China Agritech, Inc. - Exhibit 10.2




 



ESCROW AGREEMENT 


This Escrow Agreement (the "Agreement"),
entered into as of this 10th day of January, 2006, is by and among China
Agritech, Inc. (the "Company"), each of the purchasers of the shares of
the common stock of the Company (the "Shares") identified below
(collectively, the "Purchasers") and Securities Transfer Corporation
(hereinafter referred to as "Escrow Agent"). All capitalized terms used
but not defined herein shall have the meanings assigned them in the Stock
Purchase Agreement (as hereinafter defined). 


BACKGROUND 


The Company and the Purchasers have entered
into a Stock Purchase Agreement (the "Stock Purchase Agreement") pursuant
to which each Purchaser has agreed to purchase from the Company, and the Company
has agreed to sell to each Purchaser, the number of Shares identified therein.
The Company and the Purchasers have agreed to establish an escrow on the terms
and conditions set forth in this Agreement. The Escrow Agent has agreed to act
as escrow agent pursuant to the terms and conditions of this Agreement. 



AGREEMENT 


NOW, THEREFORE, in consideration of the promises of the
parties and the terms and conditions hereof, the parties hereby agree as
follows: 


1. Appointment of
Escrow Agent. Each Purchaser and the Company hereby appoints
Securities Transfer Corporation as Escrow Agent to act in accordance with the
Stock Purchase Agreement and the terms and conditions set forth in this
Agreement, and Escrow Agent hereby accepts such appointment and agrees to act in
accordance with such terms and conditions. 


2. Establishment
of Escrow. All amounts provided by the Purchasers in connection with
their acquisition of the Shares as set forth in the Stock Purchase Agreement
shall be deposited with the Escrow Agent in immediately available funds by
federal wire transfer or cashiers check, such funds being referred to herein as
the "Escrow Funds". 


3. Segregation of
Escrow Funds. The Escrow Funds shall be segregated from the assets of
Escrow Agent and held in trust for the benefit of the Company and the Purchasers
in accordance herewith. 


4. Receipt and Investment of
Funds. 


  (a) Escrow Agent
  agrees to place the Escrow Funds in a non-interest bearing and federally
  insured depository account. Subject to Section 7(c) hereof, Escrow Agent shall
  have no liability for any loss resulting from the deposit of the Escrow Funds.
  

  
  (b) The Escrow
  Agent shall cause to be prepared all income and other tax returns and reports
  the Escrow Agent, in its sole discretion, deems necessary or advisable in
  order to comply with all tax and other laws, rules and regulations applicable
  to the Escrow Funds. 






5. Disbursement of the Escrow
Funds. 

(a) This Agreement
shall terminate upon the earlier of (a) the close of business on January 16,
2006, unless otherwise extended by the parties hereto, or (b) the consummation
of the transactions contemplated by the Stock Purchase Agreement. 


(b) On the
Termination Date, Escrow Agent shall release the Escrow Funds in the Escrow
Account and in accordance with the written instruction of Global Hunter
Securities, LLC. 


6. 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, Escrow Agent
shall have the right to consult counsel and/or to institute an appropriate
interpleader action to determine the rights of the parties. 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 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 6
shall be filed in any court of competent jurisdiction in Dallas, Texas, and the
portion of 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
that portion of the Escrow Funds. 


7. Exculpation and
Indemnification of Escrow Agent. 

(a) 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. 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 or depositing the Escrow Funds. Escrow Agent
will have no duties or responsibilities other than those expressly set forth
herein. Escrow Agent will be under no liability to anyone by reason of any
failure on the part of any party hereto (other than 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 Escrow Agent pursuant to the terms of this Agreement, 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. 


(b) 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 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 

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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 Texas upon
fiduciaries. 


(c) Escrow Agent
will be indemnified and held harmless by the Company from and against any
expenses, including reasonable attorneys' fees and disbursements, damages or
losses suffered by 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 Escrow Agent is
guilty of willful misconduct, fraud or gross negligence under this Agreement,
then Escrow Agent will bear all losses, damages and expenses arising as a result
of such willful misconduct, fraud or gross negligence. For this purpose, the
term "attorneys' fees" includes fees payable to any counsel retained by the
Escrow Agent in connection with its services under this agreement and, with
respect to any matter arising under this agreement as to which the Escrow Agent
performs legal services, its standard hourly rates and charges then in effect.
Promptly after the receipt by 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, 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 7 shall survive the termination of this Agreement.



8. Compensation of Escrow Agent.
The Company will pay Escrow Agent $3,000 for all services rendered by Escrow
Agent hereunder. 


9. Resignation of
Escrow Agent. At any time, upon ten (10) days' written notice to the
Company, Escrow Agent may resign and be discharged from its duties as Escrow
Agent hereunder. As soon as practicable after its resignation, Escrow Agent will
promptly turn over to a successor escrow agent appointed by the Purchasers all
monies and property 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 Escrow Agent,
the Purchasers shall have failed to appoint a successor escrow agent, Escrow
Agent may interplead the Escrow Funds into the registry of any court having
jurisdiction. 


10. Method of
Distribution by Escrow Agent. All disbursements by Escrow Agent to a
party to this Agreement will be made by wire transfer of immediately available
funds to an account designated in writing by the party to receive any such
payment. 


11. Records.
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,
Escrow Agent shall provide the parties hereto, as the case may be, with a
complete copy of such records, certified by Escrow Agent to be a complete and
accurate account of all such transactions. The authorized 

3




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 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. 


13. Execution in
Counterparts; Facsimile Execution. 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 or Escrowed Certificates 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 IN ACCORDANCE
WITH THE LAWS OF THE STATE OF TEXAS, USA APPLICABLE TO CONTRACTS MADE AND TO BE
PERFORMED THEREIN. THE PARTIES EXPRESSLY WAIVE SUCH DUTIES AND LIABILITIES, IT
BEING THEIR INTENT TO CREATE SOLELY AN AGENCY RELATIONSHIP AND HOLD THE ESCROW
AGENT LIABLE ONLY IN THE EVENT OF ITS WILLFUL MISCONDUCT, FRAUD, OR GROSS
NEGLIGENCE. ANY LITIGATION CONCERNING THE SUBJECT MATTER OF THIS AGREEMENT SHALL
BE EXCLUSIVELY PROSECUTED IN THE COURTS OF DALLAS COUNTY, TEXAS USA, 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. 


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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date first above written. 


	 	
    COMPANY:

	 	
     

	 	
    CHINA AGRITECH, INC.

	 	
     

	 	
    By: /s/ Chang Yu

	 	
     

	 	
    Its: CEO and President

	 	
     

	 	
     

	 	
    ESCROW AGENT:

	 	
     

	 	
    SECURITIES TRANSFER CORPORATION

	 	
     

	 	
    By: /s/ Kevin Halter Jr.

	 	
     

	 	
    Its: President

	 	
     

	 	
     

	 	
    PURCHASERS:

	 	
     

	 	
    PINNACLE CHINA FUND, L.P.

	 	
     

	 	
    By: /s/ Barry M. Kitt

	 	
    Name: Barry M. Kitt

	 	
    Title: Sole Member, Kitt China Management,

	 	
    L.L.C.,

	 	the Manager of Pinnacle China Management,
    L.L.C.,
	 	the General Partner of Pinnacle China
    Advisors, L.P.,
	 	the General Partner of Pinnacle China Fund,
    L.P.




	 	 
	 	Ardsley Partners
    Offshore Fund, Ltd.
	 	 
	 	By: /s/ Steven Napoli
	 	 
	 	   Name:
    Steven Napoli
	 	   Title:
    Partner/Agent
	 	 
	 	Ardsley Partners Fund
    II, L.P.
	 	 
	 	By: /s/ Steven Napoli
	 	 
	 	   Name:
    Steven Napoli
	 	   Title:
    Partner
	 	 
	 	Ardsley Partners
    Institutional Fund, L.P.
	 	 
	 	By: /s/ Steven Napoli
	 	 
	 	   Name:
    Steven Napoli
	 	   Title:
    Partner
	 	 
	 	Jayhawk China Fund
    (Cayman), Ltd.
	 	 
	 	By: /s/ Marcey Berges
	 	 
	 	   Name:
    Marcey Berges
	 	   Title:
    CFO
	 	 
	 	Renaissance U.S.
    Growth Investment Trust PLC
	 	 
	 	By: /s/ Russell
    Cleveland
	 	 
	 	   Name:
    Russell Cleveland
	 	   Title:
    President
	 	 
	 	RENN Capital Group,
    Inc., Investment Manager
	 	 
	 	BFS U.S. Special
    Opportunities Trust PLC
	 	 
	 	By: /s/ Russell
    Cleveland
	 	 
	 	   Name:
    Russell Cleveland
	 	   Title:
    President
	 	 
	 	RENN Capital Group,
    Inc., Investment Adviser





	 	 
	 	Gary C. Evans
	 	 
	 	Signature: /s/ Gary C. Evans
	 	 
	 	Daniel Conwill IV
	 	 
	 	Signature: /s/ Daniel Conwill IV
	 	 
	 	Chet Morrison
	 	 
	 	Signature: /s/ Chet Morrison
	 	 
	 	David Kenkel
	 	 
	 	Signature: /s/ David Kenkel
	 	 
	 	George Resta
	 	 
	 	Signature: /s/ George Resta
	 	 
	 	Bob Jackson
	 	 
	 	Signature: /s/ Bob Jackson
	 	 
	 	Tom Matava
	 	 
	 	Signature: /s/ Tom Matava
	 	 
	 	Carolyn Prahl
	 	 
	 	Signature: /s/ Carolyn Prahl
	 	 
	 	Jim Brown





	 	Signature: 
    /s/ Jim Brown
	 	 
	 	James Lynch
	 	 
	 	Signature:
    /s/ James Lynch
	 	 
	 	Edwin Young
	 	 
		Signature: 
    /s/ Edwin Young
	 	 
	 	Mike Studer
	 	 
	 	Signature: 
    /s/ Mike Studer
	 	 
	 	John Trescot Jr.
	 	 
	 	Signature: 
    /s/ John Trescot Jr.
	 	 
	 	W. W. Gay
	 	 
	 	Signature: 
    /s/ W. W. Gay
	 	 
	 	Harold E. Gear
	 	 
	 	Signature:
    /s/ Harold E. Gear






WIRE TRANSFER INSTRUCTIONS 


Please wire funds to: Wells Fargo
Bank Texas, N.A. 420 Montgomery Street 

	
    City/State	
    San Francisco, CA 94104
	 	 
	
    ABA NO:	
    121000248
	 	 
	
    Credit to :	
    Securities Transfer Corporation as
    paying agent for account "F"
	 	 
	
    Account Number:	
    3172304051