Unassociated Document


    EXHIBIT
4.23

    
 

    SECURITIES
PURCHASE AGREEMENT

     

    Dated
as of February 22, 2009

     

    among

     

    FUSHI
COPPERWELD, INC.

     

    and

     

    THE
PURCHASER LISTED ON EXHIBIT  A


    
      
         


      

      
        
        

        
          

        

      

      
         


      

    

     

    This SECURITIES PURCHASE AGREEMENT
(the “Agreement”) is dated
as of February 22, 2009 by and among Fushi Copperweld, Inc., a Nevada
corporation (the “Company”), and the
Purchaser whose name is set forth on Exhibit A hereto
(“Purchaser”).

     

    The
parties hereto agree as follows:

     

    ARTICLE
I


     

    Purchase
and Sale of Securities

     

    Section
1.1   Purchase and Sale of Common
Stock.  Upon the following terms and conditions, the Company
shall issue and sell to the Purchaser and the Purchaser shall purchase from the
Company, an aggregate of 416,667 shares of the Company’s common stock, par value
$0.006 per share (the “Common Stock”) at a
purchase price of $4.80 per share (the “Purchase Price”).  The
Company and the Purchaser 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.  Notwithstanding anything to the
contrary contained in any of the Transaction Documents the Purchaser shall be
entitled to transfer any of the Securities to any of its
affiliates.

     

    Section
1.2   Warrants.   Upon
the following terms and conditions and for no additional consideration, in
addition to the Common Stock the Purchaser shall be issued (x) 100,000 Series A
Warrants, in substantially the form attached hereto as Exhibit B-1 (the “Series A Warrants”),
(y) 100,000 Series B Warrants, in substantially the form attached hereto as
Exhibit B-2 (the “Series B Warrants”),
and (z) 100,000 Series C Warrants, in substantially the form attached
hereto as Exhibit B-3 (the “Series C Warrants”
and, together with the Series A Warrants and Series B Warrants, the “Warrants”).  Each
Series A Warrant shall represent the right to purchase one share of Common Stock
at an exercise price of $5.25 per share and  shall expire on the later
of (i) one year following the Closing Date or (ii) six months following the
effective date of a registration  statement filed by the Company
pursuant to the Registration Rights Agreement (as hereinafter defined) under
which the resale of the shares of all of the shares of Common Stock underlying
the Series A Warrants have been registered under the Securities
Act.  Each Series B Warrant shall represent the right to purchase
one  share of Common Stock at an exercise price of $5.50
and  shall expire on the later of (i) one year following the Closing
Date or (ii) six months following the effective date of a
registration  statement filed by the Company pursuant to the
Registration Rights Agreement under which the resale of all of the shares of
Common Stock underlying the Series B Warrants have been registered under the
Securities Act.  Each Series C Warrant shall represent the right
to  purchase one share of Common Stock at an exercise price of $6.00
and  shall expire on the later of (i) eighteen months following the
Closing Date or (ii) twelve months following the effective date of a
registration  statement filed by the Company pursuant to the
Registration Rights Agreement under which the resale of all of the shares of
Common Stock underlying the Series C Warrants have been registered under the
Securities Act.


    
      
         


      

      
        
        

        
          

        

      

      
         


      

    

     

    Section
1.3   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
the number of shares of Common Stock as shall from time to time be sufficient to
effect the exercise of all of the Warrants then outstanding.  Any
shares of Common Stock issuable upon exercise of the Warrants (and such shares
when issued) are herein referred to as “Warrant
Shares.  The Common Stock and the Warrants are sometimes
collectively referred to as the “Securities”.  The
Common Stock and the Warrant Shares are sometimes collectively referred to as
the “Shares”.

     

    Section
1.4    Purchase Price and
Closing.  Subject to the terms and conditions hereof, the
Company agrees to issue and sell to the Purchaser and the Purchaser, severally
but not jointly, agree to purchase the number of Securities set forth opposite
their names on Exhibit A for the Purchase Price.  The closing of the
purchase and sale of the Securities to be acquired by the Purchaser from the
Company under this Agreement shall take place at the offices of Guzov Ofsink
LLC, 600 Madison Avenue, New York, New York 10022 (the “Closing”) at 2:00
p.m., New York time on such date as the Purchaser and the Company may agree
upon; 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 shares of Common Stock set forth
opposite the name of such Purchaser on Exhibit A hereto, (y) such number of
Warrants 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 account designated by the
Company.

     

    ARTICLE
II

     

    Representations
and Warranties

     

    Section
2.1    Representations and
Warranties of the Company.  The Company hereby represents and
warrants to the Purchaser, as of the date hereof and the Closing Date (except as
set forth on (i) the Schedule of Exceptions attached hereto with each numbered
Schedule corresponding to the section number herein or (ii)  disclosed
in the reports, schedules, forms, statements and other documents 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”) as follows:

     

    (a)       Organization, Good Standing
and Power.  The Company is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of Nevada 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.  The
Company and each such subsidiary is duly qualified as a foreign corporation 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.


    
      
         


      

      
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    (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 Agreement (as defined in Section 3.19 hereof) in
the form attached hereto as Exhibit D,
(collectively, the “Transaction
Documents”) and to issue and sell the Securities, 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.

     

    (c)       Capitalization. The
authorized capital stock of the Company and the shares thereof currently issued
and outstanding as of the date hereof are set forth on Schedule 2.1(c)
hereto. All of the outstanding shares of the Common Stock 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 or as
set forth on Schedule
2.1(c) hereto, 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 or as
set forth on Schedule
2.1(c) hereto 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). 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 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.


    
      
         


      

      
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    (d)       Issuance of Shares.
The Securities, the shares of Common Stock and the Warrants to be issued at the
Closing have been duly authorized by all necessary corporate action and the
shares of Common Stock, when paid for or issued in accordance with the terms
hereof, shall be validly issued and outstanding, fully paid and
nonassessable.  The Warrant Shares, when  issued in
accordance with the terms of the Warrants, 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.

     

    (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 of incorporation or bylaws, (ii) except
as set forth in Schedule 2.1(e)
hereto, 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, charge or encumbrance 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, except, in all cases
other than violations pursuant to clauses (i) and (iv) above, for such
conflicts, defaults, terminations, amendments, accelerations, cancellations and
violations as would not, individually or in the aggregate, have a Material
Adverse Effect.  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  shares of Common  Stock, the Warrants
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;
provided, that,
for purposes of the representation made in this sentence, the Company is
assuming and relying upon the accuracy of the relevant representations and
agreements of the Purchaser herein.


    
      
         


      

      
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    (f)           Commission Documents,
Financial Statements.  The Company has filed all Commission
Documents required to be filed by it with the Commission.   At
the request of such Purchaser, the Company has delivered or made available to
each of the Purchaser true and complete copies of the Commission Documents. The
Company has not provided to the Purchaser 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.  None of the Commission Documents contain any untrue
statement of a material fact or omit 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 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).

     

    (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 each person’s
ownership. 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 interest 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.

     

    (h)           No Material Adverse
Effect. Other than as disclosed in the Commission Documents, since
September 30, 2008, neither the Company nor any of its subsidiaries has
experienced or suffered any Material Adverse Effect.

     

    (i)           No Undisclosed
Liabilities. Except as disclosed in the Commission Documents and except
as set forth in Schedule 2.1(i)
hereto, since September 30, 2008 neither the Company nor any of its subsidiaries
has incurred 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 and which, individually or in the
aggregate, do not or would not have a Material Adverse Effect on the Company or
its subsidiaries.


    
      
         


      

      
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    (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, prospects, 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. The
Commission Documents disclose  all outstanding secured and unsecured
Indebtedness of the Company or any subsidiary, or for which the Company or any
subsidiary has commitments outstanding as of the most recent balance sheet date.
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 are or 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.
Except as disclosed in the Commission Documents, each of the Company and the
subsidiaries has good and marketable title to all of its real and personal
property reflected in its most recent balance sheet included in its Commission
Filings free and clear of any mortgages, pledges, charges, liens, security
interests or other encumbrances.  All leases of the Company and each
of its subsidiaries are valid and subsisting and in full force and
effect.

     

    (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.  Except as set forth in Schedule 2.1(m),
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.
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.


    
      
         


      

      
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    (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.  No brokers, finders 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 Purchaser 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.

     

    (r)           Operation of
Business. The Company and each of the subsidiaries owns or possesses 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.  Each of the Company and its Subsidiaries has operated
all facilities and properties owned, leased or operated by it in material
compliance with the Environmental Laws. “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. The Company has
all necessary governmental approvals required under all Environmental Laws and
used in its business or in the business of any of its subsidiaries. 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.


    
      
         


      

      
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    (t)           Books and Record Internal
Accounting Controls.  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.  Except as otherwise disclosed in the Commission Documents
and except as would require a qualification with respect to the Company’s
auditor’s opinion to be issued in connection with the Company’s 2008 audit, 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.

     

    (u)           Material
Agreements.  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 all material agreements filed or required to be filed with
the Commission (“Material Agreement”)
and has received no notice of default and is not in default under any material
Agreement now in effect the result of which would cause a Material Adverse
Effect.

     

    (v)           Transactions with
Affiliates. Except as set forth in the Commission Documents or 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.


    
      
         


      

      
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    (w)           Securities Act of
1933. Assuming the accuracy of the representations of the Purchaser 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 shares of Common Stock and the Warrants
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 Securities, the shares of Common Stock or 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 Securities, the shares of Common Stock 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 Securities, the shares
of Common Stock or the Warrants.

     

    (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, 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
Securities, the Shares and the Warrants, or for the performance by the Company
of its obligations under the Transaction Documents.

     

    (y)           Employees.  Except
as disclosed in the Commission Documents neither the Company nor any subsidiary
has any collective bargaining arrangements or agreements covering any of its
employees.  Except as disclosed in the Commission Documents, 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 that is not so
disclosed.   Except  as disclosed in the Commission
Documents 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. Since September 30, 2008, except as set forth in the
Commission Documents, neither the Company nor any subsidiary has:

     

    (i)    
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;


    
      
         


      

      
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    (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;

     

    (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 Purchaser 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)   
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 and Investment Company Act 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.


    
      
         


      

      
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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 Securities, the shares of Common Stock 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 Purchaser, or any person or entity that owns a
beneficial interest in any of the Purchaser, 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 Warrant
Shares upon 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
Securities  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, or any applicable exchange-related stockholder approval provisions, nor
will the Company or any of its affiliates or subsidiaries take any action or
steps that would cause the offering of the Securities 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.

     

    (ee)           Independent Nature of
Purchaser. 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 purchase 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 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 Purchaser as a partnership, an association, a joint venture or
any other kind of entity, or create a presumption that the Purchaser is 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 it has elected to provide all Purchaser
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
Purchaser.


    
      
         


      

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

     

    (a)           Organization and Good
Standing of the Purchaser. 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 Common Stock 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 or
partnership action, and no further consent or authorization of such Purchaser or
its Board of Directors, stockholders, or partners, 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 thereof.

     

    (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
Common Stock 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.


    
      
         


      

      
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    (d)           Acquisition for
Investment. Each Purchaser is acquiring the Securities, and the
underlying Common Stock  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
Shares or the Warrants, nor a present arrangement (whether or not legally
binding) or intention to effect any distribution of the 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 Shares or the Warrants for any minimum or
other specific term and reserves the right to dispose of the 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 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 People’s Republic of China and that the purchase of the
Shares and Warrants involves substantial risks.

     

    (e)           Status of Purchaser.
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.

     

    (g)           No General
Solicitation. Each Purchaser acknowledges that the Securities 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.


    
      
         


      

      
        14

        
          

        

      

      
         


      

    

     

    (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 Securities are being offered and sold in reliance
on a transactional exemption from the registration requirement 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
Securities.

     

    (j)           Independent
Investment. Except as may be disclosed in any filings with the Commission
by the Purchaser 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.

     

    (k)           Brokers.  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 Purchaser as follows, which covenants are for
the benefit of the Purchaser and their permitted assignees (as defined
herein).

     

    Section
3.1      Securities
Compliance.  The Company shall notify the Commission in
accordance with their rules and regulations, of the transactions contemplated by
any of the Transaction Documents, including filing a Form D with respect to the
Securities, the Common Shares, Warrants 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 Securities, the Common
Shares, the Warrants and the Warrant Shares to the Purchaser 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 this
Agreement or 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. The
Company will take all actions necessary to continue the quotation or listing of
its Common Stock on the NASDAQ or other exchange or market on which the Common
Stock is trading or may be traded in the future. Subject to the terms of the
Transaction Documents, the Company further covenants that it will take such
further action as the Purchaser may reasonably request, all to the extent
required from time to time to enable the Purchaser 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 Purchaser, the Company shall deliver to the Purchaser a written
certification of a duly authorized officer as to whether it has complied with
such requirements.


    
      
         


      

      
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    Section
3.3          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
3.4          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
3.5          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 practical after the
document is filed with the Commission, and in any event within five (5) days
after the document is filed with the Commission;

     

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

     

    (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
3.6          Other
Agreements.  The Company shall not enter into any agreement in
which the terms of such agreement would restrict or impair the right or ability
to perform of the Company or any subsidiary under any Transaction
Document.

     

    Section
3.7          Reservation of
Shares.  So long as any of the Warrants remain outstanding, the
Company shall take all action necessary to at all times have authorized and
reserved the number of shares of Common Stock needed to provide for the issuance
of the  Warrant Shares.


    
      
         


      

      
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    Section
3.8          Legends.  Prior
to registration of the Common Shares and the Warrant Shares under the Securities
Act, all certificates shall bear the restrictive legend specified in Section 5.1
of this Agreement.

     

    Section
3.9          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
3.10        Disclosure of Material
Information.  The Company covenants and agrees that neither it
nor any other person acting on its behalf has provided or 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 written agreement regarding the confidentiality
and use of such information.  The Company understands and confirms
that each Purchaser shall be relying on the foregoing representations in
effecting transactions in securities of the Company.

     

    Section
3.11        Transfer of Shares is
Restricted; Lock-Up Agreement.  The Purchaser acknowledges and
agrees that the transfer of the Shares and the Warrants is restricted pursuant
to the terms and provisions of a lock-up agreement in substantially the form as
Exhibit [E]
hereto (the “Lock-Up
Agreement”), which shall provide the manner in which such
Purchaser  will sell, transfer or dispose of their Shares and
Warrants.

     

    Section
3.12        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.

     

    ARTICLE
IV

     

    CONDITIONS

     

    Section
4.1          Conditions Precedent to the
Obligation of the Company to Sell the Securities.  The
obligation hereunder of the Company to issue and sell the Securities, and the
underlying Common Shares and  the Warrants to the Purchaser 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.


    
      
         


      

      
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    (b)           Performance by the
Purchaser. 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 Securities has been delivered to the
account designated by the Company.

     

    (e)           Delivery of Transaction
Documents. The Transaction Documents to which the Purchaser is a party
have been duly executed and delivered by the Purchaser to the
Company.

     

    (f)           Lock-Up Agreement. As
of the Closing Date, the Purchaser shall have delivered to the Company a fully
executed Lock-Up Agreement in the form of Exhibit D attached
hereto.

     

    Section
4.2          Conditions Precedent to the
Obligation of the Purchaser to Purchase the Securities.  The
obligation hereunder of each Purchaser to acquire and pay for the Securities 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.

     

    (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.


    
      
         


      

      
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    (e)           Closing
Certificates.  At the Closing, the Purchaser shall have
received such certificates and documents as the Purchaser or its counsel shall
reasonably require incident to the Closing.

     

    (f)           Registration Rights
Agreement. At the Closing, the Company shall have executed and delivered
the Registration Rights Agreement to each Purchaser.

     

    (g)           Certificates. The
Company shall have executed and delivered to the Purchaser the certificates (in
such denominations as such Purchaser shall request) for the Common 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 Purchaser name on Exhibit A
hereto.

     

    (h)           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”).

     

    (i)           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 exercise of the Warrants, a number of shares of Common Stock equal to the
aggregate number of Warrant Shares issuable upon exercise of the number of
Warrants issued or to be issued pursuant to this Agreement.

     

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

     

    ARTICLE
V


     

    Stock
Certificate Legend

     

    Section
5.1          Legend.  Each
certificate representing the Common Shares and the Warrants, and, if
appropriate, securities issued upon conversion 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.


    
      
         


      

      
        19

        
          

        

      

      
         


      

    

     

    THESE
SECURITIES ARE SUBJECT TO A LOCKUP AGREEMENT AND  MAY NOT BE SOLD,
TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF EXCEPT IN ACCORDANCE WITH THE
TERMS THEREOF.

     

    The
Company agrees to reissue certificates representing any of the Shares and the
Warrant Shares, without the legends set forth above if at such time, prior to
making any transfer of any such securities, (i) the Lock-Up Agreement shall have
terminated and shall be of no further force or effect and (ii) the holder
thereof shall have given 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 Common
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 Warrant
Shares is required to be issued to a Purchaser without a legend, in lieu of
delivering physical certificates representing 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 Warrant Shares to a
Purchaser by crediting the account of such Purchaser or such Purchaser’s Prime
Broker with the Depository Trust Company (“DTC”) through its
Deposit Withdrawal Agent Commission (“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 Purchaser (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 Purchaser as a result of any inaccuracy in or
breach of the representations, warranties or covenants made by the Company
herein.  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.

     

    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.
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.


    
      
         


      

      
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    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. The Company shall pay all
reasonable fees and expenses incurred by the Purchaser 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 Purchaser is  successful in any litigation or arbitration
relating to such enforcement.

     

    Section
7.2          Specific Enforcement,
Consent to Jurisdiction.

     

    (a)           The
Company and the Purchaser 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 Purchaser (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 Purchaser consents
to process being served in any such suit, action or proceeding by mailing a copy
thereof 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.


    
      
         


      

      
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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 Purchaser 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 Purchaser, and no
provision hereof may be waived other than by a written instrument signed by the
party against whom enforcement of any such amendment or waiver is
sought.  No such amendment shall be effective to the extent that it
applies to less than all of the holders of the Purchaser. 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 Common 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:

    


    Fushi
Copperweld, Inc.

    1 Shuang
Qiang Road,

    Jinshou
Qu,

    Dalian,
PRC 163000

    Attention:
Chris Wang

    Tel. No.:
86-411-8770-333

    Fax No.:
86-10-8447-8847

     

    with
copies to:

    Guzov
Ofsink, LLC

    600
Madison Avenue, 14th Floor

    New York,
New York 10022

    Attention:  Darren
Ofsink

    Tel.
No.:  (212) 371-8008, ext. 102

    Fax
No.:  (212) 688-7273

     

    
      	
            	
              If
      to any Purchaser:

            	
              At
      the address of such Purchaser set forth on Exhibit A to this Agreement,
      with copies to Purchaser’s counsel as set forth on Exhibit
    A:

            


    

     

    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.


    
      
         


      

      
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    Section
7.5          Waivers.  No
waiver by either 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 shall be binding upon and inure to the
benefit of the parties and their successors and assigns.

     

    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 Purchaser shall survive
the execution and delivery hereof and the Closings hereunder for a period of two
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 Purchaser without the consent of the Purchaser
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
Purchaser 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
Registration Rights Agreement and the other Transaction Documents.

     

    [REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]


    
      
         


      

      
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    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.

    


    
      
        
          	 
      	
                  FUSHI
      COPPERWELD, INC

                
	 
      	 
      
	 
      	
                  By:

                	/s/
      Wenbing Chris Wang
	 
      	 
      	
                  Name:
      Wenbing Chris Wang

                
	 
      	 
      	
                  Title:   President
      and Chief Financial Officer

                
	 
      	 
      
	 
      	
                  PURCHASERS

                
	 
      	 
      
	 
      	
                  GUERRILLA
      PARTNERS, LLC

                
	 
      	 
      
	 
      	
                  By:

                	/s/
      Peter Siris
	 
      	 
      	
                        
                    Name:
      Peter Siris

                  

                
	 
      	 
      	
                        
                    Title:  
      Member

                  

                


        

      

    

     

    
      
         


      

      
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    EXHIBIT
A TO THE

    SECURITIES
PURCHASE AGREEMENT

     

    
      
        

      

    

     

    EXHIBIT
B-1 TO THE

    SECURITIES
PURCHASE AGREEMENT

     

    
      
   

    SERIES
A WARRANT


    
      
         


      

      
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    EXHIBIT
B-2 TO THE

    SECURITIES
PURCHASE AGREEMENT

     

    
      
 

    SERIES
B WARRANT


    
      
         


      

      
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    EXHIBIT
B-3 TO THE

    SECURITIES
PURCHASE AGREEMENT

     

    
      
 

    SERIES
C WARRANT


    
      
         


      

      
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    EXHIBIT
C TO THE

    SECURITIES
PURCHASE AGREEMENT

     

    
      
 

    REGISTRATION
RIGHTS AGREEMENT



    
      
         


      

      
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    EXHIBIT
D TO THE

    SECURITIES
PURCHASE AGREEMENT

     

    
      
  

    LOCK-UP
AGREEMENT


    
      
         


      

      
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