ESCROW AGREEMENT
Exhibit
10.2
ESCROW
AGREEMENT (“Agreement”) dated [Closing Date] by and among GOLDEN GREEN
ENTERPRISES LIMITED, a British Virgin Islands company (“BVICo”), OASIS GREEN
INVESTMENTS LIMITED, a British Virgin Islands company (“Shareholder”) and
CONTINENTAL STOCK TRANSFER & TRUST COMPANY, as escrow agent (the “Escrow
Agent”).
BVICo,
China Opportunity Acquisition Corp. (“COAC”), Wealth Green Development Limited,
Henan Green Complex Materials Co., Ltd and the shareholders of BVICo are the
parties to a Merger Agreement dated as of November 12, 2008 (the “Merger
Agreement”) pursuant to which COAC has merged with and into BVICo. Pursuant to
the Merger Agreement, BVICo is to be indemnified in certain respects. The
parties desire to establish an escrow fund as collateral security for the
indemnification obligations under the Merger Agreement that is to consist of
3,000,000 Ordinary Shares of BVICo to be deposited by the Shareholder (the
“Escrow Shares”). Capitalized terms used herein that are not otherwise defined
herein shall have the meanings ascribed to them in the Merger
Agreement.
The
parties agree as follows:
1.
(a)
Concurrently with the execution hereof, the Shareholder is delivering to the
Escrow Agent, to be held in escrow pursuant to the terms of this Agreement,
share certificates issued in the name of the Shareholder representing the Escrow
Shares, together with five (5) share transfer instruments separate from
certificate executed in blank by the Shareholder, with medallion signature
guaranties. The Ordinary Shares of BVICo represented by the share certificates
so delivered by the Shareholder to the Escrow Agent are herein referred to
in
the aggregate as the “Escrow Fund.”
(b)
The
Escrow Agent hereby agrees to act as escrow agent and to hold, safeguard and
disburse the Escrow Fund pursuant to the terms and conditions hereof. It shall
treat the Escrow Fund as a trust fund in accordance with the terms of this
Agreement and not as the property of BVICo. The Escrow Agent’s duties hereunder
shall terminate upon its distribution of the entire Escrow Fund in accordance
with this Agreement.
(c)
Except as herein provided, the Shareholder and all Permitted Transferees (as
hereinafter defined and, together with the Shareholder, the “Owners”) shall
retain all of their rights as shareholders of BVICo with respect to the BVICo
Ordinary Shares constituting the Escrow Fund during the period any portion
of
the Escrow Fund is held by the Escrow Agent (the “Escrow Period”), including,
without limitation, the right to vote their BVICo Ordinary Shares included
in
the Escrow Fund.
(d)
During the Escrow Period, all dividends payable in cash with respect to the
BVICo Ordinary Shares included in the Escrow Fund shall be paid to the Owners,
but all dividends payable in stock 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 Fund” shall be deemed to
include the Non-Cash Dividends distributed thereon, if any.
(e)
During the Escrow Period, no sale, transfer or other disposition may be made
of
any or all of the BVICo Ordinary Shares in the Escrow Fund except (i) to a
“Permitted Transferee” (as hereinafter defined), (ii) by virtue of the laws of
descent and distribution upon death of any Owner, or (iii) pursuant to a
qualified domestic relations order; 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. As used
in
this Agreement, the term “Permitted Transferee” shall include: (x) members of
the Shareholder’s “Immediate Family” (as hereinafter defined); (y) an entity in
which (A) the Shareholder and/or members of the Shareholder’s Immediate Family
beneficially own 100% of such entity’s voting and non-voting equity securities,
or (B) the Shareholder and/or a member of the Shareholder’s Immediate Family is
a general partner and in which the Shareholder and/or members of the
Shareholder’s Immediate Family beneficially own 100% of all capital accounts of
such entity; and (z) a revocable trust established by a Shareholder during
his
lifetime for the benefit of the Shareholder or for the exclusive benefit of
all
or any of the Shareholder’s Immediate Family. As used in this Agreement, the
term “Immediate Family” means, with respect to the Shareholder, a spouse, lineal
descendants, the spouse of any lineal descendant, and brothers and sisters
(or a
trust, all of whose current beneficiaries are members of an Immediate Family
of
the Shareholder). In connection with and as a condition to each permitted
transfer, the Permitted Transferee shall deliver to the Escrow Agent an
assignment separate from certificate executed by the Shareholder, with medallion
signature guaranty, or where applicable, an order of a court of competent
jurisdiction, evidencing the transfer of shares to the Permitted Transferee,
together with two (2) assignments separate from certificate executed in blank
by
the Permitted Transferee, with medallion signature guaranties, with respect
to
the shares transferred to the Permitted Transferee. Upon receipt of such
documents, the Escrow Agent shall deliver to BVICo’s transfer agent the original
share certificate out of which the assigned shares are to be transferred,
together with the executed share transfer instrument separate from certificate
executed by the Shareholder, or a copy of the applicable court order, and shall
request that BVICo issue new certificates representing (m) the number of shares,
if any, that continue to be owned by the transferring Shareholder, and (n)
the
number of shares owned by the Permitted Transferee as the result of such
transfer. BVICo, the Shareholder and the Permitted Transferee shall cooperate
in
all respects with the Escrow Agent in documenting each such transfer and in
effectuating the result intended to be accomplished thereby. During the Escrow
Period, no Owner shall pledge or grant a security interest in such Owner’s BVICo
Ordinary Shares included in the Escrow Fund or grant a security interest in
such
Owner’s rights under this Agreement.
2.
Indemnification
Claims Procedure.
(a)
BVICo, acting through the current or former member or members of COAC’s Board of
Directors who has or have been appointed by BVICo to take all necessary actions
and make all decisions on behalf of BVICo with respect to its rights to
indemnification under Article VII of the Merger Agreement (the “Committee”), may
make a claim for indemnification pursuant to the Merger Agreement
(“Indemnification Claim”) against the Escrow Shares in the Escrow Fund by giving
notice (a “Notice”) to the Shareholder (with a copy to the Escrow Agent)
specifying (i) the covenant, representation, warranty, agreement, undertaking
or
obligation contained in the Merger Agreement which it asserts has been breached
or otherwise entitles BVICo to indemnification and (ii) in reasonable detail,
the nature and dollar amount of any Indemnification Claim. The Committee also
shall deliver to the Escrow Agent (with a copy to the Shareholder), concurrently
with its delivery to the Escrow Agent of the Notice, a certification as to
the
date on which the Notice was delivered to the Shareholder.
(b)
If
the Shareholder shall give a notice to the Committee (with a copy to the Escrow
Agent) (a “Counter Notice”), within 30 days following the date of receipt (as
specified in the Committee’s certification) by the Shareholder of a copy of the
Notice, disputing whether the Indemnification Claim is indemnifiable under
the
Merger Agreement, the Committee and the Shareholder shall attempt to resolve
such dispute by voluntary settlement as provided in Section 2(c) below. If
no
Counter Notice with respect to an Indemnification Claim is received by the
Escrow Agent from the Shareholder within such 30-day period, the Indemnification
Claim shall be deemed to be an Established Claim (as hereinafter defined) for
purposes of this Agreement.
(c)
If
the Shareholder delivers a Counter Notice to the Escrow Agent, the Committee
and
the Shareholder shall, during the period of 60 days following the delivery
of
such Counter Notice or such greater period of time as the parties may agree
to
in writing (with a copy to the Escrow Agent), attempt to resolve the dispute
with respect to which the Counter Notice was given. If the Committee and the
Shareholder shall reach a settlement with respect to any such dispute, they
shall jointly deliver written notice of such settlement to the Escrow Agent
specifying the terms thereof. If the Committee and the Shareholder shall be
unable to reach a settlement with respect to a dispute, such dispute shall
be
resolved by arbitration pursuant to Section 2(d) below.
(d)
If
the Committee and the Shareholder cannot resolve a dispute prior to expiration
of the 60-day period referred to in Section 2(c) above (or such longer period
as
the parties may have agreed to in writing), then such dispute shall be submitted
(and either party may submit such dispute) to arbitration as set forth in
Section 7 hereof.
C-2
(e)
As
used in this Agreement, “Established Claim” means any (i) Indemnification Claim
deemed established pursuant to the last sentence of Section 2(b) above, (ii)
Indemnification Claim resolved in favor of BVICo by settlement pursuant to
Section 2(c) above, resulting in a dollar award to BVICo, (iii) Indemnification
Claim established by the decision of an arbitrator pursuant to Section 2(d)
above, resulting in a dollar award to BVICo, (iv) Third Party Claim that has
been sustained by a final determination (after exhaustion of any appeals) of
a
court of competent jurisdiction, or (v) Third Party Claim that the Committee
and
the Shareholder have jointly notified the Escrow Agent has been settled in
accordance with the provisions of the Merger Agreement.
(f)
(i)
Promptly after an Indemnification Claim becomes an Established Claim, the
Committee and the Shareholder shall jointly deliver a notice to the Escrow
Agent
(a “Joint Notice”) directing the Escrow Agent to pay to BVICo, and the Escrow
Agent promptly shall pay to BVICo, an amount equal to the aggregate dollar
amount of the Established Claim (or, if at such time there remains in the Escrow
Fund less than the full amount so payable, the full amount remaining in the
Escrow Fund).
(ii)
Payment of an Established Claim shall be made from Escrow Shares pro rata from
the account maintained on behalf of each Owner. For purposes of each payment,
such shares shall be valued at the “Fair Market Value” (as defined below).
However, in no event shall the Escrow Agent be required to calculate Fair Market
Value or make a determination of the number of shares to be delivered to BVICo
in satisfaction of any Established Claim; rather, such calculation shall be
included in and made part of the Joint Notice. The Escrow Agent shall transfer
to BVICo out of the Escrow Fund that number of BVICo Ordinary Shares necessary
to satisfy each Established Claim, as set out in the Joint Notice. Any dispute
between the Committee and the Shareholder concerning the calculation of Fair
Market Value or the number of shares necessary to satisfy any Established Claim,
or any other dispute regarding a Joint Notice, shall be resolved between the
Committee and the Shareholder in accordance with the procedures specified in
Section 2(d) above, and shall not involve the Escrow Agent. Each transfer of
shares in satisfaction of an Established Claim shall be made by the Escrow
Agent
delivering to BVICo one or more share certificates held in each Owner’s account
evidencing not less than such Owner’s pro rata portion of the aggregate number
of shares specified in the Joint Notice, together with share transfer
instruments separate from certificate executed in blank by such Owner and
completed by the Escrow Agent in accordance with instructions included in the
Joint Notice. Upon receipt of the share certificates and share transfer
assignments, BVICo shall deliver to the Escrow Agent new certificates
representing the number of shares owned by each Owner after such payment. The
parties hereto (other than the Escrow Agent) agree that the foregoing right
to
make payments of Established Claims in BVICo Ordinary Shares may be made
notwithstanding any other agreements restricting or limiting the ability of
any
Owner to sell any shares of BVICo or otherwise. The Committee and the
Shareholder shall be required to exercise utmost good faith in all matters
relating to the preparation and delivery of each Joint Notice. As used herein,
“Fair Market Value” means the average reported closing price for the BVICo
Ordinary Shares for the ten trading days ending on the last trading day prior
to
(x) the day the Established Claim is paid with respect to Indemnification Claims
paid on or before the Indemnity Escrow Termination Date, and (y) the Indemnity
Escrow Termination Date with respect to shares constituting the Pending Claims
Reserve (as hereinafter defined) on the Indemnity Escrow Termination
Date.
(iii)
Notwithstanding anything herein to the contrary, at such time as an
Indemnification Claim has become an Established Claim, the Shareholder shall
have the right to substitute for the Escrow Shares that otherwise would be
paid
in satisfaction of such claim (the “Claim Shares”), cash in an amount equal to
the Fair Market Value of the Claim Shares (“Substituted Cash”). In such event
(i) the Joint Notice shall include a statement describing the substitution
of
Substituted Cash for the Claim Shares, and (ii) substantially contemporaneously
with the delivery of such Joint Notice, the Shareholder shall cause currently
available funds to be delivered to the Escrow Agent in an amount equal to the
Substituted Cash. Upon receipt of such Joint Notice and Substituted Cash, the
Escrow Agent shall (y) in payment of the Established Claim described in the
Joint Notice, deliver the Substituted Cash to BVICo in lieu of the Claim Shares,
and (z) cause the Claim Shares to be returned to the
Shareholder.
C-3
(g)
On
the first Business Day after the Indemnity Escrow Termination Date, upon receipt
of a Joint Notice, the Escrow Agent shall distribute and deliver to each Owner
certificates representing Escrow Shares then in such Owner’s account in the
Escrow Fund less that number of shares in such Owner’s account equal to the sum
of (i) the number of shares applied in satisfaction of Indemnification Claims
made prior to that date and (ii) the number of shares in the Pending Claims
Reserve allocated to such Owner’s account, as provided in the following
sentence. If, at such time, there are any Indemnification Claims with respect
to
which Notices have been received but which have not been resolved pursuant
to
Section 2 hereof or in respect of which the Escrow Agent has not been notified
of, and received a copy of, a final determination (after exhaustion of any
appeals) by a court of competent jurisdiction, as the case may be (in either
case, “Pending Claims”), and which, if resolved or finally determined in favor
of BVICo, would result in a payment to BVICo, the Escrow Agent shall retain
in
the Pending Claims Reserve that number of BVICo Ordinary Shares having a Fair
Market Value equal to the dollar amount for which indemnification is sought
in
such Indemnification Claim, allocated pro rata from the account maintained
on
behalf of each Owner. The Committee shall certify to the Escrow Agent the Fair
Market Value to be used in calculating the Pending Claims Reserve and the number
of BVICo Ordinary Shares to be retained therefor. Thereafter, if any Pending
Claim becomes an Established Claim, the Committee and the Shareholder shall
deliver to the Escrow Agent a Joint Notice directing the Escrow Agent to deliver
to BVICo the number of shares in the Pending Claims Reserve in respect thereof
determined in accordance with Section 2(f) above and to deliver to each Owner
the remaining shares in the Pending Claims Reserve allocated to such Pending
Claim, all as specified in a Joint Notice. If any Pending Claim is resolved
against BVICo, the Committee and the Shareholder shall deliver to the Escrow
Agent a Joint Notice directing the Escrow Agent to pay to each Owner its pro
rata portion of the number of shares allocated to such Pending Claim in the
Pending Claims Reserve.
(h)
As
used herein, the “Pending Claims Reserve” shall mean, at the time any such
determination is made, that number of Escrow Shares in the Escrow Fund having
a
Fair Market Value equal to the sum of the aggregate dollar amounts claimed
to be
due with respect to all Pending Claims (as shown in the Notices of such
Claims).
3.
The
Escrow Agent, the Committee and the Shareholder shall cooperate in all respects
with one another in the calculation of any amounts determined to be payable
to
BVICo and the Owners in accordance with this Agreement and in implementing
the
procedures necessary to effect such payments.
4.
(a)
The Escrow Agent undertakes to perform only such duties as are expressly set
forth herein. It is understood that the Escrow Agent is not a trustee or
fiduciary and is acting hereunder merely in a ministerial capacity.
(b)
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.
(c)
The
Escrow Agent’s sole responsibility upon receipt of any notice requiring any
payment to BVICo pursuant to the terms of this Agreement or, if such notice
is
disputed by the Committee or the Shareholder, the settlement with respect to
any
such dispute, whether by virtue of joint resolution, arbitration or
determination of a court of competent jurisdiction, is to pay to BVICo the
amount specified in such notice, and the Escrow Agent shall have no duty to
determine the validity, authenticity or enforceability of any specification
or
certification made in such notice.
(d)
The
Escrow Agent shall not be liable for any action taken by it in good faith and
believed by it to be authorized or within the rights or powers conferred upon
it
by this Agreement, and may consult with counsel of its own choice and shall
have
full and complete authorization and indemnification under Section 4(g), below,
for any action taken or suffered by it hereunder in good faith and in accordance
with the opinion of such counsel.
C-4
(e)
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 the
Escrow Fund to a successor escrow agent appointed jointly by the Committee
and
the Shareholder. 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 Fund with any court it reasonably deems appropriate.
(f)
The
Escrow Agent shall be indemnified and held harmless by BVICo 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 Fund
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
the United States District Court for the Central Division of California in
Orange County, California.
(g)
The
Escrow Agent shall be entitled to reasonable compensation from BVICo for all
services rendered by it hereunder. The Escrow Agent shall also be entitled
to
reimbursement from BVICo 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.
(h)
From
time to time on and after the date hereof, the Committee and the Shareholder
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.
(i)
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.
5.
This
Agreement expressly sets forth all the duties of the Escrow Agent with respect
to any and all matters pertinent hereto. No implied duties or obligations shall
be read into this Agreement against the Escrow Agent. The Escrow Agent shall
not
be bound by the provisions of any agreement among the parties hereto except
this
Agreement and shall have no duty to inquire into the terms and conditions of
any
agreement made or entered into in connection with this Agreement, including,
without limitation, the Merger Agreement.
6.
This
Agreement shall inure to the benefit of and be binding upon the parties and
their respective heirs, successors, assigns and legal representatives, shall
be
governed by and construed in accordance with the law of New York applicable
to
contracts made and to be performed therein. This Agreement cannot be changed
or
terminated except by a writing signed by the Committee, the Shareholder and
the
Escrow Agent.
7.
All
disputes arising under this Agreement between the Committee and the Shareholder,
including a dispute arising from a party’s failure or refusal to sign a Joint
Notice, shall be submitted to arbitration in the same manner as disputes under
the Merger Agreement are to be arbitrated pursuant to Section 9.13 thereof.
The
Committee and the Shareholder each hereby consents to the exclusive jurisdiction
of the federal and state courts sitting in New York County, New York, with
respect to any claim or controversy arising out of this Agreement. Service
of
process in any action or proceeding brought against the Committee or the
Shareholder in respect of any such claim or controversy may be made upon it
by
registered mail, postage prepaid, return receipt requested, at the address
specified in Section 8, with copies delivered by nationally recognized overnight
carrier to Xxxxxxxx Xxxxxx, The Chrysler Building, 000 Xxxxxxxxx Xxxxxx, Xxx
Xxxx, X.X. 00000-0000, Attention: Xxxxx Xxxx Xxxxxx, Esq., and to [BVICo to
specify name and address of party to be copied on its behalf].
C-5
8.
All
notices and other communications under this Agreement shall be in writing and
shall be deemed given if given by hand or delivered by nationally recognized
overnight carrier, or if given by telecopier and confirmed by mail (registered
or certified mail, postage prepaid, return receipt requested), to the respective
parties as follows:
|
|
A.
|
If
to the Committee, to it at:
|
Golden
Green Enterprises Limited
Xx.
00
Xxxxxxxx Xxxxxx
Xxxxxxx
Xxxxxx Xxxx
Xxxxx,
Xxxxx Telecopier No.:
with
a
copy to:
Xxxxxxxx
Xxxxxx
The
Chrysler Building
000
Xxxxxxxxx Xxxxxx
Xxx
Xxxx,
Xxx Xxxx 00000-0000
Attention:
Xxxxx Xxxx Xxxxxx, Esq.
Telecopier
No.: 000-000-0000
|
|
B.
|
If
to the Shareholder, to it at:
|
[To
follow]
with
a
copy to:
[To
follow]
|
|
C.
|
If
to the Escrow Agent, to it at:
|
Continental
Stock Transfer & Trust Company
0
Xxxxxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Attention:
Xxxxxx X. Xxxxxx
Telecopier
No.: 212-509-5150
or
to
such other person or address as any of the parties hereto shall specify by
notice in writing to all the other parties hereto.
9.
(a) If
this Agreement requires a party to deliver any notice or other document, and
such party refuses to do so, the matter shall be submitted to arbitration as
provided for herein.
(b)
All
notices delivered to the Escrow Agent shall refer to the provision of this
Agreement under which such notice is being delivered and, if applicable, shall
clearly specify the aggregate dollar amount due and payable to
BVICo.
(c)
This
Agreement may be executed in any number of counterparts, each of which shall
be
deemed to be an original instrument and all of which together shall constitute
a
single agreement.
IN
WITNESS WHEREOF, each of the parties hereto has duly executed this Agreement
on
the date first above written.
[Signatures
are on following page]
C-6
[Signature
Page to Escrow Agreement]
|
By:
|
|
Name:
|
|
Title:
|
|
OASIS
GREEN INVESTMENTS LIMITED
|
|
|
|
ESCROW
AGENT
|
|
CONTINENTAL
STOCK TRANSFER & TRUST COMPANY
|
|
By:
|
|
Title:
|
C-7
