Document:

EXHIBIT
10.1

       

      
        AMENDED AND RESTATED LICENSE
AGREEMENT

        

      

      
        This
Amended and Restated License Agreement (the “Agreement”) is entered into
as of the last date of execution below (the “Effective Date”) by and
between NeoMedia Technologies, Inc. (“NeoMedia”), a Delaware
corporation with a principal place of business at Suite 500, Two Concourse
Parkway, Atlanta, Georgia, 30328 and NeuStar, Inc. (“Neustar”), a Delaware
corporation, with a principal place of business at 46000 Center Oak Plaza,
Sterling, VA 20166 (each a “Party” and collectively the
“Parties”). 

        

      

      
        RECITALS

        

      

      
        WHEREAS,
NeoMedia asserts that it is the owner of certain intellectual property rights
concerning  machine-readable code resolution, and that as such,
entities performing campaign management services will require licenses from
NeoMedia to its intellectual property rights in order to interact with a
machine-readable code-related clearinghouse;

        

      

      
        WHEREAS,
Neustar desires to develop, deploy and administer a machine-readable
code-related registry and clearinghouse;

        

      

      
        WHEREAS,
NeoMedia desires to grant to Neustar, and Neustar desires to obtain from
NeoMedia, rights to sublicense certain NeoMedia intellectual property rights
concerning machine-readable code resolution, as more particularly set forth
below;

        

      

      
        WHEREAS,
the Parties desire to share in certain revenues concerning the licensing of
machine-readable code-related intellectual property, regardless of the source of
the licensing;

        

      

      
        WHEREAS,
the Parties entered into a License Agreement, effective the 2nd day of
October, 2009, which is hereby amended and restated in its
entirety.

        

      

      
        NOW
THEREFORE, in exchange for the consideration and covenants herein, the receipt
and sufficiency of which the Parties hereby acknowledge as follows.

        

      

      
        TERMS AND
CONDITIONS

        

      

      1.  
 INCORPORATION

       

      The
recitals set forth above are hereby incorporated by reference.

       

      2.  
 DEFINITIONS

       

      2.1  “Agreement” means this Amended
and Restated License Agreement severally with respect to each Territory for
which Licensed Patents are licensed hereunder, such that a separate and
independent Agreement by and between the Parties results for each
Territory.

       

      2.2  “Clearinghouse” means a
Code-related system that receives encoded messages and presents them to a third
party for resolution, as more fully set forth in Section 3 below.

       

      2.3  “Code” means a
machine-readable symbol (e.g., barcode, alpha-numeric character strings, linear
code, graphic, wired or wireless electronic signal, or other similar
representation or figure).

       

      2.4  “Confidential Information”
means all information, whether of a technical, business, financial or any other
nature, disclosed in any manner, whether verbally, electronically, visually or
in a written or other tangible form, which is either identified as confidential
or proprietary or which should be reasonably understood to be confidential or
proprietary in nature with respect to the disclosing Party, an affiliate or a
third party.

       

      2.5  “Event of Default” means any
representation or warranty made by a Party which was incorrect in any respect
when made and that could reasonably be expected to have a material adverse
effect upon the other Party’s ability to realize the benefits of its bargain or
a material breach of this Agreement that is not cured within thirty (30) days
after notice of breach to the breaching Party.

       

      
        
          
          

        

        
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      2.6  “Field of Use” means a method
or system for mobile handsets (or other devices) to resolve machine-readable
codes through scanning (or other machine-reading methods) in which a mobile
phone subscriber is connected to a Clearinghouse in the Territory. However, the
Field of Use is specifically limited by the claims contained in the Licensed
Patents set forth the in Schedule 1 hereto.  For the avoidance of
doubt, the processing of a Code-related message solely within an enterprise, and
which are not processed by a clearinghouse, shall be deemed outside the Field of
Use.

       

      2.7  “Governing Authority” means an
entity under whose auspices a Code-related Registry or Clearinghouse is
deployed.  If a third party is not a Governing Authority, then Neustar
shall be considered the Governing Authority.

       

      2.8  “Intellectual Property” or
“IPR” means all patent,
copyright, trademark, trade name, service mark, trade secret and other
intellectual property rights, including applications thereof, arising and/or
enforceable under the laws of the related Territory.

       

      2.9  “License Customer” means an
entity to which a license or sublicense is granted to the Licensed
Patents.

       

      2.10                 “Licensed Collection Revenue”
means Revenue that Neustar collects on behalf of NeoMedia from a
NeoMedia Licensed Customer. Such Revenue may include Revenue for the licensing
of NeoMedia IPR (including the Licensed Patents).  Licensed Collection
Revenue shall not in any event include monies Neustar derives from any other
Clearinghouse or Registry-related activities, including, but not limited to,
fees from a Resolution Authority for Neustar’s development,
deployment,  operation,  management, or administration of a
Registry or Clearinghouse, fees Neustar charges its customers for registering a
Code in a Registry, fees Neustar charges its customer for processing
Transactions through a Clearinghouse, fees for ancillary services.

       

      2.11                 “Licensed Patents” means with
respect to the Territory to which they pertain, the patent applications and
issued patents owned by NeoMedia, set forth in Schedule 1 hereto, containing
claims to any invention(s) useful in or relating to the Field of Use, together
with all related divisional applications, continuation applications,
continuation-in-part applications, reissues, and reexaminations thereof, and any
other future applications or patents hereafter acquired by NeoMedia, in which
claims are directed to the Field of Use, to the extent they issue during the
Term of this Agreement.

       

      2.12                 “Licensed Transaction Revenue”
means fees collected under the Licensed Patents for the Field of Use
that are based on Revenue associated with Transactions licensed by Neustar with
respect to a Clearinghouse on behalf of Neustar Sublicense
Customers.  Licensed Transaction Revenue shall not in any event
include monies Neustar derives from any other Clearinghouse or Registry-related
activities, including, but not limited to, fees from a Resolution Authority for
Neustar’s development, deployment,  operation,  management,
or administration of a Registry or Clearinghouse, fees Neustar charges its
customers for registering a Code in a Registry, fees Neustar charges its
customer for processing Transactions through a Clearinghouse, fees for ancillary
services.

       

      2.13                 “Licensee” means
Neustar.

       

      2.14                 “Licensor” means
NeoMedia.

       

      2.15                 “NeoMedia Fee” means the
amount of the License Transaction Revenue remaining after Neustar deducts the
Neustar Fee.

       

      2.16                 “NeoMedia License Customer”
means the License Customers to whom a license to Licensed Patents is
granted by NeoMedia, and which are limited to those entities set forth in
Schedule 2.  Upon a NeoMedia License Customer ceasing to be a License
Customer (i.e., no longer receiving a license from NeoMedia), such entity shall
no longer be deemed a NeoMedia License Customer, and such entity is not
precluded from becoming a Neustar Sublicense Customer or a (again) a NeoMedia
License Customer.

       

      
        
          
          

        

        
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      2.17                 “Neustar Fee” means the
compensation due Neustar under and calculated in accordance with Article 7
below.

       

      2.18                 “Neustar Sublicense Customer”
means a License Customer to whom a sublicense to Licensed Patents is granted by
Neustar hereunder.

       

      2.19                 “Referral Fee” means the fee
set forth in Section 8.7 below for Neustar’s referral to NeoMedia of a
customer.

       

      2.20                 “Registry” means a
Code-related system in which Codes are associated with Resolution Authorities
and related data, as more fully set forth in Article 3 below.

       

      2.21                 “Resolution Authority” means
an entity designated in an associated Registry as having rights to resolve a
given code (e.g., campaign managers), wherever situated.

       

      2.22                 “Revenue” means monies
actually received as payment or the equivalent payment value if any form of
non-monetary compensation. However, Revenue shall not, by way of
example and not limitation, in any way include and shall specifically exclude,
sales or other similar value added taxes, collection costs, credit card
processing fees, credits, amounts under dispute, and any monies associated with
ancillary services (e.g., connectivity, set-up, deployment, professional
services, etc.) to the extent rendered by Neustar.

       

      2.23                  “Territory” means the
jurisdictions, including their territories and possessions, set forth in
Schedule 3 hereto.

       

      2.24                 “Transaction” means the
processing of a Code-related message in a Clearinghouse.

       

      3.
   REGISTRY & CLEARINGHOUSE

       

      3.1  Intention. Neustar
intends to develop, deploy and administer a Registry and Clearinghouse, whereby
on behalf of Resolution Authorities, Code identifiers and related conditions of
use are registered, associated, and communicated.

       

      Currently,
Neustar envisions that a Registry may perform the following activities or enable
the following functions:

       

      ·      perform
a documentary and referential function for Codes and their issuing
entities

       

      ·      apply
terms and conditions of the Governing Authority to business policies for
registering both Codes and authorities for the use of Codes

       

      ·      serve
as the definitive authority for clearing services for Code
relationships

       

      Currently,
Neustar envisions that a Clearinghouse may perform the following activities or
enable the following functions:

       

      ·      receive
Code strings from devices

       

      ·      reference
the appropriate Registry to determine Resolution Authority

       

      ·      forward
the Code strings to the applicable Resolution Authority

       

      ·      receive
from the Resolution Authority a content-related response in the form of a
uniform resource identifier, or similar identifier, or content as specified by
the Resolution Authority

       

      ·      forward
that identifier to the requesting device

       

      3.2  Administration

       

      Neustar
shall store all administrative data related to licensing hereunder, e.g., rates
cards, terms of use, policies, types, etc., separate and apart from other
operational systems, including the Registry database(s).

       

      
        
          
          

        

        
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      3.3  Reservations. The
development, deployment, operation, management, or administration of a Registry
and/or a Clearinghouse is merely a statement of intent by Neustar, which intent
is dependent on various factors, as well as Neustar business judgment, in its
sole discretion.  Nothing herein shall impose on Neustar an obligation
to develop, deploy or administer a Registry or Clearinghouse, whether or not
dependent on the sublicensing of Licensed Patents.  Nothing herein
prohibits Neustar from sublicensing third party IPR as part of the Registry or
Clearinghouse, provided the resulting deployment does not violate NeoMedia’s
Licensed Patents.

       

      3.4  Conflicts.  The
Parties acknowledge that Neustar’s development, deployment, operation,
management, or administration of a Registry and/or a Clearinghouse may be
subject to requirements issued by a Governing Authority.  Because
those requirements may conflict with the requirements in this Agreement, the
Parties agree that in such a situation, they will use commercially reasonable
efforts to resolve any such conflict, including by way of amendment to this
Agreement, but only as necessary to resolve the conflict and maintain the
benefit of the bargain between the Parties.

       

      3.5  Additional
Services.  Nothing herein shall prohibit Neustar from
providing, and it is Neustar’s intention to provide, value-added services not
subject to this Agreement.

       

      3.6  Billing & Collection
Agent.   For any current or future NeoMedia License
Customer within the Territory, if NeoMedia, solely in its discretion, chooses to
outsource any billing and collection services, NeoMedia shall provide to Neustar
a right of first refusal to provide those services relating to the Field of Use
with respect to that NeoMedia License Customer.  NeoMedia shall
provide to Neustar a copy of the license, pricing and collections terms between
NeoMedia and the NeoMedia License Customer.  Neustar shall review
these terms and may, in its sole discretion, determine whether it wishes to
accept an appointment as NeoMedia’s exclusive billing and collections agent for
that NeoMedia License Customer.  If Neustar accepts in writing such an
appointment, then Neustar shall invoice the NeoMedia License Customer for
services relating to the Field of Use and collect monies, on behalf of NeoMedia,
but subject to Article 7.  If Neustar accepts any such appointment,
NeoMedia shall then provide to Neustar any other relevant compensation
provisions in the agreement(s) with each NeoMedia License
Customer.  Revenue collected by Neustar hereunder shall be deemed
Licensed Collection Revenue as provided in Article 7.   Neustar’s
performance of billing and collection activities under this Section are
contingent upon full and timely receipt of the information required to be sent
to Neustar (e.g., identity of the customer and the relevant compensation
provisions).  If the compensation provisions in any agreement between
NeoMedia and a NeoMedia License Customer are either not commercially reasonable
or not practicable for Neustar (in its sole discretion) to implement, then
Neustar shall not be under any obligation to serve as a billing and collections
agent under this Section, provided that Neustar provides NeoMedia with written
notice thereof.

       

      4. 
  LICENSES

       

      4.1  Grant.  NeoMedia
hereby grants to Neustar, as a Clearinghouse and Registry, the right to
sublicense NeoMedia’s Licensed Patents to License Customers in the Field of Use
and Territory, subject to Exhibit B to this Agreement.

       

      4.2 Conditional
Grant.  It is not
considered by the Parties that Neustar’s development, deployment, operation,
management, or administration of a Clearinghouse or Registry as contemplated
herein would require Neustar to obtain a license to the NeoMedia Licensed
Patents.  However, to the extent that it might require it, NeoMedia
shall grant to Neustar a royalty-free license to the NeoMedia Licensed Patents
for the purpose of administering or operating a Clearinghouse and Registry , as
contemplated herein.

       

      4.3 Exclusion.  The
grant of the licenses under Section 4.1 excludes the right to use or sublicense
NeoMedia’s Campaign Manager and Code Management platforms, and NeoMedia is not
obligated or expected to provide any rights or technical information on the
same, beyond what may be necessary to interface with the Registry and
Clearinghouse.

       

      
        
          
          

        

        
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      4.4 Condition.  Nothing
herein requires the licensing or sublicensing of any rights in the Licensed
Patents to the extent that the activities associated with the NeuStar
Clearinghouse would not otherwise read on the claims of such Licensed Patents
absent the licensing or sublicensing of the Licensed Patents hereunder, or when
claims are cancelled or modified, the term of the Licensed Patent expires,
or the Licensed Patents are overturned.

       

      4.5 Licensing
Restriction.  NeoMedia shall not during the Term license the
Licensed Patents to third parties within the Field of Use, with the sole
exception of, and with respect to, the NeoMedia Licensed Customers set forth in
Schedule 2.

       

      5.   
OWNERSHIP AND RESPONSIBILITIES

       

      5.1 Generally.  As
a condition of NeoMedia’s provision of the licenses and other matters set forth
hereunder, Neustar acknowledges NeoMedia’s representation that all right, title
and interest, including Intellectual Property rights, in and to the Licensed
Patents pertaining to the Field of Use, is owned exclusively by NeoMedia, or its
licensors, and are protected by applicable Intellectual Property
laws.

       

      5.2 Maintenance &
Enforcement. NeoMedia asserts that
the Licensed Patents are necessary to a License Customer’s benefit of a
Code-related Registry and Clearinghouse.  Consequently, the benefit of
the bargain set forth in this Agreement requires the maintenance and enforcement
of the Licensed Patents pertaining to the Field of Use.  NeoMedia
shall therefore at all times during the Term take all steps necessary to
maintain and enforce the Licensed Patents pertaining to the Field of
Use.

       

      5.3 Notification.  NeoMedia
shall inform Neustar if any claims in a Licensed Patent pertaining to the Field
of Use, expire or are cancelled, overturned, modified, or the subject of a
legal, regulatory or administrative challenge, within fourteen (14)
days.  NeoMedia shall also within fourteen (14) days inform Neustar
should NeoMedia acquire or be granted IPR related to the Field of Use, in which
case the Parties shall enter into good faith negotiations for amending this
Agreement, if reasonably necessary, on mutually-agreeable commercial terms,
to include such acquired or granted IPR in the definition of Licensed Patents.
However, NeoMedia shall in no way be obligated to include such IPR in this
Agreement and, should the Parties not modify this Agreement, this shall not
constitute a breach of the Agreement.

       

      6.   
SUBLICENSE AGREEMENT AND RESTRICTIONS

       

      6.1
 Sublicense
Agreement.  Neustar shall enter into a written agreement with
Neustar Sublicense Customers for the sublicensing of the Licensed Patents
pertaining to the Field of Use.  Neustar shall submit to NeoMedia
Neustar’s sublicensing terms and conditions in Neustar’s written template
agreement with Neustar Sublicense Customers for NeoMedia’s review and consent,
which consent shall not be unreasonably withheld, conditioned or
delayed.  If Neustar desires to modify materially any sublicensing
terms and conditions, then Neustar shall submit those modifications in writing
to NeoMedia for review and consent, which consent shall not be unreasonably
withheld, conditioned or delayed.  Neustar-proposed modifications to
sublicensing terms and conditions shall be deemed accepted by NeoMedia when (a)
NeoMedia provides Neustar with notice of acceptance of such modifications or (b)
if NeoMedia fails to provide written notice to Neustar of its objection, which
objections sets forth the reasons therefor, within fourteen (14)
days.  Neustar’s billing and collection methods are reserved to its
sole discretion.  Nothing herein shall be deemed to require Neustar to
commence legal proceedings, to engage a collections agency, or perform another
similar act, all of which is the ultimate obligation of Neustar.

       

      6.2  Restrictions.  Neustar
shall include in its written agreements with License Customers the following
restrictions:

       

      (a)  The
grant of a license to Licensed Patents pertaining to the Field of Use, is
non-transferable, non-sublicensable, and non-exclusive.

       

      
        
          
          

        

        
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      (b)  The
Neustar Sublicense Customer’s use of the inventions set forth in claims in the
Licensed Patents is limited to License Customer’s internal business purposes in
interacting with the Clearinghouse and Registry.

       

      (c)   NeoMedia
is a third-party beneficiary with respect to the sublicense.  agents harmless from and against any
and all liabilities, claims, demands, expenses (including, without limitation,
attorneys’ and professional fees and other costs of litigation), losses or
causes of action (each, a “Liability”) arising out of or relating in any way to
(i) the exercise of any right granted to Neustar Sublicense Customer pursuant to
the License Agreement or (ii) any breach of the License Agreement by Neustar
License Customer, except to the extent, in each case, that such Liability is
caused by the negligence or willful misconduct by Neustar or NeoMedia,
respectively.

       

      7.  
 COMPENSATION

       

      Compensation
is set forth in Exhibit A.

       

      8.  
 ANCILLARY RESPONSIBILITIES

       

      8.1 Accounting. Information concerning
licensing, sublicensing and revenues remains confidential to NeoMedia, Neustar
and the particular License Customer to which a license, sublicense, and/or
Transaction pertains. However, NeoMedia’s use of any data received hereunder
shall be limited to its own internal business uses.  By way of
clarification, and not limitation, NeoMedia is not permitted to disclose any
data provided to it under this Agreement, whether customer-specific or aggregate
in nature, to any third party, except as may be permitted or required under
Article 12 below . Neustar shall provide reports to NeoMedia on a monthly
basis in a format agreeable to the Parties.

       

      8.2 Audit.  Each
Party shall maintain (to the extent possible under this Agreement) auditable
records of revenues, licensing, sublicensing, accounts, collections, payments,
and Control Point Events (as defined below) with respect to License Customers,
and maintain those records for at least three (3) years.  Upon one (1)
month’s prior written notice from a Party, the other Party shall make such
records available to the requesting Party and their designated professionals
including but not limited to Certified Public Accountant, consultant, or other
professional designated by the requesting Party.  The records shall be
made available either electronically and remotely through a secure interface or
at a location controlled by the Party receiving the request.  Either
Party may invoke the audit rights hereunder no more than twice in any twelve
(12) month period.  When an audit is conducted at a Party’s location,
the audit shall be performed only during normal business hours.  All
audits shall be subject to commercially reasonable security and other similar
requirements.  Any audit invoked hereunder shall be limited in scope
to all matters necessary to examine compliance with the terms and conditions
related thereof.  All audits invoked hereunder shall be performed at
the requesting Party’s expense unless the discrepancy in amounts due under this
Agreement  exceeded ten percent (10%), in which case the other party
shall pay the reasonable and customary fees of the designated professionals and
the actual costs of the requesting party and their designated
professionals.

       

      8.3 Control
Point.  If during the Term of this Agreement Neustar deploys a
Registry and Clearinghouse system, then Neustar shall during the Term configure
into such system the ability to enable and disable the clearing of Transactions
if either a Resolution Authority or a License Customer fails to comply with
either (a) policies issued by the Governing Authority, (b) its written agreement
with Neustar, or (c) terms and conditions that Neustar and NeoMedia have agreed
are to be flowed down to Neustar agreements with its Neustar License
Customer.  The policies concerning the enabling and disabling of
Transaction clearing (the “Control Point Policies”)
shall be developed and agreed to by the Parties within four (4) months after the
award to Neustar of a contract to implement a Clearinghouse in the
Territory.  Neustar shall prevent Code-related Transactions that fail
to comply with the Control Point Policies.  As part of the Control
Point Policies, Neustar and NeoMedia shall in good faith develop an escalation
process for bringing License Customer’s into compliance with the Control Point
Policy or terminating/suspending the License Customer’s
sublicense.

      
        
           

        

        
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    8.4  Reporting.   During
the Term of this Agreement, Neustar will create and provide to NeoMedia
reporting capabilities regarding Licensed Transaction Revenues consisting of
reports setting forth the identity of the License Customer, frequency of
Clearinghouse Transactions for License Customers, type of License Customer, rate
of the Transaction, types/use classes to the extent these require different
pricing treatment (and possibly carrier) over specified
periods.  NeoMedia may request additional reporting capabilities in
accordance with mutually-agreeable terms.  Neustar shall provide to
NeoMedia access to a GUI over a secure connection to allow ad hoc reporting
(subject to reasonable requirements issued by Neustar’s engineering
department).  Neustar shall not be obligated to provide to NeoMedia,
and NeoMedia is not entitled to receive (a) any Codes in a Neustar Registry or
Clearinghouse associated with any customer, or (b) the content or information
associated with those Codes unless the codes or content are required under the
scope of audit provisions described in Section 8.2 above.

     

    8.5  Sales, Marketing and
Cooperation.  The Parties shall cooperate in good faith with
respect to the promotion of licensing of the Licensed Patents in the context of
a Neustar-administered Registry and Clearinghouse.  Neustar shall use
commercially reasonable efforts to promote the licensing of the Licensed
Patents pertaining to the Field of Use, including but not limited to,
content on Web sites, direct sales, trade show appearances, and direct marketing
through e-mail and other electronic means within its
control.  NeoMedia shall promptly and fully provide to Neustar
supporting collateral, explanations, value propositions, and other similar
materials.  Within one (1) month after the Effective Date of this
Agreement, the Parties shall develop a schedule for cooperative events listing
at least three events for which the Parties will cooperate to promote licensing
of the Licensed Patents.

     

    8.6  Management.  Each
Party shall promptly after the Effective Date designate in writing its business
point of contact under this Agreement.  NeoMedia and Neustar shall
jointly perform periodic business reviews to review business practices and
performance.

     

    8.7  Referral Fee As
of the effective date of this agreement NeoMedia will communicate to Neustar its
current “Sales Prospects”. NeoMedia is not obligated to update this list of
Sales Prospects after the Effective Date of this Agreement.  If
Neustar refers a third party to NeoMedia who is not at the time of such referral
a Sales Prospect of NeoMedia; or has not subsequently become a Sales Prospect of
NeoMedia; or has become a customer of NeoMedia under a written agreement for
services with NeoMedia , and such  third party purchases from NeoMedia
services, such as campaign management services, and that customer becomes a
NeoMedia License Customer, but NeoMedia does not request that Neustar account
for that NeoMedia License Customer through the License Collection Revenue as
described in Section 7, then NeoMedia shall pay to Neustar a Referral Fee equal
to Ten Percent (10%) of monies actually received by NeoMedia as payment,
excluding taxes, late charges, collection costs, credit card processing fees,
credits, and amounts under dispute, in the twenty-four-month period beginning
with the month in which fees are first received by NeoMedia.  If,
however, NeoMedia requests that Neustar serve as a billing and collections agent
with respect to such NeoMedia License Customer, then Neustar is entitled to the
Licensed Collection Revenue  for actions related to performing
Clearinghouse Transactions plus the Referral Fee for monies associated with
NeoMedia services not related to Neustar’s performance of Clearinghouse
Transactions; e.g.,  campaign management, and other services provided
by NeoMedia apart from the licensing of patents.

     

    9.  
 TERM

     

    Subject
to the limitations in Section 4.1, the Term of this Agreement shall begin on its
Effective Date, and shall continue in full force and effect for four (4) years
thereafter (with any renewals, the “Term”).  If neither
Party provides written notice to the other no later than three (3) months prior
to the expiration of the then-current Term that it does not intend for the
Agreement to renew, then the Agreement shall renew for additional an additional
three (3) year period.  The expiration or termination of the Term
shall not affect the sublicense term granted by Neustar to a Neustar Sublicense
Customer.

    
      
         

      

      
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    10. 
TERMINATION

     

    Either
Party may terminate this Agreement, without prejudice to any other remedy it may
have, immediately and without further obligation upon the following with respect
to the Party receiving the termination notice:

     

    (a)  an
Event of Default;

     

    (b)  the
making of an assignment for the benefit of creditors;

     

    (c)  the
filing under any voluntary bankruptcy or insolvency law, under the
reorganization or arrangement provisions of the United States Bankruptcy Code,
or under the provisions of any law of like import, or the appointment of a
trustee or receiver; and

     

    (d)  failure
of Neustar to deploy into production a Clearinghouse and Registry within twelve
(12) months after the Effective Date.

     

    For
purposes of item (d) immediately above, deployment into production means the
actual provision of the Clearinghouse and Registry, or an announcement of a
clear and unambiguous intent to provide the Clearinghouse and Registry in an
immediately deployable and usable capability.

     

    Termination
of this Agreement shall not relieve the Parties from their payment obligations,
confidentiality and intellectual property obligations, including indemnification
thereof, under this Agreement.

     

    11. 
NON-COMPETITION

     

    During
the first twelve (12) months of the Term, and provided Neustar has not committed
an Event of Default, NeoMedia shall neither entertain entering nor actually
enter into any collaboration, cooperation, subcontract, teaming, partnering,
licensing, or similar arrangement with any third party for the purpose of
enabling the Field of Use in a system or systems similar to the Clearinghouse or
Registry within the Territory. Nothing contained in this Article 11, or any
other portion of this Agreement, restricts NeoMedia from licensing its IPR or
technology platform to additional NeoMedia License Customers outside the Field
of Use and outside the Territory at any time during the Term of this
Agreement.

     

    12. 
CONFIDENTIAL INFORMATION

     

    12.1                 Confidential
Information.  Each Party acknowledges that they may be
furnished with, receive, or otherwise have access to Confidential Information of
the other Party.  Confidential Information excludes any information
that the receiving Party can demonstrate:

     

     

    (a) at
the time of disclosure, was in the public domain or in the possession of the
receiving Party;

     

     

    (b) after
disclosure, is published or otherwise becomes part of the public domain through
no fault of the receiving Party;

     

     

    (c)  was
received after disclosure from a third party who had a lawful right to disclose
such information to the receiving Party without any obligation to restrict its
further use or disclosure;

     

     

    (d)  was
independently developed by the receiving Party without reference to Confidential
Information of the disclosing Party; or

     

     

    (e)  was
required to be disclosed to satisfy a legal requirement of a competent
government body (e.g., securities laws or regulations of the U.S. Securities
& Exchange Commission).

     

    12.2                 Obligations.  The
obligations set forth in this Article 12 with respect to Confidential
Information shall survive the expiration or termination of this Agreement for a
period of three (3) years or such longer period as required by law, regulation,
or court order.

    
      
         

      

      
        - 8
-

        
          

        

      

      
         

      

    

     

    (a)  Each
Party’s Confidential Information shall remain the property of that
Party.  Each Party shall use at least the same degree of care, but in
any event no less than a reasonable degree of care, to prevent unauthorized
disclosure of Confidential Information as it employs to avoid unauthorized
disclosure of its own Confidential Information of a similar
nature.  Except as otherwise permitted hereunder, the Parties may
disclose such information to entities performing services required hereunder
where: (i) use of such entity is authorized hereunder, (ii) such disclosure is
necessary or otherwise naturally occurs in that entity’s scope of
responsibility, and (iii) the entity agrees in writing to assume the obligations
described in this Article 12.  Any disclosure to such entity shall be
under the terms and conditions of this Article 12.

     

    (b) Each
Party shall take reasonable steps to ensure that its employees comply with this
Article 12.  In the event of any disclosure or loss of, or inability
to account for, any Confidential Information of the disclosing Party, the
receiving Party shall promptly, and at its own expense notify the disclosing
Party in writing, and take such actions as may be necessary and cooperate in all
reasonable respects with the disclosing Party to minimize the violation and any
damage resulting therefrom.

     

    (c)  Except
as otherwise provided herein, either Party may disclose the terms and conditions
of this Agreement to (i) its directors, officers, employees, consultants,
auditors, accountant, lawyers, subcontractors or agents and (ii) any other third
parties that have expressed a bona fide interest in consummating a significant
financing, merger or acquisition transaction between such third parties and such
Party, (iii) have a reasonable ability (financial and otherwise) to consummate
such transaction; provided that in either case there exists a nondisclosure
agreement that includes within its scope the terms and conditions of this
Article 12 or terms and conditions similar thereto.  Each Party shall
endeavor to delay the disclosure of the terms and conditions of this Agreement
until the status of discussions concerning such transaction warrants such
disclosure.

     

    (d)  A
Party receiving a request pursuant to Section 12.1(e) above to disclose
Confidential Information shall immediately upon receiving such request, and to
the extent that it may legally do so, advise the disclosing Party promptly and
prior to making such disclosure in order that the disclosing Party may interpose
an objection to such disclosure, take action to assure confidential handling of
the Confidential Information, or take such other action as it deems appropriate
to protect the Confidential Information.

     

    12.3                 Trademarks and Press
Releases.  Neither Party shall use the trade names, trademarks,
service marks, or other proprietary marks of the other Party in any advertising,
sales presentation, news releases, advertising, or other promotional or
marketing materials without such other Party’s prior written consent, which
shall not be unreasonably withheld.  The Parties shall issue a joint
press release regarding their relationship under this Agreement and shall
cooperate to issue a mutually agreed press release within a reasonable time
after the Effective Date.

     

    13. 
REPRESENTATIONS & WARRANTY

     

    NeoMedia
hereby represents and warrants as follows:

     

    (a)  it
is the rightful owner of the Licensed Patents pertaining to the Field of
Use;

     

    (b)  the
Licensed Patents pertaining to the Field of Use, are enforceable and shall
remain in full force and effect during the Term (except for the natural
expiration of a patent term);

     

    (c)   Schedule
1 sets forth all pending or anticipated claims against the Licensed
Patents pertaining to the Field of Use; e.g., legal, regulatory, or
administrative proceedings directed at cancelling, overturning, or modifying any
of the claims set forth in the Licensed Patents.

     

    (d)   at
least one claim in each Licensed Patent is directed at practicing the Field of
Use.

     

    14. 
INDEMNIFICATION

     

    Neustar
shall indemnify, defend and hold NeoMedia and its directors, officers, employees
and agents harmless from and against any and all liabilities, claims, demands,
expenses (including, without limitation, attorneys’ and professional fees and
other costs of litigation), losses or causes of action (each, a “Liability”)
arising out of or relating in any way to Neustar’s breach of Articles 3, 4 or 6
of this Agreement, except to the extent, in each case, that such Liability is
caused by the negligence or willful misconduct by NeoMedia.

    
      
         

      

      
        - 9
-

        
          

        

      

      
         

      

    

     

    NeoMedia
shall indemnify, defend and hold Neustar and its directors, officers, employees
and agents harmless from and against any and all Liability arising out of or
relating in any way to Neomedia’s breach of Article 4 and Article 5 of this
Agreement, except to the extent, in each case, that such Liability is caused by
the negligence or willful misconduct by Neustar.

     

    15. 
LIMITATION OF LIABILITY

     

    IN NO
EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER FOR ANY LOST PROFITS, LOST DATA,
OR LOST EQUIPMENT, ANY WEBSITE OR NETWORK DOWNTIME, COST OF PROCURING SUBSTITUTE
SERVICES, OR FOR ANY INCIDENTAL, SPECIAL, CONSEQUENTIAL OR OTHER INDIRECT
DAMAGES OF ANY KIND, HOWEVER ARISING, WHICH ARE RELATED TO THIS AGREEMENT AND
THE PROVISION OF LICENSES HEREUNDER, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES.    

     

    16.  DISPUTE RESOLUTION

     

    16.1                 Generally.  Any
controversy, claim or dispute arising out of or relating to this Agreement or
the breach thereof, whether such claim is based on rights, privileges or
interests recognized by or based upon statute, contract, tort, common law or
otherwise (“Dispute”)
shall be settled as provided in this Article 16.

     

    16.2                 Initial
Attempts.  If a Dispute arises, the Parties shall initially
attempt to resolve the Dispute informally, as follows:

     

    (a) A
Party shall provide written notice of a Dispute (the “Dispute Notice”) to the other
Party which sets forth the nature of the Dispute and the relief
requested.  Upon receipt of such Dispute Notice, the Parties each
shall appoint a designated representative who does not devote substantially all
of his or her time to performance under this Agreement and whose task its shall
be to meet for the purpose of attempting to resolve the Dispute.

     

    (b) The
designated representatives shall meet as often as the Parties deem reasonably
necessary and shall gather information which the Parties deem to be appropriate
and germane to the Dispute.  The representatives shall discuss the
Dispute and attempt to resolve it without the necessity of any formal
proceeding.

     

    (c) A
Party may commence arbitration proceedings in accordance with Section 15.3 below
upon the earlier to occur of any of the following: (1) the designated
representatives reasonably conclude that an amicable resolution through
continued negotiation of the matter is unlikely; or (2) thirty (30) days after
delivery of the Dispute Notice or such longer period as may be agreed by the
Parties.  No Party may commence arbitration with respect to any
Dispute unless that Party has pursued informal negotiation as provided
herein.

     

    16.3                 Arbitration.  Any
Dispute that cannot be resolved by informal negotiations as set forth above
shall be settled by binding arbitration in accordance with the Commercial
Arbitration Rules of the American Arbitration Association (“AAA”) then in
effect.  The arbitration shall take place in Washington
DC.  The Parties shall share the costs of arbitration equally,
including the fees and expenses of the arbitrator unless the arbitration award
provides otherwise.  Each Party shall bear the cost of preparing and
presenting its case.  The arbitrator shall have no power or authority
to make awards or issue orders of any kind except as expressly permitted by this
Agreement, and in no event shall the arbitrator have the authority to make any
award that provides for punitive or exemplary damages.  The arbitrator
shall use all reasonable means to settle the Dispute with dispatch and shall
state his or her opinion in writing along with his or her reasons for the
decision.  The arbitrator’s decision shall follow the plain meaning of
the relevant documents, and shall be final and binding.  The award may
be confirmed and enforced in any court of competent
jurisdiction.

    
      
         

      

      
        - 10
-

        
          

        

      

      
         

      

    

     

    16.4                 Specific Performance.
Any Party may seek specific performance of this Article, and may seek to compel
the other Party to comply with such provisions by petition to any court of
general jurisdiction.  The prevailing Party in any proceeding
enforcing such provisions shall be entitled to the court’s order for payment of
reasonable attorneys’ fees and costs in connection with such
proceeding.

     

    16.5                 Equitable
Relief.  Nothing in this Article 16 shall preclude any Party
from seeking interim or provisional relief concerning the Dispute, including a
temporary restraining order, a preliminary injunction or an order of attachment,
either prior to or during the information dispute resolution or
arbitration.

     

    16.6                 Compromise.  All
communications, whether oral, written or electronic, in any negotiation or
arbitration pursuant to this Article 16 shall be treated as confidential and as
compromise and settlement negotiations for purposes of applicable rules of
evidence.

     

    16.7                 Waiver of Jury
Trial.  To the extent applicable, each Party waives any right
it may have to a trial by jury in any legal proceeding arising from or related
to this Agreement.

     

    17.  MISCELLANEOUS

     

    17.1                 Headings.  The
headings and captions used in this Agreement are for convenience only and not
intended to be used as an aid to interpretation.

     

    17.2                 Severability.  The
provisions of this Agreement are severable, and if any part of this Agreement is
held to be illegal or unenforceable, the validity of the remainder of this
Agreement shall not be affected.

     

    17.3                 Governing
Law.  This Agreement shall be construed and interpreted in
accordance with the laws of the State of New York, USA, without regard to its
conflict of laws principles.  In the event of litigation or any
collection activity arising out of the Services or this Agreement, the
prevailing party shall be awarded its costs and reasonable expert and attorneys’
fees.

     

    17.4                 Binding.  This
Agreement will be binding upon and inure to the benefit of the Parties hereto,
their respective successors and assigns.

     

    17.5                 No
Waiver.  Failure by either party to exercise any right or
remedy under this Agreement does not signify acceptance of the event giving rise
to such right or remedy.

     

    17.6                 Notices.  Unless
otherwise agreed to by the parties, any notice required or permitted to be given
or delivered under this Agreement shall be given in writing and delivered to the
address set forth in this Agreement, and addressed to the attention
of:

     

    If to
Neustar:

    Neustar,
Inc.

    46000
Center Oak Plaza

    Sterling,
VA 20166

    Attention:  General
Counsel

    P: (571)
434-5400

    F: (571)
434-5735

    

    If to
NeoMedia:

    NeoMedia
Technologies, Inc.

    Two
Concourse Parkway, Suite 500

    Atlanta,
GA 30328

    Attention:
CEO or CFO

    P: (678)
638-0460 ext.132

    F: (678)
638-0466

    
      
         

      

      
        - 11
-

        
          

        

      

      
         

      

    

     

    17.7                 Assignment.  Neither
Party may assign or otherwise transfer, including by way of merger, acquisition
or operation of law, all or any portion of its rights or obligations under this
Agreement without the prior written consent of the other Party, which consent
shall not be unreasonably conditioned, withheld or delayed, except that either
Party may assign this Agreement upon notice, but without consent, to an
Affiliate.  Any assignment or transfer in violation of this Section
shall be void and have no effect.

     

    17.8                 Force
Majeure.  Except for either party’s payment obligations
hereunder, a party shall be excused from any delay or failure in performance of
their obligations hereunder to the extent caused by reason of any occurrence or
contingency beyond its reasonable control, including but not limited to, acts of
God, earthquake, labor disputes and strikes, riots, acts of terrorism, war or
other unanticipated occurrences or problems, and governmental requirements
(“Force Majeure Events”).

     

    17.9                 Entire Agreement.  This
Agreement along with any Schedules, appendices or amendments hereto, represents
the entire agreement between NeoMedia and Neustar with respect to its subject
matter, and there are no other representations, understandings, or agreements
between NeoMedia and Neustar relative to such subject matter.

     

    BY
SIGNING BELOW, THE INDIVIDUALS EXECUTING THIS AMENDED AND RESTATED LICENSE
AGREEMENT REPRESENT THAT THEY ARE DULY AUTHORIZED TO EXECUTE AND DELIVER THIS
LICENSE AGREEMENT ON BEHALF OF THE PARTY FOR WHICH THEY HAVE
SIGNED.

     

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    	
                                            NEOMEDIA
      TECHNOLOGIES, INC.

                                          	 
      	
                                            NEUSTAR,
      INC.

                                          
	 	 	 
	
                                            By:

                                          	
                                            /s/
      Michael W. Zima

                                          	 
      	
                                            By:

                                          	
                                            /s/
      Bradley D. Smith

                                          
	 
      	 
      	 
      	 
      	 
      
	
                                            Name:

                                          	
                                            Michael
      W. Zima

                                          	 	
                                            Name:

                                          	
                                            Bradley
      D. Smith

                                          
	 
      	 
      	 
      	 
      	 
      
	
                                            Title:

                                          	
                                            Chief
      Financial Officer

                                          	 
      	
                                            Title:

                                          	
                                            VP
      Finance & Corporate Controller

                                          
	 
      	 
      	 
      	 
      	 
      
	
                                            Date:

                                          	
                                            January
      22, 2010

                                          	 
      	
                                            Date:

                                          	
                                            January
      22, 2010

                                          
	 
      	 
      	 
      	 
      	 
      
	
                                            Address:

                                          	
                                            Two
      Concourse Parkway

                                          	 
      	
                                            Address:

                                          	
                                            46000
      Center Oak Plaza

                                          
	 
      	
                                            Suite
      500

                                          	 
      	 
      	
                                            Sterling,
      Virginia 20166

                                          
	 
      	
                                            Atlanta,
      Georgia 30328

                                          	 
      	 
      	 
      
	
                                            Fax:

                                          	
                                            (678)
      638-0466

                                          	 
      	
                                            Fax:

                                          	
                                            703-738-7585

                                          
	 
      	 
      	 
      	 
      	 
      
	
                                            E-Mail:

                                          	
                                            mzima@neom.com

                                          	 
      	
                                            E-Mail:

                                          	
                                            contracts@neustar.biz

                                          

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

     

    
      
         

      

      
        - 12
-STOCK PURCHASE
AGREEMENT

     

    THIS STOCK PURCHASE AGREEMENT
(the “Agreement”), dated
as of January 19, 2010, is made and entered into by and between East Best
Industrial Limited, a company organized under the laws of British Virgin Islands
(the “Shareholder”), and
NIVS Holding Company Limited, a company organized under the laws of the British
Virgin Islands (“NIVS”),
and Hui Xi Li, an individual that has been the principal of the Shareholder (the
“Shareholder
Principal”).

     

    WITNESSETH:

     

    WHEREAS, the Shareholder owns
one hundred percent (100%) of the issued and outstanding shares in the capital
of Huizhou Dongri Digital Co., Ltd., a company organized under the laws of the
People’s Republic of China (“HDDC”), as set forth in
Section 3.01(b) of the disclosure schedule attached hereto as Exhibit A (“Disclosure
Schedule”);

     

    WHEREAS, HDDC engage in the
business of research, development, manufacture and distribution mobile phones
and related components (the “Business”); and

     

    WHEREAS, NIVS desires to
acquire from the Shareholder and the Shareholder desires to sell to NIVS all of
the issued and outstanding shares in the capital of HDDC (the “HDDC Shares”) such that NIVS
will hold 100% of the registered capital of HDDC (the “HDDC Acquisition”).

     

    NOW, THEREFORE, in consideration of
the promises and the respective representations, warranties, covenants,
agreements and conditions hereinafter set forth, NIVS, Shareholder Principal,
and Shareholder, intending to be legally bound hereby, agree as
follows:

     

    ARTICLE
ONE

    DEFINITIONS

     

    
      	
               
      

            	
              1.01

            	
              Definitions.

            

    

     

    In this Agreement, the following terms
shall have the meanings set forth below unless the context provides or requires
otherwise:

     

    “1933 Act”
means the Securities Act of 1933, as amended.

     

    “Affiliate”
means, with respect to any Person, any other Person that, directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with such Person.  “Control” for this purpose
means possession, directly or indirectly, of more than fifty percent (50%) of
the voting power of a Person.

     

    “Entity”
means any sole proprietorship, corporation, partnership of any kind having a
separate legal status, limited liability company, business trust, unincorporated
organization or association, mutual company, joint stock company or joint
venture.

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

    “Environmental
Law” means and includes all statutes, regulations, rules, policy,
guidance, ordinances, codes, common law, licenses, permits, orders, approvals,
plans, authorizations, concessions, franchises and similar items, of all
Governmental Authorities and all judicial and administrative and regulatory
writs, injunctions, decrees, judgments and orders to which HDDC or NIVS is a
party or is otherwise directly bound, now or which becomes effective on or
before the Closing Date relating to land use (other than zoning/planning), air,
soil, surface water, groundwater (including the protection, cleanup, removal,
remediation or damage thereof), human health and safety or any other
environmental matter, including the following laws and all corresponding
regulations and their equivalent or similar laws and regulations in any other
jurisdiction, in each case as the same may be amended from time to time: the PRC
Environmental Protection Law, the PRC Law on the Prevention and Control of Water
Pollution and its Implementation Rules, the PRC Law on the Prevention and
Control of Air Pollution and its Implementation Rules, the PRC Law on the
Prevention and Control of Solid Waste Pollution, and the PRC Law on the
Prevention and Control of Noise Pollution; Comprehensive Environmental Response,
Compensation and Liability Act of 1980 (CERCLA), 42 U.S.C. §§ 9601 et seq.;
Federal Resource Conservation and Recovery Act, 42 U.S.C. §§ 6901 et seq.; Clean
Water Act, 33 U.S.C. §§ 1251 et seq.; Toxic Substances Control Act, 15 U.S.C. §§
2601 et seq.; Refuse Act 33 U.S.C. § 407; Occupational Safety and Health Act, 29
U.S.C. §§ 651 et seq.; Clean Air Act, 42 U.S.C.  §§ 7401 et seq.;
Environmental Protection Act 1990 (UK); the Water Resources Act 1990 (UK); and
the Health and Safety at Work etc. Act 1974 (UK) and any federal, state, and
local counterparts and equivalents thereto.

     

               
    “GAAP”
means as it pertains to the financial statements or accounting of HDDC generally
accepted accounting principles in the PRC.

     

    “Governmental
Authority” means (i) any federal, state, county, municipal or other
government, domestic or foreign, or any agency, board, bureau, commission,
court, department or other instrumentality of any such government, or (ii) any
Person having the authority under any applicable Governmental Requirement to
administer, assess, collect or impose Taxes.

     

    “Governmental
Requirement” means at any time (i) any law, statute, code, ordinance,
order, rule, regulation, judgment, decree, injunction, writ, edict, award,
authorization or other requirement of any Governmental Authority in effect at
that time or (ii) any obligation included in any certificate, certification,
franchise, permit or license issued by any Governmental Authority or resulting
from binding arbitration, including any requirement under common law, at that
time.

     

    Person,
any other Person that, directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common control with such
Person.  “Control” for this purpose means possession, directly or
indirectly, of more than fifty percent (50%) of the voting power of a
Person.

     

    “Hong
Kong” means the
Hong Kong Special Administrative Region of the PRC.

     

    “Hazardous
Substances” means and include any
substance: (i) the presence of which requires reporting, investigation, removal
or remediation under any Environmental Law; (ii) that is defined as a “hazardous
waste,” “hazardous substance,” “toxic substance,” or “pollutant” or
“contaminant” under any Environmental Law; (iii) the presence of which causes or
threatens to cause a nuisance, trespass or other tortious condition or poses a
hazard to the health or safety of persons; or (iv) that contains gasoline,
diesel fuel or other petroleum hydrocarbons, PCBs, asbestos, silica or urea
formaldehyde foam insulation.

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     “Knowledge”
means, as it relates to the Shareholder Principal, Shareholder, or HDDC, the
actual knowledge, plus such knowledge as the Shareholder Principal and
Shareholder would have acquired after due investigation of the relevant fact or
matter (including making all necessary enquiries with the respective officers,
directors and employees of HDDC), regardless of whether such investigation has
actually occurred, and as to any other Person, the actual knowledge of a
specified Person of any particular fact or other matter after due investigation,
and the words “aware,” “known” or similar words, expressions or phrases shall be
construed accordingly.

     

    “Lease”
means any lease, sub-lease, tenancy agreement, sub-tenancy agreement, licence or
any other document (including any option for extension relating thereto) granted
or agreed to be granted to HDDC or pursuant to which any of them holds or
occupies any Leased Property, details of which are set forth in Section 3.1(m)
of the Disclosure Schedule.

     

    “Legal
Requirement” means any law, regulation, rule, ordinance, decree, order or
other standard imposed by a Governmental Authority applicable to a party or the
conduct or operation of its business or the ownership or use of any of its
assets, including, in the case of HDDC, or any equivalent or similar laws,
rules, regulations or requirements of any other applicable
jurisdiction.

     

    “License”
means any license, certification, permit or other authorization from any
Governmental Authority necessary for HDDC to conduct the Business or any part
thereof or own or operate any of its assets and properties.

     

    “Material Adverse
Effect” means (i) with respect to NIVS, a material adverse effect on the
business, operations, affairs, properties, assets or condition (financial or
otherwise) of such party; and (ii) with respect to HDDC, any event,
circumstance, occurrence, fact, condition, change or effect which, individually
or in the aggregate (a) has or would be reasonably expected to have a material
adverse effect on the business, operations, affairs, properties, assets or
condition (financial or otherwise) of HDDC, or (b) will or would be reasonably
expected to adversely affect the ability of HDDC or the Shareholder to
consummate the transactions contemplated under this Agreement or any other
Transaction Document to which it is a party.

     

    “Permitted
Liens” means, with respect to the property or other assets of HDDC (or
any revenues, income or profits of HDDC therefrom):  (i) Liens for
Taxes if the same are not at the time due and delinquent; (ii) Liens of
carriers, warehousemen, mechanics, laborers and materialmen for sums not yet
due; (iii) Liens incurred in the ordinary course of the Business in connection
with workers’ compensation, unemployment insurance and other social security
legislation; (iv) Liens incurred in the ordinary course of the Business in
connection with deposit accounts or to secure the performance of bids, tenders,
trade contracts, statutory obligations, surety and appeal bonds, performance and
return of money bonds and other obligations of like nature; (v) easements,
rights-of-way, reservations, restrictions and other similar encumbrances
incurred in the ordinary course of the Business or existing on property and not
interfering in any material respect with the ordinary conduct of the Business or
the use of that property; and (vi) defects or irregularities in HDDC’s interest
in its real properties which do not materially (A) diminish the value of the
surface estate or (B) interfere with the ordinary conduct of the Business or the
use of any of such properties.

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    “Person”
means any natural person, Entity, estate, trust, union or employee organization
or Governmental Authority.

     

    “PRC” means
the People’s Republic of China, excluding, for the purposes of this Agreement,
the Macau Special Administrative Region, Hong Kong and Taiwan.

     

    “Solvent”
means, for any Person on a particular date, that on such date (a) the fair
value of the property of such Person is greater than the total amount of
liabilities, including, without limitation, contingent liabilities, of such
Person, (b) the present fair saleable value of the assets of such Person is
not less than the amount that will be required to pay the probable liability of
such Person on its debts as they become absolute and matured, (c) such
Person does not intend to, and does not believe it will, incur debts and
liabilities beyond such Person’s ability to pay as such debts and liabilities
mature, (d) such Person is not engaged in a business or a transaction, and
is not about to engage in a business or a transaction, for which such Person’s
property would constitute an unreasonably small capital, and (e) such
Person is able to pay its debts as they become due and payable.

     

    “Statutory
Plans” means statutory or other benefit plans which HDDC is required to
participate in or comply with pursuant to any applicable statutes, laws, rules,
regulations, codes, notices, circulars, orders, edicts, decrees, practices or
promulgations of any Governmental Authority in any jurisdiction, including plans
administered pursuant to applicable health tax, workplace safety insurance and
employment insurance legislation and, without any limitation to the foregoing,
including any statutorily required employee compensation insurance, and any
social insurance, social security or welfare benefit contributions required
under the laws of the PRC or any other applicable jurisdiction.

     

    “Taxes”
means and includes
all forms of taxes, charges, fees, imposts, duties, levies, deductions,
withholdings or other assessments of any nature imposed, levied, collected,
withheld or assessed by any Governmental Authority or other taxing or similar
authority in any part of the world, including income, gross receipts, excise,
property, sales, use, transfer, payroll, licence, value added, social security,
national insurance (or other similar contributions or payments), franchise,
estimated, severance, customs and stamp taxes (including any interest, fines,
penalties, charges or additions attributable to, claimed, payable or imposed on
or with respect to, any such taxes, charges, fees, levies or other
assessments).

     

    “Tax
Returns” means any return, statement, declaration, notice, certificate,
report or other document that is or has been filed with or submitted to, or
required to be filed with or submitted to, any Governmental Authority in
connection with the determination, assessment, collection or payment of any Tax
or in connection with the administration, implementation or enforcement of or
compliance with any Legal Requirement or Governmental Requirement related to any
Tax.

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    “Transaction
Documents” means this Agreement and any other agreements, documents and
instruments delivered under or pursuant to any of the foregoing.

     

    ARTICLE
TWO

    SALE
AND PURCHASE; PURCHASE PRICE; CLOSING

     

    
      	
               
      

            	
              2.01

            	
              Purchase
      and Sale of the HDDC Shares.

            

    

     

    At the
Closing, subject to the terms and conditions of this Agreement, the Shareholder
shall sell, transfer, assign, convey and deliver to NIVS all of the HDDC Shares,
free and clear of any liens, encumbrances, pledge, security interest,
restrictive covenant, burden or charge of any kind or nature whatsoever, legal
or equitable, or any item similar or related to the foregoing (“Liens”), together with all
rights attaching thereto including the right to receive all dividends and
distributions declared, made or paid on or after the date of
Closing.

     

    
      	
               
      

            	
              2.02

            	
              Delivery
      of HDDC Certificates.

            

    

     

    At the
Closing, the Shareholder shall deliver to NIVS:

     

    (a)           all
original certificates representing all of the HDDC Shares, which certificates
shall be accompanied by instruments of transfer of the HDDC Shares duly executed
by the respective registered holders thereof in favor of NIVS (or such other
person(s) as it may direct);

     

    (b)           to
the extent any of the same shall not have been provided prior to Closing, all
documents required in Section 7.01 and such other documents as NIVS may require
evidencing the fulfilment of the conditions precedent thereunder;
and

     

    (c)           any
and all documents related to effecting the transfer of 100% of the registered
capital of HDDC to NIVS, in addition to such documents and reports from the
proper Governmental Authorities or other parties evidencing that such transfer
has taken place.

     

    
      	
               
      

            	
              2.03

            	
              Purchase
      Price; Payment.

            

    

     

    (a)           Aggregate
Purchase Price.  The
aggregate purchase price to be paid by NIVS to the Shareholder for the HDDC
Shares shall be up to Twenty Three Million U.S. Dollars (US$23,000,000) (the
“Aggregate Purchase Price”), which shall be
paid in two parts subject to and in such amounts as more specifically set forth
in Sections 2.03(b), below.

     

    
      	
               
      

            	
              (b)

            	
              Payment
      of the Aggregate Purchase
Price.

            

    

     

    (i)         The
first part of the Aggregate Purchase Price is equal to Thirteen Million U.S.
Dollars ($13,000,000), with Eight Million U.S. Dollars ($8,000,000) of this
amount has been paid to the Shareholder prior to the execution of this
Agreement, which is hereby acknowledged by the parties, and the remaining Five
Million U.S. Dollars ($5,000,000) of this amount shall be paid to Shareholder
within Thirty (30) days after the Closing; and

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    (ii)        The
second part of the Aggregate Purchase Price, equal to Ten Million U.S. Dollars
($10,000,000), is conditional and shall be payable, if at all, subject to the
following:

     

    (A) for the period the from January 1,
2010 through June 30, 2010 (the “First Half Period
2010”),

     

    (1) if HDDC’s after-tax income exceeds
RMB 13,000,000 for the First Half Period 2010, as calculated in accordance with
U.S. generally accepted accounting principles (“US GAAP”) as determined by the
parent corporation of NIVS and approved by the such parent’s independent
auditors, then Three Million U.S. Dollars ($3,000,000) shall be payable to
Shareholder;

     

    (2) if HDDC’s after-tax income for the
First Half Period 2010, as calculated in accordance with US GAAP as determined
by the parent corporation of NIVS and approved by the such parent’s independent
auditors, is between RMB 6,500,000 and RMB 13,000,000, then a pro rata amount of Three
Million U.S. Dollars ($3,000,000) shall be payable Shareholder, where such pro rata amount shall be
calculated based on the amount that the after-tax net income exceeds RMB
6,500,000, divided by RMB 6,500,000;

     

    (3) if HDDC’s after-tax income for the
First Half Period 2010, as calculated in accordance with US GAAP as shall be
determined by the parent corporation of NIVS and approved by the such parent’s
independent auditors, is less than RMB 6,500,000 then no amount shall be payable
to Shareholder; and

     

    (B) for the period from July 1, 2010
through September 30, 2010 (the “Third Quarter
2010”),

     

    (1)  if HDDC’s after-tax
income for the Third Quarter 2010, as calculated in accordance with US GAAP as
shall be determined by the parent corporation of NIVS and approved by the such
parent’s independent auditors, exceeds RMB 7,000,000, then Three Million U.S.
Dollars ($3,000,000) shall be payable to Shareholder,

     

    (2) if HDDC’s after-tax income for the
Third Quarter 2010, as calculated in accordance with US GAAP as shall be
determined by the parent corporation of NIVS and approved by the such parent’s
independent auditors, is between RMB 3,500,000 and RMB 7,000,000, then a pro rata amount of Three
Million U.S. Dollars ($3,000,000) shall be payable to Shareholder, where such
pro rata amount shall
be calculated based on the amount that the after-tax income exceeds RMB
3,500,000, divided by RMB 3,500,000; and

     

    (3) if HDDC’s after-tax income for the
Third Quarter 2010, as calculated in accordance with US GAAP as shall be
determined by the parent corporation of NIVS and approved by the such parent’s
independent auditors, is less than RMB 3,500,000, then no amount shall be
payable to Shareholder.

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    (C) for the period from October 1, 2010
through December 31, 2010 (the “Fourth Quarter
2010”),

     

    (1)  if HDDC’s after-tax
income for the Fourth Quarter 2010, as calculated in accordance with US GAAP as
shall be determined by the parent corporation of NIVS and approved by the such
parent’s independent auditors, exceeds RMB 8,000,000, then Four Million U.S.
Dollars ($4,000,000) shall be payable to Shareholder,

     

    (2) if HDDC’s after-tax income for the
Fourth Quarter 2010, as calculated in accordance with US GAAP as shall be
determined by the parent corporation of NIVS and approved by the such parent’s
independent auditors, is between RMB 4,000,000 and RMB 8,000,000, then a pro rata amount of Four
Million U.S. Dollars ($4,000,000) shall be payable to Shareholder, where such
pro rata amount shall
be calculated based on the amount that the after-tax net income exceeds RMB
4,000,000, divided by RMB 4,000,000; and

     

    (3) if HDDC’s after-tax income for the
Fourth Quarter 2010, as calculated in accordance with US GAAP as shall be
determined by the parent corporation of NIVS and approved by the such parent’s
independent auditors, is less than RMB 4,000,000, then no amount shall be
payable to Shareholder.

     

    (iii)          Any
amounts payable as required by Section 2.03(ii), above, shall be made, if any,
no later than the thirtieth (30th) day following the completion of the parent’s
preparation of its financial statements for First Half Period
2010,  Third Quarter 2010, and Fourth Quarter 2010, respectively, in
accordance with US GAAP, approval of such financial statements by the such
parent’s independent auditors, and the parent’s filing of the related Quarterly
Report on Form 10-Q or Annual Report on Form 10-K, as applicable, with the US
Securities and Exchange Commission.

     

    
      	
               
      

            	
              2.04

            	
              Closing.

            

    

     

    The closing of the transactions
contemplated by this Agreement (the “Closing”) shall take place at
the offices of K&L Gates LLP, 10100 Santa Monica Boulevard, 7th Floor,
Los Angeles, California 90067 at 10:00 a.m., Pacific Standard time on January
22, 2010, or such other place and date as the parties may mutually agree upon
(the “Closing
Date”).

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    ARTICLE
THREE

    REPRESENTATIONS
AND WARRANTIES OF THE SHAREHOLDER AND

    SHAREHOLDER
PRINCIPAL RELATING TO HDDC

     

    
      	
               
      

            	
              3.01

            	
              Representations
      and Warranties of the Shareholder and Shareholder Principal relating to
      HDDC.

            

    

     

    The
Shareholder and Shareholder Principal, jointly and severally, hereby represent
and warrant to NIVS as follows:

     

    (a)         
Corporate
Status.  HDDC is a corporation duly incorporated, validly
existing and in good standing under the laws of the place of its incorporation
or establishment, with full corporate power and authority to own its property
and to carry on its business as presently conducted.  HDDC is
qualified to do business as a foreign corporation in any other jurisdiction
where the character or location of the property owned, leased or operated by it
or the nature of the business conducted by it makes such qualification
necessary.  HDDC has made available to NIVS true and complete copies
of its Memorandum and Articles of Association or equivalent constitutional
documents, including articles, other organizational documents and certificates
of approval and any related joint venture contracts, including any amendments
thereto. The articles, other constitutional documents and certificates of
approval and any related joint venture contracts of HDDC are valid and have been
duly approved and registered (as applicable) by competent PRC Governmental
Authorities.  The minute books of HDDC, as heretofore made available
to NIVS, are correct and complete in all material respects.

     

    (b)         
Capitalization
of HDDC. The
registered capital of HDDC is Four million U.S. Dollars ($4,000,000) and the
total investment is Five Million Six Hundred Thousand U.S. Dollars
($5,600,000).  Set forth in Section 3.01(b) of the Disclosure Schedule
is a complete and correct list of shareholders of capital of HDDC, showing that
the Shareholder owns 100% of the registered capital of HDDC, with such name,
address and beneficial ownership of the Shareholder in such registered
capital.  The HDDC Shares represent all of the issued and outstanding
share capital of HDDC and all of the HDDC Shares have been duly authorized and
validly issued in compliance with applicable law (including federal, state, and
local securities laws), are fully paid and nonassessable, and were not issued in
violation of any statutory, contractual or other preemptive rights, rights of
first refusal or similar rights.  There are no outstanding options,
warrants, rights, puts, calls, commitments, conversion rights, plans or other
agreements of any character to which HDDC or the Shareholder is a party or
otherwise bound which provide for the acquisition, disposition or issuance of
any issued but not outstanding, outstanding, or authorized and unissued shares,
or any part of the share or equity capital of or any other securities
exercisable or convertible into or exchangeable for any part of the capital of
HDDC.  There is no personal liability, and there are no preemptive or
similar rights, statutory or otherwise, attached to the HDDC
Shares.  No Shareholder or any other holder of any of HDDC’s
securities has any rights, “demand,” “piggy-back” or otherwise, to have such
securities registered under the 1933 Act or similar foreign law.

     

    (c)         
Ownership
of HDDC Shares.  The Shareholder is the record and beneficial
owner of the number of HDDC Shares, as set forth in Section 3.01(b) of the
Disclosure Schedule.  The Shareholder has good and marketable title to
such HDDC Shares, free and clear of any Liens.  All such HDDC Shares
are duly authorized, validly issued, fully paid and nonassessable and the
Shareholder has complete and unrestricted power and the unqualified right to
sell, assign, transfer and deliver its HDDC Shares to NIVS.

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

     

    (d)         
No
Subsidiaries.  Section
3.01(d) of the Disclosure Schedule sets forth the name, jurisdiction of
incorporation or establishment of each Entity in which HDDC owns of record or
beneficially, directly or indirectly, any equity securities or similar interests
of any person, or any interest in a partnership or joint venture of any kind
(each a “HDDC Subsidiary”
and collectively, the “HDDC Subsidiaries”).  Section
3.01(d) further identifies any HDDC Subsidiary that was merged, dissolved,
liquidated (or terminated by similar means) at any time.  As indicated
in Section 3.01(d) of the Disclosure Schedule, there are no HDDC Subsidiaries,
and no such HDDC Subsidiary has existed to
date.  

     

    (e)         
Corporate
Authority; Authorized and Effective Agreement.  The Shareholder
has full legal capacity and power to execute and deliver this Agreement and each
of the Shareholder and HDDC has full legal capacity and power to execute and
deliver the Transaction Documents to which HDDC or the Shareholder is a party,
which Agreement and Transaction Documents have been or will, on or prior to
Closing, be duly executed and delivered by such parties and constitute the valid
and binding obligation of such parties except (i) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting enforcement of creditors’ rights generally, (ii) as
limited by laws relating to the availability of specific performance, injunctive
relief or other equitable remedies and (iii) insofar as indemnification and
contribution provisions may be limited by applicable law.

     

    (f)          
No
Conflict.  The execution, delivery, performance and the
consummation of the transactions contemplated by this Agreement and the
Transaction Documents by HDDC and the Shareholder will not, directly or
indirectly, (i) violate any Legal Requirement or any Governmental Requirement;
(ii) violate the Memorandum and Articles of Association or equivalent
constitutional documents of HDDC; (iii) violate any judgment, award or decree to
which HDDC or the Shareholder is a party or by which HDDC or the Shareholder is
bound; (iv) violate any provision of any material indenture, agreement or other
instrument to which HDDC or the Shareholder is a party, or by which HDDC, the
Shareholder, or any of its respective properties or assets is bound or affected,
or result in a breach of or constitute (with due notice or lapse of time or
both) a default under any such indenture, agreement or other instrument, except
any indenture, agreement or other instrument that will be satisfied in full at
or before Closing; (v) result in the creation or imposition of any Lien upon any
of the properties or assets of HDDC; or (vi) result in any suspension,
revocation, impairment, forfeiture or non-renewal of any License of
HDDC.

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

     

    (g)         
Financial
Statements of HDDC.  HDDC
has furnished to NIVS financial statements of HDDC prepared consisting of
balance sheets as of December 31 for the years 2008 and 2007, and the related
statements of income, changes in shareholders’ equity and cash flows for the two
(2) years ended December 31, 2008 (the “HDDC Balance Sheet Date”)
and the interim balance sheet and income statement as of November 30, 2009
(collectively, all of such consolidated financial statements are referred to as
“HDDC Financial Statements”).  The
HDDC Financial Statements have been prepared in accordance with GAAP applied on
a consistent basis during the periods involved (except as may be indicated in
the notes thereto) and fairly present in all material respects the consolidated
financial position of HDDC as of the dates thereof and its consolidated results
of operations and cash flows for the periods then ended.  The
Financial Statements have been prepared based on the books, records, accounts
and related records of HDDC maintained, which books, records, accounts and
related records are complete and accurately and fairly present in detail all of
the assets, liabilities, revenues, expenses, cash flows and transactions of HDDC
and have been maintained in accordance with sound business practices, including
the maintenance of adequate internal controls.  The Financial
Statements fairly represent in all respects the financial position of HDDC as at
each Balance Sheet Date, as applicable, and for the period then ended, all in
accordance with GAAP.  HDDC has not engaged in any transaction or used
any of the funds in the conduct of the Business except for transactions and
funds which have been and are reflected in the normally maintained books and
records of the Business.

     

    (h)          Absence
of Undisclosed Liabilities.  HDDC has no liabilities or
obligations (whether accrued, absolute, contingent or otherwise) except: (i) as
set forth in Section 3.01(h) of the Disclosure Schedule, (ii) as set forth on
the HDDC Financial Statements or (iii) as incurred since the HDDC Balance Sheet
Date in the ordinary course of business and usual and normal in amount both
individually and in the aggregate.

     

    (i)            Absence
of Changes.  Except as set forth in Section 3.01(i) of the
Disclosure Schedule, since the HDDC Balance Sheet Date, HDDC has operated its
business in the ordinary course consistent with HDDC’s past practice, and there
has not been any Material Adverse Effect with respect to
HDDC.  

     

    (j)            Reports
and Records.  HDDC and its employees have filed all reports and
maintained all records and licenses required to be filed or maintained by
it.  All such documents and reports complied in all material respects
with applicable requirements of law and rules and regulations in effect at the
time such documents and reports were filed and contained in all material
respects the information required to be stated therein.

     

    (k)           Taxes.

     

    (i)           HDDC
has timely filed all Tax Returns required to be filed on or before the date
hereof and will timely file all Tax Returns required to be filed on or before
Closing under any applicable laws and regulations.  Such Tax Returns
are true, correct and complete in all respects.  All Taxes due and
owing by HDDC (whether or not showing on any Tax Return) have been
paid.  HDDC is not currently the beneficiary of any extension of time
in which to file any Tax Return.  No written claim has ever been made
by any authority in a jurisdiction where HDDC does not file Tax Returns that
HDDC is or may be subject to taxation by that jurisdiction.  There are
no liens for Taxes (other than for Taxes not yet due and payable) upon any of
the assets of HDDC.  HDDC has not waived any statute of limitations in
respect of Taxes or agreed to any extension of time with respect to a Tax
assessment or deficiency.

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    (ii)          HDDC
has withheld and paid all Taxes required to have been withheld and paid in
connection with any amounts paid or owing to any employee, independent
contractor, creditor, stockholder, or other third party.  Proper
records have been maintained in respect of all such deductions and payments and
all applicable laws, rules and regulations have been complied with.

     

    (iii)         Neither
HDDC nor any director or officer (or employee responsible for Tax matters) of
HDDC expects any authority to assess any additional Taxes for any period for
which Tax Returns have been filed.  No foreign, federal, state, or
local tax audits or administrative or judicial Tax proceedings are pending or
being conducted with respect to HDDC.  HDDC has not received from any
Governmental Authority (including jurisdictions where HDDC does not file Tax
Returns) any (1) written notice indicating an intent to open an audit or other
review, (2) request for information related to Tax matters, or (3) notice of
deficiency or proposed adjustment for any amount of Tax proposed, asserted, or
assessed by any taxing authority against HDDC.

     

    (iv)         HDDC
is not a party to any agreement, contract, arrangement or plan that has resulted
or could result, separately or in the aggregate, in payment of (1) any “excess
parachute payment” within the meaning of Section 280G of the Internal Revenue
Code of 1986, as amended (the “Code”) from this transaction
(or any corresponding provision of state, local or foreign Tax law) or (2) any
amount that will not be fully deductible as a result of Code Section 162(m) (or
any corresponding provision of state, local or foreign Tax
law).  

     

    (v)          HDDC
has not been a member of an affiliated group filing a consolidated federal
income Tax Return and HDDC has never been a member of any group for Tax
purposes.  HDDC does not have any liability for the Taxes of any
Person or Entity under any applicable Legal Requirement as a transferee or
successor, by contract, or otherwise.  No act or transaction has been
or will, either on or before the Closing, be affected by HDDC, the Shareholder
or any other Person in consequence of which HDDC is or may be held liable for
Taxes primarily chargeable against some other Person.

     

    (vi)         The
unpaid Taxes of HDDC (1) did not, as of the date of the most recent balance
sheet included in the HDDC Financial Statements, exceed the reserve for Tax
liability (rather than any reserve for deferred Taxes established to reflect
timing differences between book and Tax income) set forth on the face of such
balance sheet (rather than in any notes thereto) and (2) do not and will
not exceed such reserve as adjusted for the passage of time through the date of
the Closing in accordance with the past custom and practice of HDDC in filing
its Tax Returns.  Since the date of the most recent balance sheet
included in the HDDC Financial Statements, HDDC has not incurred any liability
for Taxes arising from extraordinary gains or losses, as that term is used in
GAAP, outside the ordinary course of business consistent with past custom and
practice.

     

    (vii)        No
power of attorney has been granted by HDDC with respect to any matters relating
to Taxes that is currently in effect.

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

    (viii)       HDDC
has not filed any disclosures under Code Sections 6662 or 6011 or comparable
provisions of state, local or foreign law to prevent the imposition of penalties
with respect to any Tax reporting position taken on any Tax Return.

     

    (ix)          HDDC
will not be required to include any item of income in, or exclude any item of
deduction from, taxable income for any taxable period (or portion thereof)
ending after the Closing Date as a result of any (A) change in method of
accounting for a taxable period ending on or prior to the Closing Date; (B)
“closing agreement” as described in Code Section 7121 (or any corresponding or
similar provision of state, local or foreign income Tax law) executed on or
prior to the Closing Date; (C) intercompany transactions or any excess loss
account described in Treasury Regulations under Code Section 1502 (or any
corresponding similar provision of state, local or foreign income Tax law); (D)
installment sale or open transaction disposition made on or prior to the Closing
Date; or (E) prepaid amount received on or prior to the Closing
Date.

     

    (x)           HDDC
does not own an interest in real property in any jurisdiction in which a Tax is
imposed, or the value of the interest is reassessed, on the transfer of any
interest in real property and which treats the transfer of an interest in an
entity that owns an interest in real property as a transfer of the interest in
real property.

     

    (xii)         HDDC
has not, in the past ten (10) years, (i) acquired assets from another
corporation in a transaction in which the Tax basis of the acquired assets was
determined, in whole or in part, by reference to the Tax basis of the acquired
assets (or any other property) in the hands of the transferor or (ii) acquired
the stock of any corporation which is a qualified subchapter S
subsidiary.

    

    (xiii)       HDDC
has not entered into or been engaged in or been a party to any transaction which
is artificial or fictitious or any transaction or series of transactions or
scheme or arrangement of which the main or dominant purpose or one of the main
or dominant purposes was the avoidance or deferral of or reduction in the
liability to Tax of HDDC, to the extent that such arrangement is prohibited
under any Legal Requirement or Governmental Requirement.  No Tax
scheme in effect, as previously applied in the HDDC Financial Statements, has
been or will be illegal under any Legal Requirement or Governmental Requirement
or adversely affect the financial condition of HDDC or the operation of the
Business.  None of the assets and properties of HDDC has been
purchased at an under value or been given to HDDC in circumstances where the
gift or element of under value might be subject to or give rise to any form of
Tax, estate duty chargeable or assessable against HDDC or on any of its
assets.

    

    (xiv)       HDDC
has sufficient records to permit accurate calculation of the Tax liability or
relief which would arise upon a disposal or realisation on completion of each
asset owned by HDDC at the HDDC Balance Sheet Date or acquired by HDDC before
Closing and has otherwise maintained accurate and complete books of account and
records with respect to all transactions and other matters occurring on or
before Closing to enable the due and proper preparation and filing of all Tax
Returns required of HDDC whether before or after Closing.  HDDC has
duly submitted all claims and disclaimers the making of which has been assumed
for the purposes of the HDDC Financial Statements.

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

     

    (l)           
Marketable
Title; Condition of Assets.  HDDC owns, and is in rightful
possession of, and has good and marketable title to, all of its assets and
properties used (other than the HDDC Real Properties, which is addressed in
Section 3.01(m)), free and clear of any Lien or other interest of any persons
whatsoever, except for Liens constituting Permitted Liens.  The assets
of HDDC are all the assets needed to continue to conduct the Business as it is
presently being conducted.  Except for any incidental repairs required
in the ordinary course of business, each item of tangible personal property
owned or used by HDDC in conducting the Business is in good operating condition
and in a state of good maintenance and repair (ordinary wear and tear excepted)
and is adequate and suitable for the purposes for which they are presently being
used.

     

    
      	
               
      

            	
              (m)

            	
              Real
      Property.

            

    

     

    (i)       Section
3.01(m) of the Disclosure Schedule lists and describes any interest in real
property held by HDDC, including all real properties and premises owned, leased,
occupied or otherwise used by HDDC or in connection with the Business (the
“HDDC Real
Properties”).  The HDDC Real Properties constitute all of the
interests in real property used in the Business, including any land use rights
granted with respect to any real property, and all deeds and documents necessary
to prove the title of HDDC to the HDDC Real Properties are in the possession of
HDDC.  All of the buildings, structures and appurtenances situated on
the HDDC Real Properties are (i) in good operating condition and in a state of
good maintenance and repair (ordinary wear and tear excepted) and (ii) adequate
and suitable for the purposes for which they are presently being
used.

     

    (ii)      HDDC
is not the registered or beneficial owner of any HDDC Real
Properties.

     

    (iii)     The
HDDC Real Properties in Section 3.01(m) of the Disclosure Schedule (“Leased Properties”) are all
occupied under Leases and the particulars of all Leases are fully and accurately
set out in that Section 3.01(m).  The HDDC Real Properties in Section
3.01(m) of the Disclosure Schedule are all occupied pursuant to land use rights
sold or granted to HDDC.  HDDC possesses good leasehold to its Leased
Properties pursuant to valid and subsisting Leases held by it.  With
respect to any land use rights sold or granted or purported to have been sold or
granted to HDDC, such land use rights have been validly sold or granted by
competent Governmental Authorities duly authorised so to do and HDDC has good
and valid title thereto free from Liens (other than Permitted Liens) and
enforceable against any other third Person under PRC laws or the laws of any
other applicable jurisdiction.

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

    (iv)     The
Leases are head leases, are properly completed and (where required) stamped and
are in the possession and under the control of HDDC.  The land use
rights to any HDDC Real Property in the PRC are owned by HDDC for a period of
not less than
fifty (50) years from the relevant date as shown in Section 3.01(m) of
the Disclosure Schedule.

     

    (v)      All
necessary consents, permits, licenses, certificates, authorisations and
approvals for the grant of the Leases and land use rights pertaining to any HDDC
Real Property were obtained before such grant.  The landlords named in
the Leases were the registered owners of the Leased Properties at the time of
the grant of the relevant Lease and all Leases are duly registered with the
appropriate Governmental Authorities in accordance with applicable Legal
Requirement or Governmental Requirement of the PRC or of any other applicable
jurisdiction.  With respect to the land use rights, HDDC has obtained
and is in possession of the relevant land use right registration and other
certificates and all other documents of title and such certificates and
documents of title are valid and subsisting and in full force and
effect.

     

    (vi)     Save
for Permitted Liens, the HDDC Real Properties and the title deeds and
documentation relating thereto are not subject to any debenture (whether fixed
or floating), option, agreement for sale, condition, covenant, agreement, claim,
overriding interest or any other Liens, nor is there any Person in possession or
occupation of or who has or claims any right or easement of any kind in respect
of any such properties adversely to the estate, interest, right or title therein
of HDDC.

     

    (vii)    There
are no rights, interests, covenants, restrictions, reservations, licenses or
easements, nor any disputes or outstanding notices (whether given by a lessor or
any other person) nor in the case of a Leased Property, rights for the lessor to
break the term nor (without prejudice to the generality of the foregoing) any
other matters or things which adversely affect the value of the HDDC Real
Properties or the proper use and enjoyment thereof for the purpose of the
business now being carried on at such properties.

     

    (viii)   The
Leases contain no right of termination by the landlord thereof except on grounds
of non-payment of rent, breach of covenant or insolvency.  There are
no circumstances which would entitle or require a lessor or any other Person to
exercise any power of entry upon or of taking possession of any HDDC Real
Properties or which would otherwise restrict or terminate the continued
possession or occupation thereof.

     

    (ix)      The
Leased Properties are not subject to any outgoings other than general and water
rates, rent, management charges of a non-capital nature and utility
charges.  All land premiums and other Taxes and all rents, service
charges and other outgoings payable by HDDC in respect of the Leased Properties
or properties to HDDC holds land use rights have been duly and timely paid and
will be paid up to the date of Closing and no amount is or will be due or
payable by HDDC in respect thereof on or prior to Closing.

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

    (x)       HDDC
has duly performed, observed and complied with all covenants, restrictions,
reservations, conditions, agreements, statutory requirements, by-laws, orders,
building regulations and other stipulations and regulations affecting the HDDC
Real Properties and their use, including the terms of all Leases, and the use of
such properties does not contravene the same and no notice of any alleged breach
of any of the terms of any such Lease has been served on
HDDC.  Without limiting the foregoing, the current use by HDDC of the
HDDC Real Properties and all of the buildings, structures and appurtenances
situated thereon is in compliance with all zoning or planning restrictions applicable
thereto.  All necessary certificates of compliance and other
certificates, consents, occupation and other permits, licenses, authorisations
and approvals for the user of any HDDC Real Properties and any and all buildings
and structures thereon, as they are being used, have been duly obtained and are
in full force, validity and effect and there are no circumstances known to the
Shareholder and Shareholder Principal which are likely to result in the
forfeiture, avoidance, withdrawal or non-renewal of or restriction on or
amendment to the same.  All such properties are used by HDDC for legal
purposes and HDDC has not violated any Legal Requirement or any Governmental
Requirement of the PRC or elsewhere relating to land or property.  The
Shareholder and Shareholder Principal is not aware of any facts, matters or any
notice or order served by any Governmental Authority which may adversely affect
the right of HDDC to use such properties for the purpose for which they are
presently being used or intended to be used.  None of such properties
is subject to any actual or threatened condemnation or other proceedings, notice
or order given by any PRC or other Governmental Authority which would adversely
affect such properties or any part thereof or preclude or impair the use of any
such property by HDDC for the purposes for which it is currently
used.  None of the HDDC Real Properties is adversely affected or
likely to be adversely affected by any planning, highways, transport, utility or
other proposals.

     

    (xi)      HDDC
is entitled to and has exclusive vacant possession of the HDDC Real Properties
and, other than the Leases, no part of the HDDC Real Properties is subject to
any lease, tenancy or licence or any agreement to grant such lease, tenancy or
licence and no Person other than HDDC has a right to occupy or enter upon any of
the HDDC Real Properties, other than the rights of landlords pursuant to the
Leases.  The Leases are not subject to any options or rights of
pre-emption or first refusal in favour of any third parties.

     

    (xii)     There
is no outstanding monetary claim or liability, contingent or otherwise,
affecting the HDDC Real Properties and in the case of a Leased Property there
are no rent reviews in the course of being determined or exercisable by the
lessor from a date prior to the date of Closing.

    
      
         

      

      
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      (xiii)        HDDC
has maintained adequate insurance with respect to the HDDC Real Properties where
the failure so to maintain would or could reasonably expected to have a Material
Adverse Effect on HDDC.  Where HDDC is responsible for maintaining
insurance of the Leased Properties, the policy conforms in all respects with the
requirements of the relevant Lease.

       

      (n)         Legal Proceedings and
Insolvency.

       

      (i)       Except
as set forth in Section 3.01(n) of the Disclosure Schedule, there are no
actions, suits, proceedings, claims or investigations pending or, to the
Knowledge of the Shareholder and Shareholder Principal, threatened, in any
court, before any governmental agency or instrumentality or other Governmental
Authority or in any arbitration proceeding against or by HDDC or against any of
its activities, assets and properties.

       

      (ii)       As
of the date hereof, immediately prior to and immediately following Closing, HDDC
and the Shareholder is and will be Solvent.  None of HDDC and the
Shareholder is contemplating the filing of any petition by it under any
bankruptcy or insolvency laws or the liquidating of all or a substantial portion
of its property, and the Shareholder does not have any knowledge of any third
party contemplating the filing of any such petition against HDDC or the
Shareholder.

       

      (o)         Regulatory
Matters.  HDDC is not a party to and neither HDDC nor any of
its properties or assets is subject to any order, judgment, decree, agreement,
memorandum of understanding or similar arrangement with any Governmental
Authority charged with the supervision or regulation of HDDC or its business
activities.  HDDC has not been advised by any of the Governmental
Authorities that any of such Governmental Authorities are contemplating issuing
or requesting (or are considering the appropriateness of issuing or requesting)
any such order, judgment, decree, agreement, memorandum of understanding,
supervisory letter or similar submission.

       

      (p)         Brokers, Finders and
Others.  There are no fees or commissions claimed by, or
payable by HDDC, Shareholder, or Shareholder Principal to, any broker, finder,
intermediary, or any other similar person in connection with effecting this
Agreement or the transactions contemplated hereby, except for ordinary and
customary legal and accounting fees which shall be paid in full at
Closing.

      
        
           

        

        
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      (q)         Employment
Agreements.  Except as disclosed in Section 3.01(q) of the
Disclosure Schedule, HDDC is not a party to any employment, change in control,
severance, consulting, non-compete, piracy or nonsolicitation
agreement.  HDDC is not a party to, bound by or negotiating any
collective bargaining agreement, nor are any of its respective employees
represented by any labor union or similar organization. HDDC is in compliance in
all material respects with all its contractual obligations and all applicable
laws respecting employment and employment practices, terms and conditions of
employment and wages and hours, including those pertaining to welfare funds,
social benefits, social insurance contributions, provident fund or retirement
scheme contributions, medical benefits, insurance, retirement benefits, pensions
and the like, and has maintained current, adequate and suitable records
regarding the same, and HDDC has not engaged in any unfair labor
practice.  Each of the employees of HDDC who is by law subject to
immigration control, has been granted appropriate permission to remain in the
PRC or any other applicable jurisdiction and has a valid work permit issued in
relation to his employment with HDDC and has obtained all necessary extensions
to his leave to remain in the PRC or any other applicable jurisdiction and so
far as the Shareholder and Shareholder Principal is aware there are in existence
no grounds upon which any such leave to remain or work permit might be curtailed
or the employee may be required to leave the PRC or any other applicable
jurisdiction in which his services to HDDC are required to be
performed.  HDDC has complied with all Legal Requirement and
Governmental Requirement in the PRC with regard to employment, labour or labour
contracts, staff or labour management or protection, including without
limitation those pertaining to welfare funds, social benefits, social insurance
contributions, medical benefits, insurance, retirement benefits, pensions and
the like.

       

      (r)         Employee Benefit
Plans

       

      (i)           Section
3.01(r)(i) of the Disclosure Schedule sets forth a list of all (a) stock option,
stock purchase, restricted stock, equity compensation, deferred compensation,
bonus, fringe benefit, sick leave, vacation, paid or unpaid leave, profit
sharing, pension, retirement, deferred compensation, medical, life, disability,
accident, salary continuation, supplemental retirement, severance,
change-of-control and unemployment benefit plans, programs or agreements
(whether or not insured), (b) employment agreement, and (c) Statutory Plans
(collectively, the “Employee
Benefit Plans”) that have been established, maintained, or sponsored by
HDDC, or to which HDDC has contributed or into which HDDC has entered (the
“HDDC Employee Benefit
Plans”). “HDDC Employee Benefit Plans” shall not include any Employee
Benefit Plan that is maintained under applicable law by a governmental
body.  HDDC has not announced or otherwise made a commitment to
implement any arrangement that, if implemented, would be a HDDC Employee Benefit
Plan or to improve or change the benefits provided under any HDDC Employee
Benefit Plans, unless to the extent required under any applicable Legal
Requirement or Governmental Requirement.

       

      (ii)          HDDC
has made available to NIVS, to the extent applicable, true and complete copies
of the following documents with respect to each HDDC Employee Benefit Plan, (A) the
plan document (or, in the case of any unwritten HDDC Employee Benefit Plan, a
written summary of the terms of such HDDC Employee Benefit Plan), (B) the
summary plan description, (C) the trust agreement, and (D) all related
agreements, insurance contracts and other agreements by which such HDDC Employee
Benefit Plan is established, operated, administered or funded.

       

      (iii)         Each
HDDC Employee Benefit Plan complies in form and has been maintained and operated
in all respects in accordance with the requirements of all applicable laws,
including all applicable laws, rules, regulations, codes and practices
pertaining to any Statutory Plans, and each HDDC Employee Benefit Plan has been
maintained and operated in accordance with its terms.

      
        
           

        

        
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      (iv)         Neither
HDDC nor any director, officer or employee of HDDC, nor any other person who
participates in the operation of any HDDC Employee Benefit Plan has engaged in
any transaction with respect to any HDDC Employee Benefit Plan, or breached any
applicable fiduciary responsibility or obligation under any applicable Legal
Requirement or Governmental Requirement that would subject any of them to a tax,
penalty or liability for prohibited transactions or breach of any obligations
under any applicable Legal Requirement or Governmental Requirement or would
result in any claim being made under, by or on behalf of any such HDDC Employee
Benefit Plan by any party with standing to make such a claim.

       

      (v)          There
are no actions,
suits or claims pending or, to the Knowledge of the Shareholder and Shareholder
Principal, threatened verbally or in writing against or with respect to any HDDC
Employee Benefit Plan or the assets of any HDDC Employee Benefit Plan (other
than routine claims for benefits and appeals of denied claims), and no civil or
criminal action brought pursuant to the provisions of any applicable Legal
Requirements or Governmental Requirements of any jurisdiction applicable to HDDC
is pending or threatened verbally or in writing against HDDC or any fiduciary of
any HDDC Employee Benefit Plan with respect to any HDDC Employee Benefit
Plan.  HDDC has not received any written notice that any HDDC Employee
Benefit Plan or any fiduciary thereof is presently the subject of an audit,
investigation or examination by any governmental or quasi-governmental agency,
and, to the Shareholder’s and Shareholder Principal’s Knowledge, no such action
has been threatened.

       

      (xii)         HDDC
has in place and maintained all Statutory Plans in full compliance with the
Legal Requirements and Governmental Requirements of any jurisdiction applicable
to HDDC, its Business or its operations.  All employer and employee
payments, contributions and premiums required to be remitted, paid to or in
respect of each such Statutory Plan have been paid or remitted in a timely
fashion in accordance with its terms and all such Legal Requirements and
Governmental Requirements and no Taxes, penalties, fees, contributions or other
payments are owing under or, in relation to, any such Statutory
Plan.  Without limiting the foregoing, all benefits and contributions
payable to any employee of HDDC under any Statutory Plan have been fully
satisfied.

       

      (s)           Compliance with
Laws.  Except as set forth in Section 3.01(s) of the Disclosure
Schedule:

       

      (i)           HDDC
is in compliance, in all material respects, with all applicable federal, state,
local and foreign statutes, laws, regulations, ordinances, rules, judgments,
orders or decrees applicable to HDDC, its Business, operations and activities,
or to the employees conducting such business;

      
        
           

        

        
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      (ii)          HDDC
has all business and other licenses, certificates, permits, licenses,
authorizations, consents, qualifications, orders and approvals of, and has made
all filings, applications and registrations with, all Governmental Authorities,
and other authorizations required from any Governmental Authority under any
applicable Legal Requirements and Governmental Requirements in the PRC, that are
required in order to permit it to own or lease its properties and to conduct its
business as presently conducted; all such permits, licenses, certificates of
authority, orders and approvals are in full force and effect and no suspension
or cancellation of any of them has been threatened in writing;

       

      (iii)         HDDC
has received no written notification or communication from any Governmental
Authorities since January 1, 2001, (A) asserting that HDDC or any
subsidiary is not in compliance with any of the statutes, regulations or
ordinances which such Governmental Authorities enforce, or (B) threatening
to revoke any license, franchise, permit or governmental authorization which has
not been resolved to the satisfaction of the Governmental Authorities which sent
such notification or communication.  There is no event which has
occurred that, to the knowledge of HDDC, would reasonably be expected to result
in the revocation of any such license, franchise, permit or governmental
authorization;

       

      (iv)         HDDC
has not received any letter or notice from any PRC Governmental Authority
notifying revocation of any Permits or Licenses issued to it by any PRC
Governmental Authority for non-compliance or the need for compliance or remedial
actions in respect of the activities carried out by it;

       

      (v)          HDDC
has been conducting and will conduct its business activities within the
permitted scope of its business license or is otherwise operating its business
in full compliance with all applicable Legal Requirements and Governmental
Requirements and with all requisite Permits and Licenses granted by competent
PRC Governmental Authorities or any other Person;

       

      (vi)         all
Licenses and Permits required for the conduct of any part of the Business which
are subject to periodic renewal have been obtained and there are no grounds on
which such renewals will not be granted by the relevant PRC Governmental
Authorities or other Persons; and

       

      (vii)        all
filings, declarations, exemptions and registrations from or with all applicable
and competent PRC Governmental Authorities required in respect of HDDC and its
operations including, without limitation, registrations with Foreign Economic
Relations and Trade Commission, State or the relevant local Administration of
Industry and Commerce, State Administration for Foreign Exchange, tax bureau and
customs authorities have been duly completed in accordance with all applicable
Legal Requirements and Governmental Requirements in the PRC.

      
        
           

        

        
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      (t)            Environmental
Matters.

       

      (i)       Except
as set forth in Section 3.01(t) of the Disclosure Schedule, neither HDDC, the
Shareholder nor any Person acting at its direction has discharged, released or
emitted, or has threatened to discharge, release or emit Hazardous Substances
into the air, water, surface water, ground water, soil, land surface or
subsurface strata or transported Hazardous Substances to or from property
currently owned, leased or used by HDDC except in compliance with Environmental
Law and except for claims or releases which have been remediated and for which
the appropriate Governmental Authority has delivered a “no further action”
letter or similar written indications that no additional action is
required.

       

      (ii)      Except
as set forth in Section 3.01(t) of the Disclosure Schedule, neither HDDC nor the
Shareholder has received any written or verbal notification from a Governmental
Authority that there is any violation of any Environmental Law with respect to
the business and properties of HDDC and neither HDDC nor the Shareholder has
received any written or verbal notification from a Governmental Authority
pursuant to any Environmental Law, and with respect to any such matter notified,
none of them remain open, active or require any further action on the part of
HDDC.

       

      (iii)     HDDC
has all licenses, certificates, consents, approvals, qualifications, filings,
declarations, registrations, exemptions, permits and other authorizations from
federal, state, foreign or local Governmental Authorities that are necessary
with respect to the conduct of the Business and the ownership, use or operation
of HDDC Real Properties and any other assets and properties of HDDC (each a
“Permit” and
collectively, the “Permits”).  All such
Permits and the continuing validity thereof will not be adversely affected by
the consummation of the transactions contemplated hereby and, to the extent
required for the conduct of the Business by HDDC or the ownership or use of any
of its assets and properties after Closing, all such Permits may otherwise be
transferred or assigned to NIVS in accordance with their terms and with
applicable law.  To the extent so required, HDDC, Shareholder, and
Shareholder Principal shall use their best efforts to cooperate with and assist
NIVS so that the Permits can be conveyed, transferred and/or assigned to
NIVS.  The present conduct of the Business is not dependent upon any
zoning variance or non-conforming use exception.  Section 3.01(t) of
the Disclosure Schedule contains a list of all Permits.  There is no
basis for the revocation or withdrawal of any Permit or any non-renewal thereof
upon its expiry.  Neither HDDC nor the Shareholder has received any
written or verbal notification from the federal, state, foreign or local
Governmental Authorities that there is a violation of any Permit with respect to
the business and properties of HDDC and neither HDDC nor the Shareholder has
received any written or verbal notification from the federal, state, foreign or
local governments regarding any Permit, and with respect to any such matter
notified, none of them remain open, active or require any further action on the
part of HDDC or the Shareholder.

       

      
        
           

        

        
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      (iv)     Except
as set forth in Section 3.01(t) of the Disclosure Schedule, there are no
underground storage tank systems or facilities on any portion of the property
currently owned, leased or used by HDDC and any underground storage tank or
facility previously located thereon has either been removed or closed in place,
and HDDC has completed all applicable investigations and procedures required to
close such tanks or tank systems in compliance with all applicable Environmental
Laws.  Section 3.01(t) of the Disclosure Schedule identifies all
storage tanks or facilities that have been closed in place.

       

      (v)      HDDC
has never manufactured, processed, handled or sold asbestos or products
containing asbestos.  HDDC has never manufactured or sold sand
blasting sand to third parties for use outside of HDDC’s
facilities.  Except as set forth Section 3.01(t) of the Disclosure
Schedule, neither HDDC nor the Shareholder has received notice of any claim or
suit against HDDC or the Shareholder for asbestos- or silica-related exposure or
injury, whether by current or former employees or third parties.

       

      (u)           Insurance.  Section
3.01(u) of the Disclosure Schedule lists all of the insurance policies of fire,
liability, workers’ compensation, fiduciary liability and other forms of
insurance providing insurance coverage to or for HDDC in effect for the past
five (5) years.  Unless otherwise set forth in Section 3.01(u) of the
Disclosure Schedule, (i) HDDC is named insured under such policies, (ii) all
premiums required to be paid with respect thereto covering all periods up to and
including the Closing Date have been paid, (iii) except for any directors’ and
officers’ liability insurance policies, all of such insurance policies have been
issued on an “occurrence” basis, (iv) there has been no complete lapse in
insurance coverage at any time within the last ten (10) years, (v) there are not
presently, and after the Closing Date there will not be, any retrospective
premiums due under any of such policies, (vi) no notice of default, cancellation
or termination has been received with respect to any such policy, (vii) and all
claims thereunder have been filed in due and timely fashion.  HDDC has
delivered or caused to be delivered to NIVS true and complete copies of all
current insurance policies, binders or bonds.  Since January 1, 2009,
no currently outstanding and unpaid claims have been made by HDDC on any of such
policies.  There are no claims outstanding against HDDC with respect
to any period for which any lapse in insurance coverage occurred.  No
claims are being handled by an insurer of HDDC under a reservation of rights
letter.

       

      (v)           Governmental and Third-Party
Proceedings.  Except as set forth in Section 3.01(v) of the
Disclosure Schedule, no consent, approval, authorization of, or registration,
declaration or filing with, any court, Governmental Authority or any other third
party is required to be made or obtained by HDDC or the Shareholder in
connection with the execution, delivery or performance by any of them of this
Agreement and the Transaction Documents to which it is a party or the
consummation by the Shareholder of the transactions contemplated
hereby.

       

      (w)          Contracts.  Section
3.01(w) of the Disclosure Schedule sets forth a list of all Contracts (as
hereinafter defined) in existence as of the date of this Agreement (other than
those which have been performed completely):  (A) which involve
the payment by or to HDDC of more than $10,000 in connection with the purchase
of property or goods or the performance of services and (B) which are not
in the ordinary course of its business consistent with past practice (such
contracts referred to herein as “Contracts”).  Complete
copies of all such Contracts have been made available to
NIVS.  Neither HDDC nor, to the Knowledge of Shareholder or
Shareholder Principal, any other party thereto, is in default under any contract
listed in Section 3.01(w) of the Disclosure Schedule.

      
        
           

        

        
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      (x)           Customer
Relations.  To the Shareholder’s and Shareholder Principal’s
Knowledge, there exists no consideration or state of facts or circumstances
involving HDDC’s customers, insurance carriers (the “Carriers”), employees or sales
representatives that could adversely affect HDDC after the date of
Closing.  No controversy or disagreement presently exists or has been
threatened between HDDC and any customer or Carrier of HDDC (including but not
limited to any allegations of errors and/or omissions).  There has
been no change in the commission structures of such Carriers, and to the
Shareholder’s and Shareholder Principal’s Knowledge, there is no pending change
to the commission structure of such Carriers.

       

      (y)           Intellectual
Property.  Section 3.01(y) of the Disclosure Schedule sets
forth a complete list of all of the registered trademarks, trademark
registrations, applications for trademark registration, registered trade names,
patents and registered copyrights owned by HDDC, all of which are owned by HDDC
free and clear of any encumbrances.  HDDC is not infringing any
patent, copyright or trademark of any third party or otherwise violating the
intellectual property rights of any third party nor has any claim been made or,
threatened verbally or in writing against HDDC alleging any such violation, and
there has been no violation by others of any right of HDDC in any trademark or
copyright.  HDDC is not a party to or bound by any license or other
agreement requiring the payment by it of any royalty or similar payment in
connection with its operations, except for commercially available
software.

       

      (z)            Affiliate
Transactions.  Section 3.01(z) of the Disclosure Schedule
contains a list of all Contracts, transfers of assets or liabilities or other
commitments or transactions, whether or not entered into in the ordinary course
of business, to or by which HDDC, on the one hand, and any of its Affiliates, on
the other hand, are or have been a party or otherwise bound or
affected.  Except as disclosed in Section 3.01(z) of the
Disclosure Schedule, each Contract, transfer of assets or liabilities or other
commitment or transaction set forth or required to be set forth in Section
3.01(z) of the Disclosure Schedule was on terms and conditions as favorable to
HDDC as would have been obtainable by it at the time in a comparable
arm’s-length transaction with a Person other than HDDC or any of its
Affiliates.

       

      (aa)         Access to NIVS
Information.  The Shareholder has had the opportunity
to conduct its own independent investigation of NIVS and collect and review all
materials made available by NIVS to evaluate the HDDC
Acquisition.  The Shareholder, its officers and directors and its
representatives have been provided the opportunity to ask questions of, and
receive answers from, the directors and officers of NIVS concerning the business
of NIVS.  The Shareholder acknowledges that it has had access to
sufficient information to understand the merits and risks associated with the
HDDC Acquisition.  To the extent that the Shareholder has deemed it
appropriate to do so, he or she has retained, and relied upon, appropriate
professional advice concerning the tax, legal, business and financial merits and
consequences of consummating the transactions contemplated by this Agreement and
the Transaction Documents.

      
        
           

        

        
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      (bb)        Foreign
Corrupt Practices Act.  None of HDDC, the Shareholder, any
director, officer, agent or employee of any of them, and any other Person
associated with or acting for or on behalf of any of them has directly or
indirectly (1) made any contribution, gift, bribe, rebate, payoff, influence
payment, kickback, or other payment to any Person, private or public, regardless
of form, whether in money, property, or services (i) to obtain favourable
treatment in securing business, (ii) to pay for favourable treatment for
business secured, (iii) to obtain special concessions or for special concessions
already obtained, for or in respect of HDDC (or any Affiliate thereof), in
violation of any law or otherwise constituting an offence under the Foreign
Corrupt Practices Act of 1977 of the United States, as amended (assuming for
these purposes that the Shareholder and HDDC were subject to that Act), or (iv)
in violation of any law (including without limitation any relevant and
applicable Tax laws or in relation to the payment or non-payment of any Taxes by
HDDC or the Shareholder), or (2) established or maintained any fund or asset
that has not been recorded in the books and records of HDDC, or (3) has violated
any anti-corruption or anti-bribery laws or regulations of the PRC or equivalent
laws and regulations promulgated in any other jurisdictions.  None of
the assets and properties of HDDC were obtained or procured through any
contribution, gift, bribe, rebate, payoff, influence payment, kickback, or other
payment to any Person, private or public, regardless of form, whether in money,
property, or services that would have violated the foregoing representations and
warranties.

       

      (cc)         Account
Receivables.  Section 3.01(cc) of the Disclosure Schedule sets
forth an accurate, correct and complete list of all account receivables of HDDC
existing as of November 30, 2009 (“Receivables”).  Each
Receivable is (1) a valid and legally binding obligation of the account
debtor enforceable in accordance with its terms and not subject to set-offs,
adverse claims, counterclaims, assessments, defaults, prepayments, defenses or
conditions precedent; (2) a true and correct statement of the account for
products actually sold and delivered to, or for services actually performed for
and accepted by, such account debtor; and (3) except as set forth in
Section 3.01(dd) of the Disclosure Schedule, fully collectible prior to the
Receivable reaching One Hundred Eighty (180) following the creation of the
Receivable, subject to trade discounts provided in the ordinary and usual course
of the Business consistent with past practice and any allowance for doubtful
accounts contained in the HDDC Financial Statements.

       

      (dd)        Due
Diligence.  None of the statements (whether written or oral)
made by the Shareholder or any employee of HDDC (including, without limitation,
any documents and information supplied by such Persons) in response to the due
diligence process (including, without limitation, any oral statements made to
NIVS’ directors, officers, employees and/or legal representatives are untrue or
misleading in ay manner or omit to state any material fact.

       

      (ee)         Disclosure.  None
of the representations or warranties of the Shareholder and Shareholder
Principal contained in this Article Three and none of the statements and
information contained in the Disclosure Schedule referenced in Article Three or
in any certificate, document or other instrument delivered by the Shareholder
pursuant to this Agreement is false or misleading in any material respect or
omits to state a fact necessary to make the statements therein not misleading in
any material respect.  None of the representations or warranties of
the Shareholder and Shareholder Principal contained in Article Four and none of
the information contained in the Disclosure Schedule referenced in Article Four
is false or misleading in any material respect or omits to state a fact
necessary to make the statements in Article Four or in the Disclosure Schedule
referenced in Article Four not misleading in any material
respect.

      
        
           

        

        
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      ARTICLE FOUR

      REPRESENTATIONS
AND WARRANTIES OF THE SHAREHOLDER AND

      SHAREHOLDER
PRINCIPAL

       

      
        4.01 Representations
and Warranties of the Shareholder and Shareholder Principal.

      

       

      The
Shareholder and Shareholder Principal, jointly and severally, hereby represent
and warrant to NIVS as follows:

       

      (a)           Corporate
Status.  Shareholder is a corporation duly organized and
validly existing under the laws of the British Virgin Islands and has the full
corporate power and authority to own its property, to carry on its business as
presently conducted and to enter into and to perform its obligations under this
Agreement and consummate the transactions contemplated by this
Agreement.  Shareholder is duly qualified to do business as a foreign
corporation in each other jurisdiction where the character or location of the
business conducted by it makes such qualifications
necessary.  Shareholder has made available to NIVS true and complete
copies of its organizational documents, as amended, and Bylaws, as
amended.

       

      (b)           Corporate Authority; Authorized and
Effective Agreement.  Shareholder has full legal capacity and
power to execute and deliver this Agreement and the Transaction Documents to
which Shareholder is a party, which Agreement and Transaction Documents have
been or will, on or prior to Closing, be duly executed and delivered by
Shareholder and constitute the valid and binding obligation of Shareholder
enforceable against Shareholder in accordance with its terms except (i) as
limited by applicable bankruptcy, insolvency, reorganization, moratorium and
other laws of general application affecting enforcement of creditors’ rights
generally, (ii) as limited by laws relating to the availability of specific
performance, injunctive relief or other equitable remedies and (iii) insofar as
indemnification and contribution provisions may be limited by applicable
law.

       

      (c)           Legal Proceedings;
Compliance.

       

      (i)       There
are no actions, suits, proceedings, or arbitrations or investigations pending,
or to the Knowledge of the Shareholder, threatened in any court or before any
governmental agency or instrumentality or arbitration panel or otherwise against
the Shareholder (1) which seek to or could restrain, prohibit, rescind or
declare unlawful, or result in substantial damage in respect of, the transfer of
the HDDC Shares as contemplated by this Agreement, or (2) in which an adverse
determination could reasonably be expected, singly or in the aggregate, to have
a materially adverse effect on the Shareholder or its ability to perform its
obligations under this Agreement.

       

      (ii)      The
Shareholder is not subject to any judgment, order, decree or governmental
restriction which could reasonably be expected to have a materially adverse
effect on the operations of the Shareholder or which would interfere with the
sale of the HDDC Shares contemplated by this Agreement.

      
        
           

        

        
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      (d)          No Conflict.  The
execution, delivery and performance of this Agreement and the Transaction
Documents, and the consummation of the transactions contemplated hereby, by
Shareholder do not and will not (i) conflict with, or result in a violation
of, or result in the breach of or a default (or which with notice or lapse of
time would result in a default) under, any provision of:  (A) any
federal, state or local law, regulation, ordinance, order, rule or
administrative ruling of any Governmental Authorities applicable to Shareholder
or its properties; (B) the Memorandum and Articles of Association of
Shareholder; or (C) any material agreement, material indenture or material
instrument to which Shareholder is a party or by which it or its properties or
assets may be bound; or (D) any order, judgment, writ, injunction or decree of
any court, arbitration panel or any Governmental Authorities applicable to
Shareholder; (ii) result in the creation or acceleration of any security
interest, mortgage, option, lien, or encumbrance upon any property of
Shareholder, or (iii) violate the terms or conditions of, or result in the
cancellation, modification, revocation or suspension of, any contract,
agreement, license, approval, certificate, permit or authorization held by
Shareholder.

       

      (e)           Brokers, Finders and
Others.  There are no fees or commissions of any sort
whatsoever claimed by, or payable by Shareholder to, any broker, finder,
intermediary or any other similar person in connection with effecting this
Agreement or the transactions contemplated hereby, except for ordinary and
customary legal and accounting fees.

       

      (f)           Disclosure.  None
of the representations or warranties of the Shareholder and Shareholder
Principal contained in this Article Four and none of the information in respect
of the Shareholder contained in the Disclosure Schedule referenced in this
Article Four is false or misleading in any material respect or omits to state a
fact necessary to make the statements in this Article Four or in the Disclosure
Schedule to Article Four not misleading in any material respect.

       

      ARTICLE FIVE

      REPRESENTATIONS
AND WARRANTIES OF NIVS

       

      
        	
                 
      

              	
                5.01

              	
                Representations
      and Warranties of NIVS.

              

      

       

      NIVS
hereby warrants and represents to the Shareholder that:

       

      (a)           Corporate
Status.  NIVS is a company duly organized and validly existing
under the laws of the British Virgin Islands and has the full corporate power
and authority to own its property, to carry on its business as presently
conducted and to enter into and to perform its obligations under this Agreement
and consummate the transactions contemplated by this Agreement.  NIVS
is duly qualified to do business as a foreign corporation in each other
jurisdiction where the character or location of the business conducted by it
makes such qualifications necessary.  NIVS has made available to the
Shareholder true and complete copies of its Memorandum and Articles of
Association, including any amendments thereto.

      
        
           

        

        
          25

          
            

          

        

        
           

        

      

      (b)          Corporate Authority; Authorized and
Effective Agreement.  NIVS has full legal capacity and power to
execute and deliver this Agreement and the Transaction Documents to which NIVS
is a party, which Agreement and Transaction Documents have been or will, on or
prior to Closing, be duly executed and delivered by NIVS and constitute the
valid and binding obligation of NIVS enforceable against NIVS in accordance with
its terms except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors’ rights generally, (ii) as limited by laws relating to
the availability of specific performance, injunctive relief or other equitable
remedies and (iii) insofar as indemnification and contribution provisions may be
limited by applicable law.

       

      (c)          Legal
Proceedings.  There are no actions, suits, proceedings, claims
or investigations pending or, to the Knowledge of NIVS, threatened in any court,
before any governmental agency or instrumentality or in any arbitration
proceeding against or by NIVS which, individually or in the aggregate, would
have a Material Adverse Effect on NIVS.

       

      (d)          No Conflict.  The
execution, delivery and performance of this Agreement and the Transaction
Documents, and the consummation of the transactions contemplated hereby, by NIVS
do not and will not (i) conflict with, or result in a violation of, or
result in the breach of or a default (or which with notice or lapse of time
would result in a default) under, any provision of:  (A) any federal,
state or local law, regulation, ordinance, order, rule or administrative ruling
of any Governmental Authorities applicable to NIVS or its properties;
(B) the Memorandum and Articles of Association of NIVS; or (C) any
material agreement, material indenture or material instrument to which NIVS is a
party or by which it or its properties or assets may be bound; or (D) any order,
judgment, writ, injunction or decree of any court, arbitration panel or any
Governmental Authorities applicable to NIVS; (ii) result in the creation or
acceleration of any security interest, mortgage, option, lien, or encumbrance
upon any property of NIVS, or (iii) violate the terms or conditions of, or
result in the cancellation, modification, revocation or suspension of, any
contract, agreement, license, approval, certificate, permit or authorization
held by NIVS.

       

      (e)           Brokers, Finders and
Others.  There are no fees or commissions of any sort
whatsoever claimed by, or payable by NIVS to, any broker, finder, intermediary
or any other similar person in connection with effecting this Agreement or the
transactions contemplated hereby, except for ordinary and customary legal and
accounting fees.

       

      ARTICLE SIX

      FURTHER
OBLIGATIONS OF THE PARTIES

       

      
        	
                 
      

              	
                6.01

              	
                Necessary
      Further Action.

              

      

       

      Each of
NIVS, Shareholder, and Shareholder Principal agrees to use its commercially
reasonable efforts to take, or cause to be taken, all necessary actions and
execute all additional documents, agreements and instruments required to
consummate the transactions contemplated in this Agreement including taking all
steps to secure promptly all consents, rulings and approvals of Governmental
Authorities and Carriers which are necessary for the performance by each party
of each of its obligations under this Agreement and the transactions
contemplated hereby.

       

      
        	
                 
      

              	
                6.02

              	
                Press
      Releases.

              

      

       

      NIVS may
issue a press release regarding the transaction contemplated
hereunder.  The Shareholder shall not, and the Shareholder shall
procure HDDC to not, make any press release or other public announcement
concerning the transactions contemplated by this Agreement without the prior
written consent of NIVS.

      
        
           

        

        
          26

          
            

          

        

        
           

        

      

       

      
        	
                 
      

              	
                6.03

              	
                Further
      Covenants.

              

      

       

      (a)           The
Shareholder and Shareholder Principal covenants to NIVS that it will not,
without the prior written consent of NIVS, for a period of Five (5) years after
the date of Closing, either solely or jointly with or on behalf of any other
Person or otherwise, whether as a director, shareholder, employee, partner,
agent or otherwise:

       

      (i)           carry
on or be engaged or interested directly or indirectly in any capacity (except as
the owner of shares or securities listed or dealt in on an internationally
recognized stock exchange in the PRC or elsewhere held by way of investment
only) in any business which may be in competition within the PRC with HDDC or in
the carrying on of the Business;

       

      (ii)          solicit
or entice or endeavor to solicit or entice away from HDDC any employee, officer,
manager, consultant (including employees who are directors) of HDDC or any
Persons whose services are otherwise made available to HDDC on a full-time or
substantially full-time basis;

       

      (iii)         deal
with, canvass, solicit or approach or cause to be dealt with, canvassed or
solicited or approached for business in respect of any trade or business carried
on or service provided by HDDC any Person who at Closing or within two (2) years
prior to Closing was a customer, supplier, client, representative, agent of or
in the habit of dealing under contract with HDDC.

       

      (b)           The
Shareholder and Shareholder Principal further covenants to NIVS
that:

       

      (i)           it
will not at any time hereafter make use of or disclose or divulge to any Person
other than to officers or employees of HDDC whose province it is to know the
same any information relating to HDDC other than any information properly
available to the public through no breach of its obligations hereunder or
disclosed or divulged pursuant to an order of a court of competent
jurisdiction;

       

      (ii)           it
will not at any time hereafter in relation to any trade, business or company use
a name in such a way as to be capable of or likely to be confused with the name
of HDDC and shall use all reasonable endeavors to procure that no such name will
be used by any Person with which it is connected;

       

      (iii)          it
will not do anything which might prejudice the goodwill of HDDC;

       

      (iv)         it
will procure that its Affiliates and their respective employees will observe the
restrictions contained in this Section 6.03.

      
        
           

        

        
          27

          
            

          

        

        
           

        

      

       

      (c)           Each
and every obligation under this Section shall be treated as a separate
obligation and shall be severally enforceable as such and in the event of any
obligation or obligations being or becoming unenforceable in whole or in part
such part or parts as are unenforceable shall be deleted from this Section and
any such deletion shall not affect the enforceability of all such parts of this
clause as remain not so deleted.

       

      (d)           The
restrictions contained in this Section 6.03 are considered reasonable by the
Shareholder and the other parties hereto, but in the event that any such
restriction shall be found to be void but would be valid if some part thereof
were deleted or the area of operation or the period of application reduced, such
restriction shall apply with such modification as may be necessary to make it
valid and effective.

       

      6.04        Legal
Opinion.  The Shareholder shall cause to be delivered to NIVS a
legal opinion issued by PRC legal counsel with respect to HDDC (the “PRC
Opinion”).  The PRC Opinion shall opine as to effectiveness and
legality of the transfer of the capital equity interests of HDDC, subject to the
appropriate Governmental Authority’s processing of the transfer documents and
filings.  In addition, the PRC Opinion shall cover the incorporation,
business operations, share capital, management, litigation, taxes, and social
security of HDDC and the PRC Opinion shall be in the substantially the form as
previously provided to the Shareholder and its legal counsel.

       

      6.05        Additional
Covenants and Agreements

       

      The Shareholder acknowledges and agrees
to the following with respect to the sale of the HDDC Shares
hereunder:

       

      (a)           To
the extent that any loans of HDDC become immediately due and payable in full or
in part as a result of the Closing and is required to make any accelerated
payments thereunder where such accelerated payments were caused by the
Shareholder’s failure to obtain the consent of any lender, the Shareholder shall
be liable for any and all costs incurred by NIVS regardless of any surety or
guaranty, if any.

       

      (b)           If
there are any bank accounts relating to HDDC on which the Shareholder or
Shareholder Principal or other person is designated as authorized signatories,
immediately after the Closing, the Shareholder shall take any and all action
necessary to cause persons designated by NIVS, in its discretion, to become
authorized signatories on such accounts such that any disbursements made from
said accounts can only be made pursuant to instructions from the authorized
signatories as designated by NIVS.

       

      (c)           The
Shareholder acknowledges that to the extent that HDDC’s payments of social
insurance to PRC Governmental Authorities do not meet the statutory requirements
set forth under PRC law and HDDC is deemed liable for payments of social
insurance with respect to any employees hired by HDDC on or prior to the
Closing, the Shareholder and shall be liable for any and all such costs incurred
by NIVS after the Closing with respect to such payments.

       

      (d)           The
Shareholder acknowledges that to the extent that HDDC does not have any written
employment agreements executed with its employees as required under the PRC
Labor Law, the Shareholder shall be jointly and severally liable for any and all
damages incurred by NIVS as a result of such employment agreements not being
executed on or before the Closing.

      
        
           

        

        
          28

          
            

          

        

        
           

        

      

       

      ARTICLE SEVEN

      CONDITIONS
PRECEDENT TO THE OBLIGATIONS OF THE PARTIES

       

      
        	
                 
      

              	
                7.01

              	
                Conditions
      to the Obligations of NIVS.

              

      

       

      The
obligations of NIVS under this Agreement shall be subject to the satisfaction,
or written waiver by NIVS prior to the Closing, of each of the following
conditions precedent:

       

      (a)           All
material authorizations, consents, waivers and approvals required on the part of
the Shareholder or HDDC in connection with the execution, delivery and
performance of this Agreement or any Transaction Document to which it is a party
shall have been duly obtained and shall be in form and substance reasonably
satisfactory to NIVS and its counsel.

       

      (b)           No
legal action, investigation (whether antitrust or otherwise) or proceeding
(including any petition, action or proceeding for or in relation to the
winding-up, insolvency, liquidation or dissolution of HDDC or for the
appointment of any receiver, trustee or similar officer of HDDC or any of its
assets and properties) shall have been instituted by or threatened by any Person
or Governmental Authority, in either case seeking to restrain, prohibit,
invalidate or otherwise affect the consummation of the transactions contemplated
hereby or which would, if adversely decided, materially adversely affect HDDC or
the Business after the Closing Date.

       

      (c)           The
representations and warranties of the Shareholder and Shareholder Principal set
forth in this Agreement that are qualified with respect to materiality shall be
true and correct as of the date of this Agreement and as of the Closing as
though such representations and warranties were also made as of the Closing,
except that those representations and warranties which by their terms speak as
of a specific date shall be true and correct as of such date.  The
representations and warranties of the Shareholder and Shareholder Principal set
forth in this Agreement that are not qualified with respect to materiality shall
be true and correct in all material respects as of the date of this Agreement
and as of the Closing as though such representations and warranties were also
made as of the Closing, except that those representations and warranties which
by their terms speak as of a specific date shall be true and correct as of such
date.

       

      (d)           The
Shareholder shall have performed in all material respects all of its covenants
and obligations under this Agreement to be performed by it on or prior to the
Closing, including those relating to the Closing.

       

      (e)           The
Transaction Documents shall have been duly executed and delivered by all parties
hereto other than NIVS.

       

      (f)            Instruments
of transfer of the HDDC Shares duly executed by the respective registered
holders thereof in favor of NIVS (or such other person(s) as it may direct) and
contract notes (in a form complying with all laws, rules and regulations of all
PRC Governmental Authorities) recording the sale and purchase of the HDDC Shares
contemplated hereunder shall have been duly executed by the Shareholder and
delivered to NIVS.

      
        
           

        

        
          29

          
            

          

        

        
           

        

      

      (g)           No
event or circumstance shall have occurred that would constitute a Material
Adverse Effect with respect to HDDC.

       

      (h)           The
Shareholder shall have delivered to NIVS a certificate of continuing
registration, dated as of a date not more than two (2) business days prior to
the Closing Date (or such longer period as may be acceptable to NIVS), duly
issued by the registrar of companies Governmental Authority in the PRC and, if
required by NIVS, any other certificate duly issued by the appropriate
governmental authority in each state, if any, in which HDDC is authorized to do
business, showing that HDDC is in good standing and authorized to do
business.

       

      (i)            NIVS
shall have received the following documents in form and substance satisfactory
to NIVS:

       

      (i)       a
certificate of capital verifying that NIVS has been registered as holding 100%
of the registered capital of HDDC;

       

      (ii)      such
waivers or consents as NIVS may require to enable NIVS or its nominee(s) to be
registered as the holder(s) of the HDDC Shares, and such other documents as may
be reasonably required to give good title to the HDDC Shares free from all
claims, liens, charges, equities and encumbrances and third party rights of any
kind and to enable NIVS (or as it may nominate) to become the registered holder
thereof;

       

      (iii)     all
title deeds and other documents of title to the Owned Properties and any other
HDDC Real Properties to which HDDC holds land use rights, and all statutory
books and records (including, without limitation, register of members, register
of directors, register of secretaries and all minute books), duly written up to
date, of HDDC, its certificates of registration and securities and common
seals;

       

      (iv)     all
books and accounts and other records, including without limitation, the cheque
books and bank records of HDDC;

       

      (v)      if
so required by NIVS, a letter of resignation from the auditors of HDDC and of
its subsidiaries confirming that they have no outstanding claims of any kind
against HDDC or any such subsidiaries;

       

      (vi)     to
the extent required by NIVS, evidence that all guarantees given by HDDC in favor
of third parties in respect of the performance of the obligations of the
Shareholder or any other Person not being HDDC have been released;

       

      (vii)    to
the extent required by NIVS, evidence that all loans or other indebtedness due
or owing to HDDC by the Shareholder or its Affiliate or by any directors or
other officers of HDDC have been repaid in full;

      
        
           

        

        
          30

          
            

          

        

        
           

        

      

    

     

    (viii)      
powers of attorney, if necessary, on terms acceptable to NIVS, under which any
of the documents referred to in this Section 7.01(j) is executed;

     

    (ix)        
duly executed resolutions of the board of directors of HDDC and, where required,
of its Shareholder in accordance with its Memorandum and Articles of Association
and other organizational documents evidencing the following:

     

    (1)           the
approval by the board of directors of HDDC of the transfers of the HDDC Shares
to NIVS or its nominee(s) and (subject only to the production of duly stamped
transfers) its/their registration as members of HDDC in respect of the HDDC
Shares;

     

    (2)           such
persons as NIVS may nominate to be validly appointed as directors of HDDC with
effect from the date of Closing;

     

    (3)           such
directors and the secretary of HDDC as NIVS may require to resign from all their
offices with HDDC, delivering to NIVS a letter under seal from each of such
directors and secretary acknowledging that he/she has no claim outstanding for
compensation or otherwise against HDDC; and

     

    (4)           such
person(s) as NIVS may nominate to be the authorised signatories for the
operation of the bank accounts of HDDC and cause the removal of such existing
authorised signatories as NIVS may direct.

     

    
      
        	 	
                7.02

              	
                Conditions
      to the Obligations of the
Shareholder.

              

      

    

     

    The
obligations of the Shareholder under this Agreement shall be subject to
satisfaction, or written waiver by the Shareholder prior to the Closing, of each
of the following conditions precedent:

     

    (a)           All
material authorizations, consents, waivers and approvals required on the part of
NIVS in connection with the execution, delivery and performance of this
Agreement shall have been duly obtained and shall be in form and substance
reasonably satisfactory to the Shareholder and its counsel.

     

    (b)           No
legal action, investigation (whether antitrust or otherwise) or proceeding shall
have been instituted by or threatened by any Person or Governmental Authority,
in either case seeking to restrain, prohibit, invalidate or otherwise affect the
consummation by NIVS of the transactions contemplated hereby.

     

    (c)           The
representations and warranties of NIVS set forth in this Agreement that are
qualified with respect to materiality shall be true and correct as of the date
of this Agreement and as of the Closing as though such representations and
warranties were also made as of the Closing, except that those representations
and warranties which by their terms speak as of a specific date shall be true
and correct as of such date.  The representations and warranties of
NIVS set forth in this Agreement that are not qualified with respect to
materiality shall be true and correct in all material respects as of the date of
this Agreement and as of the Closing as though such representations and
warranties were also made as of the Closing, except that those representations
and warranties which by their terms speak as of a specific date shall be true
and correct as of such date.

     

    
      
         

      

      
        31

        
          

        

      

      
         

      

    

     

    (d)           NIVS
shall have performed in all material respects all of its covenants and
obligations under this Agreement to be performed by it on or prior to the
Closing, including those related to the Closing, and the Shareholder shall have
received a certificate, dated with the date of the Closing.

     

    (e)           The
Transaction Documents shall have been duly executed and delivered by all parties
hereto other than the Shareholder and Shareholder Principal.

     

    ARTICLE
EIGHT

    SURVIVAL
AND INDEMNIFICATION

     

    
      
        	 	
                8.01

              	
                Survival of Representations,
      Warranties and
Covenants.

              

      

    

     

    Notwithstanding
any investigation made on behalf of NIVS, Shareholder, or Shareholder Principal,
all representations and warranties set forth herein shall remain in full force
and effect until the date that is twenty-four (24) months from the Closing Date,
except for the representations and warranties contained in Sections 3.01(a)
(Corporate Status), 3.01(b) (Capitalization of HDDC), 3.01(c) (Ownership of HDDC
Shares), 3.01(d) (No Subsidiaries), 3.01(e) (Corporate Authority), 3.01(k)
(Taxes), 3.01(bb) (FCPA), 3.01(cc) (Account Receivables), 4.01(a) Corporate
Status), 5.01(a) Corporate Status), and 5.01(b) (Corporate Authority), which
shall survive for the applicable statute of limitations.  All
covenants and other agreements shall survive the Closing in accordance with the
respective applicable statute of limitations.

     

    
      	
               
      

            	
              8.02

            	
              Shareholder’s
      Indemnification.

            

    

     

    (a)           Subject
to the terms and conditions of Sections 8.04 and 8.05, the Shareholder and
Shareholder Principal shall indemnify NIVS and its officers, directors,
employees, Affiliates and agents and, upon and after the Closing, HDDC
(collectively, “NIVS
Indemnified Parties”) and hold each harmless from and against any and all
losses, damages, actions, proceedings, causes of action, liabilities, claims,
encumbrances, penalties, demands, assessments, settlements, judgments, costs and
expenses including court costs and reasonable attorneys’ fees and disbursements
(collectively, “Losses”)
incurred by NIVS Indemnified Parties in connection with, arising out of, or
resulting from any of the following:

     

    (i)     
      any breach or inaccuracy of any
representation, warranty or statement made by the Shareholder and/or Shareholder
Principal in this Agreement or in any other Transaction Document to which he/she
is a party;

     

    (ii)           any
failure by the Shareholder to perform any agreement, covenant or obligation of
the Shareholder pursuant to this Agreement or any Transaction Document to which
he/she is a party;
 

    
      
         

      

      
        32

        
          

        

      

      
         

      

    

     

    (iii)          any and all (1)
Taxes (or the nonpayment thereof) of HDDC for all taxable periods ending on or
before the date of the Closing and the portion through the end of the date of
the Closing for any taxable period that includes (but does not end on) the date
of the Closing (the “Pre-Closing Tax
Period”), (2) all Taxes
of any member of an unaffiliated, consolidated, combined or unitary group of
which HDDC (or any predecessor of HDDC) is or was a member on or prior to the
date of the Closing , including pursuant to Treasury Regulations Section
1.1502-6 or any analogous or similar state, local or foreign law or regulation,
and (3) any and all Taxes of any Person (other than HDDC) imposed on HDDC as a
transferee or successor, by contract or pursuant to any law, rule, or
regulation, which Taxes relate to an event or transaction occurring before or at
the Closing; provided, however, that in the case
of clauses (1), (2), and (3) above, the Shareholder shall be liable only to the
extent that such Taxes exceed the amount, if any, reserved for such Taxes
(excluding any reserve for deferred Taxes established to reflect timing
differences between book and Tax income) as reflected on the face of the most
recent balance sheet included in the HDDC Financial
Statements;

     

    (iv)          any
and all (1) Environmental Laws applicable or any environmental liability related
in any way to HDDC or the Shareholder or any of their properties, including
without limitation, the presence, generation, storage, release, threatened
release, use, transport, disposal, arrangement of disposal or treatment of oil,
oil and gas wastes, solid wastes or hazardous substances on any of their
properties, (2) breach or non-compliance by either HDDC or the Shareholder with
any Environmental Law applicable to HDDC or the Shareholder, and  (3)
actual or alleged presence, use, release, storage, treatment, disposal,
generation, threatened release, transportation, arrangement for transport or
arrangement for disposal of oil, oil and gas wastes, solid wastes or hazardous
substances on or at any of the properties owned or operated by HDDC or the
Shareholder; or

     

    (v)           any
action, litigation, suit, proceeding, investigation (civil, criminal, regulatory
or otherwise), arbitration, claim, demand, grievance or inquiry, including any
assessment, notice, demand or other document issued or action taken by or on
behalf of any Governmental Authority in any part of the world, that is pending
or threatened against HDDC prior to or on the date of Closing.

     

    (b)           Subject
to the terms and conditions of Section 8.04 and without prejudice to the other
provisions of this Section 8.02 or restricting the rights of NIVS Indemnified
Parties or the ability of any of them to claim damages on any basis, in the
event of any breach or inaccuracy of any representation, warranty or statement
made by the Shareholder and/or Shareholder Principal in this Agreement or in any
other Transaction Document to which he/she is a party, the Shareholder and
Shareholder Principal hereby covenants to pay to NIVS:

     

    (i)         
  the amount necessary to put HDDC into the position which would have
existed if such representation, warranty or statement had not been breached and
had been true and not misleading; and

     

    (ii)           all
costs and expenses incurred by NIVS, HDDC, directly or indirectly, as a result
of such breach.
 

    
      
         

      

      
        33

        
          

        

      

      
         

      

    

    (c)           Subject
to the terms and conditions of Sections 8.04 and 8.05, and without prejudice to
the other provisions of this Section 8.02 or any other rights that any NIVS
Indemnified Parties may have against the Shareholder and Shareholder Principal,
if at June 30, 2010, any of the Receivables are of an age of One Hundred Eighty
(180) days or greater, the Shareholder or Shareholder Principal shall pay to
NIVS an amount equal to the aggregate amount of such Receivables.

     

    8.03        NIVS
Indemnification. Subject
to the terms and conditions of Section 8.04, NIVS shall indemnify the
Shareholder, and their agents (“Shareholder Indemnified
Parties”) and hold each harmless from and against any and all Losses,
incurred by Shareholder’s Indemnified Parties in connection with, arising out
of, or resulting from any of the following:

     

    (a)           any
breach or inaccuracy of any representation or warranty made by NIVS in this
Agreement; or

     

    (b)           any
failure by NIVS to perform any agreement, covenant or obligation of NIVS
pursuant to this Agreement.

     

    
      	 	
              8.04

            	
              Procedures
      Relating to Third Party Claims.

            

    

     

    (a)           In order for a
NIVS Indemnified Party or a Shareholder Indemnified Party, as the case may be,
(the “indemnified party”) to be entitled
to any indemnification provided for under this Agreement in respect of, arising
out of, or involving a claim or demand made by any Person against the
indemnified party (a “Third Party
Claim”), such
indemnified party must notify the indemnifying party in writing, and in
reasonable detail, of the Third Party Claim within thirty (30) business days
after receipt by such indemnified party of written notice of the Third Party
Claim (the “Claim Notice”); provided, however, that failure to
give such notification shall not affect the indemnification provided hereunder
except to the extent the indemnifying party demonstrates that it has been
actually prejudiced as a result of such failure (except that the indemnifying
party shall not be liable for any expenses incurred during the period in which
the indemnified party failed to give such Claim Notice to the extent such
expenses resulted from such failure to give notice).  Thereafter, the
indemnified party shall deliver to the indemnifying party, within ten (10)
business days after the indemnified party’s receipt thereof, copies of all
notices and documents (including court documents) received by the indemnified
party relating to the Third Party Claim.  If a Third Party Claim is
made against an indemnified party, the indemnified party shall be entitled to
conduct and control, through counsel of its choosing, the defense of any Third
Party Claim.

     

    (b)           The
indemnified party may compromise or settle any Third Party Claim so long as the
indemnified party gives the indemnifying party advance notice of any proposed
compromise or settlement.  The indemnified party shall permit the
indemnifying party to participate in the defense of any Third Party Claim
through counsel chosen by the indemnifying party, so long as all fees and
expenses of such counsel are borne by the indemnifying party.  If the
indemnified party permits the indemnifying party to undertake, conduct, and
control the defense and settlement of a Third Party Claim: (a) the indemnifying
party shall not permit any lien to exist upon any asset of the indemnified
party, including, without limitation, the Acquired Assets, (b) the indemnifying
party shall not consent to any compromise or settlement that does not include as
an unconditional term of such compromise or settlement the giving of a complete
release from liability with respect to such Third Party Claim to the indemnified
party, (c) the indemnifying party shall permit the indemnified party to
participate in such defense or settlement through counsel chosen by the
indemnified party, and (d) the indemnifying party shall agree promptly to
reimburse the indemnified party for the full amount of any damages, including
fees and expenses of counsel for the indemnified party.

    
      
         

      

      
        34

        
          

        

      

      
         

      

    

     

    (c)           If
the indemnified party permits the indemnifying party to assume the defense of
any Third Party Claim, the indemnified party shall cooperate with the
indemnifying party in the defense or prosecution thereof.  Such
cooperation shall include the retention and (upon the indemnifying party’s
reasonable request) the provision to the indemnifying party of records and
information which are reasonably relevant to such Third Party Claim, and making
employees available on a reasonable basis to provide additional information and
explanation of any material provided hereunder.

     

    (d)           Within ten (10)
business days or the receipt of a Claim Notice, the Shareholder, Shareholder
Principal, or NIVS, as the case may be, shall deliver to the Shareholder,
Shareholder Principal, or NIVS, as the case may be, a notice (“Objection Notice”) stating they
intend to contest the claim (a “Contest”) or to accept
liability thereunder.

     

    (e)           If
the Shareholder, Shareholder Principal, or NIVS, as the case may be, do not give
an Objection Notice within that ten (10) business day period, the Shareholder,
Shareholder Principal, or NIVS, as the case may be, will be deemed to accept
liability as it relates to such claim.

     

    (f)            If NIVS gives a
timely Objection Notice, then within thirty (30) business days of the receipt
thereof, the Shareholder, Shareholder Principal, or NIVS, as the case may be,
shall select an independent arbitrator (the “Independent Arbitrator”).  The
Independent Arbitrator shall be selected by the mutual agreement of the
Shareholder, Shareholder Principal, or NIVS, as the case may be.  If
the parties cannot agree on the identity of an Independent Arbitrator within ten
(10) business days of the date of an Objection Notice, then the Independent
Arbitrator will be determined by an arbitrator selected by the Shareholder
Principal and an arbitrator selected by NIVS.  The decision of the
Independent Arbitrator shall be borne as directed by him.  The
Shareholder, Shareholder Principal, or NIVS, as the case may be, shall be
entitled to make such representation and provide such information and reports to
the Independent Arbitrator within twenty (20) business days of the date of
agreement or, if later, determination of the identity of the Independent
Arbitrator.  The Shareholder, Shareholder Principal, or NIVS, as the
case may be, shall use their respective commercially reasonable efforts to
procure that the Independent Arbitrator issues his/her ruling within thirty (30)
business days after the matter is submitted to him/her for
consideration.
 

    
      
         

      

      
        35

        
          

        

      

      
         

      

    

    8.05           Other
Claims. In
the event any indemnified party should have a claim against any indemnifying
party under Sections 8.02 or 8.03 that does not involve a Third Party Claim
being asserted against or sought to be collected from such indemnified party,
the indemnified party shall deliver notice (“Claims Notice”) of such claim with
reasonable promptness to the indemnifying party.  The failure by any
indemnified party so to notify the indemnifying party shall not relieve the
indemnifying party from any liability which it may have to such indemnified
party under Sections 8.02 or 8.03, except to the extent that the indemnifying
party demonstrates that it has been actually prejudiced by such failure or to
the extent such failure extends beyond the applicable survival period set forth
in Section Sections 8.01.  If the indemnifying party does not notify
the indemnified party within thirty (30) days following its receipt of such
Claims Notice that the indemnifying party disputes its liability to the
indemnified party under Sections 8.02 or 8.03, such claim specified by the
indemnified party in such notice shall be conclusively deemed a liability of the
indemnifying party under Sections 8.02 or 8.03 and the indemnifying party shall
pay the amount of such liability to the indemnified party on demand or, in the
case of any notice in which the amount of the claim (or any portion thereof) is
estimated, on such later date when the amount of such claim (or such portion
thereof) becomes finally determined.  If the indemnifying party has
timely disputed its liability with respect to such claim, as provided above, the
indemnifying party and the indemnified party shall proceed in good faith to
negotiate a resolution of such dispute, and, if not resolved through
negotiations, such dispute shall be resolved by litigation in an appropriate
court of competent jurisdiction.

     

    8.06           Right to
Offset.   Shareholder and Shareholder Principal
acknowledges that in the event that the NIVS is entitled to indemnification in
accordance with this Article Eight, or other amounts become due to NIVS under
this Agreement, then NIVS shall have the right to offset any such amount from
any obligations that are then, or may become, due and payable to Shareholder
under Section 2.03(b), provided, that prior to attempting to effect any such
offset, NIVS shall provide prior written notice to Shareholder.  Any
amounts so offset shall be deemed to have been paid and satisfied to the extent
of such offset amounts.

     

    ARTICLE
NINE

    TAX
MATTERS

     

    
      	
               
      

            	
              9.01

            	
              Responsibility
      for Filing Tax Returns.

            

    

     

    The
Shareholder shall and shall cause HDDC to properly prepare and file all Tax
Returns required on the part of HDDC at any time through the date of Closing in
compliance with all applicable laws, rules and regulations.  With
respect to any Tax Return required of HDDC to be filed after the date of Closing
covering any taxable period ending on or before the date of Closing or any
taxable period that includes (but does not end on) the date of Closing, the
Shareholder shall provide all assistance required by NIVS to enable it to
prepare or cause to be prepared and file or cause to be filed all such Tax
Returns for HDDC, including the provision of any books of account, records and
other information with respect to any transactions and other matters occurring
on or before Closing, in any case so to permit all such Tax Returns to be
properly and accurately prepared and filed in compliance with all applicable
laws, rules and regulations.  NIVS shall permit the Shareholder to
review and comment on each such Tax Return described in the preceding sentence
prior to filing.

    
      
         

      

      
        36

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              9.02

            	
              Certain
      Taxes and Fees.

            

    

     

    All
transfer, including real property, documentary, sales, use, stamp, registration
and other such Taxes, and all conveyance fees, recording charges and other fees
and charges (including any penalties and interest) incurred in connection with
consummation of the transactions contemplated by this Agreement  shall
be paid by the Shareholder when due, and the Shareholder will, at its own
expense, file all necessary Tax Returns and other documentation with respect to
all such Taxes, fees and charges, except that all PRC stamp duty arising from
the transfer of the HDDC Shares payable or assessed to be payable shall be borne
by the Shareholder.

     

    ARTICLE
TEN

    MISCELLANEOUS

     

    
      	 	
              10.01

            	
              Notices.

            

    

     

    All
notices, requests, demands and other communications required or permitted to be
given under this Agreement shall be given in writing and shall be deemed to have
been duly given (a) on the date of delivery if delivered by hand or by telecopy,
in the case of telecopy upon confirmation of receipt, (b) on the date of
delivery, if delivered by electronic mail, upon confirmation of receipt, or (c)
on the first business day following the date of dispatch if delivered by a
recognized next-day courier service.  All notices thereunder shall be
delivered to the following addresses:

     

    
      If to
Shareholder, to:

    

    

    
      Donghui
Ye

    

    
      East Best
Industrial Limited

    

    
      Flat
603,TCL Tower B, Tai Chung Road, NT, Hong Kong

    

    
      Email: 
dhye@hzdongri.cn

    

    

    If to
NIVS, to:

    

    NIVS
(Huizhou) Audio & Video Tech. Co., Ltd.

    NIVS
Industry Park

    No.
29-31, Shuikou Road

    Huizhou,
Guangdong

    People’s
Republic of China

    0086-752-2323616

    Attn:
Tianfu Li

    Email: gm@nivsgroup.com

    
      with a
copy to:

    

    

    
      K&L
Gates LLP

    

    
      10100
Santa Monica Blvd., 7th
Floor

    

    Los
Angeles, CA 90067

    Attention:  Thomas
J. Poletti, Esq.

    Facsimile:  (310)
552-5001

    Email:
thomas.poletti@klgates.com

    
      
         

      

      
        37

        
          

        

      

      
         

      

    

    Any party
to this Agreement may, by notice given in accordance with this Section 10.01,
designate a new address for notices, requests, demands and other communications
to such party.

    

    
      	 	
              10.02

            	
              Counterparts.

            

    

     

    This
Agreement may be executed in one or more counterparts, each of which shall be
deemed to be a duplicate original, but all of which taken together shall be
deemed to constitute a single instrument.

     

    
      	 	
              10.03

            	
              Entire
      Agreement; No Third-Party Rights.

            

    

     

    This
Agreement and the Disclosure Schedules attached hereto constitute the entire
agreement, and supersede all prior agreements and understandings, both written
and oral, between the parties with respect to the subject matter of this
Agreement, including that certain Equity Transfer Agreement by and between the
Shareholder and NIVS.  This Agreement is not intended to confer upon
any person other than the parties hereto (and their respective successors and
assigns) any rights or remedies.

     

    
      	 	
              10.04

            	
              Successors
      and Assigns.

            

    

     

    This
Agreement shall inure to the benefit of and be binding upon the respective
successors and permitted assigns (including successive, as well as immediate,
successors and assigns) of the parties hereto.  This Agreement may not
be assigned by any party hereto without the prior written consent of the other
parties.

     

    
      	 	
              10.05

            	
              Captions

            

    

     

    The
captions contained in this Agreement are included only for convenience of
reference and do not define, limit, explain or modify this Agreement or its
interpretation, construction or meaning and are in no way to be construed as
part of this Agreement.

     

    
      	 	
              10.06

            	
              Governing
      Law.

            

    

     

    This
Agreement shall be governed by, and construed in accordance with, the laws of
the State of Delaware without giving effect to principles of conflicts or choice
of laws (except to the extent that mandatory provisions of Federal law are
applicable).

     

    
      	 	
              10.07

            	
              Payment
      of Fees and Expenses.

            

    

     

    Except as
otherwise provided in Section 9.02 or otherwise agreed in writing, Shareholder
shall pay its and NIVS’ costs and expenses, including legal and accounting fees,
incurred in connection with the preparation, negotiation and execution of the
Transaction Documents and the consummation of the transactions contemplated
hereby and all expenses relating to its and NIVS’ performance of, and compliance
with, its undertakings herein.

    
      
         

      

      
        38

        
          

        

      

      
         

      

    

    
      	 	
              10.08

            	
              Amendment.

            

    

     

    From time
to time and at any time prior to the Closing, this Agreement may be amended only
by an agreement in writing executed by NIVS and the Shareholder.

     

    
      	 	
              10.09

            	
              WAIVER
      OF JURY TRIAL.

            

    

     

    TO
THE EXTENT NOT PROHIBITED BY APPLICABLE LAW THAT CANNOT BE WAIVED, EACH PARTY
HEREBY WAIVES, AND COVENANTS THAT IT WILL NOT ASSERT (WHETHER AS PLAINTIFF,
DEFENDANT OR OTHERWISE), ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF
ANY ISSUE, CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING IN WHOLE OR IN PART
UNDER, RELATED TO, BASED ON OR IN CONNECTION WITH THIS AGREEMENT OR THE SUBJECT
MATTER HEREOF, WHETHER NOW EXISTING OR HEREAFTER ARISING AND WHETHER SOUNDING IN
TORT OR CONTRACT OR OTHERWISE.  ANY PARTY HERETO MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS SECTION 10.09 WITH ANY COURT AS WRITTEN EVIDENCE
OF THE CONSENT OF EACH SUCH PARTY TO THE WAIVER OF ITS RIGHT TO TRIAL BY
JURY.

     

    
      	 	
              10.10

            	
              Waiver.

            

    

     

    The
rights and remedies of the parties to this Agreement are cumulative and not
alternative.  Neither the failure nor any delay by any party in
exercising any right, power or privilege under this Agreement or the documents
referred to in this Agreement will operate as a waiver of such right, power or
privilege, and no single or partial exercise of any such right, power or
privilege will preclude any other or further exercise of such right, power or
privilege or the exercise of any other right, power or privilege.

     

    
      	 	
              10.11

            	
              Severability.

            

    

     

    If any
provision of this Agreement is held invalid or unenforceable by any court of
competent jurisdiction, the other provisions of this Agreement will remain in
full force and effect.  Any provision of this Agreement held invalid
or unenforceable only in part or degree will remain in full force and effect to
the extent not held invalid or unenforceable.

     

    [REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
 

    
      
         

      

      
        39

        
          

        

      

      
         

      

    

    IN
WITNESS WHEREOF, this Agreement has been duly executed and delivered on behalf
of NIVS, Shareholder, and Shareholder Principal as of the date set forth in the
first paragraph above.

     

    
      
        	 
      	
                NIVS
      HOLDING COMPANY LIMITED

              
	 
      	 
      	 
      
	 
      	
                By:

              	
                /s/  Tianfu Li

              
	 
      	 
      	 
      
	 
      	
                Name:  Tianfu
      Li

              
	 
      	
                Title:  Chairman

              
	 
      	 
      	 
      
	 
      	
                EAST
      BEST INDUSTRIAL LIMITED

              
	 
      	 
      	 
      
	 
      	
                By:

              	
                /s/  Hui Xi Li

              
	 
      	 
      	 
      
	 
      	
                Name:  Hui
      Xi Li

              
	 
      	
                Title:  Director

              
	 
      	 
      	 
      
	 
      	
                SHAREHOLDER
      PRINCIPAL

              
	 
      	 
      	 
      
	 
      	
                /s/  Hui Xi Li

              
	 
      	
                Hui
      Xi Li

              

      

    

    
      
         

      

      
        40

        
          

        

      

      
         

      

    

    EXHIBIT
A

    DISCLOSURE
SCHEDULES

    TO
THE

    STOCK
PURCHASE AGREEMENT

    DATED
JANUARY 19, 2010

    

    Capitalization and Ownership
- Section 3.01(b)

    

    East Best
Industrial Limited, a company organized under the laws of British Virgin Islands
is the 100% shareholder of Huizhou Dongri Digital Co., Ltd.

    

    Subsidiaries - Section
3.01(d)

    

    Not Used
/ Applicable.

    

    Undisclosed Liabilities -
Section 3.01(h)

    

    Not Used
/ Applicable.

    

    Changes in the Financial
Statements - Section 3.01(i)

    

    Not Used
/ Applicable.

    

    Real Property - Section
3.01(m)

    

    LEASE
AGREEMENT with the LESSOR, Huizhou Dongri Electron Co.,LTD., and the LESSEE,
Huizhou Dongri Digital Co.,LTD. for the premises No.1 Building, 24 district,
Zhongkai National Hi-tech Industrial Development Zone, Huizhou, Guangdong and
living quarters at the same location for total area of the factory building is
6361 square meters and the total area of the living quarters is 2752 square
meters with a term of Three (3) years, from November, 1, 2009 to December, 31,
2012.

    

    Legal Proceedings - Section
3.01(n)

    

    Not Used
/ Applicable.

    

    Employment Agreements -
Section 3.01(q)

    

    Employment
Agreements with the following persons and information:

    
      
         

      

      
        A-1

        
          

        

      

      
         

      

    

     

    
      
        
          	
                  Name

                	 
      	
                  Term

                	 
      	
                  Position

                	 
      	
                  Salary(RMB)

                
	
                  Dongqing
      Ye

                	 
      	
                  2008.1.1-2008.12.31

                	 
      	
                  Vice
      manager

                	 
      	
                  12,500

                
	 
      	 
      	
                  2009.1.1-2009.12.31

                	 
      	
                  Vice
      manager

                	 
      	
                  13,500

                
	
                  Dongyi
      Lin

                	 
      	
                  2008.1.1-2008.12.31

                	 
      	
                  Vice
      manager

                	 
      	
                  12,500

                
	 
      	 
      	
                  2009.1.1-2009.12.31

                	 
      	
                  Vice
      manager

                	 
      	
                  13,500

                
	
                  Yunquan
      Zhang

                	 
      	
                  2008.1.1-2008.12.31

                	 
      	
                  Finance
      manager

                	 
      	
                  3,000

                
	 
      	
                    

                	
                  2009.1.1-2009.12.31

                	
                    

                	
                  Finance
      manager

                	
                    

                	
                  3,000

                

        

      

    

     

    Employee Benefit Plans -
Section 3.01(r)(i)

    

    Not Used
/ Applicable.

    

    Compliance with Laws -
Section 3.01(s)

    

    Not Used
/ Applicable.

    

    Environmental Permits,
Matters, Issues, ... - Section 3.01(t)

    

    Not Used
/ Applicable.

    

    Insurance - Section
3.01(u)

    

    Not Used
/ Applicable.

    

    Governmental and Third-Party
Approvals - Section 3.01(v)

    

    Not Used
/ Applicable.

    

    Contracts - Section
3.01(w)

    

    Production
Processing Agreement dated January 1, 2010 between Party A, East Best Industrial
Ltd., and Party B, Huizhou Dongri Digital Co., Ltd. regarding processing mobile
phones and PCBA products and related technical support.

    

    Production
Processing Agreement dated January 1, 2009 between Party A, East Best Industrial
Ltd., and Party B, Huizhou Dongri Digital Co., Ltd. regarding processing mobile
phones and PCBA products and related technical support.

    

    Contract
(No.:DK091201) dated December 1, 2009 by and between Party A, Shanghai Kuanyi
Telecom Technology Co.,Ltd, and Party B, Huizhou Dongri Digital Co., Ltd.
regarding for production and processing of mobile phones..

    
      
         

      

      
        A-2

        
          

        

      

      
         

      

    

    Sales
Contract dated November 11, 2009 for automatic score-board machine by and
between Buyer, Huizhou Dongri Digital Co., Ltd., and Seller, Hua Xin Mao
Electronic Operating Department

    

    Intellectual Property -
Section 3.01(y)

    

    Not Used
/ Applicable.

    

    Affiliate Transactions -
Section 3.01(z)

    

    LEASE
AGREEMENT with the LESSOR, Huizhou Dongri Electron Co.,LTD., and the LESSEE,
Huizhou Dongri Digital Co.,LTD. for the premises No.1 Building, 24 district,
Zhongkai National Hi-tech Industrial Development Zone, Huizhou, Guangdong and
living quarters at the same location for total area of the factory building is
6361 square meters and the total area of the living quarters is 2752 square
meters with a term of Three (3) years, from November, 1, 2009 to December, 31,
2012.

    

    Production
Processing Agreement dated January 1, 2010 between Party A, East Best Industrial
Ltd., and Party B, Huizhou Dongri Digital Co., Ltd. regarding processing mobile
phones and PCBA products and related technical support.

    

    Production
Processing Agreement dated January 1, 2009 between Party A, East Best Industrial
Ltd., and Party B, Huizhou Dongri Digital Co., Ltd. regarding processing mobile
phones and PCBA products and related technical support.

    

    Account Receivables -
Section 3.01(cc)

    

    Not Used
/ Applicable.

    
      
         

      

      
        A-3

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