respectively, which share amounts are subject to adjustments for any stock splits or other recapitalizations effected by ACT; provided that, the percentage of the outstanding common stock that Mr. Li or Ms. Lee would have had the right to receive prior to the adjustment shall not be changed by any such adjustment. Upon earning the earn-out shares, such shares will be placed in escrow, pursuant to the terms of an escrow agreement to be entered into among ACT, Mr. Li and Ms. Lee. If Mr. Li’s or Ms. Lee’s employment is terminated for “cause” (as defined in the applicable Employment Agreement) prior to the expiration of the initial term of the applicable Employment Agreement, all of the earn-out shares, whether earned or not, of Mr. Li or Ms. Lee, as applicable, will be forfeited. If, however, Mr. Li’s or Ms. Lee’s employment is terminated for reasons other than “cause” prior to the expiration of the initial term of the applicable Employment Agreement, Mr. Li and Ms. Lee, as the case may be, will be entitled to receive any of the earn-out shares earned and placed in escrow prior to such termination.

     The Company has been informed that ACT would like to appoint Martin Nielson, current Senior Vice President-Acquisitions and a director of ACT, as a director and Chief Executive Officer of the Company following the Closing, and that ACT will consolidate the financial results of the Company with those of ACT and its other subsidiaries. Upon Closing, Mr. Li will resign as Chief Executive Officer, but will be retained by the Company as Chief Financial Officer and Chief Operating Officer. Mr. Li will also remain a member of the Company’s Board of Directors. Ms. Lee will be retained in her current position of Senior Vice President, but will resign as a director of the Company. Under the terms of the Stock Purchase Agreement, ACT will have the right to request resignations from other officers and directors of the Company as it deems appropriate.

     The Stock Purchase Agreement may be terminated (i) by mutual consent of the parties or (ii) by either ACT or the Stockholders (as a group) if (a) a default or breach shall be made by the other party with respect to the due and timely performance of any of its covenants and agreements in the Stock Purchase Agreement, or with respect to the due compliance with any of its representations warranties and covenants, and such default cannot be cured and has not been waived; (b) if all conditions specified in the Stock Purchase Agreement to be performed by the other party shall not have been satisfied at the time the Closing or if satisfaction of such condition becomes impossible, other that through failure of the terminating party to comply fully with its obligations under the Stock Purchase Agreement, and shall not have been waived by the terminating party on or before such date; or (c) if the Closing does not occur, other than through the failure of the terminating party to fulfill its obligations under the Stock Purchase Agreement, on or before January 10, 2005 or such later date as may be agreed upon in writing by the parties.

     The foregoing summary of the Stock Purchase Agreement and the transactions contemplated thereby is qualified in its entirety by reference to the Stock Purchase Agreement, a copy of which is filed as Exhibit 99.1 to this Report on Form 8-K and incorporated herein by reference.

     In connection with the transactions contemplated by the Stock Purchase Agreement, the Company entered into an Agreement (the “Series A Agreement”) on December 10, 2004 with Stonestreet L.P. (“Stonestreet”), the holder of all of the Company’s issued and outstanding Series A Redeemable Convertible Preferred Stock (the “Series A Preferred Stock”).

     The Series A Agreement contemplates the amendment and restatement of the rights, preferences and limitations of the Company’s Series A Preferred Stock, including the following changes: (i) the number of shares designated as Series A Preferred Stock shall be decreased from 1000 to 600 shares; (ii) the “Stated Value” of each share of Series A Preferred Stock will be reduced from $1,000 to $666.67; (iii) the holders of the Series A Preferred Stock will no longer have any right or option to require the Company to redeem the Series A Preferred Stock; (iv) the redemption amount payable by the Company upon exercise of its redemption right will be reduced from 115% of the Stated Value to 100% of the Stated Value; (v) there will be a 181-day waiting period from the date of filing the amended and restated certificate of designation before the holders may exercise conversion (unless the Company initiates a redemption prior to the 181-day period); (vi) the conversion price of the Series A Preferred Stock will be changed from a formula based upon average high and low closing prices of the Company’s common stock, with a floor price of $0.75 per share, to a fixed price of $0.50 per share, subject to customary and full-ratchet adjustments; and (vii) the Company will have five trading days, instead of three, to comply with conversion procedures. Additionally, as part of the Series A Agreement, Stonestreet agreed to forfeit a Stock Purchase Warrant, exercisable for 300,000 shares of the Company’s common stock, that was issued to Stonestreet in connection with the original issuance of the Company’s Series A Preferred Stock.

     The Series A Agreement contains customary representations and warranties with respect to authority of the parties, transfer restrictions on the Series A Preferred Stock, indemnification provisions and a general release