ESCROW
      AGREEMENT

     

    This
      ESCROW AGREEMENT (this “Agreement”)
      made
      as of June
      11,
      2008 by and between China Advanced Construction Materials Group, Inc. (the
      “Issuer”),
      Professional
      Offshore Opportunity Fund, Ltd.,
      as
      representative of the Investors (the “Investor
      Representative”),
      and
      Maxim Group LLC (the “Placement
      Agent”),
      405
      Lexington Avenue, New York, New York 10174, and Anslow + Jaclin, LLP, 195 Route
      9 South, Suite 204, Manalapan, NJ 07726 (the “Escrow
      Agent”).

    


    WITNESETH:
      

     

    WHEREAS,
      the Issuer proposes to sell units (“Units”),
      each
      consisting of (i) one share of Issuer’s Series A Convertible Preferred
      Stock (the “Preferred
      Stock”),
      par
      value $.001 per share, each share of which shall be convertible into four (4)
      shares of the Issuer’s Common Stock, par value $0.001 per share (the
“Common
      Stock”)
      and
      (ii) a warrant to purchase two (2) shares of Common Stock, par value $0.001
      per share;

     

    WHEREAS,
      the Issuer is offering to “accredited investors,” on a “best efforts” basis, up
      to 875,000 Units at a purchase price per Unit of $8.00 (the “Offering”);

     

    WHEREAS,
      each
      holder of the Preferred Stock will receive a 9% per annum cash dividend
      (“Dividends”), payable to the record holders of the Preferred Stock on a
      quarterly basis;

    


    WHEREAS,
      the Issuer
      proposes to establish an escrow account (the “Escrow
      Account”),
      which
      shall include $630,000
      which will be used for the payment of Dividends (the “Dividend
      Escrow Amount”),
      which
      the Issuer shall be obligated to replenish each year prior to the year’s
      end,
      and
      $300,000 to be used for investor relations fees (the “IR
      Escrow Amount”);
      and
      the Escrow Agent is willing to establish the Escrow Account on the terms and
      subject to the conditions hereinafter set forth;

     

    NOW,
      THEREFORE, in consideration of the premises and mutual covenants herein
      contained, the parties hereto hereby agree as follows:

     

    1. Appointment
      of Escrow Agent.
      The
      Issuer and Placement Agent hereby appoint Anslow + Jaclin, LLP as escrow agent
      to act in accordance with the terms and conditions set forth in this Agreement,
      and the Escrow Agent hereby accepts such appointment and agrees to establish
      the
      Bank Account on the terms and subject to the conditions hereinafter set
      forth.

     

    2. Establishment
      of the Bank Account.
      The
      Escrow Agent shall establish a non-interest-bearing bank account at the branch
      of the Bank selected by the Escrow Agent (heretofore
      defined as the
      “Bank
      Account”).
      The
      purpose of the Bank Account is for (a) the deposit of the Dividend Escrow Amount
      and IR Escrow Amount by the Issuer, and (b) the disbursement of collected funds,
      all as described herein.

     

    3. Delivery
      of the Escrow Funds.
      The
      Issuer shall deliver, or cause to be delivered from the proceeds of the
      Offering, the Dividend Escrow Amount and the IR Escrow Amount (the “Escrow
      Funds”)
      to the
      Escrow Agent in immediately available funds to be held and disbursed by the
      Escrow Agent as provided in this Agreement. The Escrow Agent shall promptly
      notify the Investor of its receipt of the Escrow Funds. Prior to the last day
      of
      each calendar year until the voluntary or mandatory conversion of all
      outstanding shares of Preferred Stock, the Issuer shall deliver an additional
      amount of immediately available funds equal to the product of the Dividend
      and
      the Dividend Base Amount (as defined in the Certificate of Designation of Series
      A Preferred Convertible Stock (the “Certificate
      of Designation”))
      less
      any amounts remaining of the Dividend Escrow Amount (“Additional
      Dividend Escrow Amount”),
      to
      the Escrow Agent.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    4. Disbursements
      from the Bank Account. The
      Escrow Agent shall hold the Escrow Funds in accordance with the terms of this
      Agreement. 

     

    4.1 The
      Escrow Agent shall release funds out of the Dividend Escrow Amount for the
      payment of Dividends on a quarterly basis in accordance with the provisions
      of
      Section 2 of the Certificate of Designation. 

     

    4.2 The
      Escrow Agent shall release the IR Escrow Amount in incremental amounts pursuant
      to written instructions by the Investor Representative to an investor relations
      firm chosen by the Issuer and approved by the holders of at least sixty percent
      (60%) of the then outstanding shares of the Series A Preferred Stock. If the
      entire IR Escrow Amount is not disbursed within two (2) years from the date
      hereof, the balance of the IR Escrow Amount will be returned to the
      Issuer.

     

    5. Duration.
      This
      Agreement shall terminate upon the voluntary or mandatory conversion of all
      outstanding shares of Preferred Stock and upon the disbursement of the entire
      IR
      Escrow Amount in accordance with Section 4.2.

     

    6. Conflict.
      Each of
      the parties understands and acknowledges that the Escrow Agent is general
      outside counsel to the Issuer and owes the Issuer duties commensurate with
      such
      legal representation.

     

    7. Interpleader.
      Should
      any controversy arise among the parties hereto with respect to this Agreement
      or
      with respect to the right to receive the Escrow Funds, the Escrow Agent shall
      have the right to consult counsel and/or to institute an appropriate
      interpleader action to determine the rights of the parties. The Escrow Agent
      is
      also hereby authorized to institute an appropriate interpleader action upon
      receipt of a written letter of direction executed by the parties so directing
      Escrow Agent. If the Escrow Agent is directed to institute an appropriate
      interpleader action, it shall institute such action not prior to thirty (30)
      days after receipt of such letter of direction and not later than sixty (60)
      days after such date. Any interpleader action instituted in accordance with
      this
Section
      7
      shall be
      filed in any court of competent jurisdiction in New York, New York, and the
      Escrow Funds in dispute shall be deposited with the court and in such event
      Escrow Agent shall be relieved of and discharged from any and all obligations
      and liabilities under and pursuant to this Agreement with respect to the Escrow
      Funds. 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    8. Exculpation
      and Indemnification of Escrow Agent.
      

     

    8.1 The
      Escrow Agent is not a party to, and is not bound by or charged with notice
      of
      any agreement out of which this escrow may arise. The Escrow Agent acts under
      this Agreement as a depositary only and is not responsible or liable in any
      manner whatsoever for the sufficiency, correctness, genuineness or validity
      of
      the subject matter of the escrow, or any part thereof, or for the form or
      execution of any notice given by any other party hereunder, or for the identity
      or authority of any person executing any such notice. The Escrow Agent will
      have
      no duties or responsibilities other than those expressly set forth herein.
      The
      Escrow Agent will be under no liability to anyone by reason of any failure
      on
      the part of any party hereto (other than the Escrow Agent) or any maker,
      endorser or other signatory of any document to perform such person’s or entity’s
      obligations hereunder or under any such document. Except for this Agreement
      and
      instructions to the Escrow Agent pursuant to the terms of this Agreement, the
      Escrow Agent will not be obligated to recognize any agreement between or among
      any or all of the persons or entities referred to herein, notwithstanding its
      knowledge thereof. 

     

    8.2 The
      Escrow Agent will not be liable for any action taken or omitted by it, or any
      action suffered by it to be taken or omitted, in good faith and in the exercise
      of its own best judgment, and may rely conclusively on, and will be protected
      in
      acting upon, any order, notice, demand, certificate, or 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 reasonably believed
      by Escrow Agent to be genuine and to be signed or presented by the proper person
      or persons. The duties and responsibilities of the Escrow Agent hereunder shall
      be determined solely by the express provisions of this Agreement and no other
      or
      further duties or responsibilities shall be implied, including, but not limited
      to, any obligation under or imposed by any laws of the State of New York upon
      fiduciaries. 

     

    8.3 The
      Escrow Agent will be indemnified and held harmless, jointly and severally,
      by
      the Issuer and the Placement Agent from and against any expenses, including
      reasonable attorneys’ fees and disbursements, damages or losses suffered by the
      Escrow Agent in connection with any claim or demand, which, in any way, directly
      or indirectly, arises out of or relates to this Agreement or the services of
      Escrow Agent hereunder; except, that if the Escrow Agent is guilty of willful
      misconduct, fraud or gross negligence under this Agreement, then the Escrow
      Agent will bear all losses, damages and expenses arising as a result of such
      willful misconduct, fraud or gross negligence. Promptly after the receipt by
      the
      Escrow Agent of notice of any such demand or claim or the commencement of any
      action, suit or proceeding relating to such demand or claim, the Escrow Agent
      will notify the other parties hereto in writing. For the purposes hereof, the
      terms “expense” and “loss” will include all amounts paid or payable to satisfy
      any such claim or demand, or in settlement of any such claim, demand, action,
      suit or proceeding settled with the express written consent of the parties
      hereto, and all costs and expenses, including, but not limited to, reasonable
      attorneys’ fees and disbursements, paid or incurred in investigating or
      defending against any such claim, demand, action, suit or proceeding. The
      provisions of this Section
      8
      shall
      survive the termination of this Agreement. 

     

    9. Fees
      and Expenses.
      The
      Escrow Agent shall not be compensated for agreeing to perform the services
      set
      forth in this Agreement. The Issuer, however, agrees to pay the Escrow Agent’s
      costs and expenses including reasonable attorney’s fees in the event of any
      dispute or litigation threatened or commenced which requires the Escrow Agent
      in
      its opinion to refer such matter to its attorneys. Escrow Agent will incur
      no
      liability for any delay reasonably required to obtain such advice of counsel.
      

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    10. Resignation
      of Escrow Agent.
      At any
      time, upon ten (10) days’ written notice to the Issuer, the Escrow Agent may
      resign and be discharged from its duties as escrow agent hereunder. As soon
      as
      practicable after its resignation, the Escrow Agent will promptly turn over
      to a
      successor escrow agent appointed by the Issuer the Escrow Funds held hereunder
      upon presentation of a document appointing the new escrow agent and evidencing
      its acceptance thereof. If, by the end of the 10-day period following the giving
      of notice of resignation by the Escrow Agent, the Issuer shall have failed
      to
      appoint a successor escrow agent, the Escrow Agent may interplead the Escrow
      Funds into the registry of any court having jurisdiction. 

     

    11. Records.
      The
      Escrow Agent shall maintain accurate records of all transactions hereunder.
      Promptly after the termination of this Agreement or as may reasonably be
      requested by the parties hereto from time to time before such termination,
      the
      Escrow Agent shall provide the parties hereto, as the case may be, with a
      complete copy of such records, certified by the Escrow Agent to be a complete
      and accurate account of all such transactions. The authorized representatives
      of
      each of the parties hereto shall have access to such books and records at all
      reasonable times during normal business hours upon reasonable notice to the
      Escrow Agent. 

     

    12. Notice.
      All
      notices, communications and instructions required or desired to be given under
      this Agreement must be in writing and shall be deemed to be duly given if sent
      by registered or certified mail, return receipt requested, or overnight courier
      to the following addresses: 

     

    If
      to
      Escrow Agent:

    Anslow
      +
      Jaclin, LLP

    195
      Route
      9 South, Suite 204

    Manalapan,
      NJ 07726

    Attention:
      Richard Anslow, Esq.

    


    If
      to the
      Issuer: 

    China
      Advanced Construction Materials Group, Inc.

    Yingu
      Plaza, 9 Beisihuanxi Road, Suite 1708 

    Haidian
      District, Beijing 100080

    Attention:
      Xianfu Han, Chief Executive Officer

    


    If
      to the
      Placement Agent: 

    Maxim
      Group, LLC

    405
      Lexington Avenue

    New
      York,
      NY 10174

    Attn:
      James Siegel

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    If
      to the
      Investor Representative: 

     

    Professional
      Offshore Opportunity Fund, Ltd.

    1400
      Old
      Country Road

    Suite
      206

    Westbury,
      NY 11590

    Attention:
      Howard B. Berger, Manager

    


    or
      to
      such other address and to the attention of such other person as any of the
      above
      may have furnished to the other parties in writing and delivered in accordance
      with the provisions set forth above. 

     

    13. Execution
      in Counterparts.
      This
      Agreement may be executed in counterparts, each of which shall be deemed an
      original, but all of which together shall constitute one and the same
      instrument. Facsimile execution and delivery of this Agreement is legal, valid
      and binding for all purposes. 

     

    14. Assignment
      and Modification.
      This
      Agreement and the rights and obligations hereunder of any of the parties hereto
      may not be assigned without the prior written consent of the other parties
      hereto. Subject to the foregoing, this Agreement will be binding upon and inure
      to the benefit of each of the parties hereto and their respective successors
      and
      permitted assigns. No other person will acquire or have any rights under, or
      by
      virtue of, this Agreement. No portion of the Escrow Funds shall be subject
      to
      interference or control by any creditor of any party hereto, or be subject
      to
      being taken or reached by any legal or equitable process in satisfaction of
      any
      debt or other liability of any such party hereto prior to the disbursement
      thereof to such party hereto in accordance with the provisions of this
      Agreement. This Agreement may be changed or modified only in writing signed
      by
      all of the parties hereto. 

     

    15. Applicable
      Law.
      This
      Agreement shall be governed by and construed with the laws of the State of
      New
      York applicable to contracts made and to be performed therein. Any litigation
      concerning the subject matter of this Agreement shall be exclusively prosecuted
      in the state or federal courts located in New York, New York, and all parties
      consent to the exclusive jurisdiction and venue of those courts. 

     

    16. Headings.
      The
      headings contained in this Agreement are for convenience of reference only
      and
      shall not affect the construction of this Agreement. 

     

    17. Attorneys’
      Fees.
      If any
      action at law or in equity, including an action for declaratory relief, is
      brought to enforce or interpret the provisions of this Agreement, the prevailing
      party shall be entitled to recover reasonable attorneys’ fees from the other
      party (unless such other party is the Escrow Agent), which fees may be set
      by
      the court in the trial of such action or may be enforced in a separate action
      brought for that purpose, and which fees shall be in addition to any other
      relief that may be awarded. 

    


    [Signatures
      to Follow on Next Page]

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    IN
      WITNESS WHEREOF, the undersigned have executed this Agreement as of the day
      and
      year first above written.

     

    
      	
              ANSLOW
                + JACLIN, LLP

            
	 	 	 
	
              By:

            	
              /s/
                Kristina L. Trauger, Esq.

            	 
	 	
              Name:
                Kristina L. Trauger, Esq.

            	 
	 	
              Title:

            	 
	 	 	 
	
              CHINA
                ADVANCED CONSTRUCTION MATERIALS GROUP, INC.

            
	 	 	 
	
              By:

            	
              /s/
                Xianfu Han

            	 
	 	
              Name:
                Xianfu Han

            	 
	 	
              Title:
                Chief Executive Officer

            	 
	 	 	 
	MAXIM
              GROUP LLC
	 	 	 
	
              By:

            	
              /s/
                Clifford A. Teller

            	 
	 	
              Name:
                Clifford A. Teller

            	 
	 	
              Title:
                Director of Investment Banking

            	 
	 	 	 
	
              PROFESSIONAL
                OFFSHORE OPPORTUNITY FUND, LTD.

            
	 	 	 
	
              By:

            	
              /s/
                Howard Berger

            	 
	 	
              Name:
                Howard Berger

            	 
	 	
              Title:
                Manager