EXHIBIT 10.3
ESCROW AGREEMENT
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This ESCROW AGREEMENT (this "AGREEMENT") made as of August __, 2004 by and
among China World Trade Corporation (the "ISSUER"), and ▇▇▇▇▇▇ Capital (the
"PLACEMENT AGENT"), whose addresses and other information appear on the
Information Sheet (as defined herein) attached to this Agreement, and
Continental Stock Transfer & Trust Company, ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇ (the "ESCROW AGENT").
WITNESSETH:
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WHEREAS, the Issuer proposes to sell up to $3,000,000 (the "OFFERING
AMOUNT") of the Issuer's Common Stock and warrants to purchase common stock of
the Issuer (the "SECURITIES") to investors (the subscribers of the Securities
pursuant to this offering are hereinafter referred to as "INVESTORS"), in a
private offering to accredited investors on a "best efforts, basis through the
Placement Agent (the "OFFERING");
WHEREAS, the Issuer and the Placement Agent propose to establish an escrow
account (the "ESCROW ACCOUNT"), to which subscription monies which are received
by the Escrow Agent from the Placement Agent in connection with such private
offering are to be credited, and the Escrow Agent is willing to establish the
Escrow Account on the terms and subject to the conditions hereinafter set forth;
And
WHEREAS, the Escrow Agent has agreed to establish a special bank account at
▇.▇. ▇▇▇▇▇▇ Chase Bank (the "BANK") into which the subscription monies, which
are received by the Escrow Agent from the Placement Agent and credited to the
Escrow Account, are to be deposited.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties hereto hereby agree as follows:
Information Sheet. Each capitalized term not otherwise defined in this
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Agreement shall have the meaning set forth for such term on the information
sheet which is attached to this Agreement as Exhibit A and is incorporated by
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reference herein and made a part hereof (the "INFORMATION SHEET").
Establishment of the Bank Account.
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The Escrow Agent shall establish a non-interest-bearing bank account at the
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branch of Bank selected by the Escrow Agent, and bearing the designation set
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forth on the Information Sheet (heretofore defined as the "BANK ACCOUNT"). The
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purpose of the Bank Account is for (a) the deposit of all subscription monies
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(checks or wire transfers) which are received by the Placement Agent from
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prospective purchasers of the Securities and are delivered by the Placement
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Agent to the Escrow Agent, (b) the holding of amounts of subscription monies
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which are collected through the banking system and (c) the disbursement of
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collected funds, all as described herein.
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On or before the date of the initial deposit in the Bank Account pursuant
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to this Agreement, the Placement Agent shall notify the Escrow Agent in writing
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of the date of the commencement of the Offering (the "EFFECTIVE DATE"), and the
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Escrow Agent shall not be required to accept any amounts for credit to the
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Escrow Account or for deposit in the Bank Account prior to its receipt of such
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notification.
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The "OFFERING PERIOD," which shall be deemed to commence on the Effective
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Date, shall consist of the number of calendar days or business days set forth on
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the Information Sheet. The Offering Period shall be extended at the Placement
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Agent's discretion (an "EXTENSION PERIOD") only if the Escrow Agent shall have
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received written notice thereof prior to the expiration of the Offering Period.
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The Extension Period, which shall be deemed to commence on the next calendar day
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following the expiration of the Offering Period, shall consist of the number of
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calendar days or business days set forth on the Information Sheet. The last day
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of the Offering Period, or the last day of the Extension Period (if the Escrow
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Agent has received written notice thereof as herein above provided), is referred
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to herein as the "TERMINATION DATE". Except as provided in Section 4.3 hereof,
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after the Termination Date, the Placement Agent shall not deposit, and the
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Escrow Agent shall not accept, any additional amounts representing payments by
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prospective purchasers.
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Deposits to the Bank Account.
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The Placement Agent shall promptly deliver to the Escrow Agent all monies
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which it receives from prospective purchasers of the Securities, which monies
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shall be in the form of checks or wire transfers, provided however that
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"Cashiers" checks and "Money Orders" must be in amounts greater than $10,000;
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Cashiers checks or Money Orders in amounts less than $10,000 shall be rejected
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by the Escrow Agent. Upon the Escrow Agent's receipt of such monies, they shall
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be credited to the Escrow Account. All checks delivered to the Escrow Agent
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shall be made payable to "CST&T China World Escrow Account." Any check payable
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other than to the Escrow Agent as required hereby shall be returned to the
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prospective purchaser, or if the Escrow Agent has insufficient information to do
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so, then to the Placement Agent (together with any Subscription Information, as
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defined below or other documents delivered therewith) by noon of the next
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business day following receipt of such check by the Escrow Agent, and such check
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shall be deemed not to have been delivered to the Escrow Agent pursuant to the
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terms of this Agreement.
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Promptly after receiving subscription monies as described in Section 3.1,
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the Escrow Agent shall deposit the same into the Bank Account. Amounts of monies
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so deposited are hereinafter referred to as "ESCROW AMOUNTS". The Escrow Agent
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shall cause the Bank to process all Escrow Amounts for collection through the
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banking system. Simultaneously with each deposit to the Escrow Account, the
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Placement Agent (or the Issuer, if such deposit is made by the Issuer) shall
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inform the Escrow Agent in writing of the name, address, and the tax
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identification number of the purchaser, the amount of Securities subscribed for
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by such purchase, and the aggregate dollar amount of such subscription
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(collectively, the "SUBSCRIPTION INFORMATION").
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The Escrow Agent shall not be required to accept for credit to the Escrow
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Account or for deposit into the Bank Account checks which are not accompanied by
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the appropriate Subscription Information, which at minimum shall include the
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name address, tax identification number and the number of shares/units. Wire
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transfers representing payments by prospective purchasers shall not be deemed
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deposited in the Escrow Account until the Escrow Agent has received in writing
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the Subscription Information required with respect to such payments.
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The Escrow Agent shall not be required to accept in the Escrow Account any
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amounts representing payments by prospective purchasers, whether by check or
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wire, except during the Escrow Agent's regular business hours.
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Only those Escrow Amounts, which have been deposited in the Bank Account
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and which have cleared the banking system and have been collected by the Escrow
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Agent, are herein referred to as the "FUND."
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If the Offering is terminated before the Termination Date, the Escrow Agent
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shall refund any portion of the Fund prior to disbursement of the Fund in
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accordance with Article 4 hereof upon instructions in writing signed by both the
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Issuer and the Placement Agent.
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Disbursement from the Bank Account.
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Subject to Section 4.3 below, if by the close of regular banking hours on
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the Termination Date the Escrow Agent determines that the amount in the Fund is
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less than the Offering Amount, as indicated by the Subscription Information
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submitted to the Escrow Agent, then in either such case, the Escrow Agent shall
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promptly refund to each prospective purchaser the amount of payment received
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from such purchaser which is then held in the Fund or which thereafter clears
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the banking system, without interest thereon or deduction there from, by drawing
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checks on the Bank Account for the amounts of such payments and transmitting
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them to the purchasers. In such event, the Escrow Agent shall promptly notify
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the Issuer and the Placement Agent of its distribution of the Fund.
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Subject to Section 4.3 below, if at any time up to the close of regular
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banking hours on the Termination Date, the Escrow Agent determines that the
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amount in the Fund represents the sale of the Offering Amount, the Escrow Agent
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shall promptly notify the Issuer and the Placement Agent of such fact in
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writing. The Escrow Agent shall promptly disburse the Fund, by drawing checks on
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the Bank Account in accordance with instructions in writing signed by both the
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Issuer and the Placement Agent as to the disbursement of the Fund, promptly
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after it receives such instructions.
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This Section 4.3 applies only if a Collection Period has been provided for
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by the appropriate indication on the Information Sheet. If the Escrow Agent or
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the Placement Agent has on hand at the close of business on the Termination Date
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any uncollected amounts which when added to the Fund would raise the amount in
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the Fund to the Offering Amount and result in the Fund representing the sale of
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the Offering Amount, the Collection Period (consisting of the number of business
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days set forth on the Information Sheet) shall be utilized to allow such
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uncollected amounts to clear the banking system. During the Collection Period,
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the Placement Agent (and the Issuer) shall not deposit, and the Escrow Agent
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shall not accept, any additional amounts; provided, however, that such amounts
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as were received by the Placement Agent (or the Issuer) by the close of business
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on the Termination Date may be deposited with the Escrow Agent by noon of the
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next business day following the Termination Date. If at the close of business
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on the last day of the Collection Period an amount sufficient to raise the
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amount in the Fund to represent the sale of the Offering Amount shall not have
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cleared the banking system, the Escrow Agent shall promptly notify the Issuer
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and the Placement Agent in writing of such fact and shall promptly return all
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amounts then in the Fund, and any amounts which thereafter clear the banking
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system, to the prospective purchasers as provided in Section 4.2 hereof.
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Upon disbursement of the Fund pursuant to the terms of this Article 4, the
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Escrow Agent shall be relieved of further obligations and released from all
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liability under this Agreement. It is expressly agreed and understood that in
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no event shall the aggregate amount of payments made by the Escrow Agent exceed
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the amount of the Fund.
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Rights, Duties and Responsibilities of Escrow Agent. It is understood and
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agreed that the duties of the Escrow Agent are purely ministerial in nature, and
that:
The Escrow Agent shall notify the Placement Agent, on a daily basis, of the
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Escrow Amounts which have been deposited in the Bank Account and of the amounts,
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constituting the Fund, which have cleared the banking system and have been
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collected by the Escrow Agent.
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The Escrow Agent shall not be responsible for or be required to enforce any
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of the terms or conditions of the selling agreement or any other agreement
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between the Placement Agent and the Issuer nor shall the Escrow Agent be
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responsible for the performance by the Placement Agent or the Issuer of their
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respective obligations under this Agreement.
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The Escrow Agent shall not be required to accept from the Placement Agent
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(or the Issuer) any Subscription Information pertaining to prospective
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purchasers unless such Subscription Information is accompanied by checks or wire
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transfers meeting the requirements of Section 3.1, nor shall the Escrow Agent be
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required to keep records of any information with respect to payments deposited
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by the Placement Agent (or the Issuer) except as to the amount of such payments;
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however, the Escrow Agent shall notify the Placement Agent within a reasonable
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time of any discrepancy between the amount set forth in any Subscription
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Information and the amount delivered to the Escrow Agent therewith. Such amount
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need not be accepted for deposit in the Escrow Account until such discrepancy
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has been resolved.
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The Escrow Agent shall be under no duty or responsibility to enforce
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collection of any check delivered to it hereunder. The Escrow Agent, within a
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reasonable time, shall return to the Placement Agent any check received which is
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dishonored, together with the Subscription Information, if any, which
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accompanied such check.
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If the Escrow Agent is uncertain as to its duties or rights hereunder or
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shall receive instructions with respect to the Bank Account, the Escrow Amounts
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or the Fund which, in its sole determination, are in conflict either with other
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instructions received by it or with any provision of this Agreement, it shall be
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entitled to hold the Escrow Amounts, the Fund, or a portion thereof, in the Bank
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Account pending the resolution of such uncertainty to the Escrow Agent's sole
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satisfaction, by final judgment of a court or courts of competent jurisdiction
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or otherwise.
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The Escrow Agent shall not be liable for any action taken or omitted
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hereunder, or for the misconduct of any employee, agent or attorney appointed by
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it, except in the case of willful misconduct or gross negligence. The Escrow
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Agent shall be entitled to consult with counsel of its own choosing and shall
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not be liable for any action taken, suffered or omitted by it in accordance with
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the advice of such counsel.
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The Escrow Agent shall have no responsibility at any time to ascertain
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whether or not any security interest exists in the Escrow Amounts, the Fund or
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any part thereof or to file any financing statement under the Uniform Commercial
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Code with respect to the Fund or any part thereof.
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Amendment; Resignation or Removal of Escrow Agent. This Agreement may be
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altered or amended only with the written consent of the Issuer, the Placement
Agent and the Escrow Agent. The Escrow Agent may resign and be discharged from
its duties hereunder at any time by giving written notice of such resignation to
the Issuer and the Placement Agent specifying a date when such resignation shall
take effect and upon delivery of the Fund to the successor escrow agent
designated by the Issuer or the Placement Agent in writing. Such successor
Escrow Agent shall become the Escrow Agent hereunder upon the resignation date
specified in such notice. If the Company fails to designate a successor Escrow
Agent within thirty (30) days after such notice, then the resigning Escrow Agent
shall promptly refund the amount in the Fund to each prospective purchaser,
without interest thereon or deduction. The Escrow Agent shall continue to serve
until its successor accepts the escrow and receives the Fund. The Company shall
have the right at any time to remove the Escrow Agent and substitute a new
escrow agent by giving notice thereof to the Escrow Agent then acting. Upon its
resignation and delivery of the Fund as set forth in this Section 6, the Escrow
Agent shall be discharged of and from any and all further obligations arising in
connection with the escrow contemplated by this Agreement. Without limiting the
provisions of Section 8 hereof, the resigning Escrow Agent shall be entitled to
be reimbursed by the Issuer and the Placement Agent for any expenses incurred in
connection with its resignation, transfer of the Fund to a successor escrow
agent or distribution of the Fund pursuant to this Section 6.
Representations and Warranties. The Issuer and the Placement Agent hereby
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severally represent and warrant to the Escrow Agent that:
No party other than the parties hereto and the prospective purchasers have,
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or shall have, any lien, claim or security interest in the Escrow Amounts or the
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Fund or any part thereof.
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No financing statement under the Uniform Commercial Code is on file in any
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jurisdiction claiming a security interest in or describing (whether specifically
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or generally) the Escrow Amounts or the Fund or any part thereof.
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The Subscription Information submitted with each deposit shall, at the time
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of submission and at the time of the disbursement of the Fund, be deemed a
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representation and warranty that such deposit represents a bona fide payment by
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the purchaser described therein for the amount of Securities set forth in such
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Subscription Information.
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All of the information contained in the Information Sheet is, as of the
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date hereof, and will be, at the time of any disbursement of the Fund, true and
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correct.
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Reasonable controls have been established and required due diligence
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performed to comply with "Know Your Customer" regulations, USA Patriot Act,
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Office of Foreign Asset Control (OFAC) regulations and the Bank Secrecy Act.
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Fees and Expenses. The Escrow Agent shall be entitled to the Escrow Agent
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Fees set forth on the Information Sheet, payable as and when stated therein. In
addition, the Issuer and the Placement Agent jointly and severally agree to
reimburse the Escrow Agent for any reasonable expenses incurred in connection
with this Agreement, including, but not limited to, reasonable counsel fees.
Indemnification and Contribution.
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The Issuer and the Placement Agent (collectively referred to as the
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"INDEMNITORS") jointly and severally agree to indemnify the Escrow Agent and its
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officers, directors, employees, agents and shareholders (collectively referred
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to as the "INDEMNITEES") against, and hold them harmless of and from, any and
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all loss, liability, cost, damage and expense, including without limitation,
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reasonable counsel fees, which the Indemnitees may suffer or incur by reason of
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any action, claim or proceeding brought against the Indemnitees arising out of
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or relating in any way to this Agreement or any transaction to which this
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Agreement relates, unless such action, claim or proceeding is the result of the
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willful misconduct or gross negligence of the Indemnitees.
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If the indemnification provided for in Section 9.1 is applicable, but for
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any reason is held to be unavailable, the Indemnitors shall contribute such
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amounts as are just and equitable to pay, or to reimburse the Indemnitees for,
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the aggregate of any and all losses, liabilities, costs, damages and expenses,
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including counsel fees, actually incurred by the Indemnitees as a result of or
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in connection with, and any amount paid in settlement of, any action, claim or
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proceeding arising out of or relating in any way to any actions or omissions of
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the Indemnitors.
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The provisions of this Article 9 shall survive any termination of this
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Agreement, whether by disbursement of the Fund, resignation of the Escrow Agent
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or otherwise.
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Termination of Agreement. This Agreement shall terminate on the final
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disposition of the Fund pursuant to Section 4, provided that the rights of the
Escrow Agent and the obligations of the other parties hereto under Section 9
shall survive the termination hereof and the resignation or removal of the
Escrow Agent.
Governing Law and Assignment. This Agreement shall be construed in
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accordance with and governed by the laws of the State of New York, without
regard to the conflicts of laws principles thereof, and shall be binding, upon
the parties hereto and their respective successors and assigns; provided,
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however, that any assignment or transfer by any party of its rights under this
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Agreement or with respect to the Escrow Amounts or the Fund shall be void as
against the Escrow Agent unless (a) written notice thereof shall be given to the
Escrow Agent; and (b) the Escrow Agent shall have consented in writing to such
assignment or transfer.
Notices. All notices required to be given in connection with this Agreement
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shall be sent by registered or certified mail, return receipt requested, or by
hand delivery with receipt acknowledged, or by the Express Mail service offered
by the United States Postal Service, and addressed, if to the Issuer or the
Placement Agent, at their respective addresses set forth on the Information
Sheet, and if to the Escrow Agent, at its address set forth above, to the
attention of the Trust Department.
Severability. If any provision of this Agreement or the application thereof
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to any person or circumstance shall be determined to be invalid or
unenforceable, the remaining provisions of this Agreement or the application of
such provision to persons or circumstances other than those to which it is held
invalid or unenforceable shall not be affected thereby and shall be valid and
enforceable to the fullest extent permitted by law.
Execution in Several Counterparts. This Agreement may be executed in
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several counterparts or by separate instruments and by facsimile transmission,
and all of such counterparts and instruments shall constitute one agreement,
binding on all of the parties hereto.
Entire Agreement. This Agreement constitutes the entire agreement between
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the parties hereto with respect to the subject matter hereof and supersedes all
prior agreements and understandings (written or oral) of the parties in
connection therewith.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the day
and year first above written.
CONTINENTAL STOCK TRANSFER & TRUST COMPANY
By: ______________________________
Name: _______________________
Title: _______________________
CHINA WORLD TRADE CORPORATION
By: ______________________________
Name: _______________________
Title: _______________________
▇▇▇▇▇▇ CAPITAL
By: ______________________________
Name: _______________________
Title: _______________________
EXHIBIT A
ESCROW AGREEMENT INFORMATION SHEET