LOCK-UP AGREEMENT
THIS
LOCK-UP AGREEMENT (the "Agreement")
is
made and entered into on May 31, 2007 between the stockholder set forth on
the
signature page to this Agreement (each, a "Holder")
and
China Water and Drinks Inc., a Nevada corporation (the "Company").
RECITALS
A. The
Company has determined that it is advisable and in its best interest to enter
into that certain Securities Purchase Agreement, dated May 31, 2007 (the
"Purchase
Agreement")
with
the Investors named therein (the "Investors")
and
certain other parties named therein, pursuant to which the Company will issue
and sell in a private offering securities of the Company (the "Offering").
Capitalized terms used and not otherwise defined herein that are defined in
the
Purchase Agreement will have the meanings given such terms in the Purchase
Agreement.
B. In
connection with the Offering, the Company has agreed to provide the Investors
certain registration rights, and in furtherance thereof has agreed to file
a
registration statement to enable the Investors to resell certain of the
securities subject of the Offering.
C. It
is a
condition to the Investors' respective obligations to close under the Purchase
Agreement and provide the financing contemplating by the Offering that the
Holder execute and deliver to the Company this Agreement.
D. In
contemplation of, and as a material inducement for the Investors to enter into,
the Purchase Agreement, the Holder and the Company have each agreed to execute
and deliver this Agreement.
NOW,
THEREFORE, for and in consideration of the mutual covenants and agreements
set
forth herein, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties, intending to be
legally bound, agree as follows:
1. Effectiveness
of Agreement.
This
Agreement shall become null and void if the Purchase Agreement is terminated
prior to closing.
The
Holder has independently evaluated the merits of its decision to enter into
and
deliver this Agreement, and such Holder confirms that it has not relied on
the
advice of the Company or any other person.
2.
Representations
and Warranties.
Each of
the parties hereto, by their respective execution and delivery of this
Agreement, hereby represents and warrants to the others and to all third party
beneficiaries of this Agreement that (a) such party has the full right, capacity
and authority to enter into, deliver and perform its respective obligations
under this Agreement, (b) this Agreement has been duly executed and delivered
by
such party and is the binding and enforceable obligation of such party,
enforceable against such party in accordance with the terms of this Agreement
except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation or similar laws relating
to,
or affecting generally the enforcement of, creditors’ rights and remedies or by
other equitable principles of general application and (c) the execution,
delivery and performance of such party’s obligations under this Agreement will
not conflict with or breach the terms of any other agreement, contract,
commitment or understanding to which such party is a party or to which the
assets or securities of such party are bound.
3. Beneficial
Ownership.
Holder
hereby represents and warrants that it does not beneficially own (as determined
in accordance with Section 13(d) of the Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder) any shares of Common Stock,
or
any economic interest therein or derivative therefrom, other than those shares
of Common Stock specified on its signature page to this Agreement. For purposes
of the Agreement the shares of Common Stock beneficially owned by such Holder
as
specified on its signature page to this Agreement are collectively referred
to
as the “Holder’s
Shares.”
4. Lockup.
From
and after the date of this Agreement and through and including the one year
anniversary of the Effective Date (plus one additional day for each Trading
Day
following the Effective Date of any Registration Statement during which either
(1) the Registration Statement is not effective or (2) the prospectus
forming a portion of the Registration Statement is not available for the resale
of all Registrable Securities (as defined in the Registration Rights Agreement)
required to be covered thereby) (the "Lockup
Period"),
the
Holder irrevocably agrees it will not offer, pledge, sell, contract to sell,
sell any option or contract to purchase, purchase any option or contract to
sell, grant any option, right or warrant to purchase or otherwise transfer
or
dispose of, directly or indirectly, or announce the offering of, any of its
Holder’s Shares (including any securities convertible into, or exchangeable for,
or representing the rights to receive, Holder’s Shares). In furtherance thereof,
the Company will (x) place a stop order on all Holder’s Shares covered by any
registration statements, (y) notify its transfer agent in writing of the stop
order and the restrictions on such Holder’s Shares under this Agreement and
direct the transfer agent not to process any attempts by the Holder to resell
or
transfer any Holder’s Shares under such registration statements or otherwise in
violation of this Agreement.
5. Third-Party
Beneficiaries.
The
Holder and the Company acknowledge and agree that this Agreement is entered
into
for the benefit of and is enforceable by the Investors and their successors
and
assigns.
6. No
Additional Fees/Payment.
Other
than the consideration specifically referenced herein, the parties hereto agree
that no fee, payment or additional consideration in any form has been or will
be
paid to the Holder in connection with this Agreement.
7. Enumeration
and Headings.
The
enumeration and headings contained in this Agreement are for convenience of
reference only and shall not control or affect the meaning or construction
of
any of the provisions of this Agreement.
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8. Counterparts.
This
Agreement may be executed in facsimile and in any number of counterparts, each
of which when so executed and delivered shall be deemed an original, but all
of
which shall together constitute one and the same agreement.
9. Successors
and Assigns.
This
Agreement and the terms, covenants, provisions and conditions hereof shall
be
binding upon, and shall inure to the benefit of, the respective heirs,
successors and assigns of the parties hereto.
10. Severability.
If any
provision of this Agreement is held to be invalid or unenforceable for any
reason, such provision will be conformed to prevailing law rather than voided,
if possible, in order to achieve the intent of the parties and, in any event,
the remaining provisions of this Agreement shall remain in full force and effect
and shall be binding upon the parties hereto.
11. Amendment.
This
Agreement may not be amended or modified in any manner except by a written
agreement executed by each of the parties hereto if and only if such
modification or amendment is consented to in writing by the Investors holding
a
majority in interest of the Common Stock issued or issuable under the Purchase
Agreement.
12. Further
Assurances.
Each
party shall do and 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 and the consummation of the transactions contemplated
hereby.
13. No
Strict Construction.
The
language used in this Agreement will be deemed to be the language chosen by
the
parties to express their mutual intent, and no rules of strict construction
will
be applied against any party.
14. Remedies.
The
Company and the Investors shall have the right to specifically enforce all
of
the obligations of the Holder under this Agreement (without posting a bond
or
other security), in addition to recovering damages by reason of any breach
of
any provision of this Agreement and to exercise all other rights granted by
law.
Furthermore, the Holder recognizes that if it fails to perform, observe, or
discharge any of its obligations under this Agreement, any remedy at law may
prove to be inadequate relief to the Company or the Investors. Therefore, the
Holder agrees that each of the Company and the Investors shall be entitled
to
seek temporary and permanent injunctive relief in any such case without the
necessity of proving actual damages and without posting a bond or other
security.
15. Governing
Law.
The
terms and provisions of this Agreement shall be construed in accordance with
the
laws of the State of New York and the federal laws of the United States of
America applicable therein.
[Remainder
of Page Intentionally Left Blank]
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IN
WITNESS WHEREOF, each of the parties hereto has caused this Agreement as of
the
day and year first above written.
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Name:
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Number
of shares
of Common Stock
beneficially owned:
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CHINA
WATER AND DRINKS INC.
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| By: | ||
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Name:
Title:
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