ESCROW AGREEMENT
Exhibit
10.4
This Escrow Agreement, dated as of
August 26, 2008 (this “Agreement”), is entered into
by and among China Valves Technology, Inc., a Nevada corporation (formerly
called Intercontinental Resources, Inc.) (the "Company"), Xxxxx Xxxxxx Carret
& Co., LLC (the "Placement
Agent") and Escrow, LLC, with its principal offices located at 000 Xxxx
Xx., Xxxxxxxxxx, XX 00000 (the “Escrow Agent”). The
Placement Agent and the Company are sometimes each referred to herein as an
"Escrowing Party" and
collectively, the "Escrowing
Parties."
WITNESSETH:
WHEREAS, the Company proposes to make a
private offering pursuant to the Securities Act of 1933, as amended (the “Offering”) of approximately
Thirty Million Dollars ($30,000,000) (the “Offering Amount”) of shares of
the Company's common stock, par value $0.001 per share ("Common Stock"), pursuant to a
Securities Purchase Agreement, dated as of August 26, 2008, by and among the
Company and the investors party thereto (the "Investors," and such
agreement, the "Securities
Purchase Agreement"), and
WHEREAS, the Company and the Placement
Agent desire to deposit all gross proceeds received from subscriptions for the
shares of Common Stock being sold (the "Securities") in the Offering
(the “Escrowed Funds”)
with the Escrow Agent, to be held in escrow until joint written instructions are
received by the Escrow Agent from the Company, the Placement Agent and Pinnacle
China Fund, LP, from time to time, at which time the Escrow Agent will disburse
the Escrowed Funds in accordance with such joint written instructions (a “Closing”); and
WHEREAS, Escrow Agent is willing to
hold the Escrowed Funds in escrow in subject to the terms and conditions of this
Agreement.
NOW, THEREFORE, in consideration of the
mutual promises herein contained and intending to be legally bound, the parties
hereby agree as follows:
1. Appointment of Escrow
Agent. The Company and the Placement Agent hereby appoint
Escrow Agent as escrow agent in accordance with the terms and conditions set
forth herein and the Escrow Agent hereby accepts such appointment.
2. Delivery of the Escrowed
Funds.
2.1 The
Placement Agent and/or the Company will direct the Investors in the Offering to
deliver the Escrowed Funds to the Escrow Agent on or prior to the closing of the
Offering, addressed to the following account of the Escrow Agent:
Domestic:
Virginia
Commerce Bank
Leesburg,
VA
ABA#000000000
Account
Name: Escrow, LLC
Account
#: 00000000
International:
Correspondent
Bank: Xxxxx Fargo Bank, San Francisco, CA
SWIFT#:
XXXXXX0X
Credit
Account #: 000-00-00000
Virginia
Commerce Bank
FBO
Account Name: Escrow, LLC
Account:
00000000
2.2 (a)
All Investors’ checks shall be made payable to “Escrow, LLC" and
shall be delivered to the Escrow Agent at the address set forth on Exhibit A hereto and
shall be accompanied by a written account of subscription in the form attached
hereto as Exhibit
B (the “Subscription
Information”). The Escrow Agent shall, upon receipt of
Subscription Information, together with the related purchase price being paid by
such Investor therefore (the "Investment Amount"), deposit
the related Investment Amount of such Subscription Information in the Escrow
Account for collection; or (b) all funds to be wired shall be wired to the
account set forth in Section 2.1 above and written Subscription Information
shall be faxed or emailed to the Escrow Agent in accordance with the information
provided on Exhibit
A.
2.3 Any
checks which are received by the Escrow Agent that are made payable to a party
other than the Escrow Agent shall be returned directly to the Placement Agent
together with any documents delivered therewith. Simultaneously with
each deposit of a check with the Escrow Agent, the Placement Agent shall provide
the Escrow Agent with the Subscription Information to include the name, address
and taxpayer identification number of each Investor and of the aggregate
principal amount of Securities subscribed for by such Investor. The Escrow Agent
is not obligated, and may refuse, to accept checks that are not accompanied by a
Subscription Information containing the requisite information.
2.4 In the
event a wire transfer is received by the Escrow Agent and the Escrow Agent has
not received Subscription Information, the Escrow Agent shall notify the
Placement Agent. If the Escrow Agent does not receive the Subscription
Information by such Investor prior to close of business on the third business
day (days other than a Saturday or Sunday or other day on which the Escrow Agent
is not open for business in the State of Virginia) after notifying the Placement
Agent of receipt of said wire, the Escrow Agent shall return the funds to such
Investor.
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3. Escrow Agent to Hold and
Disburse Escrowed Funds. The Escrow Agent will hold
and disburse the Escrowed Funds received by it pursuant to the terms of this
Agreement, as follows:
3.1 Upon
receipt of both (i) written notice from the Company that the conditions to
closing under Section 5.1 of the Securities Purchase Agreement have been
satisfied or waived in accordance with the Securities Purchase Agreement and
(ii) joint written notice from the Company and the Placement Agent and Pinnacle
China Fund, LP, in substantially the form of Exhibit C hereto, the
Escrow Agent shall release the Escrowed Funds as directed in such
instructions.
3.2 In
the event this Agreement, the Escrowed Funds or the Escrow Agent becomes the
subject of litigation, the Company authorizes the Escrow Agent, at its option,
to deposit the Escrowed Funds 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 Funds, 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 Escrowed Funds 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.
3.3 In
the event that the Escrow Agent does not receive any instructions by a date that
is 30 days from the date of this Agreement (the “Escrow Termination Date”), all
Escrowed Funds shall be returned to the parties from which they were received,
without interest thereon or deduction therefrom.
4. Exculpation and
Indemnification of Escrow Agent.
4.1 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 other than itself 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 other 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 relating to the Escrowed Funds, the
Escrow Agent shall not be obligated to recognize any agreement between or among
any of the parties hereto, notwithstanding that references hereto may be made
herein and whether or not it has knowledge thereof.
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4.2 The Escrow
Agent shall not be liable to the Company or the Placement Agent 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.
4.3 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
Placement Agent, 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. The Escrow Agent
shall have no responsibility with respect to the use or application of the
Escrowed Funds pursuant to the provisions hereof.
4.4 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
Placement Agent, 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.
4.5 To
the extent that the Escrow Agent becomes liable for the payment of taxes,
including withholding taxes, in respect of income derived from the investment of
the Escrowed Funds, or any payment made hereunder, the Escrow Agent may pay such
taxes; and the Escrow Agent may withhold from any payment of the Escrowed Funds
to the Company to the extent due to the Company in accordance with the
instructions delivered as set forth in Exhibit C such amount
as the Escrow Agent estimates to be sufficient to provide for the payment of
such taxes not yet paid, and may use the sum withheld for that
purpose. The Escrow Agent shall be indemnified and held harmless by
the Company against any liability for taxes and for any penalties in respect of
taxes, on such investment income or payments in the manner provided in Section
4.6.
4.6 The Escrow
Agent and Placement Agent will be indemnified and held harmless by
the Company from and against all expenses, including all reasonable
counsel fees and disbursements, or loss suffered by the Escrow Agent or
Placement 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 or Placement Agent hereunder, except for claims relating to gross
negligence or willful misconduct by Escrow Agent or Placement Agent or breach of
this Agreement by the Escrow Agent or Placement Agent, or the monies or other
property held by it hereunder.
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Promptly
after the receipt of the Escrow Agent or Placement Agent of notice of any demand
or claim or the commencement of any action, suit or proceeding, the Escrow Agent
or Placement Agent, as applicable, shall, if a claim in respect thereof is to be
made against an Escrowing Party, notify each of them thereof in writing, but the
failure by the Escrow Agent or Placement Agent, as applicable, to give such
notice shall not relieve any such party from any liability which an Escrowing
Party may have to the Escrow Agent or Placement Agent hereunder.
4.7 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, reasonable counsel fees and disbursements, paid or incurred in
investigating or defending against any such claim, demand, action, suit or
proceeding.
5. Termination of Agreement and
Resignation of Escrow Agent.
5.1 This
Agreement shall terminate upon disbursement of all of the Escrowed Funds,
provided that the rights of the Escrow Agent and the obligations of
the Company under Section 4 shall survive the termination
hereof.
5.2 The Escrow
Agent may resign at any time and be discharged from its duties as Escrow Agent
hereunder by giving the Company and the Placement Agent at least five (5)
business days written notice thereof (the “Notice
Period”). Upon providing such
notice, the Escrow Agent shall have no further obligation hereunder except to
hold as depositary the Escrow Funds that it receives until the end of such five
Business Day period. In such
event, the Escrow Agent shall not take any action, other than receiving and
depositing the Investors’ checks and wire transfers in accordance with this
Agreement, until the Company has designated a banking corporation, trust
company, attorney or other person as successor. As soon as practicable after its
resignation, the Escrow Agent shall, if it receives notice from the Company and
the Placement Agent within the Notice Period, turn over to a successor escrow
agent appointed by the Company and the Placement Agent all Escrowed Funds (less
such amount as the Escrow Agent is entitled to retain pursuant to Section 7)
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 shall return the Escrowed Funds to the parties from
which they were received without interest or deduction.
6. Form of Payments by Escrow
Agent.
6.1 Any
payments of the Escrowed Funds by the Escrow Agent pursuant to the terms of this
Agreement shall be made by wire transfer unless directed to be made by check by
the Escrowing Parties.
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6.2 All
amounts referred to herein are expressed in United States Dollars and all
payments by the Escrow Agent shall be made in such dollars.
7. Compensation.
7.1 The Company
shall pay a documentation fee to the Escrow Agent of$1,500.00, out of the
Closing.
7.2 Closing
Fee: The Company shall pay a fee of $500 to the Escrow Agent
at each Closing. For purposes of this Section 7.2, a Closing shall
mean each time the Escrow Agent receives joint instructions from the Company and
the Initial Purchaser to disburse Escrowed Funds in accordance with the terms of
this Agreement.
7.3 Interest. The Company hereby
agrees that Escrow Agent shall retain 100%of the interest earned during the time
the Escrowed Funds are held inescrow hereunder.
8. Notices. All
notices, requests, demands, and other communications provided herein shall be in
writing, shall be delivered by hand or by first-class mail, shall be deemed
given when received and shall be addressed to parties hereto at their respective
addresses first set forth on Exhibit A
hereto.
9. Further
Assurances. From time to time on and after the date hereof,
the Company shall deliver or cause to be delivered to the Escrow
Agent such further documents and instruments and shall do and cause to be done
such further acts as the Escrow Agent shall reasonably request (it being
understood that the Escrow Agent shall have no obligation to make any such
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.
10. Consent to Service of
Process. The Company and the Placement Agent hereby
irrevocably consent 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 listed on Exhibit A
hereto.
11. Miscellaneous.
11.1 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.
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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.
11.2 This
Agreement and the rights and obligations hereunder of the parties to this
Agreement may not be assigned. 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 and the Escrowing Parties. This
Agreement is intended to be for the sole benefit of the parties hereto 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.
11.3 This
Agreement shall be governed by, and construed in accordance with, the internal
laws of the State of Virginia. The representations and warranties contained in
this Agreement shall survive the execution and delivery hereof and any
investigations made by any party. The headings in this Agreement are
for purposes of reference only and shall not limit or otherwise affect any of
the terms thereof.
12. Execution of
Counterparts. 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.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE
PAGES FOLLOW]
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IN
WITNESS WHEREOF, the parties have executed and delivered this Agreement on the
day and year first above written.
ESCROW
AGENT:
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ESCROW,
LLC
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/s/ Xxxxxxx X. Xxxxxxx
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Name:
Xxxxxxx X. Xxxxxxx
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Title: Vice-President
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COMPANY:
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/s/ Siping Fang
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Name:
Siping Fang
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Title: Chief
Executive Officer
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PLACEMENT
AGENT:
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XXXXX
XXXXXX CARRET & CO., LLC
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/s/ Xxxxxxx X. Xxxxxx
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Name: Xxxxxxx
X. Xxxxxx
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Title: Chief
Financial Officer
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Only
as to Section 3.1 herein:
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PINNACLE
CHINA FUND, LP
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/s/ Xxxxx X. Xxxx
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Name: Xxxxx
X. Xxxx
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Title: General
Partner
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[Signature
page to Closing Escrow Agreement]
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