MAKE GOOD ESCROW AGREEMENT
ESCROW
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"
and
together with the Investor Agent and Applied Spectrum, the "Third
Parties"),
Xx.
Xxxxxx Xxx and Ms. Xxx Xx, as individuals (collectively, the "XIA
Shareholders"),
Moveup Investments Limited, a company organized under the laws of the British
Virgin Islands ("Moveup",
and
together with the XIA Shareholders, the "Depositors")
and
Computershare Trust Company, Inc., the transfer agent for Applied Spectrum
(the
"Escrow
Agent").
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 certain 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. 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) into an escrow for the benefit of the Investors in the event that
the
Company fails to satisfy certain performance thresholds in accordance with
that
certain Make Good Agreement, by and among Applied Spectrum, the Company, the
XIA
Shareholders, Moveup and the Investor Agent and dated as of the date hereof
(the
"Make
Good Agreement").
D. Pursuant
to the requirements of the Securities Purchase Agreement and the Make Good
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 this Agreement and the Escrow Agent has agreed
to act as escrow agent pursuant to the terms and conditions of this
Agreement.
NOW,
THEREFORE,
the
Depositors, the Third Parties and the Escrow Agent, hereby agree that, in
consideration of the mutual promises and covenants contained herein, the Escrow
Agent shall hold in escrow and shall distribute Escrow Shares in accordance
with, and subject to, the provisions of this Agreement:
1.
APPOINTMENT.
The
Depositors and Third Parties hereby appoint the Escrow Agent as each party's
respective escrow agent for the purposes set forth herein, and the Escrow Agent
hereby accepts such appointment.
2.
ESCROW
FUND.
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 the stock powers executed in blank. The Escrow Agent shall
not
be under any duty or obligation to solicit the deposit of the Escrow Shares
to
the Escrow. The foregoing property plus all dividends and other distributions
and payments thereon, if any (collectively the "Distributions")
received by the Escrow Agent, less any property distributed or paid in
accordance with this Agreement, are collectively referred to herein as the
"Escrow
Property".
3.
INVESTMENT
OF ESCROW PROPERTY.
During
the term of this Agreement, the Escrow Agent shall not invest or liquidate
the
Escrow Property and any distribution of all or part of the Escrow Property
shall
be conducted in accordance with Section 4 below.
4.
DISTRIBUTION
OF ESCROW PROPERTY.
The
Escrow Agent shall disburse the Escrow Property as follows: (ii) upon receipt
of
a joint written instruction letter to the Escrow Agent from the Investor Agent
and Applied Spectrum, the Escrow Agent shall promptly disburse the Escrow
Property in accordance with the instructions set forth in such letter or (ii)
upon receipt of evidence of the entry of a nonappealable order of a court of
competent jurisdiction requiring the Escrow Agent to release such Escrow
Property from the Escrow Account, the Escrow Agent shall release such Escrow
Property in accordance with such order.
5. DISAGREEMENT
OF PARTIES.
In
the
event of a dispute between or conflicting claims by or among the parties or
any
other person or entity with respect to all or a portion of the Escrow Property
or the terms of this Agreement, the Escrow Agent shall be entitled in its sole
discretion to refuse to comply with claims, demands or instructions with respect
to the Escrow Property so long as such dispute or conflict shall continue and
the Escrow Agent shall not be or become liable in any way to the parties for
such refusal or failure to comply. The Escrow Agent shall not be required to
act
until, in its sole discretion such conflicting or adverse claims or demands
either (a) shall have been determined by a final order, judgment or decree
of a
court of competent jurisdiction which order, judgment or decree is not subject
to appeal, or (b) settled by agreement between the conflicting parties as
evidenced in a writing satisfactory to the Escrow Agent.
-2-
6. TERMINATION.
Unless
the Escrow Agent earlier resigns, this Agreement shall terminate, subject to
the
provisions of Section 8 upon final distribution of all property in the Escrow
Property by the Escrow Agent.
7.
ESCROW
AGENT.
(a) The
Escrow Agent undertakes to perform only those duties expressly set forth herein
and no duties shall be implied.
(b) The
Escrow Agent shall have no liability under and no duty to inquire as to the
provisions of any agreement of the Depositors and/or the Third Parties other
than this Agreement.
(c) The
Escrow Agent may rely upon and shall not be liable for acting or refraining
from
acting upon any written notice, instruction or request furnished to it hereunder
and believed by it to be genuine and to have been signed or presented by the
proper party or parties.
(d) The
Escrow Agent shall be under no duty to inquire into or investigate the validity,
accuracy or content of any document.
(e) The
Escrow Agent shall not be liable for any action taken or omitted by it in good
faith except to the extent that a court of competent jurisdiction determines
that the Escrow Agent's gross negligence or willful misconduct was the primary
cause of any loss to the Third Parties or the Depositors.
(f) The
Escrow Agent may consult with legal counsel of its choosing as to any matter
relating to this Agreement and the Escrow Agent shall not incur any liability
in
acting in good faith in accordance with advice from such counsel.
(g) Anything
in this Agreement to the contrary notwithstanding, in no event shall the Escrow
Agent be liable for special, indirect or consequential loss or damage of any
kind whatsoever (including but not limited to lost profits and/or savings),
even
if the Escrow Agent has been advised of the likelihood of such loss or damage
and regardless of the form of action.
(h) The
Escrow Agent may resign at any time by giving the Depositors and the Third
Parties thirty (30) calendar days' prior written notice thereof.
-3-
8.
FEES.
Applied
Spectrum and the Company agree jointly and severally to (i) pay the Escrow
Agent
reasonable compensation for the services to be rendered hereunder, which shall
be as described in Schedule I attached hereto, and (ii) pay or reimburse the
Escrow Agent upon request for all reasonable expenses, disbursements and
advances, including reasonable attorneys' fees and expenses, incurred or made
by
it in connection with the preparation execution, delivery, performance,
modification and/or termination of this Agreement. This Section 8 shall survive
the termination of this Agreement and the resignation of the Escrow
Agent.
9.
INDEMNITY.
Applied
Spectrum and the Company shall jointly and severally indemnify, defend and
save
harmless the Escrow Agent and its directors, officers, agents and employees
(the
"indemnitees")
from
and against all demands, claims, liabilities, losses, damages, settlements,
awards, judgments, fines, penalties, costs or expenses (including, without
limitation, reasonable attorneys' fees) (collectively, "Losses")
incurred by Escrow Agent as a result (directly or indirectly) of or relating
to
Escrow Agent's acceptance of this Agreement or provision of Services under
this
Agreement; provided, however, that no indemnitee shall have the right to be
indemnified hereunder for any liability to the extent finally determined by
a
court of competent jurisdiction that such Losses have resulted directly from
the
gross negligence or willful misconduct of such indemnitee. The parties hereto
acknowledge that the foregoing indemnities shall survive the resignation or
removal of the Escrow Agent or the termination of this Agreement and that costs
of enforcement of this provision are the joint and several obligations of
Applied Spectrum and the Company.
10.
TAXES.
It
is
understood that the Escrow Agent shall be responsible for income reporting
only
with respect to income earned on the Escrow Property and will not be responsible
for any other reporting.
11.
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
-4-
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, Chairman and Chief Executive Officer
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.
-5-
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/x
Xxxxx
Xx-Xxxx Xxxx
X-00
World Trade Plaza, 9 Fuhong Road
Shenzhen
518033, P.R. China
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
12.
MISCELLANEOUS.
(a) The
provisions of this Agreement may be waived, altered, amended or supplemented,
in
whole or in part, only by a writing signed by all of the parties hereto. This
Agreement and the rights and obligations hereunder of the parties may not be
assigned except with the prior written consent of the other parties hereto.
(b) The
covenants and provisions of this Agreement by or for the benefit of the
Depositors, the Third Parties or the Escrow Agent shall bind and inure to the
benefit of their respective successors and permitted assigns hereunder.
(c) 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 pages 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.
-6-
(d) No
party
to this Agreement is liable to any other party for losses due to, or if it
is
unable to perform its obligations under the terms of this Agreement because
of,
acts of God, fire, floods, strikes, equipment or transmission failure, or other
causes reasonably beyond its control. This Agreement may be executed in one
or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
|
(e)
|
This
Agreement may be executed by each of the parties hereto by facsimile
signature and in any number of counterparts, each of which counterpart,
when so executed and delivered, shall be deemed to be an original
and all
such counterparts shall together constitute one and the same
agreement.
|
|
(f)
|
The
headings contained in this Agreement are for convenience of reference
only
and shall have no effect on the interpretation or operation
hereof.
|
|
(g)
|
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.
|
|
(h)
|
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.
|
[The
remainder of the page is intentionally left blank]
-7-
IN
WITNESS WHEREOF,
each of
the parties hereto has executed this Escrow Agreement by the authorized officer
named below.
INVESTOR
AGENT:
XXXXXXX
SECURITIES, LLC
By:/s/
Xxxxxxx X. Keating_______
Name:
Xxxxxxx X. Xxxxxxx
Title:
President
IN
WITNESS WHEREOF,
each of
the parties hereto has executed this Escrow Agreement by the authorized officer
named below.
APPLIED
SPECTRUM:
APPLIED
SPECTRUM TECHNOLOGIES, INC.
By:/s/
Xxxxx X. Keating________
Name:
Xxxxx X. Xxxxxxx
Title:
President
IN
WITNESS WHEREOF,
each of
the parties hereto has executed this Escrow Agreement by the authorized officer
named below.
COMPANY:
EVER
LEADER HOLDINGS LIMITED
By:/s/
Yiqing Wan________
Name:
Xxxxxx Xxx
Title:
Director
IN
WITNESS WHEREOF,
each of
the parties hereto has executed this Escrow Agreement by the authorized officer
named below.
XIA
SHAREHOLDERS:
__/s/
Yiqing Wan______________________
XXXXXX
XXX
__/s/
Wei Xu__________________________
XXX
XX
IN
WITNESS WHEREOF,
each of
the parties hereto has executed this Escrow Agreement by the authorized officer
named below.
MOVEUP:
MOVEUP
INVESTMENTS LIMITED
By:/s/
Shaoping Lu____________________
Name:
Xxxxxxxx
Xx
Title:
Director
IN
WITNESS WHEREOF,
each of
the parties hereto has executed this Escrow Agreement by the authorized officer
named below.
COMPUTERSHARE
TRUST COMPANY, INC.
By:
/s/ Xxxx Xxxxxx
Name:
Xxxx Xxxxxx
Title:
Trust Officer
By:/s/
Xxxx X. Xxxx
Name:
Xxxx X. Xxxx
Title:
Corporate Trust Officer
SCHEDULE
I
Computershare
Trust Company, Inc.
Applied
Spectrum Technologies, Inc. Escrow
Escrow
Agent Fee Schedule
|
Account
Acceptance Fee
|
$2,500
|
|
|
Annual
Administrative Fee
|
$2,500
|
|
|
Overnight
Delivery Charges
|
At
cost
|
|
|
Out-of-Pocket
Expenses
|
At
cost
|
The
acceptance and first year’s annual fee are payable at closing. Annual
administrative fees are due in advance of the period for which service is to
be
rendered. Special or extraordinary events, such as amendments to the documents
or disputes are not included in the above fees, and we reserve the right to
charge an additional amount based on the time incurred in handling such events
should they occur. Late charges are 1½% per month on outstanding balances owing
45 days from date of invoice. Computershare reserves the right to earn
investment fees on escrow funds payable by third-party investment providers
and
pursuant to contracts with same.
