Document:

SETTLEMENT
      AGREEMENT AND RELEASE

     

    This
      Settlement Agreement and Release (the “Agreement”) is dated April 25, 2007 and
      is made by and between Stursberg & Veith (“Plaintiff”) and Tech
      Laboratories, Inc. (“Defendant”). Plaintiff and Defendant are collectively
      referred to herein as the “Settling Parties.”

     

    WHEREAS,
      Plaintiff filed a lawsuit against Defendant before the United States District
      Court for the Southern District of New York entitled Stursberg
      & Veith v.
      Tech Laboratories, Inc.,
      Case
      No. 04-CV-5161 (NRB) (the “Matter”);

     

    WHEREAS,
      on
      December 5, 2005 a judgment was filed by the court with respect to the matter
      in
      favor of the Plaintiff, for the payment of $204,834.10, including
      interest;

     

    WHEREAS,
      the
      Settling Parties have concluded that it is in their individual and mutual best
      interests to resolve this matter amicably and end all controversy between
      them.

     

    NOW,
      THEREFORE,
      in
      consideration of the mutual conditions and covenants contained in this
      Agreement, and for other good and valuable consideration, the sufficiency and
      receipt of which is hereby acknowledged, it is hereby stipulated, consented
      to
      and agreed by and between Plaintiff and Defendant as follows:

     

    1. Defendant
      shall pay Plaintiff the total sum of One Hundred Thousand Dollars and No Cents
      ($100,000.00) (the “Settlement Payment”) payable via
      wire
      transfer of immediately available funds to the account designated and set forth
      on Exhibit A, annexed hereto; provided, however, if the Settlement
      Payment is not made in full on or before 5:00 P.M. (EST) on April 30, 2007,
      this
      Agreement shall be null and void and the judgment shall remain in full force
      and
      effect.

     

    2. Upon
      receipt and clearance of the Settlement Payment, Plaintiff releases and
      discharges Defendant, and its officers, directors, employees, agents, partners
      and shareholders, from all actions, cause of action, suits, debts, dues, sums
      of
      money, accounts, reckonings, bonds, bills, specialties, covenants, contracts,
      controversies, agreements, promises, variances, trespasses, damages, judgments,
      extents, executions, claims, and demands whatsoever, in law, admiralty or
      equity, against Defendant, that Plaintiff or its successors and assigns ever
      had
      or now have for, upon, or by reason of any matter related to the Matter, whether
      or not known or unknown, from the beginning of the world to the day of the
      date
      of this release.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    3. Upon
      receipt and clearance of the Settlement Payment, Defendant releases and
      discharges the Plaintiff, and its officers, directors, employees, agents,
      partners and shareholders, from all actions, cause of action, suits, debts,
      dues, sums of money, accounts, reckonings, bonds, bills, specialties, covenants,
      contracts, controversies, agreements, promises, variances, trespasses, damages,
      judgments, extents, executions, claims, and demands whatsoever, in law,
      admiralty or equity, against the Plaintiff, that Defendant or its successors
      and
      assigns ever had or now have for, upon, or by reason of any matter related
      to
      the Matter, whether or not known or unknown, from the beginning of the world
      to
      the day of the date of this release.

     

    4. Plaintiff
      warrants and represents that no other person or entity has any interest in
      the
      matters released herein, and that he has not assigned or transferred, or
      purported to assign or transfer, to any person or entity all or any portion
      of
      the matters released herein.

     

    5. Each
      party shall be responsible for their own attorneys’ fees and costs.

     

    6. All
      parties acknowledge and represent that: (a) they have read the Agreement; (b)
      they clearly understand the Agreement and each of its terms; (c) they fully
      and
      unconditionally consent to the terms of this Agreement; (d) they have had the
      benefit and advice of counsel of their own selection; (e) they have executed
      this Agreement, freely, with knowledge, and without influence or duress; (f)
      they have not relied upon any other representations, either written or oral,
      express or implied, made to them by any person; and (g) the consideration
      received by them has been actual and adequate.

     

    
      
         

      

      
        -2-

        
          

        

      

      
         

      

    

     

    7. This
      Agreement contains the entire agreement and understanding concerning the subject
      matter hereof between the Settling Parties and supersedes and replaces all
      prior
      negotiations, proposed agreement and agreements, written or oral. Each of the
      parties hereto acknowledges that neither any of the parties hereto, nor agents
      or counsel of any other party whomsoever, has made any promise, representation
      or warranty whatsoever, express or implied, not contained herein concerning
      the
      subject hereto, to induce it to execute this Agreement and acknowledges ands
      warrants that it is not executing this Agreement in reliance on any promise,
      representation or warranty not contained herein.

     

    8. This
      Agreement may not be modified or amended in any manner except by an instrument
      in writing specifically stating that it is a supplement, modification or
      amendment to the Agreement and signed by each of the Settling
      Parties.

     

    9. Should
      any provision of this Agreement be declared or be determined by any court or
      tribunal to be illegal or invalid, the validity of the remaining parts, terms
      or
      provisions shall not be affected thereby and said illegal or invalid part,
      term
      or provision shall be severed and deemed not to be part of this
      Agreement.

     

    10. This
      Agreement may be executed in facsimile counterparts, each of which, when all
      parties have executed at least one such counterpart, shall be deemed an
      original, with the same force and effect as if all signatures were appended
      to
      one instrument, but all of which together shall constitute one and the same
      Agreement.

     

    11. This
      Agreement shall be construed without regard to any presumptions against the
      party causing the same to be prepared.

     

    
      
         

      

      
        -3-

        
          

        

      

      
         

      

    

     

    12. This
      Agreement constitutes the entire agreement and supersedes all prior agreements
      and understandings, oral and written, between the Settling Parties hereto with
      respect to the subject matter hereof.

     

    IN
      WITNESS WHEREOF,
      the
      parties have duly executed this Agreement as of the date first indicated
      above.

     

    
      	 	 	 
	 	STURSBERG
&
              VEITH
	 
 	 
 	 
 
	
            	By:  	/s/
              WALTER
              STURSBURG
	 	
              
Walter
              Stursburg, Partner

    

     

    
      	
            	 	 
	 	TECH LABORATORIES, INC.
	 
 	 
 	 
 
	
            	By:  	/s/ JOHN KING 
	 	
              
John
              King, Chief Executive
              Officer

    

     

    
      
         

      

      
        -4-Exhibit
        10.1

       

      AGREEMENT
        AND PLAN OF MERGER AND REORGANIZATION

       

      among

       

      EASYKNIT
        ENTERPRISES HOLDINGS LIMITED

       

      RACE
        MERGER, INC.

       

      and

       

      WITS
        BASIN PRECIOUS MINERALS INC.

       

      Dated
        as
        of April 20, 2007

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      TABLE
        OF CONTENTS

      

        
          	 	 	
                  Page

                
	
                  ARTICLE
                    I THE
                    MERGER

                	 	
                  2

                
	
                  SECTION
                    1.01 The
                    Merger

                	 	
                  2

                
	
                  SECTION
                    1.02 Effective
                    Time; Closing

                	 	
                  2

                
	
                  SECTION
                    1.03 Effect
                    of the Merger

                	 	
                  2

                
	
                  SECTION
                    1.04 Articles
                    of Incorporation; By-laws

                	 	
                  2

                
	
                  SECTION
                    1.05 Directors
                    and Officers

                	 	
                  2

                
	
                  SECTION
                    1.06 Further
                    Action

                	 	
                  3

                
	
                  ARTICLE
                    II CONVERSION
                    OF SECURITIES; EXCHANGE OF CERTIFICATES

                	 	
                  3

                
	
                  SECTION
                    2.01 Conversion
                    of Securities

                	 	
                  3

                
	
                  SECTION
                    2.02 Exchange
                    of Certificates.

                	 	
                  4

                
	
                  SECTION
                    2.03 Stock
                    Transfer Books

                	 	
                  7

                
	
                  SECTION
                    2.04 Company
                    Stock Options

                	 	
                  8

                
	
                  SECTION
                    2.05 Company
                    Warrants

                	 	
                  9

                
	
                  SECTION
                    2.06 Section
                    16

                	 	
                  10

                
	
                  SECTION
                    2.07 Appraisal
                    Rights

                	 	
                  10

                
	
                  ARTICLE
                    III REPRESENTATIONS
                    AND WARRANTIES OF THE COMPANY

                	 	
                  11

                
	
                  SECTION
                    3.01 Corporate
                    Organization

                	 	
                  11

                
	
                  SECTION
                    3.02 Certificate
                    of Incorporation and By-laws

                	 	
                  12

                
	
                  SECTION
                    3.03 Capitalization

                	 	
                  13

                
	
                  SECTION
                    3.04 Authority
                    Relative to This Agreement

                	 	
                  15

                
	
                  SECTION
                    3.05 No
                    Conflict; Required Filings and Consents

                	 	
                  15

                
	
                  SECTION
                    3.06 Permits;
                    Compliance

                	 	
                  16

                
	
                  SECTION
                    3.07 SEC
                    Filings; Financial Statements

                	 	
                  17

                
	
                  SECTION
                    3.08 Absence
                    of Certain Changes or Events

                	 	
                  20

                
	
                  SECTION
                    3.09 Absence
                    of Litigation

                	 	
                  20

                
	
                  SECTION
                    3.10 Employee
                    Benefit Plans

                	 	
                  21

                
	
                  SECTION
                    3.11 Labor
                    and Employment Matters

                	 	
                  24

                
	
                  SECTION
                    3.12 Real
                    Property; Title to Assets

                	 	
                  27

                
	
                  SECTION
                    3.13 Intellectual
                    Property

                	 	
                  29

                
	
                  SECTION
                    3.14 Taxes

                	 	
                  31

                

        

         

        
          
            
            

          

          
            i

            
              

            

          

          
            
            

          

        

         

        
          	
                  SECTION
                    3.15 Environmental
                    Matters

                	 	
                  32

                
	
                  SECTION
                    3.16 Material
                    Contracts

                	 	
                  33

                
	
                  SECTION
                    3.17 Insurance

                	 	
                  35

                
	
                  SECTION
                    3.18 Board
                    Approval; Vote Required

                	 	
                  35

                
	
                  SECTION
                    3.19 Certain
                    Business Practices

                	 	
                  36

                
	
                  SECTION
                    3.20 Interested
                    Party Transactions

                	 	
                  36

                
	
                  SECTION
                    3.21 Ownership
                    of Parent Ordinary Shares

                	 	
                  36

                
	
                  SECTION
                    3.22 Brokers

                	 	
                  36

                
	
                  ARTICLE
                    IV REPRESENTATIONS
                    AND WARRANTIES OF PARENT

                	 	
                  37

                
	
                  SECTION
                    4.01 Corporate
                    Organization

                	 	
                  37

                
	
                  SECTION
                    4.02 Memorandum
                    of Association and Bye-Laws

                	 	
                  38

                
	
                  SECTION
                    4.03 Capitalization

                	 	
                  39

                
	
                  SECTION
                    4.04 Authority
                    Relative to This Agreement

                	 	
                  41

                
	
                  SECTION
                    4.05 No
                    Conflict; Required Filings and Consents

                	 	
                  41

                
	
                  SECTION
                    4.06 Permits;
                    Compliance

                	 	
                  42

                
	
                  SECTION
                    4.07 Hong
                    Kong and Bermuda Filings; Financial Statements

                	 	
                  43

                
	
                  SECTION
                    4.08 Absence
                    of Certain Changes or Events

                	 	
                  46

                
	
                  SECTION
                    4.09 Absence
                    of Litigation

                	 	
                  46

                
	
                  SECTION
                    4.10 Employee
                    Benefit Plans

                	 	
                  46

                
	
                  SECTION
                    4.11 Labor
                    and Employment Matters

                	 	
                  48

                
	
                  SECTION
                    4.12 Real
                    Property; Title to Assets

                	 	
                  50

                
	
                  SECTION
                    4.13 Intellectual
                    Property

                	 	
                  52

                
	
                  SECTION
                    4.14 Taxes

                	 	
                  54

                
	
                  SECTION
                    4.15 Environmental
                    Matters

                	 	
                  54

                
	
                  SECTION
                    4.16 Material
                    Contracts

                	 	
                  56

                
	
                  SECTION
                    4.17 Insurance

                	 	
                  58

                
	
                  SECTION
                    4.18 Board
                    Approval; Vote Required

                	 	
                  58

                
	
                  SECTION
                    4.19 Certain
                    Business Practices

                	 	
                  59

                
	
                  SECTION
                    4.20 Interested
                    Party Transactions

                	 	
                  59

                
	
                  SECTION
                    4.21 Operations
                    of Merger Sub

                	 	
                  59

                
	
                  SECTION
                    4.22 Ownership
                    of Company Capital Stock

                	 	
                  59

                
	
                  SECTION
                    4.23 Brokers

                	 	
                  59

                
	
                  ARTICLE
                    V CONDUCT
                    OF BUSINESS PENDING THE MERGER

                	 	
                  59

                

        

         

        
          
            
            

          

          
            ii

            
              

            

          

          
            
            

          

        

         

        
          	
                  SECTION
                    5.01 Conduct
                    of Business by the Company Pending the Merger

                	 	
                  59

                
	
                  SECTION
                    5.02 Conduct
                    of Business by Parent Pending the Merger

                	 	
                  63

                
	
                  SECTION
                    5.03 Control
                    of Other Party’s Business

                	 	
                  66

                
	
                  ARTICLE
                    VI ADDITIONAL
                    AGREEMENTS

                	 	
                  66

                
	
                  SECTION
                    6.01 Disclosure
                    Documents

                	 	
                  66

                
	
                  SECTION
                    6.02 Stockholders’
                    Meetings

                	 	
                  69

                
	
                  SECTION
                    6.03 Access
                    to Information; Confidentiality

                	 	
                  69

                
	
                  SECTION
                    6.04 No
                    Solicitation of Transactions

                	 	
                  70

                
	
                  SECTION
                    6.05 Employee
                    Benefits Matters

                	 	
                  73

                
	
                  SECTION
                    6.06 Directors’
                    and Officers’ Indemnification and Insurance

                	 	
                  74

                
	
                  SECTION
                    6.07 Notification
                    of Certain Matters

                	 	
                  75

                
	
                  SECTION
                    6.08 Affiliate
                    Agreements

                	 	
                  75

                
	
                  SECTION
                    6.09 Further
                    Action; Reasonable Best Efforts

                	 	
                  75

                
	
                  SECTION
                    6.10 Plan
                    of Reorganization

                	 	
                  76

                
	
                  SECTION
                    6.11 Obligations
                    of Merger Sub

                	 	
                  76

                
	
                  SECTION
                    6.12 Stock
                    Exchange Listing/Quotation

                	 	
                  76

                
	
                  SECTION
                    6.13 Public
                    Announcements

                	 	
                  76

                
	
                  SECTION
                    6.14 Board
                    of Directors; Corporate Headquarters; Corporate Name

                	 	
                  77

                
	
                  SECTION
                    6.15 Accounting
                    Matters

                	 	
                  77

                
	
                  SECTION
                    6.16 Stock
                    Transfer Taxes

                	 	
                  77

                
	
                  SECTION
                    6.17 Deposit
                    Agreement

                	 	
                  77

                
	
                  SECTION
                    6.18 Parent
                    Assumption of Obligations

                	 	
                  77

                
	
                  SECTION
                    6.19 Title
                    to Properties

                	 	
                  78

                
	
                  ARTICLE
                    VII CONDITIONS
                    TO THE MERGER

                	 	
                  78

                
	
                  SECTION
                    7.01 Conditions
                    to the Obligations of Each Party

                	 	
                  78

                
	
                  SECTION
                    7.02 Conditions
                    to the Obligations of Parent and Merger Sub

                	 	
                  79

                
	
                  SECTION
                    7.03 Conditions
                    to the Obligations of the Company

                	 	
                  81

                
	
                  ARTICLE
                    VIII TERMINATION,
                    AMENDMENT AND WAIVER

                	 	
                  82

                
	
                  SECTION
                    8.01 Termination

                	 	
                  82

                
	
                  SECTION
                    8.02 Effect
                    of Termination

                	 	
                  84

                
	
                  SECTION
                    8.03 Fees
                    and Expenses; Termination Fees.

                	 	
                  84

                
	
                  SECTION
                    8.04 Amendment

                	 	
                  85

                
	
                  SECTION
                    8.05 Waiver

                	 	
                  85

                

        

         

        
          
            
            

          

          
            iii

            
              

            

          

          
            
            

          

        

         

        
          	
                  ARTICLE
                    IX GENERAL
                    PROVISIONS

                	 	
                  86

                
	
                  SECTION
                    9.01 Survival

                	 	
                  86

                
	
                  SECTION
                    9.02 Notices

                	 	
                  86

                
	
                  SECTION
                    9.03 Certain
                    Definitions

                	 	
                  87

                
	
                  SECTION
                    9.04 Severability

                	 	
                  95

                
	
                  SECTION
                    9.05 Entire
                    Agreement; Assignment

                	 	
                  95

                
	
                  SECTION
                    9.06 Parties
                    in Interest; Third Parties

                	 	
                  95

                
	
                  SECTION
                    9.07 Specific
                    Performance

                	 	
                  95

                
	
                  SECTION
                    9.08 Governing
                    Law

                	 	
                  96

                
	
                  SECTION
                    9.09 Headings

                	 	
                  96

                
	
                  SECTION
                    9.10 Counterparts

                	 	
                  96

                
	
                  SECTION
                    9.11 Waiver
                    of Jury Trial

                	 	
                  96

                
	EXHIBITS
                  AND SCHEDULES	 	 
	Exhibits	 	 
	Exhibit
                  6.08(a)- Form of Affiliate Letter for Affiliates of the Company	 	
                   

                
	 	 	 
	Schedules	 	 
	Company
                  Disclosure Schedule	 	
                   

                
	Parent
                  Disclosure Schedule	 	
                   

                

        

      

      
        
          
          

        

        
          iv

          
            

          

        

         

      

    

     

    AGREEMENT
      AND PLAN OF MERGER AND REORGANIZATION, dated as of April 20, 2007 (this
“Agreement”),
      among
      Easyknit Enterprises Holdings Limited, a company incorporated in Bermuda
      (“Parent”),
      Race
      Merger, Inc., a Minnesota corporation and a wholly owned subsidiary of Parent
      (“Merger
      Sub”),
      and
      Wits Basin Precious Minerals Inc., a Minnesota corporation (the “Company”).

     

    WHEREAS,
      upon the terms and subject to the conditions of this Agreement and in accordance
      with the Business Corporation Act of the State of Minnesota (the “MBCA”),
      Parent and the Company will enter into a business combination transaction
      pursuant to which Merger Sub will merge with and into the Company (the
“Merger”);

     

    WHEREAS,
      the Board of Directors of the Company (the “Company
      Board”)
      by a
      unanimous vote (i) has determined that the Merger is consistent with and in
      furtherance of the long-term business strategy of the Company and fair to,
      and
      in the best interests of, the Company and its stockholders and has approved
      and
      adopted this Agreement and declared its advisability and approved the Merger
      and
      the other transactions contemplated by this Agreement and (ii) on the terms
      and
      subject to the conditions set forth herein, has resolved to recommend the
      approval and adoption of this Agreement by the stockholders of the
      Company;

     

    WHEREAS,
      the Board of Directors of Parent (the “Parent
      Board”)
      by a
      unanimous vote (i) on the terms and subject to the conditions set forth herein,
      has determined that the Merger is consistent with and in furtherance of the
      long-term business strategy of Parent and fair to, and in the best interests
      of,
      Parent and its shareholders and has approved and adopted this Agreement, the
      Merger and the other transactions contemplated by this Agreement and (ii) has
      resolved to recommend that the shareholders of Parent vote to approve (A) this
      Agreement, the Merger and the other transactions contemplated by this Agreement,
      (B) the issuance of ordinary shares, par value HK$0.01 per share, of Parent
      (“Parent
      Ordinary Shares”)
      underlying the Parent ADSs (as defined in Section 9.03(a))
      that
      will be issued to the stockholders of the Company pursuant to the terms of
      the
      Merger, (C) the issuance of the Substitute Options (as defined in Section 2.04)
      as set
      forth in Section 2.04
      and the
      issuance of Parent Ordinary Shares underlying the Parent ADSs to be issued
      upon
      exercise of the Substitute Options, (D) the assumption of certain obligations
      under the Company Warrants (as defined below), the Company Convertible Notes
      (as
      defined below) and the Company Additional Share and Warrant Obligations (as
      defined below), the entry into any agreements in connection with such assumption
      and the issuance of Parent Ordinary Shares underlying the Parent ADSs to be
      issued upon conversion of the Company Warrants, the Company Convertible Notes
      and the Company Additional Share and Warrant Obligations (the matters in clauses
      (A), (B) and (C) being together referred to as the “Share
      Issuance”),
      (E)
      the adoption of the New Stock Option Plans (as defined in Section 2.04(a))
      (the
“New
      Stock Option Plans Adoption”)
      and
      (F) the appointment of the Company Designated Directors (as defined in
Section 6.14)
      as set
      forth in Section 6.14(a)(ii)
      (the
“Parent
      Board Appointments”);

     

    WHEREAS,
      for United States federal income tax purposes, the Merger is intended to qualify
      as a reorganization under the provisions of Section 368(a) of the United States
      Internal Revenue Code of 1986, as amended (the “Code”),
      and
      that this Agreement shall be, and is hereby, adopted as a plan of reorganization
      within the meaning of Treasury Regulations Section 1.368-2(g).

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    NOW,
      THEREFORE, in consideration of the foregoing and the mutual covenants and
      agreements herein contained, and intending to be legally bound hereby, Parent,
      Merger Sub and the Company hereby agree as follows:

     

    ARTICLE
      I

     

    THE
      MERGER

     

    SECTION
      1.01 The
      Merger.
      Upon the
      terms and subject to the conditions set forth in this Agreement, and in
      accordance with the MBCA, at the Effective Time (as defined in Section 1.02),
      Merger
      Sub shall be merged with and into the Company. As a result of the Merger, the
      separate corporate existence of Merger Sub shall cease and the Company shall
      continue as the surviving corporation of the Merger (the “Surviving
      Corporation”).

     

    SECTION
      1.02 Effective
      Time; Closing.
      Within
      two business days after the satisfaction or, if permissible, waiver of the
      conditions set forth in Article VII,
      the
      parties hereto shall cause the Merger to be consummated by filing articles
      of
      merger (the “Articles
      of Merger”)
      with
      the Secretary of State of the State of Minnesota, in such form as is required
      by, and executed in accordance with, the relevant provisions of the MBCA (the
      date and time of such filing of the Articles of Merger (or such later time
      as
      may be agreed by each of the parties hereto and specified in the Articles of
      Merger) being the “Effective
      Time”).
      Immediately prior to such filing of the Articles of Merger, a closing (the
      “Closing”)
      shall
      be held at the offices of Baker & McKenzie, 14/F., Hutchison House, 10
      Harcourt Road, Hong Kong, or such other place as the parties shall agree, for
      the purpose of confirming the satisfaction or waiver, as the case may be, of
      the
      conditions set forth in Article VII.

     

    SECTION
      1.03 Effect
      of the Merger.
      At the
      Effective Time, the effect of the Merger shall be as provided in this Agreement
      and the applicable provisions of the MBCA. Without limiting the generality
      of
      the foregoing, and subject thereto, at the Effective Time, all the property,
      rights, privileges, powers and franchises of the Company and Merger Sub shall
      vest in the Surviving Corporation, and all debts, liabilities, obligations,
      restrictions, disabilities and duties of each of the Company and Merger Sub
      shall become the debts, liabilities, obligations, restrictions, disabilities
      and
      duties of the Surviving Corporation.

     

    SECTION
      1.04 Articles
      of Incorporation; By-laws. a)
      At the
      Effective Time, the Articles of Incorporation of Merger Sub, as in effect
      immediately prior to the Effective Time, shall be the Articles of Incorporation
      of the Surviving Corporation until thereafter amended as provided by law and
      such Articles of Incorporation.

     

    (b) At
      the
      Effective Time, the By-laws of Merger Sub, as in effect immediately prior to
      the
      Effective Time, shall be the By-laws of the Surviving Corporation until
      thereafter amended as provided by law, the Articles of Incorporation of the
      Surviving Corporation and such By-laws.

     

    SECTION
      1.05 Directors
      and Officers.
      At the
      Effective Time, the Board of Directors of Merger Sub shall resign and H. Vance
      White, Stephen D. King, Mark D. Dacko, Norman D. Lowenthal, Kwong Jimmy Cheung
      Tim and Tse Wing Chiu, Ricky shall be the initial directors of the Surviving
      Corporation, each to hold office in accordance with the Articles of
      Incorporation and By-laws of the Surviving Corporation, and the officers of
      Merger Sub immediately prior to the Effective Time shall be the initial officers
      of the Surviving Corporation, in each case until their respective successors
      are
      duly elected or appointed and qualified or until the earlier of their death,
      resignation or removal.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    SECTION
      1.06 Further
      Action. At
      and
      after the Effective Time, the officers and directors of Parent and the Surviving
      Corporation will be authorized to execute and deliver, in the name and on behalf
      of the Company and Merger Sub, any deeds, bills of sale, assignments or
      assurances and to take and do, in the name and on behalf of the Company and
      Merger Sub, any other actions and things necessary or advisable in the opinion
      of Parent to vest, perfect or confirm of record or otherwise in the Surviving
      Corporation any and all right, title and interest in, to and under any of the
      rights, properties or assets acquired or to be acquired by the Surviving
      Corporation as a result of, or in connection with, the Merger.

     

    ARTICLE
      II

     

    CONVERSION
      OF SECURITIES; EXCHANGE OF CERTIFICATES

     

    SECTION
      2.01 Conversion
      of Securities.
      At the
      Effective Time, by virtue of the Merger and without any action on the part
      of
      any party:

     

    (a) each
      share of common stock, par value US$0.01 per share, of the Company
      (“Company
      Common Stock”)
      (all
      shares of Company Common Stock issued and outstanding immediately prior to
      the
      Effective Time being hereinafter collectively referred to as the “Company
      Shares”)
      issued
      and outstanding immediately prior to the Effective Time (other than any Company
      Shares to be canceled pursuant to Section 2.01(b))
      shall
      be canceled and shall be converted automatically, subject to Section 2.02,
      into
      the right to receive Parent ADSs issued in accordance with a deposit agreement
      to be entered into by and among Parent, a depositary bank, as Depositary, and
      the registered owners and holders from time to time of Parent ADSs (the
“Parent
      Deposit Agreement”).
      The
      Parent ADSs may be evidenced by one or more Parent ADRs (as defined in
Section 9.03(a)).
      The
      Parent ADSs to be issued upon conversion of Company Shares pursuant to this
      Section 2.01(a),
      any
      cash to be paid in lieu of fractional Parent ADSs as contemplated in
Section 2.02(e),
      and any
      Parent ADSs to be issued upon conversion or exercise of Substitute Warrants,
      Company Convertible Notes, Company Additional Share and Warrant Obligations
      and
      Substitute Options are referred to collectively as “Merger
      Consideration.”
As
      of
      the Effective Time, persons holding, immediately prior to the Effective Time,
      Company Shares, Company Warrants, Company Stock Options, Company Convertible
      Notes, Company Additional Share and Warrant Obligations and
      any
      other security convertible into capital stock of
      the
      Company shall receive their pro rata share of the Merger Consideration,
      calculated on a fully-diluted basis, subject to adjustment for any issuances
      of
      Company Shares after the date hereof by the Company and shall not hold, in
      the
      aggregate, more than 46% of the Parent Ordinary Shares (whether represented
      by
      ADRs or otherwise) on a fully-diluted basis. For the avoidance of doubt, the
      parties agree that the Merger Consideration shall consist of 33,452,863 Parent
      ADSs representing 3,345,286,315 newly issued Parent Ordinary Shares representing
      46% of the Parent Ordinary Shares as of the Effective Time on a fully-diluted
      basis (upon giving effect to the Merger and the Share Issuance) and that the
      Merger Consideration will be allocated among all issued and outstanding shares
      of capital stock, options, warrants, convertible notes and other equity
      securities of the Company outstanding at the Effective Time, including any
      Company Shares that may be issued by the Company prior to the Effective Time.
      Such underlying Parent Ordinary Shares shall be in the same class and of the
      same ranking as currently outstanding Parent Ordinary Shares;

     

    
      
        
        

      

      
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    (b) each
      Company Share held in the treasury of the Company and each Company Share owned
      by Merger Sub, Parent or any direct or indirect wholly owned subsidiary of
      Parent or of the Company immediately prior to the Effective Time (collectively,
      the “Excluded
      Company Shares”)
      shall
      be canceled without any conversion thereof and no payment or distribution shall
      be made with respect thereto; and

     

    (c) each
      share of common stock, par value US$0.01 per share, of Merger Sub issued and
      outstanding immediately prior to the Effective Time shall be converted into
      and
      exchanged for one validly issued, fully paid and nonassessable share of common
      stock, par value US$0.01 per share, of the Surviving Corporation (the
“Surviving
      Corporation Common Stock”).

     

    SECTION
      2.02 Exchange
      of Certificates.

     

    (a) Exchange
      Agent.
      i)
      Prior to the Effective Time, Parent shall appoint a bank or trust company
      reasonably acceptable to the Company as exchange agent (the “Exchange
      Agent”)
      for
      the purpose of accepting Certificates (as defined below) to be surrendered
      by
      holders of Company Shares in exchange for the Merger Consideration. Promptly
      after the Effective Time, the Surviving Corporation will mail, or shall cause
      the Exchange Agent to mail, to each person who was, at the Effective Time,
      a
      holder of record of Company Shares entitled to receive the Merger Consideration
      pursuant to Section 2.01(a):
      (A) a
      letter of transmittal, which shall be in customary form and shall specify that
      delivery shall be effected, and risk of loss and title to the certificates
      evidencing such Company Shares (the “Certificates”)
      shall
      pass, only upon proper delivery of the Certificates to the Exchange Agent and
      shall have such other provisions as Parent may reasonably specify and (B)
      instructions for use in effecting the surrender of the Certificates pursuant
      to
      such letter of transmittal.

     

    (ii) At
      the
      Effective Time, Parent shall issue to and deposit with the Depositary, for
      the
      benefit of the holders of Company Shares converted into the right to receive
      Parent ADSs in accordance with Section 2.01(a),
      Parent
      Ordinary Shares in an amount sufficient to permit the Depositary to deliver
      the
      number of Parent ADSs issuable pursuant to Section 2.01(a).
      Parent
      shall cause the Depositary to deliver those Parent ADRs to the Exchange Agent
      for the benefit of the holders of Company Shares converted into the right to
      receive Parent ADSs in accordance with Section 2.01(a).
      Any
      Parent Ordinary Shares made available to the Depositary pursuant to this
Section 2.02(a)
      to be
      exchanged for Company Shares for which appraisal rights have properly been
      demanded shall be returned to Parent upon demand.

     

    (b) Exchange
      Procedures.
      Upon
      surrender to the Exchange Agent of a Certificate for cancellation, together
      with
      a letter of transmittal, duly completed and validly executed in accordance
      with
      the instructions thereto and covering the Company Shares represented by such
      Certificate, and such other documents as may be required pursuant to the
      instructions to the letter of transmittal, the holder of such Certificate shall
      be entitled to receive in exchange therefor (i) the number of whole Parent
      ADSs
      (excluding any fractional interest in Parent ADSs) to which such holder is
      entitled in respect of such Company Shares pursuant to Section 2.01(a),
      and
      (ii) a check in the amount (after giving effect to any required Tax
      withholdings) equal to (A) any cash in lieu of fractional interests in Parent
      ADSs to which such holder is entitled pursuant to Section 2.02(e)
      and (B)
      any dividends or other distributions to which such holder is entitled pursuant
      to Section 2.02(c),
      and the
      Certificate so surrendered shall forthwith be cancelled. In the event of a
      transfer of ownership of Company Shares that is not registered in the transfer
      records of the Company, certificates representing, in the aggregate, the proper
      number of Parent ADSs and a check in the amount equal to any cash in lieu of
      any
      fractional interest in Parent ADSs to which such holder is entitled pursuant
      to
Section 2.02(e)
      and any
      dividends or other distributions to which such holder is entitled pursuant
      to
Section 2.02(c)
      may be
      issued to a transferee if the Certificate representing such Company Shares
      is
      presented to the Exchange Agent, properly endorsed and otherwise in proper
      form
      for transfer, accompanied by all documents required to evidence and effect
      such
      transfer and by evidence that any applicable stock transfer taxes have been
      paid. Until surrendered as contemplated by this Section 2.02,
      each
      Certificate shall be deemed at all times after the Effective Time to represent
      only the right to receive upon such surrender the Parent ADSs, cash in lieu
      of
      any fractional interest in Parent ADSs to which such holder is entitled pursuant
      to Section 2.02(e)
      and any
      dividends or other distributions to which such holder is entitled pursuant
      to
Section 2.02(c).
      No
      interest will be paid or will accrue on any cash payable to holders of
      Certificates pursuant to this Article II.

     

    
      
        
        

      

      
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    (c) Distributions
      with Respect to Unexchanged Shares.
      No
      dividends or other distributions declared or made after the Effective Time
      with
      respect to the Parent Ordinary Shares with a record date after the Effective
      Time shall be paid to the holder of any unsurrendered Certificate with respect
      to the Parent ADSs represented thereby, and no cash payment in lieu of any
      fractional interest in Parent ADSs shall be paid to any such holder pursuant
      to
Section 2.02(e),
      until
      the holder of such Certificate shall surrender such Certificate. Subject to
      the
      effect of escheat, tax or other applicable Laws (as defined in Section 3.05(a)),
      following surrender of any such Certificate, there shall be paid to the holder
      of whole Parent ADSs issued in exchange therefor, without interest, (i)
      promptly, the amount of any cash payable with respect to a fractional interest
      in Parent ADSs to which such holder is entitled pursuant to Section 2.02(e)
      and the
      amount of dividends or other distributions with a record date after the
      Effective Time and theretofore paid with respect to the Parent Ordinary Shares
      represented by such whole Parent ADSs, and (ii) at the appropriate payment
      date,
      the amount of dividends or other distributions, with a record date after the
      Effective Time but prior to surrender and a payment date occurring after
      surrender, payable with respect to the Parent Ordinary Shares represented by
      such whole Parent ADSs.

     

    (d) No
      Further Rights in Company Shares.
      All
      Parent ADSs issued upon conversion of the Company Shares and the surrender
      of
      the Certificates in accordance with the terms hereof (including any cash paid
      pursuant to Section 2.02(c)
      or
(e))
      shall
      be deemed to have been issued (and paid) in full satisfaction of all rights
      pertaining to such Company Shares.

     

    (e) No
      Fractional ADSs.
      ii) No
      certificates or scrip representing fractional interests in Parent ADSs shall
      be
      issued upon the surrender for exchange of Certificates, and such fractional
      interests will not entitle the owner thereof to vote or to any other rights
      of a
      shareholder of Parent or a holder of Parent ADRs or Parent ADSs.

     

    
      
        
        

      

      
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    (ii) As
      promptly as practicable following the Effective Time, the Exchange Agent shall
      determine the excess of (A) the number of whole Parent Ordinary Shares delivered
      to the Depositary by Parent pursuant to Section 2.02(a)(ii)
      over (B)
      the aggregate number of whole Parent Ordinary Shares represented by the Parent
      ADSs to be distributed to holders of Company Shares pursuant to Section 2.02(b)
      (such
      excess, as issued as Parent ADSs by the Depositary to the Exchange Agent, the
      “Excess
      ADSs”).
      As
      soon after the Effective Time as practicable, the Exchange Agent, as agent
      for
      the holders of Company Shares, who, but for the provisions of this Section 2.02(e),
      would
      be entitled to fractional interests in Parent ADSs, shall sell the Excess ADSs
      on the American Stock Exchange LLC (“AMEX”),
      all
      in the manner provided in clause (iii) of this Section 2.02(e).

     

    (iii) The
      sale
      of the Excess ADSs by the Exchange Agent shall be executed on the AMEX through
      one or more member firms of the National Association of Securities Dealers,
      Inc.
      (the “NASD”).
      Until
      the net proceeds of such sale or sales have been distributed to the holders
      of
      Company Shares who are entitled to receive such proceeds in lieu of fractional
      interests in Parent ADSs, the Exchange Agent will hold such proceeds in trust
      for the holders of such Company Shares (the “Company
      Shares Trust”).
      The
      Exchange Agent shall determine the portion of the Company Shares Trust to which
      each holder of Company Shares shall be entitled, if any, by multiplying the
      amount of the aggregate gross proceeds comprising the Company Shares Trust
      by a
      fraction, the numerator of which is the amount of the fractional share interest
      to which such holder of Company Shares is entitled and the denominator of which
      is the aggregate amount of fractional share interests to which all holders
      of
      Company Shares are entitled.

     

    (iv) As
      soon
      as practicable after the determination of the amount of cash, if any, to be
      paid
      to the holders of Company Shares in lieu of any fractional interest in Parent
      ADSs and subject to Section 2.02(i)
      below,
      the Exchange Agent shall make available such amounts to such holders of
      Certificates pursuant to Section 2.02(b).

     

    (f) Adjustments
      to Exchange Ratio.
      The
      Exchange Ratio shall be adjusted to reflect appropriately the effect of any
      stock split, reverse stock split, stock dividend (including any dividend or
      distribution of securities convertible into Parent Ordinary Shares, Parent
      ADSs
      or Company Common Stock), extraordinary cash dividends, reorganization,
      recapitalization, reclassification, combination, exchange of shares or other
      like change with respect to Parent ADSs, Parent Ordinary Shares or Company
      Common Stock occurring on or after the date hereof and prior to the Effective
      Time.

     

    (g) Termination
      of Unclaimed Exchange.
      Any
      Parent ADSs issuable or deliverable in respect of Certificates pursuant to
      this
Article II
      and any
      cash in lieu of fractional interests in Parent ADSs payable pursuant to
Section 2.02(e),
      plus
      any cash dividends or other distributions that such holder has the right to
      receive pursuant to Section 2.02(c),
      that
      remain unclaimed by any holders of Certificates one year after the Effective
      Time shall be returned to Parent and shall be held by or on behalf of Parent
      in
      an account or accounts in the United States designated for such purpose and
      on
      behalf of such holders of Certificates. Any Merger Consideration (including
      any
      cash in lieu of fractional interests in Parent ADSs payable pursuant to
Section 2.02(e),
      plus
      any cash dividends or other distributions that holders of unexchanged
      Certificates have the right to receive pursuant to Section 2.02(c)
      remaining unclaimed by holders of Certificates or Company Shares three years
      after the Effective Time (or such earlier date immediately prior to such time
      as
      such Merger Consideration (including any cash in lieu of fractional interests
      in
      Parent ADSs payable pursuant to Section 2.02(e),
      plus
      any cash dividends or other distributions that holders of unexchanged
      Certificates have the right to receive pursuant to Section 2.02(c)
      would
      otherwise escheat to or become property of any Governmental Authority or as
      is
      otherwise provided by applicable Law) shall, to the extent permitted by
      applicable Law, become the property of the Surviving Corporation or Parent,
      as
      Parent may determine, free and clear of any claims or interest of any person
      previously entitled thereto.

     

    
      
        
        

      

      
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    (h) No
      Liability.
      Notwithstanding any provision of this Agreement to the contrary, none of the
      Exchange Agent, the Depositary, Parent or the Surviving Corporation shall be
      liable to any holder of Company Shares converted into the right to receive
      Parent ADSs for any such Company Shares (or dividends or distributions with
      respect thereto), or cash delivered to a public official pursuant to any
      abandoned property, escheat or similar Law.

     

    (i) Withholding
      Rights.
      Each of
      the Surviving Corporation, the Exchange Agent and Parent shall be entitled
      to
      deduct and withhold from the consideration otherwise payable pursuant to this
      Agreement to any holder of Company Shares converted into the right to receive
      Parent ADSs such amounts as it is required to deduct and withhold with respect
      to the making of such payment under the Code, or any provision of state, local
      or foreign tax Law. To the extent that amounts are so deducted or withheld
      by
      the Surviving Corporation, the Exchange Agent or Parent, as the case may be,
      such withheld amounts shall be treated for all purposes of this Agreement as
      having been paid to the holder of the Company Shares converted into the right
      to
      receive Parent ADSs in respect of which such deduction or withholding was made
      by the Surviving Corporation, the Exchange Agent or Parent, as the case may
      be.

     

    (j) Lost
      Certificates.
      If any
      Certificate shall have been lost, stolen or destroyed, upon the making of an
      affidavit of that fact by the person claiming such Certificate to be lost,
      stolen or destroyed and, if required by the Surviving Corporation, the posting
      by such person of a bond, in such reasonable amount as the Surviving Corporation
      may direct, as indemnity against any claim that may be made against it with
      respect to such Certificate, the Exchange Agent will issue in exchange for
      such
      lost, stolen or destroyed Certificate the Parent ADSs, any cash in lieu of
      fractional interests in Parent ADSs to which the holders thereof are entitled
      pursuant to Section 2.02(e)
      and any
      dividends or other distributions to which the holders thereof are entitled
      pursuant to Section 2.02(c).

     

    SECTION
      2.03 Stock
      Transfer Books.
      At the
      Effective Time, the stock transfer books of the Company shall be closed and
      there shall be no further registration of transfers of Company Shares thereafter
      on the records of the Company. From and after the Effective Time, the holders
      of
      Certificates representing Company Shares outstanding immediately prior to the
      Effective Time shall cease to have any rights with respect to such Company
      Shares, except as otherwise provided in this Agreement or by Law. On or after
      the Effective Time, any Certificates presented to the Exchange Agent, the
      Surviving Corporation or Parent for any reason shall be converted into Parent
      ADSs, any cash in lieu of fractional interests in Parent ADSs to which the
      holders thereof are entitled pursuant to Section 2.02(e)
      and any
      dividends or other distributions to which the holders thereof are entitled
      pursuant to Section 2.02(c).

     

    
      
        
        

      

      
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    SECTION
      2.04 Company
      Stock Options.
      iii) At
      the Effective Time, Parent shall issue Substitute Options in accordance with
      this Section 2.04
      to all
      holders of options to purchase shares of Company Common Stock (the “Company
      Stock Options”)
      outstanding, whether or not exercisable and whether or not vested, due to
      acceleration of the Company Stock Options or otherwise, immediately prior to
      the
      Effective Time under the Meteor Industries, Inc. 1993 Employee Stock Option
      Plan, the Meteor Industries, Inc. 1997 Incentive Equity Plan, the Company 1998
      Incentive Equity Plan, the Company 1999 Employee Stock Option Plan, the 2000
      Director Stock Option Plan, the 2001 Employee Stock Option Plan, the 2003
      Director Stock Option Plan and the 2007 Stock Incentive Plan and any other
      employee or director stock option plan or stock option agreement whether or
      not
      issued under a plan (collectively, the “Company
      Stock Option Plans”).
      Parent shall issue the Substitute Options under the terms of the new stock
      option plans to be adopted by Parent at the Parent Shareholders’ Meeting (the
“New
      Stock Option Plans”)
      to
      replace each of the Company Stock Option Plans. The Company shall take all
      necessary action, including using its good faith efforts to obtain the consent
      of any holder of Company Stock Options to the extent obtaining such consent
      is
      necessary under the terms of the Company Stock Option Plan, to implement the
      terms and conditions of the New Stock Option Plans and such terms and conditions
      shall be substantially similar in all material respects with the terms and
      conditions of each of the Company Stock Option Plans, provided that the New
      Stock Option Plans shall differ from the terms and conditions of the Company
      Stock Option Plans to the extent necessary to comply with applicable Hong Kong
      and Bermuda Laws and the Rules Governing the Listing of Securities on The Stock
      Exchange of Hong Kong Limited (the “HKSE
      Listing Rules”).
      The
      Company shall use reasonable efforts to take all necessary action, including
      obtaining the consent of any holder of Company Stock Options, to implement
      the
      substitution of the Company Stock Options with Substitute Options pursuant
      to
      the terms of the New Stock Option Plans and in accordance with this Section 2.04.
      At the
      Effective Time, (a) each Company Stock Option shall be substituted by Parent
      with a Substitute Option in such manner that Parent (A) is a corporation
“issuing a stock option in a transaction to which Section 424(a) applies” within
      the meaning of Section 424 of the Code and the regulations thereunder (whether
      or not Section 424 of the Code applies) or (B), to the extent that Section
      424
      of the Code does not apply to any such Company Stock Option, would be such
      a
      corporation were Section 424 of the Code to apply to such Company Stock Option,
      and (b) each Substitute Option shall entitle its holder to acquire, on
      substantially the same terms and conditions as were applicable to the Company
      Stock Option for which the Substitute Option was substituted, (A) a number
      of
      Parent Ordinary Shares equal to the product (rounded down to the nearest whole
      Parent Ordinary Share) of (1) the number of shares of Company Common Stock
      that
      were issuable upon exercise of the related Company Stock Option immediately
      prior to the Effective Time multiplied by (2) the Exchange Ratio and (B) the
      per
      share exercise price of each Substitute Option shall be equal to the quotient
      (rounded up to the nearest cent) arrived at by dividing (1) the per share
      exercise price of each related Company Stock Option by (2) the Exchange Ratio
      (each, a “Substitute
      Option”);
      provided,
      however,
      that,
      upon exercise of a Substitute Option, the holder thereof shall receive a number
      of Parent ADSs (rather than Parent Ordinary Shares) equal to the number of
      Parent Ordinary Shares subject to the Substitute Option divided by 100 (rounded
      down to the nearest whole Parent ADS) and provided further
      that,
      notwithstanding anything to the contrary in this Section 2.04(a),
      the per
      share exercise price of the Substitute Options may be adjusted to comply with
      requirements of the HKSE Listing Rules.

     

    
      
        
        

      

      
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    (b) Subject
      to the approval of the shareholders of Parent, Parent shall take all corporate
      action necessary to make available for issuance a sufficient number of Parent
      Ordinary Shares to be issued upon exercise of the Substitute Options granted
      in
      accordance with this
      Section 2.04.

     

    (c) As
      soon
      as practicable after the Effective Time, Parent shall deliver, or cause to
      be
      delivered, to each person receiving a Substitute Option as a result of the
      Merger an appropriate notice setting forth such holder’s rights pursuant
      thereto. Parent shall also take such action that it deems appropriate for the
      Company Stock Options that are intended to be exempt from the application of
      Section 409A of the Code to be adjusted as Substitute Options in a manner that
      complies with Treasury Regulation § 1.409A-1(b)(5)(v)(D). Parent shall ensure,
      to the extent required by, and subject to the provisions of, the Company Stock
      Option Plans, that Company Stock Options that qualified as incentive stock
      options under Section 422 of the Code prior to the Effective Time shall be
      substituted by Substitute Options that qualify as incentive stock options under
      Section 422 of the Code after the Effective Time in a manner compliant with
      the
      provisions of Section 409A of the Code and the regulations thereunder. As soon
      as practicable after the Effective Time, the Parent Ordinary Shares subject
      to
      Substitute Options shall be covered by an effective registration statement
      on
      Form S-8 and Form F-6 (or any successor form) or another appropriate form,
      and
      Parent shall use its reasonable best efforts to maintain the effectiveness
      of
      such registration statement or registration statements for so long as Substitute
      Options remain outstanding. In addition, Parent shall use reasonable best
      efforts to cause the Parent Ordinary Shares subject to the Substitute Options
      or
      underlying any Parent ADSs to be issued upon exercise of the Substitute Options
      to be listed on The Stock Exchange of Hong Kong Limited (the “Hong
      Kong Stock Exchange”),
      and
      to cause any Parent ADSs to be issued upon exercise of the Substitute Options
      to
      be listed on the AMEX.

     

    SECTION
      2.05 Company
      Warrants.
      b) At
      the Effective Time, Parent shall issue Substitute Warrants (as defined below)
      in
      accordance with this Section 2.05
      to all
      holders of warrants to acquire shares of Company Common Stock (the “Company
      Warrants”)
      outstanding, whether or not exercisable and whether or not vested, immediately
      prior to the Effective Time. Parent shall issue the Substitute Warrants to
      replace each of the Company Warrants. The terms and conditions of the Substitute
      Warrants shall be substantially similar in all material respects with the terms
      and conditions of each of the Company Warrants, provided that the Substitute
      Warrants shall differ from the terms and conditions of the Company Warrants
      to
      the extent necessary to comply with applicable Hong Kong and Bermuda Laws and
      the HKSE Listing Rules. The Company shall use reasonable efforts to take all
      necessary action, including obtaining the consent of any holder of Company
      Warrants, to implement the substitution of the Company Warrants with Substitute
      Warrants. At the Effective Time, each Substitute Warrant shall entitle its
      holder to acquire, on substantially the same terms and conditions as were
      applicable to the Company Warrant for which the Substitute Warrant was
      substituted, (A) a number of Parent Ordinary Shares equal to the product
      (rounded down to the nearest whole Parent Ordinary Share) of (1) the number
      of
      shares of Company Common Stock that were issuable upon exercise of the related
      Company Stock Warrant immediately prior to the Effective Time multiplied by
      (2)
      the Exchange Ratio and (B) the per share exercise price of each Substitute
      Warrant shall be equal to the quotient (rounded up to the nearest cent) arrived
      at by dividing (1) the per share exercise price of each related Company Warrant
      by (2) the Exchange Ratio (each, a “Substitute
      Warrant”);
      provided,
      however,
      that,
      upon exercise of a Substitute Warrant, the holder thereof shall receive a number
      of Parent ADSs (rather than Parent Ordinary Shares) equal to the number of
      Parent Ordinary Shares subject to the Substitute Warrant divided by 100 (rounded
      down to the nearest whole Parent ADS).

     

    
      
        
        

      

      
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    (b) Subject
      to the approval of the shareholders of Parent, Parent shall take all corporate
      action necessary to make available for issuance a sufficient number of Parent
      Ordinary Shares to be issued upon exercise of the Substitute Warrants issued
      in
      accordance with this Section 2.05.

     

    (c) As
      soon
      as practicable after the Effective Time, Parent shall deliver, or cause to
      be
      delivered, to each person receiving a Substitute Warrant as a result of the
      Merger an appropriate notice setting forth such holder’s rights pursuant
      thereto.

     

    SECTION
      2.06 Section
      16. On
      or after
      the date of this Agreement and prior to the Effective Time, each of Parent
      and
      the Company shall take all necessary action such that, with respect to each
      member of the Company Board and each employee of the Company that is subject
      to
      Section 16 of the Exchange Act, the acquisition by such person of Parent
      ADSs in the Merger and the disposition by any such person of Parent ADSs
      pursuant to the transactions contemplated by this Agreement shall be exempt
      from
      the short-swing profit liability rules of Section 16(b) of the Exchange Act
      pursuant to Rule 16b-3 promulgated thereunder.

     

    SECTION
      2.07 Appraisal
      Rights. In
      accordance with Sections 302A.471 and 302A.473 of the MBCA, dissenters’
rights shall be available to holders of Company Common Stock in connection
      with
      the Merger. As a result, notwithstanding Section 2.01
      of this
      Agreement, shares of Company Common Stock issued and outstanding immediately
      prior to the Effective Time and held by a holder who is entitled to demand
      and
      has properly exercised his or her demand for dissenters’ rights under, and
      complies in all material respects with, Sections 302A.471 and 302A.473 of the
      MBCA (the “Dissenting
      Shares”)
      shall
      not be converted into the right to receive the Merger Consideration as of the
      Effective Time, but the holders of Dissenting Shares shall be entitled to
      payment of the fair value of such shares in accordance with the provisions
      of
      Sections 302A.471 and 302A.473 of the MBCA; provided
      however,
      that if
      any such holder shall have failed to perfect or otherwise shall effectively
      waive, withdraw or lose the right to a court determination of the fair value
      and
      payment under the MBCA or a court of competent jurisdiction shall determine
      that
      such holder is not entitled to the relief provided by Sections 302A.471 and
      302A.473 of the MBCA, then the right of such holder to be paid the fair value
      of
      such holder’s Dissenting Shares under Sections 302A.471 and 302A.473 of the MBCA
      shall cease to exist and such holder’s shares of Company Common Stock shall
      thereupon be deemed to have been converted as of the Effective Time into the
      right to receive, without interest, the Merger Consideration and such shares
      shall be deemed not be Dissenting Shares. The Company shall give Parent (a)
      prompt notice of any notices or demands of payment for shares of Company Common
      Stock received by the Company and (b) the opportunity to participate in all
      negotiations and proceedings with respect to such notices or demands. The
      Company shall not, without the prior written consent of Parent, make any payment
      with respect to, or settle, offer to settle or otherwise negotiate any demands
      for appraisal or payment for shares of Company Common Stock.
      Notwithstanding anything to the contrary contained in this Section 2.07,
      if this
      Agreement is terminated prior to the Effective Time, then the right of any
      holders of Dissenting Shares to be paid the fair market value of such holder’s
      Dissenting Shares pursuant to the MBCA shall cease.

     

    
      
        
        

      

      
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    ARTICLE
      III

     

    REPRESENTATIONS
      AND WARRANTIES OF THE COMPANY

     

    Except
      as
      set forth in the Company Disclosure Schedule that has been prepared by the
      Company and delivered by the Company to Parent in connection with the execution
      and delivery of this Agreement (the “Company
      Disclosure Schedule”)
      (which
      Company Disclosure Schedule shall be arranged in sections corresponding to
      the
      sections of this Article III,
      and any
      information disclosed in any such section of the Company Disclosure Schedule
      shall be deemed to be disclosed only for purposes of the corresponding section
      of this Article III,
      unless
      it is reasonably apparent that the disclosure contained in such section of
      the
      Company Disclosure Schedule applies to other representations and warranties
      contained in this Article III),
      the
      Company hereby represents and warrants to Parent that:

     

    SECTION
      3.01 Corporate
      Organization.
      c) Each
      of the Company and each subsidiary of the Company (each a “Company
      Subsidiary”)
      is a
      corporation or other organization duly organized, validly existing and, where
      applicable, in good standing under the laws of the jurisdiction of its
      incorporation or organization and has the requisite corporate power and
      authority and all necessary governmental approvals to own, lease and operate
      its
      properties and to carry on its business as it is now being conducted, except
      where the failure to be so organized, existing or in good standing or to have
      such power, authority and governmental approvals could not reasonably be
      expected, individually or in the aggregate, to prevent or materially delay
      consummation of the Merger or any of the transactions contemplated by this
      Agreement (the Merger and such transactions are referred to herein collectively
      as the “Transactions”)
      or
      otherwise prevent or materially delay the Company from performing its
      obligations under this Agreement and could not reasonably be expected,
      individually or in the aggregate, to have a Company Material Adverse Effect
      (as
      defined in Section 9.03(a)).
      The
      Company and each Company Subsidiary is duly qualified or licensed to do
      business, and, where applicable, is in good standing, in each jurisdiction
      where
      the character of the properties owned, leased or operated by it or the nature
      of
      its business makes such qualification or licensing necessary, except where
      the
      failure to be so qualified or licensed and in good standing could not reasonably
      be expected, individually or in the aggregate, to prevent or materially delay
      consummation of any of the Transactions or otherwise prevent or materially
      delay
      the Company from performing its obligations under this Agreement and could
      not
      reasonably be expected, individually or in the aggregate, to have a Company
      Material Adverse Effect.

     

    (b) A
      true
      and complete list of all the Company Subsidiaries, together with the
      jurisdiction of incorporation or organization of each Company Subsidiary and
      the
      percentage of the outstanding capital stock of each Company Subsidiary owned
      by
      the Company and each other Company Subsidiary, is set forth in Section 3.01(b)
      of the
      Company Disclosure Schedule. Except as set forth in Section 3.01(b)
      of the
      Company Disclosure Schedule, the Company does not directly or indirectly own
      any
      equity or similar interest in, or any interest convertible into or exchangeable
      or exercisable for any equity or similar interest in, any corporation,
      partnership, joint venture or other business association or entity.

     

    
      
        
        

      

      
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    (c) No
      order
      (including administrative order) has been made or petition presented that
      remains outstanding or resolution passed for the winding up, liquidation,
      dissolution of the Company or any Company Subsidiary or the appointment of
      a
      provisional liquidator to, or a liquidation committee of the Company or any
      Company Subsidiary. No receiver or receiver and manager has been appointed
      of
      the whole or part of the Company’s or any Company Subsidiary’s business or
      assets. No distress, execution or other process has been levied on any of the
      Company’s or any Company Subsidiary’s assets. Neither the Company nor any
      Company Subsidiary has applied for conciliation in order to settle its debts.
      No
      liquidation committee has been appointed by the Company or any Company
      Subsidiary, any court or any other authority or person for the purpose of
      liquidating the business or assets of the Company or any Company Subsidiary
      or
      any part thereof. No meeting of the creditors of the Company or any Company
      Subsidiary has been held or is in prospect, no voluntary arrangement or
      compromise or arrangement has been proposed with the creditors of the Company
      or
      any Company Subsidiary; no ruling declaring the bankruptcy of the Company or
      any
      Company Subsidiary has been made and no public announcement in respect of the
      same has been pronounced by any court of competent jurisdiction; and there
      is no
      unfulfilled or unsatisfied judgment or order of any court of competent
      jurisdiction outstanding against the Company or any Company Subsidiary; and
      there has been no delay by the Company or any Company Subsidiary in the payment
      of any obligation due for payment except in the ordinary course of
      business.

     

    (d) Neither
      the Company nor any Company Subsidiary is insolvent or unable to pay its debts,
      no receiver or receiver and manager has been appointed by any person of its
      business or assets or any part thereof, no power to make any such appointment
      has arisen, neither the Company nor any Company Subsidiary has taken any steps
      to enter liquidation and there are no grounds on which a petition or application
      could be based for the winding up or appointment of a receiver of the Company
      or
      any Company Subsidiary.

     

    SECTION
      3.02 Certificate
      of Incorporation and By-laws.
      d) The
      Company has made available to Parent or its counsel a complete and correct
      copy
      of the Certificate of Incorporation and the By-laws or equivalent organizational
      documents, each as amended to date, of the Company and each Company Subsidiary.
      Such Certificates of Incorporation, By-laws or equivalent organizational
      documents are in full force and effect. Neither the Company nor any Company
      Subsidiary is in violation of any of the provisions of its Certificate of
      Incorporation, By-laws or equivalent organizational documents and none of the
      activities, agreements, commitments or rights of the Company or any Company
      Subsidiary is ultra vires or unauthorized, except where such violations could
      not reasonably be expected, individually or in the aggregate, to prevent or
      materially delay consummation of any of the Transactions or otherwise prevent
      or
      materially delay the Company from performing its obligations under this
      Agreement and could not reasonably be expected, individually or in the
      aggregate, to have a Company Material Adverse Effect.

     

    (b) The
      Company and each Company Subsidiary has, at all times, carried on its operations
      and conducted its affairs in all material respects in accordance with its
      Certificate of Incorporation and By-laws or equivalent organizational
      documents.

     

    
      
        
        

      

      
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    SECTION
      3.03 Capitalization.
      e) The
      authorized capital stock of the Company consists of (i) 150,000,000 shares
      of
      Company Common Stock, and (ii) 365,000 shares of preferred stock, par value
      US$1.00 per share (“Company
      Preferred Stock”),
      of
      which all 365,000 shares have been designated Series B Convertible Preferred
      Stock. As of April 18, 2007, (i) 104,251,674 shares of Company Common Stock
      were
      issued and outstanding, all of which were validly issued, fully paid and
      nonassessable, (ii) no shares of Company Common Stock were held in the treasury
      of the Company, (iii) no shares of Company Common Stock were held by
      subsidiaries of the Company, (iv) 14,532,000 shares of Company Common Stock
      were
      reserved for future issuance pursuant to outstanding Company Stock Options
      and
      other purchase rights (the “Company
      Stock Awards”)
      granted pursuant to the Company Stock Option Plans and other agreements, (v)
      21,798,833 shares of Company Common Stock were reserved for issuance upon
      exercise of the Company Warrants, (vi) 3,000,000 shares of Company Common Stock
      were reserved for future issuance upon conversion of the Company Convertible
      Notes issued and to be issued to China Gold, LLC, a Kansas limited liability
      company, under a Convertible Notes Purchase Agreement dated April 10, 2007
      among
      the Company and China Gold LLC (the “Company
      Notes Purchase Agreement”),
      pursuant to which the Company agreed to sell China Gold LLC up to an aggregate
      of US$25,000,000 in 8.25% secured convertible promissory notes due 2012 (the
      “Company
      Convertible Notes”),
      and
      (vii) 4,620,000 shares of Company Common Stock were reserved for issuance under
      an asset purchase agreement to purchase the Bates-Hunter Mine by and among
      the
      Company and Hunter Gold Mining Corporation, Hunter Gold Mining Inc., Central
      City Consolidated Mining Corp., and George Otten, and other arrangements with
      investors (the “Company
      Additional Share and Warrant Obligations”).
      Under
      the terms of the Company Notes Purchase Agreement, China Gold LLC purchased
      an
      initial Company Convertible Note in the principal amount of US$3,000,000, and
      agreed to purchase additional Company Convertible Notes in the aggregate minimum
      amount of US$9,000,000 and, in the discretion of China Gold LLC and the Company,
      up to an aggregate maximum amount of US$22,000,000 within 12 months from date
      of
      the Convertible Notes Purchase Agreement. Pursuant to the terms of the Company
      Convertible Notes, all Company Convertible Notes shall automatically convert
      into shares of Company Common Stock immediately prior to the Effective Time.
      As
      of the date of this Agreement, no shares of Company Preferred Stock are issued
      and outstanding. Except as set forth in this Section 3.03,
      there
      are no options, warrants or other rights, agreements, arrangements or
      commitments of any character relating to the issued or unissued capital stock
      of, or other equity interests in, the Company or any Company Subsidiary or
      obligating the Company or any Company Subsidiary to issue or sell any shares
      of
      capital stock of, or other equity interests in, the Company or any Company
      Subsidiary and, to the extent that any such rights, agreements, arrangements
      or
      commitments previously existed, the Company has no continuing or existing
      liability or obligation with respect thereto. The Company has not adopted,
      approved or entered into, or proposed to adopt, approve or enter into, any
      stockholder “rights plan,” “poison pill” plan or comparable plan or arrangement.
      Except for the Company Convertible Notes, there are no bonds, debentures, notes
      or other indebtedness of the Company having the right (or convertible into,
      or
      exchangeable for, securities having the right) to vote on any matter on which
      holders of shares of Company Common Stock may vote. Section 3.03(a)
      of the
      Company Disclosure Schedule sets forth the following information with respect
      to
      each Company Stock Award outstanding as of the date of this Agreement: (i)
      the
      name of the Company Stock Award recipient; (ii) the particular plan pursuant
      to
      which such Company Stock Award was granted; (iii) the number of shares of
      Company Common Stock subject to such Company Stock Award; (iv) the exercise
      or
      purchase price of such Company Stock Award; (v) the date on which such Company
      Stock Award was granted; (vi) the applicable vesting schedule; (vii) the date
      on
      which such Company Stock Award expires; and (viii) whether the exercisability
      of
      or right to repurchase of such Company Stock Award will be accelerated in any
      way by the Transactions, and indicates the extent of acceleration. The Company
      has made available to Parent or its counsel or has filed with the SEC accurate
      and complete copies of all (A) Company Stock Option Plans pursuant to which
      the
      Company has granted the Company Stock Awards that are currently outstanding
      and
      the form of all stock award agreements evidencing such Company Stock Awards,
      (B)
      the Company Notes Purchase Agreement and the Company Convertible Notes, (C)
      the
      Company Warrants and (D) any agreements related to the Company Additional Share
      and Warrant Obligations. All shares of Company Common Stock subject to issuance
      as aforesaid, upon issuance on the terms and conditions specified in the
      instruments pursuant to which they are issuable, will be duly authorized,
      validly issued, fully paid and nonassessable. There are no outstanding
      contractual obligations of the Company or any Company Subsidiary to repurchase,
      redeem or otherwise acquire any shares of Company Common Stock or any capital
      stock of any Company Subsidiary or to provide funds to, or make any investment
      (in the form of a loan, capital contribution or otherwise) in, any Company
      Subsidiary or any other person. There are no shares of Company Common Stock
      outstanding that are unvested or are subject to a repurchase option, risk of
      forfeiture or other condition under any applicable restricted stock purchase
      agreement or other agreement with the Company. There are no commitments or
      agreements of any character to which the Company is bound obligating the Company
      to accelerate the vesting of any Company Stock Award as a result of the Merger.
      All outstanding shares of Company Common Stock, all outstanding Company Stock
      Awards, and all outstanding shares of capital stock of each Company Subsidiary
      have been issued and granted in compliance with (i) all applicable securities
      laws and other applicable Laws, rules and regulations and (ii) all requirements
      set forth in applicable contracts.
      With
      respect to the Company Stock Options, (A) each grant of a Company Stock Option
      was duly authorized no later than the date on which the grant of such Company
      Stock Option was by its terms to be effective (the “Company
      Grant Date”)
      by all
      necessary corporate action, including, as applicable, approval by the Company
      Board (or a duly constituted and authorized committee thereof) and any required
      shareholder approval by the necessary number of votes or written consents,
      and
      the award agreement governing such grant (if any) was duly executed and
      delivered by each party thereto, (B) each such grant was made in accordance
      with
      the terms of the applicable Company Stock Option Plan, the Exchange Act and
      all
      other applicable Laws, (C) the per share exercise price of each Company Stock
      Option was equal to the fair market value of a share of Company Common Stock
      on
      the applicable Company Grant Date and (D) each such grant was properly accounted
      for in accordance with US GAAP in the audited financial statements included
      in
      the Company SEC Reports (as defined in Section 3.07(a))
      and
      disclosed in the Company SEC Reports in accordance with the Exchange Act and
      all
      other applicable Laws.

     

    
      
        
        

      

      
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    (b) Each
      outstanding share of capital stock of each Company Subsidiary is duly
      authorized, validly issued, fully paid and nonassessable, and each such share
      is
      owned by the Company or another Company Subsidiary free and clear of all
      security interests, liens, claims, pledges, options, rights of first refusal,
      agreements, limitations on the Company’s or any Company Subsidiary’s voting
      rights, charges and other encumbrances of any nature whatsoever.

     

    
      
        
        

      

      
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    (c) On
      and
      after the Effective Time, no person shall have any rights whatsoever to acquire
      Company Common Stock, and without prejudice to the generality of the foregoing,
      all Company Preferred Stock, Company Stock Options, Company Additional Share
      and
      Warrant Obligations, Company Convertible Notes and Company Warrants shall either
      have been terminated, converted into the right to receive the Merger
      Consideration or substituted by Substitute Options, Company Additional Share
      and
      Warrant Obligations or Substitute Warrants, as applicable, in accordance with
      the terms of this Agreement, such that none of the Company, Merger Sub, the
      Surviving Corporation or Parent shall have any liability with respect
      thereto.

     

    SECTION
      3.04 Authority
      Relative to This Agreement.
      The
      Company has all legal right and all necessary corporate power and authority
      to
      execute and deliver this Agreement and to perform its obligations hereunder
      and
      to consummate the Transactions subject to, in the case of the Merger, the
      receipt of the Company Stockholders’ Approval (as defined in Section 3.18(b)).
      The
      execution and delivery of this Agreement by the Company and the consummation
      by
      the Company of the Transactions have been duly and validly authorized by all
      necessary corporate action on the part of the Company (subject in the case
      of
      the Merger, to the receipt of the Company Stockholders’ Approval), and the
      person who will execute this Agreement and any ancillary agreements on behalf
      of
      the Company has all power and authority to do so on behalf of the Company.
      No
      other corporate proceedings on the part of the Company are necessary to
      authorize this Agreement or to consummate the Transactions (other than, with
      respect to the Merger, the receipt of the Company Stockholders’ Approval, and
      the filing and recordation of appropriate merger documents as required by the
      MBCA). This Agreement has been duly and validly executed and delivered by the
      Company and, assuming the due authorization, execution and delivery by the
      other
      parties hereto, constitutes a legal, valid and binding obligation of the
      Company, enforceable against the Company in accordance with its terms, subject
      to the effect of any applicable bankruptcy, insolvency (including, without
      limitation, all laws relating to fraudulent transfers), reorganization,
      moratorium or similar laws affecting creditors’ rights generally and subject to
      the effect of general principles of equity (regardless of whether considered
      in
      a proceeding at law or in equity). The Company Board has approved this Agreement
      and the Transactions and such approvals are sufficient so that the restrictions
      on business combinations set forth in Sections 302A.671 or 302A.673 of the
      MBCA
      shall not apply to the Merger or any of the Transactions. No other state
      takeover statute is applicable to the Merger or the other
      Transactions.

     

    SECTION
      3.05 No
      Conflict; Required Filings and Consents.
      f) The
      execution and delivery of this Agreement by the Company do not, and the
      performance of this Agreement by the Company will not, (i) conflict with or
      violate the Certificate of Incorporation or By-laws or any equivalent
      organizational documents of the Company or any Company Subsidiary, (ii) assuming
      that all consents, approvals, authorizations and other actions described in
      Sections 3.04
      and
3.05(b)
      have
      been obtained and all filings and obligations described in Section 3.05(b)
      have
      been made, conflict with or violate any United States or non-United States
      statute, law, ordinance, regulation, rule, code, executive order, injunction,
      judgment, decree or other order at the national, provincial or local level
      (“Law”)
      applicable to the Company or any Company Subsidiary or by which any property
      or
      asset of the Company or any Company Subsidiary is bound or affected, or (iii)
      result in any breach of, or constitute a default (or an event which, with notice
      or lapse of time or both, would become a default) under, or give to others
      any
      right of termination, amendment, acceleration or cancellation of, or result
      in
      the creation of a lien or other encumbrance on any property or asset of the
      Company or any Company Subsidiary pursuant to, any note, bond, mortgage,
      indenture, contract, agreement, lease, license, permit, franchise or other
      instrument or obligation to which the Company or any Company Subsidiary is
      a
      party or by which the Company or any Company Subsidiary or any of their assets
      or properties is bound or affected, except, with respect to clauses (ii) and
      (iii), for any such conflicts, violations, breaches, defaults or other
      occurrences which could not reasonably be expected, individually or in the
      aggregate, to prevent or materially delay consummation of any of the
      Transactions or otherwise prevent or materially delay the Company from
      performing its obligations under this Agreement and could not reasonably be
      expected, individually or in the aggregate, to have a Company Material Adverse
      Effect.

     

    
      
        
        

      

      
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    (b) The
      execution and delivery of this Agreement by the Company do not, and the
      performance of this Agreement by the Company will not, require the Company
      to
      obtain any consent, approval, authorization or permit of, or to file with or
      to
      notify, any United States federal, state, county or local or non-United States
      government, governmental (at the national, provincial or local level),
      regulatory or administrative authority, agency, instrumentality or commission
      or
      any court, tribunal, or judicial or arbitral body (a “Governmental
      Authority”),
      except (i) applicable requirements, if any, of the Securities Act of 1933,
      as
      amended (the “Securities
      Act”),
      the
      Securities Exchange Act of 1934, as amended (the “Exchange
      Act”),
      and
      state securities or “blue sky” laws (“Blue
      Sky Laws”),
      (ii)
      the pre-merger notification requirements of the Hart-Scott-Rodino Antitrust
      Improvements Act of 1976, as amended (the “HSR
      Act”),
      and
      the receipt, termination or expiration, as applicable, of approvals or waiting
      periods required under the HSR Act or any other applicable competition, merger
      control, antitrust or similar law or regulation, (iii) the filing and
      recordation of appropriate merger documents as required by the MBCA and the
      relevant authorities of other jurisdictions in which the Company is qualified
      to
      do business, and (iv) where the failure to obtain such consents, approvals,
      authorizations or permits, or to make such filings or notifications, could
      not
      reasonably be expected, individually or in the aggregate, to prevent or
      materially delay consummation of any of the Transactions or otherwise prevent
      or
      materially delay the Company from performing its obligations under this
      Agreement and could not reasonably be expected, individually or in the
      aggregate, to have a Company Material Adverse Effect.

     

    SECTION
      3.06 Permits;
      Compliance.
      g) Each
      of the Company and the Company Subsidiaries is in possession of all franchises,
      grants, authorizations, licenses, permits, easements, variances, exceptions,
      consents, certificates, approvals and orders of any Governmental Authority
      necessary for each of the Company or such Company Subsidiary to own, lease
      and
      operate its properties or to carry on its business as it is now being conducted
      (the “Company
      Permits”),
      except where the failure to have, or the suspension or cancellation of, any
      of
      the Company Permits could not reasonably be expected, individually or in the
      aggregate, to prevent or materially delay consummation of any of the
      Transactions or otherwise prevent or materially delay the Company from
      performing its obligations under this Agreement and could not reasonably be
      expected, individually or in the aggregate, to have a Company Material Adverse
      Effect. All of the Company Permits are valid and subsisting, and are in full
      force and effect, and the Company and the relevant Company Subsidiary is not
      in
      breach of any of the terms or conditions of any of the Company Permits, there
      are no factors or circumstances that might result in any restrictions or special
      conditions being placed on any of them or might in any way materially prejudice
      the continuation or renewal or might lead to the suspension, cancellation,
      refusal, modification or revocation of any of the Company Permits, except where
      the failure to have, or the suspension or cancellation of, any of the Company
      Permits could not reasonably be expected, individually or in the aggregate,
      to
      prevent or materially delay consummation of any of the Transactions or otherwise
      prevent or materially delay the Company from performing its obligations under
      this Agreement and could not reasonably be expected, individually or in the
      aggregate, to have a Company Material Adverse Effect. Neither the Company nor
      any Company Subsidiary is in conflict with, or in default, breach or violation
      of, (a) any Law applicable to the Company or any Company Subsidiary or by which
      any property or asset of the Company or any Company Subsidiary is bound or
      affected, or (b) any note, bond, mortgage, indenture, contract, agreement,
      lease, license, Company Permit, franchise or other instrument or obligation
      to
      which the Company or any Company Subsidiary is a party or by which the Company
      or any Company Subsidiary or any property or asset of the Company or any Company
      Subsidiary is bound, except for any such conflicts, defaults, breaches or
      violations that could not reasonably be expected, individually or in the
      aggregate, to prevent or materially delay consummation of any of the
      Transactions or otherwise prevent or materially delay the Company from
      performing its obligations under this Agreement and could not reasonably be
      expected, individually or in the aggregate, to have a Company Material Adverse
      Effect.

     

    
      
        
        

      

      
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    (b) The
      Company is not, and upon the consummation of the Merger and the Transactions
      as
      herein contemplated will not be, required to register as an “investment company”
as such term is defined in the Investment Company Act of 1940 (the “Investment
      Company Act”).

     

    (c) There
      is
      no outstanding dispute with, or outstanding proceeding, notice, decree,
      judgment, fine or penalty of or imposed by, any Governmental Authority in
      relation to the Company or any Company Subsidiary or its operation which has
      been notified or deemed to be notified to the Company or any Company Subsidiary
      under applicable Laws which could reasonably be expected to have a Company
      Material Adverse Effect. There is no outstanding investigation or inquiry by
      any
      Governmental Authority on the Company or any Company Subsidiary or its
      operations nor is there any investigation, inquiry, proceeding, notice, decree,
      judgment, fine or penalty anticipated against the Company or any Company
      Subsidiary or persons for whose acts or defaults the Company or any Company
      Subsidiary may be vicariously liable which has had or could reasonably be
      expected to have a Company Material Adverse Effect.  There
      is
      no outstanding notice or other communication, actual or potential violation,
      failure to comply with any applicable Laws or constitutional documents or
      failure to comply with the standards of regulatory compliance applied in the
      conduct of each of the Company’s and Company Subsidiary’s operations, internal
      organization, risk management disciplines or other relevant control functions
      in
      respect of each of the Company’s and Company Subsidiary’s operations which in
      any case has had, or could reasonably be expected to have, a Company Material
      Adverse Effect.

     

    SECTION
      3.07 SEC
      Filings; Financial Statements.
      h) The
      Company has at
      all
      times complied with its obligations under the Securities Act and the Exchange
      Act and has at all times complied with all Laws, rules and regulations governing
      companies whose shares are quoted by market makers on the OTCBB, and the Company
      has
      filed,
      announced, furnished, published or dispatched
      all
      forms, reports and documents required to be filed,
      announced, furnished, published or dispatched
      by it
      with the Securities and Exchange Commission (the “SEC”)
      since
      January 1, 2004 (as such documents have been amended prior to the date hereof,
      collectively, the “Company
      SEC Reports”).
      As of
      their respective dates, the Company SEC Reports (i) complied in all material
      respects in accordance with either the requirements of the Securities Act,
      the
      Exchange Act or
      the
      Sarbanes-Oxley Act of 2002 (“SOX”),
      as
      the case may be, and the rules and regulations promulgated thereunder, and
      (ii)
      did not, at the time they were filed, or, if amended, as of the date of such
      amendment, contain any untrue statement of a material fact or omit to state
      a
      material fact required to be stated therein or necessary in order to make the
      statements made therein, in the light of the circumstances under which they
      were
      made, not misleading. No Company Subsidiary is, or ever has been, required
      to
      file any form, report or other document with the SEC.

     

    
      
        
        

      

      
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    (b) The
      Company has not received any notice from the SEC alleging any breach or failure
      to comply, by it or any Company Subsidiary, of or with any aspect of the
      Securities Act, SOX or the Exchange Act or any rules, regulations or laws
      governing or applying to it, which remains subsisting and outstanding, and
      there
      are no circumstances or events based on which any such notice may be
      given.

     

    (c) Each
      of
      the consolidated financial statements (including, in each case, any notes
      thereto) contained in the Company SEC Reports was prepared in accordance with
      applicable United States generally accepted accounting principles (“US
      GAAP”)
      applied on a consistent basis throughout the periods indicated (except as may
      be
      indicated in the notes thereto or, in the case of unaudited statements, as
      permitted by the SEC on Form 10-Q, Form 8-K or any similar or successor form)
      and each fairly presents, in all material respects, the consolidated financial
      position, results of operations and cash flows of the Company and its
      consolidated subsidiaries as at the respective dates thereof and for the
      respective periods indicated therein, except that the unaudited interim
      financial statements may not contain footnotes and as otherwise noted therein
      (subject, in the case of unaudited statements, to normal and recurring year-end
      adjustments).

     

    (d) The
      consolidated financial statements of the Company have disclosed and made full
      provision or reserve for or notice all contingent, unquantified or disputed
      liabilities, capital or burdensome commitments. Except as and to the extent
      set
      forth on the consolidated balance sheet of the Company and the consolidated
      Company Subsidiaries as at December 31, 2006 , including the notes thereto,
      neither the Company nor any Company Subsidiary has any liability, loan,
      guarantee, undertaking, commitments on capital account, unusual liabilities
      or
      obligation of any nature (whether accrued, absolute, contingent or otherwise)
      that would be required to be reflected on a balance sheet prepared in accordance
      with US GAAP, except for liabilities and obligations (i) incurred in the
      ordinary course of business and in a manner consistent with past practice since
       December
      31, 2006 and
      (ii) which,
      individually or in the aggregate, could not reasonably be expected to have
      a
      Company Material Adverse Effect.

     

    (e) The
      Company has made available to Parent or its counsel all comment letters received
      by the Company from the SEC or the staff thereof since January 1, 2004 and
      all
      responses to such comment letters filed by or on behalf of the Company. As
      of
      the date hereof, there are no unresolved comments issued by the staff of the
      SEC
      with respect to any of the Company SEC Reports.

     

    
      
        
        

      

      
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    (f) Each
      of
      the principal executive officer of the Company and the principal financial
      officer of the Company (or each former principal executive officer of the
      Company and each former principal financial officer of the Company, as
      applicable) has made all applicable certifications required by (x) Rule 13a-14
      or Rule 15d-14 under the Exchange Act or (y) 15 U.S.C.. Section 7241 and 18
      U.S.C. Section 1350 (Sections 302 and 906 of SOX) with respect to the Company
      SEC Reports, and the statements contained in such certifications are complete
      and accurate. The Company maintains disclosure controls and procedures required
      by Rule 13a-15 or Rule 15d-15 under the Exchange Act; such controls and
      procedures are designed to ensure that material information concerning the
      Company and the Company Subsidiaries is made known on a timely basis to the
      individuals responsible for the preparation of the Company’s SEC filings and
      other public disclosure documents.

     

    (g) The
      Company maintains a system of accounting established and administered in
      accordance with US GAAP. The Company and the Company Subsidiaries maintain
      a
      system of internal accounting controls sufficient to provide reasonable
      assurance that (i) transactions are executed in accordance with management’s
      general or specific authorizations, (ii) transactions are recorded as necessary
      to permit preparation of financial statements in conformity with US GAAP and
      to
      maintain asset accountability, (iii) access to assets is permitted only in
      accordance with management’s general or specific authorization, and (iv) the
      recorded accountability for assets is compared with the existing assets at
      reasonable intervals and appropriate action is taken with respect to any
      differences.

     

    (h) Since
      January 1, 2004, neither the Company nor any Company Subsidiary nor, to the
      Company’s knowledge, any director, officer, employee, auditor, accountant or
      representative of the Company or any Company Subsidiary, has received or
      otherwise had or obtained knowledge of any written or formal complaint,
      allegation or claim regarding the accounting or auditing practices, procedures,
      methodologies or methods of the Company or any Company Subsidiary or their
      respective internal accounting controls, including any complaint, allegation,
      assertion or claim that the Company or any Company Subsidiary has engaged in
      questionable accounting or auditing practices. No attorney representing the
      Company or any Company Subsidiary, whether or not employed by the Company or
      any
      Company Subsidiary, has reported evidence of a material violation of securities
      laws, breach of fiduciary duty or similar violation by the Company or any of
      its
      officers, directors, employees or agents to the Company Board or any committee
      thereof or to any director or officer of the Company. Since January 1, 2004,
      there have been no formal internal investigations regarding financial reporting
      or accounting policies and practices discussed with, reviewed by or initiated
      at
      the direction of the chief executive officer, chief financial officer, general
      counsel, the Company Board or any committee thereof, other than ordinary course
      audits or reviews of accounting policies and practices or internal controls
      required by SOX.

     

    (i) To
      the
      knowledge of the Company, no employee of the Company or any Company Subsidiary
      has provided or is providing information to any law enforcement agency regarding
      the commission or possible commission of any crime or the violation or possible
      violation of any applicable Law. Neither the Company nor any Company Subsidiary
      nor any officer, employee, contractor, subcontractor or agent of the Company
      or
      any such Company Subsidiary has discharged, demoted, suspended, threatened,
      harassed or in any other manner discriminated against an employee of the Company
      or any Company Subsidiary in the terms and conditions of employment because
      of
      any act of such employee described in 18 U.S.C. § 1514A(a).

     

    
      
        
        

      

      
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    (j) There
      are
      no Liens, debentures, encumbrances or unusual liabilities given, made or
      incurred by or on behalf of the Company or any Company Subsidiary (and, in
      particular but without limiting to the foregoing, no loans have been made by
      or
      on behalf of the Company or such Company Subsidiary to any of its or directors
      or shareholders of other Company Subsidiary) and no person has given any
      overdraft, loan or loan facility granted to the Company or such Company
      Subsidiary.

     

    (k) Neither
      the Company nor any Company Subsidiary is a party to, or has any commitment
      to
      become a party to, any joint venture, off balance sheet partnership or any
      similar contract or arrangement (including any contract or arrangement relating
      to any transaction or relationship between or among the Company and any of
      the
      Company Subsidiaries, on the one hand, and any unconsolidated affiliate,
      including any structured finance, special purpose or limited purpose entity
      or
      person, on the other hand, or any “off balance sheet arrangements” (as defined
      in Item 303(a) of Regulation S-K under the Exchange Act)), where the result,
      purpose or intended effect of such contract or arrangement is to avoid
      disclosure of any material transaction involving, or material liabilities of,
      the Company or any Company Subsidiaries in the Company’s or such Company
      Subsidiary’s published financial statements or other Company SEC
      Reports.

     

    SECTION
      3.08 Absence
      of Certain Changes or Events.
      Since December
      31, 2006, except as contemplated by this Agreement, (a) the Company and the
      Company Subsidiaries have conducted their businesses only in the ordinary course
      of business and in a manner consistent with past practice, (b) there has not
      been any event, circumstance, change or effect that, individually or in the
      aggregate, has had, constitutes or could reasonably be expected to have, a
      Company Material Adverse Effect, and (c) none of the Company or any Company
      Subsidiary has taken any action that, if taken after the date of this Agreement,
      would constitute a material breach of any of the covenants set forth in
Section 5.01.

     

    SECTION
      3.09 Absence
      of Litigation.
      There is
      no litigation, suit, claim, action, proceeding or investigation (an
“Action”)
      pending or, to the knowledge of the Company, threatened in writing against
      the
      Company or any Company Subsidiary, or any property or asset of the Company
      or
      any Company Subsidiary, before any Governmental Authority that (a) individually
      or in the aggregate, has had, or could reasonably be expected to have, a Company
      Material Adverse Effect or (b) seeks to materially delay or prevent the
      consummation of any of the Transactions. Neither the Company nor any Company
      Subsidiary nor any material property or asset of the Company or any Company
      Subsidiary is subject to any continuing order of, consent decree, settlement
      agreement or other similar written agreement with, or, to the knowledge of
      the
      Company, continuing investigation by, any Governmental Authority, or any order,
      writ, judgment, injunction, decree, determination or award of any Governmental
      Authority, that could reasonably be expected, individually or in the aggregate,
      to prevent or materially delay consummation of any of the Transactions or
      otherwise prevent or materially delay the Company from performing its
      obligations under this Agreement or could reasonably be expected, individually
      or in the aggregate, to have a Company Material Adverse Effect.

     

    
      
        
        

      

      
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    SECTION
      3.10 Employee
      Benefit Plans.
      i)
      Section 3.10(a)
      of the
      Company Disclosure Schedule lists each of the following plans to which the
      Company or any Company Subsidiary is a party, with respect to which the Company
      or any Company Subsidiary has any material obligation or liability or that
      are
      maintained, contributed to or sponsored by the Company or any Company Subsidiary
      for the benefit of any current or former employee, officer or director of the
      Company or any Company Subsidiary:

     

    (i) all
      employee benefit plans (as defined in Section 3(3) of the United States Employee
      Retirement Income Security Act of 1974, as amended (“ERISA”),
      including all retirement benefits, pension, provident, superannuation and all
      deferred compensation, retiree medical or life insurance, supplemental
      retirement, severance and other material benefit plans, programs or arrangements
      (collectively, the “ERISA
      Plans”);

     

    (ii) each
      other plan providing compensation (other than salaries or wages), benefits
      or
      perquisites that are not included in the preceding paragraph (i), including
      without limitation any bonus, stock option, stock purchase, restricted stock,
      incentive, vacation pay and sick pay plans; all employment, termination, and
      other material similar contracts or agreements (including, without limitation,
      any such contracts or agreements relating to a sale of the Company or any
      Company Subsidiary or the consummation of any Transaction), any employee benefit
      plan described in the preceding paragraph (i) that is not governed by any
      provision of ERISA; and all other personnel policies, practices and procedures
      (collectively, the “Compensation
      Plans”);
      and

     

    (iii) any
      “cafeteria plan” or transportation fringe plan governed by Code Section 125 or
      Code Section 132(f) (a “Flexible
      Benefit Plan”).

     

    For
      purposes of this Agreement, the ERISA Plans, the Compensation Plans and any
      Flexible Benefit Plans are collectively referred to as the “Company
      Plans.”

     

    (b) With
      respect to each Company Plan that is subject to United States Law (a
“U.S.
      Company Plan”),
      the
      Company has provided Parent or its counsel with a true and complete copy of
      (i)
      each U.S. Company Plan document; (ii) the most recently filed Internal Revenue
      Service (“IRS”)
      Form
      5500, if any, relating to such U.S. Company Plan that is an ERISA Plan; (iii)
      the most recent summary plan description for each U.S. Company Plan for which
      a
      summary plan description is required by applicable Law; (iv) the most recently
      received determination letter, if any, issued by the IRS with respect to any
      U.S. Company Plan that is an ERISA Plan intended to qualify under Section 401(a)
      of the Code; and (v) the most recently prepared actuarial report or financial
      statement, if any, relating to a U.S. Company Plan that is an ERISA Plan. With
      respect to each Company Plan that is not subject to United States Law (a
“Non-U.S.
      Company Plan”),
      the
      Company has provided Parent or its counsel with a true and complete copy of
      each
      Non-U.S. Company Plan document and each material document, if any, prepared
      in
      connection with each Non-U.S. Company Plan, including, but not limited to,
      a
      copy of the deed of trust, rules and all booklets and announcements describing
      the benefits (or any proposed changes to the benefits) of the relevant Non-U.S.
      Company Plan and all other documents, records and materials relating to the
      establishment and operation of the Non-U.S. Company Plan.

     

    
      
        
        

      

      
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    (c) None
      of
      the Company, any Company Subsidiary or any Company ERISA Affiliate maintains,
      contributes to or has any liability with respect to a multiemployer plan (within
      the meaning of Section 3(37) or 4001(a)(3) of ERISA) (a “Multiemployer
      Plan”),
      a
      single employer pension plan (within the meaning of Section 4001(a)(15) of
      ERISA) for which liability under Section 4063 or 4064 of ERISA could be incurred
      (a “Multiple
      Employer Plan”),
      an
      ERISA Plan for which the Company or any Company Subsidiary could incur liability
      under Section 4069 of ERISA in the event such plan has been or were to be
      terminated, or an ERISA Plan in respect of which the Company or any Company
      Subsidiary could incur liability under Section 4212(c) of ERISA. Except as
      set
      forth in Section 3.10(c)
      of the
      Company Disclosure Schedule, none of the U.S. Company Plans (i) provides for
      the
      payment of separation, severance, termination or similar-type benefits to any
      person, (ii) obligates the Company or any Company Subsidiary to pay separation,
      severance, termination or similar-type benefits solely or partially as a result
      of any Transaction or (iii) obligates the Company or any Company Subsidiary
      to
      make any payment or provide any benefit as a result of a “change in control”,
      within the meaning of such term under Section 280G of the Code. No payment
      under
      a U.S. Company Plan will result in an excess parachute payment to any employee
      within the meaning of Section 280G of the Code as a result of any Transaction.
      None of the U.S. Company Plans provides for or promises retiree medical,
      disability or life insurance benefits to any current or former employee, officer
      or director of the Company or any Company Subsidiary, except as required by
      applicable Law. The Company, each Company Subsidiary and each Company ERISA
      Affiliate have complied in all material respects with the requirements of Part
      6
      of Subtitle B of Title I of ERISA, Section 4980B of the Code and any similar
      state Law (“COBRA”) and, to the extent applicable, with the privacy, security
      and other provisions of the Health Insurance Portability and Accountability
      Act
      of 1996.

     

    (d) Each
      U.S.
      Company Plan has been maintained, funded and administered in accordance with
      its
      terms and the requirements of all applicable Laws, including, without limitation
      and where applicable, ERISA and the Code, except where such non-compliance
      could
      not reasonably be expected, individually or in the aggregate, to have a Company
      Material Adverse Effect. The Company and the Company Subsidiaries have performed
      all material obligations required to be performed by them under, are not in
      any
      material respect in default under or in violation of, and have no knowledge
      of
      any material default or violation by any party to, any U.S. Company Plan. No
      Action is pending or, to the knowledge of the Company, threatened with respect
      to any U.S. Company Plan (other than claims for benefits in the ordinary course)
      that could reasonably be expected, individually or in the aggregate, to have
      a
      Company Material Adverse Effect and, to the knowledge of the Company, no fact
      or
      event exists that could reasonably be expected to give rise to any such
      Action.

     

    (e) Each
      U.S.
      Company Plan that is an ERISA Plan intended to be qualified under Section 401(a)
      of the Code has timely applied for or received a favorable determination letter
      from the IRS covering all of the provisions applicable to the U.S. Company
      Plan
      for which determination letters are currently available that the U.S. Company
      Plan is so qualified or may rely on an opinion or advisory letter issued to
      a
      master or prototype or volume submitter provider with respect to the
      tax-qualified status of such U.S. Company Plan. Each U.S. Company Plan which
      is
      a nonqualified deferred compensation plan, within the meaning of Section 409A
      of
      the Code, has been operated in good faith compliance with the requirements
      of
      Section 409A of the Code (or an available exemption therefrom) such that amounts
      of compensation deferred thereunder will not be subject to the additional tax
      under Section 409A(a)(1)(B)(ii) of the Code, if such plan is timely amended,
      to
      the extent required under the Treasury Regulations issued pursuant to Code
      Section 409A.

     

    
      
        
        

      

      
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    (f) Except
      for matters that, individually or in the aggregate, have not had and could
      not
      reasonably be expected to have a Company Material Adverse Effect, there has
      not
      been any prohibited transaction (within the meaning of Section 406 of ERISA
      or
      Section 4975 of the Code) with respect to any U.S. Company Plan. None of the
      Company, any Company Subsidiary or any Company ERISA Affiliate has incurred
      any
      liability under, arising out of or by operation of Title IV of ERISA (other
      than
      liability for premiums to the Pension Benefit Guaranty Corporation arising
      in
      the ordinary course), including, without limitation, any liability in connection
      with (i) the termination or reorganization of any ERISA Plan subject to Title
      IV
      of ERISA, or (ii) the withdrawal from any Multiemployer Plan or Multiple
      Employer Plan, and no fact or event exists that would give rise to any such
      liability.

     

    (g) Other
      than the Company Plans set out in Section 3.10(a),
      the
      Company has no obligation (whether legally binding or established by custom)
      to
      pay any pension, allowance or gratuity or make any other payment on termination
      of service, death or retirement or to make any payment for the purpose of
      providing any similar benefits to or in respect of any person who is now or
      has
      been an officer or employee of the Company or any spouse or dependant of any
      such person and is not a party to any scheme or arrangement having as its
      purpose or one of its purposes the making of such payments or the provision
      of
      such benefits.

     

    (h) With
      respect to each Non-U.S. Company Plan:

     

    (i) each
      Non-U.S. Company Plan has been maintained and administered in compliance with
      all applicable Laws, except where such non-compliance could not reasonably
      be
      expected, individually or in the aggregate, to have a Company Material Adverse
      Effect;

     

    (ii) the
      Company and the trustee of the relevant Non-U.S. Company Plan have duly complied
      with their respective obligations under the trust deeds and rules thereof and
      under all relevant Laws and regulations;

     

    (iii) all
      recommendations in any reports, actuarial or otherwise, relating to the Non-U.S.
      Company Plan which have been received by the Company or the trustees within
      the
      three years immediately preceding the date hereof have been complied with in
      full;

     

    (iv) all
      employer and employee contributions to each Non-U.S. Company Plan required
      by
      Law or by the terms of such Non-U.S. Company Plan have been made, or, if
      applicable, accrued in accordance with the standard accounting practices
      applicable in the local jurisdiction, and a pro rata contribution for the period
      prior to and including the date of this Agreement has been made or
      accrued;

     

    (v) the
      fair
      market value of the assets of each funded Non-U.S. Company Plan, the liability
      of each insurer for any Non-U.S. Company Plan funded through insurance or the
      book reserve established for any Non-U.S. Company Plan, together with any
      accrued contributions, is sufficient to procure or provide for the benefits
      determined on an ongoing basis (actual or contingent) accrued to the date of
      this Agreement with respect to all current and former participants under such
      Non-U.S. Company Plan according to the actuarial assumptions and valuations
      most
      recently used to determine employer contributions to such Non-U.S. Company
      Plan,
      and no Transaction shall cause such assets or insurance obligations to be less
      than such benefit obligations; provided that a Non-U.S. Company Plan that is
      maintained solely pursuant to applicable foreign Law and sponsored by a
      Governmental Authority shall not be subject to this paragraph;

     

    
      
        
        

      

      
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    (vi) none
      of
      the grants, subsidies, concessions and/or allowances that have been received
      by
      the Company or any Company Subsidiary from any Governmental Authority, with
      respect to employment of employees, are liable to be repaid or revoked in whole
      or in part as a result of the entry into or the completion of this Agreement
      or
      the Transactions;

     

    (vii) each
      Non-U.S. Company Plan required to be registered has been registered and has
      been
      maintained in good standing with applicable regulatory authorities and, except
      as could not reasonably be expected, individually or in the aggregate, to have
      a
      Company Material Adverse Effect, each Non-U.S. Company Plan is now and always
      has been operated in compliance with all applicable non-United States
      Laws;

     

    (viii) all
      deductions and payments required to be made by Parent or any Parent Subsidiary
      in respect of Central Provident Scheme contributions (including employer’s and
      employees’ contributions) in relation to the remuneration of its employees to
      any relevant competent authority have been so made; and

     

    (ix) except
      as
      set forth in Section 3.10(h)(ix)
      of the
      Company Disclosure Schedule, none of the Non-U.S. Company Plans (A) provides
      for
      the payment of material separation, severance, termination or similar-type
      benefits to any person, (B) obligates the Company or any Company Subsidiary
      to
      pay material separation, severance, redundancy, termination, long service
      payment or similar-type benefits solely or partially as a result of any
      Transaction, or (C) obligates the Company or any Company Subsidiary to make
      any
      material payment or provide any material benefit as a result of a change in
      control under applicable Law. None of the Non-U.S. Company Plans provides for
      or
      promises material retiree medical, disability or life insurance benefits to
      any
      current or former employee, officer or director of the Company or any Company
      Subsidiary, except as required by applicable Law.

     

    SECTION
      3.11 Labor
      and Employment Matters. i)
      Except
      as set forth in Section 3.11
      of the
      Company Disclosure Schedule or as could not reasonably be expected, individually
      or in the aggregate, to prevent or materially delay consummation of any of
      the
      Transactions or otherwise prevent or materially delay the Company from
      performing its obligations under this Agreement and could not reasonably be
      expected, individually or in the aggregate, to have a Company Material Adverse
      Effect:

     

    (i) there
      are
      no controversies, charges and proceedings pending or, to the knowledge of the
      Company, threatened between the Company or any Company Subsidiary and any of
      their respective employees;

     

    
      
        
        

      

      
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    (ii) neither
      the Company nor any Company Subsidiary is a party to or is bound by any
      collective bargaining agreement or other similar agreement with any labor
      organization applicable to persons employed by the Company or any Company
      Subsidiary, nor, to the knowledge of the Company, are there any activities
      or
      proceedings of any labor union to organize any such employees;

     

    (iii) there
      are
      no unfair labor practice complaints pending against the Company or any Company
      Subsidiary before the National Labor Relations Board or any current union
      representation questions involving employees of the Company or any Company
      Subsidiary; and

     

    (iv) there
      is
      no strike, slowdown, work stoppage or lockout, or, to the knowledge of the
      Company, threat thereof, by or with respect to any employees of the Company
      or
      any Company Subsidiary.

     

    (b) Except
      as
      could not reasonably be expected, individually or in the aggregate, to prevent
      or materially delay consummation of any of the Transactions or otherwise prevent
      or materially delay the Company from performing its obligations under this
      Agreement and could not reasonably be expected, individually or in the
      aggregate, to have a Company Material Adverse Effect:

     

    (i) the
      Company and the Company Subsidiaries are in compliance with all applicable
      Laws
      relating to the employment of labor, including those related to wages, hours,
      collective bargaining, labor relations, immigration, employment and employment
      practices, the terms and conditions of employment, employment standards, equal
      employment opportunity, family and medical leave, occupational health and safety
      and the payment and withholding of taxes and other sums as required by the
      appropriate Governmental Authority and have withheld and paid to the appropriate
      Governmental Authority or are holding for payment not yet due to such
      Governmental Authority all amounts required to be withheld from employees of
      the
      Company or any Company Subsidiary and are not liable for any arrears of wages,
      taxes, penalties or other sums for failure to comply with any of the
      foregoing;

     

    (ii) the
      Company and the Company Subsidiaries have paid in full to all employees or
      adequately accrued for in accordance with US GAAP consistently applied all
      wages, salaries, commissions, bonuses, benefits and other compensation due
      to or
      on behalf of such employees and there is no claim with respect to payment of
      wages, salary, overtime pay or damages for wrongful or unreasonable dismissal
      that has been asserted or is now pending or threatened before any Governmental
      Authority with respect to any persons currently or formerly employed by the
      Company or any Company Subsidiary, and no circumstances have arisen under which
      the Company and the Company Subsidiaries are likely to be required to make
      any
      statutory severance, redundancy, long service payment and any other payment
      or
      compensation under any employment protection legislation to any current or
      former employees;

     

    
      
        
        

      

      
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    (iii) neither
      the Company nor any Company Subsidiary is a party to, or otherwise bound by,
      any
      consent decree with, or citation by, any Governmental Authority relating to
      employees or employment practices;

     

    (iv) neither
      the Company nor any Company Subsidiary has given notice of any redundancies
      or
      layoffs nor started consultations with any independent trade union or employees’
representatives regarding redundancies, layoffs or dismissals within the period
      of one year prior to the date hereof;

     

    (v) no
      circumstances have arisen under which the Company or any Company Subsidiary
      is
      likely to be required to pay damages for wrongful dismissal, to make any
      statutory severance, redundancy or long service payment or to make or pay any
      compensation for unreasonable dismissal or to make any other payment under
      any
      employment protection Laws or to reinstate or re-engage any former
      employee;

     

    (vi) there
      is
      no charge or proceeding with respect to a violation of any occupational safety
      or health standards that has been asserted or is now pending or threatened
      with
      respect to the Company or any Company Subsidiary; and during the six-month
      period prior to the date hereof, neither the Company nor any Company Subsidiary
      has effectuated a “plant closing” (as defined in the Worker Adjustment and
      Retraining Notification Act of 1988 (the “WARN
      Act”))
      affecting any site of employment, facility or operating unit of the Company
      or
      any Company Subsidiary , or a “mass layoff” as defined in the WARN Act affecting
      any site of employment, facility or operating unit of the Company or any Company
      Subsidiary; nor has the Company or any Company Subsidiary been affected by
      any
      transaction or engaged in layoffs or employment terminations sufficient in
      number to trigger application of any similar Law;

     

    (vii) there
      is
      no charge of discrimination in employment or employment practices, for any
      reason, including, without limitation, age, gender, race, religion or other
      legally protected category, which has been asserted or is now pending or
      threatened before the United States Equal Employment Opportunity Commission,
      or
      any other Governmental Authority in any jurisdiction in which the Company or
      any
      Company Subsidiary has employed or employs any person, nor is there asserted
      or
      is now, to the Company’s knowledge, pending or threatened against the Company or
      any Company Subsidiary, any action in relation to employment practices by the
      United States National Labor Relations Board, the United States Equal Employment
      Opportunity Commission, the United States Department of Labor, the Occupational
      Safety and Health Administration, the United States Immigration and
      Naturalization Service, or, with respect to each such Governmental Authority,
      any state or local equivalent thereto; and

     

    (viii) consummation
      of the transactions contemplated by this Agreement will not entitle any person
      employed by the Company or any Company Subsidiary to severance pay, the payment
      of benefits or compensation upon a change-in-control.

     

    
      
        
        

      

      
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    SECTION
      3.12 Real
      Property; Title to Assets. j) Section 3.12(a)
      of the
      Company Disclosure Schedule lists each parcel of real property, if any,
      currently owned by the Company or any Company Subsidiary or owned by the Company
      and any Company Subsidiary after January 1, 2004. Each parcel of real property
      owned by the Company or any Company Subsidiary (i) is owned free and clear
      of
      all mortgages, pledges, liens, security interests, conditional and installment
      sale agreements, encumbrances, charges or other claims of third parties of
      any
      kind, including, without limitation, any easement, right of way or other
      encumbrance to title, or any option, right of first refusal, or right of first
      offer (collectively, “Liens”),
      other
      than Permitted Liens (as defined in Section 9.03(a))
      and
      Liens reflected on the Company’s balance sheet as of December 31, 2006 and (ii)
      is neither subject to any governmental decree or order to be sold nor is being
      condemned, expropriated or otherwise taken by any public authority with or
      without payment of compensation therefor, nor, to the knowledge of the Company,
      has any such condemnation, expropriation or taking been proposed. Policies
      of
      title have been issued by national title insurance companies for the insurance
      of the interest of the fee owner for each parcel of real property owned by
      the
      Company or any Company Subsidiary (the “Company
      Title Policies”),
      such
      Company Title Policies are valid and in full force and effect and no claim
      has
      been made under any such policy. The Company has made available to Parent true
      and complete copies of all Company Title Policies, if any, in the possession
      of
      the Company.

     

    (b) Section 3.12(b)
      of the
      Company Disclosure Schedule lists each parcel of real property currently leased,
      subleased or used on any other basis by the Company or any Company Subsidiary,
      with the name of the lessor and the date of the lease, sublease, license,
      assignment of the lease or other agreement granting use rights to the Company
      or
      any Company Subsidiary, any guaranty given or leasing commissions payable by
      the
      Company or any Company Subsidiary in connection therewith and each amendment
      to
      any of the foregoing (collectively, the “Company
      Use Documents”).
      True,
      correct and complete copies of all Company Use Documents have been made
      available to Parent or its counsel. All such Company Use Documents are in full
      force and effect, are valid and effective in accordance with their respective
      terms, and there is not, under any of such Company Use Documents, any existing
      material default or event of default (or event which, with notice or lapse
      of
      time, or both, would constitute a default) by the Company or any Company
      Subsidiary or, to the Company’s knowledge, by the other party to such Company
      Use Document. The Company’s or the Company Subsidiary’s possession and quiet
      enjoyment of such leased or subleased property have not been disturbed, and
      to
      the knowledge of the Company, there are no disputes with respect to the same.
      All rent and other payments owing by the Company or any Company Subsidiary
      under
      such Company Use Documents have been paid in full through and including March
      31, 2007. Other than as specified in Section 3.12(b),
      neither
      the Company, nor to the Company’s knowledge, any Company Subsidiary, has
      received any written notice to the effect that any such current Company Use
      Document will not be renewed or is not subject to renewal at the termination
      of
      the term thereof or that any such Company Use Document will be renewed at a
      substantially higher rent or substantially higher cost. Neither the Company
      nor
      any Company Subsidiary has subleased, licensed or otherwise granted to any
      entity or individual the right to use or occupy such premises or any portion
      thereof.

     

    (c) Except
      as
      could not reasonably be expected, individually or in the aggregate, to prevent
      or materially delay consummation of any of the Transactions or otherwise prevent
      or materially delay the Company from performing its obligations under this
      Agreement and could not reasonably be expected, individually or in the
      aggregate, to have a Company Material Adverse Effect: (i) there are no
      contractual or legal restrictions that preclude or restrict the ability to
      use
      any real property owned, leased or used on any other basis by the Company or
      any
      Company Subsidiary for the purposes for which it is currently being used; (ii)
      there are no material latent defects or material adverse physical conditions
      affecting the real property, and improvements thereon, owned, leased or used
      on
      any other basis by the Company or any Company Subsidiary; (iii) neither the
      Company nor any Company Subsidiary has received written notice from any
      Governmental Authority or other entity having jurisdiction over any property
      owned, leased or used on any other basis by the Company or any Company
      Subsidiary or any portion thereof describing the violation of any Laws relating
      to permits or any property restrictions or other Liens affecting the same;
      (iv)
      the Company has obtained and maintained, or caused the Company Subsidiaries
      to
      obtain and maintain, all permits (including, without limitation, Company
      Permits), consents, licenses, concessions, certificates of compliance,
      approvals, authorizations and agreements from third parties (including, without
      limitation, water rights) necessary for the operation (including, without
      limitation, exploration and mining) of the real property owned, leased or used
      on any other basis by the Company or any Company Subsidiary, all of which are
      in
      full force and effect, and neither the Company nor any Company Subsidiary has
      received any written notice from any Governmental Authority or other entity
      having jurisdiction over any property owned, leased or used on any other basis
      by the Company or any Company Subsidiary or any portion thereof describing
      a
      violation of or threatening a suspension, revocation, modification or
      cancellation of any such permit, consent, license, concession, certificate
      of
      compliance, approval, authorization or agreement; (v) with respect to any mining
      operations performed on the real property owned, leased or used on any other
      basis by the Company or any Company Subsidiary, the Company has filed, or caused
      any Company Subsidiary to file, all reports and notifications required to be
      filed under any Laws; (vi) there are no pending or, to the Company’s knowledge,
      threatened fire, health, safety, building, zoning, land use, assessment, or
      similar proceedings relating to the real property owned, leased or used on
      any
      other basis by the Company or any Company Subsidiary; (vii) except as set forth
      in Schedule 3.12(c),
      there
      are no parties other than the Company or a Company Subsidiary in possession
      of
      the real property owned, leased or used on any other basis by the Company or
      any
      Company Subsidiary and there are no sublease, concession, occupancy, license
      or
      similar arrangements affecting any such property; (viii) no construction,
      improvements, or alterations, the cost of which exceeds US$1,000,000, are in
      process, under construction, planned or required at any real property owned,
      leased or used on any other basis by the Company or any Company Subsidiary;
      and
      (ix) no portion of the real property owned, leased or used on any other basis
      by
      the Company or any Company Subsidiary or any improvements or buildings thereon
      has suffered any damage by fire, earthquake, flood or other casualty which
      has
      not heretofore been repaired and restored to operational use and in accordance
      with applicable Laws and the requirements of any lease.

     

    
      
        
        

      

      
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    (d) Each
      of
      the Company and the Company Subsidiaries has good and valid title to, or, in
      the
      case of leased properties and assets, valid leasehold or subleasehold interests
      in, or in the case of real property and assets used on any other basis, valid
      use rights to, all of its properties and assets, tangible and intangible, real,
      personal and mixed, used or held for use in its business, free and clear of
      any
      Liens, except for Permitted Liens. All assets and inventory are in good
      condition and of merchantable quality and capable of being sold by the Company
      or any Company Subsidiary in the ordinary course of business to a purchaser
      in
      accordance with its list prices without rebate or allowance. All tangible assets
      are in the possession or under the control of the Company or Company Subsidiary.
      Neither the construction, positioning or use of any of the Company’s or Company
      Subsidiary’s assets, nor the assets themselves, contravene any relevant
      provision of any Laws. All such assets owned or used by the Company or Company
      Subsidiary are in good repair and capable of being used for the purposes for
      which they are designed, acquired or used by the Company or Company Subsidiary
      and have throughout their period of ownership by the Company or Company
      Subsidiary been maintained and serviced in accordance with their manufacturer’s
      recommendations.

     

    
      
        
        

      

      
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    (e) Except
      as
      listed on Section 3.12(e)
      of the
      Company Disclosure Schedule, to the knowledge of the Company, the Company and
      the Company Subsidiaries or its joint venture or contract parties have been
      issued all licenses, permits, consents, concessions, orders, approvals and
      authorizations (the “Mining
      Permits”)
      required to explore for and exploit or mine any natural resources situated
      on
      the surface or subsurface of any real property rights currently owned by the
      Company or any Company Subsidiary or currently leased, subleased or used on
      any
      other basis in compliance with applicable law and/or any applicable agreement
      (the “Mining
      Rights”),
      whether by the Company or any Company Subsidiary, including, but not limited
      to,
      those Mining Permits referenced in Section 3.12(e)
      of this
      Agreement. All of the terms and conditions attaching to such Mining Permits
      to
      explore for and/or exploit or mine any such natural resources on the surface
      or
      subsurface of any such real properties (and their expiration dates, if any)
      have
      been fully complied with.

     

    (f) There
      does not exist any material non-compliance by the Company or any Company
      Subsidiary with the terms of any Mining Permits that could result in the
      revocation or termination of any such Mining
      Permits.

     

    (g) Except
      as
      listed in Section 3.12(g)
      of the
      Company Disclosure Schedule, neither the Company nor any Company Subsidiary
      has
      knowledge of any third party rights or encumbrances over any Mining Rights
      that
      would materially affect the Company's exclusive rights or ability to use such
      real property and/or to explore for and exploit and extract any natural
      resources on the surface or subsurface of such real property.

     

    (h) Except
      as
      listed on Section 3.12(h)
      of the
      Company Disclosure Schedule, neither the Company nor any Company Subsidiary
      has
      any obligation to maintain any exploitation or mining rights attaching to the
      relevant exploration certificates for any designated period.

     

    SECTION
      3.13 Intellectual
      Property.
      k)
      Except as could not reasonably be expected, individually or in the aggregate,
      to
      prevent or materially delay consummation of any of the Transactions or otherwise
      prevent or materially delay the Company from performing its obligations under
      this Agreement and could not reasonably be expected, individually or in the
      aggregate, to have a Company Material Adverse Effect:

     

    (i) the
      Company and the Company Subsidiaries own or are licensed to use all Intellectual
      Property used in or necessary for the conduct of their respective businesses
      as
      currently conducted;

     

    
      
        
        

      

      
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    (ii) to
      the
      knowledge of the Company, the conduct of the business of the Company and the
      Company Subsidiaries as currently conducted does not infringe upon or
      misappropriate the Intellectual Property rights of any third party;

     

    (iii) there
      are
      no claims or suits pending or, to the knowledge of the Company and except as
      set
      forth in Section 3.13(a)(iii)
      of the
      Company Disclosure Schedule, threatened against the Company or any Company
      Subsidiary (A) alleging that the conduct of the business of the Company or
      any
      Company Subsidiary as currently conducted infringes upon or misappropriates
      the
      Intellectual Property rights of any third party or (B) challenging the
      ownership, use, validity or enforceability of any item of Intellectual Property
      owned by the Company or a Company Subsidiary (“Company
      Owned Intellectual Property”);

     

    (iv) with
      respect to the Company Owned Intellectual Property, the Company or a Company
      Subsidiary is the owner of the entire right, title and interest in and to such
      Company Owned Intellectual Property, free and clear of all liens, encumbrances
      and other restrictions, and is entitled to use such Company Owned Intellectual
      Property in the continued operation of its respective business;

     

    (v) each
      of
      the Company and Company Subsidiary has taken all steps open to it to preserve
      the Company Owned Intellectual Property. Without limitation, all renewal fees
      regarding the Company Owned Intellectual Property due on or before the Effective
      Time have been paid in full;

     

    (vi) neither
      the Company nor any Company Subsidiary has entered into any agreement,
      arrangement or understanding (whether legally enforceable or not) for the
      licensing, or otherwise permitting the use or exploitation, of the Company
      Owned
      Intellectual Property or which prevents, restricts or otherwise inhibits the
      Company’s or the relevant Company Subsidiary’s freedom to use and exploit the
      Company Owned Intellectual Property;

     

    (vii) there
      are
      no settlements, forbearances to sue, consents, judgments, orders or similar
      obligations which (A) restrict the business of the Company or any Company
      Subsidiary in or under any Intellectual Property rights of any third party;
      or
      (B) permit any third party to use any Company Owned Intellectual
      Property;

     

    (viii) Section 3.13(a)(vi)
      of the
      Company Disclosure Schedule sets forth each item of material Intellectual
      Property licensed to the Company or a Company Subsidiary (“Company
      Licensed Intellectual Property”),
      and
      the Company or a Company Subsidiary has the right to use such Company Licensed
      Intellectual Property in the continued operation of its respective business
      in
      accordance with the terms of the license agreement governing such Company
      Licensed Intellectual Property and the Company and the Company Subsidiaries
      have
      used such Company Licensed Intellectual Property in accordance with the terms
      of
      such license agreement;

     

    
      
        
        

      

      
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    (ix) the
      Company Owned Intellectual Property has not been adjudged invalid or
      unenforceable in whole or in part, and, to the knowledge of the Company, is
      valid and enforceable;

     

    (x) to
      the
      knowledge of the Company, no person is engaging in any activity that infringes
      upon or misappropriates the Company Owned Intellectual Property;

     

    (xi) each
      license of the Company Licensed Intellectual Property is valid and enforceable,
      is binding on all parties to such license, and is in full force and
      effect;

     

    (xii) to
      the
      knowledge of the Company, no party to any license of the Company Licensed
      Intellectual Property is in breach thereof or default thereunder;
      and

     

    (xiii) neither
      the execution of this Agreement nor the consummation of any Transaction will
      adversely affect any of the Company’s or Company Subsidiaries’ rights with
      respect to the Company Owned Intellectual Property or the Company Licensed
      Intellectual Property.

     

    (b) Neither
      the Company nor any Company Subsidiary has agreed to indemnify any third party
      for or against any infringement or misappropriation with respect to any third
      party Intellectual Property other than in the ordinary course of
      business.

     

    (c) The
      consummation of the Transactions will not result in the Surviving Corporation,
      the Company or any Company Subsidiary being bound by any non-compete or other
      restriction on the operation of any business of the Surviving Corporation,
      the
      Company or any Company Subsidiary, or in the grant by the Surviving Corporation,
      the Company or any Company Subsidiary of any rights or licenses to any Company
      Owned Intellectual Property.

     

    (d) The
      Company or any Company Subsidiary has not licensed any Company Owned
      Intellectual Property to any third party other than in the ordinary course
      of
      business.

     

    SECTION
      3.14 Taxes.
      l) The
      Company and the Company Subsidiaries have filed all material Tax Returns (as
      defined in Section 9.03(a))
      required to be filed by them and have paid and discharged all material Taxes
      required to be paid or discharged, other than such payments as are being
      contested in good faith by appropriate proceedings. All such Tax Returns are
      true, accurate and complete in all material respects. Neither the IRS nor any
      other United States or non-United States taxing authority or agency is now
      asserting against the Company or any Company Subsidiary any material deficiency
      or claim for any Taxes or interest thereon or penalties in connection therewith.
      The accruals and reserves for Taxes reflected in the consolidated balance sheet
      of the Company and the consolidated Company Subsidiaries as at  December
      31, 2006 have been prepared in accordance with US GAAP. There are no material
      Tax liens upon any property or assets of the Company or any of the Company
      Subsidiaries except liens for current Taxes not yet due.

     

    (b) No
      audit
      or other proceeding by any taxing authority is pending with respect to any
      material Taxes due from or with respect to the Company or any Company
      Subsidiary. No taxing authority has given written notice of its intention to
      assert any deficiency or claim for additional material Taxes against the Company
      or any Company Subsidiary.

    
       

      
        
          
          

        

        
          31

          
            

          

        

        
          
          

        

      

       

    

    (c) Neither
      the Company nor any Company Subsidiary has been a “distributing corporation” or
      a “controlled corporation” in a distribution intended to qualify under
      Section 355(e) of the Code within the past five years.

     

    SECTION
      3.15 Environmental
      Matters.
      Except
      as could not reasonably be expected, individually or in the aggregate, to
      prevent or materially delay consummation of any of the Transactions or otherwise
      prevent or materially delay the Company from performing its obligations under
      this Agreement and except as could not reasonably be expected, individually
      or
      in the aggregate, to have a Company Material Adverse Effect:

     

    (a) neither
      the Company nor any Company Subsidiary has violated or is in violation of any
      Environmental Law (as defined in Section 9.03(a))
      and
      neither the Company nor any Company Subsidiary has received any written
      communication from a Governmental Agency or person alleging any actual or
      potential liability of, or any actual or potential violation by, the Company
      or
      any Company Subsidiary arising under any Environmental Law;

     

    (b) none
      of
      the properties currently owned, leased or operated by the Company or any Company
      Subsidiary or formerly owned, leased or operated by the Company or any Company
      Subsidiary (including, without limitation, soils and surface and groundwaters)
      is or has been contaminated with any Hazardous Substance (as defined in
Section 9.03(a)),
      which
      contamination requires investigation or remediation under any Environmental
      Law,
      or has given rise to or would reasonably be expected to give rise to liability
      or obligations (including any investigatory, reporting or remedial obligation)
      under any Environmental Law;

     

    (c) neither
      the Company nor any Company Subsidiary has stored, handled, treated, disposed
      of, arranged for the disposal of, transported or released any Hazardous
      Substance at any property or facility, including, without limitation, any
      offsite location, and neither the Company nor any Company Subsidiary has or
      has
      allegedly exposed any person to any Hazardous Substance, so as to give rise
      to a
      requirement for investigation or remediation under any Environmental Law or
      so
      as to give rise to any current or reasonably expected future liability or
      obligation (including any investigatory, reporting or remedial obligation)
      under
      any Environmental Law;

     

    (d) the
      Company and the Company Subsidiaries have all Environmental Permits required
      under any Environmental Law and the Company and the Company Subsidiaries are
      in
      compliance with, and have no current or pending liability or obligation
      associated with any past non-compliance with, such permits, licenses and
      authorizations;

     

    (e) neither
      the execution of this Agreement nor the consummation of the Transactions will
      require any investigation, remediation or other action with respect to Hazardous
      Substances, or any notice to or consent of Governmental Authorities or third
      parties, pursuant to any applicable Environmental Law;

     

    (f) neither
      the Company nor any Company Subsidiary has designed, manufactured, installed,
      marketed, sold, handled or distributed asbestos or any asbestos-containing
      product or asbestos-containing material, and no basis in fact or Law, or under
      contract or lease agreement, exists upon which any claim of liability could
      be
      asserted against the Company or any Company Subsidiary relating to asbestos,
      asbestos-containing products or asbestos-containing materials located at any
      property or facility;

     

    
      
        
        

      

      
        32

        
          

        

      

      
        
        

      

    

     

    (g) neither
      the Company nor any Company Subsidiary has received any notification pursuant
      to
      any Environmental Laws that (i) any work, repairs, corrective or remedial
      action, construction or capital expenditures are required to be made as a
      condition of continued compliance with any Environmental Laws or any license,
      permit or approval issued pursuant thereto; (ii) any license, permit or approval
      is about to be reviewed, made subject to limitations or conditions, revoked,
      withdrawn or terminated; or (iii) any events, conditions, circumstances,
      activities, practices, incidents, actions or omissions may interfere with or
      prevent compliance or continued compliance with any Environmental Law;
      and

     

    (h) the
      Company has made available to Parent or its counsel all environmental reports,
      assessments, investigations, Environmental Permits, correspondence or other
      material environmental documents relating to its business or to the Company
      or
      the Company Subsidiaries, or to their respective affiliates’ or predecessors’
properties, facilities or operations.

     

    SECTION
      3.16 Material
      Contracts.
      m)
      Subsections (i)
      through
(xiv)
      of
Section 3.16(a)
      of the
      Company Disclosure Schedule list all contracts, arrangements, commitments and
      agreements of the types listed in subsections (i)
      through
(xiv)
      to which
      the Company or any Company Subsidiary is a party (such contracts, arrangements,
      commitments and agreements as are required to be set forth in Section 3.16(a)
      of the
      Company Disclosure Schedule being the “Material
      Company Contracts”):

     

    (i) each
      “material contract” (as such term is defined in Item 601(b)(10) of Regulation
      S-K and Item 601(b)(10) of Regulation S-B of the SEC) with respect to the
      Company and the Company Subsidiaries;

     

    (ii) each
      contract and agreement that is likely to involve consideration of more than
      US$100,000, in the aggregate, over the remaining term of such contract or
      agreement, than purchase orders entered into in the ordinary course of business
      and in a manner consistent with past practice;

     

    (iii) each
      contract and agreement evidencing outstanding indebtedness in a principal amount
      of US$100,000 or more;

     

    (iv) all
      leases of real property leased for the use or benefit of the Company or any
      Company Subsidiary;

     

    (v) all
      material contracts and agreements with any Governmental Authority to which
      the
      Company or any Company Subsidiary is a party;

     

    (vi) all
      contracts and agreements that limit, or purport to limit, the ability of the
      Company or any Company Subsidiary to compete in any line of business or with
      any
      person or entity or in any geographic area or during any period of
      time;

     

    
      
        
        

      

      
        33

        
          

        

      

      
        
        

      

    

     

    (vii) all
      contracts and agreements providing for benefits under any Company
      Plan;

     

    (viii) all
      contracts for employment required to be listed in Section 3.10
      of the
      Company Disclosure Schedule;

     

    (ix) each
      joint venture, partnership, strategic alliance and similar agreement to which
      the Company or any Company Subsidiary is a party, which is material to the
      Company or any Company Subsidiary or which provides for the ownership of any
      equity interest in any person or entity;

     

    (x) all
      material broker, distributor, dealer, manufacturer’s representative, franchise,
      agency, sales promotion, market research, marketing consulting and advertising
      contracts, and agreements to which the Company or any Company Subsidiary is
      a
      party;

     

    (xi) all
      management contracts (excluding contracts for employment) and contracts with
      other consultants, including any contracts involving the payment of royalties
      or
      other amounts calculated based upon the revenues or income of the Company or
      any
      Company Subsidiary or income or revenues related to any product or service
      of
      the Company or any Company Subsidiary to which the Company or any Company
      Subsidiary is a party;

     

    (xii) all
      licenses or sublicenses of Intellectual Property to which the Company or any
      Company Subsidiary is a party and that are material to the business of the
      Company or any Company Subsidiary;

     

    (xiii) all
      contracts for the development, exploration or exploitation of mines to which
      the
      Company or any Company Subsidiary is a party and that are material to the
      business of the Company or any Company Subsidiary; and

     

    (xiv) all
      other
      contracts and agreements that are material to the Company and the Company
      Subsidiaries, taken as a whole, or the absence of which could reasonably be
      expected, individually or in the aggregate, to have a Company Material Adverse
      Effect.

     

    (b) Except
      as
      could not reasonably be expected, individually or in the aggregate, to prevent
      or materially delay consummation of any of the Transactions or otherwise prevent
      or materially delay the Company from performing its obligations under this
      Agreement and could not reasonably be expected, individually or in the
      aggregate, to have a Company Material Adverse Effect:

     

    (i) each
      Material Company Contract is a legal, valid and binding agreement, subject
      to
      the effect of any applicable bankruptcy, insolvency (including, without
      limitation, all laws relating to fraudulent transfers), reorganization,
      moratorium or similar laws affecting creditors’ rights generally and subject to
      the effect of general principles of equity (regardless of whether considered
      in
      a proceeding at law or in equity);

     

    
      
        
        

      

      
        34

        
          

        

      

      
        
        

      

    

     

    (ii) the
      Company or Company Subsidiary has duly performed and complied in all material
      respects with each of its obligations thereunder;

     

    (iii) neither
      the Company nor any Company Subsidiary has received any claim of default under
      any Material Company Contract and neither the Company nor any Company Subsidiary
      is in breach or violation of, or default under, any Material Company
      Contract;

     

    (iv) there
      are
      no grounds for rescission, avoidance, repudiation or termination of any Material
      Company Contract;

     

    (v) to
      the
      Company’s knowledge, no other party is in breach or violation of, or default
      under, any Material Company Contract; and

     

    (vi) neither
      the execution of this Agreement nor the consummation of any Transaction shall
      constitute a default under, give rise to cancellation rights under or otherwise
      adversely affect any of the material rights of the Company or any Company
      Subsidiary under any Material Company Contract.

     

    (c) There
      are
      no contracts or obligations, agreements, arrangements or concerted practices
      to
      which the Company or any Company Subsidiary is a party or by which the Company
      or such Company Subsidiary is bound, and there are no practices in which the
      Company or any Company Subsidiary is engaged, which are void, illegal,
      unenforceable, registrable or notifiable under or which contravene any
      applicable Laws. The Company has made available to Parent or its counsel true
      and complete copies of all Material Company Contracts, including any amendments
      thereto.

     

    SECTION
      3.17 Insurance.
      The
      Company and the Company Subsidiaries maintain insurance coverage with reputable
      insurers in such amounts and covering such risks as are in accordance with
      normal industry practice for companies engaged in businesses similar to that
      of
      the Company and the Company Subsidiaries (taking into account the cost and
      availability of such insurance). Nothing has been done or omitted to be done
      by
      or on behalf of the Company or any Company Subsidiary which would make any
      policy of insurance void or voidable or enable the insurers to avoid the same
      and there is no claim outstanding under any such policy and the Company is
      not
      aware of any circumstances likely to give rise to such a claim or result in
      an
      increased rate of premium.

     

    SECTION
      3.18 Board
      Approval; Vote Required.
      n) The
      Company Board, by resolutions duly adopted by unanimous vote of those members
      of
      the Company Board voting at a meeting duly called and held and not subsequently
      rescinded or modified in any way, has duly (i) determined that this Agreement,
      the Merger and the other Transactions and related agreements contemplated
      thereby are fair to and in the best interests of the Company and its
      stockholders, (ii) approved this Agreement, the Merger and the other
      Transactions and related agreements contemplated thereby and declared their
      advisability and (iii) recommended that the stockholders of the Company approve
      and adopt this Agreement and approve the Merger and the other Transactions
      and
      directed that this Agreement and the Merger and the other Transactions be
      submitted for consideration by the holders of Company Common Stock at the
      Company Stockholders’ Meeting (as defined in Section 6.01(a)).
      Pursuant to Article 8 of the Company’s Articles of Incorporation, the
      limitations on business combinations contained in Sections 302A.671 and 302A.673
      of the MBCA do not apply to the Company.

     

    
      
        
        

      

      
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    (b) The
      only
      vote of the holders of any class or series of capital stock or other securities
      of the Company necessary to approve this Agreement, the Merger and the other
      Transactions is the affirmative vote of the holders of a majority of the
      outstanding shares of Company Common Stock in favor of the approval and adoption
      of this Agreement, the Merger and the other Transactions  (the
      “Company
      Stockholders’ Approval”)
      at a
      duly called Company Stockholders’ Meeting consisting of a quorum of stockholders
      of the Company (or any adjournment or postponement thereof).

     

    SECTION
      3.19 Certain
      Business Practices.
      None of
      the Company, any Company Subsidiary or, to the Company’s knowledge, any
      directors or officers, agents or employees of the Company or any Company
      Subsidiary, has (a) used any funds for unlawful contributions, gifts,
      entertainment or other unlawful expenses related to political activity or for
      the purpose of securing any contract for the Company or any Company Subsidiary;
      (b) 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 (the
      “Foreign
      Corrupt Practices Act”);
      or
      (c) made any payment in the nature of criminal bribery.

     

    SECTION
      3.20 Interested
      Party Transactions.
      Except
      for any agreement or arrangement that has involved or will involve consideration
      of less than US$50,000 during any calendar year, no director, officer or other
      affiliate of the Company or any Company Subsidiary (a) has purchased, purchases
      or will purchase from, or has sold, sells or will sell or has furnished,
      furnishes or will furnish to, the Company or any Company Subsidiary, any goods
      or services, (b) is or has been a party to any contract or agreement disclosed
      in Section 3.16
      of the
      Company Disclosure Schedule, or (c) had or has any contractual or other
      arrangement with the Company or any Company Subsidiary. The Company and the
      Company Subsidiaries have not, since January 1, 2004, (i) extended or maintained
      credit, arranged for the extension of credit or renewed an extension of credit
      in the form of a personal loan to or for any director or executive officer
      (or
      equivalent thereof) of the Company, or (ii) materially modified any term of
      any
      such extension or maintenance of credit.

     

    SECTION
      3.21 Ownership
      of Parent Ordinary Shares.
      As of
      the date of this Agreement, neither the Company nor any Company Subsidiary
      is
      the beneficial owner of any shares of capital stock of Parent.

     

    SECTION
      3.22 Brokers.
      No
      broker, finder or investment banker (other than Quam Capital Limited and SSC
      Mandarin Group) is entitled to any brokerage, finder’s or other fee or
      commission in connection with the Transactions based upon arrangements made
      by
      or on behalf of the Company.

     

    
      
        
        

      

      
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    ARTICLE
      IV

     

    REPRESENTATIONS
      AND WARRANTIES OF PARENT

     

    Except
      as
      set forth in the Parent Disclosure Schedule that has been prepared by Parent
      and
      delivered by Parent to the Company in connection with the execution and delivery
      of this Agreement (the “Parent
      Disclosure Schedule”)
      (which
      Parent Disclosure Schedule shall be arranged in sections corresponding to the
      sections of this Article IV,
      and any
      information disclosed in any such section of the Parent Disclosure Schedule
      shall be deemed to be disclosed only for purposes of the corresponding section
      of this Article IV,
      unless
      it is reasonably apparent that the disclosure contained in such section of
      the
      Parent Disclosure Schedule applies to other representations and warranties
      contained in this Article IV),
      Parent
      hereby represents and warrants to the Company that:

     

    SECTION
      4.01 Corporate
      Organization.
      o) Each
      of Parent and each subsidiary of Parent (each a “Parent
      Subsidiary”)
      is a
      corporation or other organization duly organized, validly existing and, where
      applicable, in good standing under the laws of the jurisdiction of its
      incorporation or organization and has the requisite corporate power and
      authority and all necessary governmental approvals to own, lease and operate
      its
      properties and to carry on its business as it is now being conducted, except
      where the failure to be so organized, existing or in good standing or to have
      such power, authority and governmental approvals could not reasonably be
      expected, individually or in the aggregate, to prevent or materially delay
      consummation of any of the Transactions or otherwise prevent or materially
      delay
      Parent or Merger Sub from performing its obligations under this Agreement and
      could not reasonably be expected, individually or in the aggregate, to have
      a
      Parent Material Adverse Effect (as defined in Section 9.03(a)).
      Parent
      and each Parent Subsidiary is duly qualified or licensed to do business, and,
      where applicable, is in good standing, in each jurisdiction where the character
      of the properties owned, leased or operated by it or the nature of its business
      makes such qualification or licensing necessary, except where the failure to
      be
      so qualified or licensed and in good standing could not reasonably be expected,
      individually or in the aggregate, to prevent or materially delay consummation
      of
      any of the Transactions or otherwise prevent or materially delay Parent or
      Merger Sub from performing its obligations under this Agreement and could not
      reasonably be expected, individually or in the aggregate, to have a Parent
      Material Adverse Effect. Where appropriate in the context, a “Parent Subsidiary”
includes any of the Parent PRC Companies.

     

    (b) A
      true
      and complete list of all the Parent Subsidiaries, together with the jurisdiction
      of incorporation or organization of each Parent Subsidiary and the percentage
      of
      the outstanding capital stock or entire registered capital of each Parent
      Subsidiary owned by Parent and each other Parent Subsidiary, is set forth in
      Section 4.01(b)
      of the
      Parent Disclosure Schedule. Except as set forth in Section 4.01(b)
      of the
      Parent Disclosure Schedule, Parent does not directly or indirectly own any
      equity or similar interest in, or any interest convertible into or exchangeable
      or exercisable for any equity or similar interest in, any corporation,
      partnership, joint venture or other business association or entity. For the
      avoidance of doubt, each of the Parent PRC Companies is a wholly-owned
      subsidiary of Parent and has been duly incorporated and is validly existing
      in
      accordance with the Laws of the PRC and is duly qualified to do business in
      the
      PRC and has obtained all governmental approvals and registrations necessary
      for
      its existence, which approvals and registrations are continuing and effective
      and each of the Parent PRC Companies has sufficient authority to conduct its
      business in accordance with its business license, approval certificate, articles
      of association or similar corporate documents, except where the failure to
      be so
      qualified or licensed or to have such approvals and registrations could not
      reasonably be expected, individually or in the aggregate, to prevent or
      materially delay consummation of any of the Transactions or otherwise prevent
      or
      materially delay Parent from performing its obligations under this Agreement
      and
      could not reasonably be expected, individually or in the aggregate, to have
      a
      Parent Material Adverse Effect. Except for the Parent PRC Companies, Parent
      does
      not have any equity interests or shares in any company, branch or office in
      the
      PRC.

     

    
      
        
        

      

      
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    (c) No
      order
      (including administrative order) has been made or petition presented that
      remains outstanding or resolution passed for the winding up, liquidation,
      dissolution of Parent and each Parent Subsidiary or the appointment of a
      provisional liquidator to, or a liquidation committee of Parent or any Parent
      Subsidiary. No receiver or receiver and manager has been appointed of the whole
      or part of Parent’s and each Parent Subsidiary’s business or assets. No
      distress, execution or other process has been levied on any of Parent’s or any
      Parent Subsidiary’s assets. Neither Parent nor any Parent Subsidiary has applied
      for conciliation in order to settle its debts. No liquidation committee has
      been
      appointed by Parent or any Parent Subsidiary, any court or any other authority
      or person for the purpose of liquidating the business or assets of Parent or
      any
      Parent Subsidiary or any part thereof. No meeting of the creditors of Parent
      or
      any Parent Subsidiary has been held or is in prospect, no voluntary arrangement
      or compromise or arrangement has been proposed with the creditors of Parent
      or
      any Parent Subsidiary; no ruling declaring the bankruptcy of Parent or any
      Parent Subsidiary has been made and no public announcement in respect of the
      same has been pronounced by any court of competent jurisdiction; and there
      is no
      unfulfilled or unsatisfied judgment or order of any court of competent
      jurisdiction outstanding against Parent or any Parent Subsidiary; and there
      has
      been no delay by Parent or any Parent Subsidiary in the payment of any
      obligation due for payment except in the ordinary course of
      business.

     

    (d) Neither
      Parent nor any Parent Subsidiary is insolvent or unable to pay its debts, no
      receiver or receiver and manager has been appointed by any person of its
      business or assets or any part thereof, no power to make any such appointment
      has arisen, neither Parent nor any Parent Subsidiary has taken any steps to
      enter liquidation and there are no grounds on which a petition or application
      could be based for the winding up or appointment of a receiver of Parent or
      any
      Parent Subsidiary.

     

    SECTION
      4.02 Memorandum
      of Association and Bye-Laws.
      p)
      Parent has made available to the Company or its counsel a complete and correct
      copy of the Memorandum of Association and Bye-laws or equivalent organizational
      documents, each as amended to date, of Parent and each Parent Subsidiary. Such
      Memorandum of Association and Bye-laws or equivalent organizational documents
      are in full force and effect. Neither Parent nor any Parent Subsidiary is in
      violation of any of the provisions of its Memorandum of Association and Bye-laws
      or equivalent organizational documents and none of the activities, agreements,
      commitments or rights of Parent or any Parent Subsidiary is ultra vires or
      unauthorized, except where such violations could not reasonably be expected,
      individually or in the aggregate, to prevent or materially delay consummation
      of
      any of the Transactions or otherwise prevent or materially delay Parent or
      Merger Sub from performing its obligations under this Agreement and could not
      reasonably be expected, individually or in the aggregate, to have a Parent
      Material Adverse Effect. For the avoidance of doubt, in respect of each of
      the
      Parent PRC Companies, its organizational documents include its latest business
      license, approval certificate, the articles of association and all amendments
      thereof, and all post-establishment registration certificates necessary to
      carry
      on its business under the Laws of the PRC which are valid and in full
      force.

     

    
      
        
        

      

      
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    (b) Parent
      and each Parent Subsidiary has, at all times, carried on its operations and
      conducted its affairs in all material respects in accordance with its Memorandum
      of Association and By-laws or equivalent organizational documents.

     

    SECTION
      4.03 Capitalization.
      q) The
      authorized share capital of Parent consists of 20,000,000,000 Parent Ordinary
      Shares. As of March 31, 2007, (i) 3,927,075,240 Parent Ordinary Shares were
      issued and outstanding, all of which were validly issued, fully paid and
      non-assessable, (ii) no Parent Ordinary Shares were held by subsidiaries of
      Parent, and (iii) no Parent Ordinary Shares were reserved for future issuance
      pursuant to outstanding employee stock options (“Parent
      Stock Options”)
      granted pursuant to a share option scheme of Parent which was approved by Parent
      on May 22, 2001 and was terminated by an ordinary resolution of its shareholders
      at the annual general meeting held on June 6, 2002 (the “Parent
      Stock Option Plan”).
      Except as set forth in this Section 4.03,
      there
      are no options, warrants or other rights, agreements, arrangements or
      commitments of any character relating to the issued or unissued capital stock
      of, or equity interests in, Parent or any Parent Subsidiary or obligating Parent
      or any Parent Subsidiary to issue or sell any shares of capital stock of, or
      other equity interests in, Parent or any Parent Subsidiary and, to the extent
      that any such rights, agreements, arrangements or commitments previously
      existed, Parent has no continuing or existing liability or obligation with
      respect thereto. Parent has not adopted approved or entered into, or proposed
      to
      adopt, approve or enter into any stockholder “rights plan”, “poison pill” plan
      or comparable plan or arrangement. There are no bonds, debentures, notes or
      other indebtedness of Parent having the right (or convertible into, or
      exchangeable for, securities having the right) to vote on any matter on which
      holders of Parent Ordinary Shares may vote. Section 4.03(a)
      of the
      Parent Disclosure Schedule sets forth the following information with respect
      to
      each Parent Stock Option outstanding as of the date of this Agreement: (i)
      the
      name of the Parent Stock Option recipient; (ii) the particular plan pursuant
      to
      which such Parent Stock Option was granted; (iii) the number of Parent Ordinary
      Shares subject to such Parent Stock Option; (iv) the exercise or purchase price
      of such Parent Stock Option; (v) the date on which such Parent Stock Option
      was
      granted; (vi) the applicable vesting schedule; (vii) the date on which such
      Parent Stock Option expires; and (viii) whether the exercisability of or right
      of repurchase of such Parent Stock Option will be accelerated in any way by
      the
      Transactions, and indicates the extent of acceleration. Parent has made
      available to the Company or its counsel accurate and complete copies of all
      Parent Stock Option Plans pursuant to which Parent has granted the Parent Stock
      Option that are currently outstanding. All Parent Ordinary Shares subject to
      issuance as aforesaid, upon issuance on the terms and conditions specified
      in
      the instruments pursuant to which they are issuable, will be duly authorized,
      validly issued, fully paid and non-assessable. There are no outstanding
      contractual obligations of Parent or any Parent Subsidiary to repurchase, redeem
      or otherwise acquire any Parent Ordinary Shares, any capital stock of or any
      equity interest in Parent Subsidiary or to provide funds to, or make any
      investment (in the form of a loan, capital contribution or otherwise) in, any
      Parent Subsidiary or any other person. There are no Parent Ordinary Shares
      or
      Parent ADSs outstanding that are unvested or are subject to a repurchase option,
      risk of forfeiture or other condition under the Parent Stock Plan or any
      applicable restricted stock purchase agreement or other agreement with Parent.
      There are no commitments or agreements of any character to which Parent is
      bound
      obligating Parent to accelerate the vesting of any Parent Stock Option as a
      result of the Merger. All outstanding Parent Ordinary Shares, all outstanding
      Parent Stock Options, and all outstanding shares of capital stock of or all
      registered capital in each Parent Subsidiary have been issued and granted in
      compliance with (i) all applicable securities laws and other applicable Laws,
      rules and regulations (including, without limitation, any applicable PRC and
      Hong Kong Laws, rules and regulations and where appropriate, at the national,
      provincial and local levels) and (ii) all requirements set forth in applicable
      contracts.
      With
      respect to the Parent Stock Options, (A) each grant of a Parent Stock Option
      was
      duly authorized no later than the date on which the grant of such Parent Stock
      Option was by its terms to be effective (the “Parent
      Grant Date”)
      by all
      necessary corporate action, including, as applicable, approval by the Parent
      Board (or a duly constituted and authorized committee thereof) and any required
      shareholder approval by the necessary number of votes or written consents,
      and
      the award agreement governing such grant was (in any) was duly executed and
      delivered by each party thereto, (B) each such grant was made in accordance
      with
      the terms of the applicable Parent Stock Option Plan and all other applicable
      Laws, (C) the per share exercise price of each Parent Stock Option was equal
      to
      the fair market value of a Parent Ordinary Share on the applicable Grant Date
      and (D) each such grant was properly accounted for in accordance with HKFRS
      in
      the audited financial statements included in the Parent HKSE Reports (as defined
      in Section 4.07(a))
      and
      disclosed in the Parent HKSE Reports in accordance with the HKSE Listing Rules
      and all other applicable Laws.

     

    
      
        
        

      

      
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    (b) Except
      as
      reflected in Section 4.03(a)
      or in
Section 4.03(a)
      of the
      Parent Disclosure Schedule, each outstanding share of capital stock of or entire
      registered capital in each Parent Subsidiary is duly authorized, validly issued,
      fully paid and nonassessable, and each such share or equity interest is owned
      by
      Parent or another Parent Subsidiary free and clear of all security interests,
      liens, claims, pledges, options, rights of first refusal, agreements,
      limitations on Parent’s or any Parent Subsidiary’s voting rights, charges and
      other encumbrances of any nature whatsoever.

     

    (c) The
      total
      amount of investment and registered capital of Dongguan Yong Yao Bleaching
      and
      Dyeing Company Limited (東籢永耀漂染有榰公司)
      are
      both HK$11,260,000 and the registered capital of which has been fully paid.
      The
      total amount of investment and registered capital of Yong Yi Knitting (Heyuen)
      Company Limited (永義紡織(河源)有榰公司)
      are
      US$1,250,000 and US$1,000,000 respectively and the registered capital of which
      has been fully paid. The total amount of investment and registered capital
      of
      Yong Yi Garment (Huzhou) Company Limited (永義眃瞝(湖州)有榰公司)
      are
      US$29,800,000 and US$26,000,000 respectively and US$7,004,237 of the registered
      capital has been paid in accordance with applicable Laws of the PRC. The total
      amount of investment and registered capital of Yong Yi Garment (Huzhou) Company
      Limited (永義眃瞝(湖州)有榰公司)
      are
      US$29,800,000 and US$18,000,000 respectively and US$2,711,921 of the registered
      capital has been paid in accordance with applicable Laws of the PRC. The total
      amount of investment and registered capital of Yong Yi Bleaching and Dyeing
      Company Limited (永義漂染(湖州)有榰公司)
      are
      US$29,900,000 and US$2,000,000 respectively and US$3,009,110 of the registered
      capital has been paid in accordance with applicable Laws of the PRC. Parent
      is
      the sole legal, beneficial and record owner of all equity interests in each
      of
      the Parent PRC Companies free and clear of all security interests, liens,
      claims, pledges, options, rights of first refusal, agreements, limitations
      on
      Parent’s or any Parent Subsidiary’s voting rights, charges and other
      encumbrances of any nature whatsoever. Parent has made available to the Company
      or its counsel a complete and correct copy of the latest capital verification
      report of each of the Parent PRC Companies issued by a PRC registered
      accountant.

     

    
      
        
        

      

      
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    (d) The
      Parent Ordinary Shares underlying the Parent ADSs to be issued pursuant to
      the
      Merger in accordance with Section 2.01,
      (i)
      will be duly authorized, validly issued, fully paid and non-assessable and
      not
      subject to preemptive rights created by statute, the Parent’s Memorandum of
      Association and By-laws or any agreement to which the Parent is a party or
      is
      bound and (ii) will, when issued, be registered under the Securities Act and
      the
      Exchange Act and registered or exempt from registration under applicable Blue
      Sky Laws.

     

    SECTION
      4.04 Authority
      Relative to This Agreement.
      Each of
      Parent and Merger Sub has all legal right and all necessary corporate power
      and
      authority to execute and deliver this Agreement and to perform its obligations
      hereunder and to consummate the Merger and the other Transactions subject to
      the
      Parent Shareholders’ Approval and, in the case of the Merger, the approval of
      the Merger Sub’s sole shareholder. The execution and delivery of this Agreement
      by Parent and Merger Sub and the consummation by Parent and Merger Sub of the
      Merger and other Transactions have been duly and validly authorized by all
      necessary corporate action on the part of Parent and Merger Sub, and the person
      or persons who will execute this Agreement and any ancillary agreements on
      behalf of Parent and Merger Sub have the power or authority to do so on behalf
      of Parent and Merger Sub. No other corporate proceedings on the part of Parent
      or Merger Sub are necessary to authorize this Agreement or to consummate the
      Merger and other Transactions (other than, with respect to Parent, receipt
      of
      the Parent Shareholders’ Approval (as defined in Section 4.18(b)),
      and
      with respect to Merger Sub, the approval of Merger Sub’s sole shareholder and
      the filing and recordation of the appropriate merger documents as required
      by
      the MBCA). This Agreement has been duly and validly executed and delivered
      by
      Parent and Merger Sub and, assuming due authorization, execution and delivery
      by
      the other parties hereto, constitutes a legal, valid and binding obligation
      of
      each of Parent and Merger Sub, enforceable against each of Parent and Merger
      Sub
      in accordance with its terms, subject to the effect of any applicable
      bankruptcy, insolvency (including, without limitation, all laws relating to
      fraudulent transfers), reorganization, moratorium or similar laws affecting
      creditors’ rights generally and subject to the effect of general principles of
      equity (regardless of whether considered in a proceeding at law or in
      equity).
      As of
      the date hereof, no Hong Kong or Bermuda takeover statute is applicable to
      the
      Merger or the other Transactions.

     

    SECTION
      4.05 No
      Conflict; Required Filings and Consents.
      r) The
      execution and delivery of this Agreement by Parent and Merger Sub do not, and
      the performance of this Agreement by Parent and Merger Sub will not, (i)
      conflict with or violate the Memorandum of Association and By-laws or other
      organizational documents of Parent or any Parent Subsidiary, (ii) assuming
      that
      all consents, approvals, authorizations and other actions described in
Sections 4.04
      and
4.05(b)
      have
      been obtained and all filings and obligations described in Section 4.05(b)
      have
      been made, conflict with or violate any Law applicable to Parent or any Parent
      Subsidiary or by which any property or asset of Parent or any Parent Subsidiary
      (including any of the Parent PRC Real Properties) is bound or affected, or
      (iii)
      result in any breach of, or constitute a default (or an event which, with notice
      or lapse of time or both, would become a default) under, or give to others
      any
      rights of termination, amendment, acceleration or cancellation of, or result
      in
      the creation of a lien or other encumbrance on any property or asset of Parent
      or any Parent Subsidiary (including any of the Parent PRC Real Properties)
      pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease,
      license, permit, franchise or other instrument or obligation to which Parent
      or
      any Parent Subsidiary is a party or by which Parent or any Parent Subsidiary
      or
      any of their properties or assets (including any of the Parent PRC Real
      Properties) is bound or affected, except, with respect to clauses (ii) and
      (iii), for any such conflicts, violations, breaches, defaults or other
      occurrences which could not reasonably be expected, individually or in the
      aggregate, to prevent or materially delay consummation of any of the
      Transactions or otherwise prevent or materially delay Parent or Merger Sub
      from
      performing its obligations under this Agreement and could not reasonably be
      expected, individually or in the aggregate, to have a Parent Material Adverse
      Effect.

     

    
      
        
        

      

      
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    (b) The
      execution and delivery of this Agreement by Parent and Merger Sub do not, and
      the performance of this Agreement by Parent and Merger Sub will not, require
      Parent or Merger Sub to obtain any consent, approval, authorization or permit
      of, or to file with or to notify any Governmental Authority, except (i)
      applicable requirements, if any, of the Securities Act, Exchange Act and Blue
      Sky Laws, (ii) the pre-merger notification requirements of the HSR Act and
      the
      receipt, termination or expiration, as applicable, of approvals or waiting
      periods required under the HSR Act or any other applicable competition, merger
      control, antitrust or similar law or regulation, (iii) the filing and
      recordation of appropriate merger documents as required by the MBCA and the
      relevant authorities of other jurisdictions in which Parent is qualified to
      do
      business, (iv) the applicable requirements, if any, of the HKSE Listing Rules;
      (v) appropriate applications, filings and notices to, and approval of, the
      AMEX
      and the Hong Kong Stock Exchange as may be required in connection with the
      quotation or listing of the Parent ADSs to be issued in connection with the
      Merger or pursuant to the Substitute Options, Company Additional Share and
      Warrant Obligations, Company Convertible Notes or Substitute Warrants and (vi)
      where the failure to obtain such consents, approvals, authorizations or permits,
      or to make such filings or notifications, could not reasonably be expected,
      individually or in the aggregate, to prevent or materially delay consummation
      of
      any of the Transactions or otherwise prevent or materially delay Parent or
      Merger Sub from performing its obligations under this Agreement and could not
      reasonably be expected, individually or in the aggregate, to have a Parent
      Material Adverse Effect.

     

    SECTION
      4.06 Permits;
      Compliance.
      s) Each
      of Parent and the Parent Subsidiaries is in possession of all franchises,
      grants, authorizations, licenses, permits, easements, variances, exceptions,
      consents, certificates, approvals and orders of any Governmental Authority
      necessary for each of Parent or such Parent Subsidiary to own, lease and operate
      its properties or to carry on its business as it is now being conducted (the
      “Parent
      Permits”),
      except where the failure to have, or the suspension or cancellation of, any
      of
      the Parent Permits could not reasonably be expected, individually or in the
      aggregate, to prevent or materially delay consummation of any of the
      Transactions or otherwise prevent or materially delay Parent or Merger Sub
      from
      performing its obligations under this Agreement and could not reasonably be
      expected, individually or in the aggregate, to have a Parent Material Adverse
      Effect. All of the Parent Permits are valid and subsisting, and are in full
      force and effect, and Parent and the relevant Parent Subsidiary is not in breach
      of any of the terms or conditions of any of the Parent Permits, there are no
      factors or circumstances that might result in any restrictions or special
      conditions being placed on any of them or might in any way materially prejudice
      the continuation or renewal or might lead to the suspension, cancellation,
      refusal, modification or revocation of any of the Parent Permits, except where
      the failure to have, or the suspension or cancellation of, any of the Parent
      Permits could not reasonably be expected, individually or in the aggregate,
      to
      prevent or materially delay consummation of any of the Transactions or otherwise
      prevent or materially delay Parent or Merger Sub from performing its obligations
      under this Agreement and could not reasonably be expected, individually or
      in
      the aggregate, to have a Parent Material Adverse Effect. Neither Parent nor
      any
      Parent Subsidiary is in conflict with, or in default, breach or violation of,
      (a) any Law applicable to Parent or any Parent Subsidiary or by which any
      property or asset of Parent or any Parent Subsidiary (including any of the
      Parent PRC Real Properties) is bound or affected, or (b) any note, bond,
      mortgage, indenture, contract, agreement, lease, license, Parent Permit,
      franchise or other instrument or obligation to which Parent or any Parent
      Subsidiary is a party or by which Parent or any Parent Subsidiary or any
      property or asset of Parent or any Parent Subsidiary (including any of the
      Parent PRC Real Properties) is bound, except for any such conflicts, defaults,
      breaches or violations that could not reasonably be expected, individually
      or in
      the aggregate, to prevent or materially delay consummation of any of the
      Transactions or otherwise prevent or materially delay Parent or Merger Sub
      from
      performing its obligations under this Agreement and could not reasonably be
      expected, individually or in the aggregate, to have a Parent Material Adverse
      Effect.

     

    
      
        
        

      

      
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    (b) Parent
      is
      not, and upon the consummation of the Merger and the Transactions as herein
      contemplated will not be, required to register as an “investment company” as
      such term is defined in the Investment Company Act.

     

    (c) There
      is
      no outstanding dispute with, or outstanding proceeding, notice, decree,
      judgment, fine or penalty of or imposed by, any Governmental Authority in
      relation to Parent or any Parent Subsidiary or its operation which has been
      notified or deemed to be notified to Parent or any Parent Subsidiary under
      applicable Laws which could reasonably be expected to have a Parent Material
      Adverse Effect. There is no outstanding investigation or inquiry by any
      Governmental Authority on Parent or any Parent Subsidiary or its operations
      nor
      is there any investigation, inquiry, proceeding, notice, decree, judgment,
      fine
      or penalty anticipated against Parent or any Parent Subsidiary or persons for
      whose acts or defaults Parent or any Parent Subsidiary may be vicariously liable
      which has had or could reasonably be expected to have a Parent Material Adverse
      Effect. There is no outstanding notice or other communication, actual or
      potential violation, failure to comply with any applicable Laws or
      constitutional documents or failure to comply with the standards of regulatory
      compliance applied in the conduct of each of Parent’s and Parent Subsidiary’s
      operations, internal organization, risk management disciplines or other relevant
      control functions in respect of each of Parent’s and Parent Subsidiary’s
      operations which in any case has had or could reasonably be expected to have
      a
      Parent Material Adverse Effect.

     

    SECTION
      4.07 Hong
      Kong and Bermuda Filings; Financial Statements. t)
      Parent
      has at all times complied with its obligations under the HKSE Listing Rules
      and
      has at times complied with all Laws, rules and regulations governing companies
      whose shares are listed on the Hong Kong Stock Exchange, and Parent has filed,
      announced, furnished, published or dispatched all forms, reports and documents,
      required to be filed, furnished, announced, published or dispatched by it with
      the Hong Kong Stock Exchange since January 1, 2004 (as such documents have
      been
      amended prior to the date hereof, collectively, the “Parent
      HKSE Reports”).
      As of
      their respective dates, the Parent HKSE Reports (i) complied in all material
      respects in accordance with the HKSE Listing Rules and (ii) did not, at the
      time
      they were filed, or, if amended, as of the date of such amendment, contain
      any
      untrue statement of a material fact or omit to state a material fact required
      to
      be stated therein or necessary in order to make the statements made therein,
      in
      the light of the circumstances under which they were made, not misleading.
      No
      Parent Subsidiary is, or ever has been, required to file any form, report or
      other document with the Hong Kong Stock Exchange.

     

    
      
        
        

      

      
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    (b) Parent
      has not received any notice from the Hong Kong Securities and Futures Commission
      (the “SFC”)
      or the
      Hong Kong Stock Exchange alleging any breach or failure to comply, by it or
      any
      Parent Subsidiary, of or with any aspect of the HKSE Listing Rules or any rules,
      regulations or laws governing or applying to listed companies or companies
      which
      are members of a group of companies of which a member company has shares listed
      on the Hong Kong Stock Exchange, which remains subsisting and outstanding,
      and
      there are no circumstances or events based on which any such notice may be
      given.

     

    (c) Parent
      has filed all forms, reports and documents required to be filed by it with
      the
      Registry of Companies of Hong Kong since January 1, 2004 (collectively, the
      “Parent
      Hong Kong Filings”).
      The
      Parent Hong Kong Filings complied in all material respects in accordance with
      the requirements of the Companies Ordinance (Chapter 32) of Hong Kong, as
      amended from time to time (the “Hong
      Kong Companies Ordinance”),
      and,
      if applicable, the Securities and Futures Ordinance (Chapter 571) of Hong Kong,
      as amended from time to time (the “Hong
      Kong Securities Ordinance”).
      Parent has complied in all material respects with and is not in material breach
      of any conditions, requirements or other obligations imposed under the Hong
      Kong
      Companies Ordinance or the Hong Kong Securities Ordinance. Parent has filed
      all
      forms, reports and documents required to be filed by it with the Registrar
      of
      Companies in Bermuda or the Bermuda Monetary Authority since January 1, 2004
      (collectively, the “Parent
      Bermuda Filings”).
      The
      Parent Bermuda Filings complied in all material respects in accordance with
      the
      requirements of the Companies Act 1981 of Bermuda, as amended from time to
      time
      (the “Bermuda
      Companies Act”).
      Parent has complied in all material respects with and is not in material breach
      of any conditions, requirements or other obligations imposed under the Bermuda
      Companies Act or other requirements of Bermuda law.

     

    (d) Each
      of
      the consolidated financial statements (including, in each case, any notes
      thereto) contained in the Parent HKSE Reports was prepared in accordance with
      the Hong Kong Financial Reporting Standards (“HKFRS(s)”),
      Hong
      Kong Accounting Standards (“HKAS(s)”)
      and
      Interpretations (hereinafter collectively referred to as “HKFRS”)
      issued
      by the Hong Kong Institute of Certified Public Accounts applied on a consistent
      basis throughout the periods indicated (except as may be indicated in the notes
      thereto or, in the case of unaudited statements, as permitted under the HKSE
      Listing Rules and each truly and fairly presents, in all material respects,
      the
      consolidated financial position, results of operations and cash flows of Parent
      and its consolidated subsidiaries as at the respective dates thereof and for
      the
      respective periods indicated therein, except that the unaudited interim
      financial statements may not contain footnotes and as otherwise noted therein
      (subject, in the case of unaudited statements, to normal and year-end
      adjustments)).

     

    
      
        
        

      

      
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    (e) The
      consolidated financial statements of Parent have disclosed and made full
      provision or reserve for or notice all contingent, unquantified or disputed
      liabilities, capital or burdensome commitments. Except as and to the extent
      set
      forth on the consolidated balance sheet of Parent and the consolidated Parent
      Subsidiaries as at September 30, 2006,
      including the notes thereto, neither Parent nor any Parent Subsidiary has any
      liability, loan, guarantee, undertaking, commitments on capital account, unusual
      liabilities or obligation of any nature (whether accrued, absolute, contingent
      or otherwise) that would be required to be reflected on a balance sheet prepared
      in accordance with HKFRS, except for liabilities and obligations, incurred
      in
      the ordinary course of business and in a manner consistent with past practice
      since September 30, 2006, which, individually or in the aggregate, could not
      reasonably be expected to have a Parent Material Adverse Effect.

     

    (f) Parent
      has made available to the Company or its counsel all letters received by Parent
      from the Hong Kong Stock Exchange or the staff thereof since January 1, 2004
      and
      all responses to such letters filed by or on behalf of Parent.

     

    (g) Parent
      maintains a system of accounting established and administered in accordance
      with
      HKFRS. Parent and the Parent Subsidiaries maintain a system of internal
      accounting controls sufficient to provide reasonable assurance that (i)
      transactions are executed in accordance with management’s general or specific
      authorizations, (ii) transactions are recorded as necessary to permit
      preparation of financial statements in conformity with HKFRS and to maintain
      asset accountability, (iii) access to assets is permitted only in accordance
      with management’s general or specific authorization, and (iv) the recorded
      accountability for assets is compared with the existing assets at reasonable
      intervals and appropriate action is taken with respect to any
      differences.

     

    (h) Since
      January 1, 2004, neither Parent nor any Parent Subsidiary nor, to Parent’s
      knowledge, any director, officer, employee, auditor, accountant or
      representative of Parent or any Parent Subsidiary, has received or otherwise
      had
      or obtained knowledge of any written or formal complaint, allegation or claim
      regarding the accounting or auditing practices, procedures, methodologies or
      methods of Parent or any Parent Subsidiary or their respective internal
      accounting controls, including any complaint, allegation, assertion or claim
      that Parent or any Parent Subsidiary has engaged in questionable accounting
      or
      auditing practices. No attorney representing Parent or any Parent Subsidiary,
      whether or not employed by Parent or any Parent Subsidiary, has reported
      evidence of a material violation of securities laws, breach of fiduciary duty
      or
      similar violation by Parent or any of its officers, directors, employees or
      agents to the Parent Board or any committee thereof or to any director or
      officer of Parent. Since January 1, 2004, there have been no formal internal
      investigations regarding financial reporting or accounting policies and
      practices discussed with, reviewed by or initiated at the direction of the
      chief
      executive officer, chief financial officer, general counsel, the Parent Board
      or
      any committee thereof, other than ordinary course audits or reviews of
      accounting policies and practices or internal controls required by the HKSE
      Listing Rules.

     

    (i) To
      the
      knowledge of Parent, no employee of Parent or any Parent Subsidiary has provided
      or is providing information to any law enforcement agency regarding the
      commission or possible commission of any crime or the violation or possible
      violation of any applicable Law. Neither Parent nor any Parent Subsidiary nor
      any officer, employee, contractor, subcontractor or agent of Parent or any
      such
      Parent Subsidiary has discharged, demoted, suspended, threatened, harassed
      or in
      any other manner discriminated against an employee of Parent or any Parent
      Subsidiary in the terms and conditions of employment in violation of applicable
      PRC or Hong Kong law.

     

    
      
        
        

      

      
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    (j) There
      are
      no Liens, debentures, encumbrances or unusual liabilities given, made or
      incurred by or on behalf of Parent or any Parent Subsidiary (and, in particular
      but without limiting to the foregoing, no loans have been made by or on behalf
      of Parent or such Parent Subsidiary to any of its or directors or shareholders
      of other Parent Subsidiary) and no person has given any overdraft, loan or
      loan
      facility granted to Parent or such Parent Subsidiary.

     

    SECTION
      4.08 Absence
      of Certain Changes or Events.
      Since
      September 30, 2006, except as contemplated by this Agreement, (a) Parent and
      the
      Parent Subsidiaries have conducted their businesses only in the ordinary course
      of business and in a manner consistent with past practice, (b) there has not
      been any event, circumstance, change or effect that, individually or in the
      aggregate, has had, constitutes or could reasonably be expected to have, a
      Parent Material Adverse Effect, and (c) none of Parent or any Parent Subsidiary
      has taken any action that, if taken after the date of this Agreement, would
      constitute a material breach of any of the covenants set forth in Section 5.02.

     

    SECTION
      4.09 Absence
      of Litigation.
      There is
      no Action pending or, to the knowledge of Parent, threatened in writing against
      Parent or any Parent Subsidiary, or any property or asset of Parent or any
      Parent Subsidiary (including any of the Parent PRC Real Properties), before
      any
      Governmental Authority that (a) individually or in the aggregate, has had,
      or
      could reasonably be expected to have, a Parent Material Adverse Effect or (b)
      seeks to materially delay or prevent the consummation of any of the
      Transactions. Neither Parent nor any Parent Subsidiary nor any material property
      or asset of Parent or any Parent Subsidiary (including any of the Parent PRC
      Real Properties) is subject to any continuing order of, consent decree,
      settlement agreement or other similar written agreement with, or, to the
      knowledge of Parent, continuing investigation by, any Governmental Authority,
      or
      any order, writ, judgment, injunction, decree, determination or award of any
      Governmental Authority, that could reasonably be expected, individually or
      in
      the aggregate, to prevent or materially delay consummation of any of the
      Transactions or otherwise prevent or materially delay Parent from performing
      its
      obligations under this Agreement or could reasonably be expected, individually
      or in the aggregate, to have a Parent Material Adverse Effect.

     

    SECTION
      4.10 Employee
      Benefit Plans.
      u)
With
      respect to employee benefit plans that are subject to U.S. Law:

     

    (i) neither
      Parent, any Parent Subsidiary nor any Parent ERISA Affiliate maintains,
      contributes to, nor has any material obligation or liability with respect to,
      any employee benefit plan (as defined in Section 3(3) of ERISA, and whether
      or
      not subject to the requirements of ERISA), bonus, stock option, stock purchase,
      restricted stock, incentive, deferred compensation, retiree medical or life
      insurance, supplemental retirement, severance, or other material benefit plan
      (a
“Parent
      Plan”)
      which
      covers employees of operations within the United States that is subject to
      U.S.
      Law;

     

    
      
        
        

      

      
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    (ii) none
      of
      Parent, any Parent Subsidiary or any Parent ERISA Affiliate maintains,
      contributes or has any liability under or with respect to a Multiemployer Plan
      or a Multiple Employer Plan; and

     

    (iii) other
      than the employee benefit plans set out in this Section 4.10(a),
      Parent
      has no obligation (whether legally binding or established by custom) to pay
      any
      pension, allowance or gratuity or make any other payment on termination of
      service, death or retirement or to make any payment for the purpose of providing
      any similar benefits to or in respect of any person who is now or has been
      an
      officer or employee of Parent or any spouse or dependant of any such person
      and
      is not a party to any scheme or arrangement having as its purpose or one of
      its
      purposes the making of such payments or the provision of such
      benefits

     

    (b) With
      respect to each Plan that is not subject to U.S. Law (a “Non-U.S.
      Parent Plan”),
      Parent
      has made available to the Company or its counsel a true and complete copy of
      each Non-U.S. Parent Plan document and each material document, if any, prepared
      in connection with each Non-U.S. Parent Plan, including, but not limited to,
      a
      copy of the deed of trust, rules and all booklets and announcements describing
      the benefits (or any proposed changes to the benefits) of the relevant Non-U.S.
      Parent Plan and all other documents, records and materials relating to the
      establishment and operation of the Non-U.S. Parent Plan. With respect to each
      Non-U.S. Parent Plan:

     

    (i) each
      Non-U.S. Parent Plan has been maintained, funded and administered in compliance
      with all applicable Laws, except where such non-compliance could not reasonably
      be expected, individually or in the aggregate, to have a Parent Material Adverse
      Effect;

     

    (ii) Parent
      and the trustee of the relevant Non-U.S. Parent Plan have duly complied with
      their respective obligations under the trust deeds and rules thereof and under
      all relevant Laws and regulations;

     

    (iii) all
      recommendations in any reports, actuarial or otherwise, relating to the Non-U.S.
      Parent Plan which have been received by Parent or the trustees within the three
      years immediately preceding the date hereof have been complied with in
      full;

     

    (iv) all
      employer and employee contributions (including all mandatory social security
      contributions and statutory housing funds contribution) to each Non-U.S. Parent
      Plan required by Law or by the terms of such Non-U.S. Parent Plan have been
      made, or, if applicable, accrued in accordance with the standard accounting
      practices applicable in the local jurisdiction, and a pro rata contribution
      for
      the period prior to and including the date of this Agreement has been made
      or
      accrued;

     

    (v) the
      fair
      market value of the assets of each funded Non-U.S. Parent Plan, the liability
      of
      each insurer for any Non-U.S. Parent Plan funded through insurance or the book
      reserve established for any Non-U.S. Parent Plan, together with any accrued
      contributions, is sufficient to procure or provide for the benefits determined
      on an ongoing basis (actual or contingent) accrued to the date of this Agreement
      with respect to all current and former participants under such Non-U.S. Parent
      Plan according to the actuarial assumptions and valuations most recently used
      to
      determine employer contributions to such Non-U.S. Parent Plan, and no
      Transaction shall cause such assets or insurance obligations to be less than
      such benefit obligations; provided that a Non-U.S. Parent Plan that is
      maintained solely pursuant to applicable foreign Law and sponsored by a
      Governmental Authority shall not be subject to this paragraph;

     

    
      
        
        

      

      
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    (vi) none
      of
      the grants, subsidies, concessions and/or allowances that have been received
      by
      Parent or any Parent Subsidiary from any Governmental Authority are liable
      to be
      repaid or revoked in whole or in part as a result of the entry into or the
      completion of this Agreement or the Transactions;

     

    (vii) each
      Non-U.S. Parent Plan required to be registered has been registered and has
      been
      maintained in good standing with applicable regulatory authorities, and except
      as could not reasonably be expected, individually or in the aggregate, to have
      a
      Parent Material Adverse Effect, each Non-U.S. Parent Plan is now and always
      has
      been operated in compliance with all applicable non-United States
      Laws;

     

    (viii) all
      deductions and payments required to be made by Parent or any Parent Subsidiary
      in respect of Mandatory Provident Fund, Central Provident Scheme contributions,
      mandatory social security contributions or statutory housing fund contributions
      (including employer’s and employees’ contributions) in relation to the
      remuneration of its employees to any relevant competent authority have been
      so
      made; and

     

    (ix) except
      as
      set forth in Section 4.10(b)(vii)
      of the
      Parent Disclosure Schedule, none of the Non-U.S. Parent Plans (A) provides
      for
      the payment of material separation, severance, termination or similar-type
      benefits to any person, (B) obligates Parent or any Parent Subsidiary to pay
      material separation, severance, redundancy, termination, long service payment
      or
      similar-type benefits solely or partially as a result of any Transaction, or
      (C)
      obligates Parent or any Parent Subsidiary to make any material payment or
      provide any material benefit as a result of a change in control under applicable
      Law. None of the Non-U.S. Parent Plans provides for or promises material retiree
      medical, disability or life insurance benefits to any current or former
      employee, officer or director of Parent or any Parent Subsidiary, except as
      required by applicable Law.

     

    SECTION
      4.11 Labor
      and Employment Matters.
      v)
      Except as set forth in Section 4.11
      of the
      Parent Disclosure Schedule or as could not reasonably be expected, individually
      or in the aggregate, to prevent or materially delay consummation of any of
      the
      Transactions or otherwise prevent or materially delay Parent or Merger Sub
      from
      performing its obligations under this Agreement and could not reasonably be
      expected, individually or in the aggregate, to have a Parent Material Adverse
      Effect:

     

    (i) there
      are
      no controversies, charges and proceedings pending or, to the knowledge of
      Parent, threatened between Parent or any Parent Subsidiary and any of their
      respective employees;

     

    
      
        
        

      

      
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    (ii) neither
      Parent nor any Parent Subsidiary is a party to or is bound by any collective
      bargaining agreement or other similar agreement with any labor organization
      applicable to persons employed by Parent or any Parent Subsidiary, nor, to
      the
      knowledge of Parent, are there any activities or proceedings of any labor union
      to organize any such employees;

     

    (iii) there
      are
      no unfair labor practice complaints pending against Parent or any Parent
      Subsidiary before the National Labor Relations Board or similar Government
      Authority or any current union representation questions involving employees
      of
      Parent or any Parent Subsidiary; and

     

    (iv) there
      is
      no strike, slowdown, work stoppage or lockout, or, to the knowledge of Parent,
      threat thereof, by or with respect to any employees of Parent or any Parent
      Subsidiary.

     

    (b) Except
      as
      could not reasonably be expected, individually or in the aggregate, to prevent
      or materially delay consummation of any of the Transactions or otherwise prevent
      or materially delay Parent or Merger Sub from performing its obligations under
      this Agreement and could not reasonably be expected, individually or in the
      aggregate, to have a Parent Material Adverse Effect:

     

    (i) Parent
      and the Parent Subsidiaries are in compliance with all applicable laws relating
      to the employment of labor, including those related to wages, hours, collective
      bargaining, labor relations, immigration, employment and employment practices,
      the terms and condition of employment, employment standards, equal employment
      opportunity, family and medical leave, occupational health and safety and the
      payment and withholding of taxes and other sums as required by the appropriate
      Governmental Authority and have withheld and paid to the appropriate
      Governmental Authority or are holding for payment not yet due to such
      Governmental Authority all amounts required to be withheld from employees of
      Parent or any Parent Subsidiary and are not liable for any arrears of wages,
      taxes, penalties or other sums for failure to comply with any of the
      foregoing;

     

    (ii) Parent
      and the Parent Subsidiaries have paid in full to all employees or adequately
      accrued for in accordance with HKFRS consistently applied and, in respect of
      the
      Parent PRC Subsidiaries, the applicable Laws of the PRC, all wages, salaries,
      commissions, bonuses, benefits and other compensation due to or on behalf of
      such employees and there is no claim with respect to payment of wages, salary,
      overtime pay or damages for wrongful or unreasonable dismissal that has been
      asserted or is now pending or threatened before any Governmental Authority
      with
      respect to any persons currently or formerly employed by Parent or any Parent
      Subsidiary, and no circumstances have arisen under which Parent and the Parent
      Subsidiaries are likely to be required to make any statutory severance,
      redundancy, long service payment and any other payment or compensation under
      any
      employment protection legislation to any current or former
      employees;

     

    
      
        
        

      

      
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    (iii) neither
      Parent nor any Parent Subsidiary is a party to, or otherwise bound by, any
      consent decree with, or citation by, any Governmental Authority relating to
      employees or employment practices;

     

    (iv) neither
      Parent nor any Parent Subsidiary has given notice of any redundancies or layoffs
      nor started consultations with any independent trade union or employees’
representatives regarding redundancies, layoffs or dismissals within the period
      of one year prior to the date hereof;

     

    (v) no
      circumstances have arisen under which Parent or any Parent Subsidiary is likely
      to be required to pay damages for wrongful dismissal, to make any statutory
      severance, redundancy or long service payment or to make or pay any compensation
      for unreasonable dismissal or to make any other payment under any employment
      protection Laws or to reinstate or re-engage any former employee;

     

    (vi) there
      is
      no charge or proceeding with respect to a violation of any occupational safety
      or health standards that has been asserted or is now pending or threatened
      with
      respect to Parent or any Parent Subsidiary; and during the six-month period
      prior to the date hereof, neither Parent nor any Parent Subsidiary has
      effectuated a “plant closing” (as defined in the WARN Act) affecting any site of
      employment, facility or operating unit of Parent or any Parent Subsidiary;
      nor
      has Parent or any Parent Subsidiary been affected by any transaction or engaged
      in layoffs or employment terminations sufficient in number to trigger
      applications of any similar Law;

     

    (vii) there
      is
      no charge of discrimination in employment or employment practices, for any
      reason, including, without limitation, age, gender, race, religion or other
      legally protected category, which has been asserted or is now pending or
      threatened before any Governmental Authority in any jurisdiction in which Parent
      or any Parent Subsidiary has employed or employs any person or in Hong Kong
      under the Sex Discrimination Ordinance, the Disability Discrimination Ordinance,
      the Family Status Discrimination Ordinance or any other Laws conferring
      protection against discrimination, harassment, victimisation or vilification
      by
      reason of age, gender, family circumstances, race, religion or
      disability.

     

    SECTION
      4.12 Real
      Property; Title to Assets. i)
      Section 4.12(a)
      of the
      Parent Disclosure Schedule lists each parcel of real property (including any
      of
      the Parent PRC Real Properties) currently owned by Parent or any Parent
      Subsidiary or owned by Parent or any Parent Subsidiary after January 1, 2004.
      Each parcel of real property owned by Parent or any Parent Subsidiary (i) is
      owned free and clear of all Liens, other than Permitted Liens and Liens
      reflected on the Parent’s balance sheet as of September 30, 2006, and (ii) is
      neither subject to any governmental decree or order to be sold nor is being
      condemned, expropriated or otherwise taken by any public authority with or
      without payment of compensation therefor, nor, to the knowledge of Parent,
      has
      any such condemnation, expropriation or taking been proposed. Parent has made
      available to the Company or its counsel copies of each deed or similar title
      documents including land use right certificate and building ownership
      certificate for each parcel of real property (including any of the Parent PRC
      Real Properties) and all relevant approval, permits and certificates (including
      without limitation construction land use planning permit, construction land
      use
      approval, commencement of construction work permit, construction safety and
      quality inspection certificate and construction completion examination and
      acceptance certificate). Policies of title have been issued by title insurance
      companies for the insurance of the interest of the fee owner for each parcel
      of
      real property owned by Parent or any Parent Subsidiary (the “Parent
      Title Policies”),
      such
      Parent Title Policies are valid and in full force and effect and no claim has
      been made under any such policy. Parent has made available to the Company true
      and complete copies of all Parent Title Policies, if any, in the possession
      of
      Parent.

     

    
      
        
        

      

      
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    (b) Section 4.12(b)
      of the
      Parent Disclosure Schedule lists each parcel of real property currently leased,
      subleased or used on any other basis by Parent or any Parent Subsidiary, with
      the name of the lessor and the date of the lease, sublease, license, assignment
      of the lease or any other agreement by the Parent or any Parent Subsidiary,
      any
      guaranty given or leasing commissions payable by Parent or any Parent Subsidiary
      in connection therewith and each amendment to any of the foregoing and, in
      respect of each parcel of real property leased or subleased by Parent or any
      Parent Subsidiary, any relevant land use right certificates, building ownership
      certificates and/or other permits (collectively, the “Parent
      Use Documents”).
      True,
      correct and complete copies of all Parent Use Documents have been made available
      to the Company or its counsel. All such current Parent Use Documents are in
      full
      force and effect, are valid and effective in accordance with their respective
      terms, and there is not, under any of such Parent Use Documents, any existing
      material default or event of default (or event which, with notice or lapse
      of
      time, or both, would constitute a default) by Parent or any Parent Subsidiary
      or, to Parent’s knowledge, by the other party to such Parent Use
      Documents.
      Parent’s
      or a Parent’s Subsidiary’s possession and quiet enjoyment of such leased or
      subleased property have not been disturbed, and to the knowledge of Parent,
      there are no disputes with respect to the same. All rent and other payments
      owing by Parent or any Parent Subsidiary under such Parent Use Documents has
      been paid in full through up to and including March 31, 2007. Other than
      specified in Section 4.12(b),
      neither
      Parent, nor to Parent’s knowledge, any Parent Subsidiary, has received any
      written notice to the effect that any such current Parent Use Documents will
      not
      be renewed or is not subject to renewal at the termination of the term thereof
      or that any such Parent Use Documents will be renewed at a substantially higher
      rent or substantially higher cost. Neither Parent nor any Parent Subsidiary
      has
      subleased, licensed or otherwise granted to any entity or individual the right
      to use or occupy such leased or subleased premises, or any portion
      thereof.

     

    (c) Except
      as
      could not reasonably be expected, individually or in the aggregate, to prevent
      or materially delay consummation of any of the Transactions or otherwise prevent
      or materially delay Parent from performing its obligations under this Agreement
      and could not reasonably be expected, individually or in the aggregate, to
      have
      a Parent Material Adverse Effect: (i) there are no contractual or legal
      restrictions that preclude or restrict the ability to use any real property
      owned or leased by Parent or any Parent Subsidiary for the purposes for which
      it
      is currently being used; (ii) there are no material latent defects or material
      adverse physical conditions affecting the real property, and improvements
      thereon, owned, leased or used on any other basis by Parent or any Parent
      Subsidiary; (iii) neither Parent nor any Parent Subsidiary has received written
      notice from any Governmental Authority or other entity having jurisdiction
      over
      any property owned, leased or used on any other basis by Parent or any Parent
      Subsidiary or any portion thereof describing the violation of any Laws relating
      to permits or any property restrictions or other Liens affecting the same;
      (iv)
      Parent has obtained and maintained, or caused the Parent Subsidiaries to obtain
      and maintain, all permits (including, without limitation, Parent Permits),
      consents, licenses, concessions, certificates of compliance, approvals,
      authorizations and agreements from third parties (including, without limitation,
      water rights) necessary for the operation of the real property owned or leased
      by Parent or any Parent Subsidiary, all of which are in full force and effect,
      and neither Parent nor any Parent Subsidiary has received any written notice
      from any Governmental Authority or other entity having jurisdiction over any
      property owned, leased or used on any other basis by Parent or any Parent
      Subsidiary or any portion thereof describing a violation of or threatening
      a
      suspension, revocation, modification or cancellation of any such permit,
      consent, license, concession, certificate of compliance, approval, authorization
      or agreement; (v) there are no pending or, to Parent’s knowledge, threatened
      fire, health, safety, building, zoning, land use, assessment, or similar
      proceedings relating to the real property owned, leased or used on any other
      basis by Parent or any Parent Subsidiary; (vi) except as set forth in
Section 4.12(c)
      of the
      Parent Disclosure Schedule, there are no parties other than Parent or a Parent
      Subsidiary in possession of the real property owned, leased or used on any
      other
      basis by Parent or any Parent Subsidiary and there are no sublease, concession,
      occupancy, license or similar arrangements affecting any such property; (vii)
      no
      construction, improvements, or alterations, the cost of which exceeds
      US$1,000,000, are in process, under construction, planned or required at any
      real property owned or leased by Parent or any Parent Subsidiary; and (viii)
      no
      portion of the real property owned or leased by Parent or any Parent Subsidiary
      or any improvements or buildings thereon has suffered any damage by fire,
      earthquake, flood or other casualty which has not heretofore been repaired
      and
      restored to operational use and in accordance with applicable Laws and the
      requirements of any lease.

     

    
      
        
        

      

      
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    (d) Each
      of
      Parent and the Parent Subsidiaries has good and valid title to, or, in the
      case
      of leased properties and assets, valid leasehold or subleasehold interests
      in,
      or in the case of real property and assets used on any other basis, valid use
      rights to, all of its properties and assets, tangible and intangible, real,
      personal and mixed, used or held for use in its business (including any of
      the
      Parent PRC Real Properties), free and clear of any Liens, except for Permitted
      Liens. All assets and inventory are in good condition and of merchantable
      quality and capable of being sold by Parent or any Parent Subsidiary in the
      ordinary course of business to a purchaser in accordance with its list prices
      without rebate or allowance. All tangible assets are in the possession or under
      the control of Parent or Parent Subsidiary. Neither the construction,
      positioning or use of any of Parent’s or Parent Subsidiary’s assets, nor the
      assets themselves, contravene any relevant provision of any Laws. All such
      assets owned or used by Parent or Parent Subsidiary are in good repair and
      capable of being used for the purposes for which they are designed, acquired
      or
      used by Parent or Parent Subsidiary and have throughout their period of
      ownership by Parent or Parent Subsidiary been properly maintained and
      serviced.

     

    SECTION
      4.13 Intellectual
      Property.
      w)
      Except as could not reasonably be expected, individually or in the aggregate,
      to
      prevent or materially delay consummation of any of the Transactions or otherwise
      prevent or materially delay Parent from performing its obligations under this
      Agreement and could not reasonably be expected, individually or in the
      aggregate, to have a Parent Material Adverse Effect:

     

    (i) Parent
      and the Parent Subsidiaries own or are licensed to use all Intellectual Property
      used in or necessary for the conduct of their respective businesses as currently
      conducted;

     

    
      
        
        

      

      
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    (ii) to
      the
      knowledge of Parent, the conduct of the business of Parent and the Parent
      Subsidiaries as currently conducted does not infringe upon or misappropriate
      the
      Intellectual Property rights of any third party;

     

    (iii) there
      are
      no claims or suits pending or, to the knowledge of the Parent and except as
      set
      forth in Section 4.13(a)(iii)
      of the
      Parent Disclosure Schedule, threatened against Parent or any Parent Subsidiary
      (A) alleging that the conduct of the business of Parent or any Parent Subsidiary
      as currently conducted infringes upon or misappropriates the Intellectual
      Property rights of any third party or (B) challenging the ownership, use,
      validity or enforceability of any item of Intellectual Property owned by Parent
      or a Parent Subsidiary (“Parent
      Owned Intellectual Property”);

     

    (iv) with
      respect to Parent Owned Intellectual Property, Parent or a Parent Subsidiary
      is
      the owner of the entire right, title and interest in and to such Parent Owned
      Intellectual Property, free and clear of all liens, encumbrances and other
      restrictions, and is entitled to use such Parent Owned Intellectual Property
      in
      the continued operation of its respective business;

     

    (v) each
      of
      Parent and Parent Subsidiary has taken all steps open to it to preserve the
      Parent Owned Intellectual Property. Without limitation, all renewal fees
      regarding the Parent Owned Intellectual Property due on or before the Effective
      Time have been paid in full;

     

    (vi) neither
      Parent nor any Parent Subsidiary has entered into any agreement, arrangement
      or
      understanding (whether legally enforceable or not) for the licensing, or
      otherwise permitting the use or exploitation, of the Parent Owned Intellectual
      Property or which prevents, restricts or otherwise inhibits Parent’s or the
      relevant Parent Subsidiary’s freedom to use and exploit the Parent Owned
      Intellectual Property;

     

    (vii) there
      are
      no settlements, forbearances to sue, consents, judgments, orders or similar
      obligations which (A) restrict the business of Parent or any Parent Subsidiary
      in or under any Intellectual Property rights of any third party; or (B) permit
      any third party to use any Parent Owned Intellectual Property;

     

    (viii) Section 4.13(a)(viii)
      of the
      Parent Disclosure Schedule sets forth each item of material Intellectual
      Property licensed to Parent or a Parent Subsidiary (“Parent
      Licensed Intellectual Property”),
      and
      Parent or a Parent Subsidiary has the right to use such Parent Licensed
      Intellectual Property in the continued operation of its respective business
      in
      accordance with the terms of the license agreement governing such Parent
      Licensed Intellectual Property and Parent and the Parent Subsidiaries have
      used
      such Parent Licensed Intellectual Property in accordance with the terms of
      such
      license agreement;

     

    (ix) to
      the
      knowledge of Parent, the Parent Owned Intellectual Property has not been
      adjudged invalid or unenforceable in whole or in part, and to the knowledge
      of
      Parent, is valid and enforceable;

     

    
      
        
        

      

      
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    (x) to
      the
      knowledge of Parent, no person is engaging in any activity that infringes upon
      or misappropriates the Parent Owned Intellectual Property;

     

    (xi) each
      license of the Parent Licensed Intellectual Property is valid and enforceable,
      is binding on all parties to such license, and is in full force and
      effect;

     

    (xii) to
      the
      knowledge of Parent, no party to any license of the Parent Licensed Intellectual
      Property is in breach thereof or default thereunder; and

     

    (xiii) to
      the
      knowledge of Parent, neither the execution of this Agreement nor the
      consummation of any Transaction will adversely affect any of Parent’s or Parent
      Subsidiaries’ rights with respect to the Parent Owned Intellectual Property or
      the Parent Licensed Intellectual Property.

     

    (b) Neither
      Parent nor any Parent Subsidiary has agreed to indemnify any third party for
      or
      against any infringement or misappropriation with respect to any third party
      Intellectual Property other than in the ordinary course of
      business.

     

    (c) The
      consummation of the Transactions will not result in Parent or any Parent
      Subsidiary being bound by any non-compete or other restriction on the operation
      of any business of Parent or any Parent Subsidiary, or in the grant by Parent
      or
      any Parent Subsidiary of any rights or licenses to any Parent Owned Intellectual
      Property.

     

    (d) Parent
      or
      any Parent Subsidiary has not licensed any Parent Owned Intellectual Property
      to
      any third party other than in the ordinary course of business.

     

    SECTION
      4.14 Taxes.  x)
      Parent
      and the Parent Subsidiaries have filed all material Tax Returns required to
      be
      filed by them and have paid and discharged all material Taxes required to be
      paid or discharged, other than such payments as are being contested in good
      faith by appropriate proceedings. All such Tax Returns are true, accurate and
      complete in all material respects. No taxing authority or agency is now
      asserting against Parent or any Parent Subsidiary any material deficiency or
      claim for any Taxes or interest thereon or penalties in connection therewith.
      The accruals and reserves for Taxes reflected in the consolidated balance sheet
      of Parent and the consolidated Parent Subsidiaries as at September 30, 2006
      have
      been prepared in accordance with HKFRS. There are no material Tax liens upon
      any
      property or assets of Parent or any of the Parent Subsidiaries (including any
      of
      the Parent PRC Real Properties) except liens for current Taxes not yet
      due.

     

    (b) No
      audit
      or other proceeding by any taxing authority is pending with respect to any
      material Taxes due from or with respect to Parent or any Parent Subsidiary.
      No
      taxing authority has given written notice of its intention to assert any
      deficiency or claim for additional material Taxes against Parent or any Parent
      Subsidiary.

     

    SECTION
      4.15 Environmental
      Matters.
      Except
      as could not reasonably be expected, individually or in the aggregate, to
      prevent or materially delay consummation of any of the Transactions or otherwise
      prevent or materially delay Parent from performing its obligations under this
      Agreement and except as could not reasonably be expected, individually or in
      the
      aggregate, to have a Parent Material Adverse Effect:

     

    
      
        
        

      

      
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    (a) neither
      Parent nor any Parent Subsidiary has violated or is in violation of any
      Environmental Law and neither Parent nor any Parent Subsidiary has received
      any
      written communication from a Governmental Agency or person alleging any actual
      or potential liability of, or any actual or potential violation by, Parent
      or
      any Parent Subsidiary arising under any Environmental Law;

     

    (b) none
      of
      the properties currently owned (including any of the Parent PRC Real
      Properties), leased or operated by Parent or any Parent Subsidiary or formerly
      owned, leased or operated by Parent or any Parent Subsidiary (including, without
      limitation, soils and surface and groundwaters) are or have been contaminated
      with any Hazardous Substance, which contamination requires investigation or
      remediation under any Environmental Law, or has given rise to or would
      reasonably be expected to give rise to liability or obligations (including
      any
      investigatory, reporting or remedial obligation) under any Environmental
      Law;

     

    (c) neither
      Parent nor any Parent Subsidiary has stored, handled, treated, disposed of,
      arranged for the disposal of, transported or released any Hazardous Substance
      at
      any property or facility, including, without limitation, any offsite location,
      and neither Parent nor any Company Subsidiary has or has allegedly exposed
      any
      person to any Hazardous Substance, so as to give rise to a requirement for
      investigation or remediation under any Environmental Law or so as to give rise
      to any current or reasonably expected future liability or obligation (including
      any investigatory, reporting or remedial obligation) under any Environmental
      Law;

     

    (d) Parent
      and the Parent Subsidiaries have all Environmental Permits required under any
      Environmental Law and Parent and the Parent Subsidiaries are in compliance
      with,
      and have no current or pending liability or obligation associated with any
      past
      non-compliance with, such permits, licenses and other
      authorizations;

     

    (e) neither
      the execution of this Agreement nor the consummation of the Transactions will
      require any investigation, remediation or other action with respect to Hazardous
      Substances, or any notice to or consent of Governmental Authorities or third
      parties, pursuant to any applicable Environmental Law;

     

    (f) neither
      Parent nor any Parent Subsidiary has designed, manufactured, installed,
      marketed, sold, handled or distributed asbestos or any asbestos-containing
      product or asbestos-containing material, and no basis in fact or Law, or under
      contract or lease agreement, exists upon which any claim of liability could
      be
      asserted against Parent or any Parent Subsidiary relating to asbestos,
      asbestos-containing products or asbestos-containing materials located at any
      property or facility;

     

    (g) neither
      Parent nor any Parent Subsidiary has received any notification pursuant to
      any
      Environmental Laws that (i) any work, repairs, corrective or remedial action,
      construction or capital expenditures are required to be made as a condition
      of
      continued compliance with any Environmental Laws or any license, permit or
      approval issued pursuant thereto; (ii) any license, permit or approval is about
      to be reviewed, made subject to limitations or conditions, revoked, withdrawn
      or
      terminated; or (iii) any events, conditions, circumstances, activities,
      practices, incidents, actions or omissions may interfere with or prevent
      compliance or continued compliance with any Environmental Law; and

     

    
      
        
        

      

      
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    (h) Parent
      has made available to the Company or its counsel all environmental reports,
      assessments, investigations, Environmental Permits, correspondence or other
      material environmental documents relating to its business or to Parent or the
      Parent Subsidiaries, or to their respective affiliates’ or predecessors’
properties, facilities or operations.

     

    SECTION
      4.16 Material
      Contracts.
      y)
      Subsections (i)
      through
(xiv)
      of
Section 4.16(a)
      of the
      Parent Disclosure Schedule list all contracts, arrangements, commitments and
      agreements of the types listed in subsections (i)
      through
(xiv)
      to which
      Parent or any Parent Subsidiary is a party (such contracts, arrangements,
      commitments and agreements as are required to be set forth in Section 4.16(a)
      of the
      Parent Disclosure Schedule being the “Material
      Parent Contracts”):

     

    (i) each
      “material contract” (as such term is defined in Item 601(b)(10) of Regulation
      S-K and Item 601(b)(10) of Regulation S-B of the SEC) with respect to Parent
      and
      the Parent Subsidiaries;

     

    (ii) each
      contract and agreement that is likely to involve consideration of more than
      US$100,000 (including sale and supply contracts between the Parent PRC
      Subsidiaries and their customers), in the aggregate, over the remaining term
      of
      such contract or agreement, other than purchase orders entered into in the
      ordinary course of business and in a manner consistent with past
      practice;

     

    (iii) each
      contract and agreement evidencing outstanding indebtedness in a principal amount
      of US$100,000 or more;

     

    (iv) all
      leases of real property leased for the use or benefit of Parent or any Parent
      Subsidiary;

     

    (v) all
      land
      grant contracts, land transfer contracts or other relevant contracts pursuant
      to
      which the Parent PRC Subsidiaries are entitled to use and occupy the Parent
      PRC
      Real Properties;

     

    (vi) all
      material contracts and agreements with any Governmental Authority to which
      Parent or any Parent Subsidiary is a party;

     

    (vii) all
      contracts and agreements that limit, or purport to limit, the ability of Parent
      or any Parent Subsidiary to compete in any line of business or with any person
      or entity or in any geographic area or during any period of time;

     

    (viii) all
      contracts and agreements providing for benefits under any Parent
      Plan;

     

    (ix) all
      contracts for employment required to be listed in Section 4.10
      of the
      Parent Disclosure Schedule;

     

    (x) each
      joint venture, partnership, strategic alliance and similar agreement to which
      Parent or any Parent Subsidiary is a party, which is material to Parent or
      any
      Parent Subsidiary or which provides for the ownership of any equity interest
      in
      any person or entity;

     

    
      
        
        

      

      
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    (xi) all
      material broker, distributor, dealer, manufacturer’s representative, franchise,
      agency, sales promotion, market research, marketing consulting and advertising
      contracts and agreements to which Parent or any Parent Subsidiary is a
      party;

     

    (xii) all
      management contracts (excluding contracts for employment) and contracts with
      other consultants, including any contracts involving the payment of royalties
      or
      other amounts calculated based upon the revenues or income of Parent or any
      Parent Subsidiary or income or revenues related to any product or service of
      Parent or any Parent Subsidiary to which Parent or any Parent Subsidiary is
      a
      party;

     

    (xiii) all
      licenses or sublicenses of Intellectual Property to which Parent or any Parent
      Subsidiary is a party and that are material to the business of Parent or any
      Parent Subsidiary; and

     

    (xiv) all
      other
      contracts and agreements that are material to Parent and the Parent
      Subsidiaries, taken as a whole, or the absence of which could reasonably be
      expected, individually or in the aggregate, to have a Parent Material Adverse
      Effect.

     

    (b) Except
      as
      could not reasonably be expected, individually or in the aggregate, to prevent
      or materially delay consummation of any of the Transactions or otherwise prevent
      or materially delay Parent or Merger Sub from performing its obligations under
      this Agreement and could not reasonably be expected, individually or in the
      aggregate, to have a Parent Material Adverse Effect:

     

    (i) each
      Material Parent Contract is a legal, valid and binding agreement, subject to
      the
      effect of any applicable bankruptcy, insolvency (including, without limitation,
      all laws relating to fraudulent transfers), reorganization, moratorium or
      similar laws affecting creditors’ rights generally and subject to the effect of
      general principles of equity (regardless of whether considered in a proceeding
      at law or in equity);

     

    (ii) Parent
      or
      Parent Subsidiary has duly performed and complied in all material respects
      with
      each of its obligations thereunder;

     

    (iii) neither
      Parent nor any Parent Subsidiary has received any claim of default under any
      Material Parent Contract and neither Parent nor any Parent Subsidiary is in
      breach or violation of, or default under, any Material Parent
      Contract;

     

    (iv) there
      are
      no grounds for rescission, avoidance, repudiation or termination of any Material
      Parent Contract;

     

    (v) to
      Parent’s knowledge, no other party is in breach or violation of, or default
      under, any Material Parent Contract; and

     

    
      
        
        

      

      
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    (vi) neither
      the execution of this Agreement nor the consummation of any Transaction shall
      constitute a default under, give rise to cancellation rights under or otherwise
      adversely affect any of the material rights of Parent or any Parent Subsidiary
      under any Material Parent Contract.

     

    (c) There
      are
      no contracts or obligations, agreements, arrangements or concerted practices
      to
      which Parent or any Parent Subsidiary is a party or by which Parent or such
      Parent Subsidiary is bound, and there are no practices in which Parent or any
      Parent Subsidiary is engaged, which are void, illegal, unenforceable,
      registrable or notifiable under or which contravene any applicable Laws. Parent
      has made available to the Company or its counsel true and complete copies of
      all
      Material Parent Contracts, including any amendments thereto.

     

    SECTION
      4.17 Insurance.
      Parent
      and the Parent Subsidiaries maintain insurance coverage with reputable insurers
      in such amounts and covering such risks as are in accordance with normal
      industry practice for companies engaged in businesses similar to that of Parent
      and the Parent Subsidiaries (taking into account the cost and availability
      of
      such insurance). Nothing has been done or omitted to be done by or on behalf
      of
      Parent or any Parent Subsidiary which would make any policy of insurance void
      or
      voidable or enable the insurers to avoid the same and there is no claim
      outstanding under any such policy and Parent is not aware of any circumstances
      likely to give rise to such a claim or result in an increased rate of
      premium.

     

    SECTION
      4.18 Board
      Approval; Vote Required.
      z) The
      Parent Board, by resolutions duly adopted by unanimous vote of those members
      of
      the Parent Board voting at a meeting duly called and held and not subsequently
      rescinded or modified in any way, has duly (i) determined that this Agreement,
      the Merger and other Transactions, the Share Issuance, the New Stock Option
      Plans Adoption, the Parent Board Appointments and the other transactions and
      related agreements contemplated thereby are fair to and in the best interests
      of
      Parent and its shareholders, (ii) approved this Agreement, the Merger and other
      Transactions, the Share Issuance, the New Stock Option Plans Adoption, the
      Parent Board Appointments and the other Transactions and related agreements
      contemplated thereby and (iii) recommended that the shareholders of Parent
      Ordinary Shares approve this Agreement, the Merger and other Transactions,
      the
      Share Issuance, the New Stock Option Plans Adoption and the Parent Board
      Appointments and directed that this Agreement, the Merger and other
      Transactions, the Share Issuance, the New Stock Option Plans Adoption and the
      Parent Board Appointments be submitted for consideration by the holders of
      Parent Ordinary Shares at the Parent Shareholders’ Meeting (as defined in
Section 6.01(b)).

     

    (b) The
      only
      vote of the holders of any class or series of shares or other securities of
      Parent necessary to approve this Agreement, the Merger and other Transactions,
      the Share Issuance, the New Stock Option Plans Adoption and the Parent Board
      Appointments is the affirmative vote of a majority of the votes cast with
      respect to the approval of this Agreement, the Merger and other Transactions,
      the Share Issuance, the New Stock Option Plans Adoption and the Parent Board
      Appointments (the “Parent
      Shareholders’ Approval”)
      at a
      duly called Parent Shareholders’ Meeting consisting of a quorum of shareholders
      of Parent (or any adjournment or postponement thereof).

     

    
      
        
        

      

      
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    SECTION
      4.19 Certain
      Business Practices.
      None of
      Parent, any Parent Subsidiary or, to Parent’s knowledge, any directors or
      officers, agents or employees of Parent or any Parent Subsidiary has (a) used
      any funds for unlawful contributions, gifts, entertainment or other unlawful
      expenses related to political activity or for the purpose of securing any
      contract for Parent or any Parent Subsidiary; (b) made any unlawful payment
      to
      foreign or domestic government officials or employees or to foreign or domestic
      political parties or campaigns or established or maintained any unlawful or
      unrecorded fund of group moneys or other assets or made any false or fictitious
      entries on the books or records of Parent or any Parent Subsidiary); or (c)
      made
      any payment in the nature of criminal bribery.

     

    SECTION
      4.20 Interested
      Party Transactions.
      Except
      for any agreement or arrangement that has involved or will involve consideration
      of less than US$50,000 during any calendar year, no director, officer or other
      affiliate of Parent or any Parent Subsidiary (a) has purchased, purchases or
      will purchase from, or has sold, sells or will sell or has furnished, furnishes
      or will furnish to, Parent or any Parent Subsidiary, any goods or services,
      (b)
      is or has been a party to any contract or agreement disclosed in Section 4.16
      of the
      Parent Disclosure Schedule, or (c) had or has any contractual or other
      arrangement with Parent or any Parent Subsidiary. Parent and the Parent
      Subsidiaries have not, since January 1, 2004, (i) extended or maintained credit,
      arranged for the extension of credit or renewed an extension of credit in the
      form of a personal loan to or for any director or executive officer (or
      equivalent thereof) of Parent, or (ii) materially modified any term of any
      such
      extension or maintenance of credit.

     

    SECTION
      4.21 Operations
      of Merger Sub.
      Merger
      Sub is a wholly owned subsidiary of Parent, was formed solely for the purpose
      of
      engaging in the Transactions, has engaged in no other business activities and
      has conducted its operations only as contemplated by this
      Agreement.

     

    SECTION
      4.22 Ownership
      of Company Capital Stock.
      As of
      the date of this Agreement, neither Parent nor any Parent Subsidiary is the
      beneficial owner of any shares of capital stock of the Company.

     

    SECTION
      4.23 Brokers.
      No
      broker, finder or investment banker (other than Altus Capital Limited) is
      entitled to any brokerage, finder’s or other fee or commission in connection
      with the Transactions based upon arrangements made by or on behalf of Parent
      or
      Merger Sub.

     

    ARTICLE
      V

     

    CONDUCT
      OF BUSINESS PENDING THE MERGER

     

    SECTION
      5.01 Conduct
      of Business by the Company Pending the Merger.
      aa) The
      Company agrees that, between the date of this Agreement and the earlier of
      the
      Effective Time and the termination of this Agreement pursuant to Article VIII,
      except
      as set forth in Section 5.01
      of the
      Company Disclosure Schedule or as expressly contemplated by any other provision
      of this Agreement, unless Parent shall otherwise consent in writing (which
      consent shall not be unreasonably withheld or delayed):

     

    
      
        
        

      

      
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    (i) the
      Company shall, and shall cause each Company Subsidiary to, conduct the business
      of the Company and the Company Subsidiaries, in all respects material to the
      Company and the Company Subsidiaries, taken as a whole, in the ordinary course
      of business and in a manner consistent with past practice; and

     

    (ii) the
      Company shall, and shall cause each Company Subsidiary to, use its reasonable
      efforts to preserve substantially intact the business organization of the
      Company and the Company Subsidiaries, to keep available the services of the
      current officers, employees and consultants of the Company and the Company
      Subsidiaries and to preserve the current relationships of the Company and the
      Company Subsidiaries with customers, suppliers and other persons with which
      the
      Company or any Company Subsidiary has significant business
      relations.

     

    (b) By
      way of
      amplification and not limitation of Section 5.01(a),
      except
      as contemplated by any other provision of this Agreement or as set forth in
      Section 5.01
      of the
      Company Disclosure Schedule, neither the Company nor any Company Subsidiary
      shall, between the date of this Agreement and the earlier of the Effective
      Time
      and the termination of this Agreement pursuant to Article VIII,
      directly or indirectly, do, or propose to do, any of the following without
      the
      prior written consent of Parent (which consent shall not be unreasonably
      withheld or delayed):

     

    (i) amend
      or
      otherwise change its Articles of Incorporation or By-laws or equivalent
      organizational documents;

     

    (ii) issue,
      sell, pledge, dispose of, grant or encumber, or authorize the issuance, sale,
      pledge, disposition, grant or encumbrance of, (A) any shares of any class of
      capital stock of the Company or any Company Subsidiary, or any options,
      warrants, convertible securities or other rights of any kind to acquire any
      shares of such capital stock, or any other ownership interest (including,
      without limitation, any phantom interest), of the Company or any Company
      Subsidiary (except for the issuance of shares of Company Common Stock issuable
      pursuant to currently outstanding employee stock options or shares of Company
      Common Stock issuable pursuant to the terms of the Company Additional Share
      and
      Warrant Obligations, Company Convertible Notes or Company Warrants outstanding
      on the date hereof, in the ordinary course of business and in a manner
      consistent with past practice in accordance with the terms of the Company Stock
      Option Plans, Company Additional Share and Warrant Obligations, Company
      Convertible Notes or Company Warrants as in effect as of the date hereof or
      the
      issuance of shares of Company Common Stock to holders of Company Stock Options
      in consideration for the termination or amendment of outstanding Company Stock
      Options) or (B) any assets of the Company or any Company Subsidiary, except
      in
      the ordinary course of business and in a manner consistent with past practice;
      

     

    (iii) declare,
      set aside, make or pay any dividend or other distribution, payable in cash,
      stock, property or otherwise, with respect to any of its capital stock, except
      for dividends by any direct or indirect wholly owned Company Subsidiary to
      the
      Company or any other Company Subsidiary;

     

    
      
        
        

      

      
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    (iv) reclassify,
      combine, split, subdivide or redeem, or purchase or otherwise acquire, directly
      or indirectly, any of its capital stock;

     

    (v) (A)
      acquire (including, without limitation, by merger, consolidation, or acquisition
      of stock or assets or any other business combination) any corporation,
      partnership, other business organization or any division thereof or any material
      amount of assets; (B) except for borrowings under existing credit facilities
      in
      the ordinary course of business and in a manner consistent with past practice,
      incur any indebtedness for borrowed money or issue any debt securities or
      assume, guarantee or endorse, or otherwise become responsible for, the
      obligations of any person, or make any loans or advances, or grant any security
      interest in any of its assets; (C) enter into any contract or agreement other
      than in the ordinary course of business and in a manner consistent with past
      practice that, if in effect on the date hereof, would qualify as a Company
      Material Contract; (D) make, authorize or make any commitment with respect
      to
      any capital expenditure or purchases of fixed assets which are, in the
      aggregate, in excess of US$1 million individually or US$5 million in the
      aggregate; or (E) enter into or amend any contract, agreement, commitment or
      arrangement with respect to any matter set forth in this Section 5.01(b)(v);

     

    (vi) make
      any
      investment in any entity (other than a Company Subsidiary) in excess of US$5
      million;

     

    (vii) increase
      the compensation payable or to become payable or the benefits provided to its
      directors, officers or employees, except for increases in the ordinary course
      of
      business and in a manner consistent with past practice or as required by
      applicable Law in salaries or wages of employees of the Company or any Company
      Subsidiary who are not directors or officers of the Company, or grant any
      severance or termination pay to (other than pursuant to existing contractual
      obligations disclosed in Section 3.10(a)
      of the
      Company Disclosure Schedule or in the ordinary course of business and in a
      manner consistent with past practice), or enter into any employment or severance
      agreement with any director, officer or other employee of the Company or of
      any
      Company Subsidiary, or, except as required by Law, establish, adopt, enter
      into
      or amend any collective bargaining, bonus, profit-sharing, thrift, compensation,
      stock option, restricted stock, pension, retirement, deferred compensation,
      employment, termination, severance or other plan, agreement, trust, fund, policy
      or arrangement for the benefit of any director, officer or
      employee;

     

    (viii) exercise
      its discretion with respect to or otherwise voluntarily (A) accelerate the
      vesting of any Company Stock Award as a result of the Merger, any other change
      of control of the Company (as defined in the Company Stock Option Plans) or
      otherwise; or (B) amend, modify or supplement any Company Stock Option
      Plan;

     

    (ix) make
      any
      change in any material method of accounting, method of accounting principles
      or
      practice, except as may be appropriate to conform to a change in Tax law or
      change required by reason of a concurrent change in US GAAP or compliance with
      the applicable requirements of the rules and regulations promulgated by the
      SEC;

     

    
      
        
        

      

      
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    (x) make
      or
      change any material tax election, or take any other action with respect to
      a
      material tax item, in each case inconsistent with prior practice of the Company
      or any Company Subsidiary, without providing prior notice thereof to
      Parent;

     

    (xi) pay,
      discharge or satisfy any claim, liability or obligation (absolute, accrued,
      asserted or unasserted, contingent or otherwise), other than the payment,
      discharge or satisfaction, in the ordinary course of business and in a manner
      consistent with past practice, of liabilities reflected or reserved against
      in
      the consolidated balance sheet of the Company and the consolidated Company
      Subsidiaries as at December 31, 2006 or subsequently incurred in the ordinary
      course of business and in a manner consistent with past practice;

     

    (xii) amend,
      modify or consent to the termination of any Material Company Contract (except
      for extensions of closing on completion dates), or amend, waive, modify or
      consent to the termination of the Company’s or any Company Subsidiary’s material
      rights thereunder;

     

    (xiii) commence
      any Action (except in the ordinary course of business against third parties)
      or
      settle any Action (except in the ordinary course of business, it being
      understood that any settlement involving the payment by the Company or any
      Company Subsidiary of more than US$100,000 is not in the ordinary course of
      business);

     

    (xiv) permit
      any item of Company Owned Intellectual Property to lapse or to be abandoned,
      dedicated or disclaimed, by failing to perform or make any applicable filings,
      recordings or other similar actions or filings, or by failing to pay all
      required fees and taxes required or advisable to maintain and protect its
      interest in each and every item of Company Owned Intellectual Property, except
      where the failure to make such filings and payments results from the exercise
      of
      reasonable business judgment;

     

    (xv) sell,
      assign or license any of the Company Owned Intellectual Property, except for
      licensing of Company Owned Intellectual Property in the ordinary course of
      business consistent with past practice;

     

    (xvi) fail
      to
      make in a timely manner any filings with the SEC required under the Securities
      Act or the Exchange Act or the rules and regulations promulgated thereunder;
      or

     

    (xvii) announce
      an intention, enter into any formal or informal agreement or otherwise make
      a
      commitment to do any of the foregoing.

     

    (c) Prior
      to
      the Company entering into any definitive agreement in connection with any
      acquisition (whether of stock or assets), merger or any other business
      combination in connection with (i) Xiaonanshan Iron Ore Mine in Anhui Province,
      PRC, the mining rights of which are held by Maanshan Xiaonanshan Mining Company
      Limited, (ii) Ma Tang Iron Ore Mine in Anhui Province, PRC, the mining rights
      of
      which are held by Maanshan Zhao Yuan Mining Company Limited, (iii) a processing
      plant in Anhui Province, PRC, owned by Nanjing Sudan Mining Company Limited,
      (iv) Laowan Iron Ore Mine in Hubei Province, the exploration rights of which
      are
      held by Hubei Yunxian Changjiang Mining Company Limited, (v) Taizhou Gold Mine
      (as disclosed in the Company’s press release of April 2, 2007), or (vi) Xing
      Wang Nickel Mine (as disclosed in the Company’s press release of April 2, 2007)
      (the PRC mining properties in items (i) - (vi) of this Section 5.01(c)
      are
      collectively referred to as the “PRC
      Mines”),
      all
      as further set forth in Section 5.01(c)
      of the
      Company’s Disclosure Schedule), the Company shall first obtain the prior written
      consent of Parent.

     

    
      
        
        

      

      
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    SECTION
      5.02 Conduct
      of Business by Parent Pending the Merger.
      bb)
      Parent agrees that, between the date of this Agreement and the earlier of the
      Effective Time and the termination of this Agreement pursuant to Article VIII,
      except
      as set forth in Section 5.02
      of the
      Parent Disclosure Schedule or as expressly contemplated by any other provision
      of this Agreement, unless the Company shall otherwise consent in writing (which
      consent shall not be unreasonably withheld or delayed):

     

    (i) Parent
      shall, and shall cause each Parent Subsidiary to, conduct the business of Parent
      and the Parent Subsidiaries, in all respects material to Parent and the Parent
      Subsidiaries, taken as a whole, in the ordinary course of business and in a
      manner consistent with past practice; and

     

    (ii) Parent
      shall, and shall cause each Parent Subsidiary to, use its reasonable best
      efforts to preserve substantially intact the business organization of Parent
      and
      the Parent Subsidiaries, to keep available the services of the current officers,
      employees and consultants of Parent and the Parent Subsidiaries and to preserve
      the current relationships of Parent and the Parent Subsidiaries with customers,
      suppliers and other persons with which Parent or any Subsidiary has significant
      business relations.

     

    (b) By
      way of
      amplification and not limitation of Section 5.01(a),
      except
      as contemplated by any other provision of this Agreement or as set forth in
      Section 5.02
      of the
      Parent Disclosure Schedule, neither Parent nor any Parent Subsidiary shall,
      between the date of this Agreement and the earlier of the Effective Time and
      the
      termination of the Agreement pursuant to Article VIII,
      directly or indirectly, do, or propose to do, any of the following without
      the
      prior written consent of the Company (which consent shall not be unreasonably
      withheld or delayed):

     

    (i) amend
      or
      otherwise change its Memorandum of Association and By-laws or equivalent
      organizational documents;

     

    (ii) issue,
      sell, pledge, dispose of, grant or encumber, or authorize the issuance, sale,
      pledge, disposition, grant or encumbrance of, (A) any shares of any class of
      capital stock of Parent or any Parent Subsidiary, or any options, warrants,
      convertible securities or other rights of any kind to acquire any shares of
      such
      capital stock, or any other ownership interest (including, without limitation,
      any phantom interest), of Parent or any Parent Subsidiary (except for the
      issuance of Parent Ordinary Shares (whether in the form of Parent Ordinary
      Shares or Parent ADSs) issuable pursuant to employee stock options outstanding
      on the date hereof, in the ordinary course of business and in a manner
      consistent with past practice in accordance with the terms of the Parent Stock
      Option Plans or such notes as in effect as of the date hereof) or (B) any assets
      of Parent or any Parent Subsidiary, except in the ordinary course of business
      and in a manner consistent with past practice;

     

    
      
        
        

      

      
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    (iii) declare,
      set aside, make or pay any dividend or other distribution, payable in cash,
      stock, property or otherwise, with respect to any of its capital stock, except
      for dividends by any direct or indirect wholly owned Parent Subsidiary to Parent
      or any other Parent Subsidiary;

     

    (iv) reclassify,
      combine, split, subdivide or redeem, or purchase or otherwise acquire, directly
      or indirectly, any of its capital stock;

     

    (v) (A)
      acquire (including, without limitation, by merger, consolidation, or acquisition
      of stock or assets or any other business combination) any corporation,
      partnership, other business organization or any division thereof or any material
      amount of assets; (B) except for borrowings under existing credit facilities
      in
      the ordinary course of business and in a manner consistent with past practice,
      incur any indebtedness for borrowed money or issue any debt securities or
      assume, guarantee or endorse, or otherwise become responsible for, the
      obligations of any person, or make any loans or advances, or grant any security
      interest in any of its assets; (C) enter into any contract or agreement other
      than in the ordinary course of business and in a manner consistent with past
      practice that, if in effect on the date hereof, would qualify as a Parent
      Material Contract; (D) make, authorize or make any commitment with respect
      to
      any capital expenditure or purchases of fixed assets which are, in the
      aggregate, in excess of US$1 million individually or US$5 million in the
      aggregate; or (E) enter into or amend any contract, agreement, commitment or
      arrangement with respect to any matter set forth in this Section 5.02(b)(v);

     

    (vi) make
      any
      investment in any entity (other than a Parent Subsidiary) in excess of US$5
      million;

     

    (vii) increase
      the compensation payable or to become payable or the benefits provided to its
      directors, officers or employees, except for increases in the ordinary course
      of
      business and in a manner consistent with past practice in salaries or wages
      of
      employees of Parent or any Parent Subsidiary who are not directors or officers
      of Parent, or grant any severance or termination pay to (other than pursuant
      to
      existing contractual obligations disclosed in Section 4.10(a)
      of the
      Parent Disclosure Schedule or in the ordinary course of business and in a manner
      consistent with past practice), or enter into any employment or severance
      agreement with any director, officer or other employee of Parent or of any
      Parent Subsidiary, or, except as required by Law, establish, adopt, enter into
      or amend any collective bargaining, bonus, profit-sharing, thrift, compensation,
      stock option, restricted stock, pension, retirement, deferred compensation,
      employment, termination, severance or other plan, agreement, trust, fund, policy
      or arrangement for the benefit of any director, officer or
      employee;

     

    (viii) exercise
      its discretion with respect to or otherwise voluntarily accelerate the vesting
      of any Parent Stock Award as a result of the Merger, any other change of control
      of Parent (as defined in the Parent Stock Option Plans) or
      otherwise;

     

    
      
        
        

      

      
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    (ix) make
      any
      change in any material method of accounting, method of accounting principles
      or
      practice, except as may be appropriate to conform to a change in Tax law or
      for
      such change required by reason of a concurrent change in HKFRS or compliance
      with the applicable requirements of the Hong Kong Stock Exchange, the HKSE
      Listing Rules, the Hong Kong Companies Ordinance, the Hong Kong Securities
      Ordinance, the Bermuda Companies Act, the Registrar of Companies of Bermuda
      or
      the Bermuda Monetary Authority, as the case may be, or the rules and regulations
      promulgated thereunder or, in contemplation of the consummation of the Merger
      and the Transactions, compliance with the applicable requirements of US GAAP,
      the Securities Act, the Exchange Act, SOX or AMEX, as the case may be, or the
      rules and regulations promulgated thereunder;

     

    (x) make
      or
      change any material tax election, or take any other action with respect to
      a
      material tax item, in each case inconsistent with prior practice of the Parent
      or any Parent Subsidiary, without providing prior notice thereof to the
      Company;

     

    (xi) pay,
      discharge or satisfy any claim, liability or obligation (absolute, accrued,
      asserted or unasserted, contingent or otherwise), other than the payment,
      discharge or satisfaction, in the ordinary course of business and in a manner
      consistent with past practice, of liabilities reflected or reserved against
      in
      the consolidated balance sheet of Parent and the consolidated Parent
      Subsidiaries as at September 30, 2006 or subsequently incurred in the ordinary
      course of business and in a manner consistent with past practice;

     

    (xii) amend,
      modify or consent to the termination of any Material Parent Contract (except
      for
      extensions of closing or completion dates), or amend, waive, modify or consent
      to the termination of Parent’s or any Parent Subsidiary’s material rights
      thereunder;

     

    (xiii) commence
      any Action (except in the ordinary course of business against third parties)
      or
      settle any Action (except in the ordinary course of business, it being
      understood that any settlement involving the payment by Parent or any Parent
      Subsidiary of more than US$100,000 is not in the ordinary course of
      business);

     

    (xiv) permit
      any item of Parent Owned Intellectual Property to lapse or to be abandoned,
      dedicated or disclaimed, by failing to perform or make any applicable filings,
      recordings or other similar actions or filings, or by failing to pay all
      required fees and taxes required or advisable to maintain and protect its
      interest in each and every item of Parent Owned Intellectual Property, except
      where the failure to make such filings and payments results from the exercise
      of
      reasonable business judgment;

     

    (xv) sell,
      assign or license any of the Parent Owned Intellectual Property, except for
      licensing of Parent Owned Intellectual Property in the ordinary course of
      business consistent with past practice;

     

    
      
        
        

      

      
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    (xvi) fail
      to
      make in a timely manner any filings with the Hong Kong Stock Exchange, the
      Registry of Companies of Hong Kong, the Registrar of Companies in Bermuda,
      the
      Bermuda Monetary Authority or with any other authorities or regulatory bodies
      in
      Hong Kong or Bermuda required under applicable Hong Kong or Bermuda laws, rules
      and regulations; or

     

    (xvii) announce
      an intention, enter into any formal or informal agreement or otherwise make
      a
      commitment, to do any of the foregoing.

     

    SECTION
      5.03 Control
      of Other Party’s Business.
      Nothing
      contained in this Agreement shall give the Company, directly or indirectly,
      the
      right to control or direct Parent’s operations prior to the Effective Time.
      Nothing contained in this Agreement shall give Parent, directly or indirectly,
      the right to control or direct the Company’s operations prior to the Effective
      Time. Prior to the Effective Time, each of Parent and the Company shall
      exercise, consistent with the terms and conditions of this Agreement, control
      and supervision over their respective operations.

     

    ARTICLE
      VI

     

    ADDITIONAL
      AGREEMENTS

     

    SECTION
      6.01 Disclosure
      Documents.
      cc)
U.S.
      Filings.
      As
      promptly as practicable after the execution of this Agreement, (i) Parent and
      the Company shall prepare and file the proxy statement to be sent to the
      stockholders of the Company relating to the meeting of the Company’s
      stockholders (the “Company
      Stockholders’ Meeting”)
      to be
      held to consider approval and adoption of this Agreement, or any information
      statement to be sent to such stockholders, as appropriate (such proxy statement
      or information statement, as amended or supplemented, being referred to herein
      as the “Proxy
      Statement”),
      (ii)
      Parent shall prepare and file with the SEC a registration statement on Form
      F-4
      (together with all amendments thereto, the “Registration
      Statement”),
      in
      which the Proxy Statement shall be included as a prospectus, in connection
      with
      the registration under the Securities Act of the Parent ADSs to be issued to
      the
      stockholders of the Company pursuant to the Merger and the underlying Parent
      Ordinary Shares thereof, and (iii) Parent shall use all reasonable best efforts
      to cause the Depositary to file with the SEC a registration statement on Form
      F-6 (the “Form
      F-6 Registration Statement”)
      in
      connection with the registration under the Securities Act of the Parent ADSs
      to
      be issued in connection with the Merger. Each of Parent and the Company shall
      furnish to the other party all information concerning it and its business as
      the
      other party may reasonably request in connection with such actions and the
      preparation of the Registration Statement, the Proxy Statement and the Form
      F-6
      Registration Statement. Each of Parent and the Company shall use its reasonable
      best efforts to respond as promptly as practicable to any comments of the SEC
      with respect to such documents and to cause the Registration Statement and
      the
      Form F-6 Registration Statement to be declared effective by the SEC as promptly
      as practicable and to keep the Registration Statement effective as long as
      necessary to consummate the Transactions. As promptly as practicable after
      the
      Registration Statement shall have been declared effective by the SEC, the
      Company shall mail the Proxy Statement to its stockholders and, if necessary,
      after the Proxy Statement shall have been so mailed, promptly circulate amended,
      supplemental or supplemented proxy materials, and, if required in connection
      therewith, resolicit proxies.

     

    
      
        
        

      

      
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    (b) Hong
      Kong and Bermuda Filings.
      As
      promptly as practicable after the execution of this Agreement, Parent shall
      publish an announcement in newspapers in Hong Kong in compliance with the
      requirements under the HKSE Listing Rules (the “Hong
      Kong Announcement”)
      and
      shall prepare the shareholders circular to be sent to the shareholders of Parent
      relating to the general meeting of Parent’s shareholders (the “Parent
      Shareholders’ Meeting”
and,
      together with the Company Stockholders’ Meeting, the “Stockholders’
      Meetings”)
      to be
      held to consider the approval of this Agreement, the Merger and other
      Transactions, the Share Issuance, the New Stock Option Plans Adoption and the
      Parent Board Appointments (the “Parent
      Shareholders Circular”).
      The
      Company shall furnish to Parent all information concerning it and its business
      as Parent may reasonably request in connection with such actions and the
      preparation of the Parent Shareholders Circular. Each of Parent and the Company
      shall use its reasonable best efforts to respond as promptly as practicable
      to
      any comments of the Hong Kong Stock Exchange with respect to the Hong Kong
      Announcement and the Parent Shareholders Circular and to receive the clearance
      of the Hong Kong Stock Exchange on the Hong Kong Announcement and the Parent
      Shareholders Circular as promptly as practicable. As promptly as practicable
      after the Parent Shareholders Circular shall have been cleared with the Hong
      Kong Stock Exchange, Parent shall dispatch the Parent Shareholders Circular
      to
      its shareholders and, if necessary, after the Parent Shareholders Circular
      shall
      have been so dispatched, promptly circulate amended, supplemental or
      supplemented circular materials.

     

    (c) Except
      as
      provided in Section 6.04(c),
      the
      Company covenants that none of the Company Board or any committee thereof shall
      withdraw or modify, or propose to withdraw or modify, in a manner adverse to
      Parent or Merger Sub, the approval or recommendation by the Company Board or
      any
      committee thereof of this Agreement, the Merger or any other Transaction (the
      “Company
      Board Recommendation”)
      and
      that the Proxy Statement shall include the recommendation of the Company Board
      to the stockholders of the Company in favor of approval and adoption of this
      Agreement and approval of the Merger.

     

    (d) Except
      as
      provided in Section 6.04(d),
      Parent
      covenants that none of the Parent Board or any committee thereof shall withdraw
      or modify, or propose to withdraw or modify, in a manner adverse to the Company,
      the approval or recommendation by the Parent Board or any committee thereof
      of
      this Agreement, the Merger and other Transactions, the Share Issuance, the
      New
      Stock Option Plans Adoption and the Parent Board Appointments (the “Parent
      Board Recommendation”)
      and
      that the Parent Shareholders Circular shall include the recommendation of the
      Parent Board to the shareholders of Parent in favor of this Agreement, the
      Merger and other Transactions, the Share Issuance, the New Stock Option Plans
      Adoption and the Parent Board Appointments.

     

    (e) No
      amendment or supplement to the Proxy Statement, the Registration Statement,
      the
      Form F-6 Registration Statement or the Parent Shareholders Circular will be
      made
      by Parent or the Company without the approval of the other party (such approval
      not to be unreasonably withheld or delayed) and after having provided the other
      party with the opportunity to review and comment thereon (such review not to
      be
      unreasonably delayed). Parent and the Company each will advise the other,
      promptly after they receive notice thereof, of the time when the Registration
      Statement or Form F-6 Registration Statement has been declared effective or
      any
      supplement or amendment has been filed, of the issuance of any stop order,
      of
      the suspension of the qualification of the Parent ADSs or Parent Ordinary Shares
      issuable in connection with the Merger for offering or sale in any jurisdiction,
      or of any request by the SEC or Hong Kong Stock Exchange for amendment of the
      Proxy Statement, the Registration Statement, the Form F-6 Registration Statement
      or the Parent Shareholders Circular or comments thereon and responses thereto
      or
      requests by the SEC or Hong Kong Stock Exchange for additional
      information.

     

    
      
        
        

      

      
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    (f) Parent
      represents and warrants to the Company that the information supplied by Parent
      for inclusion in the Registration Statement, the Form F-6 Registration
      Statement, the Proxy Statement or the Parent Shareholders Circular shall not,
      at
      (i) the time the Parent Shareholders Circular is cleared with the Hong Kong
      Stock Exchange, (ii) the time the Registration Statement or Form F-6
      Registration Statement is declared effective, (iii) the time the Proxy Statement
      (or any amendment thereof or supplement thereto) is first mailed to the
      stockholders of the Company, (iv) the time the Parent Shareholders Circular
      (or
      any amendment thereof or supplement thereto) is first dispatched to the
      shareholders of Parent, (v) the time of each of the Stockholders’ Meetings and
      (vi) the Effective Time, contain any untrue statement of a material fact or
      fail
      to state any material fact required to be stated therein or necessary in order
      to make the statements therein, in light of the circumstances under which they
      were made, not misleading. If, at any time prior to the Effective Time, any
      event or circumstance relating to Parent, any Parent Subsidiary or any of their
      respective officers or directors should be discovered by Parent which should
      be
      set forth in an amendment or a supplement to the Registration Statement, Form
      F-6 Registration Statement, Proxy Statement or Parent Shareholders Circular,
      Parent shall promptly inform the Company and an appropriate amendment or
      supplement describing such event or circumstance shall be promptly filed with
      the SEC or the Hong Kong Stock Exchange, as appropriate, and, to the extent
      required by law, disseminated to the shareholders of Parent. Parent represents
      and warrants to the Company that all documents that Parent is responsible for
      filing with the SEC, the Hong Kong Stock Exchange or the AMEX or published
      pursuant to the HKSE Listing Rules, or the Company Guide and the Constitution
      and Rules of the AMEX (the “AMEX
      Listing Rules”)
      as the
      case may be, in connection with the Merger or the other Transactions will comply
      as to form and substance in all material respects with the applicable
      requirements of the Securities Act, the Exchange Act, the Hong Kong Stock
      Exchange, the HKSE Listing Rules, the AMEX, the AMEX Listing Rules, the Hong
      Kong Companies Ordinance, the Hong Kong Securities Ordinance, the Bermuda
      Companies Act, the Registrar of Companies of Bermuda and the Bermuda Monetary
      Authority, as the case may be, and the rules and regulations
      thereunder.

     

    (g) The
      Company represents and warrants to Parent that the information supplied by
      the
      Company for inclusion in the Registration Statement, the Form F-6 Registration
      Statement, the Proxy Statement or the Parent Shareholders Circular shall not,
      at
      (i) the time the Parent Shareholders Circular is filed with the Hong Kong Stock
      Exchange, (ii) the time the Registration Statement or Form F-6 Registration
      Statement is declared effective, (iii) the time the Proxy Statement (or any
      amendment thereof or supplement thereto) is first mailed to the stockholders
      of
      the Company, (iv) the time the Parent Shareholders Circular (or any amendment
      thereof or supplement thereto) is first mailed to the shareholders of Parent,
      (v) the time of each of the Stockholders’ Meetings and (vi) the Effective Time,
      contain any untrue statement of a material fact or fail to state any material
      fact required to be stated therein or necessary in order to make the statements
      therein, in light of the circumstances under which they were made, not
      misleading. If, at any time prior to the Effective Time, any event or
      circumstance relating to the Company or any Company Subsidiary, or their
      respective officers or directors, should be discovered by the Company which
      should be set forth in an amendment or a supplement to the Registration
      Statement, Form F-6 Registration Statement, Proxy Statement or Parent
      Shareholders Circular, the Company shall promptly inform Parent and an
      appropriate amendment or supplement describing such event or circumstance shall
      be promptly filed with the SEC and, to the extent required by law, disseminated
      to the stockholders of the Company. The Company represents and warrants to
      Parent that all documents that the Company is responsible for filing with the
      SEC in connection with the Merger or the other Transactions will comply as
      to
      form and substance in all material respects with the applicable requirements
      of
      the Securities Act and the rules and regulations thereunder and the Exchange
      Act
      and the rules and regulations thereunder.

     

    
      
        
        

      

      
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    SECTION
      6.02 Stockholders’
      Meetings.
      dd) The
      Company shall duly call, give notice of, convene and hold the Company
      Stockholders’ Meeting as promptly as practicable for the purpose of voting upon
      the approval and adoption of this Agreement and obtaining the Company
      Stockholders’ Approval.

     

    (b) Parent
      shall dully call, give notice of, convene and hold the Parent’s Shareholders’
Meeting as promptly as practicable for the purpose of voting upon the approval
      of this Agreement, the Merger and other Transactions, the Share Issuance, the
      New Stock Option Plans Adoption and the Parent Board Appointments and obtaining
      the Parent Shareholders’ Approval.

     

    (c) Each
      of
      the Company and Parent shall use its reasonable best efforts to hold the
      Stockholders’ Meetings on the same day as soon as practicable after the date on
      which the Registration Statement becomes effective. Each of the Company and
      Parent shall use its reasonable best efforts to solicit from its shareholders
      proxies in favor of the approval and adoption of this Agreement, the Merger
      and
      other Transactions, the Share Issuance, the New Stock Option Plans Adoption
      and
      the Parent Board Appointments, as the case may be, and shall take all other
      action necessary or advisable to secure the required vote or consent of its
      shareholders, except in the event and to the extent that the Company Board
      or
      the Parent Board, as the case may be, in accordance with Section 6.04(c)
      or
Section 6.04(d),
      withdraws or modifies its recommendation to its shareholders in favor of the
      approval and adoption of this Agreement, the Merger and other Transactions,
      the
      Share Issuance, New Stock Option Plans Adoption and the Parent Board
      Appointments, as the case may be.

     

    SECTION
      6.03 Access
      to Information; Confidentiality.
      ee) Upon
      reasonable prior notice and except as required pursuant to any confidentiality
      agreement or similar agreement or arrangement to which the Company or Parent
      or
      any of their respective subsidiaries is a party or pursuant to applicable Law,
      from the date of this Agreement until the Effective Time, the Company and Parent
      shall (and shall cause their respective subsidiaries to): (i) provide to the
      other party (and the other party’s officers, directors, employees, accountants,
      consultants, legal counsel, agents and other representatives, collectively,
      “Representatives”)
      reasonable access during normal business hours to the officers, employees,
      agents, properties, offices and other facilities of such party and its
      subsidiaries and to the books and records thereof, including access to enter
      any
      real property owned, leased, subleased or occupied by such party or such party’s
      subsidiary in order to conduct an environmental assessment of such property
      (provided that no subsurface investigation work of the sort commonly referred
      to
      as “Phase II” investigatory work shall be conducted absent the prior written
      consent of the other party, which consent shall not be unreasonably withheld);
      and (ii) furnish promptly to the other party such information concerning the
      business, properties, contracts, assets, liabilities, personnel and other
      aspects of such party and its subsidiaries as the other party or its
      Representatives may reasonably request; provided,
      however,
      that
      (A) no pricing or other competitively sensitive information retrieved from
      the
      Company will be made available to persons who are involved in any pricing or
      sales activity at Parent or any Parent Subsidiary, (B) no pricing or other
      competitively sensitive information retrieved from Parent will be made available
      to persons who are involved in any pricing or sales activity at the Company
      or
      any Company Subsidiary and (C) neither Parent nor the Company shall use any
      information obtained from the other party for any purpose other than evaluation
      of such other party in connection with this Agreement.

     

    
      
        
        

      

      
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    (b) All
      information obtained by the parties pursuant to this Section 6.03
      shall be
      kept confidential in accordance with the letter of intent, dated November 29,
      2006, and the heads of agreement, dated February 2, 2007 (together, the
“Confidentiality
      Arrangements”)
      between Parent and the Company.

     

    (c) No
      investigation pursuant to this Section 6.03
      shall
      affect any representation or warranty in this Agreement of any party hereto
      or
      any condition to the obligations of the parties hereto.

     

    SECTION
      6.04 No
      Solicitation of Transactions.
      ff)
      Subject to Section 6.04(b),
      each
      party to this Agreement agrees that, from and after the date hereof until the
      earlier of the Effective Time and the termination of this Agreement pursuant
      to
Article VIII,
      it
      shall not, and shall not permit any of its subsidiaries or any of its or its
      subsidiaries’ directors, officers or employees to, and shall use its best
      efforts to cause its investment bankers, attorneys, accountants and other
      representatives retained by it or any of its subsidiaries not to, directly
      or
      indirectly: (i) solicit, initiate or knowingly encourage (including by way
      of
      furnishing nonpublic information), or take any other action knowingly to
      facilitate, any inquiries or the making of any proposal or offer (including,
      without limitation, any proposal or offer to its stockholders) that constitutes
      a Competing Transaction (as defined below); (ii) enter into or maintain or
      continue discussions or negotiations with any person in furtherance of such
      inquiries or to obtain a Competing Transaction; (iii) agree to, approve, endorse
      or recommend any Competing Transaction or enter into any letter of intent or
      other contract, agreement or commitment contemplating or otherwise relating
      to
      any Competing Transaction; or (iv) authorize or permit any of the officers,
      directors or employees of such party or any of its subsidiaries, or any
      investment banker, financial advisor, attorney, accountant or other
      representative retained by such party, to take any such action. Each party
      to
      this Agreement shall notify the other party as promptly as practicable (and
      in
      any event within one day after such party attains knowledge thereof) if any
      proposal or offer, or any inquiry or contact with any person with respect
      thereto, regarding a Competing Transaction is made, specifying the material
      terms and conditions thereof and the identity of the party making such proposal
      or offer or inquiry or contact (including material amendments or proposed
      material amendments). Each party to this Agreement immediately shall cease
      and
      cause to be terminated all existing discussions or negotiations with any parties
      conducted heretofore with respect to a Competing Transaction. Each party to
      this
      Agreement shall not release any third party from, or waive any provision of,
      any
      confidentiality or standstill agreement to which it is a party.

     

    
      
        
        

      

      
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    (b) Notwithstanding
      anything to the contrary in this Section 6.04,
      the
      Board of Directors of Parent or the Company, as the case may be, may furnish,
      prior to approval of this Agreement, the Merger and other Transactions, the
      Share Issuance, the New Stock Option Plans Adoption and the Parent Board
      Appointments, as applicable, at the Parent Shareholders’ Meeting or at the
      Company Stockholders’ Meeting, as the case may be, information to, and enter
      into discussions with, a person who, after the date hereof, has made an
      unsolicited, written, bona fide proposal or offer regarding a Competing
      Transaction or otherwise facilitate any effort or attempt to make or implement
      a
      proposal or offer for a Competing Transaction, if such Board of Directors has
      (i) determined, in its good faith judgment (after having consulted with a
      financial advisor of nationally recognized reputation in the United States
      or
      Hong Kong) that such proposal or offer is reasonably likely to lead to a
      Superior Proposal (as defined below), (ii) determined, in its good faith
      judgment after consultation with independent legal counsel (who may be such
      party’s regularly engaged independent legal counsel), that, in light of such
      proposal or offer regarding a Competing Transaction, the furnishing of such
      information or entering into discussions is consistent with its fiduciary
      obligations to Parent and its shareholders or the Company and its stockholders,
      respectively, under applicable Law, (iii) provided written notice to the other
      party of its intent to furnish information or enter into discussions with such
      person at least 24 hours prior to taking any such action, and (iv) obtained
      from
      such person an executed confidentiality agreement on terms no less favorable
      to
      the other party than those contained in the Confidentiality Arrangements (it
      being understood that such confidentiality agreement and any related agreements
      shall not include any provision calling for any exclusive right to negotiate
      with such party or having the effect of prohibiting such party from satisfying
      its obligations under this Agreement).

     

    (c) Except
      as
      set forth in this Section 6.04(c),
      the
      Company Board shall not make a change in the Company Board Recommendation (a
      “Change
      in the Company Board Recommendation”)
      in a
      manner adverse to Parent or Merger Sub or approve or recommend, or cause or
      permit the Company to enter into any letter of intent, agreement or obligation
      with respect to, any Competing Transaction. Notwithstanding the foregoing,
      if,
      prior to the approval of this Agreement and the Merger at the Company
      Stockholders’ Meeting, the Company Board determines, in its good faith judgment
      prior to the Effective Time and after consultation with independent legal
      counsel (who may be the Company’s regularly engaged independent legal counsel),
      that to make a Change in the Company Board Recommendation is consistent with
      its
      fiduciary obligations to the Company and its stockholders under applicable
      Law,
      the Company Board may recommend a Superior Proposal, but only (i) after
      providing written notice to Parent (a “Notice
      of Company Superior Proposal”)
      advising Parent that the Company Board has received a Superior Proposal,
      specifying the material terms and conditions of such Superior Proposal and
      identifying the person making such Superior Proposal and indicating that the
      Company Board intends to effect a Change in the Company Board Recommendation
      and
      the manner in which it intends (or may intend) to do so, and (ii) if Parent
      does
      not, within three business days of Parent’s receipt of the Notice of Company
      Superior Proposal, deliver to the Company a binding, written offer that the
      Company Board determines, in its good faith judgment (after having consulted
      with independent legal counsel and a financial advisor of nationally recognized
      reputation in the United States or Hong Kong) to be at least as favorable to
      the
      Company’s stockholders as such Superior Proposal. Any disclosure that the
      Company Board may be compelled to make with respect to the receipt of a proposal
      or offer for a Competing Transaction under applicable Law or Rule 14d-9 or
      14e-2
      or that the Company Board determines to comply with its fiduciary duties to
      the
      Company and its stockholders will not constitute a violation of this Agreement,
      provided that such disclosure states that no action will be taken by the Company
      Board in violation of this Section 6.04(c).
      The
      obligation of the Company to call, give notice of, convene and hold the Company
      Stockholders’ Meeting shall not be limited or otherwise affected by the
      commencement, disclosure, announcement or submission to it of any Competing
      Transaction, or by any Change in the Company Board Recommendation, except in
      the
      event that this Agreement is terminated in accordance with Section 8.01(j).
      The
      Company shall not submit to the vote of its stockholders any Competing
      Transaction, or propose to do so, except in the event that this Agreement is
      terminated in accordance with Section 8.01(j).

     

    
      
        
        

      

      
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    (d) Except
      as
      set forth in this Section 6.04(d),
      the
      Parent Board shall not make a change in the Parent Board Recommendation (a
      “Change
      in the Parent Board Recommendation”)
      in a
      manner adverse to the Company or approve or recommend, or cause or permit Parent
      to enter into any letter of intent, agreement or obligation with respect to,
      any
      Competing Transaction. Notwithstanding the foregoing, if, prior to the approval
      of this Agreement, the Merger and other Transactions, the Share Issuance, the
      New Stock Option Plans Adoption and the Parent Board Appointments at the Parent
      Shareholders’ Meeting, the Parent Board determines, in its good faith judgment
      prior to the Effective Time and after consultation with independent legal
      counsel (who may be Parent’s regularly engaged independent legal counsel), that
      to make a Change in the Parent Board Recommendation is consistent with its
      fiduciary obligations to Parent and its shareholders under applicable Law,
      the
      Parent Board may recommend a Superior Proposal, but only (i) after providing
      written notice to the Company (a “Notice
      of Parent Superior Proposal”)
      advising the Company that the Parent Board has received a Superior Proposal,
      specifying the material terms and conditions of such Superior Proposal and
      identifying the person making such Superior Proposal and indicating that the
      Parent Board intends to effect a Change in the Parent Board Recommendation
      and
      the manner in which it intends (or may intend) to do so, and (ii) if the Company
      does not, within three business days of the Company’s receipt of the Notice of
      Parent Superior Proposal, deliver to Parent a binding written offer that the
      Parent Board determines, in its good faith judgment (after having consulted
      with
      independent legal counsel and a financial advisor of nationally recognized
      reputation in the United States or Hong Kong) to be at least as favorable to
      Parent’s shareholders as such Superior Proposal. Any disclosure that the Parent
      Board may be compelled to make with respect to the receipt of a proposal or
      offer for a Competing Transaction under applicable Law (including, without
      limitation, the Hong Kong Code on Take-overs and Mergers) or Rule 14d-9 or
      14e-2
      under the Exchange Act or that the Parent Board determines to comply with its
      fiduciary duties to Parent and its shareholders will not constitute a violation
      of this Agreement, provided that such disclosure states that no action will
      be
      taken by the Parent Board in violation of this Section 6.04(d).
      The
      obligation of Parent to call, give notice of, convene and hold the Parent
      Shareholders’ Meeting shall not be limited or otherwise affected by the
      commencement, disclosure, announcement or submission to it of any Competing
      Transaction, or by any Change in the Parent Board Recommendation, except in
      the
      event that this Agreement is terminated in accordance with Section 8.01(k).
      Parent
      shall not submit to the vote of its shareholders any Competing Transaction,
      or
      propose to do so, except in the event that this Agreement is terminated in
      accordance with Section 8.01(k).

     

    (e) A
      “Competing
      Transaction”
means
      with respect to the Company or Parent, as the case may be, any of the following
      (other than the Transactions): (i) a transaction, whether a merger, purchase
      of
      assets, tender offer or otherwise, which, if consummated, would result in a
      third party acquiring (A) more than 20% of the equity securities of the Company
      or of Parent, as the case may be, (B) more than 20% of the assets of the Company
      and the Company Subsidiaries, taken as a whole, or of Parent and the Parent
      Subsidiaries, taken as a whole; (ii) in the case of the Company, any
      solicitation in opposition to approval and adoption of this Agreement or the
      Merger by the Company’s stockholders; and (iii) in the case of Parent, any
      solicitation in opposition to approval of this Agreement, the Merger and other
      Transactions, the Share Issuance, the New Stock Option Plans Adoption or the
      Parent Board Appointments by Parent’s shareholders.
      For the
      avoidance of doubt, acquisitions or agreements to acquire the Mines, the PRC
      Mining Companies or the other mines identified in Section 6.04(e)
      of the
      Company Disclosure Schedule shall not be, individually or in the aggregate,
      a
      Competing Transaction.

     

    
      
        
        

      

      
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    (f) A
      “Superior
      Proposal”
means
      with respect to the Company or Parent, as the case may be, an unsolicited bona
      fide offer made by a third party which (i) is for a transaction, whether a
      merger, purchase of assets, tender offer or otherwise, other than the
      Transactions, which, if consummated, would result in (A) the stockholders of
      such party immediately preceding such transaction holding less than 50% of
      the
      equity interest in the surviving or resulting entity of such transaction or
      (B)
      a third party’s acquiring more than 50% of the assets of the Company and the
      Company Subsidiaries, taken as a whole, or Parent and the Parent Subsidiaries,
      taken as a whole, as the case may be, and (ii) is on terms that the Board of
      Directors of such party determines, in its good faith judgment (after having
      consulted with independent legal counsel and a financial advisor of nationally
      recognized reputation in the United States or Hong Kong), taking into account,
      among other things, all legal, financial, regulatory and other aspects of the
      proposal and the person making the proposal, (A) if consummated pursuant to
      its
      terms, is reasonably likely to result in a transaction that is more favorable
      to
      the stockholders of such party (in their capacities as stockholders), from
      a
      financial point of view, than the Merger and (B) is reasonably capable of being
      completed on the terms proposed.

     

    SECTION
      6.05 Employee
      Benefits Matters. gg)
      Following the Effective Time, Parent shall, or shall cause the Surviving
      Corporation to, provide (or cause to be provided) to employees of the Surviving
      Corporation or any other affiliate of Parent who were employees of the Company
      or any Company Subsidiary immediately prior to the Effective Time and, in each
      case, to the extent an employee continues employment with the Surviving
      Corporation or any other affiliate of Parent (the “Continuing
      Employees”)
      compensation and employee benefit plans, programs and policies and fringe
      benefits (other than equity based compensation arrangements) that, in the
      aggregate, are substantially similar to those that were provided to the
      Continuing Employees by the Company or any Company Subsidiary immediately prior
      to the execution of this Agreement.

     

    (b) Following
      the Effective Time, Parent shall, or shall cause the Surviving Corporation
      to,
      recognize (or cause to be recognized) the service of each Continuing Employee
      with the Company or any Company Subsidiary determined as of the Effective Time
      for purposes of eligibility and vesting under any employee benefit plans,
      programs or arrangements maintained by Parent, the Surviving Corporation, or
      any
      of their affiliates that employs any Continuing Employee; provided,
      however,
      that
      such crediting of service shall not operate to duplicate any benefit or the
      funding of any such benefit. Each such employee benefit plan, program or
      arrangement that provides health benefits to Continuing Employees shall waive
      pre-existing condition limitations with respect to the Continuing Employees
      to
      the same extent waived under the applicable group health plan of the Company
      or
      any Company Subsidiary maintained prior to the Effective Time, and each
      Continuing Employee shall be given credit for amounts paid under the
      corresponding group health plan of the Company or any Company Subsidiary during
      the plan year in which the Effective Time occurs for purposes of applying
      deductibles, co-payments and out-of-pocket maximums for such plan
      year.

     

    
      
        
        

      

      
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    (c) As
      of the
      Effective Time, Parent shall cause the Surviving Corporation to honor all
      employment and severance agreements existing as of the date hereof and set
      forth
      in Section 3.10(a)
      of the
      Company Disclosure Schedule between the Company or any Company Subsidiary and
      any current or former director, officer or employee of the Company or any
      Company Subsidiary.

     

    (d) Except
      as
      provided in Sections 6.05(b)
      and
(c),
      no
      provision of this Agreement shall restrict Parent or the Surviving Corporation
      from amending or terminating any employee benefit plan or modifying the material
      terms and conditions of employment for Continuing Employees following the
      Effective Time. 

     

    (e) Parent
      shall use its reasonable best efforts to procure consents from non-U.S.
      Continuing Employees that are required by applicable Law or collective
      bargaining agreement as a result of Parent’s modifications of any material terms
      and conditions of employment for such employees in such employees’ respective
      jurisdictions.

     

    SECTION
      6.06 Directors’
      and Officers’ Indemnification and Insurance. hh) Parent
      shall cause all rights to indemnification and exculpation from liabilities
      for
      acts or omissions occurring at or prior to the Effective Time now existing
      in
      favor of any current and former officers and directors of the Company or any
      Company Subsidiary, and any person prior to the Effective Time serving at the
      request of any such party as a director, officer, employee fiduciary or agent
      of
      another corporation, partnership, trust or other enterprise, as provided in
      the
      respective certificates or articles of incorporation or by-laws (or comparable
      organizational documents) of the Company or any of the Company Subsidiaries,
      to
      survive the Merger and shall continue in full force and effect in accordance
      with their terms for a period of six years after the Effective
      Time.

     

    (b) The
      Surviving Corporation shall use its reasonable best efforts to maintain in
      effect, for six years from the Effective Time, the current directors’ and
      officers’ liability insurance policies maintained by the Company (provided
      that the
      Surviving Corporation may substitute therefor policies of at least the same
      coverage containing terms and conditions that are no less advantageous) with
      respect to matters occurring prior to the Effective Time; provided,
      however,
      that in
      no event shall the Surviving Corporation be required to expend pursuant to
      this
Section 6.06(b)
      more
      than an amount per year equal to 150% of current annual premiums paid by the
      Company for such insurance, it being understood that, if the premium required
      to
      be paid by Parent for such policy would exceed such 150% of such amount, then
      the coverage of such policy shall be reduced to the maximum amount that may
      be
      obtained for a per annum premium in such 150% amount. In lieu of Parent causing
      the Surviving Corporation to maintain the policies as described above, Parent
      may elect to cause the Company to purchase immediately prior to the Effective
      Time a six-year “tail” pre-paid policy on terms and conditions not materially
      less favorable than the current directors’ and officers’ liability insurance
      policies, such policy to be effective as of the Effective Time.

     

    
      
        
        

      

      
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    (c) In
      the
      event the Company or the Surviving Corporation or any of their respective
      successors or assigns (i) consolidates with or merges into any other person
      and
      shall not be the continuing or surviving corporation or entity of such
      consolidation or merger or (ii) transfers all or substantially all of its
      properties and assets to any person, then, and in each such case, proper
      provision shall be made so that the successors and assigns of the Company or
      the
      Surviving Corporation, as the case may be, or at Parent’s option, Parent, shall
      assume the obligations set forth in this Section 6.06.

     

    SECTION
      6.07 Notification
      of Certain Matters.
      The
      Company shall give prompt notice to Parent, and Parent shall give prompt notice
      to the Company, of (a) the occurrence, or non-occurrence, of any event the
      occurrence, or non-occurrence, of which could reasonably be expected to cause
      any representation or warranty of such party contained in this Agreement to
      be
      untrue or inaccurate in any material respect and (b) any failure of the Company,
      Parent or Merger Sub, as the case may be, to comply with or satisfy any covenant
      or agreement to be complied with or satisfied by it hereunder, in the case
      of
      (a) or (b), such that the conditions under Section 7.02(a)
      or
Section 7.02(b),
      in the
      case of the Company, or under Section 7.03(a)
      or
Section 7.03(b),
      in the
      case of Parent, would not be satisfied; provided,
      however,
      that
      the delivery of any notice pursuant to this Section 6.07
      shall
      not limit or otherwise affect the remedies available hereunder to the party
      receiving such notice.

     

    SECTION
      6.08 Affiliate
      Agreements.
      ii) The
      Company shall use its reasonable best efforts to cause each of its directors
      and
      executive officers and each of its “affiliates” (within the meaning of Rule 145
      under the Securities Act) to execute and deliver to Parent or cause to be
      delivered to Parent, prior to the Effective Time, an affiliate letter
      substantially in the form attached hereto as Exhibit 6.08(a).

     

    (b) As
      an
      inducement to the Company affiliates to execute the affiliate letters, Parent
      shall enter into a written registration rights agreement with such Company
      affiliates prior to the Effective Time.

     

    (c) The
      Company shall use its reasonable best efforts to cause Stephen D. King, William
      B. Green, Mark D. Dacko and Clyde L. Smith to execute and deliver, prior to
      the
      Effective Time, employment agreements relating to the terms and conditions
      of
      employment with the Surviving Corporation or Parent. 

     

    SECTION
      6.09 Further
      Action; Reasonable Best Efforts.
      Upon the
      terms and subject to the conditions of this Agreement, each of the parties
      hereto shall (a) make promptly its respective filings, and thereafter make
      any
      other required submissions, under the HSR Act or other applicable foreign,
      federal or state antitrust, competition or fair trade Laws with respect to
      the
      Transactions (if required) and (b) use its reasonable best efforts to take,
      or
      cause to be taken, all appropriate action, and to do, or cause to be done,
      all
      things necessary, proper or advisable under applicable Laws or otherwise to
      consummate and make effective the Transactions, including, without limitation,
      using its reasonable best efforts to obtain all permits, consents, approvals,
      authorizations, qualifications and orders of Governmental Authorities and
      parties to contracts with the Company or Parent or their subsidiaries as are
      necessary for the consummation of the Transactions and to fulfill the conditions
      to the Merger; provided
      that
      nothing contained in this Section 6.09
      shall
      require Parent or the Company to divest any asset or assets or license in any
      manner. In case, at any time after the Effective Time, any further action is
      necessary or desirable to carry out the purposes of this Agreement, the proper
      officers and directors of each party to this Agreement shall use their
      reasonable best efforts to take all such action.

     

    
      
        
        

      

      
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    SECTION
      6.10 Plan
      of Reorganization. From
      and
      after the date of this Agreement and until the Effective Time, each party (i)
      shall use its reasonable best efforts to cause the Merger to qualify, and shall
      not, without the prior written consent of the parties, knowingly take any
      actions or cause any actions to be taken which could prevent the Merger from
      qualifying, as a reorganization under the provisions of Section 368(a) of the
      Code. Following the Effective Time, and consistent with any such consent,
      neither Parent nor Parent Subsidiary, nor any affiliate, shall knowingly take
      any action or cause any action to be taken which would cause the Merger to
      fail
      to so qualify as a reorganization under Section 368(a) of the Code.

     

    SECTION
      6.11 Obligations
      of Merger Sub.
      Parent
      shall take all action necessary to cause Merger Sub to perform its obligations
      under this Agreement and to consummate the Merger on the terms and subject
      to
      the conditions set forth in this Agreement.

     

    SECTION
      6.12 Stock
      Exchange Listing/Quotation.
      jj)
      Parent shall promptly prepare and submit to the Hong Kong Stock Exchange a
      listing application covering the Parent Ordinary Shares underlying the Parent
      ADSs to be issued in the Merger and shall use its reasonable best efforts to
      obtain, prior to the Effective Time, approval for such listing on the Hong
      Kong
      Stock Exchange, subject to official notice of issuance to the Hong Kong Stock
      Exchange and customary conditions, and the Company shall cooperate with Parent
      with respect to such listing.

     

    (b) Parent
      shall promptly prepare and submit to the AMEX a listing application and a
      listing agreement covering the Parent ADSs to be issued in the Merger and shall
      use its reasonable best efforts to obtain, prior to the Effective Time, approval
      for the listing of such Parent ADSs, subject to official notice of issuance
      to
      the AMEX, and the Company shall cooperate with Parent with respect to such
      listing.

     

    SECTION
      6.13 Public
      Announcements.
      Each of
      Parent and the Company shall issue a separate press release relating to this
      Agreement following its execution by each of Parent, Merger Sub and the Company,
      the text of which has been agreed to by each of Parent and the Company and
      the
      substance of which shall comply with the Securities Act, the Exchange Act,
      the
      Hong Kong Securities Ordinance, the HKSE Listing Rules, as the case may be,
      the
      rules and regulations thereunder and all applicable Laws. Thereafter, unless
      otherwise required by applicable Law or the requirements of the Hong Kong Stock
      Exchange, the SEC or the AMEX, no statement or other disclosure regarding the
      Transactions will be made by any party to this Agreement without the prior
      approval of the Company and Parent, which approval shall not be unreasonably
      withheld or delayed, provided,
      however,
      that
      nothing in this Section 6.13
      shall be
      deemed to limit the rights of the Company or Parent under Section 6.04.

     

    
      
        
        

      

      
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    SECTION
      6.14 Board
      of Directors; Corporate Headquarters; Corporate Name.
      kk)
      Parent shall use its reasonable best efforts to, subject to the fiduciary duties
      of the Parent Board, (i) cause the number of directors comprising the Parent
      Board as of immediately after the Effective Time to be increased by two, such
      that the number of executive members of the Board shall be three instead of
      two;
      (ii) cause Stephen D. King and Norman D. Lowenthal (the “Company
      Designated Directors”),
      assuming that each such person is willing to serve as a director, to be
      nominated for election as a director of Parent, effective as of the Effective
      Time, at the Parent Shareholders’ Meeting, so that the directors and officers of
      Parent after the Merger shall be: (A) Stephen D. King, Executive Director,
      (B)
      Tse Wing Chiu, Ricky, Executive Director, (C) Lui Yuk Chu, Executive Director,
      (D) Kwong Jimmy Cheung Tim, Executive Director, (E) Norman D. Lowenthal,
      Non-Executive Director, (F) Kan Ka Hon, Independent Non-Executive Director
      and
      (G) Lau Sin Ming, Independent Non-Executive Director and (iii) cause the
      composition, conduct and the committees of the Parent Board to be in compliance
      with all requirements of the Securities Act, the Exchange Act and SOX, and
      all
      rules and regulations thereto. If any Company Designated Director or any
      director and officer of the Company as at the date of this Agreement shall,
      prior to the Effective Time, die or determine not to serve as a director or
      officer of Parent or the Surviving Corporation, as the case may be, the Company
      shall have the right to appoint another person as a director or officer of
      Parent or Surviving Corporation, as the case may be.

     

    (b) The
      corporate headquarters of Parent following completion of the Merger will remain
      in Hong Kong.

     

    (c) Immediately
      after the Effective Time, Parent shall take such action as may be necessary
      to
      give one designee of Parent and one designee of the Company signing powers
      on
      all banks accounts of Parent and each Parent Subsidiary (the “Parent
      Signing Power Authorization”).

     

    SECTION
      6.15 Accounting
      Matters.
      Each of
      Parent and the Company agree to each use reasonable best efforts to cause to
      be
      delivered to each other consents and comfort letters from their respective
      independent auditors, in form reasonably satisfactory to the recipient and
      customary in scope and substance for consents and comfort letters delivered
      by
      independent public accountants in connection with registration statements on
      Form F-4 under the Securities Act.

     

    SECTION
      6.16 Stock
      Transfer Taxes.
      All
      stock transfer, real estate transfer, documentary, stamp, recording and other
      similar Taxes (including interest, penalties and additions to any such Taxes)
      incurred in connection with this Agreement and the Transactions shall be paid
      by
      the Surviving Corporation, and the Company shall cooperate with Parent and
      Merger Sub in preparing, executing and filing any Tax Returns with respect
      to
      such Taxes.

     

    SECTION
      6.17 Deposit
      Agreement.
      As
promptly
      as practicable after the execution of this Agreement, and in any event prior
      to
      the Effective Time, Parent shall enter into the Parent Deposit Agreement with
      the Depositary for the issuance of the ADSs.

     

    SECTION
      6.18 Parent
      Assumption of Obligations.
      Parent
      agrees to take any and all action (subject to the agreement in relation to
      the
      amount of the total Merger Consideration to be paid as set forth in Section 2.01)
      necessary to assume the Company’s obligations under the Company Stock Option
      Plans, the Company Warrants, the Company Convertible Notes and the Company
      Additional Share and Warrant Obligations.

     

    
      
        
        

      

      
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    SECTION
      6.19 Title
      to Properties.
      Parent
      agrees to use its commercially reasonable efforts (a) to ensure that Yong Yi
      Garment (Huzhou) Company Limited shall not be required to pay the land price
      differences between the Investment Agreement and the Land Grant Contracts;
      and
      (b) for Yong Yi Knitting (Huzhou) Company Limited and Yong Yi Bleaching and
      Dyeing (Huzhou) Company Limited to be granted with land use rights to Lot 2
      and
      Lot 3 as soon as reasonably practicable by entering into the respective land
      grant contract with the competent land authority with a unit land grant fee
      of
      RMB15,000 per mu.

     

    SECTION
      6.20 Labor
      Practices.
      Parent
      agrees to diligently act to remedy any alleged violations of labor and
      employment laws in connection with the matters disclosed on Section
      4.11
      of the
      Parent Disclosure Schedule.

     

    ARTICLE
      VII

     

    CONDITIONS
      TO THE MERGER

     

    SECTION
      7.01 Conditions
      to the Obligations of Each Party.
      The
      obligations of the Company, Parent and Merger Sub to consummate the Merger
      and
      the other Transactions are subject to the satisfaction or waiver (where
      permissible) of the following conditions:

     

    (a) Registration
      Statements.
      The
      Registration Statement and Form F-6 Registration Statement shall have been
      declared effective by the SEC under the Securities Act and no stop order
      suspending the effectiveness of the Registration Statement or Form F-6
      Registration Statement shall have been issued by the SEC and no proceeding
      for
      that purpose shall have been initiated by the SEC.

     

    (b) Hong
      Kong, Stock Exchange Filings.
      The
      Parent Shareholders Circular shall have been cleared with the Hong Kong Stock
      Exchange and Parent shall have received all approvals and confirmations from
      the
      Hong Kong Stock Exchange necessary to dispatch the Parent Shareholders Circular
      to the shareholders of Parent in connection with the Parent Shareholders’
Meeting.

     

    (c) Company
      Stockholder Approval.
      The
      Company Stockholders’ Approval shall have been obtained in accordance with the
      MBCA and the Company’s Articles of Incorporation, and such Company Stockholders’
Approval shall not have been rescinded, revoked or otherwise
      withdrawn.

     

    (d) Parent
      Shareholder Approval.
      The
      Parent Shareholders’ Approval shall have been obtained in accordance with the
      HKSE Listing Rules, the AMEX Listing Rules, the Hong Kong Companies Ordinance,
      the Hong Kong Securities Ordinance, the Bermuda Companies Act, the rules and
      regulations of the Bermuda Monetary Authority and the Parent’s Memorandum of
      Association and By-laws, and such approval shall not have been rescinded,
      revoked or otherwise withdrawn.

     

    
      
        
        

      

      
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    (e) Easyknit
      International Shareholder Approval.
      The
      Merger shall have been approved by the requisite affirmative vote of the
      shareholders of Easyknit International in accordance with the HKSE Listing
      Rules, the Hong Kong Companies Ordinance, the Hong Kong Securities Ordinance,
      the Bermuda Companies Act, the rules and regulations of the Bermuda Monetary
      Authority and Easyknit International’s Memorandum of Association and By-laws,
      and such approval shall not have been rescinded, revoked or otherwise
      withdrawn.

     

    (f) No
      Order.
      No
      Governmental Authority shall have enacted, issued, promulgated, enforced or
      entered any law, rule, regulation, judgment, decree, executive order or award
      which is then in effect and has the effect of making the Merger illegal or
      otherwise prohibiting consummation of the Merger.

     

    (g) No
      Governmental Litigation.
      There
      shall not be pending any action or proceeding by any Governmental Authority
      of
      any competent jurisdiction challenging or seeking to make illegal or to restrain
      or prohibit the consummation of the Merger.

     

    (h) U.S.
      Antitrust Approvals and Waiting Periods.
      Any
      waiting period (and any extension thereof) applicable to the consummation of
      the
      Merger under the HSR Act (if any) shall have expired or been
      terminated.

     

    (i) Stock
      Exchange Listing/Quotation.
      The
      Parent ADSs to be issued in the Merger shall have been authorized for listing
      on
      the AMEX and the Listing Committee of the Hong Kong Stock Exchange granting
      listing of, and permission to deal in the Parent Ordinary Shares underlying
      such
      Parent ADSs, in each case, subject to official notice of issuance and other
      customary conditions.

     

    (j) No
      Reverse Takeover.
      The
      Merger and the Transactions will not have been deemed to constitute or have
      been
      deemed to be a reverse take-over transaction under Rule 14.06 of the HKSE
      Listing Rules and the Parent will not be required to comply with the procedures
      and requirements for new listing applications as set out in Chapter 9 of the
      HKSE Listing Rules.

     

    (k) No
      Take-Over.
      The SFC
      shall have issued an advance ruling that the Merger and the Transactions do
      not
      require the holder of record of Company Shares to make a mandatory general
      offer
      for Parent Ordinary Shares as a result of the Merger under the Hong Kong Code
      on
      Takeovers and Mergers and Share Repurchases.

     

    SECTION
      7.02 Conditions
      to the Obligations of Parent and Merger Sub.
      The
      obligations of Parent and Merger Sub to consummate the Merger and the other
      Transactions are subject to the satisfaction or waiver, where permissible,
      by
      Parent or Merger Sub, as the case may be, of the following additional
      conditions:

     

    (a) Representations
      and Warranties.
      (i) The
      representations and warranties of the Company contained in Section 3.03(a)
      of this
      Agreement shall have been true and correct in all material respects as of the
      date of this Agreement and shall be true and correct in all material respects
      as
      of the Effective Time, as though made on and as of the Effective Time (except
      to
      the extent expressly made as of an earlier date, in which case as of such
      earlier date), and (ii) the representations and warranties of the Company
      otherwise contained in this Agreement shall have been true and correct as of
      the
      date of this Agreement (without giving effect to any qualification or limitation
      as to materiality or Company Material Adverse Effect set forth therein) and
      shall be true and correct as of the Effective Time (without giving effect to
      any
      qualification or limitation as to materiality or Company Material Adverse Effect
      set forth therein), as though made on and as of the Effective Time (except
      to
      the extent expressly made as of an earlier date, in which case of as such
      earlier date), except in this clause (ii) where the failure of such other
      representations of the Company to be so true and correct (without giving effect
      to any qualification or limitation as to materiality or Company Material Adverse
      Effect set forth therein) would not reasonably be expected, individually or
      in
      the aggregate, to have a Company Material Adverse Effect.

     

    
      
        
        

      

      
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    (b) Agreements
      and Covenants.
      The
      Company shall have performed or complied in all material respects with all
      agreements and covenants required by this Agreement to be performed or complied
      with by it on or prior to the Effective Time.

     

    (c) Officer’s
      Certificate.
      The
      Company shall have delivered to Parent a certificate, dated the date of the
      Closing, signed by the chief executive officer or other authorized officer
      of
      the Company, certifying as to the satisfaction of the conditions specified
      in
Sections 7.02(a)
      and
7.02(b).

     

    (d) Consents.
      The
      consents, approvals or authorizations listed on Section 7.02(d)
      of the
      Company Disclosure Schedule shall have been obtained.

     

    (e) Material
      Adverse Effect.
      No
      Company Material Adverse Effect shall have occurred since the date of this
      Agreement.

     

    (f) Tax
      Opinion.
      Parent
      shall have received the opinion of Troutman Sanders LLP to the effect that
      the
      Merger will qualify as a reorganization within the meaning of Section 368(a)
      of
      the Code, that each of Parent, Merger Sub and the Company will be a party to
      the
      reorganization within the meaning of Section 368(b) of the Code, which opinion
      may be based upon reasonable representations of fact provided by officers of
      Parent and the Company. 

     

    (g) Affiliate
      Agreements.
      Parent
shall
      have received the executed affiliate letters contemplated pursuant to
Section 6.08(a),
      which
      agreements and any supplements thereto required thereby shall be in full force
      and effect.

     

    (h) Parent
      Due Diligence.
      The
      result of Parent’s due diligence with respect to the Company and the Company’s
      assets, businesses and operations being satisfactory to Parent, in its sole
      and
      absolute discretion.

     

    (i) Employment
      Agreements.
      Parent
shall
      have received the employment agreements contemplated pursuant to Section 6.08(c),
      duly
      executed by the employees who are parties thereto, in form and substance
      satisfactory to Parent.

     

    (j) Appraisal
      Rights.
      Holders
      of no more than 2% of the issued and outstanding shares of Company Common Stock
      as of the Effective Time shall have demanded and perfected appraisal or
      dissenters rights pursuant to the MBCA.

     

    (k) Valuation
      of Mines.
      Parent
      shall have received a certified copy of each technical valuation or reserves
      report of each mining property prepared by qualified mining experts in which
      the
      Company or a Company Subsidiary has an interest and the form and substance
      of
      each such report shall be satisfactory to Parent in its sole
      discretion.

    
      
        
        

      

      
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    SECTION
      7.03 Conditions
      to the Obligations of the Company.
      The
      obligations of the Company to consummate the Merger are subject to the
      satisfaction or waiver, where permissible, by the Company of the following
      additional conditions:

     

    (a) Representations
      and Warranties.
      (i) The
      representations and warranties of Parent contained in Section 4.03(a)
      of this
      Agreement shall have been true and correct in all material respects as of the
      date of this Agreement and shall be true and correct in all material respects
      as
      of the Effective Time, as though made on and as of the Effective Time (except
      to
      the extent expressly made as of an earlier date, in which case as of such
      earlier date), and (ii) the representations and warranties of Parent otherwise
      contained in this Agreement shall have been true and correct as of the date
      of
      this Agreement (without giving effect to any qualification or limitation as
      to
      materiality or Parent Material Adverse Effect set forth therein) and shall
      be
      true and correct as of the Effective Time (without giving effect to any
      qualification or limitation as to materiality or Parent Material Adverse Effect
      set forth therein), as though made on and as of the Effective Time (except
      to
      the extent expressly made as of an earlier date, in which case of as such
      earlier date), except in this clause (ii) where the failure of such other
      representations of Parent to be so true and correct (without giving effect
      to
      any qualification or limitation as to materiality or Parent Material Adverse
      Effect set forth therein) would not reasonably be expected, individually or
      in
      the aggregate, to have a Parent Material Adverse Effect.

     

    (b) Agreements
      and Covenants.
      Parent
      and Merger Sub shall have performed or complied in all material respects with
      all agreements and covenants required by this Agreement to be performed or
      complied with by it on or prior to the Effective Time.

     

    (c) Officer’s
      Certificate.
      Parent
      shall have delivered to the Company a certificate, dated the date of the
      Closing, signed by the chief executive officer or other authorized officer
      of
      Parent, certifying as to the satisfaction of the conditions specified in
Sections 7.03(a)
      and
7.03(b).

     

    (d) Consents.
      The
      consents, approvals or authorizations listed on Section 7.03(d)
      of the
      Parent Disclosure Schedule shall have been obtained.

     

    (e) Material
      Adverse Effect.
      No
      Parent Material Adverse Effect shall have occurred since the date of this
      Agreement.

     

    (f) Tax
      Opinion. The
      Company shall have received the opinion of Baker & McKenzie, counsel to the
      Company to the effect that the Merger will qualify as a reorganization within
      the meaning of Section 368(a) of the Code and that each of Parent, Merger Sub
      and the Company will be a party to the reorganization within the meaning of
      Section 368(b) of the Code, which opinion may be based upon reasonable
      representations of fact provided by officers of Parent and the
      Company.

     

    (g) Company
      Due Diligence.
      The
      result of the Company’s due diligence with respect to Parent and Parent’s
      assets, businesses and operations being satisfactory to the Company, in its
      sole
      and absolute discretion.

    
      
        
        

      

      
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    (h) Registration
      Rights Agreement.
      The
      Company shall have received the executed registration rights agreement
      contemplated pursuant to Section 6.08(b),
      which
      agreement and any supplement thereto required thereby shall be in full force
      and
      effect.

     

    (i) Parent
      Board Appointments.
      Parent
      shall have made, and received any required shareholder approval for, the Parent
      Board Appointments.

     

    ARTICLE
      VIII

     

    TERMINATION,
      AMENDMENT AND WAIVER

     

    SECTION
      8.01 Termination.
      This
      Agreement may be terminated and the Merger and the other Transactions may be
      abandoned at any time prior to the Effective Time, notwithstanding any requisite
      approval and adoption of this Agreement and the Transactions by the stockholders
      of the Company or Parent, by action taken or authorized by the respective
      party’s Board of Directors, as follows:

     

    (a) by
      mutual
      written consent of Parent, Merger Sub and the Company; or

     

    (b) by
      either
      Parent or the Company if the Effective Time shall not have occurred on or before
      December 31, 2007 (the “End
      Date”);
      provided,
      however,
      that
      the right to terminate this Agreement under this Section 8.01(b)
      or to
      extend the End Date shall not be available to any party whose failure to fulfill
      any obligation under this Agreement has been the cause of, or resulted in,
      the
      failure of the Effective Time to occur on or before such date; or

     

    (c) by
      either
      Parent or the Company if any Governmental Authority in the United States, Hong
      Kong or Bermuda shall have enacted, issued, promulgated, enforced or entered
      any
      injunction, order, decree or ruling which has become final and nonappealable
      and
      has the effect of making consummation of the Merger illegal or otherwise
      preventing or prohibiting consummation of the Merger; or

     

    (d) by
      Parent
      (at any time prior to the Company obtaining the Company Stockholders’ Approval)
      if a Triggering Event (as defined below) with respect to the Company shall
      have
      occurred; or

     

    (e) by
      the
      Company (at any time prior to Parent obtaining the Parent Shareholders’
Approval) if a Triggering Event with respect to Parent shall have occurred;
      or

     

    (f) by
      either
      Parent or the Company if the Company Stockholders’ Approval is not obtained at
      the Company Stockholders’ Meeting; or

     

    (g) by
      either
      Parent or the Company if the Parent Shareholders’ Approval is not obtained at
      the Parent Shareholders’ Meeting; or

     

    (h) by
      Parent
      upon a material breach of any representation, warranty, covenant or agreement
      on
      the part of the Company set forth in this Agreement, or if any representation
      or
      warranty of the Company shall have become untrue, in either case such that
      the
      conditions set forth in Section 7.02(a)
      or
Section 7.02(b)
      would
      not be satisfied (“Terminating
      Company Breach”);
      provided,
      however,
      that,
      if such Terminating Company Breach is curable by the Company, Parent may not
      terminate this Agreement under this Section 8.01(h)
      for so
      long as the Company continues to exercise its reasonable best efforts to cure
      such breach, unless such breach is not cured within 30 days after notice of
      such
      breach is provided by Parent to the Company; provided further
      that
      Parent shall not itself be in breach such that the conditions set forth in
      Section
      7.03(a)
      or
(b)
      would
      not be satisfied; or

     

    
      
        
        

      

      
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    (i) by
      the
      Company upon a breach of any representation, warranty, covenant or agreement
      on
      the part of Parent and Merger Sub set forth in this Agreement, or if any
      representation or warranty of Parent and Merger Sub shall have become untrue,
      in
      either case such that the conditions set forth in Section
      7.03(a)
      or
Section 7.03(b)
      would
      not be satisfied (“Terminating
      Parent Breach”);
      provided,
      however,
      that if
      such Terminating Parent Breach is curable by Parent, the Company may not
      terminate this Agreement under this Section 8.01(i)
      for so
      long as Parent continues to exercise its reasonable best efforts to cure such
      breach, unless such breach is not cured within 30 days after notice of such
      breach is provided by the Company to Parent; provided
      further
      that the
      Company shall not itself be in breach such that the conditions set forth in
      Section 7.02(a)
      or
(b)
      would
      not be satisfied; or

     

    (j) by
      the
      Company (at any time prior to the Company Stockholders’ Meeting) in order to
      enter into a definitive agreement with respect to a Superior Proposal if the
      Company Board shall have made a Change in the Company Board Recommendation
      in
      compliance with Section 6.04(c);
      provided,
      however,
      that
      any termination of this Agreement pursuant to this Section 8.01(j)
      shall
      not be effective until the Company has made full payment of all amounts provided
      under Section 8.03;
      or

     

    (k) by
      Parent
      (at any time prior to the Parent Shareholders’ Meeting) in order to enter into a
      definitive agreement with respect to a Superior Proposal if the Parent Board
      shall have made a Change in the Parent Board Recommendation in compliance with
      Section 6.04(d);
      provided,
      however,
      that
      any termination of this Agreement pursuant to this Section 8.01(k)
      shall
      not be effective until Parent has made full payment of all amounts provided
      under
      Section 8.03.

     

    For
      purposes of this Agreement, a “Triggering
      Event”
with
      respect to a party hereto shall be deemed to have occurred if: (i) the Board
      of
      Directors of such party or any committee thereof withdraws, modifies or changes
      its recommendation of this Agreement, the Merger or the Transactions in a manner
      adverse to the other party or shall have resolved to do so; (ii) the Board
      of
      Directors of such party shall have recommended to the stockholders of such
      party
      a Competing Transaction or shall have resolved to do so or shall have entered
      into any letter of intent or similar document or any agreement, contract or
      commitment accepting any Competing Transaction; (iii) such party shall have
      failed to include in the Proxy Statement or the Parent Shareholders Circular,
      as
      the case may be, the recommendation of the Board of Directors of such party
      in
      favor of the approval and adoption of this Agreement and the approval of the
      Merger and other Transactions or approval of the Share Issuance, the New Stock
      Option Plans Adoption or the Parent Board Appointments, as applicable; or (iv)
      a
      tender offer or exchange offer for 20% or more of the outstanding shares of
      capital stock of such party is commenced, and the Board of Directors of such
      party fails to recommend against acceptance of such tender offer or exchange
      offer by its stockholders (including by taking no position with respect to
      the
      acceptance of such tender offer or exchange offer by its stockholders) within
      20
      days of the announcement of such tender offer or exchange offer.

     

    
      
        
        

      

      
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    SECTION
      8.02 Effect
      of Termination.
      Any
      termination of this Agreement pursuant to Section 8.01
      will be
      effective immediately upon the delivery of a valid written notice of the
      terminating party to the non-terminating party. In the event of the termination
      of this Agreement pursuant to Section 8.01,
      this
      Agreement shall forthwith become void, and there shall be no liability under
      this Agreement on the part of any party hereto, except (a) as set forth in
      Section 8.03
      and
Article IX
      and (b)
      nothing herein shall relieve any party from liability for any fraud or any
      breach of any of its representations, warranties, covenants or agreements set
      forth in this Agreement prior to such termination; provided,
      however,
      that
      the Confidentiality Arrangements shall survive any termination of this
      Agreement.

     

    SECTION
      8.03 Fees
      and Expenses; Termination Fees. 

     

    (a) All
      fees
      and expenses incurred in connection with this Agreement, the Merger and the
      other Transactions, including fees and expenses of financial advisors, financial
      sponsors, legal counsel and other advisors (collectively, “Advisors”),
      will
      be paid by the party incurring such expenses whether or not the Merger is
      consummated; provided,
      however,
      that
      (A) Parent and the Company will share equally the filing fee for the
      Notification and Report Forms, if any, filed with the FTC and DOJ under the
      HSR
      Act and (B) the Company shall bear all costs and fees associated with the
      engagement of the Depositary and the negotiation, execution and delivery of
      the
      Parent Deposit Agreement and the filing of the Form F-6 Registration Statement;
      provided further
      that the
      fees in (A) shall not be deemed to include fees or expenses payable to
      Advisors.

     

    (b) If
      a
      Company Payment Event occurs, the Company shall pay Parent (by wire transfer
      of
      immediately available funds), if pursuant to clause (i) below, simultaneously
      with the occurrence of such Company Payment Event or,
      if
      pursuant to clause (ii) below, within two business days following such Company
      Payment Event, a fee of 3% of the aggregate Merger Consideration. A
“Company
      Payment Event”
means
      the termination of this Agreement pursuant to:

     

    (i) (A)
      Section 8.01(d),
      (B)
Section 8.01(h)
      with
      respect to a material breach of Section 6.04
      by the
      Company, or (C) Section
      8.01(j);
      or

     

    (ii) ‎Section 8.01(b),
      but
      only if, both (A) prior to the End Date, a Competing Transaction shall have
      been
      publicly announced or otherwise communicated to the Company Board and not
      withdrawn, revoked or rejected prior to the date of termination of this
      Agreement pursuant to Section 8.01(b),
      and (B)
      the Company, within 12 months after such termination, enters into a definitive
      agreement with respect to, or consummates a Competing Transaction (provided
      that
      for
      purposes of this clause (ii), each reference to “20%” in the definition of
      Competing Transaction shall be deemed a reference to “50%”).

     

    (c) If
      a
      Parent Payment Event occurs, Parent shall pay the Company (by wire transfer
      of
      immediately available funds) if pursuant to clause (ii) in the succeeding
      sentence, simultaneously with the occurrence of such Parent Payment Event or,
      if
      pursuant to clause (i) in the succeeding sentence, within two business days
      following such Parent Payment Event, a fee of 3% of the aggregate Merger
      Consideration.  A “Parent
      Payment Event”
means
      the termination of this Agreement pursuant to:

     

    (i) (A)
      Section 8.01(e),
      (B)
Section 8.01(i)
      with
      respect to a material breach of Section 6.04
      by
      Parent, or (C) Section 8.01(k);
      or

     

    
      
        
        

      

      
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    (ii) Section 8.01(b),
      but
      only if, both (A) prior to the End Date, a Competing Transaction shall have
      been
      publicly announced or otherwise communicated to the Parent Board and not
      withdrawn, revoked or rejected prior to the date of termination of this
      Agreement pursuant to Section 8.01(b),
      and (B)
      Parent, within 12 months after such termination, enters into a definitive
      agreement with respect to, or consummates a Competing Transaction (provided
      that
      for purposes of this clauses (ii), each reference to “20%” in the definition of
      Competing Transaction shall be deemed a reference to “50%”).

     

    (d) If
      a
      Company Payment Event occurs, the Company shall reimburse Parent (by wire
      transfer of immediately available funds), no later than two business days after
      such termination, for 100% of its documented out-of-pocket fees and expenses
      (including reasonable fees and expenses of its counsel) up to US$500,000
      actually incurred by it in connection with this Agreement and the transactions
      contemplated hereby.

     

    (e) If
      a
      Parent Payment Event occurs, Parent shall reimburse the Company (by wire
      transfer of immediately available funds), no later than two business days after
      such termination, for 100% of its documented out-of-pocket fees and expenses
      (including reasonable fees and expenses of its counsel) up to US$500,000
      actually incurred by it in connection with this Agreement and the transactions
      contemplated hereby.

     

    SECTION
      8.04 Amendment.
      This
      Agreement may be amended by the parties hereto by action taken by or on behalf
      of their respective Boards of Directors at any time prior to the Effective
      Time;
provided,
      however,
      that,
      after the approval and adoption of this Agreement and the Transactions by the
      stockholders of the Company, no amendment may be made that would reduce the
      amount or change the type of consideration into which each Share shall be
      converted upon consummation of the Merger. This Agreement may not be amended
      except by an instrument in writing signed by each of the parties
      hereto.

     

    SECTION
      8.05 Waiver.
      At any
      time prior to the Effective Time, any party hereto may, by action taken or
      authorized by its Board of Directors, (a) extend the time for the performance
      of
      any obligation or other act of any other party hereto, (b) waive any breach
      in
      the representations and warranties of any other party contained herein or in
      any
      document delivered pursuant hereto and (c) waive compliance with any agreement
      of any other party or any condition to its own obligations contained herein.
      Any
      such extension or waiver shall be valid only if set forth in an instrument
      in
      writing signed by the party or parties to be bound thereby.

     

    
      
        
        

      

      
        85

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      IX

     

    GENERAL
      PROVISIONS

     

    SECTION
      9.01 Survival.
      The
      representations and warranties in this Agreement and in any certificate
      delivered pursuant hereto shall terminate at the Effective Time or upon the
      termination of this Agreement pursuant to Section 8.01
      as
      provided in Section 8.02.
      The
      covenants and agreements of the parties hereto (including the Surviving
      Corporation after the Merger) that by their terms survive the Effective Time,
      shall survive the Effective Time.

     

    SECTION
      9.02 Notices.
      All
      notices, requests, claims, demands and other communications hereunder shall
      be
      in writing and shall be given (and shall be deemed to have been duly given
      upon
      receipt) by delivery in person, by telecopy or by registered or certified mail
      (postage prepaid, return receipt requested) to the respective parties at the
      following addresses (or at such other address for a party as shall be specified
      in a notice given in accordance with this Section 9.02:

     

    (a)   if
      to
      Parent or Merger Sub:

     

    Easyknit
      Enterprises Holdings Limited

    7th
      Floor,
      Hong Kong Spinners Building

    Phase
      6,
      481-483 Castle

    Peak
      Road, Cheung Sha Wan,

    Kowloon,
      Hong Kong SAR

    Attention:
      Mr. Jimmy Kwong

    Facsimile
      No: 852-2310-1061

    

    with
      copies to:

     

    Richards
      Butler

    20F
      Alexandra House, 16-20 Chater Road

    Central,
      Hong Kong

    Attention:
      Mr. David Butler

    Facsimile
      No: 852-2810-0664

    

    Troutman
      Sanders LLP

    Suite
      3403, Two Exchange Square

    8
      Connaught Place

    Central,
      Hong Kong

    Attention:
      Ms. Olivia Lee

    Facsimile
      No: 852-2533-7898

    

    Appleby
      Hunter Bailhache

    5511
      The
      Center99 Queen’s Road

    Central,
      Hong Kong

    Attention:
      Mr. Paul Cheuk

    Facsimile
      No: 852-2524-5548

     

    
      
        
        

      

      
        86

        
          

        

      

      
        
        

      

    

    

    (b)   if
      to the
      Company:

     

    Wits
      Basin Precious Minerals Inc.

    80
      South
      8th Street

    Suite
      900

    Minneapolis,
      Minnesota 55462

    U.S.A.

    Attention:
      Mr. Mark D. Dacko

    Facsimile
      No: 1-612-395-5276

    

    with
      copies to:

     

    Baker
      & McKenzie

    14/F.,
      Hutchison House

    10
      Harcourt Road

    Hong
      Kong

    Attention:
      Cheung Yuk Tong

    Facsimile
      No: 852-2842-0565

    

    Maslon
      Edelman Borman & Brand, LLP

    3300
      Wells Fargo Center

    90
      South
      Seventh Street

    Minneapolis,
      Minnesota 55402-4140

    U.S.A.

    Attention:
      Mr. William M. Mower

    Facsimile
      No: 1-612-672-8397

    

    SECTION
      9.03 Certain
      Definitions.
      ll) For
      purposes of this Agreement:

     

    “affiliate”
of
      a
      specified person means a person who is an affiliate within the meaning of Rule
      145 of the rules and regulations promulgated under the Securities
      Act.

     

    “beneficial
      owner”,
      with
      respect to any securities, has the meaning ascribed to such term under Rule
      13d-3(a) of the Exchange Act.

     

    “business
      day”
means
      any day on which the principal offices of the SEC in Washington, D.C. are open
      to accept filings, or, in the case of determining a date when any payment is
      due, any day on which banks are not required or authorized to close and are
      not
      closed in Hong Kong or New York.

     

    “Central
      Provident Scheme”
means
      any recognized mandatory social security scheme that is not subject to U.S.
      Law
      and under which benefits may be payable only upon the retirement, unemployment,
      physical injury or disability of the insured, which has or is capable of having
      effect in relation to one or more descriptions or categories of employment
      so as
      to provide benefits, in the form of pensions, allowances, gratuities or other
      payments, payable on termination of service, death or retirement, to or in
      respect of persons gainfully employed under a contract of service in any
      employment.

     

    
      
        
        

      

      
        87

        
          

        

      

      
        
        

      

    

     

    “Company
      ERISA Affiliate”
means
      each entity that is treated as a single employer with the Company or any Company
      Subsidiary pursuant to Section 414 of the Code.

     

    “Company
      Material Adverse Effect”
means
      any change, event, violation, circumstance or effect (any such item, an
“Effect”)
      that,
      individually or when taken together with all other Effects that have occurred
      during the applicable measurement period prior to the date of determination
      of
      the occurrence of the Company Material Adverse Effect, is or is reasonably
      likely to be materially adverse to the business, financial condition or results
      of operations of the Company and the Company Subsidiaries, taken as a whole;
      provided,
      however,
      in no
      event will any of the following, alone or in combination, be deemed to
      constitute nor will any of the following be taken into account in determining
      whether there has been or will be, a Company Material Adverse Effect: (i)
      changes in general economic conditions or changes in securities markets in
      general, which Effects do not have a materially disproportionate effect on
      the
      Company and the Company Subsidiaries, taken as a whole; (ii) changes in the
      industries in which the Company and the Company Subsidiaries operate, which
      Effects do not have a materially disproportionate effect on the Company and
      the
      Company Subsidiaries, taken as a whole; (iii) any Effect caused by the public
      announcement or pendency of the transactions contemplated hereby; (iv) any
      Effect resulting from compliance by the Company with the terms and conditions
      of
      this Agreement, including actions or omissions of the Company or any Company
      Subsidiary taken with the written consent of Parent; (v) a change in Law or
      US
      GAAP or the interpretations thereof, which Effects do not have a materially
      disproportionate effect on the Company and the Company Subsidiaries, taken
      as a
      whole; and (vi) any declaration of war by or against, or an escalation of
      hostilities involving, or an act of terrorism against, the United States, China
      or Hong Kong, which Effects do not have a materially disproportionate effect
      on
      the Company and the Company Subsidiaries, taken as a whole.

     

    “control”
      (including the terms “controlled
      by”
and
      “under
      common control with”)
      means
      the possession, directly or indirectly, or as trustee or executor, of the power
      to direct or cause the direction of the management and policies of a person,
      whether through the ownership of voting securities, as trustee or executor,
      by
      contract or credit arrangement or otherwise.

     

    “Easyknit
      International”
means
      Easyknit International Holdings Limited, a company incorporated in
      Bermuda.

     

    “Environmental
      Laws”
means
      any United States federal, state or local or non-United States law at national,
      provincial or local level (including the common law, statutes, regulations,
      rules, orders and contractual obligations) relating to: (i) releases or
      threatened releases of Hazardous Substances or materials containing Hazardous
      Substances; (ii) the manufacture, handling, transport, use, treatment, storage
      or disposal of Hazardous Substances or materials containing Hazardous
      Substances; or (iii) pollution or protection of the environment or human health,
      occupational safety or health, sanitation, or natural resources, including
      laws
      relating to emissions, spills, discharges, generation, storage, leaks,
      injection, leaching, seepage, releases, or threatened releases of Hazardous
      Substances into the environment (including ambient air, surface water,
      groundwater, mining or reclamation of mineral land, land surface or subsurface
      strata).

     

    
      
        
        

      

      
        88

        
          

        

      

      
        
        

      

    

     

    “Environmental
      Permits”
means
      any permit (including waste water discharge permit), approval, identification
      number, license and other authorization required under or issued pursuant to
      any
      applicable Environmental Laws.

     

    “Hazardous
      Substances”
means:
      (i) those substances defined in or regulated under the following United States
      federal statutes and their state counterparts, as each may be amended from
      time
      to time, and all regulations thereunder: the Hazardous Materials Transportation
      Act, the Resource Conservation and Recovery Act, the Comprehensive Environmental
      Response, Compensation and Liability Act, the Clean Water Act, the Safe Drinking
      Water Act, the Atomic Energy Act, the Federal Insecticide, Fungicide, and
      Rodenticide Act and the Clean Air Act; (ii) petroleum and petroleum products,
      including crude oil and any fractions thereof; (iii) natural gas, synthetic
      gas,
      and any mixtures thereof; (iv) polychlorinated biphenyls, asbestos and radon;
      and (v) any other wastes, pollutants, contaminant or other substances (including
      liquids, solids, gases, ions, living organisms and noise) that may be harmful
      to
      human health or other life or the environment or a nuisance to any person or
      that may make the use or ownership of any affected land or property more costly,
      or any other chemical, material or substance, exposure to which is now or
      hereafter prohibited or limited, or which is otherwise regulated by, or for
      which standards of conduct are imposed by, any Governmental Authority pursuant
      to any Environmental Laws.

     

    “HK$”
means
      Hong Kong dollars, the lawful currency of Hong Kong.

     

    “Huzhou
      Land”
means,
      collectively, the three pieces of land located in Zhili Town of Huzhou
      Municipality, Zhejiang Province, the PRC of a total area of approximately 632
      mu, the particulars of which are set forth in Section 4.12(a)
      of the
      Parent Disclosure Schedule.

     

    “Huzhou
      Zhili Government”
means
      the People’s Government of Zhili Town, Huzhou Municipality, the People's
      Republic of China.

     

    “Intellectual
      Property”
means:
      (i) patents, patent applications, and all proprietary rights associated
      therewith; (ii) all trademark rights, trademarks, service marks, trade dress,
      logos, trade names, corporate names and other source identifiers, registrations
      and applications for registration thereof, business identifiers, domain names
      and brand names; (iii) copyrightable works, copyrights, registrations and
      applications for registration thereof, and all other rights associated therewith
      and the underlying works of authorship; (iv) all inventions, mask works and
      mask
      work registrations, know-how, discoveries, improvements, designs, computer
      source codes, programs and other software (including all machine readable code,
      printed listings of code, documentation and related property and information),
      trade secrets, websites, shop and royalty rights, employee covenants and
      agreements respecting intellectual property and non-competition and all other
      types of intellectual property; (v) all confidential and proprietary
      information; (vi) all contracts or agreements granting any right, title, license
      or privilege under the intellectual property rights of any third party; and
      (vii) all registrations of any of the foregoing, all applications therefor,
      all
      goodwill associated with any of the foregoing and all claims for infringement
      or
      breach thereof.

     

    “Investment
      Agreements”
means,
      collectively, the investment agreement entered into between Easyknit (Mauritius)
      Limited and the Huzhou Zhili Government on December 24, 2004 and a series of
      supplementary agreements thereof between the parties between December 28, 2004
      and July 2, 2006 for the purpose of granting to Easyknit (Mauritius) Limited
      (or
      its wholly owned subsidiaries in Huzhou Municipality) the land use rights to
      a
      piece of land of 632.289 mu at a price of RMB15,000 per mu.

     

    
      
        
        

      

      
        89

        
          

        

      

      
        
        

      

    

     

    “Land
      Grant Contracts”
means,
      collectively, the land grant contracts entered into between the Land and
      Resources Bureau of Huzhou Municipality, Zhejiang Province, the People's
      Republic of China and Easyknit Garment (Huzhou) Co., Ltd. on August 1, 2005
      and
      August 31, 2006 respectively, pursuant to which the land use rights to two
      pieces of land of 184 mu and 67.6 mu in Huzhou Municipality were granted to
      Easyknit Garment (Huzhou) Co., Ltd., at a price of approximately RMB90,667.12
      per mu and RMB112,667 per mu, respectively.

     

    “Mandatory
      Provident Fund”
shall
      have the same meaning as is ascribed to it by the Mandatory Provident Fund
      Schemes Ordinance, Chapter 485 of the Laws of Hong Kong.

     

    “Parent
      ADRs”
means
      American Depositary Receipts, each of which evidences one Parent
      ADS.

     

    “Parent
      ADSs”
means
      the American Depositary Shares issued pursuant to the Parent Deposit Agreement,
      each of which represents the right to receive 100 Parent Ordinary
      Shares.

     

    “Parent
      ERISA Affiliate”
means
      each entity that is treated as a single employer with Parent or any Parent
      Subsidiary under Section 414 of the Code.

     

    “Parent
      Material Adverse Effect”
means
      any Effect that, individually or when taken together with all other Effects
      that
      have occurred during the applicable measurement period prior to the date of
      determination of the occurrence of the Parent Material Adverse Effect, is or
      is
      reasonably likely to be materially adverse to the business, financial condition
      or results of operations of Parent and the Parent Subsidiaries, taken as a
      whole; provided,
      however,
      in no
      event will any of the following, alone or in combination, be deemed to
      constitute nor will any of the following be taken into account in determining
      whether there has been or will be, a Parent Material Adverse Effect: (i) changes
      in general economic conditions or changes in securities markets in general,
      which Effects do not have a materially disproportionate effect on Parent and
      the
      Parent Subsidiaries, taken as a whole; (ii) changes in the industries in which
      Parent and the Parent Subsidiaries operate, which Effects do not have a
      materially disproportionate effect on Parent and the Parent Subsidiaries, taken
      as a whole; (iii) any Effect caused by the public announcement or pendency
      of
      the transactions contemplated hereby; (iv) any Effect resulting from compliance
      by Parent or Merger Sub with the terms and conditions of this Agreement,
      including actions or omissions of Parent or any Parent Subsidiary taken with
      the
      written consent of the Company; (v) a change in Law or HKFRS or the
      interpretations thereof, which Effects do not have a materially disproportionate
      effect on Parent and the Parent Subsidiaries, taken as a whole; and (vi) any
      declaration of war by or against, or an escalation of hostilities involving,
      or
      an act of terrorism against, the United States, China or Hong Kong, which
      Effects do not have a materially disproportionate effect on Parent and the
      Parent Subsidiaries, taken as a whole.

     

    “Parent
      PRC Real Properties”
mean,
      collectively, each parcel of the Huzhou Land, the parcel of land respectively
      in
      Dongguan and Heyuan of the PRC and the buildings and structures thereon, the
      particulars of which are set forth in Section 4.12(a)
      of the
      Parent Disclosure Schedule.

     

    
      
        
        

      

      
        90

        
          

        

      

      
        
        

      

    

     

    “Parent
      PRC Subsidiaries”
mean,
      collectively,
      Dongguan Yong Yao Bleaching and Dyeing Company Limited, Yong Yi Knitting
      (Heyuen) Company Limited, Yong Yi Garment (Huzhou) Company Limited, Yong Yi
      Knitting (Huzhou) Company Limited, Yong Yi Bleaching and Dyeing Company Limited;
      and a “Parent
      PRC Subsidiary”
means
      any one of them.

     

    “Permitted
      Liens”
means:
      (i) Liens for current taxes and assessments not yet past due as of the Effective
      Time or which are being legitimately contested by appropriate proceedings;
      (ii)
      inchoate mechanics’ and materialmen’s Liens for construction in progress; and
      (iii) workmen’s, repairmen’s, warehousemen’s, landlord’s and carriers’ Liens
      arising in the ordinary course of business consistent with past practice that
      are not delinquent and which, individually or in the aggregate, could not
      reasonably be expected to be materially adverse to the use, value or ownership
      of the subject property.

     

    “person”
means
      an individual, corporation, partnership, limited partnership, limited liability
      company, syndicate, person (including, without limitation, a “person” as defined
      in Section 13(d)(3) of the Exchange Act), trust, association or entity or
      government, political subdivision, agency or instrumentality of a
      government.

     

    “PRC”
means
      the People’s Republic of China.

     

    “subsidiary”
or
      “subsidiaries”
of
      the
      Company, the Surviving Corporation, Parent or any other person means an
      affiliate controlled by such person, directly or indirectly, through one or
      more
      intermediaries. Where appropriate in the context, “subsidiary” includes any of
      the branches, liaison offices or representative offices as established by any
      of
      the Company, the Surviving Corporation or Parent in the PRC.

     

    “Taxes”
shall
      mean any and all taxes, fees, levies, duties, tariffs, imposts and other charges
      of any kind (together with any and all interest, penalties, additions to tax
      and
      additional amounts imposed with respect thereto) imposed by any Governmental
      Authority or taxing authority, including, without limitation: taxes or other
      charges on or with respect to income, franchise, windfall or other profits,
      gross receipts, property, sales, use, capital stock, payroll, employment, social
      security, workers’ compensation, unemployment compensation or net worth; taxes
      or other charges in the nature of excise, withholding, ad valorem, stamp,
      transfer, value-added or gains taxes; license, registration and documentation
      fees; and customers’ duties, tariffs and similar charges.

     

    “Tax
      Returns”
means
      any and all reports, returns, declarations, claims for refund, elections,
      disclosures, estimates, information reports or returns or statements required
      to
      be supplied to a taxing authority in connection with Taxes, including any
      schedule or attachment thereto or amendment thereof.

     

    “US$”
means
      United States dollars, the lawful currency of the United States of
      America.

     

    
      
        
        

      

      
        91

        
          

        

      

      
        
        

      

    

     

    (b) The
      following terms have the meaning set forth in the Sections set forth
      below:

    

      
        	
                Defined
                  Term

              	 	
                Location
                  of Definition

              
	
                Action

              	 	
                §
                  3.09

              
	
                Advisors

              	 	
                §
                  8.03(a)

              
	
                Agreement

              	 	
                Preamble

              
	
                AMEX

              	 	
                §
                  2.02(e)

              
	
                AMEX
                  Listing Rules

              	 	
                §
                  6.01(f)

              
	
                Articles
                  of Merger

              	 	
                §
                  1.02

              
	
                Bermuda
                  Companies Act

              	 	
                §
                  4.07(c)

              
	
                Blue
                  Sky Laws

              	 	
                §
                  3.05(b)

              
	
                Certificates

              	 	
                §
                  2.02(a)

              
	
                Change
                  in the Company Board Recommendation

              	 	
                §
                  6.04(c)

              
	
                Change
                  in the Parent Board Recommendation

              	 	
                §
                  6.04(d)

              
	
                Closing

              	 	
                §
                  1.02

              
	
                COBRA

              	 	
                §
                  3.10(c)

              
	
                Code

              	 	
                Recitals

              
	
                Company

              	 	
                Preamble

              
	
                Company
                  Additional Share and Warrant Obligations

              	 	
                §
                  3.03(a)

              
	
                Company
                  Board

              	 	
                Recitals

              
	
                Company
                  Board Recommendation

              	 	
                §
                  6.01(c)

              
	
                Company
                  Common Stock

              	 	
                §
                  2.01(a)

              
	
                Company
                  Convertible Notes 

              	 	
                §
                  3.03(a)

              
	
                Company
                  Designated Directors

              	 	
                §
                  6.14(a)

              
	
                Company
                  Disclosure Schedule

              	 	
                Article
                  III

              
	
                Company
                  Grant Date

              	 	
                §
                  3.03(a)

              
	
                Company
                  Licensed Intellectual Property

              	 	
                §
                  3.13(a)

              
	
                Company
                  Notes Purchase Agreement

              	 	
                §
                  3.03(a)

              
	
                Company
                  Owned Intellectual Property

              	 	
                §
                  3.13(a)

              
	
                Company
                  Payment Event

              	 	
                §
                  8.03(b)

              
	
                Company
                  Permits

              	 	
                §
                  3.06(a)

              
	
                Company
                  Plans

              	 	
                §
                  SECTION 3.10(a)

              
	
                Company
                  Preferred Stock

              	 	
                §
                  3.03(a)

              
	
                Company
                  SEC Reports

              	 	
                §
                  3.07(a)

              
	
                Company
                  Shares

              	 	
                §
                  2.01(a)

              
	
                Company
                  Shares Trust

              	 	
                §
                  2.02(e)

              
	
                Company
                  Stock Awards

              	 	
                §
                  3.03(a)

              
	
                Company
                  Stock Option Plans

              	 	
                §
                  2.04(a)

              
	
                Company
                  Stock Options

              	 	
                §
                  2.04(a)

              
	
                Company
                  Stockholders’ Approval

              	 	
                §3.18(b)

              
	
                Company
                  Stockholders’ Meeting

              	 	
                §
                  6.01(a)

              
	
                Company
                  Subsidiary

              	 	
                §
                  3.01(a)

              
	
                Company
                  Title Policies

              	 	
                §
                  3.12(a)

              
	
                Company
                  Use Documents

              	 	
                §
                  3.12(b)

              
	
                Company
                  Warrants

              	 	
                §
                  2.05(a)

              
	
                Compensation
                  Plans

              	 	
                §
                  3.10(a)

              
	
                Competing
                  Transaction

              	 	
                §
                  6.04(e)

              

      

       

      
        
          
          

        

        
          92

          
            

          

        

        
          
          

        

      

       

        	
                Defined
                  Term

              	 	
                Location
                  of Definition

              
	
                Confidentiality
                  Arrangements

              	 	
                §
                  6.03(b)

              
	
                Continuing
                  Employees

              	 	
                §
                  6.05(a)

              
	
                Dissenting
                  Shares

              	 	
                §
                  2.07

              
	
                Effect

              	 	
                §
                  9.03(a)

              
	
                Effective
                  Time

              	 	
                §
                  1.02

              
	
                End
                  Date

              	 	
                §
                  8.01(b)

              
	
                ERISA

              	 	
                §
                  3.10(a)

              
	
                ERISA
                  Plans

              	 	
                §
                  3.10(a)

              
	
                Excess
                  ADSs

              	 	
                §
                  2.02(e)

              
	
                Exchange
                  Act

              	 	
                §
                  3.05(b)

              
	
                Exchange
                  Agent

              	 	
                §
                  2.02(a)

              
	
                Exchange
                  Ratio

              	 	
                §
                  2.01(a)

              
	
                Excluded
                  Company Shares

              	 	
                §
                  2.01(b)

              
	
                Flexible
                  Benefit Plan

              	 	
                §
                  3.10(a)

              
	
                Foreign
                  Corrupt Practices Act

              	 	
                §
                  3.19

              
	
                Form
                  F-6 Registration Statement

              	 	
                §
                  6.01(a)

              
	
                Governmental
                  Authority

              	 	
                §
                  3.05(b)

              
	
                HKAS(s)

              	 	
                §
                  4.07(d)

              
	
                HKFRS

              	 	
                §
                  4.07(d)

              
	
                HKFRS(s)

              	 	
                §
                  4.07(d)

              
	
                HKSE
                  Listing Rules

              	 	
                §
                  2.04(a)

              
	
                Hong
                  Kong Announcement

              	 	
                §
                  6.01(b)

              
	
                Hong
                  Kong Companies Ordinance

              	 	
                §
                  4.07(c)

              
	
                Hong
                  Kong Securities Ordinance

              	 	
                §
                  4.07(c)

              
	
                Hong
                  Kong Stock Exchange

              	 	
                §
                  2.04(c)

              
	
                HSR
                  Act

              	 	
                §
                  3.05(b)

              
	
                Investment
                  Company Act

              	 	
                §
                  3.06(b)

              
	
                IRS

              	 	
                §
                  3.10(b) 

              
	
                Law

              	 	
                §
                  3.05(a)

              
	
                Liens

              	 	
                §
                  3.12(a)

              
	
                Material
                  Company Contracts

              	 	
                §
                  3.16(a)

              
	
                Material
                  Parent Contracts

              	 	
                §
                  4.16(a)

              
	
                MBCA

              	 	
                Recitals

              
	
                Merger

              	 	
                Recitals

              
	
                Merger
                  Consideration

              	 	
                §
                  2.01(a)

              
	
                Merger
                  Sub

              	 	
                Preamble

              
	
                Mining
                  Permits

              	 	
                §
                  3.12(e)

              
	
                Mining
                  Rights

              	 	
                §
                  3.12(e)

              
	
                Multiemployer
                  Plan

              	 	
                §
                  3.10(c)

              
	
                Multiple
                  Employer Plan

              	 	
                §
                  3.10(c)

              
	
                NASD

              	 	
                §
                  2.02(e)

              
	
                New
                  Stock Option Plans

              	 	
                §
                  2.04(a)

              
	
                New
                  Stock Option Plans Adoption

              	 	
                Recitals

              
	
                Non-U.S.
                  Company Plan

              	 	
                §
                  3.10(b)

              

      

       

      
        
          
          

        

        
          93

          
            

          

        

        
          
          

        

      

       

        	
                Defined
                  Term

              	 	
                Location
                  of Definition

              
	
                Non-U.S.
                  Parent Plan

              	 	
                §
                  4.10(b)

              
	
                Notice
                  of Company Superior Proposal

              	 	
                §
                  6.04(c)

              
	
                Notice
                  of Parent Superior Proposal

              	 	
                §
                  6.04(d)

              
	
                Parent

              	 	
                Preamble

              
	
                Parent
                  Bermuda Filings

              	 	
                §
                  4.07(c)

              
	
                Parent
                  Board

              	 	
                Recitals

              
	
                Parent
                  Board Appointments

              	 	
                Recitals

              
	
                Parent
                  Board Recommendation

              	 	
                §
                  6.01(d)

              
	
                Parent
                  Deposit Agreement

              	 	
                §
                  2.01(a)

              
	
                Parent
                  Disclosure Schedule

              	 	
                Article
                  IV

              
	
                Parent
                  Grant Date

              	 	
                §
                  4.03(a)

              
	
                Parent
                  HKSE Reports

              	 	
                §
                  4.07(a)

              
	
                Parent
                  Hong Kong Filings

              	 	
                §
                  4.07(c)

              
	
                Parent
                  Licensed Intellectual Property

              	 	
                §
                  4.13(a)

              
	
                Parent
                  Ordinary Shares

              	 	
                Recitals

              
	
                Parent
                  Owned Intellectual Property

              	 	
                §
                  4.13(a)

              
	
                Parent
                  Payment Event

              	 	
                §
                  8.03(c)

              
	
                Parent
                  Permits

              	 	
                §
                  4.06(a)

              
	
                Parent
                  Plans

              	 	
                §
                  4.10(a)

              
	
                Parent
                  Shareholders Circular

              	 	
                §
                  6.01(b)

              
	
                Parent
                  Shareholders’ Approval

              	 	
                §
                  4.18(b)

              
	
                Parent
                  Shareholders’ Meeting

              	 	
                §
                  6.01(b)

              
	
                Parent
                  Signing Power Authorization

              	 	
                §
                  6.14(c)

              
	
                Parent
                  Stock Option Plan

              	 	
                §
                  4.03(a)

              
	
                Parent
                  Stock Options

              	 	
                §
                  4.03(a)

              
	
                Parent
                  Subsidiary

              	 	
                §
                  4.01(a)

              
	
                Parent
                  Title Policies

              	 	
                §
                  4.12(a)

              
	
                Parent
                  Use Documents

              	 	
                §
                  4.12(b)

              
	
                PRC
                  Mines

              	 	
                §
                  5.01(c)

              
	
                Proxy
                  Statement

              	 	
                §
                  6.01(a)

              
	
                Registration
                  Statement

              	 	
                §
                  6.01(a)

              
	
                Representatives

              	 	
                §
                  6.03(a)

              
	
                SEC

              	 	
                §
                  3.07(a)

              
	
                Securities
                  Act

              	 	
                §
                  3.05(b)

              
	
                SFC

              	 	
                §
                  4.07(b)

              
	
                Share
                  Issuance

              	 	
                Recitals

              
	
                SOX

              	 	
                §
                  3.07(a)

              
	
                Stockholders’
                  Meetings

              	 	
                §
                  6.01(b)

              
	
                Substitute
                  Option

              	 	
                §
                  2.04(a)

              
	
                Substitute
                  Warrant

              	 	
                §
                  2.05(a)

              
	
                Superior
                  Proposal

              	 	
                §
                  6.04(f)

              
	
                Surviving
                  Corporation

              	 	
                §
                  1.01

              
	
                Surviving
                  Corporation Common Stock

              	 	
                §
                  2.01(c)

              
	
                Terminating
                  Company Breach

              	 	
                §
                  8.01(h)

              

      

       

      
        
          
          

        

        
          94

          
            

          

        

        
          
          

        

      

       

      
        	
                Defined
                  Term

              	 	
                Location
                  of Definition

              
	
                Terminating
                  Parent Breach

              	 	
                §
                  8.01(i)

              
	
                Transactions

              	 	
                §
                  3.01(a)

              
	
                Triggering
                  Event

              	 	
                §
                  8.01

              
	
                U.S.
                  Company Plan

              	 	
                §
                  3.10(b)

              
	
                US
                  GAAP

              	 	
                §
                  3.07(c)

              
	
                WARN
                  Act

              	 	
                §
                  3.11(b)

              

      

    

    

    SECTION
      9.04 Severability.
      If any
      term or other provision of this Agreement is invalid, illegal or incapable
      of
      being enforced by any rule of law or public policy, all other conditions and
      provisions of this Agreement shall nevertheless remain in full force and effect
      so long as the economic or legal substance of the Transactions is not affected
      in any manner materially adverse to any party. Upon such determination that
      any
      term or other provision is invalid, illegal or incapable of being enforced,
      the
      parties hereto shall negotiate in good faith to modify this Agreement so as
      to
      effect the original intent of the parties as closely as possible in a mutually
      acceptable manner in order that the Transactions be consummated as originally
      contemplated to the fullest extent possible.

     

    SECTION
      9.05 Entire
      Agreement; Assignment.
      This
      Agreement, together with the schedules and exhibits thereto, the Employment
      Agreements and the Confidentiality Arrangements constitute the entire agreement
      among the parties with respect to the subject matter hereof and supersede,
      except as set forth in Sections 6.03(b),
      all
      prior agreements and undertakings, both written and oral, among the parties,
      or
      any of them, with respect to the subject matter hereof. Neither this Agreement
      nor any of the rights, interests or obligations hereunder shall be assigned
      by
      any of the parties hereto, in whole or in part (whether pursuant to a merger,
      by
      operation of law or otherwise), without the prior written consent of the other
      parties hereto, and any attempt to make any such assignment without such consent
      shall be null and void, except that Merger Sub may assign, in its sole
      discretion, any or all of its rights, interests and obligations under this
      Agreement to any direct or indirect wholly owned subsidiary of Parent without
      the consent of the Company, but no such assignment shall relieve Merger Sub
      of
      any of its obligations hereunder.

     

    SECTION
      9.06 Parties
      in Interest; Third Parties.
      This
      Agreement shall be binding upon and inure solely to the benefit of each party
      hereto and, subject to Section 9.05,
      their
      respective successors and assigns, and nothing in this Agreement, express or
      implied, is intended to or shall confer upon any other person any right, benefit
      or remedy of any nature whatsoever under or by reason of this Agreement. Except
      to the extent set forth in Sections 9.05
      and
9.06,
      no
      person who is not a party to this Agreement has any rights under the Contracts
      (Rights of Third Parties) Act, Chapter 53B of Hong Kong to enforce any provision
      of this Agreement.

     

    SECTION
      9.07 Specific
      Performance.
      The
      parties hereto agree that irreparable damage would occur in the event any
      provision of this Agreement were not performed in accordance with the terms
      hereof and that the parties shall be entitled to specific performance of the
      terms hereof, in addition to any other remedy at law or equity.

     

    
      
        
        

      

      
        95

        
          

        

      

      
        
        

      

    

     

    SECTION
      9.08 Governing
      Law.
      This
      Agreement shall be governed by, and construed in accordance with, the laws
      of
      the State of Minnesota applicable to contracts executed in and to be performed
      in that State (other than those provisions set forth herein that are required
      to
      be governed by the laws of Hong Kong). All actions and proceedings arising
      out
      of or relating to this Agreement shall be heard and determined exclusively
      in
      any Minnesota state court or any Minnesota federal court. The parties hereto
      hereby (a) submit to the exclusive jurisdiction of the Minnesota state court
      or
      any Minnesota federal court for the purpose of any Action arising out of or
      relating to this Agreement brought by any party hereto, and (b) irrevocably
      waive, and agree not to assert by way of motion, defense, or otherwise, in
      any
      such Action, any claim that it is not subject personally to the jurisdiction
      of
      the above-named courts, that its property is exempt or immune from attachment
      or
      execution, that the Action is brought in an inconvenient forum, that the venue
      of the Action is improper, or that this Agreement or the Transactions may not
      be
      enforced in or by any of the above-named courts.

     

    SECTION
      9.09 Headings.
      The
      descriptive headings contained in this Agreement are included for convenience
      of
      reference only and shall not affect in any way the meaning or interpretation
      of
      this Agreement.

     

    SECTION
      9.10 Counterparts.
      This
      Agreement may be executed and delivered (including by facsimile transmission)
      in
      one or more counterparts, and by the different parties hereto in separate
      counterparts, each of which when executed shall be deemed to be an original
      but
      all of which taken together shall constitute one and the same
      agreement.

     

    SECTION
      9.11 Waiver
      of Jury Trial.
      EACH OF
      THE PARTIES HERETO HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
      LAW ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION
      DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS
      AGREEMENT OR THE TRANSACTIONS. EACH OF THE PARTIES HERETO (A) CERTIFIES THAT
      NO
      REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
      OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION,
      SEEK
      TO ENFORCE THAT FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
      HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE TRANSACTIONS,
      AS
      APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN
      THIS SECTION
      9.11.

     

    [SIGNATURE
      PAGE FOLLOWS]

     

    
      
        
        

      

      
        96

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, Parent, Merger Sub and the Company have caused this Agreement
      to be executed as of the date first written above by their respective officers
      thereunto duly authorized.

     

    
      	 	 	 
	 	
              EASYKNIT
                ENTERPRISES HOLDINGS LIMITED

            
	 
 	 
 	 
 
	
            	By:  	/s/
              Ricky Tse Wing Chiu
	 	
              

              Name:
                Ricky Tse Wing Chiu

            
	 	
              Title:
                Chairman and CEO

            

    

     

    
      	
            	 	 
	 	
              RACE
                MERGER, INC.

            
	 
 	 
 	 
 
	
            	By:  	
              /s/
                Kwong Jimmy Cheung Tim

            
	 	
              

              Name:
                Kwong Jimmy Cheung Tim

            
	 	
              Title:

            

    

     

    
      	
            	 	 
	 	
              WITS
                BASIN PRECIOUS MINERALS INC.

            
	 
 	 
 	 
 
	
            	By:  	
              /s/
                Stephen D. King

            
	 	
              

              Name:
                Stephen D. King

            
	 	
              Title:
                Chief Executive Officer

            

    

    

    
      
        
        

      

      
        97

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