Document:

f8k082708ex10vii_ea3chinvlve.htm

     

     

    Exhibit
10.7

     

    Premises
Leaseback Agreement

    

    This
Premises Lease Agreement
(the “Agreement”)
is entered into as of  August 26, 2008 by and among the following
parties:

    

    
      Party A
(the Lessor): Henan Kaifeng High Pressure Valve Co., Ltd (河南开封高压阀门有限公司)

    

    Domicile:
No. 93, West Xin Song Road, Kaifeng City, Henan Province

    
      Legal
Representative: Fang, Siping

    

    
      Facsimile:
0378-2913714

    

    

    
      Party B
(the Lessee): Kaifeng High Pressure Valve Steel Casting Limited Liabilities
Company (开封高压阀门铸钢有限责任公司)

    

    Domicile:
No. 93, West Xin Song Road, Kaifeng City, Henan Province

    Legal
Representative: Zhang, Peizhuang

    Facsimile:
0378-2995646

    

    Party A
and Party B are referred to herein as the "Parties" collectively and as a
"Party"
individually.

    

    Whereas,

    

    
      	
              1  

            	
              Party
      A is a duly established foreign invested enterprise.  It owns
      the land use right to the land lot located at No. 93, Xin Song Road,
      Kaifeng City, Henan and the titles to the buildings
      thereon.  This land lot has been granted by the state for the
      purpose of industrial use.

            

    

     

    
      	
              2  

            	
              Party
      B is a limited liability company established by two natural persons (Zhang
      Peizhuang and Fang Binjie).

            

    

     

    
      	
              3  

            	
              Now,
      the Parties have agreed that Party A will lease parts of Factory Premises
      on the aforesaid land to Party B.

            

    

     

    

    According
to the Contract Law of the People's Republic of
China and other relevant laws and regulations, and by the principle of
equality, mutual consent, mutual benefits and good faith, the Parties have,
after mutual negotiation, entered into this Agreement as to Party B’s lease from
Party A of Factory Premises that are duly authorized to be leased.

     

    
      Article
1    Status of
the Factory Premises to be Leased

    

     

    
      	
              1.1  

            	
              The
      Factory Premises to be leased by Party A to Party B are located at No. 93,
      Xin Song Road, Kaifeng City, Henan with total construction area of 27,451
      m2.  Reference
      is made to Appendix I to this Agreement for the numbers of the building
      title certificates for the Factory Premises to be leased to Party B (the
      Factory Premises to be leased to Party B by Party A would hereinafter be
      referred to as the “Factory
      Premises”).

            

    

     

     

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

     

    
      	
              1.2  

            	
              Party
      A hereby enters into this lease with Party B as the owner of titles to the
      Factory Premises.  Before entering into this Agreement, Party A
      has demonstrated to Party B the Agreement for Transfer of Land Use Right
      and Housing Titles under which Party A obtained titles to The Factory
      Premises

            

    

     

    
       

      Article
2    The
Nature of the Lease and For Purpose of Production

    

     

    
      	
              2.1  

            	
              Party
      A has examined the business license or the contemplated business scope of
      Party B.  Party B warrants to Party A that Party B will use The
      Factory Premises strictly in accordance with its approved business scope
      during Party B’s lease thereof.

            

    

     

    
      	
              2.2  

            	
              Party
      B warrants that Party B will not, unless having been approved in writing
      by Party A or by competent regulatory authorities (including work safety
      authority, fire control authority, etc.) according to relevant
      regulations, conduct in the Factory Premises any production activities
      other than those set forth in Article
2.1.

            

    

     

    

    
      Article
3    Delivery
Date and Lease Term

    

     

    
      	
              3.1  

            	
              Party
      A will deliver The Factory Premises to Party B immediately after Party A
      acquires title to the Factory Premises pursuant to the Agreement for Transfer of Land
      Use Right and Housing Titles entered into between Party A and Party
      B on August 26, 2008.  The term of this lease will start on the
      date of such delivery and lasts for one whole
  year.

            

    

     

    
      	
              3.2  

            	
              Upon
      expiration of this lease, Party B will return The Factory Premises on a
      timely basis.  If Party B intends to extend the lease, it will
      inform Party A in writing of its intent for extension of the lease three
      months prior to the expiration to the lease.  If Party A so
      agrees, both Parties will sign a new Factory Premises Lease
      Agreement.

            

    

     

    

    
      Article
4    Rental,
Method and Time limit of Payment

    

     

    
      	
              4.1  

            	
              The
      annual total rental for The Factory Premises will be the RMB equivalent of
      US$ 80,000 (the applicable conversion rate will be the foreign exchange
      rate quoted by the People’s Bank of China for Renminbi on the date of the
      execution of this Agreement).

            

    

     

    
      	
              4.2  

            	
              Party
      B will pay each annual rental prior to December 31 each
      year.  Party B will wire transfer the payment to the below bank
      account designated by Party A, or pay the amount in other methods as
      agreed upon in writing by the
Parties:

            

    

     

     
Account-Opening Bank: Chengdong sub-branch, Kaifeng Branch, Industrial and
Commercial Bank of China

     
Account number: 1703020209048023684

     

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    
 

    In case
of any overdue payment, Party B will pay 0.3% of the annual rental as liquidated
damages for each day on which its rental is overdue.

    

    
       

      Article
5    Earnest
Money and Other Fees

    

     

    
      	
              5.1  

            	
              At
      the delivery of The Factory Premises, Party B will pay no earnest money
      for the lease of The Factory
Premises.

            

    

     

    
      	
              5.2  

            	
              During
      the term of this lease, Party B will be responsible for payment of fees
      relating to tap water, electricity, gas, telecommunication, facilities,
      property management, etc.

            

    

     

    
      	
              5.3  

            	
              During
      the term of this lease, Party A is responsible to secure property
      insurance for The Factory Premises, and Party B is responsible to secure
      property insurance for Party B’s assets in The Factory
      Premises.

            

    

     

    

    
      Article
6    Requirement
on the Use of The Factory Premises

    

     

    
      	
              6.1  

            	
              During
      the term of this lease, Party B shall be responsible for reasonable
      maintenance of the equipment and other assets inside the building; Party A
      will, at its own cost, be responsible to maintain and repair for damages
      during ordinary use of the Factory Premises unless such damages are caused
      by Party B’s fault or negligence.  Party A will repair within
      three working days after the receipt of Party B’s notice.  If
      Party A fails to repair within the aforesaid time limit, Party B could
      repair such damages itself, and then promptly inform Party A of such
      repair and present to Party A relevant invoices for the expense incurred,
      and Party A will bear expenses reasonably incurred in connection with
      Party B’s repair.

            

    

     

    
      	
              6.2  

            	
              During
      the term of this lease, Party B will reasonably use and take care of The
      Factory Premises and relevant facilities.  Party B will bear
      maintenance costs relating to damages to the Factory Premises arising out
      of Party B’s improper or unreasonable use
  thereof.

            

    

     

    
      	
              6.3  

            	
              During
      the term of this lease, both Parties will coordinate with each other in
      good faith, and ensure the Factory Premises in usable and safe
      condition.  When Party A examines the Factory Premises for its
      duty of safety administration, Party B will coordinate with Party
      A.  Upon discovering hidden work safety risks with Party B,
      Party A has the right to inform Party B in writing and require it to
      rectify.

            

    

     

    
      	
              6.4  

            	
              If
      Party B is to add equipment or decorations in the Factory Premises, it
      shall obtain Party A’s written consent in
  advance.

            

    

     

    

    
      Article
7    The
Status of the Factory Premises Upon Return

    

     

    
      	
              7.1  

            	
              Unless
      Party A has agreed to the extension of this Agreement, Party B will return
      the Factory Premises within ten days from the expiration of this
      lease.

            

    

     

    
      	
              7.2  

            	
              The
      Factory Premises so returned by Party B will be maintained in such
      condition as after normal use.

            

    

     

    

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    

    
      Article
8    Sub-lease,
Transfer and Exchange

    

     

    
      	
              8.1  

            	
              During
      the term of this lease, Party B will obtain Party A’s consent in writing
      before it sub-leases any part or the whole of the Factory Premises to any
      third party.

            

    

     

    
      	
              8.2  

            	
              During
      the term of this lease, Party B will obtain Party A’s consent in writing
      before Party B delegates its lease of the Factory Premises to a third
      party or exchanges its lease of the Factory Premises with a third
      party.  After such delegation or exchange, the third party which
      has entered into the delegation or exchange of the lease of the Factory
      Premises will enter into a agreement with Party A for a change in the
      lessee and proceeds to perform this
Agreement.

            

    

     

    
      	
              8.3  

            	
              During
      the term of this lease, if Party A intends to sell or pledge the Factory
      Premises, it will inform Party B three months in advance.  When
      Party A is to sell The Factory Premises or the mortgagee is to foreclose
      on the Factory Premises, Party B has the right of first refusal to acquire
      the Factory Premises on the same
terms.

            

    

     

    

    
      Article
9    Termination
Conditions

    

     

    
      	
              9.1  

            	
              During
      the term of this lease, upon any of the below circumstances, the Agreement
      will terminate and neither Party will be liable to the
    other:

            

    

     

    
      	
              A  

            	
              The
      land use right to the land covered by the Factory Premises is duly taken
      back by the State ahead of
schedule.

            

    

    

    
      	
              B  

            	
              The
      Factory Premises are duly requisitioned for public
    interests.

            

    

    

    
      	
              C  

            	
              For
      purpose of urban planning, the Factory Premises are duly listed among
      properties required to be demolished and
  relocated.

            

    

    

    
      	
              D  

            	
              During
      the term of this lease, the Factory Premises are identified as hazardous
      Factory Premises, or are demolished or lost due to force
      majeure.

            

    

    

    
      	
              E  

            	
              Other
      circumstances under which the lease may be terminated, as agreed upon by
      the Parties in writing.

            

    

     

    
      	
              9.2  

            	
              Under
      any of the below circumstances, either Party may inform the other to
      terminate the Agreement.  If such breach of the Agreement by one
      Party has caused damages to the other Party, the breaching Party will
      indemnify the non-breaching Party for all the direct damages incurred by
      the non-breaching Party:

            

    

     

    
      	
              A  

            	
              Party
      A fails to deliver the Factory Premises within the time limit, and fails
      again to do so thirty days after Party B’s
  notice.

            

    

    

    
      	
              B  

            	
              The
      Factory Premises delivered by Party A do not conform to the provisions of
      the Agreement, thus frustrating the purpose of this lease; or the Factory
      Premises delivered by Party A pose danger to workplace safety or contain
      defect in fire-control rating.

            

    

     

     

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    
 

    
      	
              C  

            	
              Party
      A discovers workplace safety problems in Party B, and informs Party B in
      writing and requires it to remedy the Factory Premises, but Party B fails
      or refuses to remedy.

            

    

    

    
      	
              D  

            	
              Without
      Party A’s consent in writing and approvals from competent regulatory
      authorities, Party B changes the Factory Premises’ intended or planned
      production use and conducts production activities other than those set
      forth in Article 2.1.

            

    

    

    
      	
              E  

            	
              Without
      Party A’s consent in writing or approvals from competent regulatory
      authorities (including work safety authority, fire control authority,
      etc.), Party B adds new facilities, modify internal designs, or produces,
      operates, transports, stores and uses hazardous materials or disposes of
      hazardous chemicals.

            

    

    

    
      	
              F  

            	
              Without
      Party A’s consent in writing, Party B sub-leases the Factory Premises,
      transfers the lease to a third party, or exchanges the lease with a third
      party.

            

    

    

    
      	
              G  

            	
              Party
      B has been in default on the rental payment for an aggregate of twelve
      months.

            

    

    

    
      	
              H  

            	
              The
      Factory Premises suffer damages due to Party B’s improper use thereof or
      any other negligence.

            

    

    

    
      	
              I  

            	
              Other
      circumstances under which this lease may be terminated, as agreed on by
      the Parties in writing.

            

    

     

    

    
      Article
10    Breach

    

     

    
      	
              10.1  

            	
              If
      The Factory Premises contain defects when delivered, Party A will repair
      such defects within ten days from the delivery.  If Party A
      fails to repair within such time limit,  the rental that Party A
      is entitled to will be reduced and relevant provisions relating to the
      rental will be amended.

            

    

     

    
      	
              10.2  

            	
               Party
      A will indemnify Party B for any damages Party B has suffered due to the
      fact that Party A fails to inform Party B of the existence on Factory
      Premises of any mortgage or of any restriction on alienation of its
      title.

            

    

     

    
      	
              10.3  

            	
              If
      Party B changes the construction structure of the Factory Premises, or
      violates relevant technical standards or provisions on fire control and
      safety without Party A’s consent in writing, or exceeds the scope of Party
      A’s consent in writing, Party A is entitled to Party B’s restoration of
      the Factory Premises and payment for
damages.

            

    

     

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

    
 

    
      Article
11    Disputes
Resolutions

    

     

    
      	
              11.1  

            	
              This
      agreement is governed by the laws and regulations of the People’s Republic
      of China.

            

    

     

    
      	
              11.2  

            	
              If
      any dispute arises during the performance of this agreement, it will be
      resolved by the Parties through negotiation.  If no resolution
      could be made through negotiation, the dispute will be resolved through
      arbitration.  The Parties mutually agree that the dispute will
      be submitted to Shanghai sub-commission of the China International
      Economic and Trade Arbitration Commission, and will be arbitrated
      according to its arbitration rules.  The arbitration award is
      final and binding on both Parties.

            

    

     

    

    
      Article
12    Miscellaneous

    

     

    
      	
              12.1  

            	
              Nothing
      contained in this Agreement will constitute or create between either Party
      and any of its officers, directors, employees or agents, an agency or
      representative relationship or a partnership, nor will this Agreement
      create any express or implied right, power or authority of Party B to
      enter into any agreement, or to incur any liability or obligation, on
      behalf of Party A.  Party A will not be held liable under any
      circumstances under this Agreement to Party B or any third party for any
      act or omission by Party B that takes place before or after the execution
      of this Agreement.

            

    

     

    
      	
              12.2  

            	
              .
      Under no circumstances will Party A be held liable under this Agreement
      for any obligations, commitments or liabilities that existed, exist or
      will exist with respect to any social insurance contribution, employee
      welfare plan, pension plan, severance payment, workers compensation,
      redundancy cost, or any other mandatory or optional welfare plan, for the
      benefit of, or relating to, any present or former employee (including any
      beneficiary of any such employee) of Party B or its
      predecessors.

            

    

     

    
      	
              12.3  

            	
               During
      the term of this lease, if Party A is to mortgage a part or the whole of
      the Factory Premises, it will inform Party B in writing and warrants to
      Party B: if relevant parties are to dispose of The Factory Premises by
      sale thereof, Party A will, 10 days in advance to such disposal, inquire
      Party B in writing if Party B will exercise its right of first refusal
      with respect to the Factory
Premises.

            

    

     

    
      	
              12.4  

            	
              This
      agreement will take effective after both Parties have signed and attached
      their official seals to it.  After the effectiveness of the
      Agreement, Party A will be responsible to register it according to
      relevant regulations and obtain the registration certificate for the lease
      agreement.

            

    

     

    
      	
              12.5  

            	
              After
      the registration of this agreement, if this agreement is revised or
      terminated, Party A will be responsible to go through formalities for
      alternation or termination registration with the original registration
      authority within fifteen days from such alternation or
      termination.

            

    

     

    
      	
              12.6  

            	
              The
      Parties may negotiate with each other and reach mutual consent on any
      matter not covered in this agreement and then enter into supplemental
      articles.  The supplemental articles and the appendix to this
      agreement are indivisible parts of this agreement, and any handwritten or
      printed word filled in any blank in this agreement, its supplemental
      articles or its appendix will have the same effect as the main body of
      this agreement.

            

    

     

    
      	
              12.7  

            	
              This
      Agreement and its appendix will be executed in three
      originals.  Party A and Party B will each hold one original, and
      another original should be filed with Kaifeng real estate administrative
      authority.  Each of the three originals should have equal legal
      effect.

            

    

     

    

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    

    Party A

    

    [Official
Seal]

    Legal
representative of Party A: /s/ Fang
Siping

                                                             Mr. Fang
Siping

    Date of
Execution: August 26,  2008

    Location
of Execution: Kaifeng City, Henan Province, China

    

    

    Party B

    

    [Official
Seal]

    Legal
representative of Party B: /s/
Zhang Peizhuang

                                                          
Mr.
Zhang Peizhuang

    Date of
Execution: August 26, 2008

    Location
of Execution: Kaifeng City, Henan Province, China

     

    7f8k082708ex10viii_ea3chnvlve.htm

    

     

     

    Exhibit
10.8

     

    REAL ESTATE SHARE ESCROW
AGREEMENT

     

    REAL
ESTATE SHARE ESCROW AGREEMENT (the “Agreement”), dated as
of August 26, 2008, is entered into by and among CHINA VALVES TECHNOLOGY, INC.,
a Nevada corporation (the “Company”), BIN FANG
(the “Principal”), BREAN
MURRAY, CARRET & CO., LLC, as representative (together with its successors
and assigns, the “Investor
Representative”) of the Investors who are parties to the Purchase
Agreement (as defined below), and Escrow, LLC, with an address at 20 Rock
Pointe, Suite 204, Warrenton, VA 20186 (the “Escrow Agent”).
Capitalized terms used, but not defined herein shall have the meanings set forth
in the Securities Purchase Agreement, dated as of the date hereof among the
Company, Hong Kong, WFOE and the Investors (the “Purchase
Agreement”).

     

    BACKGROUND

     

    The
Principal owns all of the issued and outstanding equity interests in Kaifeng
High Pressure Valve Steel Casting Limited Liability Company, a corporation
formed under the laws of the People’s Republic of China (the “Casting
Company”).  The Casting Company has entered into an agreement,
dated on or about the date hereof which, as translated to English, is
substantially in the form of Exhibit A (the “Real Estate Transfer
Agreement”), relating to the transfer to Henan Kaifeng High Pressure
Valve Co., Ltd., a Chinese subsidiary of the Company (the “PRC Sub”), of the
real estate (the “Real
Estate”) described in the Real Estate Transfer Agreement.

     

    In order
to ensure that the Real Estate is transferred to the PRC Sub promptly and in
accordance with the terms of the Real Estate Transfer Agreement, the Investors
have requested that the Principal enter into this Agreement pursuant to which he
will personally agree to take any and all actions necessary to consummate the
transfer of the Real Estate in accordance with the Real Estate Transfer
Agreement.  In consideration for the agreement of the Principal to
cause the Casting Company to transfer the Real Estate, the Company will issue to
the Principal, or his designee, Five Million, Five Hundred Thousand Shares (the
“Escrow
Shares”) of the Company’s Common Stock on the date hereof.  The
Escrow Shares will be held in escrow in accordance with the terms of this
Agreement to further ensure the consummation of the transactions contemplated by
the Real Estate Transfer Agreement.

     

    The
execution and delivery of this Agreement is a condition precedent to the
consummation of the transactions contemplated by the Purchase Agreement and the
Investors would not consummate the transactions, but for the existence of this
Agreement.

     

    NOW,
THEREFORE, in consideration of the covenants and mutual promises contained
herein and other good and valuable consideration, the receipt and legal
sufficiency of which are hereby acknowledged and intending to be legally bound
hereby, the parties agree as follows:

     

     

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    ARTICLE
I

     

    TERMS OF
THE ESCROW

     

    1.1. The
parties to this Agreement hereby agree to establish an escrow account with the
Escrow Agent whereby the Escrow Agent shall hold the Escrow Shares as
contemplated by this Agreement.

     

    1.2. On the
date hereof, the Company shall issue to the Principal, or his designee, the
Escrow Shares in consideration for the various agreements of the Principal set
forth in this Agreement.  The Escrow Shares shall be delivered by the
Company directly to the Escrow Agent.  On the date hereof, the
Principal or his designee, as applicable, shall deliver to the Escrow Agent an
undated medallion guaranteed stock power (or such other instrument or document
as may be required by the Company’s transfer agent to effectuate the transfer of
the Escrow Shares as contemplated by this Agreement).

     

    1.3. The
Principal shall use his best efforts to effectuate the transfer of the Real
Estate to the PRC Sub in accordance with the Real Estate Transfer Agreement
within ten (10) months following the date hereof (the “Outside Date”) and
will not take any action which could frustrate or delay such
transfer.  In addition, the Principal shall, and shall cause the
Casting Company to, perform, or cause to be done and performed, all such further
acts and things, and shall execute and deliver all such other agreements,
certificates, instruments and documents, as any other party may reasonably
request in order to carry out the intent and accomplish the purposes of this
Agreement, the Real Estate Transfer Agreement and the consummation of the
transactions contemplated hereby and thereby.

     

    1.4. The
Escrow Shares will be released from the escrow as follows:

     

    (a) If the
Real Estate has not been transferred to the PRC Sub in accordance with the Real
Estate Transfer Agreement on or before the Outside Date, then the Investor
Representative may instruct the Escrow Agent to release the Escrow Shares to the
Company and, promptly upon receipt of such instructions, the Escrow Agent will
so release the Escrow Shares to the Company.  The Escrow Agent need
only rely on the instruction from the Investor Representative in this regard and
will disregard any contrary instructions.  In such event the Company
shall immediately deliver the certificates representing the Escrow Shares to the
Company’s transfer agent along with written instructions to the transfer agent
instructing the transfer agent to cancel the Escrow Shares whereupon such Escrow
Shares shall no longer be issued and outstanding.

     

    (b) If the
Real Estate has been transferred to the PRC Sub in accordance with the Real
Estate Transfer Agreement on or before the Outside Date, then the Principal and
the Investor Representative shall jointly instruct the Escrow Agent to release
the Escrow Shares to the Principal or his designee and, promptly upon receipt of
such instructions, the Escrow Agent will so release the Escrow Shares to the
Principal or his designee.

     

    (c) Notwithstanding
any other provision of this Agreement, if at any time Escrow Agent shall receive
from the Principal and the Investor Representative (prior to being directed to
take action by a court) joint written instructions as to the delivery of the
Escrow Shares or any portion thereof, Escrow Agent shall deliver the Escrow
Shares in accordance with such joint written instructions.

    

     

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    ARTICLE
II

     

    ESCROW
AGENT

    

    2.1 Interpleader. In the
event this Agreement or the Escrow Shares becomes the subject of litigation, or
if the Escrow Agent shall desire to do so for any other reason, the Company
authorizes the Escrow Agent, at its option, to deposit the Escrow Shares with
the clerk of the court in which the litigation is pending, or a court of
competent jurisdiction if no litigation is pending, and thereupon the Escrow
Agent shall be fully relieved and discharged of any further responsibility with
regard thereto.  The Company also authorizes the Escrow Agent, if it
receives conflicting claims to the Escrow Shares, is threatened with litigation
or if the Escrow Agent shall desire to do so for any other reason, to interplead
all interested parties in any court of competent jurisdiction and to deposit the
Escrow Shares with the clerk of that court and thereupon the Escrow Agent shall
be fully relieved and discharged of any further responsibility hereunder to the
parties from which they were received.

    

    2.2           Exculpation and
Indemnification of Escrow Agent

    

    (a)   The Escrow Agent
shall have no duties or responsibilities other than those expressly set forth
herein.  The Escrow Agent shall have no duty to enforce any obligation
of any person to make any payment or delivery, or to direct or cause any payment
or delivery to be made, or to enforce any obligation of any person to perform
any other act.  The Escrow Agent shall be under no liability to the
other parties hereto or anyone else, by reason of any failure, on the part of
any party hereto or any maker, guarantor, endorser or other signatory of a
document or any other person, to perform such person’s obligations under any
such document.  Except for amendments to this Agreement referenced
below, and except for written instructions given to the Escrow Agent by the
Company and the Investor Representative relating to the Escrow Shares, the
Escrow Agent shall not be obligated to recognize any agreement between or among
any of the other parties, notwithstanding that references hereto may be made
herein and whether or not it has knowledge thereof.

    

    (b)   The Escrow Agent
shall not be liable to the  Company, the Investor Representative, any
Investor or to anyone else for any action taken or omitted by it, or any action
suffered by it to be taken or omitted, in good faith and 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 of the
terms thereof, unless evidenced by written notice 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 give its prior written consent
thereto.

     

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    
 

    (c)  The  Escrow
Agent shall not be responsible for the sufficiency or accuracy of the form, or
of the execution, validity, value or genuineness of, any document or property
received, held or delivered to it hereunder, or of any signature or endorsement
thereon, or for any lack of endorsement thereon, or for any description therein;
nor shall the Escrow Agent be responsible or liable to the Company, the Investor
Representative, any Investor or to anyone else in any respect on account of the
identity, authority or rights, of the person executing or delivering or
purporting to execute or deliver any document or property or this
Agreement.

    

    (d)   The Escrow Agent
shall have the right to assume, in the absence of written notice to the contrary
from the proper person or persons, that a fact or an event, by reason of which
an action would or might be taken by the Escrow Agent, does not exist or has not
occurred, without incurring liability to the Company, the Investor
Representative, any Investor or to anyone else for any action taken or omitted
to be taken or omitted, in good faith and in the exercise of its own best
judgment, in reliance upon such assumption.

    

    (e)    The Escrow
Agent shall be indemnified and held harmless against any liability for taxes and
for any penalties in respect of taxes, on any investment income or payments with
respect to the Escrow Shares in the manner provided in Section 2.2
(f).

    

    (f)  The  Escrow
Agent will be indemnified and held harmless by the  Company from and
against all expenses, including all counsel fees and disbursements, or loss
suffered by the Escrow Agent in connection with any action, suit or proceedings
involving any claim, or in connection with any claim or demand, which in any
way, directly or indirectly, arises out of or relates to this Agreement, the
services of the Escrow Agent hereunder, except for claims relating to gross
negligence by Escrow Agent or breach of this Agreement by the Escrow Agent, or
the monies or other property held by it hereunder or for willful misconduct of
the Escrow Agent.  Promptly after the receipt of the Escrow Agent of
notice of any demand or claim or the commencement of any action, suit or
proceeding, the Escrow Agent shall, if a claim in respect thereof is to be made
against the Company, notify the Company thereof in writing, but the failure by
the Escrow Agent to give such notice shall not relieve the Company from any
liability which the Company may have to the Escrow Agent
hereunder.  Notwithstanding any obligation to make payments and
deliveries hereunder, the Escrow Agent may retain and hold for such time as it
deems necessary such amount of monies or property, including shares of the
Company’s capital stock as it shall, from time to time, in its sole discretion,
seem sufficient to indemnify itself for any such loss or expense and for any
amounts due it under Section 4.1.

    

    (g)  For purposes hereof, the
term “expense or loss” shall include all amounts paid or payable to satisfy any
claim, demand or liability, or in settlement of any claim, demand, action, suit
or proceeding settled with the express written consent of the Escrow Agent, and
all costs and expenses, including, but not limited to, counsel fees and
disbursements, paid or incurred in investigating or defending against any such
claim, demand, action, suit or proceeding.

    

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    ARTICLE
III

     

    TERMINATION
OF AGREEMENT

     

    

    3.1           This
Agreement shall terminate upon delivery by the Escrow Agent in accordance with
this Agreement of all of the Escrow Shares, provided that the rights of the
Escrow Agent and the obligations of the Company under Article II shall survive
the termination hereof.

    

    3.2           The  Escrow
Agent may resign at any time and be discharged from its duties as Escrow Agent
hereunder by giving the Company and the Investor Representative at least five
days written notice thereof (the “Notice
Period”).  As soon as practicable after its resignation, the
Escrow Agent shall, if it receives notice from the Company within the Notice
Period, turn over to a successor escrow agent appointed by the Company all of
the Escrow Shares then held by the Escrow Agent upon presentation of the
document appointing the new escrow agent and its acceptance
thereof.  If no new agent is so appointed within the Notice Period,
the Escrow Agent may deposit the Escrow Shares with the clerk of a court of
competent jurisdiction in accordance with Section 2.1 of this
Agreement.

    

    ARTICLE
IV

     

    COMPENSATION
OF ESCROW AGENT

    

    4.1           The
Escrow Agent shall be entitled to the compensation from the Company described on
Schedule A to this Agreement.

    

     

    ARTICLE
V

     

    MISCELLANEOUS

     

    5.1           No
waiver or any breach of any covenant or provision herein contained shall be
deemed a waiver of any preceding or succeeding breach thereof, or of any other
covenant or provision herein contained. No extension of time for performance of
any obligation or act shall be deemed an extension of the time for performance
of any other obligation or act.

     

    5.2           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
to the addresses specified on the signature page to this Agreement or to such
other address and to the attention of such other person as any of the above may
have furnished to the other parties in writing and delivered in accordance with
the provisions set forth above.

     

    5.3           This
Agreement shall be binding upon and shall inure to the benefit of the permitted
successors and permitted assigns of the parties hereto.

     

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    
 

    5.4           This
Agreement and the rights and obligations hereunder of the Company may not be
assigned.  This Agreement and the rights and obligations hereunder of
the Escrow Agent may be assigned by the Escrow Agent.  This Agreement
shall be binding upon and inure to the benefit of each party’s respective
successors, heirs and permitted assigns. No other person shall acquire or have
any rights under or by virtue of this Agreement. This Agreement may not be
changed orally or modified, amended or supplemented without an express written
agreement executed by the Escrow Agent, the Company and the Investor
Representative. This Agreement is intended to be for the sole benefit of the
parties hereto and the Investors and their respective successors, heirs and
permitted assigns, and none of the provisions of this Agreement are intended to
be, nor shall they be construed to be, for the benefit of any third
person.

    

    5.5           This
Agreement shall be construed without regard to any presumption or other rule
requiring construction against the party causing such instrument to be
drafted.  The  terms “hereby,” “hereof,” “hereunder,” and
any similar terms, as used in this Agreement, refer to the Agreement in its
entirety and not only to the particular portion of this Agreement where the term
is used.  The word “person” shall mean any natural person,
partnership, corporation, government and any other form of business of legal
entity.  All words or terms used in this Agreement, regardless of the
number or gender in which they were used, shall be deemed to include any other
number and any other gender as the context may require.  This
Agreement shall not be admissible in evidence to construe the provisions of any
prior agreement.

     

    5.6           The
parties hereto expressly agree that this Agreement shall be governed by,
interpreted under and construed and enforced in accordance with the laws of the
State of Virginia without regard to conflicts of law principles that would
result in the application of the substantive laws of another
jurisdiction.  Each of the parties  hereby irrevocably
consents to the jurisdiction of the courts of the State of Virginia and of any
Federal court located in such state in connection with any action, suit or
proceedings arising out of or relating to this Agreement or any action taken or
omitted hereunder, and waives personal service of any summons, complaint or
other process and agrees that the service thereof may be made by certified or
registered mail directed to it at the address for notices set forth in Section
5.2.

     

    5.7           The
Escrow Agent’s duties hereunder may be altered, amended, modified or revoked
only by a writing signed by the Company, the Investor Representative and the
Escrow Agent.

    

    5.8           This
Agreement may be executed in a number of counterparts, by facsimile, each of
which shall be deemed to be an original as of those whose signature appears
thereon, and all of which shall together constitute one and the same
instrument.  This Agreement shall become binding when one or more of
the counterparts hereof, individually or taken together, are signed by all the
parties.

     

    5.9           If
the Escrow Agent reasonably requires other or further instruments in connection
with this Agreement or obligations in respect hereto, the necessary parties
hereto shall join in furnishing such instruments.

     

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

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

     

     

    COMPANY:

    

     

    CHINA
VALVES TECHNOLOGY, INC.

     

    
      	
               
      

            	
                 
      By: /s/
      Siping Fang

            

    

    Name:
Siping Fang

    Title:
Chief Executive Officer

     

    Address:

     

      No.93
West Xinsong Road

     
Kaifeng City, Henan Province,

     
Peoples Republic of China

     
Facsimile:  86-378-292-4630

     Attn.:
President

     

     

    PRINCIPAL:

     

    /s/
Bin Fang

    Bin
Fang

     

    Address:

    

    

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    INVESTOR
REPRESENTATIVE:

     

    BREAN
MURRAY, CARRET & CO., LLC

     

        
By:  /s/
Kenneth J.
Kirsch                          

    Name:
Kenneth J. Kirsch

    Title:
Chief Financial Officer

     

    Address:

     

    Brean
Murray, Carret & Co., LLC

    570
Lexington Avenue

    New York,
NY 10022

    Facsimile:

    Attn:

     

     

    ESCROW
AGENT:

     

    ESCROW,
LLC

     

     

     
By:   /s/
Johnnie L.
Zarecor                                  

    Name:
Johnnie L. Zarecor

    Title:
Vice-President

     

    Address:

     

    Escrow,
LLC

    20 Rock
Pointe, Suite 204

    Warrenton,
VA 20186

    Facsimile:
540-347-2291

    Attn:

     

    

    8

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