ESCROW AGREEMENT (Subscription Escrow Agreement)
ESCROW AGREEMENT
(Subscription Escrow Agreement)
THIS SUBSCRIPTION ESCROW AGREEMENT (this “Agreement”), is entered into as of May 16, 2012, by and among Xxxxxx Online Entertainment Limited (“Issuer”), ICM Capital Markets Ltd. (“Depositor”, and together with Issuer, sometimes referred to individually as “Party” and collectively as the “Parties”), and JPMorgan Chase Bank, N.A. (the “Escrow Agent”).
Whereas, the Issuer has filed a registration statement on Form F-1 under the Securities Act of 1933, as amended, with the Securities and Exchange Commission, File No. 333-169515 (the “Registration Statement”), relating to the offer and sale of American Depositary Shares (“ADSs”) of the Issuer. The Issuer proposes to sell a minimum of 800,000 ADSs (the “Minimum Offering Amount”) and a maximum of 1,600,000 ADSs at a price of $5.00 per ADS on a “best efforts, minimum/maximum” basis pursuant to the Registration Statement (the “Offering”).
WHEREAS, the Depositor has been named as the underwriter in connection with the Offering in accordance with the terms of an underwriting agreement to be entered into upon the effectiveness of the Registration Statement between the Issuer, the Depositor and any other underwriters named therein (the “Underwriting Agreement”); and
WHEREAS, in compliance with Rule 15c2-4 under the Securities Exchange Act of 1934, as amended, the Issuer and the Depositor propose to establish an Escrow Account (as defined in Section 2 hereof) with the Escrow Agent until the Offering terminates;
NOW THEREFORE, in consideration of the foregoing and of the mutual covenants hereinafter set forth, the parties hereto agree as follows:
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Upon receipt of written notification of the Offering Closing Date, one of the following procedures will take place:
(i) If Depositor has received subscriptions for the Minimum Offering Amount by the Offering Closing Date, as determined by the Escrow Agent, in its sole discretion, on the Offering Closing Date the Funds will be promptly paid to or credited to the account of, or otherwise transferred pursuant to Issuer’s funds transfer instructions as set forth in section 3(b) below; or
(ii) If Depositor has not received subscriptions for the Minimum Offering Amount by the Offering Closing Date, as determined by the Escrow Agent based on the funds deposited into the Escrow Account, the Parties shall provide to the Escrow Agent an electronic spreadsheet in a form reasonably acceptable to the Escrow Agent containing the amount received from each subscriber whose Funds have been deposited with Escrow Agent (with respect to each subscriber the “Subscriber Investment Amount”) along with the name, address and Taxpayer Identification Number, if any, of each subscriber. The aggregate of all Subscriber Investment Amounts received by the Escrow Agent shall be equal to the amount of the Funds on the Offering Closing Date, provided that if any Funds have been received via check, that such check has cleared. Escrow Agent shall distribute to each subscriber the appropriate Subscriber Investment Amount pursuant to joint written instructions of the Parties within five (5) Business Days of receipt of the information described in this Section 3(a)(ii).
(b) Any instructions setting forth, claiming, containing, objecting to, or in any way related to the transfer or distribution of the Funds, must be in writing or set forth in a Portable Document Format (“PDF”), executed by the appropriate Party or Parties as evidenced by the signatures of the person or persons signing this Agreement or one of their designated persons as set forth in Schedule 1 (each an “Authorized Representative”), and delivered to Escrow Agent only by confirmed facsimile or attached to an email on a Business Day only at the fax number or email address set forth in Section 8 below. No instruction for or related to the transfer or distribution of the Funds shall be deemed delivered and effective unless Escrow Agent actually shall have received it on a Business Day by facsimile or as a PDF attached to an email only at the fax number or email address set forth in Section 8 and as evidenced by a confirmed transmittal to the Party’s or Parties’ transmitting fax number or email address and Escrow Agent has been able to satisfy any applicable security procedures as may be required hereunder. Escrow Agent shall not be liable to any Party or other person for refraining from acting upon any instruction for or related to the transfer or distribution of the Funds if delivered to any other fax number or email address, including but not limited to a valid email address of any employee of Escrow Agent. The Parties each acknowledge that Escrow Agent is authorized to use the following funds transfer instructions to disburse any Funds pursuant to Section 3(a)(i), without a verifying call-back as set forth in Section 3(c) below:
Issuer: | Bank name: | Depositor: | Bank name: |
Bank Address: | Bank Address: | ||
ABA number: | ABA number: | ||
Account name: | Account Name: | ||
Account number: | Account Number: |
(c) In the event any other funds transfer instructions are set forth in a permitted instruction from a Party or the Parties in accordance with Section 3(a), Escrow Agent is authorized to seek confirmation of such funds transfer instructions by a single telephone call-back to one of the Authorized Representatives, and Escrow Agent may rely upon the confirmation of anyone purporting to be that Authorized Representative. The persons and telephone numbers designated for call-backs may be changed only in a writing executed by Authorized Representatives of the applicable Party and actually received by Escrow Agent via facsimile or as a PDF attached to an email. Except as set forth in Section 3(a) above, no Funds will be disbursed until an Authorized Representative is able to confirm such instructions by telephone callback. Escrow Agent and the beneficiary's bank in any Funds transfer may rely solely upon any account numbers or similar identifying numbers provided by the Parties and confirmed by an Authorized Representative.
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(d) The Parties acknowledge that there are certain security, corruption, transmission error and access availability risks associated with using open networks such as the Internet and the Parties hereby expressly assume such risks.
(e) As used in this Agreement, “Business Day” shall mean any day other than a Saturday, Sunday or any other day on which Escrow Agent located at the notice address set forth below is authorized or required by law or executive order to remain closed. The Parties acknowledge that the security procedures set forth in this Section 3 are commercially reasonable. Upon delivery of the Funds by Escrow Agent in accordance herewith, this Agreement shall terminate, subject to the provisions of Section 6.
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8. Notices. All communications hereunder shall be in writing or set forth in a PDF attached to an email, and all instructions from a Party or the Parties to the Escrow Agent shall be executed by an Authorized Representative, and shall be delivered in accordance with the terms of this Agreement by facsimile, email or overnight courier only to the appropriate fax number, email address, or notice address set forth for each party as follows:
If to Issuer: | Xxxxxx Online Entertainment Limited |
Xxxxx 0000, Xxxxx X, Xxxxx International Center | |
Xx. 0 Xxxx Xxxxxx Xxxx, Xxxxxxxx Xxxxxxxx, Xxxxxxx, P.R.C. | |
Attention: Xxxxx Xxxxxx Xxxx, Director | |
Tel No.: x00-00-00000000 | |
Email Address: xxxxx.xxxxx@xxx.000.xxx | |
With copies to: | Loeb & Loeb LLP |
000 Xxxx Xxxxxx | |
Xxx Xxxx, XX 00000 | |
Attn: Xxxxxxxx X. Xxxxxxxx, Esq. | |
Tel No.: 000-000-0000 | |
Fax No.: 000-000-0000 | |
If to Depositor: | Xxxxxxx X. Xxxxxxx |
ICM Capital Markets Ltd | |
000 Xxxxxxx Xxx, 00xx Xxx | |
Xxx Xxxx, X.X. 00000 | |
Attention: Xxxxxxx Xxxxxxx | |
Tel No.: 000-000-0000 | |
Fax No.: 000-000-0000 | |
With copies to: | Xxxxxx Xxxxxx |
Xxxxxxx Savage, LLP | |
000 Xxxxxxxxx Xxxxxx | |
0xx Xxxxx | |
Xxx Xxxx, XX 00000 | |
Tel No:000-000-0000 | |
Fax No: 000-000-0000 |
If to Escrow Agent: | JPMorgan Chase Bank, N.A. |
Escrow Services | |
0 Xxx Xxxx Xxxxx, 00xx Xxxxx | |
Xxx Xxxx, XX 00000 | |
Attention: Xxxxxxx X. Xxxx/Xxxx Xxxx-Francois | |
Fax No.: 000-000-0000 | |
Email Address: xx.xxxxxx@xxxxxxxx.xxx |
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10. Miscellaneous. The provisions of this Agreement may be waived, altered, amended or supplemented only by a writing signed by Escrow Agent and the Parties. Neither this Agreement nor any right or interest hereunder may be assigned by any Party without the prior consent of Escrow Agent and each other Party. This Agreement shall be governed by and construed under the laws of the State of New York without regard to conflicts of law principles that may result in the application of the substantive laws of another jurisdiction. Each Party and Escrow Agent irrevocably waives any objection on the grounds of venue, forum non-conveniens or any similar grounds and irrevocably consents to service of process by mail or in any other manner permitted by applicable law and consents to the jurisdiction of the courts located in the State of New York. To the extent that in any jurisdiction either Party may now or hereafter be entitled to claim for itself or its assets, immunity from suit, execution, attachment (before or after judgment) or other legal process, such Party shall not claim, and hereby irrevocably waives, such immunity. Escrow Agent and the Parties further hereby waive any right to a trial by jury with respect to any lawsuit or judicial proceeding arising or relating to this Agreement. 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, war, terrorism, floods, strikes, electrical outages, equipment or transmission failure, or other causes reasonably beyond its control. This Agreement and any joint instructions from the Parties, 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 or instruction, as applicable. All signatures of the parties to this Agreement may be transmitted by facsimile or PDF, and such facsimile or PDF will, for all purposes, be deemed to be the original signature of such party whose signature it reproduces, and will be binding upon such party. If any provision of this Agreement is determined to be prohibited or unenforceable by reason of any applicable law of a jurisdiction, then such provision shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions thereof, and any such prohibition or unenforceability in such jurisdiction shall not invalidate or render unenforceable such provisions in any other jurisdiction. The Parties represent, warrant and covenant that each document, notice, instruction or request provided by such Party to Escrow Agent shall comply with applicable laws and regulations. Except as expressly provided in Section 7, nothing in this Agreement, whether express or implied, shall be construed to give to any person or entity other than Escrow Agent and the Parties any legal or equitable right, remedy, interest or claim under or in respect of the Funds or this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date set forth above.
XXXXXX ONLINE ENTERTAINMENT LIMITED
By: | /s/ Xxxxx Xxx | |
Name: | Xxxxx Xxx | |
Title: | C.E.O. |
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ICM CAPITAL MARKETS LTD.
By: | /s/ Xxxxxxx Xxxxxxx | |
Name: | Xxxxxxx Xxxxxxx | |
Title: | Managing Director |
JPMORGAN CHASE BANK, NA,
As Escrow Agent
By: | /s/ Xxxxxxx X. Xxxx | |
Name: | Xxxxxxx X. Xxxx | |
Title: | Vice President |
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Schedule 1
Telephone Numbers and Authorized Signatures for
Person(s) Designated to Give Instructions and Confirm Funds Transfer Instructions
For Issuer:
Name | Telephone Number | Signature | |||||
1. | Xxxxx Xxx | /s/ Xxxxx Xxx | |||||
2. | |||||||
3. |
For Depositor:
Name | Telephone Number | Signature | |||||
1. | Xxxxxxx Xxxxxxx | /s/ Xxxxxxx Xxxxxxx | |||||
2. | |||||||
3. |
All instructions, including but not limited to funds transfer instructions, whether transmitted by facsimile or set forth in a PDF attached to an email, must include the signature of the Authorized Representative authorizing said funds transfer on behalf of each Party.
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Schedule 2
Schedule of Fees and Disclosures for Escrow Agent Services
Based upon our current understanding of your proposed transaction, our fee proposal is as follows:
Account Acceptance Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ......$Waived
Encompassing review, negotiation and execution of governing documentation, opening of the account, and completion of all due diligence documentation. Payable upon closing.
Annual Administration Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,500.00 (for up to seven investors) (For any investors over seven, the annual fee will be renegotiated among Issuer, Company and Escrow Agent)
The Administration Fee covers our usual and customary ministerial duties, including record keeping, distributions, document compliance and such other duties and responsibilities expressly set forth in the governing documents for each transaction. Payable upon closing and annually in advance thereafter, without pro-ration for partial years.
Extraordinary Services and Out-of Pocket Expenses
Any additional services beyond our standard services as specified above, and all reasonable out-of-pocket expenses including reasonable attorney’s or reasonable accountant’s fees and expenses will be considered extraordinary services for which related costs, transaction charges, and additional fees will be billed at the Bank's then standard rate. Disbursements, receipts, investments or tax reporting exceeding 25 items per year may be treated as extraordinary services thereby incurring additional charges. The Escrow Agent may impose, charge, pass-through and modify fees and/or charges for any account established and services provided by the Escrow Agent, including but not limited to, transaction, maintenance, balance-deficiency, and service fees, agency or trade execution fees, and other charges, including those levied by any governmental authority.
Disclosure & Assumptions: Please note that the fees quoted are based on a review of the transaction documents provided and an internal due diligence review. JPMorgan reserves the right to revise, modify, change and supplement the fees quoted herein if the assumptions underlying the activity in the account, level of balances, market volatility or conditions or other factors change from those used to set our fees. Payment of the invoice is due upon receipt
The escrow deposit shall be continuously held in a deposit account structured as a “noninterest-bearing transaction account” through December 31, 2012 and as such is intended to be fully insured by the FDIC. For more information about FDIC insurance coverage, visit xxx.xxxx.xxx.
Compliance
Patriot Act Disclosure. Section 326 of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (“USA PATRIOT Act”) requires Escrow Agent to implement reasonable procedures to verify the identity of any person that opens a new account with it. Accordingly, you acknowledge that Section 326 of the USA PATRIOT Act and Escrow Agent’s identity verification procedures require Escrow Agent to obtain information which may be used to confirm your identity including without limitation name, address and organizational documents (“identifying information”). You agree to provide Escrow Agent with and consent to Escrow Agent obtaining from third parties any such identifying information required as a condition of opening an account with or using any service provided by the Escrow Agent.
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