Document:

Unassociated Document

    Exhibit
      10.2

     

    INVESTMENT
      MANAGEMENT TRUST AGREEMENT

     

    This
      Agreement is made as of [___], 2006 by and between Middle Kingdom Alliance
      Corporation (the “Company”) and Continental Stock Transfer & Trust Company
      (“Trustee”). 

     

    WHEREAS,
      the Company’s Registration Statement on Form S-1, No. 333-133475 (“Registration
      Statement”), for its initial public offering of securities (“IPO”) has been
      declared effective as of the date hereof by the Securities and Exchange
      Commission (“Effective Date”); and 

     

    WHEREAS,
      Newbridge Securities Corp. and I-Bankers Securities, Inc. (collectively, the
      “Representatives”) are acting as the representatives of the underwriters in the
      IPO; and 

     

    WHEREAS,
      as described in the Company’s Registration Statement, and in accordance with the
      Company’s Amended and Restated Certificate of Incorporation, $24,240,000 of the
      gross proceeds of the IPO ($27,876,000 if the underwriters’ over-allotment
      option is exercised in full) will be delivered to the Trustee to be deposited
      and held in a trust account for the benefit of the Company and the holders
      of
      the Company’s Class B common stock, par value $.001 per share (“Class B Stock”)
      and common stock, $0.001 par value (“Common Stock”) (except as otherwise
      provided herein) and in the event the units to be issued in the IPO are
      registered in Colorado, pursuant to Section 11-51-302(6) of the Colorado Revised
      Statutes (the amount to be delivered to the Trustee will be referred to herein
      as the “Property”; the stockholders for whose benefit the Trustee shall hold the
      Property will be referred to as the “Stockholders,” and the Stockholders and the
      Company will be referred to together as the “Beneficiaries”); and 

     

    WHEREAS,
      pursuant to the Underwriting Agreement, dated as of [____], 2006, between the
      Company and the Representatives, a portion of the Property equal to $508,800
      ($585,120 if the underwriters’ over-allotment option is exercised in full) is
      attributable to deferred underwriting compensation that will become payable
      by
      the Company to the underwriters upon the consummation of a Business Combination
      (as defined in the Registration Statement) (the “Deferred Discount”);
      and

     

    WHEREAS,
      the Company and the Trustee desire to enter into this Agreement to set forth
      the
      terms and conditions pursuant to which the Trustee shall hold the Property;
      

     

    IT
      IS
      AGREED: 

     

    1.  Agreements
      and Covenants of Trustee. The Trustee hereby agrees and covenants
      to:

     

    (a)  Hold
      the
      Property in trust for the Beneficiaries in accordance with the terms of this
      Agreement, including the terms of Section 11-51-302(6) of the Colorado Statute,
      in a segregated trust account (“Trust Account”) established by the Trustee at a
      branch of [____] Bank and utilizing the services of a broker dealer selected
      by
      the Trustee; 

     

    (b)  Manage,
      supervise and administer the Trust Account subject to the terms and conditions
      set forth herein;

     

    (c)  In
      a
      timely manner, upon the instruction of the Company, invest and reinvest the
      Property in any Government Security. As used herein, “Government Security” means
      any Treasury Bill issued by the United States, maturing in not more than one
      hundred and eighty days;

     

    (d)  Collect
      and receive, when due, all principal and income arising from the Property,
      which
      shall become part of the “Property,” as such term is used herein; 

     

    (e)  Notify
      the Company and the Representatives of all communications received by it with
      respect to any Property requiring action by the Company; 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (f)  Supply
      any necessary information or documents as may be requested by the Company in
      connection with the Company’s preparation of the tax returns for the Company;

     

    (g)  Participate
      in any plan or proceeding for protecting or enforcing any right or interest
      arising from the Property if, as and when instructed by the Company to do
      so;

     

    (h)  Render
      to
      the Company and to the Representatives, and to such other person as the Company
      may instruct, monthly written statements of the activities of and amounts in
      the
      Trust Account reflecting all receipts and disbursements of the Trust Account;
      and 

     

    (i)  Commence
      liquidation of the Trust Account only after receipt of and only in accordance
      with the terms of a letter (“Termination Letter”), in a form substantially
      similar to that attached hereto as either Exhibit
      A
      or
Exhibit
      B,
      signed
      on behalf of the Company by its Chief Executive Officer, Chief Financial Officer
      or Secretary, and complete the liquidation of the Trust Account and distribute
      the Property in the Trust Account only as directed in the Termination Letter
      and
      the other documents referred to therein; provided, however, that in the event
      that a Termination Letter has not been received by [18 months from the Effective
      Date] (or the date that is the six month anniversary of such date, in the event
      that a letter of intent, agreement in principle or definitive agreement has
      been
      executed prior to such date in connection with a Business Combination (as
      defined in the Termination Letter attached hereto as Exhibit
      A)
      that
      has not been consummated by [18 months from the Effective Date]), the Trust
      Account shall be liquidated in accordance with the procedures set forth in
      the
      Termination Letter attached as Exhibit
      B
      to the
      stockholders of record on the record date as established by the Company. In
      all
      cases, the Trustee shall provide the Representatives with a copy of any
      Termination Letter and/or any other correspondence that it receives with respect
      to any proposed withdrawal from the Trust Account promptly after it receives
      the
      same. 

     

    (j)  The
      distribution, if any, of the Deferred Discount to the underwriters upon the
      liquidation of the Trust Account as provided herein shall be made from the
      Trust
      Account through the Trustee (and not through the Company) in accordance with
      a
      written instruction of the Representatives.

     

    2.  Limited
      Distributions of Income on Property.

     

    (a)  If
      there
      is any federal, state or local income tax obligation relating to the income
      of
      the Company (including Property of the Trust Account), then, at the written
      instruction of the Company, the Trustee shall disburse to the Company by wire
      transfer, out of the Property in the Trust Account, the amount indicated by
      the
      Company as required to pay income taxes; and

     

    (b)  The
      Trustee shall distribute to the Company on a monthly basis an amount equal
      to
      one-half of the income collected on the Property [prior to the payment of any
      amounts set forth in Section 2(a)] through the last day of the immediately
      preceding month; provided that the total amount of income that may be
      distributed pursuant to this Section 2(b) is $1,000,000 and provided further
      that to the extent that the aggregate sum of the distributions exceeds $700,000,
      the Company shall provide the Trustee with an authorization letter from Wachovia
      prior to the Trustee making any further distribution to the Company. The first
      such distribution shall be for the period ending on [_____], 2006. 

     

    (c)  Except
      as
      provided in Sections 2(a) and 2(b) above, no other distributions from the Trust
      Account shall be permitted except in accordance with Section 1(i) and (j)
      hereof.

     

    3.  Agreements
      and Covenants of the Company. The Company hereby agrees and covenants
      to:

     

    (a)  Give
      all
      instructions to the Trustee hereunder in writing, signed by the Company’s Chief
      Executive Officer, Chief Financial Officer or Secretary. In addition, except
      with respect to its duties under paragraph 1(i) above, the Trustee shall be
      entitled to rely on, and shall be protected in relying on, any verbal or
      telephonic advice or instruction which it in good faith believes to be given
      by
      any one of the persons authorized above to give written instructions, provided
      that the Company shall promptly confirm such instructions in
      writing;

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

     

    (b)  Hold
      the
      Trustee harmless and indemnify the Trustee from and against, any and all
      expenses, including reasonable counsel fees and disbursements, or loss suffered
      by the Trustee in connection with any action, suit or other proceeding brought
      against the Trustee involving any claim, or in connection with any claim or
      demand which in any way arises out of or relates to this Agreement, the services
      of the Trustee hereunder, or the Property or any income earned from investment
      of the Property, except for expenses and losses resulting from the Trustee’s
      gross negligence or willful misconduct. Promptly after the receipt by the
      Trustee of notice of demand or claim or the commencement of any action, suit
      or
      proceeding, pursuant to which the Trustee intends to seek indemnification under
      this paragraph, it shall notify the Company in writing of such claim
      (hereinafter referred to as the “Indemnified Claim”). The Trustee shall have the
      right to conduct and manage the defense against such Indemnified Claim,
      provided, that the Trustee shall obtain the consent of the Company with respect
      to the selection of counsel, which consent shall not be unreasonably withheld.
      The Company may participate in such action with its own counsel;
      and

     

    (c)  Pay
      the
      Trustee an initial acceptance fee of $[1,000] and an annual fee of $[3,000]
      (it
      being expressly understood that the Property shall not be used to pay such
      fee).
      In addition, the Company shall pay the Trustee a transaction processing fee
      of
      $[____] for each disbursement made pursuant to section 2(a) and 2(b). It is
      agreed that said fees shall be deducted from the disbursements made to the
      Company pursuant to section 2(b). The Company shall pay the Trustee the initial
      acceptance fee and first year’s fee at the consummation of the IPO and
      thereafter on the anniversary of the Effective Date. The Trustee shall refund
      to
      the Company the fee (on a pro rata basis) with respect to any period after
      the
      liquidation of the Trust Fund. The Trustee 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. The Company shall not be responsible for any other fees
      or
      charges of the Trustee except as set forth in this Section 3(c) and as may
      be
      provided in paragraph 3(b) hereof (it being expressly understood that the
      Property shall not be used to make any payments to the Trustee under such
      paragraph). 

     

    4.  Limitations
      of Liability. The Trustee shall have no responsibility or liability to:

     

    (a)  Take
      any
      action with respect to the Property, other than as directed in paragraph 1
      hereof and the Trustee shall have no liability to any party except for liability
      arising out of its own gross negligence or willful misconduct; 

     

    (b)  Institute
      any proceeding for the collection of any principal and income arising from,
      or
      institute, appear in or defend any proceeding of any kind with respect to,
      any
      of the Property unless and until it shall have received instructions from the
      Company given as provided herein to do so and the Company shall have advanced
      or
      guaranteed to it funds sufficient to pay any expenses incident thereto;

     

    (c)  Change
      the investment of any Property, other than in compliance with
      paragraph 1(c); 

     

    (d)  Refund
      any depreciation in principal of any Property;

     

    (e)  Assume
      that the authority of any person designated by the Company to give instructions
      hereunder shall not be continuing unless provided otherwise in such designation,
      or unless the Company shall have delivered a written revocation of such
      authority to the Trustee; 

     

    (f)  The
      other
      parties hereto 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 in the exercise
      of its own best judgment, except for its gross negligence or willful misconduct.
      The Trustee 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 Trustee), 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 Trustee, in good faith, to be
      genuine and to be signed or presented by the proper person or persons. The
      Trustee shall not be bound by any notice or demand, or any waiver, modification,
      termination or rescission of this agreement or any of the terms hereof, unless
      evidenced by a written instrument delivered to the Trustee signed by the proper
      party or parties and, if the duties or rights of the Trustee are affected,
      unless it shall give its prior written consent thereto; 

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

     

    (g)  Verify
      the correctness of the information set forth in the Registration Statement
      or to
      confirm or assure that any acquisition made by the Company or any other action
      taken by it is as contemplated by the Registration Statement; and

     

    (h)  Except
      as
      set forth in Section 2(a), pay any taxes on behalf of the Trust
      Account.

     

    (i)  Verify
      calculations, qualify or otherwise approve Company requests for distributions
      pursuant to paragraph 2(a) and 2(b).

     

    5.  Termination.
      This Agreement shall terminate as follows: 

     

    (a)  If
      the
      Trustee gives written notice to the Company that it desires to resign under
      this
      Agreement, the Company shall use its reasonable efforts to locate a successor
      trustee. At such time that the Company notifies the Trustee that a successor
      trustee has been appointed by the Company and has agreed to become subject
      to
      the terms of this Agreement, the Trustee shall transfer the management of the
      Trust Account to the successor trustee, including but not limited to the
      transfer of copies of the reports and statements relating to the Trust Account,
      whereupon this Agreement shall terminate; provided, however, that, in the event
      that the Company does not locate a successor trustee within ninety days of
      receipt of the resignation notice from the Trustee, the Trustee may submit
      an
      application to have the Property deposited with the United States District
      Court
      for the Southern District of New York and upon such deposit, the Trustee shall
      be immune from any liability whatsoever; or

     

    (b)  At
      such
      time that the Trustee has completed the liquidation of the Trust Account in
      accordance with the provisions of paragraph 1(i) hereof, and distributed the
      Property in accordance with the provisions of the Termination Letter, this
      Agreement shall terminate except with respect to Paragraph 3(b).

     

    6.  Miscellaneous.

     

    (a)  The
      Company and the Trustee each acknowledge that the Trustee will follow the
      security procedures set forth below with respect to funds transferred from
      the
      Trust Account. Upon receipt of written instructions, the Trustee will confirm
      such instructions with an Authorized Individual at an Authorized Telephone
      Number listed on the attached Exhibit
      D.
      The
      Company and the Trustee will each restrict access to confidential information
      relating to such security procedures to authorized persons. Each party must
      notify the other party immediately if it has reason to believe unauthorized
      persons may have obtained access to such information, or of any change in its
      authorized personnel. In executing funds transfers, the Trustee will rely upon
      account numbers or other identifying numbers of a beneficiary, beneficiary’s
      bank or intermediary bank, rather than names. The Trustee shall not be liable
      for any loss, liability or expense resulting from any error in an account number
      or other identifying number, provided it has accurately transmitted the numbers
      provided. 

     

    (b)  This
      Agreement shall be governed by and construed and enforced in accordance with
      the
      laws of the State of New York, without giving effect to conflict of laws. It
      may
      be executed in several counterparts, each one of which shall constitute an
      original, and together shall constitute but one instrument. 

     

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

     

    (d)  The
      parties hereto consent to the jurisdiction and venue of any state or federal
      court located in the City of New York for purposes of resolving any disputes
      hereunder. 

     

    (e)  Any
      notice, consent or request to be given in connection with any of the terms
      or
      provisions of this Agreement shall be in writing and shall be sent by express
      mail or similar private courier service, by certified mail (return receipt
      requested), by hand delivery or by facsimile transmission: 

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

     

    if
      to the
      Trustee, to:

    

    Continental
      Stock Transfer & Trust Company

    17
      Battery Place, 8th
      Floor

    New
      York,
      New York

    Attn:
      Steven G. Nelson, Chairman

    Fax
      No.: (212)
      509-5150

    

    if
      to the
      Company, to:

    

    Attention:
      Fred A. Brasch

    Chief
      Financial Officer

    333
      Sandy
      Springs Circle, Suite 223

    Atlanta,
      GA 30328

    Fax
      No.:
      (404) 257-9125

    

    with
      a
      copy to:

    

    Attention:
      David A. Rapaport, Esq.

    Secretary
      & General Counsel

    333
      Sandy
      Springs Circle, Suite 223

    Atlanta,
      GA 30328

    Fax
      No.:
      (404) 257-9125

    

    in
      either
      case with a copy to:

    

    Cozen
      O’Connor

    The
      Army
& Navy Club Building 

    1627
      I
      Street, NW, Suite 1100

    Washington,
      DC 20006

    Attn:
      Ralph V. De Martino 

    Fax:(866)
      741-8182

    

    (f)  This
      Agreement may not be assigned by the Trustee without the prior consent of the
      Company. 

     

    (g)  Each
      of
      the Trustee and the Company hereby represents that it has the full right and
      power and has been duly authorized to enter into this Agreement and to perform
      its respective obligations as contemplated hereunder. The Trustee acknowledges
      and agrees that it shall not make any claims or proceed against the Trust
      Account, including by way of set-off, and shall not be entitled to any funds
      in
      the Trust Account under any circumstance. 

     

    [Signature
      page to follow]

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    

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

     

    
      	 	 	 
	 	CONTINENTAL
              STOCK
              TRANSFER & TRUST COMPANY,
              as Trustee 
	 
 	 
 	 
 
	 	By:  	 
	 	
              

              Name: Steven
                Nelson

              Title: 
                 President

            
	 	 

    

     

    
      	 	 	 
	 	MIDDLE
              KINGDOM ALLIANCE CORPORATION
	 
 	 
 	 
 
	 	By:  	 
	 	
              
                

              

              Name: [_______]

              Title:    [_______] 

            
	 	 

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

     

    EXHIBIT
      A 

     

    [LETTERHEAD
      OF COMPANY]

     

    [INSERT
      DATE]

     

    ____________________________

    ____________________________

    ____________________________

    Attn: __________________________

    Re: Trust
      Account No. [___________] 

    Termination
      Letter 

    

    Gentlemen:
      

    

    Pursuant
      to the Investment Management Trust Agreement between Middle Kingdom Alliance
      Corporation (“Company”) and Continental Stock Transfer & Trust Company
      (“Trustee”), dated as of _____________, 2006 (“Trust Agreement”), this is to
      advise you that the Company has entered into an agreement (“Business Agreement”)
      with __________________ (“Target Business”) to consummate a business combination
      with Target Business (“Business Combination”) on or about [INSERT DATE]. The
      Company shall notify you at least 24 hours in advance of the actual date of
      the
      consummation of the Business Combination (“Consummation Date”). 

     

    In
      accordance with the terms of the Trust Agreement, we hereby authorize you to
      commence liquidation of the Trust Account to the effect that, on the
      Consummation Date, all of the funds held in the Trust Account will be
      immediately available for transfer to the account or accounts that the Company
      shall direct on the Consummation Date. 

     

    On
      the
      Consummation Date (i) counsel for the Company shall deliver to you written
      notification that (a) the Business Combination has been consummated and (b)
      the
      provisions of Section 11-51-302(6) and Rule 51-3.4 of the Colorado Statute
      have
      been met and (ii) the Company shall deliver to you written instructions with
      respect to the transfer of the funds held in the Trust Account (“Instruction
      Letter”). You are hereby directed and authorized to transfer the funds held in
      the Trust Account, including, but not limited to (a) funds to be delivered
      to
      any Stockholder that has properly exercised their conversion rights (as
      described in the Registration Statement), and (b) pursuant to the terms of
      the
      Underwriting Agreement, dated as of _____, 2006, between the Company and the
      Representatives, the portion of the Property attributable to the Deferred
      Discount (as defined in the Trust Agreement), immediately upon your receipt
      of
      the counsel’s letter and the Instruction Letter, in accordance with the terms of
      the Instruction Letter. In the event that certain deposits held in the Trust
      Account may not be liquidated by the Consummation Date without penalty, you
      will
      notify the Company of the same and the Company shall direct you as to whether
      such funds should remain in the Trust Account and be distributed after the
      Consummation Date to the Company. Upon the distribution of all the funds in
      the
      Trust Account pursuant to the terms hereof, the Trust Agreement shall be
      terminated. 

     

    In
      the
      event that the Business Combination is not consummated on the Consummation
      Date
      described in the notice thereof and we have not notified you on or before the
      original Consummation Date of a new Consummation Date, then the funds held
      in
      the Trust Account shall be reinvested as provided in the Trust Agreement on
      the
      business day immediately following the Consummation Date as set forth in the
      notice. 

     

    
      	 	 	 
	 	Very
              truly
              yours,
	 
 	 
 	 
 
	 	Middle Kingdom Alliance
              Corporation
	 	 	 
	 	By:  	 
	 	
              
_______,
              Chief Executive Officer
	 	 

    

    

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

     

    EXHIBIT
      B

     

    [LETTERHEAD
      OF COMPANY] 

     

    [INSERT
      DATE]

     

    _______________________

    _______________________

    _______________________
      

    Attn:
      _____________________

    Re:
      Trust
      Account No. [_________] Termination Letter 

    

    Gentlemen:
      

    

    Pursuant
      to paragraph 1(i) of the Investment Management Trust Agreement between Middle
      Kingdom Alliance Corporation (“Company”) and Continental Stock Transfer &
Trust Company (“Trustee”), dated as of _____, 2006 (“Trust Agreement”), this is
      to advise you that the Board of Directors of the Company and the stockholders
      of
      the Company have voted to dissolve and liquidate the Company. Attached hereto
      is
      a copy of the minutes of the meeting of the Board of Directors and the
      stockholders of the Company relating thereto, certified by the Secretary of
      the
      Company as true and correct and in full force and effect. 

     

    In
      accordance with the terms of the Trust Agreement, we hereby (a) certify to
      you
      that the provisions of Section 11-51-302(6) and Rule 51-3.4 of the Colorado
      Statute have been met and (b) authorize you, to commence liquidation of the
      Trust Account. You will notify the Company and [_____] Bank (“Designated Paying
      Agent”) in writing as to when all of the funds in the Trust Account will be
      available for immediate transfer (“Transfer Date”). The Designated Paying Agent
      shall thereafter notify you as to the account or accounts of the Designated
      Paying Agent that the funds in the Trust Account should be transferred to on
      the
      Transfer Date so that the Designated Paying Agent may commence distribution
      of
      such funds in accordance with the Company’s instructions. You shall have no
      obligation to oversee the Designated Paying Agent’s distribution of the funds.
      Upon the payment to the Designated Paying Agent of all the funds in the Trust
      Account, the Trust Agreement shall be terminated. 

     

    
      	 	 	 
	 	
              Very
                truly yours,

            
	 	 
	 	Middle Kingdom Alliance
              Corporation
	 
 	 
 	 
 
	 	By:  	 
	 	
              
______,
              Chief Executive Officer
	 	 

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT
      C

    

    [LETTERHEAD
      OF COMPANY]

    

    [Insert
      Date]

    

    Continental
      Stock Transfer & Trust Company

    17
      Battery Place

    New
      York,
      New York 10004

    Attn:
      [              
  ] 

    

    Re:
      Trust
      Account No.
      [                    ]
— Distribution of Income on Property 

    

    Gentlemen:
      

    

    Pursuant
      to paragraph 2(b) of the Investment Management Trust Agreement between Middle
      Kingdom Alliance Corporation (“Company”) and Continental Stock Transfer &
Trust Company (“Trustee”), dated as of ______, 2006 (“Trust Agreement”), we are
      requesting for our working capital purposes that you deliver to us fifty percent
      (50%) of the income earned on the Property from ___________ to ___________
      prior
      to any deductions made pursuant to Section 2(a) of the Trust Agreement. In
      accordance with the terms of the Trust Agreement, you are hereby directed and
      authorized to transfer said amount immediately upon your receipt of this letter
      to the Company’s operating account at:

    

    
      	
              Bank:

            	
              [_______________]

            
	
              ABA
                #:

            	
              [_______________]

            
	
              Account
                Name: 

            	
                          .

            
	
              Account
                Number: 

            	
              [_______________]

            
	
              Reference:
                

            	
              Distribution
                of Income Earned on Trust Property

            

    

    

    Very
      truly yours,

     

    By:_______________________________________       

     

    By:
      _______________________________________       

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT
      D

     

    AUTHORIZED
      INDIVIDUAL(S)

     

    AUTHORIZED
      FOR TELEPHONE CALL BACK

     

     

    
      	COMPANY: 	 	
              Middle
                Kingdom Alliance Corporation 

              Attention:
                Bernard. J Tanenbaum III

              Chief
                Executive Officer

              333
                Sandy Springs Circle, Suite 223

              Atlanta,
                GA 30328

              Tel
                No.: (404) 257-9150

            
	 	 	 
	 	 	or
	 	 	 
	 	 	
              Attention:
                Fred A. Brasch

              Chief
                Financial Officer

              333
                Sandy Springs Circle, Suite 223

              Atlanta,
                GA 30328

              Tel
                No.: (404) 257-9150)

            
	 	 	 
	TRUSTEE:	 	
              Continental
                Stock Transfer & Trust Company

              17
                Battery Place, 8th
                Floor

              New
                York, New York 10004

              Attn:
                Steven G. Nelson, Chairman

              Telephone:
                (212) 845-3200

              Fax:
                (212) 509-5150Exhibit
      10.3

     

    SECURITIES
      ESCROW AGREEMENT

     

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

     

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

     

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

     

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

     

    IT
      IS
      AGREED: 

     

    1.   Appointment
      of Escrow Agent. The Company and the Initial Shareholders hereby appoint the
      Escrow Agent to act in accordance with and subject to the terms of this
      Agreement and the Escrow Agent hereby accepts such appointment and agrees to
      act
      in accordance with and subject to such terms. 

     

    2.  Deposit
      of Escrow Securities. On or before the Effective Date, each of the Initial
      Shareholders shall deliver to the Escrow Agent certificates representing his
      respective Escrow Securities, to be held and disbursed subject to the terms
      and
      conditions of this Agreement; provided however, that the Representatives may
      release any Initial Shareholder from this escrow obligation if the
      Representatives determine, in their sole discretion, that the circumstances
      reasonably warrant such release. Each Initial Shareholder acknowledges that
      the
      certificate representing his Escrow Securities is legended to reflect the
      deposit of such Escrow Securities under this Agreement. 

     

    3.  Disbursement
      of the Escrow Securities. The Escrow Agent shall: (i) hold the Initial Common
      Stock until the third anniversary of the Effective Date, and (ii) hold the
      Class
      A Units (including the Common Stock and Class A Warrants underlying the Class
      A
      Units) until the earlier of (a) the completion of a Business Combination (as
      defined in the Prospectus) or (b) liquidation of the Trust Account (as defined
      in the Investment Management Trust Agreement between the Escrow Agent and the
      Company) (“Escrow Period”), on which date it shall, upon written instructions
      from each Initial Shareholder, disburse each of the Initial Shareholder’s Escrow
      Securities to such Initial Shareholder; provided, however, that if, after the
      Company consummates a Business Combination, it (or the surviving entity)
      subsequently consummates a liquidation, stock exchange or other similar
      transaction which results in all of the stockholders of such entity having
      the
      right to exchange their securities for cash, securities or other property,
      then
      the Escrow Agent will, upon receipt of a certificate, executed by the Chief
      Executive Officer or Chairman of the Board of the Company, in form reasonably
      acceptable to the Escrow Agent, that such transaction is then being consummated,
      release the Escrow Securities to the Initial Shareholders upon consummation
      of
      the transaction so that they can similarly participate; provided further that
      the time period set forth above may be waived by either of the Representatives.
      The Escrow Agent shall have no further duties hereunder after the disbursement
      or destruction of the Escrow Securities in accordance with this Section 3.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    4.  Rights
      of
      Initial Shareholders in Escrow Securities.  

     

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

     

    4.2  Dividends
      and Other Distributions in Respect of the Escrow Securities. During the
      Escrow Period, all dividends payable in cash with respect to the Escrow
      Securities shall be paid to the Initial Shareholders, but all dividends payable
      in securities or other non-cash property (“Non-Cash Dividends”) shall be
      delivered to the Escrow Agent to hold in accordance with the terms hereof.
      As
      used herein, the term “Escrow Securities” shall be deemed to include the
      Non-Cash Dividends distributed thereon, if any. 

     

    4.3  Restrictions
      on Transfer. During the Escrow Period, no sale, transfer or other
      disposition may be made of any or all of the Escrow Securities except
      (i) by gift to a member of Initial Shareholder’s immediate family or to a
      trust, the beneficiary of which is an Initial Shareholder or a member of an
      Initial Shareholder’s immediate family, (ii) by virtue of the laws of
      descent and distribution upon death of any Initial Shareholder,
      (iii) pursuant to a qualified domestic relations order, or
      (iv) pursuant to a transfer of record ownership whereby there is no change
      in beneficial ownership; provided, however, that such permissive transfers
      may
      be implemented only upon the respective transferee’s written agreement to be
      bound by the terms and conditions of this Agreement and of the Insider Letter
      signed by the Initial Shareholder transferring the Escrow Securities. During
      the
      Escrow Period, the Initial Shareholders shall not pledge or grant a security
      interest in the Escrow Securities or grant a security interest in their rights
      under this Agreement. 

     

    4.4   Insider
      Letters. Each of the Initial Shareholders has executed a letter agreement
      with the Representative and the Company, which is filed as an exhibit to the
      Registration Statement (“Insider Letter”), respecting the rights and obligations
      of such Initial Shareholder in certain events, including but not limited to
      the
      liquidation of the Company. 

     

    5.  Concerning
      the Escrow Agent. 

     

    5.1   Good
      Faith Reliance.
      The
      Escrow Agent shall not be liable for any action taken or omitted by it in good
      faith and in the exercise of its own best judgment, and may rely conclusively
      and shall be protected in acting upon any order, notice, demand, certificate,
      opinion or advice of counsel (including counsel chosen by the Escrow Agent),
      statement, instrument, report or other paper or document (not only as to its
      due
      execution and the validity and effectiveness of its provisions, but also as
      to
      the truth and acceptability of any information therein contained) which is
      believed by the Escrow Agent to be genuine and to be signed or presented by
      the
      proper person or persons. The Escrow Agent shall not be bound by any notice
      or
      demand, or any waiver, modification, termination or rescission of this Agreement
      unless evidenced by a writing delivered to the Escrow Agent signed by the proper
      party or parties and, if the duties or rights of the Escrow Agent are affected,
      unless it shall have given its prior written consent thereto. 

     

    5.2   Indemnification.
      The Escrow Agent shall be indemnified and held harmless by the Company from
      and
      against any expenses, including counsel fees and disbursements, or loss suffered
      by the Escrow Agent in connection with any action, suit or other proceeding
      involving any claim which in any way, directly or indirectly, arises out of
      or
      relates to this Agreement, the services of the Escrow Agent hereunder, or the
      Escrow Securities held by it hereunder, other than expenses or losses arising
      from the gross negligence or willful misconduct of the Escrow Agent. Promptly
      after the receipt by the Escrow Agent of notice of any demand or claim or the
      commencement of any action, suit or proceeding, the Escrow Agent shall notify
      the other parties hereto in writing. In the event of the receipt of such notice,
      the Escrow Agent, in its sole discretion, may commence an action in the nature
      of interpleader in an appropriate court to determine ownership or disposition
      of
      the Escrow Securities or it may deposit the Escrow Securities with the clerk
      of
      any appropriate court or it may retain the Escrow Securities pending receipt
      of
      a final, non-appealable order of a court having jurisdiction over all of the
      parties hereto directing to whom and under what circumstances the Escrow
      Securities are to be disbursed and delivered. The provisions of this
      Section 5.2 shall survive in the event the Escrow Agent resigns or is
      discharged pursuant to Sections 5.5 or 5.6 below. 

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    5.3   Compensation.
      The Escrow Agent shall be entitled to reasonable compensation from the Company
      for all services rendered by it hereunder. The Escrow Agent shall also be
      entitled to reimbursement from the Company for all expenses paid or incurred
      by
      it in the administration of its duties hereunder including, but not limited
      to,
      all counsel, advisors’ and agents’ fees and disbursements and all taxes or other
      governmental charges. 

     

    5.4  Further
      Assurances. From time to time on and after the date hereof, the Company and
      the Initial Shareholders shall deliver or cause to be delivered to the Escrow
      Agent such further documents and instruments and shall do or cause to be done
      such further acts as the Escrow Agent shall reasonably request to carry out
      more
      effectively the provisions and purposes of this Agreement, to evidence
      compliance herewith or to assure itself that it is protected in acting
      hereunder. 

     

    5.5  Resignation.
      The Escrow Agent may resign at any time and be discharged from its duties as
      escrow agent hereunder by its giving the other parties hereto written notice
      and
      such resignation shall become effective as hereinafter provided. Such
      resignation shall become effective at such time that the Escrow Agent shall
      turn
      over to a successor escrow agent appointed by the Company, the Escrow Securities
      held hereunder. If no new escrow agent is so appointed within the 60 day period
      following the giving of such notice of resignation, the Escrow Agent may deposit
      the Escrow Securities with any court it reasonably deems appropriate.

     

    5.6  Discharge
      of Escrow Agent. The Escrow Agent shall resign and be discharged from its
      duties as escrow agent hereunder if so requested in writing at any time by
      the
      other parties hereto, jointly, provided, however, that such resignation shall
      become effective only upon acceptance of appointment by a successor escrow
      agent
      as provided in Section 5.5. 

     

    5.7   Liability.
      Notwithstanding anything herein to the contrary, the Escrow Agent shall not
      be
      relieved from liability hereunder for its own gross negligence or its own
      willful misconduct. 

     

    6.   Miscellaneous.
      

     

    6.1  Governing
      Law.
      This
      Agreement shall for all purposes be deemed to be made under and shall be
      construed in accordance with the laws of the State of New York. 

     

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

     

    6.3  Entire
      Agreement. This Agreement contains the entire agreement of the parties
      hereto with respect to the subject matter hereof and, except as expressly
      provided herein, may not be changed or modified except by an instrument in
      writing signed by the party to the charged. 

     

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

     

    6.5  Binding
      Effect. This Agreement shall be binding upon and inure to the benefit of the
      respective parties hereto and their legal representatives, successors and
      assigns. 

     

    6.6  Notices.
      Any notice or other communication required or which may be given hereunder
      shall
      be in writing and either be delivered personally or be mailed, certified or
      registered mail, or by private national courier service, return receipt
      requested, postage prepaid, and shall be deemed given when so delivered
      personally or, if mailed, two days after the date of mailing, as follows:

     

    If
      to the
      Company, to: 

     

    Middle
      Kingdom Alliance Corporation 

    333
      Sandy
      Springs Circle

    Suite
      223

    Atlanta,
      GA 30328

    Attn:
      David A. Rapaport, Esq.

    Tel:
      (404) 257-9150

    Fax:
      (404) 257-9125 

    

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    with
      a
      copy to: 

    

    Cozen
      O’Connor

    The
      Army
& Navy Club Building 

    1627
      I
      Street, NW, Suite 1100

    Washington,
      DC 20006

    Attn:
      Ralph V. De Martino 

    Tel:
      (202) 912-4800

    Fax:(866)
      741-8182

    

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

     

    and
      if to
      the Escrow Agent, to: 

     

    Continental
      Stock Transfer & Trust Company 

    17
      Battery Place, 8th
      Floor

    New
      York,
      New York 10004 

    Attn:
      Steven G. Nelson, Chairman 

     

    The
      parties may change the persons and addresses to which the notices or other
      communications are to be sent by giving written notice to any such change in
      the
      manner provided herein for giving notice. 

     

    6.7  Liquidation
      of Company.
      The
      Company shall give the Escrow Agent written notification of the liquidation
      and
      dissolution of the Company in the event that the Company fails to consummate
      a
      Business Combination within the time period(s) specified in the
      Prospectus.

     

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

     

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

    
 

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

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

     

    
      	 	 	 
	 	
              MIDDLE
                KINGDOM ALLIANCE CORP.

            
	 
 	 
 	 
 
	
              By: 

            	 	 
	 	
              

              Bernard
                J. Tanenbaum III, CEO

            
	 	 

    

    
      	 	 	 
	 	
              INITIAL
                SHAREHOLDERS

            
	 
 	 
 	 
 
	 	 	 
	 	
              

              High
                Capital Funding LLC

            
	 	By: 

    

    
      	 	 	 
	 	
            
	 
 	 
 	
              
David
              A. Rapaport
 
	 	  	 
	 	
              
Fred
              A. Brasch
	 	 
	 	 
	 	
              

              Bernard
                Jerome Tanenbaum III Family Trust

              By:
                Bernard J. Tanenbaum III

            
	 	 
	 	 
	 	
              

              Gedeon
                International Limited

              By:
                Michael Marks

            
	 	 
	 	 
	 	
              

              Supreme
                Ocean Development Limited

              By:
                Allan Shu Cheuk Lam

            
	 	 
	 	 
	 	
              

              MTP
                Holdings Ltd.

              By:
                

            
	 	 
	 	 
	 	
              
Allan
              Shu Cheuk Lam
	 	 
	 	 
	 	
              

              Anthony
                Ng

            

      	 	 	 
	 	
              CONTINENTAL
                STOCK TRANSFER 

              &
TRUST
                COMPANY

            
	 
 	 
 	 
 
	
              By: 

            	 	 
	 	
              

            
	 	
              Steven
                Nelson,
                President

            

    

     

    
 

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      A

    

      
        
          	
                  Name
                    and Address of Initial
                    Shareholders        

                	 	
                  Initial
                    Common 

                  Stock

                   (Stock Certificate 

                  Number)

                	
                   

                	
                  Class
                    A Units

                	
                   

                	
                  Common
                    Stock 

                  underlying
                    Units 

                  (Stock Certificate 

                  Number)

                	
                   

                	
                  Class
                    A Warrants (Warrant Numbers)

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

                      

                    

                  

                	 	 	 	 	 	 	 	 
	
                	 	
                   

                	 	
                   

                	 	
                   

                	 	
                   

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

                      

                    

                  

                	 	 	 	 	 	 	 	 
	
                   

                	 	
                   

                	 	
                   

                	 	
                   

                	 	
                   

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

                      

                    

                  

                	 	 	 	 	 	 	 	 
	
                	 	
                   

                	 	
                   

                	 	
                   

                	 	
                   

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

                      

                    

                  

                	 	 	 	 	 	 	 	 
	
                	 	
                   

                	 	
                   

                	 	
                   

                	 	
                   

                
	
                  
                    
                      
                        Gedeon
                          International Limited

                        c/o
                          Stonehage SA

                        Puits
                          Godet 12

                        P.O.
                          Box 126

                        2005
                          Neuchatel

                        Switzerland

                        Attention:
                          Michael
                          Marks

                      

                    

                  

                	 	 	 	 	 	 	 	 
	
                   

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

                          2nd
                            Floor, Abbott Building

                          P.O.
                            Box 933

                          Road
                            Town

                          Tortola

                          British
                            Virgin Islands

                          Attention:
                            Allan Shu Cheuk
                            Lam

                        

                      

                    

                  

                	 	 	 	 	 	 	 	 
	
                	 	
                   

                	 	
                   

                	 	
                   

                	 	
                   

                
	
                  MTP
                    Holdings Ltd. 
                    Room
                      804, Hong Kong Plaza 

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

                    

                  

                	 	 	 	 	 	 	 	 
	
                	 	
                   

                	 	
                   

                	 	
                   

                	 	
                   

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

                        

                      

                    

                  

                	 	 	 	 	 	 	 	 
	
                	 	
                   

                	 	
                   

                	 	
                   

                	 	
                   

                
	
                  Anthony
                    Ng 
                    
                      
                        Cathay
                          Forest Products Corp.

                        5650
                          Yonge St., Ste 1500

                        Toronto,
                          Ontario

                        Canada
                          M2M 4G3

                      

                    

                  

                	 	 	 	 	 	 	 	 

        

      

    

     

    
      
        
        

      

      
        6

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