EARN-IN AGREEMENT
Exhibit
10.2
This
EARN-IN AGREEMENT (this “Agreement”) is made
and entered into as of April 10, 2008 (the “Effective Date”),
between Fang Siping, a resident of the People’s Republic of China (the “Purchaser”) and Xx
Xxx, a resident of the United States (the “Seller”). The
Purchaser and the Seller are also referred to herein together as the “Parties” and
individually as a “Party”.
RECITALS
WHEREAS,
pursuant to a Share Exchange Agreement, dated December 18, 2007, among
Intercontinental Resources, Inc., a Nevada Corporation (the “Company”), China
Valve Holdings Limited, a Samoan Corporation (“China Valve”), the
shareholders of the Company and the shareholders of China Valve, the Company
acquired 100% of the issued and outstanding capital stock of China Valve;
and
WHEREAS,
pursuant to a Common Stock Purchase Agreement, dated as of the same date hereof,
the Purchaser agreed to sell his shares of the common stock of the Company to
the Seller.
WHEREAS,
the Purchaser has agreed with the Seller, as a condition to his continuing to
provide services to Henan Tonghai Valve Science Technology Co., Ltd. (“Henan Tonghai”), a
PRC company that is a wholly owned subsidiary of China Valve Holdings Limited, a
Hong Kong company which is wholly owned by China Valve, as its Chairman and
Chief Executive Officer, to enter into this Agreement; and
WHEREAS,
the Seller is the holder of 24,300,000 shares of the Company’s $0.001 par value
per share common stock (“Common Stock”) and
therefore, has determined that it is in his best interest to, and will receive
benefits from, the Purchaser’s performance as CEO and Chairman of Henan Tonghai
and its subsidiaries and entered into the Share Exchange Agreement based on the
possibility of such benefits; and
WHEREAS,
the Seller desires to grant to the Purchaser an option to acquire the 24,300,000
shares of the Common Stock owned by him (“the Seller’s Shares”)
pursuant to the terms and conditions set forth in this Agreement.
NOW,
THEREFORE, the Parties, in consideration of the foregoing premises and the
terms, covenants and conditions set forth below, and other good and valuable
consideration, receipt of which is acknowledged, hereby agree as
follows:
AGREEMENT
1. DEFINITIONS;
INTERPRETATION.
1.1. Terms
Defined in this Agreement.
The following terms when used in this Agreement shall have the following
definitions:
“Bankruptcy Law” means
any Law of any jurisdiction relating to bankruptcy, insolvency, corporate
reorganization, company arrangement, civil rehabilitation, special liquidation,
moratorium, readjustment of debt, appointment of a conservator, trustee or
receiver, or similar debtor relief.
“Business Day” means
any day on which commercial banks are required to be open in the United
States.
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“Call Price” means,
with respect to any exercise of the Call Right, par value or $0.001 per share of
the Seller’s Shares subject to any Call Exercise Notice, provided, that the aggregate
Call Price with respect to the Seller’s Shares eligible to be purchased by the
Purchaser upon exercise of the Call Right relating to the satisfaction of
Condition 4 shall be the sum of (i) the par value or $0.001 per share multiplied the number
of such Seller’s Shares plus (ii)
US$75,700.
“Conditions” means
Conditions 1 through 4, as defined below, in the aggregate.
“Condition 1” means
the later of (i) the occurrence of the date that is six months after the date of
this Agreement and (ii) the date upon which the Purchaser and Henan Tonghai have
entered into a binding employment agreement for a term of not less than five
years for the Purchaser to serve as Henan Tonghai’s Chief Executive Officer and
Chairman of its Board of Directors.
“Condition 2” means
the United States Securities and Exchange Commission declaring a registration
statement filed by the Company under the Securities Act of 1933 effective, or
investors who purchased Common Stock from the Company pursuant to the Securities
Purchase Agreement dated as of April __, 2008 being able to sell their Common
Stock under Rule 144, as then effective under the U.S. Securities Act of 1933,
as amended.
“Condition 3” means
Henan Tonghai and its subsidiaries achieving not less than $3,000,000 in
after-tax net income, as determined under United States Generally Accepted
Accounting Principles consistently applied (“US GAAP”) for the six months ended
June 30, 2008.
“Condition 4” means
Henan Tonghai achieving not less than $7,232,500 in pre tax profits, as
determined under US GAAP for the fiscal year ending December 31,
2008.
“Government Authority”
means any (a) nation, principality, state, commonwealth, province, territory,
county, municipality, district or other jurisdiction of any nature; (b) federal,
state, local, municipal, foreign or other government; (c) governmental or
quasi governmental authority of any nature (including any governmental division,
subdivision, department, agency, bureau, branch, office, commission, council,
board, instrumentality, officer, official, representative, organization, unit,
body or Person and any court or other tribunal); or (d) individual, Person or
body exercising, or entitled to exercise, any executive, legislative, judicial,
administrative, regulatory, police, military or taxing authority or power of any
nature.
“Law” means any
federal, state, local, municipal, foreign or other law, statute, legislation,
constitution, principle of common law, resolution, ordinance, code, order,
edict, decree, proclamation, treaty, convention, rule, regulation, permit,
ruling, directive, pronouncement, requirement (licensing or otherwise),
specification, determination, decision, opinion or interpretation that is, has
been or may in the future be issued, enacted, adopted, passed, approved,
promulgated, made, implemented or otherwise put into effect by or under the
authority of any Government Authority.
“Person” means any
individual, firm, company, corporation, limited liability company,
unincorporated association, partnership, trust, joint venture, governmental
authority or other entity, and shall include any successor (by merger or
otherwise) of such entity.
1.2. Interpretation.
(a) Certain
Terms. The words “hereof,”
“herein,” “hereunder” and similar words refer to this Agreement as a whole and
not to any particular provision of this Agreement. The term “including” is not
limited and means “including without limitation.”
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(b) Section References;
Titles and Subtitles.
Unless otherwise noted, all references to Sections herein are to Sections of
this Agreement. The titles, captions and headings of this Agreement are inserted
for convenience of reference only and are not intended to be a part of or to
affect the meaning or interpretation of this Agreement.
(c) Reference
to Entities, Agreements, Statutes. Unless otherwise expressly provided
herein, (i) references to a Person include its successors and permitted
assigns, (ii) references to agreements (including this Agreement) and other
contractual instruments shall be deemed to include all subsequent amendments,
restatements and other modifications thereto or supplements thereof and
(iii) references to any statute or regulation are to be construed as
including all statutory and regulatory provisions consolidating, amending,
replacing, supplementing or interpreting such statute or
regulation.
2. CALL RIGHT
2.1. Call
Right. The
Purchaser shall have, during the Exercise Period (as defined below), and when a
Condition is met, the right and option to purchase from the Seller, and upon the
exercise of such right and option the Seller shall have the obligation to sell
to the Purchaser, a portion of the Seller’s Shares identified in the Call
Exercise Notice (the “Call
Right”). The
Purchaser shall be permitted to purchase, and the Seller shall be obligated to
sell, the following numbers of the Seller’s Shares upon the attainment of the
following Conditions:
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Condition
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Number
of the Seller’s Shares as to
which
there is a Call Right
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Condition
1
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12,150,000
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Condition
2
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4,050,000
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4,050,000
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Condition
4
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4,050,000
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2.2. Call
Period. The
Call Right shall be exercisable by the Purchaser by delivering a Call Exercise
Notice at any time during the period (the “Exercise
Period”) commencing on the
date upon which Condition 1 has been satisfied (the “Initial
Call Date”) and ending at
6:30 p.m. (New York time) on the fifth anniversary of the Initial Call Date
(such date or the earlier expiration of the Call Right is referred to herein as
the “Expiration
Date”).
2.3. Exercise
Process. In order to
exercise the Call Right during the Exercise Period, the Purchaser shall deliver
to the Seller a written notice of such exercise substantially in the form
attached hereto as Appendix A (a “Call
Exercise Notice”) to such
address or facsimile number set forth therein. The Call Exercise Notice shall
indicate the number of the Seller’s Shares as to which the Purchaser is then
exercising its Call Right and the aggregate Call Price. Provided the Call
Exercise Notice is delivered in accordance with Section 6.4 to the Seller on or
prior to 6:30 p.m. (New York time) on a Business Day, the date of exercise (the
“Exercise
Date”) of the Call Right
shall be the date of such delivery of such Call Exercise Notice. In the event
the Call Exercise Notice is delivered after 6:30 p.m. (New York time) on any day
or on a date which is not a Business Day, the Exercise Date shall be deemed to
be the first Business Day after the date of such delivery of such Call Exercise
Notice. The delivery of a Call Exercise Notice in accordance herewith shall
constitute a binding obligation (a) on the part of the Purchaser to purchase and
(b) on the part of the Seller to sell, the Seller’s Shares subject to such Call
Exercise Notice in accordance with the terms of this
Agreement.
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2.4. Call
Price. If the Call Right
is exercised pursuant to this Section 2, as payment for the Seller’s Shares
being purchased by the Purchaser pursuant to the Call Right, the Purchaser shall
pay the aggregate Call Price to the Seller no later than fifteen (15) Business
Days after the Exercise Date.
2.5. Delivery of
the Shares. Upon the receipt
of a Call Exercise Notice, the Seller shall deliver, or take all steps necessary
to cause to be delivered, the Seller’s Shares being purchased pursuant to such
Call Exercise Notice.
3. ENCUMBRANCES; TRANSFERS, SET-OFF AND
WITHHOLDINGS.
3.1. Encumbrances. Upon exercise of the Call Right, the
Seller’s Shares being purchased shall be sold, transferred and delivered to the
Purchaser free and clear of any claim, pledge, charge, lien, preemptive rights,
restrictions on transfers (except as required by securities laws of the United
States), proxies, voting agreements and any other encumbrance
whatsoever.
3.2 Transfers. Prior to the Expiration Date, the
Seller shall continue to own, free and clear of any hypothecation, pledge,
mortgage or other encumbrance, except pursuant to this Agreement and except in
favor of the Collateral Agent (as defined below) for the benefit of the
Purchaser, such amount of the Seller’s Shares as may be required from time to
time to in order for the Purchaser to exercise its Call Right in
full.
3.3. Set-off. The Purchaser shall be
absolutely entitled to receive all the Seller’s Shares subject to the exercise
of a Call Right, and for the purposes of this Agreement, the Seller hereby
waives, as against the Purchaser, all rights of set-off or counterclaim that
would or might otherwise be available to the Seller.
3.4 Escrow of
the Seller’s Shares.
(a) Upon
execution of this Agreement, the Seller shall deliver to Beijing Sino Pro Law
Firm, as Collateral Agent (the “Collateral Agent”),
certificates representing the Seller’s Shares. The certificates representing the
Seller’s Shares (together with duly executed stock powers in blank) shall be
held by the Collateral Agent.
(b) Upon receipt of a Call Exercise Notice,
the Collateral Agent shall promptly deliver the Seller’s Shares being purchased
pursuant to such Call Exercise Notice in accordance with the instructions set
forth therein and in accordance with any other Lock-Up or Make Good Agreement in
place between the Purchaser or the Seller and other third party. In
the event that the Collateral Agent shall receive notice from the Parties that
the Conditions have not been met, the Seller’s Shares shall be distributed in
accordance with their instructions.
4. REPRESENTATIONS AND
WARRANTIES.
4.1. Representations
and Warranties by the Seller. The Seller represents and
warrants to the Purchaser, that:
(a) Due Authorization.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereunder to be carried out by it have been duly
authorized by all necessary action on the part of the Seller. This Agreement,
and all agreements and documents executed and delivered pursuant to this
Agreement, constitute valid and binding obligations of the Seller, enforceable
against the Seller in accordance with its terms, subject to applicable
Bankruptcy Laws and other laws or equitable principles of general application
affecting the rights of creditors generally.
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(b) No
Conflicts. Neither the execution or delivery of this Agreement
by the Seller nor the fulfillment or compliance by the Seller with any of the
terms hereof shall, with or without the giving of notice and/or the passage of
time, (i) conflict with, or result in a breach of the terms, conditions or
provisions of, or constitute a default under, (A) the organizational or charter
documents of the Seller or (B) any contract or any judgment, decree or order to
which the Seller is subject or by which the Seller is bound, or (ii) require any
consent, license, permit, authorization, approval or other action by any Person
or Government Authority which has not yet been obtained or received. The
execution, delivery and performance of this Agreement by the Seller or
compliance with the provisions hereof by the Seller does not, and shall not,
violate any provision of any Law to which the Seller is subject or by which it
is bound.
(c) No Actions. There are
no lawsuits, actions or, to the best knowledge of the Seller, investigations,
claims or demands or other proceedings pending or, to the best of the knowledge
of the Seller, threatened against the Seller that, if resolved in a manner
adverse to the Seller, would adversely affect the right or ability of the Seller
to carry out its obligations set forth in this Agreement.
(d) Title. The
Seller owns the Seller’s Shares free and clear of any claim, pledge, charge,
lien, preemptive rights, restrictions on transfers, proxies, voting agreements
and any other encumbrance whatsoever, except as contemplated by this Agreement.
The Seller has not entered into nor is a party to any agreement that would cause
the Seller to not own the Seller’s Shares free and clear of any encumbrance,
except as contemplated by this Agreement.
4.2 Representations
and Warranties by the Purchaser. The Purchaser represents
and warrants to the Sellers,that:
(a) Due Authorization.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereunder to be carried out by it have been duly
authorized by all necessary action on the part of the Purchaser. This Agreement,
and all agreements and documents executed and delivered pursuant to this
Agreement, constitute valid and binding obligations of the Purchaser,
enforceable against the Purchaser in accordance with its terms, subject to
applicable Bankruptcy Laws and other laws or equitable principles of general
application affecting the rights of creditors generally.
(b) No Conflicts. Neither
the execution or delivery of this Agreement by the Purchaser nor the fulfillment
or compliance by the Purchaser with any of the terms hereof shall, with or
without the giving of notice and/or the passage of time, (i) conflict with, or
result in a breach of the terms, conditions or provisions of, or constitute a
default under, (A) the organizational or charter documents of the Purchaser or
(B) any contract or any judgment, decree or order to which the Purchaser is
subject or by which the Purchaser is bound, or (ii) require any consent,
license, permit, authorization, approval or other action by any Person or
Government Authority which has not yet been obtained or received. The execution,
delivery and performance of this Agreement by the Purchaser or compliance with
the provisions hereof by the Purchaser does not, and shall not, violate any
provision of any Law to which the Purchaser is subject or by which it is
bound.
(c) No Actions. There are
no lawsuits, actions or, to the best knowledge of the Purchaser, investigations,
claims or demands or other proceedings pending or, to the best knowledge of the
Purchaser, threatened against the Purchaser that, if resolved in a manner
adverse to the Purchaser, would adversely affect the right or ability of the
Purchaser to carry out its obligations set forth in this Agreement.
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5. EVENTS OF DEFAULT AND
TERMINATION
5.1 Events of
Default. The occurrence at
any time with respect to a Party (the “Defaulting
Party”) of any of the
following events shall constitute an event of default (an “Event of
Default”) with respect to
such party:
(a) Failure to Pay or
Deliver. The failure by a Party to make, when due, any payment under this
Agreement or deliver the Seller’s Shares in accordance with this Agreement, if
such failure is not remedied on or before the third Business Day after notice of
such failure is given to the Defaulting Party;
(b) Breach of Agreement.
The failure by a Party to comply with or perform any agreement, covenant or
obligation (other than a failure described in Section 5.1(a), which shall be
governed by Section 5.1(a)) to be complied with or performed by such Party in
accordance with this Agreement if such failure is not remedied on or before the
tenth Business Day after notice of such failure is given to the Defaulting
Party; or
(c) Bankruptcy. A Party
(1) is dissolved (other than pursuant to a consolidation, amalgamation or
merger); (2) becomes insolvent or is unable to pay its debts or fails or admits
in writing its inability generally to pay its debts as they become due; (3)
makes a general assignment, arrangement or composition with or for the benefit
of its creditors; (4) institutes or has instituted against it a proceeding
seeking a judgment of insolvency or bankruptcy or any relief under any
Bankruptcy Law, or a petition is presented for its winding-up or liquidation,
and in the case of any such proceeding or petition instituted or presented
against it, such proceeding or petition (A) results in a judgment of insolvency
or bankruptcy or the entry of an order for relief or the making of an order for
its winding-up or liquidation or (B) is not dismissed, discharged, stayed or
restrained in each case within 30 days of the institution or presentation
thereof; (5) has a resolution passed for its winding-up, official management or
liquidation (other than pursuant to a consolidation, amalgamation or merger);
(6) seeks or becomes subject to the appointment of an administrator, provisional
liquidator, conservator, receiver, trustee, custodian or other similar official
for it or for all or substantially all of its assets; (7) has a secured party
take possession of all or substantially all of its assets or has a distress,
execution, attachment, sequestration or other legal process levied, enforced or
sued on or against all or substantially all of its assets and such secured party
maintains possession, or any such process is not dismissed, discharged, stayed
or rescinded, in each case within 30 days thereafter; (8) causes or is subject
to any event with respect to it that, under applicable Law, has an analogous
effect to any of the events described in clauses (1) through (7); or (9) takes
any action in furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the foregoing acts.
5.2 Termination. If at any time an Event of Default
with respect to a Party has occurred and is continuing, the other party may
terminate this Agreement and deem the Expiration Date to have occurred by giving
written notice to the Defaulting Party specifying the relevant Event of
Default.
6. MISCELLANEOUS.
6.1. Governing
Law; Jurisdiction. This
Agreement shall be construed according to, and the rights of the Parties shall
be governed by, the laws of the State of Nevada, without reference to any
conflict of laws principle that would cause the application of the laws of any
jurisdiction other than Nevada. Each Party hereby irrevocably submits to the
exclusive jurisdiction of the federal and state courts sitting in Nevada, for
the adjudication of any dispute hereunder or in connection herewith, and agrees
not to assert in any suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of such court, that such suit, action or
proceeding is brought in an inconvenient forum, or that the venue of such suit,
action or proceeding is improper.
6.2. Successors
and Assigns. Each of the
Parties shall not assign this Agreement or any rights or obligations hereunder
without the prior written consent of the other Party. The provisions hereof
shall inure to the benefit of, and be binding upon, the successors and permitted
assigns of the Parties.
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6.3. Entire
Agreement; Amendment. This
Agreement constitutes the full and entire understanding and agreement between
the Parties with regard to the subject matter hereof. Any term of this Agreement
may be amended only with the written consent of each Party.
6.4. Notices and
Other Communications. Any
and all notices, requests, demands and other communications required or
otherwise contemplated to be made under this Agreement shall be in writing and
shall be provided by one or more of the following means and shall be deemed to
have been duly given (a) if delivered personally, when received,
(b) if transmitted by facsimile, on the date of transmission with receipt
of a transmittal confirmation, or (c) if by an internationally recognized
overnight courier service, one Business Day after deposit with such courier
service. All such notices, requests, demands and other communications shall be
addressed to such address or facsimile number as a party may have specified to
the other parties in writing delivered in accordance with this Section
6.4.
6.5. Delays or
Omissions. No delay or
omission to exercise any right, power or remedy accruing to any Person
hereunder, upon any breach or default under this Agreement, shall impair any
such right, power or remedy nor shall it be construed to be a waiver of any such
breach or default, or an acquiescence therein, or of or in any similar breach or
default thereafter occurring; nor shall any waiver of any single breach or
default be deemed a waiver of any other breach or default theretofore or
thereafter occurring. Any waiver, permit, consent or approval of any kind or
character on the part of any Person hereunder of any breach or default under
this Agreement, or any waiver on the part of any Person of any provisions or
conditions of this Agreement, must be in writing and shall be effective only to
the extent specifically set forth in such writing and signed by the waiving or
consenting Person.
6.6. Severability. If any provision of this Agreement is
found to be invalid or unenforceable, then such provision shall be construed, to
the extent feasible, so as to render the provision enforceable and to provide
for the consummation of the transactions contemplated hereby on substantially
the same terms as originally set forth herein, and if no feasible interpretation
would save such provision, it shall be severed from the remainder of this
Agreement, which shall remain in full force and effect unless the severed
provision is essential to the rights or benefits intended by the Parties. In
such event, the Parties shall use best efforts to negotiate, in good faith, a
substitute, valid and enforceable provision or agreement which most nearly
affects the Parties’ intent in entering into this Agreement.
6.7 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.
6.8. Further
Assurances. The Parties
shall perform such acts, execute and deliver such instruments and documents and
do all other such things as may be reasonably necessary to effect the
transactions contemplated hereby.
6.9. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be an original, but all of which
together shall constitute one instrument. Execution and delivery of this
Agreement by exchange of facsimile copies bearing the facsimile signature of a
Party shall constitute a valid and binding execution and delivery of this
Agreement by such Party.
[remainder of page intentionally
blank]
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[Signature Page of Earn-In
Agreement]
IN
WITNESS WHEREOF, the Parties have executed this Agreement as of the date first
written above.
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the
Purchaser:
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/s/
Fang Siping
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Fang
Siping
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the
Seller:
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/s/
Xx Xxx
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Xx
Xxx
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Acknowledged
and agreed to:
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Collateral
Agent:
BEIJING
SAPPHIRE PRO LAW FIRM, as Collateral Agent
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By:
/s/ Rongxu
Yang
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Name:
Beijing Sapphire Pro Law Firm
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APPENDIX
A
Form of Exercise
Notice
[Date]
[________________]
(the “the
Seller”)
[________________]
[________________]
Attention:
[_______]
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Re:
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Earn-In
Agreement dated April 10, 2008 (the “Earn-In
Agreement”), between Fang Siping (“the Purchaser”)
and Li Bing (“the
Seller”).
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Dear
Sir:
In
accordance with Section 2.3 of the Earn-In Agreement, the Purchaser hereby
provides this notice of exercise of the Call Right in the manner specified
below:
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(a)
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The
Purchaser hereby exercises its Call Right with respect to the Seller’s
Shares pursuant to the Earn-In
Agreement.
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(b)
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The
Purchaser shall pay the sum of $____________ to the
Seller.
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(d)
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Pursuant
to this exercise, the Seller shall deliver to _______________ the Seller’s
Shares in accordance with the instructions attached
hereto.
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Dated:
_______________, ______
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Fang
Siping
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