MAKE GOOD AGREEMENT
THIS MAKE GOOD
AGREEMENT (the
“Agreement”),
dated March 7, 2008, by and among ▇▇▇▇ Investments II LLC, a Delaware limited
liability company, as the authorized agent of the Investors (as defined below)
(the “Investor
Agent”), China Yida Holding, Co., a Delaware corporation, and its current
and future subsidiaries (collectively, the “Company”) and ▇▇▇▇
▇▇▇▇▇▇, an individual (the “CYHC
Shareholder”). This Agreement shall become effective upon the
execution thereof by all parties.
WHEREAS:
A. The
Company has offered for sale (the “Offering”) certain
shares (the “Shares”) of common
stock of the Company, $.001 par value per share (“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 the Company and the investors signatory thereto
(the “Investors”), and
certain other papers, agreements, documents, instruments and certificates
necessary to carry out the purposes thereof (collectively, the “Transaction
Documents”).
B. The
Company presented financial projections to the Investors, indicating that the
Company will report Earnings Per Share (EPS) of at least (i) $0.084 per share
for the fiscal year ending December 31, 2007, as adjusted, based on fully
diluted shares outstanding (an aggregate of 99,999,547 shares, including all
outstanding common shares, preferred shares, any convertible security, options,
and warrants) and (ii) $0.22 per share for the fiscal year ending
December 31, 2008, as adjusted, based on fully diluted shares outstanding
(an aggregate of 68,084,333 shares, including all outstanding common shares,
preferred shares, any convertible security, options, and warrants, excluding the
6,666,667 warrants to be issued in the Offering), and based upon audits
conducted in conformity with United States generally accepted accounting
principles (“US
GAAP”).
C. As
an inducement to the Investors to enter into the Securities Purchase Agreement,
the CYHC Shareholder desires to place the Escrow Shares (as hereinafter defined)
into escrow for the benefit of the Investors in the event that the Company fails
to satisfy the FY07 Performance Threshold and/or FY08 Performance Threshold (as
hereinafter defined).
D. Pursuant
to the requirements of the Securities Purchase Agreement, the Company, the CYHC
Shareholder 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 of
even date herewith (the “Escrow Agreement”),
by and among American Stock Transfer & Trust Company, the transfer agent for
the Company (the “Escrow Agent”) and
the parties hereto.
E. Contemporaneously
with the execution and delivery of this Agreement, the Company and the Investors
are executing and delivering a Registration Rights Agreement, dated as of even
date herewith (the “Registration Rights
Agreement”), pursuant to which the Company 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.
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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 Offering, the
CYHC Shareholder shall deliver to the Escrow Agent a stock certificate, or stock
certificates, evidencing 13,333,333 shares, in the aggregate, of Common Stock
(as adjusted for stock splits, stock dividends, and similar adjustments) (the
“Escrow
Shares”), with stock powers executed in blank in form and substance
reasonably satisfactory to the Investor Agent.
(b) Fees and
Expenses. 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.
(a) Performance Threshold for
Fiscal 2007. The Company covenants to the Investors and
Investor Agent that Adjusted EPS (as defined below) for the fiscal year ending
December 31, 2007 (“FY07 Adjusted EPS”)
of the Company will be greater than or equal to $0.084 per share, which is
equivalent to earnings of $8,365,000 divided by an aggregate of 99,999,547
shares (the “FY07
Performance
Threshold”). The Company’s earnings shall be as set forth in
financial statements of the Company (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 the Company 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 Section 2(a),
“Adjusted EPS”
means the net income (or loss) of the Company and its subsidiaries for such
period, excluding asset sales and other one-time events, determined on a
consolidated basis divided by 99,999,547 shares; provided, however, that the
Adjusted EPS for such period will be increased by any cash charges related to
the Offering and non-cash charges incurred as a result of the Offering (due to
non-cash amortization on warrants charged to the Company’s results of operation,
if any).
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(b) FY07 Financial
Statements. The Company shall provide the Investor Agent and
the 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 Investors,
(i) the Company shall provide to the Investor Agent and the Investors a
written certification as to the amount of the Adjusted EPS for FY07 and whether
the FY07 Performance Threshold, as adjusted, 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 FY07 Performance Threshold, as adjusted, is not attained, the Company
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
“FY07 Released Escrow Shares
Release Date”) to the Investors, on a Pro Rata Basis (as defined below),
an aggregate amount of Escrow Shares based from the following formula (the
“FY07 Released Escrow
Shares”):
(i) If
the FY07 Adjusted EPS is less than $0.084, then the number of FY07 Released
Escrow Shares will be 13,333,333.
(ii) If
the FY07 Adjusted EPS is $0.084 or greater, then none of the Escrow Shares will
be released to the Investors.
(c) Allocation of FY07 Released
Escrow Shares; Transfer of FY07 Released Escrow Shares.
(i) In
the event the that the FY07 Performance Threshold is not met, the Investors
shall be entitled to receive allocations of the FY07 Released Escrow Shares on a
Pro Rata Basis. For the purpose of this Section 2(c)(i), “Pro Rata Basis” means
such portion of the FY07 Released Escrow Shares equal to the product of
(i) the number of FY07 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 Investor in the Offering and (y) the number of
shares of Common Stock acquired by all Investors in the Offering. Any
distribution of FY07 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 FY07 Released Escrow Shares distributed to such Investor
hereunder.
(ii) In
the event that the FY07 Performance Threshold is not met, the Company and the
Investor Agent shall cause the Investor Joint Instructions to instruct the
Escrow Agent to either (x) deliver the FY07 Released 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 FY07 Released Escrow Shares of any Investor in
accordance with the foregoing, to deliver stock certificates evidencing the FY07
Released 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.
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(d) Performance Threshold for
Fiscal 2008. The
Company covenants to the Investors and Investor Agent that Adjusted EPS (as
defined below) for the fiscal year ending December 31, 2008 (“FY08 Adjusted EPS”)
of the Company will be greater than or equal to $0.22 per share, which is
equivalent to earnings of $15,000,000 divided by 68,084,333 shares (the “FY08 Performance
Threshold”). The Company’s earnings shall be as set forth in
financial statements of the Company (the “FY08 Financial
Statements”) for the period ending December 31, 2008 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 PCAOB by the Company’s Independent Accountant, with
such statements fairly presenting in all material respects the financial
position of the Company and its subsidiaries, on a consolidated basis, as of the
fiscal year ending December 31, 2008 (the “FY08”) and the FY08
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 Section 2(e), “Adjusted EPS” means
the net income (or loss) of the Company and its subsidiaries for such period,
excluding asset sales and other one-time events, determined on a consolidated
basis divided by 68,084,333 shares; provided, however, that the
Adjusted EPS for such period will be increased by any cash charges related to
the Offering and non-cash charges incurred as a result of the Offering (due to
non-cash amortization on warrants charged to the Company’s results of operation,
if any).
(e) FY08 Financial
Statements. The Company shall provide the Investor Agent and
the Investors with its audited FY08 Financial Statements on or before
March 31, 2009. Concurrently with the release of the audited
FY08 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 the Adjusted EPS for FY08 and whether the FY08
Performance Threshold, as adjusted, has been met (and, if applicable, a Call
Notice as further described in Section 2.2(a) of the Securities Purchase
Agreement) and (ii) the Company shall make such FY08 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 FY08 Performance Threshold, as adjusted, is
not attained, the Company and the Investor Agent shall promptly provide Investor
Joint Instructions, to deliver as promptly as practicable (such date, the “FY08 Released Escrow Shares
Release Date”) to the Investors, on a Pro Rata Basis (as defined below),
an aggregate amount of Escrow Shares based from the following formula (the
“FY08 Released Escrow
Shares”):
(i) If
the FY08 Adjusted EPS is $0.11 or less, then the number of FY08 Released Escrow
Shares will be 13,333,333, decreased by the number of the FY07 Released Escrow
Shares, if any.
(ii) If
the FY08 Adjusted EPS is greater than $0.11, but less than $0.20, then the
number of FY08 Released Escrow Shares shall be calculated as
follows:
A = 1.5 x
B x C
where
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A
= the aggregate
number of FY08 Released Escrow Shares;
B
= the
percentage under the FY08 Performance Threshold; and
C
= 13,333,333,
decreased by the number of the FY07 Released Escrow Shares.
(iii) If
the FY08 Adjusted EPS is $0.20 or greater, then none of the Escrow Shares will
be released to the Investors.
(f) Allocation of FY08 Released
Escrow Shares; Transfer of FY08 Released Escrow Shares.
(i) In
the event that the FY08 Performance Threshold is not met, the Investors shall be
entitled to receive allocations of the FY08 Released Escrow Shares on a Pro Rata
Basis. For the purpose of this Section 2(f)(i), “Pro Rata Basis” means
such portion of the Released Escrow Shares equal to the product of (i) the
number of FY08 Released Escrow Shares (as calculated in accordance with Section (e)
above) and (ii) the quotient of (x) the number of shares of Common
Stock acquired by such Investor in the Offering and (y) the number of
shares of Common Stock acquired by all Investors in the Offering. Any
distribution of FY08 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 FY08 Released Escrow Shares distributed to such Investor
hereunder.
(ii) In
the event that the FY08 Performance Threshold is not met, the Company and the
Investor Agent shall cause the Investor Joint Instructions to instruct the
Escrow Agent to either (x) deliver the FY08 Released 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 FY08 Released Escrow Shares of any Investor in
accordance with the foregoing, to deliver stock certificates evidencing the FY08
Released 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.
(g) Distribution of Remaining
Escrow Shares. If there are any Escrow Shares remaining in the
Escrow after the distribution of the FY07 Released Escrow Shares and/or FY08
Released Escrow Shares, or if the Company’s FY07 Performance Threshold and/or
FY08 Performance Threshold obligation ceases in accordance with Section 3 below (the
Escrow Shares held in the Escrow at such time, the “Remaining Escrow
Shares”), the Company 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 CYHC
Shareholder. The Company and the Investor Agent shall cause the
Shareholder Joint Instructions to instruct the Escrow to promptly deliver stock
certificates evidencing the Remaining Escrow Shares registered in the name of
the CYHC Shareholder to the addresses set forth in the Escrow
Agreement. Any distribution of Remaining Escrow Shares hereunder
shall also include a distribution to the CYHC Shareholder 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 the CYHC
Shareholder hereunder.
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3. Force
Majeure.
(a) Upon
the occurrence of an event of Force Majeure (as defined below), the obligation
of the Company to meet the FY07 Performance Threshold and/or FY08 Performance
Threshold shall cease and all Escrow Shares shall be immediately deemed
Remaining Escrow 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, or major failure of domestic transportation 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
the Company 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 the Company’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 the Company and/or to institute an appropriate interpleader action to
determine the rights of the parties.
4. Representations and
Warranties of the CYHC Shareholder. The CYHC Shareholder
hereby represents and warrants that:
(a) Legal Capacity;
Organization. The CYHC 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.
(b) Accredited Investor
Status. The CYHC Shareholder is an “accredited investor” as
that term is defined in Rule 501(a) of Regulation D under the
Securities Act.
(c) Securities
Ownership. As of the Closing Date (as defined in the
Securities Purchase Agreement), the CYHC Shareholder owns the Escrow Shares to
be deposited hereunder (i) as the sole record and beneficial owner, free
from all taxes, liens, claims, encumbrances and charges and there are no
outstanding rights, options, subscriptions or other agreements or commitments
obligating the CYHC Shareholder to sell or transfer such Escrow Shares and,
except in connection with the Offering, 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, the CYHC Shareholder shall have paid any and all amounts and charges due
and owing to the Company with respect to the Escrow Shares and there shall be no
unpaid amounts or charges claimed to be due to the Company from the CYHC
Shareholder with respect to the Escrow Shares.
6
(d) Authorization; Enforcement;
Validity. This Agreement has been duly authorized, executed
and delivered by the CYHC Shareholder and constitutes a valid and legally
binding agreement of the CYHC Shareholder enforceable against the CYHC
Shareholder 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 the
CYHC Shareholder 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. The CYHC Shareholder 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 the CYHC Shareholder
of this Agreement, the sale and delivery of the Escrow Shares and the
performance by the CYHC Shareholder 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 Class A Warrants)), or (ii) any order or judgment of any court or other
agency of government or any of the CYHC Shareholder’s assets or any contractual
restriction binding on or affecting the CYHC Shareholder or any of the CYHC
Shareholder’s assets.
(g) Independent
Decision. The CYHC Shareholder is acting solely for his own
account, and has made his own independent decision to enter into this Agreement
and as to whether this Agreement is appropriate or proper for the CYHC
Shareholder based upon his own judgment and upon advice of such advisors as the
CYHC Shareholder deems necessary. The CYHC Shareholder acknowledges
and agrees that he 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 he has conducted his 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. The CYHC Shareholder acknowledges that no
Investor nor any affiliate, employee or agent of any Investor is acting as a
fiduciary for or an advisor to the CYHC Shareholder in respect of this
Agreement.
(h) Brokerage
Fees. Other than amounts payable to the Investor Agent or its
affiliates, the CYHC Shareholder 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.
7
(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 the CYHC Shareholder, threatened against or
affecting the CYHC Shareholder that could reasonably be expected to have a
material adverse affect on his ability to perform its obligations
hereunder.
5. Registration
Rights. The Company acknowledges that the FY07 Released Escrow
Shares and FY08 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
the Company and the CYHC Shareholder 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. 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,
to:
▇▇▇▇ Investments II LLC
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn.: ▇▇▇▇ ▇▇▇▇▇,
President
tel.: (▇▇▇) ▇▇▇-▇▇▇▇
fax.: (▇▇▇) ▇▇▇-▇▇▇▇
8
with a copy to (for informational
purposes only):
▇▇▇▇▇▇▇ ▇▇▇▇, LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn.: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇,
Esq.
tel.: (▇▇▇) ▇▇▇-▇▇▇▇
fax.: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Company, to:
China ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇.
▇▇ ▇▇▇▇-▇ 13/F, Crocodile House
II
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇
Attn.: ▇▇▇▇ ▇▇▇▇▇▇, Chief Executive
Officer
tel.: + ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
fax.: _______________
or such
other address as indicated by the Company as its primary business address in its
SEC filings.
with a copy to:
▇▇▇▇▇▇
& Jaclin, LLP
▇▇▇ ▇▇▇▇▇
▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Attn.:
▇▇▇▇ ▇▇▇▇▇, Esq.
tel.:
(▇▇▇) ▇▇▇-▇▇▇▇
fax.: (▇▇▇) ▇▇▇-▇▇▇▇
If to the CYHC Shareholder,
to:
▇▇▇▇ ▇▇▇▇▇▇
▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇. ▇▇ ▇▇▇▇▇▇▇
▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇
Province
Peoples’ Republic of China
350001
tel.: + ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
fax.: _______________
If to the Escrow Agent:
American Stock Transfer & Trust
Company
▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn.: ▇▇▇▇ ▇▇▇▇▇▇
tel.: (▇▇▇) ▇▇▇-▇▇▇▇
fax.:
_____________________
9
(b) Appointment of Agent for
Service of Process. The CYHC Shareholder and the Company (the
“Foreign
Parties”) hereby irrevocably appoint ▇▇▇▇▇▇ & Jaclin, LLP (“▇▇▇▇▇▇”) as their
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 ▇▇▇▇▇▇ may be revoked.
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 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, 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.
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(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.
(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.
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(k) Dispute
Resolution. In the case of a dispute as to the determination
of the number of FY07 Released Escrow Shares, FY08 Released Escrow Shares,
Remaining Escrow Shares or other arithmetic calculation hereunder, the Company
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 the Company 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 the Company shall,
within one Business Day submit via facsimile the disputed determination or (the
disputed arithmetic calculation to the Independent Accountant. The Company at
the Company’s expense, shall cause the Independent Accountant to perform the
determinations or calculations and notify the Company 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.
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IN WITNESS WHEREOF, each of
the parties hereto has executed this Agreement by the authorized officer named
below.
INVESTOR
AGENT:
▇▇▇▇
INVESTMENTS II LLC
By: /s/
▇▇▇▇▇▇▇ ▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Its: Managing
Member/President
Dated: 3/6/2008
13
IN WITNESS WHEREOF, each of
the parties hereto has executed this Agreement by the authorized officer named
below.
THE
COMPANY:
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
Name:▇▇▇▇ ▇▇▇▇▇▇
Its: Chairman and Chief Executive
Officer
Dated: March 7,
2008
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IN WITNESS WHEREOF, each of
the parties hereto has executed this Agreement by the authorized officer named
below.
THE
CYHC SHAREHOLDER:
Name:
/s/ ▇▇▇▇
▇▇▇▇▇▇
Dated:
March 7,
2008
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