Document:

Unassociated Document

    
      
        

    

    

    
      	 	
              Haynes
                International, Inc.

              1020
                West Park Avenue

              P.O.
                Box 9103

              Kokomo,
                Indiana 46904-9013

              765-456-6000
                / Fax: 765-456-6905

            

    

    

    

    October
      1, 2008

    

    

    HAYNES
      INTERNATIONAL, INC.

     

    NONQUALIFIED
      STOCK OPTION AGREEMENT

     

    

    Dear
      Mark
      Comerford:

    

    The
      Compensation Committee of the Board of Directors of Haynes International, Inc.
      (the "Company") on October 1, 2008 ("Date of Grant") has granted you an option
      (the "Option") to purchase 20,000 Shares of the Company’s Common Stock, $0.001
      par value, pursuant to the Haynes International, Inc. 2007 Stock Option Plan,
      dated as of January 18, 2007 (the "Plan") and in accordance with the terms
      of
      the Executive Employment Agreement dated as of September 8, 2008 between you
      and
      the Company (the "Employment Agreement"), upon the following terms and
      conditions set forth in this Nonqualified Stock Option Agreement (the
      "Agreement"):

     

    1. PURCHASE
      PRICE OF THE OPTION. The purchase price of the Shares subject to the Option
      is
      $46.83 per Share which is equal to the Fair Market Value per Share as of the
      Date of Grant. You must pay this purchase price by personal or bank cashier's
      check at the time the Option is exercised; provided, however, that, with the
      approval of the Committee, you may exercise the Option by (i) tendering to
      the
      Company certificates representing whole Shares owned by you duly endorsed for
      transfer, or (ii) surrendering a sufficient portion of the vested Option based
      on the difference between the exercise price of the Option and the Fair Market
      Value at the time of exercise of the Shares subject to the Option, or (iii)
      any
      combination of (i) and/or (ii) and cash, together having a Fair Market Value
      equal to the exercise price of the Shares with respect to which the Option
      is
      exercised. For this purpose, any Shares so tendered or withheld shall be deemed
      to have a Fair Market Value as determined under the Plan.

     

    To
      exercise the Option, you must send written notice to the Committee at the
      address provided in SECTION 11 of this Agreement. Such notice shall (1) state
      the number of Shares being purchased pursuant to the Option; (2) be signed
      by
      the person or persons exercising the Option; and (3) be accompanied by payment
      of the full purchase price of such Shares (as provided above). Certificates
      evidencing Shares of the Company shall not be delivered to you until an
      appropriate notice has been delivered and payment has been made.

     

    2. OPTION
      TERM AND VESTING. The term of the Option (the "Option Term") shall be a period
      of ten (10) years from the Date of Grant, subject to earlier termination as
      provided in SECTIONS 3 and 4 or as may be provided in the Plan. Except as
      otherwise provided below in SECTIONS 3 or 4 which provide for accelerated
      vesting under certain circumstances, the Option shall become exercisable with
      respect to 33-1/3 percent of the total number of Shares covered by the Option
      on
      the first anniversary of the Date of Grant and with respect to an additional
      33-1/3 percent on each of the second anniversary and the third anniversary
      of
      the Date of Grant, respectively. When the Option becomes exercisable with
      respect to any Shares, those Shares may be purchased at any time, or from time
      to time, in whole or in part, until the Option Term expires, subject to the
      terms of this Agreement and the Plan.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

     

    3. TERMINATION
      OF EMPLOYMENT OR SERVICE. Notwithstanding the vesting schedule set forth in
      SECTION 2:

     

    (a) If
      you
      cease to be an Employee of the Company due to a Termination for Cause (as
      defined in the Employment Agreement), all outstanding Options whether vested
      or
      unvested shall be void and deemed to be forfeited upon the date your employment
      or service ceases and shall not be exercisable to any extent whatsoever.

     

    (b) If
      you
      cease to be an Employee of the Company due to (i) your resignation without
      Good
      Reason (as defined in the Employment Agreement), or (ii) termination by the
      Company without Cause (as defined in the Employment Agreement) or your
      resignation for Good Reason (as defined in the Employment Agreement), in either
      case, prior to or more than 24 months after a Change in Control (as defined
      in
      the Employment Agreement), the unvested portion of the Option shall terminate
      immediately and the vested portion of the Option that is exercisable as of
      the
      date employment ceases shall remain exercisable for six (6) months following
      such termination, but not later than the expiration of the Option Term. If
      you
      do not exercise the Option during such period, the Option shall be void and
      deemed to have been forfeited upon the expiration of such period and shall
      be of
      no further force or effect.

     

    (c) If
      you
      cease to be an Employee of the Company due to your termination by the Company
      without Cause (as defined in the Employment Agreement) or your resignation
      for
      Good Reason (as defined in the Employment Agreement), in either case, within
      24
      months after a Change in Control (as defined in the Employment Agreement),
      the
      Option as of the effective date of such termination of employment, to the extent
      not previously vested and exercisable, shall become vested and exercisable
      upon
      the Release Effective Date (as defined in the Employment Agreement) and shall
      remain exercisable for six (6) months following such termination, but not later
      than the expiration of the Option Term. If you do not exercise the Option during
      such period, the Option shall be void and deemed to have been forfeited upon
      the
      expiration of such period and shall be of no further force or
      effect.

     

    (d) If
      you
      cease to be an Employee of the Company by reason of your death or Disability,
      the unvested portion of the Option shall immediately vest and become exercisable
      and the Option shall remain exercisable for six (6) months following the date
      of
      death or Disability, but not later than the expiration of the Option Term.
      If
      you, or your authorized representative in the case of death, do(es) not exercise
      the Option during such period, the Option shall be void and deemed to have
      been
      forfeited upon the expiration of such period and shall be of no further force
      or
      effect. 

     

    (e) If
      you
      cease to be an Employee of the Company by reason of your Retirement, the
      unvested portion of the Option shall terminate immediately, and the vested
      portion of the Option that is exercisable as of the date your employment or
      service ceases shall remain exercisable for six (6) months following the date
      of
      such Retirement, but not later than the expiration of the Option Term. If you
      do
      not exercise the Option during such period, the Option shall be void and deemed
      to have been forfeited upon the expiration of such period and shall be of no
      further force or effect.

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    

     

    (f) If
      you
      cease to be an Employee of the Company by reason of your Disability or death
      and
      only if price quotations for the Shares are not available on any exchange or
      national market system, you or the beneficial holder of the Option, as the
      case
      may be, shall have the right during the exercise period provided in SECTION
      3(d)
      above to demand that the Company purchase the vested portion of the Option
      from
      you, or such beneficial holder, at a value equal to the difference between
      the
      Fair Market Value of the Shares subject to the Option and the exercise price
      of
      such Option. 

     

    4. ADJUSTMENT;
      CHANGE IN CONTROL.

     

    (a) The
      Option may be adjusted or terminated in any manner as contemplated in the
      Plan.

     

    (b) Except
      as
      provided herein, the Option may be exercised in whole at any time or in part
      at
      any time to the extent that the Shares under the Option are then exercisable.
      In
      no event, however, may the Option be exercised after the expiration of the
      Option Term, as described in SECTION 6 below. 

     

    5. TRANSFER
      RESTRICTIONS. The Option is non-transferable otherwise than by will or the
      laws
      of descent and distribution. It may be exercised only by you, or if you die,
      by
      your executor, administrator, or person(s) to whom the Option is transferred
      by
      will or the laws of descent and distribution in accordance with SECTION
      3.

     

    6. EXPIRATION
      OF AGREEMENT. All rights to exercise the Option shall expire, in any event,
      upon
      the expiration of the Option Term.

     

    7. SHARE
      CERTIFICATES. Certificates evidencing Shares issued upon any exercise of the
      Option may bear a legend setting forth among other things such restrictions
      on
      the disposition or transfer of the Shares as the Company may deem appropriate
      to
      comply with federal and state securities laws.

     

    8. IMPACT
      OF
      AGREEMENT ON YOUR EMPLOYMENT OR SERVICE. Nothing contained in this Agreement
      or
      the Plan shall restrict the right of the Company or any of its Subsidiaries
      to
      terminate your employment or service at any time with or without Cause subject
      to any written employment agreement.

     

    9. AGREEMENT
      IS SUBJECT TO PLAN AND EMPLOYMENT AGREEMENT. This Agreement is subject to all
      terms, provisions, and conditions of the Plan, which is incorporated herein
      by
      reference and to such regulations as may from time to time be adopted by the
      Committee. This Agreement is further subject to the terms relating to the Option
      that are set forth in the Employment Agreement. In the event of any conflict
      between the provisions of the Plan and/or the Employment Agreement and the
      provisions of this Agreement, the terms, conditions, and provisions of the
      Plan
      and/or Employment Agreement shall control, and this Agreement shall be deemed
      to
      be modified accordingly. In the event of any conflict between the provisions
      of
      the Plan and the provisions of the Employment Agreement relating to the Option,
      the provision of the Employment Agreement shall control and this Agreement
      shall
      be deemed to be modified accordingly.

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    

     

    10. NATURE
      OF
      OPTION. This Agreement is intended to grant a Nonqualified Option.

     

    11. NOTICE.
      All notices by you to the Company and your exercise of the Option shall be
      addressed to Haynes International, Inc., 1020 West Park Avenue, P.O. Box 9013,
      Kokomo, IN 46902, ATTENTION: Compensation Committee, or such other address
      as
      the Company may, from time to time specify. 

     

    12. SECURITIES
      LAWS. Notwithstanding anything contained in this Agreement or in the Plan to
      the
      contrary, the Option may not be exercised until all applicable federal and
      state
      securities requirements pertaining to the offer and sale of the securities
      issued pursuant to the Plan have been met and the Company has been advised
      by
      counsel satisfactory to the Company that all applicable requirements have been
      met. If requested by the Committee, you agree to deliver to the Company such
      signed representations and covenants as may be necessary, satisfactory to the
      Company in the opinion of counsel, for compliance with applicable federal and
      state securities laws and such other instruments and agreements as the Committee
      may reasonably request.

     

    13. WITHHOLDING.
      The Company shall have the right to withhold from your regular cash
      compensation, if any, or from any payments under this Agreement, or require
      you
      to submit, amounts sufficient to satisfy any federal, state, or local income
      or
      employment tax withholding requirements arising from your exercise of any rights
      under this Agreement or make such other arrangements satisfactory to the Company
      with regard to such taxes, including the withholding of Shares of common stock
      that are subject to the Option, at such time as the Company deems necessary
      or
      appropriate for compliance with such laws. 

     

    14. DEFINITIONS.
      All capitalized terms not otherwise defined herein shall have the meanings
      assigned to them in the Plan. 

     

    
      	 	
              Very
                truly yours,

            
	 	 
	 	
              HAYNES
                INTERNATIONAL, INC.

            
	 	 
	 	 
	 	 
	 	
              /s/
                JOHN COREY

            
	 	
              John
                Corey, Chairman of the Board

            

    

    

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    ACCEPTANCE
      OF NONQUALIFIED STOCK OPTION AGREEMENT

     

    

    I
      hereby
      accept the terms and provisions of this Nonqualified Stock Option Agreement,
      dated October 1, 2008 ("Agreement"), and the Haynes International, Inc.
      ("Company") 2007 Stock Option Plan dated as of January 18, 2007 ("Plan"). I
      acknowledge that I have received a copy of the Plan and the Employment
      Agreement, and I am familiar with the terms and provisions of the Plan,
      Employment Agreement (as it relates to the Options) and the Agreement. I agree
      to accept as binding, conclusive, and final all decisions and interpretations
      of
      the Company's Board of Directors and Committee upon any questions arising under
      the Plan or this Agreement.

     

    Dated
      this 1st day of October, 2008.

     

    

    

     

    
      	 	
              /s/
                MARK COMERFORD

            
	 	
              Mark
                Comerford

            
	 	 
	 	  

	 	  

	 	
              AddressUnassociated Document

     

    Exhibit
      10.1

     

    Equity
      Transfer Agreement

     

     

    Date:
      October 1, 2008

     

    Beijing

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    This
      Agreement is made and entered
      into
      on October 1, 2008 in Beijing by and between the following parties:

    

    Transferee:
      Beijing
      PKU Chinafront High Technology Co., Ltd., a company duly organized and validly
      existing under the laws of the People’s Republic of China ( “Party A or
      Transferee”), having its legal domicile at 7th
      Floor,
      Tower
      B, E-wing Center, No. 113 of Zhichunlu, Haidian District, Beijing, PRC.

    

    Transferors:
      Qing
      Lu, Xiaohong Chen, Hangfei Lin, Gang Li, Jianzhong Zhang and Jieqing Guo
      (collectively “Party B or Transferers”)

    

    Recitals

    

    WHEREAS
      on Feb 6th,
      2007,
      the Transferors jointly formed Shanghai Yootu Information Technology Co., Ltd.
      (the “Target Company”), a company duly organized and validly existing under the
      laws of the People’s Republic of China and mainly engaged in the business of
      processing and releasing of real-time traffic information, having its key
      technologies in the system for receiving, processing and releasing floating
      car
      data. 

    

    WHEREAS
      the Registered Capital of the Target Company is RMB two million (RMB 2,000,000),
      and the Transferors are the all existing shareholders of the Target Company,
      holding one hundred percent (100%) of the equity interest in the Target Company
      as of the date herein. The Transferors agree to transfer the one hundred percent
      (100%) of the equity interest they hold in the Target Company to the Transferee,
      with the consideration specified in Section 2.2 and in accordance with other
      terms and conditions contained herein, and the Transferee agrees to purchase
      all
      the equity interest and rights pertaining thereto under the aforesaid transfer
      pursuant to the terms and conditions herein. 

    

    NOW
      THEREFORE the Parties to this Agreement, through amicable consultation based
      on
      the principle of equality, willingness and mutual benefit, hereby agree as
      the
      follows in accordance with the terms and conditions herein: 

    

    Article
      1 Definitions

    

    1.1 In
      this
      Agreement, unless the context otherwise states, the following terms shall have
      the following meanings: 

    

    (1) “China”
      shall mean the People’s Republic of China (excluding Hong Kong SAR, Macau SAR
      and Taiwan); 

    

    (2) “RMB”
      shall mean the statutory currency of the People’s Republic of China;

    

    (3) “Shares”
      shall mean the shareholder’s equity right enjoyed by the current shareholders in
      proportion to their respective paid-up and actually invested registered capital
      pursuant to the relevant legal documents as percentage of the registered capital
      in the Target Company. Generally the shares can be represented by share
      certificates or equity interests. In this Agreement the shares are to be
      represented in the form percentage; 

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    (4) “Equity
      Transfer” shall mean the Transferors’ transfer of the one hundred percent (100%)
      of the equity interest they hold in the Target Company in accordance with the
      terms and conditions and the agreements herein; 

    

    (5) “Transfer
      Price” shall mean the price specified in Sections 2.2 and 2.3; 

    

    (6) “Transfer
      Completion Date”, shall mean the definition as given in Section 5.1;

    

    (7) “Current
      shareholders” shall mean the shareholders of the Target Company as specified in
      the Commercial Registration and the Articles of Association of the Target
      Company, which shall include all the current shareholders of the Target Company,
      before the Agreement is executed and becomes effective; 

    

    (8) “Option”
      shall mean the consideration obtained by the Target Company as a result of
      transferring the equity interest upon satisfying the provisions set forth in
      Sections 3.2 and 3.3 herein, the consideration for the 5% shares as granted
      to
      the key personnel who have mastered the key technologies; the key personnel
      and
      percentages of distribution among them will be described in Exhibit 5 of this
      Agreement; 

    

    (9) “Key
      technologies” shall mean the technologies as set forth in Exhibit 6 attached
      hereto; 

    

    (10) “Sales
      revenue” shall mean the revenue that the Target Company actually generates from
      its main business in relation to its key technologies, i.e. real time traffic
      information service (not including regular project revenue) that has actually
      been recognized on the book; such sum shall be calculated on an accrual basis
      under the US GAAP;

    

    (11) “Net
      Income” shall mean the net income that the Target Company actually generates
      from its main business in relation to its key technologies, i.e. real time
      traffic information service (not including regular project revenue) less the
      annual cost of the year that has actually been recognized on the book; such
      sum
      shall be calculated on an accrual basis under the US GAAP; and 

    

    (12) the
      “Agreement” shall mean the entire agreement, all exhibits and other documents
      agreed by both Party A and Party B to be attached hereto as exhibits;

    

    1.2 Articles,
      sections, subsections and exhibits shall respectively refer to the articles,
      sections, subsections and exhibits contained herein; 

    

    1.3 The
      headings contained herein are made for convenience and shall in no case affect
      the interpretation and understanding of the Agreement. 

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    
Article
      2 Equity Transfer

    

    2.1 Both
      Party A and Party B agree that the Transferee shall pay the Transferorssuch
      amount of cash and shares defined in Section 2.2 as consideration for purchasing
      the transferred equity interest pursuant to the terms and conditions under
      Article 4 of the Agreement. 

    

    2.2 The
      Transfer Price with which Party A acquires the one hundred percent (100%) of
      the
      equity interest shall be: maximum RMB 8.8 million and the consideration as
      represented by the net income of Party B for fiscal years 2009 and 2010,
      respectively as set forth in Article 3 of the Agreement. 

    

    2.3 The
      Transfer Price shall mean the purchase price to acquire the transferred equity
      interest, including all shareholders’ interests pertaining to the equity
      interest transferred. Such shareholder’s interests shall mean all existing and
      prospective interests as pertaining to the equity transferred, including all
      interests as represented by one hundred percent (100%) of the movable property,
      fixed assets and tangible/intangible assets. The Transfer Price shall exclude
      the following: (a) any debt or amount payable of the Target Company not
      explicitly specified in Exhibits 2 attached hereto (the “Undisclosed Debt”), and
      (b) the depreciation, damage, reduction or loss of use value of the Target
      Company’s exiting property as compared with the lists in Exhibits 4, 5 and 6
      (collectively the “Impairment Loss”)

    

    2.4 If
      any
      Undisclosed Debt exists, then Party B shall assume the liability of paying
      off
      such debts to the extent of one hundred percent (100%) of the amount in debt.
      

    

    2.5 Party
      B
      agrees that upon execution of the Agreement it shall prepare all documents
      necessary for registering the equity transfer under the Agreement and shall
      engage the persons as appointed by the parties to complete all necessary
      registration regarding the equity transfer with the Administration of Industry
      and Commerce. The parties to the Agreement shall, with their utmost effort
      including but not limited to sign all necessary legal documents as required
      by
      relevant commercial departments and administration of industry and commerce
      ,
      cause the registration of the equity transfer to be completed as soon as
      possible. 

    

    Article
      3 Payment and Delivery

    

    3.1 Party
      A
      shall pay the initial transfer price of RMB 8.8 million (RMB 8,800,000) to
      Party
      B within five (5) business days following the date of this Agreement. Upon
      the
      satisfaction of all the terms and conditions set forth in Sections 3.2, 3.3
      and
      3.4 herein, Party A shall pay the second and the third installment of the
      transfer price according to the following payment terms set forth in Sections
      3.2 and 3.3. 

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    3.2 Party
      A
      shall on the later of (1) January 1 2010 and (2) the completion of the audit
      of
      financial statements of Party B as of and for the fiscal year ending December
      31, 2009 pay the following consideration to Party B:

     

    Consideration
      of 2009 = the audited net income of the Target Company of fiscal year ending
      December 31, 2009 * 2. 

     

    Payment
      Terms: 50% in cash plus the number of shares of China TransInfo Technology
      Corp.
      in value equivalent to the remaining 50% of the consideration. The per share
      price of such shares shall be the 30-day average of the closing priceimmediately
      before the end of 2009 and the exchange rate being the 30-day average of the
      closing price of RMB against USD immediately before the end of 2009 shall apply.
      The paid shares shall be locked up for one year from their issuance date. If
      the
      Target Company experiences losses in 2009 then no consideration shall be paid.
      If on July 1 2010 there is any bad debt or outstanding receivable recorded
      in
      the recognized income of 2009, such bad debt or outstanding receivable shall
      be
      charged into the expenses of 2010.

     

    3.3 Party
      A
      shall on the later of (1) January 1 2011 and (2) the completion of the audit
      of
      financial statements of Party B as of and for the fiscal year ending December
      31, 2010 pay the following consideration to Party B:

     

    Consideration
      of 2010 = the audited net income of the Target Company of fiscal year ending
      December 31, 2010 * 3. 

     

    Payment
      Terms: 50% in cash plus the number of shares of China TransInfo Technology
      Corp.
      in value equivalent to the remaining 50% of the consideration. The per share
      price of such shares shall be the 30-day average of the closing price
      immediately before the end of 2010 and the exchange rate being the 30-day
      average of the closing price of RMB against USD immediately before the end
      of
      2010 shall apply. The paid shares shall be locked up for one year from their
      issuance date. If the Target Company experiences losses in 2010 then no
      consideration shall be paid. To ensure that the net income of 2010 is
      represented truthfully and validly in the financial statements, Party A may
      withhold any cash consideration in the amount of any outstanding receivable
      however recognized as income from January 1 2010 to December 31 2010, i.e.
      the
      amount of any outstanding receivable recognized as income multiplied by 3.
      If
      the amount withheld is greater than the aggregate cash consideration of 2010,
      Party A may withhold the amount of the share consideration in a value equivalent
      to the difference. Such withholding shall be released upon repayment of all
      outstanding receivables recognized as income and the whole receivable of related
      contracts in 2010.

     

    3.3.1
      For
      the definitions of Net Income and Sales Revenue refer to Sections 1.1.10 and
      1.1.11 of the Agreement. The amount of the net income and sales revenue shall
      be
      calculated on the accrual basis under US GAAP and shall be verified and
      confirmed by the accounting firm designated by the Transferee.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    3.4 The
      initial transfer price paid by the Transferee to the Transferors pursuant to
      Section 3.1 hereunder shall be deposited into a bank account as designated
      by
      the Transferors, and the Transferors agree to pay off all the debts as set
      forth
      in Exhibit 2 hereto within 5 days after the receipt of the aforesaid payment.
      Any payment left over from satisfying the debts may be distributed among: (a)
      the Transferors of the Target Company in proportion to their percentage of
      ownership; or (b) the Transferors according to the proportion of distribution
      as
      determined and agreed by the Transferors. 

     

    3.5 The
      Transferors shall reserve the shares of China TransInfo Technology Corp. for
      the
      key technical personnel according to the proportion as set forth in Exhibit
      5.
      Such key technical personnel may waive the right for the above options; however
      no such options shall be transferred, used as guarantee or for paying debts
      by
      the technical personnel. The Transferee shall also pay the transfer price to
      the
      technical personnel of the Target Company in proportion as set forth in Exhibit
      5 

     

    3.6 If
      before
      the payment of the remaining consideration of 2009 and 2010, the Transferee
      discovers any Undisclosed Debts and/or Impairment Loss in its property, then
      the
      Transferee shall have the right of deducting such amount of the Undisclosed
      Debts and/or devaluation of property as percentage of the aggregate Transfer
      Price from the remaining amount payable to the Transferors . If such Undisclosed
      Debts and/or devaluation of property is discovered after the whole amount of
      the
      Transfer Price has been paid by the Transferee to the Transferors , then the
      Transferors shall refund such amount of Transfer Price equal to the Undisclosed
      Debts and/or devaluation of property as percentage of the aggregate Transfer
      Price to the Transferee. 

     

    3.7 Party
      B
      shall complete the registration of the business alteration within 15 business
      days after its receipt of the initial transfer price under Section 3.1.

     

    3.8 Relevant
      tax and other charges arising out of the equity transfer under the Agreement
      shall be paid by the Transferee and the Transferors respectively in accordance
      with the relevant laws and regulations. 

     

    Article
      4 Preconditions for Share transfer

     

    4.1 Only
      when
      the following precondition are fulfilled within 30 days from the date the
      Agreement shall the Transferee perform its obligations of the payment of the
      Transfer Price as set forth in Article 3 of the Agreement. 

     

    (1) The
      Transferors have completed all legal procedures as necessary for transferring
      its equity interest in the Target Company to the Transferee; 

     

    (2) Party
      B
      has provided the resolution of the shareholders of the Target Company approving
      the equity transfer; 

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    (3) The
      Transferors should have singed a declaration for possible tax arising from
      the
      equity transfer before the Transfer Completion Date;

     

    (4) The
      Target Company should have acquired the ownership of the key technologies as
      set
      forth in Exhibit 5 attached hereto and should have had the full control over
      such technologies; 

     

    (5) The
      key
      technical personnel should have transferred all source code and documents as
      set
      forth in Exhibit 6 to the Target Company and the personnel designated by the
      Transferee; and 

     

    (6) The
      Target Company should have entered into the Confidentiality &
Non-Competition Agreement attached hereto as Exhibit 7 with the key technical
      personnel who control the key technologies. 

     

    4.2 The
      Transferee shall have the right in its discretion to waive any and all
      preconditions as set forth in Section 4.1. Such decision of waiver shall be
      made
      in writing. 

     

    4.3 If
      any of
      the preconditions as set forth in Section 4.1 is not fulfilled within the
      specified time and such precondition is not waived by the Transferee, then
      the
      Agreement shall be terminated automatically; and any right, obligation and
      responsibility under the Agreement shall become invalid and no longer binding
      on
      both parties, and the Transferors shall not claim any Transfer Price against
      the
      Transferee under the Agreement, and shall, no later than 7 business days after
      the termination of the Agreement, refund in full amount of the Transfer Price
      the Transferee has already paid to the Transferor pursuant to Section 3.1 herein
      together with any interest accrued from the payment during such period.

     

    4.4 If
      the
      Agreement is terminated pursuant to Section 4.3 and the equity transfer has
      been
      registered, then the parties agree that they shall work together with necessary
      efforts to cause such equity interest to be transferred from the Transferee
      back
      to the Transferors. 

     

    Article
      5 Equity Transfer Completion Date

     

    5.1 The
      Agreement shall come into force when signed by the authorized representatives
      of
      both parties and the Transferee shall be entitled to the transferred equity
      interest and become the only shareholder of the Target Company upon completion
      of all legal procedures for alteration and registration required for
      transferring the equity interest. However, the rights and obligations shall
      not
      be finally fulfilled until the preconditions set forth in Article 4 are
      satisfied within the specified time period under Section 4.1 and the Transfer
      Price has actually been paid to the transferors by the Transferee. 

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    Article
      6 Structure of Corporate Governance

     

    6.1 Upon
      the
      execution of the Agreement, the Transferee has the right to appoint a financial
      controller to the Target Company. The common seal, special seal for contact,
      and
      the special financial seal shall be kept by the relevant person designated
      by
      the financial controller appointed by the Transferee and the private seal of
      the
      legal representative shall be kept by the current person in charge of finance
      of
      the Target Company .
      

     

    6.2 Upon
      the
      completion of the equity transfer, the Board of Directors of the Target Company
      shall consist of 5 members, 4 of whom are recommended by the Transferee with
      the
      remaining 1 recommended by the Transferors.

     

    6.3 Upon
      the
      completion of the equity transfer, the structure of corporate governance is
      subject to the Company Law and relevant regulations of the Transferee’s parent
      company. 

     

    Article
      7 Representation and Warranties of the Transferee

     

    7.1. Representation
      and Warranties of the Transferee shall be true, complete and
      accurate.

     

    7.2 The
      Transferee has the full power, rights and capacities for execution, delivery
      and
      performance of the Agreement, and can act as the subject of litigation. Party
      A's execution and performance of the Agreement shall not violate any relevant
      laws and regulations or government order, nor breach any contract or agreement
      binding upon Party A or its assets thereof.

     

    7.3 Legality
      of the Share Transfer payments. Beijing Zhangcheng hereby warrants that its
      Share Transfer payments for subscription for transferers' shares of the Company
      are legal, and it has full power and capacity to make the Share Transfer payment
      to the transferers subject to the terms and conditions of the
      agreement.

     

    

    Article
      8 Representation and Warranties of the Transferors

    

    8.1 The
      Transferors hereby represent and warrant as follows to the Transferee:

    

    8.1.1 Authorization.
      Authorized representative of the Transferors has all the necessary rights and
      authorization for execution and performance of the Agreement and fulfillment
      of
      the transactions contemplated by the Agreement. The Agreement shall be binding
      upon the Transferors and the Target Company.

    

    8.1.2 No
      Conflict. The execution and performance of the Agreement does not breach,
      conflict with the articles of association or bylaws of the Target Company,
      nor
      violate any mandatory stipulations of Chinese laws and regulations; the
      Transferors and the Target Company have acquired all necessary consent or
      authorization from a third party in respect of the transactions
      hereunder.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    8.1.3 Duly
      existing. The Target Company is a limited liability company duly incorporated
      and existing under relevant laws.

    

    8.1.4 Investment.
      The Target Company does not as of the date of this Agreement, invest in or
      operate, including but not limited to, its subsidiaries, branch companies,
      representative offices or branches; or any other entity controlled directly
      or
      indirectly by the Target Company or any other entity in which the Target Company
      holds shares.

    

    8.1.5 Financial
      statements. The financial statements (including balance sheets, profit &
loss statement and cash flow statement) for the period ended September 30,
      2008
      (“Balance Sheets Date”) in Exhibit 2 represents the real, complete and accurate
      operation state and financial position of the Target Company in related periods
      and on related base day. All the Target Company's audit accounts and management
      accounts (including transfer accounts) have been kept in compliance with
      relevant Chinese finance and accounting system in conjunction with the real
      condition of the Target Company, which represent the real and fair financial
      position and operation state of the Target Company during the period of relevant
      accounts. The Target Company's financial records and data are in full compliance
      with Chinese laws and regulations and the principles of Chinese Accounting
      Standard.

    

    8.1.6 Undisclosed
      liabilities. The normal liabilities of the Target Company shall not have any
      material and adverse effect on the Target Company or its shareholders. In
      addition, the Target Company does not have any other liabilities not represented
      in the balance sheets nor has the Target Company ever furnished other parties
      with security of guaranty or any pledge, mortgage or any other security
      interests with respect to any of its material assets. 

    

    8.1.7 Capital
      structure. The capital structure of registered capital of the Target Company
      in
      its articles of association and its amendment with filing and registration
      with
      the Administration for Industry and Commerce is consistent with that in the
      articles of association and its amendment provided by the Transferors to the
      Transferee, which represents the complete and accurate capital structure of
      the
      Target Company prior to the date of this Agreement. Except as set forth above,
      no shares of capital stock or other voting securities of the Target Company
      are
      issued, reserved for issuance or outstanding. 

    

    8.1.8 Absence
      of Certain Changes or Events. From the Balance Sheet Date to the date of this
      Agreement, unless otherwise specified in the Agreement and approved by the
      Transferee in written form, during such period there has not been: 

    

    (a)
      any
      prepayment of the liabilities by the Target Company;

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    (b)
      any
      security of guaranty or any mortgage, pledge or any other security interest
      created by the Target Company;

    

    (c)
      any
      exemption of its creditor’s rights upon other s or wavier of its rights of
      claim; 

    

    (d)
      any
      amendment to any existing contracts or agreements;

    

    (e)
      any
      bonus granted to any executive officers, directors, employees, sales
      representatives, agents or advisors or any increase of their income in any
      other
      form, or the salaries of the five persons with the highest salary in the Target
      Company, CEO, President, COO and CFO by ann aggregate of 10% within any period
      of twelve months;

    

    (f)
      any
      incurrence of loss (whether or not the insurance has bought), or deterioration
      of relationship with the Target Company’s suppliers, customers or employees,
      which may lead to materially adverse impact on the Target Company;

    

    (g)
      any
      change of the method of accounting calculation, accounting policy or principles,
      or rules and regulations of financial accounting of the Target
      Company;

    

    (h)
      any
      transfer, or any license granted to others for the use of the intellectual
      property of the Target Company except for the normal business of the Target
      Company;

    

    (i)
      any
      material change with respect to regular sales or accounting method, employment
      policy, or related rules and regulations;

    

    (j)
      have
      materially adverse change with respect to the Target Company's financial
      position; or any other transactions rather than the regular business incurring
      responsibilities;

    

    (k)
      any
      resolutions at shareholders' meeting or board resolutions of the Target Company
      which are different from those approved at annual general meeting with respect
      to the Target Company’s routine business, except for those made particularly for
      the performance of the Agreement;

    

    (l)
      any
      declaration, payment, or causing the payment of any dividend, bonus or
      distributions in other forms; 

    

    (m)
      (i)
      any sale, mortgage, pledge, lease, transfer or disposition of assets out of
      its
      normal business scope of which the underlying transaction value reaches over
      RMB
      30,000, (ii) any disposition of any fixed asset or approval of the disposal
      of
      its fixed asset by others, giving up the control over the assets of the Target
      Company, entry into any contract which may result in the fixed assets
      expenditure, or incurrence of any other responsibilities, except for those
      incurred in the ordinary course of business of the Target Company; (iii) any
      expenditure over RMB 30,000 that is out of the Target Company’s ordinary course
      of business, or purchase of any tangible or intangible assets (including the
      equity interest in any company);

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    (n)
      any
      transaction or action that is not within the ordinary course of the Target
      Company’s business; or 

    

    (o)
      any
      action or inaction which may lead to the above events.

    

    8.1.9 Tax.
      The
      Target Company has filed all the tax returns required by the laws and
      regulations of China, and has paid all the tax payables.

    

    8.1.10 Asset.
      The Target Company has the full power and right to own and use all their assets
      as set forth in Exhibit 8. 

    

    8.1.11 Fixed
      assets. The Target Company has clear and legal property rights over its fixed
      assets, and has furnished the Transferee with relevant supporting documents
      in
      respect of the title and use right of the Target Company’s fixed assets. There
      is no mortgage, security of guaranty or any third party’s claim over such fixed
      assets.

    

    8.1.12 The
      Transferors hereby warrant that all the duplicated documents of the existing,
      effective written contracts of the Target Company have been furnished to the
      Transferee, which are true copies of the originals, and that such contracts
      are
      valid and duly operative. In addition, the Target Company does not have any
      of
      the following contracts, agreements or documents binding upon the Target Company
      or to which the Target Company is a party, or violation of the terms and
      conditions or obligations of such contracts, agreements or documents,
      which:

    

    (a)
      are
      not made in the ordinary course of business;

     

    (b)
      are
      not made on a fair base;

     

    (c)
      result in the Target Company's loss or prejudice to the Company's
      interests;

     

    (d)
      can
      not be implemented with adequate efforts and expenditure; or

     

    (e)
      limit
      the Target Company's free operation.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    8.1.13 Intellectual
      property. Unless otherwise disclosed in the Disclosure List, the Target Company
      has the legal title of or rights to use all the intellectual properties being
      used by the Target Company (including but not limited to patent, trademark,
      copyright, know-how, domain name and business secret), and the Target Company
      has acquired all the necessary authorization or license of the intellectual
      property with regard to a third party's intellectual property during its
      operation (including but not limited to the intellectual property license for
      the services with regard to providing value-added services). The Target Company
      does not infringe upon any others' intellectual property rights, business
      secret, know-how or similar rights, and is not involved in any claim, dispute
      or
      proceedings, which remain unresolved or may occur, against the Company due
      to
      the infringement upon any third party's intellectual property rights, business
      secret, know-how or similar rights. The Target Company has officially registered
      its trademark, patent, software copyright and domain name with relevant
      authorities.

    

    8.1.14 Litigation.
      There is no any of the following events which may have materially adverse impact
      on the Target Company, or have adverse impact on the execution, validness and
      enforceability of the Agreement and the Equity Transfer thereof, whether it
      is
      implemented, remain unresolved or may occur:

    

    (a)
      penalty, ban or order against the Target Company from any government
      authorities;

     

    (b)
      proceedings or dispute against the Target Company such as civil, criminal and
      administrative actions and arbitration

    

    8.1.15
      Compliance.
      The Target Company's current operation is in full compliance with the existing
      laws and regulations, rules and other provisions issued by relevant
      administrations of China, and the code of telecom operators (collectively “Laws
      and Regulations”), and the Target Company does not violate any of such Laws and
      Regulations which may lead to material and adverse impact on the Target
      Company's operation or its assets.

    

    
      
        8.1.16
          Employees.
          

      

    

    

    (a)
      All
      the employees of the Target Company abide by relevant applicable labor
      laws;

    

    (b)
      There
      are not any labor disputes or potential labor disputes between the Target
      Company and its employees and former employees;

     

    (c)
      The
      Target Company does not have any economic compensation, payable but not paid,
      to
      pay due to termination of the labor contracts, or similar obligation to pay
      the
      indemnity or compensation costs with regard to employment;

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    (d)
      The
      Target Company has fully paid and/or withheld employees' social insurance fund
      or welfares in accordance with relevant laws and regulations, including
      endowment insurance, housing fund, medical insurance, unemployment insurance
      and
      other payable insurance or welfare as per relevant laws and the agreements,
      and
      therefore does not have any existing or potential disputes concerning such
      social insurance and welfares.

    

    8.2 Special
      representation and warranties. Besides the general representation and warranties
      set forth above, the Transferors and the Target Company further represent and
      warrant as follows:

    

    8.2.1 all
      the
      documents including account books, records of equity changes, financial
      statement and other records of the Target Company have been kept subject to
      business rules and controlled by the Target Company, and all the principal
      transactions in connection with the Target Company's operation have been
      recorded in an accurate and regular way;

    

    8.2.2 as
      of the
      date of this Agreement, all the documents of the Company including the minutes
      of board meetings and meetings of shareholders' conference and shareholder
      list
      have been kept safely, in which all necessary events required by such documents
      are recorded well and truly;

    

    8.2.3 ever
      since the Balance Sheet Date, (1) except for the normal operation, there are
      not
      any events giving rise to advanced debt maturity; (2) except for the normal
      operation, there are not any assets of the Target Company disposed or out of
      the
      Target Company's control, and the Target Company has not reached any agreement
      which might give rise to additional financial expenditure, nor have any
      responsibility thereof;

    

    8.2.4 the
      Target Company has submitted to tax authorities all required information; and
      up
      to the date of this Agreement, the Target Company does not have any disputes
      with tax authorities regarding tax responsibility or potential tax
      responsibility or tax incentives;

    

    8.2.5 the
      Target Company has the financial documents for normal taxing and tax payment,
      and all the necessary supporting documents for tax incentives with the approval
      by relevant government departments;

    

    8.2.6 except
      for the employee benefit, social and endowment insurance in accordance with
      the
      Labor Law of the People's Republic of China and relevant provisions, the Target
      Company does not provide any other incumbent, retire or elderly welfares or
      insurance.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    8.3 Good
      Title. The Transferors are the record owners of the equity interest of the
      Target Company, and upon the execution of the Agreement, there is no mortgage,
      pledge, security interest, lien, impediment or other limits in any form on
      such
      equity interest, , and the Transferors hold the equity interest only for its
      own
      account rather than proxy holding for any other third party.

    

    8.4 Information
      disclosure. All the documents, material facts and information, provided to
      the
      Transferee by the Transferors and the Target Company prior and after the
      execution of the Agreement, are true, accurate, without omission and not
      misleading.

    

    8.5 The
      Transferors shall take all necessary measures to demand the trade receivables
      listed in Exhibit 2 be paid as soon as possible.

    

    8.6 Shares
      lock-up. The shares that the Transferors acquire from the Transferee’s parent
      company listed on a U.S. stock market shall be locked up for one year following
      the date of issuance. 

    

    8.7 Further
      Promises of the Target Company and the Transferors.

    

    8.7.1
       Company
      operation. During the period from the execution of the Agreement up to the
      alternation registration with the Administration for Industry and Commerce
      accepted by the Parties, unless as is specified in the Agreement and the
      Exhibits to the Agreement or approved by the Transferee in written form, the
      Transferors and the Target Company promise that they shall:

    

    (a)
      be
      operating in an ordinary course of business. They will continue to develop
      its
      relationship with customers so that the Target Company's reputation and
      operation will not experience materially adverse influence after the capital
      increase and transfer of equity;

    

    (b)
      pay
      the due payables and other liabilities in the ordinary course of business,
      and
      shall not make any unusual transactions thereby incurring unusual liabilities.
      Except for the ordinary course of business, the Target Company shall not repay
      the loan, or disburse trade payables in advance or delay;

    

    (c)
      perform the contracts, agreements, or other documents in respect of the Target
      Company's assets and business in a timely manner;

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    (d)
      not
      reconcile or waive, alter its request or other rights without the written
      approval by the Transferee, except for the ordinary course of
      business;

    

    (e)
      make
      their best efforts to maintain the legal operation of the Target Company, and
      shall not separate, nor merger with any third party or acquire the assets or
      business of a third party;

    

    (f)
      not
      breach the representation and warranties in the Agreement through action or
      inaction;

    

    (g)
      inform the Transferee in writing of relevant events, facts, conditions, changes
      or other information which have had or might have materially adverse impact
      on
      the Target Company in a timely manner; and

    

    (h)
      handle the tax affairs of the Target Company as usual in full compliance with
      relevant laws and regulations.

    

    8.7.2
       Information
      collection. During the period from the execution of the Agreement up to the
      alternation registration with the Administration for Industry and Commerce,
      the
      Transferors shall provide, at the reasonable request of the Transferee and
      its
      representatives, all relevant documents of the Target Company to the Transferee
      and its representatives during business hours, including but not limited to
      all
      necessary accounts, records, contracts, technical documentation, personnel
      information, management situation and other documents to the lawyer, accountant
      and other representatives appointed by the Transferee; in order to assist the
      Transferee in reviewing the documents in respect of the Target Company's
      properties, assets and business and those mentioned in the Agreement, the
      Transferors shall permit the Transferee to meet or contact the customers and
      creditors of the Target Company. The Transferors agree that the Transferee
      has
      the full rights to conduct detailed due diligence investigations in respect
      of
      the Target Company's financial position, asset conditions and operation status
      at any time prior to the equity transfer.

    

    Article
      9 Liability for Breach of Agreement

    

    9.1
       Any
      breach of or failure to perform its representation, warranties, obligations
      or
      responsibilities by one party shall constitute the default.

    

    9.2
       Unless
      otherwise specified in the Agreement, in case of any other additional expenses,
      responsibilities or loss incurred to the other party due to the default of
      one
      party, the defaulting party shall indemnify the innocent party for such
      expenses, responsibilities or losses (including but not limited to interests
      and
      counsel fees, paid or lost due to the default). The total amount of the
      indemnification the defaulting party has to pay to the innocent party shall
      be
      equal to the loss due to such default activity and in addition, the defaulting
      party shall pay the innocent party 20% of such loss due to the default above
      as
      penalty.

     

    
      
        
        

      

      
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    Article
      10 Information Disclosure and Confidentiality

    

    10.1
       Unless
      otherwise specified in the Agreement, the terms and conditions hereunder in
      respect of Equity Transfer (including all terms and conditions hereunder, the
      Exhibits and any other relevant documents relating to investment) are
      confidential and shall not be disclosed to any third party. If required by
      relevant laws, the disclosing party shall discuss with the other party the
      disclosure and submission of relevant information within reasonable time prior
      to the disclosure and submission. 

    

    10.2
       Unless
      otherwise specified in the Agreement, the Parties shall make their best efforts
      to keep confidential any business information, material facts and relevant
      documents in any form, which are related to the Parties hereto due to the
      performance of the Agreement.

    

    10.3
       The
      Parties shall cause their respective directors, executive officers and other
      employees, and the directors, executive officers and other employees of
      affiliated companies to perform the confidentiality obligation set forth in
      this
      Article.

    

    10.4
       In
      case
      the Agreement is terminated for any reason, the provisions in this Article
      shall
      maintain their original validity.

    

    Article
      11 Supplement, Modification, Amendment and Termination

    

    11.1
       After
      the
      execution of the Agreement, the Parties may enter into any written supplemental
      agreements upon mutual consultation, which shall take effect upon due execution
      of the Parties hereto.

    

    11.2
       The
      Agreement may be modified or amended upon mutual consultation. Any modification
      or amendment to the Agreement shall be in writing, which shall take effect
      upon
      due execution of the Parties hereto.

     

    
      
        
        

      

      
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    11.3
       Termination.
      The Agreement may be terminated as follows:

    

    11.3.1
       The
      Parties make written agreement to terminate the Agreement and define the
      effective date of termination;

    

    11.3.2
       One
      party
      shall inform the other party in writing of the termination of the Agreement
      within ten (10) business days prior to the effective date of the termination
      which shall be contained in the notification, in the event that:

    

    (a)
      the
      other party’s representation or warranties are found not true or have material
      omission when made or on the date of this Agreement;

    

    (b)
      the
      other party fails to comply with the terms, promises and obligations under
      the
      Agreement, and fails to take effective remedial actions within ten (10) days
      upon receipt of written notification from the party.

    

    11.3.3
       Where
      the
      Equity Transfer set forth in Article 3 hereunder can not be closed within one
      (1) month as of the date of this Agreement, Party A shall have the right to
      terminate the Agreement.

    

    11.4
      Validity of termination.

    

    11.4.1
       In
      the
      event that the Agreement is terminated as per any clause aforementioned, the
      Agreement shall be null and void;

    

    11.4.2
       Upon
      the
      termination of the Agreement, the Parties shall adhere to the principles of
      equity, fairness and credit and return to the other party the considerations
      obtained pursuant to the Agreement, making their best efforts to seek
restitution
      in integrum;

    

    11.4.3
       Upon
      the
      termination of the Agreement, all rights and obligations of the Parties under
      the Agreement shall be terminated, and one party shall not demand any claim
      against the other party in respect of the Agreement and its termination, except
      the responsibilities set forth in Article 9 of the Agreement.

    

    Article
      12 Force Majeure

    

    12.1
       Any
      delay
      in or failure of performance by either party of all or any of their obligations
      under this Agreement shall not constitute a breach hereunder if, and to the
      extent that such delays or failures are caused by Force Majeure, provided that
      necessary remedial measures shall be taken to reduce the damage under proper
      condition.

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    12.2
       The
      affected party shall inform the other party(ies) of the occurrence of Force
      Majeure in writing within three (3) business days after the occurrence of Force
      Majeure, and furnish the other party(ies) with descriptions of Force Majeure
      and
      proving documents issued by local competent notaries for such failure of or
      delay in performance of all or any of its obligations within fifteen (15)
      business days after the occurrence of the Force Majeure. The Parties may
      determine whether to terminate the Agreement, or partially exempt the
      performance of the Agreement, or prolong the performance of the Agreement.
      In
      the event that the Parties can not reach an agreement within sixty (60) days
      after the occurrence of Force Majeure or events, the party affected by Force
      Majeure or events has the full right to terminate the Agreement, and any party
      shall not be liable for the loss caused to other party(ies)
      thereof.

    

    12.3
       The
      Force
      Majeure means objective events or circumstances, unpredictable, unavoidable
      and
      uncontrollable, which includes earthquake, typhoon, flood, fire, war and other
      unpredictable, unavoidable and uncontrollable Acts of Gods, and change of any
      laws, rules and regulations, promulgation of new laws, rules and regulations,
      or
      any government act leading to direct influence on the performance of the
      Agreement or failure to perform the terms and conditions hereunder.

    

    Article
      13 Applicable Laws and Dispute Settlement

    

    13.1
       The
      execution, validity, interpretation, performance and dispute settlement
      hereunder shall be governed by and construed in accordance with the laws of
      China. In case of certain items in respect of the Agreement not stipulated
      in
      promulgated laws and regulations of China, such items shall be construed and
      performed as per generally accepted international business practice complying
      with the laws and regulations of China.

    

    13.2
       Any
      disputes arising out of the performance of the Agreement or in connection with
      the Agreement shall be settled via friendly consultation; either party may
      submit any dispute failing friendly settlement to competent courts of China
      for
      judgment.

    

    Article
      14 Notice and Delivery

    

    14.1
       Any
      effective notice or other communications relating to the Agreement between
      the
      Parties (“Notice”) shall be in writing (including fax and e-mail) and posted,
      sent by a courier or addressed to that notified party at the address or
      telephone number hereunder with the name of attention on the
      Notice.

     

    
      
        
        

      

      
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    To
      the
      Transferee: Beijing PKU Chinafront High Technology Co., Ltd.

    Attn.:
      Shudong Xia

    Address:
      Room 717, Tower B, E-wing Center, No. 113 of Zhichun Road, Haidian District,
      Beijing, PRC

    Post
      Code: 10086

    Tel:
      010-82671299, 13501215622

    

    To
      the
      Target Company and its shareholders

    Attn.:
      Qing Lu

    Address:
      Tower A Room 1305, Fudan Science Building, No. 11 Guotai Road, Shanghai,
      PRC

    Post
      Code: 200433

    Tel:021-65111115

    

    14.2
       The
      service time for the Notice shall be determined by the following:

    

    14.2.1
       The
      Notice shall be deemed to have been received if it is personally delivered
      or
      sent by courier and the notified party issues the receipt; those without the
      notified party's receipt shall not be deemed to have been duly served
      on;

    

    14.2.2
       Notices,
      which can be sent by post and shall be delivered through registered express
      or
      EMS, shall be deemed to have been received by the notified party on the seventh
      day after the date of dispatch;

    

    14.2.3
       The
      Notice sent by fax or e-mail is deemed as given upon the date on the receipt
      of
      fax notice or e-mail, and the confirmation date by the notified party is the
      delivery date.

    

    14.3
       In
      case
      of any change of the above address or telephone number of either party (the
      “Change Party”), the Change Party shall notify other parties within seven (7)
      days after the change. Where the Change Party fails to notify other parties
      of
      such change in a timely way, it shall bear any loss or damages incurred to
      other
      parties thereof.

    

    Article
      15 Miscellaneous

    

    15.1. The
      supplementary Exhibits to the Agreement are integral part of the Agreement,
      and
      shall have the same legal binding force with the Agreement; in case of
      discrepancy between the Exhibits and the text of the Agreement, the text of
      the
      Agreement shall prevail.

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

    15.2 In
      case
      any provision under the Agreement and the Exhibits is found invalid or not
      enforceable in accordance with applicable laws, such provision shall be deemed
      as non-existence from the beginning and the remaining provisions maintain
      effective; the Parties may define new provisions through consultation to bring
      about the original intention of such provision to the great extent.

    

    15.3
       The
      Agreement shall also be binding upon the successors and transferees of the
      Parties, and such successors and transferees may have and hold the shares
      hereunder.

    

    15.4
       Party
      A
      may assign and transfer its rights, shares and obligations hereunder to its
      affiliated companies, wholly-owned subsidiaries and holding company's
      wholly-owned subsidiaries.

    

    15.5 Except
      the aforesaid provisions in Section 15.3 and 15.4, any party shall not assign
      or
      transfer any of its rights or obligations hereunder.

    

    15.6
       Unless
      otherwise specified in the Agreement, the failure of one party to exercise
      of
      its rights, power and privilege does not constitute its waiver of such rights,
      power and privilege, and single or partial exercise of such rights, power and
      privilege shall not prevent its exercise of any other rights, power and
      privilege.

    

    15.7
       The
      Agreement shall be effective with the official seals and the signature by the
      legal representatives or duly authorized representatives of the
      Parties.

    

    15.8 
      The
      Agreement is made in five copies of equal validity with 2 copies for Beijing
      Zhangcheng, one for each shareholder of Yootu, one to be kept by Yootu for
      filing and one copy for competent Administration for Industry and
      Commerce.

    

    [Signature
      page follows]

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF,
      the
      Parties hereto have caused this Agreement to be executed by duly authorized
      representatives of the Parties on the date first written above. 

     

    Transferor:
      Shareholders (Seal)

     

    
      	
              Authorized
                representative:

            	
              /s/
                Qing Lu

            	 
	 	
              Qing
                Lu

            	 

    

     

    Transferee:
      Party A: Beijing PKU Chinafront High Technology Co., Ltd. (seal)

    

    
      	
              Authorized
                representative:

            	
              /s/ Shudong
                Xia

            	
               

            
	 	
              Shudong
                Xia

            	 

    

    

    
      
        
        

      

      
        20

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