SECURITIES ESCROW AGREEMENT
Exhibit
10.6
THIS
SECURITIES ESCROW AGREEMENT, dated as of February __, 2008 (this
“Agreement”),
by
and among CHINA RESOURCES LTD., a Delaware corporation (the “Company”),
the
undersigned parties listed under “Insiders” on the signature page hereto
(collectively, the “Insiders”)
and
AMERICAN STOCK TRANSFER & TRUST COMPANY, a New York corporation (the
“Escrow
Agent”).
WHEREAS,
the Company has entered into an Underwriting Agreement, dated February ____,
2008 (“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 4,000,000 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 February __, 2008 (the “Prospectus”),
comprising part of the Company’s Registration Statement on Form S-1
(File No. 333-145901) under the Securities Act of 1933, as amended
(the “Registration
Statement”),
declared effective on February __, 2008 (the “Effective
Date”);
WHEREAS,
the Company has sold an aggregate of 2,600,000 warrants (the “Insider Warrants”)
in a private placement to certain Insiders pursuant to Regulation S or
Regulation D under the Securities Act of 1933, as amended;
WHEREAS,
the Insiders have agreed as a condition of the sale of the Units to deposit
in
escrow with the Escrow Agent the shares of Common Stock (the “Insider Shares”)
and Insider Warrants owned by them which are set forth opposite their respective
names on Exhibit
A
attached
hereto (the “Escrow
Securities”),
as
hereinafter provided; and
WHEREAS,
the Company and the Insiders 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 Insiders 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 Insiders 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.
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3. Disbursement
of the Escrow Securities.
3.1 Except
as
set forth herein and in Section 3.2 below, the Escrow Agent shall hold, on
the
terms and subject to the conditions set forth herein, (x) the Insider Shares
until the earlier of (a) the first anniversary of the consummation of a Business
Combination (as that term is defined in the Prospectus) by the Company and
(b)
the third anniversary of the Effective Date (the “Insider
Shares Escrow
Period”),
and
(y) the Insider Warrants until the consummation of a Business Combination by
the
Company, on which date it shall, upon written instructions from the Chief
Executive Officer or Chief Financial Officer of the Company, in form reasonably
acceptable to the Escrow Agent, disburse to the Insiders their Escrow
Securities; 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, 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
Insiders 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) 14. By way of illustration, for each 14 shares redeemed, up
to
100,000 shares, 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 Insiders 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 Insiders 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 Insiders, 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.
2
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 Insiders 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 Insiders
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 Insiders, 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 Insiders 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.
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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.
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:
Xxxx
000,
Xxxxx X, Xxxxxx Xxxxxxx Xxxxx, Xxxxxxx Xxxx
Futian
District, Shenzhen, P.R. China
,
Attn:
Chief Executive Officer
If
to an
Insider, to the 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 X. 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 page to follow.)
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IN
WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
first written above.
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| By: | ||
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Name: Xxxx Xxxx |
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Title:
Chief Executive Officer
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INSIDERS:
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:
Fuzu Xxxx
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Xxxxx
Xxxxxxx Xxxx
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:
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Gemore
& Co., Ltd.
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| By: | ||
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Xxxxx
Baiping Xxxx
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Xxxxxx
Nugawela
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| MMK Capital Pte Ltd. | ||
| By: | ||
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Xxxx
Xxxx
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Xxxxxxxxx
Xxxxxxxxx
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Xxxxx
Xxxxxxxx
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American
Stock Transfer & Trust Company
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By:
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Name:
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Title:
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8
EXHIBIT
A
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Name
and Address
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Shares
(#)
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Certificate
No.
|
Warrants
(#).
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Date
of Insider Letter
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|||||||||
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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.
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500,000
|
1,100,000
|
February
_, 2008
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Xxxxx
Xxxxxxx Xxxx
Xxxx
Xxxx China Xxx Xxx Trading Co., Ltd., Room 921, Block A, Golden Central
Tower, Jintian Road, Futian District, Shenzhen, P.R. China.
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200,000
|
February
_, 2008
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|||||||||||
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Gemore
& Co., Ltd.
Room
1704, Xxxxxxx Xxxxxx, 00 Xxxxxxx Xxxx, Xxx Xxxx, Xxxx
Xxxx
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1,000,000
|
February
_, 2008
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|||||||||||
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Xxxxxx
Nugawela
XX
Xxx 000 Xxxxxxx Xxxx
Xxxxxxx
Xxxxxxxxx 0000
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100,000
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February
_, 2008
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|||||||||||
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MMK
Capital Pte Ltd.
c/o
Xxxxxx Nugawela
XX
Xxx 000 Xxxxxxx Xxxx
Xxxxxxx
Xxxxxxxxx 0000
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250,000
|
February _, 2008 | |||||||||||
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Xxxxxxxxx
Xxxxxxxxx
Xxxxx
Xxxx Xxxxxx, 00xx Xxxxx
Xxx
Xxxx, Xxx Xxxx 00000
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75,000
|
February
_, 0000
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|||||||||||
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Xxxxx
Xxxxxxxx
c/o
Xxxxxxx Xxx
000-00
00xx Xxxxxx, #000
Xxxxxxxx
XX 00000
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125,000
|
250,000
|
February
_, 2008
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