LOCK-UP AGREEMENT
Exhibit
4.2
THIS LOCK-UP AGREEMENT (the "Agreement") is made and
entered into on August 26, 2008 between the stockholders set forth on the
signature page to this Agreement (each, a "Holder") and China Valves
Technology, Inc. (f/k/a Intercontinental Resources, 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 August 26, 2008 (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 its Closing as to all
Investors.
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 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.
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Each
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.
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 this 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 of a registration statement resulting in all
Shares being registered for resale by the Investors (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 that, except as set forth below, it will
not offer, pledge, encumber, 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) or engage in any Short Sales with respect to any
security of the Company. In furtherance thereof, the Company will (x)
place a stop order with the Transfer Agent on all Holder’s Shares, including
those which are covered by a registration statement, (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 except in compliance
with this Agreement. Notwithstanding the foregoing, each Holder may
transfer any Holder's Shares by (a) bona fide gift or (b) will or intestate
succession to his or her immediate family or to a trust the sole beneficiaries
of which are one or more of the undersigned and his or her immediate family (the
term "immediate family" meaning for these purposes the spouse, domestic partner,
lineal descendant, father, mother or sibling of the undersigned), provided that
each resulting transferee of such Holder's Shares executes and delivers to the
Company an agreement satisfactory to the Company certifying that such transferee
is bound by the terms of this Agreement and has been in compliance with the
terms hereof since the date first above written as if it had been an original
party hereto. Further, Holder shall be permitted to pledge, encumber,
or create a security interest in any or all of its Holder's Shares to secure the
payment or performance of indebtedness and other obligations of the Company
and/or its Subsidiaries to bona fide commercial lending institutions in the
People's Republic of China. For purposes hereof, “Short Sales”
include, without limitation, all “short sales” as defined in Rule 200
promulgated under Regulation SHO under the Exchange Act and all types of direct
and indirect stock pledges, forward sale contracts, options, puts, calls, swaps
and similar arrangements (including on a total return basis), and sales and
other transactions through non-US broker dealers or foreign regulated
brokers.
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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. The Holder and the Company
understand and agree that this Agreement is a material inducement to the
willingness of the Investors to enter into the Purchase agreement and the
transactions contemplated thereunder, that each of the Company and the Holder
receive benefits as a result of the investment into the Company by the
Investors.
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.
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. The Company and the Holder shall each 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 Investor or the Transfer Agent or, in the case of the Holder,
the Company 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.
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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, each 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. Arbitration. Any
dispute, controversy or claim arising out of or relating to this Agreement, or
the breach, termination or invalidity thereof, shall be settled definitively and
exclusively by arbitration in accordance with the Commercial Arbitration Rules
of the American Arbitration Association by a single arbitrator appointed in
accordance with said Rules. The arbitration shall take place in New
York, New York, United States of America. The language to be used in
the arbitral proceedings shall be English. The arbitrator shall apply
the law of the State of New York, United States of America, without regard for
its principles of conflict of laws. Decisions by the Investors
participating in the arbitration shall be by majority vote based on the
percentage of the Company owned by the individual Investors participating in the
arbitration. Judgment upon the award may be entered in any court
having jurisdiction thereof. If either party shall commence a
Proceeding to enforce any provisions of a Transaction Document, then the
prevailing party in such Proceeding shall be reimbursed by the other party for
its reasonable attorneys’ fees and other costs and expenses incurred with the
investigation, preparation and prosecution of such Proceeding.
[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:
Number
of shares of Common
Stock beneficially owned:
______________________________________
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By:
Name:
Title:
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