ASSIGNMENT AND ASSUMPTION and MANAGEMENT AGREEMENT
Exhibit
10.1
ASSIGNMENT
AND ASSUMPTION
and
This
Assignment and Assumption and Management Agreement (this “Agreement) is made and
entered into on June 29, 2007, by and among the following parties (each, a
“Party” and collectively, the “Parties”): China Software Technology Group Co.,
Ltd., a Delaware corporation (the “Company”), HXT Holdings, Inc., a Delaware
corporation (the “Operating Subsidiary”), and Yuan Xxxx Xx (the
“Manager”).
WHEREAS,
the Company, through certain second and third tier subsidiaries,
including Shenzhen Hengtaifeng Technology Co., Ltd., a corporation organized
under the laws of the People's Republic of China ("HTF") is engaged in the
business of producing, marketing and selling in China highly specialized
applications software designed for use in targeted industries (the “Business,”
as further described herein); and
WHEREAS,
HTF operates the Business on leased premises located at located at Xx.0 Xxxxx
0,
Xxxxx X, Xxxxxxxx Building, Hi-tech Industrial Park, Nanshan District, Shenzhen,
518057, P.R.China (the “Premises”); and
WHEREAS,
the Operating Subsidiary is a wholly-owned, first tier subsidiary of the Company
which holds the equity in the Company’s second and third tier subsidiaries;
and
WHEREAS,
the Company desires to transfer to the Operating Subsidiary all other assets
of
the Business and to cause the Operating Subsidiary to assume all liabilities
and
obligations of the Business accrued as of the time of Closing, as more fully
described herein; and
WHEREAS,
on the date of and immediately following the closing of the
transactions contemplated by this Agreement, the Company intends to consummate
the closing of a merger pursuant to the terms of the Merger Agreement dated
June
29, 2007 (the “Merger Agreement”) by and among the Company, American Wenshen
Steel Group, Inc. and others; and
WHEREAS,
as a condition to consummation of the merger pursuant to the Merger Agreement,
the Manager, who is Chief Executive Officer and a director of the Company,
must
resign from his positions in management of the Company; and
WHEREAS,
the Operating Subsidiary wishes to engage the Manager, and the Manager wishes
to
be engaged, to manage and operate the business of the Operating Subsidiary,
effective at the Time of Closing (defined herein) and upon the terms and
conditions set forth herein;
NOW,
THEREFORE, in consideration of the mutual promises made herein, and for
other good and valuable consideration, the receipt and sufficiency of which
are
hereby acknowledged, the Parties, intending to be legally bound, agree as
follows:
ARTICLE
1 : TRANSFER AND ASSIGNMENT OF STOCK AND
ASSETS
The
“Business” is operated by HTF, a wholly owned subsidiary of Heng Xing Technology
Group Development Limited, which is in turn a wholly owned subsidiary of the
Operating Subsidiary. HTF and Heng Xing Technology Group Development Limited
are
sometimes referred to collectively herein as the “HTF Subsidiaries,” and each
may be referred to individually as an “HTF Subsidiary”. The Business includes
four products developed by HTF to date, including housing accumulation fund
software, credit guarantee management software, family planning software and
property management software. HTF also markets software products produced by
other companies as a value-added reseller and provides services, such as
installation, configuration and similar systems integration
services.
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On
the
terms and subject to the conditions herein expressed, Company hereby sells,
conveys, transfers, assigns, sets over and delivers to the Operating Subsidiary
at the Time of Closing (as defined in Section 4.1), and the Operating Subsidiary
assumes and accepts (A) all of the shares of capital stock of any entity other
than the Operating Subsidiary owned by the Company together with (B) all assets,
rights and interests, tangible and intangible, of every kind, nature and
description, then owned, possessed or operated by the Company, directly or
indirectly, wheresoever situate (collectively, the “Assets”), including without
limitation the following:
1.1Machinery
and Equipment. All machinery, equipment, computers and computer
hardware, office furniture and fixtures, and other fixed or tangible
assets;
1.2Inventories.
All inventories, including without limitation merchandise, materials, component
parts, production and office supplies, stationery and other imprinted material,
promotional materials, and business records;
1.3Licenses
and Permits. All licenses, permits and authorizations used by the
Company or any of the HTF Subsidiaries to own and operate all of the Assets
, to
conduct the Business and to occupy the Premises for the purpose of conducing
the
Business thereon;
1.4Intangible
Property. All intangible assets used in the operation of the
Business which are transferable including, but not limited to, the HTF software
programs described above and all developments, enhancements, versions and
derivations thereof, customer and supplier lists, privileges, permits, licenses,
software and software licenses, source codes, development rights, ideas,
research and information pertaining to the Business and its products,
certificates, commitments, goodwill, registered and unregistered patents,
copyrights, trademarks, service marks and trade names, and applications for
registration thereof and the goodwill associated therewith, including without
limitation the exclusive right to use the name Shenzhen Hengtaifeng Technology
or derivations thereof in the Business, the right to receive mail related to
the
Business and the Assets which is addressed to the Company or any of the HTF
Subsidiaries, and the right to telephone numbers used at the Premises in the
Business;
1.5Cash
and Accounts Receivable. All accounts receivable, deposit accounts,
cash and cash equivalents and securities owned by the Company or any of the
HTF
Subsidiaries;
1.6Contract
Rights. All rights and benefits of or in favor of the Company or
any of the HTF Subsidiaries resulting or arising from any contracts, purchase
orders, sales orders, forward commitments for goods or services, leases
(including security deposits held by the landlord pursuant to the lease of
the
Premises), franchise or license agreements, beneficial interests in covenants
not to compete or confidentiality covenants, the rights of the Company or any
of
the HTF Subsidiaries related to any other agreements whatsoever which arise
out
of the operation of the Business; and
1.7Claims.
Claims made in lawsuits and other proceedings filed by the Company or any of
the
HTF Subsidiaries, judgments and settlements in the Company’s or any HTF
Subsidiary’s favor, rights to refunds, including rights to and claims for
refunds of taxes paid based upon or measured by the income of the Business
prior
to the Closing, and insurance policies and rights accrued
thereunder.
ARTICLE
2 : ASSUMPTION OF LIABILITIES
2.1
Scope
of Liabilities Assumed. The Operating Subsidiary shall assume, pay,
perform or discharge the following:
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a.
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any
and all debts, liabilities or obligations of any nature of the Company
or
the Operating Subsidiary or any of the HTF Subsidiaries, whether
contingent or fixed and whether known or unknown, which have accrued
at
the Time of Closing.
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b.
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any
and all debts, liabilities or obligations of any nature of the Operating
Subsidiary or any of the HTF Subsidiaries, whether contingent or
fixed and
whether known or unknown, arising from the ownership or operation
of the
Assets or the Business or the occupation of the Premises either before
or
after the Time of Closing.
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The
Operating Subsidiary shall promptly provide for payment, performance and
discharge of the same in accordance with their terms.
ARTICLE
3 : COLLECTION OF ACCOUNTS RECEIVABLE
3.1Right
to Collect. Following the closing, Operating
Subsidiary shall have the right to collect the accounts receivables of the
Company or any of the HTF Subsidiaries in existence at the Time of Closing
and
to settle, compromise, xxx for collection, or take any action whatsoever with
respect to the receivables. Company shall cooperate with Operating Subsidiary
in
notifying customers as to any payment instructions or change of address that
Operating Subsidiary may wish to communicate to the customers. In the event
Company receives payment of any receivable transferred to the Operating
Subsidiary, it shall promptly endorse such payment and deliver it over to the
Operating Subsidiary.
ARTICLE
4 : THE CLOSING
4.1The
Closing. The closing of the transactions contemplated in this
Agreement (“Closing”) shall take place simultaneously with the closing of the
transactions contemplated under the Merger Agreement. The effective time of
closing is referred to herein as the “Time of Closing.”
4.2Deliveries
by Company. At Closing, Company and shall deliver to Operating
Subsidiary, in addition to all other items specified elsewhere in this
Agreement, the following:
(a)
Such instruments of sale, conveyance, transfer, assignment, endorsement,
direction or authorization as will be required or as may be desirable to vest
in
Operating Subsidiary, its successors and assigns, directly or through ownership
of the HTF Subsidiaries, all right, title and interest in and to the Assets,
subject to any and all mortgages, pledges, liens, encumbrances, equities,
charges, conditional sale or other title retention agreements, assessments,
covenants, restrictions, reservations, commitments, obligations, or other
burdens or encumbrances of any nature whatsoever that exist at the Time of
Closing;
(b)
All of the files, documents, papers, agreements, books of account and records
pertaining to the Assets and the Business;
(c)
Actual possession and operating control of the Assets; and
(d)
To the extent required, the consents of third parties to the assignment and
transfer of any of the Assets.
4.3Deliveries
by Subsidiary. At Closing, the Operating Subsidiary shall deliver
to the Company any instruments, in addition to this Agreement, as the Company
deems necessary or desirable fully to secure the assumption by the Operating
Subsidiary, its successors and assigns, of all liabilities and obligations
of
the Company, as described Section 2.1 hereof.
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ARTICLE
5 : COVENANTS ON AND SUBSEQUENT TO THE CLOSING
DATE
On
and
after the Closing Date, Operating Subsidiary covenants as follows:
5.1Pay
Creditors. Following the Closing, Operating Subsidiary shall pay
all payables and other obligations of Company or any of the HTF Subsidiaries
assumed hereunder by the Operating Subsidiary, as such obligations become due
in
the ordinary course of business.
5.2Lawsuits.
Without limiting the generality of Section 2.1, following the Closing, the
Operating Subsidiary shall continue the defense of any and all lawsuits or
other
claims filed or threatened against the Company or any of the HTF
Subsidiaries.
5.3Insurance
Policies. Operating Subsidiary shall name the Company as an
additional insured on all insurance policies transferred by the Company or
any
other insurance policies covering the period prior to the Time of
Closing.
5.4Right
to Inspect Records. Operating Subsidiary shall
permit the Company and its agents to have reasonable access to the books and
accounts of the Operating Subsidiary and each of the HTF Subsidiaries (at the
expense of the Company) for the purpose of filing tax returns, preparing filings
required by the Securities and Exchange Commission, and all other legitimate
purposes.
5.5Execution
of Further Documents. Upon the request of either party, the other
party shall execute, acknowledge and deliver all such further acts, deeds,
bills
of sale, assignments, assumptions, undertakings, transfers, conveyances, title
certificates, powers of attorney and assurances as may be required , in the
case
of Operating Subsidiary, to convey and transfer to, and vest in, Operating
Subsidiary all of Company’s right, title and interest in the Assets, and in the
case of the Company, to secure the assumption of the Company’s obligations and
liabilities arising as of the Time of Closing.
ARTICLE
6:MANAGEMENT AND OPERATION OF SUBSIDIARY
6.1Titles.
The Operating Subsidiary hereby engages the Manager to manage and operate its
business. The Manager shall serve as a member of the Board of Directors of
the
Operating Subsidiary. In addition, the Manager shall serve as the Chief
Executive Officer of the Operating Subsidiary
6.2Duties.The
Manager agrees that he will manage and operate the business of the Operating
Subsidiary to the best of his abilities and will devote such time and effort
as
necessary to fulfill his duties under this Agreement.
6.3Management
of Subsidiary. The Company agrees that the Manager will have
exclusive authority over the operations of the Operating Subsidiary, except
that
the Company shall be entitled to intervene in the event that a breach of the
covenants in this Agreement or any conduct by the Manager in the course of
operating the Operating Subsidiary (or any of the HTF Subsidiaries) threatens
the Company with material harm or material liability of any kind. (In any such
event, the Company shall be entitled to remove all of the directors and officers
of the Operating Subsidiary and to elect a new Board of Directors.) The Manager
shall maintain such books and records of the operations of the Operating
Subsidiary as are required by the Rules of the SEC, and shall prepare quarterly
and annual financial statements promptly so as to permit the Company to file
periodic reports with the SEC according to SEC Rules
6.4Company’s
Covenants. The Company shall not cause any funds or assets of the
Operating Subsidiary to be paid or transferred to the Company, nor shall the
Company cause the Operating
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Subsidiary
to issue any capital stock of any class or series or any options, warrants
or
rights to acquire capital stock of the Operating Subsidiary whether for
additional consideration or on conversion.
6.5Spin
Off of Subsidiary. The Manager shall use all reasonable efforts to
cause a registration statement covering all of the outstanding common stock
of
the Operating Subsidiary (the “Registration Statement”) to be filed with the
Securities and Exchange Commission (“SEC”) and declared effective, so as to
permit a distribution by the Company to the holders of its common stock of
the
common stock of the Operating Subsidiary. Subject to the provisions of the
Delaware General Corporation Law, the Company agrees that, immediately upon
the
declaration of effectiveness of the Registration Statement, it shall declare
a
dividend in the form of all of the shares of common stock of the Operating
Subsidiary, and that such dividend shall be payable to the holders of common
stock of the Company (and not to holders of any other class of stock of the
Company).
6.6Expenses
Associated with Registration and Spin Off. The Operating Subsidiary
shall be responsible for all expenses and liabilities incurred in connection
with the declaration of the stock dividend resulting in the spin off of the
Operating Subsidiary, including, without limitation, fees and expenses of
counsel and all filing and registration fees incurred in connection with the
registration of the common stock with the SEC.
6.7Compensation.
Five days after the Closing Date the Company shall issue to the Manager eight
million nine hundred ninety two thousand four hundred ninety three (8,992,493)
shares of its common stock. The issuance shall be in compensation for all of
the
undertakings by the Manager herein. The Manager agrees that he will take the
shares for investment and without a present intention of distributing
same.
ARTICLE
7 : INDEMNIFICATION
7.1Indemnification
by Company. From and after the Closing, the Company shall indemnify
and save Operating Subsidiary, its officers and directors, and their respective
successors, assigns, heirs and legal representatives (“Subsidiary Indemnitees”)
harmless from and against any and all losses, claims, damages, liabilities,
costs, expenses or deficiencies including, without limitation, actual attorneys’
fees and other costs and expenses incident to proceedings or investigations
or
the defense or settlement of any claim incurred by or asserted against any
Subsidiary Indemnitee due to or resulting from a violation or default by Company
with respect to any of Company’s covenants, obligations or agreements hereunder
or any losses or expenses incurred in connection with, or payments by Subsidiary
of, any debts, obligations or liabilities of Company arising after the Time
of
Closing.
7.2Indemnification
by Operating Subsidiary. From and after the Closing, the Operating
Subsidiary shall indemnify and save Company, its officers and directors, and
their respective successors, assigns, heirs and legal representatives (“Company
Indemnitees”) harmless from and against any and all losses, claims, damages,
liabilities, costs, expenses or deficiencies including, without limitation,
actual attorneys’ fees and other costs and expenses incident to proceedings or
investigations or the defense or settlement of any claim, incurred by or
asserted against any Company Indemnitee due to or resulting from a violation
or
default by Operating Subsidiary with respect to any of Operating Subsidiary’s
covenants, obligations or agreements hereunder and any losses or expenses
incurred in connection with, or payments by Company of the debts, liabilities
and obligations assumed by the Operating Subsidiary hereunder or the debts,
liabilities and obligations of, the Operating Subsidiary arising after the
Time
of Closing.
7.3Indemnification
Procedures.
(a)
The party seeking indemnification (“Indemnified Party”) shall give the
indemnifying party (“Indemnifying Party”) notice (a “Claim Notice”) of its
indemnification claim which notice shall (i) be in writing, (ii) include the
basis for the indemnification, and (iii) include the amount Indemnified Party
believes is the amount to be indemnified, if reasonably possible.
(b)
Indemnifying Party shall be deemed to accept Indemnified Party’s claim unless,
within twenty (20) business days after receipt of any Claim Notice, Indemnifying
Party delivers to Indemnified Party notice of non-acceptance of the
indemnification claim, which must (a) be in writing and (b) include the basis
for the disagreement.
(c)
The parties shall attempt in good faith to resolve any issues concerning
liability and the amount of such claim and any issues which they cannot resolve
within thirty (30) days after delivery of the notice of non-acceptance pursuant
to Section 7.3(b) shall be settled by arbitration in accordance with the Rules
of Expedited Commercial Arbitration of the American Arbitration Association,
by
a sole arbitrator located in New York, NY or such other location as the parties
shall agree, whose determination shall be final and binding on the parties
hereto. The arbitration shall be governed by the United States Arbitration
Act,
9 U.S.C. §§ 1-16, and judgment upon the award rendered by the arbitrator may be
entered in any court having jurisdiction thereof. The arbitrator shall have
the
authority to award legal fees, arbitration costs and other expenses, in whole
or
in part, to the prevailing party.
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ARTICLE
8: MISCELLANEOUS
8.1Benefit.
This Agreement shall be binding upon, and inure to the benefit of, the Parties
hereto and their respective successors, assignees, heirs and legal
representatives.
8.2Governing
Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware.
8.3Amendment,
Modification and Waiver. Any Party hereto may waive in writing any
term or condition contained in this Agreement and intended to be for its
benefit; provided, however, that no waiver by any Party, whether by conduct
or
otherwise, in any one or more instances, shall be deemed or construed as a
further or continuing waiver of any such term or condition. Each amendment,
modification, supplement or waiver shall be in writing and signed by the Party
or Parties to be charged.
8.4Entire
Agreement. This Agreement and the exhibits, schedules and other
documents expressly provided hereunder or delivered herewith represent the
entire understanding of the parties.
8.5No
Third Party Beneficiaries. Except as expressly provided by this
Agreement, nothing herein is intended to confer upon any person or entity not
a
Party to this Agreement any rights or remedies under or by reason of this
Agreement.
8.6Notices.
All notices and other communications under this Agreement shall be
in
writing and shall be deemed to have been duly given or made as
follows:
(a)
If
sent by reputable overnight air courier (such as Federal Express), 2 business
days after being sent;
(b)
If
sent by facsimile transmission, with a copy mailed on the same day in the manner
provided in clause (a) above, when transmitted and receipt is confirmed by
the
fax machine; or
(c)
If
otherwise actually personally delivered, when delivered.
All
notices and other communications under this Agreement shall be sent or delivered
as follows:
If
to the
Company, to:
China
Software Technology Group Co., Ltd.
c/o
American Union Securities, Inc.
Attn.:
Xxxxx X. Xxxx
000
Xxxx
Xxxxxx, 00xx
Xxxxx
Xxx
Xxxx,
XX 00000
Telephone:
000-000-0000 X 000
Facsimile:
000-000-0000
with
a
copy to (which shall not constitute notice):
Xxxxxx
Xxxxxx, Esq.
00
Xxxxxxxx Xxxx
Xxxxxxxxx,
XX 00000
Telephone:
000-000-0000
Facsimile:
000-000-0000
If
to
Operating Subsidiary, to:
Xx.
Xxxx
Xxxx Xx
Chairman
and CEO
Xxxxxxxx
Xxxxxxxx, Xx. 0, Xxxxx 0, Xxxxx A
Hi-Tech
Industrial Park, Xxxxxxx Xxxxxxxx
Xxxxxxxx,
X.X. Xxxxx 000000
Telephone:
000-000-0000
Facsimile:
000-0000-0000
with
a
copy to (which shall not constitute notice):
Xxxxxx
Xxxxxx, Esq.
000
Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx
Xxxx,
XX 00000
Telephone:
000-000-0000
Facsimile:
212-688-7273
Each
Party may change its address by written notice in accordance with this
Section.
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IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
on
June 29, 2007.
China
Software Technology Group Co., Ltd.
By:
/s/
Yuan Qing Xx
Xxxx
Xxxx
Xx, Chief Executive Officer
By:
/s/
Yuan Qing Xx
Xxxx Xxxx Xx, Chief Executive Officer
MANAGER:
/s/
Yuan
Qing Xx
Xxxx Xxxx Xx, individually
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