Document:

Exhibit 10.2

     

    LIHUA
INTERNATIONAL, INC.

     

    INDEPENDENT
DIRECTOR AGREEMENT

     

    

    This
INDEPENDENT DIRECTOR AGREEMENT (the “Agreement”) is made and entered into as of
this 11th day of June 2010, effective as of April 14, 2010 (the “Effective
Date”), by and between Lihua International, Inc., a Delaware corporation whose
shares are publicly traded (the “Company”), and Jonathan P. Serbin, a citizen of
the United States, with the following address: c/o Duo Guo, 819 Nanjing Lu, Room
1508, Shanghai, China 200041 (the “Independent Director”).

     

    WHEREAS,
the Company desires to re-engage the Independent Director, and the Independent
Director desires to serve, as a non-employee director of the Company, subject to
the terms and conditions contained in this Agreement.

     

    NOW,
THEREFORE, in consideration of the mutual promises and covenants contained
herein, the receipt of which is hereby acknowledged, the Company and the
Independent Director, intending to be legally bound, hereby agree as
follows:

     

    1.           DEFINITIONS.

     

    (a)           “Corporate
Status” describes the capacity of the Independent Director with respect to the
Company and the services performed by the Independent Director in that
capacity.

     

    (b)           “Entity”
shall mean any corporation, partnership, limited liability company, joint
venture, trust, foundation, association, organization or other legal
entity.

     

    (c)           “Proceeding”
shall mean any threatened, pending or completed claim, action, suit,
arbitration, alternate dispute resolution process, investigation, administrative
hearing, appeal, or any other proceeding, whether civil, criminal,
administrative or investigative, whether formal or informal, including a
proceeding initiated by the Independent Director pursuant to Section 12 of this
Agreement to enforce the Independent Director’s rights hereunder.

     

    (d)           “Expenses”
shall mean all reasonable fees, costs and expenses, approved by the Company in
advance and reasonably incurred in connection with any Proceeding, including,
without limitation, attorneys’ fees, disbursements and retainers, fees and
disbursements of expert witnesses, private investigators, professional advisors
(including, without limitation, accountants and investment bankers), court
costs, transcript costs, fees of experts, travel expenses, duplicating, printing
and binding costs, telephone and fax transmission charges, postage, delivery
services, secretarial services, and other disbursements and
expenses.

     

    (e)       
    “Liabilities” shall mean judgments, damages,
liabilities, losses, penalties, excise taxes, fines and amounts paid in
settlement.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (f)      
     “Parent” shall mean any corporation or other
entity (other than the Company) in any unbroken chain of corporations or other
entities ending with the Company, if each of the corporations or entities, other
than the Company, owns stock or other interests possessing 50% or more of the
economic interest or the total combined voting power of all classes of stock or
other interests in one of the other corporations or entities in the
chain.

     

    (g)           “Subsidiary”
shall mean any corporation or other entity (other than the Company) in any
unbroken chain of corporations or other entities beginning with the Company, if
each of the corporations or entities, other than the last corporation or entity
in the unbroken chain, owns stock or other interests possessing 50% or more of
the economic interest or the total combined voting power of all classes of stock
or other interests in one of the other corporations or entities in the
chain.

     

    2.           SERVICES
OF INDEPENDENT DIRECTOR. While this Agreement is in effect, the Independent
Director shall perform duties as an independent director and/or a member of the
committees of the Board, be compensated for such and be reimbursed expenses in
accordance with the Schedule A attached to this Agreement, subject to the
following.

     

    (a)           The
Independent Director will perform services as is consistent with Independent
Director’s position with the Company, as required and authorized by the By-Laws
and Articles of Incorporation of the Company, and in accordance with high
professional and ethical standards and all applicable laws and rules and
regulations pertaining to the Independent Director’s performance hereunder,
including without limitation, laws, rules and regulations relating to a public
company.

     

    (b)           The
Independent Director is solely responsible for taxes arising out of any
compensation paid by the Company to the Independent Director under this
Agreement, and the Independent Director understands that he/she will be issued a
U.S. Treasury form 1099 for any compensation paid to him/her by the
Company.  The Independent Director acknowledges and agrees that
because he is not an employee of the Company the Company will not withhold any
amounts for taxes from any of his payments under the Agreement.

     

    (c)           The
Company may offset any and all monies payable to the Independent Director to the
extent of any monies owing to the Company from the Independent
Director.

     

    (d)           The
rules and regulations of the Company notified to the Independent Director, from
time to time, apply to the Independent Director. Such rules and regulations are
subject to change by the Company in its sole discretion. Notwithstanding the
foregoing, in the event of any conflict or inconsistency between the terms and
conditions of this Agreement and rules and regulations of the Company, the terms
of this Agreement control.

     

    3.           REQUIREMENTS
OF INDEPENDENT DIRECTOR. During the term of the Independent Director’s services
to the Company hereunder, Independent Director shall observe all applicable laws
and regulations relating to independent directors of a public company as
promulgated from to time, and shall not: (1) be an employee of the Company or
any Parent or Subsidiary; (2) accept, directly or indirectly, any consulting,
advisory, or other compensatory fee from the Company other than as a director
and/or a member of a committee of the Board; (3) be an affiliated person of the
Company or any Parent or Subsidiary, as the term “affiliate” is defined in 17
CFR 240.10A-3(e)(1), other than in his capacity as a director and/or a member of
a committee of the Board; (4) possess an interest in any transaction with the
Company or any Parent or Subsidiary, for which disclosure would be required
pursuant to 17 CFR 229.404(a), other than in his capacity as a director and/or a
member of a committee of the Board committees; (5) be engaged in a business
relationship with the Company or any Parent or Subsidiary, for which disclosure
would be required pursuant to 17 CFR 229.404(b), except that the required
beneficial interest therein shall be modified to be 5% hereby.

     

    
      
        
        

      

      
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    4.           REPORT
OBLIGATION. While this Agreement is in effect, the Independent Director shall
immediately report to the Company in the event: (1) the Independent Director
knows or has reason to know or should have known that any of the requirements
specified in Section 3 hereof is not satisfied or is not going to be satisfied;
and (2) the Independent Director simultaneously serves on an audit committee of
any other public company.

     

    5.           TERM
AND TERMINATION. The term of this Agreement shall be for one (1) year from the
Effective Date, unless terminated as provided for in this Section 5 (the
“Term”).  This Agreement and the Independent Director’s services
hereunder shall terminate upon the earlier of the following:

     

    (a)           Removal
of the Independent Director as a director of the Company, upon proper Board or
stockholder action in accordance with the By-Laws and Articles of Incorporation
of the Company and applicable law;

     

    (b)           Resignation
of the Independent Director as a director of the Company upon written notice to
the Board of Directors of the Company; or

     

    (c)           Termination
of this Agreement by the Company, in the event any of the requirements specified
in Section 3 hereof is not satisfied, as determined by the Company in its sole
discretion.

     

    6.           LIMITATION
OF LIABILITY. In no event shall the Independent Director be individually liable
to the Company or its shareholders for any damages for breach of fiduciary duty
as an independent director of the Company, unless the Independent Director’s act
or failure to act involves intentional misconduct, fraud or a knowing violation
of law.

     

    7.           AGREEMENT
OF INDEMNITY. The Company agrees to indemnify the Independent Director as
follows:

     

    (a)           Subject
to the exceptions contained in Section 8(a) below, if the Independent Director
was or is a party or is threatened to be made a party to any Proceeding (other
than an action by or in the right of the Company) by reason of the Independent
Director’s Corporate Status, the Independent Director shall be indemnified by
the Company against all Expenses and Liabilities incurred or paid by the
Independent Director in connection with such Proceeding (referred to herein as
“Indemnifiable Expenses” and “Indemnifiable Liabilities,” respectively, and
collectively as “Indemnifiable Amounts”).

     

    
      
        
        

      

      
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    (b)           Subject
to the exceptions contained in Section 8(b) below, if the Independent Director
was or is a party or is threatened to be made a party to any Proceeding by or in
the right of the Company, to procure a judgment in its favor by reason of the
Independent Director’s Corporate Status, the Independent Director shall be
indemnified by the Company against all Indemnifiable Expenses.

     

    (c)           For
purposes of this Agreement, the Independent Director shall be deemed to have
acted in good faith in conducting the Company’s affairs as an independent
director of the Company and/or a member of a committee of the Board of the
Company, if the Independent Director: (i) exercised or used the same degree of
diligence, care, and skill as an ordinarily prudent man would have exercised or
used under the circumstances in the conduct of his own affairs; or (ii) took, or
omitted to take, an action in reliance upon advise of counsels or other
professional advisors for the Company, or upon statements made or information
furnished by other directors, officers or employees of the Company, or upon a
financial statement of the Company provided by a person in charge of its
accounts or certified by a public accountant or a firm of public accountants,
which the Independent Director had reasonable grounds to believe to be
true.

     

    8.           EXCEPTIONS
TO INDEMNIFICATION. Director shall be entitled to indemnification under Sections
7(a) and 7(b) above in all circumstances other than the following:

     

    (a)           If
indemnification is requested under Section 7(a) and it has been adjudicated
finally by a court or arbitral body of competent jurisdiction that, in
connection with the subject of the Proceeding out of which the claim for
indemnification has arisen, (i) the Independent Director failed to act in good
faith and in a manner the Independent Director reasonably believed to be in or
not opposed to the best interests of the Company, (ii) the Independent Director
had reasonable cause to believe that the Independent Director’s conduct was
unlawful, or (iii) the Independent Director’s conduct constituted willful
misconduct, fraud or knowing violation of law, then the Independent Director
shall not be entitled to payment of Indemnifiable Amounts
hereunder.

     

    (b)           If
indemnification is requested under Section 7(b) and

     

    (i)           it
has been adjudicated finally by a court or arbitral body of competent
jurisdiction that, in connection with the subject of the Proceeding out of which
the claim for indemnification has arisen, the Independent Director failed to act
in good faith and in a manner the Independent Director reasonably believed to be
in or not opposed to the best interests of the Company, including without
limitation, the breach of Section 4 hereof by the Independent Director, the
Independent Director shall not be entitled to payment of Indemnifiable Expenses
hereunder; or

     

    (ii)           it
has been adjudicated finally by a court or arbitral body of competent
jurisdiction that the Independent Director is liable to the Company with respect
to any claim, issue or matter involved in the Proceeding out of which the claim
for indemnification has arisen, including, without limitation, a claim that the
Independent Director received an improper benefit or improperly took advantage
of a corporate opportunity, the Independent Director shall not be entitled to
payment of Indemnifiable Expenses hereunder with respect to such claim, issue or
matter.

     

    
      
        
        

      

      
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    9.           WHOLLY
OR PARTLY SUCCESSFUL. Notwithstanding any other provision of this Agreement, and
without limiting any such provision, to the extent that the Independent Director
is, by reason of the Independent Director’s Corporate Status, a party to and is
successful, on the merits or otherwise, in any Proceeding, the Independent
Director shall be indemnified in connection therewith. If the Independent
Director is not wholly successful in such Proceeding but is successful, on the
merits or otherwise, as to one or more but less than all claims, issues or
matters in such Proceeding, the Company shall indemnify the Independent Director
against those Expenses reasonably incurred by the Independent Director or on the
Independent Director’s behalf in connection with each successfully resolved
claim, issue or matter. For purposes of this section, the termination of any
claim, issue or matter in such a Proceeding by dismissal, with or without
prejudice, shall be deemed to be a successful result as to such claim, issue or
matter.

     

    10.         ADVANCES
AND INTERIM EXPENSES. The Company may pay to the Independent Director all
Indemnifiable Expenses incurred by the Independent Director in connection with
any Proceeding, including a Proceeding by or in the right of the Company, in
advance of the final disposition of such Proceeding, if the Independent Director
furnishes the Company with a written undertaking, to the satisfaction of the
Company, to repay the amount of such Indemnifiable Expenses advanced to the
Independent Director in the event it is finally determined by a court or
arbitral body of competent jurisdiction that the Independent Director is not
entitled under this Agreement to indemnification with respect to such
Indemnifiable Expenses.

     

    11.         PROCEDURE
FOR PAYMENT OF INDEMNIFIABLE AMOUNTS. The Independent Director shall submit to
the Company a written request specifying the Indemnifiable Amounts, for which
the Independent Director seeks payment under Section 7 hereof and the Proceeding
of which has been previously notified to the Company and approved by the Company
for indemnification hereunder. At the request of the Company, the Independent
Director shall furnish such documentation and information as are reasonably
available to the Independent Director and necessary to establish that the
Independent Director is entitled to indemnification hereunder. The Company shall
pay such Indeminfiable Amounts within thirty (30) days of receipt of all
required documents.

     

    12.         REMEDIES
OF INDEPENDENT DIRECTOR.

     

    (a)           RIGHT
TO PETITION COURT. In the event that the Independent Director makes a request
for payment of Indemnifiable Amounts under Sections 7, 9-11 above, and the
Company fails to make such payment or advancement in a timely manner pursuant to
the terms of this Agreement, the Independent Director may petition the
appropriate judicial authority to enforce the Company’s obligations under this
Agreement.

     

    (b)           BURDEN
OF PROOF. In any judicial proceeding brought under Section 12 (a) above, the
Company shall have the burden of proving that the Independent Director is not
entitled to payment of Indemnifiable Amounts hereunder.

     

    
      
        
        

      

      
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    (c)           EXPENSES.
The Company agrees to reimburse the Independent Director in full for any
Expenses incurred by the Independent Director in connection with investigating,
preparing for, litigating, defending or settling any action brought by the
Independent Director under Section 12 (a) above, or in connection with any claim
or counterclaim brought by the Company in connection therewith.

     

    (d)           VALIDITY
OF AGREEMENT. The Company shall be precluded from asserting in any Proceeding,
including, without limitation, an action under Section 12 (a) above, that the
provisions of this Agreement are not valid, binding and enforceable or that
there is insufficient consideration for this Agreement and shall stipulate in
court that the Company is bound by all the provisions of this
Agreement.

     

    (e)           FAILURE
TO ACT NOT A DEFENSE. The failure of the Company (including its Board of
Directors or any committee thereof, independent legal counsel, or stockholders)
to make a determination concerning the permissibility of the payment of
Indemnifiable Amounts or the advancement of Indemnifiable Expenses under this
Agreement shall not be a defense in any action brought under Section 12 (a)
above.

     

    13.         PROCEEDINGS
AGAINST COMPANY. Except as otherwise provided in this Agreement, the Independent
Director shall not be entitled to payment of Indemnifiable Amounts or
advancement of Indemnifiable Expenses with respect to any Proceeding brought by
the Independent Director against the Company, any Entity which it controls, any
director or officer thereof, or any third party, unless the Company has
consented to the initiation of such Proceeding. This section shall not apply to
counterclaims or affirmative defenses asserted by the Independent Director in an
action brought against the Independent Director.

     

    14.         INSURANCE.
The Company may, at its discretion, obtain and maintain a policy or policies of
director and officer liability insurance, in an amount not less than $5,000,000,
of which the Independent Director will be named as an insured, providing the
Independent Director with coverage for Indemnifiable Amounts and/or
Indemnifiable Expenses in accordance with said insurance policy or policies
(“D&O Insurance”); provided that:

     

    (a)           The
Independent Director agrees that, while the Company has valid and effective
D&O Insurance, and except as provided in (c) of this section, Sections 7-13
of this Agreement shall not apply, and the Company’s indemnification obligation
to the Independent Director under this Agreement shall be deemed fulfilled by
virtue of purchasing and maintaining such insurance policy or policies, in
accordance with the terms and conditions thereof and subject to exclusions
stated thereon, provided,
however, that the Company will pay any deductibles under any such
insurance policy or policies. The Independent Director agrees that the Company
shall have no obligation to challenge the decisions made by the insurance
carrier(s) (“Insurance Carrier”) relating to any claims made under such
insurance policy or policies;

     

    (b)           The
Independent Director agrees that the Company’s indemnification obligation to the
Independent Director under (a) of this section shall be deemed discharged and
terminated, in the event the Insurance Carrier refused payment for any
Proceedings against the Independent Director due to the acts or omissions of the
Independent Director;

     

    
      
        
        

      

      
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    (c)           While
the D&O Insurance is valid and effective, the Company agrees that it shall
indemnify the Independent Director for the Indemnifiable Amounts and
Indemnifiable Expenses, to the extent that any Proceedings are coverable by
D&O Insurance, but in excess of the policy amount, in accordance with
Sections 7-13 of this Agreement; and

     

    (d)           While
the D&O Insurance is valid and effective, this Section 14 states the entire
and exclusive remedy of the Independent Director with respect to the
indemnification obligation of the Company to the Independent Director under this
Agreement.

     

    15.         SUBROGATION.
In the event of any payment of Indemnifiable Amounts under this Agreement or the
D&O Insurance, the Company or its Insurance Carrier, as the case may be,
shall be subrogated to the extent of such payment to all of the rights of
contribution or recovery of the Independent Director against other persons, and
the Independent Director shall take, at the request of the Company, all
reasonable action necessary to secure such rights, including the execution of
such documents as are necessary to enable the Company to bring suit to enforce
such rights.

     

    16.         AUTHORITY.
Each party has all necessary power and authority to enter into, and be bound by
the terms of, this Agreement, and the execution, delivery and performance of the
undertakings contemplated by this Agreement have been duly authorized by each
party hereto:

     

    17.         SUCCESSORS
AND ASSIGNMENT. This Agreement shall (a) be binding upon and inure to the
benefit of all successors and assigns of the Company (including any transferee
of all or a substantial portion of the business, stock and/or assets of the
Company and any direct or indirect successor by merger or consolidation or
otherwise by operation of law), and (b) be binding on and shall inure to the
benefit of the heirs, personal representatives, executors and administrators of
the Independent Director. The Independent Director has no power to assign this
Agreement or any rights and obligations hereunder.

     

    18.         CHANGE
IN LAW. To the extent that a change in applicable law (whether by statute or
judicial decision) shall mandate broader or narrower indemnification than is
provided hereunder, the Independent Director shall be subject to such broader or
narrower indemnification and this Agreement shall be deemed to be amended to
such extent.

     

    19.         SEVERABILITY.
Whenever possible, each provision of this Agreement shall be interpreted in such
a manner as to be effective and valid under applicable law, but if any provision
of this Agreement, or any clause thereof, shall be determined by a court of
competent jurisdiction to be illegal, invalid or unenforceable, in whole or in
part, such provision or clause shall be limited or modified in its application
to the minimum extent necessary to make such provision or clause valid, legal
and enforceable, and the remaining provisions and clauses of this Agreement
shall remain fully enforceable and binding on the parties.

     

    20.         MODIFICATIONS
AND WAIVER. Except as provided in Section 18 hereof with respect to changes in
applicable law which broaden or narrow the right of the Independent Director to
be indemnified by the Company, no supplement, modification or amendment of this
Agreement shall be binding unless executed in writing by each of the parties
hereto. No delay in exercise or non-exercise by the Company of any right under
this Agreement shall operate as a current or future waiver by it as to its same
or different rights under this Agreement or otherwise.

     

    
      
        
        

      

      
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    21.           NOTICES.
All notices, requests, demands and other communications hereunder shall be in
writing and shall be deemed to have been duly given (a) when delivered by hand,
(b) when transmitted by facsimile and receipt is acknowledged, or (c) if mailed
by certified or registered mail with postage prepaid, on the third business day
after the date en which it is so mailed:

     

    If to Independent Director, to:
Jonathan P. Serbin Address: c/o Duo Guo 819 Nanjing Lu, Room 1508 Shanghai, PR
China 200041.

     

    If to the
Company, to: Jinhua Zhu, CEO, Lihua International, Houxiang Five Star Industry
District, Danyang City, Jiangsu Province, PR China 212312, or to such other
address as may have been furnished in the same manner by any party to the
others.

     

    22.         GOVERNING
LAW. This Agreement shall be governed by and construed and enforced under the
laws of the State of New York.

     

    23.         CONSENT
TO JURISDICTION. The parties hereby consent to the jurisdiction of the courts
having jurisdiction over matters arising in New York County, New York for any
proceeding arising out of or relating to this Agreement. The parties agree that
in any such proceeding, each party shall waive, if applicable, inconvenience of
forum and right to a jury.

     

    24.         AGREEMENT
GOVERNS. This Agreement is to be deemed consistent wherever possible with
relevant provisions of the By-Laws and Articles of Incorporation of the Company;
however, in the event of a conflict between this Agreement and such provisions,
the provisions of this Agreement shall control.

     

    25.         INDEPENDENT
CONTRACTOR. The parties understand, acknowledge and agree that the Independent
Director’s relationship with the Company is that of an independent contractor
and nothing in this Agreement is intended to or should be construed to create a
relationship other than that of independent contractor. Nothing in this
Agreement shall be construed as a contract of employment/engagement between the
Independent Director and the Company or as a commitment on the part of the
Company to retain the Independent Director in any capacity, for any period of
time or under any specific terms or conditions, or to continue the Independent
Director’s service to the Company beyond any period.

     

    26.         ARBITRATION.
Any dispute, controversy or claim arising out of or relating to this Agreement
or the breach thereof, shall be settled by arbitration, before one arbitrator in
accordance with the rules of the American Arbitration Association then in effect
and judgment upon the award rendered by the arbitrator may be entered in any
court having jurisdiction. The arbitrator will be selected, by the parties, from
a panel of attorney arbitrators. The parties agree that any arbitration shall be
held in New York, New York. The language of the arbitration shall be in English.
The arbitrator will have no authority to make any relief, finding or award that
does not conform to the terms and conditions of this Agreement. Each party shall
bear its own attorneys’ or expert fees and any and all other party specific
costs. Either party, before or during any arbitration, may apply to a court
having jurisdiction for a restraining order or injunction where such relief is
necessary to protect its interests. Prior to initiation of arbitration, the
aggrieved party will give the other party written notice, in accordance with
this Agreement, describing the claim as to which it intends to initiate
arbitration.

     

    
      
        
        

      

      
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    27.         ENTIRE
AGREEMENT. This Agreement constitutes the entire agreement between the Company
and the Independent Director with respect to the subject matter hereof, and
supersedes all prior understandings and agreements with respect to such subject
matter.

     

    IN
WITNESS WHEREOF, the parties hereto have executed this Independent Director
Indemnification Agreement as of the day and year first above
written.

     

    

    
      
        
          
            
              
                	 
      	 	 
      	 
	
                        AGREED

                      	 	
                        AGREED

                      	 
	 
      	 	 
      	 
	
                        Lihua
      International, Inc.

                      	 	
                        Independent
      Director

                      	 
	 
      	 	 
      	 
	 
      	 	 
      	 
	 
      	 	 
      	 
	
                              
                          /s/ Jianhua
      Zhu

                        

                      	 	
                              
                          /s/ Jonathan P.
      Serbin

                        

                      	 
	
                        Name:  Jianhua
      Zhu

                      	 	
                        Name:
      Jonathan P. Serbin

                      	 
	
                        Title:   Chairman
      and CEO

                      	 	 
      	 
	 
      	 	 
      	 

              

            

          

        

      

    

     

    

     

    
      
        
        

      

      
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    SCHEDULE
A

     

    
      	
              I. 

            	
              COMPENSATION:

            

    

     

    A.  Fees. For all
services rendered by the Independent Director pursuant to this Agreement, both
during and outside of normal working hours, including but not limited to,
attending all required meetings of the Board or applicable committees thereof,
executive sessions of the independent directors, reviewing filing reports and
other corporate documents as requested by the Company, providing comments and
opinions as to business matters as requested by the Company, the Company agrees
to pay to the Independent Director a fee in cash of Twenty-Five Thousand Dollars
($25,000) during the Term (the “Base Fee”).  In addition to the Base
Fee, the Company agrees to pay the Independent Director a fee in cash of Five
Thousand Dollars ($5,000) (the Audit Committee Fee”), as long the Independent
Director remains on the Audit Committee of the Company.  The Base Fee
and the Audit Committee Fee shall be paid in cash to the Independent Director on
a quarterly basis in equal installments on the last day of each calendar
quarter. In addition to the Base Fee, and the Audit Committee Fee, the Company
agrees to pay the Independent Director the following:

    

    A)  If
the Independent Director resides in China:  (i) a $1,000 fee for each
board meeting attended by telephone; (ii) a $1,500 fee for each board meeting
attended in person in China; and (iii) a $5,000 fee for each board meeting
attended in person outside of China.

    

    B)  If
the Independent Director resides outside of China:  (i) a $1,000 fee
for each board meeting attended by telephone (ii)a $5,000 fee for each board
meeting attended in person outside of the United States; and (iii) a $1,500 fee
for each board meeting attended within the United States.

    

    The fees
under Sections I(A) and (B) above shall be paid on the last day of each calendar
quarter for meetings attended during such calendar quarter.

    

    B.  Stock Option. Upon
execution of this Agreement the Independent Director shall be granted a 10-year
option to purchase Twenty Thousand (20,000) shares of common stock of the
Company, with an exercise price equal to the fair market value of a share of the
Company’s common stock on the date of the grant of the option.  Such
option shall vest in equal installments on August 31, 2010, November 30, 2010,
February 28, 2011 and May 31, 2011, as long as the Independent Director is
serving as a member of the Board of Directors at such time.  Such
award shall be made pursuant to the Company’s 2009 Omnibus Securities and
Incentive Plan. The Independent Director’s rights in respect to any grant shall
be determined solely by the Compensation Committee of the Company and are
subject to execution by Independent Director of any applicable agreements as
established and requested by the Company pursuant to the 2009 Omnibus Securities
and Incentive Plan.

     

    
      
        
        

      

      
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    C.   Expenses. During the
Term the Company shall promptly reimburse the Independent Director for all
expenses incurred by him/her in connection with attending (a) all meetings of
the Board or applicable committees thereof, (b) executive sessions of the
independent directors, and (c) stockholder meetings, as a director or a member
of any committee of the Board , which are approved by the Company in
advance.  The Company will only reimburse the Independent Director for
economy class airplane tickets.  In addition, the Independent Director
shall rely on the Company to arrange all hotel accommodations in connection with
any such meetings the Independent Director must attend. The amount of such
expenses eligible for reimbursement by the Company during a calendar year shall
not affect such expenses eligible for reimbursement by the Company in any other
calendar year, and the reimbursement of any such eligible expenses shall be made
on or before the last day of the calendar year next following the calendar year
in which the expense was incurred.

     

     

     

    
      
        
        

      

      
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    NO OTHER
BENEFITS OR COMPENSATION. The Independent Director acknowledges and agrees that
he/she is not granted and is not entitled to any other benefits or compensation
from the Company for the services provided under this Agreement except expressly
provided for in this Schedule A.

     

    

    
      
        
          
            
              
                	 
      	 	 
      	 
	
                        AGREED

                      	 	
                        AGREED

                      	 
	 
      	 	 
      	 
	
                        Lihua
      International, Inc.

                      	 	
                        Independent
      Director

                      	 
	 
      	 	 
      	 
	 
      	 	 
      	 
	 
      	 	 
      	 
	
                        /s/ Jianhua Zhu

                      	 	
                        /s/ Jonathan P. Serbin

                      	 
	
                        Name:  Jianhua
      Zhu

                      	 	
                        Name:  Jonathan
      P. Serbin

                      	 
	
                        Title:   Chairman
      and CEO

                      	 	 
      	 
	 
      	 	 
      	 

              

            

          

        

      

    

     

    

    

     

    

    
      
        
        

      

      
        12EXECUTION
VERSION

    

    SUPPLEMENTAL
INDENTURE

     

    THIS SUPPLEMENTAL INDENTURE,
dated as of June 14, 2010 (this “Supplemental
Indenture”), is entered into by and between GKK CAPITAL LP, a Delaware
limited partnership (the “Company”) and THE
BANK OF NEW YORK MELLON TRUST COMPANY, NATIONAL ASSOCIATION (the “Trustee”).

     

    WHEREAS, the Company and the
Trustee entered into a Junior Subordinated Indenture dated as of January 30,
2009 (the “Original
Indenture”), as
amended by that certain Supplemental Indenture dated as of October 14, 2009
(together with the Original Indenture, the “Indenture”);

     

    WHEREAS, the Company desires
to amend the Indenture as set forth below; and

     

    WHEREAS, execution and
delivery by the Company of this Supplemental Indenture has been duly authorized
by all requisite corporate action and all other action required to make this
Supplemental Indenture a valid and binding instrument.

     

    NOW, THEREFORE, in
consideration of the foregoing, the Trustee and the Company are entering into
this Supplemental Indenture pursuant to Section 9.2 of the
Indenture as follows:

     

    ARTICLE
I

     

    AMENDMENTS
TO INDENTURE

     

    Section
1.01  Relation to
Indenture.  This Supplemental Indenture amends and supplements
the Indenture and shall be part and subject to all terms
thereof.  Except as amended and supplemented hereby, the Indenture and
the Securities issued thereunder shall continue in full force and
effect.

     

    Section
1.02  Definitions.  Each
term used herein that is defined in the Indenture shall have the meaning
assigned to such term in the Indenture unless otherwise specifically defined
herein, in which case the definition set forth herein shall govern.

     

    Section
1.03  The definition of “Redemption Price” is hereby deleted in
its entirety and replaced with the following:

     

    ““Redemption Price” means, when
used with respect to any Security to be redeemed, in whole or in part, the
In-Kind Redemption Price or the Optional Redemption Price, as applicable, at
which such Security or portion thereof is to be redeemed as fixed by or pursuant
to this Indenture.”

     

    Section
1.04    The following sentences shall be added to the
end of Section
11.1 of the Indenture:

    
      
         

      

      
        -1-

        
          

        

      

      
         

      

    

    “Notwithstanding
anything to the contrary herein, the Company, may, at its option, redeem the
Securities in whole at any time or in part from time to time by delivering to
the Holders certain replacement securities acceptable to the Holders in par
amounts greater than or equal to the Securities being redeemed, exclusive of any
accrued interest on the Securities being redeemed (the “In-Kind Redemption
Price”).  It being understood that the securities set forth on Exhibit B hereto are
acceptable to the Holders as replacement securities, which if delivered to the
Trustee together with a one-time payment of $5,000,000 in the form of
three-month Treasury bills issued by the U.S. Department of Treasury to be
delivered to the Trustee or as directed by the Trustee will permit the
redemption of the Securities in whole.  Notwithstanding anything to
the contrary herein, the Company shall not be required to pay accrued interest
on the Securities being redeemed in connection with the Company’s payment of the
In-Kind Redemption Price.  The Holders may agree to waive the notice
requirements set forth in Section 11.5 hereof
with respect to any redemption described in the two preceding
sentences.”

     

    Section
1.05   Section 11.3 of the Indenture is hereby deleted in
its entirety and replaced with the following:

     

    “The
election of the Company to redeem any Securities, in whole or in part, shall be
evidenced by or pursuant to a Board Resolution.  In case of any redemption
at the election of the Company, the Company shall, not less than two (2)
Business Days and not more than seventy five (75) days prior to the
Redemption Date (unless a shorter notice shall be satisfactory to the Trustee),
notify the Trustee in writing of such date and of the principal amount of the
Securities to be redeemed and provide the additional information required to be
included in the notice or notices contemplated by Section 11.5. 
In the case of any redemption of Securities, in whole or in part, (a) prior
to the expiration of any restriction on such redemption provided in this
Indenture or the Securities or (b) pursuant to an election of the Company
which is subject to a condition specified in this Indenture or the Securities,
the Company shall furnish the Trustee with an Officers’ Certificate and an
Opinion of Counsel evidencing compliance with such restriction or
condition.”

     

    Section
1.06   Section 11.5(a) of the Indenture is hereby deleted
in its entirety and replaced with the following:

     

    “Notice
of redemption shall be given by the Company not less than two (2) Business
Days and not more than sixty (60) calendar days prior to the Redemption
Date to each Holder of Securities to be redeemed, in whole or in
part.”

     

    Section
1.07    Section 11.6 of the Indenture is hereby
deleted in its entirety and replaced with the following:

     

    “Prior to
10:00 a.m., New York City time, on the Redemption Date specified in the notice
of redemption given as provided in Section 11.5, the
Company will deposit with the Trustee or with one or more Paying Agents (or if
the Company is acting as its own Paying Agent, the Company will segregate and
hold in trust as provided in Section 10.2) an
amount of money or securities, as applicable, sufficient to pay the Redemption
Price of, and, if required, any accrued interest (including any Additional
Interest) on, all the Securities (or portions thereof) that are to be redeemed
on that date.”

    
      
         

      

      
        -2-

        
          

        

      

      
         

      

    

     

    ARTICLE
II

     

    AGREEMENT
TO BE BOUND

     

    Section
2.01    The Trustee accepts the trust in this
Supplemental Indenture declared and provided upon the terms and conditions set
forth in the Indenture.  The Trustee shall not be responsible in any
manner whatsoever for the validity or sufficiency of this Supplemental Indenture
or the due execution hereof by the Company or for or in respect of the recitals
and statements contained herein, all of which recitals and statements are made
solely by the Company.

     

    Section
2.02   This Supplemental Indenture shall become effective
only upon the satisfaction of the following conditions:  (i) the
Trustee shall have received a counterpart of this Supplemental Indenture duly
executed by the Company and the Trustee and consented and agreed to by each
Holder of Outstanding Securities, (ii) the delivery of an Opinion of Counsel
relating to this Supplemental Indenture in accordance with Sections 1.2 and
9.3 of the
Indenture, (iii) the delivery of an Officer’s Certificate relating to this
Supplemental Indenture in accordance with Sections 1.2 and
9.3 of the
Indenture, (iv) the Trustee shall have received a Board Resolution of the
Company authorizing the Company to enter into this Supplemental Indenture, and
(v) the Company shall have paid all attorneys’ fees and disbursements of the
Trustee in connection with this Supplemental Indenture, and all other amounts
due and owing to the Trustee, if any, which such expenses shall be paid
simultaneously with the execution of this Supplemental Indenture.

     

    Section
2.03   By execution of this Supplemental Indenture, each
of Taberna Preferred Funding III, Ltd. (“Taberna III”) and Taberna Preferred
Funding IV, Ltd. (“Taberna IV”), collectively as Holders of 100% of the
Outstanding Securities, hereby in accordance with Section 9.2 of the
Indenture, (i) consents to the Trustee and the Company executing and delivering
this Supplemental Indenture, (ii) directs the Trustee to execute and deliver
this Supplemental Indenture, (iii) waives the requirement of the Trustee to
deliver a copy of the final form of this Supplemental Indenture pursuant to
Section 9.3 of the Indenture, and (iv) agrees to and do hereby release the
Trustee for any action taken or to be taken by the Trustee in connection with
its execution and delivery of this Supplemental Indenture and for any liability
or responsibility arising in connection herewith.

     

    Section
2.04     Each of Taberna III and Taberna IV
further acknowledges that (i) neither the Company nor any of its affiliates has
made or will make any representations or warranties with respect to the
performance and ratings of the securities set forth in Exhibit B hereto and
(ii) it has conducted independent evaluation of the performance and ratings of
such securities.

     

    ARTICLE
III

     

    MISCELLANEOUS

     

    Section
3.01    This Supplemental Indenture may be executed
in any number of counterparts, each of which shall be deemed to be an original
for all purposes; but such counterparts shall together be deemed to constitute
but one and the same instrument.  The executed counterparts may be
delivered by facsimile transmission, which facsimile copies shall be deemed
original copies.

    
      
         

      

      
        -3-

        
          

        

      

      
         

      

    

     

    Section
3.02   The laws of the State of New York shall govern this
Supplemental Indenture without regard to the conflict of law principles
thereof.

     

    Section
3.03   In the event of any inconsistency between the terms
and conditions of this Supplemental Indenture and the terms and conditions of
the Indenture, the terms and conditions of this Supplemental Indenture shall
prevail.

     

    [Remainder
of Page Intentionally Left Blank]

    
      
         

      

      
        -4-

        
          

        

      

      
         

      

    

    IN WITNESS WHEREOF, the
parties hereto have caused this Supplemental Indenture to be duly executed as of
the day and year first above written.

     

    
      
        
          
            
              	
                      GKK
      CAPITAL LP,

                    
	
                      as
      Company

                    
	 
      
	
                      By: 

                    	
                      Gramercy
      Capital Corp.,

                    
	 
      	
                      its
      general partner

                    
	 
      	 
      
	 
      	
                      By: 

                    	
                      /s/
      Robert R. Foley

                    
	 
      	
                       

                    	
                      Name:
      Robert R. Foley

                    
	 
      	
                       

                    	
                            
                        Title:
      Chief Operating
Officer

                      

                    

            

          

        

      

    

     

    
      
        
          
            	
                    THE
      BANK OF NEW YORK MELLON TRUST

                  
	
                    COMPANY, NATIONAL
      ASSOCIATION,

                  
	
                    as
      Trustee

                  
	 
      
	
                    By: 

                  	
                    /s/ Bill Marshall

                  
	 
      	
                    Name: Bill
      Marshall

                  
	 
      	
                    Title: Vice
      President

                  

          

        

      

    

     

    
      
        	
                CONSENTED
      AND AGREED TO PURSUANT

              
	
                TO
      SECTION 9.2 AND FOR PURPOSE OF

              
	
                SECTIONS
      2.03 AND 2.04 BY:

              
	 
      
	
                TABERNA
      PREFERRED FUNDING III, LTD.

              
	
                TABERNA
      PREFERRED FUNDING IV, LTD.

              
	 
      	 
      
	
                By:

              	
                  
      TP Management LLC, as collateral manager

              
	 
      	 
      
	
                By: 

              	
                /s/ Constantine M.
  Dakolias

              
	 
      	
                Name:
      Constantine M. Dakolias

              
	 
      	
                Title:
      President

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