Equity Transfer Agreement of All Issued Shares of KIT GRANT LIMITED (English Translation)
Exhibit 10.1
April 2, 2008
Transferor：
XXXX, XXXX
Transferee：
CHINA SAFETECH HOLDINGS LIMITED
Party C:
CHINA SECURITY & SURVEILLANCE TECHNOLOGY, INC.
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Equity
Transfer Agreement |
This Equity Transfer Agreement (the “Agreement”) is entered into by and among the following parties on April 2, 2008:
(1)
XXXX, XXXX whose address is Xxxx X0, 0/X, Xxxxxx Xxxxx Xxxxxxxxxx Xxxxxxxx, 212-220 Xxxxxxxx Road, Wanchai, Hong Kong (the ID Card No. in Hong Kong is X000000(0)) (hereinafter referred to as “Transferor”);
(2)
CHINA SAFETECH HOLDINGS LIMITED, a company incorporated in British Virgin Islands, whose address is X00, Xxxxx Xxxxx, Xxxxxxx Xxxxxx Special Zone, Futian District, Shenzhen (hereinafter referred to as “Transferee”);
(3)
CHINA SECURITY & SURVEILLANCE TECHNOLOGY, INC., a company incorporated in Delaware, United States, whose address is X00, Xxxxx Xxxxx, Xxxxxxx Xxxxxx Special Zone, Futian District, Shenzhen (hereinafter referred to as “Party C”);
The Transferor, the Transferee and Party C above shall be individually referred to as a “Party” and collectively referred to as the “Parties”.
WHEREAS
XXX XXXXX LIMITED, a limited liability company legally organized and validly existing under the Company Ordinance of Hong Kong, whose information is listed as Exhibit I (hereinafter referred to as “Xxx Xxxxx”), and whose all issued shares are beneficially held by the Transferor.
WHEREAS
Xxx Xxxxx invests and acquires Guangdong Stonesonic Digital Technique Co., Ltd., a wholly foreign owned company legally organized and validly existing under the laws of People’s Republic of China, whose information is listed as Exhibit III (hereinafter referred to as “Stonesonic”), and whose all shares are beneficially held by Xxx Xxxxx.
WHEREAS
The Transferee desires to purchase from the Transferor and the Transferor desires to transfer to the Transferee 100% issued shares of Xxx Xxxxx. Upon completion of the transfer under this Agreement, the Transferee shall indirectly and fully acquire 100% shares and control power of Stonesonic.
NOW, THEREFORE, the Parties hereby agree as follows:
Article 1 Definitions
1.1
Unless otherwise defined in this Agreement, the following terms shall have the meanings indicated as follow:
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“Company Ordinance” |
means Chapter 32 Company Ordinance of the laws of Hong Kong; |
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“Shares for Transfer” |
means 10,000 common share of Xxx Xxxxx owned by the Transferor to be transferred from the Transferor to the Transferee under this Agreement, constituting 100% issued and outstanding stock of Xxx Xxxxx (for details please refer to Exhibit II - Part A); |
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“Share Transfer” |
means 100% issued shares of Xxx Xxxxx to be transferred from the Transferor to the Transferee under Article 2.1 hereof; |
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“Balance” |
shall have the meaning as provided in Article 3.2.1(2); |
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“Total Transfer Price” |
means total price paid to the Transferor by the Transferee under Article 3.1 hereof; |
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“Closing Date” |
April 2, 2008; |
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“Accounts of Xxx Xxxxx” |
means management and financial statements of Xxx Xxxxx as of February 29, 2008, the copies of which are attached as Exhibit A hereof; |
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“Stonesonic Accounts” |
means management and financial statements of Stonesonic as of February 29, 2008 verified by PRC auditors, the copies of which are attached as Exhibit B hereof; |
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“Business Day and Working Hours” |
means the days when banks in Hong Kong normally provide general bank services (excluding Saturday, Sunday and other Hong Kong public holidays) and general working hours; |
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“PRC” |
means the People’s Republic of China; |
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means the Hong Kong Special Administrative Region of PRC; | |
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“HKD” |
means the legal currency of Hong Kong; |
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“USD” |
means the legal currency of United States; |
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“RMB” |
means the legal currency of PRC. |
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1.2
In this Agreement:
(i)
Any rule or law involved herein shall include any and all amendments, supplements or reenactments thereof from time to time;
(ii)
Words and terms contained in Companies Ordinance shall be interpreted according to definitions stipulated in Companies Ordinance except as otherwise defined or stated in this Agreement, however, any amendment or change to Companies Ordinance shall be excluded which is not enforced before or on the date to execute this Agreement.
(iii)
Single word also includes plural meaning; word referred to any gender also includes the other gender and neuter, word referred to person also includes groups (legal person or non-legal person) and (under every circumstance), vice versa;
(iv)
The parties, descriptions, exhibits, appendices and terms and conditions mentioned herein shall be respectively referred to the parties, descriptions, exhibits, appendices and terms and conditions hereof; and
(v)
The headings and table of contents in this Agreement are provided for reference only and will not affect its construction or interpretation.
Article 2 Share Transfer
2.1
According to the provisions in this Agreement, the Transferor, as the beneficial owner of all issued and outstanding shares of Xxx Xxxxx (for more details please refer to Part A, Exhibit II), will transfer such Shares for Transfer to the Transferee (for more details please refer to Part B, Exhibit II). After such transfer, the Transferee will own 100% issued and outstanding shares of Xxx Xxxxx.
2.2
Upon the completion of transaction hereunder, Shares for Transfer shall be free and clear of any mortgage, lien or property encumbrances of any form, and Shares for Transfer shall be transferred with all rights attached or accumulated thereto, including all dividends, profits, the investment in Stonesonic by Xxx Xxxxx and relevant benefits accumulated and distributed from the completion date.
Article 3 Transfer Price
3.1
Transfer Price
The Transferor and the Transferee agree, the Transferor shall transfer to the Transferee Shares for Transfer. In return, the Transferee shall pay to the Transferor the Total Transfer Price of RMB227,037,605, consisting of RMB 125,000,000 in cash and shares listed on the New York Stock Exchange of Party C with the value of RMB 102,037,605.
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3.2
Method of Payment
3.2.1
The Transferee shall pay the Total Transfer Price to the Transferor as follows:
(1)
The Transferee has paid to the Transferor RMB 75,000,000 before the Closing Date. The Transferee shall pay the remaining price of RMB 50,000,000 (“Balance”) under Article 5.2 hereof.
(2)
The Transferee (through its parent company, Party C) shall issue restricted shares equal to RMB102,037,605 to the Transferor or its designees within ninety days after the execution date of this Agreement, and the share value shall be calculated on the average closing price (USD 15.2175/share) of twenty trading days before the Closing Date, amounting to 953,918 shares to the Transferor, among which 381,568 shares, equal to RMB40,815,127 shall be delivered to the Transferor or its designees within ninety days after the execution of this Agreement. If the shares are issued to Yueshen Zhou, Xxxxx Xxx, Xxxxxxx Xxx, Xxxxxxx Xxxxx, Xxxxxx Xxxx, Xxx Xxx or any of the directors or general manager of Stonesonic, the restriction period of such shares shall be two years from and after the execution date of this Agreement. The Transferor shall pledge the remaining shares to the Transferee as provided under Article 5.2 hereof.
3.2.2
The Transferee shall remit the Balance to the bank accounts designated by the Transferor, the information of which will be provided otherwise.
Article 4 Closing
4.1
The Share Transfer shall be completed on the Closing Date at the place stipulated by both parties in accordance with Exhibit V.
4.2
Terms and conditions to be performed hereof shall remain in force after the Closing Date.
4.3
From the Closing Date, debts and credits and all risks of Xxx Xxxxx and Stonesonic shall be promptly borne by the Transferee (except otherwise undertaken by the Transferor in Exhibit IV).
4.4
From the Closing Date, the Transferee shall have the right to consolidate profits of Xxx Xxxxx and Stonesonic with the Transferee group. At the meantime, the Transferee shall have the right to appoint manager or financial person, or authorize to appoint existing personnel of Xxx Xxxxx and Stonesonic to take charge of management and operation of Xxx Xxxxx and Stonesonic as well as all files, materials, financial documents and so on. The Transferor shall not enjoy any shareholder right and/or interest of Xxx Xxxxx and Stonesonic from the Closing Date because of such Share Transfer, provided that all obligations relevant to the Share Transfer shall be borne by the Transferor under law and this Agreement.
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Article 5 Warrants, Representations and Covenants of the Transferor
5.1
In addition to the information disclosed in this Agreement, the Transferor shall warrant, represent and covenant to the Transferee under terms and conditions stipulated in Exhibit IV, which also constitute the base for the Transferee to accept the Shares for Transfer.
5.2
The Transferor covenants to the Transferee that the profits after tax in 2007 audited by US Auditors shall reach RMB 25,000,000. If Xxx Xxxxx and Stonesonic reach profits after tax of RMB25,000,000, the Transferee shall pay to the shareholder of Xxx Xxxxx and Stonesonic or their designee RMB 50,000,000. The Transferor also covenants to the Transferee that the profits after tax in 2008 which are audited by US Auditors shall reach RMB35,000,000. If Xxx Xxxxx and Stonesonic reach profits after tax of RMB35,000,000, the Transferee shall release 286,175 shares pledged by the Transferor. The Transferor further covenants to the Transferee that the profits after tax in 2009 which are audited by US Auditors shall reach RMB40,000,000. If Xxx Xxxxx and Stonesonic reach profits after tax of RMB40,000,000, the Transferee shall release additional 286,175 shares pledged by the Transferor.
Article 6 Warrants, Representations and Covenants of the Transferee and Party C
6.1
The Transferee covenants to keep the organization structure of Xxx Xxxxx and Stonesonic after the Share Transfer, builds up its brand recognition, fully support business development of Xxx Xxxxx and Stonesonic. The Transferee shall also provide financial support as required by business based on the real situation according to relevant laws and regulations.
6.2
The Transferee undertakes that existing employees of Xxx Xxxxx and Stonesonic shall remain employed given that they are willing to stay and their stay will not impede development of companies after the Share Transfer; arrangement of senior management and technical staff and the operation rights and benefits of such persons shall be governed by separate agreements to be entered after the Share Transfer. In addition, the Transferee covenants that benefits of such persons shall not be lower than their previous benefits.
6.3
The Transferee shall provide appropriate operation funds to Xxx Xxxxx and Stonesonic in order to support the Transferor to realize profits after tax for 2007, 2008 and 2009, dates and amounts of providing such funds shall be otherwise stipulated.
6.4
Party C shall file required reports with the U.S. Securities and Exchange Commission (“SEC”) and issue shares to the Transferor under Article 3.2.1 (2) of this Agreement.
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Article 7 Governing Law
This Agreement shall be governed and construed by rules and laws of Hong Kong.
Article 8 Settlement of Disputes and Agent of Receiving Legal Procedure Documents
8.1
Any dispute arising out of or relating to this Agreement, shall be settled by friendly negotiation and consultation. If no agreement is reached through friendly negotiation and consultation, such dispute shall be finally arbitrated by Hong Kong International Arbitration Center (HKIAC) in accordance with HKIAC Arbitration Rules then in effect. Unless otherwise provided in the arbitration rules of HKIAC then in effect, the arbitration shall be the sole and exclusive method and procedure of any dispute arising out of or relating to this Agreement.
8.2
The Parties to this Agreement agree that unless not permitted by the applicable laws and rules, the arbitration terms hereto shall be interpreted as and constitute the currently effective arbitration agreement in writing with legal effect, and shall be granted with such effect. The Parties to this Agreement hereby expressly waive any right of possibly requested local administrative, judicial or alternative dispute settlement methods, as the conditions of any settlement procedure which arising out of this Agreement.
8.3
The Parties to this Agreement expressly represent that the award made according to Article 8 hereof shall be final award binding upon the Parties. In addition, the Parties to this Agreement hereby waive the right to appeal the award made according to Article 8 hereof. The Article 8 shall constitute the most comprehensive exclusive agreement to the extent permitted by the applicable laws.
8.4
(1)
The Transferee irrevocably entrusts BOYU ENTERPRISE CONSULTING CO., LIMITED, whose address is Xxxx X0, 0/X, Xxxxxx Xxxxx Xxxxxxxxxx Xxxxxxxx, 000-000 Xxxxxxxx Xxxx, Xxxxxxx, Xxxx Xxxx (“Agent”), to receive legal procedure documents and to be on behalf of the Transferee to receive claims arising out of or relevant to the Agreement or the legal procedures in Hong Kong (including but not limited to, claims for reimbursement, summons, arbitration application and arbitration award) (“Legal Procedure Documents”).
(2)
Transferee undertakes to consecutively entrust the Agent as the agent of receiving Legal Procedure Documents, in order to on behalf of the Transferee receive Legal Procedure Documents in Hong Kong and immediately notify the Transferor in writing if the Agent or its address is modified.
(3)
The Transferee agrees and confirms that Legal Procedure Documents which have been sent to its Agent shall be deemed as having been sent to any Transferee.
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Article 9 Liabilities for Breach of Contract
9.1
If any statement or warrants made by any Party in this Agreement is untrue or false, it shall be deemed as breach of contract by the Party.
9.2
Any Party to this Agreement changes minds on purpose and causes the failure of the Share Transfer, it shall be deemed as breach of contract by the Party.
9.3
The breaching party shall, in addition to performance of other obligations under this Agreement, compensate the observant party all losses, damages, expenses suffered by the observant party due to breach of contract caused by breaching party.
9.4
If the Transferor changes minds on purpose and cause that the shares can not be transferred to the Transferee or the shares is forfeited after transfer, the Transferee shall have the right to terminate the Agreement, and The Transferor shall return the share transfer price or the shares and assume liabilities under Article 9.3 of this Agreement.
Article 10 Force Majeure and Change of Circumstances
10.1
If any Party to this Agreement can not perform any part or all of the terms hereto directly or indirectly because of events such as fire, flood, earthquake or other unforeseeable, unavoidable and/or uncontrollable events, the Party shall be exempted from liabilities to the extent as affected by force majeure.
10.2
If any Party or Parties lose(s) its/their interests under this Agreement because of legislation, or administration order or specific administration act of government, any Party shall have the right to terminate this Agreement and to restore to the conditions before the execution of this Agreement.
10.3
Any Party affected by force majeure shall deliver the other Party the written notice regarding the occurrence of force majeure within 12 days after the occurrence of the force majeure event.
10.4
After the occurrence of force majeure event, the Parties to this Agreement shall immediately consultant and decide whether to delay the performance of this Agreement to a day in the future agreed by the Parties or to terminate this Agreement.
10.5
If any Party delays or is unable to perform all or part of the terms of this Agreement for more than 30 days as a result of force majeure, the other Party shall have the right to rescind this Agreement, and the Parties shall take all necessary actions to restore the rights and obligations of all parties to their respective original positions.
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Article 11 Miscellaneous
11.1
This Agreement and its involved relevant documents constitute the full understanding of the Parties regarding the Share Transfer, and replace any previous intention, expression and understanding of the Parties.
11.2
If any term of this Agreement is regarded as illegal, invalid or unenforceable at any time, the validity, effectiveness and enforceability of other terms of this Agreement shall not be affected or impaired in any way and shall remain the full validity.
11.3
This Agreement shall bind the Parties and their respective successors and assignees. The interests of this Agreement shall be assigned to the Parties hereto and their respective successors and assignees. Without the permission of the Parties in writing, any Party shall not amend, modify or revise this Agreement.
11.4
This Agreement shall be effective upon signature.
11.5
Without the permission of the Parties in writing (the relevant permission shall not be withheld without reasonable reasons), the Parties hereto shall not transfer any rights or obligations under this Agreement.
11.6
The Parties agree to bear all the cost and expense in respect of the negotiation, preparation, execution and performance of the Agreement and the taxes arising from the transfer of Shares for Transfer. The stamp tax and all other tax and expenses arising out of the transfer of Shares for Transfer (including but not limited to, arising out of in China or in any other areas), shall be borne and paid by the Transferor.
11.7
Unless provided and required by laws, regulations, order or judgments by the competent authorities or courts (including, but not limited to, applicable regulation of security exchanges), without the previous permission of the other Party in writing (the relevant permission shall not be withheld without reasonable reasons), any Party shall not make or distribute any related press statement or announcement.
11.8
Without the prior permission of the other Party in writing, any Party shall not disclose the Agreement or any content or material in connection with any transaction of this Agreement, excluding the following disclosure:
(1)
the disclosure is made according to the provisions of applicable laws, regulations and rules (including, but not limited to, regulations of security exchanges) or requirements of relevant government authorities or supervision authorities, or court orders;
(2)
the disclosure is made to Xxx Xxxxx, Stonesonic, or its higher competent authorities or approval and examination authorities, or to contacted bank or professional consultant of the disclosing Party;
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(3)
the disclosure is made by the Transferor to the company of its company group or senior management thereof.
11.9
If any term of this Agreement is or becomes illegal, invalid or unenforceable at any time in any respect, other terms of this Agreement shall not be affected or impaired.
11.10
Any notice required to be sent under this Agreement shall be sent in writing. The notice shall be delivered to the following address or fax number or other address or fax number that the recipient designates according to this Agreement:
(1)
Transferor：
XXXX, XXXX
Address：
Unit B1,9/F.，Loyong Court Commercial Building ，000-000 Xxxxxxxx Xxxx，Wanchai，Hong Kong
Telephone：
(000) 00000000
Fax：
(000) 00000000
(2)
Transferee：
CHINA SAFETECH HOLDINGS LIMITED
Address：
Xxxxx 00, Xxxxx Xxxxx, Xxxxxxx Xxxxxx Special Zone, Futian District, Shenzhen
Telephone：
(00-000) 00000000
Fax：
(00-000) 00000000
(3)
Party C：
CHINA SECURITY & SURVEILLANCE TECHNOLOGY, INC.
Address：
Xxxxx 00, Xxxxx Xxxxx, Xxxxxxx Xxxxxx Special Zone, Futian District, Shenzhen
Telephone：
(00-000) 00000000
Fax：
(00-000) 00000000
11.11
Any notice can be sent by mail with postage pre-paid, personal delivery, courier with good reputation or by facsimile, and shall be deemed as delivered at the following time:
(1)
two days (seven days if sending by airmail with postage prepaid) after post (the date of postmark is the posting date) for those sent by mail with postage prepaid;
(2)
the next business day for those sent by fax;
(3)
the receiving time for those sent by courier or personal delivery.
Any notice to the Transferee, when properly delivered to any Transferee, shall be regarded as delivered to the other Transferee.
11.12
This Agreement shall be written in Chinese in three copies with each Party holding one copy.
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IN WITNESS WHEREOF, this Agreement has been executed by the Parties on the date first above written and the Parties confirm that the Parties have carefully reviewed and fully understand all the provisions of the Agreement.
| The Transferor |
| XXXX, XXXX |
| Signature: /s/ XXXX, XXXX |
| Place of Signature: Shenzhen |
| Witness: XXXX Xxxxxxxx |
| The Transferee |
| TU Guoshen for and on behalf of |
| CHINA SAFETECH HOLDINGS LIMITED |
| Signature: /s/ Tu Guoshen |
| Place of Signature: Shenzhen |
| Witness: LUO Ganqi |
| Party C |
| To execute, chop and deliver |
| TU Guoshen for and on behalf of |
| CHINA SECURITY & SURVEILLANCE TECHNOLOGY, INC. |
| Place of Signature: Shenzhen |
| Witness: LUO Ganqi |
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