MAKE GOOD AGREEMENT
MAKE
GOOD AGREEMENT
dated
November 15, 2006 (the "Agreement"),
by
and among Xxxxxxx Securities, LLC, a Delaware limited liability company, as
the
authorized agent of the Investors (as defined below) (the "Investor
Agent"),
Applied Spectrum Technologies, Inc., a Delaware corporation, and its current
and
future subsidiaries (collectively, "Applied
Spectrum"),
Ever
Leader Holdings Limited, a company incorporated under the laws of Hong Kong
SAR,
and its direct and indirect subsidiaries (collectively, the "Company"),
Xx.
Xxxxxx Xxx and Ms. Xxx Xx, as individuals (collectively, the "XIA
Shareholders")
and
Moveup Investments Limited, a company organized under the laws of the British
Virgin Islands ("Moveup"
and
together with the XIA Shareholders, the "Depositors").
This
Agreement shall become effective upon the execution thereof by all
parties.
WHEREAS:
A. On
September 7, 2006, Applied Spectrum entered into a definitive share exchange
agreement whereby it will acquire all of the shares and equity ownership of
the
Company from the Company's shareholders in exchange for common stock, $0.001
par
value (the "Common
Stock")
of
Applied Spectrum (the "Reverse
Merger").
B. Applied
Spectrum has offered for sale (the "Offering")
certain shares of Common Stock and attached warrants to purchase shares of
common stock in accordance with that certain Securities Purchase Agreement,
dated as of the date hereof (the "Securities
Purchase Agreement"),
by
and among Applied Spectrum, the Company and the investors signatory thereto
(the
"Investors"),
in
connection with and conditioned upon the consummation of the Reverse Merger
and
certain other conditions set forth in the Securities Purchase Agreement.
C. Applied
Spectrum and the Company presented financial projections to the Investors in
that certain private placement memorandum, dated October 20, 2006, indicating
that the Company will report net income of at least $9 million, with an
allowable grace margin of $1 million, equating to net income of $8 million
for
the fiscal year ending December 31, 2007, based upon an audit conducted in
conformity with United States generally accepted accounting principles
("US
GAAP").
D. As
an
inducement to the Investors to enter into the Securities Purchase Agreement,
the
XIA Shareholders and Moveup desire to place the Escrow Shares (as hereinafter
defined) they will receive upon the completion of the Reverse Merger into escrow
for the benefit of the Investors in the event that the Company fails to satisfy
the Performance Threshold (as hereinafter defined).
E. Pursuant
to the requirements of the Securities Purchase Agreement, Applied Spectrum,
the
Company, the XIA Shareholders, Moveup and the Investor Agent have agreed to
establish an escrow (the "Escrow")
on the
terms and conditions set forth in that certain Escrow Agreement, dated on even
date herewith (the "Escrow
Agreement"),
by
and among Computershare Trust Company, Inc., the transfer agent for Applied
Spectrum (the "Escrow
Agent")
and
the parties hereto.
F. Contemporaneously
with the execution and delivery of this Agreement, the parties hereto are
executing and delivering a Registration Rights Agreement, (the "Registration
Rights Agreement"),
pursuant to which Applied Spectrum has agreed to provide certain registration
rights with respect to the Escrow Shares (as defined below), under the
Securities Act of 1933, as amended (the "Securities
Act"),
and
the rules and regulations promulgated thereunder, and applicable state
securities laws.
G. On
or
prior to sixty (60) days from the Closing Date of the Securities Purchase
Agreement, as defined therein, (the "Audited
Financial Statement Delivery Deadline"),
the
Company is required under the Securities Purchase Agreement to deliver to the
Buyers its financial statements for the years ending December 31, 2004 and
December 31, 2005, audited by Xxxxxxxxx & Company, LP (the "New
Audit Financial Statements"),
prepared in accordance with generally accepted accounting principles,
consistently applied, during each year involved (except as may be otherwise
indicated in such financial statements or the notes thereto) and fairly
presenting in all material respects the financial position of the Company as
of
the dates thereof and the results of its operations and cash flows for each
such
year then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments).
NOW,
THEREFORE, in consideration of the covenants, promises and representations
set
forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. ESTABLISHMENT
OF ESCROW.
(a) Escrow
Deposit.
Concurrently with the closing of the Reverse Merger and the closing of the
Offering, (i) the XIA Shareholders shall deliver to the Escrow Agent stock
certificates evidencing 13.5 million shares, in the aggregate, of Common Stock
(as adjusted for stock splits, stock dividends, and similar adjustments)
("XIA
Escrow Shares"),
and
(ii) Moveup shall deliver to the Escrow Agent a stock certificate evidencing
1.5
million shares of Common Stock (as adjusted for stock splits, stock dividends,
and similar adjustments) (the "Moveup
Escrow Shares"
and
together with the XIA Escrow Shares, the "Escrow
Shares"),
in
each case, with stock powers executed in blank in form and substance reasonably
satisfactory to the Investor Agent.
(b) Fees
and Expenses.
Applied
Spectrum and the Company shall be responsible for any and all fees and costs
related to the services rendered by Escrow Agent hereunder and pursuant to
the
Escrow Agreement.
2. DISBURSEMENT
OF ESCROW SHARES.
-
2 -
(a) Performance
Threshold.
Each of
Applied Spectrum and the Company covenants to the Investors and Investor Agent
that Net Income (as defined below) for the fiscal year ending December 31,
2007
("FY07
Net Income")
of
Applied Spectrum will be greater than or equal to $8.0 million (the
"Performance
Threshold"),
as
set forth in financial statements of Applied Spectrum (the "FY07 Financial
Statements")
for
the period ending December 31, 2007 prepared in accordance with the published
rules and regulations of US GAAP applied on a consistent basis throughout the
periods involved and audited in accordance with the auditing standards of the
Public Company Accounting Oversight Board ("PCAOB")
by a
nationally recognized independent accountant registered with PCAOB (the
"Independent
Accountant"),
with
such statements fairly presenting in all material respects the financial
position of Applied Spectrum and its subsidiaries, on a consolidated basis,
as
of the fiscal year ending December 31, 2007 (the "FY07")
and
the FY07 Financial Statements shall not contain any untrue statement of a
material fact or omit 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. For the purpose of this Agreement,
"Net
Income"
means,
for any period, the net income (or loss) of Applied Spectrum and its
subsidiaries for such period, determined on a consolidated basis; provided,
however, that the net income for such period will be increased by any non-cash
charges incurred as a result of the Offering (due to non-cash amortization
on
warrants charged to the Applied Spectrum's results of operation, if
any).
(b) FY07
Financial Statements.
Applied
Spectrum shall provide the Investor Agent and the Eligible Investors (as defined
below) with its audited FY07 Financial Statements on or before March 31, 2008.
Concurrently with the release of the audited FY07 Financial Statements to the
Investor Agent and the Eligible Investors, (i) the Company shall provide to
the
Investor Agent and the Eligible Investors a written certification as to the
amount of the Net Income for FY07 and whether the Performance Threshold has
been
met and (ii) the Company shall make such FY07 Financial Statements and
certification publicly available (as part of an Annual Report on Form 10-KSB
or
on a Current Report on Form 8-K, or otherwise). Subject to Section 3 below,
in
the event the Performance Threshold is not attained, Applied Spectrum and the
Investor Agent shall promptly provide a joint written instruction to the Escrow
Agent (the "Investor
Joint Instructions"),
to
deliver as promptly as practicable (such date, the "Released
Escrow Shares Release Date")
to the
Eligible Investors, on a Pro Rata Basis (as defined below), an aggregate amount
of Escrow Shares based from the following formula (the "Released
Escrow Shares"):
(($8
million - FY07 Net Income) / $8 million) X (Escrow Shares)
The
Released Escrow Shares shall be capped at the number of Escrow Shares remaining
in escrow after the distribution of the New Financial Statement Escrow Shares,
as defined below, if any.
(c) Allocation
of Released Escrow Shares; Transfer of Released Escrow Shares.
(i) Investors
holding at least 100 shares of Common Stock as of April 10, 2008 (the
"Eligible
Investors")
shall
be entitled to receive allocations of the Released Escrow Shares on a Pro Rata
Basis. For the purpose of this Agreement, "Pro
Rata Basis"
means
such portion of the Released Escrow Shares equal to the product of (i) the
number of Released Escrow Shares (as calculated in accordance with Section
2(b)
above) and (ii) the quotient of (x) the number of shares of Common Stock
acquired by such Eligible Investor in the Offering and (y) the number of shares
of Common Stock acquired by all Investors in the Offering. Any distribution
of
Released Escrow Shares hereunder shall also include a distribution to such
Investor of any dividends or other distributions in the Escrow, which were
issued or otherwise obtained or deposited with respect to such Released Escrow
Shares distributed to such Investor hereunder.
-
3 -
(ii) Applied
Spectrum and the Investor Agent shall cause the Investor Joint Instructions
to
instruct the Escrow Agent to either (x) deliver the Released Escrow Shares
allocated to each Eligible Investor by crediting such aggregate number of shares
of Common Stock to which such Eligible Investor is entitled to such Eligible
Investor's or such Eligible Investor's designee's balance account with the
Depository Trust Company through the Deposit Withdrawal Agent Commission system
or (y) if the Escrow Agent is unable to distribute the Released Escrow Shares
of
any Eligible Investor in accordance with the foregoing, to deliver stock
certificates evidencing the Released Escrow Shares of such Eligible Investor
registered in the name of each such Eligible Investor or such Eligible
Investor's designee at such address as set forth in the Securities Purchase
Agreement or such other address provided to the Investor Agent by such Eligible
Investor.
(iii) If
there
are any Escrow Shares remaining in the Escrow after the distribution of the
Released Escrow Shares or if the Company's Performance Threshold obligation
ceases in accordance with Section 3 below (the Escrow Shares held in the Escrow
at such time, the "Remaining
Escrow Shares"),
Applied Spectrum and the Investor Agent shall promptly thereafter provide a
joint written instruction to the Escrow Agent (the "Shareholder
Joint Instructions")
to
deliver the Remaining Escrow Shares to the XIA Shareholders and Moveup, in
such
amounts as determined for each such Depositor by multiplying (i) the number
of
Remaining Escrow Shares by (ii) the quotient of (x) the number of shares of
Common Stock contributed by such Depositor into the Escrow and (y) the number
of
shares of Common Stock contributed by all Depositors into the Escrow. Applied
Spectrum and the Investor Agent shall cause the Shareholder Joint Instructions
to instruct the Escrow to promptly deliver stock certificates evidencing the
Remaining Escrow Shares of such Depositor registered in the name of such
Depositor to the addresses set forth in the Escrow Agreement. Any distribution
of Remaining Escrow Shares hereunder shall also include a distribution to such
Depositor of any dividends or other distributions in the Escrow, which were
issued or otherwise obtained or deposited with respect to such Remaining Escrow
Shares distributed to such Depositor hereunder.
(d) New
Audit Financial Statements; Allocation of Escrow Shares; Transfer of Escrow
Shares.
-
4 -
(i) Applied
Spectrum shall provide the Investor Agent and the Investors with the New Audited
Financial Statements on or before the Audited Financial Statement Delivery
Deadline. Concurrently with the release of the New Audited Financial Statements
to the Investor Agent and the Investors, (I) the Company shall provide to the
Investor Agent and the Investors a written certification as to the amount of
(u)
Revenue (as defined and calculated under US GAAP) of the Company and its
Subsidiaries for the periods ended December 31, 2004 and December 31, 2005,
as
set forth in the New Audit Financial Statements (such Revenue for each such
period, the "New
Audited Revenue"),
(v)
Cash Flow from Operations (as defined and calculated under US GAAP) of the
Company and its Subsidiaries for the periods ended December 31, 2004 and
December 31, 2005, as set forth in the New Audit Financial Statements (such
Cash
Flow from Operations for each such period, the "New
Audited Cash Flow from Operations"),
(w)
Revenue of the Company and its Subsidiaries for the periods ended December
31,
2004 and December 31, 2005 as set forth in the financial statements of the
Company audited by Xxxx & Company LLP delivered to the Investor Agent and
the Investors on or prior to the Closing Date (such Revenue for each such
period, the "Old
Audited Revenue"),
(x)
Cash Flow from Operations of the Company and its Subsidiaries for the periods
ended December 31, 2004 and December 31, 2005 as set forth in the financial
statements of the Company audited by Xxxx & Company LLP delivered to the
Investor Agent and the Investors on or prior to the Closing Date (such Cash
Flow
from Operations for each such period, the "Old
Audited Cash Flow from Operations"),
(y)
whether (A) the New Audited Revenue for any such period is 10% less than the
Old
Audited Revenue for any such corresponding period (the "New
Audited Revenue Threshold")
or (B)
the New Audited Cash Flow from Operations for any such period is 10% less than
the Old Audited Cash Flow from Operations for any such corresponding period
(the
"New
Audited Cash Flow from Operations Threshold")
(collectively, the "New
Financial Statement Thresholds")
and
(z) whether the New Financial Statement Thresholds have been met and (II) the
Company shall make such New Financial Statements and certification publicly
available (as part of an Annual Report on Form 10-KSB or on a Current Report
on
Form 8-K, or otherwise).
(ii) If
either
the New Audited Revenue Threshold or the New Audited Cash Flow from Operations
Threshold has not
been
met as determined in accordance with Section 2(d)(i) above, then Applied
Spectrum and the Investor Agent shall promptly provide a joint written
instruction to the Escrow Agent (the "New
Financial Statement Investor Joint Instructions")
to
deliver as promptly as practicable (such date, the "New
Financial Statement Release Date")
to
each Investor such number of Escrow Shares equal to the product of (x) the
New
Financial Statement Escrow Shares (as defined below) and (y) the quotient of
(A)
the number of shares of Common Stock acquired by such Investor in the Offering
and (B) the number of shares of Common Stock acquired by all Investors in the
Offering. For purposes of this Agreement, "New
Financial Statement Escrow Shares")
means
such number of Escrow Shares equal to the product of (x) one million and (y)
the
greater of the number of percentage points in excess of 10% in which (A) the
Old
Audited Revenues exceeds the New Audited Revenues and (B) the Old Audited Cash
Flow from Operations exceeds the New Cash Flow From Operations; provided, that
such number of New Financial Statement Escrow Shares shall be capped at the
total number of Escrow Shares deposited with the Escrow Agent in accordance
with
Section 1(a).
(iii) Applied
Spectrum and the Investor Agent shall cause the New Financial Statement Investor
Joint Instructions to instruct the Escrow Agent to either (x) deliver the Escrow
Shares allocated to each Investor by crediting such aggregate number of shares
of Common Stock to which such Investor is entitled to such Investor's or such
Investor's designee's balance account with the Depository Trust Company through
the Deposit Withdrawal Agent Commission system or (y) if the Escrow Agent is
unable to distribute the Escrow Shares of any Investor in accordance with the
foregoing, to deliver stock certificates evidencing the Escrow Shares of such
Investor registered in the name of each such Investor or such Investor's
designee at such address as set forth in the Securities Purchase Agreement
or
such other address provided to the Investor Agent by such Investor.
-
5 -
(iv) Notwithstanding
anything herein to the contrary, following the release of the Escrow Shares
in
accordance with this Section 2(d), the obligation of Applied Spectrum to deliver
Escrow Shares to the Eligible Investors upon failure to meet the Performance
Threshold shall cease and no Escrow Shares shall be deemed to be Remaining
Escrow Shares for any purpose hereunder.
3. FORCE
MAJEURE.
(a) Upon
the
occurrence of an event of Force Majeure (as defined below), the obligation
of
Applied Spectrum to meet the Performance Threshold shall cease and all Escrow
Shares shall be immediately deemed Remaining Shares for all purposes hereunder.
For the purpose of this Agreement, "Force
Majeure"
means a
natural disaster (e.g., earthquakes, typhoons, flood, fire), war, epidemic,
civil disturbance, strike, major failure of domestic transportation, act of
government or public agency that directly and substantially prevents the Company
from operating a significant part of its business, which was unforeseeable
at
the time of the closing and the occurrence and consequences thereof could not
reasonably be avoided or overcome.
(b) If
Applied Spectrum intends to claim a Force Majeure has occurred, it must promptly
inform the Investor Agent in writing within thirty (30) days from the occurrence
of such event and provide detailed evidence of the occurrence and the duration
of such occurrence.
(c) Should
any controversy arise with respect to Applied Spectrum's claim that a Force
Majeure has occurred and/or with respect to the right of the Investors to
receive the Escrow Shares, the Investor Agent shall have the right to consult
counsel at the expense of Applied Spectrum and/or to institute an appropriate
interpleader action to determine the rights of the parties.
4. REPRESENTATIONS
AND WARRANTIES OF DEPOSITORS.
Each
Depositor hereby represents and warrants with respect to only itself
that:
(a) Legal
Capacity; Organization.
Solely
with respect to (i) each XIA Shareholder, such XIA Shareholder has the legal
capacity and right to execute, deliver, enter into, consummate and perform
the
transactions contemplated by hereby and in the Escrow Agreement and otherwise
to
carry out its obligations hereunder and thereunder and (ii) Moveup, Moveup
is an
entity duly organized, validly existing and in good standing under the laws
of
the jurisdiction of its organization with the requisite power and authority
to
enter into and to consummate the transactions contemplated by hereby and in
the
Escrow Agreement and otherwise to carry out its obligations hereunder and
thereunder.
(b) Accredited
Investor Status.
Such
Depositor is an "accredited investor" as that term is defined in Rule 501(a)
of
Regulation D under the Securities Act.
-
6 -
(c) Securities
Ownership.
As of
the Closing Date (as defined in the Securities Purchase Agreement), such
Depositor owns the Escrow Shares to be deposited by such Depositor (i) as the
sole record and beneficial owner or (ii) the joint record and beneficial owner
with an other Depositor of such Escrow Shares, in each case, free from all
taxes, liens, claims, encumbrances and charges and there are no outstanding
rights, options, subscriptions or other agreements or commitments obligating
such Depositor to sell or transfer such Escrow Shares and such Escrow Shares
are
not subject to any lock-up or other restriction on their transfer or on the
ability of the Investors to sell or transfer such Escrow Shares. As of the
Closing Date, such Depositor shall have paid any and all amounts and charges
due
and owing to Applied Spectrum and the Company with respect to the Escrow Shares
and there shall be no unpaid amounts or charges claimed to be due to either
Applied Spectrum or the Company from such Depositor with respect to the Escrow
Shares.
(d) Authorization;
Enforcement; Validity.
This
Agreement has been duly authorized, executed and delivered by such Depositor
and
constitutes a valid and legally binding agreement of such Depositor enforceable
against such Depositor in accordance with its terms, except as such
enforceability may be limited by general principles of equity or to applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation and other
similar laws relating to, or affecting generally, the enforcement of applicable
creditors' rights and remedies.
(e) Consents.
All
government and other consents that are required to have been obtained by such
Depositor with respect to this Agreement have been obtained and are in full
force and effect and all conditions of any such consents have been complied
with. Such Depositor has complied and will comply with all applicable disclosure
or reporting requirements in respect of the transaction contemplated
hereby.
(f) No
Conflicts.
The
execution and delivery by such Depositor of this Agreement, the sale and
delivery of the Escrow Shares and the performance by such Depositor of its
obligations under this Agreement do not and will not violate or conflict with
(i) any law, rule, regulation, order, judgment or decree (including federal
and
state securities laws and regulations and the rules and regulations of the
Principal Market (as defined in the Warrants)), (ii) any order or judgment
of
any court or other agency of government or any of such Depositor's assets or
any
contractual restriction binding on or affecting such Depositor or any of such
Depositor's assets or (iii) solely with respect to Moveup, result in a violation
of any organizational or other constituent document of Moveup or any of its
subsidiaries or any capital stock of Moveup.
(g) Independent
Decision.
Such
Depositor is acting solely for such Depositor's own account, and has made such
Depositor's own independent decision to enter into this Agreement and as to
whether this Agreement is appropriate or proper for such Depositor based upon
such Depositor's own judgment and upon advice of such advisors as such Depositor
deems necessary. Such Depositor acknowledges and agrees that such Depositor
is
not relying, and has not relied, upon any communication (written or oral) of
any
Investor or any affiliate, employee or agent of any Investor with respect to
the
legal, accounting, tax or other implications of this Agreement and that such
Depositor has conducted such Depositor's own analyses of the legal, accounting,
tax and other implications hereof and thereof; it being understood that
information and explanations related to the terms and conditions of this
Agreement shall not be considered investment advice or a recommendation to
enter
into this Agreement. Such Depositor acknowledges that no Investor nor any
affiliate, employee or agent of any Investor is acting as a fiduciary for or
an
advisor to such Depositor in respect of this Agreement.
-
7 -
(h) Brokerage
Fees.
Other
than amounts payable to the Investor Agent or its affiliates, such Depositor
has
taken no action that would give rise to any claim by any person for brokerage
commissions, finder's fees or similar payments relating to this Agreement or
the
transactions contemplated hereby.
(i) Litigation.
There
is no action, suit, claim, proceeding, inquiry or investigation before or by any
court, public board, government agency or self regulatory organization or body
pending or, to the knowledge of such Depositor, threatened against or affecting
such Depositor that could reasonably be expected to have a material adverse
affect on the ability of such Depositor to perform its obligations
hereunder.
(j) Investment
Company Status.
Solely
with respect to Moveup, Moveup is not, and upon consummation of transactions
contemplated hereby will not be, an "investment company," a company controlled
by an "investment company" or an "affiliated person" of, or "promoter" or
"principal underwriter" for, an "investment company" as such terms are defined
in the Investment Company Act of 1940, as amended.
5. REGISTRATION
RIGHTS. Applied
Spectrum and the Company acknowledge that the Released Escrow Shares are
Registrable Securities (as defined in the Registration Rights Agreement) and
the
Investors shall have such registration rights set forth in the Registration
Rights Agreement related thereto.
6. TERMINATION.
This
Agreement shall terminate at such time as all of the Escrow Shares shall have
been released by the Escrow Agent from the Escrow in accordance with Section
2
hereof; provided however, that Sections 1(b), 5, 6, 7 and 8 shall survive any
such termination.
7. INDEMNITY.
The Investor Agent will be indemnified and held harmless, jointly and severally,
by Applied Spectrum, the Company, the XIA Shareholders and Moveup from and
against any expenses, including reasonable attorneys' fees and disbursements,
damages or losses suffered by Investor Agent in connection with any claim or
demand, which, in any way, directly or indirectly, arises out of or relates
to
this Agreement or the services of Investor Agent hereunder or under the Escrow
Agreement; except, that if Investor Agent is guilty of willful misconduct,
fraud
or gross negligence under this Agreement then Investor Agent will bear all
losses, damages and expenses arising as a result of such willful misconduct,
fraud or gross negligence. Promptly after the receipt by Investor Agent of
notice of any such demand or claim or the commencement of any action, suit
or
proceeding relating to such demand or claim, Investor Agent 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 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.
-
8 -
8. MISCELLANEOUS.
(a) Notices.
Any
communication, notice or document required or permitted to be given under this
Agreement shall be given in writing and shall be deemed received (i) when
personally delivered to the relevant party at such party's address as set forth
below, (ii) if sent by mail (which must be certified or registered mail,
postage prepaid) or overnight courier, when received or rejected by the relevant
party at such party's address indicated below, or (iii) if sent by
facsimile, when confirmation of delivery is received by the sending
party:
If
to the
Investor Agent:
Xxxxxxx
Securities, LLC
0000
XXX
Xxxxxxx, Xxxxx 0000
Xxxxxxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Telephone:
(000)
000-0000
Facsimile:
(000)
000-0000
Attention:
Xxxxxxx
X. Xxxxxxx, President
with
a
copy to (for informational purposes only):
Xxxxxxx
Xxxx & Xxxxx LLP
000
Xxxxx
Xxxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Telephone: (000)
000-0000
Facsimile: (000)
000-0000
Attention:
Xxxxxxx
X. Xxxxx, Esq
If
to
Applied Spectrum (prior to the deposit of the Escrow Shares):
Applied
Spectrum Technologies, Inc.,
000X
Xxxxxxxxx Xxxxxxxxx, Xxxxx 00
Xxxx
Xxxxx, Xxxxxxx 00000
Telephone: (000)
000-0000
Facsimile: (000)
000-0000
Attention:
Xxxxx
Xxxxxxx, President
and
If
to
Applied Spectrum and the Company (after the deposit of the Escrow
Shares):
00/X,
Xxxxxxxxxx Xxxxx, 0 Xxxxxxxx Xx
Xxxxx
000000, P.R. China
Telephone: x0
(00
00) 0000-0000
Facsimile: x0
(00
00) 0000-0000
Attention:
Xxxxxx
Xxx
-
9 -
(b) with
a
copy to:
Xxxxxx
& Jaclin, LLP
000
Xxxxx
0 Xxxxx, Xxxxx 000
Xxxxxxxxx,
Xxx Xxxxxx 00000
Telephone:
(000)
000-0000
Facsimile:
(000)
000-0000
Attention:
Xxxxxxx
X. Xxxxxx, Esq.
or
such
other address as indicated by Applied Spectrum as its primary business address
in its SEC filings.
If
to the
XXX Xxxxxxxxxxxx
00/X,
Xxxxxxxxxx Xxxxx, 0 Xxxxxxxx Xx
Xxxxx
000000, P.R. China
Telephone: x0
(00
00) 0000-0000
Facsimile: x0
(00
00) 0000-0000
Attention:
Xxxxxx
Xxx & Xxx Xx
If
to
Moveup
Moveup
Investments Limited
X-00
Xxxxx Xxxxx Xxxxx
0
Xxxxxx
Xxxx
Xxxxxxxx
000000 P.R.C.
Telephone: x0
(00
000) 0000-0000
Facsimile: x0
(00
000) 0000-0000
Attention: Xxxxxxxx
Xx
If
to
Computershare
Computershare
Trust Company, Inc.
000
Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx,
Xxxxxxxx 00000
Telephone:
(000)
000-0000
Facsimile:
(000) 000-0000
Attention: Corporate
Trust Department
Each
Depositor, Applied Spectrum and the Company (the "Foreign
Parties")
hereby
irrevocably appoints National Corporate Research, Ltd., of 000
Xxxx
00xx
Xxxxxx,
Xxxxx 000, Xxx Xxxx, X.X. 00000, X.X.X. ("NCR")
as its
agent for the receipt of service of process in the United States. Each Foreign
Party agrees that any document may be effectively served on it in connection
with any action, suit or proceeding in the United States by service on its
agents. The Investor Agent consents and agrees that each Foreign Party may,
in
its reasonable discretion, irrevocably appoint a substitute agent for the
receipt of service of process located within the Untied States, and that upon
such appointment, the appointment of NCR may be revoked.
-
10 -
Any
document shall be deemed to have been duly served if marked for the attention
of
the agent at its address as set forth in this Section 8(b) or such other address
in the United States as may be notified to the party wishing to serve the
document and (a) left at the specified address if its receipt is acknowledged
in
writing; or (b) sent to the specified address by post, registered mail return
receipt requested. In the case of (a), the document will be deemed to have
been
duly served when it is left and signed for. In the case of (b), the document
shall be deemed to have been duly served when received and
acknowledged.
If
any
Foreign Party's agent at any time ceases for any reason to act as such, such
Foreign Party shall appoint a replacement agent having an address for service
in
the United States and shall notify the Investor Agent of the name and address
of
the replacement agent. Failing such appointment and notification, the holders
of
a majority of the Common Shares (as defined in the Securities Purchase
Agreement) shall be entitled by notice to such Foreign Party to appoint a
replacement agent to act on such Foreign Party's behalf. The provisions of
this
Section 8(b) applying to service on an agent apply equally to service on a
replacement agent.
(c) Currency.
As used
herein, "Dollar", "US Dollar" and "$" each mean the lawful money of the United
States.
(d) Assignment;
Amendment.
This
Agreement and the rights and obligations hereunder of any of the parties hereto
may not be assigned without the prior written consent of the other parties
hereto. Subject to the foregoing, this Agreement will be binding upon and insure
to the benefit of each of the parties hereto and their respective successors
and
permitted assigns. No portion of the Escrow Shares shall be subject to
interference or control by any creditor to any party hereto, or be subject
to
being taken or reached by any legal or equitable process in satisfaction of
any
debt or other liability of any such party hereto prior to the disbursement
thereof to such party hereto in accordance with the provisions of this
Agreement. This Agreement may be changed or modified only in writing signed
by
all of the parties hereto. No provision hereof may be waived other than by
an
instrument in writing signed by the party against whom enforcement is sought.
A
waiver or amendment of any term or provision of this Agreement shall not be
construed as a waiver or amendment of any other term or provision of this
Agreement or any other Transaction Document.
(e) Entire
Agreement.
This
Agreement, together with the Escrow Agreement and the other Transaction
Documents (as defined in the Securities Purchase Agreement) contains the entire
understanding and agreement between the parties hereto with respect to the
subject matter of this Agreement, and all prior writings and discussions are
hereby merged into this Agreement.
(f) Counterparts.
This
Agreement may be executed by facsimile signatures and in multiple counterparts,
each of which shall be deemed an original. It shall not be necessary that each
party executes each counterpart, or that any one counterpart be executed by
more
than one party so long as each party executes at least one
counterpart.
-
11 -
(g) Headings.
The
headings contained in this Agreement are for convenience or reference only
and
shall not affect the construction of this Agreement.
(h) Governing
Law; Jurisdiction.
All
questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be governed by the internal laws of the State of New
York, without giving effect to any choice of law or conflict of law provision
or
rule (whether of the State of New York or any other jurisdictions) that would
cause the application of the laws of any jurisdictions other than the State
of
New York. The parties hereby agree that all actions or proceedings arising
directly or indirectly from or in connection with this Agreement shall be
litigated only in the Supreme Court of the State of New York or the United
States District Court for the Southern District of New York located in New
York
County, New York. The parties consent to the jurisdiction and venue of the
foregoing courts and consent that any process or notice of motion or other
application to any of said courts or a judge thereof may be served inside or
outside the State of New York or the Southern District of New York by registered
mail, return receipt requested, directed to the party being served at its
address set forth on the signature ages to this Agreement (and service so made
shall be deemed complete three (3) days after the same has been posted as
aforesaid) or by personal service or in such other manner as may be permissible
under the rules of said courts. Each of the parties hereto irrevocably waives,
to the fullest extent permitted by law, any objection which it may now or
hereafter have to the laying of the venue of any such suit, action, or
proceeding brought in such a court and any claim that suit, action, or
proceeding has been brought in an inconvenient forum. EACH PARTY HEREBY
IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY
TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR
ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED
HEREBY.
(i) Third
Party Beneficiaries.
The
Investors shall be intended third party beneficiaries of this Agreement to
the
same extent as if they were parties hereto, and shall be entitled to enforce
the
provisions hereof.
(j) Severability.
If any
term or other provision of this Agreement is invalid, illegal or incapable
of
being enforced by any rule of law, or public policy, all other conditions and
provisions of this Agreement shall nevertheless remain in full force and effect
so long as the economic or legal substance of this Agreement is not affected
in
any manner materially adverse to any party. Upon such determination that any
term or other provision is invalid, illegal or incapable of being enforced,
the
parties hereto shall negotiate in good faith to modify this Agreement so as
to
effect the original intent of the parties as closely as possible in a mutually
acceptable manner in order that the terms of this Agreement remain as originally
contemplated to the fullest extent possible.
-
12 -
(k) Dispute
Resolution.
In the
case of a dispute as to the determination of the number of Released Escrow
Shares, Remaining Escrow Shares or other arithmetic calculation hereunder,
Applied Spectrum shall submit the disputed determinations or arithmetic
calculations via facsimile within one (1) Business Day (as defined in the
Securities Purchase Agreement) of receipt, or deemed receipt, of the event
giving rise to such dispute, as the case may be, to the Investor Agent. If
the
Investor Agent and Applied Spectrum are unable to agree upon such determination
or calculation within one (1) Business Day of such disputed determination or
arithmetic calculation being submitted to the Investor Agent, then Applied
Spectrum shall, within one Business Day submit via facsimile the disputed
determination or (the disputed arithmetic calculation to the Independent
Accountant. Applied Spectrum at Applied Spectrum 's expense, shall cause the
Independent Accountant to perform the determinations or calculations and notify
the Applied Spectrum and the Investor Agent of the results no later than five
(5) Business Days from the time it receives the disputed determinations or
calculations. The Independent Accountant's determination or calculation, as
the
case may be, shall be binding upon all parties absent demonstrable
error.
[The
remainder of the page is intentionally left blank]
-
13 -
IN
WITNESS WHEREOF,
each of
the parties hereto has executed this Agreement by the authorized officer named
below.
INVESTOR
AGENT:
XXXXXXX
SECURITIES, LLC
By:
/s/
Xxxxxxx X. Xxxxxxx
Name:
Xxxxxxx
X. Xxxxxxx
Title:
President
IN
WITNESS WHEREOF,
each of
the parties hereto has executed this Agreement by the authorized officer named
below.
APPLIED
SPECTRUM:
APPLIED
SPECTRUM TECHNOLOGIES, INC.
By:
/s/
Xxxxx X. Xxxxxxx
Name:
Xxxxx X. Xxxxxxx
Title:
President
IN
WITNESS WHEREOF,
each of
the parties hereto has executed this Agreement by the authorized officer named
below.
COMPANY:
EVER
LEADER HOLDINGS LIMITED
By:
/s/
Xxxxxx Xxx
Name:
Xxxxxx Xxx
Title:
Director
IN
WITNESS WHEREOF,
each of
the parties hereto has executed this Agreement by the authorized officer named
below.
XIA
SHAREHOLDERS:
/s/
Xxxxxx Xxx
XXXXXX
XXX
/s/
Xxx Xx
XXX
XX
IN
WITNESS WHEREOF,
each of
the parties hereto has executed this Agreement by the authorized officer named
below.
MOVEUP:
MOVEUP
INVESTMENTS LIMITED
By:
/s/
Xxxxxxxx Xx
Name:
Xxxxxxxx Xx
Title:
Director
