WAIVER AND CONSENT
This
Waiver and Consent (the “Waiver”)
is
made as of October 26, 2007, by and among Fushi International Inc., a Nevada
corporation (the “Company”),
Fushi
Holdings, Inc. (“FHI”),
Fushi International (Dalian) Bimetallic Cable Co., Ltd., (“WFOE”),
and Dalian Fushi Bimetallic Manufacturing Co., Ltd. (“Dalian
Fushi”,
and together with the Company, FHI, the WFOE and any other subsidiary (the
“Group
Companies”),
Mr. Xx
Xx (the “Controlling
Shareholder”)
(c)
Mr. Xx Xx, Xx. Xxxxxx Xxxx Xxx, and Mr. Xxxxx Xxxx Wenbing, (together with
Mr.
Xx Xx and Xx. Xxxxxx Xxxx Xxx, the “Senior
Management”)
and Citadel
Equity Fund, Ltd (the “Purchaser”).
RECITALS
WHEREAS,
on January 19, 2007, the Company, the Group Companies, the Controlling
Shareholder, and the Purchaser entered into a Note Purchase Agreement (the
“Note
Purchase Agreement”),
pursuant to which, among other things, the Company issued to the Purchaser
(x)
the Company’s Guaranteed Senior Secured Floating Rate Notes due 2012 in the
aggregate principal amount of $40,000,000 (the “HY
Notes”)
and (y) the Company’s 3% Senior Secured Convertible Notes due 2012 in the
aggregate principal amount of $20,000,000 (the “Convertible
Notes”,
and together with the HY Notes, the “Notes”)
convertible into shares of common stock of the Company, par value $.006 per
share (the “Common
Stock”),
at an initial conversion price of $7 per share;
WHEREAS,
in connection Note Purchase Agreement, the Company, the Group Companies, the
Controlling Shareholder, Senior Management and the Purchaser entered into a
Investor Rights Agreement as of January 19, 2007 (the “Investor
Rights Agreement”),
WHEREAS,
pursuant to Section 3 of the Investor Rights Agreement if the
Company proposes to issue or sell any securities to a purchaser that is not
an
affiliate of the Company, the Company is required to (not less than fifteen
(15)
business days prior to the consummation of such issuance or sale) offer such
securities to Citadel by sending written notice (an “Issuance
Notice”)
to Citadel, which states (a)
the identity of the Proposed Third Party Purchaser, (b) a description of the
securities to be issued or sold, including detailed terms of such securities,
(c) the amount of the securities proposed to be issued to the Proposed Third
Party Purchaser (the “Offered
New Securities”);
(d) the proposed purchase price for the Offered Securities (the “Issuance
Price”);
and (e) the terms and conditions of such proposed sale.
The Issuance Notice is also required to certify that the Company has received
a
firm offer from the Proposed Third Party Purchaser and in good faith believes
a
binding agreement for the Offered New Securities is obtainable on the terms
set
forth in the Issuance Notice.
WHEREAS,
the
Company desires to enter into a Securities Purchase Agreement with a number
of
investors (the “Investors”)
pursuant to which the Company will issue up to an aggregate of
2,786,000 million
shares of its common stock to the Investors for an aggregate purchase price
of
up to $39,004,000.
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WHEREAS,
in connection with the Securities Purchase Agreement the Company proposes to
enter into a Registration Rights Agreement (a copy of which is attached hereto)
pursuant to which the Company is agreeing to register the shares of common
stock
being purchased by the Investors.
WHEREAS,
the Purchaser is willing to waive its right of first refusal set forth in
Section 3 of the Securities Purchase Agreement on condition that the Company
grant the Purchaser the same registration rights afforded to the Investors
in
the Registration Rights Agreement and execute and deliver to the Purchaser
the
Registration Rights Agreement.
NOW,
THEREFORE, in consideration of the mutual terms, conditions and other agreements
set forth herein, the parties hereto hereby agree as follows:
Section
1. Waiver and Consent. Simultaneously
with the execution and delivery by the Company to the holders of the Convertible
Notes of the Registration Rights Agreement, Purchaser hereby waives (the
“Waiver”)
the
application of and Purchaser’s rights under Section 3 of the Investors’ Rights
Agreement solely with respect to the issuance of the common stock to the
Investors contemplated by the Securities Purchase Agreement. For the avoidance
of doubt, the execution and delivery of the Registration Rights Agreement shall
be a condition precedent to the Waiver.
Section
2. Effect on Transaction Documents.
Except
as expressly set forth above, all of the terms and conditions of the Investor
Rights Agreement and any agreements, documents and instruments signed by the
Company and any Purchaser in connection therewith shall continue in full force
and effect after the execution of this Waiver and shall not be in any way
changed, modified or superseded by the terms set forth herein.
Section
3. Miscellaneous.
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a.
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Amendments
and Waivers.
The provisions of this Waiver, including the provisions of this sentence,
may not be amended, modified or supplemented, and waivers or consents
to
departures from the provisions hereof may not be given, unless the
same
shall be in writing and signed by the Company and the Purchaser.
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b.
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Notices.
Any and all notices or other communications or deliveries required
or
permitted to be provided hereunder shall be delivered as set forth
in the
Investor Rights Agreement.
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c.
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Successors
and Assigns.
This Waiver shall inure to the benefit of and be binding upon the
successors and permitted assigns of each of the parties.
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2
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d.
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Execution
and Counterparts.
This Agreement may be executed in any number of counterparts, each
of
which when so executed shall be deemed to be an original and, all
of which
taken together shall constitute one and the same Agreement and shall
become effective when counterparts have been signed by each party
and
delivered to the other parties hereto, it being understood that all
parties need not sign the same counterpart. In the event that any
signature is delivered by facsimile transmission, such signature
shall
create a valid binding obligation of the party executing (or on whose
behalf such signature is executed) the same with the same force and
effect
as if such facsimile signature were the original
thereof.
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e.
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Governing
Law.
All questions concerning the construction, validity, enforcement
and
interpretation of this Agreement shall be determined in accordance
with
the provisions of the Investor Rights
Agreement.
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f.
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Severability.
If any term, provision, covenant or restriction of this Agreement
is held
by a court of competent jurisdiction to be invalid, illegal, void
or
unenforceable, the remainder of the terms, provisions, covenants
and
restrictions set forth herein shall remain in full force and effect
and
shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their commercially reasonable efforts to find and
employ
an alternative means to achieve the same or substantially the same
result
as that contemplated by such term, provision, covenant or restriction.
It
is hereby stipulated and declared to be the intention of the parties
that
they would have executed the remaining terms, provisions, covenants
and
restrictions without including any of such that may be hereafter
declared
invalid, illegal, void or
unenforceable.
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g.
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Headings.
The headings in this Agreement are for convenience only, do not constitute
a part of the Agreement and shall not be deemed to limit or affect
any of
the provisions hereof.
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[SIGNATURE
PAGE FOLLOWS]
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IN
WITNESS WHEREOF, the undersigned have executed this Wavier and Consent as of the
day and year written above.
| GROUP COMPANIES: | ||
| Fushi International, Inc. | ||
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| By: | ||
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Name: |
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| Title: | ||
| Fushi Holdings, Inc. | ||
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| By: | ||
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Name: |
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| Title: | ||
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Fushi International (Dalian) Bimetallic
Cable Co., Ltd.
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| By: | ||
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Name: |
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| Title: | ||
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Dalian Fushi Bimetallic Manufacturing
Co., Ltd.
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| By: | ||
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Name: |
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| Title: | ||
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| CONTROLLING SHAREHOLDER: | ||
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| By: | ||
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| Mr. Xx Xx, as Controlling Shareholder | ||
| SENIOR MANAGEMENT: | ||
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| By: | ||
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Mr. Xx Xx, as a member of the Senior
Management
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| By: | ||
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Xx.
Xxxxxx Xxxx Xxx
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| By: | ||
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Mr.
Xxxxx Xxxx Wenbing
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Accepted
and Agreed to:
CITADEL
EQUITY FUND LTD.
By:
Citadel Limited Partnership, its Portfolio Manager
By:
Citadel Investment Group, L.L.C., its General Partner
| By: | |||
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Name:
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Title:
Authorized Signatory
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