ORIGINAL SHAREHOLDER LOCK-UP AGREEMENT
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 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 if
such transfer would constitute a violation or breach of this Agreement and/or
the Securities Purchase Agreement.
4. Notices. All notices, demands, consents,
requests, instructions and other communications to be given or delivered or
permitted under or by reason of the provisions of this Agreement or in
connection with the transactions contemplated hereby shall be in writing and
shall be deemed to be delivered and received by the intended recipient as
follows: (i) if personally delivered, on the business day of such delivery (as
evidenced by the receipt of the personal delivery service), (ii) if mailed
certified or registered mail return receipt requested, two (2) business days
after being mailed, (iii) if delivered by overnight courier (with all charges
having been prepaid), on the business day of such delivery (as evidenced by the
receipt of the overnight courier service of recognized standing), or (iv) if
delivered by facsimile transmission, on the business day of such delivery if
sent by 6:00 p.m. in the time zone of the recipient, or if sent after that time,
on the next succeeding business day (as evidenced by the printed confirmation of
delivery generated by the sending party’s telecopier machine). If any notice,
demand, consent, request, instruction or other communication cannot be delivered
because of a changed address of which no notice was given (in accordance with
this Section 4), or the refusal to accept same, the notice, demand, consent,
request, instruction or other communication shall be deemed received on the
second business day the notice is sent (as evidenced by a sworn affidavit of the
sender). All such notices, demands, consents, requests, instructions and other
communications will be sent to the following addresses or facsimile numbers as
applicable.
If to the
Company:
Lihua
International, Inc.
c/o Lihua
Holdings Limited
Houxiang
Five-Star Industry District
Danyang
City, Jiangsu Province, PRC
Attention: ▇▇.
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Tel.
No.:
Fax
No.:
with copies (which copies shall not
constitute notice to the Company) to:
Loeb
& Loeb LLP
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Attn.:
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Tel. No.:
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Fax No.:
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If to
Shareholder, to the address set forth on Schedule A attached
hereto.
or to
such other address as any party may specify by notice given to the other party
in accordance with this Section 4.
5. Amendment. This Agreement may not be modified,
amended, altered or supplemented, except by a written agreement executed by each
of the parties hereto.
6. Entire
Agreement. This Agreement
contains the entire understanding and agreement of the parties relating to the
subject matter hereof and supersedes all prior and/or contemporaneous
understandings and agreements of any kind and nature (whether written or oral)
among the parties with respect to such subject matter.
7. Governing
Law. This Agreement shall
be governed by and construed in accordance with the laws of the State of New
York applicable to agreements made and to be performed in that state, without
regard to any of its principles of conflicts of laws or other laws which would
result in the application of the laws of another jurisdiction. This Agreement
shall be construed and interpreted without regard to any presumption against the
party causing this Agreement to be drafted.
8. Waiver of
Jury Trial. EACH OF THE
PARTIES HERETO HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES THE RIGHT TO A
TRIAL BY JURY IN ANY ACTION, SUIT OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH OF THE PARTIES
UNCONDITIONALLY AND IRREVOCABLY CONSENTS TO THE EXCLUSIVE JURISDICTION OF THE
COURTS OF THE STATE OF NEW YORK LOCATED IN NEW YORK COUNTY AND THE FEDERAL
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK WITH RESPECT TO ANY SUIT,
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY, AND EACH OF THE PARTIES HEREBY UNCONDITIONALLY
AND IRREVOCABLY WAIVES ANY OBJECTION TO VENUE IN NEW YORK COUNTY OR SUCH
DISTRICT, AND AGREES THAT SERVICE OF ANY SUMMONS, COMPLAINT, NOTICE OR OTHER
PROCESS RELATING TO SUCH SUIT, ACTION OR OTHER PROCEEDING MAY BE EFFECTED IN THE
MANNER PROVIDED IN SECTION 4.
9. Severability. The parties agree that if any
provision of this Agreement be held to be invalid, illegal or unenforceable in
any jurisdiction, that holding shall be effective only to the extent of such
invalidity, illegally or unenforceability without invalidating or rendering
illegal or unenforceable the remaining provisions hereof, and any such
invalidity, illegally or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction. It
is the intent of the parties that this Agreement be fully enforced to the
fullest extent permitted by applicable law.
10. Binding
Effect; Assignment. This
Agreement and the rights and obligations hereunder may not be assigned by the
Shareholder hereto without the prior written consent of the Company. This
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and permitted
assigns.
11. Headings. The section headings contained in
this Agreement (including, without limitation, section headings and headings in
the exhibits and schedules) are inserted for reference purposes only and shall
not affect in any way the meaning, construction or interpretation of this
Agreement. Any reference to the masculine, feminine, or neuter gender shall be a
reference to such other gender as is appropriate. References to the singular
shall include the plural and vice versa.
12. Counterparts. This Agreement may be executed in two
or more counterparts, and by the different parties hereto in separate
counterparts, by facsimile or other electronic transmission, each of which when
executed shall be deemed to be an original, and all of which, when taken
together, shall constitute one and the same document. This Agreement shall
become effective when one or more counterparts, taken together, shall have been
executed and delivered by all of the parties hereto.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
[SIGNATURE
PAGE TO LOCK-UP AGREEMENT]
IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date first
written above herein.
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LIHUA
INTERNATIONAL, INC.
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By:
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Name:
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Title:
CEO
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SHAREHOLDER
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By:
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Name:
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Schedule
A
SHAREHOLDER NAME AND
ADDRESS
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BCM
Equity Partners II LLC
Penumbra
Worldwide LTD
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