ASSIGNMENT AND ASSUMPTION and MANAGEMENT AGREEMENT
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:
1.1 Machinery
and Equipment.
All
machinery, equipment, computers and computer hardware, office furniture and
fixtures, and other fixed or tangible assets;
1.2 Inventories.
All
inventories, including without limitation merchandise, materials, component
parts, production and office supplies, stationery and other imprinted material,
promotional materials, and business records;
1.3 Licenses
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;
1.4
Intangible 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;
1.5 Cash
and Accounts Receivable.
All
accounts receivable, deposit accounts, cash and cash equivalents and securities
owned by the Company or any of the HTF Subsidiaries;
1.6 Contract
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
1.7 Claims.
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.
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ARTICLE
2 :
ASSUMPTION
OF LIABILITIES
2.1 Scope
of Liabilities Assumed.
The
Operating Subsidiary shall assume, pay, perform or discharge the
following:
| a. |
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. |
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
3.1 Right
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
4.1 The
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.”
4.2 Deliveries
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;
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(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.
4.3 Deliveries
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.
ARTICLE
5 :
COVENANTS
ON AND SUBSEQUENT TO THE CLOSING DATE
On
and
after the Closing Date, Operating Subsidiary covenants as follows:
5.1 Pay
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.
5.2 Lawsuits.
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.
5.3 Insurance
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.
5.4 Right
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.
5.5 Execution
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
6.1 Titles.
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
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6.2 Duties.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.
6.3 Management
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
6.4 Company’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
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.
6.5 Spin
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).
6.6 Expenses
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.
6.7 Compensation.
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
7.1 Indemnification
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.
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7.2 Indemnification
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.
7.3 Indemnification
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.
ARTICLE
8 :
MISCELLANEOUS
8.1 Benefit.
This
Agreement shall be binding upon, and inure to the benefit of, the Parties hereto
and their respective successors, assignees, heirs and legal representatives.
8.2 Governing
Law.
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of Delaware.
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8.3 Amendment,
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.
8.4 Entire
Agreement.
This
Agreement and the exhibits, schedules and other documents expressly provided
hereunder or delivered herewith represent the entire understanding of the
parties.
8.5 No
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.
8.6 Notices.
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
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(c)
|
If
otherwise actually personally delivered, when delivered.
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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
HXT
Holdings, Inc.
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
HXT
Holdings, Inc.
By: /s/
Yuan
Qing Xx
Xxxx Xxxx Xx, Chief Executive Officer
MANAGER:
/s/
Yuan
Qing Xx
Xxxx Xxxx Xx, individually
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