PRINCIPAL STOCKHOLDER 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
“Shareholder”).
WHEREAS, the Company intends to enter into (i) a
share exchange transaction in which the holder of all of the equity
interests in Ally Profit Investment 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, THE 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 a date that
is twelve (12) 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 ”), as the case may be (the
“ Lock-Up Period ”). The Shareholder further
agrees that, during the twenty-four (24) months immediately
following the Lock-Up Period, such Shareholder shall not transfer
more than one-twelfth (1/12) of such Shareholder’s total
holdings of Common Stock as of the date hereof during any one (1)
calendar month. Notwithstanding the foregoing, the
Shareholder shall be permitted to engage in a Transfer in a private
sale of the Lock-Up Shares provided such Shareholder receives prior
written consent from Vision Opportunity China, LP.
2. Ownership . During the Lock-Up
Period, the 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 required to disclose the existence
of this Agreement to its transfer agent. The Company and its
transfer agent are hereby authorized and required to decline to
make any transfer of the Common Stock i
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