ESCROW AGREEMENT
THIS
ESCROW AGREEMENT (this "Escrow
Agreement")
is
dated as of April 15, 2008, among China Energy Recovery, Inc., a Delaware
corporation ("Pubco"),
Poise
Profit International, Ltd., a company incorporated pursuant to the laws of
the
British Virgin Islands ("Priveco"),
WU
Qinghuan and ZHOU Jialing, the stockholders of Priveco (the "Stockholders"),
and
Corporate Stock Transfer, Inc. (the "Escrow
Agent").
All
capitalized terms used but not defined herein shall have the meanings ascribed
to such terms in the Share Exchange Agreement, dated effective as of January
24,
2008 (the "Share
Exchange Agreement").
RECITALS
WHEREAS,
pursuant to the Share Exchange Agreement, the Stockholders exchanged all of
the
issued and outstanding shares of Priveco's capital stock for an aggregate of
41,514,179 shares of Pubco's common stock, $0.001 par value per share
("Common
Stock");
and
WHEREAS,
in accordance with the Share Exchange Agreement, the Stockholders are depositing
with the Escrow Agent 3,558,358 shares of Common Stock pursuant to the Share
Exchange Agreement (the "Escrow
Shares").
NOW,
THEREFORE, for and in consideration of the mutual covenants contained in the
Share Exchange Agreement and herein, and other good and valuable consideration,
the receipt and legal sufficiency of which are hereby acknowledged, Pubco,
Priveco, the Stockholders and the Escrow Agent hereby agree as
follows:
1. Deposit
of Escrow Shares.
Upon
the execution of this Escrow Agreement, the Stockholders will cause to be
delivered to the Escrow Agent the Common Stock certificates representing the
Escrow Shares, including stock powers duly endorsed in blank.
2. Method
of Disposition of Escrow Shares.
The
Escrow Agent will hold the Escrow Shares in its possession until authorized
hereunder to deliver such Escrow Shares as follows:
(a) In
the event the HAIE Target is satisfied pursuant to the terms of the Share
Exchange Agreement, to the Stockholders pro rata in the amounts proportionate
to
the number of shares set forth opposite each such Stockholder's name on
Schedule
1
to the
Share Exchange Agreement, within 10 days of receipt of a certificate in the
form
of Certificate
I
hereto;
or
(b) In
the event the HAIE Target is not satisfied pursuant to the terms of the Share
Exchange Agreement, to the investors in the Financing pro rata based on each
investor's respective investment amount in the Financing, within 10 days of
receipt of a certificate in the form of Certificate
II
hereto.
3. Concerning
the Escrow Agent.
(a) The
Escrow Agent shall not be under any duty to give the Escrow Shares held by
it
hereunder any greater degree of care than it gives its own similar property
and
shall not be required to invest the Escrow Shares.
(b) This
Escrow 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 Escrow Agreement against the Escrow Agent.
The Escrow Agent shall not be bound by the provisions of any other agreement
among the parties hereto except this Escrow Agreement.
(c) The
Escrow Agent shall not be liable, except for its own gross negligence or willful
misconduct, and, except with respect to claims based upon such gross negligence
or willful misconduct that are successfully asserted against the Escrow Agent,
the other parties hereto shall jointly and severally indemnify and hold harmless
the Escrow Agent (and any successor Escrow Agent) from and against any and
all
losses, liabilities, claims, actions, damages and expenses, including reasonable
attorney's fees and disbursements, arising out of and in connection with this
Escrow Agreement.
(d) The
Escrow Agent shall be entitled to rely upon any order, judgment, certification,
demand, notice, instrument or other writing delivered to it hereunder without
being required to determine the authenticity or the correctness of any fact
stated therein or the proprieties, validity or the service thereof. The Escrow
Agent may act in reliance upon any instrument or signature reasonably believed
by it to be genuine and may assume that any person purporting to give notice
or
advice, accept receipt of or execute any document, or make any statement in
connection with the provisions hereof, has been duly authorized to do
so.
(e) The
Escrow Agent may act pursuant to the advice of counsel with respect to any
matter relating to this Escrow Agreement and, except for its own gross
negligence or willful misconduct, the Escrow Agent shall not be liable for
any
action taken or omitted in accordance with such advice.
(f) The
Escrow Agent is serving as escrow holder only and has no interest in the Escrow
Shares deposited hereunder. This Section
3(f)
and
Section
3(c)
shall
survive notwithstanding any termination of this Escrow Agreement or the
resignation of the Escrow Agent.
(g) The
Escrow Agent makes no representation as to the validity, value, genuineness
or
the collectibility of any security or other documents or instrument held by
or
delivered to it.
(h) The
Escrow Agent shall not be called upon to advise any party as to the wisdom
in
selling or retaining or taking or refraining from any action with respect to
any
securities or other property deposited hereunder.
(i) The
Escrow Agent (and any successor Escrow Agent) may at any time resign as such
by
delivering the Escrow Shares to any successor Escrow Agent jointly designated
by
the other parties hereto in writing, or to any court of competent jurisdiction,
whereupon the Escrow Agent shall be discharged of and from any and all further
obligations arising in connection with this Escrow Agreement. The resignation
of
the Escrow Agent will take effect on the earlier of (i) the appointment of
a
successor (including a court of competent jurisdiction) or (ii) the day which
is
30 days after the date of delivery of its written notice of resignation to
the
other parties hereto. If at that time the Escrow Agent has not received a
designation of a successor Escrow Agent, the Escrow Agent's sole responsibility
after that time shall be to safekeep the Escrow Shares until receipt of a
designation of successor Escrow Agent or a joint written disposition instruction
by the other parties hereto or a final order of a court of competent
jurisdiction.
(j) The
Escrow Agent shall have no responsibility for the contents of any writing of
the
court or any third party contemplated herein as a means to resolve disputes
and
may rely without any liability upon the contents thereof.
(k) In
the event of any disagreement between the other parties hereto resulting in
adverse claims or demands being made in connection with the Escrow Shares,
or in
the event that the Escrow Agent in good faith is in doubt as to what action
it
should take hereunder, the Escrow Agent shall be entitled to retain the Escrow
Shares until the Escrow Agent shall have received (i) a final nonappealable
order of a court of competent jurisdiction directing delivery of the Escrow
Shares, or (ii) a written agreement executed by the other parties hereto
directing delivery of the Escrow Shares, in which event the Escrow Agent shall
disburse the Escrow Shares in accordance with such order or agreement. Any
court
order referred to in (i) above shall be accompanied by a legal opinion of
counsel for the presenting party satisfactory to the Escrow Agent to the effect
that said court order is final and nonappealable. The Escrow Agent shall act
on
such court order and legal opinions without further question.
(l) Notwithstanding
anything to the contrary contained herein, in the event of any dispute between
the parties hereto as to the facts of default, the validity or meaning of these
instructions or any other fact or matter relating to the transaction between
the
parties, the Escrow Agent is instructed as follows:
(i) that
it shall be under no obligation to act, except under process or order of court,
or until it has been adequately indemnified to its full satisfaction, and shall
sustain no liability for its failure to act pending such process or court order
or indemnification; and
(ii) that
it may in its sole and absolute discretion, deposit the property herein or
so
much thereof as remains in its hands with the then Clerk, or acting Clerk,
of
the District Court located in Denver, Colorado, interplead the parties hereto,
and upon so depositing such property and filing its complaint in interpleader
it
shall be relieved of all liability under the terms hereof as to the property
so
deposited, and furthermore, the parties hereto for themselves, their heirs,
legal representatives, successors and assigns do hereby submit themselves to
the
jurisdiction of said court. The institution of any such interpleader action
shall not impair the rights of the Escrow Agent under Section
3(c)
above.
(m) Pubco,
on the one hand, and the Stockholders, on the other hand, each agree to pay
one-half of the Escrow Agent's fees for the services hereunder, which shall
be
an aggregate amount of $1,500. All reasonable expenses, disbursements and
advances incurred or made by the Escrow Agent in performance of its duties
hereunder (including reasonable fees, expenses and disbursements of its
counsel), shall be allocated equally between Pubco, on the one hand, and the
Stockholders, on the other hand.
(n) No
printed or other matter in any language (including, without limitation,
prospectuses, notices, reports and promotional materials) which mentions the
Escrow Agent's name or the rights, powers or duties of the Escrow Agent shall
be
issued by the other parties hereto or on such parties' behalf unless the Escrow
Agent shall first have given its specific written consent thereto.
4. Notices.
Any
notice, request, demand, waiver, consent, approval or other communication which
is required or permitted hereunder shall be in writing. All such notices shall
be delivered personally, by facsimile or by reputable overnight courier (costs
prepaid), and shall be deemed given or made when delivered personally, the
business day sent if sent by facsimile or one business day after delivery to
the
overnight courier for next business day delivery. All such notices are to be
given or made to the parties at the following addresses (or to such other
address as any party may designate by a notice given in accordance with the
provisions of this Section):
If
to
Pubco:
0000
Xxxxxx Xxxxx Xxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxx
Xxxxx, Xxxxxxxxxx 00000
XXX
Attention:
Xxxxxxx Xxxxxxxx
Facsimile
No.: 000-000-0000
with
a
copy to:
Xxxxxxxxxx
Xxxxx Xxxxxx Xxxxxxx, LLP
000
Xxxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx,
Xxxxxxxx 00000
XXX
Attention:
Xxxx X. Xxxxx
Facsimile
No.: 303-223-1111
If
to the
Stockholders:
WU
Qinghuan
Xx.
000
Xxx Xxxx Xx Xxxx
Xxxx
Xx
Xxxxxxxx
Xxxxxxxx
Xxxxx
Facsimile
No.: [________________]
Zhou
Jialing
Xx.
000
Xxx Xxxx Xx Xxxx
Xxxx
Xx
Xxxxxxxx
Xxxxxxxx
Xxxxx
Facsimile
No.: [________________]
with
a
copy to:
XxxXxxxxx
Law Offices
Citigroup
Tower, 14th
Floor
00
Xxx
Xxxx Xxx Xxxx Xxxx
Xxxxxx,
Xxxxxxxx, Xxxxx 200120
Attention:
Xxxxx Xxx
Facsimile
No.: 8621-6105-9100
If
to the
Escrow Agent:
Corporate
Stock Transfer, Inc.
0000
Xxxxxx Xxxxx Xxxxx Xxxxx
Xxxxx
000
Xxxxxx,
Xxxxxxxx 00000
XXX
Attention:
Xxxxxxx Xxxx
Facsimile
No.: 000-000-0000
5. Waivers
and Amendments.
This
Escrow Agreement may be amended, superseded, canceled, renewed or extended
and
the terms hereof may be waived only by a written instrument signed by Pubco,
the
Stockholders and the Escrow Agent.
6. Counterparts.
This
Agreement may be executed in one or more counterparts, each of which shall
be
deemed an original, but all of which together shall constitute one and the
same
instrument.
7. Governing
Law; Severability.
This
Agreement shall be governed by, and construed in accordance with, the internal
laws of the State of Delaware, without reference to the choice of law or
conflicts of law principles thereof. Should any clause, section or part of
this
Agreement be held or declared to be void or illegal for any reason, all other
clauses, sections or parts of this Agreement shall nevertheless continue in
full
force and effect.
8. Assignment.
Neither
the rights nor the obligations of any party to this Agreement may be transferred
or assigned, except by the express written agreement of the parties hereto.
Any
purported assignment of this Agreement shall be null, void and of no
effect.
9. Termination.
This
Escrow Agreement shall terminate upon the complete distribution of the Escrow
Shares in accordance with the terms hereof.
10. Binding
Effect.
This
Agreement shall inure to the benefit of and be binding upon the parties hereto
and their respective representatives, successors and assigns.
[Remainder
of This Page Intentionally Left Blank; Signature Page to
Follow]
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date
first set forth above.
| PUBCO: | ||
| China Energy Recovery, Inc. | ||
| |
|
|
| By: | /s/ Xxxxxxx Xxxxxxxx | |
|
|
Name:
Xxxxxxx Xxxxxxxx
|
|
| Title: Chief Executive Officer | ||
|
PRIVECO:
|
||
| Poise Profit International, Ltd. | ||
| |
|
|
| By: | /s/ WU Qinghaun | |
|
|
Name:
WU Qinghuan
|
|
| Title: Director | ||
| STOCKHOLDERS: | ||
| /s/ WU Qinghuan | ||
|
WU Qinghuan
|
||
| /s/ ZHOU Xxxxxxx | ||
|
XXXX Jialing |
||
| ESCROW AGENT: | ||
| Corporate Stock Transfer, Inc. | ||
| |
|
|
| By: | /s/ Xxxxxxx Xxxx | |
|
|
Name: Xxxxxxx Xxxx |
|
| Title: President | ||
[signature
page to Escrow Agreement]
CERTIFICATE
I
CERTIFICATE
Reference
is hereby made to the Escrow Agreement dated as of [April __, 2008] among China
Energy Recovery, Inc., a Delaware corporation ("Pubco"),
Poise
Profit International, Ltd., a company incorporated pursuant to the laws of
the
British Virgin Islands ("Priveco"),
WU
Qinghuan and ZHOU Jialing, the stockholders of Priveco (the "Stockholders"),
and
Corporate Stock Transfer, Inc. (the "Escrow
Agent").
Capitalized terms used herein but not defined herein have the meaning assigned
such terms in the Escrow Agreement or in the Share Exchange Agreement (as
defined in the Escrow Agreement).
1. Pubco
and the Stockholders agree that HAIE High-Tech Engineering (Hong Kong) Co.,
Ltd.
has generated: (i) gross revenue for the 12-month period ended December 31,
2008
of at least 150,000,000 China Yuan Renminbi, and (ii) a gross margin for the
12-month period ended December 31, 2008 of at least 30,000,000 China Yuan
Renminbi, in each case as determined in accordance with GAAP and certified
by
Pubco's independent auditor in its report on the 2008 audited financial
statements of Pubco.
2. Pubco
and the Stockholders hereby instruct the Escrow Agent to distribute the Escrow
Shares to the Stockholders as follows:
1. 2,135,015
shares of Common Stock to WU Qinghuan; and
2. 1,423,343
shares of Common Stock to ZHOU Jialing.
IN
WITNESS WHEREOF, Pubco and the Stockholders have executed this certificate
as of
___________, 2009.
| PUBCO: | ||
| China Energy Recovery, Inc. | ||
| |
|
|
| By: | ||
|
|
Name:
Xxxxxxx Xxxxxxxx
|
|
| Title: Chief Executive Officer | ||
| STOCKHOLDERS: | ||
|
WU Qinghuan
|
||
|
ZHOU Jialing |
||
CERTIFICATE
II
CERTIFICATE
Reference
is hereby made to the Escrow Agreement dated as of [April ___, 2008] among
China
Energy Recovery, Inc., a Delaware corporation ("Pubco"),
Poise
Profit International, Ltd., a company incorporated pursuant to the laws of
the
British Virgin Islands ("Priveco"),
WU
Qinghuan and ZHOU Jialing, the stockholders of Priveco (the "Stockholders"),
and
Corporate Stock Transfer, Inc. (the "Escrow
Agent").
Capitalized terms used herein but not defined herein have the meaning assigned
such terms in the Escrow Agreement or in the Share Exchange Agreement (as
defined in the Escrow Agreement).
1. Pubco
and the Stockholders agree that HAIE High-Tech Engineering (Hong Kong) Co.,
Ltd.
has not generated: (i) gross revenue for the 12-month period ended December
31,
2008 of at least 150,000,000 China Yuan Renminbi, and (ii) a gross margin for
the 12-month period ended December 31, 2008 of at least 30,000,000 China Yuan
Renminbi, in each case as determined in accordance with GAAP and certified
by
Pubco's independent auditor in its report on the 2008 audited financial
statements of Pubco.
2. Pubco
and the Stockholders hereby instruct the Escrow Agent to distribute the Escrow
Shares, accompanied with stock powers duly endorsed in blank, to the investors
in the Financing as follows:
1. ____
shares of Common Stock to [_____________________]
2. ____
shares of Common Stock to [_____________________]
3. ____
shares of Common Stock to [_____________________]
4. ____
shares of Common Stock to [_____________________]
IN
WITNESS WHEREOF, Pubco and the Stockholders have executed this certificate
as of
___________, 2009.
| PUBCO: | ||
| China Energy Recovery, Inc. | ||
| |
|
|
| By: | ||
|
|
Name:
Xxxxxxx Xxxxxxxx
|
|
| Title: Chief Executive Officer | ||
| STOCKHOLDERS: | ||
|
WU Qinghuan
|
||
|
ZHOU Jialing |
||
