LOCK-UP AGREEMENT
THIS LOCK-UP AGREEMENT
(“Agreement”) is made
and entered into as of March 7, 2008, by and among China Yida Holding, Co., a
Delaware corporation (the “Company”), and the
individuals listed on Schedule
A attached hereto and made a part hereof (the “Stockholders”). (The
Company and the Stockholders may sometimes be referred to herein singularly as a
“party,” or collectively as, the “parties.”). Capitalized terms used herein have
the respective meanings ascribed thereto in the Securities Purchase Agreement
(as defined below) unless otherwise defined herein.
WHEREAS, the Stockholders are
the holders of an aggregate of 44,895,822 shares (the “Shares”) of the
Company’s common stock, $0.001 par value per share (“Common Stock”), as
further set forth on Schedule
A attached hereto and made a part hereof; and
WHEREAS, the Company has
offered for sale (the “Offering”) certain
shares of Common Stock and attached warrants to purchase shares of Common Stock
in accordance with that certain Securities Purchase Agreement, dated as of even
date herewith (the “Securities Purchase
Agreement”), by and among the Company and the investors signatory thereto
(the “Investors”);
and
WHEREAS, it is a condition to
the Offering that the Stockholders agree to “lock-up” the Shares, pursuant to
the terms and conditions of this Agreement; and
WHEREAS, as an inducement to
the Investors to enter into the Securities Purchase Agreement, the Xxxx Xxxxxx
(the “CYHC
Shareholder”) has agreed to place an aggregate of 13,333,333 of the
Shares (the “Escrow
Shares”) into escrow for the benefit of the Investors in the event that
the Company fails to satisfy the “FY07 Performance Threshold” and/or “FY08
Performance Threshold,” pursuant to the terms and conditions of a Make Good
Agreement, dated as of even date herewith (the “Make Good
Agreement”), by and among Xxxx Investments II LLC, a Delaware limited
liability company (as the authorized agent of the Investors), the Company and
the CYHC Shareholder.
NOW, THEREFORE, in
consideration of the mutual covenants and agreements contained herein, and other
good and valuable consideration the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:
1. Agreement to Retain the
Shares.
(a) The
Stockholders hereby agree not to sell, assign, transfer, pledge, hypothecate, or
otherwise dispose of any of the Shares until twelve (12) months from the
effective date of the initial Registration Statement (the “Lock-Up
Period”).
(b) The
foregoing restrictions are expressly agreed to and preclude the Stockholders
from engaging in any hedging or other transactions which may lead to or result
in a sale of any of the Shares during the Lock-Up Period, even if such Shares
would be sold by someone other than a Stockholder.
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Such
prohibited hedging or other transactions would include without limitation any
short sale (whether or not against the box), any pledge or any purchase, sale or
grant of any right (including without limitation any put or call option) with
respect to any of the Shares, without the prior written consent of the
Investors.
(c) The
Stockholders agree and consent to the entry of stop transfer instructions with
the Company’s transfer agent for the Company’s Common Stock against transfers of
the Shares, if any, by a Stockholder in contravention of the restrictions set
forth herein. The Stockholders understand that the Company will rely
upon the representations set forth in this Agreement in proceeding in connection
with the Offering. The Stockholders understand that their agreement is
irrevocable and shall be binding upon their heirs, legal representatives,
successors and assigns.
(d) Notwithstanding
the foregoing, any Stockholder (for the purposes of this Section 1(d), the
“Transferring
Holder”) may, as applicable, transfer any or all of the Transferring
Holder’s Shares, either during the Transferring Holder’s lifetime, or on the
Transferring Holder’s death, by will or intestacy to the Transferring Holder’s
“immediate family,” as defined in Rule 16a-1 of the General Rules and
Regulations of the Securities Exchange Act of 1934, as amended, or to a trust or
other entity, the beneficiaries of which are exclusively such Transferring
Holder and/or a member or members of the Transferring Holder’s “immediate
family”; provided, however, that in any
such case it shall be a condition to the transfer that the transferee execute an
agreement stating that the transferee is receiving and holding such Shares
subject to the provisions of this Agreement, and there shall be no further
transfer of such Shares except in accordance with this Agreement.
(e) If
any of the Escrow Shares are released to the Investors (“Released Shares”),
pursuant to the terms and conditions of the Make Good Agreement, the Lock-Up
Period shall be deemed to have automatically and permanently terminated with
respect to such Released Shares.
(f) This
Agreement shall terminate at the earlier of (i) the expiration of the Lock-Up
Period; or (ii) the termination of the Securities Purchase
Agreement.
2. Representations,
Warranties and Covenants of the Company. The Company represents,
warrants and covenants to the Stockholders that this Agreement (a) has been
authorized by all necessary corporate action on the part of the Company and has
been duly executed by a duly authorized officer of the Company, and (b)
constitutes the legal, valid and binding obligation of the
Company. Neither the execution of this Agreement by the Company nor
the consummation of the transactions contemplated hereby will result in a breach
or violation of the terms of any agreement by which the Company is bound, or of
any decree, judgment, order, law or regulation now in effect of any court or
other governmental body applicable to the Company.
3. Additional
Documents. The Stockholders
and the Company hereby covenant and agree to execute and deliver any additional
documents necessary or desirable, in the reasonable opinion of the Company’s
legal counsel to carry out the intent of this Agreement.
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4. Consent
and Waiver. The Stockholders
hereby give any consents or waivers that are reasonably required for the
consummation of the Offering under the terms of any agreement to which a
Stockholder is a party, or pursuant to any rights a Stockholder may
have.
5. Miscellaneous.
(a) Severability. If
any term, provision, covenant or restriction of this Agreement is held by a
court of competent jurisdiction to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions of this Agreement
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated.
(b) Binding Effect and
Assignment. This Agreement and all of the provisions hereof
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns, but, except as otherwise
specifically provided herein, neither this Agreement nor any of the rights,
interests or obligations of the parties hereto may be assigned by any of the
parties without the prior written consent of the other.
(c) Amendments and
Modifications. This Agreement may not be modified, amended,
altered or supplemented except upon the execution and delivery of a written
agreement executed by the parties hereto.
(d) Specific Performance;
Injunctive Relief. The parties hereto acknowledge that the
Company will be irreparably harmed and that there will be no adequate remedy at
law for a violation of any of the covenants or agreements of the Stockholders
set forth herein. Therefore, it is agreed that, in addition to any other
remedies which may be available to the Company upon such violation, the Company
shall have the right to enforce such covenants and agreements by specific
performance, injunctive relief or by any other means available to it at law or
in equity.
(e) Notices. All
notices, requests, claims, demands and other communications hereunder shall be
in writing and sufficient if delivered in person, by commercial overnight
courier service, by confirmed telecopy, or sent by mail (registered or certified
mail, postage prepaid, return receipt requested) to the respective parties as
follows:
if to the
Company, to:
China Xxxx Xxxxxxx, Xx.
XX 0000-0 13/F, Crocodile House
II
00 Xxxxxxxxx Xxxx Xxxxxxx
Xxxx Xxxx
Attn: Xxxx Xxxxxx, Chief Executive
Officer
Fax: + 00 000 00000000
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with a
copy to:
Xxxxxx & Jaclin, LLP
000 Xxxxx 0 Xxxxx, Xxxxx
000
Xxxxxxxxx, XX 00000
Attn: Xxxx Xxxxx, Esq.
Fax: (000) 000-0000
if to the
Stockholders:
to the addresses set forth below their
names on Schedule
A, attachedhereto,
or to
such other address as either party may have furnished to the other in writing in
accordance herewith, except that notices of change of address shall only be
effective upon receipt.
(f) Governing
Law. This Agreement shall be governed by, construed and
enforced in accordance with the laws of New York without giving effect to
principles of conflicts of law.
(g) Entire
Agreement. This Agreement contains the entire understanding of
the parties in respect of the subject matter hereof, and supersedes all prior
negotiations and understandings between the parties with respect to such subject
matter.
(h) Counterparts. This
Agreement may be executed in counterparts, each of which shall be an original,
but all of which together shall constitute one and the same
agreement.
(i) Effect of
Headings. The section headings herein are for convenience only
and shall not affect the construction or interpretation of this
Agreement.
(j) Third-Party
Beneficiaries. The Investors shall be intended third party
beneficiaries of this Agreement to the same extent as if they were parties
hereto, and shall be entitled to enforce the provisions hereof.
[The
remainder of this page is intentionally left blank. Signature pages
follow]
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IN WITNESS WHEREOF, the
parties herein have executed this Agreement as of the date first set forth
above.
COMPANY:
By: /s/
Xxxx Xxxxxx
Name: Xxxx Xxxxxx
Title: Chairman
and Chief Executive Officer
STOCKHOLDERS:
/s/ Xxxx Xxxxxx
Xxxx Xxxxxx
/s/ Fan Yanling
Fan Yanling
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Schedule
A
The
Stockholders
|
Name and Address
|
Total Shares
|
Shares
Subject to
Lock-Up
|
|
Xxxx
Xxxxxx
A2,
Westlake Village, Xx. 00 Xxxxxxx Xxxx Xxxxxx Xxxx, Xxxxxx
Xxxxxxxx
Peoples’
Republic of China 350001
|
22,447,911
|
22,447,911
|
|
Fan
Yanling
X0,
Xxxxxxxx Xxxxxxx, Xx. 00 Xxxxxxx Xxxx Xxxxxx Xxxx, Xxxxxx
Province
Peoples’
Republic of China 350001
|
22,447,911
|
22,447,911
|
|
TOTAL:
|
44,895,822
|
44,895,822
|
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