Document:

EXECUTION COPY

                            STOCK PURCHASE AGREEMENT

                                  BY AND AMONG

                          PARALLEL TECHNOLOGIES, INC.,

              DALIAN FUSHI BIMETALLIC MANUFACTURING COMPANY, LTD.,

        THE PERSONS LISTED ON THE SIGNATURE PAGES HERETO AS MANAGEMENT OF
              DALIAN FUSHI BIMETALLIC MANUFACTURING COMPANY, LTD.,

                         HELLER CAPITAL INVESTMENTS, LLC

                                       AND

            THE OTHER INVESTORS LISTED ON THE SIGNATURE PAGES HERETO

                         Dated as of December ___, 2005
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                                TABLE OF CONTENTS

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1.       DEFINITIONS....................................................................................................1

2.       PURCHASE AND SALE OF SHARES....................................................................................6

         (a)      Purchase and Sale of Shares...........................................................................6

         (b)      The Closing...........................................................................................7

         (c)      Performance Adjustment................................................................................8

         (d)      Public Relations and Executive Searches...............................................................9

3. REPRESENTATIONS AND WARRANTIES CONCERNING THE COMPANY, ITS SUBSIDIARIES AND DALIAN FUSHI............................10

         (a)      Organization and Standing............................................................................10

         (b)      Authorization of Transaction.........................................................................10

         (c)      Noncontravention.....................................................................................11

         (d)      Capitalization.......................................................................................11

         (e)      Subsidiaries.........................................................................................11

         (f)      Disclosure Documents; Common Stock Trading...........................................................12

         (g)      Financial Statements.................................................................................13

         (h)      Events Subsequent to Most Recent Form 10-QSB.........................................................13

         (i)      No Undisclosed Liabilities; No Guaranties............................................................13

         (j)      Absence of Litigation................................................................................13

         (k)      Title to Assets......................................................................................14

         (l)      Legal Compliance.....................................................................................14

         (m)      Contracts............................................................................................14

         (n)      Employees; Employee Benefits.........................................................................14

         (o)      Intellectual Property................................................................................15

         (p)      Notes and Accounts Receivables.......................................................................16

         (q)      Tax Matters..........................................................................................16

         (r)      Dalian Fushi.........................................................................................17

         (s)      Books and Records....................................................................................18

         (t)      Certain Business Relationships.......................................................................18

         (u)      Private Offering.....................................................................................19
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         (v)      Use of Proceeds......................................................................................19

         (w)      Powers of Attorney...................................................................................19

         (x)      Brokers' Fees........................................................................................19

         (y)      Certain Business Practices...........................................................................19

         (z)      Environmental and Safety Laws........................................................................19

         (aa)     Manufacturing and Marketing Rights...................................................................20

         (bb)     Employment of Wenbing Chris Wang.....................................................................20

         (cc)     Disclosure...........................................................................................20

4. REPRESENTATIONS AND WARRANTIES OF THE INVESTORS.....................................................................20

         (a)      Organization and Standing............................................................................20

         (b)      Authorization of Transaction.........................................................................21

         (c)      Brokers' Fees........................................................................................21

         (d)      No Registration......................................................................................21

         (e)      Acquisition for Investment...........................................................................21

         (f)      Risks of Investment..................................................................................21

         (g)      Accredited Investor Status...........................................................................21

         (h)      Disclosure of Information............................................................................21

         (i)      Investment Experience................................................................................22

5. REGISTRATION RIGHTS.................................................................................................22

         (a)      Registration by the Company..........................................................................22

         (b)      Priority Registrations...............................................................................23

         (c)      Registration Procedures..............................................................................23

         (d)      Lock-up..............................................................................................25

         (e)      Indemnification......................................................................................25

6. POST-CLOSING COVENANTS..............................................................................................26

         (a)      General..............................................................................................26

         (b)      American Stock Exchange..............................................................................26

         (c)      Board of Directors...................................................................................26

         (d)      Board of Advisors....................................................................................26

         (e)      Chief Financial Officer..............................................................................27
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                                      -ii-
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         (f)      Name Change; Reverse Stock Split.....................................................................27

         (g)      Employee Stock Ownership Plan........................................................................27

         (h)      Executive Search.....................................................................................27

         (i)      Employment Agreements................................................................................27

         (j)      Transfer of Dalian Fushi Employees...................................................................27

         (k)      Compliance with Law..................................................................................27

         (l)      Completion of Restructuring..........................................................................27

         (m)      Filing of Registration Statement.....................................................................28

         (n)      Company Bylaws.......................................................................................28

7. CONDITIONS TO OBLIGATION TO CLOSE...................................................................................29

         (a)      Conditions to Obligation of the Investors............................................................29

         (b)      Conditions to Obligation of the Company, Dalian Fushi and Management.................................30

8. REMEDIES FOR BREACHES OF THIS AGREEMENT.............................................................................31

         (a)      Survival of Representations and Warranties...........................................................31

         (b)      Indemnification Provisions for Benefit of the Investors..............................................31

         (c)      Matters Involving Third Parties......................................................................31

9. MISCELLANEOUS.......................................................................................................32

         (a)      No Third Party Beneficiaries.........................................................................32

         (b)      Entire Agreement.....................................................................................32

         (c)      Succession and Assignment............................................................................32

         (d)      Counterparts.........................................................................................32

         (e)      Headings.............................................................................................33

         (f)      Notices..............................................................................................33

         (g)      Controlling Law; Venue...............................................................................33

         (h)      Amendments and Waivers...............................................................................34

         (i)      Severability.........................................................................................34

         (j)      Expenses.............................................................................................34

         (k)      Construction.........................................................................................34

         (l)      Incorporation of Exhibits and Schedules..............................................................34

         (m)      Specific Performance.................................................................................35

         (n)      Disputes; Arbitration................................................................................35
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                                     -iii-
<PAGE>

                         HELLER STOCK PURCHASE AGREEMENT

      This Heller Stock Purchase Agreement (this "Agreement") is entered into as
of December  ___,  2005,  by and among  Parallel  Technologies,  Inc.,  a Nevada
corporation (the  "Company"),  Dalian Fushi  Bimetallic  Manufacturing  Company,
Ltd.,  a company  organized  under the laws of the  People's  Republic  of China
("Dalian Fushi"), the persons listed on the signature pages hereto as management
of Dalian Fushi  ("Management"),  Heller Investments,  LLC, a New Jersey limited
liability  company  ("Heller"),  and the other investors listed on the signature
pages hereto (Heller and the other  investors  shall be referred to individually
as an "Investor" and  collectively  as the  "Investors").  The Investors and the
Company are also referred to individually  herein as a "Party" and  collectively
herein as the "Parties."

                             PRELIMINARY STATEMENTS

      A.  Dalian  Fushi  currently  engages  in the  business  of  manufacturing
bimetallic  composite  cable and wire  products in China,  which  business  will
become the business of the Company and its Subsidiaries  (defined below) through
the restructuring and contractual arrangements with Dalian Fushi described below
(the "Business").

      B. The Company has completed a share exchange with all of the stockholders
of  Diversified  Product  Inspections,  Inc.  ("DPI")  resulting  in the Company
acquiring  DPI and its  wholly-owned  subsidiary  in China,  Dalian  Diversified
Product Inspections Bimetallic Cable Co., Ltd. ("WOFE").

      C. WOFE and  Dalian  Fushi  have  entered  into a series of  Restructuring
Agreements and are in the process of completing the transactions contemplated in
the Restructuring Agreements,  which transactions upon completion will result in
the Company,  through its Subsidiaries,  acquiring and/or leasing  substantially
all the assets of, and certain  additional  rights of and to, Dalian Fushi,  and
will have the  effect of a  reverse  merger  with  Dalian  Fushi (as more  fully
described herein).

      D. Previous to the above described share exchange and related acquisition,
the Company was a shell company without any significant assets.

      E. The Company  desires to raise a total of  $12,000,000  funds  through a
private placement offering.

      F. On December 13, 2005, the Company issued and sold to certain  investors
approximately  19.87% of the voting  capital  stock in the  Company  for a total
purchase  price  of  $11,225,000  pursuant  to a stock  purchase  agreement,  as
amended,  dated as of December 13, 2005, by and among the Company,  Dalian Fushi
and its Management, Chinamerica Fund, LP, and the other investors listed therein
(the "December 13 Stock Purchase Agreement").  The investors that are parties to
the December 13 Stock  Purchase  Agreement  are  hereinafter  referred to as the
"Initial Investors."

      G. The  Company  desires  to  issue  and  sell to the  Investors,  and the
Investors  desire to subscribe  for and acquire from the Company,  approximately
1.37% of the voting  capital stock in the Company for a total  purchase price of
$775,000 upon the terms and conditions hereinafter set forth.

                                       1
<PAGE>

                                    AGREEMENT

      The Parties, intending to be legally bound, agree as follows:

1.    DEFINITIONS.

      The  following  terms used in this  Agreement  shall have the meanings set
forth  below,  provided  that these  definitions  do not  include  terms used in
Section 2(c) that are otherwise defined in that Section.

      "2005 Performance  Shortfall" means the difference obtained by subtracting
the Actual Pre-Money Value from the Original Pre-Money Value.

      "2006 Performance  Shortfall" means the difference obtained by subtracting
the 2006 Net Profit from the 2006 Target Profit.

      "Actual  Pre-Money  Value"  means  six  times  the  2005 Net  Profit  plus
$1,000,000.

      "Acquired Assets" has the meaning set forth in Section 3(r).

      "Adverse Consequences" means all Proceedings, charges, complaints, claims,
demands,   injunctions,    judgments,   orders,   decrees,   rulings,   damages,
investigation and/or remediation costs, dues, penalties, fines, costs of defense
and other costs,  amounts  paid in  settlement,  Liabilities,  responsibilities,
Taxes, liens, losses,  expenses,  and fees, including court costs and reasonable
attorneys' fees and expenses.

      "Affiliate"  has the  meaning  set forth in Rule 12b-2 of the  regulations
promulgated under the Exchange Act.

      "Agreement" means this Stock Purchase Agreement.

      "Ancillary  Agreements" means the Stock Escrow Agreement,  as amended, the
PR Escrow Agreement, the Stock Purchase Agreement between Dalian Fushi and Glenn
Little and the  amendment  thereof,  the Share  Exchange  Agreement  between the
Company and all of the  stockholders  of DPI resulting in the Company  acquiring
DPI  and  WOFE,  and  any  other  agreements  or  arrangements  relating  to the
transactions contemplated by this Agreement.

      "Arbitration Notice" has the meaning set forth in Section 9(o).

      "Business" has the meaning set forth in the Preliminary Statements.

      "Capital Report" has the meaning set forth in Section 6(n).

      "CA"  shall  mean   Chinamerica   Fund,   LP,   the   Initial   Investor's
representative under the terms of the December 13 Stock Purchase Agreement.

      "Closing" has the meaning set forth in Section 2(b).

                                       2
<PAGE>

      "Closing Date" has the meaning set forth in Section 2(b).

      "Code" means the Internal Revenue Code of 1986, as amended.

      "Common Stock" has the meaning set forth in Section 2(a).

      "Company" has the meaning set forth in the preface.

      "Company Intellectual  Property" means all intellectual property currently
used by the Company and its  Subsidiaries  (including  Dalian Fushi)  including,
without  limitation,  (a) all inventions (whether patentable or unpatentable and
whether or not reduced to practice),  all improvements thereto, and all patents,
patent  applications,  and patent  disclosures,  together with all  reissuances,
continuations, continuations-in-part,  revisions, extensions, and reexaminations
thereof,  (b) all trademarks,  trade names,  domain names,  service marks, brand
marks,  brand names,  service  marks,  trade dress,  logos and corporate  names,
together  with all  translations,  adaptations,  derivations,  and  combinations
thereof and including all goodwill associated  therewith,  and all applications,
registrations,  and  renewals in  connection  therewith,  (c) all  copyrightable
works,  all copyrights,  and all  applications,  registrations,  and renewals in
connection  therewith,  (d) all mask works and all applications,  registrations,
and renewals in connection  therewith,  (e) all trade  secrets and  confidential
business  information  (including  ideas,  research and  development,  know how,
formulas,  compositions,  manufacturing and production processes and techniques,
technical data, industrial or other designs, drawings, specifications,  customer
and supplier  lists,  pricing and cost  information,  and business and marketing
plans and  proposals),  (f) all computer  software  (including  data and related
documentation),  (g) all  other  proprietary  rights,  and (h)  all  copies  and
tangible  embodiments thereof (in whatever form or medium),  and each license or
contract relating thereto that is material to the conduct of the Business.

      "Company Disclosure Schedule" has the meaning set forth in Section 3.

      "Confidential IP Information" has the meaning set forth in Section 3(o).

      "Dalian Assets" has the meaning set forth in Section 3(r).

      "Dalian Fushi" has the meaning set forth in the preface.

      "December 13 Stock  Purchase  Agreement"  has the meaning set forth in the
preface.

      "Disclosure Documents" has the meaning set forth in Section 3(f).

      "Dispute" has the meaning set forth in Section 9(o).

      "DPI" has the meaning set forth in the Preliminary Statements.

      "Dual Purposes Escrow Shares" has the meaning set forth in Section 2(c).

      "ERISA"  means the Employee  Retirement  Income  Security Act of 1974,  as
amended.

      "Encumbrance"   means   any   claim,   mortgage,   servitude,    easement,
encroachment,  restrictive  covenant,  right of way,  survey  defect,  equitable
interest,  lease or other possessory interest,  lien, option,  pledge,  security
interest,  preference,  priority,  right of  first  refusal,  environmental  use
restriction or similar restriction.

                                       3
<PAGE>

      "Entity" means any  corporation  (including  any non profit  corporation),
general partnership,  limited partnership,  limited liability partnership, joint
venture, estate, trust,  association,  company (including any company limited by
shares,  limited  liability  company or joint stock company),  firm,  society or
other enterprise, association, organization or entity.

      "Environmental Laws" has the meaning set forth in Section 3(dd).

      "Exchange Act" means the U.S. Securities Exchange Act of 1934, as amended.

      "GAAP" means United States generally accepted accounting  principles as in
effect as of the date of any  document  purported  to be prepared in  accordance
with GAAP.

      "Governmental  Authorization" means any approval,  consent,  ratification,
waiver,  authorization,  franchise,  license,  permit  (including  environmental
permits) or registration issued,  granted,  given or otherwise made available by
or under the authority of any Governmental Body or pursuant to any Law.

      "Governmental Body" means any (i) nation, region, state, province, county,
municipality, city, town, village, district or other jurisdiction, (ii) federal,
state,  provincial,   local,  municipal,  foreign  or  other  government,  (iii)
governmental  or  quasi-governmental  authority  of any  nature  (including  any
governmental agency,  branch,  department or other Entity and any court or other
tribunal), (iv) multinational organization,  (v) body exercising, or entitled to
exercise,  any  administrative,   executive,  judicial,   legislative,   policy,
regulatory or taxing authority or power of any nature or (vi) official of any of
the foregoing.

      "Hazardous Materials" has the meaning set forth in Section 3(dd).

      "Heller" has the meaning set forth in the preface.

      "Indemnified Party" has the meaning set forth in Section 8(d).

      "Indemnifying Party" has the meaning set forth in Section 8(d).

      "Initial Investors" has the meaning set forth in the preface.

      "Intangible Rights" has the meaning set forth in Section 3(o).

      "Investor" and "Investors" have the meanings set forth in the preface.

      "IRS" means the Internal  Revenue Service or any successor  agency and, to
the extent relevant, the Department of Treasury.

      "Law"  means  any  foreign,   federal,   state  and  local  statute,  law,
constitution,  treaty, rule, regulation,  by-law,  ordinance,  code, regulation,
resolution, order, determination,  writ, injunction, awards (including,  without
limitation,  awards of any  arbitrator),  judgment,  decree,  binding  case law,
principle of common law or notice of any Governmental Body (for the avoidance of
doubt,  including,  but not limited to, the Laws of the United States of America
and the People's Republic of China).

                                       4
<PAGE>

      "Liabilities"  includes liabilities or obligations of any nature,  whether
known or unknown,  whether absolute,  accrued,  contingent,  choate, inchoate or
otherwise,  whether  due or to become  due,  and  whether or not  required to be
reflected on a balance  sheet  prepared in accordance  with GAAP,  including any
Liability for Taxes.

      "Management" has the meaning set forth in the preface.

      "Material Contracts" has the meaning set forth in Section 3(m).

      "Material" shall mean any event or circumstance that has, or is reasonably
likely to have, a significant adverse effect on the assets,  results,  goodwill,
business,  operations or prospects of the Company or its Subsidiaries (including
Dalian Fushi) taken as a whole.

      "Most Recent Fiscal Month End" has the meaning set forth in Section 3(g).

      "NASD" means the National Association of Securities Dealers, Inc.

      "Net  Profit"  means the net profit of the  Company as  determined  in the
following manner: (i) promptly following the completion of the Company's audited
financial statements, the Company shall deliver to CA the net profit calculation
and the method for such calculation for the Company on a consolidated  basis for
the applicable time period, prepared in good faith and reviewed by the Company's
auditors;  (ii)  following  its  receipt  from  the  Company  of the net  profit
calculation  and  method,  CA  shall  have  15  days to  review  the net  profit
calculation and method and to inform the Company in writing of any  disagreement
that it may have with the net profit  calculation  and method,  which  objection
shall  specify  in  reasonable  detail  CA's  disagreement  with the net  profit
calculation and method,  including its  calculation of net profit;  (iii) if the
Company  does not receive  such  objection  within  such 15 day period,  the net
profit  calculation and method  delivered by the Company shall be deemed to have
been  accepted  by CA and  shall  become  the Net  Profit  for  purposes  of the
applicable  provision  of Section  2(c),  and (iv) if CA does timely  deliver an
objection  to the  Company,  then the  provisions  of Section  9(o) shall become
applicable.

      "Original  Investment Price" means the price per share of the Common Stock
(issuable upon  conversion of the Preferred  Stock) paid by the Investors  under
this  Agreement,  which amount is $2.82 (as may be adjusted from time to time to
account  for stock  splits  (as  contemplated  hereunder  or  otherwise),  stock
dividends, recapitalizations, reclassifications or similar events).

      "Original  Pre-Money  Value"  means six times the 2005 Target  Profit plus
$1,000,000, which amount is $41,500,000.

      "Party" and "Parties" have the meanings set forth in the preface.

      "Person" means an individual or an Entity,  including a Governmental  Body
or any other body with legal  personality  separate  from its  equityholders  or
members, including if established by any Governmental Body.

                                       5
<PAGE>

      "Plan" has the meaning specified in ERISA Section 3(3).

      "PR Escrow Agreement" has the meaning set forth in Section 2(d).

      "Preferred Stock" has the meaning set forth in Section 3(d).

      "Proceeding"   means  any   action,   arbitration,   audit,   examination,
investigation,  claim,  demand,  inquiry,  hearing,  litigation,  suit or appeal
(whether civil,  criminal,  administrative,  judicial or investigative,  whether
formal  or  informal,  and  whether  public  or  private)  commenced,   brought,
conducted,  heard by or before or otherwise  involving any Governmental  Body or
arbitrator.

      "Purchase Price" has the meaning set forth in Section 2(a).

      "Registration Statement" has the meaning set forth in Section 5(a).

      "Restructuring  Agreements"  means the documents annexed hereto as Exhibit
I.

      "Restructuring Completion Date" has the meaning specified in Section 6(l).

      "SEC" means the U.S. Securities and Exchange Commission.

      "Securities Act" means the Securities Act of 1933, as amended.

      "Series B" has the meaning set forth in Section 2(a).

      "Shares" has the meaning set forth in Section 2(a).

      "Shortfall  Percentage"  means the quotient  obtained by dividing the 2006
Percentage Shortfall by the 2006 Target Profit.

      "Stock Escrow Agreement" has the meaning set forth in Section 2(c).

      "Subsidiary" means any Entity with respect to which a specified Person (or
a  Subsidiary  thereof)  owns a majority of the common stock or has the power to
vote or direct the voting of  sufficient  securities  to elect a majority of the
directors (or members of a similar  supervisory  group) and, with respect to the
Company,  expressly includes Diversified Product  Inspections,  Inc., a Delaware
corporation, and WOFE.

      "Tax" means any federal,  state, local, or foreign income, gross receipts,
license, payroll,  employment,  excise, severance,  stamp, occupation,  premium,
windfall  profits,  environmental,  customs  duties,  capital stock,  franchise,
profits, withholding,  social security (or similar),  unemployment,  disability,
real property,  personal  property,  sales, use, transfer,  registration,  value
added,  alternative  or  add-on  minimum,  estimated,  or other  tax of any kind
whatsoever,  including  any  interest,  penalty,  or addition  thereto,  whether
disputed or not.

      "Tax Return" means any return,  declaration,  report, claim for refund, or
information  return or  statement  required to be  supplied to any  governmental
authority relating to Taxes,  including any schedule or attachment thereto,  and
including any amendment thereof.

                                       6
<PAGE>

      "Third Party Claim" has the meaning set forth in Section 8(d).

      "Warrants" has the meaning set forth in Section 2(a).

      "WOFE" means Dalian Diversified Product Inspections  Bimetallic Cable Co.,
Ltd, a company  organized under the laws of the People's Republic of China and a
wholly owned Subsidiary of the Company.

2.    PURCHASE AND SALE OF SHARES.

      (a)  Purchase  and Sale of  Shares.  On the basis of the  representations,
warranties,  covenants and agreements contained herein, and subject to the terms
and  conditions  hereof,  the Company agrees to issue and sell to the Investors,
and the Investors, severally and not jointly, agree to purchase from the Company
for an aggregate purchase price of $775,000 (the "Purchase Price"):

            (i) at the  Closing an  aggregate  of  13,912.85  shares of Series B
Convertible  Preferred Stock of the Company,  par value $.001 per share ("Series
B"),  having the  rights,  preferences  and other  terms set forth on Exhibit A,
which  Series B is  convertible  into  274,479.17  shares of common stock of the
Company,  par value $.006 per share  ("Common  Stock") upon the  occurrence of a
contemplated  reverse split (or such other amount  reflecting no less than 1.37%
of the outstanding voting capital stock at the time of conversion);

            (ii) such  number of  additional  shares  of Common  Stock,  if any,
issuable to the Investors pursuant to Section 2(c)(ii);

            (iii) such  number of  additional  shares of Common  Stock,  if any,
issuable to the Investors pursuant to Section 5(c)(iii); and

            (iv) warrants in the form of Exhibit B (the "Warrants").

The number of shares of Series B and Common  Stock and the number of Warrants to
be purchased by each  Investor and the portion of the Purchase  Price to be paid
by each Investor  (together  with the  equivalent  information  for each Initial
Investor)  is as set forth on Exhibit C. The shares of Series B and Common Stock
(including  the Common Stock into which the Series B is  convertible)  listed in
(i)-(iii) are referred to as the "Shares."

      (b) The  Closing.  The closing of the  transactions  contemplated  by this
Agreement (the "Closing")  shall take place at the offices of Guzov Ofsink,  LLC
in New York, New York,  commencing at 10:00 a.m., local time, on the date hereof
or at such  other  location,  date and time as may be agreed  upon  between  the
Investors  and the  Company,  on which date this  Agreement is signed by all the
Investors  (the  "Closing  Date").  At the Closing,  the Company shall issue and
deliver to each Investor:

            (i)  a  stock   certificate  or  certificates  in  definitive  form,
registered  in the  name of  such  Investor,  representing  the  Series  B being
purchased by such Investor as set forth on Exhibit C; and

            (ii) a certificate or certificates in definitive form, registered in
the name of such Investor,  representing  the Warrants  being  purchased by such
Investor as set forth on Exhibit C.

                                       7
<PAGE>

At the Closing,  the Investors  shall make payment in full of the Purchase Price
to the Company (or its  designated  person) for the Shares and the Warrants.  At
the Closing,  the  Investors  and the Company shall deliver to each other all of
the various certificates, instruments, and documents referred to in Section 7.

      (c) Performance Adjustment.

            (i) 2005 Performance  Adjustment.  The Company hereby  represents to
the Investors  that the Company's  after Tax Net Profit on a  consolidated,  pro
forma  basis,  prior to costs  directly  attributed  to this  Agreement  and the
transactions  contemplated  hereby, as reported under GAAP and as prepared by an
independent  registered  public  accounting firm acceptable to the Investors for
the fiscal year ending 2005  ("2005 Net  Profit")  shall be at least  $6,750,000
(the  "2005  Target  Profit").  The 2005  Net  Profit  shall  be based  upon the
performance of the Business in the form which it exists as of Closing  (assuming
completion of the transactions  contemplated by the  Restructuring  Agreements),
and shall not include any amounts from any Subsidiary, business division, assets
or  contractual  arrangement  or other source of the Company  acquired after the
Closing.  As the Investors  are relying on such expected  profit in making their
investment hereunder,  and in order to make whole the Investors in the event the
2005 Target Profit is not met and for the purposes of the  indemnity  provisions
under Section 8 of this Agreement,  the Company has placed  3,000,000  shares of
Common Stock issuable upon the conversion of the Series A Convertible  Preferred
Stock of the Company (based on post reverse split shares,  subject to applicable
adjustment)  which are owned by Management  (the "Dual Purposes  Escrow Shares")
into an escrow  account for the benefit of the Investors (as well as the Initial
Investors)  pursuant to an escrow  agreement,  dated as of December 13, 2005, by
and among the Company, Dalian Fushi, certain holders of the Series A shares, the
Initial Investors, and Gateway National Bank, N.A., as escrow agent, attached as
Exhibit E(1) (the "Stock Escrow Agreement"), amended by an amendment no.1 to the
Stock Escrow Agreement  attached as Exhibit E(2) (the "Amendment to Stock Escrow
Agreement").  In the event that the Company  does not  generate  the 2005 Target
Profit (as determined based on the Company's 2005 audited financial statements),
a number of Dual Purposes Escrow Shares,  which shall not be more than 3,000,000
(based on post reverse split shares, subject to applicable adjustment), shall be
retired to the Company  treasury  as set forth  below in order to  maintain  the
value  of the  Investors'  investment  in the  Company  (the  "2005  Performance
Adjustment")  pursuant to the terms of the Stock Escrow  Agreement,  as amended.
The 2005  Performance  Adjustment  shall be  determined by (A)  subtracting  the
Actual  Pre-Money  Value from the  Original  Pre-Money  Value to obtain the 2005
Performance  Shortfall  and (B) dividing the 2005  Performance  Shortfall by the
Original  Investment  Price.  The Company shall  immediately  redeem,  retire or
otherwise  cancel such number of the Dual  Purposes  Escrow  Shares equal to the
2005  Performance  Adjustment,  but no more than 3,000,000 shares (based on post
reverse split shares, subject to applicable adjustment),  as calculated pursuant
to this Section 2(c)(i).

      Sample Calculation:

      If the 2005 Net Profit is reported to be $6,250,000,  the 2005 Performance
Adjustment would be calculated as follows:

      1)    (Original Pre-Money Value - Actual Pre-Money Value)
            ---------------------------------------------------
                         Original Investment Price

                                       8
<PAGE>

      2)       ($41,500,000 - $38,500,000)
               ---------------------------
                           $2.82

      3)        $3,000,000
                ----------    =    1,063,829.8  Dual Purposes Escrow Shares
                   $2.82

            For avoidance of doubt, the 2005  Performance  Adjustment under this
      Section  C(i) is  intended  for the  benefit of all  Investors  under this
      Agreement and all Initial Investors.

            (ii) 2006 Performance  Adjustment.  The Company hereby represents to
the Investors  that the Company's  after Tax Net Profit on a  consolidated,  pro
forma  basis,  as  reported  under GAAP and as prepared  by an  accounting  firm
acceptable to the Investors  ("2006 Net Profit") for the fiscal year ending 2006
shall be no less than  $10,700,000  (the "2006 Target  Profit").  Except for the
acquisition of Dalian Tongfa New Materials Science and Technology Co., Ltd., the
2006 Net Profit shall be based upon the  performance of the Business in the form
which  it  exists  as  of  Closing  (assuming  completion  of  the  transactions
contemplated by the Restructuring Agreements), and shall not include any amounts
from any Subsidiary,  business  division,  assets or contractual  arrangement or
other source of the Company  acquired  after the Closing.  In the event the 2006
Net Profit is not equal to or greater  than 90% of the 2006 Target  Profit,  the
Company  agrees to issue a number of  additional  shares of Common  Stock to the
Investors (the "2006 Performance  Shares") pro rata in accordance their original
investment  holdings  as set forth on Exhibit C. The number of 2006  Performance
Shares shall be calculated by (A)  subtracting the 2006 Net Profit from the 2006
Target Profit to obtain the 2006  Performance  Shortfall,  (B) dividing the 2006
Performance  Shortfall  by the  2006  Target  Profit  to  obtain  the  Shortfall
Percentage and (C) multiplying the Shortfall  Percentage by the number of shares
of Common Stock (issuable upon conversion of the Series B) originally  issued to
the Investors under this Agreement.  If the Shortfall Percentage is 10% or less,
no 2006  Performance  Shares shall be issued to the Investors.  For avoidance of
doubt, the 2006 Performance  Adjustment under this Section C(ii) is intended for
the benefit of all Investors under this Agreement and all Initial Investors.

      Sample Calculation:

      If the 2006 Net Profit is  reported to be  $9,095,000,  the number of 2006
Performance Shares would be calculated as follows:

         1)   2006 Target Profit - 2006 Net Profit = 2006 Performance Shortfall

              10,700,000 - 9,095,000 = 1,605,000

         2)   2006 Performance Shortfall
              ---------------------------------  =    Shortfall Percentage
              2006 Target Profit

              1,605,000
              ------------      =     0.15
              10,700,000

                                       9
<PAGE>

         3)   Shortfall Percentage X Shares = 2006 Performance Shares

              0.15  X  4,250,000  =  637,500 2006 Performance Shares

      (d) Public  Relations and Executive  Searches.  The Investors  acknowledge
that  $600,000  of the  purchase  price  under the  December  13 Stock  Purchase
Agreement  was  delivered  directly  into escrow for the purpose of effecting an
integrated  investor and public  relations  campaign,  of which  $500,000 of the
escrow funds will apply,  and executive  search costs, for which $100,000 of the
escrow funds will be used pursuant to the terms of an escrow agreement, dated as
of December 13, 2005, by and among Gateway National Bank, N.A., as escrow agent,
the  Company and the  Initial  Investors,  attached as Exhibit F (the "PR Escrow
Agreement").  The release of such portion of the Purchase Price from escrow will
be effected in accordance with the terms of the PR Escrow Agreement.

3.  REPRESENTATIONS AND WARRANTIES  CONCERNING THE COMPANY, ITS SUBSIDIARIES AND
DALIAN FUSHI.

      The  Company,   Dalian  Fushi  and  Management,   jointly  and  severally,
represents and warrants to each Investor that the  statements  contained in this
Section 3 are correct and  complete as of the date of this  Agreement  except as
set forth in the disclosure  schedule  delivered by the Company to the Investors
on the date hereof (the "Company Disclosure  Schedule").  The Company Disclosure
Schedule  will be arranged  in  paragraphs  corresponding  to the  lettered  and
numbered paragraphs contained in this Section 3.

      (a)  Organization  and  Standing.   The  Company  is  a  corporation  duly
organized,  validly existing and in good standing under the laws of the State of
Nevada, with full and unrestricted corporate power and authority to own, operate
and lease its  assets,  to carry on the  Business  (and any other  business)  as
currently conducted (and proposed to be conducted),  to execute and deliver this
Agreement  and the  Ancillary  Agreements  and to  carry  out  the  transactions
contemplated hereby and thereby. The Company has made available to the Investors
complete and correct copies of the charter and by-laws of the Company,  with all
amendments thereto,  as in effect on the date of this Agreement.  The Company is
duly  qualified  to do  business  and is in good  standing  (to the extent  such
concept is  applicable in the relevant  jurisdiction)  in all  jurisdictions  in
which either the ownership or use of the properties  owned or used by it, or the
nature of the activities  conducted by it, requires such  qualification,  except
where the failure to so qualify will not have a material  adverse  effect on the
Business or financial  condition of the Company and its Subsidiaries  (including
Dalian Fushi), taken as a whole. All Governmental  Authorizations required under
the Law of the People's  Republic of China for the due and proper  establishment
and operation of Dalian Fushi have been duly obtained from all relevant People's
Republic of China authorities and are in full force and effect.  All filings and
registrations  with the  People's  Republic  of China  authorities  required  in
respect of Dalian Fushi and their  operations,  including but not limited to the
registrations  with the delegated  authority of Ministry of Commerce,  the State
Administration of Industry and Commerce,  the State  Administration  for Foreign
Exchange,  tax  bureau  and  customs  authorities  have been duly  completed  in
accordance  with  applicable  Laws. By the  Restructuring  Completion  Date, all
Governmental  Authorizations  required under the Law of the People's Republic of
China for the due and proper  establishment  and  operation of WOFE will be duly
obtained from all relevant  People's  Republic of China  authorities  and are in
full force and effect.  By the  Restructuring  Completion  Date, all filings and
registrations  with the  People's  Republic  of China  authorities  required  in
respect of WOFE to  commence  and carry out its  operations,  including  but not
limited  to the  registrations  with the  delegated  authority  of  Ministry  of
Commerce,   the  State  Administration  of  Industry  and  Commerce,  the  State
Administration  for Foreign  Exchange,  tax bureau and customs  authorities have
been duly completed in accordance with applicable Laws.

                                       10
<PAGE>

      (b) Authorization of Transaction. The Company has full corporate power and
authority to execute and deliver this  Agreement  and any  applicable  Ancillary
Agreement and to perform its obligations hereunder and thereunder. The execution
and delivery of this  Agreement and any Ancillary  Agreements by the Company and
the  consummation  by the Company of the  transactions  contemplated  hereby and
thereby have been duly authorized by all necessary  corporate action on the part
of the Company,  including any shareholder  approval  (including to complete the
transactions  required hereby). This Agreement constitutes the valid and legally
binding obligation of the Company,  enforceable in accordance with its terms and
conditions. The Company need not provide any notice to, make any filing with, or
obtain any  authorization,  consent or approval of any Governmental  Body or any
other  Person  in order to  consummate  the  transactions  contemplated  by this
Agreement or any Ancillary Agreement, except as set forth in Section 3(b) of the
Company Disclosure Schedule.

      (c)  Noncontravention.  Except as set forth in Section 3(c) of the Company
Disclosure Schedule,  the execution,  delivery and performance by the Company of
this Agreement and any Ancillary  Agreements,  the fulfillment of and compliance
with  the  respective  terms  and  provisions   hereof  and  thereof,   and  the
consummation by the Company and any of its Subsidiaries (including Dalian Fushi)
of the transactions  contemplated  hereby and thereby,  do not and will not: (i)
conflict with, or violate any provision of, any Law having  applicability to the
Company,  its  Subsidiaries  or Dalian  Fushi,  or any of their  assets,  or any
provision  of the  charter or bylaws of the  Company or any of its  Subsidiaries
(including  Dalian  Fushi);  (ii) conflict  with, or result in any breach of, or
constitute a default under any agreement, contract or other arrangement (whether
written or oral) to which the Company or any Subsidiary (including Dalian Fushi)
is a party or by which the Company,  its  Subsidiaries or Dalian Fushi or any of
their  assets  may be bound;  or (iii)  result in or  require  the  creation  or
imposition  of or  result in the  acceleration  of any  indebtedness,  or of any
Encumbrance of any nature upon, or with respect to any of the assets  (including
the Shares) of the Company or any Subsidiary (including Dalian Fushi).

      (d)  Capitalization.  The entire  authorized  capital stock of the Company
consists of (i) 100,000,000  shares of Common Stock, of which 39,243,659  shares
are issued and outstanding,  and (ii) 5,000,000 shares of preferred stock of the
Company, par value $.001 per share ("Preferred Stock"),  with 785,000 designated
as Series A, of which 784,575.16 shares are issued and outstanding,  and 216,000
designated as Series B, of which no shares are issued and outstanding.  No other
capital stock or equity securities of or interests in the Company are authorized
or outstanding,  and there are no shares of capital stock or other securities of
the Company  reserved  for future  issuance.  All of the issued and  outstanding
shares of Common  Stock  and  Preferred  Stock  have been duly  authorized,  are
validly issued, fully paid and nonassessable, were issued in compliance with all
applicable  federal and state securities Laws and any other applicable Laws, and
are held of record by the respective  stockholders  as set forth in Section 3(d)
of the Company  Disclosure  Schedule.  There are no  outstanding  or  authorized
options,  warrants,  purchase  rights,  subscription  rights,  rights  of  first
refusal,  pre-emptive  rights,  conversion  rights,  exchange  rights  or  other
contracts  or  commitments  (whether  written or oral) that  could  require  the
Company  to issue,  sell or  otherwise  cause to become  outstanding  any of its
capital stock (including any instruments or securities  convertible into capital
stock).  There are no  outstanding  or authorized  stock  appreciation,  phantom
stock, profit participation or similar rights with respect to the Company. There
are no voting  trusts,  proxies,  or other  agreements  or  understandings  with
respect to the voting of the capital stock of the Company.

                                       11
<PAGE>

      (e) Subsidiaries.  Section 3(e) of the Disclosure  Schedule sets forth (i)
the  authorized  capital  stock of each direct and  indirect  Subsidiary  of the
Company  and the  number of issued and  outstanding  shares of each class of its
capital stock (or other securities),  the names of the holders thereof,  and the
number of  shares  held by each such  holder,  (ii) the  number of shares of its
capital  stock  held in  treasury  and (iii) the  nature  and amount of any such
equity  investment,  other  interest or  advance.  All of such shares of capital
stock of Subsidiaries  directly or indirectly held by the Company have been duly
authorized,  are  validly  issued and fully paid and  nonassessable.  All of the
issued and  outstanding  shares (or other  securities) of each  Subsidiary  were
issued in compliance with all applicable  federal and state  securities Laws and
any other applicable Laws. The Company  directly,  or indirectly  through wholly
owned  Subsidiaries,  holds of record and  beneficially  owns all such shares of
capital  stock of the  direct  or  indirect  Subsidiaries  free and clear of all
Encumbrances.  Each Subsidiary is an Entity duly organized, validly existing and
in good  standing  (to the extent such  concept is  applicable  in the  relevant
jurisdiction)  under the Laws of its state or jurisdiction of incorporation  (as
listed  in  Section  3(e)  of  the  Company  Disclosure  Schedule)  and  in  all
jurisdictions  in which either the ownership or use of the  properties  owned or
used by it, or the  nature of the  activities  conducted  by it,  requires  such
qualification. Each Subsidiary has the full and unrestricted power and authority
to own, operate and lease its assets and to carry on the Business (and any other
business) as currently  conducted (and proposed to be  conducted).  Dalian Fushi
has the full and unrestricted  power and authority to own, operate and lease its
assets  and to carry on the  Business  (and any  other  business)  as  currently
conducted. Other than as contemplated by the Restructuring Agreements, there are
no outstanding or authorized options,  warrants,  purchase rights,  subscription
rights,  conversion  rights,  exchange  rights or other contracts or commitments
that could require any  Subsidiary to issue,  sell or otherwise  cause to become
outstanding  any of its capital  stock.  There are no  outstanding or authorized
stock appreciation,  phantom stock, profit  participation or similar rights with
respect to any  Subsidiary.  Other  than as  contemplated  by the  Restructuring
Agreements,  there  are no  voting  trusts,  proxies,  or  other  agreements  or
understandings with respect to the voting of the capital stock of any Subsidiary
(including  Dalian  Fushi).  Other  than as  contemplated  by the  Restructuring
Agreement,  neither the Company nor any of its  Subsidiaries  (including  Dalian
Fushi)  control  directly or  indirectly  or has any direct or  indirect  equity
participation  in  any  corporation,   partnership,  trust,  or  other  business
association which is not a Subsidiary.

      (f) Disclosure Documents; Common Stock Trading.

            (i) The Company has timely filed with, or furnished to, the SEC each
form,  proxy statement or report required to be filed with, or furnished to, the
SEC  by  the  Company   pursuant  to  the   Exchange  Act  since  July  6,  2005
(collectively,  the  "Disclosure  Documents"),  and no Disclosure  Documents are
required to be filed with, or furnished to, the SEC prior to such date that were
not otherwise filed on a timely basis. The Disclosure Documents complied,  as of
the date of their filing with the SEC, in all respects with the  requirements of
the Securities Act, the Exchange Act and the  Sarbanes-Oxley Act of 2002 and the
rules and  regulations  promulgated  thereunder.  The  information  contained or
incorporated  by reference in the  Disclosure  Documents was true,  complete and
correct in all respects as of the  respective  dates of the filing  thereof with
the SEC and, as of such  respective  dates,  the  Disclosure  Documents  did not
contain any 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, except to
the extent updated or superseded by any Disclosure  Document  subsequently filed
by the Company  with the SEC prior to the date hereof.  To the  knowledge of the
officers of the  Company,  there is no event,  fact or  circumstance  that would
cause  any  certification  signed by any such  officer  in  connection  with any
Disclosure  Document  pursuant to the requirements of the Sarbanes  Oxley-Act of
2002 to be untrue, inaccurate or incorrect in any respect.

                                       12
<PAGE>

            (ii)  The  financial  statements  of  the  Company  included  in the
Disclosure  Documents have been prepared in accordance  with the published rules
and  regulations of the SEC and in conformity  with GAAP applied on a consistent
basis  throughout  the periods  indicated  therein,  except as may be  indicated
therein or in the notes thereto, and presented fairly, in all material respects,
the  consolidated  financial  position of the Company and its Subsidiaries as of
the dates  indicated,  and the  consolidated  results of the operations and cash
flows of the Company and its  Subsidiaries  for the  periods  therein  specified
(except  in the  case of  quarterly  financial  statements  for the  absence  of
footnote  disclosure  and  subject,  in the case of interim  periods,  to normal
year-end adjustments).

            (iii)  The  Common  Stock  is  validly,   properly  and  effectively
registered  under the Exchange Act in  accordance  with all  applicable  federal
securities  laws  and is  quoted  on the OTC  Bulletin  Board.  The  Company  is
currently  in  compliance  with  all  applicable  NASD  and OTC  Bulletin  Board
requirements  and standards.  There is no revocation  order,  suspension  order,
injunction or other  Proceeding  or Law (whether  issued by the SEC, the NASD or
other  Governmental  Body) affecting the effectiveness of the Company's Exchange
Act  registration  or the trading of the Common Stock.  The  consummation of the
transactions  contemplated by this Agreement and the Ancillary Agreements do not
conflict with, and will not result in any violation of, any NASD or OTC Bulletin
Board trading  requirement  or standard  applicable to the Company or its Common
Stock.

      (g) Financial  Statements.  Attached hereto as Exhibit H are the unaudited
balance sheets and  statements of income,  changes in  stockholders'  equity and
cash flow (the  "Financial  Statements") as of and for the month ended September
30, 2005 (the "Most Recent Fiscal Month End") for each of the Company and Dalian
Fushi. The Financial Statements (including the notes thereto) have been prepared
in accordance with the requirements for the financial statements included in the
Company's  Disclosure  Documents.  No Financial Statements are available for DPI
and WOFE as they are newly formed  entities and have not  conducted any business
as of the date hereof except for this Agreement, other Ancillary Agreements, and
the Restructuring Agreements.

      (h) Events  Subsequent to Most Recent Form 10-QSB.  Except as set forth in
Section  3(h) of the Company  Disclosure  Schedule and as  contemplated  by this
Agreement  or as set  forth in any  Ancillary  Agreement  and the  Restructuring
Agreements,  since the filing of the  Company's  Form  10-QSB for the  quarterly
period ended September 30, 2005,  there has not been any change in the Business,
capital   structure,    ownership,    organizational   documents,    contractual
relationships,  financial condition, operations, results of operations or future
prospects of the Company or any of its Subsidiaries (including Dalian Fushi).

      (i) No  Undisclosed  Liabilities;  No  Guaranties.  Except as set forth on
Section 3(i) of the Company Disclosure Schedule,  in the financial statements of
the Company  included in the Disclosure  Documents and the financial  statements
attached as Exhibit H, the Company and its Subsidiaries (including Dalian Fushi)
do not have any Liabilities.  Except as set forth on Section 3(i) of the Company
Disclosure Schedule,  none of the Company nor any of its Subsidiaries (including
Dalian Fushi) is a guarantor or otherwise  liable for any  Liability  (including
indebtedness)  of  any  other  Person.  Neither  the  Company  nor  any  of  its
Subsidiaries  (including  Dalian Fushi) is a party to, or has any  commitment to
become a party to, any agreement,  contract or other arrangement associated with
off balance sheet financing.

                                       13
<PAGE>

      (j)  Absence  of  Litigation.  Except  as  set  forth  in  the  Disclosure
Documents,  there is no  Proceeding  pending  or  threatened  by or  before  any
Governmental Body against the Company or any of its Subsidiaries (nor is there a
basis for any of the foregoing).  As of the date hereof,  there is no Proceeding
pending or, to the Company's knowledge, threatened by or before any Governmental
Body (i) seeking to prevent, hinder, modify or challenge any of the transactions
contemplated by this Agreement or any of the Ancillary Agreements,  or (ii) that
would cause any of the transactions contemplated by this Agreement or any of the
Ancillary Agreements to be illegal, invalid, voidable or otherwise rescinded.

      (k) Title to Assets.  Except as set forth in Section  3(k) of the  Company
Disclosure  Schedule,  the Company or any of its Subsidiaries  (including Dalian
Fushi) have good and marketable title to, or a valid leasehold interest in, free
and clear of all  Encumbrances,  all properties and assets (i) purportedly owned
or used by them or located on their premises, or (ii) necessary or advisable for
the  conduct  of  the  Business  as  currently  conducted  (or  proposed  to  be
conducted). All facilities,  machinery,  equipment, fixtures, vehicles and other
assets  and  properties  owned,  leased  or  used by the  Company  or any of its
Subsidiaries (including Dalian Fushi) are in good operating condition and repair
(subject to ordinary  wear and tear) and are  reasonably  fit and usable for the
purposes for which they are being used.

      (l) Legal Compliance.  Each of the Company and its Subsidiaries (including
Dalian Fushi) and their  respective  predecessors and Affiliates is currently in
compliance and, except to the extent that  noncompliance  will not and could not
reasonably  be expected to have a material  adverse  effect upon the Business or
the financial  condition of the Company and any of its  Subsidiaries  (including
Dalian Fushi) as currently  conducted or proposed to be  conducted,  has been in
compliance  with all  applicable  Laws,  and no  Proceeding  has  been  filed or
commenced  against any of them  alleging  any failure so to comply.  Each of the
Company  and its  Subsidiaries  (including  Dalian  Fushi) and their  respective
predecessors and Affiliates will be in compliance with all applicable Laws after
the  consummation  of the  transactions  contemplated  by this Agreement and the
Ancillary Agreements.

      (m) Contracts.  Section 3(m) of the Company Disclosure  Schedule lists all
contracts  and other  agreements  (whether  written or oral) to which any of the
Company or its  Subsidiaries  is a party  (including  Dalian Fushi)  pursuant to
which the  Company or any of its  Subsidiaries  (including  Dalian  Fushi) is to
receive,  or is obligated to pay, more than $100,000  ("Material  Contracts") or
which is  otherwise  Material  to the Company  and its  Subsidiaries  (including
Dalian  Fushi)  taken as a whole,  specifying  for each its date and the parties
thereto. The Company has made available to the Investors, a correct and complete
copy of each  written  agreement  or other  documentation  (as  amended to date)
listed in Section 3(m) of the Company Disclosure Schedule.  With respect to each
such agreement: (i) the agreement is legal, valid, binding,  enforceable, and in
full force and effect;  (ii) the  agreement  will  continue to be legal,  valid,
binding,  enforceable, and in full force and effect on identical terms following
the  consummation  of the  transactions  contemplated  by this Agreement and the
Ancillary Agreements;  (iii) neither the Company nor its Subsidiaries (including
Dalian Fushi) have provided or received notice of breach or default and no event
has  occurred  which with  notice or lapse of time could  constitute  a material
breach or default, or permit termination,  modification, or acceleration,  under
the agreement;  and (iv) no party has repudiated any provision of the agreement.
The  contracts  and other  agreements  listed  in  Section  3(m) of the  Company
Disclosure  Schedule  represent all Material Contracts required or necessary for
the Company and its  Subsidiaries  (including  Dalian Fushi) to own, operate and
manage the Business as currently conducted (or as proposed to be conducted).

                                       14
<PAGE>

      (n) Employees; Employee Benefits.

            (i) Except as set forth in Section  3(n) of the  Company  Disclosure
Schedule,  neither  the Company nor any of its  Subsidiaries  (including  Dalian
Fushi)  maintain any Plans (as defined in ERISA Section 3(3)) or any obligation,
arrangement  or  customary  practice,  whether or not  legally  enforceable,  to
provide benefits,  other than salary, as compensation for services rendered,  to
present or former directors, officers, employees or agents.

            (ii)  Section  3(n) of the  Company  Disclosure  Schedule  lists all
current  directors  and officers of the Company and each  Subsidiary  (including
Dalian  Fushi),   showing  each  such  person's  name,   position,   and  annual
remuneration,  bonuses and fringe  benefits for the current  fiscal year.  Other
than as contemplated  hereby,  there are no employment  agreements with any such
Persons.

            (iii)  To the  Company's  knowledge,  during  the  past 5  years  no
director or officer of the Company or any  Subsidiary  has: (i) been arrested or
convicted for any crime  material to an  evaluation of such person's  ability or
integrity,  including, without limitation, any violation of any federal or state
law which  currently or has previously  regulated the types of business in which
the Company is currently or has previously  been engaged;  (ii) filed a petition
under federal  bankruptcy or any state insolvency laws; or (iii) been a director
or  officer  of a  business  Entity  which has filed a  petition  under  federal
bankruptcy or any state  insolvency  laws, or had a receiver or similar  officer
appointed by a court to administer the business or property of such Entity.

            (iv) With regard to employment  and staff or labor  management,  the
Company and each  Subsidiary  (including  Dalian  Fushi) have  complied with all
applicable  Laws in all  material  respects.  Neither  the  Company,  any of its
Subsidiaries or Dalian Fushi is aware that any officer or key employee,  or that
group of key employees,  intends to terminate  their  employment  with them, nor
does the  Company,  any of its  Subsidiaries  or  Dalian  Fushi  have a  present
intention to terminate the employment of any of the foregoing.

      (o) Intellectual Property.

            (i) Except as set forth in Section  3(o) to the  Company  Disclosure
Schedule,  the  Company  and its  Subsidiaries  own or  have a right  to use all
Company Intellectual Property, free and clear of any and all Encumbrances of any
kind,  except  where the failure to own or have a right to use such  property or
such lien or  encumbrance  would not have a  material  adverse  effect  upon the
Business or the financial  condition of the Company and any of its  Subsidiaries
(including Dalian Fushi). All Company Intellectual Property and a listing of all
names under which the Company and its Subsidiaries (including Dalian Fushi) have
operated  are set forth in  Section  3(o) to the  Company  Disclosure  Schedule.
Except as set forth in Section 3(o) to the Company Disclosure Schedule,  the use
of the  Company  Intellectual  Property  by the  Company  and  its  Subsidiaries
(including  Dalian  Fushi) does not conflict  with,  infringe  upon,  violate or
interfere with or constitute an appropriation of any right,  title,  interest or
goodwill,  including,  without  limitation,  any  intellectual  property  right,
trademark,  trade name,  domain name,  patent,  service mark,  brand mark, brand
name, database, industrial design, trade secrets, technology, software, customer
lists,  copyright  or any  pending  application  therefor  of any  other  Person
(collectively,  "Intangible  Rights"),  and the  Company and the  directors  and
officers (and employees with  responsibility for intellectual  property matters)
of the  Company  and its  Subsidiaries  (including  Dalian  Fushi)  do not  have
knowledge  of any claims  thereof.  Except as set forth in  Section  3(o) to the
Company Disclosure Schedule,  the use of all Company Intellectual  Property will
not be adversely affected by the transactions contemplated in this Agreement.

                                       15
<PAGE>

            (iii) The Company and its Subsidiaries (including Dalian Fushi) have
taken  all  reasonable  and  practicable  steps  to  protect  and  preserve  the
confidentiality of all Company Intellectual Property not subject to copyright or
patent  rights  ("Confidential  IP  Information").  Use by the  Company  and its
Subsidiaries  (including  Dalian Fushi) of Confidential IP Information not owned
by the Company and its  Subsidiaries  (including  Dalian Fushi) have been and is
pursuant to the terms of a written agreement  between the respective  Company or
Subsidiary  (including  Dalian  Fushi)  and the  owner of such  Confidential  IP
Information, or is otherwise lawful.

      (p) Notes and Accounts  Receivables.  All notes and accounts receivable of
the  Company  and its  Subsidiaries  are  reflected  properly  on the  Financial
Statements and are valid receivables subject to no setoffs or counterclaims, are
current and  collectible  within 90 days after the Closing,  subject only to the
reserve for bad debts set forth on the face of the balance sheet included in the
Financial  Statements  (rather  than in any notes  thereto) as adjusted  for the
passage of time through the Closing Date in accordance  with the past custom and
practice of the Company and its Subsidiaries.

      (q) Tax Matters.

            (i) Except as set forth in Section  3(q) of the  Company  Disclosure
Schedule,  each of the Company,  its  Subsidiaries  and Dalian Fushi have timely
filed all Tax Returns  that it was  required to file under  applicable  laws and
regulations.  All such Tax Returns  were correct and complete in all respects at
the  time of  filing  and  were  prepared  in  substantial  compliance  with all
applicable Laws. All Taxes due and owing by any of the Company, its Subsidiaries
or Dalian Fushi  (whether or not shown on any Tax Return) have been timely paid.
None of the  Company,  its  Subsidiaries,  and  Dalian  Fushi  currently  is the
beneficiary  of any  extension of time within  which to file any Tax Return.  No
Proceeding  has ever been  commenced by any  Governmental  Body where any of the
Company,  any of its  Subsidiaries  or Dalian  Fushi  does not file Tax  Returns
asserting that the Company, its Subsidiaries, or Dalian Fushi was, is, or may be
subject to taxation by that Governmental  Body. There are no Encumbrances on any
of the assets of any of the Company, its Subsidiaries or Dalian Fushi that arose
in connection  with any failure (or alleged  failure) to pay any Tax or file any
Tax Return.

            (ii) Section 3(q) of the Company  Disclosure  Schedule lists all Tax
Returns  filed with respect to any of the Company,  its  Subsidiaries  or Dalian
Fushi for taxable periods ended on or after January 1, 2000, indicates those Tax
Returns that have been audited,  and indicates  those Tax Returns that currently
are the  subject of audit.  Except as set forth in Section  3(u) of the  Company
Disclosure  Schedule,  none of the Company, its Subsidiaries or Dalian Fushi has
received from any Governmental  Body any (A) written notice indicating an intent
to open an audit or other  review,  (B) request for  information  related to Tax
matters,  or (C) notice of deficiency or proposed  adjustment  for any amount of
Tax proposed,  asserted,  or assessed  against the Company,  its Subsidiaries or
Dalian Fushi.  The Company has  delivered to the Investors  correct and complete
copies of all Tax Returns,  examination  reports and statements of  deficiencies
assessed against or agreed to by any of the Company,  its Subsidiaries or Dalian
Fushi since January 1, 2000.

            (iii) Each of the Company,  its  Subsidiaries  and Dalian Fushi have
withheld  and  paid  all  Taxes  required  to have  been  withheld  and  paid in
connection  with  any  amounts  paid  or  owing  to  any  employee,  independent
contractor, creditor, stockholder or other Person.

                                       16
<PAGE>

            (iv)  No  director  or  officer  (or  employee  responsible  for Tax
matters) of any of the Company,  it  Subsidiaries  or Dallas  Fushi  expects any
Governmental  Body to assess any  additional  Taxes for any period for which Tax
Returns have been filed.

            (v) None of the Company, its Subsidiaries or Dalian Fushi has waived
any statute of limitations in respect of Taxes or agreed to an extension of time
with respect to a Tax assessment or deficiency.

            (vi) None of the  Company,  its  Subsidiaries  or Dalian  Fushi is a
party  to or bound  by any Tax  allocation  or  sharing  agreement.  None of the
Company,  its  Subsidiaries  or  Dalian  Fushi (A) has been a member of group of
Entities filing a consolidated  Tax Return (other than a group the common parent
of which is the Company) or (B) has any liability for the Taxes of any Person as
a transferee or successor, by contract, or otherwise.

            (vii) The unpaid  Taxes of each of the Company and its  Subsidiaries
did not,  as of the Most  Recent  Fiscal  Month  End,  exceed  the  reserve  for
Liabilities  pertaining  to Taxes  (rather than any reserve for  deferred  Taxes
established to reflect timing differences between book and Tax income) set forth
on the face of the Financial Statements for the Most Recent Fiscal Month End.

      (r) Dalian Fushi.

            (i) As of the Closing Date, the Company and its  Subsidiaries are in
the  process  of  completing  a  series  of  transactions  as set  forth  in the
Restructuring  Agreements.  The Business is the only  business that Dalian Fushi
has been engaged in, and the Business is the only business  currently engaged in
by the Company.

            (ii)  As a  result  of  the  Restructuring  Agreements,  and  by the
Restructuring  Completion  Date, (A) WOFE shall have acquired,  and Dalian Fushi
legally,  validly and irrevocably  shall have transferred to WOFE, in accordance
and compliance with all applicable Laws, the Business and all the properties and
other assets of Dalian Fushi as  specifically  identified in Section 3(r) of the
Company  Disclosure  Schedule  (the  "Acquired  Assets") and as set forth in the
Restructuring Agreements,  except for those certain assets separately identified
in Section 3(r) of the Company  Disclosure  Schedule,  which assets shall remain
the property of Dalian Fushi (the "Dalian Assets"), (B) WOFE shall have acquired
those  certain  rights to such Dalian Assets as specified in Section 3(r) of the
Company  Disclosure  Schedule and as set forth in the Restructuring  Agreements,
and (C) the Company is required as of the Closing Date to  consolidate  into its
financial statements those of DPI, WOFE and Dalian Fushi in accordance with GAAP
and as required under SEC Regulation  S-X. The Acquired Assets and rights to the
Dalian  Assets to be  acquired by WOFE are  adequate  and  satisfactory  for the
conduct of the Business in the manner in which the  Business is currently  being
conducted and proposed to be  conducted.  Except as set forth in Section 3(r) of
the Company  Disclosure  Schedule,  upon the Restructuring  Completion Date, the
WOFE  shall  have  good,  valid and  marketable  title to, or a valid  leasehold
interest in, all Acquired Assets and Dalian Assets free and clear of any and all
Encumbrances.

            (iii)  As a  result  of  the  Restructuring  Agreements,  and by the
Restructuring  Completion  Date, the Company shall have,  directly or indirectly
through WOFE,  acquired all rights,  whether directly or indirectly  through its
Subsidiaries,  to the control, management and election of the Board of Directors
(or similar  supervisory  group) of Dalian  Fushi and to  otherwise  operate the
Business.  These rights include all rights with respect to the voting of any and
all  securities of Dalian Fushi  entitled to, or otherwise  having the right to,
vote and to operate the Business, including any part remaining in Dalian Fushi.

                                       17
<PAGE>

            (iv)  As  a  result  of  the   Restructuring   Agreements   and  the
consummation  of  the  transactions  contemplated  by  this  Agreement  and  the
Ancillary Agreements, the ownership structure and capitalization of Dalian Fushi
and  WOFE  will  be as set  forth  in  Section  3(r) of the  Company  Disclosure
Schedule,  which  includes  for each of them its  authorized/registered  capital
stock and the  number  of issued  and  outstanding  shares of each  class of its
capital stock (or other securities),  the names of the holders thereof,  and the
number of shares held by each such holder

            (v)  Copies  of all  Restructuring  Agreements  used to  acquire  or
evidence  the  Acquired  Assets  and the  rights  to  Dalian  Assets by WOFE are
attached as Exhibit I in their final  executed  form.  With respect to each such
agreement: (A) the agreement is legal, valid, binding,  enforceable, and in full
force and effect under all  applicable  Laws; (B) the agreement will continue to
be legal, valid, binding, enforceable, and in full force and effect on identical
terms  following  the  consummation  of the  transactions  contemplated  by this
Agreement  and  the  Ancillary  Agreements;  (C)  neither  the  Company  nor its
Subsidiaries (including Dalian Fushi) have provided or received notice of breach
or default and no event has occurred (or would occur) which with notice or lapse
of time would  constitute a material breach or default,  or permit  termination,
modification, or acceleration,  under the agreement; (D) no party has repudiated
any  provision of the  agreement;  and (E) the agreement  cannot be  terminated,
unwound,  invalidated,  voided or  otherwise  rescinded  for any reason,  event,
action  or  circumstance,  whether  as a  result  of  the  consummation  of  the
transactions  contemplated  by this  Agreement  or any  Ancillary  Agreement  or
otherwise.

            (vi)  Dalian  Fushi  has  obtained  from the  Bank of China  and the
Industrial  and Commerce  Bank of China  written  consents  that are required in
connection with the contemplated transactions of this Agreement,  including, but
not limited to, the Restructuring  Agreements. As such, the lease for the Leased
Assets  contemplated  under the  Restructuring  Agreements  will be effective at
Closing.

      (s) Books and Records.  Except as set forth in Section 3(s) to the Company
Disclosure Schedule, the books of account, minute books, equity record books and
other records of the Company and its Subsidiaries  (including Dalian Fushi), all
of which  have  been made  available  to the  Investors  prior to  Closing,  are
accurate  and  complete in all material  respects  and have been  maintained  in
accordance  with  sound  business  practices  including  the  maintenance  of an
adequate  system of  internal  controls  (including  for  purposes of making the
certifications required by the Sarbanes Oxley Act of 2002 in connection with the
Disclosure  Documents).  Except  as set  forth in  Section  3(s) of the  Company
Disclosure  Schedule,  each  transaction  of the  Company  and its  Subsidiaries
(including  Dalian Fushi) is properly and  accurately  recorded on the books and
records of the respective  Company or Subsidiary,  and each document  (including
any  contract or other  agreement,  invoice or receipt) on which  entries in the
Company's and its Subsidiaries' (including Dalian Fushi's) books and records are
based is accurate and complete in all material respects. The minute books of the
Company  and its  Subsidiaries  contain  accurate  and  complete  records of all
meetings  held  of,  and  corporate  action  taken  by,  the  Company's  and its
Subsidiaries' stockholders,  directors and directors' committees,  respectively,
and no such meeting has been held for which  minutes have not been  prepared and
are not contained in such minute books.

                                       18
<PAGE>

      (t) Certain Business Relationships. Except as set forth in Section 3(t) of
the Company Disclosure Schedule,  none of the Company, its Subsidiaries,  Dalian
Fushi  nor  any  their  respective  employees,   officers,   directors,  agents,
representatives  or Affiliates has been involved in any business  arrangement or
relationship  with the Company and its  Subsidiaries  (including  Dalian  Fushi)
within the past 36 months,  and none of the Company,  its  Subsidiaries,  Dalian
Fushi  nor  any  their  respective  employees,   officers,   directors,  agents,
representatives  or Affiliates own any asset,  tangible or intangible,  which is
used in, or required or  necessary  for the  conduct of, the  businesses  of the
Company and its Subsidiaries  (including  Dalian Fushi and the Business).  There
are no  loan,  guarantee,  cross-guarantee,  pledge,  credit  or  other  similar
agreements,  monies due, advances made or other funds  transferred,  between the
Companies or any of its Subsidiaries and Dalian Fushi, except those contemplated
in the  Restructuring  Agreements.  Except as disclosed in Schedule 3(t), to the
best of  Management's  knowledge,  none of the respective  employees,  officers,
directors,  agents,  representatives of the Company,  any of its Subsidiaries or
Dalian  Fushi  has any  direct or  indirect  ownership  interest  in any firm or
corporation with which the Company or any of its Subsidiaries  (including Dalian
Fushi) is  affiliated  or with  which  the  Company  or any of its  Subsidiaries
(including Dalian Fushi) has a business relationship, or any firm or corporation
that  competes  with the Company or any of its  Subsidiaries  (including  Dalian
Fushi).

      (u)  Private  Offering.  Based  on the  representations  provided  by each
Investor in Section 4, the offer and sale of the Shares to each Investor is, and
the offer and sale of any  Common  Stock to each  Investor  pursuant  to Section
2(c)(ii)  will  be,  exempt  from  the  registration  and  prospectus   delivery
requirements of the Securities Act and any other  securities  Laws.  Neither the
Company nor any Person acting on its behalf has offered or sold or will offer or
sell any  securities,  or has taken or will take any  other  action  (including,
without   limitation,   any  offering  of   securities   of  the  Company  under
circumstances  that would require,  under the Securities Act, the integration of
such  offering  with the offer and sale of the Shares)  which would  subject the
offer and sale of the Shares to the  registration  provisions of the  Securities
Act.

      (v) Use of Proceeds.  The Company  shall use the proceeds from the sale of
the Shares for the purpose(s) set forth in the use of proceeds schedule attached
hereto as Exhibit J.

      (w) Powers of Attorney. Except as set forth in Section 3(w) of the Company
Disclosure  Schedule,  there are no outstanding  powers of attorney  executed on
behalf of any of the Company or its Subsidiaries (including Dalian Fushi).

      (x)  Brokers'  Fees.  Except as set forth in Section  3(x) of the  Company
Disclosure Schedule,  neither the Company not any of its Subsidiaries (including
Dalian Fushi), not any of their shareholders,  employees,  officer or directors)
has any Liability to pay any fees or commissions or other  consideration  to any
broker,  finder, or agent with respect to the transactions  contemplated by this
Agreement,  including any Liability or  obligations  for which the Investors can
become liable or  obligated.  Except as set forth in Section 3(x) of the Company
Disclosure Schedule, any such Liability will be paid by the Company prior to the
Closing.

      (y) Certain Business  Practices.  None of the Company,  its  Subsidiaries,
Dalian  Fushi,  their  officers,  directors  (or Persons in similar  positions),
agents or employees or their  respective  representatives  or Affiliates has (a)
made any  unlawful  payment to  foreign  or  domestic  government  officials  or
employees or to foreign or domestic  political  parties or campaigns or violated
any  provision  of the Foreign  Corrupt  Practices  Act of 1977,  as amended (if
applicable to such Person), or (b) violated any of the provisions of Section 999
of the Code or  Section 8 of the  Export  Administration  Act,  as  amended  (if
applicable to such Person).

                                       19
<PAGE>

      (z)  Environmental  and Safety Laws.  Since their  inception,  neither the
Company,  its  Subsidiaries  nor Dalian  Fushi 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,  any of its  Subsidiaries  or Dalian
Fushi.  Each of Company,  its  Subsidiaries  and Dalian Fushi have  operated all
facilities and properties owned, leased or operated by it in material compliance
with the Environmental Laws and no Hazardous  Materials have been stored,  used,
disposed  of,  treated,  released  or  discharged  by any of  the  Company,  its
Subsidiaries or Dalian Fushi in violation of Environmental Laws. As used herein,
"Environmental  Laws"  means  all  applicable,  Laws  governing,  regulating  or
otherwise affecting the environment,  health or safety. As used herein, the term
"Hazardous  Materials"  means  the  existence  in any  form  of  polychlorinated
biphenyls,  asbestos or asbestos  containing  materials,  urea formaldehyde foam
insulation, oil, gasoline,  petroleum,  petroleum products and petroleum-derived
substances (other than in vehicles operated in the ordinary course of business),
pesticides  and  herbicides,  and any  other  chemical,  material  or  substance
regulated under any Environmental Laws.

      (aa)  Manufacturing  and Marketing  Rights.  Except for the  Restructuring
Documents,  neither the  Company,  any of its  Subsidiaries  or Dalian Fushi has
granted rights to manufacture,  produce,  assemble,  license, market or sell its
products  or  services to any other  Person nor is bound by any  agreement  that
affects their exclusive  right to develop,  manufacture,  assemble,  distribute,
market  or  sell  its  products   and   services.   There  are  no   agreements,
understandings,   instruments,  contracts,  proposed  transactions,   judgments,
orders, writs or decrees to which the Company, any of its Subsidiaries or Dalian
Fushi is a party or by which it or any its assets is bound that may  involve (A)
provisions restricting or affecting the development, manufacture or distribution
of any their  products or services,  or (B)  agreements  not to compete with any
person or entity or not to engage in any particular line of business.

      (bb) Employment of Wenbing Chris Wang.  Wenbing Chris Wang shall remain in
the  employ of Dalian  Fushi in his  current  position  for a period of one year
following  December  13,  2005 and shall use his best  efforts  to enter into an
employment agreement with the Company pursuant to Section 6(i) and the Investors
hereby acknowledge that the employment  agreement shall be in form and with such
terms as acceptable to the Company and CA.

      (cc) Disclosure. The representations and warranties and statements made by
the Company,  Dalian Fushi and Management in this Agreement are true,  accurate,
correct and complete in every respect and do not contain any untrue statement of
a material  fact or omit to state any material  fact  necessary in order to make
the statements and information contained herein not false or misleading.

4.    REPRESENTATIONS AND WARRANTIES OF THE INVESTORS.

      Each Investor,  severally and not jointly,  represents and warrants to the
Company that the statements contained in this Section 4 are correct and complete
as of the date of this Agreement.

                                       20
<PAGE>

      (a) Organization and Standing.  Heller  represents and warrants for itself
that it is a limited liability company duly organized and validly existing under
the laws of the State of New Jersey,  holding  corporate  power and authority to
own,  operate  and  lease  its  assets  to carry on its  business  as  currently
conducted,  to execute and deliver this  Agreement and the Ancillary  Agreements
and to carry out the transactions  contemplated  hereby and thereby.  Each other
Investor  represents  and warrants for itself that it is a Entity duly organized
and validly existing under the laws of its jurisdiction of organization, holding
power  and  authority  to own,  operate  and  lease  its  assets to carry on its
business as currently  conducted,  to execute and deliver this Agreement and the
Ancillary  Agreements and to carry out the transactions  contemplated hereby and
thereby.

      (b) Authorization of Transaction. Each of the Investors has full corporate
or  partnership  power  and  authority,   as  applicable  (or  capacity,  if  an
individual),  to execute and deliver this Agreement and any applicable Ancillary
Agreement  and  to  perform  its  obligations  hereunder  and  thereunder.  This
Agreement  constitutes the valid and legally binding obligation of the Investor,
enforceable  in accordance  with its terms and  conditions  except to the extent
that such enforcement may be limited by bankruptcy,  reorganization,  insolvency
and  other  similar  Laws and  court  decisions  relating  to or  affecting  the
enforcement  of creditors  rights  generally and by the  application  of general
equitable  principles.  Except as otherwise  required by  applicable  federal or
state  securities  Laws,  the Investors need not provide any notice to, make any
filing  with,  or  obtain  any  authorization,   consent,  or  approval  of  any
Governmental  Body of any other Person in order to consummate  the  transactions
contemplated by this Agreement or any Ancillary Agreement.

      (c)  Brokers'  Fees.  No  Investor  has any  Liability  to pay any fees or
commissions or other consideration to any broker,  finder, or agent with respect
to the transactions  contemplated by this Agreement for which the Company or any
of its Subsidiaries could become liable or obligated.

      (d) No  Registration.  Other than as  contemplated  herein,  each Investor
understands  that the  Shares  and the shares of Common  Stock  issuable  on the
exercise of the Warrants have not been  registered  under the  Securities Act or
any  state  securities  laws and will be  issued  in  reliance  upon  exemptions
contained in the Securities Act or interpretations thereof and in the applicable
state  securities  laws,  and  cannot be  offered  for sale,  sold or  otherwise
transferred  unless the Shares and the shares of Common  Stock  issuable  on the
exercise of the Warrants subsequently are so registered or qualify for exemption
from registration under the Securities Act.

      (e) Acquisition for Investment. The Shares and Warrants are being acquired
under this  Agreement by each Investor in good faith solely for its own account,
for investment and not with a view toward distribution within the meaning of the
Securities  Act. The Shares and Warrants  will not be offered for sale,  sold or
otherwise  transferred by the Investor without either  registration or exemption
from  registration  under the Securities Act and any applicable state securities
laws.

      (f) Risks of Investment. Each Investor understands and is able to bear any
economic risks associated with such investment  (including,  without limitation,
holding the Shares and the shares of Common  Stock  issuable on the  exercise of
the Warrants until the  effectiveness of a registration  statement  covering the
Shares filed under the Securities Act).

      (g) Accredited Investor Status. Each Investor is an "accredited  investor"
within the meaning of Rule 502 of Regulation D promulgated  under the Securities
Act.

      (h)  Disclosure of  Information.  Each Investor has had full access to all
the  information  they  consider  necessary or  appropriate  to make an informed
investment  decision  with  respect to the Shares and  Warrants to be  purchased
under this  Agreement.  Each  Investor  further  has had an  opportunity  to ask
questions  and receive  answers from the Company and Dalian Fushi  regarding the
Business  and of the Company  regarding  the terms of the offering of the Shares
and Warrants  and to obtain  additional  information  (to the extent the Company
possessed such  information or could acquire it without  unreasonable  effort or
expense)  necessary  to verify any  information  furnished to any Investor or to
which  such  Investor  had  access.  Each  Investor  has not  relied on any oral
representation  made by the  Company,  Dalian  Fushi  or any  Subsidiary  or any
officer, director, employee or agent of any of them.

                                       21
<PAGE>

      (i)  Investment  Experience.   Each  Investor  understands  the  risks  of
investing in companies  domiciled in the People's Republic of China and that the
purchase of the Shares and Warrants involves substantial risk.

5.    REGISTRATION RIGHTS.

      (a) Registration by the Company.

            (i)  Mandatory   Registration.   In  addition  to  the  registration
statement filed by the Company under the Securities Act for the  registration of
the Common  Stock  issuable  upon  conversion  of the  Series B acquired  by the
Investors at Closing (as required by Section 6(m)):

                  (A) in  the  event  additional  shares  of  Common  Stock  are
issuable  pursuant to Section  2(c)(ii)  the Company  shall file a  registration
statement (or a post-effective amendment to the registration required by Section
6(m)) to register such additional  Shares) with the SEC under the Securities Act
for the  registration of the Shares as promptly as practicable,  but in no event
later  than 30 days,  after the  determination  of the  issuance  of the  Shares
pursuant to Section 2(c)(ii); and

                  (B) any Investor  acquiring  shares of Common Stock (including
issuable  upon  conversion of shares of Series A) pursuant to Section 8(b) under
the Stock Escrow  Agreement may request  registration of such securities and the
Company shall file a registration  statement (or a  post-effective  amendment to
the  registration   required  by  Section  6(m))  to  register  such  additional
securities)  with the SEC under the Securities Act for the  registration  of the
securities as promptly as practicable,  but in no event later than 30 days after
receipt of the Investor's request.

            (ii) Registration  Statement Form. The Investors hereby  acknowledge
that  registrations  under this Section 5(a) shall be on Form SB-2 or such other
appropriate  registration form of the SEC as shall be reasonably selected by the
Company and approved by CA, which approval shall not be  unreasonably  withheld.
The Company shall provide drafts of the  Registration  Statement  proposed to be
filed by it to the  Investors  in advance of the filing  thereof and provide the
Investors  with a  reasonable  amount of time to review and  comment on the same
prior to its filing

            (iii)  Effective  Registration  Statement.  A registration  required
pursuant to this Section 5(a) shall not be deemed to have been  effected  unless
the  Registration  Statement  has  been  declared  effective  by the SEC and has
remained  effective in compliance with the provisions of the Securities Act with
respect to the  disposition  of all of the Shares  covered by such  Registration
Statement  until  such  time  as all of the  Shares  have  been  disposed  of in
accordance  with the intended  methods of disposition by each Investor set forth
in such Registration  Statement (unless the failure to so dispose of such Shares
shall be caused solely by reason of a failure on the part of the Investors).

                                       22
<PAGE>

            (iv) Expenses;  Taxes.  All expenses  (other than fees of counsel to
the  Investors)   incurred  in  connection   with   registrations,   filings  or
qualifications  of  Shares  pursuant  to  this  Section  5,  including  (without
limitation) all  registration,  filing,  and qualification  fees,  printers' and
accounting  fees, fees and  disbursements  of counsel for the Company,  shall be
borne by the Company.

      (b) Priority Registrations. Notwithstanding anything else set forth herein
and subject to the limitations set forth below, the  Registration  Statement may
include,  in  addition  to the  Shares,  the shares of Common  Stock that may be
acquired by Glenn A. Little  pursuant to the  exercise of a warrant  acquired by
him under that certain  Consulting  Agreement,  dated  November 18, 2005,  which
shares shall constitute no more than 0.4% of the  capitalization  of the Company
as set forth in  Section  3(r) of the  Company  Disclosure  Schedule;  provided,
however,  (i) that  any such  inclusion  shall  not  affect  the  rights  of the
Investors  pursuant to this Section 5; and (ii) if the Company  fails to provide
Mr. Little sufficient notice regarding,  or take appropriate  actions to include
Mr. Little's shares in, the Registration Statement, such failure shall in no way
affect,  change or delay,  and Mr.  Little shall have no rights  regarding,  the
registration procedures described in this Section 5.

      (c)  Registration  Procedures.  The Company  shall,  as  expeditiously  as
possible:

            (i) use its best efforts to cause the  Registration  Statement filed
pursuant to Section 6(m) to be declared  effective by the SEC within 90 days and
not later than 120 days from the date of the initial filing;

            (ii) prepare and file with the SEC any other requisite  Registration
Statement  pursuant to Section 5(a) and thereafter use its best efforts to cause
such Registration  Statement to be declared  effective by the SEC within 90 days
and not later than 120 days from the date of the initial filing;

            (iii)  with  regard to (i) and  (ii),  after the 120th day after the
date of the initial filing,  and for each  30-calendar day period  thereafter in
which the  Registration  Statement fails to be declared  effective,  the Company
shall issue to each  Investor a number of shares of Common  Stock equal to 3% of
such  Investor's  Shares  covered by such  Registration  Statement at that time,
which Shares  shall be included in the  Registration  Statement  and used in the
calculation of any additional issuance pursuant to this Section 5(c)(iii);

            (iv) prepare and file with the SEC such  amendments and  supplements
to such Registration  Statement and the prospectus used in connection  therewith
as may be necessary to keep such Registration  Statement effective and to comply
with the provisions of the Securities Act with respect to the disposition of all
the Shares covered by such Registration  Statement until the earlier of the time
as all of such Shares  have been  disposed of in  accordance  with the  intended
methods of disposition by the Investors set forth in such Registration Statement
or the date that the Shares are eligible for resale  pursuant to the  provisions
of Rule 144 under the Securities Act;

            (v) furnish to the Investors'  counsel copies of any  correspondence
between the Company and the SEC with respect to such  Registration  Statement or
amendments or supplements thereto filed pursuant to this Section 5.

            (vi) furnish such number of  conformed  copies of such  Registration
Statement  and of each  such  amendment  and  supplement  thereto  (in each case
including all exhibits),  such number of copies of the  prospectus  contained in
such  Registration  Statement  (including  each  preliminary  prospectus and any
summary  prospectus)  and any other  prospectus  filed  under Rule 424 under the
Securities Act, in conformity  with the  requirements of the Securities Act, and
such other documents, as the Investors may reasonably require.

                                       23
<PAGE>

            (vii) use its best  efforts to (A)  register  or qualify  the Shares
under such other  securities  or blue sky laws of such states and  jurisdictions
where an  exemption  is not  available  and as the  Investors  shall  reasonably
request,  (B) keep such  registration or  qualification in effect for so long as
such  Registration  Statement  remains in effect,  and (C) take any other action
which may be  reasonably  necessary  or  advisable  to enable the  Investors  to
consummate the disposition in such jurisdictions of the securities to be sold by
the  Investors,  except  that the  Company  shall  not for any such  purpose  be
required to qualify  generally  to do business as a foreign  corporation  in any
jurisdiction  wherein it would not but for the  requirements of this subdivision
(vii) be  obligated  to be so  qualified  or to consent  to  general  service of
process in any such jurisdiction;

            (viii)  use its best  efforts  to cause all  Shares  covered by such
Registration  Statement to be registered  with or approved by such other federal
or state governmental agencies or authorities as may be necessary in the opinion
of counsel to the Company and counsel to the  Investors to enable the  Investors
to consummate the disposition of such Shares;

            (ix) notify the  Investors  at any time when a  prospectus  relating
thereto is required to be delivered  under the  Securities  Act, upon  discovery
that,  or upon the happening of any event as a result of which,  the  prospectus
included in such Registration  Statement,  as then in effect, includes an untrue
statement of a material  fact or omits to state any material fact required to be
stated therein or necessary to make the statements  therein not  misleading,  in
the light of the circumstances under which they were made, and at the request of
the Investors  promptly prepare and furnish to it a reasonable  number of copies
of a supplement  to or an amendment  of such  prospectus  as may be necessary so
that,  as  thereafter  delivered  to the  purchasers  of such  securities,  such
prospectus  shall not include 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 not misleading in light of the circumstances under which they
were made;

            (x)  otherwise  use its  reasonable  best efforts to comply with all
applicable rules and regulations of the SEC;

            (xi)  provide  and  cause to be  maintained  a  transfer  agent  and
registrar for all the Shares  covered by such  Registration  Statement  from and
after a date not later than the effective date of such registration;

            (xii)  provide  a  CUSIP  number  for  all  Shares  covered  by such
Registration  Statement  not later than the effective  date of the  Registration
Statement;

            (xiii) use its best effort to avoid the  issuance  of, or if issued,
to obtain  the  withdrawal  of, any order  enjoining  or  suspending  the use or
effectiveness of such Registration Statement or suspending the qualification (or
exemption from qualification) of any of the Shares for sale in any jurisdiction,
as promptly as reasonably practicable; and

            (xiv) use its best efforts to list the Shares on the American  Stock
Exchange or any other  national  securities  exchange on which the shares of the
same class covered by such  Registration  Statement are then listed or for which
the Shares and the Company  qualifies,  and, if no such shares are so listed, on
any national securities exchange on which the Common Stock is then listed.

                                       24
<PAGE>

Each  Investor  agrees by  acquisition  of the Shares that,  upon receipt of any
notice from the Company of the  happening of any event of the kind  described in
subdivision  (ix) of this Section 5(c),  such holder will forthwith  discontinue
such  disposition of the Shares  pursuant to the  Registration  Statement  until
Investor's  receipt of the  copies of the  supplemented  or  amended  prospectus
contemplated by subdivision (ix) of this Section 5(c) and, if so directed by the
Company,  will deliver to the Company (at the  Company's  expense) all copies of
the prospectus then in such holder's  possession  relating to the Shares current
at the time of receipt of such notice, other than permanent file copies.

      (d)  Lock-up.  After the Closing Date of this  Agreement  and prior to the
effectiveness  of a  Registration  Statement  pursuant  to  Section  6(m),  each
Investor agrees to enter into standard lock-up agreement restricting the sale of
50% of each Investor's Shares covered by the Registration Statement for a period
of 6 months  commencing from the Closing Date of this  Agreement.  The terms and
form of the lock-up  agreement  shall be mutually  agreeable among the Investors
and the Company.

      (e) Indemnification.

            (i) Indemnification by the Company.  With regard to any Registration
Statement, the Company, Dalian Fushi and Management will, and hereby do, jointly
and  severally,  indemnify and hold  harmless  each Investor and its  respective
directors,  officers,  partners,  agents and  Affiliates,  against  any  Adverse
Consequences,  joint or several,  to which such  Investor or any such  director,
officer,  partner,  agent,  Affiliate or  controlling  person may become subject
under the Securities Act or otherwise,  including,  without limitation, the fees
and expenses of legal counsel,  insofar as such any Adverse  Consequences  arise
out of or are based upon any untrue statement or alleged untrue statement of any
material  fact  contained  in  any  Registration   Statement,   any  preliminary
prospectus,  final prospectus or summary prospectus  contained  therein,  or any
amendment or supplement  thereto,  or any omission or alleged  omission to state
therein a material fact  required to be stated  therein or necessary to make the
statements  therein  in light of the  circumstances  in which they were made not
misleading, and the Company will reimburse such Investor and each such director,
officer,  partner,  agent, Affiliate and controlling person for any legal or any
other expenses  reasonably  incurred by them in connection with investigating or
defending any such any Adverse Consequences; provided, however, that the Company
shall  not be  liable  in any such  case to the  extent  that  any such  Adverse
Consequences  arises  out of or is based  upon an untrue  statement  or  alleged
untrue  statement  or omission  or alleged  omission  made in such  Registration
Statement,   any  such  preliminary   prospectus,   final  prospectus,   summary
prospectus,  amendment or supplement  in reliance  upon and in  conformity  with
written  information  furnished to the Company by or on behalf of such Investor,
specifically  stating  that  it is  for  use in the  preparation  thereof.  Such
indemnity shall remain in full force and effect  regardless of any investigation
made by or on behalf of such Investor or any such  director,  officer,  partner,
agent,  Affiliate or  controlling  person and shall survive the transfer of such
securities by the Investor.

            (ii)  Indemnification by the Investors.  As a condition to including
the Shares in the Registration  Statement,  each Investor will, and hereby does,
indemnify  and hold  harmless  (in the same manner and to the same extent as set
forth in Section 5(e)(i)) each other Investor, the Company, and each director of
the Company and each  officer of the Company,  with respect to any  statement or
alleged  statement  in or omission or alleged  omission  from such  Registration
Statement,  any preliminary  prospectus,  final prospectus or summary prospectus
contained therein,  or any amendment or supplement thereto, if such statement or
alleged  statement or omission or alleged omission was made in reliance upon and
in conformity with written information furnished to the Company by such Investor
specifically  stating that it is for use in the preparation of such Registration
Statement,   preliminary  prospectus,  final  prospectus,   summary  prospectus,
amendment  or  supplement;   provided,  however,  that  the  Liability  of  such
indemnifying party under this Section 5(e)(ii) shall be limited to the amount of
net proceeds actually  received by such  indemnifying  party giving rise to such
Liability.

                                       25
<PAGE>

            (v) Other Indemnification.  Indemnification and contribution similar
to that  specified  in the  preceding  subdivisions  of this  Section 5(e) (with
appropriate  modifications)  shall be provided by the Company and each  Investor
with respect to any required  registration or other  qualification of securities
under any federal or state law or regulation of any governmental authority other
than the Securities Act.

            (vi) Indemnification  Payments. The indemnification and contribution
required by this Section  5(e) shall be made by periodic  payments of the amount
thereof during the course of the investigation or defense, as and when bills are
received or Adverse Consequence is incurred.

6.    POST-CLOSING COVENANTS.

      The Parties  agree as follows  with  respect to the period  following  the
Closing.

      (a) General.  In case at any time after the Closing any further  action is
reasonably  necessary or desirable to carry out the purposes of this  Agreement,
each of the Parties will take such further  action  (including the execution and
delivery  of  such  further  instruments  and  documents)  as  any  other  Party
reasonably may request, all at the sole cost and expense of the requesting Party
(unless the requesting Party is entitled to indemnification  therefor under this
Agreement).

      (b) American  Stock  Exchange.  Promptly  following  Closing,  the Company
(which  will be  assisted  by CA  pursuant  to the  December  13 Stock  Purchase
Agreement) shall prepare and submit a listing  application to the American Stock
Exchange and use its reasonable  best efforts to have such listing  approved and
effective as soon as practicable  after the  effectiveness  of the  Registration
Statement filed pursuant to Section 6(m).

      (c) Board of Directors.  Within 90 days following Closing, the Company and
the current  management and stockholders of Dalian Fushi after consultation with
the Investors (and the Investors  acknowledge that similar  consultation with CA
and the Initial  Investors  is  required  under the  December 13 Stock  Purchase
Agreement),  shall nominate a seven person Board of Directors of the Company and
take all actions and obtain all consents, authorizations and approvals which are
required to be obtained in order to effect the election of such Persons. Of such
seven member Board of Directors, (i) two members shall be members of the current
management  of Dalian Fushi,  (ii) one member shall  represent  Kuhns  Brothers,
Inc., the Company's investment bankers, pursuant to an existing agreement, (iii)
and at least four members shall be independent  directors as determined pursuant
to the American Stock Exchange Company Guide (the Investors  hereby  acknowledge
that this  requirement  may be waived or amended by  Investors  and the  Initial
Investors  representing  a  majority  of the  outstanding  Shares  then  held by
Investors and the Initial Investors if the Company is unable to obtain a listing
of its Common Stock on the American Stock Exchange  within six months  following
the Closing or such other period of time as  acceptable  to CA).  The  Investors
further  acknowledge  that  the  member  to be  elected  chairman  of the  audit
committee and the member to be elected vice-chairman of the board (who will also
serve as chairman of the  corporate  governance  committee)  must be approved in
advance by CA, which approval not to be unreasonably  withheld.  Each director's
compensation  shall be determined after  consultation with the Investors and the
Initial Investors..

                                       26
<PAGE>

      (d) Board of Advisors.  Promptly following Closing, and in addition to its
Board of Directors,  the Company shall establish a five-member board of advisors
consisting  of the  individuals  set  forth  in  Section  6(d)  of  the  Company
Disclosure Schedule. The Investors hereby acknowledge that if for any reason one
or more of these  individuals  is unable or  unwilling  to serve on the  initial
board of advisors,  the Company shall consult with CA as to substitute member(s)
and any  substitute  member(s) must be approved in advance by CA, which approval
not to be unreasonably withheld.

      (e) Chief Financial  Officer.  The Investors  acknowledge  that,  promptly
following Closing, the Company shall retain a chief financial officer acceptable
to, and after consultation with, CA; provided, however, that retention of Dalian
Fushi's current chief financial officer as the Company's chief financial officer
under an  employment  agreement  pursuant  to Section  6(i) shall  satisfy  this
Section 6(e).

      (f) Name Change;  Reverse Stock Split.  Promptly  following  Closing,  the
Company  shall take all  actions  and obtain all  consents,  authorizations  and
approvals,  including any Governmental Authorizations,  which are required to be
obtained in order to (i) change the name of the Company to Fushi  International,
Inc.,  and (ii)  effect a reverse  stock  split of the Common  Stock so that the
Company has a sufficient  number of  authorized  and  unissued  shares of Common
Stock,  the  details  of which  are set  forth in  Section  6(f) of the  Company
Disclosure  Schedule,  to permit the  conversion  of all  outstanding  shares of
Series B acquired by the Investors pursuant to this Agreement.

      (g) Employee Stock  Ownership Plan. The Company shall reserve for issuance
20,000,000 shares of Common Stock under an approved and qualified employee stock
ownership plan, terms of which shall be determined by the compensation committee
of the Board of  Directors  of the Company (as  constituted  pursuant to Section
6(c)).

      (h) Executive Search. The Investors  acknowledge that,  promptly following
the  Closing,  the Company  shall  retain one or more  independent  professional
executive  search firm,  each as  acceptable  to CA and selected  from a list of
proposed firms provided by CA, to assist in the  recruitment  for the members to
be added to the Board of Directors of the Company pursuant to Section 6(c)

      (i)  Employment  Agreements.  The  Company  shall use its best  efforts to
promptly enter into employment  agreements with Wenbing Chris Wang and the other
members of Management (and the Investors  acknowledge  that the other members of
Management  will be designated and by CA and the employment  agreements  will be
with such terms as acceptable to CA).

      (j) Transfer of Dalian Fushi Employees. The Company, WOFE and Dalian Fushi
shall  use their  best  efforts  to  promptly  transfer  the  employment  of all
employees of Dalian Fushi to WOFE in accordance with applicable  Laws. WOFE will
enter into an  employment  agreement  with each such  transferred  employee (the
terms  of  which  shall  be  acceptable  to CA)  and pay  all  social  security,
insurance, housing and other applicable fees and costs required under applicable
Law.

      (k) Compliance with Law. The  shareholder(s) of the WOFE shall comply with
Bulletin  No.  75  Notice  issued by the PRC  State  Administration  of  Foreign
Exchange,  including but not limited to, the obligation to file disclosure forms
with  respect to their  ownership  status in the Company on or before  March 31,
2006,  and the  obligation  to transfer any  dividends or profits they  received
offshore  to the PRC  within  180 days upon the  receipt  of such  dividends  or
profits.

                                       27
<PAGE>

      (l) Completion of Restructuring.  Commencing at the Closing,  the Company,
WOFE and Dalian  Fushi shall use their best  efforts to complete in all respects
the  restructuring  and related  transactions  contemplated by the Restructuring
Agreements,  including without limitations,  by taking the following actions and
obtaining the following approvals and certificates under applicable Laws, all of
which  shall be  completed  within 15 days of the  Closing  (the  "Restructuring
Completion Date"):

            (i) WOFE  shall  obtain  an audit of its  registered  capital  by an
accounting  firm duly qualified to conduct such audits in the People's  Republic
of China  and a  capital  verification  report  from  such  firm  (the  "Capital
Report");

            (ii)  WOFE  shall  file  the  Capital  Report  with  the  PRC  State
Administration for Industry and Commerce in Dalian, People's Republic of China;

            (iii)  Immediately  following the  registered  capital  verification
process is  completed,  WOFE shall  transmit to Dalian  Fushi the full  purchase
price for the assets to be  purchased by it under the  Restructuring  Agreements
and upon receipt of the purchase  price,  the title for the Acquired Assets will
be transferred to WOFE;

            (iv) WOFE shall arrange for, and have  completed,  an  environmental
report and inspection  with respect to the machinery and equipment  purchased by
the  WOFE  pursuant  to  the  Restructuring  Agreements  and as  required  under
applicable Laws;

            (v) Dalian  Fushi shall  commence the patent  transfer  procedure as
contemplated in the  Restructuring  Agreements,  which procedure is estimated to
take three to five months to complete;  prior to the effectiveness of the patent
transfer, the Company and its Subsidiaries shall have the exclusive legal right,
royalty  free,  to use  all  of  the  patents  specified  in  the  Restructuring
Agreements.  Dalian Fushi shall execute any license  agreements  required by the
Company that the Company deems necessary or advisable;

            (vi) WOFE shall obtain a new business license allowing it to conduct
the Business;

            (vii)  Dalian  Fushi shall  arrange  for,  and have  completed,  the
granting of a secondary lien on the Leased Assets to WOFE (only up to the amount
permissible under applicable Laws);

            (viii)  Dalian  Fushi  shall send a written  notice to its  existing
customers  seeking consent to the assignment of all contracts of Dalian Fushi to
WOFE.  Dalian  Fushi shall use its best efforts to obtain such  consent.  To the
extent that  customers  agree to the  assignment,  Dalian Fushi shall assign and
transfer all such  contracts to WOFE; to the extent that  customers do not agree
to assign the contracts to WOFE,  Dalian Fushi shall perform the contracts  with
WOFE's assistance as specified under the  Restructuring  Agreements and continue
to seek such consents;

            (ix) As soon as the new business license for WOFE is obtained,  WOFE
and Dalian Fushi shall complete for WOFE the tax registration with, and obtain a
tax certificate from, the tax bureau;

                                       28
<PAGE>

            (x) As soon as the new business  license for WOFE is obtained,  WOFE
and Dalian Fushi shall complete the registration  with customs  authorities,  if
applicable; and

            (xi) WOFE and Dalian Fushi shall  complete other  registrations  and
filings with such  competent  authorities  that are necessary for the conduct of
the  Business by the Company and its  Subsidiaries  and  required by  applicable
Laws.

      (m)  Filing  of   Registration   Statement.   The  Company  shall  file  a
Registration   Statement   with  the  SEC  under  the  Securities  Act  for  the
registration  of the  Common  Stock  issuable  upon  conversion  of the Series B
acquired  by the  Investors  within 5 days  after the  Closing  Date  under this
Agreement.

      (n)  Company  Bylaws.  The  Company  shall use its best  efforts to obtain
shareholder  approval  for, and take all steps  necessary to adopt,  amended and
restated  bylaws  (and  the  Investors  acknowledge  that  the  bylaws  must  be
acceptable  to CA)  within 60 days after the  Closing,  and  prepare  and file a
preliminary  Schedule  14C  information  statement  relating to the adoption and
amendment of the Company bylaws within 15 days from the Closing Date.

7.    CONDITIONS TO OBLIGATION TO CLOSE.

      (a) Conditions to Obligation of the  Investors.  The obligation of each of
the Investors to consummate the transactions to be performed by it in connection
with the Closing is subject to satisfaction of the following conditions:

            (i) the  representations and warranties set forth in Section 3 shall
be true and correct in all material respects;

            (ii) the  certificate  of  designation  containing  the terms of the
Series B as set forth in Exhibit A shall be filed;

            (iii) the  certificate  of  designation  containing the terms of the
Series A  Preferred  Stock of the  Company  as set  forth in  Exhibit A shall be
filed;

            (iv) the Company  shall have  completed  an audit on the Company and
its Subsidiaries (including Dalian Fushi) conducted by Jimmy H. Cheung & Co. for
the fiscal years ended  December 31, 2004 and December 31, 2003, and the Company
shall have received an unqualified audit opinion;

            (v) the Company  shall have  completed a share  exchange with all of
the  stockholders of DPI, whereby the Company shall become the sole owner of DPI
and sole indirect owner of WOFE;

            (vi) the Company,  Dalian Fushi and Management  shall have delivered
to the  Investors  a  certificate  to the  effect  that  each of the  conditions
specified in Section 7(a)(i)-(v) is satisfied in all respects; all actions to be
taken  by the  Company  in  connection  with  consummation  of the  transactions
contemplated  by  this  Agreement  and  all  certificates  and  other  documents
reasonably  required  to effect the  transactions  contemplated  hereby  will be
reasonably satisfactory in form and substance to the Investors.

                                       29
<PAGE>

The  Investors  may waive any  condition  specified in this Section 7(a) if they
execute a writing so stating at the Closing.

      (b) Conditions to Obligation of the Company,  Dalian Fushi and Management.
The  obligation of the Company,  Dalian Fushi and  Management to consummate  the
transactions  to be performed by them in connection  with the Closing is subject
to satisfaction of the following conditions:

            (i) the  representations and warranties set forth in Section 4 shall
be true and correct in all material respects (for purposes of this Section,  any
representation or warranty that is qualified by a materiality  standard shall be
read  without  regard  to  any  such   materiality   qualification  as  if  such
qualification were not contained therein);

            (ii) the Investors shall have delivered to the Company a certificate
to the effect that the condition specified above in Section 7(b)(i) is satisfied
in all respects;

            (iii) the  Company  shall have  received  the  Ancillary  Agreements
executed by the Investors, as applicable; and

            (iv) all actions to be taken by the  Investors  in  connection  with
consummation  of the  transactions  contemplated  hereby  and all  certificates,
instruments,  and other documents reasonably required to effect the transactions
contemplated hereby will be reasonably satisfactory in form and substance to the
Company.

The  Company  may waive  any  condition  specified  in this  Section  7(b) if it
executes a writing so stating at the Closing.

8.    REMEDIES FOR BREACHES OF THIS AGREEMENT.

      (a) Survival of Representations and Warranties.  All the  representations,
warranties,  covenants,  indemnities  and  other  agreements  contained  in this
Agreement  shall survive two years from the effective  date of the  Registration
Statement filed pursuant to Section 6(m).

      (b) Indemnification  Provisions for Benefit of the Investors.  In addition
to any indemnification  under Section 5, in the event the Company,  Dalian Fushi
or  Management  breaches any of its  representations,  warranties  and covenants
contained  herein,  the  Company,  Dalian  Fushi  and  Management,  jointly  and
severally, agree to indemnify, defend and hold harmless the Investors and any of
their  directors,  officers,  employees,  agent,  representatives  or Affiliates
(each,  an  "Indemnified  Party")  from and against the  entirety of any Adverse
Consequences  the Investors  may suffer  through and after the date of the claim
for  indemnification  resulting from, arising out of, relating to, in the nature
of, or caused by the breach (or the alleged breach).  The aggregate Liability of
the Company and Dalian Fushi under this Section 8(b) shall be limited as to each
Investor to the amount of the Purchase  Price paid by such Investor as set forth
on Exhibit C; provided,  however,  that this  limitation on Liability  shall not
apply to any  indemnification of the Investors pursuant to Section 5. To satisfy
any rights to indemnification pursuant to this Section 8 or Section 5, claims by
the  Indemnified  Party  may be made for (i) cash or (ii) Dual  Purposes  Escrow
Shares  pursuant to the terms and provisions of the Stock Escrow  Agreement,  as
amended,  in  each  case  at  the  option  and  in the  sole  discretion  of the
Indemnified Party.  Notwithstanding  anything to the contrary in this Agreement,
none of the  Indemnified  Parties  shall be  entitled  to  assert  any  right to
indemnification  under this Section 8(b) until the aggregate  Liability relating
to any Adverse  Consequences  claimed by one or more of the Indemnified  Parties
exceeds  $100,000  (whether  resulting  from one  claim or a series  of  claims,
separate  or  related),  and in such  event  the  Indemnified  Parties  shall be
entitled to recover the full amount of all such  Liability from the first dollar
without  regard to the $100,0000  minimum  threshold and this minimum  threshold
shall not apply to any subsequent  claims by the Indemnified  Parties under this
Section 8(b).

                                       30
<PAGE>

      (c) Matters Involving Third Parties.

            (i) If any third  party  shall  notify  any  Indemnified  Party with
respect to any matter (a "Third Party Claim") which may give rise to a claim for
indemnification against any other Party (the "Indemnifying Party") under Section
5 or this  Section 8, then each  Indemnified  Party  shall  promptly  notify the
Indemnifying Party thereof in writing;  provided,  however, that no delay on the
part of the Indemnified Party in notifying any Indemnifying  Party shall relieve
the Indemnifying Party from any obligation  hereunder unless (and then solely to
the  extent)  the   Indemnifying   Party  thereby  is  actually  and  materially
prejudiced.

            (ii) Any  Indemnifying  Party  will  have the  right to  defend  the
Indemnified  Party  against  the Third  Party  Claim with  counsel of its choice
reasonably satisfactory to the Indemnified Party so long as (A) the Indemnifying
Party  notifies  the  Indemnified  Party in  writing  within  15 days  after the
Indemnified   Party  has  given  notice  of  the  Third  Party  Claim  that  the
Indemnifying  Party will  indemnify the  Indemnified  Party from and against the
entirety of any Adverse  Consequences the Indemnified Party may suffer resulting
from,  arising  out of,  relating  to, in the  nature of, or caused by the Third
Party Claim,  (B) the  Indemnifying  Party provides the  Indemnified  Party with
evidence  reasonably  acceptable to the Indemnified  Party that the Indemnifying
Party will have the financial  resources to defend against the Third Party Claim
and fulfill its indemnification obligations hereunder, (C) the Third Party Claim
involves only money  damages and does not seek an injunction or other  equitable
relief,  (D)  settlement  of, or an adverse  judgment with respect to, the Third
Party Claim is not, in the good faith judgment of the Indemnified Party,  likely
to  establish  a  precedential  custom or  practice  adverse  to the  continuing
business  interests of the Indemnified  Party,  and (E) the  Indemnifying  Party
conducts the defense of the Third Party Claim actively and diligently.

            (iii) So long as the Indemnifying Party is conducting the defense of
the Third Party Claim in accordance with Section  8(d)(ii),  (A) the Indemnified
Party  may  retain  separate  co-counsel  at  its  sole  cost  and  expense  and
participate in the defense of the Third Party Claim,  (B) the Indemnified  Party
will not consent to the entry of any judgment or enter into any settlement  with
respect  to the Third  Party  Claim  without  the prior  written  consent of the
Indemnifying Party (not to be withheld  unreasonably),  and (C) the Indemnifying
Party will not consent to the entry of any judgment or enter into any settlement
with respect to the Third Party Claim without the prior  written  consent of the
Indemnified Party (not to be withheld unreasonably).

            (iv) In the event any of the  conditions  in Section  8(d)(ii) is or
becomes unsatisfied,  however, (A) the Indemnified Party may defend against, and
consent to the entry of any judgment or enter into any  settlement  with respect
to, the Third Party Claim in any manner it reasonably may deem  appropriate (and
the  Indemnified  Parties need not consult with, or obtain any consent from, any
Indemnifying Party in connection  therewith),  (B) the Indemnifying Parties will
reimburse  the  Indemnified  Party  promptly and  periodically  for the costs of
defending  against the Third Party Claim (including  reasonable  attorneys' fees
and expenses),  and (C) the Indemnifying  Party will remain  responsible for any
Adverse  Consequences the Indemnified  Party may suffer resulting from,  arising
out of, relating to, in the nature of, or caused by the Third Party Claim to the
fullest extent provided in Section 5 or this Section 8, as applicable.

                                       31
<PAGE>

9.    MISCELLANEOUS.

      (a) No Third  Party  Beneficiaries.  This  Agreement  shall not confer any
rights or remedies  upon any Person other than the Parties and their  respective
successors and permitted assigns.

      (b) Entire Agreement.  This Agreement (including any Ancillary Agreements)
constitutes  the entire  agreement  among the Parties and  supersedes  any prior
understandings,  agreements, or representations by or among the Parties, written
or oral, to the extent they related in any way to the subject matter hereof.

      (c) Succession and  Assignment.  This Agreement  shall be binding upon and
inure to the benefit of the Parties named herein and their respective successors
and permitted  assigns.  No Party may assign either this Agreement or any of his
or its rights,  interests,  or obligations  hereunder  without the prior written
approval of the other Party; provided, however, that any Investor may (i) assign
any  or all of  its  rights  and  interests  hereunder  to  one or  more  of its
Affiliates  and (ii)  designate  one or more of its  Affiliates  to perform  its
obligations hereunder (in any or all of which cases the Investor shall no longer
remain responsible for the performance of all of its obligations hereunder).

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

      (e)  Headings.  The  section  headings  contained  in this  Agreement  are
inserted  for  convenience  only and shall not affect in any way the  meaning or
interpretation of this Agreement.

      (f) Notices. All notices, consents, waivers and other communications under
this  Agreement  must be in writing and will be deemed given to a Party when (a)
delivered  to the  appropriate  address  by  hand  or by  nationally  recognized
overnight courier service (costs prepaid),  (b) sent by facsimile or e-mail with
confirmation of transmission by the transmitting  equipment,  or (c) received or
rejected by the addressee,  if sent by certified mail, return receipt requested;
in each case to the following  addresses,  facsimile numbers or e-mail addresses
and marked to the  attention  of the  individual  (by name or title)  designated
below (or to such other address,  facsimile number, e-mail address or individual
as a party may designate by notice to the other parties):

      If to the Investors:

      Heller Capital Investments, LLC
      700 East Palisades Avenue
      Englewood Cliffs, NJ 07632
      Attention: Ronald I. Heller
      Telephone No.: 201-816-4235
      Facsimile No.: 201-569-5014
      E-mail: smallcap777@yahoo.com

                                       32
<PAGE>

      If to the Company, Dalian Fushi or Management:

      Parallel Technologies, Inc.
      558 Lime Rock Road
      Lakeville, Connecticut 06039
      Attention:  John D. Kuhns
      Telephone No.:  860-435-7000
      Facsimile No.:  860-435-6540
      E-mail: jdkuhns@kuhnsbrothers.com

      with a copy (which shall not constitute notice) to:

      Guzov Ofsink, LLC
      600 Madison Avenue, 14th Floor
      New York, New York 10022
      Attention:  Darren L. Ofsink
      Telephone No.: (212) 371-8008
      Facsimile No.:  (212) 688-7273
      E-mail: dofsink@golawintl.com

      (g)  Controlling  Law;  Venue.  This  Agreement  shall be  governed by and
construed in accordance with the laws of the State of New York without regard to
choice of law  provisions,  statutes,  regulations  or principles of this or any
other  jurisdiction.  Each Party  hereby  irrevocably  submits to the  exclusive
jurisdiction  (including personal  jurisdiction) of the state and federal courts
of the  State  of New  York  for any  action,  suit  or  proceeding  arising  in
connection  with  this  Agreement,  and  agrees  that  any such  action  suit or
proceeding  shall be brought only in such court (and waives any objection  based
on forum non conveniens or any other jurisdiction to venue therein).  Process in
any  Proceeding  under this Agreement may be served on any Party anywhere in the
world.  Notwithstanding the foregoing,  nothing in this Agreement shall preclude
the Investors the right to commence  Proceedings  relating to this  Agreement in
any foreign jurisdiction, including the People's Republic of China.

      (h)  Amendments  and  Waivers.  No  amendment  of any  provision  of  this
Agreement  shall be valid  unless the same shall be in writing and signed by the
Company and Heller. No waiver by any Party of any default, misrepresentation, or
breach of warranty or covenant  hereunder,  whether intentional or not, shall be
deemed  to  extend to any prior or  subsequent  default,  misrepresentation,  or
breach of warranty or covenant hereunder or affect in any way any rights arising
by virtue of any prior or subsequent such occurrence.

      (i) Severability.  Any term or provision of this Agreement that is invalid
or  unenforceable  in any  situation  in any  jurisdiction  shall not affect the
validity or  enforceability  of the remaining terms and provisions hereof or the
validity or  enforceability  of the  offending  term or  provision  in any other
situation or in any other jurisdiction.  Furthermore, in lieu of such invalid or
unenforceable  provision,  there  shall be added  automatically  as part of this
Agreement  a  provision  as  similar in terms to such  invalid or  unenforceable
provision as may be possible and be legal, valid and enforceable.

      (j) Expenses.  The Company  shall bear all costs and expenses  relating to
the  acquisition of assets of, and certain  additional  rights of and to, Dalian
Fushi,  provided  that the  Company  shall  not bear any  Investors'  costs  and
expenses in connection with the transactions  contemplated by this Agreement and
any Ancillary  Agreement  (including legal fees and expenses of legal counsel to
the Investors).  Except as otherwise provided elsewhere in this Agreement,  each
of the Parties will bear his or its own costs and expenses (including legal fees
and expenses)  incurred in connection  with this Agreement and the  transactions
contemplated hereby.

                                       33
<PAGE>

      (k) Construction. The Parties have participated jointly in the negotiation
and drafting of this Agreement.  In the event an ambiguity or question of intent
or  interpretation  arises,  this  Agreement  shall be  construed  as if drafted
jointly  by the  Parties  and no  presumption  or  burden of proof  shall  arise
favoring  or  disfavoring  any Party by virtue of the  authorship  of any of the
provisions of this  Agreement.  Any reference to any federal,  state,  local, or
foreign  statute  or law  shall  be  deemed  also  to  refer  to all  rules  and
regulations promulgated thereunder,  unless the context requires otherwise.  The
word "including"  shall mean including  without  limitation.  The Parties intend
that each  representation,  warranty,  and covenant  contained herein shall have
independent  significance.   If  any  Party  has  breached  any  representation,
warranty,  or  covenant  contained  herein in any  respect,  the fact that there
exists  another  representation,  warranty,  or  covenant  relating  to the same
subject matter  (regardless  of the relative  levels of  specificity)  which the
Party has not  breached  shall not detract  from or  mitigate  the fact that the
Party is in breach of the first representation, warranty, or covenant.

      (l)  Incorporation  of Exhibits and Schedules.  The Exhibits and Schedules
identified  in this  Agreement are  incorporated  herein by reference and made a
part hereof.

      (m) Specific Performance. Each of the Parties acknowledges and agrees that
the Investors would be damaged irreparably in the event any of the provisions of
this  Agreement  are not performed in accordance  with their  specific  terms or
otherwise  are  breached.  Accordingly,  each of the  Parties  agrees  that  the
Investors shall be entitled to an injunction or injunctions to prevent  breaches
of the provisions of this Agreement and to enforce  specifically  this Agreement
and the terms and provisions hereof in any action instituted in any court of the
United States or any state thereof having  jurisdiction over the Parties and the
matter, in addition to any other remedy to which they may be entitled, at law or
in equity.

      (n) Disputes;  Arbitration.  Subject to Section 9(n), any issue,  dispute,
Proceeding or  controversy  arising out of or relating to this Agreement (or any
Ancillary  Agreement),  its alleged  breach or its subject  matter (a "Dispute")
shall be resolved pursuant to this Section 9(o).

            (i)  Any   Dispute   shall   first  be   referred  to  Heller  as  a
representative  of the  Investors  and a  representative  of the Company who has
authority to settle the  controversy  for  resolution  between such Parties,  if
possible.  Those  Persons  may, if they  desire,  consult  outside  experts or a
mutually  respected  disinterested  Person  for  assistance  in  arriving  at  a
resolution.

            (ii) If any Dispute cannot be resolved after good faith negotiation,
either Party or the  Indemnifying  Party or its  applicable  Affiliate,  may, by
written  notice  ("Arbitration  Notice") to the other,  demand to have the claim
finally and exclusively  settled by confidential and binding  arbitration in New
York, New York,  governed by the laws of the State of New York and in accordance
with the commercial rules of arbitration of the American Arbitration Association
in effect at that time. A total of three arbitrators shall be appointed.  Within
10 days  after  dispatch  of the  Arbitration  Notice,  each  of the  applicable
Investors and the Company shall  appoint one  arbitrator,  and the two so chosen
shall select a third within 15 days of the expiration of the 10-day period. Each
arbitrator  shall  have at  least  10  years of  experience  in an  industry  or
profession  related to the  subject  matter  involved  in the  Dispute,  and all
arbitration proceedings shall be held, and a transcribed record thereof shall be
prepared,  in English.  Neither Party involved in the arbitration shall have the
right to conduct  discovery of the other (except as the arbitrators may so order
on the application of either Party),  but shall furnish to the arbitrators  such
information  as  the  arbitrators  may  reasonably  request  to  facilitate  the
resolving  of the  Dispute.  The  arbitrators  shall  announce the award and the
reason therefor in writing within three months from the date of the selection of
the third  arbitrator,  or such  later  date as the  Parties  may agree  upon in
writing.  The losing Party on a specific  claim or  counterclaim  shall bear all
expenses of the arbitration,  including those relating to the  arbitrators,  and
attorney's fees, experts and presentation of proof with respect to that claim or

                                       34
<PAGE>

counterclaim.  Any award granted by the  arbitrators  shall be final and binding
upon the  Parties and shall  constitute  the sole and  exclusive  remedy for any
dispute between the Parties. Judgment upon the award rendered by the arbitrators
may be entered in any court having jurisdiction  thereof.  The Parties expressly
submit to the  non-exclusive  jurisdiction of the courts of the United States of
America for the enforcement of any arbitration award.

                  (Remainder of page intentionally left blank)

                                       35
<PAGE>

      The Parties have  executed  and  delivered  this  Agreement as of the date
indicated in the first sentence of this Agreement.

                                        PARALLEL TECHNOLOGIES, INC.

                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------

                                        DALIAN FUSHI BIMETALLIC MANUFACTURING
                                        COMPANY, LTD.

                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------

                                        MANAGEMENT OF DALIAN FUSHI BIMETALLIC
                                        MANUFACTURING COMPANY, LTD.

                                        ----------------------------------------
                                        Fu Li

                                        ----------------------------------------
                                        Yang Yue

                                        ----------------------------------------
                                        Yang Xishan

                                        ----------------------------------------
                                        Chunyan Xu

                                        ----------------------------------------
                                        Wenbing Chris Wang

                     (Signatures continue on following page)

                                      A-1
<PAGE>

                                        THE INVESTORS

                                        HELLER CAPITAL INVESTMENTS, LCC

                                        By:
                                           -------------------------------------
                                        Name:    Ronald I. Heller
                                        Title:
                                              ----------------------------------

                     (Signatures continue on following page)

                                      A-2
<PAGE>

                                        HAYDEN COMMUNICATIONS, INC.

                                        By:
                                            ------------------------------------
                                        Name:    Matt Hayden
                                        Title:
                                               ---------------------------------

                     (Signatures continue on following page)

                                      A-3
<PAGE>

                                        ----------------------------------------
                                        Brett Maas

                                      A-4
<PAGE>

                                    EXHIBIT A

              Certificates of Designations, Preferences and Rights
              for Series A and Series B Convertible Preferred Stock

                                 (See attached)

                                      A-5
<PAGE>

                                    EXHIBIT B

                                 Form of Warrant

                                 (See attached)

                                      B-1
<PAGE>

                                    EXHIBIT C

                                    Investors

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
                                             Percentage         Shares of
                                              Among All          Series B          Common Stock      Percentage of      Number of
                                              Investors         Convertible        Issuable upon      Outstanding        Shares
                                              (based on          Preferred          Conversion       Voting Capital   Issuable upon
        Names of             Purchase        $12,000,000           Stock           Post Reverse        Stock Post      Exercise of
       Investors               Price            total)           Purchased             Split         Reverse Split       Warrant
------------------------------------------------------------------------------------------------------------------------------------
Initial Investors under December 13 Stock Purchase Agreement
------------------------------------------------------------------------------------------------------------------------------------
<S>                         <C>              <C>                 <C>                <C>                  <C>           <C>
Chinamerica Fund,           $1,700,000       0.141666667         30,518.52          602,083.36           3.01%         301,041.67
LP
------------------------------------------------------------------------------------------------------------------------------------
Chinamerica
Dalian Fushi
Acquisition, LLC            $1,000,000       0.083333333         17,952.07          354,166.68           1.77%         177,083.33
------------------------------------------------------------------------------------------------------------------------------------
Pope Asset
Management LLC              $3,500,000       0.291666667         62,832.25         1,239,583.39          6.198%        619,791.67
------------------------------------------------------------------------------------------------------------------------------------
Renaissance US
Growth
Investment Trust            $1,000,000       0.083333333         17,952.07          354,166.68           1.77%         177,083.33
------------------------------------------------------------------------------------------------------------------------------------
BFS US Special
Opportunities
Trust PLC                   $1,000,000       0.083333333         17,952.07          354,166.68           1.77%         177,083.33
------------------------------------------------------------------------------------------------------------------------------------
John Peter Selda             $100,000         0.00833333         1,795.20            35,416.53           0.17%          17,708.33
------------------------------------------------------------------------------------------------------------------------------------
MidSouth Investor
Fund LP                      $500,000        0.041666667         8,976.04           177,083.34           0.885%         88,541.67
------------------------------------------------------------------------------------------------------------------------------------
Lyman O. Heidtke             $125,000        0.010416667         2,244.01            44,270.86           0.22%          22,135.42
------------------------------------------------------------------------------------------------------------------------------------
Lake Street Fund
LP                          $700,000.00       0.05833333         12,566.45          247,916.68           1.24%         123,958.33
------------------------------------------------------------------------------------------------------------------------------------
Fred L. Astman
Wedbush Sec Inc.
Cust IRA Rollover
10/13/92                    $350,000.00         0.029166667      6,283.22           123,958.34           0.62%          61,979.17
------------------------------------------------------------------------------------------------------------------------------------
Barron Partners LP          $1,250,000          0.104166667      22,440.09          442,708.40           2.21%         221,354.17
------------------------------------------------------------------------------------------------------------------------------------
Sub-Total                   $11,225,000          94%            201,511.98         3,975,520.83          19.87%         1,987,760
---------                   -----------          ---            ----------         ------------          ------         ---------
------------------------------------------------------------------------------------------------------------------------------------
Investors under this Agreement
------------------------------------------------------------------------------------------------------------------------------------
Heller Capital               $650,000      0.052083333           11,220.04          221,354.17           1.107%        110,677.08
Investments, LLC
------------------------------------------------------------------------------------------------------------------------------------
Hayden
Communications,
Inc.                         $100,000        0.008333333         1,795.21            35,416.67           0.18%          17,708.33
------------------------------------------------------------------------------------------------------------------------------------
Brett Maas                    $50,000        0.004166667          897.60             17,708.33           0.089%         8,854.17
------------------------------------------------------------------------------------------------------------------------------------
Sub-Total                    $775,000             6%             13,912.85          274,479.17           1.37%           137,240
---------                    --------             --             ---------          ----------           -----           -------
------------------------------------------------------------------------------------------------------------------------------------
Total                       $12,000,000          100%           215,424.84         4,250,000.00          21.25%         2,125,000
=====                       ===========          ====           ==========         ============          ======         =========
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

                                       C-1
<PAGE>

                                    EXHIBIT D

                              Intentionally Omitted

                                       D-1
<PAGE>

                                  EXHIBIT E(1)

                             Stock Escrow Agreement

                                 (See attached)

                                  EXHIBIT E(2)

                       Amendment to Stock Escrow Agreement

                                 (See attached)

                                       E-1

<PAGE>

                                    EXHIBIT F

                               PR Escrow Agreement

                                 (See attached)

                                       F-1
<PAGE>

                                    EXHIBIT G

                             (Intentionally Omitted)

                                       G-1

<PAGE>

                                    EXHIBIT H

                              Financial Statements

                                 (See attached)

                                       H-1
<PAGE>

                                    EXHIBIT I

                            Restructuring Agreements

                                 (See attached)

                                       I-1

<PAGE>

                                    EXHIBIT J

                                 Use of Proceeds

                                 (See attached)

                                       J-1NEITHER
      THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON EXERCISE OF THESE SECURITIES
      HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
      SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
      REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
      ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
      EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
      AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
      REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
      SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR
      TO
      SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
      COMPANY. THESE SECURITIES AND THE SECURITIES ISSUABLE UPON EXERCISE OF THESE
      SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT SECURED
      BY SUCH SECURITIES.

     

     

    U.S.
      WIRELESS DATA, INC.

     

    WARRANT

     

    
      
        	
                Warrant
                  No. [ ]

              	
                Date
                  of Original Issuance: _______________,
                  2005

              

      

    

     

    U.S.
      Wireless Data, Inc.,
      a
      Delaware corporation (the "Company"),
      hereby
      certifies that, for value received, ______________ or its registered assigns
      (the "Holder"),
      is
      entitled to purchase from the Company up to a total of [ ] shares of common
      stock, $.01 par value per share (the "Common
      Stock"),
      of the
      Company (each such share, a "Warrant
      Share"
      and all
      such shares, the "Warrant
      Shares")
      at an
      exercise price equal to $2.00 per share (as adjusted from time to time as
      provided in Section 9, the "Exercise
      Price"),
      at any
      time and from time to time from and after the date hereof and through and
      including ___________, 2007 (the "Expiration
      Date"),
      and
      subject to the following terms and conditions:

     

    1.  Definitions.
      In
      addition to the terms defined elsewhere in this Warrant, capitalized terms
      that
      are not otherwise defined herein shall have the meanings given to such terms
      in
      the Subscription Agreement of even date herewith to which the Company and the
      original Holder are parties (the "Subscription
      Agreement").

     

    2.  Registration
      of Warrant.
      The
      Company shall register this Warrant, upon records to be maintained by the
      Company for that purpose (the "Warrant
      Register"),
      in the
      name of the record Holder hereof from time to time. The Company may deem and
      treat the registered Holder of this Warrant as the absolute owner hereof for
      the
      purpose of any exercise hereof or any distribution to the Holder, and for all
      other purposes, absent actual notice to the contrary.

     

    3.  Registration
      of Transfers.
      The
      Company shall register the transfer of any portion of this Warrant in the
      Warrant Register, upon surrender of this Warrant, with the Form of Assignment
      attached hereto duly completed and signed, to the Company at its address
      specified herein. Upon any such registration or transfer, a new Warrant to
      purchase Common Stock, in substantially the form of this Warrant (any such
      new
      Warrant, a "New
      Warrant"),
      evidencing the portion of this Warrant so transferred shall be issued to the
      transferee and a New Warrant evidencing the remaining portion of this Warrant
      not so transferred, if any, shall be issued to the transferring Holder. The
      acceptance of the New Warrant by the transferee thereof shall be deemed the
      acceptance by such transferee of all of the rights and obligations of a holder
      of a Warrant. 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    4.  Exercise
      and Duration of Warrants.
      This
      Warrant shall be exercisable by the registered Holder at any time and from
      time
      to time on or after the date hereof to and including the Expiration Date. At
      5:30 p.m., New York City time on the Expiration Date, the portion of this
      Warrant not exercised prior thereto shall be and become void and of no
      value.

     

    5.  Delivery
      of Warrant Shares.

     

    (a)  To
      effect
      exercises hereunder, the Holder shall not be required to physically surrender
      this Warrant unless the aggregate Warrant Shares represented by this Warrant
      is
      being exercised. Upon delivery of the attached Exercise Notice to the Company
      (with the attached Warrant Shares Exercise Log) at its address for notice set
      forth herein and upon payment of the Exercise Price multiplied by the number
      of
      Warrant Shares that the Holder intends to purchase hereunder, the Company shall
      promptly (but in no event later than three Trading Days after the Date of
      Exercise (as defined herein)) issue and deliver to the Holder, a certificate
      for
      the Warrant Shares issuable upon such exercise, which, unless otherwise required
      by the Subscription Agreement, shall be free of restrictive legends. The Company
      shall, upon request of the Holder and subsequent to the date on which a
      registration statement covering the resale of the Warrant Shares has been
      declared effective by the Securities and Exchange Commission, use commercially
      reasonable efforts to deliver Warrant Shares hereunder electronically through
      the Depository Trust Corporation or another established clearing corporation
      performing similar functions, if available, provided, that, the Company may,
      but
      will not be required to change its transfer agent if its current transfer agent
      cannot deliver Warrant Shares electronically through the Depository Trust
      Corporation. A "Date
      of Exercise"
      means
      the date on which the Holder shall have delivered to the Company: (i) the
      Exercise Notice (with the Warrant Exercise Log attached to it), appropriately
      completed and duly signed and (ii) if such Holder is not utilizing the cashless
      exercise provisions set forth in this Warrant, payment of the Exercise Price
      for
      the number of Warrant Shares so indicated by the Holder to be
      purchased.

     

    (b)  The
      Company's obligations to issue and deliver Warrant Shares in accordance with
      the
      terms hereof are absolute and unconditional, irrespective of any action or
      inaction by the Holder to enforce the same, any waiver or consent with respect
      to any provision hereof, the recovery of any judgment against any Person or
      any
      action to enforce the same, or any setoff, counterclaim, recoupment, limitation
      or termination, or any breach or alleged breach by the Holder or any other
      Person of any obligation to the Company or any violation or alleged violation
      of
      law by the Holder or any other Person, and irrespective of any other
      circumstance which might otherwise limit such obligation of the Company to
      the
      Holder in connection with the issuance of Warrant Shares. Nothing herein shall
      limit a Holder's right to pursue any other remedies available to it hereunder,
      at law or in equity including, without limitation, a decree of specific
      performance and/or injunctive relief with respect to the Company's failure
      to
      timely deliver certificates representing shares of Common Stock upon exercise
      of
      the Warrant as required pursuant to the terms hereof.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    6.  Charges,
      Taxes and Expenses.
      Issuance and delivery of certificates for shares of Common Stock upon exercise
      of this Warrant shall be made without charge to the Holder for any issue or
      transfer tax, withholding tax, transfer agent fee or other incidental tax or
      expense in respect of the issuance of such certificates, all of which taxes
      and
      expenses shall be paid by the Company; provided, however, that the Company
      shall
      not be required to pay any tax which may be payable in respect of any transfer
      involved in the registration of any certificates for Warrant Shares or Warrants
      in a name other than that of the Holder. The Holder shall be responsible for
      all
      other tax liability that may arise as a result of holding or transferring this
      Warrant or receiving Warrant Shares upon exercise hereof.

     

    7.  Replacement
      of Warrant.
      If this
      Warrant is mutilated, lost, stolen or destroyed, the Company shall issue or
      cause to be issued in exchange and substitution for and upon cancellation
      hereof, or in lieu of and substitution for this Warrant, a New Warrant, but
      only
      upon receipt of evidence reasonably satisfactory to the Company of such loss,
      theft or destruction and customary and reasonable indemnity (which shall not
      include a surety bond), if requested. Applicants for a New Warrant under such
      circumstances shall also comply with such other reasonable regulations and
      procedures and pay such other reasonable third-party costs as the Company may
      prescribe. If a New Warrant is requested as a result of a mutilation of this
      Warrant, then the Holder shall deliver such mutilated Warrant to the Company
      as
      a condition precedent to the Company’s obligation to issue the New
      Warrant.

     

    8.  Reservation
      of Warrant Shares.
      The
      Company covenants that it will at all times reserve and keep available out
      of
      the aggregate of its authorized but unissued and otherwise unreserved Common
      Stock, solely for the purpose of enabling it to issue Warrant Shares upon
      exercise of this Warrant as herein provided, the number of Warrant Shares which
      are then issuable and deliverable upon the exercise of this entire Warrant,
      free
      from preemptive rights or any other contingent purchase rights of persons other
      than the Holder (taking into account the adjustments and restrictions of
Section
      9).
      The
      Company covenants that all Warrant Shares so issuable and deliverable shall,
      upon issuance and the payment of the applicable Exercise Price in accordance
      with the terms hereof, be duly and validly authorized, issued and fully paid
      and
      nonassessable.

     

    9.  Certain
      Adjustments.
      The
      Exercise Price and number of Warrant Shares issuable upon exercise of this
      Warrant are subject to adjustment from time to time as set forth in this
Section
      9.

     

    (a)  Stock
      Dividends and Splits.
      If the
      Company, at any time while this Warrant is outstanding, (i) pays a stock
      dividend on its Common Stock or otherwise makes a distribution on any class
      of
      capital stock that is payable in shares of Common Stock, (ii) subdivides
      outstanding shares of Common Stock into a larger number of shares, or (iii)
      combines outstanding shares of Common Stock into a smaller number of shares,
      then in each such case the Exercise Price shall be multiplied by a fraction
      of
      which the numerator shall be the number of shares of Common Stock outstanding
      immediately before such event and of which the denominator shall be the number
      of shares of Common Stock outstanding immediately after such event. Any
      adjustment made pursuant to clause (i) of this paragraph shall become effective
      immediately after the record date for the determination of stockholders entitled
      to receive such dividend or distribution, and any adjustment pursuant to clause
      (ii) or (iii) of this paragraph shall become effective immediately after the
      effective date of such subdivision or combination. If any event requiring an
      adjustment under this paragraph occurs during the period that an Exercise Price
      is calculated hereunder, then the calculation of such Exercise Price shall
      be
      adjusted appropriately to reflect such event.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    (b)  Fundamental
      Transactions.
      If, at
      any time while this Warrant is outstanding, (1) the Company effects any merger
      or consolidation of the Company with or into another Person, (2) the Company
      effects any sale of all or substantially all of its assets in one or a series
      of
      related transactions, (3) any tender offer or exchange offer (whether by the
      Company or another Person) is completed pursuant to which holders of Common
      Stock are permitted to tender or exchange their shares for other securities,
      cash or property, or (4) the Company effects any reclassification of the Common
      Stock or any compulsory share exchange pursuant to which the Common Stock is
      effectively converted into or exchanged for other securities, cash or property
      (in any such case, a "Fundamental
      Transaction"),
      then
      the Holder shall have the right thereafter to receive, upon exercise of this
      Warrant, the same amount and kind of securities, cash or property as it would
      have been entitled to receive upon the occurrence of such Fundamental
      Transaction if it had been, immediately prior to such Fundamental Transaction,
      the holder of the number of Warrant Shares then issuable upon exercise in full
      of this Warrant (the "Alternate
      Consideration").
      For
      purposes of any such exercise, the determination of the Exercise Price shall
      be
      appropriately adjusted to apply to such Alternate Consideration based on the
      amount of Alternate Consideration issuable in respect of one share of Common
      Stock in such Fundamental Transaction, and the Company shall apportion the
      Exercise Price among the Alternate Consideration in a reasonable manner
      reflecting the relative value of any different components of the Alternate
      Consideration. If holders of Common Stock are given any choice as to the
      securities, cash or property to be received in a Fundamental Transaction, then
      the Holder shall be given the same choice as to the Alternate Consideration
      it
      receives upon any exercise of this Warrant following such Fundamental
      Transaction. At the Holder's option and request, any successor to the Company
      or
      surviving entity in such Fundamental Transaction shall, either (1) issue to
      the
      Holder a new warrant substantially in the form of this Warrant and consistent
      with the foregoing provisions and evidencing the Holder's right to purchase
      the
      Alternate Consideration for the aggregate Exercise Price upon exercise thereof,
      or (2) purchase the Warrant from the Holder for a purchase price, payable in
      cash within five Trading Days after such request (or, if later, on the effective
      date of the Fundamental Transaction), equal to the Black Scholes value of the
      remaining unexercised portion of this Warrant on the date of such request.
      The
      terms of any agreement pursuant to which a Fundamental Transaction is effected
      shall include terms requiring any such successor or surviving entity to comply
      with the provisions of this paragraph (b) and insuring that the Warrant (or
      any
      such replacement security) will be similarly adjusted upon any subsequent
      transaction analogous to a Fundamental Transaction.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    (c)  Number
      of Warrant Shares.
      Simultaneously with any adjustment to the Exercise Price pursuant to paragraph
      (a) of this Section, the number of Warrant Shares that may be purchased upon
      exercise of this Warrant shall be increased or decreased proportionately, so
      that after such adjustment the aggregate Exercise Price payable hereunder for
      the adjusted number of Warrant Shares shall be the same as the aggregate
      Exercise Price in effect immediately prior to such adjustment.

     

    (d)  Calculations.
      All
      calculations under this Section
      9
      shall be
      made to the nearest cent or the nearest 1/100th
      of a
      share, as applicable. The number of shares of Common Stock outstanding at any
      given time shall not include shares owned or held by or for the account of
      the
      Company, and the disposition of any such shares shall be considered an issue
      or
      sale of Common Stock.

     

    (e)  Notice
      of Adjustments.
      Upon
      the occurrence of each adjustment pursuant to this Section
      9,
      the
      Company at its expense will promptly compute such adjustment in accordance
      with
      the terms of this Warrant and prepare a certificate setting forth such
      adjustment, including a statement of the adjusted Exercise Price and adjusted
      number or type of Warrant Shares or other securities issuable upon exercise
      of
      this Warrant (as applicable), describing the transactions giving rise to such
      adjustments and showing in detail the facts upon which such adjustment is based.
      Upon written request, the Company will promptly deliver a copy of each such
      certificate to the Holder and to the Company's Transfer Agent.

     

    (f)  Notice
      of Corporate Events.
      If the
      Company (i) declares a dividend or any other distribution of cash, securities
      or
      other property in respect of its Common Stock, including without limitation
      any
      granting of rights or warrants to subscribe for or purchase any capital stock
      of
      the Company or any Subsidiary, (ii) authorizes or approves, enters into any
      agreement contemplating or solicits stockholder approval for any Fundamental
      Transaction or (iii) authorizes the voluntary dissolution, liquidation or
      winding up of the affairs of the Company, then the Company shall deliver to
      the
      Holder a notice describing the material terms and conditions of such
      transaction, at least 10 calendar days prior to the applicable record or
      effective date on which a Person would need to hold Common Stock in order to
      participate in or vote with respect to such transaction, and the Company will
      take all steps reasonably necessary in order to insure that the Holder is given
      the practical opportunity to exercise this Warrant prior to such time so as
      to
      participate in or vote with respect to such transaction; provided, however,
      that
      the failure to deliver such notice or any defect therein shall not affect the
      validity of the corporate action required to be described in such
      notice.

     

    10.  Payment
      of Exercise Price.
      The
      Holder may pay the Exercise Price in one of the following manners:

     

    (a)  Cash
      Exercise.
      The
      Holder may deliver immediately available funds; or

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    (b)  Cashless
      Exercise.
      The
      Holder may notify the Company in an Exercise Notice of its election to utilize
      cashless exercise, in which event the Company shall issue to the Holder the
      number of Warrant Shares determined as follows:

     

    X
      = Y
      [(A-B)/A]

     

    where:

     

    X
      = the
      number of Warrant Shares to be issued to the Holder.

     

    Y
      = the
      number of Warrant Shares with respect to which this Warrant is being
      exercised.

     

    A
      = the
      average of the closing prices for the five Trading Days immediately prior to
      (but not including) the Exercise Date.

     

    B
      = the
      Exercise Price.

     

    For
      purposes of Rule 144 promulgated under the Securities Act, it is intended,
      understood and acknowledged that the Warrant Shares issued in a cashless
      exercise transaction shall be deemed to have been acquired by the Holder, and
      the holding period for the Warrant Shares shall be deemed to have commenced,
      on
      the date this Warrant was originally issued.

     

    11.  No
      Rights as Stockholder.
      Until
      the exercise of this Warrant, the Holder shall not have or exercise any rights
      by virtue hereof as a stockholder of the Company.

     

    12.  No
      Fractional Shares.
      No
      fractional shares of Warrant Shares will be issued in connection with any
      exercise of this Warrant. In lieu of any fractional shares which would,
      otherwise be issuable, the Company shall pay cash equal to the product of such
      fraction multiplied by the closing price of one Warrant Share as reported by
      the
      applicable Trading Market on the date of exercise.

     

    14. Notices.
      Any and
      all notices or other communications or deliveries hereunder (including, without
      limitation, any Exercise Notice) shall be in writing and shall be deemed given
      and effective on the earliest of (i) the date of transmission, if such notice
      or
      communication is delivered via facsimile at the facsimile number specified
      in
      this Section prior to 5:30 p.m. (New York City time) on a Trading Day, (ii)
      the
      next Trading Day after the date of transmission, if such notice or communication
      is delivered via facsimile at the facsimile number specified in this Section
      on
      a day that is not a Trading Day or later than 5:30 p.m. (New York City time)
      on
      any Trading Day, (iii) the Trading Day following the date of mailing, if sent
      by
      nationally recognized overnight courier service, or (iv) upon actual receipt
      by
      the party to whom such notice is required to be given. The addresses for such
      communications shall be: (i) if to the Company, to U.S. Wireless Data, Inc.,
      [ADDRESS], Attention: President, Facsimile No.: __________ or such other address
      as the Company shall so notify the Holder, or (ii) if to the Holder, to the
      address or facsimile number appearing on the Warrant Register or such other
      address or facsimile number as the Holder may provide to the Company in
      accordance with this Section.

     

    15.  Warrant
      Agent.
      The
      Company shall serve as warrant agent under this Warrant. Upon 10 days' notice
      to
      the Holder, the Company may appoint a new warrant agent. Any corporation into
      which the Company or any new warrant agent may be merged or any corporation
      resulting from any consolidation to which the Company or any new warrant agent
      shall be a party or any corporation to which the Company or any new warrant
      agent transfers substantially all of its corporate trust or shareholders
      services business shall be a successor warrant agent under this Warrant without
      any further act. Any such successor warrant agent shall promptly cause notice
      of
      its succession as warrant agent to be mailed (by first class mail, postage
      prepaid) to the Holder at the Holder's last address as shown on the Warrant
      Register.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    16.  Miscellaneous.

     

    (a)  This
      Warrant shall be binding on and inure to the benefit of the parties hereto
      and
      their respective successors and assigns. Subject to the preceding sentence,
      nothing in this Warrant shall be construed to give to any Person other than
      the
      Company and the Holder any legal or equitable right, remedy or cause of action
      under this Warrant. This Warrant may be amended only in writing signed by the
      Company and the Holder and their successors and assigns.

     

    (b)  All
      questions concerning the construction, validity, enforcement and interpretation
      of this Warrant shall be governed by and construed and enforced in accordance
      with the internal laws of the State of New York (except with respect to matters
      governed by the corporate laws of the State of Delaware), without regard to
      the
      principles of conflicts of law thereof. Each party agrees that all legal
      proceedings concerning the interpretations, enforcement and defense of this
      Warrant and the transactions herein contemplated (“Proceedings”)
      (whether brought against a party hereto or its respective Affiliates, employees
      or agents) may be commenced non-exclusively in the state and federal courts
      sitting in the City of New York, Borough of Manhattan (the “New
      York Courts”).
      Each
      party hereto hereby irrevocably submits to the non-exclusive jurisdiction of
      the
      New York Courts for the adjudication of any dispute hereunder or in connection
      herewith or with any transaction contemplated hereby or discussed herein, and
      hereby irrevocably waives, and agrees not to assert in any Proceeding, any
      claim
      that it is not personally subject to the jurisdiction of any New York Court,
      or
      that such Proceeding has been commenced in an improper or inconvenient forum.
      Each party hereto hereby irrevocably waives personal service of process and
      consents to process being served in any such 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
      Warrant and agrees that such service shall constitute good and sufficient
      service of process and notice thereof. Nothing contained herein shall be deemed
      to limit in any way any right to serve process in any manner permitted by law.
      Each party hereto hereby irrevocably waives, to the fullest extent permitted
      by
      applicable law, any and all right to trial by jury in any legal proceeding
      arising out of or relating to this Warrant or the transactions contemplated
      hereby. If either party shall commence a Proceeding to enforce any provisions
      of
      this Warrant, then the prevailing party in such Proceeding shall be reimbursed
      by the other party for its attorney’s fees and other costs and expenses incurred
      with the investigation, preparation and prosecution of such
      Proceeding.

     

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

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    (d)  In
      case
      any one or more of the provisions of this Warrant shall be invalid or
      unenforceable in any respect, the validity and enforceability of the remaining
      terms and provisions of this Warrant shall not in any way be affected or
      impaired thereby and the parties will attempt in good faith to agree upon a
      valid and enforceable provision which shall be a commercially reasonable
      substitute therefor, and upon so agreeing, shall incorporate such substitute
      provision in this Warrant.

     

    [REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK,

    SIGNATURE
      PAGE FOLLOWS]

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by
      its
      authorized officer as of the date first indicated above.

     

    
      	 	 	 
	 	U.S.
              WIRELESS DATA, INC.
	 
 	 
 	 
 
	 	By:  	 
	 	
              
Name:
	 	Title:

    

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    U.S.
      WIRELESS DATA, INC.

    WARRANT
      ORIGINALLY ISSUED DECEMBER [ ], 2005

    WARRANT
      NO. [ ]

     

    EXERCISE
      NOTICE

     

    To
      U.S.
      Wireless Data, Inc.:

     

    The
      undersigned hereby irrevocably elects to purchase _____________ shares of Common
      Stock pursuant to the above captioned Warrant, and, if such Holder is not
      utilizing the cashless exercise provisions set forth in the Warrant, encloses
      herewith $________ in cash, certified or official bank check or checks or other
      immediately available funds, which sum represents the aggregate Exercise Price
      (as defined in the Warrant) for the number of shares of Common Stock to which
      this Exercise Notice relates, together with any applicable taxes payable by
      the
      undersigned pursuant to the Warrant.

     

    By
      its
      delivery of this Exercise Notice, the undersigned represents and warrants to
      the
      Company that in giving effect to the exercise evidenced hereby the Holder will
      not beneficially own in excess of the number of shares of Common Stock
      (determined in accordance with Section 13(d) of the Securities Exchange Act
      of
      1934) permitted to be owned under Section 10 of this Warrant to which this
      notice relates.

     

    The
      undersigned requests that certificates for the shares of Common Stock issuable
      upon this exercise be issued in the name of

    

      
        	
                PLEASE
                  INSERT SOCIAL SECURITY OR

                TAX
                  IDENTIFICATION NUMBER

              

      

    

     

    (Please
      print name and address)

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Warrant
      Shares Exercise Log

     

    
      	
              Date

            	
              Number
                of Warrant Shares
                

              Available
                to be Exercised

            	
              Number
                of Warrant Shares 

              Exercised

            	
              Number
                of Warrant Shares 

              Remaining
                to be Exercised

            
	
               

               

               

               

               

               

               

               

               

               

               

            	 	 	 

    

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    U.S.
      WIRELESS DATA, INC.

    WARRANT
      ORIGINALLY ISSUED DECEMBER [ ], 2005

    WARRANT
      NO. [ ]

     

    FORM
      OF
      ASSIGNMENT

     

    [To
      be
      completed and signed only upon transfer of Warrant]

     

    FOR
      VALUE
      RECEIVED, the undersigned hereby sells, assigns and transfers unto
      ________________________________ the right represented by the above-captioned
      Warrant to purchase ____________ shares of Common Stock to which such Warrant
      relates and appoints ________________ attorney to transfer said right on the
      books of the Company with full power of substitution in the
      premises.

     

    Dated: _______________,
      ____

     

    
      
        	
                 

                _______________________________________

                (Signature
                  must conform in all respects to name of 

                holder
                  as
                  specified on the face of the Warrant)

              
	
                 

                 

                _______________________________________

                Address
                  of Transferee

              
	
                 

                 

                _______________________________________

                 

                _______________________________________

              

      

    

     

    In
      the
      presence of:

     

    __________________________

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