ESCROW AGREEMENT
ESCROW
AGREEMENT,
dated
as of November __, 2008 (“Agreement”),
by
and among KOREA MILESTONE ACQUISITION CORPORATION, a Cayman Islands company
(the
“Company”),
SANG-XXXX XXX (“Sang-Xxxx
Xxx”),
MOON
YOUL BAN, JHONG XXX XXX, SOO XXXXX XXX, and XXXX XXXX XXXX (collectively, the
“Existing
Shareholders”),
and
CONTINENTAL STOCK TRANSFER & TRUST COMPANY, a New York corporation (the
“Escrow
Agent”).
WHEREAS,
the Company has entered into an Underwriting Agreement, dated November __,
2008 (“Underwriting Agreement”), with Broadband
Capital Management (“Broadband”) acting as
representative of the several underwriters (collectively, the
“Underwriters”), pursuant to which, the Underwriters
have agreed to purchase 5,000,000 units (“Units”) of
the Company. Each Unit consists of two ordinary shares of the Company, par
value
$0.0001 per share (the “Ordinary Shares”), and one
warrant to purchase one Ordinary Share, all as more fully described in the
Company’s final Prospectus, dated November __, 2008
(“Prospectus”) comprising part of the Company’s
Registration Statement on Form F-1 (File No. 333-153155) under the
Securities Act of 1933, as amended (“Registration
Statement”), declared effective on November __, 2008
(“Effective Date”).
WHEREAS,
the Underwriters have required as a condition to purchase of the Units that
the
Existing Shareholders deposit the number of Ordinary Shares (the
“Escrow Shares”), and that Sang-Xxxx Xxx deposit the
Private Warrants (as defined in the Warrant Agreement dated November __,
2008 between the Company and Continental Stock Transfer & Trust
Company, as Warrant Agent (the “Warrant Agreement”),
in each case, as set forth opposite their respective names in
Exhibit A attached hereto (the Escrow Shares and
Private Warrants are collectively referred to herein as the “Escrow
Securities”) in escrow as hereinafter provided.
WHEREAS,
the
Company and the Existing Shareholders desire that the Escrow Agent accept the
Escrow Securities, in escrow, to be held and disbursed as hereinafter provided.
IT
IS
AGREED:
1. Appointment
of Escrow Agent. The
Company and the Existing Shareholders hereby appoint the Escrow Agent to act
in
accordance with and subject to the terms of this Agreement, and the Escrow
Agent
hereby accepts such appointment and agrees to act in accordance with and subject
to such terms.
2. Deposit
of Escrow Shares. On
or before the Effective Date, each of the Existing Shareholders shall have
delivered or caused to be delivered to the Escrow Agent certificates
representing his, her, or its respective Escrow Securities, to be held and
disbursed subject to the terms and conditions of this Agreement. Each Existing
Shareholder acknowledges that the certificates representing his, her or its
Escrow Securities is legended to reflect the deposit of such Escrow Securities
under this Agreement.
3. Disbursement
of the Escrow Securities. The
Escrow Agent shall hold the Escrow Shares until the date that is one year after
the date of consummation of an Initial Business Combination (as defined in
the
Warrant Agreement) and the Private Warrants until the consummation of an Initial
Business Combination (in each case, the “Escrow
Period”),
on
which respective dates it shall, upon written instructions from the Company’s
Chief Executive Officer or Chief Financial Officer, disburse the Escrow Shares
(and any applicable stock power) or Private Warrants, as the case may be, to
the
Existing Shareholders or Sang-Xxxx Xxx (as applicable); provided,
however,
that at
the end of the 45-day period in which the Underwriters may exercise their
over-allotment option to purchase an additional 375,000 Units of the
Company (as described in the Registration Statement), or, if earlier, the date
the Underwriters exercise their over-allotment option in full or terminate
their over-allotment option, the Company shall give the Escrow Agent notice
with
respect to the amount, if any, of the over-allotment that was exercised by
the
Underwriters and, upon such notice, the Existing Shareholders agree that the
Escrow Agent shall deliver to the Company for repurchase, at a price per share
of $0.0001 in cash, the number of Escrow Shares held by Sang-Xxxx Xxx determined
by multiplying (a) the product of (i) 187,500, multiplied by
(ii) a fraction, (x) the numerator of which is the number Escrow
Shares held by Sang-Xxxx Xxx, and (y) the denominator of which is the total
number of Escrow Shares, by (b) a fraction, (i) the numerator of which
is 375,000
minus
the number of Ordinary Shares purchased by the Underwriters upon the exercise
of
their over-allotment option, and (ii) the denominator of which is 375,000;
provided
further,
however,
that if
the Escrow Agent is notified by the Company pursuant to Section 6.7 hereof
that the Company has been liquidated, then the Escrow Agent shall promptly
destroy the certificates representing the Escrow Securities held pursuant to
this Agreement; provided
further,
however,
that
if, after the Company consummates an Initial Business Combination, it (or
the surviving entity) subsequently consummates a liquidation, merger, stock
exchange or other similar transaction which results in all of the shareholders
of such entity having the right to exchange their Ordinary Shares for cash,
securities or other property, then the Escrow Agent will, upon receipt of a
certificate, executed by the Chief Executive Officer, Chief Financial Officer
or
other authorized officer of the Company, in a form reasonably acceptable to
the
Escrow Agent, that such transaction is then being consummated or such conditions
have been achieved, as applicable, release the Escrow Shares to the Existing
Shareholders. The Escrow Agent shall have no further duties hereunder after
the
disbursement or destruction of the Escrow Securities in accordance with this
Section 3.
4. Rights
of Existing Shareholders in Escrow Securities.
4.1. Voting
Rights as a Stockholder. Subject
to the terms of the Insider Letter described in Section 4.3 hereof and except
as
herein provided, the Existing Shareholders shall retain all of their rights
as
shareholders of the Company during the Escrow Period, including, without
limitation, the right to vote the Escrow Shares.
4.2. Dividends
and Other Distributions in Respect of the Escrow Shares.
During the Escrow Period, all dividends payable in cash with respect to the
Escrow Shares shall be paid to the Existing Shareholders, but all dividends
payable in securities or other non-cash property (“Non-Cash
Dividends”)
shall
be delivered to the Escrow Agent to hold in accordance with the terms hereof.
As
used herein, the term “Escrow
Shares”
shall
be deemed to include the Non-Cash Dividends distributed thereon, if any.
4.3. Restrictions
on Transfer. During
the Escrow Period, no sale, transfer or other disposition may be made of any
or
all of the Escrow Securities except (i) by gift to a member of Existing
Shareholder’s immediate family or to a trust, the beneficiary of which is an
Existing Shareholder or a member of an Existing Shareholder’s immediate family,
(ii) by virtue of the laws of descent and distribution upon death of any
Existing Shareholder, (iii) pursuant to a qualified domestic relations order
or
(iv) to a then-current officer or director of the Company, as determined in
the
discretion of the Chairman of the Board of Directors (such transfers,
“Permitted
Transfers”
and such
transferees, individually, “Permitted
Transferees”);
provided,
however,
that
such Permitted Transfers may be implemented only upon the respective Permitted
Transferee’s written agreement to be bound by the terms and conditions of this
Agreement and, as applicable, the Insider Letter signed by the Existing
Shareholder transferring the Escrow Securities (as applicable) and/or the
Warrant Agreement. Even if transferred in accordance with this Section 4.3,
the Escrow Securities will remain subject to this Agreement and may only be
released from escrow in accordance with Section 3 hereof. As used herein,
the term “Insider
Letter”
refers
to that letter entered into by each of the Existing Shareholders, with Broadband
and the Company, dated as indicated on Exhibit A
hereto,
and which is filed as an exhibit to the Registration Statement, respecting
the
rights and obligations of such Existing Shareholder in certain events, including
but not limited to the liquidation of the Company and certain voting and
transfer restrictions which will apply during the Escrow Period.
2
4.4. Private
Warrants. Sang-Xxxx
Xxx acknowledges that the Private Warrants are subject to restrictions on
exercise and transfer during the Escrow Period as specified in the Warrant
Agreement.
5. Concerning
the Escrow Agent.
5.1. Good
Faith Reliance. The
Escrow Agent shall not be liable for any action taken or omitted by it in good
faith and in the exercise of its own best judgment, and may rely conclusively
and shall be protected in acting upon any order, notice, demand, certificate,
opinion or advice of counsel (including counsel chosen by the Escrow Agent),
statement, instrument, report or other paper or document (not only as to its
due
execution and the validity and effectiveness of its provisions, but also as
to
the truth and acceptability of any information therein contained) which is
believed by the Escrow Agent to be genuine and to be signed or presented by
the
proper person or persons. The Escrow Agent shall not be bound by any notice
or
demand, or any waiver, modification, termination or rescission of this Agreement
unless evidenced by a writing delivered to the Escrow Agent signed by the proper
party or parties and, if the duties or rights of the Escrow Agent are affected,
unless it shall have given its prior written consent thereto.
5.2. Indemnification. The
Escrow Agent shall be indemnified and held harmless by the Company from and
against any expenses, including counsel fees and disbursements, or loss suffered
by the Escrow Agent in connection with any action, suit or other proceeding
involving any claim which in any way, directly or indirectly, arises out of
or
relates to this Agreement, the services of the Escrow Agent hereunder, or the
Escrow Securities held by it hereunder, other than expenses or losses arising
from the gross negligence or willful misconduct of the Escrow Agent. Promptly
after the receipt by the Escrow Agent of notice of any demand or claim or the
commencement of any action, suit or proceeding, the Escrow Agent shall notify
the other parties hereto in writing. In the event of the receipt of such notice,
the Escrow Agent, in its sole discretion, may commence an action in the nature
of interpleader in an appropriate court to determine ownership or disposition
of
the Escrow Securities or it may deposit the Escrow Securities with the clerk
of
any appropriate court or it may retain the Escrow Securities pending receipt
of
a final, non appealable order of a court having jurisdiction over all of the
parties hereto directing to whom and under what circumstances the Escrow
Securities are to be disbursed and delivered. The provisions of this
Section 5.2 shall survive in the event the Escrow Agent resigns or is
discharged pursuant to Sections 5.5 or 5.6 below.
5.3. Compensation. The
Escrow Agent shall be entitled to reasonable compensation from the Company
for
all services rendered by it hereunder. The Escrow Agent shall also be entitled
to reimbursement from the Company for all expenses paid or incurred by it in
the
administration of its duties hereunder including, but not limited to, all
counsel, advisors’ and agents’ fees and disbursements and all taxes or other
governmental charges.
5.4. Further
Assurances. From
time to time on and after the date hereof, the Company and the Existing
Shareholders shall deliver or cause to be delivered to the Escrow Agent such
further documents and instruments and shall do or cause to be done such further
acts as the Escrow Agent shall reasonably request to carry out more effectively
the provisions and purposes of this Agreement, to evidence compliance herewith
or to assure itself that it is protected in acting hereunder.
5.5. Resignation. The
Escrow Agent may resign at any time and be discharged from its duties as escrow
agent hereunder by its giving the other parties hereto written notice and such
resignation shall become effective as hereinafter provided. Such resignation
shall become effective at such time that the Escrow Agent shall turn over to
a
successor escrow agent appointed by the Company, the Escrow Securities held
hereunder. If no new escrow agent is so appointed within the 60-day period
following the giving of such notice of resignation, the Escrow Agent may deposit
the Escrow Securities with any court it reasonably deems appropriate.
3
5.6. Discharge
of Escrow Agent. The
Escrow Agent shall resign and be discharged from its duties as escrow agent
hereunder if so requested in writing at any time by the other parties hereto,
jointly, provided, however, that such resignation shall become effective only
upon acceptance of appointment by a successor escrow agent as provided in
Section 5.5.
5.7. Liability. Notwithstanding
anything herein to the contrary, the Escrow Agent shall not be relieved from
liability hereunder for its own gross negligence or its own willful misconduct.
5.8. Trust
Account Waiver. The Escrow Agent hereby waives all right, title,
interest, or claim of any kind (“Claim”) in or to any
monies in the trust account of the Company (the “Trust
Account”) created pursuant to the Investment Management Trust
Agreement, dated as of November __, 2008, by and
between the Company and Continental Stock Transfer & Trust Company, as
Trustee, that it may have now or in the future, and hereby agrees not to seek
recourse, reimbursement, payment or satisfaction for any Claim against the
Trust
Account for any reason whatsoever.
6. Miscellaneous.
6.1. Governing
Law. This
Agreement shall for all purposes be deemed to be made under and shall be
construed in accordance with the laws of the State of New York, without giving
effect to conflicts of law principles that would result in the application
of
the substantive laws of another jurisdiction (whether of the State of New York
or any other jurisdiction that would cause the application of the laws of any
jurisdiction other than the State of New York). The Company hereby agrees that
any action, proceeding or claim against it arising out of or relating in any
way
to this Agreement shall be brought and enforced in the courts of the State
of
New York or the United States District Court for the Southern District of New
York, and irrevocably submits to such jurisdiction, which jurisdiction shall
be
exclusive. The Company hereby waives any objection to such exclusive
jurisdiction or that such courts represent an inconvenient forum. Any such
process or summons to be served upon the Company may be served by transmitting
a
copy thereof by registered or certified mail, return receipt requested, postage
prepaid, addressed to it at the address set forth in Section 6.6 hereof.
Such mailing shall be deemed personal service and shall be legal and binding
upon the Company in any action, proceeding or claim.
6.2. Third
Party Beneficiaries. Each
of the Existing Shareholders hereby acknowledges that the Underwriters are
third
party beneficiaries of this Agreement and this Agreement may not be modified
or
changed without the prior written consent of Broadband.
6.3. Entire
Agreement. This
Agreement contains the entire agreement of the parties hereto with respect
to
the subject matter hereof and, except as expressly provided herein, may not
be
changed or modified except by an instrument in writing signed by each party
hereto. It may be executed in several original or facsimile counterparts, each
one of which shall constitute an original, and together shall constitute but
one
instrument.
6.4. Headings. The
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation thereof.
6.5. Binding
Effect. This
Agreement shall be binding upon and inure to the benefit of the respective
parties hereto and their legal representatives, successors and assigns.
6.6. Notices. Any
notice or other communication required or which may be given hereunder shall
be
in writing and either be delivered personally or be mailed, certified or
registered mail, or by private national courier service, return receipt
requested, postage prepaid, and shall be deemed given when so delivered
personally or, if mailed, two days after the date of mailing, as follows:
4
If
to the
Company, to:
SoftForum
Building, 8th Floor
000-0,
Xxxxxxxxx
Xxxxxxx,
Xxxxx, Xxxxx 135-170
Attn:
Moon-Xxxx Xxxx
Fax
No.:
(82) (0) 0000-0000
If
to an
Existing Shareholder, to his, her or its address set forth in Exhibit A.
and
if to
the Escrow Agent, to:
Continental
Stock Transfer & Trust Company
00
Xxxxxxx Xxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Attn:
Chairman
Fax
No.:
(000) 000-0000
A
copy of
any notice sent hereunder shall be sent to:
Mintz,
Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
000
Xxxxx
Xxxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Attn:
Xxxxxxx X. Xxxx, Esq.
Fax
No.:
(000) 000-0000
and:
Broadband
Capital Management
000
Xxxxx
Xxxxxx, 00xx Xxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Attn:
Xxxxxxx Xxxx, Chairman
Fax
No.:
(000) 000-0000
and:
Ellenoff
Xxxxxxxx & Schole LLP
000
Xxxx
00xx
Xxxxxx,
00xx
Xxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Attn:
Xxxxxxx X. Xxxxxxxx Esq.
Fax
No.:
(000) 000-0000
The
parties may change the persons and addresses to which the notices or other
communications are to be sent by giving written notice to any such change in
the
manner provided herein for giving notice.
6.7. Liquidation
of the Company. The
Company shall give the Escrow Agent written notification of the liquidation
and
dissolution of the Company in the event that the Company fails to consummate
an
Initial Business Combination within the time period(s) specified in the
Prospectus.
[Remainder
of page intentionally left blank]
5
| “COMPANY” | ||
|
By:
|
||
|
Name:
|
||
|
Title:
|
||
|
“EXISTING
SHAREHOLDERS”
|
||
|
Xxxx-Xxxx
Xxx
|
||
|
Xxxx
Youl Ban
|
||
|
Jhong
Xxx Xxx
|
||
|
Soo
Xxxxx Xxx
|
||
|
Yong
Xxxx Xxxx
|
||
| “ESCROW AGENT” | ||
|
CONTINENTAL
STOCK TRANSFER & TRUST COMPANY
|
||
|
By:
|
||
|
Name:
|
||
|
Title:
|
||
[Signature
Page – Escrow Agreement]
Exhibit
A
|
of
Existing Shareholder(1)
|
Number
of
Escrow
Shares
|
|
Stock
Certificate
Number
|
Date
of
Insider
Letter
|
Number
of
Private
Warrants
|
Warrant
Certificate
Number
|
||||||||||
|
Sang-Xxxx
Xxx
|
2,312,500
|
3,846,154
|
N/A
|
|||||||||||||
|
Moon
Youl Ban
|
375,000
|
0
|
N/A
|
|||||||||||||
|
Jhong
Xxx Xxx
|
62,500
|
0
|
N/A
|
|||||||||||||
|
Soo
Xxxxx Xxx
|
62,500
|
0
|
N/A
|
|||||||||||||
|
Yong
Xxxx Xxxx
|
62,500
|
0
|
N/A
|
(1)
All
correspondence c/o Korea Milestone Acquisition Corporation, SoftForum Xxxxxxxx
0xx
Xxxxx, 000-0 Xxxxxxxxx, Xxxxxxx, Xxxxx, Xxxxx 135-170
