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    SHARE
      PLEDGE AGREEMENT

     

    This
      SHARE PLEDGE
      AGREEMENT,
      dated
      as of January 25, 2007 (this “Agreement”),
      is
      executed between Fushi International, Inc.,
      a Nevada
      corporation (the “Pledgor”)
      and The
      Bank
      of New York, in its capacity as collateral agent (with its successors in such
      capacity, the “Collateral
      Agent”)
      for
      the benefit of the Secured Parties (as defined below).

     

    WITNESSETH:

     

    (1) The
      Pledgor issued certain Guaranteed Senior Secured Floating Rate Notes due 2012
      (the “HY
      Notes”)
      pursuant to an indenture dated the date hereof (the “HY
      Note Indenture”)
      and
      certain 3.0% Guaranteed Senior Secured Convertible Notes due 2012 (the
“Convertible
      Notes”
and
      together with the HY Notes, the “Notes”)
      pursuant to an indenture dated the date hereof (the “Convertible
      Note Indenture”,
      together with the HY Note Indenture, both as amended, restated, supplemented
      or
      otherwise modified and in effect from time to time, the “Indentures”),
      each
      among the Pledgor, the Guarantor named therein and The Bank of New York, a
      New
      York banking corporation, as trustee (in such capacity, the “Trustee”),
      pursuant to which the Pledgor has promised the payment of all of the principal
      of, premium, if any, and interest on the Notes; 

     

    (2) The
      Pledgor owns the issued and outstanding equity interests set forth on
Exhibit
      A
      attached
      hereto and made a part hereof (the “Equity
      Interests”);

     

    (3) The
      Pledgor is required to execute and deliver this Agreement pursuant to the
      Indentures.

     

    NOW,
      THEREFORE,
      for and
      in consideration of the foregoing and of any financial accommodations or
      extensions of credit heretofore, now or hereafter made to or for the benefit
      of
      the Secured Parties pursuant to either Indenture or any other agreement,
      instrument or document executed pursuant to or in connection therewith, and
      for
      other good and valuable consideration, the receipt and sufficiency of which
      are
      hereby acknowledged, the Pledgor and the Collateral Agent hereby agree as
      follows:

     

    1.
        Defined
      Terms.
      Unless
      otherwise defined herein, each capitalized term used herein that is defined
      in
      the Indentures shall have the meaning specified for such term in the Indentures.
      Unless otherwise defined herein or in the Indentures, terms used in Article
      8 or
      Article 9 of the Uniform Commercial Code as in effect from time to time in
      the
      State of New York are used herein as therein defined. In addition as used
      herein, “Secured
      Parties”
means
      each of the Collateral Agent, the Trustee, the holders of any Note (the
“Holders”)
      and
      the holders of any other Liabilities. 

     

    2.
        Pledge.
      The
      Pledgor hereby pledges to the Collateral Agent, for the benefit of the Secured
      Parties, and grants to the Collateral Agent for the benefit of the Secured
      Parties, a security interest in, the following (collectively, the “Pledged
      Collateral”):
      

     

    (a)
        All
      of
      the right, title and interest of the Pledgor in the Equity Interests, whether
      now existing or hereafter arising, and the certificates representing the shares
      of such capital stock (such now-existing shares being identified on Exhibit
      A
      attached
      hereto and made a part hereof), all options and warrants for the purchase of
      additional equity interests now or hereafter held in the name of the Pledgor
      (all of said Equity Interests, options and warrants and all capital stock held
      in the name of the Pledgor as a result of the exercise of such options or
      warrants being hereinafter collectively referred to as the “Pledged
      Stock”),
      herewith delivered to the Collateral Agent,
      accompanied by undated stock powers in the form of Exhibit
      B
      attached
      hereto and made a part hereof duly executed in blank by the Pledgor, and,
      subject to Section
      9
      hereof,
      all dividends, distributions, cash, instruments and other property from time
      to
      time received, receivable or otherwise distributed in respect of, or in exchange
      for, any or all of the Pledged Stock; 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (b)
        All
      Additional Equity Interests (as defined below) from time to time acquired by
      the
      Pledgor from the date hereof in any manner, and the certificates representing
      such Additional Equity Interests (any such additional equity interests shall
      constitute part of the Pledged Stock and the Collateral Agent is irrevocably
      authorized to amend Exhibit
      A
      from
      time to time to reflect such additional equity interests), and subject to
Section
      9
      hereof,
      all options, warrants, dividends, distributions, cash, instruments and other
      rights and options from time to time received, receivable or otherwise
      distributed in respect of or in exchange for any or all of the Equity Interests
      or Additional Equity Interests; and

     

    (c)
        All
      proceeds of the foregoing. 

     

    3.
        Security
      for Liabilities.
      The
      Pledged Collateral secures the full and prompt payment, performance and
      observance when due (whether at stated maturity, by acceleration or otherwise)
      of (i) the payment of all of the principal of and interest and premium, if
      any,
      on the Notes, (ii) all other Note Obligations, and (iii) all obligations of
      the
      Pledgor under this Agreement (all such obligations referred to in Clauses (i),
      (ii) and (iii) now or hereafter existing being hereinafter collectively referred
      to as the “Liabilities”).
      

     

    4.
        Delivery
      of Pledged Collateral; Registration and Acknowledgments.
      All
      certificates representing or evidencing the Pledged Collateral, if any, and
      a
      copy of the UCC financing statements filed with the State of Nevada pursuant
      to
      Section 26 below, shall be physically delivered to and held by or on behalf
      of
      the Collateral Agent, pursuant hereto and shall be in suitable form for transfer
      by delivery and shall be accompanied by duly executed instruments of transfer,
      powers, or assignments in blank as appropriate (such instruments of transfer,
      powers, or assignments in blank, being the “Powers”),
      all
      in form and substance satisfactory to the Collateral Agent. After the occurrence
      and during the continuance of an Event of Default under either Indenture, the
      Collateral Agent shall have the right, at any time in its discretion and without
      notice to the Pledgor, to transfer to or to register in the name of the
      Collateral Agent or any of its nominees any or all of the Pledged Collateral,
      subject only to the revocable rights specified in Sections
      8
      and
9.
      In
      addition, the Collateral Agent shall have the right at any time to exchange
      certificates or instruments representing or evidencing Pledged Collateral for
      certificates or instruments of smaller or larger denominations. 

     

    5.
        Pledged
      Collateral Adjustments.
      If,
      during the term of this Agreement: 

     

    
      
         

      

      
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    (a)
        Any
      stock
      dividend, reclassification, readjustment or other change is declared or made
      in
      the capital structure of the Pledged Entity (as defined below), or any option
      included within the Pledged Collateral is exercised, or both, or

     

    (b)
        Any
      subscription warrants, shares, or any other rights or options or other
      securities shall be issued in connection with the Pledged Collateral,

     

    then
      all
      new, substituted and additional shares, warrants, rights, options or other
      securities, issued by reason of any of the foregoing, shall be immediately
      delivered to and held by the Collateral Agent, under the terms of this Agreement
      and shall constitute Pledged Collateral hereunder; provided,
      however,
      that
      nothing contained in this Section
      5
      shall be
      deemed to permit any distribution, issuance of additional shares, warrants,
      rights, options or other securities, reclassification, readjustment or other
      change in the capital structure which is expressly prohibited in either
      Indenture nor to permit any such distribution, issuance of additional equity
      interests, warrants, shares, rights, options or other securities,
      reclassification, readjustment or other change in the capital structure of
      such
      issuer which is expressly prohibited in the Indentures.

     

    6.
        Subsequent
      Changes Affecting Pledged Collateral.
      The
      Pledgor represents and warrants that it has made its own arrangements for
      keeping itself informed of changes or potential changes affecting the Pledged
      Collateral (including, but not limited to, rights to convert, rights to
      subscribe, payment of distributions, reorganization or other exchanges, offers
      to purchase and voting rights), and the Pledgor agrees that none of the
      Collateral Agent or any of the Secured Parties shall have any obligation to
      inform the Pledgor of any such changes or potential changes or to take any
      action or omit to take any action with respect thereto. The Collateral Agent
      may, after the occurrence and during the continuance of an Event of Default,
      without notice and at its option, transfer or register the Pledged Collateral
      or
      any part thereof into its or its nominee’s name with or without any indication
      that such Pledged Collateral is subject to the security interest hereunder.
      

     

    7.
        Representations
      and Warranties.
      The
      Pledgor represents and warrants as follows: 

     

    (a)
        The
      Pledgor is the sole legal and beneficial owner of the Equity Interests set
      forth
      opposite its name on Exhibit
      A
      attached
      hereto and made a part hereof, free and clear of any Lien except for the Lien
      created by this Agreement and Permitted Liens; 

     

    (b)
        All
      of
      the Pledged Stock has been duly authorized and validly issued, is fully paid
      and
      non-assessable; the Pledgor has acquired its ownership in the Pledged Collateral
      in good faith without notice of any adverse claims;

     

    (c)
        All
      of
      the Pledged Stock is presently represented by the certificates listed on
Exhibit
      A
      hereto
      and are a “Certificated Security” within the meaning given to such term in
      Section 8-102(a)(4) of the UCC (as defined below). As of the date hereof, there
      are no existing options, warrants, calls or commitments of any character
      whatsoever relating to the Pledged Stock; 

     

    
      
         

      

      
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    (d)
        The
      Pledgor has full power and authority to enter into this Agreement and perform
      the obligations hereunder; 

     

    (e)
        There
      are
      no restrictions upon the voting rights associated with, or upon the transfer
      of,
      any of the Pledged Collateral; 

     

    (f)
        The
      Pledgor has the right to vote, pledge, assign and grant a security interest
      in
      or otherwise transfer such Pledged Collateral free of any Liens, except as
      set
      forth in paragraph (e) above; 

     

    (g)
        No
      authorization, approval, or other action by, and no notice to or filing with,
      any Governmental Authority and no consent from any other party (including,
      without limitation, any stockholder, partner, member or creditor of the Pledgor
      or any of its Affiliates) is required either (i) for the pledge of the Pledged
      Collateral pursuant to this Agreement or for the execution, delivery or
      performance of this Agreement by the Pledgor or (ii) for the exercise by the
      Collateral Agent of the voting or other rights provided for in this Agreement
      or
      the remedies in respect of the Pledged Collateral pursuant to this Agreement
      (except for the filing of UCC financing statement with the appropriate office
      in
      the State of Nevada pursuant to Section 26 below, and except for those that
      may
      be required in connection with such disposition by laws affecting the offering
      and sale of securities generally); 

     

    (h)
        The
      pledge of the Pledged Collateral pursuant to this Agreement, together with
      the
      delivery of the stock certificates in accordance with Section
      4
      hereof
      to the Collateral Agent, creates a valid and perfected first priority security
      interest in the Pledged Collateral, in favor of the Collateral Agent for the
      benefit of the Secured Parties, securing the payment and performance of the
      Liabilities; the Collateral Agent shall have “control” (within the meaning given
      to such term in Section 8-106 of the UCC) of the Pledged Collateral and the
      Collateral Agent will be a “protected purchaser” (within the meaning given to
      such term in Section 8-303 of the UCC); 

     

    (i)
        This
      Agreement has been duly executed and delivered by and on behalf of the Pledgor
      and constitutes the legal, valid and binding obligation of the Pledgor,
      enforceable against the Pledgor in accordance with its terms; 

     

    (j)
        There
      is
      no action, suit, proceeding, governmental investigation or arbitration, at
      law
      or in equity, or before or by any Governmental Authority, pending, or to the
      knowledge of the Pledgor, threatened against the Pledgor, the Pledged Entity
      (as
      defined below) or any of its property which will materially and adversely affect
      the value of the Pledged Collateral or the ability of the Pledgor to perform
      its
      obligations under this Agreement; 

     

    (k)
        The
      execution, delivery and performance of this Agreement by the Pledgor (i) does
      not violate any indenture, mortgage, or any other agreement to which the Pledgor
      is a party or by which any of its properties or assets may be bound; (ii)
      complies with all corporate organization documents of the Pledgor; and (iii)
      does not violate any restriction on such transfer or encumbrance of the Pledged
      Collateral; 

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    (l)
        The
      Powers are effective endorsements duly executed by an appropriate person and
      give the Collateral Agent the authority they purport to confer; 

     

    (m)
        The
      Pledged Stock constitutes such percent of the issued and outstanding shares
      of
      Equity Interests of the issuer thereof as set forth in Exhibit
      A
      hereto;
      and

     

    (n)
        The
      Pledged Entity has been duly incorporated and is validly existing as a
      corporation in good standing under the laws of the State of Delaware.

     

    8.
        Voting
      Rights.
      During
      the term of this Agreement, and except as provided in this Section
      8
      below,
      the Pledgor shall have the right to vote the Pledged Stock on all corporate
      questions in a manner not inconsistent with the terms of this Agreement and
      the
      Indentures; provided,
      however,
      that no
      vote shall be cast, and no consent shall be given or action taken, which would
      have the effect of impairing the position or interest of any Secured Party
      in
      respect of the Pledged Collateral or which would authorize, effect or consent
      to
      (unless and to the extent expressly permitted by the Indentures) (i) the
      dissolution or liquidation, in whole or in part, of the issuer of Pledged Stock
      (a “Pledged
      Entity”);
      (ii)
      the consolidation or merger of a Pledged Entity with any other Person; (iii)
      the
      sale, disposition or encumbrance of all or substantially all of the assets
      of a
      Pledged Entity, except for Liens in favor of the Collateral Agent and Permitted
      Liens; (iv) any change in the authorized number of shares, the stated capital
      or
      the authorized share capital of a Pledged Entity or the issuance of any
      additional shares of its Equity Interests; or (v) the alteration of the voting
      rights with respect to the Equity Interests of a Pledged Entity. After the
      occurrence and during the continuation of an Event of Default under either
      Indenture, the Collateral Agent shall have the right to, following written
      notice from the Collateral Agent to the Pledgor, exercise all voting rights
      pertaining to the Pledged Collateral, including the right to take action by
      shareholder consent. 

     

    9.
        Dividends
      and Other Distributions.
      (a) So
      long as no Event of Default under either Indenture shall have occurred and
      be
      continuing: 

     

    (i)
        The
      Pledgor shall be entitled to receive and retain any and all dividends and
      distributions paid in respect of the Pledged Collateral, notwithstanding such
      dividends and distributions being subject to the pledge and assignment thereof
      pursuant to Section
      2,
      provided,
      however,
      that
      any and all

     

    (A)
        dividends
      and distributions paid or payable other than in cash with respect to, and
      instruments and other property received, receivable or otherwise distributed
      with respect to, or in exchange for, any of the Pledged Collateral;

     

    (B)
        dividends
      and other distributions paid or payable in cash with respect to any of the
      Pledged Collateral on account of a partial or total liquidation or dissolution
      or in connection with a reduction of capital, capital surplus or paid-in
      surplus; and

     

    (C)
        cash
      paid, payable or otherwise distributed with respect to principal of, or in
      redemption of, or in exchange for, any of the Pledged Collateral;

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

    shall
      be
      Pledged Collateral, and shall be forthwith delivered to the Collateral Agent
      to
      hold, for the benefit of the Secured Parties, as Pledged Collateral and shall,
      if received by the Pledgor, be received in trust for the Collateral Agent,
      for
      the benefit of the Secured Parties; and

     

    (ii)
        The
      Collateral Agent shall execute and deliver (or cause to be executed and
      delivered) to the Pledgor all such proxies and other instruments as the Pledgor
      may reasonably request for the purpose of enabling the Pledgor to receive the
      dividends which it is authorized to receive and retain pursuant to clause (i)
      above.

     

    (b)
        After
      the
      occurrence and during the continuation of an Event of Default under either
      Indenture: 

     

    (i)
        All
      rights of the Pledgor to receive the dividends and other distributions which
      it
      would otherwise be authorized to receive and retain pursuant to Section
      9(a)(i)
      hereof
      shall cease, and all such rights shall thereupon become vested in the Collateral
      Agent, for the benefit of the Secured Parties, which shall thereupon have the
      sole right to receive and hold as Pledged Collateral such dividends and other
      distributions;

     

    (ii)
        All
      dividends and other distributions which are received by the Pledgor contrary
      to
      the provisions of clause (i) of this Section
      9(b)
      shall be
      received in trust for the Collateral Agent, for the benefit of the Secured
      Parties;

     

    (iii)
        The
      Pledgor shall, upon the reasonable request of the Collateral Agent, at the
      Pledgor’s expense, execute and deliver, and cause the Pledged Entity and its
      officers and directors to execute and deliver, all such instruments and
      documents, and do or cause to be done all such other acts and things, as may
      be
      required by applicable law or may be necessary or, in the opinion of the Pledgor
      or its counsel, advisable to register the applicable Pledged Collateral under
      the provisions of the Securities Act, and to exercise its best efforts to cause
      the registration statement relating thereto to become effective and to remain
      effective for such period as prospectuses are required by law to be furnished,
      and to make all amendments and supplements thereto and to the related prospectus
      which, in the opinion of the Collateral Agent, the Pledgor or its counsel,
      are
      necessary or advisable, all in conformity with the requirements of the
      Securities Act and the rules and regulations of the Commission applicable
      thereto;

     

    (iv)
        The
      Pledgor shall, at the Pledgor’s expense, use its best efforts to qualify the
      Pledged Collateral under U.S. state securities or “Blue Sky” laws and to obtain
      all necessary governmental approvals for the sale of the Pledged
      Collateral;

     

    (v)
        The
      Pledgor, if applicable, shall, at the Pledgor’s expense, cause the Pledged
      Entity to make available to the holders of its securities, as soon as
      practicable, earning statements which will satisfy the provisions of Section
      11(a) of the Securities Act; and

     

    
      
         

      

      
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    (vi)
        The
      Pledgor shall, at the Pledgor’s expense, do or cause to be done all such other
      acts and things as may be necessary to make such sale of the Pledged Collateral
      or any part thereof valid and binding and in compliance with applicable
      law.

     

    The
      Pledgor will reimburse the Collateral Agent for all expenses incurred by the
      Collateral Agent, including, without limitation, attorneys’ and accountants’
fees and expenses in connection with the foregoing. Upon or at any time after
      the occurrence and during the continuation of an Event of Default, if any
      Secured Party determines that, prior to any public offering of any securities
      constituting part of the Pledged Collateral, such securities should be
      registered under the Securities Act and/or registered or qualified under any
      other federal or state law and such registration and/or qualification is not
      practicable, then the Pledgor agrees that it will be commercially reasonable
      if
      a private sale, upon at least ten (10) Business Days’ notice to the Pledgor, is
      arranged so as to avoid a public offering. The Collateral Agent shall incur
      no
      liability as a result of a sale of the Pledged Collateral, or any part thereof,
      at any private sale conducted in a commercially reasonable manner. The Pledgor
      hereby waives any claims against the Collateral Agent arising by reason of
      the
      fact that the sales price established and/or obtained at such private sale
      was
      less than prices which could have been obtained for such security on any market
      or exchange or in any other public sale.

     

    10.
        Transfers
      and other Liens.
      Other
      than as permitted under each Indenture, the Pledgor agrees that it will not,
      without the prior written consent of the Collateral Agent: (i) sell, transfer
      or
      otherwise dispose of, or create or permit to exist any Lien upon or with respect
      to, any of the Pledged Collateral, except as expressly permitted by this
      Agreement or the Indentures; or (ii) take any action in connection with any
      of
      the Pledged Collateral which would materially impair the value of the Pledged
      Collateral or otherwise materially and adversely affect the interest or rights
      of the Collateral Agent or the Secured Parties hereunder. 

     

    The
      Pledgor further agrees that it will procure, or take reasonable efforts to
      procure, that the Pledged Entity and any other direct or indirect subsidiary
      thereof shall carry on business only in the ordinary course and will not dispose
      of or agree to dispose of a substantial part of its assets or undertaking or
      take any action in connection with any of the Pledged Collateral which would
      materially impair the value of the Pledged Collateral or otherwise materially
      and adversely affect the interest or rights of the Collateral Agent or the
      Secured Parties hereunder. 

     

    11.
        Defense
      of Title.
      The
      Pledgor will defend the title to the Pledged Collateral and the Liens of the
      Collateral Agent in the Pledged Collateral against the claim of any Person
      (other than Permitted Liens) and will maintain and preserve such Liens, except
      with respect to Permitted Liens. 

     

    12.
        Additional
      Equity Interests.
      The
      Pledgor will, upon obtaining ownership of any additional equity interests
      otherwise required to be pledged to the Collateral Agent pursuant to this
      Agreement, which equity interests are not already Pledged Collateral (the
“Additional
      Equity Interests”),
      promptly (and in any event within three (3) Business Days) deliver to the
      Collateral Agent an amendment to this Agreement, duly executed by the Pledgor
      and in form and substance satisfactory to the Secured Parties, in respect of
      any
      such Additional Equity Interests, pursuant to which the Pledgor shall pledge
      to
      the Collateral Agent all of such Additional Equity Interests. The Pledgor hereby
      authorizes the Collateral Agent to attach such amendment to this Agreement
      and
      agrees that all Pledged Stock listed on any such amendment delivered to the
      Collateral Agent shall for all purposes hereunder be considered Pledged
      Collateral. 

     

    
      
         

      

      
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    13.
        Remedies. 
      (a) The
      Collateral Agent shall have, in addition to any other rights given under this
      Agreement or by law, all of the rights and remedies with respect to the Pledged
      Collateral of a secured party under the Uniform Commercial Code as in effect
      in
      the State of New York (the “UCC”)
      (whether or not the UCC applies to the affected Pledged Collateral). In
      addition, after the occurrence and during the continuation of an Event of
      Default under either Indenture, the Collateral Agent shall have such powers
      of
      sale and other powers as may be conferred by applicable law. With respect to
      the
      Pledged Collateral or any part thereof which shall then be in or shall
      thereafter come into the possession or custody of the Collateral Agent or which
      the Collateral Agent shall otherwise have the ability to transfer under
      applicable law, the Collateral Agent may, in its sole discretion, without notice
      except as specified below, after the occurrence and during the continuation
      of
      an Event of Default, sell or cause the same to be sold at any exchange, broker’s
      board or at public or private sale, in one or more sales or lots, at such price
      as the Collateral Agent or any Secured Party may deem best, for cash or on
      credit or for future delivery, without assumption of any credit risk, and the
      purchaser of any or all of the Pledged Collateral so sold shall thereafter
      own
      the same, absolutely free from any claim, encumbrance or right of any kind
      whatsoever. The Collateral Agent or any Secured Party may, in its own name,
      or
      in the name of a designee or nominee, buy the Pledged Collateral at any public
      sale and, if permitted by applicable law, buy the Pledged Collateral at any
      private sale. The Pledgor agrees to pay to the Collateral Agent all expenses
      (including, without limitation, court costs and attorneys’ and paralegals’ fees
      and expenses) of, or incident to, the enforcement of any of the provisions
      hereof. The Collateral Agent agrees to distribute any proceeds of the sale
      of
      the Pledged Collateral in accordance with the Indentures and the Pledgor shall
      remain liable for any deficiency following the sale of the Pledged Collateral.
      

     

    (b)
        Unless
      any of the Pledged Collateral threatens to decline speedily in value or is
      or
      becomes of a type sold on a recognized market, the Collateral Agent will give
      the Pledgor reasonable notice of the time and place of any public sale thereof,
      or of the time after which any private sale or other intended disposition is
      to
      be made. Any sale of the Pledged Collateral conducted in conformity with
      reasonable commercial practices of banks, commercial finance companies,
      insurance companies or other financial institutions disposing of property
      similar to the Pledged Collateral shall be deemed to be commercially reasonable.
      Notwithstanding any provision to the contrary contained herein, the Pledgor
      agrees that any requirements of reasonable notice shall be met if such notice
      is
      received by the Pledgor as provided in Section
      29
      below at
      least ten (10) Business Days before the time of the sale or disposition. Any
      other requirement of notice, demand or advertisement for sale is waived, to
      the
      extent permitted by law. The Collateral Agent shall not be obligated to make
      any
      sale of the Pledged Collateral regardless of notice of sale having been given.
      The Collateral Agent may adjourn any public or private sale from time to time
      by
      announcement at the time and place fixed therefor, and such sale may, without
      further notice, be made at the time and place to which it was so
      adjourned.

     

    
      
         

      

      
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    (c)
        In
      view
      of the fact that U.S. federal and state securities laws may impose certain
      restrictions on the method by which a sale of the Pledged Collateral may be
      effected after an Event of Default, the Pledgor agrees that after the occurrence
      and during the continuation of an Event of Default, the Collateral Agent may,
      from time to time, attempt to sell all or any part of the Pledged Collateral
      by
      means of a private placement restricting the bidders and prospective purchasers
      to those who are qualified and will represent and agree that they are purchasing
      for investment only and not for distribution. In so doing, the Collateral Agent
      may solicit offers to buy the Pledged Collateral, or any part of it, from a
      limited number of investors deemed by the Collateral Agent, in its reasonable
      judgment, to be financially responsible parties who might be interested in
      purchasing the Pledged Collateral. If the Collateral Agent solicits such offers
      from not less than four (4) such investors, then the acceptance by the
      Collateral Agent of the highest offer obtained therefrom shall be deemed to
      be a
      commercially reasonable method of disposing of such Pledged Collateral;
provided,
      however,
      that
      this Section does not impose a requirement that the Collateral Agent solicit
      offers from four (4) or more investors in order for the sale to be commercially
      reasonable. 

     

    (d)
        The
      Pledgor agrees to the maximum extent permitted by applicable law that, following
      the occurrence and during the continuance of an Event of Default, it will not
      at
      any time plead, claim or take the benefit of any appraisal, valuation, stay,
      extension, moratorium or redemption law now or hereafter in force in order
      to
      prevent or delay the enforcement of this Agreement, or the absolute sale of
      the
      whole or any part of the Pledged Collateral or the possession thereof by any
      purchaser at any sale hereunder, and the Pledgor waives the benefit of all
      such
      laws to the extent it lawfully may do so. The Pledgor agrees that it will not
      interfere with any right, power and remedy of Collateral Agent provided for
      in
      this Agreement or now or hereafter existing at law or in equity or by statute
      or
      otherwise, or the exercise or beginning of the exercise by Collateral Agent
      of
      any one or more of such rights, powers or remedies. No failure or delay on
      the
      part of Collateral Agent to exercise any such right, power or remedy and no
      notice or demand which may be given to or made upon the Pledgor by the
      Collateral Agent with respect to any such remedies shall operate as a waiver
      thereof, or limit or impair the Collateral Agent’s right to take any action or
      to exercise any power or remedy hereunder, without notice or demand, or
      prejudice its rights as against the Pledgor in any respect. 

     

    (e)
        The
      Pledgor further agrees that a breach of any of the covenants by the Pledgor
      contained in this Section
      13
      will
      cause irreparable injury to the Collateral Agent, that the Collateral Agent
      shall have no adequate remedy at law in respect of such breach and, as a
      consequence, agrees that each and every covenant contained in this Section
      13
      shall be
      specifically enforceable against the Pledgor, and the Pledgor hereby waives
      and
      agrees not to assert any defenses against an action for specific performance
      of
      such covenants. 

     

    14.
        Security
      Interest Absolute.
      All
      rights of the Collateral Agent and security interests hereunder, and all
      obligations of the Pledgor hereunder, shall be absolute and unconditional
      irrespective of: 

     

    (i)
        Any
      lack
      of validity or enforceability of the Indentures or any other agreement or
      instrument relating thereto;

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

     

    (ii)
        Any
      change in the time, manner or place of payment of, or in any other term of,
      all
      or any part of the Liabilities, or any other amendment or waiver of or any
      consent to any departure from the Indentures or this Agreement;

     

    (iii)
        Any
      exchange, release or non-perfection of any other collateral, or any release
      or
      amendment or waiver of or consent to departure from any guaranty, for all or
      any
      part of the Liabilities; 

     

    (iv)
        the
      insolvency of the Pledgor or the Pledged Entity; or

     

    (v)
        any
      other
      circumstance which might otherwise constitute a defense available to, or a
      discharge of, the Pledgor in respect of the Liabilities or of this
      Agreement.

     

    15.
        Collateral
      Agent Appointed Attorney-in-Fact.
      The
      Pledgor hereby appoints the Collateral Agent its attorney-in-fact, with full
      authority, in the name of the Pledgor or otherwise, after the occurrence and
      during the continuation of an Event of Default, from time to time in the
      Collateral Agent’s sole discretion, to take any action and to execute any
      instrument which the Collateral Agent or any Secured Party may deem necessary
      or
      advisable to accomplish the purposes of this Agreement, including, without
      limitation, to receive, endorse and collect all instruments made payable to
      the
      Pledgor representing any dividend or other distribution in respect of the
      Pledged Collateral or any part thereof and to give full discharge for the same
      and to arrange for the transfer of all or any part of the Pledged Collateral
      on
      the books of the Pledged Entity to the name of the Collateral Agent or the
      Collateral Agent’s nominee. 

     

    16.
        Waivers.
      The
      Pledgor waives to the fullest extent permitted by applicable laws presentment
      and demand for payment of any of the Liabilities, protest and notice of dishonor
      or Event of Default with respect to any of the Liabilities and all other notices
      to which the Pledgor might otherwise be entitled except as otherwise expressly
      provided herein or in the Indentures. 

     

    17.
        Term.
      This
      Agreement shall remain in full force and effect until the final payment in
      full,
      in cash, of the Liabilities. Upon the termination of this Agreement as provided
      above (other than as a result of the sale of the Pledged Collateral), the
      Collateral Agent will release the security interest created hereunder and,
      if it
      then has possession of any Pledged Stock pledged hereunder, will deliver such
      Pledged Stock previously delivered to it and the Powers to the Pledgor.

     

    18.
        Reinstatement.
      This
      Agreement shall remain in full force and effect and continue to be effective
      should any petition be filed by or against the Pledgor or the Pledged Entity
      for
      liquidation or reorganization, should the Pledgor or the Pledged Entity become
      insolvent or make an assignment for the benefit of creditors or should a
      receiver or trustee be appointed for all or any significant part of the
      Pledgor’s or the Pledged Entity’s assets, and shall continue to be effective or
      be reinstated, as the case may be. 

     

    19.
        Definitions.
      The
      singular shall include the plural and vice versa and any gender shall include
      any other gender as the context may require. 

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

     

    20.
        Binding
      Effect; Successors and Assigns.
      This
      Agreement shall be binding upon the Pledgor and its successors and assigns,
      and
      shall inure to the benefit of the Collateral Agent and the Secured Parties,
      and
      their respective successors and assigns. Nothing set forth herein or in any
      other Security Document is intended or shall be construed to give any other
      Person any right, remedy or claim under, to or in respect of this Agreement,
      the
      Indentures or any Collateral. The Pledgor’s successors shall include, without
      limitation, a receiver, trustee or debtor-in-possession of or for the Pledgor.
      

     

    21.
        Governing
      Law.
      This
      Agreement has been executed and delivered by the parties hereto in New York,
      New
      York. Any dispute between the Collateral Agent and the Pledgor arising out
      of or
      related to the relationship established between them in connection with this
      Agreement, and whether arising in contract, tort, equity, or otherwise, shall
      be
      resolved in accordance with the laws of the State of New York. 

     

    22.
        Consent
      to Jurisdiction; and Service of Process.
      THE
      COLLATERAL AGENT HEREBY CONSENTS TO THE NON-EXCLUSIVE JURISDICTION OF THE STATE
      OR FEDERAL COURTS LOCATED IN NEW YORK COUNTY, CITY OF NEW YORK, NEW YORK. THE
      PLEDGOR HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS LOCATED
      IN
      NEW YORK COUNTY, CITY OF NEW YORK, NEW YORK SHALL HAVE EXCLUSIVE JURISDICTION
      TO
      HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN THE PLEDGOR AND THE COLLATERAL
      AGENT PERTAINING TO THIS AGREEMENT OR TO ANY MATTER ARISING OUT OF OR RELATING
      TO THIS AGREEMENT; PROVIDED
      THAT THE
      COLLATERAL AGENT AND THE PLEDGOR ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS
      MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF NEW YORK COUNTY; AND,
PROVIDED,
      FURTHER,
      NOTHING
      IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE THE COLLATERAL AGENT
      FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO
      REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE GUARANTEED OBLIGATIONS,
      OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF COLLATERAL AGENT.
      THE
      PLEDGOR EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY
      ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND THE PLEDGOR HEREBY WAIVES ANY
      OBJECTION WHICH IT MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER
      VENUE OR FORUM NON CONVENIENS
      AND
      HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED
      APPROPRIATE BY SUCH COURT. THE PLEDGOR HEREBY WAIVES PERSONAL SERVICE OF THE
      SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND
      AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINTS AND OTHER PROCESS MAY BE MADE
      BY
      REGISTERED OR CERTIFIED MAIL ADDRESSED TO THE PLEDGOR AT THE ADDRESS SET FORTH
      IN THE INDENTURES AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE
      EARLIER OF ACTUAL RECEIPT THEREOF OR FIVE (5) DAYS AFTER DEPOSIT IN THE U.S.
      MAILS, PROPER POSTAGE PREPAID. The Collateral Agent shall have the right to
      proceed against the Pledgor or its personal property in a court in any location
      to enable the Collateral Agent to obtain personal jurisdiction over the Pledgor,
      to realize on the Pledged Collateral or any other security for the Liabilities
      or to enforce a judgment or other court order entered in favor of the Collateral
      Agent. 

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

     

    23.
        Waiver
      of Jury Trial.
      The
      Pledgor and the Collateral Agent waives any right to trial by jury in any
      dispute, whether sounding in contract, tort, or otherwise, between the
      Collateral Agent and the Pledgor arising out of or related to the transactions
      contemplated by this Agreement or any other instrument, document or agreement
      executed or delivered in connection herewith. Either the Pledgor or the
      Collateral Agent may file an original counterpart or a copy of this Agreement
      with any court as written evidence of the consent of the parties hereto to
      the
      waiver of their right to trial by jury. 

     

    24.
        Advice
      of Counsel.
      The
      Pledgor represents and warrants to the Collateral Agent that it has discussed
      this Agreement and, specifically, the provisions of Sections 21 through 23
      hereof, with the Pledgor’s lawyers. 

     

    25.
        Severability.
      If any
      provision of this Agreement is held to be prohibited or unenforceable in any
      jurisdiction the substantive laws of which are held to be applicable hereto,
      such prohibition or unenforceability shall not affect the validity or
      enforceability of the remaining provisions hereof and shall not invalidate
      or
      render unenforceable such provision in any other jurisdiction. 

     

    26.
        Further
      Assurances.
      The
      Pledgor agrees that at any time and from time to time, at the expense of the
      Pledgor, the Pledgor will promptly execute and deliver all further instruments
      and documents, and take all further action, that may be required by applicable
      law or may be necessary or desirable, or that the Collateral Agent or any
      Secured Party may reasonably request, in order to perfect and protect any
      security interest granted or purported to be granted hereby or to enable the
      Collateral Agent to exercise and enforce its rights and remedies hereunder
      with
      respect to any of the Pledged Collateral, including, without limitation, the
      filing of financing statements under Article 9 of the Uniform Commercial Code
      of
      Nevada, which initial filing shall be completed or caused to be completed by
      the
      Pledgor no later than one month from the date hereof. The Pledgor hereby further
      agrees that it shall not make any change to its name or jurisdiction or the
      form
      of its organization without prior written notice or otherwise permitted under
      the Indenture.

     

    27.
        The
      Collateral Agent’s Duty of Care.

     

    (a)
        The
      Collateral Agent shall not be liable for any acts, omissions, errors of judgment
      or mistakes of fact or law including, without limitation, acts, omissions,
      errors or mistakes with respect to the Pledged Collateral, except for those
      arising out of or in connection with the Collateral Agent’s (i) gross negligence
      or willful misconduct, or (ii) failure to use reasonable care with respect
      to
      the safe custody of the Pledged Collateral in the Collateral Agent’s possession.
      Without limiting the generality of the foregoing, the Collateral Agent shall
      be
      under no obligation to take any steps necessary to preserve rights in the
      Pledged Collateral against any other parties but may do so at its option. All
      expenses incurred in connection therewith shall be for the sole account of
      the
      Pledgor, and shall constitute part of the Liabilities secured hereby.

     

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

     

    (b)
        Without
      limiting the generality of the foregoing, (i) the Collateral Agent shall not
      be
      subject to any fiduciary or other implied duties, regardless of whether an
      Event
      of Default has occurred and is continuing and (ii) the Collateral Agent shall
      not have any duty to take any discretionary action or exercise any discretionary
      powers, except discretionary rights and powers expressly contemplated hereby,
      provided that it shall not amount to gross negligence or willful misconduct
      or a
      failure to use reasonable care.

     

    (c)
        No
      provision of this Agreement shall require the Collateral Agent to expend or
      risk
      its own funds or otherwise incur any financial liability in the performance
      of
      any of its duties hereunder, or in the exercise of any of its rights or powers,
      if it shall have reasonable grounds for believing that repayment of such funds
      or adequate indemnity against such risk or liability is not reasonably assured
      to it. The Collateral Agent shall have no duties or responsibilities except
      those expressly set forth in this Agreement or the Indentures. The Collateral
      Agent shall not be liable for any delay or failure to act as may be required
      hereunder when such delay or failure is due to any act of God, interruption
      or
      other circumstances beyond its control provided
      it
      exercises such diligence as the circumstances may reasonably require. The
      Collateral Agent shall be entitled to rely on any communication, instrument,
      paper or other document reasonably believed by it to be genuine and correct
      and
      to have been signed or sent by the proper person. The Collateral Agent may
      consult with, and obtain advice from, legal counsel as to the construction
      of
      any of the provisions of this Agreement, and shall incur no liability in acting
      in good faith in accordance with the reasonable advice of such
      counsel.

     

    (d)
        The
      Collateral Agent shall not be deemed to have notice of any Event of Default
      unless an officer of the Collateral Agent has actual knowledge thereof or unless
      written notice of any such Event of Default is received by the Collateral Agent
      at the office of the Collateral Agent specified in or pursuant to Section 29
      hereof. 

     

    (e)
        The
      Collateral Agent’s sole duty with respect to the custody, safekeeping and
      physical preservation of the Pledged Collateral shall be to deal with it in
      the
      same manner as the Collateral Agent deals with similar property for its own
      account.

     

    (f)
        In
      no
      event shall the Collateral Agent be liable for special, indirect or
      consequential loss or damage of any kind whatsoever (including but not limited
      to lost profits), even if the Collateral Agent has been advised of the
      likelihood of such loss or damage and regardless of the form of
      action.

     

    (g)
        The
      Collateral Agent shall not be responsible for or have any duty to ascertain
      or
      inquire into (i) any statement, warranty or representation made herein or in
      connection herewith, (ii) the contents of any certificate, report or other
      document delivered thereunder or in connection therewith, (iii) the performance
      or observance of any of the covenants, agreements or other terms or conditions
      set forth herein, or (iv) the validity, enforceability, effectiveness or
      genuineness of this Agreement or any other agreement, instrument or
      document.

     

    (h)
        The
      Collateral Agent may refuse to act on any notice, consent, direction or
      instruction from any Secured Parties or any agent, trustee or similar
      representative thereof that, in the Collateral Agent’s opinion, (i) is contrary
      to law or the provisions of this Agreement or the Indentures, (ii) may expose
      the Collateral Agent to liability (unless the Collateral Agent shall have been
      indemnified, to its satisfaction, for such liability by the Secured Parties
      that
      gave such notice, consent, direction or instruction) or (iii) is unduly
      prejudicial to Secured Parties not joining in such notice, consent, direction
      or
      instruction.

     

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

     

    (i)
        The
      Collateral Agent is authorized to take such actions and to exercise such powers
      as are delegated to the Collateral Agent by the terms hereof, together with
      such
      actions and powers as are reasonably incidental thereto.

     

    (j)
        The
      bank
      serving as the Collateral Agent shall, in its capacity as a Secured Party,
      have
      the same rights and powers as any other Secured Party and may exercise the
      same
      as though it were not the Collateral Agent. Such bank and its Affiliates may
      accept deposits from, lend money to and generally engage in any kind of business
      with the Pledgor or any of its Affiliates as if it were not the Collateral
      Agent
      hereunder.

     

    28.
        Additional
      Provisions Relating to the Collateral Agent.

     

    (a)
        Any
      corporation, bank, trust company or association into which the Collateral Agent
      may be merged or converted or with which it may be consolidated, or any
      corporation, bank, trust company or association resulting from any merger,
      conversion or consolidation to which the Collateral Agent shall be a party,
      or
      any corporation, bank, trust company or association succeeding to all or
      substantially all the corporate trust business of the Collateral Agent, shall
      be
      the successor of the Collateral Agent hereunder, without the execution or filing
      of any paper or any further act on the part of any of the parties
      hereto.

     

    Any
      resignation or removal of the Trustee under the Indentures in accordance with
      the provisions thereof shall result in a resignation or removal of the
      Collateral Agent hereunder. The provisions of Section 7.08 in the HY Note
      Indenture and Section 7.10 in the Convertible Note Indenture with respect to
      replacement of the Trustee shall be applicable to the replacement of the
      Collateral Agent.

     

    (b)
        At
      any
      time or times, for the purpose of meeting any legal requirements of any
      jurisdiction in which any of the Collateral may at the time be located, the
      Collateral Agent shall have the power to appoint any Person or Persons either
      to
      act as co-collateral agent, or co-collateral agents, jointly with the Collateral
      Agent of all or any part of the Pledged Collateral or to act as separate
      collateral agent or separate collateral agents of all or any part of the Pledged
      Collateral and to vest in such Person or Persons, in such capacity, such title
      to the Pledged Collateral or any part thereof, and such rights, powers, duties
      or obligations as the Collateral Agent may consider necessary or desirable,
      subject to the other provisions of this Section 28.

     

    (c)
        Unless
      otherwise provided in the instrument appointing such co-collateral agent or
      separate collateral agent, every co-collateral agent or separate collateral
      agent in respect of the custody, control or management of the Pledged Collateral
      shall, to the extent permitted by law, be appointed subject to the following
      terms namely: 

     

    (i)
        All
      rights, power, duties and obligations under this Agreement conferred upon the
      Collateral Agent shall be exercised solely by the Collateral Agent;

     

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

     

    (ii)
        All
      rights, powers, duties and obligations conferred or imposed upon the collateral
      agents shall be conferred or imposed upon and exercised or performed by the
      Collateral Agent, or by the Collateral Agent and such co-collateral agent or
      co-collateral agents, or separate collateral agent or separate collateral agents
      jointly, except to the extent that, under the law of any jurisdiction in which
      any particular act or acts are to be performed, the Collateral Agent shall
      be
      incompetent or unqualified to perform such act or acts, in which event such
      act
      or acts shall be performed by such co-collateral agent or co-collateral agents
      or separate collateral agent or separate collateral agents;

     

    (iii)
        Any
      request in writing by the Collateral Agent to any co-collateral agent or
      separate collateral agent to take or to refrain from taking any action hereunder
      shall be sufficient warrant for the taking, or the refraining from taking,
      of
      such action by such co-collateral agent or separate collateral
      agent;

     

    (iv)
        Any
      co-collateral agent or separate collateral agent to the extent permitted by
      law
      may delegate to the Collateral Agent the exercise of any right, power, duty
      or
      obligation, discretionary or otherwise; 

     

    (v)
        The
      Collateral Agent at any time, by an instrument in writing, may accept the
      resignation of, or remove, any co-collateral agent or separate collateral agent
      appointed under this Section
      28.
      As
      successor to any co-collateral agent or separate collateral agent so resigned
      or
      removed may be appointed in the manner provided in this Section
      28;

     

    (vi)
        No
      collateral agent hereunder shall be personally liable by reason of any act
      or
      omission of any other collateral agent hereunder; the Collateral Agent shall
      not
      be responsible for any misconduct or negligence on the part of any agent
      appointed with due care by it hereunder;

     

    (vii)
        Any
      demand, request, direction, appointment, removal, notice, consent, waiver or
      other action in writing delivered to the Collateral Agent shall be deemed to
      have been delivered to each such co-collateral agent or separate collateral
      agent; and

     

    (viii)
        Any
      Collateral received by any such co-collateral agent or separate collateral
      agent
      hereunder shall forthwith, so far as may be permitted by law, be turned over
      to
      the Collateral Agent to be held pursuant to the terms hereof.

     

    (d)
        Upon
      the
      acceptance in writing of such appointment by any such co-collateral agent or
      separate collateral agent, it or he shall be vested with the estate, right,
      title and interest in the Pledged Collateral, or any portion thereof, and with
      such rights, powers, duties, trusts or obligations, jointly or separately with
      the Collateral Agent, all as shall be specified in the instrument of
      appointment, subject to all the terms hereof.

     

    (e)
        In
      case
      any co-collateral agent or separate collateral agent shall become incapable
      of
      acting, resign or be removed, the right, title and interest in the Pledged
      Collateral and all rights, powers, duties and obligations of said co-collateral
      agent or separate collateral agent shall, so far as permitted by law, vest
      in
      and be exercised by the Collateral Agent unless and until a successor
      co-collateral agent or separate collateral agent shall be appointed pursuant
      to
      this Section 28.

     

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

     

    29.
        Notices.
      Any
      notice, demand, request or any other communication required or desired to be
      served, given or delivered hereunder shall be in writing and shall be served,
      given or delivered as provided in Section 12.01 in the HY Note Indenture and
      Section 17.03 in the Convertible Note Indenture. 

     

    30.
        Indemnity
      and Expenses.
      The
      Pledgor agrees, upon demand, to indemnify the Collateral Agent against any
      and
      all losses, claims, damages, penalties, fines, liabilities or expenses,
      including incidental and out-of-pocket expenses and attorneys fees incurred
      by
      it arising out of or in connection with the acceptance or administration of
      its
      duties under this Agreement and to pay to the Collateral Agent the amount of
      any
      and all expenses, including the fees and expenses of its counsel and of any
      experts and agents, which the Collateral Agent may incur in connection with
      (i)
      the administration of this Agreement, (ii) the custody, preservation, use or
      operation of, or the sale of, collection from, or other realization upon, any
      of
      the Pledged Collateral, (iii) the exercise or enforcement of any of the rights
      of the Collateral Agent hereunder or (iv) the failure by the Pledgor to perform
      or observe any of the provisions hereof.

     

    31.
        Amendments,
      Waivers and Consents.
      None of
      the terms or provisions of this Agreement may be waived, altered, modified
      or
      amended, and no consent to any departure by the Pledgor herefrom shall be
      effective, except by or pursuant to an instrument in writing which (i) is duly
      executed by the Pledgor and the Collateral Agent and (ii) complies with the
      requirements of Article 8 of the HY Note Indenture and Article 10 of the
      Convertible Note Indenture. Any such waiver shall be valid only to the extent
      set forth therein. A waiver by the Collateral Agent of any right or remedy
      under
      this Agreement on any one occasion shall not be construed as a waiver of any
      right or remedy which the Collateral Agent would otherwise have on any future
      occasion. No failure to exercise or delay in exercising any right, power or
      privilege under this Agreement on the part of the Collateral Agent shall operate
      as a waiver thereof; and no single or partial exercise of any right, power
      or
      privilege under this Agreement shall preclude any other or further exercise
      thereof or the exercise of any other right, power or privilege. 

     

    32.
        Section
      Headings.
      The
      section headings herein are for convenience of reference only, and shall not
      affect in any way the interpretation of any of the provisions hereof.

     

    33.
        Execution
      in Counterparts.
      This
      Agreement may be executed in any number of counterparts, each of which shall
      be
      an original, but all of which shall together constitute one and the same
      agreement. 

     

    34.
        Merger.
      This
      Agreement and the Indentures embody the entire agreement and understanding,
      between the Pledgor and the Collateral Agent or any Holder and supersedes all
      prior agreements and understandings, written and oral, relating to the subject
      matter hereof. 

     

    35.
        Termination;
      Release of Collateral.
      Notwithstanding anything in this Agreement to the contrary, the Pledgor may,
      to
      the extent permitted by Section 4.12 in the HY Note Indenture and Section 4.12
      in the Convertible Note Indenture, sell, assign, transfer or otherwise dispose
      of any Pledged Collateral. In addition, the Pledged Collateral shall be subject
      to release in accordance with Section 10.04 in the HY Note Indenture and Section
      10.04 in the Convertible Note Indenture (such Pledged Collateral and the Pledged
      Collateral referred to in the immediately preceding sentence being the
“Released
      Collateral”).
      The
      Liens under this Agreement shall terminate with respect to the Released
      Collateral upon such sale, transfer, assignment, disposition or release and
      upon
      the written request of the Pledgor, the Collateral Agent shall execute and
      deliver, at the cost of the Pledgor, such instrument or document as may be
      necessary to release the Liens granted hereunder; provided,
      however,
      that
      (i) the Collateral Agent shall not be required to execute any such documents
      on
      terms which, in the Trustee’s opinion, would expose the Collateral Agent or any
      Holder to liability or create any obligation or entail any consequence other
      than the release of such Liens without recourse or warranty, and (ii) such
      release shall not in any manner discharge, affect or impair the Liabilities
      or
      any Liens on (or obligations of the Pledgor in respect of) all interests
      retained by the Pledgor, including without limitation, the proceeds of any
      sale,
      all of which shall continue to constitute part of the Pledged Collateral.

     

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      of page intentionally left blank]

     

    
      
         

      

      
        16

        
          

        

      

      
         

      

    

     

    

     

    IN
      WITNESS WHEREOF,
      the
      Pledgor and the Collateral Agent have executed this Agreement as of the date
      set
      forth above.

     

    

    
      	 	 	FUSHI INTERNATIONAL,
              INC. 
	 	 	 
	 	 	By:_____________________ 
	 	 	Name: FU
              Li 
	 	 	
              Title: Chairman
                and CEO 

            

    

     

    Acknowledged
      and agreed to

    as
      of the
      date first written above.

     

    The
      Bank
      of New York 

    as
      Collateral Agent

    

    By:____________________________

    Name: 

    Title: 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    EXHIBIT
      A

     

    

    PLEDGED
      STOCK

    

    

    
      	
              Name
                of Pledgor

            	
              Name
                of Issuer

            	
              Percentage
                of Stock

            	
              Number
                of Shares

            
	
              Fushi
                International, Inc.

            	
              Fushi
                Holdings, Inc.

            	
              100%

            	
              15,560
                shares of Common Stock, par value $0.01 per
                share

            

    

    

     

    

     

    

     

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    STOCK
      POWER

    

    (EXECUTED
      IN BLANK)

    

    FOR
      VALUE RECEIVED,
      the
      undersigned hereby sells, assigns and transfers unto _______ shares of the
      Common Stock of Fushi Holdings, Inc., Delaware corporation (the “Corporation”),
      standing in the name of the undersigned on the books of the Corporation
      represented by Certificate No. ________, and does hereby irrevocably constitute
      and appoint ________________ as attorney-in-fact to transfer the shares on
      the
      books of the Corporation with full power of substitution in the
      premises.

    

    

    

    Dated:
      ________

    
      	 	 	FUSHI INTERNATIONAL,
              INC. 
	 	 	 
	 	 	By:
              ________________________ 
	 	 	Name: Mathus Yue
              Yang  
	 	 	Title: 
              President 

    

     

    

    

    

     

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    ACKNOWLEDGMENT

     

    The
      undersigned hereby acknowledges receipt of a copy of the foregoing Share Pledge
      Agreement, agrees promptly to note on its books the security interests granted
      under such Share Pledge Agreement, and waives any rights or requirement at
      any
      time hereafter to receive a copy of such Share Pledge Agreement in connection
      with the registration of any Pledged Collateral in the name of the Collateral
      Agent or its nominee or the exercise of voting rights by the Collateral
      Agent.

     

    
      	 	 	Fushi Holdings,
              Inc. 
	 	 	 
	 	 	By________________________________ 
	 	 	Name:  
	 	 	Title:Unassociated Document

    INVESTOR
      RIGHTS AGREEMENT

     

    THIS
      INVESTOR RIGHTS AGREEMENT (this
      “Agreement”)
      is
      made and entered into as of January 25, 2007,
      by and
      among (i) (a) Fushi International, Inc., a Nevada corporation (the “Company”),
      Fushi
      Holdings, Inc., a Delaware corporation (“FHI”),
      Dalian Fushi Bimetallic Manufacturing Company Limited, a limited liability
      company organized and existing under the laws of the PRC (“Dalian
      Fushi”),
      Fushi
      International (Dalian) Bimetallic Cable Co., Ltd., a wholly foreign-owned
      limited liability company organized and existing under the laws of the PRC
      (the
“WFOE”,
      and,
      together with the Company, FHI and Dalian Fushi, the “Group
      Companies”);
      (b)
      Mr. Fu Li (the “Controlling
      Shareholder”),
      a
      resident of Dalian, Liaoning Province in the People’s Republic of China (the
“PRC”);
      and
      (c) Mr. Fu Li, Mr. Mathus Yang Yue, a resident of Dalian, Liaoning Province
      in
      the PRC, and Mr. Chris Wang Wenbing, a resident of Dalian, Liaoning Province
      in
      the PRC (together with Mr. Fu Li and Mr. Mathus Yang Yue, the “Senior
      Management”)
      and
      (ii) Citadel Equity Fund Ltd. (“Citadel”).
      Capitalized terms used herein but not otherwise defined herein shall have the
      respective meanings set forth in the Notes Purchase Agreement (as defined
      below).

     

    WITNESSETH:

     

    WHEREAS,
      the Group Companies and Citadel have entered into that certain Notes
      Purchase
      Agreement dated as of January 24,
      2007
      (the “Notes
      Purchase
      Agreement”),
      pursuant to which the Company has agreed to issue to Citadel, and Citadel has
      agreed to purchase from the Company, US$40,000,000 Guaranteed Senior Secured
      Floating Rate Notes due 2012
      (the
      “HY
      Notes”)
      and
      US$20,000,000 3.0% Guaranteed Senior Secured Convertible Notes due
      2012
      (the
“Convertible
      Notes”,
      and
together
      with the HY Notes, the “Notes”),
      which
      are convertible into the Company’s common stock, par value $.006
      (the
“Common
      Stock”,
      and,
      together with the Notes, the “Securities”);
      

     

    WHEREAS,
      in consideration of Citadel entering into the
      Notes
      Purchase
      Agreement, the Company has agreed to provide certain rights set forth in this
      Agreement.

     

    NOW,
      THEREFORE, in consideration of the premises and other good and valuable
      consideration, the receipt and sufficiency of which are hereby acknowledged,
      the
      parties hereto, intending to be legally bound by this agreement, agree as
      follows:

     

    1.  Representations
      and Warranties of the Group Companies, the Controlling Shareholder and the
      Senior Management.
      Each of
      the Group Companies, the Controlling Shareholder and the Senior Management,
      jointly and severally, represents and warrants that: 

     

    1.1  (i)
      The
      Controlling Shareholder is the beneficial owner, free and clear of all Liens,
      of
11,915,998 shares
      of
Common
      Stock
      (of
      record or through a brokerage firm or other nominee arrangement), which
      constitutes 52.30%
      of the
      outstanding voting power of the Company’s capital stock,
      (ii)
      Mr. Mathus Yang Yue is the beneficial owner, free and clear of all Liens, of
      1,272,244
      shares
      of Common
      Stock (of record or through a brokerage firm or other nominee arrangement),
      which constitutes 5.58%
      of the
      outstanding voting power of the Company’s capital stock, and (iii) Mr. Chris
      Wang Wenbing is the beneficial owner, free and clear of all Liens, of
      200,000
      shares
      of Common
      Stock (of record or through a brokerage firm or other nominee arrangement),
      which constitutes 0.88%
      of the
      outstanding voting power of the Company’s capital stock. The Controlling
      Shareholder is the beneficial owner, free and clear of all Liens, of an
      aggregate of 87.73% of the equity interests of Dalian Fushi.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    1.2  Each
      of
      the Group Companies, the Controlling Shareholder and each member of the Senior
      Management (each of the foregoing, a “Warrantor”)
      has
      full power and authority to make, enter into and carry out the terms of this
      Agreement. This Agreement has been duly executed and delivered by each Warrantor
      and constitutes the legal, valid and binding obligations of such Warrantor
      enforceable against such Warrantor in accordance with its terms.

     

    1.3  The
      execution and delivery of this Agreement by each Warrantor do not, and the
      performance of this Agreement by such Warrantor will not: (i) conflict with
      or
      violate any law, rule regulation, order, decree or judgment applicable to any
      Warrantor or by which any Warrantor or any of the properties of any Warrantor
      is
      or may be bound or affected, or the Charter Documents of any Group Company;
      (ii)
      result in or constitute (with or without notice or lapse of time) any breach
      of
      or default under any contract to which any Warrantor is a party or by which
      any
      Warrantor or any of the affiliates or properties of any Warrantor is or may
      be
      bound or affected, or (iii) result in the creation of any encumbrance or
      restriction on any of the shares of Common Stock or equity interests in any
      other Group Company or properties of any Warrantor. The execution and delivery
      of this Agreement by each Warrantor do not, and the performance of this
      Agreement by each Warrantor will not, require any consent or approval of any
      Person. 

     

    1.4  Each
      of
      the Group Companies (i) has been duly organized, is validly existing and is
      in
      good standing under the laws of its jurisdiction of organization, (ii) has
      all
      requisite power and authority to carry on its business and to own, lease and
      operate its properties and assets, and (iii) is duly qualified or licensed
      to do
      business and is in good standing as a foreign corporation or limited liability
      company, as the case may be, authorized to do business in each jurisdiction
      in
      which the nature of such business or the ownership or leasing of such properties
      requires such qualification, except where the failure to be so qualified would
      not, individually or in the aggregate, have a material adverse effect on (A)
      the
      properties, business, prospects, operations, earnings, assets, liabilities
      or
      condition (financial or otherwise) of the Group Companies, taken as a whole,
      (B)
      the ability of the Group Companies to perform their respective obligations
      under
      any Document or (C) the validity of any of the Documents or the consummation
      of
      any of the transactions contemplated therein (each, a “Material
      Adverse Effect”).

     

    1.5  Except
      as
      set forth on Schedule
      1.5
      of the
      Disclosure Schedule, there are no outstanding (A) options, warrants or other
      rights to purchase from any Group Company, (B) agreements, contracts,
      arrangements or other obligations of any Group Company to issue, or (C) other
      rights to convert any obligation into or exchange any securities for, in the
      case of each of clauses (A) through (C), shares of capital stock of, or other
      ownership or equity interests in, any Group Company. Except as otherwise
      contemplated by that certain voting agreement set forth in this Agreement,
      the
      Company is not a party or subject to any agreement or understanding, and, to
      the
      Company’s knowledge after due inquiry, there is no agreement or understanding
      with any Person that affects or relates to (i) the voting or giving of written
      consents with respect to any security of the Company (including, without
      limitation, any voting agreements, voting trust agreements, shareholder
      agreements or similar agreements) or the voting by a director of the Company
      or
      (ii) the sale, transfer or other disposition with respect to any security of
      the
      Company.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    1.6  Each
      of
      the HY Notes and the Convertible Notes, when issued, sold and delivered in
      accordance with the terms thereof and for the consideration set forth herein,
      will be free of restrictions on transfer, other than restrictions on transfer
      under applicable state and federal securities laws. Assuming the accuracy of
      the
      Purchaser’s representations in Section 6 of the Notes Purchase Agreement, the
      Notes will be issued in compliance with applicable state and federal securities
      laws. The HY Notes, when issued, will be in the form contemplated by the HY
      Note
      Indenture, and the Convertible Notes, when issued, will be in the form
      contemplated by the Convertible Note Indenture. Each of the HY Notes and the
      Convertible Notes has been duly authorized by the Company and, when executed
      and
      delivered by the Company, authenticated by the Trustee and delivered to the
      Purchaser in accordance with the terms of the Notes Purchase Agreement and
      its
      respective Indenture, such Notes will have been duly executed, issued and
      delivered by the Company and will constitute legal, valid and binding
      obligations of the Company, entitled to the benefits of its respective
      Indenture, and enforceable against the Company in accordance with their terms,
      except as limited by applicable bankruptcy, insolvency, reorganization,
      moratorium and other laws of general application affecting enforcement of
      creditors’ rights generally. The Guarantees have been duly authorized, and, when
      the Notes have been duly executed, authenticated and issued in accordance with
      the provisions of its respective Indenture and delivered to and paid for by
      the
      Purchaser with the Guarantee endorsed thereon by the Guarantor, will constitute
      the legal, valid and binding obligations of the Guarantor entitled to the
      benefits of such Indenture.

     

    1.7  The
      Conversion Shares have been duly and validly authorized for issuance by the
      Company, and when issued pursuant to the terms of the Convertible Note
      Indenture, will be validly issued, fully paid and non-assessable, not subject
      to
      any preemptive or similar rights, free from all taxes, Liens, charges and
      security interests with respect to the issuance thereof and free of restrictions
      on transfer other than as expressly contemplated by the Documents.

     

    1.8  Except
      as
      disclosed in the SEC Reports, there is no action, claim, suit, demand, hearing,
      notice of violation or deficiency, or proceeding, domestic or foreign
      (collectively, “Proceedings”),
      pending or, to the knowledge of the Company, threatened, that seeks to restrain,
      enjoin, prevent the consummation of, or otherwise challenges any of the
      Documents, any Restructuring Agreement (considered alone or with other
      Restructuring Agreements) or any of the transactions contemplated therein.
      Except as disclosed in the SEC Reports, none of the Group Companies is subject
      to any judgment, order or decree of which the Company has
      knowledge.

     

    1.9  Each
      of
      the Group Companies has good and marketable title to all real property and
      personal property owned by it, in each case free and clear of any Liens as
      of
      the Closing Date, except such Liens as permitted under the Documents. For the
      real property not owned by any of the Group Companies and currently used or
      planned to be used for the business operations of the Group Companies, each
      of
      such Group Companies has good and marketable title to all leasehold estates
      in
      real and personal property being leased by it and, in each case free and clear
      of all Liens as of the Closing Date.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    1.10  All
      Indebtedness represented by the Notes and the Guarantees is being incurred
      for
      proper purposes and in good faith. Based on the financial condition of the
      Company as of the Closing Date after giving effect to the receipt by the Company
      of the proceeds from the sale of the Securities hereunder, (i) the fair saleable
      value of the Group Companies’ assets exceeds the amount that will be required to
      be paid on or in respect of the Group Companies’ existing debts and other
      liabilities (including contingent liabilities) as they mature; (ii) the present
      fair saleable value of the assets of the Group Companies is greater than the
      amount that will be required to pay the probable liabilities of the Group
      Companies on their respective debt as they become absolute and mature, and
      (iii)
      the Group Companies are able to realize upon their assets and pay their debt
      and
      other liabilities (including contingent obligations) as they mature; (iv) the
      Group Companies’ assets do not constitute unreasonably small capital to carry on
      their respective businesses as now conducted and as proposed to be conducted
      including their respective capital needs taking into account the particular
      capital requirements of the business conducted by the Group Companies, and
      projected capital requirements and capital availability thereof; and (v) the
      current cash flow of each of the Group Companies, together with the proceeds
      the
      Company would receive, were it to liquidate all of its assets, after taking
      into
      account all anticipated uses of the cash, would be sufficient to pay all amounts
      on or in respect of its liabilities when such amounts are required to be paid.
      None of the Group Companies intends to incur debts beyond its ability to pay
      such debts as they mature (taking into account the timing and amounts of cash
      to
      be payable on or in respect of its debt). The Company has no knowledge of any
      facts or circumstances which lead it to believe that it or any other Group
      Company will file for reorganization or liquidation under the bankruptcy or
      reorganization laws of any jurisdiction within one year from the Closing Date.
      For the purposes of this Agreement, “Indebtedness”
shall
      mean (a) any liabilities for borrowed money or amounts owed in excess of $75,000
      (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 $75,000 due under leases required to be
      capitalized in accordance with GAAP. None of the Group Companies is, or is
      reasonably likely to be, in default with respect to any Indebtedness and no
      waiver of default is currently in effect. None of the Group Companies has agreed
      or consented to cause or permit in the future (upon the happening of a
      contingency or otherwise) any of its property, whether now owned or hereafter
      acquired, to be subject to a Lien. None of the Group Companies is a party to,
      or
      otherwise subject to any provision contained in, any instrument evidencing
      Indebtedness of any of the Group Companies, any agreement relating thereto
      or
      any other agreement (including, but not limited to, its Charter Document) which
      limits the amount of, or otherwise imposes restrictions on the incurring of,
      Indebtedness of the Company.

     

    2.  Covenants
      and Agreements.

     

    Unless
      the context requires otherwise, each Group Company hereby covenants and agrees,
      and the Controlling Shareholder hereby covenants and agrees to cause each Group
      Company to do, as follows:

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    2.1  Periodic
      Reports and Other Information.
      As long
      as Citadel holds Convertible Notes then outstanding (including the principal
      amount of the Convertible Notes converted into Conversion Shares as if such
      conversion had not taken place and to the extent such Conversion Shares are
      held
      by Citadel at the time of calculating such percentage), the principal amount
      of
      which is at least 30% of the principal amount of the Convertible Notes then
      outstanding (including the principal amount of the Convertible Notes converted
      into Conversion Shares as if such conversion had not taken place and to the
      extent such Conversion Shares are held by Citadel at the time of calculating
      such percentage) (the “Minimum
      Holdings”),
      the
      Company shall furnish to Citadel, to the extent not made publicly available
      and
      permitted by applicable law and regulations:

     

    (a)  Quarterly
      Reports.
      Within
      forty-five (45) days after the end of each fiscal quarter of the Company,
      unaudited consolidated quarterly financial statements for such fiscal quarter,
      including a balance sheet as of the end of such fiscal quarter, a statement
      of
      income and a statement of cash flows of the Company for such fiscal quarter,
      setting forth in each case in comparative form the figures from the Company’s
      previous fiscal year and for the three, six or nine months then ended, as the
      case may be, prepared in accordance with generally accepted accounting
      principles (“GAAP”)
      applied on a consistent basis (except as noted) and reviewed by internationally
      recognized independent certified public accountants, which fairly present the
      financial condition, results of operations and cash flows of the Company at
      the
      date thereof and for the periods covered thereby;

     

    (b)  Annual Reports.
      Within
      ninety (90) days after the end of each fiscal year of the Company, audited
      consolidated annual financial statements for such fiscal year, including a
      balance sheet as of the end of such fiscal year, a statement of income and
      a
      statement of cash flows of the Company for such year, setting forth in each
      case
      in comparative form the figures from the Company’s previous fiscal year, if any,
      prepared in accordance with GAAP applied on a consistent basis (except as noted)
      and audited by internationally recognized independent certified public
      accountants, which fairly present the financial condition, results of operations
      and cash flows of the Company at the date thereof and for the periods covered
      thereby;

     

    (c)  Business
      Plan and Annual Budget.
      The
      Company shall prepare and submit to Citadel and the Board for their approval
      at
      least thirty (30) days prior to the beginning of the next financial year or
      period the annual budget (“Annual
      Budget”)
      of the
      Company and its Subsidiaries on a consolidated basis setting out in reasonable
      detail the planned annual
      capital and operating budgets in reasonable detail, projected
      revenues, a
      projected financial statement for such fiscal year on a quarterly basis, and
      promptly after preparation from time to time, any revisions to the forecasts
      contained therein
      of the
      Company and its Subsidiaries and attaching thereto such notes as are necessary,
      desirable or customary, together with a business plan setting forth in
      reasonable detail the operating goals of the Company and its Subsidiaries for
      the following year (the “Business
      Plan”).
      

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (d)  If
      at any
      time the results of operations of Dalian Fushi are not consolidated for
      accounting purposes with the results of operations of the Company, and if at
      such time the Company maintains a commercial relationship with Dalian Fushi
      that
      is either substantially similar to the commercial relationship between the
      Company and Dalian Fushi as of the date hereof, or that is otherwise material
      to
      the results of operations, financial condition or cash flows of the Company,
      Dalian Fushi shall provide to Citadel substantially the same financial
      statements, budget, plans and information of Dalian Fushi as set forth in the
      immediately foregoing clauses (a) through (c) with respect to Dalian Fushi
      at
      the same time and in the same manner as therein set forth.

     

    2.2  Inspection.
      As long
      as Citadel holds the Minimum Holdings,
      each
      Group Company shall permit Citadel and any authorized representative thereof,
      to
      visit and inspect the properties of such Group Company, including its corporate
      and financial records, to examine its records and make copies thereof and to
      discuss its affairs, finances and accounts with its officers, at all such
      reasonable times and as
      often
      as may be reasonably requested upon
      reasonable notice,
      provided
      that
      such visits and inspections shall not unduly interrupt the daily operation
      of
      such Group Company. Citadel and its participating agents and representatives,
      in
      exercising its rights of inspection hereunder, agrees to maintain the
      confidentiality of all financial and other confidential information of such
      Group Company acquired by them. If requested by such Group Company, Citadel,
      in
      exercising its rights under this Section 2.2 shall execute a confidentiality
      agreement with such Group Company in such reasonable form and substance as
      agreed between Citadel and such Group Company.

     

    2.3  FCPA.
      Each
      Group Company and the Controlling Shareholder shall, and shall cause each Group
      Company, any of the Company’s Subsidiaries and their respective management to,
      (i) comply with the U.S. Foreign Corrupt Practices Act of 1977, as amended,
      and
      the rules and regulations thereunder (the “FCPA”),
      including, without limitation, not making use of the mails or any means or
      instrumentality of interstate commerce corruptly in furtherance of an offer,
      payment, promise to pay or authorization of the payment of any money, or other
      property, gift, promise to give, or authorization of the giving of value to
      any
“foreign official” (as the term is defined in the FCPA) or any foreign political
      party or official thereof or any candidate for foreign political office, in
      contravention of the FCPA, (ii) conduct each such company’s respective business
      in compliance with the FCPA, and (iii) institute and maintain policies and
      procedures designed to ensure, and which are reasonably expected to continue
      to
      ensure, continued compliance therewith.

     

    2.4  Qualifying
      IPO.
      To the
      extent not inconsistent with the terms of the Indentures, the Company shall
      use
      its best efforts to effect, and the Controlling Shareholder shall cause the
      Company to effect, a Qualifying IPO on or before July 18, 2008. In addition,
      the
      Company and the Controlling Shareholder shall use their respective best efforts
      to cause the Company’s Board to effect the Qualifying IPO. For
      purposes of this Section
      2.4,
      the
      terms “Closing
      Sale Price”,
      “Permitted
      Holders”
and
      “Qualifying
      IPO”
shall
      have the respective meanings ascribed to them in the indenture for the
      Convertible Notes as of the date hereof (the “CB
      Indenture”).

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    2.5   PFIC.
      No
      Group Company shall, and the Controlling Shareholder shall cause each Group
      Company not to, become a “passive foreign investment company” within the meaning
      of Section 1297 of the U.S. Internal Revenue Code of 1986.  

     

    2.6   OFAC.
      Neither
      any Group Company nor, to the knowledge of any Group Company, any director,
      officer, agent, employee, Affiliate or Person acting on behalf of any Group
      Company is currently subject to any U.S. sanctions administered by the Office
      of
      Foreign Assets Control of the U.S. Treasury Department (“OFAC”);
      and
      no Group Company shall, and the Controlling Shareholder shall cause each Group
      Company not to, directly or indirectly use the proceeds of the sale of the
      Notes, or lend, contribute or otherwise make available such proceeds to any
      subsidiary, joint venture partner or other Person or entity, for the purpose
      of
      financing the activities of any Person currently subject to any U.S. sanctions
      administered by OFAC.

     

    2.7   Money
      Laundering Laws.
      Each of
      the Group Companies shall, and the Controlling Shareholder shall cause each
      Group Company to, conduct its operations at all times in compliance with the
      money laundering statutes of applicable jurisdictions, the rules and regulations
      thereunder and any related or similar rules, regulations or guidelines, issued,
      administered or enforced by any applicable governmental agency.

     

    2.8  Escrow
      Agreements.
      The
      Company shall, and the Controlling Shareholder shall ensure that the Company
      shall, at all times comply with the terms and conditions of the Offshore Escrow
      Agreement. The WFOE shall, and the Company, FHI and the Controlling Shareholder
      shall ensure that the WFOE shall, at all times comply with the terms and
      conditions of the Onshore Escrow Agreement.

     

    2.9  Other
      Covenants.
      As long
      as Citadel holds the Minimum Holdings,
      each
      Group Company hereby covenants and agrees, and the Controlling Shareholder
      hereby covenants and agrees to cause each Group Company to do, as follows,
      unless Citadel otherwise provides prior written consent in its sole discretion
      (the term “Subsidiary”
as
      referred to in this Agreement shall include any Subsidiary of the Company and
      Dalian Fushi):

     

    (a)  No
      Group
      Company shall change
      the substantive responsibilities of any member of the Senior Management of
      such
      Group Company and
      its
      Subsidiaries, or substitute any other Person to perform the substantive
      responsibilities of such members of Senior Management as they are performed
      as
      of the date hereof, other than in the case of incapacity of such member of
      Senior Management.

     

    (b)  No
      Group
      Company or its Subsidiaries shall issue
      any
      securities, create any security interest or enter
      into any transaction or a series of related transactions the completion of
      which
      will result in a Change of Control of the Company. “Change
      of Control”
shall
      have the meaning as defined in the CB Indenture.

     

    (c)  No
      Group
      Company or its Subsidiary shall change
      the
      number of members
      of the board
      of
      directors
      (“Board”)
      of
      such Group Company or its Subsidiaries, or the composition or structure of
      the
      board or board committees of the Group Company or its Subsidiaries or establish
      board committees of such Group Company or its Subsidiaries, or delegate powers
      of any Board to a committee, or change the powers, duties or responsibilities
      delegated to any committee of the Board of such Group Company.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (d)  No
      Group
      Company shall amend,
      alter, waive or repeal any provision of such Group Company’s or its
      Subsidiaries’ certificate of incorporation, memorandum and articles of
      association or any other organizational or constitutional documents of such
      Group Company or its Subsidiaries.

     

    (e)  The
      Company shall retain independent public accountants (the “Accountants”)
      of
      recognized international standing and acceptable to Citadel who shall certify
      the Company’s consolidated financial statements, and Dalian Fushi’s financial
      statements in case Dalian Fushi’s financials are not consolidated into the
      Company’s financial statements according to GAAP, each at the end of each fiscal
      year. The Company shall not terminate the services of the Accountants without
      Citadel’s prior written approval. In the event that the Accountants elect to
      terminate their services to the Company, the Company shall provide Citadel
      with
      a written notice prior to such resignation if reasonably practicable and if
      not,
      promptly thereafter notify Citadel and in any event shall request the
      Accountants to deliver to Citadel a letter from the Accountants setting forth
      the reasons for the termination of their services. In the event of such
      termination, the Company shall promptly thereafter engage another firm of
      independent public accountants of recognized international standing acceptable
      to Citadel to be the new Accountants. In its notice to Citadel, the Company
      shall state whether the change of Accountants was recommended or approved by
      the
      Company’s Board or any committee thereof. 

     

    (f)  No
      Group
      Company or its Subsidiaries shall approve
      any
      Annual Budget or Business Plan of such Group Company and its
      Subsidiaries
      without
      the prior written approval of Citadel,
      or
      approve any capital expenditure budget of such Group Company and its
      Subsidiaries without
      the prior written approval of Citadel (the “Approved
      Budget”).
      No
      Group Company shall expend any money in any financial year or period except
      in
      accordance with the Approved Budget; provided
      that in
      any given year the amount of the total actual capital expenditures may not
      exceed the Approved Budget for such year by more than 10% of the Approved Budget
      without Citadel’s prior written consent.

     

    (g)  No
      Group
      Company
      or its Subsidiaries
      shall
      enter into any activities which
      are
      not in the ordinary course of business of such Group Company or such Subsidiary,
      as the case may be, and that would have a material adverse effect on the
      interests of Citadel.

     

    (h)  Each
      Group Company shall use its best efforts to keep its properties and those of
      its
      Subsidiaries in good repair, working order and condition, reasonable wear and
      tear excepted, and from time to time make all needful and proper repairs,
      renewals, replacements, additions and improvements thereto; and each Group
      Company and its Subsidiaries shall at all times comply with each material
      provision of all leases to which any of them is a party or under which any
      of
      them occupies property if the breach of such provision might have a material
      and
      adverse effect on the condition, financial or otherwise, or operations of such
      Group Company and its Subsidiaries, taken as a whole.

     

    (i)  Except
      as
      otherwise decided in accordance with policies adopted by its Board, each Group
      Company shall keep its assets and those of its Subsidiaries that are of an
      insurable character insured by financially sound and reputable insurers against
      loss or damage by fire, explosion and other risks customarily insured against
      by
      companies in such Group Company’s line of business, and each Group Company shall
      maintain, with financially sound and reputable insurers, insurance against
      other
      hazards and risks and liability to Persons and property to the extent and in
      the
      manner customary for companies in similar businesses similarly
      situated.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (j)  No
      Group
      Company or its Subsidiaries shall, without the prior written consent of Citadel,
      which shall not be unreasonably withheld, acquire or dispose of any shares
      or
      debt or equity securities of any corporation or other entity or acquire any
      other business as a going concern, by one transaction or a series of
      transactions, or form any partnership or joint venture with any other
      Person.

     

    (k)  No
      Group
      Company shall change the nature of operations or the business of such Group
      Company and its Subsidiaries.

     

    (l)  In
      addition to the provisions set forth in Section 4.09(b) of the Indentures,
      each
      of the Group Companies and the Controlling Shareholder shall obtain Citadel’s
      written consent prior to increasing the aggregate principal amount of all of
      the
      Debt of the WOFE under Credit Facilities up to $25.0 million (or its equivalent
      in another currency) as set forth in Section 4.09(b) of the
      Indentures.

     

    (m)  
      Prior to
      the Closing, the WFOE shall, and the Company, FHI and the Controlling
      Shareholder shall use their respective best efforts to cause the WFOE to, enter
      into the Onshore Escrow Agreement to set up an escrow account in the name of
      the
      WFOE, and the Company shall, and the Controlling Shareholder shall use his
      best
      efforts to cause the Company to, enter into the Offshore Escrow Agreement to
      set
      up an escrow account in the name of the Company, in each case for deposit of
      the
      proceeds of the Notes to only be drawn down with prior approval of Citadel
      so
      long as Citadel holds the Alternative Minimum Holdings, or upon satisfaction
      of
      certain conditions to be agreed upon by Citadel.

     

    2.10  
      Each of
      the Company, Citadel and their respective Affiliates shall not directly or
      indirectly transact, or induce or procure any other Person to transact, any
      purchase or sale in any shares of Common Stock during the fifteen (15) Trading
      Days (as defined in the CB Indenture) preceding the determination of any Trading
      Reference VWAP (as defined in the CB Indenture).

     

    3.  Right
      of First Refusal for Future Securities Offerings.
      

     

    3.1  Issuance
      Notice.
      Subject
      to the terms and conditions of this Section
      and applicable securities laws, if, following the date hereof and until December
      31, 2010, the Company proposes to issue or sell any securities to a purchaser
      that is not an Affiliate of the Company (the “Proposed
      Third Party Purchaser”),
      the
      Company shall, not less than fifteen (15) business days prior to the
      consummation of such issuance or sale, offer such securities to Citadel as
      long
      as Citadel holds at least 10% of the outstanding HY Notes, 20% of the
      outstanding Convertible Notes (including the principal amount of the Convertible
      Notes that have been converted into Conversion Shares as if such conversion
      had
      not taken place and to the extent that such Conversion Shares are held by
      Citadel at the time of calculating such percentage) or 3% of the total
      outstanding equity interest in the Company on a fully-diluted basis (including,
      for the avoidance of doubt, any Conversion Shares) (the “Alternative
      Minimum Holding”)
      by
      sending written notice (an “Issuance
      Notice”)
      to
      Citadel, which shall state (a)
      the
      identity of the Proposed Third Party Purchaser, (b) a description of the
      securities to be issued or sold, including detailed terms of such securities,
      (c) the amount of the securities proposed to be issued to the Proposed Third
      Party Purchaser (the “Offered
      New Securities”);
      (d)
      the proposed purchase price for the Offered Securities (the “Issuance
      Price”);
      and
      (e) the terms and conditions of such proposed sale.
      The
      Issuance Notice shall also certify that the Company has received a firm offer
      from the Proposed Third Party Purchaser and in good faith believes a binding
      agreement for the Offered New Securities is obtainable on the terms set forth
      in
      the Issuance Notice. The Issuance Notice shall also include a copy of any
      written proposal, term sheet or letter of intent or other agreement or
      understanding relating to the Offered New Securities and proof satisfactory
      to
      the Company that the Offered New Securities will not violate any applicable
      securities laws. Upon delivery of the Issuance Notice, such offer shall be
      irrevocable unless and until the rights of first refusal provided for herein
      shall have been waived or shall have expired. 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    3.2  Option;
      Exercise.
      By
      notification to the Company within fifteen (15) business days after the Issuance
      Notice is given, Citadel may elect to purchase or otherwise acquire, at the
      price and on the terms specified in the Issuance Notice, up to all of the
      Offered New Securities.
      The
      closing of any sale pursuant to this Section
      3.2
      shall
      occur within sixty (60) days after the date on which such notification is given
      by Citadel.
      Citadel
      (or its assignees) shall be entitled to apportion the rights of first refusal
      hereby granted to it among itself and its Affiliates in such proportions as
      it
      deems appropriate.

     

    3.3  If
      less
      than all of the Offered New Securities are elected to be purchased or acquired
      as provided in Section
      3.2,
      the
      Company may, during the thirty (30) day period following the expiration of
      the
      15-day period provided in Section
      3.2,
      offer
      and sell the remaining unsubscribed portion of such securities to the Proposed
      Third Party Purchaser in the Issuance Notice at a price not less than, and
      upon
      terms no more favorable to the Proposed Third Party Purchaser than, those
      specified in the Issuance Notice. If the Company does not enter into an
      agreement for the sale of such securities within such period, or if such
      agreement is not consummated within thirty (30) days after the execution
      thereof, the right of first refusal provided hereunder shall be deemed to be
      revived and such securities shall not be offered to a third party unless first
      reoffered to Citadel in accordance with this Section.

     

    4.  Right
      of First Refusal for Controlling Shareholder’s Transfer and Tag-Along
      Right.

     

    4.1  Securities
      Notice.
      As long
      as Citadel holds the Alternative Minimum Holding, subject to Section
      4.8
      of this
      Agreement, if the Controlling Shareholder proposes to sell or transfer any
      securities of the Company held by it or any other Permitted Holder to a third
      party purchaser (the “Third
      Party Purchaser”)
      other
      than as otherwise agreed by Citadel in writing prior to such sale or transfer,
      or in the case of any Exempt Transfer (as defined in Section
      4.7
      below),
      the Controlling Shareholder shall, within fifteen (15) business days prior
      to
      the consummation of such transfer or sale, offer such securities to Citadel
      by
      sending written notice (an “Offering
      Notice”)
      to
      Citadel, which shall state (a) the identity of the Third Party Purchaser, (b)
      the type and number of such securities proposed to be transferred (the
“Offered
      Securities”),
      including detailed terms of such securities (if other than Common Stock); (c)
      the proposed purchase price per share for the Offered Securities (the
“Offer
      Price”);
      and
      (d) the terms and conditions of such sale. The Offer Price shall in no event
      be
      less than the Conversion Price, as defined in the CB Indenture. The Offering
      Notice shall also certify that the Controlling Shareholder has received a firm
      offer from the Third Party Purchaser and in good faith believes a binding
      agreement for the Offered Securities is obtainable on the terms set forth on
      the
      Offering Notice. The Offering Notice shall also include a copy of any written
      proposal, term sheet or letter of intent or other agreement or understanding
      relating to the Offered Securities and proof satisfactory to the Company that
      the Offered Securities will not violate any applicable securities laws. Upon
      delivery of the Offering Notice, such offer shall be irrevocable unless and
      until the rights of first refusal provided for herein shall have been waived
      or
      shall have expired. 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    4.2  Option;
      Exercise.
      For a
      period of fifteen (15) business days after the giving of the Offering Notice
      pursuant to Section
      4.1
      (the
“Option
      Period”),
      Citadel shall have the right to purchase all or any part of the Offered
      Securities at a purchase price equal to the Offer Price and upon terms and
      conditions no less favorable than those set forth in the Offering Notice.
      Citadel may assign to any of its Affiliates (other than a Person engaged in
      the
      Business) all or any portion of its rights pursuant to this
      Section.

     

    4.3  The
      right
      of Citadel to purchase all or any part of the Offered Securities under
Section
      4.2
      above
      shall be exercisable by delivering written notice of the exercise thereof (the
      “ROFR
      Exercise Notice”),
      prior
      to the expiration of the Option Period, to the Controlling Shareholder. Such
      notice shall state the number of Offered Securities that Citadel is willing
      to
      purchase pursuant to this Section. The failure of Citadel to respond within
      the
      Option Period to the Controlling Shareholder shall be deemed to be a waiver
      of
      Citadel’s rights under Section
      4.1
      above,
provided
      that
      Citadel may waive its rights under Section
      4.2
      above
      prior to the expiration of the Option Period by giving written notice to the
      Controlling Shareholder.

     

    4.4  Closing.
      The
      closing of the purchases of Offered Securities subscribed for by Citadel under
      Section
      4.3
      shall be
      held at the executive office of the Company at 11:00 a.m., local time, on the
      30th day after the giving of the ROFR Exercise Notice pursuant to Section
      4.3
      or at
      such other time and place as the parties to the transaction may agree. At such
      closing, the Controlling Shareholder shall deliver certificates representing
      the
      Offered Securities, duly endorsed for transfer and accompanied by all requisite
      transfer taxes, if any, and such Offered Securities shall be free and clear
      of
      any Liens (other than those arising hereunder and those attributable to actions
      by the purchasers thereof) and the Controlling Shareholder shall so represent
      and warrant, and shall further represent and warrant that it is the sole
      beneficial and record owner of such Offered Securities. Citadel shall deliver
      at
      the closing payment in full in immediately available funds for the Offered
      Securities purchased by it or its Affiliates. At such closing, all of the
      parties to the transaction shall execute such additional documents as are
      otherwise necessary or appropriate.

     

    4.5  Sale
      to a Third Party Purchaser.
      Unless
      Citadel elects to purchase all of the Offered Securities under Section
      4.2,
      the
      Controlling Shareholder may, subject to Section
      4.8,
      sell
      the remaining Offered Securities not purchased by Citadel to the Third Party
      Purchaser identified in the Offering Notice at a price not less than the Offer
      Price, and on terms not more favorable than the terms set forth in the Offering
      Notice; provided,
      however,
      that
      such sale is bona fide and made pursuant to a contract entered into within
      thirty (30) days after the earlier to occur of (i) the waiver by Citadel of
      its
      right to purchase the Offered Securities and (ii) the expiration of the Option
      Period (the “Contract
      Date”);
      and
provided
      further,
      that
      such sale shall not be consummated unless and until (x) such Third Party
      Purchaser shall represent in writing to Citadel that it is aware of the rights
      of Citadel contained in this Agreement and (y) prior to the purchase by such
      Third Party Purchaser of any of such Offered Securities, such Third Party
      Purchaser shall become a party to this Agreement and agree to be bound by the
      terms and conditions hereof that are applicable to the Controlling Shareholder,
      provided that if such Third Party Purchaser, together with any other Third
      Party
      Purchasers and on an aggregated basis, owns less than 10% of the Company's
      outstanding capital stock on an as-converted, fully diluted basis following
      such
      sale, then such Third Party Purchaser shall not be bound by Sections 1, 2,
      3 and
      6 of this Agreement. If such sale is not consummated within thirty (30) days
      after the ealier to occur of (i) the waiver by Citadel of its options to
      purchase the offer and (ii) the Contract Date for any reason, then the
      restrictions provided for herein shall again become effective, and no transfer
      of such Offered Securities may be made thereafter by the Controlling Shareholder
      without again offering the same to Citadel in accordance with this
      Section.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    4.6   Tag-Along
      Right.
      (a) If
      the Controlling Shareholder is directly or indirectly transferring Offered
      Securities to a Third Party Purchaser pursuant to Section
      4.5,
      then
      Citadel shall have the right to sell to such Third Party Purchaser that number
      of Shares (or Convertible Notes representing as closely as possible such number
      of shares held by Citadel) equal to that percentage of the Offered Securities
      determined by dividing (i) the total number of outstanding shares of the Common
      Stock of the Company (the “Shares”)
      (on an
      as-converted basis) then owned by Citadel by (ii) the sum of (x) the total
      number of Shares (on an as-converted basis) then owned by Citadel and (y) the
      total number of Shares then owned by the Controlling Shareholder, at a price
      equal to the Offer Price (in the case of sale of Conversion Shares) or the
      Offer
      Price less the then applicable Conversion Price (in the case of the sale of
      the
      Convertible Notes), with other terms set forth in the Offering Notice;
provided
      that if
      the Offer Price is less than the then applicable Conversion Price the Conversion
      Shares shall be transferred at the Offer Price. The Controlling Shareholder
      and
      Citadel shall effect the sale of the Offered Securities and Citadel shall sell
      the number of Offered Securities to be sold by it pursuant to this Section,
      and
      the number of Offered Securities to be sold to such Third Party Purchaser by
      the
      Controlling Shareholder shall be reduced accordingly.

     

    (b)
      The
      Controlling Shareholder shall give notice to Citadel of each proposed sale
      by
      it, or any other Permitted Holder of Offered Securities which gives rise to
      the
      rights of Citadel set forth in this Section, at least fifteen (15) business
      days
      prior to the proposed consummation of such sale, setting forth the type and
      number of Offered Securities, including detailed terms of such securities (if
      other than Common Stock), the name and address of the proposed Third Party
      Purchaser, the proposed amount and form of consideration and terms and
      conditions of payment offered by such Third Party Purchaser, the percentage
      of
      shares of Common Stock that Citadel may sell to such Third Party Purchaser
      (determined in accordance with Section
      4.6(a)),
      and a
      representation that such Third Party Purchaser has been informed of the
“tag-along” rights provided for in this Section and has agreed to purchase
      Offered Securities in accordance with the terms hereof. The tag-along rights
      provided by this Section must be exercised by Citadel within fifteen (15)
      business days following receipt of the notice required by the preceding
      sentence, by delivery of a written notice to the Controlling Shareholder
      indicating Citadel’s election to exercise its rights and specifying the number
      of shares of Common Stock (up to the maximum number of shares of Common Stock
      owned by Citadel required to be purchased by such Third Party Purchaser) it
      elects to sell (the “Tag-along
      Exercise Notice”),
      provided
      that
      Citadel may waive its rights under this Section prior to the expiration of
      such
      fifteen (15) business day period by giving written notice to the Controlling
      Shareholder, with a copy to the Company. The failure of Citadel to respond
      within such fifteen (15) business day period shall be deemed to be a waiver
      of
      Citadel’s rights under this Section. If a Third Party Purchaser fails to
      purchase shares of Common Stock from Citadel, notwithstanding Citadel’s proper
      exercise of its tag-along rights pursuant to this Section
      4.6(b),
      then
      the Controlling Shareholder shall either contemporaneously purchase from Citadel
      at the Offer Price such number of shares of Common Stock as the Third Party
      Purchaser failed to purchase from Citadel, or if the Controlling Shareholder
      does not so purchase, it shall not be permitted to consummate the proposed
      sale
      of the Offered Securities, and any such attempted sale shall be null and void
      ab
      initio.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    4.7   Exempt
      Transfers.
      The
      right of first refusal and tag-along rights set forth in this Section
      4
      shall
      not apply to (i) any transfer to a Permitted Holder; provided
      that
      adequate documentation therefor is provided to Citadel to its satisfaction
      and
      that any such Permitted Holder agrees in writing to be bound by this Agreement
      in place of the relevant transferor; provided,
      further,
      that
      such transferor shall remain liable for any breach by such Permitted Holder
      of
      any provision hereunder,
      (ii)
      the sale in an unsolicited broker’s transaction pursuant to Rule 144 under the
      Securities Act of 1933, as amended, or (iii) the Transfer (as defined below)
      by
      the Controlling Shareholder of no more than 3% (on an aggregated basis over
      the
      term of the Notes) of the total outstanding equity interest in the Company
      on a
      fully-diluted basis if, after such Transfer, the Controlling Shareholder still
      holds no less than 35% of the total outstanding equity interest in the Company
      on a fully diluted basis (the “Exempt
      Transfers”).
      “Transfer”
shall
      mean sell, transfer, assign, pledge, hypothecate, dispose of, mortgage, enter
      into any voting trust or other agreement, option or other arrangement or
      understanding with respect thereto, whether directly or indirectly and whether
      voluntarily or involuntarily.

     

    4.8   Prohibited
      Transfers.
      (a)
      Notwithstanding anything to the contrary contained herein, to the extent
      permitted under applicable law, the Controlling Shareholder shall not, and
      the
      Controlling Shareholder shall cause the Permitted Holder not to, without the
      prior written consent of Citadel, which consent shall not be unreasonably
      withheld, Transfer through one or a series of transactions any securities of
      the
      Company to any Person unless Citadel has sold more than 5% of the total
      outstanding equity interest in the Company on a fully diluted basis,
provided
      that the
      foregoing provision shall not apply to any Exempt Transfer. 

     

    (b)
       The
      Controlling Shareholder shall ensure that no other Permitted Holder shall sell
      or transfer securities of the Company held by such Permitted Holder other than
      through the Controlling Shareholder as provided in this Agreement. Any attempt
      by the Controlling Shareholder or any other Permitted Holders to sell or
      transfer any securities of the Company held by it or any other Permitted Holder
      in violation of this Section shall be void and the Company hereby agrees it
      will
      not effect such a transfer on its share register nor will it treat any alleged
      transferee as the holder of such shares.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    5.  Board
      Representation.
      

     

    5.1  Number
      of Board Members.
      The
      Company shall, effective upon Closing and until the termination of this
      Agreement, take all appropriate actions to fix and maintain a Board of no more
      than seven (7) voting members and the Company shall not change the number of
      voting members of its Board without Citadel’s prior written
      approval.

     

    5.2  Citadel
      Nominees.
      Upon
      the Citadel Election (as defined below), so long as Citadel continues to hold
      more than 5% of the outstanding shares of Common
      Stock on
      an
      as-converted basis, it shall be entitled to appoint up to 20% of the voting
      members (or the next higher whole number if such percentage does not yield
      a
      whole number) of the Company’s Board (each a “Citadel
      Nominee”
and
      together, the “Citadel
      Nominees”).
      If,
      however, there occurs any Financial and Operational Trigger (as defined in
      the
      CB Indenture) while Citadel holds more than 5% of the outstanding shares of
      Common
      Stock on
      an
      as-converted basis, Citadel shall be eligible to appoint an additional voting
      member of the Company’s Board, provided
      however,
      that
      Citadel shall have the right to appoint only one additional voting member of
      the
      Company’s Board irrespective of the number of times a Financial and Operational
      Trigger occurs.

     

    5.3  Board
      Committees.
      The
      Company shall not, without the prior written consent of Citadel, establish
      any
      committee of its Board, delegate powers of its Board to a committee, or change
      the powers, duties or responsibilities delegated to any committee of the Board
      of the Company. To
      the
      extent permitted by applicable law and exchange listing rules, Citadel
      Nominees shall be entitled to be members of all committees of the boards of
      directors of the Company and its Subsidiaries, if any.

     

    5.4  Citadel
      Election.
      If
      Citadel provides written notice to the Company informing the Company of (i)
      its
      election (the “Citadel
      Election”)
      to be
      represented on the Board and (ii) the name(s) of the Citadel Nominee(s), then,
      as soon as practicable after its receipt of such notice from Citadel, but in
      no
      event later than five (5) business days after such receipt, the Company shall:
      

     

    (a)  provide
      notice of the Citadel Election to the Company’s Board and the Controlling
      Shareholder, and

     

    (b)  to
      the
      extent permissible under applicable laws and regulations (including rules of
      any
      relevant listing exchange), take all necessary actions so as to permit the
      Citadel Nominee(s) to be duly appointed or elected as members of the Company’s
      Board as soon as practicable.

     

    Subject
      to the conditions and limitations set forth herein, the Citadel Election may
      be
      exercised by Citadel at any time in its sole discretion.

     

    5.5  Voting
      Agreement.
      The
      Controlling Shareholder agrees to vote, or cause to be voted, all of the
      Company’s Shares owned by such Controlling Shareholder or any other Permitted
      Holder (of record or through a brokerage firm or other nominee arrangement),
      or
      over which the Controlling Shareholder has voting control, from time to time
      and
      at all times, in whatever manner as shall be necessary to ensure that at each
      annual or special meeting of shareholders at which an election of directors
      is
      held or pursuant to any written consent of the shareholders, the Citadel
      Nominees are duly elected to the Board.
      The
      Controlling Shareholder further covenants not to frustrate the purpose of the
      immediately preceding sentence by any means, including through entering into
      any
      agreement or commitment inconsistent with such purpose, including but not
      limited to any inconsistent pledge, charge, hypothecation, voting agreement,
      voting trust or other disposition of voting rights of the Common Stock over
      which the Controlling Shareholder retains beneficial ownership or the economic
      benefits and risks attendant thereto.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    5.6  Vacancies.
      Any
      vacancies created by the resignation, removal or death of a Citadel Nominee
      appointed or elected to the Board shall be filled pursuant to the provisions
      of
      this Section.

     

    5.7  Quorum.
      The
      Company shall not hold any meeting of the Board without the attendance of at
      least one of the Citadel Nominee(s), provided
      that
      Citadel Nominee(s) shall exercise good faith efforts to attend each Board
      meeting in order to meet the quorum requirement provided in this Section,
      including a good faith effort to attend by telephone or in person.

     

    5.8  Reimbursement.
      Each
      time Citadel Nominee(s) attend a face-to-face meeting of the Board, the Company
      shall reimburse such director for reasonable travel expenses on the same basis
      as the other members of the Board.

     

    6.  Non-Competition.

     

    6.1  Non-competition
      and Non-solicitation.
      During
      the period commencing as of the date hereof and until the fifth anniversary
      of
      the Closing Date (such period, the “Non-compete
      Term”),
      each
      member of the Senior Management
      hereby
      agrees that such Person will not, to the extent permitted by applicable laws,
      directly or indirectly, engage in, or have any interest in, any Person, firm,
      corporation, or business (whether as an executive, officer, director, agent,
      security holder, consultant, investor or similar position) that engages in
      a
      Competitive Business, or otherwise interfere with the business of the Company
      or
      any Company Affiliates, including without limitation:

     

    (a)  either
      on
      his own behalf or on behalf of any other Person, solicit business similar to
      the
      Business from any customer, supplier, distributor of, or a Person in a similar
      commercial relationship with, the Company or Company Affiliates; or

     

    (b)  either
      on
      his own behalf or on behalf of any other Person, solicit, employ or otherwise
      engage as an employee, independent contractor, or otherwise any Person who
      is
      and was, at any time during one year prior to such solicitation, employment
      or
      engagement, an employee of the Company or Company Affiliates, or in any manner
      induce any employee of the Company or Company Affiliates to terminate his or
      her
      employment therewith;

     

    Notwithstanding
      the foregoing paragraphs of this Section:

     

    (i)  Each
      member of the Senior Management may own, as an investor, holdings as part of
      a
      portfolio investment through mutual funds or other funds pooling investments
      in
      different corporations (the stock of which is publicly traded) some of which
      may
      be engaging in a Competitive Business, in each case when any and all the
      investment and voting decisions with respect to such voting stock are made
      by
      unaffiliated third party fund managers;

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (ii)  Each
      member of the Senior Management
      may
      continue his involvement as a shareholder, officer and/or director of the
      entities as set forth in the Disclosure Schedules to the
      Notes
      Purchase
      Agreement, which represents the pre-existing relationships disclosed by the
      Company; and

     

    (iii)  Each
      member of the Senior Management
      may
      serve as a shareholder, director or officer of any entity that is not engaged
      in
      a Competitive Business.

     

    6.2  Continued
      Employment.
      Each
      member of the Senior Management agrees that during the Non-compete Term to
      the
      extent permitted under applicable law, (a) except in the event of an involuntary
      termination, he shall continue to provide the same substantive services for
      the
      Company as he is responsible for on the date hereof and, if applicable, to
      the
      other Group Companies or the Subsidiaries; and (b) he shall not voluntarily
      resign as a director of the Company and, if applicable, to the other Group
      Companies or the Subsidiaries, in each case without Citadel’s prior written
      consent.

     

    6.3  Confidentiality
      and Other Covenants.
      Each
      member of the Senior Management
      agrees
      that:

     

    (a)  he
      shall
      keep confidential any information, including Trade Secrets, relating to the
      Company, Company Affiliates, and the Business (unless such disclosure is
      permitted in writing by the Company, required under law or by order of any
      governmental or regulatory authority, or relates to information already in
      the
      public domain, or is rightfully obtained from a third party without breach
      of
      any confidentiality obligation);

     

    (b)  all
      Work
      Product of any member of
      the
      Senior Management
      conceived (whether solely or jointly with others) within the scope of his
      employment with the Company belongs to the Company and any and all of his rights
      to such Work Product, to the extent not yet assigned, are hereby assigned to
      the
      Company;

     

    (c)  upon
      the
      termination of his employment with the Company, at the request of the Company,
      he shall return to the Company all of the Company’s proprietary items in his
      possession or under his control and shall not retain any copies or other
      physical embodiment of any of such items; and

     

    (d)  upon
      the
      termination of his employment with the Company, he shall not hold himself out
      as
      an employee, agent or representative of the Company.

     

    6.4  Termination.
      The
      parties agree that the Non-Compete Term shall terminate, and this Section shall
      be deemed terminated and of no further effect, without necessity of further
      action by the parties hereto, upon the earlier to occur of (i) the payment
      in
      full of the Notes on the latest maturity date of the Notes; or (ii) the
      redemption or repurchase of the Notes in full by the Company, provided
      that
      the
      Non-Compete Term shall continue for a period of no longer than five (5) years
      fron the Closing Date so long as Citadel holders the Alternative Minimum
      Holding.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    6.5  Definitions.
      For the
      purpose of this Section, capitalized terms used in this Section shall have
      the
      meanings set forth below:

     

    (a)  “Business”
shall
      mean the
      manufacture and sale of bimetallic wire used in communications, electrical
      transmission and other electrical products, services ancillary thereto, and
      the
      sourcing and manufacture of raw materials and inputs for such
      products.

     

    (b)  “Company
      Affiliate”
shall
      mean any entity engaged in the Business which is controlled by or under common
      control with the Company, the Controlling Shareholder or any member of
      the
      Senior Management.

     

    (c)  “Competitive
      Business”
shall
      mean any business that competes with the Business.

     

    (d)  “Trade
      Secret”
shall
      mean any information, including, but not limited to, technical or non-technical
      data, formulas, patterns, compilations, programs, devices, methods, techniques,
      drawings, processes, financial data, financial plans, product plans, actual
      or
      future services, or lists of actual or potential customers or suppliers that
      (1)
      derive economic value, actual or potential, from not being generally known
      to,
      and not being readily ascertainable by proper means by, other Persons who can
      obtain economic value from their disclosure or use, and (2) are the subject
      of
      efforts that are reasonable under the circumstances to maintain their
      secrecy.

     

    (e)  “Work
      Product”
shall
      mean all intellectual property rights, including all Trade Secrets, U.S. and
      international copyrights, patentable inventions, discoveries and improvements,
      and other intellectual property rights, in any documentation, programming,
      technology, or other work that relates to the business and interests of the
      Company and that was or is conceived or developed by any member of
      the
      Senior Management,
      or
      delivered by any member of
      the
      Senior Management
      to the
      Company at any time during the term of such member of the Senior
      Management’s
      employment with the Company.

     

    7.  Indemnification.

     

    (a)  In
      addition to all rights and remedies available to Citadel at law or in equity,
      each Group Company and the Controlling Shareholder shall jointly and severally
      indemnify Citadel, and its Affiliates, stockholders, officers, directors,
      employees, agents, representatives, successors and permitted assigns
      (collectively, the “Indemnified
      Parties”)
      and
      save and hold each of them harmless against and pay on behalf of or reimburse
      such party as and when incurred for any loss (including, without limitation,
      diminutions in value), liability, demand, claim, action, cause of action, cost,
      damage, deficiency, tax, penalty, fine or expense, whether or not arising out
      of
      any claims by or on behalf of any third party, including interest, penalties,
      reasonable attorneys’ fees and expenses and all reasonable amounts paid in
      investigation, defense or settlement of any of the foregoing (collectively,
      “Losses”)
      which
      any such party may suffer, sustain or become subject to, as a result of, in
      connection with, relating or incidental to or by virtue of:

     

    (i)  any
      misrepresentation or breach of a representation or warranty on the part of
      any
      Warrantor herein;

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (ii)  any
      nonfulfillment or breach of any covenant or agreement on the part of any Group
      Company, the Controlling Shareholder or any member of the Senior Manegement
      herein; or

     

    (iii)  any
      action, demand, proceeding, investigation or claim by any third party
      (including, without limitation, governmental agencies) against or affecting
      any
      Group Company and/or its Affiliates or Subsidiaries which, if successful, would
      give rise to or evidence the existence of or relate to a breach of (A) any
      of
      the representations or warranties at the time made or (B) covenants of such
      Group Company, the Controlling Shareholder or any member of the Senior
      Manegement.

     

    (b)  Notwithstanding
      the foregoing, and subject to the following sentence, upon judicial
      determination, which is final and no longer appealable, that the act or omission
      giving rise to the indemnification hereinabove provided resulted primarily
      out
      of or was based primarily upon the Indemnified Party’s gross negligence, fraud
      or willful misconduct (unless such action was based upon the Indemnified Party’s
      reliance in good faith upon any of the representations, warranties, covenants
      or
      promises made by any Warrantor herein) by the Indemnified Party, neither any
      Group Company nor the Controlling Shareholder shall be responsible for any
      Losses sought to be indemnified in connection therewith, and each Group Company
      and the Controlling Shareholder shall be entitled to recover from the
      Indemnified Party all amounts previously paid in full or partial satisfaction
      of
      such indemnity, together with all costs and expenses of such Group Company
      and
      the Controlling Shareholder reasonably incurred in effecting such recovery,
      if
      any.

     

    (c)  All
      indemnification rights hereunder shall survive indefinitely, regardless of
      any
      investigation, inquiry or examination made for or on behalf of, or any knowledge
      of Citadel and/or any of the other Indemnified Parties.

     

    (d)  The
      indemnity obligations that each Group Company and the Controlling Shareholder
      has under this Section shall be in addition to any liability that such Group
      Company and the Controlling Shareholder may otherwise have.

     

    8.  Miscellaneous.

     

    8.1  Termination.
      Except
      for Sections
      7
      and
8,
      which
      shall survive the termination of this Agreement, or as otherwise expressly
      provided herein, this Agreement will be automatically terminated with no further
      effect at such time that Citadel no longer holds at least the Alternative
      Minimum Holding.

     

    8.2  Specific
      Enforcement.
      Upon a
      breach by the Controlling Shareholder, any member of
      the
      Senior Management
      or any
      Group Company of this Agreement, in addition to any such damages as Citadel
      is
      entitled to, directly or indirectly, by reason of said breach, Citadel shall
      be
      entitled to injunctive relief against the Controlling Shareholder or such member
      of
      the
      Senior Management
      or such
      Group Company if such relief is applicable and available, as a remedy at law
      would be inadequate and insufficient. Nothing in this Section shall be construed
      as limiting Citadel’s remedies in any way.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    8.3  Notices.
      All
      notices, requests, consents and other communications hereunder shall be in
      writing and shall be personally delivered or delivered by overnight courier
      or
      mailed by first-class registered or certified mail, postage prepaid, return
      receipt requested, or by facsimile transmission. Every notice hereunder shall
      be
      deemed to have been duly given or served on the date on which personally
      delivered, with receipt acknowledged, upon transmission by facsimile and
      confirmed facsimile receipt, or two (2) days after the same shall have been
      deposited with a reputable international overnight courier.

     

    (a)  If
      to
      Citadel, at its address as set forth in the Notes Purchase Agreement, or at
      such
      other address as may have been furnished to the Company by it in
      writing.

     

    (b)  If
      to the
      Controlling Shareholder or any member of
      the
      Senior Management,
      at the
      address set forth on Schedule
      I
      to this
      Agreement, or at such other address as may have been furnished to the Company
      by
      it in writing.

     

    (c)  If
      to the
      Company at:

    Fushi
      International, Inc.

    1
      Shuang
      Qiang Road

    Jinzhou,
      Dalian

    People’s
      Republic of China 116100

    Fax:
      +86
      10 8447 8847

    Attention:
      Mr. Chris Wenbing Wang

    

     

    with
      a
      copy to:

    Guzov
      Ofsink, LLC

    600
      Madison Avenue

    New
      York,
      New York 10022

    Fax:
      +1
      212 688 7273

    Attention:
      Darren L. Ofsink, Esq.

     

    8.4  Amendments
      and Waiver.
      Unless
      otherwise specifically stated herein, any term of this Agreement may be amended
      with the written consent of the party against whom enforcement may be sought
      and
      the observance of any term of this Agreement may be waived (either generally
      or
      in a particular instance and either retroactively or prospectively) by the
      Company and the Controlling Shareholder, in the case of Citadel’s obligations,
      and by Citadel in the case of the obligations of any other parties hereto.
      No
      waivers of or exceptions to any term, condition or provision of this Agreement,
      in any one or more instances, shall be deemed to be, or construed as, a further
      or continuing waiver of any such term, condition or provision.

     

    8.5  Entire
      Agreement.
      This
      Agreement embodies the entire agreement and understanding between the parties
      hereto and supersedes all prior agreements and understandings relating to the
      subject matter hereof.

     

    8.6  Severability.
      The
      invalidity or unenforceability of any provision of this Agreement shall not
      affect the validity or enforceability of any other provisions of this Agreement
      to the extent permitted by law.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    8.7  Governing
      Law.
      This
      Agreement shall be governed by and construed in accordance with the laws of
      the
      State of New York. 

     

    8.8  Successors
      and Assigns.
      Except
      as otherwise provided herein, the terms and conditions of this Agreement shall
      be binding upon, and inure to the benefit of, the respective representatives,
      successors and assigns of the parties hereto. Unless otherwise provided herein,
      Citadel
      may
      assign its rights hereunder to any of
      its
      Affiliates
      (as
      defined below).
      For
      purposes of this Agreement, an “Affiliate”
shall
      refer to: (i) any Person directly or indirectly controlling, controlled by
      or
      under common control with another Person, (ii) any Person owning or controlling
      50% or more of the outstanding voting securities of such other Person, (iii)
      any
      officer, director or partner of such Person, (iv)
      a trust
      for the benefit of such Person referred to in the foregoing clause (ii) of
      this
      definition. 

     

    8.9  Counterparts.
      This
      Agreement may be executed in two or more counterparts, each of which shall
      be
      deemed an original, but all of which together shall constitute one and the
      same
      instrument.

     

    

     

    [THE
      REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]

     

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    IN
      WITNESS WHEREOF, the undersigned have executed this Investor Rights Agreement
      as
      of the day and year written above.

     

     

    
      	 	 	GROUP
              COMPANIES: 
	 	 	 
	 	 	Fushi International,
              Inc. 
	 	 	 
	 	 	By:
              __________________________  
	 	 	
              Name:  

            
	 	 	
              Title: 

            
	 	 	 
	 	 	Fushi Holdings,
              Inc. 
	 	 	 
	 	 	By:
              __________________________ 
	 	 	
              Name: 

            
	 	 	
              Title: 

            
	 	 	 
	 	 	Fushi International (Dalian)
              Bimetallic Cable Co., Ltd. 
	 	 	
              By:
                __________________________ 

            
	 	 	
              Name: 

            
	 	 	
              Title: 

            
	 	 	 
	 	 	Dalian Fushi Bimetallic Manufacturing
              Co., Ltd. 
	 	 	By:
              __________________________  
	 	 	
              Name:  

            
	 	 	
              Title: 

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

     

    
      	 	 	CONTROLLING SHAREHOLDER: 
	 	 	 
	 	 	By:
              ________________________  
	 	 	
              Mr.
                Fu Li, as Controlling
                Shareholder  

            
	 	 	 
	 	 	SENIOR MANAGEMENT: 
	 	 	 
	 	 	By:
              ________________________  
	 	 	Mr. Fu Li, as a member of the Senior
              Management  
	 	 	 
	 	 	By:
              ________________________ 
	 	 	
              Mr.
                Mathus Yang Yue  

            
	 	 	 
	 	 	By:
              ________________________ 
	 	 	
              Mr.
                Chris Wang
                Wenbing  

            

    

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Accepted
      and Agreed to:

     

    CITADEL
      EQUITY FUND LTD.

    

    By:
      Citadel Limited Partnership, its Portfolio Manager

    

    By:
      Citadel Investment Group, L.L.C., its General Partner

    

    By:_________________________________

    Name:
      

    Title:
      Authorized Signatory

     

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Schedule
      I

     

    Addresses
      of Controlling Shareholder and Senior Management:

     

    c/o
      Fushi
      International, Inc., 1 Shuang Qiang Road, Jinzhou, Dalian, People’s Republic of
      China 116100, Fax: +86 10 8447 8847

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