ORIGINAL SHAREHOLDER LOCK-UP
AGREEMENT
THIS AGREEMENT (this “ Agreement
”) is dated as of October 31, 2008 by and between Lihua
International, Inc., a Delaware corporation (the “
Company ”), and the persons set forth on Schedule
A , attached hereto (each a “ Shareholder ”
and collectively, the “ Shareholders
”).
WHEREAS, the Company intends to enter into (i) a
share exchange transaction in which the holders of all of the
equity interests in Ally Profit Investments Limited, a British
Virgin Islands company, will deliver all of such equity interests
to the Company and receive from the Company, as consideration,
certain shares of the common stock of the Company, par value
$0.0001 per share (such stock, the “ Common Stock
”; such transaction, the “ Share Exchange
Transaction ”), and (ii) a private placement financing
transaction with certain accredited investors (the “
Purchasers ”) whereby the Company will issue units
composed of shares of a newly-designated Series A Convertible
Preferred Stock, par value $0.0001 per share and related warrants
to purchase shares of Common Stock of the Company (the “
Financing Transaction ”).
WHEREAS, in connection with the Financing
Transaction, the Company entered into a Securities Purchase
Agreement, dated as of the date hereof (the “ Securities
Purchase Agreement ”), by and among the Company and the
Purchasers, and certain other papers, agreements, documents,
instruments and certificates necessary to carry out the purposes
thereof (collectively, the “ Transaction Documents
”).
WHEREAS, Shareholder wishes to induce the
Company and the Purchasers to enter into the Financing
Transaction.
WHEREAS, in order to induce the Company and the
Purchasers to enter into the Financing Transaction, the Shareholder
has agreed not to sell any shares of the Company’s Common
Stock that Shareholder presently owns on the date hereof, or may
acquire on or after the date hereof, except in accordance with the
terms and conditions set forth herein (collectively, the “
Lock-Up Shares ”). Capitalized terms used herein
without definition shall have the meanings assigned to such terms
in the Securities Purchase Agreement.
NOW, THEREFORE, in consideration of the
covenants and conditions hereinafter contained, the parties hereto
agree as follows:
1. Restriction on Transfer; Term .
The Shareholder hereby agrees with the Company that such
Shareholder will not offer, sell, contract to sell, assign,
transfer, hypothecate, gift, pledge or grant a security interest
in, or otherwise dispose of, or enter into any transaction which is
designed to, or might reasonably be expected to, result in the
disposition of (whether by actual disposition or effective economic
disposition due to cash settlement or otherwise, directly or
indirectly) (each, a “ Transfer ”), any of the
Lock-Up Shares and shall not Transfer such shares until the earlier
of: (i) a date that is six (6) months following the date that the
Company’s common stock is listed and trading on the Nasdaq
Capital Market, the Nasdaq Global Market, the American Stock
Exchange, the New York Stock Exchange, or any successor market
thereto (each a “ National Stock Exchange ”);
and (ii) the date that is eighteen (18) months following the date
that the Initial Registration Statement (as defined in the
Registration Rights Agreement) is declared effective by the
Securities and Exchange Commission, as the case may be (the “
Lock-Up Period ”). The Shareholders further agree that
during the twelve (12) months immediately following the Lock-Up
Period, such Shareholders, in the aggregate, shall not Transfer,
during each subsequent thirty (30) day period (a “ Trading
Period ”), more than one-tenth (1/10) of the total
trading volume of the Company’s common stock for the
preceding thirty (30) day period (the “ Trading Volume
”). The Trading Volume and each Trading Period
shall be calculated on the first day following the Lock-Up Period
and re-calculated every thirty (30) days thereafter.
2. Ownership . During the Lock-Up
Period, Shareholder shall retain all rights of ownership in the
Lock-Up Shares, including, without limitation, voting rights and
the right to receive any dividends that may be declared in respect
thereof, except as otherwise provided in the Transaction Documents
whereby any benefits, rights, title or otherwise shall inure to the
Purchasers.
3. Company and Transfer Agent . The
Company is hereby authorized and requi
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