Exhibit 10.2
CLOSING ESCROW AGREEMENT
This Closing
Escrow Agreement, dated as of September 30, 2009 (this “
Agreement ”), is entered into by and between
Securities Transfer Corporation (the “ Escrow Agent
”), China Nutrifruit Group Limited (the “
Company ”) and each investor identified on the
signature pages hereto (the “ Investors
”).
WITNESSETH:
WHEREAS, the
Company and the Investors entered into a securities purchase
agreement (the “ Purchase Agreement ”) dated as
of September 30, 2009 pursuant to which the Investors will purchase
Units of the Company, each consisting of shares of Series A
Convertible Preferred Stock (the “ Series A Convertible
Preferred Stock ”), convertible into shares of the
Company’s common stock, par value $0.001 per share (the
“ Common Stock ”) at a conversion price of $3.30
per share and Warrants to purchase Common Stock (collectively, the
“ Securities ”), for an aggregate purchase price
of up to $15,000,000, subject to increase as contemplated in the
Purchase Agreement (the “ Investment Amount ”);
and
WHEREAS, the
Company and the Investors desire to deposit all proceeds received
from subscriptions for the Units pursuant to the Purchase Agreement
(the “ Escrowed Funds ”) with the Escrow Agent,
to be held in escrow until joint written instructions are received
by the Escrow Agent from the Company and WLT Brothers Capital, Inc.
(the “ Investor Agent ”), from time to time, at
which time the Escrow Agent will disburse the Escrowed Funds less
the Dividend Holdback referred to below in accordance with such
instructions (a “ Closing ”); and
WHEREAS, the
Company and the Investors desire that the Escrow Agent hold an
amount equal to 7% of the aggregate Investment Amount (the “
Dividend Holdback ”) in escrow, for the payment of the
dividend at the annual rate of 7% on the Series A Convertible
Preferred Stock for the first Dividend Payment Date following the
Closing pursuant to the terms of the Certificate of Designations of
the Series A Convertible Preferred Stock; and
WHEREAS, Escrow
Agent is willing to hold the Escrowed Funds in escrow in subject to
the terms and conditions of this Agreement.
NOW, THEREFORE, in
consideration of the mutual promises herein contained and intending
to be legally bound, the parties hereby agree as
follows:
1.
Appointment of Escrow
Agent . Each Investor and
the Company hereby appoints Securities Transfer Corporation as
Escrow Agent to act in accordance with the Purchase Agreement and
the terms and conditions set forth in this Agreement, and Escrow
Agent hereby accepts such appointment and agrees to act in
accordance with such terms and conditions.
2.
Establishment of
Escrow . The aggregate
Investment Amount provided by the Investors in connection with
their acquisitions of the Securities as set forth in the Purchase
Agreement shall be deposited in an account maintained by the Escrow
Agent with Vision Bank Texas in immediately available funds by
federal wire transfer, such funds being referred to herein as the
“ Escrow Funds ”. The wire transfer details
relating to such account are:
Vision Bank
Texas, 401 W. George Bush Frwy, #101
Correspondent Bank: TIB Bank
ABA # 111010170
Beneficiary Bank: Vision Bank-Texas
Acct # 1020288
Final Credit: Securities Transfer Corporation Account D
Acct # 210483
3.
Escrow Agent to Hold and Disburse
Escrowed Funds . The
Escrow Funds shall be segregated from the assets of Escrow Agent
and held in trust for the benefit of the Company and the Investors
(who shall be deemed to have an interest in such Escrow Funds in
proportion to the percentages indicated in Exhibit A ) in
accordance herewith. The Escrow Agent will hold and disburse the
Escrowed Funds received by it pursuant to the terms of this Escrow
Agreement, as follows:
(a) Upon receipt of joint instructions from the
Company and the Investor Agent, in substantially the form of
Exhibit B hereto, the Escrow Agent shall release the
Escrowed Funds, less the Dividend Holdback, to, or as directed in
such instructions, upon the instruction of the Company;
and
(b) The Escrow Agent
shall release the Dividend Holdback as follows: on September 1,
2010 (the “ Dividend Payment Date ”), the Escrow
Agent shall wire each Investors its pro rata portion of the
Dividend Holdback (equal to percentage indicated set forth on
Exhibit A multiplied by such Dividend Holdback) using the
wiring instructions contained in Exhibit A . In the event
the Company and an Investor deliver joint instructions to the
Escrow Agent to the effect that such Investor has converted shares
of Series A Convertible Preferred Stock prior to the Dividend
Payment Date, then the Escrow Agent shall release the Dividend
Holdback to such Investor as follows: (1) the Escrow Agent shall
wire such Investor its pro rata portion of the Dividend Holdback
(equal to the quotient of (i) total number of shares of the Series
A Convertible Preferred Stock purchased under the Purchase
Agreement and then held by such Investor as indicated in such joint
instructions, divided by (ii) total numbers of shares of the Series
A Convertible Preferred Stock issued pursuant to the Purchase
Agreement, multiplied by such Dividend Ho