Exhibit
      10.3

     

    SECURITIES
      ESCROW AGREEMENT

     

    SECURITIES
      ESCROW AGREEMENT, dated as of                     ,
      2006
      (“Agreement”), by and among MIDDLE KINGDOM ALLIANCE CORPORATION, a corporation
      organized under the laws of Delaware (“Company”), HIGH CAPITAL FUNDING LLC,
      DAVID A. RAPAPORT, FRED A. BRASCH, BERNARD JEROME TANENBAUM III FAMILY TRUST,
      GEDEON INTERNATIONAL LIMITED, MTP HOLDINGS LTD., ALLAN LAM, and ANTHONY NG
      (collectively “Initial Shareholders”) and Continental Stock Transfer &
Trust Company (“Escrow Agent”). 

     

    WHEREAS,
      the Company has entered into an Underwriting Agreement, dated                    ,
      2006
      (“Underwriting Agreement”), with Newbridge Securities Corp. and I-Bankers
      Securities, Inc. (the “Representatives”) acting as representative of the several
      underwriters (collectively, the “Underwriters”), pursuant to which, among other
      matters, the Underwriters have agreed to purchase 180,000 Series A Units and
      3,000,000 Series B Units (the “Units”) of the Company. Each Series A Unit
      consists of one share of common stock, $0.001 par value (“Common Stock”), and
      four Class A warrants (the “Class A Warrants”), each to purchase one share of
      Common Stock. Each Series B Unit consists of one share of common stock, $0.001
      par value (“Common Stock”), and one Class B warrant (the “Class B Warrants”),
      each to purchase one share of Common Stock, all as more fully described in
      the
      Company’s final Prospectus, dated                     ,
      2006
      (“Prospectus”) comprising part of the Company’s Registration Statement on Form
      S-1 (File No. 333-133475) under the Securities Act of 1933, (together, the
      “Registration Statement”), which was declared effective on                     ,
      2006
      (“Effective Date”). 

     

    WHEREAS,
      the Initial Shareholders have agreed as a condition of the sale of the Units
      to
      deposit their securities of the Company, consisting of Class A Units (which
      includes Common Stock and Class A Warrants) and certain additional shares of
      Common Stock (such shares of Common Stock, excluding the Common Stock included
      in the Class A Units, the “Initial Common Stock”), as set forth opposite their
      respective names in Exhibit
      A
      attached
      hereto (collectively “Escrow Securities”), in escrow as hereinafter provided.


     

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

     

    IT
      IS
      AGREED: 

     

    1.   Appointment
      of Escrow Agent. The Company and the Initial Shareholders 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. On or before the Effective Date, each of the Initial
      Shareholders shall deliver to the Escrow Agent certificates representing his
      respective Escrow Securities, to be held and disbursed subject to the terms
      and
      conditions of this Agreement; provided however, that the Representatives may
      release any Initial Shareholder from this escrow obligation if the
      Representatives determine, in their sole discretion, that the circumstances
      reasonably warrant such release. Each Initial Shareholder acknowledges that
      the
      certificate representing his 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: (i) hold the Initial Common
      Stock until the third anniversary of the Effective Date, and (ii) hold the
      Class
      A Units (including the Common Stock and Class A Warrants underlying the Class
      A
      Units) until the earlier of (a) the completion of a Business Combination (as
      defined in the Prospectus) or (b) liquidation of the Trust Account (as defined
      in the Investment Management Trust Agreement between the Escrow Agent and the
      Company) (“Escrow Period”), on which date it shall, upon written instructions
      from each Initial Shareholder, disburse each of the Initial Shareholder’s Escrow
      Securities to such Initial Shareholder; provided, however, that if, after the
      Company consummates a Business Combination, it (or the surviving entity)
      subsequently consummates a liquidation, stock exchange or other similar
      transaction which results in all of the stockholders of such entity having
      the
      right to exchange their securities for cash, securities or other property,
      then
      the Escrow Agent will, upon receipt of a certificate, executed by the Chief
      Executive Officer or Chairman of the Board 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 Shareholders upon consummation
      of
      the transaction so that they can similarly participate; provided further that
      the time period set forth above may be waived by either of the Representatives.
      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 Shareholders in Escrow Securities.  

     

    4.1  Voting
      Rights as a Shareholder.
      Subject
      to the terms of the Insider Letter described in Section 4.4 hereof and
      except as herein provided, the Initial Shareholders shall retain all of their
      rights as stockholders of the Company during the Escrow Period, including,
      without limitation, the right to vote such shares.

     

    4.2  Dividends
      and Other Distributions in Respect of the Escrow Securities. During the
      Escrow Period, all dividends payable in cash with respect to the Escrow
      Securities shall be paid to the Initial Shareholders, but all dividends payable
      in securities 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 Securities” shall be deemed to include the
      Non-Cash Dividends distributed thereon, if any. 

     

    4.3  Restrictions
      on Transfer. During the Escrow Period, no sale, transfer or other
      disposition may be made of any or all of the Escrow Securities except
      (i) by gift to a member of Initial Shareholder’s immediate family or to a
      trust, the beneficiary of which is an Initial Shareholder or a member of an
      Initial Shareholder’s immediate family, (ii) by virtue of the laws of
      descent and distribution upon death of any Initial Shareholder,
      (iii) pursuant to a qualified domestic relations order, or
      (iv) pursuant to a transfer of record ownership whereby there is no change
      in beneficial ownership; 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 Shareholder transferring the Escrow Securities. During
      the
      Escrow Period, the Initial Shareholders 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 Shareholders has executed a letter agreement
      with the Representative and the Company, which is filed as an exhibit to the
      Registration Statement (“Insider Letter”), respecting the rights and obligations
      of such Initial Shareholder 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. 

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    5.3   Compensation.
      The Escrow Agent shall be entitled to reasonable compensation from the Company
      for all services rendered by it hereunder. 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. 

     

    5.4  Further
      Assurances. From time to time on and after the date hereof, the Company and
      the Initial Shareholders 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, 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 reasonably 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
      other parties hereto, 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. 

     

    6.2  Third
      Party Beneficiaries. Each of the Initial Shareholders hereby acknowledges
      that the Underwriters are third party beneficiaries of this Agreement.


     

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


     

    If
      to the
      Company, to: 

     

    Middle
      Kingdom Alliance Corporation 

    333
      Sandy
      Springs Circle

    Suite
      223

    Atlanta,
      GA 30328

    Attn:
      David A. Rapaport, Esq.

    Tel:
      (404) 257-9150

    Fax:
      (404) 257-9125 

    


    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    with
      a
      copy to: 

    


    Cozen
      O’Connor

    The
      Army
& Navy Club Building 

    1627
      I
      Street, NW, Suite 1100

    Washington,
      DC 20006

    Attn:
      Ralph V. De Martino 

    Tel:
      (202) 912-4800

    Fax:(866)
      741-8182

    


    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, 8th
      Floor


    New
      York,
      New York 10004 

    Attn:
      Steven G. Nelson, Chairman 

     

    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   Amendment.
      This Agreement contains the entire agreement and understanding of the parties
      hereto with respect to the subject matter hereof. This Agreement or any
      provision hereof may only be changed, amended or modified by a writing signed
      by
      each of the parties hereto. As to any claim, cross-claim or counterclaim in
      any
      way relating to this Agreement, each party waives the right to trial by jury.
      

     

    6.9   Assignment.
      This Agreement may not be assigned by the Escrow Agent without the prior consent
      of the Company. 

    
 

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

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


     

    
      	 	 	 
	 	
              MIDDLE
                KINGDOM ALLIANCE CORP.

            
	 
 	 
 	 
 
	
              By: 

            	 	 
	 	
              

              Bernard
                J. Tanenbaum III, CEO

            
	 	 


    

    
      	 	 	 
	 	
              INITIAL
                SHAREHOLDERS

            
	 
 	 
 	 
 
	 	 	 
	 	
              

              High
                Capital Funding LLC

            
	 	By: 


    

    
      	 	 	 
	 	
            
	 
 	 
 	
              
David
              A. Rapaport
 
	 	  	 
	 	
              
Fred
              A. Brasch
	 	 
	 	 
	 	
              

              Bernard
                Jerome Tanenbaum III Family Trust

              By:
                Bernard J. Tanenbaum III

            
	 	 
	 	 
	 	
              

              Gedeon
                International Limited

              By:
                Michael Marks

            
	 	 
	 	 
	 	
              

              Supreme
                Ocean Development Limited

              By:
                Allan Shu Cheuk Lam

            
	 	 
	 	 
	 	
              

              MTP
                Holdings Ltd.

              By:
                

            
	 	 
	 	 
	 	
              
Allan
              Shu Cheuk Lam
	 	 
	 	 
	 	
              

              Anthony
                Ng

            


      	 	 	 
	 	
              CONTINENTAL
                STOCK TRANSFER 

              &
TRUST
                COMPANY

            
	 
 	 
 	 
 
	
              By: 

            	 	 
	 	
              

            
	 	
              Steven
                Nelson,
                President

            


    

     

    
 

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      A

    

      
        
          	
                  Name
                    and Address of Initial
                    Shareholders        

                	 	
                  Initial
                    Common 

                  Stock

                   (Stock Certificate 

                  Number)

                	
                   

                	
                  Class
                    A Units

                	
                   

                	
                  Common
                    Stock 

                  underlying
                    Units 

                  (Stock Certificate 

                  Number)

                	
                   

                	
                  Class
                    A Warrants (Warrant Numbers)

                
	 	 	 	 	 	 	 	 	 
	
                  High
                    Capital Funding LLC 
                    333
                      Sandy Springs Circle 
                      Ste
                        230 
                        Atlanta,
                          GA 30328

                      

                    

                  

                	 	 	 	 	 	 	 	 
	
                	 	
                   

                	 	
                   

                	 	
                   

                	 	
                   

                
	
                  David
                    A. Rapaport 
                    333
                      Sandy Springs Circle 
                      Ste
                        230 
                        Atlanta,
                          GA 30328

                      

                    

                  

                	 	 	 	 	 	 	 	 
	
                   

                	 	
                   

                	 	
                   

                	 	
                   

                	 	
                   

                
	
                  Fred
                    A. Brasch 
                    333
                      Sandy Springs Circle 
                      Ste
                        230 
                        Atlanta,
                          GA 30328

                      

                    

                  

                	 	 	 	 	 	 	 	 
	
                	 	
                   

                	 	
                   

                	 	
                   

                	 	
                   

                
	
                  Bernard
                    Jerome Tanenbaum III Family Trust
                    333
                      Sandy Springs Circle 
                      Ste
                        223 
                        Atlanta,
                          GA 30328

                      

                    

                  

                	 	 	 	 	 	 	 	 
	
                	 	
                   

                	 	
                   

                	 	
                   

                	 	
                   

                
	
                  
                    
                      
                        Gedeon
                          International Limited

                        c/o
                          Stonehage SA

                        Puits
                          Godet 12

                        P.O.
                          Box 126

                        2005
                          Neuchatel

                        Switzerland

                        Attention:
                          Michael
                          Marks

                      

                    

                  

                	 	 	 	 	 	 	 	 
	
                   

                	 	 	 	 	 	 	 	 
	
                  Supreme
                    Ocean Development Limited 
                    
                      
                        
                          c/o
                            ATC Trustees (BVI) Limited

                          2nd
                            Floor, Abbott Building

                          P.O.
                            Box 933

                          Road
                            Town

                          Tortola

                          British
                            Virgin Islands

                          Attention:
                            Allan Shu Cheuk
                            Lam

                        

                      

                    

                  

                	 	 	 	 	 	 	 	 
	
                	 	
                   

                	 	
                   

                	 	
                   

                	 	
                   

                
	
                  MTP
                    Holdings Ltd. 
                    Room
                      804, Hong Kong Plaza 

                    283
                      Huaihai Zhong Road 
                      Shanghai
                        200021, P.R. China

                    

                  

                	 	 	 	 	 	 	 	 
	
                	 	
                   

                	 	
                   

                	 	
                   

                	 	
                   

                
	
                  Allan
                    Shu Cheuk Lam
                    82-9133
                      Bayview Avenue 
                      Richmond
                        Hill 
                        Ontario
                          L4B 4V6 
                          Canada

                        

                      

                    

                  

                	 	 	 	 	 	 	 	 
	
                	 	
                   

                	 	
                   

                	 	
                   

                	 	
                   

                
	
                  Anthony
                    Ng 
                    
                      
                        Cathay
                          Forest Products Corp.

                        5650
                          Yonge St., Ste 1500

                        Toronto,
                          Ontario

                        Canada
                          M2M 4G3

                      

                    

                  

                	 	 	 	 	 	 	 	 


        

      

    

     

    
      
        
        

      

      
        6