the
Company by such Holder expressly for use therein, or to the extent that such
information relates to such Holder or such Holder's proposed method of
distribution of Registrable Securities and was reviewed and expressly approved
in writing by such Holder expressly for use in the Registration Statement (it
being understood that the Holder has approved Annex A hereto for this purpose),
such Prospectus or such form of Prospectus or in any amendment or supplement
thereto or (2) in the case of an occurrence of an event of the type specified
in
Section 3(c)(ii)-(v), the use by such Holder of an outdated or defective
Prospectus after the Company has notified such Holder in writing that the
Prospectus is outdated or defective and prior to the receipt by such Holder
of
an Advice or an amended or supplemented Prospectus, but only if and to the
extent that following the receipt of the Advice or the amended or supplemented
Prospectus the misstatement or omission giving rise to such Loss would have
been
corrected. In no event shall the liability of any selling Holder hereunder
be
greater in amount than the dollar amount of the net proceeds received by such
Holder upon the sale of the Registrable Securities giving rise to such
indemnification obligation.
(c) Conduct
of Indemnification Proceedings.
If any
Proceeding shall be brought or asserted against any Person entitled to indemnity
hereunder (an "Indemnified Party"), such Indemnified Party shall promptly notify
the Person from whom indemnity is sought (the "Indemnifying Party") in writing,
and the Indemnifying Party shall assume the defense thereof, including the
employment of counsel reasonably satisfactory to the Indemnified Party and
the
payment of all fees and expenses incurred in connection with defense thereof;
provided, that the failure of any Indemnified Party to give such notice shall
not relieve the Indemnifying Party of its obligations or liabilities pursuant
to
this Agreement, except (and only) to the extent that it shall be finally
determined by a court of competent jurisdiction (which determination is not
subject to appeal or further review) that such failure shall have proximately
and materially adversely prejudiced the Indemnifying Party.
An
Indemnified Party shall have the right to employ separate counsel in any such
Proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Party or Parties
unless: (1) the Indemnifying Party has agreed in writing to pay such fees and
expenses; (2) the Indemnifying Party shall have failed promptly to assume the
defense of such Proceeding and to employ counsel reasonably satisfactory to
such
Indemnified Party in any such Proceeding; or (3) the named parties to any such
Proceeding (including any impleaded parties) include both such Indemnified
Party
and the Indemnifying Party, and such Indemnified Party shall have been advised
by counsel that a conflict of interest is likely to exist if the same counsel
were to represent such Indemnified Party and the Indemnifying Party (in which
case, if such Indemnified Party notifies the Indemnifying Party in writing
that
it elects to employ separate counsel at the expense of the Indemnifying Party,
the Indemnifying Party shall not have the right to assume the defense thereof
and such counsel shall be at the expense of the Indemnifying Party); provided
that, the Indemnifying Party shall pay for no more than two separate sets of
counsel for all Indemnified Parties and such legal counsel shall be selected
by
Holders of no less than a majority in interest of the then outstanding
Registrable Securities. The Indemnifying Party shall not be liable for any
settlement of any such Proceeding effected without its written consent, which
consent shall not be unreasonably withheld. No Indemnifying Party shall, without
the prior written consent of the Indemnified Party, effect any settlement of
any
pending Proceeding in respect of which any Indemnified Party is a party, unless
such settlement includes an unconditional release of such Indemnified Party
from
all liability on claims that are the subject matter of such
Proceeding.
All
reasonable fees and expenses of the Indemnified Party (including reasonable
fees
and expenses to the extent incurred in connection with investigating or
preparing to defend such Proceeding (but as to this parenthetical, only if
there
is a settlement in connection with such Proceeding or in the absence of any
such
settlement the Indemnified Party prevails) in a manner not inconsistent with
this Section) shall be paid to the Indemnified Party, as incurred, within ten
Trading Days of written notice thereof to the Indemnifying Party (regardless
of
whether it is ultimately determined that an Indemnified Party is not entitled
to
indemnification hereunder; provided, that the Indemnifying Party may require
such Indemnified Party to undertake to reimburse all such fees and expenses
to
the extent it is finally judicially determined that such Indemnified Party
is
not entitled to indemnification hereunder).
(d) Contribution.
If a
claim for indemnification under Section 5(a) or 5(b) is unavailable to an
Indemnified Party (by reason of public policy or otherwise), then each
Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such Losses (unless such Losses arose due to the gross negligence, fraud
or
willful misconduct of the Indemnified Party), in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party and
Indemnified Party in connection with the actions, statements or omissions that
resulted in such Losses as well as any other relevant equitable considerations.
The relative fault of such Indemnifying Party and Indemnified Party shall be
determined by reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact or omission
or alleged omission of a material fact, has been taken or made by, or relates
to
information supplied by, such Indemnifying Party or Indemnified Party, and
the
parties' relative intent, knowledge, access to information and opportunity
to
correct or prevent such action, statement or omission. The amount paid or
payable by a party as a result of any Losses shall be deemed to include, subject
to the limitations set forth in Section 5(c), any reasonable attorneys' or
other
reasonable fees or expenses incurred by such party in connection with any
Proceeding to the extent such party would have been indemnified for such fees
or
expenses if the indemnification provided for in this Section was available
to
such party in accordance with its terms.
The
parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 5(d) were determined by pro rata allocation or by
any
other method of allocation that does not take into account the equitable
considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 5(d), no Holder shall be required
to contribute, in the aggregate, any amount in excess of the amount by which
the
proceeds actually received by such Holder from the sale of the Registrable
Securities subject to the Proceeding exceeds the amount of any damages that
such
Holder has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission, except in the case of fraud
by
such Holder.
The
indemnity and contribution agreements contained in this Section are in addition
to any liability that the Indemnifying Parties may have to the Indemnified
Parties.
6. Miscellaneous.
(a) Remedies.
In the
event of a breach by the Company or by a Holder, of any of their obligations
under this Agreement, each Holder or the Company, as the case may be, in
addition to being entitled to exercise all rights granted by law and under
this
Agreement, including recovery of damages, will be entitled to specific
performance of its rights under this Agreement. The Company and each Holder
agree that monetary damages would not provide adequate compensation for any
losses incurred by reason of a breach by it of any of the provisions of this
Agreement and hereby further agrees that, in the event of any action for
specific performance in respect of such breach, it shall waive the defense
that
a remedy at law would be adequate.
(b) No
Piggyback on Registrations.
Except
as and to the extent specified in Schedule
3.1(t)
to the
Purchase Agreement, neither the Company nor any of its security holders (other
than the Holders in such capacity pursuant hereto) may include securities of
the
Company in a Registration Statement other than the Registrable Securities,
and
the Company shall not during the Effectiveness Period enter into any agreement
providing any such right to any of its security holders.
(c) Compliance.
Each
Holder covenants and agrees that it will comply with the prospectus delivery
requirements of the Securities Act as applicable to it in connection with sales
of Registrable Securities pursuant to the Registration Statement.
(d) Discontinued
Disposition.
Each
Holder agrees by its acquisition of such Registrable Securities that, upon
receipt of a notice from the Company of the occurrence of any event of the
kind
described in Section 3(c), such Holder will forthwith discontinue disposition
of
such Registrable Securities under the Registration Statement until such Holder's
receipt of the copies of the supplemented Prospectus and/or amended Registration
Statement or until it is advised in writing (the "Advice") by the Company that
the use of the applicable Prospectus may be resumed, and, in either case, has
received copies of any additional or supplemental filings that are incorporated
or deemed to be incorporated by reference in such Prospectus or Registration
Statement. The Company may provide appropriate stop orders to enforce the
provisions of this paragraph.
(e) Piggy-Back
Registrations.
If at
any time during the Effectiveness Period there is not an effective Registration
Statement covering all of the Registrable Securities and the Company shall
determine to prepare and file with the Commission a registration statement
relating to an offering for its own account or the account of others under
the
Securities Act of any of its equity securities, other than on Form S-4 or Form
S-8 (each as promulgated under the Securities Act) or their then equivalents
relating to equity securities to be issued solely in connection with any
acquisition of any entity or business or equity securities issuable in
connection with stock option or other employee benefit plans, then the Company
shall send to each Holder written notice of such determination and, if within
fifteen days after receipt of such notice, any such Holder shall so request
in
writing, the Company shall include in such registration statement all or any
part of such Registrable Securities such holder requests to be registered,
subject to customary underwriter cutbacks applicable to all holders of
registration rights.
(f) Amendments
and Waivers.
The
provisions of this Agreement, including the provisions of this Section 6(f),
may
not be amended, modified or supplemented, and waivers or consents to departures
from the provisions hereof may not be given, unless the same shall be in writing
and signed by the Company and the Holders of no less than a majority in interest
of the then outstanding Registrable Securities. Notwithstanding the foregoing,
a
waiver or consent to depart from the provisions hereof with respect to a matter
that relates exclusively to the rights of certain Holders and that does not
directly or indirectly affect the rights of other Holders may be given by
Holders of at least a majority of the Registrable Securities to which such
waiver or consent relates.
(g) Notices.
Any and
all notices or other communications or deliveries required or permitted to
be
provided hereunder shall be in writing and shall be deemed given and effective
on the earliest of (a) the date of transmission, if such notice or communication
is delivered via (i) facsimile (provided the sender receives a machine-generated
confirmation of successful transmission) at the facsimile number specified
in
this Section or (ii) electronic mail (i.e., Email) prior to 6:30 p.m. (New
York
City time) on a Trading Day, (b) the next Trading Day after the date of
transmission, if such notice or communication is delivered via (i) facsimile
at
the facsimile number specified in this Section or (ii) electronic mail (i.e.,
Email) on a day that is not a Trading Day or later than 6:30 p.m. (New York
City
time) on any Trading Day, (c) the Trading Day following the date of mailing,
if
sent by U.S. nationally recognized overnight courier service, or (d) upon actual
receipt by the party to whom such notice is required to be given. The address
for such notices and communications shall be as follows:
|
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If
to the Company:
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Asian
Financial, Inc.
No.
3 Jinyuan Road
Daxing
District Industrial Development Xxxx
Xxxxxxx,
Xxxxx 000000
Facsimile:
861060216825
Email:
xxxxxxxxx@xxx.xxxx.xxx
Attn.:
Xxxxx Xxxx
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With
a copy to:
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Xxxxxx
Xxxxxx LLP
00xx
Xxxxx
Xxx
Xxxxxxxx Xxxxxx
0
Xxxxxxxxx Xxxxx
Xxxxxxx
Xxxx
Xxxx
Facsimile:
852 2292-2200
Email:
Xxxxx.Xxx@xxxxxxxxxxxx.xxx
Attn.:
Xxxxx Xxx
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If
to an Investor:
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To
the address set forth under such Investor's name on the signature
pages
hereto.
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If
to any
other Person who is then the registered Holder:
To
the
address of such Holder as it appears in the stock transfer books of the
Company
or
such
other address as may be designated in writing hereafter, in the same manner,
by
such Person.
(h) Successors
and Assigns.
This
Agreement shall inure to the benefit of and be binding upon the successors
and
permitted assigns of each of the parties and shall inure to the benefit of
each
Holder. The Company may not assign its rights or obligations hereunder without
the prior written consent of each Holder. Each Holder may assign their
respective rights hereunder in the manner and to the Persons as permitted under
the Purchase Agreement.
(i) Execution
and Counterparts.
This
Agreement may be executed in any number of counterparts, each of which when
so
executed shall be deemed to be an original and, all of which taken together
shall constitute one and the same Agreement. In the event that any signature
is
delivered by facsimile transmission, such signature shall create a valid binding
obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile signature
were the original thereof.
(j) Governing
Law.
All
questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be governed by and construed and enforced in accordance
with the internal laws of the State of New York, without regard to the
principles of conflicts of law thereof. Each party agrees that all Proceedings
concerning the interpretations, enforcement and defense of the transactions
contemplated by this Agreement (whether brought against a party hereto or its
respective Affiliates, employees or agents) will be commenced in the New York
Courts. Each party hereto hereby irrevocably submits to the exclusive
jurisdiction of the New York Courts for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein, and hereby irrevocably waives, and agrees not to assert
in
any Proceeding, any claim that it is not personally subject to the jurisdiction
of any New York Court, or that such Proceeding has been commenced in an improper
or inconvenient forum. Each party hereto hereby irrevocably waives personal
service of process and consents to process being served in any such Proceeding
by mailing a copy thereof via registered or certified mail or overnight delivery
(with evidence of delivery) to such party at the address in effect for notices
to it under this Agreement and agrees that such service shall constitute good
and sufficient service of process and notice thereof. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any manner
permitted by law. Each party hereto hereby irrevocably waives, to the fullest
extent permitted by applicable law, any and all right to trial by jury in any
Proceeding arising out of or relating to this Agreement or the transactions
contemplated hereby. If either party shall commence a Proceeding to enforce
any
provisions of this Agreement, then the prevailing party in such Proceeding
shall
be reimbursed by the other party for its attorney’s fees and other costs and
expenses incurred with the investigation, preparation and prosecution of such
Proceeding.
(k) Cumulative
Remedies.
The
remedies provided herein are cumulative and not exclusive of any remedies
provided by law.
(l) Severability.
If any
term, provision, covenant or restriction of this Agreement is held by a court
of
competent jurisdiction to be invalid, illegal, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions set forth herein
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated, and the parties hereto shall use their reasonable efforts to
find and employ an alternative means to achieve the same or substantially the
same result as that contemplated by such term, provision, covenant or
restriction. It is hereby stipulated and declared to be the intention of the
parties that they would have executed the remaining terms, provisions, covenants
and restrictions without including any of such that may be hereafter declared
invalid, illegal, void or unenforceable.
(m) Headings.
The
headings in this Agreement are for convenience of reference only and shall
not
limit or otherwise affect the meaning hereof.
(n) Independent
Nature of Investors' Obligations and Rights.
The
obligations of each Investor under this Agreement are several and not joint
with
the obligations of each other Investor, and no Investor shall be responsible
in
any way for the performance of the obligations of any other Investor under
this
Agreement. Nothing contained herein or in any Transaction Document, and no
action taken by any Investor pursuant thereto, shall be deemed to constitute
the
Investors as a partnership, an association, a joint venture or any other kind
of
entity, or create a presumption that the Investors are in any way acting in
concert or as a group with respect to such obligations or the transactions
contemplated by this Agreement or any other Transaction Document. Each Investor
acknowledges that no other Investor will be acting as agent of such Investor
in
enforcing its rights under this Agreement. Each Investor shall be entitled
to
independently protect and enforce its rights, including without limitation
the
rights arising out of this Agreement, and it shall not be necessary for any
other Investor to be joined as an additional party in any Proceeding for such
purpose. The Company acknowledges that each of the Investors has been provided
with the same Registration Rights Agreement for the purpose of closing a
transaction with multiple Investors and not because it was required or requested
to do so by any Investor.
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ASIAN
FINANCIAL, INC.
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By:
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Name:
Xxxxxx Xxx
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Title:
Chief Executive Officer
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[REMAINDER
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NAME
OF INVESTING ENTITY
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___________________________________
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By:
____________________________________
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Name:
Title:
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ADDRESS
FOR NOTICE
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c/o:
_____________________________________
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Street:
_______________________________
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City/State/Zip:
_____________________________
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Attention:
_________________________________
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Tel:
______________________________________
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Fax:
______________________________________
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Email:
_____________________________________
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Annex
A
PLAN
OF DISTRIBUTION
The
Selling Stockholders and any of their pledgees, donees, transferees, assignees
and successors-in-interest may, from time to time, sell any or all of their
shares of Common Stock on any stock exchange, market or trading facility on
which the shares are traded or in private transactions. These sales may be
at
fixed or negotiated prices. The Selling Stockholders may use any one or more
of
the following methods when selling shares:
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·
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ordinary
brokerage transactions and transactions in which the broker-dealer
solicits Investors;
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·
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block
trades in which the broker-dealer will attempt to sell the shares
as agent
but may position and resell a portion of the block as principal to
facilitate the transaction;
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·
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purchases
by a broker-dealer as principal and resale by the broker-dealer for
its
account;
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·
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an
exchange distribution in accordance with the rules of the applicable
exchange;
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·
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privately
negotiated transactions;
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·
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to
cover short sales made after the date that this Registration Statement
is
declared effective by the Commission;
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·
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broker-dealers
may agree with the Selling Stockholders to sell a specified number
of such
shares at a stipulated price per
share;
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·
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a
combination of any such methods of sale;
and
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·
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any
other method permitted pursuant to applicable
law.
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The
Selling Stockholders may also sell shares under Rule 144 under the Securities
Act, if available, rather than under this prospectus.
Broker-dealers
engaged by the Selling Stockholders may arrange for other brokers-dealers to
participate in sales. Broker-dealers may receive commissions or discounts from
the Selling Stockholders (or, if any broker-dealer acts as agent for the
purchaser of shares, from the purchaser) in amounts to be negotiated. The
Selling Stockholders do not expect these commissions and discounts to exceed
what is customary in the types of transactions involved.
The
Selling Stockholders may from time to time pledge or grant a security interest
in some or all of the Shares owned by them and, if they default in the
performance of their secured obligations, the pledgees or secured parties may
offer and sell shares of Common Stock from time to time under this prospectus,
or under an amendment to this prospectus under Rule 424(b)(3) or other
applicable provision of the Securities Act of 1933 amending the list of selling
stockholders to include the pledgee, transferee or other successors in interest
as selling stockholders under this prospectus.
Upon
the
Company being notified in writing by a Selling Stockholder that any material
arrangement has been entered into with a broker-dealer for the sale of Common
Stock through a block trade, special offering, exchange distribution or
secondary distribution or a purchase by a broker or dealer, a supplement to
this
prospectus will be filed, if required, pursuant to Rule 424(b) under the
Securities Act, disclosing (i) the name of each such Selling Stockholder and
of
the participating broker-dealer(s), (ii) the number of shares involved, (iii)
the price at which such the shares of Common Stock were sold, (iv)the
commissions paid or discounts or concessions allowed to such broker-dealer(s),
where applicable, (v) that such broker-dealer(s) did not conduct any
investigation to verify the information set out or incorporated by reference
in
this prospectus, and (vi) other facts material to the transaction. In addition,
upon the Company being notified in writing by a Selling Stockholder that a
donee
or pledgee intends to sell more than 500 shares of Common Stock, a supplement
to
this prospectus will be filed if then required in accordance with applicable
securities law.
The
Selling Stockholders also may transfer the shares of Common Stock in other
circumstances, in which case the transferees, pledgees or other successors
in
interest will be the selling beneficial owners for purposes of this
prospectus.
The
Selling Stockholders and any broker-dealers or agents that are involved in
selling the shares may be deemed to be "underwriters" within the meaning of
the
Securities Act in connection with such sales. In such event, any commissions
received by such broker-dealers or agents and any profit on the resale of the
shares purchased by them may be deemed to be underwriting commissions or
discounts under the Securities Act. Discounts, concessions, commissions and
similar selling expenses, if any, that can be attributed to the sale of the
securities will be paid by the Selling Stockholder and/or the purchasers. Each
Selling Stockholder has represented and warranted to the Company that it
acquired the securities subject to this registration statement in the ordinary
course of such Selling Stockholder’s business and, at the time of its purchase
of such securities such Selling Stockholder had no agreements or understandings,
directly or indirectly, with any person to distribute any such securities.
The
Company has advised each Selling Stockholder that it may not use shares
registered on this Registration Statement to cover short sales of Common Stock
made prior to the date on which this Registration Statement shall have been
declared effective by the Commission. If a Selling Stockholder uses this
prospectus for any sale of the Common Stock, it will be subject to the
prospectus delivery requirements of the Securities Act. The Selling Stockholders
will be responsible to comply with the applicable provisions of the Securities
Act and Exchange Act, and the rules and regulations thereunder promulgated,
including, without limitation, Regulation M, as applicable to such Selling
Stockholders in connection with resales of their respective shares under this
Registration Statement.
The
Company is required to pay all fees and expenses incident to the registration
of
the shares, but the Company will not receive any proceeds from the sale of
the
Common Stock. The Company has agreed to indemnify the Selling Stockholders
against certain losses, claims, damages and liabilities, including liabilities
under the Securities Act.
Annex
B
SELLING
SECURITYHOLDER NOTICE AND QUESTIONNAIRE
OF
ASIAN
FINANCIAL, INC.
The
undersigned beneficial owner of common stock (the “Common Stock”), of Asian
Financial, Inc., a Wyoming corporation (the “Company”) understands that the
Company has filed or intends to file with the Securities and Exchange Commission
(the “Commission”) a Registration Statement for the registration and resale of
the Registrable Securities, in accordance with the terms of the Registration
Rights Agreement, dated as of October __, 2006 (the “Registration Rights
Agreement”), among the Company and the Investors named therein. A copy of the
Registration Rights Agreement is available from the Company upon request at
the
address set forth below. All capitalized terms used and not otherwise defined
herein shall have the meanings ascribed thereto in the Registration Rights
Agreement.
The
undersigned hereby provides the following information to the Company and
represents and warrants that such information is accurate:
QUESTIONNAIRE
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1.
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(a)
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Full
Legal Name of Selling
Securityholder
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(b)
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Full
Legal Name of Registered Holder (if not the same as (a) above) through
which Registrable Securities Listed in Item 3 below are
held:
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(c)
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Full
Legal Name of Natural Control Person (which means a natural person
who
directly or indirectly alone or with others has power to vote or
dispose
of the securities covered by the
questionnaire):
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2.
Address for Notices to Selling Securityholder:
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Fax:___________________________________________________________________________________________________________________
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Contact
Person:________________________________________________________________________
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3.
Beneficial Ownership of Registrable Securities:
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Type
and Principal Amount of Registrable Securities beneficially
owned:
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(a)
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Are
you a broker-dealer?
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Yes o No o
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Note:
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If
yes, the Commission’s staff has indicated that you should be identified as
an underwriter in the Registration
Statement.
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(b)
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Are
you an affiliate of a
broker-dealer?
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Yes o No o
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(c)
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If
you are an affiliate of a broker-dealer, do you certify that you
bought
the Registrable Securities in the ordinary course of business, and
at the
time of the purchase of the Registrable Securities to be resold,
you had
no agreements or understandings, directly or indirectly, with any
person
to distribute the Registrable
Securities?
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Yes o No o
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Note:
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If
no, the Commission’s staff has indicated that you should be identified as
an underwriter in the Registration
Statement.
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5.
Beneficial Ownership of Other Securities of the Company Owned by the Selling
Securityholder.
Except
as set forth below in this Item 5, the undersigned is not the beneficial or
registered owner of any securities of the Company other than the Registrable
Securities listed above in Item 3.
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Type
and Amount of Other Securities beneficially owned by the Selling
Securityholder:
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6.
Relationships with the Company:
Except
as set forth below, neither the undersigned nor any of its affiliates, officers,
directors or principal equity holders (owners of 5% of more of the equity
securities of the undersigned) has held any position or office or has had
any
other material relationship with the Company (or its predecessors or affiliates)
during the past three years.
State
any
exceptions here:
The
undersigned agrees to promptly notify the Company of any inaccuracies or changes
in the information provided herein that may occur subsequent to the date hereof
and prior to the Effective Date for the Registration Statement.
Certain
legal consequences arise from being named as a Selling Securityholder in the
Registration Statement and related prospectus. Accordingly, the undersigned
is
advised to consult their own securities law counsel regarding the consequence
of
being named or not being named as a Selling Securityholder in the Registration
Statement and the related prospectus.
By
signing below, the undersigned consents to the disclosure of the information
contained herein in its answers to Items 1 through 6 and the inclusion of such
information in the Registration Statement and the related prospectus. The
undersigned understands that such information will be relied upon by the Company
in connection with the preparation or amendment of the Registration Statement
and the related prospectus. The undersigned hereby elects to include the
Registrable Securities owned by it and listed above in Item 3 (unless otherwise
specified in Item 3) in the Registration Statement.
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Dated:
_________________________
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Beneficial
Owner: ____________________________________________
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By:
________________________________________________________
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Name:
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Title:
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PLEASE
FAX A COPY OF THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE, AND RETURN
THE ORIGINAL BY OVERNIGHT MAIL, TO:
Xxxxxx
Xxxxxx LLP
00xx
Xxxxx
Xxx
Xxxxxxxx Xxxxxx
0
Xxxxxxxxx Xxxxx
Xxxxxxx
Xxxx
Xxxx
Facsimile:
852 2292-2200
Attn.:
Xxxxx Xxx
EXHIBIT
D
Investor
Questionnaire
(ALL
INFORMATION WILL BE TREATED CONFIDENTIALLY)
To:
[Investor’s name and address]
This
Investor Questionnaire (“Questionnaire”) must be completed by each potential
investor in connection with the offer and sale of the shares of the common
stock, par value $0.001 per share, (the “Common Stock”) of Asian Financial, Inc.
(the “Shares”). The Shares are being offered and sold by Asian Financial, Inc.
(the “Company”) without registration under the Securities Act of 1933, as
amended (the “Act”), and the securities laws of certain states, in reliance on
the exemptions contained in Section 4(2) of the Act and on Regulation D
promulgated thereunder and in reliance on similar exemptions under applicable
state laws. The Company must determine that a potential investor meets certain
suitability requirements before offering or selling Shares to such investor.
The
purpose of this Questionnaire is to assure the Company that each investor will
meet the applicable suitability requirements. The information supplied by you
will be used in determining whether you meet such criteria, and reliance upon
the private offering exemption from registration is based in part on the
information herein supplied.
This
Questionnaire does not constitute an offer to sell or a solicitation of an
offer
to buy any security. Your answers will be kept strictly confidential. However,
by signing this Questionnaire you will be authorizing the Company to provide
a
completed copy of this Questionnaire to such parties as the Company deems
appropriate in order to ensure that the offer and sale of the Shares will not
result in a violation of the Act or the securities laws of any state and that
you otherwise satisfy the suitability standards applicable to purchasers of
the
Shares. All potential investors must answer all applicable questions and
complete, date and sign this Questionnaire. Please print or type your responses
and attach additional sheets of paper if necessary to complete your answers
to
any item.
IMPORTANT:
FAILURE TO COMPLETELY AND ACCURATELY ANSWER ALL OF THESE QUESTIONS WILL DELAY
THE ISSUANCE OR REGISTRATION OF YOUR SHARES OR MAKE SUCH ISSUANCE OR
REGISTRATION IMPOSSIBLE.
A. BACKGROUND
INFORMATION
Name
[EXACT NAME AS IT WILL APPEAR ON THE STOCK CERTIFICATE; IF MULTIPLE CERTIFICATES
ARE TO BE PROVIDED, PLEASE
SPECIFY]:_______________________________________________________________________________________________________
Business
Address:__________________________________________________________________________________________________________
(Number and Street)
_________________________________________________________________________________________________________________________
(City) (State) (Zip
Code)
Telephone
Number: (___) ____________________________________________________________________________________________________
Residence
Address:_________________________________________________________________________________________________________
(Number
and Street)
________________________________________________________________________________________________________________________________
(City)
(State) (Zip Code)
Telephone
Number: (___)
____________________________________________________________________________________________________
If
an
individual:
Age:_________
Citizenship:_________ Where registered to
vote:________________
If
a
corporation, partnership, limited liability company, trust or other
entity:
Type
of
entity:______________________________________________________________________________
State
of
formation:________________________
Date of formation:
___________________________
Social
Security or Taxpayer Identification
No.____________________________________________________
Send
all
correspondence to (check one): ____ Residence
Address
____ Business Address
Email
address of contact person: ___________________________
Current
ownership of securities of the Company:
__________
shares of common stock, par value $0.001 per share (the “Common Stock”) options
to purchase
__________
shares of Common Stock.
Please
identify the number of shares that you or your organization will beneficially
own immediately after Closing, identifying the Shares purchased by your or
your
organization pursuant to this Purchase Agreement and those shares purchased
by
your or your organization through other transactions:
Shares
purchased pursuant to this Purchase Agreement: _______________
Shares
purchased by your or your organization through other transactions:
_______________
Total:
________________
BENEFICIAL
OWNERSHIP INFORMATION: Please describe the beneficial ownership of the shares
owned by you or your organization. If the Investor is a partnership, limited
liability company or similar entity, please identify the individual
or
individuals
with
ultimate voting and dispositive power over such shares, typically the investment
manager or investment advisor with primary responsibility for this investment.
This information is available from your compliance officer or general counsel.
THE COMPANY WILL NOT BE ABLE TO REGISTER YOUR SHARES WITHOUT THIS IMPORTANT
INFORMATION.
Exception:
This information need not be provided if the Investor is a publicly traded
company.
____________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________
Have
you
or your organization had any position, office or other material relationship
within the past three years with the Company or its affiliates?
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o Yes o No
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If
yes, please indicate the nature of any such relationships
below:
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____________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________
B. STATUS
AS ACCREDITED INVESTOR
The
undersigned is an “accredited investor” as such term is defined in Regulation D
under the Act, as at the time of the sale of the Shares the undersigned falls
within one or more of the following categories (Please
initial one or more, as applicable):1
____ (1) a
bank as defined in Section 3(a)(2) of the Act, or a savings and loan
association or other institution as defined in Section 3(a)(5)(A) of the
Act whether acting in its individual or fiduciary capacity; a broker or dealer
registered pursuant to Section 15 of the Securities Exchange Act of 1934;
an insurance company as defined in Section 2(13) of the Act; an investment
company registered under the Investment Corporation Act of 1940 or a business
development company as defined in Section 2(a)(48) of that Act; a Small
Business Investment Corporation licensed by the U.S. Small Business
Administration under Section 301(c) or (d) of the Small Business Investment
Act of 1958; a plan established and maintained by a state, its political
subdivisions, or any agency or instrumentality of a state or its political
subdivisions for the benefit of its employees, if such plan has total assets
in
excess of $5,000,000; an employee benefit plan within the meaning of the
Employee Retirement Income Security Act of 1974 if the investment decision
is
made by a plan fiduciary, as defined in Section 3(21) of such Act, which is
either a bank, savings and loan association, insurance company, or registered
investment adviser, or if the employee benefit plan has total assets in excess
of $5,000,000 or, if a self-directed plan, with the investment decisions made
solely by persons that are accredited investors;
____ (2) a
private business development company as defined in Section 202(a)(22) of
the Investment Adviser Act of 1940;
____ (3) an
organization described in Section 501(c)(3) of the Internal Revenue Code of
1986, as amended, corporation, Massachusetts or similar business trust, or
partnership, not formed for the specific purpose of acquiring the Shares
offered, with total assets in excess of $5,000,000;
____ (4) a
natural person whose individual net worth1 ,
or joint net worth1
with that person’s spouse, at the time of such person’s purchase of the Shares
exceeds $1,000,000;
____ (5) a
natural person who had an individual income in excess of $200,000 in each of
the
two most recent years or joint income with that person’s spouse in excess of
$300,000 in each of those years and has a reasonable expectation of reaching
the
same income level in the current year;
____ (6) a
trust, with total assets in excess of $5,000,000, not formed for the specific
purpose of acquiring the Shares offered, whose purchase is directed by a
sophisticated person as described in Rule 506(b)(2)(ii) of Regulation D;
and
____ (7) an
entity in which all of the equity owners are accredited investors (as defined
above).
C. REPRESENTATIONS
The
undersigned hereby represents and warrants to the Company as
follows:
_______________
1 As
used in this Questionnaire, the term "net worth" means the excess of total
assets over total liabilities. In computing net worth for the purpose of
subsection (4), the principal residence of the investor must be valued at cost,
including cost of improvements, or at recently appraised value by an
institutional lender making a secured loan, net of encumbrances. In determining
income, the investor should add to the investor's adjusted gross income any
amounts attributable to tax exempt income received, losses claimed as a limited
partner in any limited partnership, deductions claimed for deception,
contributions to an XXX or XXXXX retirement plan, alimony payments, and any
amount by which income from long-term capital gains has been reduced in arriving
at adjusted gross income.
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1.
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Any
purchase of the Shares would be as principal for the account of the
undersigned and not for the account of any other person or with a
view to
any resale, fractionalization, division, or distribution
thereof.
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2.
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The
information contained herein is complete and accurate and may be
relied
upon by the Company, and the undersigned will notify the Company
immediately of any material change in any of such information occurring
prior to the closing, if any, with respect to the purchase of Shares
by
the undersigned.
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3.
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There
are no suits, pending litigation, or claims against the undersigned
that
could materially affect the net worth of the undersigned as reported
in
this Questionnaire.
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4.
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The
undersigned acknowledges that there may occasionally be times when
the
Company determines that it must suspend the use of the prospectus
forming
a part of the Registration Statement (as such terms are defined in
the
Securities Purchase Agreement to which this Questionnaire is attached),
subject to the provisions in Section 2(c) of the Registration Rights
Agreement, which is attached as Exhibit A to the Securities Purchase
Agreement. The undersigned is aware that, in such event, the Shares
will
not be subject to ready liquidation, and that any Shares purchased
by the
undersigned would have to be held during such suspension. The overall
commitment of the undersigned to investments which are not readily
marketable is not excessive in view of the undersigned’s net worth and
financial circumstances, and any purchase of the Shares will not
cause
such commitment to become excessive. The undersigned is able to bear
the
economic risk of an investment in the
Shares.
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5.
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The
undersigned has carefully considered the potential risks relating
to the
Company and a purchase of the Shares, and fully understands that
the
Shares are speculative investments which involve a high degree of
risk of
loss of the undersigned’s entire investment. Among others, the undersigned
has carefully considered each of the risks identified in the Transaction
Documents.
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Print Name
|
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By:
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Signature
|
|
|
|
|
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Title:
|
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(required
for any purchaser that is a corporation,
partnership, trust or other entity) |
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