Exhibit 10.3


 


STOCK ESCROW AGREEMENT


 


This STOCK ESCROW AGREEMENT,
dated as of October 3, 2022 (“Agreement”), by and among AQUARON ACQUISITION CORP., a Delaware corporation (“Company”),
the initial stockholders listed on the signature pages 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 as of October 3, 2022 (“Underwriting Agreement”), with Chardan Capital Markets
LLC (“Chardan”) acting as representative of the several underwriters (collectively, the “Underwriters”),
pursuant to which, among other matters, the Underwriters have agreed to purchase 5,000,000 units (“Units”) of the Company,
plus an additional 750,000 Units if the Underwriters exercise their over-allotment option in full. Each Unit consists of one share
of common stock of the Company, par value $0.0001 per share (the “Common Stock”), and one right to receive one-fifth
(1/5) of one share of Common Stock upon the consummation of an initial business combination, all as more fully described in the Company’s
final Prospectus, dated October 3, 2022 (“Prospectus”), comprising part of the Company’s Registration Statement
on Form S-1 (File No. 333-265217) under the Securities Act of 1933, as amended (“Registration Statement”), declared
effective on October 3, 2022 (“Effective Date”).


 


WHEREAS, the Initial Stockholders
have agreed as a condition of the sale of the Units to deposit their Insider Shares (as defined in the Prospectus), as set forth opposite
their respective names on Exhibit A attached hereto (collectively “Escrow Shares”), in escrow as hereinafter
provided.


 


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


 


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
Shares. On or prior to the date hereof, each of the Initial Stockholders delivered to the Escrow Agent certificates representing
such Initial Stockholder’s respective Escrow Shares, together with applicable share powers, to be held and disbursed subject to
the terms and conditions of this Agreement. Each of the Initial Stockholders acknowledges that the certificate representing such
Initial Stockholder’s Escrow Shares is legended to reflect the deposit of such Escrow Shares under this Agreement.


 


3. Disbursement of the
Escrow Shares.


 


3.1 The Escrow Agent shall
hold the Escrow Shares during the period (the “Escrow Period”) commencing on the date hereof and (i) for 50% of the Escrow
Shares, ending on the earlier of (x) six months after the date of the consummation of the Company’s initial business combination
(as described in the Registration Statement, hereinafter a “Business Combination”) and (y) the date on which the closing price
of the Common Stock equals or exceeds $12.50 per share (as adjusted for stock splits, stock dividends, reorganizations and recapitalizations)
for any 20 trading days within any 30-trading day period commencing after the Company’s initial Business Combination and (ii) for
the remaining 50% of the Escrow Shares, ending six months after the date of the consummation of an initial Business Combination. The Company
shall promptly provide notice of the consummation of a Business Combination to the Escrow Agent. Upon completion of the Escrow Period,
the Escrow Agent shall disburse such amount of each Initial Shareholder’s Escrow Shares (and any applicable share power) to such
Initial Stockholder; provided, however, that if the Escrow Agent is notified by the Company pursuant to Section 6.7 hereof that the Company
is being liquidated at any time during the Escrow Period, then the Escrow Agent shall promptly destroy the certificates representing the
Escrow Shares; provided further, however, that if, within six months after the Company consummates an initial Business Combination, the
Company (or the surviving entity) subsequently consummates a liquidation, merger, stock exchange or other similar transaction which results
in all of the 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 notice executed by the Chairman of the Board, Chief Executive Officer or other authorized
officer of the Company, in form reasonably acceptable to the Escrow Agent, certifying that such transaction is then being consummated
or such conditions have been achieved, as applicable, release the Escrow Shares to the Initial Stockholders. The Escrow Agent shall
have no further duties hereunder after the disbursement or destruction of the Escrow Shares in accordance with this Section 3.1.


 






     


     


    

 


3.2 Notwithstanding Section
3.1, if the Underwriters do not exercise their over-allotment option to purchase an additional 750,000 Units of the Company in full within
45 days of the date of the Prospectus (as described in the Underwriting Agreement), the sponsor, Aquaron Investments LLC, agrees that
the Escrow Agent shall return to the Company for cancellation, at no cost, the number of Escrow Shares held by it determined by multiplying
(a) the product of (i) 187,500, by (b) a fraction, (i) the numerator of which is 750,000 minus the number of shares of Common Stock purchased
by the Underwriters upon the exercise of their over-allotment option, and (ii) the denominator of which is 750,000. The Company shall
promptly provide notice to the Escrow Agent of the expiration or termination of the Underwriters’ over-allotment option and the
number of Units, if any, purchased by the Underwriters in connection with their exercise thereof.


 


4. Rights of Initial Shareholders
in Escrow Shares.


 


4.1 Voting Rights as
a Stockholder. Subject to the terms of the Insider Letters 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 during the 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 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 Escrow Period, the only permitted transfers of the Escrow Shares will be (i) to the Company’s pre-IPO
stockholders or their respective affiliates, or to the Company’s offices, directors, advisors and employees, (ii) if the Initial
Stockholder is an entity, as a distribution to its, partners, stockholders or members upon its liquidation, (iii) by bona fide gift to
a member of the Initial Stockholder’s immediate family or to a trust, the beneficiary of which is the Initial Stockholder or a member
of the Initial Stockholder’s immediate family for estate planning purposes, (iv) by virtue of the laws of descent and distribution
upon death of the Initial Stockholder, (v) pursuant to a qualified domestic relations order, (vi) by private sales at prices no greater
than the price at which the Insider Shares were originally purchased or (vii) for the cancellation of up to 187,500 shares of Common Stock
subject to forfeiture to the extent that the Underwriters’ over-allotment is not exercised in full or in part or in connection with
the consummation of our initial Business Combination, in each case (except for clause vii or with our prior consent) on the condition
that such 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 (as defined below) signed by the Initial Stockholder transferring the Escrow Shares.


 


4.4 Insider Letters. Each
of the Initial Stockholders has executed a letter agreement with Chardan and the Company, dated as indicated on Exhibit B hereto,
and the form of 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 in good faith 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. 


 






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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 Shares 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 Shares or
it may deposit the Escrow Shares with the clerk of any appropriate court or it may retain the Escrow Shares 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 Shares 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. 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 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 the Representative, which
approval will not be unreasonably withheld, conditioned or delayed, the Escrow Shares 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 Shares 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.


 


5.8 Waiver. The
Escrow Agent hereby waives any right of set-off or any other right, title, interest or claim of any kind (“Claim”) in, or
to any distribution of, the Trust Account (as defined in that certain Investment Management Trust Agreement, dated as of the date hereof,
by and between the Company and the Escrow Agent as trustee thereunder) and hereby agrees not to seek recourse, reimbursement, payment
or satisfaction for any Claim against the Trust Account for any reason whatsoever.


 






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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, without giving effect to conflicts of law principles that would result in the application of the substantive
laws of another jurisdiction.


 


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


 


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 change, Chardan and the Escrow Agent.


 


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:	Aquaron Acquisition Corp.
	 	 	
    c/o Aquaron Investments LLC

    515 Madison Avenue, 8th Floor

    New York, NY 10022

    Attn: Yi Zhou, Chief Executive Officer

    Email: yizhou@aquaroncorp.com



 


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


 


	 	and if to the Escrow Agent, to:	
    Continental Stock Transfer & Trust Company

    1 State Street

    New York, New York 10004

    Attention: Administrative Department



 


A copy (which copy shall not constitute notice)
sent hereunder shall be sent to:


 


	 	 	Chardan Capital Markets LLC
	 	 	17 State Street, 21st Floor
	 	 	New York, NY 10004
	 	 	Attn: Shai Gerson
	 	 	Facsimile: (646) 465-9039


  


	 	and:	
    Reed Smith LLP

    506 Carnegie Center, Suite 300

    Princeton, NJ 08540

    Attn: Edward P. Bromley, III, Esq.

    Email: ebromley@reedsmith.com



 






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	 	and:	Wilson Sonsini Goodrich & Rosati Professional Corporation
	 	 	1301 Avenue of the Americas, 40th Floor
	 	 	New York, NY 10019-6022
	 	 	
    Attn: Sally Yin, Esq.

    Email: syin@wsgr.com



 


	 	 and:	
    Continental Stock Transfer & Trust Company

    1 State Street

    New York, New York 10004

    Attention: Administrative Department



 


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 the
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 specified in the Prospectus.


 


[Signature Page Follows]


 




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


 


 


	 	COMPANY:
	 	 
	 	AQUARON ACQUISITION CORP.
	 	 
	 	By:	/s/
    Yi Zhou
	 	 	Name: 	Yi Zhou
	 	 	Title:	Chief Executive Officer


 


	 	INITIAL STOCKHOLDERS:
	 	 
	 	
    AQUARON INVESTMENTS LLC 

	 	 
	 	By:	/s/
    Yating Wang
	 	 	Name: 	Yating Wang 
	 	 	Title:	Authorized Representative 


 


	 	 	/s/ Yi Zhou
	 	 	Yi Zhou


 


	 	 	/s/ Qingze Zhao
	 	 	Qingze Zhao


 


	 	 	/s/ Yang Wang
	 	 	Yang Wang


 


	 	 	/s/ Yanyan Lin
	 	 	Yanyan Lin
	 	 	 
	 	 	/s/ Xiaoming Ma
	 	 	Xiaoming Ma



 


Signature Page to the Stock Escrow Agreement


 






     


     


    

 




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


 


	 	
    ESCROW AGENT:

    

	 	 
	 	
    CONTINENTAL STOCK TRANSFER & TRUST COMPANY

	 	 
	 	By:	/s/ Douglas Reed
	 	 	Name: 	Douglas Reed
	 	 	Title:	Vice President


 


Signature Page to the Stock Escrow Agreement


 




     


     


    


 


EXHIBIT A


 


Initial Shareholders


 


	Name
    and Address of Initial1 Shareholder	 	Number
    of Shares	 	Date
    of Insider Letter
	Aquaron Investments LLC	 	1,392,500	 	
	Yi Zhou	 	10,000	 	 
	Qingze Zhao	 	10,000	 	October 3, 2022
	Yang Wang	 	5,000	 	 
	Yanyan Lin	 	15,000	 	 
	Xiaoming Ma	 	5,000	 	 





 





 






		1	The address of each of the individuals is c/o, Aquaron Acquisition
Corp., 515 Madison Avenue, 8th Floor, New York, NY 10022.



 




     


     


    


 


EXHIBIT B


 


Insider Letter


 


 


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