Unassociated Document


     

    Exhibit
      10.2

     

    SECURITIES
      ESCROW AGREEMENT

     

    SECURITIES
      ESCROW AGREEMENT,
      dated
      as of _______, 2008 (“Agreement”),
      by
      and among CHARDAN 2008 CHINA ACQUISITION CORP., a company organized under the
      laws of the British Virgin Islands (“Company”),
      KERRY
      PROPPER, STEVE URBACH, JONAS GROSSMAN, GEORGE KAUFMAN, TODD GOLD, JIANGNAN
      HUANG, ROYALE HOLDINGS,
      DR.
      RICHARD D. PROPPER, PAULA BEHARRY, DANIEL BEHARRY, LI ZHANG, LI PING HE (AS
      CUSTODIAN FOR TIFFANY HE), LI GONG, DR. JIANJUN SHI, XIAOSONG ZHONG, CARMAN
      RAMIREZ, EDWARD CARTER AND IDA CARTER (collectively
      “Existing
      Shareholders”)
      and
      CONTINENTAL STOCK TRANSFER & TRUST COMPANY (“Escrow
      Agent”).

     

    WHEREAS,
      the Company has entered into an Underwriting
      Agreement, dated
      ________
      2008
      (“Underwriting
      Agreement”),
      with
      Brean Murray, Carret & Co., LLC, Maxim
      Group, LLC and Roth Capital Partners, LLC, acting as representatives (the
“Representatives”)
      of the
      several underwriters (collectively, the “Underwriters”),
      pursuant to which, among other matters, the Underwriters have agreed to purchase
      a total of 6,875,000 units (“Units”)
      of the
      Company. Each Unit consists of one of the Company’s ordinary share, $0.0001 par
      value (each an “Ordinary
      Share”),
      and
      one warrant (“Warrant”),
      each
      Warrant to purchase one Ordinary Share, all as more fully described in the
      Company’s definitive Prospectus, dated _______, 2008 (“Prospectus”)
      comprising part of the Company’s Registration Statement on Form F-1 (File No.
      333-152623) under the Securities Act of 1933, as amended (together, the
“Registration
      Statement”),
      which
      was declared effective on _______, 2008 (“Effective
      Date”).
      

     

    WHEREAS,
      the
      Existing Shareholders 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 Ordinary Shares (the “Escrow
      Shares”)
      and
      warrants exercisable for Ordinary Shares (the “Escrow
      Warrants”;
      and
      collectively with the Escrow Shares, the “Escrow
      Securities”),
      as
      set forth opposite their respective names in Exhibit
      A attached
      hereto, in escrow as hereinafter provided.

     

    WHEREAS,
      the
      Company and the Existing 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 Existing 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 Existing Shareholders shall deliver
      to
      the Escrow Agent certificates representing his or her respective Escrow
      Securities, to be held and disbursed subject to the terms and conditions of
      this
      Agreement. Each Existing Shareholder acknowledges and agrees that the
      certificate(s) representing his or her Escrow Securities will bear a legend
      to
      reflect the deposit of such Escrow Securities under this Agreement.


     

    3. Disbursement
      of the Escrow Securities.
      The
      Escrow Agent shall not release the Escrow Securities until the earlier of:
      (a)
      one year after the consummation of a Business Combination, as defined in the
      Registration Statement, or (b) thirty (30) months from the date of the
      Prospectus (or 36 months if the period to consummate a Business Combination
      is
      extended by the Company’s shareholders), at which time such Escrow Securities
      will be released from escrow. The time that the Escrow Warrants or the Escrow
      Shares are held in escrow pursuant to this Agreement is referred to herein
      as
      the “Escrow
      Period”.
      On the
      expiration of the applicable Escrow Period, the Escrow Agent shall, upon written
      instructions from the
      Company or Company counsel,
      disburse each of the Existing Shareholder’s Escrow Securities to such Existing
      Shareholder; 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
      Securities and,
      provided further,
      that if,
      after
      the Company consummates a Business Combination, it (or the surviving entity)
      subsequently
      consummates a liquidation, merger, share exchange or other similar transaction
      which results in all of its shareholders having the right to exchange their
      Ordinary Shares or Warrants for cash, securities or other property, then the
      Escrow Agent will, upon receipt of a notice, executed by the Chairman, Chief
      Executive Officer or Chief Financial Officer of the Company, in a form
      reasonably acceptable to the Escrow Agent, certifying that such transaction
      is
      then being consummated, release the Escrow Securities to the Existing
      Shareholders so that they can similarly participate. The Escrow Agent shall
      have
      no further duties hereunder after the disbursement or destruction of the Escrow
      Securities in accordance with this Section 3. 

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    4. Rights
      of Existing 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 Existing Shareholders shall retain all of their rights
      as
      shareholders of the Company during the Escrow Period with respect to the Escrow
      Shares, 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 Existing 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.
      Except
      as set forth in Section 3, during the Escrow Period, the Existing Shareholders
      will be permitted to transfer all or a portion of the Escrow Securities to
      their
      permitted assigns. Prior to their release from escrow, the Escrow Securities
      may
      only be transferred or assigned: (i) to the Company or any of its officers,
      directors and employees, or any affiliates or family members of such
      individuals, (ii) by gift to an affiliate or a member of Existing Shareholder’s
      immediate family or to a trust or other entity, the beneficiary of which is
      one
      of its officers or directors or a member of their respective immediate families,
      (iii) by virtue of the laws of descent and distribution upon death of any
      Existing Shareholder, (iv) pursuant to a qualified domestic relations order;
      or
      (v) with respect to limited liability companies and partnerships, to their
      respective members or partners; 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 (as defined below) signed by the Existing
      Shareholder transferring the Escrow Securities. During the Escrow Period, the
      Existing 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 Existing Shareholders has executed a letter agreement with the
      Representatives and the Company, dated as of the Effective Date, and which
      is
      filed as an exhibit to the Registration Statement (“Insider
      Letter”),
      respecting the rights and obligations of such Existing Shareholder in certain
      events, including but not limited to the dissolution 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. 

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    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
      B
      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. 

     

    5.4 Further
      Assurances.
      From
      time to time on and after the date hereof, the Company and the Existing
      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 and approved by the
      Representatives, 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 Waiver
      of Claims against Trust Account.
      Notwithstanding any other provision of this Agreement, the Escrow Agent confirms
      its understanding that the Company has established the trust account (as defined
      in the Prospectus, the “Trust
      Account”)
      relating to the securities being sold pursuant to the Prospectus. The Escrow
      Agent acknowledges that the Trust Account will exist for the benefit of the
      Company’s public shareholders and the monies from the Trust Account may only be
      disbursed upon the occurrence of certain events as more fully described in
      the
      Prospectus. The Escrow Agent agrees that neither it nor any of its affiliates
      have or will have any right, title, interest or claim in or to the monies in
      the
      Trust Account, and the Escrow Agent hereby waives any and all right, title,
      interest of claim of any kind in or to any distribution of any property held
      in
      the Trust Account that it or its affiliates may have now or in the future and
      hereby agrees not to seek recourse, reimbursement, payment or satisfaction
      for
      any claim of any kind against the Trust Account for any reason whatsoever,
      including in respect of the Company’s indemnification obligations set forth in
      this Agreement.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    6.2 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, 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. Any
      such
      process or summons to be served upon each of the Company, the Purchasers and
      the
      Escrow Agent may be served by transmitting a copy thereof by registered or
      certified mail, return receipt requested, postage prepaid, addressed to it
      at
      the address set forth in Section 6.7 hereof. Such mailing shall be deemed
      personal service and shall be legal and binding upon each of the Company, the
      Purchasers and the Escrow Agent in any action, proceeding or claim.

     

    6.3 Third
      Party Beneficiaries.
      Each of
      the Existing Shareholders hereby acknowledges that the Underwriters, including,
      without limitation, the Representatives, are third party beneficiaries of this
      Agreement and this Agreement may not be modified or changed without the prior
      written consent of the Representatives. 

     

    6.4 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. 

     

    6.5 Headings.
      The
      headings contained in this Agreement are for reference purposes only and shall
      not affect in any way the meaning or interpretation thereof. 

     

    6.6 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. 

     

    6.7 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 days after the date of mailing,
      as
      follows:

     

    If
      to the
      Company, to:

    


    Chardan
      2008 China Acqusition Corp.

    Suite
      18E, Tower A

    Oriental
      Kenzo Plaza

    48
      Dongzhimenwai Street

    Beijing,
      100027, China

    Fax
      No.:
      86-10-84477246

    Attn:
      Xiaosong Zhong

     

    If
      to a
      Shareholder, to his or her address set forth in Exhibit
      A.

     

    and
      if to
      the Escrow Agent, to:

     

    Continental
      Stock
      Transfer & Trust Company

    17
      Battery Park

    New
      York,
      New York 10004

    Fax
      No.:
      (212) 509-5150

    Attn:
      Steven Nelson & Frank Di Paolo

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

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

    


    Ellenoff
      Grossman & Schole, LLP

    150
      East
      42nd Street, 11th Floor

    New
      York,
      New York 10017

    Fax
      No.:
      (212) 370-7889

    Attn:
      Lawrence A. Rosenbloom, Esq. 

    


    and

    


    Brean
      Murray, Carret & Co., LLC

    570
      Lexington Avenue

    New
      York,
      New York 10022

    Fax
      No.:
      (212) 702-6505

    Attn:
      William McCluskey

    


    and

    


    Maxim
      Group LLC

    405
      Lexington Avenue, 2nd Floor

    New
      York,
      New York 10174

    Fax
      No.:
      (212) 895-3783

    Attn:
      Clifford Teller

    


    and

    


    Roth
      Capital Partners, LLC

    24
      Corporate Plaza

    Newport
      Beach, California 92660

    Fax
      No.:
      (949) 720-7215

    Attn.:
      Renny Chavanikamannil

    


    and

    


    Richardson
      & Patel LLP

    405
      Lexington Avenue

    New
      York,
      New York 10174

    Fax
      No.:
      (212) 907-6687

    Attn:
      Jody R. Samuels, 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. 

     

    6.8 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.
      

     

    6.9 Counterparts.
      This
      Agreement may be executed in several counterparts each one of which shall
      constitute an original and may be delivered by facsimile transmission and
      together shall constitute one instrument. 

     

    6.10 Waiver.
      Notwithstanding anything herein to the contrary, the Escrow Agent hereby waives
      any and all right, title, interest or claim of any kind (“Claim”)
      in or
      to any distribution of the Trust Account, and hereby agrees not to seek
      recourse, reimbursement, payment or satisfaction for any Claim against the
      Trust
      Account for any reason whatsoever.

     

    [REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK]

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF,
      the
      execution of this Securities Escrow Agreement as of the date first above
      written.

    

      
        	 	
                CHARDAN
                  2008 CHINA ACQUISITION CORP.

              
	 	 
	 	 
	 	
                By:

              	 
	 	 	
                  Name:
                  Kerry Propper

              
	 	 	
                  Title:
                  Chief Executive Officer

              


      

    

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    
       

      
        	 	
                EXISTING
                  SHAREHOLDERS:

              
	 	 
	 	 
	 	
                Kerry
                  Propper

              
	 	 
	 	 
	 	
                Steve
                  Urbach

              
	 	 
	 	 
	 	
                Jonas
                  Grossman

              
	 	 
	 	 
	 	
                George
                  Kaufman

              
	 	 
	 	 
	 	
                Todd
                  Gold

              
	 	 
	 	 
	 	
                Jiangnan
                  Huang

              
	 	 
	 	 
	 	
                ROYALE
                  HOLDINGS

              
	 	 
	 	 
	 	
                By:

              	 
	 	 	
                Name:
                  

              
	 	 	
                Title:
                  

              
	 	 
	 	 
	 	
                Dr.
                  Richard D. Propper

              
	 	 
	 	 
	 	
                Paula
                  Beharry

              
	 	 
	 	 
	 	
                Daniel
                  Beharry

              
	 	 
	 	 
	 	
                Li
                  Zhang

              
	 	 
	 	 
	 	
                Li
                  Ping He (as custodian for Tiffany
                  He)

              


      

       

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

       

      
        	 	 
	 	
                Li
                  Gong

              
	 	 
	 	 
	 	
                Dr.
                  Jianjun Shi

              
	 	 
	 	 
	 	
                Xiaosong
                  Zhong

              
	 	 
	 	 
	 	
                Carman
                  Ramirez

              
	 	 
	 	 
	 	
                Edward
                  Carter

              
	 	 
	 	 
	 	
                Ida
                  Carter

              


      

       

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

    

     

    
      
        
          	 	
                  
                    CONTINENTAL
                      STOCK TRANSFER & TRUST
                      COMPANY

                  

                
	 	 
	 	 
	 	
                  By:

                	 
	 	 	
                    Name:
                    Steven G. Nelson

                
	 	 	
                    Title:
                    Chairman

                


        

      

       

    

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      A

     

    
      	
              Shareholders

            	 	
              Number
                of

              Ordinary
                Shares

              and
                Warrants

            	 
	
               

            	 	
               

            	 
	
              Kerry
                Propper

            	 	 	
              302,907

            	 
	
              Steve
                Urbach

            	 	 	
              136,713

            	 
	
              Jonas
                Grossman

            	 	 	
              81,296

            	 
	
              George
                Kaufman

            	 	 	
              27,708

            	 
	
              Todd
                Gold

            	 	 	
              5,542

            	 
	
              Jiangnan
                Huang

            	 	 	
              261,427

            	 
	
              Royale
                Holdings

            	 	 	
              661,693

            	 
	
              Dr.
                Richard D. Propper

            	 	 	
              186,528

            	 
	
              Paula
                Beharry

            	 	 	
              130,713

            	 
	
              Daniel
                Beharry

            	 	 	
              130,713

            	 
	
              Li
                Zhang

            	 	 	
              130,713

            	 
	
              Li
                Ping He, as custodian for Tiffany He under the California Uniform
                Transfers to Minors Act

            	 	 	
              130,713

            	 
	
              Li
                Gong

            	 	 	
              25,000

            	 
	
              Dr.
                Jianjun Shi

            	 	 	
              25,000

            	 
	
              Xiaosong
                Zhong

            	 	 	
              25,000

            	 
	
              Carman
                Ramirez

            	 	 	
              20,000

            	 
	
              Edward
                Carter

            	 	 	
              5,000

            	 
	
              Ida
                Carter

            	 	 	
              5,000

            	 


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      B

     

    Escrow
      Agent Fees

     

    $_______
      annually for acting agent escrow fee.

     

    Existing
      acceptance fee and first year agent fee to be paid at closing.