Exhibit 10.28

 

ESCROW AGREEMENT

 

This ESCROW AGREEMENT (“Escrow Agreement”) is made as of _______________30
April_____________ 2019 by and among Renren Inc., (the “Seller”), CM Seven Star
Acquisition Corporation, a Cayman Islands exempted company (the “Purchaser”),
and VISTRA CORPORATE SERVICES (HK) LIMITED, a Hong Kong company with registered
office address at 19/F, Lee Garden One, 33 Hysan Avenue, Causeway Bay, Hong Kong
(“Escrow Agent”).

 

WHEREAS the Seller, the Purchaser and Kaixin Auto Group, a Cayman Islands
exempted company (“Kaixin”), are parties to a share exchange agreement, dated as
of November 2, 2018 (the “Share Exchange Agreement”), pursuant to which the
parties thereof will consummate a share exchange where Kaixin will become a
wholly-owned subsidiary of the Purchaser (the “Transaction”);

 

WHEREAS, pursuant to and subject to the terms and conditions of the Share
Exchange Agreement, the Purchaser has agreed to issue 22,800,000 ordinary shares
in the Purchaser, being withheld from the closing payment of the Transaction
(the “Escrow Shares”), to the Escrow Agent to be held pursuant to the terms of
the Share Exchange Agreement and this Escrow Agreement, which, subject to the
terms and conditions set forth in the Share Exchange Agreement, may be
distributed to the Seller in whole or in part;

 

WHEREAS, in accordance with the Share Exchange Agreement, Kaixin, the Seller and
the Purchaser have agreed to establish a segregated escrow account (the “Escrow
Account”) under this Escrow Agreement for the purposes of holding any dividends
or distributions paid or otherwise accruing to the Escrow Shares during the time
such Escrow Shares are held (“Accrued Dividends”);

 

WHEREAS, the Purchaser will cause the Escrow Shares to be transferred in escrow
to the Escrow Agent on terms and conditions more particularly described herein
on the date of this Escrow Agreement; and

 

WHEREAS, pursuant to ARTICLE III of the Share Exchange Agreement, (i) the Escrow
Shares and Accrued Dividends (if any) will be released and transferred to the
Seller as Earnout Payment (as defined in the Share Exchange Agreement) in the
event that Kaixin and its subsidiaries meet certain minimum performance
requirements; and (ii) all remaining Escrow Shares and Accrued Dividends (if
any) held in the Escrow Account will be released and transferred to the Seller,
less the amount of any Payment Offset (as defined in the Share Exchange
Agreement), after April 30, 2021, subject to the satisfaction of the terms and
conditions of ARTICLES III and X of the Share Exchange Agreement.

 

NOW, THEREFORE, in consideration of the premises, the undersigned hereby agree
as follows:

 

ARTICLE I

TERMS AND CONDITIONS

 

1.1                        Appointment. The Purchaser and the Seller hereby
appoint the Escrow Agent to act as an independent escrow agent in relation to
the Escrow Shares and Accrued Dividends (if any) with effect from the date of
this Escrow Agreement. The Escrow Agent shall provide services pursuant to this
Escrow Agreement to the Purchaser and the Seller with reasonable skill and care.

 

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1.2                        Issue of Escrow Shares.  The Purchaser shall issue
the Escrow Shares to the Escrow Agent on the date of this Escrow Agreement. To
effect this, the Purchaser will cause to be entered in its register of members
the Escrow Agent or an agent thereof (the “Nominee”) to hold the Escrow Shares
on its behalf as a nominee (provided that such agent shall be a company within
the Escrow Agent’s group of companies) as the registered holder of the Escrow
Shares and thereafter will issue to the Escrow Agent a duly executed original
share certificate(s) in respect of the Escrow Shares in the name of the Escrow
Agent or the Nominee. The Escrow Agent will issue to Kaixin, the Seller and the
Purchaser its written confirmation of receipt of the Escrow Shares. The Escrow
Agent or the Nominee will become the registered owner of the Escrow Shares upon
being noted the same on the Purchaser’s register of members until such time as
is set out in, and in accordance with, the Share Exchange Agreement and this
Escrow Agreement.

 

1.2                        Held in Trust. The Escrow Agent declares that the
Escrow Shares are held in trust for the Seller until released and transferred in
accordance with the terms and conditions of the Share Exchange Agreement and
this Escrow Agreement. The Escrow Agent further declares that any Accrued
Dividends (if any) and any accruing interest on the Accrued Dividends (if any)
that are paid into the Escrow Account are held in trust for the Seller until
released and transferred in accordance with the terms and conditions of the
Share Exchange Agreement and this Escrow Agreement.

 

1.3                        Treatment of Escrow Shares.  Until released and
transferred in accordance with the terms and conditions of the Share Exchange
Agreement and this Escrow Agreement, the Escrow Shares cannot be sold,
transferred, assigned, mortgaged otherwise dealt with in any way, except as
provided for in this Escrow Agreement in accordance with the terms and
conditions of the Share Exchange Agreement.

 

1.4                        Escrow Account. The Escrow Agent has confirmed that
it has opened/ will open the Escrow Account on the terms and subject to the
conditions of this Escrow Agreement. The Escrow Account details are/ will be the
following:

 

Currency: USD

Name of Bank: Standard Chartered Bank (Hong Kong)

Account Number: Escrow Agent to confirm

IBAN: Escrow Agent to confirm

Sort Code: Escrow Agent to confirm

Account Holder: Escrow Agent

 

1.5                        Accrued Dividends. The Escrow Agent shall hold the
Accrued Dividends as Escrow Agent on behalf of the Seller and accept deposits
in, make distributions from, and otherwise operate the Escrow Account only in
accordance with the joint written instructions of the Purchaser and the Seller.
The Escrow Agent shall also collect any tax and other regulatory forms from the
Seller and/or Purchaser and the Seller and Purchaser agree to calculate the
withholding tax payable (if any) by the Seller that may be deductible from such
Dividends. The Escrow Agent will rely on the Seller and the Purchaser as to the
accuracy of this calculation and may use independent tax and legal advice to
confirm and file such form with any applicable authority and such costs and
expenses will be paid by the Seller and the Purchaser in accordance with Clause
2.2(C) hereof.

 

1.6                        Voting of the Escrow Shares. All and any voting
rights attached to the Escrow Shares shall at all times be exercised by the
Seller by giving written instructions to the Escrow Agent, until such Escrow
Shares are released and transferred to the Seller.

 

1.7                        Authorized Signatories. The Seller and the Purchaser
have provided on Schedule A (as it may be amended from time to time) to this
Escrow Agreement, the names and specimen signatures of those persons who are
authorized to issue notices and instructions to the Escrow Agent and execute
required documents (“Authorized Signatories”) under the Share Exchange Agreement
and this Escrow Agreement. The Seller and Purchaser can amend their respective
Authorized Signatories by issuing an amended Schedule A to the Escrow Agent in
the manner described in Section 3.2. No instruction pursuant to this Escrow
Agreement may be made other than by duly authorized signatories from the Seller
and the Purchaser. In no event shall the Seller or the Purchaser issue or cause
to be issued any instruction in contravention of the Share Exchange Agreement.

 

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1.8                        Escrow Procedure and Release Instruction.  The Escrow
Shares and Accrued Dividends (as applicable) shall be held, released and
transferred in accordance with the Share Exchange Agreement and the following
terms:

 

A.The Seller and Purchaser shall jointly provide release instructions signed by
their respective Authorized Signatory to the Escrow Agent in the form attached
hereto as Schedule B, the “Notice”.

 

B.The Purchaser shall issue new share certificate(s) in the name of each
recipient in respect of the amount of Escrow Shares to be transferred to such
recipient as specified in the Notice within two (2) business days after receipt
of the Notice. The old share certificate(s) in respect of the Escrow Shares so
transferred shall be cancelled by the Purchaser immediately upon issuance of the
new share certificate(s).

 

C.Any Escrow Shares and Accrued Dividends (if any) that remain after deducting
all Earnout Payments made/ to be made to the Seller will be returned to the
Purchaser the later of (i) five (5) business days after April 30, 2021 upon the
Escrow Agent’s receipt of a Notice jointly issued by the Seller and the
Purchaser, or (ii) in the event of a dispute between the Purchaser and Seller,
fifty (50) business days after the engagement of an Independent Expert (as
defined in the Share Exchange Agreement), upon the Escrow’s Agent receipt of a
Notice jointly issued by the Seller and the Purchaser.

 

1.9                        Termination.  This Escrow Agreement shall terminate
upon the final, proper and complete release and transfer of all Escrow Shares
and Accrued Dividends (if any) in accordance with the provisions of this Escrow
Agreement.

 

ARTICLE II

PROVISIONS AS TO ESCROW AGENT

 

2.1                        Limitation of Escrow Agent’s Capacity.

 

A.          This Escrow Agreement expressly and exclusively sets forth the
duties of Escrow Agent with respect to any and all matters pertinent hereto, and
no implied duties or obligations shall be read into this Escrow Agreement
against Escrow Agent. This Escrow Agreement constitutes the entire agreement
between the Escrow Agent and the other parties hereto in connection with the
subject matter of this escrow, and no other agreement entered into between the
parties, or any of them, shall be considered as adopted or binding, in whole or
in part, upon the Escrow Agent notwithstanding that any such other agreement may
be referred to herein or deposited with Escrow Agent or the Escrow Agent may
have knowledge thereof, and Escrow Agent’s rights and responsibilities shall be
governed solely by this Escrow Agreement.

 

B.          Escrow Agent acts hereunder as a depository only, and is not
responsible or liable in any manner whatsoever for the sufficiency, correctness,
genuineness or validity of the subject matter of this Escrow Agreement or any
part thereof, or for the form of execution thereof, or for the identity or
authority of any person executing or depositing such subject matter. Escrow
Agent shall be under no duty to investigate or inquire as to the validity or
accuracy of any document, agreement, joint written instruction or request
furnished to it hereunder believed by it to be genuine and Escrow Agent may rely
and act upon, and shall not be liable for acting or not acting upon, any such
document, agreement, joint written instruction or request, except to the extent
of Escrow Agent’s gross negligence or willful misconduct. Escrow Agent shall in
no way be responsible for notifying, nor shall it be its duty to notify, any
party hereto or any other party interested in this Escrow Agreement or any
payment required or maturity occurring under this Escrow Agreement or under the
terms of any instrument deposited herewith.

 

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2.2                        Authority to Act.

 

A.          Escrow Agent is hereby authorized and directed by the Seller and
Purchaser to release, transfer and/or deliver the subject matter of this Escrow
Agreement only in accordance with the provisions of Article I of this Escrow
Agreement.

 

B.          Escrow Agent shall be protected in acting upon any joint written
instructions, notice, request, waiver, consent, certificate, receipt,
authorization, power of attorney or other paper or document which Escrow Agent
in good faith believes to be genuine and what it purports to be, including, but
not limited to, items requesting or authorizing release or retainage of the
subject matter of this Escrow Agreement and items amending the terms of this
Escrow Agreement.

 

C.          Escrow Agent may consult with legal counsel at the several, but not
joint cost and expense of the Seller and the Purchaser (“Legal Fees”), which
shall each bear such half of such Legal Fees (provided that such Legal Fees must
be reasonably incurred by the Escrow Agent in connection with the performance of
its obligations under this Agreement) in the event of any dispute or question as
to the construction of any of the provisions hereof or its duties hereunder, and
it shall incur no liability and shall be fully protected in acting in accordance
with the advice of such counsel. The Escrow Agent shall obtain written consent
from both the Seller and the Purchaser (not to be unreasonably withheld) prior
to incurring Legal Fees. Subject to the prior sentence, the Escrow Agent may
request the Seller and the Purchaser to pay for the Legal Fees in advance.

 

D.          In the event of any disagreement between any of the parties to this
Escrow Agreement, or between any of them and any other person, resulting in
adverse claims or demands being made in connection with the matters covered by
this Escrow Agreement, or in the event that Escrow Agent, in good faith, be in
doubt as to what action it should take hereunder, Escrow Agent may, at its
option, refuse to comply with any claims or demands on it, or refuse to take any
other action hereunder, so long as such disagreement continues or such doubt
exists, and in any such event, Escrow Agent shall not be or become liable in any
way or to any person for its failure or refusal to act, and Escrow Agent shall
be entitled to continue so to refrain from acting until (i) the rights of all
interested parties shall have been fully and finally adjudicated by a court of
competent jurisdiction, or (ii) all differences shall have been adjudged and all
doubt resolved by agreement among all of the interested persons, and Escrow
Agent shall have been notified thereof in writing signed by all such persons.
Notwithstanding the foregoing, Escrow Agent may in its discretion obey the
order, judgment, decree or levy of any court, and Escrow Agent is hereby
authorized in its sole discretion, to comply with and obey any such orders,
judgments, decrees or levies. The rights of Escrow Agent under this
sub-paragraph are cumulative of all other rights which it may have by law or
otherwise.

 

E.          In the event that any controversy should arise among the parties
with respect to the Escrow Agreement, or should the Escrow Agent resign and the
parties fail to select another Escrow Agent to act in its stead, the Escrow
Agent shall have the right to institute a bill of interpleader in any court of
competent jurisdiction to determine the rights of the parties, in each case as
of 5 business days after the date of the first written notice given to the
parties in respect of the controversy or 5 business days after the date of
resignation of the Escrow Agent.

 

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2.3                        Compensation. Escrow Agent shall be entitled to a
set-up fee of US$10,000 and an additional fee of US$5,000 (per annum) as escrow
responsibility fees as well as expenses incurred in connection with the
performance by the Escrow Agent of services under this Escrow Agreement
(including reasonable fees and expenses of Escrow Agent’s counsel) and the
Seller and the Purchaser jointly and severally agree to pay to the Escrow Agent
such fees and reimburse Escrow Agent for reasonable costs and expenses. The
Seller and the Purchaser agree to cause to be paid to the Escrow Agent an
advance fee of US$15,000 within 14 business days after the closing of the
Transaction in satisfaction of the set-up fee and the annual fee in respect of
the first year of service.

 

2.4                       Indemnification. Seller and the Purchaser hereby
jointly and severally agree to indemnify and hold Escrow Agent, its affiliates
and their officers, employees, successors, assigns, attorneys and agents (each
an “Indemnified Party”) harmless from all losses, costs, claims, demands,
expenses, damages, penalties and attorney’s fees suffered or incurred by any
Indemnified Party or Escrow Agent as a result of anything which it may do or
refrain from doing in connection with this Escrow Agreement or any litigation or
cause of action arising from or in conjunction with this Escrow Agreement or
involving the subject matter hereof, including, without limitation, arising out
of the negligence (other than gross negligence) of Escrow Agent; provided that
the foregoing indemnification shall not extend to fraud, dishonesty, the gross
negligence or willful misconduct of Escrow Agent. Subject to the immediately
preceding proviso, this indemnity shall include, but not be limited to, all
costs incurred in conjunction with any interpleader which the Escrow Agent may
enter into regarding this Escrow Agreement.

 

2.5                        Miscellaneous.

 

A.          Escrow Agent shall make no disbursement, investment or other use of
the Escrow Shares and Accrued Dividends (if any).

 

B.          Escrow Agent may resign by giving not fewer than 60 days written
notice to Kaixin, Seller and the Purchaser, whereupon the Seller and the
Purchaser will immediately appoint a successor Escrow Agent. Until a successor
Escrow Agent has been named and accepts its appointment or until another
disposition of the subject matter of this Escrow Agreement has been agreed upon
by all parties hereto, Escrow Agent shall not be discharged of all of its duties
hereunder.

 

C.          All representations, covenants, and indemnifications contained in
this Article II shall survive the termination of this Escrow Agreement.

 

ARTICLE III

GENERAL PROVISIONS

 

3.1                        Discharge of Escrow Agent.  Upon the release,
transfer and/or delivery of all of the subject matter or monies pursuant to the
terms of this Escrow Agreement, the duties of the Escrow Agent shall terminate
and the Escrow Agent shall be discharged from any further obligation hereunder.

 

3.2                        Notice.  Any payment, notice, request for consent,
report, or any other communication required or permitted in this Escrow
Agreement shall be sent in writing, addressed as specified below, and shall be
deemed given: (a) if by hand or recognized courier service, by 4:00PM on a
business day, addressee’s day and time, on the date of delivery, and otherwise
on the first business day after such delivery; (b) if by fax or email, on the
date that transmission is confirmed electronically, if by 4:00PM on a business
day, addressee’s day and time, and otherwise on the first business day after the
date of such confirmation; or (c) five (5) days after mailing by certified or
registered mail, return receipt requested. Notices shall be addressed to the
respective parties as follows:

 

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If to Escrow Agent:

 

Vistra Corporate Services (HK) Limited

19/F, Lee Garden One

33 Hysan Avenue

Causeway Bay, Hong Kong 

Email: Joe.Cheung@vistra.com 

Fax: (852) 2845-9198

Attn: Joe Cheung, Managing Director

 

If to Kaixin:

 

5/F, North Wing 

18 Jiuxianqiao Middle Road,

Chaoyang District, Beijing 100016

People’s Republic of China

Email: jintao.ren@renren-inc.com  

Attn: Thomas Jintao Ren

 

With a copy to:

 

Simpson Thacher & Bartlett

35/F ICBC Tower

3 Garden Road, Central, Hong Kong

Email: clin@stblaw.com

Attn: Chris K.H. Lin

 

If to the Seller:

 

5/F, North Wing

18 Jiuxianqiao Middle Road,

Chaoyang District, Beijing 100016

People’s Republic of China

Email: james.liu@renren-inc.com

Attn: James Jian Liu

 

With a copy to:

 

Skadden, Arps, Slate, Meagher & Flom

42/F, Edinburgh Tower, The Landmark

15 Queen’s Road Central,

Hong Kong

Email: julie.gao@skadden.com; kenneth.chase@skadden.com

Attn: Z. Julie Gao and Kenneth W. Chase

 

If to the Purchaser:

 

Suite 1306, 13/F. AIA Central

1 Connaught Road, Central,

Hong Kong

Attn: Sing Wang, Anthony Ho and Adrian Cheung

 

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Any party may unilaterally designate a different address by giving notice of
each such change in the manner specified above to each other party.
Notwithstanding the foregoing, no notice to the Escrow Agent shall be deemed
given to or received by the Escrow Agent unless actually delivered to an officer
of the Escrow Agent having responsibility under this Escrow Agreement. The
Escrow Agent shall issue a written acknowledgment of receipt to the notice
sender within two (2) business days after receipt of such notice.

 

3.4                        Governing Law and Inurement.  This Escrow Agreement
shall be construed in accordance with and governed by the laws of the Hong Kong
Special Administrative Region of the People’s Republic of China and the courts
thereof shall have non-exclusive jurisdiction to adjudicate all claims, actions
or other proceedings relating to this Escrow Agreement. It shall inure to and be
binding upon the parties hereto and their respective successors, heirs and
assigns.

 

3.5                        Construction.  Words used in the singular number may
include the plural and the plural may include the singular. The section headings
appearing in this instrument have been inserted for convenience only and shall
be given no substantive meaning or significance whatsoever in construing the
terms and conditions of this Escrow Agreement.

 

3.5                        Supremacy.  Notwithstanding anything to the contrary
in this Escrow Agreement, in the event of any conflict or inconsistency between
this Escrow Agreement and the Share Exchange Agreement, the Share Exchange
Agreement shall prevail.

 

3.6                        Amendment.  The terms of this Escrow Agreement may be
altered, amended, modified or revoked only by an instrument in writing signed by
the undersigned and Escrow Agent.

 

3.7                        Force Majeure. Escrow Agent shall not be liable to
the undersigned for any loss or damage arising out of any acts of God, strikes,
equipment or transmission failure, war, terrorism, or any other act or
circumstance beyond the reasonable control of Escrow Agent.

 

3.8                        Written Agreement. This Escrow Agreement represents
the final agreement between the parties, and may not be contradicted by evidence
of prior, contemporaneous or subsequent oral agreements of the parties. There
are no unwritten oral agreements between the parties.

 

3.9                        No Partnership or Agency. None of the provisions of
this Escrow Agreement shall be deemed to constitute or create any partnership or
joint venture between the parties hereof and none of them shall have any
authority to bind the other party in any way other than as expressly provided
for herein.

 

3.10                      No Third Party Beneficiaries. Nothing expressed or
referred to in this Escrow Agreement is intended or will be construed to give
any person other than the parties hereto and their respective successors and
assigns any legal or equitable right, remedy or claim under or with respect to
this Escrow Agreement, or any provision hereof, it being the intention of the
parties hereto that this Escrow Agreement and all of its provisions and
conditions are for the sole and exclusive benefit of the parties to this Escrow
Agreement and their respective successors and assigns. A person, including but
not limited to any Investors, who is not a party to this Escrow Agreement shall
not have any rights under the Contracts (Rights of Third Parties) Ordinance (Cap
623) to enforce any term of this Escrow Agreement.

 

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3.11                     Counterparts. This Escrow Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together shall be deemed to be one and the same agreement. This Escrow Agreement
may be executed and delivered by facsimile, PDF, electronic signatures or other
means of electronic transmission and such execution and delivery shall be deemed
to have the same legal effect as delivery of an original signed copy of this
Escrow Agreement and deemed to be valid and enforceable against the parties
hereof.

  

  The Seller:         By:       Name:     Title:           The Purchaser:      
  By:       Name:     Title:  

   

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The Escrow Agent, hereby accepts its appointment as Escrow Agent as described in
the foregoing Escrow Agreement, subject to the terms and conditions set forth
therein.

 

  The Escrow Agent:         By:       Name:     Title:  

 

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SCHEDULE A

 

AUTHORIZED SIGNATORIES

 

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SCHEDULE B

 

NOTICE

 

Pursuant to that certain Escrow Agreement dated and effective as of ____________
made between the Seller, the Purchaser and the Escrow Agent:

 

The undersigned Purchaser and Seller hereby jointly request the release and
transfer of the Escrow Shares and the Accrued Dividends (if applicable) in the
amount and manner described below.

 

Please release and transfer to the below Recipient:    

 

Amount of Escrow Shares to release and transfer:    

 

Amount of dividends to release and transfer:  (if any) 

 

IN WITNESS WHEREOF: the parties hereto have executed this Notice in multiple
counterparts, each of which is and shall be considered an original for all
intents and purposes, effective as of the date first written above.

 

PURCHASER:   SELLER: Authorized Signatory   Authorized Signatory           By:  
  By:             Name:     Name:             Title:     Title:            
Date:     Date:  

 

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