Document:

Prepared by MerrillDirect

Exhibit 10.8

DATED:          July 28,  2001

	(1)	 	HOLLEY GROUP SHARE HOLDING
  CO., LTD.
 (Parent Company)
	 	 	 
	 	 	 	and
	 	 	 
	(2)	 	PACIFICNET.COM, INC.

AGREEMENT

for the sale and purchase of an equity interest in a Joint Venture to be formed

in the People’s Republic of China

by Holley Group Co., Ltd.

SOLICITORS

10th Floor,

Hutchison House,

10 Harcourt Road,

Central, Hong Kong.

Tel: (852) 2230 3500  Fax: (852)
2899 2996

Website: www.prestongates.com

Our ref.: 44036-00006/NKA-KA1L/KA1L

CONTENTS

	Clause	Heading
	 	 
	 1	Interpretation
	 2	Sale of Shares
	 3	Consideration
	 4	Conditions
	 5	Completion
	 6	Representations and warranties
	 7	Special Terms
	 8	Confidentiality
  and Exclusive Negotiation
	 9	Outsourcing
	10	Release
	11	Further Assurance,
  Attorney, Information and Debts
	12	Costs
	13	Announcements
	14	Return of Documents
	15	Complete Agreement
	16	Assignment
	17	Severability
	18	Counterparts
	19	Remaining in Force
	20	Time of the Essence
	21	No Waiver
	22	Notices
	23	Governing Law and
  Jurisdiction

THIS AGREEMENT is made the        28th         day of         July                      
2001.

BETWEEN:

	(1)	HOLLEY GROUP SHARE HOLDING CO., LTD 
  (Parent Company) a company existing under the laws of the People’s
  Republic of China whose principal place of business is at No. 78 Morganshan Road,
  Hangzhou 310005, People’s Republic of China (“Vendor”); and
	 	 
	(2)	PACIFICNET.COM, Inc. a company existing under the laws of the
  State of Delaware in the United States of America and having its registered
  office at 7808 Creekridge Circle, Suite 101, Bloomington, MN 55439, United
  States of America (the “Purchaser”)
	 	 
	WHEREAS:	 
	 	 
	A.	As at the date hereof, the Vendor and its
  Subsidiaries (“the Vendor Group”) are principally engaged in operations
  covering electrical instruments, electronic materials, fine chemicals and
  real estate (“Holley Business”). The Group includes 16 manufacturing
  enterprises and two public companies which are listed on certain stock
  exchanges  in the PRC (Holley Holding, Code: 0607; ST Hengtai, Code: 600097).
	 	 
	B.	The Vendor and the Purchaser are desirous of
  entering into a joint venture in the PRC such that the Purchaser shall own a
  51% legal and beneficial interest in the Joint Venture (as defined below) and
  the Vendor shall own a 49% legal and beneficial interest in the Joint
  Venture.  In order to facilitate the
  joint venture relationship between the parties, it has been agreed that the
  Purchaser shall purchase from the Vendor, either directly or indirectly, the
  said 51% interest in the Joint Venture (“Sale and Purchase”).  In order to facilitate such Sale and
  Purchase, it is agreed that the Vendor shall immediately after execution of
  this Agreement either :-
	 	 
	 	(a)	within 45 days of the date of this Agreement
  form (subject to the approval of the Purchaser) the Joint Venture whereby the
  shareholding structure of the Joint Venture shall allow and permit, in
  accordance with all rules, regulations and laws of the PRC (together with all
  legal and government approvals being obtained) for the Purchaser to directly
  purchase and hold an interest in the Joint Venture from the Vendor (“Holley JV
  Structure”); or
	 	 	 
	 	(b)	in the event the Vendor is unable to form the
  Joint Venture based on the Holley JV Structure or the Purchaser (for any
  reason whatsoever) disapproves of the Holley JV Structure, then the Vendor
  shall procure that there be formed and incorporated in the British Virgin
  Islands a private company limited by shares in accordance with the laws of
  the British Virgin Islands ( the “Company”) for the sole purpose of holding
  and owning 51% of the entire equity interest in the Joint Venture and whereby
  the Vendor shall own 100% of the entire issued share capital of and in the
  Company after the Company’s incorporation and immediately prior to Completion
  and to be transferred and assigned to the Purchaser at Completion (“BVI JV
  Structure”).
				

 

	C.	The Vendor shall immediately after the
  execution of this Agreement procure to be formed and established (subject to
  the approval of the Purchaser) a PRC Sino-foreign co-operative joint venture
  enterprise (“Joint Venture”) whereby the Purchaser shall upon Completion
  be the legal and beneficial owner of 51% of the Joint Venture (whether
  directly under the Holley JV Structure or indirectly under the BVI JV
  Structure) and the Vendor has agreed it will become the legal and beneficial
  owner of 49% of the Joint Venture upon incorporation of the Joint
  Venture.  The Vendor shall be
  responsible (subject to the approval of the Purchaser) of procuring all
  agreements and documents be entered into by all necessary parties and person
  in order to form the Joint Venture, including the JV Agreement (hereinafter
  defined).
	 	 
	D.	The Vendor will transfer to the Joint Venture
  its interest in such portion of its business comprising cash, working capital
  and business assets  (“Injected
  Business”) equal to the lesser amount of:
	 	 
	 	USD$1million;
	 	 
	 	OR	 
	 	 	 
	 	Operating Cash Reserve Requirements of the
  Joint Venture, being the sum of total monthly operating expenses and costs of
  good sold of the Joint Venture (derived from the proforma Joint Venture
  information provided under Clause 4.1.9) divided by 6.
	 	 	 
	E.	In addition to the JV Agreement, the Vendor
  shall, immediately after the signing of this Agreement, enter into the
  Extinguishment Agreement (hereinafter defined) to the effect that the Vendor
  shall upon the transfer of the Injected Business to the Joint Venture,
  extinguish and keep the Purchaser fully indemnified against all debts and
  liabilities attributable to the Injected Business which have arisen prior to
  such transfer.
	 	 	 
	F.	Subject to the above, the Vendor has agreed to
  sell and Purchaser has agreed to purchase from the Vendor the Sale Shares
  subject to and in accordance with the terms and conditions hereinafter set
  out.
	 	 
	NOW IT IS HEREBY AGREED as follows :
	 
	1.	INTERPRETATION
	 	 
	1.1	The Recitals and Schedules form part of this
  Agreement and shall have the same force and effect as if expressly set out in
  the body of this Agreement and any reference to this Agreement shall include
  the Recitals and Schedules.
	 	 
	1.2	In this Agreement except where the context
  otherwise requires the following words and expressions shall have the
  following meanings:
				

 

	"Accounts"	the audited financial statements (including
  balance sheet and profit and loss account) relating to the Injected Business
  and each of the Joint Venture, the Vendor, the Company (if applicable) and of
  each of their respective Subsidiaries prepared in accordance with generally
  accepted accounting principles in the PRC if in relation to the Vendor and each
  of its Subsidiaries (excluding the Company), and in accordance with generally
  accepted accounting principles of the United States if in relation to the
  Injected Business, the Joint Venture and the Company (if applicable) and each
  of their respective Subsidiaries;
	 	 
	this “Agreement”	means this agreement, and reference to this
  Agreement shall be construed as references to this Agreement as it may be
  amended or supplemented from time to time by the parties hereto in writing;
	 	 
	“Articles of Association”	means the articles of association and the
  terms thereof of the Joint Venture to be negotiated by the Vendor and the
  Purchaser in good faith and the terms of which are to be mutually agreed upon
  by the parties on or before the Conditions Precedent Date subject at all
  times that the final version as executed or to be executed shall be in such
  form and substance satisfactory to the Purchaser;
	 	 
	"Auditors"	Auditors mutually approved and agreed by the
  parties hereto on or before the Conditions Precedent Date;
	 	 	 
	"Business Day"	any day on which banks are open for business
  in Hong Kong and Hangzhou, PRC (excluding Sundays, public holidays in Hong
  Kong, Hangzhou, PRC and days on which the Typhoon Signal No.8 is hoisted or
  the Black Rainstorm warning is signaled and still in effect before 3 p.m. in
  Hong Kong or similar signals are hoisted or in place and still in effect
  before 3 pm in Hangzhou, PRC such that businesses and schools are closed in
  Hangzhou, PRC), provided that each business day shall finish (and then the
  next business day commence) at 4pm except Saturdays which shall so finish at
  12.30pm;
	 	 	 
	"Completion"	completion of the sale and purchase of the
  Sale Shares in accordance with Clause 5 of this Agreement;
	 	 	 
	"Completion Accounts"	the consolidated balance sheet relating to the
  Injected Business and to each of the Joint Venture, the Vendor, the Company
  (if applicable) and each of their respective 
  Subsidiaries made up to the close of business on the Completion Date
  and the audited consolidated profit and loss account relating to the Injected
  Business and to  each of the Joint
  Venture, the Vendor, the Company and each of their respective Subsidiaries
  for the period from the Accounting Date to the Completion Date, prepared in
  accordance with generally accepted accounting principles in the PRC if in
  relation to the Vendor and each of its Subsidiaries (excluding the Company
  (if applicable)), and in accordance with generally accepted accounting
  principles of the United States if in relation to the Injected Business, the
  Joint Venture and the Company (if applicable) and each of their respective
  Subsidiaries; and certified by Auditors.

 

	"Consideration"	the consideration payable for the sale and
  purchase of the Sale Shares to the Vendor pursuant to Clause 3;
	 	 	 
	“Consideration
  Shares”	means 4,000,000
  PACT Shares to be issued to the Vendor on Completion as the Consideration in
  accordance with the terms and conditions of this Agreement;  The shares to be issued and allotted to the
  Purchaser pursuant to the terms and condition of this Agreement by the
  Purchaser to the Vendor will not be registered under the Securities and
  Exchange Act of 1933 of the United States and are subject to restrictions on
  transferability;
	 	 	 
	“Control”	means the possession, direct or indirect, of
  the power to direct or cause the direction of the management and policies of
  a Person, whether through the ownership of voting securities, by contract or
  otherwise;
	 	 	 
	“Dispose”	means, to make or to effect any sale,
  assignment, exchange, transfer, or to grant any option, right of first
  refusal or other right or interest whatsoever or to enter into any agreement
  for any of the same and the expression “Disposal” shall be construed
  accordingly;
	 	 
	“Distributions”	means with respect to any period, such amount of profit
  distributions and allocations given or to be given to the shareholders of the
  Joint Venture in an amount as may be reasonably determined by the board of
  directors of the Joint Venture or required or authorized in accordance with the
  relevant laws of the PRC;
	 	 	 
	 “Employment
  Agreements”	means the Employment Agreements to be entered
  into between the Joint Venture and each of the Key Employees to be negotiated
  by the Vendor and the Purchaser in good faith and the terms of which are to
  be mutually agreed upon by the parties on or before the Conditions Precedent
  Date subject at all times that the final version as executed or to be
  executed shall be in such form and substance satisfactory to the Purchaser;
	 	 
	“EMS Distribution
  Agreement”	means the
  distribution agreement to be entered into between the Purchaser and the Vendor
  whereby the
  Purchaser shall grant the Vendor rights to distribute and
  market EMS in such territory agreeable to the Purchaser and to be negotiated by the Vendor and the
  Purchaser in good faith and the terms of which are to be mutually agreed upon
  by the parties subject at all times that the final version as executed or to
  be executed shall be in such form and substance satisfactory to the Purchaser;

 

	“EMS Software Agreement”	means the software development agreement to be
  entered into between the Purchaser and the Vendor in respect of the
  development of e-commerce and EMS software and application to be negotiated
  by the Vendor and the Purchaser in good faith and the terms of which are to
  be mutually agreed upon by the parties subject at all times that the final
  version as executed or to be executed shall be in such form and substance
  satisfactory to the Purchaser;
	 	 	 
	“EMS License”	means the software license to be granted by
  the Purchaser in favour of the Vendor in respect of those software developed
  in accordance with the EMS Software Agreement to be negotiated by the Vendor
  and the Purchaser in good faith and the terms of which are to be mutually
  agreed upon by the parties subject at all times that the final version as
  executed or to be executed shall be in such form and substance satisfactory
  to the Purchaser;
	 	 	 
	“Encumbrance”	means and includes any option, right to
  acquire, right of pre-emption, mortgage, charge, pledge, lien, hypothecation,
  title retention, right of set off, claim or counterclaim, trust arrangement
  or other security or encumbrance or any equity or restriction;
	 	 
	“Escrow Agent”	means such person mutually acceptable to the
  Purchaser and the Vendor and to be appointed by the parties hereto to
  facilitate the escrow arrangements set out in this Agreement;
	 	 	 
	“Escrow Agreement”	means the escrow agreement in to be entered
  into between the Vendor, the Purchaser and the Escrow Agent in respect of the
  Consideration Shares pursuant to Clause 7 to be negotiated by the Vendor and
  the Purchaser in good faith and the terms of which are to be mutually agreed
  upon by the parties on or before the Conditions Precedent Date subject at all
  times that the final version as executed or to be executed shall be in such
  form and substance satisfactory to the Purchaser;
	 	 
	“Extinguishment Agreement”	means the indemnity agreement to be entered
  into by the Vendor and the Joint Venture in respect of the liabilities and
  debts attributable to the Injected Business being transferred to the Joint
  Venture to be negotiated by the Vendor and the Purchaser in good faith and
  the terms of which are to be mutually agreed upon by the parties on or before
  the Conditions Precedent Date subject at all times that the final version as
  executed or to be executed shall be in such form and substance satisfactory
  to the Purchaser;
	 	 	 
	“Government Contract and Recognition”	means those agreements (to be negotiated by
  the Vendor and the Purchaser in good faith and to be mutually agreed upon by
  the parties on or before the Conditions Precedent Date) entered into between
  the Vendor and/or its Subsidiaries with such PRC government authorities
  concerning the Holley Business which are to be transferred and assigned to
  the Joint Venture by the Vendor;
	 	 
	"Hong Kong”	Hong Kong Special Administrative Region of the
  PRC;

 

	“HK$”	Hong Kong dollars;
	 	 	 
	"Intellectual Property”	patents, trade marks, service marks,
  registered designs, utility models, applications for any of the foregoing and
  the right to apply for any of the foregoing in any part of the world,
  copyright, inventions, confidential information, know–how and business
  names and any similar rights situated in any country; and the benefit
  (subject to the burden) of any and all licenses in connection with any of the
  foregoing;
	 	 	 
	“JV Agreement”	means the PRC Sino foreign co-operative joint
  venture agreement and the related Memorandum of Association and Articles of
  Association to be entered into (subject to the approval of the Purchaser) on
  or before the Conditions Precedent Date either (i) between the Company and
  the Vendor if in relation to the BVI JV Structure; or (ii) between the Vendor
  and such third party used to form the Joint Venture if in relation to the
  Holley JV Structure, including its variation,
  modification and supplement necessitated by the requirements of the PRC
  approving authority and approved by the Purchaser;
	 	 
	“Key Employees”	means key employees mutually agreed upon by
  the Purchaser and Vendor on or before the Condition Precedent Date and who
  shall be employed by the Joint Venture;
	 	 	 
	“Memorandum of Association”	means the memorandum of association and the
  terms thereof of the Joint Venture to be negotiated by the Vendor and the
  Purchaser in good faith and the terms of which are to be mutually agreed upon
  by the parties on or before the Conditions Precedent Date subject at all
  times that the final version as executed or to be executed shall be in such
  form and substance satisfactory to the Purchaser;
	 	 	 
	“Net Income”	means, for any period, all revenues and income
  of any kind or description received during such period by the Joint Venture
  minus all costs, expenses and taxes paid (whether income, corporate, sales or
  otherwise to the relevant tax authorities) or incurred during such period by
  the Joint Venture as may be determined in accordance with generally accepted
  accounting principles in the United States;
	 	 	 
	“Net Revenue”	means, for any period, all revenues and income
  of any kind or description received during such period by the Joint Venture
  as may be determined in accordance with generally accepted accounting
  principles in the United States;
	 	 	 
	“PACT Shares”	ordinary shares of US$0.0001 each in the
  capital of the Purchaser;
	 	 
	“Person”	means any individual, partnership,
  corporation, trust, unincorporated association, joint venture, limited
  liability company or other entity or any government, governmental agency or
  political subdivision;

 

	“PRC”	the People’s Republic of China;
	 	 	 
	"Purchaser’s Solicitors”	Preston Gates & Ellis, 10th
  Floor, Hutchison House, 10 Harcourt Road, Central, Hong Kong (Attn : Mr.
  Keith  A. Lee);
	 	 	 
	“Release Criteria”	means the basis and conditions by which the
  Escrow Agent shall release the relevant portion of Consideration Shares to
  the Vendor on the Release Date pursuant to the schedule in Clause 7.1;
	 	 	 
	“Release Date”	means the relevant date by which the Escrow
  Agent, pursuant to the Escrow Agreement, shall release such portion of
  Consideration Shares to the Vendor in accordance with the schedule in Clause
  7.1 and upon the Release Criteria being satisfied;
	 	 
	“Reserves”	means, with respect to any period, the amount
  of funds set aside, or amounts allocated during such period, for
  (a) funding reserves for contingent liabilities, working capital,
  repairs, replacements, renewals, and (b) paying taxes, insurance, debt
  service, or other costs or expenses incident to the ownership or operation of
  the Joint Venture;
	 	 	 
	"Sale Shares"	means either (i) the ordinary shares of  the Company (being 100% of the existing
  issued and allotted share capital on a fully diluted basis) such shares being
  beneficially owned by and registered in the name of the Vendor if in relation
  to the BVI JV Structure which may be used as the basis of the Sale and
  Purchase in accordance with the terms of this Agreement; or (ii) 51% of the
  entire legal and equity interest of and in the Joint Venture if in relation
  to the Holley JV Structure which may be used as the basis of the Sale and Purchase
  in accordance with the terms of this Agreement;
	 	 	 
	"Subsidiaries"	means in respect of a Person, a subsidiary of
  another company (or shall deemed to be), if :-
	 	 	 
	 	(a)	that other company (i) controls the
  composition of the board of directors of such Person; or (ii) controls more
  than half of the voting power of such Person; or (iii) holds more than half
  of the issued share capital of such Person (excluding any part of it which
  carries no right to participate beyond a specified amount in a distribution
  of either profits or capital); or
	 	 	 
	 	(b)	such Person is a subsidiary of any company
  which is that other company's subsidiary;
	 	 	 
	“Supply of Goods and Services Agreement”	means the agreement to be entered into between
  the Joint Venture and the Vendor for the supply of goods and services by the
  Joint Venture to the Vendor in order for the Joint Venture to achieve the Net
  Revenue and Net Income warranted by the Vendor in Clause 7 to be negotiated
  by the Vendor and the Purchaser in good faith and the terms of which are to
  be mutually agreed upon by the parties on or before the Conditions Precedent
  Date subject at all times that the final version as executed or to be
  executed shall be in such form and substance satisfactory to the Purchaser;
				

 

	"tax" and "taxation"	includes all forms of tax, levy, duty, charge,
  fee, contribution, impost or withholding of any nature now or hereafter
  imposed, levied, collected, withheld or assessed by a local, municipal,
  governmental, state, federal or other body or authority in Hong Kong or
  elsewhere (including any fine, penalty, surcharge or interest in relation
  thereto);
	 	 	 
	“US$”	United States dollars;
	 	 	 
	“United States”	United States of America;
	 	 	 
	"Warranties"	the representations, warranties and
  undertakings contained or referred to in Clause 6.
	 	 	 

 

	1.3	References in this Agreement to ordinances and
  to statutory provisions shall be construed as references to those ordinances
  or statutory provisions as respectively as modified (on or before the date
  hereof) or re–enacted (whether before or after the date hereof) from
  time to time and to any orders, regulations, instruments or subordinate
  legislation made under the relevant ordinances or provisions thereof and
  shall include references to any repealed ordinance or provisions thereof
  which has been so re–enacted (with or without modifications).
	 	 
	1.4	The headings are for convenience only and
  shall not affect the construction of this Agreement.
	 	 
	1.5	All representations, undertakings, warranties,
  indemnities, covenants, agreements and obligations given or entered into by
  more than one person are given or entered into jointly and severally.
	 	 	 
	1.6	Any document referred to herein as being
  "in the agreed terms" shall be in a form already agreed between the
  Solicitors acting for the parties hereto.
	 	 	 
	1.7	Except where the context otherwise requires
  words denoting the singular include the plural and vice versa; words denoting
  any one gender include all genders; words denoting persons include
  incorporations and firms and vice versa.
	 	 	 
	1.8	Reference to clauses, sub–clauses,
  paragraphs and schedules are (unless the context requires otherwise) to
  clauses, sub–clauses, paragraphs and schedules of this Agreement.
	 	 	 
	1.9	The expressions "the Vendor", the
  “Company” and “the Purchaser” shall unless the context requires otherwise
  shall include their successors, personal representatives and permitted
  assigns.

 

	2A.	FORMATION OF JOINT VENTURE AND STRUCTURE
	 	 	 
	2A.1	The Vendor hereby agrees that it shall within
  45 days from the date hereof (“45 Day Period”) use its best endeavors to
  procure the formation of the Joint Venture under the Holley JV Structure
  (such formation and structure is subject at all times to the approval in
  writing of the Purchaser in its sole discretion) and such that the Purchaser
  shall be able to, on Completion, directly purchase, own and hold 51% of the
  entire legal and beneficial interest of and in the Joint Venture in
  accordance with the terms of this Agreement. 
  Such 51% equity interest of and in the Joint Venture shall be the
  subject of the Sale Shares of this Agreement to be sold by Vendor to the
  Purchaser free from all Encumbrances;
	 	 	 
	2A.2	In the event that Vendor is unable to procure
  the formation of the Joint Venture under the Holley JV Structure either
  within the 45 Day Period or with the approval of the Purchaser such that the
  Purchaser shall be able to, on Completion, directly purchase, own and hold
  51% of the entire legal and beneficial interest of and in the Joint Venture,
  then the Vendor agrees that it shall on the expiry of the 45 Day Period or
  disapproval by the Purchaser in writing (whichever is earlier) :-
	 	 	 
	 	(a)	Within 5 days immediately after the 45 Day
  Period shall and/or shall procure to be incorporated the Company in order to
  facilitate the formation of the Joint Venture in accordance with the BVI JV
  Structure;
	 	(b)	The primary
  objective of the Company and its Subsidiaries is to carry on the business of
  holding the Sale Shares and participate in the management and affairs of the
  Joint Venture.
	 	(c)	The Vendor shall procure that the Company
  shall have an authorized share capital of US$100,000 divided into 10,000,000
  ordinary shares of [US$0.01] each;
	 	(d)	The Vendor shall be the first and only
  shareholders and directors of the Company holding one (1) share to be fully
  paid up which shall represent the entire issued share capital of the Company
  on a fully diluted basis before and after Completion;
	 	(e)	The terms and conditions of the Company’s
  memorandum and articles of association shall be those as agreed to and
  approved by the Purchaser in writing;
	 	(f)	All costs and expenses (including legal costs)
  in respect of the formation and incorporation of the Company shall be borne
  by the Vendor absolutely.
	 	 	 
	2A.3	In the event that Holley JV Structure is not
  agreed upon or adopted to be used by the Purchaser within the 45 Day Period
  to facilitate the Sale and Purchase contemplated herein this Agreement, then
  the BVI JV Structure shall be deemed to be the agreed structure to be used by
  the parties to the facilitate the Joint Venture and sale of the 51% equity
  interest in the Joint Venture to the Purchaser.  The entire issued share capital of and in the Company
  representing the 51% beneficial and legal ownership in the Joint Venture shall
  be the subject of the Sale Shares to be sold to and purchased by the
  Purchaser from the Vendor herein.
	 	 
	2.	SALE OF SHARES	 
	 	 	 
	2.1	Subject to the
  fulfilment of all the conditions in Clause 4.1, the Vendor shall sell
  as beneficial owner and the Purchaser shall purchase the Sale Shares free
  from all liens, charges and encumbrances and together with all rights now or
  hereafter attaching thereto including all dividends and distributions
  declared, made or paid on or after the date of this Agreement in respect of
  the Sale Shares.
				

 

	2.2	The Vendor hereby waives and agrees to procure
  before Completion the irrevocable waiver of pre–emption rights and any
  other restrictions whatsoever on the transfer or issue which may exist in
  relation to the Sale Shares howsoever derived.	 
	 	 	 	 
	3.	CONSIDERATION	 
	 	 	 	 
	3.1	The Consideration for the Sale Shares shall be
  satisfied by the Purchaser upon Completion by the Purchaser issuing and
  allotting to the Vendor the Consideration Shares.	 
	 	 	 	 
	4.	CONDITIONS	 
	 	 	 
	4.1	This Agreement is conditional upon:	 
	 	 	 	 
	 	4.1.1	the Purchaser being satisfied with the results
  of financial and legal due diligence review to be conducted by it on the
  Vendor Group, the Company (if applicable) and the Injected Business;	 
	 	 	 	 
	 	4.1.2	the receipt of the Vendor of all necessary
  consents, approvals and authorisations having been obtained from the
  applicable PRC approving state authorities (“Main Approving Authority”) and the State Administration for
  Industry and Commerce and any other approving authority, if necessary (“Other Approving Authorities”) in
  connection with the purchase of the Sale Shares by the Purchaser, the
  establishment and incorporation of the Joint Venture, the implementation of
  all transactions contemplated under the JV Agreement and the Extinguishment
  Agreement and all other matters incidental thereto and their certified copies
  having been provided to the Purchaser and which are all in form and substance
  satisfactory to the Purchaser;	 
	 	 	 	 
	 	4.1.3	the performance in full by the Vendor of its obligations
  contained in Clause 6.2;	 
	 	 	 	 
	 	4.1.4	the formation
  of the Joint Venture based on the Holley JV Structure which is in form and
  substance satisfactory to the Purchaser and as set out it Clause 2A.1 or
  formation of the Joint Venture in accordance with the BVI JV Structure which
  is in form and substance satisfactory to the Purchaser.	 
	 	 	 	 
	 	4.1.4A	If the BVI JV Structure is adopted in
  accordance with Clause 2A, the establishment and incorporation of the Company
  by the Vendor (to the satisfaction of the Purchaser) including the
  fulfillment of all those matters set out in Clause 2A.2.	 
	 	 	 	 
	 	4.1.5	the establishment and incorporation of the
  Joint Venture to the satisfaction (in writing) of the Purchaser, including
  the execution of following documents in the form and based on the terms and
  conditions that have been approved by and are satisfactory to the Purchaser
  and with approval of the directors of the Purchaser at a meeting of
  directors:	 
	 	 	 	 
	 	 	(a)	JV Agreement;	 
	 	 	(b)	Articles of Association of the Joint Venture	 
	 	 	(c)	Memorandum of Association of the Joint
  Venture;	 
	 	 	(d)	Extinguishment Agreement	 
	 	 	 	 
	 	4.1.6	save for those matters required to be
  performed by the parties at Completion, all steps and actions required to be
  taken by the Vendor to give effect to the purchase of the Sale Shares by the
  Purchaser and the transfer of the business of the Vendor to the Joint Venture
  in accordance with the JV Agreement and the Extinguishment Agreement having
  been completed;	 
	 	 	 	 
	 	4.1.7	the Purchaser
  having received :-	 
	 	 	 	 
	 	 	(a)	a legal opinion
  from a legal adviser in the PRC acceptable and satisfactory to the Purchaser
  confirming, inter alia, (i) the legality, validity and enforceability of the
  JV Agreement, the Extinguishment Agreement, the Employment Agreements, the
  PACT-Holley Agreements (as defined below and to be entered into by the Vendor
  pursuant to Clause 7), Supply of Goods and Services Agreement, and any other
  agreements to be entered into by any of the Vendor or the Joint Venture
  pursuant to or as contemplated under this Agreement; (ii)  that the Sale Shares can be transferred to
  and owned by the Purchaser in the manner contemplated herein; (iii) the
  consents, approvals and authorisations referred to in Clause [4.1.2]
  and the matters referred to in Clause [4.1.4] having been obtained,
  performed and completed; and	 
	 	 	 	 	 
	 	 	(b)	a legal opinion
  (in form and substance satisfactory to it from a legal adviser in each of the
  jurisdictions the Company (if applicable) and the Vendor are incorporated
  confirming, inter alia (i) the legality, validity and enforceability of this
  Agreement and the transactions contemplated herein in its jurisdiction of
  incorporation and (ii) that the Company and the Vendor (as applicable) are
  validly existing and duly incorporated and are of good standing in its
  jurisdiction of incorporation.	 
	 	 	 	 	 
	 	4.1.8	the Vendor
  having duly executed, delivered and exchanged (or procured to be executed,
  delivered and exchanged) the following agreements:-	 
	 	 	 	 
	 	 	(a)	The Employment
  Agreement (in such form and upon such terms mutually agreed upon by the
  Purchaser and Vendor) duly executed by the Joint Venture and each of the Key
  Employees;	 
	 	 	(b)	The Supply of
  Goods and Services Agreement (in such form and upon such terms mutually
  agreed upon by the Purchaser and Vendor) duly executed by the Vendor and the
  Joint Venture; and	 
	 	 	(c)	The Escrow
  Agreement (in such form and upon such terms mutually agreed upon by the
  Escrow Agent, the Purchaser and Vendor) duly executed by the Escrow Agent,
  the Purchaser and the Vendor.	 
	 	 	 	 	 
	 	 	4.1.9	The Vendor
  having obtained certification from the Auditors stating that proforma
  financial results of the Joint Venture as set out in Section A(2) (a) (2) of
  the Agreement in Principle dated 11th June 2001 and signed between the Purchaser and the Vendor are suitable and appropriate for inclusion in a Form
  8K filing of the
  Purchaser with the Securities and Exchange Commission in the
  United States;
	 	 	 	 
	 	 	4.1.10	The Vendor
  having made reasonable efforts to duly directly or indirectly transfer and
  assign the Government
  Contracts and Recognition and Operational Contracts (the “Holley Assignments”) to the Joint Venture and obtained all necessary licenses and approvals
  from all relevant authorities in the PRC and in accordance with all PRC rules,
  regulations and laws;
	 	 	 	 
	 	 	4.1.11	All necessary consents, approvals and
  authorisations having been obtained from all applicable authorities in the
  PRC by the Vendor in respect of the establishment and incorporation of the
  Joint Venture and the operation of its business and the Company or the
  Purchaser (as the case may be) becoming the foreign investor in the Joint
  Venture;
	 	 	 	 
	 	 	4.1.12	The Vendor having undertaken in writing to the
  Company (such written undertaking to be in form and substance satisfactory to
  the Purchaser) that it will bear and indemnify the Company and the Joint
  Venture against all losses, damages, claims and liabilities suffered or
  incurred by each or either of them which arises, whether directly or
  indirectly, from any breach or non-compliance by the Joint Venture or the
  Vendor of any applicable laws, rules, regulations, orders, directives or
  policies (whether having the force of law or otherwise) prior to the Company
  effectively acquiring a fifty one per cent (51%) equity interest in the Joint
  Venture (including without limitation any breach or non-compliance in
  connection with the establishment of the Joint Venture, the operation of its
  business and any transfer of interests in the Joint Venture by any existing
  or former shareholders of the Joint Venture);
	 	 	 	 
	 	 	4.1.13	evidence satisfactory to the Purchaser having
  been provided to it showing that the Company or the party owning the Sale
  Shares (as the case may be) and all other shareholders of the Joint Venture
  have made capital contributions to the Joint Venture in the manner provided
  by its Memorandum of Association and Article of Association or by any
  certificates, licenses, consents or permits granted to the Joint Venture in
  respect of its establishment and/or operation;
	 	 	 	 
	 	 	4.1.14	such documents and other evidence as the
  Purchaser may request having been provided to it showing that the Joint
  Venture is legally and properly established and in existence and that the
  Company has effectively acquired a 51 per cent equity interest in the Joint
  Venture in accordance with all applicable laws, rules and regulations;
	 	 	 	 
	 	 	4.1.15	the parties hereby agree that the Vendor shall
  give warranties and representations (in addition to those Warranties set out
  in Clause 6) to the Purchaser concerning the state, affairs, business and
  matters of each of the Vendor, Company (if applicable), Joint Venture.  In this regard, it shall be a condition
  precedent to Completion that the Vendor shall make such warranties and
  representations in writing to the Purchaser in form and substance mutually
  acceptable to the Vendor and Purchaser concerning the state, affairs,
  business and matters of each of the Vendor, Company (if applicable), Joint
  Venture as at Completion and deliver the same, duly executed, to the Purchaser.
	 	 	 	 
	 	 	4.1.16	save for Completion, all steps and actions
  required to be taken by the parties hereto and the Company (if applicable) to
  give effect to the sale and purchase of the Sale Shares hereunder and all
  other transactions contemplated hereunder having been taken and completed;
	 	 	 	 
	 	 	4.1.17	if required, the relevant stock exchange,
  government and securities authority and regulator in the United States
  granting listing of and permission to issue and allot the Consideration
  Shares (including the escrow arrangement as stated in Clause 7) which fall to
  be issued in accordance with the terms herein;
	 	 	 	 
	 	 	4.1.18	if required, the shareholders of the Purchaser
  at a meeting of members approving this Agreement, the purchase of the Sale
  Shares, creating and giving authority for the issue of the Consideration
  Shares to the Vendor, the implementation of the transactions contemplated
  hereunder and all other matters incidental hereto in accordance with the
  provisions of the Purchaser’s articles of association and  by-laws and such rules, regulations and
  laws in force from time to time in the United States and which apply to the
  Purchaser;
	 	 	 	 
	 	 	4.1.19	if required, a resolution at a meeting of
  Directors of the Purchaser approving this Agreement,  the PACT Assignments, the purchase of the
  Sale Shares, creating and giving authority for the issue of the Consideration
  Shares to the Vendor, the implementation of the transactions contemplated
  hereunder and all other matters incidental hereto in accordance with the
  provisions of its articles of association and  by-laws and such rules, regulations and laws in force from time
  to time in the United States and which apply to the Purchaser;
	 	 	 	 
	 	 	4.1.20	all other matters as may be reasonably
  required or may be deemed reasonably necessary by the Purchaser and/or the
  Vendor (as the case may be) in order to complete all of the transactions
  contemplated herein this Agreement.
	 	 	 	 
	 	4.2	The Vendor and the Purchaser shall use their
  respective endeavors to ensure that the conditions set out in Clause 4.1
  shall be fulfilled by the date set out in Clause 4.3.  The Purchaser may in its sole and absolute
  discretion, waive any of the conditions set out in Clauses 4.1.1 to 4.1.16
  prior to Completion.
	 	 	 
	 	4.3	If the Vendor is unable to comply with and
  fulfill any of the conditions set out in Clauses 4.1.2 to 4.1.16 and 4.1.20
  (save for the event of termination by either party pursuant to Clause 4.4
  below) or has failed to procure, provide, execute, deliver or perform such
  documents, acts or deeds it is obligated to perform in Clauses 4.1.2 to
  4.1.16 and 4.1.20 (save for the event of termination by either party pursuant
  to Clause 4.4 below) to the full satisfaction of the Purchaser and with the
  approval of the directors of the Purchaser at a meeting of directors on or
  before 30th October 2001 (“Conditions Precedent Date”),
  the Purchaser may in its sole discretion:
	 	 	 	 
	 	 	(a)	defer the
  Conditions Precedent Date and Completion Date to a date not later than
  November 30, 2001 (and so that the provisions of this Clause 4 shall
  apply to fulfilment of the Conditions as so deferred and the Completion and
  Completion Date as set out in Clause 5 shall be deferred accordingly); or
	 	 	 	 
	 	(b)	proceed to
  Completion so far as practicable but without prejudice to the rights of the
  Purchaser; or
	 	 	 
	 	(c)	rescind this
  Agreement, without prejudice to any rights the Purchaser may have in respect
  of the Vendor’s non-compliance or non-fulfilment of the conditions set out in
  Clause 4.1.
	 	 	 
	 	In the event
  that this Agreement is rescinded by the Purchaser pursuant to Clause 4.3 (c)
  above, then the Vendor shall pay to the Purchaser the sum of US$500,000
  immediately upon rescission by the Purchaser thereafter payment neither party
  shall have any claim against or liability to the other party. The Vendor and
  Purchaser agree that the payment to the Purchaser for the sum of US$500,000
  shall be waived in the event that the conditions outlined in Clause 4.1.2 and
  Clause 4.1.11 respectively are not fulfilled by the Vendor.
	 	 
	4.3A	If the Purchaser is unable to comply with and
  fulfill any of the conditions set out in Clauses 4.1.17 to 4.1.20 (save for
  the default or cause of the Vendor or event of termination by either party
  pursuant to Clause 4.4 below) or has failed to procure, provide, execute,
  deliver or perform such documents, acts or deeds it is obligated to perform
  in Clauses 4.1.17 to 4.1.20 (save for the default or cause of the Vendor) on
  or before the Conditions Precedent Date, the Vendor may in its sole
  discretion:
	 	 	 
	 	(a)	defer the
  Conditions Precedent Date and Completion Date to a date not later than
  November 30, 2001 (and so that the provisions of this Clause 4 shall
  apply to fulfilment of the Conditions as so deferred and the Completion and
  Completion Date as set out in Clause 5 shall be deferred accordingly); or
	 	 	 
	 	(b)	proceed to
  Completion so far as practicable but without prejudice to the rights of the
  Vendor; or
	 	 	 
	 	(c)	rescind this
  Agreement, without prejudice to any rights the Vendor may have in respect of
  the Purchaser’s non-compliance or non-fulfilment of the conditions set out in
  Clause 4.1.
	 	 	 
	 	In the event
  that this Agreement is rescinded by the Vendor pursuant to Clause 4.3A(c)
  above, then the Purchaser shall pay to the Vendor the sum of US$500,000
  immediately upon rescission by the Vendor and thereafter payment neither
  party shall have any claim against or liability to the other party.
	 	 	 
	4.4	The parties hereto agree that this Agreement
  may be terminated at any time (by written notice served on the other party)
  on or before 30th October 2001 (with immediate effect and
  thereafter no party to this Agreement shall have any claim against or
  liability to the other party save in respect of any antecedent breaches of
  this Agreement and subject to the payment of such amounts to such party as
  set out below) by either the Vendor or the Purchaser upon the resolution of
  the board of directors at a meeting of directors of either the Vendor or the
  Purchaser (as the case may be).  It is
  acknowledged by the parties hereto that the matters set out in this Agreement
  leading up to Completion, including those set out in Clause 4.1 shall incur a
  considerable amount of time, costs and expenses on the part of both parties
  and in this regard it is hereby further agreed by all parties hereto that :-
	 	 
	 	(i)	in the event that this Agreement is terminated
  by the board of directors at a meeting of directors of the Purchaser or the
  Vendor (as the case may be), following the approval of this Agreement by the
  board of the Purchaser and by the board of the Vendor, but prior to the
  voting of this Agreement  by the
  shareholders of the Purchaser and/or the shareholders of the Vendor on or
  before 30th October 2001 (if required), then the terminating party
  shall pay to the other party the sum of US$250,000 within three days of a
  termination notice being served on the other party;
	 	 	 
	 	(ii)	In the event the shareholders at a meeting of
  shareholders (if required) of the Purchaser or the Vendor (as the case may
  be) do not approve this Agreement and the transactions contemplated herein,
  the first party whose shareholders at a meeting of shareholders (if required)
  has failed to obtain the relevant approval shall pay to the other party sum
  of US$250,000 within three days of the relevant shareholders meeting.
	 	 	 
	 	(iii)	in the event that this Agreement is terminated
  by the board of directors at a meeting of directors of the Purchaser or the
  Vendor (as the case may be), following the approval of this Agreement by the
  board of the Purchaser, and after the approval of this Agreement  by the shareholders of  the Purchaser on or before 30th
  October 2001 (if required), then the terminating party shall pay to the other
  party the sum of US$500,000 within three days of a termination notice being
  served on the other party.
	 	 	 
	 	For the purpose of guaranteeing the payment of
  the damages referred to in Clause 4.3 and 5.4 (if any) or break-up fees by
  the Vendor to the Purchaser (if any) as set out above, the Vendor hereby
  agrees to procure that its Subsidiary, Holley Holding (U.S.A.) Ltd  (“China Holley USA”), a company
  incorporated in California with registered office address at 131 South Maple
  Avenue, Unit 6, South San Francisco, CA 94080, shall within 3 business days
  from the date of this Agreement, duly execute and deliver a deed of guarantee
  (in form and substance acceptable to the Purchaser) of payment for the
  fulfillment and payment of the amounts set out in and in accordance with this
  Clauses 4.4, 4.3 or 5.4 in favor of the Purchaser and shall procure that China
  Holley USA shall maintain a minimum balance of US$500,000 in a bank account
  in the United States and send such details of bank account and bank
  statements to the Purchaser immediately upon request.
	 	 	 
	4.5	The Vendor and the Company undertakes to disclose
  in writing to the Purchaser anything which will or may prevent any of the
  conditions from being satisfied at or prior to Completion, as applicable,
  immediately upon the Vendor and/or the Company becoming aware of such a
  situation.
	 	 	 
	4.6	Until Completion, the Vendor and the Company
  shall procure that the Purchaser, its agents and representatives are given
  reasonable access to such documents relating to the Joint Venture, the
  Injected Business, the Vendor Group, the Company and the Subsidiaries, as the
  Purchaser shall request.
	 	 
	
5.	COMPLETION
	 	 	 
	5.1	Subject to the terms of this Agreement,
  Completion shall take place pursuant to this clause at such place and
  location to be mutually agreed upon by the Purchaser and the Vendor on or before the 31st October 2001 or such later date as
  may be stipulated in accordance with Clause 4.3 (a) or 4.3A (a), as the case
  may be (“the
  Completion Date”).  The
  parties shall agree on the place and location where Completion shall take
  place on or before 31st October 2001 and failing such agreement
  then the place and location where Completion shall take place shall be in
  Hong Kong at the office of the Purchaser’s Solicitors.
	 	 	 
	5.2	On Completion the Vendor shall:
	 	 
	 	(a)	cause to be delivered to the Purchaser:
	 	 	 
	 	 	(i)	if the same
  shall not have been provided prior to Completion, certified copies of all
  consents, approvals and authorisations referred to in Clause 4.1. and
  such other documents and evidence showing the fulfilment of the conditions by
  the Vendor of the applicable conditions set out in Clause 4.1 ;
	 	 	 
	 	 	(ii)	if the same
  shall not have been provided prior to Completion, certified copies of the
  documents referred to in Clauses 4.1;
	 	 	 
	 	 	(iii)	if the same
  shall not have been provided prior to Completion, certified copies of the
  business licence of the Joint Venture the JV Agreement (in its final form as
  approved by the Main Approving Authority) duly executed by the Company and
  the Vendor and the final version of the Memorandum of Association and
  Articles of Association of the Joint Venture (in the agreed terms and in its
  final form duly approved by the Main Approving Authority) of the Joint
  Venture;
	 	 	 
	 	 	(iv)	if the same
  shall not have been provided prior to Completion, certified copies of all
  necessary resolutions of the board of directors and the shareholders of the
  Vendor approving the signing of the JV Agreement  and the Extinguishment Agreement, all other documents required
  by the Main Approving Authority and all those other agreements set out in
  Clause 4.1;
	 	 	 	 
	 	 	(v)	if required and
  if applicable, the original Certificate of Good Standing of the Company and
  the consent letter (if applicable) issued by the Vendor to the BVI agent for
  release of information to the Purchaser and the registration of the Sale
  Shares in favour of the Purchaser together with the duly executed
  instrument(s) of transfer of the Sale Shares by the registered holder(s)
  thereof in favour of the Purchaser or as it may direct together with the
  relative certificates;
	 	 	 	 
	 	 	(vi)	if required and
  if this transaction is on the basis of the Holley JV Structure, the duly
  executed instrument(s) of transfer of the Sale Shares by the registered
  holder(s) thereof in favour of the Purchaser or as it may direct together
  with the relative certificates together within any other documents or deeds
  which shall prove and render the Purchaser the lawful legal and beneficial
  owner of 51% of the entire equitable interest of and in the Joint Venture;
	 	 	 	 
	 	 	(vii)	if applicable,
  resolutions of the board of directors of the Company approving the transfer
  of the Sale Shares by the Vendor to the Purchaser or as it may direct;
	 	 	 	 
	 	 	(viii)	such other documents as may be reasonably
  required to give to the Purchaser good title to the Sale Shares free from all
  claims, liens, charges, equities and encumbrances and third party rights of
  any kind and to enable the Purchaser (or as it may nominate) to become the
  registered holder thereof;
	 	 	 	 
	 	 	(ix)	if applicable,
  all statutory and other books and records (including financial records) duly
  written up to date of the Company and its certificate of incorporation,
  common seal and any other papers, records and documents of the Company;
	 	 	 	 
	 	 	(x)	the Completion
  Accounts;
	 	 	 
	 	 	(xi)	if applicable,
  a certified copy of the resignation of all existing directors of the Company;
	 	 	 
	 	 	(xii)	The certificate referred to in Clause 4.1.9.
	 	 	 
	 	(b)	if requested by
  the Purchaser, cause such person(s) as the Purchaser may nominate to be
  validly appointed as additional directors of the Company and cause the
  existing directors of the Company to resign with effect from the Completion
  Date.
	 	 	 
	5.3	On Completion
  and subject to the simultaneous performance of the obligations of the Vendor
  contained in Clause 5.2, the Purchaser shall cause to be delivered to
  the Escrow Agent the
  certificate(s) for such number of Consideration Shares issued  and credited as fully paid, such shares
  upon issue to rank pari passu (save and subject to any restrictions on sale
  and transfer of the Consideration Shares by the Purchaser as well as those
  restrictions set out in Clause 7 hereof) with the existing Consideration
  Shares registered in the name of the Vendor or Holley Holding (U.S.A.) Ltd.
	 	 	 
	 	In addition, Purchaser should deliver to
  Vendor:
	 	a)	certified copy of Board resolution approving
  this agreement and the issue and allotment of consideration shares and
  certified copy of share holders resolution certified by any director of the
  Purchaser ,
	 	b)	certified copy of the receipt of the escrow
  agent of the consideration shares pursuant to this clause 5.3, and ,
	 	c)	certified copy of Board resolution approving
  the appointment of the three directors named by the Vendor as directors of
  the Board of Purchaser. The total number of directors of the Purchaser as
  outlined in the by laws is 9.
	 	d) 	If required, the Purchaser should deliver to
  the Vendor certified copy of approvals of the  relevant stock exchange, government and securities authority
  and regulator in the United States granting listing of and permission to
  issue and allot the Consideration Shares.
	 	 	 
	5.4	If any party
  hereto shall be unable to comply with any of its obligations under this Clause
  5 on the Completion Date, the party not in default may :-
	 	 
	 	(a)	defer
  Completion to a date not more than 28 days after the Completion Date (and so
  that the provisions of this Clause 5 shall apply to Completion as so
  deferred); or
	 	 	 
	 	(b)	proceed to
  Completion so far as practicable but without prejudice to the rights of the
  non-defaulting party; or
	 	 	 
	 	(c)	rescind this
  Agreement, without prejudice to any rights the non-defaulting party may have
  in respect of such default.
	 	 	 
	 	In the event
  that this Agreement is rescinded pursuant to Clause 5.4(c), then the
  defaulting party shall (in addition and without prejudice to any other rights
  or claims for damages the non-defaulting may have against the defaulting
  party) pay to the non-defaulting party the sum of US$500,000 immediately upon
  rescission by the non-defaulting party
	 	 	 
	6.	REPRESENTATIONS, WARRANTIES AND
  UNDERTAKINGS
	 	 
	6.1	Representations,
  Warranties and Undertakings of Both the Vendor and  Purchaser
	 	 	 
	 	6.1.1.	Each of the
  Warranties shall be deemed repeated by the Vendor and Purchaser   during the period from the date of this
  Agreement up to and including the day of Completion with reference to the
  facts and circumstances then subsisting.
	 	 	 
	 	6.1.2.	Each of the
  Warranties is without prejudice to any other Warranty and, except where
  expressly stated otherwise, no provision contained in this Agreement shall
  govern or limit the extent or application of any other provision.
	 	 	 
	 	6.1.3.	The Warranties
  shall survive Completion insofar as the same are not fully performed on
  Completion.
	 	 	 
	 	6.1.4.	The Vendor and
  the Purchaser hereby undertake to indemnify and keep indemnified the other party
  against any loss or liability suffered by the as a result of or in connection
  with any breach of any of the Warranties and against any costs and expenses
  incurred in connection therewith provided that the indemnity contained in
  this Clause shall be without prejudice to any other rights and remedies of
  either party  in relation to any such
  breach.
	 	 	 
	6.2	Representations,
  Warranties and Undertakings of the Vendor:
	 	 
	 	6.2.1	The Vendor
  hereby warrants and represents that:
	 	 	 
	 	 	(a)	it has the full power, authority and legal
  right to enter into this Agreement and this Agreement constitutes binding
  obligations on it in accordance with its terms;
	 	 	 
	 	 	(b)	the execution and delivery of this Agreement
  and the consummation of transactions contemplated hereby will not result in
  the breach and/or cancellation and/or termination of any of the terms or
  conditions of or constitute a default under any agreement, commitment or
  other instrument to which it is a party or by which it or its property  or assets may be bound or affected or
  violate any law or any rule or regulation of any administrative agency or
  governmental body or any court order, writ, injunction or decree of any court,
  administrative agency or governmental body affecting it; and
	 	 	 	 
	 	 	(c)	there has been no material adverse change in
  the assets, as a whole, or the business, prospects, financial condition or
  result of operations of the Vendor since its last date of audited financial
  statement. For the purpose of this Clause 6.2, “material adverse change”
  shall mean (i) a reduction in cash balance to less than US$5,000,000; or (ii)
  reduction in Net Revenue (for the last 12 months) to less than US$5,000,000
	 	 	 
	 	6.2.2	The Vendor
  hereby warrants, represent and undertakes that it shall procure that, except
  with the prior consent in writing of the Purchaser, the following events and
  matters will not occur, at any time between the date of this Agreement and
  Completion, or if this Agreement is rescinded or terminated earlier, the day
  of termination:-
	 	 	 
	 	 	(a)	if applicable,
  that the Company will not issue or transfer or agree to issue and allot or
  transfer any securities in respect of any equity (inter alia, the issued and
  unissued shares) or loan capital of the Company or grant any option over or
  right to acquire any equity or loan capital of the Company or increase the
  registered capital of the Company;
	 	 	 
	 	 	(b)	the Joint
  Venture and the Company (if applicable) will not borrow or otherwise raise
  money or incur any indebtedness or create any security over any of its assets
  and properties;
	 	 	 
	 	 	(c)	the Joint
  Venture and the Company (if applicable) will not enter into any contract or
  incur any capital commitment, expenditure or contingent liability other than
  as contemplated under the JV Agreement and the Extinguishment Agreement;
	 	 	 
	 	 	(d)	the Joint
  Venture and the Company (if applicable) will not enter into any other
  agreement with the Vendor or any third party or carry on any business,
  trading or other activities except as contemplated under this Agreement, the
  JV Agreement and the Extinguishment Agreement;
	 	 	 
	 	 	(e)	if applicable,
  propose at its own accord or vote on any resolution in general meeting of the
  Company other than resolutions relating to the business of an annual general
  meeting which is not special business;
	 	 	 
	 	 	(f)	if applicable,
  increase or authorise the increase of or undertake to increase the emoluments
  or benefits payable or granted to any director or employee of the Company
  with immediate, prospective or retrospective effect;
	 	 	 
	 	 	(g)	if applicable,
  appoint any directors of the Company other than the existing directors on the
  date of this Agreement;
	 	 	 	 
	 	 	(h)	if applicable,
  issue any dividends of the Company to any shareholders of the Company and/ or
  allow the Vendor to make any remittance of profits to its holders of equity
  or shares;
	 	 	 
	 	 	(i)	if applicable,
  it will not sell, transfer, assign, charge, or otherwise dispose of any
  shares beneficially owned by him or any legal or beneficial interest in the
  Company (save for the sale of the Sale Shares pursuant to this Agreement)
	 	 	 	 
	 	6.2.3	The Vendor
  hereby warrants, represents and undertakes it shall procure that:-
	 	 	 
	 	 	(a)	at any time prior to Completion, the
  Purchaser, its agent and professional advisers are given, promptly on
  request, all such information regarding the business, assets, liabilities,
  contracts and affairs of the Vendor Group, the Company (if applicable) and
  the Injected Business and of the documents of title and other evidence of
  ownership of assets contemplated in this Agreement and the JV Agreement as
  the Purchaser may require; and
	 	 	 
	 	 	(b)	whether before
  or after Completion, the
  Purchaser, its agent and professional advisers are given, promptly on
  request, all such other information and documents (including without
  limitation any accounts of the Vendor Group, the Company and accounts
  relating to the Injected Business) relating to the  Vendor Group, the Company, the Joint Venture and the Injected
  Business as the Purchaser may require for the purpose of or in connection
  with the performance, observance and compliance by the Purchaser of any
  provision of the such rules, regulations and laws in force from time to time
  in the United States and which apply to the Purchaser or otherwise as may be
  required by the relevant regulatory authorities in the United States or any
  other applicable authorities.
	 	 	 
	 	6.2.4	The Vendor hereby
  warrants, represents and undertakes it shall procure that on or before the day on
  which the Purchaser is obliged to satisfy such part of the Consideration as
  is referred to in Clause 3:-
	 	 	 
	 	 	(a)	If applicable, the Vendor and its affiliates
  and the directors of the Company and/or the Joint Venture will each have
  discharged in full any indebtedness of such person to the Company and/or the
  Joint Venture (whether or not then due for payment);
	 	 	 
	 	 	(b)	If applicable, the Company and/or the Joint
  Venture shall be released, without payment by or other cost to the Company
  and/or the Joint Venture, from all debts and obligations to, and from all
  guarantees, indemnities, mortgages and surety or security arrangements of any
  kind given by the Company and/or the Joint Venture in favour of the Vendor or
  any affiliates of the Vendor, or any director of the Company and/or the Joint
  Venture; and
	 	 	 
	 	 	(c)	If applicable, the accounts of the Company
  and/or the Joint Venture, audited by an independent accountant acceptable to
  the Purchaser, will be provided to the Purchaser reflecting the matters
  referred to in Clauses 6.2.4(a) and (b).
	 	 	 
	 	 	and the Vendor shall, on demand, indemnify the
  Purchaser and keep it indemnified from and against any failure so to procure
  and from any liability pending any such release.
	 	 
	 	6.2.5	The Vendor shall use its best endeavors to
  procure the Company (if applicable) and to procure all parties in the Joint
  Venture to promptly perform, observe and comply with all its obligations
  under the JV Agreement and the Extinguishment Agreement and take all
  necessary steps and sign and execute all necessary documents to facilitate or
  effect the transactions contemplated under the JV Agreement and the
  Extinguishment Agreement, including without limitation procuring such
  modification to the terms of the JV Agreement, the Extinguishment Agreement and
  other documents ancillary thereto as may be required by the Main Approving
  Authority and Other Approving Authorities.
	 	 	 
	 	6.2.6	The Vendor shall
  not (save only as may be necessary to give effect to this Agreement) do or
  allow and shall procure that no act or omission shall occur before Completion
  which would constitute a breach of any of the Warranties if they were given
  at Completion or which would make any of the Warranties inaccurate or
  misleading if they were so given.
	 	 	 
	6.3.	Representations, Warranties and Undertakings of the
  Purchaser
	 	 
	 	6.3.1	The Purchaser hereby warrants and represents
  that :-
	 	 	 
	 	 	(a)	it has the full power, authority and legal
  right to enter into this Agreement and this Agreement constitutes binding
  obligations on it in accordance with its terms;
	 	 	 
	 	 	(b)	the execution and delivery of this Agreement
  and the consummation of transactions contemplated hereby will not result in
  the breach and/or cancellation and/or termination of any of the terms or
  conditions of or constitute a default under any agreement, commitment or
  other instrument to which it is a party or by which it or its property or
  assets may be bound or affected or violate any law or any rule or regulation
  of any administrative agency or governmental body or any court order, writ,
  injunction or decree of any court, administrative agency or governmental body
  affecting it; and
	 	 	 
	 	 	(c)	there has been no material adverse change in
  the assets, as a whole, or the business, prospects, financial condition or
  result of operations of the Purchaser since its last date of audited
  financial statement. For the For the purpose of this Clause 6.3.1(c),
  “material adverse change” shall mean (i) a reduction in cash balance to less
  than US$1,500,000; and/or (ii) termination in employment of any of Tony Tong,
  Richard Hui and Chuck Mueller as employees of  the Purchaser.
	 	 	 
	 	6.3.2	Notwithstanding any other terms and conditions
  of this Agreement, it is hereby agreed by the Vendor that in the event of a
  transfer of the Purchaser from the Nasdaq National Market to the Nasdaq Small
  Cap Market, , that such event shall not constitute an event of default,
  breach of warranty, representation or undertaking or any act or event
  whatsoever which would entitle the Vendor to rescind this Agreement and/or
  claim a breach, default or damages against the Purchaser.
	7.	SPECIAL TERMS
	 	 	 
	7.1	Escrow Arrangement for Consideration Sharesand Adjustment
	 	 	 
	 	7.1.1	The Vendor warrants, represents and undertakes
  that (i) the total Net Revenue of the Joint Venture for the period from 1st  November 2001  to 31st December 2001 (“First Year”) will not be less than US$5,000,000, the period
  from 1st January 2002 to 31st December 2002 (“Second Year”) will not be less than
  US$39,000,000  and for the period from
  1st January 2003 to 31st December 2003 (“Third Year”) will not be less than
  US$50,000,000; and (ii) the total Net Income of the Joint Venture for the
  First Year will not be less than US$250,000, 
  the Second Year will not be less than US$1,950,000 and for the Third
  Year will not be less than US$2,500,000. The First Year, Second Year and
  Third Year shall collectively hereinafter be referred to as the “Warranted Years”.
	 	 	 
	 	The Vendor hereby agrees and acknowledges that
  the total Consideration payable by the Purchaser is based on the Vendor’s
  warranty in respect of the Net Revenue and Net Income of the Joint Venture as
  described above.  In this regard the
  Vendor hereby agrees to appoint the Escrow Agent upon the terms of the Escrow
  Agreement in the agreed terms to hold all the Consideration Shares to be
  issued in accordance with this Agreement on Completion and the Vendor
  undertakes with the Purchaser that it shall not either sell, transfer, charge, encumber, grant options over or otherwise
  dispose of, or of any legal or beneficial interest in any of the
  Consideration Shares until such part of the Consideration Shares are released
  to by the Escrow Agent to the Vendor in accordance with the following
  schedule but subject to Clause 7.2 below :
	 	 	 
																

 

	Release Date	 	Number of
  Consideration Shares to be Released	 	Release Criteria
	After the First
  Year, within 10 days of the Auditors certifying (in writing to  the Purchaser that the audited financial
  statements (including balance sheet and profit and loss account) in accordance
  with generally accepted accounting principles in the United States relating
  to the Joint Venture and its business is acceptable and can be consolidated
  into the
  Purchaser’s audited accounts, balance sheet and financial
  statements.	 	500,000 PACT
  Shares	 	The Joint
  Venture has achieved (i) Net Revenue for the First Year of not less than
  US$5,000,000; and (ii) Net Income for the First Year of not less than
  US$250,000
	 	 	 	 	 
	After the
  Second Year, within 10 days of the Auditors certifying (in writing to the Purchaser that the audited financial statements (including balance sheet and
  profit and loss account) in accordance with generally accepted accounting
  principles in the United States relating to the Joint Venture and its
  business is acceptable and can be consolidated into  the Purchaser’s audited accounts, balance sheet
  and financial statements.	 	1,642,000 PACT
  Shares	 	The Joint
  Venture has achieved (i) Net Revenue for the Second Year of not less than
  US$39,000,000; and (ii) Net Income for the Second Year of not less than
  US$1,950,000
	 	 	 	 	 
	After the Third
  Year, within 10 days of the Auditors certifying (in writing to  the Purchaser that the audited financial
  statements (including balance sheet and profit and loss account) in
  accordance with generally accepted accounting principles in the United States
  relating to the Joint Venture and its business is acceptable and can be
  consolidated into  the Purchaser’s audited
  accounts, balance sheet and financial statements.	 	1,858,000 PACT
  Shares	 	The Joint
  Venture has achieved (i) Net Revenue for the Third Year of not less than
  US$50,000,000; and (ii) Net Income for the Third Year of not less than
  US$2,500,000

 

 

	 	7.1.2	The Vendor
  agrees and undertakes not to dismiss nor withdraw its instructions to the
  Escrow Agent pursuant to the Escrow Agreement unless the Escrow Agent has
  voluntarily resigned or ceased to act as escrow agent in accordance with the
  Escrow Agreement, in which case the Vendor agrees and undertakes to appoint
  an escrow agent (as is agreeable to the Purchaser) in its place to act as
  escrow agent on the same terms and conditions of the Escrow Agreement.
	 	 	 
	 	7.1.3	In the event
  any of the Release Dates referred to above is not a Business Day in Hong
  Kong, then the relevant portion of the Consideration Shares shall be released
  on the immediately following Business Day.
	 	 	 
	 	7.1.4	It is agreed
  that where reference to US$ is made in this Clause 7.1, it shall also mean
  and include “or its equivalent value in RMB at the mid-price of bid and offer
  of the prevailing exchange rate quoted by the Bank of China in the PRC at
  11.00 am on the last Business Day of the relevant financial year of the Joint
  Venture subject to the Maximum Rate (as defined hereafter), which if exceeded
  shall be deemed to be the Maximum Rate. 
  The parties agree that the fluctuation in the prevailing exchange rate
  under this Agreement shall be limited to a maximum of not more than 10% of
  the mid-price of bid and offer of the prevailing exchange rate quoted by the
  Bank of China in the PRC at 11.00 am on the day of Completion (the "Maximum
  Rate").
	 	 	 
	 	7.1.5	The Vendor
  hereby warrants, represents and undertakes that it shall, within 60 days will
  make the best effort in reasonable short period time after Completion enter
  into the following agreements with  the
  Purchaser :-
	 	 	 
	 	 	(a)	The EMS
  Software Agreement;
	 	 	 	 
	 	 	(b)	The EMS
  License;  and
	 	 	 
	 	 	(c)	The EMS
  Distribution Agreement.
	 	 	 	 
	 	 	(the EMS
  Software Agreement, EMS License and EMS Distribution Agreement are all
  collectively herein this Agreement referred to as the “PACT-Holley Agreements”)
					

 

	 	7.1.6	The Vendor
  hereby agrees and undertakes that after 
  Completion and issue and allotment of the Consideration Shares in the
  name of the Vendor that it shall not nominate more than three (3) directors
  to the board of directors of the Purchaser.
	 	 	Currently,
  there are 6 directors (including independent directors) that have been
  elected by the shareholders to serve on the board of directors of the
  Purchaser.
	 	 	 
	7.2	Adjustments Consideration Shares and the Purchaser Board
  Seats
	 	 
	 	7.2.1	Adjustment in Consideration Shares :- In the event that any of the Net
  Revenue or Net Income as warranted by the Vendor in Clause 7.1.1 during any
  of Warranted Years fall below any of the amounts specified in the
  corresponding Release Criteria set out in Clause 7.1.1 above then the Vendor
  shall upon written notice (“Notice”) by the Purchaser, pay to the
  Purchaser an amount in the form of PACT Shares on each of the relevant
  Release Dates which is calculated as follows :
	 	 	 
	 	 	Number of PACT Shares to be delivered by
  Vendor to Purchaser (“Adjustment Shares”) = Number of Consideration
  Shares to be released by the Escrow Agent on any relevant Release Date
  multiplied by the greater of either Adjustment Percentage A (as defined
  below) or Adjustment Percentage B (as defined below).
	 	 	 
	 	 	 	Adjustment Percentage A, shall mean the warranted Net Revenue amount
  minus the actual amount of Net Revenue during the relevant term of Warranted
  Years divided by the warranted Net Revenue amount during the relevant term of
  the Warranted Years, of which 5% is then subtracted
	 	 	 
	 	 	 	Adjustment Percentage B, shall mean the warranted Net Income amount
  minus the actual amount of Net Income during the relevant term of Warranted
  Years divided by the warranted Net Income amount during the relevant term of
  the Warranted Years
	 	 	 	 
	 	 	Notwithstanding the above calculation of
  Adjustment Shares, in the event that either Adjustment Percentage A plus 5%
  or Adjustment Percentage B is greater than 50%, the Vendor hereby agrees it
  shall pay to the Purchaser 100% of the Consideration Shares to be released on
  the applicable Release Date.
	 	 	 
	 	 	Upon any of the events described above occurs,
  the Purchaser shall provide the Escrow Agent with the Notice, that will
  include the calculation of Adjustment Shares (which shall be deemed final and
  correct upon such delivery save in the event of a manifest error), and the
  Escrow Agent shall immediately thereafter deliver the Adjustment Shares or
  all the Consideration Shares falling to be released on the Relevant Release
  Date (as the case may be) to the Purchaser. In addition, the Vendor shall do
  and execute or procure to be done and executed all other necessary acts,
  deeds, documents and things within its power to transfer and assign the legal
  and beneficial ownership of the Adjustment Shares or all the Consideration
  Shares falling to be released on the Relevant Release Date (as the case may
  be) in the name of the Purchaser.  For
  the avoidance of doubt, the balance of the Consideration Shares after
  deducting the Adjustment Shares delivered to the Purchaser (if any) on the
  Relevant Release Date shall be released and delivered by the  Escrow Agent to the Vendor.
					

 

	 	7.2.2	Adjustment in the Purchaser Board Seats :– In the event that any of the actual
  Net Revenue or Net Income achieved by the Joint Venture during any of the
  Warranted Years is/are less than 50% of the respective amounts specified in
  the corresponding Release Criteria during the Warranted Years and set out in
  Clause 7.1.1, the Vendor agrees that the number of directors it may be
  entitled to nominate to the board of the Purchaser shall be reduced by one
  (1) director for every year during the Warranted Years it fails to meet the
  warranted Net Revenue or Net Income. In the event that the number of
  directors appointed/nominated by the Vendor to the board of directors of the
  Purchaser exceeds the number the directors the Vendor is entitled to
  appoint/nominate in accordance with the terms of this Agreement, the Vendor
  shall immediately procure such director(s) exceeding the number it is
  entitled to nominate to resign as a director of the Purchaser (and shall keep
  the Purchaser fully indemnified of any claims or proceeding such resigning
  director may have against the Purchaser).
	 	 	 
	7.3	Rights Attached to Consideration Shares while in Escrow
	 	 
	 	7.3.1	It is hereby agreed by the parties that the
  Vendor shall be allowed to exercise at any time, any rights (whatsoever) it
  may have as a registered owner of such portion of Consideration Shares
  (including voting rights, rights to appoint directors or rights to attend
  meetings of members) that the Escrow Agent is holding pursuant to Clause 7.1
  and which have not been released on or by the relevant Release Date to the
  Vendor, except for the rights outlined in Clause 7.3.2.
	 	 	 
	 	7.3.2	It is further agreed by the Vendor that if any
  dividends are declared or any distributions are made to any shareholders of
  PACT Shares, the dividends and such distributions attached to such Consideration
  Shares which are held by the Escrow Agent in the meantime, pursuant to Clause
  7.1, shall be paid to Escrow Agent. 
  It is agreed that dividends and distributions attached to each
  Consideration Share and held by the Escrow Agent shall only be released by
  the Escrow Agent, together with any interest thereon, to the Vendor as and
  when such Consideration Shares fall to be released in accordance with Clause
  7.1.  All remaining dividends and
  distributions (together with interest thereon) held by the Escrow Agent shall
  be released to the Purchaser on the relevant Release Dates.
	 	 	 
	7.4	Right of First Refusal
	 	 
	 	7.4.1	Before any shares or interest in the Joint
  Venture be sold or otherwise transferred or Disposed of by the Vendor (“Selling
  Shareholder”), the Purchaser shall have a right of first refusal
  (“Right
  of First Refusal”) to purchase such shares or interest  (“Offered Securities”) in accordance with
  Clauses 7.4.2 and 7.4.3 below.
	 	 	 
	 	7.4.2	Before the transfer or Disposal of any Offered
  Securities, the Selling Shareholders shall deliver to the Purchaser and the
  Company a written notice (“Transfer Notice”) stating :-
	 	 	 
	 	 	(a)	the Selling Shareholder’s intention to sell or
  otherwise Dispose of such Offered Securities;
	 	 	(b)	the name of each proposed purchaser or other
  transferee (a “Proposed Transferee”);
	 	 	(c)	the number of Offered Securities to be
  transferred to each Proposed Transferee;
	 	 	(d)	the cash price and/or other consideration for
  which the Selling Shareholder proposes to transfer the Offered Securities to
  the Proposed Transferee (“Offered Price”).

 

	 	 	The Transfer Notice shall certify that the
  Selling Shareholder(s) has received a firm offer from the Proposed
  Transferee(s) and in good faith believes a binding agreement for the Disposal
  is obtainable on the terms set forth in the Transfer Notice.  The Transfer Notice shall also include a
  copy of any written proposal, term sheet or letter of intent or other
  agreement relating to the proposed Disposal. 
  The Transfer Notice shall constitute an irrevocable offer by the
  Selling Shareholder to sell the Offered Securities to the Purchaser.
	 	 	 
	 	7.4.3	The Purchaser shall have a right, upon notice
  to the Selling Shareholder at any time within 30 calendar days after receipt
  of the Transfer Notice, to purchase all, any or a portion of such Offered
  Securities at (a) such price per share of the Offered Securities as (i)
  determined by an independent international appraiser experienced in the
  valuation of such shares and business of the Company as chosen by the
  Purchaser or (ii) the Offered Price, which ever shall be lower (“Purchaser Offer Price”); and (b) upon the
  same terms (or as similar as reasonably possible), upon which the Selling
  Shareholder is proposing or is to Dispose of such Offered Securities, save
  the sale/purchase price shall be the Purchaser Offer Price, and the Selling
  Shareholder shall, upon receipt of the notice of purchase from the Purchaser,
  sell such Offered Securities to the Purchaser pursuant to such terms, with
  such closing to take place within 45 calendar days after delivery of the
  Transfer Notice (“Purchase Right Period”).
	 	 	 
	 	7.4.4	If any of the Offered Securities proposed in
  the Transfer Notice to be transferred are not purchased by the Purchaser,
  then after expiry of the Purchase Right Period, the Selling Shareholder may
  sell or otherwise transfer or Dispose of such Offered Securities which have
  not been purchased by the Purchaser at the Offered Price or at a higher
  price, provided that such sale or other transfer shall be completed and
  consummated within 45 days after the expiry of Purchase Right Period, and
  provided further that the Proposed Transferee agrees in writing that the
  provisions of this Agreement and any Shareholder’s Agreement between the
  Purchaser and the Vendors regulating their respective rights within the
  Company (if any) shall continue to apply to the Offered Securities that are
  transferred to the Proposed Transferee. If the Offered Securities described
  in the Transfer Notice are not transferred to the Proposed Transferee within
  such 45 day period, such Selling Shareholder will not transfer or Dispose of
  any Offered Securities unless such securities are first re-offered to the
  Purchaser in accordance with Clauses 7.4.2 and 7.4.3 above.
	 	 	 
	7.5	Right of First Offer for Sale Shares
	 	 
	 	7.5.1	If within 24 months from the Completion Date,
  any of the following events shall occur (“Sale Events”),  then the Vendor shall have the right to
  purchase all of the Sale Shares (but not part thereof) from the Purchaser in priority
  to any other party or third party at the lower consideration of  (i) 
  as determined by an independent international appraiser experienced in
  the valuation of such shares and business of the Company as chosen by mutual
  agreement by the Purchaser and the Vendor, based on a willing buyer and a
  willing seller or (ii) as the parties may agree (“JV Share Price”):-
	 	 	 
	 	 	(a)	The Purchaser having sought creditor’s
  protection under Chapter 7 or Chapter 11 of the United States’ insolvency or
  bankruptcy laws and regulations; or
					

 

	 	 	(b)	The departure, retirement or termination of
  employment of Tony Tong, Richard Hui and Chuck Mueller of the Purchaser.  For the avoidance of doubt, so long as any
  one of the aforesaid persons are still an employee, independent contractor or
  consultant of the Purchaser then this provision shall not apply.
	 	 	 	 
	 	7.5.2	If any of the Sale Events occur within 24
  month from the Completion Date, then the Vendor shall within 30 calendar days
  of any of the Sale Events occurring serve such written notice on the
  Purchaser exercising its rights to purchase all the Sale Share at the JV
  Share Price.  Completion of the sale
  and purchase of the Sale Shares pursuant to this Clause shall occur within 45
  calendar days from receipt of written notice by the Purchaser and upon such
  completion date, the Vendor shall deliver all of the relevant consideration
  to the Purchaser in cash in exchange for the relevant share certificates and
  other necessary transfer documents for the Sale Shares.   If no written notice is served by the
  Vendor on the Purchaser in accordance with this Agreement, then the Purchaser
  shall have the right to dispose of all or any of the Sale Shares as it shall
  deem appropriate without offering the same to the Vendor.
	 	 	 
	7.6	Assignment of Reselling and Development Rights of EMS and
  ETS
	 	 
	 	The Purchaser hereby undertakes that it shall
  use reasonable efforts to procure that such research and development rights
  (as agreed upon by the Purchaser) of certain Energy Management System (“EMS”)
  and Energy Trading System (“ETS”) solutions and applications are
  assigned by the Purchaser to the Vendor as soon as possible after the
  Completion Date.  In the event that
  the Purchaser is unable to procure the assignment of such EMS and ETS to the
  Vendor, then the Vendor shall have no rights or claims against the Purchaser
  for failing to do so.
	 	 
	7.7	Appointment to Board of Joint Venture
	 	 
	 	The Vendor hereby agrees that it shall and
  shall procure that so long as the Purchaser is a beneficial owner of shares
  or has an equitable interest in the Joint Venture, it shall procure that the
  Purchaser shall have a right to appoint a majority of directors to the Joint
  Venture and in the event that the number of directors to the board of the
  Joint Venture is 5 that the Purchaser shall have the right to nominate at
  least 3 directors.
	 	 
	8.	CONFIDENTIALITY
  AND EXCLUSIVE NEGOTIATION
	 	 
	8.1	Confidentiality
	 	 
	 	The parties recognize that, in
  connection with the performance of this Agreement, a party (in such capacity,
  the “Disclosing Party”) may
  disclose Confidential Information to another party (in such capacity the “Receiving Party”). The Receiving Party
  agrees (A) not to use any such Confidential Information for any purpose
  other than in the performance of its obligations under this Agreement and
  (B) not to disclose any such Confidential Information to any Person
  whatsoever, except (1) to its employees who are reasonably required to
  have the Confidential Information in connection herewith; provided, however,
  that the Receiving Party shall remain liable for any breach by its employees
  of any provision of this Clause 8.1, (2) to its agents,
  representatives, lawyers and other advisers that have a need to know such
  Confidential Information, subject to the written obligation of any such
  agent, representative, lawyer or other advisor to whom Confidential
  Information is disclosed in accordance with this Clause 8.1 to maintain
  the confidentiality thereof, and (3) pursuant to, and to the extent of,
  a request or order by a governmental authority.  The Receiving Party agrees to take all reasonable measures to
  protect the secrecy and confidentiality of, and avoid disclosure or
  unauthorized use of, the Disclosing Party’s Confidential Information. 
  Each party acknowledges and agrees that (i) any violation of
  these provisions could cause irreparable injury to the Disclosing Party for
  which money damages would be inadequate to compensate for such breach, and
  (ii) as a result, the Disclosing Party may, in addition to other remedies,
  seek to immediately obtain and enforce injunctive relief prohibiting the
  breach or threatened breach of the provisions of this Clause 8.1 without
  the necessity of proving actual damages or compelling specific performance.

 

	8.2	Exclusive
  Negotiation
	 	 
	 	(a)	The Vendor
  hereby agrees and undertakes that it will not after the date of this
  Agreement enter into any negotiations to form any agreement, understanding or
  joint venture with any third party relating to e-commerce services of a
  similar nature to those services contemplated in this Agreement and to be
  carried on by the Joint Venture without the express written consent of the
  Purchaser. This Clause shall survive Completion or termination of this
  Agreement.
	 	 	 
	 	(b)	The Purchaser
  hereby undertakes and agrees that it will not after the date of this
  Agreement enter into any negotiations or agreements to merge with or acquire
  any other entity with similar business as the Joint Venture or enter into any
  negotiations or agreements to merge with or acquire any other entity whereby the Purchaser shall issue (in aggregate) more than 5% of its entire issued share
  capital on a fully diluted basis (after issue of such shares to such entity)
  subsequent to the date of this Agreement without the express written consent
  of the Vendor.  The Purchaser further
  undertakes and agrees that it shall not to grant any warrants or options
  without written consent of the Vendor.
	 	 	 
	 	(c)	It is further
  agreed and the Vendor hereby
  represents and undertakes that in the event any of the Net Income and Net
  Revenue targets are not satisfied in any of the First Year, Second Year or
  Third Year (as set out in Clause 7.1.1) or the Escrow Agent has not released
  all of the Consideration Shares to the Vendor, the Purchaser shall be
  released from its undertakings, obligations and the terms and conditions
  outlined in 8.2 (b) above.
	 	 	 
	9.	OUTSOURCING
	 	 
	9.1	The Vendor hereby agrees that it shall use its
  best endeavors to ensure that all goods, services and technology requirements
  of the Vendor Group, including procurement for electrical devices and
  information technology services shall first be outsourced and/or contracted
  from the Joint Venture and its Subsidiaries upon such terms and conditions
  agreeable to the Purchaser prior to acquiring, licensing or contracting for
  the same from a relevant third party.

 

	10.	RELEASE
	 	Both parties agree that neither of them shall
  be released from its obligations hereunder by the granting by the other party
  of any time or other indulgence, or by the taking by the other party of any
  other security in respect of the obligations or liabilities of such party to
  this Agreement or by the termination or variation of any of the provisions of
  this Agreement or of any such other security or the release of any other security.
	 	 
	11.	FURTHER
  ASSURANCE AND INFORMATION
	 	 	 
	11.1	Upon and after Completion each party shall do
  and execute or procure to be done and executed all other necessary acts,
  deeds, documents and things within their power to give effect to this
  Agreement.
	 	 
	11.2	Both parties shall mutually provide or procure
  to be provided all information that 
  from time to time may be reasonably requested or required (both before
  and after the Completion Date) from time to time relating to the business and
  affairs of the Joint Venture, the Injected Business, the Vendor Group, the
  Company and each of it Subsidiaries, and the Purchaser.
	 	 
	12.	COSTS
	 	 
	12.1	Each party to this Agreement shall pay its own
  legal costs and expenses and other incidental costs and disbursements in
  relation to the negotiations leading up to the purchase of the Sale Shares,
  the establishment of the Joint Venture and all other matters and transactions
  contemplated under this Agreement and to the preparation, execution and
  carrying into effect of this Agreement.
	 	 
	13.	ANNOUNCEMENTS
	 	 
	 	No party hereto shall except as required by
  law or the rules and regulations in the United States or NASDAQ stock
  exchange or relevant authority in the United States make any announcement or
  communication to the press in connection with the transaction hereby
  contemplated or effected without the written approval of the other
  party.  Notwithstanding anything
  contained in this Agreement, the Purchaser shall be permitted to make such
  announcements and disclosure in respect of this Agreement and the matters
  contemplated herein to its shareholders and the relevant government and
  regulatory authority in the United States.
	 	 
	14.	RETURN OF DOCUMENTS
	 	 	 
	 	If this Agreement ceases to have effect both
  parties shall release and return to the other party all documents concerning
  the other party and provided to such party or its advisors in connection with
  this Agreement.

 

	15.	COMPLETE AGREEMENT
	 	 
	 	This Agreement represents the entire and
  complete agreement between the parties in relation to the subject matter
  hereof and supersedes any previous agreement whether written or oral in
  relation thereto.  No variations to
  this Agreement shall be effective unless made or confirmed in writing and
  signed by all the parties hereto.
	 	 	 
	16.	ASSIGNMENT
	 	 
	16.1	This Agreement shall be binding upon and inure
  for the benefit of each party's successors and assigns [and personal
  representatives] (as the case may be) but, except as expressly provided
  herein, none of the rights of the parties under this Agreement shall be
  assigned or transferred without the agreement in writing of the other party.
	 	 	 
	17.	SEVERABILITY
	 	 
	 	In the event that any provision of this
  Agreement is held to be unenforceable, illegal or invalid by any court of
  competent jurisdiction, the validity, legality or enforceability of the
  remaining provisions shall not be affected nor shall any subsequent
  application of such provisions be affected. 
  In lieu of any such invalid, illegal or unenforceable provision, the
  parties hereto intend that there shall be added as part of this Agreement a
  provision as similar in terms to such invalid, illegal or unenforceable
  provision as may be possible and be valid, legal and enforceable.
	 	 	 
	18.	COUNTERPARTS
	 	 
	 	This Agreement may be executed in counterparts
  with the same force and effect as if executed on a single document and all
  such counterparts shall constitute one and the same instrument.
	 	 
	19.	REMAINING IN FORCE
	 	 
	 	The provisions of this Agreement insofar as
  the same shall not have been performed at Completion shall remain in full
  force and effect notwithstanding Completion.
	 	 
	20.	TIME OF THE ESSENCE
	 	 
	 	Time shall be of the essence of this
  Agreement, both as regards the dates and periods specifically mentioned and
  as to any dates and periods which may be substituted by Agreement in writing
  between or on behalf of the Vendor and the Purchaser.

 

	21.	NO WAIVER
	 	 
	21.1	No failure or delay by a party to this
  Agreement in exercising any right, power or remedy under this Agreement shall
  operate as a waiver thereof, nor shall any single or partial exercise of the
  same preclude any further exercise thereof or the exercise of any other
  right, power or remedy.  Without
  limiting the foregoing, no waiver by a party to this Agreement of any breach
  by the other party of any provisions of this Agreement shall be deemed to be
  a waiver of any subsequent breach of that or any other provision hereof.
	 	 
	22.	NOTICES
	 	 
	22.1	Any notice required to be given under this
  Agreement shall be sufficiently given if delivered in person, forwarded by
  registered post or sent by overnight international couriers or facsimile
  transmission to the relevant party at its address, or fax number set out
  below (or such other address as the addressee has by five days prior written
  notice specified to the other parties):

 

	 	To the Vendor:	Holley Group Share Holding Co., Ltd.
	 	 	No. 493 Moganshan Rd., Hangzhou 31005 China
	 	 	 	 
	 	 	Fax Number: 	86-571-88081888
	 	 	Attention: 	Wang Li Cheng
	 	 	 	 
	 	To the Purchaser:	PacificNet.com, Inc.
	 	 	29th Floor, 3 Lockhart Road, Wanchai, Hong
  Kong
	 	 	 
	 	 	Fax Number:	852-27930689
	 	 	Attention:	Tony Tong

 

	22.2	Any notice (i) sent by pre–paid
  registered post shall be deemed to have been served [48] hours after the time
  at which it was posted and in proving such service it shall be sufficient to
  prove that the notice was properly addressed and posted by prepaid registered
  letter post; and sent by facsimile transmission shall be deemed to have been
  served on the receipt of a completed transmission without error and answer–back
  advice; and (iii) sent by overnight international courier shall be deemed to
  have been served [48] hours after the time at which it was delivered to such
  courier and in proving such service it shall be sufficient to prove that the
  notice was properly addressed and delivered to the courier; and (iv) if
  delivered in person shall be deemed to have been served at the time of
  delivery at the address of the relevant party.

 

	22.3	The Vendor will appoint an agent, within
  5 business days following signature by the parties of this Agreement,  to receive and acknowledge on its behalf
  service of any writ, summons, order, judgment or other notice of legal
  process in Hong Kong.  If for any
  reason the agent named above (or its successor) no longer serves as agent of
  the Vendor for this purpose, the Vendor shall promptly appoint a successor
  agent and notify the other parties hereto. 
  The Vendor agrees that any such legal process shall be sufficiently
  served on it if delivered to such agent for service at its address for the
  time being in Hong Kong whether or not such agent gives notice thereof to the
  Vendor.
	 	 
	22.4	The Purchaser hereby appoints the Purchaser’s Solicitors as its agent to receive and acknowledge on its behalf service of any
  writ, summons, order, judgment or other notice of legal process in Hong
  Kong.  If for any reason the agent
  named above (or its successor) no longer serves as agent of the Purchaser for
  this purpose, the Purchaser shall promptly appoint a successor agent and
  notify the other parties hereto.  The
  Purchaser agrees that any such legal process shall be sufficiently served on
  it if delivered to such agent for service at its address for the time being
  in Hong Kong whether or not such agent gives notice thereof to the Purchaser.
	 	 
	23	GOVERNING LAW AND
  ARBITRATION
	 	 
	23.1	For any disputes arising between the Purchaser
  and the Vendor regarding the establishment and the operation of the Joint
  Venture, the PRC Laws will be the governing law.
	 	 
	 	For any disputes arising from the allotment of
  the consideration shares, or the appointment of directors to the Purchaser’s
  Board, USA Delaware laws will be the governing laws.
	 	 
	23.2	Any dispute arising from or in connection with
  this Agreement shall be submitted to China International Economic and Trade
  Arbitration Commission for arbitration which shall be conducted in accordance
  with the Commission’s arbitration rules in effect at the time of applying for
  arbitration. This arbitral award is final and binding upon both parties
	 	 
	24.	CONFLICT OF LANGUAGE
	 	 
	 	This Agreement has been written in the English
  language and the Chinese language. 
  The parties hereby agree that in the event of a conflict between the
  English language and the Chinese language of the Agreement, the English
  language and version shall prevail.
	 	 
	AS WITNESS the parties hereto have caused this agreement
  to be executed the day and year first above written.

 

EXECUTION
PAGE

	SIGNED BY	 	)	./s/ TONY TONG	 
	 	 	 	Chairman and CEO	 
	 	 	)	 	 
	for and on behalf of	 	)	PACIFICNET.COM, INC	 
	 	 	)	 	 
	 	 	)	 	 
	in the presence of :	 	)	 	 
	 	 	 	 	 
	 	 	 	 	 
	SIGNED BY	 	)	./s/ LICHENG WANG	 
	 	 	)	Chairman	 
	for and on behalf of	 	)	 	 
	 	 	)	HOLLEY GROUP SHARE HOLDING CO., LTD.	 
	 	 	)	 	 
	in the presence of :	 	)Prepared by MerrillDirect

EXHIBIT 4.49

THIS OPTION HAS BEEN ISSUED PURSUANT TO
EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), AND THE QUALIFICATION REQUIREMENTS OF APPLICABLE
STATE SECURITIES LAWS (THE "LAWS"). 
IT IS UNLAWFUL TO EXERCISE, SELL, PLEDGE OR OTHERWISE DISPOSE OF THIS
OPTION, OR ANY INTEREST THEREIN, OR RECEIVE ANY CONSIDERATION THEREFOR, IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND QUALIFICATION
UNDER THE LAWS, UNLESS EXEMPTIONS FROM SUCH REGISTRATION AND QUALIFICATION
REQUIREMENTS ARE AVAILABLE.

THIS OPTION MAY BE EXERCISED ONLY
IN ACCORDANCE WITH THE TERMS OF THIS STOCK OPTION AGREEMENT.

 

THE
RICEX COMPANY

BOARD
MEMBER - NONSTATUTORY STOCK OPTION AGREEMENT

 

             The
RiceX Company, a Delaware corporation (the "Company"), hereby grants
to Kenneth Miller (the "Optionee"), an option (the
"Option") to purchase a total of 50,000 shares of common stock, par
value $.001, of the Company (the "Common Stock") at an exercise price
(the "Exercise Price") equal to $0.39 per share, which is equal to
the fair market value of the Company's Common Stock on the date of the grant,
in all respects subject to the terms, definitions and provisions of this
Nonstatutory Stock Option Agreement (the "Agreement").

             1.          Nature of the Option.  The Option is intended to be a nonstatutory
option and not an incentive stock option within the meaning of Section
422 of the Internal Revenue Code of 1986, as amended (the "Code").

             2.          Payment of Exercise Price.

                           (a)         Method of Payment.  Payment of the Exercise Price for shares
purchased upon exercise of the Option shall be made (i) by delivery to the
Company of cash or a check to the order of the Company in an amount equal to
the purchase price of such shares; (ii) subject to the consent of the
Company, by delivery to the Company of shares of Common Stock of the Company
then owned by the Optionee having a fair market value equal in amount to the
purchase price of such shares in accordance with Section 2(b); or,
(iii) by any other means approved by the Board of Directors and which is
consistent with applicable laws and regulations (including, without limitation,
the provisions of Rule 16b-3 under the Securities Exchange Act of 1934 and
Regulation T promulgated by the Federal Reserve Board); or (iv) by any
combination of such methods of payment.

                           (b)        Method of Payment – Public Market.  In the event there exists a public market
for the Company's Common Stock on the date of exercise, payment of the exercise
price may be made by surrender of shares of the Company's Common Stock.  In this case payment shall be made as
follows:

                                        (i)          Optionee shall deliver to the
Secretary of the Company a written notice which shall set forth the portion of
the purchase price the Optionee wishes to pay with Common Stock, and the number
of shares of such Common Stock the Optionee intends to surrender pursuant to
the exercise of this Option, which shall be determined by dividing the
aforementioned portion of the purchase price by the average of the last reported
bid and asked prices per share of Common Stock of the Company, as reported in The
Wall Street Journal (or, if not so reported, as otherwise reported by the
National Association of Securities Dealers Automated Quotation (NASDAQ) System
or, in the event the Common Stock is listed on a national securities exchange,
or on the NASDAQ Small-Cap Market of any successor national market system, the
closing price of Common Stock of the Company on such exchange as reported in The
Wall Street Journal) for the day on which the notice of exercise is sent or
delivered;

                                        (ii)         Fractional shares shall be disregarded
and the Optionee shall pay in cash an amount equal to such fraction multiplied
by the price determined under subparagraph (i);

                                        (iii)        The written notice shall be accompanied
by a duly endorsed blank stock power with respect to the number of Shares set
forth in the notice, and the certificate(s) representing said Shares shall be
delivered to the Company at its principal offices within three (3) working days
from the date of the notice of exercise;

                                        (iv)       The Optionee hereby authorizes and
directs the Secretary of the Company to transfer so many of the Shares
represented by such certificate(s) as are necessary to pay the purchase price
in accordance with the provisions herein;

                                        (v)        If any such transfer of Shares requires
the consent of the California Commissioner of Corporations or of some other
agency under the securities laws of any other state, or an opinion of counsel
for the Company or Optionee that such transfer may be effected under applicable
federal and state securities laws, the time periods specified herein shall be
extended for such periods as the necessary request for consent to transfer is
pending before said commissioner or other agency, or until counsel renders such
an opinion, as the case may be.  All
parties agree to cooperate in making such request for transfer, or in obtaining
such opinion of counsel, and no transfer shall be effected without such consent
or opinion if required by law; and

                                        (vi)       Notwithstanding any other provisions
herein, the Optionee shall only be permitted to pay the purchase price with
shares of the Company's Common Stock owned by him as of the exercise date in
the manner and within the time periods allowed under Rule 16b-3 promulgated
under the Securities Exchange Act of 1934 as such regulation is presently
constituted, as it is amended from time to time, and as it is interpreted now
or hereafter by the Securities and Exchange Commission and any such shares have
been held by the Optionee for not less than six (6) months.

             3.          Exercise of Option.  The Option shall vest and become exercisable
during its term, subject to the provisions of Section 5 below, as follows:

                           (a)         Vesting and Right to Exercise.

                                        (i)          The Option hereby granted shall vest
and become exercisable on a prorated basis over a twelve-month period beginning
September 29, 2000.  The option will be
fully vested on September 29, 2001.

             Subject
to the provisions of subparagraph (ii) and (iii) below, the Optionee can
exercise any portion of the Option, which has vested until the expiration of
the Option term.

             If
a "change of control" of the Company should occur, as defined below,
then the Option shall immediately vest and become exercisable in full.  For purposes of the foregoing provision, a
"change in control" means the occurrence of any of the following:

                                                     (A)       any "person," as such term is
used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934,
as emended (the "Exchange Act") (other than the Company or its
existing shareholders) is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company (or a successor to the Company) representing 50% or
more of the combined voting power of the then outstanding securities of the
Company or such successor;

                                                     (B)        the dissolution of the Company or
liquidation of more than 50% or more in value of the assets of the Company,
(ii) or any merger or reorganization of the Company whether or not another
entity is the survivor, (iii) a transaction (other than the initial public
offering of the Company's shares) pursuant to which holders, as a group, of all
of the shares of the Company outstanding before the transaction, hold, as a
group, less than 50% of the combined voting power of the Company or any
successor company outstanding after the transaction, or (iv) any other event or
series of events which the Optionee determines, in his discretion, would
materially alter the structure of the Company or its ownership.

                                        (ii)         In the event of the Optionee's death,
disability, other termination of employment or ceases to be a member of the
Board prior to exercise, the exercisability of the Option shall be governed by
Section 5 below.

                                        (iii)        The Option may be exercised in whole or
in part but may not be exercised as to fractional shares.

                           (b)        Method of Exercise.  In order to exercise any portion of the
Option, the Optionee shall execute and deliver to the Chief Financial Officer
of the Company the Notice of Exercise of Stock Option in the form attached
hereto as Exhibit "A," together with the Consent of Spouse.  The Notice of Exercise must be accompanied
by payment in full of the aggregate purchase price for the Shares to be
purchased in the type of consideration set forth in Section 2.  The Notice of Exercise may be delivered to
the Company at any time.  The
certificate(s) for the Shares as to which the Option has been exercised shall
be registered in the name of Optionee or his designee.

                           (c)         Restrictions on Exercise.  This Option may not be exercised if the
issuance of the shares upon such exercise or the method of payment of
consideration for such shares would constitute a violation of any applicable
federal or state securities law or any other law or regulation.  As a condition to the exercise of the
Option, the Company may require the Optionee to make any representation or
warranty to the Company at the time of exercise of the Option as in the opinion
of legal counsel for the Company may be required by any applicable law or
regulation, including the execution and delivery of an appropriate
representation statement.  The stock
certificate(s) for the Shares issued upon exercise of the Option may bear
appropriate legends restricting transfer.

                           (d)        Delivery of Certificates.  The Company shall deliver the certificate(s)
for the Shares issued upon exercise of the Option to the Optionee as soon as is
practicable; provided, however, that if any law or regulation requires the
Company to take action with respect to such shares before the issuance thereof,
including, without limitation, actions taken pursuant to Section 6 below, then
the date of delivery of such Shares shall be extended for a period necessary to
take such action.

             4.          Non-Transferability of Option.  This Option may be exercised during the
lifetime of the Optionee only by the Optionee and may not be transferred in any
manner other than by will or by the laws of descent and distribution.  The terms of this Option shall be binding
upon the executors, administrators, heirs and successors of the Optionee.

             5.          Term of the Option.  Except as otherwise provided in this
Agreement, to the extent not previously exercised, the right to exercise the
Option shall terminate on the tenth (10th) anniversary of the date of
grant.  Notwithstanding the foregoing,
if an Optionee ceases to be a Board Member of the Company for any reason,
except death and disability, he or she may, but only within ninety (90) days
after the date he or she ceases to be a Board Member of the Company, exercise
his or her Option to the extent that he or she was entitled to exercise it at
the date of such termination, and in the case of the Optionee's death or
disability, the Optionee (or the Administrator or Executor or other
Representative of the Optionee's estate) may, but only within one (1) year
after the date he or she ceases to be a Board Member of the Company due to
death or disability, exercise his or her Option to the extent that he or she
was entitled to exercise it at the date of such termination; provided, however
that in no event may the Option be exercised after the ten (10) year term has
expired.  To the extent that the
Optionee was not entitled to exercise an Option at the date of such termination,
or if he or she does not exercise such Option (which he or she was entitled to
exercise) within the time specified herein, the Option shall terminate.

             6.          Adjustments Upon /Changes in
Capitalization; Other Adjustments. 
Subject to any required action by the shareholders of the Company, the
number of Shares and the Exercise Price shall be proportionately adjusted for
any increase or decrease in the number of issued shares of Common Stock
resulting from a stock split, reverse stock split, combination,
reclassification, the payment of a stock dividend on the Common Stock or any
other increase or decrease in the number of shares of Common Stock of the
Company effected without receipt of consideration by the Company; provided,
however, that conversion of any convertible securities of the Company shall not
be deemed to have been "effected without receipt of
consideration."  Such adjustment
shall be made by the Board, whose determination in that respect shall be final,
binding and conclusive.  Except as
expressly provided herein, no issue by the Company of shares of stock of any
class, or securities convertible into shares of stock of any class, shall
affect and no adjustment by reason thereof shall be made with respect to, the
number of shares subject to, or the Exercise Price of, this Option.

                           The
Board may, if it so determines in the exercise of its sole discretion, also
make provision for adjusting the number of shares, as well as the Exercise
Price, in the event that the Company effects one or more reorganizations,
recapitalizations, rights offerings, or other increases or reductions of shares
of its outstanding common stock, and in the event of the Company being
consolidated with or merged into any other corporation; provided, however, that
in no event shall the Optionee be adversely affected by such adjustment.

                           The
Board may, if it so determines in the exercise of its sole discretion, also
make provision for changing, modifying, amending or adjusting any of the terms
of this Option solely in order for the Company to perfect a significant
financing; provided, however, that in no event shall the Optionee be adversely
affected by such adjustment.

             7.          Rights of Shareholder.  Optionee shall have no rights as a
shareholder with respect to the shares until the date of the issuance or the
transfer to the Optionee of the certificate(s) for such shares and only after
the Exercise Price for such shares has been paid in full.

             8.          Amendment.  Except as set forth in Section 6, this
Agreement may not be amended without the written consent of the Optionee.

             9.          Income Tax Withholding.  The Optionee authorizes the Company to
withhold, in accordance with applicable law from any compensation payable to
him or her, any taxes required to be withheld by federal, state or local laws
as a result of the exercise of this Option. 
Furthermore, in the event of any determination that the Company has
failed to withhold a sum sufficient to pay all withholding taxes due in
connection with the exercise of this Option, the Optionee agrees to pay the
Company the amount of such deficiency in cash within five (5) days after
receiving a written demand from the Company to do so, whether or not Optionee
is an employee or director of the Company at that time.

             10.        Investment Representations; Legends.

                           (a)         Representations.  The Optionee represents, warrants and
covenants that:

                                        (i)          Any shares purchased upon exercise of
this Option shall be acquired for the Optionee's account for investment only,
and not with a view to, or for sale in connection with, any distribution of the
shares in violation of the Securities Act of 1933 (the "Securities
Act"), or any rule or regulation under the Securities Act.

                                        (ii)         The Optionee has had such opportunity
as he or she has deemed adequate to obtain from representatives of the Company
such information as is necessary to permit the Optionee to evaluate the merits
and risks of his or her investment in the Company.

                                        (iii)        The Optionee is able to bear the
economic risk of the holding of such shares acquired pursuant to the exercise
of this Option for an indefinite period.

                                        (iv)       The Optionee understands that the Shares
acquired pursuant to the exercise of this Option are not registered under the
Securities Act and are "restricted securities" within the meaning of
Rule 144 under the Securities Act and may not be transferred, sold or otherwise
disposed of in the absence of an effective registration statement with respect
to the Shares filed and made effective under the Securities Act of 1933, or an
opinion of counsel satisfactory to the Company to the effect that registration
under such Act is not required.

By making payment upon exercise of this
Option, the Optionee shall be deemed to have reaffirmed, as of the date of such
payment, the representations made in this Section 10.

                           (b)        Legends of Stock Certificate.  All stock certificates representing share of
Common Stock issued to the Optionee upon exercise of this Option shall have
affixed thereto legend(s) substantially in the following forms, in addition to
any other legends required by applicable state law:

"THE
SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT WITH RESPECT
TO THE SHARES EVIDENCED BY THIS CERTIFICATE, FILED AND MADE EFFECTIVE UNDER THE
SECURITIES ACT OF 1933, OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY TO
THE EFFECT THAT REGISTRATION UNDER SUCH ACT IS NOT REQUIRED."

DATE OF GRANT:  February 22, 2001

The RiceX Company

	 	 	 	 	By:	/s/
  Daniel L. McPeak, Sr., CEO
	 	 	 	 	 	

	 	 	 	 	 	Daniel
  L. McPeak, Sr., Chief Executive Officer
	 	 	 	 	 	 
	 	 	 	 	By:	/s/
  Todd C. Crow, CFO
	 	 	 	 	 	

	 	 	 	 	 	Todd
  C. Crow, Chief Financial Officer

 

             The
Optionee acknowledges receipt of a copy of the Plan, and represents that he or
she is familiar with the terms and provisions thereof, and hereby accepts this
Option subject to all of the terms and provisions thereof.  The Optionee hereby agrees to accept as
binding, conclusive and final all decisions or interpretations of the Board of
Directors of The RiceX Company upon any questions arising under such Agreement.

	Dated:	 	 
	 	

	 

 

 

	 	 	 	 	 	 	

	 
	 	 	 	 	 	 	Kenneth
  Miller (“Optionee”)	 

 

CONSENT OF SPOUSE

 

             I,
________________________, spouse of the Optionee who executed the foregoing
Agreement attached hereto, hereby agree that my spouse's interest in the shares
of Common Stock of The RiceX Company subject to said Agreement shall be
irrevocably bound by the Agreement's terms. 
I agree to accept as binding, conclusive and final all decisions or
interpretations of the Board of Directors of The RiceX Company upon any
questions arising under such Agreement. 
I further agree that my community property interest in such Shares, if
any, shall similarly be bound by said Agreement and that such consent is
binding upon my executors, administrators, heirs and assigns.  I agree to execute and deliver such
documents as may be necessary to carry out the intent of said Agreement and
this consent.

	Dated:	 	 
	 	

	 

 

	 	 	 	 	 	 	

	 	 	 	 	 	 	Signature
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	

	 	 	 	 	 	 	Print
  Name

EXHIBIT A

 

TO:                    The
RiceX Company

                           1241 Hawks
Flight Court, Suite 103

                           El Dorado
Hills, CA  95762

SUBJECT:        NOTICE
OF EXERCISE OF STOCK OPTIONS

 

With respect to the stock option granted
to the undersigned by The RiceX Company, (the “Company”) on (grant date)
_______________________, to purchase an aggregate of ________________________
shares of the Company’s Common Stock, this is official notice that the
undersigned hereby elects to exercise such option to purchase shares as
follows:

             Number
of Shares        ________________________

             Date
of Purchase:         ________________________

             Mode
of Payment:       ________________________           (certified check or cash)

 

The shares should be issued as follows:

             Name:                             _____________________________________________

             Address:                        _____________________________________________

                                                     _____________________________________________

 

             Signed
by (print name):            _____________________________________________

             Signature:                                   _____________________________________________

             Dated:                                          _____________________________________________

 

Please send this notice of exercise to:

             The
RiceX Company

             1241 Hawks Flight Court,
Suite 103

             El Dorado Hills, CA  95762

             Phone:  916-933-3000

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