ESCROW AGREEMENT
This
Escrow Agreement is made and entered into as of the 11th day of
August, 2008, by and among XXXXXXXX & XXXXXXXXX, INCORPORATED, a Virginia
corporation (the “Placement Agent”), PANSOFT COMPANY LIMITED, a British Virgin
Islands limited company (the “Company”) and SUNTRUST BANK, N.A. (the “Escrow
Agent”).
RECITALS:
A. The
Company proposes to sell 1,200,000 ordinary shares (the “Shares”) of the Company
at a price of $6.00 per share on a “best efforts, all-or-none” basis (the
“Offering”).
B. The
Company has retained the Placement Agent, as agent for the Company to sell
the
Shares in the Offering, and the Placement Agent has agreed to sell the shares
in
the Offering as the Company’s agent.
C. The
Escrow Agent is willing to hold the proceeds of the Offering in escrow pursuant
to this Agreement.
NOW,
THEREFORE, in consideration of the foregoing and the mutual covenants and
agreements contained in this Agreement, it is hereby agreed as
follows:
1. Establishment
of the Escrow Agent.
Contemporaneously herewith, the parties have established a non-interest-bearing
account with the Escrow Agent, which escrow account is entitled “Pansoft Company
Limited IPO Escrow Account” (the “Escrow Account”). The Placement Agent will
transfer funds directly to the Escrow Agent as directed by its customers and
will instruct other purchasers of the Shares to make checks payable to “SunTrust
Bank - Pansoft Company Limited IPO Escrow Account.”
2. Escrow
Period.
The
escrow period (the “Escrow Period”) shall begin with the commencement of the
Offering and shall terminate upon the earlier to occur of the following
dates:
(a) the
date
on which the Escrow Agent confirms that it has received in the Escrow Account
gross proceeds of $7,200,000, representing the funds necessary to purchase
the
Shares (the “Investment Amount”);
(b) September
30, 2008; or
(c) the
date
on which the Placement Agent and the Company notify the Escrow Agent in writing
that the Offering has been terminated.
During
the Escrow Period, the Company is aware and understands that it is not entitled
to any funds received into escrow and no amounts deposited in the Escrow Account
shall become
the
property of the Company or any other entity, or be subject to the debts of
the
Company or any other entity.
3. Deposits
into the Escrow Account.
The
Placement Agent agrees that it shall deliver to the Escrow Agent for deposit
in
the Escrow Account all monies received from purchasers of the Shares by noon
of
the next business day after receipt together with a written account of each
sale, which account shall set forth, among other things, (i) the purchaser’s
name and address, (ii) the number of Shares purchased by the purchaser, (iii)
the amount paid therefor by the purchaser, (iv) whether the consideration
received from the purchaser was in the form of a check, draft or money order,
and (v) the purchaser’s social security or tax identification number. The Escrow
Agent agrees to hold all monies so deposited in the Escrow Account (the “Escrow
Amount”) for the benefit of the parties hereto until authorized to disburse such
monies under the terms of this Agreement.
4. Disbursements
from the Escrow Account.
In the
event the Escrow Agent has not received the Investment Amount prior to the
termination of the Escrow Period, or if the Placement Agent and the Company
notify the Escrow Agent that the Offering has been terminated, the Escrow Agent
shall promptly refund to each purchaser the amount received from the purchaser,
without deduction, penalty, or expense to the purchaser, and the Escrow Agent
shall notify the Company and the Placement Agent of its distribution of the
funds. The purchase money returned to each purchaser shall be free and clear
of
any and all claims of the Company or any of its creditors.
In
the
event the Escrow Agent has received the Investment Amount prior to termination
of the Escrow Period, on the Closing Date (as defined in Section 8), the Escrow
Agent shall disburse the Escrow Amount pursuant to the provisions of Section
6,
provided,
however,
in no
event will the Escrow Amount be released to the Company until such amount is
received by the Escrow Agent in collected funds. For purposes of this Agreement,
the term “collected funds” shall mean all funds, including fed funds, received
by the Escrow Agent which have cleared normal banking channels.
5. Collection
Procedure.
(a) The
Escrow Agent is hereby authorized to deposit each check in the Escrow
Account.
(b) In
the
event any check paid by a purchaser and deposited in the Escrow Account shall
be
returned, the Escrow Agent shall notify the Placement Agent by telephone of
such
occurrence and advise it of the name of the purchaser, the amount of the check
returned, and any other pertinent information. The Escrow Agent shall then
transmit the returned check directly to the purchaser and shall transmit the
statement previously delivered by the Placement Agent relating to such purchase
to the Placement Agent.
(c) If
the
Company rejects any purchase of Shares for which the Escrow Agent has already
collected funds, the Escrow Agent shall promptly issue a refund check to
the
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rejected
purchaser. If the Placement Agent rejects any purchase for which the Escrow
Agent has not yet collected funds but has submitted the purchaser’s check for
collection, the Escrow Agent shall promptly issue a check in the amount of
the
purchaser’s check to the rejected purchaser after the Escrow Agent has cleared
such funds. If the Escrow Agent has not yet submitted a rejected purchaser’s
check for collection, the Escrow Agent shall promptly remit the purchaser’s
check directly to the purchaser.
6. Delivery
of Escrow Account.
(a) Prior
to
the Closing (as defined in Section 8 of this Agreement), the Placement Agent
and
the Company shall provide the Escrow Agent with a statement, executed by each
party, containing the following information:
(i) The
total
number of Shares sold by the Placement Agent directly to purchasers and a list
of each purchaser, and the number of Shares purchased by such purchaser, and
specification of the manner in which the Shares should be issued;
and
(ii) A
calculation by the Placement Agent and the Company as to the manner in which
the
Escrow Account should be distributed to the Company and the Placement Agent
and
in the event of oversubscription or rejection of certain purchasers, the
aggregate amount to be returned to individual purchasers and a listing of the
exact amount to be returned to each such purchaser.
The
Escrow Agent shall hold the Escrow Account and distribute it in accordance
with
the above-described statement on the date of Closing or such later date that
it
receives the above-described statement.
(b) Upon
termination of the Offering by the Company or the Placement Agent for any
reason, the Escrow Agent shall return to the purchasers who contributed to
the
Escrow Account the exact amount contributed by them.
7. Investment
of Escrow Account.
The
Escrow Agent shall deposit funds received from purchasers in the Escrow Account,
which shall be a non-interest-bearing bank account at SunTrust
Bank.
8. Closing
Date.
The
“Closing” shall be the date of closing of the Offering, and the “Closing Date”
shall be the date on or subsequent to the date on which the Escrow Agent has
received the Investment Amount that is designated to the Escrow Agent by the
Placement Agent and the Company as the Closing Date.
9. Compensation
of Escrow Agent.
The
Company shall pay the Escrow Agent a fee for its services hereunder in an amount
equal to One Thousand Five Hundred Dollars ($1,500), which amount shall paid
on
the Closing Date. In the event the Offering is canceled for any reason, the
Company shall pay the Escrow Agent its fee within ten (10) days after the
Escrow
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Amount
is
refunded to purchasers. No such fee or any other monies whatsoever shall be
paid
out of or chargeable to the funds on deposit in the Escrow Account.
10. Disbursement
into Court.
If, at
any time, there shall exist any dispute between the Company, the Placement
Agent
and/or the purchasers with respect to the holding or disposition of any portion
of the Escrow Amount or any other obligations of the Escrow Agent hereunder,
or
if at any time the Escrow Agent is unable to determine, to the Escrow Agent’s
sole satisfaction, the proper disposition of any portion of the Escrow Amount
or
the Escrow Agent’s proper actions with respect to its obligations hereunder, or
if the Company and the Placement Agent have not within 30 days of the furnishing
by the Escrow Agent of a notice of resignation appointed a successor Escrow
Agent to act hereunder, then the Escrow Agent may, in its sole discretion,
take
either both of the following actions:
(a) suspend
the performance of any of its obligations under this Escrow Agreement until
such
dispute or uncertainty shall be resolved to the sole satisfaction of the Escrow
Agent or until a successor Escrow Agent shall have been appointed (as the case
my be); provided
however,
that
the Escrow Agent shall continue to hold the Escrow Amount in accordance with
Section 7 hereof; and/or
(b) petition
(by means of an interpleader action or any other appropriate method) any court
of competent jurisdiction in Richmond, Virginia, for instructions with respect
to such dispute or uncertainty, and pay into court all funds held by it in
the
Escrow Account for holding and disposition in accordance with the instructions
of such court.
The
Escrow Agent shall have no liability to the Company, the Placement Agent or
any
other person with respect to any such suspension of performance or disbursement
into court, specifically including any liability or claimed liability that
may
arise, or be alleged to have arisen, out of or as a result of any delay in
the
disbursement of funds held in the Escrow Account or any delay in or with respect
to any other action required or requested of the Escrow Agent.
11. Duties
and Rights of the Escrow Agent.
The
foregoing agreements and obligations of the Escrow Agent are subject to the
following provisions:
(a) The
Escrow Agent’s duties hereunder are limited solely to the safekeeping of the
Escrow Account in accordance with the terms of this Agreement. It is agreed
that
the duties of the Escrow Agent are only such as herein specifically provided,
being purely of a ministerial nature, and the Escrow Agent shall incur no
liability whatsoever except for negligence, willful misconduct or bad
faith.
(b) The
Escrow Agent is authorized to rely on any document believed by the Escrow Agent
to be authentic in making any delivery of the Escrow Account or the certificates
representing the Shares. It shall have no responsibility for the genuineness
or
the validity of any document or any other item deposited with it and it shall
be
fully protected in acting in accordance with this Agreement or instructions
received.
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(c) The
Company and the Placement Agent hereby waive any suit, claim, demand or cause
of
action of any kind which they may have or may assert against the Escrow Agent
arising out of or relating to the execution or performance by the Escrow Agent
of this Agreement, unless such suit, claim, demand or cause of action is based
upon the gross negligence, willful misconduct, or bad faith of the Escrow
Agent.
12. Notices.
It if
further agreed as follows:
(a) All
notices given hereunder will be in writing, served by registered or certified
mail, return receipt requested, postage prepaid, or by hand-delivery, to the
parties at the following addresses:
to
the
Company:
Pansoft
Company Limited
3/F,
Qilu
Software Park Building
Xxxx
Hi-Tech Zone
Jinan
250101, Xxxxxxxx, XXX 000000
to
the
Placement Agent:
Xxxxxxxx
& Strudwick, Incorporated
000
Xxxx
Xxxx Xxxxxx, 00xx
Xxxxx
Xxxxxxxx,
Xxxxxxxx 00000
Attention:
X. XxXxxxxx Xxxxx, III
Facsimile:
(000) 000-0000
with
copy
to:
Xxxxxxx
& Xxxxxxx, P.C.
0000
Xxxx
Xxxx Xxxxxx
Xxxxx
0000
Xxxxxxxx,
Xxxxxxxx 00000
Attention:
Xxxxxxx X. Xxxxxxxx, Esq.
To
the
Escrow Agent:
SunTrust
Bank, N.A.
000
Xxxx
Xxxx Xxxxxx
0xx
Xxxxx
Xxxxxxxx,
Xxxxxxxx 00000
Attention:
Xxxxxxx Xxxx
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12. Miscellaneous.
(a) This
Agreement shall be binding upon, inure to the benefit of and be enforceable
by
the parties hereto and their respective successors and assigns.
(b) If
any
provision of this Agreement shall be held invalid by any court of competent
jurisdiction, such holding shall not invalidate any other provision
hereof.
(c) This
Agreement shall be governed by the applicable laws of the Commonwealth of
Virginia.
(d) This
Agreement may not be modified except in writing signed by the parties
hereto.
(e) All
demands, notices, approvals, consents, requests and other communications
hereunder shall be given in the manner provided in this Agreement.
(f) This
Agreement may be executed in one or more counterparts, and if executed in more
than one counterpart, the executed counterparts shall together constitute a
single instrument.
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IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
in
their respective names, all as of the date first above written.
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XXXXXXXX
& XXXXXXXXX, INCORPORATED
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By:
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/s/
X. XxXxxxxx Downs, III
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X.
XxXxxxxx Xxxxx, III
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Senior
Vice President
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PANSOFT
COMPANY LIMITED
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By:
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/s/
Xxxx Xxxx
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Name:
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Xxxx
Xxxx
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Title:
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Chairman
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SUNTRUST
BANK
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By:
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/s/
Xxxxxxx Xxxx
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Name:
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Xxxxxxx
Xxxx
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Title:
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Trust
Officer
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