Exhibit 10.1

SECURITIES PURCHASE AGREEMENT

Dated as of October 31, 2008

among

LIHUA INTERNATIONAL, INC.

and

THE PURCHASERS LISTED ON EXHIBIT A

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Table of Contents

   
Page
     
ARTICLE I
Purchase and Sale of Preferred Stock and Warrants
1
     
Section 1.1
Purchase and Sale of Stock
1
     
Section 1.2
Warrants
1
     
Section 1.3
Conversion and Warrant Shares
1
     
Section 1.4
Purchase Price and Closing
2
     
Section 1.5
Share Exchange Transaction
2
     
ARTICLE II
Representations and Warranties
3
     
Section 2.1
Representations and Warranties of the Company
3
     
Section 2.2
Representations and Warranties of the Purchasers
19
     
ARTICLE III
Covenants
22
     
Section 3.1
Securities Compliance
22
     
Section 3.2
Registration and Listing
22
     
Section 3.3
Inspection Rights
23
     
Section 3.4
Compliance with Laws
23
     
Section 3.5
Keeping of Records and Books of Account
23
     
Section 3.6
Reporting Requirements
23
     
Section 3.7
Amendments
24
     
Section 3.8
Other Agreements
24
     
Section 3.9
Distributions
24
     
Section 3.10
Use of Proceeds
24
     
Section 3.11
Reservation of Shares
24

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Section 3.12
Transfer Agent
24
     
Section 3.13
Disposition of Assets
25
     
Section 3.14
Reporting Status
25
     
Section 3.15
Disclosure of Transaction
25
     
Section 3.16
Disclosure of Material Information
26
     
Section 3.17
Pledge of Securities
26
     
Section 3.18
Lock-Up Agreements
26
     
Section 3.19
Investor and Public Relations Escrow
27
     
Section 3.20
DTC
27
     
Section 3.21
Sarbanes-Oxley Act
27
     
Section 3.22
Exchange Listing
27
     
Section 3.23
Registered Capital of Lihua Copper
29
     
Section 3.24
Form D
29
     
Section 3.25
No Integrated Offerings
29
     
Section 3.26
No Commissions in Connection with Conversion of Preferred Shares
29
     
Section 3.27
Financial Public Relations Firm and Appearances
29
     
Section 3.28
Vice President of Investor Relations
30
     
Section 3.29
Nasdaq Corporate Governance Requirements
30
     
Section 3.30
Option Plan Restrictions
31
     
Section 3.31
Change of Auditor
31
     
Section 3.32
Internal Control Consultant
31
     
Section 3.33
Observer Rights
32
     
Section 3.34
Transactions with Related Parties
32

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Section 3.35
Environmental Authority Approval for Jiangsu Lihua Copper Industry Co., Ltd.
32
     
Section 3.36
Direct Lending
32
     
Section 3.37
Comply with Relevant Employment Laws in PRC
33
     
Section 3.38
Construction Works Planning Permit and Construction Works Execution Permit for
Lihua Copper
33
     
Section 3.39
Additional Agreements
34
     
Section 3.40
No Manipulation of Price
34
     
Section 3.41
Variable Securities
34
     
Section 3.42
Additional Negative Covenants
34
     
Section 3.43
Intellectual Property and Commercial and Trade Secrets
35
     
Section 3.44
Payment of Stamp Tax
35
     
Section 3.45
Filing of PRC Certificates
35
     
Section 3.46
Lihua Copper Pay-Off Loan from Lihua Electron
35
     
Section 3.47
Payment of Purchasers’ PRC Legal Counsel
35
     
ARTICLE IV
CONDITIONS
36
     
Section 4.1
Conditions Precedent to the Obligation of the Company to Sell the Units
36
     
Section 4.2
Conditions Precedent to the Obligation of the Purchasers to Purchase the Units
36
     
ARTICLE V
Stock Certificate Legend
40
     
Section 5.1
Legend
40
     
ARTICLE VI
Indemnification
41
     
Section 6.1
General Indemnity
41
     
Section 6.2
Indemnification Procedure
42

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ARTICLE VII
Miscellaneous
42
     
Section 7.1
Fees and Expenses
42
     
Section 7.2
Specific Enforcement, Consent to Jurisdiction
43
     
Section 7.3
Entire Agreement; Amendment
44
     
Section 7.4
Notices
44
     
Section 7.5
Waivers
45
     
Section 7.6
Headings
45
     
Section 7.7
Successors and Assigns
45
     
Section 7.8
No Third Party Beneficiaries
46
     
Section 7.9
Governing Law
46
     
Section 7.10
Survival
46
     
Section 7.11
Counterparts
46
     
Section 7.12
Publicity
46
     
Section 7.13
Severability
46
     
Section 7.14
Further Assurances
47
     
Section 7.15
Currency
47
     
Section 7.16
Judgment Currency
47
     
Section 7.17
Termination
48
     
Exhibit A
List of Purchasers
       
Exhibit B
Form of Series A Warrant
       
Exhibit C
Form of Registration Rights Agreement
       
Exhibit D-1
Form of Lock-up Agreement for the PRC Shareholders
       
Exhibit D-2
Form of Lock-up Agreement for Original Shareholders
 

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Exhibit D-3
Form of Lock-up Agreement for Magnify Wealth
       
Exhibit E-1
Form of Escrow General Agreement
       
Exhibit E-2
Form of Securities Escrow Agreement
       
Exhibit E-3
Form of Investor and Public Relations Escrow Agreement
       
Exhibit E-4
Form of Lihua Shareholder Escrow Agreement
       
Exhibit F
Series A Certificate of Designation
       
Exhibit G
Irrevocable Transfer Agent Instructions
       
Exhibit H
Form of Opinion of Counsel
 

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SECURITIES PURCHASE AGREEMENT

This SECURITIES PURCHASE AGREEMENT (the “Agreement”) is dated as of October 31,
2008 by and among Lihua International, Inc. (f/k/a Plastron Acquisition Corp.
I), a Delaware corporation, (the “Company”) and each of the Purchasers of Units
whose names are set forth on Exhibit A hereto (individually, a “Purchaser” and
collectively, the “Purchasers”).

The parties hereto agree as follows:

ARTICLE I

Purchase and Sale of Preferred Stock and Warrants

Section 1.1 Purchase and Sale of Stock. Upon the following terms and conditions,
the Company shall issue and sell to the Purchasers and each of the Purchasers
shall purchase from the Company, Units (the “Units”), each consisting of one
share of the Company’s Series A Convertible Preferred Stock, par value $0.0001
per share (the “Preferred Shares”), convertible into one share of the Company’s
common stock, par value $0.0001 per share (the “Common Stock”) and a Series A
Warrant (as defined below) to purchase the number of shares of Common Stock
equal to twenty two percent (22%) of the Preferred Shares purchased by each
Purchaser pursuant to the terms of this Agreement, as set forth opposite such
Purchaser’s name on Exhibit A hereto, as applicable. The designation, rights,
preferences and other terms and provisions of the Series A Convertible Preferred
Stock are set forth in the Series A Certificate of Designation of the Relative
Rights and Preferences of the Series A Convertible Preferred Stock attached
hereto as Exhibit F (the “Series A Certificate of Designation”). The Company and
the Purchasers are executing and delivering this Agreement in accordance with
and in reliance upon the exemption from securities registration afforded by Rule
506 of Regulation D (“Regulation D”) as promulgated by the United States
Securities and Exchange Commission (the “Commission”) under the Securities Act
of 1933, as amended (the “Securities Act”) or Section 4(2) of the Securities
Act.

Section 1.2 Warrants. Upon the following terms and conditions and for no
additional consideration, each of the Purchasers shall be issued Series A
Warrants, in substantially the form attached hereto as Exhibit B (the
“Warrants”), to purchase the number of shares of Common Stock equal to twenty
two percent (22%) of the number of Preferred Shares purchased by each Purchaser
pursuant to the terms of this Agreement, as set forth opposite such Purchaser’s
name on Exhibit A hereto. The Warrants shall expire five (5) years following the
Closing Date, and have an initial exercise price of $3.50.

Section 1.3 Conversion and Warrant Shares. The Company has authorized and has
reserved and covenants to continue to reserve, free of preemptive rights and
other similar contractual rights of stockholders, a number of shares of Common
Stock equal to one hundred thirty percent (130%) of the number of shares of
Common Stock as shall from time to time be sufficient to effect conversion of
all of the Preferred Shares and exercise of the Warrants then outstanding. Any
shares of Common Stock issuable upon conversion of the Preferred Shares and
exercise of the Warrants (and such shares when issued) are herein referred to as
the “Conversion Shares” and the “Warrant Shares”, respectively. The Preferred
Shares, the Conversion Shares and the Warrant Shares are sometimes collectively
referred to as the “Shares”.

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Section 1.4 Purchase Price and Closing. Subject to the terms and conditions
hereof, the Company agrees to issue and sell to the Purchasers and, in
consideration of and in express reliance upon the representations, warranties,
covenants, terms and conditions of this Agreement, the Purchasers, severally but
not jointly, agree to purchase the Units for an aggregate purchase price of
$15,000,000 (the “Offering Amount”), or $2.20 per Unit (the “Purchase Price”).
The closing of the purchase and sale of the Units to be acquired by the
Purchasers from the Company under this Agreement shall take place at the offices
of Loeb & Loeb, LLP, 345 Park Avenue, New York, NY 10154 (the “Closing”).
Subject to the terms and conditions set forth in this Agreement, the date and
time of the Closing shall be the Closing Date (or such later date as is mutually
agreed to by the Company and Vision Opportunity China LP (“Vision Opportunity
China”, as the lead Purchaser), provided, that all of the conditions set forth
in Article IV hereof and applicable to the Closing shall have been fulfilled or
waived in accordance herewith (the “Closing Date”). Subject to the terms and
conditions of this Agreement, at the Closing the Company shall deliver or cause
to be delivered to each Purchaser (x) a certificate for the number of Preferred
Shares set forth opposite the name of such Purchaser on Exhibit A hereto, (y)
its Warrants to purchase such number of shares of Common Stock as is set forth
opposite the name of such Purchaser on Exhibit A attached hereto and (z) any
other documents required to be delivered pursuant to Article IV hereof. At the
Closing, each Purchaser shall deliver its Purchase Price by wire transfer to the
escrow account pursuant to the Escrow General Agreement (as hereafter defined).
The parties acknowledge that at the Closing, One Million Dollars ($1,000,000) of
the Offering Amount shall be held in escrow and not disbursed to the Company
until such time as the covenants discussed in Section 3.23 (Registered Capital
of Lihua Copper), Section 3.35 (Environmental Authority Approval for Jiangsu
Lihua Copper Industry Co., Ltd.), Section 3.37 (Comply with Relevant Employment
Laws in PRC), Section 3.38 (Construction Works Planning Permit and Construction
Works Execution Permit for Lihua Copper), Section 3.43 (Intellectual Property
and Commercial and Trade Secrets), Section 3.44 (Payment of Stamp Tax), Section
3.45 (Filing of PRC Certificates) and Section 3.46 (Lihua Copper Pay-Off Loan
from Lihua Electron) are complied with, in full and the satisfaction of Vision
Opportunity China and JZJ (as defined below). In addition, the parties
acknowledge that Seven Hundred Fifty Thousand Dollars ($750,000) of the Purchase
Price funded on the Closing Date shall be deposited in an escrow account
pursuant to the Escrow General Agreement to be used by the Company in connection
with investor and public relations.

Section 1.5 Share Exchange Transaction. The parties acknowledge that immediately
prior to the consummation of the transactions contemplated by this Agreement,
the Company will issue shares of its Common Stock to Magnify Wealth Enterprise
Limited organized in the British Virgin Islands (“Magnify Wealth”), pursuant to
that certain Share Exchange Agreement dated as of October 31, 2008 by and among
Magnify Wealth, Ally Profit Investments Limited, a British Virgin Islands
company (“Ally Profit”), the Company and the controlling stockholders of the
Company (the “Share Exchange Agreement”). Upon consummation of the transactions
contemplated by the Share Exchange Agreement, Ally Profit, together with its
subsidiaries, will become the wholly owned subsidiaries of the Company (the
“Share Exchange Transaction”).

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ARTICLE II

Representations and Warranties

Section 2.1 Representations and Warranties of the Company. The Company hereby
represents and warrants to the Purchasers on behalf of itself and its
subsidiaries, as of the date hereof and the Closing Date (except as set forth on
the Schedule of Exceptions attached hereto with each numbered Schedule
corresponding to the section number herein), as follows:

(a) Organization, Good Standing and Power. The Company and each of its
subsidiaries is a corporation or other entity duly incorporated or otherwise
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation or organization (as applicable) and has the
requisite corporate power to own, lease and operate its properties and assets
and to conduct its business as it is now being conducted. Except as disclosed on
Schedule 2.1(g), the Company does not have any subsidiaries. Except as set forth
on Schedule 2.1(g), the Company and each such subsidiary is duly qualified to do
business and is in good standing in every jurisdiction in which the nature of
the business conducted or property owned by it makes such qualification
necessary except for any jurisdiction(s) (alone or in the aggregate) in which
the failure to be so qualified will not have a Material Adverse Effect (as
defined in Section 2.1(c) hereof) on the Company’s financial condition.

(b) Authorization; Enforcement. The Company has the requisite corporate power
and authority to enter into and perform this Agreement, the Registration Rights
Agreement in the form attached hereto as Exhibit C (the “Registration Rights
Agreement”), the Lock-Up Agreements (as defined in Section 3.18 hereof) in the
forms attached hereto as Exhibit D-1, D-2 and D-3, the Escrow Agreement by and
among the Company, the Purchasers and the escrow agent named therein, dated as
of the date hereof, substantially in the form of Exhibit E-1 attached hereto
(the “Escrow General Agreement”), the Securities Escrow Agreement by and among
the Company, the Purchasers, the Principal Stockholder (as hereinafter defined)
and the escrow agent named therein, dated as of the date hereof, substantially
in the form of Exhibit E-2 attached hereto (the “Securities Escrow Agreement”),
the Investor and Public Relations Escrow Agreement by and among the Company, the
Purchasers and the escrow agent named therein, dated as of the date hereof,
substantially in the form of Exhibit E-3 attached hereto (the “Investor and
Public Relations Escrow Agreement”), the Lihua Shareholders Escrow Agreement by
and among the Company, the Shareholders and the escrow agent named therein,
dated as of the date hereof, substantially in the form of Exhibit E-4 attached
hereto (the “Lihua Shareholders Escrow Agreement” and together with the Escrow
General Agreement, the Securities Escrow Agreement and the Investor and Public
Relations Escrow Agreement, the “Escrow Agreements”), the Irrevocable Transfer
Agent Instructions (as defined in Section 3.12), the Series A Certificate of
Designation, and the Warrants (collectively, the “Transaction Documents”) and to
issue and sell the Units, the Shares and the Warrants in accordance with the
terms hereof. The execution, delivery and performance of the Transaction
Documents by the Company and the consummation by it of the transactions
contemplated hereby and thereby have been duly and validly authorized by all
necessary corporate action, and no further consent or authorization of the
Company or its Board of Directors or stockholders is required. This Agreement
has been duly executed and delivered by the Company. The other Transaction
Documents will have been duly executed and delivered by the Company at the
Closing. Each of the Transaction Documents constitutes, or shall constitute when
executed and delivered, a valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation, conservatorship, receivership or
similar laws relating to, or affecting generally the enforcement of, creditor’s
rights and remedies or by other equitable principles of general application.

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(c) Capitalization. The authorized capital stock of the Company and the shares
thereof currently issued and outstanding as of the date hereof and as
contemplated by the Transaction Documents are set forth on Schedule 2.1(c)
hereto. All of the outstanding shares of the Common Stock and the Preferred
Shares have been duly and validly authorized. Except as contemplated by the
Transaction Documents or as set forth on Schedule 2.1(c) hereto, no shares of
Common Stock are entitled to preemptive rights or registration rights and there
are no outstanding options, warrants, scrip, rights to subscribe to, call or
commitments of any character whatsoever relating to, or securities or rights
convertible into, any shares of capital stock of the Company. Except as
contemplated by the Transaction Documents, there are no contracts, commitments,
understandings, or arrangements by which the Company is or may become bound to
issue additional shares of the capital stock of the Company or options,
securities or rights convertible into shares of capital stock of the Company.
Except as contemplated by the Transaction Documents or as set forth on Schedule
2.1(c) hereto, the Company is not a party to any agreement granting registration
or anti-dilution rights to any person with respect to any of its equity or debt
securities. Except as contemplated by the Transaction Documents, the Company is
not a party to, and it has no knowledge of, any agreement restricting the voting
or transfer of any shares of the capital stock of the Company. The offer and
sale of all capital stock, convertible securities, rights, warrants, or options
of the Company issued prior to the Closing complied with all applicable Federal
and state securities laws, and no stockholder has a right of rescission or claim
for damages with respect thereto which would have a Material Adverse Effect (as
defined below). The Company has furnished or made available to the Purchasers
true and correct copies of the Company’s Certificate of Incorporation as in
effect on the date hereof (the “Certificate”), and the Company’s Bylaws as in
effect on the date hereof (the “Bylaws”). For the purposes of this Agreement,
“Material Adverse Effect” means any material adverse effect on the business,
operations, properties, or financial condition of the Company and its
subsidiaries individually, or in the aggregate and/or any condition,
circumstance, or situation that would prohibit or otherwise materially interfere
with the ability of the Company to perform any of its obligations under this
Agreement in any material respect.

(d) Issuance of Shares. The Units, the Preferred Shares and the Warrants to be
issued at the Closing have been duly authorized by all necessary corporate
action and the Preferred Shares, when paid for or issued in accordance with the
terms hereof, shall be validly issued and outstanding, fully paid and
nonassessable and entitled to the rights and preferences set forth in the Series
A Certificate of Designation. When the Conversion Shares and the Warrant Shares
are issued in accordance with the terms of the Series A Certificate of
Designation and the Warrants, respectively, such shares will be duly authorized
by all necessary corporate action and validly issued and outstanding, fully paid
and nonassessable, and the holders shall be entitled to all rights accorded to a
holder of Common Stock.

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(e) No Conflicts. The execution, delivery and performance of the Transaction
Documents by the Company and the consummation by the Company of the transactions
contemplated herein and therein do not and will not (i) violate any provision of
the Company’s Certificate or Bylaws, (ii) conflict with, or constitute a default
(or an event which with notice or lapse of time or both would become a default)
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, mortgage, deed of trust, indenture, note, bond,
license, lease agreement, instrument or obligation to which the Company is a
party or by which it or its properties or assets are bound, (iii) create or
impose a lien, mortgage, security interest, pledge, charge or encumbrance
(collectively, “Lien”) of any nature on any property of the Company under any
agreement or any commitment to which the Company is a party or by which the
Company is bound or by which any of its respective properties or assets are
bound, or (iv) result in a violation of any federal, state, local or foreign
statute, rule, regulation, order, judgment or decree (including Federal and
state securities laws and regulations) applicable to the Company or any of its
subsidiaries or by which any property or asset of the Company or any of its
subsidiaries are bound or affected, provided, however, that, excluded from the
foregoing in all cases are such conflicts, defaults, terminations, amendments,
accelerations, cancellations and violations as would not, individually or in the
aggregate, have a Material Adverse Effect. Other than as disclosed on Schedule
2.1(e), the business of the Company and its subsidiaries is not being conducted
in violation of any laws, ordinances or regulations of any governmental entity,
except for possible violations which singularly or in the aggregate do not and
will not have a Material Adverse Effect. The Company is not required under
Federal, state or local law, rule or regulation to obtain any consent,
authorization or order of, or make any filing or registration with, any court or
governmental agency in order for it to execute, deliver or perform any of its
obligations under the Transaction Documents, or issue and sell the Preferred
Shares, the Warrants, the Conversion Shares and the Warrant Shares in accordance
with the terms hereof or thereof (other than (x) any consent, authorization or
order that has been obtained as of the date hereof, (y) any filing or
registration that has been made as of the date hereof or (z) any filings which
may be required to be made by the Company with the Commission or state
securities administrators subsequent to the Closing.)

(f) Commission Documents, Financial Statements. The Company has filed all
reports, schedules, forms, statements and other documents required to be filed
by it with the Commission pursuant to the reporting requirements of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), including
material filed pursuant to Section 13(a) or 15(d) of the Exchange Act (all of
the foregoing including filings incorporated by reference therein being referred
to herein as the “Commission Documents”). The Company has delivered or made
available to each of the Purchasers true and complete copies of the Commission
Documents, at the request of any such Purchaser. The Company has not provided to
the Purchasers any material non-public information or other information which,
according to applicable law, rule or regulation, was required to have been
disclosed publicly by the Company but which has not been so disclosed, other
than with respect to the transactions contemplated by this Agreement or other
than pursuant to a non-disclosure or confidentiality agreement signed by the
Purchasers. A current report on Form 8-K is required to be and shall be filed by
the Company within four business days after the Closing Date to disclose the
Transaction Documents, the Share Exchange Agreement, the Restructuring
Agreements and transactions related thereto (the “Form 8-K”). At the time of the
respective filings, the Form 10-KSB and the Form 10-Qs complied and, in the case
of the Form 8-K, will comply in all material respects with the requirements of
the Exchange Act and the rules and regulations of the Commission promulgated
thereunder and other federal, state and local laws, rules and regulations
applicable to such documents. As of their respective filing dates, none of the
Form 10-KSB, Form 10-Qs or Form 8-K contained, contain or will contain, as
applicable, any untrue statement of a material fact; and none omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The financial statements of the Company included in the
Commission Documents, and the financial statements of the Company and its
subsidiaries that will be included in the Form 8-K (a copy of which has been
delivered to the Purchaser), comply as to form in all material respects with
applicable accounting requirements and the published rules and regulations of
the Commission or other applicable rules and regulations with respect thereto.
Such financial statements have been prepared in accordance with United States
generally accepted accounting principles (“GAAP”) applied on a consistent basis
during the periods involved (except (i) as may be otherwise indicated in such
financial statements or the notes thereto or (ii) in the case of unaudited
interim statements, to the extent they may not include footnotes or may be
condensed or summary statements), and fairly present in all material respects
the financial position of the Company and its subsidiaries as of the dates
thereof and the results of operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments). The Ally Profit Financial Statements (as defined in Section 4.2(u)
hereof) comply in all material respects with applicable accounting requirements
and the rules and regulations of the Commission with respect thereto as in
effect at the time of filing. The Ally Profit Financial Statements have been
prepared in accordance with GAAP applied on a consistent basis during the
periods involved and fairly present in all material respects, the financial
conditions and results of Ally Profit and its subsidiaries as of the dates
thereof and the results of operations and cash flows for the periods then ended.

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(g) Subsidiaries. Schedule 2.1(g) hereto sets forth each subsidiary of the
Company, showing the jurisdiction of its incorporation or organization and
showing the percentage of ownership of each subsidiary. For the purposes of this
Agreement, “subsidiary” shall mean any corporation or other entity of which at
least a majority of the securities or other ownership interests having ordinary
voting power (absolutely or contingently) for the election of directors or other
persons performing similar functions are at the time owned directly or
indirectly by the Company and/or any of its other subsidiaries. All of the
outstanding shares of capital stock of each subsidiary have been duly authorized
and validly issued, and are fully paid and nonassessable. Other than as
contemplated by the Transaction Documents, there are no outstanding preemptive,
conversion or other rights, options, warrants or agreements granted or issued by
or binding upon any subsidiary for the purchase or acquisition of any shares of
capital stock of any subsidiary or any other securities convertible into,
exchangeable for or evidencing the rights to subscribe for any shares of such
capital stock. Other than as contemplated by the Transaction Documents, neither
the Company nor any subsidiary is subject to any obligation (contingent or
otherwise) to repurchase or otherwise acquire or retire any shares of the
capital stock of any subsidiary or any convertible securities, rights, warrants
or options of the type described in the preceding sentence. Neither the Company
nor any subsidiary is party to, nor has any knowledge of, any agreement
restricting the voting or transfer of any shares of the capital stock of any
subsidiary. The Company and its subsidiaries, as applicable, each have the
unrestricted right to vote, and (subject to limitations or restrictions imposed
by applicable law) to receive dividends and distributions on, all capital
securities of its subsidiaries as owned by the Company or any such subsidiary,
as the case may be.

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(h) No Material Adverse Effect. Other than as disclosed on Schedule 2.1(h),
since June 30, 2008, neither the Company nor any of its subsidiaries has
experienced or suffered any Material Adverse Effect.

(i) No Undisclosed Liabilities. Other than as disclosed on Schedule 2.1(i) and
in the Form 8-K, neither the Company nor any of its subsidiaries has any
liabilities, obligations, claims or losses (whether liquidated or unliquidated,
secured or unsecured, absolute, accrued, contingent or otherwise) other than
those incurred in the ordinary course of the Company’s or its subsidiaries’
respective businesses since June 30, 2008 and which, individually or in the
aggregate, do not or would not have a Material Adverse Effect on the Company or
its subsidiaries.

(j) No Undisclosed Events or Circumstances. To the Company’s knowledge, no event
or circumstance has occurred or exists with respect to the Company or its
subsidiaries or their respective businesses, properties, operations or financial
condition, which, under applicable law, rule or regulation, requires public
disclosure or announcement by the Company but which has not been so publicly
announced or disclosed.

(k) Indebtedness. Other than as disclosed on Schedule 2.1(k), the Ally Profit
Financial Statements set forth all outstanding secured and unsecured
Indebtedness of the subsidiaries of the Company on a consolidated basis, or for
which the subsidiaries of the Company have commitments as of the date of such
Ally Profit Financial Statements or any subsequent period that would require
disclosure. For the purposes of this Agreement, “Indebtedness” shall mean (a)
any liabilities for borrowed money or amounts owed in excess of $50,000 (other
than trade accounts payable incurred in the ordinary course of business), (b)
all guaranties, endorsements and other contingent obligations in respect of
Indebtedness of others, whether or not the same should be reflected in the
Company’s balance sheet (or the notes thereto), except guaranties by endorsement
of negotiable instruments for deposit or collection or similar transactions in
the ordinary course of business; and (c) the present value of any lease payments
in excess of $25,000 due under leases required to be capitalized in accordance
with GAAP. Except as set forth in Schedule 2.1(k), neither the Company nor any
subsidiary is in default with respect to any Indebtedness.

(l) Title to Assets. Other than as disclosed on Schedule 2.1(l), each of the
Company and its subsidiaries has good and marketable title to (i) all properties
and assets purportedly owned or used by them as reflected in the Ally Profit
Financial Statements, (ii) all properties and assets necessary for the conduct
of their business as currently conducted, and (iii) all of its real and personal
property reflected in the Ally Profit Financial Statements free and clear of any
Lien. All leases of the Company and each of its subsidiaries are valid and
subsisting and in full force and effect.

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(m) Actions Pending. There is no action, suit, claim, investigation,
arbitration, alternate dispute resolution proceeding or any other proceeding
pending or, to the knowledge of the Company, threatened against the Company or
any subsidiary which questions the validity of this Agreement or any of the
other Transaction Documents or the transactions contemplated hereby or thereby
or any action taken or to be taken pursuant hereto or thereto. There is no
action, suit, claim, investigation, arbitration, alternate dispute resolution
proceeding or any other proceeding pending or, to the knowledge of the Company,
threatened, against or involving the Company, any subsidiary or any of their
respective properties or assets. There are no outstanding orders, judgments,
injunctions, awards or decrees of any court, arbitrator or governmental or
regulatory body against the Company or any subsidiary or any executive officers
or directors of the Company or subsidiary in their capacities as such.

(n) Compliance with Law. Other than as disclosed on Schedule 2.1(n), the
business of the Company and the subsidiaries has been and is presently being
conducted in material compliance with all applicable federal, state and local
governmental laws, rules, regulations and ordinances. The Company and each of
its subsidiaries have all franchises, permits, licenses, consents and other
governmental or regulatory authorizations and approvals necessary for the
conduct of its business in all material respects as now being conducted by it
unless the failure to possess such franchises, permits, licenses, consents and
other governmental or regulatory authorizations and approvals, individually or
in the aggregate, could not reasonably be expected to have a Material Adverse
Effect.

(o) Taxes. The Company and each of the subsidiaries has accurately prepared and
filed all federal, state and other tax returns required by law to be filed by
it, has paid or made provisions for the payment of all taxes shown to be due and
all additional assessments, and adequate provisions have been and are reflected
in the financial statements of the Company and the subsidiaries for all current
taxes and other charges to which the Company or any subsidiary is subject and
which are not currently due and payable. None of the federal income tax returns
of the Company or any subsidiary have been audited by the Internal Revenue
Service. The Company has no knowledge of any additional assessments, adjustments
or contingent tax liability (whether federal or state) of any nature whatsoever,
whether pending or threatened against the Company or any subsidiary for any
period, nor of any basis for any such assessment, adjustment or contingency.

(p) Certain Fees. Except as set forth on Schedule 2.1(p) hereto, no brokers
fees, finders fees or financial advisory fees or commissions will be payable by
the Company or any subsidiary or any Purchaser with respect to the transactions
contemplated by this Agreement and the other Transaction Documents.

(q) Disclosure. Except as set forth in Schedule 2.1(q), neither this Agreement
nor the Schedules hereto nor any other documents, certificates or instruments
furnished to the Purchasers by or on behalf of the Company or any subsidiary in
connection with the transactions contemplated by this Agreement contain any
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements made herein or therein, taken as a whole and in
the light of the circumstances under which they were made herein or therein, not
false or misleading.

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(r) Operation of Business. The Company and each of the subsidiaries owns or has
the lawful right to use all patents, trademarks, domain names (whether or not
registered) and any patentable improvements or copyrightable derivative works
thereof, websites and intellectual property rights relating thereto, service
marks, trade names, copyrights, licenses and authorizations, and all rights with
respect to the foregoing, which are necessary for the conduct of its business as
now conducted without any conflict with the rights of others, except where the
failure to so own or possess would not have a Material Adverse Effect.

(s) Environmental Compliance. Since their inception, neither the Company, nor
any of its subsidiaries have been, in violation of any applicable law relating
to the environment or occupational health and safety, where such violation would
have a material adverse effect on the business or financial condition of any of
the Company and its subsidiaries. The Company and its subsidiaries (i) are in
compliance with any and all Environmental Laws (as hereinafter defined), (ii)
have received all permits, licenses or other approvals required of them under
applicable Environmental Laws to conduct their respective businesses and (iii)
are in compliance with all terms and conditions of any such permit, license or
approval where, in each of the foregoing clauses (i), (ii) and (iii), the
failure to so comply could be reasonably expected to have, individually or in
the aggregate, a Material Adverse Effect. “Environmental Laws” shall mean all
applicable laws relating to the protection of the environment including, without
limitation, all requirements pertaining to reporting, licensing, permitting,
controlling, investigating or remediating emissions, discharges, releases or
threatened releases of hazardous substances, chemical substances, pollutants,
contaminants or toxic substances, materials or wastes, whether solid, liquid or
gaseous in nature, into the air, surface water, groundwater or land, or relating
to the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of hazardous substances, chemical substances, pollutants,
contaminants or toxic substances, material or wastes, whether solid, liquid or
gaseous in nature. Other than as disclosed on Schedule 2.1(s), the Company and
each of its subsidiaries are also in compliance with all other limitations,
restrictions, conditions, standards, requirements, schedules and timetables
required or imposed under all Environmental Laws. There are no past or present
events, conditions, circumstances, incidents, actions or omissions relating to
or in any way affecting the Company or its subsidiaries that violate or may
violate any Environmental Law after the Closing Date or that may give rise to
any environmental liability, or otherwise form the basis of any claim, action,
demand, suit, proceeding, hearing, study or investigation (i) under any
Environmental Law, or (ii) based on or related to the manufacture, processing,
distribution, use, treatment, storage (including without limitation underground
storage tanks), disposal, transport or handling, or the emission, discharge,
release or threatened release of any hazardous substance where, in each of the
foregoing clauses (i) and (ii), the failure to so comply could be reasonably
expected to have, individually or in the aggregate, a Material Adverse Effect.

(t) Books and Record Internal Accounting Controls. Except as otherwise disclosed
in the Form 10-KSB, the Form 10-Qs, or the Form 8-K, the books and records of
the Company and its subsidiaries accurately reflect in all material respects the
information relating to the business of the Company and the subsidiaries, the
location and collection of their assets, and the nature of all transactions
giving rise to the obligations or accounts receivable of the Company or any
subsidiary. The Company and each of its subsidiaries maintain a system of
internal accounting controls sufficient, in the judgment of the Company, to
provide reasonable assurance that (i) transactions are executed in accordance
with management’s general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with GAAP and to maintain asset accountability, (iii) access to
assets is permitted only in accordance with management’s general or specific
authorization and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate actions are taken
with respect to any differences.

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(u) Material Agreements. Schedule 2.1(u) sets forth any and all written or oral
contracts, instruments, agreements, commitments, obligations, plans or
arrangements, the Company or any subsidiary is a party to, that a copy of which
would be required to be filed with the Commission as an exhibit to a
registration statement on Form S-1 (collectively, the “Material Agreements”) if
the Company or any subsidiary were registering securities under the Securities
Act. The Company and each of its subsidiaries has in all material respects
performed all the obligations required to be performed by them to date under the
foregoing agreements, have received no notice of default and are not in default
under any Material Agreement now in effect the result of which would cause a
Material Adverse Effect. Except as restricted under applicable laws and
regulations, the incorporation documents, certificates of designations or the
Transaction Documents, no written or oral contract, instrument, agreement,
commitment, obligation, plan or arrangement of the Company or of any subsidiary
limits or shall limit the payment of dividends on the Company’s Preferred
Shares, other preferred stock, if any, or its Common Stock.

(v) Transactions with Affiliates. Except as set forth in the Draft Form 8-K and
the Transaction Documents there are no loans, leases, agreements, contracts,
royalty agreements, management contracts or arrangements or other continuing
transactions between (a) the Company or any subsidiary on the one hand, and (b)
on the other hand, any officer, employee, consultant or director of the Company,
or any of its subsidiaries, or any person owning any capital stock of the
Company or any subsidiary or any member of the immediate family of such officer,
employee, consultant, director or stockholder or any corporation or other entity
controlled by such officer, employee, consultant, director or stockholder, or a
member of the immediate family of such officer, employee, consultant, director
or stockholder.

(w) Securities Act of 1933. Assuming the accuracy of the representations of the
Purchasers set forth in Section 2.2 (d)-(h) hereof, the Company has complied and
will comply with all applicable federal and state securities laws in connection
with the offer, issuance and sale of the Units hereunder. Neither the Company
nor anyone acting on its behalf, directly or indirectly, has or will sell, offer
to sell or solicit offers to buy any of the Units, the Shares, the Warrants or
similar securities to, or solicit offers with respect thereto from, or enter
into any preliminary conversations or negotiations relating thereto with, any
person, or has taken or will take any action so as to bring the issuance and
sale of any of the Units, the Shares and the Warrants in violation of the
registration provisions of the Securities Act and applicable state securities
laws, and neither the Company nor any of its affiliates, nor any person acting
on its or their behalf, has engaged in any form of general solicitation or
general advertising (within the meaning of Regulation D under the Securities
Act) in connection with the offer or sale of any of the Units, the Shares and
the Warrants.

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(x) Governmental Approvals. Except for the filing of any notice prior or
subsequent to the Closing Date that may be required under applicable state
and/or Federal securities laws (which if required, shall be filed on a timely
basis), including the filing of a Form D and a registration statement or
statements pursuant to the Registration Rights Agreement, and the filing of the
Series A Certificate of Designation with the Secretary of State for the State of
Delaware, no authorization, consent, approval, license, exemption of, filing or
registration with any court or governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, is or will be necessary
for, or in connection with, the execution or delivery of the Units, the
Preferred Shares and the Warrants, or for the performance by the Company of its
obligations under the Transaction Documents.

(y) Employees. Except as disclosed on Schedule 2.1(y), neither the Company nor
any subsidiary has any collective bargaining arrangements or agreements covering
any of its employees. Except as disclosed in the Draft Form 8-K, neither the
Company nor any subsidiary has any employment contract, agreement regarding
proprietary information, non-competition agreement, non-solicitation agreement,
confidentiality agreement, or any other similar contract or restrictive
covenant, relating to the right of any officer, employee or consultant to be
employed or engaged by the Company or such subsidiary required to be disclosed
in the Commission Documents or on the Form 8-K that is not so disclosed. Since
June 30, 2008, no officer, consultant or key employee of the Company or any
subsidiary whose termination, either individually or in the aggregate, would
have a Material Adverse Effect, has terminated or, to the knowledge of the
Company, has any present intention of terminating his or her employment or
engagement with the Company or any subsidiary.

(z) Absence of Certain Developments. Except as disclosed on Schedule 2.1(z),
since June 30, 2008, neither the Company nor any subsidiary has:

(i) other than the Share Exchange Transaction, issued any stock, bonds or other
corporate securities or any rights, options or warrants with respect thereto;

(ii) borrowed any amount or incurred or become subject to any liabilities
(absolute or contingent) except current liabilities incurred in the ordinary
course of business which are comparable in nature and amount to the current
liabilities incurred in the ordinary course of business during the comparable
portion of its prior fiscal year, as adjusted to reflect the current nature and
volume of the Company’s or such subsidiary’s business;

(iii) discharged or satisfied any lien or encumbrance or paid any obligation or
liability (absolute or contingent), other than current liabilities paid in the
ordinary course of business;

(iv) declared or made any payment or distribution of cash or other property to
stockholders with respect to its stock, or purchased or redeemed, or made any
agreements so to purchase or redeem, any shares of its capital stock;

(v) sold, assigned or transferred any other tangible assets, or canceled any
debts or claims, except in the ordinary course of business;

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(vi) sold, assigned or transferred any patent rights, trademarks, trade names,
copyrights, trade secrets or other intangible assets or intellectual property
rights, or disclosed any proprietary confidential information to any person
except to customers in the ordinary course of business or to the Purchasers or
their representatives;

(vii) suffered any substantial losses or waived any rights of material value,
whether or not in the ordinary course of business, or suffered the loss of any
material amount of prospective business;

(viii) made any changes in employee compensation except in the ordinary course
of business and consistent with past practices;

(ix) made capital expenditures or commitments therefor that aggregate in excess
of $50,000;

(x) other than the Share Exchange Transaction, entered into any other
transaction other than in the ordinary course of business, or entered into any
other material transaction, whether or not in the ordinary course of business;

(xi) made charitable contributions or pledges in excess of $10,000;

(xii) suffered any material damage, destruction or casualty loss, whether or not
covered by insurance;

(xiii) experienced any material problems with labor or management in connection
with the terms and conditions of their employment;

(xiv) effected any two or more events of the foregoing kind which in the
aggregate would be material to the Company or its subsidiaries; or

(xv) entered into an agreement, written or otherwise, to take any of the
foregoing actions.

(aa) Public Utility Holding Company Act; Investment Company Act and U.S. Real
Property Holding Corporation Status. The Company is not a “holding company” or a
“public utility company” as such terms are defined in the Public Utility Holding
Company Act of 1935, as amended. The Company is not, and as a result of and
immediately upon the Closing will not be, an “investment company” or a company
“controlled” by an “investment company,” within the meaning of the Investment
Company Act of 1940, as amended. The Company is not and has never been a U.S.
real property holding corporation within the meaning of Section 897 of the
Internal Revenue Code of 1986, as amended.

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(bb) ERISA. No liability to the Pension Benefit Guaranty Corporation has been
incurred with respect to any Plan (as defined below) by the Company or any of
its subsidiaries which is or would be materially adverse to the Company and its
subsidiaries. The execution and delivery of this Agreement and the other
Transaction Documents and the issuance and sale of the Units, the Preferred
Shares and the Warrants will not involve any transaction which is subject to the
prohibitions of Section 406 of ERISA or in connection with which a tax could be
imposed pursuant to Section 4975 of the Internal Revenue Code of 1986, as
amended, provided, that, if any of the Purchasers, or any person or entity that
owns a beneficial interest in any of the Purchasers, is an “employee pension
benefit plan” (within the meaning of Section 3(2) of ERISA) with respect to
which the Company is a “party in interest” (within the meaning of Section 3(14)
of ERISA), the requirements of Sections 407(d)(5) and 408(e) of ERISA, if
applicable, are met. As used in this Section 2.1(bb), the term “Plan” shall mean
an “employee pension benefit plan” (as defined in Section 3 of ERISA) which is
or has been established or maintained, or to which contributions are or have
been made, by the Company or any subsidiary or by any trade or business, whether
or not incorporated, which, together with the Company or any subsidiary, is
under common control, as described in Section 414(b) or (c) of the Code.

(cc) Dilutive Effect. The Company understands and acknowledges that it has an
obligation to issue Conversion Shares upon the conversion of the Preferred
Shares in accordance with this Agreement and the Series A Certificate of
Designation and to issue the Warrant Shares upon the exercise of the Warrants in
accordance with this Agreement and the Warrants regardless of the dilutive
effect that such issuance may have on the ownership interest of other
stockholders of the Company.

(dd) No Integrated Offering. Neither the Company, nor any of its affiliates, nor
any person acting on its or their behalf, has directly or indirectly made any
offers or sales of any security or solicited any offers to buy any security
under circumstances that would cause the offering of the Shares pursuant to this
Agreement to be integrated with prior offerings by the Company for purposes of
the Securities Act which would prevent the Company from selling the Shares
pursuant to Rule 506 under the Securities Act, nor will the Company or any of
its affiliates or subsidiaries take any action or steps that would cause the
offering of the Shares to be integrated with other offerings. The Company does
not have any registration statement pending before the Commission or currently
under the Commission’s review and since June 27, 2008, except as contemplated
under the Transaction Documents, the Company has not offered or sold any of its
equity securities or debt securities convertible into shares of Common Stock.

(ee) Independent Nature of Purchasers. The Company acknowledges that the
obligations of each Purchaser under the Transaction Documents are several and
not joint with the obligations of any other Purchaser, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser under the Transaction Documents. The Company acknowledges that the
decision of each Purchaser to purchase securities pursuant to this Agreement has
been made by such Purchaser independently of any other Purchaser and
independently of any information, materials, statements or opinions as to the
business, affairs, operations, assets, properties, liabilities, results of
operations, condition (financial or otherwise) or prospects of the Company or of
its subsidiaries which may have been made or given by any other Purchaser or by
any agent or employee of any other Purchaser, and no Purchaser or any of its
agents or employees shall have any liability to any Purchaser (or any other
person) relating to or arising from any such information, materials, statements
or opinions. The Company acknowledges that nothing contained herein, or in any
Transaction Document, and no action taken by any Purchaser pursuant hereto or
thereto, shall be deemed to constitute the Purchasers as a partnership, an
association, a joint venture or any other kind of entity, or create a
presumption that the Purchasers are in any way acting in concert or as a group
with respect to such obligations or the transactions contemplated by the
Transaction Documents. The Company acknowledges that each Purchaser shall be
entitled to independently protect and enforce its rights, including without
limitation, the rights arising out of this Agreement or out of the other
Transaction Documents, and it shall not be necessary for any other Purchaser to
be joined as an additional party in any proceeding for such purpose. The Company
acknowledges that for reasons of administrative convenience only, the
Transaction Documents have been prepared by counsel for one of the Purchasers
and such counsel does not represent all of the Purchasers but only such
Purchaser and the other Purchasers have retained their own individual counsel
with respect to the transactions contemplated hereby. The Company acknowledges
that it has elected to provide all Purchasers with the same terms and
Transaction Documents for the convenience of the Company and not because it was
required or requested to do so by the Purchasers.

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(ff) Sarbanes-Oxley Act. The Company is in compliance with the applicable
provisions of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), and the
rules and regulations promulgated thereunder, that are effective and for which
compliance by the Company is required as of the date hereof.

(gg) Transfer Agent. The Company has retained the transfer agent listed on
Schedule 2.1(gg). Such transfer agent is eligible to transfer securities via
Depository Trust Company (“DTC”) and Deposit Withdrawal Agent Commission
(“DWAC”) and will accept the Irrevocable Transfer Agent Instructions (as defined
below).

(hh) Amendment to Articles of Association for Danyang Lihua Electron Co., Ltd.
and Jiangsu Lihua Copper Industry Co., Ltd. Each of Danyang Lihua Electron Co.,
Ltd. (“Lihua Electron”) and Jiangsu Lihua Copper Industry Co., Ltd. (“Lihua
Copper”) has amended its respective Articles of Association or any other
necessary corporate documents to bring them current and consistent with the
currently effective and applicable laws.

(ii) Share Exchange. Subject to the consummation of the Share Exchange
Agreement, the Company represents on behalf of Ally Profit, which will be a
direct wholly-owned subsidiary of the Company upon consummation of the Share
Exchange Transaction, as follows:

(i) that Ally Profit has the legal right, power and authority (corporate and
other) to enter into and perform its obligations under the Share Exchange
Agreement to which it is a party and has taken all necessary corporate action to
authorize the execution, delivery and performance of, and has authorized,
executed and delivered, the Share Exchange Agreement to which it is a party
along with related agreements contemplated by the Share Exchange Agreement; such
agreements constitute valid and legally binding obligations enforceable in
accordance with their terms, subject, as to enforceability, to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors’ rights and to general
equity principles.

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(ii) that Ally Profit does not own or lease properties or conduct any business
outside of the People’s Republic of China (“PRC”) and that Ally Profit does not
need to be duly qualified as a foreign corporation for the transaction of
business under the laws of any jurisdiction in which it is not now so qualified.

(iii) that the execution and delivery by Ally Profit, of, and the performance by
Ally Profit of its obligations under, the Share Exchange Agreement to which it
is a party and the consummation by Ally Profit of the transactions contemplated
therein will not: (A) conflict with or result in a breach or violation of any of
the terms or provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument to
which Ally Profit is a party or by which Ally Profit is bound or to which any of
the properties or assets of Ally Profit is subject; (B) result in any violation
of the provisions of the articles of association or business license of Ally
Profit; and (C) will not result in any violation of any laws, regulations,
rules, orders, decrees, guidelines or notices of the PRC, except that, with
respect to (A), (B) and (C), such conflict, breach or violation would not
reasonably be expected to have a Material Adverse Effect on Ally Profit.

 
(jj)
Additional PRC Representations and Warranties.

(i) All material consents, approvals, authorizations or licenses requisite under
PRC law for the due and proper establishment and operation of the Company’s
subsidiaries doing business in the PRC (the “PRC Subsidiaries”) have been duly
obtained from the relevant PRC governmental authorities and are in full force
and effect.
 
(ii) All filings and registrations with the PRC governmental authorities
required in respect of the Company, Ally Profit and the PRC Subsidiaries and
their capital structure and operations including, without limitation, to the
extent applicable, tax bureau and customs authorities, have been duly completed
in accordance with the relevant PRC rules and regulations, except where the
failure to complete such filings and registrations does not, and would not,
individually or in the aggregate, have a Material Adverse Effect. The Company
and the Company’s subsidiaries have complied with all relevant PRC laws and
regulations regarding the contribution and payment of the registered capital of
the PRC Subsidiaries, the payment schedules of which have been approved by the
relevant PRC governmental authorities. There are no outstanding rights of, or
commitments made by the Company or any of its subsidiaries to sell any equity
interests of any PRC Subsidiary.
 
(iii) Neither the Company nor any subsidiary of the Company is in receipt of any
letter or notice from any relevant PRC governmental or quasi-governmental
authority notifying it of the revocation, or otherwise questioning the validity,
of any licenses or qualifications issued to it or any subsidy granted to it by
any PRC governmental authority, or the need for compliance or remedial actions
in respect of the activities carried out by the Company or such subsidiary.
 
(iv) The Company and the subsidiaries of the Company have conducted their
respective business activities within their permitted scope of business or have
otherwise operated their respective businesses in compliance with all relevant
legal requirements and with all requisite licenses and approvals granted by
competent PRC governmental authorities other than such non-compliance that do
not, and would not, individually or in the aggregate, have a Material Adverse
Effect. As to licenses, approvals and government grants and concessions
requisite or material for the conduct of any part of the Company or any of its
subsidiaries’ business which is subject to periodic renewal, neither the Company
nor such subsidiary has any knowledge of any grounds on which such requisite
renewals will not be granted by the relevant PRC governmental authorities.

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(v) Other than as disclosed on Schedule 2.1(jj)(v), with regard to employment
and staff or labor, the Company and the subsidiaries of the Company have
complied with all applicable PRC laws and regulations in all material respects,
including without limitation, laws and regulations pertaining to welfare fund
contributions, social benefits, medical benefits, insurance, retirement
benefits, pensions or the like.

(vi) Each of the Company, the subsidiaries of the Company and their respective
directors are aware of the content of the PRC Rules on Mergers and Acquisitions
of Domestic Enterprises by Foreign Investors jointly promulgated by the Ministry
of Commerce, the State Assets Supervision and Administration Commission, the
State Tax Administration, the State Administration of Industry and Commerce, the
China Securities Regulatory Commission (the “CSRC”) and the State Administration
of Foreign Exchange of the PRC on August 8, 2006 (the “M&A Rules”), and, in
particular, the relevant provisions thereof which purport to require offshore
special purpose vehicles, or SPVs, formed for listing purposes and controlled
directly or indirectly by PRC companies or individuals, to obtain the approval
of the CSRC prior to the listing and trading of their securities on an overseas
stock exchange. The Company has received legal advice specifically with respect
to the M&A Rules from its PRC counsel to the effect that such approval
requirements are not applicable to the Company or to the listing or quotation of
the Company’s securities on any National Stock Exchange (as hereinafter defined
in Section 3.22).
 
(vii) Other than as disclosed on Schedule 2.1(jj)(vii), the Company and the
subsidiaries have taken all necessary steps to comply with, and to ensure
compliance by, each of their respective stockholders, option holders, directors,
officers, and employees that are, or are directly or indirectly owned or
controlled by, a PRC resident or citizen, with any applicable rules and
regulations of the relevant PRC government agencies (including, without
limitation, the Ministry of Commerce, National Development and Reform Commission
and the State Administration of Foreign Exchange) relating to overseas
investment by PRC residents and citizens or overseas listing by offshore special
purpose vehicles controlled directly or indirectly by PRC companies and
individuals (the “PRC Overseas Investment and Listing Regulations”), including,
without limitation, ensuring that each such stockholder, option holder,
director, officer and employee that is, or is directly or indirectly owned or
controlled by, a PRC resident or citizen, complete any registration and other
procedures required under applicable PRC Overseas Investment and Listing
Regulations.

(viii) Except as set forth in Schedule 2.1(jj)(viii), the PRC subsidiaries are
not currently prohibited, directly or indirectly, from paying any dividends to
their respective equity holders, nor are any of them prohibited, from making any
other distribution on their respective equity interests, or from repaying any
loans or advances. Except as set forth in Schedule 2.1(jj)(viii), any dividends
or other distributions declared with respect to after-tax retained earnings on
the equity interests of Lihua Holdings Limited, a Hong Kong company (“Lihua HK”)
may lawfully be paid to Ally Profit in Renminbi that may be converted into U.S.
dollars and freely transferred out of the PRC, free and clear of any tax,
withholding or deduction in the PRC, and without the necessity of obtaining any
governmental authorization in the PRC, except for the routine PRC foreign
exchange procedures.

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(ix) Neither the Company, nor any subsidiary, nor any of their respective
properties, assets or revenues has any right of immunity under British Virgin
Islands (“BVI”) or PRC law, from any legal action, suit or proceeding, from the
giving of any relief in any such legal action, suit or proceeding, from set-off
or counterclaim, from the jurisdiction of any BVI, PRC, New York or U.S. federal
court, from service of process, attachment upon or prior to judgment, or
attachment in aid of execution of judgment, or from execution of a judgment, or
other legal process or proceeding for the giving of any relief or for the
enforcement of a judgment, in any such court, with respect to its obligations,
liabilities or any other matter under or arising out of or in connection with
the Transaction Documents; and, to the extent that the Company, or any
subsidiary or any of their respective properties, assets or revenues may have or
may hereafter become entitled to any such right of immunity in any such court in
which proceedings may at any time be commenced, each of the Company and the
subsidiaries waives or will waive such right to the extent permitted by law and
has consented to such enforcement as provided in Section 7.3 of this Agreement.

(kk) Restructuring Transaction. The Company represents on behalf of Lihua HK,
which is a direct wholly-owned subsidiary of the Company due to the consummation
of the Share Exchange Transaction, as follows:

(i)  that Lihua HK had the legal right, power and authority (corporate and
other) to enter into and perform its obligations under each of the agreements
set forth on Schedule 2.1(kk)(i) (collectively, the “Restructuring Agreements”),
to which it is a party and took all necessary corporate action to authorize the
execution, delivery and performance of, each of the Restructuring Agreements to
which it was a party; and each of the Restructuring Agreements to which Lihua HK
was a party constituted a valid and legally binding obligation of Lihua HK,
enforceable in accordance with its terms, subject, as to enforceability, to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors’ rights
and to general equity principles.

(ii) Lihua HK does not directly own or lease properties or conduct any business
outside of the People’s Republic of China (“PRC”) and Lihua HK does not need to
be duly qualified as a foreign corporation for the transaction of business under
the laws of any jurisdiction in which it is not now so qualified.

(iii) that the execution and delivery by Lihua HK, of, and the performance by
Lihua HK of its obligations under, each of the Restructuring Agreements to which
it was a party and the consummation by Lihua HK of the transactions contemplated
therein did not: (A) conflict with or result in a breach or violation of any of
the terms or provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument to
which Lihua HK is a party or by which Lihua HK is bound or to which any of the
properties or assets of Lihua HK is subject; (B) result in any violation of the
provisions of the articles of association or business license of Lihua HK; and
(C) will not result in any violation of any laws, regulations, rules, orders,
decrees, guidelines or notices of the PRC or Hong Kong law, except that, with
respect to (A), (B) and (C), such conflict, breach or violation would not
reasonably be expected to have a Material Adverse Effect on Lihua HK or the PRC
Subsidiaries.

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(iv) that each of the Restructuring Agreements is in proper and enforceable
legal form under the laws of the PRC and was properly filed with the appropriate
authority in the PRC; and any stamp or similar tax has been paid in respect of
any of the Restructuring Agreements to ensure the legality, validity,
enforceability or admissibility in evidence of each of the Restructuring
Agreements in the PRC, except as set forth on Schedule 2.1(kk)(iv).

(ll) No Additional Agreements. Neither the Company nor any of its subsidiaries
has any agreement or understanding with any Purchaser with respect to the
transactions contemplated by the Transaction Documents other than as specified
in the Transaction Documents.

(mm) Foreign Corrupt Practices Act. None of the Company nor any of its
subsidiaries nor to the knowledge of the Company, any agent or other person
acting on behalf of the Company or any of its subsidiaries, has, directly or
indirectly, (i) used any funds, or will use any proceeds from the sale of the
Units, for unlawful contributions, gifts, entertainment or other unlawful
expenses related to foreign or domestic political activity, (ii) made any
unlawful payment to foreign or domestic government officials or employees or to
any foreign or domestic political parties or campaigns from corporate funds,
(iii) failed to disclose fully any contribution made by the Company, or any
subsidiary of the Company (or made by any Person acting on their behalf of which
the Company is aware) or any members of their respective management which is in
violation of any applicable law, or (iv) has violated in any material respect
any provision of the Foreign Corrupt Practices Act of 1977, as amended, and the
rules and regulations thereunder which was applicable to the Company or any of
its subsidiaries.

(nn) PFIC. None of the Company or any of its subsidiaries is or intends to
become a “passive foreign investment company” within the meaning of Section 1297
of the U.S. Internal Revenue Code of 1986, as amended.

(oo) OFAC. None of the Company or any of its subsidiaries nor, to the knowledge
of the Company, any director, officer, agent, employee, Affiliate or Person
acting on behalf of any of the Company or any of its subsidiaries, is currently
subject to any U.S. sanctions administered by the Office of Foreign Assets
Control of the U.S. Treasury Department (“OFAC”); and the Company will not
directly or indirectly use the proceeds of the sale of the Units, or lend,
contribute or otherwise make available such proceeds to any subsidiary of the
Company, joint venture partner or other Person or entity, towards any sales or
operations in Cuba, Iran, Syria, Sudan, Myanmar or any other country sanctioned
by OFAC or for the purpose of financing the activities of any Person currently
subject to any U.S. sanctions administered by OFAC.

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(pp) Money Laundering Laws. The operations of each of the Company and its
subsidiaries are and have been conducted at all times in compliance with the
money laundering requirements of all applicable governmental authorities and any
related or similar rules, regulations or guidelines, issued, administered or
enforced by any governmental authority (collectively, the “Money Laundering
Laws”) and no action, suit or proceeding by or before any court or governmental
authority or any arbitrator involving any of the Company or any of its
subsidiaries with respect to the Money Laundering Laws is pending or, to the
best knowledge of the Company, threatened.

(qq) Land Use Rights. The Company and each of Lihua Electron and Lihua Copper is
the sole registered owner of: (1) the land use rights in respect of the land
currently occupied and used by it (the “Land”), and (2) the buildings thereon
(the “Buildings”), and holds the Land Use Right Certificate and Building
Ownership Certificate in respect of the Land and the Buildings and such
certificates have been validly issued, according to regular procedures, and are
currently in full force and effect. The land use rights and Buildings referred
to above are not and will not be affected by any mortgage, lien or other
encumbrances or actual or potential claims by any government authority or third
party, which would prevent Lihua Electron or Lihua Copper from occupying and
using the Land and Buildings. No currently existing zoning laws or other
applicable laws or regulations would prevent or limit Lihua Electron or Lihua
Copper from using the Land and Buildings in the way as specified by their
business licences. The Buildings on the Land are in full compliance with all
material terms and conditions of all required permits, licenses and
authorizations and with other material obligations set forth in the PRC laws
related to pollution or protection of the environment, including any general or
specific rules and regulations relating to emissions, discharges, releases,
contaminants, chemicals or industrial, toxic or hazardous substances or wastes
into the environment. The Company is not aware of any current or anticipated
civil, criminal or administrative action or proceeding pending or threatened
against the land use right for the Land or the Buildings.

Section 2.2 Representations and Warranties of the Purchasers. Each Purchaser
hereby makes the following representations and warranties to the Company as of
the date hereof and the Closing Date, with respect solely to itself and not with
respect to any other Purchaser:

(a) Organization and Good Standing of the Purchasers. If the Purchaser is an
entity, such Purchaser is a corporation, partnership or limited liability
company duly incorporated or organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation or organization.

(b) Authorization and Power. Each Purchaser has the requisite power and
authority to enter into and perform this Agreement and each of the other
Transaction Documents to which such Purchaser is a party and to purchase the
Units, consisting of the Preferred Shares and Warrants, being sold to it
hereunder. The execution, delivery and performance of this Agreement and each of
the other Transaction Documents to which such Purchaser is a party by such
Purchaser and the consummation by it of the transactions contemplated hereby and
thereby have been duly authorized by all necessary corporate, partnership or
limited liability company action, and no further consent or authorization of
such Purchaser or its Board of Directors, stockholders, partners, members, or
managers, as the case may be, is required. This Agreement and each of the other
Transaction Documents to which such Purchaser is a party has been duly
authorized, executed and delivered by such Purchaser and constitutes, or shall
constitute when executed and delivered, a valid and binding obligation of such
Purchaser enforceable against such Purchaser in accordance with the terms
hereof.

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(c) No Conflicts. The execution, delivery and performance of this Agreement and
each of the other Transaction Documents to which such Purchaser is a party and
the consummation by such Purchaser of the transactions contemplated hereby and
thereby or relating hereto do not and will not (i) result in a violation of such
Purchaser’s charter documents, bylaws, operating agreement, partnership
agreement or other organizational documents or (ii) conflict with, or constitute
a default (or an event which with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of any agreement, indenture or instrument or
obligation to which such Purchaser is a party or by which its properties or
assets are bound, or result in a violation of any law, rule, or regulation, or
any order, judgment or decree of any court or governmental agency applicable to
such Purchaser or its properties (except for such conflicts, defaults and
violations as would not, individually or in the aggregate, have a material
adverse effect on such Purchaser). Such Purchaser is not required to obtain any
consent, authorization or order of, or make any filing or registration with, any
court or governmental agency in order for it to execute, deliver or perform any
of its obligations under this Agreement or any other Transaction Document to
which such Purchaser is a party or to purchase the Units, Preferred Shares or
acquire the Warrants in accordance with the terms hereof, provided, that for
purposes of the representation made in this sentence, such Purchaser is assuming
and relying upon the accuracy of the relevant representations and agreements of
the Company herein.

(d) Acquisition for Investment. Each Purchaser is acquiring the Units, and the
underlying Preferred Shares and the Warrants solely for its own account for the
purpose of investment and not with a view to or for sale in connection with
distribution. Each Purchaser does not have a present intention to sell the
Units, Preferred Shares or the Warrants, nor a present arrangement (whether or
not legally binding) or intention to effect any distribution of the Units,
Preferred Shares or the Warrants to or through any person or entity; provided,
however, that by making the representations herein and subject to Section 2.2(h)
below, such Purchaser does not agree to hold the Units, Preferred Shares or the
Warrants for any minimum or other specific term and reserves the right to
dispose of the Units, Preferred Shares or the Warrants at any time in accordance
with Federal and state securities laws applicable to such disposition. Each
Purchaser acknowledges that it is able to bear the financial risks associated
with an investment in the Units, Preferred Shares and the Warrants and that it
has been given full access to such records of the Company and the subsidiaries
and to the officers of the Company and the subsidiaries and received such
information as it has deemed necessary or appropriate to conduct its due
diligence investigation and has sufficient knowledge and experience in investing
in companies similar to the Company in terms of the Company’s stage of
development so as to be able to evaluate the risks and merits of its investment
in the Company. Each Purchaser further acknowledges that such Purchaser
understands the risks of investing in companies domiciled and/or which operate
primarily in the PRC and that the purchase of the Units, Preferred Shares and
Warrants involves substantial risks.

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(e) Status of Purchasers. Each Purchaser is an “accredited investor” as defined
in Regulation D promulgated under the Securities Act. Such Purchaser is not
required to be registered as a broker-dealer under Section 15 of the Exchange
Act and such Purchaser is not a broker-dealer, nor an affiliate of a
broker-dealer.

(f) Opportunities for Additional Information. Each Purchaser acknowledges that
such Purchaser has had the opportunity to ask questions of and receive answers
from, or obtain additional information from, the executive officers of the
Company concerning the financial and other affairs of the Company. In making the
decision to invest in the Company and its business, each Purchaser hereby
acknowledges that such Purchaser has relied solely upon the Ally Profit
Financial Statements and other written information provided to such Purchaser by
the Company and Ally Profit.

(g) No General Solicitation. Each Purchaser acknowledges that the Units were not
offered to such Purchaser by means of any form of general or public solicitation
or general advertising, or publicly disseminated advertisements or sales
literature, including (i) any advertisement, article, notice or other
communication published in any newspaper, magazine, or similar media, or
broadcast over television or radio, or (ii) any seminar or meeting to which such
Purchaser was invited by any of the foregoing means of communications.

(h) Rule 144. Such Purchaser understands that the Shares must be held
indefinitely unless such Shares are registered under the Securities Act or an
exemption from registration is available. Such Purchaser acknowledges that such
Purchaser is familiar with Rule 144 of the rules and regulations of the
Commission, as amended, promulgated pursuant to the Securities Act (“Rule 144”),
and that such person has been advised that Rule 144 permits resales only under
certain circumstances. Such Purchaser understands that to the extent that Rule
144 is not available, such Purchaser will be unable to sell any Shares without
either registration under the Securities Act or the existence of another
exemption from such registration requirement.

(i) General. Such Purchaser understands that the Units are being offered and
sold in reliance on a transactional exemption from the registration requirements
of Federal and state securities laws and the Company is relying upon the truth
and accuracy of the representations, warranties, agreements, acknowledgments and
understandings of such Purchaser set forth herein in order to determine the
applicability of such exemptions and the suitability of such Purchaser to
acquire the Units.

(j) Independent Investment. Except as may be disclosed in any filings with the
Commission by the Purchasers under Section 13 and/or Section 16 of the Exchange
Act, no Purchaser has agreed to act with any other Purchaser for the purpose of
acquiring, holding, voting or disposing of the Shares purchased hereunder for
purposes of Section 13(d) under the Exchange Act, and each Purchaser is acting
independently with respect to its investment in the Shares.

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(k) Trading Activities. Each Purchaser agrees that it shall not, directly or
indirectly, engage in any short sales with respect to the Common Stock for a
period of twenty four (24) months following the Closing Date.

(l) Brokers. Other than Broadband Capital Management, LLC, each Purchaser has no
knowledge of any brokerage or finder’s fees or commissions that are or will be
payable by the Company or any subsidiary to any broker, financial advisor or
consultant, finder, placement agent, investment banker, bank or other person or
entity with respect to the transactions contemplated by this Agreement.
 
ARTICLE III

Covenants

The Company covenants with each of the Purchasers as follows, which covenants
are for the benefit of the Purchasers and their permitted assignees (as defined
herein).

Section 3.1 Securities Compliance. The Company shall notify the Commission in
accordance with its rules and regulations, of the transactions contemplated by
any of the Transaction Documents, including filing a Form D with respect to the
Units, the Preferred Shares, Warrants, the Conversion Shares and Warrant Shares
as required under Regulation D and applicable “blue sky” laws, and shall take
all other necessary action and proceedings as may be required and permitted by
applicable law, rule and regulation, for the legal and valid issuance of the
Units, the Preferred Shares, the Warrants, Conversion Shares and the Warrant
Shares to the Purchasers or subsequent holders.

Section 3.2 Registration and Listing. The Company shall (a) comply in all
respects with its reporting and filing obligations under the Exchange Act, (b)
comply with all requirements related to any registration statement filed
pursuant to the Registration Rights Agreement, and (c) not take any action or
file any document (whether or not permitted by the Securities Act or the rules
promulgated thereunder) to terminate or suspend such registration or to
terminate or suspend its reporting and filing obligations under the Exchange Act
or Securities Act except as permitted under the Transaction Documents. Subject
to the terms of the Transaction Documents, the Company further covenants that it
will take such further action as the Purchasers may reasonably request, all to
the extent required from time to time to enable the Purchasers to sell the
Shares without registration under the Securities Act within the limitation of
the exemptions provided by Rule 144 promulgated under the Securities Act, as
amended. Upon the request of the Purchasers, the Company shall deliver to the
Purchasers a written certification of a duly authorized officer as to whether it
has complied with such requirements.

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Section 3.3 Inspection Rights. The Company shall permit, during normal business
hours and upon reasonable request and reasonable notice, each Purchaser or any
employees, agents or representatives thereof, so long as such Purchaser shall
own Shares which, in the aggregate, represent more than 5% of the total combined
voting power of all voting securities then outstanding on a fully diluted basis
(which shall include all Conversion Shares but not Warrant Shares) (“Information
Rights Purchasers”), for purposes reasonably related to such Purchaser’s
interests as a stockholder to examine and make reasonable copies of and extracts
from the records and books of account of, and visit and inspect the properties,
assets, operations and business of the Company and any subsidiary, and to
discuss the affairs, finances and accounts of the Company and any subsidiary
with any of its officers, consultants, directors, and key employees. Such
Purchaser agrees that such Purchaser and its employees, agents and
representatives will keep confidential and will not disclose, divulge or use
(other than for purposes of monitoring its investment in the Company) any
confidential information which such Purchaser may obtain from the Company
pursuant to financial statements, reports and other materials submitted by the
Company to such Purchaser pursuant to this Agreement or pursuant to inspection
rights granted hereunder, unless such information is known to the public through
no fault of such Purchaser or his or its employees or representatives; provided,
however, that a Purchaser may disclose such information (i) to its attorneys,
accountants and other professionals in connection with their representation of
such Purchaser in connection with such Purchaser’s investment in the Company,
(ii) to any prospective permitted transferee of the Shares, so long as the
prospective transferee agrees to be bound by the provisions of this Section 3.3,
(iii) to any general partner or affiliate of such Purchaser. The Company may
require each Purchaser to execute a separate confidentiality agreement in form
and substance reasonably acceptable to the Company as a prerequisite to the
exercise of such Purchaser’s inspection rights pursuant to this Section 3.3.

Section 3.4 Compliance with Laws. The Company shall comply, and cause each
subsidiary to comply in all material respects, with all applicable laws, rules,
regulations and orders.

Section 3.5 Keeping of Records and Books of Account. The Company shall keep and
cause each subsidiary to keep adequate records and books of account, in which
complete entries will be made in accordance with GAAP consistently applied,
reflecting all financial transactions of the Company and its subsidiaries, and
in which, for each fiscal year, all proper reserves for depreciation, depletion,
obsolescence, amortization, taxes, bad debts and other purposes in connection
with its business shall be made.

Section 3.6 Reporting Requirements. If the Commission ceases making periodic
reports filed under the Exchange Act available via the Internet, then at a
Purchaser’s request the Company shall furnish the following to such Purchaser so
long as such Purchaser shall beneficially own any Shares:

(a) Quarterly Reports filed with the Commission on Form 10-Q as soon as
practicable after the document is filed with the Commission, and in any event
within five (5) business days after the document is filed with the Commission;

(b) Annual Reports filed with the Commission on Form 10-K as soon as practicable
after the document is filed with the Commission, and in any event within five
(5) business days after the document is filed with the Commission; and

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(c) Copies of all notices and information, including without limitation notices
and proxy statements in connection with any meetings, that are provided to
holders of shares of Common Stock, contemporaneously with the delivery of such
notices or information to such holders of Common Stock.

Section 3.7 Amendments. The Company shall not amend or waive any provision of
the Articles or Bylaws of the Company in any way that would adversely affect the
liquidation preferences, dividends rights, conversion rights, voting rights or
redemption rights of the Preferred Shares; provided, however, that while the
Preferred Shares are outstanding, any creation and issuance of another series of
Junior Stock (as defined in the Series A Certificate of Designation) shall not
be deemed to materially and adversely affect such rights, preferences or
privileges.

Section 3.8 Other Agreements. The Company shall not enter into any agreement the
terms of which would restrict or impair the ability of the Company or any
subsidiary to perform its or their respective obligations under any Transaction
Document.

Section 3.9 Distributions. So long as any Preferred Shares remain outstanding,
the Company agrees that it shall not (i) declare or pay any dividends or make
any distributions to any holder(s) of Common Stock unless such dividends or
distributions are also simultaneously paid or made to the holders of the
Preferred Shares on an as-converted basis or (ii) purchase or otherwise acquire
for value, directly or indirectly, any Common Stock or other equity security of
the Company.

Section 3.10 Use of Proceeds. The net proceeds from the sale of the Units
hereunder shall be used by the Company for working capital and general corporate
purposes and not to redeem any Common Stock or securities convertible,
exercisable or exchangeable into Common Stock or to settle any outstanding
litigation.

Section 3.11 Reservation of Shares. So long as any of the Preferred Shares or
Warrants remain outstanding, the Company shall take all action necessary to at
all times have authorized, and reserved for the purpose of issuance, no less
than one hundred thirty percent (130%) of the aggregate number of shares of
Common Stock needed to provide for the issuance of the Conversion Shares and the
Warrant Shares.

Section 3.12 Transfer Agent. The Company has engaged the transfer agent and
registrar listed on Schedule 2.1(gg) (the “Transfer Agent”) with respect to its
Common Stock, who is DTC and DWAC eligible and who will recognize, execute and
honor the Irrevocable Transfer Agent Instructions (as defined below), no later
than the date the initial Registration Statement (as defined in the Registration
Rights Agreement) is filed with the Commission. At such time, the Company shall
issue irrevocable instructions to its transfer agent, and any subsequent
transfer agent, to issue certificates, registered in the name of each Purchaser
or its respective nominee(s), for the Conversion Shares and the Warrant Shares
in such amounts as specified from time to time by each Purchaser to the Company
upon conversion of the Preferred Shares or exercise of the Warrants in the form
of Exhibit G attached hereto (the “Irrevocable Transfer Agent Instructions”).
Prior to registration of the Conversion Shares and the Warrant Shares under the
Securities Act, all such certificates shall bear the restrictive legend
specified in Section 5.1 of this Agreement. The Company warrants that no
instruction other than the Irrevocable Transfer Agent Instructions referred to
in this Section 3.12 will be given by the Company to its transfer agent and that
the Shares shall otherwise be freely transferable on the books and records of
the Company as and to the extent provided in this Agreement and the Registration
Rights Agreement. If a Purchaser provides the Company with an opinion of
counsel, in a generally acceptable form, to the effect that a public sale,
assignment or transfer of the Shares may be made without registration under the
Securities Act or the Purchaser provides the Company with reasonable assurances
that such Shares can be sold pursuant to Rule 144 without any restriction as to
the number of securities acquired as of a particular date that can then be
immediately sold, the Company shall permit the transfer, and, in the case of the
Conversion Shares and the Warrant Shares, promptly instruct its transfer agent
to issue one or more certificates in such name and in such denominations as
specified by such Purchaser and without any restrictive legend. The Company
acknowledges that a breach by it of its obligations under this Section 3.12 will
cause irreparable harm to the Purchasers by vitiating the intent and purpose of
the transaction contemplated hereby. Accordingly, the Company acknowledges that
the remedy at law for a breach of its obligations under this Section 3.12 will
be inadequate and agrees, in the event of a breach or threatened breach by the
Company of the provisions of this Section 3.12, that the Purchasers shall be
entitled, in addition to all other available remedies, to an order and/or
injunction restraining any breach and requiring immediate issuance and transfer,
without the necessity of showing economic loss and without any bond or other
security being required.

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Section 3.13 Disposition of Assets. So long as any Preferred Shares remain
outstanding, neither the Company nor any subsidiary shall sell, transfer or
otherwise dispose of any of its properties, assets and rights including, without
limitation, its software and intellectual property, to any person except for (i)
sales to customers in the ordinary course of business (ii) sales or transfers
between the Company and its subsidiaries or between subsidiaries of the Company,
or (iii) otherwise with the prior written consent of the holders of a majority
of the Preferred Shares then outstanding.

Section 3.14 Reporting Status. So long as a Purchaser beneficially owns any of
the Shares, the Company shall timely file all reports required to be filed with
the Commission pursuant to the Exchange Act, and the Company shall not terminate
its status as an issuer required to file reports under the Exchange Act even if
the Exchange Act or the rules and regulations thereunder would permit such
termination.

Section 3.15 Disclosure of Transaction. The Company shall issue a press release
describing the material terms of the transactions contemplated hereby (the
“Press Release”) as soon as practicable after the Closing but in no event later
than 9:00 A.M. Eastern Time on the first Business Day following the Closing. The
Company shall also file with the Commission, the Form 8-K describing the
material terms of the transactions contemplated hereby (and attaching as
exhibits thereto this Agreement, the Registration Rights Agreement, the Series A
Certificate of Designation, the Lock-Up Agreements, the Escrow General
Agreement, the Securities Escrow Agreement, the Investor and Public Relations
Escrow Agreement, the Lihua Shareholders Escrow Agreement, form of Warrant, the
Press Release, and the Share Exchange Agreement) as soon as practicable
following the Closing Date but in no event more than four (4) Business Days
following the Closing Date, which Press Release and Form 8-K shall be subject to
prior review and comment by counsel for the Purchasers. “Business Day” means any
day during which the American Stock Exchange (“AMEX”) (or other principal
exchange) shall be open for trading.

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Section 3.16 Disclosure of Material Information. The Company and its
subsidiaries covenant and agree that neither it nor any other person acting on
its or their behalf has provided or, from and after the filing of the Press
Release, will provide any Purchaser or its agents or counsel with any
information that the Company believes constitutes material non-public
information (other than with respect to the transactions contemplated by this
Agreement), unless prior thereto such Purchaser shall have executed a specific
written agreement regarding the confidentiality and use of such information,
provided, however, that the non-disclosure and confidentiality agreement between
the Purchasers and Broadband, as in effect on the date hereof, shall not be
considered to be a valid confidentiality and non-disclosure agreement for the
purpose of consenting to any disclosure of material non-public information that
shall be disclosed to the Purchaser subsequent to the Closing Date. The Company
understands and confirms that each Purchaser shall be relying on the foregoing
covenants in effecting transactions in securities of the Company. The Company
shall not disclose the identity of any Purchaser in any filing with the SEC
except as required by the rules and regulations of the SEC thereunder. In the
event of a breach of the foregoing covenant by the Company, any of its
subsidiaries, or any of its or their respective officers, directors, employees
and agents, in addition to any other remedy provided herein or in the
Transaction Documents, a Purchaser may notify the Company, and the Company shall
make public disclosure of such material nonpublic information within two (2)
trading days of such notification.

Section 3.17 Pledge of Securities. The Company acknowledges and agrees that the
Shares may be pledged by a Purchaser in connection with a bona fide margin
agreement or other loan or financing arrangement that is secured by the Common
Stock. The pledge of Common Stock shall not be deemed to be a transfer, sale or
assignment of the Common Stock hereunder, and no Purchaser effecting a pledge of
Common Stock shall be required to provide the Company with any notice thereof or
otherwise make any delivery to the Company pursuant to this Agreement or any
other Transaction Document; provided, that a Purchaser and its pledgee shall be
required to comply with the provisions of Article V hereof in order to effect a
sale, transfer or assignment of Common Stock to such pledgee. At a Purchaser’s
expense, the Company hereby agrees to execute and deliver such documentation as
a pledgee of the Common Stock may reasonably request in connection with a pledge
of the Common Stock to such pledgee by a Purchaser.

Section 3.18 Lock-Up Agreements. The persons listed on Schedule 3.18(i) attached
hereto shall be subject to the terms and provisions of a lock-up agreement in
substantially the form attached as Exhibit D-1 hereto (the “Principal
Stockholder Lock-Up Agreement”), which shall provide the manner in which certain
stockholders, officers and directors of the Company may sell, transfer or
dispose of their shares of Common Stock. The persons listed on Schedule 3.18(ii)
attached hereto shall be subject to the terms and provisions of a lock-up
agreement in substantially the form attached as Exhibit D-2 hereto (the
“Original Stockholder Lock-Up Agreement”), which shall provide the manner in
which certain stockholders of the Company may sell, transfer or dispose of their
shares of Common Stock. Magnify Wealth shall be subject to the terms and
provisions of a lock-up agreement in substantially the form attached as Exhibit
D-3 hereto (the “Magnify Wealth Lock-Up Agreement” and together with the
Principal Stockholder Lock-Up Agreement and the Original Stockholder Lock-Up,
the “Lock-Up Agreements”), which shall provide the manner in which certain
stockholders of the Company may sell, transfer or dispose of their shares of
Common Stock. In the event the Company undertakes a bona fide public offering of
its Common Stock to be listed on a National Stock Exchange, the Purchasers shall
agree at the request of the lead underwriter to execute a lock-up agreement
which shall provide that the Purchasers will not sell, transfer or dispose of
their shares of Common Stock until forty-five days (45) after the Common Stock
begins trading on such National Stock Exchange. After such forty-five (45) days
expire then one-eighth of the Purchasers’ shares will be automatically released
from the lock-up on a monthly basis, provided, however, that any such lock-up
with respect to the Purchasers shall be on no less favorable terms than any
lock-up executed by any officer, director or 5% stockholder.

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Section 3.19 Investor and Public Relations Escrow. The Company shall cause to be
deposited, pursuant to the terms of the Escrow General Agreement, Seven Hundred
Fifty Thousand Dollars ($750,000) of the Purchase Price funded on the Closing
Date in an escrow account to be used by the Company in connection with investor
and public relations. One Hundred Twenty Five Thousand Dollars ($125,000) of the
Seven Hundred Fifty Thousand Dollars ($750,000) shall be released from escrow
once the Company appoints a Vice President of Investor Relations pursuant to
Section 3.28 hereto. Two Hundred Fifty Thousand Dollars ($250,000) will be
released to the Company after the Company is in compliance with all the NASDAQ
Corporate Governance Requirements (as defined in Section 3.29 herein), including
but not limited to, the appointment of three (3) independent directors and the
establishment of an audit committee of at least three (3) members and the
adoption of a formal written charter of the audit committee in accordance with
and pursuant to Section 3.29 hereof. The remaining Three Hundred Seventy Five
Thousand Dollars ($375,000) will be released to the Company as invoices become
due for the purpose of any investor and public relations activities pursuant to
Section 3.27.

Section 3.20 DTC. Not later than the Effective Date of the Registration
Statement (as defined in the Registration Rights Agreement), the Company shall
cause its Common Stock to be eligible for transfer with its transfer agent
pursuant to the Depository Trust Company Automated Securities Transfer Program.

Section 3.21  Sarbanes-Oxley Act. The Company shall be in compliance with the
applicable provisions of the Sarbanes-Oxley Act of 2002, and the rules and
regulations promulgated thereunder, as required under such Act.

Section 3.22 Exchange Listing. The Company shall list and trade its shares of
Common Stock on the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq
Global Select or any successor market thereto (collectively, “Nasdaq”), AMEX or
any successor market thereto, or NYSE or any successor market thereto (together
with Nasdaq and AMEX, each a “National Stock Exchange”) at the earliest possible
time and shall take all commercially reasonable actions to fulfill said
requirement by no later than the date which is twelve months after the Closing
Date (the “Listing Date”). Upon the request of both Vision Opportunity China and
CMHJ Technology Fund II, L.P. (“CMHJ”), the Company shall have its shares of
Common Stock quoted on the Over-the-Counter Bulletin Board (“OTCBB”) at the
earliest possible time (the “OTCBB Listing Demand”), and shall take all
commercially reasonable actions to fulfill said requirement no later than the
later of: (i) the date which is three (3) months after the OTCBB Listing Demand;
and (ii) the earlier of: (a) the date which is one (1) month following the date
that the Initial Registration Statement (as defined in the Registration Rights
Agreement, dated as of even date herewith) is declared effective; or (b) the
date that the Company Common Stock and/or Conversion Shares may be sold pursuant
to Rule 144 under the Securities Act of 1933, as amended, without restriction
(the “OTCBB Listing Date”). Further, after the OTCBB Listing Date, the Company
shall make all reasonable efforts to list its Common Stock on a National Stock
Exchange at the earliest possible time and shall take all commercially
reasonable actions to fulfill the said requirement by no later than the date
which is eighteen (18) months after the OTCBB Listing Date.

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In the event that no OTCBB Listing Demand has been made and the shares of Common
Stock are not listed and trading on a National Stock Exchange by the Listing
Date and Vision Opportunity China and CMHJ believe, using reasonable judgment,
that commercially reasonable actions have not been taken to meet such
requirement, the stockholder of the Company listed on Schedule 3.22 (the
“Principal Stockholder”) shall transfer 750,000 shares of Common Stock (the
“Listing Penalty Shares”) to the Purchasers, with no additional consideration
due from the Purchasers.

In the event an OTCBB Listing Demand is made and the Company’s Common Stock is
not quoted on the OTCBB by the OTCBB Listing Date, then the Principal
Stockholder shall transfer the Listing Penalty Shares to the Purchasers, with no
additional consideration due from the Purchasers.

In the event an OTCBB Listing Demand is made and the Company’s Common Stock is
quoted on the OTCBB by the OTCBB Listing Date, but the Company’s Common Stock is
not quoted on a National Stock Exchange on the date that is eighteen (18) months
after the OTCBB Listing Date, then the Principal Stockholder shall transfer the
Listing Penalty Shares to the Purchasers, with no additional consideration due
from the Purchasers.

The number of Listing Penalty Shares that each Purchaser shall receive shall be
calculated in the manner provided in the Securities Escrow Agreement. In the
event the Principal Stockholder fails to transfer the Listing Penalty Shares by
the date which is one (1) month after the Listing Penalty Shares are due to be
delivered, each Purchaser may elect, at each Purchaser’s sole discretion and
upon notice to the Company, Escrow Agent and Principal Stockholder (each as
defined in the Securities Escrow Agreement), to receive such Purchaser’s portion
of the Listing Penalty Shares in such amount as determined by the Securities
Escrow Agreement, from the Escrow Shares deposited with the Securities Escrow
Agent in accordance with the terms and conditions of the Securities Escrow
Agreement. Upon the release of such Escrow Shares, the Principal Stockholder
shall deposit additional shares of Common Stock into the Escrow Account in
accordance with the terms and conditions of the Securities Escrow Agreement.
Notwithstanding the foregoing, at any time the Company may make the required
submissions to have its Common Stock quoted on the OTCBB, even if such OTCBB
Listing Demand has not been made by Vision Opportunity China or CMHJ, provided,
that, the Purchasers shall remain entitled to the Listing Penalty Shares in the
event that the Company does not fulfill its obligations to list on a National
Stock Exchange pursuant to this Section 3.22.

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Section 3.23 Registered Capital of Lihua Copper. No later than the date that is
ninety (90) days following the date hereof, the Company shall cause Lihua Copper
to fulfill one hundred percent (100%) of its registered capital obligation of
fifteen million dollars ($15,000,000).

Section 3.24 Form D. The Company agrees to file a Form D with respect to the
securities as required by Rule 506 under Regulation D and to provide a copy
thereof to the Purchasers promptly after such filing.

Section 3.25 No Integrated Offerings. The Company shall not make any offers or
sales of any security (other than the securities being offered or sold
hereunder) under circumstances that would require registration of the securities
being offered or sold hereunder under the Securities Act.

Section 3.26 No Commissions in Connection with Conversion of Preferred Shares.
In connection with the conversion of the Preferred Shares into Conversion
Shares, neither the Company nor any Person acting on its behalf will take any
action that would result in the Conversion Shares being exchanged by the Company
other than with the then existing holders of the Preferred Shares exclusively
where no commission or other remuneration is paid or given directly or
indirectly for soliciting the exchange in compliance with Section 3(a)(9) of the
Securities Act.

Section 3.27 Financial Public Relations Firm and Appearances. Within six (6)
months after the Closing Date or such later date acceptable to Vision
Opportunity China, the Company shall retain a financial public relations firm
(the “Firm”) reasonably acceptable to Vision Opportunity China, for a term to be
agreed upon by the Company and Vision Opportunity China. The Company agrees
that, for so long as Vision Opportunity China and/or CMHJ or any of their
affiliates hold five percent (5%) of the aggregate total number of shares of
Common Stock of the Company on a fully diluted basis (which shall include all
Conversion Shares but not Warrant Shares), it shall provide for its Chief
Executive Officer, Chief Financial Officer and/or its Vice President of Investor
Relations to visit the United States no fewer than four times during every
twelve month period following the Closing Date for the purpose of introductions
by the Firm with the investment community. Such visits shall also include
attendance at no fewer than two industry conferences per year, reasonably
acceptable to Vision Opportunity China. Further, as set forth in Section 1.4,
Seven Hundred Fifty Thousand Dollars ($750,000) of the Purchase Price funded on
the Closing Date shall be deposited in an escrow account pursuant to the
Investor and Public Relations Escrow Agreement. As set forth in Section 3.19,
Three Hundred Seventy Five Thousand Dollars ($375,000) of such escrowed amount
shall be used by the Company in connection with investor and public relations.
In the event that the Company fails to retain the Firm in accordance with the
time frame provided in this Section, the Company shall pay to each Purchaser, an
amount in cash, as partial liquidated damages and not as a penalty, equal to
0.5% of the aggregate purchase price paid by such Purchaser pursuant to this
Agreement on the date of the expiration of the six month period provided in this
Section and an additional 0.5% of the aggregate purchase price paid for each
thirty (30) day period that this Section is not complied with. Liquidated
damages payable by the Company pursuant to this Section 3.27 shall be payable on
the first (1st) business day of each thirty (30) day period that the terms of
this Section are not complied with, provided, however, that such liquidated
damages shall not exceed 10% of the aggregate purchase price paid by the
Purchasers. Any liquidated damages payable under this Section 3.27 may be paid,
upon the Purchaser’s request, from any cash held pursuant to the Investor and
Public Relations Escrow Agreement. Notwithstanding the foregoing, neither Vision
Opportunity China nor CMHJ shall unreasonably withhold approval of the Firm
identified by the Company, and if such approval is unreasonably withheld, the
Company shall not be obligated to pay any liquidated damages under this Section
3.27.

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Section 3.28 Vice President of Investor Relations. As soon as possible following
the Closing, but no later than six (6) months after the Closing Date, the
Company shall use its best efforts to appoint an individual to serve as Vice
President of Investor Relations of the Company who is fluent in English, who
shall be mutually acceptable to the Company and Vision Opportunity China. In the
event that the Company fails to appoint an individual to serve as the Vice
President of Investor Relations in accordance with the time frame provided in
this Section, the Company shall pay to each Purchaser, an amount in cash, as
partial liquidated damages and not as a penalty, equal to 0.5% of the aggregate
purchase price paid by such Purchaser pursuant to this Agreement on the date of
the expiration of the six month period provided in this Section and an
additional 0.5% of the aggregate purchase price paid for each thirty (30) day
period that this Section is not complied with. Liquidated damages payable by the
Company pursuant to this Section 3.28 shall be payable on the first (1st)
business day of each thirty (30) day period that the terms of this Section are
not complied with, provided, however, that such liquidated damages shall not
exceed 10% of the aggregate purchase price paid by the Purchasers. Any
liquidated damages payable under this Section 3.28 may be paid, upon the
Purchaser’s request, from any cash held pursuant to the Investor and Public
Relations Escrow Agreement. Notwithstanding the foregoing, Vision Opportunity
China shall not unreasonably withhold approval of the Vice President of Investor
Relations identified by the Company, and if such approval is unreasonably
withheld, the Company shall not be obligated to pay any liquidated damages under
this Section 3.28.

Section 3.29 Nasdaq Corporate Governance Requirements. As soon as possible, but
no later than six (6) months after the Closing Date, the Company shall comply
with all Nasdaq Corporate Governance standards, including, but not limited to,
appointment of three (3) independent directors who are mutually acceptable to
the Company, Vision Opportunity China and CMHJ and establishment of an audit
committee of at least three (3) members (the “Audit Committee”) that has adopted
a formal written charter of the Audit Committee (the “Nasdaq Corporate
Governance Requirements”). In the event that the Company fails to comply with
the Nasdaq Corporate Governance Requirements within the time frame provided in
this Section, the Company shall pay to each Purchaser, an amount in cash, as
partial liquidated damages and not as a penalty, equal to 0.5% of the aggregate
purchase price paid by such Purchaser pursuant to this Agreement on the date of
the expiration of the six month period provided in this Section and an
additional 0.5% of the aggregate purchase price paid for each thirty (30) day
period that this Section is not complied with. Liquidated damages payable by the
Company pursuant to this Section 3.29 shall be payable on the first (1st)
business day of each thirty (30) day period that the terms of this Section are
not complied with, provided, however, that such liquidated damages shall not
exceed 10% of the aggregate purchase price paid by the Purchasers. Any
liquidated damages payable under this Section 3.29 may be paid, upon the
Purchaser’s request, from any cash held pursuant to the Investor and Public
Relations Escrow Agreement. Notwithstanding the foregoing, Vision Opportunity
China and CMHJ shall not unreasonably withhold approval of the independent
directors identified by the Company, and if such approval is unreasonably
withheld, the Company shall not be obligated to pay any liquidated damages under
this Section 3.29.

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Section 3.30 Option Plan Restrictions. The Company may establish an officer,
director, employee or consultant stock option or stock incentive plan, provided,
however, that such stock option plan does not permit the issuance of more than
ten percent (10%) of the number of shares of Common Stock then issued and
outstanding and any such issuance of stock options under the stock incentive
plan shall not be issued at a price below the market price on the day the option
is granted.

Section 3.31 Change of Auditor. For so long as Vision Opportunity China or any
of its affiliates hold five percent (5%) of the aggregate total number of shares
of Common Stock of the Company on a fully diluted basis (which shall include all
Conversion Shares but not Warrant Shares), Vision Opportunity China may request
that the Company change its auditor.  Within sixty (60) days of the receipt of
such request, the Company shall change its auditor to an auditor acceptable to
Vision Opportunity China and one of the top 25 audit firms in the US.  In the
event that the Company fails to change auditors within the sixty (60) day time
frame provided in this Section, the Company shall pay to each Purchaser, an
amount in cash, as partial liquidated damages and not as a penalty, equal to
0.5% of the aggregate purchase price paid by such Purchaser pursuant to this
Agreement on the date of the expiration of the sixty (60) day period provided in
this Section and an additional 0.5% of the aggregate purchase price paid for
each thirty (30) day period that this Section is not complied with.  Liquidated
damages payable by the Company pursuant to this Section shall be payable on the
first (1st) business day of each thirty (30) day period that the terms of this
Section are not complied with, provided, however, that such liquidated damages
shall not exceed 10% of the aggregate purchase price paid by the Purchasers. Any
liquidated damages payable under this Section 3.31 may be paid, upon the
Purchaser’s request, from any cash held pursuant to the Investor and Public
Relations Escrow Agreement. Notwithstanding the foregoing, such request shall
not be made prior to the earlier of: (i) the date which is twelve (12) months
following the Closing Date; and (ii) the consummation of an offering of the
Company’s Common Stock of at least $5,000,000.

Section 3.32 Internal Control Consultant. Within three (3) months following the
Closing Date, the Company shall hire an internal control consultant or an
independent internal control consultant (the “SOX Consultant”), acceptable to
Vision Opportunity China, who was previously employed with a top 10 audit firm
in the U.S., including KPMG, Deloitte & Touche, LLP, Ernst & Young and
PricewaterhouseCoopers. The SOX Consultant shall review the internal controls
already established by the Company. In the event that the Company fails to hire
a SOX Consultant that is acceptable to Vision Opportunity China within three (3)
months following the Closing Date, the Company shall pay to each Purchaser an
amount in cash, as partial liquidated damages and not as a penalty, equal to
0.5% of the aggregate purchase price paid by such Purchaser pursuant to this
Agreement on the date of the expiration of the three month period provided in
this Section and an additional 0.5% of the aggregate purchase price paid for
each thirty (30) day period that this Section is not complied with.  Liquidated
damages payable by the Company pursuant to this Section shall be payable on the
first (1st) business day of each thirty (30) day period that the terms of this
Section are not complied with, provided, however, that such liquidated damages
shall not exceed 10% of the aggregate purchase price paid by the Purchasers. Any
liquidated damages payable under this Section 3.32 may be paid, upon the
Purchaser’s request, from any cash held pursuant to the Investor and Public
Relations Escrow Agreement. Notwithstanding the foregoing, if such SOX
Consultant reports that the internal controls that have been established by the
Company are effective and in compliance with SOX requirements, the Company shall
not be required to continue to retain such SOX Consultant.

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Section 3.33 Observer Rights. The Company shall invite a representative of
Vision Opportunity China and a representative of CMHJ to attend all meetings of
its Board of Directors in a non-voting observer capacity (each, an “Observer”
and together, the “Observers”), provided, however, that in the event there will
be discussions of any material non-public information at any such meeting, the
Board of Directors shall have such discussions outside of the presence of the
Observers, unless the Observers agree to sign a non-disclosure agreement. The
execution of a non-disclosure agreement shall be in the sole discretion of each
Observer. If any Observer does not agree to enter into a non-disclosure
agreement then, upon notification by the Board of Directors that material
non-public information will be discussed, such Observer shall excuse themselves
from that portion of the meeting when any material non-public information is
discussed.

Section 3.34 Transactions with Related Parties. The Company shall not enter into
any contracts or engage in any transactions with any related party without the
prior written consent of the holders of a majority of the Preferred Shares then
outstanding; provided, however, that the Company shall not be required to obtain
such consent if at such time the Board of Directors is comprised of at least
three (3) independent directors serving on the Audit Committee, which committee
shall be responsible for approving such transactions; provided further, that the
Company shall not be required to obtain such consent with respect to any
guarantees that any related party shall make in connection with the obligations
of the Company.

Section 3.35 Environmental Authority Approval for Jiangsu Lihua Copper Industry
Co., Ltd. Upon completion of the construction of the factory for Lihua Copper,
the Company shall obtain the lawful and necessary governmental and regulatory
approvals, including but not limited to the approval by the environmental
authority, such government and regulatory approval shall be to the satisfaction
and approval of JZJ International (the International Business Group of JunZeJun
Law Offices) (“JZJ”) which shall not be unreasonably withheld.

Further, within ninety (90) days following the Closing Date, the Company
(specifically, Lihua Electron), shall obtain approval by the environmental
authority for the expansion of its production scale from 2000 tons to 6000 tons,
such government and regulatory approval shall be to the satisfaction and
approval of JZJ which shall not be unreasonably withheld.

Section 3.36 Direct Lending. Neither the Company nor any of its subsidiaries
shall engage in any transaction whereby it borrows money from companies other
than financial institutions and lends money directly to other companies unless
such practice is lawful under the laws of the governing jurisdiction and the
Company obtains the prior consent of the holders of a majority of the Preferred
Shares then outstanding.

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Section 3.37 Comply with Relevant Employment Laws in PRC. Within ninety (90)
days following the Closing Date, the Company shall cause both Lihua Electron and
Lihua Copper and any other relevant subsidiaries or related parties to comply
with any and all labor and employment requirements including paying
contributions to social insurances and compulsory housing funds for all
employees, entering into written labor contracts with employees, required
overtime payment for employees, and providing annual leave for employees, such
compliance with all labor and employment requirements shall be to the
satisfaction and approval of JZJ which shall not be unreasonably withheld.

Within ninety (90) days following the Closing Date, the Company shall ensure
that Lihua Electron and Lihua Copper rectify all non-compliance with relevant
labour laws, which includes but not limited to the failure to pay contributions
to social insurance and the compulsory housing fund for all of its employees,
failure to sign written labour contracts with the employees in probation,
failure to grant annual leave to employees and payment for overtime less than
legally allowed, such compliance with all labor and employment requirements
shall be to the satisfaction and approval of JZJ which shall not be unreasonably
withheld.

Within ninety (90) days following the Closing Date, the Company shall ensure
that all wages, bonuses, accrued social insurance and other statutory benefits,
severance pay, and all taxes, charges and the like related to the period prior
to the Closing Date be fully paid to the personnel of Lihua Electron and Lihua
Copper or into the designated statutory fund or properly set aside as required
by relevant PRC laws.

Within ninety (90) days following the Closing Date, the Company shall properly
satisfy the shortfall of RMB 1,691,904.66 (or such other amount, as adjusted)
that, as of June 30, 2008, was underpaid by Lihua Electron and Lihua Copper for
social insurance for their employees.

Within ninety (90) days following the Closing Date, the Company shall bring all
labour and related issues into full and complete compliance with the law to the
satisfaction and approval of JZJ which shall not be unreasonably withheld.

Section 3.38 Construction Works Planning Permit and Construction Works Execution
Permit for Lihua Copper. Within ninety (90) days following the Closing Date, the
Company and Lihua Copper shall obtain the Construction Works Planning Permit and
the Construction Works Execution Permit for the 100 mu of land that Lihua Copper
commenced construction on prior to obtaining the proper permits.

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Section 3.39 Additional Agreements. If during the two (2) year period following
the initial issuance date of the Series A Preferred, (i) there is a mandatory
conversion of the Preferred Shares as set forth in Section 4(b) of the Series A
Certificate of Designations, and (ii) the Company issues or sells any additional
shares of Common Stock ("Additional Shares of Common Stock") or issues any
securities convertible into or exchangeable for, directly or indirectly, Common
Stock (the "Convertible Securities"), or any rights or warrants or options to
purchase any such Common Stock or Convertible Securities (collectively, the
"Common Stock Equivalents") at a price per share less than $2.20 or without
consideration, subject to appropriate adjustment in the event of any dividend,
stock split, combination or other similar recapitalization affecting such shares
(the “Full Ratchet Price”), other than as part of an "Exempt Issuance," as
listed under Section 5(f) of the Certificate of Designations, then and in such
event, with respect to the shares of Common Stock issued upon such mandatory
conversion, each Purchaser shall be entitled to receive a number of additional
Conversion Shares based upon the difference between the Conversion Price in
effect at the time of the mandatory conversion and the Full Ratchet Price;
provided, however, that in no event shall the number of additional Conversion
Shares to be issued be based upon a Full Ratchet Price of less than $0.35,
subject to any such appropriate adjustment in the event of any dividend, stock
split, combination or other similar recapitalization. For the purposes of this
Section 3.39, all shares of Common Stock issuable upon exercise of options
outstanding immediately prior to such issue or upon conversion of Convertible
Securities outstanding immediately prior to such issue are deemed outstanding.
No adjustment shall be made pursuant to this Section 3.39 upon the issuance of
any Additional Shares of Common Stock or Convertible Securities which are issued
pursuant to the exercise of any Common Stock Equivalents, if any such adjustment
shall previously have been made upon the issuance of such Common Stock
Equivalents.

Section 3.40 No Manipulation of Price. The Company will not take, directly or
indirectly, any action designed to cause or result in, or that has constituted
or might reasonably be expected to constitute, the stabilization or manipulation
of the price of any securities of the Company.

Section 3.41 Variable Securities. For so long as any Warrants remain
outstanding, the Company shall not, in any manner, issue or sell any rights,
warrants or options to subscribe for or purchase Common Stock or directly or
indirectly convertible into or exchangeable or exercisable for Common Stock at a
price which varies or may vary with the market price of the Common Stock,
including by way of one or more reset(s) to any fixed price unless the
conversion, exchange or exercise price of any such security cannot be less than
the then applicable Exercise Price (as defined in the Warrants) with respect to
the Common Stock into which any Warrant is exercisable. This provision shall not
prohibit the Company from issuing or selling any securities that contain
customary anti-dilution provisions.

Section 3.42 Additional Negative Covenants. The Company agrees that it will not,
without the consent of the Majority Holders (as defined in Section 7.4):

(a) engage in any business other than businesses engaged in or proposed to be
engaged in by the Company on the date hereof or businesses similar thereto;

(b) merge or consolidate with any person or entity (other than mergers of wholly
owned subsidiaries into the Company), or sell, lease or otherwise dispose of its
assets other than in the ordinary course of business involving an aggregate
consideration of more than ten percent (10%) of the book value of its assets on
a consolidated basis in any 12-month period, or liquidate, dissolve,
recapitalize or reorganize;

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(c) incur any indebtedness for borrowed money or become a guarantor or otherwise
contingently liable for any such indebtedness except for obligations incurred in
the ordinary course of business;

 
(d) enter into any new agreement or make any amendment to any existing
agreement, which by its terms would restrict the Company's performance of its
obligations to holders of the Preferred Shares pursuant to this Agreement or any
agreement contemplated hereby; or
 
(e)  enter into any agreement with any holder or prospective holder of any
securities of the Company providing for the granting to such holder of
registration rights, preemptive rights, special voting rights or protection
against dilution.

Section 3.43 Intellectual Property and Commercial and Trade Secrets. Within
ninety (90) days following the Closing Date, the inventor of the technology that
is the subject of the patent shall assign and transfer all rights and ownership
of the technology and the patent to the Company and the Company shall have the
full title and right to use the patent. Further, within ninety (90) days
following the Closing Date, the Company shall cause all of its commercial and
trade secrets to be recorded and deposited with Loeb & Loeb, LLP to hold in
trust. Such transfer and/or assignment of the patent and its rights of use shall
be to the satisfaction and approval of JZJ which shall not be unreasonably
withheld.

Section 3.44 Payment of Stamp Tax. Within ninety (90) days following the Closing
Date, the Company shall cause the outstanding stamp tax disclosed in Schedule
2.1(kk)(iv) to be paid in full.

Section 3.45 Filing of PRC Certificates. Within ninety (90) days following the
Closing Date, the Company shall cause Lihua Copper to file Certificate of
Finance Registration to bring it up to date based on the change in business
license and shall cause Lihua Electron to file and bring up to date its
Certificate of Finance Registration, Social Insurance Register Certificate,
Registration Certificate for the Customs for the Consignors and Consignees of
Importing and Exporting Goods, Recordal and Registration Certificate of Self
Inspection Units. Such filings of the above listed certificates shall be to the
satisfaction and approval of JZJ which shall not be unreasonably withheld.

Section 3.46 Lihua Copper Pay-Off Loan from Lihua Electron. Within ninety (90)
days following the Closing Date, Lihua Copper will repay the loan made by Lihua
Electron in the amount of RMB 60,000,000 Yuan to Lihua Copper on June 26, 2008.
Such repayment of the loan shall be to the satisfaction and approval of JZJ
which shall not be unreasonably withheld.

Section 3.47 Payment of Purchasers’ PRC Legal Counsel. The Company shall pay to
JZJ, the Purchasers’ PRC legal counsel, all reasonable and appropriate legal
fees and expenses incurred to review all documents and confirm that the Company
and its subsidiaries (including, but not limited to, Lihua Copper and Lihua
Electron) are in compliance with all PRC laws and do not violate any covenants
in this Article III.

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ARTICLE IV

CONDITIONS

Section 4.1 Conditions Precedent to the Obligation of the Company to Sell the
Units. The obligation hereunder of the Company to issue and sell the Units, and
the underlying Preferred Shares and the Warrants to the Purchasers is subject to
the satisfaction or waiver, at or before the Closing, of each of the conditions
set forth below. These conditions are for the Company’s sole benefit and may be
waived by the Company at any time in its sole discretion.

(a) Accuracy of Each Purchaser’s Representations and Warranties. The
representations and warranties of each Purchaser in this Agreement and each of
the other Transaction Documents to which such Purchaser is a party shall be true
and correct in all material respects as of the date when made and as of the
Closing Date as though made at that time, except for representations and
warranties that are expressly made as of a particular date, which shall be true
and correct in all material respects as of such date.

(b) Performance by the Purchasers. Each Purchaser shall have performed,
satisfied and complied in all respects with all covenants, agreements and
conditions required by this Agreement to be performed, satisfied or complied
with by such Purchaser at or prior to the Closing.

(c) No Injunction. No statute, rule, regulation, executive order, decree, ruling
or injunction shall have been enacted, entered, promulgated or endorsed by any
court or governmental authority of competent jurisdiction which prohibits the
consummation of any of the transactions contemplated by this Agreement.

(d) Delivery of Purchase Price. The Purchase Price for the Units shall have been
delivered to the escrow agent pursuant to the Escrow General Agreement.

(e) Delivery of Transaction Documents. The Transaction Documents to which the
Purchasers are parties shall have been duly executed and delivered by the
Purchasers to the Company.

(f) Share Exchange Transaction. Prior to the Closing, the Share Exchange
Transaction shall have been consummated.

Section 4.2 Conditions Precedent to the Obligation of the Purchasers to Purchase
the Units. The obligation hereunder of each Purchaser to acquire and pay for the
Units is subject to the satisfaction or waiver, at or before the Closing, of
each of the conditions set forth below. These conditions are for each
Purchaser’s sole benefit and may be waived by such Purchaser at any time in its
sole discretion.

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(a) Accuracy of the Company’s Representations and Warranties. Each of the
representations and warranties of the Company in this Agreement and the other
Transaction Documents shall be true and correct in all respects as of the date
when made and as of the Closing Date as though made at that time, except for
representations and warranties that are expressly made as of a particular date,
which shall be true and correct in all respects as of such date.

(b) Performance by the Company. The Company shall have performed, satisfied and
complied in all respects with all covenants, agreements and conditions required
by this Agreement to be performed, satisfied or complied with by the Company at
or prior to the Closing.

(c) No Injunction. No statute, rule, regulation, executive order, decree, ruling
or injunction shall have been enacted, entered, promulgated or endorsed by any
court or governmental authority of competent jurisdiction which prohibits the
consummation of any of the transactions contemplated by this Agreement.

(d) No Proceedings or Litigation. No action, suit or proceeding before any
arbitrator or any governmental authority shall have been commenced, and no
investigation by any governmental authority shall have been threatened, against
the Company or any subsidiary, or any of the officers, directors or affiliates
of the Company or any subsidiary seeking to restrain, prevent or change the
transactions contemplated by this Agreement, or seeking damages in connection
with such transactions.

(e) Series A Certificate of Designation of Rights and Preferences. Prior to the
Closing, the Series A Certificate of Designation shall have been filed with the
Secretary of State of Delaware.

(f) Opinions of Counsel, Etc. At the Closing, the Purchasers shall have received
an opinion of U.S. counsel to the Company and an opinion of BVI counsel to
Magnify Wealth Enterprise Limited, dated the date of the Closing, in
substantially the form of Exhibit H hereto, and such other certificates and
documents as the Purchasers or its counsel shall reasonably require incident to
the Closing. Four (4) days prior to Closing, the Purchasers shall have received
an opinion of PRC counsel to the PRC Subsidiaries, dated the date of the Closing
with respect to the Share Exchange Agreement and such other matters as the
Purchasers may reasonably request.

(g) Registration Rights Agreement. On the Closing Date, the Company shall have
executed and delivered the Registration Rights Agreement to each Purchaser.

(h) Amendment to Articles of Association for Danyang Lihua Electron Co., Ltd.
and Jiangsu Lihua Copper Industry Co., Ltd. Prior to the Closing Date, both
Lihua Electron and Lihua Copper shall have amended its respective Articles of
Association or any other corporate documents that are not then current or
effective under applicable law in order to bring them current and consistent
with the currently effective and applicable laws.

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(i) Certificates. The Company shall have executed and delivered to the
Purchasers the certificates (in such denominations as such Purchaser shall
request) for the Preferred Shares and the Warrants being acquired by such
Purchaser at the Closing (in such denominations as such Purchaser shall request)
to such address set forth next to each Purchasers name on Exhibit A with respect
to the Closing.

(j) Resolutions. The Board of Directors of the Company shall have adopted
resolutions consistent with Section 2.1(b) hereof in a form reasonably
acceptable to such Purchaser (the “Resolutions”).

(k) Reservation of Shares. As of the Closing Date, the Company shall have
reserved out of its authorized and unissued Common Stock, solely for the purpose
of effecting the conversion of the Preferred Shares and the exercise of the
Warrants, a number of shares of Common Stock equal to one hundred thirty percent
(130%) of the aggregate number of Conversion Shares issuable upon conversion of
the Preferred Shares issued or to be issued pursuant to this Agreement and the
number of Warrant Shares issuable upon exercise of the number of Warrants issued
or to be issued pursuant to this Agreement.

(l) Transfer Agent. As of the Closing Date, the Company has retained the
transfer agent listed on Schedule 2.1(gg).

(m) Lock-Up Agreements. As of the Closing Date, the persons listed on Schedule
3.18(i) and (ii) hereto and Magnify Wealth shall have delivered to the
Purchasers fully executed Lock-Up Agreements in the form of Exhibit D-1, D-2 and
D-3, respectively, attached hereto.

(n) Secretary’s Certificate. The Company shall have delivered to such Purchaser
a secretary’s certificate, dated as of the Closing Date, as to (i) the
resolutions adopted by the Board of Directors of the Company consistent with
Section 2.1(b), (ii) the Articles, (iii) the Bylaws, (iv) the Series A
Certificate of Designation, each as in effect at the Closing, and (v) the
authority and incumbency of the officers of the Company executing the
Transaction Documents and any other documents required to be executed or
delivered in connection therewith.

(o) Officer’s Certificate. The Company shall have delivered to the Purchasers a
certificate of an executive officer of the Company, dated as of the Closing
Date, confirming the accuracy of the Company’s representations, warranties and
covenants as of the Closing Date and confirming the compliance by the Company
with the conditions precedent set forth in this Section 4.2 as of the Closing
Date.

(p) Escrow General Agreement. On the Closing Date, the Company and the escrow
agent shall have executed and delivered the Escrow General Agreement in the form
of Exhibit E-1 attached hereto to each Purchaser.

(q) Securities Escrow Agreement. On the Closing Date, the Securities Escrow
Agreement shall have been executed by the parties thereto and the Escrow Shares
(as defined in the Securities Escrow Agreement) shall have been deposited into
the escrow account pursuant to the terms of the Securities Escrow Agreement in
the form of Exhibit E-2 attached hereto.

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(r) Investor and Public Relations Escrow. On the Closing Date, the Investor and
Public Relations Escrow Agreement shall have been executed by the parties
thereto and the Escrowed Funds (as defined in the Investor and Public Relations
Escrow Agreement) shall have been deposited with the escrow agent pursuant to
the terms of the Investor and Public Relations Escrow Agreement in the form of
Exhibit E-3 attached hereto.

(s) Material Adverse Effect. No Material Adverse Effect shall have occurred at
or before the Closing Date.

(t) Share Exchange Transaction. Prior to the Closing Date, the Share Exchange
Transaction shall have been consummated.

(u) Financial Statements. No later than the fifth Business Day prior to the
Closing Date, the Company shall have delivered to the Purchasers the audited
financial statements for the fiscal years ended December 31, 2006 and 2007
audited by GK Alliance, Certified Public Accountants and the unaudited financial
statements for the six months ended June 30, 2008 and reviewed by GK Alliance,
Certified Public Accountants (the “Ally Profit Financial Statements”), which
Ally Profit Financial Statements shall be acceptable to the Purchasers.

(v) Capitalization Table. No later than the third Business Day prior to the
Closing Date, the Company shall have delivered to each of the Purchasers a
capitalization table setting forth (i) its capitalization, on a fully diluted
basis immediately prior to the Closing and (ii) its pro forma capitalization, on
a fully diluted basis, giving effect to the consummation of the transactions
contemplated by this Agreement. In each case, the table shall list all
outstanding options, warrants and other securities convertible into equity of
the Company.

(w) Draft Form 8-K. No later than three (3) Business Days prior to the Closing
Date, the Company shall have delivered to each of the Purchasers, a draft of the
Form 8-K (the “Draft Form 8-K”), in substantially final form, that it proposes
to file with the Commission, which Draft Form 8-K, subject only to Purchaser’s
comments, if any, shall be reasonably acceptable to the Purchasers.

(x) Draft Press Release. No later than two (2) Business Days prior to the
Closing Date, the Company shall have delivered to each of the Purchasers, a
draft of the press release announcing the transaction contemplated hereby (the
“Draft Press Release”), in substantially final form, that it proposes to file
with the Securities and Exchange Commission as part of Draft Form 8-K and
distribute to the public, which Draft Press Release shall be reasonably
acceptable to the Purchasers.

(y) Land Use Rights. Prior to the Closing Date, Lihua Electron and Lihua Copper
have validly and legally filed the requisite documents with the relevant PRC
governmental authorities to secure the land use rights for the property numbered
“Gong G0814” and the requisite PRC governmental authorities have acknowledged
such filing.

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ARTICLE V

Stock Certificate Legend

Section 5.1 Legend. Each certificate representing the Preferred Shares, the
Warrants and Warrant Shares and if appropriate, securities issued upon
conversion or exercise thereof, shall be stamped or otherwise imprinted with a
legend substantially in the following form (in addition to any legend required
by applicable state securities or “blue sky” laws):

THESE SECURITIES REPRESENTED BY THIS CERTIFICATE (THE “SECURITIES”) HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”) OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE
DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER APPLICABLE
STATE SECURITIES LAWS OR THE COMPANY SHALL HAVE RECEIVED AN OPINION OF COUNSEL
THAT REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT AND UNDER THE
PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED.

The Company agrees to reissue certificates representing any of the Conversion
Shares or the Warrant Shares, without the legend set forth above if at such
time, prior to making any transfer of any such securities, such holder thereof
shall give written notice to the Company describing the manner and terms of such
transfer and removal as the Company may reasonably request. Such proposed
transfer and removal will not be effected until: (a) either (i) the Company has
received an opinion of counsel reasonably satisfactory to the Company, to the
effect that the registration of the Conversion Shares or the Warrant Shares
under the Securities Act is not required in connection with such proposed
transfer, (ii) a registration statement under the Securities Act covering such
proposed disposition has been filed by the Company with the Commission and has
become effective under the Securities Act, (iii) the Company has received other
evidence reasonably satisfactory to the Company that such registration and
qualification under the Securities Act and state securities laws are not
required, or (iv) the holder provides the Company with reasonable assurances
that such security can be sold pursuant to Rule 144 under the Securities Act;
and (b) either (i) the Company has received an opinion of counsel reasonably
satisfactory to the Company, to the effect that registration or qualification
under the securities or “blue sky” laws of any state is not required in
connection with such proposed disposition, or (ii) compliance with applicable
state securities or “blue sky” laws has been effected or a valid exemption
exists with respect thereto. The Company will respond to any such notice from a
holder within five (5) business days. In the case of any proposed transfer under
this Section 5.1, the Company will use reasonable efforts to comply with any
such applicable state securities or “blue sky” laws, but shall in no event be
required, (x) to qualify to do business in any state where it is not then
qualified, (y) to take any action that would subject it to tax or to the general
service of process in any state where it is not then subject, or (z) to comply
with state securities or “blue sky” laws of any state for which registration by
coordination is unavailable to the Company. The restrictions on transfer
contained in this Section 5.1 shall be in addition to, and not by way of
limitation of, any other restrictions on transfer contained in any other section
of this Agreement. Whenever a certificate representing the Conversion Shares or
the Warrant Shares is required to be issued to a Purchaser without a legend, in
lieu of delivering physical certificates representing the Conversion Shares or
the Warrant Shares (provided that a registration statement under the Securities
Act providing for the resale of the Warrant Shares and Conversion Shares is then
in effect), the Company may cause its transfer agent to electronically transmit
the Conversion Shares or Warrant Shares to a Purchaser by crediting the account
of such Purchaser or such Purchaser’s prime broker with the DTC through its DWAC
system (to the extent not inconsistent with any provisions of this Agreement).

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ARTICLE VI

Indemnification

Section 6.1 General Indemnity. The Company agrees to indemnify and hold harmless
the Purchasers (and their respective directors, officers, managers, partners,
members, shareholders, affiliates, agents, successors and assigns) from and
against any and all losses, liabilities, deficiencies, costs, damages and
expenses (including, without limitation, reasonable attorneys’ fees, charges and
disbursements) incurred by the Purchasers as a result of any inaccuracy in or
breach of the representations, warranties or covenants made by the Company
herein. Further, the Company agrees to indemnify and hold harmless the
Purchasers (and their respective directors, officers, managers, partners,
members, shareholders, affiliates, agents, successors and assigns) from and
against any and all losses, liabilities, deficiencies, costs, damages and
expenses (including, without limitation, reasonable attorneys’ fees, charges and
disbursements) incurred by the Purchasers as a result of the failure of the
Company or any of its subsidiaries to pay contributions for all employees or any
other liability that arises from the failure to comply with any PRC rule or
regulation, including any liability imposed by the Danyang Houxiang Labor
Administrative Office or other local or national government authority. Each
Purchaser severally but not jointly agrees to indemnify and hold harmless the
Company and its directors, officers, affiliates, agents, successors and assigns
from and against any and all losses, liabilities, deficiencies, costs, damages
and expenses (including, without limitation, reasonable attorneys’ fees, charges
and disbursements) incurred by the Company as a result of any inaccuracy in or
breach of the representations, warranties or covenants made by such Purchaser
herein. The maximum aggregate liability of each Purchaser pursuant to its
indemnification obligations under this Article VI shall not exceed the portion
of the Purchase Price paid by such Purchaser hereunder. In no event shall any
“Indemnified Party” (as defined below) be entitled to recover consequential or
punitive damages resulting from a breach or violation of this Agreement.

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Section 6.2 Indemnification Procedure. Any party entitled to indemnification
under this Article VI (an “Indemnified Party”) will give written notice to the
indemnifying party of any matters giving rise to a claim for indemnification;
provided, that the failure of any party entitled to indemnification hereunder to
give notice as provided herein shall not relieve the indemnifying party of its
obligations under this Article VI except to the extent that the indemnifying
party is actually prejudiced by such failure to give notice. In case any action,
proceeding or claim is brought against an Indemnified Party in respect of which
indemnification is sought hereunder, the indemnifying party shall be entitled to
participate in and, unless in the reasonable judgment of the Indemnified Party a
conflict of interest between it and the indemnifying party may exist with
respect of such action, proceeding or claim, to assume the defense thereof with
counsel reasonably satisfactory to the Indemnified Party. In the event that the
indemnifying party advises an Indemnified Party that it will contest such a
claim for indemnification hereunder, or fails, within thirty (30) days of
receipt of any indemnification notice to notify, in writing, such person of its
election to defend, settle or compromise, at its sole cost and expense, any
action, proceeding or claim (or discontinues its defense at any time after it
commences such defense), then the Indemnified Party may, at its option, defend,
settle or otherwise compromise or pay such action or claim. In any event, unless
and until the indemnifying party elects in writing to assume and does so assume
the defense of any such claim, proceeding or action, the Indemnified Party’s
costs and expenses arising out of the defense, settlement or compromise of any
such action, claim or proceeding shall be losses subject to indemnification
hereunder. The Indemnified Party shall cooperate fully with the indemnifying
party in connection with any negotiation or defense of any such action or claim
by the indemnifying party and shall furnish to the indemnifying party all
information reasonably available to the Indemnified Party which relates to such
action or claim. The indemnifying party shall keep the Indemnified Party fully
apprised at all times as to the status of the defense or any settlement
negotiations with respect thereto. If the indemnifying party elects to defend
any such action or claim, then the Indemnified Party shall be entitled to
participate in such defense with counsel of its choice at its sole cost and
expense. The indemnifying party shall not be liable for any settlement of any
action, claim or proceeding effected without its prior written consent,
provided, however, that the indemnifying party shall be liable for any
settlement if the indemnifying party is advised of the settlement but fails to
respond to the settlement within thirty (30) days of receipt of such
notification. Notwithstanding anything in this Article VI to the contrary, the
indemnifying party shall not, without the Indemnified Party’s prior written
consent, settle or compromise any claim or consent to entry of any judgment in
respect thereof which imposes any future obligation on the Indemnified Party or
which does not include, as an unconditional term thereof, the giving by the
claimant or the plaintiff to the Indemnified Party of a release from all
liability in respect of such claim. The indemnification required by this Article
VI shall be made by periodic payments of the amount thereof during the course of
investigation or defense, as and when bills are received or expense, loss,
damage or liability is incurred, so long as the Indemnified Party irrevocably
agrees to refund such moneys if it is ultimately determined by a court of
competent jurisdiction that such party was not entitled to indemnification. The
indemnity agreements contained herein shall be in addition to (a) any cause of
action or similar rights of the Indemnified Party against the indemnifying party
or others, and (b) any liabilities the indemnifying party may be subject to
pursuant to the law.
 
ARTICLE VII

Miscellaneous

Section 7.1 Fees and Expenses. Except as otherwise set forth in this Agreement
and the other Transaction Documents, each party shall pay the fees and expenses
of its advisors, counsel, accountants and other experts, if any, and all other
expenses, incurred by such party incident to the negotiation, preparation,
execution, delivery and performance of this Agreement, provided that the Company
shall pay all actual and reasonable attorneys’ fees and expenses (including
disbursements and out-of-pocket expenses) up to a maximum of $60,000 incurred by
the Purchasers in connection with the preparation, negotiation, execution and
delivery of this Agreement and the other Transaction Documents and the
consummation of the transactions and the review of the Share Exchange Agreement
(of which Vision Opportunity China hereby acknowledges receipt of $25,000). The
Company shall also pay to Vision Opportunity China at the Closing in connection
with due diligence expenses incurred by Vision Opportunity China an amount of
$50,000 (of which Vision Opportunity China hereby acknowledges receipt of
$10,000). The Company shall also pay all reasonable fees and expenses incurred
by the Purchasers in connection with the enforcement of this Agreement or any of
the other Transaction Documents, including, without limitation, all reasonable
attorneys’ fees and expenses but only if the Purchasers are successful in any
litigation or arbitration relating to such enforcement.

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Section 7.2 Specific Enforcement, Consent to Jurisdiction.

(a) The Company and the Purchasers acknowledge and agree that irreparable damage
would occur in the event that any of the provisions of this Agreement or the
other Transaction Documents were not performed in accordance with their specific
terms or were otherwise breached. It is accordingly agreed that the parties
shall be entitled to an injunction or injunctions to prevent or cure breaches of
the provisions of this Agreement or the other Transaction Documents and to
enforce specifically the terms and provisions hereof or thereof, this being in
addition to any other remedy to which any of them may be entitled by law or
equity.

(b) Each of the Company and the Purchasers (i) hereby irrevocably submits to the
jurisdiction of the United States District Court sitting in the Southern
District of New York and the courts of the State of New York located in New York
county for the purposes of any suit, action or proceeding arising out of or
relating to this Agreement or any of the other Transaction Documents or the
transactions contemplated hereby or thereby and (ii) hereby waives, and agrees
not to assert in any such suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of such court, that the suit, action or
proceeding is brought in an inconvenient forum or that the venue of the suit,
action or proceeding is improper. Each of the Company and the Purchasers
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof via registered or certified mail or overnight delivery
(with evidence of delivery) to such party at the address in effect for notices
to it under this Agreement and agrees that such service shall constitute good
and sufficient service of process and notice thereof. Nothing in this Section
7.2 shall affect or limit any right to serve process in any other manner
permitted by law. Each party hereby irrevocably waives personal service of
process and consents to process being served in any such suit, action or
proceeding by mailing a copy thereof to such party at the address for such
notices to it under this Agreement and agrees that such service shall constitute
good and sufficient service of process and notice thereof. The Company hereby
appoints Loeb & Loeb, LLP, with offices at 345 Park Avenue, New York, New York
10154, as its agent for service of process in New York. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any manner
permitted by law.

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Section 7.3 Entire Agreement; Amendment. This Agreement and the other
Transaction Documents contains the entire understanding and agreement of the
parties with respect to the matters covered hereby and, except as specifically
set forth herein or in the Transaction Documents, neither the Company nor any of
the Purchasers makes any representations, warranty, covenant or undertaking with
respect to such matters and they supersede all prior understandings and
agreements with respect to said subject matter, all of which are merged herein.
No provision of this Agreement nor any of the Transaction Documents may be
waived or amended other than by a written instrument signed by the Company and
the holders of at least fifty percent (50%) of the Preferred Shares then
outstanding provided such consenting holders shall include Vision Opportunity
China, so long as Vision Opportunity China (or any of its affiliates) holds more
than 5% of its original investment, and CMHJ (or any of its affiliate), so long
as CMHJ (or any of its affiliates) holds more than 5% of its original
investment, (the “Majority Holders”), and no provision hereof may be waived
other than by a written instrument signed by the party against whom enforcement
of any such waiver is sought. No such amendment shall be effective to the extent
that it applies to less than all of the holders of the Preferred Shares then
outstanding. No consideration shall be offered or paid to any person to amend or
consent to a waiver or modification of any provision of any of the Transaction
Documents unless the same consideration is also offered to all of the parties to
the Transaction Documents or holders of Preferred Shares, as the case may be.

Section 7.4 Notices. Any notice, demand, request, waiver or other communication
required or permitted to be given hereunder shall be in writing and shall be
effective (a) upon hand delivery by telex (with correct answer back received),
telecopy or facsimile at the address or number designated below (if delivered on
a business day during normal business hours where such notice is to be
received), or the first business day following such delivery (if delivered other
than on a business day during normal business hours where such notice is to be
received) or (b) on the second business day following the date of mailing by
express courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur. The addresses for
such communications shall be:

If to the Company:

Lihua International, Inc.
c/o Lihua Holdings Limited,
Houxiang Five Star Industry District
Danyang City, Jiangsu Province, PRC
Attention: Mr. Zhu Jianhua
Tel. No.:86 511 8632 5621
Fax No.:86 511 8631 2040

with copies (which shall not constitute notice) to:

Loeb & Loeb LLP
345 Park Avenue
New York, NY 10154
Attention: Mitchell S. Nussbaum, Esq.
Tel. No.: (212) 407-4000
Fax No.: (212) 407-4990

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If to any Purchaser:  At the address of such Purchaser set forth on Exhibit A to
this Agreement, as the case may be, with copies to Purchaser’s counsel as set
forth on Exhibit A or as specified in writing by such Purchaser.

with copies (which shall not constitute notice) to:

Anslow & Jaclin LLP
Attn.: Joseph M. Lucosky, Esq.
195 Route 9 South, Suite 204
Manalapan, NJ 07726
Tel. No.: (732) 409-1212
Fax No: (732) 577-1188

Any party hereto may from time to time change its address for notices by giving
at least ten (10) days written notice of such changed address to the other party
hereto.

Section 7.5 Waivers. No waiver by any party of any default with respect to any
provision, condition or requirement of this Agreement shall be deemed to be a
continuing waiver in the future or a waiver of any other provisions, condition
or requirement hereof, nor shall any delay or omission of any party to exercise
any right hereunder in any manner impair the exercise of any such right accruing
to it thereafter.

Section 7.6 Headings. The article, section and subsection headings in this
Agreement are for convenience only and shall not constitute a part of this
Agreement for any other purpose and shall not be deemed to limit or affect any
of the provisions hereof.

Section 7.7 Successors and Assigns. This Agreement may not be assigned by a
party hereto without the prior written consent of the Company or the Purchasers,
as applicable, provided, however, that, subject to federal and state securities
laws and as otherwise provided in the Transaction Documents, a Purchaser may
assign its rights and delegate its duties hereunder in whole or in part to an
affiliate or to a third party acquiring all or substantially all of its Shares
or Warrants in a private transaction without the prior written consent of the
Company or the other Purchasers, after notice duly given by such Purchaser to
the Company provided, that no such assignment or obligation shall affect the
obligations of such Purchaser hereunder and that such assignee agrees in writing
to be bound, with respect to the transferred securities, by the provisions
hereof that apply to the Purchasers. The provisions of this Agreement shall
inure to the benefit of and be binding upon the respective permitted successors
and assigns of the parties. Nothing in this Agreement, express or implied, is
intended to confer upon any party other than the parties hereto or their
respective successors and assigns any rights, remedies, obligations or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement. If any Purchaser transfers Preferred Shares purchased
hereunder, any such penalty shares or liquidated damages, as the case may be,
pursuant to this Agreement shall similarly transfer to such transferee with no
further action required by the purchaser or the Company. Notwithstanding
anything to the contrary set forth herein, only those Purchasers who own shares
of Series A Preferred or Conversion Shares of the Company shall be entitled to
receive any rights and benefits of this Agreement based on their ownership
interest at the time when such rights or benefits accrue. If any Purchaser
transfers Preferred Shares purchased hereunder, any and all rights and benefits
pursuant to this Agreement shall similarly transfer to such transferee with no
further action required by the Purchaser, the transferee or the Company. In the
event that any Purchaser (or permitted assign) no longer holds shares of Series
A Preferred or Conversion Shares such Purchaser will similarly not be entitled
to any of the rights or benefits conferred upon such Purchaser pursuant to this
Agreement.

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Section 7.8 No Third Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.

Section 7.9 Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York, without giving
effect to any of the conflicts of law principles which would result in the
application of the substantive law of another jurisdiction. This Agreement shall
not be interpreted or construed with any presumption against the party causing
this Agreement to be drafted.

Section 7.10 Survival. The representations and warranties of the Company and the
Purchasers shall survive the execution and delivery hereof and the Closing
hereunder for a period of three (3) years following the Closing Date.

Section 7.11 Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original
and, all of which taken together shall constitute one and the same Agreement and
shall become effective when counterparts have been signed by each party and
delivered to the other parties hereto, it being understood that all parties need
not sign the same counterpart. In the event that any signature is delivered by
facsimile transmission, such signature shall create a valid binding obligation
of the party executing (or on whose behalf such signature is executed) the same
with the same force and effect as if such facsimile signature were the original
thereof.

Section 7.12 Publicity. The Company agrees that it will not disclose, and will
not include in any public announcement, the name of the Purchasers without the
consent of the Purchasers unless and until such disclosure is required by law or
applicable regulation, and then only to the extent of such requirement.

Section 7.13 Severability. The provisions of this Agreement and the Transaction
Documents are severable and, in the event that any court of competent
jurisdiction shall determine that any one or more of the provisions or part of
the provisions contained in this Agreement or the Transaction Documents shall,
for any reason, be held to be invalid, illegal or unenforceable in any respect,
such invalidity, illegality or unenforceability shall not affect any other
provision or part of a provision of this Agreement or the Transaction Documents
and such provision shall be reformed and construed as if such invalid or illegal
or unenforceable provision, or part of such provision, had never been contained
herein, so that such provisions would be valid, legal and enforceable to the
maximum extent possible.

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Section 7.14 Further Assurances. From and after the date of this Agreement, upon
the request of any Purchaser or the Company, each of the Company and the
Purchasers shall execute and deliver such instrument, documents and other
writings as may be reasonably necessary or desirable to confirm and carry out
and to effectuate fully the intent and purposes of this Agreement, the Preferred
Shares, the Conversion Shares, the Warrants, the Warrant Shares, the Series A
Certificate of Designation, the Registration Rights Agreement and the other
Transaction Documents.

Section 7.15 Currency. Unless otherwise indicated, all dollar amounts referred
to in this Agreement are in United States Dollars. All amounts owing under this
Agreement or any Transaction Document shall be paid in US dollars. All amounts
denominated in other currencies shall be converted in the US dollar equivalent
amount in accordance with the Exchange Rate on the date of calculation.
“Exchange Rate” means, in relation to any amount of currency to be converted
into US dollars pursuant to this Agreement, the US dollar exchange rate as
published in The Wall Street Journal on the relevant date of calculation.

Section 7.16 Judgment Currency.

(a) If for the purpose of obtaining or enforcing judgment against the Company in
any court in any jurisdiction it becomes necessary to convert into any other
currency (such other currency being hereinafter in this Section 7.17 referred to
as the “Judgment Currency”) an amount due in US Dollars under this Agreement,
the conversion shall be made at the Exchange Rate prevailing on the business day
immediately preceding:

(i) the date of actual payment of the amount due, in the case of any proceeding
in the courts of New York or in the courts of any other jurisdiction that will
give effect to such conversion being made on such date: or

(ii) the date on which the foreign court determines, in the case of any
proceeding in the courts of any other jurisdiction (the date as of which such
conversion is made pursuant to this Section being hereinafter referred to as the
“Judgment Conversion Date”).

(b) If in the case of any proceeding, there is a change in the Exchange Rate
prevailing between the Judgment Conversion Date and the date of actual payment
of the amount due, the applicable party shall pay such adjusted amount as may be
necessary to ensure that the amount paid in the Judgment Currency, when
converted at the Exchange Rate prevailing on the date of payment, will produce
the amount of US Dollars which could have been purchased with the amount of
Judgment Currency stipulated in the judgment or judicial order at the Exchange
Rate prevailing on the Judgment Conversion Date.

(c) Any amount due from the Company under this provision shall be due as a
separate debt and shall not be affected by judgment being obtained for any other
amounts due under or in respect of this Agreement.

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Section 7.17 Termination. This Agreement may be terminated prior to Closing:

(a) by mutual written agreement of the Purchasers and the Company, a copy of
which shall be provided to the escrow agent appointed under the Escrow General
Agreement (the “Escrow Agent”); and

(b) by the Company or a Purchaser (as to itself but no other Purchaser) upon
written notice to the other, with a copy to the Escrow Agent, if the Closing
shall not have taken place by 6:30 p.m. Eastern time on the November 1, 2008;
provided, that the right to terminate this Agreement under this Section 7.18(b)
shall not be available to any Person whose failure to comply with its
obligations under this Agreement has been the cause of or resulted in the
failure of the Closing to occur on or before such time.

(c) In the event of a termination pursuant to Section 7.18(a) or 7.18(b), each
Purchaser shall have the right to a return of up to its entire Purchase Price
deposited with the Escrow Agent pursuant to this Agreement, without interest or
deduction. The Company covenants and agrees to cooperate with such Purchaser in
obtaining the return of its Purchase Price, and shall not communicate any
instructions to the contrary to the Escrow Agent.

(d) In the event of a termination pursuant to this Section, the Company shall
promptly notify all non-terminating Purchasers. Upon a termination in accordance
with this Section 7.18, the Company and the terminating Purchaser(s) shall not
have any further obligation or liability (including as arising from such
termination) to the other and no Purchaser will have any liability to any other
Purchaser under the Transaction Documents as a result therefrom.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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[SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT]

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officer as of the date first above
written.

 
LIHUA INTERNATIONAL, INC.
   
By:
/s/ Zhu Jianhua
 
Name: Zhu Jianhua
Title: Chief Executive Officer and President

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By its execution and delivery of this signature page, the undersigned Purchaser
hereby joins in and agrees to be bound by the terms and conditions of the
Securities Purchase Agreement dated as of October 31, 2008 by and among Lihua
International, Inc. and the Purchasers (as defined therein), as to the number of
Units set forth below, and authorizes this signature page to be attached to the
Purchase Agreement or counterparts thereof and for its name, address and number
of Units purchased to be added to Exhibit A of the Purchase Agreement.

 
PURCHASER
     
[                       ]
       
By:
        
Name:
   
Title:
       
Number of Units:
Aggregate Purchase Price: $

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EXHIBIT A TO THE
SECURITIES PURCHASE AGREEMENT

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LIST OF PURCHASERS

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EXHIBIT B TO THE
SECURITIES PURCHASE AGREEMENT

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FORM OF SERIES A WARRANT

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EXHIBIT C TO THE
SECURITIES PURCHASE AGREEMENT

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FORM OF REGISTRATION RIGHTS AGREEMENT

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EXHIBIT D-3 TO THE
SECURITIES PURCHASE AGREEMENT

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FORM OF LOCK-UP AGREEMENT FOR MAGNIFY WEALTH

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EXHIBIT E-1 TO THE
SECURITIES PURCHASE AGREEMENT

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FORM OF ESCROW GENERAL AGREEMENT

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EXHIBIT E-2 TO THE
SECURITIES PURCHASE AGREEMENT

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FORM OF SECURITIES ESCROW AGREEMENT

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EXHIBIT E-3 TO THE
SECURITIES PURCHASE AGREEMENT

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FORM OF INVESTOR AND PUBLIC RELATIONS ESCROW AGREEMENT

59

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EXHIBIT E-4 TO THE
SECURITIES PURCHASE AGREEMENT

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FORM OF LIHUA SHAREHOLDER ESCROW AGREEMENT

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EXHIBIT F TO THE
SECURITIES PURCHASE AGREEMENT

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SERIES A CERTIFICATE OF DESIGNATION

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EXHIBIT H TO THE
SECURITIES PURCHASE AGREEMENT

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FORM OF OPINION OF COUNSEL

1.  The Company is validly existing and in good standing as a corporation under
the laws of the State of Delaware and has the corporate power to own, lease and
operate its properties and assets, and to carry on its business as presently
conducted.

2. The Company has the corporate power and authority to enter into and perform
its obligations under the Transaction Documents and to issue the Preferred
Shares, the Warrants and the Common Stock issuable upon exercise of the Warrants
and conversion of the Preferred Shares. The execution, delivery and performance
of each of the Transaction Documents by the Company and the consummation by it
of the transactions contemplated thereby have been duly and validly authorized
by all necessary corporate action. Each of the Transaction Documents has been
duly executed and delivered, and the Warrants have been duly executed, issued
and delivered by the Company and each of the Transaction Documents constitutes a
valid and legally binding obligation of the Company enforceable against the
Company in accordance with its terms. The Common Stock issuable upon exercise of
the Warrants and conversion of the Preferred Shares are not subject to any
preemptive rights under the Articles or the Bylaws.

3. The Preferred Shares have been duly authorized and, when delivered against
payment in full as provided in the Purchase Agreement, will be validly issued,
fully paid and nonassessable.

4. The execution, delivery and performance of and compliance with the terms of
the Transaction Documents and the issuance of the Preferred Shares, the Warrants
and the Common Stock issuable upon exercise of the Warrants and conversion of
the Preferred Shares do not (i) violate any provision of the Articles or Bylaws,
(ii) conflict with, or constitute a default (or an event which with notice or
lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of, any material
agreement, mortgage, deed of trust, indenture, note, bond, license, lease
agreement, instrument or obligation to which, to our knowledge, the Company is a
party, or result in a violation of any federal, state, local or foreign statute,
rule, regulation, or, to our knowledge, order, judgment, injunction or decree
applicable to the Company or by which any property or asset of the Company is
bound or affected.

5. No consent, approval or authorization of or designation, declaration or
filing with any governmental authority on the part of the Company is required
under Federal, state or local law, rule or regulation in connection with the
valid execution and delivery of the Transaction Documents, or the offer, sale or
issuance of the Preferred Shares, the Warrants or the Common Stock issuable upon
exercise of the Warrants or conversion of the Preferred Shares other than the
Registration Statement and applicable “Blue Sky” or state securities filings.

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6. To our knowledge, there is no action, suit, claim, investigation or
proceeding pending or threatened against the Company which questions the
validity of this Agreement or the transactions contemplated hereby or any action
taken or to be taken pursuant hereto or thereto. To our knowledge, there is no
action, suit, claim, investigation or proceeding pending, or threatened, against
or involving the Company or any of its properties or assets and which, if
adversely determined, is reasonably likely to result in a Material Adverse
Effect.

7. Based upon the representations of the Purchasers and the Placement Agent in
their certificate delivered to us today, the offer, issuance and sale of the
Preferred Shares and the Warrants and the offer, issuance and sale of the shares
of Common Stock issuable upon exercise of the Warrants or conversion of the
Preferred Shares pursuant to the Purchase Agreement, as applicable, are exempt
from the registration requirements of the Securities Act.

Very truly yours,

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