Document:

Exhibit
      10.1

    

    SECURITIES
      PURCHASE AGREEMENT

    

    Dated
      as of October 31, 2008

    

    among

    

    LIHUA
      INTERNATIONAL, INC.

    

    and

    

    THE
      PURCHASERS LISTED ON EXHIBIT A

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Table
      of
      Contents

    

    
      	 	 	
              Page

            
	 	 	 
	
              ARTICLE
                I

            	
              Purchase
                and Sale of Preferred Stock and Warrants

            	
              1

            
	 	 	 
	
              Section
                1.1

            	
              Purchase
                and Sale of Stock

            	
              1

            
	 	 	 
	
              Section
                1.2

            	
              Warrants

            	
              1

            
	 	 	 
	
              Section
                1.3

            	
              Conversion
                and Warrant Shares

            	
              1

            
	 	 	 
	
              Section
                1.4

            	
              Purchase
                Price and Closing

            	
              2

            
	 	 	 
	
              Section
                1.5

            	
              Share
                Exchange Transaction

            	
              2

            
	 	 	 
	
              ARTICLE
                II

            	
              Representations
                and Warranties

            	
              3

            
	 	 	 
	
              Section
                2.1

            	
              Representations
                and Warranties of the Company

            	
              3

            
	 	 	 
	
              Section
                2.2

            	
              Representations
                and Warranties of the Purchasers

            	
              19

            
	 	 	 
	
              ARTICLE
                III

            	
              Covenants

            	
              22

            
	 	 	 
	
              Section
                3.1

            	
              Securities
                Compliance

            	
              22

            
	 	 	 
	
              Section
                3.2

            	
              Registration
                and Listing

            	
              22

            
	 	 	 
	
              Section
                3.3

            	
              Inspection
                Rights

            	
              23

            
	 	 	 
	
              Section
                3.4

            	
              Compliance
                with Laws

            	
              23

            
	 	 	 
	
              Section
                3.5

            	
              Keeping
                of Records and Books of Account

            	
              23

            
	 	 	 
	
              Section
                3.6

            	
              Reporting
                Requirements

            	
              23

            
	 	 	 
	
              Section
                3.7

            	
              Amendments

            	
              24

            
	 	 	 
	
              Section
                3.8

            	
              Other
                Agreements

            	
              24

            
	 	 	 
	
              Section
                3.9

            	
              Distributions

            	
              24

            
	 	 	 
	
              Section
                3.10

            	
              Use
                of Proceeds

            	
              24

            
	 	 	 
	
              Section
                3.11

            	
              Reservation
                of Shares

            	
              24

            

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              Section
                3.12

            	
              Transfer
                Agent

            	
              24

            
	 	 	 
	
              Section
                3.13

            	
              Disposition
                of Assets

            	
              25

            
	 	 	 
	
              Section
                3.14

            	
              Reporting
                Status

            	
              25

            
	 	 	 
	
              Section
                3.15

            	
              Disclosure
                of Transaction

            	
              25

            
	 	 	 
	
              Section
                3.16

            	
              Disclosure
                of Material Information

            	
              26

            
	 	 	 
	
              Section
                3.17

            	
              Pledge
                of Securities

            	
              26

            
	 	 	 
	
              Section
                3.18

            	
              Lock-Up
                Agreements

            	
              26

            
	 	 	 
	
              Section
                3.19

            	
              Investor
                and Public Relations Escrow

            	
              27

            
	 	 	 
	
              Section
                3.20

            	
              DTC

            	
              27

            
	 	 	 
	
              Section
                3.21

            	
              Sarbanes-Oxley
                Act

            	
              27

            
	 	 	 
	
              Section
                3.22

            	
              Exchange
                Listing

            	
              27

            
	 	 	 
	
              Section
                3.23

            	
              Registered
                Capital of Lihua Copper

            	
              29

            
	 	 	 
	
              Section
                3.24 

            	
              Form
                D

            	
              29

            
	 	 	 
	
              Section
                3.25

            	
              No
                Integrated Offerings

            	
              29

            
	 	 	 
	
              Section
                3.26

            	
              No
                Commissions in Connection with Conversion of Preferred Shares
                

            	
              29

            
	 	 	 
	
              Section
                3.27

            	
              Financial
                Public Relations Firm and Appearances

            	
              29

            
	 	 	 
	
              Section
                3.28

            	
              Vice
                President of Investor Relations

            	
              30

            
	 	 	 
	
              Section
                3.29

            	
              Nasdaq
                Corporate Governance Requirements

            	
              30

            
	 	 	 
	
              Section
                3.30

            	
              Option
                Plan Restrictions

            	
              31

            
	 	 	 
	
              Section
                3.31

            	
              Change
                of Auditor

            	
              31

            
	 	 	 
	
              Section
                3.32

            	
              Internal
                Control Consultant

            	
              31

            
	 	 	 
	
              Section
                3.33

            	
              Observer
                Rights

            	
              32

            
	 	 	 
	
              Section
                3.34

            	
              Transactions
                with Related Parties

            	
              32

            

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              Section
                3.35

            	
              Environmental
                Authority Approval for Jiangsu Lihua Copper Industry Co.,
                Ltd.

            	
              32

            
	 	 	 
	
              Section
                3.36

            	
              Direct
                Lending

            	
              32

            
	 	 	 
	
              Section
                3.37

            	
              Comply
                with Relevant Employment Laws in PRC

            	
              33

            
	 	 	 
	
              Section
                3.38

            	
              Construction
                Works Planning Permit and Construction Works Execution Permit for
                Lihua
                Copper

            	
              33

            
	 	 	 
	
              Section
                3.39

            	
              Additional
                Agreements

            	
              34

            
	 	 	 
	
              Section
                3.40

            	
              No
                Manipulation of Price

            	
              34

            
	 	 	 
	
              Section
                3.41

            	
              Variable
                Securities

            	
              34

            
	 	 	 
	
              Section
                3.42

            	
              Additional
                Negative Covenants

            	
              34

            
	 	 	 
	
              Section
                3.43

            	
              Intellectual
                Property and Commercial and Trade Secrets

            	
              35

            
	 	 	 
	
              Section
                3.44

            	
              Payment
                of Stamp Tax

            	
              35

            
	 	 	 
	
              Section
                3.45

            	
              Filing
                of PRC Certificates

            	
              35

            
	 	 	 
	
              Section
                3.46

            	
              Lihua
                Copper Pay-Off Loan from Lihua Electron

            	
              35

            
	 	 	 
	
              Section
                3.47

            	
              Payment
                of Purchasers’ PRC Legal Counsel

            	
              35

            
	 	 	 
	
              ARTICLE
                IV

            	
              CONDITIONS

            	
              36

            
	 	 	 
	
              Section
                4.1

            	
              Conditions
                Precedent to the Obligation of the Company to Sell the
                Units

            	
              36

            
	 	 	 
	
              Section
                4.2

            	
              Conditions
                Precedent to the Obligation of the Purchasers to Purchase the
                Units

            	
              36

            
	 	 	 
	
              ARTICLE
                V

            	
              Stock
                Certificate Legend

            	
              40

            
	 	 	 
	
              Section
                5.1

            	
              Legend

            	
              40

            
	 	 	 
	
              ARTICLE
                VI

            	
              Indemnification

            	
              41

            
	 	 	 
	
              Section
                6.1

            	
              General
                Indemnity

            	
              41

            
	 	 	 
	
              Section
                6.2

            	
              Indemnification
                Procedure

            	
              42

            

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              ARTICLE
                VII

            	
              Miscellaneous

            	
              42

            
	 	 	 
	
              Section
                7.1

            	
              Fees
                and Expenses

            	
              42

            
	 	 	 
	
              Section
                7.2

            	
              Specific
                Enforcement, Consent to Jurisdiction

            	
              43

            
	 	 	 
	
              Section
                7.3

            	
              Entire
                Agreement; Amendment

            	
              44

            
	 	 	 
	
              Section
                7.4

            	
              Notices

            	
              44

            
	 	 	 
	
              Section
                7.5

            	
              Waivers

            	
              45

            
	 	 	 
	
              Section
                7.6

            	
              Headings

            	
              45

            
	 	 	 
	
              Section
                7.7

            	
              Successors
                and Assigns

            	
              45

            
	 	 	 
	
              Section
                7.8

            	
              No
                Third Party Beneficiaries

            	
              46

            
	 	 	 
	
              Section
                7.9

            	
              Governing
                Law

            	
              46

            
	 	 	 
	
              Section
                7.10

            	
              Survival

            	
              46

            
	 	 	 
	
              Section
                7.11

            	
              Counterparts

            	
              46

            
	 	 	 
	
              Section
                7.12

            	
              Publicity

            	
              46

            
	 	 	 
	
              Section
                7.13

            	
              Severability

            	
              46

            
	 	 	 
	
              Section
                7.14

            	
              Further
                Assurances

            	
              47

            
	 	 	 
	
              Section
                7.15

            	
              Currency

            	
              47

            
	 	 	 
	
              Section
                7.16

            	
              Judgment
                Currency

            	
              47

            
	 	 	 
	
              Section
                7.17

            	
              Termination

            	
              48

            
	 	 	 
	
              Exhibit
                A

            	
              List
                of Purchasers

            	 
	 	 	 
	
              Exhibit
                B

            	
              Form
                of Series A Warrant

            	 
	 	 	 
	
              Exhibit
                C

            	
              Form
                of Registration Rights Agreement

            	 
	 	 	 
	
              Exhibit
                D-1

            	
              Form
                of Lock-up Agreement for the PRC Shareholders

            	 
	 	 	 
	
              Exhibit
                D-2

            	
              Form
                of Lock-up Agreement for Original Shareholders

            	 

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              Exhibit
                D-3

            	
              Form
                of Lock-up Agreement for Magnify Wealth

            	 
	 	 	 
	
              Exhibit
                E-1

            	
              Form
                of Escrow General Agreement

            	 
	 	 	 
	
              Exhibit
                E-2

            	
              Form
                of Securities Escrow Agreement

            	 
	 	 	 
	
              Exhibit
                E-3

            	
              Form
                of Investor and Public Relations Escrow Agreement

            	 
	 	 	 
	
              Exhibit
                E-4

            	
              Form
                of Lihua Shareholder Escrow Agreement

            	 
	 	 	 
	
              Exhibit
                F

            	
              Series
                A Certificate of Designation

            	 
	 	 	 
	
              Exhibit
                G

            	
              Irrevocable
                Transfer Agent Instructions

            	 
	 	 	 
	
              Exhibit
                H

            	
              Form
                of Opinion of Counsel 

            	 

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    SECURITIES
      PURCHASE AGREEMENT

    

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

    

    The
      parties hereto agree as follows:

    

    ARTICLE
      I

    

    Purchase
      and Sale of Preferred Stock and Warrants

    

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

    

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

    

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

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

    

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

    

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

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    

    ARTICLE
      II

    

    Representations
      and Warranties

    

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

    

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

    

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

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    

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

    

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

    
      
        
        

      

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

    

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

    
      
        
        

      

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

    
      
        
        

      

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

    

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

    

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

    

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

    

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

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    

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

    

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

    

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

    

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

    

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

    
      
        
        

      

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

    

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

    

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

    
      
        
        

      

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

    

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

    

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

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    

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

    

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

    

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

    

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

    

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

    

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

    

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

    

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

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    

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

    

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

    

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

    

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

    

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

    

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

    

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

    

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

    

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

    

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

    

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

    
      
        
        

      

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

    

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

    

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

    

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

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    

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

    

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

    

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

    

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

    

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

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

    

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

    

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

    

    
      	 	
              (jj)

            	
              Additional
                PRC Representations and
                Warranties.

            

    

    

    (i) All
      material consents, approvals, authorizations or licenses requisite under PRC
      law
      for the due and proper establishment and operation of the Company’s subsidiaries
      doing business in the PRC (the “PRC
      Subsidiaries”)
      have
      been duly obtained from the relevant PRC governmental authorities and are in
      full force and effect.

     

    (ii) All
      filings and registrations with the PRC governmental authorities required in
      respect of the Company, Ally Profit and the PRC Subsidiaries and their capital
      structure and operations including, without limitation, to the extent
      applicable, tax bureau and customs authorities, have been duly completed in
      accordance with the relevant PRC rules and regulations, except where the failure
      to complete such filings and registrations does not, and would not, individually
      or in the aggregate, have a Material Adverse Effect. The Company and the
      Company’s subsidiaries have complied with all relevant PRC laws and regulations
      regarding the contribution and payment of the registered capital of the PRC
      Subsidiaries, the payment schedules of which have been approved by the relevant
      PRC governmental authorities. There are no outstanding rights of, or commitments
      made by the Company or any of its subsidiaries to sell any equity interests
      of
      any PRC Subsidiary.

     

    (iii) Neither
      the Company nor any subsidiary of the Company is in receipt of any letter or
      notice from any relevant PRC governmental or quasi-governmental authority
      notifying it of the revocation, or otherwise questioning the validity, of any
      licenses or qualifications issued to it or any subsidy granted to it by any
      PRC
      governmental authority, or the need for compliance or remedial actions in
      respect of the activities carried out by the Company or such
      subsidiary.

     

    (iv) The
      Company and the subsidiaries of the Company have conducted their respective
      business activities within their permitted scope of business or have otherwise
      operated their respective businesses in compliance with all relevant legal
      requirements and with all requisite licenses and approvals granted by competent
      PRC governmental authorities other than such non-compliance that do not, and
      would not, individually or in the aggregate, have a Material Adverse Effect.
      As
      to licenses, approvals and government grants and concessions requisite or
      material for the conduct of any part of the Company or any of its subsidiaries’
business which is subject to periodic renewal, neither the Company nor such
      subsidiary has any knowledge of any grounds on which such requisite renewals
      will not be granted by the relevant PRC governmental
      authorities.

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

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

    

    (vi) Each
      of
      the Company, the subsidiaries of the Company and their respective directors
      are
      aware of the content of the PRC Rules
      on Mergers and Acquisitions of Domestic Enterprises by Foreign
      Investors
      jointly
      promulgated by the Ministry of Commerce, the State Assets Supervision and
      Administration Commission, the State Tax Administration, the State
      Administration of Industry and Commerce, the China Securities Regulatory
      Commission (the “CSRC”)
      and
      the State Administration of Foreign Exchange of the PRC on August 8, 2006 (the
      “M&A
      Rules”),
      and,
      in particular, the relevant provisions thereof which purport to require offshore
      special purpose vehicles, or SPVs, formed for listing purposes and controlled
      directly or indirectly by PRC companies or individuals, to obtain the approval
      of the CSRC prior to the listing and trading of their securities on an overseas
      stock exchange. The Company has received legal advice specifically with respect
      to the M&A Rules from its PRC counsel to the effect that such approval
      requirements are not applicable to the Company or to the listing or quotation
      of
      the Company’s securities on any National Stock Exchange (as hereinafter defined
      in Section 3.22). 

     

    (vii) Other
      than as disclosed on Schedule
      2.1(jj)(vii),
      the
      Company and the subsidiaries have taken all necessary steps to comply with,
      and
      to ensure compliance by, each of their respective stockholders, option holders,
      directors, officers, and employees that are, or are directly or indirectly
      owned
      or controlled by, a PRC resident or citizen, with any applicable rules and
      regulations of the relevant PRC government agencies (including, without
      limitation, the Ministry of Commerce, National Development and Reform Commission
      and the State Administration of Foreign Exchange) relating to overseas
      investment by PRC residents and citizens or overseas listing by offshore special
      purpose vehicles controlled directly or indirectly by PRC companies and
      individuals (the “PRC
      Overseas Investment and Listing Regulations”),
      including, without limitation, ensuring that each such stockholder, option
      holder, director, officer and employee that is, or is directly or indirectly
      owned or controlled by, a PRC resident or citizen, complete any registration
      and
      other procedures required under applicable PRC Overseas Investment and Listing
      Regulations. 

    

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

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

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

    

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

    

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

    

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

    

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

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

    

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

    

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

    

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

    

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

    

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

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

    

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

    

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

    

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

    

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

    

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

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

    

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

    

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

    
      
        
        

      

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

    

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

    

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

    

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

    

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

    

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

    
      
        
        

      

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

    

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

     

    ARTICLE
      III

    

    Covenants

    

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

    

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

    

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

    
      
        
        

      

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

    

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

    

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

    

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

    

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

    

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

    
      
        
        

      

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

    

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

    

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

    

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

    

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

    

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

    

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

    
      
        
        

      

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

    

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

    

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

    
      
        
        

      

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

    

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

    

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

    
      
        
        

      

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

    

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

    

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

    

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

    
      
        
        

      

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

    

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

    

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

    

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

    
      
        
        

      

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

    

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

    

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

    

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

    

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

    
      
        
        

      

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

    

    Section
      3.29 Nasdaq
      Corporate Governance Requirements.
      As soon
      as possible, but no later than six (6) months after the Closing Date, the
      Company shall comply with all Nasdaq Corporate Governance standards, including,
      but not limited to, appointment of three (3) independent directors who are
      mutually acceptable to the Company, Vision Opportunity China and CMHJ and
      establishment of an audit committee of at least three (3) members (the
“Audit
      Committee”)
      that
      has adopted a formal written charter of the Audit Committee (the “Nasdaq
      Corporate Governance Requirements”).
      In
      the event that the Company fails to comply with the Nasdaq Corporate Governance
      Requirements within the time frame provided in this Section, the Company shall

      pay to each Purchaser, an amount in cash, as partial liquidated damages and
      not
      as a penalty, equal to 0.5% of the aggregate purchase price paid by such
      Purchaser pursuant to this Agreement on the date of the expiration of the six
      month period provided in this Section and an additional 0.5% of the aggregate
      purchase price paid for each thirty (30) day period that this Section is not
      complied with. Liquidated damages payable by the Company pursuant to this
      Section 3.29 shall be payable on the first (1st)
      business day of each thirty (30) day period that the terms of this Section
      are
      not complied with, provided, however, that such liquidated damages shall not
      exceed 10% of the aggregate purchase price paid by the Purchasers. Any
      liquidated damages payable under this Section 3.29 may be paid, upon the
      Purchaser’s request, from any cash held pursuant to the Investor and Public
      Relations Escrow Agreement. Notwithstanding the foregoing, Vision Opportunity
      China and CMHJ shall not unreasonably withhold approval of the independent
      directors identified by the Company, and if such approval is unreasonably
      withheld, the Company shall not be obligated to pay any liquidated damages
      under
      this Section 3.29.

    
      
        
        

      

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

    

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

    

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

    
      
        
        

      

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

    

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

    

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

    

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

    

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

    
      
        
        

      

      
        32

        
          

        

      

      
        
        

      

    

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

    

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

    

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

    

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

    

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

    

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

    
      
        
        

      

      
        33

        
          

        

      

      
        
        

      

    

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

    

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

    

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

    

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

    

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

    

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

    
      
        
        

      

      
        34

        
          

        

      

      
        
        

      

    

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

     

    (d) enter
      into any new agreement or make any amendment to any existing agreement, which
      by
      its terms would restrict the Company's performance of its obligations to holders
      of the Preferred Shares pursuant to this Agreement or any agreement contemplated
      hereby; or

     

    (e)
       enter
      into any agreement with any holder or prospective holder of any securities
      of
      the Company providing for the granting to such holder of registration rights,
      preemptive rights, special voting rights or protection against
      dilution.

    

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

    

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

    

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

    

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

    

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

    
      
        
        

      

      
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    ARTICLE
      IV

    

    CONDITIONS

    

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

    

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

    

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

    

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

    

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

    

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

    

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

    

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

    
      
        
        

      

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

    

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

    

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

    

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

    

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

    

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

    

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

    

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

    
      
        
        

      

      
        37

        
          

        

      

      
        
        

      

    

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

    

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

    

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

    

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

    

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

    

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

    

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

    

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

    

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

    
      
        
        

      

      
        38

        
          

        

      

      
        
        

      

    

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

    

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

    

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

    

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

    

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

    

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

    

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

    

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

    
      
        
        

      

      
        39

        
          

        

      

      
        
        

      

    

    ARTICLE
      V

    

    Stock
      Certificate Legend

    

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

    

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

    

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

    
      
        
        

      

      
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    ARTICLE
      VI

    

    Indemnification

    

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

    
      
        
        

      

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

     

    ARTICLE
      VII

    

    Miscellaneous

    

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

    
      
        
        

      

      
        42

        
          

        

      

      
        
        

      

    

    Section
      7.2 Specific
      Enforcement, Consent to Jurisdiction.

    

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

    

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

    
      
        
        

      

      
        43

        
          

        

      

      
        
        

      

    

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

    

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

    

    If
      to the
      Company:

    

    Lihua
      International, Inc.

    c/o
      Lihua
      Holdings Limited, 

    Houxiang
      Five Star Industry District

    Danyang
      City, Jiangsu Province, PRC

    Attention:
      Mr. Zhu Jianhua

    Tel.
      No.:86 511 8632 5621

    Fax
      No.:86 511 8631 2040

    

    with
      copies (which shall not constitute notice) to: 

    

    Loeb
      & Loeb LLP

    345
      Park
      Avenue

    New
      York,
      NY 10154 

    Attention:
      Mitchell S. Nussbaum, Esq.

    Tel.
      No.:
      (212) 407-4000

    Fax
      No.:
      (212) 407-4990

    
      
        
        

      

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

    

    with
      copies (which shall not constitute notice) to:

    

    Anslow
      & Jaclin LLP

    Attn.:
      Joseph M. Lucosky, Esq. 

    195
      Route
      9 South, Suite 204

    Manalapan,
      NJ 07726

    Tel.
      No.:
      (732) 409-1212

    Fax
      No:
      (732) 577-1188

    

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

    

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

    

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

    

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

    
      
        
        

      

      
        45

        
          

        

      

      
        
        

      

    

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

    

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

    

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

    

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

    

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

    

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

    
      
        
        

      

      
        46

        
          

        

      

      
        
        

      

    

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

    

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

    

    Section
      7.16 Judgment
      Currency.

    

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

    

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

    

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

    

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

    

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

    
      
        
        

      

      
        47

        
          

        

      

      
        
        

      

    

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

    

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

    

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

    

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

    

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

    

    [REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK]

    
      
        
        

      

      
        48

        
          

        

      

      
        
        

      

    

    [SIGNATURE
      PAGE TO STOCK PURCHASE AGREEMENT]

    

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

    

    
      	 	
              LIHUA
                INTERNATIONAL, INC.

            
	 	 
	
              By:

            	
              /s/
                Zhu
                Jianhua

            
	 	
              Name:
                Zhu Jianhua

              Title:
                Chief Executive Officer and
                President

            

    

    
      
        
        

      

      
        49

        
          

        

      

      
        
        

      

    

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

    

    
      	 	
              PURCHASER

            
	 	 
	 	
              [                      
                ]

            
	 	 	 
	 	
              By:

            	  

	 	 
	 	
              Name:

            
	 	 	
              Title:

            
	 	 	 
	 	
              Number
                of Units:

              Aggregate
                Purchase Price: $

            

    

    
      
        
        

      

      
        50

        
          

        

      

      
        
        

      

    

    EXHIBIT
      A TO THE

    SECURITIES
      PURCHASE AGREEMENT

    

    
      
        

      

    

    

    LIST
      OF PURCHASERS

    
      
        
        

      

      
        51

        
          

        

      

      
        
        

      

    

    EXHIBIT
      B TO THE

    SECURITIES
      PURCHASE AGREEMENT

    
      

      
        
          

        

      

       

    

    FORM
      OF SERIES A WARRANT

    
      
        
        

      

      
        52

        
          

        

      

      
        
        

      

    

    EXHIBIT
      C TO THE

    SECURITIES
      PURCHASE AGREEMENT

    
      

      
        
          

        

         

      

    

    FORM
      OF REGISTRATION RIGHTS AGREEMENT

    
      
        
        

      

      
        53

        
          

        

      

      
        
        

      

    

    

      

      

      

      

      

      

      

      

      

      

      

    

    
      
        
        

      

      
        54

        
          

        

      

      
        
        

      

    

    
      

        

        

        

        

        

        

        

        

        

        

      

      
        
          
          

        

        
          55

          
            

          

        

        
          
          

        

      

    EXHIBIT
      D-3 TO THE

    SECURITIES
      PURCHASE AGREEMENT

    
      

      
        
          

        

      

       

    

    FORM
      OF LOCK-UP AGREEMENT FOR MAGNIFY WEALTH

    
      
        
        

      

      
        56

        
          

        

      

      
        
        

      

    

    EXHIBIT
      E-1 TO THE

    SECURITIES
      PURCHASE AGREEMENT

    
      

      
        
          

        

      

      
FORM
        OF ESCROW GENERAL AGREEMENT

    

    
      
        
        

      

      
        57

        
          

        

      

      
        
        

      

    

    EXHIBIT
      E-2 TO THE

    SECURITIES
      PURCHASE AGREEMENT

    
      

      
        
          

        

      

       

    

    FORM
      OF SECURITIES ESCROW AGREEMENT

    
      
        
        

      

      
        58

        
          

        

      

      
        
        

      

    

    EXHIBIT
      E-3 TO THE

    SECURITIES
      PURCHASE AGREEMENT

    
      

      
        
          

        

      

      
FORM
        OF INVESTOR AND PUBLIC RELATIONS ESCROW
        AGREEMENT

    

    
      
        
        

      

      
        59

        
          

        

      

      
        
        

      

    

    EXHIBIT
      E-4 TO THE

    SECURITIES
      PURCHASE AGREEMENT

    
      

      
        
          

        

      

      
FORM
        OF LIHUA SHAREHOLDER ESCROW AGREEMENT

    

    
      
        
        

      

      
        60

        
          

        

      

      
        
        

      

    

    EXHIBIT
      F TO THE

    SECURITIES
      PURCHASE AGREEMENT

    
      

      
        
          

        

      

      
SERIES
        A CERTIFICATE OF DESIGNATION

    

    
      
        
        

      

      
        61

        
          

        

      

      
        
        

      

    

    

    
      
        
        

      

      
        62

        
          

        

      

      
        
        

      

    

    EXHIBIT
      H TO THE

    SECURITIES
      PURCHASE AGREEMENT

    
      

      
        
          

        

      

      
FORM
        OF OPINION OF COUNSEL

    

    

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

    

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

    

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

    

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

    

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

    
      
        
        

      

      
        63

        
          

        

      

      
        
        

      

    

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

    

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

    

    Very
      truly yours,

    
      
        
        

      

      
        64Exhibit
      10.2

    REGISTRATION
      RIGHTS AGREEMENT

    

    This
      Registration Rights Agreement (this “Agreement”)
      is
      made and entered into as of October 31, 2008, by and among Lihua International.
      Inc., a Delaware corporation (the “Company”)
      and
      each of the several purchasers signatory hereto (each such purchaser, a
“Purchaser”
and,
      collectively, the “Purchasers”).

    

    This
      Agreement is being entered into pursuant to the Securities Purchase Agreement,
      dated as of the date hereof, between the Company and each Purchaser (the
“Purchase
      Agreement”).

    

    The
      Company and each Purchaser hereby agrees as follows:

    

    1.
       Definitions

     

    Capitalized
      terms used and not otherwise defined herein that are defined in the Purchase
      Agreement shall have the meanings given such terms in the Purchase
      Agreement.
      As used
      in this Agreement, the following terms shall have the following
      meanings:

    

    “Advice”
shall
      have the meaning set forth in Section 6(d).

    

    “Broadband
      Warrants”
means
      the warrants to purchase up to 250,000 shares of Common Stock in the aggregate
      issued by the Company to Broadband Capital Management LLC, as placement agent,
      and/or its employees. 

    

    “Commission”
means
      the Securities and Exchange Commission. 

     

    “Common
      Stock”
means
      the Common Stock, $0.0001 par value per share, of the Company and any other
      Common Stock into which such stock may hereafter be changed. 

    

    “Conversion
      Shares”
means
      the shares of Common Stock issuable upon conversion of outstanding shares of
      Preferred Shares.

    

    “Demand
      Notice”
shall
      have the meaning set forth in Section 2A(a).

    

    “Effectiveness
      Date”
means,
      with respect to the Initial Registration Statement required to be filed
      hereunder, the 150th
      calendar
      day following the date hereof (or, in the event the Company receives a “full
      review” of its Initial Registration Statement by the Commission, the
      180th
      calendar
      day following the date hereof) and with respect to any additional Registration
      Statements which may be required pursuant to Section 3(c) or 2A, the
      60th
      calendar
      day following the date on which an additional Registration Statement is required
      to be filed hereunder; provided,
      however,
      that in
      the event the Company is notified by the Commission that one or more of the
      above Registration Statements will not be reviewed or is no longer subject
      to
      further review and comments, the Effectiveness Date as to such Registration
      Statement shall be the fifth Trading Day following the date on which the Company
      is so notified if such date precedes the dates otherwise required
      above.

    

    “Effectiveness
      Period”
shall
      have the meaning set forth in Section 2(a).

    

    “Event”
shall
      have the meaning set forth in Section 2(b).

    

    “Event
      Date”
shall
      have the meaning set forth in Section 2(b).

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

    “Filing
      Date”
means,
      with respect to the Initial Registration Statement required hereunder, the
      45th
      calendar
      day following the date hereof and, with respect to any additional Registration
      Statements which may be required pursuant to Section 3(c), the earliest
      practical date on which the Company is permitted by SEC Guidance to file such
      additional Registration Statement related to the Registrable
      Securities.

    

    “Holder”
or
      “Holders”
means
      the holder or holders, as the case may be, from time to time of Registrable
      Securities.

    

    “Indemnified
      Party”
shall
      have the meaning set forth in Section 5(c).

    

    “Indemnifying
      Party”
shall
      have the meaning set forth in Section 5(c).

    

    “Initial
      Registration Statement”
means
      the initial Registration Statement covering the Registrable Securities filed
      pursuant to Section 2(a) of this Agreement.

    

    “Initiating
      Purchasers”
shall
      have the meaning set forth in Section 2A(a).

    

    “Original
      Shareholders”
means
      Michael Rapp, Philip Wagenheim. Clifford Chapman, Penumbra Worldwide LTD.,
      Gerald Scott Klayman, Charles Allen, Ari Raskas, Jeff Appel and Corby
      Hocker.

     

    “Listing
      Penalty and Escrow Securities”
shall
      have the meaning set forth in Section 2A(a).

    

    “Losses”
shall
      have the meaning set forth in Section 5(a).

    

    “National
      Stock Exchange”
means,
      the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select
      Market, the American Stock Exchange or the New York Stock Exchange.

    

    “Penumbra
      Warrants”
means
      the warrants to purchase 250,000shares of Common Stock issued by the Company
      to
      Penumbra Worldwide Ltd. and/or its employees. 

    

    "Person"
      means
      an individual or a corporation, partnership, trust, incorporated or
      unincorporated association, joint venture, limited liability company, joint
      stock company, government (or an agency or political subdivision thereof) or
      other entity of any kind.

    

    “Plan
      of Distribution”
shall
      have the meaning set forth in Section 2(a). 

    

    “Preferred
      Shares”
means
      shares of the Company’s Series A Convertible Preferred Stock, par value $0.0001
      per share, purchased by the Purchasers pursuant to the Purchase Agreement.
      

    

    "Proceeding"
      means
      an action, claim, suit, investigation or proceeding (including, without
      limitation, an informal investigation or partial proceeding, such as a
      deposition), whether commenced or threatened.

    

    “Prospectus”
means
      the prospectus included in a Registration Statement (including, without
      limitation, a prospectus that includes any information previously omitted from
      a
      prospectus filed as part of an effective registration statement in reliance
      upon
      Rule 430A promulgated by the Commission pursuant to the Securities Act), as
      amended or supplemented by any prospectus supplement, with respect to the terms
      of the offering of any portion of the Registrable Securities covered by a
      Registration Statement, and all other amendments and supplements to the
      Prospectus, including post-effective amendments, and all material incorporated
      by reference or deemed to be incorporated by reference in such
      Prospectus.

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    “Registrable
      Securities”
means
      (a) all of the Conversion Shares, (b) all Warrant Shares, (c) any additional
      shares of Common Stock issuable in connection with any anti-dilution provisions
      in the Series A Certificate of Designation or the Warrants, (d) the shares
      of
      Common Stock underlying the Broadband Warrants; (e) the shares of Common Stock
      underlying the Penumbra Warrants; (f) the shares of Common Stock owned by the
      Original Shareholders; (g) any securities issued or issuable upon any stock
      split, dividend or other distribution, recapitalization or similar event with
      respect to the foregoing; and (h), in the event that a Demand Notice is
      delivered to the Company to register the Listing Penalty and Escrow Securities
      disbursed to the purchasers, such Listing Penalty and Escrow Securities shall
      be
      considered Registrable Securities. 

    

    “Registration
      Statement”
means
      any registration statement required to be filed hereunder pursuant to Section
      2(a) and any additional registration statements contemplated by Section 3(c),
      including (in each case) the Prospectus, amendments and supplements to any
      such
      registration statement or Prospectus, including pre- and post-effective
      amendments, all exhibits thereto, and all material incorporated by reference
      or
      deemed to be incorporated by reference in any such registration
      statement.

    

    “Rule
      415”
means
      Rule 415 promulgated by the Commission pursuant to the Securities Act, as such
      Rule may be amended or interpreted from time to time, or any similar rule or
      regulation hereafter adopted by the Commission having substantially the same
      purpose and effect as such Rule.

    

    “Rule
      424”
means
      Rule 424 promulgated by the Commission pursuant to the Securities Act, as such
      Rule may be amended or interpreted from time to time, or any similar rule or
      regulation hereafter adopted by the Commission having substantially the same
      purpose and effect as such Rule.

    

    “SEC
      Guidance”
means
      (i) any publicly-available written or oral guidance, comments, requirements
      or
      requests of the Commission staff, including the SEC’s Manual of Publicly
      Available Telephone Interpretations D.29, and (ii) the Securities
      Act.

     

    “Trading
      Day”
means
      (a) a day on which the Common Stock is traded on a National Stock Exchange,
      or
      (b) if the Common Stock is not traded on a National Stock Exchange, a day on
      which the Common Stock is quoted in the over-the-counter market as reported
      by
      the National Quotation Bureau Incorporated (or any similar organization or
      agency succeeding its functions of reporting prices); provided,
      however
      , that
      in the event that the Common Stock is not listed or quoted as set forth in
      (a)
      or (b) hereof, then Trading Day shall mean any day except Saturday, Sunday
      and
      any day which shall be a legal holiday or a day on which banking institutions
      in
      the State of New York are authorized or required by law or other government
      action to close.

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    2.
       Shelf
      Registration

    

    (a)  On
      or
      prior to each Filing Date, the Company shall prepare and file with the
      Commission a Registration Statement covering the resale of all of the
      Registrable Securities that are not then registered on an effective Registration
      Statement for an offering to be made on a continuous basis. Each Registration
      Statement filed hereunder shall be on Form S-3 (except if the Company is not
      then eligible to register for resale the Registrable Securities on Form S-3,
      in
      which case such registration shall be on another appropriate form in accordance
      herewith) and shall contain (unless otherwise directed by at least an 85%
      majority in interest of the Holders) substantially the “Plan
      of Distribution”
      attached hereto as Annex
      A.
      In the
      event that the Commission does not permit the Company to register in any
      Registration Statement all of the Registrable Securities pursuant to Rule 415,
      the Company shall amend such Registration Statement to register such maximum
      portion as permitted by SEC Guidance (provided that the Company shall use
      diligent efforts to advocate with the Commission for the registration of all
      of
      the Registrable Securities in accordance with the SEC Guidance, including
      without limitation, the Manual of Publicly Available Telephone Interpretations
      D.29) that are not then registered on an effective Registration Statement.
      Subject to the terms of this Agreement, the Company shall use its best efforts
      to cause a Registration Statement to be declared effective under the Securities
      Act as promptly as possible after the filing thereof, but in any event prior
      to
      the applicable Effectiveness Date, and shall use its best efforts to keep such
      Registration Statement continuously effective under the Securities Act until
      all
      Registrable Securities covered by such Registration Statement have been sold,
      or
      may be sold without volume or manner-of-sale restrictions pursuant to Rule
      144
      and, without the requirement for the Company to be in compliance with the
      current public information requirement under Rule 144, as determined by the
      counsel to the Company pursuant to a written opinion letter to such effect,
      addressed and acceptable to the Transfer Agent and the affected Holders (the
      “Effectiveness
      Period”).
      The
      Company shall submit a request for acceleration of effectiveness of a
      Registration Statement as of 5:00 p.m. New York City time on or before the
      fifth
      Trading Day following the Commission’s notice to the Company that the Commission
      will not be reviewing the Registration Statement. The Company shall immediately
      notify the Holders by e-mail of the effectiveness of a Registration Statement
      on
      the same Trading Day that the Company telephonically confirms effectiveness
      with
      the Commission. The Company shall, by 9:30 a.m. New York City time on the
      Trading Day after the effective date of such Registration Statement, file a
      final Prospectus with the Commission as required by Rule 424. Failure to so
      notify the Holders within one (1) Trading Day of such notification of
      effectiveness or failure to file a final Prospectus as foresaid shall be deemed
      an Event under Section 2(b). Notwithstanding any other provision of this
      Agreement and subject to the payment of liquidated damages pursuant to Section
      2(b)(iii), if any SEC Guidance sets forth a limitation on the number of
      Registrable Securities permitted to be registered on a particular Registration
      Statement (and notwithstanding that the Company used diligent efforts to
      advocate with the Commission for the registration of all or a greater portion
      of
      Registrable Securities), unless otherwise directed in writing by a Holder as
      to
      its Registrable Securities, the number of Registrable Securities to be
      registered on such Registration Statement will be reduced in the following
      order
      (1) by the total number of shares underlying the Broadband Warrants and the
      Penumbra Warrants, on a pro-rata basis, (2) by the shares of Common Stock owned
      by the Original Shareholders, on a pro-rata basis, and (3) pro-rata among all
      other Holders, and unless otherwise directed in writing by a Holder as to its
      Registrable Securities, the number of Registrable Securities to be registered
      on
      such Registration Statement will first be reduced by Registrable Securities
      represented by the Warrant Shares (applied, in the case that some Warrant Shares
      may already be registered, to the Holders on a pro rata basis based on the
      total
      number of unregistered Warrant Shares held by such Holders), and second by
      Registrable Securities represented by the Conversion Shares (applied, in the
      case that some Conversion Shares may already be registered, to the Holders
      on a
      pro rata basis based on the total number of unregistered Shares held by such
      Holders).

    
      
        
        

      

      
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    (b)  If:
      (i)
      the Initial Registration Statement is not filed on or prior to its Filing Date
      (or if the Company files the Initial Registration Statement without affording
      the Holders the opportunity to review and comment on the same as required by
      Section 3(a) herein, the Company shall be deemed to have not satisfied this
      clause (i)), or (ii) the Company fails to file with the Commission a request
      for
      acceleration of a Registration Statement in accordance with Rule 461 promulgated
      by the Commission pursuant to the Securities Act, within five Trading Days
      of
      the date that the Company is notified (orally or in writing, whichever is
      earlier) by the Commission that such Registration Statement will not be
“reviewed” or will not be subject to further review, or (iii) prior to the
      Effectiveness Date of a Registration Statement, the Company fails to file a
      pre-effective amendment and otherwise respond in writing to comments made by
      the
      Commission in respect of such Registration Statement within 15 calendar days
      after the receipt of comments by or notice from the Commission that such
      amendment is required in order for such Registration Statement to be declared
      effective, or (iv) the Registration Statement registering for resale all of
      the
      Registrable Securities is not declared effective by the Commission by the
      Effectiveness Date of the Initial Registration Statement, or (v) after the
      effective date of a Registration Statement, such Registration Statement ceases
      for any reason to remain continuously effective as to all Registrable Securities
      included in such Registration Statement, or the Holders are otherwise not
      permitted to utilize the Prospectus therein to resell such Registrable
      Securities (subject to the periods set forth in Section 3(k)), for more than
      15
      consecutive calendar days or more than an aggregate of 20 calendar days (which
      need not be consecutive calendar days) during any 12-month period, or (vi)
      the
      Company shall fail for any reason to satisfy the current public information
      requirement under Rule 144 as to the applicable Registrable Securities, or
      (vii)
      if, after twelve months from the date hereof or such earlier time that the
      Company’s Common Stock is quoted or listed and trading on a National Stock
      Exchange, the Common Stock fails to be quoted or is delisted from a National
      Stock Exchange for any reason for more than three (3) Trading Days in the
      aggregate (any such failure or breach being referred to as an “Event”,
      and
      for purposes of clauses (i), (iv), (vi) and (vii), the date on which such Event
      occurs, and for purpose of clause (ii) the date on which such fifth Trading
      Day
      is exceeded, and for the purpose of clause (iii) the date which such 15 calendar
      day period is exceeded, and for purpose of clause (v) the date on which such
      15
      or 20 calendar day period, as applicable, is exceeded being referred to as
      “Event
      Date”),
      then,
      in addition to any other rights the Holders may have hereunder or under
      applicable law, on each such Event Date and on each monthly anniversary of
      each
      such Event Date (if the applicable Event shall not have been cured by such
      date)
      until the applicable Event is cured, the Company shall pay to each Holder;
      provided that such Holder (or any successor or assign) is still a beneficial
      owner of the Preferred Shares, Conversion Shares, Warrants, or Warrant Shares,
      an amount in cash, as partial liquidated damages and not as a penalty, equal
      to
      1.0% of the aggregate purchase price paid by such Holder pursuant to the
      Purchase Agreement for any unregistered Registrable Securities then held by
      such
      Holder. Liquidated damages payable by the Company pursuant to this Section
      2
      shall be payable on an Event Date and the first (1st)
      Trading
      Day of each thirty (30) day period following an Event Date, provided,
      however,
      that
      such liquidated damages shall not exceed 10% of the aggregate purchase price
      paid by the Holders. The parties agree that the Company shall not be liable
      for
      liquidated damages under this Agreement with respect to any Registrable
      Securities that the Company was not permitted to include on such Registration
      Statement due solely to the Commission’s application of Rule 415. If the Company
      fails to pay any partial liquidated damages pursuant to this Section in full
      within seven days after the date payable, the Company will pay interest thereon
      at a rate of 18% per annum (or such lesser maximum amount that is permitted
      to
      be paid by applicable law) to the Holder, accruing daily from the date such
      partial liquidated damages are due until such amounts, plus all such interest
      thereon, are paid in full. The partial liquidated damages pursuant to the terms
      hereof shall apply on a daily pro rata basis for any portion of a month prior
      to
      the cure of an Event.

     

    
      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

    2A.
      Demand
      Registrations.

    

    (a)
      At
      any time following the date on which all Registrable Securities have been
      registered for resale pursuant to Section 2 hereof, a Purchaser or Purchasers
      owning, in the aggregate, at least a 50% majority in interest (the “Initiating
      Purchasers”)
      of the
      Listing Penalty Shares (as defined in the Securities Purchase Agreement) or
      the
      Escrow Shares (as defined in the Securities Escrow Agreement) (collectively,
      the
“Listing
      Penalty and Escrow Securities”)
      may
      request that the Company file a Registration Statement providing for the resale
      of all Listing Penalty and Escrow Securities then held by the Initiating
      Purchasers by giving written notice to the Company (the “Demand
      Notice”).
      The
      Demand Notice shall describe the number of Listing Penalty and Escrow Securities
      intended to be disposed of and the intended method of disposition. The Company
      shall then prepare and file with the Commission a “resale” Registration
      Statement providing for the resale of all Listing Penalty and Escrow Securities
      included in the Demand Notice for an offering to be made on a continuous basis
      pursuant to Rule 415. Each such Registration Statement shall cover to the extent
      allowable under the Securities Act and the rules promulgated thereunder
      (including Rules 415 and 416), such indeterminate number of additional shares
      of
      Common Stock resulting from stock splits, stock dividends or similar
      transactions with respect to the Listing Penalty and Escrow Securities. The
      Company shall (i) not permit any securities other than the Listing Penalty
      and
      Escrow Securities and any other unregistered Registrable Securities to be
      included in any such Registration Statement, provided that such securities
      shall
      be registered in accordance with the cutback provisions in Section 2(a) above;
      and (ii) use its reasonable best efforts to cause any such Registration
      Statement to be declared effective under the Securities Act as promptly as
      possible after the filing thereof, but in any event prior to the applicable
      Effectiveness Date, and to keep any such Registration Statement continuously
      effective under the Securities Act until such date as is the earlier of: (x)
      the
      date when all Registrable Securities covered by such Registration Statement
      have
      been sold; or (y) the date on which the Listing Penalty and Escrow Securities
      may be sold without any restriction pursuant to Rule 144 as determined by the
      counsel to the Company pursuant to a written opinion letter, addressed to the
      Company’s transfer agent to such effect. 

     

    (b)
      In
      the event that the Company is unable to register for resale under Rule 415
      of
      Regulation C under the Securities Act all of the Listing Penalty and Escrow
      Securities on any of the Registration Statements that it has agreed to file
      pursuant to the first sentence of Section 2A(a) due to limits imposed by the
      Commission’s interpretation of Rule 415 of Regulation C under the Securities
      Act, the Company will file a Registration Statement under the Securities Act
      with the Commission covering the resale by the Purchasers of such lesser amount
      of the Listing Penalty and Escrow Securities as the Company is able to register
      pursuant to the Commission’s interpretation of Rule 415 of Regulation C under
      the Securities Act and use its reasonable best efforts to have such Registration
      Statement become effective as promptly as possible, and, when permitted to
      do so
      by the Commission, to file subsequent registration statement(s) under the
      Securities Act with the Commission covering the resale of any Listing Penalty
      and Escrow Securities that were omitted from its prior Registration Statements
      filed with the Commission pursuant to this Section 2A(b) and use its reasonable
      best efforts to have such registration declared effective as promptly as
      possible. In furtherance of the Company’s obligations set forth in the preceding
      sentence, the parties hereby agree that in the event that any Purchaser shall
      deliver to the Company a written notice at any time after the later of: (x)
      the
      date which is six months after the effectiveness date of the most recent
      registration statement filed pursuant to Section 2A hereof; or (y) the date
      on
      which all Listing Penalty and Escrow Securities registered on all of the prior
      Registration Statements filed pursuant to Section 2A hereof are sold, that
      the
      Company shall file, within 30 days following the date receipt of such written
      notice, an additional Registration Statement registering any Listing Penalty
      and
      Escrow Securities that were the subject of the applicable Demand Notice that
      were omitted from such Registration Statement.

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    3.
       Registration
      Procedures.

    

    In
      connection with the Company’s registration obligations hereunder, the Company
      shall:

    

    (a)  Not
      less
      than three (3) Trading Days prior to the filing of each Registration Statement
      and not less than one (1) Trading Day prior to the filing of any related
      Prospectus or any amendment or supplement thereto (including any document that
      would be incorporated or deemed to be incorporated therein by reference), the
      Company shall (i) furnish to each Holder copies of all such documents proposed
      to be filed, which documents (other than those incorporated or deemed to be
      incorporated by reference) will be subject to the review of such Holders, and
      (ii) cause its officers and directors, counsel and independent registered public
      accountants to respond to such inquiries as shall be necessary, in the
      reasonable opinion of respective counsel to each Holder, to conduct a reasonable
      investigation within the meaning of the Securities Act. The Company shall not
      file a Registration Statement or any such Prospectus or any amendments or
      supplements thereto to which the Holders of a majority of the Registrable
      Securities shall reasonably object in good faith, provided that, the Company
      is
      notified of such objection in writing no later than three (3) Trading Days
      after
      the Holders have been so furnished copies of a Registration Statement or one
      (1)
      Trading Day after the Holders have been so furnished copies of any related
      Prospectus or amendments or supplements thereto. 

     

    (b)  (i)
      Prepare and file with the Commission such amendments, including post-effective
      amendments, to a Registration Statement and the Prospectus used in connection
      therewith as may be necessary to keep a Registration Statement continuously
      effective as to the applicable Registrable Securities for the Effectiveness
      Period and prepare and file with the Commission such additional Registration
      Statements in order to register for resale under the Securities Act all of
      the
      Registrable Securities, (ii) cause the related Prospectus to be amended or
      supplemented by any required Prospectus supplement (subject to the terms of
      this
      Agreement), and, as so supplemented or amended, to be filed pursuant to Rule
      424, (iii) respond as promptly as reasonably possible to any comments received
      from the Commission with respect to a Registration Statement or any amendment
      thereto and provide as promptly as reasonably possible to the Holders true
      and
      complete copies of all correspondence from and to the Commission relating to
      a
      Registration Statement (provided that, the Company may excise any information
      contained therein which would constitute material non-public information as
      to
      any Holder which has not executed a confidentiality agreement with the Company),
      and (iv) comply in all material respects with the provisions of the Securities
      Act and the Exchange Act with respect to the disposition of all Registrable
      Securities covered by a Registration Statement during the applicable period
      in
      accordance (subject to the terms of this Agreement) with the intended methods
      of
      disposition by the Holders thereof set forth in such Registration Statement
      as
      so amended or in such Prospectus as so supplemented.

    

    (c)  If
      the
      number of Registrable Securities at any time exceeds 100% of the number of
      shares of Common Stock then registered in a Registration Statement, then the
      Company shall file as soon as reasonably practicable, but in any case prior
      to
      the applicable Filing Date, an additional Registration Statement covering the
      resale by the Holders of not less than the number of such Registrable Securities
      which are not then registered. If at any time prior to the filing of an
      additional Registration Statement a Demand Notice is delivered to the Company
      to
      file the Listing Penalty and Escrow Securities, then such additional
      Registration Statement shall also include the Listing Penalty and Escrow
      Securities.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    (d)  Notify
      the Holders of Registrable Securities to be sold (which notice shall, pursuant
      to clauses (iii) through (vi) hereof, be accompanied by an instruction to
      suspend the use of the Prospectus until the requisite changes have been made)
      as
      promptly as reasonably possible (and, in the case of (i)(A) below, not less
      than
      one Trading Day prior to such filing) and (if requested by any such Person)
      confirm such notice in writing no later than one Trading Day following the
      day
      (i)(A) when a Prospectus or any Prospectus supplement or post-effective
      amendment to a Registration Statement is proposed to be filed, (B) when the
      Commission notifies the Company whether there will be a “review” of such
      Registration Statement and whenever the Commission comments in writing on such
      Registration Statement, and (C) with respect to a Registration Statement or
      any
      post-effective amendment, when the same has become effective, (ii) of any
      request by the Commission or any other federal or state governmental authority
      for amendments or supplements to a Registration Statement or Prospectus or for
      additional information, (iii) of the issuance by the Commission or any other
      federal or state governmental authority of any stop order suspending the
      effectiveness of a Registration Statement covering any or all of the Registrable
      Securities or the initiation of any Proceedings for that purpose; (iv) of the
      receipt by the Company of any notification with respect to the suspension of
      the
      qualification or exemption from qualification of any of the Registrable
      Securities for sale in any jurisdiction, or the initiation or threatening of
      any
      Proceeding for such purpose, (v) of the occurrence of any event or passage
      of
      time that makes the financial statements included in a Registration Statement
      ineligible for inclusion therein or any statement made in a Registration
      Statement or Prospectus or any document incorporated or deemed to be
      incorporated therein by reference untrue in any material respect or that
      requires any revisions to a Registration Statement, Prospectus or other
      documents so that, in the case of a Registration Statement or the Prospectus,
      as
      the case may be, it will not contain any untrue statement of a material fact
      or
      omit to state any material fact required to be stated therein or necessary
      to
      make the statements therein, in light of the circumstances under which they
      were
      made, not misleading and (vi) of the occurrence or existence of any pending
      corporate development with respect to the Company that the Company believes
      may
      be material and that, in the determination of the Company, makes it not in
      the
      best interest of the Company to allow continued availability of a Registration
      Statement or Prospectus, provided that, any and all of such information shall
      remain confidential to each Holder until such information otherwise becomes
      public, unless disclosure by a Holder is required by law; provided,
      further,
      that
      notwithstanding each Holder’s agreement to keep such information confidential,
      each such Holder makes no acknowledgement that any such information is material,
      non-public information.

     

    (e)  Use
      its
      best efforts to avoid the issuance of, or, if issued, obtain the withdrawal
      of
      (i) any order stopping or suspending the effectiveness of a Registration
      Statement, or (ii) any suspension of the qualification (or exemption from
      qualification) of any of the Registrable Securities for sale in any
      jurisdiction, at the earliest practicable moment.

     

    (f)  Furnish
      to each Holder, without charge, at least one conformed copy of each such
      Registration Statement and each amendment thereto, including financial
      statements and schedules, all documents incorporated or deemed to be
      incorporated therein by reference to the extent requested by such Person, and
      all exhibits to the extent requested by such Person (including those previously
      furnished or incorporated by reference) promptly after the filing of such
      documents with the Commission; provided,
      that
      any such item which is available on the EDGAR system need not be furnished
      in
      physical form.

     

    (g)  Subject
      to the terms of this Agreement, the Company hereby consents to the use of such
      Prospectus and each amendment or supplement thereto by each of the selling
      Holders in connection with the offering and sale of the Registrable Securities
      covered by such Prospectus and any amendment or supplement thereto, except
      after
      the giving of any notice pursuant to Section 3(d).

     

    (h)  
      The
      Company shall cooperate with any broker-dealer through which a Holder proposes
      to resell its Registrable Securities in effecting a filing with the FINRA
      Corporate Financing Department pursuant to NASD Rule 2710, as requested by
      any
      such Holder, and the Company shall pay the filing fee required by such filing
      within two (2) Trading Days of request therefor.

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    (i)  Prior
      to
      any resale of Registrable Securities by a Holder, the Company shall use its
      commercially reasonable efforts to register or qualify or cooperate with the
      selling Holders in connection with the registration or qualification (or
      exemption from the registration or qualification) of such Registrable Securities
      for the resale by the Holder under the securities or Blue Sky laws of such
      jurisdictions within the United States as any Holder reasonably requests in
      writing, to keep each registration or qualification (or exemption therefrom)
      effective during the Effectiveness Period and to do any and all other acts
      or
      things reasonably necessary to enable the disposition in such jurisdictions
      of
      the Registrable Securities covered by each Registration Statement; provided,
      that, the Company shall not be required to qualify generally to do business
      in
      any jurisdiction where it is not then so qualified, subject the Company to
      any
      material tax in any such jurisdiction where it is not then so subject or file
      a
      general consent to service of process in any such jurisdiction.

    

    (j)  If
      requested by a Holder, cooperate with such Holders to facilitate the timely
      preparation and delivery of certificates representing Registrable Securities
      to
      be delivered to a transferee pursuant to a Registration Statement, which
      certificates shall be free of all restrictive legends, and to enable such
      Registrable Securities to be in such denominations and registered in such names
      as any such Holder may request.

     

    (k)  Upon
      the
      occurrence of any event contemplated by Section 3(d), as promptly as reasonably
      possible under the circumstances taking into account the Company’s good faith
      assessment of any adverse consequences to the Company and its stockholders
      of
      the premature disclosure of such event, prepare a supplement or amendment,
      including a post-effective amendment, to a Registration Statement or a
      supplement to the related Prospectus or any document incorporated or deemed
      to
      be incorporated therein by reference, and file any other required document
      so
      that, as thereafter delivered, neither a Registration Statement nor such
      Prospectus will contain an untrue statement of a material fact or omit to state
      a material fact required to be stated therein or necessary to make the
      statements therein, in light of the circumstances under which they were made,
      not misleading. If the Company notifies the Holders in accordance with
      clauses (iii) through (vi) of Section 3(d) above to suspend the use of any
      Prospectus until the requisite changes to such Prospectus have been made, then
      the Holders shall suspend use of such Prospectus. The Company will use its
      best
      efforts to ensure that the use of the Prospectus may be resumed as promptly
      as
      is practicable. The Company shall be entitled to exercise its right under this
      Section 3(k) to suspend the availability of a Registration Statement and
      Prospectus, for a period not to exceed 30 calendar days (which need not be
      consecutive days) in any 12 month period.

     

    (l)  Comply
      with all applicable rules and regulations of the Commission.

     

    (m)  The
      Company may require each selling Holder to furnish to the Company a certified
      statement as to the number of shares of Common Stock beneficially owned by
      such
      Holder and, if required by the Commission, the natural persons thereof that
      have
      voting and dispositive control over the shares. In the event of the failure
      by
      such Holder to comply with the Company’s request within fifteen (15) days from
      the date of such request, the Company shall be permitted to exclude such Holder
      from a Registration Statement, without being subject to the payment of
      liquidated damages to such Holder. At such time that such Holder complies with
      the Company’s request the Company shall use its best efforts to include such
      Holder on the Registration Statement.

    

    (n)  Use
      its
      best efforts to cause all Registrable Securities relating to the Registration
      Statement to continue to be listed or quoted on a National Exchange or to be
      listed or quoted on any other national securities exchange, quotation system
      or
      market, if any, on which similar securities issued by the Company are then
      listed or traded.

    

    (o)  Within
      two (2) Trading Days after a Registration Statement which covers the Registrable
      Securities is ordered effective by the Commission, the Company shall deliver,
      and shall cause legal counsel for the Company to deliver, to the transfer agent
      for such Registrable Securities (with copies to the Holders whose Registrable
      Securities are included in such Registration Statement) confirmation that such
      Registration Statement has been declared effective by the Commission in the
      form
      attached hereto as Exhibit
      B.

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    4.
       Registration
      Expenses.
      All
      fees and expenses incident to the performance of or compliance with this
      Agreement by the Company shall be borne by the Company whether or not any
      Registrable Securities are sold pursuant to a Registration Statement. The fees
      and expenses referred to in the foregoing sentence shall include, without
      limitation, (i) all registration and filing fees (including, without limitation,
      fees and expenses of the Company’s counsel and independent registered public
      accountants) (A) with respect to filings made with the Commission, (B) with
      respect to filings required to be made with any National Stock Exchange on
      which
      the Common Stock is then listed for trading, (C) in compliance with applicable
      state securities or Blue Sky laws reasonably agreed to by the Company in writing
      (including, without limitation, fees and disbursements of counsel for the
      Company in connection with Blue Sky qualifications or exemptions of the
      Registrable Securities) and (D) with respect to any filing that may be required
      to be made by any broker through which a Holder intends to make sales of
      Registrable Securities with the FINRA pursuant to NASD Rule 2710, so long as
      the
      broker is receiving no more than a customary brokerage commission in connection
      with such sale, (ii) printing expenses (including, without limitation, expenses
      of printing certificates for Registrable Securities), (iii) messenger, telephone
      and delivery expenses, (iv) fees and disbursements of counsel for the Company,
      (v) Securities Act liability insurance, if the Company so desires such
      insurance, and (vi) fees and expenses of all other Persons retained by the
      Company in connection with the consummation of the transactions contemplated
      by
      this Agreement. In addition, the Company shall be responsible for all of its
      internal expenses incurred in connection with the consummation of the
      transactions contemplated by this Agreement (including, without limitation,
      all
      salaries and expenses of its officers and employees performing legal or
      accounting duties), the expense of any annual audit and the fees and expenses
      incurred in connection with the listing of the Registrable Securities on any
      securities exchange as required hereunder. In no event shall the Company be
      responsible for any broker or similar commissions of any Holder or, except
      to
      the extent provided for in the Transaction Documents, any legal fees or other
      costs of the Holders.

     

    5.
       Indemnification.

    

    (a)  Indemnification
      by the Company.
      The
      Company shall, notwithstanding any termination of this Agreement, indemnify
      and
      hold harmless each Holder, the officers, directors, members, partners, agents,
      brokers (including brokers who offer and sell Registrable Securities as
      principal as a result of a pledge or any failure to perform under a margin
      call
      of Common Stock), investment advisors and employees (and any other Persons
      with
      a functionally equivalent role of a Person holding such titles, notwithstanding
      a lack of such title or any other title) of each of them, each Person who
      controls any such Holder (within the meaning of Section 15 of the Securities
      Act
      or Section 20 of the Exchange Act) and the officers, directors, members,
      stockholders, partners, agents and employees (and any other Persons with a
      functionally equivalent role of a Person holding such titles, notwithstanding
      a
      lack of such title or any other title) of each such controlling Person, to
      the
      fullest extent permitted by applicable law, from and against any and all losses,
      claims, damages, liabilities, costs (including, without limitation, reasonable
      attorneys’ fees) and expenses (collectively, “Losses”),
      as
      incurred, arising out of or relating to (1) any untrue or alleged untrue
      statement of a material fact contained in a Registration Statement, any
      Prospectus or any form of prospectus or in any amendment or supplement thereto
      or in any preliminary prospectus, or arising out of or relating to any omission
      or alleged omission of a material fact required to be stated therein or
      necessary to make the statements therein (in the case of any Prospectus or
      supplement thereto, in light of the circumstances under which they were made)
      not misleading or (2) any violation or alleged violation by the Company of
      the
      Securities Act, the Exchange Act or any state securities law, or any rule or
      regulation thereunder, in connection with the performance of its obligations
      under this Agreement, except to the extent, but only to the extent, that (i)
      such untrue statements or omissions are based solely upon information regarding
      a Holder furnished in writing to the Company by such Holder expressly for use
      therein, or to the extent that such information relates to a Holder or such
      Holder’s proposed method of distribution of Registrable Securities and was
      reviewed and expressly approved in writing by such Holder expressly for use
      in a
      Registration Statement, such Prospectus or in any amendment or supplement
      thereto (it being understood that the Holder has approved Annex A hereto for
      this purpose) or (ii) the Holder used an outdated or defective Prospectus which
      the Company had previously notified such Holder was outdated or defective
      pursuant to Sections 3(d)(iii)-(vi) and for which the Company had not yet
      provided the Advice contemplated in Section 6(d). The Company shall notify
      the
      Holders promptly of the institution, threat or assertion of any Proceeding
      arising from or in connection with the transactions contemplated by this
      Agreement of which the Company is aware.

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    (b)  Indemnification
      by Holders.
      Each
      Holder shall, severally and not jointly, indemnify and hold harmless the
      Company, its directors, officers, agents and employees, each Person who controls
      the Company (within the meaning of Section 15 of the Securities Act and Section
      20 of the Exchange Act), and the directors, officers, agents or employees of
      such controlling Persons, to the fullest extent permitted by applicable law,
      from and against all Losses, as incurred, to the extent arising out of or based
      solely upon: (x) such Holder’s failure to comply with the prospectus delivery
      requirements of the Securities Act or (y) any untrue or alleged untrue statement
      of a material fact contained in any Registration Statement, any Prospectus,
      or
      in any amendment or supplement thereto or in any preliminary prospectus, or
      arising out of or relating to any omission or alleged omission of a material
      fact required to be stated therein or necessary to make the statements therein
      not misleading (i) to the extent, but only to the extent, that such untrue
      statement or omission is contained in any information so furnished in writing
      by
      such Holder to the Company specifically for inclusion in such Registration
      Statement or such Prospectus or (ii) to the extent that such information relates
      to such Holder’s proposed method of distribution of Registrable Securities and
      was reviewed and expressly approved in writing by such Holder expressly for
      use
      in a Registration Statement (it being understood that the Holder has approved
      Annex A hereto for this purpose), such Prospectus or in any amendment or
      supplement thereto or (iii) in the case of an occurrence of an event of the
      type
      specified in Section 3(d)(iii)-(vi), the use by such Holder of an outdated
      or
      defective Prospectus after the Company has notified such Holder in writing
      that
      the Prospectus is outdated or defective and prior to the receipt by such Holder
      of the Advice contemplated in Section 6(d). In no event shall the liability
      of
      any selling Holder hereunder be greater in amount than the dollar amount of
      the
      net proceeds received by such Holder upon the sale of the Registrable Securities
      giving rise to such indemnification obligation.

     

    (c)  Conduct
      of Indemnification Proceedings.
      If any
      Proceeding shall be brought or asserted against any Person entitled to indemnity
      hereunder (an “Indemnified
      Party”),
      such
      Indemnified Party shall promptly notify the Person from whom indemnity is sought
      (the “Indemnifying
      Party”)
      in
      writing, and the Indemnifying Party shall have the right to assume the defense
      thereof, including the employment of counsel reasonably satisfactory to the
      Indemnified Party and the payment of all fees and expenses incurred in
      connection with defense thereof; provided,
      that,
      the failure of any Indemnified Party to give such notice shall not relieve
      the
      Indemnifying Party of its obligations or liabilities pursuant to this Agreement,
      except (and only) to the extent that it shall be finally determined by a court
      of competent jurisdiction (which determination is not subject to appeal or
      further review) that such failure shall have prejudiced the Indemnifying
      Party.

     

    An
      Indemnified Party shall have the right to employ separate counsel in any such
      Proceeding and to participate in the defense thereof, but the fees and expenses
      of such counsel shall be at the expense of such Indemnified Party or Parties
      unless: (1) the Indemnifying Party has agreed in writing to pay such fees and
      expenses, (2) the Indemnifying Party shall have failed promptly to assume the
      defense of such Proceeding and to employ counsel reasonably satisfactory to
      such
      Indemnified Party in any such Proceeding, or (3) the named parties to any such
      Proceeding (including any impleaded parties) include both such Indemnified
      Party
      and the Indemnifying Party, and counsel to the Indemnified Party shall
      reasonably believe that a material conflict of interest is likely to exist
      if
      the same counsel were to represent such Indemnified Party and the Indemnifying
      Party (in which case, if such Indemnified Party notifies the Indemnifying Party
      in writing that it elects to employ separate counsel at the expense of the
      Indemnifying Party, the Indemnifying Party shall not have the right to assume
      the defense thereof and the reasonable fees and expenses of no more than one
      separate counsel shall be at the expense of the Indemnifying Party). The
      Indemnifying Party shall not be liable for any settlement of any such Proceeding
      effected without its written consent, which consent shall not be unreasonably
      withheld or delayed. No Indemnifying Party shall, without the prior written
      consent of the Indemnified Party, effect any settlement of any pending
      Proceeding in respect of which any Indemnified Party is a party, unless such
      settlement includes an unconditional release of such Indemnified Party from
      all
      liability on claims that are the subject matter of such Proceeding.

     

    Subject
      to the terms of this Agreement, all reasonable fees and expenses of the
      Indemnified Party (including reasonable fees and expenses to the extent incurred
      in connection with investigating or preparing to defend such Proceeding in
      a
      manner not inconsistent with this Section) shall be paid to the Indemnified
      Party, as incurred, within ten Trading Days of written notice thereof to the
      Indemnifying Party; provided, that, the Indemnified Party shall promptly
      reimburse the Indemnifying Party for that portion of such fees and expenses
      applicable to such actions for which such Indemnified Party is judicially
      determined not to be entitled to indemnification hereunder.

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    (d)  Contribution.
      If the
      indemnification under Section 5(a) or 5(b) is unavailable to an Indemnified
      Party or insufficient to hold an Indemnified Party harmless for any Losses,
      then
      each Indemnifying Party shall contribute to the amount paid or payable by such
      Indemnified Party, in such proportion as is appropriate to reflect the relative
      fault of the Indemnifying Party and Indemnified Party in connection with the
      actions, statements or omissions that resulted in such Losses as well as any
      other relevant equitable considerations. The relative fault of such Indemnifying
      Party and Indemnified Party shall be determined by reference to, among other
      things, whether any action in question, including any untrue or alleged untrue
      statement of a material fact or omission or alleged omission of a material
      fact,
      has been taken or made by, or relates to information supplied by, such
      Indemnifying Party or Indemnified Party, and the parties’ relative intent,
      knowledge, access to information and opportunity to correct or prevent such
      action, statement or omission. The amount paid or payable by a party as a result
      of any Losses shall be deemed to include, subject to the limitations set forth
      in this Agreement, any reasonable attorneys’ or other fees or expenses incurred
      by such party in connection with any Proceeding to the extent such party would
      have been indemnified for such fees or expenses if the indemnification provided
      for in this Section was available to such party in accordance with its
      terms.

     

    The
      parties hereto agree that it would not be just and equitable if contribution
      pursuant to this Section 5(d) were determined by pro rata allocation or by
      any
      other method of allocation that does not take into account the equitable
      considerations referred to in the immediately preceding paragraph.
      Notwithstanding the provisions of this Section 5(d), no Holder shall be required
      to contribute, in the aggregate, any amount in excess of the amount by which
      the
      net proceeds actually received by such Holder from the sale of the Registrable
      Securities subject to the Proceeding exceeds the amount of any damages that
      such
      Holder has otherwise been required to pay by reason of such untrue or alleged
      untrue statement or omission or alleged omission.

     

    The
      indemnity and contribution agreements contained in this Section are in addition
      to any liability that the Indemnifying Parties may have to the Indemnified
      Parties.

    

    6.
       Miscellaneous.

    

    (a)  Remedies.
      In the
      event of a breach by the Company or by a Holder of any of their respective
      obligations under this Agreement, each Holder or the Company, as the case may
      be, in addition to being entitled to exercise all rights granted by law and
      under this Agreement, including recovery of damages, shall be entitled to
      specific performance of its rights under this Agreement. The Company and each
      Holder agree that monetary damages would not provide adequate compensation
      for
      any losses incurred by reason of a breach by it of any of the provisions of
      this
      Agreement and hereby further agrees that, in the event of any action for
      specific performance in respect of such breach, it shall not assert or shall
      waive the defense that a remedy at law would be adequate.

    

    (b)  No
      Piggyback on Registrations; Prohibition on Filing Other Registration
      Statements.
      With
      the exception of a bona fide public offering of the Company’s Common Stock for
      aggregate gross proceeds of no less than $5,000,000, neither the Company nor
      any
      of its security holders (other than the Holders in such capacity pursuant
      hereto) may include securities of the Company in any Registration Statements
      other than the Registrable Securities. The Company shall not file any other
      registration statements until all Registrable Securities are registered pursuant
      to a Registration Statement that is declared effective by the
      Commission.

     

    (c)  Compliance.
      Each
      Holder covenants and agrees that it will comply with the prospectus delivery
      requirements of the Securities Act as applicable to it in connection with sales
      of Registrable Securities pursuant to a Registration Statement.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    (d)  Discontinued
      Disposition.
      By its
      acquisition of Registrable Securities, each Holder agrees that, upon receipt
      of
      a notice from the Company of the occurrence of any event of the kind described
      in Section 3(d)(iii) through (vi), such Holder will forthwith discontinue
      disposition of such Registrable Securities under a Registration Statement until
      it is advised in writing (the “Advice”)
      by the
      Company that the use of the applicable Prospectus (as it may have been
      supplemented or amended) may be resumed. The Company will use its best efforts
      to ensure that the use of the Prospectus may be resumed as promptly as is
      practicable. The Company agrees and acknowledges that any periods during which
      the Holder is required to discontinue the disposition of the Registrable
      Securities hereunder shall be subject to the provisions of Section
      2(b).

    

    (e)  Piggy-Back
      Registrations.
      If, at
      any time during the Effectiveness Period, there is not an effective Registration
      Statement covering all of the Registrable Securities and the Company shall
      determine to prepare and file with the Commission a registration statement
      relating to an offering for its own account or the account of others under
      the
      Securities Act of any of its equity securities, other than on Form S-4 or Form
      S-8 (each as promulgated under the Securities Act) or their then equivalents
      relating to equity securities to be issued solely in connection with any
      acquisition of any entity or business or equity securities issuable in
      connection with the Company’s stock option or other employee benefit plans, then
      the Company shall deliver to each Holder a written notice of such determination
      and, if within fifteen days after the date of the delivery of such notice,
      any
      such Holder shall so request in writing, the Company shall include in such
      registration statement all or any part of such Registrable Securities such
      Holder requests to be registered; provided,
      however,
      that
      the Company shall not be required to register any Registrable Securities
      pursuant to this Section 6(e) that are eligible for resale without volume or
      manner-of-sale restrictions pursuant to Rule 144 promulgated by the Commission
      pursuant to the Securities Act or that are the subject of a then effective
      Registration Statement.

    

    (f)  Amendments
      and Waivers.
      The
      provisions of this Agreement, including the provisions of this sentence, may
      not
      be amended, modified or supplemented, and waivers or consents to departures
      from
      the provisions hereof may not be given, unless the same shall be in writing
      and
      signed by the Company and the Holders of 50% or more of the then outstanding
      Registrable Securities (including, for this purpose, any Registrable Securities
      issuable upon exercise of the Warrants), provided,
      that
      such Holders shall include Vision Opportunity China LP, so long as Vision
      Opportunity China (or any of its affiliates) holds more than 5% of its original
      investment, and CMHJ Technology Fund II, L.P., (or any of its affiliate), so
      long as CMHJ Technology Fund II, L.P., (or any of its affiliates) holds more
      than 5% of its original investment. If a Registration Statement does not
      register all of the Registrable Securities pursuant to a waiver or amendment
      done in compliance with the previous sentence, then the number of Registrable
      Securities to be registered for each Holder shall be reduced pro rata among
      all
      Holders and each Holder shall have the right to designate which of its
      Registrable Securities shall be omitted from such Registration Statement.
      Notwithstanding the foregoing, a waiver or consent to depart from the provisions
      hereof with respect to a matter that relates exclusively to the rights of a
      Holder or some Holders and that does not directly or indirectly affect the
      rights of other Holders may be given by such Holder or Holders of all of the
      Registrable Securities to which such waiver or consent relates; provided,
      however,
      that
      the provisions of this sentence may not be amended, modified, or supplemented
      except in accordance with the provisions of the first sentence of this Section
      6(f). 

     

    (g)  Notices.
      All
      notices, demands, consents, requests, instructions and other communications
      to
      be given or delivered or permitted under or by reason of the provisions of
      this
      Agreement or in connection with the transactions contemplated hereby shall
      be in
      writing and shall be deemed to be delivered and received by the intended
      recipient as follows: (i) if personally delivered, on the business day of such
      delivery (as evidenced by the receipt of the personal delivery service), (ii)
      if
      mailed certified or registered mail return receipt requested, two (2) business
      days after being mailed, (iii) if delivered by overnight courier (with all
      charges having been prepaid), on the business day of such delivery (as evidenced
      by the receipt of the overnight courier service of recognized standing), or
      (iv)
      if delivered by facsimile transmission, on the business day of such delivery
      if
      sent by 6:00 p.m. in the time zone of the recipient, or if sent after that
      time,
      on the next succeeding business day (as evidenced by the printed confirmation
      of
      delivery generated by the sending party’s telecopier machine). If any notice,
      demand, consent, request, instruction or other communication cannot be delivered
      because of a changed address of which no notice was given (in accordance with
      this Section 6), or the refusal to accept same, the notice, demand, consent,
      request, instruction or other communication shall be deemed received on the
      second business day the notice is sent (as evidenced by a sworn affidavit of
      the
      sender). All such notices, demands, consents, requests, instructions and other
      communications will be sent to the following addresses or facsimile numbers
      as
      applicable.:

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    

    
      	
              If
                to the Company:

            	
               

            	
              Lihua
                International, Inc.

              c/o
                Lihua Holdings Limited

              Houxiang
                Five-Star Industry District

              Danyang
                City, Jiangsu Province, PRC

              Attention:
                Mr. Zhu Jianhua

              Tel.
                No.: +86 511 8631 7399

              Fax
                No.: +86 511 8631 2040

            
	
               

            	
               

            	
               

            
	
              with
                copies (which

              shall
                not constitute

              notice)
                to:

            	
               

            	
              Loeb
                & Loeb LLP

              345
                Park Avenue

              New
                York, New York 10154

              Attention:
                Mitchell S. Nussbaum, Esq.

              Tel.
                No.: (212) 407-4000

              Fax
                No.: (212) 407-4990

            
	
               

            	
               

            	
               

            
	
              If
                to any Purchaser:

            	
               

            	
              At
                the address of such Purchaser set forth on Exhibit
                A and
                Exhibit
                B
                to
                the Purchase Agreement or as specified in writing by such Purchaser.
                

            
	
               

            	
               

            	
               

            
	
              With
                copies (which copies shall not constitute notice) to:

            	
               

            	
              Anslow
                & Jaclin LLP

              195
                Route 9 South, Suite 204

              Manalapan,
                New Jersey 07726

              Attn:
                Joseph M. Lucosky, Esq.

              Tel.
                No.: (732) 409-1212

              Fax
                No.: (732) 577-1188

            

    

     

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

    

    (h) Assignment
      of Registration Rights.
      The
      rights of each Holder hereunder, including the right to have the Company
      register for resale Registrable Securities in accordance with the terms of
      this
      Agreement, shall be automatically assignable by each Holder to any Person who
      acquires all or a portion of
      the
      Registrable Securities if: (i) the Holder agrees in writing with the transferee
      or assignee to assign such rights, and a copy of such agreement, along with
      an
      investor questionnaire completed by the transferee or assignee is furnished
      to
      the Company within a reasonable time after such assignment, (ii) the Company
      is,
      within a reasonable time after such transfer or assignment, furnished with
      written notice of (a) the name and address of such transferee or assignee,
      and
      (b) the securities with respect to which such registration rights are being
      transferred or assigned, (iii) following such transfer or assignment the further
      disposition of such securities by the transferee or assignees is restricted
      under the Securities Act and applicable state securities laws unless such
      securities are registered in a Registration Statement under this Agreement
      (in
      which case the Company shall be obligated to amend such Registration Statement
      to reflect such transfer or assignment) or are otherwise exempt from
      registration, and (iv) at or before the time the Company receives the written
      notice contemplated by clause (ii) of this Section, the transferee or assignee
      agrees in writing with the Company to be bound by all of the provisions of
      this
      Agreement. The rights to assignment shall apply to the Holders (and to
      subsequent) successors and assigns.

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

    (i)  Successors
      and Assigns.
      This
      Agreement shall inure to the benefit of and be binding upon the successors
      and
      permitted assigns of each of the parties and shall inure to the benefit of
      each
      Holder. The Company may not assign (except by merger) its rights or obligations
      hereunder without the prior written consent of all of the Holders of the then
      outstanding Registrable Securities. Each Holder may assign their respective
      rights hereunder in the manner and to the Persons as permitted under the
      Purchase Agreement.

    

    (j)  No
      Inconsistent Agreements.
      Neither
      the Company nor any of its Subsidiaries has entered, as of the date hereof,
      nor
      shall the Company or any of its Subsidiaries, on or after the date of this
      Agreement, enter into any agreement with respect to its securities, that would
      have the effect of impairing the rights granted to the Holders in this Agreement
      or otherwise conflicts with the provisions hereof.

    

    (k)  Execution
      and Counterparts.
      This
      Agreement may be executed in two or more counterparts, all of which when taken
      together shall be considered one and the same agreement and shall become
      effective when counterparts have been signed by each party and delivered to
      the
      other party, it being understood that both parties need not sign the same
      counterpart. In the event that any signature is delivered by facsimile
      transmission or by e-mail delivery of a “.pdf” format data file, such signature
      shall create a valid and binding obligation of the party executing (or on whose
      behalf such signature is executed) with the same force and effect as if such
      facsimile or “.pdf” signature page were an original thereof.

    

    (l)  Governing
      Law.
      All
      questions concerning the construction, validity, enforcement and interpretation
      of this Agreement shall be determined in accordance with the provisions of
      the
      Purchase Agreement.

    

    (m)  Cumulative
      Remedies.
      The
      remedies provided herein are cumulative and not exclusive of any other remedies
      provided by law.

    

    (n)  Severability.
      If any
      term, provision, covenant or restriction of this Agreement is held by a court
      of
      competent jurisdiction to be invalid, illegal, void or unenforceable, the
      remainder of the terms, provisions, covenants and restrictions set forth herein
      shall remain in full force and effect and shall in no way be affected, impaired
      or invalidated, and the parties hereto shall use their commercially reasonable
      efforts to find and employ an alternative means to achieve the same or
      substantially the same result as that contemplated by such term, provision,
      covenant or restriction. It is hereby stipulated and declared to be the
      intention of the parties that they would have executed the remaining terms,
      provisions, covenants and restrictions without including any of such that may
      be
      hereafter declared invalid, illegal, void or unenforceable.

    

    (o)  Headings.
      The
      headings in this Agreement are for convenience only, do not constitute a part
      of
      the Agreement and shall not be deemed to limit or affect any of the provisions
      hereof.

    

    (p)  Independent
      Nature of Holders’ Obligations and Rights.
      The
      Company acknowledges that the obligations of each Holder under this Agreement
      are several and not joint with the obligations of any other Holder, and no
      Holder shall be responsible in any way for the performance of the obligations
      of
      any other Holder under this Agreement. The Company acknowledges that nothing
      contained herein, and no action taken by any Holder pursuant hereto (including,
      but not limited to, the (i) inclusion of a Holder in the Registration Statement
      and (ii) review by, and consent to, such Registration Statement by a Holder)
      shall be deemed to constitute the Holders as a partnership, an association,
      a
      joint venture or any other kind of entity, or create a presumption that the
      Holders are in any way acting in concert or as a group with respect to such
      obligations or the transactions contemplated by this Agreement. The Company
      acknowledges that each Holder shall be entitled to independently protect and
      enforce its rights, including without limitation, the rights arising out of
      this
      Agreement, and it shall not be necessary for any other Holder to be joined
      as an
      additional party in any proceeding for such purpose. The Company acknowledges
      that it has elected to provide all Holders with the same terms for the
      convenience of the Company and not because it was required or requested to
      do so
      by the Holders. The Company acknowledges that such procedure with respect to
      this Agreement in no way creates a presumption that the Holders are in any
      way
      acting in concert or as a group with respect to this Agreement or the
      transactions contemplated hereby.

    

    ********************

    

    (Signature
      Pages Follow)

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

    

    IN
      WITNESS WHEREOF, the parties have executed this Registration Rights Agreement
      as
      of the date first written above.

     

    
      	
               

            	
              LIHUA
                INTERNATIONAL, INC.

            
	
               

            	
               

            	
               

            
	 	
              By:  

            	
              /s/
                Zhu
                Jianhua

            
	
               

            	
              Name:
                Zhu Jianhua

            
	
               

            	
              Title:
                Chief Executive Officer and
                President

            

    

     

    [SIGNATURE
      PAGE OF HOLDERS FOLLOWS]

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    [SIGNATURE
      PAGE OF HOLDERS TO LIHUA RRA]

    

     

    Name
      of
      Holder: __________________________

    

    Signature
      of Authorized Signatory of Holder:
      __________________________

    

    Name
      of
      Authorized Signatory: _________________________

    

    Title
      of
      Authorized Signatory: __________________________

     

    

    [SIGNATURE
      PAGES CONTINUE]

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

    Annex
      A

    

    Plan
      of Distribution

    

    Each
      Selling Stockholder (the “Selling
      Stockholders”)
      of the
      common stock and any of their pledgees, assignees and successors-in-interest
      may, from time to time, sell any or all of their shares of common stock on
      the
      National Stock Exchange or any other stock exchange, market or trading facility
      on which the shares are traded or in private transactions. These sales may
      be at
      fixed or negotiated prices. A Selling Stockholder may use any one or more of
      the
      following methods when selling shares:

     

    
      	
              ·
                

            	
              ordinary
                brokerage transactions and transactions in which the broker-dealer
                solicits purchasers;

            

    

     

    
      	
              ·

            	
              block
                trades in which the broker-dealer will attempt to sell the shares
                as agent
                but may position and resell a portion of the block as principal to
                facilitate the transaction;

            

    

     

    
      	
              ·

            	
              purchases
                by a broker-dealer as principal and resale by the broker-dealer for
                its
                account;

            

    

     

    
      	
              ·

            	
              an
                exchange distribution in accordance with the rules of the applicable
                exchange;

            

    

     

    
      	
              ·

            	
              privately
                negotiated transactions;

            

    

     

    
      	
              ·

            	
              settlement
                of short sales entered into after the effective date of the registration
                statement of which this prospectus is a part;

            

    

     

    
      	
              ·

            	
              broker-dealers
                may agree with the Selling Stockholders to sell a specified number
                of such
                shares at a stipulated price per
                share;

            

    

     

    
      	
              ·

            	
              through
                the writing or settlement of options or other hedging transactions,
                whether through an options exchange or
                otherwise;

            

    

     

    
      	
              ·

            	
              a
                combination of any such methods of sale;
                or

            

    

     

    
      	
              ·

            	
              any
                other method permitted pursuant to applicable
                law.

            

    

     

    The
      Selling Stockholders may also sell shares under Rule 144 under the Securities
      Act of 1933, as amended (the “Securities
      Act”),
      if
      available, rather than under this prospectus.

     

    Broker-dealers
      engaged by the Selling Stockholders may arrange for other brokers-dealers to
      participate in sales. Broker-dealers may receive commissions or discounts from
      the Selling Stockholders (or, if any broker-dealer acts as agent for the
      purchaser of shares, from the purchaser) in amounts to be negotiated, but,
      except as set forth in a supplement to this Prospectus, in the case of an agency
      transaction not in excess of a customary brokerage commission in compliance
      with
      FINRA NASD Rule 2440; and in the case of a principal transaction a markup or
      markdown in compliance with NASD IM-2440. 

     

    In
      connection with the sale of the common stock or interests therein, the Selling
      Stockholders may enter into hedging transactions with broker-dealers or other
      financial institutions, which may in turn engage in short sales of the common
      stock in the course of hedging the positions they assume. The Selling
      Stockholders may also sell shares of the common stock short and deliver these
      securities to close out their short positions, or loan or pledge the common
      stock to broker-dealers that in turn may sell these securities. The Selling
      Stockholders may also enter into option or other transactions with
      broker-dealers or other financial institutions or the creation of one or more
      derivative securities which require the delivery to such broker-dealer or other
      financial institution of shares offered by this prospectus, which shares such
      broker-dealer or other financial institution may resell pursuant to this
      prospectus (as supplemented or amended to reflect such
      transaction).

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

    The
      Selling Stockholders and any broker-dealers or agents that are involved in
      selling the shares may be deemed to be “underwriters” within the meaning of the
      Securities Act in connection with such sales. In such event, any commissions
      received by such broker-dealers or agents and any profit on the resale of the
      shares purchased by them may be deemed to be underwriting commissions or
      discounts under the Securities Act. Each Selling Stockholder has informed the
      Company that it does not have any written or oral agreement or understanding,
      directly or indirectly, with any person to distribute the Common Stock. In
      no
      event shall any broker-dealer receive fees, commissions and markups which,
      in
      the aggregate, would exceed eight percent (8%).

     

    The
      Company is required to pay certain fees and expenses incurred by the Company
      incident to the registration of the shares. The Company has agreed to indemnify
      the Selling Stockholders against certain losses, claims, damages and
      liabilities, including liabilities under the Securities Act. 

     

    Because
      Selling Stockholders may be deemed to be “underwriters” within the meaning of
      the Securities Act, they will be subject to the prospectus delivery requirements
      of the Securities Act including Rule 172 thereunder. In addition, any securities
      covered by this prospectus which qualify for sale pursuant to Rule 144 under
      the
      Securities Act may be sold under Rule 144 rather than under this prospectus.
      There is no underwriter or coordinating broker acting in connection with the
      proposed sale of the resale shares by the Selling Stockholders.

     

    We
      agreed
      to keep this prospectus effective until the earlier of (i) the date on which
      the
      shares may be resold by the Selling Stockholders without registration and
      without regard to any volume or manner-of-sale limitations by reason of Rule
      144, without the requirement for the Company to be in compliance with the
      current public information under Rule 144 under the Securities Act or any other
      rule of similar effect or (ii) all of the shares have been sold pursuant to
      this
      prospectus or Rule 144 under the Securities Act or any other rule of similar
      effect. The resale shares will be sold only through registered or licensed
      brokers or dealers if required under applicable state securities laws. In
      addition, in certain states, the resale shares may not be sold unless they
      have
      been registered or qualified for sale in the applicable state or an exemption
      from the registration or qualification requirement is available and is complied
      with.

     

    Under
      applicable rules and regulations under the Exchange Act, any person engaged
      in
      the distribution of the resale shares may not simultaneously engage in market
      making activities with respect to the common stock for the applicable restricted
      period, as defined in Regulation M, prior to the commencement of the
      distribution. In addition, the Selling Stockholders will be subject to
      applicable provisions of the Exchange Act and the rules and regulations
      thereunder, including Regulation M, which may limit the timing of purchases
      and
      sales of shares of the common stock by the Selling Stockholders or any other
      person. We will make copies of this prospectus available to the Selling
      Stockholders and have informed them of the need to deliver a copy of this
      prospectus to each purchaser at or prior to the time of the sale (including
      by
      compliance with Rule 172 under the Securities Act).

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

    

    EXHIBIT
      A

    

    FORM
      OF NOTICE OF EFFECTIVENESS

    OF
      REGISTRATION STATEMENT

     

    [TRANSFER
      AGENT]

    _____________________________

    _____________________________

    Attn:
      _________________

    

    Re:           ,
      INC.

     

    Ladies
      and Gentlemen:

     

    We
      are
      counsel to Lihua
      International, Inc., a Delaware corporation (the “Company”).
      The
      Company entered into a Registration Rights Agreement, dated October 31, 2008
      (the “Registration
      Rights Agreement”),
      with
      _________, ____________ and ________________ (collectively, the “Stockholders”),
      pursuant to which the Company agreed, among other things, to register the
      Registrable Securities (as defined in the Registration Rights Agreement), under
      the Securities Act of 1933, as amended (the “1933
      Act”).
      In
      connection with the Company’s obligations under the Registration Rights
      Agreement, on ________________, 2008, the Company filed a Registration Statement
      on Form S-1 (File No. 333-________) (the “Registration
      Statement”)
      with
      the Securities and Exchange Commission (the “SEC”)
      relating to the resale of the Registrable Securities which names each of the
      Stockholders as a selling stockholder thereunder.

    

    In
      connection with the foregoing, we advise you that a member of the SEC’s staff
      has advised us by telephone that the Commission has entered an order declaring
      the Registration Statement effective under the 1933 Act at [ENTER TIME OF
      EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS] and we have no knowledge, after
      telephonic inquiry of a member of the SEC’s staff, that any stop order
      suspending its effectiveness has been issued or that any proceedings for that
      purpose are pending before, or threatened by, the Commission and accordingly,
      the Registrable Securities are available for resale under the 1933 Act pursuant
      to the Registration Statement.

     

    
      	
               

            	
              Very
                truly yours,

               

              [COUNSEL]

            
	
               

            	
               

            	
               

            
	
               

            	
              By:  

            	
               

            
	
               

            	 
	
              cc: [STOCKHOLDERS]

            	
               

            

    

     

    
      
        
        

      

      
        20

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