Document:

exv10w1

 

Exhibit 10.1

CONFIDENTIAL

July 14, 2006

Douglas D. Burkett, Ph.D.

Chairman, Chief Executive Officer and President

ZILA, Inc.

5227 North 7th Street

Phoenix, AZ 85014-2800

			
	Re:   	 	Engagement of Roth Capital Partners, LLC

Dear Doug:

     Roth Capital Partners, LLC (“we” or “ROTH”) is pleased to act as the exclusive financial
advisor and placement agent for ZILA, Inc. (“you” or the “Company”) in connection with a proposed
Offering (defined below) and Placement (defined below). The terms of the engagement are set forth
in this letter (the “Agreement”).

     1. The Offering.

     (a) We understand that the Company currently seeks to raise approximately $55 million through
a private placement of equity or equity-linked securities with institutional investors (the
“Offering”) and a private placement of senior and/or subordinated debt securities (the
“Placement”). This Agreement governs the terms of ROTH’s engagement with respect to the Offering
and Placement. The actual terms of the Offering and Placement will depend on market conditions and
will be subject to negotiation between the Company, ROTH and prospective investors.

     (b) We will conduct the Offering and Placement on a “best efforts” basis and cannot guarantee
that we will be able to raise new capital on terms acceptable to you.

     (c) This engagement is exclusive. As a result, during the term of our engagement, you agree
not to use any other investment banking firm or other party to raise capital (debt or equity) for
you. You also agree to refer any inquiries regarding a potential financing of the Company to ROTH
on the day that such inquiry is received by you. In the event that the Company issues equity or
debt securities during the term of this engagement, regardless of the investor, the Company shall
pay ROTH in accordance with the fee provisions of Paragraph 2.

     2. Placement Fees and Expenses.

     (a) Concurrent with and as a condition to closing the Offering, the Company will pay ROTH a
cash placement fee equal to six percent (6%) of the gross proceeds received from the sale of
securities in the Offering (the “Offering Fee”).

 

 

Douglas D. Burkett, Ph.D.

ZILA, Inc.

Page 2

     (b) Concurrent with and as a condition to closing the Placement, the Company will pay ROTH a
cash placement fee equal to two percent (2%) of the aggregate principal amount of the debt
securities issued in such Placement or committed as part of such Placement (the “Placement Fee”).
Debt securities, for the purposes of this agreement, shall include, but not be limited to, senior
and subordinated notes, term debt and revolving lines of credit.

     (c) In addition, the Company will reimburse ROTH, upon written request, for its documented
out-of-pocket expenses, including the reasonable fees and disbursements of ROTH’s legal counsel.

     (d) Furthermore, upon the closing of the Offering, the Company shall issue to ROTH warrants
(“Agent Warrants”) for the purchase of shares equal in number to six percent (6%) of the shares of
common stock of the Company purchased by investors through the Offering; provided however, that
ROTH will not be entitled to Agent Warrants related to the future issuance of shares of common
stock of the Company upon the exercise of any warrants issued to the investors in the Offering.
The Agent Warrants will be exercisable into common shares of the Company, have a strike price equal
to 120% of the price per share paid by investors in the Offering, will permit cashless exercise at
all times and will have a term of five years. If the Company issues warrants to the investors in
the Offering, the terms of the Agent Warrants shall be identical to the investor warrants, except
to the extent that the aforementioned specifically addressed terms governing the Agent Warrants
should differ from the terms of the investor warrants (in which case the specifically addressed
terms above shall govern for purposes of the Agent Warrants). The shares issuable upon exercise of
the Warrants will be entitled to the same registration rights as those granted to the investors in
connection with the Offering. To that end, you agree that ROTH will be afforded the
indemnification protections granted to the investors as part of the agreement governing the
registration of the investor securities sold in the Offering, as a third party beneficiary to such
provisions, all of which such provisions are hereby incorporated in full in this letter for ROTH’s
benefit in addition to the indemnification provisions attached to this letter.

     3. Term of Engagement; Other Fees.

     (a) The term of this engagement will be the earlier of the completion of both the Offering and
Placement, or three months; however, either party may terminate this Agreement at any time upon 10
days written notice to the other party. Furthermore, this Agreement may be extended upon the
written consent of both parties. Upon termination, ROTH will be entitled to the reimbursement of
all expenses incurred through the date of termination pursuant to Paragraph 2(c).

     (b) If the Offering and/or Placement is not consummated during the term of this engagement,
for reasons other than the termination of this Agreement by ROTH, and during the six months
following termination or expiration, the Company completes a financing transaction (other than
through a firm underwritten public offering, of which neither a shelf take-down or equity-line
transaction will qualify) involving the issuance of equity or debt securities with any investor or
party with whom conversations regarding a potential financing occurred during the term of this
Agreement, then the Company agrees to pay ROTH upon the closing of such

 

 

Douglas D. Burkett, Ph.D.

ZILA, Inc.

Page 3

transaction the cash placement fee that would otherwise have been due ROTH pursuant to
Paragraphs 2(a) and 2(b) above had such transaction occurred during the term of this engagement.

     (c) If the Company abandons the Offering and/or Placement to pursue a merger, acquisition,
joint venture or sale of the Company or all or substantially all of its assets, and during the
six-month period following the termination or expiration of this Agreement the Company completes
such a transaction, then the Company agrees to pay ROTH upon the closing of such transaction a cash
fee equal to $250,000. Such amount shall be in addition to the expense reimbursement due ROTH
pursuant to Paragraph 2(c). Should the Company use ROTH as an advisor for such transaction, this
fee above will be applied to the advisory fee with respect to such transaction which will be
separately negotiated between the parties. In such event, ROTH and the Company will enter into a
new engagement letter covering the terms related to the new transaction.

     (d) This Paragraph 3 will survive the termination or expiration of this Agreement,
notwithstanding anything herein to the contrary.

     4. Offering Materials; Representations and Warranties.

     (a) You hereby authorize ROTH to transmit to prospective purchasers of the securities
materials prepared by the Company with such exhibits and supplements as may from time to time be
required or appropriate or, alternatively, copies of the Company’s most recent filings with the
Securities and Exchange Commission, together with summary materials prepared by the Company, if we
deem them appropriate (as the case may be, the “Offering Materials”). The Company represents and
warrants that the Offering Materials (i) will be prepared by the management of the Company and
reviewed and approved by its Board of Directors; and (ii) will not contain any untrue statement of
a material fact or omit to state a material fact required to be stated therein or necessary to make
the statements therein or previously made, in light of the circumstances under which they were
made, not misleading. The Company will advise ROTH immediately of the occurrence of any event or
any other change known to the Company which results in the Offering Materials containing an untrue
statement of a material fact or omitting to state a material fact required to be stated therein or
necessary to make the statements therein or previously made, in light of the circumstances under
which they were made, not misleading. In addition, the Company will notify ROTH of any material,
non-public information included in any proposed Offering Materials.

     (b) You agree that, in connection with the Offering and the Placement, as the case may be, you
will enter into subscription, registration rights and other reasonable customary agreements, and
that your counsel will supply an opinion letter at the closing of the Offering and the Placement,
as the case may be, to Roth that is identical to that to be rendered to the investors in the
Offering or the Placement, as the case may be, in such form as is acceptable to, and addressed to,
us and such Investors.

 

 

Douglas D. Burkett, Ph.D.

ZILA, Inc.

Page 4

     (c) You further agree that ROTH may rely upon, and is a third party beneficiary of, the
representations and warranties, and applicable covenants, set forth in any agreements with
investors in the Offering and the Placement.

     5. Diligence; Information. In connection with ROTH’s activities on your behalf, you will
furnish ROTH with all financial and other information regarding the Company that ROTH reasonably
believes appropriate to its assignment (all such information so furnished by the Company, whether
furnished before or after the date of this Agreement, being referred to herein as the
“Information”). The Company will provide ROTH with access to the officers, directors, employees,
independent accountants, legal counsel and other advisors and consultants of the Company. You
recognize and agree that although ROTH will conduct a due diligence investigation of the Company,
ROTH (i) will use and rely primarily on the Information and information available from generally
recognized public sources in performing the services contemplated by this Agreement, (ii) does not
assume responsibility for the accuracy of the Information or such other information, and (iii) will
not make an appraisal of any assets or liabilities owned or controlled by the Company or its market
competitors.

     6. Indemnification, Contribution, and Confidentiality. The Company agrees to indemnify ROTH
and its controlling persons, representatives and agents in accordance with the indemnification
provisions set forth in Appendix I, and the parties agree to the confidentiality provisions of
Appendix II, all of which are incorporated herein by this reference. These provisions will apply
regardless of whether the proposed Offering or Placement is consummated and shall survive the
termination or expiration of this Agreement.

     7. Other ROTH Engagements. Nothing in this Agreement shall be construed to limit the ability
of ROTH or its affiliates to pursue, investigate, analyze, invest in, or engage in investment
banking, financial advisory or any other business relationship with entities other than the
Company, notwithstanding that such entities may be engaged in a business which is similar to or
competitive with the business of the Company, and notwithstanding that such entities may have
actual or potential operations, products, services, plans, ideas, customers or supplies similar or
identical to the Company’s, or may have been identified by the Company as potential merger or
acquisition targets or potential candidates for some other business combination, cooperation or
relationship. The Company expressly acknowledges and agrees that it does not claim any proprietary
interest in the identity of any other entity in its industry or otherwise, and that the identity of
any such entity is not confidential information.

     8. Other Finders and Placement Agents. You represent and warrant that there is no other
person or entity that is entitled to a finder’s fee or any type of brokerage commission in
connection with the transactions contemplated by this Agreement as a result of any agreement or
understanding with the Company.

     9. Governing Law. This Agreement shall be governed by and construed in accordance with the
laws of the state of California applicable to contracts executed and to be wholly performed therein
without giving effect to its conflicts of laws principles or rules. The Company and ROTH agree
that any dispute concerning this Agreement shall be resolved through

 

 

Douglas D. Burkett, Ph.D.

ZILA, Inc.

Page 5

binding arbitration before the NASD pursuant to its arbitration rules. Arbitration will be
venued in Los Angeles County.

     10. Announcement of Offering or Placement. If the Offering or Placement is consummated, ROTH
may, at its expense, place an announcement of the general terms of such Offering or Placement and
the respective parties to the transaction in such newspapers and periodicals as ROTH may desire.

     11. Advice to the Board. The Company acknowledges that any advice given by us to you is
solely for benefit and use of the Board of Directors of the Company and may not be used,
reproduced, disseminated, quoted or referred to, without our prior written consent.

     12. Entire Agreement. This Agreement constitutes the entire agreement between the parties and
supersedes and cancels any and all prior or contemporaneous arrangements, understandings and
agreements, written or oral, between them relating to the subject matter hereof.

     13. Severability. Any provision of this Agreement that is held to be invalid, illegal or
unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of
such invalidity, illegality or unenforceability, without affecting in any way the remaining
provisions hereof in such jurisdiction or rendering that or any other provision of this Agreement
invalid, illegal or unenforceable in any other jurisdiction.

     14. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of
the parties hereto, and to their respective successors and assigns, except that neither party may
assign or delegate its obligations hereunder without the prior written consent of the other party.
Any assignment in contravention of this provision is void.

 

 

Douglas D. Burkett, Ph.D.

ZILA, Inc.

Page 6

     We look forward to working with you toward the successful conclusion of the Offering and in
supporting the Company in meeting its long-term objectives.

Very truly yours,

	 	 	 	 	 
	ROTH CAPITAL PARTNERS, LLC	 	 
	 
	 	 	 	 
	By:

	 	/s/ Lisa Walters-Hoffert	 	 
	 

	 	 	 	 
	 

	 	Lisa Walters-Hoffert	 	 
	 

	 	Managing Director	 	 
	 
	 	 	 	 
	Confirmed and accepted as of

this 14th day of July, 2006:	 	 
	 
	 	 	 	 
	By:

	 	/s/ Douglas D. Burkett, Ph.D.	 	 
	 

	 	 	 	 
	 

	 	Douglas D. Burkett, Ph.D.

Chairman, Chief Executive Officer and President	 	 

 

 

Douglas D. Burkett, Ph.D.

ZILA, Inc.

Page 7

APPENDIX I

INDEMNIFICATION AND CONTRIBUTION

     The Company agrees to indemnify and hold harmless ROTH and its affiliates (as defined in Rule
405 under the Securities Act of 1933, as amended (the “Act”)) and their respective directors,
officers, employees, agents and controlling persons (ROTH and each such person being an
“Indemnified Party”) from and against all losses, claims, damages and liabilities (or actions,
including shareholder actions, in respect thereof), joint or several, to which such Indemnified
Party may become subject under any applicable federal or state law, or otherwise, which are related
to or result from the performance by ROTH of the services contemplated by or the engagement of ROTH
pursuant to, this Agreement and will promptly reimburse any Indemnified Party for all reasonable
expenses (including reasonable counsel fees and expenses) as they are incurred in connection with
the investigation of, preparation for or defense arising from any threatened or pending claim,
whether or not such Indemnified Party is a party and whether or not such claim, action or
proceeding is initiated or brought by the Company. The Company will not be liable to any
Indemnified Party under the foregoing indemnification and reimbursement provisions, (i) for any
settlement by an Indemnified Party effected without its prior written consent (not to be
unreasonably withheld); or (ii) to the extent that any loss, claim, damage or liability is found in
a final, non-appealable judgment by a court of competent jurisdiction to have resulted primarily
from ROTH’s willful misconduct or gross negligence. The Company also agrees that no Indemnified
Party shall have any liability (whether direct or indirect, in contract or tort or otherwise) to
the Company or its security holders or creditors related to or arising out of the engagement of
ROTH pursuant to, or the performance by ROTH of the services contemplated by, this Agreement except
to the extent that any loss, claim, damage or liability is found in a final, non-appealable
judgment by a court of competent jurisdiction to have resulted primarily from ROTH’s willful
misconduct or gross negligence.

     Promptly after receipt by an Indemnified Party of notice of any intention or threat to
commence an action, suit or proceeding or notice of the commencement of any action, suit or
proceeding, such Indemnified Party will, if a claim in respect thereof is to be made against the
Company pursuant hereto, promptly notify the Company in writing of the same. In case any such
action is brought against any Indemnified Party and such Indemnified Party notifies the Company of
the commencement thereof, the Company may elect to assume the defense thereof, with counsel
reasonably satisfactory to such Indemnified Party, and an Indemnified Party may employ counsel to
participate in the defense of any such action provided, that the employment of such counsel shall
be at the Indemnified Party’s own expense, unless (i) the employment of such counsel has been
authorized in writing by the Company, (ii) the Indemnified Party has reasonably concluded (based
upon advice of counsel to the Indemnified Party) that there may be legal defenses available to it
or other Indemnified Parties that are different from or in addition to those available to the
Company, or that a conflict or potential conflict exists (based upon advice of counsel to the
Indemnified Party) between the Indemnified Party and the Company that makes it impossible or
inadvisable for counsel to the Indemnifying Party to conduct the defense of both the Company and
the Indemnified Party (in which case the Company will not have the right to direct the defense of
such action on behalf of the Indemnified Party), or (iii) the Company has

 

 

Douglas D. Burkett, Ph.D.

ZILA, Inc.

Page 8

not in fact employed counsel reasonably satisfactory to the Indemnified Party to assume the
defense of such action within a reasonable time after receiving notice of the action, suit or
proceeding, in each of which cases the reasonable fees, disbursements and other charges of such
counsel will be at the expense of the Company; provided, further, that in no event shall the
Company be required to pay fees and expenses for more than one firm of attorneys representing
Indemnified Parties unless the defense of one Indemnified Party is unique or separate from that of
another Indemnified Party subject to the same claim or action. Any failure or delay by an
Indemnified Party to give the notice referred to in this paragraph shall not affect such
Indemnified Party’s right to be indemnified hereunder, except to the extent that such failure or
delay causes actual harm to the Company, or prejudices its ability to defend such action, suit or
proceeding on behalf of such Indemnified Party.

     If the indemnification provided for in this Agreement is for any reason held unenforceable by
an Indemnified Party, the Company agrees to contribute to the losses, claims, damages and
liabilities for which such indemnification is held unenforceable (i) in such proportion as is
appropriate to reflect the relative benefits to the Company, on the one hand, and ROTH on the other
hand, of the Offering or Placement, as the case may be, as contemplated whether or not the Offering
or Placement, as the case may be, is consummated or, (ii) if (but only if) the allocation provided
for in clause (i) is for any reason unenforceable, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) but also the relative fault of the
Company, on the one hand and ROTH, on the other hand, as well as any other relevant equitable
considerations. The Company agrees that for the purposes of this paragraph the relative benefits
to the Company and ROTH of the Offering or Placement, as the case may be, as contemplated shall be
deemed to be in the same proportion that the total value received or contemplated to be received by
the Company or its shareholders, as the case may be, as a result of or in connection with the
Offering or Placement, as the case may be, bear to the fees paid or to be paid to ROTH under this
Agreement. Notwithstanding the foregoing, the Company expressly agrees that ROTH shall not be
required to contribute any amount in excess of the amount by which fees paid ROTH hereunder
(excluding reimbursable expenses), exceeds the amount of any damages which ROTH has otherwise been
required to pay.

     The Company agrees that without ROTH’s prior written consent, which shall not be unreasonably
withheld, it will not settle, compromise or consent to the entry of any judgment in any pending or
threatened claim, action or proceeding in respect of which indemnification could be sought under
the indemnification provisions of this Agreement (in which ROTH or any other Indemnified Party is
an actual or potential party to such claim, action or proceeding), unless such settlement,
compromise or consent includes an unconditional release of each Indemnified Party from all
liability arising out of such claim, action or proceeding.

     In the event that an Indemnified Party is requested or required to appear as a witness in any
action brought by or on behalf of or against the Company in which such Indemnified Party is not
named as a defendant, the Company agrees to promptly reimburse ROTH on a monthly basis for all
expenses incurred by it in connection with such Indemnified Party’s appearing and preparing to
appear as such a witness, including, without limitation, the reasonable fees and disbursements of
its legal counsel.

 

 

Douglas D. Burkett, Ph.D.

ZILA, Inc.

Page 9

     If multiple claims are brought with respect to at least one of which indemnification is
permitted under applicable law and provided for under this Agreement, The Company agrees that any
judgment or arbitration award shall be conclusively deemed to be based on claims as to which
indemnification is permitted and provided for, except to the extent the judgment or arbitration
award expressly states that it, or any portion thereof, is based solely on a claim as to which
indemnification is not available.

     The provisions of this Appendix I shall survive any termination, expiration or completion of
the engagement that is the subject of this Agreement.

 

 

Douglas D. Burkett, Ph.D.

ZILA, Inc.

Page 10

APPENDIX II

INFORMATION TO BE SUPPLIED; CONFIDENTIALITY

     In connection with ROTH’s activities on behalf of the Company, the Company will furnish ROTH
with all financial and other information regarding the Company that ROTH reasonably believes
appropriate to its assignment (all such information so furnished by the Company, whether furnished
before or after the date of this Agreement, being referred to herein as the “Information”). The
Company will provide ROTH with access to the officers, directors, employees, independent
accountants, legal counsel and other advisors and consultants of the Company. The Company
recognizes and agrees that ROTH (i) will use and rely primarily on the Information and information
available from generally recognized public sources in performing the services contemplated by this
Agreement, (ii) does not assume responsibility for the accuracy of the Information or such other
information, and (iii) will not make an appraisal of any assets or liabilities owned or controlled
by the Company or its market competitors.

     ROTH will maintain the confidentiality of the Information and, unless and until such
information shall have been made publicly available by the Company or by others without breach of a
confidentiality agreement, shall disclose the Information only as authorized by the Company or as
required by law or by order of a governmental authority or court of competent jurisdiction. In the
event that ROTH is legally required to make disclosure of any of the Information, ROTH will give
notice to the Company prior to such disclosure, to the extent that ROTH can practically do so.

     The foregoing paragraph shall not apply to information that:

     (i) at the time of disclosure by the Company is, or thereafter becomes, generally available to
the public or within the industries in which the Company or ROTH or its affiliates conduct
business, other than as a direct result of a breach by ROTH of its obligations under this
Agreement;

     (ii) prior to or at the time of disclosure by the Company, was already in the possession of,
or conceived by, ROTH or any of its affiliates, or could have been developed by them from
information then in their possession, by the application of other information or techniques in
their possession, generally available to the public, or available to ROTH or its affiliates other
than from the Company;

     (iii) at the time of disclosure by the Company or thereafter, is obtained by ROTH or any of
its affiliates from a third party who ROTH reasonably believes to be in possession of or disclosing
the information not in violation of any contractual, legal or fiduciary obligation to the Company
with respect to that information; or

     (iv) is independently developed by ROTH or its affiliates.Unassociated Document

EXHIBIT
    10.4

     

     

    Dated
      the 26th
      day of February 2007

    

    

     

    Zhou
      Bizheng

     

    and

     

    SHANGHAI
      SHIHENG ARCHITECTURE CONSULTING CO., LTD

     

     

     

    
      
        

      

    

    AGREEMENT
      FOR SALE AND PURCHASE OF 

    ENTIRE
      INTEREST IN THE REGISTERED CAPTIAL OF SHANGHAI 

    JIUMENG
      INFORMATION TECHNOLOGY CO., LTD. 

    
      
        

      

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    THIS
      AGREEMENT
      is
      entered into on the 26th
      day of
      February 2007 in Shanghai.

    

    BETWEEN:

    

    
      	(1)  	
              Zhou
                Bizheng,
                (Holder of PRC ID Number 430104196903032512) of Room 1903, Building
                7, No.
                9, Rong Cheng Road, Shanghai, People’s Republic of China, (the
                “Vendor”);
                and 

            

    

    

    
      	(2)  	
              Shanghai
                Shiheng Architecture Consulting Co., Ltd.,
                a
                limited liability company incorporated in Shanghai with its registered
                office at No. 119, Jin Xi Road, Jin Ze Town, Qing Pu District, Shanghai,
                People’s Republic of China and legal representative of Liu Weiguo (the
                “Purchaser”).

            

    

    

    WHEREAS:

    

    	1.         
              	
            As
              at the date of this Agreement, Shanghai Jiumeng Information Technology
              Co., Ltd., originally named “Shanghai Jiumeng Information Service Co.,
              Ltd”, (hereinafter “Shanghai
              Jiumeng”),
              is a limited liability company incorporated in Jingan district, Shanghai
              on April 22, 2004, with registered capital of RMB5,500,000 fully paid.
              

          

    

    	2.         
              	
            As
              at the date of this Agreement, the Vendor has full rights, interests,
              and
              control in the 100% interest in Shanghai Jiumeng.
              

          

    

    	3.         
              	
            As
              at the date of this Agreement, Shanghai Huaqing Corporation Development
              Ltd. (hereinafter “Shanghai
              Huaqing”),
              is a limited liability company incorporated in Jingan district, Shanghai
              on July 10, 2000, with registered capital of RMB20,000,000 fully paid.
              

          

    

    	4.         
              	
            As
              at the date of this Agreement, Shanghai Jiumeng owns 51% equity interest
              in Shanghai Huaqing and Shanghai Jiumeng has full rights, interests
              and
              control in the 51% interest in Shanghai Huaqing.
              

          

    

    	5.         
              	
            Shanghai
              Jiumeng has its office at Room 306, Yong Teng Plaza, No. 1065, Wu Zhong
              Road, Shanghai. Shanghai Huaqing has its office at 1st
              floor, No. 708, Chang Ping Road, Shanghai.

          

    

    	6.         
              	
            The
              Vendor has agreed to sell and the Purchaser has agreed to purchase
              the
              entire interest in Shanghai Jiumeng and the 51% equity interest in
              Shanghai Huaqing that Shanghai Jiumeng duly and legally owns ( the
              “Sale
              Interests”).

          

    

    

    THEREFORE,
      IT IS HEREBY AGREED BY THE VENDOR AND THE PURCHASER AS
      FOLLOWS:

    

    	1.          
             	
            SALE
              AND PURCHASE OF THE SALE
              INTERESTS

          

    

    	1.1        
             	
            As
              at the date of this Agreement, the registered capital of Shanghai Jiumeng
              and Shanghai Huaqing is Rmb5,500,000 and Rmb20,000,000 respectively.
              Both
              companies are validly existing and duly incorporated. The Vendor owns
              100%
              equity interest in the registered capital of Shanghai Jiumeng, and
              Shanghai Jiumeng owns 51% equity interest in the registered capital
              of
              Shanghai Huaqing, being the shareholder of Shanghai Huaqing legally.
              

          

    

    
      
         

      

      
        2

        
          

        

      

      
         

      

       

    

    
      	
              1.2   

            	
              The
                Vendor agrees to sell and the Purchaser agrees to buy the Sale Interests.
                Upon completion of the transaction, the Purchaser shall assume all
                the
                rights and liabilities in Shanghai Jiumeng as the beneficial owner.
                

            

    

    

    
      	1.3   	
              Within
                five business days upon execution of the Agreement, the Vendor shall
                present the legal documents to the Purchaser proving its beneficial
                ownership in Shanghai Jiumeng and Shanghai Jiumeng’s beneficial ownership
                in Shanghai Huaqing hereof. 

            

    

    

    	2.         
               	
            CONSIDERATION

          

    

    
      	2.1   	
              The
                consideration for the sale and purchase of the Sale Interests shall
                be
                Rmb12,00,000 cash net. The Purchaser shall bear all the taxes related
                to
                the transaction. 

            

    

    

    
      	2.2   	
              The
                consideration shall be satisfied by the Purchaser crediting Rmb12,000,000
                in full amount to the account designated by the Vendor not later
                than June
                15, 2007. 

            

    

     

    
      	3              
              	
              REPRESENTATIONS
                AND WARRANTS

            

    

    

    
      	3.1   	
              Vendor’s
                representations and
                warrants

            

    

    

    
      	3.1.1         
              	
              The
                Vendor shall be actual beneficial owner of the 100% Sale Interests
                in the
                registered capital of Shanghai Jiumeng and Shanghai Jiumeng shall
                be the
                actual beneficial owner of the 51% Sale Interests in the registered
                capital of Shanghai Huaqing and the Vendor has full rights, interests
                and
                control in this Sale Interests. 

            

    

    

    
      	3.1.2         
              	
              The
                Vendor assures that no guarantee or security has been put against
                the Sale
                Interests of Shanghai Jiumeng and Shanghai Huaqing or the companies
                themselves for his own liabilities or for any third party in any
                forms
                thereof. 

            

    

    

    
      	3.1.3         
              	
              The
                Vendor assures that Shanghai Jiumeng will not sell its equity interest
                in
                the registered capital in Shanghai Huaqing to any party, and no
                third-party interest has been put against the 51% Sale Interests
                in
                Shanghai Huaqing such as pledge, lien, etc. till the completion of
                the
                sale and purchase transaction. 

            

    

    

    
      	3.1.4         
              	
              The
                Vendor has obtained all the approval, authorization or permits to
                execute
                this Agreement. 

            

    

    

    
      	3.1.5         
              	
              The
                Vendor represents the aforesaid statements and warrants will remain
                effective in all respects from date of signing of this Agreement
                up to the
                time of completion of this
                Agreement.

            

    

    

    
      	3.1.6         
              	
              The
                Vendor assures that all the documents he presents are true, legitimate
                and
                effective in all respects thereof. 

            

    

    

    
      	3.2           	
              Purchaser’s
                representations and
                warrants

            

    

    

    
      	3.2.1         
              	
              All
                the beneficial owners of the Purchaser hereby jointly and severally
                agree
                to purchase the Sale Interests in Shanghai Jiumeng incl. the 51%
                Sale
                Interests in Shanghai Huaqing hereon, and agree to undertake all
                the taxes
                incurred in the sale and purchase of the Sale Interests.
                

            

    

    

    
      
         

      

      
        3

        
          

        

      

      
         

      

       

    

    
      	3.2.2         
              	
              The
                Purchaser has obtained all the approval, authorization and permits
                to
                execute this Agreement. 

            

    

    

    
      	3.2.3         
              	
              The
                Purchaser assures that the aforesaid statements and warrants will
                remain
                effective in all respects from the date of signing of this Agreement
                up to
                the time of completion of this
                Agreement.

            

    

    

    
      	3.2.4         
              	
              The
                Purchaser assures all the documents it presents are true, legitimate
                and
                effective in all respects thereof. 

            

    

    

    
      	4               	
              CONFIDENTIALITY
                

            

    

     

                     
      Both the Vendor and the Purchaser shall keep all the known information and
      documents in connection with this Agreement strictly confidential. 

     

    
      	5               
              	
              BREACH
                OF THE AGREEMENT

            

    

    

    
      	5.1             
              	
              In
                the event that the Agreement fails to be executed due to the reason
                caused
                by the Vendor, i.e. the lien against the assets of Shanghai Huaqing,
                etc.,
                the Purchaser has the rights to terminate the Agreement and return
                all the
                documents, assets of Shanghai Jiumeng and Shanghai Huaqing, etc.
                that it
                received to the Vendor while with no liability to pay any usage fee
                of
                assets. 

            

    

     

    
      	5.2             
              	
              In
                the event that the Agreement fails to be executed due to the reason
                caused
                by the Purchaser, i.e. the Purchaser fails to pay the consideration
                in due
                course, etc., the Vendor has the rights to terminate the Agreement,
                the
                Purchaser shall return all the documents, assets of Shanghai Jiumeng
                and
                Shanghai Huaqing, etc. to the Vendor and indemnify all the losses
                incurred
                hereof. 

            

    

    

    
      	6                
              	
              FREE
                OF LIABILITIES

            

    

     

    
      
        	                  
                	
                In
                  the event of any of the following happens which results in the
                  unenforceable of this Agreement, each party shall undertake the
                  obligation
                  to return the documents and assets it received to the other party
                  hereto.
                  

              

      

       

    

    
      	
              6.1             

            	
              Force
                Majeure

            

    

     

    
      
        
          	                  
                  	
                  No
                    party shall be liable for any failure to perform its obligations
                    in
                    connection with any unforeseeable and inevitable events such
                    as natural
                    disaster, or other cause beyond such party’s
                    reasonable control, each party shall take effective and timely
                    measure to
                    reduce the damage expansion and notify the other party within
                    three
                    business days. If the aforesaid event happens, each party shall
                    return the
                    assets obtained from the other party. Provided that the aforesaid
                    event
                    happens, the party fails to take effective and timely measure
                    to reduce
                    the damage expansion which results in the elevation of the damage
                    to the
                    other party, the party shall take the liability to compensate
                    the other
                    party for the loss resulted from
                    inaction.

                

        

      

    

    
      
        
           

        

      

    

    
      	
              6.2             
                

            	
              Government
                Action

            

    

     

    
      
        
          	                  
                  	
                  
                    After
                      the execution of this Agreement, the change of regulation,
                      policy or law
                      (excl. the unawareness to the current policy, regulation by
                      each party),
                      causes the Agreement unenforceable by both parties.
                      

                  

                

        

      

    

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    
      	6.3             
              	
              If
                the events (as described in 6.1 and 6.2) happens, and provided that
                the
                sale and purchase transaction is yet not completed, the Agreement
                will
                terminate automatically, the Purchaser shall return the assets to
                the
                Vendor and pay the usage fee based on actual circumstances.
                

            

    

     

    
      	7               	
              DISPUTE
                SETTLEMENT

            

    

     

    
      
        
          
            	                  
                    	
                    
                      Any
                        dispute, controversy or claim arising out of or relating
                        to this
                        Agreement, shall be settled by negotiation and discussion
                        between both
                        parties in good faith. In the event that the dispute, controversy
                        or claim
                        cannot be solved through negotiation and discussion, this
                        dispute,
                        controversy or claim, as any parties requires, shall be submitted
                        and
                        settled in the jurisdiction of Peoples’ Court in Min Hang district,
                        Shanghai.  

                    

                  

          

        

      

8               
      GENERAL

    

    
      	8.1             
              	
              This
                Agreement will be effective immediately upon duly signed by the Vendor
                and
                the Purchaser and stamped with company seal. Without the written
                consent
                by both parties, the rights and obligations under this Agreement
                cannot be
                changed;

            

    

    

    
      	8.2             	
              Any
                changes to the Agreement shall be submitted and covenanted in written
                and
                duly signed by both parties;

            

    

    

    
      	8.3             
              	
              The
                invalidation of any clause or some clauses in this Agreement will
                not
                impact the validity of other
                clauses;

            

    

    

    
      	8.4             
              	
              This
                Agreement will be in four original copies, one copy with the Vendor
                and
                the Purchaser each, and the rest two copies are for the registration
                purpose. Each copy shall be deemed as equally
                authentic;

            

    

    

    
      	8.5             
              	
              The
                Vendor and the Purchaser can sign complementary agreement if necessary,
                with the complementary agreement has the same effectiveness as this
                Agreement. 

            

    

    

    IN
      WITNESS
      whereof
      this Agreement has been duly executed by all parties hereto the day and year
      first above written.

     

    
SIGNED
      by

    ZHOU
      BIZHENG

     

     

    SIGNED
      by

    for
      and
      on behalf of 

    SHANGHAI
      SHIHENG ARCHITECTURE CONSULTING CO., LTD. 

     

    5

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