July 2, 2007
July
2,
2007
The
Transferor: LI
YI
The
Transferee: CHINA
SAFETECH HOLDINGS LIMITED
|
Party
C:
|
CHINA
SECURITY & SURVEILLANCE TECHNOLOGY,
INC.
|
|
of
All
Issued Shares
of
Xxxxx
Xxxxxxx Technology Limited
(English
Translation)
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This
Equity Transfer Agreement (the “Agreement”)
is
entered into by and among the following parties on July 2, 2007:
|
(1)
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|
(2)
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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
XXXXX
XXXXXXX TECHNOLOGY LIMITED,
a
limited liability company legally organized and validly existing under
the
Company Ordinance of Hong Kong, whose company data are listed as Exhibit
I
(hereinafter referred to as “Xxxxx
Xxxxxxx”),
and
whose all issued shares are beneficially held by the
Transferor.
WHEREAS Xxxxx
Xxxxxxx invested and established Hangzhou Tsingvision Intelligence System Co.,
Ltd., a wholly foreign owned company legally organized and validly existing
under the laws of the People’s Republic of China, whose company data are listed
as Exhibit III (hereinafter referred to as “Tsingvision”),
and
whose all shares are beneficially held by Xxxxx Xxxxxxx.
WHEREAS The
Transferee desires to purchase from the Transferor and the Transferor desires
to
transfer to the Transferee 100% issued and outstanding shares of Xxxxx Xxxxxxx.
Upon completion of the transfer under this Agreement, the Transferee shall
indirectly and fully acquire 100% shares and control power of
Tsingvision.
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”
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means
Chapter 32 Company Ordinance of the laws of Hong Kong;
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“Shares
for Transfer”
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means
10,000 common share of Xxxxx Xxxxxxx owned by the Transferor to be
transferred from the Transferor to the Transferee under this Agreement,
which are 100% issued and outstanding shares of Xxxxx Xxxxxxx (for
details
please refer to Exhibit II - Part A);
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|
“Share
Transfer”
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means
100% issued shares of Xxxxx Xxxxxxx to be transferred from the Transferor
to the Transferee under Article 2.1 hereof;
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“Total
Transfer Price”
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means
total price paid to the Transferor by the Transferee under Article
3.1
hereof;
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|
“Closing
Date”
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July
2, 2007;
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“Accounts
of Xxxxx Xxxxxxx”
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means
management and financial statements of Xxxxx Xxxxxxx as of June 30,
2007,
the copies of which are attached as Exhibit A hereof;
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|
“Tsingvision
Accounts”
|
means
financial statements of Tsingvision as of December 31, 2006 verified
by
PRC auditors, and management and financial statements of Tsingvision
as of
March 31, 2007, the copies of which are attached as Exhibit B
hereof;
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|
“Business
Day and Working Hours”
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“PRC”
|
means
People’s Republic of China;
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|
means
Hong Kong Special Administrative Region of PRC;
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“HKD”
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means
legal currency of Hong Kong;
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“USD”
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means
legal currency of United States;
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“RMB”
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means
legal currency of PRC.
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| 1.2 |
In
this Agreement:
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|
(i)
|
Any
rule or law involved herein shall include any and all amendments,
supplements or reenactments hereof from time to
time;
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(ii)
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Words
and terms contained in the Companies Ordinance shall be interpreted
according to definitions stipulated in the Companies Ordinance except
as
otherwise defined or stated in this Agreement, however, any amendment
or
change to the Companies Ordinance shall be excluded which is not
enforced
before or on the date to execute this
Agreement.
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(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;
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(iv)
|
Hereabove
mentioned the parties, descriptions, exhibits, appendices and terms
and
conditions shall be respectively referred to the parties, descriptions,
exhibits, appendices and terms and conditions hereof;
and
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(v)
|
The
headings and table of contents in this Agreement are provided for
reference only and will not affect its construction or
interpretation.
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-2-
Article
2 Share Transfer
| 2.1 |
As
per stipulations in this Agreement, the Transferor, as the actual
interest
holder of all outstanding shares of Xxxxx Xxxxxxx (for more details
please
refer to Part A, Exhibit II), will transfer such shares to be transferred
to the Transferee (for more details please refer to Part B, Exhibit
II).
After such transfer, the Transferee will own 100% outstanding shares
of
Xxxxx Xxxxxxx.
|
| 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
Tsingvision by Xxxxx Xxxxxxx and relevant benefits accumulated and
distributed from the completion
date.
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Article
3 Transfer
Price
| 3.1 |
Transfer
Price
|
The
Transferor and the Transferee hereby agree that the Transferor shall transfer
to
the Transferee Shares for Transfer. In return, the Transferee shall pay to
the
Transferor total transfer price of RMB 50,000,000 in cash and shares listed
on
US OTCBB by Party C with the value of RMB 49,345,666.
| 3.2 |
Method
of Payment
|
The
Transferee shall pay total transfer price to the Transferor as
follows:
| (1) |
The
Transferee has paid to the Transferor RMB 50,000,000 in cash as
of the Closing Date.
|
| (2) |
The
Transferee (through the parent company, Party C) shall issue restricted
shares equal to RMB49,345,666
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 (USD14.115/share)
of twenty trading days before the Closing Date (459,000 shares) to
the
Transferor.
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| 3.3 |
Exchange
Rate
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Cash
portion of the total transfer price shall be paid by the Transferee to the
Transferor in USD. Exchange Rate shall be U.S. $1=RMB7.6165.
-3-
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.
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|
4.2
|
Terms
and conditions to be performed hereof shall remain in force after
the
Closing Date.
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| 4.3 |
From
the Closing Date, debts and credits and all risks of Xxxxx Xxxxxxx
and
Tsingvision shall be promptly borne by the Transferee (except otherwise
undertaken by the Transferor in Exhibit
IV).
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| 4.4 |
From
the Closing Date, the Transferee shall have the right to consolidate
the
profits of Xxxxx Xxxxxxx and Tsingvision 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 Xxxxx
Xxxxxxx and Tsingvision to take charge of management and operation
of
Xxxxx Xxxxxxx and Tsingvision as well as all files, materials, financial
documents and so on. The Transferor shall not enjoy any shareholder
right
and/or interest of Xxxxx Xxxxxxx and Tsingvision from the Closing
Date
because of such Share Transfer, provided however, the Transferor
shall be
liable for all obligations that are required to be borne by the Transferor
under applicable laws 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
warrants, represents and covenants 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.
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| 5.2 |
The
Transferor covenants that the audited after tax net income of Tsingvision
for 2007 shall reach RMB10 million provided that the managements
of
Tsingvision shall
remain materially intact. If its after tax net income reaches RMB10
million , the Transferee shall release 137,700 shares pledged by
the
Transferor (“2007
Pledged Shares”);
the Transferor further covenants that the audited after tax net income
of
Tsingvision for 2008 shall reach RMB15 million. If its after tax
net
income reaches RMB15 million , the Transferee
shall release 137,700 shares pledged by the Transferor (“2008
Pledged Shares”).
If its audited after tax net income for 2007 is less than XXX 0 xxxxxxx,
xxxx xxxx of the 2007 Pledged Shares shall not be returned to the
Transferor. If its audited after tax net income for 2007 is less
than
RMB10 million but no less than RMB 8 million, then the amount of
2007
Pledged Shares that shall be returned to the Transferee shall equal
to
[(RMB 10 million - the actual after tax net income of Tsingvision
for
2007) /RMB 10 million] multiplied by the 2007 Pledged Shares. If
its
audited after tax net income for 2008 is less than RMB12 million,
then
none of the 2008 Pledged Shares shall not be returned to the Transferor.
If its audited after tax net income for 2008 is less than RMB15 million
but no less than XXX 00 million, then the amount of 2008 Pledged
Shares
that shall be returned to the Transferee shall equal to [(RMB 15
million -
the actual after tax net income of Tsingvision for 2008) /RMB 15
million]
multiplied by the 2008 Pledged Shares.
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-4-
Article
6 Warrants,
Representations and Covenants of the Transferee and Party
C
| 6.1 |
The
Transferee covenants to keep the organization structure of Xxxxx
Xxxxxxx
and Tsingvision after the Share Transfer, expand its brand influence,
fully support business development of Xxxxx Xxxxxxx and Tsingvision.
The
Transferee shall also provide financial support as required by business
based on the real situation according to relevant laws and
regulations
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| 6.2 |
The
Transferee covenants that existing employees of Xxxxx Xxxxxxx and
Tsingvision shall remain employed given that they are willing to
stay and
their stay will not impede development of companies after 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.
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| 6.3 |
The
Transferee shall provide appropriate operation funds to Xxxxx Xxxxxxx
and
Tsingvision in time in order to support the Transferor to realize
profits
after tax for 2007 and 2008, dates and amounts of providing such
funds
shall be otherwise stipulated.
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| 6.4 |
Party
C shall file relevant reports with the U.S. Securities and Exchange
Committee (“SEC”) according to law and issue shares to the Transferor
under Article 3.2.1(3) hereof after the execution 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.
-5-
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 discussion. If no agreement is reached through
friendly negotiation and discussion, 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.
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| 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.
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| 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.
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| 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”).
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| (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.
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| (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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-6-
Article
9 Liabilities for Breach of Contract
| 9.1 |
If
any representations or warrants made by any Party in this Agreement
are
untrue or false, it shall be deemed as breach of contract by the
Party.
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| 9.2 |
Any
Party to this Agreement changes minds on purpose and cause the failure
of
the share transfer, it shall be deemed as breach of contract by the
Party.
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| 9.3 |
The
breaching party shall, in addition to performance of other obligations
under this Agreement, compensate the complying party all losses,
damages,
expenses suffered by the observant party due to breach of contract
caused
by breaching party.
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| 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.
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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.
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| 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.
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| 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.
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| 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.
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| 10.5 |
If
any Party delays or 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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-7-
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.
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| 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.
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| 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.
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| 11.4 |
This
Agreement shall be effective upon
signatures.
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| 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.
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| 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.
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| 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
and
approval of the other Party in writing (the relevant permission or
approval shall not be withheld without reasonable reasons), any Party
shall not make or distribute any related press statement or
announcement.
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| 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:
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(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;
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(2)
|
the
disclosure is made to Xxxxx Xxxxxxx, Tsingvision, 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.
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| 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.
|
-8-
| 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) |
The
Transferor: LI
Yi
|
Address: Flat
616,
Xxxxxx Xxxx House, Sheung Tak Estate, Xxxxxx Xxxx O, Kowloon, Hong
Kong
Telephone:(000)
0000 0000
Fax:
(000)
0000 0000
| (2) |
The
Transferee: CHINA
SAFETECH HOLDINGS LIMITED
|
Adress:
Xxxxx 00, Xxxxx
Xxxxx, Xxxxxxx Xxxxxx Special Zone, Futian District, Shenzhen
Telephone:
(00-000)
0000 0000
Fax:
(00-000)
0000 0000
| (3) |
Party
C: CHINA
SECURITY & SURVEILLANCE TECHNOLOGY,
INC.
|
Address:
Xxxxx
00,
Xxxxx Xxxxx, Xxxxxxx Xxxxxx Special Zone, Futian District, Shenzhen
Telephone:
(00-000)
0000 0000
Fax:
(00-000)
0000 0000
| 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;
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| (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.
|
-9-
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 and detailedly read and
fully understand all the contents of the Agreement before the conclusion of
the
Agreement.
|
The
Transferor
LI
Yi
|
|
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Signature:
/s/ LI
Yi
|
|
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Place
of Signature: Shenzhen
|
Witness:
XXXX
Xxxxxxxx
The
Transferee
-10-
|
TU
Guoshen
for and on behalf of
CHINA
SAFETECH HOLDINGS LIMITED
|
|
|
|
|
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Signature:
/s/
Guoshen Tu
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
|
-11-
