REAL ESTATE SHARE ESCROW AGREEMENT
Exhibit
10.8
REAL
ESTATE SHARE ESCROW AGREEMENT (the “Agreement”), dated as
of August 26, 2008, is entered into by and among CHINA VALVES TECHNOLOGY, INC.,
a Nevada corporation (the “Company”), BIN FANG
(the “Principal”), XXXXX
XXXXXX, CARRET & CO., LLC, as representative (together with its successors
and assigns, the “Investor
Representative”) of the Investors who are parties to the Purchase
Agreement (as defined below), and Escrow, LLC, with an address at 00 Xxxx
Xxxxxx, Xxxxx 000, Xxxxxxxxx, XX 00000 (the “Escrow Agent”).
Capitalized terms used, but not defined herein shall have the meanings set forth
in the Securities Purchase Agreement, dated as of the date hereof among the
Company, Hong Kong, WFOE and the Investors (the “Purchase
Agreement”).
BACKGROUND
The
Principal owns all of the issued and outstanding equity interests in Kaifeng
High Pressure Valve Steel Casting Limited Liability Company, a corporation
formed under the laws of the People’s Republic of China (the “Casting
Company”). The Casting Company has entered into an agreement,
dated on or about the date hereof which, as translated to English, is
substantially in the form of Exhibit A (the “Real Estate Transfer
Agreement”), relating to the transfer to Henan Kaifeng High Pressure
Valve Co., Ltd., a Chinese subsidiary of the Company (the “PRC Sub”), of the
real estate (the “Real
Estate”) described in the Real Estate Transfer Agreement.
In order
to ensure that the Real Estate is transferred to the PRC Sub promptly and in
accordance with the terms of the Real Estate Transfer Agreement, the Investors
have requested that the Principal enter into this Agreement pursuant to which he
will personally agree to take any and all actions necessary to consummate the
transfer of the Real Estate in accordance with the Real Estate Transfer
Agreement. In consideration for the agreement of the Principal to
cause the Casting Company to transfer the Real Estate, the Company will issue to
the Principal, or his designee, Five Million, Five Hundred Thousand Shares (the
“Escrow
Shares”) of the Company’s Common Stock on the date hereof. The
Escrow Shares will be held in escrow in accordance with the terms of this
Agreement to further ensure the consummation of the transactions contemplated by
the Real Estate Transfer Agreement.
The
execution and delivery of this Agreement is a condition precedent to the
consummation of the transactions contemplated by the Purchase Agreement and the
Investors would not consummate the transactions, but for the existence of this
Agreement.
NOW,
THEREFORE, in consideration of the covenants and mutual promises contained
herein and other good and valuable consideration, the receipt and legal
sufficiency of which are hereby acknowledged and intending to be legally bound
hereby, the parties agree as follows:
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ARTICLE
I
TERMS OF
THE ESCROW
1.1. The
parties to this Agreement hereby agree to establish an escrow account with the
Escrow Agent whereby the Escrow Agent shall hold the Escrow Shares as
contemplated by this Agreement.
1.2. On the
date hereof, the Company shall issue to the Principal, or his designee, the
Escrow Shares in consideration for the various agreements of the Principal set
forth in this Agreement. The Escrow Shares shall be delivered by the
Company directly to the Escrow Agent. On the date hereof, the
Principal or his designee, as applicable, shall deliver to the Escrow Agent an
undated medallion guaranteed stock power (or such other instrument or document
as may be required by the Company’s transfer agent to effectuate the transfer of
the Escrow Shares as contemplated by this Agreement).
1.3. The
Principal shall use his best efforts to effectuate the transfer of the Real
Estate to the PRC Sub in accordance with the Real Estate Transfer Agreement
within ten (10) months following the date hereof (the “Outside Date”) and
will not take any action which could frustrate or delay such
transfer. In addition, the Principal shall, and shall cause the
Casting Company to, perform, or cause to be done and performed, all such further
acts and things, and shall execute and deliver all such other agreements,
certificates, instruments and documents, as any other party may reasonably
request in order to carry out the intent and accomplish the purposes of this
Agreement, the Real Estate Transfer Agreement and the consummation of the
transactions contemplated hereby and thereby.
1.4. The
Escrow Shares will be released from the escrow as follows:
(a) If the
Real Estate has not been transferred to the PRC Sub in accordance with the Real
Estate Transfer Agreement on or before the Outside Date, then the Investor
Representative may instruct the Escrow Agent to release the Escrow Shares to the
Company and, promptly upon receipt of such instructions, the Escrow Agent will
so release the Escrow Shares to the Company. The Escrow Agent need
only rely on the instruction from the Investor Representative in this regard and
will disregard any contrary instructions. In such event the Company
shall immediately deliver the certificates representing the Escrow Shares to the
Company’s transfer agent along with written instructions to the transfer agent
instructing the transfer agent to cancel the Escrow Shares whereupon such Escrow
Shares shall no longer be issued and outstanding.
(b) If the
Real Estate has been transferred to the PRC Sub in accordance with the Real
Estate Transfer Agreement on or before the Outside Date, then the Principal and
the Investor Representative shall jointly instruct the Escrow Agent to release
the Escrow Shares to the Principal or his designee and, promptly upon receipt of
such instructions, the Escrow Agent will so release the Escrow Shares to the
Principal or his designee.
(c) Notwithstanding
any other provision of this Agreement, if at any time Escrow Agent shall receive
from the Principal and the Investor Representative (prior to being directed to
take action by a court) joint written instructions as to the delivery of the
Escrow Shares or any portion thereof, Escrow Agent shall deliver the Escrow
Shares in accordance with such joint written instructions.
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ARTICLE
II
ESCROW
AGENT
2.1 Interpleader. In the
event this Agreement or the Escrow Shares becomes the subject of litigation, or
if the Escrow Agent shall desire to do so for any other reason, the Company
authorizes the Escrow Agent, at its option, to deposit the Escrow Shares with
the clerk of the court in which the litigation is pending, or a court of
competent jurisdiction if no litigation is pending, and thereupon the Escrow
Agent shall be fully relieved and discharged of any further responsibility with
regard thereto. The Company also authorizes the Escrow Agent, if it
receives conflicting claims to the Escrow Shares, is threatened with litigation
or if the Escrow Agent shall desire to do so for any other reason, to interplead
all interested parties in any court of competent jurisdiction and to deposit the
Escrow Shares with the clerk of that court and thereupon the Escrow Agent shall
be fully relieved and discharged of any further responsibility hereunder to the
parties from which they were received.
2.2 Exculpation and
Indemnification of Escrow Agent
(a) The Escrow Agent
shall have no duties or responsibilities other than those expressly set forth
herein. The Escrow Agent shall have no duty to enforce any obligation
of any person to make any payment or delivery, or to direct or cause any payment
or delivery to be made, or to enforce any obligation of any person to perform
any other act. The Escrow Agent shall be under no liability to the
other parties hereto or anyone else, by reason of any failure, on the part of
any party hereto or any maker, guarantor, endorser or other signatory of a
document or any other person, to perform such person’s obligations under any
such document. Except for amendments to this Agreement referenced
below, and except for written instructions given to the Escrow Agent by the
Company and the Investor Representative relating to the Escrow Shares, the
Escrow Agent shall not be obligated to recognize any agreement between or among
any of the other parties, notwithstanding that references hereto may be made
herein and whether or not it has knowledge thereof.
(b) The Escrow Agent
shall not be liable to the Company, the Investor Representative, any
Investor or to anyone else for any action taken or omitted by it, or any action
suffered by it to be taken or omitted, in good faith and 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 of the
terms thereof, unless evidenced by written notice 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 give its prior written consent
thereto.
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(c) The Escrow
Agent shall not be responsible for the sufficiency or accuracy of the form, or
of the execution, validity, value or genuineness of, any document or property
received, held or delivered to it hereunder, or of any signature or endorsement
thereon, or for any lack of endorsement thereon, or for any description therein;
nor shall the Escrow Agent be responsible or liable to the Company, the Investor
Representative, any Investor or to anyone else in any respect on account of the
identity, authority or rights, of the person executing or delivering or
purporting to execute or deliver any document or property or this
Agreement.
(d) The Escrow Agent
shall have the right to assume, in the absence of written notice to the contrary
from the proper person or persons, that a fact or an event, by reason of which
an action would or might be taken by the Escrow Agent, does not exist or has not
occurred, without incurring liability to the Company, the Investor
Representative, any Investor or to anyone else for any action taken or omitted
to be taken or omitted, in good faith and in the exercise of its own best
judgment, in reliance upon such assumption.
(e) The Escrow
Agent shall be indemnified and held harmless against any liability for taxes and
for any penalties in respect of taxes, on any investment income or payments with
respect to the Escrow Shares in the manner provided in Section 2.2
(f).
(f) The Escrow
Agent will be indemnified and held harmless by the Company from and
against all expenses, including all counsel fees and disbursements, or loss
suffered by the Escrow Agent in connection with any action, suit or proceedings
involving any claim, or in connection with any claim or demand, which in any
way, directly or indirectly, arises out of or relates to this Agreement, the
services of the Escrow Agent hereunder, except for claims relating to gross
negligence by Escrow Agent or breach of this Agreement by the Escrow Agent, or
the monies or other property held by it hereunder or for willful misconduct of
the Escrow Agent. Promptly after the receipt of the Escrow Agent of
notice of any demand or claim or the commencement of any action, suit or
proceeding, the Escrow Agent shall, if a claim in respect thereof is to be made
against the Company, notify the Company thereof in writing, but the failure by
the Escrow Agent to give such notice shall not relieve the Company from any
liability which the Company may have to the Escrow Agent
hereunder. Notwithstanding any obligation to make payments and
deliveries hereunder, the Escrow Agent may retain and hold for such time as it
deems necessary such amount of monies or property, including shares of the
Company’s capital stock as it shall, from time to time, in its sole discretion,
seem sufficient to indemnify itself for any such loss or expense and for any
amounts due it under Section 4.1.
(g) For purposes hereof, the
term “expense or loss” shall include all amounts paid or payable to satisfy any
claim, demand or liability, or in settlement of any claim, demand, action, suit
or proceeding settled with the express written consent of the Escrow Agent, and
all costs and expenses, including, but not limited to, counsel fees and
disbursements, paid or incurred in investigating or defending against any such
claim, demand, action, suit or proceeding.
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ARTICLE
III
TERMINATION
OF AGREEMENT
3.1 This
Agreement shall terminate upon delivery by the Escrow Agent in accordance with
this Agreement of all of the Escrow Shares, provided that the rights of the
Escrow Agent and the obligations of the Company under Article II shall survive
the termination hereof.
3.2 The Escrow
Agent may resign at any time and be discharged from its duties as Escrow Agent
hereunder by giving the Company and the Investor Representative at least five
days written notice thereof (the “Notice
Period”). As soon as practicable after its resignation, the
Escrow Agent shall, if it receives notice from the Company within the Notice
Period, turn over to a successor escrow agent appointed by the Company all of
the Escrow Shares then held by the Escrow Agent upon presentation of the
document appointing the new escrow agent and its acceptance
thereof. If no new agent is so appointed within the Notice Period,
the Escrow Agent may deposit the Escrow Shares with the clerk of a court of
competent jurisdiction in accordance with Section 2.1 of this
Agreement.
ARTICLE
IV
COMPENSATION
OF ESCROW AGENT
4.1 The
Escrow Agent shall be entitled to the compensation from the Company described on
Schedule A to this Agreement.
ARTICLE
V
MISCELLANEOUS
5.1 No
waiver or any breach of any covenant or provision herein contained shall be
deemed a waiver of any preceding or succeeding breach thereof, or of any other
covenant or provision herein contained. No extension of time for performance of
any obligation or act shall be deemed an extension of the time for performance
of any other obligation or act.
5.2 All
notices, communications and instructions required or desired to be given under
this Agreement must be in writing and shall be deemed to be duly given if sent
by registered or certified mail, return receipt requested, or overnight courier
to the addresses specified on the signature page to this Agreement or to such
other address and to the attention of such other person as any of the above may
have furnished to the other parties in writing and delivered in accordance with
the provisions set forth above.
5.3 This
Agreement shall be binding upon and shall inure to the benefit of the permitted
successors and permitted assigns of the parties hereto.
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5.4 This
Agreement and the rights and obligations hereunder of the Company may not be
assigned. This Agreement and the rights and obligations hereunder of
the Escrow Agent may be assigned by the Escrow Agent. This Agreement
shall be binding upon and inure to the benefit of each party’s respective
successors, heirs and permitted assigns. No other person shall acquire or have
any rights under or by virtue of this Agreement. This Agreement may not be
changed orally or modified, amended or supplemented without an express written
agreement executed by the Escrow Agent, the Company and the Investor
Representative. This Agreement is intended to be for the sole benefit of the
parties hereto and the Investors and their respective successors, heirs and
permitted assigns, and none of the provisions of this Agreement are intended to
be, nor shall they be construed to be, for the benefit of any third
person.
5.5 This
Agreement shall be construed without regard to any presumption or other rule
requiring construction against the party causing such instrument to be
drafted. The terms “hereby,” “hereof,” “hereunder,” and
any similar terms, as used in this Agreement, refer to the Agreement in its
entirety and not only to the particular portion of this Agreement where the term
is used. The word “person” shall mean any natural person,
partnership, corporation, government and any other form of business of legal
entity. All words or terms used in this Agreement, regardless of the
number or gender in which they were used, shall be deemed to include any other
number and any other gender as the context may require. This
Agreement shall not be admissible in evidence to construe the provisions of any
prior agreement.
5.6 The
parties hereto expressly agree that this Agreement shall be governed by,
interpreted under and construed and enforced in accordance with the laws of the
State of Virginia without regard to conflicts of law principles that would
result in the application of the substantive laws of another
jurisdiction. Each of the parties hereby irrevocably
consents to the jurisdiction of the courts of the State of Virginia and of any
Federal court located in such state in connection with any action, suit or
proceedings arising out of or relating to this Agreement or any action taken or
omitted hereunder, and waives personal service of any summons, complaint or
other process and agrees that the service thereof may be made by certified or
registered mail directed to it at the address for notices set forth in Section
5.2.
5.7 The
Escrow Agent’s duties hereunder may be altered, amended, modified or revoked
only by a writing signed by the Company, the Investor Representative and the
Escrow Agent.
5.8 This
Agreement may be executed in a number of counterparts, by facsimile, each of
which shall be deemed to be an original as of those whose signature appears
thereon, and all of which shall together constitute one and the same
instrument. This Agreement shall become binding when one or more of
the counterparts hereof, individually or taken together, are signed by all the
parties.
5.9 If
the Escrow Agent reasonably requires other or further instruments in connection
with this Agreement or obligations in respect hereto, the necessary parties
hereto shall join in furnishing such instruments.
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IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date
first written above.
COMPANY:
|
|
By: /s/
Siping Fang
|
Name:
Siping Fang
Title:
Chief Executive Officer
Address:
Xx.00
Xxxx Xxxxxxx Xxxx
Xxxxxxx Xxxx, Xxxxx Xxxxxxxx,
Xxxxxxx Xxxxxxxx of China
Facsimile: 00-000-000-0000
Attn.:
President
PRINCIPAL:
/s/
Bin Fang
Bin
Fang
Address:
7
INVESTOR
REPRESENTATIVE:
XXXXX
XXXXXX, CARRET & CO., LLC
By: /s/
Xxxxxxx X.
Xxxxxx
Name:
Xxxxxxx X. Xxxxxx
Title:
Chief Financial Officer
Address:
Xxxxx
Xxxxxx, Carret & Co., LLC
000
Xxxxxxxxx Xxxxxx
Xxx Xxxx,
XX 00000
Facsimile:
Attn:
ESCROW
AGENT:
ESCROW,
LLC
By: /s/
Xxxxxxx X.
Xxxxxxx
Name:
Xxxxxxx X. Xxxxxxx
Title:
Vice-President
Address:
Escrow,
LLC
00 Xxxx
Xxxxxx, Xxxxx 000
Xxxxxxxxx,
XX 00000
Facsimile:
540-347-2291
Attn:
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