--------------------------------------------------------------------------------

 

 
SECOND AMENDED AND RESTATED SECURITIES REDEMPTION AND PAY-OFF AGREEMENT
 
This Second Amended and Restated Securities Redemption and Pay-off Agreement,
dated as of July 28, 2010 (this “Agreement”), is entered into by and between
China Intelligence Information Systems, Inc. (formerly China VoIP & Digital
Telecom Inc.), a Nevada corporation (the “Company”), and Castlerigg Master
Investments, Ltd. (the “Investor).  The Company and the Investor shall be
referred to individually as a “Party” and collectively as the “Parties.”
 
W I T N E S S E T H:
 
WHEREAS:
 
A.           The Company and the Investor entered into that certain Securities
Purchase Agreement, dated as of December 21, 2007 (as amended, modified and
restated, the “Securities Purchase Agreement”), pursuant to which, among other
things, the Investor purchased from the Company (i) the Senior Secured
Convertible Note, dated as of December 21, 2007 (the “2007 Note”), which was
convertible into shares of the Company’s common stock, par value $0.001 per
share (the “Common Stock”), in accordance with the terms thereof, (ii) a Series
A Warrant, dated as of December 21, 2007  (the “2007 Series A Warrant”), (iii) a
Series B Warrant, dated as of December 21, 2007 (the “2007 Series B Warrant”)
and (iv) a Series C Warrant, dated as of December 21, 2007 (the “2007 Series C
Warrant”, and together with the 2007 Series A Warrant and 2007 Series B Warrant,
the “2007 Warrants”).
 
B.           The Company and the Investor entered into that certain Amendment
and Exchange Agreement, dated as of December 8, 2008, pursuant to which, among
other things, the Investor exchanged the 2007 Note and the 2007 Warrants for (i)
the Amended and Restated Senior Secured Convertible Note dated as of December 8,
2008 (the “2008 Note”), which is convertible into Common Stock, (ii) a Series A
Warrant, dated as of December 8, 2008 (the “2008 Series A Warrant”), exercisable
into 23,062,731 shares of Common Stock, (iii) a Series B Warrant, dated as of
December 8, 2008 (the “2008 Series B Warrant”), exercisable into 16,143,922
shares of Common Stock, (iv) a Series C Warrant, dated as of December 8, 2008
(the “2008 Series C Warrant”) exercisable into 16,489,852 shares of Common Stock
and (v) a Series D Warrant, dated as of December 8, 2008 (the “2008 Series D
Warrant”, and together with the 2008 Series A Warrant, 2008 Series B Warrant and
2008 Series C Warrant, the “2008 Warrants”), exercisable into 7,500,000 shares
of Common Stock.
 
C.           The Company and the Investor entered into that certain Securities
Redemption and Pay-Off Agreement, dated as of January 5, 2010 (the “Original
Agreement”), pursuant to which the Investor was willing to effectuate the
redemption of the 2008 Note and the 2008 Warrants (“Redemption”) and give
certain waivers and releases in consideration for the payment to the Investor of
a cash amount equal to $3,000,000.
 
D.           The Company and the Investor entered into that certain Amended and
Restated Securities Redemption and Pay-off Agreement, dated as of April 14, 2010
(the “First Amended Agreement”), pursuant to which the Parties amended and
restated the Original Agreement to, among other things, extend the termination
date through July 2, 2010 in consideration for a payment by the Company to the
Investor of $50,000 (the “Extension Amount”).
 
E.           The Parties desire to amend and restate the First Amended Agreement
to, among other things, extend the termination date specified therein in
consideration for a payment by the Company to the Investor of $800,000 (the
“Additional Extension Amount”, and together with the Extension Amount, the
“Aggregate Extension Amount”).
 
F.           Capitalized terms used but not defined herein shall have the
meaning ascribed thereto in the Securities Purchase Agreement.
 
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the undersigned, in consideration of the premises, covenants and
agreements contained herein, do hereby agree as follows:
 
1. Mutual Waiver and Release.
 
(a) Upon the Closing, the Investor hereby agrees, on behalf of itself and its
“affiliates” (as defined in Rule 144), to waive any and all claims, arising on
or before the date hereof, that the Investor or its affiliates may now or in the
future have against the Company and its respective affiliates, partners,
members, stockholders, managers, directors, officers, agents and assigns (and
all affiliates of such partners, members, stockholders, managers, directors,
officers, agents and assigns) of the Company or any of the Company’s affiliates,
to the extent that such claims may directly or indirectly arise under or be
directly or indirectly related in any manner to the Transaction Documents (the
waiver described in this Section 1(a) is hereafter referred to as the “Investor
Waiver”).  The Investor Waiver shall include, without limitation, a waiver of
any and all claims, arising on or before the date hereof, that the Investor or
any of its affiliates may now or in the future have as a result of a breach by
the Company of any of its representations, warranties or covenants set forth in
the Transaction Documents.  Upon the Closing, the Investor further agrees and
acknowledges, on its own behalf and on behalf of its affiliates, (i) to release
the Company and all of its respective affiliates from all obligations and
liabilities arising (whether prior to, on or after the date of this Agreement)
under or directly or indirectly related to the Transaction Documents, (ii) that
all security interests and other liens granted to or held by Investor as
security under the 2008 Note shall be forever and irrevocably satisfied,
released and discharged and (iii) that the Transaction Documents shall terminate
and be of no further force or effect other than those provisions therein that
specifically survive termination.
 
(b) As of the date hereof and upon the Closing, the Company hereby agrees, on
behalf of itself and its affiliates, to waive any and all claims that the
Company or its affiliates may now or in the future have against the Investor and
its respective affiliates, partners, members, stockholders, managers, directors,
officers, agents and assigns (and all affiliates of such partners, members,
stockholders, managers, directors, officers, agents and assigns) of the Investor
or any of the Investor’s affiliates, to the extent that such claims may directly
or indirectly arise under or be directly or indirectly related in any manner to
the Transaction Documents (the waiver described in this Section 1(b) is
hereafter referred to as the “Company Waiver”).  The Company Waiver shall
include, without limitation, a waiver of any and all claims that the Company or
any of its affiliates may now or in the future have as a result of a breach by
the Investor of any of its representations, warranties or covenants set forth in
the Transaction Documents.  Upon the Closing, the Company further agrees, on its
own behalf and on behalf of its affiliates, (i) to release the Investor and all
of its respective affiliates from all obligations and liabilities directly or
indirectly arising (whether prior to, on or after the date of this Agreement)
under or directly or indirectly related to the Transaction Documents and (ii)
that the Transaction Documents shall terminate and be of no further force or
effect other than those provisions therein that specifically survive
termination.
 
(c) Each of the Parties hereby acknowledges and agrees that the waivers,
releases and agreements set forth above in clauses (a) and (b) of this Section
1: (i) shall not in any manner be construed as constituting a waiver of any
claims that a Party or any of its affiliates may have in the future as a result
of a breach of this Agreement by any other Party hereto, nor shall the releases
set forth in clauses (a) and (b) of this Section 1 be construed as constituting
a release of any obligations that a Party may have under this Agreement; and
(ii) shall only be effective at the Closing upon the satisfaction or waiver of
the conditions set forth in Section 3 (and for the avoidance of doubt, shall not
be effective if this Agreement is terminated or the Closing does not otherwise
occur).
 
(d) Notwithstanding anything to the contrary contained in this Agreement or in
any other document, the obligations and liabilities of the Company or any of its
affiliates to Investor under or in respect of the Transactions Documents insofar
as such obligations and liabilities survive termination of the Transaction
Documents shall continue in full force and effect in accordance with their
terms.
 
2. Additional Extension Amount; Closing; Redemption and Pay-off.
 
(a) The Company shall, on the date hereof, pay to the Investor the Additional
Extension Amount by bank wire transfer to the account set forth on Exhibit A
attached hereto.  This Agreement shall be effective as of the date hereof only
upon confirmation from the Investor that the Additional Extension Amount was
received.
 
(b) The closing of the Redemption, the payment of $2,150,000 (the “Redemption
Amount”) and the transactions provided for in this Agreement (the “Closing”)
will take place at 10:00 a.m. (New York City time) at the offices of Winston &
Strawn LLP, 200 Park Avenue, New York, New York 10166-4193, as promptly as
practicable following, but in no event later than, the third Business Day
following the satisfaction or waiver of each of the conditions set forth in
Section 3 hereof, or at such other time and place as may be agreed to by the
parties hereto.  Such time and date are referred to in this Agreement as the
“Closing Date.”
 
(c) As consideration for the Redemption Amount and the Company Waiver and
releases and agreements set forth in Section 1 above, subject to the terms and
conditions set forth herein (including the satisfaction or waiver of the
conditions set forth in Section 3(b) below), the Investor shall, at the Closing,
transfer and convey to the Company the 2008 Note and the 2008 Warrants and the
Company shall redeem from the Investor the 2008 Note and the 2008 Warrants.
 
(d) As consideration for the 2008 Note and the 2008 Warrants and the Investor
Waiver and releases and agreements set forth in Section 1 above, subject to the
terms and conditions set forth in this Agreement, the Company shall, at the
Closing, pay to the Investor the Redemption Amount by bank wire transfer to the
account set forth on Exhibit A attached hereto.
 
3. Conditions to Closing.
 
(a) The obligation of the Company to consummate the transactions contemplated
hereby (including, without limitation, the Redemption and payment of the
Redemption Amount) shall be subject to the satisfaction or waiver by the Company
of each of the following:
 
(i) The delivery by the Investor to the Company of the 2008 Note and the 2008
Warrants for cancellation; and
 
(ii) The representations and warranties made by the Investor in Section 5 of
this Agreement shall be true and correct as of the date hereof and at and as of
the Closing Date as if made at and as of the Closing Date and the Investor shall
have complied with all agreements and satisfied all conditions to be performed
or satisfied at or prior to the Closing.
 
(b) The obligation of the Investor to consummate the transactions contemplated
hereby (including, without limitation, the obligation of the Investor to
transfer and convey the 2008 Note and the 2008 Warrants) shall be subject to the
satisfaction or waiver by the Investor of each of the following:
 
(i) The Company shall have delivered to the Investor the Aggregate Extension
Amount by bank wire transfer in accordance with Section 2(a) and the Redemption
Amount by bank wire transfer in accordance with Section 2(d);
 
(ii) Since January 5, 2010, the Company shall have duly delivered to the
Investor an aggregate of 1,100,000 shares of Common Stock pursuant to the
Conversion Notice attached hereto as Exhibit B (the “Conversion Notice”) and in
accordance with the terms of the 2008 Note, and each such share shall be freely
transferable pursuant to Rule 144 of the Securities Act;
 
(iii) The applicable transfer agent shall have removed any transfer restriction
legend on each share of Common Stock delivered pursuant to the Conversion
Notice, in form and substance satisfactory to the Investor;
 
(iv) The Investor shall have received the opinions of The Crone Law Group, LLP
and McLaughlin & Stern LLP, the Company’s outside counsels, or such other law
firm acceptable to the Investor, dated as of the Closing Date, in form and
substance satisfactory to Investor (in its sole discretion);
 
(v) The representations and warranties made by the Company in Section 4 of this
Agreement shall be true and correct as of the date hereof and at and as of the
Closing Date as if made at and as of the Closing Date and the Company shall have
complied with all agreements and satisfied all conditions on its part to be
performed or satisfied at or prior to the Closing;
 
(vi) The Company shall have obtained all governmental, regulatory or third party
consents and approvals, if any, necessary for the transactions contemplated
hereby; and
 
(vii) The Company shall have delivered to the Investor such other documents
relating to the transactions contemplated by this Agreement as the Investor or
its counsel may reasonably request.
 
4. Representations and Warranties of the Company.  The Company represents and
warrants to the Investor as follows:
 
(a) The execution, delivery and performance by the Company of this Agreement,
and the consummation by the Company of the transactions contemplated by this
Agreement, have been duly authorized by the board of directors of the
Company.  Upon execution by the Company this Agreement will have been duly
executed and delivered by the Company and, assuming due execution by each other
Party, will constitute a legal, valid and binding obligation of the Company
enforceable in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting generally
creditors’ rights and subject to general principles of equity.
 
(b) The Company is duly authorized, validly existing and in good standing under
the laws of the State of Nevada and has all requisite power and authority to
carry on its business as currently conducted and to enter into and to perform
its obligations under this Agreement.
 
(c) The execution and delivery of, and the performance of or compliance with,
this Agreement, and the transactions contemplated hereby by the Company do not
and will not (i) with or without the giving of notice or passage of time,
contravene, result in any breach of or constitute a default under, any
applicable law or regulation, agreement, judgment, injunction, order, decree or
other instrument to which the Company is a party or by which it or its property
or assets is bound, (ii) require a consent, approval or waiver other than those
that shall be obtained prior to the Closing Date, or (iii) conflict with, or
accelerate or terminate any performance required by or under the governing or
operative documents of the Company or any agreement or other instrument to which
the Company is a party or by which the Company or its property or assets is
bound.
 
(d) The Common Stock (i) is designated for quotation or listed on the Principal
Market and (ii) has not been suspended by the SEC or the Principal Market from
trading on the Principal Market nor has suspension by the SEC or the Principal
Market been threatened, either (A) in writing by the SEC or the Principal Market
or (B) by falling below the minimum listing maintenance requirements of the
Principal Market.
 
(e) Immediately following the Redemption contemplated by this Agreement:
 
(i) the cash assets of the Company shall be greater than the total amount of its
liabilities (including all liabilities, whether or not reflected in a balance
sheet prepared in accordance with GAAP, and whether direct or indirect, fixed or
contingent, secured or unsecured, disputed or undisputed);
 
(ii) the Company shall be able to pay its debts and obligations in the ordinary
course of business as they become due; and
 
(iii) the Company shall have adequate capital to carry on its businesses and all
businesses in which its about to engage.
 
5. Representations and Warranties of the Investor.  The Investor hereby
represents and warrants to the Company that the execution, delivery and
performance by the Investor of this Agreement, and the consummation by the
Investor of the transactions contemplated by this Agreement, have been duly
authorized by all necessary action on behalf of the Investor.  Upon execution by
the Investor, this Agreement will have been duly executed and delivered by the
Investor and, assuming due execution by each other Party, will constitute a
legal, valid and binding obligation of the Investor enforceable in accordance
with its terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting generally creditors’ rights and subject to
general principles of equity.
 
6. Covenants.
 
(a) Disclosure of Transactions and Other Material Information.  On or before
8:30 a.m., New York City time, within four business days following the earlier
to occur of (i) the Closing Date or (ii) the Termination Date (as defined
below), the Company shall issue a press release and file a Current Report on
Form 8-K describing the terms of the transactions contemplated by this
Agreement, the Company’s source of funds for the Redemption Amount and/or an
explanation describing the Company’s inability to close the transactions
contemplated hereby, in the form required by the 1934 Act and attaching the
material documents as an exhibit to such filing (including all attachments, the
“8-K Filing”).  From and after the filing of the 8-K Filing with the SEC, the
Investor shall not be in possession of any material, nonpublic information
received from the Company, its affiliates or any of its respective officers,
directors, employees or agents, that is not disclosed in the 8-K Filing.  The
Company shall not, and shall cause each of its affiliates and its and each of
their respective officers, directors, employees and agents, not to, provide the
Investor with any material, nonpublic information regarding the Company or any
of its affiliates from and after the filing of the 8-K Filing with the SEC
without the express written consent of the Investor.  If the Investor has, or
believes it has, received any such material, nonpublic information regarding the
Company or any of its affiliates, it shall provide the Company with written
notice thereof.  The Company shall, within two (2) business days of receipt of
such notice, make public disclosure of such material, nonpublic information.  In
the event of a breach of the foregoing covenant by the Company, any of its
affiliates, or any of its or their respective officers, directors, employees and
agents, in addition to any other remedy provided herein, the Investor shall have
the right to make a public disclosure, in the form of a press release, public
advertisement or otherwise, of such material, nonpublic information without the
prior approval by the Company, its affiliates, or any of its or their respective
officers, directors, employees or agents.  The Investor shall not have any
liability to the Company, its affiliates, or any of its or their respective
officers, directors, employees, stockholders or agents for any such
disclosure.  Subject to the foregoing, neither the Company, its affiliates nor
the Investor shall issue any press releases or any other public statements with
respect to the transactions contemplated hereby; provided, however, that the
Company shall be entitled, without the prior approval of the Investor, to make
any press release or other public disclosure with respect to such transactions
(i) in substantial conformity with the 8-K Filing and contemporaneously
therewith and (ii) as is required by applicable law and regulations (provided
that in the case of clause (i) the Investor shall be consulted by the Company in
connection with any such press release or other public disclosure prior to its
release).  Without the prior written consent of the Investor, and except as
contemplated by the prior subsection (i) or as required by applicable law or
regulation, neither the Company nor any of its affiliates shall disclose the
name of the Investor in any filing, announcement, release or otherwise.
 
(b) Post-Closing Deliveries.  The Investor shall deliver to the Company within
fifteen (15) days following the Closing Date:
 
(i) The original certificates representing the pledged shares of the Company
pledged to the Investor under the 2007 Pledge Agreement, as set forth on Exhibit
C attached hereto; and
 
(ii) The original certificate of pledged trademarks of the Company pledged to
the Investor under the 2007 Pledge Agreement, dated as of December 21, 2007, by
and between the Company and the Investor, as set forth on Exhibit D attached
hereto.
 
(c) Release of Liens.  Following the Closing (and after the receipt of the
Redemption Amount), Investor shall take all reasonable additional steps to
release any liens or encumbrances that were granted to the Investor in
connection with the 2008 Note.
 
7. Termination.  In the event that the Closing does not occur on or before
August 13, 2010 due to the Company's failure to satisfy the conditions set forth
in Section 3(b) (and the Investor’s failure to waive such unsatisfied
conditions(s)), the Investor shall have the option to terminate this Agreement
at the close of business on such date (the “Termination Date”) without liability
to the Company.  Upon such termination, and except for the first sentence of
Section 1(b) (Company Release as of the date hereof) and Sections 6(a), 8, 10,
11, 15, 19 and 21 (which shall survive the Termination Date), the terms hereof
shall be null and void and the parties shall continue to comply with all terms
and conditions of the Transaction Documents, as in effect prior to the execution
of this Agreement.
 
8. Conversion Price.  The parties hereto acknowledge and agree that the
Conversion Price reflected in the Conversion Notice shall (i) only be the
Conversion Price for purposes of the conversion contemplated hereby and (ii) not
be deemed (by virtue of the execution of this Agreement) to be the Conversion
Price for any other conversion that may occur following the date hereof.  For
the avoidance of doubt, by execution of this Agreement, the parties hereto do
not waive any and all rights that they may have pursuant to, or terms or
provisions set forth in, the 2008 Note relating to any adjustments to the
Conversion Price.
 
9. Currency.  Unless otherwise indicated, all dollar amounts referred to in this
Agreement are in United States Dollars (“US Dollars”).  All amounts owing under
this Agreement shall be paid in US Dollars.
 
10. Acknowledgements.
 
(a) The Company hereby acknowledges and agrees that (i) the Aggregate Extension
Amount is in consideration for the extension of the Termination Date and shall
not under any circumstance be refundable (in the event that this Agreement is
terminated, the Closing does not occur or otherwise), (ii) all liens, security
interests, rights and remedies granted to the Investor in and under the
Transaction Documents are hereby confirmed, and shall continue to secure the
performance by the Company of its obligations under the Transaction Documents
unless and until the Closing occurs and (iii) if at any time any payment made by
the Company is subsequently invalidated, declared to be fraudulent or
preferential, and is set aside or required to be repaid to a trustee, receiver
or any other person or entity under any bankruptcy act, state or federal law,
common law or equitable cause, then to the extent of such payment or payments,
the obligations under this Agreement, the Transaction Documents or otherwise
intended to be satisfied shall be revived and continued in full force and effect
as if such payment or payments had not been made.
 
(b) The Company hereby acknowledges and confirms to the Investor that (i) unless
and until the Closing occurs, it is validly and justly indebted to the Investor
for the payment of all of the obligations under the Transaction Documents
(including the Original Principal Amount referenced in the Note and any and all
other payment obligations payable thereunder (including default interest or
otherwise)) and (ii) the amounts owed pursuant to the Transaction Documents are
not, as of the date hereof, subject to any defense, set-off, offset,
counterclaim, or recoupment of any kind.
 
11. Reference to and Effect on the Transaction Documents.  Except as
specifically modified herein, the Note and the other Transaction Documents shall
remain in full force and effect and are each hereby ratified and confirmed.  The
execution, delivery and effectiveness of this Agreement shall not operate as a
waiver of any right, power or remedy of the Company under the Note or any of the
other Transaction Documents, or constitute a waiver or consent of any provision
of the Note or any of the other Transaction Documents, except as expressly set
forth herein.
 
12. Entire Agreement.  This Agreement, together with any exhibits hereto,
represents the final and complete agreement of the Parties hereto with respect
to the subject matter hereof, supersedes all prior agreements and understanding
(including the Original Agreement) and shall be binding upon, and inure to the
benefit of, the Parties hereto and their respective successors, heirs,
representatives and assigns.
 
13. Third Party Beneficiaries.  Each person or entity in favor of whom a waiver
or release has been granted pursuant to the terms of this Agreement shall be
considered a third party beneficiary of this Agreement and shall be entitled to
enforce all provisions of this Agreement running in favor of such person or
entity.
 
14. Waivers and Amendments.  The waiver by any Party of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
subsequent breach, whether or not similar.  This Agreement may be amended,
modified or supplemented only by a written instrument executed by the Parties.
 
15. Expenses.  Each of the parties hereto shall pay its own costs and expenses
(including, without limitation, attorneys’ fees) incurred in connection with or
relating to the preparation, negotiation and execution of this Agreement or the
consummation of the transactions contemplated hereby; provided, however, the
Company shall pay any and all transfer, stamp and similar taxes that may be
payable with respect to the issuance and delivery of Common Stock upon the
contemplated conversion and any other costs and expenses required of it pursuant
to the Transaction Documents.
 
16. Notices.  All notices, requests, consents, demands, and other communications
to be given or delivered under or by reason of the provisions of this Agreement
shall be in writing, shall be personally delivered or sent by facsimile
transmission, overnight courier or certified mail and shall be deemed to have
been duly given when received.
 
Notices to the Company shall be addressed and delivered to:
 
China Intelligence Information Systems, Inc.
11th Floor No.11 Building, Shuntai Square, No.2000 Shunhua Rd, High-tech
Industrial Development Zone, Jinan,China 250101
Telephone:                      +86-531-55585742    
Facsimile:                      +86-531-8887-6660
Attention:                      Li Kunwu, Chief Executive Officer
 
or to such other person or at such other place as the Company may from to time
furnish to the other Parties in writing.
 
with a copy to:
 
McLaughlin & Stern LLP
 
260 Madison Avenue:
 
New York, New York 10016
 
Telephone:  212 448 1100
 
Facsimile:    212 448 0066
 
Attention: Steven Schuster
 
Notices to the Investor shall be addressed and delivered to:
 
Castlerigg Master Investments Ltd.
c/o Sandell Asset Management
40 West 57th Street, 26th Floor
New York, NY 10019
Telephone:                      212-603-5700
Facsimile:                      212-603-5710
Attention:  Matthew Pliskin
 
with a copy to:
 
Winston & Strawn LLP
200 Park Avenue
New York, NY 10166-4193
Facsimile:  (212) 294-4700
 
Attention:  Bradley C. Vaiana, Esq.

 
or to such other person or at such other place as the Investor may from to time
furnish to the other Parties in writing.
 
17. Titles and Headings.  The section headings contained in this Agreement are
solely for convenience of reference and shall not affect the meaning or
interpretation of this Agreement or of any term or provision hereof.
 
18. Counterparts.  This Agreement may be executed in two (2) or more
counterparts (delivery of which may be by facsimile or via email as a portable
document format (.pdf)), each of which will be deemed an original, and it will
not be necessary in making proof of this Agreement or the terms of this
Agreement to produce or account for more than one (1) of such counterparts.
 
19. Severability.  If any provision of this Agreement is prohibited by law or
otherwise determined to be invalid or unenforceable by a court of competent
jurisdiction, the provision that would otherwise be prohibited, invalid or
unenforceable shall be deemed amended to apply to the broadest extent that it
would be valid and enforceable, and the invalidity or unenforceability of such
provision shall not affect the validity of the remaining provisions of this
Agreement so long as this Agreement as so modified continues to express, without
material change, the original intentions of the parties as to the subject matter
hereof and the prohibited nature, invalidity or unenforceability of the
provision(s) in question does not substantially impair the respective
expectations or reciprocal obligations of the Parties or the practical
realization of the benefits that would otherwise be conferred upon the
Parties.  The Parties will endeavor in good faith negotiations to replace the
prohibited, invalid or unenforceable provision(s) with a valid provision(s), the
effect of which comes as close as possible to that of the prohibited, invalid or
unenforceable provision(s).
 
20. Further Assurances.  The Parties agree to cooperate at all times from and
after the date hereof with respect to any of the matters described herein, and
to execute such further assignments, releases, assumptions, notifications or
other documents or to take any other necessary actions as may be reasonably
requested for the purpose of giving effect to, evidencing or giving notice of
the transactions contemplated by this Agreement.
 
21. Governing Law; Jurisdiction; Jury Trial.  All questions concerning the
construction, validity, enforcement and interpretation of this Agreement shall
be governed by the internal laws of the State of New York, without giving effect
to any choice of law or conflict of law provision or rule (whether of the State
of New York or any other jurisdictions) that would cause the application of the
laws of any jurisdictions other than the State of New York.  Each Party hereby
irrevocably submits to the exclusive jurisdiction of the state and federal
courts sitting in The City of New York, Borough of Manhattan, 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 suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is brought in an inconvenient forum or that the
venue of such suit, action or proceeding is improper.  Each Party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof to such
party at the address for such notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof.  The Company hereby reaffirms the appointment of Empire Stock Transfer,
Inc., with offices at 2470 Saint Rose Parkway, Suite 304, Henderson, Nevada
89074, as its agent for service of process in New York.  Nothing contained
herein shall be deemed to limit in any way any right to serve process in any
manner permitted by law.  EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY
HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY
DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY
TRANSACTION CONTEMPLATED HEREBY.
 
[Signature Page Follows]

Error! Unknown document property name.
 
 

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the Investor and the Company have caused this Securities
Redemption and Pay-off Agreement to be duly executed as of the day and year
first written above.
 
COMPANY
 
                                                      CHINA INTELLIGENCE
INFORMATION SYSTEMS INC.
 
By:_____/s/ Li Kunwu__________________________
Name: Li Kunwu
Title:   President and Chief Executive
 
INVESTOR
 
CASTLERIGG MASTER INVESTMENTS LTD.
 
By: Sandell Asset Management Corp., its investment manager
 
By:___/s/_Thomas E. Sandell_______________________
Name: Thomas E. Sandell
Title:    Chief Executive Officer
 
 
 
 

Signature Page to Amended and Restated Securities Redemption and Pay-off
Agreement
 
 

--------------------------------------------------------------------------------

 

Exhibit A
 
Wiring Instructions
 
Citibank, NY
ABA: 021 000 089
A/C Name: Credit Suisse Securities (USA) LLC
A/C #: 40804003
Ref: Castlerigg Master Investments Ltd.
Ref A/C: 737420

 
 

--------------------------------------------------------------------------------

 

Exhibit B
 
Conversion Notice
 
(See attached)
 

 
 

--------------------------------------------------------------------------------

 

Exhibit C
 
Certificates of Pledged Shares

Pledgor
Name of Issuer
Number of shares
% of Shares
Class
Certificate No.
Li Kun Wu
China VoIP & Digital Telecom, Inc.
6,200,000
 
11.71%
Common Stock
 
1503
Wang Qing Hua
China VoIP & Digital Telecom, Inc.
6,200,000
11.71%
Common Stock
 
1504
Yin Yi Xu
China VoIP & Digital Telecom, Inc.
2,880,000
5.44%
Common Stock
 
1505

 
 

--------------------------------------------------------------------------------

 

Exhibit D
 
Certificate of Pledged Trademarks
 

Certificate Name
Certificate No.
Date of Registration
Pledgor
Pledged Value
商标专用权质押登记证
商标质字[2009]第076号
July 7, 2009
Jinan Yinquan Technologies Co. Inc
RMB 809,900

 
 

--------------------------------------------------------------------------------