SECURITIES ESCROW AGREEMENT
SECURITIES
ESCROW AGREEMENT,
dated
as of _______, 2008 (“Agreement”),
by
and among CHARDAN 2008 CHINA ACQUISITION CORP., a company organized under the
laws of the British Virgin Islands (“Company”),
XXXXX
XXXXXXX, XXXXX XXXXXX, XXXXX XXXXXXXX, XXXXXX XXXXXXX, XXXX GOLD, JIANGNAN
XXXXX, ROYALE HOLDINGS,
XX.
XXXXXXX X. XXXXXXX, XXXXX XXXXXXX, XXXXXX XXXXXXX, XX XXXXX, LI XXXX XX (AS
CUSTODIAN FOR XXXXXXX HE), XX XXXX, XX. XXXXXXX XXX, XXXXXXXX XXXXX, XXXXXX
XXXXXXX, XXXXXX XXXXXX AND XXX XXXXXX (collectively
“Existing
Shareholders”)
and
CONTINENTAL STOCK TRANSFER & TRUST COMPANY (“Escrow
Agent”).
WHEREAS,
the Company has entered into an Underwriting
Agreement, dated
________
2008
(“Underwriting
Agreement”),
with
Xxxxx Xxxxxx, Carret & Co., LLC, Maxim
Group, LLC and Xxxx Capital Partners, LLC, acting as representatives (the
“Representatives”)
of the
several underwriters (collectively, the “Underwriters”),
pursuant to which, among other matters, the Underwriters have agreed to purchase
a total of 6,875,000 units (“Units”)
of the
Company. Each Unit consists of one of the Company’s ordinary share, $0.0001 par
value (each an “Ordinary
Share”),
and
one warrant (“Warrant”),
each
Warrant to purchase one Ordinary Share, all as more fully described in the
Company’s definitive Prospectus, dated _______, 2008 (“Prospectus”)
comprising part of the Company’s Registration Statement on Form F-1 (File No.
333-152623) under the Securities Act of 1933, as amended (together, the
“Registration
Statement”),
which
was declared effective on _______, 2008 (“Effective
Date”).
WHEREAS,
the
Existing Shareholders have agreed as a condition of the Underwriters’ obligation
to purchase the Units pursuant to the Underwriting Agreement and to offer them
to the public, to deposit all of their Ordinary Shares (the “Escrow
Shares”)
and
warrants exercisable for Ordinary Shares (the “Escrow
Warrants”;
and
collectively with the Escrow Shares, the “Escrow
Securities”),
as
set forth opposite their respective names in Exhibit
A attached
hereto, 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 Securities.
On or
before the Effective Date, each of the Existing Shareholders shall deliver
to
the Escrow Agent certificates representing his or her respective Escrow
Securities, to be held and disbursed subject to the terms and conditions of
this
Agreement. Each Existing Shareholder acknowledges and agrees that the
certificate(s) representing his or her Escrow Securities will bear a legend
to
reflect the deposit of such Escrow Securities under this Agreement.
3. Disbursement
of the Escrow Securities.
The
Escrow Agent shall not release the Escrow Securities until the earlier of:
(a)
one year after the consummation of a Business Combination, as defined in the
Registration Statement, or (b) thirty (30) months from the date of the
Prospectus (or 36 months if the period to consummate a Business Combination
is
extended by the Company’s shareholders), at which time such Escrow Securities
will be released from escrow. The time that the Escrow Warrants or the Escrow
Shares are held in escrow pursuant to this Agreement is referred to herein
as
the “Escrow
Period”.
On the
expiration of the applicable Escrow Period, the Escrow Agent shall, upon written
instructions from the
Company or Company counsel,
disburse each of the Existing Shareholder’s Escrow Securities to such Existing
Shareholder; provided,
however,
that if
the Escrow Agent is notified by the Company pursuant to Section 6.7 hereof
that
the Company is being liquidated at any time during the Escrow Period, then
the
Escrow Agent shall promptly destroy the certificates representing the Escrow
Securities and,
provided further,
that if,
after
the Company consummates a Business Combination, it (or the surviving entity)
subsequently
consummates a liquidation, merger, share exchange or other similar transaction
which results in all of its shareholders having the right to exchange their
Ordinary Shares or Warrants for cash, securities or other property, then the
Escrow Agent will, upon receipt of a notice, executed by the Chairman, Chief
Executive Officer or Chief Financial Officer of the Company, in a form
reasonably acceptable to the Escrow Agent, certifying that such transaction
is
then being consummated, release the Escrow Securities to the Existing
Shareholders so that they can similarly participate. The Escrow Agent shall
have
no further duties hereunder after the disbursement or destruction of the Escrow
Securities in accordance with this Section 3.
1
4. Rights
of Existing Shareholders in Escrow Securities.
4.1 Voting
Rights as a Shareholder.
Subject
to the terms of the Insider Letter described in Section 4.4 hereof and except
as
herein provided, the Existing Shareholders shall retain all of their rights
as
shareholders of the Company during the Escrow Period with respect to the Escrow
Shares, including, without limitation, the right to vote such shares.
4.2 Dividends
and Other Distributions in Respect of the Escrow Securities. During
the Escrow Period, all dividends payable in cash with respect to the Escrow
Securities 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
Securities”
shall
be deemed to include the Non-Cash Dividends distributed thereon, if any.
4.3 Restrictions
on Transfer.
Except
as set forth in Section 3, during the Escrow Period, the Existing Shareholders
will be permitted to transfer all or a portion of the Escrow Securities to
their
permitted assigns. Prior to their release from escrow, the Escrow Securities
may
only be transferred or assigned: (i) to the Company or any of its officers,
directors and employees, or any affiliates or family members of such
individuals, (ii) by gift to an affiliate or a member of Existing Shareholder’s
immediate family or to a trust or other entity, the beneficiary of which is
one
of its officers or directors or a member of their respective immediate families,
(iii) by virtue of the laws of descent and distribution upon death of any
Existing Shareholder, (iv) pursuant to a qualified domestic relations order;
or
(v) with respect to limited liability companies and partnerships, to their
respective members or partners; provided,
however,
that
such permissive transfers may be implemented only upon the respective
transferee’s written agreement to be bound by the terms and conditions of this
Agreement and of the Insider Letter (as defined below) signed by the Existing
Shareholder transferring the Escrow Securities. During the Escrow Period, the
Existing Shareholders shall not pledge or grant a security interest in the
Escrow Securities or grant a security interest in their rights under this
Agreement.
4.4 Insider
Letters.
Each of
the Existing Shareholders has executed a letter agreement with the
Representatives and the Company, dated as of the Effective Date, and which
is
filed as an exhibit to the Registration Statement (“Insider
Letter”),
respecting the rights and obligations of such Existing Shareholder in certain
events, including but not limited to the dissolution of the Company.
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.
2
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, as set forth on Exhibit
B
hereto.
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 and approved by the
Representatives, 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.
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.
6. Miscellaneous.
6.1 Waiver
of Claims against Trust Account.
Notwithstanding any other provision of this Agreement, the Escrow Agent confirms
its understanding that the Company has established the trust account (as defined
in the Prospectus, the “Trust
Account”)
relating to the securities being sold pursuant to the Prospectus. The Escrow
Agent acknowledges that the Trust Account will exist for the benefit of the
Company’s public shareholders and the monies from the Trust Account may only be
disbursed upon the occurrence of certain events as more fully described in
the
Prospectus. The Escrow Agent agrees that neither it nor any of its affiliates
have or will have any right, title, interest or claim in or to the monies in
the
Trust Account, and the Escrow Agent hereby waives any and all right, title,
interest of claim of any kind in or to any distribution of any property held
in
the Trust Account that it or its affiliates may have now or in the future and
hereby agrees not to seek recourse, reimbursement, payment or satisfaction
for
any claim of any kind against the Trust Account for any reason whatsoever,
including in respect of the Company’s indemnification obligations set forth in
this Agreement.
3
6.2 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. Each of the
parties 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. Each of the parties hereby waives any
objection to such exclusive jurisdiction and that such courts represent an
inconvenient forum. Any
such
process or summons to be served upon each of the Company, the Purchasers and
the
Escrow Agent 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 6.7 hereof. Such mailing shall be deemed
personal service and shall be legal and binding upon each of the Company, the
Purchasers and the Escrow Agent in any action, proceeding or claim.
6.3 Third
Party Beneficiaries.
Each of
the Existing Shareholders hereby acknowledges that the Underwriters, including,
without limitation, the Representatives, are third party beneficiaries of this
Agreement and this Agreement may not be modified or changed without the prior
written consent of the Representatives.
6.4 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 the party
to
the charged.
6.5 Headings.
The
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation thereof.
6.6 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.
6.7 Notices.
Any
notice or other communication required or which may be given hereunder shall
be
in writing and either be delivered personally or by private national courier
service, or be mailed, certified or registered mail, return receipt requested,
postage prepaid, and shall be deemed given when so delivered personally or,
if
sent by private national courier service, on the next business day after
delivery to the courier, or, if mailed, two days after the date of mailing,
as
follows:
If
to the
Company, to:
Chardan
0000 Xxxxx Acqusition Corp.
Suite
18E, Tower A
Oriental
Kenzo Plaza
00
Xxxxxxxxxxxxx Xxxxxx
Xxxxxxx,
000000, Xxxxx
Fax
No.:
00-00-00000000
Attn:
Xxxxxxxx Xxxxx
If
to a
Shareholder, to his or her address set forth in Exhibit
A.
and
if to
the Escrow Agent, to:
Continental
Stock
Transfer & Trust Company
00
Xxxxxxx Xxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Fax
No.:
(000) 000-0000
Attn:
Xxxxxx Xxxxxx & Xxxxx Di Paolo
4
A
copy of
any notice sent hereunder shall be sent to:
Ellenoff
Xxxxxxxx & Schole, LLP
000
Xxxx
00xx Xxxxxx, 00xx Xxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Fax
No.:
(000) 000-0000
Attn:
Xxxxxxxx X. Xxxxxxxxxx, Esq.
and
Xxxxx
Xxxxxx, Carret & Co., LLC
000
Xxxxxxxxx Xxxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Fax
No.:
(000) 000-0000
Attn:
Xxxxxxx XxXxxxxxx
and
Maxim
Group LLC
000
Xxxxxxxxx Xxxxxx, 0xx Xxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Fax
No.:
(000) 000-0000
Attn:
Xxxxxxxx Xxxxxx
and
Xxxx
Capital Partners, LLC
00
Xxxxxxxxx Xxxxx
Xxxxxxx
Xxxxx, Xxxxxxxxxx 00000
Fax
No.:
(000) 000-0000
Attn.:
Xxxxx Xxxxxxxxxxxxxxx
and
Xxxxxxxxxx
& Xxxxx LLP
000
Xxxxxxxxx Xxxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Fax
No.:
(000) 000-0000
Attn:
Xxxx X. Xxxxxxx, Esq.
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.
6.8 Liquidation
of 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
a
Business Combination within the time period(s) specified in the Prospectus.
6.9 Counterparts.
This
Agreement may be executed in several counterparts each one of which shall
constitute an original and may be delivered by facsimile transmission and
together shall constitute one instrument.
6.10 Waiver.
Notwithstanding anything herein to the contrary, the Escrow Agent hereby waives
any and all right, title, interest or claim of any kind (“Claim”)
in or
to any distribution of the Trust Account, and hereby agrees not to seek
recourse, reimbursement, payment or satisfaction for any Claim against the
Trust
Account for any reason whatsoever.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
5
IN
WITNESS WHEREOF,
the
execution of this Securities Escrow Agreement as of the date first above
written.
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By:
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Name:
Xxxxx Xxxxxxx
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Title:
Chief Executive Officer
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6
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EXISTING
SHAREHOLDERS:
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Xxxxx
Xxxxxxx
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Xxxxx
Xxxxxx
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Xxxxx
Xxxxxxxx
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Xxxxxx
Xxxxxxx
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Xxxx
Gold
|
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|
Jiangnan
Xxxxx
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ROYALE
HOLDINGS
|
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By:
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Name:
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Title:
|
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Xx.
Xxxxxxx X. Xxxxxxx
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Xxxxx
Xxxxxxx
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Xxxxxx
Xxxxxxx
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Li
Zhang
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Li
Xxxx Xx (as custodian for Xxxxxxx
He)
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7
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Xx
Xxxx
|
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Xx.
Xxxxxxx Xxx
|
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Xxxxxxxx
Xxxxx
|
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Xxxxxx
Xxxxxxx
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Xxxxxx
Xxxxxx
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Xxx
Xxxxxx
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8
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CONTINENTAL
STOCK TRANSFER & TRUST
COMPANY
|
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|
By:
|
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|
Name:
Xxxxxx X. Xxxxxx
|
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|
Title:
Chairman
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9
EXHIBIT
A
|
Shareholders
|
Number
of
Ordinary
Shares
and
Warrants
|
|||
|
|
|
|||
|
Xxxxx
Xxxxxxx
|
302,907
|
|||
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Xxxxx
Xxxxxx
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136,713
|
|||
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Xxxxx
Xxxxxxxx
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81,296
|
|||
|
Xxxxxx
Xxxxxxx
|
27,708
|
|||
|
Xxxx
Gold
|
5,542
|
|||
|
Jiangnan
Xxxxx
|
261,427
|
|||
|
Royale
Holdings
|
661,693
|
|||
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Xx.
Xxxxxxx X. Xxxxxxx
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186,528
|
|||
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Xxxxx
Xxxxxxx
|
130,713
|
|||
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Xxxxxx
Xxxxxxx
|
130,713
|
|||
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Li
Zhang
|
130,713
|
|||
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Li
Xxxx Xx, as custodian for Xxxxxxx He under the California Uniform
Transfers to Minors Act
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130,713
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|||
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Xx
Xxxx
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25,000
|
|||
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Xx.
Xxxxxxx Xxx
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25,000
|
|||
|
Xxxxxxxx
Xxxxx
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25,000
|
|||
|
Xxxxxx
Xxxxxxx
|
20,000
|
|||
|
Xxxxxx
Xxxxxx
|
5,000
|
|||
|
Xxx
Xxxxxx
|
5,000
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EXHIBIT
B
Escrow
Agent Fees
$_______
annually for acting agent escrow fee.
Existing
acceptance fee and first year agent fee to be paid at closing.
