ESCROW AGREEMENT
THIS
AGREEMENT, dated for reference July 1, 2006 is made
BETWEEN:
Baoshinn
Corporation,
a
company incorporated under the laws of Nevada and having its head office at
A-B
8/F Xxxx Avenue, Tsimshatsui, Kowloon, Hong Kong
(the
“Company”);
Applbaum
& Zouvas LLP,
a
partnership having an office at 000 Xxxxx Xxxxxx Xxxxx, Xxx Xxxxx, XX
00000
(“Escrow
Agent”).
WHEREAS:
A. Pursuant
to a prospectus dated for reference August 3, 2006 (the “Prospectus”), the
Company intends to issue a minimum of 1,000,000 and a maximum of 2,500,000
common shares in the Company’s share capital at a price of $0.30 per share (the
“Issuance Shares”) to as yet unidentified person or entities (collectively, the
“Shareholders”);
B. The
Company shall issue the Issuance Shares pursuant to Subscription Agreements,
a
copy of which form is attached to this Agreement as Schedule “A”(the
“Subscriptions”). Pursuant to the Subscriptions, each Shareholder shall deliver
funds in the appropriate fashion to “Applbaum & Zouvas LLP, in trust for
Baoshinn Corporation” to pay for the Issuance Shares subscribed for by each such
Shareholder (the “Purchase Funds”);
C. The
Company has agreed to, and has or shall, inform and advise all Shareholders
that
it shall place the Purchase Funds in escrow with the Escrow Agent pursuant
to
the terms of this Agreement; and
D. The
Escrow Agent is prepared to hold the Purchase Funds in escrow on the terms
of
this Agreement.
THEREFORE,
the parties agree:
PLACEMENT
OF PURCHASE FUNDS IN escrow
The
Company shall cause the Shareholders to deliver the Purchase Funds delivered
pursuant to the Subscriptions for the Issuance Shares to the Escrow Agent to
be
held in accordance with the terms of this Agreement.
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- 1
While
the
Purchase Funds are in escrow, the Company will not issue, deliver, transfer,
assign, option, dispose of, pledge or encumber any interest in the Issuance
Shares.
TERMS
OF ESCROW
The
Company directs the Escrow Agent not to release or otherwise deal with the
Purchase Funds, and the other documents, held in escrow under this Agreement
except in accordance with the terms of this Agreement.
Unless
otherwise directed in a notice in writing executed by the Company and each
of
the Shareholders, the Escrow Agent will release the Purchase Funds to the
Company or to the Shareholders as follows:
A. To
the
Company
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i.
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Upon
the Company providing written notice to the Escrow Agent that the
Purchase
Funds are to be released to the Company and that all Subscriptions
for the
Issuance Shares pursuant to the Prospectus have been received by
the
Company;
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ii.
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The
Escrow Agent being in possession of not less than 1,000,000 shares
in
Purchase Funds; and
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iii.
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The
Company providing the Escrow Agent with written confirmation that
the
Company shall, forthwith upon the delivery of the Purchase Funds
to the
Company, immediately issue and deliver to the Shareholders all Issuance
Shares owing pursuant to the Subscriptions and in accordance with
the
Purchase Funds;
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B. To
the
Shareholders
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i.
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On
written notice from the Company confirming that the financing contemplated
by the Prospectus shall not proceed, that no Issuance Shares shall
be
delivered to any Shareholders, and that the Purchase Funds ought
to be
returned to the respected Shareholders;
or
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ii.
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Upon
the Escrow Agent being in possession of less than 1,000,000 shares
in
Purchase Funds and more than 270 days having elapsed from the effective
date of the Prospectus.
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All
Purchase Funds released by the Escrow Agent pursuant to the terms of this
Agreement will cease to be governed or affected by this Agreement.
The
Escrow Agent shall have no duties except those which are expressly set forth
herein, and it shall not be bound in any way by:
any
notice of a claim or demand with respect thereto or any waiver, modification,
amendment, termination or rescission of this Agreement unless received in
writing and signed by the Company and the Shareholders, and, if its duties
herein are affected, unless it shall have given its prior written consent
thereto; or
any
other
contract or agreement between the Company and the Shareholders whether or not
the Escrow Agent has knowledge thereof or of its terms and
conditions.
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- 2
AMENDMENT
AND ASSIGNMENT
This
Agreement may be amended only by a written agreement among the Escrow Agent,
the
Company and the Shareholders.
INDEMNIFICATION
OF ESCROW AGENT
4.1 Except
for its acts of negligent misconduct, the Escrow Agent shall not be liable
for
any acts done or steps taken or omitted in good faith, or for any mistake of
fact or law and each of the Company and the Shareholders will jointly and
severally release, indemnify and save harmless the Escrow Agent from all costs,
charges, claims, demands, damages, losses and expenses resulting from the Escrow
Agent’s compliance in good faith with this Agreement. The Company agrees to pay
the Escrow Agent’s proper and reasonable charges for its services rendered and
its disbursements incurred as Escrow Agent in this matter.
4.2 Upon
the
release of the Purchase Funds to the Company in accordance with section 2.2
(a)
above, the Escrow Agent shall be entitled, but not required, to retain Purchase
Funds such funds required to pay the Escrow Agent’s costs, fees, disbursements,
and accounts incurred with regards to this Agreement.
RESIGNATION
OF ESCROW AGENT
If
the
Escrow Agent wishes to resign as escrow agent under this Agreement, the Escrow
Agent must give notice in writing to the Company.
The
resignation of the Escrow Agent shall be effective and the Escrow Agent shall
cease to be bound by this Agreement on the date that is 60 days after the date
of receipt of the notice referred to in subsection 5.1 or on such other date
as
the Escrow Agent are the Company may agree upon (the “Resignation
Date”).
Following
receipt of the notice referred to in subsection 5.1 and before the Resignation
Date, the Company will provide the Escrow Agent with written instructions to
deliver any Purchase Funds then held by the Escrow Agent pursuant to this
Agreement to a third party, to be held on the terms and conditions of this
Agreement or otherwise as the Company and the Shareholders may agree. If the
Company does not appoint a new Escrow Agent within 50 days of receipt of the
notice in subsection 5.1, then the Company will have the right to designate
the
registrar and transfer agent for the Company (if such person is not the Escrow
Agent) as the person to replace the Escrow Agent and the Company shall instruct
the Escrow Agent of its designation prior to the Resignation Date.
If
the
Escrow Agent does not receive the instructions referred to in subsection 5.3
on
or before the Resignation Date, the Escrow Agent will deliver any Purchase
Funds
then held in escrow under this Agreement to the registrar and transfer agent
for
the Company (if such person is not the Escrow Agent) with instructions to hold
such documents on the terms and conditions of this Agreement.
The
effect of the delivery of any Purchase Funds then held in escrow to a third
party or the registrar and transfer agent of the Company under subsection 5.3
or
5.4 will be to appoint the third party or the registrar and transfer agent
as
Escrow Agent under this Agreement and the third party or the registrar and
transfer agent will be entitled to all the rights of the Escrow Agent under
this
Agreement, and the Company will be bound by the appointment and by this
Agreement as if the third party or the registrar and transfer agent had
originally been appointed as Escrow Agent under this Agreement.
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- 3
If,
at
any time, a dispute arises between any of the Company, the Shareholders and
the
Escrow Agent as to the proper interpretation of this Agreement, the Escrow
Agent
will be at liberty to deliver any Purchase Funds then held by it in escrow
under
this Agreement into court and will thereby be released of all further
obligations under this Agreement and the Company and the Shareholders will
jointly and severally be liable for and will indemnify the Escrow Agent for
all
fees, charges and expenses of the Escrow Agent charged on a solicitor and own
client basis in connection with any such dispute.
FURTHER
ASSURANCES
The
Company will execute and deliver any further documents and perform any acts
necessary to carry out the intent of this Agreement.
TIME
Time
is
of the essence of this Agreement.
NOTICES
All
notices, documents and other communications (“Notices”) required or permitted to
be given to the parties to this Agreement shall be in writing, and shall be
addressed to the parties as follows or at such other address as the parties
may
specify from time to time:
the
Company:
Baoshinn
Corporation
A-B
0/X
Xxxx Xxxxxx
Xxxxxxxxxxx,
Xxxxxxx, Xxxx Xxxx
Attention: Xxxxx
Xxxx
Telephone: 000
0000
0000
Facsimile: 852
2722
4008
the
Escrow Agent:
Applbaum
& Zouvas LLP
000
Xxxxx
Xxxxxx Xxxxx
Xxx
Xxxxx, XX 00000
Attention: Xxxx
X. Xxxxxx, Esq.
Telephone: 000
000
0000
Facsimile: 000
000
0000
Notices
must be delivered or sent by telecopier and addressed to the party to which
notice is to be given to the address or facsimile number above or to such other
address as a party may by Notice to the other parties advise. If Notice is
delivered or transmitted by telecopier during the normal business hours of
the
recipient, it will be deemed to be received when delivered or sent by
telecopier. If a Notice is delivered or transmitted by telecopier outside of
normal business hours of the recipient, it will be deemed to be received at
the
commencement of normal business hours of the recipient on the next business
day.
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- 4
COUNTERPARTS
This
Agreement may be executed in two or more counterparts, each of which shall
be
deemed to be an original and all of which shall constitute one
agreement.
LANGUAGE
Wherever
a singular expression is used in this Agreement, that expression is deemed
to
include the plural or the body corporate where required by the
context.
ENUREMENT
This
Agreement ensures to the benefit of and is binding on the parties and their
successors and permitted assigns.
CONFLICTING
AGREEMENTS
Where
a
provision of this Agreement conflicts or is inconsistent with a provision of
the
Prospectus, a Subscription any other agreement to which either or both of the
Company and the Shareholders are party, the terms of this Agreement will
supersede any such conflicting provision.
13. SHAREHOLDERS
13.1 The
Company agrees, guarantees, represents, and warrants to the Escrow Agent that
it
shall:
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(a)
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cause
all Shareholders to be bound by the terms of this
Agreement;
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(b)
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provide
a copy of the Prospectus to all
Shareholders;
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(c)
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obtain
properly executed Subscriptions from all Shareholders prior to causing
the
Shareholders to deliver the Purchase Funds to the Escrow
Agent;
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(d)
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ensure
that all Purchase Funds received by the Escrow Agent are received
in
accordance with the terms of, and commensurate with the number of
shares
designated in, a properly executed
Subscription;
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(e)
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cause
all Purchase Funds raised or received pursuant to the Prospectus
and the
Subscriptions to be delivered to, and only to, the Escrow
Agent;
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(f)
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advise
the Escrow Agent, from time to time and in a diligent and punctual
manner,
of the identities of all
Shareholders;
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(g)
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provide
the Escrow Agent, from time to time, with a Schedule (Schedule “B” to this
Agreement) setting out the identity of all Shareholders, the number
of
Issuance Shares to which they have subscribed under a Subscription,
and
the amount of Purchase Funds which they shall
deliver.
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Page
- 5
13.2 The
Escrow Agent shall have no obligations to the Shareholders, save and except
as
set out in this Agreement and the Company agrees to hold the Escrow Agent
harmless, and provide the Escrow Agent with a full indemnity, with regards
to
any claims made by any Shareholders against the Escrow Agent.
IN
WITNESS of this Agreement, the parties have executed and delivered this
Agreement as of the date given above.
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THE
COMMON SEAL of
Baoshinn
Corporation was
hereunto affixed in the presence of:
/s/
Xxxxx Xxxx
Authorized
Signatory
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)
)
)
)
)
)
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(C/S)
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THIS
AGREEMENT WAS EXECUTED ON BEHALF OF ESCROW
AGENT was
hereunto affixed in the presence of:
/s/
Xxxx Xxxxxxxx, Esq.
Name
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)
)
)
)
)
)
)
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/s/ Xxxx X. Xxxxxx, Esq.
Xxxx
X. Xxxxxx, Esq.
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Page
- 6
SCHEDULE
“B”
Schedule
“B” to the Escrow Agreement between Baoshinn Corporation and Applbaum &
Zouvas LLP dated July 1, 2006.
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SHAREHOLDER
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ISSUANCE
SHARES
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PURCHASE
FUNDS
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1.
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2.
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3.
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4.
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5.
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6.
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7.
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8.
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9.
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10.
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11.
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12.
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13.
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14.
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15.
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16.
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