MANAGEMENT ESCROW AGREEMENT
THIS
MANAGEMENT ESCROW AGREEMENT (“Agreement”)
is
made as of October 14, 2008 by and among China Bio Energy Holding Group Co.,
Ltd. (the “Company”), the Purchaser whose name is set forth on Exhibit
A
to the
Securities Purchase Agreement dated this same date (the “Purchaser”
and
together with the Company, the “Parties”)
and
Loeb & Loeb LLP, with offices at 000 Xxxx Xxxxxx, Xxx Xxxx, XX 00000 (the
“Escrow Agent”).
RECITALS:
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(1)
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Pursuant
to that certain Securities Purchase Agreement, dated as of October
14,
2008 by and between the Company and the Purchaser (the “Purchase
Agreement”),
a copy of which is attached hereto as Exhibit
A
and incorporated herein by reference, the Purchaser purchased a
convertible debenture in the amount of $9,000,000, which is automatically
convertible into 2,465,753 shares of the Company’s Series B Preferred
Stock. The Company received proceeds in the amount of $9,000,000
(the
“Gross
Proceeds”).
Capitalized terms used in this Agreement without definition, have
the
meaning assigned to those terms in the Purchase Agreement;
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(2)
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To
induce the Purchaser to enter into the Purchase Agreement, the Company
agreed to deposit $750,000 of the Gross Proceeds (the “Escrow
Funds”)
into an escrow account at the Closing, to be held by the Escrow Agent
for
disbursement in accordance with the terms and conditions set forth
herein;
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(3)
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This
Agreement constitutes the Management Escrow Agreement referred to
in the
Purchase Agreement pursuant to which the Escrow Agent shall receive
and
disburse the Escrow Funds.
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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:
ARTICLE
1
TERMS
OF
THE ESCROW
1.1 Appointment
of Escrow Agent.
The
parties hereby agree to have Loeb & Loeb LLP act as Escrow Agent to receive
the Escrow Funds in escrow and distribute the same as set forth in this
Agreement.
1.2 Escrow
Deposit
(a) In
accordance with the terms of the Purchase Agreement, immediately after the
Closing, the Escrow Funds shall be wired to the Escrow Agent; and
(b) The
Escrow Agent shall hold the Escrow Funds at all times until such Escrow Funds
are disbursed in accordance herewith.
1.3 Escrow
Release. The
Escrow Agent will hold and disburse the Escrow Funds received by it pursuant
to
the terms of this Agreement, as follows:
(a) The
Escrow Funds shall remain in the escrow account and shall only be released
by
the Escrow Agent in accordance with Section 1.3(b) below upon the Escrow Agent’s
receipt of joint written notice in the forms of Exhibits B, C and D hereto,
as
applicable, from the Company and Purchaser.
(b) Pursuant
to Section 3.14 of the Purchase Agreement, upon the Escrow Agent’s receipt of
notice as provided in Section 1.3(a) above (i) Two Hundred Fifty Thousand
Dollars ($250,000) shall be released from the Escrow Funds to the Company at
such time that the Company appoints a new Chief Financial Officer, (ii) Two
Hundred Fifty Thousand Dollars ($250,000) shall be released from the Escrow
Funds to the Company at such time that the Company fulfills NASDAQ’s corporate
governance requirements including, but not limited to, appointing three (3)
independent directors to serve on its Board of Directors, as well as forming
the
Audit Committee and Compensation Committee, and (iii) Two Hundred Fifty Thousand
Dollars ($250,000) shall be released from the Escrow Funds to the Company at
such time that the Company appoints a new Vice President of Investor Relations.
(c) In
the
event this Agreement, the Escrow Funds, or the Escrow Agent, in its capacity
as
the escrow agent under this Agreement, becomes the subject of litigation, or
if
the Escrow Agent determines it is necessary to do so for any other reason
relating to litigation arising out of this Agreement or the Purchase Agreement,
each of the Company and the Purchaser authorizes the Escrow Agent, at its option
if not otherwise so required, to deposit the Escrow Funds with the clerk of
the
court in which the litigation is pending, and thereupon the Escrow Agent shall
be relieved and discharged of any further responsibility with regard thereto
to
the extent determined by any such court. Each of the Company and the Purchaser
further authorizes the Escrow Agent, if it receives conflicting claims to any
of
the Escrow Funds, is threatened with litigation, in its capacity as escrow
agent
under this Agreement, or if the Escrow Agent determines it is necessary to
do so
for any other reason relating to this Agreement, to interplead all interested
parties in any court of competent jurisdiction and to deposit the Escrow Funds
with the clerk of that court and thereupon the Escrow Agent shall be relieved
and discharged of any further responsibility hereunder to the parties from
which
they were received to the extent determined by such court.
(d) Upon
receipt of the notice provided in Section 1.3(b) above, the Escrow Agent shall
release the Escrow Funds as specified therein. The names and true signatures
of
each individual authorized to act singly on behalf of each of the Parties are
stated in Exhibit
E,
which
is attached hereto and made a part hereof. The Parties may each remove or add
one or more of its authorized signers stated on Exhibit
E
by
notifying the Escrow Agent of such change in accordance with this Agreement,
which notice shall include the true signature for any new authorized
signatories
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(e) Upon
the
Escrow Agent’s completion of its obligations under Section 1.3, this Agreement
shall terminate and the Escrow Agent shall have no further liability hereunder.
1.4 This
Agreement may be altered or amended only with the written consent of all of
the
parties hereto. Should any of the Parties attempt to change this Agreement
in a
manner, which, in the Escrow Agent’s discretion, shall be undesirable, the
Escrow Agent may resign as Escrow Agent by notifying the Parties in writing
five
days in advance. In the case of the Escrow Agent’s resignation or removal
pursuant to the foregoing, its only duty, until receipt of notice from the
Parties that a successor escrow agent has been appointed, shall be to hold
and
preserve the Escrow Funds that are in his possession. Upon receipt by the Escrow
Agent of said notice from the Parties of the appointment of a successor escrow
agent, the name of a successor escrow account and a direction to transfer the
Escrow Funds, the Escrow Agent shall promptly thereafter transfer all of the
Escrow Funds that it is still holding in escrow, to said successor escrow agent.
Immediately after said transfer of the Escrow Funds, the Escrow Agent shall
furnish the Parties with proof of such transfer. The Escrow Agent is authorized
to disregard any notices, requests, instructions or demands received by it
from
the Parties after the Escrow Agent promptly transfers all of the Escrow Funds
that it is still holding in escrow, to the above said successor escrow agent.
1.5
The
Escrow Agent shall be reimbursed by the Parties for any reasonable expenses
incurred in the event there is a conflict between the Parties and the Escrow
Agent shall deem it necessary to retain counsel, upon whose advice the Escrow
Agent may rely. The Escrow Agent shall not be liable for any action taken or
omitted by it in good faith and in no event shall the Escrow Agent be liable
or
responsible except for the Escrow Agent’s own gross negligence or willful
misconduct. The Escrow Agent has made no representations or warranties to the
Parties in connection with this transaction. The Escrow Agent has no liability
hereunder to either Party other than to hold the Escrow Funds and to deliver
them under the terms hereof. Each Party hereto agrees to indemnify and hold
harmless the Escrow Agent from and with respect to any suits, claims, actions
or
liabilities arising in any way out of this transaction including the obligation
to defend any legal action brought which in any way arises out of or is related
to this Agreement or the investment being made by Seller. The
Purchaser acknowledges and represents that it is not being represented in a
legal capacity by Loeb & Loeb LLP and has had the opportunity to consult
with its own legal advisors prior to the signing of this Agreement. The
Purchaser acknowledges that the Escrow Agent is not rendering securities advice
to it with respect to this Agreement. The Escrow Agent is acting as legal
counsel for the Company in connection with the Purchase Agreement and related
Transaction Documents and may continue to act as legal counsel for the Company,
from time to time, notwithstanding its duties as the Escrow Agent hereunder.
The
Purchaser consents to the Escrow Agent acting in such capacity as legal counsel
for the Company and waives any claim that such representation represents a
conflict of interest on the part of the Escrow Agent. The Purchaser understands
that the Escrow Agent is relying explicitly on the foregoing provisions
contained in this Section 1.5 in entering into this Agreement.
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1.6 The
Escrow Agent shall be obligated only for the performance of such duties as
are
specifically set forth herein and may rely and shall be protected in relying
or
refraining from acting on any instrument reasonably believed by the Escrow
Agent
to be genuine and to have been signed or presented by the proper Party or
Parties. The Escrow Agent shall not be personally liable for any act the Escrow
Agent may do or omit to do hereunder as the Escrow Agent while acting in good
faith, and any act done or omitted by the Escrow Agent pursuant to the advice
of
the Escrow Agent's attorneys-at-law shall be conclusive evidence of such good
faith.
1.7 The
Escrow Agent is hereby expressly authorized to disregard any and all warnings
given by any of the parties hereto or by any other person or corporation,
excepting only orders or process of courts of law and is hereby expressly
authorized to comply with and obey orders, judgments or decrees of any court.
In
case the Escrow Agent obeys or complies with any such order, judgment or decree,
the Escrow Agent shall not be liable to any of the parties hereto or to any
other person, firm or corporation by reason of such decree being subsequently
reversed, modified, annulled, set aside, vacated or found to have been entered
without jurisdiction.
1.8 The
Escrow Agent shall not be liable in any respect on account of the identity,
authorities or rights of the parties executing or delivering or purporting
to
execute or deliver the Agreement or any documents or papers deposited or called
for hereunder.
1.9 If
the
Escrow Agent reasonably requires other or further documents in connection with
this Agreement, the necessary parties hereto shall join in furnishing such
documents.
1.10 It
is
understood and agreed that should any dispute arise with respect to the Escrow
Funds held by the Escrow Agent hereunder, the Escrow Agent is authorized and
directed in the Escrow Agent's sole discretion (a) to retain in the Escrow
Agent's possession without liability to anyone , the Escrow Funds until such
disputes shall have been settled either by mutual written agreement of the
parties concerned or by a final order, decree or judgment of a court of
competent jurisdiction after the time for appeal has expired and no appeal
has
been perfected, but the Escrow Agent shall be under no duty whatsoever to
institute or defend any such proceedings or (b) to deliver the Escrow Funds
and
any other property and documents held by the Escrow Agent hereunder to a state
or federal court having competent subject matter jurisdiction and located in
the
State of New York in accordance with the applicable procedure
therefor.
ARTICLE
2
MISCELLANEOUS
2.1
No
waiver
of 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 any extension of the time for performance
of
any other obligation or act.
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2.2 This
Agreement shall be binding upon and shall inure to the benefit of the permitted
successors and assigns of the Parties hereto.
2.3
This
Agreement is the final expression of, and contains the entire agreement between,
the Parties with respect to the subject matter hereof and supersedes all prior
understandings with respect thereto. This Agreement may not be modified,
changed, supplemented or terminated, nor may any obligations hereunder be
waived, except by written instrument signed by the Parties to be charged or
by
their respective agents duly authorized in writing or as otherwise expressly
permitted herein.
2.4
Whenever
required by the context of this Agreement, the singular shall include the plural
and masculine shall include the feminine. This Agreement may be executed in
two
or more counterparts, all of which taken together shall constitute one
instrument. Execution and delivery of this Agreement by exchange of facsimile
copies bearing the facsimile signature of a Party shall constitute a valid
and
binding execution and delivery of this Agreement by such Party. Such facsimile
copies shall constitute enforceable original documents.
2.5 The
Parties hereto expressly agree that this Agreement shall be governed by,
interpreted under, and construed and enforced in accordance of the laws of
the
State of New York. The parties agree that any dispute arising under or with
respect to or in connection with this Agreement, whether during the term of
this
Agreement or at any subsequent time, shall be resolved fully and exclusively
in
the federal or state courts resident in New York County, New York.
2.6 Any
notice required or permitted hereunder shall be in writing and shall be
effective (a) upon hand delivery by telex (with correct answer back received),
telecopy, email or facsimile at the address or number designated below (if
delivered on a business day during normal business hours where such notice
is to
be received), or the first business day following such delivery (if delivered
other than on a business day during normal business hours where such notice
is
to be received) or (b) sent by commercial overnight courier such as UPS or
Fedex
The addresses for such communications shall be:
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If
to the Company:
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c/oXi'an
Baorun Industrial Development Co. Ltd.
Dongxin
Century Square, 7th Floor
Xi'an
East Xxxx Xxxx-tech Industrial Development Park
Shannxi
Province, P.R. China
Attn:
Xx. Xxx Xincheng
Tel:
00 00 00000000
Fax:
00 00 00000000
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with
copies to (which shall not constitute notice):
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Loeb
& Loeb
000
Xxxx Xxxxxx
Xxx
Xxxx, XX00000
Attn:
Xxxxxxxx X. Xxxxxxxx
Tel:
000.000.0000
Fax:
212.407-4990
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If
to the Purchaser:
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Vision
Opportunity China LP
00
Xxxx 00xx Xxxxxx
0xx
Xxxxx
Xxx
Xxxx, XX 00000
Attn:
Xxx Xxxxxxx
Tel:
000-000-0000
Fax:
000-000-0000
Email: x.xxxxxxx@xxxxxxx.xxx
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If
to the Escrow Agent:
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Loeb
& Loeb LLP
000
Xxxx Xxxxxx
Xxx
Xxxx, XX 00000
Attention:
Xxxxxxxx X. Xxxxxxxx. Esq.
Telephone
Number: 000-000-0000
Facsimile
Number: 212-4-7-4990
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2.7 By
signing this Agreement, the Escrow Agent becomes a Party hereto only for the
purpose of this Agreement; the Escrow Agent does not become a Party to the
Purchase Agreement or any related agreements.
2.8 Each
Party acknowledges and agrees that this Agreement shall not be deemed prepared
or drafted by any one Party. In the event of any dispute between the Parties
concerning this Agreement, the Parties agree that any rule of construction,
to
the effect that any ambiguity in the language of the Agreement is to be resolved
against the drafting Party, shall not apply.
(Signature
Page to Follow)
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IN
WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the
date
first set forth above.
Executed:
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By:
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/s/ Gao Xincheng |
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Name:
Gao Xincheng
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Title:
Chief Executive Officer
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Vision
Opportunity China LP
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By:
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/s/ Xxxx Xxxxxxxx |
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Name:
Xxxx Xxxxxxxx
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Title:
Authorized Signatory
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Escrow
Agent
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Loeb
& Loeb LLP
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By:
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/s/ Xxxxxxxx X. Xxxxxxxx |
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Name:
Xxxxxxxx X. Xxxxxxxx
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Title:
Partner
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7
Exhibit
A
Securities
Purchase Agreement
8
Exhibit
B
RELEASE
NOTICE
Pursuant
to that Management Escrow Agreement dated as of October 14, 2008, by and among
China Bio Energy Holding Group Co., Ltd. (the “Company”), the Purchaser whose
name is set forth on Exhibit
A
to
Securities Purchase Agreement dated as of the date thereof (the “Purchaser”),
and Loeb & Loeb, LLP, as Escrow Agent, the Company hereby certifies that the
Company has hired a Chief Financial Officer, and hereby requests disbursement
of
funds in the amount and manner described below (wire instructions
attached).
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Please
disburse to:
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Amount
to disburse:
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Form
of distribution:
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Payee:
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Name:
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Address:
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City/State:
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Zip:
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CHINA
BIO ENERGY HOLDING
GROUP CO., LTD. |
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Date:
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By:
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Name:
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Title:
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VISION
OPPORTUNITY CHINA LP
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Date:
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By:
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Name:
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Title:
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9
Exhibit
C
RELEASE
NOTICE
Pursuant
to that Management Escrow Agreement dated as of October 14, 2008, by and among
China Bio Energy Holding Group Co., Ltd. (the “Company”), the Purchaser whose
name is set forth on Exhibit
A
to the
Securities Purchase Agreement dated as of the date thereof (the “Purchaser”),
and Loeb & Loeb, LLP, as Escrow Agent, the Company hereby certifies that the
Company has complied with all of the NASDAQ corporate governance requirements,
and hereby requests disbursement of funds in the amount and manner described
below (wire instructions attached).
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Please
disburse to:
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Amount
to disburse:
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Form
of distribution:
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Payee:
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Name:
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Address:
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City/State:
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Zip:
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CHINA
BIO ENERGY HOLDING
GROUP CO., LTD. |
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Date:
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By:
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Name:
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Title:
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VISION
OPPORTUNITY CHINA LP
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Date:
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By:
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Name:
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Title:
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10
Exhibit
D
RELEASE
NOTICE
Pursuant
to that Management Escrow Agreement dated as of October 14, 2008, by and among
China Bio Energy Holding Group Co., Ltd. (the “Company”), the Purchaser whose
name is set forth on Exhibit
A
to the
Securities Purchase Agreement dated as of the same date thereof (the
“Purchaser”), and Loeb & Loeb, LLP, as Escrow Agent, the Company hereby
certifies that the Company has hired an Investor Relations Officer, and hereby
requests disbursement of funds in the amount and manner described below (wire
instructions attached).
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Please
disburse to:
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Amount
to disburse:
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Form
of distribution:
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Payee:
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Name:
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Address:
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City/State:
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Zip:
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CHINA
BIO ENERGY HOLDING
GROUP
CO., LTD.
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Date:
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By:
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Name:
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Title:
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VISION
OPPORTUNITY CHINA LP
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Date:
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By:
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Name:
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Title:
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11
Exhibit
E
The
Escrow Agent is authorized to accept instructions signed or believed by the
Escrow Agent to be signed by any or all of the following individuals on behalf
of each of the Company and Purchaser:
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Name
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True
Signature
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COMPANY
AUTHORIZED SIGNATORY
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Name
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True
Signature
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Gao
Xincheng
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Li
Gaihong
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PURCHASER
AUTHORIZED SIGNATORY
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Name
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True
Signature
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Xxxx
Xxxxxxxx
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