Document:

Exhibit 10.1

 

December 20, 2005

 

 

SIHITECH COMPANY LIMITED

MEGA CAPITAL GROUP SERVICES LIMITED

PROFIT LOYAL CONSULTANTS LIMITED

ELITE CONCORD INTERNATIONAL LIMITED

CHINA CENTURY HOLDINGS GROUP LIMITED

SHINNING GROWTH INVESTMENT GROUP LIMITED

 

 

CHINA UNISTONE ACQUISITION CORP.

 

 

YUCHENG TECHNOLOGIES LIMITED

 

 

CHIH CHEUNG

JAMES LI

JAMES PREISSLER

 

 

AGREEMENT

 

for the sale and purchase of the shares of

 

AHEAD BILLION VENTURE LIMITED and PORT WING 

DEVELOPMENT COMPANY LIMITED

 

 

 

THIS
AGREEMENT for sale and
purchase of shares of Ahead Billion Venture Limited and Port Wing Development
Company Limited is made on December 20, 2005

Between

(1)           SIHITECH COMPANY LIMITED, a company with limited liability
established and existing pursuant to the laws of the British Virgin Islands
(BVI) whose registered office is at TrustNet Chambers, P.O. Box 3444, Road
Town, Tortola, British Virgin Islands (the Sihitech Holdingco #1);

 

(2)           MEGA CAPITAL GROUP SERVICES LIMITED, a company with limited liability
established and existing pursuant to the laws of the BVI whose registered
office is at TrustNet Chambers, P.O. Box 3444, Road Town, Tortola, British
Virgin Islands (the
Sihitech Holdingco #2);

 

(3)           PROFIT LOYAL CONSULTANTS LIMITED, a company with limited liability
established and existing pursuant to the laws of the BVI whose registered
office is at TrustNet Chambers, P.O. Box 3444, Road Town, Tortola, British
Virgin Islands (the
Sihitech Holdingco #3);

 

(4)           ELITE CONCORD INTERNATION LIMITED, a company with limited liability established
and existing pursuant to the laws of the BVI whose registered office is at TrustNet
Chambers, P.O. Box 3444, Road Town, Tortola, British Virgin Islands (the e-Channels Holdingco A);

 

(5)           CHINA CENTURY HOLDINGS GROUP LIMITED, a company with limited liability
established and existing pursuant to the laws of the BVI whose registered
office is at TrustNet Chambers, P.O. Box 3444, Road Town, Tortola, British
Virgin Islands (the
e-Channels Holdingco B);

 

(6)           SHINING GROUTH INVESTMENT GROUP LIMITED, a company with limited liability
established and existing pursuant to the laws of the BVI whose registered
office is at TrustNet Chambers, P.O. Box 3444, Road Town, Tortola, British
Virgin Islands (the
e-Channels Holdingco C); and

(7)           CHINA UNISTONE ACQUISITION CORP., a
company incorporated under the laws of the State of Delaware of the United
States (CUAQ);
and

 

(8)           YUCHENG TECHNOLOGIES LIMITED, a
wholly owned subsidiary of CUAQ and a company incorporated under the laws of
the BVI whose registered office is at Room 1708, Dominion Centre 43-59 Queen’s
Road East, Wanchai, Hong Kong S.A.R. (CUAQ Sub).

 

(9)           CHIH CHEUNG

 

(10)         JAMES LI

 

(11)         JAMES PREISSLER

 

1

 

Whereas

 

(A)          BEIJING SIHITECH CO., LTD. (Sihitech) provides application
developments and information technology services to customers in the banking
and financial services industry (the Sihitech Business) in the People’s Republic
of China (the PRC).  Detailed information in respect of Sihitech
is set out in Schedule 1(A).

 

(B)           BEIJING E-CHANNELS CENTURY TECHNOLOGY CO., LTD. (e-Channels) provides
electronic payment software and solutions to the banking and financial services
industry (the e-Channels
Business) in the PRC. 
Detailed information in respect of e-Channels is set out in Schedule
1(B).

 

(C)           The
Sihitech Holdingcos are the registered owners of Ahead Billion Venture Limited,
a BVI limited liability company (hereinafter referred as Sihitech BVI) and the
e-Channels Holdingcos are the registered owners of Port Wing Development
Company Limited, a BVI limited liability company (hereinafter referred as e-Channels BVI).

 

(D)          The
shareholders of Sihitech and Sihitech BVI have entered into an agreement for
the sale and purchase of the entire equity interest of Sihitech as of the date
hereof, pursuant to which Sihitech BVI will become the sole owner of Sihitech
upon Closing.

 

(E)           The
shareholders of e-Channels and e-Channels BVI have entered into an agreement
for the sale and purchase of the entire equity interest of e-Channels as of the
date hereof, pursuant to which e-Channels BVI will become the sole owner of
e-Channels upon Closing.

 

(F)           Subject
to the terms and conditions of this Agreement, CUAQ will consummate a plan of
merger (Plan of Merger)
pursuant to which CUAQ will be merged with and into CUAQ Sub at the Closing
with CUAQ Sub as the surviving entity (the CUAQ Merger).

 

(G)           Subject
to the terms and conditions of this Agreement, CUAQ Sub, at the Closing, shall
acquire by payment of the Purchase Consideration, all of the shares in both of
Sihitech BVI and e-Channels BVI (collectively, the Shares) from the
Vendors (the Transfer).

 

(H)          Upon completion of the Transfer as
contemplated by this Agreement, CUAQ Sub will be the registered owner of one
hundred per cent (100%) of the Shares, and Sihitech and e-Channels will be
converted into wholly foreign-owned enterprises, who will be respectively the
sole owner, user, occupier and conductor of the Sihitech Business and the
e-Channels Business.

 

It is Agreed as follows:

ARTICLE I

Interpretation

 

1.1           In
this Agreement, unless this Agreement or the Schedules hereto otherwise
stipulate, the following expressions shall have the following meanings:

 

2

 

Accountants means KPMG Huazhen.

 

Action means any claim, action, suit, litigation,
arbitration, inquiry, proceeding or investigation by or pending before any
Governmental Authority.

 

Business Day means any day, other than a Saturday, Sunday
or a day on which banking institutions in Beijing or New York City are
authorized or obligated by law, regulation or executive order to close.

 

Cash Amount shall mean Sihitech Cash Amount and
e-Channels Cash Amount, collectively.

 

Claim means any claim, demand, suit, proceeding or
action.

 

Closing and Closing Date are defined in Article 3.1.

 

Contracts mean any contract, agreement, arrangement,
plan, lease, license or similar instrument.

 

Copyrights shall mean all copyrights, including rights
in and to works of authorship and all other rights corresponding thereto
throughout the world, whether published or unpublished, including rights to
prepare, reproduce, perform, display and distribute copyrighted works and
copies, compilations and derivative works thereof.

 

CUAQ
Merger shall have the meaning ascribed to it in the
recitals to this Agreement.

 

CUAQ Sub means Yucheng Technologies Limited.

 

CUAQ Sub Stock means Guaranteed Stock and Additional Stock,
if any, collectively.

 

Damages means the dollar amount of any loss, damage,
expense or liability, including, without limitation, reasonable attorneys’ fees
and disbursements incurred by an Indemnified Party in any action or proceeding
between the Indemnified Party and the Indemnifying Party or between the
Indemnified Party and a third party, which is determined (as provided in
Article X) to have been sustained, suffered or incurred by a Party or the
Company and to have arisen from or in connection with an event or state of
facts which is subject to indemnification under this Agreement; the amount of
Damages shall be the amount finally determined by a court of competent
jurisdiction or appropriate governmental administrative agency (after the
exhaustion of all appeals) or the amount agreed to upon settlement in
accordance with the terms of this Agreement, if a Third Party Claim, or by the
Parties, if a Direct Claim.

 

Direct Claim means any claim other than a Third Party
Claim.

 

E-Channels
means Beijing e-Channels Century Technology Co., Ltd.

 

3

 

E-Channels Business shall have the meaning ascribed to it in the
recitals to this Agreement.

 

E-Channels Holdingcos means e-Channels Holdingco A, e-Channels
Holdingco B and e-Channels Holdingco C, collectively.

 

Encumbrance means any mortgage, pledge, lien, transfer
restrictions and/or security interest, as provided for, recognized and/or
enforceable under the Laws of the United States, BVI or PRC.

 

Exchange Act means the Securities Exchange Act of 1934,
as amended, of the United States.

 

Government Securities means any Treasury Bill issued by the United
States having a maturity of one hundred and eighty days or less.

 

Governmental Authority means any PRC or non-PRC national,
supranational, state, provincial, local or similar government, governmental,
regulatory or administrative authority, agency or commission or any court,
tribunal or judicial or arbitral body.

 

Intellectual Property means any intellectual property rights,
including, without limitations, Patents, Copyrights, service marks, moral
rights, Trade Secrets, Trademarks, designs and Technology, together with (a)
all registrations and applications for registration therefore and (b) all
rights to any of the foregoing (including (i) all rights received under any
license or other arrangement with respect to the foregoing, (ii) all rights or
causes of action for infringement or misappropriation (past, present or future)
of any of the foregoing, (iii) all rights to apply for or register any of the
foregoing, (iv) domain names and URLs of or relating to Sihitech and e-Channels,
and variations of the domain names and URLs, (vi) Contracts which related to
any of the foregoing, including invention assignment, intellectual property
assignment, confidentiality, and non-competition agreements, and (vii) goodwill
of any of the foregoing).

 

Laws means all statutes, rules, regulations,
ordinances, orders, writs, injunctions, judgments, decrees, awards and
restrictions, including, without limitation, applicable statutes, rules,
regulations, orders and restrictions relating to zoning, land use, safety,
health, environment, hazardous substances, pollution controls, employment and
employment practices and access by the handicapped.

 

Material Adverse Effect means any change, circumstance, condition,
development, effect, event, occurrence or state of facts that, individually or
in the aggregate, has been, or would reasonably be expected to be, materially
adverse to the business, condition (financial or otherwise), operations or
results of operations of any Person.  For
purposes of this definition and its use in this Agreement, “material” and “materially”
shall be determined in accordance with the customary meaning of such terms
under the U.S. federal securities Laws.

 

4

 

Party means each of CUAQ, CUAQ Sub, Sihitech
Holdingcos and e-Channels Holdingcos (collectively, the Parties).

 

Patents means all United States and foreign patents
and utility models and applications therefore and all reissues, divisions,
re-examinations, renewals, extensions, provisionals, continuations and
continuations-in-part thereof, and equivalent or similar rights anywhere in the
world in inventions and discoveries.

 

Person means an individual, partnership,
corporation, joint venture, unincorporated organization, cooperative or a
governmental entity or agency thereof.

 

PRC means
the People’s Republic of China, which, for the purposes of this Agreement only,
shall not include Hong Kong, Macau or Taiwan.

 

Public
Company Compliance Expenses mean all the expenses
paid or payable by CUAQ Sub in connection with any Law relating to its status
as a public company, including, but not limited to, filing fees, attorneys’
fees, accountants’ fees and fees paid or payable to any other professional
parties, external costs in connection with any filings to the SEC or other
Government Authorities, and external compliance costs incurred for the
compliance with Sarbanes-Oxley Act of 2002.

 

RMB means the legal currency of the PRC.

 

SEC means the
Securities Exchange Commission of the United States.

 

Securities Act means the Securities Act of 1933, as
amended, of the United States.

 

Software means all software, in object,
human-readable or source code, whether previously completed or now under
development, including programs, applications, databases, data files, coding
and other software, components or elements thereof, programmer annotations, and
all versions, upgrades, updates, enhancements and error corrections of all of
the foregoing.

 

Shares
shall have the meaning ascribed to it in the recitals to this Agreement.

 

Sihitech Business shall have the meaning ascribed to it in the
recitals to this Agreement.

 

Sihitech Holdingcos means Sihitech Holdingco #1, Sihitech
Holdingco #2 and Sihitech Holdingco #3, collectively.

 

Stockholder Meeting has the meaning specified in Section 6.2.

 

Tax or Taxes means all income, gross receipts,
sales, stock transfer, excise, bulk transfer, use, employment, social security,
franchise, profits, property or other taxes, tariffs, imposts, fees, stamp
taxes and duties, assessments, levies or other charges of any kind whatsoever
(whether payable directly or by withholding), together with any interest and
any penalties, 

 

5

 

additions
to tax or additional amounts imposed by any government or taxing authority with
respect thereto.

 

Technology means any know-how, confidential or
proprietary information, name, data, discovery, formulae, idea, method,
process, procedure, other invention, record of invention, model, research,
Software, technique, technology, test information, market survey, website, or
information or material of a like nature, whether patentable or unpatentable
and whether or not reduced to practice.

 

Third Party Claim means a Claim by a person, firm, corporation
or government entity other than a party hereto or any affiliate of such party.

 

Trademarks means any and all United States and foreign
trademarks, service marks, logos, trade names, corporate names, trade dress,
Internet domain names and addresses, and all goodwill associated therewith
throughout the world.

 

U.S. Dollars and US$ mean
the legal currency of the United States of America.

 

U.S. GAAP means generally accepted accounting
principles, consistently applied in the United States.

 

Vendors refer to Sihitech Holdingcos and e-Channels
Holdingcos collectively.

 

1.2           The
Schedules and Recitals comprise schedules and recitals to this Agreement and
form part of this Agreement.

 

1.3           The
expressions Sihitech Holdingcos, Sihitech BVI, e-Channels Holdingcos,
e-Channels BVI, CUAQ and CUAQ Sub and references to any other person in this
Agreement shall, where the context permits, include their respective
successors, transferees and permitted assigns and any persons deriving title
under them.

 

1.4           References
to person mean any natural person, corporation, firm, joint venture,
partnership, association, enterprise, trust or other entity or organization or
any governmental agency.

 

ARTICLE II

THE SHARE PURCHASE

 

2.1           Purchase and Sale.  Upon the terms and subject to the conditions
hereof, at the Closing, the Vendors shall sell, transfer, assign and convey to
CUAQ Sub, and CUAQ Sub shall purchase from the Vendors, all of the right, title
and interest of the Vendors in and to the Shares.  The Shares represent all of the equity
interest in Sihitech BVI and e-Channels BVI, and shall be sold and transferred
to CUAQ Sub free from any Encumbrance.

 

2.2           Purchase
Consideration.

 

In consideration of the Transfer, at the
Closing, CUAQ Sub shall pay a purchase price in 

 

6

 

cash and issue certain stock of CUAQ Sub to
the Vendors as set forth below, which shall collectively be referred to as the Purchase Consideration.

 

(a)          Subject
to adjustment and the Holdback Amount as hereinafter set forth, the purchase
price in cash to be paid by CUAQ Sub to the Vendors for the Shares shall be the
following:

 

(i)    cash in
the amount of Two Million Seven Hundred Thirty One Thousand Eight Hundred and
Eighty Four U.S. Dollars (US$2,731,884),
or cash in the amount equal to the total current assets minus the total current
liabilities of Sihitech at Closing, whichever amount is lower (the Sihitech Cash Amount), shall be paid to the Sihitech Holdingcos;
and

 

(ii)   cash in
the amount of One Million Two Hundred Sixty Eight Thousand One Hundred and
Sixteen U.S. Dollars (US$1,268,116),
or cash in the amount equal to the total current assets minus the total current
liabilities of e-Channels at Closing, whichever amount is lower (the e-Channels Cash Amount), shall be paid to the e-Channels Holdingcos.

 

(b)         Payments.

 

(i)    Initial Payment.  At the Closing, the sum of the Cash Amount,
less the Holdback Amount (the Initial Payment), will be paid by wire transfer of
immediately available United States dollars to the Vendors to the accounts of
the Vendors as specified on Schedule 2.2.

 

(ii)   Additional Payments.  In the event that any of the following events
occurs during the period starting from the Closing Date and ending on December
31, 2009, CUAQ Sub shall promptly pay in aggregate to the Vendors, as an
addition to the Cash Amount, the amounts set forth below in cash by wire
transfer to the accounts of the Vendors as specified on Schedule 2.2:

 

(1)             Five million U.S.
Dollars (US$5,000,000), if CUAQ Sub receives an aggregate of US$34,500,000 in
gross proceeds in additional financing, including, but not limited to, (a)
exercise of the warrants of CUAQ Sub (the Warrants), (b) CUAQ Sub’s successful
completion of a secondary offering, or (c) the private investment into CUAQ Sub
by a strategic investor;

 

(2)             One million U.S.
Dollars (US$1,000,000), if the average closing price of the stock of CUAQ
and/or CUAQ Sub in any sixty (60) consecutive trading days of the year (the Share Price Average)
is above US$10.00 in 2006;

 

(3)             Two million U.S.
Dollars (US$2,000,000), if the Share Price Average is above US$12.00 in 2007;
and

 

7

 

(4)             Three million U.S.
Dollars (US$3,000,000), if the Share Price Average is above US$14.40 in 2008;

provided, however, that in the event that all
of the above events occur, the maximum aggregate amount to be paid by CUAQ Sub
to the Vendors shall be no more than ten million U.S. Dollars (US$10,000,000).

 

(iii)  Holdback. 
A sum of US$250,000 (Holdback Amount) shall be withheld from the Cash Amount
and shall be retained by CUAQ Sub for a period of 12 months after the Closing
Date.  The Holdback Amount will be
security for the indemnification obligations of the Vendors set forth in
Article X.  Subject to this section and
Article X, on the first anniversary of the Closing, or the first business day
thereafter, CUAQ Sub shall deliver the Holdback Amount pro rata to the Sihitech
Holdingcos and e-Channels Holdingcos in the same proportions as the Initial
Payment was allocated between them.  CUAQ
Sub may withhold from the Holdback Amount the equivalent of any amount then in
dispute related to the Vendors’ indemnification obligations arising pursuant to
Article X or for which CUAQ Sub has notified the Vendors of an indemnification
Claim.  Any withheld Holdback Amount, to
the extent not applied in satisfaction of an indemnification claim, will be
paid by CUAQ Sub promptly on resolution of the dispute or claim.  Nothing in this section shall be construed as
limiting the liability of the Vendors for indemnification claims or any other
claim by CUAQ Sub or any other rightful claimant, and the Holdback Amount shall
not be considered liquidated damages or any breach of this Agreement or any
other matter related hereto.

 

(iv)  Allocation of Purchase Price.  All payments of the cash portion of the
Purchase Consideration shall be made in such proportion as requested by the
Vendors set forth on Schedule 2.2(b)(iv).

 

(c)          Issuance
of CUAQ Sub Stock:

 

At the Closing, CUAQ Sub
shall issue and deliver to the relevant Vendors certificates representing:

 

(i)          3,884,936 ordinary shares of CUAQ Sub, no par
per share (the Guaranteed
Stock), free from any Encumbrance, to the Vendors, of which
2,981,439 ordinary shares of CUAQ Sub shall be issued to the Sihitech Holdingcos
and 903,497 ordinary shares of CUAQ Sub shall be issued to e-Channels
Holdingcos;

 

(ii)          Additional
Stock tied to Performance

 

(a)          670,339
ordinary shares of CUAQ Sub, no par per share, to the e-Channels Holdingcos, at
the Closing.  If the net profit as shown
in the audited financial statements of e-Channels and its subsidiaries prepared
in accordance with U.S. GAAP for the year ended December 31, 2005, 

 

8

 

is lower than RMB9,000,000,
the e-Channels Holdingcos shall, on a joint and several basis, promptly return
the certificates representing 670,339 shares of CUAQ Sub Stock for no
additional consideration;

 

(b)         773,045
ordinary shares of CUAQ Sub, no par per share, to the Sihitech Holdingcos, at
the Closing.  If the net profit as shown
in the audited consolidated financial statements of CUAQ Sub and its
subsidiaries prepared in accordance with U.S. GAAP for the year ended December
31, 2006, plus all the Public Company Compliance Expenses, is lower than
US$6,073,941, the Sihitech Holdingcos shall, on a joint and several basis,
promptly return the certificates representing 773,045 shares of CUAQ Sub Stock
for no additional consideration; and

 

(iii)  Allocation of CUAQ Sub Stock. 
The CUAQ Sub Stock issued pursuant to this Section 2.2 (c) shall be made
available to each of the Sihitech Holdingcos and e-Channels Holdings in
accordance with Schedule 2.2(c).

 

2.3           Bonus Plan. After the Closing, the
management team of CUAQ Sub, the composition of which shall be decided by the
Board of Directors of CUAQ Sub but shall include the Chairman, Chief Executive
Officer and Chief Operation Officer of CUAQ Sub, will be entitled to receive
952,832 stock of CUAQ Sub each year, for four years beginning in 2008, if CUAQ
Sub achieves net profits of the following amounts according to the financial
statements audited each year in accordance with U.S. GAAP:

 

	
  Year ending December 31

  	
   

  	
  Net Profit

  	
   

  
	
  2007

  	
   

  	
  US$8.5 million

  	
   

  
	
  2008

  	
   

  	
  US$11.9 million

  	
   

  
	
  2009

  	
   

  	
  US$16.7 million

  	
   

  
	
  2010

  	
   

  	
  US$23.3
  million

  	
   

  

 

ARTICLE III

THE CLOSING

3.1           The Closing. Subject
to the terms and conditions of this Agreement, the consummation of the Transfer
and the transactions contemplated by this Agreement shall take place at a
closing (Closing)
to be held at 9:30 p.m., local time, on the fourth business day after the date
on which the last of the conditions to Closing set forth in Article IX is
fulfilled, at the office of Beijing Sihitech Co., Ltd, 3rd Floor, Tower B,
Beijing Financial Trust Building, 5 Anding Road, Chaoyang District, Beijing
100029, the PRC, or at such other time, date or place as the Parties may agree
upon in writing.  The date on which the
Closing occurs is referred to herein as the Closing Date.

 

3.2           Deliveries.

 

(a)          Vendors. 
At the Closing, each Vendor will (i) assign and transfer to CUAQ 

 

9

 

Sub all of such Vendor’s
right, title and interest in and to his, her or its respective portion of the
Shares by delivering to CUAQ Sub the certificates representing such Shares,
duly endorsed for transfer and free from any Encumbrance and (ii) deliver to
CUAQ Sub the certificates, opinions and other agreements contemplated by
Article IX and other provisions of this Agreement.

 

(b)         CUAQ
Sub.  At the Closing, CUAQ Sub shall deliver
to the Vendors (i) the Cash Amount to which each of the Sihitech Holdingcos and
e-Channels Holdingcos is entitled to pursuant to Section 2.2 herein; (ii) the
certificates representing the CUAQ Sub Stock, and (iii) the certificates,
opinions and other agreements and instruments contemplated by Article IX and
other provisions of this Agreement.

 

3.3           Additional
Agreements.  On the Closing Date, the
following agreements shall have been executed and delivered (collectively, the Transaction Documents),
the effectiveness of each of which is subject to the Closing:

 

(a)          An
equity sale and purchase agreement for the transfer of 100% equity interest in
Sihitech to Sihitech BVI, substantially in the form of Appendix 3.3 (a) hereto,
by and between the shareholders of Sihitech and Sihitech BVI, (the Sihitech SPA);

 

(b)         An equity sale and purchase agreement for the
transfer of 100% equity interest in e-Channels to e-Channels BVI, substantially
in the form of Appendix 3.3 (b) hereto, by and between the shareholders of
e-Channels and e-Channels BVI, (the e-Channels SPA);

 

(c)          Employment
agreements between CUAQ Sub and each of Chih Cheung, Weidong Hong and Shuo
Zeng;

 

(d)         A Merger
Agreement between CUAQ and CUAQ Sub in the form of Appendix 3.3 (d) hereto;

 

3.4           Further Assurances.  Subject to the terms and conditions of this
Agreement, at any time or from time to time after the Closing, each of the
Parties hereto shall execute and deliver such other documents and instruments,
provide such materials and information and take such other actions as may
reasonably be necessary, proper or advisable, to the extent permitted by law,
to fulfill its obligations under this Agreement and other Transaction Documents
to which it is a party.

 

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

OF THE VENDORS

 

Sihitech
Holdingcos, jointly and severally, and e-Channels Holdingcos, jointly and
severally, represent and warrant to CUAQ as of the Closing, as follows:

 

10

 

4.1                                 The Shares.

 

(a)          Ownership.  The Sihitech Holdingcos are the registered
and beneficial owners of all of the Shares in respect of Sihitech BVI, and
e-Channels Holdingcos are the registered and beneficial owners of all of the
Shares in respect of e-Channels BVI, in the amounts set forth in Schedule 4.1,
free from any Encumbrance, which shares constitute all of the shares of capital
stock of Sihitech BVI and e-Channels BVI. 
There are no options, warrants or other contractual rights outstanding
which give any person the right to acquire shares of Sihitech BVI and/or
e-Channels BVI, respectively, owned by the Vendors, whether or not such rights
are presently exercisable.  As of the
Closing, Sihitech BVI and e-Channels BVI will become the registered and
beneficial owners of the entire equity interest of Sihitech and e-Channels,
respectively, free from any Encumbrance.

 

(b)         Capitalization.
All of the Shares are validly issued, fully paid and non-assessable.

 

4.2           Organization of
Sihitech and e-Channels.  Each of
Sihitech BVI and e-Channels BVI is a private owned limited liability company
duly organized, validly existing and in good standing under the laws of the
BVI.  Each of Sihitech and e-Channels is
a private owned limited liability company duly organized, validly existing and
in good standing under the laws of the PRC. 
Each of Sihitech and e-Channels has all requisite power and authority to
own, lease and operate its properties and to carry on its business as now being
conducted and as presently contemplated to be conducted.

 

4.3                                 Authority and Corporate Action; No Conflict.

 

(a)          Each
of the Vendors, and the shareholders of Sihitech and e-Channels has all
necessary power and authority to enter into this Agreement and the Transaction
Documents to which it is a party and to consummate the Transfer and other
transactions contemplated hereby and thereby. 
All actions, corporate and otherwise, necessary to be taken by each of
Vendors, and the shareholders of Sihitech and e-Channels to authorize the
execution, delivery and performance of this Agreement, the Transaction
Documents and all other agreements and instruments delivered by the Vendors in
connection with the Transfer have been duly and validly taken.  This Agreement and the Transaction Documents
to which each of the Vendors, and the shareholders of Sihitech and e-Channels
is a party have been duly executed and delivered by each of the Vendors, and
the shareholders of Sihitech and e-Channels, and constitute the valid, binding,
and enforceable obligation of each of the Vendors, and the shareholders of
Sihitech and e-Channels, enforceable in accordance with its terms, except (i)
as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or similar laws of general
application now or hereafter in effect affecting the rights and remedies of
creditors and by general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity) and (ii) as 

 

11

 

enforceability of any indemnification provision may be limited by
federal and state securities laws and public policy of the United States, BVI
and PRC.

 

(b)         Neither
the execution and delivery of this Agreement or any of the other Transaction
Documents contemplated hereby by each of the Vendors, Sihitech BVI, e-Channels
BVI and the shareholders of Sihitech and e-Channels nor the consummation of the
transactions contemplated hereby or thereby will (i) conflict with, result in a
breach or violation of or constitute (or with notice of lapse of time or both
constitute) a default under, (1) the Articles of Association of each of
Sihitech BVI and e-Channels BVI, or (2) any law, statute, regulation, order,
judgment or decree or any instrument, contract or other agreement to which a
Vendor is a party or by which it (or any of its properties or assets) is
subject or bound; (ii) result in the creation of, or give any party the right
to create, any lien, charge, option, security interest or other encumbrance
upon the assets of Sihitech BVI, e-Channels BVI and any Vendor; (iii) terminate
or modify, or give any third party the right to terminate or modify, the
provisions or terms of any contract to which Sihitech, e-Channels or a Vendor
is a party; or (iv) result in any suspension, revocation, impairment,
forfeiture or non-renewal of any permit, license, qualification, authorization
or approval applicable to Sihitech, e-Channels or a Vendor.

 

4.4           Consents and
Approvals.  Except for those set forth in
Schedule 4.4, the execution and delivery of this Agreement and the Transaction
Documents by each of the Vendors, Sihitech BVI, e-Channels BVI and the
shareholders of Sihitech and e-Channels does not, and the performance of this
Agreement and the Transaction Documents by it will not, require any consent,
approval, authorization or other action by, or filing with or notification to,
any Governmental Authority, except where failure to obtain such consents,
approvals, authorizations or actions, or to make such filings or notifications,
would not prevent it from performing any of its material obligations under this
Agreement and the Transaction Documents.

 

4.5           Licenses,
Permits, Etc.  To the best of the knowledge of each Vendor,
each of Sihitech and e-Channels possesses or will possess prior to the Closing
all Permits necessary, in all material respects, to own and operate the
Sihitech Business and e-Channels Business respectively, which necessary Permits
are described or are as set forth on Schedule 4.5 hereto.  To the best of the knowledge of each Vendor,
Sihitech or e-Channels is not in default in any material respect under any of
such Permits and no event has occurred and no condition exists which, with the
giving of notice, the passage of time, or both, would constitute a default
thereunder.  Neither the execution and
delivery of this Agreement, the Transaction Documents or any of the other
documents contemplated hereby nor the consummation of the transactions
contemplated hereby or thereby nor, to the best of the knowledge of the
Vendors, compliance by Sihitech or e-Channels with any of the provisions hereof
or thereof will result in any suspension, revocation, impairment, forfeiture or
non-renewal of any Permit applicable to the Sihitech Business or the e-Channels
Business.

 

12

 

4.6           Taxes, Tax Returns
and Audits.  (a) each of Sihitech,
e-Channels and the Vendors has filed on a timely basis (taking into account any
extensions received from the relevant taxing authorities) all returns and
reports pertaining to all Taxes that are or were required to be filed by it
with the appropriate taxing authorities in all jurisdictions in which such
returns and reports are or were required to be filed, and all such returns and
reports are true, correct and complete in all material respects, (b) all Taxes
that are due from or may be asserted against Sihitech and e-Channels (including
deferred Taxes) in respect of or attributable to all periods ending on or
before the Closing Date have been or will be fully paid, deposited or
adequately provided for on the books and financial statements of Sihitech and
e-Channels or are being contested in good faith by appropriate proceedings, (c)
no issues have been raised (or are currently pending) by any taxing authority
in connection with any of the returns and reports referred to in clause (a)
which might be determined adversely to Sihitech or e-Channels, (d) Sihitech or
e-Channels has not given or requested to give waivers or extensions of any
statute of limitations with respect to the payment of Taxes, and (e) no tax
liens which have not been satisfied or discharged by payment or concession by
the relevant taxing authority or as to which sufficient reserves have not been
established on the books and financial statements of Sihitech or e-Channels are
in force as of the date hereof.

 

4.7           Financial
Statements.  Prior to the execution of
this Agreement, the Vendors have delivered to CUAQ consolidated balance sheets
of each of Sihitech and e-Channels as at December 31, 2002, 2003 and 2004, and
related consolidated statements of income and source and application of funds
for the three years ended December 31, 2004, audited by the Accountants, and
the notes, comments, schedules, and supplemental data therein (collectively,
the 2004 Financial
Statements) and an interim consolidated balance sheet as of June
30, 2005, and related consolidated statements of income and source and
application of funds for the six (6) months then ended (collectively, the Last Financial Statements).  The 2004 Financial Statements and the Last
Financial Statements shall be prepared in accordance with U.S. GAAP throughout
the periods indicated and fairly present the consolidated financial condition
of Sihitech and e-Channels at their respective dates and the consolidated
results of the operations of Sihitech and e-Channels for the periods covered
thereby in accordance with U.S. GAAP. 
The 2004 Financial Statements and the Last Financial Statements are
included in Schedule 4.7 to this Agreement.

 

4.8           No Undisclosed Material
Liabilities.  Sihitech BVI or e-Channels
BVI does not have any material liabilities, whether known or unknown, absolute,
accrued, contingent or otherwise.

 

4.9           Real Property.  Schedule 4.9 contains an accurate and
complete list and description of all real estate owned by Sihitech and
e-Channels as well as any other real estate that is in the possession of or
leased by Sihitech or e-Channels and the improvements (including buildings and
other structures) located on such real estate (collectively, the Real Property), and
lists and accurately describes any leases under which any such Real Property is
possessed (the Real
Estate Leases).  Sihitech
or e-Channels is not in default under any of the Real Estate Leases, and is not
aware of any default by any of the lessors thereunder.

 

13

 

4.10         Certain Personal Property.  The Last Financial Statements contain an
accurate and complete list and description of the material fixed assets of
Sihitech and e-Channels specifying the location of all material items of
tangible personal property of Sihitech and e-Channels.

 

4.11         Non-Real Estate Leases.  Schedule 4.11 contains an accurate and
complete list and description of all material assets and property (other than
Real Property and Real Estate Leases) that are used as of the date of this
Agreement in the operation of the Sihitech Business and e-Channels Business and
that are possessed by Sihitech and e-Channels under an existing lease.  All of such leases are referred to herein as
the Non-Real Estate
Leases.  Sihitech or
e-Channels is not in default under any of the Non-Real Estate Leases, and is
not aware of any default by any of the lessors hereunder.

 

4.12         Accounts
Receivable.  The accounts receivable of
Sihitech and e-Channels reflected on the Last Financial Statements and created
after the Last Financial Statements Date, are bona fide accounts receivable,
created in the ordinary course of business and subject to historical rates of
uncollected liabilities, as reserved against on the financial statements of
Sihitech and e-Channels, are good and collectible within periods of time
normally prevailing in the industry at the aggregate recorded amounts thereof.

 

4.13         Inventory.  The inventory of Sihitech and e-Channels
consists of items of quality and quantity useable or saleable in the ordinary
course of business at regular sales prices, subject to (a) changes in price
levels as a result of economic and market conditions, and (b) reserves
reflected in the Last Financial Statements for spoiled and discontinued
items.  Schedule 4.13 sets forth a break
down of the inventory balance of Sihitech as of the date of the Last Financial
Statement, but it is understood that any material or intentional inaccuracy in
the Schedule 4.13 estimates will not be a breach of this representation and
warranty.

 

4.14         Contracts,
Obligations and Commitments.  Except as
listed on Schedule 4.14, and other than the Real Estate Leases and the Non-Real
Estate Leases, Sihitech or e-Channels do not have any existing contract,
obligation or commitment (written or oral) of any nature (other than
obligations involving payments of less than $300,000 individually or $300,000
in the aggregate), including without limitation the following:

 

(a)          Employment,
bonus, severance or consulting agreements, retirement, stock bonus, stock
option, or similar plans;

 

(b)         Loans
or other agreements, notes, indentures or instruments relating to or evidencing
indebtedness for borrowed money or mortgaging, pledging or granting or creating
a lien or security interest or other encumbrance on any of the assets of
Sihitech or e-Channels or any agreement or instrument evidencing any guaranty
by Sihitech or e-Channels of payment or performance by any other Person;

 

(c)          Agreements
of any kind relating to employment matters such as labor agreements or
agreements providing for benefits under any plan;

 

14

 

(d)         Any
contract or series of contracts with the same Person for the furnishing or
purchase of equipment, goods or services, except for purchase and sales orders
in the ordinary course of business;

 

(e)          Any
joint venture contract or arrangement or other agreement involving a sharing of
profits or expenses to which Sihitech or e-Channels is a party or by which it
is bound;

 

(f)            Agreements
which limit the freedom of Sihitech or e-Channels to compete in any line of
business or in any geographic area or with any Person;

 

(g)         Agreements
providing for disposition of the assets, businesses or a direct or indirect
ownership interest in Sihitech or e-Channels;

 

(h)         Any
contract, commitment or arrangement not made in the ordinary course of business
of Sihitech or e-Channels; or

 

(i)             Agreements
with any Governmental Authority.

 

Each Contract to which Sihitech or e-Channels is a party is a valid and
binding obligation of Sihitech or e-Channels and, to the best of the knowledge
of Sihitech and e-Channels, enforceable in accordance with its terms (except as
the enforceability thereof may be limited by any applicable bankruptcy,
insolvency or other laws affecting creditors’ rights generally or by general
principles of equity, regardless of whether such enforceability is considered
in equity or at law), and is in full force and effect (except for any Contracts
which by their terms expire after the date hereof or are terminated after the
date hereof in accordance with the terms thereof, provided, however, that
Sihitech or e-Channels will not terminate any Contract after the date hereof
without the prior written consent of CUAQ, which consent shall not be
unreasonably withheld or delayed), and Sihitech or e-Channels has not breached
any material provision of, nor is in default in any material respect under the
terms of any of the Contracts.

 

4.15         Intellectual Property
Rights.

 

(a)          Intellectual Property.  Schedule
4.15(a) contains an accurate and complete list and description of all
Intellectual Property used by Sihitech and e-Channels in connection with the
Sihitech Business and e-Channels Business, specifying as to each (i) the nature
of such right, (ii) the ownership thereof, (iii) the Governmental Authority
that has issued or recorded a registration or certificate or similar document
with respect thereto or with which an application for such a registration,
certificate or similar document is pending and (iv) any applicable
registration, certificate or application number.  Complete and accurate copies of all
registered Intellectual Property relating to the Sihitech Business and
e-Channels have been provided to CUAQ.

 

(b)         Other
Intellectual Property Rights.  Schedule
4.15(b) includes an accurate and complete list and description of all material
inventions and trade secrets that 

 

15

 

Sihitech or e-Channels has formally documented and that are owned,
used, controlled, authorized for use or held by, or licensed to, Sihitech or
e-Channels that relate to or are necessary to the Sihitech Business or
e-Channels Business, including as conducted at or prior to Closing or as
proposed to be conducted by Sihitech or e-Channels, together with a designation
of the ownership thereof.

 

(c)          Software.  Schedule 4.15(c) includes an accurate and
complete list and description of all Software used by Sihitech and e-Channels
in connection with the Sihitech Business and e-Channels Business, including as
conducted at or prior to Closing or as proposed to be conducted by Sihitech or
e-Channels, together with a designation of ownership.

 

(d)         Out-Bound
Licenses.  Schedule 4.15(d) includes an
accurate and complete list and description of all licenses, sublicenses, and
other Contracts pursuant to which (i) any Person is authorized to use any
Intellectual Property rights used in connection with the Sihitech Business or
e-Channels Business, or (ii) any right of Sihitech or e-Channels in, or its use
of, any Intellectual Property right used in connection with the Sihitech
Business or e-Channels Business is otherwise materially affected.

 

(e)          In-Bound
Licenses.  Schedule 4.15(e) includes an
accurate and complete list and description of all licenses, sublicenses, and
other Contracts pursuant to which Sihitech or e-Channels is authorized to use,
or can be authorized to use (through, for example, the grant of a sublicense),
any Intellectual Property owned by any other Person in connection with the
Sihitech Business or e-Channels Business.

 

(f)            Ownership.  As of the date hereof, each of Sihitech and
e-Channels owns, and at the Closing Date, will own all right, title and
interest in and to all Intellectual Property rights used in connection with the
Sihitech Business or e-Channels Business, and those Intellectual Property
rights were developed and created solely by employees of Sihitech or e-Channels
acting within the scope of their employment or by third parties (all of which employees
and third parties have validly and irrevocably assigned all of their rights
therein to Sihitech or e-Channels ) and Sihitech or e-Channels is duly and
validly licensed to use all other Intellectual Property used in connection with
the Sihitech Business and e-Channels Business, free and clear of
royalties.  Sihitech or e-Channels has
not assigned or transferred ownership of, agreed to so assign or transfer
ownership of, or granted any exclusive license of or exclusive right to use,
any Intellectual Property used in connection with the Sihitech Business or
e-Channels Business.

 

(g)         Royalties.  Except for licenses listed and accurately and
completely described on Schedule 4.15(G) as royalty-bearing, there are (and
will be upon Closing) no royalties, honoraria, fees, or other payments payable
by Sihitech or e-Channels to any Person by reason of the ownership, use,
license, sale, or disposition of any Intellectual Property used in connection
with the Sihitech Business or e-Channels Business.

 

16

 

(h)         Infringement.  The Intellectual Property used in connection
with the Sihitech Business or e-Channels Business does not infringe or
misappropriate any Intellectual Property rights of any Person under the laws of
any jurisdiction.  To the best knowledge
of the Vendors, no notice, claim or other communication (in writing or
otherwise) has been received from any Person: (A) asserting any ownership
interest in any material Intellectual Property used in connection with the
Sihitech Business or e-Channels Business; (B) of any actual, alleged, possible
or potential infringement, misappropriation or unauthorized use or disclosure
of any Intellectual Property used in connection with the Sihitech Business or
e-Channels Business, defamation of any Person, or violation of any other right
of any Person (including any right to privacy or publicity) by Sihitech or
e-Channels or relating to the Intellectual Property used in connection with the
Sihitech Business or e-Channels Business; or (C) suggesting or inviting
Sihitech or e-Channels to take a license or otherwise obtain the right to use
any Intellectual Property in connection with the Sihitech Business or
e-Channels Business.  To the best knowledge
of the Vendors, no Person is infringing, misappropriating, using or disclosing
in an unauthorized manner any Intellectual Property used in connection with the
Sihitech Business or e-Channels Business owned by, exclusively licensed to,
held by or for the benefit of, or otherwise controlled by Sihitech or
e-Channels.

 

(i)             Proceedings.  There are no current or, to the best of its
knowledge, threatened Proceedings (including but not limited to any
interference, reexamination, cancellation, or opposition proceedings) arising
out of a right or claimed right of any person before any Governmental Authority
anywhere in the world related to any Intellectual Property used in connection
with the Sihitech Business or e-Channels Business owned by, exclusively
licensed to, held by or for the benefit of, or otherwise controlled by Sihitech
or e-Channels.

 

4.16         Title to and
Condition of Assets.  Each of Sihitech
and e-Channels has good and marketable title to all the properties and assets
owned by it.  Except as set forth in the
Last Financial Statements, none of such properties and assets is subject to any
Encumbrance, option to purchase or lease, easement, restriction, covenant,
condition or imperfection of title or adverse claim of any nature whatsoever,
direct or indirect, whether accrued, absolute, contingent or otherwise.

 

4.17         Absence of Certain
Changes.  Except as set forth in Schedule
4.17 or as agreed by CUAQ in advance and incurred in ordinary course of
business and consistent with past practice, Sihitech or e-Channels has not and
will not, since the Last Financial Statements Date:

 

(a)          issued,
delivered or agreed to issue or deliver any stock, bonds or other corporate
securities (whether authorized and unissued or held in the treasury), or
granted or agreed to grant any options (including employee stock options),
warrants or other rights for the issue thereof;

 

17

 

(b)         borrowed
or agreed to borrow any funds exceeding $200,000 (or other currency equivalent)
except current bank borrowings not in excess of the amount thereof shown on the
Last Financial Statements;

 

(c)          incurred
any obligation or liability, absolute, accrued, contingent or otherwise,
whether due or to become due exceeding $200,000 (or other currency equivalent),
except current liabilities for trade obligations incurred in the ordinary
course of business and consistent with prior practice;

 

(d)         discharged
or satisfied any encumbrance exceeding $200,000 (or other currency equivalent)
other than those then required to be discharged or satisfied, or paid any
obligation or liability other than current liabilities shown on the Last
Financial Statements and liabilities incurred since the Last Financial
Statements Date in the ordinary course of business and consistent with prior
practice;

 

(e)          sold,
transferred, leased to others or otherwise disposed of any assets exceeding
$100,000 (or other currency equivalent), except for inventories sold in the
ordinary course of business and assets no longer used or useful in the conduct
of its business, or canceled or compromised any debt or claim, or waived or
released any right of substantial value;

 

(f)            received
any notice of termination of any Contract, Lease or other agreement, or
suffered any damage, destruction or loss exceeding $100,000 (or other currency
equivalent) (whether or not covered by insurance) which, in any case or in the
aggregate, has had, or might reasonably be expected to have, Material Adverse
Effect;

 

(g)         had
any material change in its relations with its employees or agents, clients or
insurance carriers which has had or might reasonably be expected to have
Material Adverse Effect;

 

(h)         transferred
or granted any rights under, or entered into any settlement regarding the
breach or infringement of, any Intellectual Property or modified any existing
rights with respect thereto;

 

(i)             declared
or made, or agreed to declare or make, any payment of dividends or
distributions of any assets of any kind whatsoever to any shareholder of any
Sihitech or e-Channels, or purchased or redeemed, or agreed to purchase or
redeem, any of its capital stock, or made or agreed to make any payment to any
shareholder of Sihitech or e-Channels, whether on account of debt, management
fees or otherwise;

 

(j)             suffered
any other material adverse effect in its assets, liabilities, financial
condition, results of operations or business; or

 

18

 

(k)          entered
into any agreement or made any commitment to take any of the types of action
described in any of the foregoing clauses (other than clauses (f), (g) or (j)).

 

4.18         Employee Plans; Labor
Matters.  Schedule 4.18 contains an
accurate and complete list and description of all employee benefits, including,
without limitation, pension, medical insurance, work related injury insurance,
birth and nursery insurance, unemployment insurance and educational benefits,
which Sihitech or e-Channels is obligated to pay, including amounts and
recipients of such payments.  Except as
disclosed on Schedule 4.18, each of Sihitech and e-Channels has complied with
all applicable Laws relating to employment benefits, including, without
limitation, pension, medical insurance, work-related injury insurance, birth
and nursery insurance, unemployment insurance and educational benefits.  All contributions or payments required to be
made by Sihitech and e-Channels with respect to employee benefits have been
made on or before their due dates. 
Except as disclosed in the Last Financial Statements, all such
contributions and payments required to be made by any employees of Sihitech or
e-Channels with respect to the employee benefits have been fully deducted and
paid to the relevant Governmental Authorities on or before their due dates, and
no such deductions have been challenged or disallowed by any Governmental Authority
or any employee of Sihitech or e-Channels.

 

4.19         Compliance with
Law.  To the best of its knowledge, the
Sihitech Business and e-Channels Business have been conducted, and are now
being conducted, by Sihitech and e-Channels in compliance in all material
respects with all applicable Laws.  None
of Sihitech, e-Channels, or any officers, directors and employees of Sihitech
or e-Channels (i) is, and during the past five years was, in violation of, or
not in compliance with, in any material respect all such applicable Laws with
respect to the conduct of the Sihitech Business or e-Channels Business; and
(ii) has received any notice from any Governmental Authority, and to the best
of its knowledge, no Action is threatened which alleges that Sihitech or e-Channels
has violated, or not complied with, any of the above.

 

4.20         No Illegal or
Improper Transactions.  Neither Sihitech
nor e-Channels has offered, paid or agreed to pay to any Person or entity
(including any governmental official) or solicited, received or agreed to
receive from any such Person or entity, directly or indirectly, in any manner
which is in violation of any applicable policy of Sihitech or e-Channels,
ordinance, regulation or law, any money or anything of value for the purpose or
with the intent of (i) obtaining or maintaining business for Sihitech or
e-Channels, (ii) facilitating the purchase or sale of any product or service,
or (iii) avoiding the imposition of any fine or penalty.

 

4.21         Related
Transactions.  Except as set forth in
Schedule 4.21 and except for compensation to employees for services rendered,
no current or former director, officer, employee or shareholder or any
associate (as defined in the rules promulgated under the Exchange Act) of
Sihitech or e-Channels is presently, or during the last three fiscal years has
been, (a) a party to any transaction with Sihitech or e-Channels (including,
but not limited to, any Contract providing for the furnishing of services by,
or rental of real or personal property from, or otherwise requiring payments
to, any such director, officer, employee or shareholder or such associate), or
(b) the direct or indirect owner of an interest 

 

19

 

in any corporation, firm, association or business organization which is
a present (or potential) competitor, supplier or customer of Sihitech or
e-Channels nor does any such Person receive income from any source other than
Sihitech or e-Channels which relates to the business of, or should properly
accrue to, Sihitech or e-Channels.

 

4.22         Records.  The books of account, minute books, stock
certificate books and stock transfer ledgers of Sihitech BVI, e-Channels BVI,
Sihitech and e-Channels are complete and correct in all material respects, and
there have been no material transactions involving Sihitech BVI, e-Channels
BVI, Sihitech and e-Channels which are required to be set forth therein and
which have not been so set forth.

 

4.23         Insurance.  The Last Financial Statements set forth a
complete list and complete and accurate description of all insurance policies
maintained by Sihitech and e-Channels which are in force as of the date hereof
and the amounts of coverage thereunder. 
During the past three years, Sihitech or e-Channels has not been refused
insurance in connection with the Sihitech Business or e-Channels Business, nor
has any claim in excess of US$10,000 been made in respect of any such
agreements or policies, except as set forth in the Last Financial
Statements.  Such insurance are
commercially reasonable for the companies in the information technology
industry in the PRC.

 

4.24         Litigation.  Except as set forth in Schedule 4.24, there
are no Actions by any Governmental Authority or Person by or against Sihitech
or e-Channels, nor to the best of its knowledge, any threatened Action by any
Governmental Authority or Person against Sihitech or e-Channels.  Neither Sihitech or e-Channels nor any of
their property is subject to any Action by a Governmental Authority or Person
which would cause a Material Adverse Effect.

 

4.25         Settled
Litigation.  Schedule 4.25 sets forth a
description of all threatened, withdrawn, settled or litigated claims against
Sihitech or e-Channels during the last three years.

 

4.26         Disclosure of
Information.  Each of the Vendors
acknowledges that all of the SEC Reports (as defined below) were fully
available to it, and it has reviewed and understood them.  Each of the Vendors acknowledges that it has
received all the information that it has required relating to CUAQ and CUAQ
Sub.  Each of the Vendors further
represents that it has had an opportunity to ask questions and receive answers
from CUAQ regarding the terms and conditions of its acquisition of the CUAQ Sub
Stock.

 

4.27         Regulation S
Offering.  The Vendors represent that
each of them is not a “U.S. Person” and they are not taking the securities to
be delivered under this Agreement for the account or benefit of a U.S.
Person.  The Vendors represent that at
the time of the offer they were and at the time of sale they will be outside of
the territories of the United States. 
Each Vendor agrees that it will not resell any of the securities
received under this Agreement except in compliance with Rule 905 of Regulation
S (Regulation S),
promulgated under the Securities Act, pursuant to a registration under the
Securities Act or pursuant to an available exemption from registration and
agrees not to engage in hedging transactions with regard to such securities
unless in compliance with the Securities Act. 
The Vendors 

 

20

 

agree that they will not take any action to have the securities
transferred into bearer form, regardless if the law of any state permits
securities to be held in bearer form. Defined terms in this section have the
meanings assigned to them in Regulation S.

 

4.28         Restricted
Securities.  Each of the Vendors
understands that it will acquire securities under this Agreement that are
characterized as “restricted securities” under the United States federal
securities laws and with limitations imposed by Regulation S.  Therefore, each of the Vendors understands
that sales of such securities may only be sold in the United States, either
privately or publicly, pursuant to applicable securities laws and rules and
regulations thereunder, including without limitation, Regulation S, and
exemptions from registration, or pursuant to an effective registration
statement.

 

4.29         Legends.  It is understood that the certificates
evidencing the CUAQ Sub Stock may bear the legend set forth below in this section.  The Vendors hereby consent to the inclusion
of such legend on certificates of securities they receive hereunder and for the
placement of stop orders against the transfer of such securities, which may be
enforced by CUAQ Sub by instruction to its transfer agent or recourse to
appropriate judicial authorities to prevent the registration of any transfer
not in accordance with the provisions of this Agreement and the legend set
forth below.

 

“THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”). 
THE SECURITIES REPRESENTED HEREBY MAY NOT BE SOLD, TRANSFERRED, OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE ACT OR AN OPINION OF COUNSEL, REASONABLY ACCEPTABLE TO COUNSEL FOR
THE COMPANY TO THE EFFECT THAT THE PROPOSED SALE, TRANSFER, OR DISPOSITION MAY
BE EFFECTUATED WITHOUT REGISTRATION UNDER THE ACT AND SUCH SALE, TRANSFER OR
DISPOSITION IS IN COMPLIANCE WITH REGULATION S PROMULGATED UNDER THE ACT, TO
THE EXTENT THEN APPLICABLE.

 

4.30         No Brokers.  No broker, finder or investment banker is
entitled to any brokerage, finder’s or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of the Vendors, Sihitech and/or e-Channels.

 

4.31         Disclosure.  No representation or warranty by any Vendor
contained in this Agreement and no information contained in any Schedule or
other instrument furnished or to be furnished to CUAQ pursuant to this
Agreement or in connection with the transactions contemplated hereby contains
or will contain any untrue statement of a material fact or omits or will omit
to state a material fact necessary in order to make the statements contained
therein not misleading.

 

4.32         Acquisition Entirely
for Own Account.  The CUAQ Sub Stock to
be acquired by each of the Vendors will be acquired for investment for such
Vendor’s own account and not with a view for the resale or distribution of any
part thereof.

 

21

 

4.33         Survival of
Representations and Warranties.  The
representations and warranties of each Vendor set forth in this Agreement shall
survive the Closing for a period of two (2) years, except that the representations
and warranties set forth in Sections 4.1, 4.2 and 4.3 shall survive without
limitation as to time and the representations and warranties set forth in
Section 4.17 shall survive until the expiration of the statute of limitations
with respect to each respective Tax.

 

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF CUAQ AND CUAQ SUB

 

CUAQ
and CUAQ Sub, jointly and severally, represent and warrant to the Vendors as
follows:

 

5.1           Organization.  CUAQ is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware.  CUAQ Sub is a corporation duly organized,
validly existing and in good standing under the laws of the BVI.  Each of CUAQ and CUAQ Sub has
all requisite power and authority to own, lease and operate its properties and
to carry on its business as now being conducted and as presently contemplated
to be conducted.

 

5.2                                 Capitalization.

 

(a)          Capitalization.

 

(i)             The
authorized capital stock of CUAQ includes 20,000,000 shares of common stock and
1,000,000 shares of preferred stock of which 4,200,000 shares of common stock
are issued and outstanding and no shares of preferred stock are issued and
outstanding.  There are 6,900,000
warrants outstanding to purchase up to 6,900,000 shares of common stock at a
current exercise price of US$5.00 per share (the number and price subject to
adjustment), expiring November 18, 2008, 150,000 unit purchase options
exercisable at $9.90 to purchase 150,000 shares of common stock and 300,000
warrants, which if issued, may be exercised at US$6.25 to purchase 300,000
shares of common stock.  Except as set
forth on Schedule 5.2, there are no other options, warrants or rights (other
than as contemplated by this Agreement) to acquire any capital stock of CUAQ,
whether or not such options, warrants or rights are currently exercisable.  All the outstanding stock of CUAQ will be
validly issued, fully paid and non-assessable.

 

(ii)          The
authorized capital stock of CUAQ Sub as of the date hereof includes 60,000,000
Ordinary Shares and 1,000,000 Preferred Shares, of which 1 Ordinary Share is
issued and outstanding, and no Preferred Shares are issued and
outstanding.  Except as set forth on
Schedule 5.2, there are no other options, warrants or rights (other than as
contemplated by this Agreement) to acquire any capital stock of CUAQ Sub,
whether or not such options, warrants or rights are currently exercisable.  All the outstanding 

 

22

 

stock of CUAQ Sub as of the date hereof has been validly issued, fully
paid and non-assessable.  As of the
effective date of the CUAQ Merger, the CUAQ Sub capitalization will be as
follows: (A) 60,000,000 Ordinary Shares authorized, 8,084936 Ordinary Shares
issued and outstanding and an addition of 1,443,384 Ordinary Shares tied to
2005 and 2006 performance for a total of 9,528,320 Ordinary Shares issued and
outstanding if the condition of Sections 2.2(c)(ii)(a) and (b) of this
Agreement are fully satisfied; (b) 1,000,000 Preferred Shares
authorized, none outstanding; (C) 6,900,000 share purchase warrants outstanding
to purchase up to 6,900,000 Ordinary Shares at an exercise price of US$5.00 per
share (the number and price subject to adjustment), expiring November 18, 2008;
and (D) 150,000 unit purchase options exercisable at $9.90 to purchase 150,000
Ordinary Shares and 300,000 share purchase warrants, which if issued, may be
exercised at US$6.25 per share to purchase 300,000 Ordinary Shares, provided however, the forgoing does not
take into account any other shares that may be issued or issuable under the
terms of this Agreement in respect of the provisions of Sections 2.2(c) or 2.3,
in connection with any employment arrangements contemplated by the Agreement,
or the creation or issuance or commitment to issue any awards under a
performance equity plan that may be approved by CUAQ.

 

(iii)       Upon the
acquisition of Sihitech BVI and e-Channels BVI, CUAQ Sub Stock will be issued
as set forth in this Agreement.

 

(b)         Disputes.  There are no disputes, arbitrations or
litigation proceedings involving CUAQ or CUAQ Sub with respect to the common
stock and outstanding warrants, options and other rights relating to the
capital stock of CUAQ or CUAQ Sub.

 

(c)          Issuances.  Except for the issuance of common stock,
warrants and options as set forth in the SEC Reports of CUAQ and the
Registration Statement on Form S-1, SEC Registration Statement No. 333-117639,
there have not been any issuances of capital securities or options, warrants or
rights to acquire the Shares.

 

5.3                                 Authority and Corporate Action; No Conflict.

 

(a)          Each
of CUAQ and CUAQ Sub has all necessary corporate power and authority to enter
into this Agreement and, subject to the requirement to obtain stockholder
approval, to consummate the transactions contemplated hereby.  Except for the actions required to complete
CUAQ Merger, all board of directors’ actions necessary to be taken by CUAQ and
CUAQ Sub to authorize the execution, delivery and performance of this Agreement
and all other agreements delivered in connection with this transaction have
been duly and validly taken.  This
Agreement has been duly executed and delivered by CUAQ and CUAQ Sub and
constitutes the valid, binding, and enforceable obligation of CUAQ and CUAQ
Sub, enforceable in accordance with its terms, except (i) 

 

23

 

as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or similar laws of general
application now or hereafter in effect affecting the rights and remedies of
creditors and by general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity), (ii) as
enforceability of any indemnification provision may be limited by federal and
state securities laws and public policy and (iii) as enforceability may be
limited by the absence of stockholder approval.

 

(b)         Neither
the execution and delivery of this Agreement or any of the other documents
contemplated hereby by CUAQ or CUAQ Sub nor (assuming receipt of stockholder
approval) the consummation of the transactions contemplated hereby or thereby
will (i) conflict with, result in a breach or violation of or constitute (or
with notice of lapse of time or both constitute) a default under, (A) the
Certificate of Incorporation or By-Laws of either of CUAQ or CUAQ Sub or (B)
any law, statute, regulation, order, judgment or decree or any instrument
contract or other agreement to which CUAQ or CUAQ Sub is a party or by which
CUAQ or CUAQ Sub (or any of the properties or assets of CUAQ or CUAQ Sub) is
subject or bound; (ii) result in the creation of, or give any party the right
to create, any lien, charge, option, security interest or other encumbrance
upon the assets of CUAQ or CUAQ Sub; (iii) terminate or modify, or give any
third party the right to terminate or modify, the provisions or terms of any
contract to which CUAQ or CUAQ Sub is a party; or (iv) result in any
suspension, revocation, impairment, forfeiture or non-renewal of any permit,
license, qualification, authorization or approval applicable to CUAQ or CUAQ
Sub.

 

5.4           Consents and
Approvals.  Other than the requirement to
obtain stockholder approval, satisfy the requirements of Delaware and the
British Virgin Islands applicable to CUAQ Merger, the execution and delivery of
this Agreement by CUAQ or CUAQ Sub does not, and the performance of this
Agreement will not require any consent, approval, authorization or other action
by, or filing with or notification to, any Governmental Authority, except where
failure to obtain such consents, approvals, authorizations or actions, or to
make such filings or notifications, would not prevent it from performing any of
its material obligations under this Agreement.

 

5.5           Valid Issuance of
CUAQ Sub Stock.  At the Closing, the CUAQ
Sub Stock to be issued to the Vendors hereunder will be duly and validly
authorized and, when issued and delivered in accordance with the terms hereof
for the consideration provided for herein, will be validly issued and will
constitute legally binding obligations of CUAQ Sub in accordance with their
terms and will have been issued in compliance with all applicable federal and
state securities laws.

 

5.6                                 Financial Statements.

 

(a)          The
audited consolidated financial statements and the unaudited consolidated
financial statements of CUAQ included in CUAQ ‘s Annual Report on Form 

 

24

 

10-KSB and its Quarterly Reports on Form 10-QSB that are referred to in
Section 5.7 fairly present in conformity with U.S. GAAP applied on a consistent
basis the financial position and assets and liabilities of CUAQ as of the dates
thereof and CUAQ’s results of operations and cash flows for the periods then
ended (subject, in the case of any unaudited interim financial statement, to
normal, recurring year-end adjustments which were not or are not expected to be
material in amount).  The balance sheet
of CUAQ as of September 30, 2005 that is included in such financial statements
is referred to herein as CUAQ
Balance Sheet.

 

(b)         Attached
hereto as Schedule 5.6(b) is an unaudited, unreviewed balance sheet prepared by
management of CUAQ as of a date within seven days prior to the date of this
Agreement, prepared in accordance with U.S. GAAP, applied on a consistent basis
with prior practice of CUAQ.

 

5.7                                 SEC Reports.

 

(a)          CUAQ
has delivered to Sihitech Holdingcos and e-Channels Holdingcos, or there have
been available by public means (i) CUAQ’s Annual Report on Form 10-KSB for the
period ended December 31, 2004, (ii) CUAQ’s Quarterly Reports on Form 10-QSB
for the quarters ended March 30, 2005 and June 30, 2005 and September 30, 2005
(iii) CUAQ’s prospectus, dated November 18, 2004 relating to its initial public
offering of securities, and (iv) all other reports filed by CUAQ under the
Exchange Act (all of such materials, together with any amendments thereto and
documents incorporated by reference therein, are referred to herein as the SEC Reports).

 

(b)         As of
its filing date or, if applicable, its effective date, each SEC Report complied
in all material respects with the requirements of the Laws applicable to CUAQ
for such SEC Report, including the Securities Act and the Exchange Act.

 

(c)        Each SEC
Report as of its filing date and the prospectus referred to in clause (iii) of
Section 5.7(a), as of its effective date, did not contain any untrue statement
of a material fact or omit to state any material fact necessary in order to
make the statements made therein, in the light of the circumstances under which
they were made, not misleading.  CUAQ has
filed all reports under the Exchange Act that were required to be filed as of
the date hereof and will have filed all such reports required to have been
filed through the Closing Date, and has otherwise materially complied with all
requirements of the Securities Act and the Exchange Act.

 

5.8           Trust Fund.  As of the date hereof CUAQ has, and at the
Closing Date, CUAQ will have no less than $18,000,000 invested in Government
Securities in a trust account with Morgan Stanley & Co., administered by
Continental Stock Transfer & Trust Company, less such amounts, if any, as
CUAQ is required to pay to stockholders who elect to have 

 

25

 

their shares redeemed in accordance with the provisions of CUAQ’s Certificate
of Incorporation.

 

5.9           No Undisclosed
Liabilities.  CUAQ and CUAQ Sub do not
have any liabilities, debts or cash contingencies, pledges in any form,
obligations, undertakings or arrangements, whether known or unknown, absolute,
accrued, contingent or otherwise, except (a) as and to the extent reflected or
reserved against on CUAQ Balance Sheet; and (b) those incurred since the date
of the CUAQ Balance Sheet in the ordinary course of business and consistent
with prior practice.

 

5.10                           Absence of Certain Changes.  As contemplated by this Agreement and those
incurred in ordinary business consistent with past practice, neither CUAQ nor
CUAQ Sub has since the date of CUAQ Balance Sheet:

 

(a)          except
for any securities issued for the CUAQ Merger, issued, delivered or agreed to
issue or deliver any stock, bonds or other corporate securities (whether
authorized and unissued or held in the treasury), or granted or agreed to grant
any options (including employee stock options), warrants or other rights for the
issue thereof;

 

(b)         been
removed from trading on the OTC-BB because of a breach or violation of any
applicable laws, or received notice by any security supervisory agencies CUAQ
due to a violation of exchange market rules or receive notice of termination or
suspension in trading on the OTC-BB, except for suspensions for trading in
normal situations.

 

(c)          borrowed
or agreed to borrow any funds exceeding $200,000, except current bank
borrowings not in excess of the amount thereof shown on the Balance Sheet;

 

(d)         incurred
any obligation or liability, absolute, accrued, contingent or otherwise,
whether due or to become due exceeding $200,000, except current liabilities for
trade obligations incurred in the ordinary course of business and consistent
with prior practice;

 

(e)          discharged
or satisfied any encumbrance exceeding $200,000 other than those then required
to be discharged or satisfied, or paid any obligation or liability other than
current liabilities shown on the CUAQ Balance Sheet and liabilities incurred
since the date of the CUAQ Balance Sheet in the ordinary course of business and
consistent with prior practice;

 

(f)            sold,
transferred, leased to others or otherwise disposed of any assets exceeding
$100,000, except for inventories sold in the ordinary course of business and
assets no longer used or useful in the conduct of its business, or canceled or
compromised any debt or claim, or waived or released any right of substantial
value;

 

26

 

(g)         received
any notice of termination of any contract, lease or other agreement, or
suffered any damage, destruction or loss exceeding $100,000 (whether or not
covered by insurance) which, in any case or in the aggregate, has had, or might
reasonably be expected to have, a Material Adverse Effect;

 

(h)         had
any material change in its relations with its employees or agents, clients or
insurance carriers which has had or might reasonably be expected to have a
Material Adverse Effect;

 

(i)             suffered
any other serious material adverse effect in its assets, liabilities, financial
condition, results of operations or business; or

 

(j)             entered
into any agreement or made any commitment to take any of the types of action
described in any of the foregoing clauses (other than clauses (f), (g) or (i)).

 

5.11                           Compliance with Law.  The business of CUAQ and CUAQ Sub, if any,
has been conducted, and is now being conducted, in compliance in all material
respects with all applicable Laws.  Each
of CUAQ and CUAQ Sub and its officers, directors and employees (i) are not, and
during the periods of existence of CUAQ and CUAQ Sub were not, in violation of,
or not in compliance with, in any material respect all such applicable Laws
with respect to the conduct of the businesses of CUAQ and CUAQ Sub; and (ii)
have not received any notice from any Governmental Authority, and to the best
of the knowledge of CUAQ and CUAQ Sub none is threatened, alleging that either
of CUAQ or CUAQ Sub has violated, or not complied with, any of the above.

 

5.12                           Litigation.  There are no actions, suits, arbitrations or
other proceedings pending or, to the best of the knowledge of CUAQ and CUAQ
Sub, threatened against CUAQ or CUAQ Sub at law or in equity before any
Governmental Authority.  Neither CUAQ or
CUAQ Sub nor any of their property is subject to any order, judgment,
injunction or decree that would have a material adverse effect on the business
or financial condition of CUAQ or CUAQ Sub.

 

5.13         Records.  The books of account, minute books, stock
certificate books and stock transfer ledgers of CUAQ and CUAQ Sub are complete
and correct in all material respects, and there have been no material
transactions involving CUAQ or CUAQ Sub which are required to be set forth
therein and which have not been so set forth.

 

5.14         Disclosure.  No representation or warranty by CUAQ or CUAQ
Sub contained in this Agreement and no information contained in any Schedule or
other instrument furnished or to be furnished to Sihitech Holdingcos and
e-Channels Holdingcos pursuant to this Agreement or in connection with the
transactions contemplated hereby contains or will contain any untrue statement
of a material fact or omits or will omit to state a material fact necessary in
order to make the statements contained therein not misleading.

 

5.15         Survival of
Representations and Warranties.  The
representations and warranties of CUAQ and CUAQ Sub set forth in this Agreement
shall survive the Closing for a period of 

 

27

 

two (2) years, except that the representations in Sections 5.1, 5.2 and
5.3 shall survive without limitation as to time.

 

ARTICLE VI

COVENANTS OF CUAQ AND CUAQ SUB

 

6.1           Conduct of the
Business.  Each of CUAQ and CUAQ Sub
covenants and agrees that, from the date hereof through the Closing Date,
except (i) in the context of an unsolicited, bona fide written proposal for a
superior transaction or consummation of a superior transaction, (ii) as
otherwise set forth in this Agreement or (iii) with the prior written consent
of Sihitech Holdingcos and e-Channels Holdingcos, it shall:

 

(a)          conduct
its business only in the ordinary course and in a manner consistent with the
current practice of their business, except as required to reorganize for the
purpose of CUAQ Merger, to preserve substantially intact the business
organization of CUAQ and CUAQ Sub, to preserve its current relationships with
customers and other persons with which they have had significant business
relations and to comply with all Laws;

 

(b)         except
as required to reorganize for the purpose of CUAQ Merger, not pledge, sell,
transfer, dispose or otherwise encumber or grant any rights or interests to
others of any kind with respect to all or any part of the capital securities of
CUAQ or CUAQ Sub;

 

(c)          except
as required to reorganize for the purpose of CUAQ Merger, not pledge, sell,
lease, transfer, dispose of or otherwise encumber any property or assets of
CUAQ or CUAQ Sub, other than consistent with past practices and in the ordinary
course of business of CUAQ and CUAQ Sub;

 

(d)         except
as required to reorganize for the purpose of CUAQ Merger, not issue any shares
of capital stock of CUAQ or CUAQ Sub or any other class of securities, whether
debt (other than debt incurred in the ordinary course of business and
consistent with past practice) or equity, of CUAQ or CUAQ Sub or any options
therefore or any securities convertible into or exchangeable for capital stock
of CUAQ or CUAQ Sub or enter into any agreements in respect of the ownership or
control of such capital stock;

 

(e)          not
declare any dividend or make any distribution in cash, securities or otherwise
on the outstanding shares of capital stock of CUAQ or CUAQ Sub or directly or
indirectly redeem, purchase or in any other manner whatsoever advance, transfer
(other than in payment for goods received or services rendered in the ordinary
course of business), or distribute to any of their affiliates or otherwise
withdraw cash or cash equivalents in any manner inconsistent with established
cash management practices, except to pay existing indebtedness of CUAQ or CUAQ
Sub;

 

28

 

(f)            not
make, agree to make or announce any general wage or salary increase or enter
into any employment contract or, unless provided for on or before the date of
this Agreement, increase the compensation payable or to become payable to any
officer or employee of CUAQ or CUAQ Sub or adopt or increase the benefits of
any bonus, insurance, pension or other employee benefit plan, payment or
arrangement, except for those increases, consistent with past practices,
normally occurring as the result of regularly scheduled salary reviews and
increases, and except for increases directly or indirectly required as a result
of changes in applicable law or regulations;

 

(g)         except
as required to reorganize for the purpose of CUAQ Merger, not amend the
Certificate of Incorporation or By-laws or Memorandum and Articles of
Association (or other organizational documents) of CUAQ or CUAQ Sub;

 

(h)         except
as required to reorganize for the purpose of CUAQ Merger, not merge or
consolidate with, or acquire all or substantially all the assets of, or
otherwise acquire any business operations of, any Person;

 

(i)             not
make any payments outside the ordinary course of business; and

 

(j)             not
make any capital expenditures, except in accordance with prudent business and
operational practices consistent with prior practice.

 

6.2                                 Stockholder Meeting.  CUAQ shall cause a meeting of its
stockholders (the Stockholder
Meeting) to be duly called and held as soon as reasonably
practicable for the purpose of voting on the adoption of this Agreement and the
CUAQ Merger as required by CUAQ’s certificate of incorporation.  The directors of CUAQ shall recommend to its
stockholders that they vote in favor of the adoption of such matters.  In connection with such meeting, CUAQ (a)
will file with the SEC as promptly as practicable a proxy statement meeting the
requirements of the Exchange Act (Proxy Statement) and all other proxy
materials for such meeting, (b) upon receipt of approval from SEC, will mail to
its stockholders the Proxy Statement and other proxy materials, (c) will use
its best efforts to obtain the necessary approvals by its stockholders of this
Agreement and the transactions contemplated hereby, and (d) will otherwise
comply with all legal requirements applicable to such meeting.  As a condition to the filing and distribution
to the stockholders of CUAQ of the Proxy Statement, CUAQ will have received the
Proxy Information.

 

6.3                                 Fulfillment of Conditions.  >From the date hereof to the Closing Date,
each of CUAQ and CUAQ Sub shall use its best efforts to fulfill the conditions
specified in Article IX to the extent that the fulfillment of such conditions
is within its control.  The foregoing
obligation includes (a) the execution and delivery of documents necessary or
desirable to consummate the transactions contemplated hereby, and (b) taking or
refraining from such actions as may be necessary to fulfill such conditions
(including conducting the business of CUAQ or CUAQ Sub in such manner that on
the Closing Date the representations and warranties of CUAQ and CUAQ Sub
contained herein shall be accurate as though then made).

 

29

 

6.4                                 Disclosure of Certain Matters.  From the date hereof through the Closing
Date, CUAQ and CUAQ Sub shall give Sihitech Holdingcos and e-Channels
Holdingcos prompt written notice of any event or development that occurs that
(a) had it existed or been known on the date hereof would have been required to
be disclosed under this Agreement, (b) would cause any of the representations
and warranties of CUAQ or CUAQ Sub contained herein to be inaccurate or
otherwise misleading, (c) gives CUAQ or CUAQ Sub any reason to believe that any
of the conditions set forth in Article IX will not be satisfied, (d) is of a
nature that is or may be materially adverse to the operations, prospects or
condition (financial or otherwise) of CUAQ or CUAQ Sub, or (e) would require
any amendment or supplement to the Proxy Statement.

 

6.5                                 Post-Closing Assurances.  CUAQ Sub, from time to time after the Closing,
at the request of Sihitech Holdingcos or e-Channels Holdingcos, will take such
other actions and execute and deliver such other documents, certifications and
further assurances as Sihitech Holdingcos or e-Channels Holdingcos may
reasonably require in order to manage and operate CUAQ Sub, including but not
limited to executing such certificates as may be reasonably requested by
Accountants in connection with any audit of the financial statements of CUAQ
for any period through the Closing Date.

 

6.6                                 Regulatory and Other Authorizations; Notices
and Consents.

 

(a)          CUAQ
and CUAQ Sub shall use their commercially reasonable efforts to obtain all
authorizations, consents, orders and approvals of all Governmental Authorities
and officials that may be or become necessary for their execution and delivery
of, and the performance of their obligations pursuant to, this Agreement and
will cooperate fully with Sihitech Holdingcos or e-Channels Holdingcos in
promptly seeking to obtain all such authorizations, consents, orders and
approvals.

 

(b)         CUAQ
and CUAQ Sub shall promptly give such notices to third parties and use its or
their best efforts to obtain such third party consents and estoppel
certificates as Sihitech Holdingcos or e-Channels Holdingcos may in their reasonable
discretion deem necessary or desirable in connection with the transactions
contemplated by this Agreement.

 

6.7                                 Books and Records.

 

(a)          On
and after the Closing Date, CUAQ Sub will permit Sihitech Holdingcos and
e-Channels Holdingcos and their Representatives, during normal business hours,
to have access to and to examine and make copies of all books and records of
CUAQ and CUAQ Sub or to events occurring prior to the Closing Date or to
transactions or events occurring subsequent to the Closing Date which arise out
of transactions or events occurring prior to the Closing Date to the extent
reasonably necessary to Sihitech Holdingcos or e-Channels Holdingcos in
connection with preparation of any Tax returns, Tax audits, government or
regulatory investigations, lawsuits or any other matter in which 

 

30

 

Sihitech Holdingcos or e-Channels Holdingcos is a party to the
proceeding or in which they have a reasonable business interest.

 

(b)         CUAQ
and CUAQ Sub will preserve and keep all books and records for a period of at
least seven years from the Closing Date. 
After such seven year period, before CUAQ shall dispose of any such
books and records, at least 90 days’ prior written notice to such effect shall
be given by CUAQ Sub to Sihitech Holdingcos and e-Channels Holdingcos who shall
be given an opportunity, at their cost and expense, to remove and retain all or
any part of such books or records as they may select.

 

6.8                                 CUAQ Merger. 
CUAQ and CUAQ Sub shall take all necessary actions and obtain all
necessary approvals, including stockholders and governmental approvals, for
CUAQ Merger before Closing.  CUAQ shall
cause CUAQ Sub to adopt the Plan of Merger, to effectuate the CUAQ Merger, to
issue the CUAQ Sub Stock and to do all other things as are necessary for it to
do as a constituent corporation to the CUAQ Merger.

 

6.9                                 Listing on NASDAQ.  CUAQ Sub shall use its good faith best
efforts to procure a listing of its stock and warrants on the Nasdaq Stock
Market before December 31, 2006.

 

6.10                           Trust Fund. 
On or before the Closing, CUAQ shall procure the liquidation of the
Trust Account pursuant to the Trust Agreement and the aggregate amount of funds
disbursed to the Vendors and CUAQ Sub shall not be lower than US$18,000,000
less such amounts, if any, as CUAQ is required to pay to stockholders who elect
to have their shares redeemed in accordance with the provisions of CUAQ’s
certificate of incorporation..

 

ARTICLE VII

COVENANTS OF THE VENDORS

 

7.1                                 Conduct of the Sihitech Business and
e-Channels Business.  Each Vendor
covenants and agrees that, from the date hereof through the Closing Date,
except as otherwise set forth in this Agreement or with the prior written
consent of CUAQ, they shall, and shall use their best efforts to cause Sihitech
and e-Channels to: 

 

(a)          conduct
the Sihitech Business and e-Channels Business only in the ordinary course and
in a manner consistent with the current practice of the Sihitech Business and
e-Channels Business to preserve substantially intact the business organization,
to keep available the services of the current employees, to preserve the
current relationships of Sihitech and e-Channels with customers and other
persons with which Sihitech and e-Channels have significant business relations
and to comply with all Laws;

 

(b)         not
pledge, sell, transfer, dispose or otherwise encumber or grant any rights or
interests to others of any kind with respect to all or any part of the Shares
or the equity interest of Sihitech BVI, e-Channels BVI, Sihitech or e-Channels,
or enter into any discussions or negotiations with any other party to do so;

 

31

 

(c)          not
pledge, sell, lease, transfer, dispose of or otherwise encumber any property or
assets of Sihitech BVI, e-Channels BVI, Sihitech or e-Channels, other than
consistent with past practices and in the ordinary course of business or enter
into any discussions or negotiations with any other party to do so;

 

(d)         not
issue any shares of capital stock of Sihitech BVI or e-Channels BVI or any
other class of securities, whether debt (other than debt incurred in the
ordinary course of business and consistent with past practice) or equity, or
any options therefor or any securities convertible into or exchangeable for
capital stock of Sihitech, e-Channels, Sihitech BVI or e-Channels BVI or enter
into any agreements in respect of the ownership or control of such capital
stock;

 

(e)          except
for those specifically permitted in Sihitech SPA and e-Channels SPA, not declare
any dividend or make any distribution in cash, securities or otherwise on the
outstanding shares of capital stock of Sihitech BVI, e-Channels BVI, Sihitech
or e-Channels, or directly or indirectly redeem, purchase or in any other
manner whatsoever advance, transfer (other than in payment for goods received
or services rendered in the ordinary course of business), or distribute to any
of their affiliates or otherwise withdraw cash or cash equivalents in any
manner inconsistent with established cash management practices;

 

(f)            not
make, agree to make or announce any general wage or salary increase or enter
into any employment contract or, unless provided for on or before the date of
this Agreement, increase the compensation payable or to become payable to any
officer or employee of Sihitech or e-Channels, or adopt or increase the
benefits of any bonus, insurance, pension or other employee benefit plan,
payment or arrangement, except for the renewal of any currently existing
employment agreement, and those increases, consistent with past practices,
normally occurring as the result of regularly scheduled salary reviews and
increases, and except for increases directly or indirectly required as a result
of changes in applicable law or regulations;

 

(g)         Except
for amendments shown in Schedule 7.1(g), not to amend the Articles of
Association (or other organizational documents) of Sihitech or e-Channels;

 

(h)         Each
of Sihitech BVI, e-Channels BVI, Sihitech and e-Channels shall not merge or
consolidate with, or acquire all or substantially all the assets of, or
otherwise acquire any business operations of, any Person, except for the
purpose of facilitating the consummation of any transaction contemplated under
the Transaction Documents and tax reasons;

 

(i)             Each
of Sihitech BVI, e-Channels BVI, Sihitech and e-Channels shall not make any
payments outside the ordinary course of business; and

 

32

 

(j)             Each
of Sihitech BVI, e-Channels, Sihitech and e-Channels shall not make any capital
expenditures, except in accordance with prudent business and operational
practices consistent with prior practice.

 

7.2                                 Access to Information.

 

(a)          Between
the date of this Agreement and the Closing Date, during normal business hours,
the Vendors will (i) permit CUAQ and its Representatives reasonable access to
all of the books, records, reports and other related materials, offices and
other facilities and properties of Sihitech and e-Channels; (ii) permit CUAQ
and its Representatives to make such inspections thereof as CUAQ may reasonably
request; and (iii) furnish CUAQ and its Representatives with such financial and
operating data (including, without limitation, the work papers of Accountants,
subject to Accountant’s consent) and other information with respect to Sihitech
and e-Channels, and the Sihitech Business and e-Channels Business, as CUAQ may
from time to time reasonably request, provided, however, that no activity
conducted pursuant to this clause shall interfere with or disrupt the normal operation
and ordinary course of business of Sihitech and e-Channels.

 

b)             Between the date of this Agreement and the
Closing Date, during normal business hours, CUAQ shall be permitted to meet
with and interview all employees of Sihitech or e-Channels, provided, however,
that such interview shall not interfere with or disrupt the normal operation
and ordinary course of business of Sihitech or e-Channels and its employees.

 

7.3                                 Insurance. 
Through the Closing Date, the Vendors shall cause each of Sihitech and e-Channels
to maintain the same insurance policies as it has as of the date hereof.

 

7.4                                 Protection of Confidential Information;
Non-Competition.

 

(a)          Confidential
Information. Each Vendor acknowledges that:

 

(i)             As
a result of transactions contemplated herein, they have obtained secret and
confidential information concerning the Sihitech Business and e-Channels
Business, including, without limitation, financial information, trade secrets
and “know-how,” customers, and certain methodologies (Confidential Information).

 

(ii)          CUAQ
Sub will suffer substantial damage which will be difficult to compute if they
should divulge Confidential Information or enter into a business competitive
with that of Sihitech or e-Channels.

 

(iii)       The
provisions of this Section are reasonable and necessary for the protection of
the Sihitech Business and e-Channels Business.

 

33

 

(b)         Maintain
Confidentiality.  Each Vendor agrees not
to, at any time after the date hereof, divulge to any person or entity any
Confidential Information obtained or learned as a result of its stock ownership
of Sihitech BVI and e-Channels BVI who own Sihitech and e-Channels, except (i)
with the express written consent of CUAQ on or before the Closing Date and of CUAQ
Sub’s Board of Directors thereafter; (ii) to the extent that any such
information is in the public domain other than as a result of a breach of any
obligations hereunder; or (iii) where required to be disclosed by court order,
subpoena or other government process.  If
any Vendor shall be required to make disclosure pursuant to the provisions of
clause (iii) of the preceding sentence, it will promptly, but in no event more
than 72 hours after learning of such subpoena, court order, or other government
process, notify, by personal delivery or by electronic means, confirmed by
mail, CUAQ, and shall: (i) take all reasonably necessary steps required by CUAQ
to defend against the enforcement of such subpoena, court order or other
government process, and (ii) permit CUAQ to intervene and participate with
counsel of its choice in any proceeding relating to the enforcement thereof.

 

(c)          Records.  At the Closing, each Vendor will promptly
deliver to CUAQ all original memoranda, notes, records, reports, manuals, formula
and other documents relating to the Sihitech Business and e-Channels Business,
and all property associated therewith, which they then possess or have under
their control; provided, however, that they shall be entitled to retain copies
of such documents reasonably necessary to document their financial relationship
with Sihitech and e-Channels.

 

(d)         Non-Compete.  During the Non-Competition Period, neither
the Vendors nor any shareholders thereof, without the prior written permission
of CUAQ, shall, anywhere in the mainland of the PRC, Hong Kong and Taiwan,
directly or indirectly, (i) enter into the employ of or render any services to
any person, firm or corporation engaged in any business which is a Competitive Business
(as defined below); (ii) engage in any Competitive Business for his own
account; (iii) become associated with or interested in any Competitive Business
as an individual, partner, shareholder, creditor, director, officer, principal,
agent, employee, trustee, consultant, advisor or in any other relationship or
capacity; (iv) employ or retain, or have or cause any other person or entity to
employ or retain, any person who was employed or retained by Sihitech,
e-Channels or any other subsidiary of CUAQ in the six-month period prior to the
date that all relationships of such person terminates with Sihitech, e-Channels
or any other subsidiary of CUAQ; or (v) solicit, interfere with, or endeavor to
entice away from Sihitech, e-Channels or any other subsidiary of CUAQ, for the
benefit of a Competitive Business, any of its customers or other persons with
whom Sihitech, e-Channels or any other subsidiary of CUAQ has a business
relationship.  However, nothing in this
Agreement shall preclude them from investing their personal assets in the
securities of any corporation or other business entity which is engaged in a
Competitive Business if such securities are traded on a national stock exchange
or in the over-the-counter market and if 

 

34

 

such investment does not result in their beneficially owning, at any
time, more than 1% of the publicly-traded equity securities of such Competitive
Business.

 

(e)          Injunctive
Relief.  If any Vendor breaches, or
threatens to breach, any of the provisions of Sections 6.4 (b), (c) or (d),
Sihitech, e-Channels and CUAQ shall have the right and remedy to have the
provisions of this Section 6.4 specifically enforced by any Governmental
Authority, it being acknowledged and agreed by each Vendor that any such breach
or threatened breach will cause irreparable injury to Sihitech, e-Channels and
CUAQ and that money damages will not provide an adequate remedy.

 

(f)            Modification
of Scope.  If any provision of Sections
6.4 (b), (c) or (d) is held to be unenforceable because of the scope, duration
or area of its applicability, the Governmental Authority making such
determination shall have the power to modify such scope, duration, or area, or
all of them, and such provision or provisions shall then be applicable in such
modified form.

 

(g)         Competitive
Business.  As used in this Agreement,

 

(i)             Competitive Business means any business which operates in any
aspect of the Sihitech Business and the e-Channels Business; and

 

(ii)          Non-Competition Period means the period beginning on the Closing Date
and ending on the third anniversary of the Closing Date.

 

7.5                                 Post-Closing Assurances.  Each Vendor, from time to time after the
Closing, at CUAQ’s request, will take such other actions and execute and
deliver such other documents, certifications and further assurances as CUAQ may
reasonably require in order to manage and operate Sihitech and e-Channels,
including but not limited to executing such certificates as may be reasonably
requested by CUAQ’s accountants in connection with any audit of the financial
statements of Sihitech and/or e-Channels for any period through the Closing
Date.

 

7.6                                 No Other Negotiations.  Until the earlier of the Closing or the
termination of this Agreement, neither Sihitech, e-Channels, Sihitech
Holdingcos or e-Channels Holdingcos shall (a) solicit, encourage, directly or
indirectly, any inquiries, discussions or proposals for, (b) continue, propose
or enter into any negotiations or discussions looking toward, or (c) enter into
any agreement or understanding providing for any acquisition of any capital
stock of Sihitech, e-Channels, Sihitech BVI or e-Channels BVI, or of any part
of the assets of Sihitech, e-Channels, Sihitech BVI or e-Channels BVI, or the
Sihitech Business or e-Channels Business (in whole or in part), nor shall any of
Sihitech, e-Channels, Sihitech Holdingcos or e-Channels Holdingcos provide any
information to any Person for the purpose of evaluating or determining whether
to make or pursue any such inquiries or proposals with respect to any such
acquisition.  The Vendors shall, and
shall cause Sihitech or e-Channels, immediately notify CUAQ of any such
inquiries or proposals or requests for information.

 

35

 

7.7                                 No Securities Transactions.  No Vendor, Sihitech, e-Channels, Sihitech BVI
or e-Channels BVI nor any of their affiliates, directly or indirectly, shall
engage in any transactions involving the securities of CUAQ prior to the time
of the making of a public announcement of the transactions contemplated by this
Agreement.  Each of the Vendors shall use
its best efforts to require each of its officers, directors, employees, agents
and Representatives and those of Sihitech and e-Channels to comply with the
foregoing requirement.

 

7.8                                 Fulfillment of Conditions.  The Vendors shall use their best efforts to
fulfill the conditions specified in Article IX to the extent that the
fulfillment of such conditions is within their control.  The foregoing obligation includes (a) the
execution and delivery of documents necessary or desirable to consummate the
transactions contemplated hereby and (b) taking or refraining from such actions
as may be necessary to fulfill such conditions (including using their best
efforts to conduct the Sihitech Business and e-Channels Business in such manner
that on the Closing Date the representations and warranties of each Vendor
contained herein shall be accurate as though then made, except as contemplated
by the terms hereof).

 

7.9                                 Disclosure of Certain Matters.  From the date hereof through the Closing
Date, each Vendor shall give CUAQ prompt written notice of any event or
development that occurs that (a) had it existed or been known on the date
hereof would have been required to be disclosed under this Agreement, (b) would
cause any of the representations and warranties of the Vendors contained herein
to be inaccurate or otherwise misleading, (c) gives any Vendor any reason to
believe that any of the conditions set forth in Article IX will not be
satisfied, (d) is of a nature that is or may be materially adverse to the
operations, prospects or condition (financial or otherwise) of Sihitech or
e-Channels or (e) would require any amendment or supplement to the Proxy
Statement.

 

7.10                           Regulatory and Other Authorizations; Notices
and Consents.

 

(a)          The
Vendors shall use their commercially reasonable efforts to obtain all
authorizations, consents, orders and approvals of all Governmental Authorities
and officials that may be or become necessary for their execution and delivery
of, and the performance of their obligations pursuant to, this Agreement and
the Transaction Documents and will cooperate fully with CUAQ in promptly
seeking to obtain all such authorizations, consents, orders and approvals.

 

(b)         Each
Vendor shall promptly give such notices to third parties and use its or their
best efforts to obtain such third party consents and estoppel certificates as
CUAQ may in its reasonable discretion deem necessary or desirable in connection
with the transactions contemplated by this Agreement.

 

(c)          CUAQ
shall cooperate and use all reasonable efforts to assist each Vendor in giving
such notices and obtaining such consents and estoppel certificates; provided,
however, that CUAQ shall have no obligation to give any guarantee or other
consideration of any nature in connection with any such notice, consent or
estoppel certificate or to consent to any change in the terms of any agreement 

 

36

 

or arrangement which CUAQ in its sole discretion may deem adverse to
the interests of CUAQ, the Sihitech Business or e-Channels Business.

 

7.11                           Use of Intellectual Property.  Each Vendor acknowledges that from and after
the Closing, all the Intellectual Property of any kind related to or used in
connection with the Sihitech Business and e-Channels Business shall be owned by
Sihitech and e-Channels respectively, that no Vendor nor any of their
affiliates shall have any rights in the Intellectual Property and that no
Vendor nor any of their affiliates will contest the ownership or validity of
any rights of Sihitech and e-Channels in or to the Intellectual Property.

 

7.12                           Related Tax. 
Each Vendor covenants and agrees to pay any tax and duties assessed on
the part of such Vendor required by any Governmental Authority.

 

7.13                           Proxy Information.  As a condition to CUAQ calling and holding
the Stockholder Meeting (as hereinafter defined), the Vendors will furnish to
CUAQ such information as is reasonably required by CUAQ for the preparation of
the Proxy Statement (as hereinafter defined) in accordance with the
requirements of SEC, including full and accurate descriptions of the Sihitech
Business and e-Channels Business, material agreements affecting Sihitech, the
Sihitech Business, e-Channels and e-Channels Business, the Vendors and the audited
consolidated financial statements of Sihitech and e-Channels for each of the
three years ended December 31, 2004, which financial statements will include a
balance sheet, statement of operations and statement of cash flows, prepared in
accordance with U.S. GAAP, together with the Last Financial Statements, as
required by the rules and regulations of SEC for combination proxy statement
disclosure (collectively, Proxy
Information).  The Proxy
Information will not contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements in the Proxy
Information not misleading at the time of distribution by CUAQ and at the
Closing, and the Vendors agree to promptly notify CUAQ of any material changes
to the previously provided Proxy Information.

 

7.14                           Interim Financial Information.  From the date of this Agreement until the
Closing, the Vendors shall provide to CUAQ a copy of the monthly internal
management report of financial figures concerning Sihitech and e-Channels.  The above interim financial information shall
be delivered to CUAQ within twenty-five (25) days after the end of each
calendar month.  Sihitech and e-Channels
shall prepare the above financial information in good faith.

 

7.15                           Regulatory Approvals of the PRC. 
The Vendors shall use their best efforts to

 

(i)                                     submit applications for approval of Sihitech SPA and e-Channels SPA to
the Governmental Authority and any other government authority of the PRC whose
approval is required; and

 

(ii)                                  obtain new business licenses of Sihitech and e-Channels.

 

37

 

ARTICLE VIII

ADDITIONAL COVENANTS OF THE PARTIES

 

8.1                                 Other Information.  If in order to properly prepare documents
required to be filed with any Governmental Authority or financial statements of
CUAQ or CUAQ Sub it is necessary that a Party be furnished with additional
information relating to CUAQ and CUAQ Sub, and such information is in the
possession of any other Party(ies), such Party(ies) agree(s) to use its/their
best efforts to furnish such information in a timely manner to such other
Party, at the cost and expense of the Party being furnished such information.

 

8.2                                 Further Action.  Each of the Parties shall execute such
documents and other papers and take such further actions as may be reasonably
required or desirable to carry out the provisions hereof and the transactions
contemplated hereby.  Upon the terms and
subject to the conditions hereof, each of the Parties shall use its best
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all other things necessary, proper or advisable to consummate and make
effective as promptly as practicable the transactions contemplated by this
Agreement.

 

8.3                                 Schedules. 
The Parties shall have the obligation to supplement or amend the
Schedules being delivered concurrently with the execution of this Agreement and
annexed hereto with respect to any matter hereafter arising or discovered
which, if existing or known at the date of this Agreement, would have been
required to be set forth or described in the Schedules.  The obligations of the Parties to amend or
supplement the Schedules being delivered herewith shall terminate on the
Closing Date.

 

8.4                                 Confidentiality.  Sihitech Holdingcos and e-Channels
Holdingcos, on the one hand, and CUAQ Sub on the other hand, on and after the
Closing Date, shall hold and shall cause their respective Representatives to
hold in strict confidence, unless compelled to disclose by judicial or
administrative process or by other requirements of law, all documents and
information concerning the other Parties furnished it by such other Parties or
their Representatives in connection with the transactions contemplated by this
Agreement (except to the extent that such information can be shown to have been
(a) previously known by the Party to which it was furnished, (b) in the public
domain through no fault of such Party or (c) later lawfully acquired from other
sources, which source is not the agent of the other Party, by the Party to
which it was furnished), and each Party shall not release or disclose such
information to any other person, except its Representatives in connection with
this Agreement.  Each Party shall be
deemed to have satisfied its obligations to hold confidential information
concerning or supplied by the other Parties if it exercises the same care as it
takes to preserve confidentiality for its own similar information.

 

8.5                                 Public Announcements.  From the date of this Agreement until Closing
or termination, CUAQ, CUAQ Sub, and the Vendors shall, and the Vendors shall
cause Sihitech, e-Channels, Sihitech BVI and e-Channels BVI to, cooperate in
good faith to jointly prepare all press releases and public announcements
pertaining to this Agreement and the transactions governed by it, and none of
the foregoing shall issue or otherwise 

 

38

 

make any public announcement or communication pertaining to this
Agreement or the transaction without the prior consent of CUAQ and CUAQ Sub,
except as required by any legal requirement or by the rules and regulations of,
or pursuant to any agreement of a stock exchange or trading system.  If any party determines with the advice of
counsel that it is required to make this Agreement and the terms of the
transaction public or otherwise issue a press release or make public disclosure
with respect thereto, it shall at a reasonable time before making any public
disclosure, consult with the other party regarding such disclosure, seek such
confidential treatment for such terms or portions of this Agreement or the
transaction as may be reasonably requested by the other party and disclose only
such information as is legally compelled to be disclosed.  This provision will not apply to communications
by any party to its counsel, accountants and other professional advisors.

 

8.6                                 Board Matters.  (a) as promptly as possible following the
date hereof, CUAQ and CUAQ Sub shall take all actions necessary to ensure that:
the board of directors of CUAQ Sub following Closing (the Board) shall consist
of nine (9) directors.

 

(b)         The
Parties agree that for a period of three years, they and any persons over which
they have influence, shall use their best efforts to nominate and elect the
following persons as directors: three (3) persons designated by Sihitech
Holdingcos; one (1) person designated by e-Channels Holdingcos; two (2) current
management members of CUAQ; and three (3) independent directors each designated
by Sihitech Holdingcos, e-Channels Holdingcos and CUAQ, respectively, and
agreed to by the other two Parties.  In
addition, the Parties agree to use their best effort to cause the board of
directors of CUAQ Sub to comply with the requirement for an independent board
of directors as specified by the NASDAQ rules and regulations.

 

8.7                                 Requirements for Specific Board Actions.  The Parties agree during the first three (3)
years after Closing, the following proposed actions shall require at least two
thirds affirmative votes by the Board: (A) any debt financing with an amount of
more than US$3,000,000 or any debt financing not in the ordinary course of
business; (B) distribution and sales of assets of CUAQ Sub with a value of more
than US$500,000 and not in the ordinary course of business; (C) any financing
activities, including, but not limited to, secondary offerings and any
activities that may cause the dilutions of the then existing stockholders, with
offering price below the market price of the stock of CUAQ; (D) change of the
business focus; (E) merger or consolidation with, or sale or disposition of all
or substantially all of its assets to, or acquisition of all or substantially
all the assets of, any Person; (F) approval of annual budget planning and any
capital expenditure outside the annual budget and in an amount of more than
US$2,000,000; (G) nomination of the following officers: chairman, chief
executive officer, chief operation officer, and chief financial officer.

 

8.8                                 Transfer Restriction.  Sihitech Holdingcos and e-Channels Holdingcos
shall not publicly offer, sell, transfer or otherwise dispose of any CUAQ Sub
Stock on any national stock exchanges of the United States, from the Closing
Date until the first anniversary of such Closing Date, without the prior
written consent of the Board of Directors of CUAQ Sub.

 

39

 

8.9                                 Registration Rights Agreement.  At the Closing, the Parties shall enter into
a registration rights agreement, containing customary terms and conditions,
including customary demand and piggyback registration rights and indemnities,
provided, however, that the registration rights agreement shall provide that no
registration statement shall be filed with SEC before the first anniversary of
the Closing.

 

8.10                           Voting Agreement.  At Closing, Sihitech Holdingcos, e-Channels
Holdingcos, Chih Cheung and James Li shall have entered into a voting
agreement, setting forth that they will vote all the capital stock of CUAQ over
which they have direct or beneficial ownership and right to nominate and vote
in favor of the board structure contained in Section 8.6 for a period of three
years.

 

ARTICLE IX

CONDITIONS

 

9.1                                 Conditions to Each Party’s Obligations.  The respective obligations of each Party to
consummate the transactions contemplated by this Agreement shall be subject to
the fulfillment, at or prior to the Closing, of each of the following
conditions.

 

(a)          Approval
by CUAQ.  This Agreement and the
transactions contemplated hereby shall have been approved by the common
stockholders of CUAQ in accordance with CUAQ’s certificate of incorporation and
the aggregate number of shares of CUAQ common stock held by stockholders of
CUAQ, other than the initial stockholders of CUAQ, who exercise their right to
convert the shares of common stock of CUAQ owned by them into cash in
accordance with CUAQ’s certificate of incorporation shall not constitute 20% or
more of the number of shares of CUAQ’s common stock outstanding as of the date
of this Agreement and owned by Persons other than the initial stockholders of
CUAQ.

 

(b)         Litigation.  No order, stay, judgment or decree shall have
been issued by any Governmental Authority preventing, restraining or
prohibiting in whole or in part, the consummation of the transactions
contemplated hereby or instrumental to the consummation of the transactions
contemplated hereby, and no action or proceeding by any governmental authority
shall be pending or threatened (including by suggestion through investigation)
by any person, firm, corporation, entity or Governmental Authority, which
questions, or seeks to enjoin, modify, amend or prohibit (a) the issuance of
the CUAQ Sub Stock, or (b) the Stockholders Meeting and use of the Proxy
Statement by CUAQ.

 

(c)          Transaction
Documents.  Each of the Transaction
Documents shall have been executed by the parties thereto and delivered to each
Party.

 

(d)         Regulatory
Approvals.  Any Governmental Authority
whose approval or consent is required shall have unconditionally approved the
acquisition of 100% equity interest in Sihitech by Sihitech BVI in accordance
with the

 

40

 

Sihitech SPA, and the acquisition of 100% equity interest in e-Channels
by e-Channels BVI in accordance with the e-Channels SPA, and CUAQ shall have
received written confirmation thereof.

 

(e)          Business
Licenses.  Each of Sihitech and
e-Channels has been converted into a company wholly owned by Sihitech BVI and
e-Channels BVI respectively for PRC regulatory purposes and has received a
business license therefor.  

 

9.2                                 Conditions to Obligations of Sihitech
Holdingcos and e-Channels Holdingcos. 
The obligations of Sihitech Holdingcos and e-Channels Holdingcos to
consummate the transactions contemplated by this Agreement shall be subject to
the fulfillment, at or prior to the Closing, of each of the following
conditions:

 

(a)          Deliveries.  Sihitech Holdingcos and e-Channels Holdingcos shall have received
the CUAQ Sub Stock and such other documents, certificates and instruments as
may be reasonably requested by Sihitech
Holdingcos and e-Channels Holdingcos.  CUAQ
Sub shall have delivered to the Vendors reasonable evidence of the completion
of CUAQ Merger.

 

(b)         Representations
and Warranties; Covenants. Without supplementation after the date of this
Agreement, the representations and warranties of CUAQ and CUAQ Sub contained in
this Agreement shall be with respect to those representations and warranties
qualified by any materiality standard, true and correct as of the Closing, and
with respect to all the other representations and warranties, true and correct
in all material respects as of the Closing, with the same force and effect as
if made as of the Closing, and all the covenants contained in this Agreement to
be materially complied with by CUAQ and CUAQ Sub on or before the Closing shall
have been materially complied with, and CUAQ and CUAQ Sub shall have delivered
a certificate signed by a duly authorized officer thereof to such effect.

 

(c)
Consents.  CUAQ and CUAQ Sub shall have
obtained and delivered to Sihitech
Holdingcos and e-Channels Holdingcos consents of all third parties, as
appropriately required for the consummation of the transactions contemplated by
this Agreement.

 

(d)         Performance
of Agreements.  All covenants, agreements
and obligations required by the terms of this Agreement to be performed by CUAQ
at or prior to the Closing shall have been duly and properly performed or
fulfilled in all material respects.

 

(e)          No
Adverse Changes.  At the Closing, there
shall have been no material adverse change in the assets, liabilities or
financial condition of CUAQ and CUAQ Sub from that shown in CUAQ Balance Sheet
and related statements of income. 
Between the date of this Agreement and the Closing Date, there shall not
have occurred an event which would have had a Material Adverse Effect on the
operations, financial condition or prospects of CUAQ or CUAQ Sub.

 

41

 

(f)            Necessary
Proceedings.  All proceedings, corporate
or otherwise, to be taken by CUAQ and CUAQ Sub in connection with the
consummation of the transactions contemplated by this Agreement shall have been
duly and validly taken, and copies of all documents, resolutions and
certificates incident thereto, duly certified by CUAQ as of the Closing, shall
have been delivered to Sihitech Holdingcos and e-Channels Holdingcos.

 

(g)         Resignations.  Effective as of the Closing, the directors
and the officers of CUAQ or CUAQ Sub will have resigned and that they have no
claim for employment compensation in any form from CUAQ or CUAQ Sub.

 

(h)         Employment
and Option Agreements.  CUAQ will have
entered into, effective as of the Closing, the employment agreements provided
for in Section 3.3(C) of this Agreement.

 

(i)             Legal
Opinion.  The Vendors shall have received
from legal counsels to CUAQ and CUAQ Sub, legal opinions dated as of the
Closing Date, in substantial form as set forth in Schedule 9.2(i) hereto.

 

(j)             Supplemental
Disclosure.  If CUAQ or CUAQ Sub shall
have supplemented or amended any schedule pursuant to their obligations set forth
in Section 8.3 in any material respect, the Vendors may give notice to CUAQ
that as a result of information provided to the Vendors in connection with any
or all of such amendments or supplements, the Vendors have determined not to
proceed with the consummation of the transactions contemplated hereby.

 

(k)          Trustee
Notice.  CUAQ, simultaneously with the
Closing, will deliver to the Trustee of the Trust Account of CUAQ a termination
letter pursuant to the Trust Agreement to liquidate such Trust Account and
disburse the funds therein to the Vendors or their designees and to CUAQ. 

 

9.3                                 Conditions to Obligations of CUAQ.  The obligations of CUAQ to consummate the
transactions contemplated by this Agreement shall be subject to the
fulfillment, at or prior to the Closing, of each of the following conditions:

 

(a)          Ownership.  Sihitech BVI and e-Channels BVI shall, for
the regulatory purposes of the PRC, have become the registered and beneficial
owners of the entire equity interest of Sihitech and e-Channels, respectively,
free and clear of all Encumbrance.

 

(b)         Deliveries.  The Vendors shall have delivered the
confirmations of release of payments of the Cash Amount specified in Section
2.2 if the minimum asset requirements contained in Section 9.3(i) below is not
satisfied, and CUAQ Sub shall have received the same and such other documents,
certificates and instruments as may be reasonably requested by CUAQ.

 

(c)          Representations
and Warranties; Covenants.  Without
supplementation after the date of this Agreement, the representations and
warranties of each Vendor 

 

42

 

contained in this Agreement shall be with respect to those
representations and warranties qualified by any materiality standard, true and
correct in all respects as of the Closing, and with respect to all the other
representations and warranties, true and correct in all material respects as of
the Closing, with the same force and effect as if made as of the Closing, and
all the covenants contained in this Agreement to be materially complied with by
Sihitech, e-Channels and each Vendor on or before the Closing shall have been
materially complied with, and CUAQ shall have received a certificate of each
Vendor to such effect;

 

(d)         Consents.  Each Vendor shall have obtained and delivered
to CUAQ consents of all third parties required by the Contracts and Permits set
forth in Schedule 4.4 and as required and appropriate for the consummation of
the transactions contemplated by this Agreement;

 

(e)          Performance
of Agreements.  All covenants, agreements
and obligations required by the terms of this Agreement to be performed by each
Vendor at or prior to the Closing shall have been duly and properly performed
or fulfilled in all material respects;

(f)            No
Adverse Change.  At the Closing, there
shall have been no material adverse change in the assets, liabilities,
financial condition or prospects of Sihitech or the Sihitech Business, or
e-Channels or the e-Channels Business, from that shown or reflected in the Last
Financial Statements and as described in the Proxy Statement.  Between the date of this Agreement and the
Closing Date, there shall not have occurred any event which, in the reasonable
opinion of CUAQ, would have a Material Adverse Effect on the operations, financial
condition or prospects of Sihitech or the Sihitech Business, or e-Channels or
the e-Channels Business;

 

(g)       Necessary
Proceedings.  All proceedings, corporate
or otherwise, to be taken by Sihitech Holdingcos and e-Channels Holdingcos in
connection with the consummation of the transactions contemplated by this
Agreement, including without limitation any and all regulatory approvals
required by any Governmental Authority of the PRC for the formation of any and
all of Sihitech Holdingcos, e-Channels Holdingcos, Sihitech BVI and e-Channels
BVI, shall have been duly and validly taken, and copies of all documents,
resolutions and certificates incident thereto, duly certified by Sihitech
Holdingcos and e-Channels Holdingcos, as appropriate, as of the Closing, shall
have been delivered to CUAQ.

 

(h)       Legal
Opinion.  CUAQ and CUAQ Sub shall have
received from the legal counsel to the Vendors and selling shareholders under
the Sihitech SPA and e-Channels SPA, a legal opinion dated as of the Closing
Date, in substantial form as set forth in Schedule 9.3(G) hereto.

 

43

 

(i)             Minimum
Assets.  At the Closing, the Vendors will
certify to CUAQ that on a consolidated basis, immediately prior to Closing,
Sihitech BVI and e-Channels BVI will have US$4 million cash and only have
short- and long-term debt arising in the ordinary course.  

 

ARTICLE X

INDEMNIFICATION

 

10.1                           Indemnification by Sihitech Holdingcos and
e-Channels Holdingcos.  Subject to the
limitations set forth in Section 10.4, each of Sihitech Holdingcos and
e-Channels Holdingcos shall indemnify and hold harmless CUAQ and CUAQ Subfrom and against, and shall reimburse
CUAQ or CUAQ Sub for, any
Damages which may be sustained, suffered or incurred by them, whether as a
result of any Third Party Claim or otherwise, and which arise from or in
connection with or are attributable to the breach of any of the representations
or warranties or covenants by Sihitech Holdingcos or e-Channels Holdingcos contained
herein.  Indemnification pursuant to this
Section 10.1 shall be the sole remedy of CUAQ and CUAQ Sub with respect to any
breach of the representations and warranties or covenants by Sihitech
Holdingcos and e-Channels Holdingcos. 
Each of Sihitech Holdingcos and e-Channels Holdingcos shall give prompt
written notice to CUAQ and CUAQ Sub of any Third Party Claims or other facts
and circumstances known to them which may entitle CUAQ or CUAQ Sub to
indemnification under this Section 10.1.

 

10.2                           Indemnification by CUAQ Directors.  Subject to the limitations set forth in
Section 10.4, the current Board members of CUAQ, namely Chih Cheung,
James Li and James Preissler (the CUAQ Directors), shall, jointly and
severally, indemnify and hold harmless each of Sihitech
Holdingcos and e-Channels Holdingcos from and against, and shall reimburse each
of Sihitech Holdingcos and e-Channels Holdingcos for, any Damages which may be
sustained, suffered or incurred by Sihitech Holdingcos or e-Channels
Holdingcos, whether as a result of Third Party Claims or otherwise, and which
arise or result from or in connection with or are attributable to the breach of
any of CUAQ or CUAQ Sub’s representations or warranties or covenants contained
in this Agreement.  CUAQ or CUAQ Sub
shall give each of Sihitech Holdingcos and e-Channels Holdingcos prompt written
notice of any Third Party Claims or other facts and circumstances known to it
which may entitle them to indemnification under this Section 10.2.

 

10.3                           Notice, Etc. 
A Party required to make an indemnification payment pursuant to this
Agreement (Indemnifying
Party) shall have no liability with respect to Third Party
Claims or otherwise with respect to any covenant, representation, warranty,
agreement, undertaking or obligation under this Agreement unless the Party
entitled to receive such indemnification payment (Indemnified Party) gives notice to the
Indemnifying Party specifying (i) the covenant, representation or warranty,
agreement, undertaking or obligation contained herein which it asserts has been
breached, (ii) in reasonable detail, the nature and dollar amount of any Claim
the Indemnified Party may have against the Indemnifying Party by reason thereof
under this Agreement, and (iii) whether or not the Claim is a Third Party
Claim.  With respect to Third Party
Claims, an Indemnified Party (i) shall give the Indemnifying Party prompt
notice of any Third Party Claim, (ii) prior to

 

44

 

taking any action with respect to such Third Party Claim, shall consult
with the Indemnifying Party as to the procedure to be followed in defending,
settling, or compromising the Third Party Claim, (iii) shall not consent to any
settlement or compromise of the Third Party Claim without the written consent
of the Indemnifying Party (which consent shall not be unreasonably withheld or
delayed), and (iv) shall permit the Indemnifying Party, if it so elects, to
assume the exclusive defense of such Third Party Claim (including, except as
provided in the penultimate sentence of this Section, the compromise or
settlement thereof) at its own cost and expense.  If the Indemnifying Party shall elect to
assume the exclusive defense of any Third Party Claim pursuant to this
Agreement, it shall notify the Indemnified Party in writing of such election,
and the Indemnifying Party shall not be liable hereunder for any fees or
expenses of the Indemnified Party’s counsel relating to such Third Party Claim
after the date of delivery to the Indemnified Party of such notice of
election.  The Indemnifying Party will
not compromise or settle any such Third Party Claim without the written consent
of the Indemnified Party (which consent shall not be unreasonably withheld or
delayed) if the relief provided is other than monetary damages or such relief would
have a material adverse effect on the Indemnified Party.  Notwithstanding the foregoing, if the
Indemnifying Party elects to assume the defense with respect to any Third Party
Claim, the Indemnifying Party shall have the right to compromise or settle for
solely monetary damages such Third Party Claim, provided such settlement will
not result in or have a material adverse effect on the Indemnified Party.  Notwithstanding the foregoing, the Party
which defends any Third Party Claim shall, to the extent required by any
insurance policies of the Indemnified Party, share or give control thereof to
any insurer with respect to such Claim.

 

10.4                           Limitations.

 

(a)          Neither
Sihitech Holdingcos nor e-Channels Holdingcos shall be required to indemnify
CUAQ under Section 10.1 unless the aggregate of all amounts for which indemnity
would otherwise be due against them exceeds US$10,000.  Claims may be asserted once the damages
exceed US$10,000, and in no event the aggregate indemnification amount shall
exceed the value of the Purchase Consideration.

 

(b)         The
CUAQ Directors shall not be required to indemnify either Sihitech Holdingcos or
e-Channels Holdingcos under Section 10.2 unless the aggregate of all amounts
for which indemnity would otherwise be due against them exceeds US$10,000.
Claims may be asserted once the damages exceed US$10,000, and in no event the
aggregate indemnification amount shall exceed the value of the Purchase
Consideration.

 

(c)          If a
Third Party Claim subject to indemnification by either of Sihitech Holdingcos
and e-Channels Holdingcos is brought against Sihitech Holdingcos and e-Channels
Holdingcos, and either of Sihitech Holdingcos and e-Channels Holdingcos
prevails in the defense thereof, Sihitech Holdingcos and e-Channels Holdingcos
shall not be required to indemnify CUAQ with respect to the costs of such
defense, including attorneys’ fees.

 

45

 

(d)         In no
event shall a claim for indemnification be made after the second anniversary of
the Closing Date.

 

10.5                           Adjustment to Purchase Consideration; Setoff.

 

(a)          Purchase
Price.  Any indemnification payments made
pursuant to Sections 10.1 and 10.2 shall be deemed to be an adjustment to the
Purchase Consideration.  To the extent
that any Vendor is obligated to indemnify CUAQ or CUAQ Sub under the provisions
of this Article X for Damages reduced to a monetary amount, CUAQ or CUAQ Sub
shall have the right to adjust any amount due and owing or to be due and owing
under any agreement with the Vendors, whether under this Agreement or any other
agreement between the Vendors and any of CUAQ or CUAQ Sub’s affiliates,
subsidiaries or controlled persons or entities. 
To the extent that CUAQ or CUAQ Sub is obligated to indemnify any Vendor
after Closing under the provisions of this Article X for Damages reduced to a
monetary amount, any Vendor after Closing shall have the right to decrease any
amount due and owing or to be due and owing under any agreement with CUAQ or
CUAQ Sub, whether under this Agreement or any other agreement between the
Vendors and any of CUAQ or CUAQ Sub’s affiliates, subsidiaries or controlled
persons or entities.

 

(b)         Holdback
Amount.  Notwithstanding the foregoing,
CUAQ or CUAQ Sub may apply all or a portion of the Holdback Amount to satisfy
any Claim for indemnification pursuant to this Article X.  CUAQ or CUAQ Sub will hold the Holdback
Amount until final resolution of the Claim or dispute.  The Holdback Amount is security for the
indemnification obligations of the Vendors and is not a limitation on the
Damages recoverable or liquidated damages and such security does not limit any
other right of set off or recovery under this Agreement or at law, whether
pursuant to this Agreement or any other agreement of the Vendors.

 

10.6                           Claims on behalf or in right of CUAQ or CUAQ
Sub.  Pursuant to the provisions of this
Article X, if any Claim for indemnification is to be brought against Sihitech
Holdingcos and e-Channels Holdingcos on behalf of or by right of CUAQ or CUAQ
Sub, such claims will be determined by the Independent Committee of the Board
of Directors.  Any settlement of a Claim
for indemnification brought on behalf of or by right of CUAQ or CUAQ Sub shall
be determined and approved by the Independent Committee of the Board of
Directors.  The Independent Committee of
the Board of Directors of CUAQ or CUAQ Sub will consist of two persons, none of
which are officers or employees of CUAQ or CUAQ Sub or any of their operating
subsidiary companies or are direct or beneficial owners of 5% or more of the voting
capital stock of CUAQ or CUAQ Sub.  For a
period of not less than one year after the Closing or until final resolution of
Claims under this Article X brought by or by right of CUAQ or CUAQ Sub, the
board of directors of CUAQ or CUAQ Sub will maintain a sufficient number of
directors such that it will be able to maintain the Independent Committee.

 

46

 

10.7                           No Multiple Indemnifications.  The Parties agree that, in the event of a
breach of any representations, warranties or covenants by any party in Sihitech
SPA, e-Channels SPA or this Agreement and sufficient indemnification has been
provided for thereunder, the indemnified party shall, or shall cause its affiliates,
not seek any additional indemnification for the same breach under any other
agreements.  

 

ARTICLE XI

TERMINATION AND ABANDONMENT

 

11.1                           Methods of Termination.  The transactions contemplated herein may be
terminated and/or abandoned at any time but not later than the Closing:

 

(a)          by
mutual written consent of CUAQ and the Vendors;

 

(b)         (i) by
CUAQ if any Vendor amends or supplements any Vendor schedule hereto and such
amendment or supplement reflects a material adverse change in the condition
(financial or other), operations or prospects of Sihitech or the Sihitech
Business, or e-Channels or the e-Channels Business as a whole or in part, after
the date hereof, or (ii) by Vendors if CUAQ amends or supplements any CUAQ
Schedule hereto and such amendment or supplement reflects a material adverse
change in the condition (financial or other) or operations of CUAQ.

 

(c)          by
either CUAQ or the Vendors jointly, if the Closing has not occurred by May 31,
2006 (or such other date as may be extended from time to time by written
agreement of Parties); provided, however, that the right to terminate this
Agreement under this Section 11.1(c) shall not be available to any Party that
is then in breach of any of its covenants, representations or warranties in
this Agreement;

 

(d)         by the
Vendors, (i) if CUAQ shall have breached any of its covenants herein in any
respect or (ii) if the representations and warranties of CUAQ contained in this
Agreement shall not be true and correct in all material respects, at the time
made, or (iii) if such representations and warranties shall not be true and
correct at and as of the Closing Date as though such representations and
warranties were made again at and as of the Closing Date, except to the extent
that such representations are made herein as of a specific date prior to the
Closing Date, and in any such event, if such breach is subject to cure, CUAQ
has not cured such breach within 10 Business Days of the Vendor’s notice of an
intent to terminate;

 

(e)          by
CUAQ, (i) if any Vendor shall have breached any of the covenants herein in any
respect or (ii) if the representations and warranties of any Vendor contained
in this Agreement shall not be true and correct in all material respects, at
the time made, or (iii) if such representations and warranties shall not be
true and correct at and as of the Closing Date as though such representations
and warranties were made again at and as of the Closing Date, except to the
extent 

 

47

 

that such representations are made herein as of a specific date prior
to the Closing Date, and in any such event, if such breach is subject to cure,
the Vendors have not cured such breach within 10 Business Days of CUAQ’s notice
of an intent to terminate;

 

(f)            by
Vendors, jointly, if the Board of Directors of CUAQ (or any committee thereof)
shall have failed to recommend or withdrawn or modified in a manner adverse to
the Vendors its approval or recommendation of this Agreement and any of the
transactions contemplated hereby;

 

(g)         by
CUAQ if the Board of Directors of CUAQ shall have determined in good faith,
based upon the advice of outside legal counsel, that the failure to terminate
this Agreement is reasonably likely to result in the Board of Directors
breaching its fiduciary duties to stockholders under applicable law by reason
of the pendency of an unsolicited, bona fide written proposal for a superior
transaction;

 

(h)         by
either CUAQ or Vendors, if, at CUAQ’s Stockholder Meeting (including any
adjournments thereof), this Agreement and the transactions contemplated thereby
shall fail to be approved and adopted by the affirmative vote of the holders of
CUAQ’s common stock required under its certificate of incorporation, or 20% or
more of the number of shares of CUAQ’s common stock outstanding as of the date
of the record date of the stockholders meeting held by Persons other than the
Initial Stockholders exercise their rights to convert the shares of CUAQ’s
common stock held by them into cash in accordance with CUAQ’s certificate of
incorporation.

 

11.2                           Effect of Termination.

 

(a)          In
the event of termination and/or abandonment by CUAQ or by Vendors, or both,
pursuant to Section 11.1 hereof, written notice thereof shall forthwith be
given to the other Party, and except as set forth in this Section 11.2, all
further obligations of the Parties shall terminate, no Party shall have any
right against the other Party hereto, and each Party shall bear its own costs
and expenses.

 

(b)         Consequence
of Termination.  If the transactions
contemplated by this Agreement are terminated, rescinded and/or abandoned as
provided herein:

 

(i)             each
Party hereto will return all documents, work papers and other material (and all
copies thereof) of the other Party relating to the transactions contemplated
hereby, whether so obtained before or after the execution hereof, to the Party
furnishing the same;

 

(ii)          all
confidential information received by either Party hereto with respect to the
business of the other Party hereto shall be treated in accordance with Section
8.4 hereof, which shall survive such termination or abandonment.

 

48

 

(c)        Termination
Recovery and Fee.  If this Agreement is
terminated by CUAQ under Section 11.1(b)(i) or (e), then CUAQ will be entitled
to US$200,000 due and payable from the Vendors, on a joint and several basis,
immediately upon termination of this Agreement as liquidated damages and not as
a penalty amount, and in lieu of any other right or remedy that CUAQ may have
against the other parties to this Agreement for such breach.  If this Agreement is terminated by any of the
Vendors under Section 11.1(b)(ii), (d) or (f), then the Vendors will jointly be
entitled to $200,000 due and payable from the CUAQ Directors Chih
Cheung, James Li and James Preissler, on a joint and several basis, immediately upon termination of this
Agreement as liquidated damages and not as a penalty amount, and in lieu of any
other right or remedy that Vendors may have against the other parties to this
Agreement for such breach.

 

11.3                           No Claim Against Trust Fund.  It is understood by Sihitech Holdingcos and
e-Channels Holdingcos that in the event of any breach of this Agreement by
CUAQ, that they have no right to Damages, including the termination fees set
forth in Section 11.2(c) from CUAQ.  In
addition, Sihitech Holdingcos and e-Channels Holdingcos agree that they have no
right to any amount held in the trust fund and they will not make any claim
against CUAQ that would adversely affect the business, operations or prospects
of CUAQ or the amount of the funds held in the trust fund.

 

ARTICLE XII

GENERAL PROVISIONS

 

12.1                           Expenses. 
Except as otherwise provided herein, all costs and expenses, including,
without limitation, fees and disbursements of Representatives, incurred in
connection with the preparation of this Agreement and the transactions
contemplated hereby shall be paid by the Party incurring such costs and
expenses, whether or not the Closing shall have occurred.

 

12.2                           Notices. 
All notices and other communications given or made pursuant hereto shall
be in writing and shall be deemed to have been duly given or made as of the
date delivered or mailed if delivered personally or by nationally recognized
courier or mailed by registered mail (postage prepaid, return receipt
requested) or by telecopy to the Parties at the following addresses (or at such
other address for a Party as shall be specified by like notice, except that
notices of changes of address shall be effective upon receipt):

 

	
  Sihitech Holdingcos and e-Channels Holdingcos:

  
	
   

  	
   

  
	
   

  	
  Sihitech Company Limited

  
	
   

  	
   

  
	
   

  	
  Address:

  	
   

  	
  TrustNet Chambers, P.O.
  Box 3444, Road Town, 

  Tortola, British Virgin
  Islands

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Fax:

  	
   

  	
  +86 10 6442 1210

  
	
   

  	
  For the attention of:

  	
   

  	
  Peter Li

  

 

49

 

	
   

  	
  Mega Capital Group Services Limited

  
	
   

  	
   

  
	
   

  	
  Address:

  	
   

  	
  TrustNet Chambers, P.O.
  Box 3444, Road 

  Town, Tortola, British
  Virgin Islands

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Fax:

  	
   

  	
  +86 10 6442 1210

  
	
   

  	
  For the attention of:

  	
   

  	
  Peter Li

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Profit Loyal Consultants Limited

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
   

  	
  TrustNet
  Chambers, P.O. Box 3444, Road Town, 

  Tortola,
  British Virgin Islands

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Fax:

  	
   

  	
  +86 10 6442 1210

  
	
   

  	
  For the attention of:

  	
   

  	
  Peter Li

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Elite Concord International Limited

  
	
   

  	
   

  
	
   

  	
  Address:

  	
   

  	
  TrustNet Chambers, P.O.
  Box 3444, Road 

  Town, Tortola, British
  Virgin Islands

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Fax:

  	
   

  	
  +86 10 6296 7456

  
	
   

  	
  For the attention of:

  	
   

  	
  ZENG Shuo

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  China Century Holdings Group Limited

  
	
   

  	
   

  
	
   

  	
  Address:

  	
   

  	
  TrustNet Chambers, P.O.
  Box 3444, Road Town, 

  Tortola, British Virgin
  Islands

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Fax:

  	
   

  	
  +86 10 6296 7456

  
	
   

  	
  For the attention of:

  	
   

  	
  ZENG Shuo

  
	
   

  	
   

  
	
   

  	
  Shinning Growth Investment Group Limited

  
	
   

  	
   

  
	
   

  	
  Address:

  	
   

  	
  TrustNet Chambers, P.O.
  Box 3444, Road Town, 

  Tortola, British Virgin
  Islands

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Fax:

  	
   

  	
  +86 10 6296 7456

  
	
   

  	
  For the attention of:

  	
   

  	
  ZENG Shuo

  
	
  CUAQ:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  China
  Unistone Acquisition Corp.

  
	
   

  	
   

  
	
   

  	
  Address:

  	
   

  	
  c/o
  Suite 1208, Grand Gateway Tower One, 1 

  Hongqiao
  Road, Shanghai 200030, the PRC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Fax:

  	
   

  	
  +86 21 6113 8580

  
	
   

  	
  For the attention of:

  	
   

  	
  James Li

  
											

 

50

 

	
  CUAQ Sub:

  
	
   

  
	
   

  	
  Yucheng
  Technologies Limited

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
   

  	
  Room 1708, Dominion Centre
  43-59 Queen’s Road 

  East, Wanchai, Hong Kong
  S.A.R.

  
	
   

  	
  Fax:

  	
   

  	
  +86 21 6113 8580

  
	
   

  	
  For the attention of:

  	
   

  	
  James Li

  
	
   

  	
   

  	
   

  	
   

  
	
  Chih Cheung

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
   

  	
  c/o Suite 1208, Grand
  Gateway Tower One, 1

   Hongqiao Road, Shanghai 200030, the PRC

  
	
   

  	
  Fax:

  	
   

  	
  +86 21 6113 8580

  
	
   

  	
   

  	
   

  	
   

  
	
  James Li

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
   

  	
  c/o Suite 1208, Grand
  Gateway Tower One, 1 

  Hongqiao Road, Shanghai
  200030, the PRC

  
	
   

  	
  Fax:

  	
   

  	
  +86 21 6113 8580

  
	
   

  	
   

  	
   

  	
   

  
	
  James Preissler

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
   

  	
  c/o Suite 1208, Grand
  Gateway Tower One, 1 

  Hongqiao Road, Shanghai
  200030, the PRC

  
	
   

  	
  Fax:

  	
   

  	
  +86 21 6113 8580

  
						

 

12.3                           Amendment. 
This Agreement may not be amended or modified except by an instrument in
writing signed by the Parties.

 

12.4                           Waiver. 
At any time prior to the Closing, either Party may (a) extend the time
for the performance of any of the obligations or other acts of the other Party,
(b) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto and (c) waive compliance
with any of the agreements or conditions contained herein.  Any such extension or waiver shall be valid
only if set forth in an instrument in writing signed by the Party to be bound
thereby.

 

12.5                           Headings. 
The headings contained in this Agreement are for reference purposes only
and shall not affect in any way the meaning or interpretation of this
Agreement.

 

12.6                           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
contemplated hereby is not affected in any manner adverse to any Party. Upon
such determination that any term or other provision is invalid, illegal or
incapable of being enforced, the Parties shall negotiate in good faith to
modify this Agreement so as to effect the original intent of the Parties as
closely as possible 

 

51

 

in
an acceptable manner to the end that transactions contemplated hereby are
fulfilled to the extent possible.

 

12.7                           Entire Agreement.  This Agreement and the Schedules and Exhibits
hereto, constitute the entire agreement and supersede all prior agreements and
undertakings, both written and oral, between the Parties with respect to the
subject matter hereof and, except as otherwise expressly provided herein, are
not intended to confer upon any other person any rights or remedies hereunder.

 

12.8                           Benefit. 
This Agreement shall inure to the benefit of and be binding upon the
successors and assigns of the Parties.

 

12.9                           Governing Law.  This Agreement
and the relationship between the Parties shall be governed by, and interpreted
in accordance with, the laws of the State of New York, without giving effect to
the conflicts of laws principles thereof.

 

12.10                     Arbitration.

 

12.10.1                                                            All
disputes, controversies or claims arising out of or in connection with this
Agreement, including the breach, termination or invalidity of this Agreement,
shall be finally settled under the Rules of Arbitration of the International
Chamber of Commerce by three arbitrators appointed in accordance with those
Rules.

 

12.10.2                                                            The
seat of the arbitration shall be Singapore.

 

12.10.3                                                            The language of the arbitration shall be
English.

 

12.11                     Counterparts. 
This Agreement may be executed in one or more counterparts, and by the
different Parties in separate counterparts, each of which when executed shall
be deemed to be an original but all of which when taken together shall
constitute one and the same agreement.

 

12.12                     Joint and Several.  (a) Sihitech Holdingcos may only exercise any
and all of the rights granted to Sihitech Holdingcos hereunder jointly and
shall be liable for any and all of the obligations of Sihitech Holdingcos on a
joint and several basis.

 

(b) e-Channels Holdingcos may only exercise any and all of the rights
granted to e-Channels Holdingcos hereunder jointly and shall be liable for any
and all of the obligations of e-Channels Holdingcos on a joint and several
basis.

 

12.14.                  Language. 
This Agreement shall be signed in both English and Chinese.  If there is any conflict between the two
language versions, the English version shall prevail.

 

52

 

IN
WITNESS WHEREOF, the Parties have caused this Agreement to be executed as of
the date first written above.

 

	
  For
  and on behalf of

  	
  For
  and on behalf of

  
	
  Sihitech Company Limited

  	
  Elite Concord International Limited

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
  Name:

  	
  Name:

  
	
  Title:
  Authorized Representative

  	
  Title:
  Authorized Representative

  
	
   

  	
   

  
	
  For
  and on behalf of

  	
  For
  and on behalf of

  
	
  Mega Capital Group Services Limited

  	
  China Century Holdings Group Limited

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
  Name:

  	
  Name:

  
	
  Title:
  Authorized Representative

  	
  Title:
  Authorized Representative

  
	
   

  	
   

  
	
  For
  and on behalf of

  	
  For
  and on behalf of

  
	
  Profit Loyal Consultants Limited

  	
  Shinning Growth Investment Group Limited

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
  Name:

  	
  Name:

  
	
  Title:
  Authorized Representative

  	
  Title:
  Authorized Representative

  
	
   

  	
   

  
	
  For
  and on behalf of

  	
  For
  and on behalf of

  
	
  China Unistone Acquisition Corp.

  	
  Yucheng Technologies Limited

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By: 

  	
   

  	
   

  
	
  Name:

  	
  Name:

  
	
  Title:

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Chih
  Cheung

  	
  James Li

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  James
  Preissler

  	
   

  
										

 

53Exhibit 10.2

 

 

December 20, 2005

 

 

BEIJING
XINYUAN TIANYU TECHNOLOGIES CO., LTD.

 

BEIJING
ZHANHENG JIYUAN SOFTWARE TECHNOLOTIES
CO., LTD.

 

BEIJING SIHITECH CO., LTD.

 

AHEAD BILLION VENTURE LIMITED

 

INDIVIDUAL SHAREHOLDERS

 

 

AGREEMENT

 

for the sale and purchase of the equity interest of

 

BEIJING SIHITECH CO., LTD.

 

 

 

 

THIS AGREEMENT for sale and purchase of equity interest of Beijing Sihitech Co., Ltd.
is made on December 20, 2005

 

Among

 

(1)                                  BEIJING XINYUAN TIANYU
TECHNOLOGIES CO., LTD. [ILLEGIBLE], with limited liability established and existing pursuant to the laws
of the PRC whose registered office is at Room 312, Shunpinda Bus Terminal, 8
Chuangxin Road, Beijing Changping Technology Park, Beijing, PRC (Shareholder #1);

 

(2)                                  BEIJING ZHANHENG JIYUAN SOFTWARE
TECHNOLOTIES CO., LTD. [ILLEGIBLE], with limited liability established and existing pursuant to the laws
of the PRC whose registered office is at Room 305, Shunpinda Bus Terminal, 8
Chuangxin Road, Beijing Changping Technology Park, Beijing, PRC (Shareholder #2);

 

(3)                                  BEIJING SIHITECH CO., LTD. [ILLEGIBLE], a company with limited liability
established and existing pursuant to the laws of the PRC whose registered
office is at 3rd Floor, Tower B, Beijing Financial Trust Building, 5 Anding
Road, Chaoyang District, Beijing, 100029, PRC (the Company
or Sihitech);

 

(4)                                  AHEAD BILLION VENTURE
LIMITED, a company incorporated under the laws of
the British Virgin Islands whose registered office is at TrustNet Chambers, P.O. Box 3444, Road Town, Tortola,
British Virgin Islands (the Purchaser); and

 

(5)                                  INDIVIDUAL SHAREHOLDERS listed in Appendix A.

 

Whereas

 

(A)                              Sihitech provides application developments and information technology
services to customers in the banking and financial services industry (the Sihitech Business) in the People’s
Republic of China (the PRC).  Detailed information in respect of Sihitech
is set out in Schedule 1.

 

(B)                                Individual Shareholders are currently the registered owners of such
equity interest in Sihitech as set forth opposing their names respectively on Appendix
A (collectively, the Shares).

 

(C)                                Shareholder #1 and Shareholder #2 have entered into an equity transfer
agreement with the Individual Shareholders (the Equity
Transfer Agreement), a copy of which is attached hereto as
Appendix B, on the date hereof pursuant to which, prior to Closing, Individual
Shareholders will irrevocably transfer the Shares to Shareholder #1 and
Shareholder #2 (the Vendors), and the Vendors will
become the registered owners of the

 

1

 

entire equity interest in Sihitech.

 

(D)                            subject to the terms and conditions of this Agreement, the Purchaser,
at the Closing, shall acquire by payment of the Purchase Price, the Shares from
the Vendors (the Transfer).

 

(E)                                 On the even date hereof, shareholder(s) of e-Channels
entered into an agreement for sale and purchase of equity interest of e-Channels
with e-Channels BVI in a form that is substantially the same as this Agreement
for the transfer of 100% equity interest in e-Channels to e-Channels BVI.

 

(F)                                 Upon completion of the Transfer as
contemplated by this Agreement, the Purchaser will be the registered owner of
one hundred per cent (100%) of the Shares and Sihitech will be converted into a
company wholly owned by the Purchaser, and Sihitech shall remain the sole
owner, user, occupier and conductor of the Sihitech Business.

 

It is Agreed as follows:

 

ARTICLE I

Interpretation

 

1.1                                 In this Agreement, unless this Agreement or
the Schedules hereto otherwise stipulate, the following expressions shall have
the following meanings:

 

Accountants means KPMG Huazhen.

 

Action means any claim, action, suit, litigation, arbitration, inquiry,
proceeding or investigation by or pending before any Governmental Authority.

 

Approval Authority means
the Ministry of Commerce of China [ILLEGIBLE],
and its local branches in Beijing (as the case may be), as well as the State
Administration of Foreign Exchange.

 

Business Day
means any day, other than a Saturday, Sunday or a day on which banking institutions
in Beijing or New York City are authorized or obligated by law, regulation or
executive order to close.

 

Claim means
any claim, demand, suit, proceeding or action.

 

Contracts
mean any contract, agreement, arrangement, plan, lease, license or similar
instrument.

 

Copyrights
shall mean all copyrights, including rights in and to works of authorship and
all other rights corresponding thereto throughout the world, whether published
or unpublished, including rights to prepare, reproduce, perform, display and
distribute copyrighted works and copies, compilations and derivative works
thereof.

 

2

 

Damages
means the dollar amount of any loss, damage, expense or liability, including,
without limitation, reasonable attorneys’ fees and disbursements incurred by an
Indemnified Party in any action or proceeding between the Indemnified Party and
the Indemnifying Party or between the Indemnified Party and a third party,
which is determined (as provided in Article X) to have been sustained, suffered
or incurred by a Party or the Company and to have arisen from or in connection
with an event or state of facts which is subject to indemnification under this
Agreement; the amount of Damages shall be the amount finally determined by a
court of competent jurisdiction or appropriate governmental administrative
agency (after the exhaustion of all appeals) or the amount agreed to upon
settlement in accordance with the terms of this Agreement, if a Third Party
Claim, or by the Parties, if a Direct Claim.

 

Direct Claim
means any claim other than a Third Party Claim.

 

E-Channels means Beijing E-Channels
Century Technology Co., Ltd.

 

E-Channels BVI means Port Wing
Development Company Limited..

 

E-Channels SPA means an agreement for sale and purchase of equity
interest of e-Channels between shareholder(s) of e-Channels and e-Channels BVI
for the transfer of 100% equity interest in e-Channels to e-Channels BVI of the
even date hereof.

 

Encumbrance means any mortgage, pledge, lien and/or
security interest, as provided for, recognized and/or enforceable under the
laws of the PRC.

 

Governmental Authority means any PRC or non-PRC national, supranational, state, provincial,
local or similar government, governmental, regulatory or administrative
authority, agency or commission or any court, tribunal or judicial or arbitral
body.

 

Intellectual Property means any intellectual property rights, including, without
limitations, Patents, Copyrights, service marks, moral rights, Trade Secrets,
Trademarks, designs and Technology, together with (a) all registrations and
applications for registration therefore and (b) all rights to any of the
foregoing (including (i) all rights received under any license or other
arrangement with respect to the foregoing, (ii) all rights or causes of action
for infringement or misappropriation (past, present or future) of any of the
foregoing, (iii) all rights to apply for or register any of the foregoing, (iv)
domain names and URLs of or relating to the Sihitech and variations of the
domain names and URLs, (vi) Contracts which related to any of the foregoing,
including invention assignment, intellectual property assignment,
confidentiality, and non-competition agreements, and (vii) goodwill of any of
the foregoing).

 

Laws means
all statutes, rules, regulations, ordinances, orders, writs, injunctions,
judgments, decrees, awards and restrictions, including, without limitation,
applicable statutes, rules, regulations, orders and restrictions relating to
zoning, land use, safety, health, environment, hazardous substances, pollution
controls, employment and employment practices and access by the handicapped.

 

3

 

Material Adverse Effect means any change, circumstance, condition, development, effect, event,
occurrence or state of facts that, individually or in the aggregate, has been,
or would reasonably be expected to be, materially adverse to the business,
condition (financial or otherwise), operations or results of operations of Sihitech,
other than any change, circumstance, condition, development, effect, event,
occurrence or state of facts relating to (i) economic, industry, or securities
market conditions in the PRC or (ii) any change in legal, regulatory or
political conditions affecting the information technology industry generally in
the PRC, including any acts of war or terrorist activities.

 

Party
means the Purchaser, on the one hand, and Sihitech, each Vendor or each of the
Individual Shareholders, on the other hand (collectively, the Parties)

 

Patents
means all United States and foreign patents and utility models and applications
therefore and all reissues, divisions, re-examinations, renewals, extensions,
provisionals, continuations and continuations-in-part thereof, and equivalent
or similar rights anywhere in the world in inventions and discoveries.

 

Permits
means all governmental registrations, licenses, permits, authorizations and
approvals.

 

Person
means an individual, partnership, corporation, joint venture, unincorporated
organization, cooperative or a governmental entity or agency thereof.

 

PRC means
the People’s Republic of China, which, for the purposes of this Agreement only,
shall not include Chinese territories of Hong Kong, Macau and Taiwan.

 

PRC GAAP
means PRC Accounting Standards for Business Enterprises in effect from time to
time applied consistently throughout the periods involved.

 

Purchase Price is defined in Section 2.2.

 

Representatives of either Party means such Party’s employees, accountants, auditors, actuaries,
counsel, financial advisors, bankers, investment bankers and consultants.

 

Renminbi or RMB means the legal
currency of the PRC.

 

SAIC means
the State or Beijing Administration of Industry and Commerce, as the case may
be.

 

Sihitech Business shall have the meaning ascribed to it in the recitals to this
Agreement.

 

Software
means all software, in object, human-readable or source code, whether
previously completed or now under development, including programs,
applications, databases, data files, coding and other software, components or
elements thereof, programmer annotations, and all versions, upgrades, updates,
enhancements and error corrections of all of the foregoing.

 

4

 

Tax or Taxes means all income, gross
receipts, sales, stock transfer, excise, bulk transfer, use, employment, social
security, franchise, profits, property or other taxes, tariffs, imposts, fees,
stamp taxes and duties, assessments, levies or other charges of any kind
whatsoever (whether payable directly or by withholding), together with any
interest and any penalties, additions to tax or additional amounts imposed by
any government or taxing authority with respect thereto.

 

Technology
means any know-how, confidential or proprietary information, name, data,
discovery, formulae, idea, method, process, procedure, other invention, record
of invention, model, research, Software, technique, technology, test
information, market survey, website, or information or material of a like
nature, whether patentable or unpatentable and whether or not reduced to
practice.

 

Third Party Claim means a Claim by a person, firm, corporation or government entity
other than a party hereto or any affiliate of such party.

 

Trademarks
means any and all United States and foreign trademarks, service marks, logos,
trade names, corporate names, trade dress, Internet domain names and addresses,
and all goodwill associated therewith throughout the world.

 

U.S. Dollars and US$ mean
the legal currency of the United States of America.

 

U.S. GAAP means generally accepted accounting
principles, consistently applied in the United States.

 

Vendors shall have the meaning
ascribed to it in the recitals to this Agreement.

 

1.2                                 The Appendices, Schedules and Recitals
comprise appendices, schedules and recitals to this Agreement and form part of
this Agreement.

 

1.3                                 The
expressions Vendors, Sihitech and the Purchaser and references to any other
person in this Agreement shall, where the context permits, include their
respective successors, transferees and permitted assigns and any persons
deriving title under them.

 

1.4                                 References to person mean any natural person,
corporation, firm, joint venture, partnership, association, enterprise, trust
or other entity or organization or any governmental agency.

 

ARTICLE II

SHARE PURCHASE

 

2.1                                 Purchase and Sale.  Upon the terms and subject to the conditions
hereof, at the Closing, the Vendors shall sell, transfer, assign and convey to the
Purchaser, and the Purchaser shall purchase from the Vendors, all of the right,
title and interest of the Vendors in and to the Shares.  The Shares represent all of the equity
interest in Sihitech

 

5

 

and
shall be sold and transferred to the Purchaser free from any Encumbrance.

 

2.2                                 Purchase Price.

 

(a)          Subject to adjustment and the Holdback Amount as hereinafter set forth,
the purchase price (Purchase Price) to be paid by
the Purchaser to the Vendors or its designees for the Shares shall be the
following:

 

(i)             cash in the amount of Two Million Seven Hundred
Thirty One Thousand Eight Hundred and Eighty Four U.S. Dollars (US$2,731,884), or

 

(ii)          cash
in the amount equal to the total current assets minus the total current
liabilities of Sihitech at Closing, whichever amount is lower;

 

(b)         Payments.

 

(i)    Initial Payment.  Within sixty (60) days after the Closing, the
sum of the Purchase Price, less the Holdback Amount (the Initial
Payment), will be paid by wire transfer of immediately available
U.S. Dollars to the Vendors to the accounts of the Vendors as specified on
Schedule 2.2 (b).

 

(ii)   Holdback.  The sum of US$150,000 (Holdback
Amount) to be withheld from the Initial Payment, representing a
portion of the Purchase Price, shall be retained by the Purchaser for a period
of 12 months starting from Closing. The Holdback Amount will be security for
the indemnification obligations of the Vendors set forth in Article X. Subject
to this Section and Article X, on the first anniversary of the Closing, or the
first business day thereafter, the Purchaser shall deliver the Holdback Amount
pro rata to the Vendors in the same proportions as the Initial Payment was
allocated among them.  The Purchaser may
withhold from the Holdback Amount the equivalent of any amount then in dispute
related to the Vendors’ indemnification obligations arising pursuant to Article
X or for which the Purchaser has notified the Vendors of an indemnification
Claim.  Any withheld Holdback Amount, to
the extent not applied in satisfaction of an indemnification claim, will be
paid by the Purchaser promptly on resolution of the dispute or claim.  Nothing in this section shall be construed as
limiting the liability of the Vendors for indemnification claims or any other
claim by the Purchaser or any other rightful claimant, and the Holdback Amount
shall not be considered liquidated damages or any breach of this Agreement or
any other matter related hereto.

 

(c)          Allocation of Purchase Price. 
All payments of the Purchase Price shall be made in proportion as
requested by the Vendors as set forth on Schedule 2.2(c).

 

6

 

ARTICLE III

THE CLOSING

 

3.1                                 The Closing. Subject to the terms and
conditions of this Agreement, the consummation of the Transfer and the
transactions contemplated by this Agreement shall take place at a closing (Closing) to be held at 9:30 p.m.,
local time, on the fourth business day after the date on which the last of the
conditions to Closing set forth in Article IX is fulfilled, at the office of
Beijing Sihitech Co., Ltd, 3rd Floor, Tower B, Beijing Financial Trust
Building, 5 Anding Road, Chaoyang District, Beijing 100029, the PRC,, or at
such other time, date or place as the Parties may agree upon in writing.  The date on which the Closing occurs is
referred to herein as the Closing Date.

 

3.2                                 Deliveries.

 

(a)          Vendors.  At the Closing, each Vendor will (i) assign
and transfer to the Purchaser all of such Vendor’s right, title and interest in
and to his, her or its respective portion of the Shares by delivering to the
Purchaser the certificates representing such Shares, duly endorsed for transfer
and free and clear of Encumbrance and (ii) deliver to the Purchaser the
certificates, opinions and other agreements contemplated by Article IX hereof
and the other provisions of this Agreement.

 

(b)         the
Purchaser.  Within sixty (60) days after
Closing, the Purchaser shall pay to the Vendors the Purchase Price to which
each of the Vendors is entitled pursuant to Section 2.2 and (ii) the
certificates, opinions and other agreements and instruments contemplated by
Article IX hereof and the other provisions of this Agreement.

 

3.3                                 Further Assurances.  Subject to the terms and conditions of this
Agreement, at any time or from time to time after the Closing, each of the
Parties hereto shall execute and deliver such other documents and instruments,
provide such materials and information and take such other actions as may
reasonably be necessary, proper or advisable, to the extent permitted by law,
to fulfill its obligations under this Agreement.

 

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

OF SIHITECH, INDIVIDUAL SHAREHOLDERS AND THE VENDORS

Sihitech,
Individual Shareholders, jointly and severally, and the Vendors, jointly and
severally, represent and warrant to the Purchaser as of the Closing, as
follows:

 

7

 

4.1                                 The Shares.

 

(a)          Ownership.
Prior to the Closing Date, the Vendors will become the registered and
beneficial owners of all of the Shares in the amounts set forth in Schedule 4.1(a)
free and clear of all Encumbrance, which shares constitute all of the shares of
capital stock of Sihitech.  There are no
options, warrants or other contractual rights outstanding which give any person
the right to acquire shares of Sihitech owned by the Vendors, whether or not
such rights are presently exercisable.

 

(b)         Capitalization.
The registered capital of Sihitech is set forth in Schedule 1.  There are no options, warrants or other
contractual rights outstanding which give any person the right to require the
issuance of any capital stock of Sihitech, whether or not such rights are
presently exercisable.  All of the Shares
are validly issued, fully paid and non-assessable.

 

4.2                                 Organization of Sihitech.  Sihitech is a private owned limited liability
company duly organized, validly existing and in good standing under the law of
the PRC.  Sihitech has all requisite
power and authority to own, lease and operate its properties and to carry on the
Sihitech Business as now being conducted and as presently contemplated to be
conducted.

 

4.3                                 Authority and Corporate Action; No Conflict.

 

(a)          Sihitech
and each of the Individual Shareholders and Vendors have all necessary power
and authority to enter into this Agreement and to consummate the Transfer and
other transactions contemplated hereby. 
All actions, corporate and otherwise, necessary to be taken by Sihitech and
Vendors to authorize the execution, delivery and performance of this Agreement,
and all other agreements and instruments delivered by Sihitech and the Vendors
in connection with the Transfer have been duly and validly taken.  This Agreement has been duly executed and
delivered by Sihitech and each of the Vendors and Individual Shareholders and
constitute the valid, binding, and enforceable obligation of Sihitech and each of
the Vendors and Individual Shareholders, enforceable in accordance with its
terms, except (i) as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer or similar laws of
general application now or hereafter in effect affecting the rights and
remedies of creditors and by general principles of equity (regardless of
whether enforcement is sought in a proceeding at law or in equity) and (ii) as enforceability
of any indemnification provision may be limited by federal and state securities
laws and public policy of the United States, BVI and the PRC.

 

(b)         Neither
the execution and delivery of this Agreement by Sihitech or each of the Vendors
and Individual Shareholders nor the consummation of the transactions
contemplated hereby will (i) except as set forth in Schedule 4.3, conflict
with, result in a breach or violation of or constitute (or with notice of lapse
of time or both constitute) a default under, (1) the Articles of Association of
Sihitech or (2) any law, statute, regulation, order, judgment or

 

8

 

decree or any instrument, contract or other agreement to which Sihitech,
any Individual Shareholder or a Vendor is a party or by which it (or any of its
properties or assets) is subject or bound; (ii) result in the creation of, or
give any party the right to create, any lien, charge, option, security interest
or other encumbrance upon the assets of Sihitech or a Vendor; (iii) terminate
or modify, or give any third party the right to terminate or modify, the
provisions or terms of any contract to which Sihitech, any Individual
Shareholder or a Vendor is a party; or (iv) result in any suspension,
revocation, impairment, forfeiture or nonrenewal of any permit, license,
qualification, authorization or approval applicable to Sihitech, any Individual
Shareholder or a Vendor.

 

4.4                                 Consents and Approvals.  Other than as set forth on Schedule 4.4, the
execution and delivery of this Agreement by Sihitech, each Individual
Shareholder and each Vendor does not, and the performance of this Agreement by
it will not, require any consent, approval, authorization or other action by,
or filing with or notification to, any Governmental Authority, except where
failure to obtain such consents, approvals, authorizations or actions, or to
make such filings or notifications, would not prevent it from performing any of
its material obligations under this Agreement.

 

4.5                                 Licenses,
Permits, Etc.  To the best of the knowledge of each of the Vendors
and Individual Shareholders, Sihitech possesses or will possess prior to the
Closing all Permits necessary, in all material respects, to own and operate the
Sihitech Business, which necessary Permits are described or are as set forth on
Schedule 4.5 hereto.  To the best of the
knowledge of Sihitech and each of the Vendors and Individual Shareholders, Sihitech
is not in default in any material respect under any of such Permits and no
event has occurred and no condition exists which, with the giving of notice,
the passage of time, or both, would constitute a default thereunder.  Neither the execution and delivery of this
Agreement, or any of the other documents contemplated hereby nor the
consummation of the transactions contemplated hereby or thereby nor, to the
best of the knowledge of Sihitech and each of the Vendors and Individual
Shareholders, compliance by Sihitech with any of the provisions hereof or
thereof will result in any suspension, revocation, impairment, forfeiture or
nonrenewal of any Permit applicable to the Sihitech Business.

 

4.6                                 Taxes, Tax Returns and Audits.  Except as specifically set forth in Schedule 4.6,
(a) Sihitech has filed on a timely basis (taking into account any extensions
received from the relevant taxing authorities) all returns and reports
pertaining to all Taxes that are or were required to be filed by Sihitech with the appropriate taxing authorities in all
jurisdictions in which such returns and reports are or were required to be
filed, and all such returns and reports are true, correct and complete in all
material respects, (b) all Taxes that are due from or may be asserted against Sihitech
(including deferred Taxes) in respect of or attributable to all periods ending
on or before the Closing Date have been or will be fully paid, deposited or
adequately provided for on the books and financial statements of Sihitech or
are being contested in good faith by appropriate proceedings, (c) no issues
have been raised (or are currently pending) by any taxing authority in
connection with any of the returns and reports referred to in clause (a) which
might be determined adversely to Sihitech, (d) Sihitech has not given or
requested to give waivers or extensions of any statute of limitations with respect
to the payment of Taxes, and (e)

 

9

 

no tax liens which have not been satisfied or discharged by payment or
concession by the relevant taxing authority or as to which sufficient reserves
have not been established on the books and financial statements of Sihitech are
in force as of the date hereof.

 

4.7                                 Financial Statements.  Prior to the execution of this Agreement, the Individual
Shareholders and the Vendors have delivered to the Purchaser consolidated balance
sheets of each of Sihitech as at December 31, 2002, 2003 and 2004, and related
consolidated statements of income and source and application of funds for the
three years ended December 31, 2004, audited by the Accountants, and the notes,
comments, schedules, and supplemental data therein (collectively, the 2004 Financial Statements).  An interim consolidated balance sheet as of
June 30, 2005, and related consolidated statements of income and source and
application of funds for the six (6) months then ended (collectively, the Last Financial Statements)
have been delivered to the Purchaser. 
The 2004 Financial Statements and the Last Financial Statements shall be
prepared in accordance with U.S. GAAP throughout the periods indicated and
fairly present the financial condition of Sihitech at their respective dates
and the results of the operations of Sihitech for the periods covered thereby
in accordance with U.S. GAAP.  The 2004
Financial Statements and the Last Financial Statements are included in Schedule
4.7 to this Agreement.

 

4.8                                 No Undisclosed Liabilities.  Sihitech does not have any liabilities,
whether known or unknown, absolute, accrued, contingent or otherwise, except
(a) as and to the extent reflected or reserved against on the Last Financial
Statements, and (b) those since the Last Financial Statement Date, incurred in
the ordinary course of business and consistent with prior practice.  Schedule 4.8 contains an accurate and complete
list and description and all liabilities of Sihitech whether or not reflected
or reserved against on the Last Financial Statements which individually exceeds
US $75,000 or, if related liabilities, exceed $75,000 (or the equivalent of US
$75,000).

 

4.9                                 Real Property.  The Last Financial Statements and Schedule 4.9
together contain an accurate and complete list and description of all real
estate owned by Sihitech as well as any other real estate that is in the
possession of or leased by Sihitech and the improvements (including buildings
and other structures) located on such real estate (collectively, the Real Property), and lists and
accurately describes any leases under which any such Real Property is possessed
(the Real Estate Leases).  Sihitech is not in default under any of the
Real Estate Leases, and is not aware of any default by any of the lessors
thereunder.

 

4.10                           Certain Personal Property.  The Last Financial Statements and Schedule 4.10
together contain an accurate and complete list and description of the material
fixed assets of Sihitech specifying the location of all material items of
tangible personal property of Sihitech.

 

4.11                           Non-Real Estate Leases.  The Last Financial Statements and Schedule 4.11
together contain an accurate and complete list and description of all assets
and property (other than Real Property and Real Estate Leases) that are used as
of the date of this Agreement in the operation of the Sihitech Business and
that are possessed by Sihitech

 

10

 

under
an existing lease.  All of such leases
are referred to herein as the Non-Real Estate Leases.
 Sihitech is not in default under any of
the Non-Real Estate Leases, and is not aware of any default by any of the
lessors hereunder.

 

4.12                           Accounts Receivable.  The accounts receivable of Sihitech reflected
on the Last Financial Statements and created after the Last Financial
Statements Date, are bona fide accounts receivable, created in the ordinary
course of business and subject to historical rates of uncollected liabilities,
as reserved against on Sihitech’s financial statements, are good and
collectible within periods of time normally prevailing in the industry at the
aggregate recorded amounts thereof.

 

4.13                           Inventory.  The inventory of Sihitech consists of items of
quality and quantity useable or saleable in the ordinary course of business at
regular sales prices, subject to (a) changes in price levels as a result of
economic and market conditions and (b) reserves reflected in the Last Financial
Statements for spoiled and discontinued items.  Schedule 4.13 sets forth a break down of the
inventory balance of Sihitech as of the date of the Last Financial Statement,
but it is understood that any material or intentional inaccuracy in the
Schedule 4.13 estimates will not be a breach of this representation and warranty.

4.14                           Contracts, Obligations and Commitments.  Except as set forth in the Last Financial
Statements and on Schedule 4.14 together, other than the Real Estate Leases and
the Non-Real Estate Leases, Sihitech does not have any existing contract,
obligation or commitment (written or oral) of any nature (other than
obligations involving payments of less than $300,000 individually or $300,000
in the aggregate), including without limitation the following:

 

(a)          Employment,
bonus, severance or consulting agreements, retirement, stock bonus, stock
option, or similar plans;

 

(b)         Loans
or other agreements, notes, indentures or instruments relating to or evidencing
indebtedness for borrowed money or mortgaging, pledging or granting or creating
a lien or security interest or other encumbrance on any of the assets of Sihitech
or any agreement or instrument evidencing any guaranty by Sihitech of payment
or performance by any other Person;

 

(c)          Agreements
of any kind relating to employment matters such as labor agreements or
agreements providing for benefits under any plan;

 

(d)         Any
contract or series of contracts with the same Person for the furnishing or
purchase of equipment, goods or services, except for purchase and sales orders
in the ordinary course of business;

 

(e)          Any
joint venture contract or arrangement or other agreement involving a sharing of
profits or expenses to which Sihitech is a party or by which it is bound;

 

(f)            Agreements
which limit the freedom of Sihitech to compete in any line of business or in any
geographic area or with any Person;

 

11

 

(g)         Agreements
providing for disposition of the assets, businesses or a direct or indirect
ownership interest in Sihitech;

 

(h)         Any
contract, commitment or arrangement not made in the ordinary course of business
of Sihitech; or

 

(i)             Agreements
with any Governmental Authority.

 

Except as set forth on Schedule 4.14, each Contract to which Sihitech
is a party is a valid and binding obligation of Sihitech and, to the best of
the knowledge of Sihitech, enforceable in accordance with its terms (except as
the enforceability thereof may be limited by any applicable bankruptcy,
insolvency or other laws affecting creditors’ rights generally or by general
principles of equity, regardless of whether such enforceability is considered
in equity or at law), and is in full force and effect (except for any Contracts
which by their terms expire after the date hereof or are terminated after the
date hereof in accordance with the terms thereof, provided, however, that Sihitech
will not terminate any Contract after the date hereof without the prior written
consent of the Purchaser, which consent shall not be unreasonably withheld or
delayed), and Sihitech has not breached any material provision of, nor is in
default in any material respect under the terms of any of the Contracts.

 

4.15                           Intellectual Property Rights.

 

(a)          Intellectual Property.  Schedule
4.15(a) contains an accurate and complete list and description of all
Intellectual Property used by Sihitech in connection with the Sihitech Business,
specifying as to each (i) the nature of such right, (ii) the ownership thereof,
(iii) the Governmental Authority that has issued or recorded a registration or
certificate or similar document with respect thereto or with which an
application for such a registration, certificate or similar document is pending
and (iv) any applicable registration, certificate or application number. Sihitech
has provided the Purchaser with complete and accurate copies of all registered
Intellectual Property relating to the Sihitech Business.

 

(b)         Other Intellectual Property Rights.  Schedule 4.15(b) includes an accurate and
complete list and description of all material inventions and trade secrets that
Sihitech has formally documented and that are owned, used, controlled,
authorized for use or held by, or licensed to, Sihitech that relate to or are
necessary to the Sihitech Business, including as conducted at or prior to
Closing or as proposed to be conducted by Sihitech, together with a designation
of the ownership thereof.

 

(c)          Software.  Schedule 4.15(c)
includes an accurate and complete list and description of all Software used by Sihitech
in connection with the Sihitech Business, including as conducted at or prior to
Closing or as proposed to be conducted by Sihitech, together with a designation
of ownership.

 

12

 

(d)         Out-Bound Licenses.  Schedule 4.15(d)
includes an accurate and complete list and description of all licenses,
sublicenses, and other Contracts pursuant to which (i) any Person is authorized
to use any Intellectual Property rights used in connection with the Sihitech Business
or (ii) any right of Sihitech in, or its use of, any Intellectual Property
right used in connection with the Sihitech Business is otherwise materially
affected.

 

(e)          In-Bound Licenses.  Schedule 4.15(e)
includes an accurate and complete list and description of all licenses,
sublicenses, and other Contracts pursuant to which Sihitech is authorized to
use, or can be authorized to use (through, for example, the grant of a
sublicense), any Intellectual Property owned by any other Person in connection
with the Sihitech Business.

 

(f)            Ownership.  As of the date hereof, Sihitech owns, and at
the Closing Date, will own all right, title and interest in and to all
Intellectual Property rights used in connection with the Sihitech Business, and
those Intellectual Property rights were developed and created solely by
employees of Sihitech acting within the scope of their employment or by third
parties (all of which employees and third parties have validly and irrevocably
assigned all of their rights therein to Sihitech) and Sihitech is duly and
validly licensed to use all other Intellectual Property used in connection with
the Sihitech Business, free and clear of royalties.  Sihitech has not assigned or transferred
ownership of, agreed to so assign or transfer ownership of, or granted any
exclusive license of or exclusive right to use, any Intellectual Property used
in connection with the Sihitech Business.

 

(g)         Royalties.  Except for licenses
listed and accurately and completely described on the Last Financial Statements
or Schedule 4.15(g) as royalty-bearing, there are (and will be upon Closing) no
royalties, honoraria, fees, or other payments payable by Sihitech to any Person
by reason of the ownership, use, license, sale, or disposition of any
Intellectual Property used in connection with the Sihitech Business.

 

(h)         Infringement.  The Intellectual
Property used in connection with the Sihitech Business does not infringe or
misappropriate any Intellectual Property rights of any Person under the laws of
any jurisdiction.  To the best of Sihitech’s
knowledge, no notice, claim or other communication (in writing or otherwise)
has been received from any Person: (A) asserting any ownership interest in any
material Intellectual Property used in connection with the Sihitech Business;
(B) of any actual, alleged, possible or potential infringement,
misappropriation or unauthorized use or disclosure of any Intellectual Property
used in connection with the Sihitech Business, defamation of any Person, or
violation of any other right of any Person (including any right to privacy or
publicity) by Sihitech or relating to the Intellectual Property used in
connection with the Sihitech Business; or (C) suggesting or inviting Sihitech
to take a license or otherwise obtain the right to use any Intellectual
Property in connection with the Sihitech Business.  To the best of its knowledge, no

 

13

 

Person is infringing,
misappropriating, using or disclosing in an unauthorized manner any
Intellectual Property used in connection with the Sihitech Business owned by,
exclusively licensed to, held by or for the benefit of, or otherwise controlled
by Sihitech.

 

(i)             Proceedings.  Except as set forth on Schedule 4.15(i), there
are no current or, to the best of its knowledge, threatened Proceedings
(including but not limited to any interference, reexamination, cancellation, or
opposition proceedings) arising out of a right or claimed right of any person
before any Governmental Authority anywhere in the world related to any
Intellectual Property used in connection with the Sihitech Business owned by,
exclusively licensed to, held by or for the benefit of, or otherwise controlled
by Sihitech.

 

4.16                           Title
to and Condition of Assets.  Sihitech has
good and marketable title to all the properties and assets owned by it.  Except as set forth in the Last Financial
Statements and Schedule 4.16, none of such properties and assets is subject to
any Encumbrance, option to purchase or lease, easement, restriction, covenant,
condition or imperfection of title or adverse claim of any nature whatsoever,
direct or indirect, whether accrued, absolute, contingent or otherwise.

 

4.17                           Absence of Certain Changes.  Except as set forth on Schedule 4.17 or agreed
by the Purchaser in advance and incurred in ordinary business in compliance
with past practice, Sihitech has not, since the Last Financial Statements Date:

 

(a)          issued, delivered or agreed to issue or deliver any stock, bonds or
other corporate securities (whether authorized and unissued or held in the
treasury), or granted or agreed to grant any options (including employee stock
options), warrants or other rights for the issue thereof;

 

(b)         borrowed or agreed to borrow any funds exceeding $200,000 (or other
currency equivalent) except current bank borrowings not in excess of the amount
thereof shown on the Last Financial Statements;

 

(c)          incurred any obligation or liability, absolute, accrued, contingent or
otherwise, whether due or to become due exceeding $200,000 (or other currency
equivalent), except current liabilities for trade obligations incurred in the
ordinary course of business and consistent with prior practice;

 

(d)         discharged or satisfied any encumbrance exceeding $200,000 (or other
currency equivalent) other than those then required to be discharged or
satisfied, or paid any obligation or liability other than current liabilities
shown on the Last Financial Statements and liabilities incurred since the Last
Financial Statements Date in the ordinary course of business and consistent
with prior practice;

 

(e)          sold, transferred, leased to others or otherwise disposed of any assets
exceeding $100,000 (or other currency equivalent), except for inventories sold
in the ordinary course of business and assets no longer used or useful in the

 

14

 

conduct of its business, or
canceled or compromised any debt or claim, or waived or released any right of
substantial value;

 

(f)            received any notice of termination of any
Contract, Lease or other agreement, or suffered any damage, destruction or loss
exceeding $100,000 (or other currency equivalent) (whether or not covered by
insurance) which, in any case or in the aggregate, has had, or might reasonably
be expected to have, a Material Adverse Effect;

 

(g)         had any material change in its relations with its employees or agents,
clients or insurance carriers which has had or might reasonably be expected to
have a Material Adverse Effect;

 

(h)         transferred or granted any rights under, or entered into any settlement
regarding the breach or infringement of, any Intellectual Property or modified
any existing rights with respect thereto;

 

(i)             declared or made, or agreed to declare or
make, any payment of dividends or distributions of any assets of any kind
whatsoever to any shareholder of any Sihitech or any affiliate of any
shareholder of Sihitech, or purchased or redeemed, or agreed to purchase or
redeem, any of its capital stock, or made or agreed to make any payment to any
shareholder of Sihitech or any affiliate of any shareholder of Sihitech,
whether on account of debt, management fees or otherwise;

 

(j)             suffered any other material adverse effect in
its assets, liabilities, financial condition, results of operations or
business; or

 

(k)          entered into any agreement or made any commitment to take any of the
types of action described in any of the foregoing clauses (other than clauses
(f), (g) or (j)).

 

4.18                           Employee Plans; Labor Matters.  The Last Financial Statements and Schedule
4.18 together contain an accurate and complete list and description of all
employee benefits, including, without limitation, pension, medical insurance,
work related injury insurance, birth and nursery insurance, unemployment
insurance and educational benefits, which Sihitech is obligated to pay,
including amounts and recipients of such payments.  Except as disclosed in the Last Financial
Statements or Schedule 4.18, Sihitech has complied with all applicable Laws
relating to employment benefits, including, without limitation, pension,
medical insurance, work-related injury insurance, birth and nursery insurance,
unemployment insurance and educational benefits.  All contributions or payments required to be
made by Sihitech with respect to employee benefits have been made on or before
their due dates.  Except as disclosed in
the Last Financial Statements or Schedule 4.18, all such contributions and
payments required to be made by any employees of Sihitech with respect to the
employee benefits have been fully deducted and paid to the relevant
Governmental Authorities on or before their due dates, and no

 

15

 

such deductions have been challenged or disallowed by any Governmental
Authority or any employee of Sihitech.

 

4.19                           Compliance with Law.  To the best of its knowledge, the Sihitech Business
has been conducted, and is now being conducted, by Sihitech in compliance in
all material respects with all applicable Laws.  Neither Sihitech nor any officers, directors
and employees of Sihitech (i) is, and during the past five years was, in
violation of, or not in compliance with, in any material respect all such
applicable Laws with respect to the conduct of the Sihitech Business; and (ii)
has received any notice from any Governmental Authority, and to the best of its
knowledge, no Action is threatened which alleges that Sihitech has violated, or
not complied with, any of the above.

 

4.20                           No Illegal or Improper Transactions.  Neither Sihitech nor any other officer,
director, employee, agent or affiliate of Sihitech has offered, paid or agreed
to pay to any Person or entity (including any governmental official) or
solicited, received or agreed to receive from any such Person or entity,
directly or indirectly, in any manner which is in violation of any applicable
policy of Sihitech, ordinance, regulation or law, any money or anything of
value for the purpose or with the intent of (i) obtaining or maintaining
business for Sihitech, (ii) facilitating the purchase or sale of any product or
service, or (iii) avoiding the imposition of any fine or penalty.

 

4.21                           Related Transactions.  Except as set forth in the Last Financial
Statements or Schedule 4.21, and except for compensation to employees for
services rendered, neither Sihitech nor any other current or former director,
officer, employee or shareholder or any associate (as defined in the rules
promulgated under the Exchange Act) of Sihitech is presently, or during the
last three fiscal years has been, (a) a party to any transaction with Sihitech
(including, but not limited to, any Contract providing for the furnishing of
services by, or rental of real or personal property from, or otherwise
requiring payments to, any such director, officer, employee or shareholder or
such associate), or (b) the direct or indirect owner of an interest in any
corporation, firm, association or business organization which is a present (or
potential) competitor, supplier or customer of Sihitech nor does any such
Person receive income from any source other than Sihitech which relates to the
business of, or should properly accrue to, Sihitech.

 

4.22                           Records. 
The books of account, minute books, stock certificate books and stock
transfer ledgers of Sihitech are complete and correct in all material respects,
and there have been no material transactions involving Sihitech which are
required to be set forth therein and which have not been so set forth.

 

4.23                           Insurance.  The Last Financial Statements and Schedule
4.23 together set forth a complete list and complete and accurate description
of all insurance policies maintained by Sihitech which are in force as of the
date hereof and the amounts of coverage thereunder.  During the past three years, Sihitech has not
been refused insurance in connection with the Sihitech Business, nor has any
claim in excess of US$10,000 been made in respect of any such agreements or
policies, except as set forth in the Last Financial Statements and Schedule
4.23 hereto.  Such insurance are
commercially reasonable for the companies in the information technology
industry in the PRC.

 

16

 

4.24                           Litigation.  Except as set forth in Schedule 4.24, there
are no Actions by any Governmental Authority or Person by or against Sihitech,
nor to the best of its knowledge, any threatened Action by any Governmental
Authority or Person against Sihitech.  Neither Sihitech nor any of its property is
subject to any Action by an Governmental Authority or Person which would cause
a Material Adverse Effect.

 

4.25                           Settled Litigation.  Schedule 4.25 sets forth a description of all
threatened, withdrawn, settled or litigated claims against Sihitech during the
last three years.

 

4.26                           Brokers.  No broker, finder or investment banker is
entitled to any brokerage, finder’s or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of Sihitech.

 

4.27                           Disclosure.  No representation or warranty by Sihitech, any
Individual Shareholder, or any Vendor contained in this Agreement and no
information contained in any Schedule or other instrument furnished or to be
furnished to the Purchaser pursuant to this Agreement or in connection with the
transactions contemplated hereby contains or will contain any untrue statement
of a material fact or omits or will omit to state a material fact necessary in
order to make the statements contained therein not misleading.

 

4.28                           Survival of Representations and
Warranties.  The representations and
warranties of each of the Vendors and Individual Shareholders set forth in this
Agreement shall survive the Closing for a period of two (2) years, except that
the representations and warranties set forth in Sections 4.1, 4.2 and 4.3 shall
survive without limitation as to time and the representations and warranties
set forth in Section 4.6 shall survive until the expiration of the statute of
limitations with respect to each respective Tax. Notwithstanding anything to
the contrary contained herein, the Individual Shareholders shall only be held
liable for the representations and warranties contained herein in respect of
Sihitech and Sihitech Business prior to, and shall not be held liable for such
representations and warranties after, the completion of the transfer of equity
contemplated under the Equity Transfer Agreement.

 

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF THE PURCHASER

 

The
Purchaser represents and warrants to Sihitech and each of the Vendors as
follows:

 

5.1                                 Organization.  The Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of BVI.  The Purchaser has all requisite power and
authority to own, lease and operate its properties and to carry on its business
as now being conducted and as presently contemplated to be conducted.

 

5.2                                 Authority and Corporate Action; No Conflict.

 

(a)          The
Purchaser has all necessary corporate power and authority to enter this
Agreement and, subject to the requirement to obtain stockholder approval, to

 

17

 

consummate the Transfer and other transactions contemplated hereby.  All board of directors actions necessary to be
taken by the Purchaser to authorize the execution, delivery and performance of
this Agreement and all other agreements delivered in connection with this
transaction have been duly and validly taken. 
This Agreement has been duly executed and delivered by the Purchaser and
constitutes the valid, binding, and enforceable obligation of the Purchaser,
enforceable in accordance with its terms, except (i) as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer or similar laws of general application now or hereafter in effect
affecting the rights and remedies of creditors and by general principles of
equity (regardless of whether enforcement is sought in a proceeding at law or
in equity), (ii) as enforceability of any indemnification provision may be
limited by federal and state securities laws and public policy and (iii) as
enforceability may be limited by the absence of stockholder approval.

 

(b)         Neither
the execution and delivery of this Agreement or any of the other documents
contemplated hereby by the Purchaser nor (assuming receipt of stockholder
approval) the consummation of the transactions contemplated hereby or thereby
will (i) conflict with, result in a breach or violation of or constitute (or
with notice of lapse of time or both constitute) a default under, (A) the
Certificate of Incorporation or By-Laws of the Purchaser or (B) any law,
statute, regulation, order, judgment or decree or any instrument contract or
other agreement to which the Purchaser is a party or by which the Purchaser (or
any of the properties or assets of the Purchaser) is subject or bound; (ii)
result in the creation of, or give any party the right to create, any lien,
charge, option, security interest or other encumbrance upon the assets of the
Purchaser; (iii) terminate or modify, or give any third party the right to
terminate or modify, the provisions or terms of any contract to which the
Purchaser is a party; or (iv) result in any suspension, revocation, impairment,
forfeiture or nonrenewal of any permit, license, qualification, authorization
or approval applicable to the Purchaser.

 

5.3                                 Consents and Approvals.  The execution and delivery of this Agreement
by the Purchaser does not, and the performance of this Agreement by each Vendor
will not, require any consent, approval, authorization or other action by, or
filing with or notification to, any Governmental Authority, except where
failure to obtain such consents, approvals, authorizations or actions, or to
make such filings or notifications, would not prevent it from performing any of
its material obligations under this Agreement.

 

5.4                                 Compliance with Law.  The business of the Purchaser has been
conducted, and is now being conducted, in compliance in all material respects
with all applicable Laws.  The Purchaser
and its officers, directors and employees (i) are not, and during the periods
of the Purchaser’s existence were not, in violation of, or not in compliance
with, in any material respect all such applicable Laws with respect to the
conduct of the businesses of the Purchaser; and (ii) have not received any
notice from any Governmental Authority,

 

18

 

and to the best of the knowledge of the Purchaser none is threatened,
alleging that the Purchaser has violated, or not complied with, any of the
above.

 

5.5                                 Litigation.  There are no actions, suits, arbitrations or
other proceedings pending or, to the best of the knowledge of the Purchaser,
threatened against the Purchaser at law or in equity before any Governmental
Authority.  Neither the Purchaser nor any
of their property is subject to any order, judgment, injunction or decree that
would have a Material Adverse Effect on the business or financial condition of the
Purchaser.

 

5.6                                 Brokers.  No broker, finder or investment banker is
entitled to any brokerage, finder’s or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of the Purchaser.

 

5.7                                 Disclosure.  No representation or warranty by the Purchaser
contained in this Agreement and no information contained in any Schedule or
other instrument furnished or to be furnished to the Vendors or any Vendor
pursuant to this Agreement or in connection with the transactions contemplated
hereby contains or will contain any untrue statement of a material fact or
omits or will omit to state a material fact necessary in order to make the
statements contained therein not misleading.

 

5.8                                 Records. 
The books of account, minute books, stock certificate books and stock
transfer ledgers of the Purchaser are complete and correct in all material
respects, and there have been no material transactions involving the Purchaser
which are required to be set forth therein and which have not been so set
forth.

 

5. 9                              Survival of Representations and
Warranties.  The representations and
warranties of the Purchaser set forth in this Agreement shall survive the
Closing for a period of two (2) years, except that the representations in
Sections 5.1 and 5.2 shall survive without limitation as to time.

 

ARTICLE VI

COVENANTS OF SIHITECH AND THE VENDORS

 

6.1                                 Conduct of the Sihitech Business.  Sihitech and each Vendor covenant and agree
that, from the date hereof through the Closing Date, except as otherwise set
forth in this Agreement or with the prior written consent of the Purchaser,
they shall, and shall use their best efforts to cause Sihitech to:

 

(a)          conduct
the Sihitech Business only in the ordinary course and in a manner consistent
with the current practice of the Sihitech Business to preserve substantially
intact the business organization, to keep available the services of the current
employees, to preserve the current relationships of Sihitech with customers and
other persons with which Sihitech has significant business relations and to
comply with all Laws;

 

19

 

(b)         not
pledge, sell, transfer, dispose or otherwise encumber or grant any rights or
interests to others of any kind with respect to all or any part of the Shares,
or enter into any discussions or negotiations with any other party to do so;

 

(c)          not
pledge, sell, lease, transfer, dispose of or otherwise encumber any property or
assets of Sihitech, other than consistent with past practices and in the
ordinary course of business or enter into any discussions or negotiations with
any other party to do so;

 

(d)         not
issue any shares of capital stock of Sihitech or any other class of securities,
whether debt (other than debt incurred in the ordinary course of business and
consistent with past practice) or equity, or any options therefor or any
securities convertible into or exchangeable for capital stock of Sihitech or
enter into any agreements in respect of the ownership or control of such
capital stock;

 

(e)          Other
than the dividend plan set forth in Schedule 6.1 (e), not declare any dividend
or make any distribution in cash, securities or otherwise on the outstanding
shares of capital stock of Sihitech or directly or indirectly redeem, purchase
or in any other manner whatsoever advance, transfer (other than in payment for
goods received or services rendered in the ordinary course of business), or
distribute to any of their affiliates or otherwise withdraw cash or cash equivalents
in any manner inconsistent with established cash management practices, except
to pay existing indebtedness of Sihitech;

 

(f)            not
make, agree to make or announce any general wage or salary increase or enter
into any employment contract or, unless provided for on or before the date of
this Agreement, increase the compensation payable or to become payable to any
officer or employee of Sihitech or adopt or increase the benefits of any bonus,
insurance, pension or other employee benefit plan, payment or arrangement,
except for the renewal of any currently existing employment agreement, and those
increases, consistent with past practices, normally occurring as the result of
regularly scheduled salary reviews and increases, and except for increases
directly or indirectly required as a result of changes in applicable law or
regulations;

 

(g)         Except
as set forth in Schedule 6.1(g), not to amend the Articles of Association (or
other organizational documents) of Sihitech;

 

(h)         not to
merge or consolidate with, or acquire all or substantially all the assets of,
or otherwise acquire any business operations of, any Person, except for the
purpose of facilitating the consummation of any transaction contemplated herein
and tax reasons;

 

(i)             not
to make any payments outside the ordinary course of business; and

 

(j)             not
to make any capital expenditures, except in accordance with prudent business
and operational practices consistent with prior practice.

 

20

 

6.2                                 Access to Information.

 

(a)          Between
the date of this Agreement and the Closing Date, during normal business hours, Sihitech
and the Vendors will (i) permit the Purchaser and its Representatives
reasonable access to all of the books, records, reports and other related
materials, offices and other facilities and properties of Sihitech; (ii) permit
the Purchaser and its Representatives to make such inspections thereof as the
Purchaser may reasonably request; and (iii) furnish the Purchaser and its
Representatives with such financial and operating data (including, without
limitation, the work papers of the Accountants, subject to the Accountant’s
consent) and other information with respect to Sihitech and the Sihitech Business
as the Purchaser may from time to time reasonably request, provided, however,
that any activity conducted pursuant to this clause shall not interfere with or
disrupt the normal operation and ordinary course of business of Sihitech and
the Vendors.

 

b)             Between the date of this Agreement and the
Closing Date, during normal business hours, the Purchaser shall be permitted to
meet with and interview all employees of Sihitech, provided, however, that such
interview shall not interfere with or disrupt the normal operation and ordinary
course of business of Sihitech and its employees.

 

6.3                                 Insurance.  Through the Closing Date, Sihitech and the
Vendors shall cause Sihitech to maintain the same insurance policies as it has
as of the date hereof.

 

6.4                                 Protection of Confidential Information;
Non-Competition.

 

(a)          Confidential
Information. Each Vendor acknowledges that:

 

(i)             As
a result of their stock ownership of Sihitech, they have obtained secret and
confidential information concerning the Sihitech Business, including, without
limitation, financial information, trade secrets and “know-how,” customers, and
certain methodologies (Confidential Information).

 

(ii)          Sihitech
and the Purchaser will suffer substantial damage which will be difficult to
compute if they should divulge Confidential Information or enter a business
competitive with that of Sihitech.

 

(iii)       The
provisions of this Section are reasonable and necessary for the protection of
the Sihitech Business.

 

(b)         Maintain
Confidentiality.  Each Vendor agrees to
not at any time after the date hereof divulge to any person or entity any
Confidential Information obtained or learned as a result of stock ownership of Sihitech
and employment by Sihitech except (i) with the express written consent of the
Purchaser on or before the Closing Date and of Sihitech’s Board of Directors
thereafter; (ii) to the extent that any such information is in the public
domain other than as a

 

21

 

result of a breach of any obligations hereunder; or (iii) where
required to be disclosed by court order, subpoena or other government process.  If any Vendor shall be required to make
disclosure pursuant to the provisions of clause (iii) of the preceding
sentence, it will promptly, but in no event more than 72 hours after learning
of such subpoena, court order, or other government process, notify, by personal
delivery or by electronic means, confirmed by mail, both of Sihitech and the
Purchaser, and shall: (i) take all reasonably necessary steps required by Sihitech
or the Purchaser to defend against the enforcement of such subpoena, court
order or other government process, and (ii) permit Sihitech or the Purchaser to
intervene and participate with counsel of its choice in any proceeding relating
to the enforcement thereof.

 

(c)          Records.
 At the Closing, each Vendor will
promptly deliver to Sihitech all original memoranda, notes, records, reports,
manuals, formula and other documents relating to the Sihitech Business and all
property associated therewith, which they then possess or have under their
control; provided, however, that they shall be entitled to retain copies of
such documents reasonably necessary to document their financial relationship
with Sihitech.

 

(d)         Non-Compete.
 During the Non-Competition Period, no Vendor,
without the prior written permission of Sihitech and the Purchaser, shall,
anywhere in the mainland of the PRC, Hong Kong, Macau and Taiwan, directly or
indirectly, (i) enter into the employ of or render any services to any person,
firm or corporation engaged in any business which is a Competitive
Business (as defined below); (ii) engage in any Competitive
Business for his own account; (iii) become associated with or interested in any
Competitive Business as an individual, partner, shareholder, creditor, director,
officer, principal, agent, employee, trustee, consultant, advisor or in any
other relationship or capacity; (iv) employ or retain, or have or cause any
other person or entity to employ or retain, any person who was employed or
retained by Sihitech, e-Channels or any other subsidiary of the Purchaser in
the six-month period prior to the date that all relationships of such person
terminates with Sihitech, e-Channels or any other subsidiary of the Purchaser;
or (v) solicit, interfere with, or endeavor to entice away from Sihitech, e-Channels
or any other subsidiary of the Purchaser, for the benefit of a Competitive
Business, any of its customers or other persons with whom Sihitech, e-Channels
or any other subsidiary of the Purchaser has a business relationship.  However, nothing in this Agreement shall
preclude them from investing their personal assets in the securities of any
corporation or other business entity which is engaged in a Competitive Business
if such securities are traded on a national stock exchange or in the
over-the-counter market and if such investment does not result in their
beneficially owning, at any time, more than 1% of the publicly-traded equity
securities of such Competitive Business.

 

(e)          Injunctive
Relief.  If any Vendor breaches, or threatens
to breach, any of the provisions of Sections 6.4 (b), (c) or (d), Sihitech and
the Purchaser shall have

 

22

 

the right and remedy to have the provisions of this Section 6.4
specifically enforced by any Governmental Authority, it being acknowledged and
agreed by each Vendor that any such breach or threatened breach will cause
irreparable injury to Sihitech and the Purchaser and that money damages will
not provide an adequate remedy.

 

(f)            Modification
of Scope.  If any provision of Sections
6.4 (b), (c) or (d) is held to be unenforceable because of the scope, duration
or area of its applicability, the Governmental Authority making such
determination shall have the power to modify such scope, duration, or area, or
all of them, and such provision or provisions shall then be applicable in such
modified form.

 

(g)         Competitive
Business.  As used in this Agreement,

 

(i)             Competitive Business means any business which operates in any aspect of the Sihitech Business
and the business of e-Channels; and

 

(ii)          Non-Competition Period means the period beginning on the Closing Date and ending on the third
anniversary of the Closing Date.

 

6.5                                 Post-Closing Assurances.  Sihitech and each Vendor from time to time
after the Closing, at the Purchaser’s request, will take such other actions and
execute and deliver such other documents, certifications and further assurances
as the Purchaser may reasonably require in order to manage and operate Sihitech
and the Sihitech Business, including but not limited to executing such
certificates as may be reasonably requested by the Purchaser’s accountants in
connection with any audit of the financial statements of Sihitech for any
period through the Closing Date.

 

6.6                                 Fulfillment of Conditions.  Each Vendor and Sihitech shall use their best
efforts to fulfill the conditions specified in Article IX to the extent that
the fulfillment of such conditions is within their control.  The foregoing obligation includes (a) the
execution and delivery of documents necessary or desirable to consummate the
transactions contemplated hereby and (b) taking or refraining from such actions
as may be necessary to fulfill such conditions (including using their best
efforts to conduct the Sihitech Business in such manner that on the Closing
Date the representations and warranties of Sihitech and each Vendor contained
herein shall be accurate as though then made, except as contemplated by the
terms hereof).

 

6.7                                 Disclosure of Certain Matters.  From the date hereof through the Closing Date,
Sihitech and each Vendor shall give the Purchaser prompt written notice of any
event or development that occurs that (a) had it existed or been known on the
date hereof would have been required to be disclosed under this Agreement, (b)
would cause any of the representations and warranties of Sihitech and each Vendor
contained herein to be inaccurate or otherwise misleading, (c) gives Sihitech
and each Vendor any reason to believe that any of the conditions set forth in
Article IX will not be satisfied, (d) is of a nature that is or may be
materially adverse to the operations, prospects or condition

 

23

 

(financial or otherwise) of Sihitech or (e) would require any amendment
or supplement to the Proxy Statement.

 

6.8                                 Regulatory and Other Authorizations; Notices
and Consents.

 

(a)          Sihitech
and each Vendor shall use their commercially reasonable efforts to obtain all
authorizations, consents, orders and approvals of all Governmental Authorities
and officials that may be or become necessary for their execution and delivery
of, and the performance of their obligations pursuant to, this Agreement, and
will cooperate fully with the Purchaser in promptly seeking to obtain all such
authorizations, consents, orders and approvals.

 

(b)         Sihitech
and each Vendor shall promptly give such notices to third parties and use its
or their best efforts to obtain such third party consents as the Purchaser may
in its reasonable discretion deem necessary or desirable in connection with the
transactions contemplated by this Agreement.

 

(c)          the
Purchaser shall cooperate and use all reasonable efforts to assist Sihitech and
each Vendor in giving such notices and obtaining such consents; provided,
however, that the Purchaser shall have no obligation to give any guarantee or
other consideration of any nature in connection with any such notice, consent
or estoppel certificate or to consent to any change in the terms of any
agreement or arrangement which the Purchaser in its sole discretion may deem
adverse to the interests of the Purchaser or the Sihitech Business.

 

6.9                                 Use of Intellectual Property.  Each Vendor acknowledges that from and after
the Closing, all the Intellectual Property of any kind related to or used in connection
with the Sihitech Business shall be owned by Sihitech, that no Vendor nor any
of their affiliates shall have any rights in the Intellectual Property and that
no Vendor nor any of their affiliates will contest the ownership or validity of
any rights of Sihitech in or to the Intellectual Property.

 

6.10                           Related Tax.  Each Vendor covenants and agrees to pay any
tax and duties assessed on the part of such Vendor required by any Governmental
Authority.

 

ARTICLE VII

COVENANTS OF THE PURCHASER

 

7.1                                 Conduct of the Business.  The Purchaser covenants and agrees that, from
the date hereof through the Closing Date, except (i) in the context of an
unsolicited, bona fide written proposal for a superior transaction or
consummation of a superior transaction, (ii) as otherwise set forth in this
Agreement or (iii) with the prior written consent of the Vendors, it shall:

 

(a)          conduct
its business only in the ordinary course and in a manner consistent with the
current practice of their business to preserve substantially intact the

 

24

 

business organization of the Purchaser, to preserve the current
relationships of the Purchaser with customers and other persons with which they
have had significant business relations and to comply with all Laws;

 

(b)         not
pledge, sell, transfer, dispose or otherwise encumber or grant any rights or
interests to others of any kind with respect to all or any part of the capital
securities of the Purchaser;

 

(c)          not
pledge, sell, lease, transfer, dispose of or otherwise encumber any property or
assets of the Purchaser, other than consistent with past practices and in the
ordinary course of business of the Purchaser;

 

(d)         not
issue any shares of capital stock of the Purchaser or any other class of
securities, whether debt (other than debt incurred in the ordinary course of
business and consistent with past practice) or equity, of the Purchaser or any
options therefore or any securities convertible into or exchangeable for
capital stock of the Purchaser or enter into any agreements in respect of the
ownership or control of such capital stock;

 

(e)          not
declare any dividend or make any distribution in cash, securities or otherwise
on the outstanding shares of capital stock of the Purchaser or directly or
indirectly redeem, purchase or in any other manner whatsoever advance, transfer
(other than in payment for goods received or services rendered in the ordinary
course of business), or distribute to any of their affiliates or otherwise
withdraw cash or cash equivalents in any manner inconsistent with established
cash management practices, except to pay existing indebtedness of the Purchaser;

 

(f)            not
make, agree to make or announce any general wage or salary increase or enter
into any employment contract or, unless provided for on or before the date of
this Agreement, increase the compensation payable or to become payable to any
officer or employee of the Purchaser or adopt or increase the benefits of any
bonus, insurance, pension or other employee benefit plan, payment or
arrangement, except for those increases, consistent with past practices,
normally occurring as the result of regularly scheduled salary reviews and
increases, and except for increases directly or indirectly required as a result
of changes in applicable law or regulations;

 

(g)         except
as set forth in Schedule 7.1(g), not amend the Certificate of Incorporation or
By-laws or Memorandum and Articles of Association (or other organizational
documents) of the Purchaser;

 

(h)         not
merge or consolidate with, or acquire all or substantially all the assets of,
or otherwise acquire any business operations of, any Person;

 

(i)             not
make any payments outside the ordinary course of business; and

 

25

 

(j)             not
make any capital expenditures, except in accordance with prudent business and
operational practices consistent with prior practice.

 

7.2                                 Fulfillment of Conditions.  From the date hereof to the Closing Date, the
Purchaser shall use its best efforts to fulfill the conditions specified in
Article IX to the extent that the fulfillment of such conditions is within its
control.  The foregoing obligation
includes (a) the execution and delivery of documents necessary or desirable to
consummate the transactions contemplated hereby, and (b) taking or refraining
from such actions as may be necessary to fulfill such conditions (including
conducting the business of the Purchaser in such manner that on the Closing
Date the representations and warranties of the Purchaser contained herein shall
be accurate as though then made).

 

7.3                                 Disclosure of Certain Matters.  From the date hereof through the Closing
Date, the Purchaser shall give Sihitech and the Vendors prompt written notice
of any event or development that occurs that (a) had it existed or been known
on the date hereof would have been required to be disclosed under this
Agreement, (b) would cause any of the representations and warranties of the
Purchaser and the Schedules contained herein to be inaccurate or otherwise misleading,
(c) gives the Purchaser any reason to believe that any of the conditions set
forth in Article IX will not be satisfied, (d) is of a nature that is or may be
materially adverse to the operations, prospects or condition (financial or
otherwise) of the Purchaser, or (e) would require any amendment or supplement
to the Proxy Statement.

 

7.4                                 Post-Closing Assurances.  the Purchaser from time to time after the
Closing, at Sihitech or Vendors’ request, will take such other actions and
execute and deliver such other documents, certifications and further assurances
as Sihitech or Vendors may reasonably require in order to manage and operate the
Purchaser and the Sihitech Business, including but not limited to executing
such certificates as may be reasonably requested by Sihitech or Vendors’
Accountants in connection with any audit of the financial statements of the
Purchaser for any period through the Closing Date.

 

7.5                                 Regulatory and Other Authorizations; Notices
and Consents.

 

(a)          The
Purchaser shall use their commercially reasonable efforts to obtain all
authorizations, consents, orders and approvals of all Governmental Authorities
and officials that may be or become necessary for their execution and delivery
of, and the performance of their obligations pursuant to, this Agreement, and
will cooperate fully with Sihitech or the Vendors in promptly seeking to obtain
all such authorizations, consents, orders and approvals.

 

(b)         the
Purchaser shall give promptly such notices to third parties and use its or
their best efforts to obtain such third party consents and estoppel
certificates as Sihitech or Vendors may in their reasonable discretion deem
necessary or desirable in connection with the transactions contemplated by this
Agreement.

 

26

 

ARTICLE VIII

ADDITIONAL COVENANTS OF THE PARTIES

 

8.1                                 Other Information.  If in order to properly prepare documents
required to be filed with any Governmental Authority or financial statements of
the Purchaser it is necessary that either Party be furnished with additional
information relating to the Purchaser or the Business, and such information is
in the possession of the other Party, such Party agrees to use its best efforts
to furnish such information in a timely manner to such other Party, at the cost
and expense of the Party being furnished such information.

 

8.2                                 Mail Received After Closing.

 

(a)          If
Sihitech receives after the Closing any mail or other communications addressed
to any Vendor, Sihitech may open such mail or other communications and deal
with the contents thereof in its discretion to the extent that such mail or
other communications and the contents thereof relate to Sihitech.  Sihitech will deliver promptly or cause to be
delivered to the Vendors all other mail addressed to them and the contents
thereof which does not relate to Sihitech or the Sihitech Business.

 

(b)         If any
Vendor receives after the Closing Date mail or other communications addressed
to them which relate to Sihitech, they shall promptly deliver or cause to be
delivered all such mail and the contents thereof to Sihitech.

 

8.3                                 Further Action.  Each of the Parties shall execute such
documents and other papers and take such further actions as may be reasonably
required or desirable to carry out the provisions hereof and the transactions
contemplated hereby.  Upon the terms and
subject to the conditions hereof, each of the Parties shall use its best
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all other things necessary, proper or advisable to consummate and make
effective as promptly as practicable the transactions contemplated by this
Agreement.

 

8.4                                 Schedules. 
The Parties shall have the obligation to supplement or amend the
Schedules being delivered concurrently with the execution of this Agreement and
annexed hereto with respect to any matter hereafter arising or discovered
which, if existing or known at the date of this Agreement, would have been
required to be set forth or described in the Schedules.  The obligations of the Parties to amend or supplement
the Schedules being delivered herewith shall terminate on the Closing Date.

 

8.5                                 Confidentiality. Sihitech and each Vendor, on
the one hand, and the Purchaser on the other hand, on and after the Closing
Date, shall hold and shall cause their respective Representatives to hold in
strict confidence, unless compelled to disclose by judicial or administrative
process or by other requirements of law, all documents and information
concerning the other Party furnished it by such other Party or its
Representatives in connection with the transactions contemplated by this
Agreement (except to the extent that such information can be shown to have been
(a) previously known by the Party to which it was furnished, (b) in the public
domain through no fault of such Party or (c) later lawfully acquired from other
sources, which source is not the agent of the other Party, by

 

27

 

the Party to which it was furnished), and each Party shall not release
or disclose such information to any other person, except its Representatives in
connection with this Agreement.  Each
Party shall be deemed to have satisfied its obligations to hold confidential
information concerning or supplied by the other Party if it exercises the same
care as it takes to preserve confidentiality for its own similar information.

 

8.6                                 Public Announcements.  From the date of this Agreement until Closing
or termination, the Purchaser, Sihitech and each Vendor shall cooperate in good
faith to jointly prepare all press releases and public announcements pertaining
to this Agreement and the transactions governed by it, and none of the
foregoing shall issue or otherwise make any public announcement or
communication pertaining to this Agreement or the transaction without the prior
consent of the Purchaser, except as required by any legal requirement or by the
rules and regulations of, or pursuant to any agreement of a stock exchange or
trading system.  If any party determines
with the advice of counsel that it is required to make this Agreement and the
terms of the transaction public or otherwise issue a press release or make
public disclosure with respect thereto, it shall at a reasonable time before
making any public disclosure, consult with the other party regarding such
disclosure, seek such confidential treatment for such terms or portions of this
Agreement or the transaction as may be reasonably requested by the other party
and disclose only such information as is legally compelled to be
disclosed.  This provision will not apply
to communications by any party to its counsel, accountants and other
professional advisors.

8.7                                 Transfer to Vendors.  After the date hereof but no later than the
Closing, Individual Shareholders shall irrevocably complete the transfer of the
Shares to the Vendors.

 

ARTICLE IX

CONDITIONS TO CLOSING

 

9.1                                 Conditions to Each Party’s Obligations.  The respective obligations of each Party to
consummate the transactions contemplated by this Agreement shall be subject to
the fulfillment, at or prior to the Closing, of each of the following
conditions.

 

(a)          Litigation.
 No order, stay, judgment or decree shall
have been issued by any Governmental Authority preventing, restraining or
prohibiting in whole or in part, the consummation of the transactions
contemplated hereby or instrumental to the consummation of the transactions
contemplated hereby, and no action or proceeding by any governmental authority
shall be pending or threatened (including by suggestion through investigation)
by any person, firm, corporation, entity or Governmental Authority, which
questions, or seeks to enjoin, modify, amend or prohibit (a) the ownership of Sihitech,
(b) the Stockholders Meeting and use of the Proxy Statement by the Purchaser, or
(c) the conduct or ownership (direct or indirect or beneficial) in any material
respect the Sihitech Business.

 

28

 

(b)         Regulatory
Approvals.  Any Governmental Authority
whose approval or consent is required each shall have unconditionally approved
of the transactions contemplated by this Agreement and the Purchaser shall have
received written confirmation thereof;

 

The Approval Authority has:

 

(i)                           approved this Agreement in its present form;

 

(ii)                        approved the conversion of Sihitech from a limited
liability company into a foreign invested limited liability company; and

 

(iii)                     issued an Approval Certificate to the
post-Transfer Sihitech, which characterizes the post-Transfer Sihitech as a company
wholly owned by the Purchaser.

 

(c)          SAIC
has:

 

(i)                           registered this Agreement in its present
form; and

 

(ii)                        issued a Business License or its official
duplicate to the post-Transfer Sihitech.

 

9.2                                 Conditions to Obligations of Sihitech and the
Vendors.  The obligations of Sihitech and
the Vendors to consummate the transactions contemplated by this Agreement shall
be subject to the fulfillment, at or prior to the Closing, of each of the
following conditions:

 

(a)          Deliveries.  The Purchaser shall have delivered and
Sihitech and the Vendors shall have received such documents, certificates and
instruments as may be reasonably requested by each of Sihitech or the Vendors
for the purpose of satisfying the approval requirements in the PRC.

 

(b)         Representations
and Warranties; Covenants. Without supplementation after the date of this
Agreement, the representations and warranties of the Purchaser contained in
this Agreement shall be with respect to those representations and warranties
qualified by any materiality standard, true and correct as of the Closing, and
with respect to all the other representations and warranties, true and correct
in all material respects as of the Closing, with the same force and effect as
if made as of the Closing, and all the covenants contained in this Agreement to
be materially complied with by the Purchaser on or before the Closing shall
have been materially complied with, and the Purchaser shall have delivered a
certificate signed by a duly authorized officer thereof to such effect.

 

(c)          Consents.
 The Purchaser shall have obtained and
delivered to Sihitech and the Vendors consents of all third parties, as
appropriately required for the consummation of the transactions contemplated by
this Agreement.

 

29

 

(d)         Performance
of Agreements.  All covenants, agreements
and obligations required by the terms of this Agreement to be performed by the
Purchaser at or prior to the Closing shall have been duly and properly
performed or fulfilled in all material respects.

 

(e)          No
Adverse Changes.  At the Closing, there
shall have been no material adverse change in the assets, liabilities or
financial condition of the Purchaser from that shown in the Purchaser Balance
Sheet and related statements of income.  Between
the date of this Agreement and the Closing Date, there shall not have occurred
an event which, in the reasonable opinion of Vendors, would have had a material
adverse effect on the operations, financial condition or prospects of the
Purchaser.

 

(f)            Necessary Proceedings.
 All proceedings, corporate or otherwise,
to be taken by the Purchaser in connection with the consummation of the
transactions contemplated by this Agreement shall have been duly and validly
taken, and copies of all documents, resolutions and certificates incident
thereto, duly certified by the Purchaser as of the Closing, shall have been
delivered to Sihitech and the Vendors.

 

(g)         Resignations.
 Effective as of the Closing, the
directors of the Purchaser and the officers of the Purchaser will have resigned
and that they have no claim for employment compensation in any form from the
Purchaser.

 

(h)         Supplemental
Disclosure.  If the Purchaser shall have
supplemented or amended any schedule pursuant to their obligations set forth in
Section 8.4 in any material respect, Sihitech and the Vendors shall give notice
to the Purchaser that as a result of information provided to Sihitech and the
Vendors in connection with any or all of such amendments or supplements,
Sihitech and the Vendors have determined not to proceed with the consummation
of the transactions contemplated hereby.

 

9.3                                 Conditions to Obligations of the Purchaser.  The obligations of the Purchaser to consummate
the transactions contemplated by this Agreement shall be subject to the fulfillment,
at or prior to the Closing, of each of the following conditions:

 

(a)          Deliveries.  The Vendors shall have delivered the Shares
and the Purchaser shall have received the same and such other documents,
certificates and instruments as may be reasonably requested by the Purchaser.

 

(b)         Representations
and Warranties; Covenants.  Without
supplementation after the date of this Agreement, the representations and
warranties of Sihitech and each Vendor contained in this Agreement shall be
with respect to those representations and warranties qualified by any
materiality standard, true and correct in all respects as of the Closing, and
with respect to all the other representations and warranties, true and correct
in all material respects as of the Closing, with the same force and effect as
if made as of the Closing, and

 

30

 

all the covenants contained in this Agreement to be materially complied
with by Sihitech and each Vendor on or before the Closing shall have been materially
complied with, and the Purchaser shall have received a certificate of Sihitech
and each Vendor to such effect;

 

(c)          Consents.  Sihitech and each Vendor shall have obtained
and delivered to the Purchaser consents of all third parties required by the
Contracts and Permits set forth in Schedule 4.4;

 

(d)         Performance
of Agreements.  All covenants, agreements
and obligations required by the terms of this Agreement to be performed by Sihitech
and each Vendor at or prior to the Closing shall have been duly and properly
performed or fulfilled in all material respects;

 

(e)          No
Adverse Change.  At the Closing, there
shall have been no material adverse change in the assets, liabilities,
financial condition or prospects of Sihitech or the Sihitech Business from that
shown or reflected in the Last Financial Statements and as described in the
Proxy Statement.  Between the date of
this Agreement and the Closing Date, there shall not have occurred an event
which, in the reasonable opinion of the Purchaser, would have a Material
Adverse Effect;

 

(f)            Necessary Proceedings.  All proceedings, corporate or otherwise, to be
taken by Sihitech and each Vendor in connection with the consummation of the
transactions contemplated by this Agreement shall have been duly and validly
taken, and copies of all documents, resolutions and certificates incident
thereto, duly certified by Sihitech and each Vendor, as appropriate, as of the
Closing, shall have been delivered to the Purchaser.

 

(g)         Minimum
Assets.  At the Closing, Sihitech and the
Vendors will certify to the Purchaser that on a consolidated basis, immediately
prior to closing, Sihitech will only have short- and long-term debt arising in
the ordinary course.

 

(h)         e-Channels
SPA.  e-Channels SPA has been executed by
the parties thereto and approved by the Approval Authority of the PRC, and has
become effective.

 

ARTICLE X

INDEMNIFICATION

 

10.1                           Indemnification by Vendors and Individual
Shareholders.  Subject to the limitations
set forth in Section 10.4, each of the Vendors shall indemnify and hold
harmless the Purchaser from and against, and shall reimburse the Purchaser for,
any Damages which may be sustained, suffered or incurred by them, whether as a
result of any Third Party Claim or otherwise, and which arise from or in connection
with or are attributable to the breach of any of the representations or
warranties or covenants by

 

31

 

Sihitech, any Individual Shareholder or the Vendors contained in this
Agreement.  Indemnification pursuant to
this Section 10.1 shall be the sole remedy of the Purchaser with respect to any
breach of the representations and warranties or covenants by Sihitech, any
Individual Shareholder or any Vendor contained in this Agreement.  Each Vendor shall give prompt written notice
to the Purchaser of any Third Party Claims or other facts and circumstances
known to them which may entitle the Purchaser to indemnification under this
Section 10.1.

 

10.2                           Indemnification by the Purchaser.  Subject to the limitations set forth in
Section 10.4, the Purchaser shall indemnify and hold harmless each Vendor from
and against, and shall reimburse each Vendor for, any Damages which may be
sustained, suffered or incurred by such Vendor, whether as a result of Third
Party Claims or otherwise, and which arise or result from or in connection with
or are attributable to the breach of any of the Purchaser’s representations or
warranties or covenants contained in this Agreement.  The Purchaser shall give each Vendor prompt
written notice of any Third Party Claims or other facts and circumstances known
to it which may entitle them to indemnification under this Section 10.2.

 

10.3                           Notice, Etc.  A Party required to make an indemnification
payment pursuant to this Agreement (Indemnifying Party)
shall have no liability with respect to Third Party Claims or otherwise with
respect to any covenant, representation, warranty, agreement, undertaking or
obligation under this Agreement unless the Party entitled to receive such
indemnification payment (Indemnified Party)
gives notice to the Indemnifying Party specifying (i) the covenant,
representation or warranty, agreement, undertaking or obligation contained
herein which it asserts has been breached, (ii) in reasonable detail, the
nature and dollar amount of any Claim the Indemnified Party may have against
the Indemnifying Party by reason thereof under this Agreement, and (iii)
whether or not the Claim is a Third Party Claim.  With respect to Third Party Claims, an
Indemnified Party (i) shall give the Indemnifying Party prompt notice of any
Third Party Claim, (ii) prior to taking any action with respect to such Third
Party Claim, shall consult with the Indemnifying Party as to the procedure to
be followed in defending, settling, or compromising the Third Party Claim,
(iii) shall not consent to any settlement or compromise of the Third Party
Claim without the written consent of the Indemnifying Party (which consent
shall not be unreasonably withheld or delayed), and (iv) shall permit the
Indemnifying Party, if it so elects, to assume the exclusive defense of such
Third Party Claim (including, except as provided in the penultimate sentence of
this Section, the compromise or settlement thereof) at its own cost and
expense.  If the Indemnifying Party shall
elect to assume the exclusive defense of any Third Party Claim pursuant to this
Agreement, it shall notify the Indemnified Party in writing of such election,
and the Indemnifying Party shall not be liable hereunder for any fees or
expenses of the Indemnified Party’s counsel relating to such Third Party Claim
after the date of delivery to the Indemnified Party of such notice of
election.  The Indemnifying Party will
not compromise or settle any such Third Party Claim without the written consent
of the Indemnified Party (which consent shall not be unreasonably withheld or
delayed) if the relief provided is other than monetary damages or such relief
would have a material adverse effect on the Indemnified Party.  Notwithstanding the foregoing, if the
Indemnifying Party elects to assume the defense with respect to any Third Party
Claim,

 

32

 

the Indemnifying Party shall have the right to compromise or settle for
solely monetary damages such Third Party Claim, provided such settlement will
not result in or have a Material Adverse Effect on the Indemnified Party.  Notwithstanding the foregoing, the Party which
defends any Third Party Claim shall, to the extent required by any insurance
policies of the Indemnified Party, share or give control thereof to any insurer
with respect to such Claim.

 

10.4                           Limitations.

 

(a)          No Vendor
shall be required to indemnify the Purchaser under Section 10.1 unless the
aggregate of all amounts for which indemnity would otherwise be due against
them exceeds US$10,000.  Claims may be
asserted once the damages exceed US$10,000, and in no event the indemnification
amount shall exceed the Purchase Price.

 

(b)         The Purchaser
shall not be required to indemnify any Vendor under Section 10.2 unless the
aggregate of all amounts for which indemnity would otherwise be due against the
Purchaser exceeds $10,000.  Claims may be
asserted once the damages exceed US$10,000, and in no event the indemnification
amount shall exceed the Purchase Price.

 

(c)          If a Third
Party Claim subject to indemnification by any Vendor is brought against Sihitech
and Sihitech prevails in the defense thereof, such Vendor shall not be required
to indemnify Sihitech or the Purchaser with respect to the costs of such
defense, including attorneys’ fees.

 

(d)         In no event shall a claim for indemnification
be made after the second anniversary of the Closing Date.

 

10.5                           Adjustment to Purchase Price; Setoff.

 

(a)          Purchase
Price.  Any indemnification payments made
pursuant to Sections 10.1 and 10.2 shall be deemed to be an adjustment to the
Purchase Price.  To the extent that any Vendor
is obligated to indemnify the Purchaser under the provisions of the Article X
for Damages reduced to a monetary amount, the Purchaser shall have the right to
adjust any amount due and owing or to be due and owing under any agreement with
the Vendors, whether under this Agreement or any other agreement between the Vendors
and any of the Purchaser’s affiliates, subsidiaries or controlled persons or
entities.  To the extent that the
Purchaser is obligated to indemnify Sihitech or any Vendor after Closing under
the provisions of this Article X for Damages reduced to a monetary amount, Sihitech
or any Vendor after Closing shall have the right to decrease any amount due and
owing or to be due and owing under any agreement with the Purchaser, whether
under this Agreement or any other agreement between the Sihitech or the Vendors
and any of the Purchaser’s affiliates, subsidiaries or controlled persons or
entities.

 

33

 

(b)         Holdback
Amount.  Notwithstanding the foregoing, the
Purchaser may apply all or a portion of the Holdback Amount to satisfy any
Claim for indemnification pursuant to this Article X.  The Purchaser will hold the Holdback Amount
until final resolution of the Claim or dispute.  The Holdback Amount is security for the
indemnification obligations of the Vendors and is not a limitation on the
Damages recoverable or liquidated damages and such security does not limit any
other right of set off or recovery under this Agreement or at law, whether
pursuant to this Agreement or any other agreement of the Vendors.

 

ARTICLE XI

TERMINATION AND ABANDONMENT

 

11.1                           Methods of Termination.  The transactions contemplated herein may be
terminated and/or abandoned at any time but not later than the Closing:

 

(a)          by
mutual written consent of the Purchaser, Sihitech and the Vendors;

 

(b)         (i) by
the Purchaser if Sihitech or any Vendor amends or supplements any Sihitech or Vendor
schedule hereto in accordance with Section 8.4 hereof and such amendment or
supplement reflects a material adverse change in the condition (financial or
other), operations or prospects of Sihitech or the Sihitech Business, as a
whole or in part, after the date hereof, or (ii) by Vendors if the Purchaser
amends or supplements any the Purchaser Schedule hereto in accordance with
Section 8.4 hereof and such amendment or supplement reflects a material adverse
change in the condition (financial or other) or operations of the Purchaser.

 

(c)          by
either the Purchaser or the Vendors, if the Closing or the closing for the
acquisition of e-Channels by e-Channels BVI has not occurred by May 31, 2006
(or such other date as may be extended from time to time by written agreement
of the Purchaser and Vendors); provided, however, that the right to terminate
this Agreement under this Section 11.1(c) shall not be available to any Party
that is then in breach of any of its covenants, representations or warranties
in this Agreement;

 

(d)         by the
Vendors, (i) if the Purchaser shall have breached any of its covenants herein
in any respect or (ii) if the representations and warranties of the Purchaser
contained in this Agreement shall not be true and correct in all material
respects, at the time made, or (iii) if such representations and warranties
shall not be true and correct at and as of the Closing Date as though such
representations and warranties were made again at and as of the Closing Date,
except to the extent that such representations are made herein as of a specific
date prior to the Closing Date, and in any such event, if such breach is
subject to cure, the Purchaser has not cured such breach within 10 Business
Days of the Vendor’s notice of an intent to terminate;

 

34

 

(e)          by the
Purchaser, (i) if Sihitech or any Vendor shall have breached any of the
covenants herein in any respect or (ii) if the representations and warranties
of Sihitech or any Vendor contained in this Agreement shall not be true and
correct in all material respects, at the time made, or (iii) if such
representations and warranties shall not be true and correct at and as of the
Closing Date as though such representations and warranties were made again at
and as of the Closing Date, except to the extent that such representations are
made herein as of a specific date prior to the Closing Date, and in any such
event, if such breach is subject to cure, Sihitech or the Vendors have not
cured such breach within 10 Business Days of the Purchaser’s notice of an
intent to terminate.

 

11.2                           Effect of Termination.

 

(a)          In
the event of termination and abandonment by the Purchaser or by Vendors, or
both, pursuant to Section 11.1 hereof, written notice thereof shall forthwith
be given to the other Party, and except as set forth in this Section 11.2, all
further obligations of the Parties shall terminate, no Party shall have any
right against the other Party hereto, and each Party shall bear its own costs
and expenses.

 

(b)         Consequence
of Termination.  If the transactions
contemplated by this Agreement are terminated and/or abandoned as provided
herein:

 

(i)             each Party hereto
will return all documents, work papers and other material (and all copies
thereof) of the other Party relating to the Transfer contemplated hereby,
whether so obtained before or after the execution hereof, to the Party
furnishing the same; and

 

(ii)          all confidential
information received by either Party hereto with respect to the business of the
other Party hereto shall be treated in accordance with Section 8.6 hereof,
which shall survive such termination or abandonment.

 

ARTICLE XII

GENERAL PROVISIONS

 

12.1                           Expenses.  Except as otherwise provided herein, all costs
and expenses, including, without limitation, fees and disbursements of
Representatives, incurred in connection with the preparation of this Agreement
and the transactions contemplated hereby shall be paid by the Party incurring
such costs and expenses, whether or not the Closing shall have occurred.

 

12.2                           Notices.  All notices and other communications given or
made pursuant hereto shall be in writing and shall be deemed to have been duly
given or made as of the date delivered or mailed if delivered personally or by
nationally recognized courier or mailed by registered mail (postage prepaid,
return receipt requested) or by telecopy to the Parties

 

35

 

at
the following addresses (or at such other address for a Party as shall be
specified by like notice, except that notices of changes of address shall be
effective upon receipt):

 

	
  The
  Vendors:

  
	
   

  	
   

  	
   

  
	
   

  	
  Shareholder
  #1

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  Room 312, Shunpinda Bus Terminal, 8 Chuangxin 

  Road, Beijing Changping Technology Park

  
	
   

  	
   

  	
  Beijing, the PRC

  
	
   

  	
  Fax:

  	
   +86 10 6442 1210

  
	
   

  	
  For the attention of:

  	
   Peter Li

  
	
   

  	
   

  	
   

  
	
   

  	
  Shareholder
  #2

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  Room 305, Shunpinda Bus
  Terminal, 8 Chuangxin

  Road, Beijing Changping Technology Park

  
	
   

  	
   

  	
  Beijing, the PRC

  
	
   

  	
  Fax:

  	
   +86 10 6442 1210

  
	
   

  	
  For the attention of:

  	
   Peter Li

  
	
   

  	
   

  	
   

  
	
   

  	
  Beijing
  Sihitech Co., Ltd.

  
	
   

  	
   

  
	
   

  	
  Address:

  	
  3rd Floor,
  Tower B,

  
	
   

  	
   

  	
  Beijing Financial Trust
  Building

  
	
   

  	
   

  	
  5 Anding Road, Chaoyang
  District,

  
	
   

  	
   

  	
  Beijing 100029, the PRC

  
	
   

  	
  Fax:

  	
   +86 10 6442 1210

  
	
   

  	
  For the attention of:

  	
   Peter Li

  
	
   

  	
   

  	
   

  
	
  The
  Purchaser:

  
	
   

  	
   

  	
   

  
	
   

  	
  Ahead
  Billion Venture Limited

  
	
   

  	
   

  
	
   

  	
  Address:

  	
  TrustNet
  Chambers, P.O. Box 3444, Road Town,

  Tortola, British Virgin Islands

  
	
   

  	
  Fax:

  	
  +86 21 6113 8580

  
	
   

  	
  For the attention of:

  	
  Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
  Individual
  Shareholders:

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  3rd Floor,
  Tower B,

  
	
   

  	
   

  	
  Beijing Financial Trust Building

  
	
   

  	
   

  	
  5 Anding Road, Chaoyang
  District,

  
	
   

  	
   

  	
  Beijing 100029, the PRC

  
	
   

  	
  Fax:

  	
  +86 10 6442 1210

  

 

36

 

	
   

  	
  For the attention of:

  	
  Hong Weidong

  

 

12.3                           Amendment. 
This Agreement may not be amended or modified except by an instrument in
writing signed by the Parties.

 

12.4                           Waiver.  At any time prior to the Closing, either Party
may (a) extend the time for the performance of any of the obligations or other
acts of the other Party, (b) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant hereto and
(c) waive compliance with any of the agreements or conditions contained herein.
 Any such extension or waiver shall be
valid only if set forth in an instrument in writing signed by the Party to be
bound thereby.

 

12.5                           Headings.  The headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.

 

12.6                           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 contemplated hereby is not affected in any manner
adverse to any Party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the Parties shall negotiate
in good faith to modify this Agreement so as to effect the original intent of
the Parties as closely as possible in an acceptable manner to the end that
transactions contemplated hereby are fulfilled to the extent possible.

 

12.7                           Entire Agreement.  This Agreement and the Schedules and Exhibits
hereto constitute the entire agreement and supersede all prior agreements and
undertakings, both written and oral, between Sihitech, Vendors and the
Purchaser with respect to the subject matter hereof and, except as otherwise expressly
provided herein, are not intended to confer upon any other person any rights or
remedies hereunder.

 

12.8                           Benefit.  This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of the Parties.

 

12.9                           Governing Law.  This Agreement
and the relationship between the Parties shall be governed by, and interpreted
in accordance with, the laws of the PRC.

 

12.10                     Arbitration.  Any dispute,
controversy or claim (a Dispute)
arising out of or in relation to this Agreement, including any question
regarding its existence, validity or termination, shall be resolved through
friendly consultations between the Parties. 
If no resolution is reached within twenty-two (22) Business Days from
the date of notification by the Purchaser to the Vendors or by any of the
Vendors to the Purchaser that a Dispute has arisen, then such Dispute shall be
referred to arbitration.

 

If a Dispute is referred to arbitration, the
Parties agree that they shall seek to resolve the Dispute in accordance with
this section 12.10 before pursuing any other remedies available to them:

 

37

 

(a)                                  The Parties shall submit the Dispute to China
International Trade Arbitration Committee, Shanghai Branch (CIETAC) to be
arbitrated according to its rules and regulations.

 

(b)                                 The arbitral tribunal shall be three (3)
arbitrators.  The Vendors shall jointly appoint
one (1) arbitrator and the Purchaser shall appoint one (1) arbitrator.  The two arbitrators shall be selected within
thirty (30) days after giving or receiving of the request for arbitration.  The
presiding arbitrator of the arbitral tribunal shall be appointed by the two
party-appointed arbitrators.  If the
Vendors or the Purchaser fails to appoint their respective Party-appointed arbitrator within
thirty (30) days after the date
of commencement of the arbitration, the Chairman of CIETAC shall make the
appointment within the aforesaid restrictions.

 

(c)                                  The
arbitration proceedings shall be conducted in English.

 

(d)                                 The arbitration
tribunal shall apply the arbitration rules of CIETAC in effect on the date of
the signing of this Agreement. However, if such rules are in conflict with the
provisions of the previous paragraph of this section, including the provisions
for appointing arbitrators, the provisions of this section shall prevail.

 

(e)                                  The arbitral award shall be final and binding
on the Parties to the arbitration proceedings. 
Such Parties shall execute and perform the award and each Party to this
Agreement hereby irrevocably waives any right it may have to contest the
validity of this Agreement or the jurisdiction of the arbitrator to hear any
reference to arbitration to which this Agreement applies.  The Parties further hereby expressly agree to
waive any right they may have under applicable law to any form of appeal
against any arbitral award or of recourse to any court of law or other judicial
authority wherever situated.  The Parties
expressly confirm that any arbitral award rendered in proceedings conducted
pursuant to this Agreement shall be rendered in Shanghai and shall be
enforceable in any court of competent jurisdiction, including the courts of the
PRC, pursuant to the provisions of the United Nations Convention on the
Recognition and Enforcement of Foreign Arbitral Awards (New York, 1958).

 

(f)                                    The losing Party or Parties shall bear the
costs of the arbitration, unless the arbitral tribunal determines otherwise.

 

12.11                     Counterparts.  This Agreement may be executed in one or more
counterparts, and by the different Parties in separate counterparts, each of
which when executed shall be deemed to be an original but all of which when
taken together shall constitute one and the same agreement.

 

12.12                     Language. 
This Agreement shall be written in both English and Chinese.  Both versions shall be equally valid.  In case there is any conflict between the two
language versions, the English version shall prevail.

 

38

 

IN
WITNESS WHEREOF, the
Parties have caused this Agreement to be executed as of the date first written
above.

 

	
  BEIJING ZHANHENG JIYUAN

  SOFTWARE TECHNOLOTIES CO.,

  LTD.

  	
   

  	
  AHEAD
  BILLION VENTURE

  LIMITED

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  	
  Name:

  
	
  Title:

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  BEIJING XINYUAN TIANYU

  TECHNOLOGIES CO., LTD.

  	
   

  	
  INDIVIDUAL
  SHAREHOLDERS

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  	
  Name:

  
	
  Title:

  	
   

  	
  Authorized
  Representative

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  BEIJING
  SIHITECH CO., LTD.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

39

 

APPENDIX A

INDIVIDUAL SHAREHOLDERS

 

	
  Shareholders’ Name

  	
   

  	
  Contribution in Registered
  Capital

  (RMB million)

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Hong Weidong

  	
   

  	
  9.5
  (47.5%)

  	
   

  
	
  Wu Hong

  	
   

  	
  3.6
  (18%)

  	
   

  
	
  Wang Yanmei

  	
   

  	
  0.9
  (4.5%)

  	
   

  
	
  Liu Xin

  	
   

  	
  0.5
  (2.5%)

  	
   

  
	
  Fan Qinghua

  	
   

  	
  0.8
  (4%)

  	
   

  
	
  Zheng Chun

  	
   

  	
  0.6
  (3%)

  	
   

  
	
  Li Yuan

  	
   

  	
  0.4
  (2%)

  	
   

  
	
  Li Shixin

  	
   

  	
  0.4
  (2%)

  	
   

  
	
  Zhao Yiyong

  	
   

  	
  0.3
  (1.5%)

  	
   

  
	
  Li Feng

  	
   

  	
  0.2
  (1%)

  	
   

  
	
  Liu Wei

  	
   

  	
  0.2
  (1%)

  	
   

  
	
  Ma Gehua

  	
   

  	
  1
  (5%)

  	
   

  
	
  He Changqing

  	
   

  	
  0.6
  (3%)

  	
   

  
	
  Su Yong

  	
   

  	
  1
  (5%)

  	
   

  

 

40

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