Exhibit
10.5


 


SECURITIES ESCROW AGREEMENT


 


SECURITIES
ESCROW AGREEMENT, dated as of October 15, 2007 (“Agreement”) by and among Stone
Tan China Acquisition Corp., a Delaware corporation (“Company”), the
undersigned parties listed as Initial Stockholders on the signature page hereto
(collectively, the “Initial Stockholders”) and Continental Stock Transfer &
Trust Company, a New York corporation (“Escrow Agent”).


 


WHEREAS,
the Company has entered into an Underwriting Agreement, dated October 15, 2007
(“Underwriting Agreement”) with Morgan Joseph & Co., Inc. (“Morgan Joseph”),
as representative of the underwriters named therein (collectively, “Underwriters”),
pursuant to which, among other matters, the Underwriters have agreed to
purchase 30,000,000 units (“Units”) of the Company. Each Unit consists of one
share of the Company’s common stock, par value $.0001 per share (“Common Stock”),
and one warrant, each warrant to purchase one share of Common Stock, all as
more fully described in the Company’s definitive Prospectus, dated October 15,
2007 (“Prospectus”) comprising part of the Company’s Registration Statements on
Form S-1 (File Nos. 333-142729 and 333-146772) under the Securities Act of
1933, as amended (collectively, the “Registration Statement”), declared effective
on October 15, 2007 (“Effective Date”); and


 


WHEREAS,
the Initial Stockholders have agreed, as a condition of the Underwriters’
obligation to purchase the Units pursuant to the Underwriting Agreement and to
offer them to the public, to deposit all of their shares of Common Stock as set
forth opposite their respective names in Schedule A attached hereto
(collectively “Escrow Shares”), in escrow as hereinafter provided;


 


WHEREAS,
certain of the Initial Stockholders have agreed to purchase warrants (the “Founders’
Warrants”) in a private placement prior to the consummation of the offering,
and to deposit all of their Founders’ Warrants in escrow in the amounts set
forth opposite their respective names in Schedule B attached hereto the (the “Escrow
Warrants” and together with the Escrow Shares, the “Escrow Securities”); and


 


WHEREAS,
the Company and the Initial Stockholders desire that the Escrow Agent accept
the Escrow Securities, in escrow, to be held and disbursed as hereinafter
provided.


 


NOW,
THEREFORE, IT IS AGREED:


 


1.                                       Appointment
of Escrow Agent. The Company
and the Initial Stockholders 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. With respect to the Escrow Securities, each of the
Initial Stockholders shall deliver on or prior to the Effective Date to the
Escrow Agent certificates representing his or her respective Escrow Securities
that have been


 

















 


issued as of such date, to be held and disbursed
subject to the terms and conditions of this Agreement. Each Initial Stockholder
acknowledges and agrees that the certificates representing his or her Escrow
Securities is legended to reflect the deposit of such Escrow Securities under
this Agreement.


 


3.                                       Disbursement
of the Escrow Securities. The Escrow Agent shall hold the Escrow Securities
until, with respect to the Escrow Shares, one year from the closing date of a
Business Combination, and with respect to the Escrow Warrants, 30 days from the
closing date of a Business Combination (as applicable, the “Escrow Period”), on
which dates it shall, upon written instructions from the Chief Executive Officer
of the Company, disburse each of the Initial Stockholders’ applicable Escrow
Securities to such Initial Stockholder; provided, however, that
if the Underwriters
do not exercise their over-allotment option in full, up to 1,125,000 of Escrow
Shares shall be released to the Company upon written instruction from the
Company; provided, further, that if the  Escrow Agent is notified by the Company
pursuant to Section 6.6 hereof that the Company is being liquidated at any time
during the applicable Escrow Period, then the Escrow Agent shall promptly
destroy the certificates representing the Escrow Securities; 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 its 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 Chairman, 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 Initial Stockholders upon consummation of such transaction so
that they can similarly participate. Upon written instructions from the Company advising
that a Business Combination has been consummated and that public stockholders
holding in excess of 20% of the shares of Common Stock issued pursuant to the
Registration Statement exercise the right to redeem their shares for cash as
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 (up to a maximum of 937,500) which results in the
Initial Stockholders collectively owning no more then 23.81% of the Company’s
outstanding Common Stock immediately prior to the consummation of the Business
Combination after giving effect to the redemption. Such instructions shall be
set forth both the number of shares the Company is redeeming and the number of
Escrow Securities to be delivered to the Company for cancellation. The
Escrow Agent shall have no further duties hereunder after the disbursement or
destruction of the Escrow Securities in accordance with this Section 3.


 


4.                                       Rights
of Initial Stockholders 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 Initial
Stockholders shall retain all of their rights as stockholders of the Company
with respect to the Escrow Shares during the applicable Escrow Period,
including, without limitation, the right to vote such shares.


 

















 


4.2                                 Dividends
and Other Distributions in Respect of the Escrow Shares. During the
applicable Escrow Period, all dividends payable in cash with respect to the
Escrow Shares shall be paid to the Initial Stockholders, but all dividends
payable in stock or other non-cash property (“Non-Cash Dividends”) shall be
delivered to the Escrow Agent to hold in accordance with the terms hereof. As
used herein, the term “Escrow Shares” shall be deemed to include the Non-Cash
Dividends distributed thereon, if any.


 


4.3                                 Restrictions
on Transfer. During the applicable
Escrow Period, no sale, transfer or other disposition may be made of the Escrow
Securities except (i) in transfers resulting from death, (ii) by
operation of law, (iii) for estate planning purposes to persons
immediately related to the transferor by blood, marriage or adoption, or
(iv) to any trust solely for the benefit of such transferor and/or the
persons described in the preceding clause; 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 applicable Escrow Period,
the Initial Stockholders shall not pledge or grant a security interest in the
Escrow Securities or grant a security interest in their rights under this
Agreement.


 


4.4                                 Insider
Letters. Each of the Initial Stockholders has executed a letter agreement
with Morgan Joseph and the Company, dated as indicated on Schedule 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.


 


5.3                                 Compensation.
The Escrow Agent shall be entitled to reasonable compensation from the Company
for all services rendered by it hereunder, as set forth on Exhibit A hereto.
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 counsel, advisors’ and agents’
fees and disbursements and all taxes or other governmental charges. The Escrow
Agent shall bill the Company on a monthly basis for services rendered.


 


5.4                                 Further
Assurances. From time to time on and after the date hereof, the Company and
the Initial Stockholders 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 and approved by
Morgan Joseph, the Escrow Securities held hereunder. If no new escrow agent is
so appointed within the 60 day period following the giving of such notice of
resignation, the Escrow Agent may deposit the Escrow Securities with any court
it 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 Initial Stockholders, 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 State of New York. Each
of the parties hereby agrees that any action, proceeding or claim against it
arising out of or relating in any way to this Agreement shall be brought and
enforced in the courts of the State of New York or the United States District
Court for the Southern District of New York (each, a “New York court”), and
irrevocably submits to such jurisdiction, which jurisdiction shall be
exclusive. Each of the parties hereby waives any objection to such exclusive
jurisdiction and that such courts represent an inconvenient forum.


 


6.2                                 Third-Party
Beneficiaries. Each of the Initial Shareholders hereby acknowledges that
Morgan Joseph is a third-party beneficiary of this Agreement and this Agreement
may not be modified or changed without the prior written consent of Morgan
Joseph.


 


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 the charged.


 


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 by private national
courier service, or be mailed, certified or registered mail, return receipt
requested, postage prepaid, and shall be deemed given when so delivered
personally or, if sent by private national courier service, on the next
business day after delivery to the courier, or, if mailed, two business days
after the date of mailing, as follows:


 


If to the Company, to:


Stone Tan
China Acquisition Corp.

Suite 1A, 11th Floor, Tower 1


China Hong
Kong City


33 Canton Road


Kowloon, Hong Kong

Attn: Richard Tan, President and Chief Executive Officer


 


If to a Stockholder, to
his address set forth in Exhibit A.


 

















 


and if to the Escrow
Agent, to:


 


Continental Stock
Transfer & Trust Company

17 Battery Place

New York, New York 10004

Attn: Felix Orihuela, Vice President and Senior Account Executive


 


A copy of any notice sent
hereunder shall be sent to:


 


Loeb & Loeb LLP

345 Park Avenue

New York, New York 10154

Attn: Fran Stoller, Esq.


 


and:


 


Morgan Joseph & Co.,
Inc.

600 Fifth Avenue

19th Floor

New York, New York 10020

Attn: Tina Pappas


 


and:


 


DLA Piper LLP

1251 Avenue of the Americas

New York, New York 10020

Attn: Jonathan Klein, Esq.


 


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 any number of counterparts and each of such counterparts
shall for all purposes be deemed to be an original and all such counterparts
shall together constitute one and the same instrument.


 


[remainder of page intentionally left blank]


 





















 


WITNESS
the execution of this Agreement as of the date first above written.


 


 


	
   

  	
  STONE TAN CHINA ACQUISITION CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Richard Tan

  	
   

  
	
   

  	
   

  	
  Richard Tan, President and Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CONTINENTAL STOCK TRANSFER & 

  
	
   

  	
  TRUST COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John W. Comer, Jr.

  	
   

  
	
   

  	
  Name:

  	
  John W. Comer, Jr., Vice President

  



 


 


- Signature page of Initial Stockholders
immediately follows -


 

















 


WITNESS
the execution of this Agreement as of the date first above written.


 


 


	
   

  	
  INITIAL STOCKHOLDERS:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SPAC TRUST

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Richard Tan

  	
   

  
	
   

  	
   

  	
  Richard Tan, Trustee

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  STONE 2007 FAMILY TRUST

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Susan Stone

  	
   

  
	
   

  	
   

  	
  Susan Stone, Trustee

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Roger W. Stone

  	
   

  
	
   

  	
  Roger W. Stone

  



 

















 


SCHEDULE A


 


	
  Name and Address of Initial Stockholder

  	
   

  	
  Number of 

  Common Shares

  	
   

  	
  Number of 

  Warrants

  	
   

  
	
  Roger W.
  Stone 

  c/o Stone Tan China Acquisition Corp. 

  Suite 1A, 11th Floor, Tower 1 

  China Hong Kong City 

  33 Canton Road 

  Kowloon, Hong Kong

  	
   

  	
  450,000

  	
   

  	
  2,480,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Stone 2007
  Family Trust 

  c/o Stone Tan China Acquisition Corp. 

  Suite 1A, 11th Floor, Tower 1 

  China Hong Kong City 

  33 Canton Road

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Kowloon, Hong Kong

  	
   

  	
  3,000,000

  	
   

  	
  0

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SPAC Trust 

  c/o Stone Tan China Acquisition Corp. 

  Suite 1A, 11th Floor, Tower 1 

  China Hong Kong City 

  33 Canton Road

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Kowloon, Hong Kong

  	
   

  	
  5,175,000

  	
   

  	
  3,720,000

  	
   

  



 

















 


EXHIBIT A


 


Escrow Agent Fees


 

















 


SCHEDULE B


 


Escrow Warrants


 


	
  Name

  	
   

  	
  Number of Warrants

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SPAC Trust

  	
   

  	
  3,720,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Roger W. Stone

  	
   

  	
  2,480,000

  	
   

  



 


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