FUNDS ESCROW AGREEMENT
This
Agreement is dated as of the ____ day of December, 2007 among China Broadband,
Inc., a Nevada corporation (the "Company"), the Subscribers identified on
Schedule A hereto (each a “Subscriber” and collectively “Subscribers”), and
Grushko & Xxxxxxx, P.C. (the "Escrow Agent"):
WITNESSETH:
WHEREAS,
the Company and Subscribers have entered into a Subscription Agreement calling
for the sale by the Company to the Subscriber of promissory notes (“Notes”) and
Warrants for an aggregate purchase price of up to $5,000,000 in the amounts
set
forth on Schedule A hereto; and
WHEREAS,
the parties hereto require the Company to deliver the Notes and Warrants
against
payment therefor, with such Notes, Warrants and the Escrowed Funds to be
delivered to the Escrow Agent, along with the other documents, instruments
and
payments hereinafter described, to be held in escrow and released by the
Escrow
Agent in accordance with the terms and conditions of this Agreement;
and
WHEREAS,
the Escrow Agent is willing to serve as escrow agent pursuant to the terms
and
conditions of this Agreement;
NOW
THEREFORE, the parties agree as follows:
ARTICLE
I
INTERPRETATION
1.1. Definitions.
Capitalized terms used and not otherwise defined herein that are defined
in the
Subscription Agreement shall have the meanings given to such terms in the
Subscription Agreement. Whenever used in this Agreement, the following terms
shall have the following respective meanings:
§ "Agreement"
means this Agreement and all amendments made hereto and thereto by written
agreement between the parties;
§ “Broker”
shall have the meaning set forth in Section 8(a) of the Subscription
Agreement;
§ “Broker’s
Warrants” shall have the meaning set forth in Section 8(a) to the Subscription
Agreement;
§ “Closing
Date” shall have the meaning set forth in Section 1 of the Subscription
Agreement;
§ “Due
Diligence Fee” shall have the meaning set forth in Section 8(a) of the
Subscription Agreement;
§ "Escrowed
Payment" means an aggregate cash payment of up to $5,000,000 which is the
Purchase Price;
§ “Legal
Fees” shall have the meaning set forth in Section 8(b) of the Subscription
Agreement;
§ “Legal
Opinion” means the original signed legal opinion referred to in Section 6 of the
Subscription Agreement;
§ “Notes”
shall have the meaning set forth in the Subscription Agreement;
§ “Purchase
Price” shall mean up to $5,000,000;
§ "Subscription
Agreement" means the Subscription Agreement (and the exhibits and schedules
thereto) entered into or to be entered into by the Company and Subscribers
in
reference to the sale and purchase of the Notes and Warrants;
§ “Warrants”
shall mean the Class A Warrants described in Section 3 of the Subscription
Agreement;
§ Collectively,
Broker’s Warrants, Due Diligence Fee, Legal Opinion, Notes, the Company’s
executed Subscription Agreement, and Warrants are referred to as "Company
Documents"; and
§ Collectively,
the Escrowed Payment and the Subscriber executed Subscription Agreement are
referred to as "Subscriber Documents".
1.2. Entire
Agreement.
This
Agreement along with the Company Documents and the Subscriber Documents
constitute the entire agreement between the parties hereto pertaining to
the
Company Documents and Subscriber Documents and supersedes all prior agreements,
understandings, negotiations and discussions, whether oral or written, of
the
parties. There are no warranties, representations and other agreements made
by
the parties in connection with the subject matter hereof except as specifically
set forth in this Agreement, the Company Documents and the Subscriber
Documents.
1.3. Extended
Meanings.
In this
Agreement words importing the singular number include the plural and vice
versa;
words importing the masculine gender include the feminine and neuter genders.
The word "person" includes an individual, body corporate, partnership, trustee
or trust or unincorporated association, executor, administrator or legal
representative.
1.4. Waivers
and Amendments.
This
Agreement may be amended, modified, superseded, cancelled, renewed or extended,
and the terms and conditions hereof may be waived, only by a written instrument
signed by all parties, or, in the case of a waiver, by the party waiving
compliance. Except as expressly stated herein, no delay on the part of any
party
in exercising any right, power or privilege hereunder shall operate as a
waiver
thereof, nor shall any waiver on the part of any party of any right, power
or
privilege hereunder preclude any other or future exercise of any other right,
power or privilege hereunder.
1.5. Headings.
The
division of this Agreement into articles, sections, subsections and paragraphs
and the insertion of headings are for convenience of reference only and shall
not affect the construction or interpretation of this Agreement.
1.6. Law
Governing this Agreement.
This
Agreement shall be governed by and construed in accordance with the laws
of the
State of New York without regard to conflicts
of laws
principles that would result in the application of the substantive laws of
another jurisdiction. Any action brought by either party against the other
concerning the transactions contemplated by this Agreement shall be brought
only
in the state courts of New York or in the federal courts located in the state
of
New York. Both parties and the individuals executing this Agreement and other
agreements on behalf of the Company agree to submit to the jurisdiction of
such
courts and waive trial by jury. The prevailing party (which shall be the
party
which receives an award most closely resembling the remedy or action sought)
shall be entitled to recover from the other party its reasonable attorney's
fees
and costs. In the event that any provision of this Agreement or any other
agreement delivered in connection herewith is invalid or unenforceable under
any
applicable statute or rule of law, then such provision shall be deemed
inoperative to the extent that it may conflict therewith and shall be deemed
modified to conform with such statute or rule of law. Any such provision
which
may prove invalid or unenforceable under any law shall not affect the validity
or enforceability of any other provision of any agreement.
2
1.7. Specific
Enforcement, Consent to Jurisdiction.
The
Company and Subscriber acknowledge and agree that irreparable damage would
occur
in the event that any of the provisions of this Agreement were not performed
in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injuction or
injunctions to prevent or cure breaches of the provisions of this Agreement
and
to enforce specifically the terms and provisions hereof or thereof, this
being
in addition to any other remedy to which any of them may be entitled by law
or
equity. Subject to Section 1.6 hereof, each of the Company and Subscriber
hereby
waives, and agrees not to assert in any such suit, action or proceeding,
any
claim that it is not personally subject to the jurisdiction of such court,
that
the suit, action or proceeding is brought in an inconvenient forum or that
the
venue of the suit, action or proceeding is improper. Nothing in this Section
shall affect or limit any right to serve process in any other manner permitted
by law.
ARTICLE
II
DELIVERIES
TO THE ESCROW AGENT
2.1. Company
Deliveries.
On or
before the Closing Date, the Company shall deliver the Company Documents
to the
Escrow Agent.
2.2. Subscriber
Deliveries.
On or
before the Closing Date, each Subscriber shall deliver to the Escrow Agent
such
Subscriber’s portion of the Purchase Price and the executed Subscription
Agreement. The Escrowed Payment will be delivered pursuant to the following
wire
transfer instructions:
Citibank,
N.A.
0000
0xx
Xxxxxx
Xxx
Xxxx,
XX 00000, XXX
ABA
Number: 0210-00089
For
Credit to: Grushko & Xxxxxxx, XXXX Trust Account
Account
Number: 00000000
2.3. Intention
to Create Escrow Over Company Documents and Subscriber Documents.
The
Subscriber and Company intend that the Company Documents and Subscriber
Documents shall be held in escrow by the Escrow Agent pursuant to this Agreement
for their benefit as set forth herein.
2.4. Escrow
Agent to Deliver Company Documents and Subscriber Documents.
The
Escrow Agent shall hold and release the Company Documents and Subscriber
Documents only in accordance with the terms and conditions of this
Agreement.
3
ARTICLE
III
RELEASE
OF COMPANY DOCUMENTS AND SUBSCRIBER DOCUMENTS
3.1. Release
of Escrow.
Subject
to the provisions of Section 4.2, the Escrow Agent shall release the Company
Documents and Subscriber Documents as follows:
(a) On
the
Closing Date, the Escrow Agent will simultaneously release the Company Documents
to the Subscriber and release the Subscriber Documents to the Company except
that (i) the Broker’s Warrants and Due Diligence Fee will be released to the
Broker; and (ii) Legal Fees will be released to Grushko & Xxxxxxx,
P.C.
(b) All
funds
to be delivered to the Company shall be delivered pursuant to the wire
instructions to be provided in writing by the Company to the Escrow Agent.
(c) Notwithstanding
the above, upon receipt by the Escrow Agent of joint written instructions
("Joint Instructions") signed by the Company and the Subscriber, it shall
deliver the Company Documents and Subscriber Documents in accordance with
the
terms of the Joint Instructions.
(d) Notwithstanding
the above, upon receipt by the Escrow Agent of a final and non-appealable
judgment, order, decree or award of a court of competent jurisdiction (a
"Court
Order"), the Escrow Agent shall deliver the Company Documents and Subscriber
Documents in accordance with the Court Order. Any Court Order shall be
accompanied by an opinion of counsel for the party presenting the Court Order
to
the Escrow Agent (which opinion shall be satisfactory to the Escrow Agent)
to
the effect that the court issuing the Court Order has competent jurisdiction
and
that the Court Order is final and non-appealable.
3.2. Acknowledgement
of Company and Subscriber; Disputes.
The
Company and the Subscriber acknowledge that the only terms and conditions
upon
which the Company Documents and Subscriber Documents are to be released are
set
forth in Sections 3 and 4 of this Agreement. The Company and the Subscriber
reaffirm their agreement to abide by the terms and conditions of this Agreement
with respect to the release of the Company Documents and Subscriber Documents.
Any dispute with respect to the release of the Company Documents and Subscriber
Documents shall be resolved pursuant to Section 4.2 or by agreement between
the
Company and Subscriber.
ARTICLE
IV
CONCERNING
THE ESCROW AGENT
4.1. Duties
and Responsibilities of the Escrow Agent.
The
Escrow Agent's duties and responsibilities shall be subject to the following
terms and conditions:
(a) The
Subscriber and Company acknowledge and agree that the Escrow Agent (i) shall
not
be responsible for or bound by, and shall not be required to inquire into
whether either the Subscriber or Company is entitled to receipt of the Company
Documents and Subscriber Documents pursuant to, any other agreement or
otherwise; (ii) shall be obligated only for the performance of such duties
as
are specifically assumed by the Escrow Agent pursuant to this Agreement;
(iii)
may rely on and shall be protected in acting or refraining from acting upon
any
written notice, instruction, instrument, statement, request or document
furnished to it hereunder and believed by the Escrow Agent in good faith
to be
genuine and to have been signed or presented by the proper person or party,
without being required to determine the authenticity or correctness of any
fact
stated therein or the propriety or validity or the service thereof; (iv)
may
assume that any person believed by the Escrow Agent in good faith to be
authorized to give notice or make any statement or execute any document in
connection with the provisions hereof is so authorized; (v) shall not be
under
any duty to give the property held by Escrow Agent hereunder any greater
degree
of care than Escrow Agent gives its own similar property; and (vi) may consult
counsel satisfactory to Escrow Agent, the opinion of such counsel to be full
and
complete authorization and protection in respect of any action taken, suffered
or omitted by Escrow Agent hereunder in good faith and in accordance with
the
opinion of such counsel.
4
(b) The
Subscriber and Company acknowledge that the Escrow Agent is acting solely
as a
stakeholder at their request and that the Escrow Agent shall not be liable
for
any action taken by Escrow Agent in good faith and believed by Escrow Agent
to
be authorized or within the rights or powers conferred upon Escrow Agent
by this
Agreement. The Subscriber and Company, jointly and severally, agree to indemnify
and hold harmless the Escrow Agent and any of Escrow Agent's partners,
employees, agents and representatives for any action taken or omitted to
be
taken by Escrow Agent or any of them hereunder, including the fees of outside
counsel and other costs and expenses of defending itself against any claim
or
liability under this Agreement, except in the case of gross negligence or
willful misconduct on Escrow Agent's part committed in its capacity as Escrow
Agent under this Agreement. The Escrow Agent shall owe a duty only to the
Subscriber and Company under this Agreement and to no other person.
(c) The
Subscriber and Company jointly and severally agree to reimburse the Escrow
Agent
for outside counsel fees, to the extent authorized hereunder and incurred
in
connection with the performance of its duties and responsibilities
hereunder.
(d) The
Escrow Agent may at any time resign as Escrow Agent hereunder by giving five
(5)
days prior written notice of resignation to the Subscriber and the Company.
Prior to the effective date of the resignation as specified in such notice,
the
Subscriber and Company will issue to the Escrow Agent a Joint Instruction
authorizing delivery of the Company Documents and Subscriber Documents to
a
substitute Escrow Agent selected by the Subscriber and Company. If no successor
Escrow Agent is named by the Subscriber and Company, the Escrow Agent may
apply
to a court of competent jurisdiction in the State of New York for appointment
of
a successor Escrow Agent, and to deposit the Company Documents and Subscriber
Documents with the clerk of any such court.
(e) The
Escrow Agent does not have and will not have any interest in the Company
Documents and Subscriber Documents, but is serving only as escrow agent,
having
only possession thereof. The Escrow Agent shall not be liable for any loss
resulting from the making or retention of any investment in accordance with
this
Escrow Agreement.
(f) This
Agreement sets forth exclusively the duties of the Escrow Agent with respect
to
any and all matters pertinent thereto and no implied duties or obligations
shall
be read into this Agreement.
(g) The
Escrow Agent shall be permitted to act as counsel for the Subscriber in any
dispute as to the disposition of the Company Documents and Subscriber Documents,
in any other dispute between the Subscriber and Company, whether or not the
Escrow Agent is then holding the Company Documents and Subscriber Documents
and
continues to act as the Escrow Agent hereunder.
(h) The
provisions of this Section 4.1 shall survive the resignation of the Escrow
Agent
or the termination of this Agreement.
5
4.2. Dispute
Resolution: Judgments.
Resolution of disputes arising under this Agreement shall be subject to the
following terms and conditions:
(a) If
any
dispute shall arise with respect to the delivery, ownership, right of possession
or disposition of the Company Documents and Subscriber Documents, or if the
Escrow Agent shall in good faith be uncertain as to its duties or rights
hereunder, the Escrow Agent shall be authorized, without liability to anyone,
to
(i) refrain from taking any action other than to continue to hold the Company
Documents and Subscriber Documents pending receipt of a Joint Instruction
from
the Subscriber and Company, or (ii) deposit the Company Documents and Subscriber
Documents with any court of competent jurisdiction in the State of New York,
in
which event the Escrow Agent shall give written notice thereof to the Subscriber
and the Company and shall thereupon be relieved and discharged from all further
obligations pursuant to this Agreement. The Escrow Agent may, but shall be
under
no duty to, institute or defend any legal proceedings which relate to the
Company Documents and Subscriber Documents. The Escrow Agent shall have the
right to retain counsel if it becomes involved in any disagreement, dispute
or
litigation on account of this Agreement or otherwise determines that it is
necessary to consult counsel.
(b) The
Escrow Agent is hereby expressly authorized to comply with and obey any Court
Order. In case the Escrow Agent obeys or complies with a Court Order, the
Escrow
Agent shall not be liable to the Subscriber and Company or to any other person,
firm, corporation or entity by reason of such compliance.
ARTICLE
V
GENERAL
MATTERS
5.1. Termination.
This
escrow shall terminate upon the release of all of the Company Documents and
Subscriber Documents or at any time upon the agreement in writing of the
Subscriber and Company.
5.2. Notices.
All
notices, demands, requests, consents, approvals, and other communications
required or permitted hereunder shall be in writing and, unless otherwise
specified herein, shall be (i) personally served, (ii) deposited in the mail,
registered or certified, return receipt requested, postage prepaid, (iii)
delivered by reputable air courier service with charges prepaid, or (iv)
transmitted by hand delivery, telegram, or facsimile, addressed as set forth
below or to such other address as such party shall have specified most recently
by written notice. Any notice or other communication required or permitted
to be
given hereunder shall be deemed effective (a) upon hand delivery or delivery
by
facsimile, with accurate confirmation generated by the transmitting facsimile
machine, at the address or number designated below (if delivered on a business
day during normal business hours where such notice is to be received), or
the
first business day following such delivery (if delivered other than on a
business day during normal business hours where such notice is to be received)
or (b) on the second business day following the date of mailing by express
courier service, fully prepaid, addressed to such address, or upon actual
receipt of such mailing, whichever shall first occur. The addresses for such
communications shall be:
(a)
If
to the
Company, to:
China
Broadband, Inc.
0000
Xxxxx Xxxxxx, 0xx
Xxxxx
Xxxxxxx,
XX 00000
Attn:
Xxxxx Xx, President
Fax:
(000)
000-0000
With
a
copy by facsimile only to:
Xxxxxxx
Xxxx LLP
0000
Xxxxxxxx, 00xx
Xxxxx
Xxx
Xxxx,
XX 00000
Attn:
Xxxxxxx Xxxx, Esq.
Fax:
(000) 000-0000
6
(b) If
to the
Subscribers, to: the addresses and fax numbers listed on Schedule A
hereto
(c) If
to the
Broker, to:
Chardan
Capital Markets, LLC
00
Xxxxx
Xxxxxx, Xxxxx 0000
Xxx
Xxxx,
XX 00000
Attn:
Xxxxx Xxxxxxx, CEO
Fax:
(000) 000-0000
(d) If
to the
Escrow Agent, to:
Grushko
& Xxxxxxx, P.C.
000
Xxxxx
Xxxxxx, Xxxxx 0000
Xxx
Xxxx,
Xxx Xxxx 00000
Fax:
000-000-0000
or
to
such other address as any of them shall give to the others by notice made
pursuant to this Section 5.2.
5.3. Interest.
The
Escrowed Payment shall not be held in an interest bearing account nor will
interest be payable in connection therewith. In the event the Escrowed Payment
is deposited in an interest bearing account, each Subscriber shall be entitled
to receive its pro rata
portion
of any accrued interest thereon, but only if the Escrow Agent receives from
such
Subscriber the Subscriber’s United States taxpayer identification number and
other requested information and forms.
5.4. Assignment;
Binding Agreement.
Neither
this Agreement nor any right or obligation hereunder shall be assignable
by any
party without the prior written consent of the other parties hereto. This
Agreement shall enure to the benefit of and be binding upon the parties hereto
and their respective legal representatives, successors and assigns.
5.5. Invalidity.
In the
event that any one or more of the provisions contained herein, or the
application thereof in any circumstance, is held invalid, illegal, or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be in any way impaired thereby, it
being
intended that all of the rights and privileges of the parties hereto shall
be
enforceable to the fullest extent permitted by law.
5.6. Counterparts/Execution.
This
Agreement may be executed in any number of counterparts and by different
signatories hereto on separate counterparts, each of which, when so executed,
shall be deemed an original, but all such counterparts shall constitute but
one
and the same instrument. This Agreement may be executed by facsimile
transmission and delivered by facsimile transmission.
7
5.7. Agreement.
Each of
the undersigned states that he has read the foregoing Funds Escrow Agreement
and
understands and agrees to it.
|
CHINA
BROADBAND, INC.
the
“Company”
By:
/s/ Clive Ng__________________________
Xxxxx
Xx, President
|
“SUBSCRIBERS”
|
________________________________________
|
______________________________________
|
|
PLATINUM
PARTNERS VALUE
|
GLOBIS
CAPITAL PARTNERS, LP
|
|
ARBITRAGE
FUND, L.P.
|
|
|
_______________________________________
|
_______________________________________
|
|
GLOBIS
OVERSEAS FUND, LTD.
|
GLOBIS
ASIA LLC
|
|
_______________________________________
|
_______________________________________
|
|
XXXXXX
XXXXXXXXX
|
XXXXXXXX
CAPITAL, LLC
|
|
________________________________________
|
_______________________________________
|
|
XXXXXX
XXXXX
|
XXXX
XXXXX
|
|
________________________________________
|
_______________________________________
|
|
XXXXX
XXXXXXX
|
CHARDAN
CAPITAL MARKETS, LLC
|
|
ESCROW
AGENT:
______________________________________
GRUSHKO
& XXXXXXX, P.C.
|
8
SCHEDULE
A TO FUNDS ESCROW AGREEMENT
|
SUBSCRIBER
|
ESCROWED
PAYMENT AND NOTE PRINCIPAL AMOUNT
|
CLASS
A WARRANTS
|
|
PLATINUM
PARTNERS VALUE ARBITRAGE FUND, L.P.
000
Xxxx 00xx
Xxxxxx, 00xx
Xxxxx
Xxx
Xxxx, XX 00000
|
$1,500,000.00
|
2,000,000
|
|
GLOBIS
CAPITAL PARTNERS, LP
00
Xxxxx Xxxxxx, 00xx
Xxxxx
Xxx
Xxxx, XX 00000
|
$325,000.00
|
433,333
|
|
GLOBIS
OVERSEAS FUND, LTD.
00
Xxxxx Xxxxxx, 00xx
Xxxxx
Xxx
Xxxx, XX 00000
|
$100,000.00
|
133,333
|
|
GLOBIS
ASIA LLC
0000
Xxxxxx Xxxxx
Xxxxxxx,
Xxx Xxxx 00000
|
$125,000.00
|
166,667
|
|
XXXXXX
XXXXXXXXX
|
$50,000.00
|
66,667
|
|
XXXXXXXX
CAPITAL, LLC
00
Xxxxxxxxxx Xxxxx
Xxx
Xxxx, XX 00000
Fax:
(000) 000-0000
|
$2,000,000.00
|
2,666,667
|
|
XXXXXX
XXXXX
0000
Xxxx Xxxxxx
Xxx
Xxxx, XX 00000
|
$250,000.00
|
333,333
|
|
XXXX
XXXXX
000
X. Xxxxxx Xxxxx
Xxx
Xxxxxxx, XX 00000
|
$100,000.00
|
133,333
|
|
XXXXX
XXXXXXX
00000
Xxxxxx Xxxxxx Xxxx
Xxx
Xxxxx, XX 00000
|
$400,000.00
|
533,333
|
|
CHARDAN
CAPITAL MARKETS, LLC
00
Xxxxx Xxxxxx, Xxxxx 0000
Xxx
Xxxx, XX 00000
Fax:
(000) 000-0000
|
$121,250
|
161,667
|
|
TOTALS
|
$4,971,250.00
|
6,628,333
|
9
