SHARE PURCHASE AGREEMENT Effective as of October 28, 2008 Between BIAN YONG and LI ZHONG (collectively, as the “Sellers”) and RISE AND GROW LIMITED and ZYTX TECHNOLOGY CO., LTD. (collectively, as the “Buyer”)
Effective
as of October 28, 2008
Between
▇▇▇▇
▇▇▇▇ and ▇▇ ▇▇▇▇▇
(collectively,
as the “Sellers”)
and
RISE
AND GROW LIMITED
and
ZYTX
TECHNOLOGY CO., LTD.
(collectively,
as the “Buyer”)
STOCK
PURCHASE AGREEMENT
THIS
STOCK PURCHASE AGREEMENT
(this
“Agreement”)
is
effective as of October 28, 2008 (the “Effective
Date”),
by
and between Rise and Grow Limited, a Hong Kong limited company (“R&G”)
and
ZYTX Technology Co., Ltd.(“ZYTX”),
a
company organized under the laws of The People’s Republic of China and is a
Variable Interest Entity controlled by R&G through its wholly-owned PRC
subsidiary ZBDT (Beijing) Technology Co., Ltd. (ZYTX and R&G are
collectively refered to as the “Buyer”),
and
also ▇▇▇▇ ▇▇▇▇ and Li Zhong, each is a resident of The People’s Republic of
China, excluding Hong Kong, Macau and Taiwan (“Seller”
and
collectively, “Sellers”).
PRELIMINARY
STATEMENT
Sellers
are owners, beneficially and of record, of all of the registered capital and
equity interest of ▇▇▇▇▇ ▇▇▇ Insurance Agency Company Limited, a limited
liability company organized under the laws of The People’s Republic of China
(the “Company”).
Sellers desire to sell to Buyer, and Buyer desires to purchase from Sellers,
all
of the registered capital of the Company on the terms and subject to the
conditions set forth herein.
Accordingly,
in consideration of the mutual agreements hereinafter set forth, Buyer and
Sellers agree as follows:
ARTICLE
1
DEFINITIONS
AND INTERPRETATION
Section
1.1 In
this
Agreement, the following terms have the meanings specified or referred to in
this Section
1.1
and
shall be equally applicable to both the singular and plural forms.
“Affiliate”
means,
with respect to any Person, any other Person which directly or indirectly
controls, is controlled by or is under common control with such Person; provided
that neither the Company nor any Subsidiary of the Company shall be deemed
an
Affiliate of Sellers.
“Associate”
has
the
meaning specified in Section
4.15.
“Balance
Sheet”
has
the
meaning specified in Section
4.4.
“Balance
Sheet Date”
means
June 30, 2008.
“Buyer”
means
R&G together with its Variable Interest Entity, ZYTX, which is controlled by
R&G through its wholly-owned subsidiary, ZBDT, as set forth in the preamble
to
this
Agreement.
“Buyer
Ancillary Agreements”
means
all agreements, instruments and documents being or to be executed and delivered
by Buyer under this Agreement or in connection herewith.
“Claim
Notice”
has
the
meaning specified in Section
10.3.
“Closing”
means
the closing of the transfer of the Shares from Sellers to Buyer.
“Closing
Date”
has
the
meaning specified in Section
3.1.
“Code”
means
the Internal Revenue Code of 1986, as amended.
“Company”
has
the
meaning specified in the first paragraph of this Agreement.
“Company
Agreements”
has
the
meaning specified in Section
4.15.
“Copyrights”
means
United States and foreign copyrights, copyrightable works, and mask work,
whether registered or unregistered, and pending applications to register the
same.
“Court
Order”
means
any judgment, order, award or decree of any foreign, federal, state, local
or
other court or tribunal and any award in any arbitration
proceeding.
“Effective
Date”
has
the
meaning set forth in the preamble of this Agreement.
“Encumbrance”
means
any lien (statutory or other), claim, charge, security interest, mortgage,
deed
of trust, pledge, hypothecation, assignment, conditional sale or other title
retention agreement, preference, priority or other security agreement or
preferential arrangement of any kind or nature, and any easement, encroachment,
covenant, restriction, right of way, defect in title or other encumbrance of
any
kind.
“Environmental
Law”
means
all Requirements of Laws derived from or relating to all federal, state and
local laws or regulations relating to or addressing the environment, health
or
safety and all foreign or state equivalents thereof.
“Expenses”
means
any and all expenses incurred in connection with investigating, defending or
asserting any claim, action, suit or proceeding incident to any matter
indemnified against hereunder (including court filing fees, court costs,
arbitration fees or costs, witness fees, and reasonable fees and disbursements
of legal counsel, investigators, expert witnesses, consultants, accountants
and
other professionals).
“Governmental
Body”
means
any political subdivision or department thereof, any other governmental or
regulatory body, commission, central bank, board, bureau, organ or
instrumentality or any court, in each case whether federal, state, local or
foreign.
“Governmental
Permits”
has
the
meaning specified in Section
4.9.
“Intellectual
Property”
means
Copyrights, Patent Rights, Trademarks and Trade Secrets and all agreements,
contracts, licenses, sublicenses, assignments and indemnities which relate
or
pertain to any of the foregoing.
“Laws”
has
the
meaning set forth in Section
4.14.
“Leased
Real Property”
has
the
meaning specified in Section
4.10.
“Losses”
means
any and all losses, costs, obligations, liabilities, settlement payments,
awards, judgments, fines, penalties, damages, expenses, deficiencies or other
charges.
“Material
Adverse Effect”
means
any condition, circumstance, change or effect (or any development that, insofar
as can be reasonably foreseen, would result in any condition, circumstance,
change or effect) that is materially adverse to the assets, business, financial
condition, results of operations or prospects of the Company.
“Money
Laundering Laws”
has
the
meaning set forth in Section
4.23.
“Owned
Software”
has
the
meaning specified in Section
4.12(g).
-
3
-
“Patent
Rights”
means
United States and foreign patents, patent applications, continuations,
continuations-in-part, divisions, reissues, patent disclosures, inventions
(whether or not patentable or reduced to practice) and improvements
thereto.
“Permitted
Encumbrances”
means:
(i) liens for taxes and other governmental charges and assessments arising
in
the ordinary course of business which are not yet due and payable, (ii) liens
of
landlords and liens of carriers, warehousemen, mechanics and materialmen and
other like liens arising in the ordinary course of business for sums not yet
due
and payable and (iii) other liens or imperfections on property which are not
material in amount, do not interfere with, and are not violated by, the
consummation of the transactions contemplated by this Agreement, and do not
impair the marketability of, or materially detract from the value of or
materially impair the existing use of, the property affected by such lien or
imperfection.
“Person”
means
any individual, corporation, partnership, joint venture, limited liability
company, association, joint-stock company, trust, unincorporated organization
or
Governmental Body.
“Purchase
Price”
has
the
meaning specified in Section
2.2.
“R&G”
means
Rise and Grow Limited, a company organized under the laws of Hong
Kong.
“Requirements
of Laws”
means
any foreign, federal, state and local laws, statutes, regulations, rules, codes
or ordinances enacted, adopted, issued or promulgated by any Governmental Body
(including those pertaining to electrical, building, zoning, subdivision, land
use, environmental and occupational safety and health requirements) or common
law.
“RMB”
means
the legal ▇▇▇▇▇▇▇▇ of the People’s Republic of China.
“Sellers”
has
the
meaning specified in the first paragraph of this Agreement.
“Sellers
Ancillary Agreements”
means
all agreements, instruments and documents being or to be executed and delivered
by Sellers under this Agreement or in connection herewith.
“Shares”
means
all of the registered capital of the Company.
“Software”
means
computer software programs and software systems, including all databases,
compilations, tool sets, compilers, higher level or “proprietary” languages,
related documentation and materials, whether in source code, object code or
human readable form.
“Subsidiaries”
means
any corporation, partnership, limited liability company, joint venture or other
entity in which the Company (a) owns, or at any relevant time owned, directly
or
indirectly, fifty percent (50%) or more of the outstanding voting securities
or
equity interests or (b) is a general partner.
“Tax”
means
any present or future tax, levy, impost, duty, charge, fee, deduction or
withholding of any nature and whatever called, by whomsoever, on whomsoever
and
wherever imposed, levied, collected, withheld or assessed, including interest,
penalties, additions to tax and any similar liabilities with respect
thereto.
“Tax
Asset”
means
any net operating loss, net capital loss, investment tax credit, foreign tax
credit, charitable deduction or any other credit or tax attribute that could
be
carried forward or back to reduce Taxes (including without limitation deductions
and credits related to alternative minimum Taxes).
-
4
-
“Tax
Return”
means
any federal, state, local or foreign tax return, declaration, statement, report,
schedule, form or information return or any amendment or attachment to any
of
the foregoing relating to Taxes.
“Trademarks”
means
United States, state and foreign trademarks, service marks, logos, trade dress
and trade names (including all assumed or fictitious names under which the
Company [or any Subsidiary] is conducting business or has within the previous
five years conducted business), whether registered or unregistered, and pending
applications to register the foregoing.
“Trade
Secrets”
means
confidential ideas, trade secrets, know-how, concepts, methods, processes,
formulae, reports, data, customer lists, mailing lists, business plans, or
other
proprietary information.
“ZBDT”
means
ZBDT (Beijing) Technology Co. Ltd., a company organized under the laws of The
People’s Republic of China and a wholly-owned subsidiary of R&G as set forth
in the preamble to this Agreement.
“ZYTX”
means
ZYTX Technology Co. Ltd., a company organized under the laws of The People’s
Republic of China and is a Variable Interest Entity controlled by R&G
through its wholly-owned PRC subsidiary ZBDT.
Section
1.2 Interpretation.
As used
in this Agreement, the word “including” means without limitation, the word “or”
is not exclusive and the words “herein”, “hereof”, “hereby”, “hereto” and
“hereunder” refer to this Agreement as a whole. Unless the context otherwise
requires, references herein: (i) to Articles, Sections, Exhibits and Schedules
mean the Articles and Sections of and the Exhibits and Schedules attached to
this Agreement; (ii) to an agreement, instrument or other document means such
agreement, instrument or other document as amended, supplemented and modified
from time to time to the extent permitted by the provisions thereof and by
this
Agreement; and (iii) to a statute means such statute as amended from time to
time and includes any successor legislation thereto. The Schedules and Exhibits
referred to herein shall be construed with and as an integral part of this
Agreement to the same extent as if they were set forth verbatim herein. Titles
to Articles and headings of Sections are inserted for convenience of reference
only and shall not be deemed a part of or to affect meaning or interpretation
of
this Agreement. References herein to the knowledge of a party or matters or
information known to a party mean the actual knowledge or conscious awareness
of
the Chief Executive Officer, Chief Financial Officer, Chairman of the Board
or
Manager of such party.
ARTICLE
2
PURCHASE
AND SALE OF SHARES; PURCHASE PRICE
Section
2.1 Purchase
and Sale of Shares.
Upon
the terms and subject to the conditions of this Agreement, on the Closing Date,
Sellers shall sell, transfer, assign, convey and deliver to ZYTX,
and
Buyer shall purchase from Sellers, the Shares, free and clear of all
Encumbrances (except for Permitted Encumbrances).
Section
2.2 Purchase
Price.
The
purchase price for the Shares shall be RMB
40,000,000 in
cash
(the “Purchase
Price”),
of
which RMB30,000,000 shall be funded by R&G and RMB10,000,000 shall be funded
by ZYTX.
-
5
-
Section
2.3 Certain
Tax Matters
The
Company shall pay, at or prior to the Closing Date, all of its Taxes through
its
most recently completed fiscal year. In addition, Sellers shall be responsible
for all transfer and withholding Taxes related to the transaction contemplated
by this Agreement.
ARTICLE
3
CLOSING
Section
3.1 Closing
Date.
The
Closing shall take place at 9:00 A.M., local time or such later date as may
be
agreed upon by Buyer and Sellers after the conditions set forth in Article
VIII
have
been satisfied, at such place or at such other time as shall be agreed upon
by
Buyer and Sellers. The time and date on which the Closing is actually held
are
sometimes referred to herein as the “Closing
Date”.
Section
3.2 Payment
of Purchase Price.
(a) Subject
to fulfillment or waiver of the conditions set forth in Section
8.1,
at the
Closing, Buyer shall pay the Purchase Price by wire transfer of immediately
available funds to the account specified in Schedule
3.2.
Section
3.3 Buyer’s
Additional Deliveries.
Subject
to fulfillment or waiver of the conditions set forth in Section
8.1,
at the
Closing,
Buyer
shall deliver to Sellers all the following:
(a) Copy
of
R&G’s
Certificate of Incorporation certified as of a recent date by the appropriate
office in Hong Kong;
(b) Copy
of
ZYTX’s Certificate of Incorporation (or equivalent) certified as of a recent
date by the appropriate office in The People’ Republic of China;
(c) Certificate
of good standing of R&G
(or the
equivalent) issued as of a recent date by the appropriate office in Hong
Kong;
(d) Certificate
of good standing of ZYTX (or the equivalent) issued as of a recent date by
the
appropriate office in The People’s Republic of China;
(e) Certificate
of the corporate secretary of R&G,
dated
the Closing Date, in form and substance reasonably satisfactory to Sellers,
as
to (i) no amendments to the Certificate of Incorporation of R&G
since a
specified date; (ii) the Charter of R&G;
(iii)
the resolutions of the Board of Directors of R&G
(or the
equivalent) authorizing the execution and performance of this Agreement and
the
transactions contemplated hereby; and (iv) incumbency and signatures of the
officers of
R&G
executing this Agreement and any Buyer Ancillary Agreement; and
(f) Certificate
of the corporate secretary of ZYTX, dated the Closing Date, in form and
substance reasonably satisfactory to Sellers, as to (i) no amendments to the
Certificate of Incorporation of ZYTX since a specified date; (ii) the Charter
of
ZYTX; (iii) the resolutions of the Board of Directors of ZYTX (or the
equivalent) authorizing the execution and performance of this Agreement and
the
transactions contemplated hereby; and (iv) incumbency and signatures of the
officers of ZYTX executing this Agreement and any Buyer Ancillary Agreement;
and
(g) The
certificates
contemplated by Section 8.2(a)-(b),
duly
executed by an authorized officer of R&G
and an authorized officer of ZYTX.
-
6
-
Section
3.4 Sellers’
Deliveries.
Subject
to fulfillment or waiver of the conditions set forth in Section
8.2,
at
Closing, Sellers shall deliver to Buyer all the following:
(a) Copy
of
the Certificate of Incorporation (or the equivalent) of the Company certified
as
of a recent date by the appropriate office of The People’s Republic of China and
a copy of the Company’s bylaws (or the equivalent) dated as of a recent
date.
(b) Sellers’
Certificate, executed by each of the Sellers and dated the Closing Date, in
form
and substance reasonably satisfactory to Buyer, certifying that (i) no
litigation, proceeding, investigation, or inquiry is pending, or to the best
knowledge of Sellers threatened, which might result in an action to enjoin
or
prevent the consummation of the transactions contemplated by this Agreement,
or,
to the extent not disclosed herein, by or against the Company, which might
result in any material adverse change in any of the assets, properties,
business, or operations of the Company and (ii) there have been no amendments
to
the Certificate of Incorporation or the bylaws of the Company (or their
equivalents) since the dates indicated on such documents as delivered in
accordance with Section
3.4(a).
(c) Opinion
of counsel to Sellers substantially in the form contained in Exhibit
A
attached
hereto;
(d) All
consents, waivers or approvals required to be obtained by Sellers and/or the
Company with respect to the consummation of the transactions contemplated by
this Agreement;
(e) The
certificate contemplated by Sections
8.1(a)
duly
executed by each Seller; and
ARTICLE
4
REPRESENTATIONS
AND WARRANTIES OF SELLERS
As
an
inducement to Buyer to enter into this Agreement and to consummate the
transactions contemplated hereby, Sellers hereby jointly and severally represent
and warrant to Buyer and agree as follows:
Section
4.1 Title
to the Shares; Authority of Sellers.
(a) As
of the
Closing Date, each Seller has good and valid title to their respective Shares,
free and clear of any and all Encumbrances whatsoever, and none of the Shares
are subject to any outstanding option, warrant, call, or similar right of any
other Person to acquire the same, and none of the Shares are subject to any
restriction on transfer thereof except for restrictions under applicable Laws.
Upon consummation of the transactions contemplated hereby in accordance with
the
terms hereof, Sellers will convey good and valid title to the Buyer of all
of
the Shares, free and clear of any and all Encumbrances whatsoever, except for
restrictions on transfer under applicable Laws.
(b) Sellers
have full power and authority to execute, deliver and perform this Agreement
and
all of the Sellers Ancillary Agreements. This Agreement has been duly executed
and delivered by Sellers and is the legal, valid and binding obligation of
Sellers enforceable in accordance with its terms, and each of the Sellers
Ancillary Agreements upon execution and delivery by Sellers will be a legal,
valid and binding obligation of Sellers enforceable in accordance with its
terms.
(c) Neither
the execution and delivery of this Agreement or any of the Sellers Ancillary
Agreements or the consummation of any of the transactions contemplated hereby
or
thereby nor compliance with or fulfillment of the terms, conditions and
provisions hereof or thereof will:
-
7
-
(i) conflict
with, result in a breach of the terms, conditions or provisions of, or
constitute a default, an event of default or an event creating rights of
acceleration, termination or cancellation or a loss of rights under, or result
in the creation or imposition of any Encumbrance upon any of the assets or
properties of Sellers or the Company, under (1) the charter or Bylaws of the
Company, (2) any note, instrument, agreement, mortgage, lease, license,
franchise, permit or other authorization, right, restriction or obligation
to
which Sellers or the Company is a party or any of the respective assets or
properties of Sellers or the Company is subject or by which Sellers or the
Company is bound, (3) any Court Order to which Sellers or the Company is a
party
or any of the respective assets or properties of Sellers or the Company is
subject or by which Sellers or the Company is bound, or (4) any Requirements
of
Laws affecting Sellers or the Company or their respective assets or properties;
or
(ii) require
the approval, consent, authorization or act of, or the making by Sellers or
the
Company of any declaration, filing or registration with, any
Person.
Section
4.2 Organization
and Capital Structure of the Company.
(a) The
Company is a company duly organized, validly existing and in good standing
under
the laws of the People’s Republic of China. The Company is duly qualified to
transact business as a foreign corporation and is in good standing in each
of
the jurisdictions is transacts business. No other jurisdiction has demanded,
requested or otherwise indicated that the Company is required so to qualify.
The
Company has full power and authority to own or lease and to operate and use
its
properties and assets and to carry on its business as now
conducted.
(b) The
registered capital of the Company is RMB10,000,000. Except for this Agreement,
there are no agreements, arrangements, options, warrants, calls, rights or
commitments of any character relating to the issuance, sale, purchase or
redemption of any shares of capital stock of the Company. No holder of Company
Common Stock has any preemptive, stock purchase or other rights to acquire
Company Common Stock. All of the outstanding shares of the Company Common Stock
are validly issued, fully paid and nonassessable and were not issued in
violation of any preemptive or similar rights. Sellers are the record and
beneficial owner of one hundred percent (100%) of the shares of Company Common
Stock. All of such shares of Company Common Stock are so owned free from all
Encumbrances of any kind.
(c) True
and
complete copies of the Certificate of Incorporation (or the equivalent) and
all
amendments thereto, of the Charter, as amended to date, and of the stock ledger
of the Company have been delivered to Buyer.
Section
4.3 Subsidiaries
and Investments.
The
Company does not have any Subsidiaries.
Section
4.4 Financial
Statements.
Schedule
4.4
contains
(i) the audited balance sheets of the Company as of June 30, 2007 and June
30,
2008 and the related statements of income and cash flows for the two years
then
ended, together with the appropriate notes to such financial statements and
the
report thereon of June 30, 2008, and (ii) the unaudited balance sheet of the
Company as of September 30, 2008, (such balance sheet being herein called the
“Balance
Sheet”)
and
the related statements of income and cash flows for the three months then ended.
All such statements were (or shall have been) prepared in conformity with GAAP
and fairly present the financial position (on a consolidated and, where
applicable, consolidating basis) of the entities described in such financial
statements as at the respective dates thereof and the results of operations
and
cash flows (on a consolidated and, where applicable, consolidating basis) of
the
entities described therein for each of the periods then ended, subject, in
the
case of any such unaudited financial statements, to changes resulting from
audit
and normal year-end adjustments.
-
8
-
Section
4.5 Operations
Since Balance Sheet Date.
(a) Since
the
Balance Sheet Date, there has been:
(i) no
material adverse change in the assets, business, operations, liabilities,
profits, prospects or condition (financial or otherwise) of the Company, and
no
fact or condition exists or is contemplated or threatened which might reasonably
be expected to cause such a change in the future; and
(ii) no
damage, destruction, loss or claim, whether or not covered by insurance, or
condemnation or other taking adversely affecting any of the assets, business,
operations, condition or prospects of the Company.
(b) Since
the
Balance Sheet Date, the Company has conducted its business only in the ordinary
course and in conformity with past practice and, without limiting the generality
of the foregoing, has not:
(i) sold,
leased (as lessor), transferred or otherwise disposed of (including any
transfers from the Company to Sellers or any of its Affiliates), or mortgaged
or
pledged, or imposed or suffered to be imposed any Encumbrance (other than a
Permitted Encumbrance) on, any of the assets reflected on the Balance Sheet
or
any assets acquired by the Company after the Balance Sheet Date, except for
inventory and minor amounts of personal property sold or otherwise disposed
of
for fair value in the ordinary course of business consistent with past
practice;
(ii) canceled
any debts owed to or claims held by the Company (including the settlement of
any
claims or litigation) or waived any other rights held by the Company other
than
in the ordinary course of business consistent with past practice;
(iii) paid
any
claims against the Company (including the settlement of any claims and
litigation against the Company or the payment or settlement of any obligations
or liabilities of the Company) other than in the ordinary course of business
consistent with past practice;
(iv) created,
incurred or assumed, or agreed to create, incur or assume, any indebtedness
for
borrowed money (other than money borrowed or advances from Sellers or any of
its
Affiliates in the ordinary course of business consistent with past practice)
or
entered into, as lessee, any capitalized lease obligations;
(v) accelerated
or delayed collection of notes or accounts receivable in advance of or beyond
their regular due dates or the dates when the same would have been collected
in
the ordinary course of business consistent with past practice;
(vi) delayed
or accelerated payment of any account payable or other liability of the Company
beyond or in advance of its due date or the date when such liability would
have
been paid in the ordinary course of business consistent with past
practice;
(vii) acquired
any real property or undertaken or committed to undertake capital expenditures
exceeding RMB100,000 in
the
aggregate;
(viii) made,
or
agreed to make, any payment of cash or distribution of assets to Sellers or
any
of its Affiliates;
-
9
-
(ix) instituted
any increase in any compensation payable to any officer or employee of the
Company or in any profit-sharing, bonus, incentive, deferred compensation,
insurance, pension, retirement, medical, hospital, disability, welfare or other
benefits made available to officers or employees of the Company;
(x) made
any
change in the accounting principles and practices used by the Company from
those
applied in the preparation of the Balance Sheet and the related statements
of
income and cash flow for the period ended on the Balance Sheet
Date;
(xi) entered
into or become committed to enter into any other material transaction except
in
the ordinary course of business; or
(xii) prepared
or filed any Tax Return inconsistent with past practice or, on any such Tax
Return, taken any position, made any election, or adopted any method that is
inconsistent with positions taken, elections made or methods used in preparing
or filing similar Tax Returns in prior periods.
Section
4.6 No
Undisclosed Liabilities.
The
Company is not subject to any liability (including unasserted claims, whether
known or unknown), whether absolute, contingent, accrued or otherwise, which
is
not shown or which is in excess of amounts shown or reserved for in the Balance
Sheet, other than liabilities of the same nature as those set forth in the
Balance Sheet and the notes thereto and reasonably incurred after the Balance
Sheet Date in the ordinary course of business consistent with past
practice.
Section
4.7 Taxes.
(a) All
Tax
Returns of the Company required to be filed by any of them have been filed,
all
such Tax Returns are true and correct in all material respects, and all Taxes
shown on such Tax Returns to be due and payable and all assessments, fees and
other governmental charges upon the Company and upon their respective
properties, assets, income, businesses and franchises that are due and payable
have been paid when due and payable, except for such Taxes (i) which are not
yet
delinquent or (ii) that are being contested in good faith and by proper
proceedings, and against which adequate reserves or other appropriate
provisions, if any, as shall be required in conformity with GAAP shall have
been
made or provided therefore. All Taxes required to be withheld by the Company
have been duly withheld, and such withheld Taxes have been either duly paid
to
the proper Governmental Body or properly set aside in accounts for such purpose.
(b) No
Governmental Body has asserted or threatened to assert any deficiency, claim
or
issue with respect to Taxes or any adjustment to Taxes against the Company
with
respect to any taxable period for which the period of assessment or collection
remains open. No adjustment that would materially increase the Tax liability,
or
materially reduce any Tax Asset, of the Company or any Subsidiary has been
made,
proposed or threatened by a Governmental Body during any audit of any taxable
period which would reasonably be expected to be made, proposed or threatened
in
an audit of any subsequent taxable period.
(c) The
Company will not be required to include any item of income in, or exclude any
item of deduction from, taxable income for any taxable period (or portion
thereof) ending after the Closing Date, as a result of any (i)
change
in method of accounting for a taxable period ending on or prior to the Closing
Date under Section 481 of the Code (or any corresponding provision of state,
local or foreign income Tax law), (ii)
installment sale or open transaction disposition made on or prior to the Closing
Date or (iii)
prepaid
amount received on or prior to the Closing Date.
-
10
-
(d) The
Company has never been a member of any consolidated, combined, affiliated or
unitary group of corporations for any Tax purposes other than a group in which
the Company is the common parent.
(e) Sellers
have paid all relevant Taxes including capital gain Taxes, transfer Taxes and
withholding Taxes originated by this agreement, particularly as related to
the
transfer of the Units and has provided Buyer evidence of such.
(f) Sellers
or the Company have paid, prior to the Closing Date, all of its applicable
Taxes.
Section
4.8 Availability
of Assets.
The
assets owned or leased by the Company constitute all the assets and properties
used in, or necessary for, the operation of the business of the Company
(including all books, records, computers and computer programs and data
processing systems) and are in good condition (subject to normal wear and tear)
and serviceable condition and are suitable for the uses for which
intended.
Section
4.9 Governmental
Permits.
The
Company owns, holds or possesses all licenses, franchises, permits, privileges,
immunities, approvals and other authorizations from a Governmental Body which
are necessary to entitle it to own or lease, operate and use its assets and
to
carry on and conduct its business substantially as currently conducted,
including, without limitation, all licenses necessary to operate as an insurance
agent in The People’s Republic of China (herein collectively called
“Governmental
Permits”).
Schedule
4.9
sets
forth a list and brief description of each Governmental Permit, except for
such
incidental licenses, permits and other authorizations which would be readily
obtainable by any qualified applicant without undue burden in the event of
any
lapse, termination, cancellation or forfeiture thereof. Complete and correct
copies of all of the Governmental Permits have heretofore been delivered to
Buyer by Sellers.
(i) The
Company has fulfilled and performed its obligations under each of the
Governmental Permits, and no event has occurred or condition or state of facts
exists which constitutes or, after notice or lapse of time or both, would
constitute a breach or default under any such Governmental Permit or which
permits or, after notice or lapse of time or both, would permit revocation
or
termination of any such Governmental Permit, or which might adversely affect
the
rights of the Company under any such Governmental Permit; (ii) no notice of
cancellation, of default or of any dispute concerning any Governmental Permit,
or of any event, condition or state of facts described in the preceding clause,
has been received by, or is known to, Sellers or the Company; and (iii) each
of
the Governmental Permits is valid, subsisting and in full force and effect
and
will continue to be in full force and effect immediately after the Closing,
in
each case without (x) the occurrence of any breach, default or forfeiture of
rights thereunder, or (y) the consent, approval, or act of, or the making of
any
filing with, any Governmental Body.
Section
4.10 Real
Property.
(a) The
Company does not own any real property.
(b) Schedule
4.10(B)
sets
forth a list and brief description of each lease or similar agreement (showing
the parties thereto, annual rental, expiration date, renewal and purchase
options, if any, the improvements thereon, the uses being made thereof, and
the
location and the legal description of the real property covered by, and the
space occupied under, such lease or other agreement) under which (i) the Company
is lessee of, or holds, uses or operates, any real property owned by any third
Person (the “Leased
Real Property”).
Except as set forth in such Schedule, the Company has the right to quiet
enjoyment of all the Leased Real Property described in such Schedule for the
full term of each such lease or similar agreement (and any renewal option)
relating thereto, and the leasehold or other interest of the Company in such
Leased Real Property is not subject or subordinate to any Encumbrance except
for
Permitted Encumbrances. Except for Permitted Encumbrances, there are no
agreements or other documents governing or affecting the occupancy or tenancy
of
any of the Leased Real Property by the Company. Complete and correct copies
of
any instruments evidencing Encumbrances, commitments for the issuance of title
insurance, title opinions, surveys and appraisals in Sellers’s or the Company’s
possession and any policies of title insurance currently in force and in the
possession of Sellers or the Company with respect to each such parcel of Leased
Real Property have heretofore been delivered by Sellers to Buyer.
-
11
-
(c) Neither
the whole nor any part of any real property leased, used or occupied by the
Company is subject to any pending suit for condemnation or other taking by
any
public authority, and, to the best knowledge of Sellers or the Company, no
such
condemnation or other taking is threatened or contemplated.
Section
4.11 Personal
Property.
(a) Schedule
4.11(A)
contains
a detailed list of all equipment, vehicles, furniture and other personal
property owned by the Company having an original cost of RMB100,000 or more.
The
Company has good and marketable title to all of its assets and properties free
and clear of all Encumbrances, except for Permitted Encumbrances.
(b) Schedule
4.11(B)
contains
a brief description of each lease or other agreement or right, whether written
or oral (including in each case the annual rental, the expiration date thereof
and a brief description of the property covered), under which the Company is
lessee of, or holds or operates, any equipment, vehicle or other tangible
personal property owned by a third Person, except for any such lease, agreement
or right that is terminable by the Company without penalty or payment on notice
of thirty (30) days or less, or which involves the payment by the Company of
rentals of less than RMB400,000 per year.
Section
4.12 Intellectual
Property; Software.
(a) Schedule
4.12
contains
a list and description (showing in each case any product, device, process,
service, business or publication covered thereby, the registered or other owner,
expiration date and number, if any) of all Copyrights, Patent Rights and
Trademarks owned by, licensed to or used by the Company.
(b) Schedule
4.12
contains
a list and description (showing in each case any owner, licensor or licensee)
of
all Software owned by, licensed
to or
used by the Company, except Software licensed to the Company that is available
in consumer retail stores and subject to “shrink-wrap” license
agreements.
(c) Schedule
4.12
contains
a list and description (showing in each case the parties thereto and the
material terms thereof) of all agreements, contracts, licenses, sublicenses,
assignments and indemnities which relate to (i) any Copyrights, Patent Rights
or
Trademarks listed in Schedule
4.12,
(ii)
any Trade Secrets owned by, licensed to or used by the Company or (iii) any
Software listed in Schedule
4.12.
(d) The
Company either: (i) owns the entire right, title and interest in and to the
Intellectual Property and Software included in its assets and properties, free
and clear of any Encumbrance; or (ii) has the perpetual, royalty-free right
to
use the same.
-
12
-
(e) (i)
All
registrations for Copyrights, Patent Rights and Trademarks identified in
Schedule
4.12
as being
owned by the Company are valid and in force, and all applications to register
any unregistered Copyrights, Patent Rights and Trademarks so identified are
pending and in good standing, all without challenge of any kind; (ii) the
Intellectual Property owned by the Company is valid and enforceable; (iii)
the
Company has the sole and exclusive right to bring actions for infringement
or
unauthorized use of the Intellectual Property and Software owned by the Company,
and to the knowledge of Sellers and the Company, there is no basis for any
such
action; (iv) the Company has taken all actions reasonably necessary to protect,
and where necessary register, the Copyrights, Trademarks, Software, Patent
Rights or Trade Secrets; and (v) the Company is not in breach of any agreement
affecting the Intellectual Property, and has not taken any action which would
impair or otherwise adversely affect its rights in the Intellectual Property.
Correct and complete copies of: (x) registrations for all registered Copyrights,
Patent Rights and Trademarks identified in Schedule
4.12
as being
owned by the Company; and (y) all pending applications to register unregistered
Copyrights, Patent Rights and Trademarks identified in Schedule
4.12
as being
owned by the Company (together with any subsequent correspondence, notices
or
filings relating to the foregoing) have heretofore been delivered by Sellers
to
Buyer.
(f) (i)
No
infringement of any Intellectual Property of any other Person has occurred
or
results in any way from the operations, activities, products, Software,
equipment, machinery or processes used in the Company’s business; (ii) no claim
of any infringement of any Intellectual Property of any other Person has been
made or asserted in respect of the operations of the Company’s business; (iii)
no claim of invalidity of any Copyright, Trademark or Patent Right, Software
or
Trade Secret has been made; (iv) no proceedings are pending or, to the knowledge
of the Company, threatened which challenge the validity, ownership or use of
any
Intellectual Property; and (v) neither Sellers nor the Company has had notice
of, or knowledge of any basis for, a claim against Sellers that the operations,
activities, products, software, equipment, machinery or processes of the Company
infringe any Intellectual Property of any other Person.
(g) (i)
The
Software included in the assets and properties of the Company is not subject
to
any transfer, assignment, reversion, site, equipment, or other limitations;
(ii)
the Company has maintained and protected the Software included in the assets
and
properties of the Company that it owns (the “Owned
Software”)
(including all source code and system specifications) with appropriate
proprietary notices, confidentiality and non-disclosure agreements and such
other measures as are necessary to protect the proprietary, trade secret or
confidential information contained therein; (iii) the Owned Software has been
registered or is eligible for protection and registration under applicable
copyright law and has not been forfeited to the public domain; (iv) the Company
has copies of all prior releases or separate versions of the Owned Software
so
that the same may be subject to registration in the United States Copyright
Office; (v) the Company has complete and exclusive right, title and interest
in
and to the Owned Software; (vi) the Company has developed the Owned Software
through its own efforts and for its own account without the aid or use of any
consultants, agents, independent contractors or Persons (other than Persons
that
are employees of the Company); (vii) the Owned Software does not infringe any
Intellectual Property of any other Person; (viii) any Owned Software includes
the source code, system documentation, statements of principles of operation
and
schematics, as well as any pertinent commentary, explanation, program (including
compilers), workbenches, tools, and higher level (or “proprietary”) language
used for the development, maintenance, implementation and use thereof, so that
a
trained computer programmer could develop, maintain, enhance, modify, support,
compile and use all releases or separate versions of the same that are currently
subject to maintenance obligations by the Company; (ix) there are no agreements
or arrangements in effect with respect to the marketing, distribution, licensing
or promotion of the Owned Software by any other Person; (x) the Owned Software
complies with all applicable Requirements of Laws relating to the export or
reexport of the same; and (xi) the Owned Software may be exported or reexported
to all countries without the necessity of any license, other than to those
countries specified as prohibited destinations pursuant to applicable
regulations of the United States Department of Commerce and/or the United States
State Department.
-
13
-
(h) All
employees, agents, consultants or contractors who have contributed to or
participated in the creation or development of any Intellectual Property or
Software on behalf of the Company or any predecessor in interest thereto either:
(i) is a party to a “work-for-hire” agreement under which the Company is deemed
to be the original owner/author of all property rights therein; or (ii) has
executed an assignment or an agreement to assign in favor of the Company (or
such predecessor in interest, as applicable) of all right, title and interest
in
such material.
Section
4.13 Accounts
Receivable.
All
accounts receivable of the Company have arisen from bona fide transactions
by
the Company in the ordinary course of business. All accounts receivable
reflected in the Balance Sheet are good and collectible in the ordinary course
of business at the aggregate recorded amounts thereof, net of any applicable
allowance for doubtful accounts reflected in the Balance Sheet.
Section
4.14 Reserved.
Section
4.15 Employee
Relations.
(a) Schedule
4.15(A)
contains: (i) a list of all key employees or commission salespersons of the
Company as of the Effective Date whose then current annual compensation was
in
excess of RMB100,000 and (ii) the then current annual compensation of, and
a
description of the fringe benefits (other than those generally available to
employees of the Company) provided by the Company to any such employees or
commission salespersons.
(b) The
Company is not involved in any labor dispute or, to the knowledge of the
Company, is any such dispute threatened. None of the Company’s employees is a
member of a union and the Company believes that its relations with its employees
are good.
(c)
(i) To
the best knowledge of Sellers and the Company, the Company is not involved
in
any transaction or other situation with any employee, officer, director or
Affiliate of the Company which may be generally characterized as a “conflict of
interest”, including, but not limited to, direct or indirect interests in the
business of competitors or customers of the Company and (ii) there are no
situations with respect to the Company which involved or involves (A) the use
of
any corporate funds for unlawful contributions, gifts, entertainment or other
unlawful expenses related to political activity, (B) the making of any direct
or
indirect unlawful payments to government officials or others from corporate
funds or the establishment or maintenance of any unlawful or unrecorded funds,
(C) the violation of any of the provisions of The Foreign Corrupt Practices
Act
of 1977, or any rules or regulations promulgated thereunder, (D) the receipt
of
any illegal discounts or rebates or any other violation of the antitrust laws
or
(E) any investigation by the U.S. Securities and Exchange Commission or any
other federal, foreign, state or local government agency or
authority.
(d) Since
the
Balance Sheet Date, the Company has not, directly or indirectly, purchased,
leased from others or otherwise acquired any material property or obtained
any
material services from, or sold, leased to others or otherwise disposed or
any
material property or furnished any material services to (except with respect
to
remuneration for services rendered as a director, officer or employee of the
Company), in the ordinary course of business or otherwise, (i) Sellers, (ii)
any
other Affiliate of the Company, (iii) any Person who is an officer or director
of the Company or (iv) any Associate of any person referred to in clause (i),
(ii) or (iii) above. The Company does not owe any amount in excess of RMB100,000
to, or have any contract with or commitment to, Sellers or any manager,
director, officer or employee of the Company (other than for compensation for
current services not yet due and payable and reimbursement of expenses arising
in the ordinary course of business) and none of such Persons owes any amount
in
excess of RMB100,000 to
the
Company. An “Associate”
of
any
Person means (i) a corporation or organization of which such Person is an
officer or partner or is, directly or indirectly, the beneficial owner of ten
percent (10%) or more of any class of equity securities, (ii) any trust or
other
estate in which such Person has a substantial beneficial interest or as to
which
such Person serves as trustee or in a similar fiduciary capacity and (iii)
any
relative or spouse of such Person, or any relative of such spouse, who has
the
same home as such Person or who is a director or officer of the person or any
of
its parents or subsidiaries.
-
14
-
(e) Neither
the Company nor any officer, employee or agent or other person acting on its
behalf has, directly or indirectly, given or agreed to give any gift or similar
benefit (other than with respect to bona fide payments for which adequate
consideration has been given) to any customer, governmental employee or other
person who is or may be in a position to help or hinder the business of the
Company (or assist the Company in connection with any actual or proposed
transaction) (i) which might subject the Company to any damage or penalty in
any
civil, criminal or governmental litigation or proceeding, (ii) which, if not
continued in the future, would have an adverse effect on the assets, business,
operations or prospects of the Company or which would subject the Company to
suit or penalty in any private or governmental litigation or proceeding, (iii)
for any of the purposes described in Section 162(c) of the Code, or (iv) for
establishment or maintenance of any concealed fund or concealed bank
account.
Section
4.16 Contracts.
(a) The
Company is not a party to or bound by:
(i) any
contract for the purchase, sale or lease of real property;
(ii) any
contract for the sale of goods or services which involved the payment of more
than RMB250,000 in fiscal year ended 2008, which the Company reasonably
anticipates will involve the payment of more than RMB250,000 in fiscal year
ending 2009 or which extends beyond fiscal year ending 2010;
(iii) any
contract for the purchase, licensing or development of software to be used
by
the Company;
(iv) any
consignment, distributor, dealer, manufacturers representative, sales agency,
advertising representative or advertising or public relations
contract;
(v) any
guarantee of the obligations of customers, officers, managers, directors,
employees, Affiliates or others;
(vi) any
agreement which provides for, or relates to, the incurrence by the Company
of
debt for borrowed money (including, without limitation, any interest rate or
foreign currency swap, cap, collar, hedge or insurance agreements, or options
or
forwards on such agreements, or other similar agreements for the purpose of
managing the interest rate and/or foreign exchange risk associated with its
financing);
(vii) any
contract not made in the ordinary course; or
(viii) any
other
contract, agreement, commitment, understanding or instrument which is material
to the Company.
-
15
-
(b) Each
of
the leases, contracts and other agreements listed in Schedules
4.10(B),
4.11(B),
4.12
and
4.16
(collectively, the “Company
Agreements”)
constitutes a valid and binding obligation of the parties thereto and is in
full
force and effect and (except for those Company Agreements which by their terms
will expire prior to the Closing Date or are otherwise terminated prior to
the
Closing Date in accordance with the provisions hereof) will continue in full
force and effect after the Closing, in each case without breaching the terms
thereof or resulting in the forfeiture or impairment of any rights thereunder
and without the consent, approval or act of, or the making of any filing with,
any other party. The Company has fulfilled and performed its obligations under
each of the Company Agreements, and the Company is not in, or alleged to be
in,
breach or default under, nor is there or is there alleged to be any basis for
termination of, any of the Company Agreements and no other party to any of
the
Company Agreements has breached or defaulted thereunder, and no event has
occurred and no condition or state of facts exists which, with the passage
of
time or the giving of notice or both, would constitute such a default or breach
by the Company or by any such other party. The Company is not currently
renegotiating any of the Company Agreements or paying liquidated damages in
lieu
of performance thereunder. None of the Company Agreements contains terms unduly
burdensome to the Company or is harmful to its business. Complete and correct
copies of each of the Company Agreements have heretofore been delivered to
Buyer
by Sellers.
Section
4.17 No
Violation, Litigation or Regulatory Action.
(a) the
assets of the Company and their uses comply with all applicable Requirements
of
Laws and Court Orders;
(b) the
Company has complied with all Requirements of Laws and Court Orders which are
applicable to its assets or business;
(c) there
are
no lawsuits, claims, suits, proceedings or investigations pending or, to the
best knowledge of Sellers or the Company, threatened against or affecting the
Company nor, to the best knowledge of Sellers or the Company, is there any
basis
for any of the same, and there are no lawsuits, suits or proceedings pending
in
which Sellers is the plaintiff or claimant;
(d) there
is
no action, suit or proceeding pending or, to the best knowledge of Sellers
or
the Company, threatened which questions the legality or propriety of the
transactions contemplated by this Agreement; and
(e) to
the
best knowledge of Sellers or the Company, no legislative or regulatory proposal
or other proposal for the change in any Requirements of Law or the
interpretation thereof has been adopted or is pending which could adversely
affect the Company.
Section
4.18 Environmental
Matters.
The
operations of the Company comply with all applicable Environmental
Laws.
Section
4.19 Insurance.
Schedule
4.19
sets
forth a list and brief description (including nature of coverage, limits,
deductibles, premiums and the loss experience for the most recent five years
with respect to each type of coverage) of all policies of insurance maintained,
owned or held by or for the benefit of the Company on the date hereof. Sellers
shall (and shall cause the Company to) keep or cause such insurance or
comparable insurance to be kept in full force and effect through the Closing
Date. Sellers has complied (or has caused the Company to comply) with each
of
such insurance policies and has not failed to give any notice or present any
claim thereunder in a due and timely manner. Sellers has delivered to Buyer
correct and complete copies of the most recent inspection reports, if any,
received from insurance underwriters as to the condition of the assets and
properties of the Company.
Section
4.20 Intentionally
Not Used.
Section
4.21 Bank
Accounts; Powers of Attorney; Minute Books.
True
and complete copies of the minute books of the Company have been delivered
to
Buyer. Such minute books contain true and complete records of all meetings
and
other corporate action taken by the Board of Directors and stockholders of
the
Company.
-
16
-
Section
4.22 No
Finder.
Neither
Sellers, the Company nor any Person acting on their
behalf
have
paid or
become obligated to pay any fee or commission to any broker, finder or
intermediary for or on account of the transactions contemplated by this
Agreement.
Section
4.23 Intentionally
Not Used.
Section
4.24 Disclosure.
None of
the representations or warranties of Sellers contained herein, none of the
information contained in the Schedules referred to in this Article
IV,
and
none of the other information or documents furnished to Buyer or any of its
representatives by Sellers or the Company or their representatives pursuant
to
the terms of this Agreement, is false or misleading in any material respect
or
omits to state a fact herein or therein necessary to make the statements herein
or therein not misleading in any material respect. There is no fact which
adversely affects or in the future is likely to adversely affect the Company
or
its business in any material respect which has not been set forth or referred
to
in this Agreement or the Schedules hereto.
ARTICLE
5
REPRESENTATIONS
AND WARRANTIES OF BUYER
As
an
inducement to Sellers to enter into this Agreement and to consummate the
transactions contemplated hereby, Buyer hereby represents and warrants to
Sellers and agrees as follows:
Section
5.1 Organization
of Buyer.
(a) R&G
is a
company duly organized, validly existing and in good standing under the laws
of
Hong Kong and has full corporate power and authority to own or lease and to
operate and use its properties and assets and to carry on its business as now
conducted.
(b) ZYTX
is a
company duly organized, validly existing and in good standing under the laws
of
The People’s Republic of China and has full corporate power and authority to own
or lease and to operate and use its properties and assets and to carry on its
business as now conducted.
Section
5.2 Authority
of Buyer.
(a) R&G
has full
power and authority to execute, deliver and perform this Agreement and all
of
the Buyer Ancillary Agreements. The execution, delivery and performance of
this
Agreement and the Buyer Ancillary Agreements by R&G
have
been duly authorized and approved by R&G’s
board
of directors and do not require any further authorization or consent of
R&G
or its
stockholders. This Agreement has been duly authorized, executed and delivered
by
R&G
and is
the legal, valid and binding agreement of R&G
enforceable in accordance with its terms, and each of the Buyer Ancillary
Agreements has been duly authorized by R&G
and upon
execution and delivery by R&G
will be
a legal, valid and binding obligation of R&G
enforceable in accordance with its terms.
(b) ZYTX
has
full power and authority to execute, deliver and perform this Agreement and
all
of the Buyer Ancillary Agreements. The execution, delivery and performance
of
this Agreement and the Buyer Ancillary Agreements by ZYTX have been duly
authorized and approved by ZYTX’s board of directors and do not require any
further authorization or consent of ZYTX or its stockholders. This Agreement
has
been duly authorized, executed and delivered by ZYTX and is the legal, valid
and
binding agreement of ZYTX enforceable in accordance with its terms, and each
of
the Buyer Ancillary Agreements has been duly authorized by ZYTX and upon
execution and delivery by ZYTX will be a legal, valid and binding obligation
of
ZYTX enforceable in accordance with its terms.
-
17
-
Section
5.3 Neither
the execution and delivery of this Agreement nor
any of
the Buyer Ancillary Agreements or the consummation of any of the transactions
contemplated hereby or thereby nor compliance with or fulfillment of the terms,
conditions and provisions hereof or thereof will:
(a) conflict
with, result in a breach of the terms, conditions or provisions of, or
constitute a default, an event of default or an event creating rights of
acceleration, termination or cancellation or a loss of rights under (1) the
Certificates
of
Incorporation or Charters
of
R&G
or ZYTX,
(2) any
material note, instrument, agreement, mortgage, lease, license, franchise,
permit or other authorization, right, restriction or obligation to which
either
R&G or ZYTX
is a
party or any of their
properties are
subject
or by which they
are
bound,
(3) any Court Order to which either
R&G or ZYTX
is a
party or by which it is bound or (4) any Requirements of Laws affecting
either
R&G or ZYTX;
or
(b) require
the approval, consent, authorization or act of, or the making by either
R&G or ZYTX
of any
declaration, filing or registration with, any Person.
ARTICLE
6
Intentionally
Not Used.
ARTICLE
7
ADDITIONAL
AGREEMENTS
Section
7.1 Covenant
Not to Compete or Solicit Business.
(a) In
furtherance of the sale of the Shares to Buyer hereunder and more effectively
to
protect the value and goodwill of the assets and business of the Company,
Sellers covenants and agrees that, for a period ending on the two (2) year
anniversary of the Closing Date, neither Sellers nor any of its Affiliates
will:
(i) directly
or indirectly (whether as principal, agent, independent contractor, partner
or
otherwise) own, manage, operate, control, participate in, perform services
for,
or otherwise carry on, a business similar to or competitive with the business
conducted by the Company on the date hereof anywhere in The People’s Republic of
China (it being understood by the parties hereto that the business prohibited
activities are not limited to any particular region because such business has
been conducted by the Company throughout The People’s Republic of China and the
prohibited activities may be engaged in effectively from any location in The
People’s Republic of China; or
(ii) induce
or
attempt to persuade any employee, agent or customer of the Company to terminate
such employment, agency or business relationship in order to enter into any
such
relationship on behalf of any other business organization in competition with
the business conducted by the Company on the date hereof;
(iii) provided,
that nothing set forth in this Section
7.1
shall
prohibit Sellers or its Affiliates from owning not in excess of five percent
(5%) in the aggregate of any class of capital stock of any corporation if such
stock is publicly traded and listed on any national or regional stock
exchange.
(b) In
addition, Sellers covenants and agrees that neither it nor any of its Affiliates
will divulge or make use of any trade secrets or other confidential information
of the Company other than to disclose such secrets and information to Buyer
or
its Affiliates.
-
18
-
(c) In
the
event Sellers or any Affiliate of Sellers violates any of its obligations under
this Section
7.1,
Buyer
or the Company may proceed against it in law or in equity for such damages
or
other relief as a court may deem appropriate. Sellers acknowledge
that a
violation of this Section
7.1
may
cause Buyer or the Company irreparable harm which may not be adequately
compensated for by money damages. Sellers therefore agrees that in the event
of
any actual or threatened violation of this Section
7.1,
Buyer
or the Company shall be entitled, in addition to other remedies that it may
have, to a temporary restraining order and to preliminary and final injunctive
relief against Sellers or such Affiliate of Sellers to prevent any violations
of
this Section
7.1,
without
the necessity of posting a bond. The prevailing party in any action commenced
under this Section
7.1
shall
also be entitled to receive reasonable attorneys’ fees and court
costs.
(d) It
is the
intent and understanding of each party hereto that if, in any action before
any
court or agency legally empowered to enforce this Section
7.1,
any
term, restriction, covenant or promise in this Section
7.1
is found
to be unreasonable and for that reason unenforceable, then such term,
restriction, covenant or promise shall be deemed modified to the extent
necessary to make it enforceable by such court or agency.
Section
7.2 Access
to Records after Closing.
For a
period of four (4) years after the Closing Date, Buyer and its representatives
shall have reasonable access to all of the books and records relating to the
Company which Sellers or any of its Affiliates may retain after the Closing
Date. Such access shall be afforded by Sellers and its Affiliates upon receipt
of reasonable advance notice and during normal business hours. Buyer shall
be
solely responsible for any costs and expenses incurred by it pursuant to this
Section
7.2.
If
Sellers or any of its Affiliates shall desire to dispose of any of such books
and records prior to the expiration of such six-year period, Sellers shall,
prior to such disposition, give Buyer a reasonable opportunity, at Buyer’s
expense, to segregate and remove such books and records as Buyer may
select.
Section
7.3 Confidential
Nature of Information.
Each
party agrees that it will treat in confidence all documents, materials and
other
information which it shall have obtained regarding the other party during the
course of the negotiations leading to the consummation of the transactions
contemplated hereby (whether obtained before or after the date of this
Agreement), the investigation provided for herein and the preparation of this
Agreement and other related documents, and, in the event the transactions
contemplated hereby shall not be consummated, each party will return to the
other party all copies of nonpublic documents and materials which have been
furnished in connection therewith. Such documents, materials and information
shall not be communicated to any third Person (other than, in the case of Buyer,
to its counsel, accountants, financial advisors or lenders, and in the case
of
Sellers, to its counsel, accountants or financial advisors). No Person shall
use
any confidential information in any manner whatsoever except solely for the
purpose of evaluating the proposed purchase and sale of the Shares or the
negotiation or enforcement of this Agreement or any agreement contemplated
hereby; provided that after the Closing Buyer and the Company may use or
disclose any confidential information related to the Company or its assets
or
business. The obligation of each party to treat such documents, materials and
other information in confidence shall not apply to any information which (i)
is
or becomes lawfully available to such party from a source other than the
furnishing party, (ii) is or becomes available to the public other than as
a
result of disclosure by such party or its agents, (iii) is required to be
disclosed under applicable law or judicial process, but only to the extent
it
must be disclosed, or (iv) such party reasonably deems necessary to disclose
to
obtain any of the consents or approvals contemplated hereby.
Section
7.4 No
Public Announcement.
Neither
Buyer nor Sellers shall (nor shall Sellers permit the Company to), without
the
approval of the other, make any press release or other public announcement
concerning the transactions contemplated by this Agreement, except as and to
the
extent that any such party shall be so obligated by law or the rules of any
stock exchange or quotation system, in which case the other party shall be
advised and the parties shall use their best efforts to cause a mutually
agreeable release or announcement to be issued; provided that the foregoing
shall not preclude communications or disclosures necessary to implement the
provisions of this Agreement or to comply with the accounting and U.S.
Securities and Exchange Commission disclosure obligations.
-
19
-
Section
7.5 Expenses.
Each
party hereto will pay all costs and expenses incident to its negotiation and
preparation of this Agreement and to its performance and compliance with all
agreements and conditions contained herein on its part to be performed or
complied with, including the fees, expenses and disbursements of its counsel
and
accountants. All costs and expenses, if any, incurred by the Company in
connection with this Agreement and the transactions contemplated hereby,
including the fees, expenses and disbursements of the Company’s counsel and
accountants shall be paid by Sellers.
Section
7.6 Further
Assurances.
From
time to time following the Closing, Sellers shall execute and deliver, or cause
to be executed and delivered, to the Company such other bills of sale, deeds,
endorsements, assignments and other instruments of conveyance and transfer
as
Buyer or the Company may reasonably request or as may be otherwise necessary
to
more effectively convey and transfer to, and vest in, the Company Buyer and
put
the Company in possession of, any part of the assets or properties of the
Company not in its possession on the Closing Date.
ARTICLE
8
CONDITIONS
PRECEDENT TO OBLIGATIONS OF PARTIES
Section
8.1 Conditions
to Buyer’s Obligations.
The
obligations of Buyer to purchase the Shares pursuant to this Agreement shall,
at
the option of Buyer, be subject to the satisfaction, on or prior to the Closing
Date, of the following conditions:
(a) Each
of
the representations and warranties of Sellers contained or referred to herein
shall be true and correct on the Closing Date as though made on the Closing
Date, except for changes therein specifically permitted by this Agreement or
resulting from any transaction expressly consented to in writing by Buyer and
there shall have been delivered to Buyer a certificate to such effect, dated
the
Closing Date, signed on behalf of Sellers, in addition to the other deliveries
specified in Section
3.4.
(b) The
parties shall have received all approvals and actions of or by all Governmental
Bodies which are necessary to consummate the transactions contemplated hereby,
which are required to be obtained prior to the Closing by applicable
Requirements of Laws.
(c) The
Company shall have received all required consents, in form and substance
reasonably satisfactory to Buyer, to the transactions contemplated hereby from
the other parties to all contracts, leases, agreements and permits to which
the
Company is a party or by which the Company or any of its assets or properties
is
affected.
Section
8.2 Conditions
to Sellers’
Obligations.
The
obligations of Sellers to sell the Shares pursuant to this Agreement shall,
at
the option of Sellers, be subject to the satisfaction, on or prior to the
Closing Date, of the following conditions:
(a) Each
of
the representations and warranties of R&G
contained or referred to in this Agreement shall be true and correct on the
Closing Date as though made on the Closing Date, except for changes therein
specifically permitted by this Agreement or resulting from any transaction
expressly consented to in writing by Sellers or any transaction contemplated
by
this Agreement; and there shall have been delivered to Sellers a certificate
to
such effect, dated the Closing Date and signed on behalf of R&G
by an
authorized officer of R&G,
in addition to the other deliveries specified in Section
3.3.
-
20
-
(b) Each
of
the representations and warranties of ZYTX contained or referred to in this
Agreement shall be true and correct on the Closing Date as though made on the
Closing Date, except for changes therein specifically permitted by this
Agreement or resulting from any transaction expressly consented to in writing
by
Sellers or any transaction contemplated by this Agreement; and there shall
have
been delivered to Sellers a certificate to such effect, dated the Closing Date
and signed on behalf of ZYTX by an authorized officer of ZYTX,
in
addition to the other deliveries specified in Section
3.3.
(c) The
parties shall have received all approvals and actions of or by all Governmental
Bodies necessary to consummate the transactions contemplated hereby, which
are
required to be obtained prior to the Closing by applicable Requirements of
Laws.
ARTICLE
9
[Reserved.]
ARTICLE
10
INDEMNIFICATION
Section
10.1 Indemnification
by Sellers.
(a) Sellers
agrees to indemnify and hold harmless Buyer from and against any and all Losses
and Expense incurred by Buyer up to the Purchase Price in connection with or
arising from:
(i) any
breach by Sellers of any of its covenants in this Agreement or in any Sellers
Ancillary Agreement;
(ii) any
failure of Sellers to perform any of its obligations in this Agreement or in
any
Sellers Ancillary Agreement; or
(iii) any
breach of any warranty or the inaccuracy of any representation of Sellers
contained or referred to in this Agreement or any certificate delivered by
or on
behalf of Sellers pursuant hereto;
provided
that, without limitation of Sellers’s indemnification obligations under clause
(i) or (ii) of this subsection (a), Sellers shall be required to indemnify
and
hold harmless under clause (iii) of this subsection with respect to Loss and
Expense incurred by Buyer as a result of inaccuracies only to the extent that
the aggregate amount of such Loss and Expense exceeds RMB100,000.
(b) The
indemnification provided for in this Section
10.1
shall
terminate two (2) years after the Closing Date (and no claims shall be made
by
any Buyer under this Section
10.1
thereafter), except that the indemnification by Sellers shall continue as
to:
(i) the
representations and warranties of Sellers set forth in Sections
4.1
and
4.2;
(ii) any
Loss
or Expense of which Buyer has notified Sellers in accordance with the
requirements of Section
10.3
on or
prior to the date such indemnification would otherwise terminate in accordance
with this Section
10.1,
as to
which the obligation of Sellers shall continue until the liability of Sellers
shall have been determined pursuant to this Article
X
and
Sellers shall have reimbursed Buyer for the full amount of such Loss and Expense
in accordance with this Article
X.
-
21
-
Section
10.2 Indemnification
by Buyer.
(a) Buyer
agrees to indemnify and hold harmless Sellers from and against any and all
Loss
and Expense incurred by Sellers up to the Purchase Price in connection with
or
arising from:
(i) any
breach by Buyer of any of its covenants or agreements in this Agreement or
in
any Buyer Ancillary Agreement;
(ii) any
failure by Buyer to perform any of its obligations in this Agreement or in
any
Buyer Ancillary Agreement; or
(iii) any
breach of any warranty or the inaccuracy of any representation of Buyer
contained or referred to in this Agreement or in any certificate delivered
by or
on behalf of Buyer pursuant hereto;
provided
that, without limitation of Buyer’s indemnification obligations under clauses
(i) and (ii) of this subsection (a), Buyer shall be required to indemnify and
hold harmless under clause (iii) of this subsection with respect to Loss and
Expense incurred by Sellers only to the extent that the aggregate amount of
such
Loss and Expense exceeds RMB100,000.
(b) The
indemnification provided for in this Section
10.2
shall
terminate two (2) years after the Closing Date (and no claims shall be made
by
Sellers under this Section
10.2
thereafter), except that the indemnification by Buyer shall continue as
to:
(i) the
representations and warranties of Buyer set forth in Sections
5.1
and
5.2;
and
(ii) any
Loss
or Expense of which Sellers has notified Buyer in accordance with the
requirements of Section
10.3
on or
prior to the date such indemnification would otherwise terminate in accordance
with this Section
10.2,
as to
which the obligation of Buyer shall continue until the liability of Buyer shall
have been determined pursuant to this Article
X,
and
Buyer shall have reimbursed Sellers for the full amount of such Loss and Expense
in accordance with this Article
X.
Section
10.3 Notice
of Claims.
(a) Any
party
seeking indemnification hereunder shall give to the party obligated to provide
indemnification to such Indemnified Party (the “Indemnitor”)
a
notice (a “Claim
Notice”)
describing in reasonable detail the facts giving rise to any claim for
indemnification hereunder and shall include in such Claim Notice (if then known)
the amount or the method of computation of the amount of such claim, and a
reference to the provision of this Agreement or any other agreement, document
or
instrument executed hereunder or in connection herewith upon which such claim
is
based; provided, that (i) a Claim Notice in respect of any action at law or
suit
in equity by or against a third Person as to which indemnification will be
sought shall be given promptly after the action or suit is commenced; and (ii)
failure to give such notice shall not relieve the Indemnitor of its obligations
hereunder except to the extent it shall have been prejudiced by such
failure.
(b) After
the
giving of any Claim Notice pursuant hereto, the amount of indemnification to
which an Indemnified Party shall be entitled under this Article
X
shall be
determined: (i) by the written agreement between the Indemnified Party and
the
Indemnitor; (ii) by a final judgment or decree of any court of competent
jurisdiction; or (iii) by any other means to which the Indemnified Party and
the
Indemnitor shall agree. The judgment or decree of a court shall be deemed final
when the time for appeal, if any, shall have expired and no appeal shall have
been taken or when all appeals taken shall have been finally determined. The
Indemnified Party shall have the burden of proof in establishing the amount
of
Loss and Expense suffered by it.
-
22
-
Section
10.4 Third
Person Claims.
(a) Subject
to Section
10.4(b),
the
Indemnified Party shall have the right to conduct and control, through counsel
of its choosing, the defense, compromise or settlement of any third Person
claim, action or suit against such Indemnified Party as to which indemnification
will be sought by any Indemnified Party from any Indemnitor hereunder, and
in
any such case the Indemnitor shall cooperate in connection therewith and shall
furnish such records, information and testimony and attend such conferences,
discovery proceedings, hearings, trials and appeals as may be reasonably
requested by the Indemnified Party in connection therewith; provided, that
(i)
the Indemnitor may participate, through counsel chosen by it and at its own
expense, in the defense of any such claim, action or suit as to which the
Indemnified Party has so elected to conduct and control the defense thereof;
and
(ii) the Indemnified Party shall not, without the written consent of the
Indemnitor (which written consent shall not be unreasonably withheld), pay,
compromise or settle any such claim, action or suit, except that no such consent
shall be required if, following a written request from the Indemnified Party,
the Indemnitor shall fail, within fourteen (14) calendar days after the making
of such request, to acknowledge and agree in writing that, if such claim, action
or suit shall be adversely determined, such Indemnitor has an obligation to
provide indemnification hereunder to such Indemnified Party. Notwithstanding
the
foregoing, the Indemnified Party shall have the right to pay, settle or
compromise any such claim, action or suit without such consent, provided that
in
such event the Indemnified Party shall waive any right to indemnity therefor
hereunder unless such consent is unreasonably withheld.
(b) If
any
third Person claim, action or suit against any Indemnified Party is solely
for
money damages or, where Sellers is the Indemnitor, will have no continuing
effect in any material respect on the Company or its business, assets or
operations, then the Indemnitor shall have the right to conduct and control,
through counsel of its choosing, the defense, compromise or settlement of any
such third Person claim, action or suit against such Indemnified Party as to
which indemnification will be sought by any Indemnified Party from any
Indemnitor hereunder if the Indemnitor has acknowledged and agreed in writing
that, if the same is adversely determined, the Indemnitor has an obligation
to
provide indemnification to the Indemnified Party in respect thereof, and in
any
such case the Indemnified Party shall cooperate in connection therewith and
shall furnish such records, information and testimony and attend such
conferences, discovery proceedings, hearings, trials and appeals as may be
reasonably requested by the Indemnitor in connection therewith; provided that
the Indemnified Party may participate, through counsel chosen by it and at
its
own expense, in the defense of any such claim, action or suit as to which the
Indemnitor has so elected to conduct and control the defense thereof.
Notwithstanding the foregoing, the Indemnified Party shall have the right to
pay, settle or compromise any such claim, action or suit, provided that in
such
event the Indemnified Party shall waive any right to indemnity therefor
hereunder unless the Indemnified Party shall have sought the consent of the
Indemnitor to such payment, settlement or compromise and such consent was
unreasonably withheld, in which event no claim for indemnity therefor hereunder
shall be waived.
ARTICLE
11
[Reserved.]
ARTICLE
12
GENERAL
PROVISIONS
Section
12.1 Survival
of Obligations.
All
representations, warranties, covenants, agreements and obligations contained
in
this Agreement shall survive the consummation of the transactions contemplated
by this Agreement; provided,
however,
that,
except as otherwise provided in Article
X,
the
representations and warranties contained in Articles
IV
and
V
(other
than the representations and warranties contained in Sections 4.1,
4.2,
4.3,
4.7,
4.10,
and
4.18
and the
covenants and agreements contained in Sections
7.2
and
7.4,
each of
which shall survive indefinitely) shall terminate on the two (2) year
anniversary of the Closing Date. Except as otherwise provided herein, no claim
shall be made for the breach of any representation or warranty contained in
Articles
IV
or
V
or under
any certificate delivered with respect thereto under this Agreement after the
date on which such representations and warranties terminate as set forth in
this.
-
23
-
Section
12.2 Notices.
All
notices or other communications required or permitted hereunder shall be in
writing and shall be deemed given or delivered (i) when delivered personally,
(ii) if transmitted by Fax when confirmation of transmission is received, or
(iii) if sent by registered or certified mail, return receipt requested, or
by
private courier when received; and shall be addressed as follows:
(a) If
to
either
R&G or ZYTX
(or to
the Company after the Effective Date), to:
|
Rise
and Grow Limited
|
|
|
▇▇▇▇/▇▇▇▇
▇▇, ▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
|
|
|
▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇
|
|
|
Attention:
|
▇▇.
▇▇▇▇▇ ▇▇
|
|
Facsimile
#:
|
86 – 10 – 8721
6018
|
|
with
a copy to:
|
|
|
K&L
Gates LLP
|
|
|
▇▇▇
▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
|
|
|
▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
|
|
|
Attention:
|
▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇, Esq.
|
|
Facsimile:
|
(▇▇▇)
▇▇▇-▇▇▇▇
|
(b) If
to
Sellers, at:
|
▇▇▇▇
▇▇▇▇
|
|
|
▇-▇-▇▇▇
▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇
▇▇▇▇ District
|
|
|
Beijing,
the PRC 102208
|
|
|
Attention:
|
▇▇▇▇
▇▇▇▇
|
|
Telecopy
#:
|
[ ]
|
|
Li
Zhong
|
|
|
▇-▇-▇▇▇
▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇
▇▇▇▇ District
|
|
|
Beijing,
the PRC 102208
|
|
|
Attention:
|
Li
Zhong
|
|
Telecopy
#:
|
[ ]
|
or
to
such other address as such party may indicate by a notice delivered to the
other
party hereto.
Section
12.3 Successors
and Assigns.
(a) Either
party may assign any of its rights hereunder, but no such assignment shall
relieve it of its obligations hereunder.
-
24
-
(b) This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their successors and permitted assigns. The successors and permitted assigns
hereunder shall include without limitation, in the case of Buyer, any permitted
assignee as well as the successors in interest to such permitted assignee
(whether by merger, liquidation (including successive mergers or liquidations)
or otherwise). Nothing in this Agreement, expressed or implied, is intended
or
shall be construed to confer upon any Person other than the parties and
successors and assigns permitted by this Section
12.3
any
right, remedy or claim under or by reason of this Agreement.
Section
12.4 Entire
Agreement; Amendments.
This
Agreement and the Exhibits and Schedules referred to herein and the documents
delivered pursuant hereto contain the entire understanding of the parties hereto
with regard to the subject matter contained herein or therein, and supersede
all
prior agreements, understandings or letters of intent between or among any
of
the parties hereto. This Agreement shall not be amended, modified or
supplemented except by a written instrument signed by an authorized
representative of each of the parties hereto.
Section
12.5 Waivers.
Any
term or provision of this
Agreement may be waived, or the time for its performance may be extended, by
the
party or parties entitled to the benefit thereof. Any such waiver shall be
validly and sufficiently given for the purposes of this Agreement if, as to
any
party, it is in writing signed by an authorized representative of such party.
The failure of any party hereto to enforce at any time any provision of this
Agreement shall not be construed to be a waiver of such provision, nor in any
way to affect the validity of this Agreement or any part hereof or the right
of
any party thereafter to enforce each and every such provision. No waiver of
any
breach of this Agreement shall be held to constitute a waiver of any other
or
subsequent breach.
Section
12.6 Partial
Invalidity.
Wherever possible, each provision hereof shall be interpreted in such manner
as
to be effective and valid under applicable law, but in case any one or more
of
the provisions contained herein shall, for any reason, be held to be invalid,
illegal or unenforceable in any respect, such provision shall be ineffective
to
the extent, but only to the extent, of such invalidity, illegality or
unenforceability without invalidating the remainder of such provision or
provisions or any other provisions hereof, unless such a construction would
be
unreasonable.
Section
12.7 Execution
in Counterparts.
This
Agreement may be executed in two (2) or more counterparts, each of which shall
be considered an original instrument, but all of which shall be considered
one
and the same agreement, and shall become binding when one or more counterparts
have been signed by each of the parties hereto and delivered to each of Sellers
and Buyer.
Section
12.8 Governing
Law.
This
Agreement shall be governed by and construed in accordance with the internal
laws (as opposed to the conflicts of law provisions) of Hong Kong.
-
25
-
IN
WITNESS WHEREOF,
the
parties hereto have caused this Stock Purchase Agreement to be executed the
day
and year first above written.
| BUYER: | |||
| RISE AND GROW LIMITED | |||
|
By:
|
/s/
Junjun
XU
|
||
|
Name:
|
Junjun
XU
|
||
|
Title:
|
Chief
Executive
Officer
|
||
|
(Witness)
|
|||
|
/s/
▇▇▇▇▇▇▇ ▇▇▇▇
|
|||
|
Name: ▇▇▇▇▇▇▇
▇▇▇▇
|
|||
|
ZYTX
TECHNOLOGY CO., LTD.
|
|||
|
By:
|
/s/
Junjun
XU
|
||
|
Name:
|
Junjun
XU
|
||
|
Title:
|
Chief
Executive
Officer
|
||
|
(Witness)
|
|||
|
/s/
▇▇▇▇▇▇▇ ▇▇▇▇
|
|||
|
Name: ▇▇▇▇▇▇▇
▇▇▇▇
|
|||
-
26
-
|
SELLERS:
|
||
|
By: /s/
▇▇▇▇
▇▇▇▇
|
||
|
Name: ▇▇▇▇
▇▇▇▇
|
||
|
By: /s/
Li
Zhong
|
||
|
Name: Li
Zhong
|
-
27
-