Exhibit 10.6
SECURITIES ESCROW AGREEMENT
THIS SECURITIES ESCROW AGREEMENT, dated as of ____ __, 2007 (this
"Agreement"), by and among CHINA RESOURCES LTD., a Delaware corporation (the
"Company"), the undersigned parties listed under Initial Stockholders on the
signature page hereto (collectively, the "Initial Stockholders") and AMERICAN
STOCK TRANSFER & TRUST COMPANY, a New York corporation (the "Escrow Agent").
WHEREAS, the Company has entered into an Underwriting Agreement, dated
____, 2007 ("Underwriting Agreement"), with Maxim Group LLC ("Maxim" or the
"Representative") acting as representative of the several underwriters
(collectively, the "Underwriters"), pursuant to which, among other matters, the
Underwriters have agreed to purchase up to 4,600,000 units (the "Units") of the
Company's securities. Each Unit consists of one share of the Company's common
stock, par value $0.0001 per share, and one Warrant, each Warrant to purchase
one share of Common Stock, all as more fully described in the Company's final
Prospectus, dated ______, 2007 (the "Prospectus"), comprising part of the
Company's Registration Statement on Form S-1 (File No. 333-_____) under the
Securities Act of 1933, as amended (the "Registration Statement"), declared
effective on _____, 2007 (the "Effective Date");
WHEREAS, the Initial Stockholders have agreed as a condition of the sale
of the Units to deposit those securities of the Company owned by them which are
set forth opposite their respective names on Exhibit A attached hereto
(collectively, the "Escrow Securities"), in escrow with the Escrow Agent as
hereinafter provided; and
WHEREAS, the Company and the Initial Stockholders desire that the Escrow
Agent accept the Escrow Securities, in escrow, to be held and disbursed as
hereinafter provided.
NOW, THEREFORE, in consideration of the premises and the mutual covenants,
representations and warranties contained herein and intending to be legally
bound hereby, the parties hereto agree as follows:
1. Appointment of Escrow Agent. The Company and the Initial Stockholders
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 Initial Stockholders 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 Initial Stockholder
acknowledges that the certificate representing his or her Escrow Securities is
legended to reflect the deposit of such Escrow Securities under this Agreement.
3. Disbursement of the Escrow Securities.
3.1 Except as set forth herein and in Section 3.2 below, the Escrow Agent
shall hold the Escrow Securities until the earlier of (a) the first anniversary
of the consummation of a Business Combination (as such term is defined in the
Certificate of Incorporation of the Company) by the Company and (b) the third
anniversary of the Effective Date (the "Escrow Period"), on which date it shall,
upon written instructions from each Initial Stockholder, disburse each of the
Initial Stockholder's Escrow Securities to such Initial Stockholder; 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 (as such term is defined in the
Prospectus), it (or the surviving entity) subsequently consummates a
liquidation, merger, stock exchange or other similar transaction which results
in all of the stockholders of such entity having the right to exchange their
shares of Common Stock for cash, securities or other property, then the Escrow
Agent will, upon receipt of a certificate, executed by the Chief Executive
Officer or Chief Financial Officer of the Company, in form reasonably acceptable
to the Escrow Agent, that such transaction is then being consummated, release
the Escrow Securities to the Initial Stockholders upon consummation of the
transaction 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.
3.2 Upon written instructions from the Company advising that a Business
Combination has been consummated and that one or more of the public stockholders
has determined to exercise the right to redeem their shares for cash described
in the Registration Statement, the Escrow Agent will release and deliver to the
Company for cancellation on a pro rata basis certificates representing that
number of escrow shares of Common Stock (not to exceed 100,000 in the aggregate)
which is equal to the quotient obtained by dividing (i) the total number of
shares redeemed by (ii) 16.10. By way of illustration, for each 16 shares
redeemed, one share of Common Stock will be surrendered for cancellation. Such
instructions set forth both the number of shares the Company is redeeming and
the number of shares of Common Stock to be delivered to the Company for
cancellation.
4. Rights of Initial Stockholders in Escrow Securities.
4.1 Voting Rights as a Stockholder. Subject to the terms of the Insider
Letter described in Section 4.4 hereof, and except as herein provided, the
Initial Stockholders shall retain all of their rights as stockholders of the
Company during the Escrow Period, including, without limitation, the right to
vote their Escrow Securities.
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 Initial Stockholders, but all dividends
payable in stock or other non-cash property (the "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.
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4.3 Restrictions on Transfer . Except as set forth in Section 3.2, during
the Escrow Period, no sale, transfer or other disposition may be made of any or
all of the Escrow Securities except, with respect to (a) an entity that is an
Initial Stockholder, to any person or entity controlling, controlled by, or
under common control with, such Initial Stockholder, and (b) with respect to an
Initial Stockholder who is an individual, (i) to an entity controlled by such
Initial Stockholder or to a member of Initial Stockholder's immediate family or
to a trust, the beneficiary of which is an Initial Stockholder or a person
related to an Initial Stockholder's by blood, marriage or adoption, or (ii) by
virtue of the laws of descent and distribution upon death of any Initial
Stockholder; 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 signed
by the Initial Stockholder transferring the Escrow Securities. During the Escrow
Period, no Initial Stockholder shall pledge or grant a security interest in his,
her or its Escrow Securities or grant a security interest in his, her or its
rights under this Agreement.
4.4 Insider Letters. Each of the Initial Stockholders has executed a
letter agreement with the Representatives and the Company, dated as indicated on
Exhibit A hereto, and which is filed as an exhibit to the Registration Statement
("Insider Letter"), respecting the rights and obligations of such Initial
Stockholder in certain events, including, but not limited to, the liquidation 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.
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.
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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 legal counsel 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 Initial Stockholders 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 sixty (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 Company and a majority of the Initial Stockholders, 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 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 New York.
6.2 Third Party Beneficiaries. Each of the Initial Stockholders 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 the Representatives.
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 the party to be charged and by the
Representatives.
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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:
If to the Company, to:
China Resources Ltd.
Xxxx 000, Xxxxx X, Xxxxxx Xxxxxxx Xxxxx, Xxxxxxx Xxxx
Futian District, Shenzhen, P.R. China
Attn: Chief Executive Officer
If to a Stockholder, to his or her address set forth in Exhibit A;
And if to the Escrow Agent, to:
American Stock Transfer & Trust Company
00 Xxxxxx Xxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx Xxxxxx, Vice President
A copy of any notice sent hereunder shall be sent to:
Maxim Group, LLC
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxxx X. Xxxxxx, Director of Investment Banking
and:
Ellenoff Xxxxxxxx & Schole LLP
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx X. Xxxxxxxx, Esq
and:
Xxxxx & Xxx Xxxxxx LLP
Three Park Avenue , 16th floor
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx XxXxxx, Esq.
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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 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.
6.8 Counterparts. This Agreement may be executed in several counterparts,
each one of which may be delivered by facsimile transmission and each of which
shall constitute an original, and together shall constitute but one instrument.
(Remainder of page intentionally left blank. Signature pages to follow.)
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first written above.
CHINA RESOURCES LTD.
By: _______________________________
Name: Xxxx Xxxx
Title: Chief Executive Officer
Signature Page To Securities Escrow Agreement
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INITIAL STOCKHOLDERS:
__________________________________
Name: Xxxx Xxxx
__________________________________
Xxxxx Xxxxxxx Xxxx
__________________________________
Xxxxxx Nugawela
__________________________________
Xxxxxxxxx Xxxxxxxxx
__________________________________
Xxxxx Xxxxxxxx
Signature Page To Securities Escrow Agreement
American Stock Transfer & Trust Company
By:_________________________________
Name: __________________________
Title: __________________________
Signature Page To Securities Escrow Agreement
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EXHIBIT A
Date of Insider
Name and Address Shares (#) Share Cert. No. Letter
------------------------------------ ---------- --------------- ---------------
Xxxx Xxxx
Xxxx Xxxx China Xxx Xxx Trading Co.,
Ltd., Room 921, Block A, Golden
Central Tower, Jintian Road, Futian
District, Shenzhen, P.R. China. _______, 2007
) 500,000
Xxxxx Xxxxxxx Xxxx
Xxxx Xxxx China Xxx Xxx Trading Co., ________ 2007
Ltd., Xxxx 000, Xxxxx X, Xxxxxx
Xxxxxxx Tower, Jintian Road, Futian
District, Shenzhen, P.R. China. 200,000
Xxxxxx Nugawela
XX Xxx 000 Xxxxxxx Xxxx
Xxxxxxx Xxxxxxxxx 0000 100,000 _______, 2007
Xxxxxxxxx Xxxxxxxxx
Three Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000 75,000
_______, 0000
Xxxxx Xxxxxxxx
c/o Xxxxxxx Xxx
000 Xxxxx Xxxxxx, 00xx floor _______, 2007
Xxx Xxxx, XX 00000 125,000
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