LOCK-UP AGREEMENT
THIS LOCK-UP AGREEMENT (this “Agreement”)
is dated as of [ ], 2009, by and
between the shareholder set forth on the signature page to this Agreement (the
“Holder”) and China Holdings
Acquisition Corp., a Delaware corporation, or its successor company (“China
Holdings”). Capitalized terms used and not otherwise defined
herein that are defined in the Stock Purchase Agreement (as defined below) will
have the meanings given such terms in the Stock Purchase Agreement.
BACKGROUND
A. China
Holdings has entered into that certain Stock Purchase Agreement dated August 19,
2009 (the “Stock Purchase
Agreement”), by and among China Holdings, Jinjiang Hengda Ceramics Co.,
Ltd., a Chinese enterprise (“Hengda”),
Success Winner Limited (“Success”), the owner of 100% of the
equity interests of Stand Best Creation Limited, which owns 100% of the equity
interests of Hengda, and Xx. Xxxx Kung Tok (the “Seller”),
the owner of 100% of the equity interests of Success. The Seller owns all of the
issued and outstanding securities of Success. Pursuant to the Stock
Purchase Agreement, a wholly-owned subsidiary of China Holdings, China Ceramics
Co., Ltd., a British Virgin Islands company (“Purchaser”)
will acquire all of the outstanding securities of Success, and following such
acquisition, China Holdings will merge with and into the
Purchaser. China Holdings has agreed to issue to the Seller 5,743,320
shares of China Holdings’s common stock, par value $.0001 (the “Common
Stock”), pursuant to Section 2.3(a) of the
Stock Purchase Agreement (the “Purchase
Price”). In
addition, pursuant to an earn-out provision in the Stock Purchase Agreement,
China Holdings has agreed to issue to the Seller, up to an aggregate of
8,185,763 shares of Common Stock (the “Contingent
Shares”), which shall be placed into escrow pursuant to the
terms of an Escrow Agreement relating to the Contingent Shares.
B. As
a condition of, and as a material inducement for China Holdings to enter into
and consummate the transactions contemplated by the Stock Purchase Agreement,
Holder has agreed to execute and deliver this Agreement.
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. 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.
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 China Holdings, China Holdings’s legal counsel, Hengda, Hengda’s legal
counsel, Success, Success’ legal counsel or any other person.
2. Beneficial
Ownership. The Holder hereby represents and warrants that it
does not beneficially own, directly or through its nominees (as determined in
accordance with Section 13(d) of the Exchange Act of 1934, as amended (the
“Exchange
Act”), 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 the signature page
hereto. For purposes of this Agreement, the number of shares of
Common Stock beneficially owned by such Holder as specified on the signature
hereto, plus any number of shares of Common Stock acquired during the Lock-Up
Period (as defined below), including, but not limited to, the Contingent Shares,
if any, are collectively referred to as the “Lock-up
Shares.”
3. Lock-Up.
(a) During
the Lock-up Period (as defined below), the Holder irrevocably agrees that it
will not offer, sell, contract to sell, pledge or otherwise dispose of, directly
or indirectly, any of the Lock-up Shares (including any securities convertible
into, or exchangeable for, or representing the rights to receive, Lock-up
Shares), enter into a transaction that would have the same effect, or enter into
any swap, hedge or other arrangement that transfers, in whole or in part, any of
the economic consequences of ownership of such Lock-up Shares, whether any of
these transactions are to be settled by delivery of any such Lock-up Shares, in
cash or otherwise, publicly disclose the intention to make any offer, sale,
pledge or disposition, or to enter into any transaction, swap, hedge or other
arrangement, or engage in any Short Sales (as defined below) with respect to any
security of China Holdings.
(b) In
furtherance of the foregoing, China Holdings will (i) place an irrevocable stop
order on all Lock-up Shares, including those which are covered by a registration
statement, and (ii) notify China Holdings’ transfer agent in writing of the stop
order and the restrictions on such Lock-up Shares under this Agreement and
direct China Holdings’ transfer agent not to process any attempts by the Holder
to resell or transfer any Lock-up Shares, except in compliance with this
Agreement.
(c) 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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(d) For
purpose of this agreement, “Lock-up
Period” means a period of 6 months from the Closing Date (as defined in
the Stock Purchase Agreement).
4. Investment
Representations.
(a) The
Holder is an “accredited investor” as such term is defined in Rule 501 of
Regulation D (“Reg. D”) promulgated under the Act. The Holder
acknowledges that China Holdings has the right to require evidence
of its status as an accredited investor, if necessary.
(b) The
Holder acknowledges that it has prior investment experience, including
investments in non-listed and non-registered securities, or has employed the
services of an investment advisor, attorney or accountant to evaluate the merits
and risks of such an investment on its behalf, and the Holder represents that it
understands the highly speculative nature of an investment in shares of China
Holdings’ Common Stock, which may result in the loss of the total amount of such
investment.
(c) The
Holder has adequate means of providing for the Holder’s current needs and
possible personal contingencies, and the Holder has no need, and anticipates no
need in the foreseeable future, for liquidity in the Holder’s investment in
shares of China Holdings’ Common Stock. The Holder is able to bear
the economic risks of this investment and, consequently, without limiting the
generality of the foregoing, the Holder is able to hold the shares of China
Holdings’ Common Stock for an indefinite period of time and has a sufficient net
worth to sustain a loss of the entire investment in the event such loss should
occur.
(d) The
Holder has made an overall commitment to investments which are not readily
marketable that are disproportionate to the Holder’s net worth, and the Holder’s
investment in the shares of China Holdings’ Common Stock will not cause such
overall commitment to become excessive.
(e) Except
as otherwise set forth in Article V of the Stock Purchase Agreement, China
Holdings has not and is not making any representations or warranties to the
Holder or providing any advice or information to the Holder. The
Holder acknowledges that it has retained its own professional advisors to
evaluate the tax and other consequences of an investment in the shares of China
Holdings’ Common Stock.
(f) The
Holder acknowledges that this offering of shares of China Holdings’ Common Stock
has not been reviewed by the SEC because this is intended to be a non-public
offering pursuant to Section 4(2) of the Act and Rule 506 under Reg.
D. The shares of China Holidngs’ Common Stock will be received by the
Holder, for investment and not for distribution or resale to
others.
(i) The
Holder understands and consents to the placement of a legend on any certificate
or other document evidencing shares of China Holdings’ Common Stock stating that
such shares of China Holdings’ Common Stock have not been registered under the
Act and setting forth or referring to the restrictions on transferability and
sale thereof. Each certificate evidencing shares of China Holdings’
Common Stock shall bear the legends set forth below, or legends substantially
equivalent thereto, together with any other legends that may be required by
federal or state securities laws at the time of the issuance of the shares of
China Holdings’ Common Stock:
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THE
SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), AND MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL (I) REGISTERED
UNDER THE ACT OR (II) THE ISSUER OF THE SHARES (THE “ISSUER”) HAS RECEIVED AN
OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER THAT SUCH
OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS IN COMPLIANCE WITH THE
ACT.
5. 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.
6. Notices. Any
notices required or permitted to be sent hereunder shall be delivered personally
or by courier service to the following addresses, or such other address as any
party hereto designates by written notice to the other
party. Provided, however, a transmission per telefax or email shall
be sufficient and shall be deemed to be properly served when the telefax or
email is received if the signed original notice is received by the recipient
within three (3) calendar days thereafter.
(a)
If
to China Holdings:
0000 X.
Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxx,
XX 00000
Attn:
Xxxx X. Xxxxx
With a copy (which shall not constitute notice) to:
Loeb & Loeb LLP
000 Xxxx
Xxx.
Xxx Xxxx,
XX 00000
XXX
Attn:
Xxxxxxxx Xxxxxxxx
(b)
If
to Holder:
c/o
Jinjiang Hengda Ceramics Co., Ltd.
Junbing
Industrial Zone,
Anhai,
Jinjiang City
Fujian
Province, PRC
Attn:
Xxxxx Xxx Dong
or to
such other address as any party may have furnished to the others in writing in
accordance herewith.
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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. Without limiting the generality of the foregoing, it is being
specifically understood that China Holdings will acquire all of the outstanding
securities of Success and following such acquisition, China Holdings will merge
with and into the Purchaser. The Holder hereby acknowledges and agrees that this
Agreement is entered into for the benefit of and is enforceable by China
Holdings and its successors and assigns.
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 be amended or modified by written agreement executed by each of
the parties hereto.
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. Dispute
Resolution. Section 12.1 of the Stock Purchase Agreement,
regarding arbitration of disputes, is incorporated by reference herein to apply
with full force to any disputes arising under this Agreement.
15. Governing
Law. The terms and provisions of this Agreement shall be
construed in accordance with the laws of the State of New York.
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16. Controlling
Agreement. To the extent the terms of this Agreement (as
amended, supplemented, restated or otherwise modified from time to time)
directly conflicts with a provision in the Stock Purchase Agreement, the terms
of this Agreement shall control.
[Signature Page
Follows]
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IN WITNESS WHEREOF, the parties hereto
have caused this Lock-Up Agreement to be duly executed by their respective
authorized signatories as of the date first indicated above.
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CHINA
HOLDINGS ACQUISITION CORP.
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By:
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Name:
Xxxx X. Xxxxx
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Title:
Chairman and Chief Executive Officer
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[Top
Plenty International Limited and Park Rise
Holdings
Limited]
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By:
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Name:
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LOCK-UP
SHARES:
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shares
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