TOUCHSTONE RESOURCES USA, INC. March ___, 2006
Exhibit 10.6
TOUCHSTONE RESOURCES USA, INC.
March ___, 2006
Re: Touchstone Resources USA, Inc. (the “Company”) – Lock-Up Agreement
Dear Sirs:
In connection with the issuance of the Common Stock, par value $0.001 per share, of the
Company (each a “Security” and collectively, the “Securities”) pursuant to the Securities Purchase
Agreement entered by and among the Company and the investors named on the Schedule of Buyers
attached thereto (the “Buyers”), on March ___, 2006 (the “Securities Purchase Agreement”), the
undersigned agrees that, commencing on the date hereof and during the period specified below (the
“Lock-Up Period"), the undersigned will not offer, sell, contract to sell, hypothecate, pledge,
grant any option to purchase, make any short sale or otherwise dispose of, directly or indirectly,
or establish or increase a put equivalent position or liquidate or decrease a call equivalent
position within the meaning of Section 16 of the Securities and Exchange Act of 1934, as amended
(the “Exchange Act”) and the rules and regulations of the Securities and Exchange Commission
promulgated thereunder with respect to any shares of the Company’s common stock, par value $.001
per share (the “Common Stock”), owned directly by the undersigned (including holding as a
custodian) or with respect to which the undersigned has beneficial ownership within the rules and
regulations of the Securities and Exchange Commission (collectively the “Undersigned’s Shares”).
The foregoing restriction is expressly agreed to preclude the undersigned or any affiliate of
the undersigned from engaging in any hedging or other transaction which is designed to or which
reasonably could be expected to lead to or result in a sale or disposition of the Undersigned’s
Shares even if the Undersigned’s Shares would be disposed of by someone other than the undersigned.
Such prohibited hedging or other transactions would include, without limitation, any short sale or
any purchase, sale or grant of any right (including, without limitation, any put or call option)
with respect to any of the Undersigned’s Shares or with respect to any security that includes,
relates to, or derives any significant part of its value from the Undersigned’s Shares.
The Lock-Up Period will commence on the date hereof and continue until six (6) months after
the Effective Date (as defined in the Registration Rights Agreement); provided,
however, that notwithstanding the foregoing, commencing thirty days after the Effective
Date, the undersigned shall be
permitted to sell the Undersigned’s Shares at a price greater than 175% of the Conversion Price (as
defined in the Securities
Purchase Agreement); and provided further, that (x) the Lock-Up Period
will terminate upon the consummation of a Fundamental Transaction (as defined in the Notes) and (y)
Xxxxxxx X. Xxxxxxxxxx shall be permitted to sell during the Lock-Up Period a number of shares of
Common Stock that does not exceed the number of Conversion Shares (as defined in the Securities
Purchase Agreement) previously delivered to Kings Road Holdings II LLC.
Notwithstanding the foregoing, the undersigned may transfer the Undersigned’s Shares (i) as a
bona fide gift or gifts, provided that the donee or donees thereof agree to be bound in writing by
the restrictions set forth herein, (ii) to any trust for the direct or indirect benefit of the
undersigned or the immediate family of the undersigned, provided that the trustee of the trust
agrees to be bound in writing by the restrictions set forth herein, and provided further that any
such transfer shall not involve a disposition for value, or (iii) if the undersigned is or becomes
subject to the reporting requirements of Section 16 of the Exchange Act, pursuant to the terms of
written trading plans in existence on the date hereof or entered into after the date hereof
designed to comply with Rule 10-b5-1(c) of the Exchange Act, provided no sales or other
dispositions may occur under such plans until after the closing of trading on the date six months
from the Effectiveness Date. For purposes of this Lock-Up Agreement, “immediate family” shall mean
any relationship by blood, marriage or adoption, not more remote than first cousin. The
undersigned now has, and, except as contemplated by clauses (i) and (ii) above, for the duration of
this Lock-Up Agreement will have, good and marketable title to the Undersigned’s Shares, free and
clear of all liens, encumbrances, and claims whatsoever. The undersigned also agrees and consents
to the entry of stop transfer instructions with the Company’s transfer agent and registrar against
the transfer of the Undersigned’s Shares except in compliance with the foregoing restrictions.
The undersigned understands and agrees that this Lock-Up Agreement is irrevocable and shall be
binding upon the undersigned’s heirs, legal representatives, successors, and assigns.
This Lock-Up Agreement may be executed in two counterparts, each of which shall be deemed an
original but both of which shall be considered one and the same instrument.
This Lock-Up Agreement will be governed by and construed in accordance with the laws of the
State of New York, without giving effect to any choice of law or conflicting provision or rule
(whether of the State of New York, or any other jurisdiction) that would cause the laws of any
jurisdiction other than the State of New York to be applied. In furtherance of the foregoing, the
internal laws of the State of New York will control the interpretation and construction of this
Lock-Up Agreement, even if under such jurisdiction’s choice of law or conflict of law analysis, the
substantive law of some other jurisdiction would ordinarily apply.
The Buyers 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.
| Very truly yours, |
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